City of Tempe, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2012 City Council: Hugh Hallman, Mayor Joel Navarro, Vice Mayor Robin Arredondo-Savage Shana Ellis Mark Mitchell Onnie Shekerjian Corey Woods Administrative Staff: Charles W. Meyer, City Manager Presented by: Kenneth Jones, Finance and Technology Director Jerry Hart, CPA, Deputy Finance and Technology Director Karen Huffman, CPA, Controller 1 City of Tempe, Arizona  Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting List of Principal Officials City Organizational Chart 7 12 13 14 FINANCIAL SECTION Independent Auditors' Report 15 Management’s Discussion and Analysis (required supplementary information) 17 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities 35 36 Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - General Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - Transit Special Revenue Fund Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds 50 51 Notes to the Financial Statements 53 38 40 42 44 45 46 48 Combining Fund Financial Statements: Non-Major Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Internal Service Funds: Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Combining Statement of Cash Flows 3 112 116 122 123 124 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona TABLE OF CONTENTS Exhibit Page FINANCIAL SECTION (CONTINUED) Other Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual: General, Debt Service, Special Revenue and Enterprise Fund Types General Obligation Debt Service Fund Performing Arts Fund Highway User Revenue Fund Community Development Fund Housing Assistance Fund Community Facilities District Fund Transit Capital Projects Fund Streets Capital Projects Fund Police Capital Projects Fund Fire Capital Projects Fund Storm Drains Capital Projects Fund Parks Capital Projects Fund Rio Salado Capital Projects Fund Community Development Capital Projects Fund Signals Capital Projects Fund Water and Wastewater Fund Water and Wastewater Capital Projects Fund Solid Waste Fund Golf Fund Cemetery Fund 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 Financial Data Schedules: Housing Assistance Fund Balance Sheet Revenues and Expenses 152 153 STATISTICAL SECTION Net Assets by Component - Last Ten Fiscal Years (accrual basis of accounting) Changes in Net Assets - Last Ten Fiscal Years (accrual basis of accounting) Fund Balances, Governmental Funds - Last Ten Fiscal Years (modified accrual basis of accounting) Changes in Fund Balance, Governmental Funds – Last Ten Fiscal Years (modified accrual basis of accounting) Taxable Sales and Percentage of Taxable Sales by Category – Last Ten Fiscal Years (cash basis) Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years General Property Tax Information Primary and Secondary Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - All Direct and Overlapping Governments Last Ten Fiscal Years 4 S-1 S-2 157 158 S-3 161 S-4 162 S-5 S-6 S-7 164 165 166 S-8 168 S-9 170 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona TABLE OF CONTENTS Exhibit Page S-10 S-11 S-12 S-13 172 174 175 177 S-14 S-15 S-16 S-17 S-18 S-19 178 179 180 181 182 183 S-20 S-21 S-22 S-23 184 185 186 187 S-24 S-25 S-26 188 189 190 STATISTICAL SECTION (CONTINUED) Property Tax Levies – All Direct and Overlapping Governments – Last Ten Fiscal Years Property Tax Levies and Collections - Last Ten Fiscal Years Principal Tax Payers – Current Year and Nine Years Prior Excise Tax Collections – Last Ten Fiscal Years Percent of Net Direct Debt to Assessed Valuation and Net Direct Debt Per Capita - Last Ten Fiscal Years Net Direct and Overlapping General Obligation Bonded Debt Legal Debt Margin Information – Last Ten Fiscal Years Remaining General Obligation Bond Authorizations Pledged-Revenue Coverage – Last Ten Fiscal Years Pledged Revenue, Projected Debt Service and Estimated Coverage – Excise Tax Obligation Pledged Revenue, Projected Debt Service and Estimated Coverage – Transit Excise Tax Obligations Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Demographic and Economic Statistics - Last Ten Fiscal Years Principal Employers – Current Fiscal Year and Nine Years Prior Full-Time Equivalent City Government Employees by Function Last Nine Fiscal Years Operating Indicators by Function/Program - Last Seven Fiscal Years Capital Asset Statistics by Function/Program - Last Seven Fiscal Years 5 City of Tempe, Arizona  This section provides general information on the government’s structure and information useful in assessing the City’s financial condition. Intr oductor y Section 7 8 9 10 11 12 City of Tempe, Arizona List of Principal Officials City Council Hugh Hallman, Mayor Joel Navarro, Vice Mayor Robin Arredondo-Savage Shana Ellis Mark Mitchell Onnie Shekerjian Corey Woods Administrative Staff For the Fiscal Year Ended June 30, 2012 Charles W. Meyer, City Manager Jeff Kulaga, Assistant City Manager Tom Ryff, Police Gregory Ruiz, Fire Kathy Berzins, Community Services Don Bessler, Public Works Lisa Rastovsky-Collins, Community Development Shelley Hearn, Community Relations Rosa Inchausti, Diversity Program Barbara Blue, Internal Audit/Consulting Gretchen Maynard, Tempe Learning Center Brigitta Kuiper, City Clerk and Elections Andrew Ching, City Attorney MaryAnne Majestic, Municipal Court Kenneth Jones, Finance and Technology Renie Broderick, Human Resources 13 City Organizational Chart Residents of Tempe Mayor and City Council City Clerk City Attorney City Manager City Court Brigitta Kuiper brigitta_kuiper@tempe.gov Andrew Ching Charlie Meyer MaryAnne Majestic andrew_ching@tempe.gov charlie_meyer@tempe.gov m_majestic@tempe.gov Police Assistant City Manager Chief of Police Tom Ryff Jeff Kulaga Jeff_Kulaga@tempe.gov tom_ryff@tempe.gov Community Relations Office Fire Interim Fire Chief Gregory Ruiz Community Relations Manager Shelley Hearn greg_ruiz@tempe.gov shelley_hearn@tempe.gov Finance and Technology Diversity Office Finance and Technology Director Ken Jones Diversity Manager Rosa Inchausti ken_jones@tempe.gov rosa_inchausti@tempe.gov Community Development Interim Community Development Director Lisa Rastovsky-Collins lisa_rastovsky-collins@tempe.gov Internal Audit Office City Auditor Barbara Blue barbara_blue@tempe.gov Public Works Tempe Learning Center Public Works Director Don Bessler Organizational Dev Administrator Gretchen Maynard don_bessler@tempe.gov gretchen_maynard@tempe.gov Community Services Community Services Director Kathy Berzins kathy_berzins@tempe.gov Human Resources Human Resources Director Renie Broderick renie_broderick@tempe.gov 14 This section contains the independent auditor’s report, management’s discussion and analysis, and basic financial statements. Also included is financial statements for individual funds and component units for which data are not provided separately in the basic financial statements, and other useful supplementary information. Financial Section 3033 N. Central Ave., Suite 300 Phoenix, Arizona 85012 Tel (602) 277-9449 Fax (602) 277-9297 INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and Members of the City Council City of Tempe, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Tempe, Arizona (the City), as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Tempe, Arizona, as of June 30, 2012, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparisons for the General Fund and the Transit Special Revenue Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 21, 2012, on our consideration of City of Tempe, 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 and should be considered in assessing the results of our audit. 15 TUCSON • PHOENIX • FLAGSTAFF • ALBUQUERQUE www.heinfeldmeech.com Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 17 through 34 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The accompanying supplementary information such as the introductory section, combining statements, other supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining statements and other supplementary information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants November 21, 2012 16 Finance and Technology Department MANAGEMENT’S DISCUSSION AND ANALYSIS This section of the City of Tempe’s (the City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2012. Readers are encouraged to consider the information presented here in conjunction with additional information that has been furnished in the letter of transmittal. FINANCIAL HIGHLIGHTS The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $1.190 billion (net assets). Of this amount, $341.9 million (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors. The City’s total net assets decreased by $4.6 million during the fiscal year compared to a slight increase of $0.4 million in the prior year. The governmental funds experienced a decrease in net assets of $11.7 million which was offset with an increase in net assets of the enterprise funds of $7.1 million. The reason for the decrease in current year net assets for the governmental funds was a decrease in revenues. For the fiscal year ended June 30, 2012, the City’s governmental revenues decreased by $8.9 million. Predominately it was due to a decrease in capital grants and contributions of $8.7 million. Other variances in governmental revenues included an increase of $1.1 million in sales tax revenue offset by a decrease of $2.5 million of State shared income taxes. Expenses remained fairly constant between the current year and prior year. At June 30, 2012, the City’s governmental funds reported combined ending fund balances of $216.6 million. Approximately 63.7% of this total amount ($138.1 million) is for spending at the government’s discretion (committed, assigned, or unassigned). At June 30, 2012, total fund balance for the General Fund was $61.6 million which represents an increase of $7.5 million over the prior year’s fund balance. Revenues continued to exceed expenditures by $7.9 million; however it was less than prior year’s amount of $14.1 million. Although revenues increased by $3.2 million, General Fund expenditures increased by $9.5 million. At June 30, 2012, the City’s proprietary funds reported combined total net assets of $255.7 million, and total unrestricted net assets of $93.0 million. $88.3 million of the unrestricted net assets were in the Water and Wastewater Fund. At June 30, 2012, the total long-term obligations of the City decreased by $19.5 million due primarily to the scheduled debt service payments on existing debt being greater than the limited amount of new money bond issues which was $7.0 million in general obligation bonds for public safety, community service and street improvements and $8.4 million in excise tax revenue obligations for water/wastewater projects. In addition, the general obligation issuance included a refunding component of $12.8 million and the excise tax issuance refunded $22.1 million of general governmental and enterprise debt. The City also refunded $18.3 million in Performing Arts Center excise tax obligations. 17 OVERVIEW OF THE 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 are comprised of three components: (1) Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the current fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. Both of the government-wide statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include police, fire, community services, public works, community development, community relations, mayor and council, city manager, diversity program, internal audit/consulting, Tempe learning center, city clerk and elections, city attorney, municipal court, finance and technology, and human resources. The business-type activities of the City include water and wastewater, solid waste, golf and cemetery operations. Included within the government-wide financial statements are the operations of the Rio Salado Community Facilities District. Although legally separate from the City, this component unit is blended with the primary government (the City) because of its governance or financial relationships with the City. FUND FINANCIAL STATEMENTS The fund financial statements are designed to report information about groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. All of the funds of the City can be divided into the following two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Most of the City’s basic services are reported in governmental funds. These statements, however, focus on near-term inflows and outflows of spendable resources and spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs. 18 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 government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Other than the General Fund, the City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Transit Special Revenue Fund, General Obligation Debt Service Fund, Special Assessment Debt Service Fund and the Transit Capital Projects Fund which are all considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for the General, Special Revenue (except Grants and Court Awards), General Obligation Debt Service, and Proprietary Funds along with a Capital Improvement Program Budget for the Capital Projects Funds. The legal level of budgetary control is at the citywide level (incorporating both the operating and capital budgets). Budgetary comparison statements have been provided in the basic financial statements for the General and Transit Special Revenue Funds to demonstrate compliance with the budget. Budgetary comparison schedules for other Non-major Special Revenue, General Obligation Debt Service, Capital Projects, and Enterprise Funds are included in Other Supplementary Information. Proprietary funds. Proprietary funds are generally used to account for services provided to customers for which the City charges user fees that are designed to fully recover the cost of providing the service. Proprietary fund statements provide the same type of information shown in the government-wide financial statements, only in more detail. The City maintains the following two types of proprietary funds: Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and wastewater, solid waste, golf course and cemetery operations. All enterprise funds are considered to be major funds of the City. Internal Service funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses internal service funds to account for its employee and retiree health insurance programs and its risk management services including workers compensation, general liability and property liability claims. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. COMBINING STATEMENTS The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the notes to the financial statements. 19 GOVERNMENT-WIDE STATEMENTS FINANCIAL ANALYSIS Net Assets- June 30, 2012 Assets Current and other assets Capital assets, net Total assets Governmental Activities Business-type Activities $ $ 621,890,987 879,865,525 1,501,756,512 254,186,363 368,915,555 623,101,918 Total $ 876,077,350 1,248,781,080 2,124,858,430 Liabilities Long-term liabilities Other liabilities Total liabilities 494,350,690 73,241,585 567,592,275 332,645,131 34,730,635 367,375,766 826,995,821 107,972,220 934,968,041 Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets 560,427,507 124,800,333 248,936,397 934,164,237 162,774,388 92,951,764 255,726,152 723,201,895 124,800,333 341,888,161 $ 1,189,890,389 $ $ Net Assets- June 30, 2011 Assets Current and other assets Capital assets, net Total assets Governmental Activities Business-type Activities $ $ 623,225,269 892,786,857 1,516,012,126 261,613,606 366,693,931 628,307,537 Total $ 884,838,875 1,259,480,788 2,144,319,663 Liabilities Long-term liabilities Other liabilities Total liabilities 504,532,040 65,660,445 570,192,485 341,988,946 37,674,614 379,663,560 846,520,986 103,335,059 949,856,045 Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets 571,925,061 114,643,888 259,250,692 945,819,641 175,625,967 73,018,010 248,643,977 747,551,028 114,643,888 332,268,702 $ 1,194,463,618 $ 20 $ ANALYSIS OF NET ASSETS As noted earlier, net assets may serve as a useful indicator of a government’s financial position. For the City, assets exceeded liabilities by $1.190 billion and $1.194 billion as of June 30, 2012 and 2011, respectively. The largest portion of the City’s net assets reflects its investment in capital assets (e.g. land, buildings, infrastructure, improvements, machinery and equipment and construction in progress) less any related debt used to acquire those assets. The net assets invested in capital assets, net of related debt were $723.2 million and $747.6 million at June 30, 2012 and 2011, respectively. These totals represent 60.8% and 62.6% of total net assets at June 30, 2012 and 2011, respectively. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities. An additional portion of the City’s net assets represents resources that are subject to external restriction on their usage. The net assets subject to external restrictions were $124.8 million (10.5% of total net assets) at June 30, 2012. At June 30, 2011 restricted net assets were $114.6 million (9.6% of total net assets). With the implementation of Governmental Accounting Standards Board (GASB) No. 54, new categories were established and existing ones redefined. One new category represents non-spendable items which are inventories, prepaid items, and notes receivable. This category is considered unrestricted. The remaining balance of net assets is also unrestricted (committed, assigned, and unassigned), and may be used to meet the government’s ongoing obligations to citizens and creditors. The total balance of unrestricted net assets was $341.9 million (28.7% of total net assets) and $332.3 million (27.8% of total net assets) at June 30, 2012 and 2011, respectively. At the end of each fiscal year, the City is able to report positive balances in all three categories of net assets for the governmental as well as for the business-type activities as a whole. ANALYSIS OF CHANGE IN NET ASSETS The City’s net assets decreased by $4.6 million during the current fiscal year. These changes in net assets are explained in the governmental and business-type activities discussion below. It should be noted that the City implemented organizational changes in fiscal year 2010-11 involving several departments in an effort to consolidate operations. The parks and recreation department was divided and the parks component was merged into public works and the recreation component was merged into community services. Development services was merged into community development. Financial services and information technology were merged into one department and titled “finance and technology”. Tempe learning center was disaggregated from human resources. The final change was that water and wastewater was merged into public works. 21 Changes in Net Assets- June 30, 2012 Governmental Activities Business-type Activities Total Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes State shared income taxes, unrestricted Property taxes Franchise taxes Auto-lieu taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Total revenues $ 46,068,709 22,450,002 15,961,785 $ 90,747,206 1,988,550 $ 136,815,915 22,450,002 17,950,335 142,985,910 13,649,203 35,899,010 3,428,125 5,437,201 822,900 3,199,954 496,911 290,399,710 335,297 3,032,990 40,582 96,144,625 142,985,910 13,649,203 35,899,010 3,428,125 5,437,201 1,158,197 6,232,944 537,493 386,544,335 76,799,591 28,156,863 31,069,618 98,915,390 25,113,273 7,456,756 356,468 78,458 476,011 338,059 462,817 910,616 2,854,168 3,934,716 5,325,401 2,102,617 2,301,194 14,894,293 301,546,309 (11,146,599) 72,156,412 14,626,578 2,658,416 129,849 89,571,255 6,573,370 76,799,591 28,156,863 31,069,618 98,915,390 25,113,273 7,456,756 356,468 78,458 476,011 338,059 462,817 910,616 2,854,168 3,934,716 5,325,401 2,102,617 2,301,194 14,894,293 72,156,412 14,626,578 2,658,416 129,849 391,117,564 (4,573,229) (508,805) (11,655,404) 945,819,641 $ 934,164,237 508,805 7,082,175 248,643,977 $ 255,726,152 (4,573,229) 1,194,463,618 $1,189,890,389 Expenses Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Unallocated depreciation Interest on long-term debt Water/wastewater Solid waste Golf Cemetery Total expenses Increase(decrease) in net assets before transfers Transfers Change in net assets Net assets at beginning of year Net assets at end of year 22 Changes in Net Assets- June 30, 2011 Governmental Activities Business-type Activities Total Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes State shared income taxes Property taxes Franchise taxes Auto-lieu taxes Unrestricted investment earnings Miscellaneous Gain (loss) on sale of capital assets Total revenues $ 45,331,333 22,131,520 24,708,317 $ 87,093,499 1,691,429 $ 132,424,832 22,131,520 26,399,746 141,844,739 16,137,383 35,501,233 3,821,436 5,424,902 1,229,447 2,991,971 133,677 299,255,958 459,759 1,976,132 (5,563,191) 85,657,628 141,844,739 16,137,383 35,501,233 3,821,436 5,424,902 1,689,206 4,968,103 (5,429,514) 384,913,586 72,492,475 27,499,884 27,031,973 94,687,386 30,778,689 4,463,790 316,531 556,354 447,287 477,080 467,763 403,792 2,659,312 4,179,694 8,321,853 2,037,261 5,733,128 18,453,487 301,007,739 (1,751,781) 67,505,481 13,784,106 2,011,316 176,553 83,477,456 2,180,172 72,492,475 27,499,884 27,031,973 94,687,386 30,778,689 4,463,790 316,531 556,354 447,287 477,080 467,763 403,792 2,659,312 4,179,694 8,321,853 2,037,261 5,733,128 18,453,487 67,505,481 13,784,106 2,011,316 176,553 384,485,195 428,391 293,418 (1,458,363) 947,278,004 $ 945,819,641 (293,418) 1,886,754 246,757,223 $ 248,643,977 428,391 1,194,035,227 $1,194,463,618 Expenses Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Unallocated depreciation Interest on long-term debt Water/wastewater Solid waste Golf Cemetery Total expenses Increase (decrease) in net assets before transfers Transfers Change in net assets Net assets at beginning of year Net assets at end of year 23 Governmental activities. The decrease in governmental net assets totaled $11.7 million and $1.5 million for the fiscal years ended June 30, 2012 and 2011, respectively. The increase in the deficit was due to the City receiving $8.7 million less in capital grants and contributions and $2.5 million less in State shared income taxes while maintaining predominately the same level of expenditures. The key factors contributing to the change in net assets compared to the prior year are as follows: The largest component contributing to the decrease in net assets was a decrease in capital grants and contributions of $8.7 million (35.4%). In prior year, the City received the remaining reimbursements of $8.9 million from the Federal government relating to the light rail system. As the system has been operational since December 2008, no additional capital grants relating to the light rail system were received in the current year. Overall, citywide sales tax revenue increased by $1.1 million (0.8%) from the prior year. This was a modest increase in a slow recovering economy. Unfortunately, the increase in sales tax was offset by a further decrease in State shared income taxes in the amount of $2.5 million (15.4%) from the prior year. Another component which increased the deficit in the current year was unrestricted investment earnings which were down $0.4 million (33.1%). This is due to the continual commitment from the Federal Reserve to maintain interest rates at historically low levels. Due to refunding certain existing debt issuances discussed later, the City obtained savings of $3.6 million in interest on long-term debt. The savings were offset by additional increases in functional expenses which resulted in only a slight overall increase in expenses. The following charts illustrate the City’s governmental expenses and program revenues by function and its revenues by source for the current fiscal year: 24 A comparison of expenses by function and the percentage of total expenses for the largest functions is presented below. In general, total expenses for the City were consistent with prior year (increasing only by $0.5 million or 0.18%). Within the functions however, there was an increase in expenditures for Public Works, Police, Community Services and Fire which was offset with a decrease in expenditures for Community Development, interest on long-term debt and unallocated depreciation. Fiscal Year Ended June 30, 2012 June 30, 2011 Public works Police Community services Fire Community development $98,915,390 76,799,591 31,069,618 28,156,863 25,113,273 25 32.8% 25.5 10.3 9.3 8.3 $94,687,386 72,492,475 27,031,973 27,499,884 30,778,689 31.5% 24.1 9.0 9.1 10.2 General revenues such as sales taxes, property taxes, State shared income taxes, and other excise taxes are not shown by program, but are effectively used to support program activities citywide. For governmental activities overall, without regard to program, a comparison of the largest general revenues and their percentage of total revenues (excluding transfers) is presented below. As stated previously, sales taxes and property tax only increased modestly by $1.1 million and $0.4 million, respectively. Meanwhile, the slow economic recovery continues to impact State shared income taxes resulting in a decrease of $2.5 million (15.4%). Fiscal Year Ended June 30, 2012 June 30, 2011 Sales taxes Property taxes State shared income taxes, unrestricted Auto-lieu taxes Franchise taxes Unrestricted investment earnings $142,985,910 35,899,010 13,649,203 5,437,201 3,428,125 822,900 26 49.2% 12.4 4.7 1.9 1.2 0.3 $141,844,739 35,501,233 16,137,383 5,424,902 3,821,436 1,229,447 47.4% 11.9 5.4 1.8 1.3 0.4 Business-type activities. Business-type activities increased the City’s net assets by $7.1 million for the year ended June 30, 2012 compared to an increase of $1.9 million for the year ended June 30, 2011. The recovery has been primarily from water and wastewater rate increases which resulted in charges for services increasing by $3.3 million (4.7%) in the Water and Wastewater Fund for the current year. In addition, the Water and Wastewater Fund had a net loss on sale of capital assets of $5.6 million in prior year that was not experienced in the current year. For the business-type activities a comparison of revenues by source is provided for each activity. For the Year Ended June 30, 2012 Water and Wastewater Charges for services Capital grants and contributions Unrestricted investment earnings/other Total $ 73,392,328 1,988,550 Solid Waste Golf Cemetery Total $ 14,866,281 $2,344,355 $ 144,242 $ 90,747,206 - - - 1,988,550 3,343,872 $ 78,724,750 67,823 $ 14,934,104 $2,344,355 $ 144,242 3,411,695 $ 96,147,451 For the Year Ended June 30, 2011 Water and Wastewater Solid Waste Golf Cemetery Total $ 15,326,780 $1,562,489 $ 110,196 $ 87,093,499 Charges for services Capital grants and contributions Unrestricted investment earnings/other Total $ 70,094,034 1,691,429 2,393,484 $ 74,178,947 84,904 $ 15,411,684 $1,562,489 $ 110,196 1,691,429 2,478,388 $ 91,263,316 As shown in the Analysis of Change in Net Assets schedules presented previously, the largest of the City’s business-type activities, Water and Wastewater, had expenses of $72.2 million for the fiscal year, followed by Solid Waste with $14.6 million, Golf with $2.7 million and Cemetery with $0.1 million. Water and Wastewater expenses decreased by $0.1 million (1.3%), Solid Waste increased $0.8 million (6.1%) and Golf increased by $0.6 million (32.2%). The Cemetery Fund was able to reduce its expenses in the area of interest and fiscal fees. 27 FUND STATEMENTS FINANCIAL ANALYSIS 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 resources that are available for spending. Such information is useful in assessing the City’s financing requirements. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds and Capital Project Funds. Fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Non-spendable, Restricted, Committed, Assigned, and Unassigned. The amount that represents available resources for spending is the total of Committed, Assigned, and Unassigned. The unrestricted fund balance, less the non-spendable portion, may serve as a useful measure of a government’s net resources available for spending at each fiscal year end. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $216.6 million, an increase of $0.5 million from the prior year. Approximately $138.1 million of this total amount pertained to the categories of committed, assigned or unassigned, all of which is available for spending at the City’s discretion. The combination of these categories nets a decrease of $0.3 million over the prior year’s combined balance of $138.4 million. The remainder of fund balance contains two components: Non-spendable and Restricted. Non-spendable fund balance includes amounts that cannot be spent as they are not in a spendable form. At June 30, 2012 fiscal year end, the fund balance included amounts for inventories ($1.4 million), prepaid items ($0.7 million) and capital improvement notes receivable ($0.3 million). Restricted fund balances are amounts that have externally (outside the City) enforceable limitations or enabling legislation (changes in City Charter).The restricted portion of fund balance consists of amounts for debt service ($32.1 million), community services ($1.6 million), public works ($38.6 million) and community development ($3.8 million). Revenues for governmental functions overall totaled $290.2 million in the fiscal year ended June 30, 2012, which represents a decrease of 2.9% or $8.8 million from the fiscal year ended June 30, 2011. This decrease is primarily due to the Transit Capital Projects revenue decrease of $11.3 million which was offset by the General Fund increased revenue of $3.2 million and the Transit Special Revenue increase of $1.5 million. An analysis of each individual major fund follows. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance was $61.6 million; the fund did not have any restricted fund balance. As a measure of the General Fund’s liquidity, it may be useful to compare fund balances to total fund revenues. The total fund balance in the City’s General Fund increased by $7.5 million during the current fiscal year. The increase is primarily due to revenues exceeding expenditures by $7.9 million. Fiscal Year Ended June 30, 2012 June 30, 2011 Revenues Total fund balance Unassigned fund balance $ 163,034,772 61,556,364 50,954,570 28 $ 159,827,943 37.8 % 31.3 54,038,399 39,604,103 33.8 % 24.8 Total revenues increased by $3.2 million (2.0%) from the prior year. Sales tax increased by $3.4 (4.1%) million over prior year due to the slight recovery in the economy. Property tax also increased by $1.3 million which was due to maximizing the increase in the levy as allowed by State statute, and the addition of new property to the tax rolls. The final major increase was an additional $1.9 million for charges for services. These increases were offset with a decrease of $2.5 million in State shared income tax. The Transit Special Revenue Fund is used to account for revenues and expenditures utilized to provide related transit services. Revenues continued to recover in the current year by $1.5 million. As this fund is primarily sales tax funded, the increase in sales tax collections contributed to the increase in revenues by $1.2 million. As part of the final year of the three year budget reduction plan, bus services where reduced resulting in a $2.5 million decrease in charges for services. This decrease however, was offset by an increase of $2.3 million in Federal grants due to the FTA 5307 grant funding being reallocated from capital expenditures to operating preventative maintenance. The fund balance totaled $23.0 million at June 30, 2012, compared to a $21.4 million fund balance at June 30, 2011. As the result of the three year budget balancing plan, for the year ended June 30, 2012, revenues exceeded expenditures by $1.9 million. This was a turnaround from the prior year expenditures over revenues of $2.8 million. The General Obligation Debt Service Fund accounts for the accumulation of resources for and payments of general obligation debt. Total fund balance (restricted for general obligation debt service payments) increased from $34.7 million at June 30, 2011 to $35.4 million at June 30, 2012. The change in fund balance is due primarily to $0.7 million received from other entities for their portion of an excise debt issuance. The total debt service fund balance will be used for future debt service payments consistent with the City’s Debt Management Plan. The Special Assessment Debt Service Fund accounts for the accumulation of resources for and payments of special assessment debt to which the City acts as a trustee for the established improvement districts. Total fund balance (restricted for special assessment debt service payments) increased from a deficit of $0.7 million at June 30, 2011 to a deficit of $1.7 million at June 30, 2012. The deficit was the result of certain delinquent receivables which will be covered by future anticipated special assessment payments (refer to Note 9 of the Notes to the Financial Statements). The Transit Capital Projects Fund accounts for the acquisition of buses, streetscapes, the East Valley Bus Maintenance Facility upgrades and other traffic flow improvements. Total fund balance had a slight decrease from $64.9 million at June 30, 2011 to $64.5 million at June 30, 2012, a $0.4 million change. In prior year there were reimbursements received for previous expenditures relating to construction of the light rail system. As the project is complete and the revenues received, the current year showed a decreased of $11.3 million in revenues. As expenditures stayed consistent with prior year’s, the reduction in revenue resulted in the net decrease in fund balance. 29 PROPRIETARY FUNDS The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year indicated, the total net assets for the proprietary funds were as follows: Fiscal Year Ended June 30, 2012 June 30, 2011 Water and wastewater fund Solid waste fund Golf fund Cemetery fund Internal service funds $242,420,029 12,440,335 1,076,749 (210,961) (970,747) $235,060,325 12,489,370 1,318,207 (223,925) 2,665,431 The Water and Wastewater Fund accounts for the provision of water and sewer services to the City and the adjoining Town of Guadalupe. In accordance with the rate study report, the fund experienced an increase in total net assets of $7.4 million for the fiscal year ended June 30, 2012 versus only a slight increase in net assets of $0.8 million for the fiscal year ended June 30, 2011. This is due primarily to planned increases in charges for services as a result of rate adjustments which increased revenue by another $3.3 million. The rate study calls for phased in rate increases. The rate increase was implemented November 1, 2011 for this operation. In the prior year, the fund also incurred a $5.6 million loss due to the retirement of certain assets associated with the decommissioning of the Kyrene Water Reclamation Plant which impacted that year’s net assets. The Solid Waste Fund accounts for the provision of solid waste collection and disposal services for both residential and commercial customers. Revenues decreased in the current year while expenditures increased resulting in a decrease in net assets of $0.05 million verses an increase of $1.3 million in net assets in prior year. The Golf Fund accounts for the operation of the Rolling Hills and Ken McDonald golf courses. The Golf Fund recognized a $0.2 million reduction in total net assets for fiscal year ending June 30, 2012 which was similar to prior year’s reduction. However, the City has changed the golf course operations and the loss before transfers reduced from $0.5 million for the fiscal year ended June 30, 2011 to $0.3 million for the fiscal year ended June 30, 2012. The Cemetery Fund was established to account for the improvements, expansion and operations of the Double Butte Cemetery. Due to reduced demand for cemetery services, the fund was unable to cover the costs of operations. As such, all operational costs were moved to the general fund. The expenses in the fund currently relate to depreciation and interest expense. As a result of the restructuring of the fund, it produced an increase in net assets of $0.01 million in the current year verses a decrease in net assets of $0.07 million in prior year. The Internal Service Funds account for the risk management and health insurance activities of the City. The $3.6 million decrease in net assets is due primarily to higher than anticipated claims cost. BUDGET HIGHLIGHTS The City’s final General Fund expenditure budget of $159.5 million differs from the original budget of $159.4 million due to carry-forward appropriations for encumbrances rolled forward from the prior fiscal year and budget transfers to other funds. During the year, actual revenues were greater than budgetary estimates by $3.0 million (1.9% of total budgeted revenue) in the General Fund. This is due primarily to the increase in charges for services. Actual expenditures were less than budgetary estimates by $4.3 million (2.7% of final budgetary estimates) in the General Fund. This positive variance was attributable to continual cost reduction efforts in response to the economic downturn. 30 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The City’s capital assets for its governmental and business-type activities as of June 30, 2012 amount to $1.249 billion (net of accumulated depreciation). Capital assets include land, buildings, infrastructure, improvements, machinery and equipment, and construction in progress. The total decrease in the City’s capital assets for the current fiscal year was $10.7 million. The tables below reflect the capital assets at the end of the fiscal year June 30, 2012 and 2011, respectively. Capital Assets, Net of Depreciation- June 30, 2012 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 89,605,173 224,043,994 390,370,114 116,511,676 45,008,581 14,325,987 $ 879,865,525 Business-type Activities $ 6,693,377 34,664,872 165,532,252 145,674,832 14,040,681 2,309,541 $ 368,915,555 Total $ 96,298,550 258,708,866 555,902,366 262,186,508 59,049,262 16,635,528 $ 1,248,781,080 Capital Assets, Net of Depreciation- June 30, 2011 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 89,605,173 234,910,565 393,779,428 114,668,070 46,615,307 13,208,314 $ 892,786,857 31 Business-type Activities $ 6,693,377 36,054,109 124,156,242 153,156,745 11,399,169 35,234,289 $ 366,693,931 Total $ 96,298,550 270,964,674 517,935,670 267,824,815 58,014,476 48,442,603 $ 1,259,480,788 Major capital asset events during the current fiscal year included the following: Governmental Activities The City completed several improvement projects including $7.2 million in bike paths, $2.4 million in arterial roadways, $5.3 million in energy retrofits and $2.4 million in police equipment acquisitions. There were also various other infrastructure and improvement projects for parks and street lights. Business-type Activities The Water and wastewater fund incurred $39.5 million in capital infrastructure improvements for the South Tempe Water Treatment Plant during the fiscal year. In addition, there were $3.9 million in capital infrastructure improvements for the Johnny G. Martinez water treatment plant. The final major project was $3.3 million for a new utility billing system. For government-wide financial statement presentation, all depreciable capital assets are depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. Please refer to Note 8 of the Notes to the Financial Statements for further information regarding capital assets. DEBT ADMINISTRATION At the end of the current fiscal year, the City had total long-term obligations outstanding of $827.0 million which is a decrease of $19.5 million over the prior fiscal year. The decrease is due in large part to the annual principal payment being more than the new money debt issued in the current year. Outstanding Long-term Obligations - June 30, 2012 Governmental Activities Business-type Activities Total General obligation bonds Special assessment bonds Excise tax obligations HUD Section 108 loan WIFA loan Total debt payable $ 162,200,000 27,815,000 218,522,900 5,572,000 414,109,900 $ 256,770,000 55,505,432 13,945,646 326,221,078 $ 418,970,000 27,815,000 274,028,332 5,572,000 13,945,646 740,330,978 Capital leases Compensated absences Claims and judgments Net OPEB obligation Total long-term obligations 57,921 25,327,942 4,597,033 50,257,893 $ 494,350,689 45,352 6,378,701 $ 332,645,131 103,273 25,327,942 4,597,033 56,636,594 $ 826,995,820 32 Outstanding Long-term Obligations- June 30, 2011 Governmental Activities Business-type Activities Total General obligation bonds Special assessment bonds Excise tax obligations HUD Section 108 loan WIFA loan Total debt payable $ 166,680,000 29,875,000 228,746,000 5,883,000 431,184,000 $ 273,000,000 48,827,424 14,621,092 336,448,516 $ 439,680,000 29,875,000 277,573,424 5,883,000 14,621,092 767,632,516 Capital leases Compensated absences Claims and judgments Net OPEB obligation Total long-term obligations 96,735 23,731,713 4,992,030 44,527,562 $ 504,532,040 97,439 5,442,991 $ 341,988,946 194,174 23,731,713 4,992,030 49,970,553 $ 846,520,986 The City’s issued $19.8 million in general obligation debt during the current fiscal year which consisted of $7.0 million of new money and $12.8 million to refund existing general obligation debt. The new money was for public safety, community service and street improvements in the amounts of $2.2 million, $1.9 million, and $2.9 million, respectively. The primary purpose of the $12.8 million to refund existing debt was to take advantage of lower interest rates thereby reducing future debt service payments which resulted in an economic gain (the difference between the present values of the debt service payment on the old and new debt) of $0.7 million in the City’s General Obligation Debt Service and Water/Wastewater funds. Furthermore, the City issued $30.5 million in excise tax obligations; $22.1 million was for refunding existing excise debt and $8.4 million was new money for water projects. The economic gain from this excise refunding was $1.5 million. The final refunding the City issued was for $18.3 million of excise tax revenue obligations relating to the Performing Arts Center. The economic gain resulting from this refunding was $0.7 million. The City’s total general obligation bonded debt outstanding decreased by approximately $20.7 million from the fiscal year ended June 30, 2011 to the fiscal year ended June 30, 2012. The ratio of net general obligation bonded debt (total bonded debt less debt service reserves) for governmental purposes to taxable valuation and the amount of bonded debt per capita are useful indicators of the City’s debt position to management, citizens, oversight bodies and investors. A comparison of these indicators follows: Fiscal Year Ended June 30, 2012 June 30, 2011 Net general bonded debt Net general bonded debt per capita Ratio of net general bonded debt to net assessed value Debt service secondary tax rate per $100 of taxable valuation $ 126,839,530 773 6.5% $ 1.13 $ 131,961,748 816 5.3% $ 0.88 The State constitution imposes certain debt limitations on the City of 6% and 20% of the outstanding assessed valuation of the City. The City’s available debt margin at June 30, 2012 is $102.4 million under the 6% limitation. Due to the fall in property values, the City currently does not have any available borrowing capacity under the 20% limitation. Additional information on the statutory debt limitations may be found in Note 9 of the Notes to the Financial Statements and the Statistical Section (Exhibit S-16) of this report. 33 During the year, the City’s ratings on its outstanding general obligation bonds were AAA from Standard & Poors Corporation, Aa1 from Moody’s Investors Service, and AAA from Fitch Ratings. Additional information on the City’s long-term debt can be found in Note 9 of the Notes to the Financial Statements. OTHER MATTERS While the requirements of GASB Statements No. 43 and 45, related to financial reporting of other postemployment benefits (OPEB), had a material affect on the financial position of the City beginning with the fiscal year ended June 30, 2008, the Tempe Mayor and Council approved changes to the benefit plan which reduced the annual OPEB cost. In October 2011, the City again implemented significant plan design changes for retiree healthcare benefits. The primary change included moving the retirees from the City’s self-insurance program to a City funded “healthcare reimbursement account”. City contribution changes are dependent upon premium increases or decreases in the Arizona State Retirement System Health Benefits Program. An actuarial analysis was performed in order to determine the financial impact for the fiscal year ending June 30, 2012. Please refer to Note 15 of the Notes to the Financial Statements. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, city council, customers, investors and creditors with a general overview of the City’s finances. If you have questions about this report or need additional information, contact: City of Tempe Finance and Technology Department Accounting Division 20 E. Sixth Street Tempe, AZ 85281 480.350.8350 34 Statement of Net Assets June 30, 2012 City of Tempe, Arizona Governmental Activities Business-type Activities Total Assets Pooled cash and investments Receivables: Taxes Accounts, net Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Special assessment receivables Capital improvement notes receivable Equity in joint venture Capital assets not being depreciated: Land Construction in progress Capital assets (net of accumulated depreciation): Buildings Infrastructure Improvements Machinery and equipment Total assets $ 218,288,284 $ 56,636,084 $ 274,924,368 14,259,633 8,828,314 1,399,037 17,500,670 1,399,477 710,789 34,823,972 27,803,832 16,699,407 280,177,572 12,332,102 364,236 698,298 33,933,583 1,723,149 148,498,911 14,259,633 21,160,416 1,763,273 17,500,670 2,097,775 710,789 68,757,555 27,803,832 18,422,556 428,676,483 89,605,173 14,325,987 6,693,377 2,309,541 96,298,550 16,635,528 224,043,994 390,370,114 116,511,676 45,008,581 1,501,756,512 34,664,872 165,532,252 145,674,832 14,040,681 623,101,918 258,708,866 555,902,366 262,186,508 59,049,262 2,124,858,430 18,614,053 9,928,898 12,014,376 3,848,247 28,836,011 4,358,067 505,415 4,856,407 146,365 24,864,381 22,972,120 10,434,313 16,870,783 3,994,612 53,700,392 Liabilities Accounts payable Deposits Accrued expenses Deferred charges Liabilities payable from restricted assets Long-term liabilities: Special assessment debt with a governmental commitment: Due within one year Due in more than one year Other long-term liabilities: Due within one year Due in more than one year Total liabilities 2,140,000 25,675,000 - 2,140,000 25,675,000 39,551,715 426,983,975 567,592,275 19,617,710 313,027,421 367,375,766 59,169,425 740,011,396 934,968,041 560,427,507 162,774,388 723,201,895 32,975,942 1,635,026 6,747,385 375,692 513,122 145,040 6,903,100 75,505,026 248,936,397 934,164,237 92,951,764 255,726,152 32,975,942 1,635,026 6,747,385 375,692 513,122 145,040 6,903,100 75,505,026 341,888,161 $ 1,189,890,389 Net Assets Invested in capital assets, net of related debt Restricted for: Transit Cultural and recreational Highways and streets Community development Housing assistance Court enhancements Capital projects Debt service Unrestricted Total net assets $ $ The notes to the financial statements are an integral part of this statement. 35 Statement of Activities For the fiscal year ended June 30, 2012 Program Revenues Charges for Services Expenses Operating Grants and Contributions Capital Grants and Contributions Functions/Programs Governmental activities: Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Unallocated depreciation Interest on long-term debt Total governmental activities Business-type activities: Water and wastewater Solid waste Golf course Cemetery Total business-type activities Total government $ 76,799,591 28,156,863 31,069,618 98,915,390 25,113,273 7,456,756 356,468 78,458 476,011 338,059 462,817 910,616 2,854,168 3,934,716 5,325,401 2,102,617 2,301,194 14,894,293 301,546,309 72,156,412 14,626,578 2,658,416 129,849 89,571,255 $ 391,117,564 $ 1,649,775 1,642,702 7,101,043 18,136,860 7,088,168 7,826,823 2,623,338 46,068,709 73,392,328 14,866,281 2,344,355 144,242 90,747,206 $ 136,815,915 General revenues: Sales taxes State shared income taxes, unrestricted Property taxes Franchise taxes Auto-lieu taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Transfers Total general revenues and transfers Change in net assets Net assets- beginning Net assets- ending 36 $ $ 3,339,812 355,483 1,467,679 3,793,292 11,503,760 1,911,318 78,658 22,450,002 22,450,002 $ $ 438,119 12,130,376 3,393,290 15,961,785 1,988,550 1,988,550 17,950,335 City of Tempe, Arizona Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ (71,810,004) (25,720,559) (22,500,896) (64,854,862) (3,128,055) (5,545,438) (356,468) (78,458) (476,011) (338,059) (462,817) (910,616) (2,775,510) 3,892,107 (2,702,063) (2,102,617) (2,301,194) (14,894,293) (217,065,813) Business-type Activities $ (217,065,813) $ 142,985,910 13,649,203 35,899,010 3,428,125 5,437,201 822,900 3,199,954 496,911 (508,805) 205,410,409 (11,655,404) 945,819,641 934,164,237 3,224,466 239,703 (314,061) 14,393 3,164,501 3,164,501 $ 335,297 3,032,990 40,582 508,805 3,917,674 7,082,175 248,643,977 255,726,152 Total $ (71,810,004) (25,720,559) (22,500,896) (64,854,862) (3,128,055) (5,545,438) (356,468) (78,458) (476,011) (338,059) (462,817) (910,616) (2,775,510) 3,892,107 (2,702,063) (2,102,617) (2,301,194) (14,894,293) (217,065,813) 3,224,466 239,703 (314,061) 14,393 3,164,501 (213,901,312) 142,985,910 13,649,203 35,899,010 3,428,125 5,437,201 1,158,197 6,232,944 537,493 209,328,083 (4,573,229) 1,194,463,618 $ 1,189,890,389 The notes to the financial statements are an integral part of this statement. 37 Balance Sheet Governmental Funds June 30, 2012 General Transit Special Revenue General Obligation Debt Service Special Assessment Debt Service Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other funds Due from other governments Inventories Prepaid items Restricted cash and investments Special assessments Capital improvement notes receivable Total assets $ 66,531,297 $ 9,456,448 6,760,069 253,294 1,674,515 344,527 1,989,305 290,000 87,299,455 $ 13,534,696 $ 2,624,733 12,011 15,080,815 3,618,584 1,974,675 36,845,514 $ 33,569,085 $ 850,939 1,056,673 17,256,445 14,434,732 67,167,874 $ $ 876,273 1,129,097 679,898 27,803,832 30,489,100 Liabilities and Fund Balances Liabilities Accounts payable Deposits Accrued expenditures Claims and judgements Due to other funds Deferred revenue Matured bonds payable Matured interest payable Total liabilities Fund Balances Fund balances: Non-spendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities and fund balances $ $ 3,822,056 9,893,346 4,526,527 1,106,317 6,394,845 25,743,091 634,526 9,967,268 50,954,570 61,556,364 87,299,455 38 $ $ 8,176,840 96,815 22,195 1,974,675 2,950,000 668,584 13,889,109 16,487,760 5,177,922 1,290,723 22,956,405 36,845,514 $ $ 102,790 14,991,780 12,445,000 4,267,834 31,807,404 32,062,939 3,297,531 35,360,470 67,167,874 $ $ 602 1,358,295 30,183,725 679,897 32,222,519 (1,733,419) (1,733,419) 30,489,100 City of Tempe, Arizona Other Governmental Funds Transit Capital Projects $ 65,236,601 $ 65,236,601 $ $ 723,094 723,094 14,513,507 50,000,000 64,513,507 65,236,601 $ 34,096,921 $ 1,327,513 135,299 4,635 2,419,855 1,054,950 710,789 11,279,740 51,029,702 $ $ 5,424,267 35,552 314,072 53,268 316,220 3,083,177 6,260,000 1,564,696 17,051,252 1,765,739 13,075,624 12,017,675 7,119,412 33,978,450 51,029,702 Total Governmental Funds $ 212,968,600 $ 14,259,633 8,828,314 1,399,037 1,674,515 17,500,670 1,399,477 710,789 34,823,972 27,803,832 16,699,407 338,068,246 $ $ 18,249,649 9,928,898 4,937,414 1,181,780 1,674,515 56,628,202 21,655,000 7,181,011 121,436,469 2,400,265 76,139,830 67,195,597 21,674,934 49,221,151 216,631,777 338,068,246 The notes to the financial statements are an integral part of this statement. 39 Reconciliation of the Balance Sheet to the Statement of Net Assets June 30, 2012 City of Tempe, Arizona Fund balances- total governmental funds $ 216,631,777 Amounts reported for the governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Accumulated depreciation 1,462,079,510 (582,213,985) 879,865,525 The equity in joint venture is not a financial resource and, therefore, is not reported in the funds. 280,177,572 Other assets are not available to pay current-period expenditures and, therefore are offset by deferred/unavailable revenue. Deferred special assessment revenue Deferred tax and other deferred revenue Deferred notes receivable revenue Deferred court revenue Capital grant and contribution monies not received within 60 days 30,183,725 1,446,080 16,409,406 5,603,524 2,985,467 56,628,202 Bond premium net of issuance costs are not financial resources and, therefore, are not reported in the funds. (3,848,244) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. Compensated absences Claims and judgments Other post employment benefits (excluding internal service) Bonds, capital improvement notes and capital leases (25,327,942) (4,597,033) (50,227,052) (414,167,821) (494,319,848) Internal service funds are used by management to charge the costs of self insurance to individual funds. The assets and liabilities of the internal service funds are reported with governmental activities. Net assets of governmental activities (970,747) $ The notes to the financial statements are an integral part of this statement. 40 934,164,237 City of Tempe, Arizona 41 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2012 General General Obligation Debt Service Transit Special Revenue Special Assessment Debt Service Revenues: Taxes: Sales taxes Property taxes Franchise taxes Intergovernmental: Federal grants State grants State sales tax State income tax Auto lieu tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Special assessments Licenses and permits Miscellaneous Total revenues $ 85,842,047 14,593,744 3,428,125 $ 30,172,338 - $ 21,884,734 - 12,636,771 13,649,203 5,437,201 571,448 479,251 11,541,542 7,731,585 1,650,907 5,472,948 163,034,772 3,197,867 474,508 321,660 15,614,347 382,831 50,163,551 63,617,412 25,443,558 20,149,254 16,756,778 9,358,984 5,278,353 440,161 101,885 457,292 393,958 415,447 899,917 2,648,388 3,556,756 3,572,392 2,087,079 42,934,885 - 155,177,614 2,950,000 2,363,023 48,247,908 14,175,000 8,346,883 22,521,883 7,857,158 1,915,643 29,803 $ 666,952 22,551,686 2,526,283 2,526,283 Expenditures: Current: Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Debt service: Principal retirement Interest and fiscal fees Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures before other financing sources (uses) - 12,120 2,060,000 1,411,891 3,484,011 (957,728) Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded bonds escrow agent Total other financing sources (uses) 2,369,077 (3,146,837) 438,567 (339,193) Net change in fund balance Fund balance (deficit) at beginning of year Fund balance (deficit) at end of year $ (366,643) (366,643) 7,566,288 (9,679,280) 13,517 3,112,004 20,296,900 (20,697,014) 612,415 7,517,965 1,549,000 642,218 54,038,399 61,556,364 21,407,405 22,956,405 34,718,252 35,360,470 42 $ $ (957,728) $ (775,691) (1,733,419) City of Tempe, Arizona Other Governmental Funds Transit Capital Projects $ - $ 5,026,279 1,477,229 6,503,508 7,348,763 7,348,763 $ 122,250,885 36,478,478 3,428,125 17,912,225 79,879 8,098,254 4,140,371 21,989 4,459,226 467,053 2,875,233 1,166,053 45,456,783 26,136,371 554,387 20,735,025 13,649,203 5,437,201 6,189,048 822,900 31,615,115 8,198,638 3,542,185 2,526,283 1,650,907 7,021,832 290,236,583 3,708,072 427,832 3,324,468 7,141,818 14,213,581 1,901,971 317,878 - 67,325,484 25,871,390 23,473,722 66,845,601 23,572,565 7,180,324 440,161 101,885 457,292 393,958 415,447 899,917 2,648,388 3,874,634 3,572,392 2,087,079 6,571,000 3,372,356 22,163,912 63,142,888 25,756,000 15,494,153 29,512,675 299,923,067 (845,255) (17,686,105) (9,686,484) 366,643 58,412 425,055 7,802,556 (5,420,609) 6,991,483 3,556,532 37,984 24,885,000 (27,970,185) 9,882,761 18,104,564 (18,613,369) 7,005,000 6,668,536 534,963 45,181,900 (48,667,199) 10,214,395 (420,200) $ 6,236,500 - Total Governmental Funds 64,933,707 64,513,507 (7,803,344) $ 41,781,794 33,978,450 527,911 $ 216,103,866 216,631,777 The notes to the financial statements are an integral part of this statement. 43 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Net change in fund balances- total governmental funds $ 527,911 Amounts reported for the governmental activities in the statement of activities are different because: Certain expenditures reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences and long-term claims and judgements OPEB (excluding internal service) (1,201,231) (5,775,474) (6,976,705) Certain revenues in the statement of activities do not provide current financial resources and, therefore, are not reported as revenues in the governmental funds. Property tax and charges for services revenue Court revenue Capital grants and contributions Special assessments received/recognized (227,432) 976,530 (855,778) (227,104) (333,784) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Miscellaneous net capital expenditures Depreciation expense 29,512,675 (4,807,947) (42,147,813) (17,443,085) Lease payments are reported as expenditures in the governmental funds when paid. For the City as a whole, however, the principal portion of the payments serve to reduce the liability in the statement of net assets while the acquisition of new leases increase the liability. Principal payments made 38,814 Bond issuance costs are expended in the governmental funds when paid, and are capitalized and amortized in the statement of net assets. Bond issuance costs Amortization of bond issuance costs 390,973 208,887 599,860 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. Issuance of debt Premium on issuance of debt Principal payments made (3,519,701) (6,668,536) 25,756,000 15,567,763 Internal service funds are used by management to charge the costs of self-insurance to individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs. Changes in net assets of governmental activities (3,636,178) $ The notes to the financial statements are an integral part of this statement. 44 (11,655,404) Statement of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual General Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues Taxes Intergovernmental Investment income Charges for services Fines and forfeitures Licenses and permits Miscellaneous Total revenues Budgeted Amounts Original Final $ 102,883,360 31,358,933 1,159,000 9,748,097 8,907,007 1,597,450 4,493,710 160,147,557 Expenditures Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Interdepartmental charges Total expenditures Other financing sources (uses) Transfers from other funds Transfers to other funds Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 102,883,360 31,358,933 1,159,000 9,748,097 8,907,007 1,597,450 4,456,710 160,110,557 65,018,285 26,354,274 20,212,298 17,722,514 9,504,602 5,144,533 322,621 281,445 449,752 405,502 538,177 917,783 2,524,064 3,787,780 16,339,878 2,041,178 (12,207,041) 159,357,645 $ 120,000 120,000 909,912 Actual Amounts (Budgetary Basis) $ 103,863,916 32,294,623 548,979 11,541,542 7,731,585 1,650,907 5,472,948 163,104,500 64,281,094 26,236,310 20,353,508 18,049,205 9,502,786 5,245,533 322,621 281,445 449,752 414,315 538,177 917,783 2,539,664 3,787,780 16,592,664 2,194,067 (12,207,041) 159,499,663 $ 120,000 120,000 730,894 2,369,077 (3,146,837) 438,567 (339,193) 7,561,912 2,369,077 (3,146,837) 318,567 (459,193) $ 6,831,018 294,188 52,401 (320,808) 7,517,965 The notes to the financial statements are an integral part of this statement. 45 980,556 935,690 (610,021) 1,793,445 (1,175,422) 53,457 1,016,238 2,993,943 1,879,838 973,971 175,240 952,581 146,781 (49,667) (3,756) (68,099) (7,152) 20,818 123,603 18,839 (104,001) 154,340 36,785 102,588 (56,441) 4,296,268 (69,728) $ $ 62,401,256 25,262,339 20,178,268 17,096,624 9,356,005 5,295,200 326,377 349,544 456,904 393,497 414,574 898,944 2,643,665 3,633,440 16,555,879 2,091,479 (12,150,600) 155,203,395 Explanation of differences between budgetary revenues and expenditures, and GAAP revenues and expenditures: The City does not budget for the change in the fair value of investment, but recognizes the change for GAAP purposes The City budgets for claims and other accrued expenses on a cash basis, rather than on a modified accrual basis The City recognizes encumbrances as expenditures for budgetary purposes but not for GAAP purposes The City recognizes certain other expenditures on a cash basis, rather than on a modified accrual basis Net change in fund balance as reported on the statement of revenues, expenditures and changes in fund balances- governmental funds Variance with Final Budget Positive (Negative) Statement of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Transit Special Revenue Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues Taxes Intergovernmental revenue Investment income Charges for services Miscellaneous Total revenues Expenditures Current: Public works Debt service: Principal retirement Interest and fiscal fees Total expenditures Other financing uses Transfers to other funds Total other financing uses Net change in fund balance Budgeted Amounts Original Final Actual Amounts (Budgetary Basis) Variance with Final Budget Positive (Negative) $ $ $ 29,124,332 14,357,991 212,386 3,496,178 134,000 47,324,887 $ 29,124,332 14,712,905 212,386 3,415,098 134,000 47,598,721 48,793,809 47,717,428 42,933,523 4,783,905 1,640,000 3,430,000 53,863,809 1,640,000 3,430,000 52,787,428 2,950,000 2,363,023 48,246,546 (1,310,000) 1,066,977 4,540,882 $ (6,538,922) $ (5,188,707) Explanation of differences between budgetary revenues and expenditures, and GAAP revenues and expenditures: The City does not budget for the change in the fair value of investment, but recognizes the change for GAAP purposes The City budgets for claims and other accrued expenses on a cash basis, rather than on a modified accrual basis The City recognizes certain other expenditures on a cash basis, rather than on a modified accrual basis Net change in fund balance as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds 30,172,338 3,672,375 338,511 15,614,347 382,831 50,180,402 (366,643) (366,643) 1,567,213 (16,851) (3,881) 2,519 $ 1,549,000 The notes to the financial statements are an integral part of this statement. 46 $ 1,048,006 (11,040,530) 126,125 12,199,249 248,831 2,581,681 (366,643) (366,643) 6,755,920 City of Tempe, Arizona 47 Statement of Net Assets Proprietary Funds June 30, 2012 City of Tempe, Arizona Business-type Activities - Enterprise Funds Water and Wastewater Solid Waste Golf Course Cemetery Total Governmental ActivitiesInternal Service Funds Assets Current assets: Pooled cash and investments Restricted cash and investments Accounts receivable Accrued interest receivable Due from other funds Inventories Total current assets Noncurrent assets: Notes receivable Equity in joint venture Capital assets: Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets $ 48,977,265 33,790,987 11,272,655 323,105 593,441 698,298 95,655,751 $ 358,314,926 508,536,986 $ 604,192,737 - $ 1,056,302 23,250 - 8,738,371 - 1,723,149 148,498,911 6,330,829 55,734,289 294,617,266 223,475,059 33,005,407 2,309,541 (257,157,465) 7,658,819 $ - - 142,596 3,646 146,242 - $ 56,636,084 33,933,583 12,332,102 364,236 593,441 698,298 104,557,744 $ 5,319,684 - - - 662,937 - 5,982,621 1,723,149 148,498,911 - (15,260,611) 362,548 1,822,663 4,247,980 1,322,843 (5,888,260) 2,261,330 19,449 (289,380) 6,693,377 58,822,735 294,617,266 229,984,369 55,083,983 2,309,541 (278,595,716) - 6,741,456 6,741,456 1,867,774 1,867,774 1,991,399 1,991,399 368,915,555 519,137,615 - 2,137,641 $ 623,695,359 1,265,783 - 20,736,284 - $ 3,145 14,235 17,380 15,479,827 48 $ 1,885,154 $ $ 5,982,621 Business-type Activities - Enterprise Funds Water and Wastewater Solid Waste Golf Course Cemetery Total Governmental ActivitiesInternal Service Funds Liabilities Current liabilities: Accounts payable Deposits Accrued expenses Due to other funds Deferred revenue Accrued interest payable General obligation bonds- current Excise tax revenue obligations- current WIFA loan payable- current Capital leases payable- current OPEB- current Total current liabilities Noncurrent liabilities: General obligation bonds payable Excise tax revenue obligations WIFA loan payable OPEB obligation Unamortized premium Total noncurrent liabilities Total liabilities $ 3,905,466 505,415 3,510,997 $ 397,626 133,070 46,748 218,564 148,867 45,352 30,705 33,882,562 1,660,604 490,236 587,170 36,620,572 1,658,100 103,332 1,761,432 256,770,000 55,402,100 13,255,903 5,817,300 103,332 331,348,635 30,843 2,348,602 367,969,207 6,953,368 - 400,688 1,126,846 $ - 146,365 6,896,950 16,230,000 1,600,000 689,743 - - 256,770,000 53,744,000 13,255,903 4,120,243 1,378,888 327,890,146 1,378,888 318,169 318,169 361,772,708 3,039,492 808,405 154,075,543 88,344,486 $ 242,420,029 6,741,456 5,698,879 12,440,335 1,822,422 (745,673) 1,076,749 - - $ 5,165 444,574 42,431 95,000 - $ 4,358,067 505,415 4,856,407 593,441 146,365 6,939,381 16,230,000 1,695,000 689,743 45,352 561,401 $ 364,406 - 5,895,182 662,937 - 6,922,525 - - 30,843 Net Assets Invested in capital assets, net of related debt Unrestricted Total net assets $ $ $ The notes to the financial statements are an integral part of this statement. 49 134,967 (345,928) (210,961) 162,774,388 92,951,764 $ 255,726,152 - $ (970,747) (970,747) Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2012 City of Tempe, Arizona Business-type Activities - Enterprise Funds Water and Wastewater Solid Waste Golf Course Cemetery Total Governmental ActivitiesInternal Service Funds Operating revenues: Charges for services Miscellaneous Total operating revenues $ 73,392,328 3,032,990 76,425,318 $ 14,866,281 14,866,281 $ 2,344,355 2,344,355 $ 144,242 144,242 $ 90,747,206 3,032,990 93,780,196 $ 25,002,409 25,002,409 Operating expenses: Personnel services Supplies and materials Fees and services Depreciation Total operating expenses Operating income (loss) 15,715,494 4,426,808 15,709,328 16,553,635 52,405,265 24,020,053 5,477,139 364,475 7,519,145 1,265,819 14,626,578 239,703 791,350 456,780 1,185,631 224,655 2,658,416 (314,061) 93,232 93,232 51,010 21,983,983 5,248,063 24,414,104 18,137,341 69,783,491 23,996,705 307,790 (13,074,430) 3,092 (6,676,717) 30,333 37,490 - (1,397) - (1,429) (36,617) - 335,297 (13,111,047) 40,582 (6,676,717) 4,579,788 307,526 (315,458) 12,964 4,584,820 (3,636,178) 1,988,550 6,913,495 (6,122,129) 7,359,704 (356,561) (49,035) 74,000 (241,458) 12,964 1,988,550 6,987,495 (6,478,690) 7,082,175 (3,636,178) Nonoperating revenues (expenses): Investment income (loss) Interest and fiscal fees Gain on sale of capital assets Net loss from joint venture Income (loss) before contributions and operating transfers Capital contributions Transfers in Transfers out Change in net assets Total net assets- beginning Total net assets- ending 235,060,325 $ $ 242,420,029 12,489,370 $ 12,440,335 1,318,207 $ 1,076,749 (223,925) $ (210,961) The notes to the financial statements are an integral part of this statement. 50 248,643,977 $ 255,726,152 28,638,587 28,638,587 (3,636,178) - $ 2,665,431 (970,747) Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2012 City of Tempe, Arizona Business-type Activities- Enterprise Funds Water and Wastewater Cash flows from operating activities: Receipts from customers Receipts from other funds Payments to employees for services Payments to suppliers for goods and services Payment for premiums and settlement of claims Net cash provided (used) by operating activities $ Cash flows from noncapital financing activities: Advances from/(to) other funds Transfers in Transfers out Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Proceeds from sale of bonds Payment to refunded bond escrow agent Principal paid on long-term debt Interest and fiscal fees Acquisition of capital assets Capital contributions Deferred revenue Gain from the sale of assets Investment in joint venture Net cash used by capital and related financing activities Cash flows from investing activities: Interest received Collection of notes receivable Net cash provided (used) by investing activities 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 Change in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories Increase (decrease) in deposits Increase (decrease) in payables Increase (decrease) in accrued expenses Increase (decrease) in net OPEB obligation Net cash provided (used) by operating activities Noncash investing, capital, and financing activities: Net loss from joint venture Total noncash investing, capital, and financing activities: $ 14,990,942 (5,246,277) (8,982,880) 761,785 (108,742) 6,913,495 (6,122,129) 682,624 (356,561) (356,561) 15,145,000 (6,755,000) (18,145,446) (12,663,414) (19,231,547) 1,988,550 (24,747) 3,092 (473,100) (40,156,612) (1,048,682) 37,490 (1,011,192) 314,976 (505,933) (190,957) Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 75,394,866 (14,249,505) (23,605,974) 37,539,387 Solid Waste Golf Course $ 26,513 26,513 (2,125,558) 84,893,810 2,341,210 (864,625) (1,643,666) (167,081) Cemetery $ 82,768,252 $ 7,658,819 $ $ 24,020,053 $ 239,703 $ 92,871,260 (20,360,407) (34,227,355) 38,283,498 $ - 25,002,409 (30,215,753) (5,213,344) (40,125) (40,125) 6,987,495 (6,478,690) 508,805 (52,087) (1,397) (78,736) (132,220) (121,900) (23,284) (145,184) 15,145,000 (6,755,000) (18,319,433) (12,688,095) (20,358,965) 1,988,550 (24,747) 40,582 (473,100) (41,445,208) - (1,200) (1,200) 340,628 (505,933) (165,305) - (37,102) 179,698 (2,818,210) 93,387,877 (76,095) 76,095 $ $ 148,867 74,000 222,867 339 339 (579,455) 8,238,274 144,242 5,165 149,407 Total Governmental ActivitiesInternal Service Funds - (314,061) - (5,213,344) 10,533,028 $ 142,596 $ 90,569,667 $ 5,319,684 $ 51,010 $ 23,996,705 $ (3,636,178) 16,553,635 1,265,819 224,655 93,232 18,137,341 $ (1,030,452) (183,649) 125,307 (3,411,496) 539,887 926,102 37,539,387 $ 124,661 (1,285) (1,097,975) 162,566 68,296 761,785 (3,145) (1,255) (14,587) (58,688) (167,081) 5,165 149,407 $ (908,936) (183,649) 124,022 (4,505,561) 687,866 935,710 38,283,498 $ $ (6,676,717) $ - $ - $ - $ (6,676,717) $ - $ (6,676,717) $ - $ - $ - $ (6,676,717) $ - 51 $ The notes to the financial statements are an integral part of this statement. $ 192,660 (1,724,685) (45,141) (5,213,344) City of Tempe, Arizona 52 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona The City of Tempe, Arizona (the "City") was incorporated on November 26, 1894. On October 19, 1964, the electors in accordance with Arizona State Law ratified a Home Rule City Charter. The City operates under a Council-Manager form of government and provides services as authorized by its charter including: public safety (police, fire, building inspection), highways and streets, public transit, sanitation, water and wastewater, cultural-recreational, community development, and administrative. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying summary of the City's significant accounting policies is presented to assist the reader in interpreting the basic financial statements. The basic financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as applied to governmental units. A. Reporting Entity The accompanying basic financial statements include the City and its component unit, collectively referred to as "the financial reporting entity". In accordance with the Governmental Accounting Standards Board's ("GASB") Statement 14, as amended, the component unit discussed below has been included in the City's financial reporting entity because of the significance of its financial relationships with the City. Rio Salado Community Facilities District: The Rio Salado Community Facilities District (CFD) was organized on February 20, 1997, under the laws of the State of Arizona to facilitate development of the Rio Salado Town Lake project. The board of the district is comprised of the same members as the City’s council. Data for this component unit has been included in the City's basic financial statements utilizing the "blending" method because its sole purpose is to finance public facilities and facilitate development for the City. Blending involves aggregating the component unit’s data and data from the City at the government-wide and fund financial statement level. Separately issued financial statements are not available for the City's component unit. B. Basic Financial Statements The basic financial statements include both government-wide (based on the City as a whole and its component unit) and fund financial statements. Both the government-wide and fund financial statements categorize activities as either governmental activities or business-type activities. Governmental activities are normally supported by taxes and intergovernmental revenues. Business-type activities rely to a significant extent, on fees and charges for support. All activities, both governmental and business-type, are reported in the government-wide financial statements using the economic resources measurement focus and the accrual basis of accounting, which includes long-term assets as well as long-term obligations. The government-wide financial statements focus more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The government-wide Statement of Activities demonstrates the degree to which the direct expenses, including depreciation, of the various departments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific department. Interest on long-term debt and depreciation expense on assets shared by multiple departments, are not allocated to the various departments. 53 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basic Financial Statements (Continued) Program revenues include revenues from fines and forfeitures, licenses and permit fees, special assessment taxes, certain intergovernmental grants, other entities participation and charges for services. Taxes and other items not properly included among program revenues are reported as general revenues. Generally, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. The City does not currently utilize an indirect cost allocation system. The General Fund charges certain administrative fees to departments within other operating funds to support general services used by those funds. The expenditures/expenses are recorded as a reduction of expense in the allocating fund. Therefore, no elimination is required from either the government-wide or fund level financial statements. The fund financial statements are, in substance, very similar to the financial statements presented prior to the adoption of GASB Statement 34. Emphasis here is on the major funds in either the governmental or business-type categories. Non-major funds are summarized into a single column. Unless an internal service fund is combined with the business-type activities (deemed to be an infrequent event), totals on the proprietary fund statement should directly reconcile to the business-type activity column presented in the government-wide statements. Internal service funds of a government (which traditionally provide services primarily to other funds of the City) are presented as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements of internal service funds are consolidated into the governmental activities column when presented at the government-wide level. To the extent possible, the costs of these services are reflected in the appropriate department. C. Basis of Presentation The City uses funds to report on its financial position and the results of its operations. A fund is a separate accounting entity with a self-balancing set of accounts. Fund accounting is designed to demonstrate legal compliance and to aid in the City's financial management by segregating transactions related to certain functions or activities. The following fund categories are used by the City: Governmental Funds Governmental Funds are those through which most of the governmental functions of the City are financed. The focus of Governmental Fund measurement, in the fund financial statements, is upon determination of financial position and changes in financial position rather than upon net income. 54 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Governmental Funds (Continued) Governmental Funds include the following fund types: General - The General Fund is the general operating fund of the City. It is used to account for all activities of the City not accounted for in some other fund. Special Revenue - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally or otherwise restricted to expenditures for specified purposes. There is one special revenue fund presented as a major fund in the basic financial statements, it is as follows: Transit Special Revenue Fund - accounts for the receipt and expenditures of the Transit Tax monies. These monies are restricted to financing transit operations and improvements. Debt Service - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long term debt not being accounted for in the Special Revenue Funds and Enterprise Funds. Both debt service funds are presented as major funds in the basic financial statements: General Obligation Debt Service Fund - accounts for the accumulation of resources and payments of general obligation and other debt. Special Assessment Debt Service Fund - accounts for the accumulation of resources and payments of special assessment debt. Capital Projects - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and improvements (other than those financed by Enterprise Funds). The following capital project fund is presented as a major fund in the basic financial statements: Transit Capital Projects Fund - used for the acquisition of buses, the light rail system, and other traffic flow improvements. Proprietary Funds Proprietary funds are used to account for the City's ongoing operations and activities, which are similar to those often found in the private sector. The focus of Proprietary Fund measurement is upon the determination of operating income, changes in net assets, financial position and cash flows. Each proprietary fund is reported as a major fund in the basic financial statements. 55 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Proprietary Funds (Continued) Proprietary funds include the following fund types: Enterprise - Enterprise Funds are used to account for operations, including debt service, (a) that are financed and operated in a manner similar to private businesses - where the intent of the government body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis is financed or recovered primarily through user charges; or (b) where the governing body has determined that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Equity in Joint Venture - The equity method is used to account for the City's equity interest in a joint venture (See Note 7). Under this method, the equity interest is recorded in the balance sheet as a single amount. In addition, the City's share of the net income or loss is reported in the Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds, as a nonoperating revenue or expense. The following enterprise funds are used by the City: Water and Wastewater Fund – accounts for the provision of water and sewer services to the residents of the City and some residents in the adjoining Town of Guadalupe. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance, financing and related debt service, billing and collection. Solid Waste Fund – accounts for the provision of refuse collection and disposal services for both residential and commercial customers. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, billing and collection. Golf Course Fund - accounts for the operation of the Rolling Hills and Ken McDonald golf courses. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance and financing. Cemetery Fund – accounts for the operation of the Double Butte cemetery. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance and financing. Internal Service - Internal Service Funds account for operations that provide services to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. The following internal service funds are used by the City: Risk Management Fund – accounts for expenses incurred for worker’s compensation, automobile liability, general liability, and property claims under the City’s self-insurance program. Health Fund – accounts for the expenses incurred for employee health related costs under the City’s self-insurance program. 56 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to 1) demonstrate legal and covenant compliance, 2) demonstrate the source and use of liquid resources, and 3) demonstrate how the City’s actual experience conforms to the annual budget. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" is defined as collectible within the current period or within 60 days of the end of the current fiscal period. Expenditures, other than interest on long-term debt, are recorded when the related fund liability is incurred, if measurable. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded only when payment is due. Revenues susceptible to accrual include property tax, local sales tax, state-shared sales tax, highway user tax, vehicle license tax, franchise fees, special assessments and interest earned on pooled investments. Licenses and permits, charges for services, fines and forfeitures and miscellaneous revenues are generally recorded as revenues when received in cash because they are not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended for a specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to the purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. The City reports deferred revenues in the governmental funds if the potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized. Since the governmental fund financial statements are presented on a basis different than the governmental activities column of the government-wide financial statements, a reconciliation is provided immediately following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the governmental fund financial statements into the governmental activities column of the government-wide financial statements. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. An exception to this rule is charges between the government’s water and sewer function and various functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the applicable functions. Amounts reported as program revenue include 1) charges to customers or users who purchase, use or directly benefit from goods or services provided by a particular department 2) operating grants and contributions that are restricted to meeting the operational requirements of a particular department and 3) capital grants and contributions that are restricted. Taxes, investment income and other revenues not identifiable with a particular department are included as general revenues. The general revenues support the net costs of the departments not covered by program revenues. 57 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. GASB No. 20 requires that governments with proprietary activities apply all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board ("FASB") Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins. Governments are given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements. Accounting Principles Board Opinion No. 22, Disclosure of Accounting Policies, require the same treatment for the government-wide financial statements. The City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989 for the government-wide or enterprise fund financial statements. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing goods and services of the fund’s principal ongoing operations. Operating expenses include the cost of providing the goods and services, administrative expenses, and depreciation on capital assets. Non-operating revenues and expenses are items such as investment income and interest expense, which are not a result of the direct operations of the activity. E. Budgetary Data State law mandates that cities and towns adopt a budget annually. As a result, an operating budget is legally adopted each fiscal year for the General, Special Revenue (except Grants and Court Awards), Debt Service (except Special Assessments), and Proprietary Funds on a modified accrual basis plus encumbrances. The separately issued annual budget may be obtained from the City's Finance and Technology Department, Budget and Research Division, 20 East Sixth Street, Tempe, Arizona, 85281. Certain differences as described in Note 2 exist between the basis of accounting used for budgetary purposes and that used for reporting purposes in accordance with GAAP. The legal level of budgetary control is at the city-wide level consisting of the total operating budget and the total capital projects budget, as adopted. Management may amend the budget at any level below the total budget as adopted. The total operating budget can only be amended by the City Council subject to limitations in the State law (see Note 1F). At the end of each fiscal year, all amounts encumbered are reappropriated as part of the following year’s operating or capital projects budget. Any appropriations that are either unexpended or unencumbered, lapse at fiscal year-end. No supplemental appropriations were necessary during the year. The City adheres to the following procedures in establishing the budgetary data reflected in the basic financial statements: 1) Prior to May 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed revenues and expenditures. 2) Public hearings are conducted to obtain taxpayer comments. 3) Prior to July 1, the budget is legally enacted through passage of a resolution. 58 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. Expenditure Limitation On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments, which restricts the annual growth of expenditures to a percentage determined by population and inflation. Certain types of expenditures are excluded from the limitation. Article 9, Sections 20 and 21 of the Arizona Constitution require the Economic Estimates Commission to determine each year the expenditure limitation for the following fiscal year for each city. The limitation is calculated based upon the amount of FY 1979-80 actual payments of local revenues, referred to as the “base limit”. Each year, the base limits for local jurisdictions are adjusted for population and inflation to reach the expenditure limitations. The City of Tempe’s 2011-12 Expenditure Limitation is $285,252,583. Local governments may carryforward to later years revenues, which are not subject to the expenditure limitation and were not expended in the year of receipt. G. Pooled Cash and Investments Cash resources of the City are combined to form a pool of cash and investments managed by the Accounting Division. Excluded from this pool are certain legally restricted cash resources. In accordance with the City’s legally adopted budget, the interest earned on pooled investments is recorded in the General Fund, except for the earnings of Enterprise Funds and other funds whose interest earnings are specifically mandated by law or an outside regulating agency to remain in those funds. Investments are stated at fair value. The City's investment policy permits investment in the following instruments: 1) Obligations of the United States Government, its agencies and instrumentalities; 2) Fully insured or collateralized certificates of deposit and other evidences of deposit at banks and savings and loan associations; 3) Bankers' acceptances issued by the 10 largest domestic banks and the 20 largest international banks, provided collateral meets the standards set by the Investment Advisory Committee; 4) A-1/P-1 rated commercial paper secured by an irrevocable line of credit or collateralized by U.S. government securities; 5) Repurchase agreements whose underlying collateral consist of the foregoing; 6) Money market funds whose portfolios consist of the foregoing; and 7) The State of Arizona's Local Government Investment Pools 5 and 7. H. Receivables For accounts receivable, all amounts outstanding in excess of 120 days are included in the allowance. I. Inventories All inventories are valued using the average cost method. They consist of expendable supplies held for consumption and are accounted for using the consumption method. 59 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the Balance Sheet, or Statement of Net Assets, because they are maintained in trust accounts and their use is limited by applicable debt covenants. K. Capital Assets Capital assets, including public domain infrastructure (e.g., roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 ($25,000 for infrastructure assets) and an estimated useful life greater 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 cost of normal maintenance and repairs that do not add to the value of the asset or materially extend its life, are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed, if material. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives (land and construction-in-progress are not depreciated): Assets Useful life (years) Buildings Infrastructure Improvements Machinery and equipment 10-70 7-70 10-50 3-25 L. Compensated Absences Accumulated unpaid vacation, vested sick pay and vested "Mediflex" supplementary health maintenance benefits are accrued in the Government-wide and all Proprietary Fund statements. Compensated absences are only reported in the governmental funds if they have matured (i.e. unused reimbursable leave still outstanding following an employee’s resignation or retirement). These long-term liabilities of the governmental funds are not shown on the fund financial statements, as the benefits are not expected to be liquidated with expendable available financial resources. Vacation leave will be absorbed by time off from work or, within certain limitations, may be payable to the employees. Sick leave is accumulated at the rate of 96 hours (or a proportionate equivalent for employees with workweeks other than 40 hours) per year up to a maximum of 480 hours. Each year, hours accumulated in excess of 480 hours are either converted to cash at a 4-for-1 rate or accumulated in a “sick bank”. Upon retirement or resignation, employees with at least 10 years service are eligible for compensation of up to 50 percent of accumulated sick leave. Each employee with 3 years service receives a "Mediflex" allowance each year as reimbursement for all otherwise nonreimbursed health maintenance costs. Benefits are prorated based on length of service and increase up to a maximum of $650 a year. Unused credits are cumulative and upon employee termination are "banked" at the following rates: after 10 years, 50 percent; after 15 years, 75 percent; after 20 years, 100 percent. 60 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, businesstype activities, or proprietary fund type. Bond premiums, discounts, and issuance costs are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, in the period in which the bonds are issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. N. Interfund Transactions Interfund transactions consist of identified services performed for other funds or costs billed to other funds and are recorded as expenditures in the fund receiving the services and as a reimbursement, reducing expenditures, in the fund performing the services except for sales of water, sewer and refuse services to other City departments and the internal service risk management or health charges which are recorded as revenue and expenditures in the appropriate funds. All other interfund transactions are reported as transfers. O. Fund Equity In the fund financial statements, the classifications of fund balance are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable and Restricted fund balances represent the “restricted” classifications and Committed, Assigned, and Unassigned represent the “unrestricted” classifications (see note 11). P. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. For the purposes of the statement of cash flows, all pooled cash and investments are also considered to be cash equivalents, although there are investments with maturities in excess of three months when purchased in the portfolio. This is due to the fact that the Proprietary funds may deposit or withdraw cash at any time without prior notice or penalty, having the characteristics of demand deposits. In a statement of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. Q. Use of Estimates The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses/expenditures, and the disclosure of contingent assets and liabilities at the date of the basic financial statements. Actual results could differ from those estimates. 61 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 2 - BUDGET BASIS OF ACCOUNTING Arizona state statutes require accounting for certain transactions to be on a basis other than GAAP. The actual results of operations, in accordance with state statutes ("budget basis") are presented in the Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual for the General Fund and Transit Special Revenue Fund (major funds) to provide a meaningful comparison of actual results with the budget. Budgetary statements include a reconciliation of the adjustments required to convert the budgetary basis to GAAP basis. The major differences between the budget and GAAP bases are: 1) Encumbrances are recorded as the equivalent of expenditures (budget) as opposed to a reservation of fund balance (GAAP). 2) Certain revenues and expenditures not recognized in the budgetary year are accrued (GAAP). 3) Changes in the fair value of investments (GAAP) are not budgeted. NOTE 3 - PROPERTY TAXES Under Arizona law a two-tiered tax system exists: (1) a primary system for taxes levied to pay for current operation and maintenance expenses, and (2) a secondary system for taxes levied to pay principal and interest on bonded indebtedness as well as for the determination of the maximum permissible bonded indebtedness. Specific provisions are made under each system for determining full cash values of property, the basis of assessment, and the maximum annual tax levies on certain types of property and by certain taxing authorities. Under the primary system, the full cash value of locally assessed real property (consisting of residential, commercial, industrial, agricultural and unimproved property) may increase by more than 10% only under certain circumstances. Under the secondary system, there is no limitation on annual increases in full cash value of any property. Primary levies are limited to a 2% increase annually plus levies attributable to assessed valuation added as a result of growth and annexation. Secondary tax levies do not have a limitation. The City's property tax is levied each year on or before the third Monday in August based on the previous January 1 full cash value as determined by the Maricopa County Assessor. Levies are due and payable in two installments on October 1 and March 1, and become delinquent on November 1 and May 1, respectively. Delinquent amounts bear interest at the rate of 16%. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions of properties which have delinquent real estate taxes are held in February following the May 1 date upon which the second installment becomes delinquent. The purchaser is given a Certificate of Purchase issued by the County Treasurer. Five years from the date of sale, the holder of a Certificate of Purchase, which has not been redeemed, may demand of the County Treasurer a County Treasurer's Deed. Additionally, a lien against property assessed attaches on the first day of January preceding the assessment and levy thereof. Using the accrual basis of accounting, property taxes are recognized as revenue when earned in the governmentwide financial statements. In the governmental funds, property taxes are recognized as revenue on the modified accrual basis, i.e., when both measurable and available. Property taxes levied in August 2012 are not available for the current year; accordingly, such taxes will not be recognized as revenue until the subsequent fiscal year. Prior year levies were recorded using these same principles, and remaining receivables from such levies are also recognized as revenue, when available. 62 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the Statement of Net Assets and on the Balance Sheet as "Pooled cash and investments." Pooled cash and investments are stated at fair value, with accrued interest shown under “Accrued interest receivable”. The change in fair value of the investments is recorded in investment income. Restricted cash and investments are amounts held separately by trustees and segregated due to their source and future intent. Amounts held by trustees are invested in money market securities, maturing within one year from the time of purchase, or US treasury obligations and are reported at amortized cost. Deposits At year-end, the carrying amount of the City's deposits with financial institutions was $3,494,694 and the bank balance was $6,587,141; $6,379,701 of that amount was exposed to custodial credit risk because it was uninsured and is collateralized with securities held by the pledging financial institution. Investments City Charter, Ordinance, and Trust Agreements authorize the City to invest in US treasury obligations, US agency obligations, certificates of deposit that are fully insured or collateralized, banker’s acceptances issued by the 10 largest domestic banks and the 20 largest international banks, A-1/P-1 rated commercial paper secured by an irrevocable line of credit or collateralized by US government securities, repurchase agreements whose underlying collateral consist of the foregoing, money market funds whose portfolios consist of the foregoing and the Arizona Local Government Investment Pools 5 and 7. Cash and investments as of June 30, 2012 are classified in the accompanying financial statements as follows: Carrying amount of investments Carrying amount of cash deposits Total pooled cash and investments $340,187,229 3,494,694 $343,681,923 Pooled cash and investments – unrestricted Restricted cash and investments Total pooled cash and investments $274,924,368 68,757,555 $343,681,923 The City had a net increase in the fair value of investments during fiscal year 2011-12 of $439,946. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. 63 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS (Continued) Investments (Continued) At June 30, 2012, the City maintained the following investments and maturities: Remaining Maturity in Months Investment Type US government treasuries US government agencies Money market Repurchase agreements Cash held with trustee State investment pool Fair Value $ 95,207,085 176,304,488 33,042 3,721,494 15,108,000 49,813,120 $ 340,187,229 12 Months or Less 13 - 24 Months $ 71,316,114 46,228,549 33,042 3,721,494 15,108,000 49,813,120 $ 186,220,319 $ 23,890,971 92,170,952 $116,061,923 25 - 36 Months $ $ 37,904,987 37,904,987 Interest rate risk. One of the ways the City limits its exposure to fair value losses arising from rising interest rates is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Although the City’s formal investment policy allows for investment maturities up to 5 years from the date of purchase, in general, the City limits all securities to a final maturity of no more than three years and assumes that its callable investments will not be called. In general, it is the City’s intent to hold investments to maturity. Credit risk. The City addresses credit risk through the investment policy by restricting the allowable investment instruments. The investments in the US agency obligations were rated AA+ and money market funds were rated AAAm by Standard & Poor’s. The repurchase agreements are between JP Morgan and the City of Tempe, Arizona and are considered a short term debt obligation of the bank. The Arizona Local Government Investment Pool 5 is currently rated AAAf/S1+ by Standard & Poor’s. Concentration of Credit Risk. The City policy places no limit on the amount that the City may invest in any one issuer of the US treasury obligations and the US agency obligations. The investment policy does establish a maximum percentage of 10% in banker’s acceptances, 20% in commercial paper and 25% in repurchase agreements. The maximum investment in any one issuer for certificates of deposits is 33% and for repurchase agreements is 10%. The City is required to disclose if 5% or more of its investments are in securities of a single issuer. As of June 30, 2012, 5.18% of the City’s investments are in Federal Home Loan Bank securities, 35.90% of the City’s investments are in Fannie Mae, and 39.83% of the City’s investments are in Federal Home Loan Mortgage Corporation Securities. Custodial Credit Risk. The City’s investment in the State of Arizona Local Government Investment Pool (LGIP) is stated at fair value, which approximates the value of the City’s pool shares. The LGIP is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statutes, §35-326. Arizona Revised Statutes, §35-312 and §35-313, regulate authorized investments. The Arizona State Legislature has created the Arizona Board of Investments which reviews the investment of state monies, serves as trustees of the Permanent Land Trust Funds, and approves the State Treasurer’s Office Investment Policy. 64 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 5 - DUE TO/FROM OTHER FUNDS AND INTERFUND TRANSFERS Due to/from other funds consisted of the following at June 30, 2012: Due to 1,358,295 316,220 $ 1,674,515 Due from $ 1,674,515 $ 1,674,515 General fund Special assessment debt service Non-major governmental Total governmental funds $ Water and wastewater fund Golf fund Cemetery fund Total enterprise funds $ $ Due to 662,937 $ 662,937 Due from $ 662,937 $ 662,937 Due to 148,867 444,574 $ 593,441 Risk management fund Health fund Total internal service funds $ Due from 593,441 $ 593,441 The interfund balances at June 30, 2012 are short-term loans to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2012 are expected to be repaid within one year. Interfund balances between the governmental funds and interfund balances between the proprietary funds have been eliminated in the government-wide statement of net assets. Transfers Out Transfers In General General General Obligation Debt Service Transit Capital Projects Non-major Governmental Water and Wastewater Golf Total $ - Transit Special Revenue $ 476,144 - - 366,643 General Obligation Non-major Debt Service Governmental Water and Wastewater $ $ - $ 2,279,516 - - - - 1,554,615 - 2,670,693 - 4,222,907 129,356 - - 5,456,373 1,457,122 - - - $ 9,679,280 $ 5,420,609 $ 3,146,837 $ 366,643 83,000 Solid Waste $ 6,561 - 5,535,529 - - 429,600 350,000 - - 74,000 - $ 6,122,129 $ 356,561 Total $ 2,369,077 7,566,288 366,643 7,802,556 6,913,495 74,000 $ 25,092,059 The interfund transfers generally fall within one of the following categories: 1) pay-as-you-go financing transfers into capital project funds; 2) transfers to cover debt service payments; or 3) transfers to cover operating expenditures in accordance with City policy. There were no significant transfers during fiscal year 2011-12 that were either non-routine in nature or inconsistent with the activities of the fund making the transfer. 65 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 6 – CAPITAL IMPROVEMENT NOTES RECEIVABLE On November 10, 2004 the City entered into an intergovernmental agreement with the Arizona Tourism and Sports Authority (“TSA”) for the renovation of the Tempe Diablo Stadium Complex. On September 1, 2005, the City funded the project through the issuance of municipal bonds (see note 9). The TSA agreed to reimburse the City $12,000,000 for their contribution, plus interest at the bond rate (3.50% to 5.00%). A note receivable was recorded in the General Obligation Debt Service Fund for the TSA’s portion. Payments are received semi-annually and any unpaid interest is capitalized. Due to capitalizing interest, at June 30, 2012 the note receivable balance is $14,434,732. In August 2008, the City advanced to the Downtown Tempe Community (DTC) $250,000 to begin operations. The DTC is to repay the advance at zero percent interest rate when the district is terminated. During the construction of the light rail, the City entered into two development agreements to add a light rail station at Washington and Center Parkway. Each agreement has a total contribution to the City of $1.3 million, payable at $130,000 annually over a five and six year period with the remaining balance due the following year. In addition, there is an option for a prepayment equal to the net present value of the unpaid balance calculated using a 4.50% discount rate. At June 30, 2012 the note receivable balance in the Transit Special Revenue fund is $1,974,675 and the corresponding revenue has been deferred. In accordance with a development agreement, the City has deferred certain water and sewer development fees. Commencing in August 2011, the City receives $12,324 monthly over a 10 year period with an interest rate of 4.00%. The notes receivable balance in the Water and Wastewater Enterprise Fund at June 30, 2012 was $1,133,302. In August 2011, in accordance with a development agreement, the City has deferred certain water and sewer development fees. The City will use the sales tax rebate due to the developer to pay for the deferred development fees. The outstanding fees accrue at an interest rate of 2.00%. The notes receivable balance in the Water and Wastewater Enterprise Fund at June 30, 2012 was $589,847. NOTE 7 - JOINT VENTURE The City currently participates in two joint ventures, the Subregional Operating Group and Valley Metro Rail, Inc. Subregional Operating Group (SROG) The City participates with the cities of Phoenix, Mesa, Scottsdale, and Glendale in an intergovernmental agreement for the construction, operation and maintenance of jointly used facilities including the 91st Avenue Wastewater Treatment Plant, the Salt River Project Outfall Sewer, the Southern Avenue Interceptor and related transportation facilities. The City of Phoenix is the management agency who has agreed to be responsible for the planning, designing, constructing, operating and maintaining of the jointly used sewage facilities and to perform the required accounting, administrative and other support functions. The agreement provides for the formation of a Multicity Subregional Operating Group Committee ("Multicity SROG"), whose members are composed of a representative officially appointed upon motion and order of each city, for the specific purpose of making recommendations concerning specific decisions or courses of action for the jointly used facilities. The Multicity SROG annually reviews and approves the capital improvements and replacements budget and also the operating budget for the jointly used facilities. As of June 30, 2011 (the latest information available), the City has a 15.88% equity interest or purchased capacity in the 91st Avenue Wastewater Treatment Plant and other varied, yet less significant percentages of equity interest in the other jointly used facilities. Purchased capacity is a measure of the right of use owned by the City in the total capacity of the wastewater treatment plant. The City contributes to capital improvements based upon equity interest and contributes to operating and maintenance expenses based upon proportional flow and sewage strength. The City has financed its share of capital improvement costs through the issuance of general obligation bonds, excise tax bonds, development fees and grants. The joint venture has not issued any debt. 66 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) Subregional Operating Group (SROG) (Continued) Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2011 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net assets $ 946,707 (42,286) $ 904,421 Total revenues Total expenses Total non-operating revenues (expenses) Net decrease in net assets $ 55,565 (83,878) (95) ($ 28,408) The City's net investment and its share of operating and maintenance expenses are recorded in the Water and Wastewater Enterprise Fund. The City's equity in joint venture at June 30, 2012, was $148,498,911. The City’s net loss from joint venture was $6,676,717 for the fiscal year ended June 30, 2012. Separately audited financial statements for the jointly used wastewater treatment and transportation facilities may be obtained from the Arizona Municipal Water Users Associations, 4041 North Central, Suite 900, Phoenix, Arizona, 85012. Valley Metro Rail, Inc. (VMRI) The City currently participates with the cities of Phoenix, Mesa and Glendale in a joint powers agreement for the design, construction and operation of a light rail transit system. Valley Metro Rail, Inc. (VMRI) is the management agency that was incorporated to administer the joint powers agreement between the cities. In addition, VMRI has oversight responsibility for the planning, designing, construction and operation of a regional mass transit light rail system. The agreement provides voting rights for members of the representative cities related to strategic initiatives including passage of an annual capital program and annual operating budget. As of June 30, 2012, the City has a 24.60% (unaudited) equity interest in the joint venture. The light rail project was completed and began operations in December 2008. Member contributions to the joint venture were offset by a Federal funding agreement from the U.S. Department of Transportation. These contributions were recognized as intergovernmental revenue in the Transit Capital Projects fund. Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2011 (the latest information available) is as follows: Total assets Total liabilities Total net assets $ 1,225,905,066 (67,532,429) $ 1,158,372,637 Total revenues Total expenses Total non-operating revenues Total non-operating expenses Net decrease in net assets $ $ 67 90,309,914 (77,410,654) 10,957,874 (44,217,025) (20,359,891) Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) Valley Metro Rail, Inc. (VMRI) (Continued) The City has an ongoing financial responsibility as a result of the joint powers agreement to participate in the cost to construct and operate the light rail project and related improvements less any federal reimbursements and operating fares. The equity interests will be determined, and periodically adjusted, based on the number of rail mileage located within each city. The City expended $103,226 in the fiscal year ended June 30, 2012 toward the light rail project. These expenditures were included in the financial statements predominately as capital outlay in the Transit Capital Projects fund. The City’s equity in joint venture at June 30, 2012 was $280,177,572. Separate financial statements may be obtained from Valley Metro Rail, Inc., 411 North Central Avenue, Suite 200, Phoenix, Arizona 85004. NOTE 8 - CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the fiscal year ended June 30, 2012 is as follows: Balances June 30, 2011 Governmental activities: Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets Depreciable assets: Buildings Infrastructure Improvements Machinery and equipment Total depreciable assets Accumulated depreciation: Buildings Infrastructure Improvements Machinery and equipment $ 89,605,173 Additions $ - Retirements $ - Transfers in (out) Balances June 30, 2012 - $ 89,605,173 $ 13,208,314 102,813,487 29,409,449 29,409,449 (2,235,824) (2,235,824) (26,055,952) (26,055,952) 14,325,987 103,931,160 304,185,403 704,195,758 161,987,410 161,033,245 1,331,401,816 2,090,908 2,090,908 (1,400,326) (1,400,326) 35,970 12,854,300 8,127,528 5,038,154 26,055,952 304,221,373 717,050,058 170,114,938 166,761,981 1,358,148,350 (69,274,838) (310,416,330) (47,319,340) (114,417,938) (10,902,541) (16,263,614) (6,283,922) (8,697,736) Total accumulated depreciation (541,428,446) (42,147,813) Governmental activities capital assets, net $ 892,786,857 $(10,647,456) 68 1,362,274 - (80,177,379) (326,679,944) (53,603,262) (121,753,400) 1,362,274 - (582,213,985) $(2,273,876) $ - $ 879,865,525 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 8 - CAPITAL ASSETS (Continued) Balances June 30, 2011 Business-type activities: Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets Depreciable assets: Buildings Infrastructure Improvements Machinery and equipment Total depreciable assets $ 6,693,377 35,234,289 41,927,666 $ Additions Retirements 19,189,241 19,189,241 $ 58,822,735 246,343,246 229,919,855 50,555,712 585,641,548 Accumulated depreciation: Buildings (22,768,626) Infrastructure (122,187,004) Improvements (76,763,110) Machinery and equipment (39,156,543) Total accumulated depreciation (260,875,283) Business-type activities capital assets, net $366,693,931 (250,953) (250,953) 1,420,676 1,420,676 (416,907) (416,907) (1,389,237) (6,898,010) (7,546,427) (2,303,666) (18,137,340) 416,907 416,907 $ 2,472,577 ($250,953) Transfers in (out) $ $ 6,693,377 (51,863,036) 2,309,541 (51,863,036) 9,002,918 48,274,020 64,514 3,524,502 51,863,036 $ Balances June 30, 2012 58,822,735 294,617,266 229,984,369 55,083,983 638,508,353 - (24,157,863) (129,085,014) (84,309,537) (41,043,302) (278,595,716) - $368,915,555 Depreciation expense was charged to the governmental functions in the government-wide financial statements as follows: Police Fire Community services Public works Community development Community relations City manager Diversity program City attorney Municipal court Finance and technology Unallocated depreciation Total depreciation expense 69 $ $ 4,607,691 2,188,491 5,350,838 25,208,619 1,381,291 30,101 6,358 996 660 38,113 1,033,461 2,301,194 42,147,813 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT 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 general government and proprietary activities. Bonds issued for proprietary activities are reported in the Proprietary Funds as they are to be repaid from proprietary revenues. In the current year, $7.005 million was issued to finance improvements for Transportation, Public Safety, and Library. In addition, general obligation bonds have been issued to refund previously issued 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 10-20 year serial bonds with varying amounts of principal maturing each year. General obligation bonds outstanding at June 30, 2012, were as follows (the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated): $44,820,000 2003 Capital Improvement Serial Bonds due in annual installments of $955,000 to $3,340,000 through July 1, 2014; interest at 3.50% to 5.00% $19,900,000 2004 Capital Improvement Serial Bonds due in annual installments of $560,000 to $1,485,000 through July 1, 2024; interest at 3.5% to 5.5% $18,775,000 2004R Capital Improvement Refunding Issue Serial Bonds due in annual installments of $40,000 to $2,925,000 through July 1, 2017; interest at 2.00% to 5.00% $52,425,000 2005 Capital Improvement Serial Bonds due in annual installments of $1,740,000 to $3,860,000 through July 1,2024; interest at 3.50% to 5.00% $74,495,000 2006 Capital Improvement Serial Bonds due in annual installments of $2,150,000 to $5,900,000 through July 1, 2025; interest at 3.50% to 5.00% $20,690,000 2007 Capital Improvement Refunding Issue Serial Bonds due in annual installments of $20,000 to $5,860,000 through July 1, 2018; interest at 3.75% to 5.00% $76,485,000 2007A Capital Improvement Serial Bonds due in annual installments of $2,220,000 to $5,350,000 through July 1, 2026; interest at 3.50% to 4.50% $66,365,000 2008A Capital Improvement Serial Bonds due in annual installments of $1,870,000 to $5,080,000 beginning July 1, 2009 through July 1, 2028; interest at 3.375% to 4.375% $56,055,000 2009A Capital Improvement Serial Bonds due in annual installments of $1,760,000 to $4,200,000 beginning July 1, 2011 through July 1, 2029; interest at 3.00% to 4.375% $16,755,000 2010A Capital Improvement Serial Bonds due in annual installments of $500,000 to $2,160,000 beginning July 1, 2011 through July 1, 2019; interest at 2.50% to 5.00% $28,410,000 2010B Capital Improvement Serial Bonds due in annual installments of $2,250,000 to $2,295,000 beginning July 1, 2020 through July 1, 2030; interest at 4.21% to 5.719%, net of 35% federal credit $60,280,000 2010C Capital Improvement Refunding Issue Serial Bonds due in annual installments of $1,225,000 to $7,735,000 through July 1, 2022; interest at 1.25% to 5.00% $5,375,000 2011A Capital Improvement Serial Bonds due in annual installments of $475,000 to $605,000 beginning July 1, 2012 through July 1, 2021; interest at 2.00% to 4.00% $7,005,000 2012A Capital Improvement Serial Bonds due in annual installments of $635,000 to $765,000 beginning July 1, 2013 through July 1, 2022; interest at 2.00% to 2.25% $12,765,000 2012B Capital Improvement Refunding Serial Bonds due in annual installments of $1,055,000 to $3,320,000 beginning July 1, 2013 through July 1, 2023; interest at 2.00% to 3.50% Total general obligation bonds outstanding (excluding current portion of general obligation bonds outstanding) 70 $ 4,365,000 5,690,000 8,895,000 37,725,000 58,140,000 16,240,000 62,450,000 57,825,000 50,305,000 13,575,000 28,410,000 50,680,000 4,900,000 7,005,000 12,765,000 $ 418,970,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) General Obligation Bonds (Continued) The following is a summary of total debt service cash requirements to maturity (net of 35% federal credit): Fiscal Year Ending June 30, Principal Interest Total 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2030 $ 27,905,000 29,120,000 30,400,000 28,300,000 29,540,000 147,215,000 104,800,000 21,690,000 $ 16,770,642 15,690,357 14,524,969 13,359,163 12,226,725 43,064,230 15,053,284 1,378,167 $ 44,675,642 44,810,357 44,924,969 41,659,163 41,766,725 190,279,230 119,853,284 23,068,167 $ 418,970,000 $ 132,067,537 $ 551,037,537 The following is a summary of governmental debt service cash requirements to maturity (net of 35% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2030 Principal $ 11,640,000 12,155,000 12,655,000 11,320,000 11,720,000 54,840,000 36,290,000 11,580,000 $ 162,200,000 Interest $ 6,165,691 5,732,993 5,275,675 4,831,450 4,405,637 15,628,529 6,196,243 761,749 $ 48,997,967 Total $ 17,805,691 17,887,993 17,930,675 16,151,450 16,125,637 70,468,529 42,486,243 12,341,749 $ 211,197,967 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal Interest Total 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2030 $ 16,265,000 16,965,000 17,745,000 16,980,000 17,820,000 92,375,000 68,510,000 10,110,000 $ 10,604,951 9,957,364 9,249,295 8,527,713 7,821,088 27,435,701 8,857,040 616,418 $ 26,869,951 26,922,364 26,994,295 25,507,713 25,641,088 119,810,701 77,367,040 10,726,418 $ 256,770,000 $ 83,069,570 $ 339,839,570 71 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Special Assessment Bonds Payable with Governmental Commitment. As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2012, the special assessments receivable of $27,803,832, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and the related interest. Improvement 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 improvement bonds. As of June 30, 2012, there is $676,205 in delinquent receivables. 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 at June 30, 2012, were as follows (the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated): $7,070,000 ID 172 Special Assessment Bonds Payable with Governmental Commitment issued August 1, 1997; maturing January 1, 2013; due in annual installments of $470,000 to $475,000; interest at 5.10% $6,175,000 ID 175 Special Assessment Bonds Payable with Governmental Commitment issued May 6, 1999; maturing January 1, 2015; due in annual installments of $295,000 to $555,000; interest at 4.70% $4,405,000 ID 179 Special Assessment Bonds Payable with Governmental Commitment issued June 1, 2005; maturing January 1, 2021; due in annual installments of $220,000 to $385,000; interest at 4.10% $25,190,000 ID 180 Special Assessment Bonds Payable with Governmental Commitment issued February 27, 2008; maturing January 1, 2029; due in annual installments of $760,000 to $1,925,000; interest at 5.00% Total special assessment bonds outstanding $ 470,000 1,595,000 2,960,000 22,790,000 $ 27,815,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal Interest Total 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 $ 2,140,000 1,745,000 1,830,000 1,335,000 1,395,000 7,670,000 7,940,000 3,760,000 $ 1,308,085 1,214,850 1,129,758 1,054,233 988,863 3,855,227 1,971,250 190,250 $ 3,448,085 2,959,850 2,959,758 2,389,233 2,383,863 11,525,227 9,911,250 3,950,250 $27,815,000 $11,712,516 $39,527,516 72 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations. On February 1, 2003, the City issued $39,275,000 of Excise Tax Revenue Obligations. The proceeds were used to refund $40,500,000 of the 1998 Variable Rate Demand Excise Tax Revenue Obligations, and pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for, it will not further encumber the excise taxes on a parity basis unless the excise taxes collected in the next preceding fiscal year of the City shall have amounted to at least three times the highest combined debt service requirements for any succeeding fiscal year for all obligations and outstanding parity obligations, including the additional parity obligations proposed to be secured by a pledge or the excise taxes. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $39,275,000 2003 Excise Tax Revenue Refunding Obligations due in annual installments of $475,000 to $2,950,000 through July 1, 2013; interest at 2.00% to 5.25% $1,830,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2013 $ 1,830,000 Interest $ 73,200 Total $ 1,903,200 Excise Tax Revenue Obligations. On June 1, 2004, the City issued $37,595,000 of Excise Tax Revenue Obligations. The proceeds were used to (i) refund $14,185,000 of the 2002 Variable Rate Demand Excise Tax Revenue Obligations related to the Tempe Center for the Performing Arts Project (Performing Arts Project), (ii) to fund a portion of the cost of the Performing Arts Project and (iii) to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of 0.10% performing arts center tax, approved by voters on May 16, 2000, which are restricted to the Tempe Center for the Performing Arts Project. Additionally, the payments to be made by the City are secured by a subordinate lien pledge by the City of all unrestricted excise, transaction, franchise, privilege and business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing, including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. 73 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The City covenants and agrees that the Performing Arts Center Excise Taxes and the Excise Taxes which it presently imposes will continue to be imposed in each Fiscal Year so that the sum of (A) the Performing Arts Center Excise Taxes for such Fiscal Year plus (B) the excess of the Excise Taxes for such Fiscal Year over the Debt Service requirements on the Outstanding Senior Excise Tax Obligations for such Fiscal Year, shall be equal to at least three times the total of the Debt Service with respect to Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. The City further covenants and agrees that so long as any Special Parity Obligations are outstanding, the Performing Arts Center Excise Taxes, the Excise Taxes and the Special Excise Taxes will be imposed in each Fiscal Year so that the sum of (A) Performing Arts Center Excise Taxes for such Fiscal Year, plus (B) Special Excise Taxes for such Fiscal Year plus (C) the excess of the Excise Taxes for such Fiscal Year over the Debt Service on the Outstanding Senior Excise Tax Obligations for such Fiscal Year shall be equal to at least three times the total of the Debt Service with respect to the Parity Obligations and the Special Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year's actual Debt Service with respect to Parity Obligations and Special Parity Obligations, the City will either impose new Excise Taxes or Special Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations and Special Parity Obligations and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year’s Debt Service with respect to Parity Obligations and Special Parity Obligations. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for, it will not further encumber the excise taxes on a parity basis unless the excise taxes collected in the next preceding fiscal year of the City shall have amounted to at least three times the highest combined debt service requirements for any succeeding fiscal year for all obligations and outstanding parity obligations, including the additional parity obligations proposed to be secured by a pledge or the excise taxes. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $37,595,000 2004 Excise Tax Revenue Obligations due in annual installments of $1,500,000 to $3,350,000 through July 1, 2014; interest at 2.25% to 5.25% The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2013 2014 $ 2,340,000 2,460,000 $ 252,000 129,150 $ 2,592,000 2,589,150 $ 4,800,000 $ 381,150 $ 5,181,150 Interest 74 Total $ 4,800,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations. On September 1, 2005, the City issued $21,315,000 of Excise Tax Revenue Obligations. The proceeds were used to finance the construction and renovation of various projects for Tempe Diablo Stadium, various cemetery improvements and pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $21,315,000 2005 Excise Tax Revenue Obligations due in annual installments of $345,000 to $2,135,000 through July 1, 2016; interest at 3.50% to 5.00% The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 Principal $ Interest 425,000 450,000 460,000 1,390,000 $ 2,725,000 75 $ Total 113,250 92,000 74,000 55,600 $ 538,250 542,000 534,000 1,445,600 $ 334,850 $ 3,059,850 $ 2,725,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 Principal $ Interest 325,000 345,000 355,000 1,280,000 $ 2,305,000 $ Total 95,450 79,200 65,400 51,200 $ 420,450 424,200 420,400 1,331,200 $ 291,250 $ 2,596,250 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 Principal Interest $ 100,000 105,000 105,000 110,000 $ 420,000 $ 17,800 12,800 8,600 4,400 $ 43,600 Total $ 117,800 117,800 113,600 114,400 $ 463,600 Excise Tax Revenue Obligations. On May 1, 2006 the City issued $22,265,000 of Excise Tax Revenue Obligations. The proceeds were used to fund a portion of the cost of the Tempe Center for the Arts Project and to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of 0.10% performing arts center tax, approved by voters on May 16, 2000, which are restricted to the Tempe Center for the Performing Arts Project. Additionally, the payments to be made by the City are secured by a subordinate lien pledge by the City of all unrestricted excise, transaction, franchise, privilege and business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing, including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. 76 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The City covenants and agrees that the Performing Arts Center Excise Taxes and the Excise Taxes which it presently imposes will continue to be imposed in each Fiscal Year so that the sum of (A) the Performing Arts Center Excise Taxes for such Fiscal Year plus (B) the excess of the Excise Taxes for such Fiscal Year over the Debt Service requirements on the Outstanding Senior Excise Tax Obligations for such Fiscal Year, shall be equal to at least three times the total of the Debt Service with respect to Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. The City further covenants and agrees that so long as any Special Parity Obligations are outstanding, the Performing Arts Center Excise Taxes, the Excise Taxes and the Special Excise Taxes will be imposed in each Fiscal Year so that the sum of (A) Performing Arts Center Excise Taxes for such Fiscal Year, plus (B) Special Excise Taxes for such Fiscal Year plus (C) the excess of the Excise Taxes for such Fiscal Year over the Debt Service on the Outstanding Senior Excise Tax Obligations for such Fiscal Year shall be equal to at least three times the total of the Debt Service with respect to the Parity Obligations and the Special Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year's actual Debt Service with respect to Parity Obligations and Special Parity Obligations, the City will either impose new Excise Taxes or Special Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations and Special Parity Obligations and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year’s Debt Service with respect to Parity Obligations and Special Parity Obligations. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for, it will not further encumber the excise taxes on a parity basis unless the excise taxes collected in the next preceding fiscal year of the City shall have amounted to at least three times the highest combined debt service requirements for any succeeding fiscal year for all obligations and outstanding parity obligations, including the additional parity obligations proposed to be secured by a pledge or the excise taxes. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $22,265,000 2006 Excise Tax Revenue Obligations due in annual installments of $1,650,000 to $2,385,000 through July 1, 2016; interest at 4.00% to 4.50% The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2013 2014 2015 2016 $ 2,100,000 2,190,000 2,280,000 2,385,000 $ 392,250 303,000 209,926 107,326 $ 2,492,250 2,493,000 2,489,926 2,492,326 $ 8,955,000 $1,012,502 $ 9,967,502 Interest 77 Total $ 8,955,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Variable Rate Demand Excise Tax Revenue Obligations. On June 21, 2006, the City entered into a purchase agreement with Royal Bank of Canada, acting by and through its New York branch, to pay costs associated with a portion of the City’s light rail project. These costs were financed through the issuance of $60,675,000 of variable rate demand excise tax revenue obligations (Obligations). The Obligations are remarketed by RBC Dain Rauscher, Inc., serving as the remarketing agent, at an interest rate which would cause the Obligations to have a market value on the commencement date of such rate period equal to the principal amount thereof plus accrued and unpaid interest, if any, not to exceed 12%. The interest rate on these Obligations is reset on a weekly basis and interest will be paid monthly. The City has the option of converting from the weekly rate to either a daily rate or term rates, including a term rate period through the final maturity of the Obligations. In the event that the Obligations are converted to a term rate (other than daily or weekly), the Obligations are subject to mandatory tender for purchase. The City has entered into a standby obligation purchase agreement with Royal Bank of Canada. The stated expiration date of the standby obligation purchase agreement is December 7, 2012, with extension request options available to the City thereafter. Royal Bank of Canada is providing liquidity and is obligated to purchase the Obligations that are tendered for purchase and not remarketed. The quarterly fee paid to Royal Bank of Canada for this liquidity support is an annualized rate of .70% of the average daily amount of available commitment for principal and interest. As of June 30, 2012 there were no draws outstanding or bonds presented for debt service payments under this standby obligation. If the standby obligation purchase agreement was to be exercised and all outstanding obligations were purchased by Royal Bank of Canada because they could not be remarketed, the maximum repayment liability would be the outstanding principal balance plus interest calculated at the greater of the Federal Funds Rate plus 2.5% or the Prime Rate plus 2.0%. The City has collateralized the bonds by a pledge of excise taxes collected and paid to the City under a 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which is restricted to public transit use. The City covenants and agrees that the excise taxes, which it presently imposes, will continue to be imposed so that the amount of excise taxes shall be equal to at least two times the total obligation debt service requirements for all outstanding parity obligations in each fiscal year. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $60,675,000 2006 Variable Rate Excise Tax Revenue Obligations due in annual installments of $890,000 to $3,385,000 through July 1, 2036. 78 $53,670,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Variable Rate Demand Excise Tax Revenue Obligations (Continued) The average annualized interest rate paid on these Obligations during the fiscal year ended June 30, 2012 was 0.15%. The following is a summary of debt service cash requirements to maturity utilizing the interest rate in effect at June 30, 2012 of 0.18%. Fiscal Year Ending June 30, Principal 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2036 $ 1,375,000 1,430,000 1,485,000 1,545,000 1,605,000 9,045,000 11,010,000 13,395,000 12,780,000 $ 96,606 94,132 91,558 88,884 86,104 384,796 296,598 189,246 58,636 $ 1,471,606 1,524,132 1,576,558 1,633,884 1,691,104 9,429,796 11,306,598 13,584,246 12,838,636 $53,670,000 $1,386,560 $55,056,560 Interest Total Excise Tax Revenue Refunding Obligations. On January 1, 2007, the City issued $21,310,000 of Excise Tax Revenue Obligations. The proceeds were used to refund $4,205,000 of the 2000A Excise Tax Revenue Obligations, $17,025,000 of the 2003 Excise Tax Revenue Refunding Obligations, and pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, State-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for, it will not further encumber the excise taxes on a parity basis unless the excise taxes collected in the next preceding fiscal year of the City shall have amounted to at least three times the highest combined debt service requirements for any succeeding fiscal year for all obligations and outstanding parity obligations, including the additional parity obligations proposed to be secured by a pledge or the excise taxes. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. 79 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) $21,310,000 2007 Excise Tax Revenue Refunding Obligations due in annual installments of $25,000 to $3,100,000 through July 1, 2022; interest at 4.00% to 5.00% $20,810,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 Principal Interest Total 420,000 435,000 455,000 2,550,000 2,675,000 14,275,000 $ 1,000,350 983,550 966,150 947,950 820,450 1,999,225 $ 1,420,350 1,418,550 1,421,150 3,497,950 3,495,450 16,274,225 $20,810,000 $ 6,717,675 $ 27,527,675 $ Variable Rate Demand Excise Tax Revenue Obligations. On June 7, 2007, the City entered into a purchase agreement with Royal Bank of Canada, acting by and through its New York branch, to pay costs associated with a portion of the City’s light rail project. These costs were financed through the issuance of $50,000,000 of variable rate demand excise tax revenue obligations (Obligations). The Obligations are remarketed by RBC Dain Rauscher, Inc., serving as the remarketing agent, at an interest rate which would cause the Obligations to have a market value on the commencement date of such rate period equal to the principal amount thereof plus accrued and unpaid interest, if any, not to exceed 12%. The interest rate on these Obligations is reset on a weekly basis and interest will be paid monthly. The City has the option of converting from the weekly rate to either a daily rate or term rates, including a term rate period through the final maturity of the Obligations. In the event that the Obligations are converted to a term rate (other than daily or weekly), the Obligations are subject to mandatory tender for purchase. The City has entered into a standby obligation purchase agreement with Royal Bank of Canada. The stated expiration date of the standby obligation purchase agreement is December 7, 2012, with extension request options available to the City thereafter. Royal Bank of Canada is providing liquidity and is obligated to purchase the Obligations that are tendered for purchase and not remarketed. The quarterly fee paid to Royal Bank of Canada for this liquidity support is an annualized rate of 0.70% of the average daily amount of available commitment for principal and interest. As of June 30, 2012, there were no draws outstanding or bonds presented for debt service payments under this standby obligation. If the standby obligation purchase agreement was to be exercised and all outstanding obligations were purchased by Royal Bank of Canada because they could not be remarketed, the maximum repayment liability would be the outstanding principal balance plus interest calculated at the greater of the Federal Funds Rate plus 2.5% or the Prime Rate plus 2.0%. The City has collateralized the bonds by a pledge of excise taxes collected and paid to the City under a 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which is restricted to public transit use. The City covenants and agrees that the excise taxes, which it presently imposes, will continue to be imposed so that the amount of excise taxes shall be equal to at least two times the total obligation debt service requirements for all outstanding parity obligations in each fiscal year. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. 80 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Variable Rate Demand Excise Tax Revenue Obligations (Continued) $50,000,000 2007 Variable Rate Excise Tax Revenue Obligations due in annual installments of $760,000 to $2,790,000 through July 1, 2037. $45,295,000 The average annualized interest rate paid on these Obligations during the fiscal year ended June 30, 2012 was 0.15%. The following is a summary of debt service cash requirements to maturity utilizing the interest rate in effect at June 30, 2012 of 0.18%. Fiscal Year Ending June 30, Principal 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 $ 1,085,000 1,130,000 1,175,000 1,225,000 1,270,000 7,170,000 8,720,000 10,610,000 12,910,000 Interest $ $45,295,000 Total 81,532 79,578 77,544 75,430 73,224 329,896 260,004 174,980 71,534 $ 1,166,532 1,209,578 1,252,544 1,300,430 1,343,224 7,499,896 8,980,004 10,784,980 12,981,534 $ 1,223,722 $ 46,518,722 Excise Tax Revenue Obligations. On June 17, 2008 the City issued $30,170,000 of Excise Tax Revenue Obligations. The proceeds were used to fund the costs associated with a portion of the City’s light rail project and to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of 0.50% transit excise tax revenues, approved by voters on September 10, 1996, which are restricted to public transit use. Such lien on and pledge of the transit excise taxes is on parity with that for the City’s Variable Rate Demand Transit Excise Tax Revenue Obligations, Series 2006 and the City’s Variable Rate Demand Transit Excise Tax Obligations, Series 2007. The City covenants and agrees that, so long as any of the Parity Obligations remain outstanding and the principal and interest shall be unpaid, it will not further encumber the Transit Excise Taxes on a parity basis unless the Transit Excise Taxes collected in the immediately preceding fiscal year shall have amounted to at least two times the highest combined principal and interest debt service payments, or any required deposits, for any succeeding fiscal year for with respect to the transit excise tax revenue Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $30,170,000 2008 Excise Tax Revenue Obligations due in annual installments of $480,000 to $1,120,000 through July 1, 2038; interest at 3.50% to 5.00% 81 $27,990,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 2038 Principal Interest Total 605,000 630,000 650,000 675,000 705,000 3,965,000 4,885,000 6,185,000 7,880,000 1,810,000 $ 1,286,594 1,265,419 1,241,794 1,217,419 1,190,419 5,505,244 4,583,688 3,277,000 1,591,500 85,975 $ 1,891,594 1,895,419 1,891,794 1,892,419 1,895,419 9,470,244 9,468,688 9,462,000 9,471,500 1,895,975 $27,990,000 $21,245,052 $49,235,052 $ Excise Tax Revenue Obligations. On June 24, 2009, the City issued $23,615,000 of Excise Tax Revenue Obligations: $14,300,000 of tax-exempt obligations (Series 2009A) and $9,315,000 of taxable obligations (Series 2009B) referred to as Build America Bonds. As an issuer of Build America Bonds, the City qualifies, and intends to apply, for the interest subsidy payment directly from the US Treasury. The amount of the interest subsidy payment is 35.00% of the corresponding interest payable on the Series 2009B taxable obligations on any interest payment date. The proceeds were used to finance the construction of a public parking garage and various projects for the Tempe Water/Wastewater Department and to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. 82 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) $14,300,000 2009A Excise Tax Revenue Obligations due in annual installments of $770,000 to $1,340,000 through July 1, 2023; interest at 3.00% to 5.00% $9,315,000 2009B Excise Tax Revenue Obligations due in annual installments of $1,400,000 to $1,715,000 through July 1, 2029; interest at 4.23%, net of 35.00% federal credit Total $ 11,875,000 9,315,000 $ 21,190,000 The following is a summary of total debt service cash requirements to maturity (net of 35.00% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Principal $ Interest 860,000 905,000 935,000 960,000 1,010,000 5,865,000 7,295,000 3,360,000 $21,190,000 $ Total 928,222 885,222 858,072 827,684 779,684 3,088,169 1,658,451 214,419 $ 1,788,222 1,790,222 1,793,072 1,787,684 1,789,684 8,953,169 8,953,451 3,574,419 $ 9,239,923 $ 30,429,923 The following is a summary of governmental debt service cash requirements to maturity (net of 35.00% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Principal $ Interest 250,000 265,000 275,000 280,000 295,000 1,710,000 2,130,000 980,000 $ 6,185,000 83 $ 270,922 258,413 250,468 241,544 227,543 901,219 484,024 62,530 $ 2,696,663 Total $ 520,922 523,413 525,468 521,544 522,543 2,611,219 2,614,024 1,042,530 $ 8,881,663 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of enterprise debt service cash requirements to maturity (net of 35.00% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Principal $ Interest 610,000 640,000 660,000 680,000 715,000 4,155,000 5,165,000 2,380,000 $ 15,005,000 $ Total 657,299 626,809 607,604 586,140 552,142 2,186,951 1,174,428 151,889 $ 1,267,299 1,266,809 1,267,604 1,266,140 1,267,142 6,341,951 6,339,428 2,531,889 $ 6,543,262 $21,548,262 Excise Tax Revenue Obligations. On June 23, 2011, the City issued $39,125,000 of Excise Tax Revenue Obligations: $31,825,000 of tax-exempt obligations (Series 2011A) and $7,300,000 of taxable obligations (Series 2011B) referred to as Qualified Energy Conservation Bonds. As an issuer of these bonds, the City qualifies, and intends to apply, for the interest subsidy payment directly from the US Treasury. The amount of the interest subsidy payment is 72.38% of the corresponding interest payable on the Series 2011B taxable obligations on any interest payment date. The proceeds were used to finance the construction of energy retrofit improvements and various projects for the Tempe Water/Wastewater Department and to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, stateshared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. 84 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) $31,825,000 2011A Excise Tax Revenue Obligations due in annual installments of $1,030,000 to $2,375,000 through July 1, 2031; interest at 2.00% to 5.00% $7,300,000 2011B Excise Tax Revenue Obligations due in one installment of $7,300,000 on July 1, 2025; interest due semi-annually at 4.87%, net of 72.38% federal credit Total $ 30,795,000 7,300,000 $ 38,095,000 The following is a summary of total debt service cash requirements to maturity (net of 72.38% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2031 Principal $ Interest 1,085,000 1,120,000 1,150,000 1,195,000 1,245,000 7,150,000 16,310,000 8,840,000 $ 38,095,000 $ Total 1,554,258 1,521,708 1,488,108 1,442,108 1,394,308 6,053,790 3,890,274 1,132,000 $ 2,639,258 2,641,708 2,638,108 2,637,108 2,639,308 13,203,790 20,200,274 9,972,000 $ 18,476,554 $ 56,571,554 The following is a summary of governmental debt service cash requirements to maturity (net of 72.38% federal credit): Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2026 Principal $ Interest 25,000 30,000 30,000 30,000 30,000 175,000 7,426,000 $ 7,746,000 85 $ 118,358 117,608 116,708 115,508 114,308 549,840 307,624 $ 1,439,954 Total $ 143,358 147,608 146,708 145,508 144,308 724,840 7,733,624 $ 9,185,954 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2031 Principal $ Interest 1,060,000 1,090,000 1,120,000 1,165,000 1,215,000 6,975,000 8,884,000 8,840,000 $ 30,349,000 $ Total 1,435,900 1,404,100 1,371,400 1,326,600 1,280,000 5,503,950 3,582,650 1,132,000 $ 2,495,900 2,494,100 2,491,400 2,491,600 2,495,000 12,478,950 12,466,650 9,972,000 $ 17,036,600 $47,385,600 Excise Tax Revenue Obligations. On August 31, 2011, the City issued $18,300,000 of Excise Tax Revenue Refunding Obligations. The Obligations were issued for the purpose of providing funds (i) to refund in advance of maturity portions of certain outstanding Performing Arts Center Excise Tax Revenue Obligations (the “Obligations Being Refunded”) and (ii) to pay the costs and expenses relating to the issuance of the Obligations. The City has collateralized the obligations by a pledge of 0.10% performing arts center tax, approved by voters on May 16, 2000, which are restricted to the Tempe Center for the Performing Arts Project. Additionally, the payments to be made by the City are secured by a subordinate lien pledge by the City of all unrestricted excise, transaction, franchise, privilege and business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing, including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The general Excise Taxes do not include the Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Performing Arts Center Excise Taxes and the Excise Taxes which it presently imposes will continue to be imposed in each Fiscal Year so that the sum of (A) the Performing Arts Center Excise Taxes for such Fiscal Year plus (B) the excess of the Excise Taxes for such Fiscal Year over the Debt Service requirements on the Outstanding Senior Excise Tax Obligations for such Fiscal Year, shall be equal to at least three times the total of the Debt Service with respect to Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. The City further covenants and agrees that so long as any Special Parity Obligations are outstanding, the Performing Arts Center Excise Taxes, the Excise Taxes and the Special Excise Taxes will be imposed in each Fiscal Year so that the sum of (A) Performing Arts Center Excise Taxes for such Fiscal Year, plus (B) Special Excise Taxes for such Fiscal Year plus (C) the excess of the Excise Taxes for such Fiscal Year over the Debt Service on the Outstanding 86 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) Senior Excise Tax Obligations for such Fiscal Year shall be equal to at least three times the total of the Debt Service with respect to the Parity Obligations and the Special Parity Obligations in such Fiscal Year. The City further covenants and agrees that if such revenues for any such Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year's actual Debt Service with respect to Parity Obligations and Special Parity Obligations, the City will either impose new Excise Taxes or Special Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations and Special Parity Obligations and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year’s Debt Service with respect to Parity Obligations and Special Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $18,300,000 2011 Excise Tax Revenue Refunding Obligations due in annual installments of $100,000 to $3,295,000 through July 1, 2020; interest at 2.00% to 5.00% $ 18,065,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2020 Principal $ Interest 100,000 100,000 2,695,000 2,825,000 2,880,000 9,465,000 $ 18,065,000 $ 738,100 736,100 734,100 604,350 547,850 825,800 $ 4,186,300 Total $ 838,100 836,100 3,429,100 3,429,350 3,427,850 10,290,800 $ 22,251,300 Excise Tax Revenue Obligations. On June 11, 2012, the City issued $30,500,000 of Excise Tax Revenue and Revenue Refunding Obligations: $8,390,000 of revenue obligations and $22,110,000 of revenue refunding obligations. The proceeds were used (i) to refund in advance of maturity certain outstanding Excise Tax Revenue Obligations of the City, (ii) finance the construction and acquisition of certain water and wastewater improvements, and (iii) to pay the costs of execution and delivery of the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the taxes collected and paid to the City under the 0.50% transportation privilege (sales) and use tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, the 0.10% Performing Arts Center Excise Taxes approved by voters of the City on May 16, 2000, which are restricted to the Tempe Center for the Arts Project, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. 87 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2012 principal payment was deducted as the fiscal year 2012 resources were dedicated. $30,500,000 2012 Excise Tax Revenue and Refunding Obligations due in annual installments of $280,000 to $5,125,000 through July 1, 2032; interest at 1.50% to 5.00% The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 Principal $ Interest 280,000 2,135,000 2,220,000 305,000 1,735,000 9,980,000 11,080,000 2,765,000 $30,500,000 $ Total 1,348,090 1,327,675 1,242,275 1,208,975 1,196,775 4,687,625 1,484,075 290,413 $ 1,628,090 3,462,675 3,462,275 1,513,975 2,931,775 14,667,625 12,564,075 3,055,413 $ 12,785,903 $ 43,285,903 The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 Principal $ Interest 1,845,000 1,920,000 1,302,155 7,509,250 8,295,495 $ 20,871,900 88 $ 995,423 944,923 871,123 842,323 842,323 3,237,071 697,522 $ 8,390,708 Total $ 955,423 2,789,923 2,791,123 842,323 2,144,478 10,746,321 8,993,017 $ 29,262,608 $30,500,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 Principal $ Interest 280,000 290,000 300,000 305,000 432,845 2,470,750 2,784,505 2,765,000 $ 9,628,100 $ Total 392,667 382,752 371,152 366,652 354,452 1,450,554 786,553 290,413 $ $ 4,395,195 672,667 672,752 671,152 671,652 787,297 3,921,304 3,571,058 3,055,413 $14,023,295 Section 108 Guaranteed Loan. In July 2004, the City entered into a Section 108 guaranteed loan agreement with the U.S. Department of Housing and Urban Development (HUD) for funding of $7,000,000 for on-site environmental remediation of the University/Hayden Butte Redevelopment Area 5 (Rio Salado Marketplace Redevelopment). The note requires interest only payments until August 2007. At that time the note was due in annual installments of $261,000 to $549,000 through August 1, 2024; interest at 5.37% to 6.01%. The City has pledged its Community Development Block Grants as security for HUD’s guaranteed loan. The City was awarded a $1,000,000 HUD Brownfield Economic Development Initiative grant to be used to pay interest on the HUD Section 108 loan until such time the development generates sufficient tax revenue to cover the debt service of the development. $7,000,000 HUD Section 108 Guaranteed Loan due in annual installments of $261,000 to $549,000 through August 1, 2024; interest at 5.37% to 6.01% $ 5,572,000 The following discloses debt service requirements as of June 30, 2012 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2025 Principal 325,000 340,000 355,000 371,000 387,000 2,214,000 1,580,000 $ 5,572,000 $ Interest 306,404 289,708 271,860 252,705 232,158 803,743 144,597 $ 2,301,175 $ 89 Total 631,404 629,708 626,860 623,705 619,158 3,017,743 1,724,597 $ 7,873,175 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Water Infrastructure Finance Authority Loans. In September 2009, the City signed two capitalization grant agreements with the Water Infrastructure Finance Authority (WIFA). The funding from these agreements was derived from the United States Environmental Protection Agency pursuant to the federal American Recovery and Reinvestment Act (ARRA) of 2009, Public Law 111-5. The loan agreement for Loan #92A174-10 is in the principal amount of $4,084,503 of which $2,200,000 will be forgivable principal and the remaining balance bears interest and administrative fees at a combined rate of 3.06%. $1,884,503 Water Infrastructure Finance Authority Loan #92A174-10 due in annual installments of $69,678 to $123,631 through July 1, 2029; interest at 1.56% and administrative fee at 1.50% $ 1,669,000 The following discloses debt service requirements on WIFA Loan #92A174-10 as of June 30, 2012 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Principal $ 76,281 78,618 81,027 83,510 86,068 471,552 548,358 243,586 $ 1,669,000 Interest and Administrative Fee $ 51,138 48,801 46,392 43,909 41,351 165,543 88,736 11,252 $ 497,122 Total 127,419 127,419 127,419 127,419 127,419 637,095 637,094 254,838 $ 2,166,122 $ The loan agreement for Loan #92A175-10 is in the principal amount of $14,045,799 and bears interest and administrative fees at a reduced ARRA rate of 2.00%. $14,045,799 Water Infrastructure Finance Authority Loan #92A175-10 due in annual installments of $578,079 to $842,152 through July 1, 2029; interest at .50% and administrative fee at 1.50% $ 12,276,646 The following discloses debt service requirements on WIFA Loan #92A175-10 as of June 30, 2012 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2029 Principal $ 613,462 625,731 638,246 651,011 664,031 3,524,757 3,891,617 1,667,791 $ 12,276,646 Interest and Administrative Fee $ 245,533 233,264 220,749 207,984 194,964 770,218 403,358 50,199 $ 2,326,269 90 Total 858,995 858,995 858,995 858,995 858,995 4,294,975 4,294,975 1,717,990 $ 14,602,915 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Capital Leases. The City has entered into capital lease agreements for equipment. These lease agreements generally require annual payments and the lease term varies from 4 to 5 years. The lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the date of inception. The governmental assets acquired through capital leases are for equipment with an original cost of $142,670. The following is a schedule of future minimum lease payments, together with the net present value of the minimum lease payments as of June 30, 2012. These amounts will be paid for by the General Fund. Fiscal Year Ending June 30, 2013 2014 $ Total minimum lease payments Less: interest at 4.84% to 11.85% Total 31,080 31,080 62,160 (4,238) Present value of future minimum lease payments $ 57,922 The proprietary assets acquired through capital leases are for equipment with an original cost of $246,841. The following is a schedule of future minimum lease payments, together with the net present value of the minimum lease payments as of June 30, 2012. These amounts will be paid for by the Golf Fund. Fiscal Year Ending June 30, 2013 $ Total 46,356 (1,003) $ 45,353 Less: interest at 4.66% Present value of future minimum lease payments 91 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Statutory Debt Limitation. In the absence of more restrictive bond authorization ballot limitations, the City is subject to state statutory limitations on the amount of net bonded debt (exclusive of revenue and special assessment bonds and purchase contracts) it may have outstanding. The statutory debt limitation is 20 percent of the secondary assessed valuation for purposes of water, wastewater, open space preserves, artificial lighting, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities and 6 percent of the secondary assessed valuation for all other purposes. At June 30, 2012, the 20 percent debt limitation was $391,465,722 with $446,276,092 of outstanding debt. Due to the decline in property values, there is no additional capacity in the 20 percent debt margin category. The 6 percent debt limitation was $117,439,717 with $15,030,000 of outstanding debt. This provided a 6 percent debt margin of $102,409,717. The authorized, unissued debt subject to the statutory limitations of 20 percent and 6 percent at June 30, 2012, was $154,979,698. Bond Covenants. The various bond indentures contain certain 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. Arbitrage. Under U.S. Treasury Department regulations, all government tax-exempt debt issued after August 31, 1986 is subject to arbitrage rebate requirements. The requirements stipulate, in general, the earnings from the investment of tax exempt bond proceeds that exceed related interest expenditures on the bonds must be remitted to the Federal government on every fifth anniversary of each bond issue. The City has evaluated each general obligation bond and revenue bond issue subject to the arbitrage rebate requirements and has determined that no liability exists at June 30, 2012. However, the City has assigned $500,000 in the General Fund for this purpose. Debt Service Coverage for Governmental General Obligation Bonds. The governmental general obligations are payable from ad valorem tax revenues to be levied on all taxable property within the City. A total of $162,200,000 is outstanding in governmental general obligation bonds. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2030. Annual principal and interest payments on the bonds are expected to require less than 83.54% of total 2011-12 ad valorem taxes. The total principal and interest remaining to be paid on the bonds is $211,197,967. Principal and interest paid for the current year and total ad valorem tax revenues were $18,279,386 and $21,884,734, respectively. Debt Service Coverage for Business-type Activities General Obligation Bonds. The business-type general obligations are paid from the water and wastewater utility system revenues of the City. A total of $256,770,000 is outstanding in business-type general obligation bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater system. The bonds are payable through July 1, 2030. Annual principal and interest payments on the bonds are expected to require less than 38.12% of 2011-12 water and wastewater utility system revenue. The total principal and interest remaining to be paid on the bonds is $339,839,570. Principal and interest paid for the current year and water and wastewater system revenues were $27,742,687 and $72,802,481, respectively 92 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Debt Service Coverage for Governmental Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay a total of $59,747,900 in outstanding governmental excise tax obligations. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2031. Annual principal and interest payments on the bonds are expected to require less than 4.22% of total 2011-12 pledged excise taxes. The total principal and interest remaining to be paid on the bonds is $79,357,348. Principal and interest (net of Federal subsidy) paid for the current year and total pledged excise taxes were $5,456,373 and $129,522,900, respectively. Debt Service Coverage for Business-type Activities Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay a total of $55,402,100 in outstanding business-type activities excise tax obligations. Proceeds of the bonds were used for improvements to the Double Butte Cemetery and for improvements and expansions to the City’s water and wastewater system. The bonds are payable through July 1, 2029. Annual principal and interest payments on the bonds are expected to require less than 3.05% of total 2011-12 excise taxes. The total principal and interest remaining to be paid on the bonds is $69,397,460. Principal and interest paid for the current year and total excise taxes were $3,943,366 and $129,522,900, respectively. Debt Service Coverage for Transit Excise Tax Obligations. For the repayment of transit excise tax obligation bonds, the City has pledged all future excise taxes collected and paid under the 0.50% transportation excise tax. Proceeds of the bonds were used for the construction of the City’s portion of the light rail system. The current balance outstanding is $126,955,000. The bonds are payable through July 1, 2038. Annual principal and interest payments on the bonds are expected to require less than 14.72% of total 2011-12 transit excise taxes. The total principal and interest remaining to be paid on the bonds is $150,810,334. Principal and interest paid for the current year and transit excise taxes were $4,439,463 and $30,172,338, respectively. Debt Service Coverage for Performing Arts Center Excise Taxes. For repayment of performing arts excise tax obligations, the City has pledged all future excise taxes collected and paid under a 0.10% performing arts center tax. Proceeds of the bonds were used for the construction of the Tempe Performing Arts Center. The bonds are payable primarily from performing arts excise taxes and are secured by a subordinate lien pledge of all future unrestricted excise taxes. The current balance outstanding is $31,820,000 and the bonds are payable through July 1, 2020. Annual principal and interest payments on the bonds are expected to be less than 86.24% of total 2011-12 performing arts excise taxes. The total principal and interest remaining to be paid on the bonds is $37,399,952. Principal and interest paid for the current year and total available excise taxes were $5,377,764 and $130,381,636, respectively. 93 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Changes in Long-term Liabilities. The following is a summary of changes in long-term liabilities for the fiscal year ended June 30, 2012 (the ending balance does not include 7/1/2012 “matured” payment for general or excise tax obligations): Beginning Balance Governmental activities: Debt payable: General obligation bonds payable Special assessments 2003 Excise tax refunding obligations 2004 Excise tax obligations 2005 Excise tax obligations 2006 Excise tax obligations 2006 Variable rate demand excise tax obligations 2007 Excise tax refunding obligations 2007 Variable rate demand excise tax obligations 2008 Excise tax obligations 2009 Excise tax obligations 2011 Excise tax obligations 2011 Excise tax refunding obligations 2012 Excise tax obligations 2004 HUD Section 108 loan Capital leases Compensated absences Claims and judgments Net OPEB obligation Governmental activities long-term Business-type activities: General obligation bonds payable 2005 Excise tax obligations 2005 Excise tax obligation premium amortization 2009 Excise tax obligations 2011 Excise tax obligations 2012 Excise tax obligations 2012 Excise tax obligation premium amortization 2010 WIFA Loan 2010 WIFA Loan Capital leases Net OPEB obligation Total debt payable Additions $166,680,000 29,875,000 10,425,000 24,760,000 17,275,000 10,970,000 Reductions $13,015,000 $(17,495,000) (2,060,000) (8,595,000) (19,960,000) (14,970,000) (2,015,000) 54,990,000 21,210,000 - 46,340,000 28,575,000 6,430,000 7,771,000 5,883,000 431,184,000 96,735 23,731,713 4,992,030 44,527,562 $504,532,040 18,300,000 20,871,900 52,186,900 11,010,203 2,992,526 10,081,946 $76,271,575 $273,000,000 1,785,000 88,424 15,600,000 31,354,000 - Amounts Due Within One Year $162,200,000 $11,640,000 27,815,000 2,140,000 1,830,000 1,830,000 4,800,000 2,340,000 2,305,000 325,000 8,955,000 2,100,000 53,670,000 20,810,000 1,375,000 420,000 (1,045,000) (585,000) (245,000) (25,000) (235,000) (311,000) (69,261,000) (38,814) (9,413,974) (3,387,523) (4,351,615) (86,452,926) 45,295,000 1,085,000 27,990,000 605,000 6,185,000 250,000 7,746,000 25,000 18,065,000 100,000 20,871,900 5,572,000 325,000 414,109,900 24,560,000 57,921 28,276 25,327,942 9,614,495 4,597,033 3,065,652 50,257,893 4,423,292 $494,350,689 $41,691,715 $6,755,000 $(22,985,000) (1,365,000) $256,770,000 $16,265,000 420,000 100,000 9,628,100 1,743,013 12,878,079 97,439 5,442,991 $ 341,988,946 (1,320,000) (400,000) Ending Balance (63,160) (595,000) (1,005,000) - 78,068 (74,013) (601,433) (52,087) 1,198,751 (263,041) $17,659,919 $(27,003,734) 25,264 15,005,000 30,349,000 9,628,100 2,105 610,000 1,060,000 280,000 78,068 4,109 1,669,000 76,281 12,276,646 613,462 45,352 45,352 6,378,701 561,402 $332,645,131 $19,617,711 The long-term liabilities at June 30, 2012 have been reduced by deposits made with the City’s fiscal agent for July 1, 2012 maturities. For the governmental activities, claims and judgements and compensated absences are generally liquidated by the General Fund. 94 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 10 - BONDS TO BE PAID FROM ASSETS HELD IN TRUST Advance Bond Refundings Future debt service on refunded bonds has been provided through advance refunding bond issues. Under an advance refunding arrangement, refunding bonds are issued and the net proceeds, plus any additional resources that may be required, are used to purchase securities issued or guaranteed by the United States government. These securities are then deposited in an irrevocable trust under an escrow agreement which provides that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued bonded debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flow generated by the securities, will be sufficient to service the previously issued bonds. On January 1, 2007, the City issued $21,310,000 of excise tax revenue refunding obligation bonds with a premium of $1,387,396 to partially refund $4,205,000 of Series 2000A; and $17,025,000 of Series 2003 outstanding excise tax revenue obligation bonds. The bonds were issued with an average interest rate of 4.80%. The net proceeds of $22,436,893, after allocation of $260,503 of issuance costs and accrued interest of $22,674, were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s General Obligation Debt Service and Community Facilities District funds. As a result of the advance refunding, the City reduced its total debt service requirements by $946,355, which resulted in an economic gain (the difference between the present values of the debt service payment on the old and new debt) of $701,966. On November 10, 2010, the City issued $60,280,000 of general obligation refunding bonds with a premium of $4,997,165 to refund $3,215,000 of Series 1998; $9,860,000 of Series 1998A; $9,015,000 of Series 2001A $14,475,000 of Series 2002A; and partially refund $15,530,000 of Series 2003 and $8,185,000 of Series 2004 of outstanding general obligation bonds. The bonds were issued with an average interest rate of 3.71%. The net proceeds of $64,670,397, after payment of $124,528 issuance costs and an underwriter’s discount of $482,240, were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s General Obligation Debt Service and Water/Wastewater funds. As a result of the advance refunding, the City reduced its total debt service requirements by $4,858,809 which resulted in an economic gain of $4,342,453. On August 31, 2011, the City issued $18,300,000 of excise tax revenue refunding obligation bonds with a premium of $2,322,676 to partially refund $17,735,000 of Series 2004 outstanding excise tax revenue obligation bonds. The bonds were issued with an average interest rate of 2.11%. The net proceeds of $20,384,744, after allocation of $100,683 of issuance costs and an underwriter’s discount of $137,250 were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the Performing Arts fund. As a result of the advance refunding, the City reduced its total debt service requirements by $819,224, which resulted in an economic gain of $751,095. 95 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 10 - BONDS TO BE PAID FROM ASSETS HELD IN TRUST (Continued) Advance Bond Refundings On June 21, 2012, the City issued $12,765,000 of general obligation refunding bonds with a premium of $775,588 to refund $3,205,000 of Series 2002R and partially refund $9,560,000 of Series 2003 outstanding general obligation bonds. The bonds were issued with an average interest rate of 2.36%. The net proceeds of $13,090,453, after transferring $239,463 to the debt service fund, the payment of $114,066 in issuance costs and an underwriter’s discount of $96,606, were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s General Obligation Debt Service and Water/Wastewater funds. As a result of the advance refunding, the City reduced its total debt service requirements by $635,751 which resulted in an economic gain of $697,681. On June 11, 2012, the City issued $22,110,000 of excise tax revenue refunding obligation bonds with a premium of $3,992,095 to partially refund $6,835,000 of Series 2003 and $15,925,000 of Series 2005 outstanding excise tax revenue obligation bonds. The bonds were issued with an average interest rate of 2.50%. The net proceeds of $25,258,908 after transferring $553,944 to the debt service fund, the payment of $123,418 in issuance costs and an underwriter’s discount of $165,825, were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s General Obligation Debt Service, Community Facilities District, and Cemetery funds. As a result of the advance refunding, the City reduced its total debt service requirements by $1,616,232, which resulted in an economic gain of $1,462,225. Bonds which have been advance refunded (and thus not included in the debt of the City) and are still outstanding as of June 30, 2012 are as follows: $39,275,000 excise tax revenue obligation bonds issued in 2003 and partially refunded in 2007 (final redemption date is 7/1/2013) $ 17,025,000 $44,820,000 general obligation bonds issued in 2003 and partially refunded in 2011 (final redemption date is 7/1/2013) 15,530,000 $19,900,000 general obligation bonds issued in 2004 and partially refunded in 2011 (final redemption date is 7/1/2014) 8,185,000 $37,595,000 excise tax revenue obligation bonds issued in 2004 and partially refunded in 2012 (final redemption date is 7/1/2014) 17,735,000 $44,820,000 general obligation bonds issued in 2003 and partially refunded in 2012 (final redemption date is 7/1/2013) 9,560,000 $39,275,000 excise tax revenue obligation bonds issued in 2003 and partially refunded in 2012 (final redemption date is 7/1/2013) 6,835,000 $21,315,000 excise tax revenue obligation bonds issued in 2005 and partially refunded in 2012 (final redemption date is 7/1/2015) 15,925,000 Total bonds advance refunded $ 90,795,000 96 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 11 – FUND BALANCE CLASSIFICATIONS During the year ended June 30, 2011, the City implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 establishes standards for financial reporting, including note disclosure requirements, for fund balance classifications of the governmental funds, and clarifies existing governmental fund type definitions. In the fund financial statements, fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Non-spendable, Restricted, Committed, Assigned, and Unassigned. Committed, Assigned, and Unassigned represent the amount that is available for discretionary spending. Non-spendable 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) legally or contractually required to be maintained intact. Restricted fund balance is externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation (changes in City Charter). Committed fund balance is self-imposed limitations imposed at the highest level of decision making authority, namely, Mayor and Council. Mayor and Council approval (through ordinance or another type of formal action) is required to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. In June 2011, through resolution 2011.56, the Mayor and Council authorized the Chief Financial Officer to assign fund balance amounts for specific purposes. Unassigned fund balance represents the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. 97 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 11 – FUND BALANCE CLASSIFICATIONS (Continued) As of June 30, 2012, the fund balance details by classification are listed as follows: General Fund balances: Non-spendable: Inventories Prepaid items Capital improvements notes receivable Restricted: Debt service reserve Community services Public works Community development Committed to: Police Fire Community services Public works Community development Debt service Assigned to: Self-insurance purposes Capital projects Reserved Property Lease Revenue Arbitrage rebate Transit SRP in-lieu Unassigned: Total fund balances $ 344,526 $ 290,000 634,526 Transit Special Revenue - General Special Obligation Assessment Debt Service Debt Service $ - $ - Transit Capital Projects $ - Total Other Total Governmental Governmental Funds Funds $ 1,054,950 $ 710,789 1,765,739 1,399,476 710,789 290,000 2,400,265 - 16,487,760 - 32,062,939 - - 14,513,507 - 1,635,026 7,601,641 3,838,957 32,062,939 1,635,026 38,602,908 3,838,957 - 16,487,760 32,062,939 - 14,513,507 13,075,623 76,139,829 - 957,657 4,220,265 5,177,922 - 50,000,000 50,000,000 763,997 1,031,952 1,361,625 2,952,626 5,907,476 12,017,676 763,997 1,031,952 1,361,625 3,910,283 5,907,476 54,220,265 67,195,598 7,119,412 7,119,412 8,841,391 7,470,289 275,000 500,000 1,290,723 3,297,531 21,674,933 8,841,391 350,877 275,000 500,000 9,967,268 50,954,570 1,290,723 1,290,723 - 3,297,531 3,297,531 - - (1,733,419) $ 61,556,364 $ 22,956,405 $ 35,360,470 $ (1,733,419) $ 64,513,507 $ - 49,221,151 33,978,450 $ 216,631,777 The Mayor and Council have established a minimum aggregate committed, assigned, and unassigned fund balance policy for the General Fund of 20% to 30% of current year revenues. As of June 30, 2012, the aggregate balance is 37.37% of General Fund revenues. The unassigned percentage of revenues is 31.25%. 98 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 12 - COMMITMENTS In the Governmental fund financial statements, construction commitments are included in either the restricted or committed fund balances. At June 30, 2012 the City’s construction commitments are as follows: Governmental funds: Transit Streets Fire Storm drains Parks Rio Salado Community development Signals Proprietary funds: Water/wastewater Commitment Construction in Progress $ 1,989,540 433,996 700 546,525 2,524,081 3,390,410 282,443 $ 9,167,695 $ 12,438,677 87,517 56,654 4,500 1,045,555 618,176 74,907 $ 14,325,987 Commitment Construction in Progress $ 7,094,928 $ 7,094,928 $ 2,309,541 $ 2,309,541 In addition, there were non-construction related commitments as follows: Commitment Governmental funds: General Non-major special revenue $ $ 52,401 200,000 252,401 Commitment Proprietary funds: Water/wastewater $ $ 518,081 518,081 99 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 13 - OPERATING LEASES The City leases copiers under certain noncancelable leases accounted for as operating leases. Operating leases do not give rise to property rights or lease obligations, and therefore the results of the lease agreements are not reflected in the City’s Statement of Net Assets. Current year lease costs for the fiscal year ended June 30, 2012 were $243,606. The following is a schedule by year of future minimum lease payments: Fiscal Year Ending June 30, 2013 2014 2015 2016 Total minimum payments required Amount $ 237,408 198,213 80,628 60,603 $ 576,852 NOTE 14 - RETIREMENT AND PENSION PLANS The City contributes to four separate defined benefit pension plans for the benefit of all full-time employees and elected officials. The Arizona Public Safety Personnel Retirement System administers separate agent multiple-employer retirement plans for all full-time police and fire personnel. The Arizona Public Safety Personnel Retirement System also acts as fund administrator for the Elected Officials Retirement Plan, a multiple-employer cost-sharing plan for elected officials of the City. The Arizona State Retirement System administers a multiple-employer cost-sharing plan for all other full-time employees. The City has met all required payment dates for these plans. Arizona Public Safety Personnel Retirement System (Full-time Police and Fire Employees) A. Plan Description The City contributes to the Arizona Public Safety Personnel Retirement System (“PSPRS”), an agent multipleemployer public safety employee retirement system that acts as a common investment and administrative agent for the various police and fire agencies within the state. All police and fire personnel are eligible to participate in the plan. The plan provides retirement, disability, and death benefits to plan members and beneficiaries. The PSPRS is jointly administered by the Fund Manager and 162 Local Boards and was established by Title 38, Chapter 5, Article 4 of the Arizona Revised Statutes (A.R.S). The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to Arizona Public Safety Personnel Retirement System, PO Box 17670, Phoenix, Arizona, 85011-0670 or by calling 602-255-5575. B. Funding Policy The System is funded through a member contribution of 8.65 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 fire is 27.21 percent of annual covered payroll, of which 0.45 percent was the health insurance premium portion. The current aggregate contribution rate for police is 24.22 percent of annual covered payroll, of which 0.47 percent was the health insurance premium portion. Benefit and contribution provisions are established by law and may be amended only by the State of Arizona Legislature (A.R.S. Section 38-843). 100 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 14 - RETIREMENT AND PENSION PLANS (Continued) C. Annual Pension Cost Police personnel contributed $2,228,280 and fire personnel $976,607 during fiscal year 2011-12. For 2012, the City’s annual pension cost was $7,185,625 for police and $3,393,286 for fire and was equal to the City’s required contributions. The required contribution was determined as part of the June 30, 2010 actuarial valuation determining contribution requirements for fiscal year 2011-12, using the projected unit credit method. The actuarial assumptions included (a) 8.25% investment rate of return (b) projected salary increases of 5.00% per year compounded annually, attributable to inflation and other across-the-board increases, (c) additional projected salary increases ranging from 5.00% to 8.00% per year, attributable to seniority/merit. The actuarial value of the PSPRS assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a 7-year period. PSPRS’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at July 1, 2011 was 25 years. D. Three Year Trend Information : Police Fiscal Year Ended June 30, 2010 (Pension) 2010 (Health) 2011 (Pension) 2011 (Health) 2012 (Pension) 2012 (Health) Annual Pension Cost (APC) $ 6,415,283 401,144 6,749,378 415,632 7,185,625 447,526 Percentage Contributed 100% 100 100 100 100 100 Net Pension Obligation - Fiscal Year Ended June 30, 2010(Pension) 2010 (Health) 2011 (Pension) 2011 (Health) 2012 (Pension) 2012 (Health) Annual Pension Cost (APC) $ 2,949,541 230,094 3,107,361 231,319 3,393,286 230,392 Percentage Contributed 100% 100 100 100 100 100 Net Pension Obligation - Fire E. Schedule of Funding Progress: Police Actuarial Valuation Date Value of June 30, Assets 2010 $ 96,465,397 2011 101,406,746 2012 103,346,360 Actuarial Accrued Liability (AAL) $ 164,091,514 181,662,671 200,736,814 Percent Unfunded Funded AAL 58.8% $ 67,626,117 55.8 80,255,925 51.5 97,390,454 101 Annual Unfunded AAL as Covered a % of Covered Payroll Payroll $ 28,315,537 238.8 25,820,652 310.8 26,046,499 373.9 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 14 - RETIREMENT AND PENSION PLANS (Continued) Arizona Public Safety Personnel Retirement System (Full-time Police and Fire Employees) (Continued) E. Schedule of Funding Progress (Continued): Fire Actuarial Valuation Date Value of June 30, Assets 2010 $ 70,868,109 2011 73,698,685 2012 76,211,736 Actuarial Accrued Percent Unfunded Liability (AAL) Funded AAL $ 102,307,685 69.3% $ 31,439,576 112,778,109 65.3 39,079,424 123,125,911 61.9 46,914,175 Annual Covered Payroll $ 11,965,093 11,179,799 11,373,929 Unfunded AAL as a % of Covered Payroll 262.8 349.6 412.5 Arizona State Retirement System (All Other Full-time Employees) A. Plan Description The City has elected to participate in the Arizona State Retirement System (ASRS or The System), a multiple-employer cost-sharing retirement plan, which provides retirement benefits for all full-time employees, except police and fire employees. The plan provides for retirement, disability, health insurance premium benefits, and death and survivor benefits. 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 Title 38, Chapter 5, of the Arizona Revised Statutes. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the Arizona State Retirement System, 3300 North Central Avenue, Suite1300, Phoenix, AZ, 85012 or by calling 602-240-2000. B. Funding Policy The 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 the statutes prescribe the basis of making the actuarial calculation, the Arizona legislature is able to change the contribution rate from that actuarially determined. The actuarially determined contribution rates for the year ended June 30, 2012 were 10.74 percent (10.50 percent for retirement and 0.24 percent for long-term disability) for active members and the City was required to contribute 10.74 percent (9.83 percent for retirement, 0.67 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 ASRS for the years ended June 30, 2012, 2011, and 2010 were $7,104,490, $6,586,650 and $7,190,912 respectively, equal to the annual required contributions for each year. 102 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 14 - RETIREMENT AND PENSION PLANS (Continued) Elected Officials Retirement Plan (Mayor and City Council) A. Plan Description The City's Mayor and Councilmembers participate in the Elected Officials Retirement Plan (“EORP”) a multiple employer, cost-sharing pension plan. The Fund Manager of the Arizona Public Safety Personnel Retirement System (“PSPRS”) is the administrator for the EORP which was established by Title 38, Chapter 5, Article 3 of the Arizona Revised Statutes to provide pension benefits for state and county elected officials, judges and certain city elected officials. EORP provides retirement benefits as well as death and disability benefits. The authority to amend Title 38, Chapter 5, Article 3 is reserved for the State Legislature. EORP issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to the Elected Officials Retirement Plan, 3010 East Camelback Road, Suite 200, Phoenix, Arizona, 85016 or by calling 602-255-5575. B. Funding Policy The retirement plan's funding policy (required by State Statutes) provides for periodic employer contributions at actuarially determined rates and employee contributions of 10.00 percent of their annual covered salary. The employer rate for 2011-12 was 32.99 percent of the members’ annual covered payroll, of which 0.83 percent was the health insurance premium portion. The City’s contributions to EORP for the fiscal years ended June 30, 2012, 2011 and 2010 were $72,692, $65,673, and $57,841, respectively, equal to the annual required contributions for each year. The City’s employees contributed $22,035, $15,432, and $15,424, respectively for the same time period. NOTE 15 - OTHER POSTEMPLOYMENT BENEFITS Other post employment healthcare benefits, like the cost of pension benefits, constitute an exchange of compensation for employee services rendered. Similar to pension benefits, the cost of other postemployment benefits (OPEB) generally should be associated with the periods in which the exchange occurs rather than in future periods in which the benefits are provided. GASB Statement No. 45 requires the City to measure and recognize the OPEB cost while employee services are rendered, report the accumulated liability from prior years and provide information about the potential demands on the City’s future cash flows. Recognition of the liability, from the plan described below, accumulated from prior years, is being amortized over 30 years with the first period beginning with the fiscal year ending June 30, 2008. A. Plan Description The City offers (single-employer plan) the continuation of group health insurance benefits, in accordance with Resolution 2009.86 of the City Council, to all retired, benefitted employees who meet the following eligibility requirements: (a) have at least 10 years of service, (b) be enrolled in one of the City's group health insurance plans, and (c) at the time of retirement, be or have been eligible to receive benefits from one of the City sponsored state retirement plans. Due to changes effective July 1, 2009, benefitted employees hired after June 30, 1999 are not eligible to participate in the post employment benefit plan subject to the requirements of GASB Statement No. 45. As of June 30, 2012, 746 retirees meet those eligibility requirements to receive postemployment healthcare benefits. Total membership in the program is as follows: Retirees receiving benefits Active employees eligible Total 103 746 615 1,361 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 15 - OTHER POSTEMPLOYMENT BENEFITS (Continued) Effective with changes implemented on October 1, 2011, this OPEB plan provides medical coverage for qualified, pre-Medicare retired employees through a single-employer defined contribution plan; prior to this change, coverage was provided through a defined benefit plan. (With this change, active employees are the only group participating in a defined benefit plan for health benefits.) The plan provides benefits to eligible retirees (as outlined above), their spouses and dependents through monthly City contributions to a health reimbursement account established for each retiree. The plan benefits and contribution rates are determined by the City’s Human Resources Department based on the costs of coverage that is available through the health plan offered by the ASRS. Coverage for Medicare-eligible retirees is provided through fully-insured, City-sponsored Medicare Supplemental plans. Because an irrevocable trust fund has not been established, the plan is not accounted for as a trust fund nor does the plan issue separate financial statements. B. Benefits Provided For those retirees/dependents who have not reached Medicare eligibility, the City makes monthly contributions to the retiree/dependents’ health reimbursement account. For coverage to be continued for retirees and dependents reaching Medicare eligibility, beneficiaries are required to enroll in a City sponsored Medicare Supplemental Plan. C. Funding Policy The pre-Medicare plan contributions are determined annually by the City’s Human Resources Department. Contributions for retirees/dependents are determined based on a review of the premiums (and changes thereto) for health care coverage that is available through the ASRS. For the City sponsored Medicare supplemental plans, premiums are determined annually by the outside insurance company. Retirees/ dependents are not required to enroll in the health plan offered through the ASRS. Because retired employees and their dependents are enrolled in a completely separate plan than active employees, there are no implicit rate subsidies. The City has not advance-funded any portion of the retiree health plan and covers the cost of the program on a pay-as-you-go basis. Both the Arizona State Retirement and Arizona Public Safety Personnel Retirement systems subsidize the health insurance premium of eligible retirees depending on type of health plan chosen, coverage selected, and years of service. D. Annual OPEB Cost and Net OPEB Obligation The City’s annual OPEB cost is calculated based on the annual required contribution (ARC) which is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City’s annual OPEB cost for the year ended June 30, 2012, the amount actually contributed to the plan and changes in the City’s net OPEB obligation. ARC ARC adjustment Interest on the net OPEB obligation Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation – beginning of year Net OPEB obligation – end of year 104 $ 12,288,177 (3,006,302) 1,998,822 11,280,697 (4,614,656) 6,666,041 49,970,553 $ 56,636,594 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 15 - OTHER POSTEMPLOYMENT BENEFITS (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the new OPEB obligation for the fiscal years ended June 30, 2012, 2011, and 2010 are as follows. Fiscal Year Ended June 30, 2010 2011 2012 Annual OPEB Cost $ 9,821,574 10,132,549 11,280,697 Employer Contributions $5,885,849 5,897,126 4,614,656 Percentage of Annual OPEB Cost Contributed 59.9% 58.2 41.0 Net OPEB Obligation $45,735,130 49,970,553 56,636,594 E. Health Care Cost Trend Rate The following annual trend rates are applied on a select and ultimate basis: Benefit Medical/Rx Pre 65 Medical/Rx Post 65 Select 10.0% 7.5 Ultimate 5.0% 5.0 Select trends are reduced 0.5% each year until reaching the ultimate trend. F. Funded Status and Funding Progress (most recent information available) Actuarial Valuation Date 7/1/2008 7/1/2009 7/1/2011 Actuarial Accrued Actuarial Liability Entry Age Value of Assets $ $ 159,149,836 154,671,513 166,968,101 Unfunded AAL (UAAL) $159,149,836 154,671,513 166,968,101 Unfunded AAL as Funded Annual a % of Covered Ratio Covered Payroll Payroll 0.0% $ 51,388,438 309.7% 0.0% 51,923,274 297.9 0.0% 47,378,802 352.4 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and healthcare cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions and actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The City will obtain an actuarial valuation on a bi-annual basis. 105 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 15 - OTHER POSTEMPLOYMENT BENEFITS (Continued) G. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The investment rate reflects the expected long term rate of return for the assets expected to pay the postemployment benefits. Significant methods and assumptions used for this fiscal year valuation were as follows: Actuarial valuation date Actuarial cost method Remaining amortization period Asset valuation method Actuarial assumptions: Healthcare inflation rate Investment rate of return Projected salary increases Amortization method July 1, 2011 Entry age normal 26 years, closed N/A 10.0% select rate, 5% ultimate rate, 8 year grade in period 4% Not applicable Level dollar NOTE 16 - DEFERRED COMPENSATION PLANS The City offers its employees two compensation plans created in accordance with Internal Revenue Code, Section 457 and 401(K). The plans, available to all City employees, permit them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. The City’s fiduciary responsibility is that of exercising “due care” in selecting a third-party administrator. Federal legislation requires that Section 457 plan assets be held in trust for employees. As a result, the employee assets held in Section 457 plans are neither the property of the City nor subject to claims of the City’s general creditors. Therefore, the plan assets are not included in the City’s basic financial statements. NOTE 17 - RISK FINANCING ACTIVITIES The City is exposed to risks arising from general liability, automobile liability (physical damage and bodily injury), property liability, workers compensation, and employee health claims. The City has established a Risk Management Fund and Health Fund (both internal service funds) to account for and finance its uninsured risks of loss. Amounts are paid into the internal service funds by all other funds and are available to pay claims and to fund claim reserves. As with any risk retention program, the City is contingently liable in respect to claims beyond those actuarially projected. These interfund premiums are used to reduce the amount of claim expenditures reported in the internal service funds. The City is a self insured entity with excess commercial insurance coverage purchased for general and automobile liability, property, workers' compensation/employers’ liability, crime and group health coverage. The coverage is 106 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 17 - RISK FINANCING ACTIVITIES (Continued) as follows: for general and automobile liability the first $2.0 million per occurrence is self-insured and excess coverage of $40.0 million is provided; for property the self-insurance retention is the first $100,000 per occurrence of all perils with a policy limit of $807.1 million; for workers' compensation the first $750,000 for police, firefighters, and EMT and $500,000 for all others of each claim is self-insured, with excess coverage per the Arizona statutory workers' compensation requirements and $2.0 million per occurrence in employer’s liability; and for group health the self-insurance retention is $250,000 per occurrence, with an aggregate stop loss deductible of $26.6 million. During the year there were no significant reductions in the amounts of excess coverage purchased. At fiscal year end, the estimated, unpaid insurance claims liability was based on a case-by-case review of actual pending claims and an estimated amount for incurred but not reported claims. A liability for a known claim was established if information indicated that it was probable that a loss had been incurred as of June 30, 2012, and that the amount was reasonably estimable. A liability for incurred but not reported claims was based on historical experience. The following is a summary of changes in insurance claims liabilities, accounted for in the governmental and proprietary funds, for the last two fiscal years: General liability Automobile liability Property liability Workers' compensation Health insurance General liability Automobile liability Property liability Workers' compensation Health insurance June 30, 2011 $ 5,999,095 57,767 39,341 1,491,668 1,306,341 $ 8,894,212 Claims Incurred Net of Change in Estimates $ (202,183) 176,874 203,183 1,500,606 15,022,310 $ 16,700,790 Payments $ (2,089,412) (131,664) (166,684) (999,763) (14,896,711) $(18,284,234) June 30, 2012 $ 3,707,500 102,977 75,840 1,992,511 1,431,940 $ 7,310,768 June 30, 2010 $ 7,077,346 171,270 51,857 1,804,059 1,895,298 $ 10,999,830 Claims Incurred Net of Change in Estimates $ 1,132,020 63,427 153,680 695,299 18,105,476 $ 20,149,902 Payments $ (2,210,271) (176,930) (166,196) (1,007,690) (18,694,433) $(22,255,520) June 30, 2011 $ 5,999,095 57,767 39,341 1,491,668 1,306,341 $ 8,894,212 At June 30, 2012, the Risk Management Internal Service Fund accrued expenses totaled $5,895,182. This balance includes the general liability, automobile liability, property liability and worker’s compensation liability of $5,878,828 and other accrued expenses of $16,354. The health claims liability at June 30, 2012 of $1,431,940 is deemed due and payable at June 30, 2012 and recorded as accrued expenditures/expense in the governmental and proprietary funds, respectively. Additionally, at June 30, 2012, the City had $8,841,391 of General Fund fund balance assigned for self-insurance purposes. 107 Notes to the Financial Statements For Fiscal Year Ended June 30, 2012 City of Tempe, Arizona NOTE 18 - CONTINGENT LIABILITIES The City is subject to a number of lawsuits, investigations, and other claims that are incidental to the ordinary course of its operations. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a materially adverse effect on the City’s financial position. The City participates in federally-funded and state-funded programs administered by various government agencies. The programs included in these financial statements may be subject to program compliance and/or financial monitoring by the granting agency or its representatives. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. NOTE 19 - RELATED ORGANIZATION The Industrial Development Authority (IDA) is a non-profit corporation established by the City in 1981 to promote industry and develop trade by inducing manufacturing, industrial and commercial enterprises to locate and remain in Tempe. The Board of Directors of the IDA is appointed by the City Council; however, the City does not have a financial benefit/burden relationship nor is the City able to impose its will on the IDA as defined in GASB Statement No. 14; therefore, data for the IDA is not included in the City’s basic financial statements. Separately issued financial statements are not available for the IDA. NOTE 20 - DEFICIT IN FUND BALANCE/NET ASSETS The Special Assessment Debt Service Fund had a deficit fund balance of $1,733,419 at June 30, 2012. The deficit will be covered by anticipated assessment payments. The Cemetery Fund had a negative net asset balance of $210,961 at June 30, 2012. The deficit will be covered by future transfers from the general fund. The Risk Management Fund had a negative net asset balance of $28,511. The deficit will be covered by future contributions to the fund. The Health Fund had a negative asset balance of $942,236. The deficit will be covered by future transfers from operating funds. NOTE 21 – SUBSEQUENT EVENTS In July 2012, the City cash defeased the remaining outstanding $53.67 million of Series 2006 Transit Excise Tax Revenue Obligations. The cash utilized was from the federal reimbursement for the Transit Light Rail project. The bonds had been issued to bridge the gap between the cash outlay required for the project and the timing of the federal reimbursement. In September 2012, the City issued $41.39 million in Transit Excise Tax Revenue Refunding Obligations. The purpose of the issuance was to refund the 2007 Variable Rate Demand Excise Tax Revenue Obligations in order to fix the interest rate. 108 City of Tempe, Arizona 109 City of Tempe, Arizona NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for specific revenues used to finance certain projects or activities as required by law or contractual agreement.  Performing Arts Fund. To account for the receipt and expenditure of the Performing Arts Tax monies. These monies are restricted to financing the performing and visual arts center.  Highway User Revenue Fund. To account for the receipt and expenditure of the City's share of the highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets, and repayment of transportation-related general obligation debt.  Local Transportation Assistance Fund. To account for the receipt and expenditure of the City's share of state lottery allocations. These monies are restricted to transportation programs only.  Community Development Fund. To account for the receipt and expenditure of U.S. Department of Housing and Urban Development Community Development Block Grant and Home Program monies.  Housing Assistance Fund. To account for the receipt and expenditure of U.S. Department of Housing and Urban Development Lower Income Housing Assistance Program grant monies.  Rio Salado. To account for the receipt and expenditure of miscellaneous monies used to foster the development of Rio Salado.  Grants and Court Awards. To account for the receipt and expenditure of miscellaneous grant monies and revenue received from court awarded confiscated property under both the Federal and State Organized Crime Acts.  Community Facilities District. To account for the receipt and expenditure of monies for the Rio Salado Community Facilities District. 110 City of Tempe, Arizona NON-MAJOR GOVERNMENTAL FUNDS (continued) CAPITAL PROJECTS FUNDS Capital Projects Funds account for all current financial resources used for the acquisition of capital facilities except those financed by Enterprise Funds. Disbursements from these funds are primarily for property acquisition and the construction of permanent public improvements. The major sources of financing are derived from bond proceeds and special revenues.  Streets Fund. Used for improving, constructing and reconstructing major streets, highways, collector and local streets within the City, and to acquire rights-of-way.  Police Fund. Used for purchasing, constructing and equipping public safety buildings.  Fire Fund. Used for purchasing, constructing and equipping fire stations.  Storm Sewers Fund. Used for planning, constructing, extending and improving storm drain trunk lines and detention basins.  Parks Fund. Used for acquiring, developing and equipping parks, playgrounds and recreation facilities.  Rio Salado Fund. Used for consulting and engineering studies necessary for the design of the Rio Salado projects and for constructing a wildlife habitat.  Community Development Fund. Used for acquiring, reconstructing, remodeling, renovating and equipping existing buildings that house municipal departments, and for acquiring and constructing housing for the elderly and the redevelopment of the downtown area.  Signals Fund. Used for purchasing, constructing and equipping street light and traffic signal upgrades and for the planning of an overall transportation plan. 111 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 Special Revenue Performing Arts Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Total assets Liabilities Accounts payable Deposits Accrued expenditures Claims and judgements Due to other funds Deferred revenue Matured bonds payable Matured interest payable Total liabilities Fund Balances Fund balance: Non-spendable Restricted Committed Assigned Total fund balances Total liabilities and fund balances $ 2,588,032 $ 540,726 1,096 5,269,750 8,399,604 $ $ 35,729 87,021 10,453 4,475,000 794,750 5,402,953 1,635,026 1,361,625 2,996,651 8,399,604 Highway User Revenue $ 5,069,357 $ 786,787 1,054,950 6,911,094 $ 231,599 107,386 42,815 381,800 1,054,950 5,474,344 6,529,294 6,911,094 $ 112 Local Transportation Assistance $ 1,273,041 $ 1,273,041 $ $ - 1,273,041 1,273,041 1,273,041 Community Development $ $ $ $ 535,140 15,934 551,074 43,255 15,321 316,220 131,027 505,823 45,251 45,251 551,074 City of Tempe, Arizona Special Revenue Housing Assistance Rio Salado Grants and Court Awards Community Facilities District Total Assets $ 572,574 $ 37,589 710,789 1,320,952 $ - $ - $ 3,020,534 $ 3,539 1,857,172 4,881,245 $ 464,795 $ 2,451,716 2,916,511 $ 12,988,333 $ 1,327,513 37,589 4,635 2,392,312 1,054,950 710,789 7,737,400 26,253,521 Liabilities $ 416 96,625 97,041 $ - $ 1,707,467 35,552 7,719 2,985,467 4,736,205 $ 162,151 1,785,000 638,919 2,586,070 $ 2,180,617 35,552 314,072 53,268 316,220 2,985,467 6,260,000 1,564,696 13,709,892 Fund Balances $ 710,789 513,122 1,223,911 1,320,952 $ - $ 145,040 145,040 4,881,245 $ (continued) 113 330,441 330,441 2,916,511 $ 1,765,739 9,416,265 1,361,625 12,543,629 26,253,521 Combining Balance Sheet Nonmajor Governmental Funds June 30, 2012 rizona Capital Projects Streets Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Total assets Liabilities Accounts payable Deposits Accrued expenditures Claims and judgements Due to other funds Deferred revenue Matured bonds payable Matured interest payable Total liabilities Fund Balances Fund balance: Non-spendable Restricted Committed Assigned Total fund balances Total liabilities and fund balances $ 3,041,568 $ 3,041,568 $ $ 720,346 720,346 2,321,222 2,321,222 3,041,568 Police $ 2,384,316 $ 2,384,316 $ $ 388,989 388,989 763,997 1,231,330 1,995,327 2,384,316 114 Fire Storm Sewers $ 1,249,296 $ 1,058,961 $ 1,249,296 $ 1,058,961 $ $ 45,351 45,351 1,031,952 171,993 1,203,945 1,249,296 $ $ - 263,306 685,846 109,809 1,058,961 1,058,961 Parks $ 3,342,250 $ 97,710 3,439,960 $ $ 759,285 97,710 856,995 590,950 1,910,885 81,130 2,582,965 3,439,960 City of Tempe, Arizona Capital Projects Rio Salado $ 3,680,829 $ 3,680,829 $ $ 306,664 306,664 3,242,086 132,079 3,374,165 3,680,829 Community Development $ 5,521,784 $ 3,542,340 9,064,124 $ $ 869,444 869,444 2,805,103 2,665,390 2,724,187 8,194,680 9,064,124 Signals $ 829,584 $ 27,543 857,127 $ $ 153,571 153,571 355,894 347,662 703,556 857,127 Total Nonmajor Governmental Funds Total $ 21,108,588 $ 97,710 27,543 3,542,340 24,776,181 $ $ 3,243,650 97,710 3,341,360 3,659,359 10,656,050 7,119,412 21,434,821 24,776,181 115 $ 34,096,921 $ 1,327,513 135,299 4,635 2,419,855 1,054,950 710,789 11,279,740 51,029,702 $ $ 5,424,267 35,552 314,072 53,268 316,220 3,083,177 6,260,000 1,564,696 17,051,252 $ 1,765,739 13,075,624 12,017,675 7,119,412 33,978,450 51,029,702 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2012 Special Revenue Local Transportation Assistance Highway User Revenue Performing Arts Community Development Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ 6,236,500 $ - $ - $ - 19,750 640,284 6,579 6,903,113 186,774 8,098,254 92,350 18,816 8,396,194 - 2,413,831 61,145 25 627,987 3,102,988 2,268,512 - 7,020,384 - - 2,109,628 - 4,475,000 1,697,329 8,440,841 7,020,384 - 311,000 315,705 2,736,333 (1,537,728) 1,375,810 - 366,655 701,322 350,000 - - - - Expenditures: Current: Police Fire Community services Public works Community development Community relations Municipal court Debt service: Principal retirement Interest and fiscal fees Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures before other financing sources (uses) Other financing sources (uses): Transfers in: General fund Special revenue funds Debt service funds Capital projects funds Enterprise funds Transfers out: General fund Debt service funds Capital projects funds Enterprise funds Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded bond escrow agent Total other financing sources (uses) 2,322,676 18,300,000 (20,384,744) 237,932 Net change in fund balances (1,299,796) Fund balance (deficit) at beginning of year Fund balance at end of year (1,553,304) (14,329) 33,857 (482,454) 893,356 4,296,447 $ 2,996,651 - 5,635,938 $ 6,529,294 116 366,655 1,273,041 $ 1,273,041 (321,404) $ 45,251 City of Tempe, Arizona Special Revenue Housing Assistance $ - Rio Salado $ Community Facilities District $ $ - - Total $ 6,236,500 9,470,381 918 16,494 9,487,793 - 2,462,826 79,879 3,829,226 499 649,901 450,559 406,584 7,879,474 2,415,139 2,415,139 14,533,812 79,879 8,098,254 3,890,371 21,192 3,797,674 467,053 1,059,966 38,184,701 9,816,380 - - 3,708,072 427,832 1,055,956 121,434 198,748 1,901,971 317,878 2,088,825 - 3,708,072 427,832 3,324,468 7,141,818 14,213,581 1,901,971 317,878 9,816,380 - 7,731,891 1,785,000 1,359,322 5,233,147 6,571,000 3,372,356 40,978,976 - 147,583 (2,818,008) (2,794,275) - 2,910,907 - 701,322 2,910,907 350,000 (2,279,516) (2,279,516) (20,000) (20,000) 1,233,856 4,127 6,585,000 (7,585,441) 3,148,449 (2,279,516) (1,553,304) (34,329) 3,556,532 37,984 24,885,000 (27,970,185) 604,411 (2,279,516) 127,583 2,279,516 17,457 (328,587) - - (328,587) 1,552,498 $ - Grants and Court Awards 1,223,911 $ - $ 145,040 330,441 (2,189,864) $ 330,441 (continued) 117 14,733,493 $ 12,543,629 Combining Statement of Revenues, Expenditures and Changes in Fund Balance Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2012 Capital Projects Streets Police Fire Storm Sewers Parks Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ - $ - 1,761,004 322,682 1,288 2,084,974 $ - - $ 438,119 438,119 - $ - 406 338,870 25,000 364,276 Expenditures: Current: Police Fire Community services Public works Community development Community relations Municipal court Debt service: Principal retirement Interest and fiscal fees Capital outlay Total expenditures - Excess (deficiency) of revenues over expenditures before other financing sources (uses) - - - - 3,089,032 3,089,032 2,532,260 2,532,260 1,733,932 1,733,932 178,827 178,827 1,768,143 1,768,143 (1,004,058) (2,532,260) (1,295,813) (178,827) (1,403,867) Other financing sources (uses): Transfers in: General fund Special revenue funds Debt service funds Capital projects funds Enterprise funds Transfers out: General fund Debt service fund Capital projects funds Enterprise funds Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded bond escrow agent Total other financing sources (uses) - Net change in fund balances Fund balance (deficit) at beginning of year Fund balance at end of year - (1,288) 1,898,488 1,897,200 (27,205) 1,328,736 1,301,531 893,142 (1,230,729) 1,428,080 $ 2,321,222 846,264 846,264 1,995,327 118 1,203,945 (2,543) 1,912,995 1,922,162 (704,019) 1,653,494 $ 11,710 - (1,053,192) 400,000 (525,192) (449,549) 3,226,056 $ 128,000 518,295 1,762,980 $ 1,058,961 2,064,670 $ 2,582,965 City of Tempe, Arizona Capital Projects Community Development Rio Salado $ - $ 566,807 2,826,483 3,393,290 $ 259,334 250,000 391 104,799 614,524 - - - 8,677,131 8,677,131 513,804 Total 353,149 23,750 376,899 - 2,879,486 2,879,486 $ - Signals Total Nonmajor Governmental Funds 1,305,101 1,305,101 $ - $ 3,378,413 250,000 797 661,552 2,875,233 106,087 7,272,082 6,236,500 17,912,225 79,879 8,098,254 4,140,371 21,989 4,459,226 467,053 2,875,233 1,166,053 45,456,783 - 3,708,072 427,832 3,324,468 7,141,818 14,213,581 1,901,971 317,878 22,163,912 22,163,912 6,571,000 3,372,356 22,163,912 63,142,888 (8,062,607) (928,202) (14,891,830) (17,686,105) 1,896,828 20,000 - 15,543 1,312,000 83,317 301,600 57,000 14,329 - 1,969,371 34,329 1,312,000 95,027 429,600 2,670,693 34,329 4,222,907 95,027 779,600 (53,568) (299,057) 1,564,203 (24) (11,710) (104,873) 1,595,853 605,000 676,329 (1,312) (95,026) (1,457,122) 6,991,483 9,278,350 (2,279,516) (1,554,616) (129,355) (1,457,122) 6,991,483 3,556,532 37,984 24,885,000 (27,970,185) 9,882,761 2,078,007 (6,466,754) (251,873) (5,613,480) (7,803,344) 1,296,158 14,661,434 955,429 27,048,301 41,781,794 703,556 $ 21,434,821 3,374,165 $ 8,194,680 $ 119 $ 33,978,450 City of Tempe, Arizona 120 City of Tempe, Arizona INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the government and to other government units, on a cost reimbursement basis.  Risk Management Fund. Used to account for the costs of general liability, automobile liability, property liability and workers compensation claims by the City under a self-insurance program.  Health Fund. Accounts for the expenses incurred for employee health related costs under the City’s self-insurance program. 121 Combining Statement of Net Assets Internal Service Funds June 30, 2012 City of Tempe, Arizona Risk Management Health Total Assets Current assets: Pooled cash and investments Due from other funds $ 5,319,684 662,937 Total assets Net Assets 122 (28,511) 30,843 30,843 942,236 (28,511) $ 364,406 662,937 5,895,182 6,922,525 - 6,011,132 6,953,368 (942,236) $ (942,236) 5,319,684 662,937 5,982,621 279,299 662,937 942,236 30,843 30,843 Total liabilities $ - 85,107 5,895,182 5,980,289 Noncurrent liabilities: Net OPEB obligation Total noncurrent liabilities Total net assets - 5,982,621 Liabilities Current liabilities: Accounts payable Due to other funds Accrued expenses and claims payable Total current liabilities Unrestricted $ (970,747) $ (970,747) Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Operating revenues: Contributions Total operating revenues Risk Management $ Operating expenses: Fees and services Total operating expenses Total 3,291,790 3,291,790 $ 21,710,619 21,710,619 3,246,649 3,246,649 25,391,938 25,391,938 28,638,587 28,638,587 (3,681,319) (3,636,178) Changes in net assets Total net assets- beginning Total net assets- ending Health 45,141 (73,652) (28,511) $ 123 $ 2,739,083 (942,236) $ $ 25,002,409 25,002,409 2,665,431 (970,747) Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Risk Management Cash flows from operating activities: Receipts from other funds Payments for settlement of claims Net cash used by operating activities $ Cash flows from noncapital financing activities: Advances from (to) other funds Net cash provided (used) by noncapital financing activities Net decrease in cash and cash equivalents 3,291,790 (4,983,415) (1,691,625) (662,937) (662,937) Health Total $ 21,710,619 (25,232,338) (3,521,719) $ 25,002,409 (30,215,753) (5,213,344) 662,937 662,937 - (2,354,562) (2,858,782) (5,213,344) Cash and cash equivalents, beginning of year 7,674,246 2,858,782 10,533,028 Cash and cash equivalents, end of year 5,319,684 - 5,319,684 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: Change in assets and liabilities: Increase (decrease) in accounts payable Increase (decrease) in accrued expenses Increase (decrease) in net OPEB obligation Net cash used by operating activities 124 45,141 33,060 (1,724,685) (45,141) (1,691,625) (3,681,319) (3,636,178) 159,600 (3,521,719) 192,660 (1,724,685) (45,141) (5,213,344) City of Tempe, Arizona Other Supplementary Information 125 City of Tempe, Arizona 126 City of Tempe, Arizona BUDGETARY COMPARISON SCHEDULES 127 City of Tempe, Arizona 128 Combined Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual General, Debt Service, Special Revenue, Capital Projects and Enterprise Fund Types For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues Taxes Intergovernmental Investment income Charges for services Fines and forfeitures Licenses and permits Miscellaneous Total revenues Expenditures Current: Police Fire Community services Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Finance and technology Human resources Interdepartmental charges Debt Service: Principal Interest and fiscal fees Total expenditures Other financing sources (uses) Transfers from other funds Transfers to other funds Issuance of debt Premium on issuance of debt Proceeds of refunding bonds Payment to refunded bond escrow agent Proceeds (loss) from sale of capital assets Total other financing sources (uses) Net change in fund balance Final Budget Amounts Actual Amounts (Budgetary Basis) $ 160,189,971 78,692,351 1,983,386 103,322,273 8,907,007 1,597,450 7,513,994 362,206,432 $ 162,496,358 68,317,854 1,258,049 121,413,442 7,731,585 1,650,907 10,340,542 373,208,737 Variance with Final Budget Positive (Negative) $ 2,306,387 (10,374,497) (725,337) 18,091,169 (1,175,422) 53,457 2,826,548 11,002,305 68,253,438 28,934,071 26,720,555 248,322,871 34,172,526 5,245,533 322,621 281,445 449,752 414,315 538,177 917,783 2,539,664 3,787,780 16,592,664 2,194,067 (12,207,041) 64,933,516 26,996,271 24,759,079 179,894,865 28,773,716 5,295,200 326,377 349,544 456,904 393,497 414,574 898,944 2,643,665 3,633,440 16,555,879 2,091,479 (12,150,600) 3,319,922 1,937,800 1,961,476 68,428,005 5,398,810 (49,667) (3,756) (68,099) (7,152) 20,818 123,603 18,839 (104,001) 154,340 36,785 102,588 (56,441) 39,598,410 30,472,461 497,551,092 42,296,446 28,370,928 416,933,724 (2,698,036) 2,101,533 80,617,367 25,092,059 (22,792,543) 15,381,483 7,278,536 45,181,900 (48,667,199) 575,545 22,049,781 (21,675,206) 21,837,592 (21,810,787) (82,733,662) 7,278,536 45,181,900 (48,667,199) 355,545 (78,558,075) 13,061,597 3,254,467 (981,756) 98,115,145 220,000 100,607,856 $ (34,736,804) 129 $ $ Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) $ 22,100,179 182,459 22,282,638 $ 21,884,734 666,952 13,517 22,565,203 Expenditures: Debt service: Principal retirement Interest and fiscal fees Total expenditures 12,859,902 8,639,420 21,499,322 14,175,000 8,346,883 22,521,883 (1,315,098) 292,537 (1,022,561) Excess of revenues over expenditures 783,316 43,320 (739,996) Revenues: Property taxes Other entities' participation Miscellaneous Total revenues Other financing sources (uses): Transfers in Transfers out Premium on issuance of debt Proceeds of refunding bonds Payment to refunded bond escrow agent Total other financing sources Net change in fund balance 1,550,000 (49,000) 1,501,000 $ 2,284,316 130 7,566,288 (9,679,280) 3,112,004 20,296,900 (20,697,014) 598,898 $ 642,218 Variance with Final BudgetPositive (Negative) $ (215,445) 484,493 13,517 282,565 6,016,288 (9,630,280) 3,112,004 20,296,900 (20,697,014) (902,102) $ (1,642,098) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Performing Arts Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Sales taxes Investment income Charges for services Miscellaneous Total revenues Expenditures: Current: Community services Debt service: Principal retirement Interest and fiscal fees Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Premium on issuance of debt Proceeds of refunding bonds Payment to refunded bond escrow agent Total other financing sources Net change in fund balance $ 6,082,100 57,000 631,000 6,000 6,776,100 $ 6,236,500 24,661 640,284 6,579 6,908,024 Variance with Final BudgetPositive (Negative) $ 154,400 (32,339) 9,284 579 131,924 2,537,499 2,266,143 271,356 4,240,000 1,787,788 8,565,287 4,475,000 1,697,329 8,438,472 (235,000) 90,459 126,815 $ (1,789,187) $ (1,789,187) 131 $ (1,530,448) 2,322,676 18,300,000 (20,384,744) 237,932 $ (1,292,516) $ 258,739 2,322,676 18,300,000 (20,384,744) 237,932 $ 496,671 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Highway User Revenue Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants State sales tax Charges for services Miscellaneous Total revenues $ Expenditures: Current: Public works Total expenditures $ 9,282,857 9,282,857 Deficiency of revenues over expenditures (483,799) 1,135,824 1,135,824 $ 86,612 132 186,774 8,098,254 92,350 18,816 8,396,194 8,879,993 8,879,993 (1,049,212) Other financing sources (uses): Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance 8,142,645 91,000 8,233,645 $ Variance with Final BudgetPositive (Negative) $ 186,774 (44,391) 1,350 18,816 162,549 402,864 402,864 565,413 1,051,322 (1,567,633) 33,857 (482,454) (84,502) (1,567,633) 33,857 (1,618,278) (966,253) $ (1,052,865) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Community Development Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues: Intergovernmental: Federal grants Other Investment income Miscellaneous Total revenues Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 4,934,231 50,000 632,912 5,617,143 $ 2,413,831 61,145 25 627,987 3,102,988 $ (2,520,400) 11,145 25 (4,925) (2,514,155) 4,984,200 2,109,583 2,874,617 311,000 321,912 5,617,112 311,000 315,705 2,736,288 6,207 2,880,824 Expenditures: Current: Community development Debt service: Principal retirement Interest and fiscal fees Total expenditures Net change in fund balance $ 31 133 $ 366,700 $ 366,669 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Housing Assistance Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Charges for services Investment income Total revenues $ 10,334,964 10,000 10,344,964 Expenditures: Current: Community development Total expenditures Net change in fund balance $ 10,344,964 10,344,964 $ - 134 9,470,381 16,494 918 9,487,793 Variance with Final BudgetPositive (Negative) $ 9,815,736 9,815,736 $ (327,943) (864,583) 6,494 918 (857,171) 529,228 529,228 $ (327,943) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Community Facilities District Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues: Charges for services Miscellaneous Total revenues Expenditures: Current: Community development Debt service: Principal Interest and fiscal fees Total expenditures Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 1,023,737 53,175 1,076,912 $ 2,415,139 2,415,139 $ 1,391,402 (53,175) 1,338,227 2,508,415 2,088,825 419,590 1,785,000 1,274,331 5,567,746 1,785,000 1,359,322 5,233,147 (84,991) 334,599 (4,490,834) (2,818,008) 1,672,826 2,910,907 1,233,856 6,585,000 (7,585,441) 4,127 3,144,322 2,910,907 1,233,856 6,585,000 (7,585,441) 4,127 3,144,322 Deficiency of revenues over expenditures Other financing sources (uses): Transfers in Premium on issuance of debt Proceeds of refunding bonds Payment to refunded bond escrow agent Proceeds from sale of capital assets Total other financing sources Net change in fund balance - $ (4,490,834) 135 $ 326,314 $ 4,817,148 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Transit Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues: Intergovernmental: Federal grants Other Total revenues Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources: Transfers in Proceeds from sale of capital assets Total other financing sources Net change in fund balance Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 3,889,636 948,533 4,838,169 $ 5,026,279 1,477,229 6,503,508 $ 1,136,643 528,696 1,665,339 16,465,930 16,465,930 9,338,303 9,338,303 7,127,627 7,127,627 (11,627,761) (2,834,795) 8,792,966 366,643 366,643 366,643 58,412 425,055 $ (11,261,118) 136 $ (2,409,740) 58,412 58,412 $ 8,851,378 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Streets Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues: Intergovernmental: Federal grants Charges for services Miscellaneous Total revenues Final Budget Amounts Actual Amounts (Budgetary Basis) $ 2,254,716 2,254,716 $ 1,761,004 322,682 1,288 2,084,974 5,994,951 5,994,951 3,523,028 3,523,028 2,471,923 2,471,923 (3,740,235) (1,438,054) 2,302,181 4,561,741 4,561,741 (1,288) 1,898,488 1,897,200 (1,288) (2,663,253) (2,664,541) Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers out Issuance of debt Total other financing sources Net change in fund balance $ 821,506 137 $ 459,146 Variance with Final BudgetPositive (Negative) $ $ (493,712) 322,682 1,288 (169,742) (362,360) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Police Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Expenditures: Current: Police Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers out Issuance of debt Total other financing sources Net change in fund balance Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 3,972,344 3,972,344 $ 2,532,260 2,532,260 $ 1,440,084 1,440,084 (3,972,344) (2,532,260) 2,004,834 2,004,834 (27,205) 1,328,736 1,301,531 $ (1,967,510) 138 $ (1,230,729) 1,440,084 (27,205) (676,098) (703,303) $ 736,781 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Fire Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Total revenues Expenditures: Current: Fire Total expenditures Deficiency of revenues over expenditures Other financing sources: Issuance of debt Total other financing sources Net change in fund balance $ 369,996 369,996 $ 438,119 438,119 2,697,761 2,697,761 1,733,932 1,733,932 (2,327,765) (1,295,813) 846,264 846,264 846,264 846,264 $ (1,481,501) 139 $ (449,549) Variance with Final BudgetPositive (Negative) $ 68,123 68,123 963,829 963,829 1,031,952 $ 1,031,952 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Storm Sewers Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Expenditures: Current: Public works Total expenditures $ 1,127,978 1,127,978 Defiiency of revenues over expenditures (1,127,978) Other financing sources (uses): Transfers in Transfers out Issuance of debt Total other financing sources (uses) Net change in fund balance $ $ (179,527) 128,000 400,000 528,000 $ 179,527 179,527 Variance with Final BudgetPositive (Negative) 948,451 128,000 (1,053,192) 400,000 (525,192) (599,978) 140 $ (704,719) 948,451 948,451 (1,053,192) (1,053,192) $ (104,741) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Parks Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Other local taxes Investment income Miscellaneous Total revenues Expenditures: Current: Community services Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Total other financing sources Net change in fund balance $ - $ 338,870 406 25,000 364,276 Variance with Final BudgetPositive (Negative) $ 338,870 406 25,000 364,276 3,829,548 3,829,548 2,314,668 2,314,668 1,514,880 1,514,880 (3,829,548) (1,950,392) 1,879,156 1,912,995 1,912,995 11,710 (2,543) 1,912,995 1,922,162 $ (1,916,553) 141 $ (28,230) 11,710 (2,543) 9,167 $ 1,888,323 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Rio Salado Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Other entities participation Miscellaneous Total revenues Expenditures: Current: Community development Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources Net change in fund balance $ 2,826,483 1,277,396 4,103,879 $ 566,807 2,826,483 3,393,290 Variance with Final BudgetPositive (Negative) $ 566,807 (1,277,396) (710,589) 6,832,161 6,832,161 5,403,567 5,403,567 (2,728,282) (2,010,277) 718,005 - 1,916,828 (352,625) 1,564,203 1,916,828 (352,625) 1,564,203 $ (2,728,282) 142 $ (446,074) 1,428,594 1,428,594 $ 2,282,208 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Community Development Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Other Investment income Miscellaneous Total revenues Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources Net change in fund balance $ 454,396 246,842 701,238 $ 259,334 250,000 391 104,799 614,524 Variance with Final BudgetPositive (Negative) $ (195,062) 250,000 391 (142,043) (86,714) 14,541,816 14,541,816 12,067,541 12,067,541 2,474,275 2,474,275 (13,840,578) (11,453,017) 2,387,561 301,600 301,600 1,712,460 (116,607) 1,595,853 $ (13,538,978) 143 $ (9,857,164) 1,410,860 (116,607) 1,294,253 $ 3,681,814 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Signals Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Charges for services Total revenues $ 1,241,396 1,241,396 Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources : Transfers in Issuance of debt Total other financing sources Net change in fund balance $ $ (888,247) 23,750 (864,497) 2,431,302 2,431,302 1,587,544 1,587,544 843,758 843,758 (1,189,906) (1,210,645) (20,739) 605,000 605,000 $ 353,149 23,750 376,899 Variance with Final BudgetPositive (Negative) 71,329 605,000 676,329 (584,906) 144 $ (534,316) 71,329 71,329 $ 50,590 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Water and Wastewater Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Miscellaneous Total revenues Expenditures: Current: Public works Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Premium on issuance of debt Proceeds from sale of capital assets Total other financing uses Net change in fund balance $ 69,992,604 500,000 524,500 71,017,104 $ 73,037,286 266,919 2,482,990 75,787,195 Variance with Final BudgetPositive (Negative) $ 3,044,682 (233,081) 1,958,490 4,770,091 42,148,687 42,128,938 19,749 18,667,508 14,933,147 75,749,342 18,505,446 14,188,889 74,823,273 162,062 744,258 926,069 963,922 5,696,160 (4,732,238) (582,756) (582,756) $ (5,314,994) 145 6,913,495 (6,122,129) 504,459 3,092 1,298,917 $ 2,262,839 6,913,495 (5,539,373) 504,459 3,092 1,881,673 $ 7,577,833 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Water and Wastewater Capital Projects Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental: Federal grants Investment income Charges for services Miscellaneous Total revenues Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources: Issuance of debt Premium on issuance of debt Total other financing sources Net change in fund balance $ 1,000,000 1,000,000 1,988,550 41,246 355,042 550,000 2,934,838 $ 1,988,550 41,246 (644,958) 550,000 1,934,838 73,462,368 73,462,368 26,757,268 26,757,268 46,705,100 46,705,100 (72,462,368) (23,822,430) 48,639,938 87,784,311 87,784,311 8,390,000 610,000 9,000,000 (79,394,311) 610,000 (78,784,311) $ 15,321,943 146 $ Variance with Final BudgetPositive (Negative) $ (14,822,430) $(30,144,373) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Solid Waste Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Charges for services Total revenues $ Expenditures: Current: Public works Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers out Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance 55,000 15,076,809 15,131,809 $ 34,705 14,866,281 14,900,986 14,809,796 14,809,796 12,900,067 12,900,067 1,909,729 1,909,729 322,013 2,000,919 1,678,906 (350,000) 100,000 (250,000) $ Variance with Final BudgetPositive (Negative) 72,013 (356,561) 37,490 (319,071) $ 1,681,848 147 $ (20,295) (210,528) (230,823) (6,561) (62,510) (69,071) $ 1,609,835 Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Golf Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Revenues: Charges for services Miscellaneous Total revenues Final Budget Amounts Actual Amounts (Budgetary Basis) $ 2,220,828 2,220,828 $ 2,344,003 352 2,344,355 2,290,553 2,290,553 2,502,509 2,502,509 Expenditures: Current: Public works Total expenditures Deficiency of revenues over expenditures Other financing sources: Transfers in Total other financing sources Net change in fund balance $ Variance with Final BudgetPositive (Negative) $ 123,175 352 123,527 (211,956) (211,956) (69,725) (158,154) (88,429) 74,000 74,000 74,000 74,000 - 4,275 $ 148 (84,154) $ (88,429) Schedule of Revenues, Expenditures and Changes in Fund BalanceBudget to Actual Cemetery Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Charges for services Total revenues $ Expenditures: Debt service: Principal Interest and fiscal fees Total expenditures Net change in fund balance 113,100 113,100 $ 95,000 85,863 180,863 $ (1,759) 144,242 142,483 Variance with Final BudgetPositive (Negative) $ 95,000 99,777 194,777 (67,763) 149 $ (52,294) (1,759) 31,142 29,383 (13,914) (13,914) $ 15,469 City of Tempe, Arizona 150 City of Tempe, Arizona FINANCIAL DATA SCHEDULES The Financial Data Schedules in this section are presented as required by the U.S. Department of Housing and Urban Development in accordance with the Uniform Financial Reporting Standards Rule as contained in the Federal Register (24CFR, Part 5, Subpart H). These schedules are presented on a modified accrual basis of accounting. 151 Other Supplementary Information - Financial Data Schedule Balance Sheet Housing Assistance Fund June 30, 2012 City of Tempe, Arizona Line Item # Section 8 Voucher Program Account Description Assets 111 113 115 128 142 Cash - Unrestricted Cash - Other Restricted Cash - Restricted for Payment of Current Liabilities Accounts Receivable - Fraud Recovery Prepaid Expense Total Assets $ $ 154,180 371,704 46,690 37,589 710,789 1,320,952 Liabilities 312 321 345 353 Accounts Payable ≤ 90 Days Accrued Wages / Payroll Taxes Payable Other Current Liabilities Non-Current Liabilities Total Liabilities $ $ 416 24,696 21,579 50,350 97,041 Equity 509 511.2 512 513 600 Fund Balance Reserved Unreserved, Designated Fund Balance Undesignated Fund Balance Total Equity Total Liabilities and Equity 152 $ $ $ 371,704 710,604 141,603 1,223,911 1,320,952 Other Supplementary Information - Financial Data Schedule Revenues and Expenses Housing Assistance Fund For the Fiscal Year Ended June 30, 2012 City of Tempe, Arizona Line Item # Section 8 Voucher Program Account Description 706 714 711 720 Revenues HUD PHA Grants Fraud Recovery Investment Income - Unrestricted Investment Income - Restricted Total Revenues 911 912 915 916 925 973 Expenses Administrative Salaries Auditing Fees Employee Benefit Contributions - Administrative Other Operating - Administrative Tenant Services Housing Assistance Payments Total Expenses Excess of Revenues Over Expenses $ $ $ $ 9,470,381 16,494 151 767 9,487,793 460,946 5,058 157,056 156,035 82,988 8,954,297 9,816,380 $ (328,587) $ $ 12,984 12,946 141,604 371,704 Memo Account Information 1120 1121 1117 1118 Unit Months Available Number of Unit Months Leased Administrative Fee Equity Housing Assistance Payments Equity 153 City of Tempe, Arizona 154 This section provides a broad range of trend data covering key financial indicators including general governmental revenues and expenditures, property taxes, debt burden, demographics and miscellaneous data useful in assessing the City’s financial condition. Statis tical Section City of Tempe, Arizona STATISTICAL SECTION The Statistical Section presents detailed information as a context for understanding the information in the financial statements, note disclosures and required supplementary information in regards to the City’s overall financial health.  Financial Trends. These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.  Revenue Capacity. These schedules contain information to help the reader assess the City’s most significant local revenue sources, property tax and sale and use taxes.  Debt Capacity. These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.  Economic and Demographic Information. These schedules offer economic and demographic indicators to help the reader understand the environment within which the City’s financial activities take place.  Operating Information. These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 155 City of Tempe, Arizona 156 Net Assets by Component (Exhibit S-1) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 Governmental activities Invested in capital assets, net of related debt Restricted (A) Unrestricted $ 440,494,223 135,314,124 73,239,199 $ 426,857,287 143,723,739 91,829,853 $ 425,257,427 137,183,741 153,918,478 $ 388,629,882 174,328,803 226,533,760 $ 397,087,925 114,918,257 414,023,370 $ 597,765,255 139,393,928 277,055,145 $ 574,872,877 181,241,102 237,470,312 $ 562,958,494 142,947,736 241,371,774 $ 571,925,061 114,643,888 259,250,692 $ 560,427,507 124,800,334 248,936,397 Total governmental activities net assets $ 649,047,546 $ 662,410,879 $ 716,359,646 $ 789,492,445 $ 926,029,552 $ 1,014,214,328 $ 993,584,291 $ 947,278,004 $ 945,819,641 $ 934,164,237 Business-type activities Invested in capital assets, net of related debt Unrestricted $ 171,881,978 89,985,585 $ 174,841,674 89,162,318 $ 191,670,395 74,678,567 $ 174,110,077 88,802,930 $ 177,682,915 88,554,746 $ 154,867,017 103,816,965 $ 151,096,394 100,251,937 $ 144,245,429 102,511,794 $ 175,625,967 73,018,010 $ 162,774,388 92,951,764 Total business-type activities net assets $ 261,867,563 $ 264,003,992 $ 266,348,962 $ 262,913,007 $ 266,237,661 $ 258,683,982 $ 251,348,331 $ 246,757,223 $ 248,643,977 $ 255,726,152 Primary government Invested in capital assests, net of related debt Restricted (A) Unrestricted $ 612,376,201 143,444,919 155,093,989 $ 601,698,961 152,737,563 171,978,347 $ 616,927,822 137,183,741 228,597,045 $ 562,739,959 174,328,803 315,336,690 $ 574,770,840 114,918,257 502,578,116 $ 752,632,272 139,393,928 380,872,110 $ 725,969,271 181,241,102 337,722,249 $ 707,203,923 142,947,736 343,883,568 $ 747,551,028 114,643,888 332,268,702 $ 723,201,895 124,800,334 341,888,161 Total primary government net assets $ 910,915,109 $ 926,414,871 $ 982,708,608 $ 1,052,405,452 $ 1,192,267,213 Fiscal Year 2007-08 $ 1,272,898,310 Fiscal Year 2008-09 $ 1,244,932,622 Fiscal Year 2009-10 $ 1,194,035,227 (A) With the implementation of GASB No. 54 in fiscal year 2010-11, Restricted fund balance has been redefined to include only amounts that have externally enforceable limitations or enabling legislation. 157 Fiscal Year 2010-11 $ 1,194,463,618 Fiscal Year 2011-12 $ 1,189,890,389 Changes in Net Assets (Exhibit S-2a) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 Fiscal Year 2007-08 Fiscal Year 2008-09 Fiscal Year 2009-10 Fiscal Year 2010-11 Fiscal Year 2011-12 $ 47,729,305 15,103,049 20,307,801 57,917,031 3,245,906 2,845,176 579,089 918,556 433,922 2,027,045 3,230,817 18,760,209 5,404,942 3,762,782 4,185,163 14,852,873 6,956,107 $ 49,973,991 16,990,382 20,629,836 61,814,870 4,021,965 2,472,966 407,818 209,830 505,865 440,660 652,442 2,087,009 4,053,127 19,111,722 3,946,238 2,418,605 2,280,717 9,637,203 8,974,827 $ 51,928,073 17,679,667 21,116,067 61,853,194 3,187,992 2,312,548 400,549 312,882 544,872 446,333 443,255 2,262,903 3,655,280 21,449,181 4,102,556 2,561,746 1,854,603 6,895,583 9,033,035 $ 59,957,698 20,098,598 22,205,153 67,537,876 30,358,768 2,499,978 362,810 412,936 534,950 460,824 752,336 2,348,553 4,342,297 4,492,161 4,256,427 2,727,058 1,462,595 6,122,335 10,821,420 $ 60,929,075 22,563,083 16,072,936 20,015,034 56,869,440 21,444,736 2,816,030 362,281 445,531 548,552 476,089 528,493 2,903,028 4,708,606 8,611,601 4,597,029 2,877,320 889,443 8,127,073 13,996,681 $ 83,613,800 30,133,124 24,070,427 20,521,457 82,727,089 20,037,984 3,179,145 547,453 488,323 687,926 558,706 870,815 3,641,333 6,066,038 8,596,785 5,969,557 3,648,975 2,677,340 3,067,647 12,091,111 $ 86,126,079 30,850,700 30,402,447 20,431,433 101,674,714 20,445,243 3,137,349 418,851 265,531 583,563 484,460 684,875 2,933,734 5,496,374 6,338,984 4,458,557 3,157,288 1,817,517 1,297,669 16,247,598 $ 78,283,021 30,542,829 21,891,886 21,238,479 115,283,119 23,494,471 4,210,261 387,723 369,153 531,651 427,828 739,884 3,101,845 5,245,105 7,107,213 3,923,486 3,443,660 2,149,363 2,383,904 16,185,139 $ 72,492,475 27,499,884 27,031,973 94,687,386 30,778,689 4,463,790 316,531 556,354 447,287 477,080 467,763 403,792 2,659,312 4,179,694 8,321,853 2,037,261 5,733,128 18,453,487 $ 76,799,591 28,156,863 31,069,618 98,915,390 25,113,273 7,456,756 356,468 78,458 476,011 338,059 462,817 910,616 2,854,168 3,934,716 5,325,401 2,102,617 2,301,194 14,894,293 208,259,773 210,630,073 212,040,319 241,754,773 249,782,061 313,195,035 337,252,966 340,940,020 301,007,739 301,546,309 Business-type activities: Water and wastewater Solid waste Golf course Cemetery 38,417,396 10,205,570 2,435,783 - 42,739,236 10,912,307 2,353,586 - 47,156,603 11,413,402 2,442,925 - 53,588,122 11,836,691 2,375,802 152,717 53,688,700 12,403,387 2,225,214 171,817 64,954,769 15,130,899 2,667,539 251,743 64,720,725 14,499,308 2,324,208 218,447 73,045,936 13,730,227 2,269,182 312,525 67,505,481 13,784,106 2,011,316 176,553 72,156,412 14,626,578 2,658,416 129,849 Total business-type activities expenses 51,058,749 56,005,129 61,012,930 67,953,332 68,489,118 83,004,950 81,762,688 89,357,870 83,477,456 89,571,255 $ 259,318,522 $ 266,635,202 $ 273,053,249 $ 309,708,105 $ 318,271,179 $ 396,199,985 $ 419,015,654 $ 430,297,890 $ 384,485,195 $ 391,117,564 Expenses Governmental activities: Police Fire Community services Parks and recreation (A) Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center (D) City clerk and elections City attorney Municipal court Development services (B) Financial and technology (C) © Financial services (C) © Human resources Information technology (C)© Non-departmental Unallocated depreciation Interest on long-term debt Total governmental activities expenses Total primary government expenses Note: (A) (B) (C) (D) In fiscal year 2010-11, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. In fiscal year 2010-11, the Development Services department was merged into Community Development. In fiscal year 2010-11, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. In fiscal year 2010-11, Tempe Learning Center was disaggregated from Human Resources. 158 Changes in Net Assets (Exhibit S-2b) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 Fiscal Year 2007-08 Fiscal Year 2008-09 Fiscal Year 2009-10 Fiscal Year 2010-11 Fiscal Year 2011-12 Program Revenues Governmental activities: Charges for services: Police Fire Community services Parks and recreation (B) Public works Community development Community relations City attorney Municipal court Development services (C)© Economic development (A) Finance and technology Financial services (D) Non-departmental Operating grants and contributions Captital grants and contributions Total governmental activities program revenues $ Business-type activities: Charges for services: Water and wastewater Solid waste Golf course Cemetery Capital grants and contributions Total business-type activities program revenues 833,378 334,773 4,996,644 4,112,610 2,711,225 2,808,889 238,226 1,469,142 83,938 13,490,697 5,098,677 36,178,199 836,081 305,964 5,213,032 5,261,301 5,857,804 2,881,155 238,417 1,378,148 59,598 14,346,903 12,589,817 48,968,220 $ 877,330 41,561 5,045,852 9,904,057 6,497,384 3,523,443 325,191 1,744,163 78,767 16,245,880 33,688,443 77,972,071 $ 877,704 566,505 5,098,319 6,594,229 637,445 7,179,554 5,566,289 1,932,684 92,827 19,903,398 54,935,929 103,384,883 $ 831,973 1,116,101 5,353,815 30,053 7,940,104 526,893 7,687,007 5,891,971 1,900,016 284,084 18,812,530 103,412,667 153,787,214 $ 1,110,714 303,824 6,924,685 27,844 11,305,217 451,535 8,211,574 6,175,963 1,728,472 79,536 15,625,633 79,670,490 131,615,487 $ 1,201,962 314,969 7,122,650 9,348 20,461,847 592,236 24,070 8,912,739 5,090,280 1,781,809 130,492 16,052,299 35,955,254 97,649,955 $ 1,052,723 912,000 6,173,870 126,455 19,596,611 1,938,184 5,868,369 3,710,512 1,997,614 18,222,849 38,709,299 98,308,486 $ 1,657,335 2,107,133 6,453,226 19,582,397 4,484,572 8,682 8,413,798 2,624,190 22,131,520 24,708,317 92,171,170 $ 1,649,775 1,642,702 7,101,043 18,136,860 7,088,168 7,826,823 2,623,338 22,450,002 15,961,785 84,480,496 43,315,681 10,496,774 1,920,699 179,754 55,912,908 42,604,532 11,014,949 2,020,132 751,525 56,391,138 44,443,764 12,054,563 1,954,278 2,835,223 61,287,828 47,012,596 12,989,827 1,971,031 18,943 506,593 62,498,990 50,922,496 13,820,128 1,912,286 18,339 4,782,425 71,455,674 53,208,327 14,669,542 1,984,429 231,960 472,928 70,567,186 55,504,216 15,130,988 1,813,578 98,356 59,867 72,607,005 62,511,102 15,242,801 1,574,081 116,643 4,765,839 84,210,466 70,094,034 15,326,780 1,562,489 110,196 1,691,429 88,784,928 73,392,328 14,866,281 2,344,355 144,242 1,988,550 92,735,756 92,091,107 $ 105,359,358 $ 139,259,899 $ 165,883,873 $ 225,242,888 $ 202,182,673 $ 170,256,960 $ 182,518,952 $ 180,956,098 $ 177,216,252 $ (161,661,853) 386,009 $ (161,275,844) $ (134,068,248) 274,898 $ (133,793,350) $ (138,369,890) (5,454,342) $ (143,824,232) $ (95,994,847) 2,966,556 $ (93,028,291) $ (181,579,548) (12,437,764) $ (194,017,312) $ (239,603,011) (9,155,683) $ (248,758,694) $ (242,631,534) (5,147,404) $ (247,778,938) $ (208,836,569) 5,307,472 $ (203,529,097) $ (217,065,813) 3,164,501 $ (213,901,312) Total primary government program revenues $ Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense $ (172,081,574) 4,854,159 $ (167,227,415) (A) (B) (C) (D) $ In fiscal year 2004-05, Economic Development merged into Community Development. In fiscal year 2010-11, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. In fiscal year 2010-11, the Development Services department was merged into Community Development. In fiscal year 2010-11, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. 159 Changes in Net Assets (Exhibit S-2c) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 $ 112,724,512 16,882,535 21,269,140 1,476,718 6,247,543 2,898,356 1,469,345 171,977 163,140,126 $ 120,075,959 14,303,004 22,580,678 1,457,085 6,427,396 2,336,129 1,681,895 6,362,790 (199,750) 175,025,186 $ 131,256,519 14,582,117 24,872,388 1,678,437 6,791,043 4,537,422 2,126,029 2,004,326 168,734 188,017,015 $ 145,109,192 16,607,943 27,532,893 1,858,851 7,527,675 8,038,565 1,864,289 1,813,311 1,149,970 211,502,689 $ 157,488,587 18,823,759 26,826,227 2,693,256 6,870,739 13,337,247 2,780,229 3,711,910 232,531,954 Fiscal Year 2007-08 Fiscal Year 2008-09 Fiscal Year 2009-10 (A) Fiscal Year 2010-11 Fiscal Year 2011-12 General revenues and other changes in net assets Governmental activities: General revenues: Sales taxes State shared income taxes, unrestricted Property taxes Franchise taxes Auto-lieu taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Transfers Total governmental activities Business-type activites: Unrestricted investment earnings Miscellaneous Gain (loss) on sale of capital assets Transfers Total business-type activities Total primary government 900,524 481,297 (171,977) 1,209,844 959,081 567,189 24,400 199,750 1,750,420 1,408,251 438,447 392,108 (168,734) 2,070,072 1,909,727 993,233 265,397 (1,149,970) 2,018,387 $ 3,305,406 716,338 48,264 (3,711,910) 358,098 150,687,016 23,332,475 32,447,203 3,424,561 6,655,516 14,041,876 2,879,878 36,146,557 149,242 269,764,324 $ 4,618,383 344,449 70,495 (149,242) 4,884,085 $ 164,349,970 $ 176,775,606 $ 190,087,087 $ 213,521,076 $ 232,890,052 $ $ (8,941,448) 6,064,003 $ (2,877,445) $ 13,363,333 2,136,429 $ 15,499,762 $ 53,948,767 2,344,970 $ 56,293,737 $ 73,132,799 (3,435,955) $ 69,696,844 $ 136,537,107 3,324,654 $ 139,861,761 $ 274,648,409 134,382,181 24,832,128 35,891,803 3,976,956 6,024,595 7,410,643 4,348,126 1,491,079 615,463 218,972,974 $ 1,940,956 262,728 231,811 (615,463) 1,820,032 125,186,698 21,406,004 37,183,541 3,559,615 5,560,791 97,660 3,429,435 17,160 (115,657) 196,325,247 $ 10,698 332,955 96,986 115,657 556,296 141,844,739 16,137,383 35,501,233 3,821,436 5,424,902 1,229,447 2,991,971 133,677 293,418 207,378,206 459,759 1,976,132 (5,563,191) (293,418) (3,420,718) $ 220,793,006 $ 196,881,543 $ $ (20,630,037) (7,335,651) (27,965,688) $ (46,306,287) (4,591,108) (50,897,395) $ 203,957,488 $ 142,985,910 13,649,203 35,899,010 3,428,125 5,437,201 822,900 3,199,954 496,911 (508,805) 205,410,409 335,297 3,032,990 40,582 508,805 3,917,674 $ 209,328,083 Changes in net assets Governmental activities Business-type activities Total primary government (A) Due to the prolonged economic downturn, in 2009-10 the City had planned drawdown of fund balance. 160 $ 88,184,776 (7,553,679) 80,631,097 $ $ $ (1,458,363) 1,886,754 428,391 $ (11,655,404) 7,082,175 $ (4,573,229) Fund Balances, Governmental Funds (Exhibit S-3) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 General fund Reserved Unreserved Nonspendable Restricted Committed Assigned Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Debt service funds (A) Special revenues funds Capital projects funds Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds $ Fiscal Year 2003-04 $ $ 2,949,516 63,670,728 66,620,244 $ 42,004,605 $ 67,312,797 29,984,703 139,302,105 Fiscal Year 2004-05 $ $ 1,963,029 72,823,641 74,786,670 $ 36,882,416 $ 64,835,343 36,375,643 138,093,402 Fiscal Year 2005-06 $ $ 3,275,943 78,064,176 81,340,119 $ 76,440,839 $ 55,470,121 21,153,248 153,064,208 Fiscal Year 2006-07 $ $ 2,376,818 94,648,961 97,025,779 $ 71,648,277 $ 66,938,765 53,752,477 192,339,519 Fiscal Year 2007-08 $ $ 4,299,060 96,883,636 101,182,696 $ 58,559,662 $ (66,826) 65,022,802 17,044,525 140,560,163 Fiscal Year 2008-09 $ $ 4,449,843 92,432,479 96,882,322 $ 69,814,938 $ 36,228,348 28,848,898 134,892,184 $ $ 1,322,728 75,647,216 76,969,944 $ 59,067,648 $ (45,374) 23,220,030 71,685,317 153,927,621 (A) In fiscal years 2006-07 and 2008-09, the special assessment debt service fund is reported in "unreserved" fund balance due to the current year deficit balance. (B) In fiscal year 2010-11, GASB No. 54 was implemented requiring additional classifications of fund balance. A deficit fund balance is reported in "unassigned". 161 Fiscal Year 2009-10 Fiscal Year 2010-11 (B) $ $ 981,529 42,832,205 43,813,734 $ 69,324,494 $ $ 32,742,748 63,078,330 165,145,572 $ $ 650,506 13,783,790 39,604,103 54,038,399 1,826,335 75,275,738 75,446,158 10,614,331 (1,097,095) 162,065,467 Fiscal Year 2011-12 $ $ $ $ 634,526 9,967,268 50,954,570 61,556,364 1,765,739 76,139,830 67,195,597 11,707,666 (1,733,419) 155,075,412 Changes in Fund Balance, Governmental Funds (Exhibit S-4a) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Revenues: Taxes Intergovernmental Investment earnings Charges for services Fines and forfeitures Other entities' participation Special assessments Licenses and permits Miscellaneous Total revenues Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 $ 112,859,765 66,221,384 2,898,356 7,660,472 6,058,944 394,803 2,835,480 1,263,163 2,806,330 202,998,697 $ 119,673,043 68,292,581 2,336,129 14,027,946 7,230,067 2,781,314 1,131,517 3,669,815 219,142,412 $ 130,779,821 94,349,370 4,537,422 14,896,580 7,742,929 78,433 2,706,951 1,250,205 4,748,157 261,089,868 $ 146,084,925 109,213,832 8,038,565 18,304,846 8,261,486 2,382,056 2,705,348 1,389,130 3,973,800 300,353,988 $ 159,569,926 127,738,319 13,337,247 20,242,897 8,407,254 2,074,553 2,610,195 1,524,891 5,061,404 340,566,686 Fiscal Year 2007-08 $ 159,798,418 102,320,894 14,041,876 23,674,598 10,148,376 1,412,155 2,842,153 1,592,521 5,486,178 321,317,169 Fiscal Year 2008-09 $ 150,848,798 143,357,538 6,393,595 31,096,490 11,516,359 1,600,100 2,860,571 1,546,287 6,168,789 355,388,527 Fiscal Year 2009-10 $ 145,038,639 111,505,248 97,660 27,866,740 11,082,812 328,147 2,783,916 1,670,698 5,968,065 306,341,925 Fiscal Year 2010-11 $ Fiscal Year 2011-12 158,749,333 87,180,913 1,229,966 30,285,327 8,235,437 622,543 3,867,979 1,666,196 7,209,565 299,047,259 $ 162,157,488 72,701,235 822,900 31,615,115 8,198,638 3,542,185 2,526,283 1,650,907 7,021,832 290,236,583 Expenditures: Police Fire Community services Parks and recreation (A) Public works Community development Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center (D) City clerk and elections City attorney Municipal court Development services (B) Finance and technology Financial services (C)© Human resources Information technology (C)© Non-departmental Debt service: Principal retirement Interest and fiscal fees Capital outlay Total expenditures 45,287,397 14,944,261 18,578,259 40,904,425 2,956,263 2,904,697 579,089 944,568 442,615 2,121,212 3,142,488 17,919,144 5,151,110 3,797,137 990,568 9,197,356 48,576,160 15,622,805 18,809,726 43,811,239 4,002,794 2,414,527 407,818 254,578 472,233 408,862 641,753 2,079,092 4,039,664 17,285,467 3,743,137 2,388,877 633,533 3,440,150 50,148,794 17,235,231 18,653,915 45,853,027 3,296,692 2,380,562 400,549 293,964 544,032 420,449 440,041 2,206,857 3,588,317 19,435,003 3,867,513 2,567,259 537,006 4,433,871 59,977,366 19,599,806 20,743,534 48,822,208 19,795,483 2,470,215 362,810 383,025 520,748 450,650 747,588 2,345,165 4,454,473 5,768,444 3,978,571 2,730,740 3,937,911 60,200,957 21,054,670 15,289,688 15,166,076 49,026,864 20,566,776 2,773,675 362,281 440,915 542,292 462,751 484,894 2,844,636 4,662,214 17,278,332 4,342,723 2,842,328 6,031,097 71,813,995 24,413,707 20,844,315 15,826,217 56,316,376 18,246,591 2,843,668 367,250 294,042 641,719 491,057 748,371 3,224,007 5,563,038 7,394,179 4,390,171 3,282,022 3,407,427 77,046,317 28,330,453 26,158,843 17,583,861 73,659,648 19,515,673 3,095,259 386,483 347,556 555,034 506,621 633,640 2,914,014 5,525,601 6,376,874 4,211,080 3,127,479 395,648 74,747,734 27,134,920 18,254,109 16,880,739 72,253,980 19,343,140 4,217,031 388,486 330,992 520,731 514,069 799,975 3,117,084 5,267,930 7,056,690 3,842,927 3,405,582 - 65,289,995 25,639,288 22,010,148 67,998,367 22,946,249 4,332,418 318,282 521,642 427,103 379,752 445,556 395,778 2,564,283 4,051,517 6,620,247 1,945,518 - 67,325,484 25,871,390 23,473,722 66,845,601 23,572,565 7,180,324 440,161 101,885 457,292 393,958 415,447 899,917 2,648,388 3,874,634 3,572,392 2,087,079 - 8,105,000 7,296,250 58,052,049 243,313,888 10,345,000 8,470,153 52,669,125 240,516,693 10,470,000 9,472,601 84,525,728 280,771,411 14,580,000 12,016,680 153,861,610 377,547,027 15,765,000 15,239,760 193,312,819 448,690,748 18,121,865 16,636,211 138,410,945 413,277,173 19,656,531 17,153,400 106,066,458 413,246,473 22,212,157 16,656,095 58,406,594 355,350,965 26,062,231 18,989,678 35,348,520 306,286,572 25,756,000 15,494,153 29,512,675 299,923,067 Deficiency of revenues over expenditures before other financing sources (uses) (40,315,191) (21,374,281) (19,681,543) (77,193,039) (108,124,062) (91,960,004) (57,857,946) (49,009,040) (A) (B) (C) (D) In fiscal year 2010-11, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. In fiscal year 2010-11, the Development Services department was merged into Community Development. In fiscal year 2010-11, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. In fiscal year 2010-11, Tempe Learning Center was disaggregated from Human Resources. 162 (7,239,313) (9,686,484) Changes in Fund Balance, Governmental Funds (Exhibit S-4b) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2002-03 Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Capital lease proceeds Proceeds from sale of capital assets Proceeds from loan Issuance of refunding bonds Payment to refunded bond escrow agent Total other financing sources Net change in fund balances Debt service as a percentage of noncapital expenditures 32,447,621 (32,275,644) 35,220,000 990,569 40,931,700 (40,500,000) 36,814,246 $ (3,500,945) 8.3% Fiscal Year 2003-04 35,261,611 (35,461,361) 30,560,000 1,861,088 633,533 8,492,867 24,945,000 (24,145,002) 42,147,736 $ 20,773,455 10.0% Fiscal Year 2004-05 40,964,257 (40,795,523) 17,680,000 537,006 2,004,326 7,000,000 27,390,066 $ 7,708,523 10.2% Fiscal Year 2005-06 23,839,365 (22,689,395) 125,845,000 1,847,396 220,940 3,090,704 132,154,010 $ 54,960,971 11.9% 163 Fiscal Year 2006-07 Fiscal Year 2007-08 37,963,787 (34,250,777) 55,640,000 1,746,522 108,464 656,603 31,655,000 (33,017,976) 60,501,623 $ (47,622,439) 12.1% 71,362,599 (71,213,357) 71,170,000 1,242,369 9,430,040 81,991,651 $ (9,968,353) 12.6% Fiscal Year 2008-09 64,230,445 (63,614,982) 45,980,000 807,728 9,577,814 56,981,005 $ Fiscal Year 2009-10 59,305,503 (59,421,161) 26,040,000 755,553 27,986 362,900 27,070,781 (876,941) $ (21,938,259) 12.0% 13.1% Fiscal Year 2010-11 Fiscal Year 2011-12 16,912,259 (16,618,841) 13,146,000 2,401,827 110,617 328,593 26,040,000 (27,936,582) 14,383,873 $ 14,383,873 16.6% 18,104,564 (18,613,369) 7,005,000 6,668,536 534,963 45,181,900 (48,667,199) 10,214,395 $ 527,911 15.3% Taxable Sales and Percentage of Taxable Sales by Category (Exhibit S-5) Last Ten Fiscal Years Cash Basis City of Tempe, Arizona Taxable Sales Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Retail $ Utilities and Telecommunications Rental 2,719,123,000 2,859,898,000 3,143,764,000 3,602,528,000 3,732,944,000 3,511,222,000 3,050,222,000 2,976,389,000 3,117,950,000 3,248,736,000 $ 906,578,000 899,688,000 917,707,000 997,198,000 1,085,111,000 1,174,056,000 1,203,889,000 1,136,889,000 1,133,200,000 1,175,200,000 $ 467,648,000 497,207,000 501,111,000 545,661,000 571,722,000 608,389,000 590,556,000 536,611,000 515,000,000 522,095,000 Restaurant $ 368,798,000 377,853,000 412,293,000 465,231,000 484,500,000 519,556,000 504,611,000 472,667,000 479,150,000 514,519,000 Hotel and Motel Contracting $ 296,741,000 340,484,000 410,634,000 523,679,000 784,444,000 738,611,000 631,556,000 400,000,000 298,450,000 341,542,000 $ 106,429,000 107,091,000 122,426,000 136,971,000 132,889,000 150,222,000 123,611,000 110,944,000 112,600,000 123,981,000 Amusements $ 91,584,000 85,961,000 97,749,000 95,181,000 82,278,000 84,222,000 87,778,000 96,167,000 89,850,000 87,663,000 All Other City Direct Sales Tax Rate Total $ 92,734,000 98,813,000 109,532,000 109,300,000 116,722,000 100,722,000 88,167,000 66,056,000 68,550,000 66,141,000 $ 5,049,635,000 5,266,995,000 5,715,216,000 6,475,749,000 6,990,610,000 6,887,000,000 6,280,390,000 5,795,723,000 5,814,750,000 6,079,877,000 Percentage of Taxable Sales Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Retail 53.85 % 54.30 55.01 55.63 53.40 50.98 48.57 51.35 53.62 53.43 Rental 17.95 % 17.08 16.06 15.40 15.52 17.05 19.17 19.62 19.49 19.33 Utilities and Telecommunications 9.26 % 9.44 8.77 8.43 8.18 8.83 9.40 9.26 8.86 8.59 Restaurant Contracting 7.30 % 7.17 7.21 7.18 6.93 7.54 8.03 8.16 8.24 8.46 5.88 % 6.46 7.18 8.09 11.22 10.72 10.06 6.90 5.13 5.60 Source: City of Tempe, Arizona Tax and License Division Note: In fiscal year 2010-11, City of Tempe, Arizona voters approved a 0.2% temporary (4 years) increase in the City sales tax. 164 Hotel and Motel 2.11 % 2.03 2.14 2.12 1.90 2.18 1.97 1.91 1.94 2.04 Amusements 1.81 % 1.63 1.71 1.47 1.18 1.22 1.40 1.66 1.55 1.44 All Other 1.84 % 1.89 1.92 1.68 1.67 1.48 1.40 1.14 1.17 1.11 Total 100 % 100 100 100 100 100 100 100 100 100 1.80 % 1.80 1.80 1.80 1.80 1.80 1.80 1.80 2.00 2.00 Direct and Overlapping Sales Tax Rates (Exhibit S-6) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 City Direct Sales Tax Rate 1.80 % 1.80 1.80 1.80 1.80 1.80 1.80 1.80 2.00 2.00 Maricopa County Sales Tax Rate 0.70 % 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 State Sales Tax Rate 5.60 % 5.60 5.60 5.60 5.60 5.60 5.60 6.60 6.60 6.60 Total Sales Tax Rate 8.10 % 8.10 8.10 8.10 8.10 8.10 8.10 9.10 9.30 9.30 Source: City of Tempe, Arizona Tax and License Division Note: In fiscal year 2009-10, State of Arizona voters approved a 1.0% increase in the State sales tax. In fiscal year 2010-11, City of Tempe, Arizona voters approved a 0.2% temporary (4 years) increase in the City sales tax. 165 General Property Tax Information (Exhibit S-7) City of Tempe, Arizona Tax Levy Limitations Beginning in 1980-81, the total tax levy is comprised of two elements: a primary levy for operating costs and a secondary levy for general obligation bond debt service requirements. The primary levy was limited to a 7% increase for 1980-81 and a 2% annual increase thereafter. In addition, the primary levy on residential property only is limited to an amount not more than 1% of market value. The secondary levy is unlimited. Assessments and Collections Since 1950-51, Maricopa County, at no charge to the cities, has assessed and collected all municipal property taxes. Remittances are made to the respective cities periodically as collections accrue. Taxes Due First installment is due October 1st; second installment is due March 1st. Taxes Payable City property taxes are payable at the office of the County Treasurer. Taxes for the first half of the year can be paid on the first of September through the first of November. Second half taxes can be paid on the first of March through the first of May. Taxes Delinquent The first half becomes delinquent on the first day of November at 5 p.m. The second half becomes delinquent on the first day of May at 5 p.m. Interest at the rate of 16% per annum attaches on the first and second installments following the delinquent dates. Tax Sale The sale of delinquent tax bills is begun on a date not earlier than February 1 nor later than March 1 following the May 1 date upon which the second half taxes become delinquent. The sale is made at public auction in the office of the County Treasurer. Tax bills are sold to the highest bidder who offers to pay the accumulated amount of tax and to charge thereon the lowest rate of interest. The maximum amount of interest allowed by law is 12% per annum. The purchaser is given a Certificate of Purchase for each parcel. Tax Deed Five years subsequent to the tax sale, the holder of a Certificate of Purchase which has not been redeemed by the delinquent property owner may demand a County Treasurer's Deed. However, at the end of three full years, a holder of a Certificate of Purchase may institute quiet title action and the court will instruct the County Treasurer to issue a County Treasurer's Deed if the suit is successful. Redemption Redemption may be made by the delinquent property owner or any interested party by payment in full of all accumulated charges at any time before issuance of the tax deed. Payment may be made to the County Treasurer. 166 City of Tempe, Arizona 167 Primary and Secondary Assessed Value and Estimated Actual Value of Taxable Property (Exhibit S-8) Last Ten Fiscal Years Rate per $100 of Assessed Value Commercial, Manufacturing, Telecommunications Property Fiscal Year 915,869,448 981,176,470 Vacant, Agricultural & Governmental Property $ 30,810,942 38,767,071 Owner Occupied Residential Property $ $ 130,945,963 136,567,526 Railroad & Airlines Property 2002-03 Primary $ Secondary 2003-04 Primary Secondary 935,290,666 1,016,813,162 28,432,421 40,528,635 461,432,599 466,917,457 139,596,174 153,014,453 1,695,416 1,829,752 2004-05 Primary Secondary 1,013,975,894 1,094,932,248 28,432,421 37,741,236 461,432,599 472,792,985 146,840,125 152,253,913 2,973,252 3,347,552 2005-06 Primary Secondary 1,245,827,301 1,303,026,577 238,624,198 282,897,988 499,989,878 528,444,640 163,440,750 175,658,220 2,770,242 3,046,217 2006-07 Primary Secondary 1,306,192,761 1,392,698,031 249,763,558 335,482,079 515,469,816 523,973,749 175,924,392 182,197,200 3,008,952 3,198,718 2007-08 Primary Secondary 1,369,975,785 1,487,353,047 287,255,556 386,956,732 587,620,345 782,035,308 191,632,935 240,647,400 3,284,085 3,652,041 2008-09 Primary Secondary 1,416,640,407 1,605,563,621 326,359,399 439,585,924 674,491,736 901,618,735 218,810,180 291,324,398 3,043,548 3,447,472 2009-10 Primary Secondary 1,518,486,978 1,746,634,264 443,398,023 610,147,603 747,601,586 840,563,032 265,780,915 326,620,717 2,656,174 3,162,023 2010-11 Primary Secondary 1,516,407,070 1,634,522,147 491,365,479 598,845,876 714,116,748 718,136,239 297,885,542 321,946,932 2,487,354 2,984,727 2011-12 Primary Secondary 1,215,073,855 1,225,527,325 507,897,174 558,393,732 601,231,081 601,912,854 260,011,506 261,295,232 2,447,610 2,740,384 Source: Az Dept of Revenue - State and Country Abstract of the Assessment Roll Note 1: Beginning in 1980-81, the total tax levy is comprised of two elements: a primary levy for operating costs and a secondary levy for general obligation bond debt service requirements. The primary levy was limited to a 7% increase for 1980-81 and a 2% annual increase thereafter. In addition, the primary levy on residential property only is limited to an amount not more than 1% of market value. The secondary levy is unlimited. (A) Assessed values are shown net of tax-exempt property for fiscal year 2002-03 through 2004-05. 168 384,928,341 388,897,351 Rental Residential Property $ 1,639,351 1,737,214 City of Tempe, Arizona Non-commercial Historic Property $ 9,336,275 9,346,662 Less: Tax-Exempt Property (A) $ N/A N/A Total Taxable Assessed Value $ Total Direct Tax Rate 1,473,530,320 $ 1,556,492,294 0.52 0.83 Estimated Actual Taxable Value $ Assessed Value as a Percentage of Actual Value 10,505,677,932 9,669,307,443 14.03 % 16.10 9,128,538 9,348,956 N/A N/A 1,575,575,814 1,688,452,415 0.55 0.80 11,424,612,316 10,779,997,040 13.79 15.66 7,538,097 7,809,451 N/A N/A 1,661,192,388 1,768,877,385 0.53 0.82 12,379,112,416 11,034,323,885 13.42 16.03 1,229,232 1,426,854 350,861,051 390,074,308 1,801,020,550 1,904,426,188 0.52 0.88 13,289,932,548 14,207,441,131 13.55 13.40 1,341,770 1,448,936 356,496,779 432,295,381 1,895,204,470 2,006,703,332 0.52 0.88 13,995,714,438 15,035,677,275 13.54 13.35 5,569,454 6,404,967 413,757,218 505,151,029 2,031,580,942 2,401,898,466 0.51 0.89 15,428,450,636 18,964,996,979 13.17 12.66 5,628,185 7,346,018 480,062,120 591,937,974 2,164,911,335 2,656,948,194 0.51 0.89 17,268,165,844 21,784,820,579 12.54 12.20 5,489,270 7,160,219 601,138,220 766,798,994 2,382,274,726 2,767,488,864 0.49 0.91 19,944,626,693 23,547,502,463 11.94 11.75 6,031,888 8,869,602 664,036,520 772,654,291 2,364,257,561 2,512,651,232 0.52 0.88 20,571,191,970 22,071,142,609 11.49 11.38 5,848,137 7,897,668 652,320,790 700,438,585 1,940,188,573 1,957,328,610 0.66 1.13 15,987,591,189 16,128,348,415 12.14 12.14 169 Property Tax Rates - All Direct and Overlapping Governments (Exhibit S-9) Last Ten Fiscal Years Rate per $100 of Assessed Value Fiscal Year City of Tempe (A) Tempe Union Schools Tempe Elementary (B) Cou East Valley Institute of Technology Maricopa County Community College 2002-03 Primary Secondary Total 0.52 0.83 1.35 2.19 1.13 3.32 3.32 0.95 4.27 0.06 0.06 1.21 0.08 1.29 0.96 0.15 1.11 2003-04 Primary Secondary Total 0.55 0.80 1.35 2.24 1.05 3.29 3.10 1.10 4.20 0.05 0.05 1.21 0.07 1.28 0.94 0.14 1.08 2004-05 Primary Secondary Total 0.53 0.82 1.35 2.05 0.99 3.04 2.90 1.09 3.99 0.05 0.05 1.21 1.21 0.92 0.12 1.04 2005-06 Primary Secondary Total 0.52 0.88 1.40 1.73 0.92 2.65 2.90 1.08 3.98 0.06 0.06 1.20 1.20 0.89 0.14 1.03 2006-07 Primary Secondary Total 0.52 0.88 1.40 1.74 0.89 2.63 2.61 1.38 3.99 0.05 0.05 1.18 1.18 0.88 0.18 1.06 2007-08 Primary Secondary Total 0.51 0.89 1.40 1.75 0.76 2.51 2.59 1.23 3.82 0.05 0.05 1.10 1.10 0.82 0.15 0.97 2008-09 Primary Secondary Total 0.51 0.89 1.40 1.76 0.52 2.28 2.43 1.08 3.51 0.05 0.05 1.03 1.03 0.78 0.16 0.94 2009-10 Primary Secondary Total 0.49 0.91 1.40 1.48 0.74 2.22 2.14 1.14 3.28 0.05 0.05 0.99 0.99 0.72 0.16 0.88 2010-11 Primary Secondary Total 0.52 0.88 1.40 1.47 0.83 2.30 2.31 1.29 3.60 0.05 0.05 1.05 1.05 0.79 0.18 0.97 2011-12 Primary Secondary Total 0.66 1.13 1.79 1.61 0.96 2.57 2.65 1.34 3.99 0.05 0.05 1.24 1.24 1.01 0.20 1.21 Source: Maricopa County Assessor's Office Maricopa County Tax Levies & Rates Publication (A) Primary levies are limited to a 2% increase annually plus levies attributable to assessed valuation added as a result of growth and annexation. Secondary tax levies do not have a limitation. (B) Tempe property owners residing within the Kyrene Elementary School District No. 28, Scottsdale Unified School District No. 48 or Mesa Unified School District No. 4 have combined rates of $10.74, $7.99 or $9.21, respectively. Also, see the Net Direct and Overlapping General Obligation Bonded Debt Schedule (Exhibit S15). 170 City of Tempe, Arizona County Ed Equalization Rate County-Wide Jurisdiction Central Fire Flood Arizona District District Project Assistance County Free Library District 0.49 0.49 0.21 0.21 0.13 0.13 0.01 0.01 - 0.47 0.47 0.21 0.21 0.12 0.12 0.01 0.01 - 0.46 0.46 0.21 0.21 0.12 0.12 0.01 0.01 - 0.44 0.44 0.21 0.21 0.12 0.12 0.01 0.01 - - 0.20 0.20 0.12 0.12 0.01 0.01 - - 0.15 0.15 0.10 0.10 0.01 0.01 - - 0.14 0.14 0.10 0.10 0.01 0.01 - 0.33 - 0.14 0.14 0.10 0.10 0.01 0.01 - 0.36 0.36 0.15 0.15 0.10 0.10 0.01 0.01 - 0.43 0.43 0.18 0.18 0.10 0.10 0.01 0.01 - 171 Special Health Care District Total 0.04 0.04 - 8.69 3.59 12.28 0.05 0.05 - 8.51 3.60 12.11 0.05 0.05 - 8.07 3.46 11.53 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.05 0.05 - - - - - - - 0.12 0.12 7.68 3.59 11.27 0.12 0.12 6.93 3.88 10.81 0.09 0.09 6.77 3.47 10.24 0.09 0.09 6.51 3.08 9.59 0.09 0.09 6.15 3.38 9.53 0.11 0.11 6.50 3.64 10.14 0.15 0.15 7.60 4.17 11.77 Property Tax Levies - All Direct and Overlapping Governments (Exhibit S-10) Last Ten Fiscal Years Fiscal Year City of Tempe Tempe Union Schools Tempe Elementary (A) East Valley Institute of Technology $ Maricopa County Community College 6,175,823 6,175,823 $ 277,949,612 19,565,638 297,515,250 $ 221,156,802 36,526,312 257,683,114 2002-03 Primary Secondary Total $ 7,682,987 12,897,095 20,580,082 $ 56,994,879 31,162,656 88,157,535 $ 40,319,642 12,272,916 52,592,558 2003-04 Primary Secondary Total 8,621,551 13,554,896 22,176,447 63,921,636 32,236,303 96,157,939 40,269,326 15,349,563 55,618,889 6,429,195 6,429,195 308,122,580 19,234,591 327,357,171 239,464,278 37,777,314 277,241,592 2004-05 Primary Secondary Total 8,792,691 14,517,177 23,309,868 62,191,787 32,057,837 94,249,624 39,486,342 15,894,306 55,380,648 6,507,464 6,507,464 339,882,099 339,882,099 258,560,787 34,904,190 293,464,977 2005-06 Primary Secondary Total 9,413,934 16,707,531 26,121,465 56,658,831 31,948,408 88,607,239 43,132,854 17,095,540 60,228,394 8,400,949 8,400,949 371,224,118 371,224,118 277,107,904 45,791,129 322,899,033 2006-07 Primary Secondary Total 9,822,845 17,693,103 27,515,948 59,625,270 32,003,893 91,629,163 40,935,824 22,931,797 63,867,621 7,877,526 7,877,526 398,725,245 398,725,245 298,014,922 66,462,148 364,477,070 2007-08 Primary Secondary Total 10,371,221 21,364,887 31,736,108 65,184,130 34,707,242 99,891,372 43,415,950 23,923,712 67,339,662 10,940,725 10,940,725 430,023,735 430,023,735 321,018,986 74,981,944 396,000,930 2008-09 Primary Secondary Total 10,976,100 23,726,547 34,702,647 71,503,299 26,355,087 97,858,386 42,985,150 23,151,705 66,136,855 12,032,028 12,032,028 463,492,311 463,492,311 347,905,170 95,293,956 443,199,126 2009-10 Primary Secondary Total 11,665,890 25,192,451 36,858,341 65,733,950 39,195,990 104,929,940 41,787,151 25,976,662 67,763,813 12,586,167 12,586,167 492,230,736 492,230,736 359,942,153 92,685,846 452,627,999 2010-11 Primary Secondary Total 12,238,972 22,174,672 34,413,644 64,028,512 38,435,006 102,463,518 44,984,350 26,867,644 71,851,994 10,970,238 10,970,238 492,224,342 492,224,342 371,276,183 89,482,591 460,758,774 2011-12 Primary Secondary Total 12,751,029 22,100,197 34,851,226 58,076,820 34,886,097 92,962,917 41,459,414 21,157,373 62,616,787 8,672,478 8,672,478 477,571,468 477,571,468 389,655,514 75,935,239 465,590,753 Source: Maricopa County Assessor's Office Maricopa County Tax Levies and Rates Publication (A) For levies for Tempe property owners residing within Kyrene, Scottsdale or Mesa School Districts, see the Net Direct and Overlapping General Obligation Bonded Debt Schedule (Exhibit S-15). (B) District which had its first secondary tax levy set in FY 2005-06. 172 City of Tempe, Arizona Flood District County-Wide Jurisdictions County Ed Central Equalization Arizona Rate Project Fire District Assistance County Free Library District Special Health Care District (B) $ 1,859,466 1,859,466 $ 10,296,417 10,296,417 $ $ 44,868,063 44,868,063 $112,231,223 112,231,223 $ 31,805,013 31,805,013 51,153,993 51,153,993 120,037,513 120,037,513 33,010,980 33,010,980 1,931,237 1,931,237 56,334,141 56,334,141 128,003,169 128,003,169 36,112,556 36,112,556 62,733,411 62,733,411 135,142,821 135,142,821 67,096,622 67,096,622 Total - $ 716,335,145 207,429,399 923,764,544 14,316,032 14,316,032 - 780,436,884 224,994,104 1,005,430,988 2,084,229 2,084,229 15,664,900 15,664,900 - 836,916,875 214,076,800 1,050,993,675 39,800,085 39,800,085 2,276,200 2,276,200 17,295,751 17,295,751 40,000,000 40,000,000 892,680,462 282,049,004 1,174,729,466 - 43,585,607 43,585,607 2,466,637 2,466,637 18,401,410 18,401,410 40,000,000 40,000,000 807,124,106 318,518,743 1,125,642,849 70,422,870 70,422,870 - 49,730,785 49,730,785 2,631,597 2,631,597 19,368,018 19,368,018 46,310,880 46,310,880 870,014,022 354,382,660 1,224,396,682 74,674,333 74,674,333 - 58,315,605 58,315,605 3,105,495 3,105,495 20,581,183 20,581,183 49,923,129 49,923,129 936,862,030 387,159,068 1,324,021,098 74,996,804 74,996,804 164,225,937 - 58,113,465 58,113,465 3,324,489 3,324,489 20,468,370 20,468,370 53,018,363 53,018,363 1,135,585,817 405,558,607 1,541,144,424 68,019,592 68,019,592 166,947,807 166,947,807 49,581,306 49,581,306 3,265,310 3,265,310 20,479,676 20,479,676 55,722,300 55,722,300 1,151,700,166 384,998,335 1,536,698,501 62,401,172 62,401,172 163,937,848 163,937,848 38,781,832 38,781,832 3,251,752 3,251,752 19,070,066 19,070,066 57,895,470 57,895,470 1,143,452,093 344,151,676 1,487,603,769 173 Property Tax Levies and Collections (Exhibit S-11) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Source: Total Tax Levy For Fiscal Year (A) $ 20,453,121 22,154,599 23,739,716 26,366,507 27,385,069 31,520,944 35,130,400 37,081,738 34,455,730 34,856,232 Adjustments $ (380,418) (564,888) (678,783) (950,618) (860,618) (321,833) (348,663) (677,453) (573,426) (283,616) Collected within the Fiscal Year of the Levy % of Amount Original Levy Adjusted Tax Levy For Fiscal Year $ 20,072,703 21,589,711 23,060,933 25,415,889 26,524,451 31,199,111 34,781,737 36,404,285 33,882,304 34,572,616 $ 19,789,415 21,283,933 23,122,629 25,519,585 26,185,044 30,686,950 33,987,393 35,581,096 33,299,312 33,860,185 96.8 % 96.1 97.4 96.8 95.6 97.4 96.7 96.0 96.6 97.1 $ 254,752 276,410 (83,334) (129,865) 315,253 498,020 744,920 768,211 544,955 - Maricopa County Treasurer (A) The amounts listed in this column do not tie directly to the amount listed in Exhibit S-10 for City of Tempe for total of Primary and Secondary Property Tax Levy. Due to a timing difference, the amount listed on the Maricopa County Secured Tax Levy Report, from the Maricopa County Treasurer's office, is at the time the levy is placed on the Tax Levy report (in May/June when the property tax rate is set). The amount listed on the Secured Tax Levy Report, from the Maricopa County Treasurer's office, is at the time the levy is placed on the actual tax rolls in August. (B) Negative collections are due to successful tax protests being higher than actual tax payments being made. 174 Total Collections to Date % of Amount Adjusted Levy Collections in Subsequent Years (B) $ 20,044,167 21,560,343 23,039,295 25,389,720 26,500,297 31,184,970 34,732,313 36,349,307 33,844,267 33,860,185 99.9 % 99.9 99.9 99.9 99.9 100.0 99.9 99.8 99.9 97.9 Principal Tax Payers (Exhibit S-12a) Property Tax Current Year and Nine Years Prior City of Tempe, Arizona Taxable Secondary Assessed Value Taxpayer Arizona Mills LLC Arizona Public Service Company Qwest Corporation (formerly US West) Verizon Wireless Honeywell Tempe Fountainhead Corporate LLC RP HFL LLC State Farm Mutual Auto Insurance Target Corporation Freescale Semiconductor Inc. Motorola, Incorporated Britcher Arizona AT&T Microchip Technology Allied Signal Kimco Realty Corp. $ 25,894,140 21,682,164 16,730,117 15,643,680 13,300,547 10,737,308 9,782,648 9,353,944 8,567,508 8,459,601 - Total $ 140,151,657 Fiscal Year 2011-12 Rank 1 2 3 4 5 6 7 8 9 10 - Source 2011-12: RBC Capital Markets Source 2002-03: Maricopa County Assessor's Office 175 Percentage of Total City Secondary Taxable Assessed Value Taxable Secondary Assessed Value 1.32 % 1.11 0.85 0.80 0.68 0.55 0.50 0.48 0.44 0.43 - $ 24,946,645 17,931,196 30,188,843 12,151,085 36,999,282 13,505,779 10,830,550 9,051,783 8,640,964 8,214,869 7.16 % $ 172,460,996 Fiscal Year 2002-03 Rank 3 4 2 6 1 5 7 8 9 10 Percentage of Total City Secondary Taxable Assessed Value 1.60 % 1.15 1.94 0.78 2.38 0.87 0.70 0.58 0.56 0.53 11.09 % Principal Tax Payers (Exhibit S-12b) Sales and Use Tax Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2011-12 Taxpayer Business Type Taxpayer A Taxpayer B Taxpayer C Taxpayer D Taxpayer E Taxpayer F Taxpayer G Taxpayer H Taxpayer I Taxpayer J Taxpayer K Taxpayer L Taxpayer M Taxpayer N Utility Grocery Stores Mixed Retail Mixed Retail Mixed Retail Electronics/Software Auto Sales Electronics/Software Hotel Utility Auto Sales Auto Sales Auto Sales Telecommunications Total Sales and Use Tax Payments $ 5,716,403 2,906,208 2,396,180 2,158,154 2,013,770 1,759,803 1,613,021 1,270,017 1,110,729 1,086,743 Rank 1 2 3 4 5 6 7 8 9 10 $ 22,031,028 Fiscal Year 2002-03 Percentage of Total Sales and Use Tax Payments Sales and Use Tax Payments 4.00 % 2.03 1.68 1.51 1.41 1.23 1.13 0.89 0.78 0.76 - $ 15.41 % $ 4,023,912 2,329,386 1,099,048 1,943,737 1,755,550 1,719,623 1,412,548 1,296,320 1,096,155 1,003,334 Rank Percentage of Total Sales and Use Tax Payments 1 2 8 3 4 5 6 7 9 10 17,679,613 Source: City of Tempe, Arizona Tax and License Division Note: The identities of the ten largest revenue payers are prohibited from disclosure per State Statute. The business type of the top ten taxpayers has been disclosed along with the appropriate data. 176 3.57 % 2.07 0.97 1.72 1.56 1.53 1.25 1.15 0.97 0.89 15.68 % Excise Tax Collections (Exhibit S-13) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2002-03 Privilege and use tax (A) $ 59,379,586 Fiscal Year 2003-04 $ 62,884,508 Fiscal Year 2004-05 $ 68,533,088 Fiscal Year 2005-06 $ 77,080,250 Fiscal Year 2006-07 $ 86,750,870 Fiscal Year 2007-08 $ 81,108,518 Fiscal Year 2008-09 $ 74,295,074 Fiscal Year 2009-10 $ 69,043,642 Fiscal Year 2010-11 $ 83,258,888 Fiscal Year 2011-12 $ 84,937,373 State shared sales tax 12,405,713 13,345,152 14,695,069 16,810,760 15,758,491 15,237,310 13,191,255 12,167,009 12,656,738 12,636,771 State shared income tax 16,882,535 14,303,004 14,582,117 16,607,943 18,823,759 25,401,762 24,832,128 21,406,004 16,137,383 13,649,203 Franchise tax 1,531,714 1,505,133 1,678,437 1,858,851 2,693,256 3,424,560 3,980,674 3,559,615 3,821,436 3,428,125 Permits and Fees (B) 3,731,523 3,722,079 4,643,117 6,708,183 7,300,676 7,812,768 7,227,027 6,171,045 5,491,077 7,139,843 Fines and forfeitures 5,510,476 5,831,133 6,651,934 7,287,717 7,219,328 8,616,319 9,200,777 7,108,900 7,576,496 7,731,585 $ 99,441,547 $ 101,591,009 $ 110,783,762 $ 126,353,704 $ 138,546,380 $ 141,601,237 $ 132,726,935 $ 119,456,216 $ 128,942,018 $ 129,522,900 Total Source: City of Tempe, Arizona Comprehensive Annual Financial Report City of Tempe, Arizona "Revenue and Expenditure by Account by Fund" report. (A) Amounts exclude the 0.5% Excise Tax approved by voters on September 10, 1996 as a dedicated "transit tax", the 0.1% Performing Arts Center Tax approved by voters in September 2000, and the 1.0% increase in the transient lodging tax on hotels approved by the voters in September 2002, which are restricted to fund programs of the Tempe Convention and Visitor's Bureau. (B) Amounts include all licenses/permits and Community Development and Public Works fees/charges for services. 177 Percent of Net Direct Debt to Assessed Valuation and Net Direct Debt per Capita (Exhibit S-14) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Governmental General Obligation Debt $ 90,395,000 91,640,000 99,880,000 117,610,000 116,500,000 125,075,000 156,265,000 172,665,000 166,680,000 162,200,000 Less: Debt Service Reserves Net Direct Debt $ 13,471,704 13,335,706 15,991,147 18,547,848 17,607,767 23,858,992 31,844,188 38,126,393 34,718,252 35,360,470 $ 76,923,296 78,304,294 83,888,853 99,062,152 98,892,233 101,216,008 124,420,812 134,538,607 131,961,748 126,839,530 Secondary Assessed Valuation (A) $ 1,556,492,294 1,688,452,415 1,768,877,385 1,904,426,188 2,006,703,332 2,401,898,466 2,656,948,194 2,767,488,864 2,512,995,468 1,957,328,610 Percent of Net Direct Debt To Assessed Valuation 4.9 % 4.6 4.7 5.2 4.9 4.2 4.7 4.9 5.3 6.5 Net Direct Debt Per Capita Population (B) 159,425 159,615 160,820 165,796 166,625 167,458 172,641 174,833 161,719 163,989 $ Note: General obligation debt for business-type activities is not paid by secondary property taxes and therefore is not included on this schedule. Source: (A) Assessed valuation from Maricopa County Assessor's Office (B) Estimate Population from estimates City of Tempe, from Maricopa ArizonaAssociation Budget Division of Governments 178 482.50 490.58 521.63 597.49 593.50 604.43 720.69 769.53 815.99 773.46 Net Direct and Overlapping General Obligation Bonded Debt (Exhibit S-15) City of Tempe, Arizona 2011-12 Secondary Assessed Valuation Jurisdiction Net Bonded Debt 2011-12 Combined Tax Rate Per $100 Assessed Portion Applicable To City of Tempe Percent Amount Net Direct City of Tempe - General (net) Overlapping State of Arizona Maricopa County Maricopa County Community College Tempe Elementary School District No. 3 Mesa Unified School District No. 4 Kyrene Elementary School District No. 28 Scottsdale Unified School District No. 48 Tempe Union High School District No. 213 East Valley Institute of Technology Total overlapping debt $ 1,957,328,610 $ 61,000,292,915 38,760,296,714 38,760,296,714 1,582,122,127 3,076,711,654 2,052,736,876 4,960,210,513 3,634,859,003 17,344,956,554 Total net direct and overlapping debt 126,839,530 (A) None None 671,250,000 129,200,000 244,095,000 132,155,000 311,050,000 62,560,000 None 1,550,310,000 $ 1,677,149,530 100.00 % $ N/A N/A 5.05 82.93 0.77 29.61 0.28 53.85 11.28 126,839,530 None None 33,898,125 107,145,560 1,879,532 39,131,096 870,940 33,688,560 None 216,613,813 $ $ 1.79 N/A N/A 1.21 3.99 5.22 6.75 4.00 2.57 0.05 343,453,343 (B) Source: RBC Capital Markets and Maricopa County Assessor City of Tempe, Arizona Budget Division Note: The applicable percentage of each jurisdiction's assessed valuation which lies within the City's boundaries (see "Percent" column above) was derived from information obtained from the County Assessor's Office. (A) Total outstanding general obligation less debt service fund reserve. (B) Excludes the outstanding principal amount of Maricopa County Hospital District No.1 general obligation bonds, as this obligation has historically and is presently being paid from revenues generated from the operations of the District. 179 Legal Debt Margin Information (Exhibit S-16) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2002-03 Fiscal Year 2003-04 Fiscal Year 2004-05 Fiscal Year 2005-06 Fiscal Year 2006-07 Assessed Valuation $ 1,556,492,294 $ 1,688,452,415 $ 1,768,877,385 $ 1,904,426,188 $ 2,006,703,332 $ 2,401,898,466 20% Limitation Debt limit equal to 20% of assessed valuation $ $ $ $ $ $ 480,379,693 Total net debt applicable to 20% limit Legal 20% debt margin (available borrowing capacity) 129,580,000 $ Total net debt applicable to the 20% limit as a percentage of 20% debt limit 6% Limitation Debt limit equal to 6% of assessed valuation Total net debt applicable to the 6% limit as a percentage of 6% debt limit 181,718,459 $ 93,389,538 $ 24,019,538 74.28% 195,505,483 $ 101,307,145 $ 35,617,145 64.84% 179,510,477 $ 106,132,643 $ 32,597,643 69.29% 161,420,238 $ 114,265,571 $ 21,965,571 80.78% 29,375,666 $ 120,402,200 117,337,200 2.55% Source: Maricopa County Assessor's Office City of Tempe, Arizona Accounting Division Note: Effective with fiscal years beginning 2006-07, general obligation bonded debt for transportation and public safety purposes became subject to the 20% debt limitation. Previously, general obligation debt issued for these purposes was subject to the 6% debt limitation. 180 $ Fiscal Year 2009-10 Fiscal Year 2010-11 Fiscal Year 2011-12 $ 2,656,948,194 $ 2,767,488,864 $ 2,512,995,468 $ 1,957,328,610 $ $ $ $ 55,704,693 $ 144,113,908 $ 142,658,908 1.01% 69,134,638 $ 159,416,891 $ 158,021,891 0.88% 61,344,067 $ 166,049,332 $ 157,764,332 4.99% 27,711,549 $ 150,779,728 $ 142,449,728 5.52% - 114.00% $ 8,330,000 $ 391,465,722 446,276,092 94.49% 8,285,000 $ 502,599,094 474,887,545 88.92% 1,395,000 $ 553,497,773 492,153,706 86.99% 1,455,000 $ 531,389,638 462,255,000 88.40% 3,065,000 $ Fiscal Year 2008-09 424,675,000 92.68% 92,300,000 $ 401,340,666 371,965,000 57.62% 73,535,000 $ 380,885,238 219,465,000 49.26% 65,690,000 $ 353,775,477 174,265,000 42.11% 69,370,000 $ 337,690,483 142,185,000 41.63% Total net debt applicable to 6% limit Legal 6% debt margin (available borrowing capacity) 311,298,459 Fiscal Year 2007-08 117,439,717 15,030,000 $ 102,409,717 12.80% Remaining General Obligation Bond Authorizations (Exhibit S-17) City of Tempe, Arizona 2008 Program Water / Wastewater Authorization $ 113,300,000 WIFA Funding (A) 18,130,302 Prior Issues $ 36,095,000 Current Year Issue Remaining Authorization - 59,074,698 Streets / Transportation/Storm Drains 44,200,000 - 1,080,000 2,915,000 40,205,000 Public Safety - Police/Fire 32,010,000 - 8,995,000 2,175,000 20,840,000 Community Services/Park Improvements 51,800,000 - 15,025,000 1,915,000 34,860,000 $ 61,195,000 $ 7,005,000 $ 154,979,698 Total $ 241,310,000 $ 18,130,302 Source: City of Tempe, Arizona Finance and Technology Department (A) The WIFA funding includes a "forgivable" principal portion of $2.2 million. Per the loan agreement, the forgivable portion could be added back should the City not comply with the terms of the agreement. As some of the terms are not fulfilled until the end of the loan period, the forgivable portion will continue to utilize authorization until the loan is paid off (FY 2028-29). At that time, the authorization will be restored. 181 Pledged-Revenue Coverage (Exhibit S-18) Last Ten Fiscal Years City of Tempe, Arizona Special Assessment Bonds Special Assessment Collections Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 $ 2,839,171 $ 2,781,576 2,709,851 2,705,348 2,610,195 2,842,153 2,860,571 2,783,916 3,867,979 2,526,283 Debt Service (D) Excise Tax Revenue Obligations Excise Tax Revenue Collections (A) Coverage 2,861,902 2,821,905 2,704,827 2,866,617 3,023,174 4,066,900 4,094,274 4,796,008 4,697,441 3,469,611 0.99 0.99 1.00 0.94 0.86 0.70 0.70 0.58 0.82 0.73 $ Performing Arts Excise Tax Obligations 0.1% Privilege and Use Tax Collections (B) Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 $ 5,010,393 $ 5,279,580 5,768,058 6,480,218 7,007,790 6,820,193 6,158,761 5,749,649 5,979,900 6,236,500 Debt Service (D) Coverage 891,432 710,448 3,524,316 6,017,247 6,021,476 6,009,925 6,012,725 6,005,626 6,016,226 5,377,764 5.62 7.43 1.64 1.08 1.16 1.13 1.02 0.96 0.99 1.16 99,441,547 $ 101,591,009 110,783,762 126,353,704 138,546,380 141,601,237 132,726,935 119,456,216 128,942,018 129,522,900 Debt Service (D) Coverage 3,457,746 4,497,682 4,495,011 5,737,352 5,783,921 5,626,868 6,177,704 6,760,138 6,761,359 9,399,739 28.76 22.59 24.65 22.02 23.95 25.17 21.48 17.67 19.07 13.78 Transit Excise Tax Obligations 0.5% Privilege and Use Tax Collections (C) $ 25,140,826 $ 26,740,623 28,848,493 32,440,082 34,971,294 32,449,710 29,850,942 27,891,084 29,012,370 30,172,338 Debt Service (D) Coverage 3,301,829 5,092,190 5,449,867 4,356,904 4,428,049 4,410,547 10.59 6.37 5.48 6.40 6.55 6.84 Source: City of Tempe, Arizona Accounting Division (A) Excise tax revenue collections include privilege and use tax, state shared privilege and use tax, state shared income tax, franchise tax, permits and fees, and fines and forfeitures. Note that the privilege and use tax exclude the 0.5% excise tax approved by voters on September 10, 1996 as a dedicated "transit tax", the 0.1% Performing Arts Center Tax approved by voters in September 2000, and the 1.0% increase in the transient lodging tax on hotels approved by the voters in September 2002, which are restricted to fund programs of the Tempe Convention and Visitor's Bureau. (B) The 0.1% privilege and use tax is a Performing Arts Center Tax approved by voters in September 2000. (C) The 0.5% privilege and use tax is a Transit Tax approved by voters in September 1996. (D) The debt service amount does not include fiscal agent fees. 182 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-19) Excise Tax Obligations (Excluding Transit Excise Tax Obligations) City of Tempe, Arizona Senior Excise Tax Obligations 2011-12 Pledged Excise Tax Revenues (A) Fiscal Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 $ 129,522,900 Subordinate Excise Tax Obligations Outstanding Senior Excise Tax Outstanding Obligations Senior Excise Tax Debt Service Obligations Requirements (B) Coverage (C) $ 9,399,739 9,244,702 9,182,403 9,177,453 10,210,665 10,068,921 10,077,999 10,078,650 10,079,700 9,473,570 9,467,585 9,398,290 6,444,806 13,735,245 4,284,935 4,283,465 4,278,960 4,281,959 2,491,750 2,493,750 13.78 14.01 14.11 14.11 12.69 12.86 12.85 12.85 12.85 13.67 13.68 13.78 20.10 9.43 30.23 30.24 30.27 30.25 51.98 51.94 Revenue Available for Debt Service (D) $ Outstanding Subordinate Excise Tax Obligations Debt Service Requirements (E) 126,359,661 $ Coverage (F) 5,377,764 5,922,350 5,918,250 5,919,026 5,921,676 3,427,850 3,428,850 3,428,100 3,433,850 - 23.50 21.34 21.35 21.35 21.34 36.86 36.85 36.86 36.80 - Source: City of Tempe, Arizona Accounting Division (A) Excise Tax Revenues received by the City in fiscal year 2011-12. See Excise Tax Collection schedule (Exhibit S-13). (B) Includes the annual debt service requirements of the City of Tempe, Arizona Excise Tax Refunding Obligations, Series 2003, currently outstanding in the principal amount of $1,830,000; the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2005, currently outstanding in the principal amount of $2,725,000 and the City of Tempe, Arizona Excise Tax Revenue Refunding Obligations, Series 2007, currently outstanding in the principal amount of $20,810,000; the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2009A+B, currently outstanding in the principal amount of $21,190,000; the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2011A+B, currently outstanding in the principal amount of $38,095,000; the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2012, currently outstanding in the principal amount of $30,500,000. Debt service requirements do not include fiscal fees. (C) The estimated coverage figures shown reflect the ratio of actual fiscal year 2011-12 excise tax revenues to total debt service requirements for the City's revenue bonds. (D) Consists of Performing Arts Center Excise Taxes and Excise Taxes (net of maximum annual debt service on Outstanding Senior Excise Tax Obligations) received in fiscal year 2011-12. (E) Includes the annual debt service requirements of the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2004, currently outstanding in the principal amount of $4,800,000; the City of Tempe, Arizona Excise Tax Revenue Obligations, Series 2006, currently outstanding in the principal amount of $8,955,000; the City of Tempe, Arizona Excise Tax Refunding Obligations, Series 2011, currently outstanding in the principal amount of $18,065,000. Debt service requirements do not include fiscal fees. (F) Pursuant to the Purchase Agreement, the City agrees that the Performing Arts Center Excise Taxes and the Excise Taxes presently imposed will continue to be imposed so that the amount of Performing Arts Center Excise Taxes and the Excise Taxes (net of maximum annual debt service on the Outstanding Senior Excise Tax Obligations) collected for any fiscal year shall be equal to at least three times the total Debt Service requirements for the Obligations and other Parity Obligations in such fiscal year. 183 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-20) Transit Excise Tax Obligations City of Tempe, Arizona Senior Excise Tax Obligations 2011 Pledged Excise Tax Revenues (A) Fiscal Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35 2035-36 2036-37 2037-38 $ 30,172,338 Outstanding Senior Excise Tax Obligations Debt Service Requirements (B) $ Outstanding Senior Excise Tax Obligations Coverage (C) 4,439,463 4,529,732 4,629,129 4,720,896 4,826,733 4,929,747 5,041,371 5,151,781 5,270,783 5,403,359 5,532,643 5,659,785 5,804,077 5,946,348 6,091,600 6,253,480 6,417,552 6,578,568 6,761,530 6,941,150 7,132,426 7,335,092 7,538,882 7,752,534 7,977,228 4,687,935 1,895,975 6.80 6.66 6.52 6.39 6.25 6.12 5.98 5.86 5.72 5.58 5.45 5.33 5.20 5.07 4.95 4.82 4.70 4.59 4.46 4.35 4.23 4.11 4.00 3.89 3.78 6.44 15.91 Source: RBC City ofCapital Tempe, Markets Arizona Accounting Division (A) Excise Tax Revenues received by the City in Fiscal Year 2011-12. (B) Includes the annual debt service requirements of the City of Tempe, Arizona Transit Variable Rate Revenue Bond Series 2006 and Series 2007 currently outstanding in the principal amount of $53,670,000 and $45,295,000 respectively. Interest is assumed at a rate of 0.18% per annum through maturity. Also includes annual debt service requirements for the Series 2008 City of Tempe, Arizona Transit Excise Tax Revenue Obligations in the principal amount of $27,990,000. Debt service requirements do not include fiscal fees. (C) The estimated coverage figures shown reflect the ratio of actual fiscal year 2011-12 excise tax revenues to total debt service requirements for the City's Transit excise tax bonds. 184 Ratios of Outstanding Debt by Type (Exhibit S-21) Last Ten Fiscal Years City of Tempe, Arizona Governmental Activities General Obligation Bonds Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 $ $ 18,520,000 16,725,000 19,345,000 17,490,000 15,345,000 38,310,000 36,095,000 33,025,000 29,875,000 27,815,000 $ 97,580,000 103,735,000 137,390,000 180,935,000 243,265,000 282,520,000 285,735,000 289,895,000 273,000,000 256,770,000 Refunding Certificates of Participation $ $ 520,000 400,000 275,000 140,000 - 3,335,000 2,840,000 2,320,000 1,780,000 1,220,000 625,000 - Excise Tax Revenue Bonds $ 60,650,000 81,910,000 78,780,000 174,710,000 218,480,000 241,125,000 239,560,000 230,470,000 228,746,000 218,522,900 HUD Section 108 Loan $ 7,000,000 7,000,000 7,000,000 6,739,000 6,466,000 6,181,000 5,883,000 5,572,000 Capital Improvement Notes $ Business-Type Activities Municipal Property Corporation Bonds General Obligation Bonds Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 90,395,000 91,640,000 99,880,000 117,610,000 116,500,000 125,075,000 156,265,000 172,665,000 166,580,000 162,200,000 Special Assessment Bonds Excise Tax Revenue Bonds $ 2,330,004 2,130,000 2,050,000 18,685,000 18,050,000 48,827,424 55,505,432 WIFA Loans $ 13,273,706 14,621,092 13,945,646 185 194,416 147,089 97,439 45,352 $ Total Business Type Debt Capital Leases $ 3,654,755 3,258,112 2,845,604 2,416,596 1,970,427 1,506,411 1,023,835 521,955 - Capital Leases $ 98,100,000 104,135,000 137,665,000 183,405,004 245,395,000 284,570,000 304,614,416 321,365,795 336,545,955 326,266,430 7,436,279 7,186,712 7,209,396 6,732,171 4,923,764 3,351,733 1,888,630 1,776,147 96,735 57,921 Total Primary Government $ 282,091,034 307,694,824 355,045,000 511,143,771 610,834,191 701,302,144 745,912,881 766,004,897 767,726,690 740,434,251 Total Government Type Debt $ 183,991,034 203,559,824 217,380,000 327,738,767 365,439,191 416,732,144 441,298,465 444,639,102 431,180,735 414,167,821 Percentage of Personal Income 7.78 % $ 8.38 9.48 13.09 14.91 15.98 18.05 16.43 14.95 16.57 Per Capita 1,769 1,928 2,208 3,083 3,666 4,188 4,321 4,381 4,747 4,515 Demographic and Economic Statistics (Exhibit S-22) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year Population (A) 2002-03 159,425 2003-04 159,615 2004-05 Total Personal Income (B) $ Median Age (C) School Enrollment (D) ASU School Enrollment (E) Unemployment Rate (F)) N/A N/A 26,380 49,980 4.50 % 3,673,858,455 23,017 N/A N/A 26,960 52,265 4.20 160,820 3,745,015,340 23,287 N/A N/A 26,787 49,171 3.40 2005-06 165,796 3,906,153,760 23,560 58,000 30.9 26,800 61,033 3.50 2006-07 166,625 4,097,808,625 24,593 59,936 31.3 26,292 63,278 3.00 2007-08 167,458 4,387,734,516 26,202 66,864 29.7 25,929 64,394 2.80 2008-09 172,641 4,131,989,694 23,934 63,866 31.6 25,780 67,082 4.20 2009-10 174,833 4,661,747,112 26,664 67,971 31.8 25,857 68,064 6.70 2010-11 161,719 5,133,769,655 31,745 68,427 35.2 26,670 70,440 8.00 2011-12 163,989 4,469,848,173 27,257 63,881 31.3 28,136 72,254 8.20 (A) (B) (C) (D) (E) (F) 3,626,440,475 Average Household Income (C) 22,747 Source: $ Per Capita Personal Income (C) Estimate provided by Sites USA (June 2012) Amount is calculated using population times per capita personal income Estimate provided by Sites USA (June 2012) Arizona Department of Education (Azed.gov) ASU.edu/enrollment-summary workforce.az.gov 186 Principal Employers (Exhibit S-23) Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2011-12 Employers Arizona State University Maricopa Community Colleges SRP Safeway Inc. Wells Fargo Banking Division Motorola Honeywell Kyrene School District Chase Manhattan Corporation US Airways Bank One Telephone Banking Division City of Tempe Phillips 66 Company Total Source: Employees (A) 11,185 4,611 4,374 3,996 3,576 3,000 3,000 2,401 2,377 1,898 - Rank Fiscal Year 2002-03 Employment 1 2 3 4 5 6 7 8 9 10 27.67 % 11.41 10.82 9.89 8.85 7.42 7.42 5.94 5.88 4.70 12,569 3,331 6,601 4,779 3,000 2,205 2,377 2,000 1,679 1,500 100.00 % 38,541 - 40,418 (A) www.tempe.gov/Economic Development/Tempe's Top Employers (B) City of Tempe, Arizona Comprehensive Annual Financial Report, 2002-03 187 Employees (B) Rank 1 4 2 3 5 7 6 8 9 10 Employment 32.61 % 8.64 17.13 12.40 7.78 5.72 6.17 5.19 4.36 3.89 100.00 % Full-Time Equivalent City Government Employees by Function (Exhibit S-24) Last Nine Fiscal Years City of Tempe, Arizona Full-Time Equivalent Employees Fiscal Year 2003-04 Police Fire Community services Parks and recreation Public works Community relations Mayor and council City manager Diversity program Internal audit/consulting Tempe learning center City clerk and elections City attorney Municipal court Development services Community development Economic development Finance and technology Financial services Human resources Information technology Water/wastewater Total 522 157 305 377 20 7 3 3 4 5 25 37 87 12 70 19 73 131 1,857 Fiscal Year 2004-05 - - - 522 157 308 377 18 7 3 4 4 5 25 38 89 13 69 19 72 131 1,861 - - - Fiscal Year 2005-06 Fiscal Year 2006-07 Fiscal Year 2007-08 Fiscal Year 2008-09 535 171 340 530 160 234 208 307 20 7 4 4 4 577 187 230 208 323 20 7 4 5 4 580 187 232 210 330 20 7 4 5 4 380 18 7 4 4 4 5 26 41 52 53 69 19 72 135 1,935 - - - 5 29 41 63 60 72 21 73 136 1,978 5 29 46 63 62 72 23 76 138 2,079 5 29 46 62 62 73 24 76 143 2,097 Fiscal Year 2009-10 568 185 308 535 27 7 3 4 4 5 25 42 106 139 20 1,977 Fiscal Year 2010-11 Fiscal Year 2011-12 499 182 289 489 25 7 4 3 3 3 5 25 42 88 132 17 1,813 494 182 287 485 25 7 4 3 3 3 5 25 42 83 132 17 1,797 Source: City of Tempe, Arizona 2011-12 Annual Budget Note: In fiscal year 2009-10, the Parks & Recreation department was split, with Parks consolidated into Public Works and Recreation consolidated into Community Services. The Information Technology department and the Financial Services department were consolidated into the Finance and Technology department. The Development Services department was consolidated into Community Development. 188 Operating Indicators by Function/Program (Exhibit S-25) Last Seven Fiscal Years City of Tempe, Arizona Fiscal Year 2005-06 Fiscal Year 2006-07 Fiscal Year 2007-08 Fiscal Year 2008-09 Fiscal Year 2009-10 Fiscal Year 2010-11 Fiscal Year 2011-12 Function /Program Police Crime rate (per 100,000 population) 8,269 8,000 6,700 6,100 5,500 Traffic accidents 5,562 6,729 5,895 4,920 4,595 Emergency service average response time (minimum) 4:43 5:01 5:07 5:08 5:17 Citizen calls for police service 124,923 123,847 112,409 106,317 86,074 Operating expenditures per citizen calls $391.87 $353.37 $415.22 $443.34 $432.95 Fire Firefighters per capita (10,000) 8.52 8.24 9.43 9.37 9.13 No. of fire calls 2,097 2,148 1,964 2,414 2,144 No. of medical calls 13,059 13,469 13,255 15,199 15,413 No. of other assistance calls 1,722 2,429 2,708 1,260 1,253 Emergency service average response time (minimum) 4:25 4:17 4:22 4:20 4:20 % of emergency responses taking 5.0 minutes or less 70% 72% 71% 72% 74% Transportation 90% 94% On-time performance (bus) 94% 92% 89% Annual boardings (bus) 6,805,383 8,156,782 7,387,024 9,157,912 8,877,964 Number of square yards repaired 1,884,102 1,136,956 1,391,711 2,090,504 74,471 Library Registered borrowers 141,509 142,323 142,524 142,500 147,914 Circulation 1,404,318 1,246,650 1,257,336 1,250,000 1,089,174 Development services # of permits issued for commercial /industrial 69 69 46 21 18 Valuation of commercial/industrial permits $83,599,700 $170,983,900 $ 88,143,100 $ 109,851,600 $ 86,704,700 # of permits issued for residential 1,061 700 675 508 425 Valuation of residential permits $250,869,200 $ 152,320,600 $ 96,512,400 $ 161,914,600 $ 27,741,900 # of permits issued other 715 673 653 577 534 Valuation of other permits $ 119,168,700 $ 89,884,365 $ 188,916,700 $ 105,413,500 $ 68,502,500 Water/wastewater Number of customer accounts 42,059 42,261 42,494 42,686 42,453 16,686 (C) 17,135 (C) 15,774 (C) 15,606 Total water gallons treated (million gallons - mg) 17,589 (C) O&M per customer account $221 $317 $251 $256 $181 Service calls responded to within 30 min. and repaired in 24 hours 100% 100% 100% 100% 100% Total wastewater gallons treated (million gallons per day) 21.5 (C) 21.3 (C) 20.9 (C) 19.7 (C) 18.7 Solid waste collection Residential container/recycling cost per ton $73 $70 $102 $71 $114 # of residential accounts 33,021 33,056 32,964 32,916 32,886 Residential recycling diversion rate 34% 29% 28% 28% 28% # of commercial accounts 1,976 1,861 1,942 1,875 1,837 Commercial collection cost per ton $57 $52 $59 $59 $77 Source: City of Tempe, Arizona Budget and Research Division and other applicable City departments. Note: Information prior to fiscal year 2005-06 was not available in this format. (A) Numbers are updated to actual values as shown in City of Tempe, Arizona Annual Budget 2011-12 (B) Numbers are estimates as shown in City of Tempe, Arizona Annual Budget 2011-12 (C) Numbers revised by department to reflect change in methodology in tracking. 189 5,898 (A) 4,693 5,800 (B) 4,834 5:30 (A) 85,673 (A) $748.69 (A) 5:00 (B) 87,730 $725.33 8.95 (A) 2,208 15,264 1,275 9.45 (B) 2,167 17,156 1,336 4:20 (A) 4:20 (B) 74% 74% (B) 95% 7,971,817 64,665 (C) 140,600 (A) 937,500 (A) 8 6,874,200 314 $ 18,260,624 521 $ 77,951,841 $ 95% 8,430,857 569,600 145,764 (B) 1,001,310 (B) 18 $ 88,812,800 297 $ 68,954,800 600 $ 99,407,953 42,218 15,877 (C) $217 (A) 42,500 (B) 16,800 (B) $134 (B) 100% (A) 18.6 (C) 100% (B) 18.6 $112 (A) 33,927 29% (A) 1,940 $73 (A) $108 (B) 33,759 34% (B) 2,030 $78 (B) Capital Asset Statistics by Function/Program (Exhibit S-26) Last Seven Fiscal Years City of Tempe, Arizona Fiscal Year 2005-06 Police Stations Patrol Units (Squads) Fire Stations Transportation Streets (miles) Streetlights Traffic Signals Buses Parks and recreation Acreage Playgrounds Sports Fields Community centers Golf Courses Water/Wastewater Water mains (miles) Water production capacity (million gallons per day) Water storage capacity (million gallons) Sanitary sewers (miles) Storm sewers (miles) Wastewater treatment capacity (million gallons per day) Solid waste collection Collection trucks Fiscal Year 2006-07 Fiscal Year 2007-08 Fiscal Year 2008-09 Fiscal Year 2009-10 Fiscal Year 2010-11 Fiscal Year 2011-12 2 22 6 2 22 6 3 22 6 3 22 6 3 22 6 3 20 6 3 20 6 1,241 11,754 193 123 1,241 11,774 199 115 1,241 11,810 217 148 1,241 12,021 219 198 1,241 12,428 219 188 1,241 11,778 221 188 1,241 11,778 221 140 1,684 44 195 4 2 1,684 44 195 4 2 1,872 45 200 4 2 1,872 45 200 4 2 1,872 45 200 4 2 1,872 45 200 5 2 1,872 45 200 5 2 852 852 823 825 839 839 839 120 53 502 174 120 53 502 174 120 53 500 193 120 53 497 193 129 53 498 195 125 42 498 194 125 42 498 194 32 32 32 38 38 33 33 68 56 60 58 58 58 58 Source: The City of Tempe, Arizona Budget and Research Division and other applicable City departments. Note: Information prior to fiscal year 2005-06 was not available in this format. 190