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, 2011 City of Mesa, Arizona Comprehensive Annual Financial Report Scott Smith Mayor Dave Richins Councilmember, District 1 Alex Finter Councilmember, District 2 Dennis Kavanaugh Councilmember, District 3 Christopher Glover Councilmember, District 4 Dina Higgins Councilmember, District 5 Scott Somers Vice Mayor, District 6 Chris Brady City Manager Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov Kari Kent Deputy City Manager For the Fiscal Year Ended June 30, 2011 Introductory Section TABLE OF CONTENTS Page SECTION I – INTRODUCTORY SECTION Table of Contents Letter of Transmittal – Manager of Technology and Innovation Certificate of Achievement for Excellence in Financial Reporting I V XI SECTION II - FINANCIAL SECTION Exhibits Independent Auditors' Report 1 Management’s Discussion and Analysis 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) Exhibits NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Note 2 - Restatement of Beginning Fund Balances/Net Assets Note 3 - Reconciliation of Governmental Fund Financial Statements to Government-wide Financial Statements Note 4 - Retirement and Pension Plans Note 5 - Post Employment Benefits Note 6 - Long-Term Obligations Note 7 - Liabilities to be Paid From Assets Held in Escrow Note 8 - Capital Contributions Note 9 - Commitments and Contingent Liabilities Note 10 - Enterprise Activities Operations Detail Note 11 - Net Assets Note 12 - Pledged Revenues Note 13 - Joint Ventures Note 14 – Subsequent Events Page 32 52 53 59 63 67 77 78 78 79 80 81 82 85 Required Supplementary Information 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 86 87 B-3 88 B-4 89 90 C-1 91 C-2 92 Combining Balance Sheet C-3 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-4 93 95 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 97 99 TABLE OF CONTENTS (Continued) Exhibits Page Combining Financial Statements (Continued) Non-major Capital Projects Funds Combining Balance Sheet C-7 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-8 101 103 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-11 105 107 109 C-12 111 D-1 112 D-2 114 D-3 115 D-4 124 D-5 127 D-6 128 D-7 D-8 129 130 D-9 131 D-10 136 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 Debt Service Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budget Basis) Non-major Capital Project Funds Schedule of Revenues, Expenditures And Changes in Fund Balances – Budget and Actual 9Budget 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) Exhibits Capital Assets Used in the Operation of Governmental Funds Schedule by Source D-11 Page 137 SECTION III - STATISTICAL SECTION Financial Trends Net Assets by Components - Last Ten Fiscal Years (Accrual Basis of Accounting) Changes in Net Assets - Last Ten 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 138 140 III 142 IV 148 V VI 150 152 VII VIII IX X XI 153 155 156 157 159 XII XIII 161 162 XIV XV XVI 163 165 167 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 7, 2011 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, 2011 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 the 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, 2011, 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, 2011, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s 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, by the 2010 decennial census, is 440,677 compared with the 2000 decennial census count of 397,760, within an incorporated area of approximately 137 square miles. Total land area encompasses 182 square miles. The City is the 38th largest city in the United States, up one position from 2009, and is the third largest city in the State of Arizona. Mesa 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 nonpartisan 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 3,442 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 and golf courses. The Mesa Art Center which includes 212,755 square feet of performing arts, visual arts and art education facilities, is the largest comprehensive arts campus in the state, and has been selected by CNN to host Arizona’s, nationally televised, Republican Presidential Candidate Debate in early 2012. The financial statements include the funds for the City and its blended component unit, the City of 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. VI 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. 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--6). 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 indicator for residential construction in fiscal year 2010-11 is down from fiscal year 2009-10. However, commercial construction indicators did increase somewhat in fiscal year 10/11 compared to 09/10. During FY10-11 the City issued 405 permits for new residential construction. This is 263 less than the previous fiscal year. The corresponding dollar valuation associated with FY10-11 permits decreased approximately $43 million from the prior fiscal year. Commercial construction valuation increased from the prior fiscal year. Commercial valuation in FY10-11 was $287 million, in FY09-10 it was $141 million. Early analysis of the recent data may indicate that a stable “bottom” level has finally been reached. City sales tax revenue declines that began during the 2007-08 fiscal year continued during fiscal year 2010-11, although the rate of decline has also flattened. While most categories showed increases from the previous year, publishing, contracting and retail sales tax categories incurred significant decreases totaling $5.1 million. For the year ending June 30, 2011, overall sales tax revenues decreased by only 0.4% or $0.5 million from the previous year. This indicator is also trending toward a stable “bottom” level. To accommodate the continued decline in revenues the City again reduced fund allocations for a variety of City services. The required changes resulted in the elimination of various positions, and the reduction or total elimination of many city services that reduced current year expenditures by another $21 million and 168 FTE. No filled positions were impacted, although 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. Conservative budget practices and early and significant response to the declining economic indicators continue to allow the City to retain and enhance fund balance levels during the year. VII All fund balances were maintained at or above the levels prescribed by financial policy and prudent practice. Bond ratings were maintained during this time. Major Initiatives During the year several major accomplishments have continued to be realized. Some of these were:  On June 3, 2010 the City of Mesa announced an initiative that will provide the financing for the construction of a Chicago Cubs Spring Training facility in the City. The initiative involves the use of funds and assets from the City's enterprise fund, and will enable the stadium to be built with no increases in property taxes, no increases in sales taxes and no impact to the City's general fund. Part of the City's plan includes selling its inventory of undeveloped farmland in Pinal County and utilizing sales proceeds to help finance the new facilities. In addition to the City's funding, the Mesa Convention and Visitors Bureau (CVB) approved a proposal to increase the City bed tax from the current three percent to five percent, and asked the Mesa City Council to put the bed tax increase on the November 2010 ballot for a public vote. This was approved by voters and this increase will match increases passed by both Tempe and Scottsdale voters in March. The City of Mesa looks at the Cubs deal as economic preservation. To lose the Cubs, a significant economic engine for the City and State, at a time when our city faces serious fiscal challenges would only exasperate the revenue shortfalls that already exist, further reducing already declining sales tax revenues. An economic impact study conducted in 2009 by the Arizona-based Maguire Company indicated that if Mesa lost the Chicago Cubs and backfilled with an “average” major league baseball team, the overall impact to the State’s economy would be more than $52 million. Even more staggering, an update to that same study in January 2010 estimates that if no team were to replace the Cubs, the economic impact would be in excess of $130 million with more than 1,500 jobs lost. Additionally, Mesa is exploring options to reuse the existing Hohokam Stadium after the Cubs occupy their new facility.  METRO light rail continues on track and has reached the 30% design phase. Recently, President Barack Obama signed a federal appropriations bill providing $35.5 million which will fund right-of-way acquisition and utility relocation for the approximately 3 miles along Main Street from the Sycamore Street station through Mesa's downtown. The program will include four stations and one park-and-ride, and is expected to be fully operational in 2016. METRO light rail ridership continues to be above projections, with the highest month over month increase occurring in October, which reached +8%.  First Solar, Inc. began construction of its new U.S. manufacturing center in Mesa. First Solar will invest about $300 million in the factory, which will create approximately 600 ongoing jobs and is designed to include four manufacturing lines with a capacity to produce more than 250 megawatts (MW) of advanced thin-film photovoltaic (PV) VIII modules per year. Construction is expected to last a year, creating an average of 400-500 construction jobs. The facility is located on a 135-acre site that was previously home to the GM Proving Grounds site, which was acquired by DMB Associates, Inc. in 2006.  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, continues on a solid growth path. In January 2011, the Airport celebrated the boarding of 2 million passengers, a mark set in a little more than three years and an achievement that took many airports much longer to reach. Enplanements are going up by more than 20 percent a year. Gateway executives and the airport's fivemember governing board have been looking at alternatives for additional passenger space for more than a year amid projections of up to 5 million passengers a year within the decade.  Mesa City Council, at a special meeting June 23, 2011, voted to authorize City Manager Chris Brady to sign an interim lease agreement between the City of Mesa and the United States Air Force for the possession and reuse of the Air Force Research Laboratory Mesa Research Site (AFRL), located between Phoenix-Mesa Gateway Airport and Arizona State University (ASU) Polytechnic campus. The City envisions continuing the legacy of the AFRL site by using this complex as the cornerstone of a science and technology research center including a wide range of academic and security industry organizations and projects. This site will continue to be used as a center for specialized research in technology, defense and national security fields, capitalizing upon the unique nature of the buildings, the security status of the facilities, and the skills, knowledge and experience of the work force. Long-term Financial Planning Mesa continues to make progress in implementing fully integrated ERP system to provide us with near real-time accounting, grants management, budgeting, purchasing, human resources and inventory information. The first phase of the system, the NeoGov human resources, and recruiting system is now live, and the Performance Budgeting system is being prepared by budget staff for city wide use in developing and managing the FY 12/13 budget. 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, 2010. This was the twenty-ninth 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 report. This report satisfied both accounting principles generally accepted in the United States of America and applicable legal requirements. IX Financial Section INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and the City Council of the City of Mesa, Arizona We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Mesa, Arizona (City), as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Mesa, Arizona, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. A prior period adjustment was recorded, as described in Note 2, to restate the governmental activities beginning net assets for an error in the previously reported financial statements related to depreciation expense calculated on capital leases. Business-type activities beginning net assets were restated for an error in the previously issued financial statements related to an error in recording joint venture activity. As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for the year ended June 30, 2011, which represents a change in accounting principle. (1) An independent member of Nexia International The Honorable Mayor and the City Council of the City of Mesa, Arizona In accordance with Government Auditing Standards, we have also issued our report dated December 7, 2011 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management’s discussion and analysis on pages 3 through 17, the Public Safety Personnel Retirement System Schedule of Funding Progress on page 86, the Other Postemployment Benefit Plan Schedule of Funding Progress on page 87, and budgetary comparison information on pages 88 through 90 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements, supplemental information, introductory section and statistical section are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual nonmajor fund financial statements and supplemental information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. LarsonAllen LLP Mesa, Arizona December 7, 2011 (2) 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, 2011. 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-X, 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 $69 million in fiscal year 2011.  Total net assets of the City are $1.65 billion, of which $252 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 2011, the City’s governmental funds reported a combined ending fund balance of $235.8 million, a $1.6 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 unassigned fund balance for the General Fund was $93.9 million, or 29% of total General Fund expenditures.  The City issued $29.3 million in general obligation debt during the current fiscal year for new street and public safety improvement projects  The City issued $53.9 million in utility system revenue debt during the current fiscal year for electric, gas, water and wastewater improvement projects. 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 3 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, stadiums, convention center and district cooling. These activities are primarily supported by user charges and fees. The City restated the beginning net assets for the governmental-type activities due to an error in calculating the depreciation expense for a capital lease for fiscal year 2009 and fiscal year 2010. This resulted in an increase to beginning net assets of $6.6 million. See Note 2 to the basic financial statements for additional details of this restatement. The City restated the beginning net assets for the business-type activities due to errors in calculating the joint venture expenses from prior fiscal years and for bond premiums related to the 2009 Utility System Revenue Bond issue. These premiums were recognized all in fiscal year 2009 instead of being amortized over the life of the bonds. These resulted in an increase to beginning net assets of $23.2 Million. See Note 2 to the basic financial statements for additional details of this restatement. 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. 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 4 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 3 to the basic financial statements (pages 53-58). For the fiscal year ended June 30, 2011, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 54- Fund Balance Reporting and Governmental Fund Type Definitions. This statement changed the previous reporting of Reserved and Unreserved fund balance to five new classifications, which are Nonspendable, Restricted, Committed, Assigned and Unassigned. This statement also added additional note disclosures for the new classifications and refined the definitions of the various governmental fund types. See Note 1 p and Note 2 to the financial statements for additional detail. 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 105-110). The City restated the beginning net assets for the Enterprise Fund due to errors in calculating the joint venture expenses that occurred in prior fiscal years and for bond premiums related to the 2009 Utility System Revenue Bond issue. These premiums were recognized all in fiscal year 2009 instead of being amortized over the life of the bonds. These resulted in an increase to beginning net assets of $23.2 Million. See Note 2 for additional details of this restatement. 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 32–85) 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 88. 5 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, 2011 and as of and for the year ended June 30, 2010. 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, 2011 and 2010. Condensed Statement of Net Assets As of June 30 (In thousands of dollars) Governmental Business-type T otal Activities Activities Primary Government 2011 Cash and Other Assets $ 426,059 Capital Assets 1,279,788 T otal Assets 1,705,847 2010 As Restated $ 428,176 1,269,292 1,697,468 2011 $ 464,539 1,302,381 1,766,920 2010 As Restated $ 449,421 1,289,921 1,739,342 2011 $ 890,598 2,582,169 3,472,767 2010 As Restated $ 877,597 2,559,213 3,436,810 Change $ Dollars 13,001 22,956 35,957 Percent 1.48 0.90 1.05 6.84 0.08 6.14 Non-current Liabilities, Outstanding Other Liabilities T otal Liabilities 691,599 109,026 800,625 639,725 115,715 755,440 953,975 68,505 1,022,480 900,502 61,677 962,179 1,645,574 177,531 1,823,105 1,540,227 177,392 1,717,619 105,347 139 105,486 Net Assets: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted 872,302 39,296 (6,376) 851,422 86,955 3,651 430,436 55,873 258,131 458,447 47,011 271,298 1,302,738 95,169 251,755 1,309,869 133,966 274,949 (7,131) (0.54) (38,797) (28.96) (23,194) (8.44) 776,756 $ 1,649,662 $ 1,718,784 T otal Net Assets $ 905,222 $ 942,028 $ 744,440 $ $ (69,122) In the case of the City, the combined net assets (governmental activities and business-type activities) exceeded liabilities by $1.65 billion at the close of the most recent year. The net assets decreased $69 million (4%) in fiscal year 2011. The governmental activities decreased $37 million, after restatement, while the business-type activities decreased $32 million, after restatement. The largest portion of net assets (79%) 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. $95 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 $252 million may be used to meet the City’s ongoing obligations to citizens and creditors. 6 (4.02) Changes in Net Assets The following table shows the revenues and expenses of the City for the fiscal years ended June 30, 2011 and 2010. Changes in Net Assets (In thousands of dollars) Governmental Business-type Activities Activities 2011 2010 As Restated REVENUES Program Revenues: Charges for Services $ 44,710 Operating Grants & Contributions 65,284 Capital Grants & Contributions 31,461 General Revenues: Sales T axes 121,046 Property T axes 14,244 Occupancy T axes 2,148 Unrestricted State-Shared 92,613 Contributions 15,611 Unrestricted Investment Income 617 Miscellaneous 7,060 Government 2010 As Restated 210 65,309 73,022 (7,713) (10.56) 30,343 10,774 17,782 42,235 48,125 (5,890) (12.24) 121,557 14,318 1,581 104,581 14,757 261 13,846 839 - 508 - 121,046 14,244 2,148 92,613 15,611 1,456 7,060 121,557 14,318 1,581 104,581 14,757 769 13,846 (511) (74) 567 (11,968) 854 687 (6,786) (0.42) (0.52) 35.86 (11.44) 5.79 89.34 (49.01) 394,794 416,442 311,111 307,874 705,905 724,316 (18,411) (2.54) 59,552 273,320 54,549 106,434 21,078 54,863 285,607 54,010 104,096 20,013 - - 59,552 273,320 54,549 106,434 21,078 54,863 285,607 54,010 104,096 20,013 4,689 (12,287) 539 2,338 1,065 8.55 % (4.30) 1.00 2.25 5.32 - - 26,816 36,020 82,378 63,614 31,462 3,972 2,679 3,849 8,324 15 965 27,106 35,466 80,915 64,262 31,504 3,944 2,715 4,158 7,408 1,000 26,816 36,020 82,378 63,614 31,462 3,972 2,679 3,849 8,324 15 965 27,106 35,466 80,915 64,262 31,504 3,944 2,715 4,158 7,408 1,000 (290) 554 1,463 (648) (42) 28 (36) (309) 916 15 (35) (1.07) 1.56 1.81 (1.01) (0.13) 0.71 (1.33) (7.43) 12.37 100.00 (3.50) 514,933 518,589 260,094 258,478 775,027 777,067 (2,040) (0.26) (120,139) (102,147) 51,017 49,396 (69,122) (52,751) 83,333 65,433 (83,333) (65,433) Change in Net Assets (36,806) (36,714) (32,316) (16,037) Net Assets-Beginning, as Restated 942,028 978,742 776,756 792,793 1,718,784 942,028 $ 744,440 776,756 $ 1,649,662 T ransfers Net Assets-Ending $ 905,222 $ 7 $ 344,183 $ - 331,760 $ (16,371) - (69,122) - (52,751) 1,771,535 $ 1,718,784 12,423 Percent 25 Increase (decrease) in Net Assets Before T ransfers $ Dollars 72,812 T otal Expenses 289,374 Change 2010 As Restated $ 299,473 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 Cubs Stadium District Cooling $ 2011 42,386 T otal Revenues $ 2011 T otal Primary $ 3.74 % 31.03 0.00 (16,371) 31.03 (52,751) (2.98) (69,122) (4.02) Governmental Activities As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are taxes (29%) and state-shared revenues (19%). The largest users of resources for the governmental activities are Public Safety (53%), Community Environment (21%), General Government (12%), and Cultural-Recreational (10%). Revenues by Source Including Transfers – Governmental Activities For the Fiscal Year Ended June 30, 2011 Transfers 17% Taxes 29% State-Shared 19% Miscellaneous 5% Charges for Services 9% Capital Grants & Contributions 7% Operating Grants & Contributions 14% Functional Expenses – Governmental Activities For the Fiscal Year Ended June 30, 2011 Public Safety 53% CulturalRecreational 10% Community Environment 21% Interest on Long-term Debt 4% General Government 12% 8 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 an $83.3 million transfer from the business-type activities, cover expenses not generated by direct program revenues. Expenses and Program Revenues – Governmental Activities For the Fiscal Year ended June 30, 2011 (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 $37 million accounting for a 3.9% decrease. Governmental activities accounted for 56% of the total revenues and 66% of the total expenses of the City in fiscal year 2011. This compares to 57% of total revenues and 66% of the total expenses in fiscal year 2010. Governmental Activities Revenues For Fiscal Years 2011 and 2010 (In millions of dollars) Program Revenues Taxes State-Shared Contributions Investment Income Miscellaneous $0 $20 $40 $60 $80 2011 9 2010 $100 $120 $140 $160 The graph above compares governmental activities revenues from fiscal year 2011 to fiscal year 2010. Total governmental activities revenues decreased $21.6 million from $416.4 million to $394.8 million. This is the fourth 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 $4 million over the previous year. There was a $2.4 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 decreased by $7.5 million over the previous year due to decreased federal funding resulting from the American Reinvestment and Recovery Act of 2009.  Sales taxes decreased by only $0.5 million over the previous year reflecting some stability is returning to the local economy after decreasing by $5 million in the previous fiscal year.  State shared revenues decreased by $12.0 million over the previous year because of reduced revenues received from the state. Governmental Activities Functional Expenses For Fiscal Years 2011 and 2010 (In millions of dollars) General Government Public Safety Cultural-Recreational Community Environment Interest on Long-term Debt $0 $50 $100 2011 $150 $200 $250 $300 2010 The graph above compares governmental activities expenses from fiscal year 2011 to fiscal year 2010. Total governmental expenses decreased by $3.7 million from $518.6 million, as restated to $514.9 million. Key factors in this change include:  The changes in the General Government and Public Safety functions resulted from depreciation adjustments relating to useful life and in-service dates. 10 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 20% Water 35% Solid Waste 15% Gas 14% Other Programs 5% Electric 11% Functional Expenses – Business-type Activities Wastewater 24% Water 32% Solid Waste 12% Gas 14% Other Programs 8% Electric 10% Business-type activities decreased the City’s net assets by $32 million. Total business-type activities program and general revenues increased by $3.2 million (1%) from $307.9 million to $311.1 million, while the business-type activities total expenses increased by $1.6 million from $258.5 million, as restated to $260.1 million. Business-type activities accounted for 44% of the total revenues and 34% of the total expenses of the City in fiscal year 2011. This compares to 43% of total revenues and 34% of the expenses in fiscal year 2010. 11 Business-type Activities Program Revenues For Fiscal Years 2011 and 2010 (In millions of dollars) Electric Gas Water Wastewater Solid Waste Other Activities $0 $20 $40 $60 2011 $80 $100 $120 2010 The graph above compares program revenues for the Business-type Activities from fiscal year 2011 to fiscal year 2010. Total business-type activities program revenues increased by $2.9 million (0.9%) from $307.4 million to $310.3 million. Key factors in this change include:  Capital contributions decreased by $7.0 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.  Charges for Services increased $10.1 million reflecting increases in the rate structure and usage. All commodity cost increases in the Electric and Gas utilities are passed through to the customers. Business-type Activities Functional Expenses For the Fiscal Years 2011 and 2010 Electric Gas Water Wastewater Soild Waste Other Activites $0 $20 $40 $60 2011 12 2010 $80 $100  The transfer to the General Fund increased by $17.9 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. Unassigned 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 $235.8 million, a $1.6 million increase from the previous year. $93.9 million of this total amount is in unassigned fund balance, available for spending in the coming year. The remainder of fund balance includes $114.5 million in restricted fund balance, $24.1 million in committed find balance and $3.3 million in nonspendable fund balance. See Note 1 p. to the basic financial statements for additional detail on these fund balance amounts. 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 $101.2 million, while unassigned fund balance was $93.9 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. For 2011, unassigned fund balance represents 29.4% of total General Fund expenditures of $319 million, while total fund balance represents 31.7% of the same amount. Total fund balance of the City’s General Fund decreased by $6.2 million during the current fiscal year from $107.4, as restated, to $101 million. Total revenues of $256 million were $62 million less than the previous year, however approximately $45 million of this difference is due to the reclassification of funds and property tax revenue due to the implementation of GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. State-shared revenue reported in the General Fund was $13 million less than the prior fiscal year. Total expenditures of $319 million were $31 million less than the previous year, however approximately $22 million of this difference is due to the reclassification of funds and property tax revenue due to the implementation of GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. See Note 1 to the financial statements for additional detail on this new GASB standard. Capital outlay expenditures increased $4.7 million from the prior fiscal year. The transfer in of $83.6 million, mostly from the Enterprise Fund, was reduced by $26.9 million in transfers out to other funds, compared with a transfer in from the Enterprise Fund of $85.5 million that was reduced by $47 million in transfers out to other funds in the previous year. 13 The Highway User Revenue Fund that accounts for the capital and maintenance costs for the City’s streets received $246 thousand more in state-shared revenue and had an increase of $13 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 a decrease of $25.9 million in capital expenditures. These expenditures were for improvements in law enforcement, fire, storm sewers, streets, parks and other city facilities. Included in these expenditures are $200 thousand in Vehicle Replacement Fund expenditures that was reclassified from the Special Revenue Funds due to GASB Statement No. 54. See Note 1 p. and Note 2 of the basic financial statements for additional details. 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 City restated the beginning net assets for the Enterprise Fund due to errors in calculating the joint venture expenses that occurred in prior fiscal years and for bond premiums related to the 2009 Utility System Revenue Bond issue. These premiums were recognized all in fiscal year 2009 instead of being amortized over the life of the bonds. These resulted in an increase to beginning net assets of $23.2 Million. See Note 2 of the basic financial statements for additional details of this restatement. The total net assets of the Enterprise Fund decreased by $31.7 million in fiscal year 2011 from $778.9 million, after restatement, in fiscal year 2010 to $747.2 million. The unrestricted net assets of the Enterprise Fund amounted to $211.3 million. 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 88-90. 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 112-138. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see Note 1.r. and Note 1.s. of the notes to the financial statements for more information on budget policies). No amendments increasing the City’s total adopted budget of $1.113 billion occurred during fiscal year 2011. Contingency allocations were made at fiscal year-end to cover programs in the General Fund of $3.6 million. General Fund revenues of $270.5 million, on a budgetary basis, were less than budgeted revenues of $287.9 million by $17.4 million while expenditures of $352.2 million were only 81% of budgeted expenditures. The shortfall in revenues is due to lower revenue received in sales taxes and intergovernmental revenue. Sales taxes continued to be less than budgeted, however, they appear to have stabilized. 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 the continuation of a hiring freeze and unused contingency allocations. 14 Capital Asset and Debt Administration Capital Assets – The City’s investment in capital assets for its governmental and business-type activities amounts to $2.6 billion (net of accumulated depreciation/amortization) as of June 30, 2011. 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. The following table provides a breakdown of the City’s capital assets at June 30, 2011 and 2010. Capital Assets (net of accumulated depreciation/amortization) As of June 30 (In thousands of dollars) Governmental Business-type Total Activities Activities Primary Government Change 2011 2010 2011 2010 2011 2010 As Restated As Restated As Restated Dollars Percent Land $ 265,803 $ 261,771 $ 58,803 $ 59,947 $ 324,606 $ 321,718 $ 2,888 0.90 % Water Rights 12,761 17,570 12,761 17,570 (4,809) (27.37) Buildings 232,855 239,228 36,530 60,266 269,385 299,494 (30,109) (10.05) Other Improvements 147,205 82,990 133,904 969,620 281,109 1,052,610 (771,501) (73.29) M achinery & Equipment 44,884 48,391 128,512 53,262 173,396 101,653 71,743 70.58 Intangibles 14 15 3,920 4,219 3,934 4,234 (300) (7.09) Infrastructure 499,485 498,342 814,481 6,879 1,313,966 505,221 808,745 160.08 Construction-in-Progress 89,542 138,555 113,470 118,158 203,012 256,713 (53,701) (20.92) Total $ 1,279,788 $ 1,269,292 $ 1,302,381 $ 1,289,921 $ 2,582,169 $ 2,559,213 $ 22,956 0.90 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 $1.2 million spent during fiscal year 2011. 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 started an implementation of an Enterprise Resource Planning (ERP) system with $7.1 million spent during fiscal year 2011. The ERP system will replace the current Human Resources/Payroll and Financial applications in the City. The $24.7 million project will have a final implementation on January 1, 2013. 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 $1.293 billion. Of this amount, $281 million comprises debt backed by the full faith and credit of the City and $1.012 billion 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 $1.348 billion at June 30, 2011. $458 million of this total was in governmental activities and 15 $890 million was in business-type activities. The City’s outstanding long-term debt (considering new borrowings, debt retirements and refunding) increased $41 million. New borrowings during the fiscal year included $29.3 million in general obligation bonds and $53.9 million in utility system revenue bonds. The following schedule shows the outstanding long-term debt of the City as of June 30, 2011 and 2010. Outstanding Long-term Debt (In thousands of dollars) Governmental Activities 2011 2010 General Obligation Bonds $ 279,028 $ 270,593 Utility System Revenue Bonds Highway User Revenue Fund Bonds 126,573 132,220 Special Assessment Bonds with Governmental Commitment 5,806 6,550 Capital Leases 2,166 5,406 Notes Payable 45,000 45,000 Total $ 458,573 $ 459,769 Business-type Activities 2011 2010 $ 2,210 $ 2,672 884,995 841,864 2,731 2,964 $ 889,936 $ 847,500 $ Total 2011 281,238 $ 884,995 126,573 2010 273,265 841,864 132,220 5,806 6,550 2,166 5,406 47,731 47,964 $ 1,348,509 $ 1,307,269 Change Dollars Percent $ 7,973 2.92 % 43,131 5.12 (5,647) (4.27) $ (744) (3,240) (233) 41,240 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 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, 2011 is: 6% Bonds 20% Bonds Total Available $184,531,122 354,445,979 $538,977,101 Additional information on the City’s long-term obligations can be found in Note 6 and Note 7 of the notes to the basic financial statements. 16 (11.36) (59.93) (0.49) 3.15 Economic Factors In June 2011, the City Council approved a $1.148 billion budget, which is approximately a 3.1% increase from the prior year’s budget. The fiscal year 2010–11 budget includes $928 million for operations and $220 million for scheduled bond capital improvements. The operations budget decreased by $16 million from the previous year’s budget. The City prepared and adopted a conservative budget that includes additional reductions and reprioritization of services. Mesa’s General Fund revenue stream is strongly influenced by both national and regional economic conditions. Nationally, the economy appears to be slowly recovering from a serious and prolonged recession. In Arizona, the distressed real estate market seem to be hampering consumer spending which will likely continue to curtail economic growth in our region during the coming years. Fiscal year 2011-12 General Fund revenues are projected to decline from the previous fiscal year. As a result of the City departments’ continued efforts to increase efficiency and reduce cost, the City experienced expenditure savings that will provide additional resources to offset projected shortfalls for fiscal year 2011-12. A General Fund reduction of $7.4 million and a reduction of 32 full-time equivalent positions were still necessary. The majority of these positions were vacant. For the third consecutive year, the budget reflects no compensation or step increases for employees. However, total compensation-related expenses have increased as a result of increased employer contributions required by the state retirement systems and to the self-administered medical insurance program. 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, 2011 Primary Government Business-Type Activities Governmental Activities ASSETS Pooled Cash and Investments Receivables: Accounts and Miscellaneous (Net of Allowances) Accrued Interest Due From Other Governments Internal Balances Inventory Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments $ $ 18,608,736 144,381 20,290,036 2,793,835 5,867,894 3,618,968 363,733 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 Total Assets 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 Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted For: Convention Center Airport Golf Courses Hohokam Stadium/Fitch Complex Court Projects Debt Service Bond Indentures Grant Programs Transportation Programs Water, Wastewater & Solid Waste Improvements Miscellaneous Programs Unrestricted Total Net Assets 225,039,917 $ 55,592,988 Total $ 37,953,905 120,001,956 44,729,538 383,189 22,782,191 5,867,894 3,716,900 5,450,384 157,955,861 22,490,388 9,980,946 22,993,869 2,022,914 53,888,931 3,119,315 4,025,440 250,556,816 22,490,388 9,980,946 22,993,869 3,119,315 6,048,354 304,445,747 355,345,830 924,442,901 1,705,847,184 185,033,654 1,117,347,782 1,766,920,464 540,379,484 2,041,790,683 3,472,767,648 2,341,770 22,421,123 29,424,391 9,042,835 1,048,067 44,747,523 7,806,679 60,698,673 2,341,770 30,227,802 29,424,391 9,042,835 1,048,067 105,446,196 34,585,985 657,013,257 800,624,951 26,837,919 927,137,360 1,022,480,631 61,423,904 1,584,150,617 1,823,105,582 872,302,182 430,435,538 1,302,737,720 - 272,909 5,422,074 19,425 272,909 5,422,074 19,425 359,948 34,783,136 14,917,527 98,487 258,130,789 744,439,833 359,948 1,590,834 34,825,967 14,917,527 4,343,888 32,917,156 98,487 401,077 251,755,054 1,649,662,066 1,590,834 42,831 4,343,888 32,917,156 401,077 (6,375,735) 905,222,233 The accompanying notes are an integral part of the financial statements. 18 26,120,802 238,808 2,492,155 (2,793,835) 97,932 5,086,651 280,632,905 $ $ CITY OF MESA, ARIZONA EXHIBIT A-2 STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 $ 59,551,669 $ 17,109,537 273,320,156 9,584,232 1,777,282 1,107,338 4,521,268 54,549,751 9,826,530 697,505 - 106,434,114 8,189,159 61,701,867 26,940,181 21,078,138 - - - 514,933,828 44,709,458 65,283,992 31,461,449 Electric 26,816,560 33,138,456 - 196,343 Gas 36,020,012 41,369,805 15,463 380,514 Water 82,377,888 102,215,430 10,000 5,950,015 Wastewater 63,613,492 59,659,464 - 3,516,496 Solid Waste 31,462,070 47,537,833 - 75,020 3,971,648 3,317,542 - 505,604 Community Environment Interest on Long-Term Debt Total Government Activities Business-type Activities: Airport Golf Course 2,679,327 2,250,256 - 50,000 Convention Center 3,849,444 2,825,693 - - HohokamStadium/Fitch Complex 8,323,724 6,161,320 - 99,996 Cubs Stadium 14,990 51,614 - - District Cooling 964,585 945,434 - - 260,093,740 299,472,847 25,463 10,773,988 $ 775,027,568 $ 344,182,305 Total Business-type Activities Total Primary Government $ 65,309,455 $ 42,235,437 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, as Restated 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 (40,664,850) $ (40,664,850) - (258,107,318) (44,025,716) - (44,025,716) (9,602,907) - (9,602,907) (21,078,138) - (21,078,138) (373,478,929) - (373,478,929) - 6,518,239 6,518,239 - 5,745,770 5,745,770 - 25,797,557 25,797,557 (437,532) - (437,532) 16,150,783 - 16,150,783 (148,502) (148,502) - (379,071) (379,071) - (1,023,751) (1,023,751) - (2,062,408) (2,062,408) - 36,624 36,624 - (19,151) (19,151) - $ $ (258,107,318) - $ - Total (373,478,929) 50,178,558 $ 50,178,558 50,178,558 $ (323,300,371) 121,046,053 - 121,046,053 14,243,721 - 14,243,721 2,148,216 - 2,148,216 92,612,858 - 92,612,858 15,610,470 - 15,610,470 617,419 839,348 1,456,767 7,060,132 - 7,060,132 83,334,303 (83,334,303) - 336,673,172 (82,494,955) 254,178,217 (36,805,757) (32,316,397) (69,122,154) 942,027,990 776,756,230 905,222,233 $ 744,439,833 1,718,784,220 $ 1,649,662,066 20 CITY OF MESA, ARIZONA EXHIBIT A-3 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2011 General Fund Highway User Revenue Fund Non-major Governmental Funds Total Governmental Funds $ $ 95,419,064 1,627,766 45,018 3,054,502 2,905,610 - $ 184,984,430 17,055,389 144,381 20,272,069 1,915,000 3,310,116 363,733 - 37,953,905 22,490,388 5,648,845 22,993,869 37,953,905 22,490,388 9,980,946 22,993,869 ASSETS Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due From Other Governments Due From Other Funds Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash With Trustee Accounts Receivable Due From Other Governments $ 89,564,715 15,396,233 99,363 13,814,450 1,915,000 404,506 363,733 Total Assets $ 125,890,101 $ 3,435,158 $ 192,138,967 $ 321,464,226 $ 2,341,770 11,619,957 3,153,061 1,048,067 $ 1,519,350 1,915,000 25 - $ $ 4,332,101 - 651 31,390 3,403,117 - 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 Rev. Bonds Payable Matured Capital Leases Payable 7,731,056 5,889,749 - 2,341,770 20,870,363 1,915,000 9,042,835 1,048,067 6,558,186 - - 194 9,749,172 756,250 5,648,845 21,675,399 6,030,000 50,043 194 9,749,172 756,250 12,207,031 21,675,399 6,030,000 50,043 Total Liabilities 24,721,041 3,434,375 57,530,708 85,686,124 Fund Balances Nonspendable Restricted Committed Unassigned 404,506 1,991,911 4,897,687 93,874,956 783 - 2,905,610 112,537,018 19,165,631 - 3,310,116 114,529,712 24,063,318 93,874,956 101,169,060 783 134,608,259 235,778,102 3,435,158 $ 192,138,967 $ 321,464,226 Total Fund Balances Total Liabilities and Fund Balances $ 125,890,101 $ The accompanying notes are an integral part of the financial statements. 21 CITY OF MESA, ARIZONA EXHIBIT A-4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2011 Fund Balances - total governmental funds $ 235,778,102 Amounts reported for governmental activities in the statement of net assets are different because (also see Note 3 to the basic financial statements): Capital assets used in governmental activites are not financial resources and therefore not reported in the governmental funds. 1,276,127,429 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 55,911,845 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore not reported in the governmental funds. (685,842,777) 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. 5,720,566 Internal service funds are used by management to charge the costs of certain activites to individual funds. 17,527,068 Net assets of the governmental activities - statement of net assets The accompanying notes are an integral part of the financial statements. 22 $ 905,222,233 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, 2011 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 Non-major Governmental Funds Highway User Revenue Fund 100,283,750 2,148,216 9,291,101 114,387,283 11,958,110 10,831,835 382,535 6,572,075 $ 31,852,516 58,909 108,004 33,328 $ 20,762,303 14,273,796 1,069,363 3,286,325 28,541,432 8,286,495 880,189 204,264 811,276 Total Governmental Funds $ 121,046,053 14,273,796 2,148,216 1,069,363 12,577,426 174,781,231 20,303,514 11,820,028 586,799 7,416,679 255,854,905 32,052,757 78,115,443 366,023,105 38,843,180 209,180,440 42,191,344 11,632,326 25,709,794 5,985,101 31,120,816 38,843,180 215,165,541 42,191,344 68,462,936 - - 16,952,450 9,995 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 43,210,145 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 60,172,590 Total Expenditures 318,799,740 25,719,789 133,255,807 477,775,336 Excess (Deficiency) of Revenues Over (Under) Expenditures (62,944,835) 6,332,968 (55,140,364) (111,752,231) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 83,653,918 (26,948,206) - (12,399,242) - 44,410,587 (5,070,857) 29,320,000 359,932 128,064,505 (44,418,305) 29,320,000 359,932 Total Other Financing Sources (Uses) 56,705,712 (12,399,242) 69,019,662 113,326,132 Net Change in Fund Balances (6,239,123) (6,066,274) 13,879,298 1,573,901 6,067,057 120,728,961 234,204,201 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 Fund Balances - Beginning, as Restated Fund Balances - Ending 107,408,183 $ 101,169,060 $ The accompanying notes are an integral part of the financial statements. 23 783 $ 134,608,259 $ 235,778,102 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, 2011 Net change in fund balances - total governmental funds $ 1,573,901 Amounts reported for governmental activities in the statement of activities are different because (also see Note 3 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. (822,489) 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. (52,215,224) 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 ($60,172,590) exceeded depreciation ($55,452,439) in the current period. 4,720,151 The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to increase net assets. 11,866,630 Loss on equity in Joint Venture (3,279,296) 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. 2,369,924 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. (929,365) 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. (89,989) Change in net assets of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 24 $ (36,805,757) CITY OF MESA, ARIZONA EXHIBIT A-7 STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2011 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable (Net of Allowances of $2,615,463) Accrued Premiums Receivable Accrued Interest Receivable Due From Other Governments Inventory Prepaid Costs Deposits $ Restricted Assets: Pooled Cash and Investments Customer Deposits Total Current Assets 55,592,988 26,120,802 238,808 2,492,155 97,932 5,086,651 $ 40,055,487 413,165 1,140,182 17,967 5,867,894 308,852 - 51,293,369 3,119,315 - 144,042,020 47,803,547 98,487 - 14,917,527 - 53,692,573 4,025,440 - 72,734,027 - Noncurrent Assets: Restricted Assets: Impact & Development Fees: Pooled Cash and Investments Bond Replacement, Extensions and Reserves: Pooled Cash and Investments Capital Projects: Pooled Cash and Investments 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 58,802,555 12,760,846 62,413,552 174,566,571 216,413,649 13,683,262 1,201,069,809 113,470,253 (550,799,061) 2,014,156 4,944,884 2,133,887 58,997 (5,490,622) Total Capital Assets, Net Investment in Joint Ventures 1,302,381,436 250,556,816 3,661,302 - 1,625,672,279 3,661,302 Total Noncurrent Assets Total Assets $ The accompanying notes are an integral part of the financial statements. 25 1,769,714,299 $ 51,464,849 CITY OF MESA, ARIZONA EXHIBIT A-7 (Continued) STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2011 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: 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 Other Long Term Obligations Current Portion of Compensated Absences 24,840,000 679,363 237,489 116,754 964,313 103,439 95,343,271 31,078,590 860,154,679 1,530,367 2,493,636 116,754 16,008,249 3,198,954 43,634,721 814,120 4,838,906 927,137,360 5,653,026 1,022,480,631 36,731,616 430,435,538 3,661,302 $ 272,909 5,422,074 19,425 359,948 34,783,136 14,917,527 98,487 260,924,624 747,233,668 11,071,931 14,733,233 $ (2,793,835) 744,439,833 Total Long-Term Liabilities Total Liabilities The accompanying notes are an integral part of the financial statements. 26 1,550,760 29,424,391 - Long-Term Liabilities: Revenue Bonds Payable, Net of Deferred Amounts on Refundings General Obligation Bonds Payable Notes Payable Other Long Term Obligations Unamortized Bond Premium Compensated Absences Post Employment Benefits Adjustment to reflect the consolidation of the internal service funds related to the enterprise fund. Total net assets of the business-type activities $ 6,284,854 31,109 21,576,835 13,054,601 121,725 19,629,549 Total Current Liabilities 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 7,806,679 - $ 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, 2011 Business-type Activities Enterprise Fund 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 Cubs Stadium District Cooling Charges Charges For Services Self-Insurance Contributions Other Total Operating Revenues $ 33,138,456 41,369,805 102,215,430 59,659,464 47,537,833 3,317,542 2,250,256 2,825,693 6,161,320 51,614 945,434 - Governmental Activities Internal Service Funds $ 18,002,284 64,329,913 66,009 299,472,847 82,398,206 23,455,135 30,306,602 43,801,175 21,470,703 29,096,080 2,379,968 2,335,861 3,807,523 7,673,706 14,990 567,143 - 19,267,484 63,495,689 Total Operating Expenses 164,908,886 82,763,173 Operating Income (Loss) Before Depreciation and Amortization Depreciation and Amortization 134,563,961 (45,215,543) Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Warehouse, Maintenance & Services Self-Insurance Operating Income (Loss) 89,348,418 The accompanying notes are an integral part of the financial statements. 27 (364,967) (386,538) (751,505) (Continued) 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, 2011 Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds 828,608 10,740 25,463 39,110 - Nonoperating Revenues (Expenses): Investment Income Pledged as Security for Revenue Bonds Investment Income Unpledged Intergovernmental Interest Expense: Revenue Bonds General Obligation Bonds Notes Payable Other Long Term Obligations Amortization of Bond Issuance and Administrative Costs Gain (Loss) on Disposal of Capital Assets Equity Interest in Joint Ventures (36,711,130) (129,439) (58,659) (28,978) (280,107) 166,504 (12,273,892) Total Nonoperating Revenues (Expenses) (48,450,890) 39,106 40,897,528 (712,399) Capital Contributions Transfers Out 11,054,685 (83,615,000) (31,200) Change in Net Assets (31,662,787) (743,599) Total Net Assets - Beginning, as Restated 778,896,455 Income (Loss) before Transfers and Capital Contributions Total Net Assets - Ending $ Adjustment to reflect consolidation of internal service funds related to the enterprise fund. 747,233,668 (653,610) Change in net assets of the business-type activities $ The accompanying notes are an integral part of the financial statements. 28 (32,316,397) (4) - 15,476,832 $ 14,733,233 CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Business-type Governmental Activities 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 $ 296,624,919 5,672,569 (98,559,747) (52,088,451) Funds $ 82,102,123 (72,672,727) (8,194,210) Net Cash Provided By Operating Activities 151,649,290 1,235,186 Cash Flows From Noncapital Financing Activities: Intergovernmental Investment in Joint Ventures Transfers Out to Other Funds 25,463 (5,243,277) (83,615,000) (31,200) Net Cash Used For Noncapital Financing Activities (88,832,814) (31,200) Cash Flows From Capital and Related Financing Activities: Proceeds From Bond Sales Proceeds From Other Long-Term Obligations Acquisition and Construction of Capital Assets Proceeds From Sale of Capital Assets Principal Paid on Bonds, Leases and Notes Maturities Interest Paid on Bonds, Leases and Notes Capital Contributed by Other Governments Capital Contributed by Subdividers 54,801,871 350,263 (46,650,866) 544,987 (11,095,343) (41,849,536) 3,294,629 3,966,289 (65,334) - Net Cash Used For Capital and Related Financing Activities (36,637,706) (65,334) Cash Flows From Investing Activities: Interest Received on Investments 648,025 59,770 Net Cash Provided By Investing Activities 648,025 59,770 26,826,795 1,198,422 148,768,149 38,857,065 Net Increase in Pooled Cash and Investments Pooled Cash and Investments at Beginning of Year Pooled Cash and Investments at End of Year $ 175,594,944 The accompanying notes are an integral part of the financial statements. 29 $ 40,055,487 CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Business-type Governmental Activities Activities Internal Service Enterprise Fund Reconciliation of Operating Income to Net Cash Provided By Operating Activities: Operating Income (Loss) $ 89,348,418 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided By Operating Activities: Depreciation and Amortization Changes in Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventory Decrease in Deposits and Prepaid Costs Increase in Accounts Payable Increase in Other Accrued Expense Total Adjustments Net Cash Provided By 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 The accompanying notes are an integral part of the financial statements. 30 Funds $ (751,505) 45,215,543 386,538 2,824,641 1,769,921 12,490,767 - (296,083) 96,470 87,529 10,613 1,701,624 62,300,872 1,986,691 $ 151,649,290 $ $ $ 3,513,069 280,697 (378,483) 2,166,452 (280,107) 1,773,546 1,235,186 (4) - CITY OF MESA, ARIZONA EXHIBIT A-10 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES JUNE 30, 2011 Payroll Agency ASSETS Pooled Cash and Investments $ 11,499,861 Total Assets $ 11,499,861 LIABILITIES Accrued Payroll Payable $ 11,499,861 Total Liabilities $ 11,499,861 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, 2011 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 440,677 within an area of approximately 137 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, 2011, the City implemented GASB Statement No. 54-Fund Balance Reporting and Governmental Fund Type Definitions. This statement changed the previous reporting of Reserved and Unreserved fund balance to five new classifications, which are Nonspendable, Restricted, Committed, Assigned and Unassigned. This statement also added additional note disclosures for the new classifications and refined the definitions of the various governmental fund types. As a result of implementing GASB Statement No. 54, a new Special Revenue Fund was created for the Local Streets Sales Tax revenues and expenditures that were previously reported in the General Fund. In addition, the Vehicle Replacement and the Regional Transportation Plan Special Revenue Funds were moved to the Capital Projects Funds. The Public Art Special Revenue Fund was dissolved and the fund balance was moved to the General Fund. It was determined that property tax revenues and the court construction fees should be reported in the General Obligation Debt Service Fund. The July 1, 2010 beginning fund balances of the General Fund, Special Revenue Funds, Capital Project Funds and Debt Service Funds have been restated to reflect these changes. (See note 2 – Restatement of Beginning Fund Balances/Net 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 (Continued) 32 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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 $173,775. 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 13). 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 (Continued) 33 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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. 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. (Continued) 34 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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 (Continued) 35 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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. 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. (Continued) 36 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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: Seven 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, stadiums 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. (Continued) 37 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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. Pooled Cash and Investments The City maintains an invested pool that is available for use by all City funds. Each funds portion of this pool is reported on the financial statements as “pooled cash and investments”. A single master custodian holds all assets of the invested pool. In addition, certain cash deposits and investments are also held separately by various City funds in separate accounts. At year-end, City cash totaled $23,266,077 which includes $219,040 of petty cash. The carrying amount of the City’s deposits was $23,047,037 and the bank balance was $21,012,963. The entire balance was covered by federal depository insurance. The difference of $2,034,074 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, 2011, 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 Federal Agency Securities are rated AAA by Standard & Poor’s. 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 total $345,486,859. (Continued) 38 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The City’s investments at June 30, 2011 are as follows: Investment Maturities (in Years) Fair Value Investment Type U.S. Treasuries U.S. Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn City of Mesa Special Improvement District Bonds Total $ Less Than 1 54,078,674 $ 7,830,944 13,499,996 24,863,455 $ 3,553,010 103,826,079 16,166,504 $ 335,000 21,993,699 36,288,923 $ 13,499,996 7,114,607 5,492,195 $ More than 2 1-2 $ 335,000 57,238,526 Concentration of Credit Risk % 1,623,247 52.09 % 7,830,944 7.54 13.00 23.95 12,256,653 $ 2,883,010 24,593,854 None of these Investments are callable. Total Pooled City Cash and Investments at fair value are as follows: Cash on Hand $ Carrying Amount of City Deposits Investments in Local Govt Invest Pool Repurchase Agreement Cash with Trustee Long-Term Investments Total Pooled Cash and Investments $ 219,040 23,047,037 242,341,350 80,655,121 22,490,388 103,826,079 472,579,015 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 increase in the fair value of investments during fiscal year 2010-11 of $360,591. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. (Continued) 39 3.42 100.00 % CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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: Fund Receivables Governmental Activities: General Fund: Taxes $ 11,013,266 Courts 52,306,410 Other Customers 3,233,381 Restricted 4,332,101 Due from Other Governments State Shared Revenues 7,350,213 Other 6,464,237 Highway User Revenue Fund: Customers 31,390 Due from Other Governments: 3,403,117 Non-Major Governmental Funds: Taxes 1,582,635 Other Customers 45,131 Restricted-Spec. Assessments 5,246,412 Restricted-Property Taxes 402,433 Due from Other Governments 3,054,502 Restricted-Due from Other Governments 22,993,869 Internal Service Funds Customers 1,553,347 Due from Other Governments 17,967 Total Governmental Activities $ 123,030,411 Business-Type Activities: Utility Customers $ 26,932,286 Other Customers 1,803,979 Due from Other Governments 2,492,155 Total Business-type Activities $ 31,228,420 Allowance $ Net (1,535,000) (48,573,919) (1,047,905) - $ - 7,350,213 6,464,237 - 31,390 3,403,117 - 1,582,635 45,131 5,246,412 402,433 3,054,502 22,993,869 - $ $ $ 9,478,266 3,732,491 2,185,476 4,332,101 (51,156,824) (2,438,203) (177,260) (2,615,463) $ $ $ 1,553,347 17,967 71,873,587 24,494,083 1,626,719 2,492,155 28,612,957 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: (Continued) 40 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Rehabilitation Revolving Loans not yet due (General Fund) $ 71,721 Surcharges included in Court Receivables (General Fund) 4,260,277 Grants received prior to meeting all eligibility requirements (General Fund) 2,226,188 Delinquent Property Taxes (Debt Service Fund) 402,433 Special assessments not yet due (Debt Service Fund) 5,246,412 Total deferred revenue for governmental funds $ 12,207,031 i. Interfund Receivables, Payables, and Transfers The following interfund activities are included in the fund financial statements at June 30, 2011: Interfund Receivables Fund Governmental funds: General Fund Highway User Revenue Fund Total Governmental funds $ $ 1,915,000 1,915,000 Interfund Payables $ $ 1,915,000 1,915,000 The interfund balances at June 30, 2011 are short-term loans to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2011 are expected to be repaid within one year. The net transfers of $83,334,303 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 $280,697 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, 2011: 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 Transfers In 26,948,206 12,399,242 5,070,857 44,418,305 83,653,918 44,410,587 128,064,505 83,615,000 31,200 128,064,505 128,064,505 $ (Continued) 41 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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. 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, 2011, unbilled utility service receivables are recorded in the Enterprise Fund as follows: Electric Gas Water Wastewater Solid Waste $ $ 1,220,844 987,627 4,929,726 2,080,649 1,607,435 10,826,281 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. 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. 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. Capital assets with a value of $280,697, 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, 2011 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. The City has made various class changes to both the government-wide and business-type capital asset classifications during fiscal year 2010–11 in preparation for the implementation of fully integrated ERP system expected to go live in fiscal year 2012. The changes did not affect the overall capital asset cost. 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 (Continued) 43 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2011 follows: Balance July 1, 2010, as Restated 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 $ 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) (114,907,406) (134,590) (276,972,002) (516,937,644) 868,966,591 1,269,291,814 $ Additions 4,371,159 $ 58,963,357 63,334,516 Retirements Class Change and Transfers - $ (107,975,522) (107,975,522) (338,387) $ (338,387) 3,788,104 86,728,960 5,304,067 26,471 17,579,936 113,427,538 (2,491,510) (1,486,440) (19,139,424) (91,645) (23,209,019) (5,948,218) (11,684,721) (9,397,059) 27,086,819 56,821 (5,391,114) (10,044,730) (13,787,977) (27,950) (26,587,206) (55,838,977) 57,588,561 749,615 1,168,221 19,098,593 22,649 21,039,078 (2,169,941) 2,919,668 (465,682) 14,414,771 (16,867,888) 869 57,690 120,923,077 $ (110,145,463) $ Balance June 30, 2011 (280,697) $ 265,803,456 89,542,374 355,345,830 300,612,775 215,435,029 140,066,160 176,578 819,889,033 1,476,179,575 (67,757,845) (68,229,823) (95,182,019) (162,540) (320,404,447) (551,736,674) 924,442,901 1,279,788,731 Depreciation expense was charged to governmental functions in the government-wide financial statements as follows: General Government $ Public Safety Cultural - Recreational Community Environment Capital assets held by the City's Internal Service funds are charged to the various functions based on their usage of the assets 9,770,951 10,745,368 6,309,539 28,626,581 Total Depreciation $ 55,838,977 386,538 (Continued) 44 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 7,593,657 34,965,178 12,048,648 34,875,894 58,997 89,542,374 $ 19,226,906 12,525,806 65,533,776 8,229,124 1,078,181 3,884,520 29,374 1,083,077 254,395 1,134,434 490,660 $ 113,470,253 $ $ $ 302,213 6,717,127 388,910 9,113,532 22,363 16,544,145 Business-type Activities Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Stadium Hohokam District Cooling Total $ $ 2,591,896 1,118,685 14,192,125 3,214,103 1,090,904 53,694 7 1 18,500 59 28,428 22,308,402 m. Capitalization of Interest For the year ended June 30, 2011, the City capitalized net interest costs of $5,675,166 (interest expense of $5,710,498 reduced by interest income of $35,332 in the Business-type Activities Enterprise Fund). Total interest expense and income in the Business-type Activities Enterprise Fund before capitalization was $42,638,704 and $874,680 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 (Continued) 46 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 and Public Liability Insurance program. In addition, the City carries full property insurance 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 estimated liability for claims outstanding is determined by a yearly actuarial study in the Property and Public Liability Fund. The claims liability in the Workers Compensation and Employee Benefits Funds are generated by the claims processing software systems maintained by City Staff. The stop loss receivable balance for the Workers’ Compensation Fund at June 30, 2011 is $293,588. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $507,901 with $287,911 received this current fiscal year. The Property and Public Liability Fund does not have a stop loss receivable at June 30, 2011, 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, 2011 is $119,577. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $3,123,571 with $2,611,967 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, 6/30/09 $ 23,500,000 Adjustments to Reserves-FY 09-10 768,233 Claim Payments-FY 09-10 (6,632,233) $ 6,962,630 3,711,902 (2,953,506) $ 3,793,067 50,014,525 (50,076,301) $ 34,255,697 54,494,660 (59,662,040) Unpaid Claims, 6/30/10 $ 7,721,026 $ 3,731,291 $ 29,088,317 Adjustments to Reserves-FY 10-11 $ 545,129 Claim Payments-FY 10-11 (3,540,129) $ 6,876,420 (3,127,828) $ 51,013,683 (51,431,201) $ 58,435,232 (58,099,158) Unpaid Claims, 6/30/11 $ 11,469,618 $ 3,313,773 $ 29,424,391 $ 17,636,000 $ 14,641,000 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. (Continued) 47 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 6 for additional disclosure of long-term balances). p. Fund Balance Policies In the fund financial statements, fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable and Restricted fund balances represent the restricted classifications and Committed, Assigned, and Unassigned represent the unrestricted classifications. Nonspendable fund balance includes amounts that can not be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) legally or contractually required to be maintained intact. Restricted fund balance has externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation (changes in City Charter). Committed fund balance has self-imposed limitations imposed at the highest level of decision making authority, namely, Mayor and Council. Mayor and Council approval is required to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. Assigned fund balance requests are submitted to the Controller for approval/nonapproval. Unassigned fund balance represents the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. (Continued) 48 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 As of June 30, 2011 the fund balance details by classification are listed below: General Fund Fund Balances: Nonspendable: Prepaid Costs $ Restricted: Debt Service Capital Projects Streets Projects General Government Public Safety Cultural-Recreational Community Environment Court Committed To: General Govt Cultural-Recreational Public Safety Building Safety Community Environment Vehicle Replacements General Govt Facilities Other Commitments Unassigned Total Fund Balances $ Highway User Revenue Fund 404,506 $ - $ Non-Major Governmental Funds Total Governmental Funds 2,905,610 $ 3,310,116 11,892 275,065 114,120 1,590,834 783 - 45,042,831 32,460,114 32,892,046 2,142,027 - 45,042,831 32,460,114 32,892,829 11,892 275,065 114,120 2,142,027 1,590,834 1,069,197 539,078 2,754,593 478,171 12,702 - - 43,946 - 134,273 2,153,143 350,834 6,751,088 5,185,807 4,590,486 - 1,203,470 2,692,221 3,105,427 478,171 6,763,790 5,185,807 4,590,486 43,946 93,874,956 - - 93,874,956 101,169,060 $ 783 $ 134,608,259 $ 235,778,102 The Mayor and Council has established a minimum fund balance policy for the General Fund of eight to ten percent of budgeted expenditures. The fund balance in the General Fund as of June 30, 2011 as reported in Exhibit B-3 is 21.9% of General Fund expenditures budgeted for fiscal year 2011-2012. (Continued) 49 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 q. 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. r. 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. 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 (Continued) 50 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 21, 2010. s. 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, 2011 and are made in accordance with State Statutes. t. Property Taxes The City’s secondary property tax is levied each year on or before the third Monday in August based on the previous January 1 full cash value as determined by the Maricopa County Assessor. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent after November 1 and after May 1, respectively. A lien attaches to the property on the first day of January preceding the assessment and levy of taxes. Delinquent amounts bear interest at the rate of 16 percent. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions of properties which have delinquent real estate taxes are held in February. Secondary property taxes are levied to pay principal and interest on bonded indebtedness. The dollar amount of the secondary property tax is “unlimited” and the actual full cash value of property is used in determining the tax rate. In fiscal year 2010-11, current property tax collections were $13,889,057 or 97.4% of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax is recorded as a receivable. Revenue is recognized for those payments expected to be collected within 60 days and the remaining balance is reported as deferred revenue. The (Continued) 51 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 receivable at 06/30/11 was $843,859 of which $441,426 was recorded as revenue and $402,433 as deferred revenue. 2. RESTATEMENT OF BEGINNING FUND BALANCES /NET ASSETS a. Governmental Fund Balances The restatement of beginning fund balances related to the implementation of GASB 54 is as follows: Non-Major Special Revenue Funds General Fund Fund Balance at 06/30/2010, as Previously Reported $ Reclassifications: Regional Transportation Plan Fund Court Construction Fee Fund Public Art Fund Street Sales Tax Fund Vehicle Replacement Fund Fund Balance at 07/01/2010, as Restated 132,934,983 $ $ - $ 17,181 (2,867,180) $ 45,338,759 $ (17,181) 107,408,183 $ (382) (25,543,981) $ 26,332,523 Non-Major Debt Service Funds Non-Major Capital Project Funds $ - 2,867,180 382 - - - 25,543,981 - - (4,839,313) - 4,839,313 44,152,448 $ 45,339,141 $ Property tax revenues were moved to the debt service fund, however no restatement was necessary as all property tax revenues were spent as of 06/30/2010. b. Governmental Activities, Business Type Activities and Enterprise Fund Net Assets Beginning net assets of the Business-type activities have been restated for an error in calculating joint venture expenses relating to the joint water reclamation plant with the towns of Gilbert and Queen Creek. The adjustment is for the fiscal years ending 06/30/2007 through 06/30/2010. Net assets also have been restated for the bond premiums from the 2009 utility revenue bond sale. These will be amortized over the life of the bond issue. In addition, beginning net assets of the Governmental Activities have been restated for an error in calculating depreciation expense related to a capital lease. The adjustment is for the fiscal years ending June 30, 2009 and June 30, 2010. (Continued) 52 23,530,879 31,237,372 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The effect on net assets for the Government-wide Statements and the Fund Statements is as follows: Net Assets at 06/30/10, as Previously Reported Governmental Business-Type Activities Activities $ 935,383,146 $ 753,530,517 $ Capitalized Lease Depreciation Adjustment Unamortized Premium Adjustment Joint Venture Adjustment Net Assets at 07/01/10, as Restated Enterprise Fund 755,670,742 6,644,844 (407,356) 23,633,069 $ 942,027,990 $ 776,756,230 $ (407,356) 23,633,069 778,896,455 3. 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. (Continued) 53 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Reconciliation of the Governmental Funds Balance Sheet to the government-wide Statement of Net Assets: Total Governmental Funds Assets Pooled Cash and Investments Accounts Receivable, net Interest Receivable Due From Other Governments Due From Other Funds Inventories Prepaid Costs Deposits Restricted Pooled Cash and Investments Restricted Cash With Trustee Restricted Accounts Receivable 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 $ 184,984,430 17,055,389 144,381 20,272,069 1,915,000 Long-term Assets/ Liabilities(1) $ Internal Service Funds(2) $ 40,055,487 1,553,347 321,464,226 $ 2,341,770 20,870,363 1,915,000 9,042,835 1,048,067 194 9,749,172 756,250 12,207,031 21,675,399 6,030,000 50,043 $ 2,022,914 53,888,931 1,276,127,429 $ 1,332,039,274 3,661,302 $ 54,258,684 $ $ $ $ 225,039,917 18,608,736 144,381 20,290,036 (1,915,000) 2,793,835 5,867,894 3,618,968 363,733 37,953,905 22,490,388 9,980,946 22,993,869 2,022,914 53,888,931 1,279,788,731 (1,915,000) $ 1,705,847,184 $ 1,550,760 29,424,391 (1,915,000) (5,720,566) 85,686,124 685,842,777 680,122,211 5,756,465 36,731,616 235,778,102 651,917,063 17,527,068 321,464,226 $ 1,332,039,274 $ 54,258,684 Statement of Net Assets Total $ 17,967 2,793,835 5,867,894 308,852 3,310,116 363,733 37,953,905 22,490,388 9,980,946 22,993,869 $ Reclassifications and Eliminations (1,915,000) $ 2,341,770 22,421,123 29,424,391 9,042,835 1,048,067 194 9,749,172 756,250 6,486,465 21,675,399 6,030,000 50,043 691,599,242 800,624,951 905,222,233 (1,915,000) $ 1,705,847,184 (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 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. (Continued) 54 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Costs of capital assets Accumulated depreciation $1,822,373,488 (546,246,059) $1,276,127,429 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 $ 53,888,931 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 $ 2,022,914 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 $ 411,406,859 45,000,000 2,165,596 16,376,719 203,548,142 7,345,461 $ 685,842,777 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) 402,433 5,246,412 71,721 5,720,566 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 $ 17,527,068 (Continued) 55 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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 $ (30,075) (783,885) (8,529) 15,610,470 11,820,028 586,799 7,416,679 39,110 79,962 (436,509) 14,300,119 128,064,505 29,320,000 359,932 523,767,542 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 121,046,053 $ 14,273,796 2,148,216 1,069,363 12,577,426 174,781,231 20,303,514 Lo ng-te rm R e ve nue s / Expe ns e s (1) 38,843,180 215,165,541 42,191,344 68,462,936 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 60,172,590 477,775,336 (31,200) (29,320,000) (359,932) (822,489) 6,984,302 36,476,684 4,598,927 4,164,857 522,193,641 1,573,901 $ (44,410,587) 15,698,342 (30,116,441) 11,559,981 10,774,473 6,434,285 32,115,788 2,161,235 10,858,125 1,289,198 1,479,773 2,971 45,333 35,998 210,761 59,551,669 273,320,156 54,549,752 106,434,115 (31,689,924) (133,039) 19,300,793 201,649 1,575,694 514,933,828 (29,100) (60,172,590) 711,937 52,215,224 15,788,331 (31,557,000) - 280,697 52,215,224 (53,037,713) $ 992,634 13,307,485 (44,410,587) $ 15,788,331 (89,989) $ (31,557,000) 1,440,559 $ (44,410,587) - $ (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 $ (30,075) (783,885) (8,529) $ (822,489) (Continued) 56 14,300,119 83,622,718 - 14,300,119 (9,546) 44,418,305 $ (44,410,587) 121,046,053 14,243,721 2,148,216 285,478 12,577,426 174,772,702 20,303,514 15,610,470 11,820,028 625,909 7,060,132 478,416,486 288,415 515,222,243 (36,805,757) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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) $ 1,321,179 (53,536,405) $ (52,215,224) 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 Loss on equity interest for joint venture Total $ 58,898,023 1,274,567 (55,452,439) (3,279,296) $ 1,440,855 The net effect of miscellaneous transactions involving capital assets (donations, transfers and disposals) is to increase net assets. Donation of capital assets $ 14,300,119 Loss on disposal of capital assets (2,152,792) Transfer of capital assets reclassified to transfer in (280,697) Total $ 11,866,630 (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 out to General Fund Change in net assets $ 15,729,542 (15,788,331) (31,200) $ (89,989) (Continued) 57 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 (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 Principal repayments Total $ (29,320,000) 31,689,924 $ 2,369,924 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. Amortization of bond issue costs $ (265,964) Amortization of deferred refunding amounts (1,173,630) Current year bond premium additions (796,440) Amortization of bond premiums 1,306,669 Total $ (929,365) (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 $ (44,410,587) 44,410,587 $ - (Continued) 58 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 4. 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 9.85 percent of their salary to the System during fiscal year 2010-11 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, 2011, 2010 and 2009 were $13,347,661, $13,134,628 and $13,983,834 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) 59 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 2010-11 was 29.79 percent. The City’s contributions to EORP for the fiscal years ending June 30, 2011, 2010 and 2009 were $44,454, $39,152 and $42,300 respectively, which were equal to the required contributions for each year. The City’s employees contributed $10,446, $10,440 and $10,575, 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 2010-11 was 20.30 (18.77 pension plus 1.53 health care) percent for fire personnel and 21.11 (19.52 pension plus 1.59 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) (Continued) 60 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 c. Annual Pension Cost Police personnel contributed $4,166,854 and fire personnel $2,074,082 during fiscal year 2010-11. For 2011, the City’s annual pension cost of $11,498,338 for police and $5,503,772 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. Funded Status and Funding Progress The funded status of the plans as of June 30, 2010 (Latest actuarial date available) is as follows: Police Actuarial accrued liability (AAL) $ Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) $ Funded ratio (actuarial value of plan assets/AAL) Covered payroll (active plan members) $ UAAL as a percentage of covered payroll 369,998,464 $ 257,026,009 112,972,455 $ 69.5% 56,051,165 $ 201.6% Fire 211,840,704 156,842,989 54,997,715 74.0% 26,743,003 205.7% The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. (Continued) 61 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 e. Three Year Trend Information for PSPRS Police Fiscal Year Ending 2009 2010 2011 Annual Pension Cost (APC) $ 12,653,191 12,275,544 11,498,338 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Annual Pension Cost (APC) $ 7,206,009 6,013,620 5,503,772 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Fire Fiscal Year Ending 2009 2010 2011 f. Annual Other Post Employment Benefits Cost For 2011 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 2011 and the two preceding years were as follows: (Continued) 62 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Police Fiscal Year Ending 2009 2010 2011 $ 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 2009 2010 2011 $ 5. POST EMPLOYMENT BENEFITS In addition to the pension benefits described in Note 4, 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, 2011, approximately 1,505 former employees were eligible for these benefits, an increase of 77 participants from the prior year or a 5.4% 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 10-11 was $66,999,119. A liability of $12,160,364 is accrued in the business type activities financial statements, the remaining $54,838,755 has been accrued in the governmental activities column in the government-wide financial statements. (Continued) 63 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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, 2010, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Active Employees Total 1,465 3,495 4,960 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, 2011, the City contributed $13,494,020 to the plan (approximately 70.2 percent of total premiums). Plan members receiving benefits contributed $5,726,367 or approximately 29.8 percent of total premiums. (Continued) 64 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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 N/A, no assets in trust Actuarial Assumptions: Discount rate Health care cost trend rate: 4.50%  Medical, Drugs 10.0% in 2010-2011, grading down by 0.5% each year to an ultimate rate of 5.0%   Dental, Mental Health, Vision Retiree contribution increase 5% Same as medical Trend 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. (Continued) 66 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 6. 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 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 Less Deferred Amounts on Refundings Total Bonds Payable Notes Payable Unamortized Bond Premiums Post Employment Benefits Compensated Absences Other Long-Term Obligations Business-type Activities Total $ $ $ $ Beginning Balances Additions 273,869,349 $ 134,545,000 29,320,000 - Reductions Ending Balances Amounts Due Within One Year (21,675,400) $ 281,513,949 $ (6,030,000) 128,515,000 21,755,637 6,390,000 6,550,000 (5,601,720) 409,362,629 29,320,000 5,406,120 45,000,000 7,855,690 796,440 153,548,293 65,883,605 18,552,257 12,948,949 639,724,989 $ 108,948,994 $ (744,000) 5,806,000 1,173,630 (4,428,090) (27,275,770) 411,406,859 (3,240,524) 2,165,596 45,000,000 (1,306,669) 7,345,461 (11,044,850) 208,387,048 (14,206,928) 17,294,278 (57,074,741) $ 691,599,242 $ 744,000 28,889,637 1,344,046 4,352,302 34,585,985 857,435,000 $ 2,690,651 (15,590,188) 844,535,463 2,963,780 16,915,475 31,474,357 4,613,127 900,502,202 $ (12,585,000) $ 898,800,000 $ (469,600) 2,221,051 1,773,546 (13,816,642) (11,281,054) 887,204,409 (232,655) 2,731,125 (2,166,452) 16,008,249 (2,449,170) 43,634,721 (3,121,342) 4,163,267 (116,755) 233,508 (19,367,428) $ 953,975,279 $ 24,840,000 679,363 25,519,363 237,489 964,313 116,754 26,837,919 53,950,000 53,950,000 1,259,226 14,609,534 2,671,482 350,263 72,840,505 $ (Continued) 67 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 b. Bonds Payable At June 30, 2011, long-term bonds payable consisted of: Classified in Governmental Activities on the government-wide financial statements: General Obligation Bonds $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. $ 4,959,069 $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. 22,109,014 $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. 20,065,000 $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. 44,489,253 $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. 24,845,461 $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 $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. 14,300,000 $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. 50,745,000 $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 (Continued) 68 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 $29,320,000 2011 general obligation serial bonds due in annual installments ranging from $800,000 to $6,825,000 plus semi-annual interest ranging from 2 percent to 4.25 percent through July 1, 2031 $ 29,320,000 Total General Obligation Bonds Deferred amounts on refundings Bonds not including deferred amounts on refunding $ 279,027,797 2,486,152 $ 281,513,949 Street and Highway User Revenue Bonds $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. $ 1,000,000 $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. 25,968,147 $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. 25,800,000 $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. 1,375,000 $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. 17,196,159 $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. 22,858,756 $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. 10,025,000 $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 $126,573,062 1,941,938 $128,515,000 (Continued) 69 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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. $ 3,350,000 $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 2,456,000 $ 5,806,000 Total bonds payable recorded in governmental activities $411,406,859 Classified in Business-type Activities on the government-wide financial statements: General Obligation Bonds $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. $ 23,027 $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. 811,148 $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. 214,125 $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. 1,161,430 Total General Obligation Bonds Deferred amounts on refundings $ 2,209,730 11,321 Total General Obligation Bonds not including deferred amounts on refunding $ 2,221,051 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. $ 4,000,000 $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 (Continued) 70 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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. $ 18,446 $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. 6,000,000 $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. 125,416,449 $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. 45,704,775 $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. 23,000,000 $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. 38,832,020 $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. $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. 120,641,411 $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 55,334,720 (Continued) 71 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 $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. $ 18,741,858 $59,900,000 2009 utility systems revenue 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 $50,380,000 2010 utility systems revenue serial bonds, due in one principal installment plus semi-annual interest 6.10 percent through July 1, 2034. 50,380,000 $53,950,000 2011 utility systems revenue serial bonds, due in one principal installment plus semi-annual interest 5.0 percent through July 1, 2035. 53,950,000 Total Utility Systems Revenue Bonds Deferred amounts on refundings Total Utility System Revenue Bonds not including deferred amounts on refundings $ 884,994,679 13,805,321 Total bonds payable recorded in business-type activities $ 887,204,409 $ 898,800,000 The following tables summarize the City’s debt service requirements to maturity for its long term bonds payable at June 30, 2011. The deferred amounts on refundings are not included. Governmental Activities General Obligation Bonds Fiscal Year 2012 $ 2013 2014 2015 2016 2017-21 2022-26 2026-30 Principal 21,755,637 $ 22,888,905 15,157,029 12,239,033 13,033,766 79,419,579 56,320,000 60,700,000 Interest 12,762,594 $ 11,752,560 10,678,535 10,065,060 9,560,162 36,383,013 22,482,173 8,364,984 TOTALS $ 281,513,949 $ 122,049,081 $ Highway User Revenue Bonds Total 34,518,231 34,641,465 25,835,564 22,304,093 22,593,928 115,802,592 78,802,173 69,064,984 403,563,030 Fiscal Year 2012 $ 2013 2014 2015 2016 2017-21 2022-26 2027-31 Principal 6,390,000 $ 6,745,000 7,040,000 7,355,000 7,695,000 44,165,000 45,225,000 3,900,000 Interest 6,028,242 $ 5,695,242 5,378,088 5,088,587 4,776,660 17,959,035 6,623,750 165,751 TOTALS $ 128,515,000 $ 51,715,355 $ Total 12,418,242 12,440,242 12,418,088 12,443,587 12,471,660 62,124,035 51,848,750 4,065,751 180,230,355 (Continued) 72 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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, 2011 are $5,806,000. General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $2,209,730 of these bonds at June 30, 2011 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 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, 2011 is: 6% Bonds 20% Bonds $184,531,122 354,445,979 Total Available $538,977,101 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, 2011, the amount provided in the Replacement and Extension Funds equaled $14,917,527 which is in compliance with the bond provisions. (Continued) 74 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 d. 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. 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 $3,486,902 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. (Continued) 75 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2011: Governmental Activites Fiscal Year 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2029 TOTALS Principal $ - $ - 20,000,000 25,000,000 - $ 45,000,000 $ Business-type Activities Interest Interest Total Principal & Fees Total 1,512,500 $ 1,512,500 $ 237,489 $ 61,186 $ 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 25,812,500 130,437 46,567 177,004 696,079 188,939 885,018 775,570 109,448 885,018 516,655 23,611 540,266 6,862,500 $ 51,862,500 $ 2,731,125 $ 585,866 $ 3,316,991 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, 2011. Governmental Activities Fiscal Year Principal Interest Total 2012 $ 1,344,046 $ 86,367 $ 1,430,413 2013 681,958 34,184 716,142 2014 67,953 6,581 74,534 2015 71,639 2,894 74,533 TOTALS $ 2,165,596 $ 130,026 $ 2,295,622 (Continued) 76 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 The assets acquired through capital leases are as follows: Governmental Activities Asset: Land $ Buildings Other Improvements 1,363,821 Machinery & Equipment 11,030,807 Infrastructure 1,817,532 Construction Work in Process 1,090,568 Less: Accumulated depreciation (11,839,707) Total $ 25,947,610 f. Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2011. 7. 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 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, 2011 as reflected below is not included in the City’s financial statements. Utility System Revenue Bond Issue dated April 1, 1997 Utility System Revenue Refunding Bond Issue dated March 1, 1998 $ 7,000,000 5,890,000 Utility System Revenue Bond Issue dated March 1, 1998 13,125,000 Utility System Revenue Bond Issue dated March 1, 2003 25,500,000 (Continued) 77 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 $ 156,090,000 8. CAPITAL CONTRIBUTIONS During the year, external capital contributions consisted of the following: Property Owners Governmental Activities: Federal and State Funds $ Contributions - Capital Assets Total $ Business-type Activities: Federal and State Funds $ Developers - Impact and Development Fees Contributions-In-Aid Contributions - Capital Assets Total $ 9. Governmental Agencies 84,668 84,668 $ 708,161 708,161 Developers Total $ 17,161,330 $ 6,392,696 23,554,026 $ - $ 7,822,755 7,822,755 $ 17,161,330 14,300,119 31,461,449 $ 3,294,629 $ - $ 3,294,629 $ 3,294,629 $ 3,258,129 3,513,069 6,771,198 $ 3,258,129 708,161 3,513,069 10,773,988 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 (Continued) 78 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 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, 2011, is $5,543,458. 10. ENTERPRISE ACTIVITIES OPERATIONS DETAIL The Enterprise Fund includes operations of electricity, gas, water, wastewater, solid waste, airport, golf course, convention center, stadiums 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, 2011 for these services are as follows: (Continued) 79 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Depreciation and Amortization Functions Operating Revenues Electric $ Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam /Fitch Complex Cubs Stadium District Cooling 33,138,456 $ 41,369,805 102,215,430 59,659,464 47,537,833 3,317,542 2,250,256 2,825,693 6,161,320 51,614 945,434 2,982,802 $ 3,037,528 19,681,747 14,316,638 2,292,728 1,577,362 262,787 18,180 648,329 397,442 23,455,135 $ 30,306,602 43,801,175 21,470,703 29,096,080 2,379,968 2,335,861 3,807,523 7,673,706 14,990 567,143 6,700,519 8,025,675 38,732,508 23,872,123 16,149,025 (639,788) (348,392) (1,000,010) (2,160,715) 36,624 (19,151) Total 299,472,847 $ 45,215,543 $ 164,908,886 $ 89,348,418 $ Operating Income (Loss) Other 11. NET ASSETS a. Restricted Net Assets The government-wide statement of net assets reports $95,169,292 of restricted net assets, of which $32,917,156 is restricted by enabling legislation. b. Designated Net Assets The net assets in the Employee Benefits Self Insurance Fund is designated for anticipated future losses and is 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. In addition contributions from the other funds have not increased since fiscal year 2007. A decrease in claims incurred but not reported calculated by the actuarial study resulted in a reduction of the deficit net assets during the fiscal year. The deficit in the Workers Compensation Self-Insurance Fund was the result of a $1.7 million reduction in contributions to the fund during the year and a $3.6 million increase in liabilities. The (Continued) 80 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 increase in liabilities was due to several adjustments to reported reserve amounts and increase in the number of claims filed and open at fiscal year end. Contributions from the various funds will need to be increased in future years to cover these deficits. 12. PLEDGED REVENUES a. Utility System Revenue Bonds The City has pledged future utility customer revenues, net of specified operating expenses, to repay approximately $1.207 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 2035. 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 $1,505,141,424. Principal and interest paid for the current year and total customer net revenues were $55,398,598 and $93,479,850, respectively. b. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $168.3 million in highway user revenue bonds issued since 2002. 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 42 percent of eligible revenues. The total principal and interest remaining to be paid on the bonds is $180,230,355. Principal and interest paid for the current year and total highway user tax revenues were $12,395,243 and $32,052,757, 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. 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 $7,146,100. Principal and interest paid for the current year and total assessments collected were $1,081,040, and $1,088,465, respectively. (Continued) 81 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 13. 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, 2010 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments $ 39,169,000 Receivables 12,680,000 Inventories at Average Cost 527,000 Capital Assets 923,885,000 Total Assets 976,261,000 Liabilities 43,434,000 Net Assets $ 932,827,000 Total Revenues Total Expenses $ 109,318,000 (87,687,000) Increase (Decrease) in Net Assets $ 21,631,000 Separate financial statements for the activity under the Joint Venture agreement can be obtained through the AMWUA office at 3003 N. Central Avenue, Suite 1550, 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 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. (Continued) 82 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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, 2010 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments Receivables Inventories Capital Assets, Net of Accumulated Depreciation $ Total Assets 6,433,000 9,816,000 348,000 251,282,000 267,879,000 Liabilities 11,850,000 Net Assets $ 256,029,000 Total Revenues Total Expenses $ 54,260,000 (33,267,000) Increase in Net Assets $ 20,993,000 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. Total investment in the joint venture as of June 30, 2011 is: Mesa’s Share Gilbert’s Share Queen Creek’s Share $ 69,672,048 66,273,146 28,891,812 Total Joint Venture $164,837,006 (Continued) 83 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 $53,057,069 has been spent on this project through the fiscal year ended June 30, 2011. The City has received $43.5 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, 2010, (latest information available) is as follows: Assets Current Assets Non Current Assets Total Assets $ Liabilities 102,712,169 1,213,821,644 1,316,533,813 137,801,285 Net Assets $ 1,178,732,528 Total Revenues Total Expenses $ 183,482,980 (192,607,118) Decrease in Net Assets $ (9,124,138) Separate financial statements for the activity can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. In March 2010, the Mesa City Council approved a 3 mile extension of the LRT system and in August 2010, the Federal Transit Administration approved the alignment for project development as the next step toward federal funding. The extension begins at the eastern limits of METRO’s existing light rail system (Sycamore) and extends east on Main Street to Mesa Drive. The entire extension is within the City of Mesa. There are four stations on Main Street including a station at Alma School Road, Country Club Drive, Center Street, and Mesa Drive. The extension is planned to open in 2016 with ridership estimated at approximately 4,750 riders per day. The total capital cost of the project is $198.5 million to be funded with a combination of federal and regional funds. (Continued) 84 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 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, 2011 is: City of Mesa $ 831,862 Town of Gilbert 224,785 City of Apache Junction 48,687 Apache Junction Fire District 23,063 Town of Queen Creek 8,387 Total Joint Venture $ 1,136,784 14. SUBSEQUENT EVENTS On October 12, 2011 the City issued $77,835,000 of Highway Project Advancement Notes to provide funds to the Arizona Department of Transportation (ADOT) for the acceleration of the construction of State Route 24 between State Route 202L and Ellsworth Road. The bonds mature on July 1, 2021 and the total interest is $30,421,148. The City has entered into an intergovernmental agreement with ADOT and the Maricopa Association of Governments to advance the improvements to State Route 24. The agreement provides for repayment of 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. (Concluded) 85 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, 2011 Police Valuation Date June 30, 2008 2009 2010 Actuarial Value of Assets 233,493,642 250,465,218 257,026,009 Actuarial Accrued Liability (AAL) 320,603,102 336,097,656 357,206,422 Actuarial Value of Assets $145,931,808 155,971,492 156,842,989 Actuarial Accrued Liability (AAL) $192,991,745 193,517,551 205,749,451 Percent Funded 72.8 74.5 72.0 Unfunded AAL 87,109,460 85,632,438 100,180,413 Annual Covered Payroll 59,211,259 58,240,512 56,051,165 Unfunded AAL as a % of Covered Payroll 147.1 147.0 178.7 Annual Covered Payroll $28,607,906 27,553,989 26,743,003 Unfunded AAL as a % of Covered Payroll 164.5 % 136.3 182.9 Fire Valuation Date June 30, 2008 2009 2010 Percent Funded 75.6 % 80.6 76.2 Unfunded AAL $47,059,937 37,546,059 48,906,462 Other Post-Employment Benefits (Health Insurance Subsidy) Police Valuation Date June 30, 2008 2009 2010 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $13,529,449 12,123,354 12,792,042 Unfunded ALL (UALL) (b-a) $ 13,529,449 12,123,354 12,792,042 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $7,237,804 5,787,717 6,091,253 Unfunded ALL (UALL) (b-a) $ 7,237,804 5,787,717 6,091,253 Funded Ratio (a/b) - % - Annual Covered Payroll (c) $59,211,259 58,240,512 56,051,165 UALL as a % of Covered Payroll (( b - a ) / c ) 22.9 % 20.8 22.8 Funded Ratio (a/b) - % - Annual Covered Payroll (c) $28,607,906 27,553,989 26,743,003 UALL as a % of Covered Payroll (( b - a ) / c ) 25.3 % 21.0 22.8 Fire Valuation Date June 30, 2008 2009 2010 86 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, 2011 Actuarial Valuation Date July 1, 2007 July 1, 2009 $ Actuarial Value of Assets - Actuarial Accrued Liability (AAL) $ 664,071,640 916,615,559 Percent Funded - % Unfunded AAL as a Annual Percentage Unfunded Covered of Covered AAL Payroll Payroll $ 664,071,640 $ 338,835,124 196.0 % 916,615,559 321,012,148 285.5 The original GASB 43 & 45 compliant OPEB valuation for the City of Mesa had a valuation date of July 1, 2007 producing biennial funding results applying to the 2007-08 and 2008-09 fiscal years. This corresponds to the first fiscal period that GASB reporting was required for OPEB plans. The current valuation as of July 1, 2009 provides funding results for the 2009-10 and 2010-11 fiscal years with biennial valuation planned going forward from this date. 87 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, 2011 Original Budget Revenues: Sales Taxes Property Taxes Occupancy Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous $ Total Revenues Final Budget 105,518,000 14,141,000 1,444,000 8,188,000 136,947,000 11,475,000 11,256,000 275,000 4,808,000 $ 105,518,000 14,141,000 1,444,000 8,188,000 136,947,000 11,475,000 11,256,000 275,000 4,808,000 Actual Amounts Budgetary Basis $ 100,818,500 14,273,796 2,148,216 9,291,101 114,736,929 12,126,961 15,560,437 371,502 6,522,858 Variance With Final Budget Positive (Negative) $ (4,699,500) 132,796 704,216 1,103,101 (22,210,071) 651,961 4,304,437 96,502 1,714,858 294,052,000 294,052,000 275,850,300 6,200,000 6,200,000 5,399,422 287,852,000 287,852,000 270,450,878 (17,401,122) 44,570,463 224,652,505 43,624,512 14,776,825 30,294,691 45,455,000 45,423,941 222,530,931 43,883,069 16,764,201 29,106,506 44,920,286 40,651,542 208,435,711 42,210,525 11,649,682 18,654,128 - 4,772,399 14,095,220 1,672,544 5,114,519 10,452,378 44,920,286 20,253,679 11,071,540 20,253,679 11,071,540 20,254,831 10,353,699 434,699,215 433,954,153 352,210,118 81,744,035 (146,847,215) (146,102,153) (81,759,240) 64,342,913 Other Financing Sources (Uses): Transfers In Transfers Out 83,615,000 (8,074,000) 83,615,000 (8,074,000) 83,646,493 (7,175,000) 31,493 899,000 Total Other Financing Sources (Uses) 75,541,000 75,541,000 76,471,493 930,493 (71,306,215) (70,561,153) (5,287,747) 65,273,406 70,777,012 70,777,012 84,182,283 13,405,271 529,203 529,203 14,373,198 13,843,995 Less: Bad Debts Total Net Revenues (18,201,700) 800,578 Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Capital Outlay Contingencies Debt Service: Principal Retirement Interest/Service Charges on Bonds Total Expenditures Deficiency of Revenues Under Expenditures Net Change in Fund Balance Fund Balance - Beginning Decrease in Restricted Fund Balance Fund Balance - Ending $ - $ See Note to Required Supplementary Information. 88 745,062 $ 93,267,734 (1,152) 717,841 $ 92,522,672 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, 2011 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) Revenues: Intergovernmental $ 32,553,000 $ 32,553,000 $ 31,852,516 $ (700,484) Charges For Services 24,000 24,000 58,909 34,909 Fines and Forfeitures 9,000 9,000 108,004 99,004 Miscellaneous 5,000 5,000 33,328 28,328 Total Revenues 32,591,000 32,591,000 32,052,757 (538,243) Expenditures: Current: 26,202,156 26,202,156 25,709,794 492,362 Capital Outlay Community Environment 407,512 108,127 9,995 98,132 Contingencies - 299,385 - 299,385 Debt Service: Principal Retirement 6,030,000 6,030,000 6,030,000 - Interest/Service Charges on Bonds 6,369,741 6,369,741 6,369,242 499 39,009,409 39,009,409 38,119,031 890,378 (6,418,409) (6,418,409) (6,066,274) 352,135 6,418,441 6,418,441 6,067,057 (351,384) Total Expenditures Deficiency of Revenues Under Expenditures Fund Balance - Beginning Fund Balance - Ending $ 32 See Note to Required Supplementary Information. 89 $ 32 $ 783 $ 751 CITY OF MESA, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION – BUDGETARY REPORTING FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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, 2011 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis Exhibit B-3 Basis Differences: Compensated Absences Special Assessments Sales Tax Accrual Unrealized Gain on Investments Timing Differences: Grants & Contributions Interest Earnings in Escrow Account Net Change in Fund Balance-GAAP Basis Exhibit A-5 90 $ (5,287,747) 217,833 (11,677) (201,176) 130,268 (1,083,878) (2,746) $ (6,239,123) 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 provide rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from grants from 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. 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. 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. 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. Street Sales Tax Fund accounts for expenditures of the voter-approved sales tax that is used as the City match for the MAG Proposition 400 sales tax funds and also provides a local revenue source that is dedicated for street programs. 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. Streets Construction Fund accounts for the cost of right-of-way acquisitions and street 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. Capital Projects Funds (cont.) Service Center Construction Fund accounts for the cost of improvements to the 6th Street service center. 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. 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, 2011 Special Revenue Funds Debt Service Funds Capital Projects Funds Total Non-major Governmental Funds ASSETS Pooled Cash and Investments Accounts Receivable Accrued Interest Receivable Due From Other Governments Prepaid Costs Restricted Assets: Pooled Cash and Investments Cash with Trustee Special Assessments Receivable Accounts Receivable-Property Taxes Due From Other Governments $ 56,672,696 1,627,766 45,018 2,574,392 13,656 Total Assets - $ 38,746,368 480,110 2,891,954 - - 37,953,905 22,490,388 5,246,412 402,433 22,993,869 $ 60,933,528 $ 89,087,007 $ 42,118,432 $ 192,138,967 $ 6,150,499 5,889,749 $ - $ 1,580,557 - $ 7,731,056 5,889,749 - 194 9,749,172 756,250 5,648,845 - 194 9,749,172 756,250 5,648,845 - 21,675,399 - 21,675,399 - 6,030,000 50,043 - 6,030,000 50,043 Total Liabilities 12,040,248 43,909,903 1,580,557 57,530,708 Fund Balances: Nonspendable Restricted Committed 13,656 35,034,073 13,845,551 45,042,831 134,273 2,891,954 32,460,114 5,185,807 2,905,610 112,537,018 19,165,631 Total Fund Balances 48,893,280 45,177,104 40,537,875 134,608,259 $ 60,933,528 $ 89,087,007 $ 42,118,432 LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable 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 Total Liabilities and Fund Balances $ - 91 $ 95,419,064 1,627,766 45,018 3,054,502 2,905,610 37,953,905 22,490,388 5,246,412 402,433 22,993,869 - $ 192,138,967 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, 2011 Special Revenue Funds Revenues: Sales Taxes Property Taxes Special Assessments Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Total Revenues Debt Service Funds $20,762,303 3,286,325 22,763,472 8,286,495 164,270 214,076 $ $ 14,273,796 1,069,363 880,189 34,248 19,102 Total Nonmajor Governmental Fund Capital Projects Funds $ 5,777,960 5,746 578,098 $ $ 20,762,303 14,273,796 1,069,363 3,286,325 28,541,432 8,286,495 880,189 204,264 811,276 55,476,941 16,276,698 6,361,804 78,115,443 5,985,101 31,120,816 - - 5,985,101 31,120,816 - 26,862,239 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 43,210,145 Expenditures: Current: Public Safety Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance Capital Outlay 16,347,906 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 - Total Expenditures 53,453,823 52,939,745 26,862,239 133,255,807 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,023,118 (36,663,047) (20,500,435) (55,140,364) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 7,476,076 (4,758,362) - 36,809,511 (308,501) - 125,000 (3,994) 29,320,000 359,932 44,410,587 (5,070,857) 29,320,000 359,932 Total Other Financing Sources (Uses) 2,717,714 36,501,010 29,800,938 69,019,662 Net Change in Fund Balances 4,740,832 9,300,503 13,879,298 45,339,141 31,237,372 120,728,961 45,177,104 $40,537,875 $ 134,608,259 Fund Balances - Beginning, as Restated Fund Balances - Ending (162,037) 44,152,448 $48,893,280 $ 92 CITY OF MESA, ARIZONA EXHIBIT C-3 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2011 Local Transportation Assistance Mesa Housing Authority Cemetery Development Impact Fees ASSETS Pooled Cash and Investments Accounts Receivable Accrued Interest Receivable Due From Other Governments Prepaid Costs $ 4,028,689 1,167,856 534 $ 2,176,339 - $ 6,714,834 45,131 29 $ 5,622,343 5,130 Total Assets $ 5,197,079 $ 2,176,339 $ 6,759,994 $ 5,627,473 $ 5,172,218 - $ $ $ 22,811 - LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Due To Other Funds Customer Deposits Total Liabilities 58,626 - 7,425 2,170 5,172,218 58,626 9,595 22,811 Fund Balances: Nonspendable Restricted Committed 534 24,327 - 2,117,700 13 29 6,750,370 5,130 5,599,532 Total Fund Balances 24,861 2,117,713 6,750,399 5,604,662 5,197,079 $ 2,176,339 $ 6,759,994 Total Liabilities and Fund Balances $ 93 $ 5,627,473 EXHIBIT C-3 (Continued) Mesa Arts Center Restoration Environmental Compliance Street Sales Tax Total $ 1,157,748 - $ 640,401 531 $ 36,332,342 1,582,635 45,018 1,406,536 7,432 $ 56,672,696 1,627,766 45,018 2,574,392 13,656 $ 1,157,748 $ 640,932 $ 39,373,963 $ 60,933,528 $ 10,425 - $ 292,088 - $ $ 6,150,499 5,889,749 $ 586,906 5,887,579 10,425 292,088 6,474,485 12,040,248 1,147,323 531 348,313 7,432 32,892,046 - 13,656 35,034,073 13,845,551 1,147,323 348,844 32,899,478 48,893,280 640,932 $ 39,373,963 1,157,748 $ $ 94 60,933,528 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, 2011 Local Transportation Assisistance Revenues: Taxes Licenses and Permits Intergovernmental Charges for Services Investment Income Miscellaneous $ 870,381 1,030,607 183,371 Mesa Housing Authority $ 12,016,967 12 2,175 29,590 Cemetery $ 1,209,887 8,183 1,115 Development Impact Fees $ 3,286,325 8,490 - Total Revenues 2,084,359 12,048,744 1,219,185 3,294,815 Expenditures: Current: Public Safety Community Environment Capital Outlay 7,538,111 1,609,394 11,641,820 - 1,037,831 156,668 2,965,614 Total Expenditures 9,147,505 11,641,820 1,194,499 2,965,614 329,201 Excess (Deficiency) of Revenues Over (Under) Expenditures (7,063,146) 406,924 24,686 Other Financing Sources (Uses): Transfers In Transfers Out 7,075,000 - 100,000 - - (3,057,668) Total Other Financing Sources (Uses) 7,075,000 100,000 - (3,057,668) Net Change in Fund Balances 11,854 506,924 24,686 (2,728,467) Fund Balances - Beginning, as Restated 13,007 1,610,789 6,725,713 24,861 $ 2,117,713 $ 6,750,399 Fund Balances - Ending $ 95 8,333,129 $ 5,604,662 EXHIBIT C-4 (Continued) Mesa Arts Center Restoration $ 264,250 1,159 - Environmental Compliance $ Total 5,781,739 1,330 - $ 20,762,303 9,876,124 142,933 - 265,409 5,783,069 30,781,360 55,476,941 125,048 5,985,101 367,991 10,903,054 11,123,191 5,985,101 31,120,816 16,347,906 125,048 6,353,092 22,026,245 53,453,823 8,755,115 2,023,118 140,361 (570,023) $ 20,762,303 3,286,325 22,763,472 8,286,495 164,270 214,076 - - 301,076 (1,700,694) 7,476,076 (4,758,362) - - (1,399,618) 2,717,714 (570,023) 7,355,497 4,740,832 918,867 25,543,981 44,152,448 348,844 $ 32,899,478 140,361 1,006,962 $ Street Sales Tax 1,147,323 $ $ 96 48,893,280 CITY OF MESA, ARIZONA EXHIBIT C-5 NON-MAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2011 General Obligation Bond Redemption Special Assessment Bond Redemption Capital Lease Redemption ASSETS Restricted Assets: Pooled Cash and Investments Cash with Trustee Special Assesments Receivable Accounts Receivable-Property Taxes Due From Other Governments $ 27,776,247 402,433 441,426 $ Total Assets $ 28,620,106 $ 158,550 5,246,412 $ 5,404,962 50,237 - $ 50,237 LIABILITIES AND FUND BALANCES Liabilities 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 6,408,001 402,433 21,675,399 - 158,550 5,246,412 - 194 50,043 Total Liabilities 28,485,833 5,404,962 50,237 Fund Balances: Restricted Committed 134,273 - - Total Fund Balances 134,273 - - Total Liabilities and Fund Balances $ 28,620,106 97 $ 5,404,962 $ 50,237 EXHIBIT C-5 (Continued) Highway User Revenue Bond Redemption Highway Project Advancement Notes $ $ 9,212,621 - 22,552,443 $ 37,953,905 22,490,388 5,246,412 402,433 22,993,869 45,799,081 $ 89,087,007 3,182,621 6,030,000 - 756,250 - 194 9,749,172 756,250 5,648,845 21,675,399 6,030,000 50,043 9,212,621 756,250 43,909,903 - 45,042,831 - 45,042,831 134,273 - 45,042,831 45,177,104 45,799,081 $ 89,087,007 $ $ 9,212,621 9,212,621 $ $ 756,250 22,490,388 - Total 98 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, 2011 General Obligation Bond Redemption Revenues: Property Taxes Special Assessments Fines and Forfeitures Investment Income Miscellaneous $ 14,273,796 Total Revenues Expenditures: Debt Service: Principal Retirement Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change In Fund Balances Fund Balances - Beginning, as Restated Fund Balances - Ending $ 99 Special Assessment Bond Redemption $ Capital Lease Redemption 880,189 - 1,069,363 19,102 $ - 15,153,985 1,088,465 - 21,675,400 12,731,550 5,546 744,000 337,040 - 3,240,524 201,649 - 34,412,496 1,081,040 3,442,173 (19,258,511) 7,425 (3,442,173) 19,392,402 19,392,402 (7,425) (7,425) 3,442,173 3,442,173 133,891 - - 382 - - 134,273 $ - $ - EXHIBIT C-6 (Continued) Highway User Revenue Bond Redemption Highway Project Advancement Notes $ $ - 34,248 - $ 14,273,796 1,069,363 880,189 34,248 19,102 - 34,248 16,276,698 6,030,000 6,365,242 4,000 1,575,694 29,100 31,689,924 19,433,832 201,649 1,575,694 9,546 29,100 12,399,242 1,604,794 52,939,745 (12,399,242) (1,570,546) (36,663,047) 12,399,242 12,399,242 1,575,694 (301,076) 1,274,618 36,809,511 (308,501) 36,501,010 - (295,928) (162,037) $ Total - $ 45,338,759 45,339,141 45,042,831 $ 45,177,104 100 CITY OF MESA, ARIZONA EXHIBIT C-7 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30, 2011 Fire Storm Sewer Streets Law Enforcement ASSETS Pooled Cash and Investments Due From Other Governments Prepaid Costs $ 6,230,596 2,891,954 $ 1,090,444 - $ 19,188,147 480,110 - $ 6,465,414 - Total Assets $ 9,122,550 $ 1,090,444 $ 19,668,257 $ 6,465,414 LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ 421,092 $ $ $ 103,556 Total Liabilities - 1,013,981 421,092 - 1,013,981 103,556 Fund Balances: Nonspendable Restricted Committed 2,891,954 5,809,504 - 1,090,444 - 18,654,276 - 6,361,858 - Total Fund Balances 8,701,458 1,090,444 18,654,276 6,361,858 9,122,550 $ 1,090,444 $ 19,668,257 Total Liabilities and Fund Balances $ 101 $ 6,465,414 EXHIBIT C-7 (Continued) Service Center Library Vehicle Replacement Capital Leases Total $ 548,076 - $ - $ 5,223,691 - $ - $ 38,746,368 480,110 2,891,954 $ 548,076 $ - $ 5,223,691 $ - $ 42,118,432 $ 4,044 $ - $ 37,884 $ - $ $ 1,580,557 4,044 - 37,884 - 1,580,557 544,032 - - 5,185,807 - 2,891,954 32,460,114 5,185,807 544,032 - 5,185,807 - 40,537,875 - $ 42,118,432 548,076 $ - $ 5,223,691 $ 102 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, 2011 Storm Sewer Fire Revenues: Intergovernmental Investment Income Miscellaneous $ - $ Streets 133,406 $ 5,777,960 - Law Enforcement $ 28,796 Total Revenues - 133,406 5,777,960 28,796 Expenditures: Capital Outlay 3,931,416 369,298 17,617,834 4,467,637 Total Expenditures 3,931,416 369,298 17,617,834 4,467,637 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,931,416) (235,892) (11,839,874) (4,438,841) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 6,595,000 82,436 - 22,725,000 277,496 - Total Other Financing Sources (Uses) 6,677,436 - 23,002,496 - Net Change in Fund Balances 2,746,020 Fund Balances - Beginning, as Restated 5,955,438 8,701,458 Fund Balances - Ending $ 103 (235,892) 11,162,622 (4,438,841) 1,326,336 7,491,654 10,800,699 $ 1,090,444 $ 18,654,276 $ 6,361,858 EXHIBIT C-8 (Continued) Service Center Library $ $ - $ Vehicle Replacement - $ 5,746 415,896 Capital Leases $ Total - $ 5,777,960 5,746 578,098 - - 421,642 - 6,361,804 275,906 - 200,148 - 26,862,239 275,906 - 200,148 - 26,862,239 (275,906) - 221,494 - (20,500,435) - (293) - 125,000 - (3,701) - 125,000 (3,994) 29,320,000 359,932 - (293) 125,000 (3,701) 29,800,938 (275,906) (293) 346,494 (3,701) 9,300,503 819,938 293 3,701 31,237,372 - $ 40,537,875 544,032 $ - 4,839,313 $ 5,185,807 $ 104 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, 2011 ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable Accrued Premiums Receivable Warehouse, Maintenance and Services Property and Public Liability Self Insurance $ $ Due From Other Governments Inventory Prepaid Costs Total Current Assets Capital Assets: Buildings Other Improvements Machinery and Equipment Construction in Progress 767,681 - 7,766,427 - 17,967 - 5,867,894 2,865 6,656,407 224,557 7,990,984 Less Accumulated Depreciation Net Capital Assets 2,014,156 4,944,884 2,133,887 58,997 9,151,924 (5,490,622) 3,661,302 Total Assets 10,317,709 7,990,984 788,495 337 103,439 891,934 7,252,000 7,389,000 14,641,337 Long-Term Liabilities Compensated Absences Post Employment Benefits Total Long-Term Liabilities Total Liabilities 814,120 4,838,906 5,653,026 6,544,960 14,641,337 Net Assets: Invested in Capital Assets, Net of Related Debt Unrestricted Total Net Assets 3,661,302 111,447 3,772,749 (6,650,353) (6,650,353) LIABILITIES AND FUND EQUITY Current Liabilities: Accounts Payable Other Accrued Expenses: Incurred-Not Reported Incurred and Pending Current Portion of Compensated Absences Total Current Liabilities $ 105 - $ EXHIBIT C-9 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance Total $ 6,401,587 293,588 - $ 25,119,792 119,577 1,140,182 $ 40,055,487 413,165 1,140,182 - - 17,967 79,757 6,774,932 1,673 26,381,224 5,867,894 308,852 47,803,547 - - 6,774,932 26,381,224 51,464,849 68,341 693,587 1,550,760 11,469,618 11,537,959 3,313,773 4,007,360 10,565,773 18,858,618 103,439 31,078,590 11,537,959 4,007,360 814,120 4,838,906 5,653,026 36,731,616 22,373,864 $ 22,373,864 3,661,302 11,071,931 $ 14,733,233 $ (4,763,027) (4,763,027) 2,014,156 4,944,884 2,133,887 58,997 9,151,924 (5,490,622) 3,661,302 106 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, 2011 Warehouse, Maintenance and Services Property and Public Liability Self Insurance $ $ Operating Revenues: Charges For Services: Material and Supply Printing and Graphics Fleet Support Services 937,263 - 895,204 - 16,169,817 - Self-Insurance Contributions: Employee - - City - 4,301,000 State Retirement System Other Total Operating Revenues - - - - 18,002,284 4,301,000 1,098,633 - 1,087,514 17,081,337 - - 989,533 Operating Expenses: Material and Supply Printing and Graphics Fleet Support Services Administrative Costs Claims Incurred - 531,174 Premiums to Insurance Carriers - 1,131,359 Total Operating Expenses 19,267,484 2,652,066 Operating Income (Loss) Before Depreciation (1,265,200) 1,648,934 (386,538) - (1,651,738) 1,648,934 (4) 9,615 - (4) 9,615 (1,651,742) 1,658,549 (31,200) - (1,682,942) 1,658,549 5,455,691 (8,308,902) Depreciation Operating Income (Loss) Nonoperating Revenues (Expense): Investment Income Loss on Disposal of Capital Assets Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Transfers and Capital Contributions Transfers Out Change in Net Assets Total Net Assets - Beginning Total Net Assets - Ending $ 107 3,772,749 $ (6,650,353) EXHIBIT C-10 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance $ $ - $ 937,263 - - 895,204 - - 16,169,817 - 12,320,770 12,320,770 397,362 44,021,081 48,719,443 - 3,289,700 3,289,700 - 66,009 66,009 397,362 59,697,560 82,398,206 - - 1,098,633 - - 1,087,514 17,081,337 923,772 4,808,575 6,721,880 5,945,198 48,282,200 54,758,572 549,580 334,298 2,015,237 7,418,550 53,425,073 82,763,173 (7,021,188) 6,272,487 (364,967) - (386,538) 6,272,487 (751,505) 9,511 - 19,984 - 39,110 (4) 9,511 19,984 39,106 (7,021,188) (7,011,677) 6,292,471 (712,399) - (31,200) (7,011,677) 6,292,471 (743,599) 2,248,650 16,081,393 - $ - Total (4,763,027) $ 22,373,864 15,476,832 $ 14,733,233 108 CITY OF MESA, ARIZONA EXHIBIT C-11 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 18,005,771 (12,580,862) (5,433,796) (8,887) Cash Flows From Noncapital Financing Activities: Operating Transfers-Out From Other Funds (31,200) Net Cash Provided By Noncapital Financing Activities (31,200) Cash Flows From Capital and Related Financing Activities: Acquisition and Construction of Capital Assets (65,334) Net Cash Used For Capital and Related Financing Activities (65,334) Cash Flows From Investing Activities: Interest Received on Investments - Net Cash Provided By Investing Activities - Net Increase (Decrease) in Cash and Cash Equivalents (105,421) Pooled Cash and Investments at Beginning of Year 873,102 $ Pooled Cash and Investments at End of Year 767,681 Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities: Operating Income (Loss) $ (1,651,738) Adjustments to Reconcile Operating Income (Loss) to Net Cash Used Provided By Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventory (Increase) Decrease in Prepaid Costs Increase (Decrease) in Accounts Payable Increase (Decrease) in Other Accrued Expenses 3,487 96,470 (1,090) (208,104) 1,365,550 Total Adjustments 1,642,851 386,538 Net Cash Provided By (Used For) Operating Activities $ (8,887) Noncash Transactions Affecting Financial Position: Loss on Disposal of Capital Assets (4) 109 EXHIBIT C-11 (Continued) Property and Public Liability Self Insurance $ 4,301,000 (4,628,397) (848,975) Workers' Compensation Self Insurance $ (1,176,372) 143,720 (3,377,008) (365,271) Employee Benefits Self Insurance $ 59,651,632 (52,086,460) (1,546,168) Total $ (3,598,559) 6,019,004 1,235,186 - - - (31,200) - - - (31,200) - - - (65,334) - - - (65,334) 9,615 9,511 40,644 59,770 9,615 9,511 40,644 59,770 (1,166,757) (3,589,048) 6,059,648 1,198,422 8,933,184 9,990,635 19,060,144 38,857,065 $ 7,766,427 $ 6,401,587 $ 25,119,792 $ $ 1,648,934 $ (7,021,188) $ 6,272,487 $ - $ 82,102,123 (72,672,727) (8,194,210) - - 40,055,487 (751,505) 386,538 169,748 (54) (2,995,000) (253,642) (79,757) 7,436 3,748,592 (45,928) (1,372) 211,335 (417,518) (296,083) 96,470 87,529 10,613 1,701,624 (2,825,306) 3,422,629 (253,483) 1,986,691 (1,176,372) $ (3,598,559) $ 6,019,004 $ 1,235,186 (4) 110 CITY OF MESA, ARIZONA EXHIBIT C-12 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Balance July 1, 2010 PAYROLL AGENCY FUND Assets: Pooled Cash and Investments Due From Other Funds Additions Balance June 30, 2011 Deductions $ 10,158,717 - $ 538,938,295 11,178,218 $ 537,597,151 11,178,218 $ 11,499,861 - Total Assets $ 10,158,717 $ 550,116,513 $ 548,775,369 $ 11,499,861 Liabilities: Accrued Payroll Payable $ 10,158,717 $ 335,502,212 $ 334,161,068 $ 11,499,861 Total Liabilities $ 10,158,717 $ 335,502,212 $ 334,161,068 $ 11,499,861 111 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, 2011 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 1,621,000 959,000 4,239,000 1,156,000 15,192,000 1,085,000 1,414,000 1,450,000 1,904,000 2,809,000 8,353,000 934,000 5,756,753 2,287,000 834,000 Final Budget $ 1,618,093 1,193,834 4,397,998 1,156,000 15,156,338 1,122,566 1,537,900 1,445,627 2,242,075 2,772,776 8,274,960 1,057,211 5,643,944 2,281,541 834,000 Actual Amounts Budget Basis Variance With Final Budget Positive (Negative) $ $ 1,563,603 1,193,834 4,397,998 890,551 12,487,917 1,001,476 1,537,900 1,075,848 2,242,075 2,036,306 7,291,406 1,057,211 5,450,064 2,135,748 772,884 54,490 265,449 2,668,421 121,090 369,779 736,470 983,554 193,880 145,793 61,116 49,993,753 50,734,863 45,134,821 5,600,042 3,191,312 2,231,978 3,078,944 2,231,978 2,251,340 2,231,939 827,604 39 44,570,463 45,423,941 40,651,542 4,772,399 Public Safety: Law Enforcement Fire Prevention Building Safety Code Compliance Environmental Management 167,870,000 78,213,000 3,872,000 951,000 6,284,508 166,998,007 75,874,193 3,856,356 948,093 6,248,509 159,448,014 66,095,663 3,373,798 679,249 1,912,069 7,549,993 9,778,530 482,558 268,844 4,336,440 Total Public Safety 257,190,508 253,925,158 231,508,793 22,416,365 16,990,222 15,547,781 15,846,446 15,547,781 8,261,310 14,811,772 7,585,136 736,009 222,530,931 $ 208,435,711 Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures $ 224,652,505 112 $ $ 14,095,220 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, 2011 Original Budget Cultural-Recreational: Parks and Recreation Cultural Aquatics Library Community Aid Museum of Natural History Museum for Youth Neighborhood & Human Services $ Total Cultural-Recreational 20,347,000 11,138,984 8,551,000 9,090,356 2,757,000 2,106,000 1,531,000 2,953,000 Final Budget $ 20,291,322 11,097,864 8,551,000 9,045,963 3,015,557 2,098,355 1,519,362 2,938,442 Actual Amounts Budget Basis Variance With Final Budget Positive (Negative) $ $ 18,912,045 10,260,669 8,393,872 8,657,881 3,015,557 1,869,608 1,347,989 2,740,135 1,379,277 837,195 157,128 388,082 228,747 171,373 198,307 58,474,340 58,557,865 55,197,756 3,360,109 9,222,056 5,627,772 9,047,024 5,627,772 7,023,181 5,964,050 2,023,843 (336,278) Total Current Expenditures 43,624,512 43,883,069 42,210,525 1,672,544 Community Environment: Community Development Streets Storm Sewer Mass Transit Miscellaneous Services 13,966,000 2,909,404 5,627,348 347,862 735,000 13,966,000 2,909,404 5,627,348 590,853 2,722,376 8,856,588 2,872,421 5,326,510 590,853 2,722,376 5,109,412 36,983 300,838 - Total Community Environment 23,585,614 25,815,981 20,368,748 5,447,233 891,101 7,917,688 1,134,092 7,917,688 1,118,297 7,600,769 15,795 316,919 Total Current Expenditures 14,776,825 16,764,201 11,649,682 5,114,519 Contingencies 45,455,000 44,920,286 - 44,920,286 433,954,153 $ 352,210,118 Less: Capital Outlay Expenditures Debt Service Expenditures Less: Capital Outlay Expenditures Debt Service Expenditures Total General Fund Expenditures $ 434,699,215 113 $ $ 81,744,035 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, 2011 Final Budget Actual Amounts Budget Basis Variance With Final Budget Positive (Negative) 38,831,757 177,652 38,532,372 177,652 37,795,975 323,056 736,397 (145,404) Total Community Environment 39,009,409 38,710,024 38,119,031 590,993 Less: Capital Outlay Expenditures Debt Service Expenditures 407,512 12,399,741 108,127 12,399,741 9,995 12,399,242 98,132 499 Total Current Expenditures 26,202,156 26,202,156 25,709,794 492,362 - 299,385 - 299,385 $ 39,009,409 $ 39,009,409 $ 38,119,031 Original Budget Community Environment: Streets Storm Sewer Contingencies Total Highway User Revenue Fund Expenditures 114 $ 890,378 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, 2011 Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) Original Budget Final Budget $ 12,750,169 1,500,000 2,000 $ 12,750,169 1,500,000 2,000 Total Revenues 14,252,169 14,252,169 2,084,359 (12,167,810) Expenditures: Current: Community Environment Capital Outlay 8,435,653 13,791,485 8,435,653 13,791,485 7,538,111 1,609,394 897,542 12,182,091 Total Expenditures 22,227,138 22,227,138 9,147,505 13,079,633 Deficiency of Revenues Under Expenditures (7,974,969) (7,974,969) (7,063,146) 911,823 7,975,000 7,975,000 7,075,000 (900,000) 31 31 11,854 11,823 349 349 13,007 12,658 LOCAL TRANSPORTATION ASSISTANCE FUND Revenues: Intergovernmental Charges For Services Miscellaneous Other Financing Sources: Transfers In Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 380 115 $ 380 $ $ 870,381 1,030,607 183,371 24,861 $ $ (11,879,788) (469,393) 181,371 24,481 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, 2011 Original Budget Final Budget Actual Amounts Budgetary Basis $ 14,213,000 1,000 47,000 $ 14,213,000 1,000 47,000 $ 12,016,967 12 2,175 29,590 Total Revenues 14,261,000 14,261,000 12,048,744 (2,212,256) Expenditures: Current: Community Environment 14,260,000 14,260,000 11,641,820 2,618,180 Total Expenditures 14,260,000 14,260,000 11,641,820 2,618,180 1,000 1,000 406,924 405,924 - - 100,000 100,000 1,000 1,000 506,924 505,924 458,560 458,560 1,610,789 1,152,229 MESA HOUSING AUTHORITY FUND Revenues: Intergovernmental Charges For Services Investment Income Miscellaneous Excess of Revenues Over Expenditures Other Financing Sources: Transfers In Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 459,560 116 $ 459,560 $ 2,117,713 Variance With Final Budget Positive (Negative) $ $ (2,196,033) 12 1,175 (17,410) 1,658,153 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, 2011 Original Budget CEMETERY FUND Revenues: Charges For Services Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 1,139,000 4,000 - $ 1,139,000 4,000 - $ 1,209,887 8,183 1,115 Variance With Final Budget Positive (Negative) $ 70,887 4,183 1,115 Total Revenues 1,143,000 1,143,000 1,219,185 76,185 Expenditures: Current: Community Environment Capital Outlay 1,202,456 522,544 1,202,456 522,544 1,037,831 156,668 164,625 365,876 Total Expenditures 1,725,000 1,725,000 1,194,499 530,501 24,686 606,686 6,725,713 22,293 Net Change in Fund Balance (582,000) Fund Balance - Beginning Fund Balance - Ending (582,000) 6,703,420 $ 6,121,420 117 6,703,420 $ 6,121,420 $ 6,750,399 $ 628,979 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, 2011 Original Budget DEVELOPMENT IMPACT FEES FUND Revenues: Licenses & Permits Investment Income $ Total Revenues Actual Amounts Budgetary Basis Final Budget 2,782,000 6,000 $ 2,782,000 6,000 $ 3,286,325 8,490 Variance With Final Budget Positive (Negative) $ 504,325 2,490 2,788,000 2,788,000 3,294,815 506,815 7,426,016 7,430,780 2,965,614 4,465,166 674,544 1,979,100 674,544 2,719,100 674,568 2,383,100 10,079,660 10,824,424 6,023,282 4,801,142 Net Change in Fund Balance (7,291,660) (8,036,424) (2,728,467) 5,307,957 Fund Balance - Beginning 8,388,800 8,388,800 8,333,129 Expenditures: Capital Outlay Debt Service: Principal Retirement Interest on Bonds Total Expenditures Fund Balance - Ending $ 1,097,140 118 $ 352,376 $ 5,604,662 (24) 336,000 (55,671) $ 5,252,286 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, 2011 Original Budget MESA ARTS CENTER RESTORATION FUND Revenues: Charges For Services Investment Income $ 261,000 1,000 Actual Amounts Budgetary Basis Final Budget $ 261,000 1,000 $ 264,250 1,159 Variance With Final Budget Positive (Negative) $ 3,250 159 Total Revenues 262,000 262,000 265,409 3,409 Expenditures: Capital Outlay 250,000 250,000 125,048 124,952 Total Expenditures 250,000 250,000 125,048 124,952 12,000 12,000 140,361 128,361 1,035,301 1,035,301 1,006,962 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 1,047,301 119 $ 1,047,301 $ 1,147,323 (28,339) $ 100,022 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, 2011 Original Budget ENVIRONMENTAL COMPLIANCE FUND Revenues: Charges For Services Investment Income $ 5,784,000 1,000 Actual Amounts Budgetary Basis Final Budget $ 5,784,000 1,000 $ 5,781,739 1,330 Variance With Final Budget Positive (Negative) $ (2,261) 330 Total Revenues 5,785,000 5,785,000 5,783,069 (1,931) Expenditures: Current: Public Safety Capital Outlay 5,917,383 709,109 5,917,383 709,109 5,985,101 367,991 (67,718) 341,118 Total Expenditures 6,626,492 6,626,492 6,353,092 273,400 Net Change in Fund Balance (841,492) Fund Balance - Beginning Fund Balance - Ending (841,492) 1,112,401 $ 270,909 120 1,112,401 $ 270,909 $ (570,023) 271,469 918,867 (193,534) 348,844 $ 77,935 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, 2011 STREET SALES TAX FUND Revenues: Sales Taxes Intergovernmental Investment Income Miscellaneous Total Revenues Original Budget Final Budget Actual Amounts Budgetary Basis $ 21,347,000 6,707,000 90,000 1,721,000 29,865,000 $ 21,347,000 6,707,000 90,000 1,721,000 29,865,000 $ 20,792,000 9,876,124 110,829 30,778,953 17,601,173 13,642,501 16,293,000 17,601,173 13,598,474 16,337,027 10,903,054 11,123,191 - 6,698,119 2,475,283 16,337,027 47,536,674 47,536,674 1,575,694 23,601,939 (1,575,694) 23,934,735 (17,671,674) (17,671,674) 7,177,014 24,848,688 (125,000) (125,000) (17,796,674) (17,796,674) Expenditures: Current: Community Environment Capital Outlay Contingencies Debt Service: Interest/Service Charges on Notes Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources: Transfers In Transfers Out Net Change in Fund Balance Fund Balance - Beginning, As Restated Fund Balance - Ending $ 17,797,631 957 $ 17,797,631 957 Budget Basis Actual amount (budgetary basis) "Net Change in Fund Balance" from the budgetary comparison schedule 301,076 (125,000) 121 (555,000) 3,169,124 20,829 (1,721,000) 913,953 301,076 25,149,764 23,931,649 $ 31,284,739 6,134,018 $ 31,283,782 $ 7,353,090 32,104 (29,697) GAAP Basis "Net Change in Fund Balance "GAAP Basis as reported on the Statement of Revenues, Expenditures and Changes in Fund Balance-Non-Major Special Revenue Funds Exhibit C-4 $ 7,353,090 Basis Difference Unrealized Gain on Investment Sales Tax Accrual Variance With Final Budget Positive (Negative) $ 7,355,497 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, 2011 Original Budget Final Budget Actual Amounts Budgetary Basis $ 21,347,000 2,782,000 33,670,169 8,684,000 103,000 1,770,000 $ 21,347,000 2,782,000 33,670,169 8,684,000 103,000 1,770,000 $ 20,792,000 3,286,325 22,763,472 8,286,495 132,166 214,076 68,356,169 68,356,169 55,474,534 (12,881,635) 5,917,383 41,499,282 36,341,655 16,293,000 5,917,383 41,499,282 36,302,392 16,337,027 5,985,101 31,120,816 16,347,906 - (67,718) 10,378,466 19,954,486 16,337,027 674,544 1,979,100 674,544 2,719,100 674,568 3,958,794 (24) (1,239,694) Total Expenditures 102,704,964 103,449,728 58,087,185 45,362,543 Excess (Deficiency) of Revenues Over (Under) Expenditures (34,348,795) (35,093,559) (2,612,651) 32,480,908 7,975,000 (125,000) 7,975,000 (125,000) 7,476,076 (125,000) (26,498,795) (27,243,559) 4,738,425 31,981,984 35,496,462 35,496,462 42,540,116 7,043,654 8,252,903 $ 47,278,541 $ 39,025,638 RECAP Revenues: Sales Tax Licenses and Permits Intergovernmental Charges for Services Investment Income Miscellaneous Total Revenues Expenditures: Current: Public Safety Community Environment Capital Outlay Contingencies Debt Service: Principal Retirement Interest on Notes and Bonds Other Financing Sources: Transfers In Transfer Out Net Change in Fund Balances Fund Balances - Beginning, As Restated Fund Balances - Ending $ 8,997,667 122 $ Variance With Final Budget Positive (Negative) $ (555,000) 504,325 (10,906,697) (397,505) 29,166 (1,555,924) (498,924) - 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, 2011 Budget Basis Actual amount (budgetary basis) "Net Change in Fund Balances" from the budgetary comparison schedule $ Basis Difference Unrealized Gain on Investment Sales Tax Accrual 4,738,425 32,104 (29,697) GAAP Basis "Net Change in Fund Balances" GAAP Basis as reported on the Statement of Revenues, Expenditures and Changes in Fund Balance-Non-Major Special Revenue Funds Exhibit C-4 123 $ 4,740,832 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, 2011 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) LOCAL TRANSPORTATION ASSISTANCE FUND Community Environment: Mass Transit $ 22,227,138 $ 22,227,138 $ 9,147,505 $ 13,079,633 Total Community Environment 22,227,138 22,227,138 9,147,505 13,079,633 Less: Capital Outlay Expenditures 13,791,485 13,791,485 1,609,394 12,182,091 8,435,653 8,435,653 7,538,111 897,542 Total Current Expenditures Total Local Transportation Assistance Fund Expenditures $ 22,227,138 $ 22,227,138 $ 9,147,505 $ 13,079,633 $ 14,260,000 $ 14,260,000 $ 11,641,820 $ 2,618,180 MESA HOUSING AUTHORITY Community Environment Mesa Housing Authority Total Community Environment 14,260,000 14,260,000 11,641,820 2,618,180 Total Current Expenditures 14,260,000 14,260,000 11,641,820 2,618,180 Total Mesa Housing Authority Fund Expenditures $ 14,260,000 $ 14,260,000 $ 11,641,820 $ 2,618,180 $ 1,725,000 $ 1,725,000 $ 1,194,499 $ 530,501 CEMETERY FUND Community Environment: Cemetery Less: Capital Outlay Expenditures Total Current Expenditures Total Cemetery Fund Expenditures $ 522,544 522,544 156,668 365,876 1,202,456 1,202,456 1,037,831 164,625 1,725,000 124 $ 1,725,000 $ 1,194,499 $ 530,501 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, 2011 Original Budget DEVELOPMENT IMPACT FEES FUND General Government: Capital Outlay: General Government Facilities Total General Government Public Safety: Debt Service: Law Enforcement Fire Prevention $ 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 Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) 7,188,000 7,188,000 2,856,339 4,331,661 7,188,000 7,188,000 2,856,339 4,331,661 457,000 301,000 $ 765,000 518,000 $ 765,000 518,000 $ $ - 758,000 1,283,000 1,283,000 - 225,000 13,016 225,000 17,780 91,495 17,780 133,505 - 885,644 778,000 885,644 778,000 885,668 442,000 (24) 336,000 1,901,660 1,906,424 1,436,943 469,481 232,000 447,000 447,000 - 232,000 447,000 447,000 - $ 10,079,660 $ 10,824,424 $ 6,023,282 $ 4,801,142 $ 250,000 $ 250,000 $ 125,048 $ 124,952 MESA ARTS CENTER RESTORATION FUND Cultural-Recreational: Capital Outlay: Cultural Total Cultural-Recreational 250,000 250,000 125,048 124,952 Total Mesa Arts Center Restoration Fund Expenditures $ 250,000 125 $ 250,000 $ 125,048 $ 124,952 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, 2011 Original Budget Variance With Final Budget Positive (Negative) Actual Amounts Budgetary Basis Final Budget ENVIRONMENTAL COMPLIANCE FUND Public Safety: Environmental Management $ Total Environmental Management Less: Capital Outlay Expenditures Total Current Expenditures 6,626,492 $ 6,626,492 $ 6,353,092 $ 273,400 6,626,492 6,626,492 6,353,092 273,400 709,109 709,109 367,991 341,118 5,917,383 5,917,383 5,985,101 (67,718) Total Environmental Compliance Fund Expenditures $ 6,626,492 $ 6,626,492 $ 6,353,092 $ 273,400 $ 31,243,674 $ 31,199,647 $ 23,601,939 $ 7,597,708 STREET SALES TAX FUND Community Environment: Streets Total Community Environment 31,243,674 31,199,647 23,601,939 Less: Capital Outlay Expenditures 13,642,501 13,598,474 11,123,191 2,475,283 - - 1,575,694 (1,575,694) 17,601,173 17,601,173 10,903,054 6,698,119 16,293,000 16,337,027 - 16,337,027 Less: Debt Service Expenditures Total Current Expenditures Contingencies Street Sales Tax Fund Expenditures 7,597,708 $ 47,536,674 $ 47,536,674 $ 23,601,939 $ 23,934,735 $ 7,188,000 $ 7,188,000 $ 2,856,339 $ 4,331,661 RECAP General Government Public Safety Cultural-Recreational 7,384,492 7,909,492 7,636,092 273,400 2,151,660 2,156,424 1,561,991 594,433 Community Environment 69,687,812 69,858,785 46,023,763 23,835,022 Contingencies 16,293,000 16,337,027 - 16,337,027 $ 102,704,964 $ 103,449,728 Total Nonmajor Special Revenue Funds Expenditures 126 $ 58,078,185 $ 45,371,543 CITY OF MESA, ARIZONA EXHIBIT D-5 NON-MAJOR DEBT SERVICE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Original Budget GENERAL OBLIGATION BOND REDEMPTION FUND Revenues: Fines and Forfeitures $ Actual Amounts Budgetary Basis Final Budget 746,000 $ 746,000 $ 880,189 Variance With Final Budget Positive (Negative) $ 134,189 Total Revenues 746,000 746,000 880,189 134,189 Expenditures: Debt Service: Principal Retirement Service Charges 746,000 - 746,000 298 746,000 298 ‐ - Total Expenditures 746,000 746,298 746,298 - 133,891 134,189 Net Change in Fund Balance - Fund Balance - Beginning Fund Balance - Ending (298) 912 $ 912 127 912 $ 614 382 $ 134,273 (530) $ 133,659 CITY OF MESA, ARIZONA EXHIBIT D-6 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, 2011 Original Budget CAPITAL PROJECTS FUNDS Revenues: Intergovernmental Investment Income Miscellaneous $ Final Budget Variance With Final Budget Positive (Negative) Actual 4,413,000 $ 120,000 4,413,000 $ 120,000 5,777,960 5,746 799,634 1,364,960 5,746 679,634 4,533,000 4,533,000 6,583,340 2,050,340 176,695,165 - 175,294,217 1,400,948 79,427,462 - 95,866,755 1,400,948 176,695,165 176,695,165 79,427,462 97,267,703 (172,162,165) (172,162,165) (72,844,122) 99,318,043 Other Financing Sources: Face Amount of Bonds Issued Premium on Issuance of Bonds Transfers In Transfers Out 111,716,007 6,035,000 - 111,716,007 6,035,000 - 83,270,000 1,211,802 5,866,700 (293) (28,446,007) 1,211,802 (168,300) (293) Net Change in Fund Balances (54,411,158) (54,411,158) 17,504,087 71,915,245 63,468,510 63,468,510 85,359,034 21,890,524 Total Revenues Expenditures: Capital Outlay Contingencies $ Total Expenditures Deficiency of Revenues Under Expenditures Fund Balances-Beginning,as Restated Fund Balances-Ending $ 9,057,352 $ 9,057,352 Budget Basis Actual amounts (budgetary basis) "Net Change in Fund Balances" from the budgetary comparison schedule $ 102,863,121 $ 17,504,087 Perspective Differences: Proprietary Capital Project Funds (8,199,883) Entity Differences: Non-Budgeted Capital Leases (3,701) 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-8 128 $ 9,300,503 $ 93,805,769 CITY OF MESA, ARIZONA EXHIBIT D-7 ENTERPRISE FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Original Budget Revenues: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Less: Bad Debt Expense $ Total Revenues Actual Amounts Budgetary Basis Final Budget 34,988,000 44,655,000 108,441,000 65,376,000 46,043,000 7,525,000 2,301,000 2,200,000 6,409,000 944,000 (1,100,000) $ 34,988,000 44,655,000 108,441,000 65,376,000 46,043,000 7,525,000 2,301,000 2,200,000 6,409,000 944,000 (1,100,000) $ 33,567,888 41,748,322 106,039,319 62,038,897 47,996,809 3,834,075 2,301,416 2,825,693 6,261,316 51,614 945,434 (1,151,801) Variance With Final Budget Positive (Negative) $ (1,420,112) (2,906,678) (2,401,681) (3,337,103) 1,953,809 (3,690,925) 416 625,693 (147,684) 51,614 1,434 (51,801) 317,782,000 317,782,000 306,458,982 (11,323,018) 26,190,000 36,015,000 65,626,000 54,211,000 28,540,000 10,512,000 2,787,000 5,559,000 7,874,000 757,000 50,464,000 26,168,330 35,976,767 65,558,292 54,155,138 28,495,699 10,507,274 2,787,000 5,559,000 8,431,868 219,385 757,000 49,919,247 23,818,916 32,407,523 60,121,013 50,988,445 27,819,761 3,825,353 2,497,529 3,566,825 8,431,868 219,385 548,405 - 2,349,414 3,569,244 5,437,279 3,166,693 675,938 6,681,921 289,471 1,992,175 208,595 49,919,247 288,535,000 288,535,000 214,245,023 74,289,977 Income Before Transfers 29,247,000 29,247,000 92,213,959 62,966,959 Other Operating Uses: Transfers Out 83,615,000 83,615,000 83,615,000 - Change in Net Assets (54,368,000) (54,368,000) 8,598,959 62,966,959 Unappropriated Net Assets - Beginning 56,417,742 56,417,742 51,732,839 (4,684,903) Increase in Restricted Net Assets (2,049,742) (2,049,742) Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Contingencies Total Expenses Unappropriated Net Assets - Ending $ - 129 $ - (136,532) $ 60,195,266 1,913,210 $ 60,195,266 CITY OF MESA, ARIZONA EXHIBIT D-8 ENTERPRISE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-7 $ Basis Differences: Compensated Absences Post Employment Benefits Capitalized Interest Contractual Commitments Utility Revenue Accrual Increase of Fair Market Value of Investments Revenues in Capital Project Funds 8,598,959 349,511 (12,160,364) 5,675,166 1,116 66,859 199,469 221,536 Perspective Differences: Contributions of Capital Assets 3,793,766 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 (4,799,301) 5,249,048 (45,215,543) (12,295,349) (378,483) 18,918,026 2,166,452 (2,053,655) GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 130 (31,662,787) CITY OF MESA, ARIZONA EXHIBIT D-9 INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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 $ 1,129,922 1,403,881 16,257,562 $ 1,129,922 1,403,881 16,257,562 $ 937,263 895,204 16,169,817 $ (192,659) (508,677) (87,745) Total Revenues 18,791,365 18,791,365 18,002,284 (789,081) Expenses: Materials and Supply Printing and Graphics Fleet Support Services Contingencies 1,149,922 1,412,128 16,328,562 - 1,144,829 1,409,941 16,309,998 25,844 995,556 899,356 16,076,237 - 149,273 510,585 233,761 25,844 Total Expenses 18,890,612 18,890,612 17,971,149 919,463 31,135 130,382 Loss Before Transfers Transfers In Transfers Out Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending $ (99,247) (99,247) 99,000 99,000 - - - (99,000) (31,200) (31,200) (247) (247) (65) 182 802 802 83 (719) 555 131 $ 555 $ 18 $ (537) CITY OF MESA, ARIZONA EXHIBIT D-9 (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, 2011 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) PROPERTY AND PUBLIC LIABILITY FUND Revenues: Investment Income Contributions Miscellaneous $ 6,000 4,301,000 53,000 $ 6,000 4,301,000 53,000 $ 9,615 4,301,000 13,954 $ 3,615 (39,046) Total Revenues 4,360,000 4,360,000 4,324,569 (35,431) Expenses: Administrative and Other Fees Claims Incurred 1,937,978 2,387,022 1,937,978 2,387,022 2,120,892 3,540,129 (182,914) (1,153,107) Total Expenses 4,325,000 4,325,000 5,661,021 (1,336,021) 35,000 35,000 (1,336,452) (1,371,452) 9,220,020 9,220,020 9,327,099 9,255,020 $ 7,990,647 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending $ 9,255,020 132 $ 107,079 $ (1,264,373) CITY OF MESA, ARIZONA EXHIBIT D-9 (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, 2011 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) WORKERS' COMPENSATION FUND Revenues: Investment Income Contributions Miscellaneous $ Total Revenues 7,000 400,000 139,000 $ 7,000 400,000 139,000 $ 9,511 397,362 931,223 $ 2,511 (2,638) 792,223 546,000 546,000 1,338,096 792,096 Expenses: Administrative and Other Fees Claims Incurred 1,274,821 2,427,179 1,274,821 2,427,179 1,473,352 3,127,828 (198,531) (700,649) Total Expenses 3,702,000 3,702,000 4,601,180 (899,180) (3,156,000) (3,156,000) (3,263,084) (107,084) 9,982,511 9,982,511 9,969,676 (12,835) 6,826,511 $ 6,706,592 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending $ 6,826,511 133 $ $ (119,919) CITY OF MESA, ARIZONA EXHIBIT D-9 (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, 2011 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) EMPLOYEE BENEFITS FUND Revenues: Investment Income Contributions Miscellaneous $ 54,000 57,093,000 843,000 $ 54,000 57,093,000 843,000 $ 21,234 59,631,551 2,797,492 $ (32,766) 2,538,551 1,954,492 Total Revenues 57,990,000 57,990,000 62,450,277 4,460,277 Expenses: Administrative and Other Fees Claims Incurred 5,038,417 57,403,583 5,038,417 57,403,583 5,142,872 51,431,201 104,455 (5,972,382) Total Expenses 62,442,000 62,442,000 56,574,073 (5,867,927) Change in Net Assets (4,452,000) (4,452,000) 5,876,204 10,328,204 Unappropriated Net Assets - Beginning 19,814,581 19,814,581 19,811,435 $ 15,362,581 $ 15,362,581 $ 25,687,639 Unappropriated Net Assets - Ending 134 (3,146) $ 10,325,058 CITY OF MESA, ARIZONA EXHIBIT D-9 (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, 2011 Original Budget Final Budget Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) $ 18,791,365 67,000 61,794,000 1,035,000 $ 18,791,365 67,000 61,794,000 1,035,000 $ 18,002,284 40,361 64,329,913 3,742,669 Total Revenues 81,687,365 81,687,365 86,115,227 4,427,862 Expenses: Materials and Supply Printing and Graphics Fleet Support Administrative and Other Fees Claims Incurred Contingencies 1,149,922 1,412,128 16,328,562 8,251,216 62,217,784 - 1,144,829 1,409,941 16,309,998 8,251,216 62,217,784 25,844 995,556 899,356 16,076,237 8,737,117 58,099,158 - 149,273 510,585 233,761 (485,901) 4,118,626 25,844 Total Expenses 89,359,612 89,359,612 84,807,424 4,552,188 Income (Loss) Before Transfers (7,672,247) (7,672,247) 1,307,803 8,980,050 RECAP Revenues: Charges for Services Investment Income Contributions Miscellaneous Transfer In Transfer (Out) 99,000 - 99,000 - $ (31,200) (789,081) (26,639) 2,535,913 2,707,669 (99,000) (31,200) Change in Net Assets (7,573,247) (7,573,247) 1,276,603 8,849,850 Unappropriated Net Assets - Beginning 39,017,914 39,017,914 39,108,293 90,379 $ 31,444,667 $ 31,444,667 $ 40,384,896 Unappropriated Net Assets - Ending 135 $ 8,940,229 CITY OF MESA, ARIZONA EXHIBIT D-10 INTERNAL SERVICE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-9 $ 1,276,603 Basis Differences: Compensated Absences Post Employment Benefits Decrease of Fair Market Value of Investments 37,150 (1,302,350) (1,250) Timing Differences: Capital Expenditures Non-Cash Loss on Disposal of Capital assests Depreciation - Amortization Inventory Decrease Increase in Contingent Liabilities 65,334 (4) (386,538) (96,470) (336,074) GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 136 (743,599) CITY OF MESA, ARIZONA EXHIBIT D-11 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE JUNE 30, 2011 Governmental Funds Capital Assets Land Buildings Other Improvements Machinery and Equipment Infrastructure Intangibles Construction in Progress Total Governmental Funds Capital Assets $ 265,803,456 298,598,618 210,490,145 137,932,274 819,889,033 176,578 89,483,382 $ 1,822,373,486 Investments in Governmental Funds Capital Assets Investments in Property Acquired Prior to July 1, 1978 Source Indeterminable Investments in Property Acquired After July 1, 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 M.D.C. Contributions from Other Gov't Contributions - Indeterminant Funding Total Total Investment in Governmental Funds Capital Assets This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets recorded in the internal services funds are exluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 137 $ 1,057,842 486,767,159 150,154,413 2,154,778 58,835,409 491,050,357 466,613,926 19,194,653 19,558,074 56,465,600 70,521,275 1,821,315,644 $ 1,822,373,486 Statistical Section 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. 138 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 150 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. 153 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. 161 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. 163 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 TEN 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 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 $ 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 1,418,909,974 $ 1,535,615,538 $ 1,619,743,990 $ Unrestricted Total Business-type Activities PRIMARY GOVERNMENT Invested in Capital Assets, Net of Related Debt Total Primary Government $ 138 1,646,439,397 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 2010-11 844,777,095 $ 872,302,182 84,386,395 95,107,036 86,252,122 92,532,141 86,954,514 39,295,786 85,734,791 128,548,213 125,128,033 91,363,394 3,651,537 (6,375,735) $ 935,996,016 $ 1,015,246,882 $ 1,006,100,558 $ 975,418,995 $ 935,383,146 $ 905,222,233 $ 390,100,160 $ 366,497,841 $ 410,073,719 $ 413,943,796 $ 434,813,786 $ 430,435,538 89,383,126 96,756,386 94,133,333 82,697,422 47,011,208 55,873,506 268,388,224 308,374,940 308,215,959 278,891,568 271,705,523 258,130,789 $ 747,871,510 $ 771,629,167 $ 812,423,011 $ 775,532,786 $ 753,530,517 $ 744,439,833 $ 1,155,974,990 $ 1,158,089,474 $ 1,204,794,122 $ 1,205,467,256 $ 1,279,590,881 $ 1,302,737,720 173,769,521 191,863,422 180,385,455 175,229,563 133,965,722 95,169,292 354,123,015 436,923,153 433,343,992 370,254,962 275,357,060 251,755,054 1,683,867,526 $ 1,786,876,049 $ 1,818,523,569 $ 1,750,951,781 $ 1,688,913,663 $ $ 139 1,649,662,066 CITY OF MESA, ARIZONA TABLE II (Concluded) CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS 2001-02 2002-03 2003-04 2004-05 GOVERNMENTAL ACTIVITIES: Sales Taxes $ 101,660,597 $ Property Taxes Occupancy Taxes Unrestricted State Shared Revenues 98,434,394 $ 105,096,378 $ 112,528,968 - - - - 1,256,894 1,224,044 1,320,706 1,856,955 89,144,692 89,146,593 85,469,452 90,867,567 Contributions Not Restricted to Specific Programs 5,031,780 5,363,401 8,202,920 10,725,969 Unrestricted Investment Income 4,594,757 2,499,434 1,202,348 1,905,411 - - Loss on Investment in Local Government Investment Pool - Miscellaneous Transfers Total Governmental Activities (4,442,638) 5,903,080 7,109,157 5,461,757 9,740,646 96,961,247 59,719,000 67,772,618 76,359,837 304,553,047 259,053,385 274,526,179 303,985,353 1,857,942 1,230,644 947,498 1,579,215 - - 925,291 84,910 BUSINESS-TYPE ACTIVITIES: Unrestricted Investment Income Loss on Investment in Local Government Investment Pool - Miscellaneous 277,039 Special Item - Gain on Sale of Land Transfers Total Business-type Activities Total Primary Government $ (1,733,725) 800,247 - - - (96,961,247) (59,719,000) (67,772,618) (76,359,837) 32,678,293 (94,826,266) (59,421,834) (65,899,829) (42,017,419) 209,726,781 $ 199,631,551 $ 208,626,350 $ 261,967,934 52,411,537 $ 30,025,396 $ 56,288,845 $ 13,715,741 86,680,168 27,839,627 12,979,666 84,128,472 $ 26,695,407 Change in Net Assets Governmental Activities Business-type Activities Total Primary Government (14,317,107) $ 38,094,430 $ 144 116,705,564 $ TABLE II (Concluded) 2005-06 $ 2006-07 128,372,155 $ 2007-08 155,817,051 $ 2008-09 147,762,866 $ 2009-10 126,519,701 $ 2010-11 121,556,751 $ 121,046,053 - - - - 14,318,257 14,243,721 2,189,830 2,389,528 2,394,765 1,807,601 1,580,533 2,148,216 103,848,818 113,048,782 122,560,731 117,542,894 104,580,393 92,612,858 12,205,647 14,037,707 14,745,722 14,740,889 14,757,171 15,610,470 5,430,860 7,824,612 6,282,425 1,895,561 260,939 617,419 - - - - - - 10,052,208 7,053,840 6,678,633 15,849,424 13,846,390 7,060,132 72,902,111 61,439,940 94,121,492 96,599,000 65,433,214 83,334,303 335,001,629 361,611,460 394,546,634 374,955,070 336,333,648 336,673,172 4,818,652 8,125,127 6,546,254 1,894,369 507,752 839,348 - - - - - - 553,806 428,962 693,962 407,356 - - - - - - - - (72,902,111) (61,439,940) (94,121,492) (96,599,000) (65,433,214) (83,334,303) (67,529,653) (52,885,851) (86,881,276) (94,297,275) (64,925,462) (82,494,955) $ 267,471,976 $ 308,725,609 $ 307,665,358 $ 280,657,795 $ 271,408,186 $ 254,178,217 $ 35,046,547 $ 79,250,866 $ (9,146,324) $ (30,681,563) $ (40,035,849) $ (36,805,757) 23,757,657 40,793,844 (36,890,225) (22,002,269) (32,316,397) 31,647,520 $ (67,571,788) $ (62,038,118) $ (69,122,154) 2,381,582 $ 37,428,129 $ 103,008,523 $ 145 CITY OF MESA, ARIZONA TABLE III FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2001-02 2002-03 2003-04 2004-05 GENERAL FUND Reserved (1)(2) $ Unreserved 69,785,175 $ 24,532,385 53,697,322 $ 11,253,612 30,195,115 $ 25,844,445 37,871,632 19,310,081 Nonspendable - - - - Restricted - - - - Committed - - - - Unassigned - - - - Total General Fund $ 94,317,560 $ 64,950,934 $ 56,039,560 $ 57,181,713 $ 20,241,119 $ 14,555,545 $ 8,542,839 $ 10,335,341 ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved, Reported in: Special Revenue Funds Capital Project Funds 12,119,328 9,211,016 20,215,242 23,498,926 8,559,611 23,676,985 13,773,686 15,681,069 Nonspendable - - - - Restricted - - - - Committed - - - - Unassigned - - - - Total All Other Governmental Funds $ 40,920,058 $ 47,443,546 $ 42,531,767 $ 49,515,336 (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. 146 TABLE III (Continued) 2005-06 $ 61,257,305 2006-07 $ 27,993,782 2007-08 77,177,037 $ 57,029,523 2008-09 84,886,350 $ 50,283,211 2009-10 51,862,378 $ 74,711,328 2010-11 40,748,236 $ 92,186,747 - - - - - - 404,506 - - - - - 1,991,911 - - - - - 4,897,687 - - - - - 93,874,956 $ 89,251,087 $ 134,206,560 $ 135,169,561 $ 126,573,706 $ 132,934,983 $ 101,169,060 $ 8,391,978 $ 5,885,100 $ 8,643,272 $ 17,012,682 $ 53,674,468 $ - $ 21,745,990 24,627,227 24,921,672 24,815,604 31,870,664 - 18,611,420 17,567,790 11,142,826 28,442,378 15,724,086 - - - - - - 2,905,610 - - - - - 112,537,801 - - - - - 19,165,631 - - - - - - 48,749,388 $ 48,080,117 $ 44,707,770 $ 147 70,270,664 $ 101,269,218 $ 134,609,042 CITY OF MESA, ARIZONA TABLE IV CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2001-02 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 $ 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 Total Expenditures Excess 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 Proceeds from Obligations of Capital Leases Proceeds From Refunding Issue Payment to Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Debt Service as a percentage of Noncapital Expenditures $ 5,702,529 Total Revenues Net Change in Fund Balances 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 $ (3,588,706) 6,204,205 105,096,378 1,320,706 57,567 19,819,170 149,036,481 11,152,669 8,536,253 885,188 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 5,268,925 9,562,131 292,227,854 295,027,870 301,173,337 319,517,708 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 38,364,301 182,224,448 54,761,753 56,953,311 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 7,692,222 15,369,204 61,994 62,392,135 405,500,218 431,479,453 404,903,953 417,819,368 (113,272,364) (136,451,583) (103,730,616) (98,301,660) 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 - 104,642,640 (28,065,640) 21,930,000 640,258 - 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) 6,746,097 26,420,341 (26,156,314) 89,907,483 106,157,382 113,297,318 $ 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 24,954 113,611,445 $ 10.93% (22,840,138) $ 10.51% (13,823,133) $ 6.59% (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. 148 7,855,722 6.51% TABLE IV (Continued) 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 $ $ 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 $ 2010-11 121,556,751 13,885,749 1,580,533 922,651 11,823,758 190,731,282 20,419,291 10,134,507 190,716 $ 121,046,053 14,273,796 2,148,216 1,069,363 12,577,426 174,781,231 20,303,514 11,820,028 586,799 9,632,863 6,365,625 6,421,576 14,754,573 13,675,435 7,416,679 372,972,750 414,721,174 414,366,277 384,975,695 384,920,673 366,023,105 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 38,843,180 215,165,541 42,191,344 68,462,936 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 31,689,926 21,211,173 9,546 29,100 60,172,590 448,405,671 475,269,020 528,466,841 526,866,165 507,480,119 477,775,336 (75,432,921) (60,547,846) (114,100,564) (141,890,470) (122,559,446) (111,752,231) 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 45,000,000 401,850 869,000 128,064,505 (44,418,305) 29,320,000 359,932 - 6,401,832 25,482,000 (27,474,833) 6,911,382 - 106,736,347 $ 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 31,303,426 6.86% 2,528,683 - 104,834,048 $ 44,286,202 6.68% - 111,691,218 $ (2,409,346) - 158,857,509 $ 16,967,039 10.01% 12.42% 149 - 159,919,277 $ 37,359,831 13.19% 113,326,132 $ 1,573,901 12.67% CITY OF MESA, ARIZONA TABLE V SALES TAX COLLECTIONS BY CATEGORY LAST TEN FISCAL YEARS 2001-02 Utilities $ 5,988,972 2002-03 $ 5,912,385 2003-04 $ 6,762,032 2004-05 $ 6,692,042 Communications 3,771,511 3,574,953 3,164,951 3,241,465 Publishing 1,594,079 1,530,906 1,470,008 1,564,309 418,108 384,241 378,322 367,306 Contracting 14,146,743 11,333,545 12,454,780 12,073,940 Retail Sales Printing & Advertising 54,461,048 54,110,533 58,588,455 64,266,464 Restaurants & Bars 7,029,557 7,176,167 7,749,295 8,483,650 Amusements 1,005,956 974,633 1,029,101 1,071,285 13,156,005 13,323,813 13,399,200 14,380,416 88,618 113,218 100,234 118,091 Rentals Miscellaneous Total $ 101,660,597 City Direct Tax Rate 1.50% $ 98,434,394 1.50% $ 105,096,378 1.50% $ 112,258,968 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 150 TABLE V (Continued) 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 2010-11 $ 11,103,931 2,839,438 3,939,497 4,312,054 3,748,960 3,808,798 4,455,855 1,792,345 1,963,330 1,922,909 1,402,465 1,102,145 999,010 453,958 477,939 374,839 280,350 175,207 342,381 14,580,722 21,424,371 19,300,601 15,263,241 10,913,417 8,387,647 74,420,542 85,014,600 77,307,911 63,230,186 63,468,754 60,265,881 9,417,798 11,725,779 12,038,983 10,956,021 10,948,158 11,164,824 1,210,343 1,456,808 1,348,973 1,362,931 1,176,440 1,433,369 15,786,032 20,533,854 21,369,386 20,514,008 20,122,775 22,218,976 331,557 164,582 119,432 107,051 84,330 674,180 128,372,155 1.50% $ 155,817,051 1.75% $ 147,762,866 1.75% $ 126,519,701 1.75% 151 $ 121,556,751 1.75% $ 121,046,053 1.75% CITY OF MESA, ARIZONA TABLE VI DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS City Direct Rate 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 1.50 1.50 1.50 1.50 1.50 1.75 1.75 1.75 1.75 1.75 Maricopa County % 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 State of Arizona % 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 6.60 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 152 CITY OF MESA, ARIZONA TABLE VII RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Obligation Bonds Year 2002 $ Municipal Development Corporation Bonds Highway User Revenue Bonds Special Assessment Bonds 72,700,000 $ Capital Leases Highway Project Advancement Notes 181,307,268 $ 11,925,000 $ 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 2011 281,513,949 - 128,515,000 5,806,000 2,165,596 45,000,000 (1) Information on personal income and population is presented on Table XII. 153 TABLE VII (Continued) Business-type Activities Utility System Revenue Bonds $ 353,875,000 General Obligation Bonds $ Municipal Development Corporation Bonds Notes Payable Capital Leases Total Primary Government Percentage of Personal Income (1) Per Capita (1) 23,072,732 $ 20,600,000 $ 1,355,468 $ 12,140,530 $ 698,038,606 8.34 % 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 2,843 898,800,000 2,221,051 - 2,731,125 - 1,366,752,721 13.06 3,101 154 $ 1,616 CITY OF MESA, ARIZONA TABLE VIII RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS General Bonded Debt Outstanding Secondary Assessed Value (1) Year 2002 Less: Amounts Available in Debt Service Fund Total 2,142,980,665 $ 204,380,000 $ - 204,380,000 9.54 % 2,272,244,234 201,545,000 - 201,545,000 8.87 463.76 2004 2,463,878,234 190,935,000 - 190,935,000 7.75 428.73 2005 2,648,163,284 202,060,000 - 202,060,000 7.63 447.81 2006 2,921,998,915 211,150,000 - 211,150,000 7.23 463.91 2007 3,083,070,290 226,405,000 - 226,405,000 7.34 492.02 2008 4,114,527,313 224,915,000 - 224,915,000 5.47 485.36 2009 4,793,081,793 259,895,000 - 259,895,000 5.42 558.59 2010 4,749,616,941 276,560,000 382 276,559,618 5.82 591.75 2011 4,094,036,999 283,735,000 134,273 283,600,727 6.93 643.56 (1) Maricopa County Finance Department Assessor's Office. (2) Population figures are found on Table XII. 155 $ Per Capita (2) 2003 Source: $ General Obligation Bonds Percentage Of Secondary Assessed Value $ 473.24 CITY OF MESA, ARIZONA TABLE IX DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (1) JUNE 30, 2011 Proportion Applicable Debt Governmental Unit Outstanding (2) to the City of Mesa Percent (3) Amount Debt repaid with property taxes Maricopa County Community College District $ 737,930,000 8.24 % $ 60,805,432 Mesa Unified School District No. 4 271,845,000 86.28 234,547,866 Gilbert Unified School District 188,720,000 25.23 47,614,056 Queen Creek Unified School District No. 95 45,735,000 26.90 12,302,715 Higley Elementary School District No. 60 67,645,000 2.32 1,569,364 Tempe Union High School District No. 213 85,410,000 0.27 230,607 139,120,000 0.60 834,720 197,835,000 8.24 16,301,604 Tempe Elementary School District No. 3 Other Debt: Maricopa County Subtotal, overlapping debt 374,206,364 City direct debt (4) 465,917,916 Total Direct and Overlapping Debt $ 840,124,280 (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 2010/11 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 156 CITY OF MESA, ARIZONA TABLE X LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2001-02 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 $ $ $ 428,596,133 $ 312,461,133 $ 352,794,973 33,424,693 454,448,977 $ 355,813,977 $ 389,238,670 $ 45,117,694 $ 492,775,647 $ 404,555,647 $ 449,673,341 $ 437,657,657 17.37% $ (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 valuation. (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. 157 529,632,657 91,975,000 17.90% $ 48,804,797 69.28% 88,220,000 $ 158,889,797 110,085,000 69.48% 21.70% $ 147,832,694 2004-05 102,715,000 98,635,000 27.10% $ $ 75.48% 116,135,000 Total Net Debt Applicable to the 20% Limit as a Percentage of the 20% Legal Debt Limitation Total Margin Available 40,333,840 136,334,693 2003-04 102,910,000 68.63% Total Net Debt Applicable to 20% Limit Margin Available for Future General Obligation Bond Issues for 20% Bonds $ 88,245,000 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 128,578,840 2002-03 486,462,454 TABLE X (Continued) Legal Debt Margin Calculation for Fiscal Year 2010-11 $ 4,094,036,999 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 $ 245,642,220 $ 175,319,935 2006-07 $ 115,400,000 $ 59,919,935 584,399,783 $ 488,649,783 $ 548,569,718 $ 616,614,058 $ 412,662,424 $ 299,815,678 (21,406,195) 5,325,517 278,409,483 240,316,703 575,193,275 229,184,023 822,905,463 $ 615,678,079 $ 844,862,103 $ 274,015,586 $ 958,616,359 $ 712,290,681 $ 158 986,306,267 780,714,621 284,977,016 2010-11 $ 278,912,694 949,923,388 $ 679,427,710 $ 958,340,404 240,316,703 2.17% $ 818,807,400 278,409,483 $ 28.48% $ 245,642,220 5,325,517 270,495,678 25.70% $ $ 2.13% 246,325,678 $ 540,397,917 6,064,322 4.72% 25.18% $ 287,584,908 $ 2009-10 13,569,322 207,227,384 33.08% $ $ 7.16% 203,951,634 16.38% $ 162,530,851 246,871,639 2008-09 17,687,616 12.14% 95,750,000 $ $ 22,453,366 65.82% $ 184,984,217 2007-08 818,807,400 6,064,322 (738,805) Total Margin Available 2005-06 20% Bonds (2) $ 540,397,917 34.00% $ 780,714,621 CITY OF MESA, ARIZONA TABLE XI PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Utility System Revenue Bonds Operating Revenues (1) 2001-02 $ 199,854,151 Net Revenue Available for Debt Service Operating Expenses $ 122,151,840 $ 77,702,311 Debt Service Principal $ 4,650,000 Interest $ Coverage Ratio 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 2008-09 274,497,036 197,991,577 76,505,459 9,815,000 37,224,639 1.63 2009-10 275,192,780 194,158,513 81,034,267 10,475,000 40,379,631 1.59 2010-11 283,920,988 190,441,138 93,479,850 12,585,000 42,813,585 1.69 Highway User Revenue Fund Revenue Bonds Highway User Fund Debt Service Revenues 2001-02 $ 30,129,033 Principal $ Coverage Interest - $ Ratio 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 2010-11 32,052,757 6,030,000 6,365,242 2.59 (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. 159 TABLE XI (Continued) Special Assessment Bonds Special Assessment Collections $ Debt Service Principal Interest 80,040 $ Highway Project Advancement Notes Excise Tax Revenues (2) Coverage Ratio $ Coverage Ratio 112,000 $ 16,695 0.62 - $ - $ - 0.00 75,365 84,000 10,535 0.80 - - - 0.00 60,844 85,000 5,455 0.67 - - - 0.00 5,807 12,000 2,535 0.40 - - - 0.00 188,475 12,000 184,771 0.96 - - - 0.00 850,926 343,000 357,384 1.21 - - - 0.00 1,709,830 751,840 457,396 1.41 - - - 0.00 1,202,384 752,000 417,040 1.03 - - - 0.00 922,651 744,000 376,920 0.82 202,519,144 - 449,167 450.88 1,088,465 744,000 337,040 1.01 188,734,056 - 1,575,694 119.78 Municipal Development Corporation Bonds Excise Tax Debt Service Revenues (2) $ Debt Service Principal Interest Principal 152,643,664 $ Coverage Interest 910,000 $ Ratio 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 - - - - - - - - 160 CITY OF MESA, ARIZONA TABLE XII DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Sources: (1) (2) (3) (4) (5) Population (1) 431,874 $ 434,585 445,354 451,223 455,151 460,155 463,397 465,272 467,355 440,677 Personal Income (2) 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 10,465,197,396 Per Capita Personal Income (3) 19,377 21,751 21,938 22,613 23,156 23,559 23,689 24,263 24,742 23,748 Median Age (3) Public School Enrollment (4) 32.8 31.0 32.3 32.5 32.6 32.9 33.1 33.3 33.6 32.6 72,707 73,211 73,428 74,070 74,626 74,128 73,054 70,297 67,749 66,144 Unemployment Rate (5) City of Mesa Development Services Estimate 2002-2004 Census Bureau (estimate), 2005-2010 Claritas (estimate) 2002-2004 Census Bureau, 2005-2010 Claritas Mesa Public Schools AZ Dept of Economic Security. Data is Phoenix - Mesa Metropolitan Area. For year 2011 unemployment rate is not seasonally adjusted. 161 4.7 % 4.4 4.2 3.6 3.8 2.9 4.3 8.0 8.7 9.0 CITY OF MESA, ARIZONA TABLE XIII PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2011 Employer Employees Rank 2002 Percentage of Total City Employment Employees Rank Percentage of Total City Employment Mesa Public Schools 9,500 1 4.65 % 9,300 1 5.01 % Banner Health Systems 8,650 2 4.24 5,800 2 3.12 Boeing 4,260 3 2.09 5,000 3 2.69 4 1.94 City of Mesa 3,442 4 1.69 3,600 Wal-Mart 2,503 5 1.23 - 0.00 Mesa Community College 2,201 6 1.08 - 0.00 The Kroger Company (Fry's) 1,276 7 0.63 - 0.00 826 8 0.40 - 0.00 The Home Depot Maricopa County Government 720 9 0.35 - 0.00 Mountain Vista Medical Center 627 10 0.31 - 0.00 Motorola Semiconductor Products - 0.00 3,100 5 1.67 TRW/Vehicle Safety Systems, Inc. - 0.00 3,000 6 1.62 AT&T - 0.00 2,400 7 1.29 General Motors Desert Proving Grounds - 0.00 1,400 8 0.75 Empire Southwest Machinery - 0.00 1,100 9 0.59 Excell Agent Services - 0.00 1,000 10 0.54 Phoenix Newspapers - 0.00 1,000 10 0.54 Total 34,005 16.66 % Source: City of Mesa Office of Economic Development Total City Employment comes from 2002 Census 162 36,700 19.76 % CITY OF MESA, ARIZONA TABLE XIV FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 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 Source: City of Mesa Budget and Research Division 163 TABLE XIV (Continued) 2006-07 2007-08 2008-09 2009-10 2010-11 857 875 793 783 781 1,332 1,306 1,282 1,240 1,163 468 472 470 455 457 122 91 46 52 43 426 398 318 315 317 183 181 189 184 189 44 47 48 32 29 81 85 92 91 87 113 97 134 159 160 64 69 79 73 70 132 136 126 124 120 10 9 10 10 9 19 19 17 14 17 3,851 3,785 3,601 3,529 3,442 164 CITY OF MESA, ARIZONA TABLE XV OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2001-02 2002-03 2003-04 Function/Program Police Major Crimes 32,956 29,379 27,933 Traffic Accidents 16,572 9,593 9,562 Fire Fires 1,459 1,451 1,332 37,928 37,339 39,489 False Alarms 2,067 2,073 1,999 Hazardous Conditions 1,199 557 653 206 7,229 7,439 199,563 184,647 200,461 Rescue or Emergency Other Calls Libraries Number of Registered Borrowers Total Attendance 1,187,052 1,202,947 1,183,794 Access to Electronic Resources 3,392,101 1,027,157 1,365,863 Electric Connections 15,911 15,797 17,945 Gas Connections 38,629 40,328 42,241 124,742 127,140 129,477 91.9 93.5 105.3 132.32 141.01 132.15 107,532 110,537 112,497 42.1 38.7 39.3 Customers Served 135,517 140,190 109,960 Refuse Collected (tons) 254,688 Water Connections Average Daily Consumption (mgd)* Peak Daily Consumption (mg)** Wastewater Connections Average Daily Sewage Treatment (mgd)* Solid Waste 244,999 245,286 Recyclables Collected (tons) 32,924 36,282 34,141 Green Waste Collected (tons) 13,713 15,373 16,384 Falcon Field Average Number of Aircraft Based Aircraft Operations (annual) 902 930 934 251,702 290,902 277,088 * mgd - millions of gallons per day ** mg - millions of gallons 165 TABLE XV (Continued) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 25,853 24,904 22,437 21,388 18,482 17,345 16,623 10,121 9,205 12,184 7,578 6,256 5,890 5,952 1,386 1,605 1,428 1,200 1,165 1,048 981 41,689 43,073 38,003 34,207 32,478 34,079 38,788 2,021 2,595 2,875 2,456 2,125 1,478 1,478 591 676 608 567 663 701 478 7,738 7,820 11,792 12,976 11,923 12,819 11,840 193,722 233,836 266,839 275,449 306,427 352,607 220,812 1,208,594 1,195,075 1,161,887 1,165,451 1,348,555 1,367,667 1,095,196 1,835,867 2,307,051 3,029,001 2,910,088 3,661,261 2,542,927 1,691,966 15,652 15,806 15,723 15,215 14,546 14,738 15,064 45,435 48,622 50,478 51,454 51,911 52,832 53,434 131,141 133,105 133,249 133,086 132,771 133,701 134,072 93.6 94.5 89.6 85.8 79.7 72.7 76.2 137.95 131.28 128.83 125.72 108.68 111.14 114.30 114,500 116,282 116,190 116,465 116,721 117,831 118,413 38.9 41.8 38.1 38.0 36.0 33.6 33.7 114,112 113,146 115,305 112,632 112,832 113,079 115,811 248,255 261,369 266,817 243,208 234,709 217,295 223,217 36,264 32,869 38,660 39,296 37,841 36,490 35,486 16,983 17,500 18,215 17,601 18,936 18,588 19,149 922 924 901 934 873 841 789 255,069 271,295 261,623 337,178 283,336 248,381 221,910 166 CITY OF MESA, ARIZONA TABLE XVI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2001-02 2002-03 2003-04 Function/Program Police Stations Stations 4 4 4 270 421 306 17 17 17 3 3 3 Developed Parks (acres) 1,158 1,202 1,198 Undeveloped Acres 1,947 1,932 1,228 13 13 13 7 6 6 1,094 1,132 1,152 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 12 252 271 290 929 954 998 1,809 1,924 1,978 97 97 97 1,356 1,454 1,496 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 167 TABLE XVI (Continued) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 4 4 4 4 4 4 4 321 285 351 368 330 289 290 17 17 17 17 17 18 18 3 3 3 3 3 3 4 1,149 1,184 1,184 1,180 1,180 1,154 1,154 1,230 1,251 1,251 1,251 1,251 1,078 1,074 12 12 12 12 12 12 13 6 6 6 6 6 6 6 1,160 1,162 1,169 1,178 1,182 1,184 1,190 12 12 12 12 12 12 12 296 298 303 308 316 321 329 1,037 1,121 1,147 1,202 1,223 1,243 1,247 2,004 2,022 2,008 2,068 2,104 2,127 2,136 97 117 117 117 125 125 125 1,512 1,522 1,544 1,577 1,598 1,606 1,613 56 56 60 60 60 60 60 69 78 68 70 69 69 69 2 2 2 2 2 2 2 168 Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov 9/11 TEN YEARS WE WILL NEVER FORGET