Financial Statements
Arizona Department of Transportation
Highway Expansion and Extension Loan
Program Fund
Fiscal Years Ended June 30, 2008 and 2007

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Financial Statements
Fiscal years ended June 30, 2008 and 2007

Contents
Independent Auditors’ Report ......................................................................................................1
Management’s Discussion and Analysis ......................................................................................2

Basic Financial Statements
Statements of Net Assets ..............................................................................................................6
Statements of Activities ................................................................................................................7
Statements of Cash Flows.............................................................................................................8
Notes to Financial Statements.......................................................................................................9

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis
June 30, 2008 and 2007
As management of the Arizona Department of Transportation, Highway Expansion and
Extension Loan Program (HELP) Fund, we offer readers of the Fund’s financial statements this
narrative overview and analysis of the financial activities of the Fund for the fiscal years ended
June 30, 2008 and 2007. We encourage readers to consider the information presented here in
conjunction with the Fund’s financial statements and the accompanying notes to the basic
financial statements.
Financial Highlights
•

•
•

The assets of the HELP Fund exceeded its liabilities by $74,115,046 at the end of fiscal year
2008 as compared to $71,707,711 at fiscal year end 2007 and $67,713,248 at fiscal year end
2006. All of this amount may be used to meet the HELP Fund’s operational needs for loans
or other financial assistance.
The HELP Fund’s total net assets increased by $2,407,335 and $3,994,463 for fiscal years
2008 and 2007, respectively.
Total loan amounts of $26.0 million were disbursed from July 1, 2007 to June 30, 2008 and
$5.8 million from July 1, 2006 to June 30, 2007. Of the $26.0 million disbursed in fiscal year
2008, $2.6 million was disbursed to the City of Goodyear for the I-10 widening project, $8.0
million was disbursed to the Town of Oro Valley for the La Canada Drive widening project,
$2.0 million was disbursed to Pinal County for the Thornton Road project, and $13.4 million
was disbursed to the City of Tucson for the Mountain Avenue project. Of the $5.8 million
disbursed in fiscal year 2007, $3.3 million was disbursed to the City of Goodyear for the I-10
widening project, $2.0 million was disbursed to the City of Kingman for the North Bank
Street Reconstruction project, and $0.5 million was disbursed for other projects.

Fund Financial Statements
Fund accounting The operations of the HELP Fund are accounted for with a separate set of
self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenses.
Government resources are allocated to and accounted for based upon the purposes for which they
are to be spent and the means by which spending activities are controlled. The various
transactions are accounted for in one fund type as follows:
Proprietary funds
Enterprise funds are used to report the same functions presented as
business-type activities in the government-wide financial statements. An enterprise fund is used
by the Arizona Department of Transportation (Department) to account for the HELP operation.
The Department’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.

2

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2008 and 2007
Financial Analysis
In governmental financial statements, net assets may serve over time as a useful indicator of a
government’s financial position. The HELP Fund’s net assets increased by $2,407,335 and
$3,994,463 by the end of fiscal years 2008 and 2007, respectively.
Table 1
Highway Expansion and Extension Loan Program Fund's Net Assets
as of June 30, 2008, 2007, and 2006

Current assets
Non-current assets
Total assets

Business-type Activities
2008
2007
2006
$ 126,032,237
$ 204,294,154
$ 129,218,849
41,967,252
109,007,095
20,273,156
246,261,406
238,225,944
146,305,393

Current liabilities
Non-current liabilities
Total liabilities

70,019,991
2,170,356
72,190,347

154,553,695
20,000,000
174,553,695

140,000,000
30,512,696
170,512,696

Net assets
Restricted
Total net assets

74,115,046
$ 74,115,046

71,707,711
71,707,711

67,713,248
67,713,248

$

$

All of the HELP Fund’s net assets are restricted for loans and other financial assistance.
Changes in current assets for fiscal year 2008 primarily related to the repayment of $140,000,000
principal amount and accrued interest of the Series 2003 Board Funding Obligations (BFOs) and
the borrowing of $50,000,000 of the Series 2007 BFOs. Changes in current assets for fiscal year
2007 primarily related to changes in the percentage of loans becoming due in less than one year
and to balances of cash on deposit with the State Treasurer. Cash on deposit with the State
Treasurer increased primarily due to the need to repay the Series 2003 BFOs in fiscal year 2008.
In fiscal year 2008, non-current assets decreased by 51.7 percent. Because of the State’s
economic condition and other factors, only a limited number of new loans were disbursed in
fiscal year 2008. As a result, loan receivables declined as loan repayments were received from
borrowers, but were not offset by new loan activity. In fiscal year 2007, non-current assets
decreased by 61.5 percent which related to changes in the percentage of loans becoming due in
less than one year.

3

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2008 and 2007
In fiscal year 2008, current liabilities decreased due to the repayment of $140,000,000 principal
amount and accrued interest of the Series 2003 BFOs and the borrowing of $50,000,000 of the
Series 2007 BFOs. In fiscal year 2007, current liabilities increased and non-current liabilities
decreased due to the change in classification of the Series 2003 BFOs from a non-current
liability to a current liability.
Table 2
Highway Expansion and Extension Loan Program Fund's Changes in Net Assets
for fiscal years ended June 30, 2008, 2007, and 2006

2008
Revenues:
Operating revenues
Interest on loans receivables
Non-operating revenues
Interest on investments
Total revenues
Expenses:
Operating expenses
Interest on Board Funding Obligations
Other
Total expenses
Increase <decrease> in net assets
Net assets - July 1
Net assets - June 30

$

Business-type Activities
2007

1,755,395

$

2,909,458

$

2006

3,281,361

4,705,331
6,460,726

5,439,624
8,349,082

3,432,020
6,713,381

3,795,890
257,501
4,053,391

4,040,000
314,619
4,354,619

4,040,000
233,429
4,273,429

2,407,335
71,707,711
$ 74,115,046

3,994,463
67,713,248
$ 71,707,711

2,439,952
65,273,296
$ 67,713,248

At the end of fiscal years 2008 and 2007, the HELP Fund is able to report a positive balance of
net assets. The net assets of the HELP Fund are restricted for loans and other financial
assistance, and are available for future loan activity.
The HELP Fund’s interest on loans receivable revenues decreased by 40 percent in fiscal year
2008 and decreased by 11 percent in fiscal year 2007. Lower average principal balances
outstanding accounted for the decrease in interest on loans in fiscal years 2008 and 2007.
In fiscal year 2008, interest on investments decreased by $734,293 due to the HELP Fund
maintaining lower average cash balances during the year and by lower average interest rates on
invested cash due to prevailing market conditions during the fiscal year. In fiscal year 2007,
interest on investments increased by $2,007,604 due primarily to higher average interest rates on
invested cash during the fiscal year.

4

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2008 and 2007
The HELP Fund’s interest expense on BFOs for fiscal year 2008 declined due to the fact that
only $50,000,000 of BFOs were outstanding for most of the fiscal year. During the prior fiscal
year, $140,000,000 of BFOs were outstanding for the entire year. In addition, the interest rate on
the Series 2007 BFOs is higher than the average interest rate on the Series 2003 BFOs. Other
operating expenses decreased by 18.2 percent in fiscal year 2008 primarily due to a reduction in
salaries and benefits charged to the HELP Fund. In fiscal year 2007, other operating expenses
increased by 35 percent primarily due to an increase in salaries and benefits charged to the HELP
Fund.
Notes to the financial statements The notes provide additional information that is essential to a
full understanding of the data provided in the fund financial statements. The notes to the
financial statements can be found beginning on page 9 of this report.
Requests for information This financial report is designed to provide our citizens, taxpayers,
customers, investors and creditors with an overview of the Fund’s finances. Questions
concerning any of the information provided in this report or request for additional financial
information should be addressed to the Controller, Arizona Department of Transportation,
206 S. 17th Avenue, Phoenix, Arizona, 85007 or by visiting our website at
http://www.azdot.gov/Inside_ADOT/help/statementarchives.asp.

5

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Net Assets
June 30, 2008 and 2007

2008
Assets
Current assets:
Restricted cash on deposit with the State Treasurer (Note 1C)
Receivables:
Accrued interest
Loans (Note 3A)
Due from other Arizona Department of Transportation
funds
Total current assets

$

Non-current assets:
Receivables:
Loans (Note 3A)
Total non-current assets
Total assets
Liabilities
Current liabilities:
Accrued payroll and other accrued expenses
Board Funding Obligations (Note 3C)
Compensated absences
Advance from other Arizona Department of Transportation
funds (Note 3B)
Total current liabilities

77,630,108

2007

$

130,631,610

669,877
47,732,252

868,517
72,715,250

126,032,237

78,777
204,294,154

20,273,156
20,273,156
146,305,393

41,967,252
41,967,252
246,261,406

6,170
50,000,000
13,821

5,350
154,534,466
13,879

20,000,000
70,019,991

154,553,695

Non-current liabilities:
Accrued interest payable (Note 3C)
Advance from other Arizona Department of Transportation
funds (Note 3B)
Total non-current liabilities
Total liabilities

2,170,356

-

2,170,356
72,190,347

20,000,000
20,000,000
174,553,695

Net assets
Restricted for loans and other financial assistance
Total net assets

74,115,046
74,115,046

71,707,711
71,707,711

$

$

The notes to the financial statements are an integral part of this statement.

6

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Activities
For the fiscal years ended June 30, 2008 and 2007

2008
Operating revenues:
Interest on loans receivables
Total operating revenues
Operating expenses:
Salaries and related benefits
Supplies
Professional and outside services
Travel
Interest on Board Funding Obligations
Other
Total operating expenses
Operating loss
Non-operating revenues <expenses>:
Interest on investments
Investment expense
Distributions to other state agencies
Total non-operating revenues <expenses>
Change in net assets
Total net assets - July 1
Total net assets - June 30

$

1,755,395
1,755,395
146,321
2,477
24,759
254
3,795,890
1,439
3,971,140
<2,215,745>

2007
$

2,909,458
2,909,458
197,042
1,144
31,000
886
4,040,000
1,311
4,271,383
<1,361,925>

4,705,331
5,439,624
<80,251>
<83,236>
<2,000>
4,623,080
5,356,388
2,407,335
3,994,463
71,707,711
67,713,248
$ 74,115,046 $ 71,707,711

The notes to the financial statements are an integral part of this statement.

7

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Cash Flows
For the fiscal years ended June 30, 2008 and 2007

2008
Cash flows from operating activities:
Receipts from customers
Receipts from other funds
Receipts from Arizona counties and cities
Payments to suppliers
Payments to employees
Payments to Arizona counties and cities
Other receipts <payments>
Net cash provided <used> by operating activities

$

Cash flows from non-capital financing activities:
Distributions to other state agencies
Repayment of Board Funding Obligations
Issuance of Board Funding Obligations
Net cash provided <used> by non-capital financing activities

-

5,108,111
<80,251>
5,027,860

Net increase <decrease> in cash

Reconciliation of operating income <loss> to net cash
provided <used> by operating activities:
Operating income <loss>
Net changes in assets and liabilities:
Receivables
Due from other Arizona Department of
Transportation funds
Due from Arizona counties and cities
Accrued payroll and other accrued expenses
Compensated absences
Notes payable
Net cash provided <used> by operating activities

1,630,032 $
3,634,058
65,000,000
31,600,000
7,715,250
7,608,289
<27,236>
<32,144>
<145,813>
<196,930>
<26,038,156>
<5,797,282>
<1,311>
<1,439>
36,814,680
48,132,638

<2,000>
<156,160,000>
50,000,000
<106,162,000>

Cash flows from investing activities:
Interest on investments
Investment expense
Net cash provided <used> by investing activities

Cash - July 1
Cash - June 30

2007

5,124,274
<83,236>
5,041,038

<53,001,502>
130,631,610
$ 77,630,108

$

$

41,855,718
88,775,892
$ 130,631,610

<2,215,745> $ <1,361,925>
46,677,094

33,411,007

78,777
<204,140>
820
<58>
3,795,890
48,132,638 $

726,494
<1,895>
141
858
4,040,000
36,814,680

The notes to the financial statements are an integral part of this statement.

8

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements
June 30, 2008 and 2007
NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Arizona Department of Transportation (Department) was authorized in 1996 to administer a
State Infrastructure Bank under a cooperative agreement with the Federal Highway
Administration (FHWA), pursuant to Section 350 of the National Highway System Designation
Act of 1995. The Highway Expansion and Extension Loan Program (HELP) was authorized to be
established as Arizona’s State Infrastructure Bank under Arizona Revised Statutes, Title 28,
Chapter 21. The HELP Fund (Fund) was initially capitalized with grants from FHWA and state
matching funds.
The Fund is administered by a seven-member advisory committee. The members serve staggered
four-year terms and serve no more than two consecutive terms. The committee is charged with
reviewing requests for loans and financial assistance, making recommendations to the
Transportation Board of the State of Arizona Department of Transportation (Transportation
Board) and submitting an annual report to the Governor and State Legislature. Qualified
borrowers, which include any political subdivision, the State or its agencies, and Indian tribes,
may submit loan applications to HELP for eligible projects.
The Transportation Board may make loans or provide other financial assistance to qualified
borrowers, including the Department, from monies in the Fund for eligible projects; enter into
loan repayment agreements with recipients; and apply for, accept, and administer grants and other
financial assistance from the United States and from other public and private sources that are
made for deposit in the Fund. HELP does not increase the Transportation Board’s bonding
authority.
The Department is a department of the State of Arizona and is not a legally separate entity. The
Department has no component units. The Director of the Department serves as the Chief
Administrative Officer and is directly responsible to the Governor. The Governor appoints a
seven-member Transportation Board, which has responsibility for establishing a complete system
of state highway routes and distributing monies for local airport facilities’ projects through a grant
program.
The financial statements present only the funds comprising the Fund and are not intended to
present fairly the financial position or results of operations of the Department. The accounting
policies of the Department conform to generally accepted accounting principles in the United
States of America (GAAP) as applicable to governmental units.

9

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES–Continued
B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The economic resources measurement focus and the accrual basis of accounting are followed for
reporting purposes. Under the accrual basis of accounting, revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Federal grants and reimbursements are recognized as revenues as soon as all eligibility
requirements imposed by the provider have been met.
The Department uses an enterprise fund to account for the Fund and for its loan distribution
operation. The Fund can receive monies from the FHWA along with applicable state matching
funds, State Transportation Board Funding Obligations, direct state appropriations, and other
lawfully available sources. The Transportation Board may use monies in the Fund to make
eligible project loans or provide other financial assistance to qualified borrowers; subsidize
interest rates; provide other forms and methods of financial assistance; and pay the costs to
administer the Fund.
Transactions that would be treated as revenues or expenses if they involved organizations external
to the governmental unit are accounted for as revenues or expenses in the funds involved.
Transactions which constitute reimbursements of a fund for expenses initially made from that
fund, which are properly applicable to another fund, are recorded as expenses in the reimbursing
fund and as reductions of the expenses in the fund that is reimbursed.
The preparation of these financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from
those estimates.
C. Assets, Liabilities, and Net Assets
Deposits and Investments
The cash balance is on deposit with the State Treasurer for pooled investment purposes and is not
evidenced by securities that exist in physical or book entry form in the Fund’s name. All
investments are carried in the name of the State of Arizona. State statutes require the State
Treasurer to invest these pooled funds in collateralized time certificates of deposit, repurchase
agreements, obligations of the U.S. Government, and other permitted investments. All
investments are carried at fair value. These balances are not subject to GASB Statement No. 3,
Deposits with Financial Institutions, Investments (including Repurchase Agreements), and
Reverse Repurchase Agreements, and GASB Statement No. 40, Deposit and Investment Risk

10

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES–Continued
Disclosures – an amendment of GASB Statement No. 3, classification because they are included in
the state’s investment pool.
The investment pool is not required to register (and is not registered) with the Securities and
Exchange Commission under the 1940 Investment Advisors Act. The activity and performance of
the pool is reviewed monthly by the State Board of Investment in accordance with ARS §35-311.
The fair value of investments is measured on a monthly basis. Participant shares are purchased
and sold based on the Net Asset Value (NAV) of the shares. The NAV is determined by dividing
the fair value of the portfolio by the total shares outstanding. The State Treasurer does not
contract with an outside insurer in order to guarantee the value of the portfolio or the price of
shares redeemed. As of June 30, 2008 and 2007, the state’s investment pool was not rated.
The Fund’s investments are included in the state investment pool and these investments are not
shown in the Fund’s name. Therefore, the Fund presents its equity in the internal pool as required
in GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for
External Investment Pools.
Receivables and Payables
Activities between Departmental funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as due to/due from. All other outstanding
balances between the Fund and Arizona counties and cities are reported as “loans receivable.”
Restricted Assets
Resources of the Fund are classified as restricted assets on the balance sheet because their use is
limited by state statutes.
Compensated Absences
It is the Department’s policy to permit employees to accumulate earned but unused sick leave and
vacation benefits. There is no liability for unpaid accumulated sick leave. All vacation pay is
accrued when incurred in the proprietary fund financial statements. A liability for these amounts
is reported as current liabilities.

11

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES–Continued
Effective July 1, 1998, state employees are eligible to receive payment for an accumulated sick
leave balance of 500 hours or more with a maximum of 1,500 hours, upon retirement directly
from state service. The benefit value is calculated by taking the state hourly rate of pay at the
retirement date, multiplied by the number of sick hours at the retirement date, times the eligibility
percentage. The eligibility percentage varies based upon the number of accumulated sick hours
from 25 percent for 500 hours to a maximum of 50 percent for 1,500 hours. The maximum benefit
value is $30,000. The benefit is paid out in annual installments over three years. The Retiree
Accumulated Sick Leave Fund is accounted for on the State’s financial statements as an Internal
Service Fund.
Employees are allowed to accumulate up to 240 hours of vacation leave (320 hours for uncovered
employees) which is paid when vacation is taken or upon termination of employment at the
individual’s then current rate of pay. For the proprietary funds, all of the outstanding vacation at
June 30 is recorded as a current liability.
Net Assets
The difference between assets and liabilities is reported as “Net Assets” on the proprietary fund
statements.
D. Revenues and Expenses
Revenues and expenses of proprietary funds are classified as operating and non-operating and are
sub-classified by object (e.g., salaries, travel, interest on Board Funding Obligations, etc).
Operating revenues and expenses generally result from providing services and producing and
delivering goods. All other revenues and expenses are reported as non-operating.

NOTE 2–STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
The expenses of the Fund are not governed by appropriations of the state legislature and therefore
are not subject to the limitations of a legally adopted budget.

12

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 3–DETAILED NOTES
A. Loans Receivables
Loans receivables represent loans made pursuant to Loan Repayment Agreements. Twenty loans
have balances outstanding or are pending as of June 30, 2008, as follows:
PROJECT SPONSOR

LOAN DATE

ADOT
GILA COUNTY
GILA COUNTY
GILA COUNTY
CITY OF SAFFORD
TOWN OF THATCHER
REGIONAL FREEWAY SYSTEM
TOWN OF ORO VALLEY
CITY OF TUCSON
ADOT
TOWN OF MARANA
PIMA COUNTY
CITY OF KINGMAN
CITY OF PHOENIX
CITY OF TOMBSTONE
CITY OF GOODYEAR
MOHAVE COUNTY
CITY OF TUCSON
TOWN OF ORO VALLEY
PINAL COUNTY

09/21/2001
04/19/2002
04/19/2002
04/19/2002
08/16/2002
08/16/2002
11/21/2003
02/20/2004
08/20/2004
11/19/2004
11/19/2004
05/20/2005
09/23/2005
11/18/2005
11/18/2005
04/21/2006
04/21/2006
03/16/2007
07/20/2007
12/21/2007

INTEREST
RATE*
3.30%
1.43%
1.81%
3.12%
2.42%
1.56%
1.44%
2.52%
To be determined
To be determined
2.51%
3.06%
3.11%
To be determined
To be determined
3.13%
To be determined
1.97%
3.20%
2.35%

TOTAL

AUTHORIZED
FINAL
LOAN AMOUNT MATURITY
$
50,000,000
Dec-08
1,237,500
Mar-09
600,000
Jun-08
487,500
Jun-08
2,000,000
Oct-07
2,000,000
Oct-07
80,500,000
Aug-08
5,000,000
Feb-08
12,293,000
Jan-09
18,500,000
Jul-09
7,000,000
Mar-10
4,836,000
Jun-09
2,000,000
Oct-10
11,900,000
Jun-10
150,000
Nov-10
7,369,000
Jun-10
8,700,000
Jun-10
14,000,000
Jan-11
8,000,000
Aug-08
2,000,000
May-08

DRAWS TO
OUTSTANDING
DATE
LOAN BALANCE
$
50,000,000
$
1,237,500
185,595
600,000
487,500
121,875
2,000,000
2,000,000
80,500,000
33,900,000
5,000,000
7,000,000
1,900,000
4,836,000
1,000,000
2,000,000
1,550,000
5,947,938
5,947,938
13,400,000
13,400,000
8,000,000
8,000,000
2,000,000
2,000,000

DUE WITHIN
ONE YEAR
$
185,595
121,875
33,900,000
1,000,000
1,000,000
450,000
3,309,782
7,500,000

$

$

$

238,573,000

185,008,938

$

68,005,408

265,000
47,732,252

* Interest Rate will be determined on the date of the first draw.

The activity for the fiscal year ended June 30, 2008, was as follows:

Loans receivable

Beginning
Balance
July 1, 2007
$ 114,682,502

Additions
$ 26,038,156

Ending
Balance
Reductions
June 30, 2008
$ <72,715,250> $ 68,005,408

Due Within
One Year
$ 47,732,252

13

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 3–DETAILED NOTES–Continued
Eighteen loans had balances outstanding or were pending as of June 30, 2007, as follows:
PROJECT SPONSOR

LOAN DATE

ADOT
GILA COUNTY
GILA COUNTY
GILA COUNTY
CITY OF SAFFORD
TOWN OF THATCHER
REGIONAL FREEWAY SYSTEM
TOWN OF ORO VALLEY
CITY OF TUCSON
TOWN OF MARANA
ADOT
PIMA COUNTY
CITY OF KINGMAN
CITY OF TOMBSTONE
CITY OF PHOENIX
MOHAVE COUNTY
CITY OF GOODYEAR
CITY OF TUCSON

09/21/2001
04/19/2002
04/19/2002
04/19/2002
08/16/2002
08/16/2002
11/21/2003
02/20/2004
08/20/2004
11/19/2004
11/19/2004
05/20/2005
09/23/2005
11/18/2005
11/18/2005
04/21/2006
04/21/2006
03/16/2007

INTEREST
RATE*
3.30%
1.43%
1.81%
3.12%
2.42%
1.56%
1.44%
2.52%
To be determined
2.51%
To be determined
3.06%
3.11%
To be determined
To be determined
To be determined
3.13%
To be determined

TOTAL

AUTHORIZED
FINAL
LOAN AMOUNT MATURITY
$
50,000,000
Dec-08
1,237,500
Mar-09
600,000
Jun-08
487,500
Jun-08
2,000,000
Oct-07
2,000,000
Oct-07
80,500,000
Aug-08
5,000,000
Feb 08
12,293,000
Jan-09
7,000,000
Mar-10
18,500,000
Jul-09
4,836,000
Jun-09
2,000,000
Oct-10
150,000
Nov-10
11,900,000
Jun-10
8,700,000
Jun-10
7,369,000
Jun-10
14,000,000
Jan-11

DRAWS TO
OUTSTANDING
DATE
LOAN BALANCE
$
50,000,000 $
25,000,000
1,237,500
433,095
600,000
200,000
487,500
365,625
2,000,000
180,000
2,000,000
180,000
80,500,000
73,900,000
5,000,000
2,500,000
7,000,000
2,900,000
4,836,000
3,714,000
2,000,000
2,000,000
3,309,782
3,309,782
-

DUE WITHIN
ONE YEAR
$
25,000,000
247,500
200,000
243,750
180,000
180,000
40,000,000
2,500,000
1,000,000
2,714,000
450,000
-

$

$

$

228,573,000

158,970,782

$

114,682,502

72,715,250

* Interest Rate will be determined on the date of the first draw.

The activity for the fiscal year ended June 30, 2007, was as follows:

Loans receivable

Beginning
Balance
July 1, 2006
$ 148,093,509

Additions
$
5,797,282

Ending
Balance
Reductions
June 30, 2007
$ <39,208,289> $ 114,682,502

Due Within
One Year
$ 72,715,250

B. Advance from other Arizona Department of Transportation funds
Laws 1999, Chapter 2 (SB 1002) authorized the transfer of $20,000,000 from the State Highway
Fund to the HELP Fund in fiscal year 2000. This amount is shown as Advance to Other Arizona
Department of Transportation funds in the State Highway Fund and Advance from other Arizona
Department of Transportation funds in this Fund. The Advance is due no later than
December 31, 2008.
C. Short-term Debt – Board Funding Obligations
The Transportation Board has issued Board Funding Obligations (BFOs) to the State Treasurer in
accordance with Arizona Revised Statutes, §28-7678. The BFOs are nonnegotiable and are
authorized by Transportation Board resolution specifying the rate(s) of interest, the date(s) of
maturity, the terms of redemption, the form and manner of execution of the funding obligation,
any terms necessary to secure credit enhancement or other sources of payment or security and any
other item the Transportation Board determines is necessary. The total principal amount of BFOs

14

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 3–DETAILED NOTES–Continued
at any one time shall not be more than $200 million and shall mature no later than four calendar
years after the delivery. Up to $60 million of the proceeds shall be deposited into the General
Fund (State Highway Fund) and up to $140 million shall be deposited into the Highway
Expansion and Extension Loan Program Fund.
The BFOs are special obligations of the Transportation Board; are not obligations that are general,
special or otherwise of the State; are not a legal debt of the State; and are payable and enforceable
only from the monies pledged and assigned in the authorizing resolutions of the Transportation
Board.
The State Treasurer shall provide written notice to the Transportation Board and the Department
when the operating monies fall below $400 million. If operating monies fall below $200 million,
the State Treasurer may call the investment in the BFOs in $25 million increments up to the
amount that the operating monies are below $200 million. The State Treasurer shall give the
Transportation Board and the Department at least fifteen days’ notice of the call.
The activity for the fiscal years ended June 30, 2008 and 2007, was as follows:

Board Funding Obligations

Beginning
Balance
July 1, 2007
$ 140,000,000

Board Funding Obligations

Beginning
Balance
July 1, 2006
$ 140,000,000

Additions
$ 50,000,000

Ending
Balance
Reductions
June 30, 2008
$ <140,000,000> $ 50,000,000

Additions

Reductions
-

$

-

Ending
Balance
June 30, 2007
$ 140,000,000

During fiscal year 2008, the Department repaid $140,000,000 in principal and $14,534,466 in
accrued interest for the Series 2003 BFOs, and borrowed $50,000,000 of the Series 2007 BFOs.
Interest accrued to date on the Series 2007 BFOs is $2,170,356. Both the principal and interest on
the Series 2007 BFOs are due no later than August 8, 2011. During fiscal year 2007, there were
no repayments and the Department accrued interest of $4,040,000 on the Series 2003 BFOs.

15

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2008 and 2007
NOTE 4–OTHER INFORMATION
A. Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenses which may be disallowed by the grantor cannot be determined at this time although the
Fund expects such amounts, if any, to be immaterial.
B. Subsequent Events
On October 23, 2008, the State Treasurer notified the Department and the Transportation Board of
the potential call of the $50 million of the Series 2007 Board Funding Obligations (BFOs)
outstanding and deposited in the HELP Fund. Arizona Revised Statutes §35-313(D)(3) require
that the State Treasurer provide this notice when operating monies of the state fall below $400
million. This statute further provides that the State Treasurer may call the BFOs in $25 million
increments if operating monies of the state fall below $200 million. The BFOs may only be called
with 15 days' notice. Interest accrued on any BFOs that are called is not payable until maturity of
the BFOs.

16