Home City of Mesa, Arizona Comprehensive Annual Financial Report Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov For the Fiscal Year Ended June 30, 2010 City of Mesa, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2010 Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov Scott Smith Mayor Scott Somers Councilmember, District 6 Dave Richins Councilmember, District 1 Chris Brady City Manager Alex Finter Councilmember, District 2 Bryan Raines Deputy City Manager Dennis Kavanaugh Councilmember, District 3 Jack Friedline Deputy City Manager Kyle Jones Vice Mayor, District 4 Kari Kent Deputy City Manager Dina Higgins Councilmember, District 5 Introductory Section TABLE OF CONTENTS Page SECTION I – INTRODUCTORY SECTION Table of Contents Letter of Transmittal – Financial Services Manager Certificate of Achievement for Excellence in Financial Reporting SECTION II - FINANCIAL SECTION I V X Exhibits Independent Auditors' Report Management’s Discussion and Analysis 1 3 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets Statement of Activities A-1 A-2 18 19 A-3 21 A-4 A-5 22 23 A-6 24 A-7 25 A-8 A-9 27 29 A-10 31 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures And Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows Fiduciary Funds Financial Statements Statement of Fiduciary Assets and Liabilities I TABLE OF CONTENTS (Continued) Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies Note 2 - Reconciliation of Governmental Fund Financial Statements to Government-wide Financial Statements Note 3 - Retirement and Pension Plans Note 4 - Post Employment Benefits Note 5 - Long-Term Obligations Note 6 - Liabilities to be Paid From Assets Held in Escrow Note 7 - Capital Contributions Note 8 - Commitments and Contingent Liabilities Note 9 - Enterprise Activities Operations Detail Note 10 - Net Assets Note 11 - Pledged Revenues Note 12 - Joint Ventures Exhibits Page 32 50 56 59 63 73 75 75 76 76 77 78 Required Supplementary Information Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds: Schedule of Funding Progress - Public Safety Personnel Retirement System Schedule of Funding Progress – Other Post-Employment Benefits General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budget Basis) Highway User Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budget Basis) Note to Required Supplementary Information – Budgetary Reporting B-1 B-2 82 83 B-3 84 B-4 85 86 C-1 87 C-2 88 Combining Balance Sheet C-3 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-4 89 91 Combining Financial Statements Non-major Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Special Revenue Funds Non-major Debt Service Funds Combining Balance Sheet C-5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-6 II 93 95 TABLE OF CONTENTS (Continued) Exhibits Combining Financial Statements (Continued) Page Non-major Capital Projects Funds Combining Balance Sheet C-7 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-8 97 99 Internal Service Funds Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Net Assets Combining Statement of Cash Flows C-9 C-10 C-11 101 103 105 C-12 107 D-1 108 D-2 110 D-3 111 D-4 122 D-5 127 D-6 D-7 128 129 D-8 130 D-9 135 Agency Fund Statement of Changes in Assets and Liabilities Supplemental Information Budgetary Comparison Schedules – General Fund and Major Governmental Funds General Fund Schedule of Expenditures by Program – Budget and Actual (Budget Basis) Highway User Revenue Fund Schedule of Expenditures by Program – Budget and Actual (Budget Basis) Budgetary Comparison Schedules – Other Non-major Governmental Funds Non-major Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budget Basis) Non-major Special Revenue Funds Schedule of Expenditures by Program Budget and Actual (Budget Basis) Non-major Capital Project Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budget Basis) Budgetary Comparison Schedules – Proprietary Funds Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Assets – Budget and Actual (Budget Basis) Enterprise Fund Reconciliation of Budget to GAAP Changes in Net Assets Internal Service Funds Schedule of Revenues, Expenses and Changes in Net Assets – Budget and Actual (Budget Basis) Internal Service Funds Reconciliation of Budget to GAAP Changes in Net Assets III TABLE OF CONTENTS (Concluded) Capital Assets Used in the Operation of Governmental Funds Schedule by Source Exhibits D-10 Page 136 SECTION III - STATISTICAL SECTION Financial Trends Net Assets by Components - Last Nine Fiscal Years (Accrual Basis of Accounting) Changes in Net Assets - Last Nine Fiscal Years (Accrual Basis of Accounting) Fund Balance, 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) I II 137 139 III 145 IV 147 V VI 149 151 VII VIII IX X XI 152 154 155 156 158 XII XIII 160 161 XIV XV XVI 162 164 166 Revenue Capacity Sales Tax Collections by Category - Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information – Last Ten Fiscal Years Pledged-Revenue Coverage – Last Ten Fiscal Years Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years Principal Employers – Current Year and Ten Years Ago Operating Information Full-Time Equivalent City Government Employees by Function/Program Last Nine Fiscal Years Operating Indicators by Function/Program – Last Ten Fiscal Years Capital Asset Statistics by Function/Program – Last Ten Fiscal Years IV Financial Services Department December 23, 2010 To the Citizens, Honorable Mayor, City Council and City Manager: The Comprehensive Annual Financial Report of the City of Mesa (the “City”) for the fiscal year ended June 30, 2010 is hereby submitted. Prepared by the Accounting Services Division of the Financial Services Department, this report consists of management’s representations concerning the finances of the City of Mesa. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by LarsonAllen, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the City for the fiscal year ended June 30, 2010, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit that there was a reasonable basis for rendering an unqualified opinion that the City’s financial statements for the fiscal year ended June 30, 2010, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditors’ report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report. V Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A) and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. Profile of the City The City was founded in 1878 and incorporated July 15, 1883 with an approximate population of 300 and an area of one square mile. Today, the City’s estimated population is over 465,000 within an incorporated area of approximately 133 square miles. Total land area encompasses 182 square miles. The City is the 39th largest city in the United States as well as the third largest in the State of Arizona and is located 16 miles east of Phoenix, the State Capitol. The City operates under a charter form of government with citizens electing a Mayor and six Councilmembers to set policy for the City. City Councilmembers are elected from districts and serve terms of four years, with three members being elected every two years. The Mayor is elected at-large every four years. The Mayor and Council are elected on a non-partisan basis, and the Vice Mayor is selected by the City Council. The Mayor and City Council are responsible for appointing the City Manager, City Attorney, City Auditor, City Clerk and the Presiding City Magistrate. The City Manager has full responsibility for carrying out City Council policies and administering City operations and is responsible for the hiring of City employees. Additionally, City employees are hired under merit system procedures as specified in the City Charter. An allocated staff of 3,529 full-time (equivalent) City employees working within twenty-eight different City departments undertakes the various functions of Mesa’s city government and its operation. The City provides a full range of municipal services, including police and fire protection, parks and recreation, library, transportation, health and certain social services and general administration; and, the City owns and operates enterprises including operations of electric, gas, water, wastewater, solid waste, airport, golf courses and the Mesa Art Center which includes 212,755 square feet of performing arts, visual arts and art education facilities. The financial statements include the funds for the City and its blended component unit, the City Mesa Municipal Development Corporation, collectively referred to as “the financial reporting entity”. Although the corporation is legally separate from the City, it is reported as if it is part of the primary government because its sole purpose is to finance the acquisition and or construction of public facilities for the City. The annual budget serves as the foundation for the City’s financial planning and control. Each year, the City Manager issues a budget calendar giving specific completion dates for various phases of the budget preparation process. The final adoption of the operating budget is by ordinance. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget in total, and from the resolution itself that limits expenditures by fund and by VI departmental groupings. Transfers of sums within a specific fund or departmental group may be made upon City Manager approval. The legally adopted budget consists of all funds except the Payroll Agency fund. Capital Projects (both General Government and Proprietary) are budgeted as one item (as shown in Exhibit D-5). General Government debt service expenditures are budgeted in the General Fund and Special Revenue Funds. Budget schedules for the major governmental funds (General and Highway User Revenue Fund) are presented in the Required Supplementary Section, and the other funds are located in the Supplementary Information Section. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The City’s economic indicators for residential construction in fiscal year 2009-10 were slightly higher than the very low activity levels experienced in fiscal year 2008-09, but they are still well below previous years. The number of dwelling units built in fiscal year 2009-10 remains significantly lower than fiscal year 2007-08. During fiscal year 2009-10, the City issued 668 permits for new residential construction. This is 202 more than the previous fiscal year, but 512 units less than the 1180 units built in fiscal year 2007-08. The corresponding dollar valuation associated with fiscal year 2009-10 permits increased approximately $50 million from the prior fiscal year. Commercial construction valuation continues a severe decline from $821 million in fiscal year 2007-08 to $141 million in fiscal year 2009-10. City sales tax revenue declines that began during the 2007-08 fiscal year continued during fiscal year 2009-10, although the rate of decline appears to be flattening. Sales tax revenues decreased by 6.2% or $8.1 million from the previous fiscal year. Contracting, retail and rental sales tax categories incurred the most significant losses, accounting for $7 million of the overall loss. To accommodate the decline in revenues the City continued to reduce fund allocations for a variety of City services. Ultimately, the required changes resulted in the combining of City departments, the elimination of various positions, and the reduction or total elimination of many city services that reduced current year expenditures by a total of more than $60 million. Services throughout the City, including public safety and street maintenance, were impacted. The operation of the City’s various utilities were the only areas not impacted. The early and significant response to the declining economic indicators allowed the City to retain and enhance fund balance levels during the year. All funds’ balances were maintained at or above the levels prescribed by financial policy and prudent practice. VII Major Initiatives During the year several major accomplishments have continued to be realized. Some of these were: Building on the success of the 2008 initiation of the initial light rail segment of 20 miles connecting the cities of Mesa, Tempe and Phoenix, Mesa has received the approval to build a 3.1-mile extension to continue the system along Main Street. The program will include four stations and one park-and-ride lot, and is expected to be fully operational in 2016. Ridership for fiscal year 2009-10 continues to exceed projections with 1,119,519 riders reported through Mesa’s Sycamore station. Build America Bonds (BABS); in May 2009 Mesa Council accepted bids for $59.9 million for Utility system revenue bonds. Net interest cost of the ten BAB bids submitted was 4.12% with an anticipated interest savings of $12.5 million. Transaction was first of its type in Arizona and the largest twin-bid to date. The City has been awarded $70.73 million in ARRA grants, both formula and competitive. These grants will assist in the construction of two new fire stations as well as numerous Transporting, Streets, Energy, Public Safety and Sustainability projects. Phoenix-Mesa Gateway Airport jointly operated and maintained by the Phoenix-Mesa Gateway Airport Authority (PMGAA), a Joint Powers Airport Authority comprised of the City of Mesa, City of Phoenix, Town of Queen Creek, Town of Gilbert, and the Gila River Indian Community, received $13.9 million in FAA grants for airport improvements and expansion, continuing to solidify the airport’s role in the east valley community. Gaylord Entertainment remains committed to the 1,200 room, 5-star resort and convention facility planned for an under-developed area of the City previously occupied by General Motors, the location near Phoenix-Mesa Gateway Airport, despite setbacks with economy and a flood of the Gaylord Nashville property. Long-term Financial Planning To stay current with the rapidly changing economy the City continues to refine its methods for making informed financial decisions. We have begin the process of implement a fully integrated ERP system to provide us with near real-time accounting, grants management, budgeting, purchasing, human resources and inventory information, expected go live is for fiscal year 2012. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2009. This was the twenty-eighth consecutive year the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial VIII report. This report satisfied both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. The efficient and dedicated services of the City’s Controller, Doug Yeskey, and the devoted staff of the Accounting Services Division has made the preparation of the comprehensive annual financial report on a very timely basis possible. Also, I want to thank the Mayor, members of the City Council and the City Manager for their continued interest and support of the staff’s efforts in planning and conducting the financial operations of the City. Respectfully submitted, Alex P. Deshuk, Manager of Technology and Innovation IX X Financial Section MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Mesa, Arizona (the City), we offer this discussion and analysis of the financial activities of the City for the fiscal year ended June 30, 2010. This discussion and analysis is designed to 1) assist the reader in focusing on significant financial issues, 2) provide an overview of the City’s financial activities, 3) identify changes in the City’s financial position, 4) identify any material deviations from the financial plan (the approved annual budget), and 5) identify individual fund issues and concerns. The management’s discussion and analysis should be read in conjunction with the transmittal letter presented on pages V–IX, as well as the financial statements beginning on page 18 and the accompanying notes to the financial statements. Financial Highlights  The City’s total net assets decreased $62 million in fiscal year 2010.  Total net assets of the City are $1.69 billion, of which $275 million are unrestricted and may be used to meet the City’s ongoing obligations to citizens and creditors.  As of the end of fiscal year 2010, the City’s governmental funds reported a combined ending fund balance of $234.2 million, a $37.4 million increase from the previous year. A complete reconciliation of the governmental funds’ fund balance to the governmental activities’ net assets is on page 22.  At the end of the fiscal year, the City’s unreserved fund balance for the General Fund was $92.2 million, or 26.4% of total General Fund expenditures, compared to $74.7 million, or 19.6% of total General Fund expenditures the previous year.  The City recognized $14.3 million in secondary property taxes. This is the first property tax the City has collected in over 65 years and was a result of a voter-approved initiative during 2008. The property tax revenue is restricted to pay for the debt service requirements for general obligation bonds.  The City issued $30.9 million in taxable general obligation debt during the current fiscal year for new street, storm sewer and public safety improvement projects. These taxable bonds qualify as Build America Bonds under the America’s Economic Recovery and Reinvestment Act of 2009 and include a 35% interest rebate from the Federal government that will total $10.5 million over the life of the bonds.  The City issued $45 million in Highway Project Advancement Notes during the current fiscal year. These notes will be used to accelerate the design and right-of-way acquisition for highway improvements to the State Route 802 between State Route 202L and Ellsworth Road. The agreement provides for repayment by ADOT to the City of the full amount of the City advance from monies available to ADOT for the project within a 60month loan period.  The City issued $50.4 million in taxable utility system revenue debt during the current fiscal year. These taxable bonds qualify as Build America Bonds under the America’s 3 Economic Recovery and Reinvestment Act of 2009 and include a 35% interest rebate from the Federal government that will total $25.9 million over the life of the bonds. OVERVIEW OF THE FINANCIAL STATEMENTS This management discussion and analysis serves as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: government-wide financial statements, fund financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide Financial Statements The government-wide financial statements (pages 18–20) are designed to provide a broad overview of the City’s finances in a manner similar to private businesses. All the activities of the City, except fiduciary activities, are included in these statements. The statement of net assets presents information on all the City’s assets and liabilities, with the difference between the two being reported as net assets. Over time increases and decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed over the most recent fiscal year. All changes to net assets are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the City, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general revenues for support. The activities of the City are presented in two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided.  The governmental activities include the City’s basic services including general government (administration), public safety, cultural-recreational, and community environment. Taxes and general revenues generally support these activities.  The business-type activities include private sector type activities such as the City-owned electric, gas, water, wastewater and solid waste systems, as well as the City-owned airport, golf courses, stadium, convention center and district cooling. These activities are primarily supported by user charges and fees. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the City. Traditional fund financial statements are presented for governmental funds, proprietary funds and fiduciary funds. These fund financial statements now focus on major funds of the City, rather than fund types used in the previous financial reporting model. 4 Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements (pages 21-24) focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in evaluating the City’s near-term financing requirements. Since the governmental fund financial statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer-term focus, a reconciliation of the differences between the two is provided with the fund financial statements and also in Note 2 to the basic financial statements (pages 50-55). Proprietary funds – The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet support; materials and supplies; printing and graphics; and the property and public liability; workers’ compensation and employee benefits self-insurance programs. Since the primary customers of the internal service funds are the governmental activities, the assets and liabilities of those funds are included in the governmental activities column of the government-wide statement of net assets. The costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. The proprietary fund financial statements (pages 25–30) are prepared on the same long-term focus as the governmentwide financial statements. The enterprise funds provide the same information as the government-wide financial statements, only with more detail. The internal service funds are combined into a single column on the proprietary funds statements. Additional detail of the internal service funds can be found in the combining statements (pages 101-106). Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of others outside the City government. Fiduciary funds are not reflected in the government-wide financial statements because the resources are not available to support the City’s programs. The fiduciary fund financial statement (page 31) is prepared on the same basis as the governmentwide and proprietary fund financial statements. Notes to the financial statements – The notes to the financial statements (pages 32–81) provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. Other information – Governments have an option of including the budgetary comparisons statements for the General Fund and major special revenue funds as either part of the fund financial statements within the basic financial statements or as required supplementary information after the notes to the financial statements. The City has chosen to present these budgetary statements as required supplementary information beginning on page 84. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis discuss the financial position and changes to the financial position for the City as a whole as of and for the year ended June 30, 2010 and as of and for the year ended June 30, 2009. 5 Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Assets of the City for June 30, 2010 and 2009. Condensed Statement of Net Assets As of June 30 (In thousands of dollars) Governmental Business-type T otal Activities Activities Primary Government 2010 2009 $ 877,597 $ 822,563 2,528,935 2,471,477 3,406,532 3,294,040 2010 Cash and Other Assets $ 428,176 Capital Assets 1,262,647 T otal Assets 1,690,823 2009 $ 375,676 1,238,993 1,614,669 2010 $ 449,421 1,266,288 1,715,709 2009 $ 446,887 1,232,484 1,679,371 Change Dollars Percent $ 55,034 6.69 % 57,458 2.32 112,492 3.42 Non-current Liabilities, Outstanding Other Liabilities T otal Liabilities 639,725 115,715 755,440 540,612 98,638 639,250 900,502 61,677 962,179 845,466 58,372 903,838 1,540,227 177,392 1,717,619 1,386,078 157,010 1,543,088 154,149 20,382 174,531 Net Assets: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted 844,777 86,955 3,651 791,524 92,532 91,363 434,814 47,011 271,705 413,944 82,697 278,892 1,279,591 133,966 275,356 1,205,468 175,229 370,255 74,123 6.15 (41,263) (23.55) (94,899) (25.63) 775,533 $ 1,688,913 $ 1,750,952 T otal Net Assets $ 935,383 $ 975,419 $ 753,530 $ $ (62,039) In the case of the City, the combined net assets (governmental activities and business-type activities) exceeded liabilities by $1.69 billion at the close of the most recent year. The net assets decreased $62 million (3.5%) in fiscal year 2010. The governmental activities decreased $40 million, a 4.1% decrease, while the business-type activities decreased $22 million, a 2.8% decrease. The largest portion of net assets (76%) reflects the City’s investment in capital assets (land, buildings, equipment, infrastructure, etc.) less any outstanding related debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. $134 million of the City’s net assets represent resources that are subject to external restrictions on how they may be used. The unrestricted net assets of $275 million may be used to meet the City’s ongoing obligations to citizens and creditors. Changes in Net Assets The following table shows the revenues and expenses of the City for the fiscal years ended June 30, 2010 and 2009. 6 11.12 12.98 11.31 (3.54) Changes in Net Assets (In thousands of dollars) Governmental Business-type Activities Activities 2010 2009 2010 REVENUES Program Revenues: Charges for Services $ Operating Grants & Contributions Capital Grants & Contributions General Revenues: Sales T axes Property T axes Occupancy T axes Unrestricted State-Shared Contributions Unrestricted Investment Income Miscellaneous T otal Revenues 2009 $ 283,287 72,812 63,054 210 101 73,022 63,155 9,867 15.62 30,343 35,436 17,782 31,222 48,125 66,658 (18,533) (27.80) 121,557 14,318 1,581 104,581 14,757 261 13,846 126,520 1,808 117,543 14,741 1,896 15,849 508 - 1,894 407 121,557 14,318 1,581 104,581 14,757 769 13,846 126,520 1,808 117,543 14,741 3,790 16,256 (4,963) 14,318 (227) (12,962) 16 (3,021) (2,410) (3.92) 100.00 (12.56) (11.03) 0.11 (79.71) (14.83) 416,442 425,306 307,874 316,911 724,316 742,217 (17,901) (2.41) 54,863 288,929 54,010 104,096 20,013 54,226 290,928 67,039 121,736 18,658 - - 54,863 288,929 54,010 104,096 20,013 54,226 290,928 67,039 121,736 18,658 637 (1,999) (13,029) (17,640) 1,355 1.17 % (0.69) (19.43) (14.49) 7.26 - - 27,106 35,466 80,915 70,228 31,504 3,944 2,715 4,158 7,408 1,000 27,633 35,992 68,956 80,349 31,953 3,703 3,082 4,558 976 27,106 35,466 80,915 70,228 31,504 3,944 2,715 4,158 7,408 1,000 27,633 35,992 68,956 80,349 31,953 3,703 3,082 4,558 976 (527) (526) 11,959 (10,121) (449) 241 (367) (400) 7,408 24 (1.91) (1.46) 17.34 (12.60) (1.41) 6.51 (11.91) (8.78) 100.00 2.46 521,911 552,587 264,444 257,202 786,355 809,789 (23,434) (2.89) (105,469) (127,281) 43,430 59,709 (62,039) (67,572) 5,533 (8.19) 65,433 96,599 (65,433) (96,599) Change in Net Assets (40,036) (30,682) (22,003) (36,890) Net Assets-Beginning 975,419 1,006,101 775,533 812,423 1,750,952 1,818,524 975,419 $ 753,530 $ 775,533 $ 1,688,913 $ 1,750,952 Increase (decrease) in Net Assets Before T ransfers T ransfers Net Assets-Ending $ 935,383 $ $ 331,760 (62,039) $ Change Dollars Percent $ 289,374 T otal Expenses $ Government 2010 2009 48,459 EXPENSES Governmental Activities: General Government Public Safety Cultural-Recreational Community Environment Interest on Long-term Debt Business-type Activities: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling 42,386 T otal Primary 331,746 $ - 14 - (67,572) $ 0.00 5,533 (8.19) (67,572) (3.72) (62,039) (3.54) Governmental Activities As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are taxes (28%) and state-shared revenues (22%). The largest users of resources for the governmental activities are Public Safety (55%), Community Environment (20%), General Government (11%), and Cultural-Recreational (10%). 7 0.00 % Revenues by Source Including Transfers – Governmental Activities For the Fiscal Year Ended June 30, 2010 Taxes 28% Transfers 14% State-Shared 22% Miscellaneous 6% Charges for Services 9% Capital Grants & Contributions 6% Operating Grants & Contributions 15% Functional Expenses – Governmental Activities For the Fiscal Year Ended June 30, 2010 Public Safety 55% CulturalRecreational 10% Community Environment 20% General Government 11% Interest on Long-term Debt 4% The following graph shows the functional revenues and expenses of the governmental activities to demonstrate the extent to which the governmental functions produce direct revenues to offset the program costs. It should be noted that this is not intended to represent the full cost allocation to these functions. General revenues of the City, including a $65.4 million transfer from the business-type activities, cover expenses not generated by direct program revenues. 8 Expenses and Program Revenues – Governmental Activities For the Fiscal Year ended June 30, 2010 (In millions of dollars) $300 $250 $200 $150 $100 $50 $0 General Government Public Safety Expenses Cultural Recreational Community Environment Program Revenues Governmental activities decreased the net assets of the City by $40 million accounting for a 4.1% decrease. Governmental activities accounted for 57% of the total revenues and 66% of the total expenses of the City in fiscal year 2010. This compares to 57% of total revenues and 68% of the total expenses in fiscal year 2009. Governmental Activities Revenues For Fiscal Years 2010 and 2009 (In millions of dollars) Program Revenues Taxes State-Shared Contributions Investment Income Miscellaneous $0 $20 $40 $60 $80 2010 2009 $100 $120 $140 $160 The graph above compares governmental activities revenues from fiscal year 2010 to fiscal year 2009. Total governmental activities revenues decreased $8.9 million from $425.3 million to $416.4 million. This is the third consecutive year that governmental activities revenues declined. Key factors in this change include:  The program revenues (charges for services, grants and contributions that are clearly identifiable to an operating activity) of the governmental activities decreased $1.4 million 9 over the previous year. Charges for services decreased by $6.1 million over the previous year as a result of the City transferring the Hohokam Stadium/Fitch Park Complex from the General Fund to the Enterprise Fund during fiscal year 2009-10. Prior year revenues for Hohokam Stadium/Fitch Park Complex were $7 million. There was an $8.3 million decrease in the amount of capital contributions of streets, storm sewers and retention basins by developers over the previous year. These capital contributions are not cash revenues and therefore are not available to cover operating expenses. Operating grants and contributions increased by $9.8 million over the previous year due to increased federal funding resulting from the American Reinvestment and Recovery Act of 2009.  Sales taxes decreased by $5 million over the previous year primarily as a result of the continuing weak economy and the downturn in the construction industry within the City limits.  State shared revenues decreased by $13 million over the previous year because of reduced revenues received from the state.  The City recognized $14.3 million in secondary property taxes. This is the first property tax the City has collected in over 65 years and was a result of a voter-approved initiative during 2008. The property tax revenue is restricted to pay for the debt service requirements for general obligation bonds. Governmental Activities Functional Expenses For Fiscal Years 2010 and 2009 (In millions of dollars) General Government Public Safety Cultural-Recreational Community Environment Interest on Long-term Debt $0 $50 $100 2010 $150 $200 $250 $300 2009 The graph above compares governmental activities expenses from fiscal year 2010 to fiscal year 2009. Total governmental expenses decreased by $30.7 million (5.6%) from $552.6 million to $521.9 million. Key factors in this change include:  The City had additional budget reductions during fiscal year 2009-2010 that included workforce eliminations of 277 full time equivalent positions with the majority of the impact affecting the Governmental Activities programs and changes to the types of services provided. 10  The City transferred the Hohokam Stadium/Fitch Park Complex from the General Fund to the Enterprise Fund during fiscal year 2009-10. Hohokam Stadium/Fitch Park Complex had $7.4 million in expenditures during the most recent fiscal year.  There was a decrease in the Community Environment expenses compared to the prior fiscal year due to the recognition of a $6.3 million loss on sale of property that occurred in the prior fiscal year. Business-type Activities As presented in the following two graphs, the largest funding sources and users of resources for the business-type activities are Water, Wastewater, Solid Waste, Gas and Electric. Revenues by Source – Business-type Activities Wastewater 21% Water 35% Solid Waste 15% Gas 13% Electric 11% Other Programs 5% Functional Expenses – Business-type Activities Wastewater 27% Water 31% Solid Waste 12% Gas 13% Other Programs 7% Electric 10% Business-type activities decreased the City’s net assets by $22 million a 2.8% decrease. Total business-type activities program and general revenues decreased by $9 million (2.9%) from $316.9 million to $307.9 million, while the business-type activities total expenses increased by $7.2 million (2.8%) from $257.2 million to $264.4 million. Business-type activities accounted 11 for 43% of the total revenues and 34% of the total expenses of the City in fiscal year 2010. This compares to 43% of total revenues and 32% of the expenses in fiscal year 2009. Business-type Activities Program Revenues For Fiscal Years 2010 and 2009 (In millions of dollars) Electric Gas Water Wastewater Solid Waste Other Activities $0 $20 $40 $60 2010 $80 $100 $120 2009 The graph above compares program revenues for the Business-type Activities from fiscal year 2010 to fiscal year 2009. Total business-type activities program revenues decreased by $7.2 million (2.3%) from $314.6 million to $307.4 million. Key factors in this change include:  Capital contributions decreased by $13 million from the previous year and, while they continue to be a major revenue source for the business-type activities, the amount contributed each year is dependent on how well the construction activity in the City is performing.  Changes in Water and Wastewater revenues resulted from reduction in consumption for the fiscal year. Business-type Activities Functional Expenses For the Fiscal Years 2010 and 2009 Electric Gas Water Wastewater Soild Waste Other… $0 $20 $40 $60 2010 12 2009 $80 $100  The decrease in Wastewater activities resulted primarily from a reduction in depreciation amounts related to the City’s participation in joint ventures with other cities. The increase in Water activities resulted from higher operating, depreciation and bond interest expenses.  The transfer to the General Fund decreased by $31.2 million over the previous fiscal year. This transfer is used by the governmental activities programs to cover expenses not generated by direct program revenues. Financial Analysis of the City’s Funds As previously mentioned, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The following is a brief discussion of the financial highlights from the fund financial statements. Governmental Funds - The focus of the City’s governmental funds (pages 21-24) is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The City’s governmental funds reported combined ending fund balance of $234.2 million, a $37.4 million increase from the previous year. $139.8 million of this total amount is in unreserved fund balance, available for spending in the coming year. The remainder of fund balance ($94.4 million) is reserved to indicate it is not available for new spending as it is already committed. These fund balance reservations include $25.2 million committed to liquidate contracts and purchase orders of the prior fiscal year, $6.6 million reserved for Quality of Life Projects, $16.7 million reserved for Transportation programs, $45.3 million reserved for debt service and the remaining $0.6 million is reserved for prepaid costs. The General Fund is the chief operating fund of the City and accounts for many of the major functions of the government including general government, public safety, cultural-recreational and community environment services. At the end of the current fiscal year, total fund balance of the General Fund was $132.9 million, while unreserved fund balance was $92.2 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. For 2010, unreserved fund balance represents 26.4% of total General Fund expenditures of $350 million, while total fund balance represents 38% of the same amount. For 2009, unreserved fund balance was 19.6% of total General Fund expenditures of $382 million, while total fund balance was 33.1% of the same amount. Total fund balance of the City’s General Fund increased by $6.3 million during the current fiscal year from $126.6 million to $132.9 million. Total revenues of $318 million were $5 million less than the previous year, while total expenditures of $350 million were $32 million less than the previous year. Sales taxes collected were $5 million less than the previous year primarily as a result of the weakening local economy and the downturn in the construction industry. The City collected $13.9 million in property taxes reflecting the voter-approved initiative passed in 2008 that enacted a secondary property tax for the City. This property tax is restricted to be used for the debt service requirements of the general obligation debt. 13 The decrease in General Fund expenditures is primarily a result of City implementing additional budget reduction during fiscal year 2009-2010, that included workforce eliminations of over 277 full time positions with the impact predominately affecting the General Fund. The City transferred the Hohokam Stadium/Fitch Park Complex from the General Fund to the Enterprise Fund during fiscal year 2009-10. Hohokam Stadium/Fitch Park Complex had $7.4 million in expenditures reported in the Cultural-Recreational function during the most recent fiscal year. The transfer in of $85.5 million, mostly from the Enterprise Fund, was reduced by $47 million in transfers out to other funds, compared with a transfer in from the Enterprise Fund of $96.6 million that was reduced by $46 million in transfers out to other funds in the previous year. The Highway User Revenue Fund that accounts for the capital and maintenance costs for the City’s streets received $1.7 million less in state-shared revenue and had a decrease of $16 million in street-related expenditures. The City’s Capital Project Funds that account for the acquisition and construction of major capital facilities other than those reported in the proprietary funds reported an increase of $20.2 million in capital expenditures. These expenditures were for improvements in law enforcement, fire, storm sewers, streets, parks and other city facilities. Proprietary Funds - The City’s Enterprise Fund (pages 25-30) provides the same type of information as the government-wide financial statements, except in more detail. The total net assets of the Enterprise Fund decreased by $21.2 million in fiscal year 2010 from $776.9 million in fiscal year 2009 to $755.7 million. The unrestricted net assets of the Enterprise Fund amounted to $273.8 million. However, $257.6 million of the unrestricted net assets are invested in joint ventures. Other factors concerning the finances of the Enterprise Fund have already been addressed in the discussion on the City’s business-type activities. Budgetary Highlights The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison schedules are required for the General Fund and major special revenue funds and may be found on pages 84-86. These schedules compare the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. Budgetary schedules for the other governmental funds as well as the proprietary funds are also presented on pages 108-135. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see Note 1.q. and Note 1.r. of the notes to the financial statements for more information on budget policies). No amendments increasing the City’s total adopted budget of $1.137 billion occurred during fiscal year 2010. Contingency allocations were made at fiscal year-end to cover programs in the General Fund of $3.8 million. General Fund revenues of $317.3 million, on a budgetary basis, were less than budgeted revenues of $355.3 million by $38 million while expenditures of $385.8 million were only 77% of budgeted expenditures. The shortfall in revenues is due to lower revenue received in sales taxes and intergovernmental revenue. Sales taxes continue to decline because of the weak economy and the stagnated local housing market. Federal grant revenues were less than budgeted however, since the majority of the Federal grants are on a reimbursement basis, the City also did not have the associated expenditures. Reduced expenditures resulted from budget 14 reductions including eliminating an additional 277 full-time equivalent positions, a hiring freeze and unused contingency allocations. Capital Asset and Debt Administration Capital Assets – The City’s investment in capital assets for its governmental and business-type activities amounts to $2.5 billion (net of accumulated depreciation/amortization) as of June 30, 2010. This investment in capital assets includes land, buildings, other improvements, machinery and equipment, intangibles and infrastructure. Infrastructure assets are items that are normally immovable and have value only to the City, such as streets, street lighting systems and storm drainage systems. Effective July 1, 2009 the City implemented GASB Statement No. 51 Accounting and Financial Reporting for Intangible Assets, which requires the capitalization of intangible assets. Intangible assets for the City include goodwill, right of way, easements and computer software. The following table provides a breakdown of the City’s capital assets at June 30, 2010 and 2009. Capital Assets (net of accumulated depreciation/amortization) As of June 30 (In thousands of dollars) Governmental Activities 2010 2009 Land $ 261,771 $ 257,858 Water Rights Buildings 239,228 217,712 Other Improvements 82,990 73,647 M achinery & Equipment 41,746 45,494 Intangibles 15 Infrastructure 498,342 478,752 Construction-in-Progress 138,555 165,530 Total $ 1,262,647 $ 1,238,993 Business-type Activities 2010 2009 $ 59,947 $ 52,028 17,570 15,524 58,759 47,709 957,296 914,082 43,460 51,914 4,219 3,594 6,879 118,158 147,633 $ 1,266,288 $ 1,232,484 Total Primary Government 2010 2009 $ 321,718 $ 309,886 17,570 15,524 297,987 265,421 1,040,286 987,729 85,206 97,408 4,234 3,594 505,221 478,752 256,713 313,163 $ 2,528,935 $ 2,471,477 Change Dollars Percent $ 11,832 3.82 % 2,046 13.18 32,566 12.27 52,557 5.32 (12,202) (12.53) 640 17.81 26,469 5.53 (56,450) (18.03) $ 57,458 2.32 Major capital assets completed or constructed during the current fiscal year included:  The City continued construction of the South Central Arizona Project Water Treatment Plant with $9.8 million spent during fiscal year 2010. The $87.7 million facility will serve the growing southeast area of the City. The plant will have an initial capacity of 24 million gallons a day with the ability to expand to 48 million gallons a day.  The City completed construction of a new City Court building with $.4 million spent during fiscal year 2010. The $36.8 million facility has more courtrooms, office space for judges, juror facilities and records storage. Additional information on the City’s capital assets can be found in Note 1(l.) of the notes to the financial statements. Debt Administration - At the end of the current fiscal year, the City had total bonded debt outstanding of $1.247 billion. Of this amount, $273.3 million comprises debt backed by the full 15 faith and credit of the City and $974.1 million represents bonds secured by specified revenue sources (i.e., Utility System Revenue Bonds and Highway User Revenue Bonds). The City’s outstanding long-term debt, including bonds, capital leases and notes payable was $1.307 billion at June 30, 2010. $460 million of this total was in governmental activities and $847 million was in business-type activities. The City’s outstanding long-term debt (considering new borrowings, debt retirements and refunding) increased $85 million. New borrowings during the fiscal year included $30.9 million in general obligation bonds, $45 million in Highway Project Advancement Notes and $50.4 million in taxable utility system revenue bonds. The City issued $30.9 million in taxable general obligation bonds and $50.4 million in taxable utility systems revenue bonds that qualify as Build America Bonds under the America’s Economic Recovery and Reinvestment Act of 2009. These taxable bonds include a 35% interest rebate from the United States Government. The total interest rebate to be received from the Federal government over the life of the bonds is $10.5 million for the general obligation bonds and $25.9 million for the utility revenue bonds. The City issued $45,000,000 of Highway Project Advancement Notes to provide funds to the Arizona Department of Transportation (ADOT) to accelerate the right-of-way acquisition and for the design of highway improvements to the State Route 802 between State Route 202L and Ellsworth Road. The City has entered into to an intergovernmental agreement with ADOT and the Maricopa Association of Governments to advance the improvements to State Route 802. The agreement provides for repayment by ADOT to the City of the full amount of the City advance from monies available to ADOT for the project within a 60-month loan period. The following schedule shows the outstanding long-term debt of the City as of June 30, 2010 and 2009. Outstanding Long-term Debt (In thousands of dollars) Governmental Activities 2010 2009 General Obligation Bonds $ 270,593 $ 264,200 Utility System Revenue Bonds Highway User Revenue Fund Bonds 132,220 137,543 Special Assessment Bonds with Governmental Commitment 6,550 7,294 Capital Leases 5,406 9,730 Notes Payable 45,000 Total $ 459,769 $ 418,767 Business-type Activities 2010 2009 $ 2,672 $ 2,978 841,864 800,222 158 2,964 333 $ 847,500 $ 803,691 $ Total 2010 273,265 $ 841,864 132,220 2009 267,178 800,222 137,543 6,550 7,294 5,406 9,888 47,964 333 $ 1,307,269 $ 1,222,458 The City’s current bond ratings are as follows: General Obligation Bonds Highway User Revenue Bonds Utility Systems Revenue Bonds Standard and Poor’s Corporation Moody’s Investors Service AA AA AA- Aa2 A1 Aa2 16 Change Dollars Percent $ 6,087 2.28 % 41,642 5.20 (5,323) (3.87) $ (744) (10.20) (4,482) (45.33) 47,631 14,303.60 84,811 6.94 The Arizona Constitution provides that the general obligation bonded indebtedness of a city for general municipal purposes may not exceed 6 percent of the secondary assessed valuation of the taxable property in that city. In addition to the 6 percent limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20 percent of the secondary assessed valuation for supplying such city with water, artificial light or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. The total debt margin available July 1, 2010 is: 6% Bonds 20% Bonds Total Available $239,577,898 548,311,722 $787,889,620 Additional information on the City’s long-term obligations can be found in Note 5 and Note 6 of the notes to the financial statements. Economic Factors In June 2010, the City Council approved a $1.113 billion budget, which is approximately a 2.1% decrease from the prior year’s budget. The fiscal year 2010–11 budget includes $944 million for operations and $169 million for scheduled bond capital improvements. The difficult economic period continues for the City of Mesa. The on-going decline in available revenues further reduced planned expenditures requiring continued redefinition and prioritization of services. In response to the economic shifts, additional reductions were identified that eliminated 180 full-time equivalent positions and over $17 million in anticipated expenditures from the fiscal year 2010-2011 budget. These reductions occurred predominately in departments receiving General Fund dollars. In addition, and in response to the loss of the Local Transportation Assistance Funds from the State, transit funding was reduced by almost $2.5 million resulting in the elimination of routes, longer wait times between buses and the delay in initiating new services. Significant economic factors affecting the City are as follows:  The City’s unemployment rate of 8.7% compares favorably to the state unemployment rate of 9.6% and the national average rate of 9.5%.  New residential and commercial building permits for the fiscal year remained at all-time lows. Requests for Information This financial report is designed to provide a general overview of the City of Mesa, Arizona’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to City of Mesa Controller, P.O. Box 1466, Mesa, Arizona, 85211-1466. 17 Basic Financial Statements CITY OF MESA, ARIZONA EXHIBIT A-1 STATEMENT OF NET ASSETS JUNE 30, 2010 Governmental Activities ASSETS Cash and Cash Equivalents Investments Receivables: Accounts and Miscellaneous (Net of Allowances) Accrued Interest Due From Other Governments Internal Balances Inventory Prepaid Costs Deposits Restricted Assets: Cash and Cash Equivalents Cash with Trustee Accounts Receivable Due From Other Governments Customer Deposits Unamortized Bond Issue Costs Investment in Joint Ventures Capital Assets: Non-Depreciable Depreciable, Net $ 208,313,967 8,758,992 Primary Government Business-Type Activities $ 17,862,724 128,119 33,690,104 2,140,225 5,964,364 938,724 374,931 Total Assets 39,111,806 5,021,900 Total $ 26,030,889 12,153 5,406,709 (2,140,225) 27,776 6,926,728 247,425,773 13,780,892 43,893,613 140,272 39,096,813 5,964,364 966,500 7,301,659 41,109,457 33,110,780 9,867,430 12,227,979 1,545,430 52,143,017 104,634,443 3,264,802 3,536,595 257,587,431 145,743,900 33,110,780 9,867,430 12,227,979 3,264,802 5,082,025 309,730,448 400,325,223 862,321,747 195,674,670 1,070,613,365 595,999,893 1,932,935,112 1,690,823,213 1,715,709,042 3,406,532,255 LIABILITIES Warrants Outstanding Accounts Payable Other Accrued Expenses Customer and Defendant Deposits Compensated Absences Liabilities Payable From Restricted Assets Noncurrent Liabilities: Due Within One Year Due in More Than One Year 3,157,664 27,067,945 29,088,317 9,338,642 1,265,901 45,796,609 7,962,332 53,713,991 3,157,664 35,030,277 29,088,317 9,338,642 1,265,901 99,510,600 35,382,683 604,342,306 14,112,254 886,389,948 49,494,937 1,490,732,254 Total Liabilities 755,440,067 962,178,525 1,717,618,592 844,777,095 434,813,786 1,279,590,881 6,605,784 45,338,759 2,463,678 32,546,293 3,651,537 262,875 4,815,651 242,342 21,937 31,291,280 9,683,617 693,506 271,705,523 6,605,784 262,875 4,815,651 242,342 21,937 76,630,039 9,683,617 2,463,678 32,546,293 693,506 275,357,060 NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted For: Quality of Life Projects Convention Center Airport Hohokam Stadium/Fitch Complex Golf Courses Debt Service Bond Indentures Grant Programs Transportation Programs Water, Wastewater & Solid Waste Improvements Unrestricted Total Net Assets $ 935,383,146 The accompanying notes are an integral part of the financial statements. 18 $ 753,530,517 $ 1,688,913,663 CITY OF MESA, ARIZONA EXHIBIT A-2 STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Program Revenues Charges for Services Expenses Operating Grants and Contributions Capital Grants and Contributions $ $ Functions/Programs Primary Government: Governmental Activities: General Government Public Safety Cultural-Recreational $ 54,862,584 $ 15,397,839 288,928,693 8,989,208 1,886,260 2,085,361 1,221,010 54,010,115 9,565,672 1,245,030 - 104,096,133 8,433,546 67,595,093 29,122,077 20,013,068 - - - 521,910,593 42,386,265 72,811,744 30,343,087 Electric 27,106,177 33,078,601 - 146,271 Gas 35,466,448 38,923,919 34,000 481,051 Water 80,915,190 98,806,049 19,669 10,042,370 Wastewater 70,227,712 57,698,904 - 5,782,814 Solid Waste 31,503,513 46,685,307 55,497 122,421 Airport 3,943,651 3,124,886 100,908 1,057,399 Golf Course 2,714,896 2,265,452 - 50,000 Convention Center 4,158,023 1,970,891 - - Hohokam Stadium/Fitch Complex 7,407,501 5,836,650 - 100,000 District Cooling 1,000,347 983,592 - - 264,443,458 289,374,251 210,074 17,782,326 $ 786,354,051 $ 331,760,516 Community Environment Interest on Long-Term Debt Total Government Activities Business-type Activities: Total Business-type Activities Total Primary Government $ 73,021,818 $ 48,125,413 General Revenues: Sales Taxes Property Taxes Occupancy Taxes Unrestricted State Shared Revenue Contributions Not Restricted to Specific Programs Unrestricted Investment Income Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Assets Net Assets - Beginning Net Assets - Ending The accompanying notes are an integral part of the financial statements. 19 EXHIBIT A-2 (Continued) Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Activities $ Business-type Activities (37,578,485) $ (276,633,114) $ $ (37,578,485) - (276,633,114) (43,199,413) - (43,199,413) 1,054,583 - 1,054,583 (20,013,068) - (20,013,068) (376,369,497) - (376,369,497) - 6,118,695 6,118,695 - 3,972,522 3,972,522 - 27,952,898 27,952,898 - (6,745,994) (6,745,994) - 15,359,712 15,359,712 - 339,542 339,542 - (399,444) (399,444) - (2,187,132) (2,187,132) - (1,470,851) (1,470,851) - (16,755) (16,755) $ - Total (376,369,497) 42,923,193 $ 42,923,193 42,923,193 $ (333,446,304) 121,556,751 - 121,556,751 14,318,257 - 14,318,257 1,580,533 - 1,580,533 104,580,393 - 104,580,393 14,757,171 - 14,757,171 260,939 507,752 768,691 13,846,390 - 13,846,390 65,433,214 (65,433,214) - 336,333,648 (64,925,462) 271,408,186 (40,035,849) (22,002,269) (62,038,118) 975,418,995 775,532,786 935,383,146 $ 753,530,517 1,750,951,781 $ 1,688,913,663 20 CITY OF MESA, ARIZONA EXHIBIT A-3 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2010 General Fund Non-major Governmental Funds Highway User Revenue Fund Total Governmental Funds ASSETS Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due From Other Governments Due From Other Funds Prepaid Costs Deposits Restricted Assets: Cash and Cash Equivalents Cash With Trustee Accounts Receivable Due From Other Governments $ 117,394,610 3,757,742 16,539,709 107,459 24,345,544 3,625,000 541,336 374,931 $ Total Assets $ 170,523,464 $ 6,681,666 $ 152,253,741 $ 329,458,871 $ $ 614,584 25 - $ 6,284,976 3,625,000 1,850 - $ 3,157,664 25,527,799 3,625,000 9,338,642 1,265,901 3,837,133 - 3,772,119 600 2,908,947 - $ - 53,291,423 68,638 6,414,159 1,008 - $ 41,109,457 33,110,780 6,030,297 12,227,979 174,458,152 3,757,742 16,608,947 107,459 33,668,650 3,625,000 542,344 374,931 41,109,457 33,110,780 9,867,430 12,227,979 LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Due To Other Funds Customer and Defendant Deposits Compensated Absences Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Accrued Note Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable Total Liabilities Fund Balances Reserved For Encumbrances Reserved For Prepaid Costs Reserved For Quality of Life Projects Reserved for Transportation Programs Reserved For Debt Service Unreserved, reported in: General Fund Special Revenue Funds Capital Project Funds Total Fund Balances Total Liabilities and Fund Balances 3,157,664 18,628,239 9,336,767 1,265,901 5,199,910 - - 2,793 10,823,241 449,167 6,030,297 24,058,189 5,720,000 56,067 2,793 10,823,241 449,167 11,230,207 24,058,189 5,720,000 56,067 37,588,481 614,609 57,051,580 95,254,670 16,896,222 541,336 6,605,784 16,704,894 - 10,041 - 8,324,660 1,008 45,338,759 25,230,923 542,344 6,605,784 16,704,894 45,338,759 92,186,747 - 6,057,016 - 25,813,648 15,724,086 92,186,747 31,870,664 15,724,086 132,934,983 6,067,057 95,202,161 234,204,201 $ 170,523,464 The accompanying notes are an integral part of the financial statements. 21 $ 6,681,666 $ 152,253,741 $ 329,458,871 CITY OF MESA, ARIZONA EXHIBIT A-4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2010 Fund Balances - total governmental funds $ 234,204,201 Amounts reported for governmental activities in the statement of net assets are different because (also see Note 2 to the basic financial statements): Capital assets used in governmental activites are not financial resources and therefore not reported in the governmental funds. 1,258,664,460 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 53,688,447 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore not reported in the governmental funds. (635,334,074) Deferred revenue for long-term rehabilitation loans and special assessments is shown on the governmental funds, but is not deferred on the statement of net assets. 6,543,055 Internal service funds are used by management to charge the costs of certain activites to individual funds. 17,617,057 Net assets of the governmental activities - statement of net assets The accompanying notes are an integral part of the financial statements. 22 $ 935,383,146 CITY OF MESA, ARIZONA EXHIBIT A-5 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 General Fund Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Total Revenues $ 121,556,751 13,885,749 1,580,533 9,271,058 137,515,938 11,739,505 9,363,903 159,520 12,552,373 Highway User Revenue Fund Non-major Governmental Funds Total Governmental Funds $ $ 922,651 2,552,700 21,609,406 8,645,011 761,804 31,196 981,686 $ 121,556,751 13,885,749 1,580,533 922,651 11,823,758 190,731,282 20,419,291 10,134,507 190,716 13,675,435 31,605,938 34,775 8,800 141,376 317,625,330 31,790,889 35,504,454 384,920,673 40,112,552 210,783,051 40,129,484 37,967,436 12,534,006 5,242,813 20,550 21,579,831 40,112,552 216,025,864 40,150,034 72,081,273 20,821,645 774,100 34,845,924 20,366,043 370,600 449,167 9,397 538,824 60,934,696 34,845,924 20,366,043 370,600 449,167 9,397 538,824 82,530,441 Total Expenditures 349,814,168 13,308,106 144,357,845 507,480,119 Excess (Deficiency) of Revenues Over (Under) Expenditures (32,188,838) 18,482,783 (108,853,391) (122,559,446) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds Premium on Issuance of Notes 85,519,851 (46,969,736) - (12,416,168) - 63,917,480 (7,268,000) 30,865,000 45,000,000 401,850 869,000 149,437,331 (66,653,904) 30,865,000 45,000,000 401,850 869,000 38,550,115 (12,416,168) 133,785,330 159,919,277 6,361,277 6,066,615 24,931,939 37,359,831 126,573,706 442 70,270,222 196,844,370 95,202,161 $ 234,204,201 Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance Capital Outlay Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 132,934,983 The accompanying notes are an integral part of the financial statements. 23 $ 6,067,057 $ CITY OF MESA, ARIZONA EXHIBIT A-6 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Net change in fund balances - total governmental funds $ 37,359,831 Amounts reported for governmental activities in the statement of activities are different because (also see Note 2 to the basic financial statements): Revenues in the statement of activities that do not provide current financial resources are not reported in the governmental funds. (150,326) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (56,645,572) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($82,530,441) exceeded depreciation ($56,694,347) in the current period. 25,589,094 The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to increase net assets. (2,670,760) The issuance of long-term debt (e.g., bonds and capital leases) provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes financial resources of governmental funds. Neither transaction has any effect on net assets. (41,019,076) Governmental funds report the effect of bond issuance costs, premiums and deferred amounts related to refunding when the new debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 308,224 Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. Change in net assets of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 24 (2,807,264) $ (40,035,849) CITY OF MESA, ARIZONA EXHIBIT A-7 STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2010 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund ASSETS Current Assets: Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances of $2,238,186) $ Accrued Premiums Receivable Accrued Interest Receivable Due From Other Governments Inventory Prepaid Costs Deposits 39,111,806 5,021,900 26,030,889 12,153 5,406,709 27,776 6,926,728 Restricted Assets: Cash and Cash Equivalents Customer Deposits 46,867,848 3,264,802 - 132,670,611 46,513,700 753,771 - 9,756,810 - 47,256,014 3,536,595 - 61,303,190 - Total Current Assets $ 33,855,815 5,001,250 499,679 754,098 20,660 21,454 5,964,364 396,380 - Noncurrent Assets: Restricted Assets: Impact & Development Fees: Cash and Cash Equivalents Bond Replacement, Extensions and Reserves: Cash and Cash Equivalents Capital Projects: Cash and Cash Equivalents Unamortized Bond Issue Costs Total Restricted Assets Capital Assets: Land Water Rights Buildings Other Improvements Machinery and Equipment Intangibles Infrastructure Construction in Progress Less Accumulated Depreciation and Amortization 59,946,543 17,569,867 92,701,747 1,363,453,007 131,049,353 13,564,978 7,145,836 118,158,260 (537,301,556) 2,014,156 4,944,866 2,095,871 44,702 (5,117,085) Total Capital Assets, Net Investment in Joint Ventures 1,266,288,035 257,587,431 3,982,510 - 1,523,875,466 3,982,510 Total Noncurrent Assets Total Assets $ The accompanying notes are an integral part of the financial statements. 25 1,717,849,267 $ 50,496,210 CITY OF MESA, ARIZONA EXHIBIT A-7 (Continued) STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2010 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund LIABILITIES Current Liabilities-Payable From Current Assets: Accounts Payable Other Accrued Expenses Current Liabilities-Payable From Restricted Assets: Impact & Development Fees-Accounts Payable Bond Replacement, Extensions and Reserves-Accounts Payable Capital Projects-Accounts Payable Accrued Notes Interest Payable Accrued Bond Interest Payable Matured Bonds Payable Matured Notes Payable Customer Deposits and Prepayments Current Portion of Long-term Liabilities: Current Portion of Revenue Bonds Payable Current Portion of General Obligation Bonds Payable Current Portion of Notes Payable Current Portion of Compensated Absences $ 7,962,332 - $ 1,540,146 29,088,317 60,264 73,193 3,447,884 6,964 20,418,908 10,741,811 125,847 18,839,120 - 12,585,000 469,601 239,581 818,072 90,019 75,788,577 30,718,482 829,278,756 2,202,106 2,724,199 16,915,475 3,795,055 31,474,357 764,340 3,536,556 Total Long-Term Liabilities 886,389,948 4,300,896 Total Liabilities 962,178,525 35,019,378 434,813,786 3,982,510 262,875 4,815,651 21,937 242,342 31,291,280 9,683,617 693,506 273,845,748 11,494,322 Total Current Liabilities Long-Term Liabilities: Revenue Bonds Payable, Net of Deferred Amounts on Refundings General Obligation Bonds Payable Notes Payable Unamortized Bond Premium Compensated Absences Post Employment Benefits NET ASSETS Invested In Capital Assets, Net of Related Debt Restricted For: Convention Center Airport Golf Courses Hohokam Stadium\Fitch Complex Debt Service Bond Indentures Water, Wastewater & Solid Waste Improvements Unrestricted Total Net Assets $ Adjustment to reflect the consolidation of the internal service funds related to the enterprise fund. 755,670,742 (2,140,225) Total net assets of the business-type activities $ The accompanying notes are an integral part of the financial statements. 26 753,530,517 $ 15,476,832 CITY OF MESA, ARIZONA EXHIBIT A-8 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Operating Revenues: Electric Sales Pledged as Security for Revenue Bonds Gas Sales Pledged as Security for Revenue Bonds Water Sales Pledged as Security for Revenue Bonds Wastewater Charges Pledged as Security for Revenue Bonds Solid Waste Charges Pledged as Security for Revenue Bonds Airport Fees Golf Course Fees Convention Center Fees Hohokam Stadium/Fitch Complex Fees District Cooling Charges Charges For Services Self-Insurance Contributions Recovery of Prior Year Expense Other Business-type Governmental Activities Enterprise Fund Activities Internal Service Funds $ $ 33,078,601 38,923,919 98,806,049 57,698,904 46,685,307 3,124,886 2,265,452 1,970,891 5,836,650 983,592 -- 16,835,494 56,758,829- - 133,467 289,374,251 73,727,790 23,211,018 29,615,303 40,921,769 22,890,468 28,729,107 2,587,431 2,411,164 2,894,614 7,407,183 611,877 - 18,329,249 60,252,553 Total Operating Expenses 161,279,934 78,581,802 Operating Income Before Depreciation and Amortization Depreciation and Amortization 128,094,317 (52,030,215) (4,854,012) (397,805) 76,064,102 (5,251,817) (Continued) Total Operating Revenues Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling Warehouse, Maintenance & Services Self-Insurance Operating Income (Loss) The accompanying notes are an integral part of the financial statements. 27 CITY OF MESA, ARIZONA EXHIBIT A-8 (Continued) STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund Nonoperating Revenues (Expenses): Investment Income Pledged as Security for Revenue Bonds Investment Income Unpledged Intergovernmental Interest Expense: Revenue Bonds General Obligation Bonds Notes Payable Capital Leases Amortization of Bond Issuance and Administrative Costs Loss on Disposal of Capital Assets Equity Interest in Joint Ventures (36,280,691) (134,780) (20,870) (3,558) (537,168) (1,603,658) (11,797,464) (79,417) - Total Nonoperating Revenues (Expenses) (49,660,363) (485) 503,382 4,370 210,074 Income before Transfers and Capital Contributions 78,932 - 26,403,739 (5,252,302) Capital Contributions Transfers In Transfers Out 36,795,839 134,560 (84,581,287) 26,618 1,663,300 - Change in Net Assets (21,247,149) (3,562,384) Total Net Assets - Beginning 776,917,891 19,039,216 $ 755,670,742 $ 15,476,832 Total Net Assets - Ending Adjustment to reflect consolidation of internal service funds related to the enterprise fund. Change in net assets of the business-type activities (755,120) $ The accompanying notes are an integral part of the financial statements. 28 (22,002,269) CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business-type Activities Governmental Activities Internal Service Enterprise Fund Cash Flows From Operating Activities: Cash Received From Customers Cash Received From Users Cash Payments to Suppliers Cash Payments to Employees $ 278,400,436 6,057,142 (91,659,979) (51,441,324) Funds $ 73,889,610 (75,341,083) (8,188,254) Net Cash Provided By (Used For) Operating Activities 141,356,275 (9,639,727) Cash Flows From Noncapital Financing Activities: Intergovernmental Transfers In From Other Funds Transfers Out to Other Funds 202,574 134,560 (84,581,287) 1,689,918 - Net Cash Provided By (Used For) Noncapital Financing Activities (84,244,153) 1,689,918 Cash Flows From Capital and Related Financing Activities: Proceeds From Bond Sales Proceeds From WIFA Notes Acquisition and Construction of Capital Assets Investment in Joint Ventures Proceeds From Sale of Capital Assets Principal Paid on Bonds, Leases and Notes Maturities Interest Paid on Bonds, Leases and Notes Bond Issuance and Administrative Expenses Capital Contributed by Other Governments Capital Contributed by Subdividers 51,134,189 3,486,902 (56,007,562) (9,937,347) 233,031 (11,496,142) (38,790,517) (390,050) 3,140,249 4,778,443 (49,729) - Net Cash Provided By (Used For) Capital and Related Financing Activities (53,848,804) (49,729) Cash Flows From Investing Activities: Purchase of Investment Securities Proceeds from Sale and Maturities of Investment Securities Interest Received on Investments (20,006,327) 25,798,119 755,709 (5,000,000) 5,001,250 82,670 Net Cash Provided By Investing Activities 6,547,501 Net Increase (Decrease) in Cash and Cash Equivalents 9,810,819 Cash and Cash Equivalents at Beginning of Year 83,920 (7,915,618) 133,935,430 Cash and Cash Equivalents at End of Year $ 143,746,249 The accompanying notes are an integral part of the financial statements. 29 41,771,433 $ 33,855,815 CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business-type Activities Governmental Activities Internal Service Enterprise Fund Reconciliation of Operating Income to Net Cash Provided By Operating Activities: Operating Income $ 76,064,102 Adjustments to Reconcile Operating Income to Net Cash Provided By Operating Activities: Depreciation and Amortization Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) in Inventory Decrease in Deposits and Prepaid Costs Increase in Accounts Payable (Decrease) in Other Accrued Expense Funds $ 52,030,215 Total Adjustments Net Cash Provided By (Used For) Operating Activities Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Transfers of Capital Assets from Governmental Funds Loss on Disposal of Capital Assets Amortization of Bond Premium Amortization of Debt Issuance Costs Amortization of Deferred Amounts on Refundings Accretion of Certificates of Supplementary Interest Payments Increase of Fair Market Value of Investments The accompanying notes are an integral part of the financial statements. 30 (5,251,817) 397,805 (4,916,673) 4,292,829 13,885,802 - 161,821 (223,748) 292,849 97,394 (5,114,031) 65,292,173 (4,387,910) $ 141,356,275 $ $ $ 9,814,746 19,013,513 1,836,689 2,103,208 267,691 1,738,836 41,235 15,573 (9,639,727) 26,618 1,250 CITY OF MESA, ARIZONA EXHIBIT A-10 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES JUNE 30, 2010 Payroll Agency ASSETS Cash and Cash Equivalents $ 10,158,717 Total Assets $ 10,158,717 LIABILITIES Accrued Payroll Payable $ 10,158,717 Total Liabilities $ 10,158,717 The accompanying notes are an integral part of the financial statements. 31 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The City of Mesa, Arizona, (the “City”) was incorporated July 5, 1883 with an approximate population of 300 and an area of one square mile. Today, the City’s estimated population is 467,355 within an area of approximately 136 square miles. The City’s charter was adopted August 18, 1967 providing for a Council-Manager form of government. The City provides a full range of municipal services including police and fire protection, parks and recreation, library, transportation, health and certain social services and general administration. In addition, the City owns and operates an enterprise whose activities include operations of electricity, gas, water, wastewater, solid waste, airport, golf courses, convention center, stadium and district cooling. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. For the fiscal year ended June 30, 2010, the City adopted GASB Statement No. 51 – Accounting and Financial Reporting for Intangible Assets. This statement requires that all intangible assets not specifically excluded by its scope provisions be classified as capital assets. Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets should be applied to these intangible assets, as applicable. This Statement also provides authoritative guidance that specifically addresses the nature of these intangible assets. Such guidance should be applied in addition to the existing authoritative guidance for capital assets. In implementing the requirements of GASB Statement No. 51 during the fiscal year ended June 30, 2010, the City has determined which assets meet the provisions to be classified as intangible and added them to the schedule capital assets. The City’s other significant accounting policies are described below: a. Reporting Entity The accompanying financial statements include the City and its blended component unit, the City of Mesa Municipal Development Corporation, collectively referred to as “the financial reporting entity”. In accordance with GASB No. 14, the component unit discussed below has been included in the City’s reporting entity because of the significance of its operational or financial relationship with the City. City of Mesa Municipal Development Corporation is a nonprofit corporation that is organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. The corporation is governed by a board of directors which is responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, the corporation is reported as if it is part of the primary government because its sole purpose is to finance the acquisition and or construction of public facilities for the City. Separate financial 32 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 statements for the corporation can be obtained through the City’s Accounting Services Division. b. Jointly Governed Organizations Phoenix – Mesa Gateway Airport Authority (“PMGAA”) is a nonprofit corporation established and funded by the City, the City of Phoenix, and Towns of Gilbert and Queen Creek, and the Gila River Indian Community. The purpose of the entity is the redevelopment of Williams Air Force Base that was closed in September 1993 to become PMGAA. The Board of Directors consists of the mayors for the respective municipalities and the governor of the tribal community. The City contributed $1.7 million to the PMGAA operating and capital budget during this fiscal year. Regional Public Transportation Authority (“RPTA”) is a voluntary association of local governments, including the cities of Mesa, Tempe, Scottsdale, Glendale, Phoenix and Maricopa County. Its purpose is to create a regional public transportation plan for Maricopa County. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (“AMWUA”) is a nonprofit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities’ interests before the Arizona legislature. The City’s annual membership fee for this fiscal year was approximately $190,207. In addition, AMWUA contracts with the cities jointly using a multi-city sanitary sewer system to perform certain accounting, administrative and support services (see Note 12). c. Basic Financial Statements Government-wide Financial Statements: The government-wide financial statements (the statement of net assets and the statement of activities) report on the City as a whole, excluding fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for services. The government-wide focus is 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. For the most part, 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. Certain charges between the Enterprise Fund’s utility systems and the various functional activities are not eliminated, as this would distort the direct costs and program revenues reported for the various functions concerned. The government-wide statement of net assets reports all financial and capital resources of the City, excluding fiduciary funds. It is presented in a format of assets less liabilities equals net (Continued) 33 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be presented in three components: invested in capital assets, net of related debt; restricted and unrestricted. Invested in capital assets, net of related debt is capital assets net of accumulated depreciation and reduced by outstanding balances of bonds, capital leases, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net assets are those with constraints placed on their use externally either imposed by creditors (such as bond covenants), grantors, contributors, laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as restricted, are shown as unrestricted. Generally, the City would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. The government-wide statement of activities demonstrates the degree to which the direct expenses of the various functional activities and segments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific functional activity (General Government, Public Safety, Cultural-Recreational, etc.) or segment. Expenses reported for the various functional activities or segments include indirect expenses, such as overhead costs. Interest on long-term debt is not allocated to the various functions in the governmental activities. Program revenues include charges to customers or applicants who directly benefit from goods, services or privileges provided by a given function or segment. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment, including special assessments. Taxes and other items not properly included as program revenues are reported as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. Historically, the previous reporting model did not summarize or present net cost by function or activity. Effective July 1, 2009, the City moved the Hohokam Stadium/Fitch Complex from the governmental activities to the business-type activities reflecting the desire to track the operations of this recreational complex. Fund Financial Statements: The fund financial statements are, in substance, very similar to the financial statements presented in the previous model. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. However, the fiduciary funds are not included in the government-wide financial statements. The focus of the fund financial statements is on major funds, as defined by GASB Statement No. 34. Major individual governmental funds are reported as separate columns in the fund financial statements. The City has only one enterprise fund, which is reported as a major fund. Nonmajor governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in combining statements included as supplementary information after the basic financial statements. d. Measurement Focus, Basis Accounting and Financial Statement Presentation Government-wide Financial Statements: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of (Continued) 34 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 accounting. Revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Governmental Fund Financial Statements: The governmental fund financial statements are reported using the current financial resources measurement focus and modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become susceptible to accrual, i.e., - measurable and available to finance the City’s operations. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers revenues to be available if they are collected within 60 days of the end of the current period. Principal revenue sources considered to be susceptible to accrual are City sales taxes, property taxes, intergovernmental revenues and interest on investments. In applying the susceptible to accrual concept to intergovernmental revenues pursuant to GASB Statement No. 33, receivables and revenues are recognized when all the applicable eligibility requirements, including time requirements, have been met. Resources transmitted before the eligibility requirements are met are reported as deferred revenue. Expendituredriven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. City sales taxes collected and held by merchants at year-end on behalf of the City are recognized as revenue. State shared revenues, including sales and income taxes, highway user and auto lieu taxes, and lottery distributions for transportation assistance, which are collected and held by the State at year-end, on behalf of the City, are also recognized as revenue. Special assessments are recognized as revenue only to the extent that individual installments are considered current assets. Annual installments not currently receivable are reflected as deferred special assessments revenue. Licenses and permits, charges for services and miscellaneous revenues are recorded as revenue when received as cash because they are generally not available until actually received. Changes in the fair value of investments are recognized in revenue at the end of each year. Expenditures are generally recognized when the related fund liability is incurred, as under accrual accounting. An exception to this general rule is interest on long-term debt which is recorded when due. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide financial statements, a reconciliation is presented on the page following each governmental fund financial statement, which briefly explains the adjustments necessary to transform the fund-based financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. (Continued) 35 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Proprietary Funds and Fiduciary Funds Financial Statements: The financial statements of the proprietary fund are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements described above. GASB Statement No. 20 requires that governments’ proprietary and business-type 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 to its enterprise fund and business-type activities. The City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. The proprietary fund financial statements distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting this definition, such as investment income and interest expense are reported as non-operating revenues and expenses. Internal service funds of the City, which provide services primarily to the other funds of the City, are presented in summary form 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 the internal service funds are consolidated into the governmental activities column when presented at the government-wide level. The costs of these services are reflected in the appropriate functional activity (General Government, Public Safety, Cultural-Recreational, etc.) on the government-wide statement of activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling up effect of these revenues and expenses. The City’s fiduciary fund is presented in the fund financial statements. The City’s fiduciary fund is an agency fund, which is custodial in nature and does not involve measurement of results of operations. The agency fund is accounted for on the accrual basis of accounting. Since by definition these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the City, these funds are not incorporated into the government-wide financial statements. e. Fund Accounting The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are (Continued) 36 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 reported by generic classification within the fund financial statements. GASB Statement No. 34 sets forth minimum criteria for the determination of major funds. The non-major funds are combined in a column in the fund financial statements and detailed in the combining section. The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Highway User Revenue Fund accounts for capital projects and maintenance of the City’s streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by the state shared fuel taxes. The City reports the following non-major governmental funds: Ten non-major Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specific purposes. Five non-major Debt Service Funds are used to account for the accumulation of resources for the payment of long-term obligation principal, interest and service charges. Eight non-major Capital Project Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. The City reports the following major proprietary fund: The Enterprise Fund has been established to account for all enterprise functions. This includes the City-owned electric, gas, water, wastewater and solid waste systems, as well as the City-owned airport, golf courses, convention center, stadium and district cooling. Additionally, the City reports the following fund types: The Internal Service Funds are used to account for operations that provide services to other departments of the government on a cost-reimbursement basis. These services include fleet support, materials and supply, printing and graphics, and self-insurance for property and public liability, workers’ compensation and employee benefit programs. The Agency Fund is used to account for assets being held by the City as an agent in a temporary custodial capacity. The Payroll Agency Fund accounts for all payroll transactions. f. Cash and Cash Equivalents and Investments At year-end, City cash totaled $6,438,291 which includes $225,310 of petty cash. The carrying amount of the City’s deposits was $6,212,981 and the bank balance was $2,088,066. 37 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The entire balance was covered by federal depository insurance or by collateral held in the pledging banks trust department in the City’s name. The difference of $4,124,915 represents deposits in transits, outstanding checks and other reconciling items. Interest Rate Risk. The City’s investment policy for limiting its exposure from rising interest rates complies with Arizona Revised Statute §35-323, which limits investments of public monies to maturities of less than three years. The City has purchased its own Special Improvement District Bonds with maturities that exceed three years. Credit Risk. The City’s Policy is consistent with the City Charter which authorizes the investment of City funds in accordance with Arizona Revised Statute §35-313. These investments include obligations of the U.S. Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase agreements, obligations of the State of Arizona or any of its counties or incorporated cities, towns or duly organized school districts, improvement districts in this state and the State Treasurer’s Investment Pool. The State Treasurer’s Investment Pool is overseen according to Arizona State Statute by the State Board of Deposit. The fair value of each share as of June 30, 2010, is equal to $1.00. The State Treasurer’s Investment Pool #7 that the City participates in does not receive a credit quality rating. The City’s investment in the bonds of U.S. Government agencies are rated AAA by Standard & Poor’s and Aaa by Moody’s. The Money Market Mutual Funds are all invested in U.S. Treasury securities. The City’s Special Improvement District bonds have no credit rating. The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The City’s investments that are reflected in the financial statements as cash equivalents total $429,733,379. The City’s investments and cash equivalents at June 30, 2010 are as follows: Investment Maturities (In Years) Investment Type Fair Value Less Than 1 U.S. Government Agencies City of Mesa Special Improvement District Bonds $ 10,023,150 Total Investments $ 13,780,892 $ 3,757,742 1-2 $ 744,000 $ 744,000 3-12 - $ 10,023,150 * 744,000 $ 2,269,742 ** 744,000 $ 12,292,892 *$10,023,150 of these bonds are callable from July 7, 2010 to November 12, 2010. **These bonds are callable from July 1, 2010 to July 1, 2020. 38 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Fair Value Investments: U.S. Government Agencies City of Mesa Special Improvement District Bonds $ 10,023,150 3,757,742 Total Investments as Reported in the Financial Statements Cash Equivalents: Money Market Mutual Funds Investments in State Treasurer's Local Government Investment Pool Repurchase Agreement Cash with Trustee 13,780,892 $ 24,023 391,429,314 5,436,762 33,110,780 Total Cash Equivalents 430,000,879 Total Investments and Cash Equivalents $ 443,781,771 Interest income from investments is recorded as revenue within the fund that made the investment, with the exception of the Debt Service, Capital Projects and Agency Funds. Income from investments within these funds is recorded in the General or Enterprise Fund based upon their general governmental or enterprise related function. The City had a net decrease in the fair value of investments during fiscal year 2009-10 of $216,433. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. g. Accounts Receivable and Due from Other Governments Accounts receivable are recorded in the various funds and displayed in the financial statements net of an allowance for uncollectibles as follows: 39 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Fund Receivables Governmental Activities: General Fund: Taxes $ 13,837,113 Courts 46,876,829 Other Customers 3,224,936 Restricted 3,837,133 Due from Other Governments State Shared Revenues 7,202,407 Other 17,143,137 Highway User Revenue Fund: Customers 600 Due from Other Governments: 2,908,947 Non-Major Governmental Funds: Customers 68,638 Restricted-Spec. Assessments 6,030,297 Due from Other Governments 6,414,159 Restricted-Due from Other Governments 12,227,979 Internal Service Funds Customers 1,253,777 Due from Other Governments 21,454 Total Governmental Activities $ 121,047,406 Business-Type Activities: Utility Customers $ 26,275,377 Other Customers 1,993,698 Due from Other Governments 5,406,709 Total Business-type Activities $ 33,675,784 Allowance $ $ $ $ Net (2,401,100) (43,864,418) (1,133,651) - $ 11,436,013 3,012,411 2,091,285 3,837,133 - 7,202,407 17,143,137 - 600 2,908,947 - 68,638 6,030,297 6,414,159 12,227,979 (47,399,169) (2,005,186) (233,000) (2,238,186) $ $ $ 1,253,777 21,454 73,648,237 24,270,191 1,760,698 5,406,709 31,437,598 h. Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Rehabilitation Revolving Loans not yet due (General Fund) $ 80,250 Surcharges included in Court Receivables (General Fund) 3,756,882 Grants received prior to meeting all eligibility requirements (General Fund) 930,270 Delinquent Property Taxes (General Fund) 432,508 Special assessments not yet due (Debt Service Fund) 6,030,297 Total deferred revenue for governmental funds $11,230,207 40 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 i. Interfund Receivables, Payables, and Transfers The following interfund activities are included in the fund financial statements at June 30, 2010: Interfund Receivables Fund Governmental funds: General Fund Special Revenue Funds Total Governmental funds $ $ 3,625,000 3,625,000 Interfund Payables $ $ 3,625,000 3,625,000 The interfund balances at June 30, 2010 are short-term loans to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2010 are expected to be repaid within one year. The net transfers of $65,433,214 from business-type activities to governmental activities on the government-wide statement of activities are primarily operational subsidies from the Enterprise Fund to the General Fund and capital assets with a book value of $19,013,513 that were transferred between governmental and business-type activities. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2010: Fund Governmental funds: General Fund Highway User Revenue Fund Non-major Governmental Funds Total governmental funds Proprietary funds: Enterprise Fund Internal Service Funds Total Transfers Out $ $ 46,969,736 12,416,168 7,268,000 66,653,904 84,581,287 151,235,191 Transfers In $ $ 85,519,851 63,917,480 149,437,331 134,560 1,663,300 151,235,191 The interfund transfers generally fall within one of the two following categories: 1) debt service payments made from a debt service fund but funded from an operating fund; 2) subsidy transfers. 41 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 j. Inventory The warehouse inventory is valued at the lower of average cost or market, while fleet support services inventory is valued at cost on a first-in, first out (FIFO) basis. The cost of inventory is reported as an expenditure at the time individual items are consumed. k. Unbilled Accounts Receivable Unbilled utility service receivables are recorded in the year in which the services are provided. At June 30, 2010, unbilled utility service receivables are recorded in the Enterprise Fund as follows: Electric Gas Water Wastewater Solid Waste $ 1,371,627 927,391 4,669,565 2,089,092 1,671,746 $ 10,729,421 l. Capital Assets Capital assets, including infrastructure (streets, sidewalks, street lighting, storm drainage and other assets that are immovable and of value only to the City) are defined as assets with an initial cost of $5,000 or more and an estimated useful life of more than one year. Effective July 1, 2009, the City implemented GASB Statement No. 51 - Accounting and Financial Reporting for Intangible Assets, which requires the capitalization of intangible assets. Intangible assets for the City include goodwill, right of way, easements and computer software. The City has elected to capitalize software with an initial cost of $100,000 or more. Intangible assets will be capitalized and accounted for prospectively from July 1, 2009. All capital assets, whether owned by governmental activities or business-type activities are required to be recorded and depreciated in the government-wide financial statements. Effective July 1, 2009, the City moved the Hohokam Stadium/Fitch Complex from the governmental activities to the business-type activities. Capital assets with a value of $19,013,513, net of accumulated depreciation, were transferred to the business-type activities. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Contributions of assets are stated at fair market value based on appraisals or engineering estimates of value at the time of receipt. When assets are retired or sold, the costs of the assets and the related accumulated depreciation are eliminated from the accounts, and any resultant gain or loss is charged to income or expense. Prior to June 30, 1978, the City did not maintain detailed property cost records of its capital assets other than for rolling stock. A physical inventory was performed during the fiscal year ended June 30, 1978 and detailed property records were prepared. Generally, the assets were (Continued) 42 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 recorded at cost. Where historical cost information was not available, the assets were valued at estimated cost using engineering estimates, appraisals or current replacement cost, adjusted to the year of acquisition. Depreciation has been provided using the straight-line method based on the estimated useful lives of the assets. Amortization of capital leased assets has been provided using the straightline method based on the shorter of the lease period or estimated useful lives of the leased assets. The estimated useful lives are as follows: Buildings Other Improvements Machinery and Equipment Intangibles Infrastructure 15-50 Years 10-50 Years 3-30 Years 3-99 Years 10-99 Years 43 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2010 follows: Governmental Activities: Non-depreciable Assets: Land $ Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Depreciable Assets Less Accumulated Depreciation for: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Accum. Depreciation Total Depreciable Assets, net Governmental Activities Capital Assets, net $ Balance July 1, 2009 Additions 257,858,440 $ 165,530,225 423,388,665 4,597,901 $ 82,580,163 87,178,064 284,809,762 127,800,378 152,085,182 735,085,394 1,299,780,716 (67,097,912) (54,153,379) (106,591,230) (256,333,866) (484,176,387) 815,604,329 1,238,992,994 $ Retirements - $ (109,555,849) (109,555,849) Transfers (685,657) $ (685,657) 39,939,202 23,490,200 15,696,258 150,107 42,690,289 121,966,056 (1,171,629) (1,161,746) (3,609,888) (2,461,760) (8,405,023) (18,312,936) (8,251,602) (872,976) (27,437,514) (5,156,301) (8,916,172) (19,269,540) (134,590) (23,099,896) (56,576,499) 65,389,557 1,166,812 851,117 3,581,051 2,461,760 8,060,740 (344,283) 5,051,387 3,330,802 727,469 9,109,658 (18,327,856) 152,567,621 $ (109,900,132) $ Balance June 30, 2010 (19,013,513) $ 261,770,684 138,554,539 400,325,223 305,264,399 141,877,230 163,298,576 150,107 775,313,923 1,385,904,235 (66,036,014) (58,887,632) (121,552,250) (134,590) (276,972,002) (523,582,488) 862,321,747 1,262,646,970 Depreciation expense was charged to governmental functions in the government-wide financial statements as follows: General Government $ 4,925,077 Public Safety 18,100,881 Cultural - Recreational 6,582,621 Community Environment 26,570,115 Capital assets held by the City's Internal Service funds are charged to the various functions based on their usage of the assets 397,805 Total Depreciation 44 $56,576,499 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business-type Activities: Non-depreciable Assets: Land Water Rights Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Depreciable Assets Less Accum. Depr. & Amort. for: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Accum. Depr. & Amort. Total Depreciable Assets, net Business-type Activities Capital Assets, net Balance July 1, 2009 $ $ Additions 52,027,492 $ 15,523,973 147,632,984 215,184,449 7,233,394 $ 2,045,894 53,011,810 62,291,098 Retirements Transfers - $ (82,486,534) (82,486,534) Balance June 30, 2010 685,657 $ 685,657 59,946,543 17,569,867 118,158,260 195,674,670 74,361,132 1,281,588,116 128,749,601 12,522,509 1,497,221,358 27,679 76,341,207 4,409,493 1,042,469 7,145,836 88,966,684 (2,727,918) (3,009,335) (5,737,253) 18,312,936 8,251,602 899,594 27,464,132 92,701,747 1,363,453,007 131,049,353 13,564,978 7,145,836 1,607,914,921 (26,652,069) (367,506,440) (76,835,185) (8,928,177) (479,921,871) 1,017,299,487 (2,239,106) (36,302,997) (12,804,045) (417,417) (266,650) (52,030,215) 36,936,469 982,610 2,804,196 3,786,806 (1,950,447) (5,051,387) (3,330,802) (754,087) (9,136,276) 18,327,856 (33,942,562) (406,157,629) (87,589,121) (9,345,594) (266,650) (537,301,556) 1,070,613,365 19,013,513 $ 1,266,288,035 1,232,483,936 $ 99,227,567 $ (84,436,981) $ Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statement as follows: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Stadium District Cooling $ 3,372,147 3,394,025 19,379,577 20,348,628 2,296,471 1,335,495 252,859 515,182 747,361 388,470 Total Depreciation and Amortization $ 52,030,215 45 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Construction in progress and related construction commitments are composed of the following: Construction in Progress Governmental Activities General Government Public Safety Cultural-Recreational Community Environmental Warehouse, Maintenance & Services Total $ Commitments 11,142,816 25,540,596 22,460,838 79,365,587 44,702 $ 138,554,539 $ $ $ 235,029 932,570 10,136,409 2,976,925 112,819 232,984 1,023 6,901 - $ 14,634,660 $ 206,541 6,062,464 6,790,110 19,704,675 6,458 32,770,248 Business-type Activities Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Stadium District Cooling Total 13,356,031 13,940,418 64,044,655 17,944,536 1,097,438 5,523,657 537,573 1,422,211 159,956 131,785 $ 118,158,260 m. Capitalization of Interest For the year ended June 30, 2010, the City capitalized net interest costs of $3,453,424 (interest expense of $3,476,485 reduced by interest income of $23,061 in the Business-type Activities Enterprise Fund). Total interest expense and income in the Business-type Activities Enterprise Fund before capitalization was $39,916,384 and $530,813 respectively. n. Self-Insurance Internal Service Fund The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds have been established to account for the costs of claims incurred by the City under self-insurance programs. The City is fully self-insured for all public liability risks, up to a maximum of $3,000,000 per occurrence, for the current policy year under the Property and Public Liability Insurance program. In addition, the City carries full property insurance 46 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 with a $50,000 per occurrence deductible. Under the Workers’ Compensation Program, the City is subject to a maximum deductible of $1,000,000 liability per occurrence. In the Employee Benefits Fund, the City has excess insurance coverage when an individual’s claims exceed $175,000 per contract year. There were no changes in insurance coverage during this fiscal year for any of the three Self-Insurance Funds. The various funds of the City include, as expenditures, amounts contributed to each of the self-insurance funds during the fiscal year. The Property and Public Liability and the Employee Benefits Self-Insurance Funds establish a liability for actuarially computed estimates for those claims incurred but not yet reported. The claims incurred but not reported in the Workers’ Compensation Fund consist of actual claims reported during July 2010. The stop loss receivable balance for the Workers’ Compensation Fund at June 30, 2010 is $39,946. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $422,086 with $93,080 received this current fiscal year. The Property and Public Liability Fund does not have a stop loss receivable at June 30, 2010, and the Fund has not received any settlements in excess of insurance coverage over the past three fiscal years. The stop loss receivable for the Employee Benefits Fund at June 30, 2010 is $459,733. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $1,919,050 with $148,619 received this current fiscal year. Changes in the balances of claims liabilities during the past two fiscal years are as follows: Property & Public Liability Workers' Compensation Employee Benefits Total Unpaid Claims, 6/30/08 $ 16,800,000 Adjustments to Reserves-FY 08-09 8,304,458 Claim Payments-FY 08-09 (1,604,458) $ 6,239,328 3,146,731 (2,423,429) $ 5,650,397 45,104,935 (46,962,265) $ 28,689,725 56,556,124 (50,990,152) Unpaid Claims, 6/30/09 $ 6,962,630 $ 3,793,067 $ 34,255,697 Adjustments to Reserves-FY 09-10 $ 768,233 Claim Payments-FY 09-10 (6,632,233) $ 3,711,902 (2,953,506) $ 50,014,525 (50,076,301) $ 54,494,660 (59,662,040) Unpaid Claims, 6/30/10 $ 7,721,026 $ 3,731,291 $ 29,088,317 $ 23,500,000 $ 17,636,000 All unpaid claims are reported as current liabilities in the Statement of Net Assets as the change in these amounts have already been expensed in the statement of activities. 47 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The Property and Public Liability Self Insurance Fund reported a decrease in unpaid claim reserves of $5.9 million during the fiscal year ended June 30, 2010. This decrease is due to the settlement of three large claims, dismissals of several high exposure cases and reserve estimates were revised during the current year. o. Compensated Absences The current portion of governmental funds accrued vacation and sick leave benefits payable are included as a liability in the fund financial statements. The entire amount of accumulated unpaid vested vacation pay and an estimated amount for sick leave related to the proprietary funds is included as a liability in the fund financial statements. The remaining long-term balances related to governmental activities are included in the government-wide financial statement (see Note 5 for additional disclosure of long-term balances). p. Statement of Cash Flows A statement of cash flows classifies cash receipts and payments according to whether they stem from operating, non-capital financing, capital and related financing, or investing activities. For purposes of the statements of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. This includes repurchase agreements and all monies in the State Treasurer’s Local Government Investment Pool since the City may deposit or withdraw cash at any time without prior notice or penalty. q. Budgets and Budgetary Accounting Each year, the City Manager issues a budget calendar giving specific completion dates for various phases of the budget preparation process. The final adoption of the operating budget is by ordinance. Prior to June 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 expenditures and the means of financing them. Public hearings are conducted by the City to obtain citizen comments. Prior to June 30, the budget for the ensuing year is legally adopted through passage of an ordinance; these appropriations lapse at the end of each fiscal year. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget in total, and from the resolution itself that limits expenditures by fund and by departmental groupings. Transfers of sums within a specific fund or departmental group may be made upon City Manager approval. 48 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The legally adopted budget consists of all funds except the Agency Fund. Capital Projects (both Governmental and Proprietary) are budgeted as one item (as shown in Exhibit D-5). Governmental debt service expenditures are budgeted in the General Fund and Special Revenue Funds. Budget schedules for the major governmental funds (General and Highway User Revenue Funds) are presented in the Required Supplementary Information Section, and the other funds are located in the Supplementary Information Section. Additional detailed budget schedules for the General and Highway User Revenue Funds are also located in the Supplementary Information Section. On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. The State Economic Estimates Commission determines and publishes, prior to April 1st of each year, the expenditure limitation for the following fiscal year for each governmental unit. Fiscal year 1979-80 is the base year for calculations. Budgets for all funds are adopted in accordance with the requirements of the Arizona Constitution, Arizona Revised Statutes and the Mesa City Charter. There are certain differences between the basis used for budgetary purposes and that used for reporting in accordance with generally accepted accounting principles. For additional detail, see the note to required supplementary information and the individual budget schedules in the supplemental information exhibits. Budgeted amounts are as originally adopted by the City Council on June 22, 2009. r. Contingency Services The principal purpose of a contingency is to cover any unforeseen expenditures that may arise after the budget is adopted, and to cover expenditures resulting from prior year encumbrances. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditure of each program or activity for the ensuing year. Thus a contingency is essential for budgetary purposes. Any balance of a contingency appropriation not used during one fiscal year is available to help finance the following year’s budget. The contingency applications are reflected in the budget basis financial statements for the fiscal year ended June 30, 2010 and are made in accordance with State Statutes. 49 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 2. RECONCILIATION OF GOVERNMENTAL FUND FINANCIAL STATEMENTS TO GOVERNMENT-WIDE STATEMENTS The governmental fund financial statements are presented on a current financial resources measurement focus and modified accrual accounting basis while the government-wide financial statements are prepared on a long-term economic resources measurement focus and accrual accounting basis. Reconciliations briefly explaining the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements immediately follow each governmental fund financial statement. Additional reconciliations are provided on the next page. 50 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Reconciliation of the Governmental Funds Balance Sheet to the government-wide Statement of Net Assets: Total Governmental Funds Assets Cash and Cash Equivalents Investments Accounts Receivable, net Interest Receivable Due From Other Governments Due From Other Funds Inventories Prepaid Costs Deposits Restricted Cash and Cash Equivalents Restricted Cash With Trustee Restricted Accounts Receivable - Deferred Restricted Due From Other Governments Unamortized Bond Issuance Costs Investment in Joint Ventures Capital Assets Total Assets Liabilities Warrants Outstanding Accounts Payable Other Accrued Expenses Due To Other Funds Customer and Defendant Deposits Compensated Absences Restricted Lease Interest Payable Restricted Bond Interest Payable Restricted Note Interest Payable Restricted Deferred Revenue M atured G.O. Bonds Payable M atured HURF Bonds Payable M atured Capital Leases Payable Long-term Liabilities Total Liabilities Fund Balance/Net Assets Total Fund Balance/Net Assets Total Liabilities and Fund Balance/Net Assets $ 174,458,152 3,757,742 16,608,947 107,459 33,668,650 3,625,000 Long-term Assets/ Liabilities(1) $ Internal Service Funds(2) Reclassifications and Eliminations $ 33,855,815 5,001,250 1,253,777 20,660 21,454 2,140,225 5,964,364 396,380 542,344 374,931 41,109,457 33,110,780 9,867,430 12,227,979 $ $ 329,458,871 1,545,430 52,143,017 1,258,664,460 $ 1,312,352,907 3,982,510 $ 52,636,435 $ $ $ $ $ 3,157,664 25,527,799 208,313,967 8,758,992 17,862,724 128,119 33,690,104 (3,625,000) 2,140,225 5,964,364 938,724 374,931 41,109,457 33,110,780 9,867,430 12,227,979 1,545,430 52,143,017 1,262,646,970 (3,625,000) $ 1,690,823,213 $ 1,540,146 29,088,317 3,625,000 9,338,642 1,265,901 2,793 10,823,241 449,167 11,230,207 24,058,189 5,720,000 56,067 (3,625,000) (6,543,055) 95,254,670 635,334,074 628,791,019 4,390,915 35,019,378 234,204,201 683,561,888 17,617,057 $ 329,458,871 $ 1,312,352,907 $ 52,636,435 Statement of Net Assets Total (3,625,000) $ 3,157,664 27,067,945 29,088,317 9,338,642 1,265,901 2,793 10,823,241 449,167 4,687,152 24,058,189 5,720,000 56,067 639,724,989 755,440,067 935,383,146 (3,625,000) $ 1,690,823,213 (1) When capital assets (land, buildings, equipment, etc.) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures 51 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 in governmental funds, and thus a reduction in fund balance. However, the statement of net assets includes those capital assets among the assets of the City as a whole. Costs of capital assets Accumulated depreciation $1,777,129,863 (518,465,403) $1,258,664,460 Investment in joint ventures that are to be used in governmental activities are also reported in the governmental funds as expenditures as constructed. These assets are included in the statement of net assets for the City as a whole. Investment in joint ventures $ 52,143,017 Bond issuance costs are expended when incurred in governmental funds, but are deferred and amortized over the life of the bonds in the statement of net assets. Unamortized bond issuance costs $ 1,545,430 Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period, and accordingly are not reported as fund liabilities in the governmental fund statement. Bonds payable Notes payable Capital leases Compensated absences Post employment benefits Unamortized bond premiums $ 409,362,629 45,000,000 5,406,120 17,697,898 150,011,737 7,855,690 $ 635,334,074 Deferred revenue for the long-term special assessment receivables, property tax receivables and for the rehabilitation loan program shown on the governmental fund statements is not deferred on the statement of net assets. Deferred property tax revenues Deferred special assessment revenue Deferred rehabilitation loan revenue (2) $ $ 432,508 6,030,297 80,250 6,543,055 Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets, but are not included on the governmental funds balance sheet. Total $ 17,617,057 (Continued) 52 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government-wide Statement of Activities: To ta l Go ve rnm e nta l F unds R e v e n u e s a n d O t h e r S o u rc e s Ta xe s P ro pe rty Ta xe s Oc c upa nc y Ta xe s S pe c ia l As s e s s m e nts Lic e ns e s a nd P e rm its Inte rgo ve rnm e nta l C ha rge s fo r S e rvic e s C o ntributio ns F ine s a nd F o rfe iture s Inve s tm e nt Inc o m e M is c e lla ne o us Othe r S o urc e s : C a pita l C o ntributio ns Tra ns fe rs In F a c e Am o unt o f B o nd S a le s P re m ium s o n Is s ua nc e o f B o nds F a c e Am o unt o f No te s Is s ue d P re m ium s o n Is s ua nc e o f No te s To ta l R e ve nue s a nd Othe r S o urc e s $ C a pita l R e la te d Ite m s (2) $ Inte rna l S e rvic e F unds (3) $ Lo ng-te rm De bt Tra ns a c tio ns (4) $ Elim ina tio ns a nd Adjus tm e nts (5) $ S ta te m e nt of Ac tivitie s $ 432,508 (600,187) 17,353 14,757,171 10,134,507 190,716 13,675,435 78,932 133,467 37,488 16,664,125 149,437,331 30,865,000 401,850 45,000,000 869,000 611,493,854 E xp e n d it u re s / E xp e n s e s C urre nt: Ge ne ra l Go ve rnm e nt P ublic S a fe ty C ultura l-R e c re a tio na l C o m m unity Enviro nm e nt De bt S e rvic e : P rinc ipa l P a ym e nts Inte re s t o n B o nds Inte re s t o n C a pita l Le a s e s Inte re s t o n No te s S e rvic e C ha rge s C o s t o f Is s ua nc e C a pita l Outla y To ta l Expe nditure s \Expe ns e s O t h e r F in a n c in g Us e s / C h a n g e s in N e t A s s e t s Tra ns fe rs Out To ta l Expe nditure s \Expe ns e s & Othe r F ina nc ing Us e s Ne t C ha nge fo r the Ye a r 121,556,751 $ 13,885,749 1,580,533 922,651 11,823,758 190,731,282 20,419,291 Lo ng-te rm R e ve nue s / Expe ns e s (1) 40,112,552 216,025,864 40,150,034 72,081,273 34,845,924 20,366,043 370,600 449,167 9,397 538,824 82,530,441 507,480,119 992,905 (30,865,000) (401,850) (45,000,000) (869,000) (150,326) 7,265,196 40,060,765 4,962,033 4,366,975 574,134,023 37,359,831 $ (63,917,480) 15,962,475 (77,098,362) 4,932,241 18,136,117 7,103,924 27,063,819 2,550,750 14,668,535 1,760,142 487,325 1,845 37,412 33,982 96,741 54,862,584 288,928,693 54,010,115 104,096,133 (34,845,924) (1,172,742) 19,193,301 370,600 449,167 521,910,593 (538,824) (82,530,441) (25,294,340) 56,645,572 19,040,131 56,645,572 (56,795,898) $ (6,254,209) 22,918,334 $ 19,466,752 (36,387,510) - (697,013) 18,769,739 (2,807,264) $ (63,917,480) (36,387,510) (40,710,852) $ (63,917,480) - $ (1) Revenues that are “unavailable” and do not provide current financial resources are not reported in the governmental funds. These revenues are reported in the statement of activities. However, the subsequent collection of these revenues in the governmental funds will reduce the amount reported in the statement of activities. Property tax revenue Special assessment revenue Rehabilitation loan revenue Total 53 16,664,125 86,512,756 - 16,664,125 (9,397) 66,653,904 $ (63,917,480) 121,556,751 14,318,257 1,580,533 322,464 11,823,758 190,748,635 20,419,291 14,757,171 10,134,507 269,648 13,846,390 $ 432,508 (600,187) 17,353 $ (150,326) (Continued) 502,954,286 21,079,542 542,990,135 (40,035,849) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrual of long-term compensated absences Accrual of post employment benefits Total (2) $ 1,316,639 (57,962,211) $ (56,645,572) When capital assets that are to be used in the governmental activities are purchased or constructed, or are to be classified as investment in joint venture, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of the financial resources expended, whereas net assets decrease by the amount of depreciation expense charged for the year. Capital outlay for capital assets Capital outlay for joint venture Depreciation expense Depreciation expense for joint venture Total $ 80,915,523 1,614,918 (56,178,694) (762,653) $ 25,589,094 The net effect of miscellaneous transactions involving capital assets (donations, transfers and disposals) is to increase net assets. Donation of capital assets $ 16,664,125 Loss on disposal of capital assets (294,754) Transfer of capital assets reclassified to transfer in (19,040,131) Total $ (2,670,760) (3) Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The adjustments for internal service funds “close” those funds by charging the additional amounts to participating governmental activities to completely cover the internal service funds’ costs for the year. Revenue and other sources Expenditures and other uses Transfers in from General Fund Transfer in from Enterprise Fund Transfer of capital assets from governmental activities Change in net assets 54 $ 14,969,570 (19,466,752) 697,013 966,287 26,618 $ (2,807,264) (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 (4) Bond and note proceeds are reported as financing sources and the repayment of principal consumes financial resources in the governmental funds. Neither transaction has any effect on the statement of activities. New debt issued (including refunded debt) General Obligation bond proceeds Highway Project Advancement Notes Principal repayments Total $ (30,865,000) (45,000,000) 34,845,924 $ (41,019,076) Governmental funds report bond issue costs, premiums and deferred amounts relating to refunding when first issued. In the statement of activities these amounts are deferred and amortized. Current year bond issue cost additions $ 621,873 Amortization of bond issue costs (169,980) Amortization of deferred amounts (1,190,187) 1,124,069 Accretion of certificates Current year bond premium additions (1,270,850) Amortization of bond premiums (1,193,299) Total $ 308,224 (5) Interfund transfers between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of transfers in and transfers out to eliminate the doubling up effect of these transactions within the governmental activities. Elimination of transfers to/from the Internal Service Funds is netted into the results of the Internal Service Funds in (3) above. Transfers out Transfers in Total $ (63,917,480) 63,917,480 $ - 55 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 3. RETIREMENT AND PENSION PLANS All full-time employees of the City are covered by one of three pension plans. The Arizona State Retirement System is for the benefit of the employees of the state and certain other governmental jurisdictions. All full-time City employees, except fire and police personnel, are included in the plan that is a multiple-employer cost-sharing defined benefit pension plan. All police and fire personnel participate in the Public Safety Personnel Retirement System that is an agent multipleemployer plan. In addition, the Mayor and Councilmembers contribute to the State’s Elected Officials Retirement Plan that is also a multiple-employer cost-sharing pension plan. Arizona State Retirement System: a. Plan Description All the City’s full-time general employees participate in the Arizona State Retirement System (“System”), a multiple-employer, cost-sharing defined benefit pension plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with Title 38, Chapter 5 of the Arizona Revised Statutes. The System provides for retirement, disability, and death and survivor benefits. The System issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Arizona State Retirement System, 3300 N. Central Avenue, Suite 1300, Phoenix, Arizona, 85012 or by calling 1-800-621-3778. b. Funding Policy Covered employees were required by state statute to contribute 9.40 percent of their salary to the System during fiscal year 2009-10 and the City was required to match it. The Arizona Revised Statutes (“A.R.S.”) 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 legislate a contribution rate other than the actuarially determined rate. The City’s contributions to the System for the years ending June 30, 2010, 2009 and 2008 were $13,134,628, $13,983,834 and $14,784,935 respectively, which were equal to the required contributions for each year. The City’s employees contributed equal amounts to the System for the same time period. Elected Officials Retirement Plan: a. Plan Description The City’s Mayor and Councilmembers participate in the Elected Officials Retirement Plan (“EORP”) a multiple employer, cost-sharing defined benefit pension plan. The Fund Manager of the Public Safety Personnel Retirement System (“PSPRS”) is the administrator (Continued) 56 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 for the EORP that 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. 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, 1020 East Missouri Avenue, Phoenix, Arizona, 85014 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 7 percent of their annual covered salary. The employer rate for 2009-10 was 26.25 percent. The City’s contributions to EORP for the fiscal years ending June 30, 2010, 2009 and 2008 were $39,152, $42,300 and $30,470 respectively, which were equal to the required contributions for each year. The City’s employees contributed $10,440, $10,575 and $10,554, for the same time period. Public Safety Personnel Retirement System: a. Plan Description The City contributes to the Public Safety Personnel Retirement System (“PSPRS”), an agent multiple-employer public safety employee retirement system that acts as a common investment and administrative agent for the various fire and police agencies within the state. All police and fire personnel are eligible to participate in the plan. The plan provides retirement and disability benefits, 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. The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to Public Safety Personnel Retirement System, 1020 East Missouri, Phoenix, Arizona, 85014 or by calling 602-255-5575. b. Funding Policy PSPRS members are required to contribute 7.65 percent of their annual covered salary and the City is required to contribute an actuarially determined rate. The rate for 2009-10 was 21.88 (21.44 pension plus .44 health care) percent for fire personnel and 21.44 (20.90 pension plus .54 health care) percent for police members. Benefit and contribution provisions are established by state law and may be amended only by the State of Arizona Legislature. (A.R.S. Section 38-843) 57 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 c. Annual Pension Cost Police personnel contributed $4,347,225 and fire personnel $2,101,874 during fiscal year 2009-10. For 2010, the City’s annual pension cost of $12,183,595 for police and $6,011,633 for fire was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2009 actuarial valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) 8.5 percent investment rate of return, (b) projected salary increases of 5.5 percent attributable to inflation, (c) additional projected salary increases ranging from 0.0 percent to 3.0 percent per year, attributable to seniority/merit. The actuarial value of PSPRS assets was determined using the smooth market value method. PSPRS’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over an closed period of 27 years. d. Three Year Trend Information for PSPRS (Latest Available Information): Police Fiscal Year Ending 2007 2008 2009 Annual Pension Cost (APC) $ 7,112,462 9,525,313 13,261,044 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Annual Pension Cost (APC) $ 3,501,613 5,098,956 6,677,496 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Fire Fiscal Year Ending 2007 2008 2009 e. Annual Other Post Employment Benefits Cost For 2009 the City’s annual Other Post Employment Benefits (OPEB) cost of $1,030,688 for police and $469,225 for fire was equal to the City’s required contributions. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 and the two preceding years were as follows: 58 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Police Fiscal Year Ending 2007 2008 2009 $ Annual OPEB Cost 1,000,670 971,065 1,030,688 Percentage of Annual OPEB Cost Contributed 100% 100 100 Net OPEB Obligation $ - Annual OPEB Cost 489,195 477,752 469,225 Percentage of Annual OPEB Cost Contributed 100% 100 100 Net OPEB Obligation $ - Fire Fiscal Year Ending 2007 2008 2009 $ 4. POST EMPLOYMENT BENEFITS In addition to the pension benefits described in Note 3, the City provides post-retirement health care benefits to all eligible retirees in accordance with the compensation plan adopted by the City Council each fiscal year. These benefits include medical, dental and vision insurance programs and are the same as those offered to active employees. Retirees may select single or family coverage. As of June 30, 2010, approximately 1,428 former employees were eligible for these benefits, an increase of 107 participants from the prior year or an 8.1% increase. The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In implementing the requirements of GASB Statement No. 45, the City recognizes the cost of post employment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the City’s future cash flows. Recognition of the liability accumulated from prior years will be amortized over 30 years, the first period commencing with the fiscal year ending June 30, 2008. The unfunded actuarial accrued annual required contribution for current retirees as well as current active members for fiscal year 09-10 was $72,089,991. A liability of $12,723,899 is accrued in the business type activities financial statements, the remaining $59,366,092 has been accrued in the governmental activities column in the government-wide financial statements. 59 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Plan Description The City provides post-employment medical care (OPEB) for retired employees through a singleemployer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents through the City’s self-insurance health insurance plan which covers both active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Benefits Advisory Board and approved by the Mesa City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Employees must enroll in a City plan immediately after they retire or their eligibility for this benefits ceases. All medical care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Upon a retiree’s death, the retiree’s dependents are no longer eligible for City coverage. As of July 1, 2009, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Active Employees Total 1,296 3,167 4,463 Funding Policy The plan premium rates are determined annually by the Benefits Advisory Board and approved by the City Council. The City’s contribution to the retirees health insurance premium is determined by their length of service with the City and their original hire date. To receive maximum benefits an employee must meet the following: Ten years of service for employees hired prior to January 1, 2001 Fifteen years of service for employees hired at January 1, 2001 but before January 1, 2006. Twenty years of service for employees hired on or after January 1, 2006. As of January 1, 2009, new hires are no longer eligible for benefits. For fiscal year ended June 30, 2010, the City contributed $9,879,765 to the plan (approximately 65.4 percent of total premiums). Plan members receiving benefits contributed $5,235,201 or approximately 34.6 percent of total premiums. 60 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Annual OPEB Costs / Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and the related information for the plan are as follows at June 30, 2010: Annual Required Contribution Interest on Net OPEB Obligation Adjusted to Annual Required Contribution Annual OPEB Cost Contributions Made Increase in Net OPEB Obligation Net OPEB Obligation – Beginning of year Net OPEB Obligation – End of year $ $ 83,522,342 5,081,970 (6,634,556) 81,969,756 9,879,765 72,089,991 112,932,659 185,022,650 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the three years ending June 30, 2008 through 2010 were as follows: Fiscal Year Ended 2008 2009 2010 Annual Required Contributions $65,194,175 65,194,175 81,969,756 Actual Contributions $8,191,946 9,263,746 9,879,765 Percentage of OPEB Cost Contributed 12.57% 14.21 12.05 Net OPEB Obligation $ 57,002,229 112,932,659 185,022,650 Funded Status and Funding Progress The funded status of the plan as of June 30, 2010 was as follows: Actuarial Value of Plan Assets Actuarial Accrued Liability Unfunded actuarial accrued liability Funded ratio Covered payroll Unfunded actuarial accrued liability as a percentage of covered payroll $ 916,615,559 916,615,559 0% 321,012,148 $ $ 286.0% Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations 61 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant method and assumptions used for this fiscal year valuation were as follows: Valuation Date Actuarial Cost Method Amortization method Remaining amortization period Asset Valuation Method July 1, 2009 Entry age normal, level dollar amount 30 – year amortization open 30 years remaining as of June 30, 2009 N/A, no assets in trust Actuarial Assumptions: Discount rate Projected salary increases Health care cost trend rate: 4.50% N/A Cost of living adjustments Medical, Drug, Vision10.0% in 2009-2010, grading down by 0.5% each year to an ultimate rate of 5.0% Dental, Mental Health 5% for all years Retiree contribution increase Same as medical Trend N/A Medical Reimbursements The federal government may provide the City subsidies per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. Any current and future year subsidies are recorded as revenue in the year received and is not recognized as a reduction to the actuarial accrued liability. 62 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 5. LONG-TERM OBLIGATIONS a. Changes in Long-Term Obligations The following is a summary of changes in long-term obligations. Governmental Activities: Bonds Payable: General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds with Governmental Commitment Add Certificates of Supplemental Interest Less Deferred Amounts on Refundings Total Bonds Payable Capital Leases Highway Project Advancement Notes Unamortized Premiums Post Employment Benefits Compensated Absences Governmental Activities Total Business-type Activities: Bonds Payable: Revenue Bonds General Obligation Bonds Add Certificates of Supplemental Interest Less Deferred Amounts on Refundings Total Bonds Payable Notes Payable Capital Leases Unamortized Bond Premiums Post Employment Benefits Compensated Absences Business-type Activities Total $ $ $ $ Additions 267,062,537 $ 140,265,000 30,865,000 $ - (24,058,188) $ 273,869,349 $ (5,720,000) 134,545,000 21,675,399 6,030,000 7,294,000 1,124,069 43,097 (6,708,552) 409,037,054 30,908,097 9,729,856 45,000,000 7,778,139 1,270,850 94,182,201 67,502,076 19,885,086 12,506,267 540,612,336 $ 157,187,290 $ (744,000) 6,550,000 (1,167,166) 1,106,832 (5,601,720) (30,582,522) 409,362,629 (4,323,736) 5,406,120 45,000,000 (1,193,299) 7,855,690 (8,135,984) 153,548,293 (13,839,096) 18,552,257 (58,074,637) $ 639,724,989 $ 744,000 28,449,399 3,240,527 3,692,757 35,382,683 817,530,000 $ 2,957,463 41,234 (17,329,024) 803,199,673 333,189 158,413 18,264,494 18,750,458 4,759,465 845,465,692 $ (10,475,000) $ 857,435,000 $ (266,812) 2,690,651 (42,816) 1,738,836 (15,590,188) (9,045,792) 844,535,463 (856,311) 2,963,780 (158,413) (2,103,208) 16,915,475 (1,743,781) 31,474,357 (3,033,041) 4,613,127 (16,940,546) $ 900,502,202 $ 63 50,380,000 $ 1,582 50,381,582 3,486,902 754,189 14,467,680 2,886,703 71,977,056 $ Reductions Ending Balances Amounts Due Within One Year Beginning Balances 12,585,000 469,601 13,054,601 239,581 818,072 14,112,254 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 b. Bonds Payable At June 30, 2010, long-term bonds payable consisted of: Classified in Governmental Activities on the government-wide financial statements: General Obligation Bonds $36,500,000 2000 general obligation serial bonds (partially refunded by general obligation refunding bonds, series 2002A, 2004 & 2006), due in annual principal installments ranging from $2,500,000 to $2,750,000, plus semi-annual interest of 6.50 percent through July 1, 2011. $ 2,750,000 $25,375,000 2002 general obligation serial bonds (partially refunded by general obligation refunding bonds, series 2002A, 2004 & 2006), due in annual principal installments ranging from $1,750,600 to $1,825,000, plus semi-annual interest ranging from 5.25 percent to 6.00 percent through July 1, 2011. 1,743,700 $24,720,000 2002 general obligation refunding serial bonds, due in annual principal installments ranging from $59,706 to $9,498,229, plus semi-annual interest ranging from 3.75 percent to 5.375 percent through July 1, 2015. 5,803,957 $41,680,611 2002A general obligation refunding serial bonds, due in annual principal installments ranging from $1,461,369 to $10,277,813, plus semi-annual interest ranging from 3.75 percent to 4.20 percent through July 1, 2016. Total bonds outstanding at June 30, 2008, include $1,473,597 of certificates of ownership of supplemental interest payments and $98,701 of capital appreciation maturing through 2010. 32,179,011 $22,565,000 2003 general obligation serial bonds, due in annual installments ranging from $1,250,000 to $2,315,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2022. 21,315,000 $46,230,300 2004 general obligation refunding serial bonds, due in annual installments ranging from $34,839 to $31,852,800, plus semi-annual interest ranging from 2.4 percent to 5.0 percent through July 1, 2018. 44,281,391 $11,705,000 2005 general obligation serial bonds, due in annual installments ranging from $500,000 to $3,250,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2024. 11,705,000 $9,710,000 2006 general obligation serial bonds, due in annual installments ranging from $135,000 to $4,225,000, plus semi-annual interest ranging from 4.40 percent to 5.0 percent through July 1, 2025. 9,710,000 $25,482,000 2006 general obligation refunding serial bonds, due in annual installments ranging from $143,425 to $11,306,746, plus semi-annual interest ranging from 4.25 percent to 5.25 percent through July 1, 2014. 24,694,494 $15,915,000 2007 general obligation serial bonds due in annual installments ranging from $615,000 to $5,500,000 plus semi-annual interest ranging from 4.125 percent to 6.0 percent through July 1, 2027. 15,915,000 64 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 $15,450,000 2008 general obligation serial bonds due in annual installments ranging from $375,000 to $6,675,000 plus semi-annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2028. $ 14,700,000 $61,830,000 2009 general obligation serial bonds due in annual installments ranging from $1,750,000 to $10,125,000 plus semi-annual interest ranging from 4.0 percent to 4.625 percent through July 1, 2029. 54,930,000 $30,865,000 2010 general obligation bonds due in annual installments ranging from $1,115,000 to $13,225,000 plus semi-annual interest ranging from 4.75 percent to 5.85 percent through July 1, 2030. 30,865,000 Total General Obligation Bonds Deferred amounts on refundings Bonds not including deferred amounts on refunding $270,592,553 3,276,796 $273,869,349 Street and Highway User Revenue Bonds $20,000,000 2000 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2002A, 2004 & 2005), due in annual principal installments of $1,500,000, plus semi-annual interest of 6.50 percent through July 1, 2011. $ 1,500,000 $25,800,000 2002 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2002A, 2004 & 2005), due in annual principal installments ranging from $800,000 to $1,000,000, plus semi-annual interest ranging from 5.75 percent to 6.25 percent through July 1, 2012. 2,000,000 $31,985,000 2002 street and highway user revenue refunding bonds, due in annual installments ranging from $40,000 to $6,270,000, plus semi-annual interest ranging from 2.0 percent to 5.0 percent through July 1, 2017. 28,612,457 $26,805,000 2003 street and highway user revenue bonds, due in annual principal installments ranging from $500,000 to $9,750,000, plus semi-annual interest ranging from 4.25 percent to 5.50 percent through July 1, 2022. 26,300,000 $9,585,000 2004 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2005), due in annual principal installments ranging from $100,000 to $225,000, plus semi-annual interest ranging from 4.00 percent to 5.00 percent through July 1, 2022. 1,475,000 $17,760,000 2004 street and highway user revenue refunding bonds, due in annual installments ranging from $20,000 to $7,250,000, plus semi-annual interest ranging from 3.5 percent to 5.0 percent through July 1, 2018. 17,098,621 $23,800,000 2005 street and highway user revenue refunding bonds, due in annual principal installments ranging from $25,000 to $8,000,000, plus semi-annual interest ranging from 2.75 percent to 5.0 percent through July 1, 2023. 22,758,998 $10,225,000 2005 street and highway user revenue bonds, due in annual principal installments ranging from $50,000 to $8,500,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2024. 10,125,000 65 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 $11,675,000 2006 street and highway user revenue bonds, due in annual installments ranging from $850,000 to $9,850,000, plus semi-annual interest ranging from 4.50 percent to 5.25 percent through July 1, 2025. $ 11,675,000 $10,675,000 2007 street and highway user revenue bonds, due in annual principal installments ranging from $1,000,000 to $3,900,000, plus semi-annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2027. 10,675,000 Total Street and Highway User Revenue Bonds Deferred amounts on refundings Total Street and Highway User Revenue Bonds not including deferred amounts on refundings $132,220,076 2,324,924 $134,545,000 Special Assessment Bonds (payable from special assessments levied on the benefited properties) $5,025,000 2005 special assessment district bonds, due in annual principal installments of $335,000, plus semi-annual interest of 5.80 percent, through January 1, 2021. $ 3,685,000 $4,091,840 2007 special assessment district bonds, due in annual principal installments ranging from $408,840 to $410,000, plus semi-annual interest of 5.0 percent, through January 1, 2017. Total Special Assessment Bonds 2,865,000 $ Total bonds payable recorded in governmental activities 6,550,000 $409,362,629 Classified in Business-type Activities on the government-wide financial statements: General Obligation Bonds $1,200,000 2002 general obligation serial bonds (partially refunded by 2002A, 2004 & 2006 general obligation refunding bonds), due in annual principal installments ranging from $79,100 to $82,490, plus semi-annual interest ranging from 5.25 percent to 6.00 percent through July 1, 2011. $ 81,300 $120,000 2002 general obligation refunding serial bonds, due in annual principal installments ranging from $294 to $46,771, plus semi-annual interest ranging from 3.75 percent to 5.375 percent through July 1, 2015. 27,364 $1,529,379 2002A general obligation refunding serial bonds, due in annual principal installments ranging from $53,631 to $377,187, plus semi-annual interest ranging from 3.75 percent to 4.20 percent through July 1, 2016. Total bonds outstanding at June 30, 2007, include $54,062 of certificates of ownership of supplemental interest payments and $3,640 of capital appreciation maturing through 2010. 1,180,711 $214,700 2004 general obligation refunding serial bonds, due in annual principal installments ranging from $35,000 to $32,000,000, plus semi-annual interest ranging from 2.4 percent to 5.0 percent through July 1, 2016. 214,332 66 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 $1,168,000 2006 general obligation refunding serial bonds, due in annual principal installments ranging from $6,574 to $518,254, plus semi-annual interest ranging from 4.25 percent to 5.25 percent through July 1, 2014. $ 1,168,000 Total General Obligation Bonds Deferred amounts on refundings $ 2,671,707 18,944 Total General Obligation Bonds not including deferred amounts on refunding $ 2,690,651 $ 4,000,000 Utility Systems Revenue Bonds $94,730,000 1997 utility systems revenue serial bonds (partially refunded by 1998, 2002 & 2006 utility systems revenue refunding bonds), due on July 1, 2012, plus semi-annual interest of 7.25 percent through July 1, 2012. $32,500,000 1998 utility systems revenue refunding serial bonds (partially refunded by 2002A, 2006 and 2008 utility systems revenue refunding bonds), due in annual principal installments ranging from $100,000 to $9,105,000, plus semi-annual interest ranging from 4.25 percent to 5.00 percent through July 1, 2013. 15,751 $69,200,000 2000 utility systems revenue serial bonds (partially refunded by 2002, 2002A & 2004 utility systems revenue refunding bonds), due in annual principal installments ranging from $4,200,000 to $5,250,000, plus semi-annual interest of 6.50 percent through July 1, 2011. 5,250,000 $57,950,000 2002 utility systems revenue serial bonds (partially refunded by 2004 & 2006 utility systems revenue refunding bonds), due in annual principal installments ranging from $950,000 to $1,000,000, plus semi-annual interest ranging from 4.25 percent to 5.75 percent through July 1, 2017. 7,000,000 $129,000,000 2002 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $65,000 to $29,550,000, plus semi-annual interest ranging from 3.40 percent to 5.25 percent through July 1, 2017. 126,727,949 $48,850,000 2002A utility systems revenue refunding serial bonds, due in annual principal installments ranging from $40,000 to $17,890,000, plus semi-annual interest ranging from 3.00 percent to 5.00 percent through July 1, 2017. 47,327,045 $50,470,000 2003 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $970,000 to $25,500,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2022. 24,000,000 $64,625,000 2004 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $1,125,000 to $11,000,000, plus semi-annual interest ranging from 5.00 percent to 6.00 percent through July 1, 2028. 6,125,000 $40,345,000 2004 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $20,000 to $21,010,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2019. 38,628,461 67 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 $91,200,000 2005 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $750,000 to $24,000,000, plus semi-annual interest ranging from 4.125 percent to 5.0 percent through July 1, 2029. $ 71,200,000 $105,400,000 2006 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $8,650,000 to $36,750,000, plus semi-annual interest ranging from 4.375 percent to 5.0 percent through July 1, 2030. 87,325,000 $61,300,000 2006 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $2,075,000 to $18,000,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2021. 55,023,086 $127,260,000 2006 (Series 2) utility systems revenue refunding serial bonds, due in annual principal installments ranging from $50,000 to $25,845,000 plus semi-annual interest ranging from 4.0 percent to 5.25 percent through July 1, 2028. 120,168,301 $65,550,000 2007 utility systems revenue serial bonds, due in annual principal installments ranging from $2,500,000 to $41,800,000 plus semi-annual interest ranging from 4.25 percent to 6.25 percent through July 1, 2031. 65,550,000 $52,875,000 2008 utility systems revenue serial bonds, due in annual principal installments ranging from $700,000 to $44,675,000 plus semi-annual interest ranging from 4.875 percent to 5.25 percent through July 1, 2032. 52,875,000 $21,125,000 2008 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $100,000 to $2,200,000 plus semi-annual interest ranging from 3.00 percent to 4.00 percent through July 1, 2018. 20,368,163 $50,380,000 2010 utility systems revenue bonds, due in one principal installment plus semi-annual interest 6.10 percent through July 1, 2034. 50,380,000 $59,900,000 2009 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $900,000 to $48,250,000 plus semi-annual interest ranging from 5.875 percent to 6.375 percent through July 1, 2033. 59,900,000 Total Utility Systems Revenue Bonds Deferred amounts on refundings Total Utility System Revenue Bonds not including deferred amounts on refundings $ 841,863,756 15,571,244 Total bonds payable recorded in business-type activities $ 844,535,463 68 857,435,000 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The following tables summarize the City’s debt service requirements to maturity for its long term bonds payable at June 30, 2010. The deferred amounts on refundings are not included. Governmental Activities General Obligation Bonds Fiscal Year $ 2011 2012 2013 2014 2015 2016-20 2021-25 2026-30 Principal 21,675,399 $ 20,955,638 21,868,905 14,007,029 10,964,033 75,228,345 48,620,000 60,550,000 Interest 12,780,313 $ 11,714,226 10,720,190 9,666,567 9,076,090 35,801,352 21,636,431 9,513,176 TOTALS $ 273,869,349 $ 120,908,345 $ Total 34,455,712 32,669,864 32,589,095 23,673,596 20,040,123 111,029,697 70,256,431 70,063,176 394,777,694 Highway User Revenue Bonds Fiscal Year 2011 $ 2012 2013 2014 2015 2016-20 2021-25 2026-30 Principal 6,030,000 $ 6,390,000 6,745,000 7,040,000 7,355,000 42,110,000 51,200,000 7,675,000 Interest 6,365,243 $ 6,028,242 5,695,242 5,378,088 5,088,587 20,010,620 9,022,638 491,938 TOTALS $ 134,545,000 $ 58,080,598 $ Total 12,395,243 12,418,242 12,440,242 12,418,088 12,443,587 62,120,620 60,222,638 8,166,938 192,625,598 Special Assessment Bonds Fiscal Year 2011 $ 2012 2013 2014 2015 2016-20 2021 Principal 744,000 $ 744,000 744,000 744,000 744,000 2,495,000 335,000 Interest 337,040 $ 297,160 257,280 217,400 177,520 381,025 9,715 Total 1,081,040 1,041,160 1,001,280 961,400 921,520 2,876,025 344,715 TOTALS $ 6,550,000 $ 1,677,140 $ 8,227,140 69 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business-type Activities General Obligation Bonds Revenue Bonds Fiscal Year $ 2011 2012 2013 2014 2015 2016-20 2021-25 2026-30 2031-34 Principal 469,601 $ 679,363 706,095 357,971 210,966 266,655 - Interest 122,787 $ 103,843 70,521 35,722 21,061 28,934 - Total 592,388 783,206 776,616 393,693 232,027 295,589 - Fiscal Year 2011 $ 2012 2013 2014 2015 2016-20 2021-25 2026-30 2031-34 Principal 12,585,000 $ 24,840,000 34,030,000 35,595,000 37,595,000 174,275,000 154,900,000 194,460,000 189,155,000 Interest 42,835,311 $ 41,948,511 40,618,536 38,983,886 37,163,311 157,753,579 118,724,294 78,417,059 27,992,221 Total 55,420,311 66,788,511 74,648,536 74,578,886 74,758,311 332,028,579 273,624,294 272,877,059 217,147,221 TOTALS $ 2,690,651 $ 382,868 $ 3,073,519 TOTALS $ 857,435,000 $ 584,436,708 $ 1,441,871,708 Special Assessment Bonds The City acts as trustee for special assessment districts whereby it collects the assessments levied against owners of property within established districts and disburses the amounts collected to retire the bonds issued to finance the improvements. At June 30, 2010, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, is 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. 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 currently outstanding as of June 30, 2010 are $6,550,000. General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $2,671,707 of these bonds at June 30, 2010 is carried as a liability of the Enterprise Fund to reflect the intention of retirement from resources of that fund. All bonds, except Special Assessment Bonds, are callable by the City at various dates and at various premiums. The Arizona Constitution provides that the general obligation bonded indebtedness of a city for general municipal purposes may not exceed 6 percent of the secondary assessed valuation of the taxable property in that city. In addition to the 6 percent limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20 (Continued) 70 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 percent of the secondary assessed valuation for supplying such city with water, artificial light or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreation facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. The total debt margin available July 1, 2010 is: 6% Bonds 20% Bonds $239,577,898 548,311,722 Total Available $787,889,620 City revenue bond indenture ordinances require that the net amount of revenues of the electric, gas, water, wastewater and solid waste systems (total revenues less operations and maintenance expenses) equal 120 percent of the principal and interest requirement in each fiscal year. The above covenant and all other bond covenants have been met. c. Reserves for Bond Indentures Pursuant to the provisions of the Bond Resolution of the City of Mesa Utility System Revenue and Refunding bonds, Replacement and Reserve Funds are required to be established, into which a sum equal to 2 percent of the gross revenues – as determined on a modified accrual basis – must be deposited until a sum equal to two percent of all tangible assets of the Utility System is accumulated. As of June 30, 2010, the amount provided in the Replacement and Extension Funds equaled $9,683,617 which is in compliance with the bond provisions. f. Notes Payable Governmental Activities The City issued $45,000,000 of Highway Project Advancement Notes to provide funds to the Arizona Department of Transportation (ADOT) for the acceleration of the right-of-way acquisition and for design of highway improvements to State Route 802 between State Route 202L and Ellsworth Road. The City has entered into an intergovernmental agreement with ADOT and the Maricopa Association of Governments to advance the improvements to State Route 802. The agreement provides for repayment by ADOT to the City of the full amount of the City advance from monies available to ADOT for the project within a 60-month loan period. The repayments are not secured by any lien upon or pledge of any particular revenues, monies or property of ADOT. No assurance can be given that ADOT will have funds available for repayments due at the times or in the amounts set forth under the agreement. 71 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Business Type Activities The City has entered into a loan agreement with the State of Arizona Department of Transportation Aeronautics Division State Aviation Fund for the construction of T-Hangars at the airport. The interest rate on the notes is 6.02 percent. The City entered into four separate loan agreements with the Water Infrastructure Finance Authority of Arizona. The purposes of the loans are to make improvements and upgrades to existing water and wastewater projects. The loans utilize funds from the United States Environmental Protection Agency pursuant to the federal American Reinvestment and Recovery Act of 2009. Subject to the City meeting the required specifications of the loan documents, two of the loans include a combined interest and fee rate subsidy and the two remaining loans include a principal forgiveness portion. Total principal (without principal forgiveness) is $3,846,902 and the loans have a 20 year repayment period. The total principal forgiveness is $626,000. Total interest over the 20 years with principal forgiveness and the combined interest and fee rate subsidy is $635,736. The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2010: Governmental Activites Fiscal Year 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2029 TOTALS $ Principal - $ - 20,000,000 25,000,000 - $ 45,000,000 $ Business-type Activities Interest Total Principal Interest Total 1,575,694 $ 1,575,694 $ 232,654 $ 59,775 $ 292,429 1,512,500 1,512,500 237,490 61,185 298,675 1,512,500 1,512,500 122,290 54,714 177,004 1,512,500 1,512,500 124,945 52,058 177,003 1,512,500 21,512,500 127,660 49,343 177,003 812,500 25,812,500 681,225 203,792 885,017 758,948 126,070 885,018 678,568 38,701 717,269 8,438,194 $ 53,438,194 $ 2,963,780 $ 645,638 $ 3,609,418 72 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 e. Lease Obligations The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of June 30, 2010. Governmental Activities Fiscal Year Principal Interest Total 2011 $ 3,240,527 $ 204,646 $ 3,445,173 2012 1,344,045 83,368 1,427,413 2013 681,953 34,186 716,139 2014 67,952 6,581 74,533 2015 71,643 2,889 74,532 TOTALS $ 5,406,120 $ 331,670 $ 5,737,790 The assets acquired through capital leases are as follows: Governmental Activities Asset: Land $ 3,642,860 Buildings 10,567,294 Other Improvements 3,664,352 Machinery & Equipment 30,084,585 Infrastructure 85,936 Construction Work in Process 4,351,277 Less: Accumulated depreciation (26,448,694) Total $ 25,947,610 Business-type Activities $ $ 10,646,407 2,863,145 3,041 (11,989,301) 1,523,292 f. Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2010. 6. LIABILITIES TO BE PAID FROM ASSETS HELD IN ESCROW Liabilities to be paid from assets held in escrow include bonded debt of the City that has been provided for through an Advanced Refunding Bond Issue. Under an advanced refunding arrangement, refunding bonds are issued and the net proceeds, plus additional resources that may be required, are used to purchase securities issued or guaranteed by the United States (Continued) 73 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 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. In accordance with GASB Statement No. 7, the refunded debt outstanding at June 30, 2010 as reflected below is not included in the City’s financial statements. Utility Systems Revenue Bond Issue dated September 1, 1995 $ 7,000,000 Utility System Revenue Bond Issue dated April 1, 1997 7,000,000 Utility System Revenue Refunding Bond Issue dated March 1, 1998 7,405,000 Utility System Revenue Bond Issue dated March 1, 1998 13,125,000 General Obligation Bond Issue dated January 1, 2002 21,250,000 Utility System Revenue Bond Issue dated January 1, 2002 49,000,000 Street and Highway User Revenue Bond Issue dated January 1, 2002 23,000,000 Utility System Revenue Bond Issue dated March 1, 2003 25,500,000 Street and Highway User Revenue Bond Issue dated June 1, 2004 8,000,000 Utility System Revenue Bond Issue dated June 1, 2004 58,500,000 Utility System Revenue Bond Issue dated June 1, 2005 20,000,000 Utility System Revenue Bond Issue dated June 1, 2006 18,075,000 Total Refunded Bonds Outstanding $ 257,855,000 74 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 7. CAPITAL CONTRIBUTIONS During the year, external capital contributions consisted of the following: Property Owners Governmental Activities: Federal and State Funds $ Contributions - Capital Assets Total $ Governmental Agencies 124,437 124,437 Business-type Activities: Federal and State Funds $ Developers - Impact and Development Fees Contributions-In-Aid 1,172,456 Contributions - Capital Assets Total $ 1,172,456 8. $ Developers $ 13,678,962 9,788,806 23,467,768 $ $ 6,750,882 6,750,882 $ 3,140,249 $ - $ 3,140,249 3,654,875 9,814,746 $ 13,469,621 Total $ 13,678,962 16,664,125 $ 30,343,087 $ 3,140,249 3,654,875 1,172,456 9,814,746 $ 17,782,326 COMMITMENTS AND CONTINGENT LIABILITIES a. Pending Litigation The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. b. Sick Leave Benefits Sick leave benefits provided for ordinary sick pay are not vested with the employee. Fifty percent of unused benefits are payable only upon retirement of an employee. In accordance with the criteria, sick leave paid within 60 days of the year-end has been recorded as a liability in the governmental fund financial statements. Long-term liabilities of governmental funds are not shown on the fund financial statements. In the government-wide financial statements as well as the proprietary fund financial statements an amount of estimated sick 75 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 pay to employees has been expensed and the liability is shown in the appropriate funds. These amounts have been calculated based on the vested method. The total sick leave balance recorded as a liability at June 30, 2010, is $6,957,085. 9. ENTERPRISE ACTIVITIES OPERATIONS DETAIL The Enterprise Fund includes operations of electricity, gas, water, wastewater, solid waste, airport, golf course, convention center, stadium and district cooling. Although the City’s Enterprise Fund does not meet the requirements for disclosing segment information, these services provided by the City are of such significance as to warrant certain additional disclosures. Operating revenue, expenses and operating income loss for the year ended June 30, 2010 for these services are as follows: Operating Revenues Functions Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam /Fitch Complex District Cooling $ 33,078,601 38,923,919 98,806,049 57,698,904 46,685,307 3,124,886 2,265,452 1,970,891 5,836,650 983,592 Total $ 289,374,251 Operating Expenses Depreciation and Amortization Other Operating Income (Loss) $ 23,211,018 29,615,303 40,921,769 22,890,468 28,729,107 2,587,431 2,411,164 2,894,614 7,407,183 611,877 $ 6,495,436 5,914,591 38,504,703 14,459,808 15,659,729 (798,040) (398,571) (1,438,905) (2,317,894) (16,755) $ 161,279,934 $ 76,064,102 3,372,147 3,394,025 19,379,577 20,348,628 2,296,471 1,335,495 252,859 515,182 747,361 388,470 $ 52,030,215 $ 10. NET ASSETS a. Restricted Net Assets The government-wide statement of net assets reports $133,965,722 of restricted net assets, of which $39,152,077 is restricted by enabling legislation. 76 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 b. Designated Net Assets The net assets in the Employee Benefit and Workers’ Compensation Self Insurance Funds are designated for anticipated future losses and are a result of excess premiums charged to increase the fund balance specifically for this purpose. c. Deficit Net Assets The deficit in the Property and Public Liability Self-Insurance Fund is the result of the large increases in the estimated liability for claims during prior fiscal years. Settlements in three claims, dismissals of several high exposure cases and adjustments to reported reserve amounts resulted in a reduction of the deficit net assets during the fiscal year. Contributions from the various funds will need to be increased in future years to cover this deficit. 11. PLEDGED REVENUES a. Utility System Revenue Bonds The City has pledged future utility customer revenues, net of specified operating expenses, to repay approximately $1.223 billion in utility system revenue bonds issued since 1997. Proceeds from the bonds provided financing for the construction of various utility related projects including new gas pipelines and water and wastewater treatment plants. The bonds are payable solely from utility customer net revenues and are payable through 2034. Annual principal and interest payments on the bonds were 63 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $1,441,871,708. Principal and interest paid for the current year and total customer net revenues were $50,854,631 and $81,037,308, respectively. b. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $188.3 million in highway user revenue bonds issued since 2000. Proceeds from the bonds provided financing for streets projects. The bonds are payable solely from the state shared Highway User Tax revenues and are payable through 2027. Annual principal and interest payments on the bonds were 39 percent of eligible revenues. The total principal and interests remaining to be paid on the bonds is $192,625,598. Principal and interest paid for the current year and total highway user tax revenues were $12,411,417 and $31,790,889, respectively. c. Special Assessment Bonds The special assessment revenues collected by the City are pledged to repay $9.1 million of special assessment bonds issued since 2005. Proceeds from the bonds are used to finance improvements that property owners have agreed to pay. In the event of default by the property owner, an auction sale may be enforced by the City. If collections and auction proceeds are not sufficient to retire outstanding bonds the City is contingently liable. These bonds are payable through 2021. (Continued) 77 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Annual principal and interest payments on the bonds are expected to be covered 100% with collections from the property owners. The total principal and interest remaining to be paid on the bonds is $8,227,140. Principal and interest paid for the current year and total assessments collected were $1,120,920, and $922,651, respectively. 12. JOINT VENTURES The City participates with the cities of Phoenix, Glendale, Scottsdale and Tempe in a multi-city sanitary sewer system (the “System”) in which Phoenix is the lead agency. The City of Phoenix is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agency, Phoenix provides all management personnel and financing arrangements. The various cities participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The different agencies participate in each facility at varying rates depending on their needs at the time each facility was constructed. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. The System has no debt outstanding. Audited summary financial information on the System (GAAP basis) as of and for the fiscal year ended June 30, 2009 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments $ 37,478,000 Receivables 25,627,000 Inventories at Average Cost 537,000 Capital Assets 900,813,000 Total Assets Liabilities 964,455,000 53,259,000 Net Assets $ 911,196,000 Total Revenues Total Expenses $ 173,417,000 (67,878,000) Increase (Decrease) in Net Assets $ 105,539,000 Separate financial statements for the activity under the Joint Venture agreement can be obtained through the AMWUA office at 4041 N. Central Avenue, Phoenix, Arizona, 85012. The City also participates with the City of Phoenix in a water treatment plant. The City of Phoenix is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agency, Phoenix provides all management personnel and financing (Continued) 78 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 arrangements. Phoenix and Mesa participate in ownership of the plant and are charged for operating expenses based on gallons of water treated. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. The water treatment plant has no debt outstanding. Audited summary financial information for the plant (GAAP basis) as of and for the fiscal year ended June 30, 2009 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments Receivables Inventories Capital Assets, Net of Accumulated Depreciation $ Total Assets 7,674,000 7,385,000 277,000 230,288,000 245,624,000 Liabilities 10,588,000 Net Assets $ 235,036,000 Total Revenues Total Expenses $ 72,205,000 (24,388,000) Increase in Net Assets $ 47,817,000 Separate financial statements for the activity can be obtained through the City of Phoenix at 305 W. Washington Street, Phoenix, Arizona, 85003. Construction of a joint water reclamation plant with the Towns of Gilbert and Queen Creek was completed on December 2, 2006. The City acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agent, the City provides all management personnel and financing arrangements. Mesa, Gilbert and Queen Creek participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. Separate financial statements are not prepared. 79 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Total investment in the joint venture as of June 30, 2010 is: Mesa’s Share Gilbert’s Share Queen Creek’s Share $ 72,322,270 68,796,562 30,058,417 Total Joint Venture $171,177,249 In June 2002, the City agreed to participate in the Central Phoenix/East Valley Light Rail Transit (LRT). The City participates with the cities of Phoenix, Tempe and Glendale. Valley Metro Rail, Inc. (VMR) will design, construct, and operate the LRT project. A total of $51,429,715 has been spent on this project through the fiscal year ended June 30, 2010. The City has received $41.6 million of funding from the Federal Transit Administration (FTA); Congestion Mitigation Air Quality (DMAQ) and Public Transit Funds (PTF) related to this project. The City’s investment in the joint venture is reflected in the governmental activities column on the government-wide financial statements. Audited summary financial information on the system (GAAP basis), as of and for the fiscal year ended June 30, 2009, (latest information available) is as follows: Assets Current Assets Non Current Assets Total Assets $ Liabilities 159,051,762 1,221,349,623 1,380,401,385 192,544,719 Net Assets $ 1,187,856,666 Total Revenues Total Expenses $ 179,370,902 (75,076,079) Increase in Net Assets $ 104,294,823 Separate financial statements for the activity can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. Valley Metro Rail Inc. (METRO) and the City of Mesa (COM) are advancing the planning to implement an extension to the existing 20-mile Light Rail (LRT) starter line that opened in December 2008. The Central Mesa corridor is a 3.1 mile extension east into downtown Mesa that 80 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 will connect to the existing Light Rail line. The new line is anticipated to commence passenger operations in 2016. The project is identified in the voter approved Regional Transportation Plan (RTP) and is included in the Regional Transportation Improvement Plan (TIP) approved by the Maricopa Association of Governments (MAG) Regional Council. The total capital cost of the project is $175 million in 2010 dollars and $199 million in year of expenditure dollars. In August 2008, the City of Mesa, the City of Apache Junction, Apache Junction Fire District the Town of Gilbert, and the Town of Queen Creek (the Parties) entered into an intergovernmental agreement to plan, design, construct, operate, maintain and finance the TOPAZ Regional Wireless Cooperative Network (Trunked Open Arizona Network – 700/800 MHz Network procured and built by the City of Mesa). The City acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the network. As lead agent, the City provides all management personnel and financing arrangements. The Parties participate in ownership of the network and are charged for operating and capital expenses based on subscriber units (radio counts). The City’s investment in the joint venture is reflected in the governmental funds financial statements. Separate financial statements are not prepared. Total investment in the joint venture as of June 30, 2010 is: City of Mesa $ 713,302 Town of Gilbert 190,815 City of Apache Junction 42,231 Apache Junction Fire District 19,056 Town of Queen Creek 6,695 Total Joint Venture 81 $ 972,099 (Concluded) Required Supplementary Information CITY OF MESA, ARIZONA EXHIBIT B-1 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Police Valuation Date June 30, 2007 2008 2009 Actuarial Value of Assets $218,252,079 233,493,642 250,465,218 Actuarial Accrued Liability (AAL) $307,553,149 320,603,102 336,097,656 Actuarial Value of Assets $137,833,130 145,931,808 155,971,492 Actuarial Accrued Liability (AAL) $189,128,576 192,991,745 193,517,551 Percent Funded 71.1 % 72.8 74.5 Unfunded AAL $89,301,070 87,109,460 85,632,438 Annual Covered Payroll $55,407,996 59,211,259 58,240,512 Unfunded AAL as a % of Covered Payroll 161.2 % 147.1 147.0 Fire Valuation Date June 30, 2007 2008 2009 Percent Funded 72.9 % 75.6 80.6 Unfunded AAL $51,295,446 47,059,937 37,546,059 Annual Covered Payroll $27,164,554 28,607,906 27,553,989 Unfunded AAL as a % of Covered Payroll 188.8 % 164.5 136.3 Other Post-Employment Benefits (Health Insurance Subsidy) Police Valuation Date June 30, 2007 2008 2009 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $12,818,425 13,529,449 12,123,354 Unfunded ALL (UALL) (b-a) $ 12,818,425 13,529,449 12,123,354 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $6,987,132 7,237,804 5,787,717 Unfunded ALL (UALL) (b-a) $ 6,987,132 7,237,804 5,787,717 Funded Ratio (a/b) - % - Annual Covered Payroll (c) $55,407,996 59,211,259 58,240,512 UALL as a % of Covered Payroll (( b - a ) / c ) 23.1 % 22.9 20.8 Funded Ratio (a/b) - % - Annual Covered Payroll (c) $27,164,554 28,607,906 27,553,989 UALL as a % of Covered Payroll (( b - a ) / c ) 25.7 % 25.3 21.0 Fire Valuation Date June 30, 2007 2008 2009 82 CITY OF MESA, ARIZONA EXHIBIT B-2 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS OTHER POST-EMPLOYMENT BENEFITS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Actuarial Valuation Date July 1, 2007 July 1, 2008 July 1, 2009 $ Actuarial Value of Assets - Actuarial Accrued Liability (AAL) $ 664,071,640 664,071,640 916,615,559 Percent Funded - 83 % Unfunded AAL as a Annual Percentage Unfunded Covered of Covered AAL Payroll Payroll $ 664,071,640 $ 344,654,766 192.7 % 664,071,640 338,835,124 196.0 916,615,559 321,012,148 285.5 CITY OF MESA, ARIZONA EXHIBIT B-3 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Final Budget Actual Amounts Budgetary Basis $ 131,660,000 14,138,000 1,831,000 8,915,000 168,607,000 13,379,000 12,629,000 1,180,000 6,118,000 $ 131,660,000 14,138,000 1,831,000 8,915,000 168,607,000 13,379,000 12,629,000 1,180,000 6,118,000 $ 122,806,058 13,885,749 1,580,533 9,271,058 137,769,895 11,842,883 10,508,203 347,471 12,263,886 358,457,000 358,457,000 320,275,736 3,200,000 3,200,000 2,958,519 355,257,000 355,257,000 317,317,217 (37,939,783) 43,119,714 229,301,446 45,584,464 40,380,227 59,709,163 56,650,000 44,810,392 229,316,635 45,549,372 41,647,099 59,201,762 47,158,747 42,203,367 211,004,366 40,124,198 37,937,374 22,029,244 - 2,607,025 18,312,269 5,425,174 3,709,725 37,172,518 47,158,747 21,462,607 13,092,761 - 22,202,998 13,092,761 - 20,128,233 11,882,410 449,167 509,300,382 502,979,766 385,758,359 117,221,407 (154,043,382) (147,722,766) (68,441,142) 79,281,624 83,734,000 (13,049,000) 83,734,000 (13,049,000) 85,506,000 (9,630,573) 1,772,000 3,418,427 70,685,000 70,685,000 75,875,427 5,190,427 (83,358,382) (77,037,766) 7,434,285 84,472,051 Fund Balance - Beginning 85,564,893 85,564,893 72,619,705 (12,945,188) (Increase) Decrease in Restricted Fund Balance (2,206,511) (2,206,511) 4,128,293 6,334,804 Revenues: Sales Taxes Property Taxes Occupancy Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Total Revenues Less: Bad Debts Total Net Revenues Variance With Final Budget Positive (Negative) $ (8,853,942) (252,251) (250,467) 356,058 (30,837,105) (1,536,117) (2,120,797) (832,529) 6,145,886 (38,181,264) 241,481 Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Capital Outlay Contingencies Debt Service: Principal Retirement Interest/Service Charges on Bonds Interest/Service Charges on Notes Total Expenditures Deficiency of Revenues Under Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance - Ending $ - See Note to Required Supplementary Information. 84 $ 6,320,616 $ 84,182,283 2,074,765 1,210,351 (449,167) $ 77,861,667 CITY OF MESA, ARIZONA EXHIBIT B-4 HIGHWAY USER REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) Revenues: Intergovernmental $ 33,267,000 $ 33,267,000 $ 31,605,938 $ (1,661,062) Charges For Services 38,000 38,000 34,775 (3,225) Fines and Forfeitures 34,000 34,000 8,800 (25,200) Investment Income 9,000 9,000 - (9,000) Miscellaneous 3,000 3,000 141,376 Total Revenues 33,351,000 33,351,000 31,790,889 (1,560,111) 17,523,788 17,523,788 12,534,006 4,989,782 138,376 Expenditures: Current: Community Environment Capital Outlay 982,782 982,782 774,100 208,682 Contingencies 1,587,000 1,587,000 - 1,587,000 Principal Retirement 6,625,625 6,625,625 5,720,000 905,625 Interest/Service Charges on Bonds 6,695,817 6,695,817 6,696,168 33,415,012 33,415,012 25,724,274 7,690,738 6,066,615 6,130,627 Debt Service: Total Expenditures (351) Excess (Deficiency) of Revenues Over (Under) Expenditures Fund Balance - Beginning Fund Balance - Ending $ (64,012) (64,012) 64,490 64,490 478 See Note to Required Supplementary Information. 85 $ 478 442 $ 6,067,057 (64,048) $ 6,066,579 CITY OF MESA, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION – BUDGETARY REPORTING FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The financial statements for the City are prepared in accordance with generally accepted accounting principles – “GAAP basis”. Since Mesa, like most other Arizona cities, prepares its annual budget on a modified cash basis that differs from the “GAAP basis”, additional schedules of revenues and expenditures are presented for the General Fund to provide a meaningful comparison of actual results to budget on the “budget basis”. Adjustments necessary to convert the results of operations of the General Fund for the year ended June 30, 2010 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis Exhibit B-3 $ 7,434,285 Basis Differences: Compensated Absences Special Assessments Sales Tax Accrual Unrealized Gain on Investments (649,839) (198,269) 322,446 (186,060) Timing Differences: Grants & Contributions Interest Earnings in Escrow Account (242,907) (118,379) Net Change in Fund Balance-GAAP Basis Exhibit A-5 86 $ 6,361,277 Combining Statements NON-MAJOR FUNDS OTHER GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Local Transportation Assistance Fund accounts for expenditures on local transportation operations and capital outlay, as mandated by the Arizona State Legislature. The principal financing source for this fund is the state shared lottery revenue. Mesa Housing Authority Fund accounts for expenditures of the City’s housing assistance programs that consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. Cemetery Fund is designed to provide an accumulation of monies from which the interest earnings will provide perpetual care of the Cemetery. Public Art Fund is designed to provide a balance of monies from which public art projects throughout the City may be developed. Funds are provided through allocations from the General Fund. Development Impact Fees Fund is designed to provide a balance of monies to ensure that new development bears a proportionate share of the cost of improvements to the City’s parks, cultural facilities, libraries, fire facilities and equipment, police facilities and equipment, general government facilities and storm sewers. These funds are provided through the collection of development impact fees. Court Construction Fee Fund is designed to provide an accumulation of monies for the construction and debt service of the new Mesa Municipal Court building. These funds are provided through a fee on all court cases, except for parking violations. Mesa Arts Center Restoration Fund is designed to provide an accumulation of monies to be used to replace or refurbish the Mesa Arts Center facilities. These funds are provided through a fee on all ticketed events at the facility. Regional Transportation Plan (RTP) Fund accounts for Maricopa Association of Government (MAG) Proposition 400 sales tax funds that are allocated to local subdivisions for transportation projects. Special Revenue Funds (cont.) Environmental Compliance Fund accounts for expenditures that are a result of federal and state environmental requirements. Financing for this fund is derived from a monthly environmental compliance fee that is charged to each utility customer. Vehicle Replacement Fund accounts for expenditures related to the acquisition of replacement vehicles for the City’s governmental funds. The funds are provided through transfers from the City’s General Fund. Debt Service Funds These funds are established to account for the accumulation of resources for, and the payment of, principal and interest not serviced by the Enterprise Fund. General Obligation Bond Redemption Fund accumulates monies for the payment of principal and interest requirements of the City’s General Obligation Bonds. Special Assessment Bond Redemption Fund accumulates monies for the payment of the Special Assessment Bonds that are issued to finance the costs of improvements which are to be paid from special assessments levied against the benefited properties. Capital Lease Redemption Fund accumulates monies for the payment of principal and interest requirements of capital leases relating to the acquisition of land, computer equipment, communication equipment, police helicopters and various public improvements within the City. Highway User Revenue Bond Redemption Fund accumulates monies for the payment of principal and interest requirements of the City’s Highway User Revenue Bonds. Highway Project Advancement Notes Fund accumulates monies for the payment of principal and interest requirements for the Highway Project Advancement Notes. Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and special revenue funds. Fire Construction Fund accounts for the cost of fire prevention facilities and equipment. Storm Sewer Construction Fund accounts for the construction of drains, basins, channels and other storm sewer improvements. Capital Projects Funds (cont.) Streets Construction Fund accounts for the cost of right-of-way acquisitions and street improvements. Parks Construction Fund accounts for the cost of new park site acquisitions as well as improvements. Law Enforcement Construction Fund accounts for the cost of public safety facilities. Library Construction Fund accounts for the cost of improvements to the main library and expansion of branches. Service Center Construction Fund accounts for the cost of improvements to the 6th Street service center. Capital Leases Construction Fund accounts for the cost of acquiring various computer equipment, communications equipment and public improvements within the City. CITY OF MESA, ARIZONA EXHIBIT C-1 NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2010 Special Revenue Funds Capital Projects Funds Debt Service Funds Total Non-major Governmental Funds ASSETS Cash and Cash Equivalents Accounts Receivable (Net of Allowances) Due From Other Governments Prepaid Costs Restricted Assets: Cash and Cash Equivalents Cash with Trustee Special Assessments Receivable Due From Other Governments $ 24,758,528 68,638 6,414,159 1,008 Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Due To Other Funds Customer Deposits Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Accrued Note Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable - $ 28,532,895 - - 41,109,457 33,110,780 6,030,297 12,227,979 - $ 31,242,333 $ 92,478,513 $ 28,532,895 $ 152,253,741 $ $ $ $ 6,284,976 3,625,000 1,850 1,282,960 3,625,000 1,850 $ - 5,002,016 - $ 53,291,423 68,638 6,414,159 1,008 41,109,457 33,110,780 6,030,297 12,227,979 - 2,793 10,823,241 449,167 6,030,297 24,058,189 - 2,793 10,823,241 449,167 6,030,297 24,058,189 - 5,720,000 56,067 - 5,720,000 56,067 4,909,810 47,139,754 5,002,016 57,051,580 Fund Balances: Reserved For Encumbrances Reserved For Prepaid Costs Reserved For Debt Service Unreserved 517,867 1,008 25,813,648 45,338,759 - 7,806,793 15,724,086 8,324,660 1,008 45,338,759 41,537,734 Total Fund Balances 26,332,523 45,338,759 23,530,879 95,202,161 $ 31,242,333 $ 92,478,513 $ 28,532,895 Total Liabilities Total Liabilities and Fund Balances 87 $ 152,253,741 CITY OF MESA, ARIZONA EXHIBIT C-2 NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Special Revenue Funds Revenues: Special Assessments Licenses and Permits Intergovernmental Charges For Services Fees and Forfeitures Investment Income Miscellaneous Total Revenues $ 2,552,700 21,609,406 8,645,011 761,804 22,613 962,214 Capital Projects Funds Debt Service Funds $ 922,651 8,583 - $ Total Non-major Governmental Fund 19,472 $ 922,651 2,552,700 21,609,406 8,645,011 761,804 31,196 981,686 34,553,748 931,234 19,472 35,504,454 5,242,813 20,550 21,579,831 - - 5,242,813 20,550 21,579,831 8,166,729 34,845,924 20,366,043 370,600 449,167 9,397 538,824 - 52,767,967 34,845,924 20,366,043 370,600 449,167 9,397 538,824 60,934,696 35,009,923 56,579,955 52,767,967 144,357,845 (55,648,721) (52,748,495) (108,853,391) 8,799,000 (7,254,149) - 55,118,480 45,000,000 869,000 (13,851) 30,865,000 401,850 - 63,917,480 (7,268,000) 30,865,000 45,000,000 401,850 869,000 Total Other Financing Sources (Uses) 1,544,851 100,987,480 31,252,999 133,785,330 Net Change in Fund Balances 1,088,676 45,338,759 (21,495,496) 24,931,939 25,243,847 - 45,026,375 70,270,222 $ 26,332,523 $ 45,338,759 $ 23,530,879 Expenditures: Current: Public Safety Cultural - Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance Capital Outlay Total Expenditures Deficiency of Revenues Under Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds Premium on Issuance of Notes Fund Balances - Beginning Fund Balances - Ending (456,175) 88 $ 95,202,161 CITY OF MESA, ARIZONA EXHIBIT C-3 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2010 Local Transportation Assistance Mesa Housing Authority Cemetery Public Art Development Impact Fees ASSETS Cash and Cash Equivalents Accounts Receivable Due From Other Governments Prepaid Costs $ 629 3,673,224 310 $ 1,722,026 21,258 164 $ 6,693,599 47,380 164 $ 17,181 - $ 8,376,717 - Total Assets $ 3,674,163 $ 1,743,448 $ 6,741,143 $ 17,181 $ 8,376,717 $ 36,156 3,625,000 - $ $ $ - $ 43,588 - LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Due To Other Funds Customer Deposits Total Liabilities 132,659 - 13,580 1,850 3,661,156 132,659 15,430 - 43,588 Fund Balances: Reserved For Encumbrances Reserved For Prepaid Costs Unreserved 12,697 310 - 164 1,610,625 164 6,725,549 17,181 14,565 8,318,564 Total Fund Balances 13,007 1,610,789 6,725,713 17,181 8,333,129 3,674,163 $ 1,743,448 $ 6,741,143 Total Liabilities and Fund Balances $ 89 $ 17,181 $ 8,376,717 EXHIBIT C-3 (Continued) Court Construction Fee Mesa Arts Center Restoration Regional Transportation Plan Environmental Compliance Vehicle Replacement Total $ 382 - $ 1,023,335 - $ 126,245 2,740,935 - $ 1,108,121 370 $ 5,690,293 - $ 24,758,528 68,638 6,414,159 1,008 $ 382 $ 1,023,335 $ 2,867,180 $ 1,108,491 $ 5,690,293 $ 31,242,333 $ - $ 16,373 - $ - $ 189,624 - $ 850,980 - $ 1,282,960 3,625,000 1,850 $ - 16,373 - 189,624 850,980 4,909,810 382 11,804 995,158 52,590 2,814,590 33,911 370 884,586 392,300 4,447,013 517,867 1,008 25,813,648 382 1,006,962 2,867,180 918,867 4,839,313 26,332,523 382 $ 1,023,335 $ 2,867,180 $ 1,108,491 90 $ 5,690,293 $ 31,242,333 CITY OF MESA, ARIZONA EXHIBIT C-4 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Local Transportation Assisistance Revenues: Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Miscellaneous $ 5,099,060 1,481,060 769,438 Mesa Housing Authority $ Public Art Cemetery 12,191,801 1 1,265 63,958 $ 1,174,962 7,108 4,965 $ Development Impact Fees 18 - $ 2,552,700 8,709 - Total Revenues 7,349,558 12,257,025 1,187,035 18 2,561,409 Expenditures: Current: Public Safety Cultural-Recreational Community Environment Capital Outlay 8,618,082 4,414,565 11,917,797 - 1,043,952 822,791 - 414,126 Total Expenditures 13,032,647 11,917,797 1,866,743 - 414,126 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,683,089) 339,228 18 2,147,283 Other Financing Sources (Uses): Transfers In Transfers Out 5,709,000 (13,253) - - - (3,682,957) Total Other Financing Sources (Uses) 5,695,747 - - - (3,682,957) 12,658 339,228 18 (1,535,674) 349 1,271,561 7,405,421 17,163 13,007 $ 1,610,789 $ 6,725,713 $ 17,181 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 91 (679,708) (679,708) 9,868,803 $ 8,333,129 EXHIBIT C-4 (Continued) Court Construction Fee $ $ 761,804 606 - Mesa Arts Center Restoration $ 255,040 863 - Regional Transportation Plan $ 4,318,545 - Environmental Compliance $ 5,733,948 606 - Vehicle Replacement $ 3,438 123,853 Total $ 2,552,700 21,609,406 8,645,011 761,804 22,613 962,214 762,410 255,903 4,318,545 5,734,554 127,291 34,553,748 - 20,550 120,692 35,345 5,242,813 33,276 2,325,934 5,242,813 20,550 21,579,831 8,166,729 - 141,242 35,345 5,276,089 2,325,934 35,009,923 762,410 114,661 4,283,200 458,465 (2,198,643) (456,175) (1,666,939) - (1,891,000) - 3,090,000 - 8,799,000 (7,254,149) (1,666,939) - (1,891,000) - 3,090,000 1,544,851 (904,529) 114,661 2,392,200 458,465 891,357 1,088,676 904,911 892,301 474,980 460,402 3,947,956 25,243,847 382 $ 1,006,962 $ 2,867,180 $ 918,867 92 $ 4,839,313 $ 26,332,523 CITY OF MESA, ARIZONA EXHIBIT C-5 NON-MAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2010 General Obligation Bond Redemption Special Assessment Bond Redemption Capital Lease Redemption ASSETS Restricted Assets: Cash and Cash Equivalents Cash with Trustee Special Assessments Receivable Due From Other Governments $ 31,357,231 - $ 178,490 6,030,297 - $ 58,860 - Total Assets $ 31,357,231 $ 6,208,787 $ 58,860 LIABILITIES AND FUND BALANCES Liabilities Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Accrued Note Interest Payable Deferred Revenue - Special Assessments Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable 7,299,042 24,058,189 - 178,490 6,030,297 - 2,793 56,067 Total Liabilities 31,357,231 6,208,787 58,860 - - - Fund Balances-Reserved For Debt Service Total Liabilities and Fund Balances $ 31,357,231 93 $ 6,208,787 $ 58,860 EXHIBIT C-5 (Continued) Highway User Revenue Bond Redemption Highway Project Advancement Notes $ 9,065,709 - $ 449,167 33,110,780 12,227,979 $ 41,109,457 33,110,780 6,030,297 12,227,979 $ 9,065,709 $ 45,787,926 $ 92,478,513 3,345,709 5,720,000 - 449,167 - 2,793 10,823,241 449,167 6,030,297 24,058,189 5,720,000 56,067 9,065,709 449,167 47,139,754 - 45,338,759 45,338,759 45,787,926 $ 92,478,513 $ 9,065,709 $ Total 94 CITY OF MESA, ARIZONA EXHIBIT C-6 NON-MAJOR DEBT SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 General Obligation Bond Redemption Revenues: Special Assessments Investment Income $ Total Revenues - Special Assessment Bond Redemption $ 922,651 - Capital Lease Redemption $ - - 922,651 - Expenditures: Debt Service: Principal Retirement Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance 24,058,188 13,297,705 4,646 - 744,000 376,920 - 4,323,736 370,600 - Total Expenditures 37,360,539 1,120,920 4,694,336 Deficiency of Revenues Under Expenditures (37,360,539) (198,269) (4,694,336) 37,360,539 37,360,539 198,269 198,269 4,694,336 4,694,336 Net Change In Fund Balances - - - Fund Balances - Beginning - - - Other Financing Sources (Uses): Transfers In Face Amount of Notes Issued Premium on Issuance of Notes Total Other Financing Sources (Uses) Fund Balances - Ending $ 95 - $ - $ - EXHIBIT C-6 (Continued) Highway User Revenue Bond Redemption Highway Project Advancement Notes $ $ $ - 8,583 Total $ 922,651 8,583 - 8,583 931,234 5,720,000 6,691,418 4,751 - 449,167 538,824 34,845,924 20,366,043 370,600 449,167 9,397 538,824 12,416,169 987,991 56,579,955 (12,416,169) (979,408) (55,648,721) 12,416,169 12,416,169 449,167 45,000,000 869,000 46,318,167 55,118,480 45,000,000 869,000 100,987,480 - 45,338,759 45,338,759 - - - 45,338,759 $ 45,338,759 - $ 96 CITY OF MESA, ARIZONA EXHIBIT C-7 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30, 2010 Storm Sewer Fire Streets Parks ASSETS Cash and Cash Equivalents $ 6,715,595 $ 2,309,725 $ 7,627,258 $ - Total Assets $ 6,715,595 $ 2,309,725 $ 7,627,258 $ - LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ 760,157 $ $ 3,002,784 $ - Total Liabilities 983,389 760,157 983,389 3,002,784 - Fund Balances: Reserved For Encumbrances Unreserved 1,960,275 3,995,163 1,326,336 4,624,474 - - Total Fund Balances 5,955,438 1,326,336 4,624,474 - 6,715,595 $ 2,309,725 Total Liabilities and Fund Balances $ 97 $ 7,627,258 $ - EXHIBIT C-7 (Continued) Law Enforcement Service Center Library Capital Leases Total $ 11,038,810 $ 819,938 $ 293 $ 21,276 $ 28,532,895 $ 11,038,810 $ 819,938 $ 293 $ 21,276 $ 28,532,895 $ $ - $ - $ 17,575 $ 238,111 5,002,016 238,111 - - 17,575 5,002,016 1,204,754 9,595,945 17,290 802,648 293 3,701 7,806,793 15,724,086 10,800,699 819,938 293 3,701 23,530,879 21,276 $ 28,532,895 $ 11,038,810 $ 819,938 $ 293 $ 98 CITY OF MESA, ARIZONA EXHIBIT C-8 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Storm Sewer Fire Revenues: Miscellaneous $ - $ Streets - $ 19,472 Parks $ - Total Revenues - - 19,472 - Expenditures: Capital Outlay 13,252,488 4,864,141 21,152,453 16,871 Total Expenditures 13,252,488 4,864,141 21,152,453 16,871 (13,252,488) (4,864,141) (21,132,981) (16,871) Other Financing Sources (Uses): Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 5,143,750 66,948 5,025,000 65,421 7,935,000 103,316 - Total Other Financing Sources (Uses) 5,210,698 5,090,421 8,038,316 - Deficiency of Revenues Under Expenditures Net Change in Fund Balances (8,041,790) Fund Balances - Beginning 13,997,228 1,100,056 5,955,438 $ 1,326,336 Fund Balances - Ending $ 99 226,280 $ (13,094,665) (16,871) 17,719,139 16,871 4,624,474 $ - EXHIBIT C-8 (Continued) Law Enforcement $ - Service Center Library $ - $ Capital Leases - $ Total - $ 19,472 - - - - 19,472 13,025,126 75,803 - 381,085 52,767,967 13,025,126 75,803 - 381,085 52,767,967 (13,025,126) (75,803) - (381,085) (52,748,495) 12,761,250 166,165 - - (13,851) - (13,851) 30,865,000 401,850 12,927,415 - - (13,851) 31,252,999 - (394,936) (21,495,496) 398,637 45,026,375 3,701 $ 23,530,879 (97,711) (75,803) 10,898,410 $ 10,800,699 895,741 $ 819,938 293 $ 293 $ 100 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. Warehouse, Maintenance and Services Fund was established to finance and account for services and commodities furnished by Fleet Support, Materials and Supply, and Printing and Graphics. Property and Public Liability Self-Insurance Fund was established to account for the cost of claims incurred by the City under a self-insurance program. Workers’ Compensation Self-Insurance Fund was established to account for the costs of maintaining a self-insurance program for industrial insurance at the City. Employee Benefit Self-Insurance Fund was established to account for the costs of maintaining the City’s self-insurance health program. CITY OF MESA, ARIZONA EXHIBIT C-9 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2010 ASSETS Current Assets: Cash and Cash Equivalents Investments Accounts Receivable Accrued Premiums Receivable Accrued Interest Receivable Governments Due From Other Funds Inventory Prepaid Costs Total Current Assets Capital Assets: Buildings Other Improvements Machinery and Equipment Construction in Progress Warehouse, Maintenance and Services Property and Public Liability Self Insurance $ $ 873,102 21,4545,964,364 1,775 6,860,695 8,933,184 394,304 9,327,488 Less Accumulated Depreciation Net Capital Assets 2,014,156 4,944,866 2,095,871 44,702 9,099,595 (5,117,085) 3,982,510 - Total Assets 10,843,205 9,327,488 LIABILITIES AND FUND EQUITY Current Liabilities: Accounts Payable Other Accrued Expenses: Estimated Liability For Claims: Incurred-Not Reported Incurred and Pending Current Portion of Compensated Absences Total Current Liabilities 996,599 390 90,019 1,086,618 11,206,000 6,430,000 17,636,390 Long-Term Liabilities Compensated Absences Post Employment Benefits Total Long-Term Liabilities Total Liabilities 764,340 3,536,556 4,300,896 5,387,514 17,636,390 Net Assets: Invested in Capital Assets, Net of Related Debt Unrestricted Total Net Assets 3,982,510 1,473,181 5,455,691 (8,308,902) (8,308,902) $ 101 $ EXHIBIT C-9 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance Total $ 9,990,635 39,946 10,030,581 $ 14,058,894 5,001,250 459,733 754,098 20,660 301 20,294,936 $ 33,855,815 5,001,250 499,679 754,098 20,660 21,4545,964,364 396,380 46,513,700 - - 10,030,581 20,294,936 50,496,210 60,905 482,252 1,540,146 13,350 7,707,676 7,781,931 3,731,291 4,213,543 14,950,641 14,137,676 90,019 30,718,482 7,781,931 4,213,543 764,340 3,536,556 4,300,896 35,019,378 2,248,650 2,248,650 16,081,393 $ 16,081,393 3,982,510 11,494,322 $ 15,476,832 $ 2,014,156 4,944,866 2,095,871 44,702 9,099,595 (5,117,085) 3,982,510 102 CITY OF MESA, ARIZONA EXHIBIT C-10 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Warehouse, Maintenance and Services Property and Public Liability Self Insurance $ $ Operating Revenues: Charges For Services: Material and Supply Printing and Graphics Fleet Support Services 1,069,697 - 917,841 - 14,847,956 - Self-Insurance Contributions: Employee - - City - 4,301,000 State Retirement System - - - - 16,835,494 4,301,000 Other Total Operating Revenues Operating Expenses: Material and Supply 1,144,177 - 1,121,872 16,063,200 - Administrative Costs - 801,616 Claims Incurred - 793,233 Premiums to Insurance Carriers - 1,106,132 Total Operating Expenses 18,329,249 2,700,981 Operating Income (Loss) Before Depreciation (1,493,755) 1,600,019 (397,805) - (1,891,560) 1,600,019 Nonoperating Revenues (Expense): Investment Income Loss on Disposal of Capital Assets (79,417) 9,059 - Total Nonoperating Revenues (Expenses) (79,417) 9,059 (1,970,977) 1,609,078 Printing and Graphics Fleet Support Services Depreciation Operating Income (Loss) Net Income (Loss) Before Transfers and Capital Contributions Capital Contributions Transfers In Change in Net Assets 26,618 - 1,663,300 - (281,059) Total Net Assets - Beginning 1,609,078 5,736,750 Total Net Assets - Ending $ 103 5,455,691 (9,917,980) $ (8,308,902) EXHIBIT C-10 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance $ $ - $ 1,069,697 - - 917,841 - - 14,847,956 - 11,631,056 11,631,056 2,141,209 35,559,449 42,001,658 - 3,126,115 3,126,115 - 133,467 133,467 2,141,209 50,450,087 73,727,790 - - 1,144,177 - - 1,121,872 16,063,200 320,860 4,247,325 5,369,801 3,591,565 48,486,234 52,871,032 560,263 345,325 2,011,720 4,472,688 53,078,884 78,581,802 (2,331,479) (2,628,797) (4,854,012) - - (2,331,479) (397,805) (2,628,797) (5,251,817) 10,247 - 59,626 - 78,932 (79,417) 10,247 59,626 (485) (2,321,232) $ - Total (2,569,171) (5,252,302) - - 26,618 - - 1,663,300 (2,321,232) (2,569,171) (3,562,384) 4,569,882 18,650,564 19,039,216 2,248,650 $ 16,081,393 $ 15,476,832 104 CITY OF MESA, ARIZONA EXHIBIT C-11 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Warehouse, Maintenance and Services Cash Flows From Operating Activities: Cash Received From Users Cash Payments To Suppliers Cash Payments To Employees $ Net Cash (Used For) Operating Activities 16,852,869 (12,657,763) (5,751,289) (1,556,183) Cash Flows From Noncapital Financing Activities: Operating Transfers-In From Other Funds 1,689,918 Net Cash Provided By Noncapital Financing Activities 1,689,918 Cash Flows From Capital and Related Financing Activities: Acquisition and Construction of Capital Assets PrincipalPaid Paidon onLeases Lease Maturities Interest 49,729 (6,539) - Net Cash Provided By Capital and Related Financing Activities 43,190 Cash Flows From Investing Activities: Purchase of Investment Securities Proceeds from Sale and Maturities of Investment Securities Interest Received on Investments - Net Cash Provided By Investing Activities - Net Increase (Decrease) in Cash and Cash Equivalents 176,925 Cash and Cash Equivalents at Beginning of Year 696,177 Cash and Cash Equivalents at End of Year $ 873,102 Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities: Operating Income (Loss) $ Adjustments to Reconcile Operating Income (Loss) to Net Cash Used Provided By Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) in Inventory (Increase) Decrease in Prepaid Costs Increase (Decrease) in Accounts Payable Increase (Decrease) in Other Accrued Expenses (1,891,560) 397,805 17,374 (226,650) (951) 147,798 - Total Adjustments 335,376 Net Cash (Used For) Operating Activities $ Noncash Transactions Affecting Financial Position: Transfer of Capital Assets from Governmental Funds Increase of Fair Market Value of Investments (1,556,184) 26,618 105 EXHIBIT C-11 (Continued) Property and Public Liability Self Insurance $ 4,881,820 (7,666,266) (786,371) Employee Benefits Self Insurance Workers' Compensation Self Insurance $ (3,570,817) 2,162,597 (3,353,445) (305,449) $ (1,496,297) Total 49,992,325 (51,756,529) (1,345,145) $ (3,109,349) 73,889,611 (75,434,003) (8,188,254) (9,732,646) - - - 1,689,918 - - - 1,689,918 - - - 49,729 (6,539) - - - - 43,190 18,976 20,084 18,976 20,084 (5,000,000) 5,001,250 43,610 (5,000,000) 5,001,250 82,670 44,860 83,920 (3,551,841) (1,476,213) (3,064,489) (7,915,618) 12,485,025 11,466,848 17,123,383 41,771,433 $ 8,933,184 $ 9,990,635 $ 14,058,894 $ 33,855,815 $ 1,600,019 $ (2,331,479) $ (2,628,797) $ (5,251,817) - $ - - 397,805 580,821 87,556 (212) (5,839,000) 21,390 206,351 (150,954) 758,396 (457,764) (107) 10,744 (33,427) 161,821 (226,650) 292,849 7,376 (5,114,031) (5,170,835) 835,183 (480,554) (4,480,830) (3,570,816) $ (1,496,296) $ (3,109,351) 1,250 106 $ (9,732,647) FIDUCIARY FUND The Fiduciary Fund accounts for assets held by the City in a custodial capacity for the benefit of a third party and cannot be used to address activities or obligations of the City. The Payroll Agency Fund accounts for all payroll transactions. CITY OF MESA, ARIZONA EXHIBIT C-12 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Balance July 1, 2009 PAYROLL AGENCY FUND Assets: Cash and Cash Equivalents Due From Other Funds Additions Balance June 30, 2010 Deductions $ 9,054,712 - $ 552,190,099 11,947,893 $ 551,086,094 11,947,893 $ 10,158,717 - Total Assets $ 9,054,712 $ 564,137,992 $ 563,033,987 $ 10,158,717 Liabilities: Accrued Payroll Payable $ 9,054,712 $ 340,743,680 $ 339,639,675 $ 10,158,717 Total Liabilities $ 9,054,712 $ 340,743,680 $ 339,639,675 $ 10,158,717 107 Supplemental Information CITY OF MESA, ARIZONA EXHIBIT D-1 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget General Government: Legislative Executive Williams Gateway Town Center Development Judicial Legal Building Maintenance City Clerk Economic Development Engineering Financial Services E-Streets & Cable TV Licensing General Services Planning Capital Improvement Total General Government $ Final Budget 1,469,000 870,000 3,746,000 1,351,000 12,225,000 817,000 1,773,473 979,000 1,776,000 3,119,000 8,244,000 1,981,000 5,728,604 2,381,000 1,014,000 $ 1,559,479 1,067,104 4,362,623 1,350,987 12,732,963 816,637 1,773,249 978,947 1,775,960 3,118,384 8,977,057 1,981,000 5,723,069 2,441,812 1,014,000 Variance With Final Budget Positive (Negative) Actual Amounts Budget Basis $ 1,559,479 1,067,104 4,362,623 1,037,733 12,732,963 666,050 1,692,326 845,430 1,758,936 2,074,474 8,977,057 685,415 5,228,056 2,441,812 817,078 $ 313,254 150,587 80,923 133,517 17,024 1,043,910 1,295,585 495,013 196,922 47,474,077 49,673,271 45,946,536 3,726,735 3,651,043 703,320 3,651,043 1,211,836 1,769,833 1,973,336 1,881,210 (761,500) 43,119,714 44,810,392 42,203,367 2,607,025 Public Safety: Law Enforcement Fire Prevention Building Safety Code Compliance Environmental Management 171,072,693 75,739,000 3,949,000 1,062,000 2,368,624 170,747,335 75,703,569 4,023,410 1,061,967 2,368,624 159,484,761 66,871,736 4,023,410 890,864 241,926 11,262,574 8,831,833 171,103 2,126,698 Total Public Safety 254,191,317 253,904,905 231,512,697 22,392,208 8,481,912 16,407,959 8,180,311 16,407,959 6,202,397 14,305,934 1,977,914 2,102,025 $ 229,301,446 $ 229,316,635 $ 211,004,366 Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures 108 $ 18,312,269 CITY OF MESA, ARIZONA EXHIBIT D-1 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Variance With Final Budget Positive (Negative) Original Budget Final Budget Actual Amounts Budget Basis $ 23,465,000 11,258,856 14,518,000 9,373,043 2,909,000 2,551,000 1,481,000 2,763,000 $ 23,431,383 11,258,535 14,517,730 9,372,541 2,909,000 2,550,912 1,480,945 2,762,761 $ 20,435,642 9,832,936 6,172,548 8,095,758 1,994,179 1,800,965 1,453,240 2,443,428 Total Cultural-Recreational 68,318,899 68,283,807 52,228,696 16,055,111 Less: Capital Outlay Expenditures Debt Service Expenditures 14,614,067 8,120,368 14,614,067 8,120,368 4,311,127 7,793,371 10,302,940 326,997 Total Current Expenditures 45,584,464 45,549,372 40,124,198 5,425,174 Community Environment: Community Development Streets Storm Sewer Mass Transit Miscellaneous Services 25,015,000 51,677,716 4,301,787 954,586 717,000 25,015,000 51,471,250 4,533,616 954,586 1,984,584 12,998,443 35,660,019 4,533,616 893,768 1,984,584 12,016,557 15,811,231 60,818 - Total Community Environment 82,666,089 83,959,036 56,070,430 27,888,606 Less: Capital Outlay Expenditures Debt Service Expenditures 32,962,141 9,323,721 32,756,341 9,555,596 9,745,887 8,387,169 23,010,454 1,168,427 Total Current Expenditures 40,380,227 41,647,099 37,937,374 3,709,725 Contingencies 56,650,000 47,158,747 - 47,158,747 $ 509,300,382 $ 502,979,766 $ 385,758,359 Cultural-Recreational: Parks and Recreation Cultural Aquatics Library Community Aid Museum of Natural History Museum for Youth Neighborhood & Human Services Total General Fund Expenditures 109 $ $ 2,995,741 1,425,599 8,345,182 1,276,783 914,821 749,947 27,705 319,333 117,221,407 CITY OF MESA, ARIZONA EXHIBIT D-2 HIGHWAY USER REVENUE FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Variance With Final Budget Positive (Negative) Original Budget Final Budget Actual Amounts Budget Basis $ 31,759,799 68,213 $ 31,759,799 68,213 $ 25,636,528 87,746 Total Community Environment 31,828,012 31,828,012 25,724,274 6,103,738 Less: Capital Outlay Expenditures Debt Service Expenditures 982,782 13,321,442 982,782 13,321,442 774,100 12,416,168 208,682 905,274 Total Current Expenditures 17,523,788 17,523,788 12,534,006 4,989,782 1,587,000 1,587,000 - 1,587,000 $ 33,415,012 $ 33,415,012 $ 25,724,274 Community Environment: Streets Storm Sewer Contingencies Total Highway User Revenue Fund Expenditures 110 $ $ 6,123,271 (19,533) 7,690,738 CITY OF MESA, ARIZONA EXHIBIT D-3 NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) Original Budget Final Budget $ 13,877,000 455,000 1,000 - $ 13,877,000 455,000 1,000 - Total Revenues 14,333,000 14,333,000 7,349,558 (6,983,442) Expenditures: Current: Community Environment Capital Outlay Contingencies 10,355,392 13,614,356 - 10,355,006 13,614,356 386 8,631,335 4,414,565 - 1,723,671 9,199,791 386 Total Expenditures 23,969,748 23,969,748 13,045,900 10,923,848 Deficiency of Revenues Under Expenditures (9,636,748) (9,636,748) (5,696,342) 3,940,406 9,637,000 9,637,000 5,709,000 (3,928,000) Net Change in Fund Balance 252 252 12,658 12,406 Fund Balance - Beginning 283 283 349 66 LOCAL TRANSPORTATION ASSISTANCE FUND Revenues: Intergovernmental Charges For Services Investment Income Miscellaneous Other Financing Sources: Transfers In Fund Balance - Ending $ 535 111 $ 535 $ $ 5,099,060 1,481,060 769,438 13,007 $ $ (8,777,940) 1,026,060 (1,000) 769,438 12,472 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Final Budget Actual Amounts Budgetary Basis $ 11,818,000 18,000 81,000 $ 11,818,000 18,000 81,000 $ 12,191,801 1 1,265 63,958 Total Revenues 11,917,000 11,917,000 12,257,025 340,025 Expenditures: Current: Community Environment 13,542,000 13,542,000 11,917,797 1,624,203 Total Expenditures 13,542,000 13,542,000 11,917,797 1,624,203 Net Change in Fund Balance (1,625,000) (1,625,000) 339,228 1,964,228 1,625,765 1,625,765 MESA HOUSING AUTHORITY FUND Revenues: Intergovernmental Charges For Services Investment Income Miscellaneous Fund Balance - Beginning Fund Balance - Ending $ 765 112 $ 765 Variance With Final Budget Positive (Negative) $ 1,271,561 $ 1,610,789 373,801 1 (16,735) (17,042) (354,204) $ 1,610,024 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget CEMETERY FUND Revenues: Charges For Services Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 1,231,000 58,000 - $ 1,231,000 58,000 - $ 1,174,962 7,108 4,965 Variance With Final Budget Positive (Negative) $ (56,038) (50,892) 4,965 Total Revenues 1,289,000 1,289,000 1,187,035 (101,965) Expenditures: Current: Community Environment Capital Outlay Contingencies 1,217,314 808,686 151,000 1,217,314 808,686 151,000 1,043,952 822,791 - 173,362 (14,105) 151,000 Total Expenditures 2,177,000 2,177,000 1,866,743 310,257 Net Change in Fund Balance (888,000) Fund Balance - Beginning Fund Balance - Ending (888,000) 7,489,629 $ 6,601,629 113 (679,708) 7,489,629 $ 6,601,629 208,292 7,405,421 $ 6,725,713 (84,208) $ 124,084 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget PUBLIC ART FUND Revenues: Investment Income $ Actual Amounts Budgetary Basis Final Budget - $ - $ Variance With Final Budget Positive (Negative) 18 $ 18 Total Revenues - - 18 18 Expenditures: Current: Cultural-Recreational - - - - Total Expenditures - - - - Net Change in Fund Balance - - 18 18 4,234 4,234 17,163 12,929 Fund Balance - Beginning Fund Balance - Ending $ 4,234 114 $ 4,234 $ 17,181 $ 12,947 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget DEVELOPMENT IMPACT FEES FUND Revenues: Licenses & Permits Investment Income $ Total Revenues Actual Amounts Budgetary Basis Final Budget 2,300,000 84,000 $ 2,300,000 84,000 $ 2,552,700 8,709 Variance With Final Budget Positive (Negative) $ 252,700 (75,291) 2,384,000 2,384,000 2,561,409 177,409 29,018 Expenditures: Capital Outlay Debt Service: Principal Retirement Interest on Bonds 443,144 443,144 414,126 3,210,554 336,403 3,317,536 336,403 3,346,554 336,403 Total Expenditures 3,990,101 4,097,083 4,097,083 (1,606,101) (1,713,083) (1,535,674) 177,409 9,584,811 9,584,811 9,868,803 283,992 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 7,978,710 115 $ 7,871,728 $ 8,333,129 (29,018) - $ 461,401 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget COURT CONSTRUCTION FUND Revenues: Fines and Forfeitures Investment Income $ Total Revenues Actual Amounts Budgetary Basis Final Budget 706,000 12,000 $ 706,000 12,000 $ 761,804 606 718,000 718,000 762,410 Expenditures: Debt Service: Principal Retirement Interest on Notes and Bonds 204,402 1,295,598 371,341 1,295,598 583,402 1,083,537 Total Expenditures 1,500,000 1,666,939 1,666,939 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ Variance With Final Budget Positive (Negative) $ 55,804 (11,394) 44,410 (212,061) 212,061 - (782,000) (948,939) (904,529) 44,410 897,288 897,288 904,911 7,623 115,288 116 $ (51,651) $ 382 $ 52,033 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget MESA ARTS CENTER RESTORATION FUND Revenues: Charges For Services Investment Income $ 179,000 6,000 Actual Amounts Budgetary Basis Final Budget $ 179,000 6,000 $ 255,040 863 Variance With Final Budget Positive (Negative) $ 76,040 (5,137) Total Revenues 185,000 185,000 255,903 70,903 Expenditures: Current: Cultural-Recreational Capital Outlay 110,000 90,000 110,000 90,000 20,550 120,692 89,450 (30,692) Total Expenditures 200,000 200,000 141,242 58,758 Net Change in Fund Balance (15,000) (15,000) 114,661 129,661 Fund Balance - Beginning 869,909 869,909 892,301 22,392 Fund Balance - Ending $ 854,909 117 $ 854,909 $ 1,006,962 $ 152,053 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget REGIONAL TRANSPORTATION PLAN FUND Revenues: Intergovernmental $ Actual Amounts Budgetary Basis Final Budget 5,460,000 $ 5,460,000 $ 4,318,545 Variance With Final Budget Positive (Negative) $ (1,141,455) Total Revenues 5,460,000 5,460,000 4,318,545 Expenditures: Current: Capital Outlay 5,462,203 5,462,203 35,345 5,426,858 Total Expenditures 5,462,203 5,462,203 35,345 5,426,858 4,283,200 4,285,403 (1,891,000) (1,891,000) 2,392,200 2,394,403 474,980 472,281 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,203) Other Financing Sources: Transfer Out - Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending (2,203) $ - (2,203) (2,203) 2,699 2,699 496 118 $ 496 $ 2,867,180 (1,141,455) $ 2,866,684 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget ENVIRONMENTAL COMPLIANCE FUND Revenues: Charges For Services Investment Income $ 5,487,000 7,000 Actual Amounts Budgetary Basis Final Budget $ 5,487,000 7,000 $ 5,733,948 606 Variance With Final Budget Positive (Negative) $ 246,948 (6,394) Total Revenues 5,494,000 5,494,000 5,734,554 240,554 Expenditures: Current: Public Safety Capital Outlay Contingencies 5,602,376 400,000 - 5,602,323 400,000 53 5,242,813 33,276 - 359,510 366,724 53 Total Expenditures 6,002,376 6,002,376 5,276,089 726,287 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ (508,376) (508,376) 458,465 966,841 508,858 508,858 460,402 (48,456) 482 119 $ 482 $ 918,867 $ 918,385 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget VEHICLE REPLACEMENT FUND Revenues: Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 20,000 150,000 $ 20,000 150,000 $ 3,438 123,853 Variance With Final Budget Positive (Negative) $ (16,562) (26,147) Total Revenues 170,000 170,000 127,291 Expenditures: Capital Outlay Contingencies 2,715,782 2,666,000 2,666,659 2,715,123 2,325,934 - 340,725 2,715,123 Total Expenditures 5,381,782 5,381,782 2,325,934 3,055,848 (5,211,782) (5,211,782) (2,198,643) 3,013,139 3,244,000 3,244,000 3,090,000 (1,967,782) (1,967,782) 1,968,217 1,968,217 Deficiency of Revenues Under Expenditures Other Financing Sources: Transfers In Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 435 120 $ 435 $ (42,709) (154,000) 891,357 2,859,139 3,947,956 1,979,739 4,839,313 $ 4,838,878 CITY OF MESA, ARIZONA EXHIBIT D-3 (Concluded) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget RECAP Revenues: Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 2,300,000 31,155,000 7,352,000 706,000 206,000 231,000 $ 2,300,000 31,155,000 7,352,000 706,000 206,000 231,000 $ 2,552,700 21,609,406 8,645,011 761,804 22,613 962,214 Variance With Final Budget Positive (Negative) $ 252,700 (9,545,594) 1,293,011 55,804 (183,387) 731,214 Total Revenues 41,950,000 41,950,000 34,553,748 (7,396,252) Expenditures: Current: Public Safety Cultural-Recreational Community Environment Capital Outlay Contingencies Principal Retirement Interest on Notes and Bonds 5,602,376 110,000 25,114,706 23,534,171 2,817,000 3,414,956 1,632,001 5,602,323 110,000 25,114,320 23,485,048 2,866,562 3,688,877 1,632,001 5,242,813 20,550 21,593,084 8,166,729 3,929,956 1,419,940 359,510 89,450 3,521,236 15,318,319 2,866,562 (241,079) 212,061 Total Expenditures 62,225,210 62,499,131 40,373,072 22,126,059 (20,275,210) (20,549,131) (5,819,324) 14,729,807 Other Financing Sources: Transfers In Transfers Out 12,881,000 - 12,881,000 - 8,799,000 (1,891,000) (4,082,000) (1,891,000) Net Change in Fund Balances (7,394,210) (7,668,131) 1,088,676 8,756,807 Fund Balances - Beginning 22,951,693 22,951,693 25,243,847 2,292,154 $ 15,557,483 $ 15,283,562 $ 26,332,523 $ 11,048,961 Deficiency of Revenues Under Expenditures Fund Balances - Ending 121 CITY OF MESA, ARIZONA EXHIBIT D-4 NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) LOCAL TRANSPORTATION ASSISTANCE FUND Community Environment: Mass Transit $ 23,969,748 $ 23,969,362 $ 13,045,900 $ 10,923,462 Total Community Environment 23,969,748 23,969,362 13,045,900 10,923,462 Less: Capital Outlay Expenditures 13,614,356 13,614,356 4,414,565 9,199,791 Total Current Expenditures 10,355,392 10,355,006 8,631,335 1,723,671 - 386 - 386 Contingencies Total Local Transportation Assistance Fund Expenditures $ 23,969,748 $ 23,969,748 $ 13,045,900 $ 10,923,848 $ 13,542,000 $ 13,542,000 $ 11,917,797 $ 1,624,203 MESA HOUSING AUTHORITY Community Environment Mesa Housing Authority Total Community Environment 13,542,000 13,542,000 11,917,797 1,624,203 Total Mesa Housing Authority Fund Expenditures $ 13,542,000 $ 13,542,000 $ 11,917,797 $ 1,624,203 $ 2,026,000 $ 2,026,000 $ 1,866,743 $ 159,257 CEMETERY FUND Community Environment: Cemetery Less: Capital Outlay Expenditures Total Current Expenditures Contingencies Total Cemetery Fund Expenditures $ 808,686 808,686 822,791 1,217,314 1,217,314 1,043,952 173,362 151,000 151,000 - 151,000 2,177,000 122 $ 2,177,000 $ 1,866,743 (14,105) $ 310,257 CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget PUBLIC ART FUND Cultural Recreational: Cultural $ Total Cultural-Recreational - Actual Amounts Budgetary Basis Final Budget $ - $ Variance With Final Budget Positive (Negative) - $ - - - - - Less: Capital Outlay Expenditures - - - - Total Current Expenditures - - - - Total Public Art Fund Expenditures DEVELOPMENT IMPACT FEES FUND Public Safety: Debt Service: Law Enforcement Fire Prevention $ - $ - $ - $ - $ 519,000 351,000 $ 519,000 351,000 $ 416,000 276,000 $ 103,000 75,000 Total Public Safety Cultural-Recreational: Capital Outlay: Library Cultural Facilities Debt Service: Library Parks & Recreation Total Cultural-Recreational Community Environment: Debt Service: Storm Sewer Total Community Environment Total Development Impact Fees Fund Expenditures $ 870,000 870,000 692,000 178,000 443,144 443,144 48,741 365,385 (48,741) 77,759 2,058,957 395,000 2,058,957 501,982 2,058,957 722,000 (220,018) 2,897,101 3,004,083 3,195,083 (191,000) 223,000 223,000 210,000 13,000 223,000 223,000 210,000 13,000 3,990,101 123 $ 4,097,083 $ 4,097,083 $ - CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) COURT CONSTRUCTION FUND General Government: Debt Service: Judicial $ Total General Government Total Court Construction Fund Expenditures 1,500,000 $ 1,500,000 1,666,939 $ 1,666,939 1,666,939 $ 1,666,939 - $ 1,500,000 $ 1,666,939 $ 1,666,939 $ - $ 200,000 $ 200,000 $ 141,242 $ 58,758 MESA ARTS CENTER RESTORATION FUND Cultural-Recreational: Cultural Total Cultural-Recreational Less: Capital Outlay Expenditures Total Current Expenditures 200,000 200,000 141,242 58,758 90,000 90,000 120,692 (30,692) 110,000 110,000 20,550 89,450 Total Mesa Arts Center Restoration Fund Expenditures $ 200,000 $ 200,000 $ 141,242 $ 58,758 $ 5,462,203 $ 5,462,203 $ 35,345 $ 5,426,858 REGIONAL TRANSPORTATION PLAN FUND Community Environment: Capital Outlay: Streets Total Community Environment 5,462,203 5,462,203 35,345 5,426,858 Less: Capital Outlay Expenditures 5,462,203 5,462,203 35,345 5,426,858 Total Regional Transportation Plan Fund Expenditures $ 5,462,203 124 $ 5,462,203 $ 35,345 $ 5,426,858 CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts - Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) ENVIRONMENTAL COMPLIANCE FUND Public Safety: Environmental Management $ Total Public Safety 6,002,376 $ 6,002,376 Less: Capital Outlay Expenditures Total Current Expenditures 6,002,323 $ 6,002,323 5,276,089 $ 5,276,089 726,234 726,234 400,000 400,000 33,276 366,724 5,602,376 5,602,323 5,242,813 359,510 - 53 - 53 Contingencies Total Environmental Compliance Fund Expenditures $ 6,002,376 $ 6,002,376 $ 5,276,089 $ 726,287 $ 145,527 $ 145,527 $ 76,363 $ 69,164 VEHICLE REPLACEMENT FUND Capital Outlay: General Government Building Maintenance Engineering 114,000 114,000 - 38,000 38,000 39,619 (1,619) - - 26,618 (26,618) 297,527 297,527 142,600 154,927 Law Enforcement 1,425,307 1,425,307 1,608,720 (183,413) Total Public Safety 1,425,307 1,425,307 1,608,720 (183,413) 228,000 228,000 - 228,000 228,000 228,000 - 228,000 General Services Fleet Services Total General Government 114,000 Public Safety Cultural-Recreational Parks and Recreation Total Cultural-Recreational Community Environment Streets Total Community Environment 764,948 715,825 574,614 141,211 764,948 715,825 574,614 141,211 Total Capital Outlay 2,715,782 2,666,659 2,325,934 340,725 Less: Capital Outlay Expenditures 2,715,782 2,666,659 2,325,934 340,725 - - - - Total Current Expenditures Contingencies Total Vehicle Replacement Fund Expenditures 2,666,000 $ 5,381,782 125 2,715,123 $ 5,381,782 $ 2,325,934 2,715,123 $ 3,055,848 CITY OF MESA, ARIZONA EXHIBIT D-4 (Concluded) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Final Budget Actual Amounts - Budgetary Basis Variance With Final Budget Positive (Negative) RECAP General Government $ 1,797,527 $ 1,964,466 $ 1,809,539 $ 154,927 Public Safety 8,297,683 8,297,630 7,576,809 720,821 Cultural-Recreational 3,325,101 3,432,083 3,336,325 95,758 45,987,899 45,938,390 27,650,399 18,287,991 2,817,000 2,866,562 - 2,866,562 Community Environment Contingencies Total Nonmajor Special Revenue Funds Expenditures $ 62,225,210 126 $ 62,499,131 $ 40,373,072 $ 22,126,059 CITY OF MESA, ARIZONA EXHIBIT D-5 NON-MAJOR CAPITAL PROJECT FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget CAPITAL PROJECTS FUNDS Revenues: Intergovernmental Miscellaneous $ Final Budget Actual Variance With Final Budget Positive (Negative) - $ - - $ - 1,215 225,016 1,215 225,016 Total Revenues - - 226,231 226,231 Expenditures: Capital Outlay 175,716,000 175,716,000 106,960,870 68,755,130 Total Expenditures 175,716,000 175,716,000 106,960,870 68,755,130 (175,716,000) (175,716,000) (106,734,639) 68,981,361 183,950,000 5,927,000 183,950,000 5,927,000 81,245,000 1,156,039 3,486,902 5,525,900 (102,705,000) 1,156,039 3,486,902 (401,100) Net Change in Fund Balances 14,161,000 14,161,000 (15,320,798) (29,481,798) Fund Balances-Beginning 66,482,404 66,482,404 92,973,339 26,490,935 80,643,404 $ 80,643,404 $ 77,652,541 $ (2,990,863) Deficiency of Revenues Under Expenditures Other Financing Sources: Face Amount of Bonds Issued Premium on Issuance of Bonds Face Amount of Notes Issued Transfers In Fund Balances-Ending $ Budget Basis Actual amounts (budgetary basis) "Net Change in Fund Balances" from the budgetary comparison schedule $ Perspective Differences: Proprietary Capital Project Funds (15,320,798) (5,779,762) Entity Differences: Non-Budgeted Capital Leases (394,936) GAAP Basis Actual amount (GAAP basis) "Net Change in Fund Balance" as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Non-major Capital Project Funds Exhibit C-8 127 $ (21,495,496) CITY OF MESA, ARIZONA EXHIBIT D-6 ENTERPRISE FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Final Budget Actual Amounts Budgetary Basis $ 35,117,000 45,035,000 108,518,000 63,172,000 47,826,000 8,188,000 2,349,000 3,294,000 6,782,000 824,000 (1,100,000) $ 35,117,000 45,035,000 108,518,000 63,172,000 47,826,000 8,188,000 2,349,000 3,294,000 6,782,000 824,000 (1,100,000) $ 33,422,989 39,076,614 104,925,056 60,054,466 47,047,901 4,287,736 2,317,924 1,970,891 5,936,650 983,592 (1,101,861) 320,005,000 320,005,000 298,921,958 (21,083,042) 34,469,000 46,037,000 67,507,000 53,324,000 32,120,000 8,624,000 2,651,000 5,632,000 6,688,000 1,868,000 34,773,000 34,467,440 45,945,752 67,445,702 53,316,671 32,110,262 8,623,920 2,650,860 5,631,896 7,351,248 1,867,995 34,281,182 25,423,324 31,439,175 62,353,209 50,539,921 27,061,465 4,143,273 2,427,051 3,019,148 7,351,248 1,629,008 - 9,044,116 14,506,577 5,092,493 2,776,750 5,048,797 4,480,647 223,809 2,612,748 238,987 34,281,182 293,693,000 293,692,928 215,386,822 78,306,106 26,312,000 26,312,072 83,535,136 57,223,064 (83,734,000) (83,734,000) 134,560 (84,581,287) 134,560 (847,287) (83,734,000) (83,734,000) (84,446,727) (712,727) (57,422,000) (57,421,928) (911,591) Unappropriated Net Assets - Beginning 61,307,039 61,307,039 Increase in Restricted Net Assets (3,935,039) (3,885,111) Revenues: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling Less: Bad Debt Expense Total Revenues Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling Contingencies Total Expenses Income Before Transfers Other Operating Sources and (Uses): Transfers In Transfers Out Total Other Operating Sources and (Uses) Change in Net Assets Unappropriated Net Assets - Ending $ (50,000) 128 $ - Variance With Final Budget Positive (Negative) $ 56,510,337 53,372,708 (7,934,331) (728,278) $ 51,732,839 (1,694,011) (5,958,386) (3,592,944) (3,117,534) (778,099) (3,900,264) (31,076) (1,323,109) (845,350) 159,592 (1,861) 3,156,833 $ 51,732,839 CITY OF MESA, ARIZONA EXHIBIT D-7 ENTERPRISE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-6 $ Basis Differences: Compensated Absences Post Employment Benefits Capitalized Interest Contractual Commitments Utility Revenue Accrual Increase of Fair Market Value of Investments (911,591) 146,376 (12,723,899) 3,453,424 (2,135,982) 102,331 (15,573) Perspective Differences: Grants and Contributions 29,003,878 Timing Differences: Water Rights Capital Expenditures Depreciation - Amortization Investment in Joint Ventures Non-Cash Loss on Disposal of Capital Assets Bond Principal and Reserves Amortization of Bond Premiums Deferred Amounts on Refundings Accretion of Certificates of Supplemental Interest Deferred Revenue 437,333 9,146,080 (52,030,215) (11,122,801) (1,807,334) 17,019,558 2,103,209 (2,009,567) 41,235 56,389 GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 129 (21,247,149) CITY OF MESA, ARIZONA EXHIBIT D-8 INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Final Budget Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) WAREHOUSE, MAINTENANCE AND SERVICES Revenues: Charges For Services: Materials and Supply Printing and Graphics Fleet Support Services $ 1,143,716 1,422,014 18,074,443 $ 1,143,716 1,422,014 18,074,443 $ 1,069,697 917,841 14,847,956 $ (74,019) (504,173) (3,226,487) Total Revenues 20,640,173 20,640,173 16,835,494 (3,804,679) Expenses: Materials and Supply Printing and Graphics Fleet Support Services 1,174,933 1,427,410 18,205,226 2,214,969 1,427,410 18,659,397 2,140,950 919,653 15,432,910 74,019 507,757 3,226,487 Total Expenses 20,807,569 22,301,776 18,493,513 3,808,263 (1,661,603) (1,658,019) Loss Before Transfers (167,396) Transfers In 168,000 Change in Net Assets 604 Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending 168,000 (1,493,603) 81 $ 685 130 81 $ (1,493,522) 3,584 1,663,300 1,495,300 5,281 1,498,884 (5,198) $ 83 (5,279) $ 1,493,605 CITY OF MESA, ARIZONA EXHIBIT D-8 (Continued) INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) PROPERTY AND PUBLIC LIABILITY FUND Revenues: Investment Income Contributions Miscellaneous $ 89,000 4,301,000 53,000 $ 89,000 4,301,000 53,000 $ 9,059 4,301,000 - $ (79,941) (53,000) Total Revenues 4,443,000 4,443,000 4,310,059 (132,941) Expenses: Administrative and Other Fees Claims Incurred 2,100,978 2,387,022 2,100,978 6,439,003 1,907,748 6,632,233 193,230 (193,230) Total Expenses 4,488,000 8,539,981 8,539,981 (4,096,981) (4,229,922) 10,584,910 13,557,021 6,487,929 $ 9,327,099 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending (45,000) 10,584,910 $ 10,539,910 131 $ (132,941) 2,972,111 $ 2,839,170 CITY OF MESA, ARIZONA EXHIBIT D-8 (Continued) INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) WORKERS' COMPENSATION FUND Revenues: Investment Income Contributions Miscellaneous $ 86,000 4,000,000 200,000 $ 86,000 4,000,000 200,000 $ 10,247 2,141,209 120,337 $ (75,753) (1,858,791) (79,663) Total Revenues 4,286,000 4,286,000 2,271,793 (2,014,207) Expenses: Administrative and Other Fees Claims Incurred 1,315,000 2,400,000 1,315,000 2,519,628 881,122 2,953,506 433,878 (433,878) Total Expenses 3,715,000 3,834,628 3,834,628 571,000 451,372 11,611,273 11,611,273 11,532,511 $ 12,182,273 $ 12,062,645 $ 9,969,676 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending 132 - (1,562,835) (2,014,207) (78,762) $ (2,092,969) CITY OF MESA, ARIZONA EXHIBIT D-8 (Continued) INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) EMPLOYEE BENEFITS FUND Revenues: Investment Income Contributions Miscellaneous $ 170,000 51,474,000 314,000 $ 170,000 51,474,000 314,000 $ 74,426 50,316,620 1,661,758 $ (95,574) (1,157,380) 1,347,758 Total Revenues 51,958,000 51,958,000 52,052,804 94,804 Expenses: Administrative and Other Fees Claims Incurred 5,111,022 49,176,978 5,111,022 49,557,929 4,592,650 50,076,301 (518,372) 518,372 Total Expenses 54,288,000 54,668,951 54,668,951 Change in Net Assets (2,330,000) (2,710,951) (2,616,147) Unappropriated Net Assets - Beginning 26,682,247 26,682,247 22,427,582 $ 24,352,247 $ 23,971,296 $ 19,811,435 Unappropriated Net Assets - Ending 133 94,804 (4,254,665) $ (4,159,861) CITY OF MESA, ARIZONA EXHIBIT D-8 (Concluded) INTERNAL SERVICE FUNDS SELF-INSURANCE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR JUNE 30, 2010 Original Budget Final Budget Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) $ 20,640,173 345,000 59,775,000 567,000 $ 20,640,173 345,000 59,775,000 567,000 $ 16,835,494 93,732 56,758,829 1,782,095 Total Revenues 81,327,173 81,327,173 75,470,150 (5,857,023) Expenses: Materials and Supply Printing and Graphics Fleet Support Administrative and Other Fees Claims Incurred Contingencies 1,174,933 1,427,410 18,205,226 8,527,000 53,964,000 - 2,214,969 1,427,410 18,659,397 8,527,000 58,516,559 - 2,140,950 919,653 15,432,910 7,381,520 59,662,040 - 74,019 507,757 3,226,487 1,145,480 (1,145,481) - Total Expenses 83,298,569 89,345,335 85,537,073 3,808,262 Loss Before Transfers (1,971,396) (8,018,162) (10,066,923) (2,048,761) 1,663,300 1,495,300 RECAP Revenues: Charges for Services Investment Income Contributions Miscellaneous Transfers In 168,000 168,000 Change in Net Assets (1,803,396) (7,850,162) (8,403,623) Unappropriated Net Assets - Beginning 48,878,511 48,878,511 47,511,916 $ 47,075,115 $ 41,028,349 $ 39,108,293 Unappropriated Net Assets - Ending 134 $ (3,804,679) (251,268) (3,016,171) 1,215,095 (553,461) (1,366,595) $ (1,920,056) CITY OF MESA, ARIZONA EXHIBIT D-9 INTERNAL SERVICE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-8 $ Basis Differences: Compensated Absences Increase of Fair Market Value of Investments (8,403,623) 16,150 (14,800) Perspective Differences: Transfer of Capital Assets from Governmental Activities 26,618 Timing Differences: OPEB Proprietary Funds Capital Expenditures Loss on Sale of Assets Depreciation - Amortization Inventory Increase Increase in Contingent Liability (1,403,881) 49,729 (79,418) (397,805) 1,502,266 5,142,379 GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 135 (3,562,384) Statistical Section CITY OF MESA, ARIZONA EXHIBIT D-10 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE JUNE 30, 2010 GOVERNMENTAL FUNDS CAPITAL ASSETS Land Buildings Other Improvements Machinery and Equipment Infrastructure Intangibles Construction in Progress $ 261,770,684 303,250,243 136,932,364 161,202,705 775,313,923 150,107 138,509,837 Total Governmental Funds Capital Assets $ 1,777,129,863 INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS Investment in Property Acquired Prior to July 1, 1978: Source Indeterminable $ 1,625,597 Investment in Property Acquired After June 30, 1978 From: General Obligation Bonds Highway User Revenue Bonds Federal Revenue Sharing Federal Aid General Revenue Contributions From Developers Contributions From Property Owners Contributions From Other Gov't Contributions - Indeterminant Funding Total 493,742,603 150,593,184 2,160,440 53,390,176 473,255,687 458,802,575 19,209,816 53,823,547 70,526,238 1,775,504,266 Total Investment in Governmental Funds Capital Assets $ 1,777,129,863 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 136 STATISTICAL SECTION This part of the City of Mesa’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 137 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 149 Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current level of outstanding debt and the City’s ability to issue additional debt in the future. 152 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 160 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. 162 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting governmentwide information include information beginning in that year. CITY OF MESA, ARIZONA TABLE I NET ASSETS BY COMPONENTS LAST NINE FISCAL YEARS (accrual basis of accounting) GOVERNMENTAL ACTIVITIES Invested in Capital Assets, Net of Related Debt 2001-02 $ 624,647,011 $ 2002-03 692,576,782 $ 2003-04 781,518,870 $ 2004-05 769,923,509 Restricted 96,006,282 85,299,383 61,749,912 68,486,614 Unrestricted 80,266,214 53,068,738 43,964,946 62,539,346 Total Governmental Activities Net Assets $ 800,919,507 $ 830,944,903 $ 887,233,728 $ 900,949,469 $ 406,180,825 $ 477,877,715 $ 451,550,515 $ 424,820,602 BUSINESS-TYPE ACTIVITIES Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Business-type Activities $ 36,822,813 44,402,649 62,692,972 101,565,804 174,986,829 182,390,271 218,266,775 219,103,522 617,990,467 $ 704,670,635 $ 732,510,262 $ 745,489,928 PRIMARY GOVERNMENT Invested in Capital Assets, Net of Related Debt $ 1,030,827,836 $ 1,170,454,497 $ 1,233,069,385 $ 1,194,744,111 Restricted 132,829,095 129,702,032 124,442,884 170,052,418 Unrestricted 255,253,043 235,459,009 262,231,721 281,642,868 Total Primary Government $ 1,418,909,974 $ 1,535,615,538 $ 1,619,743,990 $ 1,646,439,397 137 TABLE I (Continued) 2005-06 $ 765,874,830 $ 2006-07 791,591,633 $ 2007-08 794,720,403 $ 2008-09 791,523,460 $ 2009-10 844,777,095 84,386,395 95,107,036 86,252,122 92,532,141 86,954,514 85,734,791 128,548,213 125,128,033 91,363,394 3,651,537 $ 935,996,016 $ 1,015,246,882 $ 1,006,100,558 $ 975,418,995 $ 935,383,146 $ 390,100,160 $ 413,943,796 $ 434,813,786 366,497,841 $ 410,073,719 $ 89,383,126 96,756,386 94,133,333 82,697,422 47,011,208 268,388,224 308,374,940 308,215,959 278,891,568 271,705,523 747,871,510 $ 771,629,167 $ 812,423,011 $ 775,532,786 $ 753,530,517 $ 1,155,974,990 $ 1,158,089,474 $ 1,204,794,122 $ 1,205,467,256 $ 1,279,590,881 $ 173,769,521 191,863,422 180,385,455 175,229,563 133,965,722 354,123,015 436,923,153 433,343,992 370,254,962 275,357,060 $ 1,683,867,526 $ 1,786,876,049 $ 1,818,523,569 $ 1,750,951,781 $ 138 1,688,913,663 CITY OF MESA, ARIZONA TABLE II CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (accrual basis of accounting) EXPENSES 2001-02 2002-03 2003-04 2004-05 GOVERNMENTAL ACTIVITIES: General Government $ Public Safety 41,768,977 $ 48,918,830 $ 44,012,723 $ 48,722,316 164,866,979 169,665,871 181,856,295 204,366,091 Cultural-Recreational 49,917,805 52,778,367 53,201,350 62,870,201 Community Environment 75,331,481 55,886,591 72,984,342 86,363,321 Interest in Long-term Debt 13,482,328 13,891,122 14,490,474 15,503,667 345,367,570 341,140,781 366,545,184 417,825,596 Electric 21,586,810 21,809,560 24,390,551 27,118,590 Gas 20,215,585 22,433,015 25,990,497 33,829,631 Water 49,031,606 46,247,340 49,542,568 54,247,920 Wastewater 30,394,738 36,177,157 39,673,430 47,799,248 Solid Waste 21,430,944 21,737,238 21,826,949 23,863,908 Airport 2,018,408 1,940,735 2,087,395 2,119,795 Golf Course 2,275,182 2,296,550 2,781,273 2,966,147 Convention Center Total Governmental Activities Expenses BUSINESS-TYPE ACTIVITIES: 3,026,657 3,013,443 4,224,151 4,260,510 Hohokam Stadium/Fitch Complex - - - - District Cooling - - - - 149,979,930 155,655,038 170,516,814 196,205,749 Total Business-type Activities Expenses Total Primary Government Expenses $ 495,347,500 $ 139 496,795,819 $ 537,061,998 $ 614,031,345 TABLE II (Continued) 2005-06 $ $ 2006-07 44,568,148 $ 2007-08 48,200,767 $ 2008-09 63,633,405 $ 2009-10 54,225,566 $ 232,099,968 292,395,865 65,389,229 64,591,583 72,999,346 67,039,000 54,010,115 97,613,466 91,664,096 99,414,870 121,735,796 104,096,133 16,061,123 18,037,348 19,082,936 18,658,530 20,013,068 435,642,918 454,593,762 547,526,422 552,586,608 521,910,593 26,817,051 26,280,947 31,612,431 27,633,642 27,106,177 38,743,370 37,825,634 43,246,724 35,991,817 35,466,448 54,110,525 59,964,524 59,224,757 68,955,827 80,915,190 67,180,688 60,603,399 61,293,453 80,349,057 70,227,712 25,070,150 27,891,495 32,877,483 31,953,188 31,503,513 4,194,272 2,720,953 3,316,536 3,703,129 3,943,651 2,524,364 2,601,521 3,011,883 3,082,522 2,714,896 4,822,347 5,666,507 5,447,050 4,558,208 4,158,023 - - - - 7,407,501 67,274 1,090,931 768,873 975,687 1,000,347 223,530,041 224,645,911 240,799,190 257,203,077 264,443,458 659,172,959 $ 679,239,673 $ 788,325,612 290,927,716 54,862,584 212,010,952 $ 140 809,789,685 288,928,693 $ 786,354,051 CITY OF MESA, ARIZONA TABLE III FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2000-01 2001-02 2002-03 2003-04 GENERAL FUND Reserved (1)(2) $ Unreserved Total General Fund 61,847,049 $ 22,182,897 69,785,175 $ 24,532,385 53,697,322 $ 11,253,612 30,195,115 25,844,445 $ 84,029,946 $ 94,317,560 $ 64,950,934 $ 56,039,560 $ 14,731,211 $ 20,241,119 $ 14,555,545 $ 8,542,839 ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved, Reported in: Special Revenue Funds 11,958,553 12,119,328 9,211,016 20,215,242 Capital Project Funds 24,492,954 8,559,611 23,676,985 13,773,686 Total All Other Governmental Funds $ 51,182,718 $ 40,920,058 $ 47,443,546 $ 42,531,767 (1) During fiscal Year 1998-99, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund improvements to quality of life projects and is reported as reserved fund balance in the General Fund. (2) During FY 2006-07, a quarter percent portion of the sales tax increase described in (1) above to fund capital improvements to quality of life projects expired and was not renewed. Also during FY 2006-07, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund street improvements and is reported as restricted fund balance in the General Fund. 145 TABLE III (Continued) 2004-05 $ 37,871,632 2005-06 $ 19,310,081 61,257,305 2006-07 $ 27,993,782 77,177,037 2007-08 $ 57,029,523 84,886,350 2008-09 $ 50,283,211 51,862,378 2009-10 $ 74,711,328 40,748,236 92,186,747 $ 57,181,713 $ 89,251,087 $ 134,206,560 $ 135,169,561 $ 126,573,706 $ 132,934,983 $ 10,335,341 $ 8,391,978 $ 5,885,100 $ 8,643,272 $ 17,012,682 $ 53,674,468 $ 23,498,926 21,745,990 24,627,227 24,921,672 24,815,604 31,870,664 15,681,069 18,611,420 17,567,790 11,142,826 28,442,378 15,724,086 49,515,336 $ 48,749,388 $ 48,080,117 $ 146 44,707,770 $ 70,270,664 $ 101,269,218 CITY OF MESA, ARIZONA TABLE IV CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2000-01 REVENUES Sales Taxes (1) Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Loss on Investment in Local Government Investment Pool Miscellaneous $ 102,710,563 1,449,997 547,069 18,530,634 139,131,708 9,122,804 8,087,106 7,805,680 2001-02 $ 101,660,597 1,256,894 68,388 17,441,330 144,899,946 9,492,864 7,881,541 3,823,765 2002-03 $ 98,434,394 1,227,044 67,313 15,436,013 157,187,256 9,639,690 8,421,178 1,999,483 2003-04 $ 105,096,378 1,320,706 57,567 19,819,170 149,036,481 11,152,669 8,536,253 885,188 3,193,930 5,702,529 290,579,491 292,227,854 295,027,870 301,173,337 32,158,977 143,663,306 43,370,223 43,641,860 34,413,634 152,211,510 45,139,625 48,793,335 35,314,279 160,151,434 46,940,164 48,643,271 36,328,122 166,576,022 47,366,458 51,520,603 13,240,354 20,861,188 91,344 77,341,312 20,844,687 13,482,328 98,891 90,516,208 20,548,390 13,551,752 74,345 106,255,818 7,145,591 14,081,131 62,131 81,823,895 Total Expenditures 374,368,564 405,500,218 431,479,453 404,903,953 Excess of Revenues Under Expenditures (83,789,073) (113,272,364) (136,451,583) (103,730,616) 94,442,234 (40,154,867) 56,500,000 10,935 - 98,319,124 (38,779,124) 51,175,000 134,318 - 100,545,246 (40,765,246) 49,370,000 145,133 - 98,213,698 (27,993,698) 9,585,000 - 2,021,000 - 2,448,000 26,333,383 (26,333,383) 4,899,000 84,292,722 (84,875,410) 9,322,015 139,441,539 (138,661,071) 113,297,318 113,611,445 89,907,483 Total Revenues EXPENDITURES General Government Public Safety Cultural-Recreational Community Environment Debt Service Principal Interest Issuance Cost on Refunding Bonds Service Charges Cost of Issuance Capital Outlay OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds Premium on Issuance of Notes Proceeds from Obligations of Capital Leases Proceeds From Refunding Issue Payment to Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a percentage of Noncapital Expenditures 112,819,302 $ 29,030,229 $ 11.51% 24,954 10.93% (3,588,706) 6,204,205 $ (22,840,138) $ 5,268,925 (13,823,133) 10.51% (1) During fiscal year 1998-99, a voter approved one-half percent increase to sales tax was enacted. (2) During fiscal year 2006-07, a voter approved one-half percent increase to sales tax was enacted. In addition, a quarter percent portion of the sales tax described in (1) above expired and was not renewed by the voters. 147 6.59% TABLE IV (Continued) 2004-05 $ $ 112,258,968 1,856,955 4,770 18,817,521 153,369,074 13,047,596 9,247,469 1,353,224 2005-06 $ 128,372,155 2,189,830 4,770 23,145,062 178,553,235 17,649,718 9,049,107 4,376,010 2006-07 $ 155,817,051 2,389,528 416,906 20,127,674 190,825,624 22,039,055 10,276,600 6,463,111 2007-08 $ 147,762,866 2,394,765 1,218,100 23,342,116 193,585,472 23,702,601 10,761,086 5,177,695 2008-09 $ 2009-10 126,519,701 1,807,601 806,151 13,426,408 191,084,600 24,343,284 10,215,428 2,017,949 $ 121,556,751 13,885,749 1,580,533 922,651 11,823,758 190,731,282 20,419,291 10,134,507 190,716 9,562,131 9,632,863 6,365,625 6,421,576 14,754,573 13,675,435 319,517,708 372,972,750 414,721,174 414,366,277 384,975,695 384,920,673 38,364,301 182,224,448 54,761,753 56,953,311 36,730,857 190,761,508 56,187,938 60,079,827 40,661,807 210,541,969 54,711,334 65,314,260 48,111,893 233,506,939 57,765,169 66,615,531 36,506,727 230,863,556 53,171,005 72,646,647 40,112,552 216,025,864 40,150,034 72,081,273 7,692,222 15,369,204 61,994 62,392,135 8,857,085 16,181,484 234,487 55,510 79,316,975 8,357,577 18,150,710 56,768 77,474,595 25,870,624 19,229,682 58,196 77,308,807 36,905,901 18,845,224 27,738 77,899,367 34,845,924 21,185,810 9,397 538,824 82,530,441 417,819,368 448,405,671 475,269,020 528,466,841 526,866,165 507,480,119 (98,301,660) (75,432,921) (60,547,846) (114,100,564) (141,890,470) (122,559,446) 104,642,640 (28,065,640) 21,930,000 640,258 - 106,253,593 (32,339,810) 26,410,000 2,003,565 - 99,900,805 (33,233,233) 30,681,840 573,254 - 147,477,785 (53,960,459) 15,450,000 195,209 - 155,696,867 (59,105,867) 61,830,000 436,509 - 149,437,331 (66,653,904) 30,865,000 45,000,000 401,850 869,000 6,746,097 26,420,341 (26,156,314) 6,401,832 25,482,000 (27,474,833) 6,911,382 - 2,528,683 - - - 106,157,382 106,736,347 104,834,048 111,691,218 158,857,509 159,919,277 7,855,722 6.51% $ 31,303,426 6.86% $ 44,286,202 6.68% $ (2,409,346) 10.01% 148 $ 16,967,039 12.42% $ 37,359,831 13.19% CITY OF MESA, ARIZONA TABLE V SALES TAX COLLECTIONS BY CATEGORY LAST TEN FISCAL YEARS 2000-01 (2) Utilities $ 5,938,529 2001-02 $ 5,988,972 2002-03 $ 5,912,385 2003-04 $ 6,762,032 Communications 3,576,769 3,771,511 3,574,953 3,164,951 Publishing 1,576,120 1,594,079 1,530,906 1,470,008 411,049 418,108 384,241 378,322 Contracting 14,415,520 14,146,743 11,333,545 12,454,780 Retail Sales 55,557,307 54,461,048 54,110,533 58,588,455 6,774,683 7,029,557 7,176,167 7,749,295 Printing & Advertising Restaurants & Bars Amusements Rentals 1,027,591 1,005,956 974,633 1,029,101 13,352,281 13,156,005 13,323,813 13,399,200 80,714 88,618 113,218 100,234 Miscellaneous Total $ 102,710,563 City Direct Tax Rate 1.50% $ 101,660,597 1.50% $ 98,434,394 1.50% $ 105,096,378 1.50% Note: Amounts shown include penalties and interest. Occupancy tax not included. (1) Beginning in August 1998, the City enacted a voter-approved 1/2 percent increase in sales tax to fund quality of life projects. (2) Beginning in fiscal year 2001, the City enacted a voter-approved initiative that eliminated sales tax on food items. (3) During FY 2006-07, a quarter percent portion of the sales tax increase described in (1) above to fund capital improvements to quality of life projects expired and was not renewed. Also during FY 2006-07, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund street improvements and is reported as restricted fund balance in the General Fund. Source: City of Mesa Tax & Licensing Division 149 TABLE V (Continued) 2004-05 $ $ 6,692,042 2005-06 $ 7,539,420 2006-07 (3) $ 9,116,291 2007-08 $ 9,667,778 2008-09 $ 9,654,488 2009-10 $ 9,756,726 3,241,465 2,839,438 3,939,497 4,312,054 3,748,960 3,808,798 1,564,309 1,792,345 1,963,330 1,922,909 1,402,465 1,102,145 367,306 453,958 477,939 374,839 280,350 175,207 12,073,940 14,580,722 21,424,371 19,300,601 15,263,241 10,913,417 64,266,464 74,420,542 85,014,600 77,307,911 63,230,186 63,468,754 8,483,650 9,417,798 11,725,779 12,038,983 10,956,021 10,948,158 1,071,285 1,210,343 1,456,808 1,348,973 1,362,931 1,176,440 14,380,416 15,786,032 20,533,854 21,369,386 20,514,008 20,122,775 118,091 331,557 164,582 119,432 107,051 84,330 112,258,968 1.50% $ 128,372,155 1.50% $ 155,817,051 1.75% $ 147,762,866 1.75% 150 $ 126,519,701 1.75% $ 121,556,751 1.75% CITY OF MESA, ARIZONA TABLE VI DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS City Direct Maricopa State of Rate County Arizona 2000-01 1.50 0.70 5.60 2001-02 1.50 0.70 5.60 2002-03 1.50 0.70 5.60 2003-04 1.50 0.70 5.60 2004-05 1.50 0.70 5.60 2005-06 1.50 0.70 5.60 2006-07 1.75 0.70 5.60 2007-08 2008-09 2009-10 1.75 1.75 1.75 0.70 0.70 0.70 5.60 5.60 6.60* Source: City of Mesa Tax & Licensing Division *Note: The State of Arizona increased it's tax to 6.60% effective 6/1/10 for a 3 year period 151 /10 for a 152 CITY OF MESA, ARIZONA TABLE VII RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Obligation Bonds Year 2001 $ Municipal Development Corporation Bonds Highway User Revenue Bonds Special Assessment Bonds Capital Leases Highway Project Advancement Notes 175,433,951 $ 22,315,000 $ 46,900,000 $ 329,000 $ 25,238,893 $ - 2002 181,307,268 11,925,000 72,700,000 217,000 20,845,608 - 2003 187,839,000 10,970,000 101,190,000 133,000 21,665,644 - 2004 187,644,270 9,970,000 110,770,000 48,000 25,193,586 - 2005 198,769,540 9,970,000 120,410,000 36,000 24,968,195 - 2006 207,859,834 9,970,000 131,950,000 5,049,000 23,273,476 - 2007 223,115,128 9,970,000 142,460,000 8,797,840 22,988,632 - 2008 221,625,447 9,970,000 142,290,000 8,046,000 17,502,575 - 2009 267,062,537 - 140,265,000 7,294,000 9,729,851 - 2010 273,869,349 - 134,545,000 6,550,000 5,406,120 45,000,000 (1) Information on personal income and population is presented on Table XII. Personal income information not available for years 1999 & 2001. 152 TABLE VII (Continued) Business-type Activities Utility System Revenue Bonds $ 285,755,000 General Obligation Bonds $ Municipal Development Corporation Bonds Notes Payable Total Primary Government Capital Leases Percentage of Personal Income (1) Per Capita (1) N/A 1,584 69,028,384 $ 24,600,000 $ 1,484,952 $ 14,853,400 $ 665,938,580 353,875,000 23,072,732 20,600,000 1,355,468 12,140,530 698,038,606 8.34 1,616 397,315,000 13,706,000 19,800,000 1,218,660 10,092,842 763,930,146 8.08 1,758 458,525,000 3,290,730 16,900,000 1,074,110 23,473,486 836,889,182 8.57 1,879 549,415,000 3,290,460 13,500,000 921,377 21,641,099 942,921,671 9.24 2,090 655,085,000 3,290,166 9,600,000 759,993 4,301,174 1,051,138,643 9.97 2,309 723,185,000 3,289,872 5,100,000 589,462 2,869,497 1,142,365,431 10.54 2,483 767,445,000 3,289,553 - 431,565 1,541,281 1,172,141,421 10.68 2,529 817,530,000 2,957,463 - 333,189 158,413 1,245,330,453 11.03 2,677 857,435,000 2,690,651 - 2,963,780 - 1,328,459,900 11.49 2,843 153 CITY OF MESA, ARIZONA TABLE VIII RATIOS OF GENERAL BONDED DEBT OUTSTANDING (1) LAST TEN FISCAL YEARS General Bonded Debt Outstanding Year Secondary Assessed Value (2) General Obligation Bonds Less: Current Portion $ Net General Bonded Debt Percentage Of Secondary Assessed Value Per Capita (3) 2001 $ 1,919,915,826 $ 235,490,000 16,765,000 $ 218,725,000 11.39 $ 520.12 2002 2,142,980,665 231,025,000 26,645,000 204,380,000 9.54 473.24 2003 2,272,244,234 226,945,000 25,400,000 201,545,000 8.87 463.76 2004 2,463,878,234 191,130,000 195,000 190,935,000 7.75 428.73 2005 2,648,163,284 202,640,000 580,000 202,060,000 7.63 447.81 2006 2,921,998,915 211,770,000 620,000 211,150,000 7.23 463.91 2007 3,083,070,290 227,065,000 660,000 226,405,000 7.34 492.02 2008 4,114,527,313 241,855,000 16,940,000 224,915,000 5.47 485.36 2009 4,793,081,793 276,620,000 16,725,000 259,895,000 5.42 558.59 2010 4,749,616,941 300,885,000 24,325,000 276,560,000 5.82 591.76 (1) General Obligation debt has been supported through non-property tax revenues since the 1944-45 fiscal year. The City of Mesa, Arizona has operated without a property tax levy since that time. Source: (2) Maricopa County Finance Department Assessor's Office. (3) Population figures are found on Table XII. 154 CITY OF MESA, ARIZONA TABLE IX DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (1) JUNE 30, 2010 Proportion Applicable Debt Governmental Unit to the City of Mesa Outstanding (2) Percent (3) 653,040,000 8.19 Amount Debt repaid with property taxes Maricopa County Community College District $ $ 53,483,976 Mesa Unified School District No. 4 289,165,000 85.61 247,554,157 Gilbert Unified School District 201,310,000 25.62 51,575,622 Queen Creek Unified School District No. 95 44,685,000 15.89 7,100,447 Higley Elementary School District No. 60 70,845,000 3.24 2,295,378 Tempe Union High School District No. 213 107,465,000 0.31 333,142 Tempe Elementary School District No. 3 131,735,000 0.71 935,319 197,835,000 8.19 16,202,687 Other Debt: Maricopa County Subtotal, overlapping debt 379,480,728 City direct debt (4) $ 467,624,439 Total Direct and Overlapping Debt $ 847,105,167 (1) Does not include Salt River Project Agricultural Improvement and Power District debt, which is considered self-supporting from earnings of the district or special assessment debt of the City of Mesa, which is considered a junior lien. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Mesa. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. Proportion applicable to the City is computed on the ratio of secondary assessed valuation as calculated for fiscal year 2009/10 for the overlapping jurisdiction to the amount of such valuation which lies within the City. Source: (2) Wedbush Securities (3) Maricopa County Finance Department and Assessor's Office. (4) Includes: General Obligation Bonds, Highway User Revenue Bonds, Special Assesment Bonds, Deferred Amts on refundings, Capital Leases, Highway Project Advancement Notes, and Unamortized Bond Premiums 155 CITY OF MESA, ARIZONA TABLE X LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 6% Limitation Legal Debt Limitation Equal to 6% of Assessed Valuation $ Total Net Debt Applicable to 6% Limit Margin Available for Future General Obligation Bond Issues for 6% Bonds $ $ $ Total Net Debt Applicable to the 20% Limit as a Percentage of the 20% Legal Debt Limitation Total Margin Available 115,194,950 $ 128,578,840 29,014,950 $ 428,596,133 132,545,000 116,135,000 280,453,115 $ $ 312,461,133 $ 352,794,973 $ 33,424,693 $ 454,448,977 $ 355,813,977 $ 389,238,670 $ 404,555,647 17.90% $ (1) Under Arizona law, cities can issue General Obligation Bonds for all purposes other than those listed in Note 2 below, up to an amount not exceeding 6 percent of assessed secondary valaution. (2) Under Arizona law, cities can issue General Obligation Bonds for purposes of water, wastewater, artificial light, open space preserves, parks playgrounds and recreational facilities up to an amount not exceeding 20 percent of assessed secondary valuation. 156 492,775,647 88,220,000 21.70% $ 45,117,694 69.48% 98,635,000 $ 147,832,694 102,715,000 75.48% 27.10% $ 136,334,693 2003-04 102,910,000 68.63% 34.52% $ 40,333,840 383,983,165 $ 251,438,165 2002-03 88,245,000 74.81% Total Net Debt Applicable to 20% Limit Margin Available for Future General Obligation Bond Issues for 20% Bonds 2001-02 86,180,000 Total Net Debt Applicable to the 6% Limit as a Percentage of the 6% Legal Debt Limitation 20% Limitation Legal Debt Limitation Equal to 20% of Assessed Valuation 2000-01 449,673,341 TABLE X (Continued) Legal Debt Margin Calculation for Fiscal Year 2009-10 $ 4,749,616,941 Secondary Assessed Value 6% Bonds (1) $ Legal Debt Limitation Debt Applicable to Limit: General Obligation Bonds Less: Cash With Fiscal Agents Total Net Debt Applicable to Limit Margin Available for Future General Obligation Bond Issues $ 284,977,016 $ 158,889,797 2005-06 $ 110,085,000 $ 48,804,797 529,632,657 $ 437,657,657 $ 486,462,454 $ 584,399,783 $ 488,649,783 $ 287,315,678 (16,820,000) 6,064,322 270,495,678 278,912,694 548,569,718 162,530,851 616,614,058 $ 412,662,424 $ 575,193,275 $ 229,184,023 $ 822,905,463 $ 615,678,079 $ 157 844,862,103 958,340,406 287,584,908 2009-10 $ 274,015,586 958,616,359 $ 712,290,681 $ 986,306,267 278,912,694 2.13% $ 949,923,388 270,495,678 $ 25.70% $ 284,977,016 6,064,322 246,325,678 25.18% $ $ 4.72% 207,227,384 $ 679,427,710 13,569,322 7.16% 33.08% $ 246,871,639 $ 2008-09 17,687,616 203,951,634 16.38% $ $ 12.14% 95,750,000 17.37% $ 59,919,935 184,984,217 2007-08 22,453,366 65.82% 91,975,000 $ $ 115,400,000 69.28% $ 175,319,935 2006-07 949,923,388 13,569,322 (7,505,000) Total Margin Available 2004-05 20% Bonds (2) $ 679,427,710 28.48% $ 958,340,406 CITY OF MESA, ARIZONA TABLE XI PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Utility System Revenue Bonds Net Revenue Available for Debt Service Debt Service Operating Revenues (1) Operating Expenses 2000-01 191,782,485 129,099,163 62,683,322 200,000 14,050,528 4.40 2001-02 199,854,151 122,151,840 77,702,311 4,650,000 16,301,351 3.71 2002-03 201,213,634 124,831,571 76,382,063 8,475,000 18,784,114 2.80 2003-04 221,775,345 132,447,862 89,327,483 14,010,000 20,476,532 2.59 2004-05 228,502,773 156,577,547 71,925,226 310,000 23,444,519 3.03 2005-06 254,216,355 174,560,598 79,655,757 340,000 25,843,553 3.04 2006-07 270,069,593 175,941,671 94,127,922 340,000 29,304,976 3.18 2007-08 278,365,559 196,129,748 82,235,811 7,960,000 34,658,198 1.93 2008-09 2009-10 274,497,036 275,192,780 197,991,577 194,158,513 76,505,459 81,034,267 9,815,000 10,475,000 37,224,639 40,379,631 1.63 1.59 Principal Interest Coverage Ratio Highway User Revenue Fund Revenue Bonds Highway User Fund Revenues Debt Service Principal Interest Coverage Ratio 2000-01 30,233,015 - 1,417,069 21.33 2001-02 30,129,033 - 2,486,694 12.12 2002-03 31,384,493 - 3,793,944 8.27 2003-04 33,640,946 40,000 4,899,880 6.81 2004-05 35,369,649 135,000 5,400,476 6.39 2005-06 38,285,152 135,000 5,829,910 6.42 2006-07 40,974,923 135,000 6,401,428 6.27 2007-08 38,512,394 170,000 6,828,068 5.50 2008-09 34,259,887 2,025,000 6,822,668 3.87 2009-10 31,790,889 5,720,000 6,691,418 2.56 (1) Includes electric, gas, water, wastewater and solid waste systems. (2) Excise tax revenues include city use and sales taxes, transient occupancy taxes, unrestricted license, fees and permits, state-shared sales tax and state revenue sharing. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 158 TABLE XI (Continued) Special Assessment Bonds Special Assessment Collections Debt Service Principal Interest Coverage Ratio 583,833 610,000 45,905 0.89 80,040 112,000 16,695 0.62 75,365 84,000 10,535 0.80 60,844 85,000 5,455 0.67 5,807 12,000 2,535 0.40 188,475 12,000 184,771 0.96 850,926 343,000 357,384 1.21 1,709,830 751,840 457,396 1.41 1,202,384 922,651 752,000 744,000 417,040 376,920 1.03 0.82 Municipal Development Corporation Bonds Excise Tax Revenues (2) Debt Service Principal Interest Coverage Ratio 147,509,279 875,000 82,010 154.14 152,643,664 910,000 126,832 147.22 149,774,369 1,755,000 910,270 56.19 153,456,415 3,900,000 796,250 32.68 162,555,789 3,400,000 625,250 40.38 187,580,165 3,900,000 479,250 42.83 216,896,723 4,500,000 309,000 45.10 226,909,733 5,100,000 108,375 43.57 203,197,847 9,970,000 16,643 20.35 202,519,144 - - 159 - CITY OF MESA, ARIZONA TABLE XII DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Note: Sources: (1) (2) (3) (4) (5) Population (1) 420,525 431,874 434,585 445,354 451,223 455,151 460,155 463,397 465,272 467,355 Personal Income (2) N/A 8,368,422,498 9,452,658,335 9,770,176,052 10,203,505,699 10,539,476,556 10,840,791,645 10,977,411,533 11,288,894,536 11,563,297,410 Per Capita Personal Income (3) N/A 19,377 21,751 21,938 22,613 23,156 23,559 23,689 24,263 24,742 Median Age (3) Public School Enrollment (4) Unemployment Rate (5) N/A 32.8 31.0 32.3 32.5 32.6 32.9 33.1 33.3 33.6 72,476 72,707 73,211 73,428 74,070 74,626 74,128 73,054 70,297 67,749 3.1 4.7 4.4 4.2 3.6 3.8 2.9 4.3 8.0 8.7 Personal Income and Median age information is not available for Fiscal Year 2001. City of Mesa Development Services Estimate 2001-2004 Census Bureau (estimate), 2005-2010 Claritas (estimate) 2001-2004 Census Bureau, 2005-2010 Claritas Mesa Public Schools AZ Dept of Economic Security. Data is Phoenix - Mesa Metropolitan Area 160 CITY OF MESA, ARIZONA TABLE XIII PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2010 Employer Mesa Public Schools Banner Health Systems Employees Rank 2001 Percentage of Total City Employment Employees Rank Percentage of Total City Employment 10,000 1 4.30 % 9,300 1 5.01 % 8,650 2 3.72 5,800 2 3.12 Boeing 4,000 3 1.72 5,000 3 2.69 City of Mesa 3,776 4 1.62 3,600 4 1.94 Wal-Mart 2,410 5 1.04 - 0.00 Mesa Community College 2,201 6 0.95 - 0.00 The Kroger Company (Fry's) 1,276 7 0.55 - 0.00 943 8 0.41 - 0.00 The Home Depot Bashas' 835 9 0.36 - TRW Vehicle Safety Systems 800 10 0.34 3,000 0.00 6 1.62 Motorola Semiconductor Products - 0.00 3,100 5 1.67 AT&T - 0.00 2,400 7 1.29 General Motors Desert Proving Grounds - 0.00 1,400 8 0.75 Empire Southwest Machinery Excell Agent Services - - 0.00 0.00 1,100 1,000 9 10 0.59 0.54 Phoenix Newspapers - 0.00 1,000 10 0.54 Total 34,891 15.01 % Source: City of Mesa Office of Economic Development 161 36,700 19.76 % CITY OF MESA, ARIZONA TABLE XIV FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST NINE FISCAL YEARS (1) 2001-02 2002-03 2003-04 2004-05 2005-06 Function/Program General Government 891 879 867 882 826 1,247 1,269 1,286 1,325 1,311 Public Safety Police Fire 436 434 440 446 454 Other 116 113 121 123 108 Cultural-Recreational 518 501 478 490 398 Community Environment 175 168 164 170 161 Electric 64 48 51 50 38 Gas 83 82 77 79 77 Water 86 90 97 104 102 Wastewater 40 43 47 44 54 Solid Waste 141 137 135 135 138 Airport 11 9 10 9 11 Convention Center 24 22 21 21 64 3,832 3,795 3,794 3,878 3,742 Total (1) Information from earlier fiscal years not available. Source: City of Mesa Budget and Research Division 162 TABLE XIV (Continued) 2006-07 2007-08 2008-09 2009-10 857 875 793 783 1,332 1,306 1,282 1,240 468 472 470 455 122 91 46 52 426 398 318 315 183 181 189 184 44 47 48 32 81 85 92 91 113 97 134 159 64 69 79 73 132 136 126 124 10 9 10 10 19 19 17 14 3,851 3,785 3,601 3,529 163 CITY OF MESA, ARIZONA TABLE XV OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2000-01 2001-02 2002-03 Function/Program Police Major Crimes 16,362 32,956 29,379 Traffic Accidents 16,432 16,572 9,593 1,271 1,459 1,451 34,405 37,928 37,339 2,213 2,067 2,073 778 1,199 557 7,172 206 7,229 144,773 199,563 184,647 Total Attendance 1,054,039 1,187,052 1,202,947 Access to Electronic Resources Fire Fires Rescue or Emergency False Alarms Hazardous Conditions Other Calls Libraries Number of Registered Borrowers 1,977,527 3,392,101 1,027,157 Electric Connections 15,901 15,911 15,797 Gas Connections 36,485 38,629 40,328 121,656 124,742 127,140 Water Connections Average Daily Consumption (mgd)* 87.5 91.9 93.5 127.14 132.32 141.01 130,699 107,532 110,537 41.7 42.1 38.7 Customers Served 129,339 135,517 140,190 Refuse Collected (tons) 241,921 244,999 245,286 Recyclables Collected (tons) 31,783 32,924 36,282 Green Waste Collected (tons) 13,706 13,713 15,373 Peak Daily Consumption (mg)** Wastewater Connections Average Daily Sewage Treatment (mgd)* Solid Waste Falcon Field Average Number of Aircraft Based Aircraft Operations (annual) 904 902 930 270,731 251,702 290,902 * mgd - millions of gallons per day ** mg - millions of gallons 164 TABLE XV (Continued) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 27,933 25,853 24,904 22,437 21,388 18,482 17,345 9,562 10,121 9,205 12,184 7,578 6,256 5,890 1,332 1,386 1,605 1,428 1,200 1,165 1,048 39,489 41,689 43,073 38,003 34,207 32,478 34,079 1,999 2,021 2,595 2,875 2,456 2,125 1,478 653 591 676 608 567 663 701 7,439 7,738 7,820 11,792 12,976 11,923 12,819 200,461 193,722 233,836 266,839 275,449 306,427 352,607 1,183,794 1,208,594 1,195,075 1,161,887 1,165,451 1,348,555 1,367,667 1,365,863 1,835,867 2,307,051 3,029,001 2,910,088 3,661,261 2,542,927 17,945 15,652 15,806 15,723 15,215 14,546 14,738 42,241 45,435 48,622 50,478 51,454 51,911 52,832 129,477 131,141 133,105 133,249 133,086 132,771 133,701 105.3 93.6 94.5 89.6 85.8 79.7 72.7 132.15 137.95 131.28 128.83 125.72 108.68 111.14 112,497 114,500 116,282 116,190 116,465 116,721 117,831 39.3 38.9 41.8 38.1 38.0 36.0 33.6 109,960 114,112 113,146 115,305 112,632 112,832 113,079 254,688 248,255 261,369 266,817 243,208 234,709 217,295 34,141 36,264 32,869 38,660 39,296 37,841 36,490 16,384 16,983 17,500 18,215 17,601 18,936 18,588 934 922 924 901 934 873 841 277,088 255,069 271,295 261,623 337,178 283,336 248,381 165 CITY OF MESA, ARIZONA TABLE XVI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2000-01 2001-02 2002-03 Function/Program Police Stations Stations 4 4 4 255 270 421 15 17 17 3 3 3 Developed Parks (acres) 1,089 1,158 1,202 Undeveloped Acres 1,971 1,947 1,932 13 13 13 6 7 6 1,070 1,094 1,132 Vehicular Patrol Units Fire Stations Libraries Parks and Recreation Swimming Pools Recreation Facilities Community Environment Streets (miles) Paved Unpaved Storm Sewers (miles) Gas Mains (miles) 12 12 12 238 252 271 909 929 954 1,758 1,809 1,924 97 97 97 1,311 1,356 1,454 56 56 56 - - - 2 2 2 Water Mains (miles) Storage Capacity (millions of gallons) Wastewater Mains (miles) Treatment Capacity (millions of gallons per day) Solid Waste Collection Trucks (1) Golf Courses (1) Amounts for fiscal years prior to 2004-05 not available 166 TABLE XVI (Continued) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 4 4 4 4 4 4 4 306 321 285 351 368 330 289 17 17 17 17 17 17 18 3 3 3 3 3 3 3 1,198 1,149 1,184 1,184 1,180 1,180 1,154 1,228 1,230 1,251 1,251 1,251 1,251 1,078 13 12 12 12 12 12 12 6 6 6 6 6 6 6 1,152 1,160 1,162 1,169 1,178 1,182 1,184 12 12 12 12 12 12 12 290 296 298 303 308 316 321 998 1,037 1,121 1,147 1,202 1,223 1,243 1,978 2,004 2,022 2,008 2,068 2,104 2,127 97 97 117 117 117 125 125 1,496 1,512 1,522 1,544 1,577 1,598 1,606 56 56 56 60 60 60 60 - 69 78 68 70 69 69 2 2 2 2 2 2 2 167 Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov