City of Scottsdale, Arizona Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009 City of Scottsdale, Arizona Comprehensive Annual Financial Report for the fiscal year ended June 30, 2009 Prepared by: Financial Services Department Scott McCarty, CPA Chief Financial Officer Richard D. Chess, MBA Accounting & Tax Audit Director City of Scottsdale, Arizona City of Scottsdale, Arizona Comprehensive Annual Financial Report For the Fiscal Year ended June 30, 2009 Table of Contents  Page INTRODUCTORY SECTION Letter of Transmittal – Chief Financial Officer, Financial Services................................................................................. 1 Certificate of Achievement - Government Finance Officers Association....................................................................... 7 List of Elected and Appointed Officials/Organizational Chart........................................................................................ 8 FINANCIAL SECTION Independent Auditors’ Report...............................................................................................................................................11 Management’s Discussion and Analysis...............................................................................................................................13 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets..............................................................................................................................................34 Statement of Activities................................................................................................................................................35 Fund Financial Statements Balance Sheet - Governmental Funds.......................................................................................................................36 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets.............................................................................................................................................................38 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds................................................................................................................................................39 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities..........................................................41 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual - General Fund.........................................................................................................................42 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance -Budget and Actual - General Fund..............................................................................................43 Statement of Net Assets - Proprietary Funds..........................................................................................................44 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds......................................................................................................................................................46 Statement of Cash Flows - Proprietary Funds........................................................................................................47 Statement of Fiduciary Net Assets - Fiduciary Funds............................................................................................49 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds.......................................................................50 Notes to the Financial Statements.........................................................................................................................................51 I Summary of Significant Accounting Policies...........................................................................................................51 II Reconciliation of Government-wide and Fund Financial Statements.................................................................60 III Stewardship, Compliance, and Accountability.........................................................................................................66 IV Detailed Notes on All Funds......................................................................................................................................69 A. Cash and Investments...................................................................................................................................69 B. Receivables......................................................................................................................................................73 C. Capital Assets.................................................................................................................................................74 D. Interfund Balances and Interfund Transfers.............................................................................................76 E. Leases...............................................................................................................................................................78 F. Bonds, Loans, and Other Payables..............................................................................................................79 City of Scottsdale, Arizona  Page V Other Information........................................................................................................................................................92 A. Risk Management..........................................................................................................................................92 B. Contingent Liabilities....................................................................................................................................92 C. Commitments and Subsequent Events......................................................................................................92 D. Joint Venture...................................................................................................................................................94 E. Pollution Remediation...................................................................................................................................94 F. Related Organization.....................................................................................................................................95 G. Retirement and Pension Plans.....................................................................................................................95 H. Other Postemployment Benefits...............................................................................................................100 I. Postemployment Benefits Other Than Pensions....................................................................................101 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds . .................................................................................107 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds................................................................................................108 Combining Balance Sheet - Nonmajor Special Revenue Governmental Funds......................................................110 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Special Revenue Governmental Funds..................................................................111 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: Highway User Fuel Tax – Special Revenue Fund..................................................................................................112 Preserve Privilege Tax – Special Revenue Fund....................................................................................................113 Combining Balance Sheet - Nonmajor Debt Service Governmental Funds............................................................114 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Debt Service Governmental Funds...............................................................115 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Obligation Bond – Debt Service Fund....................................................................................................116 Municipal Property Corporation Bond – Debt Service Fund.............................................................................117 Special Assessments Bond – Debt Service Fund..................................................................................................118 Scottsdale Preserve Authority Bond – Debt Service Fund..................................................................................119 Combining Balance Sheet - Nonmajor Capital Projects Governmental Funds.......................................................120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Capital Projects Governmental Funds...................................................................121 Combining Statement of Net Assets - Internal Service Funds..................................................................................123 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Internal Service Funds.............................................................................................................124 Combining Statement of Cash Flows - Internal Service Funds.................................................................................125 Combining Statement of Fiduciary Net Assets - Fiduciary Funds............................................................................127 Combining Statement of Changes in Assets and Liabilities – Fiduciary Funds......................................................128 Other Supplementary Information: Schedule of Changes in Long-Term Debt.........................................................................................................................130 City of Scottsdale, Arizona STATISTICAL SECTION  Financial Trends Page Net Assets by Component – Last Eight Fiscal Years (accrual basis of accounting)��������������������������������������������� 134 Changes in Net Assets – Last Eight Fiscal Years (accrual basis of accounting)���������������������������������������������������� 135 Governmental Activities Tax Revenue by Source – Last Eight Fiscal Years (accrual basis of accounting).������������������������������������������������������������������������������������������������������������������������������������ 138 Fund Balances of Governmental Funds – Last Eight Fiscal Years (modified accrual basis of accounting).������������������������������������������������������������������������������������������������������������������� 139 Changes in Fund Balances of Governmental Funds – Last Eight Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 140 Governmental Activities Tax Revenue by Source – Last Eight Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 143 Revenue Capacity Taxable Sales Subject to Privilege (Sales) Tax by Category - Last Eight Fiscal Years�������������������������������������������� 144 Direct and Overlapping Sales Tax Rates - Last Eight Fiscal Years��������������������������������������������������������������������������� 145 Sales Tax Revenue Payers by Industry - Current Year and Nine Years Ago����������������������������������������������������������� 146 Property Tax Rates – Direct and Overlapping Governments – Last Eight Fiscal Years�������������������������������������� 147 Principal Property Tax Payers – June 30, 2009 and 2000������������������������������������������������������������������������������������������� 148 Assessed Value of Taxable Property – Last Eight Fiscal Years.������������������������������������������������������������������������������� 149 Property Tax Levies and Collections – Last Eight Fiscal Years�������������������������������������������������������������������������������� 150 Debt Capacity Ratios of Outstanding Debt by Type – Last Eight Fiscal Years������������������������������������������������������������������������������� 151 Ratios of General Bonded Debt Outstanding – Last Eight Fiscal Years���������������������������������������������������������������� 152 Direct and Overlapping Governmental Activities Debt as of June 30, 2009��������������������������������������������������������� 153 Legal Debt Margin Information – Last Eight Fiscal Years��������������������������������������������������������������������������������������� 154 Pledged-Revenue Coverage – Last Eight Fiscal Years������������������������������������������������������������������������������������������������ 156 Economic and Demographic Information Demographic and Economic Statistics – Last Eight Fiscal Years���������������������������������������������������������������������������� 157 Principal Employers – Current Year and Nine Years Ago���������������������������������������������������������������������������������������� 158 Operating Information Full-time Equivalent City Government Employees by Function – Last Eight Fiscal Years�������������������������������� 159 Operating Indicators by Function – Last Eight Fiscal Years������������������������������������������������������������������������������������ 160 Capital Asset Statistics by Function – Last Eight Fiscal Years���������������������������������������������������������������������������������� 163 City of Scottsdale, Arizona City of Scottsdale, Arizona Table of Contents October 14, 2009 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Scottsdale, Arizona: Transmittal Letter For the Fiscal Year Ended June 30, 2009 City of Scottsdale Scottsdale, Arizona The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2009, is submitted in accordance with Article 6, Section 14, of the City Charter. Management assumes full responsibility for the completeness and reliability of all information presented in this report, based upon a comprehensive framework of internal control that it established for this purpose. Because the cost of internal controls should not outweigh their anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements. LarsonAllen, LLP has issued an unqualified (“clean”) opinion on the City of Scottsdale, Arizona’s financial statements for the year ended June 30, 2009. The independent auditor’s report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. City of Scottsdale Profile Scottsdale is centrally located in Maricopa County, Arizona, with its boundaries encompassing an area approximately 184 square miles, stretching 31 miles from north to south. The City is bordered to the west by Phoenix, the state capital, by Tempe to the south, and by the Salt River/Pima Maricopa Indian Community to the east. Scottsdale, together with its neighboring cities, forms the greater metropolitan Phoenix area, which is the economic, political, and population center of the state. City of Scottsdale, Arizona 1 Table of Contents Scottsdale was founded in the 1800’s when retired Army Chaplain Major Winfield Scott homesteaded what is now the center of the City. The City incorporated in 1951 and the City Charter, under which it is presently governed, was adopted in 1961. The City has experienced significant increases in population, with the 1950 census reporting 2,032 residents, and the 2000 census reporting 202,705. The City’s population for 2009 was estimated at 242,337. Scottsdale operates under a council-manager form of government as provided by its Charter. The Mayor and six City Council members are elected at large on a non-partisan ballot for a four-year term. The City Council appoints the City Manager, who has full responsibility for carrying out City Council policies and administering City operations. The City Manager, in turn, appoints City employees and department General Managers under service procedures specified by Charter. City service departments provide a full range of services including police and fire protection, sanitation/solid waste service, water and sewer services, construction and maintenance of streets, recreational activities, including libraries and cultural events. The annual budget serves as the foundation for Scottsdale’s financial planning and control. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the City’s various funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. On or before the second regular Council meeting in May, the City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them. Two public hearings are held prior to the budget’s final adoption in order to obtain taxpayer comments. In June, the budget is legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article 9, Section 20. During fiscal year (FY) 2008/09, there were no such supplemental budgetary appropriations to the original budget. The expenditure appropriations in the adopted budget are by department. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Departmental appropriations may be amended during the year. Upon the recommendation of the City Manager, and with the approval of the City Council: (1) transfers may be made from the appropriations for contingencies to departments; and (2) unexpended appropriations may be transferred from one department to another. Local Economy The City of Scottsdale’s tax revenue base consists of a variety of tax categories, the most significant being revenue collections from retail sales and tourism activity. The City also benefits from other favorable conditions associated with Scottsdale, including a stable, diversified economic base and a desirable location for work, destination, and living. Scottsdale is past its historic period of peak expansion and the long-term economic outlook for the City recognizes this fact. Revitalization efforts have resulted in a rebirth of the City’s downtown area, as well as renewed interest in redevelopment of the more mature, southern parts of the City. Commercial successes are due, in part, to Scottsdale’s commitment to targeted recruitment efforts that focus on industry segments that complement the existing business mix, including: corporate headquarter and regional offices; high-tech, research and development; bio-med; luxury resorts and hotels, and business and professional services. The following categories represent key factors affecting Scottsdale’s economic and financial success: 2 City of Scottsdale, Arizona Table of Contents Retail Sales Scottsdale’s largest revenue source is sales tax generated from a well-balanced variety of business categories including automotive, construction, food stores, hotels/motels, department stores, retail stores, restaurants, utilities and rentals. The City saw retail sales tax revenues decrease by 17 percent in FY 2008/2009 after falling 4 percent in the previous fiscal year, a result of the national recession. Employment and Job Growth Scottsdale remains a net importer of labor, with an estimated ratio of 1.3 jobs to workforce population in the City (Source: SitesUSA 2009). This creates employment opportunities for Scottsdale residents and creates a significant business component to the local tax base. Scottsdale’s unemployment rate was 6.3 percent in August 2009, significantly lower than the state level of 9.3 percent. Historically, Scottsdale’s unemployment rate is about 2 percent lower than the state’s average. Scottsdale recruited seven new, targeted firms with about 360 new jobs over the past year. New employers to announce moves to Scottsdale last year included Allviant, Stirling Energy Systems, and NightHawk Radiology, as well as the expansion of the GoDaddy facility. Commercial Vacancy Rates Scottsdale’s citywide office vacancy rate was about 29 percent for the last quarter of the fiscal year. The percentage is in line with the Valley average. Scottsdale has nearly 20 percent of new office space in the Valley that is currently under construction. Tourism Tourism is one of Scottsdale’s largest and most vibrant industries, and is a significant contributor to the City’s economy. A variety of lodging properties, including several world-class resorts and “boutique” hotels, provide over 11,000 guest rooms, along with spectacular spas, trend-setting dining and one-of-a kind Sonoran desert golf courses. With the addition of the new 54-room Best Western Sundial hotel in 2009, room supply in Scottsdale is expected to remain relatively stable in 2010. Bed tax revenues to the City declined by 22 percent for fiscal year 2008/2009, due largely to the declining national economy and the “AIG Effect” affecting business travel, which resulted in significant reductions in occupancy rates and room rates. Scottsdale visitors contribute about 20 percent of the City’s total privilege and use tax revenues. With over 17,000 retail shops, nearly 600 restaurants, national and international events, and spectacular southwest Sonoran desert setting, Scottsdale continues to be a popular destination for visitors year-round and is well-positioned as the economy emerges from the current recession. City of Scottsdale, Arizona 3 Table of Contents Long-term Financial Planning Scottsdale’s Five-Year Financial Plan is based upon sound financial reserves and conservative revenue growth forecasts for the foreseeable future. Potential for State legislative impacts to reduce revenuesharing and additional demands for essential City services such as police, fire, transportation and social services remain. Financial Services management plays a pivotal role in maintaining and recommending enhancements to financial plan elements to ensure the continued financial stability for the City of Scottsdale. Achieving and maintaining fiscal stability requires many elements all working in concert with one another. The following identifies key elements of our financial plan. Adopted Comprehensive Financial Policies Financial policies establish the framework for Scottsdale’s overall fiscal planning and management. They set forth guidelines against which current budgetary performance can be measured and proposals for future programs can be evaluated. These policies set the tone for all fiscal decisions made by staff and City Council. We currently identify 53 financial policies governing operations, capital planning, debt management, reserves and financial reporting – regular review and enhancement of these policies is done in conjunction with financial plan development and are adopted annually by the City Council. Financial Resource Planning Scottsdale’s strategic financial planning begins with determining the City’s fiscal capacity based upon long-term financial forecasts of recurring, available revenues. Conservative financial forecasts coupled with financial trend analysis techniques and careful reserve analysis help preserve the fiscal wellbeing of Scottsdale. Strategic financial capacity planning is a critical element to reach long-term financial stability goals and to determine special financial needs for the critical objectives of the City Council. Multi-Year Operating Budget Planning Multi-year budget planning encompasses long-range operating expenditure plans (including the operating impacts of capital projects), which are linked to community expectations and broad goals of the City Council. The multi-year approach provides a better opportunity for staff to change its financial paradigm from what do we need this year to how do we accomplish our level of service objectives over time, given our financial capacity. While the City is required to adopt an annual budget to meet State statutory requirements, Scottsdale builds a five-year financial plan to help anticipate future impacts and ensure achievement of City objectives. Strategic Capital Improvement Project Planning Scottsdale Capital Improvement Projects are planned for five or more years and analyzed using City specific prioritization criteria. The operating cost impacts of projects are also planned and considered in developing future operating budget plans. Projects with significant operating impacts are carefully timed to avoid contingent liabilities, which future operating resources cannot meet. Pay-as-you-go funding sources are also conservatively estimated to avoid over-committing to capital construction using revenues that are not certain. To the extent debt financing is used, capital project plans are sized to conform to existing debt management policies. 4 City of Scottsdale, Arizona Table of Contents Debt Management Scottsdale has a financial policy, which prohibits the issuance of debt for operating expenses. With that as a governing framework, all debt issuances are for the purposes of financing capital infrastructure (or longlived costly assets). Each debt issuance is evaluated against policies addressing: debt service as a percent of operating expenditures, tax and revenue bases for the repayment of debt, the overall debt burden on the community, statutory limitations and market factors affecting tax-exempt interest costs. In all cases a long-term analysis is made considering the financial (debt) capacity that fits the wherewithal (and willingness) of our community to pay for the capital projects. Sizing of the City’s Capital Improvement Plan based on debt capacity in conjunction with conservatively estimated pay-as-you-go revenues helps stabilize per capita debt and lower annual debt service costs to the City over the long-term. The City retained credit ratings of “Aaa”, “AAA”, and “AAA” from the three major credit rating agencies, Moody’s Investors Service, Standard and Poor’s Ratings Group, and Fitch Ratings, respectively on the City’s outstanding general obligation bonds. These are the highest ratings possible, originally earned by the City in 2001, and are held by only a handful of local governments across the nation. A summary of the City’s bond ratings are shown as follows: City of Scottsdale Bonded Debt Ratings As of June 30, 2009 General Obligation (GO) Municipal Property Corp (MPC) Water and Sewer Revenue (W&S) Highway User Revenue Fund (HURF) Scottsdale Preserve Authority (SPA) Moody's Investors Service Aaa Aa1 Aa1 Aa3 Aa2 Standard and Poor's Rating Group AAA AAA AAA AA AA Fitch Investors Service, Inc. AAA AA+ AA+ Not Rated AA Major Initiatives The City of Scottsdale’s adopted fiscal year 2009/2010 budget was established with the national recession as the back drop. The budget document was the culmination of the most challenging budget process in the City’s history. We moved quickly and decisively to deal with the downturn. During the first half of the 2008/09 fiscal year, we had already taken action to close a $40 million gap between revenues and expenses. For the 2009/10 budget year, the City Council, the new Budget Review Commission, our citizens and staff were faced with wrenching choices necessary to close an even larger gap – about $65 million. We collectively met the challenge. We did so without instituting any new taxes or raising tax rates. The Council was able to lower the City’s combined property tax rate from 79 cents to 74 cents per $100 of assessed valuation. The Council also voted for the lowest increase in five years in utility fees, adding about 2.4 percent to a typical homeowner’s bill. City of Scottsdale, Arizona 5 Table of Contents In the process, we were able to accomplish two even more important objectives: 1) We were able to make the needed reductions while limiting the impacts on our direct services to citizens. We promised to affect them least and last, and we held to that commitment. 2) We were able to restructure the City organization, reducing its size by 10 percent, streamlining the chain of command and combining similar work functions to be more efficient and effective. We positioned our organization to be more financially sustainable for the long term. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Scottsdale for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2008. This was the 36th consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The City of Scottsdale received the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2008 from the GFOA for our conformity in budget presentation. We believe that our current budget continues to conform to the program requirements and expect to receive this award for the fiscal year beginning July 1, 2009. Additionally, on July 7, 2009, the City of Scottsdale was formally recognized for having its Cash Handling Program certified by the Association of Public Treasurers of the United States and Canada (APT US&C). The preparation of this report could not have been accomplished without the dedicated service of the entire staff of the Accounting and Budget divisions, the assistance of administrative personnel in the various departments, and through the competent service of our independent auditors. I also wish to express my sincere appreciation to the City Council and the City Manager for their interest and support in planning and conducting the financial affairs of the City of Scottsdale in a responsible and progressive manner. Respectfully submitted, Scott McCarty Chief Financial Officer 6 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona 7 Table of Contents City of Scottsdale, Arizona List of Elected and Appointed Officials City Council W.J. “Jim” Lane, Mayor Lisa M. Borowsky Wayne Ecton Susan Klapp Robert W. Littlefield Ron McCullagh Tony Nelssen Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009 City of Scottsdale Scottsdale, Arizona 8 Charter Offices Deborah Robberson, City Attorney Sharron Walker, City Auditor Carolyn Jagger, City Clerk B. Monte Morgan, City Judge City Treasurer, (Vacant) Administrative Staff John Little, City Manager David Ellison, Assistant City Manager Roger Klingler, Assistant City Manager Neal Shearer, Assistant City Manager City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Citizens of Scottsdale Mayor and City Council City Manager Citizen Advisory Boards Citizen Advisory Commissions Other Council-Appointed Staff City Attorney - Deborah Robberson 480-312-7994 City Auditor - Sharon Walker (480) 312-7867 City Clerk - Carolyn Jagger 480-312-2411 City Judge - B. Monte Morgan 480-312-2442 City Treasurer - (Vacant) John Little 480-312-2800 Administrative Support Transportation Mary O’Connor 480-312-2334 Administration * Aviation * Transportation Planning * Traffic Engineering -Intelligent Transportation Systems * Parking Assistant City Manager Assistant City Manager Assistant City Manager David Ellison 480-312-4510 Roger Klingler 480-312-5830 Neal Shearer 480-312-2604 Planning & Development Services David Richert 480-312-2890 Human Citizen & Communication Neighborhood Resources & Public Affairs LaVerne Resources Pat Dodds Raun Keagy Parker Diggs 480-312-2373 480-312-2615 480-312-2336 9 Administration Administration Customer Public * Services & Relations * Customer Administration * Human Service & * Media Resources Planning & Communication Relations * * Training & Design Services * Neighborhood Development CityCable 11 * Services/ Current Planning * Code Services Diversity & Enforcement * Dialogue Plan Review & * Benefits Permit Services/ Management One Stop Shop * * Inspection & Human Resources Land Survey Operations & Admin Services * Planning Technology * Preservation * Office of Environmental Initiatives Police Fire Alan Rodbell 480-312-1900 William L. McDonald 480-312-1880 Office of the Chief * Uniformed Services * Special Programs * Investigative Services * Administrative Services * Personnel Development Fire Administration * Fire Emergency Services * Fire Support Services * Emergency Management Economic Vitality Harold Stewart (Acting) Economic Development * Tourism * Revitalization * Business Services Water Resources Municipal Services WestWorld The Downtown Group Michelle Korf (Acting) 480-312-2638 Marshall Brown Dan Worth Brian Dygert 480-312-5683 480-312-5555 480-312-6825 Downtown Marketing & Promotion * Downtown Project Planning & Coordination * Cultural Council Contract Administration Water Resources Administration * Water Operations * Water Quality * Water Treatment Administration Operations & * Facilities Capital Management Project * Management Events * Management Solid Waste Management * Traffic Operations * Fleet Management * Stormwater Management * Street Operations Community Services Debra Baird 480-312-2480 Administration * Parks & Recreation * Human Services * Library Systems * Facilities Management Financial Services Information Systems Government Relations Scott McCarty Brad Hartig Bridget Schwartz-Manock 480-312-2454 480-312-7582 480-312-7615 Administration * Accounting * Budget * Risk Management * Purchasing * Customer Service IS Admin * Application Dev. Integration, Mgt. & Support * Network Operations * GIS Data Services * Project Office * Application Support * Help Desk/ Desktop Technical Support Federal Relations * State Relations * Regional Relations Table of Contents 10 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona 11 Table of Contents 12 City of Scottsdale, Arizona Table of Contents M ANAGEMENT’S DISCUSSION AND ANALYSIS This section of the City of Scottsdale’s (the City) Comprehensive Annual Financial Report presents a narrative overview and comparative analysis of the financial activities of the City for the fiscal years ended June 30, 2009 and 2008. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal and the basic financial statements. FINANCIAL HIGHLIGHTS Key Financial highlights for fiscal year 2009 are as follows: • The assets of the City exceeded its liabilities at the close of the fiscal years 2009 and 2008 by $4.1 billion and $3.9 billion (net assets), respectively. Of these amounts, $322.8 million and $383.7 million (unrestricted net assets), respectively, may be used to meet the government’s ongoing obligations to citizens and creditors. • The City’s total net assets increased by $196.8 million and $195.5 million during fiscal years 2009 and 2008, respectively. • As of June 30, 2009 and 2008, the City’s governmental funds reported combined ending fund balances of $221.3 million and $335.8 million, respectively. • At the close of the current fiscal year, unreserved fund balance for the General Fund was $59.6 million or 23 percent of total General Fund expenditures of $257.2 million. • During fiscal year 2009 the City’s total bonded debt decreased by approximately $41.1 million. City of Scottsdale, Arizona 13 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements 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. Relationship Between Comprehensive Annual Financial Report (CAFR) and Basic Financial Statements and Required Supplementary Information (RSI) General Information on the government structure, Introductory services and environment Section + Management's Discussion and Analysis CAFR Government-wide Financial Statements Basic Financial Statements and RSI Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements Financial Section Notes to the Financial Statements Additional Required Supplementary Information Information on individual funds and other supplementary information not required by GAAP + Trend data and nonfinancial data Statistical Section Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net assets and the statement of activities provide information about the whole City, presenting both an aggregate view of the City’s finances and a longer-term view of those assets. Major fund financial statements provide the next level of detail. For governmental funds, these statements reflect how services were financed in the short term as well as what dollars remain for future spending. The fund financial statement also displays the City’s most significant funds with all other major funds presented in total in one column. 14 City of Scottsdale, Arizona Table of Contents Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the City include general government, police, financial services, transportation, community services, including parks, recreation and library services, information systems, planning and development, downtown group, fire, municipal services, citizen and neighborhood resources, human services, economic vitality, westworld, and streetlight and services district. The business-type activities of the City include water, sewer, solid waste, and airport operations. The government-wide financial statements are for the City itself. However, included within the governmental activities of the government-wide financial statements are the operations of the City of Scottsdale Municipal Property Corporation (MPC), the Scottsdale Preserve Authority (SPA), and the Scottsdale Mountain, McDowell Mountain Ranch, DC Ranch, Via Linda Road, and Waterfront Commercial Community Facilities Districts. Although legally separate from the City, these component units are blended with the primary government because of their governance or financial relationships to the City. Management’s Discussion and Analysis The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses for earned but unused vacation and sick leave balances. For the Fiscal Year Ended June 30, 2009 The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating. Separate financial statements of the MPC, SPA and the Scottsdale Mountain, McDowell Mountain Ranch, DC Ranch, Via Linda Road and Waterfront Commercial Community Facilities Districts may be obtained at the City’s Financial Services Department, Accounting Division, 7447 East Indian School Road, Suite 210, Scottsdale, Arizona 85251. The government-wide financial statements can be found on pages 34 and 35 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into the following three categories: Governmental Funds, Proprietary Funds, and Fiduciary Funds. City of Scottsdale, Arizona 15 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects). 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, General Obligation Bond Debt Service Fund, General Capital Improvement Plan (CIP) Capital Project Fund, and Transportation Privilege Tax Capital Project Fund which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements in a separate section of this report. The basic governmental fund financial statements begin on page 36 of this report. Proprietary Funds Proprietary Funds are generally used to account for services for which the City charges customers–either outside customers, internal units or departments of the City. Proprietary Funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City maintains the following two types of Proprietary Funds: Enterprise Funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses Enterprise Funds to account for the operations of the Water, Sewer, Solid Waste and Airport operations of the City. All Enterprise Funds are considered to be major funds of the City. Internal Service Funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses Internal Service Funds to account for its fleet of vehicles and self-insurance. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The Internal Service Funds are combined into a single, aggregated presentation in the Propriety Fund financial statements. Individual fund data for the Internal Service Funds is provided in the form of combining statements in a separate section of this report. The basic Proprietary Fund financial statements begin on page 44 of this report. 16 City of Scottsdale, Arizona Table of Contents The basic Fiduciary Fund financial statements begin on page 49 of this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found beginning on page 51 of this report. Combining Statements The combining statements referred to earlier in connection with non-major Governmental Funds, Internal Service Funds, and Fiduciary Funds are presented immediately following the notes to the financial statements. Management’s Discussion and Analysis Fiduciary Funds are used to account for resources held for the benefit of parties outside the City. The City has one private-purpose trust fund and two agency funds, which are reported under the Fiduciary Funds. Fiduciary Funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for Fiduciary Funds is much like that used for Proprietary Funds. For the Fiscal Year Ended June 30, 2009 Fiduciary Funds GOVERNMENT-WIDE FINANCIAL ANALYSIS While this document contains information about the funds used by the City to provide services to our citizens, the Statement of Net Assets and the Statement of Activities serve to provide an answer to the question of how the City, as a whole, did financially throughout the year. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by the private sector. The basis for this accounting takes into account all of the current year’s revenues and expenses regardless of when the cash is received or paid. These two statements report the City’s net assets and the changes in those assets. The change in assets is important because it tells the reader whether the financial position of the City as a whole has improved or diminished. However, in evaluating the overall position of the City, non-financial information such as changes in the City’s tax base and the condition of the City’s capital assets will also need to be evaluated. Analysis of Net Assets As noted earlier, net assets may serve as a useful indicator of a government’s financial position. For the City, assets exceeded liabilities by $4.1 billion and $3.9 billion at the close of the fiscal years 2009 and 2008, respectively. City of Scottsdale, Arizona 17 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents Net Assets June 30, 2009 and 2008 (in thousands of dollars) Governmental Business-type Business-Type Activities 2009 Assets Current and Other Assets Capital Assets Total Assets Liabilities Long-term Liabilities Outstanding Other Liabilities Total Liabilities Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets $ Activities 2008 2009 Total 2008 2009 2008 404,805 $ 506,927 $ 338,886 $ 357,230 $ 743,691 $ 864,157 3,389,974 3,128,903 1,305,463 1,235,209 4,695,437 4,364,112 3,794,779 3,635,830 1,644,349 1,592,439 5,439,128 5,228,269 826,301 166,131 992,432 858,392 143,693 1,002,085 342,395 44,893 387,288 323,853 39,717 363,570 1,168,696 211,024 1,379,720 1,182,245 183,410 1,365,655 2,586,731 2,353,573 991,390 909,632 3,578,121 3,263,205 131,732 189,540 26,568 26,147 158,300 215,687 83,884 90,632 239,103 293,090 322,987 383,722 $ 2,802,347 $ 2,633,745 $ 1,257,061 $ 1,228,869 $ 4,059,408 $ 3,862,614 The largest portion of the City’s net assets reflects its investment in capital assets (e.g. land, buildings, and equipment); less any related outstanding debt used to acquire those assets, of $3.6 billion (88 percent) and $3.3 billion (84 percent) at June 30, 2009 and 2008, respectively. Although the City’s investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources because the City uses these assets to provide services to citizens and; therefore, cannot liquidate them. An additional portion of the City’s net assets, $158.3 million (4 percent) at June 30, 2009 and $215.7 million (6 percent) at June 30, 2008 represent resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets at June 30, 2009 and 2008, $323.0 million (8 percent) and $383.7 million (10 percent), respectively, may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of both the current and previous fiscal years, the City was able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for the business-type activities. Analysis of Changes in Net Assets The City’s total net assets increased by $196.8 million and $195.5 million during the fiscal years 2009 and 2008, respectively. These increases are explained in the government and business-type activities discussion herein, and are primarily a result of contributions from developers of infrastructure assets. 18 City of Scottsdale, Arizona Table of Contents Governmental Activities 2009 2008 Revenues Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues Property Taxes Business Taxes Intergovernmental Taxes Interest and Investment Income Other Total Revenues Expenses General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Interest on Long-term Debt Water Utility Sewer Utility Airport Solid Waste Total Expenses Increase in Net Assets Before Transfers Transfers Increase in Net Assets Net Assets at Beginning of Year Net Assets at End of Year $ Business-type Activities 2009 2008 2009 Total 2008 36,941 $ 26,272 240,289 51,393 $ 28,409 157,808 148,606 $ 22,067 147,875 $ 50,679 185,547 $ 26,272 262,356 199,268 28,409 208,487 61,138 160,134 64,145 14,653 5,038 608,610 54,139 192,191 65,933 19,187 7,606 576,666 117 4,958 408 176,156 195 6,910 517 206,176 61,138 160,251 64,145 19,611 5,446 784,766 54,139 192,386 65,933 26,097 8,123 782,842 20,646 92,530 9,913 87,552 78,523 13,723 4,595 31,174 22,887 3,802 3,545 8,553 29,029 595 631 42,242 449,940 32,712 91,102 10,930 90,039 78,285 13,704 4,697 31,943 20,153 3,663 4,790 9,711 31,933 3,289 712 39,457 467,120 81,391 33,509 3,482 19,650 138,032 71,140 26,947 3,343 18,772 120,202 20,646 92,530 9,913 87,552 78,523 13,723 4,595 31,174 22,887 3,802 3,545 8,553 29,029 595 631 42,242 81,391 33,509 3,482 19,650 587,972 32,712 91,102 10,930 90,039 78,285 13,704 4,697 31,943 20,153 3,663 4,790 9,711 31,933 3,289 712 39,457 71,140 26,947 3,343 18,772 587,322 Management’s Discussion and Analysis For the Years Ended June 30, 2009 and 2008 (in thousands of dollars) For the Fiscal Year Ended June 30, 2009 Changes in Net Assets 158,670 109,546 38,124 85,974 196,794 195,520 9,932 10,997 (9,932) (10,997) 168,602 120,543 28,192 74,977 196,794 195,520 2,633,745 2,513,202 1,228,869 1,153,892 3,862,614 3,667,094 $ 2,802,347 $ 2,633,745 $ 1,257,061 $ 1,228,869 $ 4,059,408 $ 3,862,614 Governmental Activities Governmental activities increased the City’s net assets by $168.6 million in fiscal year 2009 and $120.5 million in fiscal year 2008, thereby accounting for 86 percent and 62 percent, respectively, of the total growth in the net assets of the City. The key factor of the increase is as follows: Capital grants and contributions increased significantly over the previous fiscal year. The increase is primarily due to capital contributions related to streets and storm drains donated by developers. Based on construction schedules, there was an increase in cash contributions for capital projects. Also, the City received additional distributions in Proposition 400 regional sales tax funds from the State of Arizona. Property taxes increased 13 percent over previous prior year, due to new construction assessed values being added to the tax roll. In addition, there was an increase in primary assessed valuations over the previous year. City of Scottsdale, Arizona 19 Business taxes decreased 17 percent over previous year, primarily due to reduced sales taxes, an affect of the economic recession which impacted most categories but especially affecting the automotive and construction sectors. Also, bed taxes were greatly reduced due to the adverse impact the recession had on Scottsdale’s tourism industry. Program Revenues and Expenses for Governmental Activities Fiscal Year 2008-09 (in thousands) Expenses Revenues t es tW or ld st es on D ist Lo ric ng ts -te rm D eb t lit m en y lo p W ve vic De an d te ht lig re Se r d ni St re et In es rc Vi ta ic om ng an rc es so u Re an m Ec on Pl an hb ig ou es oo d R al ic ip or h un M Ne & en tiz Ci Hu n Se rv ic es re Fi up s G ro em w wn Th e at io n to Sy st Se r ity un rm fo In m m Do n vic es tio s rta ic e rv sp o an Se Tr ia l nc na Fi G ov al er en G Co t Po en nm lic e $280,000 $260,000 $240,000 $220,000 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 er Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents As shown in the “Program Revenues and Expenses for Governmental Activities” chart, police is the largest function in expense (21 percent), followed by transportation (19 percent), and community services (17 percent). The Scottsdale Police Department, in partnership with the citizens of Scottsdale, recognizes the changing needs of our community and law enforcement’s role in addressing those needs. Furthermore, they pledge excellence, initiative and integrity to enhance the quality of life throughout our City knowing those they serve deserve no less. The Transportation Department ensures that Scottsdale neighborhoods, businesses and visitors are provided an accessible, environmentally sensitive, safe and efficient transportation system. Projects and operations for street, transit and non-motorized travel are developed in cooperation with the public and promote economic sustainability for the community, preserves and enhances neighborhood quality of life and ensures seamless connections to the regional network. The City’s Community Services Department improves and preserves Scottsdale’s quality of life through development of safe and highly maintained facilities and imaginative services that provide opportunities for family interaction, cultural enrichment, and development of lifetime skills which build self-esteem, promote healthy lifestyles and are a catalyst for community involvement. They provide assistance and guidance to those in need and link our citizens with information and resources throughout the world. 20 City of Scottsdale, Arizona Table of Contents Intergovernmental taxes $64,145 / 11% Interest and investment income $14,653 / 2% Charges for services $36,941 / 6% Operating grants and contributions $26,272 / 4% Business taxes $160,134 / 26% Management’s Discussion and Analysis Revenues by Source - Governmental Activities Fiscal Year 2008/2009 (in thousands) For the Fiscal Year Ended June 30, 2009 General revenues such as property, business, and privilege taxes are not shown by program, but are effectively used to support program activities citywide, such as police and fire services. For governmental activities overall, without regard to program, capital grants and contributions (40 percent), are the largest single source of funds, followed by business taxes which includes sales and use taxes and franchise taxes (26 percent), intergovernmental taxes (11 percent), which includes state shared revenues, property taxes (10 percent) and charges for services (6 percent). Capital grants and contributions $240,289 / 40% Other $5,038 / 1% Property taxes $61,138 / 10% Business-type Activities Business-type activities increased the City’s net assets in fiscal years 2009 and 2008 by $28.2 million and $75.0 million, respectively, accounting for 14 percent and 38 percent, respectively, of the total growth in the City’s net assets. The key factor of this increase is as follows: The Water and Sewer Utility Fund had capital contributions from developers and grantors resulting in $22.1 million and $50.7 million in revenue for fiscal years 2009 and 2008, respectively. The majority of this amount is from infrastructure donated from developers and development fees received. City of Scottsdale, Arizona 21 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents Program Revenues and Expenses -Business-type Activities Fiscal Year 2008 / 2009 (in thousands) Expenses Program Revenues $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Water Utility Sewer Utility Airport Solid Waste Revenues by Source - Business-type Activities Fiscal Year 2008 / 2009 (in thousands) Capital grants and contributions $22,067 / 13% Business Taxes & Other Income $525 / 0% Interest and investment income $4,958 / 3% Charges for services, $148,606 / 84% As shown in “Program Revenues and Expenses for Business-type Activities” and the “Revenues by Source for Business-type Activities” charts, the largest of Scottsdale’s business-type activities, Water and Sewer utilities, each had expenses of $81.4 million and $33.5 million, respectively, in fiscal year 2009, followed by Solid Waste with operating expenses of $19.7 million and Aviation of $3.5 million. For the fiscal year, revenues exceeded expenses for the Water and Sewer utilities and Solid Waste business activity. Revenues exceed expenses due to multi-year financial planning and pay-as-you-go contributions to capital projects. For the fiscal year, expenses exceeded revenue for Airport business activity, primarily due to a decrease in airport fees. Charges for services provided the largest share of revenues (84 percent) followed by capital grants and contributions (13 percent), which are largely developer contributions and development fees, for all of the business-type activities. 22 City of Scottsdale, Arizona Table of Contents The Aviation Department is a general aviation reliever facility with no commercial commuter or airline service and is home to many of the Valley’s corporate aircraft. Approximately 10,000 passengers a year travel through Scottsdale Airport to see the numerous sights across the State of Arizona. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental Funds Management’s Discussion and Analysis The Solid Waste Department provides effective and responsive leadership that ensures the delivery of safe, efficient and environmentally sound solid waste services to approximately 79,000 residential customers and 1,600 commercial and roll-off customers. For the Fiscal Year Ended June 30, 2009 The City’s Water Resources Department plans, manages and operates a safe, reliable water supply and wastewater reclamation system and provides efficient, high quality customer service to Scottsdale citizens. The Water Resources Department provides water service connections to approximately 87,000 customers. Funds are created and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Activity not required to be reported in a separate fund is included in the General Fund. Governmental funds are used to account for tax-supported activities. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. These funds are accounted for by using the modified accrual basis of accounting. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Project Funds. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $221.3 million, a decrease of $114.5 million in comparison to the combined ending fund balances at June 30, 2008 of $335.8 million. Approximately $193.2 million of the total at June 30, 2009 constitutes unreserved fund balance. Portions of this unreserved balance are designated in the City’s budget plan for pay-as-you-go capital projects and operational contingency funding. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed. For example, $24.2 million is committed for debt service payments. Revenues for governmental functions overall totaled approximately $404.5 million in fiscal year 2009, a decrease of about 5 percent ($22 million) over the previous year total of $426.6 million. In fiscal year 2009 expenditures for governmental functions, totaled $533.9 million, a decrease of 6 percent ($37 million) over the fiscal year 2008 total of $570.6 million. In the fiscal years ended June 30, 2009 and 2008, expenditures for governmental functions exceeded revenues by approximately $129.5 million and $144.0 million respectively. City of Scottsdale, Arizona 23 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unreserved fund balance of the General Fund was $59.6 million, while total fund balance was $60.4 million. The unreserved and total balances for the General Fund at the end of fiscal year 2008 were $61.4 million and $62.3 million, respectively. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 23 percent of the total General Fund expenditures of $257.2 million in fiscal year 2009 and 24 percent of the total General Fund expenditures of $253.9 million in fiscal year 2008. Total fund balance represents 24 percent and 25 percent of total fund expenditures for fiscal years 2009 and 2008, respectively. In fiscal year 2009 management has designated $30.9 million of the General Fund unreserved fund balance for various uses. See note section III.C in the Notes to the Financial Statements for further information regarding reservations and designations. The General Fund Balance decreased in fiscal year 2009 by $1.9 million. General Fund performance also reflects the recession. Overall, the General Fund’s performance resulted in expenditures exceeding revenue in the fiscal year ended June 30, 2009, of $11.9 million. The General Obligation Bond Debt Service fund is used to account for the accumulation of resources for, and the payment of, general obligation long-term debt principal, interest and related costs. At the end of the current fiscal year, the fund balance of the General Obligation Bond Debt Service Fund was $10.8 million, an increase of $1.3 million from the $9.5 million at the end of fiscal year 2009 due to planned debt service payments. The General CIP Construction Capital Project fund accounts for the resources used to acquire, construct and improve major capital facilities, other than those financed by Proprietary Funds. These expenses were primarily funded by pay-as-you-go transfers. The fund balances were $59.6 million and $101.0 million at June 30, 2009 and 2008, respectively. Capital improvement expenditures in 2009 were $89.8 million. The Transportation Privilege Tax Capital Project Fund accounts for the portion of the authorized 0.2 percent Transportation Privilege (Sales) Tax dedicated to transportation capital improvements. At the end of the current fiscal year, the fund balance of the Transportation Privilege Tax Capital Project Fund was $19.2 million, a decrease of $10.4 million from the $29.6 million at the end of fiscal year 2009. Capital improvement expenditures in 2009 were $54.4 million. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal years 2009 and 2008, the unrestricted net assets for the Water and Sewer Utility were $227.0 million and $281.1 million, respectively; Scottsdale Airport were $5.1 million and $4.9 million, respectively; and the Solid Waste Utility Fund were $7.0 million and $7.1 million, respectively. The Internal Service Funds, which are used to account for certain governmental activities, also had unrestricted net assets of $26.1 million and $29.5 million, respectively. 24 City of Scottsdale, Arizona Table of Contents The City maintains Fiduciary Funds for the assets of the Family Self-Sufficiency Agency Fund, the Retainage Escrow Agency Fund, and the Handicap Scholarship Private Purpose Trust Fund. As of the end of fiscal year 2009, the net assets of the Handicap Scholarship Private Purpose Trust Fund totaled $3,000. General Fund Budgetary Highlights The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. The City’s final year-end budget differs from the original adopted budget due to applying budget balancing strategies mid-year to deal with the depth and duration of the economic recession. • Allocated personnel costs from operating funds to special revenue and capital funds to better reflect program and capital project costs • Reduced the transfer-out from the General Fund to the Capital Fund by reducing maintenance projects • Eliminated vacant and occupied positions, including a retirement incentive program • Cancelled a 2% pay increase that was scheduled for January 2009 • Implemented budget reductions to contractual services and commodities such as consultants, advertising, banking charges, training and travel, software licensing, supplies, printing, clothing and small tools. Management’s Discussion and Analysis Fiduciary Funds For the Fiscal Year Ended June 30, 2009 The total growth in net assets for the Enterprise Funds was $28.2 million and $75.0 million for fiscal years 2009 and 2008, respectively. Factors concerning the finances of these funds have been addressed previously in the discussion of the City’s business-type activities. In particular, the Scottsdale Water and Sewer net assets increased by $27.9 million due to capital contributions of $21.6 million as well as increased revenues. Additionally, the City Council approved Budget Contingency adjustments. The City Council approved the use of contingency and increased the budget authorizing WestWorld to establish a Feed and Bedding Program and increased funding for utilities necessary to cover the costs of operating new infrastructure such as buildings and rights-of-way. The actual budget based fund balance was $10.1 million better than the revised budget. Revenues and transfers in were $1.3 million less than projected primarily because of local and state shared sales taxes. However, expenses and transfers out were $11.4 million less than the revised budget. Specifically, public safety overtime, software maintenance, communications, contract services, (e.g. banking and custodial), supplies, and travel/training were all significantly less than the revised budget. City of Scottsdale, Arizona 25 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents Net budget expenditures for increases by department totaled $4.0 million and $3.0 million for fiscal years 2009 and 2008, respectively. The net increase is defined as follows (in thousands): General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Debt Service Principal Interest and Fiscal Charges $ $ 262 2,103 (11) (74) 3,084 (467) (4) (1,120) 460 18 (669) (136) 261 302 33 8 4,050 Note: Amounts are the difference between the final and adopted budget for each department See CAFR "Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual" Capital Assets and Debt Administration Capital Assets The City’s capital assets for its governmental and business-type activities as of June 30, 2009 and 2008, amount to $4.7 billion and $4.4 billion, respectively (net of accumulated depreciation). Capital assets include land, buildings and improvements, water and sewer systems, water rights, vehicles, machinery and equipment, furniture and fixtures, and construction in progress. The total increase in the City’s capital assets (net of accumulated depreciation) for the fiscal years 2009 and 2008 was 7.6 percent as shown in the table below. Capital Assets, Net of Depreciation June 30, 2009 and 2008 (in thousands of dollars) Land Buildings and Land Improvements Streets and Storm Drains Machinery and Equipment Water Rights Water System Sewer System Motor Vehicles and Maintenance by Fleet Furniture, Fixtures and Office Equipment Construction in Progress Total 26 $ $ Governmental Activities 2009 2008 1,380,255 $ 1,221,868 $ 272,321 260,004 1,427,453 1,433,125 27,452 28,354 24,120 25,398 258,373 160,154 3,389,974 $ 3,128,903 $ Business-type Activities 2009 2008 37,969 $ 37,969 $ 13,178 10,784 12,930 13,242 89,701 90,173 682,560 691,948 308,230 310,989 7 160,895 80,097 1,305,463 $ 1,235,209 $ Total 2009 1,418,224 $ 285,499 1,427,453 40,382 89,701 682,560 308,230 24,120 419,268 4,695,437 $ 2008 1,259,837 270,788 1,433,125 41,596 90,173 691,948 310,989 25,398 7 240,251 4,364,112 City of Scottsdale, Arizona Table of Contents Construction in progress on the design and construction of the Police Operational Support facilities at 76th Street and McKellips Road. Expenditures totaled $9.6 million this year against a budget of $31.9 million. • Construction in progress on the Fuel/Fleet Maintenance Facility-McKellips Service Center located at McKellips Road. Expenditures totaled $3.4 million this year against a budget of $4.3 million. • Construction in progress on the Appaloosa Library located at Pinnacle Peak Road and Scottsdale Road. Expenditures totaled $6.5 million this year against a budget of $10.7 million. • Construction in progress on the infrastructure improvements and 157,000 square foot building at the SkySong ASU Scottsdale Center for Innovation located at Scottsdale and McDowell Road. Expenditures totaled $9.9 million this year against a budget of $38.2 million. • Construction in progress on the acquisition, preservation and restoration of desert lands along Scottsdale Road. Expenditures totaled $2.3 million this year against a budget of $26.9 million. • Construction in progress on the Upper Camelback Wash Watershed bounded by Sweetwater Avenue on the north, 96th Place on the east, Shea Boulevard on the South and 90th Street on the west. Expenditures totaled $1.0 million against a budget of $6.4 million. • Construction in progress on the Scottsdale Center for the Performing Arts Renovation located on Second Street. Expenditures totaled $10.4 million against a budget of $16.6 million. • Construction in progress on the four-lane minor arterial standards with landscaped median, turn lanes, bike lanes, curb and gutter, new all-weather crossing of Indian Bend Wash and sidewalk on the south side. Expenditures totaled $10.1 million against a budget of $25.8 million. • Construction in progress on the four-lane major collector between Pima Freeway and 96th Street and two-lane neighborhood collector between 96th Street and Frank Lloyd Wright. Expenditures totaled $5.4 million against a budget of $21.6 million. • Construction in progress on the six-lane major arterial cross-section with landscaped median, turn lanes, bike lanes, sidewalks, curb and gutter, roadway drainage, and intelligent transportation system facilities. Expenditures totaled $13.7 million against a budget of $49.1 million. City of Scottsdale, Arizona Management’s Discussion and Analysis • For the Fiscal Year Ended June 30, 2009 Major capital asset events during the current fiscal year included the following: 27 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents • The City’s water and sewer 5-year capital improvement plan includes significant cost impacts from “unfunded” federal water quality mandates for treatment of arsenic and disinfection by-product requirements, in addition to plant and infrastructure expansion to accommodate growth. The most significant CIP cash expenditures include: • Arsenic Mitigation Treatment ($1.2 million) – Design and construction of arsenic removal treatment facilities and related distribution systems at various satellite sites throughout the City to comply with the Safe Drinking Water Act Arsenic Rule. The Safe Drinking Water Act lowered the maximum allowable levels for arsenic in drinking water from 50 ppb to 10 ppb as of January 2006. This new level for arsenic will require the City to utilize arsenic mitigation treatment systems in accordance with the 2001 Water Resources Master Plan. The project’s budget totals $88.5 million. • Multi-City Sub-Regional Operating Group (SROG) Wastewater Plant Expansion UP01 ($2.8 million) – Provides for additional sewer flow and solids handling capacity through contribution to the capital improvements at the Multi-City 91st Avenue Wastewater Treatment Plant located in Phoenix. Capacity expansion is due to planned increased demand. The City of Scottsdale proportionate cost shared is derived through existing intergovernmental agreements with the SROG. This expansion is designated as the Unified Plant 2001 (UP01). The project’s budget totals $67.1 million. • Central Arizona Project Plant expansion ($39.0 million) – Expansion of the existing CAP Water Treatment Plant from its current capacity of 50 million gallons per day (mgd) to a minimum capacity of 70 mgd to meet required standards. This will further reduce the use of groundwater and increase use of surface water. The project’s budget totals $96.0 million. • Well Sites ($2.0 million) – Design and construction of new wells and upgrade of existing wells at locations determined consistent with the Master Plan for water system demand. The City will still need to replace existing wells once the well has reached its useful life, a new well will be needed to replace it. The project’s budget totals $23.1 million. • CAP Plant Regulatory Compliance ($2.1 million) – Addition of granular activated carbon facility at the CAP Water Treatment Plant in order to ensure compliance with the new Federal water quality rule regarding disinfection by-products (DBP). The project’s budget totals $59.4 million. • Water Distribution System Improvements ($6.8 million) – Provides for water distribution system improvements needed due to age of the system and increasing demand. Includes replacement of mains, meters and valves, as well as design and construction of new water mains at various locations throughout the distribution system to improve service and to reduce operating costs. The project’s budget totals $35.7 million. For government-wide financial statement presentation, all depreciable capital assets were depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. See Section IV.C in the Notes to the Financial Statements for further information regarding capital assets. 28 City of Scottsdale, Arizona Table of Contents June 30, 2009 and 2008 (in thousands of dollars) General Obligation Bonds Revenue Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Special Assessments Bonds Certificates of Participation Community Facilities Districts General Obligation Bonds Add Deferred Issuance Premiums Less Deferred Amounts on Refunding Total Bonds Payable Contracts Payable Capital Lease Compensated Absences Post Employment Benefit - Implied Subsidy Total Long-Term Liabilities $ $ Governmental Activities 2009 2008 551,455 $ 574,445 $ 149,216 149,007 71,235 74,495 3,000 3,835 4,954 5,689 40,665 17,572 (8,112) 829,985 16,828 22,553 1,157 870,523 $ 42,450 19,257 (9,410) 859,768 17,875 141 21,909 1,179 900,872 $ Business-type Business-Type Activities 2009 2008 - $ - $ 48,345 52,005 249,735 256,790 21,532 (5,592) 314,020 53 2,797 185 317,055 $ Total 2009 2008 551,455 $ 574,445 48,345 52,005 398,951 405,797 71,235 74,495 3,000 3,835 4,954 5,689 40,665 42,450 22,999 39,104 42,256 (6,439) (13,704) (15,849) 325,355 1,144,005 1,185,123 16,828 17,875 97 53 238 2,556 25,350 24,465 146 1,342 1,325 328,154 $ 1,187,578 $ 1,229,026 Management’s Discussion and Analysis Outstanding Debt For the Fiscal Year Ended June 30, 2009 Debt Administration At the end of the fiscal years 2009 and 2008, the City had total long-term obligations outstanding of $1,187.6 million and $1,229.0 million, respectively. Of these amounts, $551.5 million and $574.4 million, respectively, are General Obligation Bonds backed by the full faith and credit of the City. The remainder includes revenue bonds, certificates of participation, and other obligations of $635.1 million and $654.6 million, respectively. During fiscal year 2009, the City’s total bonded debt decreased by approximately $41.1 million. Bond payable balances were reduced due to principal payments made in fiscal year 2009. The State constitution imposes certain debt limitations on the City of six percent (6%) and twenty percent (20%) of the outstanding assessed valuation of the City. The City’s available debt margin at June 30, 2009 and 2008 is $358.0 million and $285.0 million, respectively, in the 6% capacity and $1,241.4 million and $1,024.0 million, respectively, in the 20% capacity. Additional information on the debt limitations and capacities may be found in Section IV.F of the Notes to the financial statements and also in Table XVIIa in the statistical section of this report. In accordance with Statement No. 45 of the Governmental Accounting Standards Board - GASB (Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions), the Net Other Post-Employment Benefit Obligation (NOPEBO) included in the Outstanding Debt table (above) represents the City’s actuarial required contribution (ARC) pursuant to the actuarial calculations for the accrued cost of retiree health insurance as of June 30, 2009. The NOPEBO at the end of the fiscal years 2009 and 2008 were $1.3 million and $1.3 million, respectively. The City is self insured and funds employee healthcare costs with current funds and designates a reserve for actuarially determined incurred but not reported claims (IBNR), a risk corridor, and partial funding for the ARC. Additional information in the City’s long-term debt can be found in Section IV.F of the Notes to the Financial Statements. City of Scottsdale, Arizona 29 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2009 Table of Contents Economic Factors and Next Year’s Budget and Rates The City of Scottsdale’s fiscal year 2010 budget included funding for the highest priorities of the City Council and our citizens despite an economic recession. The budget was created with the intention of impacting programs and services for citizens least and last. The budget was not only developed to address the economic crisis but also included a significant change in the way the City was structured. The City’s main functions are now consolidated under 8 divisions instead of 21 departments. The goal was to restructure Scottsdale City government so that it is more sustainable, more responsive and less subject to ups and downs of the economy. Significant reductions to the base budget include $22 million in staff reductions resulting from a tenpercent reduction in the workforce, 280 positions were eliminated via a retirement incentive program, elimination of vacant positions and layoffs. Additionally, the City instituted $11 million in compensation reductions by not going forward with a two-percent across-the- board pay increase effective January 1, 2009, suspending the merit pay program, and a two-percent across-the board pay reduction effective July 1, 2009. All other types of expenses were reduced as well, such as transit services, fleet replacement, technology and utilities. A separate, key component of the annual financial plan is the City’s five-year Capital Improvement Plan (CIP) for infrastructure and public facilities including roads, water and sewer improvements, parks, buildings and information technology. The adopted CIP appropriation for fiscal year 2010 is $569.4 million, which includes $470.2 million (or 83 percent of the total) re-budgeted from the prior year. Under Arizona law, the City must re-budget for a capital project until it is completed. Some examples of major projects included in the CIP budget are: • • • • • • • Community Facilities – Acquire, preserve and restore desert lands along Scottsdale Road to promote its designation as a Scenic Corridor, infrastructure to support site development of the Sky Song facility, design and construction of the Appaloosa library. Preservation – Construction of trails supporting the gateway to the preserve and expansion of preserve lands. Drainage and Flood Control – Drainage improvement to several areas within Scottsdale including the Granite Reef Watershed, Upper Camelback Watershed, and East Union Hills Interceptor Channel. Public Safety – Construction of the Cactus Acres Fire Station 8 and Public Safety Radio System. Service Facilities – Fuel/Fleet Maintenance Facility-McKellips Service Center, Transfer Station Expansion and Network Infrastructure Extension. Transportation – Improvements to several main Scottsdale thorough ways including Scottsdale Road-Thompson Peak Parkway to Pinnacle Peak, and Pima Road – Deer Valley to Pinnacle Peak. Additionally, improvements will be made to bicycle lanes, enhanced sidewalks, and provide for Loop 101 Park and Ride lot. Water Services – Modification and improvements to water distribution and sewer collection system improvements. The adopted budget continues the practice of designating a reserve equal to 10 percent of the General Fund and Highway User Fund program budgets to ensure the City can provide basic services in the event of major emergencies. This amount is $25.9 million and a $5 million contingency exists as well. 30 City of Scottsdale, Arizona Table of Contents City of Scottsdale Financial Services Department Accounting Division 7447 E. Indian School Road, Suite 210 Scottsdale, AZ 85251 (480) 312-2437 Or visit our website at: http://www.scottsdaleaz.gov/finance City of Scottsdale, Arizona Management’s Discussion and Analysis This financial report is designed to provide a general overview of the City’s finances for all of those with an interest in the government’s finances. If you have questions about this report or need additional financial information, contact: For the Fiscal Year Ended June 30, 2009 Requests For Information 31 Table of Contents 32 City of Scottsdale, Arizona Table of Contents Basic Financial Statements City of Scottsdale, Arizona 33 Table of Contents Statement of Net Assets June 30, 2009 (in thousands of dollars) Governmental Activities Business-type Activities $ $ Total ASSETS Current Assets Cash and Investments Cash with Fiscal Agent Receivable (net of uncollectible amounts of $ 18,335) Property Taxes and Penalties Other Local Taxes Intergovernmental Charges for Services Interest and Other Prepaid Expenses Supplies Inventory 287,647 42,903 103,461 18,285 $ 391,108 61,188 12,609 17,448 25,773 13,527 748 779 14 176 16,005 2,323 - 12,609 17,462 25,949 16,005 15,850 748 779 - 1,534 1,534 - 7,730 7,730 401,434 149,528 550,962 3,371 - 123,632 1,524 29,143 123,632 4,895 29,143 - 8,491 26,568 8,491 26,568 1,638,628 1,751,346 3,389,974 288,565 1,016,898 1,305,463 1,927,193 2,768,244 4,695,437 Total Noncurrent Assets 3,393,345 1,494,821 4,888,166 Total Assets 3,794,779 1,644,349 5,439,128 Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences-Current Accrued Compensated Absences-Due within One Year Claims Payable Due to Other Governments Customer Advances and Deposits Matured Bonds, Loans, Other Payables Matured Bonds, Loans, Other Interest Payable Bonds, Loans, and Other Payables-Due within One Year Unearned Revenue Other Liabilities Total Current Liabilities 25,046 16,598 155 10,570 11,530 3,856 2,128 28,920 19,140 33,652 11,209 3,327 166,131 11,460 1,319 1,179 1,534 10,715 7,570 11,116 44,893 36,506 17,917 155 11,749 11,530 3,856 3,662 39,635 26,710 44,768 11,209 3,327 211,024 Noncurrent Liabilities Accrued Compensated Absences-Due in More Than One Year Deferred Revenue Bonds, Loans, and Other Payables-Due in More Than One Year Pollution Remediation Obligation Total Noncurrent Liabilities 11,983 814,318 826,301 1,618 8,492 303,142 29,143 342,395 13,601 8,492 1,117,460 29,143 1,168,696 992,432 387,288 1,379,720 2,586,731 991,390 3,578,121 26,568 239,103 1,257,061 24,236 39,108 56,639 768 10,351 630 26,568 322,987 $ 4,059,408 Restricted Cash, Cash Equivalents, and Investments: Customer Advances and Deposits Other Restricted Assets Joint Venture Construction Deposits Total Current Assets Noncurrent Assets Equity in Joint Venture Deferred Charges Pollution Remediation Recoveries Restricted Cash, Cash Equivalents, and Investments: Deferred Revenue Water and Sewer System Replacement Capital Assets Land, Water Rights, and Construction in Progress Facilities, Infrastructure, and Equipment (net of depreciation) Total Capital Assets (net of accumulated depreciation) LIABILITIES Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted Debt Service Transportation and Preserve Privilege Tax Activities Capital Projects Grants Special Programs Streetlight and Service District Water and Sewer System Replacement Unrestricted Total Net Assets $ 24,236 39,108 56,639 768 10,351 630 83,884 2,802,347 $ The notes to the financial statements are an integral part of this statement. 34 City of Scottsdale, Arizona Table of Contents Statement of Activities For the Year Ended June 30, 2009 (in thousands of dollars) Function/Programs Governmental Activities General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Interest on Long-term Debt Total Governmental Activities Expenses $ Business-Type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-Type Activities Total Government $ Charges for Services 20,646 $ 92,530 9,913 87,552 78,523 13,723 4,595 31,174 22,887 3,802 3,545 8,553 29,029 595 631 42,242 449,940 Program Revenues Operating Capital Grants and Grants and Contributions Contributions 14,670 $ 5,703 4,619 2,275 6,393 2,682 599 36,941 81,391 33,509 3,482 19,650 138,032 91,546 34,198 2,813 20,049 148,606 587,972 $ 185,547 $ 3 $ 2,573 14,892 8,635 80 12 17 45 15 26,272 26,272 $ General Revenues Taxes Property Taxes Sales and Use Taxes Franchise Taxes Intergovernmental State Shared Sales State Revenue Sharing Other Interest and Investment Income Other Revenue Transfers Total General Revenues and Transfers Change in Net Assets Net Assets - Beginning Net Assets - Ending 1,104 236,776 242 2,158 9 240,289 Governmental Activities $ 12,994 8,584 489 22,067 Business-type Activities (4,869) $ (84,254) (9,913) 164,116 (65,027) (13,723) (4,595) (28,819) (20,729) (3,790) (3,528) (8,499) (22,621) 2,087 (32) (42,242) (146,438) - 262,356 (146,438) 61,138 148,558 11,576 $ 18,677 35,103 10,365 14,653 5,038 9,932 315,040 168,602 2,633,745 2,802,347 $ Total - $ 23,149 9,273 (180) 399 32,641 32,641 117 4,958 408 (9,932) (4,449) 28,192 1,228,869 1,257,061 $ (4,869) (84,254) (9,913) 164,116 (65,027) (13,723) (4,595) (28,819) (20,729) (3,790) (3,528) (8,499) (22,621) 2,087 (32) (42,242) (146,438) 23,149 9,273 (180) 399 32,641 (113,797) 61,138 148,675 11,576 18,677 35,103 10,365 19,611 5,446 310,591 196,794 3,862,614 4,059,408 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 35 Balance Sheet Table of Contents 36 Governmental Funds June 30, 2009 (in thousands of dollars) Balance Sheet ASSETS Governmental Funds Cash30, and2009 Investments June (in thousands of dollars) Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Hotel/Motel Tax ASSETS Property Tax Cash and Investments State Shared Sales Tax Cash with Fiscal Franchise Fee Agent Receivables (net of allowance for Court Receivable uncollectibles) Highway User Tax Interest Auto Lieu Tax Privilege Tax Intergovernmental Hotel/Motel Tax Grants Property Tax Special Assessments State Shared Sales Tax Miscellaneous Franchise FeeFunds Due from Other Court Receivable Supplies Inventory Highway User Tax Total Assets Auto Lieu Tax Intergovernmental Grants Special Assessments Miscellaneous Due from Other Funds Supplies Inventory Total Assets City of Scottsdale, Arizona (continued) (continued) General Obligation Bond Debt Service General $ $ $ $ 71,058 459 624 General 7,252 73 902 71,058 1,521 459 2,786 10,071 624 817 7,252 6 739021,521 6,025 2,786 40 10,071 205 101,839817 6 6,025 40 205 101,839 $ 18,575 27,871 General Obligation Bond Debt Service 1,418 $ 18,57527,871---1,418---$ 47,864$ 47,864 General CIP Construction Capital Projects $ 63,657 259 $ General CIP Construction321 Capital Projects $ $ $ 63,657259321-100-3,007--67,344100 3,007 67,344 Total Nonmajor Governmental Funds Transportation Privilege Tax Capital Projects 25,687 - $ $ $ $ $ Total Nonmajor Governmental 477 Funds 3,434 Transportation Privilege Tax 72 Capital Projects - 25,687-721,827-----27,5861,827 27,586 70,033 14,314 Total Governmental Funds $ $ $ 293 218 70,03314,3141,272 4773,434 23,461 293 379 218 2,542 233--1,272 116,656 23,461 379 2,542 233 116,656 249,010 42,903 Total Governmental 1,494 Funds10,686 $ $ $ 366 2,538 249,010 1,521 42,903 2,786 10,071 1,272 1,494 817 10,686 25,294 366 479 2,538 2,542 1,521 9,265 2,786 40 10,071 205 1,272 361,289 817 25,294 479 2,542 9,265 40 205 361,289 Table of Contents City of Scottsdale, Arizona Balance Sheet Governmental Funds June 30, 2009 (in thousands of dollars) General Obligation Bond Debt Service General LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Court Tax Audit Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ 6,630 15,226 88 370 $ 1 13,092 22,990 General CIP Construction Capital Projects $ 7,325 32 - Total Nonmajor Governmental Funds Transportation Privilege Tax Capital Projects $ 5,999 21 - $ 3,306 1,120 40 5,960 5,560 Total Governmental Funds $ 23,261 16,399 40 19,140 28,920 605 4,235 4,526 994 3,827 1,593 3,323 41,417 940 37,023 6 29 313 7,705 2,406 8,426 143 2,542 26,223 332 222 4 45,452 1,688 2,542 4,235 4,526 26,223 3,738 3,856 2,128 3,327 140,023 205 630 - 10,841 - 3,000 - 13,395 - 205 630 24,236 3,000 30,860 28,727 60,422 101,839 10,841 47,864 56,639 59,639 67,344 19,160 19,160 27,586 27,099 30,710 71,204 116,656 30,860 28,727 102,898 30,710 221,266 361,289 Fund Balances Reserved for Inventory Streetlight and Services Districts Debt Service Miscellaneous Receivable Unreserved, Reported in General Fund - Designated General Fund - Undesignated Capital Projects Funds Special Revenue Funds Total Fund Balances Total Liabilities and Fund Balances $ The notes to the financial statements are an integral part of this statement. $ $ $ $ $ 37 Table of Contents Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2009 (in thousands of dollars) Fund Balances -Total Governmental Funds $ 221,266 Amounts reported for governmental activities in the statement of net assets are different because (see Note II A): Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Bond issuance costs are not financial resources and, therefore, are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. 3,361,080 3,371 (870,059) Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current period expenditures. Those assets are offset by deferred revenue in the funds. 31,743 Internal Service Funds are used by management to charge the costs of certain activities, such as, insurance and vehicles to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the statement of net assets. 54,946 Net Assets of Governmental Activities $ 2,802,347 The notes to the financial statements are an integral part of this statement. 38 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) General Obligation Bond Debt Service General REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State-Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Fire Fees Recreation Fees Westworld Equestrian Facility Fees Fines, Fees and Forfeitures Court Fines Parking Photo Radar Court Enhancement Library Police Fees Special Assessments Property Rental Interest Earnings Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues (continued) $ 21,892 94,118 1,515 7,831 3,606 139 820 $ General CIP Construction Capital Projects 34,932 - $ Total Nonmajor Governmental Funds Transportation Privilege Tax Capital Projects - $ - $ 3,669 45,262 6,062 - Total Governmental Funds $ 60,493 139,380 7,577 7,831 3,606 139 820 18,677 35,103 8,530 1,733 - - - 14,083 1,015 - 18,677 35,103 8,530 14,083 1,015 1,733 6,446 2,275 3,186 2,682 - - - 1,130 - 6,446 2,275 4,316 2,682 6,671 423 2,466 303 3,074 6,753 - 2,518 846 4 967 625 821 453 3,374 6,675 423 2,466 967 303 625 821 3,527 13,491 1,225 14 599 1 492 14,038 647 245,259 34,932 242 368 212 3,340 1,203 18,622 9,043 246 29,960 7,147 720 2,654 1,518 260 879 344 90,987 8,592 720 22,501 9,425 599 1,519 1,210 14,917 991 404,478 39 Table of Contents 40 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) General Obligation Bond Debt Service General EXPENDITURES Current General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Capital Improvements Total Expenditures General CIP Construction Capital Projects Total Nonmajor Governmental Funds Transportation Privilege Tax Capital Projects Total Governmental Funds 18,682 88,415 9,701 124 60,505 9,904 4,475 30,687 1,679 3,721 3,447 1,337 16,650 3,615 632 - - - 534 1,387 15,456 10,302 152 80 17,121 11 18 6,909 21 89 - 19,216 89,802 9,701 15,580 70,807 9,904 4,627 30,767 18,800 3,732 3,465 8,246 16,671 3,704 632 1,058 2,542 257,174 22,990 26,885 49,875 105 7 89,646 89,758 54,364 54,364 7,155 12,178 11,348 82,761 31,308 41,612 155,358 533,932 Excess (Deficiency) of Revenues Over Expenditures (11,915) (14,943) (86,418) (24,404) 8,226 (129,454) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 28,330 (18,296) 10,034 16,264 16,264 59,774 (14,787) 44,987 22,607 (8,600) 14,007 33,344 (103,674) (70,330) 160,319 (145,357) 14,962 (1,881) 1,321 (41,431) (10,397) (62,104) (114,492) 62,303 9,520 101,070 29,557 133,308 335,758 Net Change in Fund Balances City of Scottsdale, Arizona Fund Balances - Beginning Fund Balances - Ending $ 60,422 The notes to the financial statements are an integral part of this statement. $ 10,841 $ 59,639 $ 19,160 $ 71,204 $ 221,266 Table of Contents 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, 2009 (in thousands of dollars) Net Change in Fund Balances - Total Governmental Funds $ (114,492) Amounts reported for governmental activities in the statement of activities are different because (see Note II B): 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 and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. 51,079 Donations of capital assets are not reflected on the governmental fund statements but are shown in the statement of activities. 209,561 Transfer of capital asset to the Internal Service Fund. (2,021) Some expenses reported in the statement of activities do not require the use of current financial resources and; therefore, are not reported as expenditures in governmental funds. (605) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (4,581) Bond issuance costs are expended in the governmental funds when paid, and are capitalized and amortized in the statement of net assets. This is the amount by which current year bond issuance costs exceed amortization expense in the current period. (293) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction; however, has any effect on net assets. This is the amount by which debt proceeds exceeded principal retirement in the current period. 31,308 Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refunding. (337) The net revenues of certain activities of internal service funds is reported with governmental activities. Changes in Net Assets of Governmental Activities (1,017) $ 168,602 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 41 Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State-Shared Sales State Revenue Sharing Auto Lieu Tax Business and Liquor Licenses Charges for Current Services Building and Related Permits Fire Fees Recreation Fees Westworld Equestrian Facility Fees Fines, Fees and Forfeitures Court Fines Parking Photo Radar Library Property Rental Interest Earnings Intergovernmental Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues $ 22,361 116,611 1,972 7,718 3,603 175 842 Final $ 22,167 96,910 1,598 8,200 3,603 139 830 Actual Amounts Budgetary Basis $ Budget to GAAP Differences 22,607 95,757 1,525 7,791 3,566 139 814 $ Actual Amounts GAAP Basis (715) (1,639) (10) 40 40 6 $ 21,892 94,118 1,515 7,831 3,606 139 820 Variance Between Final Budget and Actual Amounts Budgetary Basis $ 440 (1,153) (73) (409) (37) (16) 22,000 34,000 9,700 1,835 19,900 34,600 8,000 1,669 18,936 35,103 8,151 1,733 (259) 379 - 18,677 35,103 8,530 1,733 (964) 503 151 64 14,500 1,440 3,114 2,387 6,616 2,331 3,114 2,728 6,912 1,752 3,206 2,663 (466) 523 (20) 19 6,446 2,275 3,186 2,682 296 (579) 92 (65) 6,451 318 2,844 382 3,381 4,500 6,368 475 2,315 302 3,327 3,498 6,671 423 2,466 303 3,222 3,691 (148) 3,062 6,671 423 2,466 303 3,074 6,753 303 (52) 151 1 (105) 193 675 732 350 12,937 1,000 275,828 1,064 14 732 365 14,016 1,016 245,897 1,160 14 600 1 456 14,038 628 244,328 65 (1) 36 19 931 1,225 14 599 1 492 14,038 647 245,259 96 (132) 1 91 22 (388) (1,569) 19,129 90,335 9,993 201 58,822 10,603 4,581 33,238 1,687 3,775 4,316 1,503 17,132 3,550 732 - 19,391 92,438 9,982 127 61,906 10,136 4,577 32,118 2,147 3,793 3,647 1,367 17,393 3,852 732 - 18,645 88,325 9,586 123 60,380 9,888 4,479 30,733 1,673 3,691 3,439 1,323 16,620 3,609 632 249 37 90 115 1 125 16 (4) (46) 6 30 8 14 30 6 (249) 18,682 88,415 9,701 124 60,505 9,904 4,475 30,687 1,679 3,721 3,447 1,337 16,650 3,615 632 - 746 4,113 396 4 1,526 248 98 1,385 474 102 208 44 773 243 100 (249) 1,528 4,498 265,623 1,561 4,506 269,673 1,058 2,542 256,995 179 1,058 2,542 257,174 503 1,964 12,678 Excess (Deficiency) of Revenues Over Expenditures 10,205 (23,776) (12,667) 752 (11,915) 11,109 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 11,691 (22,898) (11,207) 28,078 (17,054) 11,024 28,330 (18,296) 10,034 - 28,330 (18,296) 10,034 252 (1,242) (990) (1,002) (12,752) (2,633) 752 (1,881) 10,119 41,359 44,887 44,887 EXPENDITURES Current General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Inventory/Other Debt Service Principal Interest and Fiscal Charges Total Expenditures Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 40,357 $ 32,135 $ 42,254 17,416 $ 18,168 62,303 $ 60,422 $ 10,119 The notes to the financial statements are an integral part of this statement. 42 City of Scottsdale, Arizona Table of Contents General Fund Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Change in Fair Value of Investments $ The City budgets revenues on the cash basis, rather than on the modified accrual basis: Change in Receivables 4,589 Total Revenue Reconciling Items: 931 The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Claims and Compensated Absences Bad Debt Expense Inventory/Other Expenses 321 107 (249) Total Expenditure Reconciling Items: Net Increase in Fund Balance - Budget to GAAP (3,658) 179 $ 752 Fund Balance - Beginning $ 17,416 Fund Balance - Ending $ 18,168 The beginning balance for Actual Amounts Budgetary Basis was adjusted to the fiscal year ending fund balance amounts for fiscal year 2007/08 in the City of Scottsdale Adopted Fiscal Year Ending 2009/10 Budget Balance: The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 43 Table of Contents Statement of Net Assets Proprietary Funds June 30, 2009 (in thousands of dollars) Water and Sewer Utility Airport Solid Waste Total Governmental Activities Internal Service Funds ASSETS Current Assets Balance Sheet Cash and Investments $ 91,834 Cash with Fiscal Agent 18,285 Receivables Governmental Funds Privilege Tax Charges Services 14,084 June 30,for 2009 (in thousands of dollars) Intergovernmental Interest 876 Miscellaneous 1,188 Prepaid Expenses General Supplies Inventory Restricted Cash, Cash Equivalents, and Investments: Customer 1,467 ASSETS Advances and Deposits Other Restricted Assets Cash and Investments $ 71,058 Joint Construction 7,730 CashVenture with Fiscal Agent Deposits 459 Receivables (net of allowance for Total Current Assets uncollectibles) Interest Noncurrent Assets Tax EquityPrivilege in Joint Venture Hotel/Motel Deferred Charges Tax Property Tax Recoveries Pollution Remediation StateCash, Shared Sales Tax Restricted Cash Equivalents, and Investments: Deferred Revenue Franchise Fee Water andReceivable Sewer System Replacement Court Highway User Tax Capital Assets Auto Lieu Tax Land Intergovernmental Water Rights Grants Water System Special Assessments Sewer System Miscellaneous Buildings and Improvements Due from Other Funds Motor Vehicles Supplies Inventory Machinery and Equipment Totaland Assets Furniture Fixtures Construction in Progress Less Accumulated Depreciation $ $ $ 6,458 - 14 176 30 General 148 Obligation Bond Debt Service - - 18,575 27,871 5,604 44 - $ 9,564 19,295 956 721 (7,824) $ 103,461 18,285 $ 14 1,921 16,005 176 40 946 41 General CIP 1,377 Construction Capital Projects1,534 67 $ 135,464 624 7,252 123,632 1,52473 902 29,143 1,521 8,447 2,786 26,568 10,071 817 27,294 6 89,701 911,050 417,352 6,025 40 205 14,936 101,839 621 159,440 (341,773) 5,169 - $ - 8,460 1,418 1,111 - 3,005 - 1,933 47,864 $ 734 (2,653) 63,657 7,730 259 220 Transportation 6 Privilege 748 Tax Capital 574 Projects - - $ 1,847 66,838 768 3,901 (44,460) 1,278,621 22,712 4,130 1,305,463 28,894 Total Noncurrent Assets 1,467,935 22,756 4,130 1,494,821 28,894 12,590 $ 1,644,349 $ 1,603,399 $ 28,360 $ $ 69,079 (continued on next page) (continued) 44 25,687 - $ 40,185 Total Capital Assets (net of accumulated depreciation) Total Assets No Gov F - $ 149,528 321 123,632 1,524 29,143 8,491 26,568 37,969 89,701 100 911,050 417,352 3,007 22,300 - 17,825 67,344 621 160,895 (352,250) 38,637 - City of Scottsdale, Arizona 72 1,827 27,586 $ Table of Contents Statement of Net Assets Proprietary Funds June 30, 2009 (in thousands of dollars) Water and Sewer Utility Airport Solid Waste Total Governmental Activities Internal Service Funds LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Due Within One Year Claims Payable Customer Advances and Deposits Matured Bonds Payable Matured Bond Interest Payable Bonds Payable and Other Payables - Due Within One Year Total Current Liabilities $ 10,898 1,013 824 1,467 10,715 7,570 11,116 $ 124 133 59 67 - $ 438 173 296 - $ 11,460 1,319 1,179 1,534 10,715 7,570 11,116 $ 1,785 354 201 11,530 - 43,603 383 907 44,893 13,870 1,006 8,447 303,080 29,143 68 45 9 - 544 53 - 1,618 8,492 303,142 29,143 217 46 - 341,676 122 597 342,395 263 385,279 505 1,504 387,288 14,133 964,548 26,568 22,712 - 4,130 - 991,390 26,568 28,894 - 6,956 11,086 239,103 $ 1,257,061 Noncurrent Liabilities Accrued Compensated Absences - Due in More Than One Year Deferred Revenue Bonds Payable and Other Payables - Due in More Than One Year Pollution Remediation Obligation Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Water and Sewer System Replacement Unrestricted Total Net Assets 227,004 $ 1,218,120 $ 5,143 27,855 $ $ 26,052 54,946 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 45 Table of Contents Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2009 (in thousands of dollars) Water and Sewer Utility Operating Revenues Charges for Sales and Services Water Service Fees Sewer Service Fees Proprietary - Non-Potable Water Fees Solid Waste Fees Airport Fees Other Services Other Total Operating Revenues Operating Expenses Costs for Sales and Services Water Operations Sewer Operations Solid Waste Operations Airport Operations Other Services Indirect Costs Depreciation Total Operating Expenses Operating Income $ 84,722 34,198 6,824 408 Airport $ Solid Waste 2,813 - $ 20,049 - Total $ 84,722 34,198 6,824 20,049 2,813 408 Governmental Activities Internal Service Funds $ 49,644 1,305 126,152 2,813 20,049 149,014 50,949 44,551 16,927 9,758 34,253 1,900 611 971 16,884 2,568 198 44,551 16,927 16,884 1,900 12,937 35,422 44,648 5,451 105,489 3,482 19,650 128,621 50,099 20,663 (669) 399 20,393 850 4,630 (9,411) - 117 134 - 194 - 117 4,958 (9,411) - 23 1,162 (43) (4,781) 251 194 (4,336) 1,142 15,882 (418) 593 16,057 1,992 21,578 150 (9,702) 489 (58) 71 (393) 22,067 221 (10,153) 2,021 (5,030) Change in Net Assets 27,908 13 271 28,192 (1,017) Total Net Assets - Beginning 1,190,212 27,842 10,815 1,228,869 11,086 $ 1,257,061 Non-Operating Revenues (Expenses) Property Tax Transaction Privilege Tax Investment Income Interest Expense Gain (Loss) on Sale of Capital Assets Net Non-Operating Revenues (Expenses) Income Before Contributions and Transfers Capital Contributions Transfers In Transfers Out Total Net Assets - Ending $ 1,218,120 $ 27,855 $ 55,963 $ 54,946 The notes to the financial statements are an integral part of this statement. 46 City of Scottsdale, Arizona Table of Contents Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2009 (in thousands of dollars) Water and Sewer Utility Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating $ Net Cash Provided by Operating Activities Cash Flows from Non-Capital Financing Activities Property Tax Transaction Privilege Tax Transfers In Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities Capital Contributions from Other Water and Sewer Development Fees Capital Grants Capital Contributions Acquisition and Construction of Property and Equipment Principal Payments on Capital Debt Interest Paid on Capital Debt Investment in Joint Venture & CIP Deposit Sale of Capital Assets 126,194 (55,295) (17,594) 501 Airport $ Cash Flows from Investing Activities Income Received on Investments Net Cash Provided by Investing Activities $ Total 20,035 (13,310) (5,972) - $ 49,642 (39,050) (4,607) 1,305 753 55,073 7,290 150 (9,702) 119 (58) 71 (393) 119 221 (10,153) 23 (5,030) (9,552) 61 (322) (9,813) (5,007) 1,242 - 3,169 1,244 - (79,000) (8,418) (13,321) (3,515) 564 (697) - (580) - (80,277) (8,418) (13,321) (3,515) 564 (6,093) 168 (100,519) 545 (580) (100,554) (5,925) 4,913 144 215 5,272 1,291 4,913 144 215 5,272 1,291 (50,022) (2,351) 208,361 40,988 (51,352) 1,264 66 Cash and Cash Equivalents at Beginning of Year 197,953 4,016 6,392 $ 149,071 (69,841) (24,658) 501 514 Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at End of Year $ 53,806 3,169 2 Net Cash Used for Capital and Related Financing Activities 2,842 (1,236) (1,092) - Solid Waste Governmental Activities Internal Service Funds 146,601 $ 5,280 $ 6,458 $ 158,339 $ 38,637 (continued on next page) City of Scottsdale, Arizona 47 Table of Contents Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2009 (in thousands of dollars) (Concluded) Water and Sewer Utility Airport Solid Waste Total Governmental Activities Internal Service Funds Cash and Cash Equivalents at End of Year Includes Cash and Investments Cash with Fiscal Agent Restricted Cash and Investments $ 91,834 18,285 36,482 $ 5,169 111 $ 6,458 - $ 103,461 18,285 36,593 $ 38,637 - Total Cash and Cash Equivalents $ 146,601 $ 5,280 $ 6,458 $ 158,339 $ 38,637 $ 20,663 $ $ 399 $ 20,393 $ 850 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation and Amortization Changes In Assets and Liabilities Sources (Uses) of Cash Accounts Receivable Miscellaneous Receivables Prepaid Expenses Supplies Inventory Accounts Payable Accrued Payroll and Benefits Claims Payable Deferred Revenue Other Liabilities Total Adjustments Net Cash Provided by Operating Activities (669) 34,253 971 198 35,422 5,451 (386) 93 (2,291) 684 837 (47) 22 70 112 7 1 (29) 15 38 125 7 (415) 130 (2,183) 921 844 (39) 2 (748) 218 249 239 1,011 (4) 22 354 34,680 6,440 33,143 1,183 $ 53,806 $ 514 $ 753 $ 55,073 $ 7,290 Supplemental Disclosure of Non-Cash Financing Activities Additions to Property, Plant, and Equipment Contributions from Developers Contributions from Other Government Units Amortization of Deferred Charges Loss on Sale of Capital Assets $ 18,426 (154) (563) $ - $ - $ 18,426 (154) (563) $ 2,021 - Total Non-Cash Financing Activities $ 17,709 $ - $ - $ 17,709 $ 2,021 The notes to the financial statements are an integral part of this statement. 48 City of Scottsdale, Arizona Table of Contents Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2009 (in thousands of dollars) Private Purpose Trust Funds ASSETS Cash and Cash Equivalents $ Total Assets LIABILITIES Accounts Payable Designated Escrow Payable Total Liabilities NET ASSETS Held in Trust for Other Purposes $ Agency Funds 3 $ 9,467 3 9,467 - 127 9,340 - 9,467 3 $ - The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 49 Table of Contents Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended June 30, 2009 (in thousands of dollars) Private Purpose Trust Funds ADDITIONS Contributions: Private Donations $ Total Additions 5 DEDUCTIONS Scholarships 6 Total Deductions 6 Change in Net Assets (1) Net Assets - Beginning Net Assets - Ending 5 4 $ 3 The notes to the financial statements are an integral part of this statement. 50 City of Scottsdale, Arizona Table of Contents The City of Scottsdale, Arizona (City) was incorporated in 1951. The current City Charter was adopted in 1961, which established the Council/Manager form of government. The City provides basic government services to its citizens including roads, water, sewer, solid waste management, public transit, parks and recreation facilities, police and fire. The accounting policies of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is a summary of the more significant policies. The financial reporting entity presented in these financial statements consists of the City of Scottsdale, Arizona (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. Component Unit City of Scottsdale Municipal Property Corporation (MPC) Scottsdale Preserve Authority (SPA) Scottsdale Mountain Community Facilities District (CFD) Description and Criteria for Inclusion • Non-profit corporation created in 1967. • Sole purpose is to construct, acquire, and equip buildings, structures or land improvements for the City. • Governed by Board of Directors appointed by the City Council. • For financial reporting purposes, transactions are included as a governmental and proprietary fund type, as if part of the City’s operation. • Non-profit corporation created in 1997. • Sole purpose is to finance land acquisitions for McDowell Sonoran Preserve. • Governed by a Board of Directors appointed by the City Council. • For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. • Formed by 1992 petition to City Council. • Created to acquire and improve public infrastructure in specified land area. • Able to levy taxes and issue bonds independent of the City. • Property owners within the designated area are assessed for District taxes and costs of operation. • City Council serves as the Board of Directors. • The City has no liability for the District debt. • For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. City of Scottsdale, Arizona Reporting Method For Separate Financial Statements Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Notes to Financial Statements A. Financial Reporting Entity For the Fiscal Year Ended June 30, 2009 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 51 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents McDowell Mountain Ranch Community Facilities District (CFD) • • • • • • • DC Ranch Community Facilities District (CFD) • • • • • • • Via Linda Road Community Facilities District (CFD) • • • • • • • Waterfront Commercial Community Facilities District (CFD) • • • • • • • 52 Formed by 1994 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for the District debt. For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 1997 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for the District debt. For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 1998 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for the District debt. For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 2005 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for the District debt. For financial reporting purposes, transactions are included as a governmental fund type, as if part of the City’s operation. Blended City of Scottsdale Finance Department Accounting Division 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 City of Scottsdale, Arizona Table of Contents The statement of activities demonstrates the degree to which the direct expenses for 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 and other items not properly 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. Notes to Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. For the Fiscal Year Ended June 30, 2009 B. Government-wide and Fund Financial Statements C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and trust fund financial statements. Agency funds do not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims, and judgments, are recorded only when payment is due. Property taxes, other local taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the City receives cash. City of Scottsdale, Arizona 53 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents The government reports the following major governmental funds: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Obligation Bond Debt Service Fund is used to account for the accumulation of resources for, and the payment of, long-term obligation debt principal, interest, and related costs. The General CIP Construction Capital Projects Fund accounts for the resources used to acquire, construct and improve major capital facilities, other than those financed by proprietary funds. Capital Projects Funds allow the City to compile project cost data and demonstrate that legal or contractual requirements regarding the use of the resources are fully satisfied. The Transportation Privilege Tax Capital Projects Fund accounts for the resources used to acquire, construct and improve transportation related capital projects. The government reports the following major proprietary funds: The Water and Sewer Utility, Airport and Solid Waste Funds account for the operating revenues and expenses of the City’s water and sewer utility systems, airport and sanitation services (solid waste, brush removal, container maintenance, etc.), respectively. Additionally, the government reports the following fund types: The Internal Service Funds account for fleet management and self-insurance services provided to other departments or units of the City, on a cost-reimbursement basis. The Agency Funds are purely custodial (assets equal liabilities) and do not involve measurement of results of operations. The City’s agency funds are used to record the Family Self-Sufficiency activity and Retainage Escrow activity. The Private-Purpose Trust Funds are used to account for assets held in a trustee capacity for scholarships and other purposes as designated by the donors or by legal restrictions. Both the principal and earnings of these expendable trust funds can be expended for the trusts’ intended purposes. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. In general, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this rule are payments-in-lieu of taxes, indirect costs and franchise fees and other charges between the City’s Water and Sewer Utility Fund, Airport Fund, and Solid Waste Fund, because elimination of these charges would distort the direct costs and program revenues reported in the statement of activities. 54 City of Scottsdale, Arizona Table of Contents When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first; then unrestricted resources as they are needed. D. Assets, Liabilities, and Net Assets or Equity 1. Deposits and Investments Notes to Financial Statements Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise and internal service funds are charges for customer services including: water, sewer, airport, and solid waste fees, vehicle purchase amounts and risk management charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. For the Fiscal Year Ended June 30, 2009 Amounts reported as program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Cash equivalents for purposes of the statements of cash flows are investments (including restricted assets) in mutual funds, demand deposits, repurchase agreements, and U.S. Treasury bills and notes with maturities of three months or less at acquisition date. GASB Statement No. 31 provides that governmental entities may report all investments at fair value or they may elect to report certain money market investments and participating interest-earning investment contracts at amortized cost. The City has elected to report all investments at fair value. The City’s policy is to invest in certificates of deposit, repurchase agreements, commercial paper, direct U.S. Treasury debt, securities guaranteed by the United States Government or any of its agencies, and the State of Arizona Local Government Investment Pool (LGIP). The LGIP is overseen by the State of Arizona. The fair value of each share in the LGIP is $1. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are classified as “due to/from other funds” (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” All accounts, property tax and court receivables are shown net of an allowance for uncollectibles. All receivables in excess of one year comprise the allowance for uncollectibles at June 30, 2009. City of Scottsdale, Arizona 55 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents The City’s property tax is levied each year on or before the third Monday in August based on the previous January 1 full cash value as determined by the Maricopa County Assessor. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent after November 1 and after May 1, respectively. If a taxpayer owes $100 or less, the tax must be paid in full by November 1. A lien attaches to the property on the first day of January preceding the assessment and levy of taxes. Delinquent amounts bear interest at the rate of 16 percent. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions of properties which have delinquent real estate taxes are held in February. Property taxes levied for current operation and maintenance expenses on residential property are limited to 1.0 percent of the limited property value of such property. In addition, taxes levied for current operation and maintenance expenses on all types of property are limited to a maximum increase of 2.0 percent over the prior year’s levy, adjusted for new construction and annexations. Property taxes levied to pay principal and interest on bonded indebtedness are not limited. 3. Inventories Inventories of the governmental funds are recorded under the consumption method. Inventories are recorded as expenditures when consumed rather than when purchased. Inventories are valued at year-end based on cost, with cost determined using an average cost method. 4. Restricted Assets Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheets because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. The revenue bond renewal and replacement account is used to report resources set aside to meet unexpected contingencies or to fund asset renewals and replacements. 5. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets, as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Assets contributed (donated) to those funds are recorded by reference to historical costs of the donor if recently purchased or constructed, or if such records are not available, at estimated fair market value on the date of receipt. 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. 56 City of Scottsdale, Arizona Table of Contents Sewer System....................................................................... 25 to 50 Years Buildings and Improvements............................................... 25 to 50 Years Streets and Storm Drains..............................................................30 Years Land Improvements.. .....................................................................25 Years Machinery and Equipment.. ................................................... 5 to 20 Years Motor Vehicles.. ..................................................................... 3 to 15 Years Furniture, Fixtures, and Office Equipment........................... 5 to 10 Years The excess purchase price over fair market value of assets acquired in the Water and Sewer Utility Enterprise Fund is amortized on the straight-line method over 20 to 60 years. When capital assets are disposed of, the cost and accumulated depreciation or amortization is removed from the accounts, and any resultant gain or loss is recognized in the government-wide and proprietary fund financial statements. 6. Compensated Absences Notes to Financial Statements Water System....................................................................... 10 to 75 Years For the Fiscal Year Ended June 30, 2009 Depreciation and amortization of all assets are recorded and calculated using the straight-line method over the following estimated useful lives: Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. Employees may accumulate up to a maximum number of hours of vacation depending on years of service, but any vacation hours in excess of the maximum amount unused at year-end are forfeited. The City’s policy is to pay employees for unused accumulated vacation hours at termination or retirement. Sick leave time can be accumulated without limit. The City’s policy, however, is that only those employees hired full-time before July 1, 1982 are paid for unused sick leave at death or retirement. Prior to July 1, 2009, employees who retire on or after July 1, 1996, and who have accumulated 300 or more hours of sick leave, could elect to apply the value of the sick leave toward their City medical plan premiums. Effective July 1, 2009, the City funds the value of medical leave balances in a Retiree Health Savings Account for the participant immediately upon retirement. Taxable portions for employees hired before July 1, 1982 will be retained by the City until age 65 or the account balance is exhausted. Vacation pay is calculated based on vacation taken and the medical leave conversion is based on an actuarial valuation dated January 1, 2009. The medical leave conversion and vacation pay amounts are accrued in the government-wide and proprietary fund financial statements. A liability for the current amount of compensated absences is recorded as a current liability at June 30 in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30 that resulted from employee resignations and retirements. The current compensated absences amount in the governmental funds is combined with accrued payroll and other payroll related amounts in the accrued payroll and benefits line item. There is no long-term liability for compensated absences in the governmental funds. City of Scottsdale, Arizona 57 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents 7. Long-term Obligations In the government-wide financial statements and the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount and deferred amounts on refundings. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received are reported as debt service expenditures. 8. Fund Equity In the fund financial statements, governmental funds report reservation of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent management plans that are subject to change. 9. Net Assets The government-wide and proprietary fund financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted, and unrestricted. Invested in Capital Assets, Net of Related Debt – This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Assets – This category represents net assets that have external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Assets – The category represents net assets of the City, not restricted for any project or other purpose. 58 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Notes to Financial Statements 1. Governmental Accounting Standards Board Statement No. 49 The City adopted the provisions of GASB Statement No. 49 Accounting and Financial Reporting for Pollution Remediation Obligations. This statement establishes a framework for the recognition and measurement of pollution remediation liabilities. A pollution remediation obligation addresses the current or potential detrimental effects of existing pollution by participation in pollution remediation activities. This statement enhances the comparability of financial statements among governments by reporting pollution remediation obligations in the same manner. This statement also enhances the ability to assess the government’s obligations by requiring timely and complete reporting of such obligations as the components are reasonably estimable. For the Fiscal Year Ended June 30, 2009 E. Implementation of New Accounting Principles 59 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents II. Reconciliation of Government-wide and Fund Financial Statements A. Explanation of certain difference between the governmental fund balance sheet and the government-wide statement of nets assets. The City’s total governmental fund balances, $221,266, differs from net assets of governmental activities, $2,802,347, reported in the statement of net assets. The difference primarily results from the longterm economic focus in the statement of net assets versus the current financial resources focus in the governmental fund balance sheets. Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Assets (in thousands of dollars) Total Governmental Funds ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Hotel/Motel Tax Property Tax State Shared Sales Tax Franchise Fee Court Receivable Highway User Tax Auto Lieu Tax Intergovernmental Grants Special Assessments Miscellaneous Due from Other Funds/Internal Balances Prepaid Expenses Supplies Inventory Capital Assets (net of accumulated depreciation) Deferred charges and other assets Total Assets LIABILITIES Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Current Accrued Compensated Absences - Due Within One Year Accrued Compensated Absences - Due in More Than One Year Claims Payable Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Court Tax Audit Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Bonds, Loans, Capital Leases, and Other Payables Total Liabilities Fund Balances/Net Assets Total Fund Balances/Net Assets Total Liabilities and Fund Balances/Net Assets 60 $ $ $ Internal Service Funds (2) Reclassifications and Eliminations Statement of Net Assets Totals 249,010 $ 42,903 - $ - 38,637 $ - 1,494 10,686 366 2,538 1,521 2,786 10,071 1,272 817 25,294 479 2,542 9,265 40 205 361,289 $ 3,361,080 3,371 3,364,451 $ 220 6 748 574 28,894 69,079 $ (40) (40) $ 1,714 10,686 366 2,538 1,521 2,786 10,071 1,272 817 25,294 479 2,542 9,271 748 779 3,389,974 3,371 3,794,779 23,261 $ 16,399 40 19,140 28,920 - $ (155) 155 10,369 11,766 - 1,785 $ 354 201 217 11,530 - - $ (40) - 25,046 16,598 155 10,570 11,983 11,530 19,140 28,920 46 14,133 (40) 54,946 69,079 $ (40) $ 1,688 2,542 4,235 4,526 26,223 3,738 3,856 2,128 3,327 140,023 $ Long-Term Assets/ Liabilities (1) 221,266 361,289 $ (1,688) (2,542) (4,235) (4,526) (18,327) (425) 847,924 838,316 2,526,135 3,364,451 $ - $ - 287,647 42,903 7,896 3,313 3,856 2,128 3,327 847,970 992,432 2,802,347 3,794,779 City of Scottsdale, Arizona Table of Contents (1) When capital assets (land, buildings, equipment, etc) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net assets includes those capital assets among the assets of the City as a whole. Cost of capital assets Accumulated depreciation $ $ 4,690,618 (1,329,538) 3,361,080 Bond issuance costs are expended in governmental funds when paid, and are capitalized and amortized over the life of the corresponding bonds for purpose of the statement of net assets. Bond issuance costs @ 7/1/08 Bond issuance cost for fiscal year 2009 Amortization of bond issuance costs $ $ 3,664 (293) 3,371 Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities in the governmental funds. All liabilities, both current and long-term, are reported in the statement of net assets. Balances at June 30, 2009 were: Contract and capital lease payables Bonds payable Deferred amount on refunding Deferred issuance premium Accrued vacation and sick leave pay Post Employment - Implied Subsidy $ $ (16,828) (820,525) 8,112 (17,572) (22,135) (1,111) (870,059) Notes to Financial Statements (in thousands of dollars) For the Fiscal Year Ended June 30, 2009 Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Assets Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current period expenditures. Those assets (for example, receivables) are offset by deferred revenues in the governmental funds and thus are not included in fund balance. Deferred revenue for the long-term special assessment receivables shown on the governmental fund statements is not deferred on the statement of net assets. Certain tax and other revenues deferred under modified accrual for governmental fund statements, is recognized as revenue under accrual accounting for the government-wide statements. Deferred special assessment revenue Deferred court revenue Deferred tax revenue Deferred intergovernmental revnue Deferred other $ $ 2,542 4,235 6,214 18,327 425 31,743 $ 54,946 (2) Internal Service Funds are used by management to charge the costs of certain activities, such as fleet management and self insurance, to individual funds. The assets and liabilities of certain Internal Service Funds are included in governmental activities in the statement of net assets. City of Scottsdale, Arizona 61 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents 62 B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities. The net change in fund balances for governmental funds, a deficit $114,492, differs from the change in net assets for the governmental activities, $168,602, reported in the statement of activities. The differences arise primarily from the long-term economic focus in the statement of activities versus the current financial resources focus in the governmental funds. The effect of the differences is illustrated below. Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands of dollars) Total Governmental Funds REVENUES: Taxes - Local: Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental: State-Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services: Building and Related Permits Fire Fees Recreation Fees Westworld Equestrian Facility Fees Fines and Forfeitures: Court Fines Parking Photo Radar Court Enhancement Library Police Fees Special Assessments Property Rental Interest Earnings Intergovernmental: Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total $ 60,493 $ 139,380 7,577 7,831 3,606 139 820 Long-Term Revenue/ Expenses (3) Capital Related Items (4) 622 $ 1,601 - Internal Service Funds (5) - $ - Long-Term Debt Transactions (7) Reclassifications and Eliminations (6) 23 $ - Statement of of Activities - $ - - $ - 61,138 140,981 7,577 7,831 3,606 139 820 18,677 35,103 8,530 14,083 1,015 1,733 - - - - - 18,677 35,103 8,530 14,083 1,015 1,733 6,446 2,275 4,316 2,682 - - - (53) - - 6,393 2,275 4,316 2,682 6,675 423 2,466 967 303 625 821 3,527 13,491 (4,964) (271) (218) (675) - - 1,162 - - 1,711 152 2,248 967 303 625 146 3,527 14,653 8,592 720 22,501 9,425 599 1,519 1,210 14,917 991 404,478 14 (690) (4,581) - - (1,980) - 8,592 720 22,515 9,425 599 1,519 1,210 12,937 301 399,049 - - 1,185 (2,033) (continued) City of Scottsdale, Arizona Table of Contents EXPENDITURES/EXPENSES Current: General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Debt Service: Principal Interest and Fiscal Charges Capital Improvements Total Expenditures/Expenses OTHER FINANCING USES/CHANGES IN NET ASSETS Net Transfers (to) From Other Funds Capital Contibutions Total Net Change for the Year $ $ 19,216 $ 89,802 9,701 15,580 70,807 9,904 4,627 30,767 18,800 3,732 3,465 8,246 16,671 3,704 632 Long-Term Revenue/ Expenses (3) Capital Related Items (4) (171) $ 608 (81) 56 (201) 56 (29) 31 143 6 (2) (7) 200 (4) - 1,543 $ 2,345 548 72,666 8,051 3,867 (2) 605 4,996 73 73 313 12,262 (3,061) Internal Service Funds (5) 107 $ 3 3 37 (93) 5 (1) (197) (629) (9) 9 1 2 (44) (1) Long-Term Debt Transactions (6) Reclassifications and Eliminations (49) $ (228) (258) (787) (41) (109) (32) (423) (106) - Statement of of Activities - $ - 20,646 92,530 9,913 87,552 78,523 13,723 4,595 31,174 22,887 3,802 3,545 8,553 29,029 595 631 31,308 41,612 155,358 533,932 605 (155,358) (51,079) (807) (2,033) (31,308) 630 (30,678) 42,242 449,940 14,962 14,962 - (2,021) 209,561 207,540 (3,009) (3,009) - - 9,932 209,561 219,493 (114,492) $ (5,186) $ 258,619 $ (1,017) $ - $ 30,678 $ Notes to Financial Statements Total Governmental Funds For the Fiscal Year Ended June 30, 2009 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands of dollars) 168,602 (continued on next page) City of Scottsdale, Arizona 63 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands of dollars) (3) Reconciling Items Description: Because some property taxes will not be collected for several months after the City's fiscal year ends, they are not considered as "available" revenues in the governmental funds. Similarly, other revenues are not currently available at year-end and are not reported as revenue in the governmental funds. Property taxes Court revenue Tax audit revenue Special Assessment revenue Intergovernmental revenue Other Receivable revenue $ $ 622 (5,453) 1,601 (675) 14 (690) (4,581) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrual for long-term compensated absences Accrual for long-term post employment implied subsidy $ $ (4) (649) 44 (605) When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources expended, whereas net assets decrease by the amount of depreciation expense charged for the year, and the loss on disposal of capital assets. Capital expenditures Depreciation Expenses Loss on disposal of capital assets Difference $ Transfer of capital assets to Internal Service Fund $ 154,290 (102,923) (288) 51,079 $ (2,021) $ 209,561 $ (1,017) $ $ (2,033) (2,033) - $ - $ (293) Donations of capital assets are not shown on the governmental fund statements, but are included in the assets of the City. On the statement of activities, these donations are shown as capital contributions. Capital Contributions (5) Internal Service funds are used by management to charge the costs of certain activities, such as insurance and motor pool, to the individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs for the year. Change in Net Assets (6) Interfund transactions between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of revenues and expenditures to eliminate the doubling up effect of these transactions within the governmental activities. Reduction in Revenues - Governmental Funds Reduction in Expenditures/Expenses - Governmental Funds Bond issuance costs are reported as an expenditure in governmental funds in the year of bond issuance and thus, have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements; however, the bond issuance costs are deferred and amortized (expensed) over the life of the (continued) bonds. (7) 64 Bond issuance costs for fiscal year 2009 Amortization of bond issuance costs Difference City of Scottsdale, Arizona (293) (5) Internal Service funds are used by management to charge the costs of certain activities, such as insurance and motor pool, to the individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs for the year. (1,017) $ (2,033) (2,033) - Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes Interfund transactionsto between governmental activities, other than Internal Service Funds, eliminated inof thedollars) consolidation of these activities for the statement of in Fund Balances the Government-wide Statement of Activities (inarethousands (6) activities. The elimination is reflected as a reduction of revenues and expenditures to eliminate the doubling up effect of these transactions within the governmental activities. Reduction in Revenues - Governmental Funds Reduction in Expenditures/Expenses - Governmental Funds (7) (3) Reconciling Description: Bond issuanceItems costs are reported as an expenditure in governmental funds in the year of bond issuance and thus, have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements; however, the bond issuance costs are deferred and amortized (expensed) over the life of the Because some property taxes will not be collected for several months after the City's fiscal year ends, they are not considered as "available" revenues in the governmental bonds. $ funds. Similarly, other revenues are not currently available at year-end and are not reported as revenue in the governmental funds. Bond issuance costs for fiscal year 2009 Amortization of bond issuance costs Difference $ $ Property taxes $ Courthasrevenue Repayment of bond principal is reported as an expenditure in governmental funds and, thus, the effect of reducing fund balance because current financial resources have been used. For the government-wide statements, however, the principal payments Tax reduce therevenue liabilities in the statement of net assets and do not result in an expense audit in the statement of activities. Special Assessment revenue Intergovernmental revenue Principal payments made $ Other Receivable revenue Interest expense in the statement of activities differs from the amount reported in governmental funds because additional accrued and accreted interest was calculated for $ bonds and notes payable, and additional interest expense was recognized on the amortization of bond discount and premiums which are expended within the fund statements. Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Amortization of deferred charges on refundings Interest accretion and amortization Amortization of bond premium and discounts Accrual for long-term compensated absences Accrual for long-term post employment implied subsidy $ $$ $ (4) (293) (293) 622 (5,453) 1,601 (675) 14 31,308 (690) (4,581) (1,298) (724) 1,685 (649) (337) 44 (605) Notes to Financial Statements $ For the Fiscal Year Ended June 30, 2009 Change in Net Assets Table of Contents When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources expended, whereas net assets decrease by the amount of depreciation expense charged for the year, and the loss on disposal of capital assets. Capital expenditures Depreciation Expenses Loss on disposal of capital assets Difference Transfer of capital assets to Internal Service Fund $ $ 154,290 (102,923) (288) 51,079 $ (2,021) $ 209,561 $ (1,017) $ (2,033) (2,033) - Donations of capital assets are not shown on the governmental fund statements, but are included in the assets of the City. On the statement of activities, these donations are shown as capital contributions. Capital Contributions (5) Internal Service funds are used by management to charge the costs of certain activities, such as insurance and motor pool, to the individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs for the year. Change in Net Assets (6) Interfund transactions between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of revenues and expenditures to eliminate the doubling up effect of these transactions within the governmental activities. Reduction in Revenues - Governmental Funds Reduction in Expenditures/Expenses - Governmental Funds $ (7) Bond issuance costs are reported as an expenditure in governmental funds in the year of bond issuance and thus, have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements; however, the bond issuance costs are deferred and amortized (expensed) over the life of the bonds. City of Scottsdale, Arizona Bond issuance costs for fiscal year 2009 Amortization of bond issuance costs Difference $ $ (293) (293) 65 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents III. Stewardship, Compliance, and Accountability A. Budget And Budgetary Accounting The City prepared an annual budget that covered fiscal year 2008/09. The 2008/09 budget appropriation is established and reflected in the financial statements as follows: The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the General Fund, Special Revenue Funds (Highway User Fuel Tax and Preserve Privilege Tax), and Debt Service Funds (except for the Community Facilities Districts Debt Service Funds). Therefore, these funds have appropriated budgets, and budget to actual information is presented. The Community Development Block Grant, Home, Grants, Section 8, and Special Programs Special Revenue Funds, Community Facilities Districts Funds, Capital Projects Funds, Enterprise Funds, Internal Service Funds, and Trust and Agency Funds have non-appropriated budgets. Accordingly, no comparison of budget to actual is presented in the financial statements for these funds. Budgets for the Community Development Block Grant, Grants, and Section 8 Funds are established pursuant to the terms of the related grant awards. Budgets for the Community Facilities Districts are established in accordance with Arizona Revised Statutes, which do not require their inclusion in the City budget or adoption by the City Council. Budgets for Capital Projects Funds are established for individual projects and unexpended funds are re-appropriated each year until the project is completed and capitalized. Budgets for Enterprise Funds are established in order to help departments control operational costs. Budgets for Internal Service Funds are established in order to help departments control operational costs. Budgets for Trust and Agency Funds are established in accordance with the trust/agency agreements. On or before the second regular Council meeting in May, the City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them. Two public hearings are held prior to the budget’s final adoption in order to obtain taxpayer comments. In June, the budget is legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article 9, Section 20. During 2008/09, there were no supplemental budgetary appropriations to the original budget. The expenditure appropriations in the adopted budget are by department. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Departmental appropriations may be amended during the year. Upon the recommendation of the City Manager, and with the approval of the City Council: (1) transfers may be made from the appropriations for contingencies to departments; and (2) unexpended appropriations may be transferred from one department to another. 66 City of Scottsdale, Arizona Table of Contents B. Excess of Expenditures over Appropriations The Preserve Privilege Tax Special Revenue Fund exceeded its Special Revenue Expenditures appropriation by $2,000. Administrative costs incurred which were not included in the expenditures appropriation were funded by available fund balance. C. Fund Balance/Net Assets Reservations and Designations Only restrictions imposed by external sources are shown as restricted net assets on the governmentwide financial statements. Reservations or designations of fund balances are shown in aggregate on the governmental fund financial statements, but not on the proprietary fund financial statements. The City does, however, reserve or designate portions of net assets in other funds to demonstrate the government’s intended use of those net assets. Designations are created by administrative policy. The following are the reservations and designations of fund balance/net assets included in the unreserved fund balance/ net assets at June 30, 2009: City of Scottsdale, Arizona Notes to Financial Statements All expenditure appropriations that have not been expended lapse at year-end. The City discontinued the use of encumbrance accounting, as such, fund balance amounts are not reserved for purchase orders, contract or other commitments. For the Fiscal Year Ended June 30, 2009 Management control of budgets is further maintained at a line item level within the department. 67 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Fund Balance Reservations and Designations (in thousands of dollars) General Fund Reserved for Inventory Reserved\Restricted for Streetlight and Service Districts Designated for Operating Reserve\Contingency Total $ 205 630 30,860 31,695 Debt Service Fund Reserved for Debt Service $ 10,841 Capital Projects Fund Reserved for Miscellaneous Receivable $ 3,000 Water and Sewer Restricted for Repair and Replacement $ 26,568 Major $ $ 13,395 The amounts presented below detail the City's planned use of the following Unrestricted Net Asset amounts: Water and Sewer Designated for Operating Reserve $ 19,194 Airport Designated for Operating Reserve $ 590 Solid Waste Designated for Operating Reserve $ 5,017 $ 2,961 7,177 10,138 Self-Insurance Designated for General Liability Claims Designated for Health Care Benefits $ 68 Nonmajor City of Scottsdale, Arizona Table of Contents The City maintains a cash and investment pool for use by all funds except the Community Facilities Districts Funds, which have investments held separately by a trustee. City Charter, Ordinance, and Trust Agreements authorize the City to invest in obligations of the U.S. Treasury, U.S. Government agencies, certificates of deposit, bankers’ acceptances, commercial paper (A-1, P-1), repurchase agreements, mutual funds consisting of the foregoing, and the State of Arizona Local Government Investment Pool (LGIP). Deposits At June 30, 2009, the carrying amount of the City’s deposits was $90,821,942, and the bank balance was $89,585,848. The $1,236,094 difference represents deposits in transit and other reconciling items. Custodial Credit Risk Custodial credit risk for deposits is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. As of June 30, 2009, in accordance with the City’s policy, the City’s deposits were covered by federal depository insurance or by collateral held by the City’s agent or pledging financial institution’s trust department or agent in the name of the City, and thus had no deposits that were exposed to custodial credit risk. Notes to Financial Statements A. Cash and Investments For the Fiscal Year Ended June 30, 2009 IV. Detailed Notes on All Funds The custodial credit for investments is the risk that, in the event of the failures of the counterparty (e.g. broker-dealer) to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s investment policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City be conducted on a delivery-versus-payment basis. Securities are to be held by a third party custodian. City of Scottsdale, Arizona 69 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Interest Rate Risk Interest rate risk is the risk that changes in market interest rates 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. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits the City’s investment portfolio to maturities of less than three years unless matched to a specific cash flow. The following table summarizes the City’s interest rate risk, based on maturity dates of various investments: (in thousands of dollars) Investment Maturities (in Years) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Guaranteed Investment Contracts Fair Value $ 76,596 312,307 18,359 Total Investments $ Less Than 1 1-2 2-3 3+ $ 1,014 $ 56,235 $ 19,336 $ 11 206,477 * 92,835 ** 12,995 *** 8,160 10,199 - 275 275 - - 407,537 $ 207,766 $157,230 $ 42,530 $ 11 *$12,002 of these bonds are callable July 7, 2009 **$21,124 of these bonds are callable between February 17, 2010 and April 20, 2010 ***$12,995 of these bonds are callable between December 15, 2009 and December 29, 2009 Credit Risk Generally, 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 nationally recognized statistical rating organizations (NRSROs). It is the City’s policy to invest in securities with the highest rating issued by NRSROs. Presented below is the rating as of June 30, 2009 for each investment type: (in thousands of dollars) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Guaranteed Investment Contracts Total Investments 70 $ Total 76,596 312,307 18,359 407,537 Not Rated $ - - - - 275 5,748 $ 324,918 A-1+ $ 275 $ 306,559 18,359 Exempt from Disclosure $ 76,596 - $ AAA 5,748 - $ $ 76,596 $ 275 City of Scottsdale, Arizona Table of Contents The following is a listing by issuer of the City’s investments at June 30, 2009: (in thousands of dollars) Issuer U.S. Government Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corp. (FHLMC) Federal National Mortgage Assocation (FNMA) Federal Farm Credit Bank (FFCB) General Electric Capital Corp. Goldman Sachs PNC Bank SunTrust Bank Pacific Life Insurance Company Investment Type U.S. Government Securities Federal Agency Securities Federal Agency Securities Federal Agency Securities Federal Agency Securities Corporate Note Corporate Note Corporate Note Corporate Note Guaranteed Investment Contract Total Investments Market Value $ 76,596 113,129 91,555 66,831 40,792 5,045 3,115 5,041 5,158 275 $ 407,537 Percent of Holdings 18.79% 27.76% 22.46% 16.40% 10.01% 1.24% 0.76% 1.24% 1.27% 0.07% 100.00% Notes to Financial Statements The City’s investment policy contains no limitations on the amount that can be invested in any one issuer. For the Fiscal Year Ended June 30, 2009 Concentration of Credit Risk Investments Total City cash and investments at fair value are as follows (in thousands of dollars): Carrying Amount of City Deposits Investments $ 90,822 407,537 Total Cash and Investments $ 498,359 Total City cash and investments are reported as follows (in thousands of dollars): Primary Government Cash and Investments Cash with Fiscal Agent Restricted Cash Handicap Scholarship Private Purpose Trust Fund Family Self-Sufficiency Agency Fund Retainage Escrow Agency Fund Total Cash and Investments City of Scottsdale, Arizona $ 391,108 61,188 36,593 3 127 9,340 $ 498,359 71 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents 72 Investment income comprises the following for the year ended June 30, 2009 (in thousands of dollars): Net Interest and Dividends Net Increase in the Fair Value of Investments $ 17,071 2,540 Total Net Investment Income $ 19,611 The net increase in the fair value of investments during fiscal year 2008/09 was $2,540,225. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. The unrealized gain on investments held at June 30, 2009, was $2,287,483. In a previous year, the City reported a decrease in fair value of $7,864,309 consisting of the City’s share of a loss on an investment within the Local Government Investment Pool. The State and numerous other bondholders filed suit against the principals, underwriters, trustees, accountants and others in May 2003. The case is presently pending in federal court in Ohio. No reliable assessment of the litigation outcome is available; however, the City has received $4,146,406 plus interest of $39,182 as a partial recovery. City of Scottsdale, Arizona Table of Contents Governmental and Governmental Activities Internal Service Funds: Receivables Property Taxes and Penalties: Property Court Subtotal Property Taxes and Penalties General Obligation Bond Debt Service General Fund $ 902 $ 32,680 33,582 General CIP Construction Capital Projects 1,418 $ 1,418 Transportation Privilege Tax Capital Projects Nonmajor and Other Funds - $ - - $ - 218 $ 218 Total Governmental Funds 2,538 32,680 35,218 Other local taxes: Privilege Hotel/Motel State Shared Sales Tax Franchise Fee Auto Lieu Highway User Subtotal Other Local Taxes 7,252 73 1,521 2,786 817 12,449 - - - 3,434 293 1,272 4,999 10,686 366 1,521 2,786 817 1,272 17,448 Intergovernmental/Grants 6 - 100 1,827 23,840 25,773 Interest and Other: Interest Special Assessments Miscellaneous Subtotal Interest and Other 624 6,025 6,649 - 321 3,007 3,328 72 72 697 2,542 239 3,478 1,714 2,542 9,271 13,527 52,686 (22,609) 1,418 - 3,428 - 1,899 - 32,535 - 91,966 (22,609) 30,077 $ 1,418 $ 3,428 $ 1,899 $ 32,535 $ 69,357 Gross Receivable Less: Allowance for Uncollectibles Net Total Receivables $ Notes to Financial Statements Receivables as of year end for the government’s individual major governmental funds, nonmajor governmental funds and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts are as follows (in thousand of dollars): For the Fiscal Year Ended June 30, 2009 B. Receivables Enterprise Funds: Receivables Privilege Tax Charges for services Intergovernmental/Grants Interest Miscellaneous Gross Receivable Net Total Receivables City of Scottsdale, Arizona Water and Sewer Utility Airport Total Enterprise Fund Solid Waste $ - $ 14,084 876 1,188 16,148 14 $ 176 30 148 368 - $ 1,921 40 41 2,002 14 16,005 176 946 1,377 18,518 $ 16,148 $ 368 $ 2,002 $ 18,518 73 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows (in thousand of dollars): Property Tax Special Assessments Court Tax Audit Intergovernmental Other Unavailable $ 1,688 2,542 4,235 4,526 18,327 425 Total $ $ 7,896 3,313 $ 11,209 C. Capital Assets Capital asset activity for the year ended June 30, 2009, was as follows (in thousands of dollars): Governmental Activities Capital Assets, not being depreciated: Land Construction In Progress Total Capital Assets, not being depreciated: Beginning Balance $ Increases 1,221,868 $ 160,154 1,382,022 158,387 $ 158,985 317,372 Capital Assets, being depreciated: Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Capital Assets, being depreciated: 430,776 2,442,854 60,791 3,494 78,225 3,016,140 Less Accumulated depreciation for: Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Accumulated depreciation: Total Capital Assets, being depreciated, net: Governmental activities Capital Assets, net: 74 31,743 Unearned $ Decreases Ending Balance - $ (60,766) (60,766) 1,380,255 258,373 1,638,628 28,432 74,114 3,962 250 6,538 113,296 (1,537) (122) (2,433) (4,092) 459,208 2,516,968 63,216 3,622 82,330 3,125,344 170,772 1,009,729 35,805 3,082 49,871 1,269,259 16,115 79,786 5,156 164 7,153 108,374 (1,367) (122) (2,146) (3,635) 186,887 1,089,515 39,594 3,124 54,878 1,373,998 1,746,881 4,922 (457) 1,751,346 322,294 $ (61,223) $ 3,389,974 3,128,903 $ City of Scottsdale, Arizona Table of Contents $ Increases 37,969 $ 90,173 80,097 208,239 - $ 6 94,506 94,512 Ending Balance Decreases - $ (478) (13,708) (14,186) 37,969 89,701 160,895 288,565 Capital Assets, being depreciated: Water System Sewer System Buildings and Land Improvements Machinery and Equipment Furniture, Fixtures and Office Equipment Total Capital Assets, being depreciated: 897,724 409,637 18,909 17,234 621 1,344,125 13,366 7,715 3,391 878 25,350 (40) (287) (327) 911,050 417,352 22,300 17,825 621 1,369,148 Less Accumulated depreciation for: Water System Sewer System Buildings and Land Improvements Machinery and Equipment Furniture, Fixtures and Office Equipment Total Accumulated depreciation: 205,776 98,648 8,125 3,992 614 317,155 22,754 10,474 997 1,190 7 35,422 (40) (287) (327) 228,490 109,122 9,122 4,895 621 352,250 1,026,970 (10,072) - 1,016,898 1,235,209 $ 84,440 $ Total Capital Assets, being depreciated, net: Business-type activities capital assets, net $ (14,186) $ Notes to Financial Statements Beginning Balance For the Fiscal Year Ended June 30, 2009 Business-type Activities Capital Assets, not being depreciated: Land Water Rights Construction In Progress Total Capital Assets, not being depreciated: 1,305,463 During fiscal year 2008/09, the Water and Sewer Utility Enterprise Fund capitalized net interest costs of $5,949,519. Total interest expense in this fund before capitalization was $15,360,886. Depreciation expense was charged to functions/programs of the primary government as follows (in thousands of dollars): Governmental Activities General Government Police Financial Services Transportation Community Services Information Services Fire Municipal Services Citizen and Neighborhoods Resources Human Resources Economic Vitality Planning and Development Capital Assets Held by the Government's Internal Service Funds are Charged to the Various Functions Based on their Usage of the Assets $ Total Depreciation Expense - Government Activities $ 108,374 City of Scottsdale, Arizona 8,565 2,113 486 77,262 6,341 3,858 782 3,373 2 34 3 104 5,451 75 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Water and Sewer System Airport Solid Waste Business-type Activities $ 34,253 971 198 Total Depreciation Expense - Business-type Activities $ 35,422 Construction Commitments The City has active construction projects as of June 30, 2009. At year-end the government’s commitments with contractors for specific projects are as follows (in thousands of dollars): Construction Commitments Spent to Date Streets Traffic Fire Police Drain/Flood Control Community/Preserve Parks/Recreation Municipal Facilities Technology Libraries Airport Transit Water System Sewer System Total Construction Commitments Remaining Commitment $ 120,195 16,178 12,243 45,222 26,496 214,182 33,209 25,719 17,168 19,778 6,356 22,558 375,943 125,124 $ 21,664 757 735 1,952 424 6,432 1,379 1,909 19,197 3,861 242 1,081 16,925 7,810 $ 1,060,371 $ 84,368 The traffic commitments are being financed by the 0.2% transportation sales tax, which is reported in the special revenue fund financial statements. All water and sewer system improvement projects are being financed through the use of water or sewer development fees and water or sewer rates. D. Interfund Balances and Interfund Transfers Due To and Due From Other Funds “Due to” and “Due from” balances have been recorded to address temporary cash flow needs. The composition of interfund balances as of June 30, 2009, is as follows: 76 Receivable Fund (in thousands of dollars) General $ Amount 40 Total $ 40 Payable Fund (in thousands of dollars) Nonmajor Governmental Funds $ Amount 40 Total $ 40 City of Scottsdale, Arizona Table of Contents Transfers are used to fund capital projects and debt service, reallocate special revenue funds to operating centers or other operations and for indirect administrative cost allocations (including in-lieu property tax and franchise fees) charges to Enterprise Funds. Net transfers (in thousands of dollars): Transfers Out From: Major Governmental Funds General Capital Projects General CIP Construction Transportation Privilege Tax Transfers In To: $ 18,296 14,787 8,600 Major Governmental Funds General Capital Projects General CIP Construction Transportation Privilege Tax $ 12,279 622 Nonmajor Governmental Funds 14,625 Enterprise Funds Water and Sewer Solid Waste Total Major Governmental Funds Major Enterprise Funds Water and Sewer Airport Solid Waste 41,683 $ 9,702 58 393 10,153 41,683 $ 9,206 Capital Projects General CIP Construction 496 Major Governmental Funds General 47 Capital Projects General CIP Construction 11 Major Governmental Funds General Capital Projects General CIP Construction Nonmajor Governmental Funds Total Major Enterprise Funds 150 71 Total Major Governmental Funds Major Governmental Funds General 13,936 Total Major Enterprise Funds Notes to Financial Statements Interfund Transfers For the Fiscal Year Ended June 30, 2009 The Community Develop Block Grant Special Revenue Fund had a deficit cash balance of $35,000, due to grants being received on a reimbursement basis. The HOME Special Revenue Fund had a deficit cash balance of $5,000, due to grants being received on a reimbursement basis. 11 48 334 10,153 (continued) City of Scottsdale, Arizona 77 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Transfers Out From: Transfers In To: Nonmajor Governmental Funds 103,674 Total Nonmajor Governmental Funds 103,674 Internal Service 5,030 Total Internal Service Funds Total 5,030 $ 160,540 Major Governmental Funds General 130 Debt Service General Obligation Bond 16,264 Capital Projects General CIP Construction Transportation Privilege Tax 46,910 21,985 Nonmajor Governmental funds 18,385 Total Nonmajor Governmental Funds 103,674 Major Governmental Funds Capital Projects General General CIP Construction 5,000 30 Total Internal Service Funds 5,030 Total $ 160,540 E. Leases Operating Leases The City has entered into rental agreements of retail and parking facilities. Rental payments on these facilities during fiscal year 2008/2009 were $2,193,207. Payments are contingent upon sales tax revenues received on the properties; thus, future payments cannot be determined. Capital Leases The City entered into a lease agreement as lessee for financing the fiscal year 2005/06 acquisition of a modular office building for its fire department training facility. The lease agreement qualified as a capital lease for accounting purposes and, therefore, has been recorded in the governmental activities at the present value of the future minimum lease payments as of the inception date. The building acquired by this lease agreement is recorded in the Fire System at historic cost, less accumulated depreciation. The outstanding debt of $112,447 was paid in full in fiscal year 2008/09. The City has entered into a lease agreement as lessee for financing the acquisition of a modular office building for its water operations. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded in the Water and Sewer Fund at the present value of the future minimum lease payments as of the inception date. The building acquired by this lease agreement is recorded in the Water System at a value of $212,654, less accumulated depreciation of $13,114. 78 City of Scottsdale, Arizona Table of Contents There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all significant limitations and restrictions. General Obligation Bonds General obligation (GO) bonds are issued, after approval by City of Scottsdale voters at an authorized bond election, to finance the construction of water and sewer systems, artificial lighting, parks and open spaces, recreational facilities, and general purpose improvements. At June 30, 2009, the City had $57,200,000 of unissued various purpose GO bonds, which were authorized in September 2000. The City had no unissued Preservation GO bonds from the September 1999 authorization. In May 2004, voters authorized $500,000,000 of additional Preservation GO bonds, as well as, an additional 0.15% sales tax increase to be used to finance Preserve land acquisitions. At June 30, 2009, the City had $460,000,000 of unissued Preservation GO bonds from the May 2004 authorization. GO bonds are backed by the full faith and credit of the City, and are repaid through the City’s levying of property (ad valorem) taxes. However, the Preservation GO bonds are repaid through the two-tenths of one percent City sales tax approved by voters in September 1996 to be used specifically to finance land acquisitions for the McDowell Sonoran Preserve. Notes to Financial Statements The following are brief descriptions of bonds outstanding at June 30, 2009. The totals shown are the principal amount outstanding, net of the current portion due July 1, 2009. For the Fiscal Year Ended June 30, 2009 F. Bonds, Loans, and Other Payables Municipal Property Corporation Bonds The City of Scottsdale Municipal Property Corporation (MPC) is a nonprofit corporation created by the City in 1967 to finance the construction or acquisition of certain capital improvement projects. The MPC issues its own bonds, which are repaid through the City’s excise tax collections and other unrestricted revenues. The use of property taxes to repay these bonds is specifically prohibited by law. Most of these bonds are recorded as governmental activities long-term debt. The 2001 MPC Scottswater bonds, the 2004 MPC bonds, the 2005E MPC bonds, a portion of the 2006 MPC Refunding bonds and the 2008A MPC bonds are recorded in and paid out of the revenues of the Water and Sewer Enterprise Fund. The City has pledged to repay $584,900,322 in MPC bonds issued in 2001 through 2008. The bonds are payable through 2024, 2030, and 2035. The coverage ratio (revenues to debt service) for 2009 is 9.47. The total principal and interest remaining to be paid on the bonds is $653,447,608. Principal and interest paid for the current year and total excise tax were $27,559,635 and $256,146,000 respectively. City of Scottsdale, Arizona 79 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Scottsdale Preserve Authority Bonds The Scottsdale Preserve Authority (SPA) is a nonprofit corporation created by the City in 1997 to finance land acquisitions for the McDowell Sonoran Preserve. The SPA issues its own bonds, which are repaid through the two tenths of one percent City sales tax approved by voters in September 1996 to be used specifically for this purpose. In May 2004, voters approved an additional 0.15% sales tax increase. SPA bonds are recorded as governmental activities long-term debt and are paid out of the SPA Debt Service Fund. The City has pledged to repay $117,420,000 in SPA bonds issued in 1998, 2001, and 2004. The bonds are payable through 2024, 2022, and 2016. The coverage ratio (revenues to debt service) for 2009 is 23.21. The total principal and interest remaining to be paid on the bonds is $100,969,049. Principal and interest paid for the current year and total sales tax were $6,760,271 and $29,121,000 respectively. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued as authorized by the voters for the construction, acquisition, furnishing and equipping of water and sewer facilities and related systems. The water and sewer revenue bonds are collateralized by revenue in excess of operating and maintenance expenses of the City’s water and sewer utility system, and are repaid via user charges or fees for service. Property taxes cannot be used to pay the debt service on these bonds. The City has pledged to repay $54,170,000 in water and sewer revenue bonds issued in 2004 and 2008. The bonds are payable through 2016 and 2023. The coverage ratio (revenues to debt service) for 2009 is 12.49. The total principal and interest remaining to be paid on the bonds is $67,421,375. Principal and interest paid for the current year and total customer net revenues were $6,167,187 and $77,716,000 respectively. Water and sewer revenue bond covenants require that the City accumulate sufficient reserves to cover the eventual replacement of the water and sewer system. The City has continued to meet this reserve requirement. At June 30, 2009, the funds reserved for this purpose were $26,568,048. Special Assessment Bonds Special assessment bonds are issued by the City on behalf of improvement districts created by property owners for a specific purpose, such as to finance local street, water or sewer improvements, or to acquire an existing water or sewer operation. Property owners in the designated districts agree to be assessed for the principal and interest costs of repaying the bonds. As trustee for improvement districts, the City is responsible for collecting the assessments levied against the owners of property within the improvement districts and for disbursing these amounts to retire the bonds issued to finance the improvements. The receivables, revenues, and debt service expenses related to these bonds are recorded in the Special Assessments Debt Service Fund. At June 30, 2009, special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, were adequate for the scheduled maturities of the bonds payable and the related interest. 80 City of Scottsdale, Arizona Table of Contents At June 30, 2009, there were 2 separate series of special assessment improvement bonds outstanding, each series issued as serial bonds to be repaid over 10 years. Bonds issued September 1998 through December 2001 totaling $8,350,000 mature January 2009 through January 2013. The coverage ratio (revenues to debt service) for 2009 is 0.82 due to prepayment of amounts that are currently in fund balance. The total principal and interest remaining to be paid on the bonds is $3,270,000. Principal and interest paid for the current year and total collections were $1,003,000 and $821,000 respectively. Certificates of Participation Certificates of Participation are issued to finance acquisition and improvements of real property that is leased to the City. The City’s obligation to make lease payments are subject to, and dependent upon, annual appropriations made by the City Council. In the event any such appropriation is not made, the lease will terminate and the lessor will have legal right to take possession of the property. The City’s obligation to make lease payments does not constitute a debt or liability of the City within the meaning of any constitutional or statutory limitation. Neither the full faith and credit nor the general taxing power of the City is pledged to make payments of principal or interest due with respect to the Certificates of Participation. Such payments will be made solely from amounts derived under the terms of the lease, including lease payments, and amounts from time to time on deposit under the terms of the declaration of trust. Notes to Financial Statements The City Council’s adopted policy is that special assessment improvement debt is permitted only when the ratio of the full cash value of the property (prior to improvements being installed) when compared to debt is a minimum of 3 to 1 prior to issuance of debt, and 5 to 1 or higher after construction of improvements. In addition, cumulative improvement district debt is not permitted to exceed 5 percent of the City’s secondary assessed valuation. For the Fiscal Year Ended June 30, 2009 These bonds are secured by a lien on the property and improvements of all parcels within each district. In the event of default by the property owner, the City may enforce auction sale to satisfy the debt service requirements of the improvement bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Community Facilities Districts General Obligation Bonds Community Facilities District General Obligation Bonds are issued by community facilities districts (CFDs), which are special purpose districts created specifically to acquire and improve public infrastructure in specified land areas. CFD bonds are repaid by ad valorem taxes levied directly by the districts and collected by the county. Property owners in the districts are assessed for district taxes and thus for all costs associated with the districts. The City has no liability for community facilities district bonds. CFDs are created only by petition to the City Council by property owners within the district areas. As board of directors for the CFDs, the City Council has adopted a formal policy that CFD debt will be permitted only when the ratio of the full cash value of the unimproved district property to the proposed district debt, is a minimum of 3 to 1, and 5 to 1 or higher after construction of improvements. These ratios are verified by an appraisal paid for by the CFD and administered by the City. In addition, cumulative debt of all CFDs cannot exceed 5 percent of the City’s secondary assessed valuation. City of Scottsdale, Arizona 81 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents 82 CFD Advance Refundings There were no refundings during fiscal year 2008/09. In prior years, the McDowell Mountain Ranch CFD and the Scottsdale Mountain CFD refinanced other bond issues through the issuance of refunding bonds. The proceeds from the refunding bonds were deposited in irrevocable trusts at commercial banks and invested in U.S. Government securities which, together with interest earned thereon, provided amounts sufficient for future redemption or payment of principal and interest of the issues refunded. The assets, liabilities, and financial transactions of all of these trust accounts and the liability for refunded (defeased) bonds are not reflected in the financial statements of the City. There was no CFD refunded debt outstanding at June 30, 2009. Bonds payable at June 30, 2009, are comprised of the following: Classified in Governmental Activities on the Government-wide Financial Statements: General Obligation Bonds Bonds Outstanding (in thousands of dollars) 1993 Refunding Bonds due in annual installments of $1,010,000 to $8,150,000 through July 1, 2009; interest at 4.0 percent to 5.5 percent. $28,399,993 of these bonds are recorded in and paid out of the Water and Sewer Fund. On June 15, 2004, $2,505,000 due 2007 through 2009 were defeased. The original issue amount for the 1993 Refunding Bonds was $45,015,000. $ - 1997 Refunding Bonds (issued September 3, 1997) due in annual installments of $50,000 to $3,510,000 through July 1, 2014, interest at 4.45 percent to 5.5 percent. Original issue amount $19,900,000. 9,400 1989 Capital Improvement Project Serial Bonds (issued April 6, 1998) due in annual installments of $445,000 to $1,340,000 through July 1, 2018, interest at 4.3 percent to 6.5 percent. On September 26, 2002, $8,180,000 due 2009 through 2015 were refunded. Original issue amount $20,500,000. 4,445 1999A Transportation, Storm Sewer, Flood Protection and Pima Road Improvements Serial Bonds (issued June 29, 1999) due in annual installments of $675,000 to $1,900,000 through July 1, 2019; interest at 4.6 percent to 6.5 percent. On September 26, 2002, $15,525,000 due 2010 through 2019 were refunded. Original issue amount $25,200,000. - 1999 Preservation Bonds (issued November 16, 1999) due in annual installments of $800,000 to $4,225,000 through July 1, 2024; interest at 7.5 percent to 5.0 percent. On July 18, 2001, $32,375,000 due 2012 through 2022 were refunded, on September 26, 2002, an additional $4,125,000 due 2010 and 2011 were refunded, and on March 29, 2005 an additional $8,225,000 due 2023 and 2024 were refunded. Original issue amount $59,600,000. - 2001 Preservation Bonds (issued March 29, 2001) due in annual installments of $920,000 to $2,455,000 through July 1, 2024; interest at 4.0 percent to 6.0 percent. On September 26, 2002, $3,920,000 due 2010 through 2012 were refunded, and on March 29,2005 an additional $22,680,000 due 2013 through 2024 were refunded. Original issue amount $35,000,000. - 2001 Refunding Bonds (issued July 18, 2001) due in annual installments of $70,000 to $5,030,000 through July 1, 2022; interest at 3.875 percent to 5.375 percent. On April 15, 2004, $5,490,000 due 2010 and 2014 through 2018 were defeased. Original issue amount $51,155,000. 35,555 2002 Various Purpose Bonds (issued May 16, 2002) due in annual installments of $1,740,000 to $5,000,000 through July 1, 2024; interest at 4 percent to 5 percent. On June 15, 2004, $3,000,000 due 2010 through 2011 were defeased, and on March 29, 2005 an additional $42,665,000 due 2012 through 2019 and 2021 through 2024 were refunded. Original issue amount $68,000,000. 7,765 2002 Refunding Bonds (issued September 26, 2002) due in annual installments of $1,625,000 to $8,795,000 through July 1, 2019; interest at 2 percent to 5 percent. On April 15, 2004, $1,510,000 due 2010 were defeased. Original issue amount $72,000,000. 47,990 City of Scottsdale, Arizona $5,030,000 through July 1, 2022; interest at 3.875 percent to 5.375 percent. On April 15, 2004, $5,490,000 due 2010 and 2014 through 2018 were defeased. Original issue amount $51,155,000. 35,555 2002 Various Purpose Bonds (issued May 16, 2002) due in annual installments of $1,740,000 to $5,000,000 through July 1, 2024; interest at 4 percent to 5 percent. On June 15, 2004, $3,000,000 due 2010 through 2011 were defeased, and on March 29, 2005 an additional General Obligation $42,665,000 due 2012Bonds through 2019 and 2021 through 2024 were refunded. Original issue amount $68,000,000. Bonds Outstanding (in thousands of dollars) 7,765 10,020 9,400 2004 Various Purpose Bonds (issued May 13, 2004) due in annual installments of $1,600,000 1989 Capital Improvement Serial at Bonds (issued 6, Original 1998) due in amount annual to $30,300,000 through July 1,Project 2025; interest 3 percent to 5April percent. issue installments of $445,000 to $1,340,000 through July 1, 2018, interest at 4.3 percent to 6.5 $113,400,000. percent. On September 26, 2002, $8,180,000 due 2009 through 2015 were refunded. Original issue amount 2005 Refunding Bonds$20,500,000. (issued March 29, 2005) due in annual installments of $2,715,000 to 107,900 4,445 $11,075,000 through July 1, 2024; interest at 3.85 percent to 5 percent. Original issue amount 1999A Transportation, Storm Sewer, Flood Protection and Pima Road Improvements Serial $74,630,000. Bonds (issued June 29, 1999) due in annual installments of $675,000 to $1,900,000 through July 1, 2019; interest at 4.6Bonds percent to 6.5December percent. On 2002, $15,525,000 2005A Various Purpose (issued 1, September 2005) due 26, in annual installmentsdue of 2010 through were refunded. issueinterest amountat$25,200,000. $2,500,000 to 2019 $10,750,000 through Original July 1, 2024; 3.5 percent to 5 percent. Original issue amount $125,000,000. 1999 Preservation Bonds (issued November 16, 1999) due in annual installments of $800,000 to $4,225,000 through July (issued 1, 2024;December interest at1,7.5 percent to annual 5.0 percent. On July 2001, 2005B Preservation Bonds 2005) due in installments of 18, $775,000 $32,375,000 2012 July through 2022 were at refunded, on to September 2002, issue an additional to $1,575,000due through 1, 2024; interest 3.5 percent 5 percent.26, Original amount $4,125,000 $20,000,000.due 2010 and 2011 were refunded, and on March 29, 2005 an additional $8,225,000 due 2023 and 2024 were refunded. Original issue amount $59,600,000. 2008A Various Purpose Bonds (issued May 13, 2008) due in annual installments of 2001 Preservation Bonds through (issued March 2001) due in annual installments of $920,000 to $3,075,000 to $9,800,000 July 1, 29, 2028; interest at 3.25 percent to 5 percent. Original $2,455,000 through July 1, 2024; interest at 4.0 percent to 6.0 percent. On September 26, issue amount $100,000,000. 2002, $3,920,000 due 2010 through 2012 were refunded, and on March 29,2005 an additional $22,680,000 due 2013Bonds through 2024May were13, refunded. Original issueinstallments amount $35,000,000. 2008B Preservation (issued 2008) due in annual of $325,000 to $1,250,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $20,000,000. 2001 Refunding Bonds (issued July 18, 2001) due in annual installments of $70,000 to $5,030,000 through July 1, 2022; interest at 3.875 percent to 5.375 percent. On April 15, 2004, due 2010 Bonds and 2014 through 2018 were defeased. Original issue amount Total$5,490,000 General Obligation Outstanding $51,155,000. 74,630 116,500 17,575 - 100,000 19,675 $ 2002 Various Purpose Bonds (issued May 16, 2002) due in annual installments of $1,740,000 The 1999 and 2001 Preservation Bonds of $18,400,000 and $29,210,000, respectively, and to $5,000,000 through July 1, 2024; interest at 4 percent to 5 percent. On June 15, 2004, portions of the 2001 Refunding Bonds, 2002 Various Purpose Bonds, 2002 Refunding $3,000,000 due 2010 through 2011 were defeased, and on March 29, 2005 an additional Bonds, 2004 Various Purpose Bonds and 2005 Refunding Bonds of $33,235,000, $42,665,000 due 2012 through 2019 and 2021 through 2024 were refunded. Original issue $40,000,000, $8,100,000, $65,400,000 and $66,090,000, respectively, are paid from the .2% amount $68,000,000. Preservation Sales Tax. The 2005B Preservation Bonds and the 2008B Preservation Bonds of $20,000,000 and $20,000,000, respectively, are paid from the .15% Preservation Sales Tax. 2002 Refunding Bonds (issued September 26, 2002) due in annual installments of $1,625,000 to $8,795,000 through July 1, 2019; interest at 2 percent to 5 percent. On April 15, 2004, $1,510,000 due 2010 were defeased. Original issue amount $72,000,000. Municipal Property Corporation Bonds 2003 Refunding Bonds (issued September 24, 2003) due in annual installments of $45,000 to 2004A Municipal Property Corporation Excise Tax Revenue Bonds (issued September 15, $5,515,000 through July 1, 2013; interest at 2 percent to 4.5 percent. Original issue amount 2004) due in annual installments of $920,000 to $2,715,000 through July 1, 2034; interest at $16,265,000. 3.25 percent to 5.25 percent. On November 29, 2006, $30,975,000 due 2017 and 2020 through 2034 were refunded. Original issue amount, $40,760,000. 47,990 - 551,455 35,555 7,765 47,990 10,020 $ 9,785 2005 Municipal Property Corporation Excise Tax Revenue Bonds (issued June 15, 2005) due in annual installments of $35,026 to $4,925,019 through July 1, 2021; interest at 3.22 percent to 5 percent. Original issue amount, $19,945,322. 22,446 2005D Municipal Property Corporation Excise Tax Revenue Bonds (issued December 1, 2005) due in annual installments of $200,000 to $3,625,000 through July 1, 2035; interest at 3.25 percent to 5 percent. On November 29, 2006, $25,925,000 due 2017 through 2030 were refunded. Original issue amount, $46,500,000. 19,925 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due in annual installments of $1,105,000 to $2,730,000 through July 1, 2034; interest at 5 percent. Original issue amount, $55,450,000. 55,450 2006A Municipal Property Corporation Excise Tax Revenue Bonds (issued November 29, 2006) due in annual installments of $240,000 to $625,000 through July 1, 2031; interest at 4 percent to 5 percent. Original issue amount, $10,000,000. 9,110 City of Scottsdale, Arizona 2006B Municipal Property Corporation Excise Tax Revenue Bonds (issued November 29, Notes to Financial Statements $ For the Fiscal Year Ended June 30, 2009 1993 in annual installments of $1,010,000 to $8,150,000 July 1, 2002 Refunding Bonds Bonds due (issued September 26, 2002) due in annual installmentsthrough of $1,625,000 2009; interest at 4.0 percent 5.5 percent. bonds are and to $8,795,000 through July 1,to2019; interest$28,399,993 at 2 percentoftothese 5 percent. Onrecorded April 15,in2004, paid out of due the Water and Sewer Fund. On June 2004, $2,505,000 due 2007 through 2009 $1,510,000 2010 were defeased. Original issue15,amount $72,000,000. were defeased. The original issue amount for the 1993 Refunding Bonds was $45,015,000. 2003 Refunding Bonds (issued September 24, 2003) due in annual installments of $45,000 to 1997 Refunding Bonds September duetoin4.5 annual installments $50,000 to $5,515,000 through July(issued 1, 2013; interest at3,21997) percent percent. Original of issue amount $3,510,000 $16,265,000.through July 1, 2014, interest at 4.45 percent to 5.5 percent. Original issue amount $19,900,000. Table of Contents 83 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements 2005D Municipal Property Corporation Excise Tax Revenue Bonds (issued December 1, 2005) due in annual installments of $200,000 to $3,625,000 through July 1, 2035; interest at 3.25 percent to 5 percent. On November 29, 2006, $25,925,000 due 2017 through 2030 were refunded. Original issue amount, $46,500,000. 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued General Obligation Bonds November 29, 2006) due in annual installments of $1,105,000 to $2,730,000 through July 1, 2034; interest at 5 percent. Original issue amount, $55,450,000. 1993 Refunding Bonds due inCorporation annual installments of $1,010,000 to $8,150,000 July 29, 1, 2006A Municipal Property Excise Tax Revenue Bonds (issued through November 2009; interest at 4.0 percent to 5.5 percent. $28,399,993 of these bonds are recorded in and 2006) due in annual installments of $240,000 to $625,000 through July 1, 2031; interest at 4 paid out of Water and Sewerissue Fund. On June 15, 2004, $2,505,000 due 2007 through 2009 percent to the 5 percent. Original amount, $10,000,000. were defeased. The original issue amount for the 1993 Refunding Bonds was $45,015,000. Table of Contents Bonds 19,925 Outstanding (in thousands of dollars) 55,450 $ 2006B Municipal Property Corporation Excise Tax Revenue Bonds (issued November 29, 1997 Refunding Bonds (issued September 3, 1997) due in annual installments of $50,000 to 2006) due in annual installments of $950,000 to $2,475,000 through July 1, 2031; interest at 4 $3,510,000 through July 1, 2014, interest at 4.45 percent to 5.5 percent. Original issue percent to 5 percent. Original issue amount, $32,500,000. amount $19,900,000. Total MPC Bonds Outstanding 1989 Capital Improvement Project Serial Bonds (issued April 6, 1998) due in annual installments of $445,000 to $1,340,000 through July 1, 2018, interest at 4.3 percent to 6.5 percent. OnPreserve September 26, 2002, $8,180,000 due 2009 through 2015 were refunded. Scottsdale Authority Bonds Original issue amount $20,500,000. 1998 Scottsdale Preserve Authority Excise Tax Revenue Bonds due in annual installments of 1999A Transportation, Storm Sewer,July Flood Protection andJuly Pima Road interest Improvements Serial $1,015,000 to $6,585,000 beginning 1, 1999, through 1, 2024; at 6.0 percent to 4.75(issued percent. $22,770,000 due 2009 throughto2016 were refunded. Bonds JuneOn 29,March 1999) 30, due 2004, in annual installments of $675,000 $1,900,000 through Original issueinterest amountat$77,000,000. July 1, 2019; 4.6 percent to 6.5 percent. On September 26, 2002, $15,525,000 due 2010 through 2019 were refunded. Original issue amount $25,200,000. 2001 Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds issued July 18, 2001,Preservation due in annual installments of $60,00016,to1999) $1,465,000 July 1, 2002, through 1999 Bonds (issued November due in beginning annual installments of $800,000 1, 2022; interest 4.375 to 5.25atpercent. Original issue amountOn $17,495,000. toJuly $4,225,000 throughatJuly 1, percent 2024; interest 7.5 percent to 5.0 percent. July 18, 2001, $32,375,000 due 2012 through 2022 were refunded, on September 26, 2002, an additional 2004 Scottsdale Preserve Excise Tax Revenue Refunding Bonds issued 30, $4,125,000 due 2010 andAuthority 2011 were refunded, and on March 29, 2005 an March additional 2004, due due in annual installments of refunded. $75,000 toOriginal $3,315,000 1, 2016; interest at 2 $8,225,000 2023 and 2024 were issuethrough amountJuly $59,600,000. percent to 5 percent. Original issue amount $22,925,000. 2001 Preservation Bonds (issued March 29, 2001) due in annual installments of $920,000 to Total Scottsdale Authority Bonds $2,455,000 throughPreserve July 1, 2024; interest at 4.0 percent to 6.0 percent. On September 26, 2002, $3,920,000 due 2010 through 2012 were refunded, and on March 29,2005 an additional Special Assessment Bonds 2024 were refunded. Original issue amount $35,000,000. $22,680,000 due 2013 through 32,500 9,400 $ 149,216 4,445 $ 36,725 - 14,290 20,220 $ 71,235 - 2001 Refunding Bonds (issued July 18, 2001) due in annual installments of $70,000 to Special Assessment Bonds 1998, through December 20, 2001, maturing $5,030,000 through July 1, issued 2022; September interest at 28, 3.875 percent to 5.375 percent. On April 15, January 1, 2009, through 1, 2013; due in2018 annual $85,000issue to $750,000; 2004, $5,490,000 due 2010January and 2014 through wereinstallments defeased. of Original amount interest at 4.5 percent to 4.625 percent. Total original issue amount, $8,350,000. $51,155,000. $ 3,000 35,555 2002 Various Purpose Bonds (issued May 16, 2002) due in annual installments of $1,740,000 Participation toCertificates $5,000,000 ofthrough July 1, 2024; interest at 4 percent to 5 percent. On June 15, 2004, $3,000,000 due 2010 through 2011 were defeased, and on March 29, 2005 an additional 2005 Certificates of Participation January 26, 2005, due inrefunded. annual installments of $42,665,000 due 2012 through 2019issued and 2021 through 2024 were Original issue $223,832 to $450,965 beginning January 1, 2006, through July 1, 2015. Original issue amount amount $68,000,000. $7,650,000. $ 7,765 4,954 2002 Refunding Bonds (issued September 26, 2002) due in annual installments of $1,625,000 to $8,795,000 through July 1, 2019; interest at 2 percent to 5 percent. On April 15, 2004, Community Bonds $1,510,000 dueFacilities 2010 wereDistricts defeased.General OriginalObligation issue amount $72,000,000. 1998Refunding DC Ranch Community Facilities District General Bonds due in annual 2003 Bonds (issued September 24, 2003) due in Obligation annual installments of $45,000 to installmentsthrough of $155,000 $385,000 beginning July 15, throughOriginal July 15, issue 2023; amount interest $5,515,000 July 1,to2013; interest at 2 percent to 2005 4.5 percent. at 4.75% to 5.5%. Original issue amount $4,750,000. $16,265,000. 84 9,110 - 47,990 $ 3,905 10,020 1999 Via Linda Road Community Facilities District General Obligation Bonds due in annual installments of $95,000 to $255,000 beginning July 15, 2004 through July 15, 2023; interest at 5.0% to 5.75%. Original issue amount $3,225,000. 2,580 1999 McDowell Mountain Ranch Community Facilities District General Obligation Refunding Bonds due in annual installments of $320,000 to $1,455,000 beginning July 15, 1999 through July 15, 2022; interest at 4.0% to 6.0%. Original issue amount $20,245,000. 14,065 1999 DC Ranch Community Facilities District General Obligation Bonds (issued November 1, 1999) due in annual installments of $85,000 to $260,000 beginning July 15, 2005 through July 15, 2011. Interest at 5.45% to 6.50%. Original issue amount $3,085,000. 2,610 2002 Scottsdale Mountain Community Facilities District General Obligation Refunding Bonds (issued May 15, 2002) due in annual installments of $160,000 to $455,000 beginning July 15, 2003 through July 15, 2018; interest at 3.0 percent to 4.7 percent. Original issue amount $5,375,000. 3,350 City of Scottsdale, Arizona 1999 Via Linda Road Community Facilities District General Obligation Bonds due in annual installments of $95,000 to $255,000 beginning July 15, 2004 through July 15, 2023; interest at 5.0% to 5.75%. Original issue amount $3,225,000. 2,580 1999 McDowell Mountain Ranch Community Facilities District General Obligation Refunding Bonds due in annual installments of $320,000 to $1,455,000 beginning July 15, General Obligation Bonds 1999 through July 15, 2022; interest at 4.0% to 6.0%. Original issue amount $20,245,000. Bonds Outstanding (in thousands of dollars) 14,065 1993 Refunding Bonds due in annual installments of $1,010,000 to $8,150,000 through July 1, 1999 interest DC Ranch Community District General Obligation Bonds November 2009; at 4.0 percent toFacilities 5.5 percent. $28,399,993 of these bonds are(issued recorded in and 1, 1999) due in annual installments of $85,000 to $260,000 beginning July 15, 2005 through paid out of the Water and Sewer Fund. On June 15, 2004, $2,505,000 due 2007 through 2009 July defeased. 15, 2011. Interest at 5.45% 6.50%.forOriginal issue amount Bonds $3,085,000. were The original issueto amount the 1993 Refunding was $45,015,000. $ Table of Contents 9,400 3,350 1989 Capital Improvement Project Serial Bonds (issued April 6, 1998) due in annual installments of $445,000 to $1,340,000 through July 1, 2018, interest at 4.3 percent to 6.5 2002 DCOn Ranch Community District General Obligation percent. September 26, Facilities 2002, $8,180,000 due 2009 throughBonds 2015(issued were December refunded. 17, 2002) dueamount in annual installments of $245,000 to $1,395,000 beginning July 15, 2004 Original issue $20,500,000. through July 15, 2027. Interest at 3% to 5%. Original issue amount $12,165,000. 4,445 10,375 1999A Transportation, Storm Sewer, Flood Protection and Pima Road Improvements Serial 2007 (issued Waterfront Facilities District General Obligationthrough Bonds Bonds June Commercial 29, 1999) dueCommunity in annual installments of $675,000 to $1,900,000 (issued December due in to annual installments of $25,000 26, to $300,000 beginning due July July 1, 2019; interest11,at2007) 4.6 percent 6.5 percent. On September 2002, $15,525,000 15, through 2009 through Julyrefunded. 15, 2032.Original Interest at amount 4.85% to 6.05%. Original issue amount 2010 2019 were issue $25,200,000. $3,805,000. 3,780 1999 Preservation Bonds (issued November 16, 1999) due in annual installments of $800,000 Total Community Facilities Districts General Obligation Bonds Outstanding to $4,225,000 through July 1, 2024; interest at 7.5 percent to 5.0 percent. On July 18, 2001, $32,375,000 due 2012 through 2022 were refunded, on September 26, 2002, an additional Total Bonds Payable Recorded in Governmental Activities $4,125,000 due 2010 and 2011 were refunded, and on March 29, 2005 an additional $8,225,000 due 2023 and 2024 were refunded. Original issue amount $59,600,000. $ 40,665 $ 820,525 - 2001 PreservationinBonds (issued March 29, Activities 2001) due in annual installments of $920,000 to Classified Business-type on the Government-wide $2,455,000 through July 1, 2024; interest at 4.0 percent to 6.0 percent. On September 26, 2002, $3,920,000 due 2010 through 2012 were refunded, and on March 29,2005 an additional $22,680,000 due 2013 through 2024 were refunded. Original issue amount $35,000,000. 2001 Refunding Bonds (issued July 18, 2001) due in annual installments of $70,000 to $5,030,000 through July 1, 2022; interest at 3.875 percent to 5.375 percent. On April 15, 2004, $5,490,000 due 2010 and 2014 through 2018 were defeased. Original issue amount Water and Sewer Revenue Bonds $51,155,000. 2004Various Water and SewerBonds Revenue Refunding issued March 30, due in 2002 Purpose (issued May 16,Bonds 2002)(Series due in 2004 annual installments of 2004) $1,740,000 installments of July $80,000 to $3,175,000 Julyto1,52016 ; interest 2 percent to 5 toannual $5,000,000 through 1, 2024; interest atthrough 4 percent percent. On at June 15, 2004, percent. Original issue amount2011 $18,880,000. $3,000,000 due 2010 through were defeased, and on March 29, 2005 an additional $42,665,000 due 2012 through 2019 and 2021 through 2024 were refunded. Original issue amount $68,000,000. 2008 Water and Sewer Revenue Refunding Bonds (Series 2008 issued February 6, 2008) due in annual installments of $190,000 to $4,375,000 through July 1, 2023 ; interest at 3.25 2002 Refunding September 26, 2002) due in annual installments of $1,625,000 percent to 5.25 Bonds percent.(issued Original issue amount $35,290,000. to $8,795,000 through July 1, 2019; interest at 2 percent to 5 percent. On April 15, 2004, $1,510,000 due 2010 were defeased. Original issue amount $72,000,000. Total Water and Sewer Revenue Bonds Outstanding 2003 Refunding Bonds (issued September 24, 2003) due in annual installments of $45,000 to $5,515,000 through July 1, 2013; interest at 2 percent to 4.5 percent. Original issue amount $16,265,000. City of Scottsdale, Arizona Notes to Financial Statements 2002Refunding ScottsdaleBonds Mountain District General Obligation Refunding 1997 (issuedCommunity September Facilities 3, 1997) due in annual installments of $50,000 to Bonds (issued May 15, due in annualatinstallments of $160,000 to $455,000 beginning $3,510,000 through July2002) 1, 2014, interest 4.45 percent to 5.5 percent. Original issue July 15,$19,900,000. 2003 through July 15, 2018; interest at 3.0 percent to 4.7 percent. Original issue amount amount $5,375,000. For the Fiscal Year Ended June 30, 2009 2,610- Financial Statements: Bonds Outstanding (in thousands of dollars) 35,555 $ 14,885 7,765 33,460 $ 47,990 48,345 10,020 85 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Bonds Outstanding (in thousands of dollars) Bonds Table of Contents Outstanding (in thousands of dollars) Municipal Property Corporation Bonds General Obligation Bonds 2004 Municipal Property Corporation Excise Tax Revenue Bonds (Series 2004 issued May 13, 2004) due in annual installments ofBonds $2,190,000 to $5,435,000 through Julyto 1, 2024; interest 1993 Refunding due in annual installments of $1,010,000 $8,150,000 through at July 1, 3.25 percent to 5.25 percent. These paid out thebonds Water Sewer 2009; interest at 4.0bonds percentare to recorded 5.5 percent.and $28,399,993 of of these areand recorded in and paid November out of the Water Sewer Fund. On June 15, $2,505,000 due 2007 Enterprise Fund. On 29,and2006, $44,835,000 due2004, 2015 through 2024through were2009 were defeased. The original issue amount for the 1993 Refunding Bonds was $45,015,000. refunded. Original issue amount $75,000,000. $ $ 16,520 1997 Refunding Bonds (issued September 3, 1997) due in annual installments of $50,000 to 2005E Municipal Property Corporation Revenue Bonds to(issued December $3,510,000 through July Excise 1, 2014, Tax interest at 4.45 percent 5.5 percent. Original1,issue amount $19,900,000. 2005) due in annual installments of $2,275,000 to $6,305,000 through July 1, 2030; interest at 5 percent. These bonds are recorded in and paid out of the Water and Sewer Enterprise 1989 Capital Improvement Project Serial Bonds (issued April 6, 1998) due in annual Fund. On Novemberinstallments 29, 2006 of$67,455,000 due 2015 through throughJuly2030 wereinterest refunded. Original $445,000 to $1,340,000 1, 2018, at 4.3 percent to 6.5 issue amount $88,360,000. percent. On September 26, 2002, $8,180,000 due 2009 through 2015 were refunded. 18,630 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued 1999A Transportation, Storm Sewer, Flood Protection and Pima Road Improvements Serial November 29, 2006) Bonds due in(issued annual installments of $3,600,000 to $10,140,000 through July 1, June 29, 1999) due in annual installments of $675,000 to $1,900,000 through 2030; interest at 5 percent. Original issue amount, $110,510,000. July 1, 2019; interest at 4.6 percent to 6.5 percent. On September 26, 2002, $15,525,000 due 110,510 1999 Preservation Bonds (issued November 16, 1999) due in annual installments of $800,000 2008A Municipal Property Corporation Excise Tax Revenue Bonds (issued May 13, 2008) to $4,225,000 through July 1, 2024; interest at 7.5 percent to 5.0 percent. On July 18, 2001, due in annual installments of $1,800,000 to $7,250,000 throughonJuly 1, 2032; at 4 $32,375,000 due 2012 through 2022 were refunded, September 26, interest 2002, an additional percent to 5 percent. $4,125,000 Original issue amount, $105,875,000. due 2010 and 2011 were refunded, and on March 29, 2005 an additional 104,075 9,400 Original issue amount $20,500,000. 4,445 2010 through 2019 were refunded. Original issue amount $25,200,000. - $8,225,000 due 2023 and 2024 were refunded. Original issue amount $59,600,000. Total Municipal Property Corporation Bonds Outstanding Total Bonds 2001 Preservation Bonds (issued March 29, 2001) due in annual installments of $920,000 to $2,455,000 through July 1, 2024; interest at 4.0 percent to 6.0 percent. On September 26, Payable in Business-type Activities 2002, Recorded $3,920,000 due 2010 through 2012 were refunded, and on March 29,2005 an additional $22,680,000 due 2013 through 2024 were refunded. Original issue amount $35,000,000. Total Long-term Bonds Payable 2001 Refunding Bonds (issued July 18, 2001) due in annual installments of $70,000 to $5,030,000 through July 1, 2022; interest at 3.875 percent to 5.375 percent. On April 15, 2004, $5,490,000 due 2010 and 2014 through 2018 were defeased. Original issue amount $51,155,000. - $ 249,735 $ 298,080 $ 1,118,605 - 35,555 Statutory Debt Limitation 2002 Various Purpose Bonds (issued May 16, 2002) due in annual installments of $1,740,000 to $5,000,000 July Constitution, 1, 2024; interest at outstanding 4 percent to 5 percent. On obligation June 15, 2004, bonded debt issued for Under the provisions of the through Arizona general $3,000,000 due 2010 through 2011 were defeased, and on March 29, 2005 an additional water, sewer, light,$42,665,000 parks, and open space purposes may 2024 not were exceed 20 percent of a city’s net secondary due 2012 through 2019 and 2021 through refunded. Original issue $68,000,000. general obligation bonded debt for all other purposes may 7,765 assessed valuation.amount Outstanding not exceed 6 percent of a city’s secondary assessed valuation. on capital appreciation bonds, which 2002net Refunding Bonds (issued September 26, 2002) dueAccretion in annual installments of $1,625,000 to $8,795,000 through July 1, 2019; interest at 2 percent to 5 percent. On April 15, 2004, is included for GAAP purposes as outstanding debt, is excluded for this calculation. General obligation $1,510,000 due 2010 were defeased. Original issue amount $72,000,000. 47,990 bonds of community facilities districts also are not subject to or included in this calculation. The following summarizes the City Scottsdale, Arizona’s legal general bonded debt 2003of Refunding Bonds (issued September 24, 2003) due in obligation annual installments of $45,000 to borrowing capacity at $5,515,000 through July 1, 2013; interest at 2 percent to 4.5 percent. Original issue amount June 30, 2009 (in thousands of dollars): $16,265,000. 10,020 General Obligation Bonds Issued to Provide Water, Sewer, Light, 20% Constitutional Limit $ 1,654,483 General Obligation Bonds Issued for All Other Purposes 6% Constitutional Limit $ 496,345 Less General Obligation 20% Bonds Outstanding Less General Obligation 6% Bonds Outstanding Available 20% Limitation Borrowing Capacity 86 (413,095) $ 1,241,388 Available 6% Limitation Borrowing Capacity (138,360) $ 357,985 City of Scottsdale, Arizona Table of Contents Advance Refundings and Defeasances In prior years, the City refinanced other bond issues through the issuance of refunding bonds. The proceeds from the refunding bonds have been deposited in irrevocable trusts at commercial banks and invested in U.S. Government securities which, together with interest earned thereon, will provide amounts sufficient for future redemption or payment of principal and interest of the issues refunded. The assets, liabilities, and financial transactions of all of these trust accounts and the liability for refunded (defeased) bonds are not reflected in the financial statements of the City. The table below reflects refunded debt outstanding at June 30, 2009, net of any amounts to be paid or retired by the trustee on July 1, 2009 (in thousands of dollars). Notes to Financial Statements Under U.S. Treasury Department regulations, all governmental tax-exempt debt issued after August 31, 1986, is subject to arbitrage rebate requirements. The requirements stipulate, in general, that the earnings from the investment of tax-exempt bond proceeds, which exceed related interest expenditures on the bonds, must be remitted to the Federal government on every fifth anniversary of each bond issue. The City used an independent consultant to evaluate the City’s outstanding tax-exempt debt for arbitrage liability and determined that there is no arbitrage liability due as of June 30, 2009. For the Fiscal Year Ended June 30, 2009 Arbitrage Refunded in Prior Years (in thousands of dollars) 1999A General Obligation Bonds 1999 Preservation General Obligation Bonds 2001 Preservation General Obligation Bonds 2002 General Obligation Bonds 1998 Water and Sewer Revenue Bonds 2004 MPC Excise Tax Revenue Bonds 2004A MPC Excise Tax Revenue Bonds 2005D MPC Excise Tax Revenue Bonds 2005E MPC Excise Tax Revenue Bonds City of Scottsdale, Arizona $ 15,525 44,725 26,600 42,665 9,210 44,835 30,975 25,925 67,455 $ 307,915 87 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Contracts Payable The City has entered into various purchase contracts related to economic development, acquisition of water system facilities, acquisition of recreational facilities and patents. The contract for the acquisition of water system facilities is payable only from the operating revenue of the water and sewer utility system. The following is a summary of debt service to maturity for all long-term contracts payable at June 30, 2009. Classified in Governmental Activities on the Government-wide Financial Statements: Contracts Payable (in thousands of dollars) Contract payable to the U.S. Army Corps of Engineers for the construction of flood control and recreation facilities; due in annual installments through 2032; interest at 5.1 percent. 2,879 Contract payable for the maintenance of a federal patent; due in three year installments beginning January 1, 2001 through January 1, 2009; non-interest bearing. 3 Contract payable for the oversight and management of the Tournament Players Club Recreational Land Use Agreement; due in annual installments beginning March 1999 through June 2035; non-interest bearing. 5,635 Contract payable for the oversight and management of the Westworld Cost-share and Land Use Agreement; due in annual installments beginning December 2000 through December 2032; non-interest bearing. 4,906 Contract payable for the undergrounding of 69kv power lines; due in annual installments beginning January 1999 through January 2010; interest at 10.0 percent. 20 Contract payable for the purchase of a portion of 2,685 acres of land for the McDowell Sonoran Preserve; due in fifteen annual installments beginning July 1, 1999 through July 1, 2013; interest from 3.75 percent to 6.0 percent. 3,385 Total Contracts Payable Recorded in Governmental Activities 88 $ $ 16,828 City of Scottsdale, Arizona Table of Contents Beginning Balance Governmental Activities: Bonds payable: General Obligation Bonds Governmental Activities: Municipal Property Corporation Bonds Bonds payable: Scottsdale Preserve Authority Bonds General Obligation Bonds Special Assessments Bonds Municipal Corporation Bonds CertificatesProperty of Participation Scottsdale Preserve Authority Community Facilities DistrictsBonds General Special Assessments Obligation Bonds Bonds Certificates of Participation Add Deferred Issuance Premiums Community Facilities Districts General Less Deferred Amounts on Refunding Obligation Total BondsBonds Payable Add Deferred Issuance Premiums Contracts Payable Less Deferred Capital Lease Amounts on Refunding Total Bonds Payable Compensated Absences Contracts Payable Benefit - Implied Subsidy Post Employment Capital Lease Governmental Activity Long-term Liabilities Compensated Absences Post Employment Benefit - Implied Subsidy Governmental Activity Long-term Liabilities Beginning Balance $ 574,445 149,007 74,495 $ 574,445 3,835 149,007 5,689 74,495 3,835 42,450 5,689 19,257 (9,410) 42,450 859,768 19,257 17,875 (9,410) 141 859,768 21,909 17,875 1,179 141 $ 900,872 21,909 1,179 $ 900,872 Additional Obligations, Interest Additional Accretion Obligations, and Net Interest Increases Accretion and Net Increases $ 724 $ -724--724--724 10,809 -$ 11,533 10,809 $ 11,533 Current Maturities, Retirements, Current and Net Maturities, Decreases Retirements, and Net Decreases $ (22,990) (515) (3,260) $ (22,990) (835) (515) (735) (3,260) (835) (1,785) (735) (1,685) 1,298 (1,785) (30,507) (1,685) (1,047) 1,298 (141) (30,507) (10,165) (1,047) (22) (141) $ (41,882) (10,165) (22) $ (41,882) Ending Balance Ending Balance $ 551,455 149,216 71,235 $ 551,455 3,000 149,216 4,954 71,235 3,000 40,665 4,954 17,572 (8,112) 40,665 829,985 17,572 16,828 (8,112)829,985 22,553 16,828 1,157 $ 870,523 22,553 1,157 $ 870,523 Amounts Due Within One Year Amounts Due Within One Year $ 24,065 1,703 3,365 $ 24,065 750 1,703 759 3,365 750 1,905 7591,905 32,547 1,105 -32,547 10,570 1,105$ 44,222 10,570 $ 44,222 Notes to Financial Statements The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2009 (in thousands of dollars). For the Fiscal Year Ended June 30, 2009 Changes in Long-Term Liabilities Internal Service Funds serve primarily the governmental funds, the long-term liabilities of which are included as part of the governmental activities. For the year ended June 30, 2009, $417,541 of accrued compensated absences is included in the above amount. For the governmental activities, the General Fund, Special Revenue Funds and Capital Projects Funds generally liquidate accrued compensated absences. The compensated absences presented in this note are net of the current liability of $155,495 in the governmental funds and $0 in the Internal Service funds. Beginning Balance Business-type Activities: Bonds Payable: Water and Sewer Revenue Bonds Business-type Activities: Municipal Property Corporation Bonds Bonds Payable: Issuance Premiums Add Deferred Water and Sewer Revenue Less Deferred Amounts onBonds Refunding Municipal Property Corporation Bonds Total Bonds Payable Add Deferred Capital Lease Issuance Premiums Less Deferred Amounts on Refunding Compensated Absences Total Bonds Payable Post Employment Benefit - Implied Subsidy Capital Lease Business-type Activity Long-term Liabilities Compensated Absences Post Employment Benefit - Implied Subsidy Business-type Activity Long-term Liabilities City of Scottsdale, Arizona Beginning Balance $ 52,005 256,790 22,999 $ 52,005 (6,439) 256,790 325,355 22,999 97 (6,439) 2,556 325,355 146 97 $ 328,154 2,556 146 $ 328,154 Additional Obligations, Interest Additional Accretion Obligations, and Net Interest Increases Accretion and Net Increases $ $ ---1,38739$ 1,4261,387 39 $ 1,426 Current Maturities, Retirements, Current and Net Maturities, Decreases Retirements, and Net Decreases $ (3,660) (7,055) (1,467) $ (3,660) 847 (7,055) (11,335) (1,467) (44) 847 (1,146) (11,335)(44) $ (12,525) (1,146) $ (12,525) Ending Balance Ending Balance $ 48,345 249,735 21,532 $ 48,345 (5,592) 249,735 314,020 21,532 53 (5,592) 2,797 314,020 185 53 $ 317,055 2,797 185 $ 317,055 Amounts Due Within One Year Amounts Due Within One Year $ 3,115 7,955 $ 3,1157,955 11,070 46 1,179 11,07046 $ 12,295 1,179 $ 12,295 89 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for long-term liabilities at June 30, 2009. Deferred issuance costs and deferred amounts on refunding are not included. Governmental Activities (in thousands of dollars) General Obligation Bonds Issued To Provide Water, Sewer, Light Parks, and Open Spaces 20% Limitation Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Total $ $ Principal 13,950 22,390 21,730 21,012 20,070 99,443 155,925 52,825 5,750 - $ 413,095 $ Interest 18,877 18,209 17,174 16,106 15,091 62,466 34,515 5,626 799 - $ General Obligation Bonds Issued For All Other Purposes 6% Limitation Total 32,827 40,599 38,904 37,118 35,161 161,909 190,440 58,451 6,549 - 188,863 $ 601,958 $ $ Principal 10,115 3,995 4,500 7,038 11,675 66,312 16,775 17,950 - $ 138,360 $ Interest 6,262 5,788 5,627 5,403 5,078 16,201 6,420 2,228 - $ 53,007 $ Total General Obligation Bonds Total 16,377 9,783 10,127 12,441 16,753 82,513 23,195 20,178 191,367 $ $ Principal 24,065 26,385 26,230 28,050 31,745 165,755 172,700 70,775 5,750 - $ 551,455 $ Interest 25,139 $ 23,997 22,801 21,509 20,169 78,667 40,935 7,854 799 - Total 49,204 50,382 49,031 49,559 51,914 244,422 213,635 78,629 6,549 - 241,870 $ 793,325 ** For GAAP financial statement reporting, accretion of capital appreciation bonds is added to the principal balance outstanding. Municipal Property Corporation Bonds Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 $ Capital Appreciation ** Total $ Principal 1,703 1,513 3,091 3,135 3,745 30,846 32,038 33,920 32,860 3,625 $ Interest 6,191 6,100 6,229 5,938 6,653 32,904 23,512 13,475 5,114 163 $ 2,740 (2,740) 149,216 $ 103,539 $ Scottsdale Preserve Authority Excise Tax Revenue Bonds Total 7,894 7,613 9,320 9,073 10,398 63,750 55,550 47,395 37,974 3,788 $ $ - 252,755 Principal 3,365 3,470 3,625 3,790 3,965 23,180 29,840 - $ Interest 3,367 3,229 3,061 2,884 2,698 10,311 4,184 - $ Total 6,732 6,699 6,686 6,674 6,663 33,491 34,024 - - 71,235 $ Special Assessment Bonds $ - 29,734 $ 100,969 $ Principal Interest 750 $ 118 $ 750 84 750 51 750 17 - - 3,000 $ 270 $ Total 868 834 801 767 3,270 ** For GAAP financial statement reporting, accretion of capital appreciation bonds is added to the principal balance outstanding. Community Facilities Districts General Obligation Bonds Certificates of Participation Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Total $ $ Principal Interest 759 $ 157 $ 785 132 811 105 838 79 866 51 895 22 4,954 $ 546 $ Total 916 917 916 917 917 917 - $ 5,500 $ Principal 1,905 2,015 2,105 2,230 2,335 12,795 11,315 5,115 850 - $ 40,665 $ Interest 2,051 1,966 1,874 1,776 1,671 6,530 3,204 874 105 - $ 20,051 $ Contracts Payable Total 3,956 3,981 3,979 4,006 4,006 19,325 14,519 5,989 955 60,716 $ $ Principal Interest 1,105 $ 314 $ 1,152 272 1,201 227 1,263 179 370 129 2,151 560 2,750 391 3,459 174 3,004 9 373 16,828 $ 2,255 $ Total 1,419 1,424 1,428 1,442 499 2,711 3,141 3,633 3,013 373 19,083 (continued) 90 City of Scottsdale, Arizona Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2009 Governmental Activities (concluded) (in thousands of dollars) Total Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Capital Appreciation Principal $ 33,652 $ 36,070 37,813 40,056 43,026 235,622 248,643 113,269 42,464 3,998 Total $ Interest 37,337 $ 35,780 34,348 32,382 31,371 128,994 72,226 22,377 6,027 163 2,740 (2,740) 837,353 $ 398,265 $ Total 70,989 71,850 72,161 72,438 74,397 364,616 320,869 135,646 48,491 4,161 1,235,618 Business-type Activities (in thousands of dollars) Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Total Fiscal Year 2010 2011 2012 2013 2014 2015-2019 2020-2024 2025-2029 2030-2034 2035-2039 Total City of Scottsdale, Arizona Water and Sewer Revenue Bonds $ $ Principal Interest 3,115 $ 2,351 $ 3,220 2,199 3,380 2,056 3,115 1,891 3,240 1,738 16,100 6,661 16,175 2,180 48,345 $ 19,076 $ Municipal Property Corporation Bonds Total 5,466 5,419 5,436 5,006 4,978 22,761 18,355 67,421 $ $ Principal Interest 7,955 $ 12,299 $ 8,255 11,926 8,570 11,540 8,920 11,112 9,320 10,666 54,740 45,829 69,280 30,699 55,735 14,678 26,960 2,208 249,735 $ Capital Lease $ Principal Interest 46 $ 1 $ 7 - - $ 53 $ 150,957 $ Total 20,254 20,181 20,110 20,032 19,986 100,569 99,979 70,413 29,168 400,692 Total Total $ - 47 7 - 1 $ 54 $ Principal Interest 11,116 $ 14,651 $ 11,482 14,125 11,950 13,596 12,035 13,003 12,560 12,404 70,840 52,490 85,455 32,879 55,735 14,678 26,960 2,208 298,133 $ 170,034 $ Total 25,767 25,607 25,546 25,038 24,964 123,330 118,334 70,413 29,168 468,167 91 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents V. Other Information A. Risk Management The City is exposed to various risks of loss related to public, property, and aviation premises liability, selfinsured benefits and workers compensation. Public liability includes public officials’ errors and omissions, automobile and general liability. The City is self-insured for the first $2,000,000 of public liability, the first $100,000 of property coverage, the first $325,000 of health benefits claims for an individual in a fiscal year and the first $750,000 of workers compensation. Coverage in excess of these respective amounts is provided through the purchase of commercial insurance. As for claim expenditures, settlements for each of the past six fiscal years have not exceeded the City’s excess insurance coverage amounts for any claims. The City reports its self-insurance activity in its Self-Insurance Internal Service Fund. Claims liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. The claims liabilities amount recorded in the accompanying financial statements is based on reported pending claims; and an actuarial analysis and projection of the accrued liability amounts necessary to fund the claims as well as a corridor reserve for the self-insured benefits. At June 30, 2009, the general liability claims payable totaled $9,707,336 and the self-insured benefits claims payable totaled $1,822,802. The City began to administer all self-insured health and dental plans in January of 2004. Years Ended June 30 2009 (in thousands of dollars) 2008 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 10,519 22,031 (21,020) $ 14,347 15,865 (19,693) Claims Payable, June 30 $ 11,530 $ 10,519 B. Contingent Liabilities The City is a party to several lawsuits incidental to its normal operations. Management, with concurrence of the City Attorney, and outside legal counsel, is of the opinion that settlement of these lawsuits will not have a material effect on the financial position of the City. Therefore, no specific provision has been reflected in the accompanying basic financial statements for these matters. C. Commitments and Subsequent Events 92 Only July 11th, 2006, the City agreed to the sale of Planet Ranch, including all related water rights, farm infrastructure and equipment to Phelps Dodge Corporation. Planet Ranch is land that was purchased by the City in 1984 to secure future water supplies. It is located along the Bill Williams River in western Arizona, east of Parker. It consists of 8,300 acres of land and has 14,400 acre-feet of surface water rights to the Bill Williams River. When all conditions are satisfied and the sale of the property closes, the City is expected to receive a total value of $24.65 million, consisting of $12 million cash and water rights valued at $12.65 million. City of Scottsdale, Arizona Table of Contents Deposit of remaining cash balance into the City’s Water and Sewer Fund. • Arizona Department of Water Resources approval of sever and transfer and change of use of a portion of Planet Ranch water rights for habitat restoration. • Arizona Department of Water Resources approval of sever and transfer and change of use of a Horseshoe Dam water credits to the City of Scottsdale water service area. • Completion of assignment agreement for Horseshoe Dam water credits between the Corporation, the City and Salt River Project. • Creation of a conservation easement on Planet Ranch property. • Completion of Lower Colorado River Multi-Species Conservation Program habitat Development Agreement insuring use of Planet Ranch property for habitat restoration purposes. On November 19, 2002, the City Council approved a development agreement with John Lund relating to a new automotive complex at the southeast corner of Scottsdale Road and Loop 101 Freeway. The terms of this agreement require the City to reimburse Lund for up to $5.5 million in public benefits relating to the project including the acquisition of public lands, reimbursement of the City’s water and sewer development fees, and reimbursement of the City’s stormwater retention payment in lieu. The actual amount will be dependent upon actual costs. However, the reimbursement amount may not exceed $5.5 million even if actual costs are higher. The City has also agreed to pay interest costs on Lund’s cost of borrowing on the unpaid balance beginning at 8.5% in the first year and dropping by 0.5% per year. The reimbursement of the costs listed above, will be accomplished by paying Lund quarterly payments equal to 67% of the City’s General Fund sales tax receipts received from the new dealership in that quarter, for a maximum of 10 years. The first payment is not due until the calendar quarter after the calendar quarter in which the first certificate of occupancy is issued. Notes to Financial Statements • For the Fiscal Year Ended June 30, 2009 The major conditions for closure are: The City has a Service Agreement with the Scottsdale Cultural Council (Council) that provides that the Council will manage the arts and cultural affairs within the Scottsdale community for a ten-year period, automatically renewable for two five-year periods. In return, the City will pay service fees to the Council based on the Service Agreement between the City and the Council. Payments to Scottsdale Cultural Council amounted to $3,205,504 for the year ended June 30, 2009. Contractual payments due in fiscal year 2009/10 are budgeted for $4,084,209. The City has a Service Agreement with the Scottsdale Convention and Visitors’ Bureau (SCVB) that provides that SCVB will manage the tourism promotion within the Scottsdale community for a ten-year period. In return, the City will pay service fees to SCVB based on the Service Agreement with the City. Payments to SCVB amounted to $6,690,128 for the year ended June 30, 2009. Contractual payments due in fiscal year 2009/10 are budgeted for $5,535,040. The City has entered into several agreements whereby it will reimburse developers for construction costs of certain public infrastructure improvements. The funding source for the reimbursements will come from Water and Sewer development fees paid over the life of the development. Only amounts paid subsequent to January 13, 1997 are eligible for reimbursement. The City does not become liable under the agreements until the City has accepted the cost, a development fee has been paid and a water meter has been set. The City has limited its liability to the lesser of the cost accepted by the City or the development fees paid. The City’s maximum contingent liability at June 30, 2009, is $10,540,185. City of Scottsdale, Arizona 93 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents The City has entered into several agreements whereby it will reimburse developers a portion of the sales tax collected on their site for a time period up to a maximum dollar amount. The funding source for the reimbursements will come from sales tax collected on the site over the life of the agreement. The City does not become liable under the agreements until the developer has collected and remitted the tax to the City. The City’s probable contingent liability at June 30, 2009 is $59,258,666. D. Joint Venture The City participates with the cities of Phoenix, Glendale, Mesa, and Tempe in the multi-city Sub-Regional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) in order to govern the construction, operation, and maintenance of jointly used sewage treatment and transportation facilities. The facilities include the 91st Avenue Wastewater Treatment Plant, the Salt River Outfall Sewer, the Southern Avenue Interceptor, and related transportation facilities. The City of Phoenix acts as lead agency and is responsible for the planning, budgeting, construction, operation, and maintenance of the facilities. In addition, the City of Phoenix provides all management, personnel, and financing arrangements and accepts federal grants on behalf of the participants. The JEPA requires each city to pay for its share of the actual cash costs of operating and maintaining the facilities based on relative sewage flows and strengths. The City records its share of SROG’s cash operating expenses, and its equity in the joint venture in the City’s Water and Sewer Fund. For the year ended June 30, 2008, (the latest audited information available from SROG), the City’s net investment in SROG was $115,686,000. SROG’s net cash operating expenses for the year ended June 30, 2008, were $36,862,428, of which the City’s share was $3,591,692, or 9.7 percent. For the year ended June 30, 2009, the City paid $6,576,428 for SROG capital contributions, and $5,935,818 for SROG operating expenses, including adjustments to the operating and replacement reserves. The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 for the multi-city Sub-Regional Operating Group (the latest SROG CAFR available) may be obtained from the Arizona Municipal Water Users Association, 4041 N. Central Avenue, Suite 900, Phoenix, AZ 85012. E. Pollution Remediation In the proprietary funds financial statements, a long-term pollution remediation obligation is recognized for the remaining remediation period. In 1981, groundwater contamination was discovered when elevated levels of trichloroethylene (TCE) and other volatile organic chemicals were detected in two City wells. The City immediately shut down the affected wells. Following an investigation by the Environmental Protection Agency (EPA), the Indian Bend Wash Site was placed on the federal Superfund list in 1983. The Superfund law was enacted in order to provide funding and regulatory authority for the study and cleanup of contaminated sites. The EPA directs the cleanup of the North Indian Bend Wash (NIBW) Site that encompasses groundwater contamination plumes in Scottsdale. 94 City of Scottsdale, Arizona Table of Contents Improvements in technology and changes in laws or regulations did not impact the average annual cost. The liability is revalued annually. Fiscal year 2008/09 outlays for operating and monitoring the CGTF were $703,574. The total liability is expected to be fully recovered by the participating companies and therefore a corresponding Pollution Remediation Recoveries receivable has been accrued. Since the realizable recoveries are equal to the estimated liability, a restatement of net assets at the beginning of the year was not necessary. Notes to Financial Statements The measurement of the City’s pollution remediation obligation liability includes all remediation work that the City expects to perform; including work expected to be performed for the participating companies. In order to estimate the liability, five projected cash flows, based on the prior five years of historical costs and weighted equally, were used to calculate an average annual cost. This average cost was then projected over the remaining remediation period of 42 years; remediation began in 2001 and is estimated to be required for approximately 50 years. For the Fiscal Year Ended June 30, 2009 Following its investigation, the EPA identified three companies, Motorola, Inc., Siemens Corporation, and SmithKline Beecham Corporation, as the primary parties potentially responsible for causing the contamination and directed the companies to pay the costs associated with the cleanup. In 1991, EPA, the State of Arizona, the City, Salt River Project and these three participating companies entered into a Consent Decree in order to begin the containment and remediation of the contaminated groundwater plume and provide Scottsdale citizens with a potable water source. The companies agreed to pay for the construction and operation of the Central Groundwater Treatment Facility (CGTF), an air stripping plant that removes contaminants from the groundwater. As the CGTF operator and drinking water provider, the City ensures the water produced by the plant meets all federal and state water quality standards before water is delivered into the City’s distribution system. F. Related Organization The Industrial Development Authority (Authority) is a nonprofit corporation established by the City in 1984 to promote industry and develop trade by inducing manufacturing, industrial and commercial enterprises to locate and remain in Scottsdale. The Board of Directors of the Authority is appointed by the City Council; however, the City’s accountability for the authority does not extend beyond making the appointments. G. Retirement and Pension Plans All full-time employees of the City, the Mayor, and City Council are covered by one of three pension plans. All full-time City employees, except public safety personnel, participate in the Arizona State Retirement System, a multiple-employer cost sharing pension plan. All public safety personnel participate in the Public Safety Personnel Retirement System, which is an agent multiple-employer pension plan. The Mayor and Council participate in the Elected Officials’ Retirement Plan, a multiple-employer cost sharing pension plan. All three pension plans are administered by the State of Arizona. City of Scottsdale, Arizona 95 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Arizona State Retirement System Plan Description All full-time City employees, except public safety personnel, participate in the Arizona State Retirement System (System), a multiple-employer cost sharing defined benefit pension plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with Title 38, Chapter 5, of the Arizona Revised Statutes. The System provides for retirement, disability, health insurance premium benefits, and death and survivor benefits. The Arizona State Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to Arizona State Retirement System, P. O. Box 33910, Phoenix, AZ 85067-3910, or by calling 1-800-621-3778. Funding Policy The Arizona Revised Statutes (ARS) provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. Although the statutes prescribe the basis of making the actuarial calculation, the Arizona legislature is able to legislate a contribution rate other than the actuarially determined rate. The actuarially determined contribution rate for the years ended June 30, 2009, 2008, and 2007, were 9.45% (8.95% retirement and .50% long-term disability) 9.60% and 9.10%, respectively, for both employers and employees. The City’s contributions to the System for the years ending June 30, 2009, 2008, and 2007 were $10,860,822, $10,731,440, and $9,226,983 respectively, equal to the required contributions for each year. Public Safety Personnel Retirement System Plan Description All of the City’s public safety personnel (police officers and firefighters) participate in the Public Safety Personnel Retirement System (PSPRS), an agent multiple-employer defined benefit pension plan. PSPRS was established by Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes to provide pension benefits for public safety employees of certain state and local governments. The PSPRS is jointly administered by the fund manager and 229 local boards. PSPRS provides retirement benefits, as well as death and disability benefits. The Public Safety Personnel Retirement System of the State of Arizona issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Public Safety Personnel Retirement System, 3010 E. Camelback Rd, Suite 200, Phoenix, AZ 85016 or by calling (602) 255-5575. Funding Policy The System for both police and fire is funded through a member contribution of 7.65% of gross payroll, an employer contribution set by an actuarial valuation expressed as a percent of gross payroll, and a distribution of the net earnings of the Fund. The City’s contribution rate for police for the fiscal year ended June 30, 2009 was 20.46% of annual covered payroll. Contribution rates for police were 15.16% and 12.50% in 2008 and 2007, respectively. The City’s contribution rate for fire for the fiscal year ended June 30, 2009 was 9.41% of annual covered payroll. The City’s contribution rate for fire was 8.24% and 11.03% in 2008 and 2007, respectively. 96 City of Scottsdale, Arizona Table of Contents Three-Year Trend Information for PSPRS (Police) (in thousands of dollars) Fiscal Year Ending 2006 2007 2008 Annual Pension Cost (APC) $ 2,905 3,468 4,855 Percentage of APC Contributed 100% 100% 100% Net Pension Obligation - Three -Year Trend Information for PSPRS (Fire) (in thousands of dollars) Fiscal Year Ending 2006 2007 2008 Annual Pension Cost (APC) $ 1,601 1,870 1,497 Percentage of APC Contributed 100% 100% 100% Notes to Financial Statements For 2009, the City’s annual pension costs of $6,787,080 for police and $1,766,321 for fire were equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2008 actuarial valuation using the projected unit credit cost method. For the Fiscal Year Ended June 30, 2009 Annual Pension Cost Net Pension Obligation - Actuarial Methods and Assumptions The actuarial assumptions for both police and fire include (a) a rate of return on the investment of present and future assets of 8.50% per year compounded annually, (b) projected salary increases of 5.50% per year compounded annually, attributable to inflation and other across-the-board factors, and (c) additional projected salary increases ranging from 0% to 3.00% per year, attributable to seniority/merit. Included in (b) is an inflation component of 5.00%. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over time. PSPRS’ unfunded accrued liability is being amortized as a level percent of projected payroll over a closed period of 30 years, 28 years remaining as of June 30, 2008 (20 year open period for any excess of valuation assets over actuarial accrued liability). City of Scottsdale, Arizona 97 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Funded Status The funded status of each plan (Police and Fire) as of June 30, 2008, the most recent actuarial valuation dates, is as follows: Public Safety Personnel Retirement System (Police) Funded Status (in thousands of dollars) Actuarial Accrued Liability Retired members and survivors Former members with vested benefits Active members DROP members Total June 30, 2008 $ Valuation Assets* 67,289 798 73,257 17,801 159,145 111,692 Unfunded Actuarial Accrued Liability 47,453 Stabilization Reserve - Net Unfunded Actuarial Liability $ 47,453 * This amount excludes the $11,056 investment income reserve held for future pension increases pursuant to state statute. Public Safety Personnel Retirement System (Fire) Funded Status (in thousands of dollars) Actuarial Accrued Liability Retired members and survivors Former members with vested benefits Active members DROP members Total June 30, 2008 $ 12 12,401 12,413 Valuation Assets* 15,509 Unfunded Actuarial Accrued Liability (3,096) Stabilization Reserve 1,492 Net Unfunded Actuarial Liability $ (1,604) * This amount excludes the $2,522 investment income reserve held for future pension increases pursuant to state statute. 98 City of Scottsdale, Arizona Table of Contents Required Supplementary Information Public Safety Personnel Retirement System (Police) Schedule of Funding Progress (in thousands of dollars) Actuarial Valuation June 30 2006 2007 2008 (1) Actuarial Value of Assets 105,440 104,800 111,692 (2) Entry Age Actuarial Accrued Liability (AAL) 131,775 149,605 153,785 (3) Percent Funded (1)/(2) 80.0% 70.0% 72.6% (4) Unfunded AAL (2) - (1) 26,335 44,805 42,092 (6) Unfunded AAL as a (5) Percentage Annual of Covered Covered Payroll Payroll (4)/(5) 25,435 103.5% 28,232 158.7% 33,143 127.0% Notes to Financial Statements The following schedules of funding progress, presented as required supplemental information (RSI), present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits: For the Fiscal Year Ended June 30, 2009 Funding Progress Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress (in thousands of dollars) Actuarial Valuation June 30 2006 2007 2008 City of Scottsdale, Arizona (1) Actuarial Value of Assets 7,860 11,565 15,509 (2) Entry Age Actuarial Accrued Liability (AAL) 5,996 10,360 12,207 (3) Percent Funded (1)/(2) 131.1% 111.6% 127.1% (4) Unfunded AAL (2) - (1) (1,864) 1,205 (3,302) (6) Unfunded AAL as a (5) Percentage Annual of Covered Covered Payroll Payroll (4)/(5) 14,440 0.0% 17,327 7.0% 18,162 0.0% 99 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Elected Officials’ Retirement Plan Plan Description The City’s Mayor and Council participate in the Elected Officials’ Retirement Plan (EORP), a multipleemployer cost sharing defined benefit pension plan. The EORP was established and is administered by the State of Arizona to provide pension benefits for state and county elected officials, judges, and certain City-elected officials. The fund manager of the PSPRS is also the administrator for the EORP. EORP provides retirement benefits, as well as death and disability benefits. The Elected Officials’ Retirement Plan issues a publicly available financial report that includes financial statements and required supplementary information for EORP. The report may be obtained by writing to Elected Officials’ Retirement Plan, 3010 E. Camelback Road, Suite 200, Phoenix, Arizona 85016 or by calling (602) 255-5575. Funding Policy Covered employees are required by state statute to contribute an amount equal to 7.00% of gross salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amount is to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rates for fiscal years ended June 30, 2009, 2008, and 2007, were 28%, 20.21%, and 18.55%, respectively. The City’s contributions to EORP for the years ending June 30, 2009, 2008, and 2007, were $40,902, $29,103, and $26,711, respectively, equal to the required contributions for each year. H. Other Postemployment Benefits In addition to the pension benefits described in G (above) the City provides an option of post-retirement health care benefits, in accordance with Chapter 14 of the City Code. At retirement, employees with medical leave accumulated prior to September 6, 1976 are eligible for payment of medical leave at one hundred percent cash value at current rate of pay. Employees hired before July 1, 1982 can elect to receive cash equal to fifty percent of the first five hundred twenty hours of unused medical leave plus twenty-five percent of all hours in excess of five hundred twenty. The conversion rate is the employee’s average hourly base pay rate for the five years immediately preceding retirement. Any retiring employee with 300 or more hours of accumulated medical leave, who chooses to remain on the City medical plan, may elect to apply the value of the sick leave to the employee’s portion of the health care premiums, up until age 65. The value of the accumulated medical leave is calculated at the employee’s hourly rate of pay at the time of retirement. Effective July 1, 2009, the City funds the value of the medical leave balances in a Retiree Health Savings account for the participant immediately upon retirement. The taxable portion of the accounts for participants hired before July 1, 1982 will be retained by the City and used to pay participant health premiums. 100 City of Scottsdale, Arizona Table of Contents The cost of postemployment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In early implementing the requirements of GASB Statement No. 45 during the fiscal year ended June 30, 2007, the City recognized the cost of postemployment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the City’s future cash flows. Recognition of the liability accumulated from prior years will be amortized over 30 years, the first period began with the fiscal year ending June 30, 2007. Notes to Financial Statements I. Postemployment Benefits Other Than Pensions For the Fiscal Year Ended June 30, 2009 Twenty-four participants were added and twenty-six were removed during fiscal year 2008/09 for a total number of participants of 137 at June 30, 2009. The actual liability for retirees, as of June 30, 2009, for medical conversion was $3,120,026. The projected liability for active employees, as of June 30, 2009, was $11,813,641. Of this liability, $104,263 was considered current and reflected in the governmental fund financial statements. The remaining $11,709,377 was considered payable within one year or greater and was considered non-current and included in the proprietary and government-wide financial statements. Significant actuarial assumptions of the January 1, 2009 actuarial valuation include a) mortality rates based on the RP 2000 male and female rates, b) interest compounded 4.0 percent annually, c) salaries increase at a rate of 2% to 3% based on years of service, d) traditional unit credit method based on participant data as of January 1, 2009. Plan Description The City provides postemployment medical care (OPEB) for retired employees through a single-employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents though the City’s group health insurance plans, which covers both active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Employee Benefit Coordination Team and approved by the Scottsdale City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. Benefits Provided The City provides postemployment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Retirees can enroll in a City plan up to 60 days after they retire, after that their eligibility for this benefit ceases. Effective July 1, 2009 this benefit will only apply to employees hired before July 1, 2009 and for employees who retire before July 1, 2012. All medical care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Upon a retiree reaching 65 years of age, the retiree and related dependents are no longer eligible for City coverage. As of June 30, 2009, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Terminated Employees Eligible for Benefits, But Not Yet Enrolled Active Employees Total Participating Employers City of Scottsdale, Arizona 233 2,536 2,769 1 101 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents Funding Policy The plan premium rates are determined annually in collaboration with an outside employee benefits actuarial and consulting firm, and approved by the Scottsdale City Council. City code requires the City Council to authorize the contribution rates for employee health benefits. The retiree’s contribution is 100% of the actuarially determined blended premium rate. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. By providing retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. This implied subsidy exists because on average retiree health care costs are higher than active employee healthcare costs. By the City not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. For fiscal year ending June 30, 2009, retirees contributed $496,000 and the City contributed $191,000 (implied subsidy). Annual OPEB costs and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost for each plan is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and the related information for each plan are as follows at June 30, 2009 (dollar amounts in thousands): Annual Required Contribution $ 206 Interest on Net OPEB Obligation 53 Adjusted to Annual Required Contribution (51) Annual OPEB Cost 208 Contributions Made (191) Increase in Net OPEB Obligation 17 Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year $ 1,325 1,342 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows (dollar amounts in thousands): Fiscal Year Ended 2009 102 Annual OPEB Cost 208 Employer Contributions 191 Percentage of OPEB Cost Contributed 91.8% Net OPEB Obligation 1,342 City of Scottsdale, Arizona Table of Contents Actuarial Accrued Liability Actuarial Value of Plan Assets Unfunded actuarial accrued liability $ $ Funded ratio 3,664 3,664 0% Covered payroll $ Unfunded actuarial accrued liability as a percentage of covered payroll 52,675 7.0% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Notes to Financial Statements The funded status of the plan as of June 30, 2009 was as follows (dollar amounts in thousands): For the Fiscal Year Ended June 30, 2009 Funded Status and Funding Progress The following schedule of funding progress, presented as required supplementary information presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Required Supplementary Information City of Scottsdale, Arizona Other Postemployment Benefit Plan Schedule of Funding Progress (in thousands of dollars) Actuarial Valuation June 30 2007 2008 2009 (1) Actuarial Value of Assets - (2) Projected Unit Actuarial Accrued Liability (AAL) 5,440 6,822 3,664 (3) Percent Funded (1)/(2) 0.0% 0.0% 0.0% (4) Unfunded AAL (2) - (1) 5,440 6,822 3,664 City of Scottsdale, Arizona Other Postemployment Benefit Plan Schedule of Employer Contribution City of Scottsdale, Arizona (in thousands of dollars) (6) Unfunded AAL as a (5) Percentage Annual of Covered Covered Payroll Payroll (4)/(5) 134,280 4.1% 143,209 4.8% 52,675 7.0% 103 For the Fiscal Year Ended June 30, 2009 Notes to Financial Statements Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Other Postemployment Benefit Plan Other Postemployment Benefit Plan Schedule of Employer Contribution Schedule of Employer Contribution Actuarial Actuarial Valuation Valuation June 30 June 30 2007 2007 2008 2008 2009 2009 (in thousands of dollars) (in thousands of dollars) (2) (2) Annual (3) Annual (3) (1) Required Percent (1) Required Percent Employer Contribution Contributed Employer Contribution Contributed Contributions (ARC) (1)/(2) Contributions (ARC) (1)/(2) 96 703 13.7% 96 703 13.7% 163 880 18.5% 163 880 18.5% 191 208 91.8% 191 208 91.8% Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant method and assumptions used for this fiscal year valuation were as follows: Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method June 30, 2009 Projected Unit Credit Closed 27 N/A Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Healthcare Inflation Rate 4%* 2-3%+ 9% initial rate, 5% ultimate rate * Investment rate of return based on City's own investments. + Projected salary increases based on City's past salary increases. Medical Reimbursements The federal government may provide the City subsidies per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. Any current and future year subsidies are recorded as revenue in the year received and is not recognized as a reduction to the actuarial accrued liability. 104 City of Scottsdale, Arizona Table of Contents Nonmajor Governmental Funds SPECIAL REVENUE FUNDS Special Revenue Funds are established to finance particular activities and are created out of receipts of specific taxes or other earmarked revenue. Such funds are authorized by statutory or charter provisions to pay for certain activities with some form of continuing revenue. Highway User Fuel Tax Fund This fund receives and expends the City’s allocation of the Arizona Highway User Revenue tax and other transportation related revenue. The amount available to each city is allocated on a population basis, which is determined by the latest federal census. These monies must be used for street construction, reconstruction, maintenance, or transit. Community Development Block Grant Fund This fund receives and expends the City’s Community Development Block Grant revenues. The amount of the grant is awarded annually by the U.S. Department of Housing and Urban Development (HUD) upon application for funding by the City. Community Development Block Grant revenues may be used only for those projects approved in the grant budget and are subject to agency expenditure guidelines. Home Fund This fund receives and expends monies from the Maricopa County Home Consortium. Expenditures are made to provide affordable housing, expand the capacity of nonprofit housing providers, strengthen the ability of local governments to provide housing, and leverage private-sector participation in housing. Section 8 Fund This fund receives and expends the City’s Section 8 Housing revenues. Assistance contracts are awarded by the U.S. Department of Housing and Urban Development (HUD) upon application by the City, and covers a five year period. Budgets are approved annually by HUD. Section 8 revenues may be used only for assistance approved by HUD and are subject to agency expenditure guidelines. Preserve Privilege Tax Fund This fund receives a 0.35 percent Preservation Privilege (Sales) Tax revenue approved by the voters in 1995 (.2%) and 2004 (.15%). Revenues are transferred to Capital Projects Funds for land purchases and improvements in the McDowell Sonoran Preserve or are used for related debt service payments. Special Programs Fund This fund receives monies from a variety of sources. The monies are required to be expended for specific purposes related to the source of the revenue. DEBT SERVICE FUNDS These funds record the accumulation of resources for, and the payment of, long-term debt principal and interest not serviced by the proprietary funds. Municipal Property Corporation Fund This fund accounts for the principal and interest requirements of the City’s Municipal Property Corporation (MPC) bonds. Financing is provided primarily by transaction privilege tax. Grants Fund This fund receives and expends the City’s grant revenues. The amount of grants received is generally based upon application to granting agencies by the City and upon availability of funding by the grantors. Grant revenues may be used only for the stated purpose in the approved grant agreement and are subject to grantor expenditure guidelines. City of Scottsdale, Arizona 105 Table of Contents Special Assessments Fund This fund accounts for the principal and interest requirements of special assessment bonds. Financing is provided by special assessment levies against the benefited property holders. Preserve Privilege Tax Fund Scottsdale Mountain Community Facilities District Fund Accounts for the resources used to acquire and improve land within the McDowell Sonoran Preserve. Resources are provided by the proceeds from the sale of bonds and the .15% 2004approved Preserve Privilege Tax. Capital Projects Funds allow the City to compile project cost data and demonstrate that legal or contractual requirements regarding the use of the resources are fully satisfied. McDowell Mountain Community Facilities District Fund Community Facilities Districts Funds: Community Facilities Districts Funds: DC Ranch Community Facilities District Fund Via Linda Road Community Facilities District Fund Waterfront Commercial Community Facilities District Fund These funds account for the principal and interest of general obligation bonds issued by community facilities districts. Although these bonds are not obligations of the City, generally accepted accounting principles indicate that the bonds should be disclosed herein. McDowell Mountain Community Facilities District Fund DC Ranch Community Facilities District Fund Accounts for the proceeds issued by community facilities districts to acquire and improve public infrastructure in specified areas. Scottsdale Preserve Authority Fund This fund accounts for the principal and interest requirements of excise tax revenue bonds issued by the Scottsdale Preserve Authority. Financing is provided by a 0.2 percent Preservation Privilege (Sales) Tax. CAPITAL PROJECTS FUNDS Capital Projects Funds account for the resources used to acquire, construct and improve major capital assets, other than those financed by proprietary funds. Capital Projects Funds allow the City to compile project cost data and demonstrate that legal or contractual requirements regarding the use of the resources are fully satisfied. General Obligation Bond Fund Accounts for proceeds of the sale of 1989, 1992 and 2000 voter-approved general obligation bonds that are used for authorized capital improvements. 106 City of Scottsdale, Arizona Table of Contents Combining Balance Sheet Nonmajor Governmental Funds June 30, 2009 (in thousands of dollars) Special Revenue Funds ASSETS Cash and Investments Cash with Fiscal Agent Receivables Interest Privilege Tax Hotel/Motel Tax Property Tax Highway User Tax Intergovernmental Grants Special Assessments Miscellaneous Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Intergovernmental Other Guaranty and Other Deposits Other Total Liabilities $ $ $ Fund Balances Reserved for Debt Service Unreserved Total Fund Balances Total Liabilities and Fund Balances City of Scottsdale, Arizona $ 31,967 278 3,434 293 1,272 5,134 379 233 42,990 2,674 1,116 40 - Debt Service Funds $ $ $ 10,743 14,117 218 18,327 2,542 45,947 16 5,960 5,560 Total Nonmajor Governmental Funds Capital Projects Funds $ $ $ 27,323 197 199 27,719 616 4 - $ $ $ 70,033 14,314 477 3,434 293 218 1,272 23,461 379 2,542 233 116,656 3,306 1,120 40 5,960 5,560 7,896 332 222 12,280 143 2,542 18,327 4 32,552 620 143 2,542 26,223 332 222 4 45,452 30,710 13,395 - 27,099 13,395 57,809 30,710 13,395 27,099 71,204 42,990 $ 45,947 $ 27,719 $ 116,656 107 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Highway User Tax Local Transportation Assistance Fund Charges for Current Services Recreation Fees Fines, Fees and Forfeitures Court Fines Court Enhancement Police Fees Special Assessments Property Rental Interest Earnings Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Reimbursements From Outside Sources Indirect Costs Other Total Revenues Special Revenue Funds $ 45,262 6,062 14,083 1,015 Debt Service Funds $ Total Nonmajor Governmental Funds Capital Projects Funds 3,669 - $ - $ 3,669 45,262 6,062 14,083 1,015 1,130 - - 1,130 4 967 625 288 1,053 821 165 38 2,283 4 967 625 821 453 3,374 7,147 593 1,690 1,518 258 879 344 82,918 964 2 5,659 127 2,410 7,147 720 2,654 1,518 260 879 344 90,987 (continued) 108 City of Scottsdale, Arizona Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) Special Revenue Funds EXPENDITURES Current General Government Police Transportation Community Services The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Debt Service Principal Interest and Fiscal Charges Capital Improvements Total Expenditures Debt Service Funds Total Nonmajor Governmental Funds Capital Projects Funds 421 1,387 15,456 10,302 152 80 17,121 11 18 6,909 21 89 113 - - 534 1,387 15,456 10,302 152 80 17,121 11 18 6,909 21 89 750 202 52,919 6,405 11,975 18,493 1 11,348 11,349 7,155 12,178 11,348 82,761 Excess (Deficiency) of Revenues Over Expenditures 29,999 (12,834) (8,939) 8,226 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 9,165 (43,633) (34,468) 13,149 13,149 11,030 (60,041) (49,011) 33,344 (103,674) (70,330) (4,469) 315 (57,950) (62,104) 85,049 133,308 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending City of Scottsdale, Arizona 35,179 $ 30,710 13,080 $ 13,395 $ 27,099 $ 71,204 109 Table of Contents 110 Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2009 (in thousands of dollars) Highway User Fuel Tax ASSETS Cash and Investments Receivables Interest Privilege Tax Hotel/Motel Tax Highway User Tax Intergovernmental Grants Miscellaneous Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Deferred Revenue Intergovernmental Other Guaranty and Other Deposits Total Liabilities $ 3,135 $ 1,195 1,272 5,602 $ Fund Balances Unreserved Total Fund Balances Total Liabilities and Fund Balances $ 1,983 1,017 - Community Development Block Grant HOME $ - $ 201 201 $ 166 35 Grants $ - $ 141 141 $ 136 5 Section 8 $ 425 $ 15 37 126 603 $ Preserve Privilege Tax 17 14 - $ 546 $ 546 $ 4 17 - Special Programs $ 14,681 $ 204 2,239 17,124 $ - $ 13,180 $ 74 293 5,119 107 18,773 $ 368 68 - Total $ 31,967 $ 278 3,434 293 1,272 5,134 379 233 42,990 $ 2,674 1,116 40 135 3,135 201 141 329 360 21 - 7,896 3 87 8,422 7,896 332 222 12,280 2,467 2,467 - - 243 243 525 525 17,124 17,124 10,351 10,351 30,710 30,710 5,602 $ 201 $ 141 $ 603 $ 546 $ 17,124 $ 18,773 $ 42,990 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) Highway User Fuel Tax REVENUES Taxes - Local Transaction Privilege Transient Occupancy Highway User Tax Local Transportation Assistance Fund Charges for Current Services Recreation Fees Fines, Fees and Forfeitures Court Fines Court Enhancement Fee Police Fees Property Rental Interest Earnings Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Reimbursements From Outside Sources Indirect Costs Other Total Revenues $ EXPENDITURES Current General Government Police Transportation Community Services The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 16,141 14,083 1,015 $ Net Change in Fund Balances 111 $ HOME - $ Grants - $ Preserve Privilege Tax Section 8 - $ - $ Special Programs 29,121 - $ Total 6,062 - $ 45,262 6,062 14,083 1,015 - - - - - - 1,130 1,130 - - - - 2 863 4 967 625 288 188 4 967 625 288 1,053 432 377 7 879 248 33,182 990 990 172 172 229 161 205 949 239 1,783 5,756 5 21 5,784 29,984 1,108 569 7 75 11,023 7,147 593 1,690 1,518 258 879 344 82,918 15,456 17,121 - 952 - 180 - 3 446 966 80 11 45 1 - 6,236 - 2 - 416 941 1,968 152 18 6,864 20 89 421 1,387 15,456 10,302 152 80 17,121 11 18 6,909 21 89 32,577 952 180 1,552 6,236 750 202 954 10,468 750 202 52,919 605 38 29,030 555 29,999 8,857 (8,295) 562 Fund Balances - Beginning Fund Balances - Ending Community Development Block Grant (8) - - 1,167 38 (8) 1,300 (38) 8 2,467 $ - 231 $ - (452) 5 5 - 236 (452) 7 $ 243 (34,049) (34,049) (5,019) 977 $ 525 303 (1,289) (986) (431) 22,143 $ 17,124 9,165 (43,633) (34,468) (4,469) 10,782 $ 10,351 35,179 $ 30,710 Table of Contents 112 Highway User Fuel Tax - Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Intergovernmental State Grants Miscellaneous Reimbursement From Outside Sources Indirect Costs Other Total Revenues $ EXPENDITURES Current Transportation Municipal Services Total Expenditures Excess (Deficiency) of Revenues Over Expenditures $ 16,474 $ (333) 16,141 $ (222) (60) - 14,083 1,015 643 (54) 305 180 38,564 432 305 836 121 32,959 432 377 7 879 248 33,575 (393) 432 377 7 879 248 33,182 72 7 43 127 616 15,805 19,600 35,405 14,878 18,158 33,036 15,436 17,109 32,545 20 12 32 15,456 17,121 32,577 (558) 1,049 491 1,030 (425) (77) 10,139 (10,103) 36 (81) 8,857 (8,295) 562 (41) (1,686) $ (1,727) City of Scottsdale, Arizona The City budgets revenues on the cash basis, rather than on the modified Change in Receivables (425) (1,560) $ 32 $ (393) The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Compensated Absences 32 Net Decrease in Fund Balance - Budget to GAAP (425) The beginning balance for Actual Amounts Budgetary Basis was adjusted to the fiscal year ending fund balance amounts for fiscal year 2007/08 in the City of Scottsdale Adopted Fiscal Year 2009/10 Budget : $ 2,860 2,435 605 - 1,592 Explanation of Differences: Fund Balance - Beginning Fund Balance - Ending $ 14,143 1,015 (2,671) $ $ Actual Amounts GAAP Basis 13,500 1,069 2,590 Fund Balance - Beginning 16,696 Budget to GAAP Differences 16,900 1,088 9,534 (10,103) (569) Net Change in Fund Balance Fund Balance - Ending 20,091 3,159 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and Uses Actual Amounts Budgetary Basis Final Variance Between Final Budget and Actual Amounts Budgetary Basis 2,860 $ 2,435 $ 1,107 8,857 (8,295) 562 (1,282) 1,808 526 1,167 1,633 1,300 126 2,467 $ 1,759 Table of Contents City of Scottsdale, Arizona Preserve Privilege Tax - Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Transaction Privilege Interest Earnings Total Revenues $ EXPENDITURES Current General Government Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 35,573 1,120 36,693 $ 30,389 1,120 31,509 $ 29,596 1,100 30,696 $ Actual Amounts GAAP Basis (475) (237) (712) $ 29,121 863 29,984 $ (793) (20) (813) 2 - 2 - 2 (2) 750 202 954 750 202 952 750 202 954 - 750 202 954 (2) 35,739 30,557 29,742 29,030 (815) (23,282) (23,282) (23,282) (23,282) (34,049) (34,049) 12,457 7,275 (4,307) 18,382 19,045 19,045 30,839 $ 26,320 $ 14,738 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Change in Fair Value of Investments $ (56) The City budgets revenues on the cash basis, rather than on the modified accrual basis: Change in Receivables (656) Net Decrease in Fund Balance - Budget to GAAP (712) The beginning balance for Actual Amounts Budgetary Basis was adjusted to the fiscal year ending fund balance amounts for fiscal year 2007/08 in the City of Scottsdale Adopted Fiscal Year 2009/10 Budget : 113 Fund Balance - Beginning Fund Balance - Ending Budget to GAAP Differences Variance Between Final Budget and Actual Amounts Budgetary Basis $ 3,098 2,386 (712) (712) 3,098 $ 2,386 (34,049) (34,049) (10,767) (10,767) (5,019) (11,582) 22,143 $ 17,124 $ (11,582) Table of Contents 114 Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2009 (in thousands of dollars) Municipal Property Corporation ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Property Tax Intergovernmental Special Assessments Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Matured Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Intergovernmental Special Assessments Other Total Liabilities $ $ $ Fund Balances Reserved for Debt Service Total Fund Balances Total Liabilities and Fund Balances $ Special Assessments Scottsdale Mountain CFD McDowell Mountain CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Scottsdale Preserve Authority Total 9,664 $ 3,593 758 $ 68 - $ 768 - $ 1,659 - $ 1,709 - $ 733 321 $ 577 5,010 18,327 31,584 $ 2,542 3,368 $ 16 784 $ 29 1,688 $ 147 1,856 $ 11 744 $ 15 913 $ 5,010 - $ 3,078 515 11 $ 68 - 1 $ 79 335 1 $ 352 730 1 $ 446 575 1 $ 76 120 1 $ 111 25 1,750 3,260 $ $ $ 10,743 14,117 218 18,327 2,542 45,947 16 5,960 5,560 18,327 21,920 2,542 4 2,625 6 421 17 1,100 105 1,127 7 204 8 145 5,010 143 18,327 2,542 4 32,552 9,664 9,664 743 743 363 363 588 588 729 729 540 540 768 768 - 13,395 13,395 744 $ 913 $ 31,584 $ 3,368 $ 784 $ 1,688 $ 1,856 $ 5,010 $ 45,947 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) Municipal Property Corporation REVENUES Taxes - Local Property Special Assessments Property Rental Interest Earnings Intergovernmental Miscellaneous Reimbursements from Outside Sources Total Revenues $ EXPENDITURES Current General Government Debt Service Principal Interest and Fiscal Charges Total Expenditures 165 - 418 5 $ 1,272 5 $ 1,493 6 $ 185 17 $ Scottsdale Preserve Authority 301 4 $ Total 1 $ 3,669 821 165 38 1,277 1 1,500 1 203 305 1 964 2 5,659 - 1 11 10 70 11 10 - 113 515 6,167 6,682 845 158 1,004 335 158 504 730 703 1,443 575 907 1,552 120 155 286 25 225 260 3,260 3,502 6,762 6,405 11,975 18,493 (83) 45 (6,761) (12,834) - 6,761 6,761 13,149 13,149 6,388 6,388 (183) 8,829 9,664 (81) - 835 $ $ Waterfront Commercial CFD 423 OTHER FINANCING SOURCES (USES) Transfers In Total Other Financing Sources and (Uses) Fund Balances - Beginning 821 - Via Linda Road CFD DC Ranch CFD 821 (5,553) Fund Balances - Ending $ McDowell Mountain CFD 964 1,129 Excess (Deficiency) of Revenues Over Expenditures Net change in Fund Balances Scottsdale Mountain CFD Special Assessments $ (166) - (52) - - - (183) (81) (166) (52) (83) 45 - 315 926 444 754 781 623 723 - 13,080 743 $ 363 $ 588 $ 729 $ 540 $ 768 $ - $ 13,395 115 Table of Contents 116 General Obligation Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Property Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Final 35,796 35,796 $ 35,796 35,796 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 34,887 34,887 22,990 26,885 49,875 (15,039) (14,088) (14,988) 15,040 15,040 15,040 15,040 16,264 16,264 - 16,264 16,264 1,224 1,224 1 952 1,276 45 1,321 324 7,733 9,088 9,088 432 9,520 - $ 10,040 10,364 The City budgets for certain revenues on the cash basis, rather than on the modified accrual basis. Change in Receivables $ 45 Net Increase in Fund Balance - Budget to GAAP 45 Explanation of Differences: City of Scottsdale, Arizona The beginning balance for Actual Amounts Budgetary Basis was adjusted to the fiscal year ending fund balance amounts for fiscal year 2007/08 in the City of Scottsdale Adopted Fiscal Year 2009/10 Budget : Fund Balance - Beginning 432 $ 477 22,990 26,885 49,875 (909) (909) 22,990 26,894 49,884 7,734 - 34,932 34,932 22,990 27,845 50,835 $ Fund Balance - Ending 45 45 45 $ 477 9 9 (14,943) $ 10,841 (900) $ 324 Table of Contents City of Scottsdale, Arizona Municipal Property Corporation Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Property Rental Intergovernmental Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 140 292 432 Actual Amounts Budgetary Basis Final $ 140 292 432 $ Budget to GAAP Differences 165 964 1,129 $ - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 165 964 1,129 25 672 697 677 6,300 6,977 677 6,300 6,977 515 6,167 6,682 - 515 6,167 6,682 162 133 295 (6,545) (6,545) (5,553) - (5,553) 992 6,685 6,685 6,685 6,685 6,388 6,388 - 6,388 6,388 (297) (297) 140 140 835 - 835 7,588 8,832 8,829 - 8,829 7,728 $ 8,972 $ 9,664 $ - $ 9,664 695 (3) $ 692 117 Table of Contents 118 Special Assessments Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Special Assessments Total Revenues $ EXPENDITURES Current: General Government Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 1,005 1,005 $ 1,005 1,005 $ 822 822 $ (1) (1) Actual Amounts GAAP Basis $ $ 821 821 (183) (183) - - 1 - 1 (1) 850 155 1,005 850 155 1,005 845 158 1,004 - 845 158 1,004 5 (3) 1 - - 1,092 941 1,092 $ 941 $ (182) (1) (183) 941 (15) 926 759 Explanation of Differences: City of Scottsdale, Arizona The City budgets for certain revenues on the cash basis, rather than on the modified accrual basis. Change in Receivables $ (1) Net Decrease in Fund Balance - Budget to GAAP (1) The beginning balance for Actual Amounts Budgetary Basis was adjusted to the fiscal year ending fund balance amounts for fiscal year 2007/08 in the City of Scottsdale Adopted Fiscal Year 2009/10 Budget : Fund Balance - Beginning Fund Balance - Ending Budget to GAAP Differences Variance Between Final Budget and Actual Amounts Budgetary Basis (15) $ (16) $ (16) $ 743 (182) $ (182) Table of Contents City of Scottsdale, Arizona Scottsdale Preserve Authority Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2009 (in thousands of dollars) Budgeted Amounts Original REVENUES Interest Earnings Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Final - $ - Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 1 1 - 1 1 1 1 3,260 3,508 6,768 3,260 3,508 6,768 3,260 3,502 6,762 - 3,260 3,502 6,762 6 6 (6,768) (6,768) (6,761) - (6,761) 7 6,768 6,768 6,768 6,768 6,761 6,761 - 6,761 6,761 (7) (7) - - - - - - - - - - - - - $ - $ - $ - $ - $ - 119 Table of Contents 120 Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2009 (in thousands of dollars) General Obligation Bond ASSETS Cash and Investments Cash with Fiscal Agent Receivables Interest Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Total Liabilities $ $ $ Fund Balances Unreserved Total Fund Balances Total Liabilities and Fund Balances 26,346 199 26,545 - $ $ $ 26,545 26,545 $ McDowell Mountain CFD Preserve Privilege Tax 26,545 977 977 616 4 620 $ $ $ 357 357 $ 977 DC Ranch CFD 110 110 - $ $ $ 110 110 $ 110 Total 87 87 - $ $ $ 87 87 $ 87 27,323 197 199 27,719 616 4 620 27,099 27,099 $ 27,719 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Governmental Funds For the Year Ended June 30, 2009 (in thousands of dollars) General Obligation Bond REVENUES Interest Earnings Intergovernmental State Grants Total Revenues $ McDowell Mountain CFD Preserve Privilege Tax 2,198 $ 84 $ DC Ranch CFD 1 $ Total - $ 2,283 2,198 127 211 1 - 127 2,410 - 11,348 11,348 1 1 - 1 11,348 11,349 Excess (Deficiency) of Revenues Over Expenditures 2,198 (11,137) - - (8,939) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 6 (60,041) (60,035) 11,024 11,024 - - 11,030 (60,041) (49,011) - - (57,950) 110 87 EXPENDITURES Debt Service Interest and Fiscal Charges Capital Improvements Total Expenditures Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ (57,837) (113) 84,382 470 26,545 $ 357 $ 110 $ 87 85,049 $ 27,099 121 Table of Contents INTERNAL SERVICE FUNDS Internal Services Funds are established to finance and account for services and/or commodities furnished by one department or unit to other departments or units within the City. Fleet Management Fund The Fleet Management Fund is responsible for the maintenance and operations of various automobiles and other equipment of the City. Revenue to this fund is derived from charges to user programs. Self-Insurance Fund The Self-Insurance Fund is responsible for the administration of the City’s self-insurance program. Revenue to this fund is derived from charges to user programs and employee contributions for health and dental coverage. This fund provides coverage of unemployment, self-insured benefits, workmen’s compensation, property, and liability claims. 122 City of Scottsdale, Arizona Table of Contents Combining Statement of Net Assets Internal Service Funds June 30, 2009 (in thousands of dollars) Fleet Management SelfInsurance Total ASSETS Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Interest Miscellaneous Prepaid Expenses Supplies Inventory $ Total Current Assets Noncurrent Assets Capital Assets Buildings and Improvements Motor Vehicles Machinery and Equipment Construction in Progress Less Accumulated Depreciation 16,589 $ 22,048 $ 38,637 94 748 574 126 6 - 220 6 748 574 18,005 22,180 40,185 1,847 66,838 768 3,901 (44,460) - 1,847 66,838 768 3,901 (44,460) Total Capital Assets (net of accumulated depreciation) 28,894 - 28,894 Total Noncurrent Assets 28,894 - 28,894 46,899 22,180 69,079 1,523 174 165 - 262 180 36 11,530 1,785 354 201 11,530 1,862 12,008 13,870 191 38 229 26 8 34 217 46 263 2,091 12,042 14,133 28,894 15,914 10,138 28,894 26,052 Total Assets LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Due Within One Year Claims Payable Total Current Liabilities Noncurrent Liabilities Accrued Compensated Absences - Due in More Than One Year Other Payables - Due in More Than One Year Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Unrestricted Total Net Assets City of Scottsdale, Arizona $ 44,808 $ 10,138 $ 54,946 123 Table of Contents Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2009 (in thousands of dollars) Fleet Management Operating Revenues Charges for Sales and Services Billings To User Programs Self Insurance Contributions-Employee State Contributions Other $ Total Operating Revenues $ Total 26,030 4,669 646 1,115 $ 44,329 4,669 646 1,305 18,489 32,460 50,949 11,124 5,451 3,555 6,109 22,031 1,829 - 11,124 3,555 6,109 22,031 1,829 5,451 Total Operating Expenses 16,575 33,524 50,099 Operating Income (Loss) 1,914 (1,064) Operating Expenses Costs of Sales and Services Fleet Management Operations Self-Insurance Administration Self-Insurance Claims Self-Insurance Benefits Insurance and Bond Premiums Depreciation Non-Operating Revenues Property Tax Investment Income Loss on Sale of Capital Assets Total Non-Operating Revenues Income Before Contributions and Transfers 850 429 (43) 23 733 - 23 1,162 (43) 386 756 1,142 (308) 1,992 2,300 Capital Contributions Transfers Out 2,021 (23) (5,007) 2,021 (5,030) Change in Net Assets 4,298 (5,315) (1,017) Total Net Assets - Beginning 40,510 15,453 55,963 Total Net Assets - Ending 124 18,299 190 SelfInsurance $ 44,808 $ 10,138 $ 54,946 City of Scottsdale, Arizona Table of Contents Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2009 (in thousands of dollars) Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating Fleet Management SelfInsurance $ $ Net Cash Provided (Used) by Operating Activities 7,305 Cash Flows from Non-Capital Financing Activities Property Tax Transfers Out Net Cash Used by Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities Acquisition and Construction of Property and Equipment Sale of Capital Assets Net Cash Used for Capital and Related Financing Activities Cash Flows from Investing Activities Income Received on Investments Cash and Cash Equivalents at Beginning of Year Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash Provided by (Used for) Operating Activities Depreciation Changes in Assets and Liabilities Sources (Uses) of Cash Miscellaneous Receivables Prepaid Expenses Supplies Inventory Accounts Payable Accrued Payroll and Benefits Deferred Revenue Other Payables Claims Payable Supplemental Disclosure of Noncash Financing Activities Additions to Property, Plant, and Equipment Contributions from Other Government Units Total Non-Cash Financing Activities City of Scottsdale, Arizona $ 49,642 (39,050) (4,607) 1,305 7,290 (23) 23 (5,007) 23 (5,030) (23) (4,984) (5,007) (6,093) 168 - (6,093) 168 (5,925) - (5,925) 844 1,291 1,804 (4,155) (2,351) 14,785 26,203 40,988 $ 16,589 $ 22,048 $ 38,637 $ 1,914 $ (1,064) $ 850 5,451 - (748) 218 349 103 18 - Total Adjustments Net Cash Provided (Used) by Operating Activities 31,343 (31,442) (1,031) 1,115 (15) 447 Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at End of Year 18,299 (7,608) (3,576) 190 Total 5,391 $ 7,305 $ $ $ 2,021 2,021 $ $ 5,451 2 (100) 136 (4) 4 1,011 2 (748) 218 249 239 (4) 22 1,011 1,049 6,440 (15) - $ 7,290 $ $ 2,021 2,021 125 Table of Contents FIDUCIARY FUNDS Private Purpose Trust Funds and Agency Funds administer resources received and held by the City as the trustee or as the agent for others. Use of these funds facilitates the discharge responsibilities placed upon the governmental unit by virtue of law or other similar authority. Handicap Scholarship Private Purpose Trust Fund This fund accounts for monies received and expended for college scholarships for individuals with handicaps. Family Self-Sufficiency Agency Fund This fund accounts for monies in escrow for Section 8 Housing Program participants. Retainage Escrow Agency Fund This fund accounts for monies held in escrow for construction contract retainage payable. 126 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2009 (in thousands of dollars) Private Purpose Trust Funds Handicap Scholarship Private Purpose Trust Fund ASSETS Cash and Cash Equivalents $ Total Assets LIABILITIES Accounts Payable Designated Escrow Payable Total Liabilities NET ASSETS Held in Trust for Other Purposes $ 3 Agency Funds Family Self-Sufficiency Agency Fund Total $ 3 $ Retainage Escrow Agency Fund 127 $ Total 9,340 $ 9,467 3 3 127 9,340 9,467 - - 127 - 9,340 127 9,340 - - 127 9,340 9,467 3 $ 3 $ - $ - $ - 127 Table of Contents 128 Combining Statement of Changes in Assets and Liabilities Fiduciary Funds For the Year Ended June 30, 2009 (in thousands of dollars) Family Self-Sufficiency Balance July 1, 2008 Additions Retainage Escrow Balance June 30, 2009 Deductions Balance July 1, 2008 Additions Balance June 30, 2009 Deductions ASSETS Cash and Cash Equivalents Total Assets $ 112 $ 75 $ 60 $ 127 $ 10,136 $ 9,340 $ 10,136 $ 9,340 $ 112 $ 75 $ 60 $ 127 $ 10,136 $ 9,340 $ 10,136 $ 9,340 $ 112 - $ 69 - $ 54 - $ 127 - $ 10,136 $ 9,340 $ 10,136 $ 9,340 $ 112 $ 69 $ 54 $ 127 $ 10,136 $ 9,340 $ 10,136 $ 9,340 LIABILITIES Accounts Payable Designated Escrow Payable Total Liabilities City of Scottsdale, Arizona Table of Contents OTHER SUPPLEMENTARY INFORMATION Debt Requirements The supplemental debt service schedule provides a comprehensive overview of the City’s total debt. The Schedule of Changes in Long-Term Debt for the current fiscal year presents the City’s debt by debt type without regard to fund classification. Debt issued by community facilities districts is included for full disclosure although such debt is not legally an obligation of the City. City of Scottsdale, Arizona 129 Table of Contents 130 Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2009 (in thousands of dollars) July 1, 2008 GENERAL OBLIGATION BONDS Governmental Fund Type: 1993 Refunding 1997 GO Refunding 1989 Series I (1998) 1999A GO / Pima Road 1999 GO Preservation 2001 GO Preservation 2001 GO Refunding Various Purpose 2001 GO Refunding Preservation 2002 GO Various Purpose 2002 GO Preservation 2002 GO Refunding Various Purpose 2002 GO Refunding Preservation 2003 GO Refunding Various Purpose 2004 GO Various Purpose 2004 GO Preservation 2005 GO Refunding Various Purpose 2005 GO Refunding Preservation 2005A GO Various Purpose 2005B GO Preservation 2008A GO Various Purpose 2008B GO Preservation 2001 GO Refunding Series Deferred Issuance Premium 2001 GO Series Deferred Amount on Refunding 2002 GO Refunding Series Deferred Issuance Premium 2002 GO Series Deferred Amount on Refunding 2003 GO Series Deferred Amount on Refunding 2003 GO Refunding Series Deferred Issuance Premium 2004 GO Series Deferred Issuance Premium 2005 GO Series Deferred Amount on Refunding 2005 GO Refunding Series Deferred Issuance Premium 2005A GO Series Deferred Issuance Premium 2005B GO Series Deferred Issuance Premium 2008A GO Series Deferred Issuance Premium 2008B GO Series Deferred Issuance Premium Total General Obligation Bonds City of Scottsdale, Arizona REVENUE BONDS Business Type - Revenue Bonds 1996 Utility Revenue Series Refunding 1989 Utility Series D (1998) 1989 Utility Series E (1998) 2004 Utility Revenue Series Refunding 2008 Utility Revenue Series Refunding 1996 Revenue Series Deferred Amount on Refunding 2004 Revenue Series Deferred Amount on Refunding 2004 Refunding Series Deferred Issuance Premium 2008 Revenue Series Deferred Amount on Refunding 2008 Refunding Series Deferred Issuance Premium Total Revenue Bonds $ Issued Retired $ 2,550 $ 12,685 4,445 1,200 1,925 1,200 7,765 28,715 4,355 5,755 43,585 8,100 11,710 48,000 59,900 8,540 66,090 119,500 18,425 100,000 20,000 720 (1,177) 361 (369) (76) 106 822 (3,108) 2,386 2,092 334 2,219 139 578,894 $ - $ 17,670 34,335 (630) 695 (719) 4,202 55,553 $ - $ $ 2,550 3,285 1,200 1,925 1,200 925 2,345 3,695 1,690 3,000 850 325 22,990 $ 2,785 875 3,660 Refunding Bonds Issued $ $ Bonds Defeased - $ $ - $ - $ *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). Accretions, Amortizations & Contract Adjustments - $ June 30, 2009 Governmental Activities $ - $ (115) 187 (361) 369 58 (80) (51) 278 (213) (136) (22) (112) (5) (203) $ - $ 9,400 4,445 6,840 28,715 2,010 5,755 39,890 8,100 10,020 48,000 59,900 8,540 66,090 116,500 17,575 100,000 19,675 605 (990) (18) 26 771 (2,830) 2,173 1,956 312 2,107 134 555,701 $ $ 248 (273) 49 (288) (264) $ 14,885 33,460 (382) 422 (670) 3,914 51,629 $ Business-type Activities - $ 9,400 4,445 6,840 28,715 2,010 5,755 39,890 8,100 10,020 48,000 59,900 8,540 66,090 116,500 17,575 100,000 19,675 605 (990) (18) 26 771 (2,830) 2,173 1,956 312 2,107 134 555,701 $ - $ - 14,885 33,460 (382) 422 (670) 3,914 51,629 Final Payment Date 07/01/09 07/01/14 07/01/18 07/01/09 07/01/09 07/01/09 07/01/22 07/01/22 07/01/24 07/01/24 07/01/19 07/01/19 07/01/13 07/01/25 07/01/25 07/01/24 07/01/24 07/01/24 07/01/24 07/01/28 07/01/34 07/01/14 07/01/22 07/01/23 07/01/16 07/01/23 Table of Contents City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* (continued here and on following page) For the Year Ended June 30, 2009 (in thousands of dollars) MUNICIPAL PROPERTY CORPORATION BONDS Governmental Fund Type: 2004A MPC 2005 MPC 2005D MPC 2006 MPC Refunding 2006A MPC 2006B MPC 2004A Series Deferred Issuance Premium 2005 Series Deferred Issuance Premium 2005D Series Deferred Issuance Premium 2006 Series Deferred Amount on Refunding 2006 Refunding Series Deferred Issuance Premium 2006A Series Deferred Issuance Premium 2006B Series Deferred Issuance Premium Subtotal July 1, 2008 Business Type - Municipal Property Corporation Bonds 2004 Water/Sewer 2005E Water/Sewer 2006 MPC Refunding 2008A Water/Sewer 2004 Water/Sewer Deferred Issuance Premium 2005E Water Deferred Issuance Premium 2006 Refunding Series Deferred Issuance Premium 2006 Series Deferred Amount on Refunding 2008A Series Deferred Issuance Premium Subtotal Total Municipal Property Corporation Bonds SCOTTSDALE PRESERVE AUTHORITY BONDS Governmental Fund Type: 1998 Excise Tax Revenue 2001 Excise Tax Refunding 2004 Excise Tax Refunding 2001 Excise Tax Revenue Deferred Issuance Premium 2001 Excise Tax Revenue Deferred Amount on Refunding 2004 Excise Tax Revenue Deferred Issuance Premium 2004 Excise Tax Revenue Deferred Amount on Refunding Total Scottsdale Preserve Authority Bonds SPECIAL ASSESSMENT BONDS Governmental Fund Type: Pima Acres Paving & Drainage Series 105 Bell Road II Series 106 Total Special Assessment Bonds CERTIFICATES OF PARTICIPATION Governmental Fund Type: 2005 Certificates of Participation Total Certificates of Participation $ $ $ $ Issued Retired Refunding Bonds Issued Accretions, Amortizations & Contract Adjustments Bonds Defeased June 30, 2009 9,785 21,762 20,150 55,450 9,360 32,500 190 311 1,026 (2,392) 6,424 111 202 154,879 - 40 225 250 515 - - 724 (17) (24) (38) 89 (247) (5) (9) 473 9,785 22,446 19,925 55,450 9,110 32,500 173 287 988 (2,303) 6,177 106 193 154,837 19,500 20,905 110,510 105,875 1,078 633 11,721 (5,090) 4,670 269,802 - 2,980 2,275 1,800 - - - (180) (79) (451) 550 (196) (356) 16,520 18,630 110,510 104,075 898 554 11,270 (4,540) 4,474 262,391 424,681 7,055 $ - $ 7,570 $ - 36,725 $ 15,070 22,700 86 (518) 1,661 (1,566) 74,158 $ - $ 780 2,480 3,260 $ - $ - $ - $ - $ $ - $ $ - $ 85 3,750 3,835 $ $ 5,689 5,689 $ $ - $ $ - $ $ $ $ 85 750 835 $ $ - $ $ 735 735 $ $ - *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). $ $ - $ $ 117 $ - $ (6) 37 (237) 223 17 $ $ $ - $ $ - 417,228 Governmental Activities 9,785 22,446 19,925 55,450 9,110 32,500 173 287 988 (2,303) 6,177 106 193 154,837 $ $ $ 4,954 4,954 - - 16,520 18,630 110,510 104,075 898 554 11,270 (4,540) 4,474 262,391 $ 36,725 14,290 20,220 80 (481) 1,424 (1,343) 70,915 $ 3,000 3,000 Business-type Activities 154,837 Final Payment Date 07/01/19 07/01/21 07/01/35 07/01/34 07/01/30 07/01/31 07/01/14 07/01/16 07/01/30 07/01/32 $ 262,391 36,725 14,290 20,220 80 (481) 1,424 (1,343) 70,915 $ - 07/01/24 07/01/22 07/01/16 01/01/09 01/01/13 01/01/15 $ 3,000 3,000 $ - $ $ 4,954 4,954 $ $ - 131 Table of Contents 132 Schedule of Changes in Long-Term Debt* (continued) For the Year Ended June 30, 2009 (in thousands of dollars) COMMUNITY FACILITIES DISTRICT BONDS Governmental Fund Type: McDowell Mtn Ranch Refunding Series 1999 DC Ranch Series 1998 Via Linda Road Series 1999 DC Ranch Series 1999 Scottsdale Mountain Refunding Series 2002 DC Ranch Series 2002 Waterfront Commercial Series 2007 Scottsdale Mountain 2002 Deferred Issuance Premium Scottsdale Mountain 2002 Deferred Amount on Refunding DC Ranch 2002 Deferred Issuance Premium Total Community Facilities District Bonds Total Bonds CONTRACTS PAYABLE Governmental Fund Type: US Corps of Engineers US Patent Office McDowell Sonoran Preserve Bureau of Reclamation\Westworld Bureau of Reclamation\TPC Underground Improvement District Series 104 Total Contracts CAPITAL LEASES Governmental Fund Type: Modular Building - Fire Department Training Facility Business Type: Modular Building - Water Operations TOTAL BONDS, CONTRACTS AND CAPITAL LEASES July 1, 2008 $ Issued 14,795 $ 4,090 2,700 2,715 3,685 10,660 3,805 16 (204) 51 42,313 Retired - $ Refunding Bonds Issued 730 185 120 105 335 285 25 1,785 $ Accretions, Amortizations & Contract Adjustments Bonds Defeased - $ - $ June 30, 2009 - $ (4) 57 (3) 50 $ 1,185,123 $ - $ 40,835 $ - $ - $ (283) $ $ 2,959 3 4,135 5,011 5,740 27 $ - $ 80 750 105 105 7 $ - $ - $ - $ 17,875 $ - $ 1,047 $ - $ - $ $ 141 $ - $ 141 $ - $ - $ 97 238 $ - $ 44 185 $ - $ $ 1,203,236 $ - $ 42,067 $ - $ Governmental Activities 14,065 $ 3,905 2,580 2,610 3,350 10,375 3,780 12 (147) 48 40,578 City of Scottsdale, Arizona *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). 14,065 $ 3,905 2,580 2,610 3,350 10,375 3,780 12 (147) 48 40,578 - Final Payment Date 07/15/22 07/15/23 07/15/23 07/15/24 07/15/18 07/15/27 07/15/32 1,144,005 $ 829,985 $ 314,020 $ 2,879 3 3,385 4,906 5,635 20 $ 2,879 3 3,385 4,906 5,635 20 $ - - $ 16,828 $ 16,828 $ - $ - $ - $ - $ - 2012 - $ - $ 53 53 $ - $ 53 53 2010 - $ (283) $ 1,160,886 $ 846,813 $ 314,073 - Compensated Absences Other Post Employment Benefit - Implied Subsidy Total Long-Term Debt Business-type Activities 22,553 1,157 $ 870,523 2,797 185 $ 317,055 2032 2009 2013 2033 2035 01/01/10 Table of Contents Statistical Section Contents Financial Trends Page 134 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 144 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 151 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 157 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 159 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 and consistantly present information beginning with fiscal year 2002, when the City implemented Statement 34. City of Scottsdale, Arizona 133 Table of Contents 134 City of Scottsdale, Arizona Net Assets by Component Last Eight Fiscal Years (accrual basis of accounting) ( in thousands) Table I 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 2002 2003 2004 $ 1,429,495 $ 1,497,575 $ 1,548,486 133,460 117,801 199,767 152,731 165,209 127,017 $ 1,715,686 $ 1,780,585 $ 1,875,270 $ $ 629,106 $ 16,399 175,624 821,129 $ 659,130 $ 16,721 186,147 861,998 $ 2005 City of Scottsdale, Arizona (1) The increase from the prior period was caused by a substantial increase in capital asset contributions. (2) Restated Restricted and Unrestricted Net Assets related to the classification of unspent bond proceeds. 2007 2008 2009 $ 1,877,955 $ 2,029,375 $ 2,198,130 $ 2,353,573 $ 2,586,731 78,794 102,293 (2) 108,686 189,540 131,732 195,887 172,530 (2) 206,386 90,632 83,884 $ 2,152,636 $ 2,304,198 $ 2,513,202 $ 2,633,745 $ 2,802,347 653,351 $ 20,842 272,431 (1) 946,624 $ $ 2,058,601 $ 2,156,705 $ 2,201,837 149,859 134,522 220,609 328,355 351,356 399,448 $ 2,536,815 $ 2,642,583 $ 2,821,894 2006 756,433 $ 806,749 23,472 27,000 212,957 239,535 992,862 $ 1,073,284 $ 2,634,388 $ 2,836,124 102,266 129,293 408,844 412,065 $ 3,145,498 $ 3,377,482 $ 895,636 $ 909,632 $ 991,390 33,649 26,147 26,568 224,607 293,090 239,103 $ 1,153,892 $ 1,228,869 $ 1,257,061 $ 3,093,766 $ 3,263,205 $ 3,578,121 142,335 215,687 158,300 430,993 383,722 322,987 $ 3,667,094 $ 3,862,614 $ 4,059,408 Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting) (in thousands) Table IIa Fiscal Year Expenses Governmental Activities: General Government Police Financial Services Transportation Community Services Information Services The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Service Districts Interest on Long-term Debt Total Governmental Activities Expenses $ Business-type Activities: Water Utility Sewer Utility Airport Solid Waste Total Business-type Activities Expenses Total Primary Government Expenses 2002 2003 2004 2005 2006 2007 2008 2009 26,982 $ 52,719 7,464 72,159 53,325 10,821 16,494 11,482 2,484 18,269 1,044 28,063 301,306 22,776 $ 54,469 7,883 71,837 52,222 11,901 18,127 12,290 2,433 3,601 6,421 11,908 1,099 27,786 304,753 23,839 $ 60,027 7,655 78,373 55,087 11,135 19,570 13,024 2,812 3,462 6,130 11,697 1,024 28,028 321,863 30,943 $ 63,076 8,315 85,835 57,519 7,941 28,620 (1) 16,520 3,496 3,333 8,026 12,522 1,094 32,466 359,706 42,729 $ 74,408 8,343 82,047 57,931 14,589 26,943 14,746 3,419 3,615 7,549 12,883 617 37,192 387,011 45,682 $ 81,375 9,843 95,214 70,527 13,329 28,054 17,698 3,727 3,800 9,475 15,133 597 38,981 433,435 40,698 $ 91,102 10,930 90,039 78,285 13,704 31,943 20,153 3,663 4,790 9,711 31,933 712 39,457 467,120 20,646 92,530 9,913 87,552 78,523 13,723 4,595 31,174 22,887 3,802 3,545 8,553 29,029 595 631 42,242 449,940 59,723 28,324 3,346 15,508 106,901 53,961 27,854 2,922 16,412 101,149 64,915 26,089 2,958 17,895 111,857 71,140 26,947 3,343 18,772 120,202 81,391 33,509 3,482 19,650 138,032 488,160 $ 545,292 $ 587,322 $ 587,972 51,125 24,007 2,648 14,071 91,851 $ 393,157 $ 50,406 22,862 2,476 13,783 89,527 394,280 $ 51,095 24,678 2,622 15,153 93,548 415,411 $ 135 (1) Increase from prior year was caused by the purchase of equipment, furnishing and clothing needed to start the City's Fire Department on July 1, 2005. 466,607 $ Table of Contents 136 City of Scottsdale, Arizona Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting) (in thousands) Table IIb Fiscal Year Program Revenue Governmental Activities: Charges for Services: General Government Police Transportatiom Community Services Fire Citizen and Neighborhood Resources Planning and Development WestWorld Streetlight and Service Districts Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues $ Business-type Activities: Charges for Services: Water Utility Sewer Utility Airport Solid Waste Capital Grants and Contributions Total Business-type Activities Revenues 2002 2003 2004 2005 2006 11,243 $ 5,706 3,229 15,764 1,012 22,200 77,412 136,566 11,402 $ 4,227 3,405 15,449 1,018 21,219 70,369 127,089 12,742 $ 6,760 3,759 17,314 1,000 24,508 105,794 171,877 12,106 $ 11,514 3,914 18,188 998 26,865 73,092 146,677 13,783 9,938 277 4,028 1,010 (1) 163 20,515 511 26,355 136,745 (2) 213,325 68,064 24,017 1,689 15,796 38,733 148,299 66,626 25,316 2,424 16,250 28,487 139,103 70,613 25,587 2,936 16,488 71,709 187,333 72,612 27,503 3,162 16,984 38,313 158,574 81,517 27,119 3,342 17,163 55,580 184,721 284,865 $ 266,192 $ 359,210 $ 305,251 $ 398,046 City of Scottsdale, Arizona Total Primary Government Revenues $ Net (Expense)/Revenue Governmental Activities Business-type Activities Total Primary Government Net Expense $ (164,740) $ (177,664) $ (149,986) $ (213,029) $ (173,686) 56,448 49,576 93,785 51,673 83,572 $ (108,292) $ (128,088) $ (56,201) $ (161,356) $ (90,114) 2007 $ 14,102 15,071 326 4,388 1,155 228 16,128 546 29,293 211,707 (3) 292,944 $ $ 486,627 $ (140,491) 81,826 $ (58,665) (2) Developer contributions increased significantly due to the increase in the assets donated and their valuation (increase in construction costs and land values). 2009 15,581 $ 16,664 4,637 1,095 21 12,800 595 28,409 157,808 237,610 14,670 5,703 4,619 2,275 6,393 2,682 599 26,272 240,289 303,502 90,741 33,930 3,380 19,824 50,679 198,554 91,546 34,198 2,813 20,049 22,067 170,673 436,164 $ 474,175 $ (229,510) $ 78,352 $ (151,158) $ (146,438) 32,641 (113,797) 84,381 32,250 3,451 18,490 55,111 193,683 (1) The City's Fire Department was formed on July 1, 2005. Prior to this time the City contracted with an external fire service provider. (3) Developer contributions increased significantly due to the increase in the assets donated and their valuation (increase in construction costs). 2008 $ Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting) (in thousands) Table IIc Fiscal Year Governmental Revenues and Other Changes in Net Assets Governmental Activities: Taxes Intergovernmental Interest and Investment Income Miscellaneous and Special Items Transfers Total Governmental Activities $ Business-type Activities: Taxes Interest and Investment Income Miscellaneous Transfers Total Business-type Activities: Total Primary Government Change in Net Assets Governmental Activities Business-type Activities Total Primary Government 2002 2003 2004 2005 2006 2007 2008 2009 167,105 $ 44,918 11,485 5,382 6,288 235,178 167,153 $ 46,971 4,108 4,760 10,955 233,947 183,039 $ 45,163 2,655 2,777 11,037 244,671 217,325 (1) $ 48,346 6,765 4,100 9,567 286,103 240,731 $ 54,481 13,714 5,786 10,536 325,248 249,411 $ 60,520 23,013 5,377 11,174 349,495 246,330 $ 65,933 19,187 7,606 10,997 350,053 221,272 64,145 14,653 5,038 9,932 315,040 1,493 755 (10,955) (8,707) 973 905 (11,037) (9,159) 119 6,581 686 (10,536) (3,150) 195 9,265 496 (11,174) (1,218) 195 6,910 517 (10,997) (3,375) 5,820 874 (6,289) 405 4,288 (156) (9,567) (5,435) 117 4,958 408 (9,932) (4,449) $ 235,583 $ 225,240 $ 235,512 $ 280,668 $ 322,098 $ 348,277 $ 346,678 $ 310,591 $ 70,438 $ 56,853 127,291 $ 56,283 $ 40,869 97,152 $ 94,685 $ 84,626 179,311 $ 73,074 46,238 119,312 $ 151,562 $ 80,422 231,984 $ 209,004 $ 80,608 289,612 $ 120,543 $ 74,977 195,520 $ 168,602 28,192 196,794 $ (1) In May 2004, the City of Scottdale, Arizona citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. $ 137 Table of Contents 138 City of Scottsdale, Arizona Governmental Activities Tax Revenues By Source Last Eight Fiscal Years (accrual basis of accounting) (in thousands) Table III Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 City of Scottsdale, Arizona Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 (1) Property $ 39,485 42,218 46,371 48,416 50,610 50,961 54,139 61,138 Privilege & Use General $ 81,871 79,483 87,422 94,407 106,019 109,143 105,277 87,430 Sales and Use Taxes Privilege & Privilege & Use Use McDowell Mtn (1) Transportation $ 15,814 $ 15,587 15,645 15,335 16,981 16,628 31,301 18,115 35,483 20,020 37,281 20,910 35,604 19,823 29,121 16,141 Franchise Taxes Cable TV Light & Power Franchise $ 2,223 2,440 2,740 2,859 3,157 3,355 3,544 3,606 State Shared Franchise $ 5,238 5,147 5,488 5,596 6,308 7,284 8,030 7,831 $ Sharing 15,621 15,853 17,054 18,779 21,664 22,312 21,575 18,677 8,491 9,978 10,578 10,145 8,289 Intergovernmental State Revenue Sales $ Privilege & Use Public Safety (1) $ 21,142 21,574 18,278 18,634 21,223 26,653 33,037 35,103 Other $ 512 611 663 1,337 962 929 957 959 In May 2004, the City of Scottdale citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. Transient Occupancy $ 6,691 6,688 7,227 7,939 8,970 9,723 9,621 7,577 Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Fund Balances of Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) (in thousands) Table IV Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 General Fund Reserved Unreserved $ 2,006 $ 74,363 1,992 $ 71,236 2,153 59,707 (1) $ 872 $ 72,772 805 $ 93,243 754 $ 89,534 924 $ 61,379 835 59,587 Total General Fund $ 76,369 $ 73,228 $ 61,860 $ 73,644 $ 94,048 $ 90,288 $ 62,303 $ 60,422 $ 12,880 $ 13,670 $ 9,122 $ 10,613 $ 23,142 $ 21,249 $ 25,600 $ 27,236 All Other Governmental Funds Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds Total All Other Governmental Funds $ 25,775 168,550 24,553 159,421 22,122 224,422 (2) 207,205 $ 197,644 $ 255,666 $ 31,873 148,626 40,952 189,905 52,484 179,477 35,179 212,676 30,710 102,898 191,112 $ 253,999 $ 253,210 $ 273,455 $ 160,844 (1) The decrease from prior period was caused by a defeasance of debt. (2) The increase from prior period was caused by unspent bond proceeds that were received in the last quarter of the fiscal year. 139 Table of Contents 140 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) (in thousands) Table Va Fiscal Year Revenues Taxes - Local Taxes - Intergovernmental Business and Liquor Licenses Charges for Current Services Fines, Fees and Forfeitures Special Assessments Property Rental Interest Earnings Intergovernmental Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues 2002 2003 2004 2005 2006 2007 2008 2009 $ 164,775 $ 57,176 1,815 20,038 5,234 2,339 2,835 10,300 12,892 799 1,012 367 118 7,960 2,260 167,153 $ 59,694 1,816 19,990 6,047 1,970 2,836 3,830 9,609 762 1,018 439 1,032 8,045 850 182,362 $ 58,716 1,813 22,401 6,921 2,558 3,212 2,385 11,810 762 1,000 647 1,659 8,729 2,110 218,189 $ 61,948 1,633 23,300 9,649 2,029 3,617 6,053 11,771 4,708 998 917 461 8,635 9,079 239,478 $ 69,413 1,572 27,260 10,260 1,106 4,173 12,518 13,129 392 511 835 969 9,898 644 251,017 $ 76,545 1,626 23,291 14,779 1,825 3,868 21,083 15,763 2,024 546 1,878 568 10,208 700 246,175 $ 81,246 1,761 20,376 15,210 895 3,733 17,298 15,552 7,775 595 1,673 1,824 11,577 934 219,846 77,408 1,733 15,719 11,459 821 3,527 13,491 31,813 9,425 599 1,519 1,210 14,917 991 $ 289,920 $ 285,091 $ 307,085 $ 362,987 $ 392,158 $ 425,721 $ 426,624 $ 404,478 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) (in thousands) Table Vb Fiscal Year Expenditures General Government Police Financial Services Transportation Community Services Information Systems The Downtown Group Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development WestWorld Streetlight and Services Districts Debt Service: Principal Interest and Fiscal Charges Bond Issuance Costs Advance Refunding Escrow Capital Improvements 2002 $ 2003 2004 19,528 $ 49,362 7,135 10,016 49,276 7,380 16,281 11,214 2,235 18,040 1,044 16,010 $ 52,371 7,752 10,869 48,950 7,386 17,745 11,553 2,446 3,375 6,268 11,746 1,099 16,121 $ 55,510 7,222 9,399 50,494 7,328 19,265 8,774 2,754 3,290 6,199 11,218 1,024 26,216 29,062 597 339 68,638 30,305 29,759 1,046 68,338 31,905 25,452 586 81,149 2005 21,793 59,874 7,631 8,760 49,941 7,674 21,320 11,813 2,831 3,261 6,506 12,111 1,094 $ 33,173 31,948 878 213,585 (1) Total Expenditures $ 316,363 $ 327,018 $ 337,690 $ Excess of Revenues over (under) Expenditures $ (26,443) $ (41,927) $ (30,605) $ (131,206) (1) The increase from prior period was caused by land purchases related to capital improvement projects. 2006 494,193 $ 23,516 $ 66,278 7,769 10,099 53,535 8,253 24,296 8,850 3,070 3,507 7,510 12,436 617 2007 24,938 $ 78,261 9,080 13,439 61,778 8,931 26,614 9,692 3,254 3,855 9,016 14,331 597 2008 26,633 $ 89,725 9,433 14,301 69,200 10,149 29,785 19,140 3,621 3,854 9,373 15,012 712 2009 19,216 89,802 9,701 15,580 70,807 9,904 4,627 30,767 18,800 3,732 3,465 8,246 16,671 3,704 632 27,632 36,382 351 218,897 34,252 38,279 735 147,367 33,043 38,651 1,028 196,976 31,308 41,612 155,358 512,998 $ 484,419 $ 570,636 $ 533,932 $ (120,840) $ (58,698) $ (144,012) $ (129,454) 141 Table of Contents 142 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) (in thousands) Table Vc Fiscal Year Other Financing Sources (Uses) Transfers in Transfers out Refunding Bonds Issued Long-term Capital-Related Debt Issued Premium on Bonds Issued Payment to Bond Refunding Escrow Agent Proceeds from Capital Lease Proceeds from Notes Payable Sale of Capital Assets 2002 $ Total Other Financing Sources and (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures $ 2003 2004 2005 71,095 $ 107,441 $ 137,043 $ 141,783 (60,408) (91,582) (126,269) (133,284) 74,025 102,570 39,190 74,630 75,500 12,165 113,400 68,355 2,390 6,284 4,429 4,536 (75,025) (108,077) (90,534) (77,584) 424 87,577 29,225 77,259 61,134 $ (12,702) $ 46,654 $ 22.7% 23.6% 22.6% City of Scottsdale, Arizona (1) The change from the prior period was caused by the increase in spending for capital improvement projects. 2006 $ 78,436 (52,770) (1) $ 23.5% 2007 2008 2009 147,643 $ 162,965 $ 195,170 $ 160,319 (140,513) (155,295) (185,082) (145,357) 55,450 191,500 42,500 123,805 5,501 7,199 2,379 (61,845) 175 3,000 204,131 83,291 $ 21.9% 54,149 136,272 14,962 (4,549) $ (7,740) $ (114,492) 21.7% 19.5% 19.3% Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Governmental Activities Tax Revenues By Source Last Eight Fiscal Years (modified accrual basis of accounting) (in thousands) Table VI Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 (1) Property 38,413 41,583 46,088 48,249 49,651 50,732 53,778 60,493 Privilege & Use General 80,297 79,704 86,547 94,302 104,949 110,225 104,673 85,829 Franchise Taxes Cable TV Light & Power Franchise 2,223 2,440 2,740 2,859 3,157 3,355 3,544 3,606 Franchise 5,238 5,147 5,488 5,596 6,308 7,284 8,030 7,831 Sales and Use Taxes Privilege & Privilege & Use Use McDowell Mtn (1) Transportation 15,814 15,587 15,645 15,335 16,981 16,628 31,301 18,115 35,483 20,020 37,281 20,910 35,604 19,823 29,121 16,141 State Shared Sales 15,621 15,853 17,054 18,779 21,664 22,312 21,575 18,677 Privilege & Use Public Safety (1) 8,491 9,978 10,578 10,145 8,289 Intergovernmental State Revenue Sharing 21,142 21,574 18,278 18,634 21,223 26,653 33,037 35,103 Other 512 611 663 1,337 962 929 957 959 143 In May 2004, the City of Scottdale, Arizona citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. Transient Occupancy 6,691 6,688 7,227 7,939 8,970 9,723 9,621 7,577 Table of Contents 144 City of Scottsdale, Arizona Taxable Sales Subject to Privilege (Sales) Tax by Category Last Eight Fiscal Years (in thousands) Table VII Fiscal Year Automotive Construction Food Stores Hotel Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities $ Total $ 2002 1,501,832 $ 1,573,073 503,057 372,610 748,732 1,035,590 341,314 910,184 524,241 389,409 2003 1,499,864 $ 1,213,352 518,665 373,375 795,091 1,059,857 360,991 955,494 551,806 376,319 2004 1,525,050 $ 1,432,006 550,704 400,836 871,244 1,138,028 416,514 977,379 604,652 368,442 2005 1,557,909 $ 1,703,826 562,877 432,006 959,361 1,248,228 457,819 1,054,666 661,542 380,043 2006 1,662,604 $ 2,046,791 584,706 497,804 1,012,906 1,413,445 513,553 1,102,152 726,122 398,204 2007 1,622,601 $ 2,208,957 626,083 533,055 1,011,240 1,478,112 551,095 1,211,551 774,598 418,460 2008 2009 1,370,365 $ 918,219 1,932,043 1,251,432 652,226 624,917 529,862 416,216 974,330 864,676 1,364,347 1,078,674 532,751 556,842 1,308,247 1,217,688 754,103 684,188 435,415 432,570 7,900,042 $ 7,704,814 $ 8,284,855 $ 9,018,277 $ 9,958,287 $ 10,435,752 $ 9,853,689 $ 8,045,422 Note: In May 2004, the City of Scottsdale, Arizona citizens approved an additional .15% Preservation Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Direct and Overlapping Sales Tax Rates Last Eight Fiscal Years Table VIII Privilege (Sales) Tax Rates City Direct Fiscal Year Rate County Rate State Rate 2002 1.40% 0.70% 5.60% 2003 1.40% 0.70% 5.60% 2004 1.40% 0.70% 5.60% 2005 1.65% 0.70% 5.60% 2006 1.65% 0.70% 5.60% 2007 1.65% 0.70% 5.60% 2008 1.65% 0.70% 5.60% 2009 1.65% 0.70% 5.60% Use Tax Rates City Direct Fiscal Year Rate County Rate State Rate 2002 1.20% 0.00% 5.60% 2003 1.20% 0.00% 5.60% 2004 1.20% 0.00% 5.60% 2005 1.45% 0.00% 5.60% 2006 1.45% 0.00% 5.60% 2007 1.45% 0.00% 5.60% 2008 1.45% 0.00% 5.60% 2009 1.45% 0.00% 5.60% Transient Occupancy Tax Rates City Direct Fiscal Year Rate County Rate State Rate 2002 3.00% 1.77% 5.50% 2003 3.00% 1.77% 5.50% 2004 3.00% 1.77% 5.50% 2005 3.00% 1.77% 5.50% 2006 3.00% 1.77% 5.50% 2007 3.00% 1.77% 5.50% 2008 3.00% 1.77% 5.50% 2009 3.00% 1.77% 5.50% Jet Fuel Tax Rates (cents per gallon) City Direct Fiscal Year Rate County Rate State Rate 2002 1.80% 0.46% 2.90% 2003 1.80% 0.46% 2.90% 2004 1.80% 0.46% 2.90% 2005 1.80% 0.46% 2.90% 2006 1.80% 0.46% 2.90% 2007 1.80% 0.46% 2.90% 2008 1.80% 0.46% 2.90% 2009 1.80% 0.46% 2.90% Source: City Tax Audit Section Note: The following gives a general description of each tax. Complete details for each tax can be found in Appendix C of the Scottsdale Revised City Code. 145 Privilege (Sales) Tax applies to the sale, lease, license for use and/or rental transactions. Use Tax applies to the storage or use of items within the City on which no privilege tax has been paid. Transient Occupancy Tax applies to transactions involving transient lodging. Jet Fuel Tax applies to transactions involving the sale of jet fuel. Table of Contents 146 City of Scottsdale, Arizona Sales Tax Revenue Payers by Industry Fiscal Years 2009 and 2000 (in thousands) Automotive Construction Food Stores Hotel Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities Total Number of Filers 534 8,214 148 64 29 4,813 3,690 3,681 835 245 22,253 Fiscal Year 2009 Percentage Percentage of Total Tax Revenue of Total 2.40% $ 15,255 11.14% 36.91% 20,834 15.21% 0.67% 10,201 7.45% 0.29% 7,140 5.21% 0.13% 14,381 10.50% 21.63% 19,411 14.17% 16.58% 10,113 7.37% 16.54% 20,669 15.09% 3.75% 11,261 8.22% 1.10% 7,725 5.64% 100.00% $ 136,990 100.00% Table IX Number of Filers 614 6,929 230 70 14 6,059 2,855 2,568 829 277 20,445 Fiscal Year 2000 Percentage Percentage of Total Tax Revenue of Total 3.00% $ 18,434 17.10% 33.89% 23,855 22.13% 1.12% 7,133 6.62% 0.34% 5,827 5.41% 0.07% 7,966 7.39% 29.64% 16,464 15.27% 13.98% 6,572 6.10% 12.56% 10,214 9.48% 4.05% 6,521 6.05% 1.35% 4,799 4.45% 100.00% $ 107,785 100.00% Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories are intended to provide alternative information regarding the sources of the city's revenue. The industry classifications were based on Standard Industrial Classification (SIC) in 2000 and the North American Industry Classification System (NAICS) classifications in 2009. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Property Tax Rates Direct and Overlapping Governments Last Eight Fiscal Years Table X City Direct Rate Overlapping Rates Scottsdale Unified School District Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 Operating Rate $ 0.49 $ 0.51 0.48 0.45 0.44 0.42 0.38 0.35 Debt Service Rate Total City Rate 0.67 0.65 0.64 0.62 0.60 0.55 0.41 0.43 1.16 1.15 1.12 1.07 1.04 0.97 0.79 0.79 $ Operating Rate 4.08 $ 3.94 3.89 3.77 3.46 3.45 3.42 2.82 Debt Service Rate 1.36 $ 1.36 1.30 1.26 1.22 1.26 1.26 1.07 EVIT Rate 0.11 $ 0.11 0.10 0.10 0.06 0.05 0.05 0.05 Total School Rate 5.55 5.41 5.29 5.13 4.74 4.76 4.73 3.94 Overlapping Rates County-Wide Jurisdictions Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 County County Operating Debt Service $ 1.18 $ 1.21 1.21 1.21 1.20 1.18 1.10 1.03 Community County County Education College Flood Equalization 0.09 $ 0.08 0.07 - 1.11 $ 0.23 $ 1.11 0.21 1.08 0.21 1.04 0.21 1.03 0.21 1.06 0.20 0.98 0.15 0.94 0.14 Fire District Assistance 0.50 $ 0.49 0.47 0.46 0.44 - Central AZ County Free County Special Project Library Health Care 0.01 $ 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.13 $ 0.13 0.12 0.12 0.12 0.12 0.10 0.10 0.04 $ 0.04 0.05 0.05 0.05 0.05 0.04 0.04 0.12 0.12 0.09 0.09 Total County Total Direct & Overlapping $ $ 3.29 3.28 3.22 3.09 3.18 2.74 2.47 2.33 147 Source: Maricopa County Department of Finance Publications On-Line "Tax Levy 2008" Note: The City has Community Facilities Districts (CFD) that levy property taxes independent of the City to property owners within a designated area. For FY 2008/09 the rates were as follows: Scottsdale Mountain CFD - $0.75, McDowell Mountain CFD - $.50, DC Ranch CFD - $0.44, and Via Linda Road CFD - $0.70 and the Waterfront Commercial CFD - $2.30. 10.00 9.85 9.63 9.30 8.96 8.47 7.99 7.06 Table of Contents 148 City of Scottsdale, Arizona Principal Property Taxpayers June 30, 2009 and 2000 (in thousands) Table XI 2009 Taxpayer Arizona Public Service Company Scottsdale Fashion Square Partnership Qwest Corporation Scottsdale Fashion Square LLC Blackwell Robert L/Etal Gainey Drive Associates DC Ranch LLC PR Hotel LLC Portales Corporate Center LLC/Etal DTR5 LLC Motorola, Inc. Scottsdale Princess Partnership Mayo Clinic Arizona Nationwide Realty Investors Ltd. PCS Inc. Southwest Gas Corporation Taxable Assessed Value $ 60,195 43,295 27,807 22,666 22,652 22,341 21,159 19,026 17,222 16,215 - Rank 1 2 3 4 5 6 7 8 9 10 - 2000 Percentage of Total Taxable Assessed Value 0.728% 0.523% 0.336% 0.274% 0.274% 0.270% 0.256% 0.230% 0.208% 0.196% - Taxable Assessed Value $ 46,153 29,037 41,806 12,014 23,914 18,681 18,191 12,627 11,797 11,068 Rank 1 3 2 8 4 5 6 7 9 10 Percentage of Total Taxable Assessed Value 1.870% 1.180% 1.690% 0.490% 0.970% 0.760% 0.740% 0.510% 0.480% 0.450% Source: 2009 information - The Maricopa County Assessor's Office & ADOR Abstract for 2008 Property Tax Year. City of Scottsdale, Arizona Source: 2000 information - The City of Scottsdale's Financial Advisor, as obtained from the records of the Arizona Department of Revenue, Division of Utilities and Mines and the tax rolls of the Maricopa County Assessor's office. The Salt River Project Agricultural Improvement and Power District's (SRP) assessed valuation is not reflected in the total assessed valuation of the City. SRP is subject to a "voluntary contribution" in lieu of ad valorem taxation. The 2008/09 secondary assessed valuation of the SRP within the City is $17,703,543 as provided by SRP. The secondary in lieu contribution received by the City of Scottsdale for 2008/09 was $139,220. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Assessed Value of Taxable Property Last Eight Fiscal Years (in thousands) Table XII Fiscal Year Ended June 30th Real Property Commercial Vacant Property Land Residential Property 2002 2002 P S $ 1,699,156 1,815,234 2003 2003 P S 1,870,142 1,921,093 2004 2004 P S 2005 2005 $ 815,273 $ 923,764 Personal Property: Assessed Value Historic & Special Use 355,384 $ 520,604 675 1,091 913,222 1,045,249 400,448 615,184 878 1,484 2,148,272 2,373,446 968,183 1,043,487 473,966 656,600 P S 2,370,252 2,460,307 1,071,915 1,203,844 2006 2006 P S 2,622,605 2,792,337 2007 2007 P S 2008 2008 2009 2009 $ 242,757 242,768 Less: Tax Exempt Property $ Total Taxable Assessed Value Total Direct Tax Rate (166,942) $ (225,510) 2,946,303 $ 3,277,951 0.49 0.67 266,959 266,959 (220,195) (323,364) 3,231,454 3,526,605 0.51 0.65 1,100 1,575 277,334 277,334 (269,136) (376,920) 3,599,719 3,975,522 0.48 0.64 572,909 809,560 1,374 2,214 257,783 277,482 (285,524) (409,953) 3,988,709 4,343,454 0.45 0.62 1,220,872 1,309,263 614,301 784,962 1,507 2,136 225,683 246,619 (320,326) (404,264) 4,364,642 4,731,053 0.44 0.60 2,846,492 2,919,838 1,347,926 1,545,559 674,315 921,888 1,474 1,797 238,279 240,843 (322,012) (420,481) 4,786,474 5,209,444 0.42 0.55 P S 3,358,045 4,583,036 1,406,676 1,711,178 787,106 1,193,455 1,645 1,888 388,502 402,675 (442,551) (648,410) 5,499,423 7,243,822 0.38 0.41 P S 3,947,876 5,237,939 1,584,811 1,987,377 950,456 1,505,737 1,727 2,073 403,064 427,495 (559,516) (888,204) 6,328,418 8,272,417 0.35 0.43 Source: Arizona Department of Revenue Abstract of the Assessment Roll. Under Arizona law, there are two property valuation bases: PRIMARY (P) and SECONDARY (S). The primary (limited assessed valuation is used when levying for maintenance and operation of cities, school districts, community college districts, counties, and the state. The secondary (full cash) assessed valuation is used when levying for debt retirement, voter-approved budget overrides, and maintenance and operation of special service districts. 149 Table of Contents 150 City of Scottsdale, Arizona Property Tax Levies and Collections Last Eight Fiscal Years (in thousands) Table XIII Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Source: Total Tax Levy for Fiscal Year $ 36,166 39,159 42,756 44,879 47,809 48,778 50,838 58,179 Collected within the Fiscal Year of the Levy Amount $ 34,993 37,858 41,728 43,688 46,431 47,105 49,408 55,876 Percentage of Levy 96.8% 96.7% 97.6% 97.3% 97.1% 96.6% 97.2% 96.0% Collections in Subsequent Years $ 672 743 772 658 941 1,071 1,310 - Total Collections to Date Amount $ 35,665 38,601 42,500 44,346 47,372 48,176 50,718 55,876 Percentage of Levy 98.6% 98.6% 99.4% 98.8% 99.1% 98.8% 99.8% 96.0% "Total Tax Levy Amount for Fiscal Year" = Marciopa County Tax Levy Reports on County Finance Website. Collections Amounts = Maricopa County Finance Office "Secured Tax Levy Report". Amounts represent property taxes recorded in the General, Debt Service and the Self-Insurance Fund. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Ratios of Outstanding Debt by Type Last Eight Fiscal Years (in thousands) Table XIV Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Municipal Property Corporation Bonds $ 49,870 41,955 4,850 61,253 108,225 149,176 149,007 149,216 General Obligation Bonds $ 319,657 305,003 389,598 372,070 499,365 476,200 574,445 551,455 Revenue Bonds $ 13,385 10,990 8,475 5,815 2,990 - General Obligation Bonds $ 18,315 14,323 10,651 6,515 - Business-Type Activities Municipal Property Revenue Corporation Bonds Bonds $ 73,945 $ 11,555 71,230 10,010 68,365 83,365 65,735 79,430 62,405 161,965 58,930 155,650 52,005 256,790 48,345 249,735 Governmental Activities Scottsdale Preserve Special Authority Assessment Bonds Bonds $ 90,585 $ 13,061 88,270 11,140 85,980 8,755 83,385 6,340 80,570 5,505 77,605 4,670 74,495 3,835 71,235 3,000 Certificates of Participation $ 7,650 7,090 6,401 5,689 4,954 Community Facilities District Bonds $ 34,935 46,355 44,950 43,480 41,945 40,330 42,450 40,665 Total Primary Government $ 646,724 618,903 718,691 745,997 983,375 989,092 1,176,829 1,135,486 Percentage of Personal Income 7.70% 7.04% 7.85% 7.84% 9.94% 9.54% 10.39% 10.79% Per Capita $ 3,080 2,891 3,303 3,374 4,344 4,151 4,901 4,686 $ Capital Lease 179 139 97 53 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Table XIX - Schedule of Demographic and Economic Statistics for personal income and population data. Contracts Payable $ 21,416 19,627 13,702 14,324 13,136 19,819 17,875 16,828 $ Capital Lease 172 141 - 151 Table of Contents 152 City of Scottsdale, Arizona Ratios of General Bonded Debt Outstanding Last Eight Fiscal Years Table XV Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Governmental Activities General Obligation Bonds $ 319,657,000 305,003,000 389,598,000 372,070,000 499,365,000 476,200,000 574,445,000 551,455,000 Less: Amounts Available in Debt Service Fund $ 8,448,962 9,006,329 3,468,780 5,601,739 12,435,797 9,382,702 9,520,257 10,841,183 $ Total 311,208,038 295,996,671 386,129,220 366,468,261 486,929,203 466,817,298 564,924,743 540,613,817 Percentage of Total Taxable Assessed Value of Property 9.5% 8.4% 9.7% 8.4% 10.3% 9.0% 10.8% 10.4% $ Per Capita 1,482.23 1,382.58 1,774.86 1,657.25 2,150.84 1,959.19 2,352.62 2,230.83 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Schedule of Assessed Value and Estimated Actual Value of Taxable Property on Table XII for property value data. See the Schedule of Demographic and Economic Statistics (Table XIX) for population data. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2009 (in thousands) Table XVI Governmental Unit Debt repaid with property taxes Maricopa County Maricopa County Community College District Tempe Elementary School District No. 3 Balsz Elementary School District No. 31 Scottsdale Unified School District No. 48 Paradise Valley Unified School District No. 69 Cave Creek Unified School District No. 93 Fountain Hills Unified School District No. 98 Phoenix Union High School District No. 210 Tempe Union High School District No 213 East Valley Institute of Technology District No. 401 Scottsdale Mountain Community Facilities District McDowell Mountain Community Facilities District DC Ranch Community Facilities District Via Linda Road Community Facilities District Waterfront Community Facilities District Debt Outstanding $ 727,390 110,975 10,200 319,805 344,440 22,795 24,035 304,795 128,000 3,685 14,795 17,465 2,700 3,780 Estimated Share of Overlapping Debt Estimated Percentage Applicable 14.2655% 14.2655% 0.0002% 4.7528% 69.9434% 32.8795% 62.6405% 3.1612% 0.2930% 0.0001% 19.4538% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% $ Subtotal, overlapping debt City direct debt Total direct and overlapping debt 103,766 0 485 223,682 113,250 14,279 760 893 0 3,685 14,795 17,465 2,700 3,780 499,540 345,645 100.0000% 345,645 $ 845,185 Source: Maricopa County Assessor's Office Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Scottsdale. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 153 The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the county's taxable assessed value that is within the government's boundaries and dividing it by the county's total taxable assessed value. Table of Contents 154 City of Scottsdale, Arizona Legal Debt Margin Information Last Eight Fiscal Years (in thousands) Table XVIIa Fiscal Year 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 2002 $ Total Net 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 Net Debt Applicable to 6% Limit Legal 6% Debt Margin (Available Borrowing Capacity) Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit 2005 2006 2007 705,321 $ 795,104 $ 868,691 $ 947,151 $ 1,041,889 $ 245,209 237,400 319,765 313,786 372,545 363,455 410,381 $ 467,921 $ 475,339 $ 554,905 $ 574,606 $ 678,434 $ 196,677 $ 81,757 $ 2004 655,590 $ 37.40% $ 2003 114,920 $ 41.57% 33.66% 211,596 $ 71,695 139,901 $ 33.88% 40.22% 238,531 $ 74,984 163,547 $ 31.44% 36.12% 260,607 $ 64,799 195,808 $ 24.86% 39.33% 34.88% 2008 2009 1,448,765 $ 1,654,483 424,865 413,095 1,023,900 $ 1,241,388 29.33% 24.97% 284,145 $ 312,567 $ 434,629 $ 496,345 126,820 112,745 149,580 138,360 157,325 $ 199,822 $ 285,049 $ 357,985 44.63% 36.07% 34.42% 27.88% City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2009 (in thousands) Table XVIIb Legal Debt Margin Calculation for Fiscal Year 2009 Net Secondary Assessed Valuation as of June 30, 2009 $ 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 8,272,417 1,654,483 Debt applicable to limit: General Obligation Bonds 413,095 Legal 20% Debt Margin (Available Borrowing Capacity) $ 1,241,388 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 496,345 Debt applicable to limit: General Obligation Bonds Legal 6% Debt Margin (Available Borrowing Capacity) 138,360 $ 357,985 Source: City of Scottsdale Financial Services Under Arizona law, cities can issue general obligation bonds for purposes of water, sewer, light, parks, and open space purposes, but outstanding bonds issued for such purposes may not exceed 20 percent of the City's net secondary assessed valuation. Outstanding general obligation bonded debt for all other purposes may not exceed 6 percent of the City's net secondary assessed valuation. General obligation bonds of community facilities districts are not subject to or included in this computation since they are not bonds of the City of Scottsdale, Arizona. 155 Table of Contents 156 City of Scottsdale, Arizona Pledged-Revenue Coverage Last Eight Fiscal Years (in thousands) Table XVIII Water and Sewer Revenue Bonds Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Operating Revenue(1) $ 97,802 95,064 97,813 105,078 115,374 125,880 131,553 130,782 Less: Operating Expenses $ 49,840 46,991 49,662 56,413 56,329 64,089 66,077 71,236 Net Operating Revenue $ 47,962 48,073 48,151 48,665 59,045 61,791 65,476 59,546 Development Fee Revenue $ 15,087 17,648 21,574 20,155 24,071 17,878 15,280 3,043 Net Revenue $ 63,049 65,721 69,725 68,820 83,116 79,669 80,756 62,589 Special Assessment Collections $ 2,339 1,970 2,558 2,016 1,106 1,825 895 821 Debt Service Principal Interest $ 2,208 $ 393 1,990 279 2,425 492 2,448 360 851 275 848 235 846 197 845 158 Debt Service Principal Interest $ 2,595 $ 3,937 2,715 3,792 2,860 3,159 2,630 3,570 3,330 3,182 3,475 2,997 3,640 2,582 3,660 2,507 Coverage 9.65 10.10 11.58 11.10 12.76 12.31 12.98 10.15 Scottsdale Preserve Authority Bonds Special Assessment Bonds Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 Highway User Revenue Bonds Coverage (2) 0.90 0.87 0.88 0.72 0.98 1.69 0.86 0.82 0.2% and 0.15% Sales Tax (3) $ 15,814 13,377 16,981 31,301 35,483 37,281 35,604 29,121 Debt Service Principal Interest $ 2,185 $ 4,704 2,315 4,566 2,445 3,825 2,595 4,437 2,815 3,997 2,965 3,843 3,110 3,676 3,260 3,502 Highway User Tax Revenue $ 12,574 13,137 14,034 14,738 15,708 16,778 16,123 14,083 Coverage 2.30 1.94 2.71 4.45 5.21 5.48 5.25 4.31 Excise Tax $ 188,548 189,516 199,889 239,284 268,134 277,366 271,560 256,146 City of Scottsdale, Arizona (2) Coverage ratio is less than 1.0 due to prepayment of amounts that are currently in fund balance. (3) In May 2004, the City of Scottdale, Arizona citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Coverage 4.05 4.22 4.52 4.72 5.00 5.32 N/A N/A Municipal Property Corporation Bonds (1) Includes investment income. (4) Includes debt service payments paid out of revenue from the Water and Sewer Fund. Debt Service Principal Interest $ 2,275 $ 828 2,395 715 2,515 592 2,660 460 2,825 317 2,990 165 - Debt Service (4) Principal Interest $ 8,325 $ 3,775 9,145 3,045 7,170 1,108 8,265 6,413 5,995 10,017 5,305 10,057 5,584 13,988 7,570 19,482 Coverage 15.58 15.55 24.15 16.30 16.75 18.06 13.87 9.47 Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Demographic and Economic Statistics Last Eight Fiscal Years Table XIX Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 Population (1) 209,960 214,090 217,555 221,130 226,390 238,270 240,126 242,337 Personal Income (2) (in thousands) $ 8,396,720 8,787,110 9,158,195 9,515,538 9,896,159 10,367,366 11,329,384 10,526,392 Per Capita Personal Income (3) $ 39,992 41,044 42,096 43,148 43,713 43,511 47,181 43,437 Median Age (4) 41.1 40.5 40.2 39.9 39.5 41.0 40.2 40.6 Education Level in Years of Schooling (5) 13 to 16 13 to 16 13 to 16 13 to 16 13 to 16 13 to 16 13 to 16 13 to 16 Data Sources: 1 Arizona Department of Economic Security 2 Sites USA (estimate) 3 Sites USA (estimate) 4 Sites USA (estimate) 5 Sites USA (estimate) 6 Arizona Department of Education 7 Arizona Department of Economic Security; Arizona Workforce year-end average unemployment rates School Enrollment (6) 27,436 27,479 27,328 26,559 27,000 26,653 26,567 27,029 Unemployment Rate (7) 4.1% 3.6% 3.9% 2.9% 3.0% 2.6% 2.4% 3.6% 157 Table of Contents 158 City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago Table XX 2009 Employer Scottsdale Healthcare Mayo Clinic*** General Dynamics Scottsdale Unified School District** City of Scottsdale** CVS - CareMark Go Daddy Group*** The Vanguard Group Troon Golf LLC*** Scottsdale Insurance Company Scottsdale Memorial Health Systems Advanced PCS Scottsdale Princess Resort Hickey Mitchell Insurance Total Employees 6,650 4,900 3,600 3,126 2,808 2,048 1,915 1,899 1,539 1,400 29,885 Rank 1 2 3 4 5 6 7 8 9 10 - Percentage of Total City Employment* 3.53% 2.60% 1.91% 1.66% 1.49% 1.09% 1.02% 1.01% 0.82% 0.74% 15.86% City of Scottsdale, Arizona Source: City of Scottsdale, Arizona's Economic Vitality Department * 2009 total Scottsdale employment = 188,488 (Souce: SitesUSA); 2000 total employment- 126,918 ** Full-time Equivalents (FTE) ***Includes all Metro Phoenix employees ****The 2000 Principal Employer information was presented as this information was unavailable for 1999. 2000**** Employees 3,000 3,600 2,700 1,700 1,118 959 4,473 2,700 1,080 1,000 22,330 Rank 3 2 4 6 7 10 1 5 8 9 - Percentage of Total City Employment* 2.36% 2.84% 2.13% 1.34% 0.88% 0.76% 3.52% 2.13% 0.85% 0.79% 17.60% Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Full-time Equivalent City Government Employees by Function Last Eight Fiscal Years Table XXI Full-time Equivalent Employees as of June 30 Function General Government Police Financial Services Transportation Community Services Information Systems Fire Municipal Services Citizen and Neighborhood Resources Human Resources Economic Vitality Planning and Development Water Resources Aviation Solid Waste Total 2002 196.5 574.1 144.5 35.0 516.1 73.8 2.7 132.8 35.0 36.5 10.0 157.0 139.0 11.9 77.3 2,142.2 Source: The City of Scottsdale, Arizona's Budget Department. 2003 195.5 591.1 144.5 34.0 516.1 73.8 2.7 132.8 35.0 35.5 10.0 151.0 136.0 12.4 80.3 2,150.5 2004 196.5 590.1 139.5 24.0 506.1 74.8 3.7 135.8 32.0 34.5 8.0 140.0 136.0 12.4 79.3 2,112.5 2005 202.0 631.1 143.0 25.0 513.6 78.8 3.7 139.8 37.0 36.5 10.0 140.0 139.0 12.4 79.3 2,191.0 2006 217.0 676.1 149.0 27.0 559.4 80.8 259.0 151.8 39.0 35.5 11.0 144.0 152.5 13.0 83.3 2,598.3 2007 222.2 705.6 151.0 30.0 580.3 83.8 268.0 170.5 40.0 36.5 11.0 161.0 162.0 15.0 85.3 2,722.2 2008 222.7 721.6 152.0 32.0 605.1 85.8 274.0 182.0 40.0 37.5 11.0 164.0 169.0 15.0 85.8 2,797.5 2009 214.9 723.6 153.0 32.0 605.1 86.8 273.0 183.0 40.0 36.5 11.0 168.0 176.0 16.0 89.0 2,807.8 159 Table of Contents 160 City of Scottsdale, Arizona Operating Indicators by Function Last Eight Fiscal Years Table XXII Fiscal Year Function General Government Legislative and Constituent/Gov. Relations % of survey respondents rating the "Overall Quality of Life in Scottsdale" as good to excellent City Clerk's Office # of legal postings City Attorney's Office % of cases resolved at first court appearance (arraignment) City Auditor's Office # of audits performed City Court Charges filed / charges adjudicated (resolved) City Manager's Office % of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent Communications & Public Affairs News releases, media updates, traffic alerts, construction updates released to news media WestWorld # of special events The Downtown Group # of downtown special events coordinated Preservation Acres of land acquired for inclusion in the McDowell Sonoran Preserve Police Scottsdale Uniform Crime Report, Part 1 (crimes per thousand) Scottsdale Valley Average Achieve the standard of six minutes or less for response to emergency calls for service (includes medical and accident related calls) 2002 2003 2004 2005 2006 2007 2008 2009 No Survey No Survey 90% 93% No Survey 90% N/A 90% 518 466 456 651 890 974 1,000 1,150 20% 26% 30% 30% 32% 35% 35% 35% 60 6 11 11 17 22 25 13 153,320 / 156,292 201,866 / 216,000 221,400 / 218,000 225,828 / 224,380 79,638 / 114,514 96,995 / 94,045 121,560 / 129,888 136,747 / 134,793 No Survey No Survey 86% 89% No Survey 90% N/A 90% 277 215 182 247 250 220 220 230 49 55 53 57 59 46 50 45 N/A N/A 41 58 62 71 84 100 514 660 450 2,600 40 259 612 612 44.9 70.5 44.3 72.0 45.5 60.2 42.3 56.5 37.1 51.0 35.0 51.0 35.0 51.0 38.2 57.8 6:00 6:29 5:87 6:12 6:00 6:10 6:00 6:42 50% 60% 96% 98% 98% 100% 100% 100% 35,636 35,344 34,547 37,954 38,371 37,398 38,662 43,000 8,531 10,212 12,254 9,611 10,600 12,000 13,000 9,600 # of water meters read annually 943,212 971,508 986,080 1,000,870 1,033,600 1,030,368 1,050,975 1,059,080 # of customer contacts (utilities, taxes & licensing) 212,787 218,185 221,900 229,500 230,000 216,764 220,259 220,500 Provide initial contact to 100% of citizen traffic concerns within seven days Financial Services # of Accounts Payable checks issued # of purchase orders City of Scottsdale, Arizona (continued) Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Function Last Eight Fiscal Years Table XXII Fiscal Year Transportation Total citywide transit ridership Function Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies) Scottsdale Airport - Takeoffs and Landings Community Services # attending Parks & Recreation facilities, Human Services facilities and Libraries annually # of square feet of medians and rights of way maintained Facility inventory maintained (square feet) Information Systems # of SPAM emails blocked (monthly) from being delivered to the City (An average of 30 seconds per email is expended by staff) Annual Disk Storage size (DAS, NAS, and SAN) (Terabytes) Fire # of responses to calls for emergency services Responses per capita Average response time to urban calls for service (minutes) Water Service Water Service Connections 2002 2003 2004 2005 2006 2007 2008 2009 1,780,578 1,917,011 1,917,000 1,969,512 2,255,450 2,321,073 2,626,893 2,985,375 76 124 150 270 322 375 475 475 181,657 197,483 195,276 208,106 210,481 185,241 201,958 169,972 6,817,413 7,485,295 7,565,511 7,573,369 7,717,000 7,925,000 8,100,000 8,100,000 13,168,516 13,253,516 13,949,440 14,569,062 15,188,684 15,460,961 16,727,490 18,553,414 1,551,620 1,755,162 1,807,298 1,825,564 2,166,650 2,221,650 2,271,550 2,334,310 n/a 32,244 129,000 2,319,000 46,100,000 94,187,000 113,024,000 9,670,000 2.5 4.0 5.0 7.0 30.0 30.0 80.0 110.0 21,877 21,162 21,756 23,102 23,572 22,894 22,936 23,000 0.10 0.09 0.09 0.10 0.10 0.10 0.10 0.10 4:02 4:01 4:20 4:23 4:23 4:15 4:10 4:10 79,052 80,454 81,947 83,511 86,399 86,728 87,248 87,349 Drinking Water Supplied (million gallons per day) 70.4 67.6 70.0 67.7 73.1 72.1 73.7 69.4 Reclaimed Water Supplied (million gallons per day) Sewer Service Sewer Service Connections 11.8 14.2 11.8 11.6 11.5 11.4 11.7 9.6 69,121 70,732 72,034 73,232 74,143 76,092 76,849 77,363 24.0 24.5 24.2 25.5 24.2 25.3 23.9 19.7 Sewage Treated (million gallons per day) Municipal Services # of active Capital Projects 101 118 116 183 199 202 202 180 # of homes serviced by Residential Refuse Collection 70,546 72,166 73,602 74,850 76,300 77,800 78,994 79,456 # of citizens serviced annually by Household Hazardous Waste collection program 1,708 1,900 2,201 1,718 1,900 2,100 2,100 2,300 (continued) 161 Table of Contents 162 City of Scottsdale, Arizona Operating Indicators by Function Last Eight Fiscal Years Table XXII Fiscal Year Function Citizen & Neighborhood Resources % increase of Neighborhood Watch groups annually 2002 n/a 15% 37% 37% 25% 5% 5% 10% # of new Code Enforcement cases processed per year Human Resources Citywide turnover 7,357 10,000 10,000 11,336 14,000 16,900 15,570 160,000 120 6.8% 7.3% 7.9% 11.1% 11.5% 12.0% 8.5% HR operating cost as a % of City payroll Economic Vitality Targeted job creation - number of companies / number of jobs 3.1% 2.6% 2.4% 2.3% 2.0% 2.0% 2.1% 2.0% 10 / 1,305 17 / 1,716 23 / 1,800 10 / 1,443 10 / 1,200 10 / 1,000 10 / 900 8 / 800 - 2% 55.0% 57.5% 60.0% 69.0% 70.0% 71.0% 67.0% - 13% 0% + 3% + 5% + 5% 4% 5% -6% Hotel/Motel average occupancy rate Bed Tax growth (% annual change) Planning & Development Services Customer wait-time (in minutes) at One Stop Shop 2003 2004 2005 2006 2007 2008 2009 n/a n/a 45 25 15 20 20 20 Provide applicant with pre-application meeting within 30 days of submitting request. n/a n/a 90% 100% 100% 100% 100% 100% % of inspections performed within 24 hours of the request 99% 99% 97% 98% 99% 99% 99% 99% Source: The City of Scottsdale's Budget Department and applicable City departments. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Capital Asset Statistics by Function Last Eight Fiscal Years Table XXIII Fiscal Year Function Public Safety Police: Stations Police Vehicles Fire Stations Highways and Streets Square Yards of Pavement Equivalent 12' Wide Lane Miles Streetlights Traffic Signals Culture and Recreation Parks Parks Acreage Swimming Pools Tennis Courts Community Centers Water Water Mains (miles) Fire Hydrants Sewer Sanitary Sewers (miles) Storm Sewers (miles) Source: City of Scottsdale, Arizona departments. 2002 2003 2004 2005 2006 2007 2008 2009 3 261 10 3 295 12 3 286 12 3 290 13 3 345 13 3 375 13 3 383 13 4 363 14 19,100,000 2,713 9,510 250 19,100,000 2,713 10,300 253 19,231,553 2,732 10,500 258 19,231,553 2,732 10,650 262 19,660,273 2,793 10,828 276 20,393,288 2,897 11,022 276 20,562,017 2,921 11,132 285 20,644,388 2,932 9,134 295 40 869 3 49 6 40 869 3 49 6 40 849 3 49 6 40 849 3 49 6 40 937 3 49 6 40 937 4 51 5 43 962 4 55 5 41 931 4 55 5 1,738 8,659 1,815 8,928 1,854 9,193 1,897 9,541 1,933 9,839 1,997 10,147 2,030 10,367 2,044 10,365 1,155.0 68.7 1,262.0 68.7 1,280.0 137.7 1,287.4 142.8 1309.0 148.0 1,350.0 153.5 1,353 157.2 1,360 166.9 163 Table of Contents 164 City of Scottsdale, Arizona