Compr ehensi v eAnnual Fi nanci al Repor t Ci t yofScot t sdal e, Ar i z ona Fort heFi scal YearEndedJune30, 2015 City of Scottsdale, Arizona Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015 Prepared by: City Treasurer’s Office Jeffery M. Nichols, CPA 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, 2015 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal – City Treasurer .................................................................................................................................. 1 Certificate of Achievement – Government Finance Officers Association ..................................................................... 7 List of Elected and Appointed Officials ............................................................................................................................... 9 Organizational Chart ..............................................................................................................................................................11 FINANCIAL SECTION Independent Auditors’ Report ..............................................................................................................................................13 Management’s Discussion and Analysis ..............................................................................................................................17 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position..........................................................................................................................................36 Statement of Activities ...............................................................................................................................................38 Fund Financial Statements: Balance Sheet – Governmental Funds .....................................................................................................................39 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position .........................................................................................................................................................41 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ...............................................................................................................................................42 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .........................................................44 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund .......................................................................................................................45 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund ..........................................................................................47 Statement of Fund Net Position – Proprietary Funds ..........................................................................................48 Reconciliation of the Proprietary Funds Statement of Fund Net Position to the Statement of Net Position ......................................................................................................................................50 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds.....................................................................................................................................................51 Reconciliation of the Proprietary Funds Statement of Revenue, Expenses, and Changes in Fund Net Position to the Statement of Activities..........................................................................52 Statement of Cash Flows – Proprietary Funds.......................................................................................................53 Statement of Fiduciary Net Position – Fiduciary Funds.......................................................................................55 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ..................................................................56 Notes to Financial Statements: I. Summary of Significant Accounting Policies ..........................................................................................................57 II. Reconciliation of Government-wide and Fund Financial Statements ................................................................68 III. Stewardship, Compliance and Accountability .........................................................................................................76 City of Scottsdale, Arizona Page IV. Detailed Notes on All Funds: A. Cash and Investments ..................................................................................................................................79 B. Receivables .....................................................................................................................................................82 C. Capital Assets.................................................................................................................................................83 D. Interfund Balances and Interfund Transfers ............................................................................................85 E. Leases ..............................................................................................................................................................86 F. Service Concession Arrangements.............................................................................................................88 G. Bonds, Loans, and Other Payables. ............................................................................................................88 V. Other Information: A. Risk Management........................................................................................................................................100 B. Contingent Liabilities .................................................................................................................................100 C. Subsequent Events......................................................................................................................................101 D. Joint Venture ................................................................................................................................................101 E. Polution Remediation .................................................................................................................................101 F. Related Organization ..................................................................................................................................102 G. Retirement and Pension Plans ..................................................................................................................103 H. Other Postemployment Benefits ..............................................................................................................118 I. Postemployment Benefits Other Than Pensions ...................................................................................119 Required Supplementary Information ...............................................................................................................................122 Notes to Required Supplementary Information................................................................................................................131 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds ..................................................................................135 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ..............................................................................................136 Combining Balance Sheet – Nonmajor Special Revenue Governmental Funds.....................................................137 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Special Revenue Governmental Funds.................................................................139 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Transportation – Special Revenue Fund ................................................................................................................141 Community Development Block Grant – Special Revenue Fund .....................................................................142 HOME – Special Revenue Fund .............................................................................................................................143 Grants – Special Revenue Fund ..............................................................................................................................144 Section 8 – Special Revenue Fund ..........................................................................................................................145 Preserve Privilege Tax – Special Revenue Fund ...................................................................................................146 Streetlight Districts – Special Revenue Fund.........................................................................................................147 Special Programs – Special Revenue Fund ............................................................................................................148 Tourism Development – Special Revenue Fund...................................................................................................149 Combining Balance Sheet – Nonmajor Debt Service Governmental Funds ..........................................................150 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Debt Service Governmental Funds..............................................................151 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: General Obligation Bond Debt Service Fund ......................................................................................................152 Municipal Property Corporation Bond Debt Service Fund ...............................................................................153 Debt Service Stabilization Debt Service Fund ......................................................................................................154 Scottsdale Preserve Authority Bond Debt Service Fund ....................................................................................155 City of Scottsdale, Arizona Page Combining Balance Sheet – Nonmajor Capital Projects Governmental Funds .....................................................156 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Capital Projects Governmental Funds .................................................................157 Combining Statement of Fund Net Position – Internal Service Funds...................................................................159 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds. ........................................................................................................160 Combining Statement of Cash Flows – Internal Service Funds ...............................................................................161 Combining Statement of Fiduciary Net Position – Fiduciary Funds .......................................................................163 Combining Statement of Changes in Assets and Liabilities – Agency Funds ........................................................164 Other Supplementary Information: Schedule of Changes in Long-Term Debt ....................................................................................................................166 STATISTICAL SECTION Financial Trends Net Position by Component – Last Ten Fiscal Years (accrual basis of accounting) ............................................. 170 Changes in Net Position – Last Ten Fiscal Years (accrual basis of accounting) .................................................... 171 Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting)..................................................................................................................... 174 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting)..................................................................................................................... 175 Tax Revenue by Source – Last Ten Fiscal Years (modified accrual basis of accounting) .................................................................................................................... 178 Revenue Capacity Taxable Sales Subject to Privilege (Sales) Tax by Category – Last Ten Fiscal Years .............................................. 179 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years............................................................................. 180 Sales Tax Revenue Payers by Industry – Current Year and Nine Years Ago .......................................................... 181 Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years ......................................... 182 Principal Property Taxpayers – Current Year and Nine Years Ago ......................................................................... 183 Assessed Value of Taxable Property – Last Ten Fiscal Years. .................................................................................. 184 Property Tax Levies and Collections – Last Ten Fiscal Years ................................................................................... 185 Debt Capacity Ratios of Outstanding Debt by Type – Last Ten Fiscal Years .................................................................................. 186 Ratios of Net General Bonded Debt Outstanding – Last Ten Fiscal Years ........................................................... 187 Direct and Overlapping Governmental Activities Debt as of June 30, 2015 ......................................................... 188 Legal Debt Margin Information – Last Ten Fiscal Years .......................................................................................... 189 Pledged-Revenue Coverage – Last Ten Fiscal Years ................................................................................................... 191 Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years ............................................................................... 192 Principal Employers – Current Year and Nine Years Ago ........................................................................................ 193 Operating Information Full-time Equivalent City Government Employees by Function – Last Ten Fiscal Years ................................... 194 Operating Indicators by Division – Last Ten Fiscal Years ........................................................................................ 195 Capital Asset Statistics by Function – Last Ten Fiscal Years ..................................................................................... 198 City of Scottsdale, Arizona City of Scottsdale, Arizona October 26, 2015 To the Honorable Mayor, Members of the City Council and Citizens of the City of Scottsdale, Arizona: The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2015 is submitted in accordance with City Charter and state statute. Both the City Charter and state statute require that the City issue annually a report on its financial position and activity, and that this report be audited by certified public accountants independent of the City government. Management assumes full responsibility for the completeness and reliability of the information contained 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 Letter of any material misstatements. To the best of our knowledge and belief, the enclosed Transmittal data is accurate in all material aspects and is reported in a manner that presents fairly the financial position and results of operations of the various funds and For the Fiscal Year Ended June 30, 2015 component units of the City. City of Scottsdale Scottsdale, Arizona The City contracted with Heinfeld, Meech & Co., P.C., a firm of Certified Public Accountants, to perform the annual independent audit. The auditors expressed an opinion that the City’s financial statements for the fiscal year ended June 30, 2015 are fairly stated in conformity with accounting principles in the United States. This is the most favorable conclusion and is commonly known as an unmodified or “clean” opinion. The independent auditors’ report is located at the front of the financial section of this report. In addition, Heinfeld, Meech & Co., P.C. audited the City’s major program expenditures of federal funds for compliance with the Federal Single Audit Act. The report of the Single Audit is published separately from this report and may be obtained upon request. This letter of transmittal provides a non-technical summary of City finances, economic prospects and achievements. 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. The MD&A complements this letter of transmittal and should be read in conjunction with it. CITY OF SCOTTSDALE PROFILE History - Scottsdale was founded in 1888 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. City of Scottsdale, Arizona 1 Current Profile - Scottsdale is centrally located in Maricopa County, Arizona, with its boundaries encompassing 184.5 square miles, stretching 31 miles from north to south, and 11.4 miles at its widest point. 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. At July 1, 2015 the City’s population was estimated at 228,300 residents, making it the sixth largest municipality by population in Arizona. Government and Organization - 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 appoints 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 day-to-day City operations. The City provides a full range of municipal services including police and fire protection, sanitation service, water and sewer services, construction and maintenance of streets, and recreational activities including libraries and cultural events. Budgetary Controls - 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. Three 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 2014/15, 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 Business Scottsdale has a diverse economy built on medical research, high-tech innovation, tourism and corporate headquarters. The Scottsdale Airpark is one of the largest employment centers in the State of Arizona with more than 2,500 businesses and 41,000 employees in over 2 million square feet of commercial space. The high-tech innovation center SkySong, located just a few miles from downtown, is designed to help companies grow through a unique partnership with nearby Arizona State University. Downtown Scottsdale is home to a number of technology and healthcare companies and one of the most successful shopping centers in the southwest United States – Scottsdale Fashion Square. Farther north, the Scottsdale Cure Corridor is a partnership of premier health care providers and biomedical companies seeking to advance medicine and patient care through cutting-edge research. 2 City of Scottsdale, Arizona Tourism Tourism is one of Scottsdale’s largest and most vibrant industries, and is a significant contributor to the City’s economy. With a variety of lodging properties in the area, including several world-class resorts and “boutique” hotels, along with spectacular spas, trend-setting dining and one-of-a kind Sonoran desert golf courses, Scottsdale is one of the most popular tourist destinations in Arizona. Sales Tax Scottsdale’s largest revenue source is sales tax generated from a 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 continues to see growth in its municipal sales tax revenues with a year-over-year increase of 5.5 percent in fiscal year 2014/15, with the highest increases occurring in the automotive, restaurant and hotel/motel categories. The Arizona Legislature passed a bill that required local municipal transaction privilege and affiliated excise taxes to be collected and administered by the Arizona Department of Revenue (ADOR) effective January 1, 2015; however, implementation has been delayed until mid-2016. When this does occur, the change may result in a temporary cash-flow impact to Scottsdale during the transition from Scottsdale’s administration and collection of the taxes to the ADOR. Property Values The City benefits from a robust assessed valuation of the properties contained within the City boundaries. These strong assessed valuations contribute to Scottsdale residents experiencing lower property tax rates and higher median housing values than many of the surrounding municipalities in the Phoenix metropolitan area. Scottsdale property owners will see a reduction in the City’s portion of their property tax bill in the coming year. This reduction is achieved through decreased tort recovery, reduced debt service payments and use of debt service reserves. 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 City anticipates a moderate increase in revenues over the next several years with a continued focus on efficient spending to maintain essential City services to the community such as police, fire, transportation and social services. 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 46 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 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; and statutory limitations and market factors affecting interest costs. In all cases, a long-term analysis is made considering the debt capacity that fits the financial wherewithal (and willingness) of our community to pay for the capital projects. Sizing of the City’s Capital Improvement Plan based on debt capacity in conjunction with conservatively estimated revenues helps stabilize per capita debt and lower annual debt service costs to the City over the long-term. The City 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.G. of the Notes to the Financial Statements for further information). The City will hold a special bond election in November 2015 for $95.96 million in General Obligation bonds to fund 20 projects identified by City Council. The estimated average annual tax rate for the proposed bond authorization is $0.11 per $100 of net assessed valuation used for secondary property tax purposes. 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. Scottsdale is one of a handful of cities in the nation to earn this distinction. 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 City of Scottsdale Bonded Debt Ratings As of June 30, 2015 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+ ACCOMPLISHMENTS AND PRIORITIES Highlights of activities and accomplishments for the fiscal year ended June 30, 2015 include the following:  Opened Scottsdale’s Museum of the West in Downtown Scottsdale  Replaced 13 diesel garbage trucks with compressed natural gas trucks  Improved parking, signage and trailhead access in northern Preserve  Completed bicycle lanes, medians and landscaping on Thomas Road from Scottsdale Road to Indian Bend Wash  Hosted Super Bowl XLIX events, including Fan Fest Scottsdale, which attracted more than 100,000 visitors  Opened multi-sensory room at community center that serves persons of all ages with disabilities The City of Scottsdale’s adopted fiscal year 2015/16 budget incorporates the priorities and policy direction expressed by the City Council over the past year. It balances modest projected increases in revenue with additional expenses in priority areas, primarily public safety. Key priorities include:  Continuing to work with residents, businesses and SkySong to revitalize the McDowell Road corridor  Providing strategic support of tourism and visitor events  Carrying out the comprehensive economic development strategy  Developing a transportation strategy that anticipates future needs  Preparing and adopting fiscally sustainable operating and capital budgets  Reinvesting in a high performance organization and work culture AWARDS AND ACKNOWLEDGEMENTS Certificates of Achievement 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, Arizona for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2014, marking the fortysecond consecutive year the City has achieved this prestigious recognition. City of Scottsdale, Arizona 5 In order to be awarded a Certificate of Achievement, a government must 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. Additionally, the City of Scottsdale received the “Distinguished Budget Presentation Award” for the fiscal year beginning July 1, 2014 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, 2015. Acknowledgments The preparation of this report would not have been possible without the talent, effort and dedication of the Accounting and Finance departments and the many members of other departments who responded so positively to the requests for detailed information that accompanies each annual audit. 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, Jeffery M. Nichols, CPA City Treasurer/Chief Financial Officer 6 City of Scottsdale, Arizona City of Scottsdale, Arizona 7 This page is intentionally blank. 8 City of Scottsdale, Arizona City of Scottsdale, Arizona List of Elected and Appointed Officials City Council W.J. “Jim” Lane, Mayor Suzanne Klapp Virginia Korte Kathy Littlefield Linda Milhaven Guy Phillips David N. Smith Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 Charter Officers Fritz Behring, City Manager Bruce Washburn, City Attorney Sharron Walker, City Auditor Carolyn Jagger, City Clerk Joseph Olcavage, Presiding Judge Jeffery M. Nichols, City Treasurer/Chief Financial Officer City of Scottsdale Scottsdale, Arizona City of Scottsdale, Arizona 9 This page is intentionally blank. 10 City of Scottsdale, Arizona City of Scottsdale, Arizona Citizens of Scottsdale Mayor and City Council Organization Chart Boards, Commissions, Task Forces City Attorney City Auditor City Clerk City Manager City Treasurer Civil Accounting Prosecution Budget Victim Services Business Services Presiding Judge City Court Finance Risk Management Public Safety Police Fire Administrative Services Community & Economic Development Information Technology Purchasing Public Works Human Services Capital Projects Airport Libraries Facilities Economic Development Parks & Recreation Fleet Planning & Development Preserve Communications Human Resources Community Services Tourism & Events Transportation WestWorld Solid Waste Street Operations Water Resources Planning & Engineering Reclamation Services Water Quality Water Services 11 12 City of Scottsdale, Arizona 3033 N. Central Ave., Suite 300 Phoenix, Arizona 85012 Tel (602) 277-9449 Fax (602) 277-9449 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Scottsdale, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Scottsdale, Arizona (City), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com City of Scottsdale, Arizona 13 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, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, for the year ended June 30, 2015, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and net pension liability and other post employment benefit plan information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, Combining and Individual Fund Statements and Schedules, Other Supplementary Information and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Combining and Individual Fund 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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Statements and Schedules and Other Supplementary Information are fairly stated in all material respects in relation to the basic financial statements as a whole. 14 City of Scottsdale, Arizona The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 26, 2015, on our consideration of City of Scottsdale, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Scottsdale, Arizona’s internal control over financial reporting and compliance. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants October 26, 2015 City of Scottsdale, Arizona 15 16 City of Scottsdale, Arizona FINANCIAL HIGHLIGHTS  The City’s total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources at the close of fiscal years 2015 and 2014 by $4.10 billion and $4.34 billion (net position), respectively. Of these amounts, $233.6 million and $454.3 million respectively, represent unrestricted net position which may be used to meet the government’s ongoing obligations to citizens and creditors. The City’s unrestricted net position was negatively impacted this fiscal year with the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68), which required the City to record its proportionate share of unfunded pension liabilities for pension plans in which it participates. More information on the City’s pension plans can be found in Note V. G. on pages 103-118 of this report.  The City’s total net position decreased in fiscal year 2015 by $16.9 million compared to an increase in net position of $15.8 million during fiscal year 2014. Total expenses exceeded total revenues in the current year primarily due to the pension expense recorded as required for implementation of GASB 68 and a reduction in capital grants and contributions received.  As of June 30, 2015 and 2014, the City’s governmental funds reported combined ending fund balances of $213.2 million and $185.5 million, respectively. Approximately 24 percent of the current year amount ($50.2 million) is available for spending at the City’s discretion (unassigned fund balance).  At the end of the current fiscal year, unrestricted fund balance (the total of the committed and unassigned components of fund balance) for the General Fund was $56.0 million or approximately 24 percent of total General Fund expenditures of $235.2 million.  The City’s total long-term liabilities increased by $274.2 million to $1.62 billion during the fiscal year. This increase is due primarily to the net pension liability of $272.1 million the City was required to record with the implementation of GASB 68. City of Scottsdale, Arizona Management’s Discussion and Analysis This section of the City of Scottsdale, Arizona’s (the City) Comprehensive Annual Financial Report (CAFR) presents a narrative overview and comparative analysis of the financial activities of the City for the fiscal years ended June 30, 2015 and 2014. Readers are encouraged to consider the information presented here in conjunction with the basic financial statements that immediately follow, along with the letter of transmittal and other portions of this CAFR. For the Fiscal Year Ended June 30, 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS 17 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which comprise three components: (1) Government-wide Financial Statements (2) Fund Financial Statements (3) Notes to the Financial Statements This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. Relationship Between Comprehensive Annual Financial Report (CAFR) and Basic Financial Statements and Required Supplementary Information (RSI) General Information on the government structure, Introductory services and environment Section + Management's Discussion and Analysis CAFR Government-wide Financial Statements Basic Financial Statements and RSI Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements Financial Section Notes to the Financial Statements Additional Required Supplementary Information Information on individual funds and other supplementary information not required by GAAP + Trend data and nonfinancial data 18 Statistical Section City of Scottsdale, Arizona The statement of net position presents financial information on all of the City’s assets/deferred outflows of resources and liabilities/deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position 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. 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 and streetlight districts. The business-type activities of the City include water, sewer, solid waste management and aviation operations. Management’s Discussion and Analysis 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, to provide information about the City as a whole, 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 major fund financial statements also display the City’s most significant funds. For the Fiscal Year Ended June 30, 2015 Government-wide Financial Statements The government-wide financial statements include not only the City itself (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 Scottsdale City Treasurer’s Office, 7447 East Indian School Road, Suite 210, Scottsdale, Arizona 85251. The government-wide financial statements can be found on pages 36-38 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 19 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis 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, and provide the 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. This comparison 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 (general, special revenue, debt service and capital projects). Information is presented separately in the governmental funds balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, General Obligation Bond Debt Service Fund, and the General Capital Improvement Plan (CIP) 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 39-47 of this report. Proprietary Funds Proprietary funds are generally used to account for services for which the City charges customers; either outside customers or internal units/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 its water, sewer, solid waste and aviation services. 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 health and general liability insurance activities. Because these services predominantly benefit internal units or divisions of the City rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the propriety fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in a separate section of this report. The basic proprietary fund financial statements can be found on pages 48-54 of this report. 20 City of Scottsdale, Arizona The basic fiduciary fund financial statements can be found on pages 55-56 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 57-121 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City’s portion of the net pension liability, schedule of contributions to the pension plans and progress in funding its obligation to provide other post-employment benefits (OPEB). Required supplementary information and notes to this section can be found on pages 122-131 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 two agency funds, which are reported under the fiduciary funds. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. For the Fiscal Year Ended June 30, 2015 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 133-164. Other Supplementary Information The supplemental schedule of changes in long-term debt provides a comprehensive overview of the City’s total debt and can be found on pages 165-168. Statistical Information The statistical section, found on pages 169-198, 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 position 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/deferred outflows of resources and liabilities/deferred inflows of resources 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. These two statements report the City’s net position and changes in net position. The change in net position 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. City of Scottsdale, Arizona 21 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis Analysis of Net Position As noted earlier, net position may serve as a useful indicator of a government’s financial position. For the City, total assets and deferred outflows of resources exceeded liabilities by $4.10 billion and $4.34 billion at the close of the fiscal years 2015 and 2014, respectively. The following table is a condensed summary of the City’s net position for governmental and businesstype activities: Net Position June 30, 2015 and 2014 (in thousands) Governmental Activities 2015 2014 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current and other assets Capital assets Total assets Total deferred outflows of resources Total assets and deferred outflows of resources $ 489,053 $ 3,574,505 4,063,558 75,785 4,139,343 470,224 3,609,808 4,080,032 19,872 4,099,904 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Long-term liabilities outstanding Other liabilities Total liabilities Total deferred inflows of resources Total liabilities and deferred inflows of resources 1,170,661 175,711 1,346,372 31,681 1,378,053 943,451 180,791 1,124,242 1,124,242 NET POSITION Net investment in capital assets Restricted Unrestricted Total net position 2,663,269 117,485 (19,464) 2,761,290 $ 2,685,105 109,615 180,942 2,975,662 $ Business-Type Activities 2015 2014 $ 425,957 $ 1,358,970 1,784,927 11,043 1,795,970 405,677 48,243 453,920 5,390 459,310 $ Total 409,555 1,373,850 1,783,405 3,660 1,787,065 $ 375,287 45,011 420,298 420,298 1,036,650 1,046,345 46,901 47,101 253,109 273,321 1,336,660 $ 1,366,767 $ 2015 2014 915,010 $ 4,933,475 5,848,485 86,828 5,935,313 879,779 4,983,658 5,863,437 23,532 5,886,969 1,576,338 223,954 1,800,292 37,071 1,837,363 1,318,738 225,802 1,544,540 1,544,540 3,699,919 164,386 233,645 4,097,950 $ 3,731,450 156,716 454,263 4,342,429 The largest portion (90.3 percent) of the City’s net position reflects its net investment in capital assets (such as land, buildings, water and sewer system, and streets and storm drains) less any related outstanding debt used to acquire those assets. These amounted to $3.70 billion and $3.73 billion at June 30, 2015 and 2014, 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. An additional portion (4.0 percent) of the City’s net position ($164.4 million at June 30, 2015 and $156.7 million at June 30, 2014) represents resources that are subject to external restrictions on how they may be used. Unrestricted net position (5.7 percent of the City’s total net position at June 30, 2015 and 10.5 percent at June 30, 2014), $233.6 million and $454.3 million, respectively, may be used to meet the government’s ongoing obligations to its citizens and creditors. Analysis of Changes in Net Position The City restated fiscal year 2015 beginning net position for both governmental and business-type activities due to GASB 68 and various capital asset adjustments. More information on these adjustments can be found on page 67 of this report. The City’s total net position decreased in fiscal year 2015 by $16.9 million compared to an increase in net position of $15.8 million during fiscal year 2014. Total expenses exceeded total revenues in the current year primarily due to the pension expense recorded as required for implementation of GASB 68 and a reduction in capital grants and contributions received. 22 City of Scottsdale, Arizona Governmental Activities 2015 2014 Business-Type Activities 2015 2014 $ $ Total 2015 2014 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 Other Total revenues EXPENSES General government: Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Interest on Long-Term Debt Bond Issuance Costs Water Utility Sewer Utility Airport Solid Waste Total expenses Increase (decrease) in net position before transfers Transfers Change in net position Net position - beginning Net effect of prior priod adjustments Net position - beginning restated Net position - ending City of Scottsdale, Arizona $ 45,656 $ 28,397 14,831 43,315 27,710 38,817 162,288 $ 11,726 168,436 22,019 $ 207,944 28,397 26,557 $ 211,751 27,710 60,836 66,229 191,631 46,183 10,133 1,372 13,829 418,261 64,770 183,872 43,152 9,563 1,274 8,422 420,895 169 1,346 175,529 154 964 191,573 66,229 191,800 46,183 10,133 2,718 13,829 593,790 64,770 184,026 43,152 9,563 2,238 8,422 612,468 790 927 6,103 792 5,682 1,828 5,088 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 445,730 (27,469) 6,579 (20,890) 840 1,042 5,810 754 5,705 864 6,069 43,597 134,626 127,026 55,190 17,552 576 35,486 998 436,135 (15,240) 6,202 (9,038) 95,958 44,352 3,703 20,911 164,924 10,605 (6,579) 4,026 91,496 45,421 4,014 19,608 160,539 31,034 (6,202) 24,832 790 927 6,103 792 5,682 1,828 5,088 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 95,958 44,352 3,703 20,911 610,654 (16,864) (16,864) 840 1,042 5,810 754 5,705 864 6,069 43,597 134,626 127,026 55,190 17,552 576 35,486 998 91,496 45,421 4,014 19,608 596,674 15,794 15,794 2,990,555 (5,855) 2,984,700 2,975,662 1,366,767 (34,133) 1,332,634 1,336,660 $ 2,975,662 (193,482) 2,782,180 2,761,290 $ $ 1,343,188 (1,253) 1,341,935 1,366,767 $ 4,342,429 (227,615) 4,114,814 4,097,950 $ Management’s Discussion and Analysis Changes in Net Position For the fiscal years ended June 30, 2015 and 2014 (in thousands) For the Fiscal Year Ended June 30, 2015 The reasons for this overall decrease are discussed in the governmental and business-type activities discussion herein, and are primarily a result of a decrease in charges for service and capital grants and contributions received and higher expenses than the prior fiscal year. Such amounts are included in the table that follows: 4,333,743 (7,108) 4,326,635 4,342,429 23 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis Governmental Activities Net position for governmental activities decreased $20.9 million after transfers during fiscal year 2015 compared to a decrease of $9.0 million after transfers in fiscal year 2014. Total revenues decreased $2.6 million or 0.63 percent from the prior fiscal year and expenses increased $9.6 million or 2.2 percent. Overall, expenses exceeded revenues resulting in a decrease in net position. A significant element of the decrease in net position before transfers for governmental activities from June 30, 2014 to June 30, 2015 was the current year pension expense for Public Safety and amortization of service concession arrangements recorded in Community and Economic Development. Also contributing were lower program revenues, specifically capital grants and contributions posting a year-over-year decrease of $24.0 million, or approximately 62 percent. This was the result of a reduction of $14.2 million in grants due to fewer projects funded by regional transportation sales taxes; receiving $8.0 million in state grant funding for Preserve land purchases in the prior year and no funding this year, and a decrease of approximately $2.0 million in capital contributions. General revenues such as property, franchise and privilege taxes are not shown by program, but are used to support program activities citywide. Total general revenues were $18.3 million or 5.9 percent higher in fiscal year 2015 compared with fiscal year 2014. Property taxes were slightly higher in fiscal year 2015 at $66.2 million compared to $64.8 million in fiscal year 2014. Business taxes, which include sales, use and franchise taxes, increased $7.8 million or 4.2 percent from the previous year. Sales and use tax revenue posted year-over-year growth of 4.4 percent in fiscal year 2015 indicating a sustained economic recovery. Sales tax categories with the largest increases over the prior year include automotive, restaurant and hotel/ motel categories. For governmental activities overall, without regard to program, business taxes, which includes sales and use taxes and franchise taxes (46 percent), are the largest single source of funds, followed by property taxes (16 percent), intergovernmental revenues (including state shared revenues) (13 percent), and charges for services (11 percent). Governmental Activities Revenues Fiscal Year 2014/15 (in thousands) Interest and Investment Income $1,372 0% Intergovernmental $56,316 13% Business Taxes $191,631 46% Capital Grants and Contributions $14,831 4% Other Revenue $13,829 3% 24 Charges for Services $45,656 11% Operating Grants and Contributions $28,397 7% Property Taxes $66,229 16% City of Scottsdale, Arizona 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. Expenses increased by $8.6 million or 6.8 percent during fiscal year 2015 due primarily to pension expense exceeding current year pension contributions by $6.2 million and increased personnel services costs in both the fire and police departments. The City’s Community Services Division is responsible for improving and maintaining facilities and sponsors services that provide opportunities for family interaction, cultural enrichment, 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. The division has five departments: Parks & Recreation, Human Services, Library Systems, Community Services Planning/Administration and Preserve Management. Overall, expenses were relatively flat with the prior fiscal year. Management’s Discussion and Analysis The Community and Economic Development Division is charged with stimulating economic activity and offering a diverse range of value-added programs to build, revitalize and sustain Scottsdale’s unique lifestyle and character. The division has six departments: Aviation, Economic Development, Planning & Development, Tourism & Events, Transportation and WestWorld. Overall, expenses increased by $4.3 million or 3.2 percent during fiscal year 2015, due primarily to additional personnel and other Super Bowl XLIX related costs for events that took place in the City, amortization cost and depreciation expense for streets. For the Fiscal Year Ended June 30, 2015 The Community and Economic Development Division is the largest expense function (31 percent) followed by the Scottsdale Police and Fire Departments, which together comprise the Public Safety Division (30 percent), and Community Services Division (12 percent). Business-Type Activities Net position for business-type activities increased by $4.0 million after transfers during fiscal year 2015 compared to $24.8 million after transfers in fiscal year 2014. Total revenues decreased by 8.4 percent or $16.0 million due to less revenue from charges for service and capital grants and contributions received over the prior year. Capital contributions are chiefly made up of utility development fees and contributed capital from developers. The significant reduction of 46.7 percent in this category was primarily due to a 65 percent decrease in development fee revenue; fees were significantly decreased in fiscal year 2015 due a shorter growth-related capital expansion planning period and less system growth-related capital improvement infrastructure. Additionally, contributed capital from developers decreased by 12 percent due to less general development. Overall, total revenues continue to exceed expenses resulting in an increase in net position for the fiscal year. As shown in the “Business-type Activities Revenues by Source” chart, charges for services provided the largest share of revenues (92 percent) followed by capital grants and contributions (7 percent), which are principally developer contributions and development fees. City of Scottsdale, Arizona 25 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2015 Business-type Activities Revenues by Source Fiscal Year 2014/15 (in thousands) Interest and Investment Income $1,346 1% Capital Grants and Contributions $11,726 7% Business Taxes and Other Income $169 0% Charges for Services $162,288 92% As shown in the “Business-type Activities Program Revenues and Expenses” chart, the largest of Scottsdale’s business-type activities, water and sewer utilities, had expenses of $96.0 million and $44.4 million, respectively, in fiscal year 2015, followed by solid waste with operating expenses of $20.9 million and airport $3.7million. Business-type Activites Program Revenues and Expenses Fiscal Year 2014/15 (in thousands) $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Water Utility Sewer Utility Program Revenues 26 Airport Solid Waste Program Expenses City of Scottsdale, Arizona The Airport Fund’s total expenses decreased by 7.7 percent in fiscal year 2015 compared to fiscal year 2014. The decrease was primarily driven by an asset loss in fiscal year 2014 that was not repeated in fiscal year 2015 offset by higher personnel services and fringe benefit costs and increased capital improvement project expenses. 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 153,000 take-offs and landings occurred last year at Scottsdale Airport. Management’s Discussion and Analysis The Solid Waste Fund’s total expenses increased by 6.6 percent in fiscal year 2015 compared to fiscal year 2014. The increase was primarily driven by higher personnel services and fringe benefit costs, fleet replacement, landfill contract and refuse container costs. The Solid Waste Department provided delivery of safe, efficient and environmentally sound refuse collection services to 80,785 residential customers in fiscal year 2015. For the Fiscal Year Ended June 30, 2015 The Water and Sewer Fund’s total expenses increased by 2.5 percent in fiscal year 2015 compared to fiscal year 2014. The increase was primarily driven by higher personnel services and fringe benefit costs and increased capital improvement project expenses offset by lower chemical, maintenance, advanced water treatment reverse osmosis and effluent costs. 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 88,905 water service connections to customers in fiscal year 2015. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Funds are created and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. Activity not required to be reported in a separate fund is included in the General Fund. Governmental funds are used to account for tax-supported activities. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable and non-spendable resources. Such information may be useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use, as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City itself, or the City Treasurer who has been delegated authority to assign resources for use for particular purposes by the City Council. 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 $213.2 million, an increase of $27.7 million in comparison to the balance at June 30, 2014 of $185.5 million. Approximately 24 percent or $50.2 million of this amount at June 30, 2015 constitutes unassigned fund balance. The remainder of fund balance is either nonspendable, restricted or committed to indicate that it is not available for new spending. City of Scottsdale, Arizona 27 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis Revenues for governmental functions totaled $412.0 million in fiscal year 2015, an increase of 1.3 percent ($5.2 million) from the previous year total of $406.8 million. In fiscal year 2015, expenditures for governmental functions totaled $480.7 million, an increase of 2.0 percent ($9.4 million) from the fiscal year 2014 total of $471.3 million. In the fiscal years ended June 30, 2015 and 2014, expenditures for governmental functions exceeded revenues by approximately $68.7 million and $64.5 million, respectively. The current year deficit is offset by a net $96.4 million from other financing sources and uses. 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 $56.0 million, while the total fund balance was $56.2 million; the unassigned and total balances for the General Fund at the end of fiscal year 2014 were $52.4 million and $52.6 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 23.8 percent of the total General Fund expenditures of $235.2 million in fiscal year 2015 and represented 22.9 percent of the total General Fund expenditures of $229.1 million in fiscal year 2014. Total fund balance represented 23.9 percent and 23.0 percent of total fund expenditures for fiscal years 2015 and 2014, respectively. Overall, the General Fund’s performance resulted in revenues exceeding expenditures in the fiscal year ended June 30, 2015 by $19.1 million. Key contributors to the positive variance were increases in privilege tax, building permit fees and state shared revenues. The General Fund’s fund balance increased in fiscal year 2015 by $3.6 million. The higher revenues received this fiscal year was the primary reason for the increase. 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 $12.2 million, an increase of $2.8 million from the $9.4 million as of June 30, 2014. The increase in fund balance was primarily due to other financing sources received on refunding of bonds. 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, community facility districts, MPC and preservation/transportation privilege taxes. At the end of the current fiscal year, the fund balance of the General CIP Construction Capital Projects fund was $26.2 million, an increase of $16.7 million from the $9.5 million at June 30, 2014. Lower capital outlay and higher transfers in were the primary contributors to the increase. Capital outlay expenditures in 2015 and 2014 were $18.2 million and $64.6 million, respectively. 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 2015 and 2014, the unrestricted net position for the Water and Sewer Utility Fund was $238.7 million and $250.1 million, respectively; the Airport Fund was $8.0 million and $8.6 million, respectively; and the Solid Waste Fund was $5.4 million and $14.2 million, respectively. The internal service funds, which are used to account for certain governmental activities, had unrestricted net position of $14.0 million and $17.4 million, respectively. The total growth in net position for the enterprise funds was $3.4 million and $24.4 million for fiscal years 2015 and 2014, respectively. Factors concerning the finances of these funds have been addressed previously in the discussion of the City’s business-type activities. 28 City of Scottsdale, Arizona The City’s final year-end budget differs from the original adopted budget primarily due to the following City Council approved contingency budget transfers:  Citywide expenditures related to Super Bowl XLIX  Preparation for the sale of city buildings  Citywide staff relocations  Unfavorable variance in Fire overtime  Unfavorable variance in Police photo enforcement Revenues were $10.3 million more than projected. The largest drivers of the greater than anticipated revenues were: 1) $3.7 million in privilege sales tax due to increased activity for construction (both single family and multi-family building projects) and increased sales of new and used motor vehicles. Additionally, privilege sales tax activity in the dining/entertainment category performed better than expected due in part to the Super Bowl and Pro Bowl events held in the Phoenix metro area; and 2) $2.4 million in building and related permit charges, which include building permits, right-of-way fees, plan review fees and engineering plan review fees, due to high valuation of building projects (mostly multi-family) and projects that had been approved in previous years but were just recently permitted. In addition, single family residential development activity increased. Management’s Discussion and Analysis 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. For the Fiscal Year Ended June 30, 2015 General Fund Budgetary Highlights Expenses were $2.6 million less than the revised budget largely due to newly hired positions within the Police Department at rates lower than the previous incumbents, which also created a favorable variance in Police retirement. Community Services had significant savings in full and part-time wages which was also due to employees being hired at lower rates than budgeted and due to seasonal jobs being used more efficiently allowing for other positions to remain vacant. Finally, banking services and fuel for fleet were less than the revised budget. Capital Assets and Debt Administration Capital Assets The City’s capital assets for its governmental and business-type activities as of June 30, 2015 and 2014 totaled to $4.93 billion and $4.98 billion, respectively (net of accumulated depreciation). This investment in capital assets includes 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 decrease in the City’s capital assets (net of accumulated depreciation) between fiscal years 2015 and 2014 was 1.0 percent and was due primarily to lower construction in progress. City of Scottsdale, Arizona 29 For the Fiscal Year Ended June 30, 2015 Management’s Discussion and Analysis 30 Capital Assets, Net of Depreciation June 30, 2015 and 2014 (in thousands) Land Buildings and Land Improvements Streets and Storm Drains Machinery and Equipment Water Rights Water System Sewer System Motor Vehicles and Equipment Maintained by Fleet Furniture, Fixtures, and Office Equipment Construction in Progress Total Governmental Activities 2015 2014 $ 1,858,868 $ 1,839,212 414,435 363,158 1,209,597 1,251,032 38,602 26,234 34,696 24,107 18,307 106,065 $ 3,574,505 $ 3,609,808 Business-Type Activities 2015 2014 $ 50,325 $ 48,821 15,813 16,871 2,946 14,390 87,171 87,171 774,006 791,540 405,116 404,607 157 199 29 94 23,407 10,157 $ 1,358,970 $ 1,373,850 Total 2015 2014 $ 1,909,193 $ 1,888,033 430,248 380,029 1,209,597 1,251,032 41,548 40,624 87,171 87,171 774,006 791,540 405,116 404,607 34,853 24,306 29 94 41,714 116,222 $ 4,933,475 $ 4,983,658 Major capital asset events during the current fiscal year included the following:  The Scottsdale’s Museum of the West project constructed a 40,000 square-foot museum and sculpture garden. Expenditures totaled $9.7 million this year. As of June 30, 2015, the inception to date expenditures for the project totaled $13.6 million against a budget of $13.6 million, leaving no remaining balance.  The TPC Clubhouse and Stadium Course Renovation project includes an expansion to the men’s bathroom, the current patio and meeting room areas, resurfacing the greens, irrigation system and lake bank repair. Expenditures totaled $4.9 million this year. As of June 30, 2015, the inception to date expenditures for the completed project totaled $13.8 million against a budget of $14.1 million, leaving a balance of $0.3 million.  The Pavement Overlay Program project consists of an on-going program that completed street pavement overlays. Expenditures totaled $3.5 million this year against a budget of $3.3 million leaving a remaining negative budget balance of ($0.2) million. The negative budget balance will be replenished during Fiscal Year 2015/16 by transferring budget from a contingency fund.  The Thomas Road Bicycle Lanes and Enhanced Sidewalks project includes the addition of bicycle lanes, shade, landscaping, site furnishings and widening of sidewalks. Expenditures totaled $3.2 million this year. As of June 30, 2015, the inception to date expenditures totaled $6.3 million for the project against a budget of $6.9 million, leaving a balance of $0.6 million.  The Public Safety Radio System – Phase I project purchased a new radio system to provide better coverage, interoperability with other public agencies and increased bandwidth to handle growth in radio voice traffic. Expenditures totaled $1.7 million this year against a budget of $22.1 million. As of June 30, 2015, the inception to date expenditures for Phase I totaled $20.7 million, leaving a balance of $1.4 million.  The Upper Camelback Wash Watershed project has a goal to reduce flooding for this major wash corridor. Expenditures totaled $1.2 million this year. As of June 30, 2015, the inception to date expenditures totaled $15.6 million against a budget of $17.7 million, leaving a balance of $2.1 million.  The Facilities Repair and Maintenance Program project provided protection of the city’s infrastructure through systematic and rational repair and maintenance to major municipal facilities. Expenditures totaled $1.6 million this year against a budget of $2.1 million, leaving a balance of $0.5 million. City of Scottsdale, Arizona º Water Distribution System Improvements – 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 $18.6 million. As of June 30, 2015, the inception to date expenditures total $8.2 million, leaving a balance of $10.4 million. º Wastewater Collection System Improvements – 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 $16.6 million. As of June 30, 2015, the inception to date expenditures total $5.9 million, leaving a balance of $10.7 million. Additional information on the City’s capital assets can be found in Note IV.C. on pages 83-85 of this report. Debt Administration Management’s Discussion and Analysis The City’s water and sewer 5-year capital improvement plan includes significant cost impacts from “unfunded” federal water quality mandates for treatment of arsenic and disinfection byproduct requirements, in addition to plant and infrastructure expansion to accommodate growth. The most significant CIP cash expenditures include: For the Fiscal Year Ended June 30, 2015  At the end of the fiscal years 2015 and 2014, the City had total long-term liabilities of $1,616.8 million and $1,342.6 million, respectively. Of these amounts, $586.9 million and $619.1 million, for fiscal years 2015 and 2014 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 (MPC) bonds, Scottsdale Preserve Authority (SPA) bonds, certificates of participation, and other obligations of $1,029.9 million and $723.5 million for fiscal years 2015 and 2014, respectively. Long-Term Liabilities June 30, 2015 and 2014 (in thousands) General Obligation Bonds Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Certificates of Participation Community Facilities Districts General Obligation Bonds Issuance Premiums Total Bonds Payable Capital Lease Service Concession Arrangements Risk Management Claims Compensated Absences Net Other Postemployment Benefit Net Pension Liabilities Total Long-Term Liabilities City of Scottsdale, Arizona Governmental Activities 2015 2014 $ 586,910 $ 619,065 217,483 200,840 44,365 48,505 11,762 13,914 26,805 29,395 67,810 52,186 955,135 963,905 229 329 2,837 2,990 15,939 15,663 25,690 24,881 915 627 241,311 $ 1,242,056 $ 1,008,395 Business-Type Activities 2015 2014 $ - $ 29,335 32,275 286,442 280,795 - $ 24,891 340,668 3,298 30,821 374,787 $ 18,095 331,165 3,085 334,250 Total 2015 2014 $ 586,910 $ 619,065 29,335 32,275 503,925 481,635 44,365 48,505 11,762 13,914 26,805 29,395 92,701 70,281 1,295,803 1,295,070 229 329 2,837 2,990 15,939 15,663 28,988 27,966 915 627 272,132 $ 1,616,843 $ 1,342,645 31 Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2015 During fiscal year 2015, the City’s total long-term liabilities increased by $274.2 million. This is due primarily to the net pension liability of $272.1 million the City was required to record for the implementation of GASB 68. Other contributing factors include the City making $67.0 million of scheduled and early redemption principal payments offset by issuing $45.3 million of Municipal Property Corporation (MPC) new bonds and increased issuance premium of $22.4 million. As part of the new issuance process, the City’s ratings on its uninsured General Obligation bonds and MPC bonds were affirmed by the Rating Agencies in February 2015 (see the Letter of Transmittal page 1 for more information). 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, 2015 and 2014 is $256.6 million and $223.7 million, respectively, in the 6 percent capacity and $502.5 million and $412.4 million, respectively, in the 20 percent capacity. Additional information on the debt limitations and capacities may be found in Section IV.G. of the Notes to the Financial Statements and also in Tables XVIa and XVIb in the Statistical Section of this report. In accordance with GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, the Net Other Postemployment 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 eligible retiree health insurance as of June 30, 2015. The NOPEBO at the end of the fiscal years 2015 and 2014 was $0.9 million and $0.6 million, respectively. Additional information in the City’s long-term liabilities can be found in Section IV.G. of the Notes to the Financial Statements on pages 88-99 of this report. Economic Factors and Next Year’s Budget and Rates The City remains on solid financial ground and its long-term financial plan remains one of conservative fiscal growth as the economy continues to improve. The fiscal year 2015/16 budget includes the following priorities and policy given by City Council: 32  Continue working with residents, businesses and SkySong to revitalize the McDowell Road corridor  Provide strategic support of tourism and visitor events  Carry out the comprehensive economic development strategy  Develop a transportation strategy that anticipates future needs  Prepare and adopt fiscally sustainable operating and capital budgets  Reinvest in a high performance organization and work culture City of Scottsdale, Arizona Granite Reef Watershed Drainage Improvements º  Pima/Dynamite Trailhead º  FY 2015/16: $2.6 million ($3.7 million total project budget) Water Distribution System Improvements º  FY 2015/16: $3.2 million ($11.0 million total project budget) Traffic Signal Systems Upgrades º  FY 2015/16: $3.5 million ($4.0 million total project budget) Facilities Repair and Maintenance Program º  FY 2015/16: $13.5 million ($51.0 million total project budget) FY 2015/16: $22.8 million ($62.0 million total project budget) Wastewater Collection System Improvements º FY 2015/16: $21.3 million ($42.7 million total project budget) Management’s Discussion and Analysis  For the Fiscal Year Ended June 30, 2015 A separate, key component of the annual financial plan is the City’s five-year Capital Improvement Plan for infrastructure and public facilities including roads, water and sewer improvements, parks, buildings and information technology. The City is projecting to spend up to $254.6 million for capital improvements in fiscal year 2015/16. Some notable projects include: In fiscal year 2015/16 citizen tax bills will reflect an estimated combined property tax rate of $1.1537 which is $0.0912 less than the adopted combined fiscal year 2014/15 rate of $1.2449. The City adopted a water surcharge of 10 percent, effective July 2015, for customers located outside City limits and an increase of $0.10 per month was added to the stormwater quality charge to support expanded permit compliance costs. The City determined that existing rates and fees for sanitation and aviation services are sufficient to cover forecasted costs and fund operating reserves. 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 directed to the Scottsdale City Treasurer’s Office, 7447 E. Indian School Road, Suite 210, Scottsdale, AZ 85251. Or visit our website at: http://www.scottsdaleaz.gov/finance City of Scottsdale, Arizona 33 This page is intentionally blank. 34 City of Scottsdale, Arizona Basic Financial Statements City of Scottsdale, Arizona 35 Statement of Net Position June 30, 2015 (in thousands) Governmental Activities Business-Type Activities Total ASSETS Current Assets Cash and Investments Cash with Fiscal Agent Receivables (net of uncollectible amounts of $38,843) Property Taxes and Penalties Other Local Taxes Charges for Services Intergovernmental Interest and Other Internal Balances Supplies Inventory Prepaid Items $ 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 Prepayments Pollution Remediation Recoveries Service Concession Arrangements Restricted Cash, Cash Equivalents, and Investments Advanced Construction Payments Advanced Lease Payments Water and Sewer System Replacement Revenue Bond Reserve Capital Assets Land, Water Rights, and Construction in Progress Facilities, Infrastructure, and Equipment (net of accumulated depreciation) Total Capital Assets (net of accumulated depreciation) Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Amounts on Refundings Pensions Total Deferred Outflows of Resources $ 252,022 63,968 $ 177,577 32,041 $ 429,599 96,009 12,164 24,439 23,525 8,027 (1,048) 1,039 - 15 15,191 96 3,313 1,048 1,063 12,164 24,454 15,191 23,621 11,340 1,039 1,063 - 1,251 1,251 384,136 4,295 235,890 4,295 620,026 30,500 74,417 100,329 44,865 - 100,329 30,500 44,865 74,417 - 600 1,667 37,914 4,692 600 1,667 37,914 4,692 1,877,175 160,903 2,038,078 1,697,330 3,574,505 1,198,067 1,358,970 2,895,397 4,933,475 3,679,422 1,549,037 5,228,459 4,063,558 1,784,927 5,848,485 29,561 46,224 75,785 7,105 3,938 11,043 36,666 50,162 86,828 $ $ (continued) 36 City of Scottsdale, Arizona Statement of Net Position June 30, 2015 (in thousands) Governmental Activities 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 $ Noncurrent Liabilities Accrued Compensated Absences - Due in more than one year Advanced Construction Payments Advanced Lease Payments Net Other Post Employment Benefit Net Pension Liabilities Bonds, Loans, and Other Payables - Due in more than one year Pollution Remediation Obligation Total Noncurrent Liabilities Total Liabilities 13,924 9,062 143 11,462 6,620 4,327 2,330 46,361 16,253 53,313 8,522 3,394 175,711 Business-Type Activities $ 8,679 1,272 1 1,427 1,251 13,490 7,308 14,815 48,243 Total $ 22,603 10,334 144 12,889 6,620 4,327 3,581 59,851 23,561 68,128 8,522 3,394 223,954 14,228 915 241,311 914,207 1,170,661 1,871 600 1,667 30,821 325,853 44,865 405,677 16,099 600 1,667 915 272,132 1,240,060 44,865 1,576,338 1,346,372 453,920 1,800,292 31,681 5,390 37,071 2,663,269 1,036,650 3,699,919 37,432 45,951 30,203 370 3,505 24 (19,464) 2,761,290 4,692 37,914 4,295 253,109 1,336,660 42,124 45,951 30,203 370 3,505 24 37,914 4,295 233,645 4,097,950 DEFERRED INFLOWS OF RESOURCES Pensions NET POSITION Net Investment in Capital Assets Restricted Debt Service Transportation and Preserve Privilege Tax Activities Capital Projects Grants Special Programs Streetlight and Service District Repair and Replacement Joint Venture Construction Deposits Unrestricted Total Net Position $ $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 37 38 Statement of Activities For the Fiscal Year Ended June 30, 2015 (in thousands) Program Revenues Charges for Services Expenses Operating Grants and Contributions Capital Grants and Contributions $ $ Governmental Activities Business-Type Activities Total FUNCTIONS/PROGRAMS Governmental Activities General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Streetlight and Services Districts Interest on Long-Term Debt Bond Issuance Costs Total Governmental Activities $ Business-Type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-Type Activities Total Government 790 927 6,103 792 5,682 1,828 5,088 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 445,730 $ 95,958 44,352 3,703 20,911 164,924 $ 610,654 176 227 737 188 232 2,719 1,861 19,474 10,350 6,334 2,827 531 45,656 98,495 39,541 4,020 20,232 162,288 $ 207,944 1 2 37 855 70 14,785 3,747 8,900 28,397 - $ 28,397 $ 840 13,270 299 325 97 14,831 $ City of Scottsdale, Arizona Net Position - Ending $ - $ (613) (700) (5,364) (604) (5,645) (741) (2,369) (37,860) (91,370) (121,251) (39,575) (14,925) (52) (34,134) (1,643) (356,846) 6,783 4,297 646 11,726 - 9,320 (514) 963 (679) 9,090 9,320 (514) 963 (679) 9,090 26,557 (356,846) 9,090 (347,756) 66,229 179,192 12,439 169 - 66,229 179,361 12,439 19,867 26,316 10,133 1,372 13,829 6,579 335,956 (20,890) 2,782,180 2,761,290 1,346 (6,579) (5,064) 4,026 1,332,634 1,336,660 19,867 26,316 10,133 2,718 13,829 330,892 (16,864) 4,114,814 4,097,950 General Revenues Taxes Property Taxes Sales and Use Taxes Franchise Taxes Intergovernmental State Shared Sales State Revenue Sharing Other Interest and Investment Income Other Revenue Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning, restated The notes to the financial statements are an integral part of this statement. (613) (700) (5,364) (604) (5,645) (741) (2,369) (37,860) (91,370) (121,251) (39,575) (14,925) (52) (34,134) (1,643) (356,846) $ $ $ City of Scottsdale, Arizona Balance Sheet Governmental Funds June 30, 2015 (in thousands) General General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds Total Governmental Funds ASSETS Cash and Investments Cash with Fiscal Agent Receivable (net of allowance for uncollectibles $38,804) 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 Miscellaneous Due from Other Funds Supplies Inventory Total Assets (continued) $ $ 57,863 1,266 296 14,064 827 1,730 1,964 10,204 741 347 3,101 43 227 92,673 $ $ 11,731 42,109 1,047 54,887 $ $ 24,518 74 538 880 2,710 28,720 $ $ 121,813 20,593 123 4,267 752 86 58 1,257 21,037 1,070 503 171,559 $ $ 215,925 63,968 493 18,331 752 1,960 1,730 2,022 10,204 741 1,257 347 21,575 1,950 6,314 43 227 347,839 39 40 Balance Sheet Governmental Funds June 30, 2015 (in thousands) General LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources City of Scottsdale, Arizona Fund Balances Nonspendable Restricted Committed Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances The notes to the financial statements are an integral part of this statement. $ 4,800 8,522 191 1,076 General Obligation Bond Debt Service $ 9,954 32,155 General CIP Construction Capital Projects $ 1,052 15 - Total Nonmajor Governmental Funds $ 6,100 479 43 6,108 13,130 Total Governmental Funds $ 11,952 9,016 43 16,253 46,361 419 4,326 2,325 3,374 25,033 42,109 4 1,071 6,998 1,101 1 5 20 33,985 6,998 1,524 4,327 2,330 3,394 102,198 11,396 606 1,418 19,039 32,459 36,429 . 42,715 2,489 53,024 134,657 227 56,017 56,244 12,172 12,172 2,807 28,178 (4,754) 26,231 98,258 21,376 (1,099) 118,535 227 113,237 49,554 50,164 213,182 92,673 $ 54,887 $ 28,720 $ 171,559 $ 347,839 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2015 (in thousands) Fund Balances - Total Governmental Funds $ 213,182 Amounts reported for governmental activities in the statement of net position are different because (see Note II A): Capital assets used in governmental activities are not financial resources; therefore, are not reported in the funds. 3,529,371 Prepayments and service concession arrangements are not financial resources; therefore, are not reported in the funds. 104,917 Deferred outflows relating to deferred amounts on refunding and pensions are not financial resources; therefore are not reported in the funds. 75,188 Long-term liabilities, including bonds payable, are not due and payable in the current period; therefore, are not reported in the funds. (1,221,039) Deferred inflows relating to pensions represent a future acquisition of net position that is not reported in the funds. Also, 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 unavailable revenue in the funds. 1,597 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 position. 58,074 Net Position of Governmental Activities $ 2,761,290 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 41 42 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) General General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ Total Nonmajor Governmental Funds Total Governmental Funds REVENUES City of Scottsdale, Arizona 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 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 (continued) $ $ 25,466 110,397 8,401 3,748 264 906 35,253 - - $ 3,553 53,526 17,047 290 - $ 64,272 163,923 17,047 8,691 3,748 264 906 19,867 26,316 8,307 1,872 - - 13,461 652 53 19,867 26,316 8,307 13,461 652 1,925 14,779 3,851 4,176 918 - 116 - 315 1,700 - 15,210 5,551 4,176 918 4,148 243 2,883 340 2,864 1,214 (355) - 73 (42) 173 1,753 460 2,418 647 (165) 4,321 243 2,883 1,753 340 460 5,282 1,934 (562) 1,173 1 1,836 6,463 4,271 254,349 35,253 204 2,288 169 1,490 5 795 5,098 9,939 360 5,882 484 531 2,067 1,604 524 68 117,342 10,143 360 9,343 653 531 3,558 3,445 6,987 5,134 412,042 $ $ $ $ City of Scottsdale, Arizona Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) General General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ Total Nonmajor Governmental Funds Total Governmental Funds EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer 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 Outlay Total Expenditures $ Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning* Fund Balances - Ending $ 709 917 6,012 782 3,948 977 4,790 19,559 23,806 121,876 33,877 15,050 - - - 75 1,636 855 114 14,959 20,744 1,885 11,121 583 $ 784 917 6,012 782 5,584 1,832 4,904 34,518 44,550 123,761 44,998 15,050 583 2,405 536 235,244 90,395 23,752 966 115,113 18,161 18,161 13,130 12,418 677 34,003 112,200 105,930 36,706 1,643 52,164 480,718 19,105 (79,860) (13,063) 5,142 (68,676) 10,012 (25,493) (15,481) 3,624 21,461 160,415 14,230 (113,443) 82,663 2,803 22,782 (2,014) 20,768 7,705 35,551 (55,704) 46,758 26,815 9,641 (54,626) 8,435 13,577 89,806 (83,211) 207,173 26,815 23,871 (168,069) 96,385 27,709 52,620 56,244 $ 9,369 12,172 $ 18,526 26,231 *The General CIP Construction Capital Projects beginning fund balance was increased by $9,043,000 due to the reclassification of the MPC Bonds from no longer being reported in this fund and moved to a separate fund in the Nonmajor Capital Projects. The notes to the financial statements are an integral part of this statement. $ $ 104,958 118,535 $ 185,473 213,182 43 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2015 (in thousands) Net Change in Fund Balances - Total Governmental Funds $ 27,709 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 depreciation exceeded capital outlay in the current period. (62,018) Donations of capital assets are not capitalized on the governmental fund statements, but are shown in the statement of activities. 8,703 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. (29,493) Current-year pension contributions are reclassified to deferred outflows of resources, and therefore are not reported as expenditures in governmental funds. 18,169 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (5,016) Prepayments are expended in the governmental funds when paid, and are capitalized and amortized in the statement of net position. This is the amount of the amortization expense in the current period. (967) 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 position. This is the amount by which principal retirement exceeded debt proceeds in the current period. 16,140 Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refunding. 2,572 The change in net position of the Internal Service Funds attributed to governmental activities. 3,311 Change in Net Position of Governmental Activities $ (20,890) The notes to the financial statements are an integral part of this statement. 44 City of Scottsdale, Arizona 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, 2015 (in thousands) Budgeted Amounts Original REVENUES Taxes - Local Property Transaction Privilege 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 City Attorney Service Enhancement Parking Photo Radar Library Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues (continued) $ $ 25,744 106,706 8,444 3,395 267 898 Final $ 25,744 106,706 8,444 3,395 267 898 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 25,466 110,397 8,401 3,748 264 906 Actual Amounts GAAP Basis - $ 25,466 110,397 8,401 3,748 264 906 Variance Between Final Budget and Actual Amounts Budgetary Basis $ (278) 3,691 (43) 353 (3) 8 19,642 26,314 7,687 1,805 19,642 26,314 7,687 1,805 19,867 26,316 8,307 1,872 - 19,867 26,316 8,307 1,872 225 2 620 67 12,332 3,538 3,921 664 12,332 3,538 3,921 664 14,779 3,851 4,176 918 - 14,779 3,851 4,176 918 2,447 313 255 254 4,529 300 238 2,110 369 1,836 575 - 4,829 238 2,110 369 1,836 575 - 4,148 243 2,883 340 2,864 1,214 - (355) 4,148 243 2,883 340 2,864 1,214 (355) (681) 5 773 (29) 1,028 639 - 1,024 1,247 6,439 4,381 244,405 1,024 1,247 6,439 4,381 244,405 1,173 1 1,836 6,463 4,271 254,704 (355) 1,173 1 1,836 6,463 4,271 254,349 149 1 589 24 (110) 10,299 $ $ $ $ $ 45 46 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Debt Service Principal Interest and Fiscal Charges Total Expenditures $ 762 1,000 5,924 849 4,044 1,047 5,315 18,309 23,252 119,050 34,039 18,044 Excess (Deficiency) of Revenues over Expenditures City of Scottsdale, Arizona 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. $ Actual Amounts Budgetary Basis Final $ 725 1,018 6,087 866 3,950 1,056 5,238 19,260 24,325 122,371 34,344 15,500 $ 711 916 5,997 779 3,935 978 4,820 19,528 23,848 121,580 33,891 15,016 Budget to GAAP Differences $ Actual Amounts GAAP Basis (2) 1 15 3 13 (1) (30) 31 (42) 296 (14) 34 $ 709 917 6,012 782 3,948 977 4,790 19,559 23,806 121,876 33,877 15,050 2,305 525 234,465 2,305 525 237,570 2,405 536 234,940 304 2,405 536 235,244 9,940 6,835 19,764 (659) 19,105 9,990 (25,461) (15,471) 9,990 (25,461) (15,471) 10,012 (25,493) (15,481) (5,531) (8,636) 4,283 39,989 34,458 $ 61,654 53,018 $ 61,654 65,937 (659) $ (9,034) (9,693) $ Variance Between Final Budget and Actual Amounts Budgetary Basis $ 14 102 90 87 15 78 418 (268) 477 791 453 484 (100) (11) 2,630 12,929 10,012 (25,493) (15,481) 22 (32) (10) 3,624 12,919 52,620 56,244 $ 12,919 General Fund Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (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 Net Decrease in Fund Balance - Budget to GAAP (355) 304 $ (659) The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 47 Statement of Fund Net Position Proprietary Funds June 30, 2015 (in thousands) Water and Sewer Utility ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments Cash with Fiscal Agent Receivables (net of uncollectible amounts of $39) Privilege Tax Charges for Services Intergovernmental Interest Miscellaneous Supplies Inventory Restricted Cash, Cash Equivalents, and Investments Customer Advances and Deposits Prepaid Expenses Other Restricted Assets Joint Venture Construction Deposits $ Total Current Assets Noncurrent Assets Equity in Joint Venture Pollution Remediation Recoveries Restricted Cash, Cash Equivalents, and Investments Advanced Construction Payments Advanced Lease Payments 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 Capital Assets (net of accumulated depreciation) Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred Amounts on Refunding Pensions Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources $ 155,248 32,041 Airport $ Solid Waste 9,660 - $ Governmental Activities Internal Service Funds Total 12,669 - $ 177,577 32,041 $ 36,097 - 13,351 179 2,814 - 15 96 5 221 - 1,840 12 82 - 15 15,191 96 196 3,117 - 479 812 1,197 1,063 54 - - 1,251 1,063 - 4,295 - - 4,295 - 210,188 10,051 14,603 234,842 37,388 100,329 44,865 - - 100,329 44,865 - 600 37,914 4,692 1,667 - - 600 1,667 37,914 4,692 - 39,650 87,171 1,171,519 592,262 4,492 613 17,906 (586,832) 9,564 25,813 628 861 4,823 (13,539) 1,111 4,771 678 (2,521) 50,325 87,171 1,171,519 592,262 30,584 628 5,353 613 23,407 (602,892) 12,447 72,134 1,020 367 (40,834) 1,326,781 28,150 4,039 1,358,970 45,134 - 1,515,181 29,817 4,039 1,549,037 45,134 1,725,369 39,868 18,642 1,783,879 82,522 7,105 2,817 9,922 175 175 946 946 7,105 3,938 11,043 597 597 1,735,291 $ 40,043 $ 19,588 $ 1,794,922 $ 83,119 (continued on next page) 48 City of Scottsdale, Arizona Statement of Fund Net Position Proprietary Funds June 30, 2015 (in thousands) Water and Sewer Utility Airport Solid Waste Governmental Activities Internal Service Funds Total LIABILITIES Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - 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 Total Current Liabilities $ Noncurrent Liabilities Accrued Compensated Absences - Due in more than one year Advanced Construction Payments Advanced Lease Payments Net Pension Liabilities Bonds, Loans, and Other Payables - Due in more than one year Pollution Remediation Obligation Total Noncurrent Liabilities 7,923 922 1,043 1,197 13,490 7,308 14,815 46,698 $ 385 54 64 54 557 $ 371 296 1 320 988 $ 8,679 1,272 1 1,427 1,251 13,490 7,308 14,815 48,243 $ 1,972 189 175 6,620 8,956 1,339 600 22,004 325,853 44,865 394,661 92 1,667 1,377 3,136 440 7,440 7,880 1,871 600 1,667 30,821 325,853 44,865 405,677 217 4,686 9,319 14,222 441,359 3,693 8,868 453,920 23,178 3,848 241 1,301 5,390 819 445,207 3,934 10,169 459,310 23,997 NET POSITION Net Investment in Capital Assets 1,004,461 28,150 4,039 1,036,650 45,134 Restricted for Water and Sewer System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits Unrestricted Total Net Position 37,914 4,692 4,295 238,722 1,290,084 - - 37,914 4,692 4,295 252,061 1,335,612 13,988 59,122 Total Liabilities Deferred Inflows of Resources Pensions Total Liabilities and Deferred Inflows of Resources $ $ 7,959 36,109 $ 5,380 9,419 $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 49 Reconciliation of the Proprietary Fund Statement of Fund Net Position to the Statement of Net Position June 30, 2015 (in thousands) Total Enterprise Fund Net Position $ 1,335,612 Amounts reported for business-type activities in the government-wide statement of net position are different because: Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and vehicles to individual funds. A look-back adjustment applies to business-type activities and creates an internal balance. Net Position of Business-Type Activities 1,048 $ 1,336,660 The notes to the financial statements are an integral part of this statement. 50 City of Scottsdale, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2015 (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 (Loss) NON-OPERATING REVENUES (EXPENSES) Transaction Privilege Tax Property Tax Investment Income Interest Expense Gain(Loss) on Sale of Capital Assets Net Non-Operating Revenue (Expenses) Income Before Contributions and Transfers Capital Contributions Transfers In Transfers Out Change in Net Position Total Net Position - Beginning as Restated Total Net Position - Ending $ 85,623 38,715 11,349 2,349 138,036 Airport $ Solid Waste 3,822 198 4,020 $ 20,232 20,232 Total $ 85,623 38,715 11,349 20,232 3,822 2,547 162,288 Governmental Activities Internal Service Funds $ 55,403 1,260 56,663 52,270 22,019 4,865 48,262 127,416 2,231 477 1,000 3,708 19,005 1,646 245 20,896 52,270 22,019 19,005 2,231 6,988 49,507 152,020 49,566 5,767 55,333 10,620 312 (664) 10,268 1,330 1,206 (12,984) (43) (11,821) 169 64 233 76 (487) (411) 169 1,346 (12,984) (530) (11,999) 2,077 479 2,556 (1,201) 545 (1,075) (1,731) 3,886 11,080 229 (6,800) 646 (4) (4) 11,726 229 (6,808) 51 (16) 3,308 1,187 (1,079) 3,416 3,921 1,286,776 1,290,084 $ 34,922 36,109 $ 10,498 9,419 $ 1,332,196 1,335,612 $ 55,201 59,122 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 51 Reconciliation of the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position to the Statement of Activities For the Fiscal Year Ended June 30, 2015 (in thousands) Net Change in Total Enterprise Fund Net Position $ 3,416 Amounts reported for business-type activities in the government-wide statement of net position are different because: Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and vehicles to individual funds. A look-back adjustment applies to business-type activities and creates an internal balance, which reduced the expenses. Change in Net Position of Business-Type Activities 610 $ 4,026 The notes to the financial statements are an integral part of this statement. 52 City of Scottsdale, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Water and Sewer Utility Cash Flows from Operating Activities Cash Received from Customers Cash Payments to Suppliers for Goods/Services Cash Payments to Employees for Services Other Cash Receipts Net Cash Provided by (Used for) Operating Activities Cash Flows from Non-Capital Financing Activities Financing Activities Property Tax Transaction Privilege Tax Transfers In Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities Cash Flows from Capital and Related Financing Activities Bond Proceeds Capital Contributions from: 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 and Other Payables Interest Paid on Capital Debt Investment in Joint Venture and CIP deposit Sale of Capital Assets Net Cash (Used for) for Capital and Related Financing Activities Cash Flows from Investing Activities Income Received on Investments Net Cash Provided by 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 $ 136,859 (54,357) (20,385) (28) 62,089 Airport $ Solid Waste 3,769 (1,194) (1,175) 198 1,598 229 (6,800) (6,571) 169 (4) 165 20,000 - $ Total 20,245 (13,599) (7,099) (453) $ 160,873 (69,150) (28,659) 170 63,234 (4) (4) 169 229 (6,808) (6,410) - 20,000 Governmental Activities Internal Service Funds $ 55,270 (45,189) (4,458) 1,259 6,882 2,077 (16) 2,061 - 5,591 (27,421) (265) (15,288) (11,721) 1,190 (27,914) 562 (1,341) (779) (642) (642) 5,591 562 (29,404) (265) (15,288) (11,721) 1,190 (29,335) (9,222) 777 (8,445) 1,199 63 75 1,337 - 1,199 63 75 1,337 - 28,803 1,047 (1,024) 28,826 498 202,889 10,334 13,693 226,916 35,599 12,669 $ 255,742 $ 231,692 $ 11,381 $ $ 36,097 (continued) City of Scottsdale, Arizona 53 Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Water and Sewer Utility 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 Operating Activities Cash Flows from Operating Activities Operating Income (Loss) Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation/Amortization Pension Expense Current Year Pension Contributions Change in Equity in Joint Venture Change in Accounts Receivable Change in Miscellaneous Receivable Change in Inventories Change in Prepaid Expense Change in Customer Deposits Change in Accounts Payable Change in Accrued Payroll and Compensated Absences Change in Claims Payable Change in Advanced Construction Payments Change in Advanced Lease Payments Total Adjustments Net Cash Provided by (Used for) Operating Activities Supplemental Disclosure of Non-cash Financing Activities Additions to Property, Plant, and Equipment Contributions from Developers Contributions from Others Loss on Sale/Disposal of Assets Change in Equity in Joint Venture Total Non-Cash Financing Activities $ 155,248 32,041 44,403 $ 231,692 $ 10,620 Airport $ Solid Waste $ 9,660 1,721 11,381 $ 12,669 12,669 $ 312 $ (664) 48,262 (1,506) 1,564 3,596 2,140 (1,457) (197) 212 1,081 151 (2,377) 51,469 $ 1,000 (94) 96 46 (1) 2 322 15 (100) 1,286 Total Governmental Activities Internal Service Funds $ 177,577 32,041 46,124 $ 255,742 $ 36,097 36,097 $ $ 1,330 245 (509) 523 13 (22) (39) 211 10,268 $ 49,507 (2,109) 2,183 3,596 2,199 (1,458) (197) 214 1,381 127 (2,377) (100) 52,966 5,767 320 (331) (134) 94 (471) 31 276 5,552 $ 62,089 $ 1,598 $ (453) $ 63,234 $ 6,882 $ 5,754 (43) 4,855 $ - $ (487) - $ 5,754 (530) 4,855 $ 8,415 - 10,566 $ $ (487) $ 10,079 $ 8,415 $ - The notes to the financial statements are an integral part of this statement. 54 City of Scottsdale, Arizona Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 (in thousands) Private Purpose Trust Funds ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Escrow Payable Vouchers State Land Department Rebate $ 10 $ 1,470 $ 10 $ 1,470 $ - $ 55 1,415 - $ 1,470 Total Liabilities NET POSITION Held in Trust for Other Purposes Agency Funds $ 10 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 55 Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Private Purpose Trust Funds ADDITIONS Contributions: Private Donations $ Total Additions 10 DEDUCTIONS Scholarships / Program Activities 5 Total Deductions 5 Change in Net Position 5 Total Net Position - Beginning Total Net Position - Ending 10 5 $ 10 The notes to the financial statements are an integral part of this statement. 56 City of Scottsdale, Arizona 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, and public safety. 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. The City has operational responsibility for the component units. 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.  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.  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.  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. City of Scottsdale, Arizona Reporting Method Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Sole purpose is to construct, acquire and equip buildings, structures or land improvements for the City. Sole purpose is to finance land acquisitions for McDowell Sonoran Preserve. Created to acquire and improve public infrastructure in specified land area. For Separate Financial Statements Notes to Financial Statements SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For the Fiscal Year Ended June 30, 2015 I. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. 57 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 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)        58 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 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 City Treasurer’s Office 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 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 City Treasurer’s Office 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 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 City Treasurer’s Office 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 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 City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 City of Scottsdale, Arizona The government-wide financial statements (i.e., the statement of net position 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. Indirect costs incurred by governmental activities and reimbursed by business-type activities are included in the program expense reported by the individual business-type functions. 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, 2015 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 position and in governmental fund balance sheets, amounts reported as restricted fund balances in governmental funds may be different from amounts reported as restricted net position in the statement of net position. Property taxes, other local taxes and licenses available within the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Interest is accrued in the same fiscal period in which 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 59 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 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 for and report the accumulation of financial resources that are restricted, committed or assigned to expenditures for the payment of longterm obligation debt principal, interest and related costs. The General CIP Construction Capital Projects Fund is used to account for and report 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, community facility districts, Municipal Property Corporation and preservation/transportation privilege taxes or bonds. The Municipal Property Corporation activity was previously included in this fund and beginning this fiscal year this activity is presented separately in the non-major capital project fund. 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 and the Crossroad East Development Agreement. 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. In general, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this rule are indirect costs, in-lieu franchise fees, and other charges between the City’s governmental activities and the 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. 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, 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 non-operating revenues and expenses. 60 City of Scottsdale, Arizona Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance 1. Deposits and Investments The City considers all highly liquid investments (including restricted assets) in mutual funds, demand deposits, repurchase agreements, and U.S. Treasury bills with an original maturity of three months or less to be cash equivalents. For the purposes of the statements of cash flows, all pooled cash and investments are also considered to be cash equivalents, although there are investments with maturities in excess of three month when purchased in the portfolio. This is due to the fact that the Proprietary funds may deposit or withdraw cash at any time without prior notice or penalty, having the characteristics of demand deposits. GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools 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), which is overseen by the Office of the Arizona State Treasurer. 2. Notes to Financial Statements D. For the Fiscal Year Ended June 30, 2015 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. 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.” 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 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 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. City of Scottsdale, Arizona 61 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 3. Inventories, Prepayments and Prepaid Items 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. Prepayments of the governmental funds, which are prepared using the modified accrual basis of accounting, are recorded under the purchases method, and are therefore recorded as expenditures when purchased. Within the government-wide statements, which are prepared using the accrual basis of accounting, prepayments are recorded as assets and amortized over the life of the related agreement. Prepaid items contain payments made to vendors applicable to future accounting periods in both the government-wide and proprietary fund financial statements. The cost of a prepaid item is recorded as an expense when consumed rather than purchased. 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 position because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. The revenue bond reserve and water and sewer replacement accounts are used to report resources set aside to meet unexpected contingencies or to fund asset replacements. The joint venture construction deposits with the City of Phoenix are used for capital expansion, rehabilitation and expansion of the jointly used facilities. Assets are also restricted in enterprise funds for deposits received from water, sewer and airport customers, as well as unearned 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. 62 City of Scottsdale, Arizona 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 resulting gain or loss is recognized in the government-wide and proprietary fund financial statements. 6. Pensions Notes to Financial Statements Water System ...................................................................... 10 to 75 Years For the Fiscal Year Ended June 30, 2015 Depreciation and amortization of all assets are recorded and calculated using the straight-line method over the following estimated useful lives: For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plans’ fiduciary net position and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 7. Compensated Absences 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, receive 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 to 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. City of Scottsdale, Arizona 63 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Vacation pay is calculated based on vacation used and the medical leave conversion is based on an actuarial valuation dated January 1, 2015. 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, 2015, in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30, 2015, 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. 8. Long Term Obligations In the government-wide financial statements and the proprietary fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and discounts are 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 bond issuance costs are expensed when incurred. 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. 9. Deferred Outflows/Inflows of Resources In addition to assets, the government-wide financial statements and the proprietary fund financial statements include a section for deferred outflows of resources. This represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for this category: deferred amounts on refunding and pension-related amounts. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The pension-related amounts result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, changes in proportion and differences between employer contributions and proportionate share of contributions, and contributions made to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period. With the exception of the difference between projected and actual investment earnings and contributions made to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period, the pension-related deferred outflows of resources should be recognized in pension expense, beginning in the current reporting period, using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the pension plan (active employees and inactive employees) determined as of the beginning of the measurement period. 64 City of Scottsdale, Arizona 10. Notes to Financial Statements In addition to liabilities, the fund financial statements include a section for deferred inflows of resources. This represents an acquisition of fund balance or net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for this category: unavailable revenue and pensionrelated amounts. Unavailable revenue, which arises only under the modified accrual basis of accounting, is recognized as an inflow of resources in the period that the related amounts become available. The pension-related amounts result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and changes in proportion and differences between employer contributions and proportionate share of contributions. With the exception of the difference between projected and actual investment earnings, the pension-related deferred inflows of resources should be recognized in pension expense, beginning in the current reporting period, using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the pension plan (active employees and inactive employees) determined as of the beginning of the measurement period. The deferred inflows of resources relating to the difference between projected and actual investment earnings should be recognized in pension expense using a systematic and rational method over a closed five-year period, beginning in the current reporting period. For the Fiscal Year Ended June 30, 2015 The deferred outflows of resources relating to the difference between projected and actual investment earnings should be recognized in pension expense using a systematic and rational method over a closed five-year period, beginning in the current reporting period. The deferred outflow of resources relating to contributions made to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period will reduce the beginning net pension liability in the following fiscal year. 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 connected 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. 11. 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 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 they are 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. City of Scottsdale, Arizona 65 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Committed fund balances are self imposed limitations by the highest level of decision making authority, namely Mayor and City Council, prior to the end of the reporting period. Mayor and City Council approval is required to commit resources or to rescind the commitment through a City Council resolution. Assigned fund balances are limitations imposed internally by management based on the intended use of the funds. In June 2011, through City Council Resolution No. 8751, the City Council authorized the City Treasurer to assign fund balance for specific purposes. 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. 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. 12. Net Position The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure and capital-related deferred outflows of resources, into one component of net position. Accumulated depreciation, the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets, and the capital-related deferred inflows of resources reduce the balance in this category. Restricted Net Position – This category represents net position that has 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 Position – This category represents net position of the City not restricted for any project or other purpose. E. Implementation of New Accounting Principles 1. Governmental Accounting Standards Board Statement No. 68 The City adopted the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This statement establishes standards of accounting and financial reporting for defined benefit pensions and defined contribution pensions provided for the employees of state and local governmental employers. The pension plans are administered through trusts or equivalent arrangements in which contributions from employers and non-employer contributing entities to the pension plan and earnings on those contributions are irrevocable. Pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms, and pension plans are legally protected from the creditors of employer and non-employer contributing entities, and the pension plan administrator. 66 City of Scottsdale, Arizona The City adopted the provisions of GASB Statement No. 69, Government Combinations and Disposals of Government Operations. This statement improves financial reporting for government combinations and disposals of government operations. The term government combination is used in this Statement to refer to a variety of arrangements including mergers and acquisitions. This pronouncement did not impact the preparation of these financial statements. 3. Governmental Accounting Standards Board Statement No. 71 The City adopted the provisions of GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. The objective of this Statement is to address an issue regarding the application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. This statement amends paragraph 137 of Statement No. 68 to require that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions, if any, made subsequent to the measurement date of the beginning net pension liability. 4. Restatement of Net Position The City sold land in the fiscal year ended June 30, 2014 and at the time of the sale proceeds due to the Irrigation Water Distribution System (IWDS) participants were unknown. In fiscal year ended June 30, 2015 the City paid out $1,786,992 related to the land sale to IWDS participants and the ending fund balance for water and sewer funds in the proprietary fund statement was restated to reflect this prior period adjustment. Notes to Financial Statements Governmental Accounting Standards Board Statement No. 69 For the Fiscal Year Ended June 30, 2015 2. The City restated beginning net position in the government-wide statement of net position for infrastructure paid in a prior fiscal year with a net book value of $11,316,204 that was not determined to be a capital asset of the City until the fiscal year ended June 30, 2015. Additionally in the current fiscal year, the City recorded several land donations with building improvements received in a prior fiscal year with a net book value of $7,724,329. Lastly, the fleet internal service fund balance and the government-wide statement of net position were restated for vehicle donations received in a prior fiscal year with a net book value of $7,901,401. Net position as of July 1, 2014, was restated for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. The following table shows a summary of all adjustments (in thousands): Government-Wide Statement of Net Position Governmental BusinessActivities Type Activities Net position at June 30, 2014, as previously GASB Statement No. 68 adjustments: Net pension liability (measurement date as of June 30, 2013) Deferred outflows - City contributions made during fiscal year 2014 Prior year revenue adjustment Capital asset adjustment Net position at July 1, 2014, as restated $ $ 2,975,662 $ 1,366,767 (239,439) (34,356) 19,015 26,942 2,782,180 2,010 (1,787) 1,332,634 $ Statements of Fund Net Position Water and Sewer Utility Fund $ 1,311,658 (24,528) $ Airport Solid Waste Fleet Self Management Insurance $ 36,366 $ 18,305 $ (1,535) (8,293) 1,433 91 486 (1,787) 1,286,776 $ 34,922 $ 10,498 $ 46,359 $ (4,343) 254 7,901 50,171 $ 4,920 (881) 52 4,091 A stand-by commitment account equal to the maximum annual debt service of $321,070 for the Waterfront Community Facilities District (CFD) was moved from the Waterfront CFD to the Debt Stabilization Fund since the CFD has no legal rights to these funds. City of Scottsdale, Arizona 67 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 68 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 net position The City’s total governmental fund balances, $213,182,000 differs from net position of governmental activities, $2,761,290,000 reported in the statement of net position. The difference primarily results from the long-term economic focus in the statement of net position versus the current financial resources focus in the governmental fund balance sheets. City of Scottsdale, Arizona Long-Term Assets & Deferred Outflows/ Liabilities and Deferred Inflows(1) Total Governmental Funds ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectible amounts of $38,804) 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 Miscellaneous Due from Other Funds Supplies Inventory Prepaid Items Capital Assets (net of accumulated depreciation) Prepayments Service Concession Arrangements Total Assets $ Deferred Outflows of Resources Deferred Amounts on Refundings Pension-Related Amounts Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources 215,925 63,968 $ - Internal Service Funds(2) $ 36,097 - Reclassifications and Eliminations $ - Statement of Net Position Total $ 252,022 63,968 493 18,331 752 1,960 1,730 2,022 10,204 741 1,257 347 21,575 1,950 6,314 43 227 347,839 3,529,371 30,500 74,417 3,634,288 479 812 45,134 82,522 (43) (43) 493 18,331 752 1,960 1,730 2,022 10,204 741 1,257 347 21,575 1,950 6,793 1,039 3,574,505 30,500 74,417 4,064,606 - 29,561 45,627 75,188 597 597 - 29,561 46,224 75,785 $ 347,839 $ 3,709,476 $ 83,119 $ (43) $ 4,140,391 $ 11,952 9,016 43 16,253 46,361 $ (143) 143 11,287 14,011 - $ 1,972 189 1,048 175 217 6,620 - $ (43) - $ 13,924 9,062 1,048 143 11,462 14,228 6,620 16,253 46,361 Notes to Financial Statements (in thousands) For the Fiscal Year Ended June 30, 2015 Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE/NET POSITION 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 Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Bonds, Loans, Capital Leases, and Other Payables Total Liabilities Deferred Inflows of Resources Unavailable Revenue Pension-Related Amounts Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Fund Balances/Net Position Total Fund Balances/Net Position Total Liabilities, Deferred Inflows of Resources, and Fund Balances/Net Position City of Scottsdale, Arizona $ 6,998 1,524 4,327 2,330 3,394 102,198 1,195,741 1,221,039 14,005 24,226 (43) 6,998 1,524 4,327 2,330 3,394 1,209,746 1,347,420 32,459 32,459 (32,459) 30,862 (1,597) 819 819 - 31,681 31,681 134,657 1,219,442 25,045 (43) 1,379,101 213,182 2,490,034 58,074 - 2,761,290 347,839 $ 3,709,476 $ 83,119 $ (43) $ 4,140,391 69 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) (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 position includes those capital assets among the assets of the City as a whole. $ 5,461,467 (1,932,096) $ 3,529,371 Cost of capital assets Accumulated depreciation Certain items that are recognized as assets on the statement of net position are expended in governmental funds when paid (such as long-term prepayments), while others arise from the incurrence of long-term liabilities or the receipt of capital assets from elsewhere within the City, such as service concession arrangements (SCAs). These assets are capitalized and amortized over the life of the corresponding agreement. Prepayments at 7/1/14 Amortization of prepayments $ $ SCAs at 7/1/14 Land improvements additions for SCAs Amortization of SCAs $ $ 31,467 (967) 30,500 67,022 11,299 (3,904) 74,417 Deferred outflows consist of items that will consume net position in a future reporting period(s) and do not meet the definition of an asset. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. The pension-related amounts result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and contributions made to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period. Deferred amounts on refundings Pensions $ $ 29,561 45,627 75,188 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 position. Balances at June 30, 2015, were: Capital leases payable Bonds payable Service concession arrangement Issuance premium Accrued vacation and sick leave pay Post employment - explicit subsidy Net pension liability $ $ (229) (887,325) (2,837) (67,810) (25,298) (915) (236,625) (1,221,039) 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 unavailable revenues in the governmental funds and thus are not included in fund balance. Certain tax and other revenues that are considered unavailable under modified accrual for governmental fund statements are recognized as revenue under accrual accounting for the government-wide statements. $ Unavailable library revenue Unavailable court revenue Unavailable property tax revenue Unavailable privilege tax revenue Unavailable transient occupancy tax revenue Unavailable intergovernmental revenue Unavailable other $ 741 3,766 1,126 5,255 54 20,232 1,285 32,459 Deferred inflows represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows related to pensions may result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and changes in proportion and differences between employer contributions and proportionate share of contributions. $ (30,862) (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 position. $ 70 58,074 City of Scottsdale, Arizona The net change in fund balances for governmental funds, $27,709,000 differs from the change in net position for the governmental activities, $(20,890,000) 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 Notes to Financial Statements Explanation of certain differences between the governmental funds statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities For the Fiscal Year Ended June 30, 2015 B. 71 Notes to Financial Statements 72 For the Fiscal Year Ended June 30, 2015 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) Total Governmental Funds 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 and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines and Forfeitures Court Parking Photo Radar Court Enhancement Library Police Fees 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 (continued) $ $ 64,272 163,923 17,047 8,691 3,748 264 906 Capital Related Items(4) Long-Term Revenue/ Expenses(3) $ (120) (1,587) (191) 4 $ Internal Service Funds(5) - $ Reclassifications and Eliminations(6) 2,077 - $ Long-Term Debt Transactions(7) - $ Statement of Activities - $ 66,229 162,336 16,856 8,691 3,748 264 910 19,867 26,316 8,307 13,461 652 1,925 61 - - - - 19,867 26,316 8,307 13,461 652 1,986 15,210 5,551 4,176 918 (14) (7) 143 37 - - (41) - - 15,155 5,544 4,319 955 4,321 243 2,883 1,753 340 460 5,282 1,934 (562) (709) (24) (17) 450 (31) - - - - - 3,612 219 2,866 1,753 790 460 5,251 1,934 (562) 10,143 360 9,343 653 531 3,558 3,445 6,987 5,134 412,042 592 24 (3,363) (286) (24) 34 (5,028) - 2,077 (11) (52) - 10,735 384 5,980 653 531 3,272 3,421 6,987 5,157 409,039 $ $ $ $ $ $ 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) Total Governmental Funds EXPENDITURES/EXPENSES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer 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 Outlay Total Expenditures/Expenses OTHER FINANCING USES/ CHANGES IN NET POSITION Net Transfers (to) from Other Funds Capital Contributions Proceeds from Sale of Assets Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Net Change for the Year $ $ $ 784 917 6,012 782 5,584 1,832 4,904 34,518 44,550 123,761 44,998 15,050 583 105,930 36,706 1,643 52,164 480,718 6,595 $ $ 27,709 5 8 85 10 52 (5) 88 16 4,098 6,880 867 175 12,279 $ $ 2 1 42 103 6,263 90,373 5,433 9,333 2,632 (52,164) 62,018 Internal Service Funds(5) $ $ 1 5 4 1 4 (166) (81) (416) (64) (8) (720) Reclassifications and Eliminations(6) $ $ Long-Term Debt Transactions(7) (11) (41) (11) (63) $ $ Statement of Activities (105,930) (2,572) (108,502) $ - $ 8,703 8,703 $ (16) 51 479 514 $ (11) (11) $ (207,173) (26,815) (23,871) 168,069 (89,790) $ (17,307) $ (53,315) $ 3,311 $ - $ 18,712 207,173 26,815 23,871 (168,069) 96,385 $ Capital Related Items(4) Long-Term Revenue/ Expenses(3) $ $ $ $ 790 927 6,103 792 5,682 1,828 5,088 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 445,730 6,579 8,743 479 15,801 (20,890) (continued on next page) For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 73 Notes to Financial Statements 74 For the Fiscal Year Ended June 30, 2015 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 Transient occupancy tax revenue Intergovernmental revenue Other receivable revenue $ $ (120) (755) 450 (1,597) 54 (2,840) (208) (5,016) $ (967) $ (778) (288) (24,523) (3,904) (29,493) Some expenditures reported in the governmental funds are related to benefits that are allocable to periods beyond the end of the City's current fiscal year. Amortization of long-term prepaid leases 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 Pension expense Amortization of service concession arrangements (SCAs) $ Current-year pension contributions are reclassified to deferred outflows of resources on the statement of activities, and are therefore not a reduction of net position. $ 18,169 (4) When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds; however, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources expended, whereas net position decrease by the amount of depreciation expense charged for the year and the loss on disposal of capital assets. City of Scottsdale, Arizona Capital expenditures Miscellaneous net capital expenditures Depreciation expense Loss on disposal of capital assets $ $ 52,164 (1,562) (110,892) (1,728) (62,018) $ 8,703 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 (continued) 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) (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 adjust those funds by charging additional amounts to participating governmental activities and recording an amount due to/from the enterprise funds. Change in net position Internal payable to Enterprise Fund $ $ 3,921 (610) 3,311 (6) Interfund transactions between governmental activities 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/capital contributions - Governmental Funds Reduction in expenditures/expenses - Governmental Funds $ $ (7) (63) 63 - Repayment of bond principal is reported as an expenditure, and payments made to a bond refunding escrow is treated as an other financing use, in governmental funds. Thus, these payments have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements, however, these payments reduce the liabilities in the statement of net position and do not result in an expense in the statement of activities. Transferred to the paying agent Principal payments made Payment to refunded bond escrow - funded by refunding bonds $ $ 105,930 168,069 273,999 Interest expense in the statement of activities differs from the amount reported in governmental funds because additional interest was calculated for the amortization of deferred refunding costs, and reductions of interest expense were recognized due to the amortization of bond premiums which are expended within the fund statements. Amortization of deferred charges on refundings Amortization of bond premium and discounts $ $ (2,337) 4,909 2,572 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 position and does not affect the statement of activities. Proceeds were received from: Refunding bonds Long-Term capital-related debt Premium on bonds $ $ (207,173) (26,815) (23,871) (257,859) For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 75 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budget and Budgetary Accounting The City prepared an annual budget that covered fiscal year 2014/15. The fiscal year 2014/15 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 adjustments for fair market value of investments, payroll accruals and compensated absences. A budgetary comparison statement for the General Fund is presented in the basic financial statements. This statement displays 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, certain Special Revenue Funds (Transportation, Community Development Block Grant, HOME, Grants, Section 8, Preserve Privilege Tax, Streetlight Districts, Special Programs and Tourism Development), and Debt Service Funds (except for the Community Facilities Districts Debt Service Funds); therefore, these funds have appropriated budgets, and budget to actual information is presented. Community Facilities Districts Funds, Capital Projects Funds, Enterprise Funds, Internal Service Funds, and Trust and Agency Funds have non-appropriated budgets. Accordingly, no comparison of budget to actual is presented in the financial statements for these funds. Budgets for the Community Development Block Grant, HOME, Grants and Section 8 Funds are established pursuant to the terms of the related grant awards. Budgets for the Community Facilities Districts are established in accordance with Arizona Revised Statutes, which do not require their inclusion in the City budget or adoption by the City Council. Budgets for Capital Projects Funds are established for individual projects and unexpended funds are reappropriated each year until the project is completed and capitalized. Budgets for Enterprise Funds 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. Three 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 2014/15, 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. 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. Management control of budgets is further maintained at a line-item level within the division. 76 City of Scottsdale, Arizona The General Obligation Bond Debt Service Fund exceeded its expenditure appropriations by $55,334,000 due to a current year refunding. The additional expenditures incurred were funded by the amounts issued from the refunding bonds. The Preserve Privilege Tax Special Revenue Fund exceeded its expenditure appropriation by $2,000. The additional expenditures incurred were funded by available fund balance or available revenues within the fund. C. Deficit Fund Equity The CDBG Special Revenue Fund, HOME Special Revenue Fund and Grants Special Revenue Fund had deficit ending fund balances of $40,000, $355,000 and $343,000, respectively, caused by certain grant reimbursements not being available. Revenue accruals are not recognized in the current fiscal year due to the unavailability of the funds. These reimbursements due will be recognized as revenue when actually received. The Preserve Capital Projects Fund had a deficit ending fund balance of $16,000 due to timing differences of a pending bond issuance and accruals. D. Fund Balance Classifications The table on the following page details the fund balance categories and classifications for Governmental Funds (in thousands): City of Scottsdale, Arizona Notes to Financial Statements Excess of Expenditures over Appropriations For the Fiscal Year Ended June 30, 2015 B. 77 Notes to Financial Statements 78 For the Fiscal Year Ended June 30, 2015 (In thousands) General Obligation Bond Debt Service General General CIP Construction Capital Projects Total Nonmajor Governmental Funds Total Governmental Funds FUND BALANCES Nonspendable Inventory Total Nonspendable $ 227 227 $ - $ - $ - $ 227 227 City of Scottsdale, Arizona Restricted Property Tax for Debt Service Property Tax for Community Facility Districts MPC Funds for Debt Payments Street Light Districts General Government Special Programs Public Works Special Programs Public Safety Special Programs Community Services Special Programs Transaction Privilege & Highway User Tax for Transportation Improvements Transaction Privilege Tax for Preserve Land Purchase and Improvements Federal Grants for CDBG Federal Grants for Section 8 Housing Transaction Privilege Tax for Transportation Capital Improvements GO Bond Proceeds for Capital Improvements MPC Bond Proceeds for Capital Improvements External Contributions for Capital Improvements Stadium Contributions for Stadium Capital Improvements Sales Tax Rebate for District Debt Service Stadium Surcharge for Debt Service Maricopa County Stadium District Contract for Debt Service In-Lieu Fee for Street Improvement State Tourism Authority Contract for Debt Service Total Restricted - 12,172 12,172 2 2,197 566 42 2,807 702 3 24 2,086 58 987 61 12,711 33,147 34 333 27,269 14,422 145 321 1,753 3,419 783 98,258 12,172 702 3 24 2,086 58 987 61 12,711 33,147 34 335 27,269 14,422 145 2,197 566 321 1,753 3,419 42 783 113,237 Committed General Government Special Programs Community and Economic Development Special Programs Public Safety Special Programs Community Services Special Programs Transit Occupancy Tax for Tourism Development Excise Tax Debt Reserve General Fund Contribution for Capital Improvements Stadium Surcharge for Stadium Improvements Tourism Development Capital Projects In Lieu Stormwater Fees for Drainage Improvements In Lieu Parking Fees for Parking Projects Total Committed - - 26,855 408 383 258 274 28,178 2,544 2,096 437 1,812 9,787 4,700 21,376 2,544 2,096 437 1,812 9,787 4,700 26,855 408 383 258 274 49,554 Unassigned Total Fund Balances $ 56,017 56,244 $ 12,172 $ (4,754) 26,231 $ (1,099) 118,535 $ 50,164 213,182 Net Position Restrictions Only restrictions imposed by external sources are shown as restricted net position on the governmentwide financial statements. The following restrictions apply to the Business-Type Activities at June 30, 2015: Net Position Restrictions (in thousands) Water and Sewer Restricted for System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits $ $ IV. DETAILED NOTES ON ALL FUNDS A. Cash and Investments 37,914 4,692 4,295 46,901 The City maintains a cash and investment pool for use by all funds except the Community Facilities Districts, Municipal Property Corporation and Scottsdale Preserve Authority Funds, which have investments held separately by a trustee. Notes to Financial Statements E. For the Fiscal Year Ended June 30, 2015 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 Transportation, Nonmajor Special Revenue Fund. The reserves in these funds are to be maintained for unforeseen emergencies or catastrophic impacts to the City. 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, 2015, the carrying amount of the City’s deposits was $292,548,582, and the bank balance was $294,686,684. The $2,138,102 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, 2015, in accordance with City policy, $500,000 of the City’s deposits were covered by federal depository insurance, $37,727,981 were CDARS covered by federal depository insurance, $160,449,107 were collateralized by securities held by the City’s agent, and $96,009,596 were securities held by the pledging financial institution’s trust department in the name of the City. Thus, the City 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 79 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 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 (in thousands): Investment Maturities (in Years) Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Municipal Obligations Fair Value $ 106,796 87,826 83,998 2,024 Total Investments $ 280,644 Less than 1 $ 16,094 8,362 7,063 $ $ 31,519 $ 1-2 57,259 58,469 43,309 2,024 $ 161,061 2-3 33,443 20,995 33,626 - $ 88,064 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). Presented below is the rating as of June 30, 2015, for each investment type (in thousands): Investment Type U.S. Government Securities Federal Agency Securities Corporate Notes Municipal Obligations Total Investments Total $ 106,796 87,826 83,998 2,024 $ 280,644 A$ 5,870 $ 5,870 A $ 13,463 $ 13,463 A+ $ 17,339 $ 17,339 AA$ 14,291 $ 14,291 AA $ 17,602 $ 17,602 AA+ $ 87,826 6,557 $ 94,383 AAA $ 8,876 2,024 $ 10,900 Exempt from Disclosure $ 106,796 $ 106,796 Concentration of Credit Risk The City’s investment policy contains no limitations on the amount that can be invested in any one issuer. 80 City of Scottsdale, Arizona Issuer U.S. Government Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corporation (FHLMC) Federal National Mortgage Association (FNMA) AZ School Facilities Board American Express Co American Honda Finance Apple Inc Bank of New York Co Inc Berkshire Hathaway Inc Caterpillar Inc Chevron Corp Cisco Systems Inc Coca-Cola Co Exxon Mobil Corp IBM Corp Johnson & Johnson JP Morgan Chase & Co PepsiCo Inc The Walt Disney Corporation Toyota Motor Corp Walmart Stores Inc Wells Fargo & Co Investment Type U.S. Government Securities Federal Agency Securities Federal Agency Securities Federal Agency Securities Municipal Obligations Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Market Value $ 106,796 23,272 37,640 26,914 2,024 5,870 5,631 6,557 5,572 6,059 2,453 2,791 6,021 6,327 5,276 5,542 3,600 2,730 4,998 3,282 2,727 2,425 6,137 Percent of Holdings 38.05% 8.29% 13.41% 9.59% 0.72% 2.09% 2.01% 2.34% 1.99% 2.16% 0.87% 1.00% 2.15% 2.25% 1.88% 1.98% 1.28% 0.97% 1.78% 1.17% 0.97% 0.86% 2.19% Total Investments $ 280,644 100.00% Notes to Financial Statements (in thousands) For the Fiscal Year Ended June 30, 2015 The following is a listing by issuer of the City’s investments at June 30, 2015: Investments Total City cash and investments at fair value are as follows (in thousands): Cash on Hand Carrying Amount of City Deposits Investments $ 20 292,548 280,644 Total Cash and Investments $ 573,212 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 Crossroads East Dev Agreement Total Cash and Investments City of Scottsdale, Arizona $ 429,599 96,009 46,124 10 55 1,415 $ 573,212 81 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Investment income comprises the following for the year ended June 30, 2015 (in thousands): Net Interest and Dividends Net Decrease in the Fair Value of Investments $ 3,717 (999) Total Net Investment Income $ 2,718 The net decrease in the fair value of investments during Fiscal Year 2014/15 was $998,595. 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, 2015, 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 General Receivables Property Taxes and Penalties Property Court Subtotal Property Taxes and Penalties $ 827 47,307 48,134 Other Local Taxes Privilege Transient Occupancy State Shared Sales Franchise Fee Auto Lieu Highway User Subtotal Other Local Taxes Intergovernmental/Grants Interest and Other Interest Library Miscellaneous Subtotal Interest and Other Gross Receivable Less: Allowances for Uncollectibles Net Total Receivables $ General CIP Construction Capital Projects General Obligation Bond Debt Service $ 1,047 1,047 $ Total Governmental and Internal Service Funds Nonmajor and Other Funds - $ 86 86 $ 1,960 47,307 49,267 14,905 1,730 1,964 347 18,946 - - 4,267 752 58 1,257 6,334 19,172 752 1,730 2,022 347 1,257 25,280 - - 1,418 22,107 23,525 296 1,601 3,101 4,998 - 74 2,710 2,784 123 982 1,105 493 1,601 6,793 8,887 72,078 (38,804) 1,047 - 4,202 - 29,632 - 106,959 (38,804) 33,274 $ 1,047 $ 4,202 $ 29,632 $ 68,155 Business-Type Activities Enterprise Funds Water and Sewer Utility Receivables Privilege Tax Charges for Services Intergovernmental Interest Miscellaneous $ Gross Receivable Less: Allowances for Uncollectibles Net Total Receivables 82 13,390 179 2,814 Airport $ 16,383 (39) $ 16,344 Solid Waste 15 96 5 221 $ 337 $ 337 1,840 12 82 Total Enterprise Fund $ 1,934 $ 1,934 15 15,230 96 196 3,117 18,654 (39) $ 18,615 City of Scottsdale, Arizona $ Total C. Unavailable $ 1,126 54 3,766 741 5,255 20,232 1,285 Unearned $ 6,998 1,524 32,459 $ 8,522 Capital Assets Capital asset activity for the year ended June 30, 2015 was as follows (in thousands): Governmental Activities Capital Assets, not being depreciated Land* Construction in Progress** Total Capital Assets, not being depreciated Beginning Balance $ 1,842,865 106,065 1,948,930 Increases $ 16,354 52,476 68,830 Decreases $ (351) (140,234) (140,585) Ending Balance $ 1,858,868 18,307 1,877,175 Capital Assets, being depreciated Buildings and Land Improvements*** Streets and Storm Drains Vehicles**** Equipment Maintained by Fleet Machinery and Equipment Total Capital Assets, being depreciated 656,322 2,763,354 66,500 2,681 87,794 3,576,651 56,977 45,248 8,144 17,499 127,868 (1,455) (621) (4,889) (302) (26,992) (34,259) 711,844 2,807,981 69,755 2,379 78,301 3,670,260 Less Accumulated depreciation for Buildings and Land Improvements*** Streets and Storm Drains Vehicles**** Equipment Maintained by Fleet Machinery and Equipment Total Accumulated depreciation 277,775 1,512,322 34,678 2,496 61,560 1,888,831 20,112 86,512 5,211 27 4,797 116,659 (478) (450) (4,672) (302) (26,658) (32,560) 297,409 1,598,384 35,217 2,221 39,699 1,972,930 1,687,820 11,209 (1,699) 1,697,330 Total Capital Assets, being depreciated, net: Governmental Activities Capital Assets, net $ 3,636,750 $ 80,039 $ (142,284) $ Notes to Financial Statements Property Tax Transient Occupancy Tax Court Library Privilege Tax Intergovernmental Other For the Fiscal Year Ended June 30, 2015 Governmental funds report deferred inflows in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Additionally, governmental funds record unearned revenue when resources have been received, but not yet earned. At the end of the fiscal year, the various components of deferred inflows and unearned revenue reported in the governmental funds were as follows (in thousands): 3,574,505 *The Land category had increases of $3,653,124 for a prior period adjustment primarily due to land donations received but not recorded. **The Construction in Progress category had decreases of $11,298,684 for assets related to a Service Concessionaire Arrangement (SCA). The capitalized amounts have been included in the City's SCA asset classification per GASB 60. ***The Building and Land Improvement category was restated due to a prior period adjustment for an increase cost of $17,205,594 and accumulated depreciation of $1,818,185 to capitalize underground infrastructure and building improvements. ****The Vehicles category was restated for trolleys that were donated to the City in a prior year but not recorded with cost of $8,363,343 and accumulated depreciation of $461,942. City of Scottsdale, Arizona 83 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Business-Type Activities Capital Assets, not being depreciated Land Water Rights Construction in Progress Total Capital Assets, not being depreciated Beginning Balance $ 48,821 87,171 10,157 146,149 Increases $ Decreases 1,504 34,588 36,092 $ Ending Balance (21,338) (21,338) $ 50,325 87,171 23,407 160,903 Capital Assets, being depreciated Water System* Sewer System* Buildings and Land Improvements Machinery and Equipment* Vehicles Furniture, Fixtures, and Office Equipment* Total Capital Assets, being depreciated 1,160,437 583,667 30,759 8,071 830 754 1,784,518 11,643 8,719 42 20,404 (561) (124) (175) (2,760) (202) (141) (3,963) 1,171,519 592,262 30,584 5,353 628 613 1,800,959 Less Accumulated depreciation for Water System* Sewer System* Buildings and Land Improvements Machinery and Equipment* Vehicles Furniture, Fixtures, and Office Equipment* Total Accumulated depreciation 366,398 171,672 13,888 3,537 631 691 556,817 31,676 15,554 1,059 1,142 42 34 49,507 (561) (80) (176) (2,272) (202) (141) (3,432) 397,513 187,146 14,771 2,407 471 584 602,892 Total Capital Assets, being depreciated, net: 1,227,701 (29,103) (531) 1,198,067 Business-Type Activities Capital Assets, net $ 1,373,850 $ 6,989 $ (21,869) $ 1,358,970 *Assets were restated to move cost of $15,179,962, accumulated depreciation of $5,324,534 from Machinery & Equipment and cost of $59,203, accumulated depreciation of $28,169 from Furniture, Fixtures and Office Equipment to Water System cost $6,293,365, accumulated depreciation $3,794,227 and cost of $8,945,800, accumulated depreciation of $1,558,476 to Sewer System. During fiscal year 2014/15, the Water and Sewer Utility Enterprise Fund capitalized net interest costs of $871,383. Total interest expense in this fund before capitalization was $14,877,356. Depreciation expense was charged to functions/programs of the primary government as follows (in thousands): Governmental Activities City Clerk City Court Public Works Community and Economic Development Public Safety City Treasurer 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 $ 2 39 6,747 88,239 4,439 73 8,529 2,824 5,767 $ 116,659 $ 48,262 1,000 245 $ 49,507 Business-Type Activities Water and Sewer System Airport Solid Waste Total Depreciation Expense - Business-Type Activities 84 City of Scottsdale, Arizona Capital Project Program Classification Aviation Drainage and Flood Control Fire Protection Municipal Facilities Neighborhood and Community Parks Police Preservation Streets Technology Traffic Transit Wastewater Water Spent to Date $ 2,058 1,115 48 571 4,153 344 430 771 2,237 42 462 4,994 4,804 14,142 $ Total Construction Commitments Governmental Activities: General CIP Construction Capital Project Fund Nonmajor Governmental Funds Internal Service Funds $ 36,171 3,509 11,545 109 Remaining Commitment $ 4,120 2,150 387 429 1,726 191 475 571 2,112 142 658 2,721 4,391 13,449 $ $ 33,522 3,743 7,680 133 Total Governmental Activities 15,163 11,556 Business-Type Activities: Water & Sewer Utility Airport Total Business-Type Activities Total Construction Commitments 18,950 2,058 21,008 36,171 17,846 4,120 21,966 33,522 D. $ $ Notes to Financial Statements The City has active construction projects as of June 30, 2015. At year-end the government’s commitments with contractors for specific projects are as follows (in thousands): For the Fiscal Year Ended June 30, 2015 Construction Commitments 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, 2015, is as follows: Receivable Fund (in thousands) General Fund Amount $ 43 Payable Fund (in thousands) Nonmajor Governmental Funds Amount $ 43 The HOME Special Revenue Fund had a deficit cash balance of $2,356 due to grants being received on a reimbursement basis. The MPC Bond Capital Project Fund had a deficit cash balance of $34,698 due to a timing difference for the City to be reimbursed from the cash with fiscal agent. The Preserve Capital Project Fund had deficit cash balance $6,479 due to timing difference for the City to be reimbursed for a pending bond issuance. City of Scottsdale, Arizona 85 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 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 franchise fees) charged to Enterprise Funds. Net Transfers (in thousands) Transfers Out Governmental Funds General Debt Service - General Obligation Bond Capital Projects - General CIP Construction Nonmajor Governmental Funds Total Governmental Funds $ 25,493 2,014 55,704 83,211 Enterprise Funds Water and Sewer Utility Airport Solid Waste Total Enterprise Funds Internal Service Funds $ Total Transfers E. Transfers In $ 10,012 21,461 22,782 35,551 89,806 6,800 4 4 6,808 229 229 16 - 90,035 $ 90,035 Leases Operating Leases City as Lessee The City, as a lessee, has entered into lease agreements involving office space, park equipment, vehicles, a distributed antenna system, and a street sweeper and trailer. Payments relating to these leases totaled $650,334, of which $488,016 was the minimum and $162,318 was contingent. The contingent payments were a percentage of the net revenues generated by the park equipment. The distributed antenna system’s lease increases annually by 3 percent as per the lease agreement’s escalation clause, and may be renewed by the City for up to ten years subsequent to the initial lease term’s ending date of March 31, 2020. The street sweeper and trailer lease may be renewed by the City for up to one year subsequent to the current lease term’s initial termination date of December 21, 2015. The future lease payments under non-cancellable operating lease agreements are as follows (in thousands): Fiscal Year Ending June 30, 2016 2017 2018 2019 2020 Total 86 $ $ 32 6 6 7 2 53 City of Scottsdale, Arizona Fiscal Year Ending June 30, 2016 2017 2018 2019 2020 Thereafter Total $ 2,774 2,714 2,610 2,508 2,359 79,491 92,456 $ The above amounts do not include contingent rentals, which totaled $2,056,817 for the fiscal year ended June 30, 2015. A summary of the assets leased to third parties under the City’s operating lease agreements at June 30, 2015, is as follows (in thousands): Cost Less: Accumulated Depreciation Carrying Value $ $ Notes to Financial Statements The City has agreements in which it conveys the right to use land, airport facilities, and other capital assets that it accounts for as operating leases. Minimum future rentals on noncancellable operating leases at June 30, 2015, are as follows (in thousands): For the Fiscal Year Ended June 30, 2015 City as Lessor 77,832 (4,983) 72,849 Capital Leases The City has entered into a lease agreement as lessee for financing the acquisition of field maintenance equipment for its community services operations. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, is included in the City’s governmental capital assets. The equipment acquired through this lease agreement is recorded at a cost of $63,643, less accumulated amortization of $49,500. Current year amortization expense was $21,214. The City has entered into a lease agreement as lessee for financing the acquisition of printing and imaging equipment for its administrative operations. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, is included in the City’s governmental capital assets. The equipment acquired through this lease agreement is recorded at a cost of $296,434, less accumulated amortization of $88,930. Current year amortization expense was $59,287. The present value of net minimum future lease payments under capital lease agreements are as follows (in thousands): Fiscal Year Ending June 30, 2016 2017 2018 2019 Less: Imputed Interest Total City of Scottsdale, Arizona $ $ 81 65 66 33 (16) 229 87 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements F. Service Concession Arrangements During fiscal year 1983, the City entered into a cost-sharing and land use agreement with the United States Bureau of Reclamation (BOR), under which the City would operate and develop the land where the City’s WestWorld operation is located for a period of 50 years (with a mutual option to renew for an additional 25 years). The City entered into this agreement to develop the WestWorld facility for public recreation use and to enhance its revenue stream from rentals, concession sales and parking fees. Beginning in fiscal year 2001, the BOR required the City to make annual payments for the administration of the agreement, and the present value of those payments as of June 30, 2015, is $1,359,326. The City has also provided consideration in the form of land improvements with a book value of $10,501,827 as of June 30, 2013, upon implementation of GASB Statement No. 60. and an additional $49,331,437 through the fiscal year ended June 30, 2015. These improvements were reclassified from capital assets to an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $56,250,736 at year-end pursuant to the service concession arrangement. During fiscal year 1985, the City entered into a recreational land use agreement with the BOR, under which the City would develop, operate and maintain the land where the City’s Tournament Players Club (TPC) golf complex is located for a period of 50 years (with a mutual option to renew for an additional 25 years). The City entered into this agreement to develop the TPC complex for public recreation use and to enhance its revenue stream from facility usage fees and rentals. Beginning in fiscal year 1999, the BOR required the City to make annual payments for the administration of the agreement, and the present value of those payments as of June 30, 2015, is $1,477,560. The City also provided consideration in the form of land improvements with a book value of $10,126,752 as of June 30, 2013, upon implementation of GASB Statement No. 60 and an additional $7,801,274 through the fiscal year ended June 30, 2015. These improvements were reclassified from capital assets to an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $18,166,199 at year-end pursuant to the service concession arrangement. G. Bonds, Loans, and Other Payables The following are brief descriptions of bonds outstanding at June 30, 2015. The totals shown are the principal amount outstanding, net of the current portion due July 1, 2015. General Obligation Bonds General Obligation (GO) bonds are issued, after approval by City of Scottsdale voters at an authorized bond election, to finance the construction of water and sewer systems, artificial lighting, parks and open spaces, recreational facilities, and general purpose improvements. At June 30, 2015, 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, 2015, the City had $298,475,000 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. 88 City of Scottsdale, Arizona The City of Scottsdale entered into an Intergovernmental Agreement with the Arizona Tourism and Sports Authority, doing business as the Arizona Sports and Tourism Authority (AZSTA) pertaining to the Scottsdale municipal spring training facility renovation project in March 2005. Per this agreement, City of Scottsdale MPC bonds were issued for $20,000,000, with one third of the repayments provided by the City from funds received by the Maricopa County Stadium District (MCSD) and two thirds of the repayments provided to the City by the AZSTA. The parties acknowledge that the exact amount of revenue accruing to the MCSD or the AZSTA may vary from year to year. Recognizing this, if funds accruing to either are insufficient to cover the estimated finance costs over the term of the bonds, then the parties agree to extend the repayment time as needed until the total amount is repaid. If the repayment time were extended, the City of Scottsdale would utilize excise taxes for the shortfall until such time as the parties fulfilled the full obligation. 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 2005E MPC bonds, a portion of the 2006 MPC refunding bonds, the 2008A MPC bonds, the 2010 MPC bonds, a portion of the 2015A MPC bonds, and a portion of the 2015 MPC refunding bonds are recorded in and paid out of the revenues of the Water and Sewer Enterprise Fund. For the Fiscal Year Ended June 30, 2015 Municipal Property Corporation Bonds The City has pledged to repay $584,900,322 in MPC bonds issued from 2004 through June 30 2010, payable through 2036, with pledged revenues that include transient occupancy tax. The coverage ratio (revenues to debt service) for 2015 for these bonds is 5.40. The City issued $226,605,000 in MPC bonds July 1, 2010 through 2015, payable through 2035, with pledged revenues that exclude the transient occupancy tax. The coverage ratio (revenues to debt service) for 2015 for these bonds is 4.97. The total principal and interest remaining to be paid on all MPC bonds is $738,799,806. Principal and interest paid for the current year was $39,249,260. Total excise tax collections (including transient occupancy taxes) for the current year that are pledged for MPC bonds issued before July 1, 2010 was $212,084,000. Total excise tax collections (excluding transient occupancy taxes) for the current year that are pledged for bonds issued after July 1, 2010 was $195,037,000. 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. 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 2015 is 5.32. The total principal and interest remaining to be paid on the bonds is $56,177,038. Principal and interest paid for the current year and total sales tax were $6,469,813 and $34,429,000, respectively. City of Scottsdale, Arizona 89 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements 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, 2015, the funds restricted for this purpose were $37,914,174. 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 2015 is 14.41. The total principal and interest remaining to be paid on the bonds is $36,576,750. Principal and interest for the current year and total customer net revenues were $4,539,438 and $65,414,000, 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. Community Facilities Districts General Obligation Bonds Community Facilities District General Obligation Bonds are issued by Community Facilities Districts (CFDs), which are special purpose districts created specifically to acquire and improve public infrastructure in specified land areas. CFD bonds are repaid by ad valorem taxes levied directly by the districts and collected by the county. Property owners in the districts are assessed for district taxes and thus for all costs associated with the districts. The City has no liability for CFD bonds. 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. 90 City of Scottsdale, Arizona General Obligation Bonds Bonds Outstanding (in thousands) 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. $ 8,680 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. On May 7, 2014, $68,500,000 due 2017 through 2023 were refunded. On April 2, 2015, $10,750,000 due 2024 were refunded. Original issue amount $125,000,000. 8,000 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. On May 7, 2014, $9,175,000 due 2017 through 2023 were refunded. On April 2, 2015, $1,575,000 due 2024 were refunded. Original issue amount $20,000,000. 1,100 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. On April 2, 2015, $75,225,000 due 2019 through 2028 were refunded. Original issue amount $100,000,000. 14,675 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. On April 2, 2015, $14,625,000 due 2019 through 2034 were refunded. Original issue amount $20,000,000. 1,875 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 $50,800,000. 45,000 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 $22,525,000. 19,475 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 $43,115,000. 28,685 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 $50,000,000. 50,000 2012 Refunding Bonds (issued July 11, 2012) due in annual installments of $205,000 to $30,045,000 through July 1, 2025; interest at 2 percent to 4 percent. Original issue amount $83,025,000. 82,165 2013 Preservation Bond (issued February 13, 2013) due in annual installments of $1,000,000 to $8,665,000 through July 1, 2034; interest at 2 percent to 4 percent. Original issue amount $75,000,000. 74,000 2014 Preservation Bond (issued May 7, 2014) due in annual installments of $465,000 to $945,000 through July 1, 2034; interest at 1.75 percent to 4 percent. Original issue amount $14,000,000. 13,535 2014 Refunding Bonds (issued May 7, 2014) due in annual installments of $3,845,000 to $12,230,000 through July 1, 2023; interest at 2 percent to 5 percent. Original issue amount $83,150,000. 79,305 2015 Refunding Bonds (issued April 2, 2015) due in annual installments of $500,000 to $30,565,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $160,415,000. 160,415 Total General Obligation Bonds Outstanding Some of the above General Obligation Bonds are paid from the .2 percent and .15 percent Preservation Sales Taxes. City of Scottsdale, Arizona $ Notes to Financial Statements Classified in Governmental Activities on the Government-wide Financial Statements: For the Fiscal Year Ended June 30, 2015 Bonds payable at June 30, 2015, comprised of the following: 586,910 91 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Bonds Outstanding (in thousands) Municipal Property Corporation Bonds 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. On May 29, 2014, $2,610,000 due 2018 through 2019 were refunded. Original issue amount $40,760,000. 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. On March 26, 2015, $22,630,000 due 2016 through 2021 were refunded. Original issue amount $19,945,322. 1,160 275 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. On March 26, 2015, $16,250,000 due 2031 through 2035 were refunded. Original issue amount $46,500,000. 1,025 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. On May 29, 2014, $4,385,000 due 2018 through 2027 were refunded. On March 26, 2015, $2,350,000 due 2028 through 2031 were refunded. Original issue amount $10,000,000. 665 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. On May 29, 2014, $16,725,000 due 2018 through 2027 were refunded. On March 26, 2015, $9,300,000 of 2028 through 2031 were refunded. Original issue amount $32,500,000. 2,375 2013A Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $830,000 to $1,995,000 through July 1, 2028; interest at 3 percent to 5 percent. Original issue amount $26,295,000. 24,550 2013B Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $45,000 to $100,000 through July 1, 2033; interest at 3 percent to 5 percent. Original issue amount $1,440,000. 1,345 2013C Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $1,210,000 to $2,855,000 through July 1, 2033; interest at 3 percent to 5 percent. Original issue amount $37,265,000. 34,810 2014 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued May 29, 2014) due in annual installments of $1,730,000 to $3,040,000 through July 1, 2027; interest at 1.75 percent to 5 percent. Original issue amount $22,735,000. 22,735 2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual installments of $205,000 to $865,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $12,200,000. 11,995 2015A Municipal Property Corporation Taxable Revenue Bonds (issued January 6, 2015) due in annual installments of $275,000 to $1,025,000 through July 1, 2034; interest at 2 percent to 4 percent. Original issue amount $14,615,000. 14,340 2015 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 26, 2015) due in annual installments of $1,460,000 to $6,877,488 through July 1, 2035; interest at 3 percent to 5 percent. Original issue amount $46,758,269. 46,758 Total Municipal Property Corporation Bonds Outstanding 92 $ $ 217,483 City of Scottsdale, Arizona $ 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. 3,315 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. 8,195 Total Scottsdale Preserve Authority Bonds 44,365 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. 11,762 Community Facilities Districts General Obligation Bonds 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 percent to 4.7 percent. Original issue amount $5,375,000. 1,055 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. 3,330 2012 DC Ranch Community Facilities District General Obligation Refunding Bonds due in annual installments of $555,000 to $1,245,000 beginning July 15, 2013 through July 15, 2027; interest at 3.41 percent. Original issue amount $14,670,000. 12,485 2012 McDowell Mountain Ranch Community Facilities District General Obligation Refunding Bonds due in annual installments of $1,020,000 to $1,335,000 beginning July 15, 2013 through July 15, 2022; interest at 2.84 percent. Original issue amount $11,555,000. 8,405 2012 Via Linda Community Facilities District General Obligation Refunding Bonds due in annual installments of $135,000 to $210,000 beginning July 15, 2013 through July 15, 2023; interest at 2.60 percent. Original issue amount $2,000,000. 1,530 Total Community Facilities Districts General Obligation Bonds Outstanding Total Bonds Payable Recorded in Governmental Activities City of Scottsdale, Arizona Notes to Financial Statements 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. For the Fiscal Year Ended June 30, 2015 Scottsdale Preserve Authority Bonds Bonds Outstanding (in thousands) $ 26,805 887,325 93 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Classified in Business-Type Activities on the Government-wide Financial Statements: Water and Sewer Revenue Bonds Bonds Outstanding (in thousands) 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. 28,335 Total Water and Sewer Revenue Bonds Outstanding 29,335 Municipal Property Corporation Bonds 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, 2016; interest at 5 percent. On November 29, 2006, $67,455,000 due 2017 through 2030 were refunded. Original issue amount $88,360,000. 3,255 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. 106,910 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. On March 26, 2015, $49,100,000 due 2019 through 2028 were refunded. Original issue amount $105,875,000. 37,800 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. 73,490 2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual installments of $310,000 to $1,305,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $18,485,000 18,175 2015 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 26, 2015) due in annual installments of $3,788,459 to $5,822,479 through July 1, 2028; interest at 5 percent. Original issue amount $46,811,731. 46,812 Total Municipal Property Corporation Bonds Outstanding 286,442 Total Bonds Payable Recorded in Business-Type Activities Total Long-Term Bonds Payable 94 1,000 315,777 $ 1,203,102 City of Scottsdale, Arizona General Obligation Bonds Issued to Provide Water, Sewer, Light, Parks, Open Spaces, Public Safety, and Transportation 20% Constitutional Limit $ 1,035,355,578 Less General Obligation (532,887,656) 20% Bonds Outstanding 6% Constitutional Limit Less General Obligation 6% Bonds Outstanding Available 20% Limitation Borrowing Capacity Available 6% Limitation Borrowing Capacity $ 502,467,922 General Obligation Bonds Issued for All Other Purposes $ 310,606,673 (54,022,344) $ 256,584,329 Notes to Financial Statements 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, 2015: For the Fiscal Year Ended June 30, 2015 Statutory Debt Limitation 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, 2015. 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 City issued $160,415,000 of General Obligation Refunding Bonds, Series 2015 (current and advance refunding) dated April 2, 2015, with an all-in true interest cost of 2.3 percent to refund $160,415,000 of Series 2005A and 2005B, Series 2005 Refunding and Series 2008A and 2008B Bonds. The City will reduce its total debt service payments over the next 20 years by approximately $16,026,498 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $13,345,770. City of Scottsdale, Arizona 95 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements The Scottsdale MPC issued $93,570,000 of Refunding Bonds, Series 2015 (advance refunding) dated March 26, 2015, with an all-in true interest cost of 2.8 percent to refund $99,630,000 of Series 2005A and 2005C, Series 2005D, Series 2006A and 2006B and Series 2008A Bonds. The City will reduce its total debt service payments over the next 21 years by approximately $9,597,900 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $7,507,116. The proceeds from the refunding bonds issued were used to purchase U.S. government securities that were placed in an irrevocable trust with an escrow agent to provide debt service payments on the bonds being refunded. As a result, the refunded bonds are considered to be defeased and the liability has been removed from the governmental activities column of the financial statements. The amount of debt defeased that remains outstanding on the 2015 Refunding Bonds at June 30, 2015 was $83,905,000 for MPC bonds and $102,175,000 for General Obligation bonds. The following table reflects refunded debt outstanding at June 30, 2015, net of any amounts to be paid or retired by the trustee on July 1, 2015. Refunded Debt Outstanding (in thousands) 2005C MPC Excise Tax Revenue Bonds 2005D MPC Excise Tax Revenue Bonds 2005E MPC Excise Tax Revenue Bonds 2008A MPC Excise Tax Revenue Bonds 2005 Various Purpose GO Bonds 2008 Various Purpose GO Bonds $ 18,555 42,175 67,455 49,100 90,000 89,850 $ 357,135 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, 2015 (in thousands): Governmental Activities Bonds Payable General Obligation Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Certificates of Participation Communities Facilities Districts General Obligation Bonds Add Issuance Premiums Total Bonds Payable Capital Lease Service Concession Arrangements Risk Management Claims Compensated Absences Net Other Postemployment Benefit Net Pension Liability Governmental Activities Long-Term Liabilities 96 Beginning Balance $ $ 619,065 200,840 48,505 13,914 29,395 52,186 963,905 329 2,990 15,663 24,881 627 1,008,395 Additional Obligations, Interest Accretion, and Net Increases $ $ 160,415 73,573 23,871 257,859 32,080 11,883 288 241,311 543,421 Current Maturities, Retirements, and Net Decreases $ $ (192,570) (56,930) (4,140) (2,152) (2,590) (8,247) (266,629) (100) (153) (31,804) (11,074) (309,760) Ending Balance $ $ 586,910 217,483 44,365 11,762 26,805 67,810 955,135 229 2,837 15,939 25,690 915 241,311 1,242,056 Amounts Due Within One Year $ $ 35,395 8,455 4,340 2,216 2,680 53,086 73 154 6,620 11,462 71,395 City of Scottsdale, Arizona Business-Type Activities Long-Term Liabilities City of Scottsdale, Arizona $ $ 32,275 280,795 18,095 331,165 3,085 334,250 $ $ 65,297 9,971 75,268 1,566 30,821 107,655 Current Maturities, Retirements, and Net Decreases $ $ (2,940) (59,650) (3,175) (65,765) (1,353) (67,118) Ending Balance $ $ 29,335 286,442 24,891 340,668 3,298 30,821 374,787 Amounts Due Within One Year $ $ 3,055 11,760 14,815 1,427 16,242 Notes to Financial Statements Business-Type Activities Bonds Payable Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Add Issuance Premiums Total Bonds Payable Compensated Absences Net Pension Liability Beginning Balance Additional Obligations, Interest Accretion and Net Increases For the Fiscal Year Ended June 30, 2015 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, 2015, $392,094 of accrued compensated absences is included in the above amount for Internal Service Funds. 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 $143,000 in the governmental funds and $0 in the Internal Service funds. 97 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for long-term liabilities at June 30, 2015: Governmental Activities (in thousands) Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 Total Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 General Obligation Bonds Issued to Provide Water, Sewer, Light, Parks, Open Spaces, Public Safety, and Transportation Facilities 20% Limitation Principal Interest Total $ 19,120 $ 19,610 $ 38,730 25,974 18,777 44,751 28,833 17,717 46,550 30,091 16,651 46,742 38,485 15,536 54,021 210,185 54,549 264,734 124,180 21,395 145,575 56,020 4,999 61,019 General Obligation Bonds Issued For All Other Purposes 6% Limitation Principal Interest Total $ 16,275 $ 1,847 $ 18,122 11,631 1,162 12,793 11,697 807 12,504 10,469 437 10,906 2,250 123 2,373 1,700 55 1,755 - Total General Obligation Bonds Principal Interest Total $ 35,395 $ 21,457 $ 56,852 37,605 19,939 57,544 40,530 18,524 59,054 40,560 17,088 57,648 40,735 15,659 56,394 211,885 54,604 266,489 124,180 21,395 145,575 56,020 4,999 61,019 $ 532,888 $ 169,234 $ $ $ 586,910 $ 173,665 $ Municipal Property Corporation Bonds Principal Interest Total $ 8,455 $ 9,595 $ 18,050 9,831 9,316 19,147 11,200 8,810 20,010 14,157 8,369 22,526 15,552 7,773 23,325 53,656 30,124 83,780 62,378 16,808 79,186 42,175 4,703 46,878 Capital Appreciation ** Total Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 Total 702,122 79 $ 217,483 $ (79) 95,419 $ 54,022 $ 4,431 $ 58,453 Scottsdale Preserve Authority Excise Tax Revenue Bonds Principal Interest Total $ 4,340 $ 2,143 $ 6,483 4,175 1,936 6,111 4,365 1,760 6,125 4,540 1,602 6,142 4,780 1,375 6,155 22,165 2,996 25,161 - Capital Leases Principal Interest Total $ 73 $ 8 $ 81 60 5 65 63 3 66 33 1 34 - $ $ 312,902 44,365 $ 11,812 $ 56,177 Certificates of Participation Principal Interest Total $ 2,216 $ 333 $ 2,549 2,282 267 2,549 2,350 198 2,548 2,421 128 2,549 2,493 55 2,548 - Community Facilities Districts General Obligation Bonds Principal Interest Total $ 2,680 $ 949 $ 3,629 2,770 859 3,629 2,555 764 3,319 2,475 680 3,155 2,550 600 3,150 9,550 1,831 11,381 3,640 527 4,167 585 54 639 $ $ 11,762 $ 981 $ 760,575 12,743 26,805 $ 6,264 $ 229 $ 17 $ 246 33,069 (continued) 98 City of Scottsdale, Arizona Total Total Principal Interest Total $ 53,313 $ 34,627 $ 87,940 56,877 32,478 89,355 61,217 30,231 91,448 64,340 28,056 92,396 66,264 25,667 91,931 298,025 90,870 388,895 190,967 40,620 231,587 99,309 11,554 110,863 79 $ 2,837 $ 5,866 $ 8,703 $ 890,391 $ (79) 294,024 $ 1,184,415 Business-Type Activities (in thousands) Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 2036-2040 Total Water and Sewer Revenue Bonds Principal Interest Total $ 3,055 $ 1,487 $ 4,542 3,195 1,354 4,549 3,370 1,195 4,565 3,540 1,026 4,566 3,725 849 4,574 12,450 1,331 13,781 - Municipal Property Corporation Bonds Principal Interest Total $ 11,760 $ 13,626 $ 25,386 12,640 13,052 25,692 13,365 12,435 25,800 13,979 11,792 25,771 14,798 11,106 25,904 81,053 43,959 125,012 82,012 25,045 107,057 49,035 8,051 57,086 7,800 390 8,190 $ $ 286,442 $ 139,456 $ 425,898 29,335 $ 7,242 $ 36,577 Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 2036-2040 Total Principal Interest Total $ 14,815 $ 15,113 $ 29,928 15,835 14,406 30,241 16,735 13,630 30,365 17,519 12,818 30,337 18,523 11,955 30,478 93,503 45,290 138,793 82,012 25,045 107,057 49,035 8,051 57,086 7,800 390 8,190 Total $ 315,777 $ 146,698 $ 462,475 City of Scottsdale, Arizona Notes to Financial Statements Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 Capital Appreciation Service Concession Arrangements Principal Interest Total $ 154 $ 142 $ 296 154 156 310 154 172 326 154 188 342 154 205 359 769 1,315 2,084 769 1,890 2,659 529 1,798 2,327 For the Fiscal Year Ended June 30, 2015 Governmental Activities (continued) (in thousands) 99 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements V. OTHER INFORMATION A. Risk Management The City is exposed to various risks of loss related to public and aviation premises liability, self-insured benefits, property, and workers’ compensation. Public liability includes public officials’ errors and omissions, law enforcement liability, 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 $1,000,000 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, 2015, the general liability claims payable totaled $13,625,680 and the self-insured benefits claims payable totaled $2,313,000. The City began to administer all self-insured health and dental plans in January of 2004. Years Ended June 30 (in thousands) 2015 2014 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 15,663 32,080 (31,804) $ 12,882 31,813 (29,032) Claims Payable, June 30 $ 15,939 $ 15,663 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 $2,500 up to $10,000,000 are probable, and $15,000 up to $5,000,000 are reasonably possible. Reasonably possible is defined that the chance of the loss occurring is more than remote, but less than probable. The City is self-insured for the first $2,000,000 of public liability; coverage in excess of this amount is provided through the purchase of commercial insurance. For more information on the City’s self-insurance, please see the Note V.A. above. In January 2013, the City entered into a settlement agreement with Scottsdale Fashion Square LLC to prepay an existing lease. In addition to a cash payment, the settlement included a provision for a waiver of $2.5 million against future City fees associated with the development of the Scottsdale Fashion Square parcel plus any property acquired in the future that is contiguous to the property. The eligible fees to be waived include water and sewer development fees. Per Arizona Revised Statute 9-463.05, “If a municipality agrees to waive any of the development fees assessed on a development, the municipality shall reimburse the appropriate development fee accounts for the amount that was waived.” As of June 30, 2015, approximately $866,000 in fee waivers had been applied. 100 City of Scottsdale, Arizona Subsequent Events In July 2015 the City received $10.2 million from Scottsdale National Golf Club, LLC, an Irrigation Water Distribution System (IWDS) participant. Payment assigned IWDS capacity ownership in the IWDS to Scottsdale National from Desert Mountain Club, Inc. effective on July 13, 2015. Of the funds received, $2.9 million was paid to Desert Mountain as consideration, the remaining funds are held by the IWDS for future expansion and replacement costs. In July 2015 the City received approximately $2.0 million from the sale of a city office complex located at 7575 E. Main Street that previously served as the offices for Human Resources department personnel. D. Joint Venture The City participates with the cities of Phoenix, Glendale, Mesa and Tempe in the multi-city Sub-Regional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) in order to govern the construction, operation and maintenance of jointly used sewage treatment and transportation facilities. The facilities include the 91st Avenue Wastewater Treatment Plant, the Salt River Outfall Sewer, the Southern Avenue Interceptor, and related transportation facilities. The City of Phoenix acts as lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the facilities. In addition, the City of Phoenix provides all management, personnel, and financing arrangements, and accepts federal grants on behalf of the participants. The JEPA requires each city to pay for its share of the actual cash costs of operating and maintaining the facilities based on relative sewage flows and strengths. Notes to Financial Statements C. For the Fiscal Year Ended June 30, 2015 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 sales tax is generated, collected and remitted to the City. As of June 30, 2015, this requirement has not been met under any of the agreements. The City’s estimated contingent liability at June 30, 2015 is $16,026,742. 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, 2014, (the latest audited information available from SROG), the City’s net investment in SROG was $105,809,000. SROG’s net cash operating expenses for the year ended June 30, 2014 were $38,837,978, of which the City’s share was $3,987,261, or 10.3 percent. For the year ended June 30, 2015, the City paid $247,420 for SROG capital contributions and $4,313,595 for SROG operating expenses, including adjustments to the operating and replacement reserves and prior year settlement. The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014, for the multi-city Sub-Regional Operating Group (the latest SROG CAFR available) may be obtained from the Arizona Municipal Water Users Association, 4041 N. Central Avenue, Suite 900, Phoenix, AZ 85012. E. Pollution Remediation In the proprietary funds financial statements, a long-term pollution remediation obligation is recognized for the remaining remediation period. In 1981, groundwater contamination was discovered when elevated levels of trichloroethylene (TCE) and other volatile organic chemicals were detected in two active City wells and three future wells. The City immediately shut down the affected wells. Following an investigation by the Environmental Protection Agency (EPA), the North Indian Bend Wash Site which includes the five wells above was placed on the federal Superfund list in 1983. City of Scottsdale, Arizona 101 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements The Superfund law was enacted in order to provide funding and regulatory authority for the study and cleanup of contaminated sites. The EPA, in conjunction with the State of Arizona, directs the cleanup of the North Indian Bend Wash (NIBW) Site that encompasses a groundwater contamination plume in Scottsdale. Following its investigation, the EPA identified three companies, Motorola Solutions (MSI), Inc., Siemens Corporation and GlaxoSmithKline 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 affected wells. 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. An Amended Consent Decree was signed by all parties in 2003 to capture additional voluntary and required work at the NIBW Site. No additional obligations were identified for the City. To facilitate groundwater sustainability and plume management, in 2012 the City voluntarily entered into an agreement with MSI to operate an additional groundwater treatment facility that would be designed and constructed to deliver treated water to the Chaparral Water Treatment Plant (CWTP). The North Indian Bend Wash Granular Activated Carbon Treatment Facility (NGTF) was completed in late 2013 and began delivery of water to the CWTP in August 2014. The facility is a granular activated carbon plant that is owned by MSI but operated and maintained by the City to treat a well owned by SRP. The type of treatment chosen was due to the lower concentration of contaminants in the well. All costs are reimbursed to the City by MSI. 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 CGTF liability, eight projected cash flows, based on the prior eight years of historical costs and weighted equally, were used to calculate an average annual cost. In order to estimate the NGTF liability, three projected cash flows, based on the prior three years of historical costs and weighted equally, were used to calculate an average annual cost. These average costs were then projected over the remaining remediation period of 59 years for CGTF and the NGTF. It is estimated that future remediation will be required for approximately 50-70 years at each site; this estimate is reviewed and revised every five years with the next review due in the next 18 months. Improvements in technology and changes in laws or regulations did not impact the average annual cost. The liability is revalued annually. Fiscal Year 2014/15 reimbursable outlays for operating and monitoring the CGTF were $375,181 and for the NGTF were $177,417. 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. 102 City of Scottsdale, Arizona All benefitted employees of the City, the Mayor and the City Council are covered by one of four pension plans. All full-time City employees, except public safety personnel (police officers and firefighters) and the Mayor and City Council, participate in the Arizona State Retirement System, a cost-sharing multipleemployer defined benefit pension plan. All public safety personnel participate in the Public Safety Personnel Retirement System, which is an agent multiple-employer defined benefit pension plan. The Mayor and City Council participate in either the Elected Officials’ Retirement Plan (a cost-sharing multiple-employer defined benefit pension plan) or the Elected Officials’ Defined Contribution Retirement System (a defined contribution plan). The City contributes to the Elected Officials’ Retirement Plan; however the plan is not described below because of its relative insignificance to the financial statements. The plans are component units of the State of Arizona. Arizona State Retirement System General Information about the Pension Plan Plan Description All benefitted City employees, except public safety personnel and the Mayor and City Council, participate in the Arizona State Retirement System (“ASRS”). The ASRS administers a costsharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. ASRS was established by the State of Arizona to provide pension benefits for employees of both the state and participating political subdivisions and school districts. ASRS is administered in accordance with Title 38, Chapter 5, Articles 2 and 2.1 of the Arizona Revised Statutes (ARS). The ASRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to ASRS, P. O. Box 33910, Phoenix, AZ 85067-3910, calling 1-800-621-3778, or by visiting https://www.azasrs.gov/content/annual-reports. Notes to Financial Statements Retirement and Pension Plans For the Fiscal Year Ended June 30, 2015 G. Benefits Provided The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefits terms. A member may retire upon meeting the following age and service requirements: Initial Membership Date Pre-July 1, 2011 July 1, 2011 and after Age Years of Service 65 N/A 62 10 Age plus years of service total 80 City of Scottsdale, Arizona Age Years of Service 65 62 60 55 N/A 10 25 30 103 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements The retirement benefit is based on a percentage of average monthly compensation multiplied by the years of credited service. The compensation generally does not include lump sum payments on termination of employment for accumulated vacation or annual leave, sick leave, compensatory time or any other form of termination pay (see discussion of pre-January 1, 1984 members below). The multiplier percentage and average monthly compensation are defined in the following schedules: Years of Service 0.00-19.99 years 20.00-24.99 years 25.00-29.99 years 30.00 or more years Multiplier 2.10% 2.15% 2.20% 2.30% Membership Date Pre-July 1, 2011 July 1, 2011 and after Average Monthly Compensation 36 consecutive months of highest compensation within final 120 months of service 60 consecutive months of highest compensation within final 120 months of service Members who began participation in the Plan prior to January 1, 1984 may choose to have average monthly compensation determined based upon the period of 60 consecutive months during which the member receives the highest compensation within the last 120 months of service, including lump sum payments as described above. Members who attain age 50 with at least five years of total credited service may take an early retirement; however, the amount of their retirement benefit is actuarially reduced. Survivor benefits are applicable if death occurs prior to retirement, and are payable, at the option of the beneficiary, by either of the following methods: 1. 2. A lump sum equal to the sum of (a) and (b): a. the sum of the member’s employee and employer balances, and accumulated interest and b. the amount of the member’s employee and employer accounts along with supplemental credits, if any, transferred from the System (closed portion of ASRS) to the Plan, with interest The beneficiary may elect to receive a monthly income, in the single life form, which is actuarially equivalent to the amount in 1. Retirees who have been retired one year are eligible for a permanent benefit increase (“PBI”) up to a maximum of a 4 percent increase. The PBI is paid from a reserve of “Excess Investment Earnings.” If there are no “Excess Investment Earnings” in reserve, then no PBI is paid. Further, PBI enhancements (“EPBI”) provide retired members with at least ten years of service who have been retired five or more years an additional benefit. For each complete 5-year period the member has been retired an incremental benefit is paid if monies to pay the benefit are available. This benefit is funded by an interest credit of 8 percent of the reserve for future PBIs. Due to legislation enacted in the 2013 legislative session, PBIs and EPBIs will not be awarded to members hired after September 13, 2013. 104 City of Scottsdale, Arizona Notes to Financial Statements The ARS provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of the City’s covered payroll. Although the statutes prescribe the basis of making the actuarial calculation, the Arizona legislature is authorized to approve a contribution rate other than the actuarially determined rate. Employees were required to contribute 11.6 percent (11.48 percent for retirement and 0.12 percent for long-term disability) of their annual pay for the fiscal year ended June 30, 2015, and the City’s required contribution rate was 11.6 percent (10.89 percent for retirement, 0.59 percent for health insurance premium benefit, and 0.12 percent for long-term disability) during the same time period. In addition, the City was required by statute to contribute at the actuarially determined rate of 9.57 percent (9.51 percent for retirement and 0.06 percent for long-term disability) of annual covered payroll of retired members who worked for the City in positions that would typically be filled by an employee who contributes to the ASRS. The required contribution rate for the year ended June 30, 2015, was actuarially determined to yield contribution amounts sufficient to finance costs earned by employees during the year and to amortize the Plan’s unfunded actuarially accrued liability over the period specified in the statutes. Contributions to the pension plan from the City were $11,092,000 for the year ended June 30, 2015. The City’s contributions for the years ending June 30, 2015, 2014, and 2013 for OPEB were $720,997, $828,499, and $859,525 respectively, all of which were equal to the required contributions for each year. For the Fiscal Year Ended June 30, 2015 Contributions Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the City reported a liability of $163,141,788 for its proportionate share of the collective net pension liability of the ASRS. The collective net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the collective net pension liability was determined by an actuarial valuation as of June 30, 2013. Update procedures were used to roll forward the total pension liability to the measurement date. The City’s proportion of the collective net pension liability was based on the City’s proportionate share of contributions to the pension plan relative to the contributions of all participating entities for the fiscal year ended June 30, 2014. At June 30, 2014, the City’s proportion was 1.102563 percent, which was an increase of .008684 percent from its proportion measured as of June 30, 2013 For the year ended June 30, 2015, the City recognized a collective pension expense of $11,168,228. At June 30, 2015, the City reported a collective deferred outflow of resources and a collective deferred inflow of resources related to pensions from the following sources (in thousands): Deferred Outflows of Resources Differences between expected and actual experience $ 8,291 Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date City of Scottsdale, Arizona $ - Changes in proportion and differences between City contributions and proportionate share of contributions Total Deferred Inflows of Resources $ 28,528 995 - 11,092 - 20,378 $ 28,528 105 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements The $11,092,000 reported as a collective deferred outflow of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the collective net pension liability in the year ended June 30, 2016. Other amounts reported as a collective deferred outflow of resources and a collective deferred inflow of resources related to pensions will be recognized in pension expense as follows (in thousands): Year ended June 30: 2016 2017 2018 2019 2020 Thereafter $ (3,095) (3,094) (5,921) (7,132) - Actuarial assumptions The total pension liability in the June 30, 2014 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial valuation date Actuarial rollforward date Actuarial cost method Amortization method Plan amendments Investment gain/loss Assumption gain/loss Experience gain/loss Asset valuation Discount rate Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2013 June 30, 2014 Entry age normal Immediate Five years Average future service lives Average future service lives Fair value 8% 3-6.75% 3% Included 1994 GAM Scale BB The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2012. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.79 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: 106 City of Scottsdale, Arizona Equity Fixed Income Real estate Commodities Long-Term Expected Real Rate of Return 63% 25% 8% 4% 100% 4.43% 0.80% 0.38% 0.18% Discount Rate The discount rate used to measure the total pension liability was 8 percent. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the actuarially determined amounts. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the City’s Proportionate Share of the Collective Net Pension Liability to Changes in the Discount Rate Notes to Financial Statements Target Allocation For the Fiscal Year Ended June 30, 2015 Asset Class The following presents the City’s proportionate share of the collective net pension liability calculated using the discount rate of 8 percent, as well as what the City’s proportionate share of the collective net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (7 percent) or 1-percentage-point higher (9 percent) than the current rate: City's proportionate share of the collective net pension liability 1% Decrease (7.0%) Discount Rate (8.0%) 1% Increase (9.0%) $ 206,203 $ 163,142 $ 139,779 Pension Plan Fiduciary Net Position The pension plan’s fiduciary net position has been determined on the same basis used by the pension plan. The financial statements of the ASRS are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America that apply to government accounting of fiduciary funds including the Governmental Accounting Standards Board (GASB) Statements 28, 34, 37, 40, 43, 53, 63 and 67. Benefits and refunds are recognized when due and payable. Publicly traded investments are reported at fair values determined by the custodial agent. The agents’ determination of fair values includes, among other things, utilization of pricing services or prices quoted by independent brokers at current exchange rates. ASRS’ derivative instruments which consist of futures, forward contracts, options, swaps, rights and warrants, are measured at fair value. The fair value of limited partnership investments are based on estimated current values and accepted industry practice. City of Scottsdale, Arizona 107 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Fair value is based on estimates and assumptions from information and representations provided by the respective general partners, in the absence of readily ascertainable market values. Shortterm investments are reported at cost plus accrued interest, which approximates fair value. For investments where no readily ascertainable fair value exists, management, in consultation with their investment advisors, has determined the fair values for the individual investments based on anticipated maturity dates and current interest rates commensurate with the investment’s degree of risk. Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. Public Safety Personnel Retirement System General Information about the Pension Plan Plan Description All of the City’s public safety personnel participate in the Public Safety Personnel Retirement System (“PSPRS”). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan (agent plans). PSPRS is administered in accordance with Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes. The PSPRS acts as a common investment and administrative agent that is jointly administered by the Board of Trustees (“the Board”) and 237 local boards. The PSPRS 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, calling (602) 2555575, or by visiting: http://www.psprs.com/sys_psprs/AnnualReports/cato_annual_rpts_psprs. htm. Benefits Provided The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. The calculation of retirement benefits for employees who became a member on or before December 31, 2011 commence the first day of the month following termination of employment and are based upon the following: 108 1. 20 years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service. 2. Age 62 with 15 years of service, or 20 years of service with less than 20 years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service. The pension is reduced by 4 percent per year for each year of credited service under 20 years. 3. 20 to 24.99 years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service plus 2 percent of the average monthly benefit compensation for each year of credited service between 20 and 24.99. 4. 25 or more years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service plus 2.5 percent of the average monthly benefit compensation for each year of credited service above 20 years - up to a maximum of 80 percent of the average monthly benefit compensation. City of Scottsdale, Arizona Age 52.5 with 25 years of service: 62.5 percent of the average monthly benefit compensation. Benefits will be reduced by 4 percent for each year of credited service under 25 years. 2. 25 or more years of service: 62.5 percent of the average monthly benefit compensation for the first 25 years of credited service plus 2.5 percent of the average monthly benefit compensation for each year over 25 years of credited service - up to a maximum of 80 percent of the average monthly benefit compensation. The pension is reduced by 4 percent per year for each year of credited service under 25 years with a pro-rata reduction for any fractional years. The phrase “average monthly benefit compensation,” as it is used in the above discussion, is defined as the average of the highest 36 consecutive months of compensation within the last 20 years of credited service (for employees who became a member on or before December 31, 2011) or as the average of the highest 60 consecutive months of compensation within the last 20 years of credited service (for employees who became a member on or after January 1, 2012). Disability benefits are calculated as follows: Accidental Disability Retirement: Catastrophic Disability Retirement: Ordinary Disability Retirement: Notes to Financial Statements 1. For the Fiscal Year Ended June 30, 2015 The calculation of retirement benefits for employees who became a member on or after January 1, 2012 commence the first day of the month following termination of employment and are based upon the following: 50% of average monthly compensation, or normal pension amount, whichever is greater. 90% of average monthly compensation for the first 60 months. Thereafter, the benefit is the greater of 62.5% of average monthly compensation or the member’s accrued normal pension. A percentage of normal pension on employee’s credited service (maximum of 20 years divided by 20). Survivor benefits are paid on behalf of an active member in the amount of 80 percent of the pension based on the calculation for an accidental disability retirement. If the member was killed in the line of duty, the benefit is 100 percent of the member’s average monthly benefit compensation. The benefit amount is allocated to the surviving spouse and, if applicable, eligible children. If there is no surviving spouse, and there is at least one eligible child, the guardian of the eligible child(ren) and the eligible child(ren) are the recipients of the benefit. If there is no surviving spouse or eligible child(ren), the member’s named beneficiary on file will receive the member’s accumulated contributions. Benefits are paid on behalf of an inactive, non-retired member to the member’s named beneficiary in the amount of the member’s accumulated contributions. Death benefits are paid on behalf of a retired member in a manner similar to an active member. The surviving spouse (if married for at least two consecutive years at the time of the member’s death) will receive 80 percent of the member’s pension benefit for lifetime. The surviving children and guardian provisions are the same as those regarding active members, with the exception that the percentages received are based upon the pension amount as opposed to the amounts referenced above for active members. If there is no surviving spouse or eligible child(ren), the member’s named beneficiary on file will receive the member’s accumulated contributions less the pension payments made to the member. City of Scottsdale, Arizona 109 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements A retired member or survivor of a retired member may receive a benefit increase from the System if monies are available. Effective July 1, 2013, and each July 1 thereafter, as long as there are no monies left to pay under the old benefit increase structure, a benefit increase will be issued as long as the following criteria have been met: 1. A retired member who became a member on or before December 31, 2011, or the survivor of a retired member, was receiving benefits on or before July 31 of the two previous years, OR was 55 or older on July 1 of the current year and receiving benefits on or before July 31 of the previous year. 2. A retired member who became a member on or after January 1, 2012, or the survivor of a retired member, was 55 or older on July 1 of the current year and is receiving benefits, OR the retired member was under 55 on July 1 of the current year, was receiving an accidental disability or a catastrophic disability retirement benefit and was receiving benefits on or before July 31 of the two previous years, OR a survivor was under 55 on July 1 of the current year, is the survivor of a member who was killed in the line of duty and was receiving benefits on or before July 31 of the two previous years. The increase is contingent upon a total return of more than 10.5 percent for the prior fiscal year, and will be calculated as follows (if there are insufficient earnings to cover the maximum increases, the percentage increase is limited to the earnings available): Ratio of Actuarial Value of Assets to Liabilities 60-64% 65-69% 70-74% 75-79% 80% or more Maximum increase 2.00% 2.50% 3.00% 3.50% 4.00% From and after December 31, 2015, legislature may enact permanent one-time benefit increases after an analysis of the effect of the increase on the System by the Joint Legislative Budget Committee (JLBC). Employees covered by benefit terms At June 30, 2015, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active Employees Total 110 210 88 628 926 City of Scottsdale, Arizona ARS Title 9, Chapter 8, Article 3, Section 9-952 requires the state treasurer to distribute a fire insurance premium tax to the respective incorporated cities and towns and legally organized fire districts in proportion to the full cash value of the real property and improvements in each incorporated city and town and legally organized fire district which procures the services of a private fire company and in each area served by a department or legally organized fire district. The warrant issued by the state treasurer is identified as the “fire fighters’ relief and pension fund”, to cover the firefighting personnel deposit into the pension plan. The annual tax provided by law is based on a portion of the premiums received on policies and contracts of fire insurance covering property within the state. The PSPRS received $1,606,097 of fire insurance premium tax for the City of Scottsdale’s fire pension plan for fiscal year ended June 30, 2015. PSPRS accounts for the fire insurance premium tax collected for the City as employer contributions. Notes to Financial Statements ARS Title 38, Chapter 5, Article 4, Section 38-843 provides the authority for determining the City and active employee contribution requirements to the PSPRS pension and health insurance premium benefit plans. The contribution rates for employers are based on an actuarially determined rate recommended by an independent actuary contracted by the Board. The contribution rates for employees are prescribed by the ARS Section referenced above. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. For the fiscal year ended June 30, 2015, the employee contribution rate for pensions was 11.05 percent of annual pay for fire and police employees. The City’s contribution rate for pensions was 27.04 percent for police employees and 11.23 percent for fire employees. The City’s contribution rate for the health insurance premium benefit plans was 1.34 percent for police employees and 0.77 percent for fire employees. In addition, the City was required by statute to contribute at the actuarially determined rate of 19.65 percent of annual covered payroll of retired members who worked for the City in positions that would typically be filled by an employee who contributes to the PSPRS. The City’s contributions to the pension plan and annual OPEB cost for the year ended June 30, 2015, were $9,591,314 and $629,201, respectively. For the Fiscal Year Ended June 30, 2015 Contributions and Annual OPEB Cost Net Pension Liability The City’s net pension liability of $108,990,615 was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial assumptions The total pension liability in the June 30, 2014 measurement was determined using the following actuarial assumptions: Actuarial Cost Method Asset Valuation Method Inflation Salary increases Investment rate of return Mortality rates Individual Entry Age Normal Market Value of Assets 4.00% 4.00%-8.00%, including inflation 7.85%, net of investment and administrative expenses RP-2000 mortality table projected to 2015 using projection scale AA (adjusted by 105% for both males and females). The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study covering the 2006-2011 period. City of Scottsdale, Arizona 111 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These real rates of return are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. For each major asset class that is included in the pension plan’s target asset allocation as of June 30, 2014, these best estimates are summarized in the following table: Asset Class U.S. Equity Non-U.S. Equity Private Equity Fixed Income Credit Opportunities Absolute Return GTAA Real Assets Real Estate Risk Parity Short Term Investments Target Allocation 16.00% 14.00% 11.00% 7.00% 13.00% 4.00% 10.00% 8.00% 11.00% 4.00% 2.00% 100.00% Long-Term Expected Real Rate of Return* 7.60% 8.63% 9.50% 4.75% 8.00% 6.75% 5.73% 5.96% 6.50% 6.04% 3.25% * Geometric Real Rate of Return. Based on inflation assumption of 2.50%. Discount rate The discount rate used to measure the total pension liability was 7.85 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the statutorily mandated amounts and employer contributions will be made at the actuarially determined amounts. Based on those assumptions, the PSPRS plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 112 City of Scottsdale, Arizona Increase (Decrease) Balances at 6/30/14 Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions/other inputs Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at 6/30/15 Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability (a)-(b) $ $ $ $ 218,281 124,647 93,634 6,363 16,898 3,987 (896) 22,122 - 7,997 3,495 17,047 6,363 16,898 3,987 (896) 22,122 (7,997) (3,495) (17,047) (12,411) 36,063 254,344 (12,411) (137) (50) 15,941 140,588 137 50 20,122 113,756 $ $ Notes to Financial Statements Public Safety Personnel Retirement System (Police) Changes in the Net Pension Liability (dollars in thousands) For the Fiscal Year Ended June 30, 2015 Changes in the Net Pension Liability Public Safety Personnel Retirement System (Fire) Changes in the Net Pension Liability (dollars in thousands) Increase (Decrease) Balances at 6/30/14 Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions/other inputs Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at 6/30/15 City of Scottsdale, Arizona Total Pension Liability (Asset) (a) Plan Fiduciary Net Position (b) Net Pension Liability (Asset) (a)-(b) $ $ $ $ 42,567 44,257 (1,690) 3,509 3,449 (448) 462 1,157 - 2,392 2,629 6,294 3,509 3,449 (448) 462 1,157 (2,392) (2,629) (6,294) (780) 7,349 49,916 (780) (51) (60) 10,424 54,681 51 60 (3,075) (4,765) $ $ 113 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Sensitivity of the net pension liability to changes in the discount rate The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.85 percent, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.85 percent) or 1-percentagepoint higher (8.85 percent) than the current rate: 1% Decrease (6.85%) Police net pension liability (asset) Fire net pension liability (asset) $ 145,007 3,393 Discount Rate (7.85%) $ 113,756 (4,765) 1% Increase (8.85%) $ 87,760 (11,318) Pension plan fiduciary net position The pension plan’s fiduciary net position has been determined on the same basis used by the pension plan. PSPRS financial statements are prepared using the accrual basis of accounting. Benefits are recognized when due and payable in accordance with the terms of PSPRS. Refunds are due and payable by state law within 20 days of receipt of a written application for a refund. Refunds are recorded when paid. PSPRS investments are reported at fair value. Fair values are determined as follows: Short-term investments are reported at cost plus accrued interest. Equity securities are valued at the last reported sales price. Fixed-income securities are valued using the last reported sales price or the estimated fair value as determined by fixed income broker/ dealers plus accrued interest. Investments in hedge funds are valued monthly at the last reported valuations. Limited partnership investments in credit opportunities, private equity, real assets and real estate are valued on a quarterly or monthly basis at last reported valuations adjusted by any subsequent cash flows. Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the City recognized pension expense of $15,786,095. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Differences between expected and actual experience $ Change of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total 114 $ Deferred Inflows of Resources 420 $ 758 19,773 - - 7,785 9,591 - 29,784 $ 8,543 City of Scottsdale, Arizona 2016 2017 2018 2019 2020 Thereafter $ 1,464 1,464 1,464 1,465 3,411 2,382 Agent Plan OPEB Trend Information The table below presents the annual OPEB cost information for the health insurance premium benefit for the current and two preceding years: Three-Year Trend Information for PSPRS (Police) (dollars in thousands) Fiscal Year Ending 2015 2014 2013 Annual OPEB Cost $ 442 376 415 Percentage of Annual Cost Contributed 100% 100% 100% Notes to Financial Statements Year ended June 30: For the Fiscal Year Ended June 30, 2015 City contributions subsequent to the measurement date of $9,591,314 were reported as deferred outflows and will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Net OPEB Obligation $ - Three-Year Trend Information for PSPRS (Fire) (dollars in thousands) Fiscal Year Ending 2015 2014 2013 Annual OPEB Cost $ 156 125 122 Percentage of Annual Cost Contributed 100% 100% 100% Net OPEB Obligation $ - Agent Plan OPEB Actuarial Assumptions Actuarial valuations involve estimates of the reported amounts’ value and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress for the health insurance premium benefit presented as required supplementary information provides multi-year trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. City of Scottsdale, Arizona 115 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Projections of benefits are based on (1) the plan as understood by the City and plan members and include the types of benefits in force at the valuation date and (2) the pattern of sharing benefit costs between the City and plan members to 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. The actuarial methods and assumptions used to establish the fiscal year 2015 contribution requirements are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation Retirement age Mortality Assumed future permanent benefit increases June 30, 2013 Entry age normal Level Percentage of Payroll, Closed 23 years; if the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years and applied as a credit to reduce the normal cost which otherwise would be payable. 7-Year smoothed market; 80%/120% market 7.85%, net of investment and administrative expenses 4.5% - 8.5% 4.0% Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 - June 30, 2011. RP-2000 mortality table projected to 2015 using projection scale AA (adjusted by 105% for both males and females). No explicit assumed permanent benefit increases assumption The funded status of the PSPRS health insurance premium benefit plan in the June 30, 2014, actuarial valuation was determined using the following actuarial methods and assumptions, applied to all periods included in the measurement: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation 116 June 30, 2014 Entry age normal Level Percentage of Payroll, Closed 22 years; if the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years and applied as a credit to reduce the normal cost which otherwise would be payable. 7-Year smoothed market; 80%/120% market 7.85%, net of investment and administrative expenses 4.0% - 8.0% 4.0% City of Scottsdale, Arizona Public Safety Personnel Retirement System (Police) Funded Status for Health Insurance (dollars in thousands) June 30, 2014 Actuarial Accrued Liability (AAL) Retired members and beneficiaries Active members DROP members Total Valuation Assets Net Unfunded Actuarial Accrued Liability $ $ 2,010 2,869 539 5,418 5,809 (391) 107.2% Percent Funded $ Annual Covered Payroll Unfunded AAL as a Percentage of Covered Payroll Notes to Financial Statements The following tables present the funded status of the health insurance premium benefit plans as of the most recent valuation date, June 30, 2014: For the Fiscal Year Ended June 30, 2015 Agent Plan OPEB Funded Status 31,348 0.0% Public Safety Personnel Retirement System (Fire) Funded Status for Health Insurance (dollars in thousands) June 30, 2014 Actuarial Accrued Liability (AAL) Retired members and beneficiaries Active members DROP members Total Valuation Assets Net Unfunded Actuarial Accrued Liability $ $ 74.5% Percent Funded Annual Covered Payroll Unfunded AAL as a Percentage of Covered Payroll City of Scottsdale, Arizona 115 1,243 41 1,399 1,042 357 $ 19,336 1.8% 117 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Elected Officials’ Defined Contribution Retirement System The City contributes to the Elected Officials’ Defined Contribution Retirement System (EODCRS), which includes a defined contribution pension plan for elected officials and judges of certain state, county and local governments. Participants in this plan include only those elected officials who began service subsequent to December 31, 2013, and had no relationship to ASRS or EORP at the inception of service. The Board of Trustees of the PSPRS is also the administrator for the EODCRS. Benefit terms, including contribution requirements, for EODCRS are established by Title 38, Chapter 5, Article 3.1 of the Arizona Revised Statutes and may be amended by the State of Arizona. For each member of EODCRS, the City is required to contribute 6 percent of gross compensation to an individual member retirement account. Members are required to contribute 8 percent of gross compensation to their retirement account. Members are immediately vested in both their and the City’s contributions and earnings on those contributions. For the year ended June 30, 2015, the City recognized pension expense of $499. 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 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. The medical leave not paid out in cash is applied to a retirement health savings account at the employee’s hourly rate of pay at the time of retirement. For shift fire employees with more than 420 hours and all other retirees with 300 or more hours of accumulated medical leave hired on or after July 1, 1982, the City will 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. The projected liability for active employees, as of June 30, 2015, was $14,445,798. The projected liability was considered payable within one year or greater and was therefore considered non-current and included in the proprietary and government-wide financial statements. Significant actuarial assumptions of the January 1, 2015 actuarial valuation include: a) mortality rates based on the RPH-2014 TotalDataset Mortality Table fully generational using scale MP 2014, b) interest compounded 4.0 percent annually, c) salary increases at a rate of 2 percent to 4 percent based on years of service, and d) Traditional Unit Credit cost method based on participant data as of January 1, 2015. 118 City of Scottsdale, Arizona The cost of postemployment healthcare benefits, from an accrual accounting perspective, should be associated with the periods in which the future costs are earned rather than in the future years when they will be paid (similar to the cost of pension benefits). 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 were 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 is being amortized over 30 years; the first period began with the fiscal year ended June 30, 2007. Plan Description The City provides postemployment medical care (OPEB) for eligible retired employees through a single-employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and their dependents through the City’s group health insurance plans. 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 Notes to Financial Statements Postemployment Benefits Other Than Pensions For the Fiscal Year Ended June 30, 2015 I. The City offers postemployment medical benefits to its eligible retirees. An eligible retiree is a Public Safety Personnel Retirement System Accidental Disability retired employee. Eligible 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. As of June 30, 2015, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Terminated Employees Eligible for Benefits, But Not Yet Enrolled Active Employees Total Participating Employers 23 643 666 1 Funding Policy The plan premium rates are determined annually in collaboration with an outside employee benefits 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 ended June 30, 2015, the eligible retirees paid 100 percent of the blended actuarial rate. By continuing to provide eligible retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to eligible 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 ended June 30, 2015, retirees contributed $171,380 and the City contributed $90,367 (implied subsidy). City of Scottsdale, Arizona 119 For the Fiscal Year Ended June 30, 2015 Notes to Financial Statements Annual OPEB costs and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost for the 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 the plan are as follows at June 30, 2015 (in thousands): Annual Required Contribution Interest on Net OPEB Obligation (Asset) Adjustment to Annual Required Contribution Annual OPEB Cost Contributions Made Change in Net OPEB Obligation Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year $ 387 25 (33) 379 (91) 288 627 915 $ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation were as follows (in thousands): Fiscal Year Ended 2013 2014 2015 Annual OPEB Cost $ 636 453 379 Employer Contributions $ 186 114 91 Percentage of OPEB Cost Contributed 29.2% 25.2% 24.0% Net OPEB Obligation (Asset) $ 288 627 915 Funded Status The funded status of the plan as of June 30, 2015 was as follows (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 3,234 3,234 0% $ 46,522 7.0% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. 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 129. 120 City of Scottsdale, Arizona Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method July 1, 2014 Projected Unit Credit Level Percentage of Payroll 22 years, Closed N/A Actuarial Assumptions Investment Rate of Return Inflation Rate Projected Salary Increases Healthcare Inflation Rate 4%* 3% 2.8% 8.5% initial rate, 5% ultimate rate Notes to Financial Statements 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: For the Fiscal Year Ended June 30, 2015 Actuarial Methods and Assumptions *Investment rate of return based on City's own investments 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 retirees. Any current and future years subsidies are recorded as revenue in the year received and are not recognized as a reduction to the actuarial accrued liability. City of Scottsdale, Arizona 121 For the Fiscal Year Ended June 30, 2015 Required Supplementary Information Proportionate Share of Collective Net Pension Liability for Cost –Sharing Pension Plan Schedule of the City's Proportionate Share of the Collective Net Pension Liability Arizona State Retirement System Current Fiscal Year (in thousands) 2015 City's proportion of the net collective pension liability 1.102563% City's proportionate share of the collective net pension liability $ 163,142 City's covered-employee payroll $ 99,077 City's proportionate share of the collective net pension liability as a percentage of its coveredemployee payroll 164.66% Plan fiduciary net position as a percentage of the total pension liability 69.49% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information for the prior years is not available. 122 City of Scottsdale, Arizona 2015 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability-beginning Total pension liability-ending (a) Plan fiduciary net position Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position $ 6,363 16,898 3,987 (896) 22,122 (12,411) 36,063 218,281 $ 254,344 $ 7,997 3,495 17,047 (12,411) (137) (50) 15,941 Plan fiduciary net position-beginning Plan fiduciary net position-ending(b) 124,647 $ 140,588 City's net pension liability-ending ((a) - (b)) $ 113,756 Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll City's net pension liability as a percentage of covered-employee payroll Required Supplementary Information Public Safety Personnel Retirement System (Police) Schedule of Changes in the City's Net Pension Liability and Related Ratios Last Fiscal Year (Dollar amounts in thousands) For the Fiscal Year Ended June 30, 2015 Changes in the City’s Net Pension Liability (Asset) and Related Ratios for Agent Pension Plan 55.27% $ 31,438 361.84% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information for the prior years is not available. See accompanying notes to the schedule. City of Scottsdale, Arizona 123 For the Fiscal Year Ended June 30, 2015 Required Supplementary Information Public Safety Personnel Retirement System (Fire) Schedule of Changes in the City's Net Pension Liability (Asset) and Related Ratios Last Fiscal Year (Dollar amounts in thousands) 2015 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability-beginning Total pension liability-ending (a) Plan fiduciary net position Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position $ $ $ 3,509 3,449 (448) 462 1,157 (780) 7,349 42,567 49,916 2,392 2,629 6,294 (780) (51) (60) 10,424 Plan fiduciary net position-beginning Plan fiduciary net position-ending(b) $ 44,257 54,681 City's net pension (asset)-ending ((a) - (b)) $ (4,765) Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll 109.55% $ 19,336 City's net pension liability as a percentage of covered-employee payroll 0.00% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information for the prior years is not available. See accompanying notes to the schedule. 124 City of Scottsdale, Arizona 2014 $ 10,635 2013 $ 9,949 Contributions in relation to the statutorily required contribution (11,092) (10,635) (9,949) Contribution deficiency (excess) $ - $ - $ - Covered-employee payroll $ 101,962 $ 99,077 $ 97,257 Contributions as a percentage of covered-employee payroll 10.88% 10.73% 10.23% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information prior to fiscal year 2013 is not available. City of Scottsdale, Arizona Required Supplementary Information Statutorily required contribution 2015 $ 11,092 For the Fiscal Year Ended June 30, 2015 Schedule of City Contributions Arizona State Retirement System Last 3 Fiscal Years (in thousands) 125 For the Fiscal Year Ended June 30, 2015 Required Supplementary Information Schedule of City Contributions Public Safety Personnel Retirement System (Police) Last Fiscal Year (Dollar amounts in thousands) Actuarially determined contribution $ Employer contributions in relation to the actuarially determined contribution 2015 8,921 $ 8,921 2014 7,997 7,997 Contribution deficiency (excess) $ - $ - Covered-employee payroll $ 33,075 $ 31,438 Contributions as a percentage of covered-employee payroll 26.97% 25.44% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information prior to 2014 is not available. See accompanying notes to the schedule. 126 City of Scottsdale, Arizona $ Employer contributions in relation to the actuarially determined contribution 2015 2,276 $ 2,276 2014 2,392 2,392 Contribution deficiency (excess) $ - $ - Covered-employee payroll $ 20,420 $ 19,336 Contributions as a percentage of covered-employee payroll 11.15% 12.37% The City implemented GASB Statement No. 68 for the fiscal year ended June 30, 2015. Information prior to 2014 is not available. Required Supplementary Information Actuarially determined contribution For the Fiscal Year Ended June 30, 2015 Schedule of City Contributions Public Safety Personnel Retirement System (Fire) Last Fiscal Year (Dollar amounts in thousands) See accompanying notes to the schedule. City of Scottsdale, Arizona 127 For the Fiscal Year Ended June 30, 2015 Required Supplementary Information Schedule of OPEB Plans’ Funding Progress The following schedules of funding progress, presented as required supplementary information (RSI), present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits: Public Safety Personnel Retirement System (Police) Schedule of Funding Progress Health Insurance (dollars in thousands) Actuarial Valuation June 30 2012 2013 2014 (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (2)-(1) Payroll (4)/(5) $ 5,485 $ 32,276 17.0% 5,407 30,601 17.7% (391) 31,438 0.0% (2) (3) (1) Actuarial Actuarial Value Accrued Liability Percent Funded (1)/(2) of Assets (AAL) $ - $ 5,485 0.0% 5,407 0.0% 5,809 5,418 107.2% See accompanying notes to the schedule. Public Safety Personnel Retirement System (Fire) Schedule of Funding Progress Health Insurance (dollars in thousands) Actuarial Valuation June 30 2012 2013 2014 (2) (3) (1) Actuarial Actuarial Value Accrued Liability Percent Funded (1)/(2) of Assets (AAL) $ - $ 1,059 0.0% 1,276 0.0% 1,042 1,399 74.5% (6) Unfunded AAL as a Percentage (4) (5) of Covered Unfunded AAL Annual Covered Payroll (4)/(5) (2)-(1) Payroll $ 1,059 $ 18,203 5.8% 1,276 17,980 7.1% 357 19,336 1.8% See accompanying notes to the schedule. 128 City of Scottsdale, Arizona (1) Actuarial Value of Assets $ - Other Post-Employment Benefit Plan Schedule of Employer Contribution (dollars in thousands) Actuarial Valuation July 1 2012 2013 2014 City of Scottsdale, Arizona (2) (1) Annual Required Contribution Employer (ARC) Contributions $ 186 $ 635 114 455 91 387 (3) Percent Contributed (1)/(2) 29.3% 25.1% 23.5% Required Supplementary Information Actuarial Valuation July 1 2012 2013 2014 (dollars in thousands) (2) (6) Projected Unit Unfunded AAL Credit Cost as a Percentage (3) (4) (5) Actuarial of Covered Accrued Liability Percent Funded Unfunded AAL Annual Covered Payroll (AAL) (1)/(2) (2)-(1) Payroll (4)/(5) $ 5,754 0.0% $ 5,754 $ 42,805 13.4% 4,148 0.0% 4,148 45,422 9.1% 3,234 0.0% 3,234 46,522 7.0% For the Fiscal Year Ended June 30, 2015 Other Post-Employment Benefit Plan Schedule of Funding Progress 129 This page is intentionally blank. 130 City of Scottsdale, Arizona Actuarial determined contribution rates for PSPRS are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation Retirement age Mortality Assumed future permanent benefit increases II. June 30, 2013 Entry age normal Level Percentage of Payroll, Closed 23 years; if the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years and applied as a credit to reduce the normal cost which otherwise would be payable. 7-Year smoothed market; 80%/120% market 7.85%, net of investment and administrative expenses 4.5% - 8.5% 4.0% Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 - June 30, 2011. RP-2000 mortality table projected to 2015 using projection scale AA (adjusted by 105% for both males and females). No explicit assumed permanent benefit increases assumption Notes to Required Supplementary Information ACTUARIALLY DETERMINED CONTRIBUTION RATES For the Fiscal Year Ended June 30, 2015 I. FACTORS THAT AFFECT THE IDENTIFICATION OF TRENDS Beginning in fiscal year 2014, PSPRS established separate funds for pension benefits and health insurance premium benefits. Previously, the plan recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2014, the plan transferred prior-year health insurance premium benefit contributions that exceeded benefit payments from the plan’s Pension Fund to the new Health Insurance Fund. City of Scottsdale, Arizona 131 This page is intentionally blank. 132 City of Scottsdale, Arizona 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. Transportation This fund receives and expends the City’s allocation of the Arizona Highway User Revenue tax and 1.2 percent of transportation privilege tax for transportation improvements. The amount of Highway User Revenue available to each city is allocated on a population basis, which is determined by the latest federal census and must be used for street construction, reconstruction, maintenance or transit. Community Development Block Grant Fund This fund receives and expends the City’s Community Development Block Grant revenues. The amount of the grant is awarded annually by the U.S. Department of Housing and Urban Development (HUD). Community Development Block Grant revenues may be used only for those projects approved in the grant budget and are subject to agency expenditure guidelines. HOME Fund This fund receives and expends monies from the Maricopa County Home Consortium. Expenditures are made to provide affordable housing, expand the capacity of nonprofit housing providers, strengthen the ability of local governments to provide housing, and leverage private-sector participation in housing. Grants Fund This fund receives and expends the City’s grant revenues not accounted for in other funds. The amount of grants received is generally based on applications to granting agencies by the City and on availability of funding by the grantors. Grant revenues may be used only for the stated purpose in the approved grant agreement and are subject to grantor expenditure guidelines. City of Scottsdale, Arizona Section 8 Fund This fund receives and expends the City’s Section 8 Housing revenues. 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 Housing revenues may be used only for assistance approved by HUD and are subject to agency expenditure guidelines. Preserve Privilege Tax Fund This fund receives a 0.35 percent Preservation Privilege (Sales) Tax revenue approved by the voters in 1995 (0.2 percent) and 2004 (0.15 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 Facilities Districts (CFD) Funds Scottsdale Mountain CFD McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD These funds account for the non-debt related expenditures incurred by community facilities districts. Streetlight Districts Fund This fund accounts for the property tax revenues received from the streetlight districts generated through the annual streetlight district levy. These funds are restricted for electricity expenditures of each streetlight district. 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 source of the revenue. Tourism Development Fund This fund receives revenues generated through transient occupancy taxes and certain lease rentals. The use of these funds has been committed by the City Council for tourism-related purposes. 133 DEBT SERVICE FUNDS Debt Service 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 Debt Service 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. Debt Service Stabilization Fund This fund accounts for revenues received for future debt payments from the Arizona Sports and Tourism Authority, the Maricopa County Stadium District, the San Francisco Giants and funds committed by the City Council to be used for repayment of debt. Community Facilities Districts (CFD) Funds Scottsdale Mountain CFD McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD 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 the proceeds and interest 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. Preserve 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 0.15 percent 2004-approved Preserve Privilege Tax. MPC (Municipal Property Corporation) Bond Fund Accounts for the activity related to the MPC bond proceeds and authorized capital improvements. 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 0.35 percent Preservation Privilege (Sales) Tax revenue approved by the voters in 1995 (0.2 percent) and 2004 (0.15 percent). 134 City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Governmental Funds June 30, 2015 (in thousands) Special Revenue Funds ASSETS Cash and Investments Cash with Fiscal Agent Receivables Interest Privilege Tax Transient Occupancy Tax Franchise Fee Property Tax Highway User Tax Intergovernmental Grants Miscellaneous Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ $ $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources Fund Balances Restricted Committed Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances City of Scottsdale, Arizona $ 66,091 73 40 4,267 752 58 1 1,257 3,405 971 503 77,418 2,479 437 2 - Debt Service Funds $ $ $ 10,976 19,825 85 17,632 48,518 6,108 13,130 Capital Projects Funds Total Nonmajor Governmental Funds $ $ $ $ 44,746 695 83 99 45,623 3,621 42 41 - $ $ 121,813 20,593 123 4,267 752 58 86 1,257 21,037 1,070 503 171,559 6,100 479 43 6,108 13,130 6,998 1,101 1 5 20 11,043 19,238 3,704 6,998 1,101 1 5 20 33,985 1,267 17,673 99 19,039 12,310 36,911 3,803 53,024 49,515 16,676 (1,083) 65,108 6,907 4,700 11,607 41,836 (16) 41,820 98,258 21,376 (1,099) 118,535 77,418 $ 48,518 $ 45,623 $ 171,559 135 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Special Revenue Funds REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Fees 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 EXPENDITURES Current General Government Mayor and City Council City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Outlay Total Expenditures $ $ $ Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending 136 $ 83 53,526 17,047 290 Debt Service Funds $ Total Nonmajor Governmental Funds Capital Projects Funds 3,470 - $ - $ 3,553 53,526 17,047 290 13,461 652 53 - - 13,461 652 53 315 1,700 - - 315 1,700 173 1,753 460 2,250 310 (90) 168 - 337 (75) 173 1,753 460 2,418 647 (165) 7,710 360 2,908 484 531 2,067 654 524 57 107,278 1,489 5,127 2,229 1,485 950 11 4,937 9,939 360 5,882 484 531 2,067 1,604 524 68 117,342 75 1,636 855 114 14,959 20,744 1,885 11,121 583 $ $ - $ $ - $ $ 75 1,636 855 114 14,959 20,744 1,885 11,121 583 51,972 13,130 12,418 677 26,225 34,003 34,003 13,130 12,418 677 34,003 112,200 55,306 (21,098) (29,066) 5,142 99 (47,465) (47,366) 21,884 (1,062) 46,758 8,571 (54,626) 21,525 13,568 (7,177) 26,815 1,070 34,276 35,551 (55,704) 46,758 26,815 9,641 (54,626) 8,435 7,940 427 5,210 13,577 57,168 65,108 $ 11,180 11,607 $ 36,610 41,820 $ 104,958 118,535 City of Scottsdale, Arizona City of Scottsdale, Arizona Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2015 (in thousands) Community Development Block Grant Transportation ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax Franchise Fee Highway User Tax Intergovernmental Grants Miscellaneous Prepaid Items Total Assets $ $ 11,307 1,522 1,257 93 14,179 $ $ HOME 559 261 6 826 $ $ Grants 357 357 $ $ Preserve Privilege Tax Section 8 936 353 5 1,294 $ $ 351 351 $ $ 30,380 40 2,745 33,165 Scottsdale Mountain CFD $ $ McDowell Mountain CFD - $ $ - LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources Fund Balances Restricted Committed Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances (continued) $ 1,054 321 - $ 35 12 - $ 354 1 2 $ 43 12 - $ 4 14 - $ 18 - $ - $ - 1,375 737 5 789 357 141 1,098 1,294 18 18 - - 93 77 355 343 - - - - 1,468 866 712 1,637 18 18 - - 12,711 12,711 34 (74) (40) (355) (355) (343) (343) 333 333 33,147 33,147 - - 14,179 $ 826 $ 357 $ 1,294 $ 351 $ 33,165 $ - $ - 137 138 Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2015 (in thousands) Via Linda Road CFD DC Ranch CFD ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax Franchise Fee Highway User Tax Intergovernmental Grants Miscellaneous Prepaid Items Total Assets $ $ 58 1 59 $ $ Waterfront Commercial CFD - $ $ 15 15 Streetlight Districts $ $ Tourism Development Special Programs 17 7 24 $ $ 12,941 58 3,405 211 16,615 $ $ Total 9,600 752 181 10,533 $ $ 66,091 73 40 4,267 752 1 58 1,257 3,405 971 503 77,418 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ Deferred Inflows of Resources Unavailable Revenues City of Scottsdale, Arizona Total Liabilities and Deferred Inflows of Resources Fund Balances Restricted Committed Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ - $ - $ - $ - $ 292 69 - $ 679 8 - $ 2,479 437 2 - - - - 6,120 3 18 6,502 1 2 690 6,998 1,101 1 5 20 11,043 - - - - 343 56 1,267 - - - - 6,845 746 12,310 59 59 - 15 15 24 24 3,192 6,889 (311) 9,770 9,787 9,787 49,515 16,676 (1,083) 65,108 59 $ - $ 15 $ 24 $ 16,615 $ 10,533 $ 77,418 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances City of Scottsdale, Arizona Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Community Development Block Grant Transportation HOME Grants Section 8 Preserve Privilege Tax Scottsdale Mountain CFD McDowell Mountain CFD $ $ $ REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees Fines, Fees, and Forfeitures Court Court Enhancement Police 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 $ EXPENDITURES Current General Government Mayor and City Council City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Streetlight and Services Districts Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) 139 (continued) $ $ - $ - $ - 34,429 - 10 - 10 - - - - - - - - - - - - - - - - - 52 - - - 1 - 284 (84) - - 503 524 18 34,255 1,066 1,118 12 12 1,180 360 92 1,506 1 3,139 5,452 2 15 5,470 3 34,632 10 10 14,871 7,900 1,182 23,953 1,171 1,171 366 366 855 70 497 879 762 3,063 5,251 5,251 4 4 10 10 10 10 10,302 (53) (354) 76 219 34,628 - - - - (19) (19) (4) (4) 7 (29,547) (29,540) - - (53) (354) 57 215 5,088 - - 697 $ - 13,461 652 - (9,605) (9,605) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending 19,097 - 12,014 12,711 $ 13 (40) $ (1) (355) $ (400) (343) $ 118 333 $ 28,059 33,147 $ - $ - 140 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) DC Ranch CFD Via Linda Road CFD Waterfront Commerical CFD Streetlight Districts Tourism Development Special Programs Total REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Fees 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 $ City of Scottsdale, Arizona EXPENDITURES Current General Government Mayor and City Council City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Streetlight and Services Districts Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures 53 - $ 10 - $ - $ - $ 290 $ 17,047 - $ 83 53,526 17,047 290 - - - - 53 - 13,461 652 53 - - - - 315 1,700 - 315 1,700 - - - - 173 1,753 460 411 25 (6) 1,787 - 173 1,753 460 2,250 310 (90) 53 10 - 531 531 2,313 484 561 629 21 9,182 22 18,856 7,710 360 2,908 484 531 2,067 654 524 57 107,278 70 70 10 10 10 10 583 583 1,636 18 532 1,006 2,389 5,581 75 11,815 11,890 75 1,636 855 114 14,959 20,744 1,885 11,121 583 51,972 (17) - (10) (52) 3,601 6,966 55,306 - - - - 60 (1,834) (1,774) 32 (6,456) (6,424) 99 (47,465) (47,366) (17) - (10) (52) 1,827 542 7,940 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 $ 76 59 $ - $ 25 15 $ 76 24 $ 7,943 9,770 $ 9,245 9,787 $ 57,168 65,108 City of Scottsdale, Arizona Transportation – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Intergovernmental Federal Grants State Grants Miscellaneous Indirect Costs Other Total Revenues $ Final 18,413 $ 18,413 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 19,097 - 19,097 684 12,945 - 12,945 - 13,461 652 - 13,461 652 516 652 750 650 676 524 15 33,973 750 650 676 524 15 33,973 503 524 18 34,255 - 503 524 18 34,255 (750) (650) (173) 3 282 EXPENDITURES Current Public Works Community and Economic Development Community Services Total Expenditures 15,014 9,209 1,067 25,290 14,944 9,211 1,067 25,222 14,890 7,893 1,182 23,965 (19) 7 (12) 14,871 7,900 1,182 23,953 54 1,318 (115) 1,257 Excess of Revenues over Expenditures 8,683 8,751 10,290 12 10,302 1,539 (9,256) (9,256) (9,256) (9,256) (9,605) (9,605) - (9,605) (9,605) (349) (349) (573) (505) 685 12 697 1,190 OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ 8,297 7,724 Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals $ (12) $ 12,151 11,646 $ 12,151 12,836 $ (137) (125) $ 12,014 12,711 $ 1,190 141 142 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, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ REVENUES Property Rental Intergovernmental Federal Grants Total Revenues $ EXPENDITURES Current Community Services Total Expenditures (Deficiency) of Revenues (under) Expenditures Fund Balance - Beginning Fund Balance - Ending - $ 52 - 52 52 2,811 2,811 2,811 2,811 1,066 1,118 - 1,066 1,118 (1,745) (1,693) 2,811 2,811 2,819 2,819 1,171 1,171 - 1,171 1,171 1,648 1,648 (53) - (53) (45) - $ - - (8) $ 24 16 $ 24 (29) $ (11) (11) $ 13 (40) $ (45) City of Scottsdale, Arizona 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, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ REVENUES Intergovernmental Federal Grants Total Revenues $ EXPENDITURES Current Community Services Total Expenditures (Deficiency) of Revenues (under) Expenditures Fund Balance - Beginning Fund Balance - Ending $ 981 981 $ 981 981 12 12 - 12 12 (969) (969) 981 981 982 982 366 366 - 366 366 616 616 - (1) (354) - (354) (353) - $ (1) (2) $ (1) (355) $ - $ (1) (355) $ (353) 143 144 Grants – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original REVENUES Intergovernmental Federal Grants State Grants Miscellaneous Contributions and Donations Reimbursements from Outside Sources Total Revenues $ EXPENDITURES Current General Government City Manager Public Works Community and Economic Development Public Safety Community Services Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and (Uses) City of Scottsdale, Arizona Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending Final 2,620 143 120 2,793 5,676 7,630 123 120 655 8,528 Budget to GAAP Differences Actual Amounts GAAP Basis $ $ $ 1,180 360 92 1,506 1 3,139 1,930 3,746 5,676 855 140 891 1,456 3,342 855 70 497 884 764 3,070 - 5,186 69 - - - 5,186 $ - $ (7) Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals $ Actual Amounts Budgetary Basis $ (389) 4,797 $ - $ (6,450) 237 (28) 851 1 (5,389) 855 70 497 879 762 3,063 70 (497) 7 692 272 7 76 (5,117) (19) (19) - (19) (19) 50 7 57 (389) (339) (5) (2) (7) 1,180 360 92 1,506 1 3,139 Variance Between Final Budget and Actual Amounts Budgetary Basis $ (11) (4) $ (400) (343) (19) (19) (5,136) $ (5,136) 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, 2015 (in thousands) Original REVENUES Interest Earnings Intergovernmental Federal Grants Reimbursements from Outside Sources Other Total Revenues $ EXPENDITURES Current Community Services Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance3 - Ending - $ - $ Budget to GAAP Differences 1 $ Actual Amounts GAAP Basis - $ 1 $ 1 5,984 5,984 5,984 5,984 5,452 2 15 5,470 - 5,452 2 15 5,470 (532) 2 15 (514) 5,984 5,984 5,992 5,992 5,257 5,257 (6) (6) 5,251 5,251 735 735 - (8) 213 6 219 221 - (4) (4) (4) (4) - (4) (4) - - (12) 209 6 215 221 $ - $ (6) Explanation of Difference: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals Actual Amounts Budgetary Basis Final Variance Between Final Budget and Actual Amounts Budgetary Basis $ 130 118 $ 130 339 $ (12) (6) $ 118 333 $ 221 145 146 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, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis $ $ $ Variance Between Final Budget and Actual Amounts Budgetary Basis REVENUES Taxes - Local Transaction Privilege Interest Earnings Investment Income Other Total Revenues $ EXPENDITURES Current General Government City Treasurer Community Services Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance City of Scottsdale, Arizona Fund Balance - Beginning Fund Balance - Ending 33,219 77 33,296 33,219 77 33,296 34,429 284 3 34,716 (84) (84) 34,429 284 (84) 3 34,632 $ 1,210 207 3 1,420 2 2 2 2 4 4 - 4 4 (4) 2 (2) 33,294 33,294 34,712 (84) 34,628 1,418 (32,689) (32,689) (32,689) (32,689) 7 (29,547) (29,540) - 7 (29,547) (29,540) 7 3,142 3,149 605 605 5,172 (84) 5,088 4,567 $ 23,324 23,929 $ (84) Explanation of Difference: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Investment Income $ $ 28,612 29,217 $ 28,612 33,784 $ (553) (637) $ 28,059 33,147 $ 4,567 City of Scottsdale, Arizona Streetlight Districts – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original REVENUES Streetlight and Services Districts Total Revenues $ EXPENDITURES Current Streetlight and Services Districts Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures Fund Balance - Beginning Fund Balance - Ending $ Final 533 533 $ 533 533 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 531 531 - 531 531 (2) (2) 599 599 599 599 583 583 - 583 583 16 16 (66) (66) (52) - (52) 14 68 2 $ 76 10 $ 76 24 $ - $ 76 24 $ 14 147 148 Special Programs – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original Actual Amounts Budgetary Basis Final Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis REVENUES Taxes - Local Light and Power Franchise Taxes - Intergovernmental Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Property Rental Interest Earnings Investment Income Intergovernmental Miscellaneous Developer Contributions Contributions and Donations Reimbursements from Outside Sources Other Total Revenues $ 250 $ 250 $ 290 $ - $ 290 $ 40 City of Scottsdale, Arizona 24 24 53 - 53 29 1,697 1,697 315 1,700 - 315 1,700 315 3 126 1,766 480 458 16 - 126 1,766 480 458 16 - 173 1,753 460 411 25 - (6) 173 1,753 460 411 25 (6) 47 (13) (20) (47) 9 - 2,489 878 487 100 8,771 2,489 878 487 100 8,771 2,313 484 561 629 21 9,188 (6) 2,313 484 561 629 21 9,182 (176) 484 (317) 142 (79) 417 EXPENDITURES Current General Government Mayor and City Council City Court Public Works Community and Economic Development Public Safety Community Services Total Expenditures 1,865 250 1,025 1,614 2,778 7,532 1 1,899 250 1,134 2,587 2,743 8,614 1,644 18 532 1,012 2,386 5,592 (8) (6) 3 (11) 1,636 18 532 1,006 2,389 5,581 1 255 232 602 1,575 357 3,022 Excess of Revenues over Expenditures 1,239 157 3,596 5 3,601 3,439 60 (1,075) (1,015) 60 (1,075) (1,015) 60 (1,834) (1,774) - 60 (1,834) (1,774) (759) (759) 224 (858) 1,822 5 1,827 2,680 $ 6,500 6,724 7,993 7,135 7,993 9,815 (50) (45) 7,943 9,770 $ (6) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending Explanation of Difference: Items recorded as revenue 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 Increase in Fund Balance – Budget to GAAP (11) $ 5 $ $ $ $ $ 2,680 City of Scottsdale, Arizona Tourism Development – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original REVENUES Taxes - Local Transient Occupancy Tax Property Rental Reimbursements from Outside Sources Other Total Revenues $ Final 15,794 1,600 20 17,414 $ 15,794 1,600 20 17,414 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 17,047 1,787 22 18,856 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 17,047 1,787 22 18,856 1,253 187 22 (20) 1,442 EXPENDITURES Current General Government Mayor and City Council Community and Economic Development Total Expenditures 75 10,797 10,872 75 13,281 13,356 75 11,815 11,890 - 75 11,815 11,890 1,466 1,466 Excess of Revenues over Expenditures 6,542 4,058 6,966 - 6,966 2,908 (8,900) (8,900) (7,825) (7,825) 32 (6,456) (6,424) - 32 (6,456) (6,424) 32 1,369 1,401 (2,358) (3,767) 542 - 542 4,309 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 7,619 5,261 $ 9,252 5,485 $ 9,252 9,794 $ (7) (7) $ 9,245 9,787 $ 4,309 149 150 Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2015 (in thousands) Municipal Property Corporation Debt Service Stabilization Scottsdale Mountain CFD McDowell Mountain CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD $ $ $ $ $ Scottsdale Preserve Authority Total ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Property Tax Intergovernmental Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Matured Bond Interest Payable Matured Bonds Payable Total Liabilities $ $ $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources Fund Balances Restricted Committed Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 10,827 10,827 4,424 6,400 10,824 $ $ $ 10,976 17,632 28,608 - $ $ 498 13 511 33 420 453 $ $ 1,326 22 1,348 135 1,055 1,190 $ $ 1,149 45 1,194 227 830 1,057 $ $ 225 5 230 22 170 192 $ $ 495 495 102 115 217 $ $ $ 5,305 5,305 1,165 4,140 5,305 $ $ $ 10,976 19,825 85 17,632 48,518 6,108 13,130 19,238 - 17,632 6 9 23 3 - - 17,673 10,824 17,632 459 1,199 1,080 195 217 5,305 36,911 3 3 6,276 4,700 10,976 52 52 149 149 114 114 35 35 278 278 - 6,907 4,700 11,607 10,827 $ 28,608 $ 511 $ 1,348 $ 1,194 $ 230 $ 495 $ 5,305 $ 48,518 City of Scottsdale, Arizona City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Municipal Property Corporation Debt Service Stabilization Scottsdale Mountain CFD McDowell Mountain CFD DC Ranch CFD Via Linda Road CFD $ $ $ $ Waterfront Commercial CFD Scottsdale Preserve Authority Total REVENUES Taxes - Local Property Property Rental Intergovernmental Miscellaneous Total Revenues $ EXPENDITURES Current Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Refunding Bonds Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning, Restated* Fund Balances - Ending $ - $ 168 490 - 1,270 - 1,273 - 172 - $ 265 - $ - $ 3,470 168 - 1,489 1,657 490 1,270 1,273 172 265 - 1,489 5,127 6,400 9,036 677 16,113 - 420 70 490 1,055 269 1,324 830 455 1,285 170 45 215 115 206 321 4,140 2,337 6,477 13,130 12,418 677 26,225 (16,113) 1,657 - (54) (12) (43) (56) (6,477) (21,098) 15,407 46,758 8,571 (54,626) 16,110 (1,062) (1,062) - - - - - 6,477 6,477 21,884 (1,062) 46,758 8,571 (54,626) 21,525 (3) 595 - (54) (12) (43) (56) - 427 6 3 $ 10,381 10,976 $ 52 52 $ *Restated due to a prior period adjustment to move fund balance of $321,070 from the Waterfront Commerical CFD to the Debt Stablization Fund. 203 149 $ 126 114 $ 78 35 $ 334 278 $ - $ 11,180 11,607 151 152 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, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ REVENUES Taxes - Local Property Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures 35,568 35,568 $ 35,568 35,568 35,253 35,253 - 35,253 35,253 (315) (315) 33,320 26,459 59,779 33,320 26,459 59,779 90,395 23,752 966 115,113 - 90,395 23,752 966 115,113 (57,075) 2,707 (966) (55,334) (Deficiency) of Revenues (under) Expenditures (24,211) (24,211) (79,860) - (79,860) (55,649) OTHER FINANCING SOURCES (USES) Transfers In Issuance of Refunding Bonds Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) 24,211 24,211 24,211 24,211 21,461 160,415 14,230 (113,443) 82,663 - 21,461 160,415 14,230 (113,443) 82,663 (2,750) 160,415 14,230 (113,443) 58,452 - - 2,803 - 2,803 2,803 Net Change in Fund Balance City of Scottsdale, Arizona Fund Balance - Beginning Fund Balance - Ending $ 6,307 6,307 $ 9,369 9,369 $ 9,369 12,172 $ - $ 9,369 12,172 $ 2,803 City of Scottsdale, Arizona 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, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ REVENUES Property Rental Intergovernmental Miscellaneous Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Excess (Deficiency) of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Issuance of Refunding Bonds Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 145 $ - - - - - 1,317 1,462 - - - - - 6,866 10,445 17,311 6,866 10,445 17,311 6,400 9,036 677 16,113 - 6,400 9,036 677 16,113 466 1,409 (677) 1,198 (15,849) (17,311) (16,113) - (16,113) 1,198 15,993 15,993 15,993 15,993 15,407 46,758 8,571 (54,626) 16,110 - 15,407 46,758 8,571 (54,626) 16,110 (586) 46,758 8,571 (54,626) 117 144 (1,318) (3) - (3) 1,315 10,166 10,310 $ 6 (1,312) $ 6 3 $ - $ 6 3 $ 1,315 153 154 Debt Service Stabilization Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original Final Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ REVENUES Property Rental Intergovernmental Miscellaneous Total Revenues $ EXPENDITURES Debt Service Total Expenditures Excess (Deficiency) of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers Out Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning, Restated Fund Balance - Ending $ - $ 145 168 - 168 23 - 1,317 1,462 1,489 1,657 - 1,489 1,657 172 195 - - - - - - - 1,462 1,657 - 1,657 195 - - (1,062) (1,062) - (1,062) (1,062) (1,062) (1,062) - 1,462 595 - 595 (867) - $ 10,381 11,843 $ 10,381 10,976 $ - $ 10,381 10,976 $ (867) City of Scottsdale, Arizona City of Scottsdale, Arizona Scottsdale Preserve Authority Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2015 (in thousands) Budgeted Amounts Original Actual Amounts Budgetary Basis Final Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis REVENUES Total Revenues $ EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Total Other Financing Sources and (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - $ - $ - $ - 4,140 2,338 6,478 4,140 2,338 6,478 4,140 2,337 6,477 - 4,140 2,337 6,477 1 1 (6,478) (6,478) (6,477) - (6,477) 1 6,478 6,478 6,478 6,478 6,477 6,477 - 6,477 6,477 (1) (1) - - - - - - - $ - $ - $ - $ - $ - 155 156 Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2015 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agents Receivables (net of allowance for uncollectibles) Interest Grants Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Total Liabilities General Obligation Bond Transportation Privilege Tax $ $ $ $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources City of Scottsdale, Arizona Fund Balances Restricted Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 15,125 45 15,170 738 10 748 $ $ Preserve 28,975 38 99 29,112 1,724 20 1,744 $ $ $ MPC Bonds 646 646 646 10 6 662 $ $ $ Total 695 695 513 2 35 550 $ $ $ 44,746 695 83 99 45,623 3,621 42 41 3,704 - 99 - - 99 748 1,843 662 550 3,803 14,422 14,422 27,269 27,269 (16) (16) 145 145 41,836 (16) 41,820 15,170 $ 29,112 $ 646 $ 695 $ 45,623 City of Scottsdale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Governmental Funds For the Fiscal Year Ended June 30, 2015 (in thousands) General Obligation Bond Transportation Privilege Tax Preserve MPC Bonds Total REVENUES Interest Earnings Investment Income Intergovernmental Federal Grants Miscellaneous Reimbursements from Outside Sources Other Total Revenues $ $ (Deficiency) of Revenues (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Total Other Financing Sources and (Uses) Net Change in Fund Balances $ 192 (38) $ 2,229 1,485 950 6 4,824 5 113 EXPENDITURES Current Capital Outlay Total Expenditures Fund Balances - Beginning Fund Balances - Ending 145 (37) - $ - - $ 337 (75) - 2,229 1,485 950 11 4,937 2,124 2,124 12,499 12,499 1,623 1,623 17,757 17,757 34,003 34,003 (2,011) (7,675) (1,623) (17,757) (29,066) 1,050 (4,276) (3,226) 9,920 (970) 8,950 1,614 (7) 1,607 984 (1,924) 26,815 1,070 26,945 13,568 (7,177) 26,815 1,070 34,276 (5,237) 1,275 (16) 9,188 5,210 19,659 14,422 $ 25,994 27,269 $ (16) $ (9,043) 145 $ 36,610 41,820 157 INTERNAL SERVICE FUNDS Internal Service Funds are used to report activities that provide goods or services to other funds, departments, or agencies of the primary government and its component units, on a cost-reimbursement basis. Fleet Management Fund This fund is used to account for the expenses 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 expenses associated with purchasing the City’s computers, monitors and printers. 158 City of Scottsdale, Arizona Combining Statement of Fund Net Position Internal Service Funds June 30, 2015 (in thousands) Fleet Management ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Miscellaneous Supplies Inventory Total Current Assets $ Noncurrent Assets Capital Assets Buildings and Improvements Motor Vehicles Machinery and Equipment Construction in Progress Less Accumulated Depreciation Total Noncurrent Assets Total Assets Deferred Outflows of Resources Pensions LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 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 Liabiliites Accrued Compensated Absences - Due in more than one year Net Pension Liabilities Other Payables - Due in more than one year Total Noncurrent Liabilities Total Liabilities Deferred Inflows of Resources Pensions NET POSITION Net Investment in Capital Assets Unrestricted Total Net Position City of Scottsdale, Arizona $ 12,021 Computer Replacement Self-Insurance $ 22,656 $ Total 1,420 $ 36,097 183 812 13,016 296 22,952 1,420 479 812 37,388 12,447 72,134 1,020 367 (40,834) 45,134 - - 12,447 72,134 1,020 367 (40,834) 45,134 58,150 22,952 1,420 82,522 498 99 - 597 1,455 162 146 1,763 507 27 29 6,620 7,183 10 10 1,972 189 175 6,620 8,956 177 3,896 4,073 40 790 9,319 10,149 - 217 4,686 9,319 14,222 5,836 17,332 10 23,178 681 138 - 819 45,134 6,997 5,581 1,410 45,134 13,988 52,131 $ 5,581 $ 1,410 $ 59,122 159 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2015 (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 $ $ 29,079 6,633 177 166 782 36,837 $ Total 1,046 1,046 $ 48,427 6,633 177 166 1,260 56,663 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 11,572 5,767 17,339 2,324 5,725 26,355 3,015 37,419 575 575 11,572 2,324 5,725 26,355 3,015 5,767 575 55,333 Operating Income (Loss) 1,441 (582) 471 1,330 479 479 2,077 2,077 - 2,077 479 2,556 1,920 1,495 471 3,886 51 (11) 1,960 (5) 1,490 471 51 (16) 3,921 Non-Operating Revenues Property Tax Gain on Sale of Capital Assets Total Non-Operating Revenues Income Before Contributions and Transfers Capital Contribution Transfers Out Change in Net Position Total Net Position - Beginning as Restated Total Net Position - Ending 160 18,302 478 18,780 Computer Replacement Self-Insurance $ 50,171 52,131 $ 4,091 5,581 $ 939 1,410 $ 55,201 59,122 City of Scottsdale, Arizona Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Fleet Management Cash Flows from Operating Activities Cash Received from Customers Cash Payments to Employees for Services Cash Payments to Suppliers for Goods/Services Other Cash Receipts Net Cash Provided by (Used for) Operating Activities $ Cash Flows from Non-Capital Financing Activities Property Tax Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities 18,302 (3,441) (8,149) 477 7,189 Computer Replacement Self-Insurance $ 35,922 (1,017) (36,472) 782 (785) $ Total 1,046 (568) 478 $ 55,270 (4,458) (45,189) 1,259 6,882 (11) (11) 2,077 (5) 2,072 - 2,077 (16) 2,061 Cash Flows from Capital and Related Financing Activities Acquisition of Capital Assets Sale of Capital Assets Net Cash Used for Capital and Related Financing Activities (9,222) 777 (8,445) - - (9,222) 777 (8,445) Net Increase (Decrease) in Cash and Cash Equivalents (1,267) 1,287 478 498 Cash and Cash Equivalents at Beginning of Year 13,288 21,369 942 35,599 Cash and Cash Equivalents at End of Year $ 12,021 $ 22,656 $ 1,420 $ 36,097 $ 1,441 $ (582) $ 471 $ 1,330 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Operating Income (Loss) Income Provided by (Used for) Operating Activities Depreciation Pension Expense Current Year Pension Contributions Miscellaneous Receivable Inventories Accounts Payable Accrued Payroll Compensated Absences Payable Claims Payable Total Adjustments Net Cash Provided by (Used for) Operating Activities Supplemental Disclosure of Non-cash Financing Activities Additions to Property, Plant, and Equipment Contributions from external sources Contributions from other funds 5,767 266 (277) (1) 94 (127) 4 22 5,748 7 7 5,767 320 (331) (134) 94 (471) 31 276 5,552 $ 7,189 $ (785) $ 478 $ 6,882 $ 8,364 51 8,415 $ - $ - $ 8,364 51 8,415 $ City of Scottsdale, Arizona 54 (54) (133) (351) (4) 9 276 (203) $ $ $ 161 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 disabilities. Family Self-Sufficiency Agency Fund This fund accounts for monies in escrow for Section 8 Housing Program participants. Crossroads East Development Agreement This fund accounts for monies in escrow for the Arizona State Land Department. 162 City of Scottsdale, Arizona City of Scottsdale, Arizona Combining Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 (in thousands) Private Purpose Trust Funds Handicap Scholarship Private Purpose Trust Fund ASSETS Cash and Cash Equivalents $ Total Assets LIABILITIES Escrow Payable Vouchers State Land Department Rebate Total Liabilities NET POSITION Held in Trust for Other Purposes $ 10 Agency Funds Family SelfSufficiency Agency Fund Total $ 10 $ 55 Crossroads East Dev Agreement Agency Fund $ 1,415 Total $ 1,470 10 10 55 1,415 1,470 - - 55 - 1,415 55 1,415 - - 10 $ 10 $ 55 $ 1,415 $ 1,470 163 164 Combining Statement of Changes in Assets and Liabilities Agency Funds For the Fiscal Year Ended June 30, 2015 (in thousands) Family Self-Sufficiency Balance July 1, 2014 ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Escrow Payable Vouchers State Land Department Rebate Total Liabilities Additions Crossroads East Dev Agreement Deductions Balance June 30, 2015 Balance July 1, 2014 Additions Balance June 30, 2015 Deductions $ 50 $ 44 $ 39 $ 55 $ 1,415 $ - $ - $ 1,415 $ 50 $ 44 $ 39 $ 55 $ 1,415 $ - $ - $ 1,415 $ 50 - $ 44 - $ 39 - $ 55 - $ 1,415 $ - $ - $ 1,415 $ 50 $ 44 $ 39 $ 55 $ 1,415 $ - $ - $ 1,415 City of Scottsdale, Arizona OTHER SUPPLEMENTARY INFORMATION Debt Requirements The Schedule of Changes in Long-Term Debt for the current fiscal year presents the City’s debt by debt type without regard to fund classification. Debt issued by community facilities districts is included for full disclosure although such debt is not legally an obligation of the City. City of Scottsdale, Arizona 165 166 Schedule of Changes in Long-Term Debt* For the Year Ended June 30, 2015 (in thousands of dollars) July 1, 2014 Issued Refunding Bonds Issued Retired Accretions, Amortizations & Contract Adjustments Bonds Defeased June 30, 2015 Governmental Activities Business-type Activities Final Payment Date GENERAL OBLIGATION BONDS City of Scottsdale, Arizona Governmental Fund Type: 2002 GO Refunding Various Purpose 2002 GO Refunding Preservation 2005 GO Refunding Preservation 2005A GO Various Purpose 2005B GO Preservation 2008A GO Various Purpose 2008B GO Preservation 2010 GO Various Purpose 2011 GO Preservation 2011 GO Refunding Various Purpose 2011 GO Refunding Preservation 2012 GO Preservation 2012 GO Refunding Various Purpose 2012 GO Refunding Preservation 2013 GO Preservation 2014 GO Preservation 2014 GO Refunding Various Purpose 2014 GO Refunding Preservation 2015 GO Refunding Various Purpose 2015 GO Refunding Preservation 2005 GO Refunding Series Issuance Premium 2005A GO Series Issuance Premium 2005B GO Series Issuance Premium 2008A GO Series Issuance Premium 2008B GO Series Issuance Premium 2010 GO Bonds Issuance Premium 2011 GO Preserve Series Issuance Premium 2011 GO Refunding Series Issuance Premium 2012 GO Preserve Issuance Premium 2012 GO Refunding Series Issuance Premium 2013 GO Preserve Issuance Premium 2014 GO Preserve Issuance Premium 2014 GO Refunding Series Issuance Premium 2015 GO Refunding Series Issuance Premium Total General Obligation Bonds REVENUE BONDS Business-Type: 2004 Utility Revenue Series Refunding 2008 Utility Revenue Series Refunding 2008 Refunding Series Issuance Premium Total Revenue Bonds $ $ $ $ 6,585 $ 8,100 63,085 25,250 3,725 93,575 17,075 46,400 20,260 4,445 25,850 50,000 38,321 44,244 75,000 14,000 73,785 9,365 1,105 473 81 1,548 107 664 224 2,872 2,179 6,742 2,897 568 9,334 647,859 $ 1,960 30,315 2,472 34,747 $ $ - $ - $ - $ - $ 6,005 $ 4,845 6,500 1,050 3,675 575 1,400 785 1,610 176 224 1,000 465 3,845 32,155 $ 960 1,980 2,940 $ $ - $ 86,400 74,015 14,230 174,645 $ - $ $ - $ 58,240 10,750 1,575 75,225 14,625 944 186 31 1,178 89 162,843 $ - $ $ - $ (161) (144) (25) (92) (4) (42) (12) (295) (111) (613) (148) (28) (1,037) (178) (2,890) $ 580 $ 8,100 8,000 1,100 14,675 1,875 45,000 19,475 4,445 24,240 50,000 38,145 44,020 74,000 13,535 69,940 9,365 86,400 74,015 143 25 278 14 622 212 2,577 2,068 6,129 2,749 540 8,297 14,052 624,616 $ 580 $ 8,100 8,000 1,100 14,675 1,875 45,000 19,475 4,445 24,240 50,000 38,145 44,020 74,000 13,535 69,940 9,365 86,400 74,015 143 25 278 14 622 212 2,577 2,068 6,129 2,749 540 8,297 14,052 624,616 $ - 07/01/16 07/01/19 07/01/15 07/01/16 07/01/16 07/01/18 07/01/18 07/01/30 07/01/34 07/01/18 07/01/24 07/01/34 07/01/21 07/01/25 07/01/34 07/01/34 07/01/23 07/01/23 07/01/28 07/01/34 - $ (289) (289) $ 1,000 $ 28,335 2,183 31,518 $ - $ - $ 1,000 28,335 2,183 31,518 07/01/16 07/01/23 *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). (continued) City of Scottsdale, Arizona Schedule of Changes in Long-Term Debt* (continued here and on following page) For the Year Ended June 30, 2015 (in thousands of dollars) July 1, 2014 MUNICIPAL PROPERTY CORPORATION BONDS Governmental Fund Type: 2004A MPC 2005 MPC 2005D MPC 2006 MPC Refunding 2006A MPC 2006B MPC 2013A MPC 2013B MPC 2013C MPC 2014 MPC Refunding 2015A MPC 2015A MPC Taxable 2015 MPC Refunding 2004A Series Issuance Premium 2005 Series Issuance Premium 2005D Series Issuance Premium 2006 Refunding Series Issuance Premium 2006A Series Issuance Premium 2006B Series Issuance Premium 2013A MPC Series Issuance Premium 2013B MPC Series Issuance Premium 2013C MPC Series Issuance Premium 2014 Refunding Series Issuance Premium 2015A Series Issuance Premium 2015A Taxable Series Issuance Premium 2015 Refunding Series Issuance Premium Subtotal Business-Type: 2005E Water/Sewer 2006 MPC Refunding 2008A Water/Sewer 2010 MPC Bonds Water/Sewer 2015A MPC Bonds WaterSewer 2015 MPC Refunding 2005E Water Issuance Premium 2006 Refunding Series Issuance Premium 2008A Series Issuance Premium 2010 Water/Sewer Issuance Premium 2015A Series Issuance Premium 2015 Refunding Series Issuance Premium Subtotal Total Municipal Property Corporation Bonds SCOTTSDALE PRESERVE AUTHORITY BONDS Governmental Fund Type: 2004 Excise Tax Refunding 2010 Excise Tax Refunding 2011 Excise Tax Refunding 2004 Excise Tax Revenue Issuance Premium 2010 Excise Tax Revenue Issuance Premium 2011 Excise Tax Revenue Issuance Premium Total Scottsdale Preserve Authority Bonds $ $ $ $ Issued Retired Refunding Bonds Issued Accretions, Amortizations & Contract Adjustments Bonds Defeased June 30, 2015 Governmental Activities Final Payment Date Business-type Activities 2,265 $ 23,170 18,200 55,450 3,330 12,775 25,465 1,395 36,055 22,735 43 167 798 4,942 40 72 4,515 186 4,697 2,642 218,942 - $ 12,200 14,615 1,145 269 28,229 1,105 $ 265 925 315 1,100 915 50 1,245 205 275 6,400 - $ 46,758 8,227 54,985 - $ 22,630 16,250 2,350 9,300 146 687 27 50 51,440 - $ (21) (7) (56) (247) (4) (7) (331) (10) (252) (203) (29) (7) (98) (1,272) 1,160 $ 275 1,025 55,450 665 2,375 24,550 1,345 34,810 22,735 11,995 14,340 46,758 22 14 55 4,695 9 15 4,184 176 4,445 2,439 1,116 262 8,129 243,044 1,160 $ 275 1,025 55,450 665 2,375 24,550 1,345 34,810 22,735 11,995 14,340 46,758 22 14 55 4,695 9 15 4,184 176 4,445 2,439 1,116 262 8,129 243,044 - 07/01/16 07/01/17 07/01/16 07/01/34 07/01/17 07/01/17 07/01/28 07/01/33 07/01/33 07/01/27 07/01/34 07/01/34 07/01/35 6,105 110,510 90,100 74,080 159 9,016 3,494 2,954 296,418 515,360 $ 18,485 1,734 8,237 28,456 56,685 $ 2,850 3,600 3,200 590 310 10,550 16,950 $ 46,812 46,812 101,797 $ 49,100 1,825 50,925 102,365 $ (80) (563) (92) (136) (43) (147) (1,061) (2,333) $ 3,255 106,910 37,800 73,490 18,175 46,812 79 8,453 1,577 2,818 1,691 8,090 309,150 552,194 $ 243,044 $ 3,255 106,910 37,800 73,490 18,175 46,812 79 8,453 1,577 2,818 1,691 8,090 309,150 309,150 07/01/16 07/01/30 07/01/32 07/01/36 07/01/34 07/01/28 6,465 $ 32,855 9,185 237 3,571 787 53,100 $ - $ - $ 3,150 $ 990 4,140 $ - $ - $ - $ - $ - $ (237) (345) (102) (684) $ 3,315 $ 32,855 8,195 3,226 685 48,276 $ 3,315 $ 32,855 8,195 3,226 685 48,276 $ - 07/01/16 07/01/24 07/01/22 *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). 167 168 Schedule of Changes in Long-Term Debt* (continued) For the Year Ended June 30, 2015 (in thousands of dollars) July 1, 2014 CERTIFICATES OF PARTICIPATION Governmental Fund Type: Series 2010-Public Safety Communications Project Total Certificates of Participation COMMUNITY FACILITIES DISTRICT BONDS Governmental Fund Type: Scottsdale Mountain Refunding Series 2002 Waterfront Commercial Series 2007 DC Ranch Refunding Series 2012 McDowell Mtn Ranch Refunding Series 2012 Via Linda Road Refunding Series 2012 Scottsdale Mountain 2002 Issuance Premium DC Ranch 2012 Issuance Premium McDowell Mnt Ranch 2012 Issuance Premium Total Community Facilities District Bonds Total Bonds CAPITAL LEASES Governmental Fund Type: Field Maintenance Equipment - Community Services Street Maintenance Equipment - Public Works Copier Equipment - Administrative Services Total Capital Leases SERVICE CONCESSION ARRANGEMENTS Governmental Fund Type: Bureau of Reclamation\Westworld Bureau of Reclamation\TPC Total Service Concession Arrangements TOTAL BONDS, CAPITAL LEASES, AND SERVICE CONCESSION ARRANGEMENTS Issued Refunding Bonds Issued Retired Accretions, Amortizations & Contract Adjustments Bonds Defeased $ $ 13,914 $ 13,914 $ - $ - $ 2,152 $ 2,152 $ - $ - $ - $ - $ $ $ 1,475 3,445 13,315 9,460 1,700 5 512 178 30,090 - 420 115 830 1,055 170 2,590 - - $ 1,295,070 $ 56,685 $ 60,927 $ $ 41 $ 19 269 329 $ - $ - $ $ 1,439 $ 1,551 2,990 $ $ 1,298,389 $ $ $ $ $ Governmental Activities June 30, 2015 Business-type Activities Final Payment Date - $ - $ 11,762 $ 11,762 $ 11,762 $ 11,762 $ - 07/01/20 1,055 $ 3,330 12,485 8,405 1,530 4 473 155 27,437 $ 1,055 3,330 12,485 8,405 1,530 4 473 155 27,437 $ - 07/15/18 07/15/32 07/15/27 07/15/22 07/15/23 $ - $ (1) (39) (23) (63) $ 276,442 $ 265,208 $ (6,259) $ 1,295,803 $ 955,135 $ 340,668 26 $ 19 55 100 $ - $ - $ - $ - $ - $ - $ 15 $ 214 229 $ 15 $ 214 229 $ - 2016 2015 2018 - $ - $ 80 $ 73 153 $ - $ - $ - $ - $ - $ - $ 1,359 $ 1,478 2,837 $ 1,359 $ 1,478 2,837 $ - 2032 2035 56,685 $ 61,180 $ 276,442 $ 265,208 $ (6,259) $ 1,298,869 $ 958,201 $ 340,668 $ $ $ $ $ $ $ City of Scottsdale, Arizona Compensated Absences Other Post-Employment Benefit - Implicit Subsidy Net Pension Liabilities Risk Management Claims Total Long-Term Debt *This exhibit includes both Governmental Activities and Business-Type Activities debt (paid out of Enterprise Funds). $ 25,690 915 241,311 15,939 $ 1,242,056 $ 3,298 30,821 374,787 Statistical Section Contents Financial Trends Page 170 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 179 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 186 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 192 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 194 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 169 170 City of Scottsdale, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table I 2006 Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position $ 2,029,375 102,293 172,530 $ 2,304,198 (1) (1) 2007 2008 2009 2010 2011 2012 2013 $ 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 $ 2,756,186 100,472 133,897 $ 2,990,555 2014 $ (2) $ Business-Type Activities Net Investment in Capital Assets Restricted Unrestricted Total Business-Type Activities Net Position 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 $ 1,058,880 41,545 242,763 $ 1,343,188 $ Primary Government Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position $ 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 $ 3,815,066 142,017 376,660 $ 4,333,743 $ (1) $ Restated restricted and unrestricted net position related to the classification of unspent bond proceeds. (2) In FY 2013, beginning net position was restated due to the implementation of GASB Statements 60 and 62. (3) In FY 2014, beginning net position was restated due to the implementation of GASB Statement 65. (4) In FY 2015, beginning net position was restated due to the implementation of GASB Statement 68 and an adjustment to capital assets. (5) In FY 2015, beginning net position was restated due to the implementation of GASB Statement 68 and an adjustment involving prior-year revenue. $ $ 2,685,105 109,615 180,942 2,975,662 1,046,345 47,101 273,321 1,366,767 3,731,450 156,716 454,263 4,342,429 2015 $ (3) $ $ (3) $ $ $ 2,663,269 117,485 (19,464) 2,761,290 (4) 1,036,650 46,901 253,109 1,336,660 3,699,919 164,386 233,645 4,097,950 (5) City of Scottsdale, Arizona City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table IIa 2006 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 Bond Issuance Costs Total Governmental Activities Expenses $ 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 2007 $ 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 2008 $ 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 2010(1) 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 $ 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(2) $ 21,495 35,605 134,221 111,227 3,047 51,974 13,491 2,905 578 40,358 414,901 2012(3) $ 18,964 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 2013 $ 2014(4) 20,985 36,405 147,514 118,033 56,382 16,863 569 38,389 435,140 $ 21,084 43,597 134,626 127,026 55,190 17,552 576 35,486 998 436,135 2015 $ 21,210 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 445,730 Business-Type Activities: Water Utility Sewer Utility Airport Solid Waste Total Business-Type Activities Expenses 53,961 27,854 2,922 16,412 101,149 64,915 26,089 2,958 17,895 111,857 71,140 26,947 3,343 18,772 120,202 81,391 33,509 3,482 19,650 138,032 76,178 33,274 3,120 18,889 131,461 83,888 34,533 3,680 18,853 140,954 90,829 41,218 3,681 17,671 153,399 90,205 43,169 3,785 19,146 156,305 91,496 45,421 4,014 19,608 160,539 95,958 44,352 3,703 20,911 164,924 Total Primary Government Expenses $ 488,160 $ 545,292 $ 587,322 $ 587,972 $ 564,213 $ 555,855 $ 562,120 $ 591,445 $ 596,674 $ 610,654 (1) In FY2010, the City's Governmental Activities were restructured from Departments to Divisions, which resulted in the shift of reporting associated expenses. 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. (3) In FY2012, Human Resources and Information Technology were absorbed into the Division's Administrative Services function. (4) In FY2014, the City adopted GASB Statement 65, which mandated the expensing of bond issuance costs as opposed to the previous practice of capitalizing such costs. 171 (2) 172 City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table IIb 2006 Program Revenue Governmental Activities: Charges for Services: General Government $ 13,783 Public Works Community and Economic Development Public Safety Human Resources Community Services 4,028 Information Technology Administrative Services Planning, Neighborhood, and Transportation Citizen and Neighborhood Resources 163 Economic Vitality Fire 1,010 Planning and Development 20,515 Police 9,938 Transportation 277 WestWorld Streetlight and Service Districts 511 Operating Grants and Contributions 26,355 Capital Grants and Contributions 136,745 Total Governmental Activities Program Revenues 213,325 2007 $ 14,102 4,388 228 1,155 16,128 15,071 326 546 29,293 211,707 292,944 2008 $ (1) 15,581 4,637 21 1,095 12,800 16,664 595 28,409 157,808 237,610 2009 $ 14,670 4,619 2,275 6,393 5,703 2,682 599 26,272 240,289 303,502 2010 $ 13,982 12,655 5,773 6,837 2,552 289 29,319 190,279 261,686 2011 $ 4,777 4,666 9,604 9,917 973 4,617 2,485 635 478 32,205 41,072 111,429 2012 $ (2) 3,965 3,543 10,958 10,102 5,573 2,549 551 28,144 112,163 177,548 2013 $ 4,340 1,498 14,736 9,139 5,523 3,155 551 31,255 66,917 137,114 2014 $ 4,282 1,580 17,981 10,268 5,914 2,890 400 27,710 38,817 109,842 2015 $ 4,279 1,861 19,474 10,350 6,334 2,827 531 28,397 14,831 88,884 City of Scottsdale, Arizona Business-Type Activities: Charges for Services: Water Utility Sewer Utility Airport Solid Waste Capital Grants and Contributions Total Business-Type Activities Revenues 81,517 27,119 3,342 17,163 55,580 184,721 84,381 32,250 3,451 18,490 55,111 193,683 90,741 33,930 3,380 19,824 50,679 198,554 91,546 34,198 2,813 20,049 22,067 170,673 94,199 35,027 2,879 20,269 9,268 161,642 94,056 34,533 2,816 20,940 17,889 170,234 97,944 36,032 3,248 20,744 8,607 166,575 100,615 36,939 3,552 20,458 25,638 187,202 104,722 39,917 3,635 20,162 22,019 190,455 98,495 39,541 4,020 20,232 11,726 174,014 Total Primary Government Revenues $ 398,046 $ 486,627 $ 436,164 $ 474,175 $ 423,328 $ 281,663 $ 344,123 $ 324,316 $ 300,297 $ 262,898 Net (Expense)/Revenue Governmental Activities Business-Type Activities Total Primary Government Net Expense $ (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) $ (298,026) 30,897 $ (267,129) $ (326,293) 29,916 $ (296,377) $ (356,846) 9,090 $ (347,756) (1) Developer contributions increased significantly due to the increase in the assets donated and their valuation (increase in construction costs). In FY2011, Economic Vitality was merged with Planning, Neighborhood and Transportation, to become the Community and Economic Development Division. (2) City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) Table IIc General Revenues and Other Changes in Net Position 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: 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ 240,731 54,481 13,714 5,786 10,536 325,248 $ 249,411 60,520 23,013 5,377 11,174 349,495 $ 246,330 65,933 19,187 7,606 10,997 350,053 $ 221,272 64,145 14,653 5,038 9,932 315,040 $ 208,083 56,830 1,368 6,730 10,690 283,701 $ 222,118 49,190 248 11,849 10,179 293,584 $ 227,963 44,035 1,063 20,502 7,366 300,929 $ 234,582 49,054 985 12,557 7,244 304,422 $ 248,642 52,715 1,274 8,422 6,202 317,255 $ 257,860 56,316 1,372 13,829 6,579 335,956 195 9,265 496 (11,174) (1,218) 195 6,910 517 (10,997) (3,375) 117 4,958 408 (9,932) (4,449) 130 4,295 430 (10,690) (5,835) 134 2,658 1,355 (10,179) (6,032) 132 421 7,610 (7,366) 797 144 763 (7,244) (6,337) 154 964 (6,202) (5,084) 169 1,346 (6,579) (5,064) 119 6,581 686 (10,536) (3,150) Total Primary Government $ 322,098 $ 348,277 $ 346,678 $ 310,591 $ 277,866 $ 287,552 $ 301,726 $ 298,085 $ 312,171 $ 330,892 Change in Net Position Governmental Activities Business-Type Activities Total Primary Government $ 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 $ $ $ $ (9,038) 24,832 $ 15,794 $ (20,890) 4,026 $ (16,864) $ (9,888) 23,248 13,360 $ 69,756 13,973 83,729 $ 6,396 24,560 30,956 173 174 City of Scottsdale, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table III 2006 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 Capital Project Funds Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds Total All Other Governmental Funds (1) 2007 2008 2009 2011(1) 2010 $ $ $ 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 $ $ $ 23,142 $ 40,952 189,905 $ 253,999 21,249 $ 52,484 179,477 $ In FY2011, fund balances were stated in classifications required by GASB54. 253,210 25,600 $ 35,179 212,676 $ 273,455 27,236 $ 30,710 102,898 $ 160,844 20,193 153,646 247 281 53,199 53,727 3,000 104,284 6,221 36,609 $ $ $ (640) - 30,963 102,490 $ 2012 149,474 264 260 52,105 52,629 2,980 108,073 7,345 37,183 $ $ $ (447) - $ 2013 155,134 265 48,679 48,944 114,676 16,298 39,666 $ $ $ (1,394) - $ 2014 169,246 266 52,354 52,620 105,837 20,848 7,362 $ $ $ (1,194) - $ 2015 132,853 113,237 49,554 (1,083) (4,770) - $ 227 56,017 56,244 $ 156,938 City of Scottsdale, Arizona City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table IVa 2006 Revenues Taxes - Local $ 239,478 Taxes - Intergovernmental 69,413 Business and Liquor Licenses 1,572 Charges for Current Services 27,260 Fines, Fees, and Forfeitures 10,260 Special Assessments 1,106 Property Rental 4,173 Interest Earnings 12,518 Investment Income Intergovernmental 13,129 Developer Contributions 392 Streetlight and Services Districts 511 Contributions and Donations 835 Reimbursements from Outside Sources 969 Indirect Costs 9,898 Other 644 Total Revenues $ 392,158 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ 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 $ 236,652 59,813 1,763 20,870 8,472 591 4,232 2,624 (1,639) 53,462 203 551 2,813 5,934 7,595 2,438 $ 249,289 63,816 1,782 24,078 8,343 4,270 2,974 (1,700) 40,116 64 400 2,178 2,446 7,102 1,652 $ 258,851 68,603 1,925 25,855 10,000 5,282 1,934 (562) 19,846 653 531 3,558 3,445 6,987 5,134 $ 425,721 $ 426,624 $ 404,478 $ 346,051 $ 388,232 $ 413,264 $ 406,374 $ 406,810 $ 412,042 175 176 City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table IVb 2006 City of Scottsdale, Arizona 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 Outlay (1) $ 23,516 3,507 53,535 7,510 12,436 8,253 24,296 66,278 7,769 10,099 8,850 3,070 617 2007 $ 24,938 3,855 61,778 9,016 14,331 8,931 26,614 78,261 9,080 13,439 9,692 3,254 597 2008 $ 26,633 3,854 69,200 9,373 15,012 10,149 29,785 89,725 9,433 14,301 19,140 3,621 712 2010(1) 2009 $ 19,216 3,465 70,807 8,246 16,671 3,704 9,904 4,627 30,767 89,802 9,701 15,580 18,800 3,732 632 $ 17,030 31,391 111,459 3,657 45,655 9,469 1,859 6,059 17,110 27,447 538 2011(2) $ 19,783 31,463 42,357 108,003 3,013 43,967 9,357 3,031 578 2012(3) $ 18,523 27,307 38,369 107,934 44,762 14,450 572 27,632 36,382 351 218,897 34,252 38,279 735 147,367 33,043 38,651 1,028 196,976 31,308 41,612 155,358 33,701 38,782 497 77,929 37,677 40,091 1,057 107,448 44,700 40,487 774 129,025 Total Expenditures $ 512,998 $ 484,419 $ 570,636 $ 533,932 $ 422,583 $ 447,825 $ 466,903 Deficit of Revenues under Expenditures $ (120,840) $ $ (144,012) $ (129,454) $ $ $ (58,698) (76,532) (59,593) (53,639) 2013 $ 19,695 29,658 70,351 111,960 45,346 14,141 569 2014 $ 19,730 33,381 41,063 119,159 45,035 14,950 576 2015 $ 20,815 34,518 44,550 123,761 44,998 15,050 583 63,234 38,789 1,915 181,189 59,387 37,323 998 99,722 105,930 36,706 1,643 52,164 $ 576,847 $ 471,324 $ 480,718 $ (170,473) $ $ In FY2010, the City's Governmental Activities were restructured from Departments to Divisions which resulted in the shift of reporting associated expenditures. (2) 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. (3) In FY2012, Human Resources and Information Technology were absorbed into the Division's Administrative Services function. (64,514) (68,676) City of Scottsdale, Arizona City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table IVc 2006 Other Financing Sources (Uses) Transfers In $ 147,643 Transfers Out (140,513) Capital Lease Acquisitions Issuance of Refunding Bonds 191,500 Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued 5,501 Payment to Refunded Bonds Escrow Agent Proceeds from Notes Payable Proceeds from Sale of Assets Total Other Financing Sources and (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 2007 2008 2009 2010 $ 162,965 (155,295) 175 55,450 42,500 7,199 (61,845) 3,000 - $ 195,170 (185,082) 123,805 2,379 - $ 160,319 (145,357) - $ 108,066 (98,693) 50,800 843 - 54,149 136,272 14,962 61,016 (7,740) $ (114,492) 19.2% 19.3% 204,131 $ 83,291 21.8% $ (4,549) 21.5% $ $ (15,516) 21.0% 2011 $ 79,592 (69,378) 87,985 42,525 10,047 (94,818) 1,091 2012 $ 57,044 $ (2,549) 22.8% 81,579 (75,826) 50,000 2,448 - 2013 $ 58,201 $ 4,562 25.2% 78,171 (70,919) 111,250 140,000 22,082 (99,684) - 2014 $ 180,900 $ 10,427 25.8% 89,669 (82,696) 296 105,885 14,000 12,742 (108,099) - 2015 $ 31,797 $ (32,717) 26.0% 89,806 (83,211) 207,173 26,815 23,871 (168,069) 96,385 $ 27,709 33.3% 177 178 City of Scottsdale, Arizona Tax Revenues By Source Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) Table V Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 City of Scottsdale, Arizona Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (1) $ $ Property 49,651 50,732 53,778 60,493 58,354 65,970 65,089 64,908 64,914 64,272 Privilege and Use General $ 104,949 110,225 104,673 85,829 77,878 80,119 84,633 89,002 95,604 100,560 Franchise Taxes Cable TV Light and Power Franchise Franchise 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 3,461 8,424 3,722 8,477 3,748 8,691 The Transient Occupancy tax rate increased from 3% to 5%, effective July 1, 2010. Privilege and Use McDowell Mtn $ 35,483 37,281 35,604 29,121 26,416 27,199 28,809 30,376 32,655 34,429 Sales and Use Taxes Privilege and Use Transportation $ 20,020 20,910 19,823 16,141 14,608 15,042 15,985 16,852 18,116 19,097 Intergovernmental State Revenue State Shared Sales Sharing $ 21,664 $ 21,223 22,312 26,653 21,575 33,037 18,677 35,103 17,227 30,309 17,844 22,849 16,987 18,347 17,793 22,205 18,922 24,230 19,867 26,316 Privilege and Use Public Safety $ 9,978 10,578 10,145 8,289 7,541 7,765 8,231 8,679 9,330 9,837 Other $ 962 929 957 959 979 1,010 1,086 838 900 906 $ Transient Occupancy 8,970 9,723 9,621 7,577 7,113 13,126 13,430 13,852 15,303 17,047 (1) City of Scottsdale, Arizona City of Scottsdale, Arizona Taxable Sales Subject to Privilege (Sales) Tax by Category Last Ten Fiscal Years (dollars in thousands) Table VI Automotive Construction Food Stores Hotel/Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities 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 $ 9,958,287 $ 10,435,752 1.65% 1.65% City Sales Tax $ 2007 1,622,601 2,208,957 626,083 533,055 1,011,240 1,478,112 551,095 1,211,551 774,598 418,460 $ $ 2008 1,370,365 1,932,043 652,226 529,862 974,330 1,364,347 532,751 1,308,247 754,103 435,415 9,853,689 1.65% $ 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 2013 $ 1,074,591 861,934 639,362 440,522 907,857 1,321,572 626,171 1,189,304 794,034 432,356 2014 $ 1,209,388 1,073,279 655,787 488,117 917,406 1,450,611 666,504 1,210,218 844,186 435,579 2015 $ 1,335,511 1,057,986 690,837 525,421 937,370 1,612,954 695,566 1,315,545 925,948 435,879 $ 8,045,422 $ 7,253,013 $ 7,430,162 $ 7,870,594 $ 8,287,703 $ 8,951,075 $ 9,533,017 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 179 180 City of Scottsdale, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Table VII City of Scottsdale, Arizona Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Privilege (Sales) Tax Rates City Direct County Rate Rate 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% 1.65% 0.70% 1.65% 0.70% Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Transient Occupancy Tax Rates City Direct County Rate Rate 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% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% State Rate 5.60% 5.60% 5.60% 5.60% 6.60% 6.60% 6.60% 5.60% 5.60% 5.60% State Rate 5.50% 5.50% 5.50% 5.50% 6.50% 6.50% 6.50% 5.50% 5.50% 5.50% (1) (3) (1) (2) (3) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Use Tax Rates City Direct County Rate Rate 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% 1.45% 0.00% 1.45% 0.00% State Rate 5.60% 5.60% 5.60% 5.60% 6.60% 6.60% 6.60% 5.60% 5.60% 5.60% Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Jet Fuel Tax Rates (cents per gallon) City Direct County Rate 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, with the exception of 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. (3) The state tax rate decreased, with the exception of jet fuel, on 6/1/2013 due to approval from the voters in the May 2010 election. (1) (3) City of Scottsdale, Arizona City of Scottsdale, Arizona Sales Tax Revenue Payers by Industry Current Year and Nine Years Ago (dollars 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 579 6,433 175 75 27 5,175 4,115 5,134 1,011 299 23,023 Fiscal Year 2015 Percentage of Tax Revenue Total 2.51% $ 22,649 27.94% 18,265 0.76% 11,540 0.33% 8,777 0.12% 15,598 22.48% 28,020 17.87% 15,022 22.30% 21,352 4.39% 15,493 1.30% 7,292 100.00% $ 164,008 Percentage of Total 13.81% 11.14% 7.04% 5.35% 9.51% 17.07% 9.16% 13.02% 9.45% 4.45% Number of Filers 668 8,740 175 77 30 6,445 3,960 4,007 970 284 100.00% 25,356 Fiscal Year 2006 Percentage of Tax Revenue Total 2.63% $ 27,250 34.47% 34,090 0.69% 10,258 0.30% 8,374 0.12% 15,611 25.42% 25,024 15.62% 12,130 15.80% 19,157 3.83% 12,007 1.12% 6,508 100.00% $ 170,409 Percentage of Total 15.99% 20.00% 6.02% 4.91% 9.16% 14.69% 7.12% 11.24% 7.05% 3.82% 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. 181 182 City of Scottsdale, Arizona Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Table IX City Direct Rate Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating $ 0.4400 0.4200 0.3800 0.3537 0.3650 0.3836 0.4412 0.5027 0.5342 0.5580 Debt Service $ 0.6000 0.5500 0.4100 0.4327 0.3782 0.5140 0.6503 0.7225 0.7604 0.6869 Overlapping Rates Total City $ 1.0400 0.9700 0.7900 0.7864 0.7432 0.8976 1.0915 1.2252 1.2946 1.2449 Operating $ 3.4600 3.4500 3.4200 2.8179 2.4447 2.4017 2.7498 3.0875 3.3548 3.1091 Scottsdale Unified School District Debt Service EVIT Total School $ 1.2200 $ 0.0600 $ 4.7400 1.2600 0.0500 4.7600 1.2600 0.0500 4.7300 1.0742 0.0500 3.9421 1.3382 0.0500 3.8329 1.3529 0.0500 3.8046 1.2503 0.0500 4.0501 1.3390 0.0500 4.4765 1.2239 0.0500 4.6287 1.0045 0.0500 4.1636 Overlapping Rates County-Wide Jurisdictions City of Scottsdale, Arizona Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 County Operating $ 1.2000 1.1800 1.1000 1.0327 0.9909 1.0508 1.2407 1.2407 1.2807 1.3209 Community College $ 1.0300 1.0646 0.9760 0.9386 0.8844 0.9728 1.2082 1.3778 1.5340 1.5187 County Flood $ 0.2100 0.2000 0.1500 0.1367 0.1367 0.1489 0.1780 0.1780 0.1392 0.1392 County Education Equalization $ 0.4400 0.3306 0.3564 0.4259 0.4717 0.5123 0.5089 Fire District Assistance $ 0.0100 0.0100 0.0100 0.0053 0.0057 0.0066 0.0084 0.0110 0.0121 0.0113 Central AZ Project $ 0.1200 0.1200 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1400 0.1400 County Free Library $ 0.0500 0.0500 0.0400 0.0353 0.0353 0.0412 0.0492 0.0492 0.0438 0.0556 County Special Health Care $ 0.1206 0.1184 0.0935 0.0856 0.0914 0.1122 0.1494 0.1683 0.1939 0.1856 Total County $ 3.1806 2.7430 2.4695 2.3342 2.5750 2.7889 3.3598 3.5967 3.8560 3.8802 Total Direct and Overlapping $ 8.9606 8.4730 7.9895 7.0627 7.1511 7.4911 8.5014 9.2984 9.7793 9.2887 Source: Maricopa County Department of Finance Publications On-Line "Tax Rate 2014" 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 2014/15 the rates were as follows: Scottsdale Mountain CFD - $1.5272, McDowell Mountain CFD - $0.7802, DC Ranch CFD - $0.5228, Via Linda Road CFD - $1.0766 and the Waterfront Commercial CFD - $5.5692. City of Scottsdale, Arizona City of Scottsdale, Arizona Principal Property Taxpayers Current Year and Nine Years Ago (dollars in thousands) Table X 2015 Taxpayer Arizona Public Service Company Scottsdale Fashion Square LLC Excel Promenade LLC Gainey Drive Associates Qwest Corporation* Portales Corporate Center LLC/Etal SDQ FEE LLC WJ Small Grandchildrens Trust Scottsdale Fiesta Retail Center Southwest Gas Corporation First American General Dynamics Decision Systems Marvin F Poer & Co Pederson/BVT Promenade Associates Scottsdale Acquisition LLC Drug (AZ) QRS 14-42 INC Total Taxable Assessed Value $ 60,737 29,879 18,929 13,412 13,354 13,291 13,069 13,068 12,574 11,091 $ 199,404 Rank 1 2 3 4 5 6 7 8 9 10 - 2006 Percentage of Total Taxable Assessed Value 1.173% 0.577% 0.366% 0.259% 0.258% 0.257% 0.252% 0.252% 0.243% 0.214% 0.000% 0.000% 0.000% 0.000% 0.000% 0.000% 3.851% Taxable Assessed Value $ 82,233 59,825 37,977 53,128 44,027 27,094 21,413 21,396 19,488 17,972 $ 384,553 Rank 1 2 5 3 4 6 7 8 9 10 Percentage of Total Taxable Assessed Value 1.740% 1.260% 0.800% 1.120% 0.930% 0.570% 0.450% 0.450% 0.410% 0.380% 8.11% 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 2014/15 secondary assessed valuation of the SRP within the City is $21,194,294 as provided by SRP. *Qwest Corporation was operating under the name Qwest Communications, Inc. in 2006. 183 184 City of Scottsdale, Arizona Assessed Value of Taxable Property Last Ten Fiscal Years (dollars in thousands) Table XI Fiscal Year Ended June 30th 2006 P 2006 S Residential Property $ 2,622,605 2,792,337 Real Property Commercial Property Vacant Land $ 1,220,872 1,309,263 $ 614,301 784,962 Personal Property Historic and Special Use $ 1,507 2,136 Less Tax Exempt Property Assessed Value $ 225,683 246,619 $ (320,326) (404,264) Total Taxable Assessed Value $ 4,364,642 4,731,053 Total Direct Tax Rate $ 0.44 0.60 City of Scottsdale, Arizona 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) 6,328,418 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 2013 P 2013 S 3,232,809 3,236,951 1,402,569 1,405,867 845,953 856,609 3,133 3,133 228,843 228,843 (643,724) (651,408) 5,069,583 5,079,995 0.50 0.72 2014 2014 2015 2015 3,179,924 3,190,808 3,400,223 3,542,585 1,234,395 1,238,888 1,211,532 1,228,899 763,038 793,269 731,585 792,839 2,810 2,852 2,849 2,986 213,781 214,245 208,844 209,029 (591,625) (612,212) (569,038) (599,560) 4,802,323 4,827,850 4,985,995 5,176,778 0.53 0.76 0.56 0.69 P S P S 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. City of Scottsdale, Arizona City of Scottsdale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (dollars in thousands) Table XII Collected within the Fiscal Year of the Levy Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Tax Levy for Fiscal Year $ 47,809 48,778 50,838 58,179 57,380 64,327 62,033 62,187 62,367 63,380 $ Amount 46,431 47,105 49,408 55,876 55,221 62,237 60,309 60,630 61,227 62,233 Percentage of Levy 97.1% 96.6% 97.2% 96.0% 96.2% 96.8% 97.2% 97.5% 98.2% 98.2% Total Collections to Date Collections in Subsequent Years $ 942 1,058 1,277 1,765 1,622 737 673 836 667 - $ Amount 47,373 48,163 50,685 57,641 56,843 62,974 60,982 61,466 61,894 62,233 Percentage of Levy 99.1% 98.7% 99.7% 99.1% 99.1% 97.9% 98.3% 98.8% 99.2% 98.2% Source: "Total Tax Levy Amount for Fiscal Year" = Marciopa County Tax Levy Reports on County Finance Website. Collections Amounts = Maricopa County Finance Office "Secured Tax Levy Report". Amounts represent property taxes recorded in the General, Debt Service and the Self-Insurance Funds. 185 186 City of Scottsdale, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands) Table XIII Municipal Property Corporation Bonds $ 112,209 155,200 154,879 154,837 153,582 152,578 149,983 222,403 218,942 243,044 City of Scottsdale, Arizona Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Obligation Bonds $ 501,614 478,369 578,894 555,701 583,071 579,972 603,426 651,224 647,859 624,616 Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Business-Type Activities Municipal Property Revenue Corporation Bonds Capital Leases Bonds $ 62,401 $ 169,901 $ 179 58,933 165,154 139 55,553 269,802 97 51,629 262,391 53 48,250 332,216 7 44,776 323,107 41,157 313,505 37,803 303,793 34,747 296,418 31,518 309,150 - Revenue Bonds $ 2,990 - Governmental Activities Scottsdale Special Certificates Preserve Assessment of Authority Bonds Bonds Participation $ 80,199 $ 5,505 $ 7,090 77,251 4,670 6,401 74,158 3,835 5,689 70,915 3,000 4,954 67,567 2,250 4,194 64,309 1,500 23,409 60,304 750 18,031 56,154 16,003 53,100 13,914 48,276 11,762 Total Primary Government $ 996,932 1,006,251 1,203,236 1,160,886 1,245,594 1,240,995 1,235,216 1,325,360 1,298,389 1,298,869 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. Percentage of Personal Income 10.32% 10.47% 11.54% 12.13% 11.62% 11.77% 11.09% 11.63% 11.43% 11.26% Per Capita $ 4,510 4,555 5,444 5,267 5,691 5,709 5,667 5,965 5,776 5,689 Community Facilities District Bonds $ 41,708 40,143 42,313 40,578 38,725 36,762 34,685 32,083 30,090 27,437 Contracts Payable $ 13,136 19,819 17,875 16,828 15,732 14,582 13,375 2,570 - Capital Leases $ 172 141 183 329 229 Service Concession Arrangements $ 3,144 2,990 2,837 City of Scottsdale, Arizona City of Scottsdale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (dollars in thousands, except per capita) Table XIV Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental Activities - General Obligation Bonds $ 501,614 478,369 578,894 555,701 583,071 579,972 603,426 651,224 647,859 624,616 Less: Amounts Available in Debt Service Fund $ 12,436 9,383 9,520 10,841 4,932 6,787 5,789 10,105 9,369 12,172 Net General Bonded Debt $ 489,178 468,986 569,374 544,860 578,139 573,185 597,637 641,119 638,490 612,444 Percentage of Total Taxable Assessed Value of Property (1) 10.3% 9.0% 7.9% 6.6% 6.9% 7.8% 10.5% 12.6% 13.2% 11.8% 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. $ Per Capita 2,213 2,123 2,576 2,472 2,641 2,637 2,742 2,885 2,840 2,683 187 188 City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2015 (dollars in thousands) Table XV 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 $ 709,690 86,700 18,345 239,963 281,570 13,750 11,475 295,670 75,475 Estimated Percentage Applicable 13.7641% 0.0200% 5.9625% 69.9142% 30.0054% 63.1889% 3.7081% 0.3679% 0.0100% Estimated Share of Overlapping Debt $ Subtotal, overlapping debt City direct debt Total direct and overlapping debt 97,682 1,094 167,768 84,486 8,688 426 1,088 361,232 958,201 100.0000% 958,201 $ 1,319,433 Source: Maricopa County Assessor's Office City of Scottsdale, Arizona Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Scottsdale. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the county's taxable assessed value that is within the government's boundaries and dividing it by the county's total taxable assessed value. City of Scottsdale, Arizona City of Scottsdale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands) Table XVIa 2006 20% Limitation Debt Limit Equal to 20% of Assessed Valuation $ Total Net Debt Applicable to 20% Limit Legal 20% Debt Margin (Available Borrowing Capacity) $ Total Net Debt Applicable to the 20% Limit as a Percentage of 20% Debt Limit 6% Limitation Debt Limit Equal to 6% of Assessed Valuation Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit 2008 2009 2010 2011 2012 2013 947,151 $ 1,041,889 $ 1,448,765 $ 1,654,483 $ 1,681,200 $ 1,475,082 $ 1,138,398 $ 1,015,999 372,545 363,455 424,865 413,095 499,945 498,490 524,675 561,126 678,434 $ 1,023,900 $ 1,241,388 $ 1,181,255 34.88% 29.33% 24.97% 29.74% 574,606 $ 39.33% $ Total Net Debt Applicable to 6% Limit Legal 6% Debt Margin (Available Borrowing Capacity) 2007 284,145 $ 126,820 $ 157,325 44.63% 312,567 $ 112,745 $ 199,822 36.07% 434,629 $ 149,580 $ 285,049 34.42% 496,345 $ 138,360 $ 357,985 27.88% 504,360 $ 426,115 15.51% $ 33.79% $ 78,245 $ 976,592 442,524 368,274 16.78% $ 46.09% $ 74,250 $ 613,723 341,519 271,769 20.42% $ $ 55.23% $ 69,750 $ 454,873 2014 304,799 226,790 25.59% 965,570 $ 1,035,356 553,121 532,888 412,449 $ 57.28% $ 78,009 $ 2015 289,671 51.47% $ 65,944 $ 223,727 22.77% 502,468 310,606 54,022 $ 256,584 17.39% 189 190 City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2015 (in thousands) Table XVIb Legal Debt Margin Calculation for Fiscal Year 2015 Net Secondary Assessed Valuation as of June 30, 2015 $ 5,176,777,891 20% Limitation Debt Limit Equal to 20% of Assessed Valuation $ 1,035,356 Debt applicable to limit: General Obligation Bonds 532,888 Legal 20% Debt Margin (Available Borrowing Capacity) $ 502,468 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 310,606 Debt applicable to limit: General Obligation Bonds Legal 6% Debt Margin (Available Borrowing Capacity) 54,022 $ 256,584 Source: City of Scottsdale City Treasurer City of Scottsdale, Arizona Under Arizona law, cities can issue general obligation bonds for purposes of water, sewer, light, parks, open space purposes, public safety, and transportation facilities 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. City of Scottsdale, Arizona City of Scottsdale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (dollars in thousands) Table XVII Water and Sewer Revenue Bonds Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating (1) Revenue $ 115,374 125,880 131,553 130,782 133,624 132,441 134,336 138,224 142,066 139,242 Less: Operating Expenses $ 56,329 64,089 66,077 71,236 70,165 77,456 78,837 73,647 77,891 79,154 Net Operating Revenue $ 59,045 61,791 65,476 59,546 63,459 54,985 55,499 64,577 64,175 60,088 Development Fee Revenue $ 24,071 17,878 15,280 3,043 3,126 3,859 3,073 12,213 15,139 5,326 Net Revenue $ 83,116 79,669 80,756 62,589 66,585 58,844 58,572 76,790 79,314 65,414 Special Assessment Bonds Highway User Revenue Bonds Debt Service Principal $ 3,330 3,475 3,640 3,660 3,115 3,220 3,380 3,115 3,240 2,940 Debt Service Interest $ 3,182 2,997 2,582 2,507 2,351 2,199 2,056 1,891 1,738 1,599 Coverage 12.76 12.31 12.98 10.15 12.18 10.86 10.77 15.34 15.93 14.41 Highway User Tax Revenue $ 15,708 16,778 16,123 14,083 13,342 13,396 10,885 11,903 12,268 13,461 Scottsdale Preserve Authority Bonds Debt Service Principal $ 2,825 2,990 - Debt Service Interest $ 317 165 - Coverage 5.00 5.32 N/A N/A N/A N/A N/A N/A N/A N/A Municipal Property Corporation Bonds Includes Transient Occupancy Tax (6) Fiscal Year Ended June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (1) Special Assessment Collections $ 1,106 1,825 895 821 765 733 719 591 - Debt Service Principal $ 851 848 846 845 757 757 755 755 - Debt Service Interest $ 275 235 197 158 121 86 52 17 - (2) Coverage 0.98 1.69 0.86 0.82 0.87 0.87 0.89 0.77 N/A N/A 0.2 % and 0.15% Sales (3) Tax $ 35,483 37,281 35,604 29,121 26,416 27,199 28,809 30,376 32,655 34,429 Debt Service Principal $ 2,815 2,965 3,110 3,260 3,365 3,470 3,655 3,800 3,960 4,140 Debt Service Interest $ 3,997 3,843 3,676 3,502 3,374 2,471 2,835 2,680 2,508 2,330 Coverage 5.21 5.48 5.25 4.31 3.92 4.58 4.44 4.69 5.05 5.32 Debt Debt Service Service (4) (4) Principal Interest $ 5,995 $ 10,017 5,305 10,057 5,584 13,988 7,570 19,482 9,715 18,415 9,785 22,185 11,841 21,141 12,355 21,480 18,200 22,994 16,950 22,299 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. Includes Transient Occupancy taxes which are pledged revenues for MPC bonds issued prior to July 1, 2010. (7) Excludes Transient Occupancy taxes that are no longer pledged revenues for MPC bonds issued on or after July 1, 2010. (6) Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Excise (5) Tax $ 202,081 218,205 216,066 185,801 170,638 168,641 171,075 184,079 198,679 212,084 Coverage 12.62 14.20 11.04 6.87 6.07 5.27 5.19 5.44 4.82 5.40 Excludes Transient Occupancy Tax (7) Excise (5) Tax $ 155,515 157,645 170,227 183,376 195,037 Coverage N/A N/A N/A N/A N/A 4.86 4.78 5.03 4.45 4.97 191 192 City of Scottsdale, Arizona Demographic and Economic Statistics Last Ten Fiscal Years Table XVIII Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Population(1) 221,030 220,907 221,031 220,410 218,888 217,365 217,965 222,200 224,800 228,300 Personal Income(2) (in thousands) $ 9,661,884 9,611,884 10,428,464 9,573,949 10,715,662 10,542,637 11,135,832 11,393,527 11,358,020 11,536,227 Per Capita Personal Income(3) $ 43,713 43,511 47,181 43,437 48,955 48,502 51,090 51,276 50,525 50,531 Median Age(4) 41.0 41.0 41.0 41.0 45.4 45.4 45.4 45.4 45.1 45.4 Charter and Public School Enrollment(5) 27,000 26,653 26,567 27,029 27,093 27,116 28,177 27,816 27,191 26,233 Year-End Average Unemployment Rate(6) 3.0% 2.6% 2.3% 3.9% 6.8% 7.2% 6.8% 5.8% 5.6% 4.7% Data Sources and Notes: (1) July 1 Population estimate, State of Arizona Office of Employment and Population Statistics. (2) Calculated by multiplying per capita personal income by total population divided by 1,000. (3) Sites USA (estimate) 2006-2010; U.S. Census, American Community Survey, 5-Year Estimates used for FY 2011-2015 estimates. (4) U.S. Census; 2006-2009 based on Census 2000; 2010-2012 based on Census 2010, 2013-2015 based on U.S. Census, American Community Survey, 5-Year Estimates. (5) Arizona Department of Education. For 2015, Arizona Department of Education Oct. 1, 2014 total enrollment for 8 charter and 29 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 2015 is for Calendar Year 2014. City of Scottsdale, Arizona City of Scottsdale, Arizona City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago Table XIX 2015 Employer HonorHealth (Scottsdale Healthcare) CVS - Health(2) Vanguard (3) Scottsdale Unified School District City of Scottsdale General Dynamics C4 Systems Mayo Clinic Scottsdale Insurance Company McKesson Corporation International Cruise and Excursion Fairmont Princess Resort Rural Metro Corporation Total Employees 6,382 2,800 2,500 2,240 2,160 1,945 1,851 1,800 1,350 1,340 Rank 1 2 3 4 5 6 7 8 9 10 24,368 2006 Percentage of Total City (1) Employment 5.39% 2.36% 2.11% 1.89% 1.83% 1.57% 1.64% 1.52% 1.14% 1.13% 20.58% Employees 4,400 1,636 Rank 1 7 Percentage of Total City (1) Employment 3.00% 1.10% 3,500 2,191 4,000 3,995 2,000 700 4 5 2 3 6 10 2.40% 1.50% 2.80% 2.80% 1.40% 0.50% 1,200 875 24,497 8 9 0.80% 0.60% 16.90% Source: City of Scottsdale Comprehensive Annual Financial Report, FY 2005/06 and Economic Development Department communications with employers, July 2015. (1) Annual Employment according to the Arizona Office of Employment and Population Statistics was 118,270 in Dec, 2014. The 2006 labor force was listed at 145,034. (2) In 2006, this company was known as Caremark. CVS Caremark was rebranded/renamed CVS Health in 2014. (3) Scottsdale Unified School District has administrative offices and some schools outside of Scottsdale city limits. 2015 numbers only report Scottsdale-based employees. 2006 included all employees. 193 194 City of Scottsdale, Arizona Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Table XX 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 (4) Public Safety - Fire Public Safety - Police Public Works Solid Waste Transportation Water Resources Total 2006 13.0 39.0 2007 15.0 40.0 14.7 2008 15.0 2009 38.5 16.0 2010(1) 35.0 14.0 2012(3) 138.8 14.0 2013 124.6 14.0 2014 127.4 14.0 2015 120.9 14.5 214.5 487.6 188.5 459.5 175.5 454.2 176.5 454.2 173.0 448.3 89.7 140.4 559.4 11.0 149.0 580.3 40.0 151.0 546.1 77.0 134.0 543.1 54.0 110.5 217.0 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 93.0 140.0 93.0 140.0 205.2 999.6 224.0 981.6 167.5 953.6 957.6 933.6 924.6 934.6 259.0 676.1 83.3 27.0 152.5 2,598.3 489.3 47.0 2011 35.0 14.0 268.0 705.6 85.3 30.0 162.0 2,722.3 248.5 85.8 233.0 89.0 197.0 89.0 206.0 89.0 205.0 89.0 204.0 89.0 204.0 90.0 266.0 664.6 205.0 90.0 169.0 2,798.1 180.0 2,754.1 189.0 2,537.7 189.0 2,547.5 202.0 2,454.9 204.0 2,422.9 204.0 2,437.7 205.0 2,417.4 Source: The City of Scottsdale, Arizona's Budget Department. City of Scottsdale, Arizona (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. (4) In FY2015, Public Safety was restated to reflect the creation of separate Police and Fire Divisions. City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI Division General Government City Attorney % of cases resolved at first court appearance (arraignment) City Auditor # of reports performed City Clerk RIOHJDOSRVWLQJV¬¬¬¬ # of minutes City Court &KDUJHVILOHGFKDUJHVDGMXGLFDWHG UHVROYHG City Treasurer (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 (4) News releases, media updates, traffic alerts, construction updates released to news media Total ad value equivalency generated (5) 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 (continued on next page) 2006 2007 2008 2009 2010(2) 2011 2012 2013 2014 2015 32% 34% 35% 34% 32% 40% 37% 37% 34% 39% 15 10 11 13 16 17 14 14 14 16 1,011 99 1,138 90 1,173 90 1,158 71 1,301 87 1,241 66 1,185 63 1,124 63 1,080 65 1,005 57 156,051 / 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 93,306/ 90,016 99,063/ 83,441 96,741/ 91,200 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 33,599 254,992 32,865 209,325 32,491 196,549 No Survey 90% No Survey No Survey No Survey 94% No Survey No Survey 98% No Survey 205 N/A 220 N/A 220 N/A N/A N/A 240 N/A 281 N/A N/A $20,000 N/A $78,861 N/A $64,931 N/A $34,863 138 251 648 25 399 2,001 4,419 6,400 2,365 0 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% 7.3% 1.7% 6.0% 1.4% 7.8% 1.4% 25,400,000 654,100 1,200,000 2,200,000 2,100,000 1,775,000 1,870,000 1,588,935 1,335,869 1,395,338 30.0 30.0 80.0 147.8 170.0 266.0 266.0 167.3 45.8 51.4 10,778 9,460 8,224 6,234 5,748 5,310 5,018 4,678 5,019 5,064 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 8,223,148 22,726,329 7,765,110 22,502,626 7,322,719 22,832,327 195 196 City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI City of Scottsdale, Arizona Division Community and Economic Development Planning and Development 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(6) % of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent(7) Transportation Total citywide transit ridership Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies)(8) Economic Development Targeted job creation number of companies / number of jobs(9) Tourism 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)(10) 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 Total incidents Responses per capita Travel time (en-route to on-scene) (continued on next page) 2006 2007 2008 2009 2010(2) 2011 2012 2013 2014 2015 15 20 20 7 7 6 6 12 15 12 100% 99% 100% 99% 100% 99% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 13,137 5% 16,900 5% 15,570 5% 20,568 -56% 16,452 5% 16,000 5% 16,500 5% 15,603 5% 14,222 2% 15,514 0% No Survey 90% No Survey No Survey No Survey 91% No Survey No Survey 93% No Survey 2,104,382 2,365,204 2,584,837 3,472,828 3,103,185 2,539,744 2,499,000 2,599,557 2,589,218 2,635,739 322 375 475 N/A 8,578 10,397 10,500 5,043 3,687 4,252 11 / 1,275 7 / 1,800 5 / 1,374 7 / 394 10 / 731 7 / 450 8 / 1,595 36 / 1,593 16 / 1,069 13 / 1,180 69.0% +5% 62 69.0% +9% 71 65.0% -2% 65 59.2% -21% 100 58.0% -6% 110 58.8% 8% 95 61.5% 5% 119 63.0% 3% 126 65.6% 10% 275 67.8% 12% 306 210,481 185,241 201,958 169,972 156,896 136,089 146,058 137,333 148,971 153,285 49 43 44 31 28 20 20 27 24 52 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 29.1 N/A 27.8 N/A 25.5 N/A N/A 6:06 5:07 5:07 5:01 4:57 5:11 4:54 5:04 5:25 98% 100% 100% 100% 100% 100% 100% 100% 100% 100% 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 27,075 0.12 4:26 28,544 0.13 4:27 32,425 0.14 4:33 City of Scottsdale, Arizona City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Table XXI Division Public Works and Water Resources Public Works Facility inventory maintained (square feet) # of active Capital Projects # of homes serviced by Residential Refuse Collection # of citizens serviced annually by Household Hazardous Waste collection program(11) 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(12) 2006 2007 2008 2009 2010(2) 2011 2012 2013 2014 2015 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 3,322,968 186 80,013 ¬ 150 80,354 3,348,774 120 80,785 2,000 2,100 2,200 1,923 1,497 2,573 2,591 2,691 2,905 2,362 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 87,851 67.6 8.9 78,269 20.7 1,055,230 88,348 70.2 9.7 79,014 20.9 1,059,738 88,905 63.9 9.2 79,588 21.2 1,066,385 Source: The City of Scottsdale's Budget Office and applicable City divisions. (1) This presentation is consistent with the organizational structure approved as part of the FY 2014/15 Budget. It has been noted where changes were approved by the City Council mid-year. (2) In FY 2010, the indicators for prior years were restated to actuals. 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) The complete results for the most recent survey, as well as archived copies of prior year surveys can be found at http://www.scottsdaleaz.gov/CitizenSurvey/Citizen_Survey_Results. (3) (5) Effective FY 2012 established more appropriate performance measures for Office of Communication activities and products (ad value equivalency). (6) 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. (7) The complete results for the most recent survey, as well as archived copies of prior year surveys can be found at http://www.scottsdaleaz.gov/CitizenSurvey/Citizen_Survey_Results (8) 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. (9) Effective FY 2013/14, only jobs verified through employer to be created or retained within the first 12 months were counted in annual metrics; total announced job creation is significantly higher. (10) 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. (11) 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. (12) Effective July 2011, the City Council approved placing Meter Reading under the control of the Water Resources Division. 197 198 City of Scottsdale, Arizona Capital Asset Statistics by Function Last Ten Fiscal Years Table XXII Function Public Safety Police: Stations Police Vehicles Fire Stations 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3 345 13 3 375 13 3 383 13 4 363 14 4 357 14 4 352 15 4 352 15 4 351 15 4 359 15 4 347 15 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 20,859,993 2,963 303 20,748,525 2,947 297 20,827,420 2,958 304 Culture and Recreation Parks Parks Acreage Swimming Pools Tennis Courts Community Centers 40 879 3 49 6 40 937 4 51 5 43 911 4 55 5 41 940 4 55 5 41 941 4 55 5 41 941 4 55 5 42 974 4 55 5 42 975 4 55 6 42 975 4 55 6 42 975 4 55 6 Water Water Mains (miles) Fire Hydrants 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 2,070 10,779 2,079 10,874 2,079 10,941 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 1,424.0 169.0 1,429.0 187.7 1,441.0 275.0 Highways and Streets Square Yards of Pavement Equivalent 12' Wide Lane Miles Traffic Signals Sewer Sanitary Sewers (miles) Storm Sewers (miles) Source: City of Scottsdale, Arizona divisions. City of Scottsdale, Arizona City of Scottsdale, Arizona City Treasurer’s Office (480) 312-2437 Visit our website www.ScottsdaleAZ.gov/Finance