Water Resources Dan Cleavenger Transportation Lenny Hulme (Interim) Transit Jodi Sorrell Parks, Recreation & Commercial Facilities Marc Heirshberg Engineering Beth Huning Business Technology Innovation CityEdge Programs Regional Communications Library Heather Wolf Information Technology Diane Gardner Communications Randy Thompson Grants Housing & Community Development Tammy Albright U.S. Conference of Mayors State Legislative Affairs Regional Initiatives, Maricopa Association of Governments National League of Cities Federal Initiatives Mayor and City Council Support Financial Services Irma Ashworth Strategic Planning and Development Pinal County Land Downtown Coordination, DMA Neighborhood Outreach/Diversity Ruth Giese Animal Control Diane Brady Arts & Culture Cindy Ornstein Falcon Field Corinne Nystrom Solid Waste Mike Comstock Public Information & Communications Steve Wright Human Resources Gary Manning Fleet Services Pete Scarafiotti Facilities Maintenance Dennis Ray Fire Department Harry Beck Business Services Ed Quedens Energy Resources Frank McRae Assistant to the City Manager Natalie Lewis Police Department Frank Milstead Assistant to the City Manager Scott J. Butler Chief Financial Officer Michael Kennington Manager of Technology and Innovation Alex Deshuk  Development & Sustainability Christine Zielonka CityEdge Business  Deputy City Manager John Pombier Office of Management and Budget Candace Cannistraro  Senior Executive Manager Chuck Odom Advisory Boards and Committees  Deputy City Manager Kari Kent Economic Development Bill Jabjiniak City Auditor Jennifer Ruttman  Mesa Counts on College Amy Trethaway City Attorney Debbie Spinner  CITY MANAGER Chris Brady  City Court Matt Tafoya  City Clerk DeeAnn Mickelsen  Mayor and City Council Citizens of Mesa  TABLE OF CONTENTS Page SECTION I – INTRODUCTORY SECTION Table of Contents Letter of Transmittal 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 4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position Statement of Activities A-1 A-2 16 17 A-3 19 A-4 A-5 20 21 A-6 22 A-7 23 A-8 A-9 25 27 A-10 29 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 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 Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows Fiduciary Funds Financial Statements Statement of Fiduciary Assets and Liabilities I TABLE OF CONTENTS (Concluded) Exhibits Notes to the Financial Statements Note 1 – Summary of Significant Accounting Policies Note 2 – Reconciliation of Governmental Fund Financial Statements to Government-wide Financial Statements Note 3 – Fund Balance Note 4 – Pooled Cash and Investments Note 5 – Accounts Receivable and Due from Other Governments Note 6 – Interfund Receivables, Payables and Transfers Note 7 – Capital Assets Note 8 – Long-term Obligations Note 9 – Refunded, Refinanced and Defeased Obligations Note 10 – Self-Insurance Internal Service Fund Note 11 – Commitments and Contingent Liabilities Note 12 – Net Position Note 13 – Enterprise Activities Operations Detail Note 14 – Joint Ventures Note 15 – Retirement and Pension Plans Note 16 – Post Employment Benefit Note 17 – Subsequent Events Note 18 – Restatement of Beginning Fund Balance/Net Position Page 30 40 46 46 49 50 52 55 66 68 69 70 70 71 74 79 82 82 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) Note to Required Supplementary Information B-1 B-2 83 84 B-3 85 86 C-1 C-2 87 93 C-3 C-4 C-5 98 100 102 C-6 104 Combining Statements Non-Major Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Internal Service Funds Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Net Position Combining Statement of Cash Flows Agency Fund Statement of Changes in Assets and Liabilities II TABLE OF CONTENTS (Concluded) Exhibits Page D-1 105 D-2 106 D-3 107 D-4 108 D-5 109 Supplemental Information Budgetary Comparison Schedules – Other Non-major Special Revenue Funds Highway User Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Quality of Life Sales Tax Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Street Sales Tax Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Mesa Housing Authority Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Grants and Special Programs Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual SECTION III - STATISTICAL SECTION Financial Trends Net Position by Components - Last Ten Fiscal Years (Accrual Basis of Accounting) Changes in Net Position - 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 110 112 III 118 IV 120 V VI 122 124 VII VIII IX X XI 125 127 128 129 130 XII XIII 133 134 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 III TABLE OF CONTENTS (Concluded) Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Operating Indicators by Function/Program – Last Ten Fiscal Years Capital Asset Statistics by Function/Program – Last Ten Fiscal Years IV XIV XV XVI 135 137 139 INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and the City Council of the City of Mesa, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Mesa, Arizona (City) as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. An independent member of Nexia International (1) The Honorable Mayor and the City Council of the City of Mesa, Arizona 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, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter Adjustments were recorded to correct errors in the previously issued financial statements. See Note 18 for a summary of restatements to beginning net position and beginning fund balance. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the Public Safety Personnel Retirement System Schedule of Funding Progress, the Other Post Employment Benefit Plan Schedule of Funding Progress and the budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Mesa, Arizona’s basic financial statements. The combining and individual fund financial statements and schedules and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. (2) The Honorable Mayor and the City Council of the City of Mesa, Arizona The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 8, 2014, on our consideration of the City of Mesa, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Mesa, Arizona’s internal control over financial reporting and compliance. Phoenix, Arizona May 8, 2014 (3) 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, 2013. 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 16 and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS  The City’s net position at the end of the fiscal year was $1.43 billion, of which $87.2 million is unrestricted and may be used to meet the City’s ongoing obligations to citizens and creditors.  The City’s total net position decreased $143.6 million in fiscal year 2013.  As of the end of fiscal year 2013, the City’s governmental funds reported a combined ending fund balance of $319.3 million, a $9.6 million increase from the previous year. Approximately 23.0% of the total fund balance amount, or $73.4 million is designated by the City as committed, assigned, or unassigned. The remaining 77.0% or $245.9 million is designated as non-spendable or restricted.  The City’s total long-term liabilities increased by $235.6 million to $2.1 billion at June 30, 2013. Primary factors leading to this increase include the issuance of $68.9 million in General Obligation Bonds, $47.3 million in Utility System Revenue Bonds, and $94.1 million in Excise Tax Obligations. 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 16-18) 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 position, Exhibit A-1, presents information on all the City’s assets and liabilities, with the difference between the two being reported as net position. Over time increases and decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities, Exhibit A-2, presents information showing how the City’s net position changed over the most recent fiscal year. All changes to net position 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 4 is the accrual basis of accounting. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both the Statement of Net Position and the Statement of Activities divide the functions of the City that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (Business-Type Activities):  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 position for the governmental activities due to assets that should have been placed in service in prior years and their associated depreciation expense. Additionally, items were capitalized that were owned by other entities. This resulted in a decrease to beginning net position of $11.1 million. The City also restated beginning net position for the governmental activities due to an error in prior years of accruing accounts receivables that should not have been accrued. This resulted in a decrease to beginning net position of $3.7 million. The City restated the beginning net position for the business-type activities due to assets that should have been placed in service in prior years and their associated depreciation expense. This resulted in a decrease to beginning net position of $4.9 million. See Note 18 to the basic financial statements for additional details of these restatements. Government-Wide Financial Statement 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, 2013 and 2012. Condensed Statement of Net Position As of June 30 (In thousands of dollars) Governmental Activities 2013 Cash and Other Assets Capital Assets T otal Assets Non-current Liabilities Outstanding Other Liabilities T otal Liabilities Net Position: Net Investment in Capital Assets Restricted Unrestricted T otal Net Position $ 569,087 1,261,873 1,830,960 2012 As Restated $ 511,359 1,282,648 1,794,007 931,360 124,839 1,056,199 835,493 115,426 950,919 902,397 56,719 (184,355) $ 774,761 902,554 41,257 (100,723) $ 843,088 5 Business-T ype Activities 2013 T otal Government $ 542,024 1,371,362 1,913,386 2012 As Restated $ 483,838 1,334,991 1,818,829 2013 1,111,111 2,633,235 3,744,346 2012 As Restated 995,197 2,617,639 3,612,836 1,151,357 106,263 1,257,620 1,011,663 76,117 1,087,780 2,082,717 231,102 2,313,819 1,847,156 191,543 2,038,699 346,352 37,795 271,619 407,121 69,739 254,189 1,248,749 94,514 87,264 1,309,675 110,996 153,466 $ 655,766 $ 731,049 $ 1,430,527 $ 1,574,137 Net Position - As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $1.4 billion at the close of the most recent year. The largest portion of net position ($1.2 billion or 87.3%) 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. Restricted net position represents resources that are subject to external restrictions on how they may be used. Such restrictions include debt service payments, transportation programs, and required bond indentures. The City’s restricted assets decreased $16.5 million from $111.0 million in fiscal year 2012 to $94.5 million in fiscal year 2013 primarily due to decrease in debt service restrictions. The unrestricted net position may be used to meet the City’s ongoing obligations to citizens and creditors. Unrestricted net position decreased from $153.5 million in fiscal year 2012 to $87.3 million in fiscal year 2013 primarily due to the change in net position as shown on page 9. Capital Assets – The following table provides a breakdown of the City’s capital assets at June 30, 2013 and 2012: Capital Assets (net of accumulated depreciation/amortization) As of June 30 (In thousands of dollars) Land Water Rights Collections of Art Buildings Other Improvements M achinery & Equipment Intangibles Infrastructure Construction-in-Progress Total Governmental Activities 2013 2012 As Restated $ 278,120 $ 275,383 23 215,299 221,246 59,548 81,796 48,762 51,009 12,685 13,269 479,063 528,076 168,373 111,869 $ 1,261,873 $ 1,282,648 Business-Type Activities 2013 2012 As Restated $ 57,847 $ 57,909 17,560 17,560 29,927 30,857 52,049 60,155 17,889 23,518 9,813 10,352 906,013 986,869 280,264 147,771 $ 1,371,362 $ 1,334,991 Total Government 2013 2012 As Restated $ 335,967 $ 333,292 17,560 17,560 23 245,226 252,103 111,597 141,951 66,651 74,527 22,498 23,621 1,385,076 1,514,945 448,637 259,640 $ 2,633,235 $ 2,617,639 The City’s net 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, 2013. This net 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. Major capital assets completed or constructed during the current fiscal year included:  Various street and storm sewer projects citywide valued at $70.5 million. The largest projects include transportation projects on Mesa Drive and Power Road. 6    Various water and wastewater projects citywide valued at $48 million. The largest project includes improvements to the Pasadena Pump Station. The City continued construction of a new Spring Training Facility for the Chicago Cubs Major League Baseball team with $63.4 million spent during fiscal year 2013. The City’s cost to design and construct the stadium and related facilities is limited to $84 million, with an additional cost to design and construct public infrastructure limited to $15 million. These limits were established by a voter-approved election. The City continued construction of the Fiesta District Police Station with $10.3 million spent during fiscal year 2013. In addition, the City spent $5.6 million on Fiesta District Improvement projects. Additional information on the City’s capital assets can be found in Note 7 of the notes to the financial statements. Debt Administration – The following schedule shows the outstanding long-term debt of the City as of June 30, 2013 and 2012. Outstanding Long-term Debt As of June 30 (In thousands of dollars) General Obligation Bonds Utility System Revenue Bonds Highway User Revenue Fund Bonds Excise Tax Obligations Special Assessment Bonds with Governmental Commitment Community Facility District Capital Leases Notes Payable Total Governmental Activities 2013 2012 $ 321,807 $ 285,706 111,318 118,248 - $ 4,318 2,712 140 122,835 563,130 5,062 822 122,835 $ 532,673 Business-Type Activities 2013 2012 $ 887 $ 1,596 956,336 928,226 94,060 - Total Government 2013 2012 $ 322,694 $ 287,302 956,336 928,226 111,318 118,248 94,060 - 2,370 $ 1,053,653 4,318 2,712 140 125,205 $ 1,616,783 2,493 $ 932,315 5,062 822 125,328 $ 1,464,988 At the end of the current fiscal year, the City had total outstanding debt of $1.6 billion. Of this amount, $448.0 million comprises debt backed by the full faith and credit of the City and $1.2 billion represents bonds secured by specified revenue sources (i.e., Utility System Revenue and Highway User Revenue). An additional amount of $7.0 million are special assessment and community facility district bonds where the City is contingently liable in the event that the assessment revenues are insufficient to satisfy the debt payments. The City’s outstanding long-term debt (considering new borrowings, debt retirements, and refunding) increased $151.8 million. The change in debt includes new borrowings during the fiscal year totaling $204.0 million, refundings of $17.4 million, and principal payments of $69.7 million. 7 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 A2 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 City’s total debt margin available at June 30, 2013 was $166,050,240 in the 6% capacity and $253,349,502 in the 20% capacity. Additional information on the City’s long-term obligations can be found in Note 8 of the notes to the basic financial statements and also Table X in the Statistical Section. 8 Changes in Net Position The following table shows the revenues and expenses of the City for the fiscal years ended June 30, 2013 and 2012. Changes in Net Position Year Ended June 30 (In thousands of dollars) Business-type Activities Governmental Activities 2013 2012, as Restated 50,450 60,355 23,503 $ 308,088 9,402 7,998 $ 314,908 2,125 15,814 126,644 14,234 2,019 86,103 17,171 1,503 8,939 825 860 - 850 - 137,280 14,354 2,728 104,462 49,570 2,552 7,424 126,644 14,234 2,019 86,103 17,171 2,353 8,939 455,244 390,921 327,173 333,697 782,417 724,618 105,410 287,451 61,718 129,164 23,443 58,700 294,069 58,392 99,678 22,094 - - 105,410 287,451 61,718 129,164 23,443 58,700 294,069 58,392 99,678 22,094 28,897 35,653 103,432 91,739 33,693 4,300 3,353 3,946 9,094 1,081 3,653 31,266 35,628 75,422 68,540 32,485 4,485 2,589 3,486 8,544 54 974 - 28,897 35,653 103,432 91,739 33,693 4,300 3,353 3,946 9,094 1,081 3,653 31,266 35,628 75,422 68,540 32,485 4,485 2,589 3,486 8,544 54 974 - 318,841 263,473 926,027 796,406 2013 REVENUES Program Revenues: Charges for Services $ 58,198 Operating Grants & Contributions 55,312 Capital Grants & Contributions 25,049 General Revenues: Sales T axes 137,280 Property T axes 14,354 Occupancy T axes 1,903 State-Shared 104,462 Contributions 49,570 Unrestricted Investment Income 1,692 Miscellaneous 7,424 T otal Revenues 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 Economic Investment T otal Expenses - 2012, as Restated T otal Primary Government $ - 2012, as Restated 2013 $ 366,286 64,714 33,047 $ 365,358 62,480 39,317 607,186 532,933 (151,942) 83,615 (142,012) 83,615 8,332 (83,615) 70,224 (83,615) (143,610) - (71,788) - Change in Net Position (68,327) (58,397) (75,283) (13,391) (143,610) (71,788) T otal Net Position - As Adjusted 843,088 901,485 731,049 744,440 1,574,137 1,645,925 $ 774,761 $ 843,088 $ 655,766 $ 731,049 $ 1,430,527 $ 1,574,137 Increase (decrease) in Net Position Before T ransfers T ransfers Net Position - ending 9 Governmental Activities As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are taxes (28%), state-shared revenues (19%), and capital and operating grants & contributions and unrestricted contributions (24%). The largest users of resources for the governmental activities are Public Safety (47%), Community Environment (21%), and General Government (18%). Revenues by Source Including Transfers – Governmental Activities For the Fiscal Year Ended June 30, 2013 Capital Grants & Contributions 5% Taxes 28% Operating Grants & Contributions 10% Unrestricted Contributions 9% Charges for Services 11% State Shared 19% Other 2% Transfers 16% Functional Expenses – Governmental Activities For the Fiscal Year Ended June 30, 2013 Public Safety 47% CulturalRecreational 10% General Government 18% Community Environment 21% Interest on Long-Term Debt 4% 10 Governmental Activities Revenues For Fiscal Years 2013 and 2012 (In millions of dollars) $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Miscellaneous Investment Income Contributions 2013 State-Shared Revenue Grants Taxes Program Revenues 2012 Governmental Activities Functional Expenses For Fiscal Years 2013 and 2012 (In millions of dollars) $350 $300 $250 $200 $150 $100 $50 $0 Interest on Long-term Debt Community Environment Cultural-Recreational 2013 Public Safety General Government 2012 The graphs above compare governmental activities revenues and expenses from fiscal year 2013 to fiscal year 2012. Total governmental activities revenues increased $64.3 million from $390.9 million to $455.2 million. Total governmental expenses increased by $74.3 million from $532.9 million to $607.2 million. 11 Key factors in this change include:  The program revenues of the governmental activities increased $4.3 million over the previous year. Charges for services and capital grants & contributions increased a total of $9.3 million; however this was offset by a $5 million decrease in operating grants & contributions, as compared to the previous year.  Sales taxes and state shared revenues increased by $10.6 million and $18.4 million respectively over the previous year reflecting an overall improvement in the local economy.  There was an overall increase in expenses caused by higher payments for pension-related expense, the expensing of Post-Employment Benefits to the governmental activities, and depreciation expense. 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 22% Water 37% Gas 12% Electric 10% Other Programs 4% Solid Waste 15% Functional Expenses – Business-type Activities Wastewater 29% Water 32% Gas 11% Solid Waste 11% Other Programs 8% Electric 9% 12 Total business-type activities program and general revenues decreased by $6.5 million from $333.7 million to $327.2 million, while the business-type activities total expenses increased by $55.4 million from $263.5 million to $318.9 million. The largest increase in expenses was primarily in the water and wastewater funds, and related to the post employment expense and depreciation expense. Fund Financial Statements The fund financial statements are presented in Exhibits A-3 through A-10 beginning on page 19 of this report. 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 (Exhibits A-3 through A-6), Proprietary Funds (Exhibits A-7 through A-9), and Fiduciary Funds (Exhibit A-10). Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in evaluating the City’s near-term financing requirements. Since the governmental fund financial statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer-term focus, a reconciliation of the differences between the two is provided with the fund financial statements and also in Note 2 to the basic financial statements. 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; 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 position. 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 are prepared on the same long-term focus as the government-wide 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 (Exhibits C-3 through C-5). 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 is prepared on the same basis as the government-wide and proprietary fund financial statements. Notes to the financial statements – The notes to the financial statements 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 as either part of the fund financial statements within the basic financial statements or as 13 required supplementary information after the notes to the financial statements. The City has chosen to present the budgetary statements as required supplementary information beginning on page 85. Fund Financial Statement Analysis 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 is to provide information on nearterm 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 $319.3 million, a $9.6 million increase from the previous year. $49.2 million of this total amount is in unassigned fund balance, available for spending in the coming year. Included in the remainder is $244.1 million in restricted fund balance. 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 $53.6 million, while unassigned fund balance was $50.4 million. Total fund balance of the City’s General Fund decreased by $28.4 million during the current fiscal year from $82.0 million (as restated) to $53.6 million. Total revenues of $247.0 million were $14.4 million higher than the previous year; however, $11.0 million was primarily due to the reclassification of the Transit Fund into the General Fund from the Special Revenue funds. The Highway Project Advancement Notes Fund accumulates monies for the payment of principal and interest requirements for the Highway Project Advancement Notes. Debt service on the notes increased to $5.4 million from $4.3 million in the previous fiscal year. Proprietary Funds - The City’s Enterprise Fund provides the same type of information as the government-wide financial statements, except in more detail. The total net position of the Enterprise Fund decreased by $78.7 million in fiscal year 2013 from $734.5 million (as restated) in fiscal year 2012 to $655.8 million. The unrestricted net position of the Enterprise Fund amounted to $271.6 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 can be found in Exhibit B-3. This schedule compares the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see Note 1.f. of the notes to the financial statements for more information on budget policies). No amendments increasing the City’s total adopted budget of $1.3 billion occurred during fiscal year 2013. General Fund revenues of $242.7 million, on a budgetary basis, were less than budgeted revenues of $245.3 million by $2.6 million while expenditures of $323.3 million were only 87.8% of budgeted expenditures. The decrease in revenues is due to decrease in sales taxes recorded in the general fund. 14 ECONOMIC FACTORS In June 2013, the City Council approved a $1.3 billion budget, which is approximately a 5% increase from the prior year’s budget. The fiscal year 2013–14 budget includes $994.6 million for operations and $335.0 million for scheduled bond capital improvements. The adopted fiscal year 2013-14 budget continues the City’s fiscally conservative approach to budget development, while still providing quality services to the citizens. Rather than simply surviving budget reductions, the City has reorganized and retooled to focus on community priorities and innovative approaches. The goal has been to help Mesa grow and prosper despite a challenging national, state, and local economy. 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 Finance Director, P.O. Box 1466, Mesa, Arizona, 85211-1466. 15 CITY OF MESA, ARIZONA EXHIBIT A-1 STATEMENT OF NET POSITION JUNE 30, 2013 ASSETS Pooled Cash and Investments Accounts Receivable, Net Accrued Interest Receivable Due from Other Governments Inventory Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Cash with Trustee Accounts Receivable Due from Other Governments Customer Deposits Joint Venture Construction 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 POSITION Net Investment in Capital Assets Restricted For: Convention Center Airport Golf Courses Hohokam Stadium/Fitch Complex Court Projects Debt Service Bond Indentures Public Safety Grant Programs Quality of Life Programs Transportation Programs Water, Wastewater & Solid Waste Improvements Miscellaneous Restrictions Unrestricted Total Net Position Primary Government Governmental Activities Business-Type Activities $ 243,455,833 24,050,691 481,226 30,014,661 6,109,311 1,274,183 1,616,368 $ 33,877,463 32,327,353 330,557 5,469,003 101,192 45,000 Total $ 277,333,296 56,378,044 811,783 35,483,664 6,109,311 1,375,375 1,661,368 270,770 39,448,196 42,421,795 6,604,214 84,915,276 4,050,720 84,374,441 75,526,574 46,431,179 104,549,306 2,731,265 5,790,610 5,359,964 229,484,598 75,797,344 85,879,375 146,971,101 6,604,214 84,915,276 2,731,265 5,790,610 9,410,684 313,859,039 446,514,958 815,357,673 1,830,960,316 355,671,508 1,015,690,498 1,913,386,070 802,186,466 1,831,048,171 3,744,346,386 3,132,435 21,484,428 47,796,222 8,495,067 335,615 43,595,257 1,516,150 104,746,341 3,132,435 23,000,578 47,796,222 8,495,067 335,615 148,341,598 29,082,327 902,277,736 1,056,199,087 23,419,324 1,127,937,773 1,257,619,588 52,501,651 2,030,215,509 2,313,818,675 902,397,377 346,352,341 1,248,749,718 313,103 6,791,009 9,685 571,381 22,567,071 1,751,928 5,790,610 271,619,354 $ 655,766,482 313,103 6,791,009 9,685 571,381 957,481 8,282,324 22,567,071 2,158,122 1,361,097 2,236,225 40,407,853 1,751,928 7,106,342 87,264,372 $ 1,430,527,711 957,481 8,282,324 2,158,122 1,361,097 2,236,225 40,407,853 1,315,732 (184,354,982) $ 774,761,229 The accompanying notes are an integral part of the financial statements. 16 CITY OF MESA, ARIZONA EXHIBIT A-2 STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Functions/Programs: Governmental Activities: General Government Public Safety Cultural-Recreational Community Environment Interest on Long-Term Debt Total Governmental Activities Business-type Activities: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling Economic Investment Total Business-type Activities Total Government Charges for Services Expenses $ 105,409,741 287,451,306 61,717,223 129,164,338 23,442,680 $ 6,505,517 35,039,683 11,643,613 5,009,078 - Program Revenues Operating Grants and Contributions $ 1,120,659 4,476,868 942,004 48,772,919 - Capital Grants and Contributions $ 278,172 1,178,701 359,983 23,231,762 - 607,185,288 58,197,891 55,312,450 25,048,618 28,896,937 35,652,803 103,431,852 91,738,649 33,693,521 4,299,627 3,352,623 3,946,298 9,094,227 1,080,813 3,653,007 31,075,113 39,125,019 111,933,119 64,413,119 47,368,556 3,484,409 1,472,177 2,597,298 5,496,066 975,459 148,098 186,432 264,334 4,689,833 4,050,490 187,372 4,600 18,174 202,652 24,686 2,690,627 3,226,341 1,552,881 200,000 100,000 - 318,840,357 308,088,433 9,401,235 7,997,187 $ 926,025,645 $ 366,286,324 $ 64,713,685 $ 33,045,805 General Revenues: Sales Taxes Property Taxes Occupancy Taxes Unrestricted State Shared Revenue Grants Contributions Not Restricted to Specific Programs Investment Income Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Position Total Net Position - As Reported Prior Period Adjustment Total Net Position - As Adjusted Net Position - ending The notes to the financial statements are an integral part of this statement. 17 EXHIBIT A-2 (Continued) Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type * * Total Activities Activities $ (97,505,393) (246,756,054) (48,771,623) (52,150,579) (23,442,680) $ (468,626,329) $ - $ - (97,505,393) (246,756,054) (48,771,623) (52,150,579) (23,442,680) (468,626,329) - 2,567,260 3,761,236 15,881,727 (20,048,699) 13,862,407 737,663 (1,875,846) (1,149,000) (3,498,161) (105,354) (3,486,735) 2,567,260 3,761,236 15,881,727 (20,048,699) 13,862,407 737,663 (1,875,846) (1,149,000) (3,498,161) (105,354) (3,486,735) - 6,646,498 6,646,498 (468,626,329) 6,646,498 (461,979,831) 137,280,327 14,353,824 1,903,029 104,462,267 49,569,427 1,692,304 7,423,709 83,615,000 825,297 860,473 (83,615,000) 137,280,327 14,353,824 2,728,326 104,462,267 49,569,427 2,552,777 7,423,709 - 400,299,887 (81,929,230) 318,370,657 (68,326,442) (75,282,732) (143,609,174) 857,973,030 (14,885,359) 735,944,179 (4,894,965) 1,593,917,209 (19,780,324) 843,087,671 731,049,214 1,574,136,885 774,761,229 $ 655,766,482 $ 1,430,527,711 18 CITY OF MESA, ARIZONA EXHIBIT A-3 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2013 General Fund Highway Project Advancement Notes Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due from Other Governments Due from Other Funds Advances to Other Funds Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Cash with Trustee Accounts Receivable Due from Other Governments $ $ Total Assets $ 71,605,149 $ 2,367,745 9,205,592 2,841,991 2,587,432 335,615 Non-major Governmental Funds Total Governmental Funds - $ 142,190,554 4,872,034 109,154 19,829,175 55,064 1,366,661 $ 180,706,406 22,157,500 412,930 30,009,342 3,346,597 1,176,842 601,806 1,616,368 - 756,250 42,421,795 84,399,950 270,770 38,691,946 6,604,214 515,326 270,770 39,448,196 42,421,795 6,604,214 84,915,276 $ 127,577,995 $ 214,504,898 $ 413,688,042 $ $ $ ASSETS 38,515,852 17,285,466 303,776 10,180,167 3,346,597 1,176,842 546,742 249,707 LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Other Accrued Liabilities Due to Other Funds Advances from Other Funds Customer and Defendant Deposits Compensated Absences Payable From Restricted Assets: Accrued Bond Interest Payable Accrued Note Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable 759,213 - 974 10,761,550 5,236,663 2,587,384 1,176,842 5,907,635 - 2,368,719 19,967,142 8,078,654 3,346,597 1,176,842 8,495,067 335,615 648,252 - 2,702,125 - 8,797,049 8,345,969 23,947,997 6,145,000 8,797,049 2,702,125 8,994,221 23,947,997 6,145,000 Total Liabilities 17,986,627 3,461,338 72,907,063 94,355,028 Fund Balances: Nonspendable Restricted Committed Unassigned 1,723,584 284,449 1,184,979 50,425,510 124,116,657 - 55,064 119,714,233 23,005,073 (1,176,535) 1,778,648 244,115,339 24,190,052 49,248,975 Total Fund Balances 53,618,522 124,116,657 141,597,835 319,333,014 71,605,149 $ 127,577,995 $ 214,504,898 $ 413,688,042 Total Liabilities and Fund Balances $ The accompanying notes are an integral part of the financial statements. 19 CITY OF MESA, ARIZONA EXHIBIT A-4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2013 Fund Balances - total governmental funds $ 319,333,014 Amounts reported for governmental activities in the statement of net position are different because (also see Note 2 to the basic financial statements): Capital assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 1,259,948,250 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 88,425,161 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore not reported in the governmental funds. (922,902,545) 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 position. 6,991,135 Internal service funds are used by management to charge the costs of certain activities to individual funds. Net position of the governmental activities - statement of net position The accompanying notes are an integral part of the financial statements. 20 22,966,214 $ 774,761,229 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, 2013 Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenue General Fund Highway Project Advancement Notes Non-major Governmental Funds Total Governmental Funds $ $ $ 42,001,792 14,403,757 1,903,029 897,058 3,638,869 74,890,696 11,071,667 1,382,572 414,400 2,131,440 2,904,259 $ 137,280,327 14,403,757 1,903,029 897,058 17,693,300 184,823,335 27,674,890 9,884,537 1,500,865 2,263,919 5,940,143 Total Revenues 95,278,535 14,054,431 108,420,138 16,603,223 8,501,965 1,010,872 132,479 3,035,884 1,512,501 75,593 - 247,037,527 1,588,094 155,639,539 404,265,160 68,089,737 199,297,876 31,671,056 10,387,862 - 6,506,132 27,379,081 6,115,748 44,809,037 74,595,869 226,676,957 37,786,804 55,196,899 12,960,611 5,404,250 - 31,518,955 17,994,747 34,183 9,500 1,448,095 78,576,239 31,518,955 17,994,747 34,183 5,404,250 9,500 1,448,095 91,536,850 Total Expenditures 322,407,142 5,404,250 214,391,717 542,203,109 Excess (Deficiency) of Revenues Over (Under) Expenditures (75,369,615) (3,816,156) (58,752,178) (137,937,949) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Issuance of Refunding Debt Refunding Advance 83,715,021 (36,781,754) - - 64,102,823 (27,421,090) 62,672,000 3,681,054 17,415,000 (19,889,007) 147,817,844 (64,202,844) 62,672,000 3,681,054 17,415,000 (19,889,007) 46,933,267 - 100,560,780 147,494,047 41,808,602 9,556,098 Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Interest on Bonds Interest on Leases Interest on Notes Service Charges Cost of Issuance Capital Outlay Total Other Financing Sources (Uses) Net Change in Fund Balances (28,436,348) Fund Balances - As Reported Prior Period Adjustment 85,792,127 (3,737,257) 127,932,813 - 99,789,233 - 313,514,173 (3,737,257) Fund Balance- As Adjusted 82,054,870 127,932,813 99,789,233 309,776,916 124,116,657 $ 141,597,835 $ 319,333,014 Fund Balances - Ending $ 53,618,522 (3,816,156) $ The accompanying notes are an integral part of the financial statements. 21 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, 2013 Net change in fund balances - total governmental funds $ 9,556,098 Amounts reported for governmental activities in the statement of activities are different because (also see Note 2 to the basic financial statements): Revenues in the statement of activities that do not provide current financial resources are not reported in the governmental funds. 2,112,605 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. (63,489,841) 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 depreciation ($89,768,112) exceeded capital outlay ($71,144,912) in the current period. (18,623,200) The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to decrease net position. Change in equity in Joint Venture (697,246) 30,692,806 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 position. (32,360,092) 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. 2,563,830 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. 1,918,598 Change in net position of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 22 $ (68,326,442) CITY OF MESA, ARIZONA EXHIBIT A-7 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 Business-type Activities Enterprise Fund ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due from Other Governments Inventory Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agents Cash with Trustees Customer Deposits Joint Venture Construction Deposits $ Total Current Assets 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 Total Capital Assets, Net Investment in Joint Ventures Total Noncurrent Assets Total Assets $ The accompanying notes are an integral part of the financial statements. 23 33,877,463 32,327,353 330,557 5,469,003 101,192 45,000 Governmental Activities Internal Service Funds $ 62,749,427 1,893,191 68,296 5,319 6,109,311 672,377 - 22,684,852 46,431,179 104,549,306 2,731,265 5,790,610 - 254,337,780 71,497,921 1,751,928 - 22,567,071 - 28,522,723 5,359,964 - 58,201,686 - 57,847,214 17,560,145 52,086,065 94,352,016 54,038,780 27,015,992 1,508,987,926 280,264,149 (720,790,281) 2,061,431 426,745 6,507,271 4,047 12,743 265,019 (7,352,875) 1,371,362,006 1,924,381 229,484,598 - 1,659,048,290 1,924,381 1,913,386,070 $ 73,422,302 (Continued) CITY OF MESA, ARIZONA EXHIBIT A-7 (Continued) STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 Business-type Activities Enterprise Fund LIABILITIES Current Liabilities-Payable From Current Assets: Warrants Outstanding Accounts Payable Other Accrued Expenses Current Liabilities-Payable From Restricted Assets: Impact & Development Fees-Accounts Payable Bond Replacement, Extensions and Reserves-Accounts Payable Capital Projects-Accounts Payable Accrued Bond Interest Payable Matured Bonds Payable Customer Deposits and Prepayments Current Portion of Long-Term Liabilities: Current Portion of Revenue Bonds Payable Current Portion of General Obligation Bonds Payable Current Portion of Notes Payable Current Portion of Compensated Absences $ 1,516,150 - Governmental Activities Internal Service Funds $ 763,716 1,517,286 39,717,568 20,846 8,081 32,747,145 24,089,176 22,464,976 25,416,117 - 22,550,000 281,637 125,651 462,036 75,629 Total Current Liabilities 129,681,815 42,074,199 Long-Term Liabilities: Revenue Bonds Payable, Net of Deferred Amount on Refundings General Obligation Bonds Payable Excise Tax Obligations Notes Payable Unamortized Bond Premium Compensated Absences Post Employment Benefits 933,786,082 605,451 94,060,000 2,244,350 28,352,565 3,394,151 65,495,174 549,784 7,832,105 Total Long-Term Liabilities 1,127,937,773 8,381,889 Total Liabilities 1,257,619,588 50,456,088 346,352,341 1,924,381 313,103 6,791,009 9,685 571,381 22,567,071 1,751,928 5,790,610 271,619,354 - NET POSITION Net Investment in Capital Assets Restricted For: Convention Center Airport Golf Courses Hohokam Stadium\Fitch Complex Capital Projects Debt Service Bond Indentures Water, Wastewater & Solid Waste Improvements Construction Unrestricted Total Net Position $ The accompanying notes are an integral part of the financial statements. 24 655,766,482 21,041,833 $ 22,966,214 CITY OF MESA, ARIZONA EXHIBIT A-8 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Operating Revenues: Electric Sales Pledged as Security for Revenue Bonds Gas Sales Pledged as Security for Revenue Bonds Water Sales Pledged as Security for Revenue Bonds Wastewater Charges Pledged as Security for Revenue Bonds Solid Waste Charges Pledged as Security for Revenue Bonds Airport Fees Golf Course Fees Convention Center Fees Hohokam Stadium/Fitch Complex Fees District Cooling Charges Economic Investment Charges Charges For Services Self-Insurance Contributions Other Revenue Total Operating Revenues Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds $ $ 31,075,113 39,125,019 111,933,119 64,413,119 47,368,556 3,484,409 1,472,177 2,597,298 5,496,066 975,459 148,098 308,088,433 25,868,652 72,485,563 1,215,229 99,569,444 Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling Economic Investment Warehouse, Maintenance & Services Self-Insurance Total Operating Expenses 23,525,469 27,804,313 38,969,314 21,596,360 31,183,871 2,552,453 1,525,959 3,350,485 7,094,816 634,756 3,653,007 161,890,803 27,115,989 65,758,094 92,874,083 Operating Income (Loss) Before Depreciation and Amortization 146,197,630 6,695,361 (104,656,599) (1,593,056) 41,541,031 5,102,305 (Continued) Depreciation and Amortization Operating Income (Loss) The accompanying notes are an integral part of the financial statements. 25 CITY OF MESA, ARIZONA EXHIBIT A-8 (Continued) STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds 771,673 88,800 3,887,045 191,439 - Nonoperating Revenues (Expenses): Investment Income Pledged as Security for Revenue Bonds Investment Income Unpledged Intergovernmental Interest Expense: Bonds Notes Payable and Other Long-Term Obligations Bond Administrative Costs Loss on Disposal of Capital Assets Net Loss from Joint Venture Utility Development Fees Amortization of Bond Issuance Costs Miscellaneous Revenue (42,061,117) (54,692) (35,478) (20,688) (13,205,465) 7,105,710 (372,915) 786,658 - Total Nonoperating Revenues (Expenses) (43,110,469) 191,439 (1,569,438) 5,293,744 Capital Contributions Transfers Out 6,444,306 (83,615,000) 82,252 - Change in Net Position (78,740,132) 5,375,996 Total Net Position As Reported Prior Period Adjustment 739,401,579 (4,894,965) 17,590,218 - Total Net Position As Adjusted 734,506,614 17,590,218 Income before Transfers and Capital Contributions Total Net Position - Ending $ 655,766,482 Adjustment to reflect the consolidation of the internal service funds related to the enterprise fund. Change in net position of the business-type activities 3,457,400 $ (75,282,732) The accompanying notes are an integral part of the financial statements. 26 $ 22,966,214 CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Business-type Activities Enterprise Fund Cash Flows From Operating Activities: Cash Received From Customers Cash Received From Users Cash Payments to Suppliers Cash Payments to Employees $ 308,708,162 (107,671,221) (49,644,284) Governmental Activities Internal Service Funds $ 99,156,824 (80,981,639) (6,919,163) Net Cash Provided By Operating Activities 151,392,657 Cash Flows From Noncapital Financing Activities: Intergovernmental Transient Occupancy Tax Other Non-Operating Expense Investment in Joint Ventures Transfers Out to Other Funds 1,788,863 825,297 (38,639) (49,735) (83,615,000) - Net Cash Provided By (Used For) Noncapital Financing Activities (81,089,214) - Cash Flows From Capital and Related Financing Activities: Proceeds From Bond Sales Acquisition and Construction of Capital Assets Principal Paid on Bonds, Leases and Notes Maturities Interest Paid on Bonds, Leases and Notes Contributions from Other Governments Contributions from Subdividers Net Cash Used For Capital and Related Financing Activities 11,256,022 152,111,009 (106,758,714) (22,103,715) (39,586,531) 8,418,785 (271,806) 216,292 - (7,919,166) (55,514) Cash Flows From Investing Activities: Interest Received on Investments 636,796 123,143 Net Cash Provided By Investing Activities 636,796 123,143 63,021,073 11,323,651 197,363,449 51,425,776 Net Increase in Pooled Cash and Investments Total Cash and Investments at Beginning of Year Total Cash and Investments at End of Year $ 260,384,522 The accompanying notes are an integral part of the financial statements. 27 $ 62,749,427 (Continued) CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Business-type Activities Enterprise Fund Reconciliation of Operating Income to Net Cash Provided By Operating Activities: Operating Income $ Adjustments to Reconcile Operating Income to Net Cash Provided By Operating Activities: Depreciation and Amortization Changes in Assets and Liabilities: (Increase) Decrease in Receivables Increase in Inventory Increase in Deposits and Prepaid Costs Increase in Accounts Payable Increase in Other Accrued Expense 41,541,031 Governmental Activities Internal Service Funds $ 104,656,599 1,593,056 (2,156,607) 387,587 (4,782,668) 11,746,715 Total Adjustments (412,619) (47,423) (14,664) 1,981,634 3,053,733 109,851,626 Net Cash Provided By Operating Activities $ 151,392,657 Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Loss on Disposal of Capital Assets Amortization of Bond Premium Amortization of Debt Issuance Costs Amortization of Deferred Amounts on Refunding $ The accompanying notes are an integral part of the financial statements. 28 5,131,231 (20,688) (2,887,322) 2,455,148 372,915 5,102,305 6,153,717 $ 11,256,022 CITY OF MESA, ARIZONA EXHIBIT A-10 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES JUNE 30, 2013 Payroll Agency ASSETS Pooled Cash and Investments $ 13,390,104 Total Assets $ 13,390,104 LIABILITIES Accounts Payable Accrued Payroll Payable $ 1,531,849 11,858,255 Total Liabilities $ 13,390,104 The accompanying notes are an integral part of the financial statements. 29 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 444,856 within an area of approximately 141 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. The City’s other significant accounting policies are described below: a. Reporting Entity The accompanying financial statements include the City and its blended component units, the City of Mesa Municipal Development Corporation and Community Facilities District, collectively referred to as “the financial reporting entity”. In accordance with GASB No. 14, and as amended by GASB 61, the component units discussed below have been included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. City of Mesa Municipal Development Corporation (“Corporation”) is a nonprofit corporation that is organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. The Corporation is governed by a board of directors which is responsible for approving the Corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, the Corporation is reported as if it is part of the primary government because its sole purpose is to finance the acquisition and or construction of public facilities for the City. Separate financial statements for the corporation are not prepared. Community Facilities District (“District”) is a municipal corporation political subdivision of the State of Arizona that is organized to provide a vehicle for financing certain public infrastructure that is necessary for development of the land within the boundaries of the District. The City Council serves as the board of directors of the District and the City Manager of the City currently serves as the District Manager. Although it is legally separate from the City, the District is reported as if it is part of the primary government because the District’s governing body is substantively the same as the governing body of the City and management of the City has operational responsibility for the District. Separate financial statements for the District are not prepared. 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 (Continued) 30 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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. In addition, AMWUA contracts with the cities jointly using a multi-city sanitary sewer system to perform certain accounting, administrative and support services. c. Basic Financial Statements Government-wide Financial Statements: The government-wide financial statements (the statement of net position and the statement of activities) report on the City as a whole, excluding fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for services. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. Certain charges between the Enterprise Fund’s utility systems and the various functional activities are not eliminated, as this would distort the direct costs and program revenues reported for the various functions concerned. The government-wide statement of net position reports all financial and capital resources of the City, excluding fiduciary funds. It is presented in a format of assets less liabilities equals net position, with the assets and liabilities shown in order of their relative liquidity. Net position is required to be presented in three components: net investment in capital assets; restricted and unrestricted. Net investment in capital assets 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 position 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. Unrestricted net position are those not otherwise classified as restricted, and 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 position is 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 (Continued) 31 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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. Non-major governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in combining statements included as supplementary information after the basic financial statements. d. Measurement Focus, Basis Accounting and Financial Statement Presentation Government-wide Financial Statements: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of 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. Expenditure-driven 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. (Continued) 32 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Expenditures are generally recognized when the related fund liability is incurred, as under accrual accounting. An exception to this general rule is interest on long-term debt which is recorded when due. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide financial statements, a reconciliation is presented on the page following each governmental fund financial statement, which briefly explains the adjustments necessary to transform the fund-based financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. Proprietary 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. The proprietary fund financial statements distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. 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. Fiduciary Funds Financial Statements: 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 governmentwide financial statements. e. Fund Accounting The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are 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. (Continued) 33 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 The Highway Project Advancement Notes Fund accumulates monies for payment of principal and interest requirements for the Highway Project Advancement notes. The City reports the following non-major governmental funds: Eleven 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 Cityowned 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. 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. 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. (Continued) 34 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 The legally adopted budget consists of all funds except the Agency Fund. Capital Projects are budgeted as one item and governmental debt service expenditures are budgeted in the Special Revenue Funds or Debt Service Fund. A budget schedule for the General Fund is presented in the Required Supplementary Information Section, and the other funds are located in the Supplementary Information Section. On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. The State Economic Estimates Commission determines and publishes, prior to April 1st of each year, the expenditure limitation for the following fiscal year for each governmental unit. Fiscal year 1979-80 is the base year for calculations. Budgets for all funds are adopted in accordance with the requirements of the Arizona Constitution, Arizona Revised Statutes and the Mesa City Charter. There are certain differences between the basis used for budgetary purposes and that used for reporting in accordance with generally accepted accounting principles. For additional detail, see the note to required supplementary information and the individual budget schedules in the supplemental information exhibits. Budgeted amounts are as originally adopted by the City Council on June 4, 2012. g. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make a number of estimates and assumptions that affect the reported amounts of assets, liabilities, and net position, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. h. 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. 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 are stated at fair value. Fair value is based on quoted market prices as of the valuation date. i. Inventory Inventories consist of expendable supplies held for consumption. 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. (Continued) 35 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 j. 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 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. The City has made various class changes to both the government-wide and business-type capital asset classifications during fiscal year 2012–2013 as a result of implementing a fully integrated ERP system this fiscal year. 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 straight-line 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 5-50 Years 3-30 Years 6-15 Years 5-50 Years Gain or loss is recognized when assets are retired from service or are otherwise disposed of. Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation) or net realizable value, if lower, as of the date of the transfer. k. Compensated Absences Vacation, compensatory time and sick leave benefits are accrued as liabilities as employees earn the benefits to the extent that they meet both of the following criteria: 1) the City’s obligation is attributable to employees’ services already rendered; and 2) it is probable that the City will compensate the employees for the benefits through paid time off or some other means, such as cash. For governmental funds a liability for vacation, compensatory time and sick leave are reported only if they have matured, for example, as a result of employee resignations and retirements. The entire amount of accumulated unpaid vested vacation pay, compensatory time 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. (Continued) 36 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 l. Reserve for Loss and Loss Adjustment Expenses The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds establish claim liabilities based on actuarial estimates of the ultimate cost of claims (including future claim adjustment expenses) that have been reported but not settled, and of claims that have been incurred but not reported. Adjustments to claim liabilities are charged or credited to expenses in the periods in which they are made. m. Long Term Obligations In the government-wide financial statements and the proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount and deferred amounts on refundings. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuance are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received are reported as debt service expenditures. n. 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 cannot be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) legally or contractually required to be maintained intact. Restricted fund balance 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 by resolution to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. Assigned fund balance requests are submitted to the Chief Financial Officer for approval/nonapproval. City Charter authorizes the City Manager or Designee the authority to perform all financial transactions. The City Manager has authorized the Chief Financial Officer this responsibility. 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. (Continued) 37 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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. o. 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. p. 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, 2013 and are made in accordance with State Statutes. q. 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 2012-2013, current property tax collections were $13,854,778 or 97.86% 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 receivable at June 30, 2013 was $515,326 of which $251,466 was recorded as revenue and $263,860 as deferred revenue. r. New Accounting Pronouncements GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, improves financial reporting by addressing issues related to service concession arrangements (SCAs). (Continued) 38 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 The requirements of this Statement improve financial reporting by establishing recognition, measurement, and disclosure requirements for SCAs for both transferors and governmental operators, requiring governments to account for and report SCAs in the same manner, which improves the comparability of financial statements. The requirements of this Statement are effective for fiscal periods beginning after December 15, 2011. The City has no SCAs for fiscal year 2013 and therefore is not impacted by this Statement. GASB Statement No. 61, The Financial Reporting Entity: Omnibus – an amendment of GASB Statements No. 14 and No. 34, improves financial reporting for a governmental financial reporting entity. The requirements of this Statement result in financial reporting entity financial statements being more relevant by improving guidance for including, presenting, and disclosing information about component units and equity interest transactions of a financial reporting entity. This Statement provides amendments to Statement No. 14, The Financial Reporting Entity, and Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. The requirements of this Statement are effective for fiscal periods beginning after June 15, 2012. The City has implemented this Statement in fiscal year 2013 and has recognized the Community Facilities District as a component unit. GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, improves financial reporting by contributing to the GASB’s efforts to codify all sources of generally accepted accounting principles for state and local governments so that they derive from a single source. This requirement will bring the authoritative accounting and financial reporting literature together in one place. This Statement will eliminate the need for financial statement preparers and auditors to determine which FASB and AICPA pronouncement provisions apply to state and local governments, resulting in more consistent application of applicable guidance. The requirements of this Statement are effective for fiscal periods beginning after December 15, 2011. The City has implemented this Statement in fiscal year 2013. GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those elements as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. Previous financial reporting standards do not include guidance for reporting those financial statement elements, which are distinct from assets and liabilities. The requirements of this Statement are effective for fiscal periods beginning after December 15, 2011. The City has implemented this Statement in fiscal year 2013. GASB Statement No. 64, Derivative Instruments: Application of Hedge Accounting Termination Provisions, clarifies the circumstances in which hedge accounting should continue when a swap counterparty, or a swap counterparty’s credit support provider, is replaced. The requirements of this Statement are effective for fiscal periods beginning after June 15, 2011. The City currently has no effective hedging relationships and therefore is not impacted by this Statement. GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2012. The City will implement this statement in fiscal year 2014. (Continued) 39 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 GASB Statement No. 68, Accounting and Financial Reporting for Pensions, improves accounting and financial reporting for pensions. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2014. The City will implement this Statement in fiscal year 2015. GASB Statement No. 69, Government Combinations and Disposals of Government Operations, establishes accounting and financial reporting standards related to government combinations and disposals of government operations. As used in this Statement, the term government combinations includes a variety of transactions referred to as mergers, acquisitions, and transfers of operations. The requirements of this Statement are effective for fiscal periods beginning after December 15, 2013. The City will implement this Statement in fiscal year 2015. GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, improves accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees. The requirements of this Statement are effective for fiscal periods beginning after June 15, 2013. The City will implement this Statement in fiscal year 2014. Although expected to be significant, the City has not fully determined the effects that implementation of Statement No. 68 will have on the City’s financial statements. The City has also not fully determined the effects that implementation of Statements No. 69 and 70 will have on the City’s financial statements. 2. RECONCILIATION OF GOVERNMENTAL FUND GOVERNMENT-WIDE FINANCIAL STATEMENTS FINANCIAL STATEMENTS TO 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. (Continued) 40 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Reconciliation of the Governmental Funds Balance Sheet to the government-wide Statement of Net Position: T otal Governmental Funds Asse ts Pooled Cash and Investments Account and Misc Receivables, Net Accrued Interest Receivable Due from Other Governments Due from Other Funds Advances from Other Funds Inventory Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Cash with T rustee Accounts Receivable Due from Other Governments Unamortized Bond Issue Costs Investment in Joint Ventures Capital Assets T otal Assets Liabilitie s Warrants Outstanding Accounts Payable Other Accrued Expenses Due T o Other Funds Advances to Other Funds Customer and Defendant Deposits Compensated Absences Restricted Bond Interest Payable Restricted Note Interest Payable Restricted Deferred Revenue Matured G.O. Bonds Payable Matured HURF Bonds Payable Long-term Liabilities T otal Liabilities Fund Balance /Ne t Position T otal Fund Balance/Net Position T otal Liabilities and Fund Balance/Net Position $ $ $ Long-term Assets/ Liabilities(1) 180,706,406 22,157,500 412,930 30,009,342 3,346,597 1,176,842 601,806 1,616,368 270,770 39,448,196 42,421,795 6,604,214 84,915,276 413,688,042 - $ 2,368,719 19,967,142 8,078,654 3,346,597 1,176,842 8,495,067 335,615 8,797,049 2,702,125 8,994,221 23,947,997 6,145,000 94,355,028 319,333,014 $ 413,688,042 $ 4,050,720 84,374,441 1,259,948,250 1,348,373,411 Internal Service Funds(2) $ $ 62,749,427 1,893,191 68,296 5,319 6,109,311 672,377 1,924,381 73,422,302 (6,991,135) 922,902,545 915,911,410 $763,716 1,517,286 39,717,568 8,457,518 50,456,088 432,462,001 22,966,214 1,348,373,411 $ 73,422,302 Reclassifications and Eliminations $ $ (3,346,597) (1,176,842) (4,523,439) (3,346,597) (1,176,842) (4,523,439) Statement of Net Position T otal $ $ $ $ (4,523,439) 243,455,833 24,050,691 481,226 30,014,661 6,109,311 1,274,183 1,616,368 270,770 39,448,196 42,421,795 6,604,214 84,915,276 4,050,720 84,374,441 1,261,872,631 1,830,960,316 3,132,435 21,484,428 47,796,222 8,495,067 335,615 8,797,049 2,702,125 2,003,086 23,947,997 6,145,000 931,360,063 1,056,199,087 774,761,229 $ 1,830,960,316 (Continued) 41 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 (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 position includes those capital assets among the assets of the City as a whole. Costs of capital assets Accumulated depreciation $1,934,403,121 (674,454,871) $1,259,948,250 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 position for the City as a whole. Investment in joint ventures $ 84,374,441 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 position. Unamortized bond issuance costs $ 4,050,720 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 Deferred amounts on refunding Unamortized bond premiums $ 446,362,912 122,835,000 139,592 22,369,193 315,721,776 (6,208,008) 21,682,080 $ 922,902,545 Deferred revenues shown on the governmental fund statements are not deferred on the statement of net position. Deferred property tax revenues Deferred special assessment revenue Deferred CFD special assessment revenue Deferred rehabilitation loan revenue Amounts due from tenants not yet available $ $ 263,860 3,838,573 2,712,000 53,641 123,601 6,991,135 (2) 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 position, but are not included on the governmental funds balance sheet. Total $ 22,966,214 (Continued) 42 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government-wide Statement of Activities: Total Governmental Funds Revenues and Other Sources Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Other Sources: Transfers In Face Amount of Bonds Issued Premiums on Issuance of Notes Issuance of Refunding Debt Total Revenues and Other Sources $ 137,280,327 14,403,757 1,903,029 897,058 17,693,300 184,823,335 27,674,890 9,884,537 1,500,865 2,263,919 5,940,143 (1) $ 147,817,844 62,672,000 3,681,054 17,415,000 $ 635,851,058 Expenditures/Expenses Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Payments Interest on Bonds Interest on Capital Leases Interest on Notes Service Charges Cost of Issuance Capital Outlay Total Expenditures\Expenses Other Financing Uses/ Changes in Net Position Transfers Out Refunding Advance Total Expenditures\Expenses & Other Financing Uses Net Change for the Year Long-term Revenues/ Expenses(1) $ 30,692,806 $ 2,112,605 Internal Service Funds(3) $ $ 30,692,806 Long-term Debt Transactions(4) 191,439 16,612,702 1,369,134 - $ 18,173,275 $ - Eliminations and Adjustments(5) $ (62,672,000) (3,681,054) (17,415,000) $ (83,768,054) - Statement of Activities $ (76,431,700) $ (76,431,700) 137,280,327 14,353,824 1,903,029 2,945,164 17,693,300 184,823,335 27,674,890 9,884,537 1,692,304 49,569,427 7,423,709 71,386,144 - $ 526,629,990 74,595,869 226,676,957 37,786,804 55,196,899 12,012,686 36,503,350 6,085,069 8,888,736 16,375,082 15,187,178 16,331,940 62,963,096 2,600,748 9,752,806 1,625,468 2,275,655 (174,644) (668,985) (112,058) (160,048) - 105,409,741 287,451,306 61,717,223 129,164,338 31,518,955 17,994,747 34,183 5,404,250 9,500 1,448,095 91,536,850 542,203,109 63,489,841 (91,536,850) 19,320,446 16,254,677 (31,518,955) (1,448,095) (34,082,785) - 17,994,747 34,183 5,404,250 9,500 607,185,288 64,202,844 19,889,007 $ (49,933) 2,048,106 114,432 Capital Related Items(2) 626,294,960 9,556,098 63,489,841 $ (61,377,236) - $ 19,320,446 11,372,360 - $ 16,254,677 1,918,598 (19,889,007) (53,971,792) $ (29,796,262) (76,431,700) - $ (76,431,700) - (12,228,856) - $ 594,956,432 (68,326,442) 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 Tenant Revenue Total $ (49,933) 2,048,106 (9,169) 123,601 $ 2,112,605 (Continued) 43 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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) $ (6,046,051) (57,443,790) $ (63,489,841) When capital assets that are to be used in the governmental activities are purchased or constructed 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 position decreases by the amount of depreciation expense charged for the year. Capital outlay for capital assets Depreciation expense Total $ 71,144,912 (89,768,112) $ (18,623,200) The net effect of miscellaneous transactions involving capital assets (donations, transfers and disposals) and investment in joint venture activity is to increase net position. Change in equity interest for joint venture Loss on disposal of capital assets Total (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 Change in net position (4) $30,692,806 (697,246) $ 29,995,560 $18,173,275 (16,254,677) $ 1,918,598 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 $ (68,875,000) Highway User Revenue bond proceeds (8,500,000) Community Facility District Bonds (2,712,000) Premiums on refunding bonds (3,681,054) Principal repayments 31,518,955 Payment to refunded bond escrow agent 19,889,007 Total $ (32,360,092) 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. (Continued) 44 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Current Year bond issue cost Amortization of bond issue costs Amortization of deferred refunding amounts Amortization of bond premiums Total (5) $ 1,448,095 (341,733) (1,774,049) 3,231,517 $ 2,563,830 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 $ (76,431,700) 76,431,700 $ - (Continued) 45 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 3. FUND BALANCE As of June 30, 2013 the fund balance details by classification are listed below: Fund Balances: Nonspendable: Prepaid Costs Advances to Other Funds $ Restricted: Debt Service Capital Projects Quality of Life Projects Streets Projects Public Safety Cultural-Recreational Community Environment Court Vehicle Replacements Committed To: Debt Service Capital Projects Cultural-Recreational Public Safety Building Safety Community Environment Vehicle Replacements Unassigned Total Fund Balances Highway Project Advancement Notes General Fund $ 546,742 1,176,842 55,064 - 184,449 100,000 - 124,116,657 - 186,234 71,553,180 2,236,225 40,307,853 2,158,122 350,776 1,239,362 957,481 725,000 124,302,891 71,553,180 2,236,225 40,307,853 2,158,122 535,225 1,339,362 957,481 725,000 985,364 199,615 - - 137,902 7,266,360 1,659,224 2,423,308 6,344,270 5,174,009 137,902 7,266,360 1,659,224 2,423,308 985,364 6,543,885 5,174,009 50,425,510 - (1,176,535) 49,248,975 $ - $ Total Governmental Funds - 53,618,522 $ Non-Major Governmental Funds 124,116,657 $ 141,597,835 $ $ 601,806 1,176,842 319,333,014 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, 2013 as reported in Exhibit B-3 is 21.8% of General Fund expenditures budgeted for fiscal year 2013-2014. 4. POOLED CASH AND INVESTMENTS At year-end, City cash totaled $3,094,379 which included $260,065 of petty cash. The carrying amount of the City’s deposits was $2,834,314 and the bank balance was $73,824. The entire balance was covered by federal depository insurance. The difference of $2,760,490 represents deposits in transit and other reconciling items. (Continued) 46 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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, 2013, 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 AA+ by Standard & Poor’s. The City’s Special Improvement District bonds have no credit rating. The City’s investments at June 30, 2013 are as follows: Investment Maturities (in Years) Investment Type U.S. Treasuries $ U.S. Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn City of Mesa Special Improvement District Bonds JP Morgan MMF Total $ Fair Value 179,477,574 Less Than 1 $ 18,833,925 1-2 $ 61,313,565 More than 2 $ 99,330,083 67.92 % 1.39 22.72 6.86 3,670,583 60,030,004 18,130,041 3,670,583 - 60,030,004 6,250,688 11,879,354 2,925,927 270,712 264,504,841 335,000 270,712 23,110,220 335,000 $ 127,929,257 2,255,927 113,465,364 $ $ Concentration of Credit Risk % None of these Investments are callable. (Continued) 47 1.11 0.00 100 % CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 (1) Cash with Fiscal Agent (2) Long-Term Investments $ 260,065 2,834,314 80,544,774 18,376,750 146,971,101 85,879,375 264,504,841 Pooled Cash and Investments Less: Cash in Agency Fund Total City Pooled Cash and Investments 599,371,220 (13,390,104) $ 585,981,116 (1) Represents bond and note proceeds held with trustee in compliance with bond/note agreements. Proceeds are invested in the Local Govt Investment Pool and in Mutual Funds and are used by the City for authorized capital (2) Represents cash sent by the City to fiscal agents on June 30, 2013 for debt service payments due to bondholders on July 1, 2013. 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 2012- 2013 of $303,583 This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. (Continued) 48 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 5. 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 Gove rnme ntal Activitie s: General Fund: Taxes Courts Other Customers Due from Other Governments: State Shared Revenues Other Highway Project Advancement Notes Restricted-Due from Other Governments Non-Major Governmental Funds: Taxes Other Customers Restricted-Spec. Assessments Restricted-Other Restricted-Property Taxes Due from Other Governments Internal Service Funds Customers Due from Other Governments Total Governmental Activities Busine ss-Type Activitie s: Utility Customers Other Customers Due from Other Governments Total Business-type Activities Re ce ivable s $ 11,272,095 4,455,649 5,151,256 Allowance $ (2,454,533) (1,139,001) $ 8,817,562 4,455,649 4,012,255 4,053,865 6,126,302 - 4,053,865 6,126,302 84,399,950 - 84,399,950 3,527,095 1,344,939 6,550,573 53,641 515,326 19,829,175 - 3,527,095 1,344,939 6,550,573 53,641 515,326 19,829,175 - 1,893,191 5,319 $ 149,178,376 $ $ $ 30,738,247 2,977,695 5,469,003 39,184,945 $ Ne t $ (3,593,534) 1,893,191 5,319 $ 145,584,842 (1,086,340) (302,249) (1,388,589) $ 29,651,907 2,675,446 5,469,003 $ 37,796,356 (Continued) 49 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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: Special Revenue Funds General Fund Mesa Arts Center advanced ticket sales $ Rehabilitation Revolving Loans not yet due Amounts due from tenants not yet available Rents paid in advance Grants received prior to meeting all eligibility requirements Delinquent Property Taxes Special Assessments not yet due $ 522,735 125,517 648,252 $ $ 30,592 53,641 123,061 1,324,242 1,531,536 Debt Service Funds $ $ 263,860 6,550,573 6,814,433 Unbilled Accounts Receivable Unbilled utility service receivables are recorded in the year in which the services are provided. At June 30, 2013, unbilled utility service receivables are recorded in the Enterprise Fund as follows: Electric Gas Water Wastewater Solid Waste $ $ 1,568,284 859,278 5,531,824 2,630,899 1,931,515 12,521,800 6. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS The following interfund activities are included in the fund financial statements at June 30, 2013: Interfund Interfund Fund Receivables Payables Governmental funds: General Fund $ 3,346,597 $ Highway Project Advancement Fund 759,213 Non-major Governmental Funds 2,587,384 Total Governmental funds $ 3,346,597 $ 3,346,597 (Continued) 50 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 The interfund balances at June 30, 2013 are short-term loans to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2013 are expected to be repaid within one year. The following advances are included in the fund financial statements at June 30, 2013: Advances to Other Funds Fund Governmental funds: General Fund Non-major Governmental Funds Total Governmental funds $ $ Advances from Other Funds 1,176,842 1,176,842 $ $ 1,176,842 1,176,842 The advances at June 30, 2013 are long-term loans to the Development Impact Fees fund to cover expenses which exceeded revenues received. The advances outstanding at June 30, 2013 are not expected to be repaid within one year. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2013: Fund Governmental funds: General Fund Non-major Governmental Funds Total governmental funds Proprietary funds: Enterprise Fund Total Transfe rs Out Transfe rs In $ $ 36,781,754 27,421,090 64,202,844 83,615,000 $ 147,817,844 83,715,021 64,102,823 147,817,844 $ 147,817,844 The transfer of $83,615,000 from business-type activities to governmental activities on the governmentwide statement of activities is an operational subsidy from the Enterprise Fund to the General Fund. The remaining interfund transfers generally fall within one of the three following categories: 1) debt service payments made from a debt service fund but funded from an operating fund; 2) subsidy transfers; 3) open new funds and/or close old funds. (Continued) 51 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 7. CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2013 follows: *Restated Balance July 1, 2012 Governmental Activities: Non-depreciable Assets: Land Collections of Art 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 $ Additions 275,382,962 111,869,209 387,252,171 $ 289,786,304 141,681,911 158,877,964 13,546,100 886,357,823 1,490,250,102 (68,539,698) (59,886,206) (107,869,371) (276,993) (358,281,637) (594,853,905) 895,396,197 $ 1,282,648,368 $ 3,422,112 22,510 66,519,283 69,963,905 $ (685,397) (10,015,721) (10,701,118) 7,488 474,101 10,022,510 1,288 829,106 11,334,493 (4,260,052) (159,124) (4,419,176) (5,954,618) (22,722,177) (12,257,013) (584,686) (49,842,674) (91,361,168) (80,026,675) 4,248,203 159,124 4,407,327 (11,849) (10,062,770) Balance June 30, 2013 Retirements $ (10,712,967) $ 278,119,677 22,510 168,372,771 446,514,958 289,793,792 142,156,012 164,640,422 13,547,388 887,027,805 1,497,165,419 (74,494,316) (82,608,383) (115,878,181) (861,679) (407,965,187) (681,807,746) 815,357,673 $ 1,261,872,631 Depreciation and Amortization 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 Total Depreciation $ 8,813,574 14,688,272 17,665,661 48,600,605 1,593,056 $ 91,361,168 The City changed the estimated useful lives on several assets during the current year. As a result, current year depreciation expense noted above includes $31,897,063 of expense that related to this change in useful lives. (Continued) 52 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 *Restated Balance July 1, 2012 Business-type Activities: Non-depreciable Assets: Land $ 57,909,396 Water Rights 17,560,145 Construction-in-Progress 147,770,907 Total Non-depreciable Assets 223,240,448 Depreciable Assets: Buildings 52,086,065 Other Improvements 94,352,016 Machinery & Equipment 51,881,785 Intangibles 27,000,965 Infrastructure 1,503,363,036 Total Depreciable Assets 1,728,683,867 Less Accumulated Depreciation for: Buildings (21,229,146) Other Improvements (34,196,757) Machinery & Equipment (28,364,262) Intangibles (16,649,272) Infrastructure (516,493,576) Total Accum. Depreciation (616,933,013) Total Depreciable Assets, net 1,111,750,854 Business-type Activities Capital Assets, net $1,334,991,302 Additions Retirements 134,993,517 134,993,517 $ 2,653,356 15,027 5,959,169 8,627,552 (930,113) (8,106,102) (8,280,950) (553,436) (86,785,998) (104,656,599) (96,029,047) $ 38,964,470 (62,182) (2,500,275) (2,562,457) Balance June 30, 2013 $ 57,847,214 17,560,145 280,264,149 355,671,508 (496,361) (334,279) (830,640) 52,086,065 94,352,016 54,038,780 27,015,992 1,508,987,926 1,736,480,779 494,861 304,470 799,331 (31,309) (22,159,259) (42,302,859) (36,150,351) (17,202,708) (602,975,104) (720,790,281) 1,015,690,498 $ (2,593,766) $1,371,362,006 The City changed the estimated useful lives on several assets during the current year. As a result, current year depreciation expense noted below includes $50,337,613 of expense that related to this change in useful lives. (Continued) 53 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statements as follows: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex District Cooling $ Total Depreciation and Amortization 4,248,860 4,228,952 41,116,891 43,409,516 5,044,815 1,767,903 1,798,381 595,813 1,999,411 446,057 104,656,599 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 $ $ 912,690 59,860,124 8,376,339 98,958,599 265,019 168,372,771 Construction in Progress $ 25,551,535 24,875,730 99,023,077 42,363,971 2,869,926 5,367,329 469,591 880,314 24,027 63,355,999 15,360,008 122,642 $ 280,264,149 Business-type Activities Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium Economic Develoment District Cooling Total Commitments $ 2,628,347 925,867 128,246 9,552,441 $ 13,234,901 Commitments $ 200,358 1,300,519 2,176,544 2,696,307 2,540,287 850,687 9 254,997 11,667 $ 10,031,375 (Continued) 54 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 For the year ended June 30, 2013, the City capitalized net interest costs of $4,950,146. Total interest expense in the Business-type Activities Enterprise Fund before capitalization was $47,065,955. 8. LONG-TERM OBLIGATIONS a. Changes in Long-Term Obligations The following is a summary of changes in long-term obligations. Beginning Balances Governmental Activities: Bonds Payable: General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds with Governmental Commitment Community Facility District Less Deferred Amounts on Refundings Total Bonds Payable Capital Leases Notes Payable Unamortized Premiums Post Employment Benefits Compensated Absences Governmental Activities Total Business-type Activities: Bonds Payable: Revenue Bonds General Obligation Bonds Excise Tax Revenue Obligations 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 $ $ $ $ Additions Reductions 288,668,840 121,395,000 $ 5,062,000 (6,109,537) 409,016,303 821,550 122,835,000 21,232,542 264,345,479 17,242,617 835,493,491 2,712,000 (1,872,520) 78,214,480 3,681,055 71,822,208 26,027,898 $ 179,745,641 (744,000) 1,774,049 (47,075,879) (681,958) (3,231,517) (12,613,806) (20,275,909) $ (83,879,069) $ $ $ $ 952,500,000 1,601,160 (24,279,066) 929,822,094 2,492,975 19,238,432 55,811,134 4,182,262 116,754 1,011,663,651 68,875,000 8,500,000 47,290,000 94,060,000 141,350,000 12,001,455 11,747,136 2,662,417 $ 167,761,008 $ (32,860,928) (15,245,000) (21,630,000) (714,072) 2,455,149 (19,888,923) (122,974) (2,887,321) (2,063,096) (2,988,494) (116,754) $ (28,067,562) Amounts Due Within One Year Ending Balances $ $ 324,682,912 114,650,000 4,318,000 2,712,000 (6,208,008) 440,154,904 139,592 122,835,000 21,682,080 323,553,881 22,994,606 931,360,063 978,160,000 887,088 94,060,000 (21,823,917) 1,051,283,171 2,370,001 28,352,566 65,495,174 3,856,185 1,151,357,097 $ $ $ $ 18,193,363 6,945,000 744,000 62,000 25,944,363 67,953 3,070,011 29,082,327 22,550,000 281,637 22,831,637 125,651 462,036 23,419,324 Internal service funds predominantly serve the governmental funds. Accordingly long-term liabilities for them are included as part of the above totals for governmental activities. At year end $8,457,518 of internal service funds post-employment benefits and compensated absences are included in the above (Continued) 55 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 amounts. Also, for the governmental activities, post-employment benefits and compensated absences are generally liquidated by the general fund. b. Bonds Payable At June 30, 2013, 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. $ 2,746,476 $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. 46,017,342 $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. 2,000,000 $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. 9,575,000 $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. 3,323,143 $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. 13,450,000 $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. 47,245,000 $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) 56 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 $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. $ 27,500,000 $27,290,000 2012 general obligation serial bonds due in annual installments ranging from $840,000 to $8,550,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2032. 26,450,000 $31,148,160 2012 general obligation refunding serial bonds due in annual installments ranging from $419,601 to $7,350,252, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2022. 30,720,951 $8,915,000 2013 general obligation refunding serial bonds due in annual installments ranging from $30,000 to $3,250,000, plus semi-annual interest ranging from .7 percent to 5 percent through July 1, 2024. 8,915,000 $59,960,000 2013 general obligation serial bonds due in annual installments ranging from $1,635,000 to $12,675,000, plus semi-annual interest ranging from 1.5 percent to 4 percent through July 1, 2023. 59,960,000 Total General Obligation Bonds $ 324,682,912 Street and Highway User Revenue Bonds $26,805,000 2003 street and highway user revenue bonds, (partially refunded by street and highway user revenue refunding bonds, series 2012) 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, 2018. $ 3,700,000 $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. 1,175,000 $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. 17,760,000 $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 semiannual interest ranging from 2.75 percent to 5.0 percent through July 1, 2023. 23,750,000 $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. 1,325,000 (Continued) 57 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 $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. $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. $ 11,675,000 10,675,000 $36,090,000 2012 street and highway user revenue refunding bonds, due in annual installments ranging from $665,000 to $9,700,000, plus semi-annual interest ranging from 3.0 percent to 5.0 percent through July 1, 2022. 36,090,000 $8,500,000 2013 street and highway user revenue refunding bonds, due in one installment of $8,500,000 plus semi-annual interest of 5 percent through July 1, 2024. 8,500,000 Total Street and Highway User Revenue Bonds $114,650,000 Special Assessment Bonds (payable from special assessments levied on the benefited properties) $5,025,000 2005 special assessment district bonds, due in annual principal installments of $335,000, plus semi-annual interest of 5.80 percent, through January 1, 2021. $ 2,680,000 $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. 1,638,000 Total Special Assessment Bonds $ 4,318,000 Community Facilities District $2,712,000 2013 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 1 Special Assessment Revenue Bonds, due in annual principle installments ranging from $62,000 to $95,000, plus semi-annual interest ranging from 2.0 percent to 4.375 percent through July 1, 2025. $ 2,712,000 Total bonds payable recorded in governmental activities $446,362,912 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. $ 13,524 (Continued) 58 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 $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. $ 212,658 $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. 151,857 $ 516,840 2012 general obligation refunding serial bonds, due in annual principal installments ranging from $15,399 to $269,748, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2022. 509,049 Total General Obligation Bonds $ 887,008 Utility Systems Revenue Bonds $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. $ 4,000,000 $129,000,000 2002 utility systems revenue refunding serial bonds, (partially refunded by 2012 and 2012 taxable utility systems revenue refunding bonds) due in annual principal installments ranging from $65,000 to $29,550,000, plus semiannual interest ranging from 3.40 percent to 5.25 percent through July 1, 2017. 38,815,000 $48,850,000 2002A utility systems revenue refunding serial bonds, (partially refunded by 2012 utility systems revenue refunding 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, 2015. 19,940,000 $50,470,000 2003 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) and series 2012 utility systems revenue refunding bonds), due in annual principal installments ranging from $970,000 to $25,500,000, plus semiannual interest ranging from 3.50 percent to 5.00 percent through July 1, 2019. 6,000,000 $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. 40,345,000 $91,200,000 2005 utility systems revenue serial bonds, (partially refunded by 2006 (and series 2012) utility systems revenue refunding bonds), due in annual (Continued) 59 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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. 58,075,000 $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 semiannual interest ranging from 4.0 percent to 5.25 percent through July 1, 2028. 127,090,000 $65,550,000 2007 utility systems revenue serial bonds, due in annual principal installments ranging from $2,500,000 to $41,800,000, plus semi-annual interest ranging from 4.25 percent to 6.25 percent through July 1, 2031. 65,550,000 $52,875,000 2008 utility systems revenue serial bonds, due in annual principal installments ranging from $700,000 to $44,675,000, plus semi-annual interest ranging from 4.875 percent to 5.25 percent through July 1, 2032. 52,875,000 $21,125,000 2008 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $100,000 to $2,200,000, plus semi-annual interest ranging from 3.00 percent to 4.00 percent through July 1, 2018. 10,125,000 $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 of 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 of 5.0 percent through July 1, 2035. 53,950,000 $67,300,000 2012 utility systems revenue serial bonds, due in one principal installment, plus semi-annual interest of 4.0 percent through July 1, 2036. 67,300,000 $31,580,000 2012 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $7,440,000 to $9,150,000, plus semi-annual interest ranging from 4.0 percent to 4.826 percent through July 1, 2021. 31,580,000 $80,295,000 2012 taxable utility systems revenue refunding serial bonds, due in annual principal installments ranging from $3,225,000 to $9,150,000, plus semiannual interest ranging from 3.269 percent to 5.048 percent through July 1, 2035. 80,295,000 (Continued) 60 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 $47,290,000 2013 utility systems revenue bonds, due in one principal installment, plus semi-annual interest of 4.0 percent through July 1, 2037. $ 47,290,000 Total Utility Systems Revenue Bonds $ 978,160,000 Excise Tax Revenue Obligations $94,060,000 2013 excise tax revenue obligation, due in annual principal installments ranging from $6,620,000 to $10,785,000, plus semi-annual interest of 5.0 percent through July 1, 2032. $ Total bonds payable recorded in business-type activities 94,060,000 $1,073,098,088 The following tables summarize the City’s debt service requirements to maturity for its long term bonds payable at June 30, 2013. The deferred amounts on refundings are not included. Governmental Activities General Obligation Bonds Highway User Revenue Bonds Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 Principal $ 18,193,363 15,438,606 16,106,179 16,822,596 40,613,733 66,283,435 82,475,000 68,750,000 Interest $ 13,095,877 12,408,662 11,928,503 11,449,432 10,735,656 39,526,109 24,745,994 7,034,963 Total $ 31,289,240 27,847,268 28,034,682 28,272,028 51,349,389 105,809,544 107,220,994 75,784,963 Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 TOTALS $ 324,682,912 $ 130,925,196 $ 455,608,108 TOTALS $ Principal 6,945,000 7,255,000 7,585,000 7,900,000 8,375,000 47,590,000 29,000,000 - $ 114,650,000 $ $ Interest 5,471,900 5,186,200 4,884,250 4,502,850 4,109,850 13,978,075 2,649,000 - Total $ 12,416,900 12,441,200 12,469,250 12,402,850 12,484,850 61,568,075 31,649,000 - 40,782,125 $ 155,432,125 (Continued) 61 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Special Assessment Bonds Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 2034-38 TOTALS $ $ Principal 744,000 744,000 744,000 744,000 335,000 1,007,000 - $ 4,318,000 $ Interest 217,400 177,520 137,615 87,970 48,575 116,580 - $ 785,660 $ Community Facilities District Total 961,400 921,520 881,615 831,970 383,575 1,123,580 - Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 2034-38 5,103,660 TOTALS $ $ Principal 62,000 70,000 70,000 70,000 75,000 410,000 500,000 635,000 820,000 2,712,000 $ $ Interest 129,500 121,444 120,044 118,644 116,544 545,269 453,075 316,850 133,088 2,054,458 $ $ Total 191,500 191,444 190,044 188,644 191,544 955,269 953,075 951,850 953,088 4,766,458 Business-type Activities General Obligation Bonds Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 2034-38 TOTALS Principal $ 281,637 131,394 83,821 67,404 181,267 141,565 - $ 887,088 $ Interest 21,717 12,565 18,674 15,065 19,094 24,547 - $ 111,662 Total $ 303,354 143,959 102,495 82,469 200,361 166,112 - $ Revenue Bonds Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 2034-38 Principal $ 22,550,000 23,860,000 24,800,000 26,070,000 31,880,000 164,145,000 200,075,000 250,375,000 234,405,000 TOTALS $ 978,160,000 998,750 $ Interest 47,224,441 45,952,113 44,768,408 43,559,958 42,371,533 188,119,572 145,642,012 96,016,223 25,280,454 $ 678,934,714 $ Total 69,774,441 69,812,113 69,568,408 69,629,958 74,251,533 352,264,572 345,717,012 346,391,223 259,685,454 $ 1,657,094,714 Excise Tax Revenue Obligations Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 TOTALS Principal $ 13,570,000 40,340,000 40,150,000 $ 94,060,000 $ Interest 4,703,000 4,703,000 4,703,000 4,703,000 4,703,000 23,184,000 16,285,250 5,141,250 $ 68,125,500 $ Total 4,703,000 4,703,000 4,703,000 4,703,000 4,703,000 36,754,000 56,625,250 45,291,250 $ 162,185,500 (Continued) 62 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Special Assessment Bonds The City acts as trustee for special assessment districts whereby it collects the assessments levied against owners of property within established districts and disburses the amounts collected to retire the bonds issued to finance the improvements. At June 30, 2013, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, is adequate for the scheduled maturities of the bonds payable and the related interest. Improvement bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds payable with governmental commitment currently outstanding as of June 30, 2013 are $4,318,000. General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $887,088 of these bonds at June 30, 2013 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, 2013 is: 6% Bonds 20% Bonds $ 166,050,240 253,349,502 Total Available $ 419,399,742 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, 2013, (Continued) 63 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 the amount provided in the Replacement and Extension Funds equaled $22,567,071 which is in compliance with the bond provisions. d. Notes Payable Governmental Activities The City issued $122,835,000 of Highway Project Advancement Notes to provide funds to the Arizona Department of Transportation (ADOT) for the acceleration of the right-of-way acquisition, design and construction of highway improvements to State Route 24 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 24. 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. The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2013: Governmental Activities Fiscal Year 2014 2015 2016 2017 2018 2019-23 2024-28 2029 TOTALS Principal $ $ 20,000,000 25,000,000 14,085,000 14,800,000 48,950,000 122,835,000 Interest 5,404,250 5,404,250 4,704,250 3,891,750 3,187,500 4,975,000 $ 27,567,000 $ $ $ Total 5,404,250 25,404,250 29,704,250 17,976,750 17,987,500 53,925,000 150,402,000 Business-type Activities Interest Principal & Fees $ 125,651 $ 52,014 128,389 49,276 131,189 46,476 134,052 43,613 136,981 40,684 731,225 157,101 815,147 73,179 167,367 3,698 $ 2,370,001 $ 466,041 Total 177,665 177,665 177,665 177,665 177,665 888,326 888,326 171,065 $ 2,836,042 $ (Continued) 64 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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, 2013. Governmental Activities Fiscal Year 2014 2015 Principal $ 67,953 71,639 Interest $ 6,581 2,894 Total $ 74,534 74,533 TOTALS $ $ $ 149,067 139,592 9,475 The assets acquired through capital leases are as follows: Governmental Activities Asset: Machinery & Equipment Infrastructure Less: Accumulated depreciation Total f. $ 430,375 3,196,300 (3,380,746) $ 245,929 Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2013. g. Series 2012 Special Activity Revenue Bonds PMGAA issued $19,220,000 in special facility Revenue Bonds on February 29, 2012. The City has entered into a memorandum of understanding (MOU) with PMGAA and Able Engineering and Component Services for the development, construction and lease of aircraft maintenance repair and overhaul facility at PhoenixMesa Gateway Airport. In general, the MOU addresses PMGAA issuing Special Facility Revenue Bonds, constructing the facility and leasing the facility to the City. The City, in turn, will sublease the facility to Able Engineering. The City pledged a portion of its excise taxes as security for payment of the base rent. The pledge of such excise taxes will be a junior lien subordinate to certain outstanding senior obligations. The bonds are payable from the future revenues from the City through 2038. During that time frame total principal and interest to be paid on the bonds will be $35,216,300. The bonds are not considered the debt of the City. (Continued) 65 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 h. Pledged Revenues I. Utility System Revenue Bonds The City has pledged future utility customer revenues, net of specified operating expenses, to repay approximately $1.503 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 2037. Annual principal and interest payments on the bonds were 57 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $1,657,094,715. Principal and interest paid for the current year and total customer net revenues were $68,041,686 and $161,079,371, respectively. II. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $224.4 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 32 percent of eligible revenues. The total principal and interest remaining to be paid on the bonds is $155,432,125. Principal and interest paid for the current year and total highway user tax revenues were $11,772,349 and $30,007,015, respectively. III. 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 $5,103,660. Principal and interest paid for the current year and total assessments collected were $1,001,280, and $897,058, respectively 9. REFUNDED, REFINANCED AND DEFEASED OBLIGATIONS On April 16, 2013, the City issued $8,500,000 of highway user revenue bonds with an original issue premium of $1,806,845 to advance refund $9,100,000 of outstanding highway user revenue bonds. The refunding bonds were issued with an average interest rate of 5.0 percent. The net proceeds of $10,306,845 were provided to a refunding escrow agent to pay issuance costs of $177,000 for insurance premiums, underwriting fees and other issuance costs with the remaining $10,129,845 used to provide cash and purchase United States Government securities The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The advanced refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $1,028,356. This difference, reported in the accompanying financial statements as a deduction from highway user revenue bonds payable, is being charged to operations through the year 2025 (Continued) 66 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 using the effective interest method. The purpose of the refunding was to take advantage of lower interest rates and restructuring debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $761,706 over the next ten years producing an economic gain (difference between the present value of old and new debt service payments) of $758,626. On April 24, 2013, the City issued $8,915,000 of general obligation bonds with an original issue premium of $1,006,460 to advance refund $8,915,000 of outstanding general obligation bonds. The refunding bonds were issued with an average interest rate of 3.73 percent. The net proceeds of $9,921,460 were provided to a refunding escrow agent to pay issuance costs of $162,297 for insurance premiums, underwriting fees and other issuance costs with the remaining $9,759,163 used to provide cash and purchase United States Government securities The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The advanced refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $844,162. This difference, reported in the accompanying financial statements as a deduction from general obligation bonds payable, is being charged to operations through the year 2024 using the effective interest method. The purpose of the refunding was to take advantage of lower interest rates and restructuring debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $364,175 over the next ten years producing an economic gain (difference between the present value of old and new debt service payments) of $363,718. 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, 2013 as reflected below is not included in the City’s financial statements. Utility System Revenue Bond Issue dated March 1, 1998 Utility System Revenue Refunding Bond Issue dated February 1, 2002 Street and Highway User Revenue Bond Issue dated June 1, 2004 $ 10,035,000 56,430,000 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 (Continued) 67 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 General Obligation Bond Issue dated June 9, 2005 $8,705,000 Street and Highway User Revenue Bond Issue dated June 9, 2005 $ 8,500,000 Total Refunded Bonds Outstanding $ 188,245,000 10. SELF-INSURANCE INTERNAL SERVICE FUND The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds have been established to account for the costs of claims incurred by the City under self-insurance programs. The City is fully self-insured for all public liability risks, up to a maximum of $3,000,000, per occurrence, for the current policy year under the Property and Public Liability Insurance program. In addition, the City carries full property insurance 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 $200,000 per contract year. There were no changes in insurance coverage during this fiscal year for any of the three Self-Insurance Funds. The Workers’ Compensation Fund does not have a stop loss receivable at June 30, 2013. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $744,091 with $325,432 received this current fiscal year. The Property and Public Liability Fund does not have a stop loss receivable at June 30, 2013, and the Fund has not received any settlements in excess of insurance coverage over the past three fiscal years. The Employee Benefits Fund does not have stop loss receivable at June 30, 2013. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $3,692,150 with $682,704 received this current fiscal year. 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 and the Workers Compensation Fund. The claims liability in the Employee Benefits Fund is generated by the claims processing software system maintained by City Staff. (Continued) 68 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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, 6/30/11 Adjustments to Reserves-FY 11-12 Claim Payments-FY 11-12 $ 14,641,000 567,582 (2,178,582) $ 11,469,618 10,816,654 (3,568,076) $ 3,313,773 48,861,122 (46,588,126) $ 29,424,391 60,245,358 (52,334,784) Unpaid Claims, 6/30/12 $ 13,030,000 $ 18,718,196 $ 5,586,769 $ 37,334,965 Adjustments to Reserves-FY 12-13 Claim Payments-FY 12-13 $ $ $ 48,061,842 (49,802,962) $ 55,901,601 (54,318,417) Unpaid Claims, 6/30/13 $ 13,366,000 $ $ 38,918,149 1,165,015 (829,015) 6,674,744 (3,686,440) $ 21,706,500 3,845,649 All unpaid claims are reported as current liabilities in the Statement of Net Position as the change in these amounts have already been expensed in the statement of activities. 11. COMMITMENTS AND CONTINGENT LIABILITIES a. Pending Litigation The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. b. Sick Leave Benefits Sick leave benefits provided for ordinary sick pay are not vested with the employee. Fifty percent of unused benefits are payable only upon retirement of an employee. In accordance with the criteria, sick leave paid within 60 days of the year-end has been recorded as a liability in the governmental fund financial statements. Long-term liabilities of governmental funds are not shown on the fund financial statements. In the government-wide financial statements as well as the proprietary fund financial statements an amount of estimated sick 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, 2013, is $7,651,691. (Continued) 69 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 12. NET POSITION a. Restricted Net Position The government-wide statement of net position reports $94,513,621 of restricted net position, of which $42,544,078 is restricted by enabling legislation. b. Designated Net Position The net position 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 Position 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. A decrease in claims incurred but not reported calculated by the actuarial study resulted in a reduction of the deficit net position during the fiscal year. The deficit in the Workers Compensation Self-Insurance Fund was the result of a $2.3 million increase in liabilities. The increase in liabilities was the result of increase in claims incurred and pending. The City’s funding plan calls for yearly contributions from various funds to equal the years estimated claims and claim related expenses. Future claim liabilities are not considered in determining fund for each year. The deficit in the Warehouse, Maintenance and Services fund was a result of other post-employment benefit charges. 13. 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, 2013 for these services are as follows: (Continued) 70 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Operating Expenses Depreciation and Amortization Other Operating Revenues Functions Operating Income (Loss) Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam /Fitch Complex District Cooling Economic Investment $ 31,075,113 39,125,019 111,933,119 64,413,119 47,368,556 3,484,409 1,472,177 2,597,298 5,496,066 975,459 148,098 $ 4,248,860 4,228,952 41,116,891 43,409,516 5,044,815 1,767,903 1,798,381 595,813 1,999,411 446,057 - $ 23,525,469 27,804,313 38,969,314 21,596,360 31,183,871 2,552,453 1,525,959 3,350,485 7,094,816 634,756 3,653,007 $ 3,300,784 7,091,754 31,846,914 (592,757) 11,139,870 (835,947) (1,852,163) (1,349,000) (3,598,161) (105,354) (3,504,909) Total $ 308,088,433 $ 104,656,599 $ 161,890,803 $ 41,541,031 14. JOINT VENTURES The City currently participates in five joint ventures. The Greenfield Water Reclamation Plant and TOPAZ Regional Wireless Cooperative are managed by the City of Mesa, while the Subregional Operating Group, the Val Vista Water Treatment Plant, and Valley Metro Rail, Inc. are managed externally. The City's investment in these Joint Ventures as of June 30, 2013 is as follows: Valley Metro Rail Inc TOPAZ Regional Wireless Cooperative Subregional Operating Group Val Vista Water Treatment Plant Greenfield Water Reclamation Plant Joint Ventures Construction Deposits Governmental Activities $ 82,806,749 1,567,692 - Business-Type Activities $ 98,733,945 66,167,404 64,583,249 5,790,610 Total Investment in Joint Ventures $ $ 84,374,441 235,275,208 $ $ Total 82,806,749 1,567,692 98,733,945 66,167,404 64,583,249 5,790,610 319,649,649 (Continued) 71 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Valley Metro Rail, Inc. “VMRI” The City currently participates in the Central Phoenix/East Valley Light Rail Transit (LRT) along with the cities of Phoenix, Tempe and Glendale. Valley Metro Rail, Inc. (VMRI) is the management agency that was incorporated to administer the joint agreement between the cities and has oversight responsibility for the planning, design, construction and operation of the system. The agreement provides voting rights for members of the representative cities, including passage of an annual budget. The City has ongoing financial responsibility as a result of the joint agreement including participation in the cost to construct and to operate the light rail project less any Federal reimbursements and operating fares. A total of $1,145,423,567 has been spent on this project through the fiscal year ended June 30, 2013, of which the City’s share and equity interest is $82,806,749. The City has received and accrued $52.2 million of funding from the Federal Transit Administration (FTA), Congestion Mitigation Air Quality (CMAQ) and Public Transit Funds (PTF) related to this project. 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 $199.0 million to be funded with a combination of federal and regional funds. Separate financial statements for the activity can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. TOPAZ Regional Wireless Cooperative The City of Mesa currently participates with the City of Apache Junction, Apache Junction Fire District the Town of Gilbert, the Town of Queen Creek and Rio Verde Fire District (the Parties) in an intergovernmental agreement to plan, design, construct, operate, maintain and finance the TOPAZ Regional Wireless Cooperative Network (Trunked Open Arizona Network) TOPAZ is a 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 six month rolling average of airtime. The City’s equity in the joint venture is $1,567,692 and is reflected in the governmental funds financial statements. Separate financial statements are not prepared. Total investment in the joint venture as of June 30, 2013 is: City of Mesa $ 1,567,692 Town of Gilbert 408,103 City of Apache Junction 94,406 Apache Junction Fire District 44,781 Town of Queen Creek 21,061 Rio Verde Fire District 7,193 Total Joint Venture $ 2,143,236 (Continued) 72 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Wastewater Subregional Operating Group The City participates with the cities of Phoenix, Glendale, Scottsdale and Tempe in the Subregional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) in order to govern the construction, operation and maintenance of a multi-city sanitary sewer system (the “System”). The System includes the 91st Avenue Wastewater Treatment Plant, the Salt River outfall Sewer, the Southern Avenue Interceptor and related transportation facilities. The City of Phoenix acts as the lead agency in SROG and is responsible for the planning, budgeting, construction, operation and maintenance of the plant in addition to providing 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 equity in the joint venture is $98,733,945 and is reflected in the proprietary funds financial statements. SROG has no bonded debt outstanding. 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. Water Val Vista Water Treatment Plant The City also participates with the City of Phoenix in the Val Vista Water Treatment Plant and Transmission Line. 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 $66,167,404 and is reflected in the proprietary funds financial statements. The water treatment plant has no bonded debt outstanding. Separate financial statements for the activity can be obtained through the City of Phoenix, Finance Department, Financial Accounting and Reporting Division at 251 W. Washington Street, 9th Floor, Phoenix, Arizona, 85003. Greenfield Water Reclamation Project 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, 2013 is: Mesa’s Share Gilbert’s Share Queen Creek’s Share Total Joint Venture $ 64,583,249 61,311,522 26,625,541 $ 152,520,312 (Continued) 73 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 15. RETIREMENT AND PENSION PLANS All benefitted 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 benefited City employees, except sworn fire and police personnel, are included in the plan that is a multipleemployer cost-sharing defined benefit pension plan. All sworn fire and police personnel participate in the Public Safety Personnel Retirement System that is an agent multiple-employer plan. In addition, the Mayor and Councilmembers contribute to the State’s Elected Officials Retirement Plan that is also a multipleemployer cost-sharing pension plan. Arizona State Retirement System: a. Plan Description All the City’s benefitted 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, P.O. Box 33910, Phoenix, Arizona, 85067-3910 or by calling 1-800621-3778. b. Funding Policy 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. Covered employees were required by state statute to contribute for the years ended June 30, 2013, 2012, and 2011, 11.14 percent (10.90 pension plus 0.24 long-term disability), 10.74 percent (10.50 pension plus 0.25 long-term disability), and 9.85 percent (9.60 pension plus 0.25 long-term disability), respectively. The City’s covered employee contributions to the System for the years ending June 30, 2013, 2012 and 2011 were $16,607,775, $14,563,437, and $13,347,661, respectively, which were equal to the required contributions for each year. The City contributed equal amounts to the System 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 multipleemployer public safety employee retirement system that acts as a common investment and administrative agent for the various sworn fire and police agencies within the state. All sworn fire and police personnel are eligible to participate in the plan. The plan provides retirement, disability benefits, and death benefits to plan members and beneficiaries. The PSPRS is jointly administered by the Fund Manager and 234 (Continued) 74 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 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). PSPRS members are required to contribute 9.55 percent of their annual covered salary. The City is required to contribute an actuarially determined rate expressed as a percent of covered salary and a distribution of the net earnings of the Fund. The City’s rates for the fiscal years ending June 30, 2013, 2012, and 2011, were 27.62 percent (25.94 pension plus 1.68 health care), 23.12 percent (21.46 pension plus 1.66 health care), and 20.30 percent (18.77 pension plus 1.53 health care), respectively, for fire personnel and 27.51 percent (25.63 pension plus 1.88 health care), 23.34 percent (21.58 pension plus 1.76 health care), and 21.11 percent (19.52 pension plus 1.59 health care), respectively, for police members. c. Annual Pension Cost Fire personnel contributed $2,944,131 and police personnel contributed $5,799,592 during fiscal year 2012-2013. For 2013, the City’s annual pension cost of $7,657,491 for fire and $16,691,685 for police was equal to the City’s required and actual contributions for the pension cost not including health care. The required contribution was determined as part of the June 30, 2011 actuarial valuation using an individual entry-age actuarial cost method. d. Three Year Trend Information for PSPRS (Excluding health insurance subsidy) Fire Fiscal Year Ending 2011 2012 2013 Annual Pension Cost (APC) $ 5,088,956 5,971,897 7,657,491 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Annual Pension Cost (APC) $ 10,632,286 11,583,072 16,691,685 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Police Fiscal Year Ending 2011 2012 2013 (Continued) 75 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 e. Actuarial Methods and Assumptions The actuarial assumptions for both fire and police included (a) a rate of return on the investment of present and future assets of 8.25 percent investment rate of return, (b) projected salary increases of 5.0 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 amortization method is a level percent of payroll closed. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over time. PSPRS’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over an closed period of 30 years, 25 years remaining as of June 30, 2011 (if the actuarial value of assets exceeded the actuarial accrued liability, then the excess was amortized over an open period of 20 years). f. Funded Status and Funding Progress The funded status of the plans (excluding Health Insurance Subsidy) as of June 30, 2013 (Latest actuarial date available) is as follows: Fire 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 $ $ $ 268,820,604 170,546,734 98,273,870 63.4% 31,008,317 316.9% Police $ $ $ 472,690,674 283,840,532 188,850,142 60.0% 60,096,603 314.2% 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. g. Annual Other Post-Employment Benefits Cost (Health Insurance Subsidy) For 2013 the City’s annual Other Post-Employment Benefits (OPEB) cost of $1,105,223 for police and $490,249 for fire was equal to the City’s required contributions. Funded Status and Funding Progress The funded status of the Health Insurance Subsidy plans as of June 30, 2013 (Latest actuarial date available) is as follows: (Continued) 76 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 $ $ $ Fire 7,330,823 7,330,823 0% 31,008,317 23.64% $ $ $ Police 15,822,896 15,822,896 0% 60,096,093 26.33% 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. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years were as follows: Police Fiscal Year Ending 2011 2012 2013 $ Annual OPEB Cost 866,052 944,681 1,105,223 Percentage of Annual OPEB Cost Contributed 100% 100 100 Net OPEB Obligation $ - Annual OPEB Cost 414,816 461,945 490,249 Percentage of Annual OPEB Cost Contributed 100% 100 100 Net OPEB Obligation $ - Fire Fiscal Year Ending 2011 2012 2013 $ 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 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 (Continued) 77 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 11.5 percent of their annual covered salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amounts are to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rates for fiscal years ended June 30, 2013, 2012, and 2011, were 36.44 percent, 29.79 percent, and 29.79 percent respectively. The City’s contributions to EORP for the fiscal years ending June 30, 2013, 2012, and 2011 were $59,877, $49,518, and $44,454 respectively, which were equal to the required contributions for each year. The City’s employees contributed $18,896, $15,010, and $10,446, respectively, for the same time period. 16. POST-EMPLOYMENT BENEFITS In addition to the pension benefits described in Note 15, 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, 2013, approximately 1,615 former employees were eligible for these benefits, an increase of 40 participants from the prior year or a 2.5% 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 2012-2013 was $68,892,442. A liability of $9,684,040 is accrued in the businesstype activities financial statements; the remaining $59,208,402 has been accrued in the governmental activities column in the government-wide financial statements. (Continued) 78 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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 benefit 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, 2011, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Active Employees Total 1,615 3,310 4,925 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, 2013, the City contributed $14,676,902 to the plan (approximately 70.0 percent of total premiums). Plan members receiving benefits contributed $6,297,198 or approximately 30.0 percent of total premiums. (Continued) 79 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Annual OPEB Costs / Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and the related information for the plan are as follows at June 30, 2013: Annual Required Contribution Interest on Net OPEB Obligation Adjusted to Annual Required Contribution Annual OPEB Cost Contributions Made Increase in Net OPEB Obligation Net OPEB Obligation – Beginning of year Net OPEB Obligation – End of year $ $ 86,593,869 12,447,374 (15,471,899) 83,569,344 (14,676,902) 68,892,442 320,156,613 389,049,055 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the three years ending June 30, 2011 through 2013 were as follows: Fiscal Year Ended 2011 2012 2013 Annual OPEB Cost $80,493,139 82,462,949 83,569,344 Actual Contributions $ 13,494,020 14,328,105 14,676,902 Percentage of OPEB Cost Contributed 16.76% 17.38 17.56 Net OPEB Obligation $252,021,769 320,156,613 389,049,055 (Continued) 80 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Funded Status and Funding Progress The funded status of the plan as of July 1, 2011 was as follows: (Latest actuarial date available) Actuarial Value of Plan Assets Actuarial Accrued Liability Unfunded actuarial accrued liability Funded ratio Covered payroll Unfunded actuarial accrued liability as a percentage of covered payroll $ 992,015,972 $ 992,015,972 0% $330,112,710 300.5% 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. 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, 2011 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 • • Dental, Mental Health, Vision 5% Retiree contribution increase Same as medical trend 9.0% in 2011-2012, grading down by 0.5% each year to an ultimate rate of 5.0% (Continued) 81 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 17. SUBSEQUENT EVENTS On August 15, 2013, the City called for the optional redemption of $20,000,000 of Arizona Highway Projects Anticipation Notes, Series 2009, plus accumulated interest of $85,556. 18. RESTATEMENT OF BEGINNING FUND BALANCE/NET POSITION Governmental Activities Net Position/Fund Balance at 06/30/12, as Previously Reported Depreciation Adjustment Account Recievable Adjustment Net Position/Fund Balance at 07/01/12, as Restated Business-Type Activities Enterprise Fund General Fund $ 857,973,030 (11,148,102) (3,737,257) $ 735,944,179 (4,894,965) - $ 739,401,579 (4,894,965) - $ 85,792,127 (3,737,257) $ 843,087,671 $ 731,049,214 $ 734,506,614 $ 82,054,870 The City restated the beginning net position for the governmental activities due assets that should have been placed in service in prior years and their associated depreciation expense. Additionally, items were capitalized that were owned by other entities. This resulted in a decrease to beginning net position of $11.1 million. The City also restated beginning net position for the governmental activities and general fund due to an error in prior years of accruing accounts receivables that should not have been accrued. This resulted in a decrease in beginning net position of $3.7 million. The City restated the beginning net position for the business-type activities and the enterprise fund due assets that should have been placed in service in prior years and their associated depreciation expense. This resulted in a decrease to beginning net position of $4.9 million. 82 (Concluded) 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, 2013 Police Valuation Date June 30, 2011 2012 2013 Actuarial Value of Assets $ 267,751,509 277,907,210 283,840,532 Actuarial Accrued Liability (AAL) $ 394,642,766 436,074,466 472,690,674 Actuarial Value of Assets $ 158,852,143 166,996,344 170,546,734 Actuarial Accrued Liability (AAL) $ 226,084,157 252,197,254 268,820,604 Percent Funded 67.8% 63.7% 60.0% Unfunded AAL $ 126,891,257 158,167,256 188,850,142 Annual Covered Payroll $ 53,322,879 53,991,203 60,096,603 Unfunded AAL as a % of Covered Payroll 238.0% 293.0% 314.2% Annual Covered Payroll $ 26,468,460 28,075,010 31,008,317 Unfunded AAL as a % of Covered Payroll 254.0% 303.5% 316.9% Annual Covered Payroll (c) $ 53,322,879 53,991,203 60,096,093 UALL as a % of Covered Payroll (( b - a ) / c ) 27.8% 28.2% 26.3% Annual Covered Payroll (c) $ 26,468,460 28,075,010 31,008,317 UALL as a % of Covered Payroll (( b - a ) / c ) 26.1% 25.4% 23.6% Fire Valuation Date June 30, 2011 2012 2013 Percent Funded 70.3% 66.2% 63.4% Unfunded AAL $ 67,232,014 85,200,910 98,273,870 Other Post-Employment Benefits (Health Insurance Subsidy) Police Valuation Date June 30, 2011 2012 2013 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $ 14,829,939 15,221,638 15,822,896 Unfunded ALL (UALL) (b-a) $ 14,829,939 15,221,638 15,822,896 Funded Ratio (a/b) 0.0% 0.0% 0.0% Fire Valuation Date June 30, 2011 2012 2013 Actuarial Value of Assets (a) $ - Actuarial Accrued Liability (AAL) (b) $ 6,903,647 7,129,364 7,330,823 Unfunded ALL (UALL) (b-a) $ 6,903,647 7,129,364 7,330,823 83 Funded Ratio (a/b) 0.0% 0.0% 0.0% 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, 2013 Actuarial Valuation Date July 1, 2007 July 1, 2009 July 1, 2011 Actuarial Value of Assets $ - Actuarial Accrued Liability (AAL) $ 664,071,640 916,615,559 992,015,972 Percent Funded 0.0% 0.0% 0.0% Unfunded AAL $ 664,071,640 916,615,559 992,015,972 Annual Covered Payroll $ 338,835,124 321,012,148 330,112,710 Unfunded AAL as a Percentage of Covered Payroll 196.0% 285.5% 300.5% 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, 2011 provides funding results for the 2011-12 and 2012-13 fiscal years with biennial valuation planned going forward from this date. 84 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, 2013 Budgeted Amounts Actual Budgetary Basis Variance with Final Budget 95,278,535 14,054,431 104,578,904 16,603,223 8,501,965 498,032 132,479 3,035,884 $ (12,821,465) (1,345,569) 7,478,904 4,603,223 (2,198,035) 359,522 45,479 1,235,884 Original Final $ 108,100,000 15,400,000 97,100,000 12,000,000 10,700,000 138,510 87,000 1,800,000 $ 108,100,000 15,400,000 97,100,000 12,000,000 10,700,000 138,510 87,000 1,800,000 Total Net Revenues 245,325,510 245,325,510 242,683,453 (2,642,057) Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Contingency Capital Outlay 71,349,736 202,563,977 31,952,962 13,382,550 42,000,000 7,458,921 76,190,694 213,717,841 33,593,005 14,119,354 14,041,731 16,432,277 68,941,141 199,297,876 31,671,056 10,387,862 12,960,611 7,249,553 14,419,965 1,921,949 3,731,492 14,041,731 3,471,666 Total Expenditures 368,708,146 368,094,902 323,258,546 44,836,356 Excess (Deficiency) of Revenues Over (Under) Expenditures (123,382,636) (122,769,392) (80,575,093) 42,194,299 Other Financing Sources (Uses): Transfers In Transfers Out 83,600,000 (40,100,000) 83,600,000 (43,839,142) 83,715,021 (36,781,754) 115,021 7,057,388 43,500,000 39,760,858 46,933,267 7,172,409 (79,882,636) (83,008,534) (33,641,826) 49,366,708 79,211,000 79,211,000 80,001,071 Revenues: Sales Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Capital Contributions Miscellaneous Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ (671,636) $ See accompanying note to Required Supplementary Information 85 (3,797,534) $ $ 46,359,245 790,071 $ 50,156,779 CITY OF MESA, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2013 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, 2013 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis Exhibit B-3 $ Basis Differences: Compensated Absences Sales Tax Accrual Unrealized Gain on Investments Net Change in Fund Balance-GAAP Basis Exhibit A-5 (33,641,826) 851,404 3,841,234 512,840 $ 86 (28,436,348) NON-MAJOR 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. Grants and Special Programs accounts for federal and state grant expenditures and other City programs. The principle financing source is federal and state grant revenues. Cemetery Fund is designed to provide an accumulation of monies from which the interest earnings will provide perpetual care of the Cemetery. Eastmark Community Facility District accounts for the operations of the Eastmark Community Facility District which are paid from special assessments levied against the benefited properties. 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. 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. 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. Quality of Life Sales Tax Fund accounts for expenditures of the voter-approved sales tax to improve the quality of life for Mesa residents. 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. 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. Parks Bond Construction accounts for the costs of park facilities and improvements. General Capital Projects accounts for the costs of general City construction projects. Eastmark Capital Projects accounts for the costs of construction of drains, basins, channels and other storm sewer improvements and street improvements in the Eastmark Community Facilities District. 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. Eastmark Debt Service accumulates monies for the payment of the Community Facility District Bonds that are issued to finance the costs of improvements which are to be paid from special assessments levied against the benefited properties. CITY OF MESA, ARIZONA EXHIBIT C-1 NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2013 Special Revenue Funds Local Transportation Assistance Mesa Housing Authority Grants and Special Programs - $ 1,676,626 168,949 4,014 1,620,312 - $ 1,884,677 750,820 2,275,211 11,035 - - 53,641 - - ASSETS Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due from Other Governments Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments $ Total Assets $ - $ 3,523,542 $ 4,921,743 $ - $ $ LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Other Accrued Liabilities Due To Other Funds Advances Due to Other Funds Customer and Defendant Deposits Payable From Restricted Assets: Accrued Bond Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable 974 812,884 717,373 - 303,005 687,749 - - 808,456 - 692,488 - Total Liabilities - 2,339,687 1,683,242 Fund Balances: Nonspendable Restricted Committed Unassigned - 1,183,855 - 11,035 3,466,379 182,683 (421,596) Total Fund Balances - 1,183,855 3,238,501 - $ 3,523,542 $ 4,921,743 Total Liabilities and Fund Balances $ 87 EXHIBIT C-1 (Continued) Special Revenue Funds Cemetery $ 6,247,315 88,030 9,226 13 - Eastmark Community Facilities District Development Impact Fees $ $ - 101,706 - Environmental Compliance Highway User Revenue Fund $ $ 445,311 2,157 720 - $ 1,434,126 76,089 1,917 - - $ 1,512,132 $ 3,184,270 $ $ 394,975 364,214 - $ 6,344,584 $ 101,706 $ 448,188 $ $ 46,200 - $ 1,176,842 - 300 - Mesa Arts Center Restoration 5,000 3,178,903 3,594 1,773 - Street Sales Tax 12,953 2,838,231 - $ 45,647,416 1,952,973 76,324 41,523 - - - $ 2,851,184 $ 47,718,236 $ 131,598 157,767 2,587,384 - $ - 838,544 627,681 5,902,635 - - - 30,592 - - - - 300 46,200 1,176,842 35,592 759,189 2,876,749 7,368,860 13 6,344,271 - 55,506 - 720 (729,374) 1,476,540 - 1,773 2,423,308 - (25,565) 41,523 40,307,853 - 6,344,284 55,506 (728,654) 1,476,540 2,425,081 (25,565) 40,349,376 $ 6,344,584 $ 101,706 $ 448,188 $ 1,512,132 88 $ 3,184,270 $ 2,851,184 $ 47,718,236 CITY OF MESA, ARIZONA EXHIBIT C-1 (Continued) NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2013 Special Revenue Funds Quality of Life Sales Tax Capital Projects Funds Total Special Revenue Funds Fire Storm Sewer ASSETS Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due from Other Governments Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments $ 629,757 1,606,288 180 - $ 61,245,837 4,656,102 97,412 6,733,754 55,064 - Total Assets $ - $ - 53,641 - $ 2,236,225 $ 72,841,810 $ - $ 391,005 $ $ $ - $ 71,202 86,210 - - 391,005 - LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Other Accrued Liabilities Due To Other Funds Advances Due to Other Funds Customer and Defendant Deposits Payable From Restricted Assets: Accrued Bond Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable - Total Liabilities 974 2,527,506 2,554,784 2,587,384 1,176,842 5,907,635 - 1,531,536 - - - - 16,286,661 - 157,412 Fund Balances: Nonspendable Restricted Committed Unassigned 2,236,225 - 55,064 47,249,818 10,426,802 (1,176,535) - 233,593 - Total Fund Balances 2,236,225 56,555,149 - 233,593 $ 2,236,225 $ 72,841,810 Total Liabilities and Fund Balances 89 $ - $ 391,005 EXHIBIT C-1 (Continued) Capital Projects Funds Streets $ 42,060,191 215,932 2,576 13,095,421 1,366,661 Law Enforcement Vehicle Replacement Parks Bond Construction General Capital Projects $ $ 5,889,843 9,166 - $ 15,587,582 - $ 9,502,018 - - - - $ 15,587,582 $ 9,502,018 $ $ - 5,147,822 - $ 56,740,781 $ 5,147,822 $ 5,899,009 $ $ 1,478,342 66,335 - $ - 5,502,753 1,421,104 - 28,741 23,395 - 1,150,823 1,084,835 - - - - - - 6,923,857 1,544,677 - 52,136 2,235,658 49,816,924 - 3,603,145 - 725,000 5,174,009 - 15,535,446 - 7,266,360 - 49,816,924 3,603,145 5,899,009 15,535,446 7,266,360 5,899,009 $ 15,587,582 $ 9,502,018 $ 56,740,781 $ 5,147,822 $ 90 CITY OF MESA, ARIZONA EXHIBIT C-1 (Continued) NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2013 Capital Projects Funds Debt Service Funds General Obligation Bond Redemption Special Assessment Bond Redemption $ $ Eastmark Capital Projects Total Capital Projects Funds Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due from Other Governments Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments $ 2,366,256 - $ 80,944,717 215,932 11,742 13,095,421 1,366,661 - - 29,773,174 515,326 77,720 40,950 3,838,573 - Total Assets $ 2,366,256 $ 95,634,473 $30,288,500 $ 3,957,243 $ $ ASSETS - - LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Other Accrued Liabilities Due To Other Funds Advances Due to Other Funds Customer and Defendant Deposits Payable From Restricted Assets: Accrued Bond Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable $ 2,183 - $ 8,234,044 2,681,879 - - - - - 5,938,741 263,860 23,947,997 - 118,670 3,838,573 - 2,183 10,915,923 30,150,598 3,957,243 Fund Balances: Nonspendable Restricted Committed Unassigned 2,364,073 - 72,278,181 12,440,369 - 137,902 - - Total Fund Balances 2,364,073 84,718,550 137,902 - $ 2,366,256 $ 95,634,473 $30,288,500 $ 3,957,243 Total Liabilities Total Liabilities and Fund Balances 91 EXHIBIT C-1 (Continued) Capital Lease Redemption $ - Debt Service Funds Highway User Eastmark Revenue Debt Bond Service Redemption $ - $ - Total Nonmajor Governmental Funds Total Debt Service Funds $ - $ 142,190,554 4,872,034 109,154 19,829,175 55,064 1,366,661 - 8,877,822 - 193,050 2,712,000 - 270,770 38,691,946 6,550,573 515,326 270,770 38,691,946 6,604,214 515,326 $ - $ 8,877,822 $ 2,905,050 $ 46,028,615 $ 214,504,898 $ - $ $ $ $ $ - - - 974 10,761,550 5,236,663 2,587,384 1,176,842 5,907,635 - 2,732,822 6,145,000 6,816 2,712,000 - 8,797,049 6,814,433 23,947,997 6,145,000 8,797,049 8,345,969 23,947,997 6,145,000 - 8,877,822 2,718,816 45,704,479 72,907,063 - - 186,234 - 186,234 137,902 - 55,064 119,714,233 23,005,073 (1,176,535) - - 186,234 324,136 141,597,835 - $ 8,877,822 $ 2,905,050 $ 46,028,615 $ 214,504,898 92 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, 2013 Special Revenue Funds Local Transportation Assistance Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues $ Mesa Housing Authority $ - 16,159,301 18,106,175 - 299,207 16,478,770 2,595,526 6,250,097 1,052,930 203,904 - 54,494 - - 1,764 7,838,960 - - Total Expenditures - 16,779,741 17,941,417 - 54,494 Excess (Deficiency) of Revenues Over (Under) Expenditures - Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges Cost of Issuance Capital Outlay (620,440) $ 1,903,029 10,977,177 174,644 236,078 2,609 2,131,440 2,681,198 Cemetery 164,758 $ 109,792 29,293 9,695 Eastmark Community Facilities District - Total Revenues 15 16,123,342 32,031 3,913 Grants and Special Programs $ 148,780 104,303 104,303 148,780 49,809 Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Issuance of Refunding Debt Refunding Advance (100,022) - - 3,073,743 - - 5,697 - Total Other Financing Sources (Uses) (100,022) - 3,073,743 - 5,697 Net Change in Fund Balances (100,022) Fund Balances - Beginning Fund Balances - Ending 100,022 $ - (620,440) 1,804,295 $ 1,183,855 93 3,238,501 $ 3,238,501 148,780 55,506 6,195,504 $ 6,344,284 $ 55,506 EXHIBIT C-2 (Continued) Development Impact Fees Mesa Arts Center Restoration Special Revenue Funds Highway User Revenue Environmental Street Sales Compliance Funds Tax $ $ $ 3,362,323 7,019 - 31,948 10,551,439 20,466 - $ Total Special Revenue Funds 30,007,015 36,100 3,113 - $ 24,255,782 185,771 317,955 184,492 281,673 - $ 17,746,010 80,430 1,519 - $ 42,001,792 1,903,029 3,628,539 57,561,740 11,057,067 517,444 384,052 2,131,440 2,694,806 3,369,342 288,295 10,603,853 30,046,228 25,225,673 17,827,959 121,879,909 1,321 - 3,820 - 217,367 1,357,442 5,028,644 2,415,493 11,375,711 3,194,271 291,889 10,670 14,335,159 19,173,974 - 6,062,979 27,372,609 6,096,064 44,809,037 2,039,549 79,439 244,945 1,008 7,020,633 2,040,870 83,259 9,263,891 11,376,719 24,852,622 1,328,472 205,036 1,339,962 18,669,509 373,051 19,173,974 (1,346,015) 17,226,298 101,566,987 20,312,922 165,551 (4,112,293) - - - (18,695,349) - 6,919,000 (725,000) - - 10,163,991 (23,632,664) - (3,946,742) - - (18,695,349) 6,194,000 - (13,468,673) (25,840) 6,567,051 (1,346,015) 6,844,249 33,782,325 3,582,240 49,710,900 $ 40,349,376 $ 2,236,225 $ 56,555,149 (2,618,270) 1,889,616 $ 600 281,366 6,329 - Quality of Life Sales Tax (728,654) 205,036 1,339,962 1,271,504 1,085,119 $ 1,476,540 $ 2,425,081 275 $ (25,565) 94 CITY OF MESA, ARIZONA EXHIBIT C-2 (Continued) NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Capital Project Funds Storm Sewer Fire Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues $ Total Revenues Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges Cost of Issuance Capital Outlay - $ - - - - - Streets $ 10,330 17,328,956 14,600 4,056 17,357,942 - Law Enforcement Vehicle Replacement $ $ - 26,106 209,453 235,559 - - - 183,301 580,670 36,953,459 106,457 13,301,083 984,222 Total Expenditures - 183,301 37,534,129 13,407,540 984,222 Excess (Deficiency) of Revenues Over (Under) Expenditures - (183,301) (20,176,187) (13,407,540) (748,663) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Issuance of Refunding Debt Refunding Advance (3,595,376) - - 35,750,000 520,650 - 3,595,377 6,900,000 95,452 - 725,000 - Total Other Financing Sources (Uses) (3,595,376) - 36,270,650 10,590,829 725,000 Net Change in Fund Balances (3,595,376) (183,301) 16,094,463 (2,816,711) (23,663) 3,595,376 416,894 33,722,461 6,419,856 $ 233,593 $ 49,816,924 $ 3,603,145 Fund Balances - Beginning Fund Balances - Ending $ - 95 5,922,672 $ 5,899,009 EXHIBIT C-2 (Continued) Capital Project Funds General Capital Projects Parks Bond Construction $ - - $ - 443,153 6,472 19,684 - Eastmark Capital Projects $ - Total Capital Projects Funds $ 10,330 17,328,956 14,600 30,162 209,453 - 17,593,501 - 443,153 6,472 19,684 - General Obligation Bond Redemption $ Debt Service Funds Special Assessment Bond Capital Lease Redemption Redemption 14,403,757 865,128 186 - $ 15,269,071 897,058 - $ 897,058 - - - - 280,656 1,745,545 8,182,331 13,862 141,015 - 13,862 1,108,798 61,349,941 23,947,997 12,089,440 5,100 162,297 - 744,000 257,280 400 - 681,958 34,183 - 2,026,201 8,651,640 154,877 62,941,910 36,204,834 1,001,680 716,141 (2,026,201) (8,651,640) (154,877) (45,348,409) (20,935,763) (104,622) (716,141) 17,310,000 251,647 - 15,918,000 - (193,050) 2,712,000 - 20,238,377 (3,788,426) 62,672,000 867,749 - 20,910,293 1,006,460 8,915,000 (9,759,162) 104,622 - 716,141 - 17,561,647 15,918,000 2,518,950 79,989,700 21,072,591 104,622 716,141 15,535,446 7,266,360 2,364,073 34,641,291 136,828 - - 50,077,259 1,074 - - $ 15,535,446 $ 7,266,360 $ 2,364,073 $ 84,718,550 96 $ 137,902 $ - $ - CITY OF MESA, ARIZONA EXHIBIT C-2 (Continued) NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Debt Service Funds Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues Highway User Revenue Bond Redemption Eastmark Debt Service Total Debt Service Funds Total Nonmajor Governmental Funds $ $ $ $ Total Revenues Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges Cost of Issuance Capital Outlay - - - - - - 14,403,757 897,058 865,128 186 16,166,129 - 42,001,792 14,403,757 1,903,029 897,058 3,638,869 74,890,696 11,071,667 1,382,572 414,400 2,131,440 2,904,259 155,639,539 6,506,132 27,379,081 6,115,748 44,809,037 6,145,000 5,627,349 4,000 177,000 - 6,816 - 31,518,955 17,980,885 34,183 9,500 339,297 - 31,518,955 17,994,747 34,183 9,500 1,448,095 78,576,239 11,953,349 6,816 49,882,820 214,391,717 Excess (Deficiency) of Revenues Over (Under) Expenditures (11,953,349) (6,816) (33,716,691) (58,752,178) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Issuance of Refunding Debt Refunding Advance 11,776,349 1,806,845 8,500,000 (10,129,845) 193,050 - 33,700,455 2,813,305 17,415,000 (19,889,007) 64,102,823 (27,421,090) 62,672,000 3,681,054 17,415,000 (19,889,007) 11,953,349 193,050 34,039,753 100,560,780 186,234 323,062 41,808,602 1,074 99,789,233 324,136 $ 141,597,835 Total Expenditures Total Other Financing Sources (Uses) Net Change in Fund Balances - Fund Balances - Beginning - Fund Balances - Ending $ - $ 186,234 97 $ 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-3 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2013 Warehouse, Maintenance and Services ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable Accrued Interest Receivable Due from Other Governments Inventory Prepaid Costs Total Current Assets $ Capital Assets: Buildings Other Improvements Machinery and Equipment Intangibles Infrastructure Construction in Progress Less Accumulated Depreciation and Amortization Net Capital Assets 1,699,573 5,319 6,109,311 1,468 7,815,671 2,061,431 426,745 6,507,271 4,047 12,743 265,019 (7,352,875) 1,924,381 Total Assets Property and Public Liability Self Insurance $ 11,699,641 11,023 413,401 12,124,065 - 9,740,052 12,124,065 1,109,978 469,865 29,415 22 - 75,629 4,460,000 8,906,000 - Total Current Liabilities 1,655,472 13,395,437 Long-Term Liabilities Compensated Absences Post Employment Benefits 549,784 7,832,105 - Total Long-Term Liabilities 8,381,889 - 10,037,361 13,395,437 LIABILITIES AND NET POSITION Current Liabilities: Warrants Outstanding Accounts Payable Accrued Expenses Other Accrued Expenses: Estimated Liability For Claims: Incurred-Not Reported Incurred and Pending Current Portion of Compensated Absences Total Liabilities Net Position: Net Investment in Capital Assets Unrestricted Total Net Position 1,924,381 (2,221,690) $ (297,309) 98 (1,271,372) $ (1,271,372) EXHIBIT C-3 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance Total $ 6,462,368 5,152 257,239 6,724,759 $ 42,887,845 1,893,191 52,121 269 44,833,426 $ 62,749,427 1,893,191 68,296 5,319 6,109,311 672,377 71,497,921 - - 6,724,759 44,833,426 73,422,302 135,268 49,277 753 599,033 358,009 328,801 763,716 1,517,286 799,419 6,981,500 14,725,000 - 3,845,649 - 15,287,149 23,631,000 75,629 21,891,798 5,131,492 42,074,199 - - 549,784 7,832,105 - - 8,381,889 21,891,798 5,131,492 50,456,088 39,701,934 $ 39,701,934 1,924,381 21,041,833 $ 22,966,214 (15,167,039) $ (15,167,039) 2,061,431 426,745 6,507,271 4,047 12,743 265,019 (7,352,875) 1,924,381 99 CITY OF MESA, ARIZONA EXHIBIT C-4 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Warehouse, Maintenance and Services Operating Revenues: Charges For Services: Warehouse Fleet Support Services Printing and Graphics Self-Insurance Contributions: Employee City State Retirement System Other Total Operating Revenues $ 7,214,920 17,709,880 943,852 Property and Public Liability Self Insurance $ - 25,868,652 6,301,000 6,301,000 Operating Expenses: Warehouse Fleet Support Services Printing and Graphics Administrative Costs Claims Incurred Premiums to Insurance Carriers Total Operating Expenses 6,848,321 19,309,757 957,911 27,115,989 929,876 1,165,015 1,000,067 3,094,958 Operating Income (Loss) Before Depreciation (1,247,337) 3,206,042 Depreciation (1,593,056) - Operating Income (Loss) (2,840,393) 3,206,042 Nonoperating Revenues (Expense): Investment Income - 30,594 Total Nonoperating Revenues (Expenses) - 30,594 Income (Loss) Before Transfers and Capital Contributions (2,840,393) Contributions 88,399 Change in Net Position Total Net Position - Beginning Total Net Position - Ending $ 100 3,236,636 - (2,751,994) 3,236,636 2,454,685 (4,508,008) (297,309) $ (1,271,372) EXHIBIT C-4 (Continued) Workers' Compensation Self Insurance $ - $ - Total $ 7,214,920 17,709,880 943,852 6,296,107 626,416 6,922,523 13,053,532 43,275,754 3,559,170 588,813 60,477,269 13,053,532 55,872,861 3,559,170 1,215,229 99,569,444 926,435 6,674,744 554,445 8,155,624 3,843,158 48,061,842 2,602,512 54,507,512 6,848,321 19,309,757 957,911 5,699,469 55,901,601 4,157,024 92,874,083 (1,233,101) 5,969,757 6,695,361 (1,233,101) - (1,593,056) 5,969,757 5,102,305 9,027 151,818 191,439 9,027 151,818 191,439 6,121,575 5,293,744 (1,224,074) - $ Employee Benefits Self Insurance (6,147) 82,252 (1,224,074) 6,115,428 5,375,996 (13,942,965) 33,586,506 17,590,218 (15,167,039) $ 39,701,934 $ 22,966,214 101 CITY OF MESA, ARIZONA EXHIBIT C-5 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Warehouse, Maintenance and Services Cash Flows from Operating Activities: Cash Received from Users Cash Payments to Suppliers Cash Payments to Employees $ Net Cash Provided by Operating Activities Property and Public Liability Self Insurance 25,907,215 (19,803,159) (4,746,217) $ 1,357,839 6,301,000 (1,812,886) (922,429) 3,565,685 Cash Flows from Capital and Related Financing Activities: Acquisition and Construction of Capital Assets Contributions (203,273) 153,906 - Net Cash Used for Capital and Related Financing Activities (49,367) - Cash Flows from Investing Activities: Interest Received on Investments - 19,571 Net Cash Provided by Investing Activities - 19,571 1,308,472 3,585,256 391,101 8,114,385 Net Increase in Cash and Cash Equivalents Pooled Cash and Investments at Beginning of Year Pooled Cash and Investments at End of Year $ 1,699,573 $ 11,699,641 $ (2,840,393) $ 3,206,042 Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Inventory (Increase) Decrease in Prepaid Costs (Decrease) Increase in Accounts Payable (Decrease) Increase in Other Accrued Expenses 1,593,056 Total Adjustments Net Cash Provided by Operating Activities $ 102 - 38,563 (47,423) 3,447 1,140,040 1,470,549 (4,997) 28,640 336,000 4,198,232 359,643 1,357,839 $ 3,565,685 EXHIBIT C-5 (Continued) Workers' Compensation Self Insurance $ 7,085,362 (4,759,939) (338,134) Employee Benefits Self Insurance $ 1,987,289 Total 59,863,247 (54,605,655) (912,383) $ 4,345,209 99,156,824 (80,981,639) (6,919,163) 11,256,022 - (68,533) 62,386 (271,806) 216,292 - (6,147) (55,514) 3,876 99,696 123,143 3,876 99,696 123,143 1,991,165 4,438,758 11,323,651 4,471,203 38,449,087 51,425,776 $ 6,462,368 $ 42,887,845 $ 62,749,427 $ (1,233,101) $ 5,969,757 $ 5,102,305 - $ - 1,593,056 162,840 (24,794) 94,040 2,988,304 (614,022) 11,680 718,914 (1,741,120) (412,619) (47,423) (14,664) 1,981,634 3,053,733 3,220,390 (1,624,548) 6,153,717 1,987,289 $ 4,345,209 $ 11,256,022 103 FIDUCIARY FUND The Fiduciary Fund accounts for assets held by the City in a custodial capacity for the benefit of a third party and cannot be used to address activities or obligations of the City. The Payroll Agency Fund accounts for all payroll transactions. CITY OF MESA, ARIZONA EXHIBIT C-6 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Balance July 1, 2012 Additions Balance June 30, 2013 Deductions PAYROLL AGENCY FUND Assets: Pooled Cash and Investments $ 12,851,354 $ 426,291,605 $ 425,752,855 $ 13,390,104 Total Assets $ 12,851,354 $ 426,291,605 $ 425,752,855 $ 13,390,104 Liabilities: Accounts Payable Accrued Payroll Payable $ 12,851,354 $ 1,531,849 424,759,756 $ 425,752,855 $ 1,531,849 11,858,255 Total Liabilities $ 12,851,354 $ 426,291,605 $ 425,752,855 $ 13,390,104 104 CITY OF MESA, ARIZONA EXHIBIT D-1 HIGHWAY USER REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Budgeted Amounts Variance with Final Budget Original Final Actual $ 30,844,000 92,000 200,000 1,000 $ 30,844,000 92,000 200,000 1,000 $ 30,007,015 36,100 3,113 - Total Revenues 31,137,000 31,137,000 30,046,228 (1,090,772) Expenditures: Current: Community Environment Capital Outlay 18,601,837 - 18,368,676 295,698 11,375,711 1,008 6,992,965 294,690 Total Expenditures 18,601,837 18,664,374 11,376,719 7,287,655 Excess of Revenues Over Expenditures 12,535,163 12,472,626 18,669,509 6,196,883 Other Financing Sources (Uses): Transfer Out - - (18,695,349) (18,695,349) Total Other Financing Sources (Uses) - - (18,695,349) (18,695,349) 12,535,163 12,472,626 (25,840) (12,498,466) 275 275 $ 12,535,438 $ 12,472,901 Revenues: Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending 105 275 $ (25,565) $ (836,985) (55,900) (200,000) 3,113 (1,000) $ (12,498,466) CITY OF MESA, ARIZONA EXHIBIT D-2 QUALITY OF LIFE SALES TAX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Budgeted Amounts Variance with Final Budget Original Final Actual $ 18,112,699 - $ 18,112,699 - $ 17,746,010 80,430 1,519 Total Revenues 18,112,699 18,112,699 17,827,959 (284,740) Expenditures: Current: Public Safety 18,112,699 19,248,499 19,173,974 74,525 Total Expenditures 18,112,699 19,248,499 19,173,974 74,525 (1,135,800) (1,346,015) (210,215) 3,582,240 3,582,240 Revenues: Sales Taxes Licenses & Permits Investment Income Net Change in Fund Balance - Fund Balance - Beginning Fund Balance - Ending 3,582,240 $ 3,582,240 106 $ 2,446,440 $ 2,236,225 $ (366,689) 80,430 1,519 $ (210,215) CITY OF MESA, ARIZONA EXHIBIT D-3 STREET SALES TAX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Budgeted Amounts Variance with Final Budget Original Final Actual $ 22,496,000 175,000 71,000 1,000 $ 22,496,000 175,000 71,000 1,000 $ 24,255,782 185,771 317,955 184,492 281,673 - Total Revenues 22,743,000 22,743,000 25,225,673 2,482,673 Expenditures: Current: General Government Public Safety Culture-Recreational Community Environment Capital Outlay 4,835,979 309,852 10,670 26,462,002 3,397,687 4,472,009 309,852 10,670 20,670,291 19,186,079 3,194,271 291,889 10,670 14,335,159 7,020,633 1,277,738 17,963 6,335,132 12,165,446 Total Expenditures 35,016,190 44,648,901 24,852,622 19,796,279 (12,273,190) (21,905,901) 373,051 22,278,952 6,919,000 (725,000) 6,919,000 - Revenues: Sales Taxes Licenses & Permits Intergovernmental Charges For Services Investment Income Miscellaneous Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources: Transfers In Transfers Out Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending - (725,000) $ 1,759,782 10,771 317,955 184,492 210,673 (1,000) (12,273,190) (22,630,901) 6,567,051 29,197,952 33,782,325 33,782,325 33,782,325 - $ 21,509,135 $ 11,151,424 $ 40,349,376 $ 29,197,952 107 CITY OF MESA, ARIZONA EXHIBIT D-4 MESA HOUSING AUTHORITY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget $ 31,484,698 1,000 1,490 - $ 31,484,698 1,000 1,490 - $ 16,123,342 15 32,031 3,913 $ (15,361,356) (1,000) 15 30,541 3,913 Total Revenues 31,487,188 31,487,188 16,159,301 (15,327,887) Expenditures: Current: Public Safety Community Environment Capital Outlay 296,303 32,910,885 - 385,000 32,820,188 2,000 299,207 16,478,770 1,764 85,793 16,341,418 236 Total Expenditures 33,207,188 33,207,188 16,779,741 16,427,447 Net Change in Fund Balance (1,720,000) (1,720,000) 1,804,295 1,804,295 Revenues: Intergovernmental Charges For Services Licenses and Permits Investment Income Miscellaneous Fund Balance - Beginning Fund Balance - Ending $ 84,295 108 $ 84,295 (620,440) 1,099,560 1,804,295 $ 1,183,855 $ 1,099,560 CITY OF MESA, ARIZONA EXHIBIT D-5 GRANTS AND SPECIAL PROGRAMS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original Revenues: Sales Tax Property Tax Occupancy Tax Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Contributions Miscellaneous $ Final 69,000 68,000 1,616,000 64,000 31,263,135 279,708 262,000 1,418,996 2,802,004 $ Variance with Final Budget Actual 69,000 68,000 1,616,000 64,000 31,263,135 279,708 262,000 1,418,996 2,802,004 $ 1,903,029 10,977,177 174,644 236,078 2,609 2,131,440 2,681,198 $ (69,000) (68,000) 287,029 (64,000) (20,285,958) (105,064) (25,922) 2,609 712,444 (120,806) Total Revenues 37,842,843 37,842,843 18,106,175 (19,736,668) Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Miscellaneous Expense Capital Outlay 1,181,473 11,008,525 1,556,168 1,585,000 27,661,094 1,193,551 11,445,858 1,522,640 203,904 1,921,600 29,726,510 2,595,526 6,250,097 1,052,930 203,904 7,838,960 (1,401,975) 5,195,761 469,710 1,921,600 21,887,550 Total Expenditures 42,992,260 46,014,063 17,941,417 28,072,646 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,149,417) (8,171,220) 164,758 8,335,978 3,073,743 3,073,743 3,238,501 11,409,721 - - 3,238,501 $ 11,409,721 Other Financing Sources: Transfers In Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending (5,149,417) $ (5,149,417) 109 (8,171,220) $ (8,171,220) $ 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. 110 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 122 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. 125 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. 133 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. 135 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. CITY OF MESA, ARIZONA TABLE I NET POSITION BY COMPONENTS LAST TEN FISCAL YEARS (accrual basis of accounting) GOVERNMENTAL ACTIVITIES Net Investment in Capital Assets $ 2003-04 2004-05 2005-06 2006-07 781,518,870 $ 769,923,509 $ 765,874,830 $ 791,591,633 Restricted 61,749,912 68,486,614 84,386,395 95,107,036 Unrestricted 43,964,946 62,539,346 85,734,791 128,548,213 Total Governmental Activities Net Position $ 887,233,728 $ 900,949,469 $ 935,996,016 $ 1,015,246,882 $ 451,550,515 $ 424,820,602 $ 390,100,160 $ 366,497,841 BUSINESS-TYPE ACTIVITIES Net Investment in Capital Assets Restricted 62,692,972 101,565,804 89,383,126 96,756,386 218,266,775 219,103,522 268,388,224 308,374,940 $ 732,510,262 $ 745,489,928 $ 747,871,510 $ 771,629,167 $ 1,233,069,385 $ 1,194,744,111 $ 1,155,974,990 $ 1,158,089,474 Restricted 124,442,884 170,052,418 173,769,521 191,863,422 Unrestricted 262,231,721 281,642,868 354,123,015 436,923,153 1,619,743,990 $ 1,646,439,397 $ 1,683,867,526 $ Unrestricted Total Business-type Activities PRIMARY GOVERNMENT Net Investment in Capital Assets Total Primary Government $ 110 1,786,876,049 TABLE I (Continued) $ 2007-08 2008-09 2009-10 2010-11 2011-12 794,720,403 $ 791,523,460 $ 844,777,095 $ 872,302,182 $ 913,701,563 $ 2012-13 902,397,377 86,252,122 92,532,141 86,954,514 39,295,786 41,257,218 56,718,834 125,128,033 91,363,394 3,651,537 (6,375,735) (96,985,751) (184,354,982) $ 1,006,100,558 $ 975,418,995 $ 935,383,146 $ 905,222,233 $ 857,973,030 $ 774,761,229 $ 410,073,719 $ 413,943,796 $ 434,813,786 $ 430,435,538 $ 412,016,435 $ 346,352,341 94,133,333 82,697,422 47,011,208 55,873,506 69,738,803 37,794,787 308,215,959 278,891,568 271,705,523 258,130,789 254,188,941 271,619,354 $ 812,423,011 $ 775,532,786 $ 753,530,517 $ 744,439,833 $ 735,944,179 $ 655,766,482 $ 1,204,794,122 $ 1,205,467,256 $ 1,279,590,881 $ 1,302,737,720 $ 1,325,717,998 $ 1,248,749,718 180,385,455 175,229,563 133,965,722 95,169,292 110,996,021 94,513,621 433,343,992 370,254,962 275,357,060 251,755,054 157,203,190 87,264,372 1,818,523,569 $ 1,750,951,781 $ 1,688,913,663 $ 1,649,662,066 $ 1,593,917,209 $ $ 111 1,430,527,711 CITY OF MESA, ARIZONA TABLE II CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) EXPENSES 2003-04 2004-05 2005-06 2006-07 GOVERNMENTAL ACTIVITIES: General Government $ Public Safety 44,012,723 $ 48,722,316 $ 44,568,148 $ 48,200,767 181,856,295 204,366,091 212,010,952 232,099,968 Cultural-Recreational 53,201,350 62,870,201 65,389,229 64,591,583 Community Environment 72,984,342 86,363,321 97,613,466 91,664,096 Interest in Long-term Debt 14,490,474 15,503,667 16,061,123 18,037,348 366,545,184 417,825,596 435,642,918 454,593,762 Electric 24,390,551 27,118,590 26,817,051 26,280,947 Gas 25,990,497 33,829,631 38,743,370 37,825,634 Water 49,542,568 54,247,920 54,110,525 59,964,524 Wastewater 39,673,430 47,799,248 67,180,688 60,603,399 Solid Waste 21,826,949 23,863,908 25,070,150 27,891,495 Airport 2,087,395 2,119,795 4,194,272 2,720,953 Golf Course 2,781,273 2,966,147 2,524,364 2,601,521 Convention Center 4,224,151 4,260,510 4,822,347 5,666,507 Hohokam Stadium/Fitch Complex - - - - Cubs Stadium - - - - District Cooling - - 67,274 1,090,931 Economic Investment - - - 170,516,814 196,205,749 223,530,041 Total Governmental Activities Expenses BUSINESS-TYPE ACTIVITIES: Total Business-type Activities Expenses Total Primary Government Expenses $ 537,061,998 $ 614,031,345 112 $ 659,172,959 224,645,911 $ 679,239,673 TABLE II (Continued) 2007-08 $ 2008-09 63,633,405 $ 54,225,566 $ 2010-11 54,862,584 $ 2011-12 59,551,669 $ 2012-13 57,472,328 $ 105,409,741 292,395,865 290,927,716 288,928,693 273,320,156 287,918,202 287,451,306 72,999,346 67,039,000 54,010,115 54,549,751 57,170,754 61,717,223 99,414,870 121,735,796 104,096,133 106,434,114 97,592,690 129,164,338 19,082,936 18,658,530 20,013,068 21,078,138 21,631,042 23,442,680 547,526,422 552,586,608 521,910,593 514,933,828 521,785,016 607,185,288 31,612,431 27,633,642 27,106,177 26,816,560 29,751,312 28,896,937 43,246,724 35,991,817 35,466,448 36,020,012 34,275,119 35,652,803 59,224,757 68,955,827 80,915,190 82,377,888 74,161,665 103,431,852 61,293,453 80,349,057 70,227,712 63,613,492 68,540,140 91,738,649 32,877,483 31,953,188 31,503,513 31,462,070 32,485,233 33,693,521 3,316,536 3,703,129 3,943,651 3,971,648 3,737,409 4,299,627 3,011,883 3,082,522 2,714,896 2,679,327 2,588,958 3,352,623 5,447,050 4,558,208 4,158,023 3,849,444 3,486,069 3,946,298 - - 7,407,501 8,323,724 8,525,374 9,094,227 - - - 14,990 53,747 - 768,873 975,687 1,000,347 964,585 973,595 1,080,813 - - - 3,653,007 264,443,458 260,093,740 258,578,621 318,840,357 - - 240,799,190 $ 2009-10 788,325,612 257,203,077 $ 809,789,685 $ 786,354,051 $ 775,027,568 113 $ 780,363,637 $ 926,025,645 CITY OF MESA, ARIZONA TABLE II (Continued) CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) PROGRAM REVENUES 2003-04 2004-05 2005-06 2006-07 GOVERNMENTAL ACTIVITIES: Charges for services: Licenses and Permits 19,819,170 $ 18,817,521 Charges for Services $ 11,152,669 13,047,596 17,649,718 22,039,055 Fines and Forfeitures 8,536,253 9,247,469 9,049,107 10,276,600 52,970 116,882 282,129 433,359 Operating Grants and Contributions 60,346,450 60,813,367 68,784,384 74,498,258 Capital Grants and Contributions 48,400,338 25,513,149 16,777,436 44,858,222 148,307,850 127,555,984 135,687,836 172,233,168 Electric 33,694,077 30,983,581 36,112,821 34,518,898 Gas 29,941,402 35,131,012 44,088,814 45,250,476 Other activities Total Governmental Activities Program Revenues $ 23,145,062 $ 20,127,674 BUSINESS-TYPE ACTIVITIES: Charges for services: Water 80,036,607 79,724,508 88,497,653 92,007,207 Wastewater 43,643,144 46,024,679 49,618,163 55,398,349 Solid Waste 34,460,114 36,638,993 38,898,904 42,894,663 Airport 1,873,185 1,941,001 2,086,753 2,953,825 Golf Course 2,298,163 2,327,788 2,522,464 2,456,596 Convention Center 2,686,799 2,570,569 3,727,573 4,745,578 - - - - Hohokam Stadium/Fitch Complex Cubs Stadium - - - - District Cooling - - 54,678 192,972 Economic Investment - - - 248,295 275,024 141,207 146,614 35,374,484 15,585,679 27,692,246 20,724,241 264,256,270 251,202,834 293,441,276 301,289,419 $ 412,564,120 $ 378,758,818 429,129,112 473,522,587 $ (218,237,334) $ Operating Grants and Contributions Capital Grants and Contributions Total Business-type Activities Program Revenues Total Primary Government Program Revenues $ - NET (EXPENSE)/REVENUE Governmental Activities Business-type Activities Total Primary Government Net Expense 93,739,456 $ (124,497,878) $ 114 (290,269,612) $ 54,997,085 (235,272,527) $ (299,955,082) $ 69,911,235 (230,043,847) $ (282,360,594) 76,643,508 (205,717,086) TABLE II (Continued) 2007-08 $ 2008-09 23,342,116 $ $ 11,823,758 $ 2011-12 12,577,426 $ 2012-13 13,358,859 $ 17,693,300 23,702,601 24,739,517 20,419,291 20,303,514 25,779,212 27,674,890 10,215,428 10,134,507 11,820,028 11,294,065 9,884,537 323,970 78,021 8,709 8,490 18,237 2,945,164 63,787,258 63,054,542 72,811,744 65,283,992 60,354,574 55,312,450 21,916,433 35,436,059 30,343,087 31,461,449 23,502,772 25,048,618 143,833,464 146,949,975 145,541,096 141,454,899 134,307,719 138,558,959 34,148,281 35,312,658 33,078,601 33,138,456 34,624,920 31,075,113 46,539,692 41,707,578 38,923,919 41,369,805 39,139,278 39,125,019 97,558,682 95,994,839 98,806,049 102,215,430 113,417,881 111,933,119 53,950,994 54,719,926 57,698,904 59,659,464 64,543,503 64,413,119 46,167,910 46,762,035 46,685,307 47,537,833 47,630,828 47,368,556 3,192,347 2,958,955 3,124,886 3,317,542 3,270,632 3,484,409 2,448,313 2,309,899 2,265,452 2,250,256 2,168,575 1,472,177 3,658,449 2,686,663 1,970,891 2,825,693 2,122,304 2,597,298 - - 5,836,650 6,161,320 6,073,590 5,496,066 - - - 51,614 824,556 229,168 834,376 983,592 945,434 1,091,665 - - - - 975,459 148,099 10,545 100,797 210,074 25,463 2,125,501 9,401,235 80,569,929 31,222,401 17,782,326 10,773,988 15,814,280 7,997,187 368,474,310 314,610,127 307,366,651 310,272,298 332,847,513 325,486,856 512,307,774 461,560,102 452,907,747 451,727,197 467,155,232 464,045,815 (403,692,958) $ 127,675,120 $ 13,426,408 2010-11 10,761,086 - $ 2009-10 (276,017,838) $ (405,636,633) $ 57,407,050 (348,229,583) $ (376,369,497) $ 42,923,193 (333,446,304) $ (373,478,929) $ 50,178,558 (323,300,371) $ 115 (387,477,297) $ 74,268,892 (313,208,405) $ (468,626,329) 6,646,499 (461,979,830) CITY OF MESA, ARIZONA TABLE II (Concluded) CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) GENERAL REVENUES AND OTHER CHANGES IN NET POSITION 2003-04 2004-05 2005-06 105,096,378 $ 112,528,968 $ 2006-07 GOVERNMENTAL ACTIVITIES: Sales Taxes $ Property Taxes - Occupancy Taxes Unrestricted State Shared Revenues Contributions Not Restricted to Specific Programs - 128,372,155 $ - 155,817,051 - 1,320,706 1,856,955 2,189,830 2,389,528 85,469,452 90,867,567 103,848,818 113,048,782 8,202,920 10,725,969 12,205,647 14,037,707 Unrestricted Investment Income 1,202,348 1,905,411 5,430,860 7,824,612 Miscellaneous 5,461,757 9,740,646 10,052,208 7,053,840 67,772,618 76,359,837 72,902,111 61,439,940 274,526,179 303,985,353 335,001,629 361,611,460 Unrestricted Investment Income 947,498 1,579,215 4,818,652 8,125,127 Miscellaneous 925,291 84,910 553,806 428,962 - 32,678,293 - - Transfers Total Governmental Activities BUSINESS-TYPE ACTIVITIES: Special Item - Gain on Sale of Land Transfers (67,772,618) (76,359,837) (72,902,111) (61,439,940) (65,899,829) (42,017,419) (67,529,653) (52,885,851) $ 208,626,350 $ 261,967,934 $ 267,471,976 $ 308,725,609 $ 56,288,845 $ 13,715,741 $ 35,046,547 $ 79,250,866 27,839,627 12,979,666 84,128,472 $ 26,695,407 $ Total Business-type Activities Total Primary Government Change in Net Position Governmental Activities Business-type Activities Total Primary Government $ 116 2,381,582 37,428,129 $ 23,757,657 103,008,523 TABLE II (Concluded) $ 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 147,762,866 $ 126,519,701 $ 121,556,751 $ 121,046,053 $ 126,644,151 $ 137,280,327 - - 14,318,257 14,243,721 14,234,285 14,353,824 2,394,765 1,807,601 1,580,533 2,148,216 2,018,764 1,903,029 122,560,731 117,542,894 104,580,393 92,612,858 86,103,399 104,462,267 14,745,722 14,740,889 14,757,171 15,610,470 17,170,502 49,569,427 6,282,425 1,895,561 260,939 617,419 1,502,659 1,692,304 6,678,633 15,849,424 13,846,390 7,060,132 8,939,334 7,423,709 94,121,492 96,599,000 65,433,214 83,334,303 83,615,000 83,615,000 394,546,634 374,955,070 336,333,648 336,673,172 340,228,094 400,299,887 6,546,254 1,894,369 507,752 839,348 850,454 860,473 693,962 407,356 - - - 825,297 - - - - - - (94,121,492) (96,599,000) (65,433,214) (83,334,303) (83,615,000) (83,615,000) (86,881,276) (94,297,275) (64,925,462) (82,494,955) (82,764,546) (81,929,230) $ 307,665,358 $ 280,657,795 $ 271,408,186 $ 254,178,217 $ 257,463,548 $ 318,370,657 $ (9,146,324) $ (30,681,563) $ (40,035,849) $ (36,805,757) $ (47,249,203) $ (68,326,442) 40,793,844 (36,890,225) (22,002,269) (32,316,397) (8,495,654) (75,282,731) 31,647,520 $ (67,571,788) $ (62,038,118) $ (69,122,154) $ (55,744,857) $ (143,609,173) $ 117 CITY OF MESA, ARIZONA TABLE III FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2003-04 2004-05 2005-06 2006-07 GENERAL FUND Reserved (1)(2) $ Unreserved 30,195,115 $ 25,844,445 37,871,632 $ 19,310,081 61,257,305 $ 27,993,782 77,177,037 57,029,523 Nonspendable - - - - Restricted - - - - Committed - - - - Unassigned - - - - Total General Fund $ 56,039,560 $ 57,181,713 $ 89,251,087 $ 134,206,560 $ 8,542,839 $ 10,335,341 $ 8,391,978 $ 5,885,100 ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved, Reported in: Special Revenue Funds 20,215,242 23,498,926 21,745,990 24,627,227 Capital Project Funds 13,773,686 15,681,069 18,611,420 17,567,790 Nonspendable - - - - Restricted (3)(4) - - - - Committed - - - - Unassigned - - - - Total All Other Governmental Funds $ 42,531,767 $ 49,515,336 $ 48,749,388 $ 48,080,117 (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. (3) Effective with fiscal year 2010-11 the fund balance related to the sales tax for street improvements was moved to the Special Revenue funds. (4) Effective with fiscal year 2011-12 the fund balance related to the sales tax for Quality of Life projects was moved to the Special Revenue funds. 118 TABLE III (Continued) 2007-08 $ 2008-09 84,886,350 $ 50,283,211 2009-10 51,862,378 $ 74,711,328 2010-11 40,748,236 $ 2011-12 - 92,186,747 $ - 2012-13 - $ - - - - - 404,506 753,701 1,723,584 - - - 1,991,911 2,011,527 284,449 - - - 4,897,687 4,992,039 1,184,979 - - - 93,874,956 78,034,860 50,425,510 $ 135,169,561 $ 126,573,706 $ 132,934,983 $ 101,169,060 $ 85,792,127 $ 53,618,522 $ 8,643,272 $ 17,012,682 $ 53,674,468 $ - $ - $ - $ 24,921,672 24,815,604 31,870,664 - - - 11,142,826 28,442,378 15,724,086 - - - - - - 2,905,610 83,502 55,064 - - - 112,537,801 211,279,003 243,830,890 - - - 19,165,631 16,360,478 23,005,073 - - - - 44,707,770 $ 70,270,664 $ 101,269,218 $ 134,609,042 119 (937) $ 227,722,046 (1,176,535) $ 265,714,492 CITY OF MESA, ARIZONA TABLE IV CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2003-04 REVENUES Sales Taxes (1)(2) Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Capital Contributions Miscellaneous $ Total Revenues EXPENDITURES General Government Public Safety Cultural-Recreational Community Environment Miscellaneous Expenditures 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 Refunding Advance Payment to Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a percentage of Noncapital Expenditures $ 105,096,378 1,320,706 57,567 19,819,170 149,036,481 11,152,669 8,536,253 885,188 5,268,925 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 9,562,131 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 9,632,863 2006-07 $ 155,817,051 2,389,528 416,906 20,127,674 190,825,624 22,039,055 10,276,600 6,463,111 6,365,625 301,173,337 319,517,708 372,972,750 414,721,174 36,328,122 166,576,022 47,366,458 51,520,603 - 38,364,301 182,224,448 54,761,753 56,953,311 - 36,730,857 190,761,508 56,187,938 60,079,827 - 40,661,807 210,541,969 54,711,334 65,314,260 - 7,145,591 14,081,131 62,131 81,823,895 7,692,222 15,369,204 61,994 62,392,135 8,857,085 16,181,484 234,487 55,510 79,316,975 8,357,577 18,150,710 56,768 77,474,595 404,903,953 417,819,368 448,405,671 475,269,020 (103,730,616) (98,301,660) (75,432,921) (60,547,846) 98,213,698 (27,993,698) 9,585,000 - 104,642,640 (28,065,640) 21,930,000 640,258 - 106,253,593 (32,339,810) 26,410,000 2,003,565 - 99,900,805 (33,233,233) 30,681,840 573,254 - 9,322,015 139,441,539 (138,661,071) 6,746,097 26,420,341 (26,156,314) 6,401,832 25,482,000 (27,474,833) 6,911,382 - 89,907,483 106,157,382 106,736,347 (13,823,133) $ 6.59% 7,855,722 6.51% $ 31,303,426 104,834,048 $ 6.86% (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. 120 44,286,202 6.68% TABLE IV (Continued) 2007-08 $ $ 147,762,866 2,394,765 1,218,100 23,342,116 193,585,472 23,702,601 10,761,086 5,177,695 6,421,576 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 14,754,573 $ 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 13,675,435 $ 2011-12 121,046,053 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 $ 126,644,151 14,322,925 2,018,764 995,897 13,358,859 168,433,432 25,779,212 11,294,065 1,283,881 7,572,501 2012-13 $ 137,280,327 14,403,757 1,903,029 897,058 17,693,300 184,823,335 27,674,890 9,884,537 1,500,865 2,263,919 5,940,143 414,366,277 384,975,695 384,920,673 366,023,105 371,703,687 404,265,160 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 - 41,083,321 226,428,861 43,903,634 64,403,759 - 74,595,869 226,676,957 37,786,804 55,196,899 - 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 25,513,155 22,643,300 7,864 869,882 66,950,632 31,518,955 23,433,180 9,500 1,448,095 91,536,850 528,466,841 526,866,165 507,480,119 477,775,336 491,804,408 542,203,109 (114,100,564) (141,890,470) (122,559,446) (111,752,231) (120,100,721) (137,937,949) 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 - 121,459,483 (38,135,583) 27,290,000 77,835,000 8,027,060 8,250,081 147,817,844 (64,202,844) 62,672,000 3,681,054 - 67,238,160 (74,127,409) 17,415,000 (19,889,007) - 197,836,792 147,494,047 2,528,683 - - - - 111,691,218 158,857,509 159,919,277 113,326,132 (2,409,346) 10.01% $ 16,967,039 12.42% $ 37,359,831 $ 1,573,901 13.19% 12.67% 121 $ 77,736,071 11.34% $ 9,556,098 12.20% CITY OF MESA, ARIZONA TABLE V SALES TAX COLLECTIONS BY CATEGORY LAST TEN FISCAL YEARS 2003-04 Utilities $ 6,762,032 2004-05 $ 2005-06 6,692,042 $ 7,539,420 2006-07 (3) $ 9,116,291 Communications 3,164,951 3,241,465 2,839,438 3,939,497 Publishing 1,470,008 1,564,309 1,792,345 1,963,330 378,322 367,306 453,958 477,939 Contracting 12,454,780 12,073,940 14,580,722 21,424,371 Retail Sales 58,588,455 64,266,464 74,420,542 85,014,600 7,749,295 8,483,650 9,417,798 11,725,779 Printing & Advertising Restaurants & Bars Amusements Rentals Miscellaneous Total $ 1,029,101 1,071,285 1,210,343 1,456,808 13,399,200 14,380,416 15,786,032 20,533,854 100,234 118,091 331,557 164,582 105,096,378 City Direct Tax Rate 1.50% $ 112,258,968 $ 1.50% 128,372,155 1.50% $ 155,817,051 1.75% 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 and is restricted to fund street improvements. Source: City of Mesa Tax & Licensing Division 122 TABLE V (Continued) 2007-08 $ $ 9,667,778 2009-10 2008-09 $ 9,654,488 $ 9,756,726 2010-11 $ 11,103,931 2011-12 $ 11,877,683 2012-13 $ 12,549,149 4,312,054 3,748,960 3,808,798 4,455,855 4,482,950 4,650,995 1,922,909 1,402,465 1,102,145 999,010 934,312 866,441 374,839 280,350 175,207 342,381 336,188 434,160 19,300,601 15,263,241 10,913,417 8,387,647 9,961,599 12,402,429 77,307,911 63,230,186 63,468,754 60,265,881 62,190,619 66,789,303 12,038,983 10,956,021 10,948,158 11,164,824 11,863,562 12,577,199 1,348,973 1,362,931 1,176,440 1,433,369 1,433,595 1,431,527 21,369,386 20,514,008 20,122,775 22,218,976 22,968,362 24,846,815 119,432 107,051 84,330 674,180 595,281 732,309 147,762,866 1.75% $ 126,519,701 1.75% $ 121,556,750 1.75% $ 121,046,054 1.75% 123 $ 126,644,151 1.75% $ 137,280,327 1.75% CITY OF MESA, ARIZONA TABLE VI DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS City Direct Rate 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1.50 1.50 1.50 1.75 1.75 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 6.60 6.60 6.60 5.60 % * Source: City of Mesa Tax & Licensing Division *Note: The State of Arizona increased its tax to 6.60% effective 6/1/10 for a 3 year period 124 CITY OF MESA, ARIZONA TABLE VII RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Obligation Bonds Year 2004 $ Municipal Development Corporation Bonds Highway User Revenue Bonds Special Assessment Bonds Community Facility District Capital Leases Notes Payable 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 2012 288,668,840 - 121,395,000 5,062,000 - 821,550 122,835,000 2013 327,265,337 - 120,941,583 4,318,000 2,712,000 139,592 129,435,064 (1) Information on personal income and population is presented on Table XII. 125 TABLE VII (Continued) Business-type Activities Utility System Revenue Bonds $ 458,525,000 General Obligation Bonds $ Excise Tax Revenue Obligation Bonds Municipal Development Corporation Bonds Total Primary Government Percentage of Personal Income (1) Notes Payable Capital Leases 1,074,110 $ 23,473,486 $ 836,889,182 8.57 % Per Capita (1) 3,290,730 $ - $ 16,900,000 $ 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 3,101 952,500,000 1,601,160 - - 2,492,975 - 1,495,376,525 14.10 3,390 973,669,880 887,088 105,078,769 - 2,370,001 - 1,666,817,314 16.09 3,747 126 $ 1,879 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 2004 2005 $ General Obligation Bonds 2,463,878,234 $ 190,935,000 2,648,163,284 202,060,000 Less: Amounts Available in Debt Service Fund $ Total - $ Percentage Of Secondary Assessed Value Per Capita (2) 190,935,000 7.75 % 202,060,000 7.63 $ 428.73 447.81 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 2012 3,164,277,311 290,270,000 1,074 290,268,926 9.17 657.97 2013 2,770,422,084 328,152,425 137,902 328,014,523 11.84 737.35 Source: (1) Maricopa County Finance Department Assessor's Office. (2) Population figures are found on Table XII. 127 CITY OF MESA, ARIZONA TABLE IX DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (1) JUNE 30, 2013 Proportion Applicable Debt Governmental Unit Outstanding (2) to the City of Mesa Percent (2) Amount Debt repaid with property taxes Maricopa County Community College District $ 766,085,000 8.04 % $ 61,593,234 Mesa Unified School District No. 4 256,315,000 86.24 221,046,056 Gilbert Unified School District No. 41 153,565,000 25.52 39,189,788 Queen Creek Unified School District No. 95 40,575,000 30.27 12,282,053 Higley Unified School District No. 60 63,475,000 1.31 831,523 Tempe Union High School District No. 213 Tempe Elementary School District No. 3 85,945,000 0.22 189,079 114,010,000 0.45 513,045 148,595,000 8.04 11,947,038 Other Debt: Maricopa County Subtotal, overlapping debt 347,591,816 City direct debt (3) 584,811,576 Total Direct and Overlapping Debt $ 932,403,392 (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 2012/13 for the overlapping jurisdiction to the amount of such valuation which lies within the City. Source: (2) Wedbush Securities (3) Includes: General Obligation Bonds, Highway User Revenue Bonds, Special Assesment Bonds, Community Facility District Bonds, Deferred Amts on refundings, Capital Leases, Highway Project Advancement Notes, and Unamortized Bond Premiums 128 CITY OF MESA, ARIZONA TABLE X LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2003-04 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 $ $ $ 492,775,647 $ 404,555,647 $ 449,673,341 $ 48,804,797 529,632,657 $ 437,657,657 $ 486,462,454 $ 59,919,935 $ 584,399,783 $ 488,649,783 $ 548,569,718 $ 412,662,424 33.08% $ (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. 129 616,614,058 203,951,634 16.38% $ 162,530,851 12.14% 95,750,000 $ 184,984,217 22,453,366 65.82% 17.37% $ 175,319,935 2006-07 115,400,000 91,975,000 17.90% $ 158,889,797 69.28% 88,220,000 Total Net Debt Applicable to the 20% Limit as a Percentage of the 20% Legal Debt Limitation Total Margin Available 45,117,694 2005-06 110,085,000 69.48% Total Net Debt Applicable to 20% Limit Margin Available for Future General Obligation Bond Issues for 20% Bonds $ 102,715,000 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 147,832,694 2004-05 575,193,275 TABLE X (Continued) Legal Debt Margin Calculation for Fiscal Year 2012-13 2,770,422,084 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 $ 166,225,325 $ 246,871,639 2008-09 $ 17,687,616 $ 229,184,023 822,905,463 $ 615,678,079 $ 844,862,103 $ 958,616,359 $ 712,290,681 $ 324,682,912 (23,947,997) 175,085 300,734,915 166,050,240 986,306,267 278,912,694 245,642,220 $ 240,316,703 949,923,388 $ 679,427,710 818,807,400 $ 540,397,917 958,340,404 $ 780,714,621 130 $ 419,399,742 189,856,639 2012-13 $ 188,486,601 $ 632,855,462 $ 343,955,500 $ 532,442,102 554,084,417 300,734,915 $ 45.65% $ 166,050,240 0.11% 288,899,962 $ 166,225,325 175,085 0.72% 34.00% $ 253,349,502 1,370,038 278,409,483 28.48% $ $ 2.17% $ $ 2011-12 5,325,517 270,495,678 25.70% $ $ 2.13% 246,325,678 25.18% $ 274,015,586 284,977,016 2010-11 6,064,322 4.72% 207,227,384 $ $ 13,569,322 7.16% $ 287,584,908 2009-10 554,084,417 887,088 (712,003) Total Margin Available 2007-08 20% Bonds (2) $ 253,349,502 54.28% $ 419,399,742 CITY OF MESA, ARIZONA TABLE XI PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Utility System Revenue Bonds Operating Revenues (1) 2003-04 $ Operating Expenses 221,775,345 $ Net Revenue Available for Debt Service Principal Interest Debt Service Coverage Ratio 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 2011-12 299,356,410 180,295,953 119,060,457 21,365,000 43,465,323 1.84 2012-13 293,914,926 241,128,361 52,786,565 21,630,000 46,411,686 0.78 Highway User Revenue Fund Revenue Bonds Highway User Fund Debt Service Revenues 2003-04 $ 33,640,946 Principal $ 40,000 Coverage Interest $ Ratio 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 2011-12 27,825,144 3,290,000 5,563,249 3.14 2012-13 30,046,228 6,145,000 5,627,349 2.55 (1) Includes electric, gas, water, wastewater and solid waste systems. (2) Excise tax revenues include city use and sales taxes, unrestricted license, fees and permits, fines and forfeitures, state-shared sales tax, state revenue sharing, and state shared vehicle license tax. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 131 TABLE XI (Continued) Special Assessment Bonds Special Assessment Collections $ Debt Service Principal Interest 60,844 $ 85,000 $ Community Facility District Bonds Community Facility District Collections Coverage Ratio 5,455 0.67 5,807 12,000 2,535 0.40 188,475 12,000 184,771 0.96 850,926 343,000 357,384 1.21 1,709,830 751,840 457,396 1.41 1,202,384 752,000 417,040 1.03 922,651 744,000 376,920 0.82 1,088,465 744,000 337,040 1.01 996,359 744,000 297,160 0.96 897,058 744,000 257,280 0.90 $ - Municipal Development Corporation Bonds $ - $ Coverage Ratio 6,816 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Highway Project Advancement Notes Excise Excise Tax Debt Service Revenues (2) $ Debt Service Principal Interest Principal 153,456,415 $ Interest Coverage Tax Ratio Revenues (2) $ Debt Service Principal $ Interest - $ Ratio 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 - - - 0.00 203,197,847 9,970,000 16,643 20.35 - - - 0.00 - - - - 208,547,166 - 449,167 464.30 - - - - 200,873,397 - 1,575,694 127.48 - - - - 199,948,711 - 4,312,398 46.37 - - - - 213,308,532 - 5,404,250 39.47 132 - Coverage - 0.00 - - 0.00 - - 0.00 - - 0.00 CITY OF MESA, ARIZONA TABLE XII DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sources: (1) (2) (3) (4) (5) Population (1) 445,354 $ 451,223 455,151 460,155 463,397 465,272 467,355 440,677 441,160 444,856 Personal Income (2) Per Capita Personal Income (3) 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 10,603,280,600 10,361,141,096 21,938 22,613 23,156 23,559 23,689 24,263 24,742 23,748 24,035 23,291 Median Age (3) Public School Enrollment (4) Unemployment Rate (5) 32.3 32.5 32.6 32.9 33.1 33.3 33.6 32.6 34.3 34.4 73,428 74,070 74,626 74,128 73,054 70,297 67,749 66,144 65,662 64,892 4.2 3.6 3.8 2.9 4.3 8.0 8.7 9.0 7.5 7.2 City of Mesa Development Services Estimate 2004 Census Bureau (estimate), 2005-2010 Claritas (estimate), 2011-2013 SitesUSA (estimate) 2004 Census Bureau, 2005-2010 Claritas, 2011-2013 SitesUSA Mesa Public Schools AZ Dept of Economic Security. Data is Phoenix - Mesa Metropolitan Area. Beginning in 2011 unemployment rate is not seasonally adjusted. 133 CITY OF MESA, ARIZONA TABLE XIII PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2013 Employer Employees Rank 2004 Percentage of Total City Employment Banner Health System 9,573 1 4.87 % Mesa Public Schools 8,770 2 4.46 Employees Rank Percentage of Total City Employment 6,700 2 3.31 % 10,000 1 4.94 Boeing 4,086 3 2.08 4,100 4 2.03 City of Mesa 3,485 4 1.77 4,479 3 2.21 Maricopa County Government 2,644 5 1.34 Wal-Mart 2,533 6 1.29 1,775 7 0.88 0.00 Maricopa Community College 1,951 7 0.99 2,140 6 1.06 The Kroger Company (Fry's) 1,210 8 0.62 0.00 Gilbert Unified School District 1,087 9 0.55 0.00 842 10 0.43 0.00 Aviall Inc TRW/Vehicle Safety Systems, Inc. - 0.00 1,396 8 0.69 AT&T - 0.00 2,600 5 1.29 Empire Southwest Machinery - 0.00 1,020 9 0.50 860 10 Bashas' Total - 0.00 36,181 18.40 % Source: City of Mesa Office of Economic Development 134 35,070 0.43 17.33 % CITY OF MESA, ARIZONA TABLE XIV FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2003-04 2004-05 2005-06 2006-07 Function/Program General Government Police 988 1,005 934 979 1,286 1,325 1,311 1,332 Fire 440 446 454 468 Cultural-Recreational 499 511 462 445 Community Environment 164 170 161 183 Energy Resources 128 129 115 125 Water Resources 144 148 156 177 Solid Waste 135 135 138 132 10 9 11 10 3,794 3,878 3,742 3,851 Airport Total Source: City of Mesa Budget and Research Division 135 TABLE XIV (Continued) 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 966 838 835 824 870 864 1,306 1,282 1,240 1,163 1,158 1,163 472 470 455 457 473 479 417 335 329 334 332 313 181 189 184 189 184 183 132 140 122 116 115 117 166 213 232 230 233 229 136 126 124 120 117 127 9 10 10 9 9 10 3,785 3,603 3,531 3,442 3,491 3,485 136 CITY OF MESA, ARIZONA TABLE XV OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2003-04 2004-05 2005-06 2006-07 Function/Program Police Major Crimes Traffic Accidents 27,933 25,853 24,904 22,437 9,562 10,121 9,205 12,184 Fire Fires 1,332 1,386 1,605 1,428 39,489 41,689 43,073 38,003 1,999 2,021 2,595 2,875 653 591 676 608 7,439 7,738 7,820 11,792 200,461 193,722 233,836 266,839 Total Attendance 1,183,794 1,208,594 1,195,075 1,161,887 Access to Electronic Resources 1,365,863 1,835,867 2,307,051 3,029,001 Electric Connections 17,945 15,652 15,806 15,723 Gas Connections 42,241 45,435 48,622 50,478 129,477 131,141 133,105 133,249 105.3 93.6 94.5 89.6 132.15 137.95 131.28 128.83 112,497 114,500 116,282 116,190 39.3 38.9 41.8 38.1 Customers Served 109,960 114,112 113,146 115,305 Refuse Collected (tons) Rescue or Emergency False Alarms Hazardous Conditions Other Calls Libraries Number of Registered Borrowers Water Connections Average Daily Consumption (mgd)* Peak Daily Consumption (mg)** Wastewater Connections Average Daily Sewage Treatment (mgd)* Solid Waste 254,688 248,255 261,369 266,817 Recyclables Collected (tons) 34,141 36,264 32,869 38,660 Green Waste Collected (tons) 16,384 16,983 17,500 18,215 934 922 924 901 277,088 255,069 271,295 261,623 Falcon Field Average Number of Aircraft Based Aircraft Operations (annual) * mgd - millions of gallons per day ** mg - millions of gallons 137 TABLE XV (Continued) 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 21,388 18,482 17,345 16,623 16,740 16,149 7,578 6,256 5,890 5,952 6,047 6,186 1,200 1,165 1,048 981 1,012 929 34,207 32,478 34,079 38,788 42,925 43,416 2,456 2,125 1,478 1,478 1,292 1,255 567 663 701 478 446 454 12,976 11,923 12,819 11,840 11,192 11,803 275,449 306,427 352,607 220,812 142,943 166,492 1,165,451 1,348,555 1,367,667 1,095,196 1,143,718 1,178,137 2,910,088 3,661,261 2,542,927 1,691,966 1,566,775 1,515,299 15,215 14,546 14,738 15,064 15,841 13,815 51,454 51,911 52,832 53,434 55,828 55,544 133,086 132,771 133,701 134,072 135,138 136,640 85.8 79.7 72.7 76.2 81.6 78.2 125.72 108.68 111.14 114.30 122.30 115.68 116,465 116,721 117,831 118,413 119,615 120,953 38.0 36.0 33.6 33.7 33.4 33.8 112,632 112,832 113,079 115,811 118,949 119,142 243,208 234,709 217,295 223,217 209,116 215,463 39,296 37,841 36,490 35,486 34,443 34,616 17,601 18,936 18,588 19,149 17,882 19,878 934 873 841 789 749 700 337,178 283,336 248,381 221,910 222,650 190,605 138 CITY OF MESA, ARIZONA TABLE XVI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2003-04 2004-05 2005-06 2006-07 Function/Program Police Stations Stations 4 4 4 4 306 321 285 351 17 17 17 17 3 3 3 3 Developed Parks (acres) 1,198 1,149 1,184 1,184 Undeveloped Acres 1,228 1,230 1,251 1,251 13 12 12 12 6 6 6 6 1,152 1,160 1,162 1,169 12 12 12 12 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) 290 296 298 303 998 1,037 1,121 1,147 1,978 2,004 2,022 2,008 97 97 117 117 1,496 1,512 1,522 1,544 56 56 56 60 - 69 78 68 2 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 139 TABLE XVI (Continued) 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 4 4 4 4 5 6 368 330 289 290 267 267 17 17 18 18 19 20 3 3 3 4 4 4 1,180 1,180 1,154 1,154 1,553 1,177 1,251 1,251 1,078 1,074 705 1,104 12 12 12 13 9 9 6 6 6 6 6 6 1,178 1,182 1,184 1,190 1,303 1,307 12 12 12 12 1 1 308 316 321 329 438 432 1,202 1,223 1,243 1,247 1,240 1,256 2,068 2,104 2,127 2,136 2,270 2,284 117 125 125 125 125 125 1,577 1,598 1,606 1,613 1,652 1,677 60 60 60 60 60 60 70 69 69 69 70 72 2 2 2 2 1 1 140