TABLE OF CONTENTS INSTRUCTIONS FOR NAVIGATING IN THE “COMPREHENSIVE ANNUAL FINANCIAL REPORT” PDF Files ¾ Bookmarks for major sections are provided in the navigation pane on the left. Click on the bookmark to jump directly to that section. ¾ If a “+” sign is at the left of a bookmark, click on the “+” to bring up subheadings. ¾ All pages are linked to the Table of Contents. To jump to a specific page or subsection from the Table of Contents, put the pointer finger on the title or page number within and click the mouse. ¾ Click the “Table of Contents” text located in the top right hand corner of any page or click the Table of Contents bookmark on the left. TABLE OF CONTENTS TABLE OF CONTENTS Comprehensive Annual Financial Report Year Ended June 30, 2011 John W. Lewis, Mayor Jenn Daniels, Vice Mayor Eddie Cook, Council Member Ben Cooper, Council Member Victor Petersen, Council Member Jordan Ray, Council Member John Sentz, Council Member Patrick Banger, Manager Prepared by the Finance Department Cindi Mattheisen, Finance Director i TOWN OF GILBERT, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal Advisory Organization Chart Organization Reporting Chart v x xi FINANCIAL SECTION Independent Auditor's Report 1 Management's Discussion and Analysis (required supplementary information) 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities 15 16 Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Streets Special Revenue Fund Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds Notes to the Financial Statements 18 21 22 25 26 27 28 30 32 34 35 37 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual: Grants Special Revenue Fund Other Special Revenue Funds ii 68 70 74 75 TOWN OF GILBERT, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page CDBG/HOME Special Revenue Fund Street Light Improvement District Special Revenue Fund Parkway Maintenance District Special Revenue Fund General Debt Obligations Debt Service Fund Special Assessments Debt Service Fund Streets and Transportation Capital Projects Fund Traffic Control Capital Projects Fund Municipal Facilities Capital Projects Fund Parks, Open Space and Recreation Capital Projects Fund Special Assessments Capital Projects Fund Redevelopment Capital Projects Fund Schedules of Revenues, Expenses and Changes in Net Assets Budget and Actual: Water Enterprise Fund Wastewater Enterprise Fund Solid Waste Enterprise Fund Combining Statement of Net Assets - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds Schedules of Revenues, Expenses and Changes in Net Assets Budget and Actual: Equipment Maintenance Internal Service Fund Copier Services Internal Service Fund Employee Benefit Self-Insurance Internal Service Fund Agency Funds Combining Statement of Changes in Assets and Liabilities 76 77 78 79 80 81 82 83 84 85 86 87 88 89 92 93 94 95 96 97 101 STATISTICAL SECTION Financial Trends Net Assets by Component - Last Nine Fiscal Years Changes in Net Assets - Last Nine Fiscal Years Program Revenues by Function - Last Nine Fiscal Years Fund Balances of Governmental Funds - Last Ten Fiscal Years Changes in Fund Balances of Governmental Funds - Last Nine Fiscal Years Revenue Capacity Taxable Sales by Category - Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt - As of June 30, 2011 Legal Debt Margin Information - Last Ten Fiscal Years Pledged-Revenue Coverage - Last Ten Fiscal Years iii 105 106 108 109 110 112 113 114 115 116 117 118 TOWN OF GILBERT, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years Principal Employers - Current Fiscal Year and Nine Years Ago Operating Information Full-time Equivalent Employees by Function - Last Ten Fiscal Years Operating Indicators by Function - Last Ten Fiscal Years Capital Asset Statistics by Function - Last Ten Fiscal Years Other information Property Value, Construction and Bank Deposits - Last Ten Fiscal Years System Development Fees - Fiscal Year 2011 Property Tax Levies and Collections - Last Ten Fiscal Years Principal Property Taxpayers - Fiscal Year 2011 iv 119 120 121 122 123 124 125 126 127 TABLE OF CONTENTS Introductory Section ________________________________ Letter of Transmittal Advisory Organization Chart Organization Reporting Chart TABLE OF CONTENTS TABLE OF CONTENTS Geography and Population Gilbert is located in the southeastern section of the greater Phoenix metropolitan area in Maricopa County, bounded on the north and east by the City of Mesa, on the west by the City of Chandler, on the southeast by the Town of Queen Creek, and on the south by the Gila River Indian Community. Gilbert has a planning area of 73 square miles. The most recent estimate of population as of July 1, 2011, was 212,869 (this estimate is from the Maricopa Association of Governments), an increase of 2% from fiscal year 2010. The following graph depicts the ten-year population trend for Gilbert. Population 250,000 200,000 150,000 100,000 50,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 FACTORS AFFECTING FINANCIAL CONDITION Growth and Construction There were 1,130 new residential permits and 180 commercial permits issued in fiscal year 2011 which represents a decrease of 297 residential and an increase of 33 commercial permits from the prior fiscal year. The total value of all new construction in fiscal year 2011, including commercial, was $239 million, down from $324 million in fiscal year 2010, but down significantly from over $1 billion in each of the peak growth years of 2004 and 2005. System Development Fees (SDF’s) are collected for capital needs related to growth in the community. The Council has adopted SDF’s for police, fire, general government, traffic signals, parks and recreation, water resources, water, and wastewater. The fees are based on build-out system requirements to serve the projected population and land uses. During fiscal year 2011, a total of $24 million was collected in SDF’s compared to $31.5 million in fiscal year 2010. Economic Development Gilbert has withstood the recent downturn in the economy compared to other communities. While the national unemployment rate has hovered around 9%, Gilbert’s unemployment rate never exceeded 6% even during the worst part of the recession. As of September 2011, Gilbert’s unemployment rate was 4.6%. In comparison, the state of Arizona’s unemployment was 8.9%. Although many factors are at work, Gilbert has attracted citizens that are highly educated, with over 37% holding a bachelor’s degree or higher. Gilbert’s office, industrial and retail space includes over 18 million square feet of rentable building area with the majority of office space constructed within the past five years. vi TABLE OF CONTENTS During 2011, Gilbert was selected as the new home for Banner MD Anderson Cancer Center. This state-of-the-art facility is ranked number one in cancer treatment and research in the nation by US News and World Report. Banner MD Anderson invested $109 million and opened a 133,000 square foot facility on the campus of Banner Gateway Medical Center. This is the largest MD Anderson facility outside of Houston, Texas. MD Anderson has recently begun the process to add another 320,000 square feet to the facility. One of Gilbert’s strategic goals is economic development with a focus on bio-med/life sciences. Banner MD Anderson will be a cornerstone in executing this strategy. During fiscal year 2011, Gilbert continued to experience economic development activity and growth. Over 720,000 square feet of office, industrial and retail space were absorbed and 1,390 jobs were added to the local economy. GoDaddy.com, the number one web domain name registration company in the world, recently added over 300 jobs to its Gilbert facility. The community was also ranked as the 36th most livable city in the U.S. by CNN/Money Magazine in 2010 and the 5th safest city in the U.S. in 2011 as ranked by Business Insider using FBI crime statistics. Greatschools.org recognized Gilbert has having one of the ten best public school systems for cities with a population between 100,000 and 300,000. Gilbert’s job-based economic development strategy specifically identifies life sciences, aerospace, high technology, clean and renewable energy and advanced business services. Gilbert’s knowledge assets include Arizona State University (ASU) Polytechnic Campus, Chandler-Gilbert Community College and A.T Stills University which is a private college with degrees in medicine dentistry and other health related programs. Gilbert is also home to Campo Verde High School which has the largest biotechnology program in the country. Gilbert’s connectivity to major markets is provided through a comprehensive transportation network which includes the Santan Loop 202 and US-60 Superstition Freeways, Sky Harbor International Airport, and Phoenix-Mesa Gateway Airport. This robust transportation network provides access to Gilbert-based enterprises while providing reliable and accessible modes of transportation to local, national and international markets. Both the Loop 202 and US-60 are 6 lane divided highways that connect to Interstate 10. Located just over 10 miles west of Gilbert, Phoenix Sky Harbor Airport is served by 17 major airlines. In 2010 Sky Harbor was the 10th busiest airport in the US and the 14th busiest airport in the world. Sky Harbor cargo facilities handle over 600 tons of freight a day. Phoenix-Mesa Gateway Airport is located on Gilbert’s eastern border and handles one million passengers yearly with flights to 32 destinations throughout the United States. The airport also provides air cargo services and is located within a Foreign Trade Zone for duty free business activities and commerce. Transaction Privilege (Sales) Tax Trend Sales tax revenues represented 50% of General Fund revenues for fiscal year 2011, totaling approximately $49 million. Local sales taxes are collected by the Arizona Department of Revenue and remitted to Gilbert weekly. The following graph depicts sales tax receipts by source for the past five years. Privilege Tax by Source (Millions) $70 $60 $50 Prop Rental $40 $30 Retail $20 Utilities All Other Construction $10 $0 2007 2008 2009 2010 vii 2011 TABLE OF CONTENTS Property Taxes Gilbert’s property tax rate is $1.15 per $100 of secondary assessed valuation and is used exclusively for the payment of voter approved general obligation bond debt. Gilbert does not levy a primary property tax for general operating purposes. Assessed Valuation The assessed value of real property within the Gilbert annexed area is a vital economic forecast variable, as the State Constitution contains regulatory restrictions on the amount of debt a community may have outstanding based on secondary assessed valuation. Taking the market value of a property and applying the statutory assessment ratio derives the assessed value. Residential properties are assessed at 10%, vacant land is assessed at 16%, and commercial properties are assessed at 21.5% (2004 legislation decreases the commercial property rate 0.5% a year from 25% in 2004 to 20% in 2014). This illustrates how crucial the additions of commercial properties are to the tax base. A commercial property provides two or more times the assessed value of a residential property of the same value. All property taxing jurisdictions (e.g., school districts) benefit from the increased assessed value. The assessed valuation decreased by 19% in fiscal year 2011 from $2.297 billion to $1.861 billion. The following graph depicts the changes in the assessed valuation in Gilbert for the past ten years: Secondary Assessed Value (Millions) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 State Shared Revenues State shared revenues totaled $31 million for the General Fund and $16 million for the Streets Special Revenue Fund in fiscal year 2011, representing approximately 31% of total General Fund revenues and 90% of total Streets Special Revenue Fund revenues. State shared revenues include allocations of state sales tax, income tax, gas tax, motor vehicle in-lieu tax, and lottery funds. These revenues are shared based upon relative population in the State as determined by census. The 2010 Census established the population at 208,453 compared to 173,072 from the mid-decade census in September 2005. Budget and Financial Policies Gilbert develops the annual budget based on a resource constrained model. A five year financial plan is developed for each operating fund and current year decisions are made with a forecast future impact. Other financial policies that guide the budget include: development pays for itself through fees; use of one-time revenues for one-time expenditures; issuance of debt only when available resources do not exist to pay for a project; maintenance of a designated fund balance for emergency events; annual replacement funding for fleet and utility infrastructure; and user fees set to ensure 100% cost recovery in proprietary funds. viii TABLE OF CONTENTS TABLE OF CONTENTS Advisory Organization Chart CITIZENS OF GILBERT MAYOR AND COUNCIL Town Clerk Town Manager Municipal Court Town Attorney ADVISORY BOARDS AND COMMISSIONS Human Relations, Culture & Art Promotion Commission Utilities Board of the Town of Gilbert Health Insurance Trust Industrial Development Authority Design Review Board Mayor’s Youth Advisory Committee Environmental and Energy Conservation Advisory Board Parks, Recreation, and Library Services Advisory Board Fire Public Safety Retirement Pension Board Planning Commission Gilbert Educational Access Governing Board Police Public Safety Retirement Pension Board Water Resources Municipal Property Corporation Public Facilities Municipal Property Corporation Redevelopment Commission x TABLE OF CONTENTS Organization Report Chart TOWN MANAGER Assistant Town Manager Assistant Town Manager Public Works Support Services Administration Facilities Maintenance Fleet Maintenance Water Human Resources Wastewater Technology Services Solid Waste Streets Finance Development Services Accounting Budget Customer Service Tax Compliance Permit and Plan Review Purchasing Inspection and Compliance Utility Billing & Customer Service Planning and Development Business Development Legal Engineering Services Prosecutor Public Safety Community Services Police Parks and Open Space Fire Recreation Program Support xi TABLE OF CONTENTS xii TABLE OF CONTENTS Financial Section ________________________________ Independent Auditor’s Report Management’s Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Combining and Individual Fund Statements and Schedules TABLE OF CONTENTS CERTIFIED PUBLIC ACCOUNTANTS Hein f 25 versary th A nni 1986-2011 INDEPENDENT AUDITORS’ REPORT Honorable Mayor and Members of the Town Council Town of Gilbert, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and aggregate the discretely presented component unit and remaining fund information of the Town of Gilbert, Arizona (the “Town”) as of and for the year ended June 30, 2011, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the discretely presented component unit and aggregate remaining fund information of the Town of Gilbert, Arizona, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the General Fund and the Streets Special Revenue Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1.O, the Town implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended June 30, 2011, which represents a change in accounting principle. In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2011, on our consideration of the Town’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 10120 N. Oracle Road, Tucson, Arizona 85704 Tel: (520) 742-2611 Fax: (520) 742-2718 Co. HEINFELD, MEECH & CO., P.C. & , Meech eld TABLE OF CONTENTS Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s financial statements as a whole. The accompanying supplementary information such as the Introductory Section, Combining and Individual Fund Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and are not a required part of the financial statements. The Combining and Individual Fund Financial Statements and Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. 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. HEINFELD, MEECH & CO., P.C. Certified Public Accountants December 13, 2011 2 TABLE OF CONTENTS MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the Town of Gilbert (Gilbert), we offer this narrative overview and analysis of Gilbert’s financial activities for the fiscal year ended June 30, 2011. We encourage readers to consider the information presented here in conjunction with information provided in the transmittal letter. Financial Highlights • • • • • • Gilbert’s assets exceeded its liabilities at the end of the fiscal year by $1.4 billion. Included in this amount defined as net assets is $287 million of unrestricted net assets, of which $147 million is invested in joint ventures with the Cities of Mesa and Chandler and the Town of Queen Creek, and $140 million which may be used to fund ongoing operations in future years. Net assets includes a $706 million net investment in capital assets such as streets, park land, and municipal buildings and a $295 million net investment in water, wastewater and solid waste infrastructure and equipment. The combined fund balance for all governmental funds is $182 million, of which $52 million is unrestricted. The General Fund unrestricted fund balance is $44 million, of which $10.7 million has been assigned for capital replacement. The remaining General Fund unassigned balance of $33.5 million is approximately 36% of the total fund expenditures. Gilbert’s total bonded debt outstanding at the end of the fiscal year was $544 million, as compared to $600 million at the end of fiscal year 2010. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to Gilbert’s basic financial statements which are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the finances of Gilbert as a whole, in a manner similar to a private-sector business. The statement of net assets presents information on all of Gilbert’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether Gilbert’s financial position is improving or declining. The statement of activities presents the changes in net assets from the previous year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of Gilbert that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover a majority or all of their costs through user fees and charges (business-type activities). The governmental activities of Gilbert include general government, public safety, highways and streets, culture and recreation, redevelopment and transportation. The business-type activities include water, wastewater, solid waste, and irrigation operations. The government-wide financial statements also include the Industrial Development Authority as a component unit of Gilbert. The Authority provides financing for eligible private sector entities to acquire and construct facilities deemed to be in the public interest. The financial information for the Authority is presented separately in the statements. 3 TABLE OF CONTENTS The government-wide financial statements can be found on pages 15-17 of this report. Fund financial statements A fund is a grouping of related accounts used to maintain control over resources segregated for specific activities or objectives. Gilbert, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of Gilbert’s funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Governmental funds account for essentially the same functions reported as governmental activities in the government-wide financial statements. Unlike the government-wide financial statements, however, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at fiscal year end. This information may be useful in evaluating a government’s near-term financing ability. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of Gilbert’s near-term financing decisions. To facilitate this comparison, reconciliations are provided with the fund financial statements. The basic governmental fund financial statements can be found on pages 18-27. Proprietary Funds Gilbert maintains two different types of proprietary funds. Enterprise Funds report the same functions presented as business-type activities in the government-wide financial statements, which include water, wastewater, and solid waste. Internal Service Funds accumulate and allocate costs internally among the various functions. Gilbert uses internal service funds to account for maintenance of its fleet of vehicles, copy service operations, and employee health self-insurance. The assets and liabilities of the internal service funds are included in the governmental activities column of the government-wide statement of net assets. Costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. Enterprise funds provide the same information as the government-wide financial statements, only with more detail. Internal service funds are combined into a single column on the proprietary funds statements. Additional detail for the internal service funds can be found on pages 91-97. The proprietary fund statements can be found on pages 28-33. Fiduciary Funds Fiduciary funds account for resources held for the benefit of parties outside the government. These funds are not included in the government-wide statements as these funds are not available to support Gilbert’s operations. The fiduciary fund statements can be found on pages 34-35. Notes to the financial statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. The notes to the financial statements can be found on pages 37-66. 4 TABLE OF CONTENTS Government-wide Financial Analysis Net assets serve as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Assets as of June 30, 2011 and 2010. Town of Gilbert Condensed Statement of Net Assets Current and other assets Capital assets Total assets Long-term liabilities Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Governmental Activities 2011 2010 $ 252,415,829 $ 287,200,724 982,750,500 980,524,062 1,235,166,329 1,267,724,786 Business-type Activities 2011 2010 $ 303,763,672 $ 305,794,172 451,437,194 448,494,808 755,200,866 754,288,980 Total 2011 2010 $ 556,179,501 $ 592,994,896 1,434,187,694 1,429,018,870 1,990,367,195 2,022,013,766 364,026,397 49,466,153 413,492,550 393,699,583 57,128,870 450,828,453 162,643,002 11,857,295 174,500,297 182,682,049 12,802,378 195,484,427 526,669,399 61,323,448 587,992,847 576,381,632 69,931,248 646,312,880 705,986,213 38,404,141 77,283,425 $ 821,673,779 707,099,883 43,766,457 66,029,993 $ 816,896,333 294,516,202 76,504,052 209,680,315 $ 580,700,569 276,058,613 86,942,759 195,803,181 $ 558,804,553 1,000,502,415 114,908,193 286,963,740 $ 1,402,374,348 983,158,496 130,709,216 261,833,174 $ 1,375,700,886 Net assets consist of three components. The largest portion of Gilbert’s net assets (71%) is its investment in capital assets (land, buildings, equipment, infrastructure, etc.), less depreciation and any related debt used to acquire those assets that is still outstanding. Gilbert uses these capital assets to provide services to citizens; consequently, these assets are not available for appropriation. Although Gilbert’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt are provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of Gilbert’s net assets (8%) represents resources that are subject to external restrictions on how they may be used. The remaining $287 million of unrestricted net assets (21%) includes $147 million which is invested in joint ventures with the Cities of Mesa and Chandler and the Town of Queen Creek and $140 million which may be used to meet the government’s ongoing obligations to citizens, customers, and creditors. Governmental Activities Governmental activities in fiscal year 2011 increased Gilbert’s net assets by $5 million, accounting for 18% of the total growth in net assets. Taxes and program revenues (charges for services and grants and contributions that are clearly identifiable to operating functions) were Gilbert’s most significant revenue sources comprising 98% of total revenues for governmental activities. Taxes (local and state-shared) were $110 million, a decrease of $7 million (5%) from the prior year. Program revenues were $62 million, a decrease of $14 million from the prior year which was due mostly to the $12 million decrease in capital grants and contributions. It should be noted that $7 million of the total program revenues represent capital contributions from developers of street related infrastructure; and, therefore, were not cash revenues available to cover operating expenses. The other component of the change in net assets is expenses. The largest expense functions were public safety which represented 37%, and highways and streets which represented 23% of total governmental activities expenses. Total expenses decreased $780 thousand (.5%) over the prior fiscal year. During the fiscal year, several reclassifications were made to the expenses functions. 5 TABLE OF CONTENTS The following table details the changes in net assets for governmental and business-type activities. Changes in Net Assets Business-type Activities Governmental Activities 2011 2010 2011 Total 2010 2011 2010 Revenues Program revenues: Charges for services $ 12,537,148 $ 16,662,737 $ 74,837,971 $ 72,217,153 $ 87,375,119 $ 88,879,890 Operating grants and contributions 21,167,633 19,206,066 - - 21,167,633 19,206,066 Capital grants and contributions 28,002,037 39,631,744 18,324,573 22,026,098 46,326,610 61,657,842 Sales taxes 49,248,759 47,118,885 - - 49,248,759 47,118,885 Property taxes 25,796,000 30,116,881 - - 25,796,000 30,116,881 State-shared sales taxes 13,787,266 13,029,141 - - 13,787,266 13,029,141 State-shared income taxes 17,280,849 22,922,794 - - 17,280,849 22,922,794 3,752,492 3,776,269 - - 3,752,492 3,776,269 General revenues: Other taxes Grants and contributions not restricted to specific programs 863,570 1,235,571 - - 863,570 1,235,571 2,137,352 1,300,903 1,011,691 739,124 3,149,043 2,040,027 355,415 753,545 2,380,172 1,692,276 2,735,587 2,445,821 174,928,521 195,754,536 96,554,407 96,674,651 271,482,928 292,429,187 Management and policy 3,109,759 2,830,563 - - 3,109,759 2,830,563 Support services 8,503,492 9,297,428 - - 8,503,492 9,297,428 Financial services 1,286,659 - - - 1,286,659 - Legal and court 5,126,039 5,937,288 - - 5,126,039 5,937,288 Development services 8,201,314 10,084,501 - - 8,201,314 10,084,501 - 2,782,252 - - - 2,782,252 Police 38,868,835 41,327,582 - - 38,868,835 41,327,582 Fire 24,473,377 22,871,289 - - 24,473,377 22,871,289 Highways and streets 40,440,136 36,905,783 - - 40,440,136 36,905,783 Community services 19,763,971 19,825,728 - - 19,763,971 19,825,728 Transportation 1,009,897 1,170,305 - - 1,009,897 1,170,305 Non departmental 2,194,132 - - - 2,194,132 - Unrestricted investment earnings Other Total revenues Expenses Public works Interest and fiscal charges 17,674,873 18,417,745 - - 17,674,873 18,417,745 Water on long-term debt - - 36,863,531 36,163,481 36,863,531 36,163,481 Wastewater - - 23,038,634 23,002,202 23,038,634 23,002,202 Solid waste - - 14,254,817 13,852,222 14,254,817 13,852,222 Irrigation - - - 53,690 - 53,690 170,652,484 171,450,464 74,156,982 73,071,595 244,809,466 244,522,059 4,276,037 24,304,072 22,397,425 23,603,056 26,673,462 47,907,128 345,546 - - Total expenses Increase in net assets before transfers Transfers 537,225 Increase in net assets Net assets, beginning of year * Net assets, end of year $ (345,546) (537,225) 4,813,262 23,958,526 21,860,200 23,948,602 26,673,462 47,907,128 816,860,517 792,937,807 558,840,369 534,855,951 1,375,700,886 1,327,793,758 821,673,779 $ 816,896,333 $ 580,700,569 $ 558,804,553 $ 1,402,374,348 $ 1,375,700,886 *As restated (see note 2) 6 TABLE OF CONTENTS Business-type Activities Development related growth increased Gilbert’s net assets for business-type activities in fiscal year 2011 by $22 million through $15 million in system development fee collections and $3 million in water and wastewater infrastructure contributed by developers. The revenues for business-type activities decreased $120 thousand from the prior year. Expenses increased $1 million (1.5%) from the prior year. Financial Analysis of Gilbert’s Funds As noted earlier, Gilbert maintains fund accounting to demonstrate compliance with budgetary and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental Funds The focus of the governmental funds is to provide information on near-term inflows, outflows, and balances of resources available for spending. Such information is useful in assessing Gilbert’s financing requirements. In particular, unreserved undesignated fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Gilbert operated and separately reported the following major governmental funds: • • • • • • • General Fund Streets Special Revenue Fund General Debt Service Fund Special Assessments Debt Service Fund Streets and Transportation Capital Projects Fund Municipal Facilities Capital Projects Fund Parks, Open Space and Recreation Capital Projects Fund All nonmajor funds are combined for reporting purposes captioned “Other Governmental Funds”. As of the end of fiscal year 2011, the governmental funds reported combined ending fund balances of $182 million, a decrease of $32 million in comparison with the prior fiscal year. The majority of the decrease occurred in the streets and transportation capital projects fund. This fund had a decrease of $31 million from prior year and is attributable to the spending of bond proceeds. Town of Gilbert Governmental Funds - Fund Balances As of June 30, 2011 General Streets Special Revenue General Debt Service Special Assessments Debt Service Streets and Transportation Capital Projects Municipal Facilities Capital Projects Parks, Open Space and Recreation Capital Projects Other Governmental Funds Total Fund Balances 7 Restricted $ 22,317,444 7,956,285 6,366,097 56,611 67,924,357 7,030,299 8,259,413 10,461,824 $ 130,372,330 Unrestricted Total $ 44,250,105 $ 66,567,549 4,561,474 12,517,759 561,187 6,927,284 56,611 19,701,385 87,625,742 (20,781,250) (13,750,951) 8,259,413 3,437,002 13,898,826 $ 51,729,903 $ 182,102,233 TABLE OF CONTENTS General Fund The General Fund is the primary operating fund. At the end of fiscal year 2011, the fund balance of the General Fund was $66.6 million, an increase of $12 million from the prior year mainly due to moving the General Capital Replacement fund from a Special Revenue Fund into the General Fund (see Note 2 on page 47 for further information). The unrestricted portion of the fund balance was $44 million, of which $10.7 million has been assigned for capital replacement. As a measure of the General Fund’s liquidity, it may be useful to compare its available fund balance to total fund expenditures. The General Fund’s unassigned fund balance represents 36% of total General Fund expenditures for the current year. Key elements of General Fund sources and uses are as follows: • • • • • • Overall, revenues exceeded expenditures in the General Fund by $6.2 million; however, transfers to other funds (net) were $5 million resulting in an increase in fund balance of $1.3 million. The transfers out included $1 million to capital projects funds and $5.9 million for general debt obligations. Local sales tax and intergovernmental revenues are the largest revenue sources for the General Fund accounting for 84% of the total revenues. Local sales tax, which accounts for almost half of total General Fund revenues, increased $2.4 million (5%) from the prior fiscal year due to the economic recovery. Intergovernmental revenue decreased $4.7 million (12%) from the prior fiscal year mainly due to decreased state shared income tax revenue. Public safety expenditures which comprise over half of the total General Fund expenditures decreased $2.6 million (4.6%) over the prior fiscal year mainly due to decreased salary costs because of vacant positions. Development services expenditures decreased $1.7 million (22%) due to the reclassification of certain Town-wide expenditures to the Non departmental function. General Fund Sources $101.2 Million Sales Tax 49% All Other 5% Transfers In 2% Charges for Services 6% Franchise Fees 2% Intergovernmental 34% Licenses and Permits 2% General Fund Uses $99.9 Million All Other 10% Community Services 11% Support Services 9% Fire 21% Police 33% Legal and Court 4% Development Management Financial Services 6% and Policy Services 2% 4% 8 TABLE OF CONTENTS Streets Special Revenue Fund The Streets Fund revenues include state shared revenues which are highway user revenues, vehicle license taxes and lottery funds. The gasoline taxes and lottery funds are required by state statute to be used for transportation purposes. The vehicle license tax has been designated by Council to fund the preventive maintenance activities of the Streets Fund. Total revenues increased $1.4 million (8%) from the prior year due to increased auto lieu taxes of $1 million and county intergovernmental revenue of $1.7 million. Those increases were offset by decreased highway user revenues of $0.8 million and local transportation assistance revenues of $0.5 million. Total expenditures decreased by $0.4 million (3%) due to decreased personnel related costs. In total, revenues exceeded expenditures by $7.2 million; however, there were $4 million in transfers to other funds including $3.3 million to the Debt Service Fund, resulting in a $3.3 million (36%) increase in fund balance. Other Major Governmental Funds General Debt Service. The fund balance decreased by $76 thousand during the year due to debt service requirements of $47 million exceeding the current year property tax revenues of $25.8 million and transfers in from other funds of $21 million. The remaining fund balance of $6.9 million will be used to fund future debt service payments on voter approved general obligation bonds. Special Assessments Debt Service. The fund balance of $57 thousand is all restricted to pay future debt service requirements on special assessment bonds. Streets and Transportation Capital Projects. The fund balance decreased by $31 million to $87.6 million. Current year expenditures exceeded revenues by $30.9 million but this deficit was covered by existing fund balance. Municipal Facilities Capital Projects. The fund balance decreased by $3.2 million during the year from a deficit of $10.6 million to a deficit of $13.8 million. The deficit will be covered by future collections of system development fees. Parks, Open Space and Recreation Capital Projects. The fund balance decreased by $1.6 million to $8.3 million. Current year revenues of $5.2 million exceeded expenditures of $1.3 million; however, there were $5.7 million in transfers to other funds which included $5.2 million to the General Debt Service Fund. Nonmajor Governmental Funds All nonmajor governmental funds are combined into one column on the governmental fund statements. The combined fund balance of these funds decreased $0.4 million (3%) to a balance at year end of $14 million. The majority of the decrease relates to capital outlay expenditures in the Special Assessments Capital Projects Fund. Nonmajor funds represent 7.6% of the total governmental fund balance. Proprietary Funds Gilbert’s proprietary funds statements are prepared on the same basis (accrual) as the government-wide financial statements. Gilbert operates and separately reports the following proprietary funds: • • • Water Fund Wastewater Fund Solid Waste Fund 9 TABLE OF CONTENTS Water Fund The Water Fund is responsible for producing and distributing potable water that meets all state and federal drinking water standards. The water system is sized and pressured to provide adequate fire suppression to the entire Town and operates two surface water treatment facilities capable of producing 57 million gallons per day (mgd) and 19 ground water wells capable of producing 43.5 mgd. Net assets increased by $11.2 million to $307 million due primarily to capital contributions of $10.2 million, including $8.4 million in system development fees and $1.8 million in distribution lines contributed by developers. Operating income was $8.6 million. Wastewater Fund The Wastewater Fund provides collection, treatment, and recharge services to residents and businesses in Gilbert. The services also include the storage and distribution of effluent (treated wastewater). Net assets increased $7.4 million to $250 million due primarily to capital contributions of $8.2 million, including $6.9 million in system development fees and $1.3 million in collection lines contributed by developers. Operating income was $65 thousand. Solid Waste Fund Gilbert operates the Solid Waste Fund to provide residential and commercial refuse collection and residential recycling services. Residential services are provided exclusively by Gilbert, while the commercial service competes with the private sector for customers. Net assets increased by $3.2 million to $22 million primarily from operating income. The following graph compares the fiscal year revenues to expenses for the Water, Wastewater and Solid Waste Funds. Proprietary Funds Operating Revenues and Expenses $40 Millions $30 Revenues $20 Expenses $10 $- Water Wastewater Solid Waste General Fund Budgetary Highlights There were no differences between the original adopted budget and the final amended budget. The budget projected that expenditures would exceed revenues by $6.3 million and included $4.1 million in net transfers to other funds resulting in a $10.4 million reduction to fund balance per the budget. During the year actual revenues exceeded the budgeted amount by $5.4 million (6%) mainly due to higher than expected local sales taxes. Actual expenditures were less than budgeted by $7.1 million (7%) mainly due to lower than expected public safety and capital outlay expenditures. This resulted in an excess of revenues over expenditures of $12.5 million more than budgeted, resulting in the actual net change in fund balance being $11.7 million more than budgeted. 10 TABLE OF CONTENTS Capital Asset and Debt Administration Capital Assets. As of June 30, 2011, Gilbert had invested $1.4 billion in capital assets. This amount (including additions and deletions) is consistent with prior year. The following table presents capital assets balances, net of accumulated depreciation, for the fiscal years ended June 30, 2011 and 2010. Town of Gilbert Capital Assets (net of depreciation) Governmental Activities Business-type Activities 2010 $ 171,914,361 $ 169,443,181 31,286,075 45,568,769 3,513,610 7,997,217 34,799,685 53,565,986 161,991,163 170,116,466 - - 161,991,163 170,116,466 Improvements 42,864,775 45,937,583 - - 42,864,775 45,937,583 Plant, Machinery & Equip 18,761,468 23,324,167 89,882,320 93,807,666 108,643,788 117,131,833 Land Construction-in-progress Buildings 2011 $ 2010 45,923,688 $ 2011 Total 2011 37,017,778 $ 217,838,049 $ 2010 206,460,959 Water Rights - - 7,650,454 7,748,746 7,650,454 7,748,746 Infrastructure 555,932,658 526,133,896 304,467,122 301,923,401 860,399,780 828,057,297 Total Capital Assets $ 982,750,500 $ 980,524,062 $ 451,437,194 $ 448,494,808 $ 1,434,187,694 $ 1,429,018,870 Total governmental capital assets increased $2.2 million and business-type capital assets increased $2.9 million. Major additions to capital assets during the fiscal year included the following: Governmental Activities • • Streets and traffic signal projects totaling $47.6 million. Developer contributions of street related infrastructure valued at $7.4 million. Business-type Activities • • • Developer contributions of water and wastewater infrastructure valued at $3 million. Construction-in-progress for water system improvements totaling $11.8 million and for wastewater system improvements totaling $2.5 million. Completed water system improvements totaling $5.7 million and for wastewater system improvements totaling $4.2 million. See Note 7 on pages 50-52 for further information regarding capital assets. Long-term Debt. At June 30, 2011, Gilbert had total bonded debt obligations of $356.7 million related to governmental activities and $165.6 million in business-type activities; $175.9 million of the outstanding debt is general obligation (GO) bonds backed by the full faith and credit of the Town of Gilbert; $11.4 million is special assessment bonds secured by a lien against the land of the benefited property owners in Improvement Districts #19 and #20; and all other outstanding debt is secured by pledges of specific revenue sources. The Arizona Constitution and State Statutes limit a municipality’s bonded debt capacity to certain percentages of its secondary assessed valuation and by the type of project to be constructed with GO bonds. For projects involving water, wastewater, artificial lighting, parks, open space, recreational facility improvements, streets, public safety, and fire and emergency facilities, Gilbert can issue GO bonds up to 20% of its secondary assessed valuation. For any other general-purpose improvements, Gilbert may issue bonds up to 6% of its secondary assessed valuation. Gilbert’s available debt margin at June 30, 2011 was $111.7 million in the 6% capacity and $196.3 million in the 20% capacity. See Note 9 on pages 53-59 for additional information on debt. 11 TABLE OF CONTENTS The following schedule shows Gilbert’s outstanding debt as of June 30, 2011 and 2010. Town of Gilbert Outstanding Debt 2011 Governmental Activities $ 170,385,000 11,415,000 Street and Highway User 22,875,000 Utility Revenue Municipal Property Corporation 152,015,000 Totals $ 356,690,000 General Obligation Special Assessment 2010 $ 188,205,000 11,505,000 25,150,000 161,045,000 $ 385,905,000 2011 $ Business-type Activities 5,530,000 16,795,000 143,270,000 $ 165,595,000 Total 2010 2011 7,115,000 18,150,000 160,475,000 $ 185,740,000 $ 175,915,000 11,415,000 22,875,000 16,795,000 295,285,000 $ 522,285,000 $ 2010 $ 195,320,000 11,505,000 25,150,000 18,150,000 321,520,000 $ 571,645,000 Gilbert’s bonds are rated by leading rating agencies that assess the risk of default based on Gilbert’s financial condition. The following schedule shows Gilbert’s bond ratings as of June 30, 2011. General Obligation Street and Highway User Revenue Water and Wastewater Revenue Refunding Public Facilities Municipal Property Corporation* Water Resources Municipal Property Corporation Improvement Districts Moody's Investor Service Standard and Poors Ratings Group Fitch Ratings Aa1 Aa3 Aa3 Aa2 Not Rated Aa3 AA AAAA+ AA A+ A Not Rated AA Not Rated AA A+ Not Rated * These bonds are insured Economic Factors and Next Year’s Budget After consecutive years of double digit drops, the slow but steady improvement in sales tax revenues began to ease some of the tremendous pressure on the Town’s budget, particularly as the 2011 budget had assumed continued decline. The continuing effects of recession are far-reaching. Unemployment, underemployment, and foreclosures continue to plague our nation and impact our community. Government, and particularly local government, is called upon to serve those in need while simultaneously, and paradoxically, reducing expenses. At the same time, Gilbert has continued growing. Development activity in Gilbert was a full 30% of the total permits issued in Maricopa County in 2011, exceeding even the City of Phoenix by 45%. Even so, the Town maintains one of the lowest vacancy rates in the state. The expectations of exceptional service delivery have not declined, yet the revenue stream is not matching the growth. We continue to find ourselves in a position of having to find ways to do more with less. 12 TABLE OF CONTENTS Budget Highlights for Fiscal Year 2012 • • • • • • • • Total budget of approximately $613.3 million. Staffing levels held virtually unchanged from the prior year budget. No change to the local sales or property tax rates. Permit activity dropped below 50 single family residential permits per month in November 2010, but picked back up to an average of 171 permits per month in the latter half of the fiscal year. No salary adjustments for market range or movement through the salary range. Maintenance of an undesignated fund balance of 10% for the General Fund operating expenditures. Equipment Replacement Funds for the General and Streets Funds were modified to only include a contingency balance for unforeseen and/or unanticipated replacements and additional funding only for current year replacements. Equipment Replacement Funds for the Water and Wastewater Funds kept level; anticipated annual payments diverted to pay down bond debt and reduce overall interest burden. Financial Contact This financial report is designed to provide a general overview of Gilbert’s finances and to demonstrate accountability for the use of public funds. This report is also available on Gilbert’s website at www.gilbertaz.gov. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to: Town of Gilbert Finance Department 50 E Civic Center Drive Gilbert, AZ 85296 (480) 503-6752 13 TABLE OF CONTENTS 14 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Net Assets June 30, 2011 Primary Government Governmental Activities ASSETS Pooled cash and investments Receivables, net: Taxes Special assessments Accrued interest Accounts Due from other governments Internal balances Prepaid items Inventories Restricted assets: Cash and investments Accrued interest Deferred charges Investment in Joint Venture Capital assets: Non-depreciable Depreciable, net Total assets $ Business-type Activities $ 4,021,435 11,612,593 298,457 15,194,318 3,262,053 (9,524,845) 279,077 434,675 LIABILITIES Accounts payable Accrued liabilities Accrued interest Claims payable Deposits held for others Utility deposits Bond interest payable Unearned revenue Noncurrent liabilities: Due within one year: Current portion of compensated absences Current portion of bonds payable Due in more than one year: Compensated absences Bonds payable Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service Capital projects System repair & maintenance Highways and streets Grant programs Court/police programs Special districts Other purposes Unrestricted Total net assets 205,704,856 $ Component Unit 59,995,879 Total $ 265,700,735 $ 3,237 19,777,824 101 1,145,474 209,811 79,141,302 56,368 1,941,097 147,040,995 4,021,435 11,612,593 375,319 20,268,497 3,996,150 279,077 612,723 98,919,126 56,469 3,086,571 147,250,806 203,200,436 779,550,064 1,235,166,329 49,437,298 401,999,896 755,200,866 252,637,734 1,181,549,960 1,990,367,195 3,237 7,388,722 9,153,781 1,080,441 62,440 8,358,500 43,078 3,240,924 155,252 1,742,251 2,529,046 - 10,629,646 9,309,033 1,742,251 1,080,441 62,440 2,529,046 8,358,500 43,078 - 3,424,191 19,955,000 639,822 3,550,000 4,064,013 23,505,000 - 5,550,183 358,476,214 413,492,550 924,544 161,718,458 174,500,297 6,474,727 520,194,672 587,992,847 - 705,986,213 294,516,202 1,000,502,415 - 18,035,153 7,507,371 7,630,984 2,985,845 1,736,378 380,709 127,701 77,283,425 821,673,779 24,653,878 41,059,953 10,790,221 209,680,315 580,700,569 42,689,031 48,567,324 10,790,221 7,630,984 2,985,845 1,736,378 380,709 127,701 286,963,740 $ 1,402,374,348 3,237 3,237 The notes to the financial statements are an integral part of this statement. 15 76,862 5,074,179 734,097 9,524,845 178,048 Industrial Development Authority $ $ - TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Activities For the Year Ended June 30, 2011 Program Revenues Charges for Services Expenses Functions/Programs Primary government Governmental activities: General government Management and policy Support services Financial services Legal and court Development services Public safety Police Fire Highways and streets Community services Transportation Non departmental Interest and fiscal charges on long-term debt Total governmental activities Business-type activities: Water Wastewater Solid waste Total business-type activities Total primary government Component unit Industrial development authority $ 3,109,759 8,503,492 1,286,659 5,126,039 8,201,314 $ 2,813 273,385 9,256 566,752 3,177,940 Operating Grants and Contributions $ 12,251 30,000 1,063,017 Capital Grants and Contributions $ 375,000 32,332 38,868,835 24,473,377 40,440,136 19,763,971 1,009,897 2,194,132 2,890,874 135,732 1,739,467 3,739,896 1,033 275,616 1,342,453 17,863,654 490,749 40,009 49,884 822,586 1,684,686 19,721,118 5,191,392 174,923 - 17,674,873 170,652,484 12,537,148 21,167,633 28,002,037 36,863,531 23,038,634 14,254,817 74,156,982 $ 244,809,466 $ 35,966,037 21,677,621 17,194,313 74,837,971 87,375,119 $ 21,167,633 $ 10,166,648 8,157,925 18,324,573 46,326,610 $ $ $ - $ - 590 - General revenues: Sales taxes Property taxes, levied for debt service In-Lieu property taxes Franchise taxes Unrestricted state shared sales taxes Unrestricted state shared income taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Gain on sale of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets, July 1, 2010, as restated (see note 2) Net assets, June 30, 2011 16 TABLE OF CONTENTS Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Activities Business-type Activities $ $ (3,094,695) (7,855,107) (1,277,403) (4,529,287) (3,928,025) - Total $ (3,094,695) (7,855,107) (1,277,403) (4,529,287) (3,928,025) Component Unit Industrial Development Authority $ - (34,879,759) (21,310,506) (1,115,897) (10,341,934) (794,965) (2,143,215) - (34,879,759) (21,310,506) (1,115,897) (10,341,934) (794,965) (2,143,215) - (17,674,873) (108,945,666) - (17,674,873) (108,945,666) - (108,945,666) 9,269,154 6,796,912 2,939,496 19,005,562 19,005,562 9,269,154 6,796,912 2,939,496 19,005,562 (89,940,104) (590) 49,248,759 25,796,000 1,351,479 2,401,013 13,787,266 17,280,849 863,570 2,137,352 355,415 537,225 113,758,928 4,813,262 816,860,517 $ 821,673,779 1,011,691 164,047 2,216,125 (537,225) 2,854,638 21,860,200 558,840,369 $ 580,700,569 49,248,759 25,796,000 1,351,479 2,401,013 13,787,266 17,280,849 863,570 3,149,043 164,047 2,571,540 116,613,566 26,673,462 1,375,700,886 $ 1,402,374,348 2 2 (588) 3,825 3,237 $ The notes to the financial statements are an integral part of this statement. 17 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Balance Sheet Governmental Funds June 30, 2011 General ASSETS Pooled cash and investments Receivables, net: Taxes Special assessments Accrued interest Accounts Due from other governments Due from other funds Prepaid items Inventories Advances to other funds Restricted assets: Cash and investments Accrued interest Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Deposits held for others Due to other funds Bonds payable Interest payable Advances from other funds Deferred revenue: Special assessments Other Total liabilities Fund Balances: Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities and fund balances $ $ $ $ 43,356,504 Streets Special Revenue $ 11,177,034 Special Assessments Debt Service General Debt Service $ 21,671,406 $ 56,275 3,725,045 112,401 13,718,429 264,892 178,260 271,811 22,045,633 14,107 48,687 1,647,813 - 269,347 24,370 - 11,612,593 188 - 83,672,975 12,887,641 12,882,616 45 34,847,784 11,669,056 2,871,857 9,120,455 7,500 - $ $ 354,654 12,876 2,352 - $ $ 7,000 19,555,000 8,358,500 - $ $ - 5,105,614 17,105,426 369,882 27,920,500 11,612,445 11,612,445 22,317,444 10,729,403 33,520,702 66,567,549 83,672,975 7,956,285 4,561,474 12,517,759 12,887,641 6,366,097 561,187 6,927,284 34,847,784 56,611 56,611 11,669,056 18 $ $ $ TABLE OF CONTENTS Streets and Transportation Capital Projects Municipal Facilities Capital Projects Parks, Open Space and Recreation Capital Projects $ $ $ $ $ $ 91,092,845 1,253,563 8,231,780 Other Governmental Funds $ 13,081,360 Total Governmental Funds $ 189,920,767 113,707 1,282,034 - 3,159 702 184,492 - 12,417 18,962 - 27,043 14,461 48,713 1,164,856 4,248 - 4,021,435 11,612,593 294,810 15,117,527 3,262,053 178,260 271,811 4,248 22,045,633 92,488,586 6,895,208 56 8,337,180 8,263,159 14,340,681 19,777,824 101 266,507,062 3,632,439 3,177 52,588 - $ $ 42,498 22,045,633 1,174,640 4,862,844 22,088,131 67,924,357 19,701,385 87,625,742 92,488,586 7,030,299 (20,781,250) (13,750,951) 8,337,180 $ $ $ $ 3,746 - $ $ 213,588 8,864 178,260 - $ $ 7,125,782 9,145,372 62,440 178,260 19,555,000 8,358,500 22,045,633 3,746 41,143 441,855 11,612,445 6,321,397 84,404,829 8,259,413 8,259,413 8,263,159 4,248 10,457,576 3,437,002 13,898,826 14,340,681 22,321,692 108,050,638 38,990,451 12,739,452 182,102,233 266,507,062 $ The notes to the financial statement are an integral part of this statement. 19 $ TABLE OF CONTENTS 20 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Reconciliation of the Balance Sheet to the Statement of Net Assets June 30, 2011 Fund balances - total governmental funds $ 182,102,233 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Governmental capital assets Accumulated depreciation 1,428,359,025 (445,750,286) 982,608,739 The investment in joint venture is not a financial resource and, therefore, is not reported in the funds 209,811 Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current-period expenditures. Those assets (for example, receivables) are offset by deferred revenues in the governmental funds and thus are not included in fund balance. Deferred special assessment revenue Deferred court revenue Deferred other entities participation revenue Deferred sales tax revenue 11,612,445 4,600,041 1,174,640 503,638 17,890,764 Internal service funds are used by management to charge the costs of certain activities, such as equipment maintenance, copy services, and self-insurance to the individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets, but are not included on the governmental fund balance sheet. 5,444,501 Long-term liabilities applicable to the Town's governmental activities are not due and payable in the current period, and accordingly are not reported as fund liabilities in the governmental fund statement. Bonds payable Compensated absences (356,690,000) (8,851,530) (365,541,530) Bond issuance costs, discounts and premiums are reported as expenditures, other financing uses and other financing sources, respectively, in the governmental funds when paid, but are deferred and amortized over the life of the bonds in the statement of net assets. Bond issuance costs/discounts/premiums Net assets of governmental activities - statement of net assets The notes to the financial statements are an integral part of this statement. 21 (1,040,739) $ 821,673,779 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2011 Revenues Taxes: Sales Property Franchise Licenses and permits Intergovernmental Special assessments Charges for services Other entities' participation System development fees Gifts and donations Fines and forfeitures Investment earnings Miscellaneous Total revenues General $ Expenditures Current: General government: Management and policy Support services Financial services Legal and court Development services Public safety: Police Fire Highways and streets Community services Transportation Non departmental Debt service: Principal Interest Fiscal and other charges Capital outlay 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 balances Fund balances at beginning of year, as restated (see note 2) Fund balances at end of year $ 49,315,215 2,401,013 2,364,910 34,173,723 6,191,856 11,251 3,896,508 537,762 274,090 99,166,328 Streets Special Revenue $ 17,863,294 50,690 569 84,571 54,101 18,053,225 General Debt Service $ 25,796,000 118,761 25,914,761 Special Assessments Debt Service $ 559,284 1,144 560,428 3,796,994 9,228,777 1,416,227 4,200,421 6,096,520 - - - 33,440,658 20,056,350 11,163,541 979,860 2,144,249 8,277,768 - - - 423,769 92,947,366 2,591,615 10,869,383 29,125,000 17,864,050 9,418 46,998,468 90,000 587,245 350 677,595 6,218,962 7,183,842 (21,083,707) (117,167) 2,020,937 (6,980,314) (4,959,377) 65,430 (3,912,496) (3,847,066) 21,007,682 21,007,682 442,425 (307,710) 134,715 1,259,585 3,336,776 65,307,964 9,180,983 66,567,549 22 $ 12,517,759 (76,025) 17,548 7,003,309 $ 6,927,284 39,063 $ 56,611 TABLE OF CONTENTS Streets and Transportation Capital Projects Municipal Facilities Capital Projects Parks, Open Space and Recreation Capital Projects $ $ $ 515,993 2,313,197 1,146,473 320 3,975,983 5,129,378 86,118 5,215,496 $ 2,935,573 2,642,683 1,045,848 616,443 165,157 453,422 104,263 26,904 7,990,293 Total Governmental Funds $ 49,315,215 28,731,573 2,401,013 2,364,910 55,361,498 559,284 7,288,394 2,313,197 8,735,768 176,408 4,350,499 2,105,783 355,415 164,058,957 - 46,851 - - 956 10,620 202,073 1,063,549 3,844,801 9,239,397 1,416,227 4,402,494 7,160,069 - 301,415 - - 1,265,223 143,567 1,458,397 1,427,174 30,037 49,883 35,007,296 20,199,917 9,736,165 12,590,715 1,009,897 2,194,132 34,906,170 34,906,170 10,315 360,941 719,522 1,278,885 1,278,885 2,373,045 8,024,524 29,215,000 18,451,295 20,083 41,934,425 196,421,913 2,462,921 3,936,611 (34,231) (32,362,956) 1,028,215 (6,647,786) (5,619,571) 92,160 (5,669,422) (5,577,262) 584,821 (953,184) (368,363) 25,272,656 (24,586,342) 686,314 (31,014,631) (3,156,650) (1,640,651) 118,640,373 (10,594,301) 9,900,064 (30,930,187) 30,986 (115,430) (84,444) $ 165,805 2,989,947 26,691 3,182,443 Other Governmental Funds 87,625,742 $ (13,750,951) $ 8,259,413 (402,594) (31,676,642) 14,301,420 $ 13,898,826 The notes to the financial statements are an integral part of this statement. 23 213,778,875 $ 182,102,233 TABLE OF CONTENTS 24 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities For the Year Ended June 30, 2011 Net change in fund balances - total governmental funds $ (31,676,642) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital outlay Depreciation expense 41,934,425 (47,614,579) (5,680,154) Reassignment of capital assets between governmental and business-type activities are reported as transfers, requiring a reconciling item in the governmental funds because a difference is created between the change in fund balances and the change in total net assets. 50,911 Repayment of bond principal and bond issuance costs are reported as expenditures in governmental funds and thus have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements, however, the principal payments reduce the long-term liabilities in the statement of net assets and do not result in an expense in the statement of activities. Bond issuance costs, charge on refunding bonds, and bond premium are deferred and amortized over the life of the bonds. Principal payments Amortization of bond issuance costs Amortization of deferred charge on refunding bonds Amortization of bond premium 29,215,000 (52,685) (66,072) 230,188 29,326,431 Internal service funds are used by management to charge the costs of certain activities, such as equipment maintenance and copy services, to the individual funds. The adjustments for internal service funds "close" those funds by charging the additional amounts to participating governmental activities to completely cover the internal services funds' costs for the year. Operating loss Investment earnings Transfers out (58,923) 31,569 (200,000) (227,354) Capital assets contributed by developers are not shown on the governmental fund statements, but are included in the assets of the Town. On the statement of activities, these donations are shown as capital contributions. Capital contributions 7,398,968 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. Compensated absences Arbitrage (797,791) 685,073 (112,718) Certain revenues are deferred in the governmental funds because they do not provide current financial resources due to unavailability but are recognized as revenue in the statement of activities. However, other revenues in the governmental funds that provide current financial resources are not included in the statement of activities because they were recognized in a prior period. Court revenue Sales tax Special assessments (2,107,438) (66,456) 7,907,714 Change in net assets of governmental activities - statement of activities The notes to the financial statements are an integral part of this statement. 25 5,733,820 $ 4,813,262 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Taxes: Sales Franchise Licenses and permits Intergovernmental Charges for services Gifts and donations Fines and forfeitures Investment earnings Miscellaneous Total revenues Expenditures Current: General government: Management and policy Support services Financial services Legal and court Development services Public safety: Police Fire Community services Transportation Non departmental Capital outlay Total expenditures $ 44,536,830 2,445,000 2,018,200 33,531,260 6,612,480 281,000 3,843,050 200,000 310,450 93,778,270 Actual Amounts Final $ 44,536,830 2,445,000 2,018,200 33,531,260 6,612,480 281,000 3,843,050 200,000 310,450 93,778,270 $ 49,315,215 2,401,013 2,364,910 34,173,723 6,191,856 11,251 3,896,508 537,762 274,090 99,166,328 Final Budget Positive (Negative) $ 4,778,385 (43,987) 346,710 642,463 (420,624) (269,749) 53,458 337,762 (36,360) 5,388,058 3,799,270 9,524,540 1,491,840 4,476,260 7,144,590 3,799,270 9,524,540 1,491,840 4,476,260 7,144,590 3,796,994 9,228,777 1,416,227 4,200,421 6,096,520 2,276 295,763 75,613 275,839 1,048,070 36,676,870 20,926,650 11,486,830 1,294,400 3,272,780 100,094,030 36,676,870 20,926,650 11,486,830 1,294,400 3,272,780 100,094,030 33,440,658 20,056,350 11,163,541 979,860 2,144,249 423,769 92,947,366 3,236,212 870,300 323,289 314,540 (2,144,249) 2,849,011 7,146,664 Excess (deficiency) of revenues over expenditures (6,315,760) (6,315,760) 6,218,962 12,534,722 Other financing sources (uses) Transfers in Transfers out Total other financing sources and uses 4,011,770 (8,096,420) (4,084,650) 4,011,770 (8,096,420) (4,084,650) 2,020,937 (6,980,314) (4,959,377) (1,990,833) 1,116,106 (874,727) $ (10,400,410) $ (10,400,410) Net change in fund balances 1,259,585 Fund balance at beginning of year, as restated (see note 2) Fund balance at end of year $ The notes to the financial statements are an integral part of this statement. 26 65,307,964 66,567,549 $ 11,659,995 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Streets Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues $ Expenditures Current: Highways and streets Capital outlay Contingency Total expenditures 16,617,300 15,400 45,000 16,677,700 Final $ 16,617,300 15,400 45,000 16,677,700 $ 17,863,294 50,690 569 84,571 54,101 18,053,225 Final Budget Positive (Negative) $ 1,245,994 50,690 569 69,171 9,101 1,375,525 9,173,840 3,318,360 380,000 12,872,200 9,173,840 3,318,360 380,000 12,872,200 8,277,768 2,591,615 10,869,383 896,072 726,745 380,000 2,002,817 3,805,500 3,805,500 7,183,842 3,378,342 50,000 (4,144,500) (4,094,500) 50,000 (4,144,500) (4,094,500) 65,430 (3,912,496) (3,847,066) Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources and uses Net change in fund balances Actual Amounts $ (289,000) $ (289,000) 3,336,776 Fund balance at beginning of year, as restated (see note 2) Fund balance at end of year $ The notes to the financial statements are an integral part of this statement. 27 9,180,983 12,517,759 15,430 232,004 247,434 $ 3,625,776 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Net Assets Proprietary Funds June 30, 2011 Business-type Activities - Enterprise Funds ASSETS Current assets: Pooled cash and investments Receivables (net): Accrued interest Accounts Due from other governments Prepaid items Inventories Water $ Total current assets Noncurrent assets: Restricted assets: Cash and investments Accrued interest Advances to other funds Deferred charges Investment in joint venture Capital assets: Non-depreciable Depreciable, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued liabilities Current portion of compensated absences Claims payable Accrued interest Bonds payable Utility deposits Total current liabilities Noncurrent liabilities: General obligation bonds payable Utility revenue bonds payable Accrued compensated absences Unamortized bond premium (discount) Unamortized charge - refunding bonds Advances from other funds Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for debt service Restricted for capital projects Restricted for system repair & maintenance Unrestricted Total net assets $ 52,784,307 Wastewater $ Solid Waste - $ Total 15,591,860 $ 68,376,167 59,346 3,103,605 167,687 178,048 1,280,492 566,410 - 17,516 690,082 - 76,862 5,074,179 734,097 178,048 56,292,993 1,846,902 16,299,458 74,439,353 62,601,557 50,786 1,139,854 1,220,628 76,257,644 16,539,745 5,582 720,469 70,783,351 - 79,141,302 56,368 1,139,854 1,941,097 147,040,995 37,513,568 224,305,904 11,923,730 170,836,780 6,857,212 49,437,298 401,999,896 403,089,941 270,809,657 6,857,212 680,756,810 459,382,934 272,656,559 23,156,670 755,196,163 1,634,963 63,708 319,341 1,550,906 3,550,000 2,504,276 1,132,491 28,867 128,722 191,345 - 473,470 62,677 191,759 24,770 3,240,924 155,252 639,822 1,742,251 3,550,000 2,529,046 9,623,194 1,481,425 752,676 11,857,295 5,530,000 136,659,648 415,315 355,302 (589,636) - 19,855,352 235,047 104,337 (196,545) 1,139,854 274,182 - 5,530,000 156,515,000 924,544 459,639 (786,181) 1,139,854 142,370,629 21,138,045 274,182 163,782,856 151,993,823 22,619,470 1,026,858 175,640,151 124,661,623 13,802,673 41,059,953 6,377,752 121,487,110 307,389,111 162,997,367 10,851,205 4,412,469 71,776,048 250,037,089 6,857,212 15,272,600 22,129,812 294,516,202 24,653,878 41,059,953 10,790,221 208,535,758 579,556,012 $ $ $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,144,557 Net assets of business-type activities $ 580,700,569 28 TABLE OF CONTENTS Governmental Activities Internal Service Funds $ 7,403,800 3,647 76,791 7,266 430,427 7,921,931 141,761 141,761 8,063,692 262,940 8,409 54,740 1,080,441 1,406,530 68,104 68,104 1,474,634 $ 141,761 6,447,297 6,589,058 The notes to the financial statements are an integral part of this statement. 29 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2011 Business-type Activities - Enterprise Funds Water Operating revenues Charges for services Other Total operating revenues Operating expenses General and administrative Personal services Operation and maintenance Claims Incurred Depreciation Allocation of indirect expenses Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Interest expense Investment earnings Amortization of bond issuance costs Loss on sale of capital assets Total nonoperating revenues (expenses) $ Wastewater 35,966,037 2,114,932 38,080,969 $ 21,677,621 21,969 21,699,590 Solid Waste $ Total 17,194,313 79,224 17,273,537 762,213 3,617,377 8,317,976 8,324,903 611,939 21,634,408 675,706 5,435,906 5,790,075 1,665,872 563,090 14,130,649 2,488,648 15,848,201 25,064,383 19,563,557 2,294,789 65,259,578 8,586,448 65,182 3,142,888 11,794,518 (1,101,920) 88,062 (295,832) (885) (1,310,575) 2,031,632 (1,245,393) 3,233,691 Capital contributions Transfers in Transfers out 10,171,382 191,728 (1,166,580) 8,157,925 819,960 (331,422) - Change in net assets 11,228,162 7,401,070 3,233,691 296,160,949 242,636,019 18,896,121 $ 307,389,111 $ 250,037,089 Total net assets, beginning of year, as restated (see note 2) Total net assets, end of year 74,837,971 2,216,125 77,054,096 1,050,729 6,794,918 10,956,332 9,572,782 1,119,760 29,494,521 (7,253,506) 808,345 (109,655) (6,554,816) Income (loss) before capital contributions and transfers $ 115,284 (24,481) 90,803 $ 4,019,930 18,329,307 1,011,688 (1,498,002) 21,862,923 22,129,812 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business-type activities 30 (8,355,426) 1,011,691 (405,487) (25,366) (7,774,588) (2,723) $ 21,860,200 TABLE OF CONTENTS Governmental Activities Internal Service Funds $ 18,552,956 80,341 18,633,297 1,045,113 1,350,910 4,998,786 11,259,687 40,447 18,694,943 (61,646) 31,569 31,569 (30,077) (200,000) (230,077) 6,819,135 $ 6,589,058 The notes to the financial statements are an integral part of this statement. 31 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2011 Business-type Activities - Enterprise Funds Water Cash flows from operating activities: Cash receipts from customers Other operating cash receipts Cash receipts from other funds for services Cash receipts from deposits Cash payments to suppliers for goods and services Cash payments to employees for services Cash payments to other funds for services Net cash provided by operating activities $ Cash flows from noncapital financing activities: Changes in advances from other funds Changes in advances to other funds Transfers from other funds Transfers to other funds Net cash used in noncapital financing activities Cash flows from capital and related financing activities: Acquisition and construction of capital assets Proceeds from development fees Cash paid for interest and fiscal charges Principal payments on bonds Disposal of capital assets Net cash used in capital and related financing activities Cash flows from investing activities: Interest received on investments Net cash provided by investing activities 35,408,732 2,114,932 457,162 (11,785,785) (6,730,149) (1,119,760) 18,345,132 Wastewater $ 500,402 191,728 (1,166,580) (474,450) (500,402) 819,960 (331,422) (11,864) (11,961,808) 8,404,313 (7,350,266) (11,168,738) (22,076,499) (2,526,880) 6,878,502 (1,208,113) (8,976,262) (885) (5,833,638) 730,487 730,487 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents at end of year includes: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents Reconciliation of operating income (loss) to net cash provided by (used in) operations: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation Provision for uncollectible accounts Changes in assets and liabilities: (Increase) decrease in accounts receivable Increase in prepaid items (Increase) decrease in inventories Increase (decrease) in accounts payable Increase in claims payable Increase in deposits Increase (decrease) in accrued expenses Total adjustments Net cash provided by operating activities Supplemental disclosures of noncash financing activities: Additions to property and equipment: Contributions from developers Total additions to property and equipment 32 21,628,935 21,969 (10,569,506) (3,611,892) (611,939) 6,857,567 (3,475,330) 118,861,194 $ 115,385,864 $ $ $ 52,784,307 62,601,557 $ 115,385,864 $ 8,586,448 Solid Waste $ Total 16,991,854 79,224 7,520 (6,348,045) (5,551,608) (563,090) 4,615,855 $ - 74,029,521 2,216,125 464,682 (28,703,336) (15,893,649) (2,294,789) 29,818,554 (500,402) 500,402 1,011,688 (1,498,002) (486,314) (16,537,498) 15,282,815 (8,558,379) (20,145,000) (25,366) (29,983,428) (2,048,810) (24,481) (2,073,291) 86,875 86,875 101,397 101,397 918,759 918,759 1,098,940 15,440,805 16,539,745 2,643,961 12,947,899 15,591,860 267,571 147,249,898 $ 147,517,469 $ $ $ $ $ 16,539,745 16,539,745 $ 15,591,860 15,591,860 $ 65,182 $ 3,142,888 68,376,167 79,141,302 $ 147,517,469 11,794,518 9,572,782 (238,793) 8,324,903 (52,522) 1,665,872 (16,918) 19,563,557 (308,233) (318,512) (41,893) 263,170 457,162 64,768 9,758,684 3,835 (1,489,316) 5,485 6,792,385 (185,542) 117,736 7,520 (115,701) 1,472,967 (500,219) (41,893) (1,108,410) 464,682 (45,448) 18,024,036 $ 18,345,132 $ 6,857,567 $ 4,615,855 $ 29,818,554 $ $ 1,767,069 1,767,069 $ $ 1,279,423 1,279,423 $ $ - $ $ 3,046,492 3,046,492 TABLE OF CONTENTS Governmental Activities Internal Service Funds $ 82,217 18,483,347 (17,031,784) (1,373,947) 159,833 (200,000) (200,000) - 28,597 28,597 $ $ $ $ (11,570) 7,415,370 7,403,800 7,403,800 7,403,800 (61,646) 40,447 (67,733) (7,266) 84,818 102,240 92,010 (23,037) 221,479 $ 159,833 $ $ - The notes to the financial statements are an integral part of this statement. 33 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2011 Firemen's Pension Trust Agency Funds $ 102,051 - $ 116,696 99 102,051 $ 116,795 - $ 92,518 8,927 15,350 - $ 116,795 ASSETS Restricted cash and investments Restricted accrued interest Total assets LIABILITIES Guaranty and other deposits Medical benefits payable Dependent care benefits payable Total liabilities NET ASSETS Held in trust for pension benefits $ The notes to the financial statements are an integral part of this statement. 34 102,051 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Fund For the Year Ended June 30, 2011 Firemen's Pension Trust Additions Interest on investments $ Total additions 114 114 Deductions Benefits Administration 2,400 100 Total deductions 2,500 Change in net assets (2,386) Net assets - beginning of the year Net assets - end of the year The notes to the financial statements are an integral part of this statement. 35 104,437 $ 102,051 TABLE OF CONTENTS 36 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 The Town of Gilbert, Arizona (Gilbert) was incorporated on July 6, 1920, under the provisions of Article 13, Section 1 of the Constitution of the State of Arizona. Gilbert operates as a general law community, under the provisions of Title 9, Chapter 2, Article 3 (Common Council provision). Gilbert operates under the Council-Manager form of government, as empowered in Chapter 2, Article 2-51 of the Code of the Town of Gilbert, Arizona. There are seven members of the Council, elected to staggered four-year terms. The voters select the Mayor and the Council membership annually elects the Vice Mayor. Note 1 - Summary of Significant Accounting Policies Gilbert’s accounting policies conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity Gilbert’s operations include public safety (police, fire, and animal control), community services (parks, recreation, library, culture and arts, and social services), development services (planning, code enforcement, and engineering), and general administration in support of operations. Gilbert also operates three enterprise funds to provide water, wastewater, and solid waste, and three internal service funds that provide equipment and fleet maintenance, copy services, and employee self-insurance for medical and dental claims. The accompanying financial statements present the activities of Gilbert (the primary government) and its component units. Component units are legally separate entities for which Gilbert is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of Gilbert’s operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the Town of Gilbert. Each blended and discretely presented component unit discussed below has a June 30 year-end. Blended Component Units - The Water Resources Municipal Property Corporation (Water MPC) is a legally separate, non-profit corporation which exists solely for the purpose of financing the construction or acquisition of water and wastewater capital improvement projects. The Public Facilities Municipal Property Corporation (Public Facilities MPC) is a legally separate, non-profit corporation which exists solely for the purpose of financing construction of municipal facilities. Each is considered a blended component unit because the Council appoints the five-member board of directors of the MPC, the Council must approve any amendments to the articles of incorporation of the MPC, the Council must approve any debt issues of the MPC, and the MPC provides services solely to the Town of Gilbert. At June 30, 2011, the Water MPC bonded debt is reported within the water and wastewater enterprise funds and the Public Facilities MPC bonded debt is reported within the debt service fund (current portion only) and within the governmental activities in the government-wide statement of net assets. Discretely Presented Component Unit - The Industrial Development Authority (IDA) issues industrial revenue bonds to provide financial assistance to private sector entities for the acquisition and construction of eligible industrial and commercial facilities deemed to be in the public interest. The IDA is considered a component unit because the Council appoints the board of directors of the IDA, the Council must approve any amendments to the articles of incorporation of the IDA, and the Council must approve any debt issues of the IDA. The IDA is discretely presented in these combined financial statements because the IDA does not provide services solely to Gilbert. Separate financial statements for the IDA have not been prepared. 37 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 B. Jointly Governed Organizations Williams Gateway Airport Authority (WGAA) is a non-profit corporation established and funded by the Towns of Gilbert and Queen Creek, the Cities of Mesa and Phoenix, and the Gila River Indian Community. The purpose of the entity is the redevelopment of Williams Air Force Base, which was closed in September 1993 and became Phoenix/Mesa Gateway Airport (formerly known as Williams Gateway Airport). The airport has three runways, a newly remodeled passenger terminal and is positioned to be a reliever airport to Phoenix’s Sky Harbor International Airport. The Board of Directors consists of the mayors of the respective communities and the governor of the tribal community. Gilbert contributed $350,000 in fiscal year 2011 (life to date $6,474,250) to the WGAA operating and capital budget. Regional Public Transportation Authority (RPTA) is a voluntary association of local governments, including Maricopa County, Mesa, Tempe, Scottsdale, Glendale, Phoenix, and Gilbert. Its purpose is to create a regional public transportation plan for Maricopa County. The Board of Directors consists of the mayors of those municipalities and a member of the County Board of Supervisors. C. Government-wide and Fund Financial Statements The government-wide financial statements (Statement of Net Assets and Statement of Activities) report on Gilbert and its component units as a whole, excluding fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from businesstype activities, which rely to a significant extent on fees and charges for support. The government-wide Statement of Net Assets reports all financial and capital resources of the government (excluding fiduciary funds). It is displayed in a format of assets less liabilities equals net assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be displayed in three components: 1) invested in capital assets, net of related debt, 2) restricted and 3) unrestricted. Invested in capital assets, net of related debt is capital assets net of accumulated depreciation and reduced by outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net assets are those with constraints placed on their use by either: 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as restricted, are shown as unrestricted. The government-wide Statement of Activities demonstrates the degree to which the direct expenses of the various functions or departments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or department. Interest and fiscal charges on long-term debt are not allocated to the various functions. Program revenues include charges for services, fines and forfeitures, licenses and permit fees, special assessment fees, certain system development fees, intergovernmental grants and other entities participation. Taxes, investment earnings and other revenues not identifiable with a particular function or department are included as general revenues. The general revenues support the net costs of the functions and departments not covered by program revenues. For the most part, the effect of internal activity has been removed from the government-wide financial statements. Net internal activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. Certain charges between the enterprise funds’ utility systems and the various functional activities are not eliminated as this would distort the direct costs and program revenues reported for the various functions concerned. 38 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Separate financial statements are provided for the governmental funds, proprietary funds and fiduciary funds. The focus of the fund financial statements is on major funds. Major individual governmental funds and proprietary funds are reported as separate columns in the fund financial statements. Other nonmajor governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in the combining statements included as supplementary information. As stated above, the fiduciary funds are presented in the fund financial statements and not included in the government-wide statements. By definition these assets are being held for the benefit of a third party and cannot be used to address Gilbert’s activities or obligations. The internal service funds, which provide services to the other funds of the government, are presented in a single combined column in the proprietary fund financial statements. Because the principal users of the internal service funds are the governmental activities, the assets and liabilities of the internal service funds are consolidated into the governmental activities column of the government-wide Statement of Net Assets. The costs of the internal service fund services are spread to the appropriate function or department on the government-wide Statement of Activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling up effect from these revenues and expenses. D. Measurement Focus and Basis of Accounting 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 fiduciary fund financial statements. Agency fund financial statements have no 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 revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, revenues are considered available if they are collected within 60 days of the end of the current fiscal period. Principal revenue sources considered to be susceptible to accrual are property taxes, sales taxes, franchise taxes, licenses and permits, intergovernmental revenue and investment earnings associated with the current fiscal period. Charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenue when received as cash because they are generally not measurable until actually received. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental activities column, a reconciliation is presented on the page following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide presentation. 39 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 The proprietary funds and the pension trust fund are reported using the economic resources measurement focus and the accrual basis of accounting (same basis as the government-wide financial statements). Gilbert’s business-type activities and enterprise funds follow Financial Accounting Standards Board (FASB) Statements and Interpretations issued on or before November 30, 1989; Accounting Principles Board Opinions; and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. Gilbert has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of Gilbert’s internal service funds are charges to user departments for services provided. The principal operating revenue of Gilbert’s enterprise funds are user fees and charges to customers for water, wastewater, and solid waste and irrigation services. Operating expenses for these funds include the cost of sales and services, administrative and payroll expenses, and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. E. Fund Accounting Gilbert uses funds to report its financial position and the results of its operations. Fund accounting segregates funds according to their intended purpose and is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, which includes assets, liabilities, fund equity, revenues and expenditures/expenses. Gilbert uses the following fund categories, further divided by fund type: Governmental Funds Governmental funds are those through which most of the governmental functions are financed. The measurement focus is based upon determination of changes in financial position rather than upon net income determination. Gilbert reports the following major governmental funds: General Fund - The general fund is the primary operating fund and is used to account for all financial resources except those required to be accounted for in another fund. The general fund will always be considered a major fund in the basic financial statements. Streets Special Revenue Fund – The streets fund accounts for Gilbert’s portion of the Arizona Highway User Revenue Tax, Local Transportation Assistance Funds, and Vehicle License Taxes. The revenue is used exclusively for the maintenance and improvement of highways and streets. General Debt Service Fund – The general debt service fund accounts for the principal and interest requirements of general obligation, highway user revenue and municipal property corporation revenue bonds not recorded in proprietary funds. Financing is provided from the levy of secondary property taxes and revenue-supported transfers. Special Assessments Debt Service Fund – The special assessments fund accounts for the principal and interest requirements of special assessment bonds not recorded in proprietary funds. Financing is provided by special assessment levies against benefited property owners. 40 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Streets and Transportation Capital Projects Fund – The streets and transportation fund accounts for the construction of roadway improvements. Municipal Facilities Capital Projects Fund – The municipal facilities fund accounts for the acquisition and construction of municipal facilities such as municipal buildings, libraries and fire stations. Parks, Open Space and Recreation Capital Projects Fund – The parks, open space and recreation fund accounts for the acquisition and construction of parks and recreation facilities. Proprietary Funds Proprietary funds are used to account for Gilbert's ongoing activities which are similar to those found in the private sector and where cost recovery and the determination of net income is useful or necessary for sound fiscal management. The measurement focus is based upon determination of net income, changes in net assets, financial position and cash flows. Gilbert reports the following major proprietary funds: Water Fund – The water fund accounts for the revenues and expenses from the operation and maintenance of the domestic water system. Wastewater Fund – The wastewater fund accounts for the revenues and expenses from the operation of the sanitary wastewater collection and treatment and reclaimed water distribution system. Solid Waste Fund – The solid waste fund accounts for the revenues and expenses of operating the solid waste collection system. Additionally, Gilbert reports the following fund types: Internal Service Funds – The internal service funds account for operations that provide services to other departments on a cost-reimbursement basis. These services include maintenance of Gilbert’s motorized equipment, operation of centrally located copiers and self-insurance for employee benefit programs. Pension Trust Fund - The pension trust fund accounts for assets held by the government in a trustee capacity. The fund includes the assets and pension payments to retired volunteer firefighters and survivors. Agency Funds – The agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Gilbert currently maintains an agency fund to account for monies collected from employees to pay medical and dependent care claims and monies collected from sworn fire employees for providing a monthly stipend for retirees to apply to the cost of their medical and/or dental insurance, medical and dental co-pays, and prescriptions and other benefits. 41 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 F. Budgetary Data In January of each year, the Budget Division prepares a revenue estimate based upon local and stateshared revenue forecasts, historic trends, economic indicators, anticipated growth, and year-to-date revenue performance to develop guidelines for departments to follow in preparing budget requests. The Council is briefed on this information and asked to approve boundaries and priorities for consideration in the preparation of departmental requests. Simultaneously, departments develop operating budget requests and submit them to the Budget Division. Departments work with the Capital Improvement Program (CIP) Division to finalize project estimates for the CIP, and submit them to the Budget Division for funding. Estimates for trust and agency, debt service, maintenance improvement districts, and internal service funds are prepared by the Budget Division and submitted for review. In March, the Council is presented with a working budget request for preliminary review and discussion, and approves a schedule of hearings and dates for approval of the budget. A public hearing is held in May, in anticipation of the adoption of the final budget. Prior to June 30 of each year, the Council adopts a preliminary budget as the maximum legal expenditure limit for the upcoming year. Council establishes dates for the final public hearing, the final adoption of the budget, and the setting of tax levies. The Council adopts the final tax levy and reports the levy amounts to Maricopa County for collection not later than the third Monday in August. The Council adopts the budget at the fund level as a total amount of expenditures. Financial control is administered by fund, with budgetary control for operating performance regulated at the departmental level within each fund. Grants and restricted appropriations are administered on a line item basis by department. By policy, the Manager is authorized to administer a budget adjustment process within a fund. Council action is required to approve any interfund adjustments and any contingency transactions. There were no supplemental appropriations during fiscal year 2011. All annual appropriations lapse at year-end and are considered for inclusion in the subsequent year’s budget. For fiscal year 2011, the Town adopted annual budgets for all governmental funds, except for the flood control and storm water capital projects fund. Gilbert prepares its budget on a basis generally consistent with GAAP, with certain exceptions as explained in Note 3. In addition, the financial statements present the budget and actual information for the departments at a summary level by function. G. Pooled Cash and Investments Gilbert maintains pooled cash and investment accounts for funds that are not legally required to be maintained separately. Each fund's equity in pooled cash and investments represents that fund's position in the consolidated accounts and determines that fund's allocation of interest earned in the pool. The Arizona Revised Statutes regulate the investment of surplus cash. Gilbert limits its investments to the Local Government Investment Pool (managed by the Arizona State Treasurer), U.S. government securities, certificates of deposit, bonds, and money market accounts. Investments are stated at fair value based on quoted market prices and cash equivalents are stated at amortized cost. 42 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 H. Inventories Inventories are recorded in the general fund, the parkway maintenance district fund, the equipment maintenance internal service fund, and the water enterprise fund. Inventories are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the weighted average method. I. Restricted Assets Certain bond proceeds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net assets, because they are maintained in trust accounts and their use is limited by applicable debt covenants. J. Capital Assets Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and similar assets), are defined as assets with an initial, individual cost of more than $10,000 and an estimated useful life greater than one year. All infrastructure, including infrastructure acquired prior to June 30, 1980, is reported. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets (including streets, water and wastewater lines installed by developers) are recorded at the estimated fair market value at the date of donation. Gain or loss is recognized when assets are retired from service or otherwise disposed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend its life are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. 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, if material. Capital assets are depreciated using the straight-line method based on the following estimated useful lives (land and construction-in-progress are not depreciated): Buildings Improvements Machinery and equipment Infrastructure Water rights 25 to 50 years 25 to 50 years 3 to 10 years 15 to 50 years 100 years K. Compensated Absences Annual leave is based on a graduated scale of years of employment and is credited to each employee as it accrues. Maximum annual leave hours varies according to years of employment and job class, and is either taken as time off from work or paid to employees upon separation or retirement. Sick leave accumulated in excess of 520 hours (728 hours for fire personnel) is convertible annually to a partial cash benefit. Sick leave is convertible to a cash benefit upon retirement or death of the employee (at 100%) or upon resignation (at 50%) when the employee has ten or more years of service (calculated at a 5 year average hourly rate). 43 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 For the governmental funds, a liability for compensated absences is reported only if they have matured, for example, as a result of employee resignations and retirements. For the government-wide financial statements, as well as the proprietary fund financial statements, all of the outstanding compensated absences are recorded as a liability. L. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as an other financing source. 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. The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds that benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. M. Transactions Between Funds Transactions that would be recorded as revenues and expenditures/expenses if they involved entities external to the governmental unit are recorded as revenues and expenditures/expenses in the respective funds. Transactions constituting a reimbursement of a fund for expenditures/expenses originally recorded in that fund, but properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund, and as reductions of the expenditures/expenses in the fund which is reimbursed, excluding indirect administrative costs which are recorded as revenues and expenditures/expenses in the related funds. Indirect administrative expenses represent overhead costs which have been allocated to the enterprise funds based upon a formula approved with the budget. All other interfund transactions are reported as transfers. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-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”. Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in the applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. See Note 6 for further discussion of the interfund receivables/payables at June 30. 44 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 N. Property Tax Gilbert's property tax is adopted by the Council each year on or before the third Monday of August, based on the previous year's full cash value as of the lien date (January 1). Maricopa County, at no charge, levies and collects all property taxes. Levies are due and payable in two installments on September 1 and March 1 and become delinquent on November 1 and May 1, respectively. Public auctions of properties that have delinquent real estate taxes are held in February following the May 1 delinquency of the second installment. The purchaser is given a certificate of purchase, issued by the County Treasurer. Five years from the date of sale, the holder of a certificate of purchase, which has not been redeemed, may demand of the County Treasurer, a County Treasurer's Deed. Gilbert does not levy property taxes for general operations (primary tax). Secondary property taxes are levied solely for the purpose of retiring the principal, interest, and servicing fees on voter approved general obligation bonded indebtedness. Gilbert may levy the amount deemed necessary to meet its bonded debt service requirements. By Council policy, Gilbert will not issue debt that would require a tax rate of more than $1.15 per $100 of assessed valuation. O. Fund Balance Classifications GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, was implemented during the fiscal year. This statement established new fund balance classifications for governmental funds. It changed the previous terminology of Reserved and Unreserved to five new classifications, which are Nonspendable, Restricted, Committed, Assigned, and Unassigned. These new classifications comprise a hierarchy based primarily on the extent to which Gilbert is bound to observe constraints imposed upon the use of the resources reported in the governmental funds. Nonspendable and Restricted fund balances represent the restricted classifications and Committed, Assigned and Unassigned represent the unrestricted classifications. Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form such as inventory or (b) legally or contractually required to be maintained intact. Restricted fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed externally by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Committed fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed internally by formal action of the Council. Formal action by Council through resolution is required to establish, modify or rescind committed fund balance. Assigned fund balance includes amounts that are limited to specific purposes by management. Council authorized the Finance Director to assign fund balance amounts to a specific purpose. Unassigned fund balance represents 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 other governmental fund can report a negative unassigned fund balance. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, as a general rule, restricted resources are considered spent before unrestricted. Within unrestricted, committed amounts would be reduced first, followed by assigned amounts (if available) and then unassigned amounts. 45 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 As of June 30, 2011, the fund balance details by classification are listed below: Streets General Special Fund Revenue Fund balances: Major Major Debt Service Funds Capital Projects Funds Special General Municipal Assmnts Streets Other Facilities Parks Gov’t Total Nonspendable: Advances $22,045,633 - - - - - - - - - - - - - - $4,248 4,248 271,811 - - - - - - - 271,811 Capital projects - - - - $67,924,357 $7,030,299 $8,259,413 5,230,585 88,444,654 Court/public safety programs - - - - - - - 1,736,372 1,736,372 Debt service - - $6,366,097 $56,611 - - - - 6,422,708 Grants - - - - - - - 2,986,450 2,986,450 Highways and streets - $7,956,285 - - - - - - 7,956,285 Special districts - - - - - - - 376,461 376,461 Other purposes - - - - - - - 127,708 127,708 Inventory Prepaid items $22,045,633 Restricted for: Assigned to: Capital replacement 10,676,836 4,561,474 - - - - - - 15,238,310 Capital projects - - - - - - - 3,082,021 3,082,021 Debt service - - 561,187 - - - - - 561,187 Highways and streets - - - - 19,701,385 - - - 19,701,385 Other purposes Unassigned: Total fund balances 52,567 - - - - - - 354,981 407,548 33,520,702 - - - - (20,781,250) - - 12,739,452 $66.567.549 $12,517,759 $6,927,284 $56,611 $87,625,742 ($13,750,951) $8,259,413 $13,898,826 $182,102,233 P. Statement of Cash Flows A statement of cash flows classifies cash receipts and payments according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. For purposes of the statement of cash flows, all highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased are considered cash equivalents. Q. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the statement of net assets/balance sheet and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 46 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Note 2 – Changes in Beginning Balances GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, also clarified the definition of the special revenue fund type. As a result, it was determined that several special revenue funds needed to be reclassified to ensure proper reporting as outlined in this GASB Statement. In addition, a review was made of all funds and based on this review, certain funds were then reclassified. Fund bal/net assets at June 30, 2010, as previously reported Adjustment to move capital replacement fund Adjustment to move other special revenue funds Adjustment to move debt sinking fund Fund bal/net assets at June 30, 2010, as adjusted Net assets at June 30, 2010, as previously reported Adjustment to move other special revenue funds Net assets at June 30, 2010, as adjusted General $54,550,809 11,019,338 20,538 __(282,721) $65,307,964 Governmental Activities $816,896,333 ____(35,816) $816,860,517 Streets Special Revenue $4,653,254 4,527,729 $9,180,983 General Debt Service $6,720,588 __282,721 $7,003,309 Other Gov’t $29,904,842 (15,547,068) (56,354) $14,301,420 Wastewater $242,600,203 35,816 $242,636,019 Business Type Activities $558,804,553 _____35,816 $558,840,369 GASB Statement No. 54 caused the reclassification of several other non-major funds as well. Note 3 - Budgetary Basis of Accounting Budgetary comparison statements for the general fund and major special revenue funds are presented in the basic financial statements. These statements display original budget, amended budget and actual results. Budgetary comparison schedules are also included as supplementary schedules for the other governmental funds. The budgets for the proprietary funds are adopted on a basis other than GAAP. For these funds, the budgetary schedules include a reconciliation of the adjustments required to convert budgetary revenues and expenses to GAAP revenues and expenses. The primary differences between the GAAP and budget basis statements for the proprietary funds are: 1. Obligations for compensated absences and rebatable arbitrage are accrued on the GAAP basis but are not recognized on the budget basis. 2. Capital outlays are not recognized as GAAP expenses but are recognized as expenses on the budget basis. 3. Debt service principal payments are not recorded as expenses on the GAAP basis but are recognized as expenses on the budget basis. 4. Depreciation and amortization of bond issuance costs are expensed on the GAAP basis but are not recognized on the budget basis. 5. Capital assets contributed by developers are recognized as revenue on the GAAP basis but are not recognized on the budget basis. 47 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Note 4 - Deposits and Investments The investment of public monies is regulated by Title 35 of the Arizona Revised Statutes. Gilbert limits its investments to the Local Government Investment Pool (managed by the Arizona State Treasurer), U.S. government securities, certificates of deposit, bonds, commercial paper, and money market accounts. Approximately one-third of Gilbert’s investments were in the State Treasurer’s Investment Pool. The State Board of Deposit provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares. At June 30, 2011, Gilbert’s investments were as follows: Investment Type U.S. Government Treasuries U.S. Government Agencies Commercial Paper: General Electric Cap Corp State Treasurer’s Investment Pool Money Market – U.S. Treasuries: Wells Fargo JP Morgan Bank of NY Mellon Total Fair Value $ 6,517,696 94,911,700 Investment Maturities (in Years) Less than 1 1-3 $ - $ 6,517,696 10,390,189 84,521,511 3,999,116 3,999,116 - 87,951,550 27,910,247 60,041,303 25,781,529 19,749,761 5,118,380 $244,029,732 25,781,529 19,749,761 5,118,380 $92,949,222 $151,080,510 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, Gilbert’s investment policy limits its investment portfolio to maturities of five years or less. 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. Gilbert addresses credit risk through its investment policy by restricting the allowable investment instruments. As of June 30, 2011, the investments in the U.S. Government Agencies were rated AAA, the investment in General Electric Cap Corp was rated A-1+, and the investment in Goldman Sachs Group Inc was rated AAAm. Gilbert’s investment in the State Treasurer’s Investment Pool did not receive a credit quality rating from a national rating agency. Custodial credit risk - deposits – Custodial credit risk is the risk that in the event of a bank failure, the Town’s deposits may not be returned to it. As of June 30, 2011, Gilbert’s bank balance was $126,129,874 of which $25,000,228 was with JP Morgan and $101,129,646 was with Alliance Bank of Arizona. $24,750,228 of JP Morgan’s bank balance was exposed to custodial credit risk because it was uninsured but collateralized with securities held by the pledging financial institution’s trustee. These securities are not in Gilbert’s name, but cannot be released without Gilbert’s authorization. At the end of each day, Gilbert’s bank account balance is transferred to a sweep account. This account is invested in U.S. Treasuries only. All of the Alliance Bank of Arizona bank balance was FDIC-insured through the Transaction Account Guarantee Program. Custodial credit risk - investments – 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, Gilbert will not be able to recover the value of its investment or collateral securities that are in the possession of another party. Gilbert’s 48 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 investment policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by Gilbert be conducted on a delivery-versus-payment basis. Securities are to be held by a third party custodian. Gilbert’s investment in the State Treasurer’s Investment Pool represents a proportionate interest in the Pool’s portfolio; however, Gilbert’s portion is not identified with specific investments and is not subject to custodial credit risk. Concentration of credit risk - Gilbert’s investment policy contains no limitations on the amount that can be invested in any one issuer. As of June 30, 2011, of Gilbert’s investments, 39% are in U.S. Government Agencies, 36% are in the State Treasurer’s Investment Pool and 21% are in U.S. Government Treasuries. Reconciliation of pooled cash and investments as reported on the statement of net assets: Primary government: Carrying amount of cash/deposits Carrying amount of investments Total cash and investments $120,808,876 244,029,732 $364,838,608 Pooled cash and investments Restricted cash and investments Total cash and investments (per Statement of Net Assets) Pension trust fund Agency funds Total cash and investments $265,700,735 98,919,126 364,619,861 102,051 116,696 $364,838,608 Note 5 - Taxes Receivable and Due from Other Governments The general fund taxes receivable amount at June 30, 2011, includes $1,380,989 in state shared sales tax and $2,344,056 in local sales tax due from the State of Arizona. Amounts due from other governments recorded in the streets special revenue fund include $1,065,011 in highway user revenues and $582,802 in vehicle license tax both due from the State of Arizona. Other governmental funds include $234,782 in federal grants from the U.S. Department of Housing and Urban Development, $60,078 from the U.S. Department of Transportation, and $144,211 from the U.S. Department of Homeland Security. The balance of these receivables represents various grants from the state and federal governments. Note 6 – Interfund Receivables and Payables The composition of interfund balances as of June 30, 2011, is as follows: Due to/from other funds are short-term loans that cover cash deficits and are recorded in the following funds: Due To Due From General fund $ $178,260 Other governmental funds 178,260 Total $178,260 $178,260 Advances from/to other funds are long-term loans that cover cash deficits for capital expenditures and are recorded in the following funds: Advance from Advance to General fund $ $22,045,633 Municipal facilities capital projects fund 22,045,633 Water fund 1,139,854 Wastewater fund 1,139,854 Total $23,185,487 $23,185,487 49 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Note 7 – Capital Assets A summary of changes in capital assets for governmental activities, for the fiscal year ended June 30, 2011, is as follows: July 1, 2010 Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets $ 1 Additions Deletions June 30, 2011 169,443,181 45,568,769 215,011,950 2,471,180 38,227,140 40,698,320 (52,509,834) (52,509,834) 171,914,361 31,286,075 203,200,436 212,298,946 67,408,546 57,098,885 827,849,008 399,587 679,913 634,199 59,397,234 (166,929) - 212,698,533 68,088,459 57,566,155 887,246,242 Total depreciable assets Less accumulated depreciation: Buildings Improvements other than buildings Machinery and equipment Infrastructure 1,164,655,385 61,110,933 (166,929) 1,225,599,389 (42,182,480) (21,470,963) (33,774,718) (301,715,112) (8,524,890) (3,752,721) (5,192,164) (29,598,472) 162,195 - (50,707,370) (25,223,684) (38,804,687) (331,313,584) Total accumulated depreciation (399,143,273) (47,068,247) 162,195 (446,049,325) 765,512,112 14,042,686 (4,734) 779,550,064 980,524,062 54,741,006 (52,514,568) 982,750,500 Depreciable assets: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total depreciable assets, net Governmental activities capital assets, net $ 1 The July 1, 2010 beginning balances were adjusted due to establishment of new procedure of recording land as an asset when purchased even though project not completed. Also, adjustments were made to various depreciable assets to more accurately reflect their proper classification. Governmental activities construction-in-progress and related construction commitments at June 30, 2011, were composed of the following: Constructionin-progress Redevelopment Municipal facilities Parks Storm water Traffic control Streets Special assessments Total $ $ 863,781 1,395,734 1,589,934 42,129 764,552 26,629,945 31,286,075 50 Commitments $ $ 550,845 72,379 127,116 86,348 17,782,947 20,353 18,639,988 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Depreciation expense was charged to governmental functions in the government-wide financial statement as follows: Management and policy Support services Legal and court Development services Police Fire Highways and streets Community services Total depreciation expense not including internal service funds Capital assets held by the government’s internal service funds are charged to the various functions based on their usage of the assets $ 57,305 606,788 613,852 902,654 3,689,722 3,187,779 30,802,904 7,181,782 47,042,786 40,447 Total depreciation expense - governmental activities $47,083,233 A summary of changes in capital assets for business-type activities, for the fiscal year ended June 30, 2011, is as follows: July 1, 2010 Non-depreciable assets: Land $ Construction-in-progress Total non-depreciable assets Depreciable assets: Plant and equipment Water rights Infrastructure Total depreciable assets Less accumulated depreciation: Plant and equipment Water rights Infrastructure Total accumulated depreciation Total depreciable assets, net Business-type activities capital assets, net $ 1 Additions Deletions June 30, 2011 37,017,778 7,997,217 45,014,995 8,905,910 14,308,267 23,214,177 (18,791,874) (18,791,874) 45,923,688 3,513,610 49,437,298 130,363,180 9,146,281 387,885,794 2,259,562 12,927,723 (1,370,272) - 131,252,470 9,146,281 400,813,517 527,395,255 15,187,285 (1,370,272) 541,212,268 (36,555,514) (1,397,535) (85,962,393) (6,000,229) (98,292) (10,384,002) 1,185,593 - (41,370,150) (1,495,827) (96,346,395) (123,915,442) 403,479,813 (16,482,523) (1,295,238) 1,185,593 (184,679) (139,212,372) 401,999,896 448,494,808 21,918,939 (18,976,553) 451,437,194 1 The July 1, 2010 beginning balances were adjusted due to establishment of new procedure of recording land as an asset when purchased even though project not completed. Also, adjustments were made to various depreciable assets to more accurately reflect their proper classification. One such reclassification was from Infrastructure to Investment in joint venture, see also Note 16. 51 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Business-type activities construction-in-progress and related construction commitments at June 30, 2011, are composed of the following: Constructionin-progress Commitments Water system Wastewater system Total $ $ 2,428,090 1,085,520 3,513,610 $ $ 2,570,301 183,211 2,753,512 Note 8 - Risk Management Traditional Commercial Insurance Programs Gilbert operates with traditional commercial insurance programs against major losses in property, plant, equipment, and liability. Administrative responsibility for the safety program, education, and loss prevention resides with the Human Resources Department. Insurance is procured on a competitive quotation basis, using the services of an independent broker as a consultant. Gilbert processes all claims and evaluates their validity to determine if insurance reporting is warranted, or if the claim can be resolved administratively. Claims settled administratively, which are generally less than the deductibles of the appropriate policy, are paid from the funds where the claims occurred. During fiscal year 2011, there was no reduction in insurance coverage from prior years. Additionally, settlements have not exceeded insurance coverage during any of the last three fiscal years. Self-Insurance Gilbert has established an employee benefit self-insurance trust to account for and finance its uninsured risks of loss for medical claims. Gilbert purchases commercial stop loss insurance to limit the claims liability to the employee benefit self-insurance fund. The stop loss insurance provides specific (individual member) coverage for claims incurred in excess of $250,000 on the plan year and aggregate (plan wide) coverage for claims incurred over $15,518,698 on the plan year. During fiscal year 2011, the plan received recoveries for $3,308 through specific stop loss coverage. Claim settlements did not reach the aggregate plan limit during any of the last three fiscal years. Premiums are paid into the employee benefit self-insurance trust by all other funds and are available to pay claims and administrative costs of the program and fund claim reserves. As with any risk retention program, Gilbert is contingently liable with respect to claims beyond those actuarially projected. The claims liability of $1,080,441 reported in the employee benefit self-insurance trust at June 30, 2011, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Prior to fiscal year 2011, the employee benefit self-insurance trust only included medical benefits. In fiscal year 2011, dental benefits were added to the self-insurance trust. A new IBNR of $60,400 was established for dental claims in fiscal year 2011. Additionally, an increase of $31,610 was added for IBNR claims under the medical plan. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Fiscal year 2011 reflects an increase in claims costs from fiscal year 2010. Of the $1,345,618 increase in claims costs during fiscal year 2011, $902,414 was attributable to the addition of dental benefits to the employee benefit self-insurance trust. 52 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Changes in the fund’s claim liability amount in fiscal years 2010 and 2011 were: Year Ended, June 30 Claim Liability at Beginning of Fiscal Year Fiscal Year Claims and Changes in Estimates Fiscal Year Claim Payments Claim Liability at End of Fiscal Year $1,269,776 $ 988,431 9,914,069 11,259,687 10,195,414 11,167,677 $ 988,431 $1,080,441 2010 2011 Note 9 - Long-Term Debt General Obligation Bonds Gilbert issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of Gilbert. General obligation bonds outstanding at June 30, 2011, were as follows (the 7/1/11 principal payment was deducted as fiscal year 2011 resources were dedicated): 2002 General Obligation Refunding Bonds, 3.5% to 5.75%, original amount $20,960,000, annual retirements due July 1, 2003, through July 1, 2015 2005 General Obligation Refunding Bonds, 3.0% to 5.0%, original amount $14,115,000, annual retirements due July 1, 2006, through July 1, 2016 2008 General Obligation Bonds, 3.0% to 5.0%, original amount $187,990,000, annual retirements due July 1, 2009, through July 1, 2023 Total Governmental $ Business-type 920,000 12,715,000 $5,530,000 - 156,750,000 -____ $170,385,000 $5,530,000 Annual debt service requirements to maturity for general obligation bonds are as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2023 Total Governmental Activities Principal Interest $ 10,920,000 11,900,000 12,500,000 12,350,000 17,465,000 71,750,000 33,500,000 $170,385,000 $ 7,697,400 7,177,000 6,592,000 5,967,000 5,349,500 15,476,250 1,515,000 $49,774,150 53 Business-type Activities Principal Interest $1,660,000 1,760,000 1,865,000 245,000 $5,530,000 $ 317,975 222,525 121,325 14,088 $ 675,913 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 In prior years, Gilbert refinanced various bond issues through the issuance of refunding bonds that are considered an in-substance defeasance of debt. The securities purchased with the proceeds of the refunding bonds were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments. The amount of principal outstanding on the defeased bonds at June 30, 2011, was: 2002 General Obligation Bonds $10,135,000 Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for combined water, wastewater, electric, parks and open space, streets, and public safety purposes may not exceed 20% of Gilbert's net secondary assessed valuation, nor may outstanding general obligation bonded debt for all other purposes exceed 6% of Gilbert's net secondary assessed valuation. In November 2006, voters amended the constitution to move streets, fire, and police from the six percent bond type to the twenty percent bond type. The following is a summary of legal borrowing capacity at June 30, 2011: Water, Wastewater, Electric, Streets, Fire, Police, and Parks and Open Space Purposes Bonds All Other General Obligation Bonds Secondary Assessed Valuation $1,861,193,961 Secondary Assessed Valuation $1,861,193,961 20% constitutional limit Less general obligation bonds outstanding Available 20% limitation borrowing capacity 6% constitutional limit Less general obligation bonds outstanding Available 6% limitation borrowing capacity 372,239,000 (175,915,000) $196,324,000 111,671,000 $111,671,000 As of June 30, 2011, Gilbert had authorized, but unissued bonds, approved by the voters as follows: Revenue bonds Water and wastewater Electric $ 1,110,000 27,500,000 Total $28,610,000 General obligation bonds 6% bond type 20% bond type $ 290,000 82,769,000 Total $83,059,000 Bond authorization elections on October 18, 1988, November 6, 2001, March 14, 2006, and November 6, 2007, authorized the 6% bond type and the 20% bond type to be issued as general obligation or revenue debt. 54 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Special Assessment Bonds with Governmental Commitment As trustee for the improvement districts, Gilbert is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2011, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and the related interest. Special assessment bonds are collateralized by properties within the districts. In the event of default by the owner, Gilbert may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. Gilbert is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds outstanding at June 30, 2011, were as follows (the 7/1/11 principal bond call was deducted as fiscal year 2011 resources were dedicated): Governmental 2002 Improvement District #19 Bonds, 5.2%, original amount $6,510,000, annual retirements due January 1, 2005 through January 1, 2027 $ 2,740,000 2009 Improvement District #20 Bonds, 5.1%, original amount $8,675,000, annual retirements due January 1, 2012 through January 1, 2029 8,675,000 Total $11,415,000 Annual debt service requirements to maturity for special assessment bonds are as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2029 Total Governmental Activities Principal Interest $ 400,000 435,000 470,000 475,000 500,000 2,990,000 3,865,000 2,280,000 $11,415,000 $ 574,655 553,258 530,065 505,845 480,858 1,972,127 1,100,767 164,093 $5,881,668 Street and Highway User Revenue Bonds Street and highway user revenue bonds are issued specifically for the purpose of street and highway construction projects. These bonds are payable solely from the revenues derived from highway user taxes, including motor vehicle fuel taxes and all other taxes; fees and charges relating to registration, operation or use of vehicles on public highways or streets; or to fuels or any other energy source used for the vehicles collected by the State and returned to Gilbert. Street and highway user revenue bonds outstanding at June 30, 2011, were as follows (the 7/1/11 principal payment was deducted as fiscal year 2011 resources were dedicated): Governmental 2003 Street and Highway User Revenue Bonds, 3.75% to 5.00% original amount $35,000,000, annual retirements due July 1, 2004, through July 1, 2019 55 $22,875,000 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Annual debt service requirements to maturity for street and highway user revenue bonds are as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2019 Total Governmental Activities Principal Interest $ 2,400,000 2,525,000 2,650,000 2,775,000 2,900,000 9,625,000 $22,875,000 $ 926,063 806,062 711,375 612,000 501,000 783,000 $ 4,339,500 Utility Revenue Bonds Water and wastewater revenue bonds are issued as authorized by the voters to provide funds to acquire and construct certain improvements to the water and wastewater systems and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these enterprises, and do not constitute a general obligation of Gilbert backed by the general taxing authority (see also Note 15). Revenue bonds outstanding at June 30, 2011, were as follows (the 7/1/11 principal payment was deducted as fiscal year 2011 resources were dedicated): 2004 Water and Wastewater Revenue Refunding Bonds, 2.0% to 5.0%, original amount $25,225,000, annual retirements due July 1, 2004 through July 1, 2022 Business-type $16,795,000 Annual debt service requirements to maturity for revenue bonds are as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022 Total Business-type Activities Principal Interest $ 1,385,000 1,430,000 1,500,000 1,585,000 1,660,000 7,610,000 1,625,000 $16,795,000 56 $ 723,213 681,662 610,162 535,163 455,913 1,260,538 69,062 $4,335,713 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Municipal Property Corporation (MPC) Revenue Bonds The Public Facilities MPC exists solely for the purpose of financing the multipurpose public safety complex (the 2001 issue); the service center facility, a police property facility and a sports complex (the 2006 issue); and the cost of acquisition of certain interests in real property to locate public safety and parks and recreation facilities and the costs of design, construction and outfitting of parks and recreation facilities and a parking facility (the 2009 issue). The Water MPC exists solely for the purpose of financing the construction of water and wastewater capital improvement projects. (See also Note 15 regarding Pledged Revenues.) Municipal property corporation revenue bonds outstanding at June 30, 2011, were as follows (the 7/1/11 principal payment was deducted as fiscal year 2011 resources were dedicated): Governmental 2001 Public Facilities Municipal Property Corporation Revenue Bonds, 2.375% to 5.0%, original amount $39,715,000, retirements due July 1, 2003, through July 1, 2021 2004 Water Resources Municipal Property Corporation, Wastewater System Development Fee and Subordinate Lien Wastewater Utility Revenue Bonds, 3.0% to 5.0%, original amount $72,950,000, retirements due April 1, 2017 and 2019 2006 Public Facilities Municipal Property Corporation Revenue Bonds, 3.5% to 5.0%, original amount $73,420,000, retirements due July 1, 2007, through July 1, 2021 2007 Water Resources Municipal Property Corporation, Water System Development Fee and Subordinate Lien Water Utility Revenue Bonds, 4.0% to 5.0%, original amount $146,175,000, retirements due October 1, 2008, through October 1, 2032 2009 Public Facilities Municipal Property Corporation Revenue Bonds, 3.0% to 5.5%, original amount $80,585,000, retirements due July 1, 2009 through July 1, 2028 Total Business-type $ 23,825,000 - - $ 15,620,000 53,930,000 - 74,260,000 $152,015,000 - 127,650,000 $143,270,000 Annual debt service requirements to maturity for municipal property corporation revenue bonds are as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2033 Total Governmental Activities Principal Interest $ 9,335,000 9,680,000 10,085,000 7,560,000 8,030,000 56,610,000 28,525,000 22,190,000 $152,015,000 $ 7,384,188 7,050,175 6,611,900 6,152,850 5,789,850 21,915,612 11,011,625 1,836,450 $67,752,650 57 Business-type Activities Principal Interest $ 3,550,000 3,700,000 3,875,000 4,075,000 4,275,000 40,570,000 31,850,000 40,725,000 10,650,000 $143,270,000 $ 6,893,568 6,739,505 6,564,005 6,365,255 6,156,505 25,722,390 16,524,687 7,680,000 312,313 $82,958,228 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 During the fiscal year ended June 30, 2011, Gilbert paid $8,520,000 of the 2004 Water Resources Municipal Property Corporation, Wastewater System Development Fee and Subordinate Lien Wastewater Utility Revenue Bonds and $5,285,000 of the 2007 Water Resources Municipal Property Corporation, Water System Development Fee and Subordinate Lien Water Utility Revenue Bonds. Proceeds collected from the wastewater and water system development fees were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payments of the bonds. Accordingly, the trust account assets and the liability for these bonds are not included in the financial statements. These bonds have been fully defeased. Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2011, was as follows: Governmental activities: Bonds payable: General obligation bonds Special assessment bonds with government commitment Revenue bonds Unamortized bond premium Unamortized charge - refunding bonds Total bonds payable Compensated absences Total long-term liabilities Business-type activities: Bonds payable: General obligation bonds Revenue bonds Unamortized bond discount Unamortized bond premium Unamortized charge - refunding bonds Total bonds payable Compensated absences Total long-term liabilities Balance July 1, 2010 Additions Reductions Balance June 30, 2011 Due Within One Year $204,055,000 - (25,420,000) 178,635,000 8,250,000 11,505,000 197,075,000 3,255,945 - (90,000) (10,880,000) (230,188) 11,415,000 186,195,000 3,025,757 400,000 11,305,000 - (905,615) 414,985,330 8,153,696 7,050,005 66,072 (36,554,116) (6,229,327) (839,543) 378,431,214 8,974,374 19,955,000 3,424,191 $423,139,026 7,050,005 (42,783,443) 387,405,588 23,379,191 (1,585,000) (18,560,000) 16,874 (44,729) 5,530,000 160,065,000 (69,696) 529,335 3,550,000 - $ 7,115,000 178,625,000 (86,570) 574,064 - (850,021) 185,377,473 1,229,144 1,594,403 63,840 (20,109,015) (1,259,181) (786,181) 165,268,458 1,564,366 3,550,000 639,822 $186,606,617 1,594,403 (21,368,196) 166,832,824 4,189,822 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year-end, $122,844 of internal service funds compensated absences are included in the above amounts. Long-term compensated absences of governmental activities are expected to be liquidated by the operating funds (primarily the general fund and the streets special revenue fund) as they come due. 58 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Conduit Debt Obligations The Industrial Development Authority, a discretely presented component unit of the Town of Gilbert, has issued Industrial Revenue Bonds to provide financial assistance to private sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. Neither Gilbert, Maricopa County nor the State of Arizona shall in any event be liable for payment of principal, premium or interest on these bonds, and accordingly they have not been reported in the accompanying combined financial statements. At June 30, 2011, Industrial Development Authority Revenue Bonds outstanding were $3,704,952. Note 10 - Retirement and Pension Plans Plan Descriptions and Financial Reports Gilbert contributes to three retirement plans described below. Benefits are established by state statute and generally provide retirement, long-term disability, and health insurance premium benefits including death and survivor benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are generally paid as a flat dollar amount per month towards the retiree’s health care insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and dependents. The Arizona State Retirement System (ASRS) administers cost-sharing multiple-employer defined benefit pension, health insurance premium, and long-term disability plans that cover employees of the State of Arizona and participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The system issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to the Arizona State Retirement System, 3300 N. Central Ave., P.O. Box 33910, Phoenix, Arizona, 85067-3910 or by calling (602) 240-2000 or 1 (800) 621-3778. The Public Safety Personnel Retirement System (PSPRS) administers agent multiple-employer defined benefit pension and health insurance premium plans that cover public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to the Public Safety Personnel Retirement System, 3010 East Camelback Road, Suite 200, Phoenix, Arizona 85016-4416, or by calling (602) 255-5575. The Elected Officials’ Retirement Plan (EORP) administers cost-sharing multiple-employer defined benefit pension and health insurance premium plans that cover State of Arizona and County elected officials and judges, and elected officials of participating municipalities. The Fund Manager of the PSPRS is the administrator for the EORP which was established by A.R.S. Title 38, Chapter 5, Article 3. Because the health insurance premium plan benefit of the EORP is not established as a formal trust, it is reported in accordance with GASB Statement No. 45 as an agent multiple-employer plan. Accordingly, the disclosures that follow reflect the EORP as if it were an agent multiple-employer plan. EORP issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to the Elected Officials’ Retirement Plan, 3010 East Camelback Road, Suite 200, Phoenix, Arizona 85016-4416, or by calling (602) 255-5575. 59 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Funding Policy The Arizona State Legislature establishes and may amend active plan members’ and their employers’ contribution rates for all plans of the ASRS, PSPRS, and EORP. Cost-sharing plans - For the year ended June 30, 2011, active ASRS members were required by statute to contribute at the actuarially determined rate of 9.85% (9.6% for retirement and 0.25% for long-term disability) of the members’ annual covered payroll and Gilbert was required by statute to contribute at the actuarially determined rate of 9.85% (9.01% for retirement, 0.59% for health insurance premium, and 0.25% for longterm disability) of the members’ annual covered payroll. Gilbert’s contributions for the current and two preceding years, all of which were equal to the required contributions, were as follows: Fiscal Year Ended 2011 2010 2009 Retirement Fund $ 3,236,934 3,085,526 3,041,813 Health Benefit Supplement Fund $211,964 244,178 365,474 Long-Term Disability Fund $ 89,656 147,470 189,790 Agent plans - For the year ended June 30, 2011, active PSPRS members were required by statute to contribute 7.65% of the members’ annual covered payroll. Gilbert was required to contribute at the actuarially determined rate of 14.34% for police personnel, of which 0.51% was the health insurance premium portion; and 11.07% for fire personnel, of which 0.43% was the health insurance premium portion. Active EORP members were required by statute to contribute 7% of the members’ annual covered payroll; and Gilbert was required to remit a designated portion of certain court fees plus additional contributions at the actuarially determined rate of 29.79% of the members’ annual covered payroll, of which 1.77% was the health insurance premium portion. Actuarial methods and assumptionsThe contribution requirements for the year ended June 30, 2011, were established by the June 30, 2009 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts 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 presented below provides multiyear 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. Projections of benefits are based on 1) the plans as understood by Gilbert and plan members and include the types of benefits in force at the valuation date, and 2) the pattern of sharing benefit costs between Gilbert 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 significant actuarial methods and assumptions used are the same for all plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2011 contribution requirements, are as follows: 60 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Actuarial valuation date Actuarial cost method June 30, 2009 Projected unit credit Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 27 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Inflation rate 7 year smoothed market value 8.5% 5.5% - 8.5% for PSPRS and 5.0% for EORP 5.5% for PSPRS and 5.0% for EORP Annual Pension/OPEB Cost – Gilbert’s pension/OPEB cost for the agent plans for the year ended June 30, 2011, and related information follows (actual contributions made were equal to the annual pension/OPEB cost): PSPRS-Police $2,214,309 81,656 Pension Health Insurance PSPRS-Fire $1,365,356 55,179 EORP $45,923 2,901 Trend InformationAnnual pension cost information for the current and two preceding years follows for each of the agent plans. Plan PSPRS-Police Pension Health Insurance PSPRS-Fire Pension Health Insurance EORP Pension Health Insurance Fiscal Year Ended Percentage of Annual Cost Contributed Annual Pension/ OPEB Cost Net Pension/ OPEB Obligation 2011 2010 2009 $ 2,496,320 2,267,067 2,468,501 100.0% 100.0% 100.0% -0-0-0- 2011 2010 2009 92,055 75,123 87,548 100.0% 100.0% 100.0% -0-0-0- 2011 2010 2009 $ 1,422,492 1,427,182 1,934,077 100.0% 100.0% 100.0% -0-0-0- 2011 2010 2009 57,488 44,283 65,025 100.0% 100.0% 100.0% -0-0-0- 2011 2010 2009 $45,923 41,427 37,378 100.0% 100.0% 100.0% -0-0-0- 2011 2010 2009 2,901 2,999 1,256 100.0% 100.0% 100.0% -0-0-0- 61 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Schedule of Funded Status and Funding ProgressFollowing are the schedules of funded status and funding progress of the plans as of the most recent valuation date, June 30, 2011, and the previous two fiscal years. The fiscal year 2011 actuarial methods and assumptions used for the schedules are not significantly different than the fiscal year 2009 actuarial methods and assumptions as described on pages 60-61. The EORP, by statute, is a cost-sharing plan. However, because of its statutory construction, in accordance with GASB Statement No. 43, the EORP is reported for such purposes as an agent multiple-employer plan. The Fund Manager obtains an actuarial valuation for the EORP on its statutory basis as a cost-sharing plan and, therefore, actuarial information for Gilbert, as a participating government, is not available. PSPRS - Police (1) Actuarial Actuarial Valuation Value of Date Plan June 30 Assets Pension 2011 $ 40,140,063 2010 35,764,039 2009 31,294,341 Actuarial Actuarial Valuation Value of Date Plan June 30 Assets Health Insurance 2011 $ -02010 -02009 -0PSPRS - Fire (1) Actuarial Valuation Actuarial Date Value of June 30 Assets Pension 2011 $28,233,335 2010 23,869,050 2009 20,297,098 Actuarial Valuation Actuarial Date Value of June 30 Assets Health Insurance 2011 $ -02010 -02009 -0- (2) (3) (4) (5) Actuarial Accrued Liability (AAL) Funding (Liability) Excess (1)-(2) Funded Ratio (1)/(2) Annual Covered Payroll (6) Funding Excess (Unfunded Liability) As Percentage of Covered Payroll (3)/(5)____ 53,624,989 45,612,797 42,352,958 (13,484,926) ( 9,848,758) (11,058,617) 74.9% 78.4% 73.9% 16,176,077 16,588,316 17,200,680 (83.4)% (59.4)% (64.3)% Actuarial Accrued Liability (AAL) Funding (Liability) Excess (1)-(2) Funded Ratio (1)/(2) Annual Covered Payroll Funding Excess (Unfunded Liability) As Percentage of Covered Payroll (3)/(5)____ 1,575,279 1,190,829 1,065,345 (1,575,279) (1,190,829) (1,065,345) 0.0% 0.0% 0.0% 16,176,077 16,588,316 17,200,680 (9.74)% (7.18)% (6.19)% (6) Funding Excess (Unfunded Liability) As Percentage of Covered Payroll (3)/(5)____ (2) (3) (4) (5) Actuarial Accrued Liability (AAL) Funding (Liability) Excess (1)-(2) Funded Ratio (1)/(2) Annual Covered Payroll 30,559,021 22,964,310 21,379,402 (2,325,686) 904,740 (1,082,304) Actuarial Accrued Liability (AAL) Funding (Liability) Excess (1)-(2) 1,027,298 638,239 541,008 (1,027,298) (638,239) (541,008) 62 92.4% 103.9% 94.9% Funded Ratio (1)/(2) 0.0% 0.0% 0.0% 12,905,560 12,158,329 12,748,187 Annual Covered Payroll 12,905,560 12,158,329 12,748,187 (18.0)% 7.4% ( 8.5)% Funding Excess (Unfunded Liability) As Percentage of Covered Payroll (3)/(5)____ (7.96)% (5.25)% (4.24)% TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Volunteer Firemen’s Relief and Pension Fund The Volunteer Firemen’s Relief and Pension Fund covers retired volunteer firemen and survivors and was established solely upon the provision for such pension and relief funds in the Arizona Revised Statutes. The Statutes grant discretionary powers to Boards of Trustees of such plans related to payment/nonpayment of benefits to qualified retired or disabled volunteer firemen out of the assets of the Fund. These discretionary powers do not extend, however, to the volunteer firemen’s right to their own contributions to the Fund. Gilbert has no actuarial liability for pension benefits as individual retirement benefits are not defined in the plan. Reserves for pensions, therefore, have not been established as the amounts are not vested and payment of benefits (if any) are at the discretion of the Board of Trustees of the plan. Gilbert no longer operates a Volunteer Fire Department. Accordingly, there were no contributions required or made to this plan nor refunds paid for fiscal year 2011. Administrative costs are financed through investment earnings. There is only one remaining pensioner receiving retirement benefits from the Fund. Note 11 - Capital Contributions During the year ended June 30, 2011, the Enterprise funds external capital contributions consisted of the following: Contributions from developers Development fees Total Water Wastewater Total $ 1,767,069 $ 1,279,423 $ 3,046,492 8,404,313 6,878,502 15,282,815 $10,171,382 $ 8,157,925 $18,329,307 Note 12 – Interfund Transfers As of June 30, 2011, interfund transfers were as follows: Transfers-In Transfers-Out $ 2,020,937 65,430 21,007,682 442,425 30,986 1,028,215 92,160 584,821 25,272,656 $ 6,980,314 3,912,496 307,710 115,430 6,647,786 5,669,422 953,184 24,586,342 Enterprise funds: Water Wastewater Total enterprise funds 191,728 819,960 1,011,688 1,166,580 331,422 1,498,002 Internal service funds - 200,000 $26,284,344 $26,284,344 Governmental funds: General fund Streets special revenue General debt service Special assessments Streets and transportation Municipal facilities Parks, open space and recreation Other governmental funds Total governmental funds Total transfers 63 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 The interfund transfers generally fall within one of the following categories: 1) subsidy transfers; 2) transfers to cover debt service payments; 3) transfers for the town match for grants; or 4) transfers to fund capital projects or capital replacement. For fiscal year 2011, a transfer of $200,000 was made from the copier services internal service fund to the general fund to cover any fiscal year deficits due to the economic downturn. There were no other significant transfers during fiscal year 2011 that were either non-routine in nature or inconsistent with the activities of the fund making the transfer. Note 13 - Individual Fund Disclosures Individual funds with deficiencies in fund balance/net assets at June 30, 2011, were as follows: Capital projects funds Municipal facilities $13,750,951 The deficiency in the municipal facilities fund of the capital projects funds will be eliminated through the future collection of system development fees. Individual funds with an excess of expenditures over appropriations for the year ended June 30, 2011, were as follows: Capital project funds Special assessments 303,354 Debt service funds Special assessments 441,575 The excess of expenditures over appropriations were all funded by available fund balance. Note 14 – Contingent Liabilities Gilbert is contingently liable with respect to several lawsuits and other claims incidental to its normal operations. Management, with concurrence of the Town's Attorney, is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on Gilbert’s financial condition, results of operations or liquidity. Note 15 – Pledged Revenues Gilbert has pledged future water and wastewater revenues, net of specified operating expenses, to repay $25,225,000 in water and wastewater revenue refunding bonds issued in 2004. Proceeds from the bonds refunded various other revenue bonds which provided financing for the construction of and improvements to the water and wastewater systems. The bonds are payable solely from water and wastewater net revenues and are payable through 2022. Annual principal and interest payments on the bonds are expected to require less than 8 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $21,130,713. Principal and interest paid for the current year was $2,118,313, and total customer net revenues were $26,549,315. 64 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Gilbert has pledged future water and wastewater connection development fees revenue and future water and wastewater revenues, net of specified operating expenses after debt service payments are made for the 2004 water and wastewater revenue refunding bonds, to repay $219,125,000 in utility revenue bonds issued since 2004. Proceeds from the bonds provided financing for the construction of a joint use wastewater treatment plant; and for the acquisition of additional water production and distribution capacity for the combined water and wastewater system. The bonds are payable from water and wastewater connection development fees revenue and water and wastewater net revenues and are payable through 2033. Annual principal and interest payments on the bonds are expected to require less than 28 percent of revenue. The total principal and interest remaining to be paid on the bonds is $226,228,228. Principal and interest paid for the current year was $24,403,049 (of which $13,805,000 in principal was an advance defeasance). Total water and wastewater connection development fees revenue was $13,363,885 and water and wastewater net revenues after debt payments were $24,430,452. Gilbert has pledged future street and highway revenues to repay $35,000,000 in highway user revenue bonds issued in 2003. Proceeds from the bonds provided financing for the purpose of street and highway construction projects. The bonds are payable solely from street and highway revenues (see note 9 for the detail of the sources of these revenues) and are payable through 2019. Annual principal and interest payments on the bonds are expected to require less than 36 percent of revenues. The total principal and interest remaining to be paid on the bonds is $27,214,500. Principal and interest paid for the current year was $3,314,813, and the total street and highway revenues were $9,291,120. Gilbert has pledged future excise taxes and state-shared revenues to repay $193,720,000 in public facilities municipal property corporation revenue bonds issued since 2001. Proceeds from the bonds provided financing of the multipurpose public safety complex, the service center facility, a police property facility, a sports complex, various other parks and recreation facilities, and a parking facility. The bonds are payable through 2028. Annual principal and interest payments on the bonds are expected to require less than 19 percent of excise taxes and state-shared revenues. The total principal and interest remaining to be paid on the bonds is $219,767,650. Principal and interest paid for the current year was $16,735,188, and the total excise taxes and state-shared revenues were $89,202,148. Note 16 - Investment in Joint Venture Construction of a joint water reclamation plant with the City of Mesa and the Town of Queen Creek was completed during fiscal year 2007. Mesa is the lead agent and is responsible for the operation and maintenance of the plant. Mesa, Gilbert and Queen Creek participate in ownership of the plant and are charged for operating expenses based on gallons of flow. Gilbert’s investment in joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total investment as of June 30, 2011, was: Mesa’s Share Gilbert’s Share Queen Creek’s Share Total $ 69,672,049 70,783,351 28,891,812 $169,347,212 65 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 Construction began in fiscal year 2007 for a joint water treatment plant with the City of Chandler. Gilbert is the lead agent on this project. Construction was completed during fiscal year 2009 and the plant will treat 12 million gallons per day each for Gilbert and Chandler. Gilbert’s investment in joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. (Gilbert’s Share of $76,257,644 includes a current year reclassification from Infrastructure in the amount of $2,602,328 and from Land in the amount of $910,933.) Total investment as of June 30, 2011, was: Gilbert’s Share Chandler’s Share Total $ 76,257,644 75,781,323 $152,038,967 In August 2008, Gilbert entered into an Intergovernmental Agreement with the Cities of Mesa and Apache Junction, Apache Junction Fire District (FD), and the Town of Queen Creek (the Parties) to plan, design, construct, operate, maintain and finance the TOPAZ Regional Wireless Cooperative Network (Trunked Open Arizona Network – 700/800 MHz Network procured and built by the City of Mesa). The City of Mesa acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the network, in addition to providing all management personnel and financing arrangements. The Parties participate in ownership of the network and are charged for operating and capital expenses based on subscriber units (radio counts). Gilbert’s investment in joint venture is reflected within the governmental activities in the government-wide statement of net assets. Separate financial statements are not prepared. Total investment as of June 30, 2011, was: Mesa’s Share Gilbert’s Share Apache Junction’s Share Apache Junction FD’s Share Queen Creek’s Share Total $ 831,862 209,811 48,687 23,063 8,387 $1,121,810 Note 17 - Subsequent Events Gilbert advance defeased $15,620,000 of Water Resources MPC Wastewater System Development Fee and Subordinate Lien Wastewater Utility Revenue Bonds on October 1, 2011. In addition, Gilbert advance defeased $5,205,000 of Water Resources MPC Water System Development Fee and Subordinate Lien Water Utility Revenue Bonds on October 1, 2011. 66 TABLE OF CONTENTS NONMAJOR FUNDS OTHER GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for revenues and expenditures from specific taxes or other earmarked sources. Such funds are usually required by statute or ordinance to finance particular functions or activities. Grants - accounts for miscellaneous grants received from Federal, State and local governments that require segregation of revenues and expenditures. Other Special Revenue - accounts for revenues received from various agencies and sources, including seized funds from law enforcement agencies that are required to be used for specific purposes. Community Development Block Grants (CDBG) – accounts for a series of ongoing entitlements received directly from the U.S. Department of Housing and Urban Development (HUD) and used for affordable housing and redevelopment activities. HOME Program accounts for HUD monies received from Maricopa County for affordable housing activities including housing rehabilitation. Street Light Improvement District - accounts for taxes received from and expenditures of the street light maintenance improvement districts. Parkway Maintenance District - accounts for taxes received from and expenditures of the parkway maintenance improvement districts. Capital Projects Funds Capital Projects Funds are established to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Traffic Control - accounts for the acquisition and installation of traffic signals. Flood Control and Storm Water - accounts for the construction of flood control retention basins and storm drains. Special Assessments – accounts for Gilbert’s capital construction of improvement districts. Redevelopment - accounts for the construction of capital improvements in the Heritage District. 67 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2011 Special Revenue ASSETS Pooled cash and investments Receivables, net: Taxes Accrued interest Accounts Due from other governments Inventories Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Due to other funds Deferred revenue: Other Total liabilities Fund Balances: Nonspendable Restricted Assigned Total fund balances Total liabilities and fund balances Grants Other Special Revenue $ 5,479,330 $ 1,547,336 6,484 79 239,660 $ 5,725,553 1,833 48,219 495,227 $ 2,092,615 $ $ $ $ 16,048 - 7,302 6,176 - CDBG/HOME Street Light Improvement District Parkway Maintenance District $ 12,266 $ 310,458 $ 112,093 234,782 247,048 $ 15,697 326,155 $ 11,346 10 4,248 127,697 51,525 727 178,260 $ - $ 71,182 1,961 - 41,143 57,191 13,478 230,512 - 73,143 2,969,914 2,698,448 5,668,362 $ 5,725,553 1,864,080 215,057 2,079,137 $ 2,092,615 16,536 16,536 247,048 326,155 326,155 326,155 4,248 50,306 54,554 127,697 68 $ $ $ TABLE OF CONTENTS Capital Projects Traffic Control $ 1,366,944 Flood Control and Storm Water $ 247,469 1,555 415 $ 1,368,914 $ 294 247,763 $ $ 67,510 - - Special Assessments $ 310,590 $ 600 311,190 $ 21 - Redevelopment $ 3,694,874 $ 3,685 195,187 3,893,746 $ - Total Nonmajor Governmental Funds $ 13,081,360 $ 27,043 14,461 48,713 1,164,856 4,248 14,340,681 $ 213,588 8,864 178,260 67,510 - 21 - 41,143 441,855 1,165,594 135,810 1,301,404 $ 1,368,914 247,763 247,763 247,763 311,169 311,169 311,190 3,753,822 139,924 3,893,746 3,893,746 4,248 10,457,576 3,437,002 13,898,826 14,340,681 $ $ $ 69 $ TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2011 Special Revenue Other Special Revenue Grants Revenues Taxes: Property Intergovernmental Charges for services System development fees Gifts and donations Fines and forfeitures Investment earnings Miscellaneous Total revenues Expenditures Current: General government: Management and policy Support services Legal and court Development services Public safety: Police Fire Highways and streets Community services Transportation Non departmental Capital outlay 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 balances Fund balances at beginning of year Fund balances at end of year $ 1,137,139 43,941 1,181,080 $ 1,045,848 165,157 453,422 16,358 15,750 1,696,535 CDBG/HOME Street Light Improvement District Parkway Maintenance District $ $ $ 1,081,920 4 1,081,924 1,688,208 1,688,208 1,247,365 133 1,247,498 - 956 10,620 202,073 13,187 1,050,362 - - 263,375 129,582 360 30,037 571,073 994,427 1,001,848 13,985 25,192 49,883 87,127 1,404,871 1,050,362 1,458,037 1,458,037 1,401,982 1,401,982 186,653 291,664 31,562 230,171 1,572 (24,045) (22,473) 8 (454,374) (454,366) (32,340) (32,340) - (778) 230,171 (71,484) 95,984 126,038 164,180 (162,702) 5,504,182 2,241,839 $ 5,668,362 $ 2,079,137 70 17,314 $ 16,536 $ 326,155 (154,484) 83,000 83,000 $ 54,554 TABLE OF CONTENTS Capital Projects Flood Control and Storm Water Traffic Control $ 361,610 616,443 10,711 988,764 $ 2,031 2,031 Special Assessments $ 7,509 7,509 Redevelopment $ 62,014 23,576 11,154 96,744 Total Nonmajor Governmental Funds $ 2,935,573 2,642,683 1,045,848 616,443 165,157 453,422 104,263 26,904 7,990,293 - - - - 956 10,620 202,073 1,063,549 690,534 690,534 9,870 9,870 745,784 745,784 268,657 268,657 1,265,223 143,567 1,458,397 1,427,174 30,037 49,883 2,373,045 8,024,524 298,230 (7,839) (738,275) (171,913) (34,231) 108,184 108,184 9,870 9,870 (442,425) (442,425) 382,187 382,187 584,821 (953,184) (368,363) 406,414 2,031 (1,180,700) 894,990 245,732 $ 1,301,404 $ 247,763 210,274 1,491,869 $ 311,169 (402,594) 3,683,472 $ 3,893,746 71 14,301,420 $ 13,898,826 TABLE OF CONTENTS 72 TABLE OF CONTENTS BUDGETARY COMPARISON SCHEDULES 73 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Grants Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental Investment earnings Total revenues $ Expenditures Current: Public safety: Police Fire Highways and streets Transportation Capital outlay Contingency Total expenditures Net change in fund balances Final 5,000,000 5,000,000 $ $ 1,137,139 43,941 1,181,080 $ (3,862,861) 43,941 (3,818,920) 5,000,000 5,000,000 263,375 129,582 360 30,037 571,073 994,427 (263,375) (129,582) (360) (30,037) (571,073) 5,000,000 4,005,573 - - 186,653 186,653 (2,697,000) (2,697,000) $ 5,000,000 5,000,000 Final Budget Positive (Negative) 5,000,000 5,000,000 Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources and uses Actual Amounts (2,697,000) $ (2,697,000) (2,697,000) 1,572 (24,045) (22,473) (2,697,000) 164,180 Fund balance at beginning of year 5,504,182 Fund balance at end of year $ 74 5,668,362 1,572 2,672,955 2,674,527 $ 2,861,180 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Other Special Revenue Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Charges for services Gifts and donations Fines and forfeitures Investment earnings Miscellaneous Total revenues $ Expenditures Current: General government: Management and policy Support services Legal and court Development services Public safety: Police Fire Community services Non departmental Capital outlay 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 balances $ 1,265,000 30,000 300,890 1,595,890 Actual Amounts Final $ 1,265,000 30,000 300,890 1,595,890 $ 1,045,848 165,157 453,422 16,358 15,750 1,696,535 Final Budget Positive (Negative) $ (219,152) 135,157 152,532 16,358 15,750 100,645 1,000 269,320 - 1,000 269,320 - 956 10,620 202,073 13,187 (956) (9,620) 67,247 (13,187) 1,193,410 15,600 40,000 55,000 33,000 1,607,330 1,193,410 15,600 40,000 55,000 33,000 1,607,330 1,001,848 13,985 25,192 49,883 87,127 1,404,871 191,562 1,615 14,808 5,117 (54,127) 202,459 (11,440) (11,440) 291,664 303,104 20,890 (275,920) (255,030) 20,890 (275,920) (255,030) 8 (454,374) (454,366) (20,882) (178,454) (199,336) (266,470) (162,702) (266,470) $ Fund balance at beginning of year 2,241,839 Fund balance at end of year $ 75 2,079,137 $ 103,768 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA CDBG/HOME Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental Investment earnings Total revenues $ Expenditures Current: General government: Development services Total expenditures Net change in fund balances Final 1,357,130 1,357,130 $ $ 1,081,920 4 1,081,924 $ (275,210) 4 (275,206) 1,357,130 1,357,130 1,050,362 1,050,362 306,768 306,768 - - 31,562 31,562 (490,000) (490,000) (32,340) (32,340) 457,660 457,660 (490,000) (778) (490,000) (490,000) $ 1,357,130 1,357,130 Final Budget Positive (Negative) 1,357,130 1,357,130 Excess of revenues over expenditures Other financing uses Transfers out Total other financing uses Actual Amounts (490,000) $ Fund balance at beginning of year 17,314 Fund balance at end of year $ 76 16,536 $ 489,222 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Street Light Improvement District Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Taxes Total revenues $ Expenditures Current: Highways and streets Total expenditures Final $ 1,755,860 1,755,860 Excess (deficiency) of revenues over (under) expenditures Net change in fund balances 1,692,300 1,692,300 (63,560) 1,692,300 1,692,300 $ 1,755,860 1,755,860 (63,560) $ Actual Amounts $ 1,688,208 1,688,208 (4,092) (4,092) 297,823 297,823 (63,560) 230,171 293,731 (63,560) 230,171 95,984 $ 77 $ 1,458,037 1,458,037 Fund balance at beginning of year Fund balance at end of year Final Budget Positive (Negative) 326,155 $ 293,731 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Parkway Maintenance District Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Taxes Investment earnings Total revenues $ Expenditures Current: Community services Total expenditures Final $ 1,479,450 1,479,450 Deficiency of revenues under expenditures Other financing sources Transfers in Total other financing sources Net change in fund balances 1,240,780 1,240,780 $ Actual Amounts 1,240,780 1,240,780 $ 1,479,450 1,479,450 1,247,365 133 1,247,498 Final Budget Positive (Negative) $ 1,401,982 1,401,982 6,585 133 6,718 77,468 77,468 (238,670) (238,670) (154,484) 84,186 100,000 100,000 100,000 100,000 83,000 83,000 (17,000) (17,000) (138,670) (71,484) (138,670) $ Fund balance at beginning of year 126,038 Fund balance at end of year $ 78 54,554 $ 67,186 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA General Debt Obligations Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Property taxes Investment earnings Total revenues $ Expenditures Debt service: Principal Interest Fiscal and other charges Total expenditures Deficiency of revenues under expenditures Other financing sources Transfers in Total other financing sources Net change in fund balances 26,418,130 26,418,130 Actual Amounts Final $ 26,418,130 26,418,130 $ 25,796,000 118,761 25,914,761 Final Budget Positive (Negative) $ (622,130) 118,761 (503,369) 29,125,000 17,881,580 9,600 47,016,180 29,125,000 17,881,580 9,600 47,016,180 29,125,000 17,864,050 9,418 46,998,468 17,530 182 17,712 (20,598,050) (20,598,050) (21,083,707) (485,657) 20,751,190 20,751,190 20,751,190 20,751,190 21,007,682 21,007,682 256,492 256,492 $ 153,140 $ 153,140 (76,025) Fund balance at beginning of year, as restated (see note 2) Fund balance at end of year $ 79 7,003,309 6,927,284 $ (229,165) TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Special Assessments Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Special assessments Investment earnings Total revenues $ Actual Amounts Final 677,250 677,250 $ 677,250 677,250 $ 559,284 1,144 560,428 Final Budget Positive (Negative) $ (117,966) 1,144 (116,822) Expenditures Debt service: Principal Interest Fiscal and other charges Total expenditures 90,000 144,820 1,200 236,020 90,000 144,820 1,200 236,020 90,000 587,245 350 677,595 (442,425) 850 (441,575) Excess (deficiency) of revenues over (under) expenditures 441,230 441,230 (117,167) (558,397) - - 442,425 (307,710) 134,715 442,425 (307,710) 134,715 Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances $ 441,230 $ 441,230 17,548 Fund balance at beginning of year 39,063 Fund balance at end of year $ 80 56,611 $ (423,682) TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Streets and Transportation Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental Other entities' participation Investment earnings Miscellaneous Total revenues Expenditures Capital outlay 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 balances $ 9,807,940 3,400 9,811,340 Actual Amounts Final $ 9,807,940 3,400 9,811,340 $ 515,993 2,313,197 1,146,473 320 3,975,983 Final Budget Positive (Negative) $ (9,291,947) 2,313,197 1,146,473 (3,080) (5,835,357) 92,247,480 92,247,480 92,247,480 92,247,480 34,906,170 34,906,170 57,341,310 57,341,310 (82,436,140) (82,436,140) (30,930,187) 51,505,953 2,468,140 2,468,140 2,468,140 2,468,140 $ (79,968,000) 30,986 (115,430) (84,444) $ (79,968,000) (31,014,631) Fund balance at beginning of year 118,640,373 Fund balance at end of year $ 81 87,625,742 (2,437,154) (115,430) (2,552,584) $ 48,953,369 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Traffic Control Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental System development fees Investment earnings Total revenues $ Expenditures Capital outlay Total expenditures 929,000 689,000 1,618,000 Actual Amounts Final $ 929,000 689,000 1,618,000 $ 361,610 616,443 10,711 988,764 Final Budget Positive (Negative) $ (567,390) (72,557) 10,711 (629,236) 1,570,000 1,570,000 1,570,000 1,570,000 690,534 690,534 879,466 879,466 Excess of revenues over expenditures 48,000 48,000 298,230 250,230 Other financing sources Transfers in Total other financing sources 42,000 42,000 42,000 42,000 108,184 108,184 66,184 66,184 90,000 406,414 Net change in fund balances $ 90,000 $ Fund balance at beginning of year 894,990 Fund balance at end of year $ 82 1,301,404 $ 316,414 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Municipal Facilities Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental System development fees Investment earnings Total revenues Expenditures Current: General government: Management and policy Public safety: Police Debt service: Fiscal and other charges Capital outlay Total expenditures Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources and uses Net change in fund balances $ Actual Amounts Final 2,977,000 2,564,000 5,541,000 $ 2,977,000 2,564,000 5,541,000 $ 165,805 2,989,947 26,691 3,182,443 Final Budget Positive (Negative) $ (2,811,195) 425,947 26,691 (2,358,557) - - 46,851 (46,851) 333,680 333,680 301,415 32,265 4,978,460 5,312,140 4,978,460 5,312,140 10,315 360,941 719,522 228,860 228,860 2,462,921 2,234,061 (1,062,005) 8,174,114 7,112,109 2,090,220 (14,821,900) (12,731,680) 2,090,220 (14,821,900) (12,731,680) 1,028,215 (6,647,786) (5,619,571) $ (12,502,820) $ (12,502,820) (3,156,650) Fund deficit at beginning of year (10,594,301) Fund deficit at end of year $ 83 (13,750,951) (10,315) 4,617,519 4,592,618 $ 9,346,170 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Parks, Open Space and Recreation Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental System development fees Investment earnings Total revenues $ Expenditures Capital outlay Total expenditures 1,661,000 4,092,000 5,753,000 Actual Amounts Final $ 1,661,000 4,092,000 5,753,000 $ 5,129,378 86,118 5,215,496 Final Budget Positive (Negative) $ (1,661,000) 1,037,378 86,118 (537,504) 7,016,000 7,016,000 7,016,000 7,016,000 1,278,885 1,278,885 5,737,115 5,737,115 Excess (deficiency) of revenues over (under) expenditures (1,263,000) (1,263,000) 3,936,611 5,199,611 Other financing sources (uses) Transfers in Transfers out Total other financing sources and uses (5,331,990) (5,331,990) (5,331,990) (5,331,990) 92,160 (5,669,422) (5,577,262) (6,594,990) (1,640,651) Net change in fund balances $ (6,594,990) $ Fund balance at beginning of year 9,900,064 Fund balance at end of year $ 84 8,259,413 92,160 (337,432) (245,272) $ 4,954,339 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Special Assessments Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Investment earnings Total revenues $ Expenditures Capital outlay Total expenditures Deficiency of revenues under expenditures Final - $ $ 7,509 7,509 $ 7,509 7,509 442,430 442,430 745,784 745,784 (303,354) (303,354) (442,430) (442,430) (738,275) (295,845) (442,425) (442,425) (442,425) (442,425) $ - Final Budget Positive (Negative) 442,430 442,430 Other financing uses Transfers out Total other financing uses Net change in fund balances Actual Amounts (442,430) $ (442,430) (1,180,700) Fund balance at beginning of year 1,491,869 Fund balance at end of year $ 85 311,169 $ (738,270) TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Redevelopment Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Revenues Intergovernmental Investment earnings Miscellaneous Total revenues Actual Amounts Final $ - $ - $ 62,014 23,576 11,154 96,744 Final Budget Positive (Negative) $ 62,014 23,576 11,154 96,744 Expenditures Capital outlay Total expenditures 8,236,000 8,236,000 8,236,000 8,236,000 268,657 268,657 7,967,343 7,967,343 Deficiency of revenues under expenditures (8,236,000) (8,236,000) (171,913) 8,064,087 8,236,000 8,236,000 8,236,000 8,236,000 382,187 382,187 (7,853,813) (7,853,813) Other financing sources Transfers in Total other financing sources Net change in fund balances $ - $ - 210,274 Fund balance at beginning of year 3,683,472 Fund balance at end of year $ 86 3,893,746 $ 210,274 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Water Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Other Total operating revenues $ Operating expenses General and administrative Personal services Operation and maintenance Capital outlay Allocation of indirect expenses Debt service: Principal Contingency Total operating expenses Operating loss Nonoperating revenues (expenses) Intergovernmental Interest expense Investment earnings Total nonoperating revenues (expenses) Loss before capital contributions and transfers Capital contributions Transfers in Transfers out Change in net assets $ Actual Amounts Final 36,106,000 1,050,000 37,156,000 $ 36,106,000 1,050,000 37,156,000 $ 35,966,037 2,114,932 38,080,969 Final Budget Positive (Negative) $ (139,963) 1,064,932 924,969 825,150 5,938,190 13,651,440 28,796,000 2,296,650 825,150 5,938,190 13,651,440 28,796,000 2,296,650 1,050,729 6,572,026 10,956,332 11,667,028 1,119,760 (225,579) (633,836) 2,695,108 17,128,972 1,176,890 11,168,740 827,000 63,503,170 11,168,740 827,000 63,503,170 11,168,737 42,534,612 3 827,000 20,968,558 (26,347,170) (26,347,170) (4,453,643) 21,893,527 390,000 (7,354,260) 90,000 (6,874,260) 390,000 (7,354,260) 90,000 (6,874,260) (7,253,506) 808,345 (6,445,161) (33,221,430) (33,221,430) (10,898,804) 7,676,000 510,230 (2,669,220) 7,676,000 510,230 (2,669,220) 8,404,313 191,728 (1,166,580) (27,704,420) (3,469,343) (27,704,420) $ Explanation of difference between budgetary change in net assets at June 30, 2011, and GAAP change in net assets: Obligations for compensated absenses are accrued on the GAAP basis but are not recognized on the budget basis: Add compensated absences at June 30, 2010 Less compensated absences at June 30, 2011 Capital outlays are not recognized as GAAP expenses but are recognized as expenses on the budget basis. Debt service principal payments are not recognized as expenses on the GAAP basis but are recognized as expenses on the budget basis. Capital assets contributed by developers are recognized as revenue for GAAP purposes by are not recognized as revenue on the budget basis. Depreciation is recognized as an expense for GAAP purposes but is not recognized for budgetary purposes. Amortization of bond issuance costs is recognized as an expense for GAAP purposes but not recognized for budgetary purposes. Change in net assets as reported on the statement of revenues, expenses and changes in fund net assets 87 511,764 (734,656) 11,667,028 11,168,737 1,767,069 (9,572,782) (109,655) $ 11,228,162 (390,000) 100,754 718,345 429,099 22,322,626 728,313 (318,502) 1,502,640 $ 24,235,077 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Wastewater Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Assets- Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Other Total operating revenues $ 21,221,010 1,000 21,222,010 Final $ 21,221,010 1,000 21,222,010 Actual Amounts $ 21,677,621 21,969 21,699,590 Final Budget Positive (Negative) $ 456,611 20,969 477,580 Operating expenses General and administrative Personal services Operation and maintenance Capital outlay Allocation of indirect expenses Debt service: Principal Contingency Total operating expenses 641,990 3,007,830 9,383,240 4,221,000 1,584,030 641,990 3,007,830 9,383,240 4,221,000 1,584,030 762,213 3,517,268 8,317,976 2,274,276 611,939 (120,223) (509,438) 1,065,264 1,946,724 972,091 8,851,260 911,000 28,600,350 8,851,260 911,000 28,600,350 8,976,263 24,459,935 (125,003) 911,000 4,140,415 Operating loss (7,378,340) (7,378,340) (2,760,345) 4,617,995 Nonoperating revenues (expenses) Interest expense Investment earnings Gain on sale of capital assets Other Total nonoperating revenues (expenses) (1,211,150) 79,590 1,000 (1,130,560) (1,211,150) 79,590 1,000 (1,130,560) (1,101,920) 88,062 (885) (1,014,743) Loss before capital contributions and transfers (8,508,900) (8,508,900) (3,775,088) 4,733,812 5,807,340 820,000 (666,540) 5,807,340 820,000 (666,540) 6,878,502 819,960 (331,422) 1,071,162 (40) 335,118 (2,548,100) 3,591,952 Capital contributions Transfers in Transfers out Change in net assets $ (2,548,100) $ Explanation of difference between budgetary change in net assets at June 30, 2011, and GAAP change in net assets: Obligations for compensated absences are accrued on the GAAP basis but are not recognized on the budget basis: Add compensated absences at June 30, 2010 Less compensated absences at June 30, 2011 Capital outlays are not recognized as GAAP expenses but are recognized as expenses on the budget basis. Debt service principal payments are not recognized as expenses on the GAAP basis but are recognized as expenses on the budget basis. Capital assets contributed by developers are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis. Depreciation is recognized as an expense for GAAP purposes but is not recognized for budgetary purposes. Amortization of bond issuance costs is recognized as an expense for GAAP purposes but is not recognized for budgetary purposes. Change in net assets as reported on the statement of revenues, expenses and changes in fund net assets 88 263,660 (363,769) 2,274,276 8,976,263 1,279,423 (8,324,903) (295,832) $ 7,401,070 109,230 8,472 (885) (1,000) 115,817 $ 6,140,052 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Solid Waste Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Other Total operating revenues $ Operating expenses General and administrative Personal services Operation and maintenance Capital outlay Allocation of indirect expenses Contingency Total operating expenses Final $ 368,060 5,088,380 6,996,930 3,334,000 1,301,880 451,000 17,540,250 Operating income (loss) Nonoperating revenues (expenses) Investment earnings Loss on sale of capital assets Total nonoperating revenues (expenses) Change in net assets 16,778,100 50,000 16,828,100 $ 16,778,100 50,000 16,828,100 $ 368,060 5,088,380 6,996,930 3,334,000 1,301,880 451,000 17,540,250 (712,150) (712,150) 25,700 25,700 25,700 25,700 (686,450) Actual Amounts $ 17,194,313 79,224 17,273,537 2,583,643 3,295,793 115,284 (24,481) 90,803 (686,450) 2,674,446 453,720 (465,941) 2,237,338 (1,665,872) $ 416,213 29,224 445,437 (307,646) (335,305) 1,206,855 1,096,662 738,790 451,000 2,850,356 and GAAP change in net assets: 89 $ 675,706 5,423,685 5,790,075 2,237,338 563,090 14,689,894 Explanation of difference between budgetary change in net assets at June 30, 2011, Obligations for compensated absences are accrued on the GAAP basis but are not recognized on the budget basis: Add compensated absences at June 30, 2010 Less compensated absences at June 30, 2011 Capital outlays are not recognized as GAAP expenses but are recognized as expenses on a budget basis. Depreciation is recognized as an expense for GAAP purposes but is not recognized for budgetary purposes. Change in net assets as reported on the statement of revenues, expenses and changes in fund net assets Final Budget Positive (Negative) 3,233,691 89,584 (24,481) 65,103 $ 3,360,896 TABLE OF CONTENTS 90 TABLE OF CONTENTS INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the government, on a cost reimbursement basis. Equipment Maintenance - to account for the revenues and expenses from the maintenance of Gilbert's motorized equipment. Copy Services - to account for the revenues and expenses from the operation of centrally located copiers within Gilbert. Employee Benefit Self-Insurance - to account for and finance Gilbert’s uninsured risks of loss for medical claims. 91 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Internal Service Funds Combining Statement of Net Assets June 30, 2011 Equipment Maintenance ASSETS Current assets: Pooled cash and investments Receivables (net): Accrued interest Accounts Prepaid items Inventories Total current assets $ Noncurrent assets: Capital assets: Property, plant and equipment Less accumulated depreciation Total capital assets (net) Total assets LIABILITIES Current liabilities: Accounts payable Accrued liabilities Current portion of compensated absences Claims payable Total current liabilities 712,073 Copier Services $ 370,375 $ Total 6,321,352 $ 7,403,800 754 74,292 7,266 430,427 1,224,812 428 370,803 2,465 2,499 6,326,316 3,647 76,791 7,266 430,427 7,921,931 223,225 (181,402) 41,823 1,266,635 217,575 (117,637) 99,938 470,741 6,326,316 440,800 (299,039) 141,761 8,063,692 304 1,080,441 1,080,745 262,940 8,409 54,740 1,080,441 1,406,530 262,475 8,409 54,740 325,624 Long-term portion of compensated absences Employee Benefit SelfInsurance 161 161 68,104 - - 68,104 Total liabilities 393,728 161 1,080,745 1,474,634 NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets 41,823 831,084 872,907 99,938 370,642 470,580 5,245,571 5,245,571 141,761 6,447,297 6,589,058 $ 92 $ $ $ TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets For the Year Ended June 30, 2011 Equipment Maintenance Operating revenues Charges for services Other Total operating revenues $ Operating expenses General and administrative Personal services Operation and maintenance Claims Incurred Depreciation Total operating expenses Employee Benefit SelfInsurance Copier Services 6,285,257 4,957 6,290,214 $ 318,157 318,157 $ Total 11,949,542 75,384 12,024,926 $ 165,190 1,350,910 4,721,636 20,816 6,258,552 277,150 19,631 296,781 31,662 21,376 (114,684) (61,646) Nonoperating revenues Investment earnings Total nonoperating revenues 3,611 3,611 3,592 3,592 24,366 24,366 31,569 31,569 Income (loss) before transfers 35,273 24,968 (90,318) (30,077) Operating income (loss) Transfers out Change in net assets Total net assets, beginning of year Total net assets, end of year $ - (200,000) 35,273 (175,032) 837,634 645,612 872,907 93 $ 470,580 879,923 11,259,687 12,139,610 18,552,956 80,341 18,633,297 1,045,113 1,350,910 4,998,786 11,259,687 40,447 18,694,943 - (200,000) (90,318) (230,077) 5,335,889 $ 5,245,571 6,819,135 $ 6,589,058 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Internal Service Funds Combining Statement of Cash Flows Year Ended June 30, 2011 Equipment Maintenance Cash flows from operating activities: Other operating cash receipts Cash receipts from other funds for services Cash payments to suppliers for goods and services Cash payments to employees for services $ Net cash provided by (used in) operating activities Net cash used in noncapital financing activities Cash flows from investing activities: Interest 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 Reconciliation of operating income (loss) to net cash provided by (used in) operations: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation Changes in assets and liabilities: (Increase) decrease in accounts receivable Increase in prepaid items Decrease in inventories Increase (decrease) in accounts payable Increase in claims payable Decrease in accrued expenses 318,157 (294,592) - 77,260 11,949,542 (12,049,288) - $ 82,217 18,483,347 (17,031,784) (1,373,947) (22,486) 159,833 (200,000) - (200,000) - (200,000) - (200,000) 2,973 3,320 22,304 28,597 2,973 3,320 22,304 28,597 (173,115) 543,490 712,073 $ 370,375 $ 31,662 $ 21,376 94 $ Total - $ $ Employee Benefit SelfInsurance 23,565 161,727 550,346 Total adjustments Net cash provided by (used in) operating activities $ 158,754 Cash flows from noncapital financing activities: Transfers to other funds Cash and cash equivalents at end of year 4,957 6,215,648 (4,687,904) (1,373,947) Copier Services (182) 6,321,534 (11,570) 7,415,370 $ 6,321,352 $ 7,403,800 $ $ (114,684) 20,816 19,631 (69,609) (7,266) 84,818 121,370 (23,037) (17,442) - 1,876 (1,688) 92,010 - (67,733) (7,266) 84,818 102,240 92,010 (23,037) 127,092 2,189 92,198 221,479 158,754 $ 23,565 - (61,646) $ (22,486) 40,447 $ 159,833 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Equipment Maintenance Internal Service Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Other Total operating revenues $ Operating expenses General and administrative Personal services Operation and maintenance Capital outlay Depreciation Total operating expenses Operating income Nonoperating revenues Investment earnings Total nonoperating revenues Change in net assets $ 7,110,880 7,110,880 Actual Amounts Final $ 7,110,880 7,110,880 $ 6,285,257 4,957 6,290,214 Final Budget Positive (Negative) $ (825,623) 4,957 (820,666) 66,180 1,728,990 4,668,300 19,000 6,482,470 66,180 1,728,990 4,687,300 6,482,470 165,190 1,328,023 4,721,636 20,816 6,235,665 (99,010) 400,967 (34,336) (20,816) 246,805 628,410 628,410 54,549 (573,861) 1,200 1,200 1,200 1,200 3,611 3,611 629,610 58,160 629,610 $ Explanation of difference between budgetary change in net assets at June 30, 2011, and GAAP change in net assets: Obligations for compensated absences are accrued on the GAAP basis but are not recognized on the budget basis: Add compensated absences at June 30, 2010 Less compensated absences at June 30, 2011 Change in net assets as reported on the statement of revenues, expenses and changes in fund net assets 95 99,957 (122,844) $ 35,273 2,411 2,411 $ (571,450) TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Copier Services Internal Service Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Total operating revenues $ Operating expenses Operation and maintenance Capital outlay Depreciation Total operating expenses Operating income Nonoperating revenues Investment earnings Total nonoperating revenues Income before transfers Transfers out Change in net assets $ 365,000 365,000 Actual Amounts Final $ 365,000 365,000 $ 318,157 318,157 Final Budget Positive (Negative) $ (46,843) (46,843) 323,130 30,000 353,130 323,130 30,000 353,130 277,150 19,631 296,781 45,980 30,000 (19,631) 56,349 11,870 11,870 21,376 9,506 3,600 3,600 3,600 3,600 3,592 3,592 15,470 15,470 24,968 (200,000) (200,000) (200,000) (184,530) 96 $ (184,530) $ (175,032) (8) (8) 9,498 $ 9,498 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Employee Benefit Self-Insurance Internal Service Fund Schedule of Revenues, Expenses and Changes in Net Assets - Budget and Actual - Budgetary Basis For the Year Ended June 30, 2011 Variance with Budgeted Amounts Original Operating revenues Charges for services Other Total operating revenues Operating expenses General and administrative Claims Incurred Total operating expenses Operating loss Nonoperating revenues Investment earnings Total nonoperating revenues Change in net assets $ 12,072,000 30,000 12,102,000 958,720 11,857,000 12,815,720 (713,720) 7,500 7,500 (706,220) 97 Actual Amounts Final $ 12,072,000 30,000 12,102,000 958,720 11,857,000 12,815,720 (713,720) 7,500 7,500 (706,220) $ 11,949,542 75,384 12,024,926 879,923 11,259,687 12,139,610 Final Budget Positive (Negative) $ (122,458) 45,384 (77,074) 78,797 597,313 676,110 (114,684) 599,036 24,366 24,366 16,866 16,866 (90,318) 615,902 TABLE OF CONTENTS 98 TABLE OF CONTENTS AGENCY FUNDS Agency Funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Flexible Spending - accounts for monies received from employees for medical and dependent care expenses under Internal Revenue Code Section 125. Fire Retirement Health - accounts for monies received from sworn fire employees for providing a monthly stipend for retirees to apply to the cost of their medical and/or dental insurance, medical and dental co-pays, and prescriptions and other benefits. 99 TABLE OF CONTENTS 100 TABLE OF CONTENTS TOWN OF GILBERT, ARIZONA Combining Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2011 Flexible Spending Assets Restricted cash and investments Total assets Liabilities Accounts payable Medical benefits payable Dependent care benefits payable Total liabilities Beginning Balance Ending Balance Additions Deductions $ 45,441 273,380 294,544 24,277 $ 45,441 273,380 294,544 24,277 $ 36,245 9,196 308 208,298 65,082 308 235,616 58,928 8,927 15,350 $ 45,441 273,688 294,852 24,277 $ 46,249 13 46,299 99 129 13 92,419 99 $ 46,262 46,398 142 92,518 $ 46,262 46,398 142 92,518 $ 46,262 46,398 142 92,518 $ 91,690 13 319,679 99 294,673 13 116,696 99 $ 91,703 319,778 294,686 116,795 $ 46,262 36,245 9,196 308 46,398 208,298 65,082 308 142 235,616 58,928 92,518 8,927 15,350 $ 91,703 320,086 294,994 116,795 Fire Retirement Health Fund Assets Restricted cash and investments Restricted accrued interest Total assets Liabilities Other deposits Total liabilities Total-All Agency Funds Assets Restricted cash and investments Restricted accrued interest Total assets Liabilities Accounts payable Other deposits Medical benefits payable Dependent care benefits payable Total liabilities 101 TABLE OF CONTENTS 102 TABLE OF CONTENTS Statistical Section ________________________________ Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information Other Information TABLE OF CONTENTS STATISTICAL SECTION This part of Gilbert's Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements and note disclosures says about the Town's overall financial health. Contents Page Financial Trends 105 These schedules contain trend information to help the reader understand how Gilbert's financial performance and well-being have changed over time. Revenue Capacity 112 These schedules contain information to help the reader assess Gilbert's most significant local revenue source, sales tax. Debt Capacity 114 These schedules present information to help the reader assess the affordability of Gilbert's current levels of outstanding debt and Gilbert's ability to issue additional debt in the future. Demographic and Economic Information 119 These schedules offer demographic and economic indicators to help the reader understand the environment within which Gilbert's financial activities take place. Operating information 121 These schedules contain service and infrastructure data to help the reader understand how the information in Gilbert's financial report relates to the services Gilbert provides and the activities it performs. Other information 124 Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Report for the relevant year. 103 TABLE OF CONTENTS 104 TABLE OF CONTENTS Schedule 1 Town of Gilbert, Arizona Net Assets by Component Last Nine Fiscal Years a (accrual basis of accounting) 2003 Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business-type activities Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets 105 Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets a $ $ $ $ $ $ 2004 2005 365,957,419 46,572,913 17,099,202 429,629,534 $ 414,678,279 51,872,071 19,536,802 $ 486,087,152 $ 189,063,010 29,201,609 46,364,812 264,629,431 $ 222,199,341 44,404,210 42,045,208 $ 308,648,759 $ 555,020,429 75,774,522 63,464,014 694,258,965 $ 636,877,620 96,276,281 61,582,010 $ 794,735,911 $ $ $ $ 463,258,205 49,646,029 38,750,945 551,655,179 $ 269,420,086 52,594,128 46,529,937 368,544,151 $ 732,678,291 102,240,157 85,280,882 920,199,330 Fiscal Year 2007 2006 $ $ 513,996,466 47,715,687 48,970,671 610,682,824 $ 347,212,432 62,356,255 17,926,973 427,495,660 $ $ 861,208,898 110,071,942 66,897,644 $ 1,038,178,484 Gilbert implemented GASB Statement No. 34 for the fiscal year ended June 30, 2003, therefore only nine years are shown $ $ $ $ 2008 596,974,293 42,681,149 67,609,797 707,265,239 $ 386,129,911 103,425,180 9,480,280 499,035,371 $ 983,104,204 146,106,329 77,090,077 1,206,300,610 $ $ $ $ 2009 688,393,175 34,925,873 48,021,680 771,340,728 $ 273,512,939 106,871,117 136,635,181 517,019,237 $ 961,906,114 141,796,990 184,656,861 1,288,359,965 $ $ $ 2010 704,908,142 24,035,677 63,993,988 792,937,807 $ 261,027,688 91,738,487 182,089,776 534,855,951 $ 965,935,830 115,774,164 246,083,764 $ 1,327,793,758 $ $ $ 2011 707,099,883 43,766,457 66,029,993 816,896,333 $ 276,058,613 86,942,759 195,803,181 558,804,553 $ 983,158,496 130,709,216 261,833,174 $ 1,375,700,886 $ $ 705,986,213 38,404,141 77,283,425 821,673,779 294,516,202 76,504,052 209,680,315 580,700,569 $ 1,000,502,415 114,908,193 286,963,740 $ 1,402,374,348 TABLE OF CONTENTS Schedule 2 Town of Gilbert, Arizona Changes in Net Assets Last Nine Fiscal Years a (accrual basis of accounting) 2004 2003 Expenses Governmental activities: General government: Management and policy Support services Financial services Legal and court Development services Public works Public safety: Police Fire Highways and streets Community services Transportation Non departmental Interest and fiscal charges on long-term debt Total governmental activities expenses 106 Business-type activities: Water Wastewater Solid waste Irrigation Total business-type activities expenses Total primary government expenses Program Revenues Governmental activities: Charges for services: Development services Police Fire Highways and streets Community services Other activities Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 2,655,906 4,217,564 2,686,277 7,454,599 4,271,868 $ 1,884,140 5,760,253 2,875,580 7,790,502 3,229,684 2005 $ 2,155,340 7,138,828 3,685,456 8,824,753 2,621,289 2006 $ Fiscal Year 2007 2,900,380 8,854,240 4,352,048 11,231,950 4,280,669 $ 3,070,422 9,827,763 5,316,211 13,394,123 914,339 2008 $ 3,166,667 10,351,241 5,848,004 14,500,727 978,662 2009 $ 3,068,178 10,137,539 5,838,172 12,242,742 1,451,083 2010 $ 2,830,563 9,297,428 5,937,288 10,084,501 2,782,252 2011 $ 3,109,759 8,503,492 1,286,659 5,126,039 8,201,314 - 17,176,875 8,370,833 19,765,224 8,552,036 1,512,844 5,378,449 82,042,475 19,374,504 9,898,603 19,613,335 8,526,959 1,461,861 6,415,295 86,830,716 22,908,779 11,288,467 25,100,705 10,114,095 1,548,928 6,555,140 101,941,780 29,764,753 15,377,613 24,852,381 11,238,766 1,621,910 7,943,561 122,418,271 34,021,950 18,872,416 31,052,006 15,925,776 1,438,736 9,531,956 143,365,698 39,640,802 22,563,858 36,385,215 16,175,710 1,562,754 8,893,365 160,067,005 42,109,036 24,255,563 38,540,677 19,349,722 1,681,640 17,096,048 175,770,400 41,327,582 22,871,289 36,905,783 19,825,728 1,170,305 18,417,745 171,450,464 38,868,835 24,473,377 40,440,136 19,763,971 1,009,897 2,194,132 17,674,873 170,652,484 17,026,176 9,575,779 7,788,527 51,158 34,441,640 $ 116,484,115 18,414,133 10,129,148 8,044,860 37,071 36,625,212 $ 123,455,928 20,460,920 13,023,131 9,372,049 40,356 42,896,456 $ 144,838,236 25,234,199 19,061,223 11,359,522 38,615 55,693,559 $ 178,111,830 24,029,873 19,873,117 12,978,271 29,956 56,911,217 $ 200,276,915 34,277,527 23,507,048 14,782,904 66,626 72,634,105 $ 232,701,110 35,450,601 22,398,407 13,843,596 157,865 71,850,469 $ 247,620,869 $ 36,163,481 23,002,202 13,852,222 53,690 73,071,595 244,522,059 36,863,531 23,038,634 14,254,817 74,156,982 $ 244,809,466 $ $ $ $ $ $ $ $ 6,307,197 3,092,598 320,401 1,075,907 1,947,932 217,220 13,321,723 52,693,604 78,976,582 8,212,207 2,430,266 499,102 865,437 2,149,622 435,406 14,351,688 53,754,550 82,698,278 11,917,811 2,972,598 881,962 1,111,282 2,222,258 491,167 15,251,531 61,048,198 95,896,807 11,432,135 3,749,728 794,767 1,258,182 2,464,365 542,843 17,078,782 43,855,523 81,176,325 10,227,269 6,014,921 100,360 1,396,499 2,954,876 502,682 22,465,988 70,075,655 113,738,250 7,385,200 6,358,381 71,807 1,265,289 3,129,436 707,251 22,630,806 45,821,379 87,369,549 3,773,261 6,594,319 100,218 1,454,141 3,192,962 702,607 21,183,148 31,493,349 68,494,005 4,027,463 6,374,267 78,550 1,659,066 3,734,602 788,789 19,206,066 39,631,744 75,500,547 $ 3,177,940 2,890,874 135,732 1,739,467 3,739,896 853,239 21,167,633 28,002,037 61,706,818 TABLE OF CONTENTS Business-type activities: Charges for services: Water Wastewater Solid waste Irrigation Capital grants and contributions Total business-type activities program revenues Total primary government program revenues Net (Expense)/Revenue Governmental activities b Business-type activities Total primary government net revenue (expense) 107 17,034,216 10,357,032 8,752,299 15,020 29,756,827 65,915,394 $ 144,891,976 17,967,291 11,139,203 9,324,084 16,646 41,129,808 79,577,032 $ 162,275,310 20,418,403 12,105,571 10,255,707 18,775 49,378,551 92,177,007 $ 188,073,814 24,126,163 13,989,496 11,307,240 16,634 59,182,705 108,622,238 $ 189,798,563 28,244,561 16,173,220 13,885,607 17,622 64,673,795 122,994,805 $ 236,733,055 32,320,937 18,440,258 15,642,418 17,500 34,555,868 100,976,981 $ 188,346,530 33,416,401 19,721,549 16,591,602 18,513 19,228,350 88,976,415 $ 157,470,420 34,601,338 21,024,189 16,566,987 24,639 22,026,098 94,243,251 $ 169,743,798 35,966,037 21,677,621 17,194,313 18,324,573 93,162,544 $ 154,869,362 $ $ $ (6,044,973) 49,280,551 43,235,578 $ (41,241,946) 52,928,679 $ 11,686,733 $ $ $ (107,276,395) 17,125,946 $ (90,150,449) $ $ (72,697,456) 28,342,876 (44,354,580) (95,949,917) 21,171,656 (74,778,261) $ (108,945,666) 19,005,562 $ (89,940,104) 43,159,583 12,026,288 378,782 1,711,290 10,162,364 10,084,177 2,491,151 2,314,665 55,232 602,281 679,314 83,665,127 $ $ 56,979,907 26,345,117 831,159 2,595,154 16,316,998 24,985,772 2,195,293 4,462,545 260,422 543,818 1,256,760 136,772,945 $ $ 47,118,885 30,116,881 1,327,755 2,448,514 13,029,141 22,922,794 1,235,571 1,300,903 73,744 679,801 (345,546) 119,908,443 $ 2,835,377 59,994 626,001 (679,314) 2,842,058 86,507,185 5,144,180 131,387 801,446 (54,183) 6,022,830 $ 106,292,421 5,287,992 (376,397) 405,850 (609,993) 4,707,452 $ 130,917,315 7,509,250 55,471 400,069 (1,256,760) 6,708,030 $ 143,480,975 1,066,552 51,813 753,627 (1,161,224) 710,768 $ 129,584,242 739,124 148,135 1,544,141 345,546 2,776,946 $ 122,685,389 1,011,691 164,047 2,216,125 (537,225) 2,854,638 $ 116,613,566 $ $ $ $ $ $ $ (3,065,893) 31,473,754 28,407,861 General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Sales taxes $ Property taxes, levied for debt service In-Lieu property taxes Franchise taxes Unrestricted state shared sales taxes Unrestricted state shared income taxes Unrestricted grants and contributions Unrestricted investment earnings Decrease in fair value of investments Gain on sale of capital assets Miscellaneous Transfers Total governmental activities 29,645,140 8,731,953 235,068 1,331,249 8,579,161 11,675,179 1,367,303 1,571,868 (2,606,351) 69,119 414,353 36,636 61,050,678 Business-type activities: Investment earnings Decrease in fair value of investments (Loss)/Gain on sale of capital assets Miscellaneous Transfers Total business-type activities Total primary government 1,247,691 (2,365,647) 167,189 (36,636) (987,403) 60,063,275 Change in Net Assets Governmental activities Business-type activities Total primary government $ $ $ 57,984,785 30,486,351 88,471,136 $ $ $ $ (4,132,438) 42,951,820 38,819,382 34,972,908 10,407,422 304,844 1,532,695 9,228,830 9,891,309 2,196,572 1,181,254 161,390 319,327 48,382 70,244,933 812,801 303,089 (48,382) 1,067,508 71,312,441 66,112,495 44,019,328 $ 110,131,823 $ $ $ $ 77,620,154 52,122,609 $ 129,742,763 49,198,256 14,053,737 372,682 2,010,931 12,088,197 11,485,210 3,157,577 7,018,569 215,647 614,602 54,183 100,269,591 59,027,645 58,951,509 $ 117,979,154 (29,627,448) 66,083,588 36,456,140 57,697,496 16,499,669 376,101 2,360,909 16,594,671 19,761,466 3,157,008 8,508,485 23,880 620,185 609,993 126,209,863 96,582,415 70,791,040 $ 167,373,455 a Gilbert implemented GASB Statement No. 34 for the fiscal year ended June 30, 2003, therefore only nine years are shown. b The increase in Net Expense for Governmental activities in fiscal year 2006 is due to a 32% increase in public safety expenses (hiring more police and fire personnel - see Schedule 16 for details) and a 28% decrease in capital grants and contributions (developer contributions). The increase in Net Expense for Governmental activities in fiscal year 2008 is due to a 18% increase in public safety expenses (hiring more police and fire personnel - see Schedule 16 for details) and a 35% decrease in capital grants and contributions (developer contributions). The increase in Net Expense for Governmental activities in fiscal year 2009 is due to a 92% increase in interest and fiscal charges on long-term debt (interest and principal payments on general obligation bonds issued at end of 2008) and a 31% decrease in capital grants and contributions (developer contributions). The increase in Net Expense for Governmental activities in fiscal year 2011 is due to a 29% decrease in capital grants and contributions (developer contributions). $ $ $ 64,075,489 35,050,906 99,126,395 $ 49,060,234 30,836,167 948,510 2,543,688 14,125,962 26,434,943 939,018 2,003,235 151,709 668,784 1,161,224 128,873,474 21,597,079 17,836,714 39,433,793 $ $ 23,958,526 23,948,602 47,907,128 $ 49,248,759 25,796,000 1,351,479 2,401,013 13,787,266 17,280,849 863,570 2,137,352 355,415 537,225 113,758,928 4,813,262 21,860,200 26,673,462 TABLE OF CONTENTS Schedule 3 Town of Gilbert, Arizona Program Revenues by Function Last Nine Fiscal Years a (accrual basis of accounting) 2004 2003 Function/Program Governmental activities: General government: Management and policy Support services Financial Services Legal and court Development services Public works b Public Safety: Police Fire $ 35,860 20,646 183,004 7,866,338 7,407,290 $ 44,198 163,215 268,998 9,359,374 3,080,949 Fiscal Year 2006 2005 $ 29,848 197,938 306,429 12,331,975 1,122,359 $ 66,402 236,754 343,835 12,326,494 1,976,224 $ 2007 70,147 1,132,587 412,084 11,661,699 5,837,055 2008 $ 46,632 1,183,621 674,849 8,100,907 1,948,470 2009 $ 11,140 128,102 585,944 4,571,108 901,345 2010 $ 10,406 214,748 596,714 4,575,690 1,005,068 2011 $ 15,064 648,385 9,256 596,752 4,273,289 - 5,143,496 1,363,644 51,320,127 5,593,179 42,998 - 5,225,499 2,838,497 52,716,860 8,817,868 182,820 - 6,018,763 4,576,385 57,449,518 13,477,053 386,539 - 7,139,932 5,196,579 40,427,704 13,312,782 149,619 - 9,629,340 5,286,529 65,949,321 13,248,549 510,939 - 8,491,397 4,223,014 52,536,064 9,861,396 303,199 - 7,838,153 4,385,765 39,125,537 10,538,978 407,933 - 8,494,631 3,446,899 45,193,392 11,649,317 313,682 - 3,989,076 3,162,871 39,324,239 9,422,037 214,932 50,917 Subtotal governmental activities 78,976,582 82,698,278 95,896,807 81,176,325 113,738,250 87,369,549 68,494,005 75,500,547 61,706,818 Business-type activities: Water Wastewater Solid waste Irrigation 34,368,450 22,779,625 8,752,299 15,020 41,402,414 28,833,888 9,324,084 16,646 47,216,223 34,669,529 10,272,480 18,775 55,933,046 41,365,318 11,307,240 16,634 64,313,182 44,778,394 13,885,607 17,622 52,172,311 33,144,752 15,642,418 17,500 43,997,487 28,368,813 16,591,602 18,513 47,232,137 30,419,488 16,566,987 24,639 46,132,685 29,835,546 17,194,313 - Subtotal business-type activities 65,915,394 79,577,032 92,177,007 108,622,238 122,994,805 100,976,981 88,976,415 94,243,251 93,162,544 144,891,976 $ 162,275,310 188,346,530 $ 157,470,420 $ 169,743,798 $ 154,869,362 c Highways and streets Community services Transportation Non departmental 108 Total primary government a $ $ 188,073,814 $ 189,798,563 $ 236,733,055 Gilbert implemented GASB Statement No. 34 for the fiscal year ended June 30, 2003, therefore only nine years are shown In fiscal year 2003, the Town received $6,510,000 in improvement bonds for the construction & installation of certain water and sewer improvements. c The decrease in governmental activities revenue in fiscal years 2008, 2009, and 2011 is mainly due to decreased developer contributions. b $ TABLE OF CONTENTS Schedule 4 Town of Gilbert, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2002 General fund Reserved Unreserved Nonspendable Restricted Committed Assigned Unassigned Total general fund $ $ 2004 2005 2006 Fiscal Year 2007 133,315 16,432,986 $ 16,566,301 $ 1,258,466 19,486,079 $ 20,744,545 $ 233,555 39,220,868 $ 39,454,423 $ 441,157 37,670,366 38,111,523 $ $ 15,474,998 $ 24,845,638 $ 70,452,920 $ 56,413,890 3,982,546 (321,016) 3,661,530 $ 19,136,528 15,445,596 (2,454,188) 20,694,169 33,685,577 $ 58,531,215 16,265,034 (3,221,527) (9,047,787) 3,995,720 $ 74,448,640 16,737,129 (4,744,264) (6,395,978) 5,596,887 $ 62,010,777 $ 2,029,973 7,816,100 9,846,073 2003 2008 $ $ 16,082,035 33,431,047 49,513,082 $ 108,785,039 $ 69,735,445 28,238,612 (4,500,716) (3,626,775) 20,111,121 $ 128,896,160 28,546,101 (17,761,932) 10,784,169 $ 80,519,614 $ 2009 $ $ 16,015,075 38,375,273 54,390,348 $ 42,862,953 2011c 2010 $ $ 17,630,101 36,244,514 53,874,615 $ $ 21,382,756 33,168,053 54,550,809 $ 67,625,941 $ 45,147,155 $ $ 22,317,444 10,729,403 33,520,702 66,567,549 All other governmental funds 109 Reserved a Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds b Total Unreserved Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds a b c 29,347,664 (36,580,485) (7,232,821) $ 35,630,132 25,886,221 99,569,767 125,455,988 $ 193,081,929 27,634,524 86,482,204 114,116,728 $ 159,263,883 In fiscal year 2004, the increase in reserved fund balance was due to unspent bond proceeds that were encumbered during the period for various streets capital projects. In fiscal year 2006, the increase in reserved fund balance was also due to unspent bond proceeds that were encumbered for the South Area Service Center municipal facilities capital project and the Elliot Road District Park capital project. The increase in fund balance in fiscal year 2009 was due to Public Facilities Municipal Property Corporation bonds that were issued during the year. GASB Statement No. 54 was implemented in fiscal year 2011. As a result, several special revenue funds were reclassified as general fund. $ 4,248 108,050,638 28,261,048 (20,781,250) 115,534,684 TABLE OF CONTENTS Schedule 5 Town of Gilbert, Arizona Changes in Fund Balances of Governmental Funds Last Nine Fiscal Years a (modified accrual basis of accounting) 2004 2003 Revenues Taxes: Sales Property Franchise Licenses and permits Intergovernmental Special assessments Charges for services Other entities' participation System development fees Gifts and donations Fines and forfeitures Investment earnings Decrease in fair value of investments Miscellaneous Total revenues 110 Expenditures Current: General government: Management and policy Support services Financial services Legal and court Development services Public works Public safety: Police Fire Highways and streets Community services Transportation Non departmental Debt service: Principal Interest Bond issuance costs Fiscal and other charges Capital outlay Total expenditures Deficiency of revenues under expenditures $ 29,645,140 10,275,524 1,331,249 4,867,861 43,926,179 1,242,492 5,912,088 1,242,755 8,245,450 54,641 1,844,637 1,569,227 (2,601,898) 478,059 108,033,404 $ 34,972,908 11,609,075 1,532,695 6,281,477 34,440,730 1,924,451 7,135,507 2,156,627 14,662,061 122,861 2,115,055 1,173,164 480,717 118,607,328 2005 $ 43,159,583 13,482,146 1,711,290 9,192,849 40,149,322 1,552,289 8,479,154 2,845,785 21,773,077 150,652 2,417,453 2,277,133 651,072 147,841,805 Fiscal Year 2007 2006 $ 49,198,256 15,671,497 2,010,931 8,539,210 46,258,664 1,425,857 9,536,324 2,325,967 22,959,373 341,965 2,832,536 6,933,872 799,218 168,833,670 $ 57,697,496 18,528,637 2,360,909 6,818,495 65,758,839 355,124 9,391,341 6,081,523 23,014,785 502,490 4,094,156 8,386,063 669,913 203,659,771 2008 $ 56,979,907 28,302,870 2,595,154 4,734,163 73,255,188 2,121,038 9,593,874 1,619,694 15,566,498 176,612 4,563,842 4,344,980 800,050 204,653,870 2009 $ 48,736,286 33,130,496 2,543,688 2,459,042 67,053,476 421,894 8,596,016 1,055,416 8,394,562 114,127 4,222,855 1,978,090 818,714 179,524,662 2010 $ 46,872,739 33,073,003 2,448,514 2,614,273 72,535,194 437,493 8,795,326 1,233,559 11,607,702 124,185 4,444,521 1,286,054 753,545 186,226,108 2011 $ 49,315,215 28,731,573 2,401,013 2,364,910 55,361,498 559,284 7,288,394 2,313,197 8,735,768 176,408 4,350,499 2,105,783 355,415 164,058,957 2,928,570 5,609,746 2,679,223 7,400,086 1,896,109 2,182,793 6,821,426 2,850,975 7,694,887 1,540,331 2,461,684 7,460,561 3,070,512 8,614,412 1,231,658 3,229,903 8,722,221 3,714,232 10,966,867 1,411,727 3,821,539 9,770,935 4,681,581 12,693,286 1,254,628 3,919,054 10,813,606 5,222,500 14,023,620 1,328,552 3,642,307 10,385,787 5,202,603 11,320,737 1,797,804 3,457,728 10,256,878 5,261,063 9,204,352 1,224,936 3,844,801 9,239,397 1,416,227 4,402,494 7,160,069 - 16,596,031 7,650,531 6,923,040 6,757,017 1,512,844 - 18,772,923 9,359,511 5,592,356 6,770,499 1,461,861 - 21,197,065 10,491,040 9,149,173 7,675,098 1,548,928 - 27,835,183 13,982,418 7,505,334 8,513,797 1,621,910 - 31,534,516 17,223,948 9,423,732 12,724,944 1,438,736 - 36,126,310 20,521,025 10,631,061 12,567,656 1,562,754 - 37,851,358 21,171,212 10,377,669 13,151,552 1,681,641 - 37,668,983 20,115,006 10,096,952 12,683,389 1,170,305 - 35,007,296 20,199,917 9,736,165 12,590,715 1,009,897 2,194,132 7,564,758 5,280,505 150,678 97,944 54,272,427 127,319,509 12,171,072 6,392,593 166,468 22,054 69,663,246 151,462,995 14,964,964 6,540,937 59,572 11,851 65,598,244 160,075,699 15,100,000 7,906,095 424,807 49,079 83,798,196 194,781,769 20,305,000 9,578,451 45,054 106,748,401 241,244,751 36,350,000 8,961,189 98,263 28,809 87,528,247 249,682,646 29,805,000 16,500,714 670,289 11,766 134,013,578 297,584,017 31,855,000 18,553,369 9,304 58,784,547 220,341,812 29,215,000 18,451,295 20,083 41,934,425 196,421,913 (19,286,105) (32,855,667) (12,233,894) (25,948,099) (37,584,980) (45,028,776) (118,059,355) (34,115,704) (32,362,956) TABLE OF CONTENTS Other financing sources (uses) Transfers in Transfers out Bonds issued Premium on bonds Payment to refunded bond escrow agent Total other financing sources and uses Net change in fund balances Debt service as a percentage of noncapital expenditures a 19,569,427 (19,532,791) 6,510,000 21,032 6,567,668 $ (12,718,437) 17.6% 24,334,654 (24,286,272) 52,300,000 602,954 52,951,336 $ 20,095,669 22.7% 19,512,534 (18,833,220) 18,750,000 51,095 19,480,409 $ 7,246,515 22.8% 45,391,786 (45,337,603) 103,230,000 3,078,293 (14,871,894) 91,490,582 $ 65,542,483 20.7% 77,501,538 (76,891,545) 609,993 $ (36,974,987) 22.2% Comparative prior years' information is not available because when the Town implemented GASB 34 in fiscal year 2003, it was then decided to present revenues and expenditures in more detail. 45,661,293 (44,404,533) 3,759,800 5,016,560 $ (40,012,216) 27.9% 90,679,697 (89,518,473) 273,490,200 343,995 274,995,419 $ 156,936,064 28.3% 26,608,323 (25,634,471) 973,852 $ (33,141,852) 31.2% 25,272,656 (24,586,342) 686,314 $ (31,676,642) 30.9% 111 TABLE OF CONTENTS Schedule 6 Town of Gilbert, Arizona Taxable Sales by Category Last Ten Fiscal Years 2002 Construction Manufacturing Communications & Utilities Wholesale Retail Restaurant & Bar Real Estate, Rental & Leasing Accommodation a Services 112 Other a Transportation & Warehousing b Finance & Insurance b Public Administration b Arts & Entertainment b Adjustment Total $ 8,173,674 279,396 2,532,813 444,998 12,528,922 1,180,852 1,866,040 $ 8,494,326 248,006 2,692,309 509,324 11,956,454 1,318,717 1,905,276 2,349,017 107,150 45,391 $ 29,508,253 Gilbert's local sales tax rate 1.5% 2004 2003 2006 Fiscal Year 2007 2008 8,777,849 461,330 2,748,392 556,862 14,317,055 1,673,327 3,153,884 $ 15,670,222 643,826 3,630,952 335,857 15,861,398 2,045,005 3,383,290 $ 15,457,650 734,423 4,028,971 446,597 19,598,312 2,501,237 4,299,410 $ 19,373,957 684,148 4,548,528 483,943 21,385,004 2,972,678 5,276,563 $ 15,416,006 789,804 5,269,633 577,086 23,550,094 3,228,910 5,538,416 2,429,195 91,533 - 2,018,946 1,022,984 29,060 100,986 6,214 106,019 - 818,873 346,103 7,773 61,734 5,900 348,650 - 945,003 711,618 9,906 63,851 9,819 391,459 - 973,552 1,491,268 17,264 73,410 11,416 405,765 - 1,729,464 319,810 13,347 93,008 8,272 446,057 - $ 29,645,140 $ 34,972,908 $ 43,159,583 $ 49,198,256 $ 57,697,496 $ 56,979,907 1.5% $ 2005 1.5% 1.5% 1.5% 1.5% 1.5% 2009 $ $ 7,804,840 650,179 5,303,338 527,933 23,305,081 3,509,671 5,751,120 2010 1,039,678 243,510 12,575 100,490 4,748 483,123 - 5,193,872 635,188 5,724,639 610,065 23,775,975 3,566,427 5,249,645 1,002,691 481,122 16,464 100,293 9,503 506,855 - 48,736,286 $ 46,872,739 1.5% $ 2011 $ $ 49,315,215 1.5% Source: Arizona Department of Revenue a Prior to fiscal year 2011, Accommodations was included in the "Other" category due to confidentiality requirements. Beginning in fiscal year 2011, it is now broken out into its own category. Beginning in January 2004, the Arizona Department of Revenue began using a new reporting software system for classifying business establishments called the North American Industry Classification System (NAICS). Under the new system, the category may be defined a little differently. In addition, more categories were established. When NAICS reporting began, many businesses checked the "Other" category due to uncertainty. This problem is being remedied and therefore, the "Other" category will decrease as more businesses will be classified under their proper category. In addition, due to confidentiality requirements, categories that contain ten or less taxpayers will be included in the "Other" category. b Note: State and local laws prohibit the disclosure of individual taxpayer information. 4,389,279 706,514 5,562,364 854,466 25,540,515 3,820,368 5,874,288 252,974 1,069,661 652,042 21,161 89,990 481,592 - 1.5% TABLE OF CONTENTS Schedule 7 Town of Gilbert, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years 2002 113 2003 2004 2005 2006 2007 2008 2009 2010 2011 City Direct Rates: Hotel/Transient Lodging 4.50% All Others 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% 4.50% 1.50% County Rate: Hotel/Transient Lodging 1.77% All Others 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% 1.77% 0.70% State Rate: Hotel/Transient Lodging 5.50% All Others 5.60% 5.50% 5.60% 5.50% 5.60% 5.50% 5.60% 5.50% 5.60% 5.50% 5.60% 5.50% 5.60% 5.50% 5.60% 6.50% 6.60% 6.50% 6.60% Source: Gilbert Development Services Department Note: Gilbert sales tax rate may be changed with the approval of Council. TABLE OF CONTENTS Schedule 8 Town of Gilbert, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General Obligation Bonds Fiscal Year 2002 2003 2004 2005 2006 2007 2008 114 2009 2010 2011 $ 64,175,000 $ 62,130,000 75,735,000 87,195,000 90,715,000 79,450,000 57,369,800 225,935,000 204,055,000 178,635,000 Special Assessment Bonds Street and Highway User Revenue Bonds Business-type Activities Municipal Property Corporation Revenue Bonds 5,640,795 $ 10,406,037 8,544,965 5,825,000 4,505,000 4,380,000 2,990,000 4,450,000 $ 39,715,000 3,810,000 38,340,000 38,125,000 36,900,000 36,555,000 35,450,000 34,095,000 107,370,000 32,300,000 105,845,000 31,300,000 100,635,000 11,590,000 11,505,000 11,415,000 29,375,000 27,325,000 25,150,000 175,810,000 169,750,000 161,045,000 General Obligation Bonds $ 16,665,000 $ 16,320,000 15,080,000 14,600,000 13,080,000 11,725,000 10,335,000 Special Assessment Bonds 419,205 $ 288,963 150,035 - 8,885,000 7,115,000 5,530,000 Note: See Schedule 13 for personal income and population data. Note: Details regarding Gilbert's outstanding debt can be found in the notes to the financial statements. - Water and Wastewater Revenue Bonds Municipal Property Corporation Revenue Bonds 25,290,000 $ 20,585,000 25,140,000 15,400,000 26,685,000 8,575,000 25,540,000 72,950,000 23,225,000 60,590,000 21,995,000 194,685,000 20,745,000 182,950,000 19,465,000 18,150,000 16,795,000 167,125,000 160,475,000 143,270,000 Total Primary Government $ 176,940,000 171,835,000 209,795,000 278,115,000 333,580,000 450,380,000 406,324,800 638,185,000 598,375,000 541,840,000 Percentage of Personal Income 5.04 % $ 4.41 4.83 5.77 6.39 7.87 6.65 10.24 9.39 8.56 Per Capita 1,324 1,194 1,360 1,660 1,874 2,355 2,028 3,116 2,871 2,545 TABLE OF CONTENTS Schedule 9 Town of Gilbert, Arizona Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding Fiscal Year 2002 2003 2004 2005 115 2006 2007 2008 2009 2010 2011 a Less Amount Available in Debt Service Fund $ 80,840,000 78,450,000 90,815,000 101,795,000 $ 103,795,000 91,175,000 67,704,800 234,820,000 211,170,000 184,165,000 4,446,191 6,441,465 6,697,401 7,427,782 10,224,408 11,087,607 7,279,915 6,655,504 6,720,588 6,927,284 Net General Bonded Debt Outstanding $ 76,393,809 72,008,535 84,117,599 94,367,218 93,570,592 80,087,393 60,424,885 228,164,496 204,449,412 177,237,716 Secondary Assessed Property Value a $ Percentage of Secondary Assessed Property Value 749,581,043 906,389,287 1,052,321,817 1,251,765,751 1,466,841,566 2,370,134,999 2,768,391,194 2,672,949,852 2,297,228,317 1,861,193,961 Maricopa County Assessor's Office Note: See Schedule 13 for population data. Note: General Obligations bonds principal and interest payments are paid for with secondary property taxes. 10.19 % 7.94 7.99 7.54 6.38 3.38 2.18 8.54 8.90 9.52 Per Capita $ 571.99 500.68 545.16 563.40 525.63 418.85 301.65 1,113.97 980.79 832.61 TABLE OF CONTENTS Schedule 10 Town of Gilbert, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2011 Debt Outstanding Governmental Unit Debt repaid with property taxes Maricopa County Maricopa County Community College District Maricopa County Hospital District No. 1 Gilbert Unified School District No. 41 Higley Elementary School District No. 60 Chandler Unified School District No. 80 Mesa Unified School District No. 4 East Valley Institute of Technology District No. 401 b 116 Other debt Maricopa County c Maricopa County Community College District - revenue bonds Maricopa County Hospital District No. 1 Gilbert Unified School District No. 41 Higley Elementary School District No. 60 Chandler Unified School District No. 80 Mesa Unified School District No. 4 East Valley Institute of Technology District No. 401 b $ Estimated Share of Direct and Overlapping Debt Estimated Percentage Applicable a None 671,250,000 None 170,450,000 64,905,000 210,930,000 244,095,000 None 4.84% 4.84% 4.84% 69.70% 84.66% 9.82% 0.36% 11.09% 190,040,000 11,790,000 None None None None None None 4.84% 4.84% 4.84% 69.70% 84.66% 9.82% 0.36% 11.09% $ 9,197,936 570,636 None None None None None None Subtotal, overlapping debt Town of Gilbert direct debt Total direct and overlapping debt None 32,488,500 None 118,803,650 54,948,573 20,713,326 878,742 None 237,601,363 376,245,000 100.00% 376,245,000 $ 613,846,363 Source: The various jurisdictions a Proportion applicable to Town of Gilbert, Arizona is computed on the ratio of secondary assessed valuation for fiscal year 2011. Based on the East Valley Institute of Technology's secondary assessed valuation and does not include amount of secondary assessed valuation in Pinal County. c Includes certificates of participation outstanding in the aggregate principal amount of $2,375,000; Public Finance Corporation lease revenue bonds outstanding in the aggregate principal amount of $149,890,000 and Stadium District revenue bonds outstanding in the aggregate principal amount of $37,775,000. b Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of Gilbert. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Gilbert. This process recognizes that, when considering Gilbert'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 TABLE OF CONTENTS Schedule 11 Town of Gilbert, Arizona Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20% Limitation Debt limit equal to 20% of assessed valuation $ 134,132,951 $ 39,795,000 Total net debt applicable to 20% limit 149,916,209 $ 210,464,363 $ 250,353,150 $ 293,368,313 $ 474,027,000 $ 553,678,000 $ 38,300,000 35,075,000 32,570,000 31,215,000 78,050,000 51,705,000 111,616,209 $ 175,389,363 $ 217,783,150 $ 262,153,313 $ 395,977,000 $ 501,973,000 $ 534,590,000 $ 459,446,000 $ 372,239,000 217,730,000 195,320,000 175,915,000 316,860,000 $ 264,126,000 $ 196,324,000 Legal 20% debt margin (available borrowing capacity) $ 94,337,951 $ Total net debt applicable to the 20% limit as a percentage of 20% debt limit 29.67% 25.55% 16.67% 13.01% 10.64% 40,239,885 $ 44,974,863 $ 63,139,309 $ 75,105,945 $ 88,010,494 $ 38,655,000 36,085,000 47,970,000 60,030,000 64,870,000 16.47% 9.34% 40.73% 42.51% 47.26% 6% Limitation Debt limit equal to 6% of assessed valuation $ Total net debt applicable to 6% limit 142,208,100 $ 3,550,000 166,103,000 $ 855,000 160,377,000 $ 0 137,834,000 $ 0 111,672,000 0 Legal 6% debt margin (available borrowing 117 capacity) $ 1,584,885 $ 8,889,863 $ 15,169,309 $ 15,075,945 $ 23,140,494 $ 96.06% 80.23% 75.97% 79.93% 73.71% 138,658,100 $ 165,248,000 $ 160,377,000 $ 137,834,000 $ 111,672,000 Total net debt applicable to the 6% limit as a percentage of 6% debt limit 2.50% 0.51% 0.00% 0.00% Legal Debt Margin Calculation for Fiscal Year 2011 Net secondary assessed valuation as of June 30, 2011 $ 1,861,193,961 20% Limitation Debt limit equal to 20% of assessed valuation 372,239,000 Debt applicable to limit: General obligation bonds 175,915,000 Legal 20% debt margin (available borrowing capacity) $ 6% Limitation Debt limit equal to 6% of assessed valuation 111,672,000 Debt applicable to limit: General obligation bonds Legal 6% debt margin (available borrowing capacity) Note: The Constitution of the State of Arizona establishes two levels of bonded indebtedness limits based upon the type of improvement constructed with the debt. The twenty percent bond type is restricted to water, wastewater, electric, parks and open space improvements, streets, public safety, and fire and emergency facilities. The six percent bond type is all other general purpose improvements. In November 2006, voters amended the constitution to move streets, public safety and fire and emergency facilities from the six percent bond type to the twenty percent bond type. 196,324,000 0 $ 111,672,000 0.00% TABLE OF CONTENTS Schedule 12 Town of Gilbert, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years Special Assessment Bonds Highway User Revenue Bonds Special Fiscal Assessment Year Collections 2002 $ Public Facilities Municipal Property Corp. Revenue Bonds Highway Debt Service Principal Interest Excise Taxes Debt Service User Tax Coverage Revenue $ Principal Interest Debt Service & State-Shared Coverage Revenue $ Principal Interest Coverage 21.63 1,232,600 $ 2,605,177 $ 530,425 0.39 7,420,953 $ 640,000 $ 211,375 8.72 56,674,585 $ 1,375,000 $ 1,245,023 2003 1,242,492 1,744,758 608,054 0.53 7,771,916 685,000 180,975 8.97 63,934,377 1,440,000 1,630,813 20.82 2004 1,924,451 1,861,072 564,126 0.79 8,303,686 1,570,000 1,425,365 2.77 64,525,103 1,450,000 1,596,612 21.18 2005 1,552,289 3,274,964 398,660 0.42 8,753,941 1,660,000 1,604,050 2.68 69,209,221 1,500,000 1,553,113 22.67 2006 1,425,857 765,000 262,458 1.39 9,600,919 1,750,000 1,522,950 2.93 79,497,344 1,525,000 3,155,681 16.98 2007 355,124 125,000 231,010 1.00 13,209,138 1,845,000 1,437,450 4.02 102,525,938 5,210,000 4,753,688 10.29 2008 2,121,038 1,390,000 191,620 1.34 13,182,950 1,925,000 1,347,313 4.03 107,273,375 5,410,000 4,567,400 10.75 2009 421,894 75,000 153,530 1.85 11,512,555 2,050,000 1,251,063 3.49 97,901,565 6,060,000 5,404,460 8.54 2010 437,493 85,000 149,370 1.87 10,609,631 2,175,000 1,148,563 3.19 91,609,318 8,705,000 8,014,525 5.48 2011 559,284 90,000 587,245 0.83 9,291,120 2,275,000 1,039,813 2.80 89,202,148 9,030,000 7,705,188 5.33 118 Water Resources Municipal Property Corp. Revenue Bonds Water and Wastewater Revenue Bonds Less: Net Fiscal Operating Operating Available Year Revenues a Expenses a Revenue 2002 $ Net Water Available System System Coverage Revenue b Dev't Fee Dev't Fee $ 10,990,642 $ Debt Service Principal Interest 9,464,291 $ Wastewater Coverage 26,619,520 $ 13,331,093 $ 13,288,427 $ 670,000 $ 1,627,785 5.78 3,365,000 $ 1,441,525 4.26 27,488,811 16,259,036 11,229,775 725,000 1,586,230 4.86 8,918,545 10,898,905 - 2,635,000 1,134,525 5.26 2004 29,326,860 18,940,817 10,386,043 1,045,000 1,045,563 4.97 8,295,480 14,803,415 - 3,555,000 766,180 5.35 2005 32,977,355 21,010,668 11,966,687 1,135,000 954,994 5.73 9,876,693 15,184,009 - 274,400 91.33 2006 38,518,047 28,439,547 10,078,500 1,180,000 927,263 4.78 7,971,237 - 20,491,288 - 4,332,600 6.57 2007 44,698,632 28,173,011 16,525,621 1,230,000 897,913 7.77 14,397,708 - 17,033,202 2,629,122 6.60 2008 51,061,203 32,100,716 18,960,487 1,250,000 866,563 8.96 16,843,924 9,130,452 4.32 2009 53,633,557 32,618,247 21,015,310 1,280,000 835,313 9.93 18,899,997 6,329,797 6,190,815 3,200,000 7,808,650 2.85 2010 57,096,936 32,034,177 25,062,759 1,315,000 803,313 11.83 22,944,446 8,491,638 8,715,622 3,300,000 7,910,188 3.58 2011 59,780,559 33,231,244 26,549,315 1,355,000 763,863 12.53 24,430,452 6,485,383 6,878,502 3,400,000 7,198,049 3.57 - 10,923,733 a Combined operating revenues and expenses for the Water and Wastewater Funds, as applicable. b Combined operating revenues and expenses for the Water and Wastewater Funds less debt service payments for the Water and Wastewater Revenue Bonds. Note: Details regarding Gilbert's outstanding debt can be found in the notes to the financial statements. $ Interest 2003 11,697,125 - Debt Service Principal 2,130,000 - TABLE OF CONTENTS Schedule 13 Town of Gilbert, Arizona Demographic and Economic Statistics Last Ten Fiscal Years 119 Fiscal Year Population Personal Income (in thousands) (estimate) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 133,556 143,821 154,299 167,497 178,015 191,206 200,314 204,821 208,453 212,869 3,513,000 3,897,000 4,348,000 4,817,000 5,222,000 5,721,000 6,113,000 6,230,000 6,370,000 6,329,000 Per Capita Income (estimate) 26,304 27,093 28,177 28,759 29,334 29,920 30,518 30,416 30,559 29,731 Median Age 29.7 30.1 30.1 30.1 30.1 31.3 31.3 30.4 30.7 32.7 School Enrollment Unemployment Rate 31,442 33,322 35,410 37,194 37,662 37,979 38,662 39,142 39,089 38,660 3.3% 3.1% 3.5% 2.9% 2.2% 2.0% 2.4% 4.6% 5.1% 5.1% Sources: Population figures obtained from the Maricopa Association of Governments. Median age, school enrollment, and unemployment rate were obtained from Gilbert's Development Services Department. The 2005 and the 2011 per capital income figure was obtained from the American Community Survey. The 2002 through 2004 and 2006 through 2010 per capita income figures are estimates. The personal income amounts were estimated based on population and per capita income. TABLE OF CONTENTS Schedule 14 Town of Gilbert, Arizona Principal Employers Current Fiscal Year and Nine Years Ago Employer Fiscal Year 2011 Percentage of Total Town Employees Rank Employment 120 Gilbert Unified School District Town of Gilbert Banner Health Fry's Food and Drug Mercy Gilbert Medical Center Wal-Mart Stores, Inc. Go Daddy Software, Inc. Target Stores, Inc Costco Wholesale Orbital Sciences Corporation InteSys Technologies Earnhardt Auto Center Dillard's National Bank McGee/Walpole Consolidated Spectrum Astro Chandler Ready Mix Hunter Contracting 4,173 1,402 1,213 817 762 694 600 455 418 400 --------------- Total 10,934 Source: Maricopa Association of Governments 1 2 3 4 5 6 7 8 9 10 Fiscal Year 2002 Percentage of Total Town Employees Rank Employment 6.57% 2.21% 1.91% 1.29% 1.20% 1.09% 0.94% 0.72% 0.66% 0.63% --------------- 3,900 638 --359 ------------500 554 560 475 436 311 300 17.22% 8,033 1 2 8 5 4 3 6 7 9 10 17.67% 2.89% --1.63% ------------2.27% 2 51% 2.51% 2.54% 2.15% 1.98% 1.41% 1.36% 36.41% TABLE OF CONTENTS Schedule 15 Town of Gilbert, Arizona Full-time Equivalent Employees by Function Last Ten Fiscal Years Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Function Governmental Funds General government: Management and policy 81.6 83.6 82.5 91.5 100.5 30.8 32.0 32.2 29.2 21.2 Support services N/A N/A N/A N/A N/A 91.00 92.8 91.3 88.3 62.0 Financial services N/A N/A N/A N/A N/A N/A N/A N/A N/A 18.3 Legal and court 25.5 28.0 31.5 31.6 35.1 51.3 53.3 52.3 52.9 52.9 Development services 86.2 89.7 93.2 97.2 98.4 115.6 99.1 70.5 70.5 72.5 Public works 19.5 27.0 25.5 26.0 28.0 17.3 18.0 17.5 17.5 - 198.7 207.5 270.0 276.0 309.0 330.0 352.5 347.0 346.0 346.0 83.5 102.5 110.8 122.5 139.0 173.8 193.0 199.5 197.0 197.0 Public safety: Police 121 Fire Highways and streets 35.3 41.3 40.5 45.0 47.5 54.5 55.3 55.3 49.3 49.3 Community services 107.4 120.3 111.0 109.1 113.2 114.4 120.0 117.1 106.8 101.7 Water 50.5 56.0 58.0 60.0 63.5 69.0 72.0 79.0 83.0 118.1 Wastewater 19.0 22.0 26.0 26.0 30.0 33.0 35.0 40.7 40.7 40.7 Solid Waste 43.5 51.5 52.0 57.5 63.1 71.3 77.1 79.0 79.0 79.0 0.7 0.7 0.5 0.5 0.5 0.5 0.7 0.7 0.7 - 17.0 19.0 19.0 21.0 21.0 24.0 26.0 26.0 26.0 26.0 768.4 849.1 920.5 963.9 1048.8 1,176.5 1,226.8 1,208.1 1,186.9 1,184.8 Enterprise Funds Irrigation Internal Service Funds Equipment maintenance Total Source: Gilbert Budget Division Note: During fiscal year 2007, the organization structure was changed to reflect a new support services function to include areas previously reported under management and policy and public works. During fiscal year 2011, financial services was moved from support services to its own function. TABLE OF CONTENTS Schedule 16 Town of Gilbert, Arizona Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2002 Function General government: Management and policy % of population satisfied with value received from tax dollar Support services Number of recruitments Employee turnover Legal and court Case filings % of cases charged after review Development services Building permits issued Value of permits issued (in millions) Public works Number of utility locates 122 Public Safety: Police Number of arrests Crimes per 1,000 population Fire Number of emergency calls Response time average from time of alert at station to on-scene 2003 2005 2004 2006 2007 2008 2009 2010 2011 85% 81% 81% 88% 88% 90% 87% 89% 86% 90% 116 12.0% 117 8.3% 129 9.2% 131 12.5% 171 13.1% 246 9.5% 107 9.2% 87 8.1% 90 4.9% 81 6.6% 23,329 62% 28,080 67% 23,034 62% 29,175 61% 38,315 66% 37,821 61% 36,890 61% 32,299 64% 27,376 65% 21,871 1 5,797 $ 755.1 5,891 $ 745.1 7,457 $1,004.1 7,348 $1,121.6 6,750 $ 983.3 5,322 $ 825.5 3,663 $ 539.6 2,054 $ 266.3 2,506 $ 324.3 2,219 $ 238.7 29,936 32,510 37,085 35,621 35,265 26,616 16,451 12,000 12,373 10,000 4,089 38.4 4,331 35.7 5,361 37.0 6,237 27.4 8,845 28.3 13,324 26.6 10,528 25.4 12,487 23.3 11,411 20.4 10,645 20.5 7,774 5 min 32 sec 8,490 5 min 29 sec 9,870 5 min 33 sec 10,225 5 min 39 sec 11,718 5 min 17 sec 12,260 5 min 2 sec 13,259 5 min 8 sec 12,972 4 min 11 sec 13,566 3 min 43 sec 14,172 3 min 37 sec 88 89 89 90 91 91 91 90 Highways and streets Average pavement condition index NA 88 Community services Facility reservation requests Participants in recreation programs 8,046 59,283 9,997 57,771 9,983 46,499 11,346 49,262 15,505 57,122 17,434 45,516 18,691 54,815 19,222 48,892 15,681 50,038 16,637 47,493 221 281 346 385 523 388 421 1,039 835 845 29 46,000 34 49,300 36 54,160 38 58,420 40 60,190 44 64,320 42 68,447 44 70,630 42 71,814 42 71,917 7.89 2,404 8.54 2,502 9.46 2,627 10.46 2,596 10.71 2,599 11.71 3,417 12.32 4,174 12.37 4,160 12.91 4,420 12.70 4,840 72,901 12,766 79,503 13,229 85,779 14,421 91,278 16,538 101,168 17,084 112,880 18,388 113,777 19,055 110,144 18,810 110,403 19,191 111,943 18,900 Transportation Average daily ridership Water Daily average water production (mg) Average # of meters read per month Wastewater Daily average wastewater influent (mg) Annual effluent produced/reused (mg) Solid waste Solid waste tonnage Recycle tonnage Irrigation Cost per house irrigated $ 406 $ 415 $ 294 $ 323 $ 309 $ 309 $ 384 $ 1,532 a $ 542 N/A Source: The various departments a Increase compared to prior years due to a one-time expense in 2009 for mapping and as-built condition reports on the Heritage Flood District Irrigation System in anticipation of the Town transferring this operation to another entity. Service is no longer available. b b TABLE OF CONTENTS Schedule 17 Town of Gilbert, Arizona Capital Asset Statistics by Function Last Ten Fiscal Years 2002 2003 2004 2005 Fiscal Year 2006 2007 2008 2009 2010 2011 Function Public safety: Police Number of police cars Fire Fire stations 123 87 107 109 126 142 150 151 162 156 166 6 6 6 8 9 9 9 9 9 9 Highways and streets Street center line miles (estimate) Traffic control signals 742 56 766 57 806 80 883 89 986 111 1,013 137 1,017 159 872 169 903 168 923 173 Community services Total acres of park land, trails, open space, municipal areas and support facilities, operated and maintained 755 767 676 676 676 676 676 676 690 690 Water Miles of water main 503 554 591 642 825 900 1,067 1,137 1,175 1,189 Wastewater Miles of wastewater main 416 426 455 480 487 770 809 843 860 868 39 44 46 55 51 52 52 54 57 61 Solid waste Garbage trucks Source: The various departments Note: No capital asset statistics are available for the general government or transportation functions. TABLE OF CONTENTS Schedule 18 Town of Gilbert, Arizona Property Value, Construction and Bank Deposits Last Ten Fiscal Years Fiscal Year 124 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 a Residential Construction a Number of Permits Value 3,472 3,505 4,769 4,006 3,638 2,896 1,536 1,038 1,427 1,130 $ 570,781,981 563,512,928 753,517,139 727,496,972 589,698,508 474,991,497 268,197,375 161,128,906 213,032,031 182,201,825 Development Services Department Maricopa County Assessor's Office c Arizona Banker's Association d Federal Deposit Insurance Corporation b Commercial Construction a Number of Permits Value 106 176 274 432 500 430 349 151 147 180 $ 132,489,648 130,728,289 189,583,027 297,406,547 304,955,513 252,353,478 180,776,005 60,768,344 67,488,230 25,831,880 Other Construction a Number of Permits Value 2,219 2,210 2,414 2,910 2,612 1,997 1,778 865 932 909 $ 51,781,132 50,878,249 61,006,431 96,709,861 88,679,208 98,134,107 90,605,562 44,414,870 43,754,466 30,710,863 Secondary Assessed Property Value b $ 749,581,043 906,389,287 1,052,321,817 1,251,765,751 1,466,841,566 2,370,134,999 2,768,391,194 2,672,949,852 2,297,228,317 1,861,193,961 Maricopa County Bank Deposits $ 29,293,209,000 c 34,753,406,000 c 39,014,589,000 c 46,392,368,000 c 54,925,528,000 d 55,663,285,000 d 55,054,948,000 d 55,358,822,000 d 61,925,568,000 d 60,408,631,000 d TABLE OF CONTENTS Schedule 19 Town of Gilbert, Arizona System Development Fees Fiscal Year 2011 Beginning Balance Traffic signal system development fee $ Police system development fee System Development Fees Collected Other Revenue Ending Balance Expenditures 1,100,174 616,443 10,687 (561,710) $ 1,165,594 1,767,448 784,292 14,105 (2,744,752) (178,907) a (18,426,360) 1,342,085 - (985,935) (18,070,210) a General government system development fee (2,240,171) 863,570 - (2,410,596) (3,787,197) a Parks and recreation system development fee 8,943,055 5,129,378 81,415 (6,527,031) 7,626,817 Water system development fee 23,599,328 6,485,383 5,460,875 (13,272,746) 22,272,840 Water resources system development fee 18,635,221 1,918,930 124,199 (8,831,221) 11,847,129 (39,213,354) 6,878,502 5,700,000 (12,045,698) (5,834,659) 24,018,583 11,391,281 (47,379,689) Fire system development fee 125 Wastewater system development fee Totals $ (38,680,550) b $ (17,804,484) Equivalent Residential Unit Water system development fee 5,042 Wastewater system development fee 5,866 Source: Gilbert Finance Department a b The negative ending balances for the police, fire, and general government system development fees are funded by the general fund. The general fund had a cash balance of $43,356,504 at June 30, 2011. The negative ending balance for the wastewater system development fee is funded by the wastewater operating fund and the wastewater equipment replacement fund. These funds had a combined cash balance of $38,615,662 at June 30, 2011. TABLE OF CONTENTS Schedule 20 Town of Gilbert, Arizona Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year 126 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Adopted Tax Levy $ 8,022,152 8,790,761 10,423,960 12,110,279 14,395,693 16,913,578 27,315,101 31,332,659 30,389,882 26,198,053 County Resolutions $ (9,176) (101,804) (21,510) (112,123) (183,273) (285,567) (474,995) (218,315) (214,836) 107,618 Source: Maricopa County Treasurer's Office Net Tax Levy $ 8,012,976 8,688,957 10,402,450 11,998,156 14,212,420 16,628,011 26,840,106 31,114,344 30,175,046 26,305,671 Current Collections $ 7,803,729 8,524,015 10,192,801 11,796,111 13,928,035 16,226,531 25,797,060 29,744,757 29,347,617 25,253,466 Percent Of Levy 97.39% 98.10% 97.98% 98.32% 98.00% 97.59% 96.11% 95.60% 97.26% 96.00% Delinquent Collections $ 207,598 162,634 207,444 199,682 282,724 399,732 1,026,988 1,297,263 - Total Collections $ 8,011,327 8,686,649 10,400,245 11,995,793 14,210,759 16,626,263 26,824,048 31,042,020 29,347,617 25,253,466 Percent of Levy 99.98% 99.97% 99.98% 99.98% 99.99% 99.99% 99.94% 99.77% 97.26% 96.00% TABLE OF CONTENTS Schedule 21 Town of Gilbert, Arizona Principal Property Taxpayers Fiscal Year 2011 127 1 Principal Taxpayer Type of Business Westcor Santan Village LLC Verizon Wireless Power & Ray LLC Southwest Gas Corporation Vestar CTC-Gilbert Phase II LLC Target Corporation Macerich Santan Phase 2 Spe LLC Donahue Schriber Realty Group Lp Qwest Corporation Smiths Food & Drug Centers INC Lowe's HIW Inc Spectrum Town Center Property p p y LLC Dillard Store Services Inc. Gilbert Commons Financial Group LLC Federal National Mortgage Association Branch Brook Gardens ATC REALTY SIXTEEN INC Vestar CTC-Gilbert Phase II LLC Sunnyvale Business Square LLC Gilbert LLC/ETAL Shopping Center Communications Commercial Utility Shopping Center Shopping Center Shopping Center Shopping Center Communications Shopping Center Shopping Center Shopping pp g Center Shopping Center Shopping Center Residential / Vacant Land Residential Residential Shopping Center Shopping Center Shopping Center Secondary Assessed Valuation As % of Town's Total Secondary Assessed Valuation $ 24,083,675 11,306,940 6,449,991 6,296,606 6,000,586 5,762,522 5,708,685 5,566,913 5,188,961 4,406,232 4,302,399 4,258,000 4,124,944 3,936,551 3,745,320 3,715,257 3,439,963 3,338,831 3,270,320 3,230,399 1.29% 0.61% 0.35% 0.34% 0.32% 0.31% 0.31% 0.30% 0.28% 0.24% 0.23% 0.23% 0.22% 0.21% 0.20% 0.20% 0.18% 0.18% 0.18% 0.17% $ 118,133,095 6.35% . Source: Maricopa County Treasurer's Office Note: Information included for current fiscal year only as this is what is required for continuing disclosure requirements for Gilbert's bond issues. TABLE OF CONTENTS 128