Vistancia
Community Facilities
District
Peoria, Arizona

Annual
Financial Report
For Fiscal Year Ended
June 30, 2014

District Board:
Bob Barrett, Chairman
Ron Aames
Ben Toma
Jon Edwards
Carlo Leone
Bill Patena
Tony Rivero

District Administrative Staff:
Carl Swenson, District Manager
Brent D. Mattingly, District Treasurer & Chief Financial Officer
Stephen M. Kemp, District Counsel
Rhonda Geriminsky, District Clerk

Prepared by City of Peoria Finance Department

VISTANCIA COMMUNITY FACILITIES DISTRICT
Peoria, Arizona
ANNUAL FINANCIAL REPORT
For the Year Ended June 30, 2014
TABLE OF CONTENTS
Page
Transmittal letter

ii

Independent Auditor’s Report

1

Management’s Discussion and Analysis (required supplementary information)

3

BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Position
Statement of Activities

8
9

Fund Financial Statements
Governmental Funds Balance Sheet
Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Activities
Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
Of Governmental Funds to the Statement of Activities – Governmental Activities
Budgetary Comparison Statement – General Fund
Notes to the Financial Statements

10
11
12
13
14
16

SUPPLEMENTAL INFORMATION
Budgetary Comparison Schedule – Debt Service Fund
CONTINUING DISCLOSURE INFORMATION – Unaudited
Secondary Assessed Value and Full Cash Value of Taxable Property
Secondary Assessed Value by Major Property Taxpayers
Direct and Overlapping General Obligation Bonded Debt

i

27
Table
I
II
III

29
30
31

Vistancia Community Facilities District
Peoria, Arizona

November 24, 2014
Honorable Board of Directors:
The accompanying basic financial statements of the Vistancia Community
Facilities District (the District) for the year ended June 30, 2014, have been
prepared for the use of the District Board, staff and other interested parties. This
report includes Management’s Discussion and Analysis, the basic financial
statements for the District including government-wide financial statements, fund
financial statements and footnotes, and supplemental budget comparison
schedules for the District’s funds.
This report was prepared by the Financial Services Division of the Finance
Department of the City of Peoria, Arizona (the City) as finance staff for the
District. It is intended as District management’s report to the District Board and
other interested parties.
The District is a component unit of the City of Peoria, Arizona for financial
reporting. As a component unit of the City, the accompanying financial
statements were included in the annual audit of the City’s Comprehensive Annual
Financial Report (CAFR) for the year ended June 30, 2014. A copy of the City’s
CAFR may be obtained by contacting the City’s Finance Department at 8401
West Monroe Street, Peoria, Arizona 85345. Additionally, the auditors, Heinfeld,
Meech & Co., P.C., have also expressed an opinion on the separate financial
statements of the District included herein. That opinion may be found on page 1
of this financial report.
Questions about the financial statements included herein should be addressed to
the City of Peoria, Finance Department at the above address.

ii

3033 N. Central Ave., Suite 300
Phoenix, Arizona 85012
Tel (602) 277-9449
Fax (602) 277-9297

INDEPENDENT AUDITOR’S REPORT
Board of Directors
Vistancia Community Facilities District
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of
Vistancia Community Facilities District (District), a component unit of the City of Peoria, Arizona, as of and
for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise
the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Vistancia Community Facilities
District, as of June 30, 2014, and the respective changes in financial position thereof and the respective
budgetary comparison for the General Fund for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements of the Vistancia Community Facilities District are intended to
present the financial position and the changes in financial position of only that portion of the governmental
activities and each major fund that are attributable to the District, a component unit of the City of Peoria,
Arizona. They do not purport to, and do not, present fairly the financial position of the City of Peoria,
Arizona, as of June 30, 2014, and the changes in its financial position for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
Page 1

TUCSON • PHOENIX • FLAGSTAFF
www.heinfeldmeech.com

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 3 through 7 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the District’s basic financial statements. The transmittal letter, supplemental information, and
continuing disclosure information as listed in the table of contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The supplemental information is the responsibility of management and was derived from and relates 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 supplemental information is fairly stated in all material respects
in relation to the basic financial statements as a whole.
The transmittal letter and the continuing disclosure information have not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.

HEINFELD, MEECH & CO., P.C.
CPAs and Business Consultants
November 24, 2014

Page 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

MANAGEMENT’S DISCUSSION AND ANALYSIS

As management of the Vistancia Community Facilities District (the District), we offer this narrative
overview and analysis of the financial activities of the District for the fiscal year ended June 30, 2014.
This discussion and analysis is designed to (1) assist the reader in focusing on significant financial
issues, (2) provide an overview of the District’s financial activity, (3) identify changes in the District’s
financial position, and (4) identify individual fund issues or concerns.
On October 15, 2002, the District was formed by petition to the City Council of the City of Peoria, Arizona
(City) pursuant to Title 48, Chapter 4, Article 6 of the Arizona Revised Statutes. The District is a special
purpose taxing district and separate political subdivision under Arizona statues. As such, the District can
levy taxes and issue bonds, independent of the City. Property owners within the District boundaries pay
for District infrastructure and functions through secondary property tax assessments. The District’s
purpose is to acquire or construct public infrastructure in a specified area of the City. City staff administers
the District. The Peoria City Council also serves as the District Board of Directors. The District is one of
the City of Peoria’s component units for the fiscal year ended June 30, 2014.
Financial Highlights


The fiscal year 2014 tax levy was $2.10 per $100 valuation.



District tax collections plus developer contributions were sufficient to pay District debt service
during fiscal year 2014.



The fund balance of the District’s governmental funds at June 30, 2014, was $18.4 million, a
decrease of $1.0 million. Of the total ending governmental fund balance, $8.7 million is
restricted for debt service, and $9.7 million is restricted for capital projects.

OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis introduces the District’s basic financial statements. The basic financial
statements are comprised of three components: (1) government-wide financial statements, (2) fund
financial statements and (3) notes to the financial statements.
Government-wide Financial Statements
The statement of net position is designed to provide a broad overview of the District’s finances in a
manner similar to those used by private businesses. The statement of net position presents information
on all of the District’s assets and liabilities, both current and long-term, with the difference between assets
and liabilities reported as net position. The focus on net position is designed to be similar to the
emphasis for businesses. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the District is improving or deteriorating. To assess the
overall health of the District, other indicators, including non-financial indicators should also be considered.
The statement of activities presents information showing how the District’s net position changed over the
most recent fiscal year. Since full accrual accounting is used for the government-wide financial
statements, all changes to net position are reported at the time that the underlying event giving rise to the
change occurs, regardless of the timing of the 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, such as
revenues pertaining to uncollected taxes and expenses related to accrued interest. This statement also
focuses on both the gross and net costs of the various functions of the District, based only on direct
functional revenues and expenses. This is designed to show the extent to which the various functions
depend on general taxes and revenues for support.

3

Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or conditions. Funds are used to ensure and demonstrate compliance
with finance-related legal requirements. All of the funds of the District are governmental funds and all are
restricted, either by bond covenants or state law, as to use.
The District maintains two governmental funds, a general fund and a debt service fund. 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 each fund.
The District adopts annual budgets for both the general fund and the debt service fund. Budgetary
comparison statements and schedules are provided to demonstrate compliance with the adopted
budgets.
Notes to the financial statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the financial statements and should be read in conjunction with the
financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As of June 30, 2014, the liabilities of the District exceed its assets by $32.4 million (net position). The
deficit in net position is due to the nature of the District’s operations. The purpose of the District is to
acquire or construct certain capital infrastructure, primarily water and wastewater systems, within the
boundaries of the District. Once the capital infrastructure is acquired or constructed, it is turned over to
the City to operate. As a special purpose district and a separate political subdivision under the Arizona
Constitution, the District can levy taxes and issue bonds independently of the City. Property owners
within the District are assessed property taxes to pay the debt service over the life of the bonds. The City
has no liability for debt of the District. Because the capital assets are generally reported in the City’s
financial statements, the Statement of Net Position for the District reflects a large liability (bonds payable)
without an offsetting asset. Capital assets are only shown on the District’s financial statements if they are
classified as work-in-process at year end.
The following tables, graphs and analysis discuss the financial position and changes to the financial
position for the District as a whole as of and for the year ended June 30, 2014, with comparative
information for the previous year.
Net Position
Net position may serve over time as a useful indicator of a government’s financial position. The following
table reflects the condensed Statement of Net Position of the District for June 30, 2014, compared to the
prior year.
Statement of Net Position
As of June 30
(In millions of dollars)

Governmental Activities
Current and other assets
Capital assets
Total assets
Other liabilities
Long-term liabilities outstanding
Total liabilities
Net position:
Unrestricted*

*June 30, 2013 net position has been restated.

2014
$ 18.4
1.7
20.2

2013
$ 19.6
3.7
23.3

1.4
51.2
52.6

1.6
53.8
55.4
$ (32.1)

$ (32.4)

% Change
(6.1)%
(54.1)
(13.3)
(12.5)
(4.8)
(5.1)
0.9%

See Notes to the Financials Statements (footnote 1.,N.) for explanation

4

Net position of the District decreased $0.3 million, primarily due to the reduction (payment) of outstanding
debt and transfer of capital assets to the City. Current assets decreased $1.2 million in fiscal year 2014
as cash was spent to construct capital assets. Work-in-progress capital assets of $1.7 million were
retained by the District at June 30, 2014 pending asset completion. Completed capital assets of $2.8
million were transferred to the City during fiscal year 2014. Since the net assets of the District are
negative at June 30, 2014, they are classified as unrestricted.
Changes in Net Position
The following table compares the revenue and expenses for the current and previous fiscal year.
Changes in Net Position
For the year ended June 30
(In millions of dollars)

Governmental Activities
2014
REVENUES:
Program revenues:
Developer contributions
General revenues:
Property taxes
Investment earnings
Total revenues
EXPENSES:
Program activities:
General government
Interest expense on debt
Total expenses
Excess (shortage) before transfers
Transfers in (out)
Increase (decrease) in net position

$

3.1

$

2.2
0.0
5.3

2.8
2.8
2.5
(2.8)
$ (0.3)

2013

% Change

3.4

(8.8)%

2.2
0.1
5.7

24.0
(7.0)

3.0
3.0
2.7
(1.3)
$ 1.4

(3.3)
(3.3)
(11.1)
115.4
(114.3)%

The net position of the District decreased $0.3 million in fiscal year 2014. Property tax collections stayed
steady. The developer contributions decreased by $0.3 million. Under an agreement between the
District and the developer, the developer is required to cover any deficits between tax collections and
debt service requirements. In fiscal year 2014 the developer contributed $3.1 million for payments on
district debt. The property tax rate remained unchanged at $2.10 per $100 of valuation. Interest expense
on debt reduced $0.2 million. Transfers of completed capital assets increased by $1.5 million.
FINANCIAL ANALYSIS OF THE DISTRICT’S FUNDS
The District maintains fund accounting to demonstrate compliance with budgetary and legal requirements
related to special purpose districts and general obligation bonds.
The focus of the governmental fund financial statements is to provide information on near-term inflows,
outflows and balances of spendable resources. Such information is useful in assessing the District’s
ability to pay the debt service on the general obligation bonds it issues to fund construction or acquisition
of public infrastructure.
The fund balance of the District’s combined governmental funds is $18.4 million, a decrease of $1.0
million from the previous year. The decrease is due to the expenditure of bond proceeds on capital
outlay. Of the total ending fund balance $8.7 million is restricted for debt service and $9.7 million is
restricted for capital projects.
Governmental Fund revenues totaled $5.3 million (down $0.4 million from 2013) in fiscal year ending
June 30, 2014, of which $3.1 million is from developer contributions under the Standby Contribution
Agreement between the District and the developer.
Property tax revenues stayed steady in fiscal year 2014. There was a slight decrease in the assessed
valuation from $104.4 million to $102.9 million. The property tax rate of the District remained unchanged.
5

CAPITAL ASSET AND DEBT ADMINISTRATION
The District was formed to finance the acquisition or construction of public infrastructure that is
subsequently donated to the City for operation. The District does not own or operate infrastructure once
completed. Since formation, District bonds have been issued and the proceeds used to construct public
infrastructure such as a water reclamation plant, wells and booster stations. During fiscal year 2014, $0.7
million was expended for capital. During fiscal year 2014, $2.8 million of completed capital assets were
transferred to the City, and accepted by the City as a donation of capital assets. Construction in progress
of $1.7 million was held by the District at the end of fiscal year 2014.
The District is authorized, by an election held November 12, 2002, to issue $100 million in District general
obligation or revenue bonds. As of June 30, 2014, the District has issued $67.6 million of general
obligation bonds against the authorization. These bonds are to be repaid through property taxes levied
on the property within the District. Under a Standby Contribution Agreement, Vistancia LLC, the
developer of the community, is obligated to fund any difference between debt service costs and property
tax revenues. The City has no obligation for the District’s debt, other than the administration of the
collection of property taxes and the payment of debt service on behalf of the District.
At the time of issue, District general obligation bonds have a 20-year term. In the event the District Board
decides at a future time to dissolve the District, State statute provides that all taxable property in the
District will remain subject to the lien for the payment of the bonds until all bonds have been defeased.
Outstanding Long-Term Debt at June 30

General obligation bonds

Governmental Activities
2014
2013
$ 51,095,000
$ 53,725,000

The District issued $21,250,000 in bonds in fiscal year 2003, $23,550,000 during fiscal year 2005, and an
additional $22,760,000 during fiscal year 2007. As of June 30, 2014, $16,465,000 has been paid against
principal on the outstanding debt.
BUDGETARY HIGHLIGHTS
The District’s annual budget is the legally adopted expenditure control document of the District. The
budgetary comparison statement is required for the General Fund and may be found on page 14. The
statement compares the original adopted budget, the budget as amended throughout the fiscal year, and
the actual expenditures prepared on a budgetary basis. A budgetary schedule for the other governmental
fund is also presented on page 27.
Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see
Note 1.E on page 18 for more information on budget policies). Some of these amendments include
transfers from contingency to cover approved carryovers from the previous budget, capital projects with
budget overages (or whose timing was accelerated), and other unanticipated costs.
No amendments increasing the District’s total adopted budget of $28.6 million occurred during fiscal year
2014. Budget amendments between funds or departments or from budgeted contingencies into
operational expense/expenditure accounts did occur.
General Fund inflows (revenues and other sources) of $34.1 thousand, on a budgetary basis, was below
budgeted inflows of $38.5 thousand by $4.4 thousand while budgetary basis outflows (expenditures and
other uses) of $1.0 million were 8.7% of final budgeted outflows. Capital is budgeted at 100% of all
projects identified in the feasibility report regardless of whether the project will be complete within one or
five years. Reduced General Fund outflows resulted primarily from unspent capital outlay.

6

ECONOMIC FACTORS
The unemployment rate in the metropolitan Phoenix region for June 2014 was 6.0%, which remains
below both the state (7.5%) and national average (6.3%). The regional economy continues to recover at
a slow pace with population growth in the 1% range and modest improvements in job creation over the
12-month period at 2.3%, slightly faster than the national rate of 1.5%. Construction activity began to
improve markedly over the previous year (though, much lower than after previous recessions) in the
region as home values and re-sale activity rebounded. Most job gains in the state were in the leisure and
hospitality, business and financial services, education, and healthcare sectors. Peoria also experienced
growth in new home starts with a 25.0% increase in single-family home permits compared to the previous
fiscal year. Commercial activity improved during the year, but reflects increases over historically low
levels during the previous two fiscal years.
The adopted fiscal year 2015 budget for the District is $27.2 million, a 4.9% decrease from 2014. The tax
rate for the District for fiscal year 2015 is $2.10, unchanged from the fiscal year 2014 tax rate.
FINANCIAL CONTACT
This financial report is designed to provide a general overview of the District’s finances and to
demonstrate accountability for the use of public funds. Questions about any of the information provided
in this report, or requests for additional financial information should be addressed to the City’s Finance
Department at the following address: City of Peoria, 8401 W. Monroe Street, Peoria, Arizona 85345.

7

BASIC FINANCIAL STATEMENTS

VISTANCIA COMMUNITY FACILITIES DISTRICT
STATEMENT OF NET POSITION
JUNE 30, 2014
Primary Government
Governmental
Activities
ASSETS
Accounts receivable, net
Interest receivable
Property taxes receivable
Restricted cash and cash equivalents
Restricted investments
Non-depreciable capital assets
Total assets

LIABILITIES
Accounts payable
Interest payable
Non-current liabilities:
Due within one year:
Current portion of bonds payable
Due in more than one year:
Noncurrent portion of bonds payable
Plus: Unamortized bond premium
Total liabilities
NET POSITION
Unrestricted
Total net position

$

13,344
9,714
22,313
8,618,833
9,753,598
1,734,598
20,152,400

17,226
1,393,415

2,765,000
48,330,000
53,221
52,558,862

$

(32,406,462)
(32,406,462)

The accompanying notes are an integral part of the financial statements
8

VISTANCIA COMMUNITY FACILITIES DISTRICT
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014

Expenses
Functions/Programs
Primary government:
Governmental activites:
General government
Public Works
Interest expense on debt
Totals

$

2,915
2,782,084
2,784,999

Capital
Contributions

$

Net (Expenses) Revenues and
Changes in Net Assets
Governmental Activities

3,142,411
3,142,411

General revenues
Taxes:
Property taxes, levied for debt service
Donations of capital asssets
Investment earnings
Transfers out
Total general revenues and transfers
Change in net position
Net position - beginning

$

(2,915)
3,142,411
(2,782,084)
357,412

2,151,268
38,754
(2,756,853)
(566,831)
(209,419)
(32,094,106)

Prior period adjustment (note 1.,N.)
Net position - beginning - restated
Net position - ending

The accompanying notes are an integral part of the financial statements
9

(102,937)
(32,197,043)
$ (32,406,462)

VISTANCIA COMMUNITY FACILITIES DISTRICT
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2014
Debt
Service
Fund

General
Fund
ASSETS
Accounts receivable, net
Interest receivable
Property taxes receivable
Restricted cash and cash equivalents
Restricted investments
Total assets

$

$

LIABILITIES DEFERRED INFLOWS & FUND BALANCES
Liabilities:
Accounts payable
Total liabilities
Deferred inflow of resources:
Unavailable revenue-property tax
Total deferred inflow of resources
Fund balances:
Unspendable:
Prepaid items
Restricted for:
Debt service
Capital projects
Total fund balance
Total liabilities, deferred inflows & fund balance
$

1,164
4,308,013
5,382,155
9,691,332

$

$

13,344
8,550
22,313
4,310,820
4,371,443
8,726,470

Totals
$

$

13,344
9,714
22,313
8,618,833
9,753,598
18,417,802

635
635

16,591
16,591

17,226
17,226

-

12,922
12,922

12,922
12,922

8,696,957
8,696,957
8,726,470

8,696,957
9,690,697
18,387,654
18,417,802

9,690,697
9,690,697
9,691,332

$

The accompanying notes are an integral part of the financial statements
10

$

VISTANCIA COMMUNITY FACILITIES DISTRICT
RECONCILIATION OF THE BALANCE SHEET
TO THE STATEMENT OF NET POSITION
GOVERNMENTAL ACTIVITIES
JUNE 30, 2014

Fund balances - total governmental funds balance sheet

$

18,387,654

Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the governmental funds.
Governmental capital assets

1,734,598

Long-term liabilities, including bonds payable are not due and payable
in the current period and therefore are not reported in the governmental
funds.
Governmental bonds payable
Bond premiums are recognized at the time of issuance in the governmental
funds, but are deferred and recognized over the life of the bonds for
government-wide reporting
Property tax revenue earned but not received within 60 days of year-end
is deferred for the governmental statements, but is recognized as
revenue for the government-wide statements
Interest payable on long-term debt is not reported in the governmental
funds.
Net position of governmental activities - statement of net position

The accompanying notes are an integral part of the financial statements
11

(51,095,000)

(53,221)

12,922

(1,393,415)
$ (32,406,462)

VISTANCIA COMMUNITY FACILITIES DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2014
Debt
Service
Fund

General
Fund
REVENUES:
Taxes:
Property taxes
Investment earnings
Developer contributions
Total revenues

$

EXPENDITURES:
Current operating:
General government
Debt service:
Principal payments
Interest and other charges
Capital outlay
Total expenditures

$

736,380
736,380

Excess (deficiency) of revenues
over expenditures

(723,628)

OTHER FINANCING SOURCES (USES):
Transfers out
Total other financing sources and uses

Prior period adjustment (see note 1.,N.)
Fund balances - beginning - restated

9,690,697

2,630,000
2,854,633
736,380
6,223,928

(102,937)

10,421,575
$

2,630,000
2,854,633
5,487,548

8,966,396

-

$

2,152,633
38,754
3,142,411
5,333,798

2,915

(166,502)

10,421,575

$

2,915

-

(730,878)

Fund balances - beginning

2,152,633
26,002
3,142,411
5,321,046

(166,502)

(7,250)
(7,250)

Net change in fund balances

Fund balances - ending

12,752
12,752

Totals

(890,130)

(7,250)
(7,250)
(897,380)
19,387,971
(102,937)

8,863,459

19,285,034

8,696,957

$ 18,387,654

The accompanying notes are an integral part of the financial statements
12

VISTANCIA COMMUNITY FACILITIES DISTRICT
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014
Net change in fund balances - total governmental funds

$

(897,380)

Amounts reported for governmental activities in the statement of activities are different because:
Certain revenues are deferred in the governmental funds because they do not provide current
financial resources, but are considered revenue on the statement of activities.

(1,365)

Interest expense in the statement of activities differs from the amount reported in governmental
funds because accrued interest was calculated for bonds and notes payable for the statement
of activities, but is expensed when due for the governmental fund statements.

67,803

Governmental funds report capital outlays as expenditures. However, in the statement of
activities, the costs of those assets is allocated over their estimated useful lives and reported
as depreciation expense. This is the amount by which capital outlays ($736,380) exceeded
depreciation ($0) in the current period.

736,380

Repayment of bond principal is an expenditure in the governmental funds, but reduces long-term
liabilities in the statement of net position. No effect on net position.

2,630,000

Loss on refunding and bond premiums are expensed in the year of issuance for budgetary
purposes but are amortized to interest expense over the life of the bonds for GAAP purposes.

4,746

The donation of governmental capital assets to the City's Proprietary Funds is not shown in the
governmental fund statements but is a transfer out in the statement of activities
Change in net position of governmental activities- statement of activities

The accompanying notes are an integral part of the financial statements
13

(2,749,603)
$

(209,419)

VISTANCIA COMMUNITY FACILITIES DISTRICT
BUDGETARY COMPARISON STATEMENT
GENERAL FUND
FOR THE YEAR ENDED JUNE 30, 2014

Budgeted Amounts
Original
Final
Budgetary fund balance, July 1, 2013

$

10,557,606

$

10,557,606

Variance with
Final Budget
Over
(Under)

Actual
Amounts
(budgetary basis)
$

10,557,606

$

-

RESOURCES (INFLOWS):
Investment earnings
Total inflows
Amounts available for appropriation

38,500
38,500
10,596,106

38,500
38,500
10,596,106

34,112
34,112
10,591,718

(4,388)
(4,388)
(4,388)

CHARGES TO APPROPRIATIONS (OUTFLOWS):
Capital outlay
Transfers to other funds
Total charges to appropriations

10,595,826
10,595,826

10,436,093
10,436,093

903,538
903,538

(9,532,555)
(9,532,555)

Budgetary fund balance, June 30, 2014

$

280

$

160,013

$

9,688,180

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
$
10,591,718
Differences - budget to GAAP:
The fund balance at the beginning of the year is a budgetary resource but is not a
a current year revenue for financial reporting purposes
(10,557,606)
The City budgets certain revenues on the cash basis, rather than on the modified
accrual basis
(21,360)
Total revenues as reported on the combining statement of revenue, expenditures, and changes
in fund balances - non-major governmental funds
$
12,752
Uses/outflows or resources:
Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary
comparison schedule
$
903,538
Differences - budget to GAAP:
The City budgets for certain other expenditures on the cash basis, rather than on the
modified accrual basis
(159,908)
Capital outlay recognized as expenditures for budgetary purposes, but assets capitalized
in proprietary funds for financial reporting purposes
(7,250)
Transfers to other funds are outflows of budgetary resources but are not expenditures
for financial reporting purposes
Total expenditures as reported in the combining statement of revenues, expenditures, and
changes in fund balances - non-major governmental funds
$
736,380

The accompanying notes are an integral part of the financial statements

14

$

9,528,167

VISTANCIA COMMUNITY FACILITIES DISTRICT
Peoria, Arizona
NOTES TO THE FINANCIAL STATEMENTS

Page
Summary of Significant Accounting Policies

16

Budget Basis of Accounting

21

Cash and Investments

21

Property Taxes

23

Transfers

24

Deficits in Fund Equity/Excess of Expenditures over Appropriations

24

Fund Balance/Net Position Restrictions, Commitments and Assignments

24

Capital Assets

25

Long-Term Debt

25

15

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Vistancia Community Facilities District, a component unit of the City of
Peoria, Arizona (City), conform to accounting principles generally accepted in the United States of
America (“GAAP”) as applicable to governmental units. The Governmental Accounting Standards Board
(“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial
reporting principles.
The following is a summary of other significant accounting policies:
A. Financial Reporting Entity
The Vistancia Community Facilities District (the District) was formed by petition to the City
Council in 2002. The District’s purpose is to acquire or construct public infrastructure in a
specified area of the City. As a special purpose district and separate political subdivision under
the Arizona Constitution, the District can levy taxes and issue bonds independently of the City.
Property owners in the designated areas are assessed for the District’s property taxes, and thus
for the costs of operating the District. The City Council serves as the Board of Directors of the
District. The City has no liability for the District’s debt. For financial reporting purposes, the
transactions of the District are included as governmental type funds in the City’s financial
statements as if they were part of the City’s operations.
B. Basic Financial Statements
The basic financial statements of the District include both government-wide and fund financial
statements. The government-wide financial statements (statement of net position and statement
of activities) report on all of the non-fiduciary activities of the District as a whole. All of the
activities of the District are governmental activities. All activities are reported in the governmentwide financial statements using the economic resources measurement focus and the accrual
basis of accounting, which includes long-term assets and receivables as well as long-term debt
and obligations. The government-wide financial statement focus more on sustainability of the
District as an entity and the change in aggregate financial position resulting from activities of the
period. Generally, the effect of interfund activity has been removed from the government-wide
financial statements.
The government-wide Statement of Net Position reports all financial and capital resources of the
government (excluding fiduciary funds). It is displayed in a format of assets less liabilities equal
net position, with the assets and liabilities shown in order of their relative liquidity. Net assets are
required to be displayed in three components, if applicable: 1) net investment in capital assets 2)
restricted and 3) unrestricted. Restricted net assets are those with constraints placed on their
use by either: 1) externally imposed by creditors (such as through debt covenants), grantors,
contributors, or laws or regulations of other governments, or 2) imposed by law through
constitutional provisions or enabling legislation. All net assets not otherwise classified as
restricted, are shown as unrestricted.
Generally, the District would first apply restricted
resources when an expense is incurred for purposes for which both restricted and unrestricted
net assets are available. At June 30, 2014, the net position of the District is negative and
therefore is shown as unrestricted.
The government-wide Statement of Activities demonstrates the degree to which the direct
expenses of the functions and segments of the District are offset by program revenues. Direct
expenses are those that are clearly identifiable with a specific function or segment. Interest on
general long-term debt is shown separately, not allocated to functions. Program revenues
include: 1) charges to customers or users who purchase, use or directly benefit from goods,
16

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
services or privileges provided by a particular 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, investment income and other revenues not identifiable with particular functions
or segments are included as general revenues. The general revenues support the net costs of
the functions and segments not covered by program revenues.
Also part of the basic financial statements are fund financial statements. The focus of the fund
financial statements is on major funds. Both of the funds of the District, the general fund and the
debt service fund are governmental funds. The governmental fund financial statements are
prepared on a current financial resources measurement focus and modified accrual basis of
accounting. Since the governmental fund financial statements are presented on a different basis
than the governmental activities of the government-wide financial statements, reconciliations are
provided following each fund statement. These reconciliations briefly explain the adjustments
necessary to transform the fund financial statements into the governmental activities of the
government-wide financial statements.
C. Basis of Presentation
The accounts of the District are organized and operated on the basis of funds. A fund is an
independent fiscal and accounting entity with a self-balancing set of accounts, which includes
assets, liabilities, deferred inflow of resources, fund equity, revenues and expenditures. Fund
accounting segregates funds according to their intended purpose and is used to aid management
in demonstrating compliance with finance-related legal and contractual provisions. The minimum
number of funds is maintained consistent with legal and managerial requirements.
The following fund categories (further divided by fund type) are used by the District:
Governmental Funds
Governmental funds are used to account for the District’s general government activities. The
focus of Governmental Fund measurement is upon determination of financial position and
changes in financial position rather than upon net income. The following are the Governmental
Funds of the District:
General Fund accounts for the proceeds from the sales of Community Facilities District bonds
and the acquisition of capital assets or construction of major capital projects within the District.
Debt Service Fund accounts for the resources accumulated for, and the servicing of the general
long-term debt of the District, including principal, interest and other related costs.
D. Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus. Governmental fund types are presented using the flow of current financial
resources measurement focus. This presentation is deemed most appropriate to 1) demonstrate
legal and covenant compliance, 2) demonstrate the sources and uses of liquid resources, and 3)
demonstrate how the District’s actual revenues and expenditures conform to the annual budget.
With this measurement focus, operating statements present increases and decreases in net
current assets, and unassigned fund balance is a measure of available spendable resources.
Under the modified accrual basis of accounting, revenues are recognized when susceptible to
accrual (i.e. when they are “measurable and available”). “Measurable” means the amount of the
transaction can be determined and “available” means collectible within the current period or soon
thereafter to pay liabilities of the current period. The District considers revenues available under
17

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
modified accrual, if they are earned by June 30 (all eligibility requirements have been met) and
the revenue is expected to be collected within six months after year-end, except for property
taxes. For property taxes, the District uses a 60 day collection period. Expenditures are
recorded when the related fund liability is incurred, except for unmatured interest on general longterm debt which is recognized when due.
When applying the “susceptible to accrual” concept to intergovernmental revenues pursuant to
GASB Statement #33 – Recipient Reporting for Certain Shared Non-exchange Transactions
(Statement #33), receivables and revenues are recognized when the applicable eligibility
requirements, including time requirements, are met. Resources transmitted before the eligibility
requirements are met are reported as unearned revenue.
Under GASB Statement #33, property taxes are susceptible to accrual when an enforceable legal
claim has arisen. As noted above, the District recognizes property taxes received within 60 days
of fiscal year-end to be revenues under modified accrual. The remaining taxes levied, if any, are
considered a deferred inflow of resources on the financial statements. Other receipts become
measurable and available when cash is received by the District and are recognized as revenue at
that time.
Interest and dividend income is recognized on the modified accrual basis. Changes in fair value
of investments are recognized in investment income at the end of the year.
E. Budgets and Budgetary Accounting
The District uses the following procedures in establishing the budgetary data reflected in the
accompanying financial statements:
•

According to the laws of the State of Arizona, all operating budgets must be approved
by their governing board on or before the second Monday in August to allow sufficient
time for legal announcements and hearings required for the adoption of the property
tax levy on the third Monday in August.

•

In June, the proposed budget for the following fiscal year is presented by the
Treasurer to the District Board. The budget includes proposed expenditures and the
means of financing them. Public meetings are held to obtain taxpayer comment.

•

Prior to June 30, the District Board legally enacts the budget, through the passage of
a resolution. The resolution sets the limit for expenditures for the year. There were
no supplemental appropriations made during fiscal year 2014.

•

The initial budget for the fiscal year may be amended during the year in a legally
permissible manner.

•

All unencumbered expenditure appropriations expire at the end of the fiscal year.

•

Encumbered amounts are re-budgeted in the following year as deemed appropriate
and necessary. Budgetary carry forwards are approved by the District Board.

•

All funds of the District have legally adopted budgets. Formal integration of these
budgets into the District’s financial systems is employed as a management control
device during the year for all funds.

18

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
The District prepares its annual budget on a modified cash basis, which differs from GAAP. The
District prepares budgetary comparison statements for both of its funds for presentation in the
annual financial statements of the District. These statements and schedules display original
budget, amended budget and actual results (on a budgetary basis). The budgetary comparison
statement for the General Fund is presented as part of the basic financial statements and the
budgetary comparison schedule for the Debt Service Fund is presented as supplemental
information after the notes to the financial statements.
F. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for
the expenditure of funds are recorded in order to reserve that portion of the applicable
appropriation, is employed by the District. Since they do not constitute expenditures or liabilities,
encumbrances are not reported in either the fund financial statements or the government-wide
financial statements.
G. Deposits and Investments
Arizona Revised Statutes authorizes the District to invest public monies in the State or County
treasurer’s investment pools, interest bearing savings accounts, certificates of deposit and
repurchase agreements in eligible depositories: bonds or other obligations of the United States
government that are guaranteed as to principal and interest by the United States government; or
bonds of the State of Arizona counties, cities, towns, school districts or special districts as
specified by statute. As required by statute, collateral is required for demand deposits,
certificates of deposit and repurchase agreements at 102% of all deposits not covered by Federal
depository insurance.
Cash and cash equivalents held at June 30, 2014, by the trustee, plus accrued interest are
restricted as to usage.
The District’s deposits at June 30, 2014, were collateralized with securities held by the pledging
financial institution’s trust department in the District’s name.
Investments, if any, are stated at fair value in accordance to GASB Statement #31. Interest
income from investments is recorded as earned under the modified accrual basis of accounting.
H. Capital Assets
Governmental Fund types do not display capital assets on the face of the fund financial
statements. The costs of purchasing, or constructing, capital assets are shown as capital outlay
expenditures in the Governmental Statement of Revenues, Expenditures and Changes in Fund
Balance, unless the capital assets have already been transferred to the City. The capital assets
of the District, once completed and acceptable to the City, are transferred to the City. All
subsequent costs of operating and maintaining those assets will be the responsibility of the City.
Since the capital assets acquired or constructed by the District are turned over to the City once
they are operational, the District generally does not own capital assets. Capital assets still under
construction at fiscal year-end are shown as work-in-progress on the District’s government-wide
financial statements.

19

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
I.

Restricted Assets

Certain proceeds of the District’s bonds, as well as certain resources set aside for their
repayments, are classified as restricted on the balance sheet because they are maintained in
separate bank accounts and their use is limited by applicable debt covenants.
J. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report a separate section for
deferred outlows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net position that applies to a future period and so will not
be recognized as an outflow of resources (expense/expenditure) until then. The District did not
have any items that qualified for reporting in this category.
In addition to liabilities, the statement of financial position may report a separate section for
deferred inflow of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period and so will not
be recognized as an inflow of resources (revenue) until that time.
K. Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are
reported as liabilities in the applicable governmental activities. Bond premiums and discounts are
deferred and amortized over the life of the bonds using the effective interest method. Bonds
payable are reported net of the applicable bond premium or discount.
Governmental fund types do not display long-term obligations on the face of the financial
statements. Bond premiums and discounts, as well as bond issuance costs, are recognized in
the period in which the bonds are issued. 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.
The long-term debt of the District is serviced by the District’s Debt Service Fund.
L. Risk Management
The District is exposed to various risks of loss related to torts; theft of, damage to and destruction
of assets; errors and omissions; and natural disasters. The District’s insurance coverage is
provided by the City under the City’s umbrella insurance policies. The City maintains a SelfInsurance Fund (accounted for in the Internal Service Funds) to account for and finance its
uninsured risks of loss. As with any risk retention program, the City is contingently liable with
respect to claims beyond those actuarially projected.
Governmental Accounting Standards Board Statement #10 requires that claims liabilities be
reported when it is probable that a loss has occurred and the amount of the loss can be
reasonably estimated. As of June 30, 2014, no claims liability is reported in the District’s financial
statements, or by the City on behalf of the District. The District, through the City, is self-insured
for property and public liability up to $1,000,000. Excess coverage insurance policies purchased
through commercial insurance carriers cover individual claims in excess of this amount, up to a
maximum of $40,000,000 per occurrence. Additionally, through a development agreement
between the District and the developer, the developer is responsible for $250,000, per incident, of
20

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
any insurance deductibles that might be paid by the City on behalf of the District. During the
fiscal year ended June 30, 2014, there was no significant reduction in excess insurance
coverage. Additionally, settlements for each of the last three fiscal years have not exceeded the
City’s, and therefore the District’s, insurance coverage.
M. Cash Equivalents
The District considers short-term investments, including restricted investments, in mutual fund
money market and U.S. Treasury bills and notes with maturities of less than three months at
acquisition date to be cash equivalents.
N. Prior Period Adjustment
In prior fiscal years, the City recorded a receivable due to property taxes to be received in future
periods. However in fiscal year 2014, it was determined that these receivables were overstated
in the Debt Service Fund.
The prior period adjustment impacted beginning net position and fund balance as follows:

Net position-beginning
Prior period adjustment
Net position-beginning-restated

Governmental
Activities
$ (32,094,106)
(102,937.00)
$ (32,197,043)

Debt Service
Fund
$ 8,966,396
(102,937.00)
$ 8,863,459

O. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the balance sheet and the reported amounts of revenue and
expenditures during the reported period. Actual results could differ from those estimates.
2. BUDGET BASIS OF ACCOUNTING
The District does adopt an annual operating budget for both of its funds. The District prepares the annual
budget on a modified cash basis, which differs from GAAP, as discussed in Note 1. Budgetary control
over expenditures is exercised at the fund level. The budgetary comparison schedule for the general
fund is presented as part of the basic financial statements. The budgetary schedule for the debt service
fund is presented as supplemental information after these notes to the financial statements. The
budgetary statements/schedules include a reconciliation of the adjustments required to convert the
budgetary revenues and expenditures or changes in net assets on a budgetary basis, to revenues and
expenditures or changes in net assets on a GAAP basis.
3. CASH AND INVESTMENTS
Arizona Revised Statutes authorize the District to invest public monies in the State or County Treasurers’
investment pools, interest bearing savings accounts, certificates of deposit and repurchase agreements in
eligible depositories; bonds or other obligations of the United States government that are guaranteed as
to principal and interest by the United States government; or bonds of the State of Arizona counties,
cities, towns, school districts or special districts as specified by statute. As required by statute, collateral
is required for demands deposits, certificates of deposit and repurchase agreements at 102% of all
deposits not covered by Federal depository insurance.
21

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
The District participates in the pooled cash and investments of the City for daily transactions. The City
then periodically requested reimbursement from the District’s restricted funds held by the trustee. At June
30, 2014, the District had a credit position of ($495,550) in the City’s pooled cash and investments.
Governmental Accounting Standards Board Statement No. 40 – Deposit and Investment Risk Disclosures
(Statement 40) requires the District to disclose its deposit and investment policies regarding certain types
of investment risks. The District follows the City’s adopted investment policy and is in compliance with
Statement 40.
Interest rate risk: In order to limit interest and market rate risk, State law and the City’s investment policy
sets a maximum maturity on any investment of five years with a minimum of 35% invested for a period of
one year or less and no more than 20% of the City’s portfolio be invested for a period greater than three
years. At June 30, 2014, 89.4% of the District’s investments have a maturity of less than one year and
none have maturities greater than four years. The City’s investment policy also sets a maximum
weighted average maturity (WAM) not to exceed one year. The District’s WAM at June 30, 2014, was 172
days.
Credit risk: State law and the City’s investment policy limits the purchase of Commercial Paper to those
securities rated A-1/P-1 or the equivalent by two nationally recognized statistical rating agencies. The
City’s investment policy also limits the purchase of Banker’s Acceptances to those securities rated Aa or
better by two nationally recognized rating agencies and with a maximum maturity of 180 days. At June
30, 2014, the District’s investments include $2.2 million in Commercial Paper and no Banker’s
Acceptance securities. State law and the City’s investment policy also restricts investments in certificates
of deposit (CD) to fully collateralized or insured from eligible Arizona depositories limited on a statewide
basis by their capital structure on a quarterly basis. Such CDs are further collateralized to 110% with
pledged securities held by an independent custodian approved by the City. City policy requires that
securities underlying repurchase agreements must have a market value of at least 102% of the cost of
the repurchase agreement. The market values of securities underlying repurchase agreements were at or
above the required level during the fiscal year.

Investment Type
Federal Home Loan Bank - Agency Note
Federal National Mortgage Assoc. - Agency Note

Moody's
Rating
Aaa
Aaa

S&P
Rating
AA+
AA+

% of
Investments
13.3%
28.5%

Concentration of credit risk: The City’s investment policy sets diversification limits on both security types
and length of maturity. As of June 30, 2014, the District’s investments include 41.8% invested in U.S.
Agency Coupon securities, 11.9% in commercial paper, and 46.3% in money market funds.
Custodial credit risk: To control custodial credit risk, State law and 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.

22

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
At June 30, 2014, the District’s investments included the following:
Investment Maturities in Years
Less than 1
1-2
2-3
Restricted Investments
Agency coupon securities
Commercial paper

$

Mutual fund-money market
Total restricted investments

8,732,420
$ 16,867,881

5,886,842
2,248,619

$

$

Fair Value

-

$ 2,000,100
-

$

-

$ 2,000,100

8,732,420
$ 18,867,981

Less: amount included in restricted cash and cash equivalents
Less: amount used to offset credit position in the City's pooled cash
Restricted investments, net

$
$

7,886,942
2,248,619
10,135,561

(8,618,833)
(495,550)
9,753,598

Fair value fluctuates with interest rates, and increasing rates could cause fair value to decline below
original cost. District management believes the liquidity in the portfolio is adequate to meet cash flow
requirements and to preclude the District from having to sell investments below original cost.
Investment income comprises the following for the year ended June 30, 2014:
Net interest and dividends
Net decrease in the fair value of investments
Total net investment income per statement of activities

$
$

41,209
(2,455)
38,754

The net decrease in the fair value of investments during fiscal year 2014 was approximately $2,455. This
amount takes into account all changes in fair value (including purchases and sales) that occurred during
the year. The unrealized gain on investments held at June 30, 2014, was approximately $2,032.
4. PROPERTY TAXES
Arizona law provides for a two tiered tax system: (1) a primary system for taxes levied to pay for current
operation and maintenance expenses, and (2) a secondary system for taxes levied to pay principal and
interest on bonded indebtedness as well as for the determination of maximum permissible bonded
indebtedness.
Specific provisions are made under each system for determining full cash values of property, the basis of
assessment, and the maximum annual tax levies on certain types of property and by certain taxing
authorities. Under the primary system, the full cash value of locally assessed real property (consisting of
residential, commercial, industrial, agricultural and unimproved property) may increase by more than 10%
annually only under certain circumstances. Under the secondary system, there is no limitation on annual
increases in full cash value of any property. Primary levies on residential property are limited to one
percent of the primary full cash value of such property. Additionally, primary taxes on all types of property
are limited to a maximum increase of two percent over the prior year's levy, adjusted for new construction
and annexations. Secondary property taxes levied to pay principal and interest on bonded indebtedness
are not limited. The District’s assessed valuation for 2014 is $102,857,570.
The Arizona tax year has been defined as a calendar year, notwithstanding the fact that tax procedures
begin prior to January 1 of the tax year and continue through May of the succeeding calendar year. The
definition of the tax year is a function of the fact that the tax lien for the year attaches to the real property
as of January 1 of the year in question.
23

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014

The District Board adopts the annual tax levy each year on or before the third Monday in August. The
basis of this levy is the full cash value as determined by the Maricopa County Assessor. For locally
assessed property, the value is determined as of January 1 of the preceding year, known as the valuation
year. For utilities and other centrally valued properties, the full cash value is determined as of January 1
of the tax year. The District has an enforceable claim on the property when the property tax is levied.
Levies are due and payable in two installments, on October 1 and March 1, and become delinquent on
November 1 and May 1, respectively. Delinquent amounts bear interest at the rate of 16 percent. A lien
is placed on the property at the time the tax bill is sold. Maricopa County, at no charge to the taxing
entities, bills and collects all property taxes. Public auctions for sale of delinquent real estate taxes are
held in February following the May 1 date upon which the second half taxes become delinquent. The
purchaser is given a Certificate of Purchase issued by the County Treasurer. Five years from the date of
sale, the holder of a Certificate of Purchase that has not been redeemed may demand a County
Treasurer's Deed from the County Treasurer.
Property taxes are recognized as revenue in the government-wide financial statements when an
enforceable legal claim has arisen. Therefore, the District recognizes revenue and a receivable, less any
allowance for doubtful accounts deemed appropriate, for the entire tax levy in the year it is levied. For the
governmental fund statements, property tax revenues not collected within 60 days of year end are
deferred.
Property taxes receivable consist of uncollected taxes as determined from the records of the County
Treasurer’s Office and at June 30, 2014, were $22,313 in the Debt Service Fund. There were $12,922 in
unavailable property taxes at June 30, 2014.
5. TRANSFERS
Net transfers in between the District and the City, if any, are primarily the result of transfer of completed
capital assets to the City’s Proprietary Funds during the year. Additionally, in the Fund Financial
Statements there may be transfers between the District’s General Fund and the Debt Service Fund.
There were no significant transfers during fiscal year 2014 there were either non-routine in nature or
inconsistent with the activities of the fund making the transfer.
6. DEFICITS IN FUND EQUITY/EXCESS OF EXPENDITURES OVER APPROPRIATIONS
As described in Note 1, the District was formed to finance and acquire or construct capital infrastructure
assets that are subsequently dedicated to the City for operation. The District does not own or operate
capital assets. Therefore the Statement of Net Position reflects a large liability (bonds payable) without
an offsetting asset and, therefore, negative net position at June 30, 2014.
For the year ended June 30, 2014, expenditures, including capital outlay and transfers, did not exceed
budget for either of the funds of the District.
7. FUND BALANCE/NET POSITION RESTRICTIONS, COMMITMENTS AND ASSIGNMENTS
Only restrictions imposed by external sources are shown as Restricted Net Assets on the governmentwide financial statements. Additionally, restrictions for inventories, prepaid items, and long-term interfund
loans, if any, are shown as nonspendable fund balance on the governmental fund financial statements.
Restrictions imposed by external sources or State of Arizona enabling legislation, if any, are shown as
restricted fund balance on the governmental fund financial statements. Commitments or assignments of
fund balances imposed by the reporting district, whether by administrative policy or legislative action, if
any, are shown on the governmental fund financial statements. As previously noted in Note 1.B,
generally, the District would first apply restricted resources when an expense is incurred for purposes for
24

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
which both restricted and unrestricted net assets are available. The order in which the District would
apply resources when multiple categories of unrestricted fund balance are available is as follows:
committed, assigned and unassigned. There were no committed, assigned, or unassigned fund balances
of the governmental funds at June 30, 2014.
8. CAPITAL ASSETS
The following table discloses the capital asset activity of the District, for the government-wide financial
statements, for the fiscal year ended June 30, 2014.

Non-depreciable assets:
Work in Progress-Water system
Work in Progress-Wastewater system
Total Capital Assets

Balances
June 30, 2013

Additions/
Transfers in

Disposals/
Transfers out

Balances
June 30, 2014

$ 3,707,777
40,044
$ 3,747,821

$ 501,677
234,703
$ 736,380

$ (2,749,603)
$ (2,749,603)

$ 1,459,851
274,747
$ 1,734,598

As discussed in Note 1, governmental fund types do not display capital assets on the face of the financial
statements. The District does, however, purchase or construct capital assets with the intent of conveying
the assets to the City upon completion and acceptance by the City.
9. LONG-TERM DEBT
Community Facilities Districts (CFD’s), are special purpose districts created specifically to acquire or
construct public infrastructure within specified areas of the City, are authorized under state law to issue
general obligation (GO) or revenue bonds to be repaid by property (ad valorem) taxes levied on property
within the district (for GO debt), or by specified revenues generated within the districts (revenue bonds).
CFD’s are created by petition to the City Council by property owners within the area to be covered by the
district, and debt may be issued only after approval of the voters within the district.
On October 15, 2002 the City Council formed the Vistancia Community Facilities District (the District)
pursuant to Title 48, Chapter 4, Article 6, Arizona Revised Statutes. The District was subsequently
authorized, by the voters of the district on November 12, 2002, to issue up to $100,000,000 in general
obligation bonds to construct public infrastructure within the District. The district issued $21,250,000 in
fiscal year 2003, $23,550,000 in fiscal year 2005, and $22,760,000 in fiscal year 2007 of general
obligation bonds against this authorization. These bonds will be repaid by the property owners within the
District. The bonds are obligations of the District only. The City has no obligation for the District debt
other than the administration of the collection of the property taxes and payment of the debt service on
behalf of the District.
Legal Debt Limit – General Obligation bonded indebtedness for the District cannot exceed 60 percent of
the market value of the property in the District after the infrastructure is completed plus the value of the
infrastructure improvements made.
As discussed in Note 1, governmental type funds do not display long-term obligations on the face of the
financial statements. The following tables disclose the long-term debt obligations of the District as of
June 30, 2014, for the government-wide financial statements.

25

VISTANCIA COMMUNITY FACILITIES DISTRICT
PEORIA, ARIZONA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2014
Net
Delivery
Maturity
Interest
Date
Description Purpose
Dates
Rate
CFD Bonds (collateralized by ad valorem pro perty taxes levied o n the property benefiting from the impro vements)

12/17/02 Series 2002 Vistancia CFD Infrastructure
04/27/05 Series 2005 Vistancia CFD Infrastructure
12/28/06 Series 2006 Vistancia CFD Infrastructure
Total bonds payable
Less current portion
Long-term portion of bonds payable

7/15/05-22
7/15/07-24
7/15/09-26

6.69
5.47
4.26

Ave.
Life
(Yrs)

12.7
13.2
20

Original
Principal
Balance

21,250,000
23,550,000
22,760,000

Principal
Balance
Outstanding

$ 13,375,000
18,000,000
19,720,000
51,095,000
2,765,000
$ 48,330,000

The following is a summary of the long-term debt activity of the District for the fiscal year ended June 30,
2014.

General obligation bonds

Beginning
Balance
$ 53,725,000

Additions
-

Reductions
$ 2,630,000

Ending
Balance
$ 51,095,000

Amounts
Due Within
One Year
$ 2,765,000

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
2025-2027
Totals

Principal
2,765,000
2,920,000
3,080,000
3,255,000
3,440,000
20,430,000
15,205,000
$ 51,095,000

$

Interest
2,711,311
2,555,716
2,388,074
2,207,674
2,015,359
6,745,134
1,082,914
$ 19,706,182

Total
5,476,311
5,475,716
5,468,074
5,462,674
5,455,359
27,175,134
16,287,914
$ 70,801,182

$

$

26

SUPPLEMENTAL INFORMATION

VISTANCIA COMMUNITY FACILITIES DISTRICT
BUDGETARY COMPARISON SCHEDULE
COMMUNITY FACILITIES DISTRICT (CFD) BONDS DEBT SERVICE FUND
FOR THE YEAR ENDED JUNE 30, 2014

Budgeted Amounts
Original
Final
Budgetary fund balance, July 1, 2013

$

RESOURCES (INFLOWS):
Property Taxes
Investment earnings
Miscellaneous
Total inflows
Amounts available for appropriation
CHARGES TO APPROPRIATIONS (OUTFLOWS):
Contractual services
Debt service:
Principal payments
Interest and other charges
Total charges to appropriations
Budgetary fund balance, June 30, 2014

$

8,828,779

$

Variance with
Final Budget
Over
(Under)

Actual
Amounts
(budgetary basis)

8,828,779

$

8,828,779

$

-

2,160,009
23,900
3,307,325
5,491,234
14,320,013

2,160,009
22,800
3,307,325
5,490,134
14,318,913

2,260,697
26,957
3,142,411
5,430,065
14,258,844

100,688
4,157
(164,914)
(60,069)
(60,069)

4,600

4,600

2,915

(1,685)

2,630,000
2,854,634
5,489,234

2,630,000
2,854,634
5,489,234

2,630,000
2,854,633
5,487,548

8,830,779

$

8,829,679

$

8,771,296

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
$
14,258,844
Differences - budget to GAAP:
The fund balance at the beginning of the year is a budgetary resource but is not a
a current year revenue for financial reporting purposes
(8,828,779)
The City budgets certain revenues on the cash basis, rather than on the modified
accrual basis
(109,019)
Transfers from other funds are a budgetary resource but are not revenues for financial
reporting purposes
Total revenues as reported on the combining statement of revenue, expenditures, and changes
in fund balances - non-major governmental funds
$
5,321,046
Uses/outflows or resources:
Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary
comparison schedule
$
5,487,548
Differences - budget to GAAP:
The City budgets for certain other expenditures on the cash basis, rather than on the
modified accrual basis
Capital outlay recognized as expenditures for budgetary purposes, but assets capitalized
in proprietary funds for financial reporting purposes
Total expenditures as reported in the combining statement of revenues, expenditures, and
changes in fund balances - non-major governmental funds
$
5,487,548

27

(1)
(1,686)
$

(58,383)

CONTINUING DISCLOSURE INFORMATION

VISTANCIA COMMUNITY FACILITIES DISTRICT
Peoria, Arizona
CONTINUING DISCLOSURE INFORMATION

SEC Rule 15c2-12, as amended, requires the City to provide Continuing Disclosure Annual Reports that
include audited financial statements and other financial information for the benefit of owners and holders
of bond obligations issued by the City. The Continuing Disclosure Annual Report shall contain or
incorporate by reference certain information as set forth in the Continuing Disclosure Agreements and
Undertakings executed by the City with the issuance of its municipal bond obligations.
Information in this section is provided solely pursuant to the requirements of SEC Rule 15c2-12 and
Continuing Disclosure Agreements and Undertakings and include financial information that is not required
for fair presentation in conformity with accounting principles generally accepted in the United States of
America and is therefore unaudited and not covered by the auditor’s opinion.
Annual continuing disclosure information is filed with the Municipal Securities Rulemaking Board (MSRB)
for public access via their Electronic Municipal Market Access (EMMA) system at www.emma.msrb.org.

Tables

Page

Table 1 - Secondary Assessed Value and Full Cash Value of Taxable Property

29

Table 2 – Secondary Assessed Value by Major Property Taxpayers

30

Table 3 – Direct and Overlapping General Obligation Bonded Debt

31

28

VISTANCIA COMMUNITY FACILITIES DISTRICT
SECONDARY ASSESSED VALUE AND FULL CASH VALUE OF TAXABLE PROPERTY
AS OF JUNE 30, 2014

Description

2013-14 Secondary
Assessed Value

Percent of Total

Commercial, Industrial, Mining & Utilities
Agriculture & Vacant Land
Residential - Owner Occupied
Residential - Leased or Rented

$

7,166,743
9,400,341
66,611,576
19,678,910

6.97%
9.14%
64.76%
19.13%

Net Secondary Assessed Value

$

102,857,570

100.00%

Full Cash Value

$

996,879,198

Net Secondary Assessed Value as a
Percentage of Full Cash Value

10%

Source: Maricopa County Assessor

29

Table 1

VISTANCIA COMMUNITY FACILITIES DISTRICT
SECONDARY ASSESSED VALUE BY MAJOR TAXPAYERS
AS OF JUNE 30, 2014

2013-14
Secondary
Assessed Value

Taxpayer

Type of Business

PWREO Vistancia LLC
Vistancia South LLC
Blackstone Country Club
Accipter Communications Inc.
Lake Pleasant Partners LLC
Vistancia 150 Commercial LLC
Vistancia LLC
Shea Homes Southwest Inc.
MSR Public Power Agency
Shea Homes of Phoenix Inc
Southwest Transmission
Southwest Gas Corporation
Shea Homes Limited Partnership
Mattamy Arizona LLC
Kao Family Trust/Kao Hui-Chen

Investment
Real Estate Development
Sports and Recreation Clubs
Data Communications
Real Estate Development
Real Estate Development
Sports and Recreation Clubs
Real Estate Development
Electric Utility
Real Estate Development
Electric Utility
Gas Utility
Real Estate Development
Real Estate Development
Family Trust

Source: Maricopa County Assessor

30

Table 2

% of District's
2013-14
Secondary
Assessed Value

$

2,488,059
1,313,555
1,253,141
1,168,941
1,035,589
980,762
847,881
672,166
546,714
530,190
388,994
308,927
262,160
258,616
223,114

2.42%
1.28%
1.22%
1.14%
1.01%
0.95%
0.82%
0.65%
0.53%
0.52%
0.38%
0.30%
0.25%
0.25%
0.22%

$

12,278,809

11.94%

VISTANCIA COMMUNITY FACILITIES DISTRICT
DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT
AS OF JUNE 30, 2014

Governmental Unit

Secondary
Assessed
Valuation

Overlapping:
State of Arizona
Maricopa County
Maricopa County Community College District
Peoria Unified School District No. 11
City of Peoria

$ 52,598,341,678
32,229,006,810
32,229,006,810
921,493,428
1,057,413,204

Direct:
Vistancia Community Facilities District

General Obligation
Bonds
Outstanding (2)

$

102,857,570

Percentage
Applicable to
City of Peoria (1)

712,735,000
238,910,000
152,820,000

0.20%
0.32%
0.32%
11.16%
9.73%

51,095,000

100.00%

Total direct and overlapping debt

Table 3

Amount
Applicable to
City of Peoria

Secondary
Tax Rate
per $100
Assessed

$

$

2,274,665
26,667,257
14,865,233
43,807,155

51,095,000

2.10

$ 94,902,155

6.95

(1) Percentage applicable to the City is computed on the ratio of secondary assessed valuation.
(2) Includes total stated principal amount of general obligation bonds outstanding. Does not include certificates of participation,
revenue obligations or loan obligations outstanding for the jurisdications listed.

Sources:

- City of Peoria financial records
- Maricopa County Treasurer
- Maricopa County Assessor
- State of Arizona, Department of Revenue, Abstract of the Assessment Roll

31

0.24
3.35
1.25