Comprehensive Annual Report Cover for 2011_Layout 1 10/3/11 11:50 AM Page 1 1 citY oF scottsdale arizona comprehensive annual Financial report For the Fiscal Year ended June 30, 2011 City of Scottsdale, Arizona Comprehensive Annual Financial Report for the fiscal year ended June 30, 2011 Prepared by: Finance and Accounting Division David N. Smith City Treasurer/Chief Financial Officer Jeff Nichols, CPA Accounting Director City of Scottsdale, Arizona City of Scottsdale, Arizona Comprehensive Annual Financial Report For the Fiscal Year ended June 30, 2011 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal – City Treasurer, Finance and Accounting...................................................................................... 1 Certificate of Achievement – Government Finance Officers Association...................................................................... 7 List of Elected and Appointed Officials................................................................................................................................8 Organizational Chart.................................................................................................................................................................9 FINANCIAL SECTION Independent Auditors’ Report...............................................................................................................................................11 Management’s Discussion and Analysis...............................................................................................................................13 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets..............................................................................................................................................32 Statement of Activities................................................................................................................................................33 Fund Financial Statements Balance Sheet – Governmental Funds......................................................................................................................34 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets.............................................................................................................................................................36 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds................................................................................................................................................37 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities..........................................................39 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund........................................................................................................................40 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund...........................................................................................41 Statement of Net Assets – Proprietary Funds.........................................................................................................42 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds......................................................................................................................................................44 Statement of Cash Flows – Proprietary Funds........................................................................................................45 Statement of Fiduciary Net Assets – Fiduciary Funds...........................................................................................47 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds......................................................................48 Notes to Financial Statements...............................................................................................................................................49 I. Summary of Significant Accounting Policies...........................................................................................................49 II. Reconciliation of Government-wide and Fund Financial Statements.................................................................58 III. Stewardship, Compliance, and Accountability.........................................................................................................64 IV. Detailed Notes on All Funds......................................................................................................................................68 A. Cash and Investments...................................................................................................................................68 B. Receivables......................................................................................................................................................71 C. Capital Assets.................................................................................................................................................73 D. Interfund Balances and Interfund Transfers.............................................................................................75 E. Leases...............................................................................................................................................................76 F. Bonds, Loans, and Other Payables..............................................................................................................76 City of Scottsdale, Arizona  Page V. Other Information........................................................................................................................................................90 A. Risk Management..........................................................................................................................................90 B. Contingent Liabilities....................................................................................................................................90 C. Commitments and Subsequent Events......................................................................................................91 D. Joint Venture...................................................................................................................................................92 E. Pollution Remediation...................................................................................................................................93 F. Related Organization.....................................................................................................................................94. G. Retirement and Pension Plans.....................................................................................................................94 H. Other Postemployment Benefits.................................................................................................................98 I. Postemployment Benefits Other Than Pensions......................................................................................98 Required Supplementary Information................................................................................................................................102 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 Community Development Block Grant – Special Revenue Fund......................................................................113 HOME – Special Revenue Fund..............................................................................................................................114 Grants – Special Revenue Fund...............................................................................................................................115 Section 8 – Special Revenue Fund...........................................................................................................................116 Preserve Privilege Tax – Special Revenue Fund....................................................................................................117 Special Programs – Special Revenue Fund.............................................................................................................118 Combining Balance Sheet – Nonmajor Debt Service Governmental Funds...........................................................119 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Debt Service Governmental Funds...............................................................120 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Obligation Bond – Debt Service Fund....................................................................................................121 Municipal Property Corporation Bond – Debt Service Fund.............................................................................122 Special Assessments Bond – Debt Service Fund..................................................................................................123 Scottsdale Preserve Authority Bond – Debt Service Fund..................................................................................124 Combining Balance Sheet – Nonmajor Capital Projects Governmental Funds......................................................125 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Capital Projects Governmental Funds..................................................................126 Combining Statement of Net Assets – Internal Service Funds.................................................................................128 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Internal Service Funds.............................................................................................................129 Combining Statement of Cash Flows – Internal Service Funds................................................................................130 Combining Statement of Fiduciary Net Assets – Fiduciary Funds...........................................................................132 Combining Statement of Changes in Assets and Liabilities – Fiduciary Funds......................................................133 City of Scottsdale, Arizona  Page Other Supplementary Information: Schedule of Changes in Long-Term Debt.....................................................................................................................135 STATISTICAL SECTION Financial Trends Net Assets by Component – Last Ten Fiscal Years (accrual basis of accounting)������������������������������������������������ 140 Changes in Net Assets – Last Ten Fiscal Years (accrual basis of accounting)������������������������������������������������������� 141 Governmental Activities Tax Revenue by Source – Last Ten Fiscal Years (accrual basis of accounting).������������������������������������������������������������������������������������������������������������������������������������ 144 Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting).������������������������������������������������������������������������������������������������������������������� 145 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 146 Governmental Activities Tax Revenue by Source – Last Ten Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 149 Revenue Capacity Taxable Sales Subject to Privilege (Sales) Tax by Category – Last Ten Fiscal Years���������������������������������������������� 150 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years����������������������������������������������������������������������������� 151 Sales Tax Revenue Payers by Industry – Current Year and Nine Years Ago���������������������������������������������������������� 152 Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years����������������������������������������� 153 Principal Property Tax Payers – Current Year and Nine Years Ago������������������������������������������������������������������������ 154 Assessed Value of Taxable Property – Last Ten Fiscal Years.���������������������������������������������������������������������������������� 155 Property Tax Levies and Collections – Last Ten Fiscal Years����������������������������������������������������������������������������������� 156 Debt Capacity Ratios of Outstanding Debt by Type – Last Ten Fiscal Years���������������������������������������������������������������������������������� 157 Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years������������������������������������������������������������������� 158 Direct and Overlapping Governmental Activities Debt as of June 30, 2011��������������������������������������������������������� 159 Legal Debt Margin Information – Last Ten Fiscal Years������������������������������������������������������������������������������������������ 160 Pledged-Revenue Coverage – Last Ten Fiscal Years��������������������������������������������������������������������������������������������������� 162 Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years������������������������������������������������������������������������������� 163 Principal Employers – Current Year and Nine Years Ago���������������������������������������������������������������������������������������� 164 Operating Information Full-time Equivalent City Government Employees by Function – Last Ten Fiscal Years����������������������������������� 165 Operating Indicators by Division – Last Ten Fiscal Years���������������������������������������������������������������������������������������� 166 Capital Asset Statistics by Function – Last Ten Fiscal Years������������������������������������������������������������������������������������� 169 City of Scottsdale, Arizona City of Scottsdale, Arizona Table of Contents November 2, 2011 Honorable Mayor, Members of the City Council, and Citizens of the City of Scottsdale, Arizona: Transmittal Letter The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2011, 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 on a comprehensive framework of internal control 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. For the Fiscal Year Ended June 30, 2011 LarsonAllen, LLP has issued an unqualified (“clean”) opinion on the City’s financial statements for the year ended June 30, 2011. The independent auditors’ report is located at the front of the financial section of this report. City of Scottsdale Scottsdale, Arizona Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ 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 approximately 184 square miles, stretching 31 miles from north to south. The City is bordered on the west by Phoenix, the state capital, by Tempe on the south, and by the Salt River/Pima Maricopa Indian Community on the east. Scottsdale and its neighboring cities form the greater metropolitan Phoenix area, which is the economic, political and population center of the state. 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. Portions of the City’s charter have been modified several times by vote of the citizens. 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, according to the 2010 Census, is 217,385. City of Scottsdale, Arizona 1 Table of Contents 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 six Charter officers (City Manager, City Attorney, City Auditor, City Clerk, City Judge, and City Treasurer) who have full responsibility for carrying out City Council policies and administering City operations. The City provides a full range of services including police and fire protection, sanitation/solid waste service, water and sewer services, construction and maintenance of streets, and 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; the maximum legal expenditure permitted for the fiscal year is the total budget as adopted. 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 ensuing fiscal year. Additional expenditures may be authorized if directly necessitated by a natural or man-made disaster as prescribed in the Arizona State Constitution, Article 9, Section 20. During fiscal year (FY) 2010/11, there were no such supplemental budgetary appropriations authorized. The expenditure appropriations in the adopted budget are by division; however, divisional appropriations may be amended during the year. On 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 divisions; and 2) unexpended appropriations may be transferred from one division to another. Local Economy The City of Scottsdale’s tax revenue base consists of a variety of tax categories, the most significant being taxes applicable to retail sales. The City also benefits from favorable conditions including a stable, diversified economic base and being a desirable location to work and live. Scottsdale is beyond 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 headquarters and regional offices; high-tech, research and development; bio-med; luxury resorts and hotels; and business and professional services. The following categories represent key indicators affecting Scottsdale’s economic and financial success: 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 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 recent recession. Bed tax revenues to the City increased by 85 percent for fiscal year 2010/11, due largely to the an increase in the transient occupancy tax to 5% (a 66.7 percent increase over the previous rate of 3%) Scottsdale visitors contribute about 20 percent of the City’s total privilege and use tax revenues. 2 City of Scottsdale, Arizona Table of Contents Retail Sales Scottsdale’s largest revenue source is sales tax generated from a balanced variety of business categories including automotive, construction, food stores, hotels/motels, department stores, retail stores, restaurants, utilities and rentals. Sales tax is generated directly from the City’s own applied tax rate and indirectly as the City receives a share of sales tax generated from the State of Arizona applied tax rate. The City saw retail sales tax revenues increase by 3 percent in fiscal year 2010/11 after falling a total of 25 percent over previous two fiscal years. Employment Scottsdale’s unemployment rate was 8.4 percent in June 2011, significantly lower than the state level of 9.4 percent. Historically, Scottsdale’s unemployment rate is about 2 percent lower than the state’s average. Firms relocating to Scottsdale in fiscal year 2010/11 created approximately 500 new jobs over the past year. Major new employers to announce moves to Scottsdale last year included Trakka, AirSprint US, and Cold Plasma. In addition significant expansions of over 500 jobs were announced by I.C.E., Yelp, and Fitch. Commercial Vacancy Rates Scottsdale’s citywide office vacancy rate was about 22.8 percent for the third quarter of fiscal year 2010/11 – slightly higher than the Phoenix market average of 21 percent. There were only 5 commercial buildings under construction in the Phoenix market during the first quarter of 2011; none of the buildings were located in Scottsdale. Long-term Financial Planning Scottsdale’s Five-Year Financial Plan is based on sound financial reserves, low debt burden and conservative revenue growth forecasts. The potential for State legislative initiatives to reduce revenue sharing and additional demands for essential City services such as police, fire, transportation and social services pose a fiscal challenge. 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 guidance 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. The City has 45 adopted financial policies governing operations, capital management, debt management, reserves and financial reporting. Regular review and refinement 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 a determination of the City’s fiscal capacity, based on long-term financial forecasts of available revenues. Conservative financial forecasts, coupled with financial trend analysis techniques and reserve analysis help preserve the fiscal well-being of Scottsdale. Strategic financial planning is a critical element to maintain long-term financial stability. City of Scottsdale, Arizona 3 Table of Contents Multi-Year Operating Budget Planning Multi-year budgeting 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. While the City is required to adopt a one-year budget to meet State statutory requirements, Scottsdale builds a five-year financial plan to help anticipate future impacts and ensure achievement of the City’s long-term 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 budgets. Projects with significant operating impacts are carefully timed to avoid contingent liabilities that future operating resources cannot meet. All capital funding sources are 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. Debt Management Scottsdale has a financial policy that prohibits the issuance of debt for operating expenses. With that as a governing framework, all debt issuances are for the purpose of financing infrastructure or long-lived 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, overall debt burden on the community, statutory limitations and market factors affecting interest costs. In all cases, a long-term analysis is made considering the debt capacity that fits the financial 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 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 Rating Group, and Fitch Investors Services, respectively) on the City’s outstanding general obligation bonds where debt service is supported by property taxes. These are the highest ratings possible. Ratings for the City’s bonds where debt service is supported by enterprise revenues or excise taxes are also highly rated by the three major credit rating agencies. On August 6, 2011, S&P downgraded U.S. Treasury long-term securities from AAA to AA+. This action was followed by S&P downgrading agencies that have direct reliance on the U.S. government (“U.S. Government Agencies”) from AAA to A+. However, none of the City’s credit ratings were affected by these actions. A summary of the City’s bond ratings are shown as follows: City of Scottsdale Bonded Debt Ratings As of June 30, 2011 4 Moody's Investors Service Standard and Poor's Rating Group Fitch Investors Services General Obligation (GO) Aaa AAA AAA Water and Sewer Revenue (W&S) Aaa AAA AAA Municipal Property Corp (MPC) Aa1 AAA AAA Scottsdale Preserve Authority (SPA) Aa2 AA+ AA+ Highway User Revenue Fund (HURF) Aa3 AA Not Rated City of Scottsdale, Arizona Table of Contents Major Initiatives The City of Scottsdale’s adopted fiscal year 2011/12 budget reflects continued downward pressure on revenues in the local economy and City Council direction to reduce expenditures from the prior year’s levels. The adopted budget eliminated 92 positions (4.5 percent) in the General Fund. The greatest reductions were in Community Services and Community & Economic Development, but personnel reductions were in ten divisions citywide. The budget reduced staffing levels both in the General Fund and in All Funds combined to the lowest levels since before fiscal year 2005/06, when 260 Full-Time Equivalent positions were added to form a municipal fire department. Along with staffing reductions, spending was also down in the General Fund. Total division operating budgets dropped $45 million since fiscal year 2008/09, which will take us to the lowest level since fiscal year 2005/06. There were cuts in every division and several division budgets were reduced by 10 percent or greater. The largest dollar reductions are in the largest divisions: Community Services, Community & Economic Development and Public Safety. Even with these reductions, we believe the adopted budget still supports high quality essential services necessary to maintain a high standard of living in Scottsdale. Residents will continue to enjoy high quality services comparable or better to those in any of the surrounding communities. The overarching goal was to exhaust all other cost-cutting measures before reducing service levels. Cutting the lowest priority expenditures was our first strategy in developing the budget. However, it wasn’t enough. Additional strategies that were employed to balance the budget include: 1. 2. 3. 4. 5. 6. 7. Enhancing or maintaining existing revenues Using prior-year savings to reduce debt Using one-time monies for one-time costs Reducing personnel costs Reducing some enhanced levels of service Reducing funding of city partners Closing some facilities and offices Additionally, the adopted budget does not include a property tax increase nor a water, wastewater or solid waste rate increase. Finally, the budgeted contingency was increased to ensure that there is budget flexibility given the uncertainty of the economy, which was offset in part by additional reductions and reorganizations, the elimination of newly vacated positions (with the work reassigned to existing staff), cuts to the take home vehicle program, and a phasing out of the executive car allowance program. 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, 2010. This was the 38th 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. City of Scottsdale, Arizona 5 Table of Contents The City of Scottsdale also received the “Distinguished Budget Presentation Award” for the fiscal year beginning July 1, 2010 from the GFOA for our conformity in budget presentation. We believe that our current budget continues to conform to the program requirements and we expect to receive this award again for the fiscal year beginning July 1, 2011. The preparation of this report could not have been accomplished without the dedicated service of the entire staff of the Finance and Accounting Division, the assistance of administrative personnel in the various departments, and the valuable oversight and critique 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, David N. Smith City Treasurer/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 Susan Klapp Robert W. Littlefield Ron McCullagh Linda Milhaven Dennis Robbins Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2011 Charter Offices David Richert, City Manager Bruce Washburn, City Attorney Sharron Walker, City Auditor Carolyn Jagger, City Clerk B. Monte Morgan, City Judge David N. Smith, City Treasurer/Chief Financial Officer City of Scottsdale Scottsdale, Arizona 8 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Citizens of Scottsdale ORGANIZATIONFebruary CHART 2011 Scottsdale City Council Click on box to link to web page Boards, Commissions, Task Forces City Attorney City Auditor City Clerk City Manager City Manager’s Office Assistant City Manager Administrative Assistant; Budget & Performance; Communications: Government Relations; Strategic Projects/Preserve City Treasurer Presiding Judge Finance & Accounting City Court • Accounting • Budget • Customer Service • Risk Management Administrative Services • Purchasing • Tax Audit Community Services • Human Services • Library Systems • Parks & Recreation • Preserve Management Human Resources • Benefits Management • Staffing Services/ Employee Relations • Technology Services • Workforce Management/ Employee Programs Information Technology • Application Development & Support • Technology Infrastructure Support Community & Economic Development • Aviation • Economic Vitality • Planning, Neighborhood, Transportation • WestWorld Fire • Emergency Management • Emergency Services • Support Services Police • Administrative Services • Investigative Services • Personnel Development • Uniformed Services Public Works • Capital Project Mamagement • Facilities Management • Fleet Management • Solid Waste Management • Street Operations Water Resources • Engineering & Administration • Reclamation Services • Water Quality • Water Services 9 Table of Contents 10 City of Scottsdale, Arizona Table of Contents INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and the City Council City of Scottsdale, Arizona Scottsdale, Arizona We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Scottsdale, Arizona (City), as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The financial statements of the component units were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Scottsdale, Arizona, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in the notes to the financial statements, the City of Scottsdale, Arizona adopted the provisions of Government Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of and for the year ended June 30, 2011. This statement results in the City of Scottsdale, Arizona reporting nonspendable, restricted, committed, assigned, and unassigned fund balances in its governmental fund types. In addition, an adjustment was made to fund balance reported at the beginning of the year as a result of this change in accounting principle. (11) An independent member of Nexia International City of Scottsdale, Arizona 11 Table of Contents The Honorable Mayor and the City Council City of Scottsdale, Arizona In accordance with Government Auditing Standards, we have also issued our report dated November 2, 2011 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management’s discussion and analysis on pages 13 through 30, the Public Safety Personnel Retirement System Schedule of Funding Progress on pages 102 and 103 and the Other Postemployment Benefit Plan Schedule of Funding Progress on page 104 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, other supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules and other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The accompanying introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. LarsonAllen LLP Mesa, Arizona November 2, 2011 (12) 12 City of Scottsdale, Arizona Table of Contents This section of the City of Scottsdale, Arizona’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, 2011 and 2010. We encourage readers to consider the information presented here in conjunction with additional information furnished in our letter of transmittal and the basic financial statements. FINANCIAL HIGHLIGHTS Key financial highlights for fiscal year 2011 are as follows: • The assets of the City exceeded its liabilities at the close of the fiscal years 2011 and 2010 by $4.2 billion and $4.2 billion (net assets), respectively. Of these amounts, $477.9 million and $395.0 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 $13.3 million and $137.0 million during fiscal years 2011 and 2010, respectively. • As of June 30, 2011 and 2010, the City’s governmental funds had combined ending balances of $203.2 million and $205.8 million, respectively. • At the close of the fiscal year, the unassigned fund balance for the General Fund was $53.2 million or 24 percent of total General Fund expenditures of $220.9 million. City of Scottsdale, Arizona Management’s Discussion and Analysis ANAGEMENT’S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2011 M 13 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 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 and, accordingly, provide information about the whole City, presenting both an aggregate current 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. 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, public works, water resources, community and economic development, public safety, human resources, community services, information technology, administrative services, street light and services districts. 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, they include 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. (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 Finance and Accounting Division, 7447 East Indian School Road, Suite 210, Scottsdale, Arizona 85251.) 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, accrued revenues and expenses are reported in this statement for some items that are expected to 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, 2011 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 an indicator of whether or not the financial position of the City is improving or deteriorating. The government-wide financial statements can be found on pages 32 and 33 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, 2011 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 reflects financial resources 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. Doing so highlights 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 purpose (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, and General Capital Improvement Plan (CIP) 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 can be found on pages 34-41 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 divisions 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 its health insurance and general liability insurance activities. Because these services predominantly benefit internal units or divisions of the City, 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 can be found on pages 42-46 of this report. 16 City of Scottsdale, Arizona Table of Contents The basic Fiduciary Fund financial statements can be found on pages 47-48 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 on pages 49-101 of this report. Required Supplementary Information The required supplementary information (RSI) provides additional information regarding the City’s other post-employment benefit (OPEB) and public safety personnel retirement plan. RSI can be found on pages 102-104. 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, 2011 Fiduciary Funds Combining Statements The combining statements referred to earlier in connection with non-major Governmental Funds, Internal Service Funds, and Fiduciary Funds are presented on pages 107-133. Other Supplementary Information The supplemental debt service schedule provides a comprehensive overview of the City’s total debt and can be found on pages 135-137. Statistical Information The statistical section, found on pages 140-169, presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial heath. GOVERNMENT-WIDE FINANCIAL ANALYSIS While this document contains information about the funds used by the City to provide services to its 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 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. City of Scottsdale, Arizona 17 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents These two statements report the City’s net assets and changes in those net assets. The change in net assets reflects 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 should also be considered. 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 $4.2 billion and $4.2 billion at the close of the fiscal years 2011 and 2010, respectively. Net Assets June 30, 2011 and 2010 (in thousands of dollars) Governmental Activities 2011 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 2010 Business-Type Activities 2011 2010 Total 2011 2010 389,634 $ 395,442 $ 386,398 $ 411,675 $ 776,032 $ 807,117 3,523,879 3,528,042 1,358,710 1,322,357 4,882,589 4,850,399 3,913,513 3,923,484 1,745,108 1,734,032 5,658,621 5,657,516 851,993 156,426 1,008,419 849,069 159,433 1,008,502 392,803 47,650 440,453 408,023 44,602 452,625 1,244,796 204,076 1,448,872 1,257,092 204,035 1,461,127 2,704,433 2,729,334 1,009,973 941,884 3,714,406 3,671,218 91,862 97,950 36,287 32,244 128,149 130,194 108,799 87,698 258,395 307,279 367,194 394,977 $ 2,905,094 $ 2,914,982 $ 1,304,655 $ 1,281,407 $ 4,209,749 $ 4,196,389 The largest portion (88 percent) 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. These amounted to $3.7 billion and $3.7 billion at June 30, 2011 and 2010, 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. A small portion (3 percent) of the City’s net assets ($128.1 million at June 30, 2011 and $130.2 million at June 30, 2010) represents resources that are subject to external restrictions on how they may be used. The remaining balance (9 percent) of unrestricted net assets at June 30, 2011 and 2010, $367.2 million and $395.0 million, respectively, may be used to meet the government’s ongoing obligations to citizens and creditors. Analysis of Changes in Net Assets The City’s total net assets increased by $13.3 million and $137.0 million during the fiscal years 2011 and 2010, 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. Such amounts are included in Capital Grants and Contributions on the table which follows. 18 City of Scottsdale, Arizona Table of Contents Governmental Activities 2011 2010 Revenues Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues Property Taxes Business and Privilege Taxes Intergovernmental Taxes Interest and Investment Income Other Total Revenues Expenses General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance & Accounting Public Works & Water Resources Community and Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services 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 $ 38,152 $ 32,205 41,072 67,703 154,415 49,190 248 11,849 394,834 Business-type Activities 2011 2010 2011 42,088 $ 29,319 190,279 152,345 $ 17,889 152,374 $ 9,268 190,497 $ 32,205 58,961 194,462 29,319 199,547 60,914 147,169 56,830 1,368 6,730 534,697 134 2,658 1,355 174,381 130 4,295 430 166,497 67,703 154,549 49,190 2,906 13,204 569,215 60,914 147,299 56,830 5,663 7,160 701,194 Total 2010 24,351 24,351 612 612 934 934 5,499 5,499 717 717 5,602 5,602 1,434 1,434 6,697 5,848 6,697 5,848 35,605 37,143 35,605 37,143 134,221 135,206 134,221 135,206 111,227 116,155 111,227 116,155 3,047 3,717 3,047 3,717 51,974 53,596 51,974 53,596 13,491 14,876 13,491 14,876 2,905 1,917 2,905 1,917 578 538 578 538 40,358 39,405 40,358 39,405 83,888 76,178 83,888 76,178 34,533 33,274 34,533 33,274 3,680 3,120 3,680 3,120 18,853 18,889 18,853 18,889 414,901 432,752 140,954 131,461 555,855 564,213 (20,067) 101,945 33,427 35,036 13,360 136,981 10,179 10,690 (10,179) (10,690) (9,888) 112,635 23,248 24,346 13,360 136,981 2,914,982 2,802,347 1,281,407 1,257,061 4,196,389 4,059,408 $ 2,905,094 $ 2,914,982 $ 1,304,655 $ 1,281,407 $ 4,209,749 $ 4,196,389 Management’s Discussion and Analysis For the Years Ended June 30, 2011 and 2010 (in thousands of dollars) For the Fiscal Year Ended June 30, 2011 Changes in Net Assets Governmental Activities Governmental activities decreased the City’s net assets by $9.9 million in fiscal year 2011 and increased the City’s net assets by $112.6 million in fiscal year 2010, thereby accounting for a 84 percent reduction in growth that would have occurred in fiscal year 2011 had governmental activities been stable. Governmental activities accounted for 82 percent of the total growth in the net assets of the City for fiscal year 2010. Capital grants and contributions continued to have a positive influence on net assets, despite a reduction of approximately 78 percent from the previous fiscal year. However, charges for services decreased approximately $3.9 million, which represents approximately 39 percent of the decrease in governmental net assets in the fiscal year. General revenues such as property, business, and privilege taxes are not shown by program, but are used to support program activities citywide. For governmental activities overall, without regard to program, business taxes, which includes sales and use taxes and franchise taxes(39 percent), are the largest single source of funds, followed by property taxes (17 percent), intergovernmental taxes, including state shared revenues (12 percent)followed by capital grants and contributions (10 percent), and charges for services (10 percent). City of Scottsdale, Arizona 19 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents Revenues by Source – Governmental Activities Fiscal Year 2010/11 (in thousands) Other taxes $49,190 13% Interest and investment income $248 0% Charges for services $38,152 10% Operating grants and contributions $32,205 8% Business taxes $154,415 39% Capital grants and contributions $41,072 10% Property taxes $67,703 17% Other $11,849 3% Property taxes increased by eleven percent from the previous year, due to an increase in both the primary ($0.02) and secondary ($0.13) tax rates. In addition, there was an increase in both the primary and secondary assessed valuations over the previous year. Business taxes increased 5 percent from the previous year, primarily due to increased sales tax collections, an effect of the increase in the transient occupancy tax approved by voters in 2010. The Community and Economic Development Department is the largest expense function (32.4 percent) followed closely by the Scottsdale Police and Fire Departments, which together comprise the Public Safety Division (26.8 percent), and community services (12.5 percent). The Transportation Department, one of six departments in the newly formed Community and Economic Development Division, is charged with ensuring 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, and ensure seamless connections to the regional transportation network. The City’s Community Services Division is responsible for improving and maintaining facilities and sponsors services that provide opportunities for family interaction, cultural enrichment, and development of lifetime skills, promote healthy lifestyles and serve as a catalyst for community involvement. They also provide assistance and guidance to those in need and link citizens with information and resources throughout the world. 20 City of Scottsdale, Arizona Table of Contents Program Revenues and Expenses – Business-type Activities Fiscal Year 2010/11 (in thousands) Expenses Program Revenues $120,000 $100,000 $80,000 $60 000 $60,000 $40,000 Management’s Discussion and Analysis Business-type activities increased the City’s net assets in fiscal years 2011 and 2010 by $23.2 million and $24.3 million, respectively, accounting for 100 percent and 18 percent, respectively, of the total growth in the City’s net assets. The key factor of this increase was Water and Sewer Utility Fund capital contributions from developers and grantors, resulting in $17.9 million and $9.2 million for fiscal years 2011 and 2010, respectively. The majority of this amount was infrastructure donated by developers and development fees received. For the Fiscal Year Ended June 30, 2011 Business-type Activities $20,000 $0 Water Utility Sewer Utility Airport Solid Waste Revenues by Source – Business-type Activities Fiscal Year 2010/11 (in thousands) Capital grants and contributions $17,889 10% Business Taxes & Other Income $1,489 1% Interest and investment income $2,658 2% Charges for services $152,345 87% City of Scottsdale, Arizona 21 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents 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, had expenses of $83.9 million and $34.5 million, respectively, in fiscal year 2011, followed by Solid Waste with operating expenses of $18.9 million and Aviation of $3.7 million. Charges for services provided the largest share of revenues (87 percent) followed by capital grants and contributions (10 percent), which are principally developer contributions and development fees. 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 87,458 customers. The Solid Waste Department provides delivery of safe, efficient and environmentally sound solid waste services to approximately 79,600 residential customers and 770 commercial customers. The Aviation Department operates the City’s 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. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. 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. Governmental Funds 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 may be useful in assessing the City’s financing requirements. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. 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 a combined ending fund balance of $203.2 million, a decrease of $2.6 million in comparison to the balance at June 30, 2010 of $205.8 million. Approximately $52.6 million of the total at June 30, 2011 constitutes an unassigned fund balance. The remainder of fund balance is either nonspendable, restricted, committed or assigned to indicate that it is not available for new spending. Revenues for governmental functions overall totaled approximately $388.2 million in fiscal year 2011, an increase of about 12.2 percent ($42.1 million) from the previous year total of $346.1 million. In fiscal year 2011 expenditures for governmental functions, totaled $447.8 million, a increase of 6 percent ($25.2 22 City of Scottsdale, Arizona Table of Contents The General Fund Balance increased in fiscal year 2011 by $1.4 million. Overall, the General Fund’s performance resulted in revenues exceeding expenditures in the fiscal year ended June 30, 2011, of $8.0 million. The primary reason for the increased fund balance was budgetary reductions to operating expenditures. The General Obligation Bond Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general obligation 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 $6.8 million, an increase of $1.9 million from the $4.9 million at the end of fiscal year 2010. The primary reasons for the increased fund balance were unspent bond premiums from refunding and an increase in the secondary property tax rate. Management’s Discussion and Analysis The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $53.2 million, while the total fund balance was $53.7 million; the unreserved and total balances for the General Fund at the end of fiscal year 2010 were $51.5 million and $52.1 million, respectively. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned/unreserved fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 24 percent of the total General Fund expenditures of $220.9 million in fiscal year 2011 and unreserved fund balance represents 23 percent of the total General Fund expenditures of $227.3 million in fiscal year 2010. Total fund balance represents 24 percent and 23 percent of total fund expenditures for fiscal years 2011 and 2010, respectively. For the Fiscal Year Ended June 30, 2011 million) from the fiscal year 2010 total of $422.6 million. In the fiscal years ended June 30, 2011 and 2010, expenditures for governmental functions exceeded revenues by approximately $59.6 million and $76.5 million respectively. 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. The fund balances were $37.3 million and $31.6 million at June 30, 2011 and 2010, respectively. Capital improvement expenditures in 2010 were $56.4 million. The General CIP Construction Capital Project fund balance increased by 5.7 million during the year. The primary reason for the increase was unspent debt proceeds. 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 2011 and 2010, the unrestricted net assets for the Water and Sewer Utility were $263.5 million and $293.2 million, respectively; Scottsdale Airport were $5.0 million and $6.1 million, respectively; and the Solid Waste Utility Fund were $9.0 million and $8.0 million, respectively. The Internal Service Funds, which are used to account for certain governmental activities, also had unrestricted net assets of $26.9 million and $29.4 million, respectively. The total growth in net assets for the Enterprise Funds was $23.2 million and $24.3 million for fiscal years 2011 and 2010, 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 $20.2 million due to capital contributions of $15.5 million as well as increased revenues. City of Scottsdale, Arizona 23 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents 24 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 intra-year budget strategies to deal with the depth and duration of the economic recession. The major adjustments used to develop a revised budget included holding the expenditures to the prior year actual expenditures and only filling essential vacant positions. Additionally, the City Council approved a restructuring of departments into larger divisions. Examples include the Police and Fire Departments were restructured into a combined Public Safety Division; the Planning and Development Services, Citizens and Neighborhood Resources and Transportation Departments were restructured and combined into the Planning, Neighborhood & Transportation Division; and Economic Vitality, WestWorld, and Airport departments were restructured into a combined Economic Vitality Division. Revenues and transfers in were $1.4 million more than projected primarily because Transient Occupancy (Bed) Tax performed better than expected. Expenses and transfers out were $8.0 million less than the revised budget. Specifically, overtime, professional services, utility services (electric), materials to maintain and repair machinery and equipment, and operating projects were all significantly less than the revised budget. City of Scottsdale, Arizona Table of Contents The City’s capital assets for its governmental and business-type activities as of June 30, 2011 and 2010, amount to $4.9 billion and $4.9 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. There was no increase in the City’s capital assets (net of accumulated depreciation) between fiscal years 2011 and 2010, as shown in the table below. Capital Assets, Net of Depreciation June 30, 2011 and 2010 (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 $ $ Governmental Activities 2011 2010 1,559,367 $ 1,512,943 372,136 365,776 1,401,526 1,475,341 22,343 24,894 20,380 23,471 148,127 125,617 3,523,879 $ 3,528,042 $ $ Business-type Activities 2011 2010 40,190 $ 37,969 14,178 12,413 13,789 12,224 89,701 89,701 806,046 665,879 333,954 301,897 198 60,654 202,274 1,358,710 $ 1,322,357 $ $ Total 2011 1,599,557 $ 386,314 1,401,526 36,132 89,701 806,046 333,954 20,380 198 208,781 4,882,589 $ 2010 1,550,912 378,189 1,475,341 37,118 89,701 665,879 301,897 23,471 327,891 4,850,399 Management’s Discussion and Analysis Capital Assets For the Fiscal Year Ended June 30, 2011 Capital Assets and Debt Administration Major capital asset events during the current fiscal year included the following: • Construction in progress of the Runway Safety Enhancements Phase 2 project that will enhance the runway safety at Scottsdale Airport by creating additional spacing between the aircraft that are waiting to take off and the aircraft that are using the runway. Expenditures totaled $2 million this year against a budget of $4.7 million. As of June 30, 2011, the inception to date expenditures total $2.5 million, leaving a balance of $2.2 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on the Eldorado Park Fire Station 1-Relocate Existing S. Quadrant project. Expenditures totaled $2.1 million against a budget of $6.3 million. As of June 30, 2011, the inception to date expenditures total $3.0 million, leaving a balance of $3.3 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on the 11,000 sq. ft. Cactus Acres Fire Station 8 project. Expenditures totaled $2.6 million against a budget of $9.1 million. As of June 30, 2011, the inception to date expenditures total $5.2 million, leaving a balance of $3.9 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on the renovation of the Corporation Yard Fleet Maintenance Facility Expansion project that will allow for the accommodation of customer base growth due primarily to the absorption of a City Fire Department in 2005. Expenditures totaled $2.3 million this year against a budget of $4.9 million. As of June 30, 2011, the inception to date expenditures total $4.1 million, leaving a balance of $755 thousand. The project is anticipated to be completed in fiscal year 2011/12. City of Scottsdale, Arizona 25 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents 26 • Construction in progress on the Troon North Park project. Expenditures totaled $2.4 million against a budget of $4.9 million. As of June 30, 2011, the inception to date expenditures total $3.2 million, leaving a balance of $1.7 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress of the Scottsdale Road Pedestrian and Bicycle Improvements Phase I-Grant project with the purpose of improving the pedestrian environment. Expenditures totaled $3.6 million this year against a budget of $7.3 million. As of June 30, 2011, the inception to date expenditures total $3.6 million, leaving a balance of 3.7 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on the replacement of police portable and vehicle radios. Portable radios are on an 8-year replacement plan and vehicle radios are on a 10-year replacement plan. Expenditures totaled $3.9 million this year against a budget of $4.0 million. As of June 30, 2011, the inception to date expenditures total $3.9 million, leaving a balance of $108 thousand. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on implementation of the Public Safety Radio System-Phase I project that will allow for a city owned microwave communications network. Expenditures totaled $5.7 million this year against a budget of $22.1 million. As of June 30, 2011, the inception to date expenditures total $16.6 million, leaving a balance of $5.5 million. The project is anticipated to be completed in fiscal year 2011/12. • Construction in progress on design and construction of a six-lane parkway cross-section with landscaped median, turn lanes, grade-separated path crossing, bike lanes, sidewalks, curb and gutter, roadway drainage Intelligent Transportation System facilities and noise mitigation on the Pima Road – Thompson Peak to Pinnacle Peak Road project. Expenditures totaled $14.6 million this year against a budget of $23.0 million. As of June 30, 2011, the inception to date expenditures total $21.2 million, leaving a balance of $1.8 million. The project is currently in the construction phase and is anticipated to be completed in fiscal year 2011/12. • Capitalization of preserve land purchase under the Expanded McDowell Sonoran Preserve project. Expenditures totaled $22.8 million this year against a budget of $273.5 million. As of June 30, 2011, the inception to date expenditures total $121.6 million, leaving a balance of $151.9 million. Preserve land will continue to be purchased in future years within the 36,400 acre planned preserve boundary, as approved by the voters in May 1995 and November 1998. • Capitalization of preserve land purchase under the Growing Smarter fiscal year 2010 Grant project. Expenditures totaled $22.5 million this year against a budget of $22.5 million. The project was completed and closed when the state grant funds were spent with the land purchase. City of Scottsdale, Arizona Table of Contents o Central Arizona Project Plant expansion ($6.5 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 $96.1 million. As of June 30, 2011, the project was completed. o Chaparral Water Treatment Plant Pretreatment ($1.4 million) – This project will examine specific pretreatment processes to prevent Trihalomethanes (TTHMs) from being formed within water treatment plant prior to distribution into the distribution system. The project’s budget totals $10 million. As of June 30, 2011, the inception to date expenditures total $1.4 million, leaving a balance of $8.6 million. This project is anticipated to be completed in fiscal year 2014/15. o Downtown Water Transmission Lines ($3.2 million) – Upgrades to the existing water distribution systems to address the rapid growth in the downtown area. The project’s budget totals $6.4 million. As of June 30, 2011, the inception to date expenditures total $3.4 million, leaving a balance of $3 million. The project is anticipated to be completed in fiscal year 2014/15. Management’s Discussion and Analysis 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: For the Fiscal Year Ended June 30, 2011 • o Water Distribution System Improvements ($3.9 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 $53.7 million. As of June 30, 2011, the inception to date expenditures total $35.4 million, leaving a balance of $18.3 million. The project is anticipated to be completed in fiscal year 2013/14. o Sewer Collection System Improvements ($10.4 million) – Design and construction of sewer lines and rehabilitation of sewer manholes in the aging sewer system per the Asset Management Program. The project’s budget totals $39.5 million. As of June 30, 2011, the inception to date expenditures total $26.3 million, leaving a balance of $13.2 million. The project is anticipated to be completed in fiscal year 2013/14. City of Scottsdale, Arizona 27 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents o Advanced Water Treatment – Phase 4 ($24.2 million) – Design and construction of expansion of the advanced water treatment plant consistent with the capacity of the water reclamation plant as incorporated in the updated Water and Wastewater Master Plans. This expansion will help the City comply with sewer capacity regulatory requirements (CMOM) and minimize or eliminate the need for additional capacity in the SROG regional sewage transmission facilities. The project’s budget totals $59.3 million. As of June 30, 2011, the inception to date expenditures total $30.5 million, leaving a balance of $28.8 million. The project is in the construction phase and is anticipated to be complete in fiscal year 2011/12. 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. Debt Administration At the end of the fiscal years 2011 and 2010, the City had total long-term obligations outstanding of $1,281 million and $1,287.0 million, respectively. Of these amounts, $572.7 million and $578.2 million, respectively, are General Obligation Bonds backed by the full faith and credit of the City. The remainder includes revenue bonds, municipal property corporation bonds, preserve authority bonds, certificates of participation, and other obligations of $708.3 million and $708.8 million for fiscal years 2011 and 2010, respectively. Long-Term Liabilities June 30, 2011 and 2010 (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 Risk Management Claims Capital Lease Compensated Absences Post Employment Benefit - Implied Subsidy Total Long-Term Liabilities $ $ Governmental Activities 2011 2010 572,740 $ 578,190 $ 147,459 148,212 59,920 67,870 1,500 2,250 23,409 4,194 36,745 25,123 (8,366) 858,530 14,582 11,140 25,182 325 909,759 $ 38,760 17,136 (7,223) 849,389 15,732 11,142 25,617 1,114 902,994 $ Business-Type Activities 2011 2010 - $ - $ 42,010 45,230 308,525 316,780 22,082 (4,734) 367,883 3,289 98 371,270 $ Total 2011 2010 572,740 $ 578,190 42,010 45,230 455,984 464,992 59,920 67,870 1,500 2,250 23,409 4,194 36,745 38,760 23,562 47,205 40,698 (5,106) (13,100) (12,329) 380,466 1,226,413 1,229,855 14,582 15,732 11,140 11,142 7 7 3,223 28,471 28,840 181 423 1,295 383,877 $ 1,281,029 $ 1,286,871 During fiscal year 2011, the City’s total long-term debt decreased approximately $5.8 million. The City issued $43.1 million of new general obligation refunding bonds (Governmental Activities). The Scottsdale Preserve Authority also issued $44.9 million in excise tax refunding bonds. The general obligation bonds defeased was $43.1 million and the amount of Scottsdale Preserve Authority bonds defeased equaled $49.4 million. 28 City of Scottsdale, Arizona Table of Contents The City is self insured and funds employee healthcare costs with current funds and designates a reserve for the self insured net assets. Additional information in the City’s long-term liabilities can be found in Section IV.F of the Notes to the Financial Statements. Economic Factors and Next Year’s Budget and Rates Management’s Discussion and Analysis 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 LongTerm Liabilities represents the City’s unfunded annual required contributions (ARC) pursuant to the actuarial calculations for the accrued cost of retiree health insurance as of June 30, 2011. The NOPEBO at the end of the fiscal years 2011 and 2010 were $0.4 million and $1.3 million, respectively. For the Fiscal Year Ended June 30, 2011 The State constitution imposes debt limitations on the City equal to 6 percent and 20 percent of the assessed valuation of properties within the City. The City’s available debt margin at June 30, 2011 and 2010 is $368.3 million and $426.1 million, respectively, in the 6 percent capacity and $976.6 million and $1,181.3 million, respectively, in the 20 percent 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 Tables XVIIa and XVIIb in the Statistical Section of this report. The City of Scottsdale’s fiscal year 2011/12 budget included funding for the highest priorities of the City Council and citizens. The budget is a maintenance budget. Staff was requested to maintain or reduce expenditures from the prior year’s final approved budget; therefore, increases were only allowed where contractually required or prudent based on changed conditions. The adopted budget reduces the number of divisions, reduces overall staffing and reduces the overall General Fund uses. While this is appropriate given the current economy, the General Fund adopted budget still includes the use of some prior year savings to balance the remaining deficit – if revenues and expenditures come in as projected. This budget also includes a reorganization that reflects our ongoing effort to improve efficiency and reduce costs. Police and Fire are being combined into a unified Public Safety division. Administrative Services is being expanded to include Human Resources, Information Technology, and the Office of Communications. Staffing levels are at the lowest point in seven years, down 353 full-time equivalents from the high point of 2,808 in fiscal year 2008/09. In the General Fund, there are 191 fewer positions than there were in fiscal year 2005/06 when the Scottsdale Fire Department was formed. With a smaller workforce, there are also lower personnel costs. Employees have been impacted significantly through this proposed budget. There are no cost of living increases, no merit increases, and the employees’ share of retirement and health insurance costs are increasing. Discretionary expenditure levels are also greatly reduced. In the General Fund, division operating expenditures are down approximately $17 million from the prior year approved budget, and $45 million from fiscal year 2008/09 actual expenditures. Overall, since fiscal year 2005/06, the net growth rate is only 4 percent. City of Scottsdale, Arizona 29 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents 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 2011/12 is $572.4 million, which includes $373.0 million (or 65 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 Troon North Park. 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 Pima Road Drainage System. Public Safety – Construction of the Cactus Acres Fire Station 8, Eldorado Park Fire Station 1, and Public Safety Radio System. Service Facilities – Corporate Yard Fleet Maintenance Facility Expansion, 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 – Thompson Peak Parkway to Pinnacle Peak Road. Additionally, improvements will be made to bicycle lanes and enhanced sidewalks. Water Services – Modification and improvements to water distribution and wastewater collection system improvements. The adopted budget continues the practice of maintaining 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. For fiscal year 2011/12, this amount is $23.9 million and a $5.0 million contingency is maintained as well. Requests For Information 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: City of Scottsdale Finance and 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 30 City of Scottsdale, Arizona Table of Contents Basic Financial Statements City of Scottsdale, Arizona 31 Table of Contents Statement of Net Assets June 30, 2011 (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 $ 26,442) Property Taxes and Penalties Other Local Taxes Intergovernmental Charges for Services Interest and Other Supplies Inventory $ 250,652 $ 56,626 126,342 39,372 $ 376,994 95,998 13,850 22,824 32,565 7,880 909 20 2,016 15,934 2,377 - 13,850 22,844 34,581 15,934 10,257 909 - 1,930 1,930 - 5,696 5,696 385,306 193,687 578,993 4,328 - 119,893 1,568 24,923 119,893 5,896 24,923 - 10,040 30,868 5,419 10,040 30,868 5,419 1,707,494 1,816,385 3,523,879 190,545 1,168,165 1,358,710 1,898,039 2,984,550 4,882,589 Total Noncurrent Assets 3,528,207 1,551,421 5,079,628 Total Assets 3,913,513 1,745,108 5,658,621 18,670 9,680 297 10,358 5,504 4,619 1,004 35,386 18,096 41,904 7,680 3,228 156,426 11,035 1,032 1,300 1,930 11,475 8,748 12,130 47,650 29,705 10,712 297 11,658 5,504 4,619 2,934 46,861 26,844 54,034 7,680 3,228 204,076 14,824 837,169 851,993 1,989 10,040 355,851 24,923 392,803 16,813 10,040 1,193,020 24,923 1,244,796 1,008,419 440,453 1,448,872 2,704,433 1,009,973 3,714,406 32,285 29,125 23,272 1,841 5,058 281 108,799 2,905,094 $ 5,419 30,868 258,395 1,304,655 37,704 29,125 23,272 1,841 5,058 281 30,868 367,194 4,209,749 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 Revenue Bond Reserve Capital Assets Land, Water Rights, and Construction in Progress Facilities, Infrastructure, and Equipment (net of depreciation) Total Capital Assets (net of accumulated depreciation) LIABILITIES 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 Noncurrent Liabilities Accrued Compensated Absences-Due in More Than One Year Deferred Revenue Bonds, Loans, and Other Payables-Due in More Than One Year Accreted Interest Payable Deferred Credits and Other Liabilities Pollution Remediation Obligation Total Noncurrent 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 Repair and Replacement Unrestricted Total Net Assets 32 $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona Table of Contents Statement of Activities For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Function/Programs Governmental Activities General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance & Accounting Public Works & Water Resources Community and Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services 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 $ 612 $ 934 5,499 717 5,602 1,434 6,697 35,605 134,221 111,227 3,047 51,974 13,491 2,905 578 40,358 414,901 Charges for Services 188 $ 243 889 214 430 2,813 4,666 9,604 9,917 973 4,617 2,485 635 478 38,152 83,888 34,533 3,680 18,853 140,954 94,056 34,533 2,816 20,940 152,345 555,855 $ 190,497 $ 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 Program Revenues Operating Grants and Contributions - $ 4 13 727 18,658 3,145 9,658 32,205 32,205 $ Capital Grants and Contributions 6,022 35,050 41,072 Governmental Activities $ 12,846 2,674 2,369 17,889 Business-type Activities (424) $ (691) (4,606) (503) (5,589) (1,004) (3,884) (24,190) (70,909) (98,165) (2,074) (37,699) (11,006) (2,270) (100) (40,358) (303,472) - 58,961 $ Total - $ - (424) (691) (4,606) (503) (5,589) (1,004) (3,884) (24,190) (70,909) (98,165) (2,074) (37,699) (11,006) (2,270) (100) (40,358) (303,472) 23,014 2,674 1,505 2,087 29,280 23,014 2,674 1,505 2,087 29,280 (303,472) 29,280 (274,192) 67,703 143,232 11,183 134 - 67,703 143,366 11,183 17,844 22,849 8,497 248 11,849 10,179 293,584 (9,888) 2,914,982 2,905,094 $ 2,658 1,355 (10,179) (6,032) 23,248 1,281,407 1,304,655 $ 17,844 22,849 8,497 2,906 13,204 287,552 13,360 4,196,389 4,209,749 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 33 Table of Contents 34 Balance Sheet Governmental Funds June 30, 2011 (in thousands of dollars) General City of Scottsdale, Arizona 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 Library Receivable Highway User Tax Auto Lieu Tax Intergovernmental Grants Special Assessments Miscellaneous Due from Other Funds Supplies Inventory Total Assets (continued) $ $ General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds 58,336 $ 667 5,071 $ 41,672 38,389 - 109,222 14,287 132 13,780 642 1,359 1,440 1,754 10,381 252 692 11 2,002 104 247 91,799 $ 1,945 48,688 $ 33 160 3,699 42,281 $ 111 3,406 165 1,110 25,768 6,626 1,244 329 162,268 Total Governmental Funds $ $ 211,018 56,626 276 17,186 642 3,469 1,440 1,754 10,381 252 1,110 692 25,779 6,786 1,244 6,030 104 247 345,036 Table of Contents City of Scottsdale, Arizona Balance Sheet Governmental Funds June 30, 2011 (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 Court Library Privilege Tax Special Assessments Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ 6,501 $ 9,301 63 396 General CIP Construction Capital Projects - $ 12,601 27,975 4,043 $ 26 - 921 4,135 252 6,590 1,154 4,614 917 3,228 38,072 1,325 41,901 160 739 5 4,973 247 281 53,199 53,727 91,799 $ 6,787 6,787 48,688 $ Total Nonmajor Governmental Funds 6,401 512 104 5,432 7,015 Total Governmental Funds $ 102 1,244 35,468 524 87 56,889 16,945 9,839 104 18,096 35,386 2,348 4,135 252 6,590 1,244 35,628 2,417 4,619 1,004 3,228 141,835 Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances $ The notes to the financial statements are an integral part of this statement. 3,000 6,005 1,051 27,252 37,308 42,281 $ 91,492 5,170 9,357 (640) 105,379 162,268 $ 3,247 104,565 6,221 36,609 52,559 203,201 345,036 35 Table of Contents Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2011 (in thousands of dollars) Fund Balances - Total Governmental Funds $ 203,201 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; therefore, are not reported in the funds. 3,493,414 Bond issuance costs are not financial resources; therefore, are not reported in the funds. 4,328 Long-term liabilities, including bonds payable, are not due and payable in the current period; therefore, are not reported in the funds. (898,186) 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. 44,934 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. 57,403 Net Assets of Governmental Activities $ 2,905,094 The notes to the financial statements are an integral part of this statement. 36 City of Scottsdale, Arizona Table of Contents Statement of Revenues, Expenditures, and Changes in Fund Balances City of Scottsdale, Arizona Governmental Funds For the Fiscal Year Ended June 30, 2011 (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 Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines, Fees and Forfeitures Court Parking Photo Radar Court Enhancement Library Police Fees Special Assessments Property Rental Interest Earnings Investment Loss Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues 37 (continued) $ 24,703 $ 87,884 13,126 7,842 3,163 178 832 Total Nonmajor Governmental Funds General CIP Construction Capital Projects 37,450 $ - - $ - 3,817 42,241 - Total Governmental Funds $ 65,970 130,125 13,126 7,842 3,163 178 832 17,844 22 849 22,849 7,665 1,745 - - 13,396 - 17,844 22 849 22,849 7,665 13,396 1,745 6,891 3,637 2,550 780 - 87 - 1,174 - 6,978 4,811 2,550 780 4,312 287 1,983 424 3,201 1,221 (3,369) - 735 415 (6) 2 1,044 527 733 268 1,069 (22) 4,314 287 1,983 1,044 424 527 733 4,204 2,705 (3,397) 851 34 478 1 3,374 13,932 541 228 959 228,959 1 37 451 37,451 142 22,527 32 890 1,002 25 824 25,824 16,577 213 11,990 188 1,156 408 868 349 95 998 95,998 16,719 22,740 12,841 254 478 1,157 4,673 14,800 1,892 388 232 388,232 Table of Contents 38 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) General Obligation Bond Debt Service General EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer & Finance Public Works & Water Resources Community & Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Improvements Total Expenditures Total Nonmajor Governmental Funds General CIP Construction Capital Projects Total Governmental Funds 613 964 5,502 719 4,298 1,518 4,899 15,888 25 416 25,416 105,665 3,013 34,498 9,357 3,031 578 - - 1,270 15,575 16 941 16,941 2,338 9,469 - 613 964 5,502 719 5,568 1,518 4,899 31,463 42 357 42,357 108,003 3,013 43,967 9,357 3,031 578 1,105 3,803 56 220,923 27,975 25,533 538 54,046 56,358 56,358 8,597 10,755 463 51,090 116,498 37,677 40,091 1,057 107,448 447,825 8 036 8,036 (16 595) (16,595) (30 534) (30,534) (20 500) (20,500) (59 593) (59,593) 12,216 (18,812) (6,596) 15,732 43,115 4,092 (44,489) 18,450 18,998 (3,833) 1,091 20,000 36,256 32,646 (46,733) 44,870 22,525 5,955 (50,329) 8,934 79,592 (69,378) 1,091 87,985 42,525 10,047 (94,818) 57,044 Net Change in Fund Balances 1,440 1,855 5,722 (11,566) (2,549) Fund Balances - Beginning, restated 52,287 4,932 31,586 116,945 53,727 $ 6,787 $ 37,308 $ 105,379 Excess (Deficiency) of Revenues Over Expenditures City of Scottsdale, Arizona OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Proceeds from Sale of Assets Refunding Bonds Issued Long-term Capital-Related Debt Issued Premium on Long Term Debt Payment to Bond Refunding Escrow Agent Total Other Financing Sources and (Uses) Fund Balances - Ending $ The notes to the financial statements are an integral part of this statement. 205,750 $ 203,201 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 Fiscal Year Ended June 30, 2011 (in thousands of dollars) Net Change in Fund Balances - Total Governmental Funds $ (2,549) 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. (2,642) Donations of capital assets are not capitalized on the governmental fund statements but are shown in the statement of activities. 39 Transfer of capital asset to the Internal Service Fund. (949) Some expenses reported in the statement of activities do not require the use of current financial resources; therefore, are not reported as expenditures in governmental funds. 1,175 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 5,395 Bond issuance costs are expended in the governmental funds when paid, 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. 717 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; however, neither i h transaction i h has any affect ff on net assets. Thi This iis the h amount b by which debt proceeds exceeded principal retirement in the current period. (8,062) Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refunding. 73 The net revenues of certain activities of internal service funds is reported with governmental activities. Changes in Net Assets of Governmental Activities (3,085) $ (9,888) The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 39 Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Tax 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 Recreation Fees Westworld Equestrian Facility Fees Fire Fees Fines, Fees and Forfeitures Court Parking Net Decrease in Fund Balance - Budget to GAAP Library Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues $ 24,714 88,325 10,592 8,200 3,300 140 889 Actual Amounts Budgetary Basis Final $ 24,714 85,886 12,481 8,200 3,300 140 889 $ Budget to GAAP Differences 24,703 87,884 13,126 7,842 3,163 178 832 $ Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis - $ 24,703 87,884 13,126 7,842 3,163 178 832 $ (11) 1,998 645 (358) (137) 38 (57) 17,611 22 846 22,846 8,157 1,709 17,611 22 846 22,846 8,157 1,709 17,844 22 849 22,849 7,665 1,745 - 17,844 22 849 22,849 7,665 1,745 233 3 (492) 36 8,220 3,360 2,611 645 8,220 3,360 2,555 642 6,891 3,637 2,550 780 - 6,891 3,637 2,550 780 (1,329) 277 (5) 138 7,277 425 1,757 322 2,776 959 - 4,839 425 1,757 322 2,816 959 - 4,312 287 1,983 424 3,201 1,221 - (3,369) 4,312 287 1,983 424 3,201 1,221 (3,369) (527) (138) 226 102 385 262 - 850 574 405 14,034 500 231,198 , 850 483 2,859 14,034 503 230,557 , 851 34 478 1 3,374 13,932 541 232,328 , ((3,369) , ) 851 34 478 1 3,374 13,932 541 228,959 , 1 34 (5) 1 515 (102) 38 1,771 , 613 964 5,502 719 4,298 1,518 4,899 15,888 25,416 105,665 3,013 34,498 9,357 3,031 578 29 172 289 103 314 11 (35) 501 2,102 2,253 301 1,282 257 (64) 46 1,105 3,803 56 220,923 670 (1,080) (56) 7,095 EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance & Accounting Public Works & Water Resources Community & Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures 616 1,189 5,980 827 4,670 1,407 3,691 17,660 29,957 110,886 3,525 37,354 9,904 2,816 574 609 1,139 5,771 821 4,603 1,407 4,842 16,371 27,384 107,845 3,295 35,784 9,328 2,961 624 580 967 5,482 718 4,289 1,396 4,877 15,870 25,282 105,592 2,994 34,502 9,071 3,025 578 1,775 2,723 235,554 1,775 2,723 227,282 1,105 3,803 56 220,187 33 (3) 20 1 9 122 22 18 134 73 19 (4) 286 6 736 Excess (Deficiency) of Revenues Over Expenditures (4,356) 3,275 12,141 (4,105) 8,036 8,866 12,592 (16,716) (4,124) 12,592 (19,679) (7,087) 12,216 (18,812) (6,596) - 12,216 (18,812) (6,596) (376) 867 491 (8,480) (3,812) 5,545 (4,105) 1,440 9,357 37,186 37,186 47,012 5,275 52,287 9,826 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 28,706 $ 33,374 $ 52,557 $ 1,170 $ 53,727 $ 19,183 The notes to the financial statements are an integral part of this statement. 40 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 Fiscal Year Ended June 30, 2011 (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 for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Bad Debt Expense 705 1 Total Expenditure Reconciling Items: Net Decrease in Fund Balance - Budget to GAAP (3,369) 706 $ (4,075) Fund Balance - Beginning $ 47,012 Fund Balance - Ending $ 52,557 The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 41 Table of Contents Statement of Net Assets Proprietary Funds June 30, 2011 (in thousands of dollars) Water and Sewer Utility Airport Solid Waste Governmental Activities Internal Service Funds Total ASSETS Current Assets Cash and Investments Cash with Fiscal Agent Receivables Privilege Tax Charges for ServicesFunds Governmental Intergovernmental June 30, 2011 (in thousands of dollars) Interest Miscellaneous Supplies Inventory Restricted Cash, Cash Equivalents, and Investments: Customer Advances and Deposits Other Restricted Assets Joint Venture Construction Deposits Balance Sheet $ $ 20 1,895 4 74 - 1,866 64 $ 8,966 - $ 126,342 39,372 $ 39,634 1,803 10 253 - 20 15,934 2,016 213 2,164 - 5,533 58,336 11,032 $ 667 193,687 40,374 119,893 1,568 24,923 - - 119,893 1,568 24,923 - 10,040 30,868 5,419 - 29,516 89,701 1,080,935 462,474 17,167 822 56,600 (408,606) 9,564 21,909 956 3,074 (10,009) 1,328,609 25,494 177,122 1,521,320 $ 3,476 - 14,131 121 199 1,837 - 1,698,442 $ $ 25,494 $ 31,027 42 36 662 General 1,930 Obligation Bond Debt Service 5,696 General - 5,696 ASSETS Total Current Assets Cash and Investments Cash with Noncurrent AssetsFiscal Agent Receivables (net of allowance for Equity in Joint Venture Deferred Charges uncollectibles) Pollution Remediation Recoveries Interest Restricted Cash, Cash Equivalents, and Investments: Privilege Tax Deferred Revenue Water and Sewer System Hotel/Motel Tax Replacement Revenue BondTax Reserve Property State Shared Sales Tax Capital Assets Franchise Fee Land Water Rights Court Receivable Water System Library Receivable Sewer System Highway Tax Buildings and User Improvements AutoVehicles Lieu Tax Motor Machinery and Equipment Intergovernmental Furniture and Fixtures Grants Construction in Progress Special Assessments Less Accumulated Depreciation Miscellaneous Capital Assets (net of DueTotal from Other Funds accumulated depreciation) Supplies Inventory Total Assets Assets Total Noncurrent Total Assets 113,900 39,372 5,071 $ 41,672 132 13,780 642 1,359 1,440 1,754 1,110 10,381 252 - 3,649 692 11 1,933 - 980 - (3,065) 2,002 104 4,607 247 91,799 $4,607 $ 15,639 General CIP Construction Capital Projects - - 10,040 30,868 5,419 1,945 - 1,358,710 48,688 $ 1,551,421 40,190 89,701 1,080,935 462,474 25,558 20,056 822 60,654 (421,680) $ 1,745,108 $ 7,056 65,423 977 4,098 (47,089) 30,465 30,465 38,389 - 33 160 3,699 42,281 $ 70,839 (continued on next page) (continued) 42 City of Scottsdale, Arizona 10/24/2011 Total Nonmajor Governmen Funds 10 1 2 16 Table of Contents Statement of Net Assets Proprietary Funds June 30, 2011 (in thousands of dollars) Water and Sewer Utility Airport Solid Waste Governmental Activities Internal Service Funds Total LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Due Within One Year Claims Payable - Due Within One Year Customer Advances and Deposits Matured Bonds Payable Matured Bond Interest Payable Bonds d Payable bl andd Other h Payables bl - Due Within h One Year $ Total Current Liabilities 10,142 675 854 1,866 11,475 8,748 12,130 $ 351 34 49 64 - $ 542 323 397 - $ 11,035 1,032 1,300 1,930 11,475 8,748 12,130 $ 1,725 138 185 5,504 - 45,890 498 1,262 47,650 7,552 1,239 10,040 355,810 24,923 49 1 - 701 40 - 1,989 10,040 355,851 24,923 233 5,651 - 392,012 50 741 392,803 5,884 437,902 548 2,003 440,453 13,436 979,872 25,494 4,607 1,009,973 30,465 30,868 5,419 244,381 1,260,540 4,985 30,479 9,029 13,636 30,868 5,419 258,395 1,304,655 26,938 57,403 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 Restricted for Debt Service Unrestricted Total Net Assets $ $ $ $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 11/3/2011 43 Table of Contents Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Fiscal Year Ended June 30, 2011 (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 Non-Operating Revenues (Expenses) Property Tax Transaction Privilege Tax Investment Income Interest Expense Gain on Sale of Capital Assets Net Non-Operating Revenues (Expenses) Income Before Contributions and Transfers Capital Contributions Transfers Out Change in Net Assets Total Net Assets - Beginning Total Net Assets - Ending $ 86,490 34,533 7,566 1,353 Airport $ Solid Waste 2,816 - $ Governmental Activities Internal Service Funds Total 20,940 2 $ 86,490 34,533 7,566 20,940 2,816 1,355 $ 39,141 798 129,942 2,816 20,942 153,700 39,939 50,369 17,424 9,663 34,836 1,907 683 1,090 16,131 2,509 213 50,369 17,424 16,131 1,907 12,855 36,139 40,954 5,061 112,292 3,680 18,853 134,825 46,015 17,650 (864) 2,089 18,875 (6,076) 2,499 (6,131) 2 134 66 - 93 - 134 2,658 (6,131) 2 1,703 524 (150) (3,630) 200 93 (3,337) 2,077 14,020 (664) 2,182 15,538 (3,999) 15,520 (9,377) 2,369 (11) (791) 17,889 (10,179) 949 (35) 20,163 1,694 1,391 23,248 (3,085) 1,240,377 28,785 12,245 1,281,407 60,488 1,260,540 $ 30,479 $ 13,636 $ 1,304,655 $ 57,403 The notes to the financial statements are an integral part of this statement. 44 City of Scottsdale, Arizona 11/3/2011 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2011 (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 $ Airport $ 155,373 (70,762) (23,975) 1,373 355 2,293 62,009 (900) (9,377) 130 (11) (791) 130 (10,179) 1,703 (35) (9,377) 119 (791) (10,049) 1,668 3,859 829 (49,406) (170) (13,758) (16,874) 5,662 - 885 (3,906) - (536) - 3,859 1,714 (53,848) (170) (13,758) (16,874) 5,662 - (3,774) 125 (69,858) (3,021) (536) (73,415) (3,649) 2,615 74 98 2,787 573 2,615 74 98 2,787 573 Net Increase (Decrease) in Cash and Cash Equivalents (17,259) (2,473) 1,064 (18,668) (2,308) Cash and Cash Equivalents at Beginning of Year 218,724 6,013 7,902 232,639 41,942 201,465 $ 3,540 8,966 $ 213,971 Cash Flows from Non-Capital Financing Activities Property Tax Transaction Privilege Tax 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 Acquisition and Construction of Property and Equipment Water and Sewer Development Fee Credit Agreements Principal Payments on Capital Debt Interest Paid on Capital Debt Investment in Joint Venture & CIP Deposit Sale of Capital Assets Net Cash Used for Capital and Related Financing Activities Cash Flows from Investing Activities Income Received on Investments Net Cash Provided by Investing Activities Cash and Cash Equivalents at End of Year $ $ 2,826 (1,403) (1,068) - 59,361 $ Total 20,756 (12,808) (5,657) 2 Net Cash Provided by Operating Activities 131,791 (56,551) (17,250) 1,371 Solid Waste Governmental Activities Internal Service Funds $ $ $ 39,108 (36,788) (4,018) 798 39,634 (continued) 45 City of Scottsdale, Arizona 11/3/2011 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Water and Sewer Utility Cash and Cash Equivalents at End of Year Includes Cash and Investments Deduction for Long-term Investments Cash with Fiscal Agent Cash on Deposit Restricted Cash and Investments Total Cash and Cash Equivalents 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 Pollution Remediation Recoveries Supplies Inventory Accounts Payable Accrued Payroll and Benefits Claims Payable Deferred Revenue Other Liabilities $ $ 48,193 Solid Waste 3,476 - $ 64 Total 8,966 - 126,342 39,372 - 48,257 $ 39,634 - $ 201,465 $ 3,540 $ 8,966 $ 213,971 $ 39,634 $ 17,650 $ (864) $ 2,089 $ 18,875 $ (6,076) Total Adjustments Net Cash Provided by Operating Activities 113,900 39,372 Airport Governmental Activities Internal Service Funds 34,836 1,090 213 36,139 5,061 (323) 18 2,682 3,898 (177) 729 48 51 7 (191) 205 (78) (41) (8) (64) 249 (10) (316) (122) 2,682 4,039 (6) 688 30 (33) 66 226 (115) (2) (27) 41,711 1,219 204 43,134 5,176 $ 59,361 $ 355 $ 2,293 $ 62,009 $ (900) 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 Gain on Sale of Capital Assets $ 10,919 (167) 2 $ - $ - $ 10,919 (167) 2 $ 949 - Total Non-Cash Financing Activities $ 10,754 $ - $ - $ 10,754 $ 949 The notes to the financial statements are an integral part of this statement. 46 City of Scottsdale, Arizona Table of Contents Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2011 (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 4 $ 899 4 $ 899 - $ 121 778 - $ 899 4 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 47 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2011 Table of Contents Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Private Purpose Trust Funds ADDITIONS Contributions: Private Donations $ Total Additions 6 DEDUCTIONS Scholarships 6 Total Deductions 6 Change in Net Assets - Net Assets - Beginning Net Assets - Ending 6 4 $ 4 The notes to the financial statements are an integral part of this statement. 48 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 confirmed by 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 confirmed by 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 and Accounting 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale Finance and Accounting 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale Finance and Accounting 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, 2011 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 49 For the Fiscal Year Ended June 30, 2011 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) • • • • • • • 50 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 and Accounting 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 and Accounting 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 and Accounting 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 and Accounting 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 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, 2011 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 earned 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 31 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. Because different measurement focuses and bases of accounting are used in the government-wide statement of net assets and in governmental fund statements, amounts reported as restricted fund balances in governmental funds may be different from amounts reported as restricted net assets in the statement of net assets. 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 51 For the Fiscal Year Ended June 30, 2011 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 and is used to account for and report all financial resources not accounted for and reported in another fund. The General Obligation Bond Debt Service Fund is used to account and report the accumulation of financial resources that are restricted, committed or assigned to expenditures for the payment of long-term obligation debt principal, interest, and related costs. The General CIP Construction Capital Projects Fund accounts and reports financial resources that are restricted, committed, or assigned to expenditures for capital outlays including the acquisition, construction and improvements to 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 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. 52 City of Scottsdale, Arizona Table of Contents When both restricted and unrestricted resources are available for specified expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed would be considered spent first (if available), followed by assigned (if available), and then unassigned amounts. D. Assets, Liabilities, and Net Assets or Equity 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, solid waste fees, vehicle purchase/ maintenance 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, 2011 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 included among program revenues are reported instead as general revenues. 1. Deposits and Investments 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.” City of Scottsdale, Arizona 53 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents All accounts receivables are shown net of an allowance for uncollectibles. 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 reserve and replacement account is used to report resources set aside to meet unexpected contingencies or to fund asset replacements. Assets are also restricted for enterprise funds for deposits received from water, sewer and airport customers. Additionally, the City has received a good faith deposit for the future planned sale of Planet Ranch. 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. 54 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, 2011 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 the calendar year-end are forfeited. The City’s policy is to pay employees for unused accumulated vacation hours at termination or retirement. 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 and have accumulated 300 or more hours of sick leave, could only 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. Effective July 1, 2011 employees will be funded at 100% for any medical leave hours accrued prior to July 1, 2011. If an employee has not accrued 1,200 hours before July 1, 2011, the employee will be funded the unused medical leave accrued after July 1, 2011 at 50% of the employee’s hourly base rate at the time of retirement, up to and including 1,200 hours accrued both before and after July 1, 2011. Employees that work a 56 hour workweek, will have the same rules apply, except their cap is at 1,680 medical leave hours. Vacation pay is calculated based on vacation taken and the medical leave conversion is based on an actuarial valuation dated January 1, 2011. 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, 2011 in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30, 2011 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 55 For the Fiscal Year Ended June 30, 2011 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. Development Impact Fee Revenue The City has entered into several agreements whereby it will provide a development fee credit to developers for construction of certain public infrastructure improvements. The funding source for the reimbursements will come from Water and Sewer development fees, which are paid when units of the development are hooked up to the utility system. 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. 9. Fund Balance Policies In the fund financial statements, governmental funds report fund balance into classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purpose for which amount in those funds can be spent. The classifications of fund balance are Nonspendable, Restricted, Committed, Assigned and Unassigned. Nonspendable fund balances include amounts that cannot be spent because it is not in a spendable form, such as inventory or prepaid items or because resources legally or contractually must remain intact. Restricted fund balances are the portion of fund balance that have externally enforceable limitations on their usage through legislation or limitations imposed by creditors, grantors, laws and regulations of other governments, or enabling legislation. Committed fund balances are self imposed limitations by the highest level of decision making authority, namely, Mayor and Council prior to the end of the reporting period. Mayor and Council approval is required to commit resources or to rescind the commitment. Assigned fund balances are limitations imposed by management based on the intended use of the funds. Assigned fund balances for the City are authorized by the City Treasurer. Modifications or rescissions of the constraints can also be removed by the same action that limited the funds. Unassigned fund balances represent the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. 56 City of Scottsdale, Arizona Table of Contents 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. Notes to Financial Statements 10. Net Assets For the Fiscal Year Ended June 30, 2011 When both restricted and unrestricted resources are available for specified expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed would be considered spent first (if available), followed by assigned (if available), and then unassigned amounts. E. Implementation of New Accounting Principles 1. Governmental Accounting Standards Board (GASB) Statement No. 54 The City adopted the provisions of GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. This statement established new fund balance classifications for governmental funds to make the nature and extent of the constraints placed on fund balance more transparent. The statement changed the previous classifications of fund balance of Reserved and Unreserved to five new classifications, which are Nonspendable, Restricted, Committed, Assigned, and Unassigned. GASB Statement 54 added additional note disclosures for the new classifications and refined the definitions of the various governmental fund types. 2. Restatement of Fund Balance For fiscal year ending June 30, 2011, GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions was implemented. This resulted in part of the beginning DC Ranch CFD Debt Service Fund Balance and Waterfront CFD Debt Service Fund Balance to be reclassified to the General Fund: Restatement of Fund Balance (in thousands of dollars) Fund Balance July 1, 2010 as previously stated Change in Accounting Principle – GASB 54 Fund Balance July 1, 2010, as restated City of Scottsdale, Arizona General Fund $ 52,104 Waterfront CFD Debt Service Fund DC Ranch CFD Debt Service Fund $ $ 183 $ 52,287 750 (77) $ 673 623 (106) $ 517 57 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents II. Reconciliation of Government-wide and Fund Financial Statements A. Explanation of certain differences between the governmental funds balance sheet and the government-wide statement of nets assets The City’s total governmental fund balances, $203,201, differs from net assets of governmental activities, $2,905,094, 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 g 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 Library Receivable Highway User Tax Auto Lieu Tax Intergovernmental Grants Special Assessments Miscellaneous Due from Other Funds/Internal Balances Supplies Inventory Capital Assets (net of accumulated depreciation) Deferred charges and other assets Total Assets LIABILITIES Accounts Payable Accrued Payroll and Benefits Due to Other Funds Accrued Compensated Absences - Current Accrued Compensated Absences - Due Within One Year Accrued Compensated Absences - Due in More Than One Year Claims Payable Matured Bonds Interest Payable Matured Bonds Payable D f dR Deferred Revenue Property Tax Court Library Privilege Tax Special Assessments 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 58 $ $ $ Long-Term Assets/ Liabilities (1) Reclassifications and Eliminations Statement of Net Assets Totals 211,018 $ 56,626 , - $ - 39,634 $ - - $ - 250,652 56,626 , 276 17,186 642 3,469 1,440 1,754 10,381 252 1,110 692 25,779 6,786 1,244 6,030 104 247 345,036 $ 3,493,414 4,328 3,497,742 $ 42 36 662 30,465 70,839 $ (104) (104) $ 318 17,186 642 3,469 1,440 1,754 10,381 252 1,110 692 25,779 6,786 1,244 6,066 909 3,523,879 4,328 3,913,513 16,945 $ 9,839 104 18,096 35,386 - $ (297) 297 10,173 14,591 - 1,725 $ 138 185 233 5,504 - - $ (104) - 18,670 9,680 297 10,358 14,824 5,504 18,096 35,386 - - 5,651 13,436 (104) 6,973 707 4,619 1,004 3,228 879,073 1,008,419 57,403 70,839 $ (104) $ 2,905,094 3,913,513 2,348 4,135 252 6,590 1,244 35,628 2,417 4,619 1,004 3,228 141,835 $ Internal Service Funds (2) 203,201 345,036 $ (2,348) (4,135) (252) (6,590) (1,244) (28,655) (1,710) 873,422 853,252 2,644,490 3,497,742 $ 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 $ $ 5,034,893 (1,541,479) 3,493,414 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 @ 7/1/10 Bond issuance cost for fiscal year 2011 Amortization of bond issuance costs $ $ 3,611 1,057 (340) 4,328 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, 2011 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 $ $ (14,582) (841,773) 8,366 (25,123) (24,764) (310) (898 186) (898,186) Notes to Financial Statements (in thousands of dollars) For the Fiscal Year Ended June 30, 2011 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 libraryy revenue Deferred court revenue Deferred tax revenue Deferred intergovernmental revenue Deferred other $ $ 1,244 252 4,135 8,938 28,655 1,710 44,934 $ 57,403 (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 59 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 60 B. Explanation of certain differences between the governmental funds 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 of $2,549, differs from the change in net assets for the governmental activities, a deficit of $9,888, 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 p y Transaction Privilege Hotel/Motel Tax 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 Business and Liquor Licenses Charges for Current Services: Building and Related Permits Recreation Fees Westworld Equestrian Facility Fees Fire Fees Fines and Forfeitures: Court Parking Photo Radar Court Enhancement Library Police Fees Special Assessments Property Rental Interest Earnings Investment Loss Intergovernmental: Federal Grants State Grants Miscellaneous Developer Contributions Streetlight g and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total $ Long-Term Revenue/ Expenses (3) 65,970 , $ 130,125 13,126 7,842 3,163 178 832 30 $ 411 (430) - Capital Related Items (4) Internal Service Funds (5) - $ - Reclassifications and Eliminations (6) 1,703 , $ - Long-Term Debt Transactions (7) Statement of of Activities - $ - - $ - 67,703 , 130,536 12,696 7,842 3,163 178 832 17,844 22,849 7,665 13,396 1,745 40 - - - - 17,844 22,849 7,665 13,396 1,785 6,978 4,811 2,550 780 27 1 4 12 - - (34) - - 6,971 4,812 2,554 792 4,314 287 1,983 1,044 424 527 733 4,204 2,705 (3,397) (135) (1) (619) (653) 93 416 - - 524 - - - 4,179 286 1,983 1,044 (195) 527 80 4,297 3,645 (3,397) 16,719 22,740 12,841 254 478 1,157 4,673 14,800 1,892 388,232 4,741 7 683 700 51 17 5,395 - (150) 2,077 (1,944) (22) (2,000) - 21,460 22,747 13,524 254 478 1,857 4,724 12,856 1,737 393,704 (continued) City of Scottsdale, Arizona Table of Contents EXPENDITURES/EXPENSES Current: General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer & Finance Public Works & Water Resources Community & Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Streetlight and Services Districts Debt Service: Principal Interest and Fiscal Charges Bond Issuance Costs Capital Improvements Total Expenditures/Expenses OTHER FINANCING USES/CHANGES IN NET ASSETS Net Transfers (to) From Other Funds Bonds Issued Capital Contributions Proceeds from Sale of Assets Refunding Bonds Issued Premium on Bonds Issued Payment to Bond Refunding Escrow Agent Proceeds from Long Term Debt Issued Proceeds from Notes Payable Total Net Change for the Year $ $ 613 $ 964 5,502 719 5,568 1,518 4,899 31,463 42,357 108,003 3,013 43,967 9,357 3,031 578 (4) $ (35) (38) (6) 6 (118) (8) (36) (146) (252) (38) (252) (78) (170) - Capital Related Items (4) - $ 22 175 3,729 90,250 3,887 36 7,683 4,296 12 - Internal Service Funds (5) Reclassifications and Eliminations (6) 3 $ 5 35 4 28 12 1,852 795 2,542 42 36 636 54 32 - - $ (221) (346) (782) (453) (60) (138) - Long-Term Debt Transactions (7) Statement of of Activities - $ - 612 934 5,499 717 5,602 1,434 6,697 35,605 134,221 111,227 3,047 51,974 13,491 2,905 578 37,677 40,091 1,057 107,448 447,825 (1,175) (107,448) 2,642 6,076 (2,000) (37,677) 267 (1,057) (38,467) 40,358 414,901 10,214 1,091 87,985 10,047 (94,818) 42,525 57,044 - (949) 39 (910) 914 914 - (87,985) (10,047) 94,818 (42,525) (45,739) 10,179 39 1,091 11,309 6,570 $ (3,552) $ (3,085) $ (2,549) $ - $ (7,272) $ Notes to Financial Statements Total Long-Term Governmental Revenue/ Funds Expenses (3) For the Fiscal Year Ended June 30, 2011 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands of dollars) (9,888) (continued) City of Scottsdale, Arizona 61 For the Fiscal Year Ended June 30, 2011 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) Reconciling Items Description: (3) 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 Library revenue Privilege tax revenue Transient Occupancy tax revenue Special Assessment revenue Intergovernmental revenue Other Receivable revenue $ $ 30 (135) (619) 411 (430) (653) 5,431 1,360 5,395 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 $ 413 762 1,175 (4) 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 Miscellaneous net capital expenditures Depreciation Expenses Loss on disposal of capital assets Difference $ Transfer of capital assets to Internal Service Fund $ 107,448 2,488 (111,542) (1,036) (2,642) $ (949) $ 39 $ (3,085) $ (2,000) (2,000) - Donations of capital assets are not capitalized 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) IInterfund f d transactions i between b governmentall activities, i i i other h than h Internal I l Service S i Funds, F d are eliminated li i d in i the h consolidation lid i off these h activities i i i ffor the h 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 $ (continued) 62 City of Scottsdale, Arizona Table of Contents Bond issuance costs for fiscal year 2011 Amortization of bond issuance costs Diff Difference $ $ 1,057 (340) 717 $ $ $ 94,818 37,677 132,495 $ (646) (777) 1,496 73 Repayment of bond principal is reported as an expenditure in governmental funds and, thus, has the effect of reducing fund balance because current financial resources have been used. For the government-wide statements, however, the principal payments reduce the liabilities in the statement of net assets and do not result in an expense in the statement of activities. Transferred to the paying agent: Payments to Bond Refunding Escrow Principal payments made 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. Amortization of deferred charges on refundings Interest accretion and amortization Amortization of bond premium and discounts $ Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the government-wide statements, however, issuing debt increases long-term liabilities in the statement of net assets and does not affect the statement of activities. Proceeds were received from: Refunding Revenue Bonds Long-Term Capital-Related Debt Premium on Bonds City of Scottsdale, Arizona $ $ Notes to Financial Statements (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. For the Fiscal Year Ended June 30, 2011 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands of dollars) (87,985) (42,525) (10,047) (140,557) 63 For the Fiscal Year Ended June 30, 2011 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 2010/11. The 2010/11 budget appropriation is established and reflected in the financial statements as follows: The City prepares its budget on a basis generally consistent with GAAP, with such exceptions as eliminating the Change in Fair Market Value activity. Budgetary comparison statements for the general fund and major special revenue funds are presented in the basic financial statements. The City had no major special revenue funds for fiscal year 10/11. These statements display original budget, amended budget and actual results. Budgetary comparison schedules are also included as supplementary schedules for the other governmental funds. 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, Community Development Block Grant, HOME, Grants, Section 8, Preserve Privilege Tax, and Special Programs), 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. 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 reappropriated 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 2010/11, there were no supplemental budgetary appropriations to the original budget. The expenditure appropriations in the adopted budget are by division. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Divisional appropriations may be amended during the year. 64 City of Scottsdale, Arizona Table of Contents B. Excess of Expenditures over Appropriations The Special Assessment Debt Service Fund exceeded its Debt Service Expenditure appropriation by $3,000. The additional expenditures incurred were funded by available fund balance. C. Deficit Fund Equity The Community Development Block Grant and the Grants Special Revenue Funds had a deficit ending fund balance of $247,000 and $393,000 respectively, caused by certain grant reimbursements not being available. Revenue accruals were deferred in the current fiscal year due to the unavailability of the funds. These reimbursements due will be recognized as revenue when actually received. City of Scottsdale, Arizona Notes to Financial Statements Management control of budgets is further maintained at a line item level within the division. For the Fiscal Year Ended June 30, 2011 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 divisions; and 2) unexpended appropriations may be transferred from one division to another. 65 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents D. Fund Balance Classifications The table below details the fund balance categories and classifications for Governmental Funds (in thousands of dollars): General Fund Balances: Nonspendable: Inventory Long-term Receivable Total Nonspendable: $ Restricted: Bed Tax for Tourism Bureau of Reclamation Funds for Westworld & TPC Improvements Certificates of Participation proceeds for Public Safety Project Property Tax for Debt Service Property Tax for District Improvements Street Light Districts General Government Special Programs Community and Economic Development Special Programs Community Service Special Programs Transaction Privilege Tax for Transportation Improvements Transaction Privilege Tax for Preserve Land Purchase and Improvements Federal Grants for Section 8 Housing Special Assessments for District Improvements Transportation Tax for Transportation Capital Projects Developer Contributions for Capital District Improvements GO Bond Proceeds for Capital Improvements Total Restricted: 247 247 General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ - 3,000 3,000 281 - 6,787 - 2,007 578 3,420 - 281 6,787 - - Total Nonmajor Governmental Funds $ - Total Governmental Funds $ 247 3,000 3,247 6,005 2,050 3,149 325 11 4,699 24,401 1,200 517 11,572 197 43,371 91,492 2,007 578 3,420 6,787 2,050 281 3,149 325 11 4,699 24,401 1,200 517 11,572 197 43,371 104,565 - 964 87 1,051 687 474 4,009 5,170 687 474 4,009 964 87 6,221 - 27,252 27,252 9,357 9,357 27,252 9,357 36,609 Committed: Community and Economic Dev Special Programs Public Safety Special Programs Community Service Special Programs In Lieu Stormwater Fees for Drainage Improvements In Lieu Parking Fees for Parking Projects Total Committed: Assigned: Capital Projects for Capital Improvements Excise Tax for MPC Capital Improvements Total Assigned : Unassigned: Total Fund Balances $ 53,199 53,727 $ 6,787 $ 37,308 $ (640) 105,379 $ 52,559 203,201 The Mayor and City Council have established a minimum fund balance policy of 10 percent of annual general governmental operating expenditures to be maintained in the General Fund and the Highway User Fuel Tax, Non Major-Special Revenue Fund. The reserves in these funds are to be maintained for unforeseen emergencies or catastrophic impacts to the City. 66 City of Scottsdale, Arizona Table of Contents Net Assets Reservations and Designations (in thousands of dollars) Water and Sewer Restricted for Repair and Replacement Restriced for Debt Service $ $ 30,868 5,419 36,287 The amounts presented below detail the City's planned use of the following Unrestricted Net Asset amounts: Water and Sewer Designated for Repair and Replacement Designated for Operating Reserve $ $ Airport Designated for Repair and Replacement Designated for Operating Reserve $ 3,048 570 3,618 Solid Waste Designated for Operating Reserve $ 4,566 Fleet Management Designated for Acquisition and Maintenance of Vehicles $ 14,086 $ 99,968 968 2,884 12,852 Self-Insurance D i t d ffor General Designated G l Li Liability bilit Cl Claims i Designated for Health Care Benefits $ 11,860 20,216 , 32,076 $ City of Scottsdale, Arizona Notes to Financial Statements Only restrictions imposed by external sources are shown as restricted net assets on the government-wide 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 for proprietary funds. Designations are created by administrative policy. Designations for operating reserves have been set in accordance with the City’s financial policy. Unrestricted net assets for the City’s internal service funds have been designated in accordance with the purpose of the funds. The following are the reservations and designations of net assets at June 30, 2011: For the Fiscal Year Ended June 30, 2011 E. Net Assets Reservations and Designations 67 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents IV. Detailed Notes on All Funds A. Cash and Investments 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 (A1, P-1), repurchase agreements, mutual funds consisting of the foregoing, and the State of Arizona Local Government Investment Pool (LGIP). Deposits At June 30, 2011, the carrying amount of the City’s deposits was $202,134,545, and the bank balance was $208,088,824. The $5,954,279 difference represents outstanding checks, 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, 2011, 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. The custodial credit risk 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. 68 City of Scottsdale, Arizona Table of Contents Investment Maturities (in Years) (in thousands of dollars) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Commercial Paper Guaranteed Investment Contracts Fair Value $ 124,596 176,977 10,153 7,999 Total Investments $ Less Than 1 1-2 $ 57,601 $ 66,995 38,059 * 138,912 10,153 7,999 - 275 275 - 320,000 $ 114,087 $205,907 2-3 $ 3+ 2 - $ $ 4 - 2 $ 4 * $9,010 of these bonds are callable on July 27, 2011 * $6,431 of these bonds are callable on May 18, 2012 * $22,618 of these bonds are callable between June 15, 2012 and June 20, 2012 Notes to Financial Statements 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: For the Fiscal Year Ended June 30, 2011 Interest Rate Risk 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, 2011 for each investment type: (in thousands of dollars) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Commercial Paper Guaranteed Investment Contracts Total Investments City of Scottsdale, Arizona $ Total 124,596 176,977 10,153 7,999 320,000 Not Rated $ - - - - 275 7,999 $ 187,130 $ 124,596 A-1+ $ 275 $ 176,977 10,153 - Exempt from Disclosure $ 124,596 - $ AAA 7,999 $ $ 275 69 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents Concentration of Credit Risk The City’s investment policy contains no limitations on the amount that can be invested in any one issuer. The following is a listing by issuer of the City’s investments at June 30, 2011: (in thousands of dollars) Issuer U.S. Government Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corp. (FHLMC) Federal National Mortgage Association (FNMA) Government National Mortgage Association (GNMA) Barclays PLC 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 Commercial Paper Corporate Note Corporate Note Guaranteed Investment Contract Total Investments Market Value $ 124,596 36,978 56,081 83,912 6 7,999 5,101 5,052 275 $ 320,000 Percent of Holdings 38.94% 11.56% 17.52% 26.22% 0.00% 2.50% 1.59% 1.58% 0.09% 100.00% Investments Total City cash and investments at fair value are as follows (in thousands of dollars): Cash on Hand Carrying Amount of City Deposits Investments $ 18 202,134 320,000 Total Cash and Investments $ 522,152 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 70 $ 376,994 95,998 48,257 4 121 778 $ 522,152 City of Scottsdale, Arizona Table of Contents $ 6,354 (3,448) Total Net Investment Income $ 2,906 The net decrease in the fair value of investments during fiscal year 2010/11 was $3,448,000. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. 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. B. Receivables 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): Notes to Financial Statements Net Interest and Dividends Net Decrease in the Fair Value of Investments For the Fiscal Year Ended June 30, 2011 Investment income comprises the following for the year ended June 30, 2011 (in thousands of dollars): Governmental and Governmental Activities Internal Service Funds: Receivables Property Taxes and Penalties: Property C rt Court Subtotal Property Taxes and Penalties General Obligation Bond Debt Service General Fund $ 1,359 $ 39,348 39 348 40,707 General CIP Construction Capital Projects 1,945 $ 1,945 Nonmajor and Other Funds - $ - Total Governmental and Internal Service Funds 165 $ 165 3,469 39,348 39 348 42,817 Other local taxes: Privilege Hotel/Motel State Shared Sales Franchise Fee Auto Lieu Highway User Subtotal Other Local Taxes 13,780 642 1,440 1,754 692 18,308 - - 3,406 1,110 4,516 17,186 642 1,440 1,754 692 1,110 22,824 Intergovernmental/Grants 11 - 160 32,394 32,565 Interest and Other: Interest Library Special Assessments Miscellaneous Subtotal Interest and Other 132 1,414 2,002 3,548 - 33 3,699 3,732 153 1,244 365 1,762 318 1,414 1,244 6,066 9,042 62,574 (30 (30,129) 129) 1,945 - 3,892 - 38,837 - 107,248 (30 (30,129) 129) 32,445 $ 1,945 $ 3,892 $ 38,837 $ Gross Receivable L All Less: Allowance ffor U Uncollectibles ll ibl Net Total Receivables City of Scottsdale, Arizona Enterprise Funds: $ 77,119 71 Table of Contents For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Enterprise Funds: 72 Business-Type Activities Receivables Privilege Tax Charges for services Intergovernmental/Grants Interest Miscellaneous Gross Receivable Net Total Receivables Water and Sewer Utility Airport Total Enterprise Fund Solid Waste $ - $ 14,131 121 199 1,837 16,288 20 $ 1,895 4 74 1,993 - $ 1,803 10 253 2,066 20 15,934 2,016 213 2,164 20,347 $ 16,288 $ 1,993 $ 2,066 $ 20,347 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 Court Library Privilege Tax Special Assessments Intergovernmental Other Unavailable $ 2,348 4,135 252 6,590 1,244 28,655 1,710 Total $ 44,934 Unearned $ 6,973 707 $ 7,680 City of Scottsdale, Arizona Table of Contents Governmental Activities Capital Assets, not being depreciated: Land Construction In Progress Total Capital Assets, not being depreciated: Beginning Balance $ Increases 1,512,943 $ 125,617 1,638,560 46,855 $ 108,601 155,456 Decreases Ending Balance (431) $ (86,091) (86,522) 1,559,367 148,127 1,707,494 Capital Assets, being depreciated: Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Capital Assets, being depreciated: 570,054 2,646,373 63,387 3,573 84,943 3,368,330 27,285 11,513 2,057 3,531 44,386 (1,120) (290) (3,558) (36) (2,759) (7,763) 596,219 2,657,596 61,886 3,537 85,715 3,404,953 Less Accumulated depreciation for: Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Accumulated depreciation: 204,278 1,171,032 40,277 3,212 60,049 1,478,848 20,752 85,048 4,806 67 5,930 116,603 (947) (10) (3,283) (36) (2,607) (6,883) 224,083 1,256,070 41,800 3,243 63,372 1,588,568 Total Capital Assets, being depreciated, net: 1,889,482 (72,217) (880) 1,816,385 3,528,042 $ 83,239 $ (87,402) $ 3,523,879 Governmental activities Capital Assets, net: Business-type Activities Capital Assets, not being depreciated: Land Water Rights Construction In Progress Total Capital Assets, not being depreciated: $ Beginning Balance $ 37,969 $ 89,701 202,274 329,944 Increases 2,221 $ 65,415 67,636 Decreases - $ (207,035) (207,035) Ending Balance 40,190 89,701 60,654 190,545 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: 917,289 421,633 22,657 17,804 621 1,380,004 163,646 43,484 2,901 2,310 201 212,542 (2,643) (58) (2,701) 1,080,935 462,474 25,558 20,056 822 1,589,845 Less Accumulated depreciation for: Water System Sewer System Buildings and Land Improvements Machinery and Equipment Furniture, Fixtures and Office Equipment Total Accumulated depreciation: 251,411 119,736 10,244 5,579 621 387,591 23,478 10,776 1,136 746 3 36,139 (1,992) (58) (2,050) 274,889 128,520 11,380 6,267 624 421,680 Total Capital Assets, being depreciated, net: 992,413 176,403 (651) 1,168,165 (207,686) $ 1,358,710 Business-type activities capital assets, net: City of Scottsdale, Arizona $ 1,322,357 $ 244,039 $ Notes to Financial Statements Capital asset activity for the year ended June 30, 2011, was as follows (in thousands of dollars): For the Fiscal Year Ended June 30, 2011 C. Capital Assets 73 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents During fiscal year 2010/11, the Water and Sewer Utility Enterprise Fund capitalized net interest costs of $11,224,945. Total interest expense in this fund before capitalization was $18,284,173. Depreciation expense was charged to functions/programs of the primary government as follows (in thousands of dollars): Governmental Activities City Court Public Works Community & Economic Development Public Safety City Treasurer - Finance & Accounting Human Resources Community Services Information Technology Administrative Services 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 Water and Sewer System Airport Solid Waste Business-type Activities Total Depreciation Expense - Business-type Activities 74 $ 11 8,121 88,521 4,139 154 36 7,168 3,380 12 5,061 $ 116,603 $ 34,836 1,090 213 $ 36,139 City of Scottsdale, Arizona Table of Contents 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 $ 118,617 12,931 9,525 51,514 17,032 234,927 11,343 17,389 35,157 12,295 9,520 13,768 340,315 174,427 $ 3,015 141 1,201 67 1,816 1,139 1,535 825 1,579 2 407 4,316 5,103 26,197 $ 1,058,760 $ 47,343 Notes to Financial Statements The City has active construction projects as of June 30, 2011. At year-end the government’s commitments with contractors for specific projects are as follows (in thousands of dollars): For the Fiscal Year Ended June 30, 2011 Construction Commitments The traffic commitments are being financed by the 0.2 percent 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, 2011, is as follows: Receivable Fund (in thousands of dollars) General Total Amount $ 104 Payable Fund (in thousands of dollars) Nonmajor Governmental Funds Amount $ 104 $ Total $ 104 104 The Community Develop Block Grant Special Revenue Fund had a deficit cash balance of $97,500, due to grants being received on a reimbursement basis. The Grants Special Revenue Fund had a deficit cash balance of $7,500, due to grants being received on a reimbursement basis. City of Scottsdale, Arizona 75 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents Interfund Transfers 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) charged to Enterprise Funds. Net Transfers (in thousands of dollars) Governmental Funds: General Debt Service - General Obligation Bond Capital Projects - General CIP Construction Nonmajor Governmental Funds Total Governmental Funds Enterprise Funds: Water and Sewer Utility Airport Solid Waste Total Enterprise Funds Internal Service Funds Total Transfers Transfers Out Transfers In $ 18,812 3,833 46,733 69,378 $ 12,216 15,732 18,998 32,646 79,592 $ 9,377 11 791 10,179 $ - $ 35 $ - $ 79,592 $ 79,592 $ $ E. Leases Operating Leases The City has entered into rental agreements of retail and parking facilities. Rental payments on these facilities during fiscal year 2010/11 were $3,007,014. 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 acquisition of a modular office building for its water operations in fiscal year 2005/06. The lease agreement qualified as a capital lease for accounting purposes, and therefore, was 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 historic cost, less accumulated depreciation. The outstanding debt of $7,865 was paid in full in fiscal year 2010/11. F. Bonds, Loans, and Other Payables The following are brief descriptions of bonds outstanding at June 30, 2011. The totals shown are the principal amount outstanding, net of the current portion due July 1, 2011. 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. 76 City of Scottsdale, Arizona Table of Contents 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 2004 MPC bonds, the 2005E MPC bonds, a portion of the 2006 MPC Refunding bonds, the 2008A MPC bonds and the 2010 MPC bonds are recorded in and paid out of the revenues of the Water and Sewer Enterprise Fund. Notes to Financial Statements 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, 2011, the City had $6,400,000 of unissued various purpose GO bonds, which were authorized in September 2000. In May 2004, voters authorized $500,000,000 of additional Preservation GO bonds, as well as, an additional 0.15 percent sales tax increase to be used to finance Preserve land acquisitions. At June 30, 2011, the City had $437,475,000 of unissued Preservation GO bonds from the May 2004 authorization. Preservation GO bonds are backed by the full faith and credit of the City, and are repaid through the Preserve sales tax approved by voters in May 1995 and May 2004 to be used specifically to finance land acquisitions for the McDowell Sonoran Preserve. For the Fiscal Year Ended June 30, 2011 General Obligation Bonds The City has pledged to repay $659,900,322 in MPC bonds issued in 2004 through 2010. The bonds are payable through 2036. The coverage ratio (revenues to debt service) for 2011 is 5.32. The total principal and interest remaining to be paid on the bonds is $735,762,570. Principal and interest paid for the current year and total excise tax were $31,969,592 and $170,082,000, respectively. 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 May 1995 to be used specifically for this purpose. In May 2004, voters approved an additional 0.15 percent 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 $67,795,000 in SPA bonds issued in 2004 through 2011. The bonds are payable through 2024. The coverage ratio (revenues to debt service) for 2011 is 4.58. The total principal and interest remaining to be paid on the bonds is $82,084,638. Principal and interest paid for the current year and total sales tax were $5,933,851 and $27,199,000, 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. City of Scottsdale, Arizona 77 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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, 2011, the funds reserved for this purpose were $30,868,162. 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 2011 is 10.86. The total principal and interest remaining to be paid on the bonds is $56,536,063. Principal and interest for the current year and total customer net revenues were $5,419,075 and $58,844,000, respectively. 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, 2011, 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. 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. 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. At June 30, 2011, there was one series of special assessment improvement bonds outstanding, issued as serial bonds to be repaid over 10 years. Bond was issued December 2001 totaling $8,350,000 maturing January 2013. The coverage ratio (revenues to debt service) for 2011 is 0.87 due to prepayment of amounts that are currently in fund balance. The total principal and interest remaining to be paid on the bonds is $1,567,500. Principal and interest paid for the current year and total collections were $834,375 and $733,000 respectively. 78 City of Scottsdale, Arizona Table of Contents 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. Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2011 Certificates of Participation 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 79 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents Bonds payable at June 30, 2011, are comprised of the following: Classified in Governmental Activities on the Government-wide Financial Statements: General Obligation Bonds Bonds Outstanding (in thousands of dollars) 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. $ 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. 32,330 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. 2,710 2004 Various Purpose Bonds (issued May 13, 2004) due in annual installments of $1,600,000 to $30,300,000 through July 1, 2025; interest at 3 percent to 5 percent. Original issue amount $113,400,000. 100,200 2005 Refunding Bonds (issued March 29, 2005) due in annual installments of $2,715,000 to $11,075,000 through July 1, 2024; interest at 3.85 percent to 5 percent. Original issue amount $74,630,000. 74,630 2005A Various Purpose Bonds (issued December 1, 2005) due in annual installments of $2,500,000 to $10,750,000 through July 1, 2024; interest at 3.5 percent to 5 percent. Original issue amount $125,000,000. 109,750 2005B Preservation Bonds (issued December 1, 2005) due in annual installments of $775,000 to $1,575,000 through July 1, 2024; interest at 3.5 percent to 5 percent. Original issue amount $20,000,000. 15,800 2008A Various Purpose Bonds (issued May 13, 2008) due in annual installments of $3,075,000 to $9,800,000 through July 1, 2028; interest at 3.25 percent to 5 percent. Original issue amount $100,000,000. 100,000 2008B Preservation Bonds (issued May 13, 2008) due in annual installments of $325,000 to $1,250,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $20,000,000. 18,675 2010 Various Purpose Bonds (issued April 7, 2010) due in annual installments of $950,000 to $4,800,000 through July 1, 2030; interest at 2 percent to 4 percent. Original issue amount of $50,800,000. 49,850 2011 Preservation Bonds (issued February 9, 2011) due in annual installments of $740,000 to $1,705,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount of $22,525,000. 22,525 2011 Refunding Bonds (issued April 6, 2011) due in annual installments of $640,000 to $7,265,000 through July 1, 2024; interest at 1 percent to 5 percent. Original issue amount of $43,115,000 42,475 Total General Obligation Bonds Outstanding 80 3,795 $ 572,740 City of Scottsdale, Arizona Table of Contents 2004A Municipal Property Corporation Excise Tax Revenue Bonds (issued September 15, 2004) due in annual installments of $920,000 to $2,715,000 through July 1, 2034; interest at 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. $ 7,915 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. 23,534 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. 19,475 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. 8,585 2006B Municipal Property Corporation Excise Tax Revenue Bonds (issued November 29, 2006) due in annual installments of $950,000 to $2,475,000 through July 1, 2031; interest at 4 percent to 5 percent. Original issue amount $32,500,000. 32,500 Total MPC Bonds Outstanding $ Notes to Financial Statements Municipal Property Corporation Bonds For the Fiscal Year Ended June 30, 2011 Portions of the 2001 Refunding Bonds, 2002 Various Purpose Bonds, 2002 Refunding Bonds, 2004 Various Purpose Bonds, 2005 Refunding Bonds, 2005B Preservation Bonds, 2008B Preservation Bonds, 2011 Bonds, and 2011 Refunding Bonds of $28,715,000, $5,755,000, $8,100,000, $55,900,000, $66,090,000, $17,575,000, $19,675,000, $22,525,000, and $33,830,000 respectively, are paid from the .2 percent and .15 percent Preservation Sales Taxes. Bonds Outstanding (in thousands of dollars) 147,459 Scottsdale Preserve Authority Bonds 2004 Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds issued March 30, 2004, due in annual installments of $75,000 to $3,315,000 through July 1, 2016; interest at 2 percent to 5 percent. Original issue amount $22,925,000. 15,050 2010 Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds issued October 10, 2010, due in annual installments of $3,110,000 to $6,090,000 through July 1, 2024; interest at 3 percent to 5.25 percent. Original issue amount $32,855,000. 32,855 2011 Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds issued on April 6, 2011, due in annual installments of $920,000 to $1,350,,000 through July 1, 2022; interest at 2 percent to 5 percent. Original issue amount $12,015,000. 12,015 Total Scottsdale Preserve Authority Bonds City of Scottsdale, Arizona $ 59,920 81 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents Special Assessment Bonds Bonds Outstanding (in thousands of dollars) Special Assessment Bonds issued September 28, 1998, through December 20, 2001, maturing January 1, 2009, through January 1, 2013; due in annual installments of $85,000 to $750,000; interest at 4.5 percent to 4.625 percent. Total original issue amount $8,350,000. $ 1,500 2005 Certificates of Participation issued January 26, 2005, due in annual installments of $559,882 to $894,622 beginning January 1, 2006, through July 1, 2015. Original issue amount $7,650,000. $ 3,409 2010 Certificates of Participation issued August 24, 2010, due in annual installments of $1,969,302 to $2,493,145 beginning January 1, 2012, through July 1, 2020. Original issue amount $20,000,000. $ 20,000 $ 23,409 $ 3,505 Certificates of Participation Total Certificates of Participation Bonds Community Facilities Districts General Obligation Bonds 1998 DC Ranch Community Facilities District General Obligation Bonds due in annual installments of $155,000 to $385,000 beginning July 15, 2005 through July 15, 2023; interest at 4.75 percent to 5.5 percent. Original issue amount $4,750,000. 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 percent to 5.75 percent. Original issue amount $3,225,000. 2,320 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 percent to 6.0 percent. Original issue amount $20,245,000. 12,430 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, 2024. Interest at 5.45 percent to 6.50 percent. Original issue amount $3,085,000. 2,385 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. 2,640 2002 DC Ranch Community Facilities District General Obligation Bonds (issued December 17, 2002) due in annual installments of $245,000 to $1,395,000 beginning July 15, 2004 through July 15, 2027. Interest at 3 percent to 5 percent. Original issue amount $12,165,000. 9,770 2007 Waterfront Commercial Community Facilities District General Obligation Bonds (issued December 11, 2007) due in annual installments of $25,000 to $300,000 beginning July 15, 2009 through July 15, 2032. Interest at 4.85 percent to 6.05 percent. Original issue amount $3,805,000. 3,695 Total Community Facilities Districts General Obligation Bonds Outstanding Total Bonds Payable Recorded in Governmental Activities 82 $ 36,745 $ 841,773 City of Scottsdale, Arizona Table of Contents 2004 Water and Sewer Revenue Refunding Bonds (Series 2004 issued March 30, 2004) due in annual installments of $80,000 to $3,175,000 through July 1, 2016; interest at 2 percent to 5 percent. Original issue amount $18,880,000. $ 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 percent to 5.25 percent. Original issue amount $35,290,000. Total Water and Sewer Revenue Bonds Outstanding 8,945 33,065 $ 42,010 $ 10,260 Municipal Property Corporation Bonds 2004 Municipal Property Corporation Excise Tax Revenue Bonds (Series 2004 issued May 13, 2004) due in annual installments of $2,190,000 to $5,435,000 through July 1, 2024; interest at 3.25 percent to 5.25 percent. These bonds are recorded and paid out of the Water and Sewer Enterprise Fund. On November 29, 2006, $44,835,000 due 2015 through 2024 were refunded. Original issue amount $75,000,000. 2005E Municipal Property Corporation Excise Tax Revenue Bonds (issued December 1, 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 Fund. On November 29, 2006 $67,455,000 due 2015 through 2030 were refunded. Original issue amount $88,360,000. 13,930 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due in annual installments of $3,600,000 to $10,140,000 through July 1, 2030; interest at 5 percent. Original issue amount $110,510,000. 110,510 2008A Municipal Property Corporation Excise Tax Revenue Bonds (issued May 13, 2008) due in annual installments of $1,800,000 to $7,250,000 through July 1, 2032; interest at 4 percent to 5 percent. Original issue amount $105,875,000. 98,825 2010 Municipal Property Corporation Excise Tax Revenue Bonds (issued April 7, 2010) due in annual installments of $180,000 to $7,800,000 through July 1, 2036; interest at 3 percent to 5 percent. Original issue amount $75,000,000. 75,000 Total Municipal Property Corporation Bonds Outstanding Total Bonds Payable Recorded in Business-type Activities Total Long-term Bonds Payable City of Scottsdale, Arizona $ 308,525 $ 350,535 $ 1,192,308 Notes to Financial Statements Water and Sewer Revenue Bonds Bonds Outstanding (in thousands of dollars) For the Fiscal Year Ended June 30, 2011 Classified in Business-type Activities on the Government-wide Financial Statements: 83 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents Statutory Debt Limitation Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt issued for water, sewer, light, parks, and open space purposes may not exceed 20 percent of a city’s net secondary assessed valuation. Outstanding general obligation bonded debt for all other purposes may not exceed 6 percent of a city’s net secondary assessed valuation. Accretion on capital appreciation bonds, which is included for GAAP purposes as outstanding debt, is excluded for this calculation. General obligation bonds of community facilities districts also are not subject to or included in this calculation. The following summarizes the City of Scottsdale, Arizona’s legal general obligation bonded debt borrowing capacity at June 30, 2011 (in thousands of dollars): General Obligation Bonds Issued to Provide Water, Sewer, Light, Parks and Open Spaces 20% Constitutional Limit $ Less General Obligation 20% Bonds Outstanding Available 20% Limitation Borrowing Capacity $ General Obligation Bonds Issued for All Other Purposes 1,475,082 6% Constitutional Limit (498,490) Less General Obligation 6% Bonds Outstanding 976,592 Available 6% Limitation Borrowing Capacity $ 442,524 (74,250) $ 368,274 Arbitrage 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, 2011. Advance Refundings and Defeasances The City issued $43,115,000 of General Obligation Refunding Bonds, Series 2011, (advance refunding) dated April 6, 2011, with an average interest rate of 4.26% to refund $43,115,000 of Series 1998, Series 2001 Refunding and Series 2002 Bonds with an average interest rate of 4.95%. The City will reduce its total debt service payments over the next 14 years by approximately $5.1 million and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $4.7 million. The SPA issued $12,015,000 of Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds, Series 2011, (advance refunding) dated March 15, 2011, with an average interest rate of 4.5%, to refund $12,625,000 of Series 2001 Refunding Bonds with an average interest rate of 5.0%. The SPA will reduce its total debt service payments over the next 12 years by approximately $1,459,936, and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $1,262,936. 84 City of Scottsdale, Arizona Table of Contents The following table reflects refunded debt outstanding at June 30, 2011, net of any amounts to be paid or retired by the trustee on July 1, 2011. Refunded in Prior Years (in thousands of dollars) 2004 MPC Excise Tax Revenue Bonds 2004A MPC Excise Tax Revenue Bonds 2005D MPC Excise Tax Revenue Bonds 2005E MPC Excise Tax Revenue Bonds 44,835 30,975 25,925 67,455 $ Notes to Financial Statements 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. As a result, the refunded bonds are considered defeased and the liability has been removed from the governmental activities column of the financial statements. For the Fiscal Year Ended June 30, 2011 The SPA issued $32,855,000 of Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds, Series 2010, (current refunding) dated October 5, 2010 with an average interest rate of 4.9% to refund $36,725,000 of Series 1998 Refunding Bonds with an average interest rate of 4.6%. The SPA will reduce its total debt service payments over the next 14 years by approximately $4,758,874 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $3,717,610 169,190 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, 2011. City of Scottsdale, Arizona 85 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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. $ 2,707 Contract payable for the maintenance of a federal patent; due in three year installments beginning January 1, 2001 through January 1, 2011; non-interest bearing. - 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. 5,410 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. 4,680 Contract payable for the undergrounding of 69kv power lines; due in annual installments beginning January 1999 through January 2010; interest at 10.0 percent. 10 Contract payable for the purchase of a portion of 2,685 acres of land for the McDowell Sonoran Preserve; due in 15 annual installments beginning July 1, 1999 through July 1, 2013; interest from 3.75 percent to 6.0 percent. 1,775 Total Contracts Payable Recorded in Governmental Activities $ 14,582 Changes in Long-Term Liabilities The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the year ended June 30, 2011 (in thousands of dollars). Beginning Balance Governmental Activities: Bonds payable: General Obligation 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 Risk Management Claims Compensated Absences Post Employment Benefit - Implied Subsidy Governmental Activity Long-term Liabilities 86 $ $ 578,190 148,212 67,870 2,250 4,194 38,760 17,136 (7,223) 849,389 15,732 11,142 25,617 1,114 902,994 Additional Obligations, Interest Accretion and Net Increases Current Maturities, Retirements, and Net Decreases $ $ $ 65,640 777 44,870 20,000 10,047 (3,100) 138,234 1 25,526 9,972 173,733 $ (71,090) (1,530) (52,820) (750) (785) (2,015) (2,060) 1,957 (129,093) (1,151) (25,528) (10,407) (789) (166,968) Amounts Due Within One Year Ending Balance $ $ 572,740 147,459 59,920 1,500 23,409 36,745 25,123 (8,366) 858,530 14,582 11,140 25,182 325 909,759 $ $ 28,315 3,091 3,655 750 2,780 2,105 40,696 1,208 5,504 10,358 57,766 City of Scottsdale, Arizona Table of Contents Business-type Activities: Bonds Payable: Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Add Deferred Issuance Premiums Less Deferred Amounts on Refunding Total Bonds Payable Capital Lease Compensated Absences Post Employment Benefit - Implied Subsidy Business-type Activity Long-term Liabilities City of Scottsdale, Arizona $ $ 45,230 316,780 23,562 (5,106) 380,466 7 3,223 181 383,877 Current Maturities, Retirements, and Net Decreases $ $ $ 1,370 1,370 $ (3,220) (8,255) (1,480) 372 (12,583) (7) (1,304) (83) (13,977) Ending Balance $ $ 42,010 308,525 22,082 (4,734) 367,883 3,289 98 371,270 Amounts Due Within One Year $ $ 3,380 8,750 12,130 1,300 13,430 Notes to Financial Statements Beginning Balance Additional Obligations, Interest Accretion and Net Increases For the Fiscal Year Ended June 30, 2011 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, 2011, $417,546 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 $297,451 in the governmental funds and $0 in the Internal Service funds. 87 For the Fiscal Year Ended June 30, 2011 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, 2011. 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 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Total $ $ Principal 23,815 24,585 23,815 19,945 19,500 157,210 174,330 47,315 7,975 $ 498,490 $ Interest 21,602 20,654 19,623 18,598 17,724 72,342 33,916 6,672 786 $ General Obligation Bonds Issued For All Other Purposes 6% Limitation Total 45,417 45,239 43,438 38,543 37,224 229,552 208,246 53,987 8,761 211,917 $ 710,407 $ $ Municipal Property Corporation Bonds Fiscal Year 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 $ Capital Appreciation ** Total Principal 3,091 3,135 3,745 3,710 5,290 37,544 28,745 37,620 20,380 4,199 $ 147,459 $ Interest 6,229 5,938 6,653 6,487 6,305 32,113 17,830 10,175 2,258 Principal 4,500 5,500 10,000 11,975 14,600 27,675 - $ 74,250 $ Interest 3,446 3,221 2,946 2,446 1,902 2,317 - $ Total General Obligation Bonds Total 7,946 8,721 12,946 14,421 16,502 29,992 - 16,278 $ 90,528 $ $ Scottsdale Preserve Authority Excise Tax Revenue Bonds Total 9,320 9,073 10,398 10,197 11,595 69,657 46,575 47,795 22,638 (4,199) $ 237,248 $ - - 89,789 $ Principal 3,655 3,800 3,960 4,140 4,340 22,875 17,150 - $ 59,920 $ Interest 2,835 2,680 2,508 2,330 2,143 7,831 1,838 - $ - $ 572,740 $ Interest 25,048 $ 23,875 22,569 21,044 19,626 74,659 33,916 6,672 786 Total 53,363 53,960 56,384 52,964 53,726 259,544 208,246 53,987 8,761 228,195 $ 800,935 Special Assessment Bonds Total 6,490 6,480 6,468 6,470 6,483 30,706 18,988 - $ 82,085 Principal Interest 750 $ 51 $ 750 17 - - 22,165 $ Principal 28,315 30,085 33,815 31,920 34,100 184,885 174,330 47,315 7,975 $ Total 801 767 - - 1,500 $ - 68 $ 1,568 ** 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 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Total $ $ Principal Interest 2,780 $ 685 $ 2,866 599 2,955 511 3,046 419 2,216 333 9,546 648 23,409 $ 3,195 $ Total 3,465 3,465 3,466 3,465 2,549 10,194 26,604 $ $ Principal 2,105 2,230 2,335 2,460 2,585 13,165 8,905 2,660 300 36,745 $ Interest 1,874 1,776 1,671 1,558 1,438 5,232 2,068 399 19 16,035 $ Contracts Payable Total 3,979 4,006 4,006 4,018 4,023 18,397 10,973 3,059 319 52,780 $ $ Principal Interest 1,208 $ 227 $ 1,267 179 370 129 389 124 409 118 2,373 497 3,033 310 3,464 86 2,069 14,582 $ 1,670 $ Total 1,435 1,446 499 513 527 2,870 3,343 3,550 2,069 16,252 (continued) 88 City of Scottsdale, Arizona Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2011 Governmental Activities (concluded) (in thousands of dollars) Total Fiscal Year 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Capital Appreciation Total Principal $ 41,904 $ 44,133 47,180 45,665 48,940 270,388 232,163 91,059 30,724 Interest 36,949 $ 35,064 34,041 31,962 29,963 120,980 55,962 17,332 3,063 Total 78,853 79,197 81,221 77,627 78,903 391,368 288,125 108,391 33,787 4,199 856,355 $ (4,199) 361,117 $ 1,217,472 $ Business-type Activities (in thousands of dollars) Fiscal Year 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Total Fiscal Year 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Total City of Scottsdale, Arizona Water and Sewer Revenue Bonds $ $ Principal 3,380 3,115 3,240 2,940 3,055 17,760 8,520 42,010 $ Interest 2,056 1,891 1,738 1,599 1,487 5,078 677 14,526 $ Municipal Property Corporation Bonds Total 5,436 5,006 4,978 4,539 4,542 22,838 9,197 56,536 $ $ Principal 8,750 9,220 9,760 10,240 11,115 67,095 76,780 75,645 39,920 308,525 $ Interest 14,912 14,478 14,024 13,540 13,034 56,198 38,130 20,160 5,513 189,989 $ Total 23,662 23,698 23,784 23,780 24,149 123,293 114,910 95,805 45,433 498,514 Total $ $ Principal Interest 12,130 $ 16,968 $ 12,335 16,369 13,000 15,762 13,180 15,139 14,170 14,521 84,855 61,276 85,300 38,807 75,645 20,160 39,920 5,513 350,535 $ 204,515 $ Total 29,098 28,704 28,762 28,319 28,691 146,131 124,107 95,805 45,433 555,050 89 For the Fiscal Year Ended June 30, 2011 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 three 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. At June 30, 2011, the general liability claims payable totaled $9,195,168 and the self-insured benefits claims payable totaled $1,945,000. The City began to administer all self-insured health and dental plans in January of 2004. Years Ended June 30 2011 (in thousands of dollars) 2010 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 11,142 25,390 (25,392) $ 11,530 24,292 (24,680) Claims l Payable, bl June 30 $ 11,140 $ 11,142 B. Contingent Liabilities The City is a party to several lawsuits incidental to its normal operations. Of those lawsuits, management, with the concurrence of the City Attorney, is of the opinion that, collectively, estimated potential losses ranging from $15,000 up to $75,000 are probable, and $15,000 up to $7,000,000 are reasonably possible. Reasonably possible is defined that the chance of the loss occurring is more than remote but less than probable. The City is self-insured for the first $2,000,000 of public liability, coverage in excess of these amounts is provided through the purchase of commercial insurance. For more information on the City’s self-insurance, please see the Note V.A. on page 89. 90 City of Scottsdale, Arizona Table of Contents The major conditions for closure are: • 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 portion of Planet Ranch water rights to serve Freeport’s Bagdad mining property, • Arizona Department of Water Resources approval of sever and transfer and change of use of Horseshoe Dam water credits to the City of Scottsdale water service area, • Completion of assignment agreement for Horseshoe Dam water credits between Freeport, the City and Salt River Project, and • Completion of a Lease Agreement between Freeport and the Bureau of Reclamation, and a Donation Agreement between Freeport and the Arizona Game and Fish Department, thus insuring use of Planet Ranch property for habitat restoration purposes. Notes to Financial Statements On July 11, 2006, the City agreed to the sale of Planet Ranch, including all related water rights, farm infrastructure and equipment to Phelps Dodge Corporation. Phelps Dodge Corporation has since been acquired by Freeport McMoRan Copper and Gold, Inc. (Freeport). Planet Ranch 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. For the Fiscal Year Ended June 30, 2011 C. Commitments and Subsequent Events 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 on 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 percent in the first year and dropping by 0.5 percent per year. The reimbursement of the costs listed above, will be accomplished by paying Lund quarterly payments equal to 67 percent 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. City of Scottsdale, Arizona 91 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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 10-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 $4,340,635 for the year ended June 30, 2011. Contractual payments due in fiscal year 2011/12 are budgeted for $4,130,798. 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 10-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 $6,789,622 for the year ended June 30, 2011. Contractual payments due in fiscal year 2011/12 are budgeted for $6,123,500. 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, 2011 is $48,672,673. 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, 2010, (the latest audited information available from SROG), the City’s net investment in SROG was $124,053,000. SROG’s net cash operating expenses for the year ended June 30, 2010, were $41,890,203, of which the City’s share was $4,134,575, or 9.9 percent. For the year ended June 30, 2011, the City paid $1,973,053 for SROG capital contributions, and $4,796,362 for SROG operating expenses, including adjustments to the operating and replacement reserves. The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2010 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. 92 City of Scottsdale, Arizona Table of Contents 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. 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. Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2011 E. Pollution Remediation 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, six projected cash flows, based on the prior six 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 40 years; remediation began in 2001 and is estimated to be required for approximately 50 years. Improvements in technology and changes in laws or regulations did not impact the average annual cost. The liability is revalued annually. Fiscal year 2010/11 outlays for operating and monitoring the CGTF were $578,998. The City has a reimbursement agreement with the responsible parties and the total liability is expected to be fully recovered by the participating companies and therefore a corresponding Pollution Remediation Recoveries receivable has been accrued. City of Scottsdale, Arizona 93 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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 and City Council is also involved in granting or denying IDA bond applications. G. Retirement and Pension Plans All benefitted 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 and the Mayor and City Council, 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. Arizona State Retirement System Plan Description All benefitted City employees, except public safety personnel and the Mayor and City Council, 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, 2011, 2010, and 2009, were 9.85 percent (9.60 percent retirement and .25 percent long-term disability), 9.40 percent (9.0 percent retirement and .40 percent long-term disability), and 9.45 percent (8.95 percent retirement and .50 percent long-term disability, respectively, for both employers and employees. The City’s contributions to the System for the years ending June 30, 2011, 2010, and 2009 were $9,824,677, $9,859,954, and $10,860,822, respectively, equal to the required contributions for each year. 94 City of Scottsdale, Arizona Table of Contents 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 234 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 Road, 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 percent of gross payroll, an employer contribution set by an actuarial valuation expressed as a percent of gross payroll, and a distribution of the net earnings of the Fund. The City’s contribution rate for police for the fiscal year ended June 30, 2011 was 18.96 percent of annual covered payroll. Contribution rates for police were 19.64 percent and 20.46 percent in 2010 and 2009, respectively. The City’s contribution rate for fire for the fiscal year ended June 30, 2011 was 10.05 percent of annual covered payroll. The City’s contribution rate for fire was 8.68 percent and 9.41 percent in 2010 and 2009, respectively. Notes to Financial Statements Plan Description For the Fiscal Year Ended June 30, 2011 Public Safety Personnel Retirement System Annual Pension Cost For 2011, the City’s annual pension costs of $5,937,814 for police and $1,726,225 for fire were equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2010 actuarial valuation using the projected unit credit cost method. Three-Year Trend Information for PSPRS (Police) (in thousands of dollars) Fiscal Year Ending 2008 2009 2010 Annual Pension Cost (APC) $ 4,855 7,237 6,331 Percentage of APC Contributed 100% 100% 100% Net Pension Obligation - Three-Year Trend Information for PSPRS (Fire) (in thousands of dollars) Fiscal Year Ending 2008 2009 2010 City of Scottsdale, Arizona Annual Pension Cost (APC) $ 1,497 1,817 1,575 Percentage g of APC Contributed 100% 100% 100% Net Pension Obligation - 95 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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 percent per year compounded annually, (b) projected salary increases of 5.50 percent per year compounded annually, attributable to inflation and other across-the-board factors, and (c) additional projected salary increases ranging from 0 percent to 3.00 percent per year, attributable to seniority/merit. The amortization method is a level percent of pay closed. The maximum amount of post retirement benefits is 4 percent of the average normal benefit. 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, 26 years remaining as of June 30, 2010 (20 year open period for any excess of valuation assets over actuarial accrued liability). Funded Status The funded status of each plan (Police and Fire) as of June 30, 2010, 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, 2010 $ Valuation Assets 124,093 Unfunded Actuarial Accrued Liability 48,879 Stabilization Reserve Net Unfunded Actuarial Liability 96 79,701 667 74,551 18,053 172,972 $ 48,879 City of Scottsdale, Arizona Table of Contents Actuarial Accrued Liability Retired members and survivors Former members with vested benefits Active members DROP members Total June 30, 2010 $ 312 15 19,064 1,059 20,450 Valuation Assets 25,668 Unfunded Actuarial Accrued Liability (5,218) Stabilization Reserve 4,063 Net Unfunded Actuarial Liability $ (1,155) Elected Officials’ Retirement Plan Notes to Financial Statements (in thousands of dollars) For the Fiscal Year Ended June 30, 2011 Public Safety Personnel Retirement System (Fire) Funded Status 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 percent of gross salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amount is to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rates for fiscal years ended June 30, 2011, 2010, and 2009, were 29.79 percent, 26.25 percent, and 28.0 percent, respectively. The City’s contributions to EORP for the years ending June 30, 2011, 2010, and 2009, were $43,310, $37,800, and $40,902, respectively, equal to the required contributions for each year. City of Scottsdale, Arizona 97 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents H. Other Postemployment Benefits In addition to the pension benefits described in the previous section (G) 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 100 percent cash value at current rate of pay. Employees hired before July 1, 1982 can elect to receive cash equal to 50 percent of the first 520 hours of unused medical leave plus 25 percent of all hours in excess of 520. 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. Medical leave balances accumulated through June 30, 2011 will be paid at 100% of the employee’s hourly rate at the time of retirement. Medical leave balances accumulated July 1, 2011 or after will be paid out at 50% of the employee’s hourly rate at retirement. Additionally, the payout is limited to the value of 1,200 hours combined among hours earned both before and after July 1, 2011, unless more than 1,200 hours were accrued prior to July 1, 2011 then the total hours accrued before July 1, 2011 will be paid without limitation. 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. The taxable portion of the medical leave conversion program retained by the City included two participants added and seven removed during fiscal year 2010/11 for a total number of participants of 58 at June 30, 2011. The actual liability for retirees, as of June 30, 2011, for medical conversion was $752,322. The projected liability for active employees, as of June 30, 2011, was $14,826,981. Of this liability, $307,077 was considered current and reflected in the governmental fund or proprietary fund financial statements accordingly. The remaining $14,519,904 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, 2011 actuarial valuation include a) mortality rates based on the RP 2000 combined mortality projected to 2015 using Projection Scale AA, b) interest compounded 4.0 percent annually, c) salaries increase at a rate of 2 percent to 4 percent based on years of service, d) traditional unit credit cost method based on participant data as of January 1, 2011. I. Postemployment Benefits Other Than Pensions 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. 98 City of Scottsdale, Arizona Table of Contents 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. 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. On April 5, 2011, the City Council approved the development of health plan rates, effective July 1, 2012, the City will require retirees to pay the premium that reflects the full expected cost of their coverage and thus eliminating the City subsidy. As of June 30, 2011, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Terminated Employees Eligible for Benefits, But Not Yet Enrolled Active Employees Total Participating Employers Notes to Financial Statements 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 through 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. For the Fiscal Year Ended June 30, 2011 Plan Description 336 2,480 2,816 1 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 percent 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, 2011, retirees contributed $695,880 and the City contributed $900,677 (implied subsidy). City of Scottsdale, Arizona 99 For the Fiscal Year Ended June 30, 2011 Notes to Financial Statements Table of Contents 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 30 years. The City’s annual OPEB cost for the current year and the related information for each plan are as follows at June 30, 2011 (dollar amounts in thousands): Annual Required Contribution $ 34 Interest on Net OPEB Obligation 52 Adjusted to Annual Required Contribution (57) Annual OPEB Cost 29 Contributions Made (901) Change in Net OPEB Obligation (872) Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year 1,295 423 $ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2011 were as follows (dollar amounts in thousands): Fiscal Year Ended 2011 $ 2010 2009 Annual OPEB Cost 29 180 208 $ Employer Contributions 901 227 191 Percentage of OPEB Cost Contributed 3106.9% 126.1% 91.8% $ Net OPEB Obligation 423 1,295 1,342 City of Scottsdale, Arizona Other Post-Employment Benefit Plan Schedule of Employer Contribution (in thousands of dollars) Actuarial Valuation June 30 2009 2010 2011 100 (1) Employer Contributions $ 191 227 901 (2) Annual (3) Required Percent Contribution Contributed (ARC) (1)/(2) $ 208 91.8% 180 126.1% 34 2650.0% City of Scottsdale, Arizona Table of Contents Actuarial Accrued Liability Actuarial Value of Plan Assets Unfunded actuarial accrued liability $ $ Funded ratio Covered payroll 746 746 0% $ Unfunded actuarial accrued liability as a percentage of covered payroll 136,414 0.5% 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. 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, 2011 Projected Unit Credit Level Percentage of Payroll 26 N/A Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Healthcare Inflation Rate 4%* 2-4%+ 6% initial rate, 5% ultimate rate Notes to Financial Statements The funded status of the plan as of June 30, 2011 was as follows (dollar amounts in thousands): For the Fiscal Year Ended June 30, 2011 Funded Status * 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. City of Scottsdale, Arizona 101 Required Supplementary Information For the Fiscal Year Ended June 30, 2011 Table of Contents Funding Progress The following schedules of funding progress, presented as required supplementary 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: Required Supplementary Information Public Safety Personnel Retirement System (Police) Schedule of Funding Progress Pension (in thousands of dollars) Actuarial Valuation June 30 2008 2009 2010 (2) Projected Unit Credit Cost (1) Actuarial Actuarial Accrued Value of Liability Assets (AAL) $ 111,692 $ 153,785 120,870 160,131 124,093 168,084 (3) Percent Funded (1)/(2) 72.6% 75.5% 73.8% (4) (5) Unfunded Annual AAL Covered (2) - (1) Payroll $ 42,092 $ 33,143 39,261 33,650 43,991 31,984 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 127.0% 116.7% 137.5% Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress Pension (in thousands of dollars) Actuarial Valuation June 30 2008 2009 2010 102 (2) Projected Unit Credit Cost (1) Actuarial Actuarial Accrued Value of Liability Assets (AAL) $ 15,509 $ 12,207 21,436 16,998 25,668 19,990 (3) Percent Funded (1)/(2) 127.1% 126.1% 128.4% (4) (5) Unfunded Annual AAL Covered (2) - (1) Payroll $ (3,302) $ 18,162 (4,438) 18,850 (5,678) 17,607 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 0.0% 0.0% 0.0% City of Scottsdale, Arizona Table of Contents (in thousands of dollars) (2) Projected Unit (6) Credit Unfunded Cost AAL as a (1) Actuarial (3) (4) (5) Percentage Actuarial Actuarial Accrued Percent Unfunded Annual of Covered Valuation Value of Liability Funded AAL Covered Payroll June 30 Assets (AAL) (1)/(2) (2) - (1) Payroll (4)/(5) 2008 $ - $ 5,361 0.0% $ 5,361 $ 33,143 16.2% 2009 4,649 0.0% 4,649 33,650 13.8% 2010 4,888 0.0% 4,888 31,984 15.3% Required Supplementary Information Public Safety Personnel Retirement System (Police) Schedule of Funding Progress Health Insurance For the Fiscal Year Ended June 30, 2011 Required Supplementary Information Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress Health Insurance (in thousands of dollars) (2) Projected Unit (6) Credit Unfunded Cost AAL as a (1) Actuarial (3) (4) (5) Percentage Actuarial Actuarial Accrued Percent Unfunded Annual of Covered Valuation Value of Liability Funded AAL Covered Payroll June 30 Assets (AAL) (1)/(2) (2) - (1) Payroll (4)/(5) 2008 $ - $ 206 0.0% $ 206 $ 18,162 1.1% 2009 373 0.0% 373 18,850 2.0% 2010 460 0.0% 460 17,607 2.6% City of Scottsdale, Arizona 103 Required Supplementary Information For the Fiscal Year Ended June 30, 2011 Table of Contents Required Supplementary Information City of Scottsdale, Arizona Other Post-Employment Benefit Plan Schedule of Funding Progress (in thousands of dollars) Actuarial Valuation June 30 2009 2010 2011 (1) Actuarial Value of Assets $ - (2) Projected Unit Actuarial Accrued Liability (AAL) $ 3,664 3,602 746 (3) Percent Funded (1)/(2) 0.0% 0.0% 0.0% (4) (5) Unfunded Annual AAL Covered (2) - (1) Payroll $ 3,664 $ 52,675 3,602 48,285 746 136,414 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 7.0% 7.5% 0.5% City of Scottsdale, Arizona Other Post-Employment Benefit Plan Schedule of Employer Contribution (in thousands of dollars) Actuarial Valuation June 30 2009 2010 2011 104 (1) Employer Contributions $ 191 227 901 (2) Annual (3) Required Percent Contribution Contributed (ARC) (1)/(2) $ 208 91.8% 180 126.1% 34 2650.0% 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. Grants Fund This fund receives and expends the City’s grant revenues. The amount of grants received is generally based on application to granting agencies by the City and on 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 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 percent) and 2004 (.15 percent). 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 either restricted by an outside source or committed by City Council and are required to be expended for specific purposes related to the intention of the center and 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. 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. Community Facilities Districts Funds Scottsdale Mountain Community Facilities District Fund McDowell Mountain Community Facilities District Fund 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. 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. Preserve Privilege Tax 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. Transportation Privilege Tax Fund Accounts for the authorized 0.2 percent Transportation Privilege (Sales) Tax dedicated to transportation capital improvements. Voters approved the tax on November 7, 1989. Community Facilities Districts Funds 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. 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 Bond 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, 2011 (in thousands of dollars) Special Revenue Funds ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege 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 Bonds Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Intergovernmental Other Guaranty and Other Deposits Total Liabilities $ $ $ Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances City of Scottsdale, Arizona $ Debt Service Funds 39,188 - 50 3,406 1,110 5,508 910 288 50,460 1,397 475 104 - $ $ $ Total Nonmajor Governmental Funds Capital Projects Funds 10,218 14,090 165 20,260 1,244 41 46,018 5,432 7,015 $ $ $ 59,816 197 61 5,716 65,790 5,004 37 - $ $ $ 109,222 14,287 111 3,406 165 1,110 25,768 6,626 1,244 329 162,268 6,401 512 104 5,432 7,015 9,673 409 87 12,145 102 1,244 20,260 41 34,094 5,535 74 10,650 102 1,244 35,468 524 87 56,889 33,785 5,170 (640) 2,567 9,357 - 55,140 - 91,492 5,170 9,357 (640) 38,315 11,924 55,140 50,460 $ 46,018 $ 65,790 105,379 $ 162,268 107 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) REVENUES Taxes - Local Property Transaction Privilege Taxes - Intergovernmental Highway User Tax Charges for Current Services Recreation Fees Fines, Fees and Forfeitures Court Court Enhancement Police Fees Special Assessments Property Rental Interest Earnings Investment Income Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Contributions and Donations Reimbursements From Outside Sources Indirect Costs Other Total Revenues Special Revenue Funds $ Debt Service Funds 42,241 $ Total Nonmajor Governmental Funds Capital Projects Funds 3,817 - $ - $ 3,817 42,241 13,396 - - 13,396 1,174 - - 1,174 2 1,044 527 117 370 (10) 733 151 19 - 680 (12) 2 1,044 527 733 268 1,069 (22) 13,003 213 2,145 1,156 141 868 349 76,736 10 4,730 3,574 9,835 188 267 14,532 16,577 213 11,990 188 1,156 408 868 349 95,998 (continued) 108 City of Scottsdale, Arizona Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Special Revenue Funds EXPENDITURES Current General Government City Court Public Works & Water Resources Community and Economic Development Public Safety Community Services Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Improvements Total Expenditures Debt Service Funds Total Nonmajor Governmental Funds Capital Projects Funds 1,270 15,575 16,941 2,338 9,469 - - 1,270 15,575 16,941 2,338 9,469 825 129 46,547 7,772 10,626 463 18,861 51,090 51,090 8,597 10,755 463 51,090 116,498 30,189 (14,131) (36,558) (20,500) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out 8,705 (31,542) 13,481 - 10,460 (15,191) 32,646 (46,733) Premium on Bonds Issued Refunding Bonds Issued Payment to Bond Refunding Escrow Agent Long-Term Capital-Related Debt Issued Total Other Financing Sources and (Uses) (22,837) 5,955 44,870 (50,329) 13,977 22,525 17,794 5,955 44,870 (50,329) 22,525 8,934 Net Change in Fund Balances 7,352 (154) (18,764) (11,566) Fund Balances - Beginning, restated 30,963 12,078 73,904 116,945 Excess (Deficiency) of Revenues Over Expenditures Fund Balances - Ending City of Scottsdale, Arizona $ 38,315 $ 11,924 $ 55,140 $ 105,379 109 Table of Contents 110 Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2011 (in thousands of dollars) Highway User Fuel Tax ASSETS Cash and Investments Receivables (net of allowance for uncollectibles) Interest Privilege 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 $ 3,428 $ $ City of Scottsdale, Arizona Fund Balances Restricted Committed Unassigned Total Fund Balances Total Liabilities and Fund Balances Community Development Block Grant $ HOME Grants Preserve Privilege Tax Section 8 Special Programs Total - 105 $ - $ 1,229 $ 22,217 $ 12,209 1,214 1,110 25 5,777 $ 247 247 $ 105 $ 638 27 665 $ 1,229 $ 40 2,192 24,449 $ 10 5,508 261 17,988 594 $ 372 - 140 $ 10 97 - $ 1 - 32 $ 7 11 $ 18 - - $ - 620 74 - $ 39,188 $ 50 3,406 1,110 5,508 910 288 50,460 $ 1,397 475 104 25 87 1,078 247 494 104 105 751 268 1,058 29 48 48 8,546 93 9,333 9,673 409 87 12,145 4,699 4,699 (247) (247) - (393) (393) 1,200 1,200 24,401 24,401 3,485 5,170 8,655 33,785 5,170 (640) 38,315 5,777 $ 247 $ 665 $ 1,229 $ 24,449 $ 105 $ 17,988 $ 50,460 Table of Contents City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Highway User Fuel Tax REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Charges for Current Services Recreation Fees Fines, Fees and Forfeitures Court Fines Court Enhancement Fee Police Fees Property Rental Interest Earnings Investment Income Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Reimbursements From Outside Sources Indirect Costs Other Total Revenues $ EXPENDITURES Current General Government City Court Public Works and Water Resources Community and Economic Development Public Safety Community Service 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) Fund Balances - Beginning $ HOME Grants Preserve Privilege Tax Section 8 Special Programs - $ - - - $ 13,396 - - - - - - 13,396 - - - - - - 1,174 1,174 - - - - 1 - 297 (8) 2 1,044 527 117 72 (2) 2 1,044 527 117 370 (10) 4,218 196 624 139 868 13 34,496 862 862 22 22 1,489 17 110 644 2,260 6,412 2 12 6,427 27,488 1,411 512 324 5,181 13,003 213 2,145 1,156 141 868 349 76,736 14,881 10,329 - 956 20 3 694 197 951 546 6,029 2 1,267 6,415 1,387 1,916 1,270 15,575 16,941 2,338 9,469 25,210 956 20 2,391 6,029 825 129 956 10,985 825 129 46,547 9,286 (94) 2 (131) 398 26,532 (5,804) 30,189 - (5) (5) (6) (6) 1,348 (22,956) (21,608) 6,728 (953) 5,775 8,705 (31,542) (22,837) - 27,199 $ Total 15,042 $ 629 (7,622) (6,993) Net Change in Fund Balances Fund Balances - Ending Community Development Block Grant - $ 42,241 2,293 (94) 2 (136) 392 4,924 (29) 7,352 2,406 (153) (2) (257) 808 19,477 8,684 30,963 4,699 $ (247) $ 24,401 $ 8,655 - $ (393) $ 1,200 $ $ 38,315 111 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 Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway g y User Tax Intergovernmental Federal Grants State Grants Miscellaneous Reimbursement From Outside Sources Indirect Costs Other Total Revenues $ EXPENDITURES Current Public Works and Water Resources Community and Economic Development Total Expenditures Excess (D E (Deficiency) fi i ) off Revenues R O Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Ending 15,217 $ 15,042 $ - $ 15,042 $ 228 13,396 , - 13,396 , ((419)) 1,995 300 8 820 12 32 167 32,167 1,995 300 8 820 415 32 167 32,167 4,218 196 624 139 868 13 34 496 34,496 - 4,218 196 624 139 868 13 34 496 34,496 2,223 196 324 131 48 (402) 2 329 2,329 14,889 12,018 26,907 15,328 12,066 27,394 14,877 10,327 25,204 4 2 6 14,881 10,329 25,210 451 1,739 2,190 5,260 4,773 9,292 (6) 9,286 4,519 2,447 (7,707) (5,260) 2,447 (7,707) (5,260) 629 (7,622) (6,993) - 629 (7,622) (6,993) (1,818) 85 (1,733) 2,299 (6) 2,293 2,786 2,399 7 2,406 2,399 (487) - $ (487) Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences $ Actual Amounts GAAP Basis 13,815 , $ 14,814 Budget to GAAP Differences 13,815 , - Fund Balance - Beginning Actual Amounts Budgetary Basis Final Variance Between Final Budget and Actual Amounts Budgetary Basis $ 6 City of Scottsdale, Arizona The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, basis to include only the exceptions listed above: Fund Balance - Beginning $ 2,399 Fund Balance - Ending $ 4,698 $ 4,698 $ 1 $ 4,699 $ 5,185 Table of Contents City of Scottsdale, Arizona Community Development Block Grant – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Intergovernmental Federal Grants Total Revenues $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 2,291 2,291 $ 2,291 2,291 862 862 $ Actual Amounts GAAP Basis - $ 862 862 $ (1,429) (1,429) 2,291 2,291 2,291 2,291 953 953 3 3 956 956 1,338 1,338 - - (91) (3) (94) (91) - - (146) (7) (153) (146) - $ - $ 3 Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences $ Budget to GAAP Differences Variance Between Final Budget and Actual Amounts Budgetary Basis The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: Fund Balance - Beginning $ (146) Fund Balance - Ending $ (237) $ (237) $ (10) $ (247) $ (237) 113 Table of Contents 114 HOME – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Intergovernmental Federal Grants Total Revenues $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 1,160 1,160 $ 1,160 1,160 $ Budget to GAAP Differences 22 22 $ Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis - $ 22 22 $ (1,138) (1,138) 1,160 1,160 1,160 1,160 20 20 - 20 20 1,140 1,140 - - 2 - 2 2 - - (1) (1) (2) (1) - $ - Fund Balance - Beginning $ (1) Fund Balance - Ending $ 1 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 1 $ (1) $ - $ 1 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Grants – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Total Revenues $ Actual Amounts Budgetary Basis Final 13,000 250 200 1,500 14,950 $ 13,000 250 200 1,500 14,950 $ 1,489 17 110 644 2,260 Budget to GAAP Differences $ Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis - $ 1,489 17 110 644 2,260 $ (11,511) (233) (90) (856) (12,690) EXPENDITURES Current General Government City Court City Treasurer - Finance and Accounting Public Works & Water Resources Community and Economic Development Public Safety Community Services Total Expenditures 3 2,949 873 197 216 302 4,540 3 2,877 873 279 1,593 784 6,409 3 694 197 951 546 2,391 - 3 694 197 951 546 2,391 2,877 179 82 642 238 4,018 Excess (Deficiency) of Revenues Over Expenditures 10,410 8,541 (131) - (131) (8,672) - - (5) (5) - (5) (5) (5) (5) 10,410 8,541 (136) - (136) (8,677) - - (263) 6 (257) (263) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 10,410 $ 8,541 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: Fund Balance - Beginning $ (263) Fund Balance - Ending $ (399) $ (399) $ 6 $ (393) $ (8,940) 115 Table of Contents 116 Section 8 – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Intergovernmental Federal Grants Interest Earnings Reimbursements From Outside Sources Other Total Revenues $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 6,624 18 6,642 $ 6,624 18 6,642 6,412 1 2 12 6,427 $ Actual Amounts GAAP Basis - $ 6,412 1 2 12 6,427 $ (212) 1 2 (6) (215) 6,642 6,642 6,642 6,642 6,019 6,019 10 10 6,029 6,029 623 623 - - 408 (10) 398 408 - - (6) (6) - (6) (6) (6) (6) - - 402 (10) 392 402 - - 800 8 808 800 City of Scottsdale, Arizona $ - - $ 10 Fund Balance - Beginning $ 800 Fund Balance - Ending $ 1,202 Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences $ Budget to GAAP Differences Variance Between Final Budget and Actual Amounts Budgetary Basis The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 1,202 $ (2) $ 1,200 $ 1,202 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 Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Transaction Privilege Interest Earnings Investment Income Other Total Revenues $ EXPENDITURES Current Community Services 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 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 27,697 235 27,932 $ 26,637 235 1,060 27,932 27,199 297 27,496 $ Actual Amounts GAAP Basis (8) (8) $ 27,199 297 (8) 27,488 $ 562 62 (1,060) (436) - - 2 - 2 (2) 825 131 956 825 131 956 825 129 956 - 825 129 956 2 - 26,976 26,976 26,540 (8) 26,532 (436) (26,311) (26,311) (26,311) (26,311) 1,348 (22,956) (21,608) - 1,348 (22,956) (21,608) 1,348 3,355 4,703 665 665 4,932 (8) 4,924 4,267 12,728 12,728 19,421 56 19,477 6,693 $ 13,393 13,393 $ (8) Fund Balance - Beginning $ 19,421 Fund Balance - Ending $ 24,353 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Change in Fair Value of Investments $ Budget to GAAP Differences Variance Between Final Budget and Actual Amounts Budgetary Basis The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 24,353 $ 48 $ 24,401 $ 10,960 117 Table of Contents 118 Special Progams – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Charges for Current Services Recreation Fees Fines, Fees and Forfeitures Court Fines Court Enhancement Fee Police Fees Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Contributions and Donations Other Total Revenues $ EXPENDITURES Current General Government City Court Community and Economic Development Public Safety Human Resources Community Services Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending 1,130 $ 1,130 $ - $ 1,174 $ 44 2 1,044 527 117 72 - (2) 2 1,044 527 117 72 (2) 2,956 578 6,765 2,956 578 463 7,228 1,411 512 324 5,183 (2) 1,411 512 324 5,181 (1,545) (66) (139) (2,045) 1,363 5,497 1,860 5 2,336 11,061 1,358 6,534 1,806 5 2,337 12,040 1,263 6,419 1,395 1,909 10,986 4 (4) (8) 7 (1) 1,267 6,415 1,387 1,916 10,985 95 115 411 5 428 1,054 (4,296) (4,812) (5,803) (1) (5,804) 5,226 (1,589) 3,637 6,263 (1,589) 4,674 6,728 (953) 5,775 - 6,728 (953) 5,775 465 636 1,101 (659) (138) (28) (29) 110 8,033 8,692 $ City of Scottsdale, Arizona $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Net Increase in Fund Balance - Budget to GAAP 1,174 Actual Amounts GAAP Basis 3 1,076 630 392 - 8,554 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Change in Fair Value of Investments $ Budget to GAAP Differences 3 1,076 630 392 - 8,692 $ Actual Amounts Budgetary Basis Final Variance Between Final Budget and Actual Amounts Budgetary Basis (2) (1) $ (1) The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: Fund Balance - Beginning $ 8,719 Fund Balance - Ending $ 8,691 (1) 8,719 $ 8,691 (35) $ (36) (1) (32) (103) (275) 72 - (991) 8,684 $ 8,655 27 $ 137 Table of Contents City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2011 (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 Miscellaneous Total Assets $ $ LIABILITIES AND FUND BALANCES Liabilities Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Intergovernmental Other Total Liabilities Fund Balances Restricted Assigned 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 9,357 $ 4,572 516 $ 34 - $ 622 - $ 1,382 - $ 1,451 - $ 621 321 $ 551 24 4,857 20,260 41 34,230 $ 1,244 1,794 $ 12 634 $ 28 1,410 $ 90 1,541 $ 12 633 $ 23 895 $ 4,881 $ $ 10,218 14,090 165 20,260 1,244 41 46,018 3,042 1,530 33 - 66 365 319 835 419 630 70 135 109 50 1,374 3,470 5,432 7,015 20,260 41 24,873 1,244 1,277 8 439 15 1,169 49 1,098 7 212 23 182 4,844 102 1,244 20,260 41 34,094 9,357 9,357 517 517 195 195 241 241 443 443 421 421 713 713 37 37 2,567 9,357 11,924 633 $ 895 $ 34,230 $ 1,794 $ 634 $ 1,410 $ 1,541 $ 4,881 $ 46,018 119 Table of Contents 120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Municipal Property Corporation REVENUES Taxes - Local Property Special Assessments Property Rental Interest Earnings Intergovernmental Miscellaneous Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Refunding Bonds Issued Premium on Bonds Issued Payment to Bond Refunding Escrow Agent Total Other Financing Sources and (Uses) Net change in Fund Balances Fund Balances - Beginning, restated City of Scottsdale, Arizona Fund Balances - Ending $ Scottsdale Mountain CFD Special Assessments McDowell Mountain CFD Via Linda Road CFD DC Ranch CFD Waterfront Commercial CFD Scottsdale Preserve Authority Total - $ 151 - - $ 733 - 454 $ - 1,424 $ - 1,395 $ - 235 $ 14 309 $ - 5 10 161 733 454 1,424 1,395 249 309 5 10 4,730 1,530 6,095 7,625 757 86 843 365 134 499 835 640 1,475 630 839 1,469 135 142 277 50 219 269 3,470 2,471 463 6,404 7,772 10,626 463 18,861 (7,464) (110) (45) (51) (74) (28) 40 (6,399) (14,131) 7,541 7,541 - - - - - - 5,940 44,870 5,955 (50,329) 6,436 13,481 44,870 5,955 (50,329) 13,977 77 (110) (45) (51) (74) (28) 40 37 (154) 9,280 627 240 292 517 449 673 - 9,357 $ 517 $ 195 $ 241 $ 443 $ 421 $ 713 $ 37 $ 3,817 733 151 19 12,078 $ 11,924 Table of Contents City of Scottsdale, Arizona General Obligation Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Taxes - Local Property Reimbursements from Outside Sources Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Refunding Bonds Issued Premium on Long Term Debt Issued Payment to Bond Refunding Escrow Agent Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Actual Amounts Budgetary Basis Final 37,910 37,910 $ 37,910 37,910 $ 37,450 1 37,451 Budget to GAAP Differences $ - Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis $ 37,450 1 37,451 $ (460) 1 (459) 27,335 30,185 57,520 27,335 30,185 57,520 27,975 25,533 538 54,046 - 27,975 25,533 538 54,046 (640) 4,652 (538) 3,474 (19,610) (19,610) (16,595) - (16,595) 3,015 19,610 19,610 19,610 19,610 15,732 43,115 4,092 (44,489) 18,450 - 15,732 43,115 4,092 (44,489) 18,450 (3,878) 43,115 4,092 (44,489) (1,160) - - 1,855 - 1,855 1,855 4,305 4,932 4,932 - 4,932 - 4,305 $ 4,932 Fund Balance - Beginning $ 4,932 Fund Balance - Ending $ 6,787 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 6,787 $ - $ 6,787 $ 1,855 121 Table of Contents 122 Municipal Property Corporation Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (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 $ Actual Amounts Budgetary Basis Final 145 337 482 $ 145 337 482 $ Budget to GAAP Differences 151 10 161 $ - Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis $ 151 10 161 $ 6 (327) (321) 1,659 6,219 7,878 1,659 6,219 7,878 1,530 6,095 7,625 - 1,530 6,095 7,625 129 124 253 (7,396) (7,396) (7,464) - (7,464) (68) 7,433 7,433 7,433 7,433 7,541 7,541 - 7,541 7,541 108 108 37 37 77 - 77 40 9,808 9,280 9,280 - 9,280 - 9,845 City of Scottsdale, Arizona $ 9,317 Fund Balance - Beginning $ 9,280 Fund Balance - Ending $ 9,357 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 9,357 $ - $ 9,357 $ 40 Table of Contents City of Scottsdale, Arizona Special Assessments Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Special Assessments Total Revenues $ EXPENDITURES 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 840 840 $ 840 840 $ Budget to GAAP Differences 733 733 $ - Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis $ 733 733 $ (107) (107) 755 85 840 755 85 840 757 86 843 - 757 86 843 (2) (1) (3) - - (110) - (110) (110) 1,627 627 627 - 627 - 1,627 $ 627 Fund Balance - Beginning $ 627 Fund Balance - Ending $ 517 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 517 $ - $ 517 $ (110) 123 Table of Contents 124 Scottsdale Preserve Authority Bond Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Budgeted Amounts Original REVENUES Interest Earnings Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Refunding bonds issued Premium on Bonds Issued Payment to Bond Refunding Escrow Agent Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning City of Scottsdale, Arizona Fund Balance - Ending $ Actual Amounts Budgetary Basis Final - $ - $ Budget to GAAP Differences 5 5 $ - Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis $ 5 5 $ 5 5 3,470 3,231 6,701 3,470 3,231 6,701 3,470 2,471 463 6,404 - 3,470 2,471 463 6,404 760 (463) 297 (6,701) (6,701) (6,399) - (6,399) 302 6,701 6,701 6,701 6,701 5,940 44,870 5,955 (50,329) 6,436 - - 5,940 44,870 5,955 (50,329) 6,436 (761) 44,870 5,955 (50,329) (265) - - 37 - 37 37 - - - - - - - $ - Fund Balance - Beginning $ - Fund Balance - Ending $ 37 Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was adjusted to reflect a change in the budget basis to modified accrual basis, to include only the exceptions listed above: $ 37 $ - $ 37 $ 37 Table of Contents City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2011 (in thousands of dollars) General Obligation Bond ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Grants Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Deferred Revenue Intergovernmental Other Total Liabilities $ $ $ Fund Balances Restricted Total Fund Balances Total Liabilities and Fund Balances $ Preserve Privilege Tax Transportation Privilege Tax McDowell Mountain CFD DC Ranch CFD Total 43,381 $ - 77 $ - 16,358 $ - - $ 110 87 50 43,431 $ 77 $ 11 5,716 22,085 $ 110 $ 87 - $ - 58 $ 19 4,946 $ 18 - $ - - 60 60 77 5,535 14 10,513 - 43,371 43,371 - 11,572 11,572 110 110 87 87 - 22,085 $ 110 $ 87 43,431 $ 77 $ $ $ $ 59,816 197 61 5,716 65,790 5,004 37 5,535 74 10,650 55,140 55,140 $ 65,790 125 Table of Contents 126 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Governmental Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) General Obligation Bond REVENUES Interest Earnings Investment Income Intergovernmental Federal Grants Miscellaneous Developer Contributions Reimbursements from Outside Sources Total Revenues $ Transportation Privilege Tax 506 $ (10) - $ - - EXPENDITURES Current: Capital Improvements Total Expenditures Excess (Deficiency) of Revenues Over Expenditures City of Scottsdale, Arizona OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Long-Term Capital-Related Debt Issued Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending Preserve Privilege Tax $ 174 $ (2) McDowell Mountain CFD DC Ranch CFD Total - $ - - $ 680 (12) 496 - 3,574 9,835 188 267 14,036 - - 3,574 9,835 188 267 14,532 - 23,640 23,640 27,450 27,450 - - 51,090 51,090 496 (23,640) (13,414) - - (36,558) 4 (13,008) (13,004) 1,284 (1,348) 22,525 22,461 9,172 (835) 8,337 - - 10,460 (15,191) 22,525 17,794 (12,508) (1,179) (5,077) - - (18,764) 55,879 1,179 16,649 110 87 73,904 11,572 $ 110 $ 87 43,371 $ - $ $ 55,140 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. City of Scottsdale, Arizona 127 Table of Contents Combining Statement of Net Assets Internal Service Funds June 30, 2011 (in thousands of dollars) Fleet Management SelfInsurance Total ASSETS Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Interest Miscellaneous Supplies Inventory $ 15,247 $ 24,387 $ 39,634 16 662 26 36 - 42 36 662 15,925 24,449 40,374 7,056 65,423 977 4,098 (47,089) - 7,056 65,423 977 4,098 (47,089) Total Capital Assets (net of accumulated depreciation) 30,465 - 30,465 Total Noncurrent Assets 30,465 - 30,465 46,390 24,449 70,839 1,360 108 152 - 365 30 33 5,504 1,725 138 185 5,504 1,620 5,932 7,552 204 15 219 29 5,636 5,665 233 5,651 5,884 1,839 11,597 13,436 30,465 14,086 12,852 30,465 26,938 Total Current Assets Noncurrent Assets Capital Assets Buildings and Improvements Motor Vehicles Machinery and Equipment Construction in Progress Less Accumulated Depreciation Total Assets LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Due Within One Year Claims Payable - Due Within One Year 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 128 $ 44,551 $ 12,852 $ 57,403 City of Scottsdale, Arizona Table of Contents Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds For the Fiscal Year Ended June 30, 2011 (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 SelfInsurance 14,068 16 $ 19,783 4,016 1,274 782 Total $ 33,851 4,016 1,274 798 14,084 25,855 39,939 11,184 5,061 3,004 2,964 22,310 1,492 - 11,184 3,004 2,964 22,310 1,492 5,061 16 245 16,245 29 770 29,770 46 015 46,015 (2,161) (3,915) (6,076) 197 (150) 1,703 327 - 1,703 524 (150) 47 2,030 , 2,077 , (2,114) (1,885) (3,999) Capital Contributions Transfers Out Change in Net Assets 949 (28) (1,193) (7) (1,892) 949 (35) (3,085) Total Net Assets - Beginning 45,744 14,744 60,488 Operating Expenses Costs of Sales and Services Fleet Management Operations Self-Insurance Administration Self-Insurance Claims Self-Insurance Benefits Insurance and Bond Premiums Depreciation T lO Total Operating i E Expenses Operating Income (Loss) Non-Operating Revenues Property Tax Investment Income Loss on Sale of Capital Assets Total Non-Operating p g Revenues Income Before Contributions and Transfers T lN Total Net Assets A -E Ending di City of Scottsdale, Arizona $ 44 551 44,551 $ 12 852 12,852 $ 57 403 57,403 129 Table of Contents Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Fleet Management Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating $ Net Cash Provided (Used) by Operating Activities Cash Flows from Non-Capital Financing Activities Property Tax Transfers Out Net Cash (Provided)/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 Net Decrease in Cash and Cash Equivalents Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating 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 Supplies Inventory Accounts Payable Accrued Payroll and Benefits 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 130 Total 25,040 (29,041) (664) 782 $ 39,108 (36,788) (4,018) 798 2,983 (3,883) (900) (28) 1,703 (7) 1,703 (35) (28) 1,696 1,668 (3,774) (3 774) 125 - (3,774) (3 774) 125 (3,649) - (3,649) 214 359 15,727 573 (1,828) (2,308) 26,215 41,942 $ 15,247 $ 24,387 $ 39,634 $ (2,161) $ (3,915) $ (6,076) 5,061 - 66 101 (63) (21) - Total Adjustments Net Cash Provided (Used) by Operating Activities $ (480) Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year 14,068 (7,747) (3,354) 16 SelfInsurance 5,061 (33) 125 (52) (6) (2) 5,144 (33) 66 226 (115) (27) (2) 32 $ 2,983 $ $ $ 949 949 $ $ (3,883) - 5,176 $ (900) $ $ 949 949 City of Scottsdale, Arizona 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 on 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. City of Scottsdale, Arizona 131 Table of Contents 132 Combining Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2011 (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 $ Agency Funds Family Self-Sufficiency Agency Fund Total 4 $ 4 $ Retainage Escrow Agency Fund 121 $ Total 778 $ 899 4 4 121 778 899 - - 121 - 778 121 778 - - 121 778 899 4 $ 4 $ - $ - $ - City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Statement of Changes in Assets and Liabilities Fiduciary Funds For the Fiscal Year Ended June 30, 2011 (in thousands of dollars) Family Self-Sufficiency Balance July 1, 2010 Additions Retainage Escrow Deductions Balance June 30, 2011 Balance July 1, 2010 Additions Deductions Balance June 30, 2011 ASSETS Cash and Cash Equivalents Total Assets $ 126 $ 53 $ 58 $ 121 $ 4,720 $ 778 $ 4,720 $ 778 $ 126 $ 53 $ 58 $ 121 $ 4,720 $ 778 $ 4,720 $ 778 $ 126 $ - 53 $ - 58 $ - 121 - $ - $ 4,720 - $ 778 - $ 4,720 $ 778 $ 126 $ 53 $ 58 $ 121 $ 4,720 $ 778 $ 4,720 $ 778 LIABILITIES Accounts Payable Designated Escrow Payable Total Liabilities 133 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. 134 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2011 (in thousands of dollars) July 1, 2010 GENERAL OBLIGATION BONDS Governmental Fund Type: 1997 GO Refunding 1989 Series I (1998) 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 2010 GO Various Purpose Bonds 2011 GO Preserve 2011 GO Refunding Various Purpose 2011 GO Refunding Preservation 2001 GO Refunding Series Deferred Issuance Premium 2001 GO Series Deferred Amount on Refunding 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 2010 GO Bonds Deferred Issuance Premium 2011 GO Preserve Series Deferred Issuance Premium 2011 GO Series Deferred Amount on Refunding 2011 GO Refunding Series Deferred Issuance Premium Total General Obligation Bonds REVENUE BONDS Business Type - Revenue Bonds 2004 Utility Revenue Series Refunding 2008 Utility Revenue Series 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 $ 5,890 $ 4,445 6,840 28,715 1,560 5,755 33,025 8,100 4,505 48,000 56,800 8,540 66,090 113,250 16,700 100,000 19,175 50,800 490 (803) 720 (2,552) 1,960 1,820 290 1,995 129 832 583,071 $ - $ 22,525 263 22,788 $ 2,095 $ 2,640 1,560 8,795 1,795 4,600 3,500 900 500 950 640 27,975 $ $ 11,975 33,255 (134) 149 (621) 3,626 48,250 $ - $ 3,030 190 3,220 $ *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). Refunding Bonds Issued Accretions, Amortizations & Contract Adjustments Bonds Defeased - $ June 30, 2011 Governmental Activities Business-type Activities Final Payment Date 8,645 34,470 (1,687) 3,829 45,257 $ - $ 4,445 4,200 28,715 5,755 43,115 $ - $ (490) 803 (51) 278 (213) (136) (22) (112) (5) (42) (5) 14 (73) (54) $ 3,795 $ 24,230 8,100 2,710 48,000 52,200 8,540 66,090 109,750 15,800 100,000 18,675 49,850 22,525 8,645 33,830 669 (2,274) 1,747 1,684 268 1,883 124 790 258 (1,673) 3,756 579,972 $ 3,795 $ 24,230 8,100 2,710 48,000 52,200 8,540 66,090 109,750 15,800 100,000 18,675 49,850 22,525 8,645 33,830 669 (2,274) 1,747 1,684 268 1,883 124 790 258 (1,673) 3,756 579,972 $ - 07/01/14 07/01/18 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 07/01/30 07/01/34 07/01/18 07/01/24 - $ - $ 134 (149) 49 (288) (254) $ 8,945 33,065 (572) 3,338 44,776 $ - $ 8,945 33,065 (572) 3,338 44,776 07/01/16 07/01/23 135 Table of Contents 136 Schedule of Changes in Long-Term Debt* (continued here and on following page) For the Year Ended June 30, 2011 (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, 2010 $ Retired Accretions, & Contract Adjustments Bonds Defeased 8,865 $ 22,842 19,700 55,450 8,855 32,500 156 263 950 (2,214) 5,930 101 184 153,582 - $ - 950 $ 85 225 270 1,530 - 13,440 16,330 110,510 101,500 75,000 717 475 10,819 (4,351) 4,278 3,498 332,216 - 3,180 2,400 2,675 8,255 $ 485,798 $ - $ $ 36,725 $ 13,475 17,670 - - $ Business Type - Municipal Property Corporation Bonds 2004 Water/Sewer 2005E Water/Sewer 2006 MPC Refunding 2008A Water/Sewer 2010 MPC Bonds 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 2010 Water/Sewer Deferred Issuance Premium Subtotal Total Municipal Property Corporation Bonds Issued Refunding Bonds Issued $ June 30, 2011 Governmental Activities Business-type Activities 7,915 $ 23,534 19,475 55,450 8,585 32,500 139 239 912 (2,125) 5,683 96 175 152,578 Final Payment Date City of Scottsdale, Arizona - $ - - $ 777 (17) (24) (38) 89 (247) (5) (9) 526 7,915 $ 23,534 19,475 55,450 8,585 32,500 139 239 912 (2,125) 5,683 96 175 152,578 - - (181) (79) (451) 189 (196) (136) (854) 10,260 13,930 110,510 98,825 75,000 536 396 10,368 (4,162) 4,082 3,362 323,107 9,785 $ - $ - $ (328) $ 475,685 $ 152,578 $ 323,107 - $ 850 2,620 36,725 $ 12,625 - 3,470 $ - $ 32,855 12,015 4,838 (668) 1,117 (745) 49,412 $ 49,350 $ - $ (74) 444 (237) 223 (230) 32 (25) 17 150 $ 15,050 32,855 12,015 950 (897) 4,608 (636) 1,092 (728) 64,309 $ 15,050 32,855 12,015 950 (897) 4,608 (636) 1,092 (728) 64,309 $ - 07/01/24 07/01/22 07/01/16 07/01/24 07/01/22 - - 07/01/19 07/01/21 07/01/35 07/01/34 07/01/30 07/01/31 10,260 13,930 110,510 98,825 75,000 536 396 10,368 (4,162) 4,082 3,362 323,107 07/01/14 07/01/16 07/01/30 07/01/32 07/01/36 SCOTTSDALE PRESERVE AUTHORITY BONDS Governmental Fund Type: 1998 Excise Tax Revenue 2001 Excise Tax Refunding 2004 Excise Tax Refunding 2010 Excise Tax Refunding 2011 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 2010 Excise Tax Revenue Deferred Issuance Premium 2010 Excise Tax Revenue Deferred Amount on Refunding 2011 Excise Tax Revenue Deferred Issuance Premium 2011 Excise Tax Revenue Deferred Amount on Refunding Total Scottsdale Preserve Authority Bonds $ 74 (444) 1,187 (1,120) 67,567 $ SPECIAL ASSESSMENT BONDS Governmental Fund Type: Bell Road II Series 106 Total Special Assessment Bonds $ 2,250 2,250 $ - $ 750 750 $ - $ - $ - $ 1,500 1,500 $ 1,500 1,500 $ - 01/01/13 4,194 $ $ 4,194 $ - $ 20,000 $ 20,000 $ 785 $ - $ 785 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,409 $ 20,000 $ 23,409 $ 3,409 $ 20,000 $ 23,409 $ - 01/01/15 07/01/20 CERTIFICATES OF PARTICIPATION Governmental Fund Type: 2005 Certificates of Participation Series 2010-Public Safety Communications Project Total Certificates of Participation $ $ $ *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). Table of Contents City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* (continued) For the Year Ended June 30, 2011 (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 Business Type: Modular Building - Water Operations TOTAL BONDS, CONTRACTS AND CAPITAL LEASES July 1, 2010 $ Issued Refunding Bonds Issued Retired 13,265 $ 3,710 2,455 2,500 3,005 10,080 3,745 10 (90) 45 38,725 - $ - 835 $ 205 135 115 365 310 50 2,015 $ 1,229,855 $ 42,788 $ 48,000 $ $ 2,795 $ 3 2,600 4,796 5,525 13 - $ - 88 $ 825 116 115 7 $ 15,732 $ - $ 1,151 $ $ 7 7 $ - $ $ 1,245,594 $ 42,788 $ Accretions, Amortizations & Contract Adjustments Bonds Defeased - $ Business-type Activities Governmental Activities June 30, 2011 Final Payment Date - $ - - $ (2) 57 (3) 52 12,430 $ 3,505 2,320 2,385 2,640 9,770 3,695 8 (33) 42 36,762 12,430 $ 3,505 2,320 2,385 2,640 9,770 3,695 8 (33) 42 36,762 - 92,465 $ (434) $ 1,226,413 $ 858,530 $ 367,883 - $ - 2,707 $ 1,775 4,680 5,410 10 2,707 $ 1,775 4,680 5,410 10 - - - $ (3) 4 - - $ - $ 1 $ 14,582 $ 14,582 $ - 7 7 $ - $ - $ - $ - $ - $ - 49,158 $ 94,669 $ 92,465 $ (433) $ 1,240,995 $ 873,112 $ 367,883 94,669 $ - $ Compensated Absences Other Post Employment Benefit - Implied Subsidy Risk Management Claims Total Long-Term Debt *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). 25,182 325 11,140 $ 909,759 $ - 3,289 98 371,270 07/15/22 07/15/23 07/15/23 07/15/24 07/15/18 07/15/27 07/15/32 2032 2009 2013 2033 2035 2013 2010 137 Table of Contents 138 City of Scottsdale, Arizona Table of Contents Statistical Section Contents Page Financial Trends 140 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 150 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 157 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. Demographic and Economic Information 163 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 165 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 consistently present information beginning with fiscal year 2002, when the City implemented Statement 34. City of Scottsdale, Arizona 139 Table of Contents 140 City of Scottsdale, Arizona Net Assets by Component Last Ten 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 (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 2010 2011 $ 1,877,955 $ 2,029,375 $ 2,198,130 $ 2,353,573 $ 2,586,731 $ 2,729,334 $ 2,704,433 108,686 189,540 131,732 97,950 91,862 78,794 102,293 (2) 206,386 90,632 83,884 87,698 108,799 195,887 172,530 (2) $ 2,152,636 $ 2,304,198 $ 2,513,202 $ 2,633,745 $ 2,802,347 $ 2,914,982 $ 2,905,094 653,351 $ 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 $ 941,884 $ 1,009,973 33,649 26,147 26,568 32,244 36,287 224,607 293,090 239,103 307,279 258,395 $ 1,153,892 $ 1,228,869 $ 1,257,061 $ 1,281,407 $ 1,304,655 $ 3,093,766 $ 3,263,205 $ 3,578,121 $ 3,671,218 $ 3,714,406 142,335 215,687 158,300 130,194 128,149 430,993 383,722 322,987 394,977 367,194 $ 3,667,094 $ 3,862,614 $ 4,059,408 $ 4,196,389 $ 4,209,749 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table IIa Fiscal Year Expenses Governmental Activities: General Government Public Works and Water Resources Community and Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Citizen and Neighborhood Resources Economic Vitality Finance and Accounting Financial Services Fire Information Services Municipal Services Planning and Development Planning, Neighborhood and Transportation Police The Downtown Group Transportation 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 26,982 $ 53,325 2,484 7,464 16,494 10,821 11,482 18,269 52,719 72,159 1,044 28,063 301,306 22,776 $ 3,601 52,222 2,433 6,421 7,883 18,127 11,901 12,290 11,908 54,469 71,837 1,099 27,786 304,753 23,839 $ 3,462 55,087 2,812 6,130 7,655 19,570 11,135 13,024 11,697 60,027 78,373 1,024 28,028 321,863 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 $ 2006 2007 2008 2009 2010 30,943 $ 3,333 57,519 3,496 8,026 8,315 28,620 7,941 16,520 12,522 63,076 85,835 1,094 32,466 359,706 - 42,729 $ 3,615 57,931 3,419 7,549 8,343 26,943 14,589 14,746 12,883 74,408 82,047 617 37,192 387,011 45,682 $ 3,800 70,527 3,727 9,475 9,843 28,054 13,329 17,698 15,133 81,375 95,214 597 38,981 433,435 40,698 $ 4,790 78,285 3,663 9,711 10,930 31,943 13,704 20,153 31,933 91,102 90,039 712 39,457 467,120 20,646 $ 3,545 78,523 3,802 8,553 9,913 31,174 13,723 22,887 29,029 92,530 4,595 87,552 595 631 42,242 449,940 24,351 37,143 116,155 3,717 53,596 14,876 1,917 20,676 5,848 114,530 538 39,405 432,752 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 76,178 33,274 3,120 18,889 131,461 488,160 $ 545,292 $ 587,322 $ 587,972 $ 564,213 466,607 (1) $ (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. (2) In FY2010, the City's Governmental Activities were restructured from Departments to Divsions which resutled in the shift of reporting associated expenses. (3) In FY2011, Economic Vitality merged with Planning, Neighborhood and Transportation, to become the Community and Economic Development Division. In addition, Finance & Acccounting was merged into General Government 2011 (2) $ 21,495 35,605 134,221 111,227 3,047 51,974 13,491 2,905 578 40,358 414,901 83,888 34,533 3,680 18,853 140,954 $ 555,855 (3) 141 Table of Contents 142 City of Scottsdale, Arizona Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table IIb Fiscal Year Program Revenue Governmental Activities: Charges for Services: General Government Public Works & Water Resources Community and Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Planning, Neighborhood and Transportation Citizen and Neighborhood Resources Economic Vitality Fire Planning and Development Police Transportation 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 $ 11,243 3,229 15,764 5,706 1,012 22,200 77,412 136,566 2003 $ - 11,402 3,405 15,449 4,227 1,018 21,219 70,369 127,089 2004 $ - 12,742 3,759 17,314 6,760 1,000 24,508 105,794 171,877 2005 $ - 12,106 3,914 18,188 11,514 998 26,865 73,092 146,677 2006 $ - 2007 2008 2009 2010 2011 13,783 $ 14,102 $ 15,581 $ 14,670 $ 13,982 $ 12,655 4,028 4,388 4,637 4,619 5,773 6,837 163 228 21 2,552 1,010 (1) 1,155 1,095 2,275 20,515 16,128 12,800 6,393 9,938 15,071 16,664 5,703 277 326 2,682 511 546 595 599 289 26,355 29,293 28,409 26,272 29,319 136,745 (2) 211,707 (3) 157,808 240,289 190,279 213,325 292,944 237,610 303,502 261,686 4,777 4,666 9,604 (4) 9,917 973 4,617 2,485 635 478 32,205 41,072 111,429 94,056 34,533 2,816 20,940 17,889 170,234 City of Scottsdale, Arizona 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 84,381 32,250 3,451 18,490 55,111 193,683 Total Primary Government Revenues $ 284,865 $ 266,192 $ 359,210 $ 305,251 $ 398,046 $ 486,627 $ 436,164 $ 474,175 $ 423,328 $ Net (Expense)/Revenue Governmental Activities Business-type Activities Total Primary Government Net Expense $ (164,740) 56,448 $ (108,292) $ (177,664) 49,576 $ (128,088) $ (149,986) 93,785 $ (56,201) $ (213,029) 51,673 $ (161,356) $ (173,686) 83,572 $ (90,114) $ (140,491) 81,826 $ (58,665) $ (229,510) $ (146,438) $ (171,066) $ (303,472) 78,352 32,641 30,181 29,280 $ (151,158) $ (113,797) $ (140,885) $ (274,192) (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. (2) Developer contributions increased significantly due to the increase in the assets donated and their valuation (increase in construction costs and land values). (3) Developer contributions increased significantly due to the increase in the assets donated and their valuation (increase in construction costs). (4) In FY2011, Economic Vitality was merged with Planning, Neighborhood and Transportation, to become the Community and Economic Development Division 90,741 33,930 3,380 19,824 50,679 198,554 91,546 34,198 2,813 20,049 22,067 170,673 94,199 35,027 2,879 20,269 9,268 161,642 281,663 Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Assets Last Ten 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 2010 2011 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 9,932 315,040 208,083 $ 56,830 1,368 6,730 10,690 283,701 222,118 49,190 248 11,849 10,179 293,584 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) 130 4,295 430 (10,690) (5,835) 134 2,658 1,355 (10,179) (6,032) 287,552 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 $ 277,866 $ $ 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 $ 112,635 $ 24,346 136,981 $ $ (1) In May 2004, the City of Scottsdale, Arizona citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. $ (9,888) 23,248 13,360 143 Table of Contents 144 City of Scottsdale, Arizona Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table III Privilege & Use General $ 81,871 79,483 87,422 94,407 106,019 109,143 105,277 87,430 79,767 80,563 City of Scottsdale, Arizona Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Property $ 39,485 42,218 46,371 48,416 50,610 50,961 54,139 61,138 60,914 67,703 Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Franchise Taxes Cable TV Light & Power Franchise Franchise $ 2,223 $ 5,238 2,440 5,147 2,740 5,488 2,859 5,596 3,157 6,308 3,355 7,284 3,544 8,030 3,606 7,831 3,317 7,834 3,163 7,842 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 26,416 14,608 27,199 15,042 $ State Shared Sales 15,621 15,853 17,054 18,779 21,664 22,312 21,575 18,677 17,227 17,844 Intergovernmental State Revenue Sharing $ 21,142 21,574 18,278 18,634 21,223 26,653 33,037 35,103 30,309 22,849 Privilege & Use Public Safety (1) $ $ 8,491 9,978 10,578 10,145 8,289 7,541 7,765 Other 512 611 663 1,337 962 929 957 959 979 1,010 (1) In May 2004, the City of Scottsdale citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. (2) The Transient Occupancy tax rate increased from 3% to 5%, effective July 1, 2010. Transient Occupancy $ 6,691 6,688 7,227 7,939 8,970 9,723 9,621 7,577 7,543 12,696 (2) Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table IV Fiscal Year General Fund Non Spendable Restricted Committed Assigned Unassigned Reserved Unreserved Total General Fund All Other Governmental Funds Non Spendable Restricted Committed Assigned Unassigned Unassigned, Reported in: Special Revenue Funds Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds Total All Other Governmental Funds 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $ $ $ 2,006 $ 74,363 76,369 $ 1,992 $ 71,236 73,228 $ 2,153 $ 59,707 (1) 61,860 $ 872 $ 72,772 73,644 $ 805 $ 93,243 94,048 $ 754 $ 89,534 90,288 $ 924 $ 61,379 62,303 $ 835 $ 59,587 60,422 $ 586 51,518 52,104 $ $ $ $ 12,880 $ 13,670 $ 9,122 25,775 168,550 24,553 159,421 22,122 224,422 (2) 207,205 $ 197,644 $ 255,666 $ $ 10,613 $ 23,142 $ 21,249 $ 25,600 $ 27,236 $ 20,193 31,873 148,626 40,952 189,905 52,484 179,477 35,179 212,676 30,710 102,898 30,963 102,490 191,112 $ 253,999 $ 253,210 $ 273,455 $ 160,844 $ 153,646 $ (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. (3) In FY2011, fund balances were stated in classifications required by GASB54 (3) 247 281 53,199 53,727 3,000 104,284 6,221 36,609 (640) 149,474 145 Table of Contents 146 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten 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 Investment Income 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 2010 2011 $ 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 14,917 991 204,040 $ 69,336 1,787 15,322 11,637 765 3,353 5,014 (4,696) 17,756 2,518 289 1,275 2,852 14,159 644 221,236 61,754 1,745 15,119 8,579 733 4,204 2,705 (3,397) 52,300 254 478 1,157 4,673 14,800 1,892 $ 289,920 $ 285,091 $ 307,085 $ 362,987 $ 392,158 $ 425,721 $ 426,624 $ 404,478 $ 346,051 $ 388,232 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table Vb Fiscal Year Expenditures General Government Public Works and Water Resources Community and Economic Development Public Safety Human Resources Community Services Information Technology Administrative Services Finance and Accounting Economic Vitality Planning, Neighborhood and Transportation Planning and Development WestWorld Information Systems The Downtown Group Fire Police Financial Services Transportation Municipal Services Citizen and Neighborhood Resources Streetlight and Services Districts Debt Service: Principal Interest and Fiscal Charges Bond Issuance Costs Advance Refunding Escrow Capital Improvements 2002 $ 2003 2004 19,528 $ 49,276 18,040 7,380 16,281 49,362 7,135 10,016 11,214 2,235 1,044 16,010 $ 3,375 48,950 6,268 11,746 7,386 17,745 52,371 7,752 10,869 11,553 2,446 1,099 16,121 $ 3,290 50,494 6,199 11,218 7,328 19,265 55,510 7,222 9,399 8,774 2,754 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 3,261 49,941 6,506 12,111 7,674 21,320 59,874 7,631 8,760 11,813 2,831 1,094 $ 33,173 31,948 878 213,585 (1) Total Expenditures $ 316,363 $ 327,018 $ 337,690 $ Excess of Revenues over (under) Expenditures $ (41,927) $ (30,605) $ (131,206) (26,443) $ 2006 494,193 $ 23,516 $ 3,507 53,535 7,510 12,436 8,253 24,296 66,278 7,769 10,099 8,850 3,070 617 2007 24,938 $ 3,855 61,778 9,016 14,331 8,931 26,614 78,261 9,080 13,439 9,692 3,254 597 2008 26,633 $ 3,854 69,200 9,373 15,012 10,149 29,785 89,725 9,433 14,301 19,140 3,621 712 2009 19,216 $ 3,465 70,807 8,246 16,671 3,704 9,904 4,627 30,767 89,802 9,701 15,580 18,800 3,732 632 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) $ 2010 17,030 31,391 111,459 3,657 45,655 9,469 1,859 6,059 17,110 27,447 538 2011 (2) $ 33,701 38,782 497 77,929 19,783 31,463 42,357 108,003 3,013 43,967 9,357 3,031 578 37,677 40,091 1,057 107,448 422,583 $ 447,825 (58,698) $ (144,012) $ (129,454) $ (422,583) $ (59,593) 147 (1) The increase from prior period was caused by land purchases related to capital improvement projects. (2) In FY2010, the City's Governmental Activities were restructured from Departments to Divsions which resutled in the shift of reporting associated expenses. (3) In FY2011, Economic Vitality merged with Planning, Neighborhood and Transportation, to become the Community and Economic Development Division. In addition, Finance & Acccounting was merged into General Government (3) Table of Contents 148 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten 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 Long Term Debt Payment to Bond Refunding Escrow Agent Proceeds from Capital Lease Proceeds of Long-term Debt Proceeds from Notes Payable Proceeds from Sale of Assets 2002 $ Total Other Financing Sources and (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 71,095 (60,408) 74,025 75,500 2,390 (75,025) - 2003 $ 87,577 $ 61,134 22.7% 107,441 (91,582) 102,570 12,165 6,284 (108,077) 424 2004 $ 29,225 $ (12,702) 23.6% 137,043 (126,269) 39,190 113,400 4,429 (90,534) - 2005 $ 77,259 $ 46,654 22.6% (1) The change from the prior period was caused by the increase in spending for capital improvement projects. 141,783 (133,284) 74,630 68,355 4,536 (77,584) - 2006 $ 78,436 $ (52,770) (1) $ 23.5% 147,643 (140,513) 191,500 5,501 - 2007 $ 204,131 83,291 21.9% 162,965 (155,295) 55,450 42,500 7,199 (61,845) 175 3,000 - 2008 $ 54,149 $ (4,549) 21.7% $ 195,170 (185,082) 123,805 2,379 - 2009 $ 160,319 (145,357) - 136,272 14,962 (7,740) $ (114,492) 19.5% 19.3% 2010 $ $ 108,066 $ (98,693) 843 50,800 - 2011 79,592 (69,378) 87,985 42,525 10,047 (94,818) 1,091 61,016 57,044 61,016 $ (2,549) 21.2% 22.8% City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table VI Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Property $ 38,413 41,583 46,088 48,249 49,651 50,732 53,778 60,493 58,354 65,970 Privilege & Use General $ 80,297 79,704 86,547 94,302 104,949 110,225 104,673 85,829 77,878 80,119 Sales and Use Taxes Privilege & Privilege & Use Use Transportation McDowell Mtn (1) $ 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 26,416 14,608 27,199 15,042 Franchise Taxes Cable TV Light & Power $ Franchise 2,223 2,440 2,740 2,859 3,157 3,355 3,544 3,606 3,317 3,163 $ Franchise 5,238 5,147 5,488 5,596 6,308 7,284 8,030 7,831 7,834 7,842 State Shared $ Sales 15,621 15,853 17,054 18,779 21,664 22,312 21,575 18,677 17,227 17,844 Privilege & Use Public Safety (1) $ 8,491 9,978 10,578 10,145 8,289 7,541 7,765 Intergovernmental State Revenue $ Sharing 21,142 21,574 18,278 18,634 21,223 26,653 33,037 35,103 30,309 22,849 $ Other 512 611 663 1,337 962 929 957 959 979 1,010 149 (1) In May 2004, the City of Scottsdale, Arizona citizens approved an additional .15% Preservation Privilege Tax and a .10% Public Safety Tax. These taxes were effective July 1, 2004. (2) The Transient Occupancy tax rate increased from 3% to 5%, effective July 1, 2010. Transient Occupancy $ 6,691 6,688 7,227 7,939 8,970 9,723 9,621 7,577 7,113 13,126 (2) Table of Contents 150 City of Scottsdale, Arizona Taxable Sales Subject to Privilege (Sales) Tax by Category Last Ten 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 2002 2003 2004 2005 2006 $ 1,501,832 $ 1,499,864 $ 1,525,050 $ 1,557,909 $ 1,662,604 $ 1,573,073 1,213,352 1,432,006 1,703,826 2,046,791 503,057 518,665 550,704 562,877 584,706 372,610 373,375 400,836 432,006 497,804 748,732 795,091 871,244 959,361 1,012,906 1,035,590 1,059,857 1,138,028 1,248,228 1,413,445 341,314 360,991 416,514 457,819 513,553 910,184 955,494 977,379 1,054,666 1,102,152 524,241 551,806 604,652 661,542 726,122 389,409 376,319 368,442 380,043 398,204 2007 2008 2009 2010 2011 1,622,601 $ 1,370,365 $ 918,219 $ 818,517 $ 862,091 2,208,957 1,932,043 1,251,432 754,583 718,652 626,083 652,226 624,917 611,083 611,825 533,055 529,862 416,216 395,229 401,413 1,011,240 974,330 864,676 865,614 882,376 1,478,112 1,364,347 1,078,674 1,107,272 1,194,790 551,095 532,751 556,842 449,455 502,739 1,211,551 1,308,247 1,217,688 1,144,939 1,113,821 774,598 754,103 684,188 670,311 713,420 418,460 435,415 432,570 436,010 429,035 Total $ 7,900,042 $ 7,704,814 $ 8,284,855 $ 9,018,277 $ 9,958,287 $ 10,435,752 $ 9,853,689 $ 8,045,422 $ 7,253,013 $ 7,430,161 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 Ten 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% 2010 1.65% 0.70% 6.60% 2011 1.65% 0.70% 6.60% 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% 2010 3.00% 1.77% 6.50% 2011 5.00% 1.77% 6.50% Source: Note: (1) (1) (2) 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% 2010 1.45% 0.00% 6.60% 2011 1.45% 0.00% 6.60% 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% 2010 1.80% 0.46% 2.90% 2011 1.80% 0.46% 2.90% City Tax Audit Section 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. 151 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. (1) The state tax rate increased, except for jet fuel, on 6/1/2010 due to approval from the voters in the May 2010 election. (2) The Transient Occupancy tax rate increased from 3% to 5%, effective July 1, 2010. (1) Table of Contents 152 City of Scottsdale, Arizona Sales Tax Revenue Payers by Industry Fiscal Years 2011 and 2002 (in thousands) Automotive Construction Food Stores Hotel Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities Total Number of Filers 494 7,554 169 66 29 4,754 3,699 3,786 870 261 21,682 Fiscal Year 2011 Percentage Percentage of Total Tax Revenue of Total 2.28% $ 14,711 11.51% 34.84% 12,570 9.84% 0.78% 10,110 7.91% 0.30% 6,812 5.33% 0.13% 14,686 11.49% 21.93% 21,355 16.71% 17.06% 9,262 7.25% 17.46% 19,274 15.08% 4.01% 12,053 9.43% 1.20% 6,941 5.43% 100.00% $ 127,774 100.00% Table IX Number of Filers 632 6,640 185 66 25 6,413 2,691 2,933 912 271 20,768 Fiscal Year 2002 Percentage Percentage of Total Tax Revenue of Total 3.04% $ 20,741 18.79% 31.97% 21,576 19.55% 0.89% 7,269 6.59% 0.32% 5,405 4.90% 0.12% 8,743 7.92% 30.88% 15,515 14.06% 12.96% 6,094 5.52% 14.12% 12,219 11.07% 4.39% 7,271 6.59% 1.30% 5,530 5.01% 100.00% $ 110,361 100.00% 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. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Table X City Direct Rate Overlapping Rates Scottsdale Unified School District Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Operating Rate $ 0.49 0.51 0.48 0.45 0.44 0.42 0.38 0.35 0.36 0.38 $ Debt Service Rate Total City Rate 0.67 0.65 0.64 0.62 0.60 0.55 0.41 0.43 0.38 0.51 1.16 1.15 1.12 1.07 1.04 0.97 0.79 0.79 0.74 0.90 $ Operating Rate 4.08 3.94 3.89 3.77 3.46 3.45 3.42 2.82 2.44 2.40 $ Debt Service Rate 1.36 1.36 1.30 1.26 1.22 1.26 1.26 1.07 1.34 1.35 $ EVIT Rate 0.11 0.11 0.10 0.10 0.06 0.05 0.05 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 3.83 3.80 Overlapping Rates County-Wide Jurisdictions Fiscal 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 County County Community County County Education p g Debt Service College g Flood Equalization q Operating $ 1.18 1.21 1.21 1.21 1.20 1.18 1.10 1.03 0.99 1.05 $ 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 0.88 0.14 0.97 0.15 $ Fire District Central AZ County Free County Special Assistance Project j Libraryy Health Care 0.50 $ 0.49 0.47 0.46 0.44 0.33 0.36 0.01 0.01 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 0.10 0.10 $ 0.04 $ 0.04 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.12 0.12 0.09 0.09 0.09 0.11 Total Countyy Total Direct & Overlapping pp g $ $ 3.29 3.28 3.22 3.09 3.18 2.74 2.47 2.33 2.58 2.79 153 Source: Maricopa County Department of Finance Publications On-Line "Tax Rate 2010" 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 2010/11 the rates were as follows: Scottsdale Mountain CFD - $1.0889, McDowell Mountain CFD - $.7497, DC Ranch CFD $0.4487, Via Linda Road CFD - $1.1793 and the Waterfront Commercial CFD - $2.30. 10.00 9.85 9.63 9.30 8.96 8.47 7.99 7.06 7.15 7.49 Table of Contents 154 City of Scottsdale, Arizona Principal Property Taxpayers June 30, 2011 and 2002 (in thousands) Table XI 2011 Taxpayer Arizona Public Service Company Scottsdale Fashion Square LLC General Dynamics Decision Systems, Inc. Scottsdale Princess Partnership Portales Corporate Center LLC/Etal Gainey Drive Associates Blackwell Robert L/Etal Qwest Corporation* Pacific Promenade LLC JEMB Scottsdale LLC Scottsdale Fiesta Retail Center LLC First American Title Motorola, Inc. Massachusetts Mutual Life Ins. Co. Southwest Gas Corporation Wyndham International Source: The Maricopa County Assessor's Office. Taxable Assessed Value $ 61,569 61,195 29,275 26,579 24,597 23,045 21,764 20,456 17,008 15,750 - Rank 1 2 3 4 5 6 7 8 9 10 - 2002 Percentage of Total Taxable Assessed Value 0.835% 0.830% 0.397% 0.360% 0.334% 0.312% 0.295% 0.277% 0.231% 0.214% - Taxable Assessed Value $ 46,335 45,331 18,339 27,960 12,218 23,113 23,012 9,842 12,123 9,276 Rank 1 2 6 3 8 4 5 9 7 10 Percentage of Total Taxable Assessed Value 1.410% 1.380% 0.560% 0.850% 0.370% 0.710% 0.700% 0.300% 0.370% 0.280% City of Scottsdale, Arizona 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 2010/11 secondary assessed valuation of the SRP within the City is $19,783,931 as provided by SRP. *Qwest Corporation was operating under the name Qwest Communications, Inc. in 2002. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Assessed Value of Taxable Property Last Ten Fiscal Years (in thousands) Table XII Fiscal Year Ended June 30th Residential Property $ 1,699,156 $ 1,815,234 Real Property Commercial Vacant Property Land 815,273 923,764 $ 355,384 520,604 Personal Property: Assessed Value Historic & Special Use 2002 2002 P S $ 675 1,091 2003 2003 P S 1,870,142 1,921,093 913,222 1,045,249 400,448 615,184 878 1,484 2004 2004 P S 2,148,272 2,373,446 968,183 1,043,487 473,966 656,600 2005 2005 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 $ 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 2009 2009 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 2010 2010 P S 4,409,444 4,989,883 1,879,139 2,436,470 1,177,944 1,765,907 1,845 2,070 259,145 259,145 (717,210) (1,047,474) 7,010,307 8,406,001 0.36 0.38 2011 2011 P S 4,212,414 4,261,972 1,980,853 2,312,814 1,170,054 1,458,512 4,822 5,622 242,654 242,654 (724,635) (906,165) 6,886,163 7,375,408 0.38 0.51 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. 155 Table of Contents 156 City of Scottsdale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) Table XIII Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Total Tax Levy for Fiscal Year $ 36,166 39,159 42,756 44,879 47,809 48,778 50,838 58,179 57,380 64,327 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 55,221 62,237 Percentage of Levy 96.8% 96.7% 97.6% 97.3% 97.1% 96.6% 97.2% 96.0% 96.2% 96.8% Collections in Subsequent Years $ 672 743 772 658 941 1,071 1,310 1,821 1,661 - Total Collections to Date Amount $ 35,665 38,601 42,500 44,346 47,372 48,176 50,718 57,698 56,882 62,237 Percentage of Levy 98.6% 98.6% 99.4% 98.8% 99.1% 98.8% 99.8% 99.2% 99.1% 96.8% "Total Tax Levy Amount for Fiscal Year" = Maricopa 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 Ten Fiscal Years (in thousands) Table XIV Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Municipal Property Corporation Bonds $ 49,870 41,955 4,850 61,253 108,225 149,176 149,007 149,216 148,212 147,459 General Obligation Bonds $ 319,657 305,003 389,598 372,070 499,365 476,200 574,445 551,455 578,190 572,740 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 45,230 316,780 42,010 308,525 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 67,870 2,250 59,920 1,500 $ Capital Lease 179 139 97 53 7 - Certificates of Participation $ 7,650 7,090 6,401 5,689 4,954 4,194 23,409 Total Primary Government $ 646,724 618,903 718,691 745,997 983,375 989,092 1,176,829 1,135,486 1,217,225 1,206,890 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 157 See Table XIX - Schedule of Demographic and Economic Statistics for personal income and population data. Percentage of Personal Income 7.70% 7.04% 7.85% 7.84% 9.94% 9.54% 10.39% 10.79% 10.21% 11.45% Community Facilities District Bonds $ 34,935 46,355 44,950 43,480 41,945 40,330 42,450 40,665 38,760 36,745 Per Capita $ 3,080 2,891 3,303 3,374 4,344 4,151 4,901 4,686 4,999 5,552 Contracts Payable $ 21,416 19,627 13,702 14,324 13,136 19,819 17,875 16,828 15,732 14,582 $ Capital Lease 172 141 - Table of Contents 158 City of Scottsdale, Arizona Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Table XV Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Governmental Activities General Obligation Bonds $ 319,657,000 305,003,000 389,598,000 372,070,000 499,365,000 476,200,000 574,445,000 551,455,000 578,190,000 572,740,000 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 4,932,433 6,787,123 $ Total 311,208,038 295,996,671 386,129,220 366,468,261 486,929,203 466,817,298 564,924,743 540,613,817 573,257,567 565,952,877 Percentage of Total Taxable Assessed Value of Property (1) 9.5% 8.4% 9.7% 8.4% 10.3% 9.0% 7.8% 6.5% 6.8% 7.7% $ 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 2,354.23 2,603.46 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 (1) Percentage of Total Taxable Assessed Value of Property was corrected using the information from table XII for years Fiscal Years 2006-2010. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2011 (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 $ 587,930 124,850 6,280 239,630 261,120 18,410 16,205 266,380 85,410 3,005 13,265 16,290 2,455 3,745 Estimated Share of Overlapping Debt Estimated Percentage Applicable 14.2650% 14.2665% 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 83,877 298 167,605 85,855 11,532 512 780 3,005 13,265 16,290 2,455 3,745 389,221 376,855 100.0000% 376,855 $ 766,076 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. 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. 159 Table of Contents 160 City of Scottsdale, Arizona Legal Debt Margin Information Last Ten 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 1,448,765 $ 424,865 2009 2010 2011 1,654,483 $ 1,681,200 $ 1,475,082 413,095 1,023,900 $ 1,241,388 $ 1,181,255 $ 29.33% 24.97% 29.74% 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% 499,945 34.42% 27.88% 504,360 $ 78,245 426,115 $ 15.51% 498,490 976,592 33.79% 442,524 74,250 368,274 16.78% City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2011 (in thousands) Table XVIIb Legal Debt Margin Calculation for Fiscal Year 2011 Net Secondary Assessed Valuation as of June 30, 2011 $ 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 7,375,408 1,475,082 Debt applicable to limit: General Obligation Bonds 498,490 Legal 20% Debt Margin (Available Borrowing Capacity) $ 976,592 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 442,524 Debt applicable to limit: General Obligation Bonds Legal 6% Debt Margin (Available Borrowing Capacity) 74,250 $ 368,274 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. 161 Table of Contents 162 City of Scottsdale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (in thousands) Table XVIII Water and Sewer Revenue Bonds Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Operating Revenue(1) $ 97,802 95,064 97,813 105,078 115,374 125,880 131,553 130,782 133,624 132,441 Less: Operating Expenses $ 49,840 46,991 49,662 56,413 56,329 64,089 66,077 71,236 70,165 77,456 Net Operating Revenue $ 47,962 48,073 48,151 48,665 59,045 61,791 65,476 59,546 63,459 54,985 Development Fee Revenue $ 15,087 17,648 21,574 20,155 24,071 17,878 15,280 3,043 3,126 3,859 Net Revenue $ 63,049 65,721 69,725 68,820 83,116 79,669 80,756 62,589 66,585 58,844 Special Assessment Bonds Fiscal Year Ended June 30 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Special Assessment Collections $ 2,339 1,970 2,558 2,016 1,106 1,825 895 821 765 733 Debt Service Principal Interest $ 2,208 $ 393 1,990 279 2,425 492 2,448 360 851 275 848 235 846 197 845 158 757 121 757 86 Highway User Revenue Bonds 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 3,115 2,351 3,220 2,199 Coverage 9.65 10.10 11.58 11.10 12.76 12.31 12.98 10.15 12.18 10.86 Scottsdale Preserve Authority Bonds Coverage (2) 0.90 0.87 0.88 0.72 0.98 1.69 0.86 0.82 0.87 0.87 0.2% and 0.15% Sales Tax (3) $ 15,814 13,377 16,981 31,301 35,483 37,281 35,604 29,121 26,416 27,199 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 3,365 3,374 3,470 2,471 Highway User Tax Revenue $ 12,574 13,137 14,034 14,738 15,708 16,778 16,123 14,083 13,342 13,396 Debt Service Principal Interest $ 2,275 $ 828 2,395 715 2,515 592 2,660 460 2,825 317 2,990 165 - Municipal Property Corporation Bonds Coverage 2.30 1.94 2.71 4.45 5.21 5.48 5.25 4.31 3.92 4.58 Excise Tax (5) $ 156,069 157,302 165,799 180,005 202,081 218,205 216,066 185,801 170,638 170,082 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 9,715 18,415 9,785 22,185 City of Scottsdale, Arizona (1) Includes investment income. (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 Scottsdale, Arizona citizens approved an additional .15% Preservation Privilege Tax. This tax was effective July 1, 2004. (4) Includes debt service payments paid out of revenue from the Water and Sewer Fund. (5) Excise Tax was recalculated for prior years using correct items from Table VI and the Statement of Revenue, Expenditures, and Changes in Fund Balances for the Governmental Funds. 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 N/A N/A Coverage 12.90 12.90 20.03 12.26 12.62 14.20 11.04 6.87 6.07 5.32 Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Demographic and Economic Statistics Last Ten Fiscal Years Table XIX Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Population (1) 209,960 214,090 217,555 221,130 226,390 238,270 240,126 242,337 243,501 217,385 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 11,920,591 10,543,607 Per Capita Personal Income (3) $ 39,992 41,044 42,096 43,148 43,713 43,511 47,181 43,437 48,955 48,502 Median Age (4) 41.1 40.5 40.2 39.9 39.5 41.0 40.2 40.6 40.6 45.4 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 13 to 16 13 to 16 Data Sources: (1) Arizona Department of Commerce estimate (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 Note: (8) Unemployment Rate for FY2009 was restated to actual in FY2010 School Enrollment (6) 27,436 27,479 27,328 26,559 27,000 26,653 26,567 27,029 27,093 27,116 Unemployment Rate (7) 4.3% 4.1% 3.3% 3.0% 2.7% 2.3% 3.8% (8) 6.6% 6.6% 6.2% 163 Table of Contents 164 City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago Table XX 2011 Employer Scottsdale Healthcare Mayo Clinic(2) General Dynamics C4 Systems(3) Scottsdale Unified School District(4) City of Scottsdale(5) The Vanguard Group CVS - CareMark Scottsdale Insurance Company McKesson Speciality Care Solutions Go Daddy Group Scottsdale Memorial Health Systems Advanced PCS Scottsdale Princess Resort Hickey Mitchell Insurance Total Employees 6,650 2,951 4,279 3,500 2,939 1,900 1,802 1,385 740 730 26,876 Rank 1 4 2 3 5 6 7 8 9 10 - Percentage of Total City Employment(1) 3.64% 1.61% 2.34% 1.91% 1.61% 1.04% 0.99% 0.76% 0.40% 0.40% 14.70% City of Scottsdale, Arizona Source: City of Scottsdale, Arizona's Economic Vitality Department (1) 2011 total Scottsdale employment = 182,771; 2002 total employment- 126,918 (2) Includes Mayo Clinic employees within the City of Scottsdale (3) Includes all General Dynamics employees that report to Scottsdale site (4) Includes all Full-time equivalent (FTE) Scottsdale Unified School District employees as of Jan/Feb 2009 (5) Includes all City of Scottsdale Full-time equivalent (FTE) 2002 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(1) 2.36% 2.84% 2.13% 1.34% 0.88% 0.76% 3.52% 2.13% 0.85% 0.79% 17.59% Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Table XXI Full-time Equivalent Employees as of June 30 Function Administrative Services Aviation Citizen and Neighborhood Resources Communications & Public Affairs Community and Economic Development Community Services Economic Vitality Financial Services Finance & Accounting General Government Human Resources Information Technology Municipal Services Planning and Development Planning/Neighborhood/Transportation Public Safety Public Safety - Fire Public Safety - Police Public Works Solid Waste Transportation Water Resources Total 2002 2003 2004 2005 2006 2007 2008 11.9 35.0 12.4 35.0 12.4 32.0 12.4 36.0 13.0 39.0 15.0 40.0 14.7 15.0 2009 38.5 16.0 (1) 2010 35.0 14.0 2011 35.0 14.0 214.5 487.6 516.1 10.0 144.5 516.1 10.0 144.5 506.1 8.0 139.5 512.6 10.0 143.0 559.4 11.0 149.0 580.3 40.0 151.0 546.1 77.0 134.0 543.1 54.0 110.5 489.3 47.0 196.5 36.5 73.8 132.7 157.0 195.5 35.5 73.8 132.7 151.0 196.5 34.5 74.8 135.7 140.0 215.0 35.5 78.8 139.7 140.0 217.0 35.5 80.8 151.7 144.0 172.6 36.5 83.8 170.5 167.0 172.6 53.5 91.8 167.1 35.5 81.8 92.5 155.0 30.0 78.8 95.5 153.0 30.5 75.8 2.7 574.1 2.7 590.1 3.7 590.1 260.7 630.1 259.0 676.1 268.0 705.6 205.2 999.6 224.0 981.6 167.5 953.6 957.6 77.3 35.0 140.0 2,143.0 80.3 34.0 139.0 2,152.5 79.3 24.0 136.0 2,112.5 79.3 25.0 139.0 2,457.0 83.3 27.0 152.5 2,598.3 85.3 30.0 162.0 2,722.2 248.5 85.8 233.0 89.0 197.0 89.0 206.0 89.0 169.0 2,797.9 180.0 2,754.1 189.0 2,537.7 189.0 2,547.5 Source: The City of Scottsdale, Arizona's Budget Department. 165 (1) In FY2010, the Full-time Equivalent Employees for prior years were restated to actual. In addition, the City's Governmental Activities were restructured from Departments to Divisions which resulted in the shift of reporting associated Full-time Equivalent Employees. Table of Contents 166 City of Scottsdale, Arizona Operating Indicators by Division (1) Last Ten Fiscal Years Table XXII Fiscal Year Division General Government City Attorney % of cases resolved at first court appearance (arraignment) City Auditor # of reports performed City Clerk # of legal postings # of minutes City Court Charges filed / charges adjudicated (resolved) Finance & Accounting (3) # of Accounts Payable checks issued # of water meters read annually # of customer contacts (utilities, taxes & licensing) Strategic Resources Group - City Manager City of Scottsdale, Arizona % of survey respondents rating the "Overall Quality of Life in Scottsdale" as good to excellent News releases, media updates, traffic alerts, construction updates released to news media Acres of land acquired for inclusion in the McDowell Sonoran Preserve Administrative Services # of purchase orders Community Services # attending Parks & Recreation facilities, Human Services facilities and Libraries annually # of square feet of medians and rights of way maintained Human Resources Citywide turnover HR operating cost as a % of City payroll Information Techonology # 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) 2002 2003 2004 2005 2006 2007 2008 2009 2010 (2) 2011 20% 26% 30% 30% 32% 34% 35% 34% 32% 40% 3 6 9 10 15 10 11 13 16 17 518 466 456 651 79 1,011 99 1,138 90 1,173 90 1,158 71 1,301 87 1,241 66 79,638 / 114,514 96,995 / 94,045 121,560 / 129,888 136,747 / 134,793 156,051 / 132,096 201,866 / 216,000 221,400 / 219,980 115,319 / 137,887 107,720 / 113,382 104,301 / 108,003 35,636 943,212 212,787 35,344 971,508 218,185 34,547 986,080 218,185 37,954 1,000,870 208,037 41,194 1,015,662 212,888 42,000 1,030,368 216,764 38,000 1,044,205 230,143 36,442 1,049,008 176,680 33,620 1,050,067 175,918 45,592 1,051,089 255,124 No Survey No Survey 90% 93% No Survey 90% No Survey No Survey No Survey 94% 277 267 182 247 205 220 220 NA 240 281 514 660 450 2,600 138 251 648 25 399 2,000.6 8,531 10,212 12,254 9,611 10,778 9,460 8,224 6,234 5,748 5,310 6,797,090 13,168,516 7,485,295 13,229,497 7,565,511 13,949,440 7,573,369 14,569,062 7,877,216 15,188,684 7,838,000 15,460,961 7,940,283 16,918,438 8,747,495 17,000,000 8,634,522 17,000,000 8,855,120 23,168,510 6.0% 3.1% 6.7% 2.6% 6.8% 2.4% 7.3% 2.3% 11.1% 2.3% 9.0% 2.0% 12.0% 2.1% 6.0% 2.1% 9.5% 1.6% 7.3% 1.8% n/a 32,244 129,000 2,319,000 25,400,000 654,100 1,200,000 2,200,000 2,100,000 1,775,000 2.5 4.0 5.0 7.0 30.0 30.0 80.0 147.8 170.0 266.0 (continued) Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Division (1) Last Ten Fiscal Years Table XXII Fiscal Year Division Community and Economic Development 2002 2003 2004 2005 2006 2007 2008 2009 2010 (2) 2011 n/a n/a 45 25 15 20 20 7 7 6 n/a n/a n/a n/a 90% 97% 100% 98% 100% 99% 100% 99% 100% 99% 100% 100% 100% 100% 100% 100% 7,357 10,000 10,000 11,336 13,137 16,900 15,570 20,568 16,452 16,000 n/a 15% 15% 37% 5% 5% 5% -56% 5% 5% No Survey 1,780,578 No Survey 1,917,011 86% 1,917,000 89% 1,969,512 No Survey 2,104,382 94% 2,365,204 No Survey 2,584,837 No Survey 3,472,828 No Survey 3,103,185 No Survey 2,539,744 76 124 150 270 322 375 475 NA 8,578 10,397 Targeted job creation number of companies / number of jobs Hotel/Motel average occupancy rate Bed Tax growth (% annual change) # of Downtown special events coordinated 17 / 1,716 59.5% - 13% N/A 23 / 2,032 61.3% 0% N/A 23 / 1,800 57.5% + 3% 41 10 / 1,443 60.0% + 5% 58 11 / 1,275 69.0% + 5% 62 7 / 1,800 69.0% +9% 71 5 / 1,374 65.0% -2% 65 7 / 394 59.2% -21% 100 10 / 731 58.0% -6% 110 7/ 450 58.8% 8% 120 Scottsdale Airport - Takeoffs and Landings 181,657 197,483 195,276 208,106 210,481 185,241 201,958 169,972 156,896 136,089 30 47 53 57 49 43 44 31 28 22 44.3 72.0 44.8 80.1 45.5 60.2 42.3 56.5 34.9 51.0 37.1 51.0 35.6 51.0 34.3 NA 29.6 NA 28.2 NA Planning, Neighborhood and Transportation Customer wait-time (in minutes) at One Stop Shop Provide applicant with pre-application meeting within 30 days of submitting request. % of inspections performed within 24 hours of the request # of new Code Enforcement cases processed per year % increase of Neighborhood Watch groups annually (4) % of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent Total citywide transit ridership Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies) (5) Economic Vitality Aviation WestWorld # of special events at WestWorld Public Safety Police Fire 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) Provide initial contact to 100% of citizen traffic concerns within seven days 6:41 6:30 6:27 6:12 NA 6:06 5:07 5:07 5:01 4:57 43% 60% 96% 98% 98% 100% 100% 100% 100% 100% # of responses to calls for emergency services Responses per capita Average response time to urban calls for service (minutes) 21,877 0.10 4:02 21,162 0.09 4:01 21,756 0.09 4:20 23,102 0.10 4:23 23,952 0.10 4:20 22,894 0.10 4:15 22,936 0.10 4:21 23,953 0.10 4:23 23,996 0.10 4:28 25,586 0.10 4:22 (continued) 167 Table of Contents 168 City of Scottsdale, Arizona Operating Indicators by Division (1) Last Ten Fiscal Years Table XXII Fiscal Year Division Public Works and Water Resources Public Works Facility inventory maintained (square feet) # of active Capital Projects # of homes serviced by Residential Refuse Collection # of citizens serviced annually by Household Hazardous Waste collection program (6) Water Resources Water Service Connections Drinking Water Supplied (million gallons per day) Reclaimed Water Supplied (million gallons per day) Sewer Service Connections Sewage Treated (million gallons per day) 2002 2003 2004 2005 2006 2007 2008 2009 2010 (2) 2011 1,551,620 101 70,546 1,551,780 118 72,166 1,807,298 116 73,602 1,825,564 183 74,850 2,166,650 219 76,300 2,221,650 202 77,206 2,271,550 180 78,024 2,334,310 178 78,607 2,929,802 168 79,006 3,006,106 152 79,342 1,708 1,900 1,514 1,718 2,000 2,100 2,200 1,923 1,497 2,573 79,052 70.4 11.8 69,121 24.0 80,454 67.6 14.2 70,732 24.5 81,947 70.0 11.8 72,034 24.2 83,511 67.7 11.6 73,232 25.5 86,399 73.1 11.5 74,143 24.2 86,728 72.1 11.4 76,092 25.3 87,248 73.7 11.7 76,849 23.9 87,349 69.4 9.6 77,363 19.7 87,409 68.4 11.2 77,605 21.0 87,458 67.9 8.7 77,850 21.1 Source: The City of Scottsdale's Budget Office and applicable City divisions. (1) This presentation is consistent with the organizational structure approved as part of the FY 2009/10 Budget. It has been noted where changes were approved by the City Council mid-year. (2) In FY2010, the indicators for prior years were restated to actuals. (3) Effective December 2009, the City Council approved placing Financial Management under the control of the City Treasurer, renaming the department "Finance & Accounting," moving Payroll and Risk Management from Human Resources into the (4) During fiscal year 2008/09, the Neighborhood Watch program was reviewed; participants that were no longer eligible for the program were removed, thus reducing the numbers. (5)The statistic for 'Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies)' has increased due to automation of the process. Prior to FY 2009/10 changing signal timing was a manual process. (6)The statistic for '# of citizens serviced annually by Household Hazardous Waste Collection program" number of events were restored in FY 10/11. During FY 2008/09 and FY 2009/10 the number of events were reduced as a budget savings initiative. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Capital Asset Statistics by Function Last Ten 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 2002 2004 2005 2006 2007 2008 2009 2010 2011 3 261 10 3 295 12 3 286 12 3 290 13 3 345 13 3 375 13 3 383 13 4 363 14 4 357 14 4 352 15 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 20,873,951 2,965 8,257 289 20,828,414 2,959 8,224 289 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 41 941 4 55 5 41 941 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 2,061 10,664 2,059 10,687 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 1,421 164.0 1,421 163.0 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) 2003 Source: City of Scottsdale, Arizona departments. 169 Table of Contents 170 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Finance and Accounting Division (480) 312-2437 Visit our website www.ScottsdaleAZ.gov/Finance