Cover_CAFR_Draft1.indd 1 8/29/2012 10:38:15 AM City of Scottsdale, Arizona Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012 Prepared by: Finance and Accounting Division David N. Smith City Treasurer/Chief Financial Officer Joyce L. Gilbride, CPA Accounting Director City of Scottsdale, Arizona City of Scottsdale, Arizona Comprehensive Annual Financial Report For the Fiscal Year ended June 30, 2012 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 Balance – Governmental Funds................................................................................................................................................37 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance 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...........................................................................................42 Statement of Net Assets – Proprietary Funds.........................................................................................................43 Statement of Revenues, Expenses, and Changes in Net Assets – Proprietary Funds......................................................................................................................................................45 Statement of Cash Flows – Proprietary Funds........................................................................................................46 Statement of Fiduciary Net Assets – Fiduciary Funds...........................................................................................47 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds......................................................................48 Notes to Financial Statements: 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: A. Cash and Investments...................................................................................................................................67 B. Receivables......................................................................................................................................................70 C. Capital Assets.................................................................................................................................................71 D. Interfund Balances and Interfund Transfers.............................................................................................73 E. Leases...............................................................................................................................................................74 F. Bonds, Loans, and Other Payables..............................................................................................................74 City of Scottsdale, Arizona  Page V. Other Information: A. Risk Management..........................................................................................................................................87 B. Contingent Liabilities....................................................................................................................................87 C. Subsequent Events.........................................................................................................................................88 D. Joint Venture...................................................................................................................................................89 E. Pollution Remediation...................................................................................................................................89 F. Related Organization.....................................................................................................................................90. G. Retirement and Pension Plans.....................................................................................................................90 H. Other Postemployment Benefits.................................................................................................................94 I. Postemployment Benefits Other Than Pensions......................................................................................95 Required Supplementary Information..............................................................................................................................99 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds...................................................................................104 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds.................................................................................................105 Combining Balance Sheet – Nonmajor Special Revenue Governmental Funds.....................................................107 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Special Revenue Governmental Funds...................................................................108 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Highway User Fuel Tax – Special Revenue Fund..................................................................................................109 Community Development Block Grant – Special Revenue Fund......................................................................111 HOME – Special Revenue Fund..............................................................................................................................113 Grants – Special Revenue Fund...............................................................................................................................115 Section 8 – Special Revenue Fund...........................................................................................................................117 Preserve Privilege Tax – Special Revenue Fund....................................................................................................119 Special Programs – Special Revenue Fund.............................................................................................................121 Combining Balance Sheet – Nonmajor Debt Service Governmental Funds...........................................................123 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Debt Service Governmental Funds................................................................124 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: General Obligation Bond Debt Service Fund.......................................................................................................125 Municipal Property Corporation Bond Debt Service Fund................................................................................126 Special Assessments Bond Debt Service Fund......................................................................................................127 Scottsdale Preserve Authority Bond Debt Service Fund.....................................................................................128 Combining Balance Sheet – Nonmajor Capital Projects Governmental Funds......................................................129 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Capital Projects Governmental Funds....................................................................130 Combining Statement of Net Assets – Internal Service Funds.................................................................................132 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Internal Service Funds.............................................................................................................133 Combining Statement of Cash Flows – Internal Service Funds................................................................................134 Combining Statement of Fiduciary Net Assets – Fiduciary Funds...........................................................................136 Combining Statement of Changes in Assets and Liabilities – Fiduciary Funds......................................................137 Other Supplementary Information: Schedule of Changes in Long-Term Debt.....................................................................................................................139 City of Scottsdale, Arizona  Page STATISTICAL SECTION Financial Trends Net Assets by Component – Last Ten Fiscal Years (accrual basis of accounting)������������������������������������������������ 144 Changes in Net Assets – Last Ten Fiscal Years (accrual basis of accounting)������������������������������������������������������� 145 Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting).������������������������������������������������������������������������������������������������������������������� 148 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 149 Tax Revenue by Source – Last Ten Fiscal Years (modified accrual basis of accounting)�������������������������������������������������������������������������������������������������������������������� 152 Revenue Capacity Taxable Sales Subject to Privilege (Sales) Tax by Category – Last Ten Fiscal Years���������������������������������������������� 153 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years����������������������������������������������������������������������������� 154 Sales Tax Revenue Payers by Industry – Current Year and Nine Years Ago���������������������������������������������������������� 155 Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years����������������������������������������� 156 Principal Property Taxpayers – Current Year and Nine Years Ago������������������������������������������������������������������������� 157 Assessed Value of Taxable Property – Last Ten Fiscal Years.���������������������������������������������������������������������������������� 158 Property Tax Levies and Collections – Last Ten Fiscal Years����������������������������������������������������������������������������������� 159 Debt Capacity Ratios of Outstanding Debt by Type – Last Ten Fiscal Years���������������������������������������������������������������������������������� 160 Ratios of Net General Bonded Debt Outstanding – Last Ten Fiscal Years����������������������������������������������������������� 161 Direct and Overlapping Governmental Activities Debt as of June 30, 2012��������������������������������������������������������� 162 Legal Debt Margin Information – Last Ten Fiscal Years������������������������������������������������������������������������������������������ 163 Pledged-Revenue Coverage – Last Ten Fiscal Years��������������������������������������������������������������������������������������������������� 165 Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years������������������������������������������������������������������������������� 166 Principal Employers – Current Year and Nine Years Ago���������������������������������������������������������������������������������������� 167 Operating Information Full-time Equivalent City Government Employees by Function – Last Ten Fiscal Years����������������������������������� 168 Operating Indicators by Division – Last Ten Fiscal Years���������������������������������������������������������������������������������������� 169 Capital Asset Statistics by Function – Last Ten Fiscal Years������������������������������������������������������������������������������������� 172 City of Scottsdale, Arizona City of Scottsdale, Arizona Table of Contents October 31, 2012 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Scottsdale, Arizona: Letter of Transmittal The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2012, is submitted in accordance with Article 6, Section 14, of the City Charter. Management assumes full responsibility for the completeness and reliability of the information presented in this report, based upon a comprehensive framework of internal control established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. CliftonLarsonAllen, LLP have issued an unqualified (“clean”) opinion on the For the Fiscal Year City’s financial statements for the year ended June 30, 2012. The independent Ended June 30, 2012 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 City’s basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. City of Scottsdale Profile 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. 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. The City has experienced significant increases in population, with the 1950 census reporting 2,032 residents, and the 2010 census reporting 217,385. The City’s population is currently estimated at 217,965 residents making it the sixth largest city in Arizona and the 92nd largest city in the United States. 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 and serve overlapping four-year terms. The City Council directly hires six officers (City Attorney, City Auditor, City Clerk, City Manager, City Treasurer, and Presiding Judge) who have full responsibility for carrying out City Council policies and administering City operations. The City provides a full range of municipal 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. 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 final budget adoption in order to obtain taxpayer comments. In June, the budget is legally enacted through passage of an ordinance. The ordinance sets the maximum legal expenditure limit for 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 2011/12, 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 benefits from 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 business 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-technology; healthcare and medical; 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 in the area, including several world-class resorts and “boutique” hotels, provide over 9,300 guest rooms, along with spectacular spas, trend-setting dining and one-of-a kind Sonoran desert golf courses. With close to 5,000 retail shops, more than 600 restaurants, 125 golf courses, national and international events, art galleries, and a spectacular southwest Sonoran desert setting, Scottsdale continues to be a popular destination for visitors year-round and is well-positioned as the economy recovers. Transient Occupancy Tax revenues to the City increased by 2 percent for fiscal year 2011/12, due to a strengthening Scottsdale tourism industry. 2 City of Scottsdale, Arizona Table of Contents McDowell Sonoran Preserve The Preserve encompasses some of the most scenic desert lands and mountains in Arizona and includes hundreds of miles of trails, including the award-winning Bajada Nature Trail, for explorers of all skill levels. Ultimately the Preserve is planned to span about 34,000 acres – about one-third of the City’s land mass. 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 a second year of growth in retail sales tax revenues with a year-over-year increase of 6 percent in fiscal year 2011/12 up from 3 percent in the previous fiscal year. Property Values The City benefits from a robust assessed valuation of the properties contained within the City boundaries. These strong assessed valuations, even though reduced from historical highs due to the recession and housing bubble, results in Scottsdale having lower property tax rates than most of the surrounding municipalities in the Phoenix metro area. Employment Scottsdale’s unemployment rate for the month of June 2012 was 5.8 percent, significantly lower than the state level of 8.5 percent. Historically, Scottsdale’s unemployment rate is about 2 percent lower than the state’s average. The Scottsdale Airpark is the second largest employment center in Arizona boasting about 48,000 employees in more than 2,000 businesses. A total of 9 new companies relocated to Scottsdale in fiscal year 2011/12 creating approximately 930 new jobs. Additionally, the expansion of 4 companies resulted in another 535 jobs. Commercial Vacancy Rates Scottsdale’s citywide average office vacancy rate was 25.7 percent for the second quarter of calendar year 2012 – lower than the Phoenix market average of 27.8 percent. Of the commercial construction underway in the Phoenix Market area at the end of the second quarter 2012, 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 continued economic slowdown, potential for State legislative initiatives to reduce revenue sharing and additional demands for essential City services such as police, fire, transportation and social services all pose a fiscal challenge. Achieving and maintaining fiscal stability requires many elements, all working in concert with one another. The following identifies other 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 policies which are adopted annually by the City Council. City of Scottsdale, Arizona 3 Table of Contents Financial Resources 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. 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 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. In recent years, the City has generally issued two types of debt: voter approved General Obligation bonds and non-voter approved Municipal Property Corporation bonds and Certificates of Participation (see Section IV.F of the Notes to the Financial Statements for further information). 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. A summary of the City’s bond ratings follows. 4 City of Scottsdale, Arizona Table of Contents City of Scottsdale Bonded Debt Ratings As of June 30, 2012 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 Major Initiatives The City of Scottsdale’s adopted fiscal year 2012/13 budget reflects cautious optimism as revenues continue on a positive trend from the previous year and expenditure levels are stabilized. The adopted budget eliminated 33 vacant positions in the General Fund with no anticipated service impact to citizens. Division budgets reflect only increases necessary to cover rising costs over which the City has no control such as utilities, fuel and state retirement plan contributions. Modest improvements projected in the City’s revenues will allow Scottsdale to meet its most pressing needs and fund the highest priorities for fiscal year 2012/13. The Capital Improvement Plan invests $21.0 million of General Fund dollars ($363.0 million all funds) in a variety of key infrastructure improvements throughout the City to maintain and improve the City’s service delivery systems. Additionally, one-time savings created by keeping operating expenditures below revenues during the past few years allows for $5.3 million available in the operating and capital budgets to address critical maintenance and investment at parks, pools and other City facilities. 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, 2011. This was the thirty-ninth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government has to publish an easily readable and efficiently organized CAFR that satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. However, 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 award. The City of Scottsdale also received the “Distinguished Budget Presentation Award” for the fiscal year beginning July 1, 2011 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, 2012. City of Scottsdale, Arizona 5 Table of Contents The preparation of this report would not have been possible without the talent, effort, and dedication of the entire staff of the Finance and Accounting division. I wish to thank all City divisions for their assistance in providing the data necessary to prepare this report. I also wish to express my sincere appreciation to the City Council and the City Manager for their support in maintaining the highest standards of professionalism in planning and conducting the financial affairs of the City of Scottsdale. 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, 2012 Charter Offices Dan Worth, Acting City Manager Bruce Washburn, City Attorney Sharron Walker, City Auditor Carolyn Jagger, City Clerk Joseph Olcavage, Presiding 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 ORGANIZATION CHART July 2011 Scottsdale City Council Boards, Commissions, Task Forces City Attorney Administrative Services • Communications • Human Resources • Information Technology • Purchasing • Tax Audit City Auditor Community Services • Human Services • Library Systems • Parks & Recreation • Preserve Management City Clerk City Manager Community & Economic Development • Aviation • Economic Vitality • Planning, Neighborhood, Transportation • WestWorld City Treasurer Presiding Judge Finance & Accounting City Court Public Safety • Administration • Fire Department • Police Department • Emergency Management 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, 2012, 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. 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, 2012, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2012 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. An independent member of Nexia International City of Scottsdale, Arizona (11) 11 Table of Contents The Honorable Mayor and the City Council City of Scottsdale, Arizona Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 13 through 30, the Public Safety Personnel Retirement System Schedule of Funding Progress on pages 99 and 100, and the Other Postemployment Benefit Plan Schedule of Funding Progress on page 101 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules and other supplementary information 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 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 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 and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. CliftonLarsonAllen LLP Mesa, Arizona October 31, 2012 (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, 2012 and 2011. Readers are encouraged to consider the information presented here in conjunction with additional information furnished in the letter of transmittal and the basic financial statements. FINANCIAL HIGHLIGHTS Key financial highlights for fiscal year 2012 are as follows: • The assets of the City exceeded its liabilities at the close of the fiscal years 2012 and 2011 by $4.3 billion and $4.2 billion (net assets), respectively. Of these amounts, $317.2 million and $367.2 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 $83.7 million and $13.4 million during fiscal years 2012 and 2011, respectively. • As of June 30, 2012 and 2011, the City’s governmental funds had combined ending balances of $207.8 million and $203.2 million, respectively. • At the close of the fiscal year, the unassigned fund balance for the General Fund was $52.1 million or 24 percent of total General Fund expenditures of $217.7 million. • The City sold its Planet Ranch assets for approximately $10.0 million plus 50,000 acre feet of water credits estimated at $12.7 million. • More than 4,000 acres of state trust land was added to the McDowell Sonoran Preserve at a cost of $86.0 million. Approximately $36.3 million came from the Growing Smarter State Trust Land Acquisition Grants. The remainder was financed with bond proceeds; the debt service for which will be paid from the two dedicated sales taxes approved by Scottsdale voters in 1995 and 2004. City of Scottsdale, Arizona Management’s Discussion and Analysis ANAGEMENT’S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2012 M 13 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 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, which are comprised of four components: (1) Government-wide Financial Statements (2) Fund Financial Statements (3) Notes to the Financial Statements (4) Required Supplementary Information In addition, this report also contains other supplementary information. 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 (business-type activities). The governmental activities of the City include general government, public works, community and economic development, public safety, community services, administrative services, streetlight and services districts. The business-type activities of the City include water, sewer, solid waste management, and airport operations. The government-wide financial statements include not only the City (known as the primary government), but also 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, 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 earned but unused vacation and medical leave balances. For the Fiscal Year Ended June 30, 2012 The statement of net assets presents financial information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating. 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, 2012 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 balance for the General Fund, General Obligation Bond Debt Service Fund, General Capital Improvement Plan (CIP) Capital Projects Fund, and the Preserve Privilege Tax Capital Projects 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 nonmajor governmental funds is provided in the form of combining statements in the combining and individual funds statements and schedules section of this report. The basic governmental fund financial statements can be found on pages 34-42 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 Management 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, personal computer replacement, 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 are provided in the form of combining statements in a separate section of this report. 16 The basic Proprietary Fund financial statements can be found on pages 43-46 of this report. 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 necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 49-98 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information. The required supplementary information (RSI) provides additional information regarding the City’s other post-employment benefit (OPEB) and the Public Safety Personnel Retirement system. RSI can be found on pages 99-101 of this report. 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 three 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, 2012 Fiduciary Funds Combining Statements The combining statements referred to earlier in connection with nonmajor Governmental Funds, Internal Service Funds, and Fiduciary Funds are presented on pages 104-137. Other Supplementary Information The supplemental debt service schedule provides a comprehensive overview of the City’s total debt and can be found on pages 139-141. Statistical Information The statistical section, found on pages 144-172, presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information indicates about the City’s overall financial health. 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, 2012 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 financial 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 $4.3 billion and $4.2 billion at the close of the fiscal years 2012 and 2011, respectively. The following table is a condensed summary of the City’s net assets for governmental and business-type activities: Net Assets June 30, 2012 and 2011 (in thousands) 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 Governmental Activities 2012 2011 $ 380,880 $ 3,608,608 3,989,488 389,634 3,523,879 3,913,513 858,618 156,020 1,014,638 851,993 156,426 1,008,419 2,800,451 2,704,433 100,275 91,862 74,124 108,799 $ 2,974,850 $ 2,905,094 Business-Type Activities 2012 2011 $ 357,734 $ 1,391,647 1,749,381 380,403 50,350 430,753 386,398 1,358,710 1,745,108 392,803 47,650 440,453 1,036,985 1,009,973 38,576 36,287 243,067 258,395 $ 1,318,628 $ 1,304,655 Totals $ 2012 2011 738,614 $ 5,000,255 5,738,869 776,032 4,882,589 5,658,621 1,239,021 206,370 1,445,391 1,244,796 204,076 1,448,872 3,837,436 3,714,406 138,851 128,149 317,191 367,194 $ 4,293,478 $ 4,209,749 The largest portion (89 percent) of the City’s net assets reflects its net investment in capital assets (e.g. land, buildings, and streets and storm drains) less any related outstanding debt used to acquire those assets. These amounted to $3.8 billion and $3.7 billion at June 30, 2012 and 2011, respectively. Although the City’s investment in 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 ($138.9 million at June 30, 2012, and $128.1 million at June 30, 2011) represents resources that are subject to external restrictions on how they may be used. Unrestricted net assets (8 percent of the City’s total net assets) at June 30, 2012 and 2011, $317.2 million and $367.2 million, respectively, may be used to meet the government’s ongoing obligations to citizens and creditors. 18 City of Scottsdale, Arizona Table of Contents Changes in Net Assets For the fiscal years ended June 30, 2012 and 2011 (in thousands) REVENUES Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues Property Taxes Business Taxes Intergovernmental - Taxes Intergovernmental - Other Interest and Investment Income Gain on Sale of Capital Asset Other Revenue Total Revenues EXPENSES General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Interest on Long-Term Debt Water Utility Sewer Utility Airport Solid Waste Total Expenses Increase (Decrease) in Net Assets Before Transfers Transfers Change in Net Assets Net Assets at Beginning of Year Net Assets at End of Year Governmental Activities 2012 2011 Business-Type Activities 2012 2011 $ $ 37,241 28,144 112,163 $ 38,152 32,205 41,072 157,968 8,607 $ 152,345 17,889 Totals 2012 $ 195,209 28,144 120,770 2011 $ 190,497 32,205 58,961 64,479 163,484 35,334 8,701 1,063 97 20,405 471,111 67,703 154,415 49,190 248 11,849 394,834 132 421 7,610 174,738 134 2,658 1,355 174,381 64,479 163,616 35,334 8,701 1,484 7,707 20,405 645,849 67,703 154,549 49,190 2,906 13,204 569,215 734 1,118 5,419 617 5,736 842 4,498 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 62,390 7,366 69,756 2,905,094 $ 2,974,850 612 934 5,499 717 5,602 1,434 6,697 35,605 134,221 111,227 51,974 19,443 578 40,358 414,901 (20,067) 10,179 (9,888) 2,914,982 $ 2,905,094 90,829 41,218 3,681 17,671 153,399 21,339 (7,366) 13,973 1,304,655 $ 1,318,628 83,888 34,533 3,680 18,853 140,954 33,427 (10,179) 23,248 1,281,407 $ 1,304,655 734 1,118 5,419 617 5,736 842 4,498 34,416 126,622 115,740 54,442 17,318 572 40,647 90,829 41,218 3,681 17,671 562,120 83,729 83,729 4,209,749 $ 4,293,478 612 934 5,499 717 5,602 1,434 6,697 35,605 134,221 111,227 51,974 19,443 578 40,358 83,888 34,533 3,680 18,853 555,855 13,360 13,360 4,196,389 $ 4,209,749 Management’s Discussion and Analysis The City’s total net assets increased by $83.7 million and $13.4 million during the fiscal years 2012 and 2011, 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 that follows. For the Fiscal Year Ended June 30, 2012 Analysis of Changes in Net Assets Governmental Activities Governmental activities increased the City’s net assets by $69.8 million in fiscal year 2012 and decreased the City’s net assets by $9.9 million in fiscal year 2011. Governmental activities accounted for 83 percent of the total growth in the net assets of the City for fiscal year 2012. Capital grants and contributions posted a year-over-year growth of 105 percent. City of Scottsdale, Arizona 19 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents General revenues such as property, franchise, 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 (35 percent), are the largest single source of funds, followed by capital grants and contributions (24 percent), property taxes (14 percent), intergovernmental revenues (including state shared revenues) (9 percent), and charges for services (8 percent). Revenues by Source – Governmental Activities Fiscal Year 2011/12 (in thousands) Intergovernmental $44,035 9% Business Taxes $163,484 35% Other Revenue $20,502 4% Interest and Investment Income $1,063 0% Charges for Services $37,241 8% Operating Grants and Contributions $28,144 6% Capital Grants and Contributions b $112,163 24% Property Taxes $64,479 14% Property taxes decreased by 5 percent from the previous year, primarily reflecting a reduction in the secondary tax assessment (for debt service) and the elimination of an assessment for tort claims (which was $1.7 million in fiscal year 2011). In spite of the lower tax assessments, a decrease in both the primary and secondary assessed valuation from the prior year caused increases in both the primary ($0.06) and secondary ($0.14) tax rates per $100 of assessed value. Business taxes increased 6 percent from the previous year. Sales tax categories with the largest increases over the prior year include retail stores, automotive, restaurants, and construction. The Community and Economic Development Division (including the Transportation Department) is the largest expense function (31 percent) followed closely by the Scottsdale Police and Fire Departments, which together comprise the Public Safety Division (28 percent), and Community Services Division (13 percent). 20 City of Scottsdale, Arizona Table of Contents 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, promoting healthy lifestyles and serving as a catalyst for community involvement. They also provide assistance and guidance to those in need through federal, state, local and private resources. Business-Type Activities Business-type activities increased the City’s net assets in fiscal years 2012 and 2011 by $14.0 million and $23.2 million, respectively, accounting for 17 percent and 100 percent, respectively, of the total growth in the City’s net assets. One key factor of this increase was Water and Sewer Utility Fund capital contributions from developers and grantors, resulting in $8.6 million and $17.9 million for fiscal years 2012 and 2011, respectively. The majority of this amount was infrastructure donated by developers and development fees received. Another factor contributing to the increase in fiscal year 2012 was a $7.6 million gain on the sale of Planet Ranch. Management’s Discussion and Analysis The Public Safety Division provides police and fire/emergency services throughout the City. The division confronts community crime, responds to community needs, and reduces the incidence and severity of emergencies through timely and skilled all-hazard services. For the Fiscal Year Ended June 30, 2012 The Transportation Department, one of six departments in the 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. Program Revenues and Expenses - Business-Type Activities Fiscal Year 2011/12 (in thousands) $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Water Utility Sewer Utility Program Revenues City of Scottsdale, Arizona Airport Solid Waste Expenses 21 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents Revenues by Source – Business-Type Activities Fiscal Year 2011/12 (in thousands) Interest and Investment Income $421 0% Charges for Services $157,968 91% Capital Grants and Contributions $8,607 5% Gain on Sale of Capital Asset $7,610 4% Business Taxes and Other Income $132 0% As shown in the “Program Revenues and Expenses for Business-Type Activities” chart, the largest of Scottsdale’s business-type activities, Water and Sewer utilities, had expenses of $90.8 million and $41.2 million, respectively, in fiscal year 2012, followed by Solid Waste with operating expenses of $17.7 million and Aviation of $3.7 million. As shown on the “Revenues by Source for Business-Type Activities” chart, charges for services provided the largest share of revenues (91 percent) followed by capital grants and contributions (5 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 provided 87,577 water service connections to customers in fiscal year 2011/12. The Solid Waste Department provides delivery of safe, efficient and environmentally sound solid waste services to 76,713 residential customers and 1,162 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. More than 146,000 take-offs and landings occurred last year at Scottsdale Airport. 22 City of Scottsdale, Arizona Table of Contents 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 spendable and non-spendable resources. 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 discretionary use 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 $207.8 million, an increase of $4.6 million in comparison to the balance at June 30, 2011 of $203.2 million. Approximately $51.7 million of the total at June 30, 2012, constitutes 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. Management’s Discussion and Analysis As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. For the Fiscal Year Ended June 30, 2012 FINANCIAL ANALYSIS OF THE CITY’S FUNDS Revenues for governmental functions overall totaled approximately $413.3 million in fiscal year 2012, an increase of 6.5 percent ($25.1 million) from the previous year total of $388.2 million. In fiscal year 2012 expenditures for governmental functions totaled $466.9 million, an increase of 4.3 percent ($19.1 million) from the fiscal year 2011 total of $447.8 million. In the fiscal years ended June 30, 2012 and 2011, expenditures for governmental functions exceeded revenues by approximately $53.6 million and $59.6 million respective. 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 $52.1 million, while the total fund balance was $52.6 million; the unassigned and total balances for the General Fund at the end of fiscal year 2011 were $53.2 million and $53.7 million, respectively. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 23.9 percent of the total General Fund expenditures of $217.7 million in fiscal year 2012 and represented 24.1 percent of the total General Fund expenditures of $220.9 million in fiscal year 2011. Total fund balance represented 24.2 percent and 24.3 percent of total fund expenditures for fiscal years 2012 and 2011, respectively. Overall, the General Fund’s performance resulted in revenues exceeding expenditures in the fiscal year ended June 30, 2012, by $11.9 million. The General Fund Balance decreased in fiscal year 2012 by $1.1 million. The primary reason for the decrease in fund balance was transfers to the City’s self insurance fund. City of Scottsdale, Arizona 23 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents 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 $5.8 million, a decrease of $1.0 million from the $6.8 million as of June 30, 2011. The primary reasons for the decrease in fund balance were planned use of reserve funds for bond issuance costs and property tax revenues coming in lower than expected. 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. At the end of the current fiscal year, the fund balance of the General CIP Construction Capital Project fund was $35.1 million, a decrease of $2.2 million from the $37.3 million at June 30, 2011. The primary reason for the decrease was lower current year revenues and transfers in compared to expenditures. Capital improvement expenditures in 2012 and 2011 were $56.7 million, and $56.4 million, respectively. The Preserve Privilege Tax Capital Projects Fund accounts for the resources used to acquire and improve land within the McDowell Sonoran Preserve. Significant transactions in fiscal year 2011/12 include the purchase of more than 4,000 acres of state trust land. The transaction was partially funded by a state land trust grant and the remainder of the purchase was financed using bond proceeds. The debt service will be paid from voter approved Preserve Privilege Tax. 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 2012 and 2011, the unrestricted net assets for the Water and Sewer Utility were $225.0 million and $244.4 million, respectively; Scottsdale Airport’s were $5.7 million and $5.0 million, respectively; and the Solid Waste Utility Fund’s were $12.3 million and $9.0 million, respectively. The Internal Service Funds, which are used to account for certain governmental activities, also had unrestricted net assets of $22.1 million and $26.9 million, respectively. The total growth in net assets for the Enterprise Funds was $14.0 million and $23.2 million for fiscal years 2012 and 2011, 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 $6.3 million due to capital contributions of $4.0 million as well as increased operating revenues. 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 reflecting efforts to reduce expenditures to deal with the depth and duration of the economic recession. The primary strategy used was to restrict operating expenditures at or below the prior year actual amounts and only filling essential vacant positions. 24 City of Scottsdale, Arizona Table of Contents Capital Assets The City’s capital assets for its governmental and business-type activities as of June 30, 2012 and 2011, amount to $5.0 billion and $4.9 billion, respectively (net of accumulated depreciation). Capital assets include land, buildings and improvements, streets and storm drains, water and sewer systems, water rights, vehicles, machinery and equipment, furniture and fixtures, and construction in progress. The total increase in the City’s capital assets (net of accumulated depreciation) between fiscal years 2012 and 2011 was 2.4 percent. Capital Assets, Net of Depreciation June 30, 2012 and 2011 (in thousands) 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 2012 2011 $ 1,693,561 $ 1,559,367 374,315 372,136 1,343,983 1,401,526 25,003 22,343 19,945 20,380 151,801 148,127 $ 3,608,608 $ 3,523,879 Business-Type Activities 2012 2011 $ 40,699 $ 40,190 17,919 14,178 13,993 13,789 87,171 89,701 805,830 806,046 407,741 333,954 164 198 18,130 60,654 $ 1,391,647 $ 1,358,710 Total 2012 $ 1,734,260 $ 392,234 1,343,983 38,996 87,171 805,830 407,741 19,945 164 169,931 $ 5,000,255 $ 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 Management’s Discussion and Analysis Capital Assets and Debt Administration For the Fiscal Year Ended June 30, 2012 Revenues were $9.9 million more than projected primarily because Privilege Taxes and Transient Occupancy (Bed) Tax performed better than expected. Expenses were $2.4 million less than the revised budget. Specifically, full-time and part-time wages, jail services, software maintenance and licensing, phones and specialty lines, and various other contractual services were all less than the revised budget. Major capital asset events during the current fiscal year included the following: • Pima Road Drainage System project that will construct open channel and storm drain improvements designed in conjunction with major roadway improvements. Expenditures totaled $1.6 million this year against a budget of $6.4 million. As of June 30, 2012, the inception to date expenditures total $3.2 million, leaving a balance of $3.2 million. The project is anticipated to be completed in fiscal year 2012/13. • Scottsdale/Thunderbird Park and Ride Facility project. Expenditures totaled $2.1 million against a budget of $10.6 million. As of June 30, 2012, the inception to date expenditures total $2.6 million, leaving a balance of $8.0 million. The project is anticipated to be completed in fiscal year 2012/13. • Tom’s Thumb Trailhead project that is to construct amenities and infrastructure improvements to serve passive recreational users at the major north community access area in the McDowell Sonoran Preserve. Expenditures totaled $2.2 million against a budget of $3.3 million. As of June 30, 2012, the inception to date expenditures total $2.6 million, leaving a balance of $0.7 million. The project is anticipated to be completed in fiscal year 2012/13. City of Scottsdale, Arizona 25 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents • Scottsdale Road Pedestrian and Bicycle Improvements Phase 1 project that will improve the pedestrian environment, add bicycle lanes and improve transit connections and amenities along Scottsdale Road between Osborn Road and Chaparral Road. Expenditures totaled $3.5 million this year against a budget of $7.5 million. As of June 30, 2012, the inception to date expenditures total $7.1 million, leaving a balance of $0.4 million. The project is anticipated to be completed in fiscal year 2012/13. • Pima Road – Thompson Peak to Pinnacle Peak Road project that will construct a six-lane parkway cross-section. Expenditures totaled $3.7 million against a budget of $28.4 million. As of June 30, 2012, the inception to date expenditures total $24.9 million, leaving a balance of $3.5 million. The project is anticipated to be completed in fiscal year 2012/13. • Apron Reconstruction-Landmark and Transient project with the purpose of reconstructing aircraft parking aprons designated “Landmark” and “Transient” necessary to meet FAA standards. Expenditures totaled $4.6 million this year against a budget of $7.6 million. As of June 30, 2012, the inception to date expenditures total $4.8 million, leaving a balance of $2.8 million. The project is anticipated to be completed in fiscal year 2012/13. • Tony Nelssen Equestrian Center Expansion project. Expenditures totaled $4.7 million this year against a budget of $28.2 million. As of June 30, 2012, the inception to date expenditures total $5.3 million, leaving a balance of $22.9 million. The project is anticipated to be completed in fiscal year 2012/13. • Preserve land purchased under the Expanded McDowell Sonoran Preserve project. Expenditures totaled $52.1 million this year against a budget of $237.2 million. As of June 30, 2012, the inception to date expenditures total $173.8 million, leaving a balance of $63.4 million. Preserve land may 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. • Preserve land purchased under two Growing Smarter FY 2011 Grant projects. Expenditures totaled $36.3 million this year against a budget of $36.3 million. The project was completed and closed when the state grant funds were spent with the land purchase. • 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: o Chaparral Water Treatment Plant Pretreatment ($2.1 million) – This project will examine specific pretreatment processes to prevent Trihalomethanes (THM) 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, 2012, the inception to date expenditures total $3.6 million, leaving a balance of $6.4 million. This project is anticipated to be completed in fiscal year 2014/15. 26 o Downtown Water Transmission Lines ($2.3 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, 2012, the inception to date expenditures total $5.7 million, leaving a balance of $0.7 million. The project is anticipated to be completed in fiscal year 2012/13. City of Scottsdale, Arizona Table of Contents o Water Campus Chlorine Generation ($7.5 million) – This project will modify the existing chlorine storage system. The project’s budget totals $10.0 million. As of June 30, 2012, the inception to date expenditures total $7.6 million, leaving a balance of $2.4 million. The project is anticipated to be completed in fiscal year 2015/16. o Water Distribution System Improvements ($10.6 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 $57.4 million. As of June 30, 2012, the inception to date expenditures total $46.0 million, leaving a balance of $11.4 million. The project is anticipated to be completed in fiscal year 2013/14. Management’s Discussion and Analysis o Booster Station Upgrades ($3.3 million) – This project will upgrade components of the water production system as needed to meet system demands. The project’s budget totals $6.8 million. As of June 30, 2012, the inception to date expenditures total $4.9 million, leaving a balance of $1.9 million. The project is anticipated to be completed in fiscal year 2015/16. For the Fiscal Year Ended June 30, 2012 o Reclaimed Water Distribution Systems (RWDS) Improvements ($2.4 million) – Provides for improvements to the RWDS pipeline pump stations and reservoirs. The project’s budget totals $3.1 million. As of June 30, 2012, the inception to date expenditures total $2.8 million, leaving a balance of $0.3 million. The project is anticipated to be completed in fiscal year 2012/13. o Wastewater Collection System Improvements ($19.7 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 $47.7 million. As of June 30, 2012, the inception to date expenditures total $45.9 million, leaving a balance of $1.8 million. The project is anticipated to be completed in fiscal year 2013/14. o Advanced Water Treatment – Phase 4 ($20.1 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, management, operations, and maintenance regulatory requirements and minimize or eliminate the need for additional capacity in the SubRegional Operating Group regional sewage transmission facilities. The project’s budget totals $59.3 million. As of June 30, 2012, the inception to date expenditures total $50.6 million, leaving a balance of $8.7 million. The project is in the construction phase and is anticipated to be complete in fiscal year 2012/13. For government-wide financial statement presentation, all depreciable capital assets are depreciated from acquisition date to the end of the current fiscal year. For governmental activities, fund financial statements record capital asset purchases as expenditures. Additional information on the City’s capital assets can be found in Note IV.C on pages 71-73 of this report. City of Scottsdale, Arizona 27 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents Debt Administration At the end of the fiscal years 2012 and 2011, the City had total long-term liabilities of $1,274.0 million and $1,281.0 million, respectively. Of these amounts, $594.4 million and $572.7 million, respectively, are General Obligation Bonds backed by the full faith and credit of the City. The remainder includes water and sewer revenue bonds, municipal property corporation bonds, preserve authority bonds, certificates of participation, and other obligations of $679.6 million and $708.3 million for fiscal years 2012 and 2011, respectively. Long-Term Liabilities June 30, 2012 and 2011 (in thousands) General Obligation Bonds Water and Sewer 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 Compensated Absences Net Other Postemployment Benefit Total Long-Term Liabilities Governmental Activities 2012 2011 $ 594,425 $ 572,740 144,977 147,459 56,265 59,920 750 1,500 18,031 23,409 $ 34,640 25,610 (7,519) 867,179 13,375 10,611 25,172 916,337 $ 36,745 25,123 (8,366) 858,530 14,582 11,140 25,182 325 909,759 Business-Type Activities 2012 2011 $ - $ 38,630 42,010 299,775 308,525 - $ 20,752 (4,495) 354,662 3,039 357,701 $ 22,082 (4,734) 367,883 3,289 98 371,270 $ Total 2012 2011 594,425 $ 572,740 38,630 42,010 444,752 455,984 56,265 59,920 750 1,500 18,031 23,409 34,640 36,745 46,362 47,205 (12,014) (13,100) 1,221,841 1,226,413 13,375 14,582 10,611 11,140 28,211 28,471 423 $ 1,274,038 $ 1,281,029 During fiscal year 2012, the City’s total long-term liabilities decreased approximately $7.0 million. This is due primarily to the City paying down approximately $56.0 million of debt ($28 million of General Obligation bonds, $11 million of MPC bonds, $7 million of Revenue bonds, $7 million of COPs and Contracts, and $3 million of district debt) partially offset by the City issuing $50.0 million of new Preserve General Obligation bonds. As part of the new issuance process, the City’s AAA rating on its uninsured General Obligation Bonds was affirmed by the Rating Agencies in January 2012. 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, 2012 and 2011 is $271.8 million and $368.3 million, respectively, in the 6 percent capacity and $613.7 million and $976.6 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 XVIa and XVIb in the Statistical Section of this report. In accordance with Statement No. 45 of the Governmental Accounting Standards Board – GASB (Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions), the Net Other Post-Employment Benefit Obligation (NOPEBO) included in the Outstanding Long-Term 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, 2012. The NOPEBO at the end of the fiscal years 2012 and 2011 were $(0.2) million and $0.4 million, respectively. Additional information in the City’s long-term liabilities can be found in Section IV.F of the Notes to the Financial Statements on pages 74-86 of this report. 28 City of Scottsdale, Arizona Table of Contents The City of Scottsdale’s fiscal year 2012/13 budget includes funding for the highest priorities of the citizens as directed by the City Council. The budget was created with the intention of minimizing impacts to programs and services for citizens. In those few cases where service levels were impacted, the City targeted low-demand periods or services. Division operating expenditure increases were contained to less than $10 million or 5 percent. The majority of increases were to cover rising costs over which the City has little control such as utilities, fuel, and state retirement contributions. The City has continued to reduce staffing levels to mitigate the impacts of the recessionary economy. An additional 33 positions in the General Fund were eliminated for fiscal year 2012/13, bringing total Citywide positions to the lowest point in eight years. The budget includes the first performance-based pay increase for employees since fiscal year 2008/09. 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 2012/13 is $586.9 million, which includes $431.3 million (or 73 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: • • • • • • • Management’s Discussion and Analysis Like many municipalities across the state and nation, the economic recovery for Scottsdale has been slow. The City’s long-term financial plan remains one of conservative economic growth over the next several years. Revenues are expected to increase by modest amounts in fiscal year 2012/13, a positive trend that continues from the previous year. The City’s unemployment rate for the month of June 2012 of 5.8 percent continues to track below national, state, and other local unemployment rates. For the Fiscal Year Ended June 30, 2012 Economic Factors and Next Year’s Budget and Rates 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, and design and construction of the Tony Nelssen Equestrian Center Expansion. Preservation – Construct trails supporting the gateway to the preserve and expansion of preserve lands. Drainage and Flood Control – Improve drainage to several areas within Scottsdale including the Granite Reef Watershed, Upper Camelback Watershed, and Pima Road Drainage System. Public Safety – Purchase of the Police Special Investigations building, and purchase and outfit of self propelled mobile command center to be used for large scale operations. Service Facilities – Expansion of the Transfer Station, replacement of the Natural Gas Compressor, and purchase of Mobile Network Software. Transportation – Reconstruction of Taxiway “A” and Exits in the airport, and improvements to several main Scottsdale thorough ways including Pima Road-McDowell to 90th Street and Airpark Area Access Projects Phase I. 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 (Transportation Fund) program budgets to ensure the City can provide basic services in the event of major emergencies. For fiscal year 2012/13, this amount is $29.7 million (including a $5.0 million contingency). City of Scottsdale, Arizona 29 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2012 Table of Contents 30 Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: 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 City of Scottsdale, Arizona Table of Contents Basic Financial Statements City of Scottsdale, Arizona 31 Table of Contents Statement of Net Assets June 30, 2012 (in thousands of dollars) Governmental Activities ASSETS Current Assets Cash and Investments Cash with Fiscal Agent Receivable (net of uncollectible amounts of $31,487) Property Taxes and Penalties Other Local Taxes Charges for Services Intergovernmental Interest and Other Supplies Inventory $ Business-Type Activities 245,317 58,846 $ 116,025 23,236 Total $ 361,342 82,082 13,012 23,848 27,094 7,033 986 12 18,947 10 1,590 - 13,012 23,860 18,947 27,104 8,623 986 - 1,165 1,165 376,136 5,105 166,090 5,105 542,226 4,636 108 115,391 1,412 23,345 54 115,391 6,048 23,345 162 - 12,866 33,140 5,436 12,866 33,140 5,436 1,845,362 1,763,246 3,608,608 146,000 1,245,647 1,391,647 1,991,362 3,008,893 5,000,255 3,613,352 1,583,291 5,196,643 3,989,488 1,749,381 5,738,869 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, and Other Payables Matured Bonds, Loans, and Other Interest Payable Bonds, Loans, and Other Payables - Due within one year Unearned Revenue Other Liabilities Total Current Liabilities 13,284 10,332 69 9,869 4,555 4,780 1,265 38,350 18,855 43,295 8,378 2,988 156,020 14,002 1,057 3 1,174 1,165 12,130 8,484 12,335 50,350 27,286 11,389 72 11,043 4,555 4,780 2,430 50,480 27,339 55,630 8,378 2,988 206,370 Noncurrent Liabilities Accrued Compensated Absences - Due in more than one year Deferred Revenue Bonds, Loans, and Other Payables - Due in more than one year Pollution Remediation Obligation Total Noncurrent Liabilities 15,303 843,315 858,618 1,865 12,866 342,327 23,345 380,403 17,168 12,866 1,185,642 23,345 1,239,021 1,014,638 430,753 1,445,391 2,800,451 1,036,985 3,837,436 32,639 33,908 29,968 1,310 2,190 260 74,124 2,974,850 5,436 33,140 243,067 1,318,628 38,075 33,908 29,968 1,310 2,190 260 33,140 317,191 4,293,478 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 Net Other Postemployment Benefit 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) Total Noncurrent Assets Total Assets Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted Debt Service Highway User and Preserve Privilege Tax Activities Capital Projects Grants Special Programs Streetlight and Service District Repair and Replacement Unrestricted Total Net Assets $ $ $ The notes to the financial statements are an integral part of this statement. 32 City of Scottsdale, Arizona Table of Contents Statement of Activities For the Fiscal Year Ended June 30, 2012 (in thousands of dollars) Expenses FUNCTIONS/PROGRAMS Governmental Activates General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Interest on Long-Term Debt Total Governmental Activities $ Business-Type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-Type Activities Total Government Charges for Services 734 1,118 5,419 617 5,736 842 4,498 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 $ 90,829 41,218 3,681 17,671 153,399 $ 562,120 153 245 627 172 300 2,468 3,543 10,958 10,102 5,573 2,549 551 37,241 Program Revenues Operating Grants and Contributions $ 97,944 36,032 3,248 20,744 157,968 $ 195,209 4 142 13,881 2,510 11,607 28,144 Capital Grants and Contributions $ 28,144 $ 36,342 112,163 $ 65,894 9,927 Governmental Activities 2,298 1,687 4,622 8,607 $ 120,770 General Revenues Taxes Property Taxes Sales and Use Taxes Franchise Taxes Intergovernmental State Shared Sales State Revenue Sharing Other Interest and Investment Income Gain on Sale of Capital Asset Other Revenue Transfers Total General Revenues and Transfers Change in Net Assets Net Assets - Beginning $ Net Assets - Ending Business-Type Activities (581) (873) (4,788) (445) (5,736) (542) (2,030) 35,163 (91,856) (103,128) (920) (14,769) (21) (40,647) (231,173) $ - - Total $ 9,413 (3,499) 4,189 3,073 13,176 (231,173) (581) (873) (4,788) (445) (5,736) (542) (2,030) 35,163 (91,856) (103,128) (920) (14,769) (21) (40,647) (231,173) 9,413 (3,499) 4,189 3,073 13,176 13,176 (217,997) 64,479 151,924 11,560 132 - 64,479 152,056 11,560 16,987 18,347 8,701 1,063 97 20,405 7,366 300,929 69,756 2,905,094 2,974,850 421 7,610 (7,366) 797 13,973 1,304,655 1,318,628 16,987 18,347 8,701 1,484 7,707 20,405 301,726 83,729 4,209,749 4,293,478 $ $ 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, 2012 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agent Receivable (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy 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 Current Assets (continued) General Obligation Bond Debt Service General $ $ 54,767 1,457 454 14,869 660 997 1,443 1,991 10,459 187 261 2,487 179 264 90,475 $ $ 5,604 41,501 1,405 48,510 General CIP Construction Capital Projects $ $ 36,489 38 2,985 39,512 Preserve Privilege Tax Capital Projects $ $ 398 398 Total Nonmajor Governmental Funds $ $ 114,437 15,888 90 3,567 151 1,057 24,938 2,156 568 134 162,986 Total Governmental Funds $ $ 211,695 58,846 582 18,436 660 2,553 1,443 1,991 10,459 187 1,057 261 24,938 2,156 568 5,606 179 264 341,881 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Balance Sheet Governmental Funds June 30, 2012 (in thousands) 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 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. General Obligation Bond Debt Service General $ $ 4,632 9,635 282 985 $ 260 13,187 28,315 General CIP Construction Capital Projects $ 4,338 24 - Preserve Privilege Tax Capital Projects $ 390 8 - Total Nonmajor Governmental Funds $ 2,446 568 179 5,386 9,050 Total Governmental Funds $ 12,066 10,235 179 18,855 38,350 681 4,044 187 7,471 1,007 4,775 1,159 2,988 37,846 959 42,721 10 53 5 4,430 398 98 568 30,042 280 106 48,723 1,738 4,044 187 7,471 568 30,052 1,340 4,780 1,265 2,988 134,118 264 260 52,105 52,629 90,475 5,789 5,789 48,510 2,980 237 1,215 30,650 35,082 39,512 398 102,047 6,130 6,533 (447) 114,263 162,986 3,244 108,333 7,345 37,183 51,658 207,763 341,881 $ $ $ $ $ 35 Table of Contents Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2012 (in thousands) Fund Balances - Total Governmental Funds $ 207,763 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. 3,577,729 Bond issuance costs are not financial resources; therefore, are not reported in the funds. 4,636 Long-term liabilities, including bonds payable, are not due and payable in the current period; therefore, are not reported in the funds. (905,254) 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. 37,022 Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, 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. 52,954 Net Assets of Governmental Activities $ 2,974,850 The notes to the financial statements are an integral part of this statement. 36 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) General REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State-Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits 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 Income Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements and Outside Sources Indirect Costs Other Total Revenues (continued on next page) General Obligation Bond Debt Service $ $ 24,894 92,864 13,430 8,115 3,445 227 859 $ General CIP Construction Capital Projects 36,568 - $ Preserve Privilege Tax Capital Projects - $ - Total Nonmajor Governmental Funds Total Governmental Funds $ $ 3,627 44,794 - 65,089 137,658 13,430 8,115 3,445 227 859 16,987 18,347 6,977 1,786 - - - 10,885 638 19 16,987 18,347 6,977 10,885 638 1,805 8,421 3,796 2,635 526 - 116 - - 1,491 - 8,537 5,287 2,635 526 4,525 306 2,337 350 3,632 1,558 (781) - 531 354 (190) 1 - 129 1,031 455 719 467 924 (432) 4,654 306 2,337 1,031 350 455 719 4,630 2,837 (1,403) 804 3 551 50 3,245 8,613 1,049 229,551 36,568 237 36,298 198 763 561 1,761 40,629 1 19,524 236 10,428 98 1,708 8,836 483 455 106,515 19,761 36,534 11,430 101 551 2,521 12,642 9,096 3,265 413,264 $ $ $ $ $ 37 Table of Contents 38 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) General EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Improvements Total Expenditures $ Excess (Deficiency) of Revenues over Expenditures City of Scottsdale, Arizona OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Proceeds from Long-Term Debt Issued Premium on Long-Term Debt Issued Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending The notes to the financial statements are an integral part of this statement. $ General Obligation Bond Debt Service 711 1,113 5,391 614 3,691 813 4,253 15,977 22,876 105,866 31,753 14,444 572 $ General CIP Construction Capital Projects - $ Preserve Privilege Tax Capital Projects - $ Total Nonmajor Governmental Funds - $ 1,937 11,330 15,493 2,068 13,009 6 - Total Governmental Funds $ 711 1,113 5,391 614 5,628 813 4,253 27,307 38,369 107,934 44,762 14,450 572 5,715 3,863 217,652 28,315 25,716 774 54,805 56,745 56,745 55,003 55,003 10,670 10,908 17,277 82,698 44,700 40,487 774 129,025 466,903 11,899 (18,237) (16,116) (55,002) 23,817 (53,639) 10,023 (23,020) (12,997) 14,716 75 2,448 17,239 14,909 (1,019) 13,890 5,077 49,925 55,002 36,854 (51,787) (14,933) 81,579 (75,826) 50,000 2,448 58,201 (1,098) (998) (2,226) - 8,884 4,562 53,727 52,629 $ 6,787 5,789 $ 37,308 35,082 $ - $ 105,379 114,263 $ 203,201 207,763 Table of Contents Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2012 (in thousands) Net Change in Fund Balances - Total Governmental Funds $ 4,562 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. 18,418 Donations of capital assets are not capitalized on the governmental fund statements, but are shown in the statement of activities. 65,897 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. 374 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (7,912) Bond issuance costs are expended in the governmental funds when paid, and are capitalized and amortized in the statement of net assets. This is the amount by which current year bond issuance costs exceeded amortization expense in the current period. 308 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 transaction has any affect on net assets. This is the amount by which debt proceeds exceeded principal retirement in the current period. (7,748) Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refunding. 306 The net revenues of certain activities of Internal Service Funds is reported with governmental activities. (4,449) Changes in Net Assets of Governmental Activities $ 69,756 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 39 Table of Contents 40 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts City of Scottsdale, Arizona REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State-Shared Sales State Revenue Sharing Auto Lieu Tax Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines, Fees, and Forfeitures Court Parking Photo Radar Library Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements and Outside Sources Indirect Costs Other Total Revenues (continued) $ $ Actual Amounts Budgetary Basis Final Original 25,017 88,724 12,247 7,880 3,009 209 919 $ 16,446 18,348 7,331 1,718 16,446 18,348 7,331 1,718 16,987 18,347 6,977 1,786 8,380 3,838 2,514 448 8,380 3,838 2,514 448 8,421 3,796 2,635 526 6,152 239 1,905 430 2,833 446 - 5,227 239 1,905 430 2,833 446 - 4,525 306 2,337 350 3,632 1,558 - (781) 787 725 410 8,197 1,310 220,462 787 725 1,835 8,197 810 220,462 804 3 551 50 3,245 8,613 1,049 230,332 (781) $ 25,017 88,724 12,247 7,880 3,009 209 919 $ Budget to GAAP Differences $ 24,894 92,864 13,430 8,115 3,445 227 859 $ $ Actual Amounts GAAP Basis Variance between Final Budget and Actual Amounts Budgetary Basis $ $ $ 24,894 92,864 13,430 8,115 3,445 227 859 (123) 4,140 1,183 235 436 18 (60) 16,987 18,347 6,977 1,786 541 (1) (354) 68 8,421 3,796 2,635 526 41 (42) 121 78 4,525 306 2,337 350 3,632 1,558 (781) (702) 67 432 (80) 799 1,112 - 804 3 551 50 3,245 8,613 1,049 229,551 17 3 (174) 50 1,410 416 239 9,870 $ Table of Contents City of Scottsdale, Arizona General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts 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 (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending The notes to the financial statements are an integral part of this statement. Final Original $ 764 1,060 5,506 721 3,769 899 4,393 15,776 24,304 104,652 32,697 13,819 725 $ 766 1,073 5,513 710 3,738 979 4,275 15,943 23,902 105,188 32,216 14,865 725 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 740 1,112 5,322 610 3,670 938 4,230 15,943 22,935 105,234 31,599 14,671 572 Actual Amounts GAAP Basis (29) 1 69 4 21 (125) 23 34 (59) 632 154 (227) - $ 711 1,113 5,391 614 3,691 813 4,253 15,977 22,876 105,866 31,753 14,444 572 Variance between Final Budget and Actual Amounts Budgetary Basis $ 26 (39) 191 100 68 41 45 967 (46) 617 194 153 5,891 3,156 218,132 5,891 3,745 219,529 5,715 3,863 217,154 498 5,715 3,863 217,652 176 (118) 2,375 2,330 933 13,178 (1,279) 11,899 12,245 10,472 (20,227) (9,755) 10,472 (20,227) (9,755) 10,023 (23,020) (12,997) - 10,023 (23,020) (12,997) (449) (2,793) (3,242) (7,425) (8,822) 181 (1,279) (1,098) 9,003 41,758 34,333 $ 57,802 48,980 $ 57,802 57,983 $ (4,075) (5,354) $ 53,727 52,629 $ 9,003 41 Table of Contents General Fund Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Investment Income $ 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 Total Expenditure Reconciling Items: Net Decrease in Fund Balance - Budget to GAAP (781) 496 2 498 $ (1,279) $ 52,557 The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 5,245 $ 57,802 The notes to the financial statements are an integral part of this statement. 42 City of Scottsdale, Arizona Table of Contents Statement of Net Assets Proprietary Funds June 30, 2012 (in thousands) ASSETS Current Assets Cash and Investments Cash with Fiscal Agent Receivables Privilege Tax Charges for Services Intergovernmental Interest Miscellaneous Supplies Inventory Restricted Cash, Cash Equivalents, and Investments Customer Advances and Deposits Other Restricted Assets Joint Venture Construction Deposits Water and Sewer Utility $ 98,866 23,236 Airport $ Solid Waste 5,675 - $ Governmental Activities Internal Service Funds Total 11,484 - $ 116,025 23,236 $ 33,622 - 17,104 204 940 - 12 10 6 224 - 1,843 12 204 - 12 18,947 10 222 1,368 - 90 722 1,085 80 - 1,165 - 5,105 - - 5,105 - 146,540 6,007 13,543 166,090 34,434 115,391 1,412 23,345 36 3 15 115,391 1,412 23,345 54 2 10,866 33,140 5,436 2,000 - - 12,866 33,140 5,436 - 30,024 87,171 1,108,799 548,222 18,095 813 13,998 (449,199) 9,564 26,874 939 2,937 (11,164) 1,111 3,642 1,905 1,195 (3,279) 40,699 87,171 1,108,799 548,222 30,516 20,939 813 18,130 (463,642) 7,560 59,381 886 4,806 (41,754) Total Capital Assets (net of accumulated depreciation) 1,357,923 29,150 4,574 1,391,647 30,879 Total Noncurrent Assets 1,547,549 31,153 4,589 1,583,291 30,881 Total Current Assets Noncurrent Assets Equity in Joint Venture Deferred Charges Pollution Remediation Recoveries Net Other Postemployment Benefit Restricted Cash, Cash Equivalents, and Investments Deferred Revenue Water and Sewer System Replacement Revenue Bond Reserve Capital Assets Land Water Rights Water System Sewer System Buildings and Improvements Motor Vehicles Machinery and Equipment Furniture and Fixtures Construction in Progress Less Accumulated Depreciation Total Assets $ 1,694,089 $ 37,160 $ 18,132 $ 1,749,381 $ 65,315 (continued on next page) City of Scottsdale, Arizona 43 Table of Contents Statement of Net Assets Proprietary Funds June 30, 2012 (in thousands) LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Current 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 Payable and Other Payables - Due within one year Water and Sewer Utility $ Total Current Liabilities 13,598 791 862 1,085 12,130 8,484 12,335 Airport $ Solid Waste 77 46 3 57 80 - $ Governmental Activities Internal Service Funds Total 327 220 255 - $ 14,002 1,057 3 1,174 1,165 12,130 8,484 12,335 $ 1,218 166 169 4,555 - 49,285 263 802 50,350 6,108 1,392 10,866 342,327 23,345 65 2,000 - 408 - 1,865 12,866 342,327 23,345 197 6,056 - 377,930 2,065 408 380,403 6,253 427,215 2,328 1,210 430,753 12,361 NET ASSETS Invested in Capital Assets, Net of Related Debt 1,003,261 29,150 4,574 1,036,985 30,879 Restricted for Water and Sewer System Replacement Restricted for Debt Service Unrestricted Total Net Assets 33,140 5,436 225,037 1,266,874 5,682 34,832 12,348 16,922 33,140 5,436 243,067 1,318,628 22,075 52,954 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 $ $ $ $ $ The notes to the financial statements are an integral part of this statement. 44 City of Scottsdale, Arizona Table of Contents Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds For the Fiscal Year Ended June 30, 2012 (in thousands) 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) Transaction Privilege Tax Investment Income Interest Expense Gain on Sale of Capital Assets Net Non-Operating Revenue (Expenses) Income Before Contributions and Transfers Capital Contributions Transfers In Transfers Out Change in Net Assets Total Net Assets - Beginning Total Net Assets - Ending $ 88,969 35,226 9,306 475 133,976 Airport $ Solid Waste 3,241 7 3,248 $ Governmental Activities Internal Service Funds Total 20,742 2 20,744 $ 88,969 35,226 9,306 20,742 3,241 484 157,968 $ 43,450 619 44,069 47,142 25,163 6,532 41,596 120,433 1,919 599 1,163 3,681 15,486 1,965 220 17,671 47,142 25,163 15,486 1,919 9,096 42,979 141,785 45,645 4,541 50,186 13,543 (433) 3,073 16,183 (6,117) 360 (11,614) 7,601 (3,653) 132 21 9 162 40 40 132 421 (11,614) 7,610 (3,451) (42) 97 55 9,890 (271) 3,113 12,732 (6,062) 3,985 127 (7,668) 4,622 7 (5) 193 (20) 8,607 327 (7,693) 4,200 (2,587) 6,334 4,353 3,286 13,973 (4,449) 1,260,540 30,479 13,636 1,304,655 57,403 1,266,874 $ 34,832 $ 16,922 $ 1,318,628 $ 52,954 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 45 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2012 (in thousands) Water and Sewer Utility Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating Net Cash Provided by (Used for) Operating Activities $ Cash Flows from Non-Capital Financing Activities Transaction Privilege Tax Transfers In Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities Capital Contributions from Other Water and Sewer Development Fees Capital Grants 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 and CIP Deposit Sale of Capital Assets Net Cash Provided by (Used for) Capital and Related Financing Activities Cash Flows from Investing Activities Income Received on Investments Net Cash Provided by (Used for) Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year Cash and Cash Equivalents at End of Year Includes Cash and Investments Cash with Fiscal Agent Restricted Cash and Investments Total Cash and Cash Equivalents Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Operating Income Adjustments to Reconcile Operating Income to Net Cash Provided by (Used for) 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 Other Post Employment Benefit Claims Payable Deferred Revenue Other Liabilities Total Adjustments Net Cash Provided by (Used for) Operating Activities Supplemental Disclosure of Non-Cash Financing Activities Additional to Property, Plant, and Equipment Amortization of Deferred Charges Increase (Decrease) in Receivables Gain (Loss) on Equity in Joint Venture Acquisition of Water Rights Total Non-Cash Financing Activities 132,153 (62,894) (18,103) 1,371 52,527 Airport $ Solid Waste 5,109 (1,740) (1,018) 5 2,356 $ Governmental Activities Internal Service Funds Total 20,751 (11,103) (7,158) 2 2,492 $ 158,013 (75,737) (26,279) 1,378 57,375 $ 43,395 (42,442) (4,336) 620 (2,763) 127 (7,668) (7,541) 140 7 (5) 142 193 (20) 173 140 327 (7,693) (7,226) 4,200 (2,587) 1,613 4,065 135 (61,951) (102) (13,054) (17,244) 5,092 8,880 (74,179) 6,507 (4,809) 1,698 (185) (185) 4,065 6,642 (66,945) (102) (13,054) (17,244) 5,092 8,880 (72,666) (5,734) 874 (4,860) 357 19 38 414 (2) 357 19 38 414 (2) (28,836) 4,215 2,518 (22,103) (6,012) 201,465 3,540 8,966 213,971 39,634 $ 172,629 $ 7,755 $ 11,484 $ 191,868 $ 33,622 $ $ 5,675 2,080 7,755 $ $ 116,025 23,236 52,607 191,868 $ $ 11,484 11,484 $ $ 98,866 23,236 50,527 172,629 33,622 33,622 $ 13,543 (433) $ 3,073 $ 16,183 $ $ $ $ $ $ $ (6,117) 41,596 1,163 220 42,979 4,541 (2,973) 897 1,579 (2,348) 280 (36) 825 (836) 38,984 (150) (275) 38 (3) 2,001 15 2,789 (40) 49 (213) (541) (15) (41) (581) (3,013) 796 1,579 (2,836) (223) (54) 2,826 (862) 41,192 (53) (60) (507) (22) (2) (530) (13) 3,354 52,527 $ 2,356 $ 2,492 (156) (4,502) 12,650 $ (1,885) 9 $ - (1,876) $ - 7,992 $ $ $ $ 57,375 $ (2,763) (156) (1,885) (4,502) 12,659 $ - 6,116 $ - 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, 2012 (in thousands) ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Escrow Payable Vouchers Designated Escrow Payable State Land Department Rebate Private Purpose Trust Funds $ 3 $ 3,210 $ 3 $ 3,210 $ - $ 75 1,720 1,415 - $ 3,210 Total Liabilities NET ASSETS Held in Trust for Other Purposes Agency Funds $ 3 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 47 Table of Contents Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Fiscal Year Ended June 30, 2012 (in thousands) Private Purpose Trust Funds ADDITIONS Contributions: Private Donations $ Total Additions Scholarships 4 4 DEDUCTIONS 5 Total Deductions 5 (1) Change in Net Assets Total Net Assets - Beginning Total Net Assets - Ending 4 $ 3 The notes to the financial statements are an integral part of this statement. 48 City of Scottsdale, Arizona Table of Contents A. Financial Reporting Entity 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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For the Fiscal Year Ended June 30, 2012 I. 49 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Component Unit McDowell Mountain Ranch Community Facilities District (CFD) Description and Criteria for Inclusion • • • • • • • DC Ranch Community Facilities District (CFD) • • • • • • • Via Linda Road Community Facilities District (CFD) • • • • • • • Waterfront Commercial Community Facilities District (CFD) • • • • • • • 50 Reporting Method For Separate Financial Statements 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 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. The statement of activities demonstrates the degree to which the direct expenses for a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Notes to Financial Statements Government-wide and Fund Financial Statements For the Fiscal Year Ended June 30, 2012 B. 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 balance sheet 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, and licenses available within the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Interest is accrued in the current fiscal period when the revenue is earned. 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, 2012 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 Preserve Privilege Tax Capital Projects 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 percent 2004-approved 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. 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, computer replacements, 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, Crossroad East Development Agreements, 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. 52 City of Scottsdale, Arizona Table of Contents 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, computer replacement, 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 nonoperating revenues and expenses. Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2012 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. 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 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, highly rated corporate bonds/notes, 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 is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is 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, 2012 Notes to Financial Statements Table of Contents All accounts receivables are shown net of an allowance for uncollectible amounts. 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 statement of net assets 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 as well as deferred revenues related to cash received in advance of services provided. 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 $10,000 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, 2012 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 medical 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 medical leave policy, however, is that only those employees hired full-time before July 1, 1982, have the option of being paid cash for a portion of unused medical leave at death or retirement. For employees hired after July 1, 1982, the City funds the value of medical leave balances converted and paid in a retiree health savings account for the participant immediately upon retirement. To be eligible for the medical leave conversion the employee must retire and have accumulated 300 or more hours of medical leave (420 or more hours for 56 hour workweek employees) and will be funded at 100 percent 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 percent 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 who work a 56 hour workweek will have the same rules apply, except their cap is 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, 2012. 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, 2012, in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30, 2012, 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, 2012 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 internally 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 Net Assets The government-wide and proprietary fund financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted, and unrestricted. Invested in Capital Assets, Net of Related Debt – This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Assets – This category represents net assets that have external restrictions imposed by creditors, grantors, contributors, 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. City of Scottsdale, Arizona Notes to Financial Statements 10. For the Fiscal Year Ended June 30, 2012 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. 57 For the Fiscal Year Ended June 30, 2012 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, $207,763, differs from net assets of governmental activities, $2,974,850 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) ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectible) Interest Privilege Tax Transient Occupancy 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 Net Other Postemployment Benefit Total Assets Total Governmental Funds $ $ 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 - Due within one year Matured Bond Interest Payable Matured Bond Payable 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 58 211,695 58,846 582 18,436 660 2,553 1,443 1,991 10,459 187 1,057 261 24,938 2,156 568 5,606 179 264 341,881 12,066 10,235 179 18,855 38,350 $ $ $ 1,738 4,044 187 7,471 568 30,052 1,340 4,780 1,265 2,988 134,118 207,763 341,881 Internal Service Funds(2) Long-Term Assets/ Liabilities(1) 3,577,729 4,636 106 3,582,471 (69) 69 9,700 15,106 - $ $ $ (1,738) (4,044) (187) (7,471) (568) (22,429) (585) 880,554 868,338 $ 2,714,133 3,582,471 33,622 90 722 30,879 2 65,315 1,218 166 169 197 4,555 - Reclassifications and Eliminations $ $ $ 6,056 12,361 $ 52,954 65,315 (179) (179) (179) - Statement of Net Assets Total $ $ $ (179) $ (179) 245,317 58,846 582 18,436 660 2,553 1,443 1,991 10,459 187 1,057 261 24,938 2,156 568 5,696 986 3,608,608 4,636 108 3,989,488 13,284 10,332 69 9,869 15,303 4,555 18,855 38,350 7,623 755 4,780 1,265 2,988 886,610 1,014,638 $ 2,974,850 3,989,488 City of Scottsdale, Arizona Table of Contents Cost of capital assets Accumulated depreciation $ $ 5,219,765 (1,642,036) 3,577,729 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 at 7/1/11 Bond issuance cost for fiscal year 2012 Amortization of bond issuance costs $ $ 4,328 774 (466) 4,636 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, 2012 were: Contract and capital lease payables Bonds Payable Deferred amount on refunding Deferred issuance premium Accrued vacation and sick leave pay Net Other Postemployment Benefit $ $ (13,375) (849,088) 7,519 (25,610) (24,806) 106 (905,254) Notes to Financial Statements (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. For the Fiscal Year Ended June 30, 2012 Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Assets (in thousands) 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 library revenue Deferred court revenue Deferred tax revenue Deferred intergovernmental revenue Deferred other $ $ 568 187 4,044 9,209 22,429 585 37,022 $ 52,954 (2) Internal Service Funds are used by management to charge the costs of certain activities, such as fleet management, computer equipment, 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. 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, $4,562, differs from the change in net assets for the governmental activities, $69,756, 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 in the next table. City of Scottsdale, Arizona 59 Table of Contents Notes to Financial Statements 60 For the Fiscal Year Ended June 30, 2012 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) City of Scottsdale, Arizona REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State-Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building Related Permits B ildi andd R l dP i 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 Income Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues ( i d) (continued) Total Governmental Funds $ $ 65,089 137,658 13,430 8,115 3,445 227 859 Long-Term Revenue/ Expenses(3) $ (610) 836 - Capital Related Items(4) $ Internal Service Funds(5) - $ Reclassifications and Eliminations(6) - $ - Long-Term Debt Transactions(7) Statement of Activities $ $ - 64,479 138,494 13,430 8,115 3,445 227 859 16,987 18,347 6,977 10,885 638 1,805 10 - - - - 16,987 18,347 6,977 10,885 638 1,815 8,537 8 537 5,287 2,635 526 (17) 1 (4) 20 - - (193) - - 8,327 8 327 5,288 2,631 546 4,654 306 2,337 1,031 350 455 719 4,630 2,837 (1,403) (84) 6 (3) (65) (676) (92) (329) - - (42) - - 4,570 312 2,334 1,031 285 455 43 4,538 2,508 (1,445) 19,761 36,534 11,430 101 551 2,521 12,642 9,096 3,265 413,264 (4,901) (104) (1,160) (700) (22) (18) (7,912) - (42) (193) - 14,860 36,430 10,270 101 551 1,821 12,620 9,096 3,247 405,117 $ $ $ $ $ $ Table of Contents (in thousands) OTHER FINANCING USES/ CHANGES IN NET ASSETS Net Transfers (to) From Other Funds Capital Contributions Proceeds from Sale of Assets Proceeds from Long-Term Debt Issued Premium from Long-Term Debt Issued Total Net Change for the Year $ 711 1,113 5,391 614 5,628 813 4,253 27,307 38,369 107,934 44,762 14,450 572 Long-Term Revenue/ Expenses(3) $ 44,700 44 700 40,487 774 129,025 466,903 Capital Related Items(4) 8 (4) (38) (4) (10) 12 47 73 (105) (127) (154) (72) - $ (374) 68 129 6,760 88,144 4,072 8,691 2,743 - Internal Service Funds(5) $ (129,025) (18,418) 15 9 66 7 50 17 69 276 407 3,861 1,143 197 - Reclassifications and Eliminations(6) $ 6,117 (193) - Long-Term Debt Transactions(7) Statement of Activities $ $ (193) (44,700) (44 700) 160 (774) (4 5,314) 734 1,118 5,419 617 5,736 842 4,498 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 $ 5,753 50,000 2,448 58,201 $ - $ 65,897 65,897 $ 1,613 97 1,710 $ - $ (50,000) (2,448) (52,448) $ 7,366 65,897 97 73,360 $ 4,562 $ (7,538) $ 84,315 $ (4,449) $ - $ (7,134) $ 69,756 61 Notes to Financial Statements EXPENDITURES/EXPENSES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Debt Service Principal Pi i l Interest and Fiscal Charges Bond Issuance Costs Capital Improvements Total Expenditures/Expenses Total Governmental Funds For the Fiscal Year Ended June 30, 2012 City of Scottsdale, Arizona Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities Table of Contents Notes to Financial Statements 62 For the Fiscal Year Ended June 30, 2012 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) Reconciling Items Description (3) Because some property taxes will not be collected for several months after the City's fiscal year end, 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 tax revenue Court revenue Library revenue Privilege tax revenue Special Assessment revenue Intergovernmental revenue Other Receivable revenue $ $ (610) (91) (65) 881 (676) (6,226) (1,125) (7,912) 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 $ $ (42) 416 374 (4) Wh When capital be used assets are reported i l assets that h are to b d iin governmentall activities i i i are purchased h d or constructed, d the h resources expended d d ffor those h d 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 $ City of Scottsdale, Arizona $ 129,025 (81) (110,327) (199) 18,418 $ 65,897 $ (4,449) 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, computer equipment, 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 Table of Contents City of Scottsdale, Arizona Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) (6) Interfund transactions between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of revenues and expenditures to eliminate the doubling up effect of these transactions within the governmental activities. $ Reduction in Revenues - Governmental Funds Reduction in Expenditures/Expenses - Governmental Funds $ (193) (193) - (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. $ Bond issuance costs for fiscal year 2012 Amortization of bond issuance costs Difference $ 774 (466) 308 $ 44,700 $ (847) (808) 1,961 306 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. y g agent g Transferred to the p paying 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: $ $ (50,000) (2,448) (52,448) Notes to Financial Statements 63 For the Fiscal Year Ended June 30, 2012 Long-Term Capital-Related Debt Premium on Bonds For the Fiscal Year Ended June 30, 2012 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 2011/12. The fiscal year 2011/12 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 investment income activity, payroll accruals, compensated absences, and bad debt expenditures. 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 2011/12. These statements display original budget, amended budget and actual results. Budgetary comparison schedules are also included as supplementary schedules for certain 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 Housing, Preserve Privilege Tax, and Special Programs), and Debt Service Funds (except for the Community Facilities Districts Debt Service Funds and the McDowell Preserve Privilege Bond Debt Service Fund); 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, HOME, Grants, and Section 8 Housing Funds are established pursuant to the terms of the related grant awards. Budgets for the Community Facilities Districts are established in accordance with Arizona Revised Statutes, which do not require their inclusion in the City budget or adoption by the City Council. Budgets for Capital Projects Funds are established for individual projects and unexpended funds are re-appropriated each year until the project is completed and capitalized. Budgets for Enterprise Funds and 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 fiscal year 2011/12, 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 Scottsdale Preserve Authority Debt Service Fund, and the Special Assessment Debt Service Fund exceeded their Debt Service Expenditure appropriations by $9,000 and $1,000, respectively. The additional expenditures incurred were funded by available fund balance or available revenues within the fund. C. Deficit Fund Equity The Community Development Block Grant Special Revenue Fund, the HOME Special Revenue Fund, and the Grants Special Revenue Fund had deficit ending fund balances of $140,000, $49,000 and $258,000, 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. D. Fund Balance Classifications 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, 2012 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. The table on the following page details the fund balance categories and classifications for Governmental Funds (in thousands). City of Scottsdale, Arizona 65 Table of Contents Notes to Financial Statements 66 For the Fiscal Year Ended June 30, 2012 General Obligation Bond Debt Service General Fund Nonspendable Inventory Long-Term Receivable Total Nonspendable General CIP Construction Capital Projects Preserve Privilege Tax Capital Projects Total Nonmajor Governmental Funds Total Governmental Funds FUND BALANCES $ Restricted Bureau of Reclamation Funds for WestWorld and TPC Improvements Property Tax for Debt Service Property Tax for District Debt Service Street Light Districts General Government Special Programs Community and Economic Development Special Programs Public Safety Special Programs Community Services 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 Debt Service Transportation Tax for Transportation Capital Projects Developer Contributions for Capital District Improvements GO Bond Proceeds for Capital Improvements State Tourism Authority Contract for MPC Capital Improvements Total Restricted 264 264 $ - $ 2,980 2,980 $ - $ - $ 264 2,980 3,244 City of Scottsdale, Arizona 260 260 5,789 5,789 237 237 - 1,308 1,690 319 164 17 7,402 26,144 1,053 429 28,781 197 31,667 2,876 102,047 237 5,789 1,308 260 1,690 319 164 17 7,402 26,144 1,053 429 28,781 197 31,667 2,876 108,333 Committed General Government Special Programs Community and Economic Development Special Programs Public Safety Special Programs Community Services Special Programs Scottsdale Stadium Improvements In Lieu Stormwater Fees for Drainage Improvements In Lieu Parking Fees for Parking Projects Total Committed - - 602 471 142 1,215 - 2,363 1,754 489 1,524 6,130 2,363 1,754 489 1,524 602 471 142 7,345 Assigned Capital Projects for Capital Improvements Sales Tax Rebate for District Debt Service Excise Tax for MPC Capital Improvements Total Assigned - - 30,650 30,650 - 321 6,212 6,533 30,650 321 6,212 37,183 Unassigned Total Fund Balances $ 52,105 52,629 $ 5,789 $ 35,082 $ - $ (447) 114,263 $ 51,658 207,763 Table of Contents Net Assets Restrictions Only restrictions imposed by external sources are shown as restricted net assets on the government-wide financial statements. The following restrictions apply to the Business-Type Activities restrictions at June 30, 2012: Net Assets Restrictions (in thousands) Water and Sewer Restricted for Repair and Replacement Restricted for Debt Service IV. Detailed Notes on All Funds A. Cash and Investments $ $ 33,140 5,436 38,576 Notes to Financial Statements E. For the Fiscal Year Ended June 30, 2012 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, Nonmajor Special Revenue Fund. The reserves in these funds are to be maintained for unforeseen emergencies or catastrophic impacts to the City. The City maintains a cash and investment pool for use by all funds except the Community Facilities Districts Funds, which have investments held separately by a trustee. City Charter, Ordinance, and Trust Agreements authorize the City to invest in obligations of the U.S. Treasury, U.S. Government agencies, certificates of deposit, bankers’ acceptances, commercial paper (A-1, P-1), highly rated corporate bonds/notes, repurchase agreements, mutual funds consisting of the foregoing, and the State of Arizona Local Government Investment Pool (LGIP). Deposits At June 30, 2012, the carrying amount of the City’s deposits was $191,649,032, and the bank balance was $196,277,571. The $4,628,539 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, 2012, 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. City of Scottsdale, Arizona 67 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits the City’s investment portfolio to maturities of less than five 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: Investment Maturities (in Years) (in thousands) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Commercial Paper Guaranteed Investment Contracts Fair Value $ 84,852 168,110 30,411 23,925 Total Investments $ Less than 1 $ 29,973 79,447 * 23,925 275 307,573 $ 1-2 35,391 41,475 8,010 - 275 $ 133,620 $ 2-3 19,488 42,194 17,266 - $ $ 3+ 4,994 5,135 - - 84,876 $ - 78,948 $ 10,129 * $50,639 of these bonds are callable between December 21, 2012 and December 28, 2012 * $28,808 of these bonds are callable between June 27, 2012 and June 28, 2012 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, 2012, for each investment type: (in thousands) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Commercial Paper Guaranteed Investment Contracts Total Investments 68 Total $ 84,852 168,110 30,411 23,925 275 $ 307,573 $ $ A-1 7,985 7,985 $ $ A-1+ 15,940 15,940 $ $ A 10,877 10,877 $ $ A+ 8,109 8,109 $ $ AA- AA+ 5,492 - $ 168,110 5,933 - 5,492 $ 174,043 Exempt from Disclosure $ 84,852 - $ 84,852 $ Not Rated $ - 275 275 City of Scottsdale, Arizona Table of Contents The following is a listing by issuer of the City’s investments at June 30, 2012: (in thousands) 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) U.S. Bancorp JP Morgan Chase & Co General Electric Capital Corp Bank of New York Mellon IBM Corp Coca-Cola Co Mitsubishi UFJ Financial Group Inc NY Bank of Nova Scotia NY Nordea North America Inc Pacific Life Insurance Company Investment Type U.S. Government Securities Federal Agency Securities Federal Agency Securities Federal Agency Securities Federal Agency Securities Corporate Note Corporate Note Corporate Note Corporate Note Corporate Note Corporate Note Commercial Paper Commercial Paper Commercial Paper Guaranteed Investment Contract Total Investments Market Value $ 84,852 39,409 32,765 95,933 3 5,043 5,835 5,933 2,973 5,492 5,135 7,985 7,970 7,970 275 $ 307,573 Percent of Holdings 27.58% 12.81% 10.65% 31.19% 0.00% 1.64% 1.90% 1.93% 0.97% 1.79% 1.67% 2.60% 2.59% 2.59% 0.09% 100.00% Notes to Financial Statements The City’s investment policy contains no limitations on the amount that can be invested in any one issuer. For the Fiscal Year Ended June 30, 2012 Concentration of Credit Risk Investments Total City cash and investments at fair value are as follows (in thousands): Cash on Hand Carrying Amount of City Deposits Investments $ 22 191,649 307,573 Total Cash and Investments $ 499,244 Total City cash and investments are reported as follows (in thousands): 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 Crossroads East Dev Agreement Total Cash and Investments City of Scottsdale, Arizona $ 361,342 82,082 52,607 3 75 1,720 1,415 $ 499,244 69 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Investment income comprises the following for the year ended June 30, 2012 (in thousands): Net Interest and Dividends Net Decrease in the Fair Value of Investments $ 4,397 (2,913) Total Net Investment Income $ 1,484 The net decrease in the fair value of investments during fiscal year 2011/12 was $2,913,000. This amount takes into account all changes in fair value (realized and unrealized) that occurred during the year. B. Receivables Receivables as of June 30, 2012, 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 thousands): Governmental and Governmental Activities Internal Service Funds Receivables Property Taxes and Penalties Property Court Subtotal Property Taxes and Penalties General Fund $ Other Local Taxes Privilege Transient Occupancy State Shared Sales Franchise Fee Auto Lieu Highway User Subtotal Other Local Taxes 997 40,739 41,736 Gross Receivable Less: Allowances for Uncollectibles Net Total Receivables Business-Type Activities Enterprise Funds Receivables Privilege Tax Charges for Services Intergovernmental/Grants Interest Miscellaneous Gross Receivable Net Total Receivables 70 $ 1,405 1,405 $ - $ - Nonmajor and Other Funds $ 151 151 Total Governmental and Internal Service Funds $ 2,553 40,739 43,292 14,869 660 1,443 1,991 261 19,224 - - - 3,567 1,057 4,624 18,436 660 1,443 1,991 261 1,057 23,848 - - - - 27,094 27,094 454 1,394 2,487 4,335 - 38 2,985 3,023 - 90 568 224 882 582 1,394 568 5,696 8,240 65,295 (31,487) 1,405 - 3,023 - - 32,751 - 102,474 (31,487) Intergovernmental/Grants Interest and Other Interest Library Special Assessments Miscellaneous Subtotal Interest and Other $ Preserve Privilege Tax Capital Projects General CIP Construction Capital Projects General Obligation Bond Debt Service 33,808 $ Water and Sewer Utility 1,405 $ Airport 3,023 Solid Waste $ - $ 32,751 $ 70,987 Total Enterprise Fund $ 17,104 204 940 18,248 $ 12 10 6 224 252 $ 1,843 12 204 2,059 $ 12 18,947 10 222 1,368 20,559 $ 18,248 $ 252 $ 2,059 $ 20,559 City of Scottsdale, Arizona Table of Contents $ Total C. Unearned $ 7,623 755 37,022 $ 8,378 Capital Assets Notes to Financial Statements Property Tax Court Library Privilege Tax Special Assessments Intergovernmental Other Unavailable $ 1,738 4,044 187 7,471 568 22,429 585 For the Fiscal Year Ended June 30, 2012 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 thousands): Capital asset activity for the year ended June 30, 2012, was as follows (in thousands): Governmental Activities Capital Assets, not being depreciated Land Construction in Progress Total Capital Assets, not being depreciated Beginning Balance $ 1,559,367 148,127 1,707,494 Increases $ 134,194 130,843 265,037 Decreases $ (127,169) (127,169) Ending Balance $ 1,693,561 151,801 1,845,362 Capital Assets, being depreciated Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Capital Assets, being depreciated 596,219 2,657,596 61,886 3,537 85,715 3,404,953 23,146 27,779 4,326 8,631 63,882 (1,166) (671) (9,982) (386) (9,594) (21,799) 618,199 2,684,704 56,230 3,151 84,752 3,447,036 Less Accumulated depreciation for Buildings and Land Improvements Streets and Storm Drains Vehicles Maintenance by Fleet Machinery and Equipment Total Accumulated depreciation 224,083 1,256,070 41,800 3,243 63,372 1,588,568 20,766 85,022 4,127 40 4,913 114,868 (965) (371) (9,394) (380) (8,536) (19,646) 243,884 1,340,721 36,533 2,903 59,749 1,683,790 1,816,385 (50,986) (2,153) 1,763,246 Total Capital Assets, being depreciated, net: Governmental Activities Capital Assets, net City of Scottsdale, Arizona $ 3,523,879 $ 214,051 $ (129,322) $ 3,608,608 71 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Business-Type Activities Capital Assets, not being depreciated Land Water Rights Construction in Progress Total Capital Assets, not being depreciated Beginning Balance $ 40,190 89,701 60,654 190,545 Increases $ 509 12,650 82,030 95,189 Decreases $ Ending Balance (15,180) (124,554) (139,734) $ 40,699 87,171 18,130 146,000 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 1,080,935 462,474 25,558 20,056 822 1,589,845 30,182 86,025 4,965 1,291 122,463 (2,318) (277) (7) (408) (9) (3,019) 1,108,799 548,222 30,516 20,939 813 1,709,289 Less Accumulated depreciation for Water System Sewer System Buildings and Land Improvements Machinery and Equipment Furniture, Fixtures, and Office Equipment Total Accumulated depreciation 274,889 128,520 11,380 6,267 624 421,680 28,784 11,995 1,219 947 34 42,979 (704) (34) (2) (268) (9) (1,017) 302,969 140,481 12,597 6,946 649 463,642 Total Capital Assets, being depreciated, net: 1,168,165 Business-Type Activities Capital Assets, net $ 1,358,710 (2,002) 79,484 $ 174,673 $ (141,736) 1,245,647 $ 1,391,647 During fiscal year 2011/12, the Water and Sewer Utility Enterprise Fund capitalized net interest costs of $4,429,757. Total interest expense in this fund before capitalization was $16,043,459. Depreciation expense was charged to functions/programs of the primary government as follows (in thousands): Governmental Activities City Court Public Works Community and Economic Development Public Safety City Treasurer - Finance and Accounting Community Services 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 $ 62 7,189 87,872 4,030 137 8,310 2,727 4,541 $ 114,868 $ 41,596 1,163 220 $ 42,979 Business-Type Activities Water and Sewer System Airport Solid Waste Total Depreciation Expense - Business-Type Activities 72 City of Scottsdale, Arizona Table of Contents Construction Commitments Remaining Commitment Spent to Date Aviation Drainage and Flood Control Fire Protection Municipal Facilities Neighborhood and Community Parks Police Preservation Streets Technology Traffic Transit Wastewater Water Total Construction Commitments $ 853 1,849 466 588 9,991 159 154 2,477 13,151 13,551 206 7,277 22,678 15,922 89,322 $ $ 467 205 81 439 25,499 46 63 673 1,628 1,278 901 6,348 12,214 5,618 55,460 $ Notes to Financial Statements The City has active construction projects as of June 30, 2012. At year-end the government’s commitments with contractors for specific projects are as follows (in thousands): For the Fiscal Year Ended June 30, 2012 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, 2012, is as follows: Receivable Fund (in thousands) General Fund $ Amount 179 Payable Fund (in thousands) Nonmajor Governmental Funds $ Amount 179 The Community Development Block Grant Special Revenue Fund and HOME Special Revenue Fund had deficit cash balances of $33,114 and $145,841, respectively, due to grants being received on a reimbursement basis. City of Scottsdale, Arizona 73 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Interfund Transfers Transfers are used to fund capital projects and debt service, to administer 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 Capital Projects - Preserve Privilege Tax Nonmajor Governmental Funds Total Governmental Funds Transfers Out $ 23,020 1,019 51,787 75,826 Transfers In $ 10,023 14,716 14,909 5,077 36,854 81,579 Enterprise Funds Water and Sewer Utility Airport Solid Waste Total Enterprise Funds 7,668 5 20 7,693 127 7 193 327 Internal Service Funds 2,587 4,200 Total Transfers E. $ 86,106 $ 86,106 Leases Operating Leases The City has entered into rental agreements of retail and parking facilities. Rental payments on these facilities during fiscal year 2011/12 were $3,076,020. Payments are contingent upon sales tax revenues received on the properties; thus, future payments cannot be determined. F. Bonds, Loans, and Other Payables The following are brief descriptions of bonds outstanding at June 30, 2012. The totals shown are the principal amount outstanding, net of the current portion due July 1, 2012. General Obligation Bonds 74 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, 2012, 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, 2012, the City had $387,475,000 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. City of Scottsdale, Arizona Table of Contents 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 2012 is 5.19. The total principal and interest remaining to be paid on the bonds is $702,780,251. Principal and interest paid for the current year and total excise tax were $32,982,319 and $171,075,000, 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 0.2 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. Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2012 Municipal Property Corporation Bonds 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 2012 is 4.44. The total principal and interest remaining to be paid on the bonds is $75,594,875. Principal and interest paid for the current year and total sales tax were $6,489,763 and $28,809,000, 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. 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, 2012, the funds reserved for this purpose were $33,140,414. 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 2012 is 10.77. The total principal and interest remaining to be paid on the bonds is $51,099,988. Principal and interest for the current year and total customer net revenues were $5,436,075 and $58,572,000, respectively. City of Scottsdale, Arizona 75 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents 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, 2012, 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, 2012, there was one series of special assessment improvement bonds outstanding, issued as serial bonds to be repaid over 10 years. This one series was issued December 2001 totaling $7,500,000 maturing January 2013. The coverage ratio (revenues to debt service) for 2012 is 0.89 due to prepayment of amounts that are currently in fund balance. The total principal and interest remaining to be paid on the bonds is $766,875. Principal and interest paid for the current year and total collections were $807,000 and $719,000 respectively. Certificates of Participation Certificates of Participation are issued to finance acquisition and improvements of real property that is leased to the City. The City’s obligation to make lease payments is 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. 76 City of Scottsdale, Arizona Table of Contents CFDs are created only by petition to the City Council by property owners within the district areas. As the 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 Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2012 Community Facilities Districts General Obligation Bonds 77 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Bonds payable at June 30, 2012, are comprised of the following: Classified in Governmental Activities on the Government-wide Financial Statements: General Obligation Bonds Bonds Outstanding (in thousands) 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. 25,820 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. 1,375 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. 96,700 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. 71,915 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. 105,250 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. 14,875 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. 18,150 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. 48,800 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. 21,785 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. 37,150 2012 Preservation Bonds (issued February 2, 2012) due in annual installments of $1,400,000 to $18,000,000 through July 1, 2034; interest at 2 percent to 4 percent. Original issue amount of $50,000,000. 50,000 Total General Obligation Bonds Outstanding 78 2,605 $ 594,425 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. $ 6,935 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. 23,487 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. 19,250 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. 8,305 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. 31,550 Total Municipal Property Corporation Bonds Outstanding Notes to Financial Statements Municipal Property Corporation Bonds For the Fiscal Year Ended June 30, 2012 All or portions of the 2002 Refunding Bonds, 2004 Various Purpose Bonds, 2005 Refunding Bonds, 2005B Preservation Bonds, 2008B Preservation Bonds, 2011 Preservation Bonds, 2011 Refunding Bonds, and 2012 Preservation Bonds of $8,100,000, $48,700,000, $66,090,000, $14,875,000, $18,150,000, $21,785,000, $32,705,000 and $50,000,000 respectively, are paid from the .2 percent and .15 percent Preservation Sales Taxes. Bonds Outstanding (in thousands) 144,977 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. 12,315 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. 11,095 Total Scottsdale Preserve Authority Bonds City of Scottsdale, Arizona $ 56,265 79 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Special Assessment Bonds Bonds Outstanding (in thousands) Special Assessment Bonds issued December 20, 2001, maturing January 1, 2004, through January 1, 2013; due in annual installments of $750,000; interest at 4.5 percent. Total original issue amount $7,500,000. $ Certificates of Participation 2010 Certificates of Participation issued August 24, 2010, due in semi-annual installments of $984,651 to $1,246,573 beginning January 1, 2012, through July 1, 2020; interest at 2.97 percent. Original issue amount $20,000,000. 18,031 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. 3,290 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. 2,180 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. 11,555 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. 2,260 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. 2,270 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. 9,455 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. 3,630 Total Community Facilities Districts General Obligation Bonds Outstanding Total Bonds Payable Recorded in Governmental Activities 80 750 34,640 $ 849,088 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. 5,770 32,860 Total Water and Sewer Revenue Bonds Outstanding 38,630 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. On November 29, 2006, $44,835,000 due 2015 through 2024 were refunded. Original issue amount $75,000,000. 6,965 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. On November 29, 2006, $67,455,000 due 2017 through 2030 were refunded. Original issue amount $88,360,000. 11,430 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. 96,050 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. 74,820 Total Municipal Property Corporation Bonds Outstanding 299,775 Total Bonds Payable Recorded in Business-Type Activities Total Long-Term Bonds Payable City of Scottsdale, Arizona Notes to Financial Statements Water and Sewer Revenue Bonds Bonds Outstanding (in thousands) For the Fiscal Year Ended June 30, 2012 Classified in Business-Type Activities on the Government-wide Financial Statements: 338,405 $ 1,187,493 81 For the Fiscal Year Ended June 30, 2012 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, open space purposes, public safety and transportation facilities 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, 2012 (in thousands): General Obligation Bonds Issued to Provide Water, Sewer, Light, Parks, and Open Spaces 20% Constitutional Limit Less General Obligation 20% Bonds Outstanding $ General Obligation Bonds Issued for All Other Purposes 1,138,398 (524,675) Available 20% Limitation Borrowing Capacity $ 613,723 6% Constitutional Limit Less General Obligation 6% Bonds Outstanding Available 6% Limitation Borrowing Capacity $ 341,519 (69,750) $ 271,769 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, 2012. Advance Refundings and Defeasances In prior years, the City refinanced other bond issues through the issuance of refunding bonds. The proceeds from the refunding bonds have been deposited in irrevocable trusts at commercial banks and invested in U.S. Government securities which, together with interest earned thereon, will provide amounts sufficient for future redemption or payment of principal and interest of the issues refunded. As a result, the refunded bonds are considered defeased and the liability has been removed from the governmental activities column of the financial statements. The following table reflects refunded debt outstanding at June 30, 2012, net of any amounts to be paid or retired by the trustee on July 1, 2012. Refunded in Prior Years (in thousands) 2004 MPC Excise Tax Revenue Bonds 2004A MPC Excise Tax Revenue Bonds 2005D MPC Excise Tax Revenue Bonds 2005E MPC Excise Tax Revenue Bonds 82 $ 44,835 30,975 25,925 67,455 $ 169,190 City of Scottsdale, Arizona Table of Contents Classified in Governmental Activities on the Government-wide Financial Statements: Contracts Payable (in thousands) 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. $ 2,614 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; noninterest bearing. 5,288 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 2033; noninterest bearing. 4,558 Contract payable for the undergrounding of 69kv power lines; due in annual installments beginning January 1999 through January 2013; interest at 10.0 percent. Notes to Financial Statements The City has entered into various purchase contracts related to economic development and acquisition of recreational facilities. The following is a summary of debt service to maturity for all long-term contracts at June 30, 2012. For the Fiscal Year Ended June 30, 2012 Contracts Payable 5 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. 910 Total Contracts Payable Recorded in Governmental Activities $ 13,375 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, 2012 (in thousands). Governmental Activities Bonds Payable General Obligation Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Special Assessments Bonds Certificates of Participation Communities Facilities Districts General Obligation Bonds Add Deferred Issuance Premiums Less Deferred Amounts on Refunding Total Bonds Payable Contracts Payable Risk Management Claims Compensated Absences Net Other Postemployment Benefit Governmental Activity Long-Term Liabilities City of Scottsdale, Arizona Beginning 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 Additional Obligations, Interest Accretion and Net Increases $ $ 50,000 808 2,448 53,256 28,959 10,080 92,295 Current Maturities, Retirements, and Net Decreases $ $ (28,315) (3,290) (3,655) (750) (5,378) (2,105) (1,961) 847 (44,607) (1,207) (29,488) (10,090) (325) (85,717) Ending Balance $ $ 594,425 144,977 56,265 750 18,031 34,640 25,610 (7,519) 867,179 13,375 10,611 25,172 916,337 Amounts Due Within One Year $ $ 30,085 3,135 3,800 750 2,028 2,230 42,028 1,267 4,555 9,869 57,719 83 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents 84 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, 2012, $366,752 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 $68,725 in the governmental funds and $0 in the Internal Service funds. 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 Compensated Absences Net Other Postemployment Benefit Business-Type Activity Long-Term Liabilities Beginning Balance $ $ 42,010 308,525 22,082 (4,734) 367,883 3,289 98 371,270 Additional Obligations, Interest Accretion and Net Increases $ $ 949 949 Current Maturities, Retirements, and Net Decreases $ $ (3,380) (8,750) (1,330) 239 (13,221) (1,199) (98) (14,518) Ending Balance $ $ 38,630 299,775 20,752 (4,495) 354,662 3,039 357,701 Amounts Due Within One Year $ $ 3,115 9,220 12,335 1,174 13,509 City of Scottsdale, Arizona Table of Contents Governmental Activities (in thousands) Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Total Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Capital Appreciation ** General Obligation Bonds Issued to Provide Water, Sewer, Light Parks, Open Spaces, Public Safety, and Transportation Facilities 20% Limitation Principal Interest Total $ 24,585 $ 22,255 $ 46,840 23,815 21,224 45,039 19,945 20,199 40,144 19,500 19,326 38,826 25,885 18,457 44,342 172,025 73,369 245,394 175,240 33,002 208,242 52,565 6,964 59,529 11,115 668 11,783 $ 524,675 $ 215,464 $ 740,139 Municipal Property Corporation Bonds Principal Interest Total $ 3,135 $ 5,938 $ 9,073 3,745 6,653 10,398 3,710 6,487 10,197 5,290 6,305 11,595 6,516 6,134 12,650 36,193 30,068 66,261 30,355 16,449 46,804 36,155 8,420 44,575 15,070 1,305 16,375 4,808 (4,808) General Obligation Bonds Issued For All Other Purposes 6% Limitation Principal Interest Total $ 5,500 $ 3,221 $ 8,721 10,000 2,946 12,946 11,975 2,446 14,421 14,600 1,902 16,502 9,925 1,230 11,155 17,750 1,087 18,837 $ 82,582 $ 594,425 $ 228,296 $ 822,721 Scottsdale Preserve Authority Excise Tax Revenue Bonds Principal Interest Total $ 3,800 $ 2,680 $ 6,480 3,960 2,508 6,468 4,140 2,330 6,470 4,340 2,143 6,483 4,175 1,936 6,111 24,005 6,792 30,797 11,845 941 12,786 - Special Assessment Bonds Principal Interest Total $ 750 $ 17 $ 767 - - 69,750 $ - 12,832 $ Total General Obligation Bonds Principal Interest Total $ 30,085 $ 25,476 $ 55,561 33,815 24,170 57,985 31,920 22,645 54,565 34,100 21,228 55,328 35,810 19,687 55,497 189,775 74,456 264,231 175,240 33,002 208,242 52,565 6,964 59,529 11,115 668 11,783 - - - - Total $ 144,977 $ 82,951 $ 227,928 $ 56,265 $ 19,330 $ 75,595 $ 750 $ **For GAAP financial statement reporting, accretion of capital appreciation bonds is added to the principal balance outstanding. Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Total 17 $ 767 Certificates of Participation Principal Interest Total $ 2,028 $ 520 $ 2,548 2,089 460 2,549 2,152 397 2,549 2,216 333 2,549 2,282 267 2,549 7,264 382 7,646 - Community Facilities Districts General Obligation Bonds Principal Interest Total $ 2,230 $ 1,776 $ 4,006 2,335 1,671 4,006 2,460 1,558 4,018 2,585 1,438 4,023 2,715 1,311 4,026 13,395 4,556 17,951 7,580 1,599 9,179 1,340 252 1,592 - Contracts Payable Principal Interest Total $ 1,267 $ 179 $ 1,446 370 129 499 389 124 513 409 118 527 429 112 541 2,493 463 2,956 3,186 267 3,453 3,426 49 3,475 1,406 1,406 $ 18,031 $ $ $ 2,359 $ 20,390 34,640 $ 14,161 $ 48,801 13,375 $ 1,441 Notes to Financial Statements The following is a summary of debt service requirements to maturity for long-term liabilities at June 30, 2012. Deferred issuance costs and deferred amounts on refunding are not included. For the Fiscal Year Ended June 30, 2012 Debt Service Requirements to Maturity $ 14,816 (continued on next page) City of Scottsdale, Arizona 85 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Governmental Activities (concluded) (in thousands) Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Capital Appreciation Total 4,808 (4,808) - $ 862,463 $ 348,555 $ 1,211,018 Business-Type Activities (in thousands) Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Total 86 Total Principal Interest Total $ 43,295 $ 36,586 $ 79,881 46,314 35,591 81,905 44,771 33,541 78,312 48,940 31,565 80,505 51,927 29,447 81,374 273,125 116,717 389,842 228,206 52,258 280,464 93,486 15,685 109,171 27,591 1,973 29,564 Water and Sewer Revenue Bonds Principal Interest Total $ 3,115 $ 1,891 $ 5,006 3,240 1,738 4,978 2,940 1,599 4,539 3,055 1,487 4,542 3,195 1,354 4,549 18,710 4,171 22,881 4,375 230 4,605 - Municipal Property Corporation Bonds Principal Interest Total $ 9,220 $ 14,478 $ 23,698 9,760 14,024 23,784 10,240 13,540 23,780 11,115 13,034 24,149 11,970 12,485 24,455 70,920 52,908 123,828 75,530 34,417 109,947 73,810 16,637 90,447 27,210 3,554 30,764 $ $ 299,775 $ 175,077 $ 474,852 38,630 $ 12,470 $ 51,100 Fiscal Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 Total Interest Total Principal $ 12,335 $ 16,369 $ 28,704 13,000 15,762 28,762 13,180 15,139 28,319 14,170 14,521 28,691 15,165 13,839 29,004 89,630 57,079 146,709 79,905 34,647 114,552 73,810 16,637 90,447 27,210 3,554 30,764 Total $ 338,405 $ 187,547 $ 525,952 City of Scottsdale, Arizona Table of Contents 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 $850,000 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 liability claims 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, 2012, the general liability claims payable totaled $9,010,284 and the self-insured benefits claims payable totaled $1,600,000. The City began to administer all self-insured health and dental plans in January of 2004. Notes to Financial Statements OTHER INFORMATION For the Fiscal Year Ended June 30, 2012 V. Years Ended June 30 2012 (in thousands) 2011 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 11,140 28,959 (29,488) $ 11,142 25,390 (25,392) Claims Payable, June 30 $ 10,611 $ 11,140 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 $12,000,000 are probable, and $15,000 up to $500,000 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. above. City of Scottsdale, Arizona 87 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents 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. As of June 30, 2012, a commercial building permit has not been issued. 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 estimated contingent liability at June 30, 2012, is $46,798,828. C. Subsequent Events In July 2012, the City issued $83.025 million in Series 2012 General Obligation Refunding bonds (refunding $83.025 million of the Series 2004 General Obligation bonds). The purpose of the issuance was to take advantage of lower interest rates and reduce future payments in the McDowell Preserve Privilege Tax Debt Service Fund. In July 2012, the Scottsdale City Council authorized a payment of $2.52 million to settle a condemnation case for state land. Scottsdale had already paid $5.2 million based on an agreed-upon minimum value of the property. In September 2012, bond refunding took place for the following component units of the City: DC Ranch Community Facilities District—$14.67 million of outstanding bonds were refunded with $14.67 million of refunding bonds with an average interest cost of 2.94 percent and maturing in 2027. McDowell Mountain Ranch Community Facilities District—$11.55 million of outstanding bonds were refunded with $11.55 million of refunding bonds with an average interest cost of 2.59 percent and maturing in 2022. Via Linda Road Community Facilities District—$2.0 million of outstanding bonds were refunded with $2.0 million of refunding bonds with an average interest cost of 3.18 percent and maturing in 2023. 88 City of Scottsdale, Arizona Table of Contents 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, 2011, (the latest audited information available from SROG), the City’s net investment in SROG was $120,029,000. SROG’s net cash operating expenses for the year ended June 30, 2011, were $41,721,405, of which the City’s share was $4,392,788, or 10.5 percent. For the year ended June 30, 2012, the City paid $0 for SROG capital contributions and $4,655,026 for SROG operating expenses, including adjustments to the operating and replacement reserves. The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2011, for the multi-city Sub-Regional Operating Group (the latest SROG CAFR available) may be obtained from the Arizona Municipal Water Users Association, 4041 N. Central Avenue, Suite 900, Phoenix, AZ 85012. E. Notes to Financial Statements Joint Venture For the Fiscal Year Ended June 30, 2012 D. Pollution Remediation In the proprietary funds financial statements, a long-term pollution remediation obligation is recognized for the remaining remediation period. In 1981, groundwater contamination was discovered when elevated levels of trichloroethylene (TCE) and other volatile organic chemicals were detected in two City wells. The City immediately shut down the affected wells. Following an investigation by the Environmental Protection Agency (EPA), the Indian Bend Wash Site was placed on the federal Superfund list in 1983. The Superfund law was enacted in order to provide funding and regulatory authority for the study and cleanup of contaminated sites. The EPA directs the cleanup of the North Indian Bend Wash (NIBW) Site that encompasses groundwater contamination plumes in Scottsdale. 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, the City, EPA, State of Arizona, Salt River Project, and the above-referenced 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. City of Scottsdale, Arizona 89 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents 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 39 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 2011/12 outlays for operating and monitoring the CGTF were $629,296. 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. F. Related Organization The Industrial Development Authority (IDA) is a nonprofit corporation established by the City in 1984 to promote the retention, expansion, and attraction of businesses and commercial enterprises in Scottsdale. The Board of Directors of the IDA 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 cost-sharing multiple-employer 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 cost-sharing multiple-employer 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 cost-sharing multiple-employer 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, Article 2 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. 90 City of Scottsdale, Arizona Table of Contents Public Safety Personnel Retirement System Plan Description All of the City’s public safety personnel (police officers and firefighters) participate in the Public Safety Personnel Retirement System (PSPRS), an agent multiple-employer defined benefit pension plan. PSPRS was established by Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes to provide pension benefits for public safety employees of certain state and local governments. The PSPRS acts as a common investment and administrative agent that is jointly administered by the Board of Trustees and 235 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. Notes to Financial Statements 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 authorized to legislate a contribution rate other than the actuarially determined rate. The contribution rate for the years ended June 30, 2012, 2011, and 2010, were 10.74 percent (10.50 percent retirement and .24 percent long-term disability), 9.85 percent (9.60 percent retirement and .25 percent long-term disability), and 9.40 percent (9.0 percent retirement and .40 percent longterm disability), respectively, for both employers and employees. The City’s actual contributions to the System for the years ending June 30, 2012, 2011, and 2010, were $10,349,764, $9,824,677, and $9,859,954, respectively, equal to the required contributions for each year. For the Fiscal Year Ended June 30, 2012 Funding Policy Funding Policy The System for both police and fire is funded through a member contribution of 8.65 percent of gross payroll, an employer contribution set by an actuarial valuation and required by state statute 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, 2012, was 20.50 percent of annual covered payroll. Contribution rates for police were 18.96 percent and 19.64 percent in 2011 and 2010, respectively. The City’s contribution rate for fire for the fiscal year ended June 30, 2012, was 10.40 percent of annual covered payroll. The City’s contribution rate for fire was 10.05 percent and 8.68 percent in 2011 and 2010, respectively. City of Scottsdale, Arizona 91 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Annual Pension Cost For fiscal year ended June 30, 2012, the City’s annual pension costs of $6,327,851 for police and $1,806,335 for fire were equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2011, actuarial valuation using the entry age normal method. Three-Year Trend Information for PSPRS (Police) (in thousands) Fiscal Year Ending 2009 2010 2011 Annual Pension Cost (APC) $ 6,787 6,295 5,938 Percentage of APC Contributed 100% 100% 100% $ Net Pension Obligation - Three-Year Trend Information for PSPRS (Fire) (in thousands) Fiscal Year Ending 2009 2010 2011 Annual Pension Cost (APC) $ 1,766 1,528 1,726 Percentage of APC Contributed 100% 100% 100% $ Net Pension Obligation - Actuarial Methods and Assumptions The actuarial assumptions for both police and fire include a rate of return on the investment of present and future assets of 8.25 percent per year compounded annually, projected salary increases from 5.0 to 8.0 percent per year compounded annually, with 5.0 percent attributable to inflation and other acrossthe-board factors, and increases ranging from 0 percent to 3.0 percent per year attributable to seniority/ merit. The amortization method is a level percent of pay closed. The maximum annual increase in post retirement benefits is 4 percent. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over 7 years. PSPRS’ unfunded accrued liability is being amortized as a level percent of projected payroll over a closed period of 30 years, 25 years remaining as of June 30, 2011, (20 year open period for any excess of valuation assets over actuarial accrued liability). 92 City of Scottsdale, Arizona Table of Contents Public Safety Personnel Retirement System (Police) Funded Status for Pension and Health Insurance (in thousands) June 30, 2011 Actuarial Accrued Liability (AAL) Retired members and survivors Former members with vested benefits Active members DROP members $ Total 91,790 323 79,404 21,679 193,196 Valuation Assets 131,468 Unfunded Actuarial Accrued Liability 61,728 Stabilization Reserve $ Net Unfunded Actuarial Liability Percent Funded Notes to Financial Statements The funded status of each plan (Police and Fire) as of June 30, 2011, the most recent actuarial valuation dates, is as follows: For the Fiscal Year Ended June 30, 2012 Funded Status 61,728 68.0% Annual Covered Payroll $ Unfunded AAL as a Percentage of Covered Payroll 30,945 199.5% Public Safety Personnel Retirement System (Fire) Funded Status Pension and Health Insurance (in thousands) Actuarial Accrued Liability (AAL) Retired members and survivors Former members with vested benefits Active members DROP members June 30, 2011 $ Total 1,678 232 26,318 1,125 29,353 Valuation Assets 32,871 Unfunded Actuarial Accrued Liability (3,518) Stabilization Reserve Net Unfunded Actuarial Liability 3,518 $ Percent Funded Annual Covered Payroll Unfunded AAL as a Percentage of Covered Payroll City of Scottsdale, Arizona 112.0% $ 17,025 0.00% 93 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents Elected Officials’ Retirement Plan Plan Description The City’s Mayor and Council participate in the Elected Officials’ Retirement Plan (EORP), a cost-sharing multiple-employer defined benefit pension plan. The EORP was established by Title 38, Chapter 5, Article 3 of the Arizona Revised Statutes to provide pension benefits to elected officials and judges of certain state, county, and local governments. The Board of Trustees 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 elected officials are required by state statute to contribute an amount equal to 10.00 percent of covered salary to ensure proper funding for the Plan. EORP employers are required to contribute a level percent of salary as determined by actuarial valuation to ensure proper funding for the Plan. The City’s rates for fiscal years ended June 30, 2012, 2011, and 2010, were 32.99 percent, 29.79 percent, and 26.25 percent, respectively. The City’s contributions to EORP for the years ending June 30, 2012, 2011, and 2010, were $47,505, $43,310, and $37,800, respectively, equal to the required contributions for each year. 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. At June 30, 2012, and prior the taxable portion of accounts for participants hired before July 1, 1982, were retained by the City and used to pay healthcare premiums. On March 6, 2012, the City Council authorized paying out the retirees directly for the taxable portion and the remaining amount to their Retiree Health Savings account upon retirement beginning July 1, 2012. Shift fire employees with more than 420 hours and all other retirees with 300 or more hours of accumulated medical leave, may elect to apply the value of the medical leave to a Retirement Health Savings account. Medical leave balances accumulated through June 30, 2011, will be paid at 100 percent 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 percent of the employee’s hourly rate at retirement. Additionally, the payout is limited to the value of 1,200 combined hours for all retirees, except shift fire employees, who are limited to 1,680 hours earned both before and after July 1, 2011, unless more than 1,200 or 1,680 hours, respectively, were accrued prior to July 1, 2011. Total hours accrued before July 1, 2011, will be paid without limitation. 94 City of Scottsdale, Arizona Table of Contents The cost of postemployment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In early implementing the requirements of GASB Statement No. 45 during the fiscal year ended June 30, 2007, the City recognized the cost of postemployment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the City’s future cash flows. Recognition of the liability accumulated from prior years will be amortized over 30 years; the first period began with the fiscal year ending June 30, 2007. Notes to Financial Statements I. Postemployment Benefits Other Than Pensions For the Fiscal Year Ended June 30, 2012 The taxable portion of the medical leave conversion program retained by the City as of June 30, 2012, is $568,278. The projected liability for active employees, as of June 30, 2012, was $14,547,780. Of this liability, $44,289 was considered current and reflected in the governmental fund and the proprietary fund financial statements accordingly. The remaining $14,503,491 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, 2012, 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) salary increases 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, 2012. Plan Description The City provides postemployment medical care (OPEB) for retired employees through a single-employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses, and dependents 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. Benefits Provided The City offers postemployment medical 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. City of Scottsdale, Arizona 95 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents On April 5, 2011, the City Council approved the development of health plan rates that eliminate the City subsidy for retirees over a two-year period. Effective July 1, 2012, the City will require retirees to pay a premium that reflect the full expected cost of retiree coverage, thus eliminating the City subsidy, with the exception of sworn Public Safety employees who sustain a work-related disability-induced early retirement these employees will continue to pay only the full active employee premium. As of June 30, 2012, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Terminated Employees Eligible for Benefits, But Not Yet Enrolled Active Employees 311 2,391 Total 2,702 Participating Employers 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 benefits. For fiscal year ending June 30, 2012, the retirees paid 100 percent of blended actuarial rate. By continuing to provide public safety disabled early retirees with access to the City’s healthcare plans based at the same rates it charges to active employees, the City is in effect providing a subsidy to public safety disabled early 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, 2012, retirees contributed $921,236 and the City contributed $869,571 (implied subsidy). Annual OPEB costs and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost for each plan is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed 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, 2012 (dollar amounts in thousands): Annual Required Contribution Interest on Net OPEB Obligation (Asset) Adjusted to Annual Required Contribution Annual OPEB Cost Contributions Made Change in Net OPEB Obligation (Asset) Net OPEB Obligation (Asset) - Beginning of year Net OPEB Obligation (Asset) - End of year 96 $ $ 287 17 (19) 285 (870) (585) 423 (162) City of Scottsdale, Arizona Table of Contents Annual OPEB Cost $ 180 29 285 Employer Contributions $ 227 901 870 Percentage of OPEB Cost Contributed 126.1% 3106.9% 305.3% Net OPEB Obligation (Asset) $ 1,295 423 (162) The City’s OPEB schedule of employer contributions were as follows (dollar amounts in thousands): Actuarial Valuation June 30 2010 2011 2012 (1) Employer Contributions $ 227 901 870 (2) Annual Required Contribution (ARC) $ 180 34 287 (3) Percent Contributed (1)/(2) 126.1% 2650.0% 303.1% Funded Status Notes to Financial Statements Fiscal Year Ended 2010 2011 2012 For the Fiscal Year Ended June 30, 2012 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows (dollar amounts in thousands): The funded status of the plan as of June 30, 2012, was as follows (dollar amounts in thousands): Actuarial Accrued Liability Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability $ $ Funded Ratio Covered Payroll Unfunded Actuarial Accrued Liability as a Percentage of Covered Payroll 3,834 3,834 0% $ 131,342 2.9% 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. Multi-year trend information regarding the actuarial value of plan assets increasing or decreasing over time relative to the actuarial accrued liability is available in the Required Supplementary Information section on page 101. City of Scottsdale, Arizona 97 For the Fiscal Year Ended June 30, 2012 Notes to Financial Statements Table of Contents 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, 2012 Projected Unit Credit Level Percentage of Payroll 25 years, Closed N/A Actuarial Assumptions Investment Rate of Return Inflation Rate Projected Salary Increases Healthcare Inflation Rate 4%* 4% 2-4%+ 6% initial rate, 5% ultimate rate *Investment rate of return based on City's own investments Projected salary increases based on City's past salary increases + Medical Reimbursements The federal government may provide the City subsidies per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. Any current and future year subsidies are recorded as revenue in the year received and is not recognized as a reduction to the actuarial accrued liability. 98 City of Scottsdale, Arizona Table of Contents Public Safety Personnel Retirement System (Police) Schedule of Funding Progress Pension Actuarial Valuation June 30 2009 2010 2011 (1) Actuarial Value of Assets $ 120,870 124,093 131,468 (in thousands) (2) Projected Unit Credit Cost Actuarial (3) Accrued Liability Percent Funded (AAL) (1)/(2) $ 160,131 75.5% 168,084 73.8% 187,471 70.1% (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (2)-(1) Payroll (4)/(5) $ 39,261 $ 33,650 116.7% 43,991 31,984 137.5% 56,003 30,945 181.0% Public Safety Personnel Retirement System (Police) Schedule of Funding Progress Health Insurance (in thousands) Actuarial Valuation June 30 2009 2010 2011 (2) (1) Actuarial (3) Actuarial Value Accrued Liability Percent Funded of Assets (1)/(2) (AAL) Entry Age $ - $ 4,649 0.0% 4,888 0.0% 5,725 0.0% City of Scottsdale, Arizona Required Supplementary Information 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: For the Fiscal Year Ended June 30, 2012 Funding Progress (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (2)-(1) Payroll (4)/(5) $ 4,649 $ 33,650 13.8% 4,888 31,984 15.3% 5,725 30,945 18.5% 99 Required Supplementary Information For the Fiscal Year Ended June 30, 2012 Table of Contents 100 Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress Pension Actuarial Valuation June 30 2009 2010 2011 (1) Actuarial Value of Assets $ 21,436 25,668 32,871 (in thousands) (2) (6) Projected Unit Unfunded AAL Credit Cost as a Percentage Actuarial (3) (4) (5) of Covered Accrued Liability Percent Funded Unfunded AAL Annual Covered Payroll (AAL) (1)/(2) (2)-(1) Payroll (4)/(5) (4,438) $ 18,850 0.0% $ 16,998 126.1% $ (5,678) 17,607 0.0% 19,990 128.4% (4,404) 17,025 0.0% 28,467 115.5% Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress Health Insurance (in thousands) Actuarial Valuation June 30 2009 2010 2011 (1) Actuarial (3) Actuarial Value Accrued Liability Percent Funded of Assets (1)/(2) (AAL) Entry Age $ - $ 373 0.0% 460 0.0% 886 0.0% (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (2)-(1) Payroll (4)/(5) $ 373 $ 18,850 2.0% 460 17,607 2.6% 886 17,025 5.2% City of Scottsdale, Arizona Table of Contents (1) Actuarial Value of Assets $ - (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (2)-(1) Payroll (4)/(5) $ 3,602 $ 48,285 7.5% 746 136,414 0.5% 3,834 131,342 2.9% Other Post-Employment Benefit Plan Schedule of Employer Contribution (in thousands) Actuarial Valuation June 30 2010 2011 2012 City of Scottsdale, Arizona (2) (1) Annual Required Employer Contribution Contributions (ARC) $ 227 $ 180 901 34 870 287 (3) Percent Contributed (1)/(2) 126.1% 2650.0% 303.1% Required Supplementary Information Actuarial Valuation June 30 2010 2011 2012 (in thousands) (2) Projected Unit Credit Cost Actuarial (3) Accrued Liability Percent Funded (AAL) (1)/(2) $ 3,602 0.0% 746 0.0% 3,834 0.0% For the Fiscal Year Ended June 30, 2012 Other Post-Employment Benefit Plan Schedule of Funding Progress 101 Table of Contents Nonmajor Governmental Funds SPECIAL REVENUE FUNDS Special Revenue Funds are established to finance particular activities and are created out of receipts from specific taxes, grant awards, contributions received, or other earmarked revenue. All funds in the Special Revenue Funds have either legal restrictions stipulated by an external party or are committed to a specific purpose through formal action from the City Council. Section 8 Housing Fund This fund receives and expends the City’s Section 8 Housing revenues. Funding is awarded by the U.S. Department of Housing and Urban Development (HUD) to provide rental housing assistance. 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. 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. 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. 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). Community Development Block Grant revenues may be used only for those projects approved in the grant budget and are subject to agency expenditure guidelines. 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. 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. 102 City of Scottsdale, Arizona Table of Contents 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. 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 McDowell Mountain Community Facilities District DC Ranch Community Facilities District Via Linda Road Community Facilities District Waterfront Commercial Community Facilities District 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. 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. 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 DC Ranch Community Facilities District Accounts for the proceeds issued by community facilities districts to acquire and improve public infrastructure in specified areas. Scottsdale Preserve Authority Fund This fund accounts for the principal and interest requirements of excise tax revenue bonds issued by the Scottsdale Preserve Authority. Financing is provided by a 0.2 percent Preservation Privilege (Sales) Tax. McDowell Preserve Privilege Tax Fund This fund accounts for the principal and interest requirements of a Preserve contract payable. Financing is provided by a 0.2 percent Preservation Privilege (Sales) Tax. City of Scottsdale, Arizona 103 Table of Contents Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 (in thousands) 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 Bond Interest Payable Matured Bonds Payable Deferred Revenue Property Tax Special Assessments Intergovernmental Other Guaranty and Other Deposits Total Liabilities Special Revenue Funds $ $ $ Fund Balances Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances 104 $ 43,468 30 3,567 1,057 4,326 1,321 134 53,903 1,649 540 179 - Debt Service Funds $ $ $ 9,839 15,691 151 20,612 568 46,861 1 5,386 9,050 Capital Projects Funds Total Nonmajor Governmental Funds $ $ $ $ 61,130 197 60 835 62,222 796 28 - $ $ 114,437 15,888 90 3,567 151 1,057 24,938 2,156 568 134 162,986 2,446 568 179 5,386 9,050 8,677 280 106 11,431 98 568 20,612 35,715 753 1,577 98 568 30,042 280 106 48,723 36,789 6,130 (447) 42,472 4,613 6,533 11,146 60,645 60,645 102,047 6,130 6,533 (447) 114,263 53,903 $ 46,861 $ 62,222 $ 162,986 City of Scottsdale, Arizona Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) REVENUES Taxes - Local Property Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses 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 $ $ 44,794 Debt Service Funds $ Total Nonmajor Governmental Funds Capital Projects Funds 3,627 - $ - $ 3,627 44,794 10,885 638 19 - - 10,885 638 19 1,491 - - 1,491 129 1,031 455 308 344 (140) 719 159 15 - 565 (292) 129 1,031 455 719 467 924 (432) 9,835 236 4,640 1,708 762 483 231 77,849 708 5,228 9,689 5,080 98 8,074 224 23,438 19,524 236 10,428 98 1,708 8,836 483 455 106,515 $ $ $ (continued on next page) City of Scottsdale, Arizona 105 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) EXPENDITURES Current General Government City Court Public Works Community and Economic Development Public Safety Community Services Administrative Services Debt Service Principal Interest and Fiscal Charges Capital Improvements Total Expenditures Special Revenue Funds $ Excess (Deficiency) of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending 106 $ 1,937 11,330 15,493 2,068 13,009 6 Debt Service Funds $ Total Nonmajor Governmental Funds Capital Projects Funds - $ - $ 1,937 11,330 15,493 2,068 13,009 6 43,843 10,670 10,908 21,578 17,277 17,277 10,670 10,908 17,277 82,698 34,006 (16,350) 6,161 23,817 9,021 (38,870) (29,849) 15,667 (95) 15,572 12,166 (12,822) (656) 36,854 (51,787) (14,933) 4,157 (778) 5,505 8,884 38,315 11,924 55,140 105,379 42,472 $ 11,146 $ 60,645 $ 114,263 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2012 (in thousands) 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 $ 6,324 $ 1,274 1,057 362 2 9,019 $ Fund Balances Restricted Committed Unassigned Total Fund Balances Total Liabilities and Fund Balances Community Development Block Grant Highway User Fuel Tax $ 730 419 - $ 671 $ 1 140 812 $ 122 11 33 HOME Grants $ - $ 166 166 $ 19 1 146 $ 370 $ 653 17 1,040 $ Preserve Privilege Tax Section 8 335 9 - $ 1,078 $ 1,078 $ 4 21 - $ 23,866 $ 29 2,293 26,188 $ 44 - Special Programs $ 11,159 $ 4,326 115 15,600 $ 395 79 - Total $ 43,468 $ 30 3,567 1,057 4,326 1,321 134 53,903 $ 1,649 540 179 362 106 1,617 786 952 49 215 684 270 1,298 25 44 6,796 10 7,280 8,677 280 106 11,431 7,402 7,402 (140) (140) (49) (49) (258) (258) 1,053 1,053 26,144 26,144 2,190 6,130 8,320 36,789 6,130 (447) 42,472 9,019 $ 812 $ 166 $ 1,040 $ 1,078 $ 26,188 $ 15,600 $ 53,903 107 Table of Contents 108 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Recreation Fees Fines, Fees, and Forfeitures Court Court Enhancement 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 $ City of Scottsdale, Arizona EXPENDITURES Current General Government City Court Public Works Community and Economic Development Public Safety Community Services Administrative 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 Balances Fund Balances - Beginning Fund Balances - Ending Community Development Block Grant Highway User Fuel Tax $ 15,985 $ HOME - $ Grants - $ Preserve Privilege Tax Section 8 - $ - $ Special Programs 28,809 $ Total - $ 44,794 10,885 638 - - - - - - 19 10,885 638 19 - - - - - - 1,491 1,491 - 10 (5) - - 1 - 290 (137) 129 1,031 455 308 43 2 129 1,031 455 308 344 (140) 2 2,106 31 483 58 30,188 2,160 2,165 462 9 471 1,299 236 116 1,139 2,790 5,912 3 14 5,930 28,962 2,418 569 719 159 7,343 9,835 236 4,640 1,708 762 483 231 77,849 11,188 8,749 740 20,677 2,058 2,058 520 520 1 142 1,173 1,327 2,643 6,076 6,076 7 7 1,936 6,744 895 2,281 6 11,862 1,937 11,330 15,493 2,068 13,009 6 43,843 9,511 107 (49) 147 (146) 28,955 (4,519) 34,006 1,213 (8,021) (6,808) - - 2 (14) (12) 1 (2) (1) (27,212) (27,212) 7,805 (3,621) 4,184 9,021 (38,870) (29,849) 2,703 107 (49) 135 (147) 1,743 (335) 4,157 4,699 (247) - (393) 1,200 24,401 8,655 38,315 7,402 $ (140) $ (49) $ (258) $ 1,053 $ 26,144 $ 8,320 $ 42,472 Table of Contents City of Scottsdale, Arizona 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, 2012 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Intergovernmental Federal Grants Miscellaneous Reimbursements from Outside Sources Indirect Costs Other Total Revenues Original $ EXPENDITURES Current Public Works Community and Economic Development 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 Balances Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final 15,304 $ 15,304 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 15,985 Actual Amounts GAAP Basis - $ 15,985 Variance Between Final Budget and Actual Amounts Budgetary Basis $ 681 10,945 - 10,945 - 10,885 638 - 10,885 638 (60) 638 830 500 8 62 27,649 830 500 8 62 27,649 2 2,106 31 483 58 30,188 - 2 2,106 31 483 58 30,188 (828) 1,606 23 483 (4) 2,539 11,601 9,104 746 21,451 11,604 9,039 746 21,389 11,155 8,737 740 20,632 33 12 45 11,188 8,749 740 20,677 449 302 6 757 6,198 6,260 9,556 (45) 9,511 3,296 1,551 (7,675) (6,124) 1,551 (7,675) (6,124) 1,213 (8,021) (6,808) - 1,213 (8,021) (6,808) (338) (346) (684) 74 136 2,748 (45) 2,703 2,612 451 4,704 4,704 (5) 4,699 - 525 $ 4,840 $ 7,452 $ (50) $ 7,402 $ 2,612 109 Table of Contents 110 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, 2012 (in thousands) Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals $ 45 $ 4,698 The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 6 $ 4,704 City of Scottsdale, Arizona 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, 2012 (in thousands) Budgeted Amounts Interest Earnings Investment Income Intergovernmental Federal Grants Total Revenues REVENUES Original $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues over Expenditures Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final - $ - Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis $ $ $ 10 - (5) 10 (5) Variance Between Final Budget and Actual Amounts Budgetary Basis $ 10 - 3,789 3,789 3,789 3,789 2,160 2,170 (5) 2,160 2,165 (1,629) (1,619) 3,789 3,789 3,789 3,789 2,056 2,056 2 2 2,058 2,058 1,733 1,733 - - 114 (7) 107 114 - (244) (244) (3) (247) - - $ (244) $ (130) $ (10) $ (140) $ 114 111 Table of Contents 112 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, 2012 (in thousands) Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Investment Income $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals Net Decrease in Fund Balance – Budget to GAAP (5) 2 $ (7) $ (237) The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis (7) $ (244) City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona HOME – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants Reimbursements from Outside Sources Total Revenues Original $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues over Expenditures Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final 1,622 1,622 $ 1,622 1,622 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 462 9 471 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 462 9 471 (1,160) 9 (1,151) 1,622 1,622 1,622 1,622 520 520 - 520 520 1,102 1,102 - - (49) - (49) (49) - - - - - - - $ - $ (49) $ - $ (49) $ (49) 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, 2012 (in thousands) Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis $ Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 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, 2012 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Total Revenues Original $ EXPENDITURES Current General Government City Court City Treasurer - Finance and Accounting Public Works Community and Economic Development Public Safety 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 Balances Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final 15,409 175 122 1,361 17,067 $ 15,409 175 122 1,361 17,067 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 1,299 236 116 1,139 2,790 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 1,299 236 116 1,139 2,790 (14,110) 61 (6) (222) (14,277) 3 5,542 207 36 317 462 6,567 3 4,015 207 36 1,210 1,756 7,227 1 142 1,165 1,326 2,634 8 1 9 1 142 1,173 1,327 2,643 2 4,015 65 36 45 430 4,593 10,500 9,840 156 (9) 147 (9,684) - - 2 (14) (12) - 2 (14) (12) 2 (14) (12) 10,500 9,840 144 (9) 135 (9,696) - (401) (401) 8 (393) - 10,500 $ 9,439 $ (257) $ (1) $ (258) $ (9,696) 115 Table of Contents 116 Grants – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Explanation of Differences: The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis $ Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis (399) (2) $ (401) City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Section 8 – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts REVENUES Interest Earnings Intergovernmental Federal Grants Reimbursements from Outside Sources Other Total Revenues Original $ 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 Balances Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Actual Amounts Budgetary Basis Final - $ - $ Budget to GAAP Differences 1 $ Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis - $ 1 $ 1 6,648 7 6,655 6,648 7 6,655 5,912 3 14 5,930 - 5,912 3 14 5,930 (736) 3 7 (725) 6,655 6,655 6,655 6,655 6,073 6,073 3 3 6,076 6,076 582 582 - - (143) (3) (146) (143) - - 1 (2) (1) - 1 (2) (1) 1 (2) (1) - - (144) (3) (147) (144) - 1,210 1,210 (10) 1,200 - - $ 1,210 $ 1,066 $ (13) $ 1,053 $ (144) 117 Table of Contents 118 Section 8 – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Explanation of Difference: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals $ 3 $ 1,202 The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 8 $ 1,210 City of Scottsdale, Arizona 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, 2012 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transaction Privilege Interest Earnings Investment Income Total Revenues Original $ EXPENDITURES Current Community Services Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final 27,517 135 27,652 $ 27,517 135 27,652 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis $ $ $ 28,809 290 29,099 (137) (137) Variance Between Final Budget and Actual Amounts Budgetary Basis 28,809 290 (137) 28,962 $ 1,292 155 1,447 2 - 7 - 7 (7) 865 89 956 865 91 956 7 - 7 865 91 949 26,696 26,696 29,092 (137) 28,955 2,396 (31,766) (31,766) (31,766) (31,766) (27,212) (27,212) - (27,212) (27,212) 4,554 4,554 (5,070) (5,070) 1,880 (137) 1,743 6,950 21,296 24,409 24,409 (8) 24,401 - 16,226 $ 19,339 $ 26,289 $ (145) $ 26,144 $ 6,950 119 Table of Contents 120 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, 2012 (in thousands) Explanation of Difference: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Investment Income $ (137) The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis $ Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 24,353 56 $ 24,409 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Special Programs – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts REVENUES Taxes - Intergovernmental Business and Liquor Licenses Charges for Current Services Recreation Fees Fines, Fees, and Forfeitures Court Fines Court Enhancement Fees Police Fees Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Contributions and Donations Reimbursements from Outside Sources Other Total Revenues Original $ EXPENDITURES Current General Government City Court Community and Economic Development Public Safety Community Services Administrative 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 Balances Fund Balances - Beginning Fund Balances - Ending (continued on next page) $ Final - $ - Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 19 Actual Amounts GAAP Basis - $ 19 Variance Between Final Budget and Actual Amounts Budgetary Basis $ 19 1,460 1,460 1,491 - 1,491 31 2 1,112 582 1,391 - 2 1,112 582 1,391 - 129 1,031 455 308 43 - 2 129 1,031 455 308 43 2 127 (81) (127) (1,083) 43 - 2,261 702 611 8,121 2,261 702 611 1,500 9,621 2,418 569 719 159 7,341 2 2,418 569 719 159 7,343 157 (133) 108 (1,341) (2,280) 1,985 7,652 1,653 2,344 13,634 1,985 8,117 1,653 2,344 14,099 1,934 6,744 894 2,279 6 11,857 2 1 2 5 1,936 6,744 895 2,281 6 11,862 51 1,373 759 65 (6) 2,242 (5,513) (4,478) (4,516) (3) (4,519) (38) 6,404 (3,541) 2,863 6,404 (3,541) 2,863 7,805 (3,621) 4,184 - 7,805 (3,621) 4,184 1,401 (80) 1,321 (2,650) (1,615) (332) (3) (335) 1,283 8,221 8,655 8,655 - 8,655 - 5,571 $ 7,040 $ 8,323 $ (3) $ 8,320 $ 1,283 121 Table of Contents 122 Special Programs – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Explanation of Difference: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Investment Income $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals Net Decrease in Fund Balance – Budget to GAAP 2 5 $ (3) The beginning balance for Actual Amounts Budgetary Basis was revised as indicated below: Prior Year Ending Fund Balance - Budgetary Basis $ Prior Year Adjustments from Modified Accrual to Budgetary Basis Beginning Fund Balance, Revised - Budgetary Basis 8,691 (36) $ 8,655 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2012 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agents Receivables (net of allowance for uncollectibles) Property Tax Intergovernmental Special Assessments Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Bond Interest Payable Matured Bond Payable Deferred Revenue Property Tax Special Assessments Intergovernmental Total Liabilities Municipal Property Corporation Special Assessments $ $ $ $ Fund Balances Restricted Assigned Total Fund Balances Total Liabilities and Fund Balances $ 9,088 6,305 20,612 36,005 3,015 3,290 $ $ 430 17 568 1,015 1 17 - Scottsdale Mountain CFD $ $ $ 571 15 586 58 370 McDowell Mountain CFD $ $ $ 1,358 32 1,390 301 875 DC Ranch CFD $ $ $ 1,231 64 1,295 404 655 Via Linda Road CFD $ $ $ 595 8 603 66 140 Waterfront Commercial CFD $ $ $ 321 542 32 895 108 65 Scottsdale Preserve Authority $ $ $ McDowell Preserve Privilege Tax 5,072 5,072 1,417 3,655 $ $ $ Total - - $ $ $ 9,839 15,691 151 20,612 568 46,861 1 5,386 9,050 20,612 26,917 568 586 10 438 17 1,193 37 1,096 4 210 30 203 5,072 - 98 568 20,612 35,715 2,876 6,212 9,088 429 429 148 148 197 197 199 199 393 393 371 321 692 - - 4,613 6,533 11,146 36,005 $ 1,015 $ 586 $ 1,390 $ 1,295 $ 603 $ 895 $ 5,072 $ - $ 46,861 123 Table of Contents 124 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Debt Service Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) REVENUES Taxes - Local Property Special Assessments Property Rental Interest Earnings Intergovernmental Miscellaneous Total Revenues Municipal Property Corporation Special Assessments $ $ EXPENDITURES Current 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 Balances Fund Balances - Beginning Fund Balances - Ending $ 159 - Scottsdale Mountain CFD 719 - $ 443 - McDowell Mountain CFD $ 1,434 - DC Ranch CFD $ 1,313 - Via Linda Road CFD $ 231 15 Waterfront Commercial CFD $ 206 - Scottsdale Preserve Authority $ McDowell Preserve Privilege Tax - 708 867 719 443 1,434 1,313 246 206 - 3,290 6,041 9,331 755 52 807 370 120 490 875 603 1,478 655 807 1,462 140 134 274 65 216 281 (8,464) (88) (47) (44) (149) (28) 8,195 8,195 - - - (95) (95) (269) (88) (47) (44) 9,357 517 195 241 9,088 $ 429 $ 148 $ 197 $ $ Total - $ 3,627 719 159 15 - 708 5,228 3,655 2,846 6,501 865 89 954 10,670 10,908 21,578 (75) (6,501) (954) (16,350) - 54 54 6,464 6,464 954 954 15,667 (95) 15,572 (244) (28) (21) (37) - (778) 443 421 713 37 - 11,924 199 $ 393 $ 692 $ - $ $ - $ 11,146 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona General Obligation Bond Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts Taxes - Local Property Interest Total Revenues Original 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 Proceeds from Long-Term Debt Issued Premium on Long-Term Debt Issued Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ Final 37,016 202 37,218 $ 37,016 202 37,218 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 36,568 36,568 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 36,568 36,568 (448) (202) (650) 28,315 28,866 57,181 28,315 28,866 57,181 28,315 25,716 774 54,805 - 28,315 25,716 774 54,805 3,150 (774) 2,376 (19,963) (19,963) (18,237) - (18,237) 1,726 20,165 20,165 20,165 20,165 14,716 75 2,448 17,239 - 14,716 75 2,448 17,239 (5,449) 75 2,448 (2,926) 202 202 (998) - (998) (1,200) 4,305 6,787 6,787 - 6,787 - 4,507 $ 6,989 $ 5,789 $ - $ 5,789 $ (1,200) 125 Table of Contents 126 Municipal Property Corporation Bond Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts Property Rental Intergovernmental Total Revenues REVENUES Original $ 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 Balances Fund Balances - Beginning City of Scottsdale, Arizona Fund Balances - Ending $ Final 180 1,107 1,287 $ 180 1,107 1,287 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 159 708 867 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 159 708 867 (21) (399) (420) 3,426 6,490 9,916 3,426 6,490 9,916 3,290 6,041 9,331 - 3,290 6,041 9,331 136 449 585 (8,629) (8,629) (8,464) - (8,464) 165 8,809 8,809 8,809 8,809 8,195 8,195 - 8,195 8,195 (614) (614) 180 180 (269) - (269) (449) 9,845 9,357 9,357 - 9,357 - 10,025 $ 9,537 $ 9,088 $ - $ 9,088 $ (449) Table of Contents City of Scottsdale, Arizona Special Assessments Bond Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts REVENUES Special Assessments Total Revenues Original $ EXPENDITURES Current: Public Works Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues over Expenditures Fund Balances - Beginning Fund Balances - Ending $ Final 804 804 $ 804 804 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 719 719 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 719 719 (85) (85) 2 2 - - - 2 752 52 806 752 52 806 755 52 807 - 755 52 807 (3) (1) (2) (2) (88) - (88) (86) 1,627 517 517 - 517 - 1,625 $ 515 $ 429 $ - $ 429 $ (86) 127 Table of Contents 128 Scottsdale Preserve Authority Bond Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2012 (in thousands) Budgeted Amounts Total Revenues REVENUES Original $ 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 Balances Fund Balances - Beginning Fund Balances - Ending $ Actual Amounts Budgetary Basis Final - $ - $ Budget to GAAP Differences - $ Variance Between Final Budget and Actual Amounts Budgetary Basis Actual Amounts GAAP Basis - $ - $ - 3,655 2,837 6,492 3,655 2,837 6,492 3,655 2,846 6,501 - 3,655 2,846 6,501 (9) (9) (6,492) (6,492) (6,501) - (6,501) (9) 6,492 6,492 6,492 6,492 6,464 6,464 - 6,464 6,464 (28) (28) - - (37) - (37) (37) - - 37 - 37 37 - $ - $ - $ - $ - $ - City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2012 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agents Receivables (net of allowance for uncollectibles) Interest Grants Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Deferred Revenue Intergovernmental Total Liabilities General Obligation Bond $ $ $ Fund Balances Restricted Total Fund Balances Total Liabilities and Fund Balances $ 31,622 45 31,667 - Transportation Privilege Tax McDowell Mountain CFD DC Ranch CFD $ $ $ $ $ 29,508 15 835 30,358 796 28 $ $ 110 110 - $ $ Total 87 87 - $ $ $ 61,130 197 60 835 62,222 796 28 - 753 1,577 - - 753 1,577 31,667 31,667 28,781 28,781 110 110 87 87 60,645 60,645 31,667 $ 30,358 $ 110 $ 87 $ 62,222 129 Table of Contents 130 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Capital Projects Governmental Funds For the Fiscal Year Ended June 30, 2012 (in thousands) REVENUES Interest Earnings Investment Income Intergovernmental Federal Grants Miscellaneous Developer Contributions Reimbursements from Outside Sources Other Revenue Total Revenues General Obligation Bond $ EXPENDITURES Current Capital Improvements Total Expenditures Excess (Deficiency) of Revenues over Expenditures City of Scottsdale, Arizona OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 414 (218) Transportation Privilege Tax $ 151 (74) McDowell Mountain CFD $ DC Ranch CFD - $ Total - $ 565 (292) 196 9,689 5,080 98 8,074 224 23,242 - - - - 9,689 5,080 98 8,074 224 23,438 - 17,277 17,277 - - 17,277 17,277 196 5,965 - - 6,161 (11,900) (11,900) 12,166 (922) 11,244 - - 12,166 (12,822) (656) (11,704) 17,209 - - 5,505 43,371 11,572 110 87 55,140 31,667 $ 28,781 $ 110 $ 87 $ 60,645 Table of Contents INTERNAL SERVICE FUNDS Internal Service Funds are established to account for the financing, on a cost-reimbursement basis, of commodities or services provided by one program for the benefit of other programs within the City. This allows for the internal users of services to be charged for those services based on their use. Fleet Management Fund This fund is used to account for the expenditures associated with purchasing and maintaining the City’s vehicles. Self-Insurance Fund This fund is used for the administration of the City’s self-insurance program. This fund provides coverage of unemployment, self-insured benefits, workers’ compensation, property, and liability claims. Computer Replacement Fund This fund is used to account for the expenditures associated with purchasing the City’s computers, monitors and printers. City of Scottsdale, Arizona 131 Table of Contents Combining Statement of Net Assets Internal Service Funds June 30, 2012 (in thousands) Fleet Management ASSETS Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Miscellaneous Supplies Inventory Total Current Assets $ Noncurrent Assets Net Other Post Employment Benefits Capital Assets Buildings and Improvements Motor Vehicles Machinery and Equipment Construction in Progress Less Accumulated Depreciation Total Noncurrent Assets 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 Unrestricted Total Net Assets 132 $ Computer Replacement Self-Insurance 10,648 $ 22,200 $ Total 774 $ 33,622 722 11,370 90 22,290 774 90 722 34,434 1 1 - 2 7,560 59,381 886 4,806 (41,754) 30,880 1 - 7,560 59,381 886 4,806 (41,754) 30,881 42,250 22,291 774 65,315 915 131 139 1,185 284 35 30 4,555 4,904 19 19 1,218 166 169 4,555 6,108 168 168 29 6,056 6,085 - 197 6,056 6,253 1,353 10,989 19 12,361 30,879 10,018 11,302 755 30,879 22,075 40,897 $ 11,302 $ 755 $ 52,954 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, 2012 (in thousands) Fleet Management Operating Revenues Charges for Sales and Services Billings to User Programs Self Insurance Contributions - Employee Self Insurance Contributions - Retiree State Contributions Other Total Operating Revenues $ Operating Expenses Costs of Sales and Services Fleet Management Operations Self-Insurance Administration Self-Insurance Claims Self-Insurance Benefits Insurance and Bond Premiums Depreciation Computer Replacement Total Operating Expenses 14,935 28 14,963 Computer Replacement Self-Insurance $ 21,155 5,336 1,103 921 591 29,106 $ Total - $ 36,090 5,336 1,103 921 619 44,069 11,572 4,541 16,113 4,643 3,226 23,932 1,827 33,628 445 445 11,572 4,643 3,226 23,932 1,827 4,541 445 50,186 (1,150) (4,522) (445) (6,117) (16) 97 81 (26) (26) - (42) 97 55 (1,069) (4,548) (445) (6,062) Transfers In Transfers Out Change in Net Assets (2,585) (3,654) 3,000 (2) (1,550) 1,200 755 4,200 (2,587) (4,449) Total Net Assets - Beginning 44,551 12,852 - 57,403 Operating Income (Loss) Non-Operating Revenues Investment Income Gain on Sale of Capital Assets Total Non-Operating Revenues Income Before Contributions and Transfers Total Net Assets - Ending City of Scottsdale, Arizona $ 40,897 $ 11,302 $ 755 $ 52,954 133 Table of Contents Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2012 (in thousands) Fleet Management Cash Flows from Operating Activities Cash Received from Customers Cash Paid to Suppliers Cash Paid to Employees Other Operating Net Cash Provided by (Used for) Operating Activities $ 14,934 (8,963) (3,155) 27 2,843 $ 28,461 (33,053) (1,181) 593 (5,180) $ Total (426) (426) $ 43,395 (42,442) (4,336) 620 (2,763) Cash Flows from Non-Capital Financing Activities Transfers In Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities (2,585) (2,585) 3,000 (2) 2,998 1,200 1,200 4,200 (2,587) 1,613 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 (5,734) 874 (4,860) - - (5,734) 874 (4,860) 3 (5) - (2) Net Increase (Decrease) in Cash and Cash Equivalents (4,599) (2,187) 774 (6,012) Cash and Cash Equivalents at Beginning of Year 15,247 24,387 - 39,634 Cash Flows from Investing Activities Income Received on Investments Cash and Cash Equivalents at End of Year Reconciliation of Operating Income to Net Cash Provided (Used for) 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 Total Adjustments Net Cash Provided (Used for) Operating Activities 134 Computer Replacement Self-Insurance $ 10,648 $ 22,200 $ (1,150) $ (4,522) $ $ $ 774 $ 33,622 (445) $ (6,117) 4,541 - - 4,541 (60) (447) (26) (15) 3,993 (53) (79) 4 (530) (658) 19 19 (53) (60) (507) (22) (15) (530) 3,354 2,843 $ (5,180) $ (426) $ (2,763) 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. Crossroads East Development Agreement This fund accounts for monies in escrow for the Arizona State Land Department. City of Scottsdale, Arizona 135 Table of Contents 136 Combining Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2012 (in thousands) ASSETS Cash and Cash Equivalents Private Purpose Trust Funds Handicap Scholarship Private Purpose Trust Fund Total $ Total Assets LIABILITIES Escrow Payable Vouchers Designated Escrow Payable State Land Department Rebate Total Liabilities NET ASSETS Held in Trust for Other Purposes $ 3 $ Agency Funds Family SelfSufficiency Agency Fund 3 $ 75 Retainage Escrow Agency Fund $ 1,720 Crossroads East Dev Agreement Agency Fund $ 1,415 Total $ 3,210 3 3 75 1,720 1,415 3,210 - - 75 - 1,720 - 1,415 75 1,720 1,415 - - 3 $ 3 $ 75 $ 1,720 $ 1,415 $ 3,210 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, 2012 (in thousands) Family Self-Sufficiency ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Escrow Payable Vouchers Designated Escrow Payable State Land Department Rebate Total Liabilities Balance July 1, 2011 Additions Retainage Escrow Deductions Balance June 30, 2012 Crossroads East Dev Agreement Balance July 1, 2011 Additions Deductions Balance June 30, 2012 Balance July 1, 2011 Additions Deductions Balance June 30, 2012 $ 121 $ 44 $ 90 $ 75 $ 778 $ 1,720 $ 778 $ 1,720 $ - $ 1,415 $ - $ 1,415 $ 121 $ 44 $ 90 $ 75 $ 778 $ 1,720 $ 778 $ 1,720 $ - $ 1,415 $ - $ 1,415 $ 121 - $ 44 - $ 90 - $ 75 - $ 778 - $ 1,720 - $ 778 - $ 1,720 - $ - $ 1,415 $ - $ 1,415 $ 121 $ 44 $ 90 $ 75 $ 778 $ 1,720 $ 778 $ 1,720 $ - $ 1,415 $ - $ 1,415 137 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. 138 City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2012 (in thousands) July 1, 2011 GENERAL OBLIGATION BONDS Governmental Fund Type: 1997 GO Refunding 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 Preservation 2011 GO Refunding Various Purpose 2011 GO Refunding Preservation 2012 GO Preservation 2004 GO Series Deferred Issuance Premium 2005 GO Series Deferred Amount on Refunding 2005 GO Refundingg 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 2012 GO Preserve Deferred Issuance Premium Total General Obligation Bonds REVENUE BONDS Business-Type - Revenue Bonds 2004 Utility Revenue Series Refunding 2008 Utility Revenue Series Refunding 2008 Revenue Series Deferred Amount on Refunding 2008 Refunding Series Deferred Issuance Premium Total Revenue Bonds (continued) $ $ $ $ Issued Refunding Bonds Issued Retired 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 $ 50,000 2,448 52,448 $ 8,945 $ 33,065 (572) 3,338 44,776 $ - $ $ $ 1,190 6,510 1,335 3,500 2,715 4,500 925 525 1,050 740 4,200 1,125 28,315 $ 3,175 205 3,380 $ $ $ Accretions, Amortizations and Contract Adjustments Bonds Defeased - $ - $ $ $ June 30, 2012 Governmental Activities Business-Type Activities Final Payment Date - $ - $ - $ (51) 278 ((213)) (136) (22) (112) (5) (42) (11) (24) (295) (46) (679) $ 2,605 $ 17,720 8,100 1,375 48,000 48,700 5,825 66,090 105,250 14,875 100,000 18,150 48,800 21,785 4,445 32,705 50,000 618 (1,996) , 1,534 1,548 246 1,771 119 748 247 (1,697) 3,461 2,402 603,426 $ 2,605 $ 17,720 8,100 1,375 48,000 48,700 5,825 66,090 105,250 14,875 100,000 18,150 48,800 21,785 4,445 32,705 50,000 618 (1,996) , 1,534 1,548 246 1,771 119 748 247 (1,697) 3,461 2,402 603,426 $ - 07/01/14 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 07/01/24 07/01/24 07/01/34 - $ - $ - $ 49 (288) (239) $ 5,770 $ 32,860 (523) 3,050 41,157 $ - $ - $ 5,770 32,860 (523) 3,050 41,157 07/01/16 07/01/23 139 Table of Contents 140 Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2012 (in thousands) 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, 2011 $ 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 City of Scottsdale, Arizona SCOTTSDALE PRESERVE AUTHORITY BONDS Governmental Fund Type: 2004 Excise Tax Refunding 2010 Excise Tax Refunding 2011 Excise Tax 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 (continued on next page) $ $ $ Issued Retired 7,915 $ 23,534 19,475 55,450 8,585 32,500 139 239 912 (2,125) 5,683 96 175 152,578 - $ - 980 855 225 280 950 3,290 10,260 13,930 110,510 98 825 98,825 75,000 536 396 10,368 (4,162) 4,082 3,362 323,107 - 3,295 2,500 2 775 2,775 180 8,750 475,685 Refunding Bonds Issued $ Accretions, Amortizations and Contract Adjustments Bonds Defeased - $ - - $ 808 - - $ - (17) (24) (38) 227 (247) (5) (9) 695 6,935 $ 23,487 19,250 55,450 8,305 31,550 122 215 874 (1,898) 5,436 91 166 149,983 - (180) (79) (451) 190 (196) (136) (852) 6,965 11,430 110,510 96 050 96,050 74,820 356 317 9,917 (3,972) 3,886 3,226 313,505 463,488 $ - $ 12,040 $ - $ - $ (157) $ 15,050 $ 32,855 12,015 950 (897) 4,608 (636) 1,092 (728) 64,309 $ - $ 2,735 920 3,655 $ - $ - $ - $ - $ (237) 223 (345) 48 (101) 62 (350) $ $ $ $ Governmental Activities June 30, 2012 Business-Type Activities 6,935 $ 23,487 19,250 55,450 8,305 31,550 122 215 874 (1,898) 5,436 91 166 149,983 - Final Payment Date - 07/01/19 07/01/21 07/01/35 07/01/34 07/01/31 07/01/31 6,965 11,430 110,510 96 050 96,050 74,820 356 317 9,917 (3,972) 3,886 3,226 313,505 07/01/14 07/01/16 07/01/30 07/01/32 07/01/36 $ 149,983 $ 313,505 12,315 $ 32,855 11,095 713 (674) 4,263 (588) 991 (666) 60,304 $ 12,315 $ 32,855 11,095 713 (674) 4,263 (588) 991 (666) 60,304 $ - 07/01/16 07/01/24 07/01/22 Table of Contents City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2012 (in thousands) July 1, 2011 SPECIAL ASSESSMENT BONDS Governmental Fund Type: Bell Road II Series 106 CERTIFICATES OF PARTICIPATION Governmental Fund Type: 2005 Certificates of Participation Series 2010-Public Safety Communications Project Total Certificates of Participation 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 McDowell Sonoran Preserve Bureau of Reclamation\WestWorld Bureau of Reclamation\TPC Underground Improvement District Series 104 Total Contracts TOTAL BONDS, CONTRACTS AND CAPITAL LEASES Issued Retired $ 1,500 $ - $ $ 3,409 20,000 23,409 $ - $ $ $ 12,430 $ 3,505 2,320 2,385 2,640 9,770 3,695 8 (33) 42 36,762 Refunding Bonds Issued Accretions, Amortizations and Contract Adjustments Bonds Defeased Governmental Activities June 30, 2012 Business-Type Activities Final Payment Date 750 $ - $ - $ - $ 750 $ 750 $ - 01/01/13 $ - $ - $ - $ - $ - $ - $ 18,031 18,031 $ 18,031 18,031 $ $ 3,409 1,969 5,378 - 01/01/15 07/01/20 - $ - 875 215 140 125 370 315 65 2,105 $ - $ - $ - - $ (2) 33 (3) 28 11,555 3,290 2,180 2,260 2,270 9,455 3,630 6 39 34,685 $ 11,555 3,290 2,180 2,260 2,270 9,455 3,630 6 39 34,685 $ - 07/15/22 07/15/23 07/15/23 07/15/24 07/15/18 07/15/27 07/15/32 $ 55,623 $ - $ - $ (1,397) $ 1,221,841 $ 867,179 $ 354,662 93 865 122 122 5 $ - $ - $ - - $ - 2,614 910 4,558 5,288 5 $ 2,614 910 4,558 5,288 5 $ - - $ 13,375 $ 13,375 $ - (1,397) $ 1,235,216 $ 880,554 $ 354,662 52,448 $ $ $ $ 1,226,413 $ $ 2,707 1,775 4,680 5,410 10 $ - $ - $ 14,582 $ - $ 1,207 $ - $ - $ $ 1,240,995 $ 52,448 $ 56,830 $ - $ - $ Compensated Absences Risk Management Claims Total Long-Term Debt *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). $ 25,172 10,611 $ 916,337 $ 3,039 357,701 2032 2013 2033 2035 2013 141 Table of Contents 142 City of Scottsdale, Arizona Table of Contents Statistical Section Contents Page Financial Trends 144 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 153 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 160 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 166 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 168 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. City of Scottsdale, Arizona 143 Table of Contents 144 City of Scottsdale, Arizona Net Assets by Component Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Governmental Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Governmental Activities Net Assets 2003 2004 2005 2006 $ 1,497,575 117,801 165,209 $ 1,780,585 $ 1,548,486 199,767 127,017 $ 1,875,270 $ 1,877,955 78,794 195,887 $ 2,152,636 $ 2,029,375 102,293 172,530 $ 2,304,198 $ $ $ 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 $ 2,156,705 134,522 351,356 $ 2,642,583 659,130 16,721 186,147 861,998 $ 653,351 20,842 272,431 946,624 $ 2,201,837 220,609 399,448 $ 2,821,894 (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. Table I Fiscal Year 2007 2008 (2) (2) 2009 2010 2011 2012 $ 2,198,130 108,686 206,386 $ 2,513,202 $ 2,353,573 189,540 90,632 $ 2,633,745 $ 2,586,731 131,732 83,884 $ 2,802,347 $ 2,729,334 97,950 87,698 $ 2,914,982 $ 2,704,433 91,862 108,799 $ 2,905,094 $ 2,800,451 100,275 74,124 $ 2,974,850 756,433 23,472 212,957 992,862 $ 806,749 27,000 239,535 $ 1,073,284 $ 895,636 33,649 224,607 $ 1,153,892 $ 909,632 26,147 293,090 $ 1,228,869 $ 991,390 26,568 239,103 $ 1,257,061 $ 941,884 32,244 307,279 $ 1,281,407 $ 1,009,973 36,287 258,395 $ 1,304,655 $ 1,036,985 38,576 243,067 $ 1,318,628 $ 2,634,388 102,266 408,844 $ 3,145,498 $ 2,836,124 129,293 412,065 $ 3,377,482 $ 3,093,766 142,335 430,993 $ 3,667,094 $ 3,263,205 215,687 383,722 $ 3,862,614 $ 3,578,121 158,300 322,987 $ 4,059,408 $ 3,671,218 130,194 394,977 $ 4,196,389 $ 3,714,406 128,149 367,194 $ 4,209,749 $ 3,837,436 138,851 317,191 $ 4,293,478 (1) $ 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) Expenses Governmental Activities: General Government Public Works 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 2003 $ Business-Type Activities: Water Utility Sewer Utility Airport Solid Waste Total Business-Type Activities Expenses Total Primary Government Expenses 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 2004 $ 50,406 22,862 2,476 13,783 89,527 $ 394,280 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 2005 $ 51,095 24,678 2,622 15,153 93,548 $ 415,411 (1) 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 32,466 359,706 466,607 Fiscal Year 2007 2008 2006 $ 59,723 28,324 3,346 15,508 106,901 $ Table IIa 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 $ 53,961 27,854 2,922 16,412 101,149 $ 488,160 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 $ 64,915 26,089 2,958 17,895 111,857 $ 545,292 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 $ 71,140 26,947 3,343 18,772 120,202 $ 587,322 2010(2) 2009 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 $ 81,391 33,509 3,482 19,650 138,032 $ 587,972 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 2011(3) $ 76,178 33,274 3,120 18,889 131,461 $ 564,213 (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. In FY2010, the City's Governmental Activities were restructured from Departments to Divisions, which resulted 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 and Accounting was merged into General Government. (4) In FY2012, Human Resources and Information Technology were absorbed into the Division's Administrative Services function. 145 (2) 21,495 35,605 134,221 111,227 3,047 51,974 13,491 2,905 578 40,358 414,901 2012(4) $ 90,829 41,218 3,681 17,671 153,399 83,888 34,533 3,680 18,853 140,954 $ 555,855 18,964 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 $ 562,120 Table of Contents 146 City of Scottsdale, Arizona Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Program Revenue Governmental Activities: Charges for Services: General Government Public Works 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 2003 $ Business-Type Activities: Charges for Services: Water Utility Sewer Utility Airport Solid Waste Capital Grants and Contributions Total Business-Type Activities Revenues City of Scottsdale, Arizona Total Primary Government Revenues Net (Expense)/Revenue Governmental Activities Business-Type Activities Total Primary Government Net Expense 11,402 3,405 15,449 4,227 1,018 21,219 70,369 127,089 2004 $ 66,626 25,316 2,424 16,250 28,487 139,103 12,742 3,759 17,314 6,760 1,000 24,508 105,794 171,877 2005 $ 70,613 25,587 2,936 16,488 71,709 187,333 12,106 3,914 18,188 11,514 998 26,865 73,092 146,677 2006 $ 72,612 27,503 3,162 16,984 38,313 158,574 13,783 4,028 163 1,010 20,515 9,938 277 511 26,355 136,745 213,325 Table IIb 2007 $ (1) (2) 81,517 27,119 3,342 17,163 55,580 184,721 Fiscal Year 14,102 4,388 228 1,155 16,128 15,071 326 546 29,293 211,707 292,944 $ (3) 84,381 32,250 3,451 18,490 55,111 193,683 2008 15,581 4,637 21 1,095 12,800 16,664 595 28,409 157,808 237,610 2009 $ 90,741 33,930 3,380 19,824 50,679 198,554 14,670 4,619 2,275 6,393 5,703 2,682 599 26,272 240,289 303,502 2010 $ 91,546 34,198 2,813 20,049 22,067 170,673 13,982 12,655 5,773 6,837 2,552 289 29,319 190,279 261,686 2011 $ 94,199 35,027 2,879 20,269 9,268 161,642 4,777 4,666 9,604 9,917 973 4,617 2,485 635 478 32,205 41,072 111,429 2012 $ (4) 94,056 34,533 2,816 20,940 17,889 170,234 3,965 3,543 10,958 10,102 5,573 2,549 551 28,144 112,163 177,548 97,944 36,032 3,248 20,744 8,607 166,575 $ 266,192 $ 359,210 $ 305,251 $ 398,046 $ 486,627 $ 436,164 $ 474,175 $ 423,328 $ 281,663 $ 344,123 $ (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) 78,352 (151,158) $ (146,438) 32,641 (113,797) $ (171,066) 30,181 (140,885) $ (303,472) 29,280 (274,192) $ (231,173) 13,176 (217,997) $ $ $ $ $ (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. $ $ $ $ $ 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) 2003 General 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 (1) 167,153 46,971 4,108 4,760 10,955 233,947 2004 $ 1,493 755 (10,955) (8,707) 183,039 45,163 2,655 2,777 11,037 244,671 2005 $ 973 905 (11,037) (9,159) 217,325 48,346 6,765 4,100 9,567 286,103 Table IIc Fiscal Year 2007 2008 2006 (1) $ 4,288 (156) (9,567) (5,435) 240,731 54,481 13,714 5,786 10,536 325,248 $ 119 6,581 686 (10,536) (3,150) 249,411 60,520 23,013 5,377 11,174 349,495 $ 195 9,265 496 (11,174) (1,218) 246,330 65,933 19,187 7,606 10,997 350,053 2009 $ 195 6,910 517 (10,997) (3,375) 221,272 64,145 14,653 5,038 9,932 315,040 2010 $ 117 4,958 408 (9,932) (4,449) 208,083 56,830 1,368 6,730 10,690 283,701 2011 $ 130 4,295 430 (10,690) (5,835) 225,240 $ 235,512 $ 280,668 $ 322,098 $ 348,277 $ 346,678 $ 310,591 $ 277,866 $ $ 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 $ $ $ $ $ $ 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. $ $ $ $ 287,552 (9,888) 23,248 13,360 227,963 44,035 1,063 20,502 7,366 300,929 132 421 7,610 (7,366) 797 134 2,658 1,355 (10,179) (6,032) $ $ 222,118 49,190 248 11,849 10,179 293,584 2012 $ 301,726 $ 69,756 13,973 83,729 $ 147 Table of Contents 148 City of Scottsdale, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) General Fund Nonspendable Restricted Committed Assigned Unassigned Reserved Unreserved Total General Fund All Other Governmental Funds Nonspendable Restricted Committed Assigned Unassigned, Reported in: Special Revenue Funds Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds Total All Other Governmental Funds (1) 2003 2004 2005 Table III Fiscal Year 2007 2008 2006 2009 2011(3) 2010 $ $ 1,992 71,236 73,228 $ $ $ 2,153 59,707 61,860 (1) $ $ 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 $ $ $ 13,670 $ 24,553 159,421 $ 197,644 9,122 22,122 224,422 $ 255,666 $ 10,613 $ 31,873 148,626 (2) $ 191,112 23,142 $ 40,952 189,905 $ 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. 253,999 21,249 $ 52,484 179,477 $ 253,210 25,600 $ 35,179 212,676 $ 273,455 27,236 $ 30,710 102,898 $ 160,844 153,646 247 281 53,199 53,727 3,000 104,284 6,221 36,609 $ $ $ (640) - 20,193 30,963 102,490 $ 2012 149,474 2,980 108,073 7,345 37,183 (447) - $ 264 260 52,105 52,629 $ 155,134 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) 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 2003 2004 2005 Table IVa Fiscal Year 2007 2008 2006 2009 2010 2011 2012 $ 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 $ 228,823 53,834 1,805 16,985 9,133 719 4,630 2,837 (1,403) 67,725 101 551 2,521 12,642 9,096 3,265 $ 285,091 $ 307,085 $ 362,987 $ 392,158 $ 425,721 $ 426,624 $ 404,478 $ 346,051 $ 388,232 $ 413,264 149 Table of Contents 150 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Expenditures General Government Public Works 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 Capital Improvements 2003 $ 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 2004 $ 30,305 29,759 1,046 68,338 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 2005 $ 31,905 25,452 586 81,149 33,173 31,948 878 213,585 Fiscal Year 2007 2008 2006 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 $ 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 $ 27,632 36,382 351 218,897 (1) Table IVb 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 $ 34,252 38,279 735 147,367 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 $ 33,043 38,651 1,028 196,976 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 2010 $ 31,308 41,612 155,358 (2) 17,030 31,391 111,459 3,657 45,655 9,469 1,859 6,059 17,110 27,447 538 2011 $ 33,701 38,782 497 77,929 (3) 19,783 31,463 42,357 108,003 3,013 43,967 9,357 3,031 578 2012 $ 37,677 40,091 1,057 107,448 (4) 18,523 27,307 38,369 107,934 44,762 14,450 572 44,700 40,487 774 129,025 City of Scottsdale, Arizona Total Expenditures $ 327,018 $ 337,690 $ 494,193 $ 512,998 $ 484,419 $ 570,636 $ 533,932 $ 422,583 $ 447,825 $ 466,903 Excess of Revenues over (under) Expenditures $ (41,927) $ (30,605) $ (131,206) $ (120,840) $ (58,698) $ (144,012) $ (129,454) $ (76,532) $ (59,593) $ (53,639) (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 Divisions which resulted in the shift of reporting associated expenditures. (3) In FY2011, Economic Vitality merged with Planning, Neighborhood and Transportation, to become the Community and Economic Development Division. In addition, Finance and Accounting was merged into General Government. (4) In FY2012, Human Resources and Information Technology were absorbed into the Division's Administrative Services function. 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) 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 2003 $ Total Other Financing Sources and (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures (1) 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% The change from the prior period was caused by the increase in spending for capital improvement projects. $ 78,436 $ (52,770) 23.5% Fiscal Year 2007 2008 2006 141,783 (133,284) 74,630 68,355 4,536 (77,584) - 147,643 (140,513) 191,500 5,501 - $ 204,131 (1) $ 83,291 21.9% Table IVc 162,965 (155,295) 55,450 42,500 7,199 (61,845) 175 3,000 - $ 54,149 $ (4,549) 21.7% 195,170 (185,082) 123,805 2,379 - 2009 $ 136,272 $ (7,740) 19.5% 160,319 (145,357) - 2010 $ 14,962 $ (114,492) 19.3% 108,066 (98,693) 843 50,800 - 2011 $ 61,016 $ (15,516) 21.2% 79,592 (69,378) 87,985 42,525 10,047 (94,818) 1,091 2012 $ 58,201 57,044 $ (2,549) 22.8% 81,579 (75,826) 2,448 50,000 - $ 4,562 25.4% 151 Table of Contents 152 City of Scottsdale, Arizona Tax Revenues By Source Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 City of Scottsdale, Arizona Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (1) $ $ Property 41,583 46,088 48,249 49,651 50,732 53,778 60,493 58,354 65,970 65,089 Privilege and Use General $ 79,704 86,547 94,302 104,949 110,225 104,673 85,829 77,878 80,119 84,633 Franchise Taxes Cable TV Light and Power Franchise Franchise 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 3,445 8,115 Privilege and Use McDowell Mtn(1) $ 15,645 16,981 31,301 35,483 37,281 35,604 29,121 26,416 27,199 28,809 Sales and Use Taxes Privilege and Use Transportation $ 15,335 16,628 18,115 20,020 20,910 19,823 16,141 14,608 15,042 15,985 State Shared Sales $ 15,853 17,054 18,779 21,664 22,312 21,575 18,677 17,227 17,844 16,987 Intergovernmental State Revenue Sharing $ 21,574 18,278 18,634 21,223 26,653 33,037 35,103 30,309 22,849 18,347 Table V Privilege and Use Public Safety(1) $ 8,491 9,978 10,578 10,145 8,289 7,541 7,765 8,231 $ Other 611 663 1,337 962 929 957 959 979 1,010 1,086 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 6,688 7,227 7,939 8,970 9,723 9,621 7,577 7,113 13,126 13,430 (2) Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Taxable Sales Subject to Privilege (Sales) Tax by Category Last Ten Fiscal Years (in thousands) Fiscal Year 2007 2008 1,622,601 $ 1,370,365 2,208,957 1,932,043 626,083 652,226 533,055 529,862 1,011,240 974,330 1,478,112 1,364,347 551,095 532,751 1,211,551 1,308,247 774,598 754,103 418,460 435,415 Table VI Automotive Construction Food Stores Hotel/Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities 2003 $ 1,499,864 1,213,352 518,665 373,375 795,091 1,059,857 360,991 955,494 551,806 376,319 2004 $ 1,525,050 1,432,006 550,704 400,836 871,244 1,138,028 416,514 977,379 604,652 368,442 2005 $ 1,557,909 1,703,826 562,877 432,006 959,361 1,248,228 457,819 1,054,666 661,542 380,043 2006 $ 1,662,604 2,046,791 584,706 497,804 1,012,906 1,413,445 513,553 1,102,152 726,122 398,204 Total $ 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 $ 7,870,594 1.40% 1.40% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% City District Sales Tax $ 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. $ 2009 918,219 1,251,432 624,917 416,216 864,676 1,078,674 556,842 1,217,688 684,188 432,570 $ 2010 818,517 754,583 611,083 395,229 865,614 1,107,272 449,455 1,144,939 670,311 436,010 $ 2011 862,091 718,652 611,825 401,413 882,376 1,194,790 502,739 1,113,821 713,420 429,035 $ 2012 950,450 786,402 626,883 420,494 897,617 1,299,083 525,480 1,134,785 799,231 430,169 153 Table of Contents 154 City of Scottsdale, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Table VII City of Scottsdale, Arizona Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Privilege (Sales) Tax Rates City Direct Rate County Rate 1.40% 0.70% 1.40% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Transient Occupancy Tax Rates y Rate County Rate 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 3.00% 1.77% 5.00% 1.77% 5.00% 1.77% State Rate 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 6.60% 6.60% 6.60% State Rate 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 6.50% 6.50% 6.50% (1) (1) (2) Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Use Tax Rates City Direct Rate County Rate 1.20% 0.00% 1.20% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% State Rate 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 6.60% 6.60% 6.60% Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Jet Fuel y Tax Rates (cents per gallon) Rate County Rate 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% 1.80% 0.46% State Rate 2.90% 2.90% 2.90% 2.90% 2.90% 2.90% 2.90% 2.90% 2.90% 2.90% Source: City Tax Audit Section Note: The following gives a general description of each tax. Complete details for each tax can be found in Appendix C of the Scottsdale Revised City Code. 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 City of Scottsdale, Arizona City of Scottsdale, Arizona Sales Tax Revenue Payers by Industry Current Year and Nine Years Ago (in thousands) Table VIII Automotive Construction Food Stores Hotel/Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities Total Number of Filers 528 7,219 172 83 29 4,746 3,756 4,014 906 262 21,715 Fiscal Year 2012 Percentage of Total Tax Revenue 2.43% $ 16,105 33.25% 13,876 0.79% 10,512 0.38% 7,089 0.13% 14,947 21.86% 23,051 17.30% 12,486 18.48% 19,611 4.17% 12,761 1.21% 7,220 100.00% $ 137,658 Percentage of Total 11.70% 10.08% 7.64% 5.15% 10.86% 16.75% 9.07% 14.25% 9.27% 5.24% Number of Filers 696 6,942 190 66 23 6,697 2,980 3,053 930 260 100.00% 21,837 Fiscal Year 2003 Percentage of Total Tax Revenue 3.19% $ 20,449 31.79% 18,474 0.87% 7,508 0.30% 5,315 0.11% 9,172 30.67% 15,858 13.64% 8,190 13.98% 12,687 4.26% 7,617 1.19% 5,380 100.00% $ 110,650 Percentage of Total 18.48% 16.70% 6.79% 4.80% 8.29% 14.33% 7.40% 11.47% 6.88% 4.86% 100.00% Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories are intended to provide alternative information regarding the sources of the city's revenue. The Other Taxable Activity category includes all license fees, penalties and interest. 155 Table of Contents 156 City of Scottsdale, Arizona Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Table IX City Direct Rate Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Operating $ 0.51 0.48 0.45 0.44 0.42 0.38 0.35 0.36 0.38 0.44 Debt Service $ 0.65 0.64 0.62 0.60 0.55 0.41 0.43 0.38 0.51 0.65 Overlapping Rates Total City $ 1.16 1.12 1.07 1.04 0.97 0.79 0.78 0.74 0.89 1.09 Operating $ 3.94 3.89 3.77 3.46 3.45 3.42 2.82 2.44 2.40 2.75 Scottsdale Unified School District Debt Service EVIT $ 1.36 $ 0.11 1.30 0.10 1.26 0.10 1.22 0.06 1.26 0.05 1.26 0.05 1.07 0.05 1.34 0.05 1.35 0.05 1.25 0.05 Total School $ 5.41 5.29 5.13 4.74 4.76 4.73 3.94 3.83 3.80 4.05 Overlapping Rates County-Wide Jurisdictions City of Scottsdale, Arizona Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 County Operating $ 1.21 1.21 1.21 1.20 1.18 1.10 1.03 0.99 1.05 1.24 County Debt Service $ 0.08 0.07 - Community College $ 1.11 1.08 1.04 1.03 1.06 0.98 0.94 0.88 0.97 1.21 County Flood $ 0.21 0.21 0.21 0.21 0.20 0.15 0.14 0.14 0.15 0.18 County Education Equalization $ 0.49 0.47 0.46 0.44 0.33 0.36 0.43 Fire District Assistance $ 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 Central AZ Project $ 0.13 0.12 0.12 0.12 0.12 0.10 0.10 0.10 0.10 0.10 County Free Library $ 0.04 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.05 County Special Health Care $ 0.12 0.12 0.09 0.09 0.09 0.11 0.15 Total County $ 3.28 3.22 3.10 3.18 2.74 2.47 2.35 2.58 2.79 3.37 Total Direct and Overlapping $ 9.85 9.63 9.30 8.96 8.47 7.99 7.07 7.15 7.48 8.51 Source: Maricopa County Department of Finance Publications On-Line "Tax Rate 2011" 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 2011/12 the rates were as follows: Scottsdale Mountain CFD - $1.3449, McDowell Mountain CFD - $.8801, DC Ranch CFD - $0.5392, Via Linda Road CFD - $1.3954 and the Waterfront Commercial CFD - $2.6452. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Principal Property Taxpayers Current Year and Nine Years Ago (in thousands) 2012 Taxpayer Arizona Public Service Company Scottsdale Fashion Square LLC Scottsdale Princess Partnership (SHR Scottsdale) Qwest Corporation* General Dynamics Decision Systems, Inc. WJ Small Grandchildrens Trust SDQ FEE LLC Portales Corporate Center LLC/Etal Gainey Drive Associates Pacific Promenade LLC First American Motorola, Inc. Wyndham International Southwest Gas Corporation CMD Properties Scottsdale Fiesta Retail Center LLC Total Taxable Assessed Value $ 60,208 49,818 21,788 18,583 15,392 14,949 14,427 14,018 13,594 12,887 $ 235,664 Rank 1 2 3 4 5 6 7 8 9 10 - Table X Percentage of Total Taxable Assessed Value 1.058% 0.875% 0.383% 0.326% 0.270% 0.263% 0.253% 0.246% 0.239% 0.226% 4.140% 2003 Taxable Assessed Value $ 49,923 49,808 21,438 30,364 24,186 19,519 12,675 12,668 12,215 10,186 $ 242,982 Rank 1 2 5 3 4 6 7 8 9 10 Percentage of Total Taxable Assessed Value 1.420% 1.410% 0.610% 0.860% 0.690% 0.550% 0.360% 0.360% 0.350% 0.290% 6.900% Source: The Maricopa County Assessor's Office. The Salt River Project Agricultural Improvement and Power District's (SRP) assessed valuation is not reflected in the total assessed valuation of the City. SRP is subject to a "voluntary contribution" in lieu of ad valorem taxation. The 2011/12 secondary assessed valuation of the SRP within the City is $20,757,418 as provided by SRP. *Qwest Corporation was operating under the name Qwest Communications, Inc. in 2002. 157 Table of Contents 158 City of Scottsdale, Arizona Assessed Value of Taxable Property Last Ten Fiscal Years (in thousands) Fiscal Year Ended June 30th 2003 P 2003 S Residential Property $ 1,870,142 1,921,093 Real Property Commercial Property Vacant Land $ 913,222 1,045,249 $ 400,448 615,184 Historic and Special Use $ 878 1,484 Table XI Personal Property Less Tax Exempt Property Assessed Value $ 266,959 266,959 $ (220,195) (323,364) Total Taxable Assessed Value $ 3,231,454 3,526,605 Total Direct Tax Rate $ 0.51 0.65 City of Scottsdale, Arizona 2004 P 2004 S 2,148,272 2,373,446 968,183 1,043,487 473,966 656,600 1,100 1,575 277,334 277,334 (269,136) (376,920) 3,599,719 3,975,522 0.48 0.64 2005 P 2005 S 2,370,252 2,460,307 1,071,915 1,203,844 572,909 809,560 1,374 2,214 257,783 277,482 (285,524) (409,953) 3,988,709 4,343,454 0.45 0.62 2006 P 2006 S 2,622,605 2,792,337 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 2007 P 2007 S 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 2008 P 2008 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 P 2009 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) 6,328,419 8,272,417 0.35 0.43 2010 P 2010 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 P 2011 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) 6,886,162 7,375,409 0.38 0.51 2012 P 2012 S 3,521,958 3,524,902 1,615,176 1,623,645 969,618 1,021,533 4,217 4,300 224,822 224,822 (665,901) (707,211) 5,669,890 5,691,991 0.44 0.65 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. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Tax Levy for Fiscal Year $ 39,159 42,756 44,879 47,809 48,778 50,838 58,179 57,380 64,327 62,033 Collected within the Fiscal Year of the Levy $ Amount 37,858 41,728 43,688 46,431 47,105 49,408 55,876 55,221 62,237 60,309 Percentage of Levy 96.7% 97.6% 97.3% 97.1% 96.6% 97.2% 96.0% 96.2% 96.8% 97.2% Collections in Subsequent Years $ 728 755 657 943 1,059 1,274 1,761 1,604 1,079 - Table XII Total Collections to Date $ Amount 38,586 42,483 44,345 47,374 48,164 50,682 57,638 56,825 63,316 60,309 Percentage of Levy 98.5% 99.4% 98.8% 99.1% 98.7% 99.7% 99.1% 99.0% 98.4% 97.2% Source: "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 Funds. 159 Table of Contents 160 Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 City of Scottsdale, Arizona Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 City of Scottsdale, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands) Municipal Property Corporation Bonds $ 41,955 4,850 61,253 108,225 149,176 149,007 149,216 148,212 147,459 144,977 General Obligation Bonds $ 305,003 389,598 372,070 499,365 476,200 574,445 551,455 578,190 572,740 594,425 Revenue Bonds $ 10,990 8,475 5,815 2,990 - General Obligation Bonds $ 14,323 10,651 6,515 - Business-Type Activities Municipal Property Corporation Revenue Bonds Bonds $ 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 38,630 299,775 Table XIII Governmental Activities Scottsdale Preserve Special Authority Assessment Certificates of Bonds Bonds Participation $ 88,270 $ 11,140 $ 85,980 8,755 83,385 6,340 7,650 80,570 5,505 7,090 77,605 4,670 6,401 74,495 3,835 5,689 71,235 3,000 4,954 67,870 2,250 4,194 59,920 1,500 23,409 56,265 750 18,031 Capital Lease $ 179 139 97 53 7 - Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Table XVIII - Schedule of Demographic and Economic Statistics for personal income and population data. Total Primary Government $ 618,903 718,691 745,997 983,375 989,092 1,176,829 1,135,486 1,217,225 1,206,890 1,200,868 Percentage of Personal Income 7.09% 7.91% 7.90% 10.18% 10.29% 11.28% 11.86% 11.36% 11.45% 10.78% Community Facilities District Bonds $ 46,355 44,950 43,480 41,945 40,330 42,450 40,665 38,760 36,745 34,640 $ Per Capita 2,910 3,328 3,407 4,449 4,477 5,324 5,152 5,561 5,552 5,509 Contracts Payable $ 19,627 13,702 14,324 13,136 19,819 17,875 16,828 15,732 14,582 13,375 Capital Lease $ 172 141 - Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Governmental Activities General Obligation Bonds $ 305,003,000 389,598,000 372,070,000 499,365,000 476,200,000 574,445,000 551,455,000 578,190,000 572,740,000 594,425,000 Less: Amounts Available in Debt Service Fund $ 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 5,789,013 $ Total 295,996,671 386,129,220 366,468,261 486,929,203 466,817,298 564,924,743 540,613,817 573,257,567 565,952,877 588,635,987 Percentage of Total Taxable Assessed Value of Property (1) 8.4% 9.7% 8.4% 10.3% 9.0% 7.8% 6.5% 6.8% 7.7% 10.3% 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 XI for property value data. See the Schedule of Demographic and Economic Statistics (Table XVIII) for population data. (1) Percentage of Total Taxable Assessed Value of Property was corrected using the information from table XI for years Fiscal Years 2006-2010. Table XIV $ Per Capita 1,391.62 1,787.89 1,673.49 2,203.00 2,113.18 2,555.86 2,452.76 2,618.95 2,603.70 2,700.60 161 Table of Contents 162 City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2012 (in thousands) Governmental Unit Debt repaid with property taxes 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 Debt Outstanding $ 671,250 129,200 4,185 252,050 248,465 17,900 12,745 244,430 62,560 Table XV Estimated Percentage Applicable 14.4633% 0.0003% 4.6258% 69.0214% 32.7592% 61.8953% 3.2648% 0.3327% 0.0002% Estimated Share of Overlapping Debt $ Subtotal, overlapping debt City direct debt Total direct and overlapping debt 97,085 194 173,968 81,395 11,079 416 813 364,950 862,463 100.0000% 862,463 $ 1,227,413 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. City of Scottsdale, Arizona The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the county's taxable assessed value that is within the government's boundaries and dividing it by the county's total taxable assessed value. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (in thousands) Table XVIa Fiscal Year 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 2003 $ Total Net Debt Applicable to 20% Limit Legal 20% Debt Margin (Available Borrowing Capacity) $ Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit 467,921 $ 211,596 $ 139,901 33.88% $ 475,339 $ 238,531 $ 163,547 31.44% $ 554,905 $ 36.12% $ 74,984 $ 868,691 2006 313,786 40.22% 71,695 $ 795,104 2005 319,765 33.66% Total Net Debt Applicable to 6% Limit Legal 6% Debt Margin (Available Borrowing Capacity) $ 237,400 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 705,321 2004 260,607 195,808 24.86% 2008 2009 2010 2011 2012 947,151 $ 1,041,889 $ 1,448,765 $ 1,654,483 $ 1,681,200 $ 1,475,082 $ 1,138,398 372,545 363,455 424,865 413,095 499,945 498,490 524,675 678,434 $ 1,023,900 $ 1,241,388 $ 1,181,255 574,606 $ 39.33% $ 64,799 $ 2007 284,145 34.88% $ 126,820 $ 157,325 44.63% 312,567 29.33% $ 112,745 $ 199,822 36.07% 434,629 24.97% $ 149,580 $ 285,049 34.42% 496,345 29.74% $ 138,360 $ 357,985 27.88% $ 504,360 426,115 15.51% $ 33.79% $ 78,245 $ 976,592 442,524 46.09% $ 74,250 $ 368,274 16.78% 613,723 341,519 69,750 $ 271,769 20.42% 163 Table of Contents 164 City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2012 (in thousands) Table XVIb Legal Debt Margin Calculation for Fiscal Year 2012 Net Secondary Assessed Valuation as of June 30, 2012 $ 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 5,691,991 1,138,398 Debt applicable to limit: General Obligation Bonds 524,675 Legal 20% Debt Margin (Available Borrowing Capacity) $ 613,723 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 341,519 Debt applicable to limit: General Obligation Bonds Legal 6% Debt Margin (Available Borrowing Capacity) 69,750 $ 271,769 Source: City of Scottsdale City Treasurer - Finance and Accounting City of Scottsdale, Arizona 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. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (in thousands) Table XVII Water and Sewer Revenue Bonds Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Operating Revenue(1) $ 95,064 97,813 105,078 115,374 125,880 131,553 130,782 133,624 132,441 134,336 Less: Operating Expenses $ 46,991 49,662 56,413 56,329 64,089 66,077 71,236 70,165 77,456 78,837 Net Operating Revenue 48,073 48,151 48,665 59,045 61,791 65,476 59,546 63,459 54,985 55,499 Development Fee Revenue $ 17,648 21,574 20,155 24,071 17,878 15,280 3,043 3,126 3,859 3,073 Special Assessment Bonds Fiscal Year Ended June 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (1) Special Assessment Collections $ 1,970 2,558 2,016 1,106 1,825 895 821 765 733 719 Debt Service Principal $ 1,990 2,425 2,448 851 848 846 845 757 757 755 Debt Service Interest $ 279 492 360 275 235 197 158 121 86 52 Net Revenue $ 65,721 69,725 68,820 83,116 79,669 80,756 62,589 66,585 58,844 58,572 Highway User Revenue Bonds Debt Service Principal $ 2,715 2,860 2,630 3,330 3,475 3,640 3,660 3,115 3,220 3,380 Debt Service Interest $ 3,792 3,159 3,570 3,182 2,997 2,582 2,507 2,351 2,199 2,056 Coverage 10.10 11.58 11.10 12.76 12.31 12.98 10.15 12.18 10.86 10.77 Scottsdale Preserve Authority Bonds Coverage(2) 0.87 0.88 0.72 0.98 1.69 0.86 0.82 0.87 0.87 0.89 0.2 % and 0.15% Sales Tax(3) $ 13,377 16,981 31,301 35,483 37,281 35,604 29,121 26,416 27,199 28,809 Debt Service Principal $ 2,315 2,445 2,595 2,815 2,965 3,110 3,260 3,365 3,470 3,655 Debt Service Interest $ 4,566 3,825 4,437 3,997 3,843 3,676 3,502 3,374 2,471 2,835 Debt Service Principal $ 2,395 2,515 2,660 2,825 2,990 - Debt Service Interest $ 715 592 460 317 165 - Coverage 4.22 4.52 4.72 5.00 5.32 N/A N/A N/A N/A N/A Municipal Property Corporation Bonds Coverage 1.94 2.71 4.45 5.21 5.48 5.25 4.31 3.92 4.58 4.44 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 V 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. Highway User Tax Revenue $ 13,137 14,034 14,738 15,708 16,778 16,123 14,083 13,342 13,396 10,885 Excise Tax(5) $ 157,302 165,799 180,005 202,081 218,205 216,066 185,801 170,638 168,641 171,075 Debt Service Principal(4) $ 9,145 7,170 8,265 5,995 5,305 5,584 7,570 9,715 9,785 11,841 Debt Service Interest(4) $ 3,045 1,108 6,413 10,017 10,057 13,988 19,482 18,415 22,185 21,141 Coverage 12.90 20.03 12.26 12.62 14.20 11.04 6.87 6.07 5.27 5.19 165 Table of Contents 166 City of Scottsdale, Arizona Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Population(1) 212,699 215,969 218,984 221,030 220,907 221,031 220,410 218,888 217,365 217,965 Personal Income(2) (in thousands) $ 8,730,001 9,091,434 9,448,739 9,661,891 9,611,876 10,428,443 9,573,949 10,715,673 10,542,642 11,135,832 Per Capita Personal Income(3) $ 41,044 42,096 43,148 43,713 43,511 47,181 43,437 48,955 48,502 51,090 Median Age(4) 41.0 41.0 41.0 41.0 41.0 41.0 41.0 45.4 45.4 45.4 Table XVIII Charter and Public School Enrollment(5) 27,479 27,328 26,559 27,000 26,653 26,567 27,029 27,093 27,116 28,818 Year-End Average Unemployment Rate(6) 4.1% 3.8% 3.2% 3.0% 2.6% 2.3% 3.9% 6.8% 7.2% 6.8% Data Sources and Notes: (1) July 1 Population estimate, State of Arizona Office of Employment and Population Statistics, as published on July 7, 2011 and December 15, 2011. (2) Calculated by multiplying per capita personal income by total population divided by 1,000. (3) Sites USA (estimate) 2003-2010; U.S. Census, American Community Survey 2006-2010 used for FY 2011 and FY 2012 estimates. (4) U.S. Census; 2003-2009 based on Census 2000; 2010-2012 based on Census 2010. (5) Arizona Department of Education. For 2012, Arizona Department of Education Oct. 1 total enrollment for 9 charter and 31 public schools located within Scottsdale city boundaries. (6) Arizona Office of Employment and Population Statistics, in cooperation with the U.S. Dept of Labor, Bureau of Labor Statistics, Local Area Unemployment Statistics. For calendar year that ended within the fiscal year. For example, FY 2012 is for Calendar Year 2011. City of Scottsdale, Arizona Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago 2012 Employer Scottsdale Healthcare Corporation Scottsdale Unified School District General Dynamics C4 Systems City of Scottsdale CVS - CareMark (2) Mayo Clinic The Vanguard Group Scottsdale Insurance Company Troon Golf International Cruise and Excursion Rural Metro Corporation Scottsdale Princess Resort Total Employees 6,700 3,600 2,700 2,455 2,238 2,061 1,899 1,501 1,342 1,000 25,496 Rank 1 2 3 4 5 6 7 8 9 10 - Percentage of Total City Employment(1) 6.04% 3.24% 2.43% 2.21% 2.02% 1.86% 1.71% 1.35% 1.21% 0.55% 22.62% Table XIX 2003 Employees 4,444 3,050 3,000 1,848 2,218 3,748 1,050 1,153 1,200 1,100 22,811 Source: City of Scottsdale Economic Trends Report, September 2003 and Economic Development Department communications with employers, September 2012. (1) Annual Employment according to the Arizona Office of Employment and Population Statistics was 110,984 in 2011, and was 119,088 in 2003. (2) CVS Caremark was known as Advanced PCS in 2003 when it was acquired by CareMark in 2003. Caremark was acquired by CVS in 2007. Rank 1 3 4 6 5 2 10 8 7 9 Percentage of Total City Employment(1) 3.73% 2.56% 2.52% 1.55% 1.86% 3.15% 0.88% 0.97% 1.01% 0.92% 19.15% 167 Table of Contents 168 City of Scottsdale, Arizona Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Table XX Full-time Equivalent Employees as of June 30 Function Administrative Services Aviation Citizen and Neighborhood Resources Communications and Public Affairs Community and Economic Development Community Services Economic Vitality Financial Services Finance and Accounting General Government Human Resources(2) Information Technology(2) Municipal Services Planning and Development Planning/Neighborhood/Transportation Public Safety Public Safety - Fire Public Safety - Police Public Works Solid Waste Transportation Water Resources Total 2003 2004 2005 2006 2007 (1) 214.5 487.6 188.5 459.5 12.4 32.0 12.4 36.0 13.0 39.0 15.0 40.0 14.7 15.0 516.1 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 54.0 110.5 195.5 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 83.5 141.0 205.2 999.6 224.0 981.6 167.5 953.6 957.6 933.6 248.5 85.8 233.0 89.0 197.0 89.0 206.0 89.0 205.0 89.0 169.0 2,797.9 180.0 2,754.1 189.0 2,537.7 189.0 2,547.5 202.0 2,454.9 260.7 630.1 259.0 676.1 268.0 705.6 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 2,722.2 489.3 47.0 2012(3) 138.8 14.0 12.4 35.0 3.7 590.1 2010 35.0 14.0 2011 35.0 14.0 2009 38.5 16.0 2.7 590.1 2008 City of Scottsdale, Arizona Source: The City of Scottsdale, Arizona's Budget Department. (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. (2) In FY2012, Human Resources and Information Technology were absorbed into the Division's Administrative Services function. (3) In FY2012, Meter Reading Operations was transferred from Finance and Accounting to Water Resources. Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI 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 and Accounting (3) # of Accounts Payable checks issued # of customer contacts (utilities, taxes and licensing) City Manager % 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 Total ad value equivalency generated(4) Acres of land acquired for inclusion in the McDowell Sonoran Preserve Administrative Services Human Resources Citywide turnover HR operating cost as a % of City payroll Information Technology # 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) Purchasing # of purchase orders Community Services # attending Parks and Recreation facilities, Human Services facilities and Libraries annually # of square feet of medians and rights of way maintained 2003 2004 2005 2006 2007 2008 2009 2010(2) 2011 2012 26% 30% 30% 32% 34% 35% 34% 32% 40% 30% 6 9 10 15 10 11 13 16 17 14 466 456 651 79 1,011 99 1,138 90 1,173 90 1,158 71 1,301 87 1,241 66 1,185 63 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 / 108,003 102,953/ 100,929 35,344 218,185 34,547 218,185 37,954 208,037 41,194 212,888 42,000 216,764 38,000 230,143 36,442 176,680 33,620 175,918 45,592 255,124 45,112 246,319 No Survey 90% 93% No Survey 90% No Survey No Survey No Survey 94% No Survey 267 N/A 182 N/A 247 N/A 205 N/A 220 N/A 220 N/A N/A N/A 240 N/A 281 N/A N/A 20,000 660 450 2,600 138 251 648 25 399 2,001 4,419 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% 7.1% 1.3% 32,244 129,000 2,319,000 25,400,000 654,100 1,200,000 2,200,000 2,100,000 1,775,000 1,870,000 4.0 5.0 7.0 30.0 30.0 80.0 147.8 170.0 266.0 266.0 10,212 12,254 9,611 10,778 9,460 8,224 6,234 5,748 5,310 5,018 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 8,471,649 23,475,510 (continued on next page) 169 (continued) Table of Contents 170 City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI Fiscal Year City of Scottsdale, Arizona Division Community and Economic Development 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(5) % 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)(6) Economic Development Targeted job creation number of companies / number of jobs Hotel/Motel average occupancy rate Bed Tax growth (% annual change) # of Downtown special events coordinated Aviation Scottsdale Airport - Takeoffs and Landings WestWorld # of special events at WestWorld Public Safety Police Scottsdale Uniform Crime Report, Part 1 (crimes per thousand)(7) 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 Fire # of responses to calls for emergency services Responses per capita Average response time to urban calls for service (minutes) 2003 2004 2005 2006 2007 2008 2009 2010(2) 2011 2012 N/A 45 25 15 20 20 7 7 6 6 N/A N/A 90% 97% 100% 98% 100% 99% 100% 99% 100% 99% 100% 100% 100% 100% 100% 100% 100% 100% 10,000 15% 10,000 15% 11,336 37% 13,137 5% 16,900 5% 15,570 5% 20,568 -56% 16,452 5% 16,000 5% 16,500 5% 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 No Survey 2,499,000 124 150 270 322 375 475 N/A 8,578 10,397 10,500 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% 95 8/ 1,465 61.5% 5% 105 197,483 195,276 208,106 210,481 185,241 201,958 169,972 156,896 136,089 146,058 47 53 57 49 43 44 31 28 20 20 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 N/A 29.6 N/A 31.9 N/A 32.8 N/A 6:30 6:27 6:12 N/A 6:06 5:07 5:07 5:01 4:57 5:11 60% 96% 98% 98% 100% 100% 100% 100% 100% 100% 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 26,344 0.10 4:18 (continued) (continued) Table of Contents City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI Fiscal Year Division 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(8) 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) # of water meters read annually(9) 2003 2004 2005 2006 2007 2008 2009 2010(2) 2011 2012 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 3,006,106 183 79,508 3,029,606 162 79,787 1,900 1,514 1,718 2,000 2,100 2,200 1,923 1,497 2,573 2,591 80,454 67.6 14.2 70,732 24.5 971,508 81,947 70.0 11.8 72,034 24.2 986,080 83,511 67.7 11.6 73,232 25.5 1,000,870 86,399 73.1 11.5 74,143 24.2 1,015,662 86,728 72.1 11.4 76,092 25.3 1,030,368 87,248 73.7 11.7 76,849 23.9 1,044,205 87,349 69.4 9.6 77,363 19.7 1,049,008 87,409 68.4 11.2 77,605 21.0 1,050,067 87,458 67.9 8.7 77,850 21.1 1,051,089 87,577 69.2 6.9 78,018 20.9 1,043,335 Source: The City of Scottsdale's Budget Office and applicable City divisions. 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. (1) (2) In FY 2010, 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 and Accounting," moving Payroll and Risk Management from Human Resources into the Finance and Accounting Department, and moving Tax Audit and Purchasing into a new division named Administrative Services. (4) Effective FY 2012 established more appropriate performance measures for Office of Communication activities and products (ad value equivalency). (5) During FY 2008/09, the Neighborhood Watch program was reviewed; participants that were no longer eligible for the program were removed, thus reducing the numbers. (6) 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. Starting June 2009, the process was automated through the Traffic Management Center. (7) The crime per thousand increase reflects a recalculation in population with the Census 2010 as a basepoint, rather than an increase in crime. In addition, crime stats are for the prior calendar year end, rather than fiscal year end. (8) The statistic for "# of citizens serviced annually by Household Hazardous Waste Collection program" number of events was restored in FY 2010/11. During FY 2008/09 and FY 2009/10 the number of events were reduced as a budget savings initiative. (9) Effective July 2011, the City Council approved placing Meter Reading under the control of the Water Resources Division. 171 (continued) Table of Contents 172 Function Public Safety Police: Stations Police Vehicles Fire Stations Highways and Streets Square Yards of Pavement Equivalent 12' Wide Lane Miles Traffic Signals Culture and Recreation Parks Parks Acreage Swimming Pools Tennis Courts Community Centers Water Water Mains (miles) Fire Hydrants Sewer Sanitary Sewers (miles) Storm Sewers (miles) Source: City of Scottsdale, Arizona departments. City of Scottsdale, Arizona Capital Asset Statistics by Function Last Ten Fiscal Years 2003 2004 2005 2006 2007 Table XXII Fiscal Year 2008 2009 2010 2011 2012 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 4 352 15 19,100,000 2,713 253 19,231,553 2,732 258 19,231,553 2,732 262 19,660,273 2,793 276 20,393,288 2,897 276 20,562,017 2,921 285 20,644,388 2,932 295 20,873,951 2,965 289 20,828,414 2,959 289 20,852,234 2,962 300 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 42 975 4 55 5 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 2,064 10,729 1,262.0 68.7 1,280.0 137.7 1,287.4 142.8 1309.0 148.0 1,350.0 153.5 1,352.6 157.2 1,360.0 166.9 1,421.0 164.0 1,421.0 163.0 1,422.0 168.0 City of Scottsdale, Arizona Table of Contents Table of Contents City of Scottsdale, Arizona Finance and Accounting Division (480) 312-2437 Visit our website www.ScottsdaleAZ.gov/Finance