CITY OF CHANDLER COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2013 V O L U N T E E R S 2013 Accounting Book.indd 1 9/3/13 11:01 AM CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 Jay Tibshraeny, Mayor Jack Sellers, Vice-Mayor Trinity Donovan, Councilmember Rick Heumann, Councilmember Nora Ellen, Councilmember Kevin Hartke, Councilmember Jeff Weninger, Councilmember Executive Staff Rich Dlugas, City Manager Patrick McDermott, Assistant City Manager Marsha Reed, 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, 2013 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 Position ....................................................................................................................... 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 Position ............................................................... 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 Position - Proprietary Funds .................................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds.............................................................................................................................. 34 Statement of Cash Flows - Proprietary Funds ..................................................................................... 36 Statement of Fiduciary Net Position - Fiduciary Funds ..................................................................... 38 Statement of Changes in Fiduciary Net Position - 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, 2013 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Non-Major Governmental Funds Combining Balance Sheet ....................................................................................................................... 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 90 Budgetary Comparison Schedules: Highway User ......................................................................................................................................... 93 Local Transportation Assistance .......................................................................................................... 94 Grants Special Revenue ......................................................................................................................... 95 Community Development .................................................................................................................... 96 Police Confiscated Property .................................................................................................................. 97 Parks and Recreation ............................................................................................................................. 98 Library...................................................................................................................................................... 99 General Government ........................................................................................................................... 100 Public Buildings .................................................................................................................................... 101 Grants Capital Projects ........................................................................................................................ 102 Community Services ............................................................................................................................ 103 Public Safety Buildings and Improvements ..................................................................................... 104 Vehicle and Capital Equipment ......................................................................................................... 105 Special Assessments ........................................................................................................................... 106 Technology Replacement .................................................................................................................... 107 Municipal Arts ...................................................................................................................................... 108 Non-Major Proprietary Funds: Combining Statement of Net Position ................................................................................................ 112 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ............................................................................................................................... 114 Combining Statement of Cash Flows .................................................................................................. 116 Fiduciary Funds: Statement of Changes in Assets and Liabilities - Agency Fund .................................................... 118 Other Supplemental Information: HUD Programs: Combining Statement of Net Position - All HUD Programs ......................................................... 122 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - All HUD Programs ............................................................................... 124 ii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS, continued STATISTICAL SECTION Financial Trends Schedule 1 Net Position by Component ............................................................................................. 128 Schedule 2a Changes in Net Position .................................................................................................. 130 Schedule 2b Changes in Net Position.................................................................................................. 132 Schedule 2c Changes in Net Position .................................................................................................. 134 Schedule 3 Fund Balances of Governmental Funds .......................................................................... 136 Schedule 4 Governmental Funds Revenues ....................................................................................... 138 Schedule 5 Governmental Funds Expenditures and Debt Service Ratio ....................................... 140 Schedule 6 Other Financial Sources and Uses and Net Changes in Fund Balance, Governmental Funds .......................................................................................................................... 142 Revenue Capacity Schedule 7 Taxable Revenue by Category .......................................................................................... 144 Schedule 8 Direct and Overlapping Sales and Use Tax Rates ......................................................... 146 Schedule 9 Principal Sales and Use Taxpayers .................................................................................. 147 Debt Capacity Schedule 10 Ratios of Outstanding Debt ............................................................................................ 148 Schedule 11 Direct and Overlapping Governmental Activities Debt............................................. 149 Schedule 12 Legal Debt Margin Information ..................................................................................... 150 Schedule 13a Pledged-Revenue Coverage ......................................................................................... 152 Schedule 13b Pledged-Revenue Coverage ......................................................................................... 153 Schedule 13c Pledged-Revenue Coverage.......................................................................................... 154 Demographic and Economic Information Schedule 14 Demographic and Economic Statistics .......................................................................... 155 Schedule 15 Principal Employers ........................................................................................................ 156 Operating Information Schedule 16 Employees by Function ................................................................................................... 158 Schedule 17 Operating Indicators by Function/Program ................................................................ 160 Schedule 18 Capital Asset Statistics by Function/Program............................................................. 162 iii The introductory section includes the letter of transmittal, an organizational chart, and the Certificate of Achievement for Excellence in Financial Reporting. Introductory Section INTRODUCTORY SECTION For Our City – a collaboration of Chandler’s municipal, business, non-profit and faith-based leaders – serves as a catalyst for constructive change in the community by encouraging resource sharing and by matching volunteers with service projects that best meet the needs of residents. V O L U N T E E R S 2013 Accounting Book.indd 2 9/3/13 11:01 AM Introductory Section 2013 Accounting Book.indd 3 9/3/13 11:01 AM The City boasts a strong labor market serving the high technology field’s demand for skilled workers. Resident population has a median age of 34.9 years and a median household income of $67,539. In addition, approximately 72 percent of the population has a college degree or some college education. 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 6.0 percent for fiscal year 2012-13 compared with 7.3 percent for Maricopa County and 8.7% for the State of Arizona. The City’s sales tax revenues, which comprise nearly 50 percent of its general fund, increased by 4.3 percent for 2012-13 from the prior year actuals. The City continues to recover from the effects of the recession that was felt nationally and globally and has benefitted from one-time revenues created by a large industrial expansion and new developments. With only slow and steady operating revenue growth anticipated, managing costs of services and maintaining existing infrastructure continues. Consistently applying sound financial practices and achieving notable economic development successes have helped the City recover from the recession while maintaining its AAA General Obligation Bond credit rating. 2012/2013 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 4,800 base industry jobs including General Motors, Garmin, Nationstar Mortgage, Phacil, Intel’s Research & Development facility, Infusionsoft, and St. Clair Technologies;  Completed Phase II of Innovations Technology Incubator, and Chandler was named 4th Best Place for startups in the nation;  Implemented a Local Business Consideration policy establishing procurement evaluation guidelines that support Chandler businesses;  Received Media Category Award for the Chandler Aquatics-Chandler Awareness/Water Safety public service announcement video campaign;  Completed installation of solar array over parking area at Tumbleweed Recreation Center;  American Heart Association awarded Chandler the “Fit Friendly Worksite” Gold Level Award for its promotion and creation of a worksite environment where Wellness is encouraged at all levels of the organization;  Implemented mobile “apps” that allow citizens to submit City service requests with photos and GPS coordinates;  Chandler earned the national designation of Playful City USA for the seventh consecutive year;  The United States Tennis Association of Central Arizona selected the Chandler Tennis Center as their 2012 Member Organization of the Year;  Successfully conducted a citywide Emergency Operations Center drill;  Recognized as one of the nation’s most transparent local governments on the Web for the fourth year in a row and received the A+ Sunny Award;  Completed a comprehensive revision of the City Code relating to the System Development Fee process as required by new state laws;  Conducted the second online budget meeting, “Budget Connect” enhancing citizen involvement in the budget process; and  Completed more than 4 major intersection and road projects, including the Chandler Blvd./Loop 101 Project. 2 Fire Drowning 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 242,000 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 2012/2013, $835,767,025). 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 Magistrate Law City Clerk City Manager Assistant City Managers Community Services Administration Park Dev. & Operations Aquatics Museum General Government Human Resources Building and Facilities Communications & Public Affairs Recreation Sports & Fitness Nature & Recreation Center for the Arts Library (Video Production, Print, Mail & Graphics, Mayor & Council Administration) IT Applications Support IT Infrastructure & Client Support IT Srvc. Delivery & Admin. Environmental Resources Wastewater Collection Lone Butte Wastewater Reverse Osmosis Water/Wastewater Operations Water Systems Maintenance San Tan Vista Water Treatment Meter Services Administration Budget Accounting Utility Services Airport Water Reclamation Wastewater Quality Ocotillo Water Reclamation Transportation Transit Services Streets Civil Plan Review Planning Land Use Planning Site Development Real Estate Development Services Building Inspections Building Plan Review Customer Service Special Projects Group (Tourism, Downtown Redevelopment, Airport) Purchasing Central Supply Tax and License Environmental Management Police Department Administration Professional Standards Property & Evidence Forensic Services Transportation & Development Administration Engineering Mapping/Standards Economic Development Management Services Municipal Utilities Administration Solid Waste Services Water Distribution Water Treatment Water Quality Neighborhood Resources (Code Enforcement, Housing & Redevelopment, Community Development) Field Operations Criminal Investigations Planning & Research Communications Records Detention Services Community Resources & Training Fire Department Administration Support Services Prevention & Preparedness Fleet Services Capital Projects Contract Management Construction Management 7 Emergency Services Operations 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 With 1,200+ acres of park land to maintain, the City’s Parks staff is very appreciative of the residents, businesses, schools, clubs and service organizations that participate in the Adopt-APark Program. Their efforts help stretch the City’s financial resources while making our parks more beautiful for everyone. V O L U N T E E R S 2013 Accounting Book.indd 4 9/3/13 11:01 AM Financial Section 2013 Accounting Book.indd 5 9/3/13 11:01 AM 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Chandler, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate 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, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 9 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, for the year ended June 30, 2013, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis 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 the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, 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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Other Financial Statements of the Financial Section and the Other Supplemental 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2013, on our consideration of City of Chandler, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Chandler, Arizona’s internal control over financial reporting and compliance. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants December 20, 2013 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, 2013 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, 2013. 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 2013 as follows:      The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $1.382 billion (net position) which represents an increase of $72.5 million from the prior year. Of this amount, $425.6 million (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors. However, $69.2 million is invested in a joint venture with the Town of Gilbert, and not available for obligations. At June 30, 2013, the City’s governmental funds reported combined ending fund balances of $266.8 million, a decrease of $5.5 million in comparison with the prior year. Approximately 57.6 percent of the total amount, $153.5 million, is available for spending at the City’s discretion (assigned or unassigned). At June 30, 2013, total fund balance for the General Fund was $169.1 million which represents a decrease of $4.7 million from the prior year, as anticipated due to payoff of a debt issue. General revenues from governmental activities accounted for $210.4 million, or 73.8 percent, of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $74.8 million or 26.2 percent of total governmental activity revenues. The City had $188.8 million of program revenues and $2.7 million in general revenues and transfers related to business-type activities. At June 30, 2013, the City’s proprietary funds reported combined total net position of $532.0 million, and total unrestricted net position of $176.9 million. A total of $126.4 million of the unrestricted net position is 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 position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Net position is categorized as capital assets less related debt, restricted by an outside third party, and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). 13 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 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 financial 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, 2013 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 position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $1.382 billion as of June 30, 2013. This reflects continued strong operations in governmental activities and increased investments in capital infrastructure within the business-type activities, including the expansion of City facilities cash funded by Intel due to the direct impact to their $5 billion expansion. A significant portion of the City’s net position (66.1 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 position (8.1 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (25.8 percent) includes $69.2 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 position, 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 a decrease of $2.4 million in unrestricted net position reported in connection with the City’s business-type activities. This was expected due to the deferral of a planned wastewater user rate increase from October 2012 to October 2013. 15 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 The following table presents a condensed statement of the City’s net position for the fiscal years ended June 30, 2013 and 2012. Governmental Activities 2013 Current assets Capital assets, net Long-term assets Total assets $ 368,930,801 821,181,806 3,181,283 1,193,293,890 Business-type Activities 2012 $ 2013 2012 367,674,769 835,419,032 3,688,802 1,206,782,603 $ 130,572,271 610,890,919 71,590,182 813,053,372 $ 137,433,284 550,165,201 75,161,058 762,759,543 Total (Primary Govt.) 2013 $ 499,503,072 1,432,072,725 74,771,465 2,006,347,262 2012 $ 505,108,053 1,385,584,233 78,849,860 1,969,542,146 Current liabilities Long-term liabilities Total liabilities 52,915,981 290,272,970 343,188,951 50,727,540 306,297,423 357,024,963 40,149,808 240,926,738 281,076,546 41,211,501 261,768,099 302,979,600 93,065,789 531,199,708 624,265,497 91,939,041 568,065,522 660,004,563 Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net position 558,279,485 112,307,412 179,518,042 850,104,939 545,926,100 44,047,942 259,783,598 849,757,640 355,015,004 176,961,822 $ 531,976,826 280,440,445 179,339,498 $ 459,779,943 913,294,489 112,307,412 356,479,864 1,382,081,765 826,366,545 44,047,942 439,123,096 $ 1,309,537,583 $ $ $ Millions $0 $500 $1,000 $1,500 Total assets $2,000 $2,500 Governmental Actvities Business-type Actvities Total liabilities Total net position 16 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 Changes in net position. The City’s total revenues for the fiscal year ended June 30, 2013 were $476.5 million. The total cost of all programs and services was $404.0 million, which results in an increase in net position of $72.5 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2013 and 2012. Governmental Business-type Activities 2013 Total Activities (Primary Govt.) 2012 2013 2012 2013 2012 61,664,262 $ 69,216,987 $ 101,398,476 $100,826,274 $ 163,062,738 $ 170,043,261 3,999,536 9,116,635 6,162,320 11,016,136 5,785,335 81,572,568 6,341,087 19,118,567 9,784,871 90,689,203 12,503,407 30,134,703 29,656,415 102,200,517 31,877,716 97,485,387 - - 29,656,415 102,200,517 31,877,716 97,485,387 2,936,533 12,929,504 2,988,456 11,823,280 - - 2,936,533 12,929,504 2,988,456 11,823,280 6,295,212 5,979,715 - - 6,295,212 5,979,715 51,347,206 2,843,417 45,958,627 1,221,923 1,180,290 389,446 51,347,206 4,023,707 45,958,627 1,611,369 Revenues: Program revenues Charges for services $ Operating grants and contributions Capital grants and contributions General revenues Property taxes Sales taxes Franchise fees Highway user taxes Other taxes State shared revenues Investment income Miscellaneous Total revenues 2,181,627 1,116,832 1,409,437 1,351,829 3,591,064 2,468,661 285,170,864 284,847,379 191,346,106 128,027,203 476,516,970 412,874,582 Expenses: General government 90,143,339 88,876,901 - - 90,143,339 88,876,901 Public safety Tansportation and development 95,974,126 55,846,316 89,141,559 52,111,019 - - 95,974,126 55,846,316 89,141,559 52,111,019 Community services Interest and fiscal charges 30,979,208 11,777,701 28,966,271 12,425,819 - - 30,979,208 11,777,701 28,966,271 12,425,819 Water - - 55,440,712 56,277,327 55,440,712 56,277,327 Wastewater Solid waste - - 40,401,849 13,974,858 38,804,360 13,756,352 40,401,849 13,974,858 38,804,360 13,756,352 Airport - - 1,960,788 1,941,752 1,960,788 1,941,752 284,720,690 271,521,569 7,473,891 119,252,098 7,642,503 118,422,294 7,473,891 403,972,788 7,642,503 389,943,863 450,174 13,325,810 72,094,008 9,604,909 72,544,182 22,930,719 102,875 74,075 - - 72,196,883 9,678,984 72,544,182 22,930,719 Housing authority Total expenses Increase (decrease) before transfers (102,875) Transfers in (out) 347,299 Increase (decrease) in net position Beginning net position Ending net position $ (74,075) 13,251,735 849,757,640 836,505,905 459,779,943 450,100,959 1,309,537,583 1,286,606,864 850,104,939 $ 849,757,640 $ 531,976,826 $459,779,943 $1,382,081,765 $ 1,309,537,583 While a small portion of the $63.6 million increase in revenues for governmental and business-type activities is due to higher consumer confidence as the economy starts to improve as reflected by higher sales taxes and state shared revenue, the majority is a result of capital contribution from Intel to expand water and wastewater infrastructure. 17 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 Revenue Sources - Fiscal Year 2013 Other taxes 1.32% State shared revenues 10.78% Highway user taxes 2.71% Investment income 0.84% Miscellaneous 0.75% Charges for services 34.23% Franchise fees 0.62% Sales taxes 21.45% Operating grants and contributions 2.05% Property taxes 6.22% Capital grants and contributions 19.03% Functional Expenses - Fiscal Year 2013 Solid waste 3.46% Airport 0.49% Wastewater 10.00% Housing authority 1.85% General government 22.31% Water 13.72% Interest expense on long-term debt 2.92% Community services 7.67% Public safety 23.76% Transportation & development 13.82% Governmental Activities. The increase in governmental net position totaled $347 thousand for the year ended June 30, 2013 compared with an increase of $13.3 million in the prior year. The prior fiscal year included the large Intel development activity that increased charges for services and construction sales tax revenue. FY 2012-13 reflects the large Intel development winding down, with decreases in those categories. At the same time, as consumer confidence increased, state and local sales taxes increased. This resulted in a minimal change to net position. 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 Business-type Activities. The increase in business-type net position totaled $72.2 million for the year ended June 30, 2013 compared with an increase of $9.7 million in the prior year. This is primarily due to the increased capital contributions from Intel to reimburse the City for costs to expand water and wastewater infrastructure to support the needs associated with their $5 billion plant expansion. As evident in the previous graph, the largest financing source for the City is charges for services at 34.2 percent associated with the user fees and charges for services. Sales taxes also comprise a significant portion of the City’s revenues at 21.5 percent of the total revenues with state shared revenues accounting for an additional 10.8 percent of the City’s total revenues. The City as a whole uses the largest amount of resources for public safety at 23.8 percent of the total functional expenses of the City. The next largest users of resources are general government functions and transportation & development at 22.3 percent and 13.8 percent, respectively, with water services accounting for 13.7 percent 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 $266.8 million, a decrease of $5.5 million in comparison with the prior year. Approximately $153.5 million (57.6 percent) 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’ assigned and unassigned balances of $159.1 million represents a decrease of $5.5 million. This decrease is due to planned use of general fund balance for one-time capital needs. The remainder of the fund balance comprising of non-spendable and restricted balances amounts to $113.2 million (42.4 percent of the total fund balance). The non-spendable balance consists of inventories and pre-paid amounts. The restricted balance is constrained for specific purposes imposed by external parties or enabling legislation. The total compared to the prior years’ restricted balance of $113.3 million represents a minimal decrease. 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 $167.2 million, while total fund balance reached $169.1 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 0.965 coverage of total annual general fund expenditures. This is well above the City’s contingency reserve financial policy, allowing the funding of other reserves (i.e. economic development and capital projects, compensated absences). The City’s general fund balance decreased by $4.7 million during the current fiscal year due to payoff of a debt issue and planned use for one-time capital needs. The streets capital projects 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 $36.4 million. The fund balance of the City’s street fund increased by $2.4 million during the current fiscal year. The general obligation debt service fund accounts for the accumulation of resources for and payments of general obligation debt. The fund balance restricted for general obligation debt service payments decreased by $2.8 million during the current fiscal year. The decrease is due primarily to lower property tax levy received as a result of the fourth 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 consecutive year of reduced secondary assessed values. This fund also completed an optional early redemption of the remaining principal balance for the Series 2003 bonds. This was funded by a transfer in from the general fund. 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 position for the enterprise funds and the internal service funds at the end of the fiscal year amounted to $532 million and $35.6 million, respectively, compared to $459.8 million and $39.0 million in the prior fiscal year. The primary reason for the increase in net position was due to major additions to the net investment in capital assets category within the enterprise funds. The City expanded water and wastewater infrastructure to support the needs associated with Intel’s $5 billion plant expansion, but Intel reimbursed the City for the related costs. The enterprise funds net position after net investment in capital assets is 33.3 percent unrestricted compared to 39.0 percent in the prior fiscal year. Unrestricted net position of the water fund at the end of the year amounted to $121.6 million, and those for the wastewater fund amounted to $35.6 million, compared to $126.4 million and $36.4 million in the prior fiscal year. BUDGETARY HIGHLIGHTS For the 2012-13 Budget Year, the City of Chandler held to its ongoing commitment to engage in fiscally responsible budgeting practices. With the economy showing signs of recovery, the City Council adopted a balanced budget for 2012-13, with some adjustments to operating and capital expenditures based upon an analysis of one-time versus ongoing revenue streams. Most local sources were expected to see improvement during the year, including the City’s major sources of General Fund revenues: Local Sales Tax, State Shared Sales Tax, and Urban Revenue Sharing (State Shared Income Tax). As a result, the City Council was able to increase the General Fund budget by 7.8 percent over the previous year, and the total City budget by 23.5 percent from the previous year. A large portion of the 23.5 percent increase was a result of capital projects supporting local industrial plant expansion, which was reimbursed to the water and wastewater operating funds. Additionally, debt service costs increased due to the use of $8.475 million of General Fund transferred to the Debt Service Fund to make an early payoff of 2003-series obligations. As has been the City’s practice, the budget and revenue forecast distinguishes between ongoing and one-time revenues and spending. The City’s 2012-13 budget included a variety of salary adjustments and one-time payments after several years of little or no ongoing salary increases. Other ongoing costs, such as maintenance, utilities, and supplies were managed very closely to ensure they could be met with ongoing revenues. The City continues to emphasize its strong financial policies, and continues to include a 12 percent contingency reserve in the General Fund. Council also is continuing the Infrastructure Maintenance Reserve to support street and park capital maintenance projects until additional General Obligation bonds can be sold for this purpose. Those funds are targeted for use from 2013-14 through 2016-17. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2013, the City had invested $913.3 million in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $82.7 million. The City completed several improvement projects including $1.8 million to upgrade its financial, payroll and HR software system and $6.1 million in acquisition of Sunset Library. There were also various other infrastructure and improvement projects for parks and street lights. 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2013 The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2013 and 2012. Governmental Business-type Activities Activities 2013 Land $ Land improvements 2012 83,306,168 $ Total 2013 83,306,168 $ (Primary Govt.) 2012 41,256,107 $ 2013 41,256,107 $ 124,562,275 $ 124,562,275 - - Infrastructure 395,653,277 413,807,990 System improvements Buildings and improvements 258,981,815 265,853,357 Machinery and equipment 27,620,200 24,843,054 1,236,318 1,257,360 28,856,518 26,100,414 Construction in progress Total 55,620,346 47,608,463 164,986,751 67,641,028 220,607,097 115,249,491 821,181,806 $ 835,419,032 $ 610,890,919 $ 550,165,201 $ 1,432,072,725 $ 1,385,584,233 $ 368,196 2012 466,985 368,196 466,985 - - 395,653,277 413,807,990 394,484,893 8,558,654 430,691,292 8,852,429 394,484,893 267,540,469 430,691,292 274,705,786 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 $535.7 million in long-term debt outstanding with $39.0 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, 2013 and 2012. Governmental Business-type Activities General Obligation Bonds Revenue Bonds Excise Tax Revenue Obligations Special Assessment Bonds Total Activities (Primary Govt.) 2013 2012 2013 2012 2013 2012 $ 256,288,000 $ 268,148,000 $ 161,567,000 $ 170,987,000 $ 417,855,000 $ 439,135,000 22,045,000 25,745,000 - - 5,350,000 5,780,000 Total Bonds & Obligations Payable $ 283,683,000 44,740,000 52,670,000 66,785,000 78,415,000 45,695,000 47,440,000 45,695,000 47,440,000 5,350,000 5,780,000 - - $ 299,673,000 $ 252,002,000 $ 271,097,000 $ 535,685,000 $ 570,770,000 42,704 34,784 36,186 35,216 78,890 70,000 Deferred Bond Premiums 4,566,202 5,204,045 3,957,901 4,486,782 8,524,103 9,690,827 Claims Payable 6,236,814 4,777,475 Arbitrage Payable Landfill Closure/Post Closure Compensated Absences Post Employment Benefits Total Long Term Liabilities - - 6,236,814 4,777,475 4,340,000 - 4,340,000 - 4,340,000 4,340,000 9,374,341 9,439,327 991,440 958,685 10,365,781 10,398,012 11,136,775 8,207,450 882,034 591,884 12,018,809 8,799,334 $ 315,039,836 $ 327,336,081 $ 262,209,561 $ 281,509,567 $ 577,249,397 $ 608,845,648 The City of Chandler’s total debt decreased by $31.5 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, 2013 transportation, and recreational facilities. The current debt limitation for the City is $435.1 million. The City has $407.0 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 $130.5 million. The City has $10.9 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 are continuing to be impacted by new development, particularly 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 was starting to grow, but at a very slow rate. Challenges continue at both the federal and state level so the City budget practice continues to be pragmatic – waiting for “real growth” to materialize before including it in budget estimates. This assessment of “slow growth” drove future year ongoing revenue estimates and resulted in a 2013-14 budget with only one General Fund new position and 7 enterprise fund positions and a small (3.5) 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 2013-14 required the combined efforts of citizens, the City Council, Executive Leadership team, and staff members throughout the organization. The City’s overall budget decreased from $836 million in 2012-13 to $804 million in 2013-14, but some of the reduction was due to large wastewater projects included in the prior year that were at much lower levels in the new budget. Despite a decrease in secondary assessed values (which support debt service) for the fourth year in a row, the City Council did not increase the secondary property tax rate keeping it at $0.9422 in 2013-14 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 remain in a hold status until existing debt service costs decrease (over time or through refunding opportunities) or property values show an increase over the prior year. As part of the 2013-14 Budget, the City Council reestablished the Budget Stabilization Reserve. This reserve provides the opportunity to utilize the reserve to balance the budget in the future for no more than three consecutive years, should state legislation, and unexpected decrease in property values, or other issues cause revenues to suddenly decrease. 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 Position June 30, 2013 Governmental Activities Business-Type Activities $ 353,955,136 1,522,188 5,546 554,493 877,756 78 4,830,464 934,053 5,363,358 431,127 456,602 368,930,801 $ 106,334,422 23,614,043 345,977 (78) 78 217,015 60,814 130,572,271 Total Component Units Chandler Industrial Chandler Development Cultural Authority Foundation ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Interest receivable Prepaid items Privilege license tax receivable Property taxes receivable Internal balances Due from other governments Inventories Special assessments receivable Notes receivable - current Other receivables Total current assets Long-term 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 long-term assets Total assets $ 460,289,558 25,136,231 351,523 554,493 877,756 4,830,542 1,151,068 5,363,358 431,127 517,416 499,503,072 $ 602,407 602,407 $ 733,139 6,506 40,576 83 780,304 3,181,283 - 363,450 2,028,846 69,197,886 363,450 5,210,129 69,197,886 - 1,382,694 6,000 - 138,926,514 682,255,292 821,181,806 824,363,089 1,193,293,890 206,242,858 404,648,061 610,890,919 682,481,101 813,053,372 345,169,372 1,086,903,353 1,432,072,725 1,506,844,190 2,006,347,262 602,407 59,056 59,056 1,447,750 2,228,054 24 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Unearned revenue Arbitrage liability Compensated absences payable Bonds payable Deferred bond premium Landfill closure and postclosure liability Claims and judgements payable Total current liabilities Long-term liabilities: Compensated absences payable Bonds payable Deferred bond premium OPEB liability Arbitrage liability Landfill closure and postclosure liability Claims and judgements payable Total long-term liabilities Total liabilities NET POSITION Net investment in capital assets Restricted for: Transportation and development Capital improvements Community services Community development Debt service Legal restrictions Total restricted Unrestricted Total net position 7,305,137 4,998,918 9,879,710 5,949,713 15,637 17,392 88,498 18,410,000 637,843 5,613,133 52,915,981 10,385,023 521,244 2,199,711 5,114,881 646,126 17,608 9,359 20,670,000 491,410 94,446 40,149,808 17,690,160 5,520,162 12,079,421 11,064,594 661,763 35,000 97,857 39,080,000 1,129,253 94,446 5,613,133 93,065,789 - 62,088 239,926 302,014 9,285,843 265,273,000 3,928,359 11,136,775 25,312 623,681 290,272,970 343,188,951 982,081 231,332,000 3,466,491 882,034 18,578 4,245,554 240,926,738 281,076,546 10,267,924 496,605,000 7,394,850 12,018,809 43,890 4,245,554 623,681 531,199,708 624,265,497 - 302,014 558,279,485 355,015,004 913,294,489 - 59,056 51,770,344 25,074,126 16,915,114 432,988 17,174,973 939,867 112,307,412 179,518,042 $ 850,104,939 176,961,822 $ 531,976,826 51,770,344 25,074,126 16,915,114 432,988 17,174,973 939,867 112,307,412 356,479,864 $ 1,382,081,765 602,407 602,407 1,382,694 1,382,694 484,290 1,926,040 See accompanying Notes to Basic Financial Statements. 25 $ $ City of Chandler Statement of Activities For the year ended June 30, 2013 Program Revenues Functions/Programs Expenses Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ $ Total Primary government: Governmental activities: General government $ 90,143,339 $ 35,898,378 Public safety 95,974,126 7,375,050 Transportation and development 55,846,316 Community services 30,979,208 Interest on long-term debt 2,740,752 - $ 38,639,130 794,098 - 8,169,148 10,150,102 40 9,116,635 19,266,777 8,240,732 464,646 - 8,705,378 11,777,701 - - - - 284,720,690 61,664,262 3,999,536 9,116,635 74,780,433 Water 55,440,712 48,258,282 - 5,487,496 53,745,778 Wastewater 40,401,849 37,690,400 - 75,592,288 113,282,688 Solid waste Total governmental activities Business-type activities: 13,974,858 13,836,363 - - 13,836,363 Airport 1,960,788 976,102 - 307,373 1,283,475 Chandler housing authority 7,473,891 637,329 5,785,335 185,411 6,608,075 119,252,098 101,398,476 5,785,335 81,572,568 188,756,379 $ 403,972,788 $ 163,062,738 $ $ 263,536,812 $ $ $ Total business-type activities Total primary government 9,784,871 $ 90,689,203 - $ - Component units Chandler Industrial Development Authority Chandler Cultural Foundation Total component units 9,708 1,305,369 $ 1,315,077 87,630 1,188,514 $ 1,276,144 221,237 $ 221,237 $ 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 position Net position - beginning of year Net position - end of year See accompanying Notes to Basic Financial Statements. 26 $ - 87,630 1,409,751 $ 1,497,381 Net (Expense) Revenue and Changes in Net Position Primary Government Component Units Chandler Industrial Governmental Business-Type Activities Activities $ (51,504,209) - $ (51,504,209) Cultural Authority Foundation $ - $ - (87,804,978) - (87,804,978) - - (36,579,539) - (36,579,539) - - (22,273,830) - (22,273,830) - - (11,777,701) - (11,777,701) - - (209,940,257) - (209,940,257) - - - (1,694,934) (1,694,934) - - - 72,880,839 72,880,839 - - - (138,495) (138,495) - - - (677,313) (677,313) - - - (865,816) (865,816) - - - 69,504,281 69,504,281 - - (209,940,257) 69,504,281 (140,435,976) - - - - - 77,922 - - - - - 104,382 - - - 77,922 104,382 29,656,415 - 29,656,415 - - 102,200,517 - 102,200,517 - - 2,936,533 - 2,936,533 - - 12,929,504 - 12,929,504 - - 6,295,212 - 6,295,212 - - 154,018,181 - 154,018,181 - - 51,347,206 - 51,347,206 - - 2,843,417 1,180,290 4,023,707 355 14,175 2,181,627 1,409,437 3,591,064 - - 102,875 - - - 210,287,556 2,692,602 212,980,158 355 14,175 347,299 72,196,883 72,544,182 78,277 118,557 849,757,640 459,779,943 1,309,537,583 524,130 1,807,483 850,104,939 $ 531,976,826 (102,875) $ $ Total Chandler Development $ 1,382,081,765 $ 602,407 27 $ 1,926,040 City of Chandler Balance Sheet Governmental Funds June 30, 2013 Major Funds General Obligation Other Streets Bonds Governmental General Capital Projects Debt Service Funds 157,031,911 $ Total ASSETS Equity in pooled cash and investments $ Accounts receivable 39,736,616 $ 44,132,825 1,481,136 20,124 - 8,453 1,509,713 4,496 - - 450 4,946 Prepaid items $ 70,946,769 $ 311,848,121 Privilege license tax receivable 554,493 - - - 554,493 Property taxes receivable 232,353 - 645,403 - 877,756 5,363,358 Special assessments receivable - - - 5,363,358 Notes receivable - - - 431,127 431,127 20,528,358 - - - 20,528,358 Due from other funds 1,009,876 - - - 1,009,876 Due from other governments 4,830,464 Advances to other funds 2,065,881 - - 2,764,583 Inventories 934,053 - - - 934,053 Other receivables 452,453 - - 4,149 456,602 $ 44,778,228 $ 79,518,889 $ 348,348,867 $ $ 2,623,843 $ 7,198,635 Total assets $ 184,295,010 $ 39,756,740 $ 4,073,640 $ 501,152 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - Accrued payroll 4,768,670 11,948 - 172,429 4,953,047 Trust liabilities and deposits 6,213,864 - - 3,665,846 9,879,710 Accrued interest - - 5,425,975 523,738 5,949,713 Due to other funds - - - 1,009,798 1,009,798 Advances from other funds - 2,814,300 - 17,714,058 20,528,358 Arbitrage liability - 3,190 - 14,202 17,392 Bonds payable (matured) - - 22,610,000 3,830,000 26,440,000 166,940 - 322,867 5,089,394 5,579,201 15,223,114 3,330,590 28,358,842 34,643,308 81,555,854 Deferred revenue Total liabilities Fund Balances: Nonspendable 938,549 - - - 938,549 Restricted 939,867 36,426,150 16,419,386 58,522,009 112,307,412 Committed Assigned Unassigned Total fund balances Total liabilities and fund balances $ - - - - - 101,115,766 - - - 101,115,766 66,077,714 - - 52,431,286 169,071,896 36,426,150 16,419,386 (13,646,428) 44,875,581 39,756,740 $ 44,778,228 184,295,010 $ See accompanying Notes to Basic Financial Statements. 28 $ 79,518,889 266,793,013 $ 348,348,867 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position June 30, 2013 $ Total Fund Balances - Total Governmental Funds 266,793,013 Amounts reported for governmental activities in the Statement of Net Position 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 138,926,514 Depreciable buildings, property, equipment and infrastructure, net 682,255,292 Total capital assets 821,181,806 Certain revenues are not available to pay for current period expenditures and, therefore, are deferred in the funds. 5,579,201 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 are included in governmental activities in the Government-Wide Statement of Net Position. 35,617,744 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 $6,334,336 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (257,243,000) Bonds premium (4,566,202) Bond issuance costs 3,181,283 OPEB liability (11,098,665) Arbitrage liability (25,312) Compensated absences (9,314,929) Total long-term liabilities (279,066,825) $ Net Position of Governmental Activities See accompanying Notes to Basic Financial Statements. 29 850,104,939 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2013 Major Funds General General Obligation Other Streets Bonds Governmental Capital Projects Debt Service Funds Total REVENUES: Property taxes $ Sales taxes Franchise fees Highway user taxes Regional transportation taxes State shared 7,710,290 $ - $ 22,131,449 $ - $ - 29,841,739 102,200,517 - - 102,200,517 2,936,533 - - - 2,936,533 - - - 12,929,504 12,929,504 - 6,295,212 - - 6,295,212 51,347,206 - - - 51,347,206 Grants and entitlements - - - 9,480,090 9,480,090 System development fees - 2,575,380 - 5,205,703 7,781,083 Special assessments - - - 676,127 676,127 Licenses and permits 4,887,466 - - - 4,887,466 Charges for services 19,700,410 - - 86,103 19,786,513 Fines and forfeitures 3,638,573 - - 2,186,525 5,825,098 Rentals 570,638 - - - 570,638 Contributions 100,000 - - - 100,000 1,739,702 295,648 16,203 477,525 2,529,078 Interest revenue Miscellaneous 688,499 306,834 - 388,790 1,384,123 195,519,834 9,473,074 22,147,652 31,430,367 258,570,927 General government 40,803,483 6,304 - 3,702,746 44,512,533 Public safety 88,116,099 - - 1,471,514 89,587,613 Transportation and development 14,812,531 1,687,969 - 8,307,078 24,807,578 Community services 22,333,121 - - 1,221,463 23,554,584 7,139,655 11,417,594 - 23,236,070 41,793,319 Principal - - 22,610,000 4,260,000 26,870,000 Interest and fiscal charges - - 10,851,950 1,056,075 11,908,025 173,204,889 13,111,867 33,461,950 43,254,946 263,033,652 22,314,945 (3,638,793) (11,314,298) (11,824,579) Total revenues EXPENDITURES: Current: Capital outlay Debt service: Total expenditures REVENUES OVER (UNDER) EXPENDITURES (4,462,725) OTHER FINANCING SOURCES (USES): - - - 76,381 76,381 Transfers in 1,047,000 6,003,874 8,475,000 17,324,105 32,849,979 Transfers out (28,036,381) - - (5,961,013) (33,997,394) (26,989,381) 6,003,874 8,475,000 11,439,473 (1,071,034) (4,674,436) 2,365,081 (2,839,298) 34,061,069 19,258,684 Proceeds from disposal of capital assets Total other financing sources (uses) NET CHANGE IN FUND BALANCE (385,106) (5,533,759) FUND BALANCES: Beginning of year End of year 173,746,332 $ 169,071,896 $ 36,426,150 See accompanying Notes to Basic Financial Statements. 30 $ 16,419,386 45,260,687 $ 44,875,581 272,326,772 $ 266,793,013 City of Chandler Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities For the year ended June 30, 2013 $ Net Change in Fund Balances - Total Governmental Funds (5,533,759) 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 Position, 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. 27,274,706 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Position, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in governmental funds. (44,686,702) 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 26,870,000 (2,922,688) Loss on disposal of capital assets (384,238) 23,563,074 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. 130,324 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. 2,080 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. 71,089 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. (649,670) 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. 3,559,008 The internal service fund is used by management to charge the costs of certain activities, such as insurance, to individual funds. The change in financial position of the internal service fund is reported with governmental activities. (3,382,851) $ Change in Net Position of Governmental Activities See accompanying Notes to Basic Financial Statements. 31 347,299 City of Chandler Statement of Net Position Proprietary Funds June 30, 2013 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments $ 52,108,757 $ 36,572,860 $ 17,652,805 $ 106,334,422 $ 42,107,015 Accounts receivable 7,225,519 14,569,934 1,818,590 23,614,043 Advances to other funds 3,900,000 - - 3,900,000 - - - 78 78 - Due from other governments 12,475 183,316 - 33,699 217,015 - Prepaid items - - 345,977 345,977 600 Other receivables - - 60,814 60,814 - 63,417,592 51,142,794 19,911,963 134,472,349 42,120,090 1,022,814 1,004,830 1,202 2,028,846 - - - 363,450 363,450 - 69,197,886 - - 69,197,886 - Non-depreciable 48,240,759 129,973,238 28,028,861 206,242,858 - Depreciable, net 190,854,700 187,738,419 26,054,942 404,648,061 - Total capital assets 239,095,459 317,711,657 54,083,803 610,890,919 - Total long-term assets 309,316,159 318,716,487 54,448,455 682,481,101 - Total assets 372,733,751 369,859,281 74,360,418 816,953,450 42,120,090 1,647,109 7,838,607 899,307 10,385,023 106,502 269,429 138,153 113,662 521,244 45,871 Trust liabilities and deposits 1,000,026 911,768 287,917 2,199,711 - Accrued interest 2,928,493 2,184,294 2,094 5,114,881 - - - 78 78 - Inventories Total current assets Long-term assets: Other assets Notes receivable Investment in joint venture Capital assets: LIABILITIES Current liabilities: Accounts payable Accrued payroll Due to other funds 32 Unearned revenue Compensated absences payable Bonds payable Deferred bond premium Arbitrage liability 288,318 177,821 179,987 646,126 15,637 5,022 2,543 1,794 9,359 561 12,548,485 8,101,515 20,000 20,670,000 - 275,462 215,752 196 491,410 - 4,954 12,650 4 17,608 - Landfill closure and postclosure liability - - 94,446 94,446 - Claims and judgements payable - - - - 5,613,133 18,967,298 19,583,103 1,599,485 40,149,886 5,781,704 562,587 231,143 188,351 982,081 58,851 - 3,900,000 - 3,900,000 - 128,376,720 102,834,280 121,000 231,332,000 - 1,889,975 1,573,774 2,742 3,466,491 - 481,314 278,268 122,452 882,034 38,110 Total current liabilities Long-term liabilities: Compensated absences payable Advances from other funds Bonds payable Deferred bond premium OPEB liability 8,133 10,445 - 18,578 - Landfill closure and postclosure liability - - 4,245,554 4,245,554 - Claims and judgements payable - - - - 623,681 Total long-term liabilities 131,318,729 108,827,910 4,680,099 244,826,738 720,642 Total liabilities 150,286,027 128,411,013 6,279,584 284,976,624 6,502,346 96,004,817 204,986,336 54,023,851 355,015,004 - 126,442,907 36,461,932 14,056,983 176,961,822 35,617,744 Arbitrage liability NET POSITION Net investment in capital assets Unrestricted Total net position $ 222,447,724 $ 241,448,268 See accompanying Notes to Basic Financial Statements. 33 $ 68,080,834 $ 531,976,826 $ 35,617,744 City of Chandler Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the year ended June 30, 2013 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees $ 48,258,282 $ 37,690,400 $ 14,812,465 $ 100,761,147 $ - Grants and entitlements - - 5,785,335 5,785,335 Rentals - - 637,329 637,329 - Self insurance premiums - - - - 22,578,756 21,127 227,551 631,878 880,556 797,504 48,279,409 37,917,951 21,867,007 108,064,367 23,376,260 General and administrative 4,015,280 2,589,080 1,422,830 8,027,190 - Personal services 8,626,753 4,012,990 3,649,013 16,288,756 1,468,373 Contractual services 4,895,519 6,908,360 10,280,624 22,084,503 2,138,537 Commodities 9,352,667 5,368,592 1,556,737 16,277,996 1,351,341 - - - 23,157,659 Miscellaneous Total operating revenues - OPERATING EXPENSES: Claims expense Housing assistance payments Depreciation and amortization expense Total operating expenses OPERATING INCOME (LOSS) - - 4,727,636 4,727,636 - 19,233,561 17,034,513 1,768,429 38,036,503 - 46,123,780 35,913,535 23,405,269 105,442,584 28,115,910 2,155,629 2,004,416 (1,538,262) 582,852 420,925 2,621,783 (4,739,650) NONOPERATING REVENUES (EXPENSES): Interest revenue Interest and fiscal charges (5,856,988) Accretion of bond premium Amortization of bond issuance costs Gain (loss) on disposal of capital assets Equity interest in joint venture 176,513 (4,368,589) 312,933 215,752 (152,088) (112,725) (14,500) (7,000) (3,293,356) - 1,180,290 312,259 (4,188) (10,229,765) - 196 (80) - 528,881 (264,893) (21,500) - - (3,293,356) - 172,441 (12,100,343) 312,259 - Total nonoperating revenues (expenses) (8,421,147) (3,851,637) (6,265,518) (1,847,221) 5,487,496 75,592,288 492,784 81,572,568 - - - 570,572 570,572 1,059,299 (96,032) (467,697) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (1,365,821) (9,478,560) (4,427,391) CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in Transfers out (265,153) Total capital contributions and transfers Change in Net Position (106,512) (14,759) 5,222,343 75,485,776 967,324 81,675,443 1,044,540 (1,043,175) 73,638,555 (398,497) 72,196,883 (3,382,851) NET POSITION: Beginning of year End of year 223,490,899 $ 222,447,724 167,809,713 $ See accompanying Notes to Basic Financial Statements. 34 241,448,268 68,479,331 $ 68,080,834 459,779,943 $ 531,976,826 39,000,595 $ 35,617,744 35 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2013 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 48,347,736 (17,989,680) (8,453,425) 21,904,631 $ 29,480,938 (17,146,808) (3,918,569) 8,415,561 $ 15,537,414 5,814,623 (17,412,401) (3,550,758) 388,878 Total $ 93,366,088 5,814,623 (52,548,889) (15,922,752) 30,709,070 Governmental Activities: Internal Service Fund $ 23,416,564 (25,313,298) (1,450,046) (3,346,780) (265,153) (265,153) (106,512) (106,512) 570,572 (96,032) 474,540 570,572 (467,697) 102,875 1,059,299 (14,759) 1,044,540 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets (13,761,902) (83,682,798) (693,690) (98,138,390) - Principal paid on bond maturities (12,048,090) (7,026,910) (20,000) (19,095,000) - Interest paid on bonds Cash received from capital contributions Net cash provided (used) by capital and related financing activities (6,247,027) 5,119,074 (26,937,945) (4,609,858) 75,315,380 (20,004,186) (4,572) 492,784 (225,478) (10,861,457) 80,927,238 (47,167,609) - 582,852 582,852 (4,715,615) 420,925 420,925 (11,274,212) 176,514 176,514 814,454 1,180,291 1,180,291 (15,175,373) 312,259 312,259 (1,989,981) 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 $ 56,824,372 52,108,757 36 $ 47,847,072 36,572,860 $ 16,838,351 17,652,805 $ 121,509,795 106,334,422 $ 44,096,996 42,107,015 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 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 $ $ $ 2,155,629 $ 2,004,416 $ (1,538,262) $ 2,621,783 19,233,561 17,034,513 1,768,429 38,036,503 152,913 40,764 157,982 233,022 11,612 (231,928) (10,640) 161,716 19,749,002 21,904,631 (8,514,379) 119,458 (2,280,776) 13,300 (32,361) (9,731) 81,121 6,411,145 8,415,561 6,625 (13,986) 13,705 84,743 10,057 16,552 (6,298) 47,313 1,927,140 388,878 (8,354,841) 26,778 291,145 (1,963,011) 34,969 (247,737) (26,669) 290,150 28,087,287 30,709,070 368,422 14,500 312,933 152,088 See accompanying Notes to Basic Financial Statements. 37 $ $ 276,908 7,000 215,752 112,725 $ $ 196 80 $ $ (4,739,650) - $ 143,668 600 (125,700) 11,690 1,459,339 (103,364) 6,637 1,392,870 (3,346,780) - City of Chandler Statement of Fiduciary Net Position Fiduciary Funds June 30, 2013 Volunteer Firemen's Pension and Relief Trust Fund Agency Funds ASSETS Equity in pooled cash and investments Total assets $ 21,226 $ 7,000 $ 21,226 $ 7,000 $ - $ - LIABILITIES Due to others Total liabilities NET POSITION Assets held in trust for pension benefits 21,226 $ Total net position See accompanying Notes to Basic Financial Statements. 38 21,226 7,000 $ 7,000 City of Chandler Statement of Changes in Fiduciary Net Position Fiduciary Funds - Trust Funds For the year ended June 30, 2013 Volunteer Firemen's Pension and Relief Trust Fund ADDITIONS: Net investment income $ 276 Other contributions 100 Total additions 376 DEDUCTIONS: Benefits paid to plan members 4,800 Change in net position (4,424) NET POSITION: Beginning of year 25,650 End of year $ See accompanying Notes to Basic Financial Statements. 39 21,226 40 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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, 2013 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 Position 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, 2013 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 Fund – 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 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 municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater 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 Self Insurance Funds that administer the City’s self-insured property, liability, health, 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. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 for property and liability insurance and charges to user departments for premiums related to health, dental, workers’ compensation, and short term disability self-insurance. 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 where allowable, 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, Internal Service Funds, and debt service funds. The level of control at which expenditures may not exceed budget is by department. 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 $2,103,379 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 carryforward 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 and proprietary 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 $6,116,370, for the streets capital projects fund are $6,289,234, for water enterprise fund are $11,280,903, for wastewater enterprise fund are $91,246,595, and for nonmajor governmental funds are $9,656,825. 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, 2013 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, Workers’ Compensation and Employer Liability 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. 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. G. 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. H. 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, 2013 NOTE 1 - Summary of Significant Accounting Policies, continued I. 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 J. Compensated Absences Vacation leave vests with the employee as it is earned dependent on accumulated time and the individual’s vacation benefits associated with their rank within the City. All employees may carryforward 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. K. 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 position. 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, 2013 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. L. 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 and Unassigned classifications represent “unreserved” fund balances (See Note 9). M. 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). N. 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. O. 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. P. 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, 2013 NOTE 1 - Summary of Significant Accounting Policies, concluded Q. 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. R. Implementation of New Accounting Standards During the year ended June 30, 2013, the City implemented the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB Statement No. 63 establishes reporting guidance for certain elements of the financial statements which are distinct from assets and liabilities. 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, the Chandler Health Care Benefits Trust, and the Chandler Workers Compensation Employer Liability 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, the Chandler Health Care Benefits Trust, and the Chandler Workers Compensation Employer Liability Trust separately hold investments. Deposits At year-end, cash on hand was $301,106, the carrying amount of the City deposits was $2,067,471, and the bank balance was $3,326,329. Of the bank balance, $250,000 was covered by federal depository insurance and $3,076,329 was covered by collateral held in the pledging bank’s trust department in the City’s name. In addition, at year ended June 30, 2013, the City had $58,174,594 of restricted cash held by paying agent consisting of the July 1, 2013 debt service payment. The cash held by paying 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, 2013 NOTE 2 – Cash and Investments, continued At June 30, 2013, 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 Commercial Paper: Bank of Tokyo NNA Inc Toyota Motor Credit Corporate Bonds: Apple Inc Global Bank of New York Mellon Berkshire Hathaway Inc Caterpillar Financial Services Corp Costco Wholesale Corp The Coca-Cola Company General Electric Capital Corp IBM Corp John Deere Capital JP Morgan Chase Merck and Co Inc National Rural Utility Cooperative Paccar Financial Corp Pepsico, Inc PNC Bank INA US Bankcorp Wal-Mart Stores, Inc Wells Fargo Wyeth LLC Municipal Bonds: Arizona School Facilities Board Money Market U.S. Treasuries & Agencies Total Fair Value $ 135,824,084 Less than 1 $ 49,131,330 1-5 $ 86,692,754 18,449,449 47,648,880 104,412,084 17,449,952 17,232,003 14,330,115 999,497 30,416,877 90,081,969 174,998 199,968 199,920 174,998 199,968 199,920 1,603,777 8,959,354 4,036,304 2,898,591 3,494,608 1,760,063 8,910,002 1,256,150 3,490,895 8,034,680 3,478,591 3,011,583 3,274,630 200,841 2,626,349 3,085,674 4,286,688 203,779 4,078,138 1,004,550 254,267 3,011,583 3,242,303 4,078,138 1,343,218 22,831,315 $ 399,774,613 - Concentration of Credit Risk % Credit Rating 33.99 % AA+/Aaa/AAA 4.61 11.92 26.12 AA+/Aaa/AAA* AA+/Aaa/AAA AA+/Aaa/AAA 0.04 0.05 0.05 A-1+/P-1 A-1/P-1 A-1+/P-1 1,603,777 8,959,354 4,036,304 2,898,591 3,494,608 1,760,063 8,910,002 251,600 3,490,895 7,780,413 3,478,591 3,274,630 200,841 2,626,349 3,085,674 1,044,385 203,779 - 0.40 2.24 1.01 0.73 0.87 0.44 2.23 0.31 0.87 2.01 0.87 0.75 0.82 0.05 0.66 0.77 1.07 0.05 1.02 AA+/Aa1 A+/Aa3/AAAA/Aa2/A+ A/A2/A A+/A1/A+ AA-/Aa3/A+ AA+/A1 AA-/Aa3/A+ A+/A2 A/A2/A+ AA/A2/A+ A+/A1 A+/A1 A-/A1 A/A2/A+ A+/A1/AAAA/Aa2/AA A+/A2 AA/A1/A+ 22,831,315 1,343,218 - 0.34 5.71 AAA/Aaa AAAm/NR $ 133,140,442 $ 266,634,171 100.00 % 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, 2013. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 2 – Cash and Investments, concluded 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 percent 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. 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 2012-13, current property tax collections were $28,430,935 or 99.3 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 2013 are not available for fiscal year 2012-13; accordingly, such taxes will not be recognized as revenue until fiscal year 2013-14. 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 4 – Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance July 1, 2012 Government Activitites Capital assets, not being depreciated: Land Construction in progress $ 83,306,168 47,608,463 Additions and Transfers In Deletions and Transfers Out $ $ 22,674,610 (14,662,727) Balance June 30, 2013 $ 83,306,168 55,620,346 Total capital assets not being depreciated 130,914,631 22,674,610 (14,662,727) 138,926,514 Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment 612,930,528 353,807,220 62,356,331 5,460,985 9,295,860 8,064,986 (1,760,730) 618,391,513 363,103,080 68,660,587 1,029,094,079 22,821,831 (1,760,730) 1,050,155,180 (199,122,538) (87,953,863) (37,513,277) (23,615,698) (16,167,402) (4,903,602) 1,376,492 (222,738,236) (104,121,265) (41,040,387) (324,589,678) (44,686,702) 1,376,492 (367,899,888) Total capital assets, being depreciated, net 704,504,401 (21,864,871) Governmental activities capital assets, net $ 835,419,032 Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment Total accumulated depreciation $ 809,739 (384,238) $ (15,046,965) Construction in progress in the governmental activities capital assets is comprised of the following: Expended to June 30, 2013 $ 36,776,712 7,727,407 11,116,227 $ 55,620,346 Streets Parks and recreation Buildings and related improvements Total 51 Remaining Commitments $ 7,942,815 1,308,772 5,265,334 $ 14,516,921 682,255,292 $ 821,181,806 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 4 – Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Balance July 1, 2012 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 67,641,028 108,897,135 Additions and Transfers In $ 97,353,877 97,353,877 884,019,359 21,085,874 14,903,756 2,117,236 922,126,225 904,828 262,880 290,168 1,457,876 (453,328,067) (12,233,445) (13,646,396) (1,650,251) (480,858,159) 441,268,066 (37,111,227) (556,655) (269,832) (98,789) (38,036,503) (36,578,627) 550,165,201 Deletions and Transfers Out Balance June 30, 2013 $ (8,154) (8,154) $ 41,256,107 164,986,751 206,242,858 (41,969) (41,969) 884,924,187 21,348,754 15,151,955 2,117,236 923,542,132 591 591 (41,378) $ 60,775,250 $ (49,532) Construction in progress in the business-type activities is comprised of the following: Expended to June 30, 2013 Remaining Commitments Sewer system improvements $ 124,146,964 $ Water system improvements 89,918,087 40,376,116 9,493,880 Solid waste system improvements 110,240 64,760 Airport improvements 353,431 21,082 Total $ 164,986,751 52 $ 99,497,809 (490,439,294) (12,790,100) (13,915,637) (1,749,040) (518,894,071) 404,648,061 $ 610,890,919 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 $ 5,430,045 5,909,879 8,775,390 24,571,388 $ 44,686,702 $ 19,233,561 17,034,513 480,976 804,098 483,355 $ 38,036,503 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 $417,855,000 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 approximately 112 percent of total 2012-13 ad valorem taxes. Excesses from prior years were used to cover amounts exceeding 100 percent of ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $345,387,126. Principal and interest paid for the current year and total ad valorem property taxes were $33,461,950 and $29,841,739 respectively. During fiscal year 2012-13 there was an optional early redemption of the remaining principal balance for the Series 2003 bonds. The early redemption totaled $8,475,000 and causes the percentage of ad valorem taxes to exceed 100 percent. This situation is not anticipated to continue beyond the current fiscal year, unless there is another large early redemption of an outstanding bond series, which would be funded using available fund balance. 53 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 5 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2013 were as follows: Governmental Activities General Obligation Bonds: Outstanding June 30, 2013 $6,650,000 Capital Improvement Bonds, Series 1996, due in an annual installment of $250,000 at 7/1/13; interest at 6.5 percent. $8,205,000 Capital Improvement Bonds, Series 1996B, due in an annual installment of $550,000 at 7/1/13; interest at 7.2 percent. 250,000 550,000 $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. Full amount of principal outstanding paid on 7/1/13. $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $1,050,000 to $2,775,000 through 7/1/16; interest at 4 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 2.25 percent to 4 percent. Total Governmental Activities General Obligation Bonds 8,975,000 6,410,000 7,650,000 18,725,000 55,100,000 21,035,000 118,513,000 9,925,000 9,155,000 $ 256,288,000 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds are expected to require less than 43 percent of total 2012-13 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 $215,250,644. Principal and interest paid for the current year and total net water and wastewater system and airport revenues and were $17,054,763 and $40,003,121 respectively. 54 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 5 - Long-Term Liabilities, continued Business-Type Activities General Obligation Bonds: Outstanding June 30, 2013 $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 $3,275,000 through 7/1/26; 34,750,000 interest at 3 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $6,500,000 to $11,086,000 through 7/1/28; interest 119,627,000 at 2.25 percent to 5 percent. Total Business-Type Activities General Obligation Bonds $ 161,567,000 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 $22,045,000 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 slightly more than 36 percent of total 2012-13 street and highway user revenues. The total principal and interest remaining to be paid on the bonds is $24,593,764. Principal and interest paid for the current year and street and highway user revenue taxes were $4,663,475 and $12,929,504, respectively. 55 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 5 - Long-Term Liabilities, continued Street and highway revenue bonds outstanding as reported in governmental activities at June 30, 2013 were as follows: Outstanding June 30, 2013 Governmental Activities Revenue Bonds: $1,250,000 Street & Highway User Bonds, Series 1996B, due in annual 75,000 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 an 880,000 annual installment of $880,000 on 7/1/13; interest at 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; 7,755,000 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; 8,335,000 interest at 2.25 percent to 3.5 percent. Total Governmental Activities Revenue Bonds $ 22,045,000 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 $44,740,000 in outstanding water and wastewater system revenue bonds. improvements and expansions to the City’s water and wastewater systems. water and wastewater system revenues and are payable through July 1, payments on the bonds are expected to require less than 26 percent of net revenue. operating expenses, to repay a total of Proceeds of the bonds were used for The bonds are payable solely from net 2020. Annual principal and interest 2012-13 water and wastewater system The total principal and interest remaining to be paid on the bonds is $51,738,915. Principal and interest paid for the current year and net water and wastewater system revenues were $10,445,140 and $40,179,441, respectively. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 5 - Long-Term Liabilities, continued Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2013 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 an annual installment of $400,000 at 7/1/13; interest at 7.25 percent. $7,770,000 Water & Sewer Refunding Bonds, Series 1997, due in an annual installment of $100,000 at 7/1/13; interest at 6.25 percent. $12,500,000 Water & Sewer Bonds, Series 2001, due in annual installments of $785,000 to $1,045,000 through 7/1/18; interest at 4.5 percent. $10,970,000 Water & Sewer Refunding Bonds, Series 2002, due in an annual installment of $3,755,000 at 7/1/13; interest at 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 an annual installment of $1,625,000 at 7/1/13; interest at 3.125 percent. $10,000,000 Water & Sewer Bonds, Series 2005, due in annual installments of $150,000 to $2,500,000 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 $1,415,000 to $5,725,000 through 7/1/17; interest at 3.75 percent to 5 percent. Total Business-Type Activities Revenue Bonds Outstanding June 30, 2013 $2,150,000 400,000 100,000 1,830,000 3,755,000 11,615,000 1,625,000 9,900,000 13,365,000 $ 44,740,000 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 agrees that, so long as any of the obligations remain outstanding and their principal and interest are unpaid, it will not further encumber the excise taxes unless the excise taxes received by the City in the immediately preceding fiscal year are 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 does 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, 2013 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 percent of net 2012-13 system revenues. The total principal and interest to be paid on the obligations is $59,733,307. Principal and interest paid for the current year and net water and wastewater system revenues were $3,399,863 and $40,179,441, respectively. Total excise tax revenues collected were $156,621,139. Principal and interest paid in 2012-13 equal slightly more than 2 percent 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 $715,000 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, 2013 $ 31,340,000 14,355,000 $ 45,695,000 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, 2013, 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, 2013 were as follows: Outstanding Governmental Activities Special Assessment Bonds: June 30, 2013 $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 $ 5,350,000 $ 5,350,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 5 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Balance Governmental Activities: July 1, 2012 Compensated absences Bonds payable: $ 9,439,327 Additions $ Reductions 673,551 $ (738,537) Balance Due Within June 30, 2013 One Year $ 9,374,341 $ 88,498 General obligation bonds Revenue bonds Special assessment bonds Total bonds payable 268,148,000 25,745,000 5,780,000 299,673,000 - (11,860,000) (3,700,000) (430,000) (15,990,000) 256,288,000 22,045,000 5,350,000 283,683,000 14,135,000 3,830,000 445,000 18,410,000 Arbitrage liability Claims payable Post employment benefits Deferred bond premiums 34,784 4,777,475 8,207,450 5,204,045 16,624 23,040,423 2,929,325 - (8,704) (21,581,084) (637,843) 42,704 6,236,814 11,136,775 4,566,202 17,392 5,613,133 637,843 $ 327,336,081 $ 26,659,923 $ (38,956,168) $ 315,039,836 $ 24,766,866 Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Due Within One Year Totals Business-Type Activities: Compensated absences Bonds & obligations payable: General obligation bonds Revenue bonds Excise tax revenue obligations Total bonds & obligations payable Arbitrage liability Post employment benefits Deferred bond premiums Landfill closure/post closure Totals $ 958,685 $ 71,527 $ (38,772) 991,440 $ 9,359 170,987,000 52,670,000 47,440,000 271,097,000 - (9,420,000) (7,930,000) (1,745,000) 161,567,000 44,740,000 45,695,000 10,595,000 8,260,000 1,815,000 - (19,095,000) 252,002,000 20,670,000 35,216 591,884 4,486,782 4,340,000 60,594 290,150 - (59,624) (528,881) - 36,186 882,034 3,957,901 4,340,000 17,608 491,410 94,446 422,271 $ (19,722,277) $ 262,209,561 $ 21,282,823 $ 281,509,567 $ 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, 2013, the 6 percent debt limitation was $130,522,600, providing a debt margin of $119,653,600 and the 20 percent debt limitation was $435,075,335, providing a debt margin of $28,089,335. 59 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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, 2013: Years Ended June 30 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029 Total General Obligation Principal GOVERNMENTAL ACTIVITIES Highway Highway General Users Users Improvement Improvement Obligation Revenue Revenue Districts Districts Interest Principal Interest Principal Interest Total 14,135,000 14,035,000 15,520,000 16,040,000 16,705,000 78,999,000 85,100,000 15,754,000 10,551,675 9,978,456 9,395,088 8,758,350 8,078,878 29,886,622 12,105,438 344,619 3,830,000 3,975,000 4,105,000 3,410,000 2,430,000 4,295,000 - 767,725 637,000 479,238 317,969 199,738 147,094 - 445,000 465,000 480,000 500,000 520,000 2,940,000 - 214,000 196,200 177,600 158,400 138,400 361,800 - 29,943,400 29,286,656 30,156,926 29,184,719 28,072,016 116,629,516 97,205,438 16,098,619 $ 256,288,000 $ 89,099,126 $ 22,045,000 $ 2,548,764 $ 5,350,000 $ 1,246,400 $ 376,577,290 BUSINESS-TYPE ACTIVITIES Years Ended June 30 General Obligation Principal General Obligation Interest Revenue Principal Revenue Interest Excise Tax Principal Excise Tax Interest Total 2014 10,595,000 6,247,863 8,260,000 1,999,818 1,815,000 1,561,763 30,479,444 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 9,825,000 4,849,762 7,475,000 531,931 2,105,000 1,193,750 25,980,443 49,176,000 18,335,750 8,270,000 481,903 11,570,000 4,831,106 92,664,759 2024-2028 49,550,000 7,466,063 - - 14,370,000 2,315,169 73,701,232 2029 11,086,000 242,506 - - 3,330,000 76,625 14,735,131 Total $ 161,567,000 $ 53,683,644 $ 44,740,000 $ 6,998,915 $ 45,695,000 $ 14,038,307 $ 326,722,866 2019-2023 60 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 July 1, 2012 Incurred Satisfied Balance Due Within June 30, 2013 One Year $ 9,439,327 $ 673,551 $ (738,537) $ 9,374,341 $ 88,498 $ 958,685 $ 71,527 $ (38,772) $ 991,440 $ 9,359 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, 2013 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, 2013, the City estimates total costs related to landfill closure and postclosure care is $15,439,742 and has recognized that entire amount since the landfill no longer accepts waste. To date, $11,099,742 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, 2013 NOTE 7 – Landfill Closure and Postclosure Costs, concluded The estimated total current cost of the landfill closure and postclosure, $15,439,742, 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, 2013. 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, 2012. 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 $57,925 (Water) and $68,341,620 (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 $ $ $ 5,060,416 427,080 - Total $ 5,487,496 6,723,149 68,869,139 - 75,592,288 Airport - - 307,373 307,373 Housing Authority - - 185,411 185,411 $ 11,783,565 $ 69,296,219 492,784 $ 81,572,568 Total 62 $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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, 2013 NOTE 9 – Fund Equity, concluded As of June 30, 2013 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 $ 934,053 4,496 $ G.O. Bonds Debt Service - $ Other Governmental - $ - Total $ 934,053 4,496 938,549 - - - 938,549 766,808 173,059 - 36,426,150 - 16,419,386 - 15,344,194 755,587 432,988 16,915,114 25,074,126 766,808 173,059 51,770,344 17,174,973 432,988 16,915,114 25,074,126 939,867 36,426,150 16,419,386 58,522,009 112,307,412 - - - - - - - - - - 232,634 396,555 34,600,000 48,301,614 17,584,963 - - - 232,634 396,555 34,600,000 48,301,614 17,584,963 101,115,766 - - - 101,115,766 66,077,714 - - (13,646,428) 52,431,286 66,077,714 - - (13,646,428) 52,431,286 $ 169,071,896 $ 36,426,150 $ 16,419,386 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 $ 44,875,581 $ 266,793,013 The City’s General Fund Reserve Policy requires an amount equal to 12 percent of adopted General Fund operating revenues, excluding transfers in. Unassigned includes this reserve in the amount of $21,478,200. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 1-800-621-3778. 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, 2013 was 11.14 percent (10.9 percent retirement and 0.24 percent longterm disability) for active members and the City was required to contribute 11.14 percent (10.25 percent for retirement, 0.65 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, 2013, 2012, and 2011, were $7,484,021, $6,346,391, and $6,307,634 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, 2013 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 21.58 percent of annual covered payroll of which 1.20 percent was the health insurance premium portion. The current aggregate contribution rate for firefighters is 18.52 percent of annual covered payroll of which 1.07 percent was the health insurance premium portion. C. Annual Pension Cost For fiscal year ended June 30, 2013, the City’s annual pension cost of $5,268,722 for police and $2,944,651 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, 2011, actuarial valuations using the projected unit credit actuarial cost method. The contribution requirements for the year ended June 30, 2013 were established by the June 30, 2011 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 8.25 percent per year compounded annually, attributable to inflation and other across-the-board increases, (2) projected salary increases of 5.0 percent compounded annually attributable to inflation and other across-the-board increases, and (3) additional projected salary increases of 0 percent to 3.0 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 8.25 percent per year compounded annually, attributable to inflation and other across-the-board increases, (2) projected salary increases of 5.0 percent compounded annually attributable to inflation and other across-the-board increases, and (3) additional projected salary increases of 0 percent to 3.0 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 25 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 25 years for unfunded actuarial accrued liability and 20 years for excess contributions. 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 2011 (Pension) $ 4,437,908 100% - 2011 (Health) $ 48,906 100% - 2012 (Pension) $ 4,258,298 100% - 2012 (Health) $ 51,720 100% - 2013 (Pension) $ 5,205,497 100% - 2013 (Health) $ 100% - 63,225 Arizona Public Safety Personnel Retirement System - Firefighters Three-Year Trend Information Fiscal Year Ended Annual Pension Cost (APC) Percent of APC Contributed Net Pension Obligation 2011 (Pension) $ 2,340,705 100% - 2011 (Health) $ 23,166 100% - 2012 (Pension) $ 2,340,237 100% - 2012 (Health) $ 25,072 100% - 2013 (Pension) $ 2,913,144 100% - 2013 (Health) $ 100% - 31,508 D. Funded Status and Funding Progress As of June 30, 2013, the firefighters plan was 75.1 percent funded and police was 68.5 percent funded. The actuarial accrued liability for benefits was $91.8 million and $152.1 million, and the actuarial value of assets was $68.9 million and $104.2 million, resulting in an unfunded actuarial accrued liability (UAAL) of $22.9 million and $47.9 million respectively. The covered payrolls (annual payrolls of active employees covered by the plans) were $15.4 million and $24 million, and the ratio of the UAAL to the covered payroll was 148.6 percent and 199.7 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, 2013 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 2013 was 36.44 percent of the members’ annual covered payroll, of which 1.80 percent was the health insurance premium portion. The city’s contributions to EORP for the years ended June 30, 2013, 2012, and 2011, were $60,215, $52,623, and $47,863 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, 2013, 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 2012-13. 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 health care (OPEB) for retired employees through a single employer defined benefit health plan. The plan provides health 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, 2013 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 health 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 health 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 health 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, reviewed and recommended by a five member Health Care Benefits Trust Board, and approved by the City Council. The retiree’s contribution is 100 percent 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, 2013, retirees contributed $1,472,903 and the City contributed $982,819 (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, 2013: 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 11 – Post-Employment Benefits Other Than Pensions, continued Annual Required Contribution (ARC) $ 4,214,199 ARC Adjustment (454,439) Interest Adjustment to Net OPEB Obligation 439,967 Annual OPEB Cost $ 4,199,727 Contributions Made (980,252) Increase in Net OPEB Obligation $ 3,219,475 Net OPEB Obligation - Beginning of year 8,799,334 Net OPEB Obligation - End of year $ 12,018,809 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2013 were as follows: Percentage of Fiscal Year Annual Employer OPEB Cost Net OPEB Ended June, 30 2013 OPEB Cost $ 4,199,727 Contributions $ 980,252 Contributed 23.40% Obligation $ 12,018,809 2012 3,954,406 1,124,164 28.43% 8,799,334 2011 3,294,741 1,459,219 44.29% 5,969,092 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 $ 52,300,279 Actuarial Value of Plan Assets - Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio $ 52,300,279 0.0% Covered Payroll 96,935,187 UAAL as a percentage of covered payroll 53.95% 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, 2013 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, 2013, 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, 2013 actuarial valuation, the projected unit credit actuarial cost method was used along with a discount rate of 4 percent. In addition, the actuarial assumptions included: an annual healthcare cost trend rate of 9 percent initially, reduced by decrements to an ultimate rate of 4.5 percent after 9 years, and an annual projected salary increase of 2 percent. 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 Acting 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 Acting 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 the following areas: workers’ compensation insurance, property and liability insurance, health insurance, dental insurance, and short-term disability 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 2012-13, 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 $600,000 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 2012-13, 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, 2013 NOTE 13 - Risk Management, concluded The City also has commercial stop loss insurance that provides specific (by individual member) coverage for health insurance claims incurred in excess of $200,000 within the plan year, and aggregate (plan wide) coverage for health insurance claims incurred above 110 percent 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 $6,236,814 reported as claims payable in the Self-Insurance Fund at June 30, 2013, 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 2013 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 2012 and 2013 were: Years Ended June 30, 2012 Risk of Loss Workers' compensation Beginning of Fiscal Year Balance Claim Payments Balance at Fiscal Year End - 1,522,113 (1,522,113) - Property and liability 1,966,172 220,985 (340,884) 1,846,273 Health 1,417,800 19,785,756 (18,272,354) 2,931,202 Dental 2013 Current Year Claims and Changes in Estimates Workers' compensation - 1,683,189 (1,683,189) - 3,383,972 23,212,043 (21,818,540) 4,777,475 - 3,766,762 (1,060,215) 2,706,547 (175,058) 954,586 Property and liability 1,846,273 Health 2,931,202 18,068,477 (18,570,637) 2,429,042 Dental - 1,921,813 (1,775,174) 146,639 4,777,475 23,040,423 (21,581,084) 6,236,814 72 (716,629) CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 14 – Interfund Transfers The interfund transfers in and out at June 30, 2013 are as follows: Fund Transfer Detail Transfers In General Capital projects-streets $ Debt Service-general obligation bonds Non-major governmental - 6,003,874 8,475,000 12,005,105 - 493,103 Internal service Total general fund 1,047,000 General Total streets fund 6,003,874 6,003,874 - 8,475,000 8,475,000 - Debt service-gen. obligation bonds General Total general obligation bonds fund Non-major governmental $ 1,047,000 Non-major enterprise Capital projects-streets - Transfers Out General Non-major governmental 1,059,299 28,036,381 12,005,105 1,047,000 4,836,544 4,914,013 Enterprise-water 265,153 - Enterprise-wastewater 106,512 - Non-major enterprise 96,032 - Internal service Total non-major governmental funds 14,759 17,324,105 5,961,013 Water Non-major governmental Total water fund - 265,153 265,153 Wastewater Non-major governmental Total wastewater fund - 106,512 106,512 Non-major enterprise General 493,103 - Non-major governmental Total non-major enterprise funds 77,469 570,572 96,032 96,032 Internal service General 1,059,299 - Non-major governmental Total internal service fund 1,059,299 14,759 14,759 Total $ 34,479,850 $ 34,479,850 Interfund transfers are made from various funds and cost centers to fund costs including property and liability insurance, technology replacement, vehicle replacement, debt service, streets capital projects and general government capital projects. 73 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 NOTE 15 – Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances To General Advances From Total Capital projects-public safety buildings & improvements $ 13,794,706 Capital projects-streets 2,814,300 Capital projects-public buildings 3,919,352 Total general fund 20,528,358 Enterprise Water Enterprise-wastewater 3,900,000 Total $ 24,428,358 Interfund advances were made from the general fund to capital projects funds to cover expenditures in impact fee funds until impact fees are received. None 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 Non-major enterprise-Chandler housing authority Total general fund Total $ 1,009,798 78 $ 1,009,876 Interfund due to/due from other funds were made as short term loans until the grants special revenue fund and Chandler Housing Authority enterprise fund due from other government’s balances are received. 74 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2013 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 percent of the plant capacity, and each party paying 50 percent of the construction costs. The Town of Gilbert acts as the Lead Agent, overseeing construction activities, which were substantially complete at June 30, 2013, 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, 2013, was: City of Chandler's Share $69,197,886 Town of Gilbert's Share 73,674,640 $142,872,526 NOTE 17 – Deficit in Fund Balances The grants special revenue fund and police confiscated property fund had deficit fund balances of $1,013,597 and $138,478 respectively. The deficits 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 $3,897,218, and $8,597,135 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Sales taxes Franchise fees State shared 7,545,600 $ 7,545,600 $ 7,710,290 $ 164,690 92,870,000 92,870,000 102,200,517 2,843,000 2,843,000 2,936,533 93,533 50,417,000 50,417,000 51,347,206 930,206 103,066 9,330,517 Licenses and permits 4,784,400 4,784,400 4,887,466 Charges for services 19,787,615 19,787,615 19,700,410 (87,205) Fines and forfeitures 3,325,700 3,325,700 3,634,659 308,959 Rentals 830,700 830,700 570,638 Contributions 100,000 100,000 100,000 - Interest revenue 781,000 781,000 1,739,689 958,689 Miscellaneous 265,000 265,000 688,499 423,499 183,550,015 183,550,015 195,515,907 11,965,892 22,690,703 24,429,798 22,905,837 1,523,961 724,424 756,171 631,546 124,625 Communications and public affairs 1,939,016 2,198,834 1,959,333 239,501 Law 3,383,604 3,518,419 3,461,216 57,203 City magistrate 3,976,197 4,226,574 3,814,772 411,802 54,191,682 41,952,675 14,117,428 27,835,247 769,714 790,743 760,620 30,123 Fire 27,628,276 28,366,615 28,190,080 176,535 Police 57,310,732 62,391,159 61,076,378 1,314,781 Transportation and development 16,635,210 18,903,140 17,839,772 1,063,368 Community services 22,644,792 24,220,595 23,079,181 1,141,414 211,894,350 211,754,723 177,836,163 33,918,560 (28,344,335) (28,204,708) 17,679,744 45,884,452 Total revenues (260,062) EXPENDITURES: General government City manager City clerk Management services Mayor and council Public safety Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in - Transfers out - 1,047,000 1,047,000 (47,476,626) (47,476,626) (28,036,381) 19,440,245 (47,476,626) (47,476,626) (26,989,381) 20,487,245 Change in fund balance (75,820,961) (75,681,334) (9,309,637) 66,371,697 Fund balances, July 1, 2012 173,746,332 173,746,332 Total other financing sources (uses) Fund balances, June 30, 2013 $ 97,925,371 See accompanying notes to this schedule. 78 $ 98,064,998 173,746,332 $ 164,436,695 $ 66,371,697 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2013 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 $ (4,674,436) Reserved encumbrances at June 30, 2013 recognized as budgetary expenditures in fiscal year ended June 30, 2013 Budgetary Comparison Schedule for the General Fund (4,635,201) $ (9,309,637) 79 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2013 Arizona Public Safety Personnel Retirement System - Police Schedule of Funding Progress Valuation (1) Actuarial (2) Actuarial Accrued Date 30-Jun Value of Assets Liability (AAL) Note 1 2011 2012 2013 $ 87,003,157 97,906,676 104,171,101 $ 126,207,510 145,061,169 152,068,214 (3) Percent (4) Unfunded (5) Annual (6) Unfunded AAL as a Percentage of Covered Funded (1)/(2) AAL (2) - (1) Covered Payroll Payroll (4)/(5) 68.9% 67.5% 68.5% $ 39,204,353 47,154,493 47,897,113 $ 23,962,835 24,439,914 23,985,615 163.6% 192.9% 199.7% (5) Annual Covered (6) Unfunded AAL as a Percentage of Covered Payroll Arizona Public Safety Personnel Retirement System - Firefighters Schedule of Funding Progress (1) Actuarial Value of Valuation Date 30-Jun 2011 2012 2013 (2) Actuarial Accrued Liability (AAL) (3) Percent Funded Note 1 (1)/(2) (2) - (1) Payroll (4)/(5) 76,690,236 87,095,848 91,765,966 76.8% 75.1% 75.1% $ 17,771,355 21,705,289 22,869,555 $ 14,990,957 15,497,570 15,395,116 118.5% 140.1% 148.6% Assets $ 58,918,881 65,390,559 68,896,411 $ (4) Unfunded AAL Post-Employment Benefits Other than Pensions Schedule of Funding Progress (6) (1) Actuarial Value of Assets Valuation Date 01-Jul 2009 2011 2013 $ (3) Percent Funded (1)/(2) (4) Unfunded AAL (2) - (1) (5) Annual Covered Payroll Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 26,120,095 0.0% $ 26,120,095 $ 98,508,058 26.5% 33,009,726 52,300,279 0.0% 0.0% 33,009,726 52,300,279 93,253,195 96,935,187 35.4% 54.0% (2) Actuarial Accrued Liability (AAL) Note 2 - $ Note 1 The actuarial cost method used is entry age normal method. Note 2 The actuarial cost method used is projected unit credit method. 80 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ 207,000 $ 207,000 $ 295,647 $ 88,647 System development fees 2,225,000 2,225,000 2,575,380 350,380 Regional transportation tax 1,448,374 1,448,374 6,295,212 4,846,838 - - 306,834 306,834 3,880,374 3,880,374 9,473,073 5,592,699 3,216,000 3,216,000 15,000 3,201,000 Miscellaneous Total revenues EXPENDITURES: General government Transportation and development 23,779,231 665,038 1,744,978 (1,079,940) Capital outlay 15,883,849 40,454,107 17,641,124 22,812,983 42,879,080 44,335,145 19,401,102 24,934,043 (38,998,706) (40,454,771) (9,928,029) 30,526,742 7,506,074 7,506,074 6,003,874 (1,502,200) (6,506,074) (6,506,074) 1,000,000 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2012 Fund balances (deficits), June 30, 2013 $ - 6,506,074 1,000,000 6,003,874 5,003,874 (37,998,706) (39,454,771) (3,924,155) 35,530,616 34,061,069 34,061,069 34,061,069 (3,937,637) 82 $ (5,393,702) $ 30,136,914 $ 35,530,616 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, 2013 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Interest revenue 21,548,200 $ 21,548,200 $ 22,131,449 $ 583,249 - - 16,203 16,203 21,548,200 21,548,200 22,147,652 599,452 Principal 22,610,000 22,610,000 22,610,000 - Interest and fiscal charges 10,851,950 10,851,950 10,851,950 - 33,461,950 33,461,950 33,461,950 - (11,913,750) (11,913,750) (11,314,298) 8,475,000 8,475,000 8,475,000 - 8,475,000 8,475,000 8,475,000 - Change in fund balances (3,438,750) (3,438,750) (2,839,298) Fund balances, July 1, 2012 19,258,684 19,258,684 19,258,684 Total revenues EXPENDITURES: Total expenditures Excess (deficiency) of revenues over expenditures 599,452 Other financing sources (uses): Transfers in Total other financing sources (uses) Fund balances, June 30, 2013 $ 15,819,934 83 $ 15,819,934 $ 16,419,386 599,452 $ 599,452 84 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. 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. 85 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. 86 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2013 Special Revenue Local Police Highway Transportation User Assistance Community Confiscated Parks and Grants Development Property Recreation Library ASSETS Equity in pooled cash and investments $10,473,304 Receivables (net of allowance for uncollectible): Accounts $ 3,617,516 $ - $ 54,805 $3,107,235 $299,374 $91,987 - - - - - - 7,163 Special assessments - - - - - - - Notes - - - 431,127 - - - - - 4,149 - - - - - Other Prepaids Due from other governments Total assets 1,222,725 - 412,842 174,535 501,839 - - $11,696,029 $ 3,617,516 $ 424,154 $ 660,467 $3,609,074 $299,374 $91,987 $ $ $ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 320,600 27,635 $ 208,852 47,114 $ 249,607 $ 10,319 $ 1,438 114,300 - 39,051 12,464 - 305 - Trust liabilities and deposits - - - 167,901 3,497,945 - - Accrued interest - - - - - - - Due to other funds - - 1,009,798 - - - - Advances from other funds - - - - - - - Arbitrage liability - current Bonds payable - current Deferred revenue - - 180,050 - - - - Total liabilities 434,900 27,635 1,437,751 227,479 3,747,552 10,624 1,438 11,261,129 - 3,589,881 - (1,013,597) 432,988 - (138,478) 288,750 - 90,549 - 11,261,129 3,589,881 (1,013,597) 432,988 (138,478) 288,750 90,549 $11,696,029 $ 3,617,516 $299,374 $91,987 Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) Total liabilities and fund balances $ 424,154 $ 660,467 $3,609,074 (Continued) 87 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2013 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ Receivables (net of allowance for uncollectible): Accounts 4,256,738 $ 411,579 $ 1,576,762 $ 25,773 $ 83,401 - - - - - Special assessments - 5,363,358 - - - Notes - - - - - - - - - - Other Prepaids Due from other governments Total assets - - - - 452,642 $ 4,256,738 $ 5,774,937 $ 1,576,762 $ 25,773 $ 536,043 $ - $ 8,006 $ 1,574,010 $ 3,628 $ 42,587 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll - - 2,752 - 272 - - - - - 416,738 107,000 - - - Due to other funds - - - - - Advances from other funds - - - 3,919,352 - Arbitrage liability - current Bonds payable - current Deferred revenue 5,000 3,830,000 - 4,909,344 - 11 - - Total liabilities 4,251,738 5,024,350 1,576,762 3,922,991 42,859 5,000 - 750,587 - - (3,897,218) 493,184 - 5,000 750,587 - (3,897,218) 493,184 Trust liabilities and deposits Accrued interest Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) Total liabilities and fund balances $ 4,256,738 $ 5,774,937 88 $ 1,576,762 $ 25,773 $ 536,043 Capital Projects Public Safety Community Services Improvements $ 16,584,497 Vehicle and Total Other Buildings and Capital Equipment $ 1,290 5,207,268 Special Technology Municipal Governmental Assessments Replacement Arts Funds 14,949,390 $ 4,614,999 $ 5,539,294 - - - Replacement $ - $ 52,847 $ 70,946,769 - 8,453 - - - - - - 5,363,358 - - - - - - 431,127 450 - - - - - 4,149 450 2,764,583 - - $ 16,586,237 $ 5,207,268 $ $ $ 7,256 $ 94,617 1,602 - - - - 14,949,390 $ 4,614,999 $ 5,539,294 $ 52,847 $ 79,518,889 $ $ $ 300 $ 2,623,843 - 34 27,840 - 1,683 - - 172,429 - - - - - - 3,665,846 - - - - - - 523,738 - - - - - - 1,009,798 - 13,794,706 - - - - 17,714,058 6,750 - 2,441 - - - - - 14,202 3,830,000 102,969 13,804,403 - 1,717 27,840 300 34,643,308 5,089,394 16,483,268 - (8,597,135) 14,949,390 - 4,613,282 - 5,511,454 - 52,547 - 58,522,009 (13,646,428) 16,483,268 (8,597,135) 14,949,390 4,613,282 5,511,454 52,547 44,875,581 14,949,390 $ 4,614,999 $ 5,539,294 $ 16,586,237 $ 5,207,268 $ $ 52,847 $ 79,518,889 (Concluded) 89 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2013 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Library $ $ REVENUES: Highway user taxes $ Grants and entitlements 12,929,504 $ - 694,355 $ - $ 4,807,393 1,380,100 $ - 88,560 54,548 System development fees - - - - - - - Special assessments - - - - - - - Charges for services - 86,103 - - - - - Fines and forfeitures - - - - 2,186,525 - - Interest revenue 59,917 12,069 1,888 122 - 2,327 323 5,959 84,744 2,321 - 19 - - 12,995,380 877,271 4,811,602 1,380,222 2,186,544 90,887 54,871 General government - - 1,199,000 1,276,499 - - - Public safety - - 877,242 - 555,724 - - 7,523,223 349,659 348,021 - - - - - - 264,914 - - 94,493 20,231 3,369,993 81,222 3,886,228 16,904 1,733,701 - - - - - - - - - - - - - - - - 10,893,216 430,881 6,575,405 1,293,403 2,289,425 94,493 20,231 2,102,164 446,390 (1,763,803) (3,606) 34,640 Miscellaneous Total revenues EXPENDITURES: Current: Transportation and development Community services Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES 86,819 (102,881) OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) - - - - - - - 239,673 - - - - - - (4,832,543) (4,001) - (77,469) - - - (4,592,870) (4,001) - (77,469) - - - REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER (2,490,706) FINANCING USES 442,389 (1,763,803) 9,350 (102,881) 423,638 (35,597) 432,988 $ (138,478) (3,606) 34,640 FUND BALANCES (DEFICITS): Beginning of year End of year 13,751,835 $ 11,261,129 3,147,492 $ 3,589,881 750,206 $ (1,013,597) 90 $ $ 292,356 55,909 288,750 $ 90,549 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings $ - $ - $ - $ - - $ Community Grants - - - $ Services - $ - 2,448,355 - - - - 141,372 - 4,317,101 - 676,127 - - - - - - - - - - - - - - - - - 794 5 46,251 - 181,354 - - 258,194 - - - - 676,921 258,199 187,623 2,448,355 4,498,455 - - 784,991 6,680 55,434 13,360 - - 37,975 - - - - - 1,590 - 84,585 - - - 70,154 - 100,608 514,911 - - 5,877,962 110 1,729,607 2,549,442 3,830,000 430,000 - - - - 833,475 222,600 - - - - 4,663,475 652,600 6,772,672 6,790 1,970,234 3,077,713 (4,663,475) 24,321 (6,514,473) 180,833 478,121 1,420,742 - - - - - - 4,663,475 - 7,050,556 2,610 - - - - (1,047,000) - - - 4,663,475 - 6,003,556 2,610 - - - 24,321 (510,917) 183,443 478,121 1,420,742 5,000 726,266 510,917 15,063 15,062,526 5,000 $ 750,587 $ - (4,080,661) $ (3,897,218) $ 493,184 $ 16,483,268 (Continued) 91 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2013 Capital Projects Public Safety Vehicle and Total Other Buildings and Capital Equipment Improvements Replacement Special Technology Municipal Governmental Assessments Replacement Arts Funds REVENUES: Highway user taxes $ Grants and entitlements - $ - $ - $ - $ - $ 12,929,504 - - - - 6,779 9,480,090 747,230 - - - - 5,205,703 Special assessments - - - - - 676,127 Charges for services - - - - - 86,103 Fines and forfeitures - - - - - 2,186,525 44,785 77,664 8,372 39,436 2,218 477,525 - 37,553 - - - 388,790 792,015 115,217 8,372 39,436 8,997 31,430,367 13,360 - 81,590 271,832 - 3,702,746 573 - - - - 1,471,514 Transportation and development - - - - - 8,307,078 Community services - - - - 156,152 1,221,463 801,955 2,331,527 - 857,419 - 23,236,070 System development fees Interest income Miscellaneous Total revenues EXPENDITURES: Current: General government Public safety Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures - - - - - 4,260,000 - - - - - 1,056,075 815,888 2,331,527 81,590 1,129,251 156,152 43,254,946 (23,873) (2,216,310) (73,218) (1,089,815) (147,155) (11,824,579) REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) - 76,381 - - - 76,381 108,828 2,728,024 6,199 2,524,740 - 17,324,105 - - - - - (5,961,013) 108,828 2,804,405 6,199 2,524,740 - 11,439,473 84,955 588,095 (67,019) 1,434,925 (147,155) 4,076,529 199,702 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (385,106) FUND BALANCES (DEFICITS): Beginning of year End of year (8,682,090) $ (8,597,135) 14,361,295 $ 14,949,390 4,680,301 $ 4,613,282 $ 5,511,454 $ 52,547 45,260,687 $ 44,875,581 (Concluded) 92 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Highway user taxes $ 11,900,000 $ 11,900,000 1,000 1,000 - (1,000) 71,000 71,000 59,915 (11,085) - - 5,959 5,959 11,972,000 11,972,000 12,995,378 1,023,378 4,107,900 3,096,318 - 3,096,318 10,054,101 8,660,995 8,075,191 585,804 2,017,364 5,028,411 4,759,724 268,687 16,179,365 16,785,724 12,834,915 3,950,809 (4,207,365) (4,813,724) 160,463 4,974,187 Charges for services Interest revenue Miscellaneous Total revenues $ 12,929,504 $ 1,029,504 EXPENDITURES: General government Transportation and development Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in 289,700 Transfers out 289,700 239,673 (50,027) (4,832,453) (4,832,453) (4,832,543) (90) (4,542,753) (4,542,753) (4,592,870) (50,117) Change in fund balances (8,750,118) (9,356,477) (4,432,407) Fund balances, July 1, 2012 13,751,835 13,751,835 13,751,835 5,001,717 $ 4,395,358 Total other financing sources (uses) Fund balances, June 30, 2013 $ 93 $ 9,319,428 4,924,070 $ 4,924,070 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 400,000 $ 400,000 $ 694,355 $ 294,355 Charges for services 80,000 80,000 86,103 Interest revenue 13,000 13,000 12,069 - - 84,744 84,744 493,000 493,000 877,271 384,271 266,200 100,200 - 100,200 1,294,377 913,225 350,483 562,742 - 485,843 119,807 366,036 1,560,577 1,499,268 470,290 1,028,978 (1,067,577) (1,006,268) 406,981 1,413,249 (4,001) (4,001) (4,001) - (4,001) (4,001) (4,001) - (1,071,578) (1,010,269) 3,147,492 3,147,492 Miscellaneous Total revenues 6,103 (931) EXPENDITURES: General government Transportation and development Capital outlay 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, 2012 Fund balances, June 30, 2013 $ 2,075,914 94 $ 2,137,223 $ 402,980 1,413,249 3,147,492 - 3,550,472 $ 1,413,249 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Special Revenue For the year ended June 30, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 10,463,607 Interest revenue $ - Miscellaneous 10,463,607 $ - 4,807,393 $ 1,883 (5,656,214) 1,883 - - 2,321 10,463,607 10,463,607 4,811,597 (5,652,010) General government 3,764,063 3,086,470 1,584,281 1,502,189 Public safety 2,407,300 2,603,247 879,799 1,723,448 Transportation and development 5,534,325 259,757 348,410 (88,653) 791,950 802,587 268,900 533,687 2,969,436 8,680,896 4,021,393 4,659,503 15,467,074 15,432,957 7,102,783 8,330,174 (5,003,467) (4,969,350) (2,291,186) 2,678,164 Total revenues 2,321 EXPENDITURES: Community services Capital outlay Total expenditures Change in fund balances 750,206 Fund balances, July 1, 2012 Fund balances (deficits), June 30, 2013 $ (4,253,261) 95 750,206 $ (4,219,144) 750,206 $ (1,540,980) $ 2,678,164 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 3,500,000 Interest revenue Total revenues $ 3,500,000 $ 1,380,100 $ (2,119,900) - - 124 124 3,500,000 3,500,000 1,380,224 (2,119,776) 4,898,450 4,008,021 2,207,291 1,800,730 180,000 193,867 32,154 161,713 5,078,450 4,201,888 2,239,445 1,962,443 EXPENDITURES: General government Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures (1,578,450) (701,888) (859,221) (157,333) - - (77,469) (77,469) - - (77,469) (77,469) (1,578,450) (701,888) (936,690) (234,802) 423,638 423,638 Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances 423,638 Fund balances, July 1, 2012 Fund balances (deficits), June 30, 2013 $ (1,154,812) 96 $ (278,250) $ (513,052) $ (234,802) 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Fines and forfeitures $ Interest revenue 3,000,000 $ 24,000 Miscellaneous Total revenues 3,000,000 $ 24,000 2,186,525 $ - - - 19 3,024,000 3,024,000 2,186,544 (813,475) (24,000) 19 (837,456) EXPENDITURES: 600,000 - - - Public safety General government 1,620,000 1,629,627 586,638 1,042,989 Capital outlay 1,380,000 2,575,259 1,839,377 735,882 3,600,000 4,204,886 2,426,015 1,778,871 Total expenditures Change in fund balances Fund balances (deficits), July 1, 2012 Fund balances (deficits), June 30, 2013 $ (576,000) (1,180,886) (239,471) 941,415 (35,597) (35,597) (35,597) - (611,597) 97 $ (1,216,483) $ (275,068) $ 941,415 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 86,541 $ 86,541 $ 88,560 $ 2,019 1,000 1,000 2,327 1,327 87,541 87,541 90,887 3,346 185,025 185,025 94,629 90,396 185,025 185,025 94,629 90,396 Change in fund balances (97,484) (97,484) (3,742) 93,742 Fund balances, July 1, 2012 292,356 292,356 Total revenues EXPENDITURES: Community services Total expenditures Fund balances, June 30, 2013 $ 194,872 98 $ 194,872 292,356 $ 288,614 $ 93,742 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Special Revenue For the year ended June 30, 2013 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 $ 54,548 $ (5,452) - - 323 60,000 60,000 54,871 (5,129) 60,000 63,599 22,268 41,331 60,000 63,599 22,268 41,331 (3,599) 32,603 36,202 55,909 55,909 - 323 EXPENDITURES: Community services Total expenditures - Change in fund balances 55,909 Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 55,909 99 $ 52,310 $ 88,512 $ 36,202 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, 2013 Total Budgeted Amounts Original Final Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Miscellaneous $ - $ - $ 258,194 $ 258,194 - - 258,194 12,414,961 1,843,023 519,503 93,691 7,023,337 369,694 129,736 1,082,072 48,158 1,590 79,652 2,705,670 15,807,291 8,586,364 7,220,927 17,576,848 23,330,058 9,797,836 13,532,222 (17,576,848) (23,330,058) (9,539,642) (13,274,028) 17,576,848 17,576,848 7,050,556 (10,526,292) - - (1,047,000) (1,047,000) 17,576,848 17,576,848 6,003,556 (11,573,292) (5,753,210) (3,536,086) (24,847,320) Total revenues 258,194 EXPENDITURES: General government Public safety Transportation and development Community services Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures $ 5,941,265 321,536 (1,590) 50,084 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) - Change in fund balances 510,917 Fund balances, July 1, 2012 Fund balances (deficits), June 30, 2013 $ 510,917 100 510,917 $ (5,242,293) 510,917 $ (3,025,169) $ (24,847,320) 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 180,000 $ 180,000 $ 141,372 $ (38,628) 1,000 1,000 46,251 45,251 181,000 181,000 187,623 6,623 41,201 41,953 15,752 26,201 - 110 110 - 41,201 42,063 15,862 26,201 139,799 138,937 171,761 32,824 - - 2,610 (450,000) (450,000) - 450,000 (450,000) (450,000) 2,610 447,390 (310,201) (311,063) 174,371 480,214 (4,080,661) (4,080,661) EXPENDITURES: General government Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2012 Fund balances (deficits), June 30, 2013 $ (4,390,862) 101 $ (4,391,724) (2,610) (4,080,661) $ (3,906,290) $ 480,214 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Capital Projects For the year ended June 30, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 20,603,153 Interest revenue $ 20,479,983 $ 2,448,355 $ (18,031,628) - - 3 3 20,603,153 20,479,983 2,448,358 (18,031,625) General government 1,141,320 1,374,874 55,675 1,319,199 Transportation and development 5,403,584 291,241 91,243 199,998 - 221,581 220,153 1,428 15,703,992 20,459,611 1,943,701 18,515,910 22,248,896 22,347,307 2,310,772 20,036,535 (1,645,743) (1,867,324) 137,586 2,004,910 15,063 - Total revenues EXPENDITURES: Community services Capital outlay Total expenditures Change in fund balances 15,063 Fund balances, July 1, 2012 Fund balances (deficits), June 30, 2013 $ (1,630,680) 102 15,063 $ (1,852,261) $ 152,649 $ 2,004,910 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue 2,800,000 $ 2,800,000 $ 4,317,101 $ 1,517,101 75,000 75,000 181,356 106,356 2,875,000 2,875,000 4,498,457 1,623,457 General government Community services 3,068,959 3,194,316 3,070,463 249,968 31,504 515,855 (3,038,959) 265,887 Capital outlay 3,220,100 5,659,746 3,726,780 (1,932,966) 9,483,375 8,980,177 4,274,139 (4,706,038) (6,608,375) (6,105,177) 224,318 (3,082,581) (429,300) (429,300) - 429,300 (429,300) (429,300) - 429,300 Change in fund balances (7,037,675) (6,534,477) 224,318 6,758,795 Fund balances, July 1, 2012 15,062,526 15,062,526 15,062,526 - Total revenues EXPENDITURES: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Fund balances, June 30, 2013 $ 8,024,851 103 $ 8,528,049 $ 15,286,844 $ 6,758,795 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, 2013 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 475,000 $ 475,000 $ 747,230 $ 272,230 40,000 40,000 44,786 4,786 515,000 515,000 792,016 277,016 160,640 162,144 31,504 130,640 3,484,144 2,360 573 1,787 236,000 2,249,451 803,085 1,446,366 3,880,784 2,413,955 835,162 1,578,793 (3,365,784) (1,898,955) (43,146) 1,855,809 EXPENDITURES: General government Public safety Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) 95,000 95,000 108,828 13,828 95,000 95,000 108,828 13,828 65,682 1,869,637 Change in fund balances (3,270,784) (1,803,955) Fund balances (deficits), July 1, 2012 (8,682,090) (8,682,090) (11,952,874) $ (10,486,045) Fund balances (deficits), June 30, 2013 $ 104 (8,682,090) $ (8,616,408) $ 1,869,637 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, 2013 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ 91,000 Miscellaneous $ 91,000 $ 77,665 $ (13,335) - - 37,553 37,553 91,000 91,000 115,218 24,218 General government 3,650,000 2,044,467 - 2,044,467 Capital outlay 5,222,089 6,643,931 3,630,144 3,013,787 8,872,089 8,688,398 3,630,144 5,058,254 (8,781,089) (8,597,398) (3,514,926) 5,082,472 - - 76,381 2,728,024 2,728,024 2,728,024 - 2,728,024 2,728,024 2,804,405 76,381 Change in fund balances (6,053,065) (5,869,374) Fund balances, July 1, 2012 14,361,295 14,361,295 14,361,295 8,308,230 $ 8,491,921 $ 13,650,774 Total revenues EXPENDITURES: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from disposal of capital assets Transfers in Total other financing sources (uses) Fund balances, June 30, 2013 $ 105 76,381 (710,521) 5,158,853 $ 5,158,853 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, 2013 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Total revenues 24,200 $ 24,200 $ 8,372 $ (15,828) 24,200 24,200 8,372 (15,828) 102,567 91,365 81,590 9,775 102,567 91,365 81,590 9,775 (78,367) (67,165) (73,218) (6,053) 6,750 6,750 6,199 (551) 6,750 6,750 6,199 (551) (71,617) (60,415) (67,019) EXPENDITURES: General government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances 4,680,301 Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 4,608,684 106 4,680,301 $ 4,619,886 (6,604) 4,680,301 $ 4,613,282 $ (6,604) 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, 2013 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ 25,000 $ 25,000 $ 39,436 $ 14,436 25,000 25,000 39,436 General government 1,263,300 1,006,099 399,601 606,498 Capital outlay 2,956,500 2,984,493 902,892 2,081,601 4,219,800 3,990,592 1,302,493 2,688,099 (4,194,800) (3,965,592) (1,263,057) (2,673,663) 2,521,682 2,521,682 2,524,740 3,058 2,521,682 2,521,682 2,524,740 3,058 (1,673,118) (1,443,910) 1,261,683 (2,670,605) 4,076,529 4,076,529 4,076,529 - 2,632,619 $ 5,338,212 Total revenues 14,436 EXPENDITURES: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 2,403,411 107 $ $ (2,670,605) 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, 2013 Positive (Negative) Budgeted Amounts Original Final Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ - Interest revenue $ - $ 6,779 $ 6,779 2,000 2,000 2,218 218 2,000 2,000 8,997 6,997 200,000 200,000 157,352 42,648 200,000 200,000 157,352 42,648 (198,000) (198,000) (148,355) 49,645 199,702 199,702 199,702 Total revenues EXPENDITURES: Community services Total expenditures Change in fund balances Fund balances , July 1, 2012 Fund balances , June 30, 2013 $ 1,702 108 $ 1,702 $ 51,347 $ 49,645 109 110 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. 111 City of Chandler Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2013 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds ASSETS Current assets: Equity in pooled cash and investments $ 12,629,268 $ 145,010 $ 4,878,527 $ 17,652,805 1,727,191 52,994 38,405 1,818,590 Due from other governments - - 78 78 Inventories - 33,699 - 33,699 Prepaid items - - 345,977 345,977 60,814 - - 60,814 14,417,273 231,703 5,262,987 19,911,963 Other assets - 1,202 - 1,202 Notes receivable - - 363,450 363,450 Accounts receivable Other receivables Total current assets Long-term assets: Capital assets: Non-depreciable 7,199,158 19,231,806 1,597,897 28,028,861 Depreciable, net 8,766,611 10,268,649 7,019,682 26,054,942 15,965,769 29,500,455 8,617,579 54,083,803 15,965,769 29,501,657 8,981,029 54,448,455 30,383,042 29,733,360 14,244,016 74,360,418 834,163 46,048 19,096 Accrued payroll 46,948 17,121 49,593 899,307 113,662 Trust liabilities and deposits 16,049 44,420 227,448 287,917 Total capital assets Total long-term assets Total assets LIABILITIES Current liabilities: Accounts payable 112 Accrued interest - 2,094 - 2,094 Due to other funds - - 78 Unearned revenue 158,795 16,822 4,370 78 179,987 669 262 863 1,794 Bonds payable - 20,000 - 20,000 Deferred bond premium - 196 - 196 Compensated absences payable - 4 - 4 94,446 - - 94,446 1,151,070 146,967 301,448 1,599,485 70,244 27,496 90,611 188,351 Bonds payable - 121,000 - 121,000 Deferred bond premium - 2,742 - 2,742 Arbitrage liability Landfill closure and postclosure liability Total current liabilities Long-term liabilities: Compensated absences payable OPEB liability Landfill closure and postclosure liability Total long-term liabilities Total liabilities 90,554 31,898 - 122,452 4,245,554 - - 4,245,554 4,406,352 183,136 90,611 4,680,099 5,557,422 330,103 392,059 6,279,584 15,965,769 29,440,503 8,617,579 54,023,851 5,234,378 14,056,983 NET POSITION Investment in capital assets 8,859,851 Unrestricted Total net position $ 24,825,620 (37,246) $ 29,403,257 113 $ 13,851,957 $ 68,080,834 City of Chandler Combining Statement of Revenues, Expenses, and Changes in Net Position Non-Major Proprietary Funds For the year ended June 30, 2013 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 13,836,363 $ 976,102 $ - $ 14,812,465 Grants and entitlements - - 5,785,335 5,785,335 Rentals - - 637,329 637,329 58 4,427 627,393 631,878 13,836,421 980,529 7,050,057 21,867,007 General and administrative 1,322,830 100,000 - 1,422,830 Personal services 1,578,836 542,269 1,527,908 3,649,013 10,064,152 17,713 198,759 10,280,624 Commodities Housing assistance payments 528,064 492,440 536,233 - - 4,727,636 1,556,737 4,727,636 Depreciation and amortization expense 480,976 804,098 483,355 1,768,429 13,974,858 1,956,520 7,473,891 23,405,269 Miscellaneous Total operating revenues OPERATING EXPENSES: Contractual services Total operating expenses (138,437) OPERATING INCOME (LOSS) (975,991) (423,834) (1,538,262) NONOPERATING REVENUES (EXPENSES): Interest revenue 147,362 Interest expense - Accretion of bond premium - 196 - 196 Amortization of bond issuance costs - (80) - (80) 147,362 (2,627) 27,706 8,925 (978,618) (396,128) Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 1,445 176,513 27,706 (4,188) (4,188) - 172,441 (1,365,821) CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions - 307,373 185,411 492,784 Transfers in - 208,103 362,469 570,572 Transfers out (80,189) (15,843) - (96,032) Total transfers (80,189) 499,633 547,880 967,324 Change in net position (71,264) (478,985) 151,752 (398,497) NET POSITION Beginning of year 24,896,884 End of year $ 114 24,825,620 29,882,242 $ 29,403,257 13,700,205 $ 13,851,957 68,479,331 $ 68,080,834 115 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2013 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 $ 13,776,163 (11,848,050) (1,536,739) Airport $ 1,032,171 (598,046) (526,996) Chandler Housing Authority $ 729,080 5,814,623 (4,966,305) (1,487,023) Total Other Proprietary Funds $ 15,537,414 5,814,623 (17,412,401) (3,550,758) 391,374 (92,871) 90,375 388,878 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out (80,189) 208,103 (15,843) 362,469 - 570,572 (96,032) Net cash provided (used) by noncapital financing activities (80,189) 192,260 362,469 474,540 (110,240) (320,570) (262,880) (693,690) Principal paid on bond maturities - (20,000) - (20,000) Interest paid on bonds Capital contributions - (4,572) 307,373 185,411 (4,572) 492,784 (110,240) (37,769) (77,469) (225,478) 147,362 1,445 27,707 176,514 Net cash provided (used) by investing activities 147,362 1,445 27,707 176,514 Net increase (decrease) in cash and cash equivalents 348,307 63,065 403,082 814,454 12,280,961 81,945 4,475,445 16,838,351 145,010 $ 4,878,527 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 CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 12,629,268 116 $ $ 17,652,805 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 (138,437) $ $ (423,834) $ 804,098 (44,372) 66,996 6,854 (15,886) 47,049 (13,986) 80 26,093 3,203 (705) 5,218 35,243 12,070 - 47,313 529,811 883,120 514,209 1,927,140 391,374 $ $ - $ (92,871) 196 80 483,355 (1,538,262) 480,976 $ 117 (975,991) 1,768,429 3,948 13,625 (8,346) 17,257 4,370 6,625 (13,986) 13,705 84,743 10,057 16,552 (6,298) $ 90,375 $ 388,878 $ - $ 196 80 City of Chandler Statement of Changes in Assets and Liabilities - Agency Fund Fiduciary Funds For the year ended June 30, 2013 Balance Balance July 1, 2012 Additions Deletions June 30, 2013 Miscellaneous Deposit Fund Assets: Equity in pooled cash and investments Total assets $ 11,500 $ 2,000 $ (6,500) $ 7,000 $ 11,500 $ 2,000 $ (6,500) $ 7,000 $ 11,500 $ 2,000 $ (6,500) $ 7,000 $ 11,500 $ 2,000 $ (6,500) $ 7,000 Liabilities: Due to others Total liabilities 118 119 120 City of Chandler Financial Data Schedule Housing and Redevelopment For the year ended June 30, 2013 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. 121 City of Chandler Financial Data Sheet Housing and Redevelopment June 30, 2013 Combining statement of netposition - all HUD programs FDS Line # Low Rent Public Housing AMP 1 14.850a Account Description AMP 2 14.850a All AMPs 14.850a ASSETS 111 113 114 115 Cash - unrestricted Cash - restricted for FSS escrow accounts Cash - security deposits Cash-restricted for payment of current liabilities 122 125 126 126.1 128 142 Accounts receivable - HUD other projects Accounts receivable - miscellaneous Accounts receivable - tenants - dwelling rents Allowance for doubtful accounts - dwelling rents Fraud recovery Prepaid expenses and other assets 161 162 164 166 167 171 $ Land Buildings Furniture, equipment, machinery - admin Accumulated depreciation Construction in progress Notes and mortgages receivable - non-current TOTAL ASSETS 1,170,193 833 61,228 - $ 789,060 56,935 - $ 1,959,253 833 118,163 - 9,518 (3,313) - 78 4,961 (937) 990 - 78 14,479 (4,250) 990 - 1,932,844 5,050,733 130,354 (5,479,151) - 1,582,289 9,369,039 60,106 (4,712,819) - 3,515,133 14,419,772 190,460 (10,191,970) - 2,873,239 7,149,702 10,022,941 LIABILITIES 312 321 322 331 341 342 345 Accounts payable Accrued wage/payroll taxes payable Accrued compensated absences - current Accounts payable - HUD PHA programs Tenant security deposits Deferred revenues Other current liabilities 9,071 15,149 249 61,228 5,313 4,058 8,381 95 56,935 6,301 13,129 23,530 344 118,163 11,614 353 354 Noncurrent liabilities - other Accrued compensated absences - noncurrent 833 26,090 10,007 833 36,097 117,933 85,777 203,710 1,634,780 833 1,119,693 6,298,615 765,310 7,933,395 833 1,885,003 2,755,306 7,063,925 9,819,231 TOTAL LIABILITIES NET ASSETS 508.1 511.1 512.1 Invested in capital assets, net of related debt Restricted net position Unrestricted net position TOTAL NET POSITION TOTAL LIABILITIES AND NET POSITION $ 122 2,873,239 $ 7,149,702 $ 10,022,941 Business Activities Central Office 14.850a $ Other Business 702,977 - $ - $ - 32,718 (23,393) - $ 1,719,788 2,400 - Housing Choice Vouchers 14.871 Total Business Activities 2,422,765 2,400 - $ - 200,000 520,613 129,670 (176,917) 363,450 275,542 97,620 1,951 Total $ 27,186 345,977 200,000 520,613 162,388 (200,310) 363,450 4,657,560 98,453 120,563 1,951 78 27,186 14,479 (4,250) 990 345,977 35,470 (33,977) - 3,715,133 14,940,385 388,318 (10,426,257) 363,450 712,302 2,759,004 3,471,306 749,769 14,244,016 594 15,858 353 820 270 2,400 - 864 15,858 353 2,400 820 3,230 10,204 166 1,951 4,370 368 17,223 49,592 863 1,951 120,563 4,370 12,802 37,048 - 37,048 93,250 17,466 94,083 90,611 54,673 2,670 57,343 131,005 392,058 9,325 649,124 673,366 2,082,148 682,691 2,731,272 1,493 331,785 285,486 8,617,579 332,618 4,901,761 658,449 2,755,514 3,413,963 618,764 13,851,958 713,122 $ 2,758,184 $ 3,471,306 $ 749,769 $ 123 14,244,016 City of Chandler Financial Data Sheet Housing and Redevelopment For the year ended June 30, 2013 Statement of revenues, expenses, and changes in fund net assets - all HUD programs FDS Line # Low Rent Public Housing AMP 1 14.850a Account description AMP 2 14.850a All AMPs 14.850a REVENUES 70300 70400 70600 70610 70710 70720 70730 71100 713 713.1 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 Proceeds from disposition of assets held for sale Cost of sale of assets Fraud recovery Other revenue Gain or loss on sale of capital assets Investment income - restricted $ 246,853 8,050 954,103 107,489 20,300 29,774 - $ 357,112 446,547 77,922 1,851 22,304 - $ 603,965 8,050 1,400,650 185,411 22,151 52,078 - 1,366,569 905,736 2,272,305 Administrative salaries Auditing fees Management fees Bookkeeping fees Compensated absences 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 82,689 2,620 122,297 14,498 35,641 1,946 13,846 19,560 77,856 20,613 948 34,591 46,421 1,297 45,923 182,170 140,619 121,138 67,331 11,009 11,035 26,339 10,824 1,091,211 86,612 2,145 105,336 12,495 33,557 1,939 12,731 16,800 250 1,879 6,604 95 3,288 81,885 63,962 60,530 37,079 18,473 4,690 10,102 2,669 563,121 169,301 4,765 227,633 26,993 69,198 3,885 26,577 36,360 77,856 20,613 1,198 36,470 53,025 1,392 49,211 264,055 204,581 181,668 104,410 29,482 15,725 36,441 13,493 1,654,332 Other expenditures: Housing assistance payments HAP portability-in Depreciation TOTAL EXPENDITURES 162,729 1,253,940 282,485 845,606 445,214 2,099,546 112,629 60,130 172,759 - 77,469 - 77,469 - - 77,469 77,469 112,629 137,599 250,228 2,642,677 6,926,326 9,569,003 TOTAL REVENUES EXPENSES 91100 91200 91300 91310 914 91500 91600 91900 92000 92100 92300 92400 93100 93200 93300 93800 94100 94200 94300 94500 96100 96200 96210 96300 96400 97300 97350 97400 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 POSITION TOTAL NET POSITION, BEGINNING OF YEAR NET POSITION, END OF YEAR $ 2,755,306 $ 7,063,925 $ 9,819,231 OTHER MEMORANDUM AMOUNTS 70600 11190 11210 Maximum annual contributions commitment Unit months available Number of unit months leased 1,956 1,924 124 1,680 1,663 3,636 3,587 Central Office 14.850a $ 299,584 36,360 71,063 1,594 - Business Activities Other Business $ $ 33,363 299,584 36,360 71,063 4,777 2,365 - $ 4,384,685 780 8,866 556,033 - Eliminations $ (299,584) (36,360) (71,063) - Total $ 637,328 8,050 5,785,335 185,411 27,708 8,866 610,476 - 408,601 38,911 447,512 4,950,364 (407,007) 7,263,174 317,224 112,832 3,904 2,304 37,401 473,665 1,967 330 13,417 63 175 93 12 735 8,754 37 25,583 317,224 1,967 330 112,832 17,321 63 175 93 12 3,039 8,754 37,401 37 499,248 161,170 3,570 69,984 43,740 76,685 6,873 60,592 42,609 20,482 11,970 17,632 515,307 (299,584) (71,063) (36,360) (407,007) 647,695 8,335 258,715 10,758 104,490 120,465 41,095 1,198 36,533 53,200 1,485 49,223 264,055 207,620 190,422 104,410 29,482 27,695 91,474 37 13,493 2,261,880 3,390 477,055 33,122 58,705 36,512 535,760 4,209,610 518,026 1,629 5,244,572 (407,007) 4,209,610 518,026 483,355 7,472,871 (68,454) (19,794) (88,248) (294,208) - (209,697) 135,000 - - 135,000 - 150,000 (1,019) - 362,469 (1,019) 135,000 - 135,000 148,981 - 361,450 66,546 (19,794) 46,752 (145,227) - 151,753 763,991 - 13,700,205 591,903 $ 33,363 3,183 2,365 - Housing Choice Vouchers 14.871 Total Business Activities 658,449 2,775,308 $ 2,755,514 3,367,211 $ 3,413,963 $ 618,764 $ - $ 13,851,958 4,384,685 5,832 5,840 125 126 STATISTICAL SECTION The statistical section includes various statistical schedules including historical expenditure comparisons, property taxes, debt service, and demographic information about the City. Citizen participation and input are valuable assets to any government entity and assist the City Council with their decision-making. The 228 people appointed to serve on Chandler boards and commissions volunteer their time to make a difference in the community (at left: Planning and Zoning Commission). V O L U N T E E R S Statistical Section 2013 Accounting Book.indd 6 9/3/13 11:01 AM Statistical Section 2013 Accounting Book.indd 7 9/3/13 11:01 AM 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 128 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 144 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 148 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 155 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 158 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. 127 CITY OF CHANDLER, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2004 2005 2006 2007 Governmental activities Net investment in capital assets $ Restricted Unrestricted Total governmental activities net position 101,665,063 260,653,345 (1) $ 288,893,354 90,046,996 $ 162,790,025 110,932,310 $ 106,396,966 115,343,816 224,309,216 214,663,854 208,727,675 265,645,323 416,021,275 488,386,189 575,777,986 669,882,493 Business-type activities Net investment in capital assets 252,117,283 275,991,278 325,992,618 347,306,362 Restricted 63,985,390 72,538,299 52,511,899 57,835,328 Unrestricted 82,444,533 78,334,422 76,090,729 78,718,941 398,547,206 426,863,999 454,595,246 483,860,631 Net investment in capital assets 353,782,346 438,781,303 586,645,963 636,199,716 Restricted 154,032,386 183,470,609 158,908,865 173,179,144 Unrestricted 306,753,749 292,998,276 284,818,404 Total business-type activities net position Primary government Total primary government net position $ 814,568,481 $ 915,250,188 (1) The significant increase in this year is due to the addition of the retroactive infrastructure. 128 $ 1,030,373,232 344,364,264 $ 1,153,743,124 Schedule 1 Fiscal Year 2008 $ $ 353,996,843 2009 $ 2010 433,851,899 $ 2011 537,576,346 $ 2012 534,292,488 $ 2013 545,926,100 $ 558,279,485 56,979,639 117,712,539 94,440,806 41,906,129 44,047,942 112,307,412 341,971,306 271,690,158 198,059,181 260,307,288 259,783,598 179,518,042 752,947,788 823,254,596 830,076,333 836,505,905 849,757,640 850,104,939 427,130,654 387,401,986 298,938,820 281,936,017 280,440,445 355,015,004 24,319,427 - - - - - 45,300,009 98,413,928 163,103,784 168,164,942 179,339,498 176,961,822 496,750,090 485,815,914 462,042,604 450,100,959 459,779,943 531,976,826 781,127,497 821,253,885 836,515,166 816,228,505 826,366,545 913,294,489 81,299,066 117,712,539 94,440,806 41,906,129 44,047,942 112,307,412 387,271,315 370,104,086 361,162,965 428,472,230 439,123,096 356,479,864 1,249,697,878 $ 1,309,070,510 $ 1,292,118,937 $ 1,286,606,864 129 $ 1,309,537,583 $ 1,382,081,765 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2004 2005 2006 2007 Expenses Governmental activities: General government $ Public safety Community development Public works Transportation and development Community services Interest and fiscal charges 32,925,516 $ 38,116,265 $ 36,669,140 $ 42,317,392 59,666,119 56,022,025 63,840,179 7,457,073 6,973,474 8,706,473 76,200,082 9,154,407 21,309,408 17,175,426 31,940,075 32,402,242 - - - - 20,200,390 19,017,024 24,087,695 29,464,039 11,426,919 10,649,133 11,658,090 11,479,112 152,985,425 147,953,347 176,901,652 201,017,274 Water 40,544,967 41,689,649 38,582,431 40,687,283 Wastewater 24,505,362 25,825,966 25,294,189 27,230,862 Solid waste 9,705,932 9,598,287 8,154,317 9,843,824 Airport 1,458,068 1,582,079 1,765,772 1,757,279 Chandler housing authority 8,977,049 7,773,223 6,713,829 9,133,427 85,191,378 86,469,204 80,510,538 88,652,675 Total governmental activities expenses Business-type activities: Total business-type activities expenses Total primary government expenses $ 238,176,803 $ 234,422,551 $ 257,412,190 $ 289,669,949 (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 130 Schedule 2a Fiscal Year 2008 $ $ 2009 54,459,719 $ 2010 52,293,004 $ 2011 48,920,813 $ 2012 67,808,567 80,860,917 87,609,165 92,421,801 90,738,477 11,692,559 10,429,826 11,715,276 - 39,241,652 47,180,197 56,155,939 - - 33,086,565 14,880,604 $ 2013 88,876,901 $ 90,143,339 89,141,559 95,974,126 (1) - - - (1) - - - 50,909,361 (1) 52,111,019 55,846,316 34,278,998 35,299,676 28,919,560 28,966,271 30,979,208 12,938,524 13,541,708 12,767,934 12,425,819 11,777,701 234,222,016 244,729,714 258,055,213 251,143,899 271,521,569 284,720,690 53,554,653 53,201,379 62,556,496 57,452,876 56,277,327 55,440,712 30,657,939 36,079,767 38,227,999 37,896,180 38,804,360 40,401,849 6,845,979 12,076,998 14,605,448 13,443,102 13,756,352 13,974,858 1,602,268 2,269,691 1,797,991 2,107,354 1,941,752 1,960,788 7,593,242 7,239,185 7,654,449 7,580,783 7,642,503 7,473,891 100,254,081 110,867,020 124,842,383 118,480,295 118,422,294 119,252,098 334,476,097 $ 355,596,734 $ 382,897,596 $ 131 369,624,194 $ 389,943,863 $ 403,972,788 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2004 2005 2006 2007 Program Revenues Governmental activities: Charges for services: General government $ 14,339,606 $ 11,770,912 $ 12,359,183 $ 12,793,179 Public safety 2,515,026 2,921,707 3,303,895 4,178,941 Community development 7,833,679 10,119,322 8,338,156 10,405,425 12,879,966 14,037,835 - - - - 1,713,889 1,988,832 2,272,309 2,272,826 Public works Transportation and development Community services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues 24,529,838 (1) 13,145,192 1,488,369 1,041,858 2,167,327 3,707,115 22,107,766 13,880,993 12,751,519 26,428,112 62,878,301 55,761,459 65,722,227 72,930,790 Business-type activities: Charges for services: Water 36,148,220 36,860,006 38,112,680 39,054,531 Wastewater 19,849,892 20,541,547 20,499,458 21,083,587 Solid waste 9,850,919 9,787,298 12,218,720 12,769,423 896,968 931,547 1,005,728 974,190 Airport Community services - housing authority Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues 1,744,088 631,494 648,766 661,509 6,655,089 6,839,056 6,634,435 6,312,438 34,348,267 35,817,247 23,547,210 28,014,518 109,493,443 111,408,195 102,666,997 108,870,196 $ 172,371,744 $ 167,169,654 $ 168,389,224 $ 181,800,986 $ (90,107,124) $ (92,191,888) $ (111,179,425) $ (128,086,484) $ 24,302,065 (65,805,059) $ 24,938,991 (67,252,897) $ 22,156,459 (89,022,966) $ 20,217,521 (107,868,963) 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." 132 Schedule 2b Fiscal Year 2008 $ 2009 12,629,779 $ 2010 14,349,483 $ 2011 16,621,003 $ 2012 22,548,679 $ 2013 31,381,062 $ 5,794,329 35,898,378 4,317,843 4,802,272 7,110,304 5,658,628 5,488,535 3,581,458 3,336,188 - (2) - 7,375,050 - 15,831,165 5,226,726 6,025,846 - (2) - - (2) 27,905,311 10,150,102 - - - 11,884,554 2,699,469 5,235,864 4,515,980 4,079,359 4,136,285 8,240,732 1,897,300 2,337,910 5,510,710 5,890,147 6,162,320 3,999,536 36,104,151 23,902,360 8,159,960 16,041,213 11,016,136 9,116,635 78,968,242 59,436,073 51,279,991 66,102,580 86,395,443 74,780,433 40,613,727 39,707,910 42,276,145 43,708,974 49,565,071 48,258,282 25,145,258 25,922,530 28,406,808 31,610,009 35,907,085 37,690,400 12,979,695 12,762,120 12,891,628 13,277,403 13,890,957 13,836,363 773,449 741,556 815,751 995,307 996,605 976,102 1,061,658 595,420 521,404 457,781 466,556 637,329 6,114,138 6,225,928 6,367,024 6,297,200 6,341,087 5,785,335 19,782,193 9,110,319 8,484,239 8,659,772 19,118,567 81,572,568 106,470,118 95,065,783 99,762,999 105,006,446 126,285,928 188,756,379 $ 185,438,360 $ 154,501,856 $ 151,042,990 $ 171,109,026 $ 212,681,371 $ 263,536,812 $ (155,253,774) $ (185,293,641) $ (206,775,222) $ (185,041,319) $ (185,126,126) $ (209,940,257) $ 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) $ 69,504,281 (140,435,976) 133 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2004 2005 2006 2007 Governmental Revenues and Other Changes in Net Position Governmental activities: Taxes: Property taxes $ Sales taxes Franchise fees Highway user taxes Other taxes 20,818,622 $ 22,743,537 $ 25,016,760 $ 26,921,292 66,671,049 75,702,332 82,327,461 2,365,749 3,032,260 2,198,738 95,410,460 3,230,429 - - - 16,490,129 - - - 3,481,086 State shared revenues 37,903,674 40,050,636 45,853,506 57,716,644 System development fees 15,165,191 13,878,663 2,391,875 7,862,804 695,312 - Investment income Miscellaneous Westcor contract payment Transfers in (out) Total governmental activities - (1) - 12,286,630 17,868,181 362,343 10,736 1,822,070 - 34,500,000 - 621,256 924,227 478,441 469,201 146,632,728 164,556,802 202,672,272 223,409,492 1,199,710 4,069,440 6,424,600 6,876,399 Business-type activities: Investment income Miscellaneous Transfers in (out) 376,917 (621,256) Total business-type activities: Total primary government 232,589 (924,227) 955,371 532,354 (478,441) 3,377,802 1,043,407 (469,200) 6,478,513 7,450,606 $ 147,588,099 $ 167,934,604 $ 209,150,785 $ 230,860,098 $ 56,525,604 $ 72,364,914 $ 22,796,183 $ 95,323,008 $ 122,991,135 Change in Net Position Governmental activities Business-type activities Total primary government 25,257,436 $ 81,783,040 28,316,793 $ (1) System development fees were reclassed to charges for services under program revenues. 134 100,681,707 28,634,972 $ 51,431,155 27,668,127 Schedule 2c Fiscal Year 2008 $ 2009 34,063,123 $ 97,226,841 38,957,986 $ 85,897,334 2011 40,617,269 $ 83,019,726 2012 36,158,574 $ 86,523,295 2013 31,877,716 $ 97,485,387 29,656,415 102,200,517 3,937,952 3,264,093 3,174,390 2,819,521 2,988,456 2,936,533 15,856,863 13,849,284 13,116,481 13,287,878 11,823,280 12,929,504 3,786,677 7,921,275 13,965,973 88,561 5,979,715 6,295,212 62,970,459 61,211,289 54,492,427 47,732,614 45,958,627 51,347,206 - - - - - - 20,823,059 10,045,274 3,487,145 1,841,244 1,221,923 2,843,417 767,221 995,606 850,191 3,071,588 1,116,832 2,181,627 - - - - - 534,086 (1,542,346) 239,966,281 220,599,795 5,906,545 1,792,816 (534,086) 7,165,275 $ 247,131,556 $ $ 84,712,507 $ 13,381,312 $ 2010 98,093,819 873,357 213,596,959 191,278,573 2,536,237 756,641 788,478 1,542,346 1,422,790 (873,357) 4,867,061 1,306,074 225,466,856 $ 35,306,154 $ (10,934,176) $ (244,702) 24,371,978 214,903,033 $ 6,821,737 $ (23,773,310) $ (16,951,573) 135 (102,875) 198,377,861 210,287,556 533,313 389,446 1,180,290 946,507 244,702 1,351,829 74,075 1,409,437 102,875 1,724,522 1,815,350 2,692,602 193,003,095 $ 200,193,211 $ 6,237,254 $ 13,251,735 $ (11,749,327) $ - (74,075) (5,512,073) 9,678,984 $ 22,930,719 212,980,158 347,299 72,196,883 $ 72,544,182 CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2004 General fund Reserved $ Unreserved 2005 50,644,739 $ 2006 56,325,826 $ 2007 15,211,490 $ 12,349,638 126,091,872 124,519,771 148,606,301 189,087,760 Nonspendable - - - - Restricted - - - - Assigned - - - - Unassigned - - - Total general fund - $ 176,736,611 $ 180,845,597 $ 163,817,791 $ 201,437,398 $ 76,703,585 $ 99,267,829 $ 100,167,158 $ 109,777,210 All other governmental funds Reserved Unreserved, reported in: Special revenue funds 5,648,789 9,259,261 8,089,144 14,064,542 Capital projects funds - - 253,903 9,158,971 Restricted - - - - Unassigned - - - - Total all other governmental funds $ 82,352,374 $ 108,527,090 (1) In FY 2011 the City implemented GASB 54, thus changing how fund balance is categorized. 136 $ 108,510,205 $ 133,000,723 Schedule 3 Fiscal Year 2008 $ 2009 28,237,521 $ 2010 30,482,311 $ 2011 62,149,646 $ 2012 - (1) - $ - 196,093,067 194,457,561 137,041,044 - (1) - - - - - 893,067 (1) 947,804 938,549 - - - 844,754 (1) 939,867 939,867 - - - 61,733,537 (1) 102,635,587 101,115,766 98,872,954 (1) - - - $ 224,330,588 $ 224,939,872 $ 199,190,690 $ 162,344,312 $ 43,039,742 $ 97,267,450 $ 61,355,662 $ - $ $ 2013 (1) 69,223,074 66,077,714 $ 173,746,332 $ 169,071,896 $ - $ - 17,752,306 18,786,740 18,103,651 - (1) - - 11,608,190 7,868,412 7,379,375 - (1) - - - - - 105,756,072 (1) 111,378,788 111,367,545 - - - (12,315,197) (1) (12,798,348) (13,646,428) 72,400,238 $ 123,922,602 $ 86,838,688 $ 93,440,875 137 $ 98,580,440 $ 97,721,117 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2004 Taxes - local $ Taxes - intergovernmental 2005 91,492,704 $ 2006 102,701,196 $ 2007 109,141,434 $ - (1) 50,173,867 51,677,502 60,107,031 Property taxes - - - 26,909,841 (1) Sales taxes - - - 95,410,460 (1) Franchise fees - - - 3,230,429 Highway user taxes - - - 16,490,129 Other taxes - - - 3,481,086 State shared revenues - - - 57,716,644 4,217,697 14,100,944 9,296,423 7,610,807 15,165,191 13,878,663 10,322,313 11,871,969 Grants and entitlements System development fees - (1) Special assessments 251,608 439,565 303,336 309,386 License and permits 7,500,437 7,262,403 5,541,215 6,728,309 13,386,852 15,133,670 15,475,362 18,216,653 3,517,080 4,136,342 4,231,306 4,058,090 18,012 19,580 8,363 89,875 5,980 250 500 50,000 Investment income 2,170,414 6,987,824 10,699,944 15,589,318 Miscellaneous 2,204,555 2,667,611 1,632,785 1,830,328 Charges for current services Fines and forfeitures Rentals Contributions Total revenues $ 190,104,397 $ 219,005,550 $ 226,760,012 (1) As of fiscal year ended June 30, 2007 the City reclassed the governmental funds revenues of Taxes-local and Taxes-intergovernmental to Property taxes, Sales taxes, and Other taxes. 138 $ 269,593,324 (1) Schedule 4 Fiscal Year 2008 $ $ 2009 - $ 2010 - $ 2011 - $ 2012 - $ 2013 - $ - - - - - - - 33,844,181 38,677,156 40,259,579 36,301,709 32,329,560 29,841,739 97,226,841 85,897,334 83,019,726 86,523,295 97,485,387 102,200,517 3,937,952 3,264,093 3,174,390 2,819,521 2,988,456 2,936,533 15,856,863 13,849,284 13,116,481 13,287,878 11,823,280 12,929,504 3,786,677 7,921,275 13,965,973 88,561 5,979,715 6,295,212 62,970,459 61,211,289 54,492,427 47,732,614 45,958,627 51,347,206 10,553,680 18,168,904 10,377,502 14,759,620 13,826,606 9,480,090 8,111,597 4,475,029 4,768,306 6,739,920 11,724,823 7,781,083 426,428 863,747 663,209 673,064 678,027 676,127 3,894,368 2,667,720 2,758,392 3,208,944 6,955,605 4,887,466 17,254,859 19,492,740 19,420,434 18,002,168 19,938,566 19,786,513 4,342,621 4,912,159 5,336,294 4,697,317 4,700,430 5,825,098 94,575 138,667 101,322 387,952 455,842 570,638 50,000 50,000 50,000 100,000 100,000 100,000 18,334,581 8,825,695 3,171,308 1,635,258 1,034,895 2,529,078 1,255,681 1,661,772 1,913,571 4,593,104 1,392,691 1,384,123 281,941,363 $ 272,076,864 $ 256,588,914 $ 139 241,550,925 $ 257,372,510 $ 258,570,927 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2004 General government $ Public safety Community development Public works Transportation and development 2005 31,024,154 $ 2006 41,135,736 $ 2007 33,729,455 $ 38,124,478 58,407,246 57,630,321 64,090,649 7,449,114 7,438,317 8,740,380 75,800,634 8,989,308 23,028,537 38,421,485 32,555,171 22,987,692 - - - - Community services 21,048,659 20,893,626 22,738,420 25,714,032 Capital improvements 36,794,139 33,828,009 49,884,875 75,524,840 Principal retirement 8,689,500 8,329,500 17,122,071 12,374,500 Interest and fiscal charges 9,641,321 9,180,338 10,465,983 10,669,877 - 174,917 135,437 189,840 Debt service: Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 196,082,670 $ 12.4% 217,032,249 11.1% $ 239,462,441 15.9% (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 140 $ 270,375,201 12.1% Schedule 5 Fiscal Year 2008 $ $ 2009 51,261,849 $ 2010 40,503,113 $ 2011 44,663,091 78,306,604 84,493,816 85,390,303 11,593,642 10,509,467 11,614,214 19,306,381 19,283,643 - - $ 2012 43,636,784 $ 84,007,752 2013 48,894,811 $ 44,512,533 82,820,106 89,587,613 - (1) - - 17,664,633 - (1) - - - 22,126,233 (1) 25,532,739 24,807,578 28,830,926 29,916,002 30,078,856 22,836,317 23,255,568 23,554,854 104,836,442 124,680,957 106,366,737 67,299,941 29,787,069 41,793,319 16,659,500 15,275,000 17,260,000 15,090,000 15,970,000 26,870,000 14,437,346 13,059,295 13,646,479 12,901,616 12,550,323 11,908,025 179,201 961,100 183,969 278,512 - - 325,411,891 14.1% $ 338,682,393 12.5% $ 326,868,282 $ 268,177,155 13.3% 13.3% 141 $ 238,810,616 13.5% $ 263,033,922 16.4% 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 2004 2005 2006 2007 Other Financing Sources (Uses) Bond premium $ Face amount of bonds issued $ - Proceeds from sale of capital assets 680,019 Payment to escrow agent - Westcor contract payment Transfers in Transfers out Total other financing sources and (uses) Net change in fund balances - $ 852,671 $ 515,129 35,720,000 30,905,000 264,352 205,936 (11,228,422) $ 1,975,876 88,405,000 173,742 - (24,335,292) - - 34,500,000 - 26,072,155 33,226,080 37,204,132 31,525,563 (28,318,852) (35,170,013) (39,584,767) (34,246,951) (1,566,678) 23,664,668 63,745,430 63,497,938 (7,544,951) 142 $ 25,637,969 $ (17,956,999) $ 62,716,055 Schedule 6 Fiscal Year 2008 $ $ 2009 165,431 $ 2010 2,348,878 7,370,000 120,513,000 280,969 219,793 - - $ 2011 290,569 $ 10,450,000 97,609 (10,556,600) 2012 1,047,424 $ 2013 - $ - 20,285,000 - - 108,929 89,007 76,381 - - (10,816,839) - - - - - - 38,442,603 40,593,319 46,309,016 41,605,646 20,576,188 32,849,979 (41,108,342) (44,937,903) (39,144,322) (56,040,439) (22,685,504) (33,997,394) 5,150,661 118,737,087 7,446,272 (3,810,279) (2,020,309) (1,071,034) (38,319,867) $ 52,131,648 $ (62,833,096) $ 143 (30,436,509) $ 16,541,585 $ (5,533,759) CITY OF CHANDLER, ARIZONA TAXABLE REVENUE BY CATEGORY LAST TEN FISCAL YEARS Fiscal Year 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 $ 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 $ 66,397,962 $ 75,619,727 $ 89,390,316 $ 95,410,462 City Direct Sales Tax Rate 2 1.74% 1.62% 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 percent to 4.4 percent. 144 1.72% Schedule 7 Fiscal Year 2008 2009 2010 2011 2012 2013 $ 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 $ 97,485,339 $ 102,200,517 1.72% 1.75% 1.75% 1.77% 145 1.76% 717,442 10,408,518 45,331,309 2,288,989 2,937,426 334,981 2,884,618 10,817,611 9,069,109 3,731,350 1,315,599 12,363,565 1.75% CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING SALES AND USE TAX RATES LAST TEN FISCAL YEARS Schedule 8 Overlapping Rates City Direct Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tax Rate 1 Maricopa County Tax Rate 1.74% 1.70% 1.72% 1.72% 1.72% 1.75% 1.75% 1.77% 1.76% 1.75% 0.68% 0.67% 0.68% 0.68% 0.68% 0.67% 0.67% 0.67% 0.68% 0.67% 2 State of Arizona Tourism & Sports Authority Tax Rate 3 Tax Rate 4 5.13% 5.13% 5.14% 5.12% 5.09% 5.02% 5.05% 5.85% 6.00% 5.92% 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 percent to 4.4 percent. 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 percent to 0.77 percent. 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 percent to 6.6 percent. State tax rate increases during the past ten fiscal years: 1.0 percent 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 percent 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. 146 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2013 Taxpayer 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 Taxpayer N Taxpayer O Business Type Utility Department Store Grocery Store Department Store Home Improvement Construction Telecommunication Department Store Utility Department Store Grocery Store Construction Vehicle Dealer Construction 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 2004 Rank Percentage of Total Sales and Use Tax Payments 1 2 3 4 5 6 7 8 9 10 9.49% 3.74% 2.72% 2.21% 1.64% 1.28% 1.28% 1.25% 1.23% 1.13% $ 25.97% $ 26,539,776 Rank Percentage of Total Sales and Use Tax Payments 5,478,729 1 8.25% 1,862,172 3 2.80% 1,261,596 6 1.90% 1,038,776 1,285,750 1,995,882 1,296,185 1,135,560 1,121,992 1,031,824 9 5 2 4 7 8 10 1.56% 1.94% 3.01% 1.95% 1.71% 1.69% 1.55% Sales and Use Tax Payments 17,508,466 26.37% 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. 147 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Fiscal Year General Obligation Bonds Revenue Bonds 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 102,480,000 120,805,000 140,130,000 197,075,000 187,645,000 294,588,000 282,888,000 279,968,000 268,148,000 256,288,000 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 22,045,000 Special Assessment Bonds Accrued Interest - Capital Appreciation Bonds 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 5,350,000 30,928,390 32,426,569 33,620,916 34,505,099 35,000,654 - Business-type Activities Intergovernmental Loans Total Primary Percentage of Personal Government 2 Income 1 34,040,000 34,040,000 48,540,000 47,440,000 45,695,000 75,783 56,942 37,135 16,304 - 331,682,173 345,042,011 346,212,051 436,680,903 422,040,654 636,165,000 608,655,000 603,345,000 570,770,000 535,685,000 Net General Bonded Debt Outstanding Estimated Actual Taxable Value of Property Percentage of Estimated Actual Taxable Value of Property 126,185,000 142,075,000 159,545,000 259,485,000 248,040,000 483,200,000 467,920,000 441,393,462 419,876,316 401,435,614 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 21,502,506,694 Fiscal Year General Obligation Bonds Revenue Bonds Certificates of Participation 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 23,705,000 21,270,000 19,415,000 62,410,000 60,395,000 188,612,000 185,032,000 179,747,000 170,987,000 161,567,000 116,140,000 114,800,000 108,870,000 101,095,000 93,000,000 76,415,000 67,580,000 60,280,000 52,670,000 44,740,000 10,210,000 9,335,000 - Fiscal Year General Bonded Debt 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 126,185,000 142,075,000 159,545,000 259,485,000 248,040,000 483,200,000 467,920,000 459,715,000 439,135,000 417,855,000 Less Amount Available in Debt Service Fund 18,321,538 19,258,684 16,419,386 Excise Tax Revenue Obligations 1.15% 1.16% 1.14% 1.71% 0.95% 1.58% 1.51% 1.97% 1.99% 1.87% 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. 148 5.71% 5.97% 5.70% 7.23% 6.22% 9.20% 9.35% 9.22% 7.84% 6.71% Per Capita 1 1,476 1,495 1,496 1,877 1,804 2,704 2,578 2,535 2,383 2,213 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2013 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 East Valley 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 $ 766,085,000 None 194,110,000 226,400,000 135,405,000 116,020,000 80,225,000 4.05% 6.75 6.75 13.52 71.08 4.96 1.99 21.97 16.21 None None $ Subtotal, overlapping debt 51,708,805 None 137,969,927 11,232,863 2,690,620 25,493,284 13,000,461 242,095,960 283,683,000 City direct debt 100.00 283,683,000 $ Total direct and overlapping debt 525,778,960 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 2012-13 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 149 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2004 2005 2006 2007 6% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 108,344,928 $ 37,575,000 $ 70,769,928 118,749,422 $ 61,660,000 $ 57,089,422 116,449,443 $ 74,720,000 $ 41,729,443 179,351,393 66,460,000 $ 112,891,393 Total net debt applicable to the limit as a percentage of the debt limit 35% 52% 64% 37% (1) 20% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 361,149,760 $ 395,831,408 $ 72,120,000 $ 289,029,760 388,164,810 $ 84,825,000 $ 395,831,408 $ 303,339,810 597,837,975 193,025,000 $ 404,812,975 Total net debt applicable to the limit as a percentage of the debt limit 20% 0% 22% 32% Source: Piper Jaffray, Inc. (1) In November 2006, Arizona Revised Statutes were amended to move public safety and emergency services, streets and transportation from the 6 percent category to the 20 percent 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 percent of secondary assessed valuation. Cities may issue general obligation bonds for any other purpose up to an amount not to exceed 6 percent of secondary assessed valuation. 150 (1) Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2013 Net secondary assessed valuation as of June 30, 2013 $ Debt limit (6% of assessed value) 2,175,376,677 130,522,600 Debt applicable to limit: 6% general obligation bonds 10,869,000 Legal 6% debt margin $ 119,653,600 Debt limit (20% of assessed value) $ 435,075,335 Debt applicable to limit: 20% general obligation bonds 406,986,000 Legal 20% debt margin $ 28,089,335 Fiscal Year 2008 $ 207,310,517 2009 $ 7,795,000 $ 199,515,517 691,035,056 $ 450,790,056 35% 199,550,297 $ 701,614,322 $ 229,348,322 67% $ 148,117,597 200,990,297 $ 701,614,322 $ 243,188,322 65% $ 134,756,597 $ 493,725,323 $ 47,371,323 90% 151 $ 123,470,758 $ 451,035,860 $ 23,740,860 95% 119,653,600 8% $ 427,295,000 $ 130,522,600 10,869,000 9% 446,354,000 $ 135,310,758 2013 11,840,000 9% 458,426,000 $ 2012 13,361,000 5% 472,266,000 $ 210,484,297 2011 9,494,000 5% 240,245,000 $ $ 10,934,000 4% $ 210,484,297 2010 435,075,335 406,986,000 $ 28,089,335 94% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Highway User Taxes 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 12,929,504 Less: Operating Expenses 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 10,893,216 Net Available Revenue 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 2,036,288 Debt Service Principal Interest 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 3,830,000 2,255,270 1,863,289 1,870,433 1,735,306 1,628,797 1,572,829 1,198,194 1,176,009 936,975 833,475 Coverage 1.17 1.15 1.42 1.75 1.65 0.70 0.94 0.98 0.85 0.44 Water Revenue Bonds Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Utility Service Charges 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 48,258,282 Less: Operating Expenses 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 26,890,219 Net Available Revenue 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 21,368,063 Debt Service Principal Interest 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 6,062,435 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 1,375,854 Coverage 1.64 1.62 2.08 2.08 1.06 1.19 1.45 2.14 2.85 2.87 Excise Tax Revenue Obligations Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Excise Tax Collections 148,768,677 141,025,083 136,164,353 148,885,867 156,621,139 Less: Operating Expenses Net Available Revenue - 148,768,677 141,025,083 136,164,353 148,885,867 156,621,139 Debt Service Principal 500,000 1,100,000 1,745,000 1,815,000 Interest 462,667 1,133,063 1,118,063 1,703,358 1,584,863 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 5 for breakdown of revenue pledged for Excise Tax Revenue Obligations first pledged February 4, 2009. 152 Coverage 0.00 0.00 0.00 0.00 0.00 321.55 86.36 61.39 43.18 46.07 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Utility Service Charges 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 37,690,400 Less: Operating Expenses 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 18,879,022 Net Available Revenue 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 18,811,378 Debt Service Principal Interest 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 2,197,565 1,713,875 1,592,081 1,828,920 1,691,169 1,554,504 1,341,752 1,104,530 947,148 874,363 809,286 Coverage 2.66 1.61 1.18 1.26 1.35 1.57 2.63 6.22 8.31 6.26 Solid Waste Revenue Bonds Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Utility Service Charges 9,825,572 9,773,505 - Less: Operating Expenses 9,035,882 8,703,517 - Net Available Revenue 789,690 1,069,988 - Debt Service Principal 125,000 - Note: 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) All debt was defeased June 29, 2005. 153 Interest 152,469 71,844 - Coverage 2.85 14.89 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (1) CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13c Municipal Property Corporation Certificates of Participation Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Water & Sewer Utility Service Charges 55,998,112 57,401,553 - Less: Operating Expenses 36,382,039 38,173,781 - Debt Service Net Available Revenue 19,616,073 19,227,772 - Principal Interest 825,000 875,000 - Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) All remaining debt was defeased in 2006. 154 813,045 755,295 - Coverage 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 (2) 5,805,699,536 31.2 3.1% 25,844 2004 224,644 2005 230,845 5,777,588,660 30.8 3.3% 25,028 2006 231,399 6,075,380,745 31.6 3.0% 26,255 2007 232,699 6,038,771,749 31.1 2.5% 25,951 2008 233,998 6,787,111,990 31.2 3.2% 29,005 2009 235,298 6,916,584,710 32.8 6.2% 29,395 2010 236,123 6,507,077,634 32.5 6.9% 27,558 2011 237,979 6,541,804,731 31.7 6.6% 27,489 2012 239,538 7,279,080,744 32.4 6.1% 30,388 2013 242,115 7,983,015,780 34.9 6.0% 32,972 (4) (5) Sources: 1 City's Planning Division based on July 1st estimates 2 City's Economic Development Division 3 Arizona Office of Employment and Population Statistics 4 Interim U.S. Census 5 Official U.S. Census 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. 155 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2013 Percentage Employer Employees Rank of Total City Employment Intel Corporation 11,000 1 8.77% Bank of America 3,600 2 2.87% Chandler Unified School District 3,000 3 2.39% Wells Fargo Ocotillo Corp. Campus 2,600 4 2.07% Chandler Regional Hospital 2,100 5 1.67% Ebay/Paypal 2,000 6 1.59% Verizon Wireless 1,695 7 1.35% City of Chandler 1,567 8 1.25% Microchip Technology 1,540 9 1.23% Freescale Semiconductors 1,450 10 1.16% Americredit - - - Motorola - - - MTD Outdoor Products, Inc. - - - - - - Total 30,552 Source: City's Economic Development Division and Arizona Office of Employment and Population Statistics. Note: 2004 Employment statistics are as of December 2004. 156 24.35% Schedule 15 2004 Percentage Employees 10,000 Rank 1 of Total City Employment 8.21% - - - 1,600 3 1.31% 2,000 2 1.64% 1,100 6 0.90% - - - - - - 1,523 4 1.25% 950 8 0.78% - - 900 9 0.74% 1,330 5 1.09% 1,000 7 0.82% 880 10 0.72% 21,283 17.46% 157 CITY OF CHANDLER, ARIZONA EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2004 2005 2006 2007 4 6 71 17 41 23 99 5 6 70 18 40 24 96 5 5 74 18 39 25 95 5 44 27 101 Total General Government 261 259 261 279 Total Planning and Development 117 111 108 111 183 178 182 219 3 48 6 3 55 6 3 59 Airport Engineering, development and Real estate Total Public Works 3 53 6 78 140 74 131 71 135 76 144 Police Fire Total Public Safety 438 179 617 436 195 631 460 207 667 487 219 706 5 85 29 20 139 5 85 41 18 149 5 85 41 21 152 85 42 21 153 1,457 1,459 1,505 1,612 Full Time Equivalent Personnel Mayor and council City clerk City manager Communications/public affairs City magistrate Law Management services 6 79 17 Total Transportation and Development Total Community Services 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 Neighborhood Programs moving from the Mayor and Council to the City Manager Department. Code Enforcement, Tourism, and Real Estate Services Downtown are new to the City Manager Department. (2) 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. (3) The significant change in this year is the result of Public Works Department and Planning and Development Department consolidated into one Transportation and Development Department. 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. 158 6 5 Schedule 16 Fical Year 2008 2009 2010 2011 2012 2013 5 5 5 5 6 4 6 104 18 6 103 18 6 96 15 5 122 12 4 124 14 5 178 19 48 29 106 43 28 105 41 27 95 40 27 85 38 30 72 39 29 72 316 308 285 296 288 346 114 103 80 (1) (2) (2) (2) - (3) - - 172 (3) 170 163 231 192 243 207 226 229 3 64 3 57 3 50 - (3) (3) - - 6 6 6 (3) - - 85 158 80 146 74 133 - (3) - - 496 228 724 483 223 706 478 219 697 467 218 685 467 238 705 468 234 702 5 5 6 5 5 4 88 43 20 156 86 41 18 150 80 42 20 148 88 42 20 155 89 42 19 155 85 46 18 153 1,711 1,620 1,569 1,537 1,549 1,556 159 CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program 2004 2005 2006 2007 General Government Privilege tax licenses Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio 15,713 504 996 47 3.77 16,663 534 1,542 49 3.46 20,464 505 1,292 57 2.78 20,652 721 1,292 57 3.32 Transportation & Development Building permits issued 11,688 8,951 7,909 6,474 1,817,536 1,010 1,967,446 1,027 48.1 113,501 14,560 2,236 33 40.7 136,942 15,310 3,767 58 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 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) 2,004,000 (3) 1,024 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 2,082,000 1,024 38.0 160,355 16,682 4,878 74 74,406 23 58,400,000 45,000,000 70,169 828 66,451 97,646 25,877 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 (3) Beginning in 2006 Library circulation includes e-material (4) Beginning in 2011 the previous named Planning & Development Department consolidated into Transportation & Development Department 160 Schedule 17 Fiscal Year 2008 2009 2010 2011 2012 2013 22,980 470 1,188 61 3.94 23,460 479 1,055 66 2.50 22,715 481 977 40 2.10 23,821 506 848 43 2.22 25,726 599 908 26 2.07 27,387 584 834 43 1.89 5,750 3,800 3,883 2,330 5,462 3,785 2,349,232 989 2,506,602 977 2,494,009 1,050 2,489,741 1,000 2,395,192 1,003 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 28.0 137,485 18,474 5,029 22 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 79,278 26 64,790,000 72,000,000 74,606 869 70,667 86,557 20,680 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 22,245 161 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 2004 2005 2006 2007 51 870 333 51 874 349 5 5 32 422,841 32 450,068 768 23,140 153 775 24,218 268,148,000 785 25,100 189 812 25,307 192 Public Safety Police stations Fire stations 1 8 1 9 2 9 2 10 General Government Based aircraft 433 434 457 499 1,021 10,368 21 1,051 10,799 21 1,063 10,952 22 1,080 12,291 24 Swimming pools Other recreational facilities (lighted fields) Library bookstock Transportation and Development Total miles streets (center line) Street lights Signalized intersections Based aircraft Municipal Utilities Water mains (miles) Fire hydrants Average daily treament (mgd) 53 889 535 (1) 5 33 469,000 (3) 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 (3) Beginning in 2006 Library bookstock is inclusive of electroinc circulation items (4) Beginning in 2011 Public Works Department merged into Transportaion and Development Department (5) Beginning in 2013 Airport Division moved from Transportation and Development Department to City Manager Department 162 54 959 468 5 34 483,128 Schedule 18 Fiscal Year 2008 2009 2010 2011 2012 2013 58 1,099 455 59 1,133 407 61 1,198 336 61 1,192 342 61 1,196 338 61 1,198 336 5 6 6 6 6 6 34 469,023 34 472,266 34 446,675 34 429,604 34 555,924 39 550,857 (4) 822 26,326 200 832 26,500 205 829 26,600 208 829 26,600 208 829 26,600 212 831 26,900 216 3 10 3 10 3 10 3 10 3 10 3 10 442 449 449 437 399 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) 22 163 388 (5) 1,227 12,553 26 164 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 Mayor Jay Tibshraeny & City Council V O L U N T E E R S 2013 Accounting Book.indd 8 9/3/13 11:01 AM