City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 This page left blank intentionally. City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTRODUCTORY SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 Mayor Jerry Weiers Councilmembers Yvonne J. Knaack, Vice Mayor - Barrel District Manuel D. Martinez - Cholla District Norma Alvarez - Ocotillo District Ian Hugh - Cactus District Samuel U. Chavira - Yucca District Gary D. Sherwood - Sahuaro District Management Staff Brenda Fischer - City Manager Tom Duensing, Director of Finance and Technology Prepared by Finance Vicki Rios, Assistant Finance Director i This page left blank intentionally. ii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION Title Page ......................................................................................................................................... i Table of Contents ...........................................................................................................................iii Letter of Transmittal ....................................................................................................................... 1 GFOA Certificate of Achievement.................................................................................................. 5 Glendale, Arizona and Neighboring Communities ......................................................................... 6 Glendale City Officials ................................................................................................................... 7 Glendale Council District Boundaries ............................................................................................. 8 Organization Chart .......................................................................................................................... 9 II. FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................. 11 A. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) ............................................. 15 B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position .............................................................................................................. 29 Statement of Activities .................................................................................................................. 30 Fund Financial Statements: Balance Sheet – Governmental Funds........................................................................................... 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................................... 33 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds.................................................................................................................. 34 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................. 35 Statement of Net Position – Proprietary Funds ............................................................................. 36 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ........ 37 Statement of Cash Flows – Proprietary Funds .............................................................................. 38 Notes to the Financial Statements ..................................................................................................... 40 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress ....................................................................................................... 81 Budgetary Comparison Schedule – General Fund ........................................................................ 83 Budgetary Comparison Schedule – Transportation Fund.............................................................. 85 Notes to Required Supplementary Information ............................................................................. 86 iii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS Page D. COMBINING STATEMENTS Other Major Governmental Funds Budgetary Comparison Schedule –Western Loop 101 Public Facilities Corporation Debt Service Fund .......................................................................................................................... 87 Budgetary Comparison Schedule – General Obligation Debt Service Fund ............................. 88 Non-Major Governmental Funds Combining Balance Sheet.......................................................................................................... 92 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.................. 94 Budgetary Comparison Schedules Community Development Block Grants Fund ....................................................................... 96 Highway Users Gas Tax Fund ............................................................................................... 97 Police and Fire Sales Tax Fund .............................................................................................. 98 Federal Stimulus Fund ........................................................................................................... 99 Other Special Revenue Fund ................................................................................................ 100 Highway User Debt Service Fund........................................................................................ 101 Municipal Property Corporation Debt Service Fund ........................................................... 102 Transportation Debt Service Fund ....................................................................................... 103 Development Impact Fees Fund........................................................................................... 104 Streets Construction Fund .................................................................................................... 105 Fire and Police Construction Fund ....................................................................................... 106 Parks Bond Construction Fund ............................................................................................ 107 Other Construction Fund ...................................................................................................... 108 Cemetery Perpetual Care Fund ............................................................................................ 109 Non-Major Proprietary Funds – Business-Type Activities Combining Statement of Net Position ..................................................................................... 112 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 113 Combining Statement of Cash Flows ...................................................................................... 114 Budgetary Comparison Schedules Water and Sewer Fund (a Major Fund) ................................................................................ 116 Landfill Fund ....................................................................................................................... 118 Sanitation Fund .................................................................................................................... 119 Housing Fund ....................................................................................................................... 120 Internal Service Funds Combining Statement of Net Position ..................................................................................... 121 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 122 Combining Statement of Cash Flows ...................................................................................... 123 iv City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 TABLE OF CONTENTS Page Budgetary Comparison Schedules Risk Management Fund ....................................................................................................... 124 Workers’ Compensation Fund ............................................................................................. 125 Employee Benefits Fund ...................................................................................................... 126 E. SUPPLEMENTARY INFORMATION Federal Financial Data Schedule .......................................................................................... 127 III. STATISTICAL SECTION Schedule Page Net Position by Component ............................................................................................... 1 ............. 134 Changes in Net Position ..................................................................................................... 2 ............. 136 Fund Balances – Governmental Funds ............................................................................... 3 ............. 139 Changes in Fund Balances – Governmental Funds ............................................................ 4 ............. 140 Assessed and Estimated Actual Value of Taxable Property ............................................... 5 ............. 142 Direct and Overlapping Governments Property Tax Rates ................................................ 6 ............. 143 Principal Property Taxpayers ............................................................................................. 7 ............. 144 Property Tax Levies and Collections ................................................................................. 8 ............. 145 City Transaction Privilege Taxes (Sales Tax) by Category ................................................ 9 ............. 147 Ratio of Outstanding Debt by Type.................................................................................. 10 ............. 148 Ratios of Net General Bonded Debt Outstanding............................................................. 11 ............. 150 Net Direct and Overlapping Governmental Activities Debt............................................. 12 ............. 151 Legal Debt Margin Information ....................................................................................... 13 ............. 153 Pledged-Revenue Coverage ............................................................................................. 14 ............. 154 Demographic and Economical Statistics .......................................................................... 15 ............. 156 Principal Employers ......................................................................................................... 16 ............. 157 Full-Time Equivalent City Government Employees by Function/Program ..................... 17 ............. 158 Operating Indicators by Function/Program ...................................................................... 18 ............. 159 Capital Asset Statistics by Function/Program .................................................................. 19 ............. 160 Miscellaneous Water and Sewer Rate Statistics ............................................................... 20 ............. 161 Miscellaneous Water and Sewer Statistics ....................................................................... 21 ............. 162 v This page left blank intentionally. vi December 10, 2014 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Glendale, Arizona: The Finance Division of the Finance and Technology Department is pleased to submit the City of Glendale, Arizona’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014. The City publishes the CAFR annually after the close of each fiscal year. The CAFR includes a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). The financial statements are audited by a firm of licensed certified public accountants in accordance with generally accepted auditing standards (GAAS). City Management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, Management has established a comprehensive internal control framework that is designed to both protect the government’s assets from loss, theft, or misuse; and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. To the best of our knowledge and belief, this financial report is complete and reliable in all material respects and is designed to fairly represent the financial position of the operations of the various funds of the City. This letter of transmittal is best reviewed in conjunction with the Management’s Discussion and Analysis (MD&A) beginning on page 15. The MD&A provides a narrative introduction, overview, and analysis of the basic financial statements of the City. Independent Audit The City’s financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2014, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit reporting package. City of Glendale Profile The City of Glendale, Arizona is the fifth largest city in the state with a population of approximately 231,000 people. Located in the northwestern part of the metropolitan Phoenix area and occupying approximately 59 square miles of land, the City is home to the Arizona Cardinals and the Arizona Coyotes. The City is also the owner of Camelback Ranch, the spring training facility for the Los Angeles Dodgers and the Chicago White Sox. 1 The City was incorporated in 1910 and has operated under the council-manager form of government since its incorporation. Policy-making and legislative authority are vested in the City Council which consists of the Mayor and six other members. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Clerk, Attorney, and Municipal Judge. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year terms, with three Council members elected every two years. The Mayor is elected to serve a four-year term. The City provides a full range of services including: police and fire protection; water, sewer, and sanitation services; the construction and maintenance of highways, streets, public facilities, and other infrastructure; and recreational activities and cultural events. Certain housing services are provided by the City’s public housing authority, which functions, in essence, as a department of the City and therefore has been included as an integral part of the City’s financial statements. The City also is financially accountable for two legally separate entities - the Municipal Property Corporation and Western Loop 101 Public Facilities Corporation, which are reported within the City’s financial statements. The annual budget serves as the foundation for the City’s financial planning and control. All agencies of the City are required to submit requests for appropriation to the City Manager on or before the last week in December each year. Management uses these requests to develop a budget to propose to City Council for review and adoption. The Council is required to hold public hearings on the proposed budget and adopt the final budget by the first Monday in August. Department heads may request transfers of appropriations within the same fund for his/her department. However, transfers of appropriations between funds require approval of the City Council and can only occur in the last quarter of the fiscal year. Budget-to-actual comparisons are provided in this report for each individual fund for which an appropriated annual budget has been adopted. Economic Conditions and Strategies Before reviewing the presented financial statements, it is important to consider the local and global economic factors that have impacted the City’s financial position. Primary Revenue Sources The City relies on local and state shared sales tax as well as state shared income tax as primary revenue sources for the City’s operating budget. In June 2012, the City Council approved a temporary sales tax rate increase of .7% effective August 1, 2012, through August 1, 2017. On June 24, 2014, an ordinance was passed eliminating the August 1, 2017 end date of the .7% increase in sales tax. This fiscal year saw a 6.7% increase in the sales tax over last year, primarily due to the sales tax rate increase which was effective for the entire year. In addition, there was a 7.7% increase in state shared revenue over last year. Workforce and Unemployment Glendale’s unemployment rate for the month of June 2014 was 6.5% which is lower than the statewide unemployment rate of 6.9%. Glendale’s workforce is concentrated in the following nonfarm sectors: education and health services (24.78%); trade, transportation, and utilities (22.46%); government (12.45%); construction (8.71%); and leisure and hospitality (8.66%). Glendale’s nonfarm employment grew 2.1% over last year with leisure and hospitality, educational and health services and financial activities leading the growth. The government sector saw a decline of 1.4% in nonfarm employment. The Arizona Department of Administration projects that in 2015, Arizona nonfarm employment will grow by 2.4%; Glendale is expected to grow faster than the State at 2.6%. 2 Economic Development Job creation, business retention and expansion, redevelopment, and small business assistance comprise the major programs of Glendale’s economic development strategy. Continuing its efforts in Fiscal Year 2014, the city welcomed thirteen new companies to Glendale and assisted with three business expansions resulting in the creation and retention of over 2,700 new jobs for Glendale and the addition of over 1.7 million square feet of office, industrial, and retail space. The major projects include American Lifestyle Furniture, Empereon-Constar, Aspera, Tanger Outlet expansion, and Midwestern University expansion. Financial Strategy Before the economic downturn in 2008, the City had built a healthy General Fund balance. The General Fund balance was systematically used in the City’s operating budget over the past several fiscal years to offset drastic reductions in revenues due to the economic downturn. This decision was made in an effort to maintain the level and quality of services to citizens. In order to reduce the operating budget, the City eliminated vacant positions and made reductions to operating budgets. This year the economy showed modest signs of improvement. However, this improvement has not been significant enough to prevent the need to further assess the City’s finances by looking at new revenue streams and the possible adjustment of existing revenues and expenditures in all funds with an emphasis on the General Fund. In December 2013, a comprehensive Five-Year Financial Forecast was developed and presented to Council. Based on this forecast, a structural annual deficit was identified. A dual approach was used to address the deficit, implementing short–term and long-term solutions with a strategic approach that focused on financial sustainability of the City. Based on significant measures taken as a result of presenting this five-year forecast, a balanced budget for FY14-15 was adopted by the Council and the General Fund outlook is stable for the foreseeable future. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2013. This was the twenty-sixth consecutive year the City has received this prestigious award, and the twenty-seventh year overall. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City also received the GFOA’s Distinguished Budget Presentation Award for its annual budget document dated 2013-14. This was the twenty-seventh year in a row that the City has received the highest form of recognition in governmental budgeting. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Division. I would like to express appreciation to all members of the division who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor, Council, and City Manager for their unfailing support in maintaining the highest standards of professionalism in the management of the City’s finances. Respectfully submitted, Tom Duensing Director of Finance and Technology 3 This page left blank intentionally. 4 5 Glendale, Arizona & Neighboring Communities To Flagstaff Cave Creek e fre re Ca 17 Scottsdale 60 El Mirage Peoria Sun City Surprise 303 Luke AFB Phoenix Glendale 51 Fountain Hills Paradise Valley 101 101 10 Goodyear 85 202 Sky Harbor Airport Mesa 89 60 Tempe Chandler 10 To Tucson 6 Gilbert Glendale City Officials Jerry Weiers Mayor Yvonne J. Knaack Vice Mayor/ Councilmember Barrel District Ian Hugh Councilmember Cactus District Manuel D. Martinez Councilmember Cholla District Samuel U. Chavira Norma Alvarez Councilmember Ocotillo District Gary D. Sherwood Councilmember Yucca District Councilmember Sahuaro District 7 Brenda Fischer City Manager Glendale Council District Boundaries Pinnacle Peak Rd. Deer Valley Rd. Cholla Beardsley Rd. Union Hills Dr. Bell Rd. Saquaro Greenway Rd. Thunderbird Rd. Cactus Rd. Peoria Ave. Olive Ave. Barrell Cactus Yucca Yucca Northern Ave. Glendale Ave. Ocotillo Bethany Home Rd. 43rd Ave. 51st Ave. 59th Ave. 67th Ave. 75th Ave. 83rd Ave. 91st Ave. 99th Ave. 107th Ave. 115th Ave. El Mirage Rd. Dysart Rd. Litchfield Rd. Bullard Ave. Reems Rd. Sarival Ave. Cotton Ln. e. Av 8 nd ra G Citrus Rd. Camelback Rd. CITIZENS OF GLENDALE Mayor & Council Boards & Commissions City Attorney Michael D. Bailey 9 Police Department Debora Black Police Chief Public Works Stuart Kent Executive Director Transportation Cathy Colbath Interim Executive Director Fire Department Mark Burdick Fire Chief Water Services Craig Johnson Executive Director City Manager Brenda S. Fischer Assistant City Manager Jennifer Campbell Technology/ Innovation Chuck Murphy Executive Director City Clerk Pam Hanna Assistant City Manager Julie Frisoni Parks, Recreation & Library Erik Strunk Executive Director Human Resources Jim Brown Executive Director Neighborhood & Human Services Sam McAllen Executive Director Presiding City Judge Elizabeth Finn Financial Services Tom Duensing Executive Director Community/ Economic Dev. Brian Friedman Executive Director City Auditor Candace MacLeod Communications Julie Watters Executive Director Intergovernmental Programs Brent Stoddard Director This page left blank intentionally. 10 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ FINANCIAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City of Council City of Glendale, Arizona Glendale, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona (City), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. An independent member of Nexia International 11 The Honorable Mayor and Members of City of Council City of Glendale, Arizona Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 15 – 28, the schedule of funding progress for the public safety personnel retirement system pension plan and other postemployment benefits on pages 81 – 82 and the budgetary comparison schedules for the general fund and major special revenue funds on pages 83 – 85 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Glendale, Arizona’s basic financial statements. The combining and individual nonmajor fund financial statements, supplementary information and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the supplementary information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections 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 it. 12 The Honorable Mayor and Members of City of Council City of Glendale, Arizona Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2014, on our consideration of the City of Glendale, Arizona's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Glendale, Arizona’s internal control over financial reporting and compliance. Phoenix, Arizona December 10, 2014 13 This page left blank intentionally. 14 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ MANAGEMENT’S DISCUSSION & ANALYSIS (Required Supplementary Information) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Management’s Discussion and Analysis The following discussion and analysis is provided to readers of the City’s financial statements as a narrative overview of the financial activities of the City for the fiscal year ended June 30, 2014. This discussion and analysis is designed to assist the reader in focusing on significant financial highlights; provide an overview of the City’s financial activity; identify changes in the City’s financial position; identify material deviations from the financial plan (the approved annual budget); and identify individual fund issues or concerns. The Management’s Discussion and Analysis (MD&A) has a different focus and purpose than the letter of transmittal presented on pages 1-3. It is designed to be read in conjunction with the transmittal letter, the financial statements beginning on page 29, and the accompanying notes to the financial statements. Significant Financial Highlights The financial statements illustrate the following significant financial highlights for FY 2013-14:  The City’s total net position decreased $17,060 or 1.7%. The governmental net position decreased by $25,296 or 4.5%, and the business-type net position increased by $8,236 or 1.9%.  General revenues from governmental activities increased $5,160 or 2.5% and comprised 74.6% of all revenues from governmental activities. The primary reason for this increase was an increase in state shared sales tax and income tax revenues.  Governmental activities program specific revenues in the form of charges for services, grants, and contributions increased $8,053 or 12.7%; this increase can be primarily attributed to the additional revenues received under the new arena management agreement starting in August 2013.  The total cost of all City programs increased by $32,667 or 11.9% for the governmental activities. A significant portion of the increase in expenses was related to the City recording an allowance for doubtful accounts on an outstanding note receivable from the Arizona Sports and Tourism Authority (AZSTA) on the baseball spring training facility. (See note IV on page 52 for additional information.)  A major governmental fund, the General Fund, collected $182,322 in revenues which is an increase of $17,895 or 10.9% from the prior year. This increase was due primarily to the .7% sales tax increase which was received for a full fiscal year and the opening of an additional retail outlet mall. The total expenditures of the General Fund were $142,116, which is an increase of $14,789 or 11.6%. A significant portion of this increase was due to the management fees paid to run the City owned arena.  The General Fund balance increased $9,808 or 83.1%. This increase was primarily due to the .7% sales tax rate increase being in effect for a full year. Overview of the Financial Statements This report consists of a series of financial statements that are categorized as government-wide financial statements or fund financial statements. Government-Wide Financial Statements, which include the Statement of Net Position and the Statement of Activities, are designed to provide the reader with information about the overall activities of the City and the long-term view of the City’s finances. The Fund Financial Statements show how City services were financed in the short-term as well as more detailed information about the City’s most significant funds. Also included in this report are the notes to the financial statements which are provided to help enhance understanding of the content within the financial statements. 15 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Government-Wide Financial Statements The Government-Wide Financial Statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The accrual basis of accounting is used for government-wide financial statements. The Statement of Net Position presented on page 29, provides information on all of the City’s assets, deferred outflows of resources and liabilities with the difference reported as net position. Net position is categorized as net investment in capital assets, restricted by an outside party, and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities found on page 30, presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). Both of the Government-Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, community environment, street maintenance, and interest on long-term debt. The business-type activities of the City include water and sewer services, landfill, sanitation, and housing. Fund Financial Statements The Fund Financial Statements provide more detailed information about the major funds within the City. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 18 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the 4 major funds. Data from the other 14 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. 16 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Proprietary Funds The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer, landfill, sanitation, and housing services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its risk management, workers’ compensation and employee benefit activities. Because these services predominantly benefit governmental rather than businesstype functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the water and sewer fund, while data from the other three enterprise funds is combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds is provided in the form of combining statements and schedules. Conversely, all three internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Additional Required Supplementary Information Following the basic financial statements is Required Supplementary Information (RSI) that further explains and supports the financial information in the financial statements. RSI presents the budgetary comparison schedules for the general fund and the transportation special revenue fund, as well as other required supplementary information related to the City’s public safety personnel retirement system and other post-employment benefits. Other The Combining Statements and Individual Fund Statements and Schedules section presents combining statements for non-major governmental funds, non-major enterprise funds, and non-major internal service funds, along with budget to actual comparisons on individual funds. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities by $973,643 as of June 30, 2014. By far the largest portion of the City’s net position reflects its investment in capital assets (e.g., land, building, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the City as a whole, as well as for its separate governmental and business-type activities, with the exception of unrestricted net position for governmental activities which saw a decline by $9,934 from prior year. The City is addressing the negative unrestricted net position for government activities by actively forecasting revenues and expenses in a five year plan. In addition, on June 24, 2014, an ordinance was passed by Council that effectively made a .7% sales tax rate increase permanent. 17 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) The chart below is a comparison of the City’s net position for fiscal years 2014 and 2013: Condensed Statement of Net Position As of June 30, 2014, and 2013 (in thousands) Governmental Activities 2014 2013 Current and other assets Capital assets, net Total assets $ Deferred Outflows of Resources 250,073 1,169,316 1,419,389 $ 233,041 1,205,209 1,438,250 Total Primary Government Business-Type Activities 2014 2013 $ 223,733 527,551 751,284 $ 215,370 542,902 758,272 2014 $ 473,806 1,696,867 2,170,673 2013 $ 448,411 1,748,111 2,196,522 14,235 14,996 3,443 3,689 17,678 18,685 Current liabilities Noncurrent liabilities Total liabilities 134,221 760,024 894,245 66,884 821,687 888,571 39,143 281,320 320,463 25,485 310,448 335,933 173,364 1,041,344 1,214,708 92,369 1,132,135 1,224,504 Net position: Net investment in capital assets Restricted Unrestricted Total net position 448,083 161,027 (69,731) 539,379 438,366 186,106 (59,797) 564,675 256,164 22,300 155,800 434,264 251,765 12,264 161,999 426,028 704,247 183,327 86,069 973,643 735,669 234,633 89,791 990,703 $ $ 18 $ $ $ $ CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) The following presents a summary of the changes in net position compared to the prior year: Changes in Net Position As of June 30, 2014, and 2013 (in thousands) Governmental Activities 2014 2013 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues $ General revenues: Property taxes Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Gain on disposal of capital assets Miscellaneous Total revenues Expenses: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Water and sewer Landfill Sanitation Housing Total expenses Excess before transfers Transfers in (out) Increase (decrease) in net position Net position beginning Net position ending $ 35,647 25,168 10,748 71,563 $ 30,450 25,156 7,904 63,510 Total Primary Government Business-Type Activities 2014 2013 $ 108,051 9,357 2,423 119,831 $ 2014 108,885 9,376 831 119,092 $ 2013 143,698 34,525 13,171 191,394 $ 139,335 34,532 8,735 182,602 23,577 131,983 19,734 21,372 132,872 18,558 - - 23,577 131,983 19,734 21,372 132,872 18,558 25,271 8,086 726 78 687 281,705 23,159 7,586 716 353 367 268,493 463 167 67 120,528 1,878 43 70 121,083 25,271 8,086 1,189 245 754 402,233 23,159 7,586 2,594 396 437 389,576 73,637 116,070 20,524 30,796 5,895 25,207 34,808 306,937 (25,232) 37,447 115,694 19,230 33,831 5,655 20,000 42,413 274,270 (5,777) 77,243 7,554 14,471 13,088 112,356 8,172 73,460 7,486 16,122 14,037 111,105 9,978 73,637 116,070 20,524 30,796 5,895 25,207 34,808 77,243 7,554 14,471 13,088 419,293 (17,060) 37,447 115,694 19,230 33,831 5,655 20,000 42,413 73,460 7,486 16,122 14,037 385,375 4,201 (64) (641) 64 641 - - (25,296) 564,675 (6,418) 571,093 8,236 426,028 10,619 415,409 (17,060) 990,703 4,201 986,502 539,379 $ 564,675 $ 434,264 $ 426,028 $ 973,643 $ Changes in Net Position There was a decrease of $25,296 in net position of the governmental activities. The most notable difference is due to recording an allowance for doubtful accounts on the outstanding note receivable from AZSTA for the baseball spring training facility. (See Note IV on page 52 for additional information.) The increase in net position of the business type-activities of $8,236 was primarily due to increases in water and sewer revenue and efforts to control expenses during the year. 19 990,703 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Revenues and Expenditures The chart below shows the performance of the revenues in the governmental activities versus expenses: Expenses and Program Revenues - Governmental Activities expenses program revenues $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $General government Public safety Public works Community services Community environment Street maintenance Interest on longterm debt The City’s total revenue from governmental activities for the fiscal year ended June 30, 2014, was $281,705. The cost of programs and services for governmental activities was $306,937. The increase in charges for services of $5,197 is largely due to the increase in arena revenues received under the new arena management agreement. The increase in general government expenses by $36,190 is mainly attributed to a combination of the increase in bad debt expense of $25,800 due to recording of the allowance on the note receivable from AZSTA and recording management fees of $14,002 from the arena management agreement. The decrease in the interest expense on long term debt of $7,605 is due to three factors: 1) savings from refunding of excise tax revenue debt by the Municipal Property Corporation, 2) savings from refunding of excise tax revenue debt by the Western Loop 101 Public Facilities Corporation, and 3) restructuring of internal loan repayment terms. 20 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) The chart below shows the performance of the revenues and expenses in the business-type activities: Expenses and Program Revenues - Business-Type Activities expenses program revenues $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $Water and sewer Landfill Sanitation Housing The City’s revenue from business-type activities for the fiscal year ended June 30, 2014, was $120,528. The cost of programs and services was $112,356. 21 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) City Revenue Categories Revenue Sources Fiscal Year 2013-14 Urban revenue sharing (state shared income tax) 6.3% Auto in-lieu taxes 2.0% Miscellaneous 0.5% Charges for services 35.7% State shared sales tax 4.9% Grants and contributions 11.9% Sales taxes 32.8% Property taxes 5.9% The pie chart above shows the different types of revenue the City receives and the proportion of each. The majority (68.5%) of the total revenue the City receives comes from charges for services and sales tax. The second most significant source is grants and contributions. 22 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) City Expense Categories Functional Expenses Fiscal Year 2013-14 Sanitation 3.5% Housing 3.1% Landfill 1.8% General government 17.6% Water and sewer 18.4% Public safety 27.7% Interest on long-term debt 8.3% Street maintenance 6.0% Community environment 1.4% Community services 7.3% Public works 4.9% The majority of the City’s expenses (46.1%) are incurred in the Public Safety and Water and Sewer categories. Public Safety expenses include those related to police and fire protection services provided to the community. Public Safety expenses are funded by the general fund. Water and Sewer expenses are paid by the enterprise fund which is funded primarily through user paid fees for services. 23 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $106,374, an increase of $8,370 or 8.5% in comparison with the prior year. The City implemented Governmental Accounting Standards Board Statement (GASB) 54 during the 2012 fiscal year which impacted the presentation of fund balance components by more accurately classifying the fund balances into five categories: nonspendable, restricted, committed, assigned and unassigned; Note I. K. in the summary of significant accounting policies addresses this in greater detail. In fiscal year 2014 and 2013, a negative $4,835 and $14,438, respectively, of the total fund balance constituted unassigned fund balance. Revenues for governmental functions overall totaled $276,148 in fiscal year 2014, an increase of 7.6% from the previous year total of $256,583. This increase reflects changes in the city sales tax rate for a full fiscal year. Expenditures for governmental functions totaled $267,896 in fiscal year 2014, an increase of 4.1% from the previous year total of $257,435. This decrease is primarily due to the prior year one-time purchase of airport land. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was ($4,835), while total fund balance was ($1,993). The General Fund also has $600 of its fund balance as nonspendable; $688 as restricted; and $1,554 as committed. The factors that make up the increases in the General Fund revenues from the prior year are:   Increases in sales tax activity due to a new major retail outlet mall. A full year of collection at the increased the sales tax rate. Overall, the General Fund’s performance resulted in revenues over expenditures of $40,206 in fiscal year 2014. In the prior year, revenues exceeded expenditures by $37,100. The transportation fund accounts for the City’s public transit program and transportation improvement projects. The fund saw an increase in fund balance of $1,372 for the fiscal year ended June 30, 2014. This increase is due to an effort to contain costs and improve the fund balance. The Western Loop 101 Public Facilities Corporation (PFC) debt service fund was established to account for the debt service payments on the bonds issued to finance the spring training baseball facility and the note receivable from AZSTA. Subsequently all of the debt held by the PFC was refunded. The remaining activity in the PFC fund is for the note receivable from the AZSTA (See note IV on page 52 for additional information). The general obligation debt service fund accounts for the resources received from a secondary property tax levy used to repay general obligation debt. The fund had a balance of $9,310 at June 30, 2014. This represents a decrease of $3,331 due to the decrease in secondary property tax received as result of declining home values. 24 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Proprietary Funds Net position of the enterprise funds increased $8,400 or 2.0%. The enterprise funds’ total net position was $22,300 restricted, $158,508 unrestricted, and $256,164 invested in capital assets. The water and sewer fund accounts for operations, maintenance and construction projects of city-owned water and sewer systems. The fund saw an increase in net position of $6,866 for the fiscal year ended June 30, 2014. This increase is due to increases in water and sewer revenue and a concerted effort at controlling expenses during the year. The internal service fund accounts for risk management, workers’ compensation, and employee benefits provided to other departments. The funds saw an increase of $576 for the fiscal year ended June 30, 2014. Internal service funds were 100% unrestricted. The policy of the City is to fund the worker’s compensation and risk management funds at a 55% confidence level based on the most recent actuarial valuations. General Fund Budgetary Highlights The City's fund balance was positively impacted by the sales tax increase.  The City’s budgeted revenues exceeded expectations even after factoring in the sales tax rate increase and were $12,817 higher than the final budgeted amounts.  General Fund expenditures were less than the final budget by $10,592 or 6.1%. The most significant reduction was in the debt service due to savings from refunding bonds and revising the terms of payment of internal loans. In addition, budgeted equipment purchases did not occur during the fiscal year resulting in general fund capital outlay expenditures that were $2,747 or 55.0% less than the final budget.  General Fund budgetary fund balance increased by $9,202 or 27.6% as a result of increased revenues. Capital Asset and Debt Administration Capital Assets The City’s investment in capital assets (net of accumulated depreciation) as of June 30, 2014, for its governmental-type activities was $1,169,316 and for the business-type activities was $527,551. The investment in governmental and business-type capital assets consisted of land, buildings, machinery and equipment, and infrastructure for streets, parks, airport and street lighting, water and wastewater treatment plants. 25 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Major capital asset projects capitalized during the current fiscal year included the following:     Zone 4 Groundwater Treatment Plant $44,794 Street Improvements $17,828 Glendale On Board Transportation $16,986 Bethany Home Outfall Channel $16,506 The following table is a summary of capital assets reflected in the June 30, 2014, financial statements as compared to last year’s financial statements. Capital Assets at Year End (Net of depreciation) (in thousands) Governmental Activities Construction in progress Land Water storage rights Artwork Buildings Improvements other than buildings Infrastructure-streets Infrastructure-parks Infrastructure-airport Infrastructure-flood/storm drains Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment Software Automotive equipment Total $ $ 2014 30,972 90,338 2,378 281,629 146,341 464,492 56,692 5,931 69,618 7,008 690 2,383 10,844 1,169,316 $ $ 2013 98,177 90,307 2,378 291,926 152,488 432,348 55,742 6,399 52,679 9,042 299 1,988 11,436 1,205,209 $ $ Business-Type Activities 2014 2013 12,371 $ 61,066 26,299 26,299 7,759 7,938 7,600 8,140 47,584 44,970 73,880 74,735 71,814 73,829 160,254 122,214 95,263 99,047 14,998 14,872 2,764 2,868 2,691 1,730 193 194 4,081 5,000 527,551 $ 542,902 Total Primary Government $ $ 2014 43,343 116,637 7,759 2,378 289,229 193,925 464,492 56,692 5,931 69,618 73,880 71,814 160,254 95,263 14,998 2,764 9,699 883 2,383 14,925 1,696,867 $ $ The construction commitments at June 30, 2014, were $9,039. Additional information on capital assets can be found in Note V of the financial statements. 26 2013 159,243 116,606 7,938 2,378 300,066 197,458 432,348 55,742 6,399 52,679 74,735 73,829 122,214 99,047 14,872 2,868 10,772 493 1,988 16,436 1,748,111 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Long-Term Debt At the end of the current fiscal year, the City had total debt outstanding of $962,586 compared to $1,020,889 last year, a 5.7% net decrease. Governmental Activities General obligation Transportation revenue bond Highway users revenue bonds Municipal Property Corporation revenue bonds Capital lease obligation Water and sewer revenue bonds/obligations Total $ 2014 147,810 88,015 3,700 $ 459,585 10,361 $ 709,471 2013 163,130 91,140 8,055 $ 468,875 11,094 $ 742,294 Business-Type Activities 2014 2013 $ 5,515 - $ 253,115 253,115 Total Primary Government $ - $ 273,080 278,595 2014 147,810 88,015 3,700 $ 459,585 10,361 $ 253,115 962,586 2013 168,645 91,140 8,055 468,875 11,094 $ 273,080 1,020,889 The City received a “BBB+-” underlying rating from Standard & Poor’s and an “A3” underlying rating from Moody’s for general obligation debt. The senior excise tax bonds are rated “AA” by Standard and Poor’s and an “A3” by Moody’s. The subordinate lien water and sewer revenue bonds are rated “A1” by Moody’s and “AA” by Standard & Poor’s. Transportation bonds were assigned an underlying rating of “AA” by Standard & Poor’s and “A3” by Moody’s. Street and highway user revenue bonds are rated "AA" by Standard & Poor's and "A3" by Moody's. The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the secondary assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to 20% of the secondary assessed valuation for supplying water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s current unused 6% and 20% debt limitation on June 30, 2014, was $66,471 and $93,537, respectively. Additional information on long-term debt can be found in Notes VIII and X of the financial statements. Economic Factors and Next Year’s Budgets and Rates The adopted fiscal year 2014-15 budget is $642,000 (up 11.5% from 2013-14), including a $368,512 operating budget (an increase of 6.4% from 2014) and $144,471 in capital outlay (up 45.1% from 2014). The fiscal year 2014-15 budget includes $36,697 contingency appropriation to cover emergency expenses or revenue shortages. For the first time in six years, non-represented employees were budgeted to receive a 2.5% salary increase. Glendale is also proud to be the host City for the Super Bowl XLIX which will be played on February 1, 2015. Although a variety of City services are needed to put on a mega event, the one-time costs have been budgeted and absorbed in the 2014-15 general fund budget. The economic climate has impacted the City’s revenue streams, including excise taxes, for the past several fiscal years. Total revenues in the General Fund were $166,963 in fiscal year 2008 and fell to $135,653 in fiscal year 2012 but increased to $182,322 in fiscal year 2014 primarily due to the sales tax rate increase. To offset the reduction in revenues, the City had been reducing expenditures through mandatory furloughs, leaving vacant positions open and reducing non-personnel expenses. Since fiscal year 2009, the number of full-time equivalent employees Citywide has decreased by 368 positions, a decrease of 18.8% of the workforce. The City has also reduced department budgets, merged departments to cut additional costs and streamlined operations. Total expenditures in the General Fund were $157,217 in fiscal year 2008 and were reduced to $126,020 in fiscal year 2012 and increased to $142,116 for fiscal year 2014. The General Fund balance decreased from $66,388 in fiscal year 2008 to a June 30, 2014, fund balance of deficit $1,993. The decrease in general fund 27 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) balance was the result of the City Council’s decision to use fund balance rather than reduce services to its citizens. For fiscal year 2014, the City’s annual average unemployment rate is 6.5%; this represents an improvement from last calendar year’s average of 7.2%. Request for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance and Technology, 5850 West Glendale Avenue, Suite 302, Glendale, Arizona 85301. The remainder of this page left blank intentionally. 28 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ BASIC FINANCIAL STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. City of Glendale, Arizona Statement of Net Position June 30, 2014 (amounts expressed in thousands) Governmental Activities ASSETS Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Property taxes Accounts Note Accrued interest Intergovernmental receivable Internal balances Inventories and prepaid items Restricted deposits Restricted cash and investments Capital assets: Non-depreciable Depreciable (net) Equity in joint venture Total assets $ DEFERRED OUTFLOWS OF RESOURCES Debit amounts resulting from refunded debt LIABILITIES Vouchers payable Accounts payable Contract payable Retainage payable Accrued expenses Matured bonds payable Accrued interest payable Intergovernmental payable Deposits payable Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities NET POSITION Net investment in capital assets Restricted for: Capital projects Debt service Transportation Highway and streets Revenue bond retirement, replacement, and extension Perpetual care - nonexpendable Police and Fire Other purposes Unrestricted Total net position $ Primary Government Business-Type Activities Total 153,072 98,083 751 21,328 51,308 320 5,879 (36,775) 823 53,367 12,766 9 36,775 751 3,014 15,060 751 34,094 51,308 320 5,888 1,574 3,014 68,427 123,688 1,045,628 1,419,389 38,670 488,881 57,275 751,284 162,358 1,534,509 57,275 2,170,673 14,235 3,443 17,678 12,324 1,293 5,000 3 106 29,300 17,431 177 2,445 6,835 2,155 38 6 107 10,210 6,353 313 3,924 6 14,479 1,331 5,000 9 213 39,510 23,784 490 6,369 6,841 59,307 760,024 894,245 16,031 281,320 320,463 75,338 1,041,344 1,214,708 448,083 256,164 704,247 25,988 62,206 31,917 19,645 5,637 11,372 4,262 (69,731) 539,379 10,210 10,404 1,686 155,800 434,264 25,988 72,416 31,917 19,645 10,404 5,637 11,372 5,948 86,069 973,643 The notes to the financial statements are an integral part of this statement. 29 $ $ $ 251,155 City of Glendale, Arizona Statement of Activities For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Charges for Services Expenses Functions/Programs Primary government: Governmental activities: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Total governmental activities Business-type activities: Water and sewer Landfill Sanitation Housing Total business-type activities Total primary government $ $ Program Revenues Operating Grants and Contributions Capital Grants and Contributions 73,637 116,070 20,524 30,796 5,895 25,207 34,808 306,937 17,666 6,369 1,126 10,486 35,647 660 3,999 211 1,457 6,046 12,795 25,168 3,089 5 3,451 4,203 10,748 77,243 7,554 14,471 13,088 112,356 419,293 81,065 8,646 14,836 3,504 108,051 143,698 267 9,090 9,357 34,525 2,423 2,423 13,171 $ $ General revenues: Taxes: Property taxes levied for: General purposes Debt service Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Gain on disposal of capital assets Miscellaneous Transfers Total general revenues, special items, and transfers Change in net position Net position - beginning - restated Net position - ending The notes to the financial statements are an integral part of this statement. 30 $ Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total $ (52,222) (105,697) (19,187) (15,402) 151 (8,209) (34,808) (235,374) $ (235,374) $ 5,129 18,448 131,983 19,734 25,271 8,086 726 78 687 (64) 210,078 (25,296) 564,675 539,379 - $ 6,512 1,092 365 (494) 7,475 7,475 $ 463 167 67 64 761 8,236 426,028 434,264 (52,222) (105,697) (19,187) (15,402) 151 (8,209) (34,808) (235,374) 6,512 1,092 365 (494) 7,475 (227,899) $ 5,129 18,448 131,983 19,734 25,271 8,086 1,189 245 754 210,839 (17,060) 990,703 973,643 31 City of Glendale, Arizona Balance Sheet Governmental Funds June 30, 2014 (amounts expressed in thousands) General ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Note Accrued interest Due from other funds Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable Accounts payable Contract Payable Retainage payable Compensated absences - current Accrued expenses Intergovernmental payable Due to other funds Deposits Unearned revenue Advance from other funds Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances $ 39,768 Major Funds Western Loop 101 Public Facilities Corporation Transportation Debt Service $ 29,274 $ 58 General Obligation Debt Service $ 9,453 Total Governmental Funds Other Non-Major Governmental Funds $ 64,430 $ 142,983 154 12,640 320 2,492 2,022 600 70 58,066 2,333 649 61 32,317 51,308 40 51,406 597 18,710 28,760 6,352 3,208 103 32,762 106,855 751 21,325 51,308 320 2,492 5,879 764 51,582 277,404 8,005 1,264 5,000 1,135 106 176 2,436 92 39,485 57,699 255 20 125 400 - 3,690 15,320 19,010 2,238 29 3 32 1 2,490 9 6,618 13,741 13,980 39,141 10,498 1,293 5,000 3 1,187 106 177 2,490 2,445 6,835 39,485 17,431 29,300 116,250 2,360 277 51,308 440 395 54,780 61 31,579 31,640 32,317 98 98 51,406 9,310 9,310 28,760 5,740 61,254 123 202 67,319 106,855 600 688 1,554 (4,835) (1,993) 58,066 $ The notes to the financial statements are an integral part of this statement. 32 $ $ $ $ 6,401 102,929 1,677 202 (4,835) 106,374 277,404 City of Glendale, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2014 (amounts expressed in thousands) Amounts reported for governmental activities in the statement of net position are different because: Fund balances - total governmental funds balance sheet $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 106,374 1,772,545 (603,229) 1,169,316 The reacquisition price of refunding outstanding debt is a deferred outflow of resources in the statement of net position and is amortized over the lesser of the refunded bonds or refunding bonds and represents a reconciling item between the government-wide and fund financial statements. 14,235 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds and shown as an internal balance item. 2,708 Internal service funds are used by management to charge the costs of workers' compensation, risk management, and employee benefits to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported in the funds. Bonds payable Capital lease obligations Developer payable obligations Compensated absences Bond discount OPEB obligations Unamortized premium on debt issuance (913) (699,110) (10,361) (3,112) (17,964) 1,464 (53,689) (24,349) (807,121) Deferred inflows of resources is unavailable revenue that is measurable but not yet available for governmental fund activities is recognized as revenue for governmental-wide activities. Net position of governmental activities 54,780 $ The notes to the financial statements are an integral part of this statement. 33 539,379 City of Glendale, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) General REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Proceeds from equipment disposal Capital lease proceeds Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 $ 97,675 9,833 54,005 13,642 3,735 692 2,740 182,322 Major Funds Western Loop 101 Public Facilities Corporation Transportation Debt Service $ 23,112 3,958 119 114 59 27,362 $ - General Obligation Debt Service $ Other Non-Major Governmental Funds 18,775 601 19,376 $ 19,766 1,689 22,800 18 1,020 94 1,701 47,088 Total Governmental Funds $ 159,328 11,522 81,364 18 14,781 3,735 900 4,500 276,148 29,445 85,029 7,444 13,438 11 437 2,264 9,804 - - 7 221 23,368 19 2,294 5,815 7,915 52 29,666 108,397 7,463 25,536 5,826 8,352 2,323 743 765 2,540 142,116 2,995 12,799 - 15,320 7,380 22,707 13,980 27,483 9,127 90,274 30,043 35,628 14,662 267,896 40,206 14,563 - (3,331) (43,186) 8,252 140 340 (30,878) (30,398) 14 900 (14,105) (13,191) - - 20 8 47,464 (3,785) 43,707 174 8 48,704 (48,768) 118 9,808 1,372 - (11,801) (1,993) 30,268 31,640 98 98 $ The notes to the financial statements are an integral part of this statement. 34 $ (3,331) $ 12,641 9,310 $ 521 8,370 66,798 67,319 98,004 106,374 $ City of Glendale, Arizona Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Amounts for governmental activities in the statement of net position are different because: Net change in fund balances - total governmental funds $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation. This is the amount by which capital outlays of $14,662 did not exceed depreciation of $54,640 for the current period. The net effect of various transactions involving capital is to increase net assets. Capital contributions Insurance reimbursement miscellaneous Disposals Gain (loss) on sales 8,370 (39,978) $ 4,203 (22) (174) 78 4,085 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. The net effect of long-term debt issuance and the related transactions is to increase net assets. Capital lease issued Bonds discount amortized Bond premium amortized Amortization of amounts resulting from refunding Principal paid (229) (8) (62) 1,643 (762) 30,043 30,854 Compensated absences 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. (403) Other post employment benefits 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. (2,696) Internal service funds are used by management to charge the costs of workers' compensation, risk management, and employee benefits to individual funds. 740 Expenses on the statement of activities differ from governmental funds because of the portion not accrued on the governmental funds. Change in net position of governmental activities (26,039) $ The notes to the financial statements are an integral part of this statement. 35 (25,296) City of Glendale, Arizona Statement of Net Position Proprietary Funds June 30, 2014 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernment receivable Inventories and prepaid items Total current assets $ 80,888 Noncurrent assets: Restricted deposits Restricted cash and investments Advance to other funds Capital assets: Capital assets Accumulated depreciation Capital assets, net Equity in joint venture Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences Accrued expenses Due to other funds Matured bonds payable Intergovernmental payable Deposits Unearned rent Estimated claims payable Current portion of long-term debt: Unamortized premium on debt issuance Revenue bonds/obligations payable Interest payable Total current liabilities Noncurrent liabilities: Compensated absences Unamortized premium on debt issuance Revenue bonds/obligations payable OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities NET POSITION Net investment in capital assets Restricted for: Debt service Revenue bond retirement, replacement and extension Other purposes Unrestricted Total net position $ $ 17,195 36 98,083 $ 10,089 12,013 (1,547) 730 92,084 2,659 (359) 9 21 19,525 14,672 (1,906) 9 751 111,609 3 59 10,151 3,014 14,967 14,850 93 24,635 3,014 15,060 39,485 1,785 - 776,283 (270,174) 506,109 52,934 (31,492) 21,442 829,217 (301,666) 527,551 57,275 596,215 688,299 46,170 65,695 57,275 642,385 753,994 1,785 11,936 3,443 - 3,443 - 1,358 6 1,198 99 10,210 298 3,692 - 797 38 627 8 2 15 232 6 - 2,155 38 6 1,825 107 2 10,210 313 3,924 6 - 1,826 11,022 1,036 13,170 6,353 37,420 1,725 1,036 13,170 6,353 39,145 12,848 504 13,103 239,945 7,468 261,020 298,440 420 4,621 93 15,166 20,300 22,025 924 13,103 239,945 12,089 93 15,166 281,320 320,465 1 1 12,849 234,722 21,442 256,164 - 10,210 10,404 137,966 393,302 1,686 20,542 43,670 10,210 10,404 1,686 158,508 436,972 (913) (913) $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities The notes to the financial statements are an integral part of this statement. $ Governmental Activities Internal Service Funds $ (2,708) 434,264 - $ City of Glendale, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Operating revenues: Intergovernmental Metered water sales Sewer service charges Container service Curb service Landfill user fees Self-insurance premium Recycling sales Other fees Total operating revenues Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ Operating expenses: Water Sewer Landfill Housing Closure/post-closure care adjustment Sanitation Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) 283 45,514 32,451 2,358 80,606 $ 17,989 12,779 11,777 20,226 62,771 17,835 Nonoperating revenues (expenses): Impact fees Investment income Interest expense Net loss from joint venture Gain on disposal of assets OPEB expense Total nonoperating revenues (expenses) 9,090 4,127 10,725 6,792 1,719 3,737 36,190 $ 6,514 12,602 213 12,924 2,681 34,934 1,256 811 316 (10,186) (3,764) (408) (13,231) 9,373 45,514 32,451 4,127 10,725 6,792 1,719 6,095 116,796 17,989 12,779 6,514 12,602 213 12,924 11,777 22,907 97,705 19,091 147 (3) 167 (242) 69 27,507 1,611 29,118 47 28,527 28,574 544 811 463 (10,189) (3,764) 167 (650) (13,162) 32 32 Income (loss) before contributions and transfers 4,604 1,325 5,929 576 Capital contributions Transfers in Transfers out Change in net position 2,407 (145) 6,866 274 (65) 1,534 2,407 274 (210) 8,400 576 Total net position - beginning Total net position - ending $ 386,436 393,302 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. 37 42,136 43,670 $ $ (164) 8,236 (1,489) (913) City of Glendale, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services Net cash provided (used) by operating activities $ Cash flows from noncapital financing activities: Transfers in Transfers out Advances to/due from other funds Advances from/due to other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Principal payments on obligations Acquisition of capital assets and rights Impact fees Interest payments on obligations Contributions to Join Venture Net cash (used) by capital and related financing activities 82,050 - $ 27,123 9,164 $ Governmental Activities Internal Service Funds 109,173 9,164 $ 29,115 - (7,304) (19,904) (8,908) (14,861) (16,212) (34,765) - (15,213) 39,629 (8,141) 4,377 (23,354) 44,006 (145) 75 - 274 (65) 371 (247) 274 (210) 446 (247) - (70) 333 263 - (26,657) (46) 2,412 (15,270) (3,815) 811 (11,199) (650) 16 (1,401) (3) - (15,254) (5,216) 811 (11,202) (650) - (30,123) (1,388) (31,511) - Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 316 316 147 147 463 463 32 32 Net increase (decrease) in cash and cash equivalents during fiscal year 9,752 3,469 13,221 2,444 Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ 86,103 95,855 The notes to the financial statements are an integral part of this statement. 38 $ 13,819 17,288 $ 99,922 113,143 $ 9,430 11,874 Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Amortization and depreciation Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Restricted deposits Vouchers and accounts payable Accrued expenses Intergovernmental payable Deposits Unearned rent Compensated absences Claims payable Proceeds from disposal of assets Estimated closure and post-closure costs Net cash provided (used) by operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents Noncash investing, capital, and financing activities: Contributions of capital assets Loss on joint venture Amortization of bond premium/discount Amortization of debit amounts resulting from refunded debt $ 17,835 $ 20,226 $ $ $ 39,629 80,888 14,967 95,855 2,407 (3,764) 1,036 246 39 $ 2,681 930 (59) 351 (94) 105 513 (178) - $ 1,256 $ $ $ 213 4,377 $ $ $ - $ $ 213 44,006 98,083 15,060 113,143 2,407 (3,764) 1,036 246 544 - 1,007 62 (39) 351 70 113 15 472 (142) (243) 129 17,195 93 17,288 - 19,091 22,907 77 62 20 164 8 15 (41) (142) (65) 129 $ Governmental Activities Internal Service Funds (3) (25) 280 1 1,615 - $ $ $ $ 2,412 10,089 1,785 11,874 - CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Notes to the Financial Statements The Notes to the Basic Financial Statements include a summary of significant accounting policies and other disclosures considered necessary for a clear understanding of the accompanying financial statements. Index Note Page Summary of Significant Accounting Policies ............................................................................. I ............................. 41 Compliance – Excess of Expenditures Over Appropriations/Deficits in Fund Equity ............. II ............................. 51 Deposits and Investments ........................................................................................................ III ............................. 51 Note Receivable....................................................................................................................... IV ............................. 52 Capital Assets ........................................................................................................................... V ............................. 53 Construction Commitments ..................................................................................................... VI ............................. 55 Self-Insurance Funds ..............................................................................................................VII ............................. 55 Leases ................................................................................................................................... VIII ............................. 57 Short-Term Debt ...................................................................................................................... IX ............................. 58 Long-Term Debt ....................................................................................................................... X ............................. 58 Landfill Obligations ................................................................................................................. XI ............................. 67 Interfund Transactions ............................................................................................................XII ............................. 68 Encumbrances....................................................................................................................... XIII ............................. 70 Equity in Joint Venture ......................................................................................................... XIV ............................. 70 Jointly Governed Organizations ............................................................................................ XV ............................. 71 Governmental Fund Balance Components and Fund Type Definitions ............................... XVI ............................. 71 Employee Retirement Systems and Pension Plans .............................................................. XVII ............................. 73 Other Post-Employment Benefits (OPEB) ........................................................................ XVIII ............................. 77 Contingent Liabilities and Commitments ............................................................................. XIX ............................. 79 Implementation of New Accounting Principles ..................................................................... XX ............................. 79 Subsequent Events ................................................................................................................ XXI ............................. 80 40 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) I. Summary of significant accounting policies A. Reporting entity The City of Glendale, Arizona (City) was incorporated June 18, 1910, under the provisions of Article 13, Sections 1 through 6 of the Constitution of Arizona and Title 9 of the Arizona Revised Statutes. It is governed by a Mayor elected at large, and six district council members. The City operates under a Council-Manager government. The major operations of the City include providing police and fire services to citizens as well as water and sewer. As required by GAAP, these financial statements present the government and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of a government’s operations, so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in combined financial statements to emphasize that it is legally separate from the government. The City has no discretely presented component units. Blended component units City of Glendale, Arizona, Municipal Property Corporation (MPC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. MPC is governed by a board of directors who are responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, MPC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. MPC does not issue separate audited financial statements. However, it does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Finance Division. City of Glendale, Arizona, Western Loop 101 Public Facilities Corporation (PFC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City to finance, construct and equip a spring training baseball facility for two major league teams and all other related infrastructure. The Board of Directors of the PFC, appointed by the City Council, consists of four City employees and one private citizen. The Board of Directors is responsible for authorizing debt (obligations) of the PFC. The City Council also approves the debt of the PFC. Although the PFC is a legally separate entity from the City, the PFC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. The PFC does not issue separate audited financial statements. The PFC does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Finance Division. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. There are several types of transactions that are reported in the financial statements as interfund items. Transactions that would be treated as revenue, expenditures or expenses if they involved organizations external to the governmental unit, like the sale of water from the water and sewer fund to various functions of the general fund, are accounted for as revenue and expenditures or expenses in the funds involved. Transactions that constitute reimbursement to a fund for expenditures or expenses initially made from that fund, which are properly applicable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is being 41 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) reimbursed. Governmental Accounting Standards Board (GASB) Statement 34 also requires that administrative service fees charged to other operating funds to support general services used by the other operating funds (like purchasing, accounting and administration) should be treated as reimbursement transactions and the revenue and expenditures/expenses reduced in the allocating fund. Transfers between funds are included in the results of both governmental and proprietary funds (as other sources/uses in governmental funds). Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds.” Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. These transactions include transfers between funds and interdepartmental service charges. In the government-wide financial statements, only the net interfund activity and balances between governmental activities and business-type activities are shown (reported as “internal balances”). The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The internal service funds are eliminated on an entity-wide basis as per GASB Statement 34. C. Form of presentation – fund financial statements The City reports the following major governmental funds: The general fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. The transportation special revenue fund accounts for the City’s public transit program including activities funded by federal grants and distributions received from the Arizona State Lottery. Additionally, on November 6, 2001, Glendale voters authorized a new half-cent sales tax to pay for transportation projects and programs for all modes of transportation. The Western Loop 101 Public Facilities Corporation (PFC) debt service fund was established to account for the debt service payments on the bonds issued to finance the spring training baseball facility and the note receivable from AZSTA. Subsequently all of the debt held by the PFC was refunded. The remaining activity in the PFC fund is for the note receivable from the AZSTA. The general obligation debt service fund accounts for the resources accumulated through a secondary property tax levy and payments made for principal and interest on long-term general obligation debt of governmental funds. 42 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) The City reports the following major proprietary fund: The water and sewer fund accounts for operations, maintenance and construction projects of the Cityowned water and sewer systems. Additionally, the City reports the following internal service funds: Internal service funds account for risk management, workers’ compensation and employee benefits provided to other departments. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures/expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following funds are presented in the accompanying financial statements: Governmental funds Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City’s expendable financial resources and related liabilities (except those accounted for in proprietary funds) are accounted for through governmental funds. The measurement focus is based upon determination of financial position and changes in financial position rather than upon the determination of net income. The following governmental funds are presented in the accompanying financial statements. General fund: The general fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special revenue funds: Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt service funds: Debt service funds are used to account for the accumulation of financial resources for the payment of general long-term debt principal, interest, and related costs, except the debt service accounted for in the enterprise funds. Debt service funds also include the debt payable from highway user’s gas tax revenues and unrestricted excise tax revenues as well as debt funded by property taxes levied by the City on property located within the City. Capital projects funds: Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Permanent fund: Permanent fund is used to account for financial resources to be used by the cemetery fund. Proprietary funds Proprietary funds are used to account for the City’s ongoing operations and activities, which are similar to those found in the private sector. The measurement focus is based upon the determination of net income. Enterprise funds: Enterprise funds are used to account for operations, including debt service, 1) that are financed and operated in a manner similar to private business enterprises where the intent of the 43 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or 2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The enterprise funds, which the City currently maintains, are the water and sewer, landfill, sanitation, and housing funds. Internal service funds: Internal service funds are used to account for the financing of self-insurance provided by one City department to other City departments on a cost-reimbursement basis. D. Measurement focus and basis of accounting The City-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available except as described below in relation to grants. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the related debt service fund for payments to be made shortly after fiscal year-end. Revenues susceptible to accrual because of their availability include property tax, sales tax, highway user’s tax, state shared sales tax, vehicle license tax, and interest earned on investments. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the decision to accrue depends on the terms of the arrangement or agreement. Generally, these resources are reflected as revenue at the time of receipt or earlier if they meet the available criterion. Certain grant revenues are recognized based on expenditures recorded. Resources that have been received before time requirements are met but after all other eligibility requirements have been met are recorded as a deferred inflow. However, resources transmitted before time requirements are met but after eligibility requirements have been met are recorded as deferred outflows. This practice is defined and supported by GASB Statement 63, as it pertains to Financial reporting of deferred outflows of resources, deferred inflows of resources and net position. E. Statement of cash flows The City considers short-term investments (including restricted assets) in the State of Arizona Local Government Investment Pool (LGIP), mutual fund-money market, U.S. Treasury bills and notes with original maturities of three months or less at acquisition date to be cash equivalents. 44 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) F. Interfund transactions Interfund transactions, consisting of services performed for other funds or costs billed to other funds are treated as expenditures in the fund receiving the services and as a reimbursement reducing expenditures in the fund performing the services, except for sales of water to other City departments, which are recorded as revenue in the Water Enterprise funds. In addition, operating transfers are made between funds to shift resources from a fund legally authorized to receive revenue to a fund authorized to expend the revenue. Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is classified as due to/from other funds (current portion of interfund loans) and advances to/from other funds (noncurrent 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. G. Inventories and prepaid items Inventories of the governmental and enterprise funds consist primarily of expendable supplies held for consumption. These inventories are maintained on a perpetual system verified through cyclical physical counts and are valued using a weighted average cost. Generally, expenditures are recorded at the time inventories are used (i.e., the consumption method) for both GAAP reporting and budgetary purposes. However, the City postage inventory is recorded as expenditure at time of purchase (i.e., the purchase method) for budgetary purposes. At June 30, 2014, the postage portion of the general fund supplies inventory was $16. Certain expenditures are recorded for financial reporting purposes as prepaid items. Special reporting treatment is applied to governmental fund inventories and prepaid items to indicate that they represent amounts that are not in spendable form, even though they are a component of current assets. Such amounts are presented as a component of non-spendable fund balance. H. Restricted assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net position, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants and the escrow agreement. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. Restricted assets also include cash held at the Maricopa County Treasurer for the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO funds are limited by state and federal law to qualified expenses related to fighting and preventing drug use and organized crime. I. Capital assets The City has chosen not to apply the modified approach to any networks or subsystems of infrastructure assets. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City) are defined as assets with an initial, individual cost of more than $5 and an estimated useful life greater than three years. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. 45 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives 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. The total interest expense incurred by the enterprise funds during the current fiscal year was $10,189. In addition, $1,764 was included as part of the cost of capital assets under construction in connection with water and sewer projects. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Improvements other than buildings Infrastructure Machinery and equipment Automotive equipment Software Computer equipment Useful Life (Years) 30 10-20 10-100 5-8 6-8 3 3-5 Capital assets transferred between funds are transferred at their carrying value (cost less accumulated depreciation) as of the date of the transfer. J. Water rights The City has entered into a lease agreement with Salt River Pima-Maricopa Indian Community (SRPMIC) for the rights to 1,814 acre-feet of water each year through 2099. These rights, costing $2,693, are being amortized over 40 years on a straight-line basis starting January 1, 2000. Current year amortization was $67. The net book value of water rights as of June 30, 2014, is $1,715. In addition, the City will be responsible for paying for the cost of water delivered each year. The City participates in the Plan Six cost sharing agreement to construct the Waddell Dam on the Agua Fria River and modify the Roosevelt and Stewart Mountain Dams on the Salt River. The parties to this agreement include the United States government, State of Arizona, Central Arizona Water Conservation District, Salt River Project, and the cities of Phoenix, Chandler, Glendale, Mesa, Scottsdale, Tempe and Tucson. The federal government has determined that this agreement does not constitute a joint venture. As of June 30, 2014, the City has capitalized payment of $4,463 for these water rights. Current year amortization was $112. The net book value of these water rights as of June 30, 2014, is $4,017. The City purchased Central Arizona Project water rights as part of the Salt River Pima-Maricopa Indian Community Water Rights Settlement in November 2007. These rights, as of June 30, 2014, costing $2,027, are a permanent right and are considered to have an indefinite useful life. As such, they are not amortized; therefore, cost and net book value are equal to $2,027. K. Governmental fund balance components The City has implemented GASB No. 54 fund balance reporting and governmental fund type definitions. The components of governmental fund balance consist of the following: Non-spendable amounts are portion of net resources that cannot be spent because of their form such as inventories and prepaid items. Also included are portion of net resources that cannot be spent because 46 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) they must be maintained intact pursuant to legal and contractual requirements such as the cemetery permanent fund. Restricted are amounts that are subject to externally enforceable legal restrictions imposed by parties outside the government such as creditors, grantors, contributors, and other governments through laws and regulations. Examples of restricted fund balance are amounts held to pay for bonded construction projects, debt service, and excise tax revenues collected for voter approved transportation expenditures. Committed are amounts that are constrained by limitations imposed by the highest level of decision making authority, namely Mayor and Council and require approval by the same level of authority through an ordinance to remove. Amounts must be committed prior to the fiscal year end. An example of committed fund balance is amounts for artwork. Assigned are amounts that are constrained by limitations imposed by management based on the intended use of the funds. The city manager and finance director are given authority to assign funds as needed through the financial policies adopted in the annual Budget Book approved by Mayor and Council. Examples include amounts intended for computer replacement or telephone or equipment management services. Unassigned are amounts for any other purpose. If resources were not assigned, they could not be properly reported in fund other than the general fund. Therefore, only the general fund can report a positive amount of unassigned fund balance. Any governmental fund in a deficit position could report a negative amount of unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, unrestricted resources are considered spent before restricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. On the government-wide financial statements, only restrictions imposed by external sources are shown as restricted net position. L. Net position The government-wide and proprietary fund financial statements use a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Position – This category represents net position that has external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose. M. Property tax The City levies taxes on real and personal property located within its boundaries. Property values are assessed by the Maricopa County Tax Assessor. The tax levy is then approved by the State of Arizona Property Tax Oversight Commission. The County Treasurer bills and collects property taxes and remits them to the City monthly. City property tax revenues are recognized when levied to the extent that they 47 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) are received within the current period, or soon enough thereafter (within 30 days of year-end), to pay liabilities of the current period. Remaining collectible taxes are accrued and reflected as deferred inflows of resources. Property Tax Calendar Lien date Levy (assessment) date (third Monday in August) Due dates: First half of assessment Second half of assessment Penalties and interest added (collection dates): First half of assessment Second half of assessment January 1, 2013 August 19, 2013 October 1, 2013 March 1, 2014 November 1, 2013 May 1, 2014 The City currently levies less than the maximum allowed by State Statutes for primary property taxes. The City is permitted to levy an increase of two percent over the previous year’s maximum allowable primary levy plus an increased dollar amount due to a net gain in property not taxed the previous year. The secondary property tax levy is made for the purpose of retiring the principal, interest and servicing fees on bonded indebtedness. The City may levy the amount deemed necessary to meet its bonded debt service requirements. Assessed values are established by the Maricopa County Tax Assessor each year on a uniform basis ratio to full cash value of each property class as required by State Statutes. The distribution of the City’s levy (tax rate per $100 assessed value) to its funds for the year ended June 30, 2014, is as follows: Fund General fund General obligation debt service fund Total Rate 0.50 1.79 $ 2.29 $ N. Compensated absences Vacation time is accumulated up to a maximum of 10 workweeks and compensatory time is earned in lieu of cash payment for overtime. Both vacation and compensatory time can either be taken as time off from work, within certain limitations, or may be payable to employees upon termination or retirement. Employees who have ten or more years of service will receive upon retirement 100% of up to 160 hours of vacation accrued. Any remaining vacation time above 160 hours will be 100% contributed to a mandatory Retiree Health Savings plan for the employee. Employees separating from the City receive 100% of accrued vacation time. Sick leave is accumulated without limit and can be used in the event of an illness of the employee or their immediate family. Accumulated sick leave can be converted to a cash benefit on a biannual basis for employees based on one-third of the average hourly rate the last 36 months. Employees must maintain a minimum sick leave balance on the books. Employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Employees who separate from service and have five or more years of service will receive one-third of their sick leave balance based on their average hourly wage over the last 36 months in a cash payout. Represented Fire and Police MOU employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their 48 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) average hourly wage over the last 36 months. Represented Fire and Police MOU employees who retire are paid 100% of accrued vacation time. The current portion of the liability for compensated absences recorded in the governmental fund is equal to: 1) vacation and compensatory time taken and paid during the thirty days following the year ended June 30, 2014, and 2) sick leave, taken and paid for illness during that period, paid to terminating employees or paid under the optional annual declaration. Long-term liabilities of governmental funds are not shown on the fund financial statements. All of the outstanding vacation, compensatory time, and sick leave are recorded as a liability on the government-wide financial statements, and the proprietary fund financial statements, according to payment policy. O. Deferred outflow and deferred inflow of resources Resources transmitted before time requirements are met, but after all other eligibility requirements have been met, are reported as deferred outflows. Reacquisition costs associated with bond refunding is an example of a deferred outflow of resources. Resources received before time requirements are met, but after all other eligibility requirements are met, are recorded as deferred inflows. Certain grant receipts is an example of deferred inflow of resources. Amounts that are reported as deferred outflows are shown as a separate balance sheet section following the assets. Similarly, amounts shown as deferred inflows are shown in a separate balance sheet section following liabilities. P. 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 position. Bond premiums and discounts are reported as a long-term liability and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Q. Operating revenues and expenses 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 revenues of the enterprise funds and the City’s internal service funds are charges to customers for sales and services, or housing operational grants from a federal agency. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. 49 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) R. Deferred compensation Voluntary Deferred Compensation Plan for Employees of the City of Glendale, State of Arizona; Restated Plan Document (the “Plan document”) was adopted by the Mayor and City Council on November 10, 1998, and amended on January 8, 2002, to incorporate the Federal Economic Growth and Tax Relief Reconciliation Act of 2001. In addition, the Mayor and City Council adopted a defined contribution deferred compensation plan document on April 9, 2002, under the Internal Revenue Code Section 401(a). Also, during the fiscal year 2011, the employees had available to them the option of deferring compensation in a Roth IRA administered by ICMA Retirement Corporation (ICMA RC). On February 12, 2013 the adoption of a new contract was approved by the Mayor and City Council which allowed the plan to be administered solely by the third-party administrator GREAT WEST LIFE & ANNUITY INSURANCE CO (Great West). Through the Plan document, the City offers its employees a deferred compensation plan that permits them to defer a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 and 401(a) of the Internal Revenue Code, are not available to employees until termination of employment, retirement, death or an unforeseen emergency. Contributions to the plan are administered by the thirdparty administrator, Great West. In compliance with the provisions of the U.S. Internal Revenue Code Sections 457(g) and 401(a), the plan assets are in custodial or trust accounts for the exclusive benefit of the plans’ participants and beneficiaries. The City provides neither administrative services nor investment advice to the plans; therefore, no fiduciary relationship exists between the City and the deferred compensation pension plan. In addition, the plan assets are not included as a fund of the City. Retiree Health Savings (RHS) Plan was originally adopted on July 1, 2008, and amended and restated on February 12, 2013, by Mayor and Council. The purpose of the Plan is to provide certain Employees with an opportunity to receive reimbursement for certain Health Care Expenses as provided in this Plan. It is the intention of the Adopting Employer that the benefits payable under this Plan be eligible for exclusion from the gross income of Participants as provided by Sections 105(b) and 106 of the Code. In addition, it is the intention of the Adopting Employer that the Plan qualify as a Health Reimbursement Arrangement (HRA) under IRS Revenue Ruling 202-41 (June 26, 2002) and IRS Notice 2002-45 (June 26, 2002). The provider for this RHS plan is Educator Benefit Consultants (EBC). The contributions to this Plan are detailed in the Compensated Absences (N) section on this document. S. Investments The City uses the following methods and assumptions to account for its investments: 1. 2. 3. Aside from investments clearly identified as belonging to a specific fund, any unrealized gain/loss resulting from the valuation is recognized within the general fund as investment revenue. Investments are recorded at fair value, which is based on quoted market prices as of the valuation date. Pooled investment income is allocated to various funds monthly based on the average equity balances maintained during the month. Arizona Revised Statutes require the City to deposit certain crime-related forfeitures with the County Treasurer. The County Treasurer determines the fair value of those pooled investments. The structure of the pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer is not subject to custodial credit risk. The City’s investment in LGIP represents shares of the pool’s portfolio. The fair value of each share in the LGIP is one dollar. These shares are not identified with specific investments and are not subject to custodial credit risk. Neither the County nor LGIP are registered with the Securities and Exchange 50 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Commission as investment companies. The State Board of Deposits provides oversight, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the LGIP. There is no regulatory oversight of the County Treasurer’s operations. The net increase in the fair value of investments during the fiscal year ended June 30, 2014, was $231. II. Compliance - Excess of expenditures over appropriations/deficits in fund equity The City ended the fiscal year June 30, 2014, with a deficit fund balance/net position in the following funds: General fund Deficit will be funded with council operating expenditure reductions over the next five fiscal years. $ Employee benefits internal service fund Deficit will be funded by an increase in premiums for fiscal year 2015 and next fiscal year. III. 1,993 4,076 Deposits and investments The City maintains a cash management pool for its cash and cash equivalents in which each fund and/or account or sub-account of a fund participates on a dollar equivalent basis. Deposits At year-end, the carrying amount of the City’s deposits was $38,591 and the bank balances were $39,837. The difference of $1,246 represents deposits in transit, outstanding checks, and other reconciling items. At year-end, all of the City's deposits were covered by Federal depository insurance and collateral held in the City’s name. City deposits held with fiscal agents at June 30, 2014, was $77,161 and were uncollateralized. Investments State Statutes and the City’s investment policy authorize the City to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, repurchase agreements, commercial paper (A-1/P-1 rated), interest-earning money market accounts, certificates of deposit, and the State of Arizona Local Government Investment Pool (LGIP). Investments may not exceed three years to maturity from the date of purchase. The City’s investment in the LGIP is stated at fair value, which also approximates the value of the investment upon withdrawal. As of June 30, 2014, the City had the following investments: Investment Type Commercial paper Corporate bonds U.S. Agencies U.S. Treasuries Arizona LGIP - State Pool Grand total investments Cash deposits Cash with fiscal agents Total deposits and investments 0-1 $ 9,991 15,103 18,022 5,011 38,154 $ 86,281 51 Investment Maturities (in years) 1-2 2-3 $ $ 13,059 12,050 25,063 40,359 20,018 10,014 $ 58,140 $ 62,423 Fair Value $ 9,991 40,212 83,444 35,043 38,154 $ 206,844 38,591 77,161 $ 322,596 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Interest rate risk: As a means of limiting its exposure to interest rate risk the City’s investment policy requires all securities to mature in no more than three years. The City also purchases securities to be laddered with staggered maturity dates. Credit risk: The City’s investment policy requires commercial paper to have a rating of at least A-1 by Standard and Poor’s, P-1 by Moody’s, or F1 by Fitch. Corporate bonds must have a rating of at least A or better by Standard and Poor’s, A2 by Moody’s, or A by Fitch. As of June 30, 2014, the City’s investments were rated by Moody’s Investor Service and Standard & Poor’s as follows: Investment Type U.S. Agencies Arizona LGIP U.S. Treasury Corporate Corporate Corporate Commercial Paper Commercial Paper Corporate Corporate S&P Rating AA+ NR AA+ AAA+ AA+ A-1 A-1+ AA+ A+ Moody's Rating Aaa NR Aaa Aa3 A1 Aaa P-1 P-1 A1 A2 % of Total Investments 40.33% 18.45% 16.94% 10.27% 2.43% 2.42% 2.42% 2.41% 2.38% 1.95% Weighted Average Maturity (Years) 1.16 0.00 1.89 1.40 0.55 1.06 0.00 0.00 1.75 0.62 Concentration of credit risk: The investment policy of the City contains no limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of the total investments are as follows: Issuer State Pool T-Note Total FHLB Total FFCB Total FHLMC Total Investment Type Arizona LGIP U.S. Treasury U.S. Agencies U.S. Agencies U.S. Agencies $ Amount 38,154 35,043 26,808 25,066 21,513 Custodial credit risk: To control custodial credit risk, the City’s investment policy requires all securities and collateral to be held by an independent third party custodian in the City’s name. The custodian provides the City with monthly market values along with original safekeeping receipts. IV. Note receivable On October 22, 2008, the Western Loop 101 Public Facilities Corporation, a blended component of the City, issued $199,750 in third lien excise tax revenue bonds to construct a baseball spring training facility. On October 1, 2009, the City finalized an Intergovernmental Agreement with the Arizona Sports and Tourism Authority (AZSTA) for the Glendale Spring Training Facility Project. The AZSTA agreed to contribute to the City $60,000 for the construction costs plus interest at 4.13% per annum payable semi-annually. A note receivable for the agreed upon contribution amount plus accrued interest on the note in the amount of $17,108 less an allowance for doubtful accounts in the amount of $25,800 has been recorded at June 30, 2014. No payments have been received by the City on the note as of June 30, 2014. At the Glendale City Council workshop session held on August 5, 2014, the AZSTA presentation included projections for the AZSTA to begin making payments to the City in the year 2021. On December 27, 2012, the City of Glendale Municipal Property Corporation, a blended component unit of the City, issued subordinate excise tax revenue bonds to refund the $199,750 third lien excise tax revenue bonds. The issuance of $183,405 in tax-exempt bonds and 52 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) $16,850 in taxable bonds achieved debt service savings and lowered the next five fiscal years’ annual rental payments under the Lease Agreement. V. Capital assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2014, is as follows: Balances June 30, 2013 Governmental activities Non-depreciable assets: Construction in progress Land Artwork Total non-depreciable assets $ Depreciable assets: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total depreciable assets at historical cost Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total accumulated depreciation Total depreciable assets, net Governmental activities capital assets, net $ 98,177 90,307 2,378 190,862 Increase $ 9,878 31 9,909 Balances June 30, 2014 Decrease $ (77,083) (77,083) $ 30,972 90,338 2,378 123,688 387,023 259,453 666,031 86,552 59,546 14,688 44,375 4,229 3,221 39,658 1,564,776 3,899 54,885 4,569 17,942 22 481 529 908 2,804 86,039 (808) (1,150) (1,958) 387,023 263,352 720,916 91,121 77,488 14,710 44,048 4,758 4,129 41,312 1,648,857 (95,097) (106,965) (233,683) (30,810) (6,867) (8,289) (35,333) (3,930) (1,233) (28,222) (550,429) (10,297) (10,046) (22,741) (3,619) (1,003) (490) (2,515) (138) (513) (3,278) (54,640) 808 1,032 1,840 (105,394) (117,011) (256,424) (34,429) (7,870) (8,779) (37,040) (4,068) (1,746) (30,468) (603,229) 1,014,347 31,399 (118) 1,045,628 1,205,209 53 $ 41,308 $ (77,201) $ 1,169,316 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Balances June 30, 2013 Business-Type activities: Non-depreciable assets: Construction in progress - water and sewer Construction in progress - landfill Construction in progress - sanitation Construction in progress - housing authority Land Total non-depreciable assets $ 60,451 319 165 131 26,299 87,365 Increase $ 3,599 446 102 4,147 Depreciable assets: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment Automotive equipment Total depreciable assets at historical cost 16,696 9,183 65,363 114,831 127,848 204,078 137,658 27,609 5,187 5,203 925 20,503 735,084 5,470 1,655 995 45,071 202 831 1,248 798 56,270 Less accumulated depreciation for: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment Automotive equipment Total accumulated depreciation (8,556) (1,245) (20,393) (40,096) (54,019) (81,864) (38,611) (12,737) (2,319) (3,473) (731) (15,503) (279,547) (540) (179) (2,856) (2,510) (3,010) (7,031) (3,986) (705) (104) (287) (1) (1,698) (22,907) 455,537 33,363 Total depreciable assets, net Business-Type activities capital assets, net $ 542,902 54 $ 37,510 Balances June 30, 2014 Decrease $ $ (52,408) (269) (165) (52,842) $ 11,642 496 233 26,299 38,670 (807) (807) 16,696 9,183 70,833 116,486 128,843 249,149 137,860 28,440 5,187 6,451 925 20,494 790,547 788 788 (9,096) (1,424) (23,249) (42,606) (57,029) (88,895) (42,597) (13,442) (2,423) (3,760) (732) (16,413) (301,666) (19) 488,881 (52,861) $ 527,551 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Depreciation was charged to functions/programs as follows: Governmental activities: General Public safety Public works Street maintenance Community services Community environment Total depreciation expense $ 15,612 4,832 12,310 16,807 5,068 11 $ 54,640 Business-Type activities: Water and sewer Landfill Sanitation Housing Total depreciation expense $ $ 20,226 832 1,398 451 22,907 Included in the water and sewer depreciation amount is $179 amortization of water storage rights. VI. Construction commitments The City has active construction projects as of June 30, 2014. The projects include street construction, park facilities, and the construction of additional water and sewer facilities. At year-end the government’s commitments with contractors are as follows: Project General government Community services Public safety Public works Street maintenance Water and sewer facilities Landfill Housing Total primary government Spent-to-Date $ 1,957 318 285 69 28,343 11,642 496 233 $ 43,343 Construction Commitment $ 638 65 1,620 6,643 73 $ 9,039 VII. Self-insurance funds The City is exposed to various risks of loss. Certain of these risks are accounted for within the internal service fund type. A. Risk management On January 1, 1987, the City established a risk management fund for torts, and loss and destruction of assets. The City’s risk management fund purchases excess or commercial insurance as follows: automobile, general and aviation liability, property damage liability, errors and omissions, employment practices liability, employee benefit liability, employee benefits wrongful acts, products completed 55 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) operations hazards, crime coverage with limits up to $10,000, fiduciary liability covering Deferred Compensation Plan and public employees blanket bond covering the Risk Management and Workers’ Compensation Trust Fund Board. Property coverage for damage or destruction of city assets up to $1,000,000 includes builders risk, automobile physical damage, boiler and machinery and cyber. The risk management fund was fully self-insured through June 30, 1998, for tort liability loss. Effective July 1, 1998, the City purchased excess insurance. Currently the excess insurance liability coverage has a $1,000 of self-insured retention. Funds receiving insurance coverage pay monthly premiums to the risk management fund based upon a budget model taking into consideration actuarial analysis and projections, prior loss experience, staffing, and operating budget. Premium payments to insurance carriers are made directly from the risk management fund. Insurance coverage has not been significantly reduced in recent years. B. Workers’ compensation On July 1, 1994, the City established a workers’ compensation fund for work-related injuries to employees. The workers’ compensation fund provides coverage up to a maximum of $850 for each workers’ compensation claim and purchases commercial insurance for claims in excess of $850. Funds receiving insurance coverage pay monthly premiums to the workers’ compensation fund based upon a budget model taking into consideration actuarial analysis and projections prior loss experience, staffing level, and the National Council on Compensation insurance workers’ compensation manual rates. Premium payments to insurance carriers are made directly from the workers’ compensation fund. There have been no settlements paid in excess of insurance in any of the past three years. C. Employee benefits On July 1, 2000, the City established an employee benefits fund to meet future cost increases for healthrelated insurance. Premiums are collected through contributions from employee paychecks and department budgets. Retirees contribute 100% and COBRA participants contribute 100% of premiums for their insurance benefit coverage. Premiums for the medical, vision, dental, and life insurance plans are determined prior to each renewal period by estimating the costs of claims and administration of the plan based on a variety of factors including: the demographics of the group, previous claims history, plan design changes and any new mandated benefits. These insurance benefits are provided through minimum premium and selfinsured insurance plans. The City is responsible for the first $200 in medical claims per individual per plan year. Claims exceeding $200 for an individual are paid by the reinsurance plan. Premiums for the minimum premium medical plan are set prior to the beginning of each plan year equal to 105% of the expected claims liability. Premium payments to insurance carriers are made directly from the fund. There have been no settlements paid in excess of insurance in any of the past three years nor has insurance coverage been significantly reduced in recent years. 56 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) D. Estimated liability Based on information provided by the actuary, liabilities are 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, the effects of specific, incremental claim adjustment expenses, and other allocated claim adjustment expenses. The City’s workers’ compensation self-insurance program liability includes recoveries related to subrogation. Salvage and subrogation are immaterial to both risk management and employee benefits self-insurance programs and are not incorporated into the liability. The risk management trust fund and workers’ compensation self-insurance programs do include a provision for unallocated claim adjustment expenses. The workers’ compensation fund includes payment of Industrial Commission taxes and fees. The City claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and societal factors. The risk management fund and the workers compensation fund are funded to meet a 55% confidence level of the most recent actuarial report. The City reports the estimated liability in net present value dollars using a future investment yield assumption of .51%. These liabilities are reported in the internal service funds at their actuarial determined liability of $11,022 as of June 30, 2014. Changes in the balances of claims liabilities during the past two years are as follows: Risk Management 2014 2013 Unpaid claims, beginning of fiscal year Current year claims and changes in estimate Claims payments $ Balance at fiscal year end $ 4,261 $ (655) (439) 3,167 2,108 Workers' Compensation 2014 2013 $ 3,877 (1,724) $ 4,261 3,151 $ 2,054 (1,499) $ 3,706 4,139 Employee Benefits 2014 2013 $ (74) (914) $ 3,151 1,995 $ 24,333 (22,179) $ 4,149 2,269 22,922 (23,196) $ 1,995 VIII. Leases A. Capital leases The City’s capital lease activity consists principally of leasing various types of heavy equipment for the Fire Department. Additionally, the City has entered into capital leases involving real property for the general fund. The City pledged the Glendale Regional Public Safety Training Facility as collateral for $11,503 in capital leases in May, 2011. Leases vary in terms from 7 to 9 years for fire trucks to 10 years for real property. Current year principal expenditures are $741 for governmental activities. The future minimum lease obligation and net present value of lease payments at June 30, 2014, are as follows: Year Ending June 30 2015 2016 2017 2018 2019 Total minimum lease payments Less: Amount representing interest Present value of net minimum lease payments 57 Governmental Activities $ 1,804 3,359 3,307 3,307 1 11,778 (1,417) $ 10,361 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) The assets acquired through capital leases are as follows: Governmental Activities $ 185 2,367 197 15,395 18,144 (7,291) $ 10,853 Class of Property Equipment Automotive equipment Building Other Less: Accumulated depreciation Total B. Operating lease expenditures The City leases office space and vehicles under various cancelable operating lease agreements expiring at various dates. Certain leases contain provisions for possible future increased rentals based upon changes in the Consumer Price Index. Combined annual rental payments in fiscal year 2013-14 were $178. C. Operating lease revenue The City also leases various City-owned properties and buildings under cancelable and non-cancelable long-term lease agreements through fiscal year 2014 and beyond. The carrying value of leased assets is $335,872 (cost of $484,264 less accumulated depreciation of $148,392). The leased properties and buildings are included as capital assets in the government-wide financial statements. Certain leases contain provisions for future increased revenues based upon changes in the Consumer Price Index. Scheduled minimum revenues for non-cancelable leases for succeeding fiscal years ending June 30 are as follows: Total Fiscal Year Revenues 2015 $ 2,342 2016 2,318 2017 2,327 2018 2,139 2019 2,275 2020 and beyond 52,479 Total $ 63,880 IX. Short-term debt The City did not issue short-term debt for the year ended June 30, 2014. X. Long-term debt A. General obligation bonds (GO) The City 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 the City and are repaid through the City’s levying of property taxes. Retirement of the general obligation bonds in the business-type activities are intended to be paid back by the revenues of the business-type activities. 58 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) B. Revenue bonds Highway User Revenue Fund (HURF) bonds are used to construct street and highway projects. The $3,700 HURF bonds outstanding are special obligations of the City and are secured by taxes, fees, charges or other monies collected by the state and returned to the City pursuant to Title 28, Chapter 18, Article 2, A.R.S. as amended. A special revenue fund called highway user gas tax fund has been set up by the City to collect HURF revenues from the state and transferred to the debt service fund to pay for HURF principal and interest. The total principal and interest remaining on the bonds to be paid is $3,924. The current year principal and interest amounts of $4,355 and $331, respectively, were funded with transfers of $3,696 from HURF fund; and $1,000 from transportation fund. The State Legislature has in the past and may in the future alter the type and/or rate of taxes, fees, and charges as well as allocation of such monies. The transportation revenue bonds are special revenue obligations of the City and are used to construct various transportation projects such as roadway widening, intersection improvements, and right-of-way acquisitions. The $88,015 in bonds outstanding is secured by the City’s pledge of a 0.50% transportation excise tax approved by voters on November 6, 2001. The debt service payments are also secured by the same excise tax. The total remaining principal and interest to be paid to a trustee under a trust agreement is $131,901. The current year revenues of $23,115 collected in the transportation special revenue fund paid the current year principal and interest amounts of $3,125 and $4,201, respectively. For transportation revenue bonds, the pledged revenue coverage covenants in the purchase agreements require the transportation excise taxes received must be equal to or at least one and one-half times the total interest and principal payment required in the current fiscal year. The $253,115 in water and sewer revenue bonds/obligations outstanding has been issued for the construction, acquisition, and equipping of water and sewer facilities and related systems and infrastructure. These are special revenue obligations and are pledged and secured solely by the net revenues of the system. The net revenues of the system consist of revenues collected from customers including development impact fees and interest income less such necessary expenses of operation, maintenance, and repair of the system excluding depreciation, amortization and debt service. The total principal and interest remaining to be paid is $361,138. The current year principal and interest on the bonds were $22,917 and net revenues of the system were $39,189. For water and sewer revenue bond senior obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations. For water and sewer revenue bond subordinate obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations and subordinate obligations. C. Municipal Property Corporation (MPC) bonds In 1982, 2002, 2003, 2006 and 2008 the MPC, a non-profit corporation, issued bonds to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively. On October 19, 1982, July 31, 2002, May 1, 2003, and June 1, 2006, the City entered into a lease purchase agreement with MPC, whereby, the City is purchasing the constructed municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively, from MPC. In addition, on April 1, 2004, the City entered into a lease agreement with the MPC to issue bonds to finance an escrow account to refund certain outstanding City improvement district bonds. In June 2008, the City entered into a lease agreement with the MPC to issue bonds to refund outstanding 2006B bonds. In February 2012, the City entered into a lease agreement with the MPC to issue bonds to 59 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) partially refund outstanding maturities of the bond series 2003, 2004, and 2006. In December 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003 and 2004, and to fully refund outstanding maturities of the Western Loop 101 Public Facilities Corporation bond series 2008. An amount equal to the MPC debt service and related miscellaneous fees, is payable to the MPC in monthly installments by the City. Under the provisions of the purchase agreement, the City has pledged for the payment of the purchase price: 1) all net revenues derived by it from the municipal office complex and arena, and 2) all excise, transaction, privilege and franchise taxes which it currently collects, which it may collect or which are allocated to it by any other governmental unit or municipal corporation, except its share of such amounts which by state law, rule or regulation must be expended for other purposes. However, under no circumstances shall such pledge constitute a general obligation of the City or will the purchase price be payable from the proceeds of ad valorem taxes. The total principal and interest remaining to be paid is $782,482 and the transfers of the MPC debt service fund were $29,496. Excise tax revenues pledged for repayment of MPC was $141,674. The current year principal and interest paid was $29,451. For senior liens, the pledged revenue coverage covenants in the lease agreements require the unrestricted excise taxes received must be equal to or at least three times the senior excise tax obligation payment required in any current fiscal year. The requirement for second liens is the unrestricted excise taxes received must be equal to at least two times the combined total payment on senior excise tax obligations and second lien excise tax obligations in any current fiscal year. D. Changes in long-term liabilities The following is a summary of changes in long-term liabilities reported in the governmental activities financial statements for the year ended June 30, 2014: June 30, 2013 General obligation (GO) bonds Revenue bonds: Highway user revenue Transportation bonds Municipal Property Corporation Total bonds payable $ Other long-term obligations: Capital lease obligations OPEB obligations Compensated absences Claims and judgments Unamortized premium on debt issuance Discount on debt issuance Developer payable obligations Total other long-term obligations Total $ Increases 163,130 $ June 30, 2014 Decreases - $ (15,320) $ 147,810 Amounts Due Within One Year $ 19,010 8,055 91,140 468,875 731,200 - (4,355) (3,125) (9,290) (32,090) 3,700 88,015 459,585 699,110 1,805 3,250 8,745 32,810 11,094 50,993 18,690 9,407 8 2,696 12,916 25,732 (741) (12,454) (24,117) 10,361 53,689 19,152 11,022 1,262 12,576 11,022 25,992 - (1,643) 24,349 1,637 (1,526) 2,873 117,523 239 41,591 62 (38,893) (1,464) 3,112 120,221 26,497 (70,983) $ 819,331 848,723 $ 41,591 $ $ 59,307 General, transportation, and police and fire sales tax special revenue funds typically have been used to liquidate compensated absences in prior years, since most employees engaged in governmental activities are paid from those funds. Paychecks include payment for leave taken during the current pay period. Of the $819,331 in the total liabilities, $735,468 is related to net position for the City’s net investment in 60 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are OPEB obligations, compensated absences, and claims and judgments. No governmental funds cash has been used to fund the net other post-employment benefit obligation (OPEB). The net annual OPEB cost for the current fiscal year was 34.3% funded by the employee benefits internal service fund. This fund receives money from employee contributions as well as general and water and sewer fund contributions. The following is a summary of changes in long-term liabilities reported in the business-type activities financial statements for the year ended June 30, 2014: June 30, 2013 Water and sewer GO bonds Water and sewer revenue/obligation bonds Total bonds payable $ Other long-term obligations: Estimated closure and post-closure costs Unamortized premium on debt issuance OPEB obligations Compensated absences Housing noncurrent liabilities Total other long-term obligations Total $ Additions 5,515 273,080 278,595 $ Reductions - 14,953 213 15,175 11,439 2,992 77 44,636 650 1,749 16 2,628 323,231 $ June 30, 2014 2,628 $ (5,515) (19,965) (25,480) $ (1,036) (1,992) (3,028) $ (28,508) $ 253,115 253,115 Amounts Due Within One Year $ 13,170 13,170 15,166 - 14,139 12,089 2,749 93 44,236 1,036 1,825 2,861 297,351 $ 16,031 Of the $297,351 in total liabilities, $267,254 is included in the calculation of net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are estimated landfill closure and post-closure costs, OPEB obligations, compensated absences, and housing noncurrent liabilities. The enterprise funds had unspent bond proceeds at year end in the amount of $2,634. E. Advance refunded bonds The City issued refunding bonds to defease certain outstanding bonds, thus achieving debt service savings. The City has placed the proceeds from the refunding issues in an irrevocable escrow account with a trust agent, which will provide amounts sufficient for future payment of principal and interest of the issue refunded. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City’s financial statements. Although defeased, the refunded debt from this issue will not be actually retired until the call dates have come due or until maturity if they are not callable issues. Issue Refunded Municipal Property Corporation Bonds Series 2004A Western Loop 101 Public Facilities Corporation Bonds Series 2008C 61 Date Refunded December 27, 2012 Remaining Balance $1,865 December 27, 2012 $13,585 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) F. Bonds payable Bonds payable at June 30, 2014, are comprised of the following: Classified in governmental activities on the government-wide financial statements: Purpose Interest Rate Issued Fiscal Year Ending June 30 Year Series Matures Amount of Original Issue Bonds Outstanding June 30, 2014 GO bonds payable from secondary assessed property taxes Various 1.50-5.00 2003 Various 3.00-5.00 2004 Various 3.50-4.00 2005 Refunding 5.00-5.00 2006 Various 4.00-5.00 2006 Various 4.00-5.00 2007 Various 1.50-5.63 2010 Refunding 4.00-5.00 2011 Total 2018 2019 2015 2015 2021 2022 2030 2022 Revenue bonds payable from highway user revenue funds Streets 2.50-4.00 2004 Streets 4.00-5.00 2006 Total 2014 2016 14,655 15,745 3,700 3,700 2032 109,110 88,015 Revenue bonds payable from the 0.5% transportation sales tax Transportation excise tax 4.00-5.00 2008 Municipal Property Corporation payable from general fund lease payments MPC excise tax 5.00-5.38 2003 2033 MPC excise tax 2003B 1.46-5.58 2003 2033 MPC refunding 4.70-4.70 2004 2033 MPC excise tax 2006A 4.00-5.00 2006 2026 MPC excise tax 2008A 3.00-5.00 2008 2032 MPC excise tax 2008B 5.45-6.16 2008 2033 MPC excise tax 2008C 4.00-5.02 2008 2015 MPC refunding 2012A 3.00-5.00 2012 2021 MPC refunding 2012B 5.00 2013 2033 MPC refunding 2012C 5.00 2013 2038 MPC refunding 2012D 1.30-3.125 2013 2020 Total Total bonds payable recorded in governmental activities Less current portion Long-term portion of bonds payable recorded in governmental activities 62 $ 52,525 36,645 11,960 9,065 29,365 61,000 41,650 38,300 $ 5,055 105,260 7,250 33,250 32,315 52,780 9,140 8,665 39,620 183,405 16,850 4,335 14,615 1,395 2,010 15,985 37,155 36,490 35,825 147,810 5,055 94,620 7,250 24,145 32,220 48,835 1,000 8,665 39,620 183,405 14,770 459,585 $ 699,110 (32,810) 666,300 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Classified in business-type activities on the government-wide financial statements: Purpose Interest Rate Issued Fiscal Year Ending June 30 Year Series Matures Revenue bonds/obligations payable from water and sewer fund Various 4.00-5.00 2004 2014 Various 4.00-5.25 2006 2026 Various 4.25-5.00 2007 2028 Various 3.00-5.00 2008 2028 Various 6.20-6.55 2011 2030 Various refunding 2.00-5.00 2012 2028 Total Bonds Outstanding June 30, 2014 Amount of Original Issue 80,000 80,000 44,500 65,500 25,685 77,635 $ Total bonds payable recorded in business-type activities Less current portion Long-term portion of bonds payable recorded in business-type activities 65,285 35,305 50,930 25,685 75,910 253,115 253,115 (13,170) $ 239,945 The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the secondary assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to 20% of the secondary assessed valuation for supplying such city with water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s unused bonded debt borrowing capacity as of June 30, 2014, is as follows: 6% Capacity to incur bonded debt Less: Bonded debt applicable to limit Unused bonded debt capacity $ $ 68,886 (2,415) 66,471 20% $ $ 229,622 (136,085) 93,537 The various bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, and minimum revenue and bond coverage. The City is in compliance with all such significant limitations and restrictions. 63 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) G. Bonds authorized, issued and unissued Bonds authorized but not fully issued as of June 30, 2014, are shown below: GO bonds Authorized Amount Issued through June 30, 2014 Authorized but Unissued Voter authorized October 20, 1981 Operations center $ $ $ Voter authorized March 10, 1987 Library 6,750 550 6,200 9,698 8,000 1,698 18,215 50,500 4,494 17,873 13,721 32,627 40,910 16,910 24,000 17,000 15,398 53,700 64,801 1,460 3,175 62,966 15,540 15,398 50,525 1,835 6,935 185 6,750 20,554 16,155 102,638 79,065 $ 502,319 $ 10,522 1,518 11,827 139,480 10,032 14,637 102,638 67,238 $ 362,839 Water and sewer Total revenue bonds $ 10,000 10,000 $ - Total bonds $ 512,319 $ 139,480 Voter authorized November 2, 1999 (1) Cultural facility Economic development Governmental facilities Landfill development Library Open spaces Public safety Transit (1) (1) (1) Voter authorized May 15, 2007 Flood control Parks and recreation Public safety Streets and parking Total GO bonds Revenue bonds Voter authorized November 2, 1999 (1) $ 10,000 10,000 $ 372,839 (1) Certain general obligation bonds or revenue bonds can be issued as general obligation bonds, revenue bonds or a combination thereof. 64 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) H. Other debt (developer, notes, long-term) Classified in the governmental activities in the government-wide financial statements: Developer Payable Obligation - On December 1, 2005, the City entered into a development and ground lease agreement with Cabela’s whereby Cabela’s has the option to purchase the City owned property 90 days after the expiration of the 20-year ground lease (option date). In addition, the City entered into a site improvement management agreement on July 1, 2006, whereby Cabela’s accrues a management compensation amount for their actual costs of operation, maintenance, and repair of site improvements. The management compensation amount accrues annually with interest. At the option date Cabela’s can purchase the property at Fair Market Value and receive a credit against the purchase price for the accrued management compensation amount. The remainder of this page left blank intentionally. 65 $ 3,112 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) I. Future year debt service requirements Various Purposes HURF Bonds Transportation Bonds MPC Bonds G.O. Bonds Water and Sewer Revenue Bonds/ Obligations 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total $ 1,953 1,971 3,924 $ 7,326 7,326 7,327 7,330 7,328 7,326 7,329 7,329 7,328 7,328 7,327 7,330 7,329 7,331 7,328 7,326 7,328 7,325 131,901 $ 31,444 31,948 31,430 31,195 33,560 34,657 36,581 36,583 36,585 36,584 36,585 36,586 36,581 36,581 36,585 36,585 36,585 36,583 36,583 22,533 22,532 22,532 22,532 22,532 782,482 $ 25,738 23,318 23,260 22,639 20,283 16,372 15,445 12,675 3,444 3,407 3,370 3,328 3,282 3,234 3,184 3,136 186,115 $ 25,453 25,455 25,444 25,455 25,450 25,083 24,413 24,081 25,293 25,292 25,285 25,289 24,165 20,302 7,411 7,267 361,138 Less interest 224 43,886 322,897 38,305 108,023 513,335 $ 3,700 $ 88,015 $ 459,585 $ 147,810 $ 253,115 $ 952,225 Fiscal Year Ending Principal 66 Total $ 91,914 90,018 87,461 86,619 86,621 83,438 83,768 80,668 72,650 72,611 72,567 72,533 71,357 67,448 54,508 54,314 43,913 43,908 36,583 22,533 22,532 22,532 22,532 22,532 1,465,560 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) The following table discloses the debt service requirements as of June 30, 2014, segregating principal and interest, for the next five years and in five-year increments thereafter. Fiscal Year 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 2035-2038 Total J. Principal 45,980 45,975 45,345 46,570 48,560 236,485 241,280 161,260 80,770 $ 952,225 Interest 45,934 44,043 42,116 40,049 38,061 156,650 97,133 39,991 9,358 $ 513,335 $ Total 91,914 90,018 87,461 86,619 86,621 393,135 338,413 201,251 90,128 $ 1,465,560 $ $ New bonds The City did not issue new bonds in the current fiscal year ending June 30, 2014. XI. Landfill obligations The City operates a municipal sanitary landfill under an Aquifer Protection Permit and Solid Waste Facility Plan approval issued by the Arizona Department of Environmental Quality requiring future closure work and post-closure monitoring. The permit meets federal and state regulations. These laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and post-closure costs as an operating expense in each period based on landfill capacity used. The landfill closure and post-closure care liability at June 30, 2014, calculated below, represents the cumulative amount reported to date based on the use of estimated capacity of the landfill. North Cell South Cell 31,127 - 21,493 19,220 89% Capacity (cubic yards) Capacity used to date Percentage of capacity used Total closure and post-closure costs in present dollars: as of June 30, 2014 as of June 30, 2013 $ 18,059 $ 17,925 $ 16,959 $ 16,833 Closure and post-closure care costs: Amount remaining to be recognized as of June 30, 2014 $ 18,059 $ Liability recognized as of June 30, 2014 $ $ 15,166 - 1,793 These amounts are based on what it would cost to perform all closure and post-closure care in fiscal year 2013-14. The estimated costs are subject to changes due to inflation, deflation, new technology, and 67 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) applicable laws and regulations. Assets are not restricted to fund the obligations. The estimated remaining life of the landfill is approximately 50 years. According to state and federal laws and regulations, the City must comply with the local government financial test requirements that assure the City can meet the cost of landfill closure, post-closure, and corrective action when needed. The City is in compliance with these requirements. XII. Interfund transactions Interfund balances at June 30, 2014, consisted of the following: A. Due to/due from Due to general fund from: Other non-major governmental funds Community development block grant Municipal Property Corporation debt service Other special revenue Other proprietary funds Housing Total due to general fund $ 455 1,064 971 2 $ 2,492 The interfund balances at June 30, 2014, include short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to bond sales or grant reimbursements. All interfund balances outstanding at June 30, 2014, are expected to be repaid within one year. B. Advance to/advance from Advance to general fund from: Water and sewer Landfill Sanitation Total advance to general fund $ 14,850 20,694 3,941 $ 39,485 The sanitation, landfill and water and sewer interfund advances to the general fund were $3,941, $20,694, and $14,850, respectively. The sanitation and landfill portions of the interfund advances are expected to be repaid over 22 years. The water and sewer interfund advance is expected to be repaid over 23 years. The interest rate on the interfund advances is a variable interest rate based on the City’s rate of return on investments. 68 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) C. Interfund transfers Interfund transfers for the year ended June 30, 2014, consisted of the following: Transfers to general fund from: Transportation fund Special Revenue Funds Highway Users Gas Tax Other Special Revenue Funds Capital projects funds Park Bond Construction Streets construction fund Enterprise funds Water and sewer enterprise fund Non-major proprietary fund Total transfers to general fund $ 41 20 6 1 62 145 65 340 Transfers to transportation fund from: General fund Total transfers to transportation fund 900 900 Transfers to non-major special revenue fund from: General fund Total transfers to non-major special revenue fund 208 208 Transfers to non-major debt service funds from: General fund Transportation fund Highway users gas tax Total transfers to non-major debt service funds Transfers to non-major capital projects fund from: Transportation fund Total transfers to capital projects fund Transfers to housing, other non-major proprietary fund from: General fund Total transfers to housing, other non-major proprietary fund Grand total all transfers 29,496 8,331 3,696 41,523 5,733 5,733 274 274 $ 48,978 Transfers are used to: 1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and 3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The interfund transfers are all classified as transfers and are included in the results of operations of both governmental and proprietary funds. 69 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) XIII. Encumbrances The Arizona Revised Statutes allow cities to encumber unused appropriations for up to sixty days after the end of the fiscal year. However, effective July 1, 1987, the City adopted a policy of not recognizing encumbrances at year-end. All appropriations lapse on the last day of the fiscal year. Any outstanding commitments that the City intends to honor are budgeted in the new fiscal year. At June 30, 2014, the City intended to honor $346 of outstanding encumbrances in the new fiscal year. Fund Major: General Transportation Water and sewer Non-Major: Highway Users Gas Tax Police and Fire Sales Tax Other special Revenue Streets Capital Landfill Sanitation Total XIV. $ $ 24 61 71 30 8 31 105 9 7 346 Equity in joint venture The City, along with the cities of Phoenix, Mesa, Scottsdale and Tempe participates in the Sub-Regional Operating Group (SROG), a joint venture. SROG constructs, operates and maintains jointly used facilities including the 91st Avenue Waste Water Treatment Plant (Plant) and certain sewage transportation facilities. The City of Phoenix acts as lead agency, and as such, is responsible for the planning, budgeting, construction, operation and maintenance of the Plant. In addition, the City of Phoenix provides all management personnel and financing arrangements and accepts federal grants on behalf of the participants. Each participant pays for its costs of operation and maintenance based on relative sewage flows and strengths and for purchased capacity in plant and related transportation facilities based on ownership. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2013. The City accounts for its approximate 8.59% investment using the equity method in the water and sewer fund. For the year ended June 30, 2013, the City recognized no change in the joint venture. The City has financed its share of construction costs through the issuance of revenue bonds, development fees and grants. The bonds are collateralized by a pledge of water revenues and are reflected in the financial statements of the water and sewer fund. The joint venture itself has not issued any debt. 70 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Summary of audited financial information on the joint venture as of and for the fiscal year ended June 30, 2013, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets $ 46,822 821,837 868,659 37,272 $ 831,387 Liabilities Net assets Total revenues Total expenses Decrease in net assets $ 51,566 (98,061) $ (46,495) Copies of separate financial statements of the joint venture can be obtained from Arizona Municipal Water Users Association, 4041 North Central Avenue, Phoenix, Arizona 85012. XV. Jointly governed organizations The Regional Public Transit Authority (RPTA) is a voluntary association of local governments, including Glendale, Phoenix, Mesa, Tempe, Scottsdale, and Maricopa County. Its purpose is to ensure that a viable public transportation system is provided as an alternative for regional mobility and to ease the traffic congestion and air pollution caused by over-reliance on the single occupant vehicle. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (AMWUA) is a non-profit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities' interests before the Arizona legislature. In addition, AMWUA contracts with the cities jointly using the 91st Avenue Waste Water Treatment Plant to perform certain accounting, administrative and support services. XVI. Governmental fund balance components and fund type definitions The City has a formally adopted minimum fund balance policy for the general fund. This policy was adopted though the annual budget process. The policy states that the general fund should maintain a minimum unassigned fund balance between 5% and 10% of general fund revenues received less revenues associated with the sporting facilities, certain rental revenues, replacement fund revenues and monies set aside for library, court, art commission, marketing self-sustaining and employee groups divisions. The City has not complied with the minimum fund balance requirement at the end of June 30, 2014, primarily due to the NHL payment of $50 million expensed in the prior years. According to the policy, the deficiency will be replenished over a period not to exceed five years. 71 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) General Nonspendable Inventories and prepaid items Cemetery perpetual care Total Nonspendable Restricted Public transit State drug enforcement U.S. drug enforcement Debt service Court security Court time payments Court computer upgrade HOME program Highway user gas tax Police activities Fire activities Federal stimulus activities Development impact fees Street G.O. bond projects HURF bond projects Fire and police construction Park bond construction Economic development Open space/trails Cultural and historical projects Government facilities Flood control construction Tourism promotion initiatives Other Total restricted Committed Arena/stadium activities Artwork Pool/park repair Other Total committed Assigned Other Total assigned Unassigned fund balance $ $ 600 600 Western Loop 101 Public Facilities General Other Non-Major Total Corporation Obligation Governmental Governmental Transportation Debt Service Debt Service Funds Funds $ 61 61 $ - $ - $ 103 5,637 5,740 $ 764 5,637 6,401 40 138 101 409 688 31,579 31,579 98 98 9,310 9,310 2,888 245 1,050 81 19,542 9,571 1,529 34 12,747 2,704 305 1,929 154 1,123 588 262 69 6,164 269 61,254 31,579 2,888 245 10,458 40 138 101 81 19,542 9,571 1,529 34 12,747 2,704 305 1,929 154 1,123 588 262 69 6,164 409 269 102,929 29 1,058 467 1,554 - - - 123 123 29 1,058 123 467 1,677 (4,835) (1,993) 31,640 98 9,310 202 202 67,319 202 202 (4,835) 106,374 $ 72 $ $ $ $ CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) Enterprise Fund Type WATER AND SEWER FUND $ Restricted for debt service Restricted for revenue bond retirement/replacement and extension Two percent of net water revenues must be, by bond ordinance, reserved for the replacement and extension of the City’s water distribution system, or for the retirement of water revenue bonds. The reservation is only required to the extent that the reserve equals two percent of the value of net capital assets of the water and sewer fund. Total restricted for water and sewer 10,404 $ NON-MAJOR PROPRIETARY FUNDS Net position held by the housing fund may only be used for that purpose. XVII. 20,614 1,686 $ Total restricted for enterprise fund types 10,210 12,090 Employee retirement systems and pension plans A. Plan descriptions The City contributes to the three retirement plans described below. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retiree’s 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 his or her dependents. The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension plan; a cost-sharing multiple-employer defined benefit health insurance premium plan; and a cost-sharing multiple-employer defined benefit long-term disability plan that covers employees of the State of Arizona and employees of participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of ARS Title 38, Chapter 5, Article 2. The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers 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 162 local boards according to the provisions of ARS Title 38, Chapter 5, Article 4. PSPRS is agent for the eligible Glendale Fire and Glendale Police personnel. Deferred Retirement Option Plan (DROP) is a voluntary benefit program of the PSPRS that provides employees access to a lump sum benefit in addition to their monthly retirement benefit when they terminate employment and retire. Employees who became members of the system before January 1, 2012, are eligible to participate once they have 20 years of credited service. Employees who became members of the system on or after January 1, 2012, are not eligible to participate. A member must voluntarily and irrevocably elect to enter into the program with their employer for a period of up to 60 months. During the DROP period, the member must remain as an employee of the 73 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) employer as a full-time paid firefighter or full-time paid certified peace officer. A member cannot transfer to a non-PSPRS position or change employers while in DROP. No member or employer contributions are made to the system for members who have twenty (20) years of credited service prior to January 1, 2012; therefore, no additional years of credited service are accrued on the member's behalf. Members who have twenty (20) years of credited service on or after January 1, 2012, must continue to contribute while in DROP. Effective August 2, 2012, these contributions, along with a possible 2% interest as provided for in 38-844.08 paragraph A.3, will be refunded to the member and included with the DROP payment. The Elected Officials Retirement Plan (EORP) is a cost-sharing multiple-employer defined benefit pension plan and a cost-sharing multiple-employer defined benefit health insurance premium plan that covers State of Arizona and City elected officials and judges, and elected officials of participating cities. The EORP is administered by The Fund Manager of PSPRS according to the provisions of ARS 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. SB 1609 makes change to the existing contributions and benefits structures for the ASRS, PSPRS, and EORP plans. Beginning on July 1, 2012, employers are required to pay an Alternate Contribution Rate (ACR) for retired member who perform services that would otherwise be performed by an employee of the employer. The ACR percentage is calculated as the greater of 2% or two times the “deficit” payment, and calculates the ACR by adding the employer ASRS Contribution Rate to the employer LTD Contribution Rate, and then subtracting the normal cost. The cap for this rate cannot be higher than the employer’s portion of the total ASRS Contribution Rate which is the Defined Benefit plus LTD. HB 2608 closes the Elected Officials’ Retirement Plan (EORP) to new members and established the new Elected Officials’ Defined Contribution Retirement System (EODCRS) effective January 1, 2014, (A.R.S. Title 38, Chapter 5, Article 3.1). In addition to this new plan, the EODCRS Disability Program was also established (A.R.S. Title 38, Chapter 5, Article 3.2). HB 2122, changes some of the provisions of the Elected Officials’ Defined Contribution Retirement System established with HB 2608. This bill was introduced to address previously unforeseen IRS issues with the current provisions of the EODCRS. This bill eliminates the ability of an elected official to choose between the ASRS and the EODCRS. If the elected official is able to return to the ASRS, they are required to return. There is also a retroactivity clause on this bill back to January 1, 2014. The City of Glendale current elected officials were all appointed prior to January 1, 2014, so they remain on the existing EORP plan. The City of Glendale did not have any employees affected by HB 2608 or HB 2122 during fiscal year 2014. HB 2050 eliminates the Arizona State Retirement System eligibility requirements that an employee must be covered by the State’s 218 agreement and repeals the defined contribution retirement plan for those members ineligible for the Arizona State Retirement System or the Public Safety Personnel Retirement System. The City of Glendale has only fire employees that are excluded from coverage under its 218 Agreement. 74 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) B. Financial reports Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS 3300 North Central Avenue Phoenix, Arizona 85012-0250 PSPRS or EORP 3010 East Camelback Road #200 Phoenix, Arizona 85016 (602) 240-2000 or (800) 621-3778 www.azasrs.gov (602) 255-5575 or (877) 925-5575 www.psprs.com C. Funding policy The Arizona State Legislature establishes and may amend contribution rates for active plan members and the City. Cost Sharing Plans. For the year ended June 30, 2014, active ASRS members and the City were each required by statute to contribute at the actuarially determined rate of 11.54% (10.70% for retirement, 0.60% for health insurance premiums, and 0.24% long-term disability) of the members’ annual covered payroll. The ASRS ACR rate was 9.20%. The City’s employer contributions to ASRS for the years ended June 30, 2014, 2013, and 2012 were $6,307, $6,346, and $6,876, respectively, which were equal to the required contributions for the year. The City’s employee contributions to ASRS were equal to the employers required contributions. Agent Plans. For the year ended June 30, 2014, PSPRS members were required by statute to contribute 10.35% of the members’ annual covered payroll, and the City was required to contribute at the actuarially determined rate of 24.54% and 27.98% for Fire and Police, respectively. PSPRS members that have elected to participate in the DROP program contribute 0% for both employee and employer contributions. Members who have elected to participate in the DROP program who have twenty (20) years of credited service on or after January 1, 2012, must continue to contribute 10.35% for the employee contributions with the employer contributing 0%. The PSPRS ACR rates for both Fire and Police were 17.07%. The health insurance premium portion of the contribution for fire and police members was computed as $125 and $280 for the year ended June 30, 2013, respectively. In addition, active EORP members were required by statute to contribute 13.00% of the members’ annual covered payroll. The City was required to remit contributions of 39.62% of the members’ annual covered payroll from July 1 to December 31, 2013, and 23.50% from January 1 to June 30, 2014, as determined by actuarial valuation. The City’s employer contributions to EORP for the years ended June 30, 2014, 2013, and 2012, were $80, $60, and $57, respectively, which were equal to the required contributions for the year. The City’s employee contributions to EORP are determined by actuarial valuations reported to the employer and the local board by the board of trustees. Annual Pension Cost (APC). 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 provides multi-year trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on 1) the plans as understood by the City and plans’ members and include the types of benefits in force at the valuation date, and 2) the pattern of sharing benefit costs 75 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) between the City and plans’ 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 City’s pension cost for Fire and Police for the year ended June 30, 2013, the date of the most recent available actuarial valuation, and related information follow. GASB statement No. 25 supplementary information actuarial methods, rates, and cost. Fire Police Contribution rates: City 22.06% 24.84% Plan members 9.55% 9.55% Annual pension cost $3,863 $7,111 Entry age normal Entry age normal 7.85% 4.50% - 8.50% 4.50% 7.85% 4.50% - 8.50% 4.50% Level percent-of-pay, closed Level percent-of-pay, closed Remaining amortization period** 23 years for unfunded actuarial accrued liability, 20 years for excess 23 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method** 7-year smoothed market 80%/120% market 7-year smoothed market value 80%/120% market Actuarial cost method** Actuarial assumptions**: Investment rate of return Projected salary increases* Includes inflation at* Amortization method** *Does not include payroll of members participating in the deferred retirement option plan (if any). **Actuarial presented summary of methods and assumptions used to determine the employer contribution for fiscal year 2013. D. Three-year trend information for PSPRS Information for the agent plan for PSPRS for Glendale Fire and Police as of the most recent available actuarial valuations for June 30, 2013, follows. Contributions required and contributions made Year Ended June 30 Police 2013 2012 2011 Fire 2013 2012 2011 Percentage of APC Contributed APC $ 7,111 6,243 6,163 100.0 % 100.0 % 100.0 % 3,863 3,280 3,186 100.0 % 100.0 % 100.0 % Includes insurance premium tax, where applicable. 76 Net Pension Obligation $ - CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) E. Schedule of funding progress The following information is presented as an analysis of funding progress excluding health insurance subsidy: Valuation Date 30-Jun Police 2013 Valuation Date 30-Jun Fire 2013 Actuarial Value of Plan Assets $ 108,107 Actuarial Value of Plan Assets $ 88,686 Actuarial Accrued Liability $ 192,310 Funding Liability (Excess) $ 84,203 Actuarial Accrued Liability $ 124,713 Funding Liability (Excess) $ 36,027 Annual Covered Payroll Funded Ratio 56.2% $ 28,336 Annual Covered Payroll Funded Ratio 71.1% $ 18,548 Unfunded Liability as Percentage of Covered Payroll 297.2% Unfunded Liability as Percentage of Covered Payroll 194.2% The EORP, by statute, is a cost-sharing plan. However, because of its statutory construction, in accordance with GASB Statement No. 43, paragraphs 5 and 41, 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 the City as a participating government, is not available. XVIII. Other Post-Employment Benefits (OPEB) A. Plan description The City of Glendale post-employment healthcare plan is a single-employer defined benefit plan administered by the City of Glendale. The plan provides medical, dental, and vision coverage for eligible retirees and their dependents. Retirees can also continue their basic life insurance benefit. Retirees pay their own insurance premiums. In order for employees to be eligible for this benefit, they need 5 years of service if they were hired prior to July 1, 2005, and 10 years of service if they were hired after July 1, 2005. The Mayor and Council have authority each budget year to establish, eliminate, or amend benefit provisions through the annual budget process. A separate report is not provided as the plan financial information is included in the governmental-wide basis and proprietary funds as part of the City of Glendale reporting entity. B. Funding policy The City pays for and reports retiree health care benefits on a pay-as-you-go basis, which is the practice of paying for these benefits as they become due each year. Contributions to the plan by retirees are established at the beginning of each fiscal year through the annual budget process. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. By providing retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. For the fiscal year ending June 30, 2014, the amount of $4,152 was contributed to the plan by active retirees, in the form of current premiums and the City contributed $1,748 (implied subsidy). The required contribution was 4.34% of covered payroll. 77 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) C. Annual OPEB cost and net OPEB obligation The City of Glendale’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), and the amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The City had 1,583 active and 633 retiree members for the plan year ending June 30, 2014. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and any changes in the net OPEB obligation as of June 30, 2014. Normal cost Minimum amortization of unfunded actuarial liability (UAL) Annual required contribution $ 2,677 2,315 4,992 ARC adjustment Interest adjustment to net obligation OPEB cost (2,083) 2,185 5,094 Contributions made Net OPEB obligation beginning of year Net OPEB obligation end of year (1,748) 62,432 65,778 $ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2014 is as follows: Fiscal Year 2014 2013 2012 Annual OPEB Cost $ 5,094 16,106 12,676 Percentage of Annual OPEB Cost Contributed 34.3% 12.0 21.2 Net OPEB Obligation $ 65,778 62,432 48,268 D. Funding status The City’s funding status for OPEB is as follows (determined by an actuarial study): Actuarial valuation date Actuarial value of assets Actuarial accrued liability Unfunded Actuarial Liability (UAL) Funded ratio Annual covered payroll Ratio of UAL to annual covered payroll June 30, 2014 $ $ 69,463 $ 69,463 -% $ 95,562 72.7% June 30, 2012 $ $ 152,974 $ 152,974 -% $ 105,550 144.9% July 1, 2009 $ $ 106,578 $ 106,578 -% $ 109,704 97.2% Multi-year trend information regarding the actuarial value of plan assets increasing or decreasing over time relative to the actuarial accrued liability is available in the Required Supplementary Information on page 82. 78 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) E. Actuarial methods and assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. For June 30, 2014, the last actuarial valuation, the actuarial cost method used is the entry age normal method. A 3.50% pay as you go discount/investment rate was used. No actuarial valuation of assets was done as there were no assets at the valuation date. The amortization method is level percent of payroll amortized over 30 years and the period is open. The healthcare cost trend rate used in the actuarial assumptions averaged 6.5% for the medical and dental plans in fiscal year 2013-2014. No salary or post-retirement benefit increases were projected. XIX. Contingent liabilities and commitments Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the city expects such amounts, if any, to be immaterial. The City is subject to claims and litigation, which arise in the ordinary course of its operations. In the opinion of City management, based on the advice of the City attorney, the resolution of such claims and litigation are believed to either have no material adverse effect on the financial position or the future operations of the City or likelihood of a negative outcome to the City is not determinable. The City, under the memorandum of agreement with the Arizona Sports and Tourism Authority (AZSTA) and B & B Holdings (DBA Arizona Cardinals), irrevocably assigns, transfers, and pledges unrestricted excise taxes collected at the Multipurpose Facility site (Stadium) to AZSTA. In consideration for the pledge of unrestricted excise tax revenues, the AZSTA issued bonds to improve the Stadium infrastructure. The City’s obligation is to make monthly payments to the AZSTA for sales tax payments collected from the site only. The AZSTA bonds do not constitute a legal debt of the City. XX. Implementation of new accounting principles GASB statement No. 67, Financial Reporting for Pension Plans, An Amendment of GASB Statement No.25, improves financial reporting by state and local governmental pension plans. This statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. GASB statement No. 69, Government Combinations and Disposals of Government Operations, provides specific accounting and financial reporting guidance for combinations in the governmental environment. This statement requires the use of carrying values to measure the assets and liabilities in a government merger and requires measurements of assets acquired and liabilities assumed generally to be based upon 79 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2014 (amounts expressed in thousands) their acquisition values. This statement also provides guidance for transfers of operations that do not constitute entire legally separate entities and in which no significant consideration is exchanged. GASB statement No. 70, Accounting and Reporting for Nonexchange Financial Guarantees, improves financial reporting by state and local governments that extend and receive nonexchange financial guarantees. This statement requires a government that extends a nonexchange financial guarantee to recognize a liability when qualitative factors and historical data, if any, indicate that it is more likely than not that the government will be required to make a payment on the guarantee. This statement also requires a government that has issued an obligation guaranteed in a nonexchange transaction to recognize revenue to the extent of the reduction in its guaranteed liabilities. In addition, this statement requires a government that is required to repay a guarantor for making a payment on a guaranteed obligation or legally assuming the guaranteed obligation to continue to recognize a liability until legally released as an obligor. XXI. Subsequent events On October 14, 2014, the Mayor and City Council approved an amendment to an intergovernmental agreement with the City of Phoenix whereby the City of Glendale agrees to purchase 14.2 acres of land near the Camelback Ranch development used for baseball spring training. The total payments will be $3,091 with the last payment being made no later than October 19, 2019. On November 24, 2014, the Mayor and City Council adopted an ordinance to authorize the City Manager or the Chief Financial Officer to refinance the City’s various outstanding excise tax revenue bonds, general obligation bonds, water and sewer revenue bonds, and transportation excise tax revenue bonds. The refinancing must generate a minimum savings, net of all issuance cost, of 2.5%. The refunding bonds are estimated to be sold in January 2015. The remainder of this page left blank intentionally. 80 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION (other than MD&A) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Schedule of Funding Progress June 30, 2014 (amounts expressed in thousands) Three-Year Trend Information for PSPRS The following information is presented as an analysis of funding progress excluding health insurance subsidy: Valuation Date June 30 Fire 2013 2012 2011 Valuation Date June 30 Police 2013 2012 2011 Actuarial Value of Plan Assets $ 88,686 84,891 77,133 Actuarial Accrued Liability Funding Liability (Excess) $ 124,713 119,523 104,035 $ Actuarial Value of Plan Assets Actuarial Accrued Liability Funding Liability (Excess) $ 108,107 102,979 96,829 $ 192,310 182,264 157,063 $ Annual Covered Payroll Funded Ratio 36,027 34,631 26,902 71.1 % 71.0 74.1 $ 18,548 18,406 16,811 194.2 % 188.2 160.0 Unfunded Liability as Percentage of Covered Payroll Annual Covered Payroll Funded Ratio 84,203 79,285 60,234 Unfunded Liability as Percentage of Covered Payroll 56.2 % 56.5 61.6 $ 28,336 29,356 27,576 297.2 % 270.1 218.4 GASB Statement No. 45 Supplementary Information The following information is presented concerning the post-retirement health insurance subsidy. Valuation Date June 30 Fire 2013 2012 2011 Police 2013 2012 2011 Unfund AAL (UAAL) Actuarial Accrued Liability (AAL) $ - $ 2,942 2,902 2,900 $ 2,942 2,902 2,900 0.0 % 0.0 0.0 $ 18,548 18,406 16,811 15.86 % 15.77 17.25 $ - $ 5,603 5,437 5,397 $ 5,603 5,437 5,397 0.0 % 0.0 0.0 $ 28,336 29,356 27,576 19.77 % 18.52 19.57 81 Annual Covered Payroll UAAL as a % of Covered Payroll Actuarial Value of Assets Funded Ratio CITY OF GLENDALE, ARIZONA Schedule of Funding Progress (continued) June 30, 2014 (amounts expressed in thousands) Other Post-Employement Benefits (OPEB) Valuation Date 7/1/2009 6/30/2012 6/30/2014 Actuarial Value of Assets $ - Actuarial Accrued Liability (AAL) $ 106,578 152,974 69,463 Unfund AAL (UAAL) $ 106,578 152,974 69,463 Funded Ratio 0.0 % 0.0 0.0 Annual Covered Payroll $ 109,704 105,550 95,562 UAAL as a % of Covered Payroll 97.2 % 144.9 72.7 The actuarial accrued liability and OPEB cost are significantly lower than the prior valuation. The large increase in retiree contributions have decreased the City’s cost of providing the benefits to the retirees and have reduced current and expected future retiree participation in the plan. In fiscal year 2014 the retiree contributions increased an average of 58% for medical coverage and 48% for dental. Due to the increase in retiree contributions, the assumption for participation rate was also decreased. The remainder of this page left blank intentionally. 82 City of Glendale, Arizona Budgetary Comparison Schedule General Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) 1 of 2 Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income (loss) Proceeds from disposal of assets Loan proceeds Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government Public safety Public works Community services Community environment Street maintenance Contingencies Miscellaneous Debt service: Principal Interest Capital outlay Total charges to appropriations Budgetary fund balance, June 30, 2014 $ Final 20,713 $ 20,713 Variance with Final Budget Positive (Negative) Actual Amounts (budgetary basis) $ 33,348 $ 12,635 91,030 8,672 52,460 31,243 3,336 274 250 3,466 190,731 13,859 (44,788) 180,515 91,030 8,672 52,460 31,243 3,336 274 250 3,467 190,732 14,687 (45,361) 180,771 96,943 9,833 54,005 35,881 3,735 444 140 25 2,543 203,549 340 (30,878) 206,359 5,913 1,161 1,545 4,638 399 170 (110) 25 (924) 12,817 (14,347) 14,483 25,588 33,152 84,658 21,221 14,545 20 938 8,045 2,464 39,795 86,035 21,221 14,608 20 937 2,463 39,090 84,565 19,878 13,586 11 437 2,264 705 1,470 1,343 1,022 9 500 199 2,127 2,206 4,715 174,091 2,124 2,206 4,992 174,401 968 765 2,245 163,809 1,156 1,441 2,747 10,592 6,424 $ 6,370 $ 42,550 $ 36,180 (Continued) 83 City of Glendale, Arizona Budgetary Comparison Schedule (continued) General Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) 2 of 2 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Indirect cost allocation Interest earned on restricted investments not available for appropriation Internal charges for services provided. Proceeds from disposal of assets. Interfund loan from water and sewer Revenue reported on a GAAP basis. Less: Transfers in. Add: Transfers out. Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Principal retirement. Capital outlay funded by long-term debt. Internal charges for services provided. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. The notes to the financial statements are an integral part of this statement. 84 $ 206,359 (33,348) (9,200) 248 (13,039) (140) (25) 929 (340) 30,878 $ 182,322 $ 163,809 (225) 295 (21,763) $ 142,116 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Taxes Intergovernmental Charges for services Investments Proceeds from disposal of assets Miscellaneous revenues Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services Capital outlay Total charges to appropriations Budgetary fund balance, June 30, 2014 $ 29,929 Final $ 29,929 Actual Amounts (budgetary basis) $ 30,306 Variance with Final Budget Positive (Negative) $ 377 22,358 6,490 139 80 2,000 31,067 1,567 (31,808) 30,755 22,358 6,490 140 80 2,000 31,068 1,567 (31,849) 30,715 22,919 3,958 119 114 14 59 27,183 900 (14,105) 44,284 561 (2,532) (21) 34 14 (1,941) (3,885) (667) 17,744 13,569 13,755 6,460 20,215 14,207 5,694 19,901 9,810 2,995 12,805 4,397 2,699 7,096 10,540 $ 10,814 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Proceeds from disposal of assets. Revenue reported on a GAAP basis Less: Transfers in. Add: Transfers out. Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Internal charges for services provided. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. The notes to the financial statements are an integral part of this statement. 85 31,479 $ 20,665 $ 44,284 (30,306) (14) 193 (900) 14,105 $ 27,362 $ 12,805 (6) $ 12,799 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2014 (amounts expressed in thousands) I. Budgetary basis of accounting The City prepares its annual budget on a basis which differs from the GAAP basis. Budgetary comparison schedules for the general and transportation funds are included as required supplementary information to provide a meaningful comparison of actual results to budget on the budget basis. Budgetary comparison schedules for all other funds are presented as other supplemental information after the combining statements. In all cases, the budgetary schedules include a reconciliation of the adjustments required to convert the budgetary revenues and expenditures or change in net assets on a budgetary basis, to revenues and expenditures/expenses or change in net assets on a GAAP basis. II. Budgetary information The City utilizes the following procedures in establishing the budgetary data reflected in the financial statements. 1. 2. 3. 4. 5. 6. III. Prior to the first of June of each year, the City Manager submits to the Mayor and Council a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed operating, capital and debt service expenditures and the means of financing them. The projected beginning budgeted fund balances for each fund are based on preliminary estimates of the June 30th ending actual budget basis fund balances rather than the June 30th ending budgeted fund balances. These two amounts will differ because of differences in actual results for the year versus planned results and by unused contingency appropriations. Prior to July 1, after receiving comments in a public hearing, a tentative budget is adopted by the City Council, which sets an upper-dollar limit for all funds combined, beyond which the City may not increase appropriations. After two weeks of legal advertising, the City Council legally adopts a final budget ordinance, which sets appropriations for each fund. Budget basis expenditures may not exceed appropriations for each fund, except in conjunction with the transfer of contingency funds and/or unused appropriation authority from another fund that is backed by additional revenue or fund balance in the fund receiving the appropriation. Contingency funds are appropriated for several funds as identified in the budget basis schedules and may only be transferred with City Council approval. The City Council may reallocate appropriations through budget amendments, but may not increase total appropriations above the total budget, which was legally adopted for the fiscal year. The City Council may authorize a transfer of unencumbered appropriation balanced within an individual city office, department or agency at any time during the fiscal year. During the last three months of the fiscal year, the City Council may approve transfers among city offices, departments, and agencies as necessary. Interfund transfers (i.e., transfers between funds) must be specifically approved by City Council. Procedures for requesting City Council approval of appropriation transfers and delegation of budget responsibility will be set by the City Manager. Budgetary authorization and spending management controls are employed during the year for all funds. Contingency appropriation The principal purpose of a contingency appropriation is to cover any unforeseen expenditure, which may arise after the budget is adopted. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditures of each program or activity for the ensuing year. Thus, a contingency is essential for budgetary purposes. Contingency appropriation is re-established each fiscal year based on available fund balance and balancing needs of the budget year. The unused balances of contingency appropriations are reflected in the budget basis financial statements. 86 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ COMBINING STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. City of Glendale, Arizona Budgetary Comparison Schedule Western Loop 101 Public Facilities Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Budgetary fund balance, June 30, 2014 Final - RESOURCES (INFLOWS): Miscellaneous revenues Total revenues Amounts available for appropriation $ $ Actual Amounts (budgetary basis) - - $ $ - $ 40 40 98 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Miscellaneous. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 87 58 Variance with Final Budget Positive (Negative) 98 58 40 40 98 $ 98 $ 98 (58) (40) $ - City of Glendale, Arizona Budgetary Comparison Schedule General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Taxes Intergovernmental Total inflows Add: Transfers in Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 $ 12,746 Actual Amounts (budgetary basis) Final $ 12,746 $ 12,641 Variance with Final Budget Positive (Negative) $ (105) 18,977 648 19,625 209 32,580 18,978 648 19,626 209 32,581 18,775 601 19,376 32,017 30 30 7 23 15,320 7,380 22,730 15,320 7,380 22,730 15,320 7,380 22,707 23 9,850 $ 9,851 $ 9,310 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 88 (203) (47) (250) (209) (564) $ $ (541) 32,017 (12,641) $ 19,376 $ 22,707 $ 22,707 This page left blank intentionally. 89 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for revenues from specific taxes or other earmarked revenue sources, which by law are designated to finance particular functions or activities of government and which, therefore, cannot be diverted to other uses. Community Development Block Grants Fund This fund accounts for a series of ongoing entitlements received directly from the U. S. Department of Housing and Urban Development (HUD). This fund also includes the HUD Rental Rehabilitation and HOME programs. Highway User Gas Tax Fund This fund accounts for capital outlay and maintenance of municipal streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by state-shared fuel taxes. Police and Fire Sales Tax Fund This fund accounts for police and fire activities funded by a .5 percent sales tax levied directly by voter initiative. Federal Stimulus Fund This fund accounts for the three-year federal stimulus grants that were started in FY 2010 and were allocated to the City of Glendale as part of the American Reinvestment and Recovery Act (ARRA), the federal stimulus package. Other Special Revenue Fund This fund accounts for various activities, including the airport, miscellaneous grants, and other recreation programs. Debt Service Funds Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Highway User Debt Service Fund This fund accumulates monies for payment of all street and highway revenue bonds of the City. Highway user fuel taxes are transferred from other funds to fund this debt. Municipal Property Corporation Debt Service This fund accounts for building lease payments received from the general fund and subsequently paid as debt service to Municipal Property Corporation bondholders. Transportation Debt Service This fund accumulates monies for payment of the transportation revenue bonds. Transportation excise taxes are transferred from a special revenue fund to fund this debt. 90 Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Development Impact Fees Fund This fund accounts for fees covered by Chapter 28, Article VI of the Municipal Code and is restricted in use by ARS 9-463.05. The fees are used exclusively to provide the necessary public facilities and services for development. Residential development impact fees may be spent only in the district (residential development district, not political district) in which they are collected. Streets Construction Fund This fund accounts for the construction of streets, sidewalks, streetlights, traffic signals, and street landscaping funded through GO and revenue bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. In addition, this fund accounts for transportation projects funded by transportation excise tax revenue bonds issued on October 27, 2007. Fire and Police Construction Fund This fund accounts for the construction of fire and police department facilities. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. Parks Bond Construction Fund This fund accounts for the construction of parks and recreation improvements. Other Construction Fund This fund accounts for the construction of various City projects. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999, and the Federal Aviation Administration.        Flood control facilities Library Transit projects Economic development Open space/trails Government facilities Cultural facilities Permanent Fund Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting City’s programs. Cemetery Perpetual Care Fund This fund is used to account for the revenues received by the City from the sale of cemetery lots and other related services. 91 City of Glendale, Arizona Combining Balance Sheet Non-Major Governmental Funds June 30, 2014 (amounts expressed in thousands) Special Revenue Funds Community Development Block Grants ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources Fund balances: Nonspendable Restricted Committed Assigned Total fund balances Total liabilities, deferred outflows of resources and fund balances $ 92 - Police and Fire Sales Tax Highway User Gas Tax $ 18,603 $ 10,130 Federal Stimulus $ 145 Other $ 1,232 4,066 814 4,880 1,204 103 19,910 2,163 12,293 145 1,190 4,993 7,415 251 28 4 455 4,061 4,799 247 18 265 921 921 111 111 626 1 10 1 971 9 2,013 3,631 - - 272 - - 81 81 4,880 103 19,542 19,645 19,910 11,100 11,100 12,293 34 34 145 3,459 123 202 3,784 7,415 $ $ $ $ Debt Service Funds Municipal Property Corporation Highway Debt User Transportation Service Development Impact Fees $ $ $ 35 $ 2,025 $ 6 Permanent Fund Capital Project Funds 12,750 Streets Construction $ 3,520 Fire and Police Construction $ 1,929 Parks Bond Construction $ 160 Other Construction $ 8,258 Cemetery Perpetual Care Total Non-Major Governmental Funds $ $ 5,637 64,430 4,520 4,555 18,024 20,049 5,225 5,231 12,750 3,520 1,929 160 8,258 123 5,760 6,352 3,208 103 32,762 106,855 165 4,355 4,520 1,064 11,476 6,500 19,040 2,100 3,125 5,225 3 3 158 410 568 - 6 6 26 3 23 52 - 2,238 29 3 32 1 2,490 9 6,618 13,741 13,980 39,141 - - - - - - - - 123 395 35 35 4,555 1,009 1,009 20,049 6 6 5,231 12,747 12,747 12,750 2,952 2,952 3,520 1,929 1,929 1,929 154 154 160 8,206 8,206 8,258 5,637 5,637 5,760 5,740 61,254 123 202 67,319 106,855 $ $ $ $ $ 93 $ $ $ $ City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed is thousands) Special Revenue Funds REVENUES Taxes and special assessments Licenses and permits Intergovernmental Charges for services Investments Local Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Capital lease proceeds Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 $ 4,079 735 4,814 Police and Fire Sales Tax Highway User Gas Tax Community Development Block Grants $ 12,790 1 12,791 $ Federal Stimulus 19,766 194 19,960 $ Other 257 257 $ 1 5,674 1,020 22 18 664 7,399 4,582 - 7,883 - 19,546 - 149 23 3,822 7 1,914 1,233 - 217 4,799 15 7,898 259 19,805 75 247 1,587 8,563 15 4,893 155 10 (1,164) 8 8 15 (3,716) (3,701) - - 12 193 (6) 199 23 1,192 155 10 (965) 58 81 $ 94 18,453 19,645 $ 10,945 11,100 $ 24 34 $ 4,749 3,784 Highway User $ $ - Debt Service Funds Municipal Property Corporation Debt Service Transportation $ 31 31 $ - Capital Projects Funds Development Impact Fees Streets Construction $ $ 1,688 44 60 1,792 5 16 21 Fire and Police Construction $ - Permanent Fund Parks Bond Construction $ - Other Construction $ 2 2 Cemetery Perpetual Care $ 21 21 Total Non-Major Governmental Funds $ 19,766 1,689 22,800 1,020 94 18 1,701 47,088 - 27 2 49 156 - 26 75 32 - - 4 9 - 142 3 - - 221 23,368 19 2,294 5,815 7,915 52 4,355 331 4,686 6,500 22,951 29,478 3,125 4,201 7,328 205 6,567 6,700 254 254 115 128 38 183 - 13,980 27,483 9,127 90,274 (4,686) (29,447) (7,328) 1,587 (6,679) (254) (128) (181) 4,696 4,696 8 29,496 29,504 7,331 7,331 - 5,733 (62) 5,671 10 57 3 1,587 (1,008) 25 35 $ 952 1,009 $ 3 6 $ 11,160 12,747 $ 3,960 2,952 95 - (1) (1) (254) $ 2,183 1,929 - (129) $ 283 154 (181) $ 8,387 8,206 21 (43,186) - 8 20 47,464 (3,785) 43,707 21 $ 5,616 5,637 521 $ 66,798 67,319 City of Glendale, Arizona Budgetary Comparison Schedule Community Development Block Grants Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Actual Amounts (budgetary basis) Final - $ - $ 64 Variance with Final Budget Positive (Negative) $ 64 RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation 6,328 1,413 7,741 7,741 6,328 1,413 7,741 7,741 4,079 735 4,814 4,878 (2,249) (678) (2,927) (2,863) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community environment Capital Outlay Total charges to appropriations 7,741 7,741 7,741 7,741 4,585 208 4,793 3,156 (208) 2,948 Budgetary fund balance, June 30, 2014 $ - $ - $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balance - governmental funds. Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Community environment. Capital outlay. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 96 85 $ 85 $ 4,878 (64) $ 4,814 $ 4,793 (3) 9 $ 4,799 City of Glendale, Arizona Budgetary Comparison Schedule Highway Users Gas Tax Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 18,751 Final $ 18,751 Actual Amounts (budgetary basis) $ 18,528 RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Add: Transfers in Amounts available for appropriation 12,791 12,791 31,542 12,791 12,791 31,542 12,790 1 12,791 15 31,334 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Street maintenance Capital outlay Transfers out Total charges to appropriations 11,746 29 3,696 15,471 9,072 28 3,716 12,816 7,880 15 3,716 11,611 Budgetary fund balance, June 30, 2014 $ 16,071 $ 18,726 $ 19,723 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers in. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Street maintenance. Transfers out Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 97 Variance with Final Budget Positive (Negative) $ (223) (1) 1 15 (208) 1,192 13 1,205 $ 997 $ 31,334 (18,528) (15) $ 12,791 $ 11,611 3 (3,716) $ 7,898 City of Glendale, Arizona Budgetary Comparison Schedule Police and Fire Sales Tax Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 6,995 Final $ 6,995 Actual Amounts (budgetary basis) $ 11,104 Variance with Final Budget Positive (Negative) $ 4,109 RESOURCES (INFLOWS): Taxes Miscellaneous Total revenues Amounts available for appropriation 19,914 234 20,148 27,143 19,914 235 20,149 27,144 19,573 176 19,749 30,853 (341) (59) (400) 3,709 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public safety Capital outlay Total charges to appropriations 22,421 120 22,541 22,421 120 22,541 19,687 259 19,946 2,734 (139) 2,595 Budgetary fund balance, June 30, 2014 $ 4,602 $ 4,603 $ 10,907 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Revenue reported on a GAAP basis. Miscellaneous. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Salaries payable. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 98 $ 6,304 $ 30,853 (11,104) 193 18 $ 19,960 $ 19,946 (141) $ 19,805 City of Glendale, Arizona Budgetary Comparison Schedule Federal Stimulus Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Actual Amounts (budgetary basis) Final 17 $ 17 $ 24 Variance with Final Budget Positive (Negative) $ 7 RESOURCES (INFLOWS): Intergovernmental Total revenues Amounts available for appropriation 33 33 50 33 33 50 233 233 257 200 200 207 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services Capital outlay Total charges to appropriations 50 50 270 270 149 75 224 121 (75) 46 Budgetary fund balance, June 30, 2014 $ - $ (220) $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Miscellaneous. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 99 33 $ 253 $ 257 $ 257 $ 224 23 $ 247 City of Glendale, Arizona Budgetary Comparison Schedule Other Special Revenue Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 3,382 Final $ 3,382 Actual Amounts (budgetary basis) $ 4,766 Variance with Final Budget Positive (Negative) $ 1,384 RESOURCES (INFLOWS): Licenses and permits Intergovernmental Charges for services Investments Proceeds from equipment disposal Local Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 16,961 1,116 8 8,199 26,284 251 29,917 16,941 1,116 8 8,199 26,264 251 (6) 29,891 1 5,674 993 22 12 18 664 7,384 193 (6) 12,337 1 (11,267) (123) 14 12 18 (7,535) (18,880) (58) (17,554) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public safety Public works Community services Community environment Capital outlay Capital outlay Total charges to appropriations 10,886 97 2,313 1,328 15,082 29,706 10,666 97 2,585 1,328 14,810 29,486 3,821 7 1,888 1,233 1,587 8,536 6,845 90 697 95 14,810 (1,587) 20,950 Budgetary fund balance, June 30, 2014 $ 211 $ 405 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Proceeds from equipment disposal. Charges for services. Less: Transfers in. Add: Transfers out. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Salaries payable. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 100 3,801 $ 3,396 $ 12,337 (4,766) (12) 27 (193) 6 $ 7,399 $ 8,536 27 $ 8,563 City of Glendale, Arizona Budgetary Comparison Schedule Highway User Debt Service Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 Actual Amounts (budgetary basis) Final - $ - $ 25 Variance with Final Budget Positive (Negative) $ 25 4,696 4,696 4,696 4,696 4,696 4,721 25 10 10 - 10 4,355 331 4,696 4,355 331 4,696 4,355 331 4,686 10 $ - $ - $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers in. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 101 35 $ 35 $ 4,721 (25) (4,696) $ - $ 4,686 $ 4,686 City of Glendale, Arizona Budgetary Comparison Schedule Municipal Property Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Proceeds from equipment disposal Miscellaneous revenues Total revenues Add: Transfers in Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Miscellaneous Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 $ 2,111 Actual Amounts (budgetary basis) Final $ 2,111 $ 952 Variance with Final Budget Positive (Negative) $ (1,159) 29,496 31,607 29,496 31,607 8 31 39 29,496 30,487 8 31 39 (1,120) 45 44 9 18 (9) 26 6,500 22,951 29,496 6,500 22,951 29,495 6,500 22,951 29,478 2,111 $ 2,112 $ 1,009 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers in. Less: Proceeds from equipment disposal. Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 102 17 $ (1,103) $ 30,487 (952) (29,496) (8) $ 31 $ 29,478 $ 29,478 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Debt Service Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Total revenues Add: Transfers in Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Miscellaneous Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 Actual Amounts (budgetary basis) Final - $ - $ 3 Variance with Final Budget Positive (Negative) $ 3 7,331 7,331 7,331 7,331 7,331 7,334 3 5 5 2 3 3,125 4,201 7,331 3,125 4,201 7,331 3,125 4,201 7,328 3 $ - $ - $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers in. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 103 6 $ 6 $ 7,334 (3) (7,331) $ - $ 7,328 $ 7,328 City of Glendale, Arizona Budgetary Comparison Schedule Development Impact Fees Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Actual Amounts (budgetary basis) Final 10,805 $ 10,805 RESOURCES (INFLOWS): Licenses and permits Investments Miscellaneous Total revenues Less: Transfers out Amounts available for appropriation 706 39 745 (212) 11,338 706 39 745 (212) 11,338 CHARGES TO APPROPRIATIONS (OUTFLOWS): General administration Public safety Community services Capital outlay Total charges to appropriations 195 1,747 8,123 1,273 11,338 197 1,750 8,134 1,257 11,338 Budgetary fund balance, June 30, 2014 $ - $ - $ 11,162 $ 1,688 44 60 1,792 $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 357 12,954 982 5 60 1,047 212 1,616 49 156 205 148 1,750 7,978 1,257 11,133 12,749 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 104 Variance with Final Budget Positive (Negative) $ 12,749 $ 12,954 (11,162) $ 1,792 $ 205 $ 205 City of Glendale, Arizona Budgetary Comparison Schedule Streets Construction Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Final 3,425 $ 3,425 Variance with Final Budget Positive (Negative) Actual Amounts (budgetary basis) $ 3,960 $ 535 RESOURCES (INFLOWS): Investments Miscellaneous Long-term debt issued Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 1 15,000 15,001 22,810 (81) 41,155 1 15,000 15,001 22,810 (80) 41,156 5 16 21 5,733 (62) 9,652 4 16 (15,000) (14,980) (17,077) 18 (31,504) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Community services Street maintenance Capital outlay Total charges to appropriations 702 916 281 39,256 41,155 655 964 281 41,167 43,067 26 75 32 6,567 6,700 629 889 249 34,600 36,367 Budgetary fund balance, June 30, 2014 $ - $ (1,911) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers In. Add: Transfers out. Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 105 $ 2,952 $ 4,863 $ 9,652 (3,960) (5,733) 62 $ 21 $ 6,700 $ 6,700 City of Glendale, Arizona Budgetary Comparison Schedule Fire and Police Construction Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Variance with Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Actual Final 2,069 $ 2,069 Final Budget Amounts Positive (budgetary basis) (Negative) $ 2,183 $ 114 RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation 1 1 - (1) 1 1 - (1) 2,070 2,070 2,183 113 1,747 1,747 - 1,747 323 323 254 69 2,070 2,070 254 1,816 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety Capital outlay Total charges to appropriations Budgetary fund balance, June 30, 2014 $ - $ - $ 1,929 $ 1,929 $ 2,183 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,183) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ - $ 254 $ 254 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 106 City of Glendale, Arizona Budgetary Comparison Schedule Parks Bond Construction Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Final 279 $ Variance with Final Budget Positive (Negative) Actual Amounts (budgetary basis) 279 $ 283 $ 4 RESOURCES (INFLOWS): Less: Transfers out Amounts available for appropriation 279 279 (1) 282 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Public works Capital outlay Total charges to appropriations 152 127 279 16 263 279 4 9 115 128 Budgetary fund balance, June 30, 2014 $ - $ - $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Add: Transfers out. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 107 154 (1) 3 12 (9) 148 151 $ 154 $ 282 (283) 1 $ - $ 128 $ 128 City of Glendale, Arizona Budgetary Comparison Schedule Other Construction Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Final 7,222 $ Variance with Final Budget Positive (Negative) Actual Amounts (budgetary basis) 7,222 $ 8,384 $ 1,162 RESOURCES (INFLOWS): Investments Total revenues Less: Transfers out Amounts available for appropriation 3 3 (26) 7,199 3 3 (26) 7,199 2 2 8,386 (1) (1) 26 1,187 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Community services Public Works Capital outlay Total charges to appropriations 4,724 5 2,470 7,199 4,913 5 2,281 7,199 142 3 38 183 (142) 4,913 2 2,243 7,016 Budgetary fund balance, June 30, 2014 $ - $ - Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 108 $ 8,203 $ 8,203 $ 8,386 (8,384) $ 2 $ 183 $ 183 City of Glendale, Arizona Budgetary Comparison Schedule Cemetery Perpetual Care Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ Actual Amounts (budgetary basis) Final 5,618 $ 5,618 $ 5,616 RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation 20 20 5,638 20 20 5,638 21 21 5,637 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public works Total charges to appropriations 5,638 5,638 5,638 5,638 - Budgetary fund balance, June 30, 2014 $ - $ - $ 5,637 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 109 Variance with Final Budget Positive (Negative) $ (2) 1 1 (1) 5,638 5,638 $ 5,637 $ 5,637 (5,616) $ 21 This page left blank intentionally. 110 NON-MAJOR PROPRIETARY FUNDS – BUSINESS-TYPE ACTIVITIES Proprietary funds are used to account for City operations that are run like a business. These funds are responsible for providing enough operational revenue to cover all expenses. Landfill This fund accounts for the operation of the City owned landfill and recycling operations. Fees charged for the use of the landfill are used to maintain and improve the landfill operations as well as fund future closure costs. Sanitation This fund accounts for the City’s trash collection services including curb, roll-off, bulk, and front-load services to individuals and businesses. Revenues collected are used to keep the City clean. Housing This fund accounts for operations to provide affordable housing to those who cannot afford it in the private market. This is done through administration of Federal Section 8 Housing Choice and Conventional Public Housing programs. 111 City of Glendale, Arizona Combining Statement of Net Position Non-Major Proprietary Funds - Business-Type Activities June 30, 2014 (amounts expressed in thousands) Landfill ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets $ Noncurrent assets: Restricted cash and investments Advance to other funds Capital assets: Capital assets Accumulated depreciation Capital assets, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Vouchers payable Accounts payable Compensated absences Accrued expenses Due to other funds Intergovernmental payable Deposits Unearned Rent Total current liabilities Noncurrent liabilities: Compensated absences OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities NET POSITION Net investment in capital assets Restricted for: Other purposes Unrestricted Total net position $ Sanitation 12,167 $ 2,369 570 (3) 12,734 2,088 (356) 4,101 20,694 3,941 25,093 (12,825) 12,268 32,962 45,696 13,827 (9,681) 4,146 8,087 12,188 Housing $ 2,659 Total $ 1 9 21 2,690 17,195 2,659 (359) 9 21 19,525 93 - 93 24,635 14,014 (8,986) 5,028 5,121 7,811 52,934 (31,492) 21,442 46,170 65,695 625 348 8 79 1,060 172 262 3 113 550 38 17 2 12 40 6 115 797 38 627 8 2 15 232 6 1,725 173 1,282 15,166 16,621 17,681 102 2,595 2,697 3,247 145 744 93 982 1,097 420 4,621 93 15,166 20,300 22,025 12,268 4,146 5,028 21,442 15,747 28,015 4,795 8,941 1,686 6,714 1,686 20,542 43,670 $ 112 $ $ City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Business-Type Activities Enterprise Funds Operating revenues: Intergovernmental Container service Curb service Landfill user fees Recycling sales Other fees Total operating revenues Landfill $ Operating expenses: Landfill Housing Closure/post-closure care adjustment Sanitation Depreciation Total operating expenses Operating income (loss) $ 6,514 213 832 7,559 1,187 Nonoperating revenues (expenses): Investment income Interest expense Gain (loss) on disposal of assets OPEB expense Total nonoperating revenue (expenses) 1,263 Transfers in Transfers out (25) Change in net position 1,238 $ 26,777 28,015 113 4,127 10,725 14,852 Housing $ 12,924 1,398 14,322 530 126 19 (69) 76 Income (loss) before contributions and transfers Total net position - beginning Total net position - ending 6,792 1,719 235 8,746 Sanitation $ 9,090 3,502 12,592 $ 12,602 451 13,053 (461) 20 (3) 148 (134) 31 1 (39) (38) 561 (499) (40) 274 - 521 (225) 8,420 8,941 Total $ 6,939 6,714 9,090 4,127 10,725 6,792 1,719 3,737 36,190 6,514 12,602 213 12,924 2,681 34,934 1,256 147 (3) 167 (242) 69 1,325 274 (65) 1,534 $ 42,136 43,670 City of Glendale, Arizona Combining Statement of Cash Flows Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Landfill Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid to employees for services Net cash provided (used) by operating activities $ 8,672 - Sanitation $ 15,086 - Housing $ Total 3,365 9,164 $ 27,123 9,164 (1,229) (2,217) (2,674) 2,552 (7,679) (1,142) (4,299) 1,966 (11,502) (1,168) (141) (8,908) (14,861) (8,141) 4,377 (25) 351 - (40) 20 (246) 274 (1) 274 (65) 371 (247) 326 (266) 273 333 (506) - (777) (3) 16 (118) - 16 (1,401) (3) (506) (780) (102) (1,388) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 126 126 20 20 1 1 147 147 Net increase (decrease) in cash and cash equivalents during fiscal year 2,498 940 31 3,469 Cash flows from noncapital financing activities: Transfers in Transfers out Advances to/due from other funds Advances from/due to other funds Net cash provided by (used) noncapital financing activities Cash flows from capital and related financing activities: Increase principal obligations Acquisition of capital assets and rights Interest payments on obligations Net cash (used) capital and related financing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ 9,669 12,167 114 $ 1,429 2,369 $ 2,721 2,752 $ 13,819 17,288 Landfill Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Depreciation Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Vouchers payable Accounts payable Accrued expenses Intergovernmental payable Deposits Unearned rent Compensated absences Proceeds from disposal of assets Estimated closure and post-closure costs Net cash provided by (used) operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net assets: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents $ 1,187 Sanitation $ 832 $ $ 213 2,552 12,167 12,167 115 $ 1,398 (9) 287 8 (46) 99 (19) $ 530 Housing $ $ 1,966 2,369 2,369 $ 451 82 (96) 3 4 (103) 148 $ (461) Total 2,681 4 62 20 (27) 12 1 (142) (61) $ $ $ (141) 2,659 93 2,752 1,256 77 62 20 191 (27) 8 15 (41) (142) (65) 129 $ $ $ 213 4,377 17,195 93 17,288 City of Glendale, Arizona Budgetary Comparison Schedule Water and Sewer Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Intergovernmental Charges for services: Metered water sales Sewer service charges Impact fees Other fees Investments Miscellaneous Proceeds from loan Proceeds from equipment disposal Total revenues Less: Transfers out Amounts available for appropriation Budgetary fund balance, June 30, 2014 Final 70,476 $ - CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Water Sewer Contingencies Capital outlay Debt service: Principal Interest Total charges to appropriations $ Actual Amounts (budgetary basis) 70,476 $ - 76,483 Variance with Final Budget Positive (Negative) $ 283 6,007 283 43,555 31,108 1,115 1,729 120 65 559 10 78,261 (83) 148,654 43,555 31,109 1,115 1,729 120 65 559 10 78,262 (214) 148,524 45,196 32,451 811 1,715 316 724 75 81,571 (145) 157,909 12,617 21,768 14,588 5,000 17,546 12,517 21,767 14,587 5,000 17,640 11,843 17,843 12,753 2,254 674 3,924 1,834 5,000 15,386 11,230 12,947 95,696 11,230 12,947 95,688 15,725 12,739 73,157 (4,495) 208 22,531 52,958 116 $ 52,836 $ 84,752 1,641 1,342 (304) (14) 196 659 (484) (10) 3,309 69 9,385 $ 31,916 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Revenues offset directly by bad debt expense on budgetary basis. Proceeds from loan. Internal staff and administrative charges reported as revenue only on budgetary basis. Add: Transfers out. Total revenues as reported on the statement of revenues, expenses, and changes in fund net position, excluding capital contributions. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditure. Change in compensated absences liability. Amortization and depreciation expense. Loss on Joint Venture Principal payments on long-term obligations. OPEB expense. Interest expense. Change in accrued payroll. Total expenses as reported in the statement of revenues, expenses, and changes in fund net position, excluding loss from joint venture. 117 $ 157,909 (76,483) 319 (75) (82) 145 $ 81,733 $ 73,157 (2,254) 171 20,226 3,764 (15,725) 409 (2,553) (66) $ 77,129 City of Glendale, Arizona Budgetary Comparison Schedule Landfill Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Charges for services: Landfill user fees Recycling fees Other fees Proceeds from equipment disposal Proceeds from interfund loan Investments Total revenues Less: Transfers out Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Contingencies General administration Landfill Capital outlay Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 $ 8,709 Final $ 8,709 Actual Amounts (budgetary basis) $ 9,834 Variance with Final Budget Positive (Negative) $ 1,125 6,260 1,400 126 5 9,096 970 17,857 (78) 26,488 6,260 1,400 126 5 9,096 971 17,858 (98) 26,469 7,325 1,719 135 19 352 126 9,676 (25) 19,485 1,065 319 9 14 (8,744) (845) (8,182) 73 (6,984) 2,000 5 7,092 11,133 2,000 5 7,171 11,124 6,664 719 2,000 5 507 10,405 458 306 20,994 457 315 21,072 7,383 457 315 13,689 5,494 $ 5,397 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Internal staff and administrative charges reported as revenue only on budgetary basis. Revenues offset directly by bad debt expense on budgetary basis. Proceeds from loan. Add: Transfers out. Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditures. Change in compensated absences liability. Change in estimated landfill post-closure liability. Depreciation expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 118 12,102 $ 6,705 $ 19,485 (9,834) (431) (2) (352) 25 $ 8,891 $ 7,383 (719) (150) 212 832 70 $ 7,628 City of Glendale, Arizona Budgetary Comparison Schedule Sanitation Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ RESOURCES (INFLOWS): Charges for services: Container service Curb service Investments Proceeds from equipment disposal Proceeds from interfund loan Total revenues Less: Transfers out Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Sanitation Capital outlay Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2014 $ 3,095 Final $ 3,095 Actual Amounts (budgetary basis) $ 3,111 Variance with Final Budget Positive (Negative) $ 16 4,275 10,431 179 30 14,915 18,010 4,275 10,431 180 30 14,916 (40) 17,971 4,127 10,640 20 148 20 14,955 (40) 18,026 13,936 2,282 13,857 2,282 12,931 777 926 1,505 247 3 16,468 246 3 16,388 246 3 13,957 2,431 1,542 $ 1,583 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Revenues offset directly by bad debt expense on budgetary basis. Proceeds from interfund loan. Add: Transfers out. Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Capital outlay. Change in compensated absences liability. Depreciation expense. OPEB expense. Principal payments on long-term obligations. Accrued payroll. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position 119 4,069 (148) 209 (160) 118 20 39 55 $ 2,486 $ 18,026 (3,111) 85 (20) 40 $ 15,020 $ 13,957 85 (777) (103) 1,398 135 (246) 10 $ 14,459 City of Glendale, Arizona Budgetary Comparison Schedule Housing Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 4,301 Final $ 4,301 Actual Amounts (budgetary basis) $ 2,185 Variance with Final Budget Positive (Negative) $ (2,116) RESOURCES (INFLOWS): Intergovernmental Miscellaneous Other fees Investments Total revenues Add: Transfers in Amounts available for appropriation 10,814 4,564 15,378 274 19,953 10,814 4,564 15,378 274 19,953 9,090 3,389 113 1 12,593 274 15,052 (1,724) (1,175) 113 1 (2,785) (4,901) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Housing Capital outlay Total charges to appropriations 15,721 190 15,911 15,721 190 15,911 12,604 15 12,619 3,117 175 3,292 Budgetary fund balance, June 30, 2014 $ 4,042 $ 4,042 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Less: Transfers in. Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position, excluding capital grant proceeds. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule Differences - budget to GAAP: Depreciation expense. Capital outlay. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 120 2,433 $ (1,609) $ 15,052 (2,185) (274) $ 12,593 $ 12,619 451 (15) 37 $ 13,092 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTERNAL SERVICE FUNDS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. City of Glendale, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2014 (amounts expressed in thousands) Risk Management ASSETS Current assets: Equity in pooled cash and investments Accounts receivable, net Inventories and prepaid items Total current assets $ Noncurrent assets: Restricted deposits 3,397 59 3,456 Workers' Compensation $ 6,530 6,530 Employee Benefits $ 162 3 165 Total $ 10,089 3 59 10,151 - 360 1,425 1,785 3,456 6,890 1,590 11,936 LIABILITIES Current liabilities: Vouchers payable Estimated claims payable Total current liabilities 154 3,167 3,321 156 3,706 3,862 1,516 4,149 5,665 1,826 11,022 12,848 Noncurrent liabilities: Compensated absences Total noncurrent liabilities Total liabilities 3,321 3,862 1 1 5,666 1 1 12,849 135 3,028 (4,076) Total assets NET POSITION Unrestricted Total net position $ 135 $ 121 3,028 $ (4,076) (913) $ (913) City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Operating revenues: Self-insurance premiums Other Total operating revenues Risk Management $ Operating expenses: Administrative and general Insurance claims and premiums Total operating expenses Operating income (loss) Nonoperating revenues: Investment income (loss) Change in net position Net position - beginning Net position - ending $ 2,472 30 2,502 Workers' Compensation $ 1,894 1,530 3,424 Employee Benefits $ 23,141 51 23,192 1,448 1,448 1,853 1,853 47 25,226 25,273 1,054 1,571 (2,081) 11 20 1,065 1,591 (2,080) 1,437 3,028 (1,996) (4,076) (930) 135 122 $ Total $ 47 28,527 28,574 544 1 $ 27,507 1,611 29,118 32 576 $ (1,489) (913) City of Glendale, Arizona Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Cash flows from operating activities: Cash received from customers Cash paid for insurance and in settlement of claims Cash paid to employees for services Risk Management Workers' Compensation $ $ 2,502 (2,446) - 3,424 Employee Benefits $ (1,174) - Total 23,189 $ (23,037) (46) 29,115 (26,657) (46) Net cash provided by (used for) operating activities 56 2,250 106 2,412 Cash flows from investing activities: Interest received 11 20 1 32 Net increase (decrease) in cash during fiscal year 67 2,270 107 2,444 Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operations: Change in accounts receivable Change in inventories and prepaid items Change in vouchers payable Change in compensated absences Change in claims payable Net cash provided by (used for) operating activities Reconciliation of statement of net assets cash and investments to the statement of cash flows: Per combined statement of net assets: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents $ 3,330 3,397 $ 4,620 6,890 $ 1,480 1,587 $ 9,430 11,874 $ 1,054 $ 1,571 $ (2,081) $ 544 - - (25) 121 (1,094) (3) 124 555 (3) 35 1 2,154 (25) 280 1 1,615 $ 56 $ 2,250 $ 106 $ 2,412 $ 3,397 3,397 $ 6,530 360 6,890 $ 162 1,425 1,587 $ 10,089 1,785 11,874 $ 123 $ $ $ City of Glendale, Arizona Budgetary Comparison Schedule Risk Management Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 3,469 Final $ 3,469 Actual Amounts (budgetary basis) $ 3,300 RESOURCES (INFLOWS): Self-insurance premiums Investments Other Total revenues Amounts available for appropriation 2,472 30 2,502 5,971 2,472 30 2,502 5,971 2,472 11 30 2,513 5,813 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration Insurance and claims Total charges to appropriations 2,000 2,758 4,758 2,000 2,758 4,758 2,568 2,568 Budgetary fund balance, June 30, 2014 $ 1,213 $ 1,213 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported on the combining statement of revenues, expenses, and changes in fund net position. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 124 3,245 Variance with Final Budget Positive (Negative) $ (169) 11 11 (158) 2,000 190 2,190 $ 2,032 $ 5,813 (3,300) $ 2,513 $ 2,568 (1,120) $ 1,448 City of Glendale, Arizona Budgetary Comparison Schedule Workers' Compensation Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ 4,419 Final $ 4,419 Actual Amounts (budgetary basis) $ 4,558 Variance with Final Budget Positive (Negative) $ 139 RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Other Total revenues Amounts available for appropriation 1,894 9 30 1,933 6,352 1,894 9 30 1,933 6,352 1,894 1,500 20 30 3,444 8,002 1,500 11 1,511 1,650 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Insurance and claims Total charges to appropriations 1,407 1,407 1,407 1,407 1,298 1,298 109 109 Budgetary fund balance, June 30, 2014 $ 4,945 $ 4,945 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 125 6,704 $ 1,759 $ 8,002 (4,558) $ 3,444 $ 1,298 555 $ 1,853 City of Glendale, Arizona Budgetary Comparison Schedule Employee Benefits Fund For the Fiscal Year Ended June 30, 2014 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2013 $ (1,999) Final $ (1,999) Actual Amounts (budgetary basis) $ - Variance with Final Budget Positive (Negative) $ 1,999 RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Total revenues Amounts available for appropriation 24,366 18 24,384 22,385 24,367 18 24,385 22,386 23,141 51 1 23,193 23,193 (1,226) 51 (17) (1,192) 807 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration Insurance and claims Total charges to appropriations 22,348 22,348 40 23,072 23,112 47 23,071 23,118 (7) 1 (6) Budgetary fund balance, June 30, 2014 $ 37 $ (726) $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 126 75 $ 801 $ 23,193 $ 23,193 $ 23,118 2,155 $ 25,273 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ SUPPLEMENTARY INFORMATION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) 1 of 6 The following is the schedule of Federal Financial Data as required by the United States Department of Housing and Urban Development under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H. Line Balance Sheet Item No. Account Description 111 112 113 114 115 100 ASSETS: Current assets: Cash: Cash - unrestricted Cash - restricted - modernization and development Cash - other restricted Cash - tenant security deposits Cash - restricted for payment of current liability Total cash 127 121 122 124 125 126 126.1 126.2 127 128 128.1 129 120 Accounts receivables: Accounts receivable - PHA projects Accounts receivable - HUD other projects Accounts receivable - other government Accounts receivable - miscellaneous Accounts receivable - tenants Allowance for doubtful accounts - tenants Allowance for doubtful accounts - other Notes, loans, & mortgages receivable - curren Fraud recovery Allowance for doubtful accounts - fraud Accrued interest receivable Total receivables, net of allowances for doubtful accounts 131 132 135 142 143 143.1 144 145 150 Current investments: Investments - unrestricted Investments - restricted Investments - restricted for payment of current liability Prepaid expenses and other assets Inventories Allowance for obsolete inventories Inter program - due from Assets held for sale Total current assets 161 162 163 164 165 166 167 168 160 171 172 173 174 176 180 190 200 290 Project Total $ Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ 8,715 665 9,380 22,104 (1,105) 992,155 Non-current assets: Capital assets: Land Buildings Furniture, equipment & machinery - dwellings Furniture, equipment & machinery - administration Leasehold improvements Accumulated depreciation Construction in progress Infrastructure Total capital assets, net of accumulated depreciation Notes, loans, & mortgages receivable - non-current Notes, loans, & mortgages receivable - non-current - past due Grants receivable - non-current Other assets Investment in joint venture Total non-current assets Total assets Deferred outflow of resources Total assets and deferred outflow of resources 921,921 39,855 961,776 Housing Choice Vouchers 135,533 10,417,083 531,311 186,097 2,257,869 (8,819,244) 233,073 4,941,722 $ 4,941,722 5,933,877 5,933,877 1,087,318 610,410 1,697,728 - - - - 93,376 22,948 1,814,052 24,536 24,536 18,025 18,025 - - 24,536 24,536 18,025 18,025 149,998 102,908 (166,629) 86,277 $ - 86,277 1,900,329 1,900,329 $ $ Eliminations $ Total - $ - 8,715 665 9,380 (65,509) 93,376 22,104 (1,105) 2,783,259 (65,509) - $ (65,509) (65,509) 2,009,239 610,410 39,855 2,659,504 135,533 10,567,081 531,311 289,005 2,257,869 (8,985,873) 233,073 5,027,999 $ 5,027,999 7,811,258 7,811,258 (continued) City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) Line Balance Sheet Item No. Account Description 128 311 312 313 321 322 324 325 331 332 333 341 342 343 344 345 346 347 348 310 LIABILITIES AND EQUITY-NET ASSETS/POSITION: LIABILITIES: Current liabilities: Bank Overdraft Accounts payable <= 90 days Accounts payable > 90 days past due Accrued wage/payroll taxes payable Accrued compensated absences - current portion Accrued contingency liability Accrued interest payable Accounts payable - HUD PHA Programs Accounts payable - PHA projects Accounts payable - other government Tenant security deposits Unearned revenues Total Current portion of L/T debt - capital pjts/mortgage revenue Current portion of L/T debt - operating borrowings Other current liabilities Accrued liabilities - other Inter program - due to Loan liability - current Total current liabilities 351 352 353 354 355 356 357 350 300 Noncurrent liabilities: Long-term debt, net of current- capital pjts/mortgage revenu Long-term debt, net of current- operating borrowings Noncurrent liabilities- other Accrued compensated absences - noncurrent Loan Liability - noncurrent FASB 5 liabilities Accrued pension and OPEB liabilities Total noncurrent liabilities Total liabilities 400 Deferred inflow of resources 508.4 511.4 512.4 513 600 EQUITY - NET ASSETS/POSITION: Net investment in capital assets Restricted net position Unrestricted net position Total equity - net assets / position Total liabilities, deferred inflow of resources and equity - net assets/position 2 of 6 (continued) Project Total $ $ 13,417 7,322 39,855 5,931 10,802 44,103 121,430 Housing Choice Vouchers Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ 10,825 8,780 3,403 12,600 35,608 14,623 14,623 2,761 6,783 9,544 65,901 414,224 480,125 601,555 93,376 79,023 329,287 501,686 537,294 14,623 9,544 - - - - 4,941,722 390,600 5,332,322 5,933,877 86,277 610,410 666,348 1,363,035 1,900,329 9,913 9,913 24,536 8,481 8,481 18,025 $ $ $ Eliminations $ Total (65,509) (65,509) $ (65,509) 93,376 144,924 743,511 981,811 1,097,507 - $ (65,509) 24,242 16,102 6,164 12,600 39,855 5,931 10,802 115,696 - $ 5,027,999 610,410 1,075,342 6,713,751 7,811,258 (continued) City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) Line Income Statement Item No. Account Description 70300 70400 70500 REVENUE: Net tenant rental revenue Tenant revenue - other Total tenant revenue 70600 70610 70710 70720 70730 70740 70750 70700 HUD PHA operating grants Capital grants Management fee Asset management fee Bookkeeping fee Front line service fee Other fees Total fee revenue 70800 71100 71200 71300 71310 71400 71500 71600 72000 70000 Other government grants Investment income - unrestricted Mortgage interest income Proceeds from disposition of assets held for sale Cost of sale of assets Fraud recovery Other revenue Gain or loss on sale of capital assets Investment income - restricted Total revenue 3 of 6 (continued) Project Total $ $ 300,237 8,663 308,900 Housing Choice Vouchers Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ - - - Eliminations $ Total - $ 300,237 8,663 308,900 574,586 113,095 - 8,403,414 - - - - 8,978,000 113,095 - 517 1,573 24,042 1,022,713 939 10,658 3,043,807 11,458,818 - - - 1,456 12,231 3,067,849 12,481,531 $ $ $ $ $ 129 (continued) City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) Line Income Statement Item No. Account Description 91100 91200 91300 91310 91400 91500 91600 91700 91800 91810 91900 91000 EXPENSES: Administrative salaries Auditing fees Management fee Bookkeeping fee Advertising and marketing Employee benefit contributions - administrative Office expenses Legal expense Travel Allocated overhead Other Total operating - administrative 130 92000 Asset management fee 92100 92200 92300 92400 92500 Tenant services - salaries Relocation costs Employee benefit contributions - tenant services Tenant services - other Total Tenant services 93100 93200 93300 93400 93500 93600 93700 93800 93000 94100 94200 94300 94500 94000 4 of 6 (continued) Project Total $ 209,185 76,813 28,169 130 54 23,714 338,065 Housing Choice Vouchers Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ 487,378 213,293 35,277 600 16,044 752,592 - - Eliminations $ Total - $ 696,563 290,106 63,446 730 54 39,758 1,090,657 - - - - - - 12,000 12,000 - - - - 12,000 12,000 Water Electricity Gas Fuel Labor Sewer Employee benefit contributions- utilities Other utilities expense Total utilities 42,856 25,837 3,139 34,157 105,989 - - - - 42,856 25,837 3,139 34,157 105,989 Ordinary maintenance and operations - labor Ordinary maintenance and operations - materials & other Ordinary maintenance and operations - contract costs Employee benefit contributions - ordinary maintenance Total maintenance 247,064 83,265 146,320 94,327 570,976 16,833 16,833 - - - 247,064 100,098 146,320 94,327 587,809 $ $ $ $ $ $ (continued) City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) Line Income Statement Item No. Account Description 5 of 6 (continued) Project Total Housing Choice Vouchers Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ Eliminations Total 131 95100 95200 95300 95500 95000 Protective services - labor Protective services - other contract costs Protective services - other Employee benefit contributions - protective services Total protective services 96110 96120 96130 96140 96100 Property insurance Liability insurance Workmen's compensation All other insurance Total insurance premiums 43,304 2,968 46,272 28,870 1,979 30,849 - - - 72,174 4,947 77,121 96200 96210 96300 96400 96500 96600 96800 96000 Other general expenses Compensated absences Payments in lieu of taxes Bad debt - tenant rents Bad debt- mortgages Bad debt - other Severance expense Total other general expenses - 26,952 26,952 - - - 26,952 26,952 96710 96720 96730 96700 Interest on mortgage (or bonds) payable Interest on notes payable (short and long term) Amortization of bond issue costs Total Interest expense and amortization cost - - - - - - 96900 Total operating expenses 97000 $ - 1,073,302 Excess of operating revenue over operating expenses (50,589) - - - $ - $ - 827,226 - - - 1,900,528 10,631,592 - - - 10,581,003 97100 97200 Extraordinary maintenance Casualty losses - non-capitalized - - - - - - 97300 Housing assistance payments - 7,866,838 - - - 7,866,838 446,703 1,520,005 2,875,064 4,061 11,573,189 - - - 2,875,064 450,764 13,093,194 97350 97400 97500 97600 97700 97800 90000 HAP Portability-in Depreciation expense Fraud losses Capital outlays - governmental funds Debt principal payment - governmental fund Dwelling units rent expense Total expenses $ $ $ $ $ $ (continued) City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2014 (rounded to nearest dollar) Line Income Statement Item No. Account Description 10010 10020 OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out 10030 10040 10050 10060 10070 10080 10091 10092 10093 10094 10100 Operating transfers from/to primary government Operating transfers from/to component unit Proceeds from notes, loans and bonds Proceeds from property sales Extraordinary items, net gain/loss Special items, net gain/loss Inter project excess cash transfer in Inter project excess cash transfer out Transfers between program and project - in Transfers between program and project - out Total other financing sources (uses) 10000 Excess (deficiency) of total revenues over (under) total expenses 6 of 6 (continued) Project Total $ 34,559 (34,559) Housing Choice Vouchers Disaster Voucher Program Disaster Housing Assistance Grants $ $ $ 274,269 274,269 $ (223,023) - $ (114,371) - $ - Eliminations $ - - $ - $ Total (34,559) 34,559 $ 274,269 274,269 (337,394) - - $ - $ - $ - $ MEMO ACCOUNT INFORMATION 132 11020 Required annual debt principal payments 11030 Beginning equity 11040 11050 11060 11070 11080 11090 11100 11170 11180 11190 11210 11270 Prior period adjustments, equity transfers & correction of errors Changes in compensated absence balance Changes in contingent liability balance Changes in unrecognized pension transition liabilit Changes in special term/severance benefits liability Changes in allowance for doubtful accounts - dwelling rent Changes in allowance for doubtful accounts - othe Administrative fee equity Housing assistance payments equity Unit months available Unit months leased Excess cash 11610 11620 11630 11640 11650 11660 13510 13901 Land purchases Building purchases Furniture & equipment - dwelling purchases Furniture & equipment - administrative purchases Leasehold improvements purchases Infrastructure purchases CFFP debt service payments Replacement housing factor funds $ $ - $ - $ - 5,555,345 1,365,017 9,913 8,481 - 6,938,756 1,723 1,709 745,633 112,389 752,625 610,410 12,648 12,583 - - - - 112,389 752,625 610,410 14,371 14,292 745,633 93,256 7,429 7,415 4,995 - $ - $ - $ - $ - $ 93,256 7,429 7,415 4,995 - City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ STATISTICAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2014 This page left blank intentionally. STATISTICAL SECTION This part of the City of Glendale’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Contents Pages Financial Trends These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. 134-141 Revenue Capacity These schedules contain information to help the reader assess the city’s local revenue source, the property tax and sales tax. 142-147 Debt Capacity These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future. 148-155 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. 156-157 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. 158-162 133 City of Glendale, Arizona Net Position by Component Last Ten Fiscal Years (amounts expressed in thousands) 2014 Government activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ 448,083 161,027 (69,731) 2013 $ 438,366 186,106 (59,797) 2012, restated $ 460,639 183,829 (73,375) 2011 $ 463,961 204,645 (22,532) 539,379 564,675 571,093 646,074 Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position 256,164 22,300 155,800 251,765 12,264 161,999 262,554 12,921 139,934 271,708 29,988 112,323 434,264 426,028 415,409 414,019 Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position 704,247 183,327 86,069 690,131 198,370 102,202 723,193 196,750 66,559 735,669 234,633 89,791 986,502 $ 1,060,093 $ 973,643 $ 134 990,703 $ Schedule 1 2010 $ 457,773 176,400 11,684 2009 $ 471,484 144,422 51,500 2008 $ 499,322 133,695 51,850 2007 $ 446,828 180,303 44,573 2006 $ 398,517 155,163 75,417 2005 $ 372,778 179,434 40,641 645,857 667,406 684,867 671,704 629,097 592,853 271,969 13,988 124,550 286,452 13,249 114,814 297,329 12,836 107,384 249,569 11,881 155,325 233,387 12,437 158,753 274,620 11,249 108,604 410,507 414,515 417,549 416,775 404,577 394,473 729,742 190,388 136,234 757,936 157,671 166,314 796,651 146,531 159,234 696,397 192,184 199,898 631,904 167,600 234,170 647,398 190,683 149,245 $ 1,056,364 $ 1,081,921 $ 1,102,416 $ 1,088,479 $ 1,033,674 135 $ 987,326 City of Glendale, Arizona Changes in Net Position Last Ten Fiscal Years (amounts expressed in thousands) Schedule 2 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Expenses Governmental activities: General government $ Public safety 73,637 $ 116,070 37,447 $ 115,694 35,962 $ 112,689 46,233 $ 111,217 42,530 $ 108,308 39,545 $ 109,136 39,998 $ 113,285 37,992 $ 92,405 33,329 $ 75,277 31,603 64,277 Public works 20,524 19,230 18,435 20,099 16,627 15,040 16,006 14,816 13,995 14,309 Community services 30,796 33,831 39,478 41,136 44,524 48,143 52,185 45,481 40,275 37,394 Community environment Street maintenance Other 5,895 5,655 6,828 7,061 6,316 3,539 5,164 4,698 4,125 3,236 25,207 20,000 20,045 21,721 23,058 23,978 26,175 24,906 22,720 21,355 - - - - - - - - 3,020 238 Interest on long-term debt 34,808 42,413 41,913 41,967 42,286 38,982 28,475 23,551 16,883 16,986 Total governmental activities expenses 306,937 274,270 275,350 289,434 283,649 278,363 281,288 243,849 209,624 189,398 77,243 73,460 78,917 79,444 81,910 74,424 74,581 63,289 55,607 50,190 7,554 7,486 7,602 7,280 8,454 8,045 8,067 8,264 7,950 7,431 14,471 16,122 15,437 14,814 14,093 14,039 15,209 13,847 13,257 12,287 Business-type activities: Water and sewer Landfill Sanitation Housing Total business-type activities expenses 136 Total primary government expenses 13,088 14,037 14,827 14,687 14,180 11,840 9,862 8,951 9,466 9,278 112,356 111,105 116,783 116,225 118,637 108,348 107,719 94,351 86,280 79,186 $ 419,293 $ 385,375 $ 392,133 $ 405,659 $ 402,286 $ 386,711 $ 389,007 $ 338,200 $ 295,904 $ $ 17,666 $ 12,520 $ 12,334 $ 24,822 $ 14,232 $ 11,879 $ 12,132 $ 11,610 $ 10,726 $ 268,584 Program revenues Governmental activities: Charges for services: General government Public safety Public works 6,369 5,778 5,624 5,094 5,824 4,670 5,744 1,964 1,375 9,075 1,200 1,126 1,149 512 495 7,447 588 543 531 516 506 10,486 11,003 17,910 11,733 11,918 15,661 22,859 22,285 20,121 16,871 Community environment - - - - - 3,045 - - 31 - Street maintenance - - - - 2 36 - 48 - - Operating grants and contributions 25,168 25,156 27,636 27,137 29,596 24,146 33,191 36,566 31,973 26,535 Capital grants and contributions 10,748 7,904 5,274 70,552 3,755 2,600 14,491 26,247 6,406 1,407 71,563 63,510 69,290 139,833 72,774 62,625 88,960 99,251 71,148 55,594 Community services Total governmental activities program revenues 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Business-type activities: Charges for services: Water and sewer Landfill Sanitation Housing Operating grants and contributions Capital grants and contributions 81,065 81,963 82,730 80,513 76,603 67,810 66,316 62,125 56,153 8,646 7,994 7,185 8,027 6,987 7,304 9,196 9,742 8,362 54,295 8,961 14,836 14,791 14,562 14,733 15,048 15,258 14,684 14,653 14,167 13,624 3,504 4,137 4,886 4,829 4,870 2,042 816 662 569 542 9,357 9,376 9,423 9,342 9,331 8,701 8,348 8,254 8,020 8,027 2,423 831 705 1,155 690 1,207 4,346 5,125 5,403 242 Total business-type activities program revenues 119,831 119,092 119,491 118,599 113,529 102,322 103,706 100,561 92,674 85,691 Total primary government program revenues 191,394 182,602 188,781 258,432 186,303 164,947 192,666 199,812 163,822 141,285 (235,374) (210,760) (206,060) (149,601) (210,875) (215,738) (192,328) (144,598) (138,476) (133,804) (5,108) (6,026) (4,013) Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense 7,475 $ 7,987 (227,899) $ 23,577 $ 2,708 2,374 (202,773) $ (203,352) $ 21,372 $ 20,232 $ (147,227) $ 27,189 $ (215,983) $ 33,749 $ (221,764) $ 32,890 $ 6,210 (196,341) $ 28,826 $ 6,394 (138,388) $ 23,085 $ 6,505 (132,082) $ 21,386 $ (127,299) General revenues and other changes in net position Governmental activities: Taxes: Property taxes $ Sales taxes 137 Unrestricted state shared sales tax 19,422 131,983 132,872 97,451 93,260 92,717 97,054 105,175 97,825 90,968 77,166 19,734 18,558 17,716 18,438 17,786 19,321 22,237 23,037 23,298 20,271 25,271 23,159 19,135 23,590 31,292 36,267 34,109 27,518 22,909 20,115 8,086 7,586 7,277 7,917 8,130 8,808 9,730 10,044 10,444 9,414 726 716 975 1,482 286 1,668 4,742 5,557 4,395 2,654 78 353 56 687 367 489 Unrestricted urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Gain (loss) on disposal of capital assets Miscellaneous Capital contributions - (677) 330 3,936 (52) 5,406 2,872 879 202 348 225 302 301 272 275 4,794 - - - - - - - - (64) (641) (307) (317) (370) (551) (509) (364) 700 - - (25,000) (25,000) - - - - - - 210,078 204,342 138,024 149,818 189,326 198,277 205,491 187,205 174,720 154,172 Investment earnings, unrestricted 463 1,878 1,126 614 460 2,069 4,044 5,381 3,466 2,065 Gain (loss) on disposal of capital assets 167 43 (40) 137 187 282 126 103 844 - 67 70 72 70 83 90 108 140 100 202 5,712 Transfers Special item Total governmental activities (164) Business-type activities: Miscellaneous Capital contributions Transfers Total business-type activities Total primary government - - - - - - - - - 64 641 307 317 370 551 509 364 (700) 761 2,632 1,465 1,138 1,100 2,992 4,787 5,988 $ 210,839 $ $ (25,296) $ 206,974 $ 139,489 $ $ (68,036) $ 150,956 $ 190,426 $ 201,269 $ 210,278 $ 217 $ (21,549) $ (17,461) $ 13,163 $ 164 3,710 193,193 $ 42,607 $ 8,143 178,430 $ 36,244 $ 162,315 Changes in net position Governmental activities Business-type activities Total primary government 8,236 $ (17,060) (6,418) 10,619 $ 4,201 4,173 $ (63,863) 3,512 $ 3,729 (4,008) $ (25,557) (3,034) $ (20,495) 774 $ 13,937 12,198 $ 54,805 10,104 $ 46,348 20,368 14,648 $ 35,016 This page left blank intentionally. 138 City of Glendale, Arizona Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) Schedule 3 2014(1) General fund Reserved Unreserved Total general fund General fund Nonspendable Restricted Committed Assigned Unassigned Total general fund 139 All other governmental funds Reserved Unreserved, report in: Special revenue funds Capital projects funds Total all other governmental funds All other governmental funds Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds $ $ $ $ $ $ $ $ 2013(1) - 600 688 1,554 (4,835) (1,993) $ $ $ $ - $ 5,801 102,241 123 202 108,367 $ $ $ 2012(1) - 650 311 1,676 (14,438) (11,801) $ $ $ $ - $ 5,774 103,772 115 144 109,805 $ $ $ 2011(1) - 197 368 2,351 (29,565) (26,649) $ $ $ $ - $ 5,829 117,964 129 82 124,004 $ $ $ 2010 - 463 5,403 1,965 9,253 (5,414) 11,670 $ $ 2009 9,383 29,463 38,846 $ $ - - $ 76,055 $ 50,478 41,046 167,579 5,822 129,635 11,464 199 147,120 $ $ Note: (1) Changes made per GASB 54 requirement fund balance reporting, effective June 30, 2011. - $ $ $ 2008 10,450 42,180 52,630 $ - $ 83,966 $ 57,555 27,474 168,995 $ $ - $ $ $ 2007 9,271 57,117 66,388 $ - $ 58,146 $ 76,493 18,436 153,075 $ $ - $ $ $ 2006 10,500 50,880 61,380 $ - $ 45,029 $ 34,369 68,932 148,330 $ $ - $ $ $ 2005 10,287 62,166 72,453 $ $ $ - $ - $ 42,910 $ 39,014 $ 30,584 64,106 137,600 $ 34,867 61,765 135,646 $ $ - $ 9,377 56,661 66,038 $ $ - City of Glendale, Arizona Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) 2014 Schedule 4 2013 2012 2011 2010 2009 2008 2007 2006 2005 Revenues Taxes and special assessments Licenses and permits $ 159,328 $ 149,705 $ 118,218 $ 120,974 $ 126,291 $ 130,119 $ 133,746 $ 121,122 $ 112,576 $ 96,812 11,522 10,373 10,798 9,367 9,734 10,503 17,385 17,839 16,039 15,497 81,364 76,520 73,009 79,760 90,047 91,642 101,821 107,699 86,994 75,691 18 36 - - - - - - - - Charges for services 14,781 11,896 11,487 10,461 13,640 9,881 14,125 10,086 8,838 5,681 Fines and forfeitures 3,735 3,469 3,374 3,806 4,052 4,064 4,507 3,932 3,564 3,247 900 762 1,180 1,841 774 3,805 9,986 10,905 7,825 4,762 Miscellaneous 4,500 3,822 11,700 22,054 18,000 9,346 4,915 4,212 4,136 3,335 Total revenues 276,148 256,583 229,766 248,263 262,538 259,360 286,485 275,795 239,972 205,025 20,892 Intergovernmental Local revenues Investment income (loss) Expenditures General government 140 29,666 16,065 18,147 19,668 23,085 26,048 25,364 24,524 21,868 Public safety 108,397 103,610 100,368 95,270 96,161 103,624 100,384 86,753 72,745 61,366 Public works 7,463 7,859 7,709 8,859 11,569 11,072 11,743 12,155 12,252 12,081 32,627 25,536 27,966 33,597 33,887 37,518 42,294 44,767 39,150 35,604 Community environment Community services 5,826 5,554 6,703 6,853 6,160 3,478 4,972 4,657 3,978 3,082 Street maintenance 8,352 8,305 8,311 9,038 10,388 11,901 13,045 13,372 11,609 10,534 Miscellaneous 2,323 4,617 1,782 1,577 2,026 1,666 1,629 3,059 2,918 55 Capital outlay 14,662 13,980 19,634 22,093 63,529 186,175 141,060 179,421 131,243 47,283 Debt service: Principal 30,043 26,441 24,947 31,640 29,451 29,670 32,151 28,096 20,328 18,899 Interest 35,628 43,038 42,515 42,593 42,913 39,571 32,294 20,630 17,222 17,231 267,896 257,435 263,713 271,478 322,800 455,499 407,409 411,817 329,767 224,050 (33,947) (23,215) (60,262) (196,139) (120,924) (136,022) (89,795) (19,025) Total expenditures Excess of revenues over (under) expenditures 8,252 (852) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Other financing sources (uses) Refunding lease issued Discount on long-term debt - - - 11,503 - - - - - - - (1,557) - 8,665 38,300 41,650 (3,136) 199,750 109,986 133,327 93,033 - Long-term debt issued - Refunding bonds issued - 239,875 - - - - 93,815 - 9,065 - Payment to redeem lease - 898 (11,355) 3,369 10 1,894 2,192 1,198 1,782 230 16,075 Premium on long-term debt issued - 19,779 Proceeds from equipment disposal 174 589 546 331 482 344 8,714 850 3,166 1,342 8 - - - 44 - - 668 - - - (9,320) 32,977 (41,251) 38,728 36,306 21,914 (83,521) 51,626 24,945 (9,582) 20,014 15,800 Capital lease proceeds Payment to redeem/refunded bonds escrow agent Transfers in 48,704 (256,054) 52,136 Transfers out (48,768) (53,267) (33,919) (39,045) (33,430) (22,465) (52,135) (25,309) (19,314) (15,964) - - (25,000) (25,000) - - - - - - 118 1,501 (25,153) (24,420) 45,062 198,301 130,677 135,679 98,164 17,483 Special item - Total other financing sources (uses) Net change in fund balances $ 8,370 $ 649 $ (59,100) $ (47,635) $ (15,200) $ 2,162 $ 9,753 $ (343) $ 8,369 $ (1,542) Debt service as a percentage 141 of noncapital expenditures 25.93% 28.54% 27.64% 29.77% 27.91% 25.71% 24.20% 20.97% 18.91% 20.44% Note: The debt service percentage of noncapital expenditures does not include other financing sources/uses. The percentage equals the total principal and interest expenditures divided by the total expenditures less capital outlay. City of Glendale, Arizona Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) Major Components Fiscal Year Schedule 5 Utilities Rails and Wires Less: Tax Exempt Property Net Assessed Value (1) Total Direct Tax Rate Estimated Actual Value(1) Assessed Value as a Percentage of Actual Value(2) 142 Real Estate Improvements 2004-05 $ 342,689 $ 893,850 $ 45,245 $ 56,582 $ 193,816 $ 1,144,550 1.72 $ 10,065,003 13.297 2005-06 368,181 989,418 46,475 58,101 192,607 1,269,568 1.72 11,296,734 12.943 2006-07 463,560 1,033,129 47,129 58,111 230,940 1,370,989 1.72 12,107,926 13.230 2007-08 593,311 1,406,513 51,889 60,680 285,374 1,827,019 1.62 16,733,846 12.624 2008-09 739,936 1,821,057 56,528 61,347 485,193 2,193,675 1.59 21,034,639 12.736 2009-10 739,388 1,844,506 60,888 62,176 576,051 2,130,907 1.59 20,635,557 13.118 2010-11 654,550 1,593,536 59,049 56,217 609,782 1,753,570 1.59 17,333,074 13.635 2011-12 330,057 1,189,718 49,391 53,746 473,388 1,149,524 1.59 12,040,482 13.479 2012-13 304,041 1,130,460 45,507 53,158 485,894 1,047,273 1.90 11,471,039 13.366 2013-14 316,206 1,213,829 41,750 53,581 1,148,108 2.29 12,489,163 13.014 Personal (3) 477,258 Source: Maricopa County Assessor's Office Notes: (1) Assessed values are established each year by the County. The tax rate is $100 per assessed value (reference note I. L). (2) The assessed value as a percentage of actual value does not include tax exempt property. (3) The Assessor's Office no longer breaks down the secured and unsecured personal property as of 2013. All prior years secured and unsecured have been combined. City of Glendale, Arizona Direct and Overlapping Governments Property Tax Rates Last Ten Fiscal Years Per $100 Assessed Valuation Schedule 6 Overlapping Rates* City of Glendale Glendale Elementary and High School Districts Peoria Unified School Districts Deer Valley Unified School Districts 143 Fiscal Year Basic Rate General Obligation Debt Service 2004-05 0.33 1.39 1.72 14.88 13.22 11.78 2005-06 0.31 1.41 1.72 20.96 18.45 16.98 2006-07 0.29 1.43 1.72 19.84 17.26 15.34 2007-08 0.27 1.35 1.62 17.74 15.33 13.97 2008-09 0.24 1.35 1.59 15.85 14.09 13.03 2009-10 0.22 1.37 1.59 15.18 13.81 12.74 2010-11 0.22 1.37 1.59 16.35 14.13 14.18 2011-12 0.22 1.37 1.59 20.69 15.54 16.47 2012-13 0.22 1.68 1.90 22.93 18.08 17.75 2013-14 0.50 1.79 2.29 25.06 19.82 18.91 Source: Maricopa County 2013 Tax Rates Note: The City rounds the rates to two digits from the four presented by the county. * Overlapping rates are those of local and county governments that apply to property owners within the City of Glendale. Not all overlapping rates apply to all City of Glendale property owners (e.g., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). City of Glendale, Arizona Principal Property Taxpayers Current Year and Ten Years Ago June 30, 2014 (amounts expressed in thousands) Schedule 7 Tax Year 2014 144 Taxpayer Arizona Public Service Company VHS of Arrowhead, Inc. Arrowhead Towne Center LLC Thunderbird School of Global Management Wal-Mart Stores, Inc. CenturyLink (Qwest Corporation) New Westgate LLC JQH-Glendale Az Development LLC Southwest Gas Corporation Stadium Development LLC Honeywell, Inc. New River Associates Corning Gilbert, Inc. Toys DC South LLC Alliance WE Limited Partnership Lexington Glendale LLC Chase Commercial Mtg. Total principal taxpayers Rank 1 2 3 4 5 6 7 8 9 10 $ $ Assessed Valuation 17,900 11,535 9,625 7,588 7,180 6,422 6,079 5,700 4,852 4,437 81,318 Tax Year 2004 Percentage of Total City Taxable Assessed Value 1.56 % 1.00 0.84 0.66 0.63 0.56 0.53 0.50 0.42 0.39 7.09 % Rank 2 Assessed Valuation $ 14,716 Percentage of Total City Taxable Assessed Value 1.36 % 1 16,477 1.53 5 5,318 0.49 3 4 6 7 8 9 10 10,708 8,308 4,310 4,101 3,754 3,546 3,435 0.99 0.77 0.40 0.38 0.35 0.33 0.32 74,673 6.92 % $ Source: Maricopa County Treasurer's Office Note: The Salt River Project Agriculture Improvement and Power District assessed valuation is not reflected in the total assessed valuation of the City of Glendale. The Project is subject to "voluntary contribution" in lieu of ad valorem taxation. City of Glendale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) Schedule 8 Collected within the Fiscal Year of Levy Total Collections to Date Collections Fiscal Year 2004-05 Total Tax Levy(1) $ 19,534 Amount $ Percent of Levy 19,011 97.32 % in Subsequent Years(2) $ 427 Amount $ Percent of Levy 19,438 99.51 % 145 2005-06 21,566 20,980 97.28 494 21,474 99.57 2006-07 23,423 22,721 97.00 409 23,130 98.75 2007-08 28,728 27,823 96.85 551 28,374 98.77 2008-09 33,927 32,411 95.53 1,003 33,414 98.49 2009-10 33,617 32,260 95.96 537 32,797 97.56 2010-11 27,534 26,469 96.13 64 26,533 96.36 2011-12 20,787 20,090 96.65 185 20,275 97.54 2012-13 21,841 21,268 97.38 119 21,387 97.92 2013-14 23,943 23,490 98.11 - 23,490 98.11 Source: Maricopa County Treasurer's Office (1) Total levy includes only secured property. (2) Includes collections and resolutions. This page left blank intentionally. 146 City of Glendale, Arizona City Transaction Privilege Taxes (Sales Tax) by Category Last Ten Fiscal Years (amounts expressed in thousands) 2014 Retail sales Contracting $ 73,924 2013 $ 67,133 Schedule 9 2012 $ 49,686 2011 $ 48,089 2010 $ 49,127 2009 $ 48,353 2008 $ 54,416 2007 $ 50,733 2006 $ 48,743 2005 $ 41,883 7,948 4,721 5,170 6,742 4,458 6,378 9,540 10,483 9,729 7,716 Rentals 14,502 14,182 11,550 11,854 12,729 11,511 12,082 9,895 8,897 8,228 Utilities 8,732 8,028 6,393 6,449 6,829 6,449 5,359 4,724 4,168 1,967 Telecom/cable TV 5,072 5,540 5,144 6,093 6,156 6,722 6,174 5,914 5,300 5,179 15,842 14,284 11,975 11,207 10,791 10,863 10,995 9,335 8,163 7,031 Amusement 2,110 2,154 2,896 1,860 3,697 3,659 3,034 3,288 1,934 1,043 Other 5,808 6,920 3,816 5,568 4,018 4,002 3,575 3,453 4,034 4,119 Restaurant/bar Total $ 133,938 % Growth by year Retail sales 10.1 % Contracting 68.4 $ 122,962 35.1 % (8.7) $ 96,630 3.3 % $ 97,862 (2.0) % $ 97,805 1.6 % (23.3) 51.0 (30.1) $ 97,937 (11.1) % (33.1) $ 105,175 7.3 % (9.0) $ 97,825 4.1 % 7.8 $ 90,968 16.4 % 26.1 147 Rentals 2.3 22.8 (2.6) (7.0) 10.6 (4.7) 22.1 11.2 8.1 Utilities 8.8 25.6 (0.9) (6.0) 5.9 20.3 13.4 13.3 111.9 $ 77,166 1.5 % 0.1 6.1 (24.5) Telecom/cable TV (8.4) 7.7 (15.6) (1.0) (8.4) 8.9 4.4 11.6 2.3 Restaurant/bar 10.9 19.3 6.9 4.0 (0.7) (1.2) 17.8 14.4 16.1 5.3 Amusement (2.0) (25.6) 55.7 (50.0) 1.0 20.6 (7.7) 70.0 85.4 (1.4) (16.1) 81.3 (31.5) 39.0 0.4 11.9 3.5 (14.5) (2.1) 20.8 (6.9) % 7.5 % Other Total 8.9 % 27.3 % (1.3) % 0.1 % (0.1) % 7.5 % 17.9 % 20.7 3.2 % Source: City of Glendale Tax and License Division Note: The 2012 and prior years tax rate for City activities is 2.2% except for telecommunications which is 5.4%, restaurant bars 3.2%, hotel/motel 5.6%, and retail sales food for home consumption 1.8%. The 2013 & 2014 tax rate for City activities is 2.9% except for telecommunications which is 6.1%, restaurant/bars 3.9%, hotel/motel 7.9%, retail sales food for home consumption 2.5%, and retail sales of individual items over $5,000 2.2% The amounts represent sales tax dollars collected for the fiscal year presented. City of Glendale, Arizona Ratio of Outstanding Debt by Type (1) Last Ten Fiscal Years (amounts expressed in thousands) Schedule 10 Government Activities Fiscal Year General Obligation Bonds Special Assessment Bonds Street and Highway Revenue Bonds Excise Tax Revenue Bonds Transportation Bonds Capital Leases Notes Payable 157,065 75 22,455 177,950 - 13,704 18,876 2005-06 175,155 39 35,940 223,988 - 12,875 15,689 2006-07 224,234 - 34,065 293,530 - 12,492 6,279 2007-08 212,524 - 30,895 298,050 109,110 10,838 9,045 2008-09 197,738 - 27,480 493,880 105,035 9,076 7,637 2009-10 225,595 - 23,910 487,305 102,490 7,493 6,288 2010-11 194,270 (4) - 16,290 (4) 481,705 99,815 11,833 - 2011-12 179,010 (4) - 12,250 (4) 474,840 97,035 11,667 - 2012-13 163,130 (4) - 8,055 (4) 468,875 91,140 11,094 - 2013-14 151,206 (4) (5) - 3,736 (4) (5) 477,736 10,361 - 148 2004-05 (4) (5) 89,317 (4) (5) Business Activities Water Sewer Revenue Bonds Water Sewer G.O. Bonds Landfill G.O. Bonds 2004-05 13,135 870 115,140 13,660 2,676 535,606 (1) 2,270 7.67 2005-06 12,375 700 190,020 12,285 2,613 681,679 (1) 2,794 9.08 2006-07 11,595 520 229,130 10,862 2,349 825,056 (1) 3,354 9.86 2007-08 10,805 331 288,950 10,240 1,688 982,476 (1) 3,946 11.32 2008-09 9,995 132 282,345 12,425 1,080 1,146,823 (1) 4,587 13.11 2009-10 9,160 - 273,140 14,278 592 1,150,251 (1) 4,601 13.56 2010-11 8,300 - 289,175 11,901 151 1,113,440 (1) 4,901 14.12 2011-12 6,485 (4) - 282,625 708 - 1,064,620 (1) 4,694 13.27 2012-13 5,515 (4) - 273,080 - - 1,020,889 (1) 4,471 12.21 2013-14 - - 267,254 - - 999,610 (5) 4,327 11.52 Fiscal Year Notes Payable Total Primary Government Capital Leases 149 (4) (5) Total Debt per Capita(3) Percentage of Personal Income (2) (1) Does not include other long-term obligations such as compensated absences, unamortized premiums, claims/judgments, arbitrage, post-closure costs, etc. (2) Calculate by dividing Glendale population with Maricopa County population and multiplying by total personal income to arrive at Glendale personal income (data from Schedule 15). Then divide total primary government amount by Glendale personal income to arrive at percentage of personal income. (3) Numbers not expressed in thousands. (4) Amounts outstanding less July 1. (5) Includes unamortized premiums of debt issuance and discount on debt issuance. City of Glendale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (amounts expressed in thousands) Less: Amounts Available in Debt Service Funds(2) General Obligation Bonds Fiscal Year 171,070 (1) 2005-06 188,230 (1) 2006-07 236,349 2007-08 2004-05 $ Schedule 11 $ 19,472 Total $ Percentage of Net Assessed Value of Property Per Capita(3) 151,598 13.25 % $ 642.36 22,507 165,723 13.05 679.19 (1) 24,600 211,749 15.45 859.44 223,660 (1) 30,145 193,515 10.59 778.01 2008-09 207,865 (1) 37,418 170,447 7.77 682.30 2009-10 234,755 (1) 41,934 192,821 9.05 770.75 2010-11 201,680 (1) 21,250 180,430 10.29 794.09 2011-12 185,495 (1) (4) 16,765 168,730 14.68 744.22 2012-13 168,645 (1) (4) 12,641 156,004 14.90 681.22 2013-14 147,810 (4) 9,310 138,500 12.06 599.28 Source: Maricopa County - Abstract by tax authority and class ADOA Office of Employment and Population Statistics - Population estimates for July 1, 2013 Note: (1) Includes general obligation water and sewer bonds. (2) Includes the current general obligation bond liability plus the general obligation debt service fund balance at June 30. (3) Per capita is in actual dollars. (4) Includes the July 1 payment. 150 City of Glendale, Arizona Net Direct and Overlapping Governmental Activities Debt June 30, 2014 (amounts expressed in thousands) Schedule 12 Net Debt Outstanding Jurisdiction Peoria Unified School District No. 11 $ 238,910 Percentage Applicable to Glendale 21.8075 % Amount Applicable (2) to Glendale $ 52,100 Glendale Elementary School District No. 40 11,555 99.0268 11,443 Deer Valley Unified School District No. 97 156,175 19.9810 31,205 Alhambra Elementary School District No. 68 80 18.2212 15 Glendale Union High School District No. 205 109,990 20.5827 22,639 Maricopa County Community College District 654,190 3.2752 21,426 Phoenix Union High School District No. 210 299,505 1.1376 3,407 Pendergast Elementary School District No. 92 15,915 24.3003 3,867 Tolleson Union High School District No. 214 43,300 6.9055 2,990 Washington Elementary School District No. 6 74,725 2.6640 1,991 166,855 0.0648 108 Agua Fria Union High School District No. 216 48,970 0.0716 35 Litchfield Elementary School District No. 79 30,000 0.1071 32 Cartwright Elementary School District No. 83 26,325 Maricopa County Dysart Unified School District No. 89 - - Total Overlapping Debt 1,876,495 151,258 (1) 699,013 699,013 City of Glendale Debt Total $ 2,575,508 $ Source: Maricopa County - Abstract by tax authority and class, Abstract by tax area code and Annual Report of Bonded Indebtedness. (1) The City of Glendale debt includes total General Obligation (GO) and revenue bonds debt outstanding and capital leases. (2) Calculation based on Net Debt Outstanding multiplied by Percentage Applicable to Glendale, which is determined by dividing the tax area code net secondary assessed value by the tax authority net secondary assessed value. 151 850,271 This page left blank intentionally. 152 City of Glendale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (amounts expressed in thousands) Schedule 13 Legal Debt Margin Calculation for Fiscal Year 2014 Assessed value 6% Type Bonds $ 1,148,108 Debt limit (6% of assessed value) 68,886 Debt applicable to limit: General obligation bonds 2,880 Less: Amount set aside for repayment of general obligation debt (465) Total net debt applicable to limit Legal debt margin 2005 Debt limit $ 68,673 2006 $ 76,174 2007 $ 82,259 2008 $ 109,621 2009 $ 131,621 $ 2011(1) 2010 $ 127,854 $ 105,214 2012(1) $ 68,971 2013(1) $ 62,836 2,415 66,471 2014(1) $ 68,886 Total net debt applicable to limit Legal debt margin 51,682 $ 16,991 52,539 $ 23,635 38,998 $ 43,261 43,358 $ 66,263 32,121 $ 99,500 29,010 $ 98,844 14,399 $ 90,815 11,455 $ 57,516 7,309 $ 55,527 2,415 $ 66,471 Total net debt applicable to the 153 limit as a percentage of debt limit 75.26% 68.97% 47.41% 39.55% 24.40% 22.69% 13.69% 16.61% 11.63% Assessed value 20% Type Bonds 3.51% $ 1,148,108 Debt limit (20% of assessed value) 229,622 Debt applicable to limit: General obligation bonds 144,930 Less: Amount set aside for repayment of general obligation debt (8,845) Total net debt applicable to limit Legal debt margin 2005 Debt limit $ 228,910 2006 $ 253,914 2007 $ 274,198 2008 $ 365,404 2009 $ 438,735 $ 2011 (1) 2010 $ 426,181 $ 350,714 2012(1) $ 229,905 2013(1) $ 209,455 136,085 93,537 2014(1) $ 229,622 Total net debt applicable to limit Legal debt margin 99,340 $ 129,570 113,184 $ 140,730 172,751 $ 101,447 150,157 $ 215,247 138,326 $ 300,409 163,811 $ 262,370 166,031 $ 184,683 159,306 $ 70,599 148,695 $ 60,760 136,085 $ 93,537 Total net debt applicable to the limit as a percentage of debt limit 43.40% 44.58% 63.00% 41.09% (1) Debt applicable to limit: General obligation bonds net of July 1 payment made prior to June 30. 31.53% 38.44% 47.34% 69.29% 70.99% 59.26% City of Glendale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (amounts expressed in thousands) Utility Service Charges(1) Fiscal Year 2004-05 $ 56,144 Schedule 14 Less: Operating Expenses(2) $ 32,100 Water and Sewer Revenue Bonds Net Debt Service Available Revenue Principal Interest $ 24,044 $ 6,495 (3) $ Coverage 6,168 (3) 1.90 154 2005-06 59,426 35,916 23,510 6,813 (3) 7,143 (3) 1.68 2006-07 66,646 40,825 25,821 6,303 (3) 9,280 (3) 1.66 2007-08 69,490 44,247 25,243 7,252 (3) 11,918 (3) 1.32 2008-09 69,300 40,175 29,125 9,876 (3) 13,539 (3) 1.24 2009-10 76,987 43,628 33,359 10,347 (3) 13,082 (3) 1.42 2010-11 81,127 41,550 39,577 11,107 (3) 13,598 (3) 1.60 2011-12 83,496 41,555 41,941 9,545 (6) 13,306 (3) 1.84 2012-13 83,454 39,203 44,251 9,755 13,152 1.93 2013-14 81,733 42,544 39,189 10,210 12,706 1.71 Transportation Bonds (4) Fiscal Year 2004-05 Transportation Sales Tax $ - Excise Tax Revenue Bonds (5) Debt Service Principal Interest $ - $ Excise Tax Revenue Coverage - $ - $ Debt Service Principal Interest 98,143 $ 1,885 $ Coverage 9,017 9.00 155 2005-06 - - - - 114,066 2,785 8,871 9.79 2006-07 - - - - 123,602 2,715 10,343 9.47 2007-08 23,672 4,075 3,255 3.23 127,373 7,399 17,617 5.09 2008-09 20,875 2,545 4,782 2.85 118,277 6,575 24,074 3.86 2009-10 19,488 2,675 4,655 2.66 109,536 5,600 27,812 3.28 2010-11 19,486 2,780 4,548 2.66 102,962 6,585 27,612 3.01 2011-12 20,665 2,890 4,437 2.82 100,081 (7) 2,590 (6) 27,279 3.35 2012-13 21,691 3,005 4,321 2.96 131,931 (7) 2,790 (6) 30,713 2013-14 23,112 3,125 4,201 3.15 141,674 (7) 6,500 22,951 (8) 3.94 4.81 Source: City of Glendale Finance Department Notes: (1) Operating revenues and nonoperating revenues excluding non-cash contributions, gains and losses. (2) Excluding depreciation. (3) Principal and interest amounts include debt service on the note payable to the Water Infrastructure Financing Authority of Arizona for the 00-01 loan and the 09-10 loan for fiscal years through 2010-11. (4) FY 2008 is the first year the City of Glendale has issued transportation bonds. (5) Excise tax revenue bonds include the Municipal Property Corporation and the Western Loop 101 Public Facilities Corporation (through FY 2012-13). (6) Excluding reductions to principal by refunded bonds - 2011-12 Water & Sewer Revenue Bond $74,050 and Excise Tax Revenue Bonds $8,945; and 2012-13 Excise Tax Revenue Bonds $243,250. (7) Excise tax revenue amounts include state shared revenues. (8) Includes interest expense from refunding the Western Loop 101 Public Facilities Bonds in December 2012. City of Glendale, Arizona Demographic and Economical Statistics Last Ten Fiscal Years (amounts expressed in thousands) Schedule 15 Fiscal Year City of Glendale Population(2) Maricopa County Population(6) 2004-05 236 3,638 2005-06 244 3,793 2006-07 246 2007-08 Personal Income $ Per Capita Personal Income(1)(4) (1) 120,716,738 $ Unemployment Rate 33,182 3.9 134,339,487 35,418 3.9 3,907 139,665,253 35,747 3.1 249 3,988 145,880,680 36,580 3.6 2008-09 250 4,116 146,898,132 35,690 8.4 2009-10 250 4,023 140,351,646 34,886 9.1 2010-11 227 3,817 147,724,392 (3) 38,701 9.2 2011-12 229 (5) 3,884 147,724,392 (3) 38,034 7.6 2012-13 231 (5) 3,933 (3) 147,724,392 (3) 37,560 7.2 2013-14 231 (5) 3,933 (3) 147,724,392 (3) 37,560 6.5 Note: (1) Personal Income and Per Capita Income figures are for Maricopa County. City of Glendale is one of several Valley cities that comprise Maricopa County, including Phoenix, Mesa and Scottsdale. (2) Estimate provided by City of Glendale Planning Department. (3) The previous fiscal year Maricopa County CAFR provides the most current number. (4) Calculation based on personal income divided by Maricopa County population. (5) Estimate provided by Arizona Department of Administration, Office of Employment and Population Statistics website. (6) Maricopa County population extracted from Maricopa County CAFR statistical section. 156 % City of Glendale, Arizona Principal Employers Current Year and Nine Years Ago Schedule 16 2014 Employer Luke Air Force Base Banner Thunderbird Health System Arrowhead Towne Center WalMart Glendale Union High School District Glendale Community College Glendale Elementary School District City of Glendale Arrowhead Community Hospital AAA Deer Valley Unified School District Honeywell, Inc. Schuck and Sons Total Employees 5,610 2,900 2,500 2,175 1,944 1,790 1,608 1,592 1,010 1,000 Rank 1 2 3 4 5 6 7 8 9 10 2005 Percentage of Total City Employment 4.76 % 2.46 2.12 1.85 1.65 1.52 1.37 1.35 0.86 0.85 22,129 18.79 % Source: City of Glendale Economic Development Department Department of Economic Security, Research Administration City of Glendale Human Resources Department 157 Employees 7,907 2,036 2,500 Rank 1 4 3 Percentage of Total City Employment 7.64 % 1.97 2.42 1,862 1,220 1,684 2,021 6 9 7 5 1.80 1.18 1.63 1.95 1,432 2,762 1,150 8 2 10 1.38 2.67 1.11 24,574 23.75 % City of Glendale, Arizona Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 158 Function/Program 2014 General government Management services Finance Planning Building Legal Other Police Fire Homeland security Community service Parks and recreation Library Public works Engineering Transportation Utilities Total 31.00 49.00 10.00 21.00 69.00 63.00 534.00 253.00 48.00 59.00 32.00 173.00 17.00 57.00 176.00 1,592.00 2013 2012 34.00 54.00 13.00 21.00 67.00 73.00 505.00 260.00 56.00 75.00 32.00 165.00 18.00 60.00 172.00 1,605.00 36.00 57.00 14.00 24.00 66.00 77.00 534.00 269.00 60.00 92.00 48.00 179.00 19.00 65.00 185.00 1,725.00 Sources: City Budget Division for 2005-08 City of Glendale Human Resources Department for 2009-14 Schedule 17 Full-Time Equivalent Employees as of June 30 2011 2010 2009 2008 45.00 59.00 15.00 26.00 70.00 90.00 544.00 270.00 72.00 123.00 56.00 203.00 26.00 69.00 167.00 1,835.00 43.00 61.00 24.00 32.00 73.00 96.00 554.00 276.00 72.00 122.00 57.00 225.00 27.00 63.00 170.00 1,895.00 38.00 69.00 33.00 43.00 70.00 104.00 567.00 278.00 6.00 69.00 85.00 65.00 256.00 39.00 67.00 171.00 1,960.00 35.00 86.75 28.50 53.75 78.00 108.50 557.50 263.50 7.00 93.75 99.25 87.76 281.00 45.00 89.25 186.00 2,100.51 2007 2006 35.00 86.75 28.50 51.75 78.00 105.50 543.50 251.50 7.00 87.25 98.75 88.76 271.00 45.00 88.25 165.00 2,031.51 34.00 86.75 26.50 55.75 67.00 101.00 506.50 237.50 84.25 89.75 87.76 266.00 46.00 81.25 146.00 1,916.01 2005 32.00 85.75 26.15 57.75 67.00 94.50 507.50 216.00 82.75 86.75 87.76 266.00 45.00 80.25 140.00 1,875.16 City of Glendale, Arizona Operating Indicators by Function/Program Last Ten Fiscal Years Function/Program 159 Police Calls for service Bookings Criminal offense reports Fire EMS calls Fire calls Water Number of billed accounts Water produced (millions gallons) Sewer Number of billed accounts Treated influent (millions gallons) Refuse collection Residential curb service (tons per year) Commercial container service (tons per year) Airport Departures/arrivals (2) General government Building permits Library Volumes in collection (4) Transit Dial-A-Ride passengers Schedule 18 2014 Fiscal Year 2010 2009 2013 2012 2011 2008 2007 2006 2005 146,538 18,939 31,481 127,333 8,588 34,995 127,829 7,083 33,938 129,161 9,902 27,304 129,868 11,015 29,765 137,586 11,990 32,599 146,489 12,902 32,918 154,176 12,119 35,169 148,633 8,640 34,271 158,507 8,138 33,578 30,262 3,461 30,082 3,478 29,321 3,495 27,751 3,573 26,591 3,847 24,419 3,900 25,851 4,216 25,819 4,322 22,284 5,886 60,932 13,768 60,450 13,667 60,109 14,064 59,732 13,569 59,579 14,284 59,079 15,375 59,807 14,943 60,700 16,231 60,004 16,075 59,630 15,896 56,791 6,244 56,357 6,065 55,987 5,970 55,609 5,998 55,439 6,405 56,709 6,570 54,936 6,661 54,662 7,227 56,737 7,410 55,995 7,191 45,942 41,879 46,833 40,272 48,187 39,722 49,784 40,451 52,634 41,797 53,493 44,600 58,865 48,267 60,914 51,425 63,521 49,517 57,942 44,441 70,679 76,390 80,416 80,291 69,834 91,998 137,762 152,194 143,798 108,887 4,799 6,383 5,304 5,619 5,194 5,289 6,931 6,310 7,888 7,079 408,516 415,695 446,010 529,113 523,512 540,352 546,136 557,342 596,266 620,130 78,271 85,798 90,577 92,134 89,808 91,841 88,638 84,132 89,055 87,831 Source: Various city departments and FAA ATADS report Note: Water and sewer statistics are contained in Schedule 20 and 21. (1) Fire department figures are on a calendar year, January 1, 2006, through November 3, 2006. (2) Departures/arrivals are based on calendar year prior to 2005-2006. 2005 figures are through October 2005. 2009 figures are through October 30, 2009. 2010 forward are based on fiscal year. (3) Amounts based on calendar year: January 1, 2005, through September 30, 2005. (4) Includes all formats: books, magazines, CD's, DVD's and electronic/downloadable collection. (1) (1) 18,977 2,642 (3) (3) City of Glendale, Arizona Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/Program 160 Police Stations Patrol vehicles Fire stations General government City square miles Water Treatment capacity (millions gallons per day) Storage capacity (millions gallons) Miles of water mains Sewer Treatment capacity (millions gallons per day) Miles of sewer lines Landfill Landfill capacity - south cell Landfill capacity used - south cell Other public works Streets (miles) Parks and recreation Number of parks/retention basins/facilities Acres of parks Transit Dial-A-Ride minibuses Source: Various city departments Note: Landfill capacity in thousands Schedule 19 2014 2013 2012 2011 2010 Fiscal Year 2009 2008 2007 2006 2005 3 176 9 3 139 9 3 154 9 3 174 9 3 157 9 3 159 9 3 158 9 3 157 9 3 156 9 3 156 9 59 59 59 59 59 59 58 57 57 57 104.1 67 994 104.1 67 994 104.1 67 994 104.1 67 994 94.1 67 994 94.1 67 850 81.6 62 800 81.6 62 750 81.6 62 750 81.6 62 750 29.2 707 29.2 707 29.2 700 29.2 690 29.2 680 29.2 670 29.2 659 29.2 659 29.2 659 29.2 659 21,218 18,849 22,065 19,257 21,912 18,444 21,666 18,529 21,666 18,126 22,594 17,776 22,594 17,358 22,594 16,790 22,594 16,328 718 718 717 802 736 736 736 736 733 709 100 2189 100 2,189 100 2,189 100 2,189 100 2,189 99 2,199 99 2,125 95 2,125 92 2,058 92 2,052 20 21 21 21 22 23 22 22 25 25 21,493 19,220 City of Glendale, Arizona Miscellaneous Water and Sewer Rate Statistics June 30, 2014 Schedule 20 WATER RATES PER METER SIZE Commercial and Residential Monthly Base Charge Inside Outside City City Meter Size (inch) $ 5/8 3/4 1 1 1/2 2 3 4 6 8 10 12 9.70 12.30 17.40 35.30 62.90 106.00 189.00 376.00 557.00 896.00 1,326.00 $ 12.61 15.99 22.62 45.89 81.77 137.80 245.70 488.80 724.10 1,164.80 1,723.80 Commercial 3/4 inch Meter Size and Greater (1) Residential Meter Size Gallons per Month All Year Inside Outside City City All Year Inside Outside City City 0 - 6,000 7,000 - 15,000 16,000 - 30,000 over 31,000 $ 2.14 2.68 3.76 5.27 $ 2.28 2.28 2.28 2.28 $ 2.79 3.49 4.89 6.86 $ 2.97 2.97 2.97 2.97 Summer Excess Rate Inside Outside City City $ 2.85 2.85 2.85 2.85 SEWER SERVICE RATES Type of Service Inside City Single Family Dwelling Unit $ 32.48 Office Building 53.66 Apartment - Average 5 units 85.85 Apartment - Average 35 units 535.50 Retail/Wholesale 59.05 (1) Per 1,000 gallons SOURCE: City of Glendale Finance as of October 2014 161 Outside City $ 41.13 N/A 78.67 157.11 N/A $ 3.71 3.71 3.71 3.71 City of Glendale, Arizona Miscellaneous Water and Sewer Statistics June 30, 2014 Schedule 21 HISTORICAL AVERAGE NUMBER OF WATER ACCOUNTS (1) Fiscal Year Ending June 30 2005 2006 2007 2008 2009 (3) (3) 2010 (3) 2011 (4) 2012 2013 (3) 2014 (3) Multi-Family (2) Residential 55,139 55,354 55,395 54,396 53,523 53,522 53,663 53,858 54,056 54,085 Commercial 4,491 4,650 5,305 5,411 5,556 4,247 4,264 4,281 4,296 4,336 1,672 1,674 1,673 1,680 1,690 Sprinkler (2) 1,647 1,655 1,666 1,669 1,685 Total 59,630 60,004 60,700 59,807 59,079 57,769 57,927 58,139 58,352 58,421 (1) Total meters in the system being read monthly. Slightly lower figure for active accounts due to vacant properties. (2) In 2010, the schedule was revised to separate into their own categories Sprinkler from Residential and Muli-Family from Commercial. (3) As of October following the fiscal year ended. (4) As of August 2012. SOURCE: City of Glendale Water Services Department WATER DELIVERIES Acre Feet Calendar Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Residential (1) 34,427 33,567 34,660 34,594 32,278 31,457 27,537 27,409 27,695 26,921 Commercial 8,382 9,580 10,951 11,281 10,764 10,122 10,482 11,143 11,278 10,634 (2) Other 1,211 5,636 3,730 3,937 2,818 5,606 4,455 9,558 3,683 3,050 Total 44,020 48,783 49,341 49,812 45,860 47,185 42,474 48,110 42,656 40,605 (1) Residential includes both single and multi-family housing. (2) Starting in 2005, Other represents unbilled water and system loses. SOURCE: Annual Report of Arizona Department of Water Resources. SEWERAGE ACCOUNTS BILLED AND SEWAGE TREATED Fiscal Year Ending June 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 No. of Sewer (1) Accounts Billed 55,670 55,995 56,737 54,662 54,936 56,709 56,868 57,087 57,300 57,385 91st Ave WWTP (2) (MGD) Actual 7.9 8.2 8.2 7.8 6.8 6.8 8.3 7.9 7.3 8.4 Arrowhead (MGD) 3.0 3.0 2.9 2.9 2.8 2.8 2.3 2.3 2.5 2.7 West (MGD) 7.0 8.5 9.2 9.1 8.6 8.4 5.4 4.4 5.8 6.0 (1) The number of billed accounts is less than the number of connections due to vacant properties. (2) The 91st Avenue Wastewater Treatment Plant is a regional plant servicing five cities. Previously listed as "Multi-City Plant" (SROG) SOURCE: City of Glendale Water Services Department 162 Total Treated 17.9 19.7 20.3 19.8 18.2 18.0 16.0 14.6 15.6 17.1 City of Glendale Finance Division 5850 West Glendale Avenue, Suite 302 Glendale, Arizona 85301 (623) 930-2480