City of Chandler Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2012 Chandler Centennial 1912-2012 CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 Jay Tibshraeny, Mayor Jeff Weninger, Vice-Mayor Trinity Donovan, Councilmember Rick Heumann, Councilmember Matt Orlando, Councilmember Kevin Hartke, Councilmember Jack Sellers, Councilmember Executive Staff Rich Dlugas, City Manager Patrick McDermott, Assistant City Manager Prepared by Management Services Department Dawn Lang, Management Services Director Penny Burczyk, Accounting Manager Derrick Beracy, Sr. Financial Reporting Analyst CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ............................................................................................................................................... 1 Organizational Chart .............................................................................................................................................. 7 Certificate of Achievement .................................................................................................................................... 8 FINANCIAL SECTION Independent Auditors' Report .............................................................................................................................. 9 Management’s Discussion and Analysis (MD&A)........................................................................................... 13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Assets .......................................................................................................................... 24 Statement of Activities ............................................................................................................................ 26 Fund Financial Statements Balance Sheet – Governmental Funds ................................................................................................... 28 Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Assets .................................................................. 29 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds ........................................................................................................................ 30 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities ...................................................................................................................... 31 Statement of Net Assets - Proprietary Funds ....................................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds.............................................................................................................................. 34 Statement of Cash Flows - Proprietary Funds ..................................................................................... 36 Statement of Fiduciary Net Assets - Fiduciary Funds ........................................................................ 38 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ................................................... 39 Notes to Financial Statements ................................................................................................................... 41 Required Supplementary Information: Budgetary Comparison Schedule for the General Fund........................................................................ 78 Note to Required Supplementary Information ....................................................................................... 79 Arizona Public Safety Personnel Retirement System Schedules of Funding Progress ..................... 80 Post-employment Benefits Other than Pensions Schedule of Funding Progress ............................... 80 Other Financial Statements: Budgetary Comparison Schedules for Other Major Fund Streets Capital Projects Fund .................................................................................................................. 82 General Obligation Bonds Debt Service Fund ..................................................................................... 83 i CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Non-Major Governmental Funds Combining Balance Sheet – All Non-Major Governmental Funds By Fund Type ........................................................................................................................................ 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type .................................................................... 85 Combining Balance Sheet ....................................................................................................................... 89 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ....................... 92 Budgetary Comparison Schedules: Highway User ......................................................................................................................................... 95 Local Transportation Assistance .......................................................................................................... 96 Grants Special Revenue ......................................................................................................................... 97 Community Development .................................................................................................................... 98 Police Confiscated Property .................................................................................................................. 99 Parks and Recreation ........................................................................................................................... 100 Library .................................................................................................................................................... 101 General Government ........................................................................................................................... 102 Public Buildings .................................................................................................................................... 103 Grants Capital Projects ........................................................................................................................ 104 Community Services ............................................................................................................................ 105 Public Safety Buildings and Improvements ..................................................................................... 106 Vehicle and Capital Equipment ......................................................................................................... 107 Special Assessments ........................................................................................................................... 108 Technology Replacement .................................................................................................................... 109 Municipal Arts ...................................................................................................................................... 110 Non-Major Proprietary Funds: Combining Statement of Net Assets.................................................................................................... 114 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets .................................................................................................................................. 116 Combining Statement of Cash Flows .................................................................................................. 118 Fiduciary Funds: Statement of Changes in Assets and Liabilities - Agency Fund .................................................... 120 ii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Other Supplemental Information: HUD Programs: Combining Statement of Net Assets - All HUD Programs ............................................................ 124 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - All HUD Programs .................................................................................. 126 STATISTICAL SECTION Financial Trends Schedule 1 Net Assets by Component ................................................................................................ 130 Schedule 2a Changes in Net Assets ..................................................................................................... 132 Schedule 2b Changes in Net Assets..................................................................................................... 134 Schedule 2c Changes in Net Assets ..................................................................................................... 136 Schedule 3 Fund Balances of Governmental Funds .......................................................................... 138 Schedule 4 Governmental Funds Revenues ....................................................................................... 140 Schedule 5 Governmental Funds Expenditures and Debt Service Ratio ....................................... 142 Schedule 6 Other Financial Sources and Uses and Net Changes in Fund Balance, Governmental Funds .......................................................................................................................... 144 Revenue Capacity Schedule 7 Taxable Revenue by Category .......................................................................................... 146 Schedule 8 Direct and Overlapping Sales and Use Tax Rates ......................................................... 148 Schedule 9 Principal Sales and Use Taxpayers .................................................................................. 149 Debt Capacity Schedule 10 Ratios of Outstanding Debt ............................................................................................ 150 Schedule 11 Direct and Overlapping Governmental Activities Debt............................................. 151 Schedule 12 Legal Debt Margin Information ..................................................................................... 152 Schedule 13a Pledged-Revenue Coverage ......................................................................................... 154 Schedule 13b Pledged-Revenue Coverage ......................................................................................... 155 Schedule 13c Pledged-Revenue Coverage .......................................................................................... 156 Demographic and Economic Information Schedule 14 Demographic and Economic Statistics .......................................................................... 157 Schedule 15 Principal Employers ........................................................................................................ 158 Operating Information Schedule 16 Employees by Function ................................................................................................... 160 Schedule 17 Operating Indicators by Function/Program ................................................................ 162 Schedule 18 Capital Asset Statistics by Function/Program............................................................. 164 iii Introductory Section Chandler’s first Tumbleweed Tree, 1957. Chandler resident Earle Barnum remembered a community tree built out of pine branches in Indiana, and wanted to do something similar with dried tumbleweeds. With Mayor Bert Lewis’s approval, community groups built the first tumbleweed tree in the town square, finishing it on November 27, 1957. Chandler is the only city in the Southwest to feature this kind of community tree Introductory Section The introductory section includes the letter of transmittal, an organizational chart, and the Certificate of Achievement for Excellence in Financial Reporting. Introductory Section The City boasts a strong labor market serving the high technology field’s demand for skilled workers. Resident population has a median age of 32.5 years and a median household income of $58,712. In addition, approximately 71 percent of the population has a college degree or some college education. This highly educated workforce explains in part why the City has the highest average employee wages in the Phoenix metropolitan area, 120% of the statewide average. Over 75 percent of the City’s manufacturing employees are in high technology fields; the national average is 15 percent. The City’s unemployment averaged 6.5 percent for fiscal year 2011/12 compared with 7.8% for Maricopa County and 8.9% for the State of Arizona. The City’s sales tax revenues, which comprise nearly 50 percent of its general fund, increased by 12.6 percent for 2011/12 from the current year budget as the City begins to recover from the effects of the recession that was felt nationally and globally and benefitted from one-time revenues created by a large industrial expansion in the City. Anticipating continued fallout from the economic recession and from the corresponding declining revenues, the City reduced its spending by $2.1 million in its general fund budget for 2011/12 through a combination of spending cuts and reserves specifically set aside for bridging the budget gap over three fiscal years. The City led other Phoenix metropolitan communities in recovering from the recession through a combination of sound financial practices and notable economic development successes. 2011/2012 Accomplishments Under the guidance and leadership of the Mayor and Council, along with the expertise and dedication of City management and staff, a number of accomplishments were achieved this last fiscal year. Listed below are just a few of those accomplishments.  Maintained AAA General Obligation Bond credit ratings with stable outlook from all three rating agencies;  Located more than 1,895 new jobs in Chandler through new developments;  Completed Master Development Agreement with Intel and Intel commenced construction of FAB42 which was the largest construction project in the world at that time. President Obama visited site;  Innovations Technology Incubator reached 95% occupancy and phase II is under construction;  Located ASU and U of A in downtown Chandler;  Implemented changes to system Development Fees, per SB1525;  Created Priority Based Budget Model, costing all programs and services Citywide;  Upgraded Oracle Citywide Financials and Human Resources ERP system, increasing functionality;  Chandler selected for the fifth consecutive time as one of 100 Best Communities for Young People and received the A+ Sunny Award for Web Transparency;  Held the first ever online budget meeting, “Budget Connect” and neighborhood meeting, “Neighborhood Connect”;  Completed 53 park improvement projects and the Sunset Library renovation;  Fire negotiated a new ambulance contract;  Police involved in newly formed Child Abuse Prevention and Awareness Coalition;  Installed Public Access Wi-Fi at Airport and new furnishings and services in the terminal building for enhanced customer connectivity and comfort;  Opened the new Airport entry road and activated 18 prime acres for aviation-related businesses with the completion of the Airport Blvd/Aviation Drive re-alignment project; 2  Converted 17 City Buildings to new Energy Management System;  Implemented wellness initiatives and plan design changes to assist in managing health care costs; and  Implemented the Voluntary Demo Program resulting in the elimination of 5 vacant blighted structures, proactively facilitating the resolution of 27 vacant, blighted properties. Strategic Goals The City of Chandler’s continued goal is to provide the highest quality services to the community in the most cost-effective manner. The Council’s strategy to achieve these results is through goals to improve Chandler in a coordinated manner and to make fiscally responsible decisions that will ultimately strengthen the City. The City continued with the Council’s strategic goals by focusing on the following organizational priorities.  Downtown Downtown Chandler and the Historic Square have served as the focal point of community life since Chandler’s inception. Emerging today as a location for independent business and retail, the downtown also serves as the City’s cultural center providing the community with a sense of identity and uniqueness.  Economic Development The ability of the City to maintain and enhance the quality of life of its residents depends upon a successful economic development program. High paid quality jobs attract potential residents, and diversifying the employment and tax base provides revenue to support the amenities enjoyed by the community.  Neighborhoods As Chandler has grown rapidly from a community of 30,000 in 1980 to 235,000 today, neighborhoods have become increasingly important to help define the community’s quality of life and provide a sense of identity and place. The maintenance and long term care of our neighborhoods will become increasingly important as the community continues to age.  Sustainability In order to assure that Chandler’s quality of life is enjoyed by future generations, it is imperative that the City acts as an effective steward of our financial and environmental resources. This effort is even more critical as City resources are becoming increasingly limited, and as best practices throughout the country have provided ample evidence of the many benefits of doing business in a more sustainable fashion. The City Council is committed to the stewardship of the City’s resources through improved business practices and the conservation of our financial and environmental assets.  Transportation An effective multimodal transportation system is critical to the long-term vitality of the Chandler community. The City must maintain a viable transportation network that includes an efficient arterial street and transit system that is connected regionally, as well as a network that is bicycle and pedestrian friendly. 3 FINANCIAL INFORMATION Internal Control Structure Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other City staff, as needed. Single Audit As a part of the City’s single audit, described earlier, tests were made of the City’s internal control structure and of its compliance with applicable laws and regulations, including those related to federal financial assistance programs. Budgetary Controls The City maintains budgetary controls as an integral part of its overall system of internal controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, capital projects funds, enterprise funds and internal service funds are included in the annual appropriated budget. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted (FY 2011/2012, $676,533,227). The City additionally exercises management control and oversight of the budget at the department level within each fund and maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts do not lapse at fiscal yearend and appropriation equal to the amount of year-end encumbrances are added to the current year budget in each cost center. Expenditures against those encumbrances are charged to the current year appropriation. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. OTHER INFORMATION Independent Audit City Charter and state statute require an annual audit by a firm of independent certified public accountants and the firm of Heinfeld, Meech & Co., has been selected by the City to uphold this requirement. In addition to meeting the requirements set forth in City Charter and state statutes, the audit was also designed to meet the requirements of the federal Single Audit Act of 1996 and the related U.S. Office of Management and Budget’s Circular A-133. Auditing standards generally accepted in the United States of America and the standards set forth in the General Accounting Office’s Government Auditing Standards were used by the auditors in conducting the engagement. The Auditor’s report on the basic financial statements is included in the financial section of this report. The auditor’s reports on internal controls and compliance with applicable laws and regulations can be found in a separately issued single audit report. 4 5 6 City of Chandler, Arizona Organizational Chart Citizens of Chandler Mayor/City Council Advisory Boards/Commissions City Manager City Magistrate City Attorney City Clerk Assistant City Managers Community Services Administration Library Parks Operations Aquatics Building & Facilities General Government Communications & Public Affairs Center for the Arts (Video Production, Print, Mail & Graphics) Recreation Sports & Fitness Nature & recreation Museum Mayor & Council Administration Human Resources IT Applications Support IT Infrastructure & Client Support IT Srvc. Delivery Mgmt. & Admin. (Code Enforcement, Housing & Redevelopment, Community Development) Downtown Redevelopment Management Services Municipal Utilities Administration Lone Butte Water Distribution Water Production Facility Water Treatment Economic Development Tourism Neighborhood Resources Ocotillo Water Reclamation Water Quality Wastewater Collection Reverse Osmosis Meter Services Administration & Budget Accounting Utility Services Risk Management San Tan Vista Treatment Wastewater Quality Airport Water Reclamation Purchasing Central Supply Tax and License Environmental Management Police Department Administration Professional Standards Property & Evidence Forensic Services Records Detention Services Community Services Police Community Resources & Training Transportation & Development Administration Mapping/Standards Real Estate Construction Management Transit Services Traffic Engineering Streets Airport Civil Plan Review Site Development Land Use Planning Contract Management Building Plan Review Building Inspections Customer Service Special Projects Group Field Operations Criminal Investigation Planning & Research Communications Fire Department Administration Support Services Prevention & Preparedness Operations 7 Emergency Services Fleet Services 8 Financial Section The financial section includes the City’s independent auditors’ report, management’s discussion and analysis, basic financial statements, required supplementary information, and financial statements for individual funds. Financial Section The dedication of the retired Southern Pacific steam locomotive #2562 at the Chandler Train Depot in 1956. The ceremony included a performance by the Williams Air Force Base band and a speech by Mayor Bert Lewis. The City moved the locomotive to Armstrong Park in 1969, where it remained until 2007, when it was relocated to the Arizona Railway Museum in Tumbleweed Park. Financial Section 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718 INDEPENDENT AUDITORS’ REPORT Honorable Mayor and Members of the City Council City of Chandler, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the City of Chandler, Arizona (the “City”) as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the City of Chandler, Arizona, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2012, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 9 TUCSON • PHOENIX • FLAGSTAFF • ALBUQUERQUE www.heinfeldmeech.com Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 13 through 22, the Budgetary Comparison Schedule for the General Fund on pages 78 and 79, and the Schedules of Funding Progress on page 80 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements as a whole. The accompanying supplementary information such as the Introductory Section, the Other Financial Statements of the Financial Section, Other Supplemental Information, and the Statistical Section are presented for additional analysis and are not a required part of the financial statements. The Other Financial Statements of the Financial Section and the Other Supplemental Information, as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section and the Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants December 21, 2012 10 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 11 12 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 As management of the City of Chandler (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal beginning on page one and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS The financial statements, which follow the Management’s Discussion and Analysis, provide these significant, key financial highlights for 2012 as follows:      The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $1.310 billion (net assets) which represents an increase of 22.9 million from the prior year. Of this amount, $439.1 million (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors. However, $72.5 million is invested in a joint venture with the Town of Gilbert. At June 30, 2012, the City’s governmental funds reported combined ending fund balances of $272.3 million, an increase of $16.5 million in comparison with the prior year. Approximately 58.41% of the total amount, $159.1 million, is available for spending at the City’s discretion (committed, assigned or unassigned). At June 30, 2012, total fund balance for the General Fund was $173.7 million which represents an increase of $11.4 million from the prior year. General revenues from governmental activities accounted for $198.5 million or 69.67% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $86.4 million or 30.33% of total governmental activity revenues. The City had $126.3 million of program revenues and $1.8 million in general revenues and transfers related to business-type activities. At June 30, 2012, the City’s proprietary funds reported combined total net assets of $459.8 million, and total unrestricted net assets of $179.3 million. A total of $129.9 million of the unrestricted net assets are in the Water Fund. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 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 statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Net assets are categorized as capital assets less related debt, restricted by an outside third party, and unrestricted. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). 13 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 In the government-wide financial statements the City’s activities are presented in the following categories:    Governmental activities – Most of the City’s basic services are included here, such as general government, public safety, community services, community development, and public works. Sales taxes, state shared revenues, and charges for services finance most of these activities. Business-type activities – The services provided by the City included here are water, wastewater, solid waste, airport services, and housing services. The services are financed through user fees and charges. Component units – The discretely presented component units are the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary 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 focus on near-term inflows 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 the City’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 decision. 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 21 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 General Fund, Streets Capital Projects Fund, and General Obligation Bonds Debt Service Fund which are considered to be major funds. Data from the other 18 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 in the supplemental section of this report. The City adopts an annual appropriated budget for the General, Special Revenue, General Obligation and Highway User Revenue Debt Service, Capital Projects and Proprietary Funds. Budgetary comparison statements have been provided in the basic financial statements for the General, Streets Capital Projects, and General Obligation Bonds Debt Service Funds to demonstrate compliance with the budget. Budgetary comparison schedules for other Non-major Special Revenue and Non-major Capital Projects Funds are also included in the financial section. 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, wastewater, solid waste, airport, 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 an internal service fund to account for its self-insurance funds. Because self-insurance funds are funded predominantly by governmental functions rather than business-type functions, it has 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. 14 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 The proprietary fund financial statements provide separate information for the water and wastewater, which are considered to be major funds of the City. Data from the other three enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds are provided in the form of combining statements and schedules in the financial section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements in this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental and enterprise funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $1.310 billion as of June 30, 2012. A significant portion of the City’s net assets (63.1% percent) reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, improvements other than buildings, vehicles, machinery and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its 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. An additional portion of the City’s net assets (3.4% percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (33.5% percent) includes $72.5 million which is invested in a joint venture with the Town of Gilbert that may not be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was an increase of $11.2 million in unrestricted net assets reported in connection with the City’s business type activities. 15 CIT TY OF CH HANDLER R, ARIZON NA Man nagement’s Discussion n and Analy ysis (MD&A A) Yearr Ended Jun ne 30, 2012 The ffollowing tab ble presents a condensed statement s of the City’s nett assets for th he fiscal yearrs ended Junee 30, 2012 and d 2011.. ernmental Gove e Business-type otal To Acctivities Activities (Primarry Govt.) 2012 2011 20112 22011 2012 $ 367,674,769 9 $ 355,620,,369 $ 137,4333,284 $ 122 2,726,233 $ 505,108,053 Capittal assets, net 2 835,419,032 845,523,,219 550,1665,201 559 9,683,500 1 1,385,584,233 Non- current assets 3,688,802 2 4,202,,142 75,1661,058 78 8,730,971 78,849,860 82,933,113 3 1,206,782,603 1,205,345,,730 762,7559,543 761 1,140,704 1 1,969,542,146 1,966,486,434 Curre ent assets T Total assets Curre ent liabilities Non- current liabilitie es T Total liabilitiess 2011 $ 478,346,602 1,405,206,719 0 50,727,540 48,229,,324 41,2111,501 30 0,102,524 91,939,041 78,331,848 3 306,297,423 320,636,,603 261,7668,099 280 0,937,221 568,065,522 601,573,824 3 357,024,963 368,865,,927 302,9779,600 1,039,745 311 660,004,563 679,905,672 545,926,100 0 534,292,,488 280,4440,445 281 1,936,017 826,366,545 816,228,505 44,047,942 2 41,906,,129 8 259,783,598 260,307,,288 179,3339,498 $ 849,757,640 0 $ 836,505,,905 $ 459,7779,943 Net a assets: Inv vested in capitall assets, net of rela ated debt Resstricted Unrrestricted T Total net assetss - - 44,047,942 41,906,129 168 8,164,942 439,123,096 428,472,230 $ 450 0,100,959 $1 1,309,537,583 $ 1,286,606,864 Total asssets Governmen ntal Actvities Business-ty ype Actvities Total liabilitties Total net asssets $0 $500 $1 1,000 Millio ons 16 $1,500 $2,0000 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 Changes in net assets. The City’s total revenues for the fiscal year ended June 30, 2012 were $412.9 million. The total cost of all programs and services was $389.9 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2012 and 2011. Governmental Business-type Activities 2012 Total Activities (Primary Govt.) 2011 2012 2011 2012 2011 69,216,987 $ 44,171,220 $ 100,826,274 $ 90,049,474 $ 170,043,261 6,162,320 11,016,136 5,890,147 16,041,213 6,341,087 19,118,567 6,297,200 8,659,772 12,503,407 30,134,703 12,187,347 24,700,985 Property taxes Sales taxes 31,877,716 97,485,387 36,158,574 86,523,295 - - 31,877,716 97,485,387 36,158,574 86,523,295 Franchise fees Highway user taxes 2,988,456 11,823,280 2,819,521 13,287,878 - - 2,988,456 11,823,280 2,819,521 13,287,878 5,979,715 88,561 - - 5,979,715 88,561 45,958,627 1,221,923 47,732,614 1,841,244 389,446 533,313 45,958,627 1,611,369 47,732,614 2,374,557 Revenues: Program revenues Charges for services Operating grants and contributions Capital grants and contributions $ $ 134,220,694 General revenues Other taxes State shared revenues Investment income Miscellaneous Total revenues 1,116,832 3,071,588 1,351,829 946,507 2,468,661 4,018,095 284,847,379 257,625,855 128,027,203 106,486,266 412,874,582 364,112,121 General government 88,876,901 67,808,567 - - 88,876,901 67,808,567 Public safety Tansportation & development 89,141,559 52,111,019 90,738,477 50,909,361 - - 89,141,559 52,111,019 90,738,477 50,909,361 Community services 28,966,271 28,919,560 - - 28,966,271 28,919,560 Interest and fiscal charges Water 12,425,819 - 12,767,934 - 56,277,327 57,452,876 12,425,819 56,277,327 12,767,934 57,452,876 - - 38,804,360 13,756,352 37,896,180 13,443,102 38,804,360 13,756,352 37,896,180 13,443,102 Expenses: Wastewater Solid waste Airport Housing authority Total expenses Increase (decrease) before transfers Transfers in (out) Increase (decrease) in net assets Beginning net assets Ending net assets - - 1,941,752 2,107,354 1,941,752 2,107,354 271,521,569 251,143,899 7,642,503 118,422,294 7,580,783 118,480,295 7,642,503 389,943,863 7,580,783 369,624,194 13,325,810 6,481,956 9,604,909 (11,994,029) 22,930,719 (74,075) 13,251,735 (244,702) 6,237,254 74,075 9,678,984 244,702 (11,749,327) 22,930,719 (5,512,073) (5,512,073) 836,505,905 830,268,651 450,100,959 461,850,286 1,286,606,864 1,292,118,937 $ 849,757,640 $ 836,505,905 $ 459,779,943 $450,100,959 $1,309,537,583 $ 1,286,606,864 17 CIT TY OF CH HANDLER R, ARIZON NA Man nagement’s Discussion n and Analy ysis (MD&A A) Yearr Ended Jun ne 30, 2012 Rev venue So ources - F Fiscal Yeaar 2012 Other taxess 1.45% State shared reevenues 11.13% 1 Highway user u taxes 2.86% Investment inccome 0..39% Misceellaneous 0.660% Ch harges for seervices 441.14% Franchisse fees 0.77% % Sales ta axes 23.61% % Pro operty taxess 7.72% Caapital grantss and ccontribution ns 7.30% Operating g grants and contrib butions 3.03% % Function nal Expe enses - Fiscal Yearr 2012 Solid waste 53% 3.5 Airp port 0.50 0% Wastewater 9.95% Housiing Authorrity 1.96% % General go overnment 22.79% Water W 14.43% Interesst expense on long-tterm debt 3.1 19% Commun nity services 7.43% Public ssafety 22.86% Tran nsportation & dev velopment 13.36% g al net assets to otaled $13.3 m million for the year ended d June 30, 2012 2 Goveernmental Acctivities. Thee increase in governmenta comp pared with an n increase of $6.2 $ million in n the prior yeear. This increease was prim marily due to o the increase in charges for serviices of $25.0 million m (56.7% %), sales tax revenue r of $1 11.0 million ((12.7%) and sstate shared p proposition 4400 revenue of o $5.9 million (6652 2.1%). Howev ver, capital grants g and contributions reevenues decrreased by $5.0 million (31.3%) from the priorr year and sta ate shared reevenues decreeased by 1.8 million (3.7% %); a direct reesult of the S State of Arizo ona’s reduced d incom me tax collection due to the t poor econ nomy. Finally, as a resultt of the econo omic downtu urn, property y tax revenues decreeased by $4.3 million (11.8%) and unresstricted investtment earning gs decreased by 33.6% oveer the prior yeear. 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 Business-type Activities. The increase in business-type net assets totaled $9.7 million for the year ended June 30, 2012 compared with a decrease of $11.7 million in the prior year. This is due primarily to the increased revenue of $10.8 million (12%) in charges for services resulting from the expansion at the Intel facility located in Chandler and an increase in capital grants and contributions of $10.5 million (120.8%). Also, as a result of the low interest environment, unrestricted investment earnings continued to decrease by 27% over the prior year. As evident in the previous graph, the largest financing source for the City is charges for services at 41.2% associated with the user fees and charges for services. Sales taxes also comprise a significant portion of the City’s revenues at 23.6% of the total revenues with state shared revenues accounting for an additional 11.1% of the City’s total revenues. The City as a whole uses the largest amount of resources for public safety at 22.9% of the total functional expenses of the City. The next largest users of resources are general government functions and water services at 22.8% and 14.4%, respectively, with transportation & development accounting for 13.4% of the City’s total expenses. 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. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Fund balances are reported on a hierarchy of five classifications based on spending constraints in order to provide better consistency and clarification. These classifications include Nonspendable, Restricted, Committed, Assigned and Unassigned. The spendable balances are the Restricted, Committed, Assigned and Unassigned fund balances. Additional information on Fund Balances and their classifications can be found in Note 9 of the financial statements. The financial performance of the City as a whole is reflected in its governmental funds. As the City completed the year, its governmental funds reported a combined fund balance of $272.3 million, an increase of $16.5 million in comparison with the prior year. Approximately $159.1 million (58.4%) of this amount is combined assigned and unassigned balances, all which may be spent at the City’s discretion. The total compared to the prior years’ unreserved balance of $148.3 million represents an increase of $10.8 million. The remainder of the fund balance comprising of non-spendable and restricted balances amounts to $113.3 million (41.6% of the total fund balance). The non-spendable balance consists of inventories and pre-paid amounts. The restricted balance is constrained for specific purposed imposed by external parties or enabling legislation. The total compared to the prior years restricted balance of $107.5 million, represents an increase of $5.8 million. The general fund is the chief operating fund of the City. At the end of the current fiscal year, assigned and unassigned fund balance of the general fund was $171.9 million, while total fund balance reached $173.7 million. As a measure of the general fund’s liquidity, it may be useful to compare both assigned and unassigned fund balance and total fund balance to total fund expenditures. Assigned and unassigned fund balance represents 98.9% of total general fund expenditures, which is well above the City’s 12% reserve financial policy. The City’s general fund balance increased by $11.4 million during the current fiscal year. A key factor in this increase was sales tax revenue and certain license and permits revenues as a result of a slightly improved economy and increased developments in the City, including the $5.2 billion expansion of the Intel Facility. The street fund accounts for the acquisition, construction and improvements of the City’s streets’ projects. At the end of the current fiscal year total fund balance was $34.1 million. The fund balance of the City’s street fund increased by $0.6 million during the current fiscal year. 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 Proprietary funds. The City’s proprietary funds which include enterprise and internal service funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets for the enterprise funds and the internal service funds at the end of the fiscal year amounted to $459.8 million and $39 million, respectively. Net assets after investments in capital assets and net of related debt are 39.0% unrestricted. Unrestricted net assets of the water fund at the end of the year amounted to $129.9 million, and those for the wastewater fund amounted to $36.1 million. BUDGETARY HIGHLIGHTS For the 2011-12 Budget Year, the City of Chandler held strong to its commitment to consistently engage in fiscally responsible practices as the economy showed some positive signs, but there was still considerable cause for concern. The City Council adopted a balanced budget for 2011-12, with further adjustments to operating and capital expenditures to meet the anticipated lower levels of revenues. While local revenue sources such as sales tax were starting to improve in 2011-12, areas such as Urban Revenue Sharing (State Shared Income Tax) and Primary Property Tax continued to see decreases. As a result, the City Council reduced spending appropriation and engaged internal and external stakeholders at every level to find new and better ways to continue to provide high quality services to our citizens even more efficiently. As has been the City’s practice, the City’s budget and revenue forecast distinguishes between ongoing and one-time revenues and spending. The City’s 2011-12 budget included ongoing merit pay increases for all three Public Safety union groups, while SEIU union members and non-represented employees received a 2.25% salary increase. Other ongoing costs, such as maintenance, utilities, and supplies were managed very closely to ensure they could be met with ongoing revenues. In 2011-12 the City again included a stabilization reserve in the budget to provide protection against temporary or unanticipated reductions in revenue. Ultimately, higher than anticipated revenues from development in Chandler made the use of the reserve unnecessary. The City continues to emphasize its strong financial policies, and continues to include a 12% contingency reserve in the General Fund. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2012, the City had invested $826.3 million in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $80.0 million. Some of the major capital asset events during the current fiscal year included the following:  Completed construction of South Arizona Avenue Corridor Improvements at a cost of $17.2 million.  Completed construction of Paseo Vista Recreational Area at a cost of $12.1 million  Completed construction of one phase of McQueen Road Street Improvements at a cost of $14.1 million.  Completed construction of one phase of Gilbert Road Street Improvements at a cost of $9.7 million.  Completed construction of Dobson Road/Chandler Boulevard Intersection Improvements at a cost of $9.4 million.  Completed construction of Dobson Road/Warner Road Intersection Improvements at a cost of $7.8 million.  Completed construction of Airport Boulevard Street Realignment at a cost of $3.7 million. 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2012 and 2011. Governmental Business-type Activities Total Activities (Primary Govt.) 2012 2011 2012 2011 2012 2011 $ 83,306,168 - $ 81,151,314 - $ 41,256,107 466,985 $ 41,256,107 570,340 $ 124,562,275 466,985 $ 122,407,421 570,340 Infrastructure 413,807,990 362,709,243 - - 413,807,990 362,709,243 System improvements Buildings and improvements 265,853,357 256,568,398 430,691,292 8,852,429 467,969,166 8,983,014 430,691,292 274,705,786 467,969,166 265,551,412 Land Land improvements Machinery and equipment Construction in progress Total 24,843,054 26,216,855 1,257,360 1,602,438 26,100,414 27,819,293 47,608,463 $ 835,419,032 118,877,409 $ 845,523,219 67,641,028 $ 550,165,201 39,302,434 $ 559,683,499 115,249,491 $ 1,385,584,233 158,179,843 $ 1,405,206,718 Additional information on the City’s capital assets can be found in Note 4 of the financial statements. Long-term Debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $570.8 million in long-term debt outstanding with $35.1 million due within one year. The following table presents a summary of the City’s outstanding long-term obligations for the fiscal years ended June 30, 2012 and 2011. Governmental Business-type Activities General Obligation Bonds Revenue Bonds Excise Tax Revenue Obligations Special Assessment Bonds Total Activities (Primary Govt.) 2012 2011 2012 2011 2012 2011 $ 268,148,000 $ 279,968,000 $ 170,987,000 $ 179,747,000 $ 439,135,000 $ 459,715,000 25,745,000 28,620,000 52,670,000 60,280,000 78,415,000 88,900,000 47,440,000 48,540,000 47,440,000 48,540,000 5,780,000 6,190,000 - - 5,780,000 6,190,000 $ 299,673,000 $ 314,778,000 $ 271,097,000 $ 288,567,000 $ 570,770,000 $ 603,345,000 34,784 63,398 35,216 37,844 70,000 101,242 Deferred Bond Premiums 5,204,045 5,841,889 4,486,782 5,039,191 Claims Payable 4,777,475 3,383,972 Total Bonds Payable Arbitrage Payable Landfill Closure/Post Closure - - - - - - 9,690,827 10,881,080 4,777,475 3,383,972 4,340,000 4,340,000 4,340,000 4,340,000 Compensated Absences 9,439,327 10,490,286 958,685 1,049,645 10,398,012 11,539,931 Post Employment Benefits 8,207,450 5,572,720 591,884 396,372 8,799,334 5,969,092 $ 327,336,081 $ 340,130,265 $ 281,509,567 $ 299,430,052 $ 608,845,648 $ 639,560,317 Total Long Term Liabilities The City of Chandler’s total debt decreased by $30.7 million during the current fiscal year. The key factors in the decrease were principal payments made on long-term debt while not adding additional debt. State statutes currently limit the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, artificial lighting, open space, parks, public safety and emergency services, streets, 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2012 transportation, and recreational facilities. The current debt limitation for the City is $451.0 million. The City has $427.3 million of outstanding general obligation debt for these purposes. State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $135.3 million. The City has $11.8 million of outstanding general obligation debt for this purpose. As of year-end, the City’s current bond ratings on general obligation bonds were Aaa from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch Ratings. Ratings for the street and highway users were Aa3 from Moody’s, AA from Standard & Poor’s, and AA from Fitch. Water and wastewater revenue bonds were Aa1 from Moody’s Investor Services, AA+ from Standard & Poor’s, and AA+ from Fitch. Excise Tax bonds were Aa1 from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch. Additional information on the City’s long-term debt can be found in Note 5 of the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET While many revenue sources have been impacted by the sagging economy, the most significant drivers remain local and state-shared sales tax, Urban Revenue Sharing, and property tax. While local sales tax collections have trended upwards, the Chandler City Council recognizes that the higher than anticipated sales tax revenues, and certain license and permit revenues were the result of new development, such as the $5.2 billion expansion at the Intel facility located in Chandler, and should be treated as one-time. In assessing future revenues it was clear that the overall economy (both nationally and for the Phoenix metro area) was starting to grow, but at a very slow rate. This assessment of “slow growth” drove future year ongoing revenue estimates and resulted in a 2012-13 budget with no new positions and with a small (3.8%) increase in operating budgets (total budget less capital). As was done the last two years, the Executive Leadership team made a significant effort to find savings so that expenses, overall, did not change significantly despite increases in contracts, health care costs, and retirement costs. Adopting a balanced budget for fiscal year 2012-13 required the combined efforts of citizens, the City Council, Executive Leadership team, and staff members throughout the organization. The City’s overall budget increased from $676 million in 2011-12 to $836 million in 2012-13, but most of this was due to “pass through” reimbursements for capital infrastructure for water and wastewater improvements to support the Intel expansion. Despite a decrease in secondary assessed values (which support debt service) for the third year in a row, the City Council did not increase the secondary property tax rate keeping it at $0.9422 in 2012-13 and the primary rate remains at $0.3292. Since the property tax rate remains unchanged, but assessed property values continue to decrease, new General Obligation bonds cannot be sold over the new few years. City Council created an Infrastructure Maintenance Reserve that increased one-time General Fund revenues to be used to maintain our existing streets and parks infrastructure. In addition, one-time funding has been identified to pay off an $8.475 million General Obligation debt (Series 2003) that will reduce interest and eliminate that debt from future debt service schedules. CONTACTING THE CITY’S FINANCE OFFICE This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Management Services Department, City of Chandler, P.O. Box 4008, MS 609, Chandler, AZ 85244-4008. 22 BASIC FINANCIAL STATEMENTS 23 City of Chandler Statement of Net Assets June 30, 2012 Component Units Chandler Industrial Chandler Development Cultural Authority Foundation Governmental Activities Business-Type Activities $ 346,614,376 1,889,519 4,141 1,007,977 10,629,783 944,863 5,801,116 421,522 361,472 367,674,769 $ 121,509,795 15,199,984 359,602 24,996 243,793 95,114 137,433,284 3,688,802 - 363,450 2,306,366 72,491,242 363,450 5,995,168 72,491,242 - 1,377,484 6,000 - 130,914,631 704,504,401 835,419,032 839,107,834 1,206,782,603 108,897,135 441,268,066 550,165,201 625,326,259 762,759,543 239,811,766 1,145,772,467 1,385,584,233 1,464,434,093 1,969,542,146 524,130 71,629 71,629 1,455,113 2,051,216 12,355,974 511,166 2,447,448 22,059,829 5,114,824 11,463,228 - 44,136 - Total ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Interest receivable Prepaid items Property taxes receivable Due from other governments Inventories Special assessments receivable Notes receivable - current Other receivables Total current assets Noncurrent assets: Cash and investments - restricted Notes receivable - long term Other assets Investment in joint venture Capital assets: Non-depreciable Depreciable, net Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits 9,703,855 4,603,658 9,015,780 24 $ 468,124,171 17,089,503 363,743 1,007,977 10,654,779 1,188,656 5,801,116 421,522 456,586 505,108,053 $ 524,130 524,130 $ 485,812 7,563 95,931 6,797 596,103 Accrued interest Unearned revenue Arbitrage liability - current Compensated absences payable - current Bonds payable - current Deferred bond premium - current Landfill closure and postclosure liability - current Claims and judgements payable - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Claims and judgements payable - long term Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital improvements Debt service Legal restrictions Total restricted Unrestricted Total net assets 6,246,588 119,001 7,392 103,695 15,990,000 637,843 4,299,728 50,727,540 5,482,650 672,795 12,608 10,533 19,095,000 528,881 94,446 41,211,501 11,729,238 791,796 20,000 114,228 35,085,000 1,166,724 94,446 4,299,728 91,939,041 - 199,597 243,733 9,335,632 283,683,000 4,566,202 8,207,450 27,392 477,747 306,297,423 357,024,963 948,152 252,002,000 3,957,901 591,884 22,608 4,245,554 261,768,099 302,979,600 10,283,784 535,685,000 8,524,103 8,799,334 50,000 4,245,554 477,747 568,065,522 660,004,563 - 243,733 545,926,100 280,440,445 826,366,545 - 71,629 23,118,125 19,989,950 939,867 44,047,942 259,783,598 $ 849,757,640 179,339,498 $ 459,779,943 23,118,125 19,989,950 939,867 44,047,942 439,123,096 $ 1,309,537,583 524,130 524,130 1,377,484 1,377,484 358,370 1,807,483 See accompanying Notes to Basic Financial Statements. 25 $ $ City of Chandler Statement of Activities and Changes in Net Assets For the year ended June 30, 2012 Program Revenues Functions/Programs Expenses Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ $ Total Primary government: Governmental activities: General government $ 88,876,901 $ 31,381,062 1,835,220 23,110 $ 33,239,392 Public safety 89,141,559 5,794,329 1,203,102 - 6,997,431 Transportation and development 52,111,019 27,905,311 2,708,748 10,875,586 41,489,645 Community services 28,966,271 4,136,285 415,250 117,440 4,668,975 Interest on long-term debt 12,425,819 - - - - 271,521,569 69,216,987 6,162,320 11,016,136 86,395,443 Water 56,277,327 49,565,071 - 6,116,085 55,681,156 Wastewater 38,804,360 35,907,085 - 12,662,230 48,569,315 Solid waste Total governmental activities Business-type activities: 13,756,352 13,890,957 - - 13,890,957 Airport 1,941,752 996,605 - 96,668 1,093,273 Chandler housing authority 7,642,503 466,556 6,341,087 243,584 7,051,227 118,422,294 100,826,274 6,341,087 19,118,567 126,285,928 $ 389,943,863 $ 170,043,261 $ $ 212,681,371 $ $ $ Total business-type activities Total primary government 12,503,407 $ 30,134,703 - $ - Component units Chandler Industrial Development Authority Chandler Cultural Foundation Total component units 2,342 1,192,686 $ 1,195,028 68,789 936,519 $ 1,005,308 175,047 $ 175,047 $ General revenues and transfers: Taxes: Property taxes, levied for general purposes Sales taxes Franchise fees Highway user taxes Other taxes Total taxes State shared revenues (unrestricted) Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year Net assets - end of year See accompanying Notes to Basic Financial Statements. 26 $ - 68,789 1,111,566 $ 1,180,355 Net (Expense) Revenue and Changes in Net Assets Primary Government Component Units Chandler Industrial Governmental Business-Type Activities Activities $ (55,637,509) - $ (55,637,509) Cultural Authority Foundation $ - $ - (82,144,128) - (82,144,128) - - (10,621,374) - (10,621,374) - - (24,297,296) - (24,297,296) - - (12,425,819) - (12,425,819) - - (185,126,126) - (185,126,126) - - - (596,171) (596,171) 9,764,955 - - 9,764,955 - - - 134,605 134,605 - - - (848,479) (848,479) - - - (591,276) (591,276) - - - - - 7,863,634 (185,126,126) 7,863,634 (177,262,492) - - - - 66,447 - - - - - (81,120) - - - 66,447 (81,120) 31,877,716 - 31,877,716 - - 97,485,387 - 97,485,387 - - 2,988,456 - 2,988,456 - - 11,823,280 - 11,823,280 - - 5,979,715 - 5,979,715 - - 150,154,554 - 150,154,554 - - 45,958,627 - 45,958,627 - - 1,221,923 389,446 1,611,369 531 5,969 1,116,832 1,351,829 2,468,661 - - 74,075 - - - 198,377,861 1,815,350 200,193,211 531 5,969 13,251,735 9,678,984 22,930,719 66,978 836,505,905 450,100,959 1,286,606,864 457,152 849,757,640 $ 459,779,943 (74,075) $ $ Total Chandler Development 7,863,634 $ 1,309,537,583 $ 524,130 27 (75,151) 1,882,634 $ 1,807,483 City of Chandler Balance Sheet Governmental Funds June 30, 2012 Major Funds General Obligation Other Streets Bonds Governmental General Capital Projects Debt Service Funds 153,147,175 $ Total ASSETS Equity in pooled cash and investments $ Accounts receivable 41,057,030 $ 36,497,726 1,661,228 69,721 - 2,642 1,733,591 2,941 - - - 2,941 265,175 - 742,802 - 1,007,977 - - - 5,801,116 5,801,116 Prepaid items Property taxes receivable Special assessments receivable Notes receivable Advances to other funds $ 71,815,449 $ 302,517,380 - - - 421,522 421,522 28,323,345 - - - 28,323,345 Due from other funds 2,810,223 - - - 2,810,223 Due from other governments 1,850,547 1,825,560 - 6,953,676 10,629,783 Inventories 944,863 - - - 944,863 Other receivables 360,210 98 - 949 361,257 $ 37,240,528 $ 84,995,354 $ $ $ 2,541,562 $ Total assets $ 189,365,707 $ 42,952,409 $ 5,928,933 $ 1,001,158 354,553,998 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 9,471,653 Accrued payroll 4,366,762 18,440 - 178,172 4,563,374 Trust liabilities and deposits 3,910,073 9,015,780 6,246,588 5,105,707 - - Accrued interest - - 5,662,500 584,088 Due to other funds Advances from other funds - - - 2,810,223 2,810,223 - 7,870,000 - 20,453,345 28,323,345 Arbitrage liability - 1,742 - 5,650 7,392 Bonds payable (matured) - - 11,860,000 3,700,000 15,560,000 217,973 - 459,344 5,551,554 6,228,871 15,619,375 8,891,340 17,981,844 39,734,667 82,227,226 Deferred revenue Total liabilities Fund Balances: Nonspendable 947,804 - - - 947,804 Restricted 939,867 34,061,069 19,258,684 58,059,035 112,318,655 Committed Assigned Unassigned Total fund balances Total liabilities and fund balances $ - - - - - 102,635,587 - - - 102,635,587 69,223,074 - - 56,424,726 173,746,332 34,061,069 19,258,684 (12,798,348) 45,260,687 42,952,409 $ 37,240,528 189,365,707 $ See accompanying Notes to Basic Financial Statements. 28 $ 84,995,354 272,326,772 $ 354,553,998 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2012 $ Total Fund Balances - Total Governmental Funds 272,326,772 Amounts reported for governmental activities in the Statement of Net Assets were reported differently because: Capital assets used in governmental activities are not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Non-depreciable 130,914,631 Depreciable buildings, property, equipment and infrastructure, net 704,504,401 Total capital assets 835,419,032 Certain revenues are not available to pay for current period expenditures and, therefore, are deferred in the funds. 6,228,871 The internal service fund is used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund is included in governmental activities in the Government-Wide Statement of Net Assets. 39,000,595 Long-term liabilities are not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds amounts of $4,862,257 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (284,113,000) Bonds premium (5,204,045) Bond issuance costs 3,688,802 OPEB liability (8,175,977) Arbitrage liability (27,392) Compensated absences (9,386,018) Total long-term liabilities (303,217,630) $ Net Assets of Governmental Activities See accompanying Notes to Basic Financial Statements. 29 849,757,640 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2012 Major Funds General General Obligation Other Streets Bonds Governmental Capital Projects Debt Service Funds Total REVENUES: Property taxes $ Sales taxes 8,369,580 $ - 97,485,387 Franchise fees Highway user taxes Regional transportation tax State shared $ - 23,959,980 $ - - $ - 32,329,560 97,485,387 2,988,456 - - - 2,988,456 - - - 11,823,280 11,823,280 - 5,979,715 - - 5,979,715 45,958,627 - - - 45,958,627 Grants and entitlements - - - 13,956,415 13,956,415 System development fees - 4,300,898 - 7,423,925 11,724,823 - - - 678,027 678,027 Licenses and permits Special assessments 6,955,605 - - - 6,955,605 Charges for services 20,443,220 - - 97,223 20,540,443 Fines and forfeitures 3,489,570 - - 1,210,860 4,700,430 Rentals 455,842 - - - 455,842 Contributions 100,000 - - - 100,000 Interest revenue 464,785 115,426 210,337 244,348 1,034,896 Miscellaneous 587,462 777 72,765 661,004 24,171,094 35,506,843 257,372,510 - 187,298,534 Total revenues 10,396,039 EXPENDITURES: Current: General government 42,961,543 - - 5,933,268 48,894,811 Public safety 80,719,416 - - 2,100,690 82,820,106 Transportation and development 14,098,155 3,546,018 - 7,888,566 25,532,739 Community services 21,263,658 - - 1,991,910 23,255,568 4,059,878 7,478,712 - 18,248,479 29,787,069 Capital improvements Debt service: Principal - - 11,860,000 4,110,000 15,970,000 Interest and fiscal charges - - 11,373,948 1,176,375 12,550,323 163,102,650 11,024,730 23,233,948 41,449,288 238,810,616 (5,942,445) 18,561,894 Total expenditures 24,195,884 REVENUES OVER (UNDER) EXPENDITURES (628,691) 937,146 OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) 29,152 - - 59,855 89,007 - 1,243,998 - 19,332,190 20,576,188 (12,823,016) - - (9,862,488) (22,685,504) (12,793,864) 1,243,998 - 9,529,557 (2,020,309) 615,307 937,146 3,587,112 16,541,585 11,402,020 NET CHANGE IN FUND BALANCE FUND BALANCES: Beginning of year End of year 162,344,312 $ 173,746,332 33,445,762 $ 34,061,069 See accompanying Notes to Basic Financial Statements. 30 18,321,538 $ 19,258,684 41,673,575 $ 45,260,687 255,785,187 $ 272,326,772 City of Chandler Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2012 Net Change in Fund Balances - Total Governmental Funds $ 16,541,585 Governmental activities in the Statement of Activities were reported differently because: Governmental funds report capital outlay as expenditures. However, in the GovernmentWide Statement of Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded and transfered in the current period. 27,794,794 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in governmental funds. (40,905,971) Some items reported in the governmental funds are sources and uses of current financial resources and therefore are not reported as revenues or expenses in Statement of Activities. These items include: Principal payments on debt $ Other postemployment benefits obligation 15,970,000 (2,625,010) Loss on disposal of capital assets (205,971) 13,139,019 Accrued interest payable related to long-term debt is recognized as an expense in the Statement of Activities, however is not recognized in the governmental funds because it is not payable from current financial resources. 124,504 Arbitrage liability expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. 5,000 Compensated absence expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. 1,049,236 Certain revenues in the governmental funds that provide current financial resources are not included in the Statement of Activities because they were recognized in a prior period. However, other revenues that are deferred in the governmental funds because they do not provide current financial resources due to unavailability are recognized in the Statement of Activities. (872,059) Capital assets contributed by developers to the City are not recorded in the governmental funds as they do not provide current financial resources but are recognized in the Statement of Activities as program revenues. 3,212,961 The internal service fund is used by management to charge the costs of certain activities, such as insurance, to individual funds. The net gain of the internal service fund is reported with governmental activities. Change in Net Assets of Governmental Activities (6,837,334) $ See accompanying Notes to Basic Financial Statements. 31 13,251,735 City of Chandler Statement of Net Assets Proprietary Funds June 30, 2012 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments $ 56,824,372 $ 47,847,072 $ 16,838,351 $ 121,509,795 $ 44,096,996 Accounts receivable 7,376,981 6,031,120 1,791,883 15,199,984 155,928 Advances to other funds 3,900,000 - - 3,900,000 - - 24,996 24,996 - - 19,713 243,793 - - 359,602 359,602 1,200 1,451 24,435 69,228 95,114 215 68,326,884 53,902,627 19,103,773 141,333,284 44,254,339 1,180,796 1,124,288 1,282 2,306,366 - - - 363,450 363,450 - 72,491,242 - - 72,491,242 - Due from other governments Inventories Prepaid items Other receivables Total current assets 224,080 - Noncurrent assets: Other assets Notes receivable - long term Investment in joint venture Capital assets: Non-depreciable 34,719,002 46,571,927 27,606,206 108,897,135 - Depreciable, net 209,494,194 204,221,537 27,552,335 441,268,066 - 244,213,196 250,793,464 55,158,541 550,165,201 - Total capital assets Total noncurrent assets 317,885,234 251,917,752 55,523,273 625,326,259 - Total assets 386,212,118 305,820,379 74,627,046 766,659,543 44,254,339 1,414,087 10,119,383 822,504 12,355,974 232,202 272,260 127,054 111,852 511,166 40,284 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits 1,231,954 944,129 271,365 2,447,448 - Accrued interest 3,169,623 2,310,633 2,394 5,482,650 - 32 298,958 187,552 186,285 672,795 119,001 6,077 2,543 1,913 10,533 586 12,048,090 7,026,910 20,000 19,095,000 - 312,933 215,752 196 528,881 - 2,604 10,000 4 12,608 - Landfill closure and postclosure liability - current - - 94,446 94,446 - Claims and judgements payable - current - - - - 4,299,728 18,756,586 20,943,956 1,510,959 41,211,501 4,691,801 Unearned revenue Compensated absences payable - current Bonds payable - current Deferred bond premium - current Arbitrage liability - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term 228,942 172,121 948,152 52,723 3,900,000 - 3,900,000 - 140,925,205 110,935,795 141,000 252,002,000 - 2,165,437 1,789,526 2,938 3,957,901 - 319,598 197,147 75,139 591,884 31,473 - 547,089 Advances from other funds - Bonds payable - long term Deferred bond premium - long term OPEB liability - long term 7,304 15,300 4 22,608 Landfill closure and postclosure liability - long term - - 4,245,554 4,245,554 - Claims and judgements payable - long term - - - - 477,747 Total noncurrent liabilities 143,964,633 117,066,710 4,636,756 265,668,099 561,943 Total liabilities 162,721,219 138,010,666 6,147,715 306,879,600 5,253,744 93,631,372 131,730,680 55,078,393 280,440,445 - 129,859,527 36,079,033 13,400,938 179,339,498 39,000,595 Arbitrage liability - long term NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets $ 223,490,899 $ 167,809,713 See accompanying Notes to Basic Financial Statements. 33 $ 68,479,331 $ 459,779,943 $ 39,000,595 City of Chandler Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds For the year ended June 30, 2012 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees $ 49,565,071 $ 35,907,085 $ 14,887,762 $ 100,359,918 $ - Grants and entitlements - - 6,341,087 6,341,087 Rentals - - 466,356 466,356 - Self insurance premiums - - - - 18,645,853 66,288 90,121 643,011 799,420 455,828 49,631,359 35,997,206 22,338,216 107,966,781 19,101,681 Miscellaneous Total operating revenues - OPERATING EXPENSES: General and administrative 3,977,300 2,572,800 1,416,800 7,966,900 - Personal services 7,747,265 3,585,003 3,322,715 14,654,983 1,123,320 Contractual services 5,449,682 5,302,901 9,762,929 20,515,512 2,497,916 Commodities 9,177,488 5,291,761 2,083,466 16,552,715 1,641,406 - - - 22,893,641 Claims expense Housing assistance payments Depreciation and amortization expense Total operating expenses OPERATING INCOME (LOSS) - - 4,939,931 4,939,931 - 20,056,733 17,264,802 1,809,898 39,131,433 - 46,408,468 34,017,267 23,335,739 103,761,474 28,156,283 3,222,891 1,979,939 170,822 160,650 (997,523) 4,205,307 (9,054,602) NONOPERATING REVENUES (EXPENSES): Interest revenue Interest and fiscal charges (6,373,968) Accretion of bond premium Amortization of bond issuance costs Gain (loss) on disposal of capital assets Equity interest in joint venture 57,974 (4,660,941) 330,470 221,743 (160,600) (119,152) (41,000) (7,000) - (3,293,291) 182,027 389,446 (4,788) (11,039,697) - 196 (80) - 552,409 (279,832) (48,000) - - (3,293,291) 182,027 Total nonoperating revenues (expenses) (9,367,567) (4,404,700) 53,302 (13,718,965) (6,144,676) (2,424,761) (944,221) (9,513,658) 6,116,085 12,662,230 340,252 19,118,567 - 651,998 651,998 2,050,000 (111,558) (577,923) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (8,872,575) CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in - Transfers out - (333,210) (133,155) 5,782,875 Total capital contributions and transfers (361,801) Change in net assets (14,759) 12,529,075 880,692 19,192,642 2,035,241 10,104,314 (63,529) 9,678,984 (6,837,334) NET ASSETS: Beginning of year End of year 223,852,700 $ 223,490,899 68,542,860 157,705,399 $ See accompanying Notes to Basic Financial Statements. 34 167,809,713 $ 68,479,331 450,100,959 $ 459,779,943 45,837,929 $ 39,000,595 35 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2012 Other Proprietary Funds Major Funds Water Wastewater CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services Net cash provided (used) by operating activities $ CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Principal paid on bond maturities Interest paid on bonds Cash paid to other funds Cash received from capital contributions Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 49,408,477 (17,664,591) (7,681,838) 24,062,048 $ 34,381,529 (4,572,422) (3,514,872) 26,294,235 $ Total 15,819,459 6,332,545 (17,630,850) (3,315,872) 1,205,282 $ 99,609,465 6,332,545 (39,867,863) (14,512,582) 51,561,565 Governmental Activities: Internal Service Fund $ 19,097,259 (25,709,278) (1,113,875) (7,725,894) (333,210) (333,210) (133,155) (133,155) 651,998 (111,558) 540,440 651,998 (577,923) 74,075 2,050,000 (14,759) 2,035,241 (7,780,392) (20,667,713) (567,700) (29,015,805) - (11,275,419) (6,174,581) (20,000) (17,470,000) - (6,646,226) (4,762,064) (5,268) (11,413,558) - (494,794) - - (494,794) - 5,747,663 (20,449,168) 12,385,322 (19,219,036) 340,252 (252,716) 18,473,237 (39,920,920) - 170,822 170,822 3,450,492 160,650 160,650 7,102,694 53,373,880 56,824,372 36 $ 40,744,378 47,847,072 57,974 57,974 1,550,980 $ 15,287,371 16,838,351 389,446 389,446 12,104,166 $ 109,405,629 121,509,795 182,027 182,027 (5,508,626) $ 49,605,622 44,096,996 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 operating activities: Depreciation Changes in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in prepaid items (Increase) decrease in investment in joint venture (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in claims payable Increase (decrease) in unearned revenue Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Contributions of capital assets from developers Loss on disposal of assets Accretion of bond premiums Amortization of bond issuance costs $ $ $ 3,222,891 $ 1,979,939 $ (997,523) $ 4,205,307 20,056,733 17,264,802 1,809,898 39,131,433 (434,414) (28,088) (3,210) 160,600 971,177 (37,747) 29,245 21,687 103,174 20,839,157 24,062,048 (2,020,420) 119,152 8,595,040 5,257 260,039 25,552 64,874 24,314,296 26,294,235 348,796 17,402 8,714 (16,730) (29,095) 27,864 8,492 27,464 2,202,805 1,205,282 (2,106,038) (10,686) (3,210) 288,466 9,549,487 (61,585) 317,148 55,731 195,512 47,356,258 51,561,565 368,422 41,000 330,470 160,600 See accompanying Notes to Basic Financial Statements. 37 $ $ 276,908 7,000 221,743 119,152 $ $ 196 80 $ $ (9,054,602) - $ (114,480) (1,200) (68,618) (275) 1,393,503 110,058 9,720 1,328,708 (7,725,894) - City of Chandler Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2012 Volunteer Firemen's Pension and Relief Trust Fund Agency Funds ASSETS Equity in pooled cash and investments Total assets $ 25,650 $ 11,500 $ 25,650 $ 11,500 LIABILITIES Due to others - $ Total liabilities - NET ASSETS Assets held in trust for pension benefits 25,650 $ Total net assets See accompanying Notes to Basic Financial Statements. 38 25,650 11,500 $ 11,500 City of Chandler Statement of Changes in Fiduciary Net Assets Fiduciary Funds - Trust Funds For the year ended June 30, 2012 Volunteer Firemen's Pension and Relief Trust Fund ADDITIONS: Interest revenue $ Miscellaneous 76 88 164 Total additions DEDUCTIONS: Benefits paid to plan members and suppliers 4,800 Change in net assets (4,636) NET ASSETS: Beginning of year 30,286 End of year $ See accompanying Notes to Basic Financial Statements. 39 25,650 40 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 The City of Chandler (City) was incorporated on February 17, 1920. On May 25, 1964, voters ratified a City charter providing for a Council-Manager form of government. The government of the City is operated by authority of its charter, as limited by the state legislature. A seven-member council including a separately elected mayor governs the City. The following notes to the financial statements are an integral part of the City’s financial statements. NOTE 1 - Summary of Significant Accounting Policies The accounting policies and procedures of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity As required by GAAP, these financial statements present the City and its component units, i.e., entities for which the City is considered to be financially accountable and/or exercise significant influence over operations. Blended component units, although legally separate entities, are in substance part of the City’s operations, and therefore data from these units are combined with data of the City. The City’s discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements, to emphasize that they are legally separate from the City. The component units discussed below are included in the City’s reporting entity because of the significance of their operational and/or financial relationships with the City. Each component unit has a June 30 year-end. 1. Blended Component Unit The City of Chandler Municipal Property Corporation (Corporation) is a nonprofit corporation which exists solely for the purpose of constructing or otherwise acquiring or equipping buildings, structures or improvements on land owned by the City for the benefit, common good and general welfare of the City and its citizens. The Chandler City Council appoints the five members of the Board, who are responsible for approving the Corporation’s bond sales. Additionally, all bond sales must be submitted to and approved by the City Council. All financial activities are reported within the enterprise funds of the City. Unaudited financial statements for the Corporation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 2. Discretely Presented Component Units The component unit column in the basic financial statements includes the financial data of the Chandler Industrial Development Authority (Authority). The Authority is responsible for the issuance of tax-exempt bonds for qualified projects approved by the Authority and the City Council. The Authority has a seven-member board of directors appointed by the City Council. The City is able to impose its will on the Authority inasmuch as the City Council must vote to ratify the actions of the Authority with regard to the issuance of bonds. The accounting records of the Authority are maintained by the City and are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. The Chandler Cultural Foundation (Foundation) oversees the operations of the Chandler Center for the Arts for the selection and scheduling of performances, other facility use and general policy setting activities. The City is able to significantly influence its operations. Specifically, the Foundation’s budget is annually reviewed and approved by the City Council and the Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Foundation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 41 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state shared revenues, investment income, and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation Government-wide Financial Statements - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Agency fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as 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 grantor or provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements; the exception is any interfund activity between governmental and business-type activities, such as transfers. Interfund services provided and used are not eliminated. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service resources are provided during the current year for payment of long-term debt principal and interest due early in the following year (not to exceed one month) and, therefore, the expenditures and related liabilities have been recognized. Compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise fees, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenues are not susceptible to accrual because generally they are not measurable until received in cash. 42 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued Delinquent property taxes have been recorded as deferred revenue. Grants and similar awards received before the eligibility requirements are met are also recorded as deferred revenue. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. The City reports the following major governmental funds: General Fund – This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. Streets Fund – This fund is used to account for the acquisition, construction and improvements of City streets’ projects. General Obligation Bonds – This fund accumulates monies for the payment of principal and interest requirements of the City’s tax supported General Obligation Bonds. Revenues for repayment are generated from secondary property taxes. The City reports the following major proprietary funds: Water Services Fund – This fund is used to account for the provision of water services to the residents of the City and certain county residents within the City’s boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater Services Fund – This fund is used to account for the provision of wastewater services to the residents of the City and certain county residents within the City’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Additionally, the City reports the following fund types: Internal Service Fund - Internal Service Funds are established to account for financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis. The Internal Service Fund consists of a Self Insurance Fund that administers the City’s self-insured property, liability, medical, dental, short term disability, and workers’ compensation insurance programs. Fiduciary Funds – Fiduciary funds account for assets held by the City on behalf of the Volunteer Firemen’s Pension and Relief Trust Fund and agency funds, which account for resources held by the City in a custodial capacity for peddler bonds. The Volunteer Firemen’s Pension and Relief Trust Fund is a single-employer defined benefit pension plan established to provide pension benefits for volunteer firemen of the City. All applicable pronouncements of the Financial Accounting Standards Board (FASB) issued on or before November 30, 1989, as well as the FASB Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins are followed in both the government-wide business-type and enterprise fund financial statements, unless these pronouncements conflict with or contradict GASB pronouncements. Under this requirement, the City is given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements. Accordingly, the City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued 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 City’s internal service fund are interfund transfers from the general fund and water fund for property and liability insurance and charges to user departments for premiums related to medical, dental, worker’s compensation, and short term disability selfinsurance. The principal operating revenues of the City’s enterprise funds are user fees and charges to customers for water, wastewater, solid waste, and airport services. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, claims and premiums. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources, as they are needed. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by fund type. D. Budgeting and Budgetary Control The City Council formally adopts an annual operating budget for the General, Special Revenue, Capital Projects, Enterprise and Internal Service Funds. Formal budgetary integration is not employed for the Debt Service Funds because effective budgetary control is alternately achieved through bond indenture provisions. The level of control at which expenditures may not exceed budget is by department, except for bond and grants-inaid funds, which are exempted by Arizona Revised Statutes. Upon written request by the City Manager, the City Council has the authority to transfer part or all of any unencumbered appropriation balance from one department to another per City Charter requirement. The City Manager and Department heads have the authority to transfer appropriations between divisions and expenditure categories within departments. Appropriations totaling $6,959,881 were transferred from the contingency reserves within the General, Enterprise, Internal Service, and Capital Projects funds. All appropriations expire at the end of the fiscal year except for encumbered and capital improvements carry forward appropriations. Encumbrance accounting, under which purchase orders, contracts and other commitments for the future expenditure of funds are recorded in order to reserve that portion of the related fund balance, is employed in the governmental fund types. Encumbrances outstanding at year-end are reported as part of unassigned fund balance and capital improvement carry forward at year-end are reported as part of assigned fund balance. Significant encumbrances for the general fund are $4,349,820, for the streets capital projects fund are $12,659,742, for water enterprise fund are $9,112,732, for wastewater enterprise fund are $54,467,558, and for nonmajor governmental funds are $15,373,374. The budgets are adopted on a basis differing from GAAP in that for budgetary purposes: (1) current year encumbrances are treated as expenditures; (2) bond proceeds for proprietary funds are considered revenue; (3) capital outlays for enterprise funds are treated as expenditures; (4) debt service principal payments are treated as expenditures for enterprise funds; (5) accrued compensated absences are not recognized as expenditures; (6) depreciation and amortization are not recognized as expenditures; (7) estimated landfill closure and post closure costs are not recognized as expenditures until incurred; (8) sales tax collected by merchants but not yet required to be remitted at the end of the fiscal year is not recorded as revenue; and (9) investments are recorded at cost. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. Through a Home Rule option, any city can adopt its own alternative expenditure limitation if a majority of the qualified electors vote in favor of the issue at a regular election. On November 2, 2010, the City of Chandler voters approved to continue under Home Rule for the next four years. E. Pooled Cash and Investments City Charter, Ordinance and Trust Agreements authorize the City to invest in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of Aa or AA, commercial paper with a minimum short term rating of P1 or A1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of A, repurchase agreements, and the Local Government Investment Pool. The City of Chandler Municipal Property Corporation is additionally authorized to invest in banker’s acceptances, U.S. Corporate obligations rated Aa3 and AA-, or better, full faith and credit general obligations or special revenue bonds of any state or political subdivision rated AAA and Aaa, Refcorp interest strips and money market funds. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Cash resources of the City are combined to form a pool of cash and investments. Excluded from this pool are the cash and investments of the Chandler Health Care Benefits Trust, Chandler Industrial Development Authority, and the Chandler Cultural Foundation. Interest earned on the pooled cash and investments is distributed each month on the basis of average monthly equity in the pool. F. Restricted Assets Certain proceeds of the City’s enterprise funds revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the Statement of Net Assets because their use is limited by applicable bond covenants. G. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 90 days comprise the trade accounts receivable allowance for uncollectibles. H. Inventories Inventories are stated at average cost using the first-in/first-out (FIFO) method. Inventories are recorded as expenses/expenditures when consumed in the government-wide financial statements and governmental and proprietary fund financial statements, respectively. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City defines general government infrastructure capital assets included in capital improvement projects completed at year’s end in excess of $100,000. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are completed. Estimated useful lives for capital assets were determined based on the City’s historical experience and the various industry standards. Capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Years 20-40 20 12-50 25 4-7 5-15 Assets Buildings Building improvements Infrastructure System improvements Vehicles Machinery and equipment K. Compensated Absences Vacation leave vests with the employee as it is earned. All employees may carry forward only the amount of vacation benefits equal to the maximum allowable earned credits for the preceding calendar year. Upon termination or retirement, an employee will be compensated for accumulated vacation leave dependent on accumulated time and the individual's vacation benefits associated with their rank within the City. Payment will be based on the individual's rate of pay at termination or retirement. Upon death, the same benefits shall be paid to the employee's beneficiary. The amount, including related benefits, for accumulated vacation leave is reported on the governmentwide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations or retirements. Generally, resources from the general fund are used to pay for compensated absences. Sick leave benefits provided for ordinary sick pay are not vested with the employee. Upon retirement, an employee will be compensated for 50 percent of accumulated sick leave. Payment will be based on the monthly compensation paid to the employee at the time of retirement and paid into a Retirement Health Savings Plan. Upon death, the same benefits shall be paid to the employee's beneficiary. L. Long-Term Obligations In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type activities and proprietary fund statement of net assets. Bond related charges and credits, such as premiums, discounts and issuance costs are deferred and amortized over the life of the bonds using the straight-line method. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, continued In the fund financial statements, governmental funds 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. The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds and lease purchase obligations, which benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long-term obligations, only the portion that is expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. M. Fund Equity In the fund financial statements, governmental funds report fund balances as Nonspendable, Restricted, Committed, Assigned and Unassigned. Nonspendable, Restricted and Committed classifications represent “reserved” fund balances whereas Assigned & Unassigned classifications represent “unreserved” fund balances (See Note 9). N. Capital Contributions - Enterprise Funds Capital contributions as shown in the enterprise funds represent Federal and State grants received, subdividers’ costs of installing water mains, water service connections installed at the customers’ expense, and transfers of equipment from governmental funds. Capital contributions are shown as an inflow of resources in both the government-wide and fund financial statements (See Note 8). O. Post-Employment Health Care and Life Insurance Benefits In addition to providing pension benefits, the City allows for continuance of certain health care and life insurance benefits for retired employees. Substantially all of the City's employees may become eligible for those benefits if they are eligible to receive a retirement pension when leaving employment with the City. The cost of retiree health care and life insurance premiums is borne both by the retiree and the specific retirement plan under which they participated. There is no direct cost paid by the City. P. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. In the statements of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. Q. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 1 - Summary of Significant Accounting Policies, concluded R. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - Cash and Investments The City maintains a cash and investment pool that is available for use by all funds, except for the Chandler Industrial Development Authority, the Chandler Cultural Foundation, and the Chandler Health Care Benefits Trust. Each fund’s portion of this pool is displayed on the financial statements as Equity in Pooled Cash and Investments. Pooled cash and investments are stated at fair value with accrued interest shown separately. Restricted cash and investments are amounts held separately by trustees and amounts segregated due to their source and future intent. In addition, the Industrial Development Authority, the Chandler Cultural Foundation, and the Chandler Health Care Benefits Trust separately hold investments. Deposits At year-end, cash on hand was $85,300, the carrying amount of the City deposits was $1,336,999, and the bank balance was $2,407,067. The entire bank balance was covered by the FDIC’s Transaction Account Guarantee Program. In addition, at year ended June 30, 2012, the City had $3,656,840 of restricted cash held by fiscal agent consisting of unspent bond proceeds from the 2011 Excise Tax Revenue Bond issuance. The cash held by fiscal agent is in money market funds invested primarily in short-term U.S. Treasury securities. 48 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 2 - Cash and Investments-continued Investments At June 30, 2012, the City had the following investments and maturities: Investment Maturities (in Years) Investment Type U.S. Treasuries U.S. Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn Corporate Bonds: Bank of New York Mellon Berkshire Hathaway Inc Caterpillar Financial Services Corp Chevron Corp Cisco Systems Inc The Coca-Cola Company General Electric Capital Corp IBM Corp JP Morgan Chase National Rural Utility Cooperative Oracle Corp Paccar Financial Corp The Procter and Gamble Co Wal-Mart Stores, Inc. Wyeth LLC Money Market - Certificates of Deposit Money Market - U.S. Treasuries & Agencies Cash and Cash Equivalents Total Fair Value $ 111,660,782 Less than 1 73,198,341 1-5 $ 38,462,441 61,710,698 85,509,752 71,571,155 22,528,210 56,086,843 25,395,012 39,182,488 29,422,909 46,176,143 2,160,846 3,222,697 266,096 3,203,866 2,573,901 2,510,623 8,309,506 3,785,936 7,349,412 3,023,715 1,932,944 3,262,999 1,577,167 3,271,973 4,259,445 5,021,120 68,754,038 8,106,361 4,100,470 5,021,120 68,754,038 - 2,160,846 3,222,697 266,096 3,203,866 2,573,901 2,510,623 4,209,036 3,785,936 7,349,412 3,023,715 1,932,944 3,262,999 1,577,167 3,271,973 4,259,445 - $ 463,045,032 $ 255,084,034 $ 199,854,637 $ Concentration of Credit Risk % 24.10 % 13.33 18.47 15.46 0.00 0.47 0.70 0.06 0.69 0.56 0.54 1.79 0.82 1.59 0.65 0.42 0.70 0.34 0.71 0.92 1.08 14.85 1.75 100.00 % Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maturities of its investment portfolio to five years. Credit Risk. The City’s investment policy allows for investments in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of Aa or AA, commercial paper with a minimum short term rating of P1 or A1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of A, repurchase agreements, and the Local Government Investment Pool. The City’s investment in U.S. Agencies, Corporate Bonds and Money Market Funds were rated no lower than AA+, A, and AAA by Standard & Poor’s respectively as of June 30, 2012. Concentration of Credit Risk. The City’s investment policy does not allow for an investment in any one issuer that is in excess of five percent of the City’s total investments. Securities issues by the United States of America or its agencies are exempt from this provision. More than 5% of the City’s investments are in the U.S. Agencies, and U.S. Treasuries and Agencies money market funds. See percentages in above table. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 3 - Property Taxes The City’s property tax is levied and collected by the Maricopa County Treasurer. Property taxes are levied on or before the third Monday in August based upon the previous January 1 full cash value of property as determined by the Maricopa County Assessor. Under Arizona Revised Statutes (A.R.S.), two assessed valuations are used. One is for primary taxes (used to fund operating expenditures) and the other is for secondary taxes (used to meet general obligation debt service requirements). Taxes are due in two equal installments on October 1 and March 1 following the levy date and are delinquent on the first day of November and May, respectively. Delinquent amounts bear interest at the rate of 16 percent. The City also levies various personal property taxes during the year, which are due the second Monday of the month following receipt of the tax notice, and become delinquent 30 days thereafter. Pursuant to A.R.S. a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. The State Constitution and State law specify a property tax levy limitation system. The system consists of two levies, a limited levy known as the primary property tax levy and an unlimited levy referred to as the secondary levy, which may only be used to retire bonded indebtedness. There is also a control on the assessed value of property for primary tax purposes. The base year for the new tax system is fiscal year 1979-80. From this base year, two assessed values evolve. The primary assessed values are allowed to increase by no more than 10 percent a year. The dollar amount of the secondary property tax levy is "unlimited" and the actual full cash value of property is used in determining the tax rate. The primary tax levy is limited to an increase of 2 percent over the previous year's maximum allowable primary levy, plus an increased dollar amount because of a net gain in property not taxed the previous year. Also, the primary property tax from all taxing jurisdictions for homeowners may not exceed 1 percent of the market value of their homes. If the combined primary property tax (for the City, County, School District, etc.) exceeds 1 percent of the market value of the homes, the school districts will reduce their rate until the homeowners' aggregate rate is equal to or less than the allowable 1 percent. The State will then subsidize the school districts for the reduced revenue. This 1 percent limitation applies to primary property taxes only and does not affect the secondary property tax levy. In fiscal year 2011-12, current property tax collections were $30,911,176 or 98.6% percent of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax expected to be collected within 60 days is recognized as revenue and recorded as a receivable. Property taxes levied in August 2012 are not available for fiscal year 2011-12; accordingly, such taxes will not be recognized as revenue until fiscal year 2012-2013. 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 4 – Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance July 1, 2011 Government Activitites Capital assets, not being depreciated: Land Construction in progress $ 81,151,314 118,877,409 Additions and Transfers In Deletions and Transfers Out $ $ 2,154,854 27,153,978 (98,422,924) Balance June 30, 2012 $ 83,306,168 47,608,463 Total capital assets not being depreciated 200,028,723 29,308,832 (98,422,924) 130,914,631 Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment 540,456,808 329,186,231 60,214,375 72,473,720 24,620,989 3,027,138 (885,182) 612,930,528 353,807,220 62,356,331 929,857,414 100,121,847 (885,182) 1,029,094,079 (177,747,565) (72,617,833) (33,997,520) (21,374,973) (15,336,030) (4,194,968) 679,211 (199,122,538) (87,953,863) (37,513,277) (284,362,918) (40,905,971) 679,211 (324,589,678) Total capital assets, being depreciated, net 645,494,496 59,215,876 (205,971) 704,504,401 Governmental activities capital assets, net $ 845,523,219 88,524,708 $ (98,628,895) Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment Total accumulated depreciation $ Construction in progress in the governmental activities capital assets is comprised of the following: Expended to June 30, 2012 $ 26,297,473 11,921,529 9,389,461 $ 47,608,463 Streets Parks and recreation Buildings and related improvements Total 51 Remaining Commitments $ 13,976,778 196,114 2,588,633 $ 16,761,525 $ 835,419,032 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 4 – Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Balance July 1, 2011 Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets, being depreciated: System improvements Building and improvements Vehicles, machinery and equipment Land improvements Total capital assets being depreciated Less accumulated depreciation for: System improvements Buildings and improvements Vehicles, machinery and equipment Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ 41,256,107 39,302,434 80,558,541 Additions and Transfers In $ 28,519,922 28,519,922 883,195,911 20,620,616 15,123,419 2,117,236 921,057,182 823,448 465,258 33,834 1,322,540 (415,226,745) (11,637,602) (13,520,981) (1,546,896) (441,932,224) 479,124,958 (38,101,322) (595,843) (330,913) (103,355) (39,131,433) (37,808,893) 559,683,499 Deletions and Transfers Out Balance June 30, 2012 $ (181,328) (181,328) $ 41,256,107 67,641,028 108,897,135 (253,497) (253,497) 884,019,359 21,085,874 14,903,756 2,117,236 922,126,225 205,498 205,498 (47,999) $ (9,288,971) $ (229,327) Construction in progress in the business-type activities is comprised of the following: Expended to June 30, 2012 Remaining Commitments Sewer system improvements $ 26,854,359 $ Water system improvements 40,745,653 Airport improvements 51,939,252 41,016 Total $ 67,641,028 52 6,338,667 31,852 $ 58,309,771 (453,328,067) (12,233,445) (13,646,396) (1,650,251) (480,858,159) 441,268,066 $ 550,165,201 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 4 – Capital Assets, concluded Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Community services Transportation and development Total depreciation expense - governmental activities Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority Total depreciation expense - business-type activities $ 4,827,305 5,679,934 8,130,273 22,268,459 $ 40,905,971 $ 20,056,733 17,264,802 482,490 797,193 530,215 $ 39,131,433 NOTE 5 - Long-Term Liabilities A. General Obligation Bonds 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. Bonds issued for business-type activities are reported in the enterprise funds as they are to be repaid from enterprise revenues. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds are generally issued as 10 to 15 year serial bonds, except for refunding issues, with varying amounts of principal maturing each year. The City has pledged future ad valorem tax revenues and net enterprise revenues to repay a total of $439,135,000 in outstanding general obligation bonds. Proceeds of the bonds were used for governmental and business-type activities. The bonds are payable from ad valorem taxes and enterprise fund revenues and are payable through July 1, 2028. Governmental Activities General Obligation Bonds Annual principal and interest payments on the government activities bonds are expected to require less than 72% of total 2011-12 ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $368,335,600. Principal and interest paid for the current year and total ad valorem property taxes were $23,233,948 and $32,299,643 respectively. 53 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2012 were as follows: Governmental Activities General Obligation Bonds: Outstanding June 30, 2012 $6,650,000 Capital Improvement Bonds, Series 1996, due in annual installments of $250,000 through 7/1/13; interest at 6.5 percent. $8,205,000 Capital Improvement Bonds, Series 1996B, due in annual installments of $475,000 to $550,000 through 7/1/13; interest at 7.2 percent to 7.25 percent. $23,000,000 Capital Improvement Bonds, Series 2002, due in an annual installment of $1,125,000 at 7/1/12; interest at 4.375 percent. 500,000 1,025,000 1,125,000 $21,375,000 Capital Improvement Bonds, Series 2003, due in annual installments of $500,000 to $2,775,000 through 7/1/17; interest at 3.125 percent to 4 percent. $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $915,000 to $2,775,000 through 7/1/16; interest at 3.125 percent to 5 percent. $24,800,000 Capital Improvement Bonds, Series 2005, due in annual installments of $2,000,000 to $2,900,000 through 7/1/15; interest at 4 percent. $30,905,000 Capital Improvement Bonds, Series 2006, due in annual installments of $2,000,000 to $6,675,000 through 7/1/17; interest at 4 percent to 4.5 percent. $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,000,000 to $6,6000,000 through 7/1/26; interest at 3 percent to 5 percent. $22,960,000 Refunding Bonds, Series 2007, due in annual installments of $845,000 to $4,240,000 through 7/1/20; interest at 4 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $750,000 to $17,000,000 through 7/1/28; interest at 2.25 percent to 5 percent. $9,925,000 Capital Improvement Bonds, Series 2011A, due in annual installments of $500,000 to $3,300,000 starting 7/1/15 through 7/1/20; interest at 3 percent to 4 percent. $10,360,000 Refunding Bonds, Series 2011B, due in annual installment of $795,000 to $3,305,000 through 7/1/18; interest at 2 percent to 4 percent. Total Governmental Activities General Obligation Bonds 10,175,000 7,325,000 9,650,000 20,725,000 56,100,000 21,975,000 119,263,000 9,925,000 10,360,000 $ 268,148,000 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds are expected to require less than 38% of total 2011-12 net water and wastewater system and airport revenues. The total principal and interest remaining to be paid on the business-type activities portion of the general obligation bonds is $231,310,706. Principal and interest paid for the current year and total net water and wastewater system and airport revenues and were $16,240,363 and $42,224,870 respectively. 54 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Business-Type Activities General Obligation Bonds: Outstanding June 30, 2012 $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $2,225,000 to $2,580,000 through 7/1/15; interest at 4 7,190,000 percent to 5 percent. $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,800,000 to $3,900,000 through 7/1/26; 38,650,000 interest at 3 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $5,500,000 to $11,086,000 through 7/1/28; interest 125,147,000 at 2.25 percent to 5 percent. Total Business-Type Activities General Obligation Bonds $ 170,987,000 B. Street and Highway Revenue Bonds Street and highway revenue bonds are issued specifically for the purpose of constructing street and highway projects. These bonds are payable solely from the revenues derived by the City from highway user taxes, including motor vehicle fuel taxes and all other taxes, fees and charges relating to registration, operation or use of vehicles on public highways or streets or to fuels or any other energy source used for the vehicles collected by the State and returned to the City. The City has pledged future highway user revenues to repay a total of $25,745,000 in outstanding street and highway user revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s streets and highways. The bonds are payable solely from state shared gasoline tax revenues and are payable through July 1, 2019. Annual principal and interest payments on the bonds are expected to require less than 40% of total 2011-12 street and highway user revenues. The total principal and interest remaining to be paid on the bonds is $29,178,988. Principal and interest paid for the current year and street and highway user revenue taxes were $4,636,975 and $11,823,280, respectively. 55 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Street and highway revenue bonds outstanding as reported in governmental activities at June 30, 2012 were as follows: Outstanding June 30, 2012 Governmental Activities Revenue Bonds: $1,250,000 Street & Highway User Bonds, Series 1996B, due in annual 100,000 installments of $25,000 through 7/1/15; interest at 5.5 percent to 7.5 percent. $10,540,000 Street & Highway User Refunding Bonds, Series 2002, due in annual installments of $840,000 to $880,000 through 7/1/13; 1,720,000 interest at 3.875 percent to 4.25 percent. $5,000,000 Street & Highway User Bonds, Series 2003, due in annual installments of $1,000,000 to $1,500,000 starting 7/1/16 through 7/1/19; 5,000,000 interest at 3.5 percent to 5 percent. $10,920,000 Street & Highway User Refunding Bonds, Series 2004, due in annual installments of $200,000 to $3,360,000 through 7/1/18; 8,580,000 interest at 3.5 percent to 5 percent. $10,450,000 Street & Highway User Refunding Bonds, Series 2010, due in annual installments of $535,000 to $2,965,000 through 7/1/19; 10,345,000 interest at 2 percent to 3.5 percent. Total Governmental Activities Revenue Bonds $ 25,745,000 C. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued as authorized by the voters to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these systems, and do not constitute a general obligation of the City backed by the general taxing authority. The City has pledged future water and wastewater system revenues, net of operating expenses, to repay a total of $52,670,000 in outstanding water and wastewater system revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater systems. The bonds are payable solely from net water and wastewater system revenues and are payable through July 1, 2020. Annual principal and interest payments on the bonds are expected to require less than 25% of net 2011-12 water and wastewater system revenue. The total principal and interest remaining to be paid on the bonds is $62,019,474. Principal and interest paid for the current year and net water and wastewater system revenues were $10,445,975 and $42,367,956, respectively. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2012 were as follows: Business-Type Activities Revenue Bonds: $5,150,000 Water & Sewer Bonds, Series 1994, due in an annual installment of $2,150,000 at 7/1/14; interest at 8 percent. $16,890,000 Water & Sewer Bonds, Series 1996, due in annual installments of $250,000 to $400,000 through 7/1/13; interest at 7.25 percent. $7,770,000 Water & Sewer Refunding Bonds, Series 1997, due in annual installments of $100,000 through 7/1/13; interest at 6.25 percent. $12,500,000 Water & Sewer Bonds, Series 2001, due in annual installments of $740,000 to $1,045,000 through 7/1/18; interest at 4.4 percent to 4.5 percent. $10,970,000 Water & Sewer Refunding Bonds, Series 2002, due in annual installments of $1,610,000 to $3,755,000 through 7/1/13; interest at 4.25 percent to 5 percent. $17,830,000 Water & Sewer Refunding Bonds, Series 2003, due in annual installments of $30,000 to $7,515,000 through 7/1/16; interest at 3.25 percent to 5 percent. $10,000,000 Water & Sewer Bonds, Series 2003, due in annual installments of $1,625,000 to $4,200,000 through 7/1/13; interest at 3.125 percent to 4 percent. $10,000,000 Water & Sewer Bonds, Series 2005, due in annual installments of $100,000 to $2,500,000 starting 7/1/12 through 7/1/20; interest at 4 percent to 5 percent. $15,485,000 Water & Sewer Refunding Bonds, Series 2005, due in annual installments of $900,000 to $5,725,000 through 7/1/17; interest at 3.5 percent to 5 percent. Total Business-Type Activities Revenue Bonds Outstanding June 30, 2012 $2,150,000 650,000 200,000 2,570,000 5,365,000 11,645,000 5,825,000 10,000,000 14,265,000 $ 52,670,000 D. Excise Tax Revenue Obligations Excise tax revenue obligations are issued to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the obligations. The City has collateralized the obligations by the pledge of all unrestricted excise taxes (transaction privilege tax, franchise fees, state-shared sales and income taxes, and fees for licenses and permits) including all fines and forfeitures, which the City presently or in the future imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for or any other amounts remain unpaid or unprovided for thereunder, it will not further encumber the excise taxes on a basis equal to the pledge thereunder unless the excise taxes received by the City in the immediately preceding fiscal year shall have amounted to at least three times the highest combined debt service for the current or any succeeding fiscal year for all outstanding parity obligations, including the additional parity obligations proposed be secured by a pledge of the same excise taxes. The City shall have the right to incur additional parity obligations payable from and secured by the excise taxes on parity with the obligations. 57 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Annual principal and interest payments on the obligations are being repaid from net water and wastewater system revenues and are expected to require slightly more than 8% of net 2011-12 system revenues. The total principal and interest to be paid on the obligations is $63,085,219. Principal and interest paid for the current year and net water and wastewater system revenues were $3,448,358 and $42,367,956, respectively. Total excise tax revenues collected were $148,885,867. Principal and interest paid in 2011-2012 would equal less than 3% of total excise tax revenues collected. Business-Type Actvities Excise Tax Revenue Obligations: $34,040,000 Water & Sewer Excise Tax Obligations, Series 2009, due in annual installments of $1,100,000 to $5,455,000 through 7/1/28; interest at 2.25 percent to 4.375 percent. $15,000,000 Water & Sewer Excise Tax Obligations, Series 2011, due in annual installments of $645,000 to $1,210,000 through 7/1/28; interest at 3 percent to 5 percent. Total Business-Type Activities Excise Tax Revenue Obligations Outstanding June 30, 2012 $ 32,440,000 15,000,000 $ 47,440,000 E. Special Assessment Bonds with Governmental Commitment As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2012, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and related interest. Special assessment bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds payable with governmental commitment outstanding as reported in governmental activities at June 30, 2012 were as follows: Outstanding Governmental Activities Special Assessment Bonds: June 30, 2012 $7,370,000 Spectrum Improvement District Bonds, due in annual installments of $430,000 to $635,000 through 1/1/23; interest at 4 percent. Total Special Assessment Bonds with Governmental Commitment 58 $ 5,780,000 $ 5,780,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Governmental Activities: Compensated absences Bonds payable: Balance July 1, 2011 $ 10,490,286 General obligation bonds Revenue bonds Special assessment bonds Compensated absences Bonds payable: General obligation bonds Revenue bonds Excise tax revenue obligations Total bonds payable Arbitrage liability Post employment benefits Deferred bond premiums Landfill closure/post closure Totals 374,244 $ (1,425,203) Balance June 30, 2012 Due Within One Year $ $ 9,439,327 103,695 - (11,820,000) (2,875,000) (410,000) 268,148,000 25,745,000 5,780,000 11,860,000 3,700,000 430,000 314,778,000 - (15,105,000) 299,673,000 15,990,000 63,398 3,383,972 5,572,720 5,841,889 5,000 23,212,043 2,634,730 - (33,614) (21,818,540) (637,844) 34,784 4,777,475 8,207,450 5,204,045 7,392 4,299,728 637,843 $ 340,130,265 $ 26,226,017 $ (39,020,201) $ 327,336,081 $ 21,038,658 Balance July 1, 2011 Additions Reductions Balance June 30, 2012 Due Within One Year Arbitrage liability Claims payable Post employment benefits Deferred bond premiums Business-Type Activities: $ Reductions 279,968,000 28,620,000 6,190,000 Total bonds payable Totals Additions $ 1,049,645 $ 37,920 (128,880) 958,685 - (8,760,000) (7,610,000) (1,100,000) (17,470,000) 170,987,000 52,670,000 47,440,000 271,097,000 9,420,000 7,930,000 1,745,000 19,095,000 37,844 - (2,628) 35,216 12,608 396,372 5,039,191 4,340,000 195,512 - (552,409) - 591,884 4,486,782 4,340,000 528,881 94,446 233,432 $ (18,153,917) $ 281,509,567 $ 19,741,468 179,747,000 60,280,000 48,540,000 288,567,000 $ 299,430,052 $ $ $ 10,533 Statutory Debt Limitation In the absence of more restrictive bond authorization ballot limitations, the City is subject to state limitations on the amount of net bonded debt (exclusive of revenue bonds, excise tax revenue obligations and improvement district bonds), it may have outstanding. The statutory debt limitation is 20 percent of the secondary assessed valuation for purposes of water, wastewater, artificial light, acquisition and development of land for open space preserves, recreation facilities, public safety and emergency services, streets and transportation, and 6 percent of the secondary assessed valuation for all other purposes (e.g., library, museum, center for the arts). At June 30, 2012, the 6 percent debt limitation was $135,310,758, providing a debt margin of $123,470,758 and the 20 percent debt limitation was $451,035,860, providing a debt margin of $23,740,860. 59 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, continued Bond Covenants Pursuant to certain bond indenture agreements, the City is obligated to various limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds and minimum revenue bond coverages. The City is in compliance with all such significant limitations and restrictions in the opinion of City’s management. Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for all bonds payable as of June 30, 2012: Years Ended June 30 General Obligation Principal 2013 $ 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Total GOVERNMENTAL ACTIVITIES Highway Highway General Users Users Improvement Improvement Obligation Revenue Revenue Districts Districts Interest Principal Interest Principal Interest 11,860,000 14,135,000 14,035,000 15,520,000 16,040,000 80,704,000 83,100,000 32,754,000 $ 11,088,475 10,551,675 9,978,456 9,395,088 8,758,350 33,428,513 15,591,937 1,395,106 $ 3,700,000 3,830,000 3,975,000 4,105,000 3,410,000 6,725,000 - $ 885,225 767,725 637,000 479,238 317,969 346,831 - $ 268,148,000 $ 100,187,600 $ 25,745,000 $ 3,433,988 $ 430,000 445,000 465,000 480,000 500,000 2,825,000 635,000 - $ 5,780,000 $ Total 231,200 214,000 196,200 177,600 158,400 474,800 25,400 - $ 28,194,900 29,943,400 29,286,656 30,156,926 29,184,719 124,504,144 99,352,337 34,149,106 $ 1,477,600 $ 404,772,188 BUSINESS-TYPE ACTIVITIES General Obligation Principal Years Ended June 30 2013 Revenue Principal Revenue Interest Excise Tax Principal Excise Tax Interest Total 9,420,000 $ 6,640,063 $ 7,930,000 $ 2,350,558 $ 1,745,000 $ 1,606,913 $ 29,692,534 2014 10,595,000 6,247,862 8,260,000 1,999,818 1,815,000 1,561,763 30,479,443 2015 10,900,000 5,862,113 4,485,000 1,671,026 6,180,000 1,466,419 30,564,558 2016 10,910,000 5,507,075 6,760,000 1,359,306 4,270,000 1,338,950 30,145,331 2017 9,525,000 5,172,512 9,490,000 954,931 2,055,000 1,254,525 28,451,968 2018-2022 49,076,000 20,414,594 15,745,000 1,013,835 11,170,000 5,232,118 102,651,547 2023-2027 49,975,000 9,550,094 - - 13,715,000 2,887,687 76,127,781 2028-2029 20,586,000 929,393 - - 6,490,000 296,844 28,302,237 $ 170,987,000 $ 60,323,706 $ 52,670,000 $ 9,349,474 $ 47,440,000 $ 15,645,219 $ 356,415,399 Total $ General Obligation Interest 60 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 5 - Long-Term Liabilities, concluded Compensated Absences The City’s policy relating to compensated absences is described in Note 1. The long-term portion of this debt is expected to be paid in future years from future resources. Compensated absences for governmental activities have been liquidated primarily by the General Fund. Balance Balance Due Within July 1, 2011 Incurred Satisfied June 30, 2012 One Year $ 10,490,286 $ 374,244 $ 1,425,203 $ 9,439,327 $ 103,695 $ 1,049,645 $ $ $ $ Governmental Activities Compensated Absences Business-Type Activities Compensated Absences 37,920 128,880 958,685 10,533 NOTE 6 - Defeased Debt Prior Year Defeasance In prior years, the City defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements. Bonds that have been advance refunded (defeased) as of June 30, 2012 to be released July 1, 2016 from escrow are as follows: Refunded Debt Outstanding General Obligation Bonds, Series 1996B Amount 2,910,000 Total Refunded Bonds Outstanding $ 2,910,000 NOTE 7 – Landfill Closure and Postclosure Costs State and federal 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 thirty years after closure. In addition to operating expenses related to landfill activities through its closure date (October 1, 2005), an expense provision and related liability has been recognized based on the future closure and postclosure care costs to be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. As of June 30, 2012, the City estimates total costs related to landfill closure and postclosure care is $15,403,531 and has recognized that entire amount since the landfill no longer accepts waste. To date, $11,063,531 has been paid. The remaining balance of $4,340,000 consists of a current liability of $94,446 and $4,245,554 recorded as a non-current liability on the City’s financial statements. 61 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 7 – Landfill Closure and Postclosure Costs, concluded The estimated total current cost of the landfill closure and postclosure, $15,403,531, is based on the amount that would be paid if all equipment, facilities, and services required to care, monitor, and maintain the landfill were acquired as of June 30, 2012. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by state and federal regulations to comply with local government financial test requirements that assure the City can meet the costs of landfill closure, postclosure care and, if necessary, corrective action when needed. The City complied with all local government financial test requirements for the year ended June 30, 2011. It is anticipated that future inflation costs will be financed in part from earnings on investments. The remaining portion of anticipated future inflation costs and any additional costs that might arise from changes in postclosure requirements, e.g., due to changes in technology or more rigorous environmental regulations, may need to be covered by additional charges to future taxpayers. NOTE 8 - Capital Contributions Capital contributions in the Water, Wastewater, Airport, and Housing Authority funds are the result of system development fees, developer contributions and government contributions. Developer Contributions include $181,654 (Water) and $5,150,935 (Wastewater) for agreed reimbursements from Intel Corporation for certain City enterprise fund infrastructure projects directly related to Intel's FAB 42 expansion. Total capital contributions amounted to the following: System Water Wastewater Development Developer Government Fees Contributions Contributions $ $ $ 5,566,009 550,076 - Total $ 6,116,085 7,234,387 5,427,843 - 12,662,230 Airport - - 96,668 96,668 Housing Authority - - 243,584 243,584 340,252 $ 19,118,567 Total $ 12,800,396 $ 62 5,977,919 $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 9 – Fund Equity In the fund financial statements, fund balances are reported in five classifications that comprise a hierarchy based on spending constraints placed on the purposes for which resources can be used for better consistency and clarification. The classifications of fund balance are explained below: Nonspendable fund balance includes amounts that cannot be spent because either, 1) it is not in a spendable form, such as inventory or prepaid items or 2) it is legally or contractually required to be maintained intact. Restricted fund balance includes amounts constrained to specific purposes by their providers which are either imposed 1) by external parties (grantors, bondholders and higher levels of Government), 2) by law through constitutional provisions or 3) by enabling legislation legally enforceable by external parties. Committed fund balance includes amounts with self-imposed limitations to be used only for a specific purpose pursuant to constraints by formal action of the highest level of decision making authority, namely Mayor and Council. Mayor and Council approval is required to commit resources and amounts cannot be used for any other purpose unless Mayor and Council take the same formal action to remove or change the commitment. Assigned fund balance includes amounts intended to be used for a specific purpose. For General Fund, the assigned fund balance must be for a specific purpose and for all other governmental funds the assigned fund balance represents the residual balance of the fund. Intent can be expressed by Mayor and Council or by an official to which the Mayor and Council delegates the authority. Unlike committed fund balances, assigned fund balances can be changed without formal action. Unassigned fund balance includes amounts available for any purpose; these amounts are reported only in the General Fund. In addition, other governmental funds that result in a negative fund balance are presented in this classification. Generally, the City would first apply restricted resources, then committed, assigned and unassigned resources when an expense is incurred for purposes for which more than one classification of fund balance is available. 63 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 9 – Fund Equity, continued As of June 30, 2012 the constraints placed on fund balance for the major governmental funds and other non-major governmental funds are presented in the following table: Streets Capital Projects General Non-spendable Inventories Prepaid items Total Non-spendable Restricted for Court Enhancement Judicial Enhancement Transportation and Development Debt Service Reserve Community Development Community Services Other Capital Projects Total Restricted $ 944,863 2,941 $ G.O. Bonds Debt Service - $ Other Governmental - $ - Total $ 944,863 2,941 947,804 - - - 947,804 766,808 173,059 - 34,061,069 - 19,258,684 - 18,175,513 731,266 423,638 15,610,493 23,118,125 766,808 173,059 52,236,582 19,989,950 423,638 15,610,493 23,118,125 939,867 34,061,069 19,258,684 58,059,035 112,318,655 - - - - - - - - - - 232,634 396,555 34,700,000 46,077,978 21,228,420 - - - 232,634 396,555 34,700,000 46,077,978 21,228,420 102,635,587 - - - 102,635,587 69,223,074 - - (12,798,348) 56,424,726 69,223,074 - - (12,798,348) 56,424,726 $ 173,746,332 $ 34,061,069 $ 19,258,684 Committed to Total Committed Assigned to Domestic Violence Prevention Self-Insurance Purposes Infrastructure Maintenance Capital Improvements Projects Economic Development Projects Total Assigned Unassigned Total Unassigned Total Fund Balances $ 45,260,687 $ 272,326,772 The City’s General Fund Reserve Policy requires an amount equal to 12% of adopted General Fund operating revenues, excluding transfers in. Unassigned includes this reserve in the amount of $21,062,700. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 10 - Retirement and Pension Plans All full-time employees of the City, the Mayor and City Council are covered by one of three pension plans. All fulltime City employees, except public safety personnel, participate in the Arizona State Retirement System, a multipleemployer cost-sharing pension plan. Public safety personnel participate in the Public Safety Personnel Retirement System, which is an agent multiple-employer plan. The Mayor and City Council participate in the Elected Officials’ Retirement Plan, a multiple-employer cost sharing pension plan. All three pension plans are administered by the State of Arizona. Arizona State Retirement System A. Plan Description All full-time City employees (except public safety personnel and elected officials) participate in the Arizona State Retirement System (the System), a multiple-employer cost sharing defined benefit pension, health insurance premium, and long-term disability plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with A.R.S. Title 38, Chapter 5. The System provides for retirement, disability, health insurance premium benefits, and death and survivor benefits. The System issues a publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to Arizona State Retirement System, P.O. Box 33910, Phoenix, AZ 85067-3910, or by calling 1-800621-3778. B. Funding Policy Arizona Revised Statutes provide statutory authority for determining the employees' and employers' contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. Although Arizona Revised Statutes prescribe the basis of making the actuarial calculation, the Arizona Legislature is able to legislate a contribution rate other than the actuarially determined rate. The actuarially determined contribution rate for the year ended June 30, 2012 was 10.74 percent (10.5 percent retirement and 0.24 percent longterm disability) for active members and the City was required to contribute 10.74 percent (9.87 percent for retirement, 0.63 percent for health insurance premium, and 0.24 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the System for the years ended June 30, 2012, 2011 and 2010, were $6,346,391, $6,307,634, and $6,480,656 respectively, equal to the required contributions for each year. Arizona Public Safety Personnel Retirement System (Full-time Police and Fire Employees) A. Plan Description All full-time sworn police officers and fire fighters are eligible to participate in the Public Safety Personnel Retirement System (PSPRS) in separate agent multiple-employer defined benefit retirement and health insurance premium plans. PSPRS was established by A.R.S. Title 38, Chapter 5, Article 4 to provide pension benefits for public safety employees of certain state and local governments. The PSPRS is jointly administered by the board of trustees and participating local boards. The board of trustees is a five-member board appointed by the Governor and the State Legislature. The board of trustees is responsible for establishing contribution rates in accordance with an actuarial study. The PSPRS provides retirement benefits, as well as death and disability and health insurance premium benefits. The PSPRS of the State of Arizona issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. 65 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 10 - Retirement and Pension Plans, continued B. Funding Policy The System is funded through a member contribution of 7.65 percent of gross payroll, an employer contribution set by an actuarial valuation expressed as a percent of gross payroll, and a distribution of the net earnings of the Fund. The City’s current aggregate contribution rate for police is 18.09 percent of annual covered payroll of which 1.20 percent was the health insurance premium portion. The current aggregate contribution rate for firefighters is 16.10 percent of annual covered payroll of which 1.06 percent was the health insurance premium portion. C. Annual Pension Cost For fiscal year ended June 30, 2012, the City’s annual pension cost of $4,310,018 for police and $2,365,309 for firefighters for PSPRS was equal to the City’s required and actual contributions. The required contributions were determined as part of the June 30, 2010, actuarial valuations using the projected unit credit actuarial cost method. The contribution requirements for the year ended June 30, 2012 were established by the June 30, 2010 actuarial valuations. Those valuations were based on the following. For police, the actuarial assumptions include (1) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (2) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (3) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. For firefighters, the actuarial assumptions include (1) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (2) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (3) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over a seven-year period. PSPRS’s unfunded accrued liability is being amortized as a level percent of projected payroll over a closed period of 26 years. If the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years. The remaining amortization period at July 1, 2011, was 26 years for unfunded actuarial accrued liability and 20 years for excess contributions. 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 10 –Retirement and Pension Plans, continued Arizona Public Safety Personnel Retirement System - Police Three-Year Trend Information Annual Percent Pension of APC Cost (APC) Contributed Fiscal Year Ended Net Pension Obligation 2010 (Pension) $ 4,596,415 100% - 2010 (Health) $ 100% - 2011 (Pension) $ 4,437,908 100% - 2011 (Health) $ 100% - 2012 (Pension) $ 4,258,298 100% - 2012 (Health) $ 100% - 22,633 48,906 51,720 Arizona Public Safety Personnel Retirement System - Firefighters Three-Year Trend Information Fiscal Year Ended Annual Pension Cost (APC) Percent of APC Contributed 2010 (Pension) $ 2,508,750 100% - 2010 (Health) $ 100% - 2011 (Pension) $ 2,340,705 100% - 2011 (Health) $ 100% - 2012 (Pension) $ 2,340,237 100% - 2012 (Health) $ 100% - 10,834 23,166 25,072 Net Pension Obligation D. Funded Status and Funding Progress As of June 30, 2012, the firefighters plan was 75.1 percent funded and police was 67.5 percent funded. The actuarial accrued liability for benefits was $87.1 million and $145.1 million, and the actuarial value of assets was $65.4 million and $97.9 million, resulting in an unfunded actuarial accrued liability (UAAL) of $21.7 million and $47.2 million respectively. The covered payrolls (annual payrolls of active employees covered by the plans) were $15.5 million and $24.4 million, and the ratio of the UAAL to the covered payroll was 140.1 percent and 192.9 percent. The schedule of funding progress, presented as Required Supplementary Information following the Notes to the Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Elected Officials’ Retirement Plan (Mayor and City Council) A. Plan Description The City’s Mayor and Council participate in the Elected Officials’ Retirement Plan (EORP), a multiple-employer cost sharing defined benefit pension and health insurance premium plan. The EORP was established and is administered by the State of Arizona to provide pension benefits for state and county elected officials, judges, and certain Cityelected officials. The fund manager of the PSPRS is also the administrator for the EORP. EORP provides retirement benefits, as well as death and disability benefits. The Elected Officials’ Retirement Plan issues a publicly available financial report that includes financial statements and required supplementary information for EORP. The report may be obtained by writing to Elected Officials’ Retirement Plan, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 10 –Retirement and Pension Plans, concluded B. Funding Policy Covered employees are required by state statute to contribute an amount equal to 7 percent of gross salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amount is to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rate for fiscal year ended June 2012 was 32.99 percent of the members’ annual covered payroll, of which 1.79 percent was the health insurance premium portion. The city’s contributions to EORP for the years ended June 30, 2012, 2011, and 2010, were $52,623, $47,863, and $40,950 respectively, equal to the required contributions for each year. Volunteer Firemen's Pension And Relief Fund A. Plan Description The Volunteer Firemen’s Pension Plan (VFPP) is a single-employer defined benefit pension plan administered by the City. The last actuarial valuation of the Volunteer Firemen's Pension and Relief Fund was made as of November 19, 2004, at which time the actuarial liability was fully funded. As of June 30, 2012, there was one retiree and/or beneficiary of a retiree receiving retirement benefits under the plan. There were no terminated employees entitled to benefits and not yet receiving them. Additionally there are no non-vested active employees and no partially vested employees covered by the plan. The VFPP issues a publicly available financial report that may be obtained from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 852444008. B. Funding Policy There were no contributions to the Volunteer Firemen's Pension and Relief Fund by the City in fiscal year 2011/12. Pursuant to the November 19, 2004, actuarial valuation, the present value of all benefits payable in future years was $57,222 based upon a 6 percent rate of return and the pension obligation was deemed to be fully funded. NOTE 11 – Post-Employment Benefits Other Than Pensions The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. A. Plan Description The City provides post-employment medical care (OPEB) for retired employees through a single employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents though the City’s group health insurance plans, which covers active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Human Resources Department and approved by the City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. 68 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 11 – Post-Employment Benefits Other Than Pensions, continued The City also provides a Retirement Health Savings Plan (RHSP) for active employees that may be used upon separation from City employment. The City funds $15 per pay period during the term of employment. The plan provides medical expense reimbursements eligible under Internal Revenue Code Section 213, other than direct longterm care expenses. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. B. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Upon retirement, the City deposits a one-time payment of $800 per year of City service in the retiree’s Retirement Health Savings Plan account. The retiree must have a minimum of five years of City service to receive this contribution. C. Funding Policy The plan premium rates are determined annually by the City’s Human Resources Department, in collaboration with an outside consulting firm, and approved by the City Council. The retiree’s contribution is 100% of the actuarially determined blended premium rate. 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. This implied subsidy exists because, on average, retiree healthcare costs are higher than active employee healthcare costs. By not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. As of June 30, 2012, retirees contributed $1,206,169 and the City contributed $1,124,164 (implied subsidy). D. Annual OPEB Costs and Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost for each plan is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and related information for each plan are as follows at June 30, 2012: 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 11 – Post-Employment Benefits Other Than Pensions, continued Annual Required Contribution (ARC) $ 3,949,544 ARC Adjustment (293,593) Interest Adjustment to Net OPEB Obligation Annual OPEB Cost 298,455 $ 3,954,406 Contributions Made (1,124,164) Increase in Net OPEB Obligation $ 2,830,242 Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year 5,969,092 $ 8,799,334 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2012 were as follows: Percentage of Fiscal Year Annual Employer OPEB Cost Net OPEB Ended June, 30 OPEB Cost Contributions Contributed Obligation 2012 $ 3,954,406 $ 2011 2010 1,124,164 28.43% $ 8,799,334 3,294,741 1,459,219 44.29% 5,969,092 3,293,137 1,325,055 40.24% 4,133,570 E. Funded Status and Funding Progress The funded status of the plan as of the most recent actuarial valuation is as follows: Actuarial Accrued Liability $ 33,009,726 Actuarial Value of Plan Assets - Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio $ 33,009,726 0.0% Covered Payroll 93,253,195 UAAL as a percentage of covered payroll 35.4% 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. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 11 – Post-Employment Benefits Other Than Pensions, concluded The actuarial methods and significant assumptions used to determine the ARC for the current year are as follows: 1. 2. 3. The actuarial cost method used is the projected unit credit method. As of the valuation date, July 1, 2011, there are no assets, hence no need for an actuarial value of assets. The amortization method is level percent of payroll. The amortization period is 30 years. The period is open. In the June 30, 2011 actuarial valuation, the projected unit credit actuarial cost method was used along with a discount rate of 5.0%. In addition, the actuarial assumptions included: an annual medical healthcare cost trend rate of 10% initially, reduced by decrements to an ultimate rate of 6.0% after 8 years; an annual dental healthcare cost trend rate of 5% initially, reduced to 3% after 9 years; and an annual projected salary increase of 2%. NOTE 12 - Commitments and Contingencies The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. NOTE 13 - Risk Management The City is exposed to various risks of loss related to litigation, claims and torts; theft of, damage to, and destruction of assets; errors and omissions; employee health claims; and natural disasters (for which the City carries commercial insurance). The City established a Self-Insurance Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. This fund is broken down into three main areas: property and liability insurance, worker’s compensation insurance and health insurance. Premiums are paid into the Internal Service Fund by all other funds for worker’s compensation insurance and by the general fund for property and liability insurance. The premiums are available to pay claims, fund claim reserves and pay administrative costs of the program. As with any risk retention program, the City is contingently liable with respect to claims beyond those actuarially projected. Interfund premiums are used to reduce the amount of claim expenditures reported in the Internal Service Fund. In the opinion of City management, based on the advice of the City Attorney, the outcome of such litigation and claims will not have materially adverse effect on the City’s financial position. In fiscal year 2011/2012, the Self-Insurance Fund provided coverage for up to a maximum of $50,000 for each property damage claim and $2,000,000 per occurrence for general liability claims. Coverage is also provided for claims up to $500,000 in worker’s compensation. The City purchases commercial insurance for claims in excess of coverage provided by the Self-Insurance Fund and for all other risks of loss. During fiscal year 2011/2012, there were no significant reductions in the amounts of excess coverage purchased, nor has the City experienced any settlements in excess of insurance coverage over the past three fiscal years. 71 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 13 - Risk Management, continued The City also has commercial stop loss insurance that provides specific (by individual member) coverage for medical insurance claims incurred in excess of $200,000 within the plan year, and aggregate (plan wide) coverage for medical insurance claims incurred above 110% of total plan wide claims for the plan year. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The claims liability of $4,777,475 reported as claims payable in the Self-Insurance Fund at June 30, 2012, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that liabilities be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. This includes known future payments made for insurance as well as estimated IBNR calculations. As of FY 2012 these claims also include items that are expenses of the health care benefits trust which was not the case in prior years. Changes in the Fund’s claims liability amount in fiscal years 2011 and 2012 were: Years Ended June 30, Beginning of Fiscal Year Liability Current Year Claims and Changes in Estimates Claim Payments Balance at Fiscal Year End 2011 $ 1,811,045 $ 6,603,927 (5,031,000) $ 3,383,972 2012 $ 3,383,972 $ 23,212,043 (21,818,540) $ 4,777,475 72 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 14 – Interfund Transfers The interfund transfers in and out at June 30, 2012 are as follows: Fund Transfer Detail General Capital projects-streets Capital projects-streets Transfers In $ $ 149,998 Non-major governmental - Non-major enterprise - 436,602 Internal service Total general fund - 2,050,000 12,823,016 General Non-major governmental Total streets fund Non-major governmental - Transfers Out General Capital projects-streets 10,186,416 149,998 - 1,094,000 1,243,998 - 10,186,416 - - Non-major governmental 1,094,000 8,553,092 8,553,092 Enterprise-water 333,210 Enterprise-wastewater 133,155 Non-major enterprise 111,558 215,396 14,759 19,332,190 9,862,488 Internal service Total non-major governmental funds - Water Non-major governmental Total water fund - 333,210 333,210 Wastewater Non-major governmental Total wastewater fund - 133,155 133,155 Non-major enterprise General 436,602 Non-major governmental Total non-major enterprise funds 215,396 651,998 Internal service 111,558 111,558 General 2,050,000 - Non-major governmental Total internal service fund 2,050,000 14,759 14,759 Total $ 23,278,186 $ 23,278,186 Interfund transfers are made from various funds and cost centers to fund costs including property and liability insurance, technology replacement, vehicle replacement, debt service, and general government capital projects. 73 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 15 – Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances To General Advances From Total Capital projects-community services $ Capital projects-public safety buildings & improvements 429,287 15,654,706 Capital projects-streets 7,870,000 Capital projects-public buildings 4,369,352 Total general fund 28,323,345 Enterprise Water Enterprise-wastewater 3,900,000 Total $ 32,223,345 Interfund advances were made from the general fund to capital projects funds to cover expenditures in impact fee funds until impact fees are received. $7,795,000 will be repaid within one year. The interfund advance was made from the water enterprise fund to the wastewater system development fees fund of the wastewater enterprise to cover expenditures until system development fees are collected. None will be repaid within one year. B. Interfund Due To/Due From Due from other funds General Due to other funds Special revenue-grants Special revenue-community development Total general fund Total $ 2,482,759 327,464 $ 2,810,223 Interfund due to/due from other funds were made as short term loans until the grants special revenue fund and community development special revenue fund due from other government’s balances are received. 74 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2012 NOTE 16 – Joint Venture The City and the Town of Gilbert entered into an Intergovernmental Agreement (Agreement) for the design, construction and operation of a Joint Water Treatment Plant. Under the Agreement, the real property, plant infrastructure and raw water pipelines will be jointly owned with each party entitled to 50% of the plant capacity, and each party paying 50% of the construction costs. The Town of Gilbert acts as the Lead Agent, overseeing construction activities, which were substantially complete at June 30, 2012, and operating the plant. The City’s investment in the joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total Investment as of June 30, 2012, was: City of Chandler's Share $72,491,242 Town of Gilbert's Share 74,783,441 $147,274,683 NOTE 17 – Deficit in Fund Balances The police confiscated property fund had a deficit fund balances of $35,597. The deficit will be covered by future revenues. The public buildings capital projects fund and the public safety buildings and improvements capital projects fund had deficit fund balances of $4,080,661, and $8,682,090 respectively. The funds were financed by advances of interfund loans and will be paid back by future impact fee revenues. 75 76 REQUIRED SUPPLEMENTARY INFORMATION 77 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Sales taxes 8,243,200 $ 8,243,200 $ 8,369,580 $ 126,380 87,025,000 87,025,000 97,485,387 10,460,387 2,766,000 2,766,000 2,988,456 222,456 45,279,900 45,279,900 45,958,626 678,726 Licenses and permits 3,487,400 3,487,400 6,955,605 3,468,205 Charges for services 18,045,650 18,045,650 20,443,220 2,397,570 Fines and forfeitures 3,732,500 3,732,500 3,482,787 Rentals 424,200 424,200 455,842 Contributions 100,000 100,000 100,000 - 1,700,000 1,700,000 464,785 (1,235,215) 72,000 72,000 587,461 515,461 170,875,850 170,875,850 187,291,749 16,415,899 21,268,060 23,264,349 21,858,883 1,405,466 560,098 582,960 522,552 60,408 Communications and public affairs 2,198,933 2,497,014 2,252,811 244,203 Law 3,149,461 3,214,104 3,191,374 22,730 City magistrate 3,851,242 3,901,343 3,604,698 296,645 43,242,826 31,883,866 13,403,402 18,480,464 764,010 780,958 770,993 9,965 Fire 26,427,398 26,338,689 26,241,606 97,083 Police 55,408,249 57,044,388 56,321,926 722,462 Transportation and development 16,653,526 18,641,702 17,371,772 1,269,930 Community services 22,159,782 23,163,698 21,905,668 1,258,030 195,683,585 191,313,071 167,445,685 23,867,386 (24,807,735) (20,437,221) 19,846,064 40,283,285 29,152 4,152 Franchise fees State shared Interest revenue Miscellaneous Total revenues (249,713) 31,642 EXPENDITURES: General government City manager City clerk Management services Mayor and council Public safety Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets 25,000 Transfers out 25,000 (33,295,460) (33,295,160) (12,823,016) 20,472,144 (33,270,460) (33,270,160) (12,793,864) 20,476,296 Change in fund balance (58,078,195) (53,707,381) 7,052,200 60,759,581 Fund balances, July 1, 2011 162,344,312 162,344,312 162,344,312 - Total other financing sources (uses) Fund balances, June 30, 2012 $ 104,266,117 See accompanying notes to this schedule. 78 $ 108,636,931 $ 169,396,512 $ 60,759,581 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2012 NOTE 1 – Budgetary Basis of Accounting The adopted budget of the City is prepared on a basis consistent with accounting principles generally accepted in the United States of America with the following exception: reserved encumbrances at year end are recognized as expenditures. Consequently, the following adjustment is necessary to present the change in fund balance on a budgetary basis in order to provide a meaningful comparison. Change in Fund Balances Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds $ 11,402,020 Reserved encumbrances at June 30, 2012 recognized as budgetary expenditures in fiscal year ended June 30, 2012 Budgetary Comparison Schedule for the General Fund (4,349,820) $ 79 7,052,200 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2012 Arizona Public Safety Personnel Retirement System - Police Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 30-Jun 2010 2011 2012 (2) Actuarial Accrued Liability (AAL) Note 1 $ 81,082,048 87,003,157 97,906,676 $ 109,952,888 126,207,510 145,061,169 (3) Percent Funded (1)/(2) 73.7% 68.9% 67.5% (5) Annual Covered Payroll (4) Unfunded AAL (2) - (1) $ 28,870,840 39,204,353 47,154,493 $ 26,008,462 23,962,835 24,439,914 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 111.0% 163.6% 192.9% Arizona Public Safety Personnel Retirement System - Firefighters Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 30-Jun 2010 2011 2012 (2) Actuarial Accrued Liability (AAL) Note 1 $ 54,633,092 58,918,881 65,390,559 $ 66,930,524 76,690,236 87,095,848 (3) Percent Funded (1)/(2) 81.6% 76.8% 75.1% (5) Annual Covered Payroll (4) Unfunded AAL (2) - (1) $ 12,297,432 17,771,355 21,705,289 $ 15,328,067 14,990,957 15,497,570 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 80.2% 118.5% 140.1% Post-Employment Benefits Other than Pensions Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 01-Jul 2007 2009 2011 Note 1 (2) Actuarial Accrued Liability (AAL) Note 2 $ - $ 961,768 26,120,095 33,009,726 (3) Percent Funded (1)/(2) 0.0% 0.0% 0.0% (4) Unfunded AAL (2) - (1) $ 17,961,768 26,120,095 33,009,726 $ 87,610,241 98,508,058 93,253,195 The actuarial cost method used for years 2009 and 2010 was projected unit credit method. For year 2011, the actuarial cost method used is entry age normal method. Note 2 (5) Annual Covered Payroll The actuarial cost method used is projected unit credit method. 80 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 20.5% 26.5% 35.4% OTHER FINANCIAL STATEMENTS 81 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Streets Capital Projects For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ System development fees 371,000 $ 1,500,000 Regional transportation tax Total revenues 371,000 $ 1,500,000 115,426 $ (255,574) 4,300,898 2,800,898 150,000 150,000 5,979,715 5,829,715 2,021,000 2,021,000 10,396,039 8,375,039 2,188,053 EXPENDITURES: General government 2,212,405 2,203,053 15,000 Transportation and development 18,273,396 - 4,089,909 (4,089,909) Capital improvements 16,725,626 36,892,565 19,579,570 17,312,995 Total expenditures 37,211,427 39,095,618 23,684,479 15,411,139 (35,190,427) (37,074,618) (13,288,440) 23,786,178 1,212,100 1,212,100 1,243,998 31,898 - 150,000 181,898 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out (150,000) Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ (150,000) 1,062,100 1,062,100 1,243,998 (34,128,327) (36,012,518) (12,044,442) 33,445,762 33,445,762 33,445,762 (682,565) 82 $ (2,566,756) $ 21,401,320 23,968,076 $ 23,968,076 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Obligation Bonds Debt Service For the year ended June 30, 2012 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Interest revenue 23,559,400 $ - Miscellaneous Total revenues 23,559,400 $ - 23,959,980 $ 210,337 400,580 210,337 - - 777 777 23,559,400 23,559,400 24,171,094 611,694 280,401 EXPENDITURES: 280,401 280,401 - Principal General government 11,850,000 11,850,000 11,860,000 Interest and fiscal charges 11,428,999 11,428,999 11,373,948 55,051 23,559,400 23,559,400 23,233,948 325,452 - - 937,146 937,146 18,321,538 18,321,538 18,321,538 - Total expenditures Change in fund balances Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ 18,321,538 83 $ 18,321,538 $ 19,258,684 (10,000) $ 937,146 City of Chandler Combining Balance Sheet All Non-Major Governmental Funds - By Fund Type June 30, 2012 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds 4,589,718 $ 47,529,196 $ 71,815,449 2,090 - 552 2,642 ASSETS Equity in pooled cash and investments $ 19,696,535 $ Receivables (net of allowance for uncollectible): Accounts - 5,801,116 - 5,801,116 Notes Special assessments 421,522 - - 421,522 Other 917 - 32 949 6,953,676 - - 6,953,676 $ 27,074,740 $ 10,390,834 $ 47,529,780 $ 84,995,354 $ 1,607,525 $ $ $ Due from other governments Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll Trust liabilities and deposits 926,031 2,541,562 172,000 - 6,172 178,172 3,910,073 - - 3,910,073 - 584,088 - 584,088 2,810,223 - - 2,810,223 Accrued interest Due to other funds 8,006 Advances from other funds - - 20,453,345 20,453,345 Arbitrage liability - 5,000 650 5,650 Bonds payable - 3,700,000 - 3,700,000 Deferred revenue 189,080 5,362,474 - 5,551,554 Total liabilities 8,688,901 9,659,568 21,386,198 39,734,667 - - - - 18,421,436 731,266 38,906,333 58,059,035 Committed - - - - Assigned - - - - (35,597) - (12,762,751) (12,798,348) Fund Balances: Nonspendable Restricted Unassigned Total liabilities and fund balances Total liabilities and fund balances $ 18,385,839 731,266 26,143,582 45,260,687 27,074,740 $ 10,390,834 $ 47,529,780 $ 84,995,354 84 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type For the year ended June 30, 2012 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds REVENUES: $ Highway user taxes Grants and entitlements 11,823,280 $ 12,692,773 - $ - $ 11,823,280 - 1,263,642 13,956,415 System development fees - - 7,423,925 7,423,925 Special assessments - 678,027 - 678,027 Charges for services 81,873 - 15,350 97,223 Fines and forfeitures 1,210,860 - - 1,210,860 Interest income 42,281 6,973 195,094 244,348 Miscellaneous 53,227 - 19,538 72,765 25,904,294 685,000 8,917,549 35,506,843 General government 3,284,506 - 2,648,762 5,933,268 Public safety 2,097,184 - 3,506 2,100,690 Transportation and development 7,687,471 - 201,095 7,888,566 Total revenues EXPENDITURES: Current: Community services 418,423 - 1,573,487 1,991,910 Capital improvements 6,706,267 - 11,542,212 18,248,479 Principal - 4,110,000 - 4,110,000 Interest and fiscal charges - 1,176,375 - 1,176,375- 20,193,851 5,286,375 15,969,062 41,449,288 5,710,443 (4,601,375) (7,051,513) (5,942,445) Debt service: Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) 2,064 - 57,791 59,855 - 4,636,975 14,695,215 19,332,190 (5,079,150) - (4,783,338) (9,862,488) (5,077,086) 4,636,975 9,969,668 9,529,557 633,357 35,600 2,918,155 3,587,112 17,752,482 695,666 23,225,427 41,673,575 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES: Beginning of year $ End of year 85 18,385,839 $ 731,266 $ 26,143,582 $ 45,260,687 86 City of Chandler Non-Major Governmental Funds NON-MAJOR SPECIAL REVENUE FUNDS A Special Revenue Fund is used to finance particular activities and is created out of receipts of specific taxes or other earmarked revenues. Such funds are authorized by statutory or charter provisions to pay for certain activities with some special form of continuing revenues. Highway User Used to account for the receipt and expenditure of the City’s allocation of State highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets, and repayment of transportation-related debt. Th Local Transportation Assistance Used to account for the receipt and expenditure of the City’s allocation of State lottery monies. State law restricts the use of these monies to street and highway projects in the public right-of-way and to mass transportation purposes. Grants Used to account for the receipt and expenditure of miscellaneous federal and state grants awarded to the City for various, specific operational purposes. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Police Confiscated Property Used to account for monies confiscated by the police department and monies received from the sale of confiscated property. Parks and Recreation Use to account for donations for park improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. NON-MAJOR DEBT SERVICE FUNDS Highway User Revenue Bonds Accumulates monies for the payment of principal and interest requirements of the City's Highway User Revenue Bonds. Revenues for repayment are generated from gas tax generated within the State of Arizona. Special Assessment Bonds Accumulates monies for the payment of principal and interest on Special Assessment Bonds that were issued to finance costs of improvements applicable to benefiting properties within certain improvement districts. 87 City of Chandler Non-Major Governmental Funds, Continued NON-MAJOR CAPITAL PROJECTS FUNDS General Government Used to account for the acquisition, construction, reconstruction, improvement and renovation of general government projects. Public Buildings Used to account for bond proceeds used for the acquisition, construction, reconstruction, improvement and renovation of City buildings. Grants Used to account for the receipt and expenditure of miscellaneous federal and state grants awarded to the City for various, specific capital purposes. Community Services Used to account for the acquisition of land and equipment, development, construction and improvement of community parks and projects. Public Safety Buildings and Improvements Used to account for public safety, e.g., police and fire department, building construction, renovation and improvements and equipment purchases. Vehicle and Capital Equipment Replacement Used to account for the purchase and/or replacement of general equipment-type assets, e.g., vehicles, furniture, and office equipment. Special Assessments Used to account for expenditures related to special assessment districts within the City. Technology Replacement Used to account for the purchase and/or replacement of technology assets. Municipal Arts Used to account for amounts earmarked for the acquisition of art for public spaces. 88 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2012 Special Revenue Local Police Highway Transportation Community Confiscated User Assistance $ 12,931,786 $ 3,149,254 - - 2,090 Special assessments receivable - - Notes receivable - current - - Grants Development Parks and Property Recreation Library - $ 3,261,970 $ 295,131 $ 58,394 - - - - - - - - - - 421,522 - - - ASSETS Equity in pooled cash and investments Receivables (net of allowance for uncollectible): Accounts receivable - $ 639 - 211 52 - 15 - 1,148,691 - 4,671,816 499,229 633,940 - - $ 14,081,116 $ 3,149,254 $ 4,674,117 $ 920,803 $ 3,895,910 $ 295,146 $ 58,394 $ $ 1,762 $ 1,212,450 $ 159,915 $ $ $ - 39,622 Other receivables Due from other governments Total assets $ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 209,440 119,841 21,434 39 2,485 9,786 - 2,751 - Trust liabilities and deposits - - - - 3,910,073 - - Accrued interest - - - - - - - Due to other funds - - 2,482,759 327,464 - - - Advances from other funds - - - - - - - Arbitrage liability - current Bonds payable - current Deferred revenue - - 189,080 - - - - Total liabilities 329,281 1,762 3,923,911 497,165 3,931,507 2,790 2,485 13,751,835 - 3,147,492 - 750,206 - 423,638 - (35,597) 292,356 - 55,909 - 13,751,835 3,147,492 750,206 423,638 (35,597) 292,356 55,909 Total liabilities and fund balances $ 14,081,116 $ 3,149,254 $ 4,674,117 $ 295,146 $ 58,394 Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) $ 920,803 $ 3,895,910 (Continued) 89 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2012 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ 4,178,488 $ 411,230 $ 781,592 $ 288,702 $ 430,671 Receivables (net of allowance for uncollectible): Accounts - - - - 552 Special assessments - 5,801,116 - - - Notes - - - - - Other - - 15 - - - - - - - Due from other governments Total assets $ 4,178,488 $ 6,212,346 $ 781,607 $ 288,702 $ 431,223 $ - $ 8,006 $ 267,939 $ - $ 415,945 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll - - 2,751 - 215 - - - - - 468,488 115,600 - - - Due to other funds - - - - - Advances from other funds - - - 4,369,352 - Arbitrage liability - current Bonds payable - current Deferred revenue 5,000 3,700,000 - 5,362,474 - 11 - - Total liabilities 4,173,488 5,486,080 270,690 4,369,363 416,160 5,000 - 726,266 - 510,917 - (4,080,661) 15,063 - 5,000 726,266 510,917 (4,080,661) 15,063 Trust liabilities and deposits Accrued interest Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) Total liabilities and fund balances $ 4,178,488 $ 6,212,346 90 $ 781,607 $ 288,702 $ 431,223 Capital Projects Public Safety Community Services Improvements $ 15,609,983 Vehicle and Total Other Buildings and Capital Equipment $ 6,972,743 Special Technology Municipal Governmental Assessments Replacement Arts Funds 14,361,295 $ 4,682,842 $ 4,195,680 Replacement $ $ 205,688 $ 71,815,449 - - - - - - 2,642 - - - - - - 5,801,116 - - - - - - 421,522 4 - - 13 - - 949 - - - - - - 6,953,676 $ 4,682,855 $ 4,195,680 $ 205,688 $ 84,995,354 $ $ $ 5,986 $ 2,541,562 $ 15,609,987 $ $ $ 116,984 6,972,743 $ 14,361,295 - $ - 26 119,151 678 - - 2,528 - - 178,172 - - - - - - 3,910,073 - - - - - - 584,088 - - - - - - 2,810,223 429,287 15,654,706 - - - - 20,453,345 512 - 127 - - - - - 5,650 3,700,000 547,461 15,654,833 - 2,554 119,151 5,986 39,734,667 5,551,554 15,062,526 - (8,682,090) 14,361,295 - 4,680,301 - 4,076,529 - 199,702 - 58,059,035 (12,798,348) 15,062,526 (8,682,090) 14,361,295 4,680,301 4,076,529 199,702 45,260,687 14,361,295 $ 4,682,855 $ 4,195,680 $ 15,609,987 $ 6,972,743 $ $ 205,688 $ 84,995,354 (Concluded) 91 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2012 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Library $ $ REVENUES: Highway user taxes $ Grants and entitlements 11,823,280 $ - $ - $ - $ - - - - 692,821 9,395,830 2,474,313 - 94,662 35,147 System development fees - - - - - - - Special assessments - - - - - - - Charges for services - 81,873 - - - - - Fines and forfeitures - - - - 1,210,860 - - 32,425 8,446 182 - - 966 262 6,825 44,642 1,760 - - - - 11,862,530 827,782 9,397,772 2,474,313 1,210,860 95,628 35,409 General government - - 1,047,160 2,237,346 - - - Public safety - - 1,018,828 - 1,078,356 - - 6,945,919 320,171 421,381 - - - - Community services - - 320,708 - - 73,949 23,766 Capital improvements 949,744 - 5,601,267 27,790 127,466 - - - - - - - - - 7,895,663 320,171 8,409,344 2,265,136 1,205,822 73,949 23,766 3,966,867 507,611 988,428 209,177 5,038 21,679 11,643 OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets - - - 2,064 - - - Transfers in - - - - - - - Interest revenue Miscellaneous Total revenues EXPENDITURES: Current: Transportation and development Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES Transfers out Total other financing sources (uses) (4,858,745) (5,009) - (215,396) - - - (4,858,745) (5,009) - (213,332) - - - 988,428 (4,155) 5,038 21,679 11,643 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER (891,878) FINANCING USES 502,602 FUND BALANCES (DEFICITS): Beginning of year End of year 14,643,713 $ 13,751,835 2,644,890 $ 3,147,492 (238,222) $ 750,206 92 427,793 $ 423,638 (40,635) $ (35,597) $ 270,677 44,266 292,356 $ 55,909 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings $ - $ $ - $ - $ Services - $ - - - - - 1,263,642 - - - - 404,704 - 5,794,895 - 678,027 - - - - - - - - - - - - - - - - 5,000 1,973 2 2,553 - 85,216 - - - - - - 5,000 680,000 2 407,257 1,263,642 5,880,111 - - 2,170,765 4,600 41,649 9,200 - - 2,620 - - - - - 50,146 - 150,949 - - - 216,728 - - 1,115,427 - - 5,492,126 1,633 1,214,985 1,796,094 3,700,000 936,975 410,000 239,400 - - - - 4,636,975 649,400 7,932,385 6,233 1,407,583 2,920,721 (4,631,975) 30,600 (7,932,383) 401,024 (143,941) 2,959,390 - - - - - - 4,636,975 - 8,443,300 - - - - - - (564,000) - (530,000) 4,636,975 - 8,443,300 (564,000) - (530,000) 5,000 30,600 510,917 (162,976) $ - Community Grants 5,000 695,666 $ 726,266 $ 510,917 (143,941) (3,917,685) $ 2,429,390 159,004 (4,080,661) $ 15,063 12,633,136 $ 15,062,526 (Continued) 93 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2012 Capital Projects Public Safety Vehicle and Total Other Special Technology Municipal Governmental Assessments Replacement Arts Funds Buildings and Capital Equipment Improvements Replacement REVENUES: Highway user taxes $ Grants and entitlements - $ - $ - $ - $ - $ 11,823,280 - - - - - 13,956,415 1,224,326 - - - - 7,423,925 Special assessments - - - - - 678,027 Charges for services - - - - 15,350 97,223 Fines and forfeitures - - - - - 1,210,860 16,879 54,184 14,560 21,472 228 244,348 - 19,413 - 125 - 72,765 1,241,205 73,597 14,560 21,597 15,578 35,506,843 9,200 - 83,600 329,748 - 5,933,268 886 - - - - 2,100,690 Transportation and development - - - - - 7,888,566 Community services - - - - 241,332 1,991,910 Capital improvements 1,794,554 527,662 - 715,158 - 18,248,479 - - - - - 4,110,000 1,804,640 527,662 83,600 1,044,906 241,332 41,449,288 (454,065) (69,040) (1,023,309) (225,754) (5,942,445) System development fees Interest income Miscellaneous Total revenues EXPENDITURES: Current: General government Public safety Debt service: Principal Interest and fiscal charges Total expenditures 1,176,375- REVENUES OVER (UNDER) (563,435) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets - 57,791 - - - 59,855 Transfers in - 3,728,025 - 2,523,890 - 19,332,190 Transfers out - (3,689,338) - - - (9,862,488) - 2,523,890 - 9,529,557 - Total other financing sources (uses) 96,478 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER (563,435) FINANCING USES (357,587) (69,040) 1,500,581 (225,754) 3,587,112 FUND BALANCES (DEFICITS): Beginning of year End of year (8,118,655) $ (8,682,090) 14,718,882 $ 14,361,295 4,749,341 $ 4,680,301 2,575,948 $ 4,076,529 425,456 $ 199,702 41,673,575 $ 45,260,687 (Concluded) 94 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Highway User Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Highway user taxes $ 11,495,000 $ 11,495,000 4,000 4,000 - (4,000) 109,000 109,000 32,425 (76,575) 1,000 1,000 6,825 5,825 11,609,000 11,609,000 11,862,530 253,530 General government 3,622,037 3,043,743 - 3,043,743 Transportation and development 9,680,921 8,234,727 7,573,770 660,957 Capital improvements 1,825,364 4,100,881 3,409,881 691,000 15,128,322 15,379,351 10,983,651 4,395,700 (3,519,322) (3,770,351) 878,879 4,649,230 (4,858,745) (4,858,745) (4,858,745) - (4,858,745) (4,858,745) (4,858,745) - Change in fund balances (8,378,067) (8,629,096) (3,979,866) 4,649,230 Fund balances, July 1, 2011 14,643,713 14,643,713 14,643,713 6,265,646 $ 6,014,617 Charges for services Interest revenue Miscellaneous Total revenues $ 11,823,280 $ 328,280 EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Fund balances, June 30, 2012 $ 95 $ 10,663,847 $ 4,649,230 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Transportation Assistance Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ - $ - $ 692,821 $ 692,821 Charges for services 62,000 62,000 81,873 19,873 Interest revenue 19,000 19,000 8,446 (10,554) - - 44,642 44,642 81,000 81,000 827,782 746,782 350,000 100,000 - 100,000 1,370,522 905,411 321,277 584,134 - 485,843 38,585 447,258 1,720,522 1,491,254 359,862 1,131,392 (1,639,522) (1,410,254) 467,920 1,878,174 (5,009) (5,009) (5,009) - (5,009) (5,009) (5,009) - (1,644,531) (1,415,263) 2,644,890 2,644,890 Miscellaneous Total revenues EXPENDITURES: Current: General government Transportation and development Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2011 Fund balances, June 30, 2012 $ 1,000,359 96 $ 1,229,627 $ 462,911 1,878,174 2,644,890 - 3,107,801 $ 1,878,174 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 20,211,158 $ 20,211,158 $ 9,395,832 $ (10,815,326) Interest revenue - - 182 Miscellaneous - - 1,760 1,760 20,211,158 20,211,158 9,397,774 (10,813,384) General government 4,461,456 3,348,264 1,355,843 1,992,421 Public safety 2,111,627 2,653,340 1,025,833 1,627,507 10,964,687 - 681,135 (681,135) Community services 1,271,000 1,280,371 338,842 941,529 Capital improvements 3,687,000 14,830,448 8,962,167 5,868,281 22,495,770 22,112,423 12,363,820 9,748,603 (2,284,612) (1,901,265) (2,966,046) (1,064,781) (238,222) (238,222) (238,222) - Total revenues 182 EXPENDITURES: Current: Transportation and development Total expenditures Change in fund balances Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ (2,522,834) 97 $ (2,139,487) $ (3,204,268) $ (1,064,781) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Development Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ Total revenues 4,760,000 $ 4,760,000 $ 2,474,311 $ (2,285,689) 4,760,000 4,760,000 2,474,311 (2,285,689) 6,280,000 5,655,886 2,502,704 3,153,182 500,000 194,643 41,656 152,987 6,780,000 5,850,529 2,544,360 3,306,169 (2,020,000) (1,090,529) Proceeds from disposal of capital assets - - Transfers out - - (215,396) (215,396) - - (213,332) (213,332) (2,020,000) (1,090,529) (283,381) 807,148 EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures (70,049) 1,020,480 Other financing sources (uses): Total other financing sources (uses) Change in fund balances 427,793 Fund balances, July 1, 2011 Fund balances (deficits), June 30, 2012 $ (1,592,207) 98 2,064 427,793 $ (662,736) 2,064 427,793 $ 144,412 $ 807,148 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Police Confiscated Property Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Fines and forfeitures $ 3,000,000 $ 3,000,000 $ 1,210,860 $ (1,789,140) 3,000,000 3,000,000 1,210,860 202,200 - - - Public safety 1,620,000 1,760,166 1,107,982 652,184 Capital improvements 1,380,000 1,405,528 1,302,725 102,803 3,202,200 3,165,694 2,410,707 754,987 Total revenues (1,789,140) EXPENDITURES: Current: General government Total expenditures Change in fund balances Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ (202,200) (165,694) (1,199,847) (40,635) (40,635) (40,635) (242,835) 99 $ (206,329) $ (1,240,482) (1,034,153) $ (1,034,153) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Parks and Recreation Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 73,572 $ 73,572 $ 94,663 $ 21,091 2,000 2,000 965 75,572 75,572 95,628 20,056 General government 4,700 - - - Community services 195,786 195,786 73,950 121,836 200,486 195,786 73,950 121,836 (124,914) (120,214) 21,678 141,892 270,677 270,677 270,677 - Total revenues (1,035) EXPENDITURES: Current: Total expenditures Change in fund balances Fund balances, July 1, 2011 Fund balances, June 30, 2012 $ 145,763 100 $ 150,463 $ 292,355 $ 141,892 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Special Revenue For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 60,000 Interest revenue Total revenues $ 60,000 $ 35,147 $ (24,853) - - 261 60,000 60,000 35,408 (24,592) 90,000 90,000 27,366 62,634 90,000 90,000 27,366 62,634 (30,000) (30,000) 8,042 38,042 44,266 44,266 44,266 - 261 EXPENDITURES: Current: Community services Total expenditures Change in fund balances Fund balances, July 1, 2011 Fund balances, June 30, 2012 $ 14,266 101 $ 14,266 $ 52,308 $ 38,042 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Government Capital Projects For the year ended June 30, 2012 Total Budgeted Amounts Original Final Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ - $ - Total revenues - $ - 2 $ 2 2 2 EXPENDITURES: Current: General government Public safety Transportation and development Community services $ Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures 14,044,763 2,380,196 1,783,283 2,148,389 $ 10,104,282 88,045 120,000 $ 2,569,873 2,621 50,146 227,963 $ 7,534,409 (2,621) 37,899 (107,963) 3,076,000 19,067,208 7,533,451 11,533,757 23,432,631 29,379,535 10,384,054 18,995,481 (23,432,631) (29,379,535) (10,384,052) (18,995,479) 23,432,631 23,432,631 8,443,300 (14,989,331) 23,432,631 23,432,631 8,443,300 (14,989,331) Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances - (5,946,904) (1,940,752) (33,984,810) Fund balances, July 1, 2011 - - - - Fund balances (deficits), June 30, 2012 $ - 102 $ (5,946,904) $ (1,940,752) $ (33,984,810) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Buildings Capital Projects For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 280,000 $ 280,000 $ 404,704 $ 124,704 13,000 13,000 2,553 293,000 293,000 407,257 114,257 1,144,778 24,352 20,352 4,000 - 1,131,708 1,743 1,129,965 1,144,778 1,156,060 22,095 1,133,965 385,162 1,248,222 (10,447) EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures (851,778) (863,060) 851,778 851,778 - - - (564,000) (564,000) 851,778 851,778 (564,000) 287,778 - (11,282) (178,838) 1,536,000 (3,917,685) (3,917,685) (3,917,685) - Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ (3,917,685) 103 $ (3,928,967) $ (4,096,523) 851,778 $ 1,536,000 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Capital Projects For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ Total revenues 8,956,380 $ 8,956,380 $ 1,263,643 $ 1,263,643 (7,692,737) 8,956,380 8,956,380 (7,692,737) General government - - 73,501 (73,501) Transportation and development - - 242,189 (242,189) 8,956,380 9,847,843 2,710,572 7,137,271 8,956,380 9,847,843 3,026,262 6,821,581 EXPENDITURES: Current: Capital improvements Total expenditures Change in fund balances 159,004 Fund balances, July 1, 2011 Fund balances (deficits), June 30, 2012 (891,463) $ 159,004 104 (1,762,619) 159,004 $ (732,459) (871,156) 159,004 $ (1,603,615) $ (871,156) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Services Capital Projects For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue 2,510,000 $ 2,510,000 $ 5,794,895 $ 3,284,895 88,000 88,000 85,216 2,598,000 2,598,000 5,880,111 3,282,111 General government Community Services 3,509,571 4,742,791 3,536,000 10,000 40,704 1,122,679 3,495,296 (1,112,679) Capital improvements 1,450,000 5,520,794 2,330,638 3,190,156 9,702,362 9,066,794 3,494,021 5,572,773 (7,104,362) (6,468,794) 2,386,090 8,854,884 Total revenues (2,784) EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) - - (530,000) (530,000) - - (530,000) (530,000) Change in fund balances (7,104,362) (6,468,794) 1,856,090 8,324,884 Fund balances, July 1, 2011 12,633,136 12,633,136 12,633,136 - Fund balances, June 30, 2012 $ 5,528,774 105 $ 6,164,342 $ 14,489,226 $ 8,324,884 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Safety Buildings and Improvements Capital Projects For the year ended June 30, 2012 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue 620,000 $ 620,000 $ 1,224,326 $ 604,326 64,000 64,000 16,880 684,000 684,000 1,241,206 642,000 14,306,902 1,136,794 - 40,704 886 - 10,215,674 2,562,491 7,653,183 14,948,902 11,352,468 2,604,081 8,748,387 Excess (deficiency) of revenues over expenditures (14,264,902) (10,668,468) (1,362,875) 9,305,593 Change in fund balances (14,264,902) (10,668,468) (1,362,875) 9,305,593 (8,118,655) (8,118,655) (8,118,655) - (22,383,557) $ (18,787,123) Total revenues (47,120) 557,206 EXPENDITURES: Current: General government Public safety Capital improvements Total expenditures Fund balances (deficits), July 1, 2011 Fund balances (deficits), June 30, 2012 $ 106 $ (9,481,530) 1,096,090 (886) $ 9,305,593 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Vehicle and Capital Equipment Capital Projects For the year ended June 30, 2012 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ 78,000 Miscellaneous Total revenues $ 78,000 $ 54,184 $ (23,816) - - 19,413 19,413 78,000 78,000 73,597 (4,403) 10,990,282 10,987,428 - EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures 10,987,428 3,644,000 3,952,669 1,832,408 2,120,261 14,634,282 14,940,097 1,832,408 13,107,689 (14,556,282) (14,862,097) (1,758,811) 13,103,286 - - Other financing sources (uses): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2011 Fund balances, June 30, 2012 $ 57,791 57,791 14,295,471 14,292,617 3,728,025 (10,564,592) (10,567,446) (10,567,446) (3,689,338) 6,878,108 3,728,025 3,725,171 (10,828,257) (11,136,926) (1,662,333) 14,718,882 14,718,882 14,718,882 3,890,625 $ 3,581,956 $ 13,056,549 107 96,478 (3,628,693) 9,474,593 $ 9,474,593 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Special Assessments Capital Projects For the year ended June 30, 2012 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Interest revenue Total revenues 34,000 34,000 14,560 (19,440) 34,000 34,000 14,560 (19,440) 92,640 92,727 83,600 9,127 92,640 92,727 83,600 9,127 (58,640) (58,727) (69,040) (10,313) EXPENDITURES: Current: General government Total expenditures Change in fund balances 4,749,341 Fund balances, July 1, 2011 Fund balances, June 30, 2012 $ 4,690,701 108 4,749,341 $ 4,690,614 4,749,341 $ 4,680,301 $ (10,313) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Technology Replacement Capital Projects For the year ended June 30, 2012 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ 14,000 Miscellaneous Total revenues $ 14,000 $ 21,472 $ 7,472 - - 125 125 14,000 14,000 21,597 7,597 EXPENDITURES: Current: General government 1,410,000 848,249 341,546 506,703 Capital improvements 1,551,440 1,806,918 743,150 1,063,768 2,961,440 2,655,167 1,084,696 1,570,471 (2,947,440) (2,641,167) (1,063,099) (1,562,874) 2,541,515 2,541,515 2,523,890 (17,625) 2,541,515 2,541,515 2,523,890 (17,625) 1,460,791 (1,580,499) 2,575,948 2,575,948 - 2,476,296 $ 4,036,739 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) (405,925) Change in fund balances 2,575,948 Fund balances, July 1, 2011 Fund balances, June 30, 2012 (99,652) $ 2,170,023 109 $ $ (1,580,499) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Municipal Arts Capital Projects For the year ended June 30, 2012 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Charges for services $ - Interest revenue $ - $ 15,350 $ 15,350 4,000 4,000 228 4,000 4,000 15,578 11,578 General government 50,000 50,000 - 50,000 Community services 225,000 320,269 241,332 78,937 275,000 370,269 241,332 128,937 (271,000) (366,269) (225,754) 140,515 425,456 425,456 425,456 Total revenues (3,772) EXPENDITURES: Current: Total expenditures Change in fund balances Fund balances , July 1, 2011 Fund balances , June 30, 2012 $ 154,456 110 $ 59,187 $ 199,702 $ 140,515 111 112 City of Chandler Non-Major Proprietary Funds Solid Waste Used to account for the provision of solid waste (refuse) services to the residential customers of the City. All activities necessary to provide such service are accounted for in this fund. Airport Used to account for the provision of airport services at the City's municipal airport. All activities necessary to provide such service are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, and related debt service, billing, and collection. Chandler Housing Authority Used to account for expenditures of the City's housing assistance programs which consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. 113 City of Chandler Combining Statement of Net Assets Non-Major Proprietary Funds June 30, 2012 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds ASSETS Current assets: Equity in pooled cash and investments $ 12,280,961 $ 81,945 $ 4,475,445 $ 16,838,351 1,674,501 99,947 17,435 1,791,883 - - 24,996 24,996 Inventories - 19,713 - 19,713 Prepaid items - - 359,602 359,602 69,132 96 - 69,228 14,024,594 201,701 4,877,478 19,103,773 Other assets - 1,282 - 1,282 Notes receivable - long term - - 363,450 363,450 Non-depreciable 7,088,918 18,919,391 1,597,897 27,606,206 Depreciable, net 9,247,587 11,064,592 7,240,156 27,552,335 16,336,505 29,983,983 8,838,053 55,158,541 16,336,505 29,985,265 9,201,503 55,523,273 30,361,099 30,186,966 14,078,981 74,627,046 767,167 19,955 35,382 Accrued payroll 45,141 17,982 48,729 822,504 111,852 Trust liabilities and deposits 16,049 45,125 210,191 271,365 Accounts receivable Due from other governments Other receivables Total current assets Noncurrent assets: Capital assets: Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable 114 Accrued interest - 2,394 - 174,681 11,604 - - - - 724 260 929 1,913 - 20,000 - 20,000 Deferred bond premium - current - 196 - 196 Arbitrage liability - current - 4 - 4 94,446 - - 94,446 1,098,208 117,520 295,231 1,510,959 65,142 23,434 83,545 172,121 - 141,000 - 141,000 Unearned revenue Deferred revenue Compensated absences payable - current Bonds payable - current Landfill closure and postclosure liability - current Total current liabilities 2,394 186,285 - Noncurrent liabilities: Compensated absences payable - long term Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Total noncurrent liabilities Total liabilities - 2,938 - 2,938 55,311 19,828 - 75,139 - 4 - 4 4,245,554 - - 4,245,554 4,366,007 187,204 83,545 4,636,756 5,464,215 304,724 378,776 6,147,715 16,336,505 29,903,835 8,838,053 55,078,393 4,862,152 13,400,938 NET ASSETS Invested in capital assets, net of related debt 8,560,379 Unrestricted Total net assets $ 24,896,884 (21,593) $ 29,882,242 115 $ 13,700,205 $ 68,479,331 City of Chandler Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Non-Major Proprietary Funds For the year ended June 30, 2012 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 13,890,957 $ 996,605 $ 200 $ 14,887,762 Grants and entitlements - - 6,341,087 6,341,087 Rentals - - 466,356 466,356 Miscellaneous - 9,144 633,867 643,011 13,890,957 1,005,749 7,441,510 22,338,216 Total operating revenues OPERATING EXPENSES: General and administrative 1,316,800 100,000 - 1,416,800 Personal services 1,392,600 481,269 1,448,846 3,322,715 Contractual services 9,477,623 35,411 249,895 9,762,929 Commodities Housing assistance payments 1,086,839 - 523,011 - 473,616 4,939,931 2,083,466 4,939,931 482,490 797,193 530,215 1,809,898 13,756,352 1,936,884 7,642,503 23,335,739 Depreciation and amortization expense Total operating expenses 134,605 OPERATING INCOME (LOSS) (931,135) (200,993) (997,523) 15,404 57,974 NONOPERATING REVENUES (EXPENSES): Interest revenue 42,207 Interest expense - Accretion of bond premium - 196 - 196 Amortization of bond issuance costs - (80) - (80) 42,207 (4,309) 15,404 53,302 176,812 (935,444) (185,589) (944,221) 340,252 Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 363 (4,788) - (4,788) CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions - 96,668 243,584 Transfers in - 151,602 500,396 Transfers out Total transfers Net income (loss) 651,998 (92,820) (18,738) - (111,558) (92,820) 229,532 743,980 880,692 83,992 (705,912) 558,391 (63,529) NET ASSETS Beginning of year 24,812,892 End of year $ 116 24,896,884 30,588,154 $ 29,882,242 13,141,814 $ 13,700,205 68,542,860 $ 68,479,331 117 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2012 Solid Waste CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services $ 14,244,957 (11,896,126) (1,376,768) Chandler Housing Authority Airport $ 1,004,212 (660,164) (498,732) $ 570,290 6,332,545 (5,074,560) (1,440,372) Total Other Proprietary Funds $ 15,819,459 6,332,545 (17,630,850) (3,315,872) 972,063 (154,684) 387,903 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out (92,820) 151,602 (18,738) 500,396 - 651,998 (111,558) Net cash provided (used) by noncapital financing activities (92,820) 132,864 500,396 540,440 - (102,443) (465,257) (567,700) Principal paid on bond maturities - (20,000) - (20,000) Interest paid on bonds Capital contributions - (5,268) 96,668 243,584 (5,268) 340,252 - (31,043) (221,673) (252,716) Net cash provided (used) by operating activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities CASH AND CASH EQUIVALENTS: Beginning of year End of year 42,207 363 15,404 57,974 42,207 363 15,404 57,974 682,030 1,550,980 134,445 3,793,415 15,287,371 81,945 $ 4,475,445 921,450 Net increase (decrease) in cash and cash equivalents (52,500) 11,359,511 $ 12,280,961 118 1,205,282 $ $ 16,838,351 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 operating activities: Depreciation and amortization Changes in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in unearned revenue $ Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Accretion of bond premiums Amortization of bond issuance costs 134,605 $ $ (200,993) $ (997,523) 482,490 797,193 530,215 347,942 (14,864) (4,926) (80) 6,138 (3,261) 17,402 80 (19,144) (24,169) (710) 2,354 4,115 8,634 17,278 28,654 - 20,758 6,706 - 27,464 837,458 776,451 588,896 2,202,805 $ 972,063 $ $ - $ 119 (931,135) (154,684) 196 80 1,809,898 348,796 17,402 8,714 (16,730) (29,095) 27,864 8,492 $ 387,903 $ 1,205,282 $ - $ 196 80 City of Chandler Statement of Changes in Assets and Liabilities - Agency Fund Fiduciary Funds For the year ended June 30, 2012 Balance Balance July 1, 2011 Additions Deletions June 30, 2012 Miscellaneous Deposit Fund Assets: Equity in pooled cash and investments Total assets $ 16,500 $ 3,562 $ (8,562) $ 11,500 $ 16,500 $ 3,562 $ (8,562) $ 11,500 $ 16,500 $ 3,562 $ (8,562) $ 11,500 $ 16,500 $ 3,562 $ (8,562) $ 11,500 Liabilities: Due to others Total liabilities 120 121 122 City of Chandler Financial Data Schedule Housing and Redevelopment For the year ended June 30, 2012 AS SUBMITTED ELECTRONICALLY TO: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT REAL ESTATE ASSESSMENT CENTER (REAC) The Financial Data Schedule is a required electronic submission to the U.S. Department of Housing and Urban Development by all Housing Authorities receiving HUD funding. Financial data on each of the grant programs is presented in a combining schedule. The Financial Data Schedule presented herein has been submitted electronically to HUD. The activities of the City of Chandler Housing and Redevelopment Division are reported as an enterprise fund in the City's Comprehensive Annual Financial Report. 123 City of Chandler Financial Data Sheet Housing and Redevelopment June 30, 2012 Combining statement of net assets - all HUD programs Low Rent Public Housing AMP 1 14.850a FDS Line # AMP 2 14.850a All AMPs 14.850a Account Description ASSETS 111 113 114 122 124 125 126 126.1 127 128 142 161 162 164 166 167 171 Cash - Unrestricted Cash - Restricted for FSS Escrow Accounts Cash - Security Deposits $ Accounts Receivable - HUD Other Projects Accounts Receivable - Other Governments Accounts Receivable - Miscellaneous Accounts Receivable - Tenants - Dwelling Rents Allowance for Doubtful Accounts - Dwelling Rents Notes and Mortgages Receivable - current Fraud Recovery Prepaid Expenses and Other Assets Land Buildings Furniture, Equipment, Machinery - Admin Accumulated Depreciation Construction in Progress Notes and Mortgages Receivable - non-current TOTAL ASSETS 997,593 59,503 $ 513,049 58,090 $ 1,510,642 117,593 5,093 87 8,275 (4,428) 3,737 - 19,902 34 5,671 (2,638) - 24,995 121 13,946 (7,066) 3,737 - 1,932,844 4,943,244 130,353 (5,316,421) - 1,582,289 9,213,648 60,105 (4,430,333) - 3,515,133 14,156,892 190,458 (9,746,754) - 2,759,880 7,019,817 9,779,697 LIABILITIES 312 321 322 341 342 345 Accounts Payable Accrued Wage/Payroll Taxes Payable Accrued Compensated Absences - Current Tenant Security Deposits Deferred Revenues Other Current Liabilities 14,868 16,289 248 59,503 3,992 17,058 6,295 74 58,090 5,339 31,926 22,584 322 117,593 9,331 353 354 Noncurrent Liabilities - Other Accrued Compensated Absences - Noncurrent 22,303 6,635 28,938 117,203 93,491 210,694 1,690,020 952,657 6,425,709 500,617 8,115,729 1,453,274 2,642,677 6,926,326 9,569,003 TOTAL LIABILITIES NET ASSETS 508.1 511.1 512.1 Invested in Capital Assets, net of related debt Restricted Net Assets Unrestricted Net Assets TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS $ 124 2,759,880 $ 7,019,817 $ 9,779,697 Housing Choice Vouchers 14.871 Business Activities Central Office 14.850a $ Other Business 635,367 - $ 81 - 1,706,525 2,500 $ - 32,718 (20,004) - $ Total Business Activities 2,341,892 2,500 $ 81 - 200,000 520,613 129,670 (143,795) 363,450 297,276 205,542 - Total $ 6,617 359,602 200,000 520,613 162,388 (163,799) 363,450 4,149,810 205,542 120,093 24,995 6,819 13,946 (7,066) 3,737 359,602 35,470 (32,348) - 3,715,133 14,677,505 388,316 (9,942,901) 363,450 648,162 2,778,963 3,427,125 872,159 14,078,981 183 15,154 448 158 1,155 2,500 - 1,338 15,154 448 2,500 158 1,611 10,991 159 114 34,875 48,729 929 120,093 9,603 40,316 - 40,316 81,002 14,291 81,002 83,545 56,259 3,655 59,914 108,168 378,776 12,714 579,189 706,488 2,068,820 719,202 2,648,009 3,122 484,142 276,727 8,838,053 484,142 4,378,010 591,903 2,775,308 3,367,211 763,991 13,700,205 648,162 $ 2,778,963 $ 3,427,125 $ 872,159 $ 125 14,078,981 City of Chandler Financial Data Sheet Housing and Redevelopment June 30, 2012 Statement of revenues, expenses, and changes in fund net assets - all HUD programs Low Rent Public Housing AMP 1 14.850a FDS Line # AMP 2 14.850a All AMPs 14.850a Account Description REVENUES 70300 70400 70600 70610 70710 70720 70730 71100 71400 71500 71600 72000 Net Tenant Rental Revenue Tenant Revenue - Other HUD Operating Grants HUD Capital Grants Management Fees Earned Asst Management Fees Earned Bookkeeping Fees Earned Investment Income - Unrestricted Fraud Recovery Other Revenue Gain or Loss on Sale of Capital Assets Investment Income - Restricted $ TOTAL REVENUES 194,297 8,100 936,556 3,799 23,393 9,495 - $ 236,059 598,178 243,584 1,987 18,499 - $ 430,356 8,100 1,534,734 243,584 5,786 41,892 9,495 - 1,175,640 1,098,307 2,273,947 95,335 2,540 116,337 14,370 37,254 1,704 18,404 19,560 45,022 14,953 14,746 39,003 44,430 1,598 49,396 189,499 72,536 68,899 63,499 9,965 8,443 22,551 8,092 958,136 92,839 2,075 100,385 12,412 39,368 1,669 10,827 16,800 325 1,745 6,052 12 3,569 70,132 68,956 165,183 37,466 15,947 1,654 6,709 4,788 658,913 188,174 4,615 216,722 26,782 76,622 3,373 29,231 36,360 45,022 14,953 15,071 40,748 50,482 1,610 52,965 259,631 141,492 234,082 100,965 25,912 10,097 29,260 12,880 1,617,049 209,163 1,167,299 280,800 939,713 489,963 2,107,012 8,341 158,594 166,935 - 215,396 - 215,396 - EXPENSES 91100 91200 91300 91310 91500 91600 91900 92000 92100 92300 92400 93100 93200 93300 93800 94100 94200 94300 94500 96100 96200 96210 96300 96400 97300 97350 97400 Administrative Salaries Auditing Fees Management Fees Bookkeeping Fees Employee Benefit Contributions - Administrative Office Expenses Other Operating - Administrative Asset Management Fees Tenant Services - Salaries Employee Benefit Contributions - Tenant Services Tenant Services - Other Water Electricity Gas Other Utility Expenditures Ordinary Maintenance and Operations - Labor Ordinary Maintenance and Operations - Materials Ordinary Maintenance and Operations - Contract Costs Ordinary Maintenance and Operations - Ordinary Maintenance Insurance Other General Expenditures Compensated Absences Payments in Lieu of Taxes Bad Debt - Tenant rents Total Operating Expenditures Other Expenditures: Housing Assistance Payments HAP Portability-In Depreciation TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES BEFORE OTHER FINANCING SOURCES (USES) OTHER FINANCING SOURCES (USES) 10010 10020 10030 11040 Operating Transfers In Operating Transfers Out Operating Transfers In from Primary Government Equity Transfers TOTAL OTHER FINANCING SOURCES (USES) CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR $ - 215,396 215,396 8,341 373,990 382,331 2,634,336 6,552,336 9,186,672 2,642,677 $ 6,926,326 $ 9,569,003 OTHER MEMORANDUM AMOUNTS 70600 11190 11210 Maximum Annual Contributions Commitment Unit Months Available Number of Unit Months Leased 1,956 1,916 126 1,680 1,655 3,636 3,571 Business Activities Central Office 14.850a $ Other Business - $ 288,048 36,360 70,380 2,223 - 36,000 5,221 2,975 - 397,011 44,196 285,823 96,092 4,774 13,524 1,746 4,546 40,764 447,269 466,356 8,100 6,341,087 243,584 14,193 6,940 609,532 9,495 1,211 441,207 5,380,132 (394,788) 7,700,498 2,146 360 6,745 1,479 7,733 32 18,495 285,823 2,146 360 96,092 11,519 13,524 3,225 7,733 4,546 40,764 32 465,764 157,386 3,465 69,180 43,238 67,120 3,670 60,401 38,741 15,773 10,909 14,450 484,333 (288,048) (70,380) (36,360) (394,788) 631,383 8,080 239,834 7,043 101,151 83,763 30,726 15,071 40,748 50,482 1,610 52,965 273,155 144,717 241,815 105,511 25,912 21,006 84,474 32 12,880 2,172,358 3,674 450,943 34,949 53,444 38,623 504,387 4,404,076 535,855 1,629 5,425,893 (394,788) 4,404,076 535,855 530,215 7,642,504 (53,932) (9,248) (63,180) (45,761) - 57,994 - 135,000 - 150,000 - - 500,396 - - 135,000 150,000 - 500,396 71,820 104,239 - 558,390 3,295,391 659,752 - 13,141,815 81,068 (9,248) 510,835 591,903 2,784,556 $ 2,775,308 $ 36,000 288,048 36,360 70,380 7,444 2,975 - 3,367,211 $ $ - 763,991 $ $ - Total (288,048) (36,360) (70,380) - 135,000 $ Eliminations 4,806,353 963 6,940 564,665 1,211 135,000 - $ Housing Choice Vouchers 14.871 Total Business Activities - $ $ 4,806,353 5,808 5,766 127 13,700,205 128 Statistical Section The statistical section includes various statistical schedules including historical expenditure comparisons, property taxes, debt service, and demographic information about the City. Statistical Section From the time of its founding in 1912 to the 1970s, Chandler’s economy was built around farming. Like today’s technology and science industries in Chandler, for many years agriculture drew thousands of families to the city. Many of our former mayors were involved in agriculture prior to their time in office-- picking cotton in south Chandler fields, loading cotton trailers, managing a dairy, assisting with farm land construction, or butchering local cattle. Statistical Section CITY OF CHANDLER, ARIZONA Statistical Section This part of the City of Chandler’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 Page Financial Trends 130 Schedules 1-6 contain information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity 146 Schedules 7-9 contain information to help the reader assess the factors affecting the City’s ability to generate its sales and use tax. Debt Capacity 150 Schedules 10-13 present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information 157 Schedules 14-15 offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place and to help make comparisons over time and with other governments. Operating information 160 Schedules 16-18 contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 129 CITY OF CHANDLER, ARIZONA NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Governmental activities Invested in capital assets, net of related debt $ Restricted 55,963,968 $ 117,111,402 Unrestricted Total governmental activities net assets 101,665,063 $ 90,046,996 162,790,025 $ 110,932,310 260,653,345 (1) 106,396,966 186,420,301 224,309,216 214,663,854 208,727,675 359,495,671 416,021,275 488,386,189 575,777,986 325,992,618 Business-type activities 232,259,546 252,117,283 275,991,278 Restricted Invested in capital assets, net of related debt 70,198,611 63,985,390 72,538,299 52,511,899 Unrestricted 70,831,613 82,444,533 78,334,422 76,090,729 373,289,770 398,547,206 426,863,999 454,595,246 Total business-type activities net assets Primary government Invested in capital assets, net of related debt 288,223,514 353,782,346 438,781,303 586,645,963 Restricted 187,310,013 154,032,386 183,470,609 158,908,865 Unrestricted Total primary government net assets 257,251,914 $ 732,785,441 306,753,749 $ 814,568,481 (1) The significant increase in this year is due to the addition of the retroactive infrastructure. 130 292,998,276 $ 915,250,188 284,818,404 $ 1,030,373,232 Schedule 1 Fiscal Year 2007 $ $ 288,893,354 2008 $ 353,996,843 2009 $ 2010 433,851,899 $ 2011 537,576,346 $ 2012 534,292,488 $ 545,926,100 115,343,816 56,979,639 117,712,539 94,440,806 41,906,129 44,047,942 265,645,323 341,971,306 271,690,158 198,059,181 260,307,288 259,783,598 669,882,493 752,947,788 823,254,596 830,076,333 836,505,905 849,757,640 347,306,362 427,130,654 387,401,986 298,938,820 281,936,017 280,440,445 57,835,328 24,319,427 - - - - 78,718,941 45,300,009 98,413,928 163,103,784 168,164,942 179,339,498 483,860,631 496,750,090 485,815,914 462,042,604 450,100,959 459,779,943 826,366,545 636,199,716 781,127,497 821,253,885 836,515,166 816,228,505 173,179,144 81,299,066 117,712,539 94,440,806 41,906,129 44,047,942 344,364,264 387,271,315 370,104,086 361,162,965 428,472,230 439,123,096 1,153,743,124 $ 1,249,697,878 $ 1,309,070,510 $ 1,292,118,937 131 $ 1,286,606,864 $ 1,309,537,583 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Expenses Governmental activities: General government $ Public safety 30,610,529 $ 54,854,074 Community development Public works Transportation and development Community services Interest and fiscal charges Total governmental activities expenses 32,925,516 $ 59,666,119 38,116,265 $ 56,022,025 36,669,140 63,840,179 7,067,675 7,457,073 6,973,474 8,706,473 161,195,319 21,309,408 17,175,426 31,940,075 - - - - 19,823,356 20,200,390 19,017,024 24,087,695 10,858,078 11,426,919 10,649,133 11,658,090 284,409,031 152,985,425 147,953,347 176,901,652 Business-type activities: Water 35,992,958 40,544,967 41,689,649 38,582,431 Wastewater 22,986,319 24,505,362 25,825,966 25,294,189 Solid waste 14,414,774 9,705,932 9,598,287 8,154,317 1,420,574 1,458,068 1,582,079 1,765,772 Airport Chandler housing authority Total business-type activities expenses Total primary government expenses $ 7,082,747 8,977,049 7,773,223 6,713,829 81,897,372 85,191,378 86,469,204 80,510,538 366,306,403 $ 238,176,803 $ 234,422,551 $ 257,412,190 (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 132 Schedule 2a Fiscal Year 2007 $ $ 2008 42,317,392 $ 2009 54,459,719 $ 2010 52,293,004 $ 2011 48,920,813 $ 2012 67,808,567 $ 88,876,901 76,200,082 80,860,917 87,609,165 92,421,801 90,738,477 9,154,407 11,692,559 10,429,826 11,715,276 - (1) 89,141,559 32,402,242 39,241,652 47,180,197 56,155,939 - (1) - - - - - 50,909,361 (1) 52,111,019 29,464,039 33,086,565 34,278,998 35,299,676 28,919,560 - 28,966,271 11,479,112 14,880,604 12,938,524 13,541,708 12,767,934 12,425,819 201,017,274 234,222,016 244,729,714 258,055,213 251,143,899 271,521,569 40,687,283 53,554,653 53,201,379 62,556,496 57,452,876 56,277,327 27,230,862 30,657,939 36,079,767 38,227,999 37,896,180 38,804,360 13,756,352 9,843,824 6,845,979 12,076,998 14,605,448 13,443,102 1,757,279 1,602,268 2,269,691 1,797,991 2,107,354 1,941,752 9,133,427 7,593,242 7,239,185 7,654,449 7,580,783 7,642,503 88,652,675 100,254,081 110,867,020 124,842,383 118,480,295 118,422,294 289,669,949 $ 334,476,097 $ 355,596,734 $ 382,897,596 133 $ 369,624,194 $ 389,943,863 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Program Revenues Governmental activities: Charges for services: General government $ 10,972,432 $ 14,339,606 $ 11,770,912 Public safety 2,962,608 2,515,026 2,921,707 Community development 8,407,356 7,833,679 10,119,322 11,764,790 12,879,966 14,037,835 Public works Transportation and development Community services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 12,359,183 3,303,895 8,338,156 24,529,838 (1) - - - - 1,950,792 1,713,889 1,988,832 2,272,309 3,323,489 1,488,369 1,041,858 2,167,327 29,223,045 22,107,766 13,880,993 12,751,519 68,604,512 62,878,301 55,761,459 65,722,227 Business-type activities: Charges for services: Water 34,895,930 36,148,220 36,860,006 38,112,680 Wastewater 19,253,061 19,849,892 20,541,547 20,499,458 Solid waste 9,290,021 9,850,919 9,787,298 12,218,720 832,232 896,968 931,547 1,005,728 684,758 1,744,088 631,494 648,766 6,165,984 6,655,089 6,839,056 6,634,435 Airport Community services - housing authority Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues 29,607,826 34,348,267 35,817,247 23,547,210 100,729,812 109,493,443 111,408,195 102,666,997 $ 169,334,324 $ 172,371,744 $ 167,169,654 $ 168,389,224 $ (70,804,519) $ (90,107,124) $ (92,191,888) $ (111,179,425) $ 18,742,440 (52,062,079) $ 24,302,065 (65,805,059) $ 24,938,991 (67,252,897) $ 22,156,459 (89,022,966) Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense (1) System development fees were reclassed to charges for services under program revenues. (2) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 134 Schedule 2b Fiscal Year 2007 $ 2008 12,793,179 $ 2009 12,629,779 $ 2010 14,349,483 $ 2011 16,621,003 $ 2012 22,548,679 $ 31,381,062 4,178,941 4,317,843 4,802,272 7,110,304 5,658,628 10,405,425 5,488,535 3,581,458 3,336,188 - (2) 5,794,329 13,145,192 15,831,165 5,226,726 6,025,846 - (2) - - - - - 11,884,554 (2) 27,905,311 - 2,272,826 2,699,469 5,235,864 4,515,980 4,079,359 4,136,285 3,707,115 1,897,300 2,337,910 5,510,710 5,890,147 6,162,320 26,428,112 36,104,151 23,902,360 8,159,960 16,041,213 11,016,136 72,930,790 78,968,242 59,436,073 51,279,991 66,102,580 86,395,443 39,054,531 40,613,727 39,707,910 42,276,145 43,708,974 49,565,071 21,083,587 25,145,258 25,922,530 28,406,808 31,610,009 35,907,085 12,769,423 12,979,695 12,762,120 12,891,628 13,277,403 13,890,957 974,190 773,449 741,556 815,751 995,307 996,605 661,509 1,061,658 595,420 521,404 457,781 466,556 6,312,438 6,114,138 6,225,928 6,367,024 6,297,200 6,341,087 28,014,518 19,782,193 9,110,319 8,484,239 8,659,772 19,118,567 108,870,196 106,470,118 95,065,783 99,762,999 105,006,446 126,285,928 $ 181,800,986 $ 185,438,360 $ 154,501,856 $ 151,042,990 $ 171,109,026 $ 212,681,371 $ (128,086,484) $ (155,253,774) $ (185,293,641) $ (206,775,222) $ (185,041,319) $ (185,126,126) $ 20,217,521 (107,868,963) $ 6,216,037 (149,037,737) $ (15,801,237) (201,094,878) $ (25,079,384) (231,854,606) $ (13,473,849) (198,515,168) $ 7,863,634 (177,262,492) 135 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Governmental Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ Sales taxes Franchise taxes 17,953,164 $ 20,818,622 $ 22,743,537 $ 25,016,760 60,614,779 66,671,049 75,702,332 82,327,461 2,249,190 2,365,749 3,032,260 2,198,738 Highway user taxes - - - - Other taxes - - - - 39,559,356 37,903,674 40,050,636 45,853,506 8,105,353 15,165,191 13,878,663 2,391,875 7,862,804 261,069 695,312 362,343 10,736 - - - 34,500,000 State shared revenues System development fees Investment income (loss) (4,895,290) (1) Miscellaneous Westcor contract payment Transfers (767,922) Total governmental activities 123,079,699 - (2) 12,286,630 621,256 924,227 478,441 146,632,728 164,556,802 202,672,272 1,199,710 4,069,440 6,424,600 Business-type activities: Investment income (loss) (2,624,182) (1) Miscellaneous Transfers Total business-type activities: Total primary government 897,511 767,922 376,917 (621,256) (958,749) 955,371 232,589 (924,227) 532,354 (478,441) 3,377,802 6,478,513 $ 122,120,950 $ 147,588,099 $ 167,934,604 $ 209,150,785 $ 52,275,180 $ 56,525,604 $ 72,364,914 $ 22,796,183 $ 51,431,155 Change in Net Assets Governmental activities Business-type activities Total primary government 17,873,691 $ 25,257,436 70,148,871 $ 81,783,040 28,316,793 $ 100,681,707 28,634,972 (1) The negative income this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) System development fees were reclassed to charges for services under program revenues. 136 Schedule 2c Fiscal Year 2007 $ 2008 26,921,292 $ 2009 34,063,123 $ 38,957,986 $ 2011 40,617,269 $ 2012 36,158,574 $ 31,877,716 95,410,460 97,226,841 85,897,334 83,019,726 86,523,295 3,230,429 3,937,952 3,264,093 3,174,390 2,819,521 2,988,456 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 11,823,280 97,485,387 3,481,086 3,786,677 7,921,275 13,965,973 88,561 5,979,715 57,716,644 62,970,459 61,211,289 54,492,427 47,732,614 45,958,627 - - - - - - 17,868,181 20,823,059 10,045,274 3,487,145 1,841,244 1,221,923 1,822,070 767,221 995,606 850,191 3,071,588 1,116,832 - - - - - - 469,201 534,086 (1,542,346) 873,357 (244,702) (74,075) 223,409,492 239,966,281 220,599,795 6,876,399 5,906,545 1,043,407 (469,200) 1,792,816 (534,086) 7,450,606 7,165,275 $ 230,860,098 $ 247,131,556 $ $ 95,323,008 $ 84,712,507 $ 27,668,127 $ 2010 122,991,135 13,381,312 $ 98,093,819 213,596,959 191,278,573 2,536,237 756,641 533,313 389,446 788,478 1,542,346 1,422,790 (873,357) 946,507 244,702 1,351,829 74,075 4,867,061 1,306,074 1,724,522 1,815,350 225,466,856 $ 35,306,154 $ (10,934,176) $ 24,371,978 214,903,033 $ 6,821,737 $ (23,773,310) $ (16,951,573) 137 198,377,861 193,003,095 $ 200,193,211 6,237,254 $ 13,251,735 $ 22,930,719 (11,749,327) $ (5,512,073) 9,678,984 CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2003 General fund Reserved $ Unreserved 2004 34,328,283 $ 135,307,858 2005 50,644,739 $ 126,091,872 2006 56,325,826 $ 124,519,771 15,211,490 148,606,301 Nonspendable - - - - Restricted - - - - Assigned - - - - $ 169,636,141 $ 176,736,611 $ 180,845,597 $ 163,817,791 $ 91,320,181 $ 76,703,585 $ 99,267,829 $ 100,167,158 Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Special revenue funds 5,677,614 5,648,789 9,259,261 8,089,144 Capital projects funds - - - 253,903 Restricted - - - - Unassigned - - - - Total all other governmental funds $ 96,997,795 $ 82,352,374 (1) In FY 2011 the City implemented GASB 54, thus changing how fund balance is categorized. 138 $ 108,527,090 $ 108,510,205 Schedule 3 Fiscal Year 2007 $ 2008 12,349,638 $ 2009 28,237,521 $ 2010 30,482,311 $ 2011 62,149,646 $ 2012 - (1) 189,087,760 196,093,067 194,457,561 137,041,044 - (1) - - - - - 893,067 (1) 947,804 - - - - - 844,754 (1) 939,867 - - - - 61,733,537 (1) 102,635,587 201,437,398 $ 224,330,588 $ 224,939,872 $ 199,190,690 $ 98,872,954 162,344,312 (1) $ $ 109,777,210 $ 43,039,742 $ 97,267,450 $ 61,355,662 $ - (1) $ $ $ 69,223,074 173,746,332 $ - 14,064,542 17,752,306 18,786,740 18,103,651 - (1) 9,158,971 11,608,190 7,868,412 7,379,375 - (1) - - - - - 105,756,072 (1) 111,378,788 - - - - (12,315,197) (1) 133,000,723 $ 72,400,238 $ 123,922,602 $ 86,838,688 139 $ 93,440,875 - (12,798,348) $ 98,580,440 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2003 Taxes - local $ Taxes - intergovernmental Property taxes 2004 82,591,633 $ 2005 91,492,704 $ 2006 102,701,196 $ 109,141,434 49,850,293 50,173,867 51,677,502 60,107,031 - - - - Sales taxes - - - - Franchise fees - - - - Highway user taxes - - - - Other taxes - - - - State shared - - - - Grants and entitlements 3,983,091 4,217,697 14,100,944 9,296,423 System development fees 8,105,353 15,165,191 13,878,663 10,322,313 513,242 251,608 439,565 303,336 Special assessments License and permits Charges for current services Fines and forfeitures Rentals Contributions Investment income (loss) 7,500,437 7,262,403 5,541,215 13,386,852 15,133,670 15,475,362 3,975,613 3,517,080 4,136,342 4,231,306 93,630 18,012 19,580 8,363 - 5,980 250 500 2,170,414 6,987,824 10,699,944 2,204,555 2,667,611 1,632,785 (4,330,308) (1) Miscellaneous Total revenues 6,386,478 12,843,147 1,538,830 $ 165,551,002 $ 190,104,397 $ 219,005,550 $ 226,760,012 (1) The negative income in this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) As of fiscal year ended June 30, 2007 the City reclassed the governmental funds revenues local and intergovernmental taxes to Property, Sales, and Other taxes. 140 Schedule 4 Fiscal Year 2007 $ 2008 $ 2010 - $ 2011 - $ 2012 - (2) $ - - (2) - - - - - 26,909,841 (2) 33,844,181 38,677,156 40,259,579 36,301,709 32,329,560 95,410,460 - $ - (2) 97,485,387 97,226,841 85,897,334 83,019,726 86,523,295 3,230,429 3,937,952 3,264,093 3,174,390 2,819,521 2,988,456 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 11,823,280 3,481,086 $ 2009 3,786,677 7,921,275 13,965,973 88,561 5,979,715 57,716,644 (2) 62,970,459 61,211,289 54,492,427 47,732,614 45,958,627 7,610,807 10,553,680 18,168,904 10,377,502 14,759,620 13,826,606 11,871,969 8,111,597 4,475,029 4,768,306 6,739,920 11,724,823 309,386 426,428 863,747 663,209 673,064 678,027 6,728,309 3,894,368 2,667,720 2,758,392 3,208,944 6,955,605 18,216,653 17,254,859 19,492,740 19,420,434 18,002,168 19,938,566 4,058,090 4,342,621 4,912,159 5,336,294 4,697,317 4,700,430 89,875 94,575 138,667 101,322 387,952 455,842 50,000 50,000 50,000 50,000 100,000 100,000 15,589,318 18,334,581 8,825,695 3,171,308 1,635,258 1,034,895 1,830,328 1,255,681 1,661,772 1,913,571 4,593,104 1,392,691 269,593,324 $ 281,941,363 $ 272,076,864 $ 141 256,588,914 $ 241,550,925 $ 257,372,510 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2003 General government $ Public safety 2004 29,448,025 $ 53,885,322 Community development Public works Transportation and development 2005 31,024,154 $ 58,407,246 2006 41,135,736 $ 57,630,321 33,729,455 64,090,649 7,061,116 7,449,114 7,438,317 8,740,380 19,096,782 23,028,537 38,421,485 32,555,171 - - - - Community services 20,310,994 21,048,659 20,893,626 22,738,420 Capital improvements 33,211,184 36,794,139 33,828,009 49,884,875 Principal retirement 6,614,500 8,689,500 8,329,500 17,122,071 Interest and fiscal charges 8,515,445 9,641,321 9,180,338 10,465,983 100,000 - 174,917 135,437 Debt service: Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 178,243,368 11.1% $ 196,082,670 12.4% $ 217,032,249 11.1% (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 142 $ 239,462,441 15.9% Schedule 5 Fiscal Year 2007 $ 2008 38,124,478 $ 75,800,634 $ 2009 51,261,849 $ 78,306,604 2010 40,503,113 $ 2011 44,663,091 84,493,816 $ 85,390,303 2012 43,636,784 $ 84,007,752 48,894,811 82,820,106 8,989,308 11,593,642 10,509,467 11,614,214 - (1) - 22,987,692 19,306,381 19,283,643 17,664,633 - (1) - - - - - 22,126,233 (1) 25,532,739 25,714,032 28,830,926 29,916,002 30,078,856 22,836,317 23,255,568 75,524,840 104,836,442 124,680,957 106,366,737 67,299,941 29,787,069 12,374,500 16,659,500 15,275,000 17,260,000 15,090,000 15,970,000 10,669,877 14,437,346 13,059,295 13,646,479 12,901,616 12,550,323 189,840 179,201 961,100 183,969 278,512 - 270,375,201 12.1% $ 325,411,891 14.1% $ 338,682,393 $ 326,868,282 12.5% 13.3% 143 $ 268,177,155 13.3% $ 238,810,616 15.7% CITY OF CHANDLER, ARIZONA OTHER FINANCING SOURCES AND USES AND NET CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2003 2004 2005 2006 Other Financing Sources (Uses) Bond premium $ Face amount of bonds issued Proceeds from sale of capital assets Payment to escrow agent Westcor contract payment Transfers in Transfers out Total other financing sources and (uses) Net change in fund balances $ 1,026,142 $ - 45,850,000 - 91,245 680,019 $ 852,671 $ 515,129 35,720,000 30,905,000 264,352 205,936 (20,488,542) - (11,228,422) - - - - 34,500,000 32,480,447 26,072,155 33,226,080 37,204,132 (37,723,314) (28,318,852) (35,170,013) (39,584,767) 21,235,978 (1,566,678) 23,664,668 63,745,430 8,543,612 144 $ (7,544,951) $ 25,637,969 $ (17,956,999) Schedule 6 Fiscal Year 2007 $ $ 2008 1,975,876 $ 2009 165,431 $ 2010 2,348,878 88,405,000 7,370,000 120,513,000 173,742 $ 2011 290,569 $ 10,450,000 1,047,424 $ - 20,285,000 - 108,929 89,007 280,969 219,793 (24,335,292) - - (10,556,600) (10,816,839) - - - - - - - 31,525,563 38,442,603 40,593,319 46,309,016 41,605,646 20,576,188 (34,246,951) (41,108,342) (44,937,903) (39,144,322) (56,040,439) (22,685,504) 63,497,938 5,150,661 118,737,087 7,446,272 (3,810,279) (2,020,309) 62,716,055 $ (38,319,867) $ 52,131,648 97,609 2012 $ 145 (62,833,096) $ (30,436,509) $ 16,541,585 CITY OF CHANDLER, ARIZONA TAXABLE REVENUE BY CATEGORY LAST TEN FISCAL YEARS Fiscal Year 2003 2004 2005 2006 2007 Amusements Contracting General Retail Hotel/Motel Miscellaneous Related Revenue 1 Publishing Rentals - Personal Property Rentals - Real Property Restaurant/Bar Telecommunications Use Tax Utilities $ 410,039 11,467,704 22,261,109 1,212,328 2,201,668 669,702 2,008,711 5,207,175 4,482,235 3,124,021 634,029 6,648,449 $ 477,089 13,008,527 25,638,223 1,309,463 1,583,458 711,215 1,994,513 5,454,033 5,015,335 3,006,992 750,291 7,448,823 $ 499,388 14,966,943 28,835,490 1,508,509 3,156,782 754,016 1,807,806 6,074,236 5,618,535 3,336,576 1,132,268 7,929,178 $ 611,352 16,580,509 38,501,000 1,716,055 1,898,671 699,456 1,743,393 7,141,065 6,994,533 3,603,977 989,767 8,910,538 $ 679,666 15,665,738 41,719,797 1,938,442 2,765,527 723,532 1,935,981 7,883,794 7,655,093 3,709,781 1,044,225 9,688,886 Total Sales and Use Taxes $ 60,327,170 $ 66,397,962 $ 75,619,727 $ 89,390,316 $ 95,410,462 City Direct Sales Tax Rate 2 1.73% 1.74% 1.70% 1.72% Source: Tax & License Division 1 Includes license application fees, annual license fees, audit assessments, penalties, and interest. 2 The direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. 146 1.72% Schedule 7 Fiscal Year 2008 2009 2010 2011 2012 $ 660,985 15,519,590 41,253,934 2,103,714 3,329,891 492,770 2,177,125 8,449,059 7,908,883 3,978,715 950,808 10,401,302 $ 623,159 9,352,480 36,851,140 1,672,893 2,774,033 389,046 2,474,464 8,520,878 7,267,718 4,057,982 930,636 10,982,905 $ 602,027 6,573,348 36,560,075 1,611,912 2,911,821 382,080 2,389,241 8,921,788 7,436,900 3,974,448 869,092 10,786,994 $ 673,666 6,380,957 38,741,270 1,973,790 2,551,354 351,250 2,462,219 9,479,850 7,971,183 3,524,076 1,000,342 11,413,338 $ 714,641 10,869,566 42,844,871 2,255,786 2,334,179 352,550 2,606,371 10,025,726 8,670,199 3,628,007 1,054,968 12,128,475 $ 97,226,776 $ 85,897,334 $ 83,019,726 $ 86,523,295 $ 97,485,337 1.72% 1.75% 1.75% 1.77% 147 1.76% CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING SALES AND USE TAX RATES LAST TEN FISCAL YEARS Schedule 8 Overlapping Rates City Direct Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Tax Rate 1.73% 1.74% 1.70% 1.72% 1.72% 1.72% 1.75% 1.75% 1.77% 1.76% 1 Maricopa County Tax Rate 0.68% 0.68% 0.67% 0.68% 0.68% 0.68% 0.67% 0.67% 0.67% 0.68% 2 State of Arizona Tourism & Sports Authority Tax Rate 3 Tax Rate 4 5.10% 5.13% 5.13% 5.14% 5.12% 5.09% 5.02% 5.05% 5.85% 6.00% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% Source: Tax & License Division 1 The City's direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. City tax rates were last increased effective 5/01/1994. 2 The overlapping County tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 0.5% to 0.77%. No rate changes in the past ten fiscal years. 3 The overlapping State tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 6.5% to 6.6%. State tax rate increases during the past ten fiscal years: 1.0% effective 6/01/2010 - 5/31/2013. 4 The Tourism & Sports Authority (TSA) was authorized by Maricopa County voters on November 7, 2000. An additional tax rate of 1.0% is to be levied from March 1, 2001 through February 28, 2031. The only category the overlapping tax rate applies to is the Hotel/Motel category. The overlapping tax rate is calculated using a weighted average of the actual revenues the City collected for this category. 148 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2012 Taxpayer Business Type Taxpayer A Taxpayer B Taxpayer C Taxpayer D Taxpayer E Taxpayer F Taxpayer G Taxpayer H Taxpayer I Taxpayer J Taxpayer K Taxpayer L Taxpayer M Utility Construction Department Store Grocery Store Department Store Home Improvement Telecommunications Utility Department Store Department Store Grocery Store Vehicle Dealer Vehicle Dealer Sales and Use Tax Payments $ $ 9,698,254 3,823,373 2,783,551 2,259,487 1,675,623 1,307,482 1,306,045 1,272,878 1,255,294 1,157,789 Fiscal Year 2003 Rank Percentage of Total Sales and Use Tax Payments 1 2 3 4 5 6 7 8 9 10 9.95% 3.92% 2.86% 2.32% 1.72% 1.34% 1.34% 1.31% 1.29% 1.19% 26,539,776 27.22% Rank Percentage of Total Sales and Use Tax Payments 4,721,043 1 7.83% 888,475 1,323,160 9 3 1.47% 2.19% 1,151,524 4 1.91% 957,104 850,411 926,768 1,356,257 1,092,185 977,929 7 10 8 2 5 6 1.59% 1.41% Sales and Use Tax Payments $ $ 14,244,856 2.25% 1.81% 1.62% 23.61% Source: Tax & License Division Notes: The identities of the ten largest revenue payers are prohibited from disclosure per State statute. Alternatively, the business type of the top ten taxpayers for each period has been disclosed along with the appropriate data. 149 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Fiscal Year General Obligation Bonds Revenue Bonds 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 106,970,000 102,480,000 120,805,000 140,130,000 197,075,000 187,645,000 294,588,000 282,888,000 279,968,000 268,148,000 48,725,000 46,700,000 45,015,000 42,920,000 40,480,000 37,655,000 34,690,000 31,800,000 28,620,000 25,745,000 Special Assessment Bonds Accrued Interest - Capital Appreciation Bonds 1,547,500 1,443,000 1,333,500 1,219,000 1,099,500 8,345,000 7,820,000 7,315,000 6,190,000 5,780,000 29,147,730 30,928,390 32,426,569 33,620,916 34,505,099 35,000,654 - Business-type Activities Excise Tax Revenue Obligations Fiscal Year General Obligation Bonds Revenue Bonds Certificates of Participation 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 25,395,000 23,705,000 21,270,000 19,415,000 62,410,000 60,395,000 188,612,000 185,032,000 179,747,000 170,987,000 122,735,000 116,140,000 114,800,000 108,870,000 101,095,000 93,000,000 76,415,000 67,580,000 60,280,000 52,670,000 11,035,000 10,210,000 9,335,000 - 34,040,000 34,040,000 48,540,000 47,440,000 93,706 75,783 56,942 37,135 16,304 - Net General Bonded Debt Outstanding Estimated Actual Taxable Value of Property Percentage of Estimated Actual Taxable Value of Property 132,365,000 126,185,000 142,075,000 159,545,000 259,485,000 248,040,000 483,200,000 467,920,000 441,393,462 419,876,316 8,981,174,789 10,999,084,221 12,256,368,621 13,936,132,832 15,180,800,679 26,166,428,389 30,523,597,506 31,011,422,761 22,396,334,191 21,102,582,630 Fiscal Year General Bonded Debt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 132,365,000 126,185,000 142,075,000 159,545,000 259,485,000 248,040,000 483,200,000 467,920,000 459,715,000 439,135,000 Less Amount Available in Debt Service Fund 18,321,538 19,258,684 Intergovernmental Loans 1.47% 1.15% 1.16% 1.14% 1.71% 0.95% 1.58% 1.51% 1.97% 1.99% Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Population and personal income data can be found in Schedule 14. 2 Includes general bonded debt, other governmental activities debt and business-type activities debt. 150 Total Primary Government 2 345,648,936 331,682,173 345,042,011 346,212,051 436,680,903 422,040,654 636,165,000 608,655,000 603,345,000 570,770,000 Percentage of Personal Income 1 6.51% 5.71% 5.82% 5.45% 6.81% 5.81% 8.59% 8.67% 9.23% 7.85% Per Capita 1 1,631 1,476 1,457 1,431 1,767 1,684 2,524 2,391 2,537 2,385 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2012 Schedule 11 Governmental Unit Debt Outstanding Estimated Percentage Applicable Estimated Share of Overlapping Debt Debt repaid with property taxes State of Arizona Maricopa County Maricopa County Community College District EastValley Institute of Technology Chandler Unified School District No. 80 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 Kyrene Elementary School District No. 28 Tempe Union High School District No. 213 None None $ 671,250,000 None 210,930,000 244,095,000 170,450,000 132,155,000 62,560,000 4.00% 6.37 6.37 14.71 76.51 4.55 3.24 29.75 16.80 None None $ Subtotal, overlapping debt 42,751,624 None 161,391,000 11,103,956 5,522,465 39,310,231 10,509,074 270,588,350 City direct debt 268,148,000 Total direct and overlapping debt 100.00 268,148,000 $ 538,736,350 Source: Piper Jaffray & Co. Note: The applicable percentage of overlap for each type of debt was computed on the ratio of secondary assessed valuation as calculated for fiscal year 2011/12 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 151 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2003 2004 2005 2006 6% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 98,302,556 $ 45,475,000 $ 52,827,556 108,344,928 $ 37,575,000 $ 70,769,928 118,749,422 $ 61,660,000 $ 57,089,422 116,449,443 74,720,000 $ 41,729,443 Total net debt applicable to the limit as a percentage of the debt limit 46% 35% 52% 64% 20% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 327,675,186 $ 80,710,000 $ 246,965,186 361,149,760 $ 72,120,000 $ 289,029,760 395,831,408 $ 80,415,000 $ 315,416,408 388,164,810 84,825,000 $ 303,339,810 Total net debt applicable to the limit as a percentage of the debt limit 25% 20% 20% Source: Peacock, Hislop, Staley & Given, Inc. for 1997 - 2001, Piper Jaffray, Inc. for 2002-2012. (1) In November 2006, Arizona Revised Statutes were amended to move public safety and emergency services, streets and transportation from the 6% category to the 20% category. Notes: Under Arizona law, cities may issue general obligation bonds for purposes of water, wastewater, artificial light, open space preserves, parks, public safety and emergency services, streets, transportation, playgrounds and recreational facilities up to an amount not to exceed 20% of secondary assessed valuation. Cities may issue general obligation bonds for any other purpose up to an amount not to exceed 6% of secondary assessed valuation. 152 22% Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2012 Net secondary assessed valuation as of June 30, 2012 $ Debt limit (6% of assessed value) 2,255,179,301 135,310,758 Debt applicable to limit: 6% general obligation bonds 11,840,000 Legal 6% debt margin $ 123,470,758 Debt limit (20% of assessed value) $ 451,035,860 Debt applicable to limit: 20% general obligation bonds 427,295,000 Legal 20% debt margin $ 23,740,860 Fiscal Year 2007 $ 2008 179,351,393 $ 66,460,000 $ $ $ (1) 597,837,975 $ $ 691,035,056 $ (1) 450,790,056 35% $ 199,550,297 $ 701,614,322 $ 229,348,322 $ 200,990,297 $ 701,614,322 $ 67% 243,188,322 65% 153 $ 134,756,597 $ 493,725,323 $ 47,371,323 90% 123,470,758 9% $ 446,354,000 $ 135,310,758 11,840,000 9% 458,426,000 $ 148,117,597 2012 13,361,000 5% 472,266,000 $ 210,484,297 2011 9,494,000 5% 240,245,000 404,812,975 32% 199,515,517 210,484,297 2010 10,934,000 4% 193,025,000 $ $ 7,795,000 112,891,393 37% 207,310,517 2009 451,035,860 427,295,000 $ 23,740,860 95% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Highway User Taxes 11,443,762 12,225,100 12,852,329 13,870,790 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 11,823,280 Less: Operating Expenses 7,453,094 7,125,374 8,302,871 7,731,437 8,527,904 8,299,229 10,599,041 9,018,598 9,336,554 7,895,663 Net Available Revenue 3,990,668 5,099,726 4,549,458 6,139,353 7,962,225 7,557,634 3,250,243 4,097,883 3,951,324 3,927,617 Debt Service Principal Interest 2,025,000 2,110,000 2,095,000 2,440,000 2,825,000 2,965,000 3,050,000 3,180,000 2,875,000 3,700,000 2,021,322 2,255,270 1,863,289 1,870,433 1,735,306 1,628,797 1,572,829 1,198,194 1,176,009 936,975 Coverage 0.99 1.17 1.15 1.42 1.75 1.65 0.70 0.94 0.98 0.85 Water Revenue Bonds Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Utility Service Charges 34,895,930 36,148,220 36,860,006 38,112,680 39,054,531 40,613,727 39,707,910 42,276,145 43,708,974 49,556,831 Less: Operating Expenses 21,435,429 24,536,695 25,371,528 22,633,168 23,844,731 32,812,618 31,084,108 31,137,157 26,834,274 26,351,735 Net Available Revenue 13,460,501 11,611,525 11,488,478 15,479,512 15,209,800 7,801,109 8,623,802 11,138,988 16,874,700 23,205,096 Debt Service Principal Interest 7,255,900 3,853,756 4,282,606 4,275,097 4,447,321 4,643,032 4,854,151 5,471,256 6,007,332 6,498,090 2,965,187 3,232,596 2,798,390 3,181,666 2,881,971 2,700,799 2,419,526 2,205,623 1,875,330 1,641,612 Coverage 1.32 1.64 1.62 2.08 2.08 1.06 1.19 1.45 2.14 2.85 Excise Tax Revenue Obligations Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Excise Tax Collections 148,768,677 141,025,083 136,164,353 148,885,867 Less: Operating Expenses - Net Available Revenue 148,768,677 141,025,083 136,164,353 148,885,867 Debt Service Principal 500,000 1,100,000 1,745,000 Interest 462,667 1,133,063 1,118,063 1,703,358 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. See Note 6 for breakdown of revenue pledged for Excise Tax Revenue Obligations first pledged February 4, 2009. 154 Coverage 0.00 0.00 0.00 0.00 0.00 0.00 321.55 86.36 61.39 43.18 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Utility Service Charges 19,253,061 19,849,892 20,541,547 20,499,458 21,083,587 25,145,258 25,922,530 28,406,808 31,610,009 35,907,085 Less: Operating Expenses 11,701,023 11,845,344 12,802,253 14,217,466 14,349,752 17,923,089 17,663,644 15,821,939 15,759,431 16,752,467 Net Available Revenue 7,552,038 8,004,548 7,739,294 6,281,992 6,733,835 7,222,169 8,258,886 12,584,869 15,850,578 19,154,618 Debt Service Principal Interest 10,714,100 1,296,244 3,207,394 3,499,903 3,647,679 3,786,968 3,915,849 3,678,744 1,602,668 1,431,910 2,295,089 1,713,875 1,592,081 1,828,920 1,691,169 1,554,504 1,341,752 1,104,530 947,148 874,363 Coverage 0.58 2.66 1.61 1.18 1.26 1.35 1.57 2.63 6.22 8.31 Solid Waste Revenue Bonds Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Utility Service Charges 9,257,218 9,825,572 9,773,505 - Less: Operating Expenses 13,627,896 9,035,882 8,703,517 - Net Available Revenue (4,370,678) 789,690 1,069,988 - Debt Service Principal Interest 125,000 125,000 - 206,969 152,469 71,844 - Coverage -13.17 2.85 14.89 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (1) (2) Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. (1) Expenses for FY 03 include $5,323,714 in landfill closure and post closure costs. The increase in comparable amounts is due to an increase in costs related to a change in the planned usage of the property following closure. (2) All debt was defeased June 29, 2005. 155 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13c Municipal Property Corporation Certificates of Participation Fiscal Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Water & Sewer Utility Service Charges 54,148,991 55,998,112 57,401,553 - Less: Operating Expenses 33,136,452 36,382,039 38,173,781 - Debt Service Net Available Revenue 21,012,539 19,616,073 19,227,772 - Principal 775,000 825,000 875,000 - (1) All remaining debt was defeased in 2006. Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. 156 Interest 867,295 813,045 755,295 - Coverage 12.79 11.98 11.79 (1) - CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Schedule 14 Total Fiscal Year Population (1) Per Capita Personal Median Unemployment Personal Income (2) Age (2) Rate (3) Income (4) 2003 211,984 5,310,835,152 31.2 4.2% 25,053 2004 224,644 5,805,699,536 31.2 3.1% 25,844 2005 236,877 5,928,557,556 30.8 3.3% 25,028 2006 241,910 6,351,347,050 31.6 3.0% 26,255 2007 247,097 6,412,414,247 31.1 2.5% 25,951 2008 250,619 7,269,204,095 31.2 3.2% 29,005 2009 252,056 7,409,186,120 32.8 6.2% 29,395 2010 254,602 7,016,321,916 32.5 6.9% 27,558 2011 237,776 6,536,224,464 31.7 6.6% 27,489 2012 239,335 7,272,911,980 31.7 6.1% 30,388 Sources: 1 City's Planning Division 2 3 City's Economic Development Division Arizona Office of Employment and Population Statistics 4 SitesUSA Notes: Total personal income is composed of earned income, dividends, interest and rents, and government transfer payments. Per capita personal income is calculated by dividing total personal income by population; amounts may not be exact due to rounding. 157 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2012 Percentage Employer Employees Rank of Total City Employment Intel Corporation 10,300 1 8.32% Bank of America 3,600 2 2.91% Chandler Unified School District 3,000 3 2.42% Wells Fargo Ocotillo Corp. Campus 2,600 4 2.10% Chandler Regional Hospital 2,100 5 1.70% Ebay/Paypal 2,000 6 1.62% Verizon Wireless 1,695 7 1.37% City of Chandler 1,567 8 1.27% Microchip Technology 1,540 9 1.24% Freescale Semiconductors 1,450 10 1.17% Bank First - - - Motorola - - - MDT Outdoor Products, Inc. - - - JH Kelly - - - Speedfam/IPEC - - - Total 29,852 Source: City's Economic Development Division and Arizona Office of Employment and Population Statistics 158 24.12% Schedule 15 2003 Percentage Employees Rank of Total City Employment 10,000 1 - - - 2,400 3 2.07% - - - 1,100 6 0.95% - - - - - - 1,523 4 1.31% 950 8 0.82% - - - 795 9 0.68% 2,600 2 2.24% 1,000 7 0.86% 1,500 5 1.29% 675 10 0.58% 22,543 8.61% 19.41% 159 CITY OF CHANDLER, ARIZONA EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2003 2004 2005 2006 4 6 69 17 41 25 97 4 6 71 17 41 23 99 5 6 70 18 40 24 96 5 5 74 18 39 25 95 Full Time Equivalent Personnel Mayor and council City clerk City manager Communications/public affairs City magistrate Law Management services (1) (1) Total General Government 259 261 259 261 Total Transportation and Development # 117 117 111 108 Total Community Services 178 183 178 182 Airport Engineering, development and Real estate Total Public Works 2 53 5 3 53 6 3 48 6 3 55 6 72 132 78 140 74 131 71 135 Police Fire Total Public Safety 440 181 621 438 179 617 436 195 631 460 207 667 5 90 39 24 158 5 85 29 20 139 5 85 41 18 149 5 85 41 21 152 1,465 1,457 1,459 1,505 Public works administration Streets Municipal utilities administration Water Wastewater Solid waste Total Municipal Utilities Total Primary Government Source: City's Human Resources Division (1) The significant change in this year is a result of the Information Technology Division moving from the Management Services Department to the City Manager Department. (2) The significant change in this year is a result of the Neighborhood Programs moving from the Mayor and Council to the City Manager Department. The Code Enforcement, Tourism, and Real Estate Services Downtown are new to the City Manager Department. (3) The significant change in this year is a result of the City offering a retirement incentive, voluntary separation packages, and movement between departments to retain employees. (4) The significant change in this year is the result of the combination of Planning and Development to Transportation and Development. Notes: The calculation of full time equivalent personnel includes full time and part time regular employees as of the last pay period of the fiscal year. 160 Schedule 16 Fiscal Year 2007 2008 2009 2010 2011 2012 5 5 5 5 5 6 6 79 17 6 104 18 6 103 18 6 96 15 5 122 12 4 124 14 44 27 101 48 29 106 43 28 105 41 27 95 40 27 85 38 30 72 279 316 308 285 296 288 111 114 103 80 (3) 172 219 243 207 226 (3) 229 3 59 3 64 3 57 3 50 - (4) - (4) - 6 6 6 6 - 76 144 85 158 80 146 74 133 - (4) - (4) - 487 219 706 496 228 724 483 223 706 478 219 697 467 218 685 467 238 705 5 5 5 6 5 5 85 42 21 153 88 43 20 156 86 41 18 150 80 42 20 148 88 42 20 155 89 42 19 155 1,612 1,711 1,620 1,569 1,537 1,549 (2) 161 (3) (4) 170 231 - CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program General Government Privilege tax licenses Meeting notices posted City Council actions and agenda items prepared Grant awards received Inventory turnover ratio Planning & Development Building permits issued Community Services Library circulation Center for the Arts events & exhibits Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations Municipal Utilities Water connections Operating wells Daily pumping capacity - wells (gallons) Daily pumping capacity - plants (gallons) Sewer connections Sanitary sewer (miles) Solid waste customers served Solid waste refuse collected (tons) Solid waste refuse recycled (tons) 2003 2004 2005 2006 14,843 501 947 46 3.72 15,713 504 996 47 3.77 16,663 534 1,542 49 3.46 20,464 505 1,292 57 2.78 9,723 11,688 8,951 7,909 1,700,786 535 268,148,000 1,817,536 1,010 1,967,446 1,027 268,148,000 2,004,000 1,024 54.1 126,710 13,614 3,705 49 48.1 113,501 14,560 2,236 33 270,116,473 40.7 136,942 15,310 3,767 58 64,862 21 55,800,000 45,000,000 61,911 755 55,526 125,158 20,417 68,757 21 55,800,000 45,000,000 62,107 780 59,107 134,571 21,678 70,375 23 57,400,000 45,000,000 66,750 796 62,591 117,813 23,379 Source: City of Chandler Departments (1) The 2010 Center for the Arts events & exhibits is the result of renovations within the Center for the Arts (2) The 2010 increase in Daily pumping capacity-plants (gallons) is the result of the completion of the San Tan Water Treatment Plant and the Chandler Water Treatment Plant 162 39.9 151,941 16,662 4,375 73 73,822 23 59,900,000 45,000,000 68,515 814 65,173 99,547 25,017 Schedule 17 Fiscal Year 2007 2008 2009 2010 2011 2012 20,652 721 1,292 57 3.32 22,980 470 1,188 61 3.94 23,460 479 1,055 66 2.5 22,715 481 977 40 2.1 23,821 506 848 43 2.2 25,726 599 908 26 2.1 6,474 5,750 3,800 3,883 2,330 5,462 2,082,000 1,024 2,349,232 989 2,506,602 977 2,494,009 1,050 2,489,741 1,000 38.0 160,355 16,682 4,878 74 34.9 159,535 16,709 3,585 57 35.2 157,039 18,474 3,891 49 34.4 141,279 17,892 4,424 46 33.2 137,170 17,950 5,188 34 74,406 23 58,400,000 45,000,000 70,169 828 66,451 97,646 25,877 74,841 26 65,100,000 60,000,000 70,863 837 67,433 94,633 25,555 77,596 29 66,020,000 60,000,000 71,880 857 67,902 89,408 24,596 77,408 30 64,460,000 72,000,000 73,118 866 69,480 88,466 20,832 77,626 28 61,920,000 72,000,000 73,712 868 70,179 85,257 21,096 2,592,243 335 (1) 31.8 146,508 16,904 3,208 43 76,894 31 70,700,000 72,000,000 (2) 73,042 862 68,362 85,160 22,245 163 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program Community Services Developed parks Developed acres Undeveloped acres Swimming pools Other recreational facilities (lighted fields) Library bookstock Public Works Total miles streets (center line) Street lights Signalized intersections Based aircraft Public Safety Police stations Fire stations Municipal Utilities Water mains (miles) Fire hydrants Average daily treament (mgd) 2003 2004 2005 2006 49 796 405 51 870 333 51 874 349 53 889 535 (1) 5 5 5 5 32 405,986 32 422,841 32 450,068 33 469,000 762 22,154 268,148,000 411 768 23,140 153 433 775 24,218 268,148,000 434 268,172,993 785 25,100 189 457 1 7 1 8 1 9 2 9 1,000 9,393 19 1,021 10,368 21 1,051 10,799 21 1,063 10,952 22 Source: City of Chandler Departments (1) The 2006 increase in Undeveloped Acres is due to the purchasing of more land at the following sites: Tumbleweed, Landfill and Veteran Oasis. (2) The 2010 decrease in Fire Hydrants is due to the City adjusting the count to include only hydrants owned and maintained by the City. 164 Schedule 18 Fiscal Year 2007 2008 2009 2010 2011 2012 54 959 468 58 1,099 455 59 1,133 407 61 1,198 336 61 1,192 342 61 1,192 336 5 5 6 6 6 6 34 34 483,128 34 469,023 34 472,266 34 446,675 34 429,604 555,924 812 25,307 192 499 822 26,326 200 442 832 26,500 205 449 829 26,600 208 449 829 26,600 208 437 829 26,600 212 399 2 10 3 10 3 10 3 10 3 10 3 10 1,080 12,291 24 1,117 13,033 24 1,189 13,750 24 1,223 12,925 24 1,227 10,877 24 1,194 12,318 (2) 22 165 Phone (480) 782-2333 www.chandleraz.gov Mailing Address Mail Stop 702 P.O. Box 4008 Chandler, Arizona 85244-4008 Management Services Accounting Division, 4th Floor 175 South Arizona Avenue Chandler, Arizona 85225