CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 Prepared by Management Services Department Dawn Lang, Management Services Director Kristi Smith, Accounting Manager CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal.............................................................................................................................................. Elected and Appointed Officials ........................................................................................................................... Organizational Chart ............................................................................................................................................. Certificate of Achievement for Excellence in Financial Reporting ...................................................................... 1 7 8 9 FINANCIAL SECTION Independent Auditor’s Report ............................................................................................................................... Management’s Discussion and Analysis (MD&A)............................................................................................... Basic Financial Statements: Government-wide Financial Statements Statement of Net Position ............................................................................................................................... Statement of Activities.................................................................................................................................... Fund Financial Statements: Balance Sheet - Governmental Funds ............................................................................................................ Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position.............................................................................................................................................. Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ..................... Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-wide Statement of Activities.......................................................................... Statement of Net Position - Proprietary Funds............................................................................................... Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds.................................... Statement of Cash Flows - Proprietary Funds ................................................................................................ Statement of Fiduciary Net Position - Fiduciary Funds ................................................................................. Notes to the Financial Statements..................................................................................................................... Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund. Schedule of the Proportionate Share of the Net Pension Liability - Arizona State Retirement System ........ Schedule of Contributions - All Pension Plans Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Police .......................................................................................................................... Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Fire.............................................................................................................................. Schedule of Changes in OPEB Liabilities and Related Ratios - Single Employer Plan Notes to the Required Supplementary Information ........................................................................................ Other Financial Statements: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Government Capital Projects .......................................................................................................... General Obligation Bonds Debt Service ...................................................................................................... i 11 13 26 28 30 31 32 33 34 37 38 40 41 86 87 88 89 90 91 92 95 96 CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Other Financial Statements, continued: Non-Major Governmental Funds: Combining Balance Sheet ............................................................................................................................ Combining Statement of Revenues, Expenditures and Changes in Fund Balances..................................... Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Highway User Special Revenue................................................................................................................. Local Transportation Assistance Special Revenue..................................................................................... Grants Special Revenue ............................................................................................................................. Community Development Special Revenue .............................................................................................. Police Confiscated Property Special Revenue ........................................................................................... Parks and Recreation Special Revenue ...................................................................................................... Museum Special Revenue .......................................................................................................................... Library Special Revenue ............................................................................................................................ Highway User Revenue Bonds .................................................................................................................. Special Assessment Bonds ......................................................................................................................... Streets Capital Projects............................................................................................................................... Public Buildings Capital Projects............................................................................................................... Grants Capital Projects............................................................................................................................... Community Services Capital Projects........................................................................................................ Public Safety Buildings and Improvements Capital Projects..................................................................... Vehicle and Capital Equipment Replacement Capital Projects.................................................................. Technology Replacement Capital Projects................................................................................................. Municipal Arts Capital Projects ................................................................................................................. Non-Major Proprietary Funds: Combining Statement of Net Position.......................................................................................................... Combining Statement of Revenues, Expenses and Changes in Net Position............................................... Combining Statement of Cash Flows ........................................................................................................... Fiduciary Funds: Statement of Changes in Assets and Liabilities - Agency Fund................................................................... 99 102 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 124 127 128 130 STATISTICAL SECTION Financial Trends Schedule 1, Net Position by Component...................................................................................................... Schedule 2a, Changes in Net Position.......................................................................................................... Schedule 2b, Changes in Net Position.......................................................................................................... Schedule 2c, Changes in Net Position.......................................................................................................... Schedule 3, Fund Balances of Governmental Funds.................................................................................... Schedule 4, Governmental Funds Revenues ................................................................................................ Schedule 5, Governmental Funds Expenditures and Debt Service Ratio .................................................... Schedule 6, Other Financial Sources and Uses and Net Changes in Fund Balance - Governmental Funds ii 132 134 136 138 140 142 144 146 CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS, continued STATISTICAL SECTION, continued Revenue Capacity Schedule 7, Taxable Revenue by Category .................................................................................................. 148 Schedule 8, Direct and Overlapping Sales and Use Tax Rates .................................................................... 150 Schedule 9, Principal Sales and Use Taxpayers ........................................................................................... 151 Debt Capacity Schedule 10, Ratios of Outstanding Debt .................................................................................................... Schedule 11, Direct and Overlapping Governmental Activities Debt.......................................................... Schedule 12, Legal Debt Margin Information.............................................................................................. Schedule 13a, Pledged-Revenue Coverage .................................................................................................. Schedule 13b, Pledged-Revenue Coverage.................................................................................................. Schedule 14, Property Tax Assessment Ratios............................................................................................. Schedule 15, Real and Secured Property Taxes Levied and Collected ........................................................ Schedule 16, Direct and Overlapping Assessed Valuation and Total Tax Rates Per $100 Assessed Valuation....................................................................................................................................................... Schedule 17, Secondary Assessed Valuation/Net Full Cash Value Assessed Valuation by Property Tax Classification ................................................................................................................................................ Schedule 18, Net Limited Property Assessed Value of Major Taxpayers .................................................... Schedule 19, Comparative Valuation Histories............................................................................................ Schedule 20, Direct and Overlapping General Obligation Bonded Debt Ratios ......................................... Schedule 21, Estimated Net Full Cash Value ............................................................................................... Schedule 22, Monthly Highway User Tax Revenues - Calendar Year Basis ............................................... Schedule 23, Population Statistics................................................................................................................ Schedule 24, Actual and Projected Pledged Excise Taxes ............................................................... Schedule 25, Transaction Privilege (Sales) Tax Rates by Category................................................. Schedule 26, State Sales Tax Taxable Activities, Tax Rates and Distribution Share ................................... Schedule 27, Combined Schedule of Water and Sewer System Revenues, Expenses, Net Revenues and Debt Service Coverage ................................................................................................................................. Schedule 28, Utility Rate Increase History .................................................................................................. Schedule 29, Top 10 Water and Wastewater Customers............................................................................... Schedule 30, Number of Water and Wastewater Customers ........................................................................ Schedule 31, Special Assessment Delinquencies ......................................................................................... Schedule 32, Direct and Overlapping General Obligation Bonded Debt Outstanding ................................ 152 153 154 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 176 177 Demographic and Economic Information Schedule 33, Demographic and Economic Statistics ................................................................................... 178 Schedule 34, Principal Employers................................................................................................................ 179 iii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS, continued STATISTICAL SECTION, continued Operating Information Schedule 35, Employees by Function .......................................................................................................... 180 Schedule 36, Operating Indicators by Function/Program ............................................................................ 182 Schedule 37, Capital Asset Statistics by Function/Program......................................................................... 184 iv Introductory Section December 23, 2019 Honorable Mayor, Members of the City Council, City Manager, and Citizens of the City of Chandler: The comprehensive annual financial report of the City of Chandler, Arizona (the City), for the year ended June 30, 2019, is hereby submitted in accordance with City Charter and state statutes. Both the City Charter and state statutes require that the City issue annually a report on its financial position and activity, and that this report be audited by an independent certified public accountant. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City’s management. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner that presents fairly the financial position and results of operations of the various funds and component units of the City. Accounting principles generally accepted in the United States of America (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Chandler’s MD&A can be found immediately following the report of the independent auditors. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and U.S. Office of Management and Budget Uniform Guidance. Information related to this single audit, including a schedule of expenditures of federal awards, the independent auditors’ reports on the internal control structure and compliance with applicable laws and regulations and a schedule of findings and questioned costs are included in a separately issued report. GOVERNMENTAL STRUCTURE, LOCAL ECONOMIC CONDITION AND OUTLOOK The City, incorporated on February 17, 1920, is located in the southeastern portion of Maricopa County (the County), and encompasses approximately 65 square miles. The City has operated under a council-manager form of government since May 25, 1964, and is governed by the City Council, consisting of a mayor and a six member council. Councilmembers are elected at-large on a staggered basis; the mayor and councilmembers are elected for four-year terms and are limited to two consecutive terms in office. The City Council is vested with policy and legislative authority, and is responsible for passing ordinances, adopting the annual budget, appointing committees, commissions and board members and appointing the positions of City Manager, City Attorney, City Clerk and City Magistrate. The City Manager is responsible for carrying out the policies and ordinances of the City Council, as well as overseeing the day-to-day operations of the City. Chandler is the fourth largest city in Arizona and is one of several major cities comprising the greater Phoenix metropolitan area, which is the economic, political, and population center of the State of Arizona. The City’s population has experienced remarkable growth over the past 25 years, increasing by 139 percent, from an estimated 108,000 in 1993 to more than 257,850 in 2018. The City’s economic growth prior to the current decade was in large part attributable to its manufacturing sector, which is led by high-tech industrial companies such as Intel Corporation, Northrop Grumman, Microchip Technology, and NXP Semiconductors. These four companies combine to employ over 15,000 people in the City. A rapidly growing industry in recent years has been financial services with companies such as Wells Fargo, Bank of America, PayPal, Toyota Financial Services, GM Financial Services, Liberty Mutual, Mr. Cooper, and Allstate, together employing over 14,000 people. Mailing Address Mail Stop 609 PO Box 4008 Chandler, Az 85244-4008 Management Services Administration (480)782-2250 (480) 782-2253 Fax chandleraz.gov Location Third Floor 175 S. Arizona Ave. Chandler, Az 85225 The City boasts a strong labor market serving the high technology field’s demand for skilled workers. Chandler’s median age is 36 years and the median household income is $84,089. In addition, more than 75 percent of the adult population has a college degree or some college education. Nearly 25 percent of jobs in Chandler are in high technology fields while the national average is about 10 percent, according to data from the Maricopa Association of Governments and Bureau of Labor Statistics. The City’s unemployment rate averaged 3.6 percent during fiscal year 2018 compared with 4.08 percent for Maricopa County and 4.78 percent for the State of Arizona. The City’s sales tax revenues, which comprise over 50 percent of its general fund, increased by 8.9 percent for 2018-19 from the prior year actuals. The City continues to strengthen its financial position and has benefitted from one-time revenues created by new developments. With only slow and steady operating revenue growth anticipated, managing costs of services and maintaining existing infrastructure continues to be critical. Consistently applying sound financial practices, achieving notable economic development successes, and having a structured plan to pay-down its Public Safety Personnel Retirement System (PSPRS) unfunded liability have helped the City continue its strong financial position while maintaining its AAA General Obligation Bond credit rating from all three ratings agencies. 2018-2019 Accomplishments Under the guidance and leadership of the Mayor and Council, along with the expertise and dedication of City management and staff, a number of accomplishments were achieved this last fiscal year. Listed below are just a few of those accomplishments: • Maintained AAA General Obligation Bond credit ratings with stable outlooks from all three rating agencies making Chandler 1 of 31 (as of February 2019) in the U.S. with this distinction; • Conducted the eighth online budget meeting, “Budget Connect” enhancing citizen involvement in the budget process; • Implemented a new online payment portal for Business Registrations, Specialty Licenses, and Liquor License renewals utilizing the City’s third party online payment provider, as well as direct debit payment options for airport and housing customers; • Issued more than 200 news releases, managed the City’s online and social media platforms, and launched social media campaigns to communicate City services, programs, and events, as well as wrote Chandler Insider articles distributed to 35,000 households monthly, and published the Chandler News and Events pages monthly in two local newspapers that are distributed to 65,000 households to provide residents with information about City news, programs, and events; • Launched the Mayor’s Monday Minute, Focus on Chandler, and Around Town Tuesday videos to communicate news and events about the people and places of Chandler through social media; • Maintained Chandler’s regional influence in monitoring state and federal legislation affecting City operations; • Opened Overstreet including Flix Brewhouse Cinema and Revint Solutions. Assisted in locating several businesses into Downtown Chandler including Flo Yoga & Cycle, Mingle + Graze, Civic Market, The Sleepy Whale, The Hidden House, and Craft 64; • Initiated construction on the new Square mixed-use project that will include 50,000 square feet of office space, 8,700 square feet of retail space, and a 109 bed Hilton Garden Inn; • Completed the Arizona Avenue Improvement Project from Frye to Pecos Roads. Improvements included widening sidewalks, new lighting, pedestrian-friendly features, and new monument signage identifying this area as the new front door to Downtown; • Opened the new Chandler Museum as scheduled on December 8, 2018. The Museum received the American Association of State and Local History highest award, the “Leadership in History Award of Excellence” for the Museum’s work on “Un-American: Engaging Our Community with the Story of Japanese Interment;” 2 • Implemented the following infrastructure projects: Public Safety Training Center, Police network refresh, Chandler Museum, Courts security upgrade, citywide infrastructure monitoring, and Voice Over Internet Protocol (VOIP) phone replacement; • Completed the second year of ASPIRE Read to Succeed tutoring program to improve the academic achievement of at-risk readers ages 6-8 by developing and strengthening 6 public housing residents’ oral language and early literacy skills; • Continued receiving designation as a High Performance Public Housing Authority, providing affordable housing for low income residents, and implemented an online resident portal called RENTCafe for Public Housing residents, Section 8 participants, and those currently on Chandler’s housing waitlist; • Completed several facility improvements at Tumbleweed Recreation Center, including improved cable connectivity, resurfacing of the group exercise studios, gymnasiums, and racquetball courts; replacement of the gym divider; and redesign of the lobby including a welcoming Americas Disability Act (ADA) compliant Guest Service counter, centralized Reservation/Registration desk, and secured facility access; • Completed the installation of the Aqua Rock Wall at Folley Pool and a shade structure at Nozomi Aquatic Center; completed construction of Meadowbrook and Homestead South Parks; completed renovations of Harter and Winn Parks playground and area lights; completed parking and park improvements at the Snedigar Sportsplex; and renovated 30 baseball fields and 14 multi-purpose fields to improve safety, playability, and enhance the aesthetics of the fields; • Completed Ocotillo Road (Cooper Road to Gilbert Road) and Arizona Avenue (Frye Road to Pecos Road) projects; completed wall upgrades at Warner Road (Arrowhead to Pennington Drives) and Dobson Road (Galveston to Erie Streets); completed ADA upgrades to 620 sidewalks and 605 ramps; • Completed an expansion of the Ocotillo Water Reclamation Facility which received the Arizona Water Association 2019 Wastewater Treatment Plant Project of the Year; • Treated and reclaimed 10.4 billion gallons of wastewater at the Airport, Lone Butte, and Ocotillo Water Reclamation Facilities, 8.0 billion gallons of which were reused for irrigation; • Adopted new zoning ordinance for autonomous vehicles and entertainment use permits; • Created a new map library on the City website and added interactive maps for traffic restrictions and pavement cuts which are accessible to the public; • Received the prestigious Insurance Services Office (ISO) Class 1 designation. Class 1 represents the highest rating given by the ISO and signifies that a department provides “superior property fire protection” which can lower citizen insurance costs; • Completed Phase I of the Public Safety Training Center which included an administrative/academic building, classroom, and a joint auditorium. This facility represents the first joint training facility shared by the Fire and Police Departments and introduces new opportunities for collaboration and cooperation between these departments. Began construction on Phase II which includes a firing range and multi-purpose training building; • Police training staff moved into the Public Safety Training Center, which increased the Department’s classroom space and added a 250-seat auditorium for large speaking events. Also included is a fitness area with state of the art equipment and a much needed “use of force” training room; • The Chandler Family Advocacy Center (FAC) opened and is a single location where comprehensive, investigative services take place. In the FAC, the Victim Services Unit works alongside patrol officers, detectives from the Special Victim’s Unit and the Homicide Unit, Forensic Nurse Examiners, members of the Department of Child Safety and Office of Child Welfare, Crisis Interventionists, and Forensic Interviewers to aid in crime victims’ healing and recovery; and • Crime in Chandler continues to be near historic lows, recording a crime rate that remains below 24 Part I crimes per 1,000 population. 3 Strategic Goals The City of Chandler’s continued goal is to provide the highest quality services to the community in the most costeffective manner. The Council’s strategy to achieve these results is through goals to improve Chandler in a coordinated manner and to make fiscally responsible decisions that will continue to strengthen the City. The City Council’s strategic goals are: • Being the Most Connected City Connect our community using enhanced communication technologies to share information by increasing electronic availability of City information. Increase community connectivity through enhancing multimodal transportation. • Being a Leader in Trust and Transparency Provide timely and accurate data and reports to maintain accountability and provide support for effective decision making. Promote opportunities that encourage City engagement and input. • Maintaining Fiscal Sustainability Maximize the City’s diverse portfolio of revenue sources. Continue adherence to and improvement upon fiscal policies. Maintain strong bond ratings with all three rating agencies for all types of debt. Manage expenditure growth through periodic review of programs and services. • Attracting a Range of Private Sector Businesses Position Chandler to be recognized by corporate real estate executives, site selectors, regional partners, and the development industry as a premiere location for new investment. Coordinate and facilitate the revitalization of Downtown Chandler. • Fostering a Contemporary Culture that Embraces Unity Promote Chandler as an inclusive community that values its rich diversity, history, and culture. Support diversity through City employment practices. Invest in employees, support systems, and innovation strategies that ensure Chandler remains a leader in the delivery of high quality services. • Being Safe and Beautiful Promote a multifaceted approach to address the needs of neighborhoods from the physical, safety, and community perspectives. Construct and maintain sustainable public infrastructure. Ensure Chandler remains a safe community by employing best practices. FINANCIAL INFORMATION Internal Control Structure Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state, and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other City staff, as needed. 4 Single Audit As a part of the City’s single audit, described earlier, tests were made of the City’s internal control structure and of its compliance with applicable laws and regulations, including those related to federal financial assistance programs. Budgetary Controls The City maintains budgetary controls as an integral part of its overall system of internal controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, capital projects funds, enterprise funds, internal service funds, and fiduciary funds are included in the annual appropriated budget. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted (FY 2018-19, $875,686,342). The City additionally exercises management control and oversight of the budget at the department level within each fund and maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts do not lapse at fiscal year-end and appropriation equal to the amount of year-end encumbrances are added to the current year budget in each cost center. Expenditures against those encumbrances are charged to the current year appropriation. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. OTHER INFORMATION Independent Audit City Charter and state statute require an annual audit by a firm of independent certified public accountants and the firm of Heinfeld, Meech & Co., has been selected by the City to uphold this requirement. In addition to meeting the requirements set forth in City Charter and state statutes, the audit was also designed to meet the requirements of the federal Single Audit Act of 1996 and the related U.S. Office of Management and Budget’s Uniform Guidance. Auditing standards generally accepted in the United States of America and the standards set forth in the General Accountability Office’s Government Auditing Standards were used by the auditors in conducting the engagement. The Auditor’s report on the basic financial statements is included in the financial section of this report. The auditor’s reports on internal controls and compliance with applicable laws and regulations can be found in a separately issued single audit report. Financial Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Chandler, Arizona for its comprehensive annual financial report for the year ended June 30, 2018, marking the thirty-seventh consecutive year the City has received the GFOA Certificate of Achievement. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of a municipal government financial report. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both GAAP and applicable legal requirements. Additionally, the City of Chandler was also awarded the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2018 from the GFOA, marking the thirty-first consecutive year of receiving this award. The award reflects the commitment of staff to meeting the highest principles of governmental budgeting. In order to be awarded a Distinguished Budget Presentation Award, the City had to satisfy nationally recognized guidelines for effective budget presentation. The guidelines are designed to assess how well an entity’s budget serves as a policy document, financial plan, operational guide, and communications device. The City’s budget presentation receives an outstanding rating in many of the areas rated. The Certificate of Achievement and Distinguished Budget Presentation Awards are valid for a period of one year only. 5 We believe our current Certificate of Achievement report continues to conform to the Certificate of Achievement program requirements and we are submitting it to the GFOA. Acknowledgments I wish to express my sincere thanks to the entire staff of the Accounting Division; without whose assistance this report could not have been prepared. Special acknowledgment is made for the work of Kristi Smith, Accounting Manager; Tracy Schmidt, Accounting Supervisor; Sherry McGlade, Accounting Supervisor; Robert Steele, Senior Accountant; Debbie Motta, Senior Accountant; Joanne Chang, Senior Accountant; and Lucy Vazquez, Management Assistant. Special thanks also go to Julie Buelt, Senior Financial Analyst, for assistance in reviewing the final document. Finally, I wish to thank the Mayor and Council, City Manager, Assistant City Managers, Directors, and City staff for their continued support in promoting sound financial policies and internal controls. Respectfully submitted, Dawn Lang Management Services Director 6 CITY OF CHANDLER, ARIZONA ELECTED AND APPOINTED OFFICIALS JUNE 30, 2019 Kevin Hartke, Mayor Terry Roe, Vice Mayor Sam Huang, Councilmember Rene’ Lopez, Councilmember Jeremy McClymonds, Councilmember Matt Orlando, Councilmember Mark Stewart, Councilmember Executive Staff Marsha Reed, City Manager Debra Stapleton, Assistant City Manager Joshua H. Wright, Assistant City Manager Department Heads and Directors Kelly Schwab, City Attorney Dana DeLong, City Clerk David Fuller, City Magistrate Matt Burdick, Communications and Public Affairs Director Stephen Erno, Community Services Director, Acting Derek Horn, Development Services Director Micah Miranda, Economic Development Director Tom Dwiggins, Fire Chief Sandip Dholakia, Chief Information Officer Dawn Lang, Management Services Director Leah Powell, Neighborhood Resources Director Sean Duggan, Chief of Police John Knudson, Public Works & Utilities Director 7 City of Chandler, Arizona Organizational Chart Citizens of Chandler Mayor/City Council Advisory Boards/ Commissions City Manager City Magistrate Law City Clerk Assistant City Managers Administrative Services General Government Information Technology Airport Economic Development (Serv. Delivery Mgmt. & Admin., Applications Support Infrastructure & Client Support) Human Resources Fleet Services Building & Facilities Community Services Park Dev. & Operations Recreation Sports & Fitness Nature & Recreation Museum (Downtown Redevelopment, Tourism, Innovations) Neighborhood Resources (Code Enforcement, Housing & Redevelopment, Community Development) Transportation Policy Public Works & Utilities Public Works Admin. Solid Waste Services Water Distribution Water Treatment Plant Environmental Resources Utilities Admin. Wastewater Collection Ocotillo Brine Reduction Facility Lone Butte Wastewater Treatment Water Quality Water Systems Maintenance San Tan Vista Water Treatment Meter Services Wastewater Quality Airport Water Reclamation Ocotillo Water Reclamation Traffic Engineering Streets Police Department Police Admin. Professional Standards Property & Evidence Forensic Services Police Community Resources & Training Communications & Public Affairs Communication & Public Affairs Video Production, Print, Mail & Graphics Fire Operations Prevention & Preparedness Fire Support Services Development Services Development Services Admin. Building Safety Police Field Operations Criminal Investigations Planning & Research Communications Police Technology Records Detention Services Fire, Health & Medical Fire Admin. Health & Medical Services Center for the Arts Community Services Admin Library Aquatics Management Services Engineering Planning Management Services Admin. Budget Purchasing Central Supply 8 Accounting Tax and License Utility Services Environmental Management 9 10 Financial Section INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Chandler, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the City of Chandler, Arizona (the “City”), as of and for the year ended June 30, 2019, 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. Auditor’s 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 auditor’s 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. 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 discretely presented component units and remaining fund information of the City of Chandler, Arizona, as of June 30, 2019, 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. 11 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison information, net pension liability information, and other postemployment benefit plan information, 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, the Other Financial Statements, and the Statistical Section are presented for additional analysis and are not a required part of the financial statements. The Other Financial Statements, as listed in the table of contents, are the responsibility of management and were derived from and relate 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 Other Financial Statements, are fairly stated in all material respects, in relation to the basic financial statements as a whole. The Introductory Section and the Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 23, 2019, on our consideration of City of Chandler, 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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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 City of Chandler, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Phoenix, Arizona December 23, 2019 12 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 13 14 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 As management of the City of Chandler (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2019. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal beginning on page one and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS The financial statements, which follow the Management’s Discussion and Analysis, provide these significant, key financial highlights for fiscal year 2019 as follows: • • • • • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $1.44 billion (net position) which represents an increase of $44.0 million from the prior year primarily due to capital contributions of $19.5 million coupled with a decrease in long-term liabilities. Of this amount, $176.5 million (unrestricted net position) may be used to meet the City’s obligations to citizens and creditors. However, $81.5 million is invested in a joint venture with the Town of Gilbert, which decreased $1.7 million from the prior year, and is not available for obligations. At June 30, 2019, the City’s governmental funds reported combined ending fund balances of $365.8 million, an increase of $5.9 million in comparison with the prior year primarily due to increased property tax revenues, state shared revenues and investment income. Approximately 52.3 percent of the total amount, $191.5 million, is available for spending at the City’s discretion (assigned or unassigned). At June 30, 2019, total fund balance for the general fund was $200.3 million which represents an increase of $4.4 million from the prior year; this is primarily due to an increase in privilege license tax receviable and interest revenue. General revenues from governmental activities accounted for $277.4 million, or 76.3 percent of all revenues from governmental activities as opposed to 73.5 percent in the prior year. Program specific revenues in the form of charges for services and grants and contributions accounted for $86.1 million or 23.7 percent of total governmental activity revenues, as opposed to 26.5 percent in the prior year. The City had $152.2 million of program revenues ($157.5 million in the prior year) and $10.7 million in general revenues and transfers ($20.0 million in the prior year) related to business-type activities. At June 30, 2019, the City’s proprietary funds reported combined total net position of $762.6 million after the restatement of beginning net position as compared to $745.0 million in the prior year; an increase for the current year of $17.7 million. This increase is primarily due to capital contributions of $18.3 million and reduction in long-term liabilities. This results in a total unrestricted net position of $249.1 million, of which $144.7 million of the unrestricted net position is in the water fund. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources with the difference reported as net position. Net position is categorized as capital assets less related debt, restricted by an outside third party and unrestricted. Over time, increases or 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 presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some 13 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). In the government-wide financial statements the City’s activities are presented in the following categories: • • • Governmental activities - Most of the City’s basic services are included here, such as general government, public safety, transportation and development and community services. Sales taxes, state shared revenues and charges for services finance most of these activities. Business-type activities - The services provided by the City included here are water, wastewater, solid waste, airport services and housing services. The services are financed through user fees and charges. Component units - The discretely presented component units are the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. 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 of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 21 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the general fund, general government capital projects fund and general obligation bonds debt service fund, which are considered to be major funds. Data from the other 18 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules in the financial section of this report. The City adopts an annual appropriated budget for the general, special revenue, general obligation and highway user revenue debt service, capital projects and proprietary funds. Budgetary comparison statements have been provided in the basic financial statements for the general, general government capital projects and general obligation bonds debt service funds to demonstrate compliance with the budget. Budgetary comparison schedules for other non-major special revenue and non-major capital projects funds are also included in the financial section. 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. The City uses enterprise funds to account for its water, wastewater, solid waste, airport and housing services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal service fund to account for its self-insurance funds. Because self-insurance funds are funded predominantly by governmental functions rather than business-type functions, it has been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. 14 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 The proprietary fund financial statements provide separate information for the water and wastewater funds, which are considered to be major funds of the City. Data from the other three enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds are provided in the form of combining statements and schedules in the financial section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements in this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental and enterprise funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1.44 billion as of June 30, 2019. This reflects continued strong operations in governmental activities, increase in license tax receivable in governmental activities and decreases in long-term liabilities within governmental and business-type activities. A significant portion of the City’s net position (73.5 percent) reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, improvements other than buildings, vehicles, machinery and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its 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. An additional portion of the City’s net position (14.2 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (12.3 percent) includes $81.5 million which is invested in a joint venture with the Town of Gilbert that may not be used to meet the City’s obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position: net investment in capital assets, restricted and unrestricted. The same situation held true for the prior fiscal year. There was an increase of $5.4 million in unrestricted net position reported in connection with the City’s business-type activities after the restatement of beginning fund balance. This was primarily due to increased levels of investable funds and reduction in long-term liabilities. 15 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 The following table presents a condensed statement of the City's net position for the fiscal years ended June 30, 2019 and 2018. Governmental Activities 2019 Current assets $ Capital assets, net 2018 465,370,449 $ 754,138,521 Long-term assets Total assets Total deferred outflows of resources Business-type Activities 2019 437,760,103 $ 759,716,771 262,716,865 Total (Primary Govt.) 2018 $ 806,195,465 251,081,488 823,833,124 2019 $ 728,087,314 1,560,333,986 2018 $ 688,841,591 1,583,549,895 — — 81,779,588 83,588,005 81,779,588 83,588,005 1,219,508,970 1,197,476,874 1,150,691,918 1,158,502,617 2,370,200,888 2,355,979,491 71,366,897 79,111,905 10,798,709 11,760,882 82,165,606 90,872,787 1,290,875,867 1,276,588,779 1,161,490,627 1,170,263,499 2,452,366,494 2,446,852,278 Total assets and deferred outflows of resources Current liabilities 60,048,014 52,421,194 37,067,826 39,588,117 97,115,840 92,009,311 Long-term liabilities 525,094,144 558,550,679 357,860,887 382,619,746 882,955,031 941,170,425 Total liabilities 585,142,158 610,971,873 394,928,713 422,207,863 980,070,871 1,033,179,736 28,882,440 26,595,350 3,995,003 3,073,619 32,877,443 29,668,969 614,024,598 637,567,223 398,923,716 425,281,482 1,012,948,314 1,062,848,705 Net investment in capital assets 575,953,033 536,086,249 481,911,949 467,799,036 1,057,864,982 1,003,885,285 Restricted 173,490,725 168,551,137 31,523,149 33,447,434 205,013,874 201,998,571 Unrestricted (72,592,489) (65,615,830) 249,131,813 243,735,547 176,539,324 178,119,717 744,982,017 $ 1,439,418,180 $ 1,384,003,573 Total deferred inflows of resources Total liabilities and deferred inflows of resources Net position: Total net position $ 676,851,269 $ 639,021,556 16 $ 762,566,911 $ CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 Changes in net position. The City’s total revenues for the fiscal year ended June 30, 2019 were $526.3 million. The total cost of all programs and services was $482.4 million, which results in an increase in net position of $44.0 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2019 and 2018. Governmental Business-type Total Activities Activities (Primary Govt.) 2019 2018 2019 2018 2019 2018 Revenues: Program revenues Charges for services $ 71,074,769 $ 75,516,684 $ 126,684,760 $ 128,755,491 $ 197,759,529 $ 204,272,175 Operating grants and contributions 4,522,345 3,988,629 7,224,669 6,350,858 11,747,014 10,339,487 Capital grants and contributions 10,510,464 9,340,818 18,335,155 22,360,158 28,845,619 31,700,976 Property taxes 32,550,250 30,816,495 — — 32,550,250 30,816,495 Sales taxes 127,598,179 General revenues 139,851,355 127,584,410 17,347 13,769 139,868,702 Franchise fees 3,567,184 3,571,744 — — 3,567,184 3,571,744 Highway user taxes 17,301,902 16,135,949 — — 17,301,902 16,135,949 866,267 940,203 — — 866,267 940,203 State shared revenues 67,156,430 64,723,211 — — 67,156,430 64,723,211 Investment income 14,822,135 1,531,766 7,742,589 854,848 22,564,724 2,386,614 Miscellaneous 1,261,279 1,502,418 2,842,825 3,743,026 4,104,104 5,245,444 — — — 11,180,186 — 11,180,186 363,484,380 335,652,327 162,847,345 173,258,336 526,331,725 508,910,663 General government 114,373,302 113,587,478 — — 114,373,302 113,587,478 Public safety 124,906,187 112,371,723 — — 124,906,187 112,371,723 Transportation and development 53,806,473 55,287,494 — — 53,806,473 55,287,494 Community services 36,990,853 36,824,102 — — 36,990,853 36,824,102 Interest and fiscal charges 7,046,655 6,716,119 — — 7,046,655 6,716,119 Water — — 58,297,769 61,513,990 58,297,769 61,513,990 Wastewater — — 61,218,775 60,605,779 61,218,775 60,605,779 Solid waste — — 15,221,985 14,531,558 15,221,985 14,531,558 Airport — — 2,038,417 1,841,718 2,038,417 1,841,718 Other taxes Gain (loss) on sale of capital assets Total revenues Expenses: — — 8,478,235 8,109,635 8,478,235 8,109,635 Total expenses Housing authority 337,123,470 324,786,916 145,255,181 146,602,680 482,378,651 471,389,596 Excess (deficiency) before transfers 26,360,910 10,865,411 17,592,164 26,655,656 43,953,074 37,521,067 (90,680) (4,175,579) 90,680 4,175,579 — — 26,270,230 6,689,832 17,682,844 30,831,235 43,953,074 37,521,067 Transfers in (out) Change in net position 650,581,039 Beginning net position, restated Ending net position $ 676,851,269 632,331,724 $ 639,021,556 17 744,884,067 $ 762,566,911 $ 714,150,782 1,395,465,106 1,346,482,506 744,982,017 $ 1,439,418,180 $ 1,384,003,573 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 As evidenced in the previous graph, the largest financing source for the City is charges for services at 37.57 percent, associated with the user fees and charges for services. Sales taxes and state shared revenues also comprise a significant portion of the City’s revenues at 26.57 percent and 12.76 percent, respectively, of the total revenues with property taxes accounting for an additional 6.18 percent of the City’s total revenues. The City as a whole uses the largest amount of resources for public safety functions at 25.89 percent of the total functional expenses of the City. The next largest users of resources are general government and wastewater at 23.71 percent and 12.69 percent, respectively, with water accounting for 12.09 percent of the City’s total expenses. Governmental activities. The increase in governmental net position totaled $26.3 million for the year ended June 30, 2019 compared with an increase of $6.7 million in the prior year. An increase is reflected after the restatement of the beginning net position at July 1, 2018 by an $11.6 million prior period adjustment for license privilege tax receivable. The increase is primarily due to increases in investable funds and privilege license tax receivable and a decrease in longterm liabilities. Business-type activities. The increase in business-type net position totaled $17.7 million for the year ended June 30, 2019 compared with an increase of $30.8 million in the prior year. This increase is primarily an increase in investable funds and a decrease in long-term liabilities. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Fund balances are reported on a hierarchy of five classifications based on spending constraints in order to provide better consistency and clarification. These classifications include nonspendable, restricted, committed, assigned and unassigned. The spendable balances are the restricted, committed, assigned and unassigned fund balances. Additional information on fund balances and their classifications can be found in Note 9 of the financial statements. The financial performance of the City as a whole is reflected in its governmental funds. As the City completed the year, its governmental funds reported a combined fund balance of $365.8 million, an increase of $5.9 million in comparison with the prior year increase of $47.5 million. Approximately $191.5 million (52.3 percent) of this amount is combined assigned and unassigned balances, all which may be spent at the City’s discretion. The total compared to the prior years’ assigned and unassigned balances of $179.0 million represents an increase of $12.5 million. The remainder of the fund balance comprising of nonspendable and restricted balances amounts to $174.4 million (47.7 percent of the total fund balance). The nonspendable balance consists of inventories and prepaid amounts. The restricted balance is constrained for specific purposes imposed by external parties or enabling legislation. The total compared to the prior years’ nonspendable and restricted balances of $169.4 million represents an increase of $5.0 million. This increase is primarily due highway user tax revenues exceeding expenditures and transfer out in the highway user special revenue fund. The general fund is the chief operating fund of the City. At the end of the current fiscal year, assigned and unassigned fund balance of the general fund was $197.2 million, while total fund balance reached $200.3 million. As a measure of the general fund’s liquidity, it may be useful to compare both assigned and unassigned fund balance and total fund balance to total fund expenditures. Assigned and unassigned fund balance represents 0.94 coverage of total annual general fund expenditures. The amount of fund balance is well above the City’s contingency reserve financial policy, allowing the funding of other reserves (i.e., economic development and capital projects, compensated absences). The City’s general fund balance increased by $4.4 million during the current fiscal year primarily due to increases in sales tax revenue and interest revenue. 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 The general government capital projects fund accounts for the acquisition, construction and improvements of the City’s general government projects. At the end of the current fiscal year total fund balance was $11.7 million. The fund balance of the City’s general government capital project fund increased by $2.5 million during the current fiscal year due to transfers in exceeding project costs. The general obligation bonds debt service fund accounts for the accumulation of resources for and payments of general obligation bonded debt. The fund balance restricted for general obligation debt service payments decreased by $2.9 million during the current fiscal year. The decrease is due to the total debt service expenditures exceeding property tax revenues for the year ended June 30, 2019. Proprietary funds. The City’s proprietary funds, which include enterprise and internal service funds, provide the same type of information found in the government-wide financial statements, but in more detail. Net position for the enterprise funds and the internal service funds at the end of the fiscal year amounted to $762.6 million and $39.8 million, respectively, compared to $744.9 million and $36.4 million in the prior fiscal year. The enterprise funds increase is primarily due to an increase in investable funds and decrease in long-term liabilities. The enterprise funds net position is 32.7 percent unrestricted compared to 32.7 percent in the prior fiscal year. Unrestricted net position of the water fund at the end of the year amounted to $144.7 million, and those for the wastewater fund amounted to $87.7 million, compared to $147.9 million and $81.5 million in the prior fiscal year. BUDGETARY HIGHLIGHTS For the 2018-19 budget year, the City of Chandler continued to engage in fiscally responsible budgeting practices although potential State legislative actions continue to keep Chandler cautious. With steady economic growth in the City and the region, the City Council adopted a balanced budget for 2018-19 that included slightly higher planned operating expenditures based upon anticipated increases to the ongoing revenue streams from sustainable economic development. Overall planned capital expenditures decreased slightly as the projects being completed outweighed new adds in 2018-19. One-time revenues generated were applied to select capital projects and planned Public Safety Personnel Retirement System (PSPRS) liability pay down. Most local revenue sources were forecasted to improve and expectations were met during the year. The City’s major sources of General Fund revenues include Local Sales Tax, State Shared Sales Tax and Urban Revenue Sharing (State Shared Income Tax). Continued increases in the largest General Fund revenue categories allowed the City Council to increase the General Fund budget by 4.1 percent from the previous year, and the total City budget decreased by 6.3 percent from 2017-18. As has been the City’s practice, the budget and revenue forecast distinguished between ongoing and one-time revenues and ensured related spending was also aligned. The City’s 2018-19 budget included various salary adjustments based on agreements between bargaining units and the City. Other ongoing costs, such as maintenance, utilities and supplies were managed closely to ensure they could be covered with ongoing revenues. The City continued to emphasize its strong financial policies and higher revenues, which allowed the City Council to maintain the General Fund contingency reserve at 15 percent of anticipated annual General Fund operating revenue. And finally, the City Council continued the designated Budget Stabilization Reserve in the amount of $15 million to provide the opportunity to utilize the reserve to balance the General Fund budget in the future for no more than three consecutive years, should state legislation, operational changes in tax collections or unexpected decreases in property values cause revenues to suddenly decrease. 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets. As of June 30, 2019, the City had invested $1.1 billion in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $98.6 million. During fiscal year 2018-19, there were $1.6 million of costs associated with construction of additional capacity at the joint venture water treatment plant with the Town of Gilbert. During the fiscal year the expansion project for the Ocotillo Water Reclamation facility was completed creating a new asset of more than $146 million and reducing construction in progress, and $4.9 million purchased as part of a water rights agreement in the business-type activities. There were several governmental activities improvement projects including the completion of several street improvement and expansions at a cost of $49.5 million, the purchase of three new fire trucks at a cost of $1.5 million, while also beginning work on a new parking garage in downtown Chandler of $16.2 million and continued work on a new public safety training facility totaling $5.1 million. There were also other various infrastructure and system improvement projects for parks, streets and water and wastewater infrastructure. The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2019 and 2018: Governmental Business-type Total Activities Activities (Primary Govt.) 2019 Land $ Land improvements Infrastructure System improvements Buildings and improvements 2018 92,482,104 $ 2019 92,168,183 $ 2018 46,148,899 $ 2019 46,148,898 $ 138,631,003 2018 $ 138,317,081 — — 230,828 274,129 230,828 274,129 360,459,636 334,699,138 — — 360,459,636 334,699,138 — — 693,613,670 571,922,432 693,613,670 571,922,432 197,745,342 207,129,915 9,483,052 9,120,230 207,228,394 216,250,145 27,096,772 27,834,486 4,181,698 4,183,679 31,278,470 32,018,165 Vehicles, machinery and equipment Construction in progress Total 76,354,667 $ 754,138,521 97,885,049 $ 759,716,771 52,537,318 $ 806,195,465 192,183,756 $ 823,833,124 128,891,985 $ 1,560,333,986 Additional information on the City’s capital assets can be found in Note 4 of the financial statements. 21 290,068,805 $ 1,583,549,895 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 Long-term debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $533.4 million in long-term debt outstanding with $41.4 million due within one year. The following table presents a summary of the City’s outstanding long-term obligations for the fiscal years ended June 30, 2019 and 2018. General obligation bonds Revenue bonds Excise tax revenue obligations Special assessment bonds Issuance premiums Total bonds & obligations payable Arbitrage payable Claims payable Landfill closure/post closure Governmental Business-type Total Activities Activities (Primary Govt.) 2019 2018 2019 2018 2019 2018 $ 205,764,000 $ 223,288,000 $ 95,901,000 $ 105,707,000 $ 301,665,000 $ 328,995,000 2,050,000 4,270,000 4,685,000 7,845,000 6,735,000 12,115,000 — — 222,575,000 230,635,000 222,575,000 230,635,000 2,395,000 2,940,000 — — 2,395,000 2,940,000 19,141,899 21,465,917 26,080,737 28,713,614 45,222,636 50,179,531 $ 229,350,899 $ 251,963,917 $ 349,241,737 $ 372,900,614 $ 578,592,636 $ 624,864,531 — 27,508 — 47,492 — 75,000 6,718,226 6,421,289 — — 6,718,226 6,421,289 — — 4,340,000 4,340,000 4,340,000 4,340,000 Compensated absences 10,981,265 10,659,857 1,168,263 1,132,763 12,149,528 11,792,620 Net pension liability 265,163,827 269,634,781 19,007,535 20,842,622 284,171,362 290,477,403 Post employment benefits 46,161,607 48,379,857 5,590,249 5,693,993 51,751,856 54,073,850 Total long term liabilities $ 558,375,824 $ 587,087,209 $ 379,347,784 $ 404,957,484 $ 937,723,608 $ 992,044,693 The City of Chandler’s total long term liabilities decreased by $54.3 million during the current fiscal year, due mainly to debt service payments. The City reported decreases in pension liability of $6.3 million, post employment benefits of $2.3 million and principal repayments of $41.3 million. State statutes currently limit the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, artificial lighting, open space, parks, public safety and emergency services, streets, transportation and recreational facilities. The current debt limitation for the City is $774.2 million. The City has $298.9 million of outstanding general obligation debt for these purposes. State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $232.3 million. The City has $12.5 million of outstanding general obligation debt for this purpose. As of year-end, the City’s current bond ratings on general obligation bonds were Aaa from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch Ratings. Ratings for the street and highway users were Aa3 from Moody’s, AA from Standard & Poor’s and AA from Fitch. Water and wastewater revenue bonds were rated Aa1 from Moody’s Investor Services, AA from Standard & Poor’s and AA+ from Fitch. Excise tax revenue obligation bonds were rated Aa1 from Moody’s Investor Services, AAA from Standard & Poor’s and AAA from Fitch. Additional information on the City’s long-term debt can be found in Note 5 of the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET Adopting a balanced budget for the next fiscal year (2019-20) required the combined efforts of citizens, the City Council, Executive Leadership team, and staff members throughout the organization. The City’s overall budget reflects continued steady economic growth for both the City and State, and also reflects some significant one-time revenue increases due to capital investments being made by developers and large industrial companies in the City. While the economy has had its longest period of growth in history, projections show a downturn is on the horizon. Maintaining service levels and 22 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2019 quality infrastructure in the most cost effective way will continue to be vital. This year included diligent monitoring of legislative bills that could impact our ongoing revenues, as well as focused review of expenditure impacts that can, or potentially could, cause higher costs if not contained. This includes the Public Safety Personnel Retirement System (PSPRS) rates and its unfunded liability, minimum wage increases, retirement vacancies causing overtime in public safety and additional staff or contract needs, workers’ compensation self-insurance claims, fleet sustainability, aging infrastructure, and addressing various capital needs under a higher construction cost environment. Although general economic conditions remain strong, the City is operating in a more constrained financial environment than in pre-recession years, continuing to look for efficiencies to manage expenditure growth. The budget increased from $875.7 million in 2018-19 to $927.0 million (an increase of 5.9 percent) in 2019-20, due mostly to higher expenditures for operating driven by a one-time payment increase of $20.5 million to help accelerate the pay down of the PSPRS unfunded liability, and $12.8 million in one-time maintenance and service enhancements. The City also continues a healthy capital improvement program to ensure existing infrastructure is well maintained and new facilities are planned when growth or need dictates. The Capital budget saw an increase of 5.6 percent, with $12.3 million in new projects and increased maintenance and $5.5 million in carryforward projects. With an 8.17 percent increase in Limited Property Values (including new growth), the City Council chose to reduce the primary property tax rate from $0.2686 to $0.2581, and keep the secondary property tax rate at $0.87 per $100 of assessed valuation. The rate reduction will help minimize the impact of higher values on property owner’s tax payment. The 2019-20 Budget does include an anticipated bond sale, and refunding opportunities for outstanding bonds are evaluated continuously to ensure strong debt management. Additionally, the City Council maintained the General Fund operating contingency at 15 percent of General Fund operating revenues to provide a further buffer for emergencies or to support new opportunities, such as unanticipated grants or development agreements. Finally, Chandler continues to maintain strong financial policies and added a new Pension Funding Policy in 2019 to ensure ongoing focus on managing pension costs. CONTACTING THE CITY’S FINANCE OFFICE This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Management Services Department, City of Chandler, P.O. Box 4008, MS 609, Chandler, AZ 85244-4008 or by calling 480-782-2333. 23 24 BASIC FINANCIAL STATEMENTS 25 City of Chandler Statement of Net Position June 30, 2019 Governmental Activities ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Privilege license tax receivable Property taxes receivable Internal balances Due from other governments Inventories Prepaid items Accrued interest receivable Special assessments receivable Notes receivable - current Other receivables Total current assets Long-term assets: Cash and investments - restricted Notes receivable - long term Investment in joint venture Other assets Capital assets: Non-depreciable Depreciable, net Total capital assets Total long-term assets Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of OPEB and pension plan items Deferred amounts on refundings Total deferred outflows of resources $ Business-Type Activities 428,468,011 — 1,500,023 19,159,578 356,240 30,236 8,880,483 866,239 — 1,824,832 2,186,521 448,503 1,649,783 465,370,449 $ Total Primary Government Component Units Chandler Industrial Chandler Development Cultural Authority Foundation 240,215,459 $ — 19,992,451 — — (30,236) 92,695 125,462 — 934,344 — — 1,386,690 262,716,865 668,683,470 — 21,492,474 19,159,578 356,240 — 8,973,178 991,701 — 2,759,176 2,186,521 448,503 3,036,473 728,087,314 — — — — — 238,500 81,541,088 — — 238,500 81,541,088 — — — — — 1,413,708 — — 6,000 168,836,771 585,301,750 754,138,521 754,138,521 1,219,508,970 98,686,217 707,509,248 806,195,465 887,975,053 1,150,691,918 267,522,988 1,292,810,998 1,560,333,986 1,642,113,574 2,370,200,888 — — — — 944,440 — 25,096 25,096 1,444,804 4,354,489 61,658,014 9,708,883 71,366,897 3,255,178 7,543,531 10,798,709 64,913,192 17,252,414 82,165,606 — — — — — — 26 $ — 942,440 2,000 — — — — — — — — — — 944,440 $ — 2,799,570 12,807 — — — — — 84,035 13,273 — — — 2,909,685 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Unearned revenue Customer advances Compensated absences payable Bonds payable Landfill closure and postclosure liability Claims and judgements payable Total current liabilities Long-term liabilities: Compensated absences payable Bonds payable Net pension liability OPEB liability Landfill closure and postclosure liability Claims and judgements payable Total long-term liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of OPEB and pension plan items NET POSITION Net investment in capital assets Restricted for: Transportation and development Capital improvements Community services Community development Debt service Legal restrictions Family self sufficiency escrow accounts Total restricted Unrestricted Total net position $ 12,786,979 3,054,422 6,167,342 4,129,630 627,961 — 2,061,110 25,022,535 — 6,198,035 60,048,014 3,754,297 378,679 4,279,584 6,640,333 — 528,036 219,275 21,173,176 94,446 — 37,067,826 16,541,276 3,433,101 10,446,926 10,769,963 627,961 528,036 2,280,385 46,195,711 94,446 6,198,035 97,115,840 — — — — — — — — — — — 8,920,155 204,328,364 265,163,827 46,161,607 — 520,191 525,094,144 585,142,158 948,988 328,068,561 19,007,535 5,590,249 4,245,554 — 357,860,887 394,928,713 9,869,143 532,396,925 284,171,362 51,751,856 4,245,554 520,191 882,955,031 980,070,871 — — — — — — — — 66,301 — — — 878,979 — — — — — 945,280 — — — — — — — — 945,280 28,882,440 3,995,003 32,877,443 — — 575,953,033 481,911,949 1,057,864,982 — 31,096 112,850,877 17,951,971 35,116,395 564,994 4,826,721 2,179,767 — 173,490,725 (72,592,489) 676,851,269 $ — — — — 31,507,575 — 15,574 31,523,149 249,131,813 762,566,911 112,850,877 17,951,971 35,116,395 564,994 36,334,296 2,179,767 15,574 205,013,874 176,539,324 1,439,418,180 — — — — — — — — 944,440 944,440 — — — — — 1,413,708 — 1,413,708 1,964,405 3,409,209 See accompanying Notes to the Financial Statements. 27 $ $ $ City of Chandler Statement of Activities For the year ended June 30, 2019 Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions $ 114,373,302 124,906,187 53,806,473 36,990,853 7,046,655 337,123,470 $ $ $ 58,297,769 61,218,775 15,221,985 2,038,417 8,478,235 145,255,181 $ 482,378,651 52,459,720 56,055,131 16,107,922 906,557 1,155,430 126,684,760 $ 197,759,529 $ $ $ $ Function/Programs Primary government: Governmental activities: General government Public safety Transportation and development Community services Interest on long-term debt Total governmental activities Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority Total business-type activities Total primary government Component units Chandler Industrial Development Authority Chandler Cultural Foundation Total component units Expenses $ 30,047 1,940,046 1,970,093 $ 43,622,807 4,998,779 14,869,670 7,583,513 — 71,074,769 62,039 1,918,770 1,980,809 $ 2,415,394 1,052,739 673,598 380,614 — 4,522,345 — — — — 7,224,669 7,224,669 11,747,014 — 291,756 291,756 $ $ $ 2,595,176 — 7,915,288 — — 10,510,464 $ 7,096,657 8,179,505 151,414 2,907,579 — 18,335,155 28,845,619 59,556,377 64,234,636 16,259,336 3,814,136 8,380,099 152,244,584 $ 238,352,162 — — — General revenues and transfers: Taxes: Property taxes, levied for general purposes Sales taxes Highway user taxes Other taxes Total taxes Franchise fees State shared revenues (unrestricted) Investment income Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning of year restated Net position - end of year See accompanying Notes to the Financial Statements. 28 Total $ $ 48,633,377 6,051,518 23,458,556 7,964,127 — 86,107,578 62,039 2,210,526 2,272,565 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Activities $ $ (65,739,925) $ (118,854,669) (30,347,917) (29,026,726) (7,046,655) (251,015,892) Component Units Business-Type Activities — — — — — — Chandler Industrial Development Authority Total $ (65,739,925) $ (118,854,669) (30,347,917) (29,026,726) (7,046,655) (251,015,892) — — — — — — Chandler Cultural Foundation $ — — — — — — — — — — — — (251,015,892) 1,258,608 3,015,861 1,037,351 1,775,719 (98,136) 6,989,403 6,989,403 1,258,608 3,015,861 1,037,351 1,775,719 (98,136) 6,989,403 (244,026,489) — — — — — — — — — — — — — — — — — — — — — — — 31,992 — 31,992 — 270,480 270,480 — 17,347 — — 17,347 — — 7,742,589 2,842,825 90,680 10,693,441 17,682,844 744,884,067 762,566,911 32,550,250 139,868,702 17,301,902 866,267 190,587,121 3,567,184 67,156,430 22,564,724 4,104,104 — 287,979,563 43,953,074 1,395,465,106 1,439,418,180 — — — — — — — 22,240 — — 22,240 54,232 890,208 944,440 — — — — — — — 88,548 — — 88,548 359,028 3,050,181 3,409,209 32,550,250 139,851,355 17,301,902 866,267 190,569,774 3,567,184 67,156,430 14,822,135 1,261,279 (90,680) 277,286,122 26,270,230 650,581,039 676,851,269 $ $ $ 29 $ City of Chandler Balance Sheet Governmental Funds June 30, 2019 General Major Funds General Government Capital Projects General Obligation Bonds Debt Service $ $ Other Governmental Funds Total 28,732,773 — — 266,710 — — — — 73,571 — — — 29,073,054 $ 165,247,367 23,924 — — — — 7,579,564 — 661,155 2,186,521 448,503 — $ 176,147,034 $ 382,054,502 1,422,923 19,159,578 356,240 11,835,859 2,638,099 8,880,483 866,239 1,620,253 2,186,521 448,503 1,649,783 $ 433,118,983 — — — 4,042,130 — — — 20,225,000 24,267,130 $ $ ASSETS Equity in pooled cash and investments Accounts receivable Privilege license tax receivable Property taxes receivable Advances to other funds Due from other funds Due from other governments Inventories Accrued interest receivable Special assessments receivable Notes receivable Other receivables Total assets $ 185,117,625 1,398,999 19,159,578 89,530 — 2,638,099 1,300,919 866,239 885,527 — — 1,649,783 $ 213,106,299 $ $ $ 2,956,737 — — — 11,835,859 — — — — — — — 14,792,596 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Due to other funds Advances from other funds Unearned revenue Bonds payable Total liabilities 3,322,698 2,928,003 5,875,054 — — — 608,956 — 12,734,711 Deferred inflows of resources Unavailable revenues - special assessments Unavailable revenues - property taxes Unavailable revenues - grants Total deferred inflows of resources Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows and fund balances 3,098,685 — — — — — — — 3,098,685 $ 6,301,275 95,759 292,288 87,500 2,607,863 11,835,859 6,746 2,050,000 23,277,290 12,722,658 3,023,762 6,167,342 4,129,630 2,607,863 11,835,859 615,702 22,275,000 63,377,816 — 75,608 — 75,608 — — — — — 219,362 — 219,362 2,105,262 — 1,492,983 3,598,245 2,105,262 294,970 1,492,983 3,893,215 866,239 2,179,767 131,214,214 66,035,760 200,295,980 — 11,693,911 — — 11,693,911 — 4,586,562 — — 4,586,562 — 155,030,485 — (5,758,986) 149,271,499 866,239 173,490,725 131,214,214 60,276,774 365,847,952 29,073,054 $ 176,147,034 $ 433,118,983 $ 213,106,299 See accompanying Notes to the Financial Statements. 30 $ 14,792,596 $ City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position June 30, 2019 $ 365,847,952 Total Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the Statement of Net Position were reported differently because: Capital assets used in governmental activities are not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Non-depreciable $ 168,836,771 Depreciable buildings, property, equipment and infrastructure, net 585,301,750 Total capital assets 754,138,521 Certain revenues are not available to pay for current period expenditures and, therefore, are unavailable in the funds. 3,893,214 Deferred charges on refundings are not financial resources and, therefore, are not reported in the funds. 9,708,883 Deferred outflows related to pensions and OPEB are not financial resources and, therefore, are not reported in the funds. 61,658,014 Deferred inflows related to pensions and OPEB represent a future acquisition of net position that is not reported in the funds. (28,882,440) The internal service fund is used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the Government-wide Statement of Net Position. 39,791,520 Long-term liabilities are not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds amounts of $6,796,429 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (207,075,899) Net pension liability (265,163,827) OPEB liability (46,161,607) Compensated absences (10,903,062) Total long-term liabilities (529,304,395) $ 676,851,269 Net Position of Governmental Activities See accompanying Notes to the Financial Statements. 31 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2019 Major Funds General General General Obligation Other Government Bonds Governmental Capital Projects Debt Service Funds Total REVENUES: Property taxes $ Sales taxes 7,666,777 $ — $ 24,859,580 $ — $ 32,526,357 139,851,355 — — — 139,851,355 Highway user taxes — — — 17,301,902 17,301,902 Regional transportation taxes — — — 866,267 866,267 Franchise fees 3,567,184 — — — 3,567,184 State shared 67,156,430 — — — 67,156,430 Grants and entitlements 206,182 — — 11,705,457 11,911,639 System development fees — — — 9,023,678 9,023,678 Special assessments — — — 610,501 610,501 Licenses and permits 7,268,592 — — — 7,268,592 Charges for services 20,682,104 — — 830,633 21,512,737 Fines and forfeitures 3,883,157 — — 351,129 4,234,286 127,206 — — — 127,206 Contributions 200,000 — — — 200,000 Interest revenue 7,020,220 12 584,254 5,663,534 13,268,020 Rentals Miscellaneous 815,358 25,095 — 82,916 923,369 258,444,565 25,107 25,443,834 46,436,017 330,349,523 General government 53,059,785 2,593,343 — 2,417,073 58,070,201 Public safety 110,125,351 195,423 — 1,175,889 111,496,663 Transportation and development 16,236,733 1,245,218 — 8,389,129 25,871,080 Community services 26,858,998 212,987 — 640,886 27,712,871 3,127,746 30,420,318 — 35,458,658 69,006,722 — — 20,225,000 2,595,000 22,820,000 Total revenues EXPENDITURES: Current: Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures — — 8,084,261 185,900 8,270,161 209,408,613 34,667,289 28,309,261 50,862,535 323,247,698 49,035,952 (34,642,182) (2,865,427) (4,426,518) 7,101,825 OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets 986,370 — — 370,426 1,356,796 Transfers in — 37,111,863 — 8,372,642 45,484,505 Transfers out (45,621,745) — — (2,383,742) (48,005,487) (44,635,375) 37,111,863 — 6,359,326 (1,164,186) 4,400,577 2,469,681 (2,865,427) 1,932,808 5,937,639 Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES: Beginning of year, as restated End of year 195,895,403 $ 200,295,980 9,224,230 $ 11,693,911 See accompanying Notes to the Financial Statements. 32 7,451,989 $ 4,586,562 147,338,691 $ 149,271,499 359,910,313 $ 365,847,952 City of Chandler Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-wide Statement of Activities For the year ended June 30, 2019 $ 5,937,639 Net Change in Fund Balances - Total Governmental Funds Governmental activities in the Statement of Activities were reported differently because: Governmental funds report capital outlay as expenditures. However, in the Governmentwide Statement of Net Position and Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded and transferred in the current period. 46,644,582 Depreciation expense on capital assets is reported in the Government-wide Statement of Net Position and Statement of Activities, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in the governmental funds. (53,541,469) Some items reported in the governmental funds are sources and uses of current financial resources and therefore are not reported as revenues or expenses in the Statement of Activities. These items include: Principal payments on debt $ 22,820,000 Pension related items (3,883,002) Other post employment benefits obligation 1,640,620 20,577,618 Accrued interest payable related to long-term debt is recognized as an expense in the Statement of Activities, however, it is not recognized in the governmental funds because it is not payable from current financial resources. 1,223,506 Arbitrage liability expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. 19,519 Certain revenues in the Statement of Activities do not provide current financial resources and therefore are not reported as revenues in the governmental funds. (489,450) Compensated absence expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. (311,486) Certain revenues in the governmental funds that provide current financial resources are not included in the Statement of Activities because they were recognized in a prior period. However, other revenues that are unavailable in the governmental funds because they do not provide current financial resources due to unavailability are recognized in the Statement of Activities. 1,003,258 Capital assets contributed by developers to the City are not recorded in the governmental funds as they do not provide current financial resources but are recognized in the Statement of Activities as program revenues. 1,808,083 The internal service fund is used by management to charge the costs of certain activities, such as insurance, to individual funds. The change in financial position of the internal service fund is reported with governmental activities. 3,398,430 $ 26,270,230 Change in Net Position of Governmental Activities See accompanying Notes to the Financial Statements. 33 City of Chandler Statement of Net Position Proprietary Funds June 30, 2019 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments Accounts receivable $ 93,722,473 $ 120,646,321 $ 25,846,665 $ 240,215,459 $ 46,413,509 9,219,826 8,380,208 2,392,417 19,992,451 77,100 — — 92,695 92,695 — Inventories 95,291 — 30,171 125,462 — Accrued interest receivable 347,024 469,682 117,638 934,344 204,579 — 1,386,657 33 1,386,690 — 103,384,614 130,882,868 28,479,619 262,747,101 46,695,188 — — 238,500 238,500 — Advances to other funds 3,900,000 — — 3,900,000 — Investment in joint venture 81,541,088 — — 81,541,088 — Non-depreciable 40,284,502 28,093,805 30,307,910 98,686,217 — Depreciable, net 204,047,286 476,962,644 26,499,318 707,509,248 — Total capital assets 244,331,788 505,056,449 56,807,228 806,195,465 — Total long-term assets 329,772,876 505,056,449 57,045,728 891,875,053 — Total assets DEFERRED OUTFLOWS OF RESOURCES 433,157,490 635,939,317 85,525,347 1,154,622,154 46,695,188 Deferred outflows of OPEB and pension plan items 1,597,262 859,648 798,268 3,255,178 — Deferred amounts on refundings 3,973,773 3,569,758 — 7,543,531 — Total deferred outflow of resources 5,571,035 4,429,406 798,268 10,798,709 — Due from other governments Other receivables Total current assets Long-term assets: Notes receivable Capital assets: 34 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Due to other funds Unearned revenue Customer advances Compensated absences payable Bonds payable Landfill closure and postclosure liability Claims and judgements payable Total current liabilities Long-term liabilities: Compensated absences payable Advances from other funds Bonds payable Net pension liability OPEB liability Landfill closure and postclosure liability Claims and judgements payable Total long-term liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of OPEB and pension plan items NET POSITION Net investment in capital assets Restricted for: Debt service Housing assistance Unrestricted Total net position $ 1,852,281 166,132 3,376,374 2,521,409 — — 186,888 114,247 10,513,387 — — 18,730,718 803,309 144,718 281,732 4,118,924 — — 166,574 68,106 10,659,789 — — 16,243,152 1,098,707 67,829 621,478 — 30,236 — 174,574 36,922 — 94,446 — 2,124,192 3,754,297 378,679 4,279,584 6,640,333 30,236 — 528,036 219,275 21,173,176 94,446 — 37,098,062 64,320 30,660 — — — 12,259 — 14,678 — — 6,198,035 6,319,952 494,450 — 123,084,832 9,590,476 2,577,628 — — 135,747,386 154,478,104 294,753 3,900,000 204,983,729 5,082,534 1,976,904 — — 216,237,920 232,481,072 159,785 — — 4,334,525 1,035,717 4,245,554 — 9,775,581 11,899,773 948,988 3,900,000 328,068,561 19,007,535 5,590,249 4,245,554 — 361,760,887 398,858,949 63,525 — — — — — 520,191 583,716 6,903,668 1,905,001 1,207,412 882,590 3,995,003 — 123,375,323 301,729,398 56,807,228 481,911,949 — 14,222,475 — 144,747,622 282,345,420 17,285,100 — 87,665,741 406,680,239 — 15,574 16,718,450 73,541,252 31,507,575 15,574 249,131,813 762,566,911 — — 39,791,520 39,791,520 $ See accompanying Notes to the Financial Statements. 35 $ $ $ 36 City of Chandler Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the year ended June 30, 2019 Other Major Funds Water Governmental Proprietary Wastewater Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees $ 52,459,720 $ 56,055,131 $ 17,014,929 $ 125,529,780 $ 95,790 Grants and entitlements — — 7,224,669 7,224,669 — Rentals — — 1,154,980 1,154,980 — Sales taxes — — 17,347 17,347 — Self insurance premiums — — — — 28,309,414 Miscellaneous 128,663 1,338 79,946 209,947 337,910 52,588,383 56,056,469 25,491,871 134,136,723 28,743,114 General and administrative 3,412,262 2,987,824 1,107,204 7,507,290 — Personnel services 9,026,914 7,521,594 3,792,125 20,340,633 2,095,185 Contractual services 8,276,027 4,643,286 12,112,353 25,031,666 2,535,639 Commodities 11,680,122 11,354,386 1,901,163 24,935,671 1,926,878 — — — — 22,751,891 — Total operating revenues OPERATING EXPENSES: Claims expense Housing assistance payments — — 4,706,410 4,706,410 16,993,600 25,953,501 2,110,482 45,057,583 — Total operating expenses 49,388,925 52,460,591 25,729,737 127,579,253 29,309,593 OPERATING INCOME (LOSS) 3,199,458 3,595,878 (237,866) 6,557,470 (566,479) Depreciation and amortization expense NONOPERATING REVENUES (EXPENSES): Interest revenue 3,018,314 3,799,385 924,890 7,742,589 1,534,607 Interest and fiscal charges (5,524,649) (8,698,436) — (14,223,085) — Accretion of bond premiums 1,204,131 1,426,788 1,959 2,632,878 — Amortization of deferred bond items (33,339) (23,748) — (57,087) — Gain (loss) on disposal of capital assets (57,500) (36,000) (8,900) (102,400) — (3,293,356) — — (3,293,356) — (4,686,399) (3,532,011) 917,949 (7,300,461) 1,534,607 (1,486,941) 63,867 680,083 (742,991) 968,128 7,096,657 8,179,505 3,058,993 18,335,155 — — — 749,429 749,429 2,450,000 Equity interest in joint venture Total Nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in (317,357) (217,627) (123,765) (658,749) (19,698) Total capital contributions and transfers 6,779,300 7,961,878 3,684,657 18,425,835 2,430,302 CHANGE IN NET POSITION 5,292,359 8,025,745 4,364,740 17,682,844 3,398,430 Transfers out NET POSITION: Beginning of year, restated End of year 277,053,061 $ 282,345,420 398,654,494 $ See accompanying Notes to the Financial Statements. 37 406,680,239 69,176,512 $ 73,541,252 744,884,067 $ 762,566,911 36,393,090 $ 39,791,520 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2019 Major Funds Water Governmental Activities: Internal Service Fund Other Proprietary Wastewater Funds Total CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 53,629,051 $ 56,305,567 $ 18,535,854 $ 128,470,472 $ 28,744,503 Cash received from grantors — — 7,228,407 7,228,407 — Cash payments to suppliers (23,091,325) (20,724,870) (19,652,070) (63,468,265) (26,968,233) Cash payments to employees for services (9,428,760) (7,888,088) (3,984,624) (21,301,472) (2,088,323) 21,108,966 27,692,609 2,127,567 50,929,142 (312,053) Transfers in — — 749,429 749,429 2,450,000 Transfers out (317,357) (217,627) (123,765) (658,749) (19,698) (317,357) (217,627) 625,664 90,680 2,430,302 (13,478,079) (10,298,476) (1,017,137) (24,793,692) — 1,652,634 1,839,970 — 3,492,604 — Principal paid on bond maturities (10,670,631) (12,960,287) (26,000) (23,656,918) — Interest paid on bonds (5,709,320) (8,969,954) (406) (14,679,680) — Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Proceeds from sale/refunding of bonds Cash received from capital contributions 6,524,799 7,441,748 — 13,966,547 — (21,680,597) (22,946,999) (1,043,543) (45,671,139) — 2,942,765 3,690,781 890,030 7,523,576 1,471,796 Net cash provided (used) by investing activities 2,942,765 3,690,781 890,030 7,523,576 1,471,796 Net increase (decrease) in cash and cash equivalents 2,053,777 8,218,764 2,599,718 12,872,259 3,590,045 91,668,696 112,427,557 23,246,947 227,343,200 42,823,464 Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 93,722,473 38 $ 120,646,321 $ 25,846,665 $ 240,215,459 $ 46,413,509 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 3,199,458 $ 3,595,878 $ (237,866) $ 6,557,470 $ (566,479) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 16,993,600 25,953,501 2,110,482 45,057,583 — (Increase) decrease in receivables 867,887 325,668 249,137 1,442,692 (1,549) (Increase) decrease in inventories (421) — (4,734) (5,155) — (Increase) decrease in other assets 33,339 23,748 554 57,641 — Increase (decrease) in payables 277,507 (1,739,374) 179,794 (1,282,073) (50,762) Increase (decrease) in accrued payroll and compensated absences 34,011 (15,619) (5,185) 13,207 6,862 Increase (decrease) in deposits 187,844 (59,110) 49,862 178,596 — Increase (decrease) in claims payable — — — — 296,937 Increase (decrease) in unearned revenue — — — — 2,938 Increase (decrease) in customer advances (48,402) (41,208) (26,609) (116,219) — Increase (decrease) in net pension items (391,158) (312,261) (167,437) (870,856) — Increase (decrease) in OPEB liability (44,699) (38,614) (20,431) (103,744) — 17,909,508 24,096,731 2,365,433 44,371,672 254,426 Changes in assets, liabilities and deferred items: Total adjustments Net cash provided (used) by operating activities $ 21,108,966 $ 27,692,609 $ 2,127,567 $ 50,929,142 $ (312,053) $ 510,456 $ 687,094 $ — $ 1,197,550 $ — NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from developers Contributions of capital assets from city government Gain (loss) on disposal of capital assets Accretion of bond premiums Amortization of deferred bond charges See accompanying Notes to the Financial Statements. 39 — — 3,058,993 3,058,993 — (57,500) (36,000) (8,900) (102,400) — 1,204,131 1,426,788 1,959 2,632,878 — 33,339 23,748 — 57,087 — City of Chandler Statement of Fiduciary Net Position Fiduciary Funds June 30, 2019 Agency Funds ASSETS Equity in pooled cash and investments $ 1,000 1,000 $ 1,000 1,000 $ — Total assets LIABILITIES Due to others Total liabilities Total net position See accompanying Notes to the Financial Statements. 40 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 The City of Chandler (City) was incorporated on February 17, 1920. On May 25, 1964, voters ratified a City charter providing for a Council-Manager form of government. The government of the City is operated by authority of its charter, as limited by the state legislature. A seven-member council, including a separately elected mayor, governs the City. The following notes to the financial statements are an integral part of the City’s financial statements. NOTE 1 - Summary of Significant Accounting Policies The accounting policies and procedures of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity As required by GAAP, these financial statements present the City and its component units, i.e., entities for which the City is considered to be financially accountable and/or exercise significant influence over operations. Blended component units, although legally separate entities, are in substance part of the City’s operations, and therefore data from these units are combined with data of the City. The City’s discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements, to emphasize that they are legally separate from the City. The component units discussed below are included in the City’s reporting entity because of the significance of their operational and/or financial relationships with the City. Each component unit has a June 30 year-end. 1. Blended Component Unit The City of Chandler Municipal Property Corporation (Corporation) is a nonprofit corporation which exists solely for the purpose of constructing or otherwise acquiring or equipping buildings, structures, or improvements on land owned by the City for the benefit, common good, and general welfare of the City and its citizens. The Chandler City Council appoints the five members of the Board, who are responsible for approving the Corporation’s bond sales. Additionally, all bond sales must be submitted to and approved by the City Council. All financial activities are reported within the enterprise funds of the City. Unaudited financial statements for the Corporation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 2. Discretely Presented Component Units The component unit column in the basic financial statements includes the financial data of the Chandler Industrial Development Authority (Authority). The Authority is responsible for the issuance of tax-exempt bonds for qualified projects approved by the Authority and the City Council. The Authority has a seven-member board of directors appointed by the City Council. The City is able to impose its will on the Authority inasmuch as the City Council must vote to ratify the actions of the Authority with regard to the issuance of bonds. The accounting records of the Authority are maintained by the City and are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. The Chandler Cultural Foundation (Foundation) oversees the operations of the Chandler Center for the Arts for the selection and scheduling of performances, other facility use, and general policy setting activities. The City is able to significantly influence its operations. Specifically, the Foundation’s budget is annually reviewed and approved by the City Council and the Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Foundation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 41 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 - Summary of Significant Accounting Policies, continued B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state shared revenues, investment income, and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation Government-wide Financial Statements - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Agency fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements; the exception is any interfund activity between governmental and business-type activities, such as transfers. Interfund services provided and used are not eliminated. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service resources are provided during the current year for payment of long-term debt principal and interest due early in the following year (not to exceed one month) and, therefore, the expenditures and related liabilities have been recognized. Compensated absences and claims and judgments are recorded only when payment is due. Property taxes, sales taxes, franchise fees, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenues are not susceptible to accrual because generally they are not measurable until received in cash. 42 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 - Summary of Significant Accounting Policies, continued Grants and similar awards received before the eligibility requirements are met are recorded as unearned revenue. Cash receipts received in advance of being billed have also been reported as unearned revenue on the governmental fund financial statements. Special assessments and delinquent property taxes have been recorded as deferred inflows of resources. Grant and similar awards received more than 60 days after the end of the current fiscal period have been recorded as deferred inflows of resources. The City reports the following major governmental funds: General Fund - This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. General Government Capital Projects Fund - This fund is used to account for the acquisition, construction, reconstruction, improvement, and and renovation of general government projects. General Obligation Bonds Debt Service Fund - This fund accumulates monies for the payment of principal and interest requirements of the City’s tax supported general obligation bonds. Revenues for repayment are generated from secondary property taxes. The City reports the following major proprietary funds: Water Fund - This fund is used to account for the provision of water services to the residents of the City and certain county residents within the City’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater Fund - This fund is used to account for the provision of wastewater services to the residents of the City and certain county residents within the City’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Additionally, the City reports the following fund types: Internal Service Fund - Internal Service Funds are established to account for financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis. The Internal Service Fund consists of Self Insurance Funds that administer the City’s self-insured property, liability, health, dental, short term disability and workers’ compensation insurance programs. Fiduciary Fund - Agency fund which accounts for resources held by the City in a custodial capacity for peddler bonds. Proprietary funds 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. The principal operating revenues of the City’s internal service fund are interfund transfers from the general fund for property and liability insurance and charges to user departments for premiums related to health, dental, workers’ compensation and short term disability self-insurance. The principal operating revenues of the City’s enterprise funds are user fees and charges to customers for water, wastewater, solid waste, airport services and public housing grants. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, claims and premiums. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first where allowable and then unrestricted resources as they are needed. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 - Summary of Significant Accounting Policies, continued The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by fund type. D. Budgeting and Budgetary Control The City Council formally adopts an annual operating budget for the general, special revenue, debt service, capital projects, enterprise and internal service funds, excluding the special assessment bonds debt service fund. The level of control at which expenditures may not exceed budget is by department. Upon written request by the City Manager, the City Council has the authority to transfer part or all of any unencumbered appropriation balance from one department to another per City Charter requirement. The City Manager and department heads have the authority to transfer appropriations between divisions and expenditure categories within departments. Appropriations totaling $9,782,284 were transferred from the contingency reserves within the general, enterprise, internal service and capital projects funds. All appropriations expire at the end of the fiscal year except for encumbered and capital improvements carryforward appropriations. Encumbrance accounting, under which purchase orders, contracts and other commitments for the future expenditure of funds are recorded in order to reserve that portion of the related fund balance, is employed in the governmental and proprietary fund types. Encumbrances outstanding at year-end are reported as part of restricted fund balance for governmental and proprietary funds (excluding the general fund) unless a negative fund balance is reported. If negative, encumbrances are reported as part of .unassigned fund balance. Carryforwards for capital improvement projects are reported as part of assigned fund balance at year-end and encumbrances in the general fund are reported as part of unassigned fund balance. Significant encumbrances for the general fund are $7,984,615, for the general government capital projects fund are $13,357,029, for water enterprise fund are $21,023,237, for wastewater enterprise fund are $6,255,308, and for non-major governmental funds are $43,935,704. The budgets are adopted on a basis differing from generally accepted accounting principles in that for budgetary purposes: (1) current year encumbrances are treated as expenditures; (2) bond proceeds for proprietary funds are considered revenue; (3) capital outlays for enterprise funds are treated as expenditures; (4) debt service principal payments are treated as expenditures for enterprise funds; (5) accrued compensated absences are not recognized as expenditures; (6) depreciation and amortization are not recognized as expenditures; (7) estimated landfill closure and post closure costs are not recognized as expenditures until incurred; (8) sales tax collected by merchants but not yet required to be remitted at the end of the fiscal year is not recorded as revenue; and (9) investments are recorded at cost. 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. Through a Home Rule option, any city can adopt its own alternative expenditure limitation if a majority of the qualified electors vote in favor of the issue at a regular election. On August 28, 2018, the City of Chandler voters approved to continue under Home Rule for the next four years. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 - Summary of Significant Accounting Policies, continued E. Pooled Cash and Investments City Charter, Ordinance, and Trust Agreements authorize the City to invest in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of Aa or AA, commercial paper with a minimum short term rating of P1 or A1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of A, repurchase agreements and the Local Government Investment Pool. The City of Chandler Municipal Property Corporation is additionally authorized to invest in banker’s acceptances, U.S. Corporate obligations rated Aa3 and AA, or better, full faith and credit general obligations or special revenue bonds of any state or political subdivision rated AAA and Aaa, Refcorp interest strips and money market funds. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Cash resources of the City are combined to form a pool of cash and investments. Excluded from this pool are the cash and investments of the Chandler Health Care Benefits Trust, Workers’ Compensation and Employer Liability Trust, Chandler Industrial Development Authority and the Chandler Cultural Foundation. Interest earned on the pooled cash and investments is distributed each month on the basis of average monthly equity in the pool. F. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). The water, wastewater and solid waste enterprise funds use the direct write-off method for bad debts and therefore do not have an allowance for uncollectibles. All other funds’ trade receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 90 days comprise the trade accounts receivable allowance for uncollectibles. G. Inventories Inventories are stated at average cost using the first-in/first-out (FIFO) method. Inventories are recorded as expenses/ expenditures when consumed in the government-wide financial statements and governmental and proprietary fund financial statements, respectively. H. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items under the purchases method. I. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The City defines general government infrastructure capital assets included in capital improvement projects completed at year’s end in excess of $100,000. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 - Summary of Significant Accounting Policies, continued The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are completed. Estimated useful lives for capital assets were determined based on the City’s historical experience and the various industry standards. Capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Building improvements Infrastructure Machinery and equipment System improvements Vehicles J. Years 20-40 20 12-50 5-15 25 4-7 Compensated Absences Vacation leave vests with the employee as it is earned dependent on accumulated time and the individual’s vacation benefits associated with their rank within the City. All employees may carryforward only the amount of vacation benefits equal to the maximum allowable earned credits for the preceding calendar year. Upon termination or retirement, an employee will be compensated for accumulated vacation leave dependent on accumulated time and the individual's vacation benefits associated with their rank within the City. Payment will be based on the individual's rate of pay at termination or retirement. Upon death, the same benefits shall be paid to the employee's beneficiary. The amount, including related benefits, for accumulated vacation leave is reported on the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations or retirements. Generally, resources from the general fund are used to pay for compensated absences. Sick leave benefits provided for ordinary sick pay are not vested with the employee. Upon retirement, an employee will be compensated for 50 percent of accumulated sick leave. Payment will be based on the monthly compensation paid to the employee at the time of retirement and paid into a Retirement Health Savings Plan. Upon death, the same benefits shall be paid to the employee's beneficiary. K. Long-Term Obligations In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type activities and proprietary fund Statement of Net Position. Bond related items, such as premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed in the current period. In the fund financial statements, governmental funds 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 issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 -Summary of Significant Accounting Policies, continued The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds and lease purchase obligations which benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due or when resources have been accumulated for payment early in the following year. For other long-term obligations, only the portion that is expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. L. Fund Equity In the fund financial statements, governmental funds report fund balances as nonspendable, restricted, committed, assigned and unassigned. Nonspendable, restricted and committed classifications represent “reserved” fund balances whereas assigned and unassigned classifications represent “unreserved” fund balances (see Note 9). M. Capital Contributions - Enterprise Funds Capital contributions, as shown in the enterprise funds, represent federal and state grants received, subdividers’ costs of installing water mains, water service connections installed at the customers’ expense and transfers of equipment from governmental funds. Capital contributions are shown as an inflow of resources in both the government-wide and fund financial statements (see Note 8). N. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. O. Post-Employment Health Care and Life Insurance Benefits In addition to providing pension benefits, the City allows for continuance of certain health care and life insurance benefits for retired employees. Substantially all of the City's employees may become eligible for those benefits if they are eligible to receive a retirement pension when leaving employment with the City. The cost of retiree health care and life insurance premiums is borne both by the retiree and the specific retirement plan under which they participated. There is no direct cost paid by the City. P. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. In the statements of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing or investing activities. Q. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 1 -Summary of Significant Accounting Policies, concluded R. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. S. Implementation of New Accounting Standards During the year ended June 30, 2019, the City implemented the provisions of GASB Statement No. 83, Certain Asset Retirement Obligations and GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. GASB Statement No. 83 requires governments to recognize and measure certain asset retirement obligations (AROs) and requires disclosures related to AROs. GASB Statement No. 88 requires governments to disclose additional information regarding resources used to liquidate debt and related risks. Both Statements are intended to provide better information to financial statement users. NOTE 2 - Cash and Investments The City maintains a cash and investment pool that is available for use by all funds, except for the Chandler Industrial Development Authority, the Chandler Cultural Foundation, the Chandler Health Care Benefits Trust and the Chandler Workers’ Compensation Employer Liability Trust. Each fund’s portion of this pool is displayed on the financial statements as Equity in Pooled Cash and Investments. Pooled cash and investments are stated at fair value with accrued interest shown separately. Restricted cash and investments are amounts held separately by trustees and amounts segregated due to their source and future intent. In addition, the Industrial Development Authority, the Chandler Cultural Foundation, the Chandler Health Care Benefits Trust and the Chandler Workers’ Compensation Employer Liability Trust separately hold investments. Deposits At year-end, cash on hand was $47,150, the carrying amount of the City deposits was $1,008,636, and the bank balance was $1,910,192. Of the bank balance, $250,000 was covered by federal depository insurance and $1,660,192 was covered by collateral held in the pledging bank’s trust department in the City’s name. In addition, at June 30, 2019, the City had $99,347,358 of restricted cash held by paying agent consisting of $51,619,963 in July 1, 2019 debt service payments, $21,460,479 in unspent bond proceeds from the 2017 Excise Tax Revenue Obligation issuance, and $26,266,916 for the 2017 General Obligation Bond issuance. The cash held by paying agent is in money market funds invested primarily in short-term U.S. Treasury securities. Fair Value Measurements. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. • • • Level 1 inputs are quoted prices in active markets for identical assets Level 2 inputs are significant other observable inputs Level 3 inputs are significant unobservable inputs 48 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 2 - Cash and Investments, continued At June 30, 2019, the City had the following investments and maturities: Investment Maturities (in Years) Less than 1 Year Investment Type Category Fair Value U.S. Treasuries U.S. Agencies: Fannie Mae Federal Farm Credit Banks Funding Corp Federal Home Loan Bank Freddie Mac Supra-National Agency: African Development Bank Asian Development Bank Inter-American Development Bank International Finance Corp Intl Bank of Reconstruction & Dev Corporate Bonds: 3M Co American Express Credit Corp American Honda Finance Corp Apple Inc Corp Automatic Data Processing Inc Bank of America Corp Bank of New York Mellon Corp Berkshire Hathaway Finance Corp Branch Banking & Trust Caterpillar Finl Service Charles Schwab Corp Chevron Corp Cisco Systems Inc Corp Citibank Na Coca-Cola Co Exxon Mobil Corp General Electric Co Corporate Home Depot Inc Corp Honeywell International Corp HSBC Bank Usa Jackson National Life Global Funding JPMorgan Chase Bank Na JPMorgan Chase & Co Corp Massmutual Global Funding Microsoft Corp Oracle Corp Paccar Financial Corp PNC Bank Na The Walt Disney Company Corp Toyota Motor Credit Corp Unilever Capital Corp Bonds United Parcel Service Level 1 $ 241,537,355 Level 2 Level 2 Level 2 Level 2 1-5 Years S&P/Moody/ Fitch Credit Rating 9,642,825 $ 231,894,530 10,704,534 12,172,838 25,167,216 8,717,773 3,157 — — 273,604 10,701,377 12,172,838 25,167,216 8,444,169 1.88 2.14 4.43 1.53 AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA Level 2 Level 2 Level 2 Level 2 Level 2 1,796,717 2,310,161 4,572,889 5,721,817 8,088,132 — — — — — 1,796,717 2,310,161 4,572,889 5,721,817 8,088,132 0.32 0.41 0.80 1.01 1.42 AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 3,049,389 3,345,139 2,471,265 3,117,012 3,001,899 2,392,533 7,655,114 3,166,748 1,152,963 1,773,731 4,077,456 1,995,990 3,032,090 922,549 1,496,765 360,998 4,092,240 1,036,389 623,901 1,027,642 4,053,698 4,254,671 2,157,506 2,292,171 308,775 2,477,396 3,151,075 3,010,035 2,563,089 6,487,582 273,965 2,681,067 — 3,345,139 — — — — — — — — — 1,995,990 — — — — 4,092,240 1,036,389 623,901 — — 3,049,389 — 2,471,265 3,117,012 3,001,899 2,392,533 7,655,114 3,166,748 1,152,963 1,773,731 4,077,456 — 3,032,090 922,549 1,496,765 360,998 — — — 1,027,642 4,053,698 4,254,671 2,157,506 2,292,171 308,775 2,477,396 3,151,075 3,010,035 2,563,089 6,487,582 — 2,681,067 0.54 0.59 0.43 0.55 0.53 0.42 1.35 0.56 0.20 0.31 0.72 0.35 0.53 0.16 0.26 0.06 0.72 0.18 0.11 0.18 0.71 0.75 0.38 0.40 0.05 0.44 0.55 0.53 0.45 1.14 0.05 0.47 AA-/A1/NA A-/A2 A/A2 AA+/Aa1 AA/Aa3/NA A-/A2 A/A1/AAAA/Aa2/A+ A-/A2 A/A3 A/A2/A AA/Aa2 AA-/A1 A+/Aa3/A+ A+/A1/A AA+/Aaa BBB+/Baa1 A/A2 A/A2 A/A1/A+ AA-/A1/AAA+/Aa2/AA A-/A2 AA+/Aa3/AA+ AAA/Aaa AA-/A1 A+/A1 A/A2/A+ A/A2 AA-/Aa3 A+/A1 A+/A1 49 $ Concentration of Credit Risk % — — — — — — — — 273,965 — 42.56 % AA+/Aaa/AAA CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 2 - Cash and Investments, continued Investment Maturities (in Years) Concentration of Credit Risk % 1-5 Years S&P/Moody/ Fitch Credit Rating Investment Type Category US Bank Na US Bank Na Cincinnati USAA Capital Corp Wal-Mart Store Inc Corp Commercial Paper: JP Morgan Securities LLC Asset Backed: Ally Abs 2017-2 A3 Allya 2017-5 A3 Bacct 18A2 A Carmx 184 A3 Carmx 2019-2 A3 Chait 142 A Copar 191 A3 Copar 2019-1 A3 Harot 2017-4 A3 Harot 2019-1 A3 Harot 2019-2 A3 Hart 2018-A A3 Honda Abs 2017-1 A3 Honda Abs 2017-2 A3 Hyundai Abs 2017-A A3 Hyundai Abs 2017-B A3 Hyundai Auto John Deere Abs 2017-B A3 Mbart 181 A3 Mbart 2018-1 A3 Narot 2017-C A3 Narot 2018-B A3 Narot 2019-A A3 Narot 2019-B A3 Taot 2017-D A3 Taot 2018-A A3 Woart 19B A3 Money Market - Certificates of Deposit Money Market Fund Cash and cash equivalents Level 2 Level 2 Level 2 Level 2 4,245,847 3,144,415 1,663,825 109,802 — — — — 4,245,847 3,144,415 1,663,825 109,802 0.75 0.55 0.29 0.02 AA-/A1/AAA+/A1 AA/Aa1/NA AA/Aa2 Level 2 249,362 249,362 — 0.04 A-1/P-1 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 1 Level 1 832,555 1,642,104 2,125,970 5,524,606 881,637 2,508,836 3,307,046 748,384 1,117,737 679,634 1,380,311 781,487 464,552 1,414,187 574,155 1,643,477 1,061,070 468,895 2,766,611 1,327,568 754,788 1,249,891 1,633,469 1,476,089 1,391,864 1,162,130 5,459,038 37,809,338 72,198,902 189,469 — — — — — — — — — — — — — — — — — — — — — — — — — — — 15,799,091 72,198,902 189,469 832,555 1,642,104 2,125,970 5,524,606 881,637 2,508,836 3,307,046 748,384 1,117,737 679,634 1,380,311 781,487 464,552 1,414,187 574,155 1,643,477 1,061,070 468,895 2,766,611 1,327,568 754,788 1,249,891 1,633,469 1,476,089 1,391,864 1,162,130 5,459,038 22,010,247 — — 0.15 0.29 0.37 0.97 0.16 0.44 0.58 0.13 0.20 0.12 0.24 0.14 0.08 0.25 0.10 0.29 0.19 0.08 0.49 0.23 0.13 0.22 0.29 0.26 0.24 0.20 0.96 6.65 12.70 0.03 NR/Aaa AAA/Aaa AAA/Aaa/NA AAA/NA/AAA AAA/NR AAA/NR/AAA AAA/Aaa/AAA AAA/Aaa NR/Aaa AAA/NR NR/Aaa AAA/Aaa NR/Aaa AAA/Aaa AAA/NR AAA/Aaa AAA/NR NR/Aaa AAA/Aaa/NA AAA/Aaa NR/Aaa AAA/Aaa NR/Aaa NR/Aaa AAA/Aaa AAA/Aaa AAA/NA/AAA AAAm/NR AAAm/NR AAA/Aaa/AAA $ 568,281,326 $ 109,724,034 $ 458,557,292 100.00 Total Fair Value Less than 1 Year Investment Valuation Techniques. U.S. treasuries, agencies, money market, and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for identical securities. Governmental bonds, corporate bonds, other fixed income instruments, and international bonds classified in Level 2 of the fair value hierarchy are valued based on significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 2 - Cash and Investments, concluded Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maturities of its investment portfolio to five years. Credit Risk. The City’s investment policy allows for investments in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of AA+ or Aaa, commercial paper with a minimum short term rating of A1 or P1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of BBB+ or Baa1, repurchase agreements and the Local Government Investment Pool. The City’s investment in U.S. Agencies, Corporate Bonds and Money Market Funds were rated no lower than AA+, BBB+ and AAAm by Standard & Poor’s, respectively, as of June 30, 2019. Concentration of Credit Risk. The City’s investment policy does not allow for an investment in any one issuer that is in excess of five percent of the City’s total investments. Securities issues by the United States of America or its agencies are exempt from this provision. More than 5 percent of the City’s investments are in U.S. Agencies and U.S. Treasuries and Agencies money market funds. See percentages in table on preceding pages. NOTE 3 - Property Taxes The City’s property tax is levied and collected by the Maricopa County Treasurer. Property taxes are levied on or before the third Monday in August. As of fiscal year 2017, the levy is based upon the January 1 limited property tax value of property as determined by the Maricopa County Assessor. Under Arizona Revised Statutes (A.R.S.), two assessed valuations are used. One is for primary taxes (used to fund operating expenditures) and the other is for secondary taxes (used to meet general obligation debt service requirements). Taxes are due in two equal installments on October 1 and March 1 following the levy date and are delinquent on the first day of November and May, respectively. Delinquent amounts bear interest at the rate of 16 percent. The City also levies various personal property taxes during the year, which are due the second Monday of the month following receipt of the tax notice, and become delinquent 30 days thereafter. Pursuant to A.R.S. a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. The State Constitution and State law specify a property tax levy limitation system. The system consists of two levies, a limited levy known as the primary property tax levy and an unlimited levy referred to as the secondary levy, which may only be used to retire bonded indebtedness. There is also a control on the assessed value of property for primary tax purposes. The base year for the tax system is fiscal year 1979-80. From this base year, two assessed values evolve. The primary assessed values are allowed to increase by no more than 5 percent a year. The dollar amount of the secondary property tax levy is "unlimited" and the actual limited property value of property is used in determining the tax rate. The primary tax levy is limited to an increase of 2 percent over the previous year's maximum allowable primary levy, plus an increased dollar amount because of a net gain in property not taxed the previous year. Also, the primary property tax from all taxing jurisdictions for homeowners may not exceed 1 percent of the market value of their homes. If the combined primary property tax (for the City, County, School District, etc.) exceeds 1 percent of the market value of the homes, the school districts will reduce their rate until the homeowners' aggregate rate is equal to or less than the allowable 1 percent. The State will then subsidize the school districts for the reduced revenue. This 1 percent limitation applies to primary property taxes only and does not affect the secondary property tax levy. In fiscal year 2018-19, current property tax collections were $31,714,150 or 99 percent of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax expected to be collected within 60 days is recognized as revenue and recorded as a receivable. Property taxes levied in August 2019 are not available for fiscal year 2018-19; accordingly, such taxes will not be recognized as revenue until fiscal year 2019-20. 51 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 4 - Capital Assets A summary of changes in capital assets for governmental activities is as follows: Governmental Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Balance June 30, 2018 $ 92,168,183 97,885,049 190,053,232 Additions and Transfers In $ 313,921 64,851,207 65,165,128 Deletions and Transfers Out $ Balance June 30, 2019 — $ (86,381,589) (86,381,589) 92,482,104 76,354,667 168,836,771 739,598,534 399,450,754 99,552,800 1,238,602,088 686,849,181 390,854,623 94,334,290 1,172,038,094 52,749,353 8,596,131 9,797,029 71,142,513 — — (4,578,519) (4,578,519) (352,150,043) (183,724,708) (66,499,804) (602,374,555) 569,663,539 $ 759,716,771 $ (26,988,855) (17,980,704) (9,628,184) (54,597,743) 16,544,770 81,709,898 $ — (379,138,898) — (201,705,412) 3,671,960 (72,456,028) 3,671,960 (653,300,338) (906,559) 585,301,750 (87,288,148) $ 754,138,521 Construction in progress in the governmental activities capital assets is comprised of the following: Expended to June 30, 2019 $ 22,109,344 5,163,735 49,081,588 $ 76,354,667 Streets Parks and recreation Buildings and related improvements Total 52 Remaining Commitments $ 35,253,676 991,543 18,070,706 $ 54,315,925 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 4 - Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: System improvements Building and improvements Vehicles, machinery and equipment Land improvements Total capital assets being depreciated Less accumulated depreciation for: System improvements Buildings and improvements Vehicles, machinery and equipment Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ Balance Additions and Deletions and Balance June 30, 2018 Transfers In Transfers Out June 30, 2019 46,148,898 192,183,756 238,332,654 $ 1,206,183,651 25,017,235 19,363,863 2,471,912 1,253,036,661 (634,261,219) (15,897,005) (15,180,184) (2,197,783) (667,536,191) 585,500,470 $ 823,833,124 $ 1 28,244,467 28,244,468 164,839,756 1,108,279 1,726,974 10,122 167,685,131 $ — $ (167,890,905) (167,890,905) 46,148,899 52,537,318 98,686,217 — — (823,626) — (823,626) 1,371,023,407 26,125,514 20,267,211 2,482,034 1,419,898,166 (43,148,518) — (677,409,737) (745,457) — (16,642,462) (1,496,145) 590,816 (16,085,513) (53,423) — (2,251,206) (45,443,543) 590,816 (712,388,918) 122,241,588 (232,810) 707,509,248 150,486,056 $ (168,123,715) $ 806,195,465 Construction in progress in the business-type activities capital assets is comprised of the following: Expended to June 30, 2019 $ 14,484,281 34,782,660 180,348 3,090,029 $ 52,537,318 Sewer system improvements Water system improvements Solid waste system improvements Airport improvements Total 53 Remaining Commitments $ 2,803,432 17,767,235 128,822 705,458 $ 21,404,947 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 4 - Capital Assets, concluded Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Community services Transportation and development Total depreciation expense - governmental activities Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority Total depreciation expense - business-type activities $ $ $ $ 7,556,358 7,349,539 10,008,915 28,626,657 53,541,469 16,993,600 25,953,501 591,819 944,989 573,674 45,057,583 NOTE 5 - Long-Term Liabilities A. General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. Bonds issued for business-type activities are reported in the enterprise funds as they are to be repaid from enterprise revenues. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds are generally issued as 10 to 15 year serial bonds, except for refunding issues, with varying amounts of principal maturing each year. The City has pledged future ad valorem tax revenues and net enterprise revenues to repay a total of $366,114,585 in outstanding general obligation bonds and are payable through July 1, 2032. Proceeds of the bonds were used for governmental and business-type activities. Governmental Activities General Obligation Bonds Annual principal and interest payments on the government activities bonds are expected to require less than 80 percent of total 2018-19 ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $249,759,690. Principal and interest paid for the current year and total ad valorem property taxes were $25,932,979 and $32,526,357 respectively. 54 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2019 were as follows: Outstanding Governmental Activities General Obligation Bonds: June 30, 2019 $9,925,000 Capital Improvement Bonds, Series 2011A, due in annual installments of $2,500,000 to $3,300,000 through 7/1/20; interest at 4 percent. $ $214,540,000 Refunding Bonds, Series 2014, due in annual installments of $10,370,000 to $16,210,000 through 7/1/28; interest at 3 percent to 5 percent. 120,049,000 $39,050,000 Refunding Bonds, Series 2016, due in annual installments of $4,980,000 to $15,465,000 beginning 7/1/25 through 7/1/27; interest at 3 percent to 5 percent. 25,500,000 $58,740,000 Capital Improvement Bonds, Series 2017, due in annual installments of $3,075,000 to $7,125,000 through 7/1/32; interest at 2.3 percent to 4 percent. Total Governmental Activities General Obligation Bonds 5,800,000 54,415,000 $ 205,764,000 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds are expected to require less than 28 percent of total 2018-19 net water and wastewater system and airport revenues. The total principal and interest remaining to be paid on the business-type activities portion of the general obligation bonds is $116,354,895. Principal and interest paid for the current year and total net water system, wastewater system, and airport revenues were $13,810,156 and $49,432,565 respectively. Outstanding June 30, 2019 Business-Type Activities General Obligation Bonds: $214,540,000 Refunding Bonds, Series 2014, due in annual installments of $6,895,000 to $11,036,000 through 7/1/28; interest at 3 percent to 5 percent. $ $39,050,000 Refunding Bonds, Series 2016, due in annual installments of $2,395,000 to $8,650,000 beginning 7/1/25 through 7/1/27; interest at 3 percent to 5 percent. Total Business-Type Activities General Obligation Bonds 55 82,351,000 13,550,000 $ 95,901,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, continued B. Street and Highway Revenue Bonds Street and highway revenue bonds are issued specifically for the purpose of constructing street and highway projects. These bonds are payable solely from the revenues derived by the City from highway user taxes, including motor vehicle fuel taxes and all other taxes, fees, and charges relating to registration, operation or use of vehicles on public highways or streets or to fuels or any other energy source used for the vehicles collected by the State and returned to the City. The City has pledged future highway user revenues to repay a total of $2,050,000 in outstanding street and highway user revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s streets and highways. The bonds are payable solely from state shared gasoline tax revenues and are payable through July 1, 2019. Annual principal and interest payments on the bonds are expected to require less than 14 percent of total 2018-19 street and highway user revenues. The total principal and interest remaining to be paid on the bonds is $2,089,600. Principal and interest paid for the current year and street and highway user revenue taxes were $2,341,594 and $17,301,902, respectively. Street and highway revenue bonds outstanding as reported in governmental activities at June 30, 2019 were as follows: Outstanding June 30, 2019 Governmental Activities Revenue Bonds: $10,450,000 Street & Highway User Refunding Bonds, Series 2010, due in an annual installment of $560,000 through 7/1/19; interest at 3.5 percent. $ $8,660,000 Street & Highway User Refunding Bonds, Series 2014, due in an annual installment of $1,490,000 through 7/1/19; interest at 4 percent. Total Governmental Activities Revenue Bonds 560,000 1,490,000 $ 2,050,000 C. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued as authorized by the voters to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these systems, and do not constitute a general obligation of the City backed by the general taxing authority. The City has pledged future water and wastewater system revenues, net of operating expenses, to repay a total of $4,685,000 in outstanding water and wastewater system revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater systems. The bonds are payable solely from net water and wastewater system revenues and are payable through July 1, 2020. Annual principal and interest payments on the bonds are expected to require less than 7 percent of net 2018-19 water and wastewater system revenue. The total principal and interest remaining to be paid on the bonds is $4,872,300. Principal and interest paid for the current year and net water and wastewater system revenues were $3,410,600 and $49,612,436 respectively. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, continued Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2019 were as follows: Outstanding June 30, 2019 Business-Type Activities Revenue Bonds: $15,400,000 Water & Sewer Refunding Bonds, Series 2014, due in annual installments of $2,340,000 to $2,345,000 through 7/1/20; interest at 4 percent. Total Business-Type Activities Revenue Bonds $ 4,685,000 $ 4,685,000 D. Excise Tax Revenue Obligations Excise tax revenue obligations are issued to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the obligations. The City has collateralized the obligations by the pledge of all unrestricted excise taxes (transaction privilege tax, franchise fees, state-shared sales and income taxes and fees for licenses and permits) including all fines and forfeitures, which the City presently or in the future imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The City agrees that, so long as any of the obligations remain outstanding and their principal and interest are unpaid, it will not further encumber the excise taxes unless the excise taxes received by the City in the immediately preceding fiscal year are at least three times the highest combined debt service for the current or any succeeding fiscal year for all outstanding parity obligations, including the additional parity obligations proposed be secured by a pledge of the same excise taxes. The City does have the right to incur additional parity obligations payable from and secured by the excise taxes on parity with the obligations. Annual principal and interest payments on the obligations are being repaid from net water and wastewater system revenues and are expected to require less than 30 percent of net 2018-19 system revenues. The total principal and interest to be paid on the obligations is $305,400,663. Principal and interest paid for the current year and net water and wastewater system revenues were $17,518,659 and $49,612,436 respectively. Total excise tax revenues during the fiscal year were $221,726,718. Principal and interest paid in 2018-19 were less than 8 percent of total excise tax revenues. 57 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, continued Outstanding Business-Type Activities Excise Tax Revenue Obligations: June 30, 2019 $15,000,000 Water & Sewer Excise Tax Revenue Obligations, Series 2011, due in annual installments of $805,000 to $905,000 through 7/1/22; interest at 3 percent to 4 percent. $ 3,415,000 $104,500,000 Water & Sewer Excise Tax Revenue Obligations, Series 2013, due in annual installments of $2,750,000 to $12,000,000 through 7/1/33; interest at 4 percent to 5 percent. 100,150,000 $66,660,000 Water & Sewer Excise Tax Revenue Obligations, Series 2015, due in annual installments of $1,750,000 to $5,620,000 through 7/1/35; interest at 3 percent to 5 percent. 63,755,000 $19,510,000 Water & Sewer Excise Tax Revenue Refunding Obligations, Series 2016, due in annual installments of $1,180,000 to $3,050,000 beginning 7/1/20 through 7/1/28; interest at 4 percent to 5 percent. 19,510,000 $36,220,000 Water & Sewer Excise Tax Revenue Obligations, Series 2017, due in annual installments of $525,000 to $4,045,000 through 7/1/37; interest at 3 percent to 5 percent. 35,745,000 Total Business-Type Activities Excise Tax Revenue Obligations $ 222,575,000 E. Special Assessment Bonds with Governmental Commitment As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2019, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and related interest. Special assessment 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 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 outstanding as reported in governmental activities at June 30, 2019 were as follows: Outstanding June 30, 2019 Special Assessment Bonds with Governmental Commitment: $7,370,000 Spectrum Improvement District Bonds, due in annual installments of $565,000 to $635,000 through 1/1/23; interest at 4 percent. $ 2,395,000 Total Special Assessment Bonds with Governmental Commitment $ 2,395,000 58 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Balance Governmental Activities: Compensated absences Bonds payable: General obligation bonds Revenue bonds Special assessment bonds Issuance premiums Total bonds payable Arbitrage liability Claims payable Net pension liability Post employment benefits Totals Business-Type Activities: Compensated absences Bonds & obligations payable: General obligation bonds Revenue bonds Excise tax revenue obligations Issuance premiums Total bonds & obligations payable Arbitrage liability Net pension liability Post employment benefits Landfill closure/post closure Totals Balance June 30, 2018 $ 10,659,857 Additions $ 2,108,139 223,288,000 4,270,000 2,940,000 21,465,917 251,963,917 27,508 6,421,289 269,634,781 — — — — — — 24,040,298 — $ 48,379,857 587,087,209 — 26,148,437 $ Balance June 30, 2018 $ 1,132,763 Additions $ 224,279 105,707,000 7,845,000 230,635,000 28,713,614 372,900,614 47,492 20,842,622 5,693,993 4,340,000 404,957,484 — — — — — — — — — 224,279 $ $ Reductions June 30, 2019 $ (1,786,731) $ 10,981,265 $ (17,524,000) (2,220,000) (545,000) (2,324,018) (22,613,018) (27,508) (23,743,361) (4,470,954) 205,764,000 2,050,000 2,395,000 19,141,899 229,350,899 — 6,718,226 265,163,827 (2,218,250) (54,859,822) $ 46,161,607 558,375,824 Balance Reductions June 30, 2019 $ (188,779) $ 1,168,263 $ (9,806,000) (3,160,000) (8,060,000) (2,632,877) (23,658,877) (47,492) (1,835,087) (103,744) — (25,833,979) $ 95,901,000 4,685,000 222,575,000 26,080,737 349,241,737 — 19,007,535 5,590,249 4,340,000 379,347,784 Due within One Year $ 2,061,110 20,225,000 2,050,000 565,000 2,182,535 25,022,535 — 6,198,035 — $ — 33,281,680 Due Within One Year $ 219,275 $ 9,640,000 2,345,000 6,590,000 2,598,176 21,173,176 — — — 94,446 21,486,897 Compensated Absences The City’s policy relating to compensated absences is described in Note 1. The long-term portion of this debt is expected to be paid in future years from future resources. Compensated absences for governmental activities have been liquidated primarily by the general fund. Statutory Debt Limitation In the absence of more restrictive bond authorization ballot limitations, the City is subject to state limitations on the amount of net bonded debt (exclusive of revenue bonds, excise tax revenue obligations, and improvement district bonds), it may have outstanding. The statutory debt limitation is 20 percent of the full cash property assessed valuation for purposes of water, wastewater, artificial light, acquisition and development of land for open space preserves, recreation facilities, public safety and emergency services, streets and transportation and 6 percent of the full cash property assessed valuation for all other purposes (e.g., library, museum, center for the arts). At June 30, 2019, the 6 percent debt limitation was $232,258,669, providing a debt margin of $219,747,369 and the 20 percent debt limitation was $774,195,564, providing a debt margin of $475,314,362. The assessed valuation method used was changed in fiscal year 2015-16 from secondary assessed valuation to the full cash valuation based on advice of bond council. 59 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 5 - Long-Term Liabilities, concluded Bond Covenants Pursuant to certain bond indenture agreements, the City is obligated to various limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds, and minimum revenue bond coverages. The City is in compliance with all such significant limitations and restrictions in the opinion of City’s management. Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for all bonds payable as of June 30, 2019: GOVERNMENTAL ACTIVITIES Highway Users Revenue Principal General Obligation Interest Highway Users Revenue Interest Years Ended June 30 General Obligation Principal 2020 $ 20,225,000 95,800 $ 30,708,160 2021 20,775,000 7,032,510 — — 585,000 73,200 28,465,710 2022 18,395,000 6,333,405 — — 610,000 49,800 25,388,205 2023 17,760,000 5,627,850 — — 635,000 25,400 24,048,250 $ 7,732,760 $ 2,050,000 $ 39,600 Improvement Districts Principal Improvement Districts Interest $ $ 565,000 Total 2024 18,560,000 4,824,275 — — — — 23,384,275 2025-2029 94,089,000 11,550,605 — — — — 105,639,605 2030-2034 15,960,000 894,285 — — — — 16,854,285 Total $ 205,764,000 $ 43,995,690 244,200 $ 254,488,490 $ 2,050,000 $ 39,600 $ 2,395,000 $ BUSINESS-TYPE ACTIVITIES General Obligation Principal Years Ended June 30 2020 $ 9,640,000 General Obligation Interest $ 3,724,050 Revenue Principal $ Revenue Interest 2,345,000 $ Excise Tax Principal 140,500 $ 6,590,000 Excise Tax Interest $ Total 9,068,025 $ 31,507,575 8,525,000 8,712,450 32,388,825 2021 9,325,000 3,439,575 2,340,000 46,800 2022 9,525,000 3,120,630 — — 9,360,000 8,294,225 30,299,855 2023 9,650,000 2,748,560 — — 10,035,000 7,834,925 30,268,485 2024 9,555,000 2,316,685 — — 10,425,000 7,334,350 29,631,035 2025-2029 48,206,000 5,104,395 — — 60,450,000 28,176,725 141,937,120 2030-2034 — — — — 94,730,000 12,343,625 107,073,625 2035-2039 — — — — 22,460,000 1,061,338 23,521,338 $ 95,901,000 $ 20,453,895 187,300 $ 222,575,000 $ 82,825,663 $ 426,627,858 Total $ 4,685,000 60 $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 6 - Defeased Debt Prior Year Defeasance In prior years, the City defeased certain general obligation bonds and certain excise tax revenue obligations by placing the proceeds of new bonds and obligations in an irrevocable trust to provide for all future debt service payments on the old bonds or obligations. Accordingly, the trust account assets and the liability for the defeased bonds and obligations are not included in the City’s financial statements. Bonds and obligations that have been advance refunded (defeased) as of June 30, 2019: Refunded Debt Outstanding Excise Tax Revenue Obligations, Series 2011 (Final Redemption 7/1/21) Amount $ 6,450,000 NOTE 7 - Landfill Closure and Postclosure Costs State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. In addition to operating expenses related to landfill activities through its closure date (October 1, 2005), an expense provision and related liability has been recognized based on the future closure and postclosure care costs to be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. As of June 30, 2019, the City estimates total costs related to landfill closure and postclosure care is $15,861,075 and has recognized that entire amount since the landfill no longer accepts waste. To date, $11,521,075 has been paid. The remaining balance of $4,340,000 consists of a current liability of $94,446 and $4,245,554 recorded as a long-term liability on the City’s financial statements. The estimated total current cost of the landfill closure and postclosure, $15,861,075, is based on the amount that would be paid if all equipment, facilities and services required to care, monitor and maintain the landfill were acquired as of June 30, 2019. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology or changes in landfill laws and regulations. The City is required by state and federal regulations to comply with local government financial test requirements that assure the City can meet the costs of landfill closure, postclosure care and, if necessary, corrective action when needed. The City complied with all local government financial test requirements for the year ended June 30, 2018. It is anticipated that future inflation costs will be financed in part from earnings on investments. The remaining portion of anticipated future inflation costs and any additional costs that might arise from changes in postclosure requirements, e.g., due to changes in technology or more rigorous environmental regulations, may need to be covered by additional charges to future taxpayers. 61 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 8 - Capital Contributions Capital contributions in the Water, Wastewater, Solid Waste and Airport funds are the result of system development fees, developer contributions and government contributions. Total capital contributions amounted to the following: Water Wastewater Solid Waste Airport Total System Development Fees $ 6,524,799 7,441,748 — — $ 13,966,547 Developer Contributions $ 510,456 687,094 — — $ 1,197,550 Government Contributions $ 61,402 50,663 151,414 2,907,579 $ 3,171,058 Total 7,096,657 8,179,505 151,414 2,907,579 $ 18,335,155 $ NOTE 9 - Fund Equity In the fund financial statements, fund balances are reported in five classifications that comprise a hierarchy based on spending constraints placed on the purposes for which resources can be used for better consistency and clarification. The classifications of fund balance are explained below: 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) it is legally or contractually required to be maintained intact. Restricted fund balance includes amounts constrained to specific purposes by their providers which are either imposed 1) by external parties (grantors, bondholders and higher levels of government), 2) by law through constitutional provisions or 3) by enabling legislation legally enforceable by external parties. Committed fund balance includes amounts with self-imposed limitations to be used only for a specific purpose pursuant to constraints by formal action of the highest level of decision making authority, namely Mayor and Council. Mayor and Council approval is required to commit resources and amounts cannot be used for any other purpose unless Mayor and Council take the same formal action to remove or change the commitment. Assigned fund balance includes amounts intended to be used for a specific purpose. For the general fund, the assigned fund balance must be for a specific purpose and for all other governmental funds the assigned fund balance represents the residual balance of the fund. Fund balance assignments are approved through the Annual Budget Fund Policies section by Mayor and Council. Unlike committed fund balances, assigned fund balance amounts can be changed without formal action by the City Manager. Unassigned fund balance includes amounts available for any purpose; these amounts are reported only in the general fund. In addition, other governmental funds that result in a negative fund balance are presented in this classification. Generally, the City would first apply restricted resources, then committed, assigned and unassigned resources when an expense is incurred for purposes for which more than one classification of fund balance is available. 62 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 9 - Fund Equity, concluded As of June 30, 2019 the constraints placed on fund balance for the major governmental funds and other non-major governmental funds are presented in the following table: General Nonspendable: Inventories Total non-spendable $ 866,239 866,239 General Government Capital Projects General Obligation Bonds Debt Service Other Governmental $ $ $ — — — — — — Total $ 866,239 866,239 Restricted for: Court enhancement Judicial enhancement Weapons proceeds Citing agency Transportation and development Debt service reserve Community development Community services Other capital projects Total restricted 1,613,503 431,009 94,489 40,766 — — — — — 2,179,767 — — — — 11,693,911 — — — — 11,693,911 — — — — — 4,586,562 — — — 4,586,562 — — — — 101,156,966 240,159 564,994 35,116,395 17,951,971 155,030,485 1,613,503 431,009 94,489 40,766 112,850,877 4,826,721 564,994 35,116,395 17,951,971 173,490,725 Assigned to: Domestic violence prevention Self-insurance purposes Traffic safety reserve PSPRS contribution Capital improvement projects Economic development projects Total assigned 94,109 1,396,555 133,000 35,954,072 82,636,228 11,000,250 131,214,214 — — — — — — — — — — — — — — — — — — — — — 94,109 1,396,555 133,000 35,954,072 82,636,228 11,000,250 131,214,214 66,035,760 66,035,760 $ 200,295,980 — — $ 11,693,911 — — $ 4,586,562 (5,758,986) (5,758,986) 60,276,774 60,276,774 $ 365,847,952 Unassigned Total unassigned Total fund balances $ 149,271,499 The City’s General Fund Reserve Policy requires an amount equal to 15 percent of adopted General Fund operating revenues, excluding one-time transfers in, for fiscal year 2018-19. This amounts to $37,345,700 and is included in unassigned above. 63 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans The City of Chandler contributes to the pension plans described below. The City of Chandler also contributes to the Elected Officials Retirement Plan and Other Post Employment Benefit (OPEB) plans; however the plans are not described below because of its relative insignificance to the financial statements. The plans are component units of the State of Arizona. At June 30, 2019, the City of Chandler reported the following aggregate amounts related to pensions and other postemployment benefits (OPEB) for all plans to which it contributes. Governmental Activities Net pension liability $ 265,163,827 Pension deferred outflows of resources 59,665,869 Pension deferred inflows of resources 15,961,953 Pension expense 23,462,120 Net OPEB liability OPEB deferred outflows of resources OPEB deferred inflows of resources OPEB expense Governmental Activities $ 46,161,607 1,992,145 12,920,487 2,043,014 Pensions Plans Business-type Total Activities $ 19,007,535 $ 284,171,362 3,028,315 62,694,184 2,425,903 18,387,856 5,865,530 29,327,650 OPEB Plans Business-type Activities $ 5,590,249 226,863 1,569,100 278,593 $ Total 51,751,856 2,219,008 14,489,587 2,321,607 The City of Chandler reported $30,864,015 and $1,675,256 of pension expenditures in its governmental and enterprise funds, respectively, related to all pension plans to which it contributed in the current fiscal year. Arizona State Retirement System A. Plan Description The City of Chandler employees not covered by the other pension plans described after this section participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. For governmental activities OPEB and pension liabilities are generally liquidated by the general fund. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued B. Benefits Provided The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: Before July 1, 2011 On or After July 1, 2011 Years of service and age required to Sum of years and age equals 80 30 years, age 55 receive benefit 10 years, age 62 25 years, age 60 5 years, age 50* 10 years, age 62 Any years, age 65 5 years, age 50* Any years, age 65 Final average salary is based on Highest 36 months of last 120 months Highest 60 months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-ofliving adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a members’ death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. C. Contributions In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the current fiscal year, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.80 percent (11.64 percent for retirement and 0.16 percent for long-term disability) of the members’ annual covered payroll, and the City of Chandler was required by statute to contribute at the actuarially determined rate of 11.80 percent (11.18 percent for retirement, 0.46 percent for health insurance premium benefit, and 0.16 percent for long-term disability) of the active members’ annual covered payroll. In addition, the City of Chandler was required by statute to contribute at the actuarially determined rate of 10.53 percent of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to the ASRS. The required contribution rate for the fiscal year ended June 30, 2019, was actuarially determined to yield contribution amounts sufficient to finance costs earned by employees during the year and to amortize the Plan’s unfunded actuarially accrued liability over the period specified in the statutes. The City of Chandler’s contributions for the year ended June 30, 2019, were $8,470,741. The City of Chandler’s pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the general fund. 65 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued D. Pension Liability At June 30, 2019, the City of Chandler reported a liability of $106,413,043 for its proportionate share of the net pension liability of the ASRS. The net pension liability was measured as of June 30, 2018. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2017, to the measurement date of June 30, 2018. The City of Chandler’s proportion of the net pension liability was based on a projection of the City of Chandler’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2018, the City of Chandler’s proportion was 0.76 percent, which was an increase of 0.02 percent from its proportion measured as of June 30, 2017. E. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2019, the City of Chandler recognized pension expense for ASRS of $3,396,199 and reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 2,931,593 2,815,884 Deferred Inflows of Resources $ 586,638 9,434,977 — 2,558,982 2,350,377 8,470,741 16,568,595 638,260 — 13,218,857 $ $ The deferred outflows of resources related to ASRS pensions resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as a reduction of the net pension liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year Ending June 30: 2019 2020 2021 2022 66 $ 1,598,949 (1,690,561) (3,881,787) (1,147,604) CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued F. Actuarial Assumptions The significant actuarial assumptions used to measure the total ASRS pension liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Discount rate Projected salary increases Inflation Permanent base increases Mortality rates June 30, 2017 June 30, 2018 Entry age normal 7.5% 2.7 - 7.2% 2.3% Included 2017 SRA Scale U-MP The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017, actuarial valuation. The study did not include an analysis of the assumed investment rate of return. The long-term expected rate of return on ASRS pension plan investments was determined to be 5.07 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class of the ASRS are summarized in the following table: Target Allocation 50% 30% 20% 100% Asset Class Equity Fixed income Real estate Total Real Rate of Return 5.50% 3.83% 5.85% G. Discount Rate The discount rate used to measure the ASRS total pension liability was 7.5 percent, which was a decrease of 0.5 percent from the discount rate used as of June 30, 2017. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued H. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City of Chandler’s proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: City of Chandler's proportionate share of the net pension liability I. 1% Decrease (6.5%) Current Discount Rate (7.5%) 1% Increase (8.5%) 151,694,241 $ 106,413,043 $ 68,581,334 $ Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. The report is available on the ASRS website at www.azasrs.gov. Public Safety Personnel Retirement System A. Plan Description City of Chandler public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan. A sevenmember board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com. 68 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued B. Benefits Provided The PSPRS provides retirement, health insurance premium supplement, disability and survivor benefits. State statute establishes benefits terms. Certain retirement and disability benefits are calculated on the basis of age, average monthly compensation and service credit as follows. See the publicly available PSPRS financial report for additional benefits information. Years of service and age required to receive benefit Final average salary is based on Normal retirement Accidental disability retirement Survivor benefit: Retired members Active members Retirement Initial Membership Date: On or After January 1, 2012 On or After July 1, 2017 25 years and age 52.5 15 years and age 55 Before January 1, 2012 20 years, any age 15 years age 62 Highest 36 months of last Highest 60 months of last 20 Highest 60 months of last 20 years years 15 years 50% less 2.0% for each 2.5% per year of credited 1.5% to 2.5% per year of year of credited service service, not to exceed 80% service, not to exceed 80% less than 20 years or plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 50% or normal retirement, whichever is greater 80% of retired member’s pension benefit 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. The PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. C. Employees Covered by Benefit Terms At June 30, 2019, the following employees were covered by the agent pension plan’s benefit terms: PSPRS - Police Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total 69 PSPRS - Fire 149 67 49 305 503 20 196 283 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued D. Contributions State statutes establish the pension contribution requirements for active PSPRS employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS pension benefits. The combined active member and employer contribution rates are expected to finance the cost of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2019, are indicated below. Rates are a percentage of active members’ annual covered payroll. PSPRS - Police Active members - pension Tier 1 Tier 2 Tier 3 Employer rates - pension Tier 1 Tier 2 Tier 3 PSPRS - Fire 7.65% 11.65% 9.91% 7.65% 11.65% 10.55% 45.42% 45.42% 40.55% 40.68% 40.68% 35.59% In addition, the City of Chandler was required by statute to contribute at the actuarially determined rate of 26.75 percent for police and 21.67 percent for fire for the PSPRS of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to the PSPRS. For the agent plans, the contributions to the pension plan for the year ended were: PSPRS - Police Pension: Contributions made $ 15,398,196 PSPRS - Fire $ 8,670,333 E. Pension Liability At June 30, 2019, the City of Chandler reported $115,703,251 in net pension liability for police and $62,055,068 in net pension liability for fire. The net pension liabilities were measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The total pension liability as of June 30, 2018, reflects changes of benefit terms and actuarial assumptions for a court ruling for funding permanent benefit increases and a decrease in the wage growth assumption. 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued F. Actuarial Assumptions The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial cost method Investment rate of return Tier 1/2 Investment rate of return Tier 3 Price inflation Wage inflation Projected salary increases including inflation Cost of living adjustment Mortality rates June 30, 2018 Entry age normal 7.4% 7.0% 2.5% 3.5% 4.0 - 8.0% Included for pensions RP-2014 tables using MP-2016 improvement scale with adjustments to match current experience The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.40 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Short-term investments Risk parity Fixed income Real assets GTS Real estate Private equity Private Credit Non-U.S. equity U.S. equity Total Target Allocation 2% 4% 5% 9% 12% 10% 12% 16% 14% 16% 100% Long-Term Expected Real Rate of Return 0.25% 5.00% 1.25% 4.52% 3.96% 3.75% 5.83% 6.75% 8.70% 7.60% G. Pension Discount Rates The discount rate of 7.40 percent was used to measure the total pension liability for Tier 1/2 members and 7.00 percent for Tier 3 members. The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension liability. 71 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued Increase/(Decrease) Total Pension Liability PSPRS - Police Balances at June 30, 2018 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2019 $ 245,328,802 $ $ 72 130,445,748 $ 114,883,054 — — — 5,737,868 17,999,842 — (671,252) — — — — 10,296,409 2,765,932 9,301,979 (671,252) (10,296,409) (2,765,932) (9,301,979) (9,913,263) — — 13,153,195 258,481,997 $ (9,913,263) (142,274) 24,215 12,332,998 142,778,746 $ — 142,274 (24,215) 820,197 115,703,251 147,043,353 $ $ Net Pension Liability 5,737,868 17,999,842 — Total Pension Liability PSPRS - Fire Balances at June 30, 2018 Changes for the year: Service cost Interest on the total pension liability Differences between expected and actual experience in the measurement of the pension liability Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2019 Plan Fiduciary Net Position Increase/(Decrease) Plan Fiduciary Net Position $ 87,140,956 Net Pension Liability $ 59,902,397 4,014,526 10,794,299 — — 4,014,526 10,794,299 1,014,752 — — — — 5,956,704 1,633,743 6,174,093 1,014,752 (5,956,704) (1,633,743) (6,174,093) (6,363,418) — — 9,460,159 156,503,512 $ (6,363,418) (94,669) 1,035 7,307,488 94,448,444 $ — 94,669 (1,035) 2,152,671 62,055,068 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, continued H. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the City of Chandler’s net pension liability calculated using the discount rates noted above, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentagepoint lower or 1-percentage-point higher than the current rate: Tier1-2/Tier 3 1% Decrease I. Current Discount Rate Tier1-2/Tier 3 1% Increase PSPRS - Police: Rate Net pension liability $ 6.4/6.0 152,998,049 $ 7.4/7.0 115,703,251 $ 8.4/8.0 85,518,290 PSPRS - Fire: Rate Net pension liability $ 6.4/6.0 84,706,344 $ 7.4/7.0 62,055,068 $ 8.4/8.0 43,610,167 Pension Expense Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. The report is available on the PSPRS website at www.psprs.com. J. Pension Expense For the year ended June 30, 2019, the City of Chandler recognized the following as pension expense: Pension Expense $ 16,770,158 9,162,624 PSPRS - Police PSPRS - Fire 73 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 10 - Retirement and Pension Plans, concluded K. Pension Deferred Outflows/Inflows of Resources At June 30, 2019, the City of Chandler reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS - Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total PSPRS - Fire Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 1,824,218 9,450,307 Deferred Inflows of Resources $ 4,560,278 — 1,188,188 — — 15,398,196 27,860,909 — — 4,560,278 $ $ Deferred Outflows of Resources $ 1,612,438 7,078,805 Deferred Inflows of Resources $ 608,721 — 903,104 — — 8,670,333 18,264,680 — — 608,721 $ $ The amounts reported as deferred outflows of resources related to pension resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending June 30: PSPRS - Police PSPRS - Fire 2020 $ 5,378,084 $ 3,061,632 2021 2,739,225 2,470,872 2022 (93,281) 931,036 2023 20,979 1,365,126 2024 (105,736) 889,237 Thereafter (36,836) 267,723 74 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan The cost of postemployment healthcare benefits, from an accrual accounting perspective, should be associated with the periods in which the future costs are earned rather than in the future years when they will be paid (similar to the cost of pension benefits). GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions requires the City to recognize the entire OPEB liability and a comprehensive measure of OPEB expense. The comprehensive measure of OPEB expense includes immediate recognition in OPEB expense of the effects of changes of benefit terms, as well as the incorporation of the amortization of deferred inflows of resources and deferred outflows of resources related to OPEB over a defined, closed period. A. Plan Description The City provides post-employment health care (OPEB) for retired employees through a single employer defined benefit health plan. The plan provides health benefits for eligible retirees, their spouses and dependents though the City’s group health insurance plans, which covers active and retired members. The benefits, benefit levels, and contribution rates are determined annually by the City’s Human Resources Department and approved by the 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 and no assets are accumulated. The plan does not issue a separate financial report. Generally, resources from the general fund are used to pay for post-employment benefits. The City also provides a Retirement Health Savings Plan (RHSP) for active employees that may be used upon separation from City employment. The City funds $15 per pay period during the term of employment. The plan provides health expense reimbursements eligible under Internal Revenue Code Section 213, other than direct longterm care expenses. 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. B. Benefits Provided The City provides post-employment health 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 health plan during their active status. Upon retirement, the City deposits a one-time payment of $800 per year of City service in the retiree’s RHSP account. The retiree must have a minimum of five years of City service to receive this contribution. C. Contributions The plan premium rates are determined annually by the City’s Human Resources Department in collaboration with an outside consulting firm, reviewed, and recommended by a five member Health Care Benefits Trust Board, and approved by the City Council. The retiree’s contribution is 100 percent of the actuarially determined blended premium rate. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. By providing retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. This implied subsidy exists because, on average, retiree healthcare costs are higher than active employee healthcare costs. The City contributes 0 percent of these premiums for employees. By not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. A separate financial report is not issued for the plan. 75 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 11 - Post-Employment Benefits Other Than Pensions, continued D. Employees covered by benefit terms. The following employees were covered as of the effective date of the OPEB valuation: Inactive employees or beneficiaries currently receiving benefits Active members Total 437 1,595 2,032 E. Total OPEB Liability The City’s total OPEB liability of $51,751,856 was measured as of June 30, 2018 and was determined by an actuarial valuation as of that date. The total OPEB liability was determined using update procedures to roll forward the total OPEB liability from an acturial valuation date as of June 30, 2017 to the measurement date of June 30, 2018. F. Actuarial Assumptions and Other Inputs Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the employer and plan members to that point. The total OPEB liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Measurement date Actuarial valuation date Discount Rate Inflation rate Projected salary increases Health care cost trend rate: Medical and Prescription Drug Retiree contribution increase June 30, 2018 June 30, 2017 3.87% 2.70% Vary depending on retirement plan and years of service from 2.7% - 7.5% 3.325% graded down to an ultimate rate of 4.5% over 9 years Consistent with medical/drug trends. 100% share of benefit related costs The discount rate is based on the index rate for a 20 year tax exempt general obligation municipal bond with an average rating of AA/Aa or higher. Mortality rates were based on the 2017 State Retirees of Arizona Mortality Table for current retirees and the RP-2014 Disabled Mortality Table for disabled retirees. 76 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 11 - Post-Employment Benefits Other Than Pensions, continued G. Changes in the Total OPEB Liability Total OPEB liability - beginning of year Changes for the year Service cost Interest Differences between expected and actual experience Changes in assumptions or other inputs Benefit payments Net changes Total OPEB liability - end of year $ 52,838,811 $ 3,020,484 1,939,376 (883,708) (1,789,527) (3,373,580) (1,086,955) 51,751,856 Changes in assumptions reflect the following: 1. 2. 3. The discount rate increased from 3.58% to 3.87% based on the changes in the 20 year municipal bond rate from June 30, 2017 to June 30, 2018. Future health trend rates were updated. Decrement rates and salary scale were updated based on recent actuarial experience studies. H. Sensitivity of the total OPEB liability to changes in the discount rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: 1% Increase (4.87%) Total OPEB liability I. $ Current Discount Rate (3.87%) 46,316,734 $ 51,751,856 1% Decrease (2.87%) $ 58,422,759 Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current rate: Current Healthcare Cost Trend Rates (6.75%) 1% Increase (7.75%) Total OPEB liability $ 55,721,178 77 $ 51,751,856 1% Decrease (5.75%) $ 48,370,935 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 11 - Post-Employment Benefits Other Than Pensions, concluded J. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2019, the City recognized OPEB expense of $2,321,607. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between expected and actual experience Changes of assumptions or other inputs Contributions subsequent to measurement date Total Deferred Outflows of Resources $ — — 2,219,008 $ 2,219,008 Deferred Inflows of Resources $ 6,989,389 7,500,198 — $ 14,489,587 The deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the previous table will be recognized as an adjustment of the net OPEB liability in the year ended June 30, 2020. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending June 30: 2020 $ 2021 2022 2023 2024 Thereafter (2,638,253) (2,638,253) (2,638,253) (2,638,253) (2,638,253) (1,298,322) NOTE 12 - Commitments and Contingencies The City is subject to a number of lawsuits, investigations, and other claims (some of which involve alleged damages in substantial amounts) that are incidental to the ordinary course of its operations, including those related to property damage and personal injury matters as well as alleged civil rights violations. All cases are being vigorously defended by the City of Chandler both as to liability as well as the amount of damages claimed. Although the City Attorney cannot reasonably estimate the actual results upon disposition of the outstanding cases, some could be significant to the City’s operations, which is why the City not only self-insures with a $1,750,000 liability retention, but carries an additional $50,000,000 in liability insurance policies which are in excess of its self-insured retention. 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. NOTE 13 - Risk Management The City is exposed to various risks of loss related to litigation, claims and torts; theft of, damage to and destruction of assets; errors and omissions; employee health claims; and natural disasters (for which the City carries commercial insurance). The City established a Self-Insurance Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. This fund is broken down into the following areas: workers’ compensation insurance, property and liability insurance, health insurance, dental insurance and short-term disability insurance. 78 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 13 - Risk Management, concluded Premiums are paid into the Internal Service Fund by all other funds for workers’ compensation insurance and by the general fund for property and liability insurance. The premiums are available to pay claims, fund claim reserves and pay administrative costs of the program. As with any risk retention program, the City is contingently liable with respect to claims beyond those actuarially projected. Interfund premiums are used to reduce the amount of claim expenditures reported in the Internal Service Fund. In the opinion of City management, based on the advice of the City Attorney, the outcome of such litigation and claims will not have materially adverse effect on the City’s financial position. In fiscal year 2018-19, the Self-Insurance Fund provided coverage for up to a maximum of $50,000 for each property damage claim and $1,750,000 per occurrence for general liability claims. Coverage is also provided for claims up to $1,250,000 in Public Safety and up to $600,000 in all other classifications of workers’ compensation. The City purchases commercial insurance for claims in excess of coverage provided by the Self-Insurance Fund and for all other risks of loss. During fiscal year 2018-19, there were no significant reductions in the amounts of excess coverage purchased, nor has the City experienced any settlements in excess of insurance coverage over the past three fiscal years. The City also has commercial stop loss insurance that provides specific (by individual member) coverage for health insurance claims incurred in excess of $300,000 within the plan year, and aggregate (plan wide) coverage for health insurance claims incurred above 110 percent of total plan wide claims for the plan year. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The claims liability of $6,718,226 reported as claims payable in the Self-Insurance Fund at June 30, 2019, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that liabilities be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. This includes known future payments made for insurance as well as estimated IBNR calculations. Changes in the Fund’s claims liability amount in fiscal years 2018 and 2019 were: Year Ended June 30, 2018 2019 Risk of Loss Workers' compensation Property and liability Health Dental Workers' compensation Property and liability Health Dental Beginning of Fiscal Year Balance $ 1,854,501 1,620,383 2,400,953 132,022 $ 6,007,859 Current Year Claims and Changes in Estimates $ 3,020,423 2,402,138 19,816,326 1,900,597 $ 27,139,484 $ $ $ 1,869,023 1,687,414 2,713,763 151,089 6,421,289 79 $ Claim Balance at Payments Fiscal Year End (3,005,901) $ $ 1,869,023 (2,335,107) 1,687,414 (19,503,516) 2,713,763 (1,881,530) 151,089 $ (26,726,054) $ 6,421,289 3,222,254 $ (164,683) 18,987,679 1,995,048 24,040,298 $ (2,278,587) $ (214,776) (19,255,993) (1,994,005) (23,743,361) $ 2,812,690 1,307,955 2,445,449 152,132 6,718,226 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 14 - Interfund Transfers The interfund transfers in and out at June 30, 2019 are as follows: Fund General Transfer Detail Capital projects - general government Non-major governmental Non-major enterprise Internal service Total general fund Capital projects - general government General $ Transfers In — — — — — Transfers Out $ 37,111,863 5,620,867 439,015 2,450,000 45,621,745 37,111,863 — 37,111,863 — 5,620,867 2,073,328 317,357 217,627 123,765 19,698 8,372,642 — 2,073,328 — — 310,414 — 2,383,742 Non-major governmental General Non-major governmental Enterprise - water Enterprise - wastewater Non-major enterprise Internal service Total non-major governmental funds Water Non-major governmental Total water fund — — 317,357 317,357 Wastewater Non-major governmental Total wastewater fund — — 217,627 217,627 Non-major enterprise General Non-major governmental Total non-major enterprise funds 439,015 310,414 749,429 — 123,765 123,765 Internal service General Non-major governmental Total internal service fund 2,450,000 — 2,450,000 — 19,698 19,698 Total $ 48,683,934 $ 48,683,934 Interfund transfers are made from various funds and cost centers to fund costs including property and liability insurance, technology replacement, vehicle replacement, debt service, streets capital projects, and general government capital projects. 80 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 15 - Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances to other funds Advances from other funds Total Governmental funds: Capital projects - general government Enterprise funds: Water Capital projects - public safety buildings and improvements Capital projects - public buildings Total governmental funds $ Enterprise - wastewater Total all funds 9,546,432 2,289,427 11,835,859 3,900,000 $ 15,735,859 Interfund advances were made from governmental funds to capital projects funds to cover expenditures in impact fee funds until impact fees are received. $2,000,000 of the public safety buildings and improvements capital projects fund advances and $100,000 of the public buildings capital projects fund advance will be repaid within one year. An interfund advance was made from the water enterprise fund to the wastewater system development fees fund of the wastewater enterprise to cover expenditures until system development fees are collected. None will be repaid within one year. B. Interfund Due To/Due From Due from other funds General Due to other funds Capital projects - public buildings Capital projects - grants Special revenue - community development Total $ Chandler Housing Authority Total general fund 67,209 2,470,522 70,132 30,236 $ 2,638,099 Interfund balances at June 30, 2019 are short-term loans used to cover temporary cash deficits in various funds and are expected to be repaid within one year. 81 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 16 - Joint Venture The City and the Town of Gilbert entered into an Intergovernmental Agreement (Agreement) for the design, construction and operation of a Joint Water Treatment Plant. Under the Agreement, the real property, plant infrastructure and raw water pipelines will be jointly owned with each party entitled to 50 percent of the plant capacity and each party paying 50 percent of the construction costs. The Town of Gilbert acts as the Lead Agent, overseeing construction activities and operating the plant. The City’s investment in the joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total investment in joint venture as of June 30, 2019, is: City of Chandler's Share Town of Gilbert's Share $ 81,541,088 89,957,419 $ 171,498,507 NOTE 17 - Deficit in Fund Balances The police confiscated property special revenue fund had a deficit fund balance of $40,060. The deficit will be covered by future revenues. The public buildings capital projects fund had deficit fund balance of $2,356,335. The funds were financed by advances of interfund loans and will be paid back by future impact fee revenues. The grants capital project fund had a deficit fund balance of $218,555. The deficit will be covered by future revenues. Public safety buildings and improvement capital projects fund had deficit fund balance of $3,144,036. The defict will be covered by future impact fee revenues. NOTE 18 - Tax Abatements The City has made commitments as part of our economic development programs to reimburse certain public improvement costs through transaction privilege taxes generated out of the respective development area. The total amount rebated in the fiscal year 2018-2019 is $526,942. Detailed information on such commitments is prohibited from disclosure under Arizona Revised Statute 42-2002, Disclosure of Confidential Information Prohibited, and City of Chandler Code, 62-510 Divulging of Information Prohibited. In addition, the City enters into property tax abatement agreements under Arizona Revised Statutes 42-6201 through 42-6210, Government Property Lease Excise Tax (GPLET) to enhance the economic viability of the City. The recipients of the GPLET commit to conveying the property to the City upon the project completion and the City will lease it back to the recipient for an agreed upon amount. State law imposes an excise tax on buildings that are owned by the City, leased by a private party and occupied/used for commercial, residential rental or industrial purposes. The City is allowed to abate the full tax for a period of eight years for both existing and new projects within redevelopment area that are part of a single central business district. After the abatement period the projects pay an excise tax in which the City receives a 7 percent distribution. For the fiscal year ended June 30, 2019, the City abated property taxes totaling $144,941 under this program, including the following tax abatement agreement that exceeds $100,000: Property Tax GLPET to a residential rental development for constructing a multi-family residential complex. The GPLET amounted to $115,102 of property tax abated. 82 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2019 NOTE 19 - Prior Period Adjustments The City restated the beginning net position for governmental activities and beginning General Fund fund balance to record prior year privilege tax receivables not previously accrued. This resulted in increases to beginning governmental activities net position and General Fund fund balance of $11,559,483. The City restated the beginning net position for the Chandler Housing Authority Fund, a non-major proprietary fund to record prior year collection of notes receivable. This resulted in a decrease to beginning net position of $97,950. NOTE 20 - Subsequent Events On December 4, 2019, the City issued General Obligation Bonds, Series 2019 in the amount of $30,400,000, maturing on July 1, 2035, with a true interest rate of 2.02 percent. Proceeds from the obligations will be used for acquiring and constructing improvements to parks and recreation facilities, a museum, streets, a police and fire training center and other public safety improvements, and to pay the costs incurred in connection with the issuance of the obligations. On December 4, 2019, the City issued Excise Tax Revenue Obligation Bonds, Series 2019 in the amount of $13,000,000, maturing on July 1, 2028, with a true interest rate of 1.42 percent. Proceeds from the obligations will be used for the purpose of paying costs associated with various capital improvements to the City water and wastewater system, and to pay costs incurred in connection with the issuance of the obligations. 83 84 REQUIRED SUPPLEMENTARY INFORMATION 85 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Property taxes Sales taxes Franchise fees State shared Grants and entitlements Licenses and permits Charges for services Fines and forfeitures Rentals Contributions Interest revenue Miscellaneous $ 7,527,370 122,770,000 3,271,000 66,091,000 335,155 6,043,000 19,610,756 3,825,200 116,100 200,000 2,538,000 161,500 $ 7,527,370 122,770,000 3,271,000 66,091,000 335,155 6,043,000 19,610,756 3,825,200 116,100 200,000 2,538,000 161,500 $ 7,666,777 139,851,355 3,567,184 67,156,430 206,182 7,268,592 20,682,104 3,880,467 127,206 200,000 7,020,213 815,358 $ 139,407 17,081,355 296,184 1,065,430 (128,973) 1,225,592 1,071,348 55,267 11,106 — 4,482,213 653,858 232,489,081 232,489,081 258,441,868 25,952,787 20,956,899 9,059,849 863,007 2,493,311 3,812,952 4,601,954 65,014,772 1,016,927 22,341,365 9,560,016 892,939 2,994,347 3,858,227 4,620,519 45,766,442 1,058,200 20,772,993 7,001,756 805,135 2,500,483 3,804,950 4,513,409 15,199,184 1,133,690 1,568,372 2,558,260 87,804 493,864 53,277 107,110 30,567,258 (75,490) 35,949,791 73,658,545 38,003,892 75,966,097 37,451,140 74,769,891 552,752 1,196,206 11,025,323 8,369,451 27,880,249 13,136,714 8,491,582 28,728,600 12,496,018 7,812,358 27,838,558 640,696 679,224 890,042 264,703,030 255,418,940 216,099,565 39,319,375 (32,213,949) (22,929,859) 42,342,303 65,272,162 Proceeds from disposal of capital assets Transfers out — (75,998,205) — (76,096,035) 986,370 (45,621,745) 986,370 30,474,290 Total other financing sources (uses) (75,998,205) (76,096,035) (44,635,375) 31,460,660 (108,212,154) (99,025,894) (2,293,072) 96,732,822 Total Revenues EXPENDITURES: General government Administrative services City manager City clerk Communications and public affairs Law City magistrate Management services Mayor and council Public safety Fire Police Transportation and development Public works Development services Community services Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Net change in fund balance 195,895,403 Fund balance, July 1, 2018, as restated Fund balance, June 30, 2019 $ 87,683,249 See accompanying notes to this schedule. 86 195,895,403 $ 96,869,509 195,895,403 $ 193,602,331 — $ 96,732,822 City of Chandler Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System For the year ended June 30, 2019 2019 City's proportion of the net pension liability (asset) 2018 0.76% 0.74% 2017 0.75% 2016 0.73% 2015 0.71% City's proportionate share of the net pension liability (asset) $ 106,413,043 $ 115,691,952 $ 121,549,835 $ 113,885,153 $ 105,661,552 City's covered payroll $ 75,579,140 $ 72,284,183 $ 70,362,938 $ 67,230,465 $ 64,263,236 City's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 140.80% 160.05% 172.75% 169.40% 164.42% Plan fiduciary net position as a percentage of the total pension liability 73.00% 69.92% 67.06% 68.35% 69.49% Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 87 City of Chandler Schedule of Contributions All Pension Plans For the year ended June 30, 2019 2019 2018 2017 2016 2015 Arizona State Retirement System: Actuarially determined contribution $ 8,470,741 $ 8,268,029 $ 7,793,041 $ 7,634,805 $ 7,323,872 Contributions in relation to the actuarially determined contribution 8,470,741 Contribution deficiency (excess) $ — City's covered payroll $ 75,407,689 8,268,029 $ — $ 75,579,140 7,793,041 $ — $ 72,284,183 7,634,805 $ — $ 70,362,938 7,323,872 $ — $ 67,230,465 Contributions as a percentage of covered payroll 11.23% 10.94% 10.78% 10.85% 10.89% Public Safety Personnel Retirement System - Police: Actuarially determined contribution $ 12,267,559 $ 10,950,501 $ 8,470,411 $ 8,561,143 $ 6,083,333 Contributions in relation to the actuarially determined contribution1 15,398,196 14,300,501 10,145,411 Contribution deficiency (excess) $ (3,130,637) $ (3,350,000) $ (1,675,000) $ 8,561,143 City's covered payroll $ 28,848,732 $ 28,294,661 $ 27,058,086 $ 27,946,237 — 6,083,333 $ — $ 26,187,641 Contributions as a percentage of covered payroll 42.52% 38.70% 31.30% 30.63% 23.23% Public Safety Personnel Retirement System - Fire: Actuarially determined contribution $ 7,021,133 $ 6,392,313 $ 4,616,587 $ 4,438,495 $ 3,193,139 Contributions in relation to the actuarially determined contribution1 8,670,333 8,042,313 5,441,587 Contribution deficiency (excess) $ (1,649,200) $ (1,650,000) $ City's covered payroll $ 19,025,780 $ 18,200,175 $ 17,275,940 (825,000) 4,438,495 $ — $ 16,874,362 3,193,139 $ — $ 15,671,133 Contributions as a percentage of covered payroll Note: 36.90% 35.12% 26.72% 26.30% 20.38% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 1Additional contributions above the actuarially determined contributions were made beginning with fiscal year 2016-17 and continue. 88 City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Police For the year ended June 30, 2019 2019 2018 2017 2016 2015 Total pension liability Service cost Interest $ 5,737,868 $ 6,092,332 $ 5,337,103 $ 4,583,770 $ 4,602,603 17,999,842 17,064,596 14,964,498 13,839,509 11,841,118 — 1,501,042 17,456,919 — 1,741,535 (671,252) (6,211,672) 858,761 4,879,849 567,380 — 6,528,203 8,537,784 — 13,082,165 Benefit payments, including refunds (9,913,263) (8,254,947) (13,015,625) (5,681,836) (7,054,499) Net change in total pension liability 13,153,195 16,719,554 34,139,440 17,621,292 24,780,302 Changes of benefit terms Differences between expected and actual experience Changes of assumptions 245,328,802 228,609,248 194,469,808 176,848,516 152,068,214 $ 258,481,997 $ 245,328,802 $ 228,609,248 $ 194,469,808 $ 176,848,516 Contributions - employer $ 10,296,409 $ 10,247,877 $ $ $ Contributions - employee 2,765,932 3,244,412 Net investment income 9,301,979 14,017,325 Benefit payments, including refunds (9,913,263) (8,254,947) (142,274) (124,430) Total pension liability - beginning Total pension liability - ending Plan fiduciary net position Administrative expense Other 8,728,082 3,633,359 6,155,142 5,465,059 3,308,265 2,675,724 677,501 3,873,466 12,329,319 (13,015,625) (5,681,836) (7,054,499) (97,889) (94,891) — 24,215 (167,280) 238,667 (70,777) (2,733,237) Net change in plan fiduciary net position 12,332,998 18,962,957 164,095 7,489,369 10,682,366 Plan fiduciary net position beginning 130,445,748 111,482,791 111,318,696 103,829,327 93,146,961 Plan fiduciary net position - ending $ 142,778,746 $ 130,445,748 $ 111,482,791 $ 111,318,696 $ 103,829,327 Net pension liability - ending $ 115,703,251 $ 114,883,054 $ 117,126,457 $ 83,151,112 $ 73,019,189 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll Note: 55.24% $ 28,294,661 408.92% 53.17% $ 27,058,086 424.58% 48.77% $ 27,946,237 419.11% 57.24% $ 26,187,641 317.52% 58.71% $ 24,290,497 300.61% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 89 City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Fire For the year ended June 30, 2019 2019 2018 2017 2016 2015 Total pension liability Service cost $ Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds 4,014,526 $ 3,863,571 $ 3,174,665 $ 2,915,603 $ 2,949,507 10,794,299 9,983,423 8,707,808 8,264,915 7,191,487 — 753,382 10,272,193 — 930,663 1,014,752 941,823 96,063 (1,037,307) (409,426) — 2,845,297 4,937,927 — 6,465,545 (6,363,418) (5,049,317) (5,647,270) (3,614,319) (3,258,846) Net change in total pension liability 9,460,159 13,338,179 21,541,386 6,528,892 13,868,930 Total pension liability - beginning 147,043,353 133,705,174 112,163,788 105,634,896 91,765,966 Total pension liability - ending $156,503,512 $147,043,353 $133,705,174 $112,163,788 $105,634,896 $ $ $ $ $ Plan fiduciary net position Contributions - employer 5,956,704 5,514,825 4,672,177 3,222,291 3,152,694 Contributions - employee 1,633,743 2,312,753 2,140,037 1,837,291 1,775,319 Net investment income 6,174,093 9,228,731 440,223 2,568,880 8,217,832 Benefit payments, including refunds (6,363,418) (5,049,317) (5,647,270) (3,614,319) (3,258,846) (94,669) (82,059) (63,746) (63,063) — 1,035 50,502 38,948 (55,142) (1,798,718) 7,307,488 11,975,435 1,580,369 3,895,938 8,088,281 Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position beginning 87,140,956 75,165,521 73,585,152 69,689,214 61,600,933 Plan fiduciary net position - ending $ 94,448,444 $ 87,140,956 $ 75,165,521 $ 73,585,152 $ 69,689,214 Net pension liability - ending $ 62,055,068 $ 59,902,397 $ 58,539,653 $ 38,578,636 $ 35,945,682 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll Note: 60.35% $ 18,200,175 340.96% 59.26% $ 17,275,940 346.74% 56.22% $ 16,874,362 346.91% 65.61% $ 15,671,133 246.18% 65.97% $ 15,691,213 229.08% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 90 City of Chandler Schedule of Changes in OPEB Liabilities and Related Ratios Single Employer Plan For the year ended June 30, 2019 2019 2018 Measurement date Total OPEB liability - beginning of year Changes for the year Service cost Interest Differences between expected and actual experience Changes in assumptions or other inputs Benefit payments Net changes Total OPEB liability - end of year 6/30/2018 $ 52,838,811 $ 6/30/2017 66,519,700 3,020,484 1,939,376 (883,708) (1,789,527) (3,373,580) (1,086,955) $ 51,751,856 3,962,284 1,967,447 (8,539,064) (8,174,073) (2,897,483) (13,680,889) $ 52,838,811 Total covered payroll Total OPEB liability as percentage of covered payroll $ 108,862,317 47.54% $ 106,207,139 49.75% The City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, for the fiscal year ended June 30, 2018. Information for the prior years is not available. Note 1: No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Note 2: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 91 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2019 NOTE 1 - Budgetary Basis of Accounting The adopted budget of the City is prepared on a basis consistent with accounting principles generally accepted in the United States of America with the following exception: reserved encumbrances at year end are recognized as expenditures. Consequently, the following adjustment is necessary to present the change in fund balance for the general fund on a budgetary basis in order to provide a meaningful comparison. Changes in Fund Balances Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds $ Reserved encumbrances at June 30, 2019 recognized as budgetary expenditures in fiscal year ended June 30, 2019 Budgetary Comparison Schedule for the General Fund 4,400,577 (6,693,649) $ (2,293,072) NOTE 2 - Pension Plan Schedules Actuarial Assumptions for Valuations Performed The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends - Arizona State Retirement System (ASRS) The actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017 actuarial valuation. The study did not include an analysis of the assumed investment rate of return. Factors that Affect Trends - Public Safety Personnel Retirement System (PSPRS) The actuarial assumptions used in the June 30, 2018 valuation for PSPRS were based on the results of an actuarial experience study for the 5-year period ended June 30, 2017. The total pension liability used to calculate the net pension liability for PSPRS was determined by an actuarial valuation as of that date. The total pension liability as of June 30, 2018 reflects changes of benefit terms and actuarial assumptions for funding assumed future permanent benefit increases. 92 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2019 NOTE 3 - Other Post Retirement Employment Benefit (OPEB) Plan Schedules The City of Chandler does not have assets invested or accumulated in a qualified OPEB trust and funds the plan on a pay-as-you-go basis. Actuarial Assumptions for Valuations Performed The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends The actuarial assumptions used in the June 30, 2018 valuation were made for the purposes of fulfilling plan accounting requirements. Factors such as retiree group program experience, changes in assumptions and changes in retiree group benefits program provisions or applicable law may differ from future actuarial measurements. 93 OTHER FINANCIAL STATEMENTS 94 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Government Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Miscellaneous $ 450,000 $ 450,000 $ 25,095 $ (424,905) 450,000 450,000 25,095 (424,905) General government 23,204,685 15,007,509 4,128,354 10,879,155 Public safety 3,771,100 816,070 306,616 509,454 Transportation and development 18,571,858 2,597,406 1,303,927 1,293,479 Community services 3,241,977 81,897 226,903 (145,006) Capital outlay 30,577,289 68,905,448 42,058,517 26,846,931 Total expenditures 79,366,909 87,408,330 48,024,317 39,384,013 (78,916,909) (86,958,330) (47,999,222) 38,959,108 Transfers in 78,916,909 78,916,909 37,111,863 (41,805,046) Total other financing sources (uses) 78,916,909 78,916,909 37,111,863 (41,805,046) — (8,041,421) (10,887,359) (2,845,938) 9,224,230 9,224,230 9,224,230 — Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures Other financing sources (uses): Net change in fund balance Fund balance, July 1, 2018 Fund balance (deficit), June 30, 2019 $ 9,224,230 95 $ 1,182,809 $ (1,663,129) $ (2,845,938) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Obligation Bonds Debt Service For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Property taxes $ 24,369,329 $ 24,369,329 $ 24,859,580 $ 490,251 Interest revenue 196,000 196,000 584,252 388,252 Total revenues 24,565,329 24,565,329 25,443,832 878,503 20,225,000 20,225,000 20,225,000 — EXPENDITURES: Principal Interest and fiscal charges 8,084,261 8,084,261 8,084,261 — Total expenditures 28,309,261 28,309,261 28,309,261 — Net change in fund balance (3,743,932) (3,743,932) (2,865,429) 878,503 Fund balance, July 1, 2018 7,451,989 7,451,989 7,451,989 — Fund balance, June 30, 2019 $ 3,708,057 96 $ 3,708,057 $ 4,586,560 $ 878,503 City of Chandler Non-Major Governmental Funds NON-MAJOR SPECIAL REVENUE FUNDS A Special Revenue Fund is used to finance particular activities and is created out of receipts of specific taxes or other earmarked revenues. Such funds are authorized by statutory or charter provisions to pay for certain activities with some special form of continuing revenues. Highway User Used to account for the receipt and expenditure of the City’s allocation of State highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets and repayment of transportationrelated debt. Local Transportation Assistance Used to account for the receipt and expenditure of the City’s allocation of State lottery monies. State law restricts the use of these monies to street and highway projects in the public right-of-way and to mass transportation purposes. Grants Used to account for the receipt and expenditure of miscellaneous federal, state and local grants awarded to the City for various specific operational purposes. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Police Confiscated Property Used to account for monies confiscated by the Police Department and monies received from the sale of confiscated property. Parks and Recreation Used to account for donations for park improvements and programs restricted pursuant to donor covenants. Museum Used to account for donations for museum improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. NON-MAJOR DEBT SERVICE FUNDS Highway User Revenue Bonds Accumulates monies for the payment of principal and interest requirements of the City's Highway User Revenue Bonds. Revenues for repayment are generated from gas tax generated within the State of Arizona. 97 City of Chandler Non-Major Governmental Funds Special Assessment Bonds Accumulates monies for the payment of principal and interest on Special Assessment Bonds that were issued to finance costs of improvements applicable to benefiting properties within certain improvement districts. NON-MAJOR CAPITAL PROJECTS FUNDS Streets Used to account for the acquisition, construction and improvements of City streets projects. Public Buildings Used to account for bond proceeds used for the acquisition, construction, reconstruction, improvement and renovation of City buildings. Grants Used to account for the receipt and expenditure of miscellaneous federal, state and local grants awarded to the City for various specific capital purposes. Community Services Used to account for the acquisition of land and equipment, development, construction and improvement of community parks and projects. Public Safety Buildings and Improvements Used to account for public safety, e.g., Police and Fire Departments, building construction, renovation, improvements and equipment purchases. Vehicle and Capital Equipment Replacement Used to account for the purchase and/or replacement of general equipment-type assets, e.g., vehicles, furniture and office equipment. Technology Replacement Used to account for the purchase and/or replacement of technology assets. Municipal Arts Used to account for amounts earmarked for the acquisition of art for public spaces. 98 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2019 Special Revenue Local Highway Transportation User Assistance Grants Police Community Confiscated Parks and Development Property Recreation Museum ASSETS Equity in pooled cash and investments $ 19,615,465 $ 4,675,247 $ 1,866,367 $ — $ 254,528 $ 257,187 $ 37,082 Receivables (net of allowance for uncollectible): Accounts — — 6,924 Special assessments — — Notes — — 92,276 1,545,345 Accrued interest Due from other governments Total assets — — — — — — — — — — 448,503 — — — 19,808 9,412 — 555 1,203 169 — 196,412 323,115 — — — $ 2,079,115 $ 771,618 $ 255,083 $ $ $ 128,262 $ 2,855 $ $ 21,253,086 $ 4,695,055 $ $ 59,763 258,390 $ — $ 37,251 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 396,289 17,392 — 64,164 74 14,485 8,230 — — — Trust liabilities and deposits — — — — 292,288 — — Accrued interest — — — — — — — Due to other funds — — — 70,132 — — — Advances from other funds — — — — — — — Unearned revenue — — 6,746 — — — — Bonds payable - current — — — — — — — 460,453 59,837 38,623 206,624 295,143 — — Unavailable revenues - special assessments — — — — — — — Unavailable revenues - grants — — — — — — — Total deferred inflows of resources — — — — — — — 20,792,633 4,635,218 2,040,492 564,994 — 258,390 37,251 — — — — (40,060) — — 20,792,633 4,635,218 2,040,492 564,994 (40,060) 258,390 37,251 4,695,055 $ 2,079,115 Total liabilities Deferred inflows of resources: Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 21,253,086 $ $ 771,618 $ 255,083 $ 258,390 $ 37,251 (Continued) 99 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2019 Special Revenue Debt Service Library Capital Projects Special Highway User Assessment Revenue Bonds Bonds Public Streets Buildings ASSETS Equity in pooled cash and investments $ 32,529 $ 2,089,600 $ 206,800 $ 73,843,369 $ — Receivables (net of allowance for uncollectible): Accounts — — — — — Special assessments — — 2,186,521 — — Notes — — — — — Accrued interest 159 — — 276,403 301 — — — 109,934 — Due from other governments Total assets $ 32,688 $ 2,089,600 $ 2,393,321 $ 74,229,706 $ 301 $ 150 $ — $ — $ 533,205 $ — LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll — Trust liabilities and deposits — Accrued interest — Due to other funds — Advances from other funds — Unearned revenue Bonds payable - current — 7,878 — — — — — 39,600 47,900 — — — — — 67,209 — — — 2,289,427 — — — — — — 2,050,000 — — — 150 2,089,600 47,900 541,083 2,356,636 Unavailable revenues - special assessments — — 2,105,262 — — Unavailable revenues - grants — — — — — Total deferred inflows of resources — — 2,105,262 — — 32,538 — 240,159 73,688,623 — — — — — (2,356,335) 32,538 — 240,159 73,688,623 (2,356,335) Total liabilities — Deferred inflows of resources: Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 32,688 $ 2,089,600 $ 2,393,321 $ 74,229,706 $ 301 (Continued) 100 Capital Projects Community Public Safety Buildings and Vehicle and Capital Equipment Technology Municipal Total Other Governmental Services Improvements Replacement Replacement Arts Funds Grants $ — $ 34,179,783 17,000 — — — — — 23,924 — — — — — — 2,186,521 — — — — — — 448,503 — 156,387 15,713 54,760 31,645 2,364 661,155 5,404,758 — — — — — 7,579,564 $ 5,421,758 $ 34,336,170 $ 9,013,581 $ 11,829,680 $ 6,931,617 $ 519,014 $ 176,147,034 $ 1,676,367 $ $ 2,611,185 $ 809,326 $ — $ 2,000 $ 6,301,275 64,481 $ 8,997,868 $ 11,774,920 $ 6,899,972 $ 516,650 $ 165,247,367 441 487 — — — — 95,759 — — — — — — 292,288 — — — — — — 87,500 2,470,522 — — — — — 2,607,863 — — 9,546,432 — — — 11,835,859 — — — — — — 6,746 — — — — — — 2,050,000 4,147,330 64,968 12,157,617 809,326 — 2,000 23,277,290 — — — — — — 2,105,262 1,492,983 — — — — — 1,492,983 1,492,983 — — — — — 3,598,245 — 34,271,202 — 11,020,354 6,931,617 517,014 155,030,485 (218,555) — (3,144,036) — — — (5,758,986) (218,555) 34,271,202 (3,144,036) 11,020,354 6,931,617 517,014 149,271,499 $ 5,421,758 $ 34,336,170 $ 9,013,581 $ 11,829,680 $ 6,931,617 $ 519,014 $ 176,147,034 (Concluded) 101 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2019 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Museum REVENUES: Highway user taxes $ 17,301,902 $ — $ — $ — $ — $ — $ — Regional transportation taxes — — — — — — — Grants and entitlements — 673,598 1,707,575 1,965,722 — 102,428 4,603 System development fees — — — — — — — Special assessments — — — — — — — Charges for services — 241,447 — — — — — Fines and forfeitures Interest revenue Miscellaneous Total revenues — — — — 351,129 — — 686,764 155,457 77,609 4 — 9,762 1,350 19,424 3,000 — — — — 90 18,008,090 1,073,502 1,785,184 1,965,726 351,129 112,190 6,043 — — 370,184 1,615,885 — — — — EXPENDITURES: Current: General government Public safety — — 890,325 — 67,182 — 7,702,510 80,040 — — — — — — — 243,254 — — 71,692 1,462 3,022,397 243,424 59,282 34,633 291,258 8,083 749 Principal — — — — — — — Interest and fiscal charges — — — — — — — 10,724,907 323,464 1,563,045 1,650,518 358,440 79,775 2,211 7,283,183 750,038 222,139 315,208 (7,311) 32,415 3,832 — — — — — — — Transportation and development Community services Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in — — — — — — — Transfers out (2,069,116) (4,212) — (310,414) — — — Total other financing sources (uses) (2,069,116) (4,212) — (310,414) — — — NET CHANGE IN FUND BALANCE 5,214,067 745,826 222,139 4,794 (7,311) 32,415 3,832 15,578,566 3,889,392 1,818,353 560,200 (32,749) 225,975 33,419 4,635,218 $ 2,040,492 (40,060) $ 258,390 FUND BALANCES (DEFICITS): Beginning of year End of year $ 20,792,633 $ $ 564,994 $ $ 37,251 (Continued) 102 Special Revenue Debt Service Capital Projects Special Library $ $ — $ Highway User Assessment Revenue Bonds Bonds — $ Public Streets — $ Community Buildings — — — — 20,421 — — — — — — — 610,501 — — — — — — — — 1,454 5,001 1 $ 866,267 Grants — $ Services — $ — — — — — — 7,231,110 — 4,819,431 163,724 — 2,904,225 — — — — 285,277 — — — — — 2,447,261 5,550 — 1,261,578 — — — 8,592 — — — 21,875 5,001 610,502 8,141,551 169,274 7,516,387 4,165,803 — — — 10,533 2,938 25,273 33,162 — — — — — — — — — — 590,336 — 16,243 — 17,949 — — — — 106,140 180,949 — — — 9,195,509 — 7,844,039 3,225,177 — 2,050,000 545,000 — — — — — 79,200 106,700 — — — — 17,949 2,129,200 651,700 9,796,378 2,938 7,991,695 3,439,288 3,926 (2,124,199) (41,198) (1,654,827) 166,336 (475,308) 726,515 — — — — — — — — 1,897,346 — — — — — — — — — — — — — 1,897,346 — — — — — 3,926 (226,853) (41,198) (1,654,827) 166,336 (475,308) 726,515 28,612 226,853 281,357 75,343,450 (2,522,671) 256,753 33,544,687 (2,356,335) $ (218,555) $ 34,271,202 32,538 $ — $ 240,159 $ 73,688,623 $ (Continued) 103 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2019 Capital Projects Public Safety Vehicle and Buildings and Capital Equipment Technology Municipal Governmental Total Other Improvements Replacement Replacement Arts Funds REVENUES: Highway user taxes $ Regional transportation taxes — $ — $ — $ — $ 17,301,902 — — — — 866,267 Grants and entitlements — — — — 11,705,457 System development fees 1,136,298 — — — 9,023,678 Special assessments — — — — 610,501 Charges for services — — — 303,909 830,633 Fines and forfeitures Interest revenue Miscellaneous — — — — 351,129 235,400 497,011 267,046 12,286 5,663,534 — 51,810 — — 82,916 1,371,698 548,821 267,046 316,195 46,436,017 General government 13,470 — 345,628 — 2,417,073 Public safety Total revenues EXPENDITURES: Current: 218,382 — — — 1,175,889 Transportation and development — — — — 8,389,129 Community services — — — 19,440 640,886 5,048,337 4,858,310 1,607,460 20,000 35,458,658 Principal — — — — 2,595,000 Interest and fiscal charges — — — — 185,900 5,280,189 4,858,310 1,953,088 39,440 50,862,535 (3,908,491) (4,309,489) (1,686,042) 276,755 (4,426,518) Proceeds from disposal of capital assets — 370,426 — — 370,426 Transfers in — 3,320,599 3,154,697 — 8,372,642 Transfers out — — — — (2,383,742) Total other financing sources (uses) — 3,691,025 3,154,697 — 6,359,326 NET CHANGE IN FUND BALANCE (3,908,491) (618,464) 1,468,655 276,755 1,932,808 764,455 11,638,818 5,462,962 240,259 147,338,691 (3,144,036) $ 11,020,354 Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): FUND BALANCES (DEFICITS): Beginning of year End of year $ $ 6,931,617 $ 517,014 $ 149,271,499 (Concluded) 104 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Highway User Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Highway user taxes $ Interest revenue 15,548,000 $ 15,548,000 $ 17,301,902 $ 1,753,902 222,000 222,000 686,758 464,758 — — 19,424 19,424 15,770,000 15,770,000 18,008,084 2,238,084 General government 3,864,300 6,296,323 — 6,296,323 Transportation and development 12,535,760 8,931,742 8,183,344 748,398 Capital outlay 4,601,069 5,883,016 6,025,230 (142,214) Total expenditures 21,001,129 21,111,081 14,208,574 6,902,507 (5,231,129) (5,341,081) 3,799,510 9,140,591 Transfers out (2,300,865) (2,300,865) (2,069,116) 231,749 Total other financing sources (uses) (2,300,865) (2,300,865) (2,069,116) 231,749 Net change in fund balance (7,531,994) (7,641,946) 1,730,394 9,372,340 Fund balance, July 1, 2018 15,578,566 15,578,566 15,578,566 — Miscellaneous Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2019 $ 8,046,572 105 $ 7,936,620 $ 17,308,960 $ 9,372,340 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Transportation Assistance Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 692,821 $ 692,821 $ 673,598 $ (19,223) Charges for services 237,000 237,000 241,447 4,447 Interest revenue 56,000 56,000 155,460 99,460 Miscellaneous — — 3,000 3,000 985,821 985,821 1,073,505 87,684 General government 2,044,200 1,879,845 — 1,879,845 Transportation and development 1,293,189 1,164,887 80,960 1,083,927 Total revenues EXPENDITURES: Capital outlay 405,200 662,201 412,963 249,238 3,742,589 3,706,933 493,923 3,213,010 (2,756,768) (2,721,112) 579,582 3,300,694 (4,212) (4,212) (4,212) — (4,212) (4,212) (4,212) — Net change in fund balance (2,760,980) (2,725,324) 575,370 3,300,694 Fund balance, July 1, 2018 3,889,392 3,889,392 3,889,392 — Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Fund balance, June 30, 2019 $ 1,128,412 106 $ 1,164,068 $ 4,464,762 $ 3,300,694 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 5,033,858 Interest revenue Total revenues $ 5,033,858 $ 1,707,575 $ (3,326,283) 29,000 29,000 77,615 48,615 5,062,858 5,062,858 1,785,190 (3,277,668) EXPENDITURES: General government 5,012,333 2,903,881 370,684 2,533,197 50,525 1,851,139 892,935 958,204 Community services — 299,221 245,754 53,467 Capital outlay — 8,617 75,212 (66,595) 5,062,858 5,062,858 1,584,585 3,478,273 — — 200,605 200,605 1,818,353 1,818,353 1,818,353 — Public safety Total expenditures Net change in fund balance Fund balance, July 1, 2018 Fund balance, June 30, 2019 $ 1,818,353 107 $ 1,818,353 $ 2,018,958 $ 200,605 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Community Development Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 2,045,000 Total revenues $ 2,045,000 $ 1,965,722 $ (79,278) 2,045,000 2,045,000 1,965,722 (79,278) 2,602,915 3,088,801 1,797,197 1,291,604 EXPENDITURES: General government Capital outlay 300,000 228,470 34,633 193,837 2,902,915 3,317,271 1,831,830 1,485,441 (857,915) (1,272,271) 133,892 1,406,163 Transfers out — — (310,414) (310,414) Total other financing sources (uses) — — (310,414) (310,414) Net change in fund balance (857,915) (1,272,271) (176,522) 1,095,749 Fund balance, July 1, 2018 560,200 560,200 560,200 — (297,715) $ (712,071) $ 383,678 Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2019 $ 108 $ 1,095,749 City of Chandler Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Police Confiscated Property Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Fines and forfeitures $ Total revenues 2,165,100 $ 2,165,100 $ 351,129 $ (1,813,971 ) 2,165,100 2,165,100 351,129 (1,813,971) 32,000 — — — EXPENDITURES: General government Public safety 947,000 783,108 67,182 715,926 Capital outlay 1,320,000 2,173,292 2,154,155 19,137 Total expenditures 2,299,000 2,956,400 2,221,337 735,063 Net change in fund balance (133,900) (791,300) (1,870,208) (1,078,908) Fund balance (deficit), July 1, 2018 (32,749) (32,749) (32,749) — (166,649) $ (824,049) $ (1,902,957) $ Fund balance (deficit), June 30, 2019 $ 109 (1,078,908) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Parks and Recreation Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 106,300 Interest revenue $ 106,300 $ 102,208 $ (4,092) 4,000 4,000 9,759 5,759 110,300 110,300 111,967 1,667 215,386 216,819 71,692 145,127 — — 8,083 (8,083) 215,386 216,819 79,775 137,044 Net change in fund balance (105,086) (106,519) 32,192 138,711 Fund balance, July 1, 2018 225,975 225,975 225,975 — Total revenues EXPENDITURES: Community services Capital outlay Total expenditures Fund balance, June 30, 2019 $ 120,889 110 $ 119,456 $ 258,167 $ 138,711 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Museum Special Revenue For the year ended June 30, 2019 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 39,500 $ 1,000 Miscellaneous Total revenues 39,500 $ 1,000 4,603 $ 1,349 (34,897) 349 3,300 3,300 90 (3,210) 43,800 43,800 6,042 (37,758) EXPENDITURES: General government 8,463 8,463 — 8,463 Community services 35,337 35,337 1,462 33,875 Capital outlay Total expenditures Net change in fund balance Fund balance, July 1, 2018 Fund balance, June 30, 2019 $ 111 — — 749 (749) 43,800 43,800 2,211 41,589 — — 3,831 3,831 33,419 33,419 33,419 — 33,419 $ 33,419 $ 37,250 $ 3,831 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Special Revenue For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 80,000 $ 80,000 $ 20,421 $ (59,579) 1,000 1,000 1,452 452 81,000 81,000 21,873 (59,127) General government 1,000 1,000 — 1,000 Community services 80,000 80,000 17,949 62,051 Total expenditures 81,000 81,000 17,949 63,051 — — 3,924 3,924 28,612 28,612 28,612 — Total revenues EXPENDITURES: Net change in fund balance Fund balance, July 1, 2018 Fund balance, June 30, 2019 $ 112 28,612 $ 28,612 $ 32,536 $ 3,924 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Highway User Revenue Bonds For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Miscellaneous $ — $ — Total revenues — $ — 5,001 $ 5,001 5,001 5,001 EXPENDITURES: Principal $ 2,050,000 $ 2,050,000 $ 2,050,000 $ — Interest and fiscal charges 79,200 79,200 79,200 — Total expenditures 2,129,200 2,129,200 2,129,200 — (2,129,200) (2,129,200) (2,124,199) 5,001 Transfers in 2,129,200 2,129,200 1,897,346 (231,854) Total other financing sources (uses) 2,129,200 2,129,200 1,897,346 (231,854) — — (226,853) (226,853) 226,853 226,853 226,853 — Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance, July 1, 2018 Fund balance, June 30, 2019 $ 113 226,853 $ 226,853 $ — $ (226,853) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Bonds For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Special assessments $ Interest revenue — $ — $ 610,501 $ 610,501 — — 1 1 — — 610,502 610,502 Principal — — 545,000 (545,000) Interest and fiscal charges — — 106,700 (106,700) Total expenditures — — 651,700 (651,700) Net change in fund balance — — (41,198) (41,198) Fund balance, July 1, 2018 — — 281,357 281,357 Total revenues EXPENDITURES: Fund balance, June 30, 2019 $ 114 — $ — $ 240,159 $ 240,159 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Streets Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Regional transportation taxes $ Grants and entitlements Interest revenue Miscellaneous 67,000 $ 67,000 $ 866,267 $ 799,267 6,000,000 6,000,000 4,819,431 (1,180,569) 925,000 925,000 2,447,259 1,522,259 — — 8,592 8,592 6,992,000 6,992,000 8,141,549 1,149,549 General government 11,068,900 15,118,807 10,533 15,108,274 Transportation and development 43,198,735 1,913,059 634,400 1,278,659 Capital outlay 8,654,166 37,518,263 23,560,270 13,957,993 Total expenditures 62,921,801 54,550,129 24,205,203 30,344,926 (55,929,801) (47,558,129) (16,063,654) 31,494,475 Transfers in 67,000 67,000 — (67,000) Transfers out (2,381,300) (2,381,300) — 2,381,300 Total other financing sources (uses) (2,314,300) (2,314,300) — 2,314,300 Net change in fund balance (58,244,101) (49,872,429) (16,063,654) 33,808,775 Fund balance, July 1, 2018 75,343,450 75,343,450 75,343,450 — Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2019 $ 115 17,099,349 $ 25,471,021 $ 59,279,796 $ 33,808,775 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Buildings Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ Interest revenue 336,700 $ 336,700 $ 163,724 $ (172,976) 3,400 3,400 5,550 2,150 340,100 340,100 169,274 (170,826) General government 49,700 50,619 2,938 47,681 Total expenditures 49,700 50,619 2,938 47,681 290,400 289,481 166,336 (123,145) Transfers out (300,000) (300,000) — 300,000 Total other financing sources (uses) (300,000) (300,000) — 300,000 (9,600) (10,519) 166,336 176,855 (2,522,671) (2,522,671) (2,522,671) — (2,532,271) $ (2,533,190) $ (2,356,335) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance (deficit), July 1, 2018 Fund balance (deficit), June 30, 2019 $ 116 176,855 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Grants Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Charges for services 16,691,020 $ 16,691,020 $ 7,231,110 $ (9,459,910) — — 285,277 285,277 16,691,020 16,691,020 7,516,387 (9,174,633) General government 1,133,060 974,849 35,315 939,534 Transportation and development 16,970,630 943,738 16,243 927,495 Community services 1,333,034 55,832 106,140 (50,308) Capital outlay 15,278,048 40,533,062 23,010,249 17,522,813 Total expenditures 34,714,772 42,507,481 23,167,947 19,339,534 (18,023,752) (25,816,461) (15,651,560) 10,164,901 Transfers out — (120,000) — 120,000 Total other financing sources (uses) — (120,000) — 120,000 Net change in fund balance (18,023,752) (25,936,461) (15,651,560) 10,284,901 Fund balance, July 1, 2018 256,753 256,753 256,753 — (17,766,999) $ (25,679,708) $ (15,394,807) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2019 $ 117 10,284,901 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Community Services Capital Projects For the year ended June 30, 2019 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ Interest revenue 5,586,000 $ 5,586,000 $ 2,904,225 $ (2,681,775) 471,300 471,300 1,261,576 790,276 6,057,300 6,057,300 4,165,801 (1,891,499) General government 9,699,700 13,889,032 33,162 13,855,870 Community services 8,060,694 631,106 318,520 312,586 Total revenues EXPENDITURES: Capital outlay 347,444 3,596,246 3,625,367 (29,121) 18,107,838 18,116,384 3,977,049 14,139,335 Net change in fund balance (12,050,538) (12,059,084) 188,752 12,247,836 Fund balance, July 1, 2018 33,544,687 33,544,687 33,544,687 — Total expenditures Fund balance, June 30, 2019 $ 118 21,494,149 $ 21,485,603 $ 33,733,439 $ 12,247,836 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Safety Buildings and Improvements Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ Interest revenue 2,232,600 $ 2,232,600 $ 1,136,298 $ (1,096,302) 199,000 199,000 235,398 36,398 2,431,600 2,431,600 1,371,696 (1,059,904) General government 2,312,800 3,077,467 13,470 3,063,997 Public safety 4,357,329 1,880,472 373,265 1,507,207 Capital outlay 5,426,090 7,285,251 8,058,222 (772,971) Total expenditures 12,096,219 12,243,190 8,444,957 3,798,233 (9,664,619) (9,811,590) (7,073,261) 2,738,329 Transfers out (2,235,650) (2,235,650) — 2,235,650 Total other financing sources (uses) (2,235,650) (2,235,650) — 2,235,650 Net change in fund balance (11,900,269) (12,047,240) (7,073,261) 4,973,979 Fund balance, July 1, 2018 764,455 764,455 764,455 — (11,135,814) $ (11,282,785) $ (6,308,806) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2019 $ 119 4,973,979 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Vehicle and Capital Equipment Replacement Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 209,000 Miscellaneous $ 209,000 $ 497,010 $ 288,010 — — 51,810 51,810 209,000 209,000 548,820 339,820 General government 1,563,310 150,000 — 150,000 Public safety 3,430,000 — — — Capital outlay 6,169,500 10,871,770 9,540,064 1,331,706 Total expenditures 11,162,810 11,021,770 9,540,064 1,481,706 (10,953,810) (10,812,770) (8,991,244) 1,821,526 300,000 300,000 370,426 70,426 Transfers in 3,215,546 3,215,546 3,320,599 105,053 Total other financing sources (uses) 3,515,546 3,515,546 3,691,025 175,479 Net change in fund balance (7,438,264) (7,297,224) (5,300,219) 1,997,005 Fund balance, July 1, 2018 11,638,818 11,638,818 11,638,818 — Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Fund balance, June 30, 2019 $ 120 4,200,554 $ 4,341,594 $ 6,338,599 $ 1,997,005 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Technology Replacement Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 82,000 $ 82,000 $ 267,047 $ 185,047 82,000 82,000 267,047 185,047 General government 1,374,668 1,215,668 443,080 772,588 Capital outlay 1,864,495 2,037,537 1,756,251 281,286 Total expenditures 3,239,163 3,253,205 2,199,331 1,053,874 (3,157,163) (3,171,205) (1,932,284) 1,238,921 Transfers in 3,147,163 3,147,163 3,154,697 7,534 Total other financing sources (uses) 3,147,163 3,147,163 3,154,697 7,534 Net change in fund balance (10,000) (24,042) 1,222,413 1,246,455 Fund balance, July 1, 2018 5,462,962 5,462,962 5,462,962 — Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2019 $ 121 5,452,962 $ 5,438,920 $ 6,685,375 $ 1,246,455 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Municipal Arts Capital Projects For the year ended June 30, 2019 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Charges for services $ Interest revenue 50,000 $ 50,000 $ 303,909 $ 253,909 2,700 2,700 12,287 9,587 52,700 52,700 316,196 263,496 200,500 200,500 19,440 181,060 — 20,000 20,000 — 200,500 220,500 39,440 181,060 Net change in fund balance (147,800) (167,800) 276,756 444,556 Fund balance, July 1, 2018 240,259 240,259 240,259 — Total revenues EXPENDITURES: Community services Capital outlay Total expenditures Fund balance, June 30, 2019 $ 122 92,459 $ 72,459 $ 517,015 $ 444,556 City of Chandler Non-Major Proprietary Funds Solid Waste Used to account for the provision of solid waste (refuse) services to the residential customers of the City. All activities necessary to provide such service are accounted for in this fund. Airport Used to account for the provision of airport services at the City's municipal airport. All activities necessary to provide such service are accounted for in this fund, including but not limited to administration, operation, maintenance, financing and related debt service, billing and collection. Chandler Housing Authority Used to account for expenditures of the City's housing assistance programs which consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. 123 City of Chandler Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2019 Solid Waste Airport Chandler Housing Authority Total Other Proprietary Funds 6,353,289 14,061 92,695 — 28,997 — 6,489,042 $ 25,846,665 2,392,417 92,695 30,171 117,638 33 28,479,619 ASSETS Current assets: Equity in pooled cash and investments Accounts receivable Due from other governments Inventories Accrued interest receivable Other receivables Total current assets $ 19,422,058 2,377,197 — — 88,641 33 21,887,929 Long-term assets: Notes receivable Capital assets: Non-depreciable Depreciable, net Total capital assets Total long-term assets Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of OPEB and pension plan items 124 $ 71,318 1,159 — 30,171 — — 102,648 $ — — 238,500 238,500 6,587,912 7,704,895 14,292,807 14,292,807 36,180,736 21,968,461 10,909,374 32,877,835 32,877,835 32,980,483 1,751,537 7,885,049 9,636,586 9,875,086 16,364,128 30,307,910 26,499,318 56,807,228 57,045,728 85,525,347 186,715 167,117 444,436 798,268 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Due to other funds Customer advances Compensated absences payable Landfill closure and postclosure liability Total current liabilities 999,813 28,553 — — 135,316 15,722 94,446 1,273,850 27,866 7,878 44,270 — 30,510 3,721 — 114,245 71,028 31,398 577,208 30,236 8,748 17,479 — 736,097 1,098,707 67,829 621,478 30,236 174,574 36,922 94,446 2,124,192 Long-term liabilities: Compensated absences payable Net pension liability OPEB liability Landfill closure and postclosure liability Total long-term liabilities Total liabilities 68,038 1,017,844 408,514 4,245,554 5,739,950 7,013,800 16,105 1,104,947 144,926 — 1,265,978 1,380,223 75,642 2,211,734 482,277 — 2,769,653 3,505,750 159,785 4,334,525 1,035,717 4,245,554 9,775,581 11,899,773 272,429 150,472 459,689 882,590 32,877,835 9,636,586 — 15,574 (1,260,930) 3,190,965 $ 31,616,905 $ 12,843,125 56,807,228 15,574 16,718,450 $ 73,541,252 DEFERRED INFLOWS OF RESOURCES Deferred inflows of OPEB and pension plan items NET POSITION Net investment in capital assets Restricted Unrestricted Total net position 14,292,807 — 14,788,415 $ 29,081,222 125 126 City of Chandler Combining Statement of Revenues, Expenses and Changes in Net Position Non-Major Proprietary Funds For the year ended June 30, 2019 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 16,107,922 $ 906,557 $ 450 $ 17,014,929 Grants and entitlements — — 7,224,669 7,224,669 Rentals — — 1,154,980 1,154,980 Sales taxes — 17,347 — 17,347 Miscellaneous 51 16,952 62,943 79,946 16,107,973 940,856 8,443,042 25,491,871 1,007,204 100,000 — 1,107,204 Personnel services 1,537,651 546,975 1,707,499 3,792,125 Contractual services 11,252,200 32,886 827,267 12,112,353 833,111 406,567 661,485 1,901,163 — — 4,706,410 4,706,410 Total operating revenues OPERATING EXPENSES: General and administrative Commodities Housing assistance payments Depreciation and amortization expense 591,819 944,989 573,674 2,110,482 Total operating expenses 15,221,985 2,031,417 8,476,335 25,729,737 OPERATING INCOME (LOSS) 885,988 (1,090,561) (33,293) (237,866) 703,975 1 220,914 924,890 NONOPERATING REVENUES (EXPENSES): Interest revenue Accretion of bond premiums — 1,959 — 1,959 Gain (loss) on disposal of capital assets — (7,000) (1,900) (8,900) 703,975 (5,040) 219,014 917,949 1,589,963 (1,095,601) 185,721 680,083 151,414 2,907,579 — 3,058,993 Transfers in — 154,015 595,414 749,429 Transfers out (98,512) (25,253) — (123,765) 52,902 3,036,341 595,414 3,684,657 1,642,865 1,940,740 781,135 4,364,740 Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions Total capital contributions and transfers CHANGE IN NET POSITION NET POSITION Beginning of year, restated 27,438,357 End of year $ 127 29,081,222 29,676,165 $ 31,616,905 12,061,990 $ 12,843,125 69,176,512 $ 73,541,252 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2019 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 16,336,775 $ 941,257 $ 1,257,822 $ 18,535,854 Cash received from grantors — — 7,228,407 7,228,407 Cash payments to suppliers (12,992,265) (533,728) (6,126,077) (19,652,070) Cash payments to employees for services (1,605,201) (591,624) (1,787,799) (3,984,624) Net cash provided (used) by operating activities 1,739,309 (184,095) 572,353 2,127,567 Transfers in — 154,015 595,414 749,429 Transfers out (98,512) (25,253) — (123,765) Net cash provided (used) by noncapital financing activities (98,512) 128,762 595,414 625,664 (135,135) 69,467 (951,469) (1,017,137) Principal paid on bond maturities — (26,000) — (26,000) Interest paid on bonds — (406) — (406) (135,135) 43,061 (951,469) (1,043,543) Investment income 679,309 1 210,720 890,030 Net cash provided (used) by investing activities 679,309 1 210,720 890,030 2,184,971 (12,271) 427,018 2,599,718 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year 17,237,087 End of year $ 128 19,422,058 83,589 $ 71,318 5,926,271 $ 6,353,289 23,246,947 $ 25,846,665 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 885,988 $ (1,090,561) $ (33,293) $ (237,866) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 591,819 944,989 573,674 2,110,482 (Increase) decrease in receivables 250,663 (97) (1,429) 249,137 (Increase) decrease in inventories — (4,734) — (4,734) (Increase) decrease in other assets — — 554 554 100,250 10,459 69,085 179,794 6,692 (17,491) 5,614 (5,185) Changes in assets, liabilities and deferred items: Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits — 1,734 48,128 49,862 Increase (decrease) in customer advances (21,861) (1,236) (3,512) (26,609) Increase (decrease) in net pension items (66,002) (24,756) (76,679) (167,437) Increase (decrease) in OPEB liability (8,240) (2,402) (9,789) (20,431) Total adjustments 853,321 Net cash provided (used) by operating activities 906,466 605,646 $ 1,739,309 $ (184,095) $ 572,353 $ 2,127,567 2,365,433 $ 151,414 $ 2,907,579 — $ 3,058,993 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from city government $ Gain (loss) on disposal of capital assets — (7,000) (1,900) (8,900) Accretion of bond premiums — 1,959 — 1,959 129 City of Chandler Statement of Changes in Assets and Liabilities - Agency Fund Fiduciary Funds For the year ended June 30, 2019 Balance Balance July 1, 2018 Additions Deductions June 30, 2019 Miscellaneous Deposit Fund Assets: Equity in pooled cash and investments $ 6,000 $ — $ 5,000 $ 1,000 Total assets $ 6,000 $ — $ 5,000 $ 1,000 Due to others $ 6,000 $ — $ 5,000 $ 1,000 Total liabilities $ 6,000 $ — $ 5,000 $ 1,000 Liabilities 130 Statistical Section CITY OF CHANDLER, ARIZONA Statistical Section This part of the City of Chandler’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 132 Schedules 1-6 contain information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity 148 Schedules 7-9 contain information to help the reader assess the factors affecting the City’s ability to generate its sales and use tax. Debt Capacity 152 Schedules 10-13b present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Schedules 14-32 provide additional information for continuing disclosure purposes. Demographic and Economic Information 178 Schedules 33-34 offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place and to help make comparisons over time and with other governments. Operating Information 180 Schedules 35-37 contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 131 CITY OF CHANDLER, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 Governmental activities Net investment in capital assets $ 537,576,346 $ 534,292,488 $ 545,926,100 $ 558,279,485 Restricted 94,440,806 41,906,129 44,047,942 112,307,412 Unrestricted 198,059,181 260,307,288 259,783,598 179,518,042 Total governmental activities net position 830,076,333 836,505,905 849,757,640 850,104,939 298,938,820 281,936,017 280,440,445 355,015,004 — — — — Unrestricted 163,103,784 168,164,942 179,339,498 176,961,822 Total business-type activities net position 462,042,604 450,100,959 459,779,943 531,976,826 Net investment in capital assets 836,515,166 816,228,505 826,366,545 913,294,489 Restricted 94,440,806 41,906,129 44,047,942 112,307,412 Unrestricted 361,162,965 428,472,230 439,123,096 356,479,864 Business-type activities Net investment in capital assets Restricted Primary government Total primary government net position $ 1,292,118,937 132 $ 1,286,606,864 $ 1,309,537,583 $ 1,382,081,765 Schedule 1 Fiscal Year 2014 $ $ 2015 563,033,503 $ 567,041,560 2016 $ 2017 579,591,241 $ 587,213,640 2018 $ 536,086,249 2019 $ 575,953,033 105,723,768 108,965,994 121,767,847 122,006,140 168,510,855 173,490,725 183,088,676 7,709,550 (5,872,464) (36,358,845) (65,575,548) (72,592,489) 851,845,947 683,717,104 695,486,624 672,860,935 639,021,556 676,851,269 388,837,444 380,427,606 342,252,306 439,823,546 467,799,036 481,911,949 — 119,075 31,365,801 32,977,926 33,447,434 31,523,149 206,284,498 217,824,645 258,806,679 176,390,803 243,735,547 249,131,813 595,121,942 598,371,326 632,424,786 649,192,275 744,982,017 762,566,911 951,870,947 947,469,166 921,843,547 1,027,037,186 1,003,885,285 1,057,864,982 105,723,768 109,085,069 153,133,648 155,184,734 201,958,289 205,013,874 389,373,174 225,534,195 252,934,215 139,831,290 178,159,999 176,539,324 1,446,967,889 $ 1,282,088,430 $ 1,327,911,410 $ 133 1,322,053,210 $ 1,384,003,573 $ 1,439,418,180 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 Expenses Governmental activities: General government $ 48,920,813 $ 67,808,567 $ 88,876,901 $ 90,143,339 Public safety 92,421,801 90,738,477 Community development 11,715,276 — (1) Public works 56,155,939 — (1) — — — 50,909,361 (1) 52,111,019 55,846,316 Community services 35,299,676 28,919,560 28,966,271 30,979,208 Interest and fiscal charges 13,541,708 12,767,934 12,425,819 11,777,701 Total governmental activities expenses 258,055,213 251,143,899 271,521,569 284,720,690 Water 62,556,496 57,452,876 56,277,327 55,440,712 Wastewater 38,227,999 37,896,180 38,804,360 40,401,849 Solid waste 14,605,448 13,443,102 13,756,352 13,974,858 Airport 1,797,991 2,107,354 1,941,752 1,960,788 Chandler housing authority 7,654,449 7,580,783 7,642,503 7,473,891 124,842,383 118,480,295 118,422,294 119,252,098 Transportation and development 89,141,559 95,974,126 — — Business-type activities: Total business-type activities expenses Total primary government expenses $ 382,897,596 $ 369,624,194 $ 389,943,863 $ 403,972,788 (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 134 Schedule 2a Fiscal Year 2014 $ $ 2015 99,231,501 $ 2016 104,456,315 $ 2017 112,514,903 $ 2018 104,998,802 $ 2019 113,587,478 $ 114,373,302 94,738,371 102,050,425 111,568,323 149,366,614 112,371,723 124,906,187 — — — — — — — — — — — — 52,183,052 51,714,085 55,012,081 56,752,197 55,287,494 53,806,473 32,331,286 31,784,321 31,441,019 32,599,549 36,824,102 36,990,853 10,044,363 6,986,490 7,884,146 6,623,830 6,716,119 7,046,655 288,528,573 296,991,636 318,420,472 350,340,992 324,786,916 337,123,470 55,877,774 55,470,724 54,075,742 63,236,746 61,513,990 58,297,769 41,969,764 50,823,497 51,034,921 58,112,931 60,605,779 61,218,775 14,131,202 14,087,780 13,925,017 14,380,178 14,531,558 15,221,985 1,980,706 1,860,057 2,011,880 1,893,830 1,841,718 2,038,417 7,616,301 7,433,284 7,267,806 7,728,876 8,109,635 8,478,235 121,575,747 129,675,342 128,315,366 145,352,561 146,602,680 145,255,181 410,104,320 $ 426,666,978 $ 446,735,838 $ 135 495,693,553 $ 471,389,596 $ 482,378,651 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 Program Revenues Governmental activities: Charges for services: General government $ 16,621,003 $ 22,548,679 Public safety 7,110,304 5,658,628 Community development 3,336,188 — Public works 6,025,846 — — 11,884,554 Community services 4,515,980 4,079,359 Operating grants and contributions 5,510,710 Capital grants and contributions 8,159,960 Total governmental activities program revenues 51,279,991 Water $ 31,381,062 $ 35,898,378 5,794,329 7,375,050 (1) — — (1) — — (1) 27,905,311 10,150,102 4,136,285 8,240,732 5,890,147 6,162,320 3,999,536 16,041,213 11,016,136 9,116,635 66,102,580 86,395,443 74,780,433 42,276,145 43,708,974 49,565,071 48,258,282 Wastewater 28,406,808 31,610,009 35,907,085 37,690,400 Solid waste 12,891,628 13,277,403 13,890,957 13,836,363 Airport 815,751 995,307 996,605 976,102 Chandler housing authority 521,404 457,781 466,556 637,329 Operating grants and contributions 6,367,024 6,297,200 6,341,087 5,785,335 Capital grants and contributions 8,484,239 8,659,772 19,118,567 81,572,568 Total business-type activities program revenues 99,762,999 105,006,446 126,285,928 188,756,379 Transportation and development Business-type activities: Charges for services: Total primary government program revenues $ 151,042,990 $ 171,109,026 $ 212,681,371 $ 263,536,812 $ (206,775,222) $ (185,041,319) $ (185,126,126) $ (209,940,257) (25,079,384) (13,473,849) 7,863,634 69,504,281 $ (231,854,606) $ (198,515,168) $ (177,262,492) $ (140,435,976) Net (expense)/revenue Governmental activities Business-type activities Total primary government net (expense) (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 136 Schedule 2b Fiscal Year 2014 $ 38,832,217 5,861,044 — — 16,145,692 7,744,507 4,744,636 10,170,236 83,498,332 2015 $ 49,588,376 40,509,289 14,034,894 961,067 806,540 5,457,991 72,176,582 183,534,739 39,207,061 6,469,215 — — 14,438,138 7,551,166 3,514,714 13,133,637 84,313,931 2016 $ 48,045,103 45,666,777 14,140,246 1,010,288 877,380 5,862,477 35,357,741 150,960,012 2017 42,021,638 7,471,344 — — 16,538,175 10,792,114 5,188,787 16,725,462 98,737,520 $ 50,483,097 51,321,346 14,940,591 946,419 946,408 5,784,021 32,690,364 157,112,246 41,400,079 6,561,052 — — 16,333,273 10,732,351 4,481,750 9,702,683 89,211,188 2018 $ 53,251,020 53,563,934 15,648,992 950,294 954,070 6,198,797 27,645,932 158,213,039 43,089,930 6,100,584 — — 17,145,894 9,180,276 3,988,629 9,340,818 88,846,131 2019 $ 54,031,592 56,367,650 16,307,409 963,827 1,085,013 6,350,858 22,360,158 157,466,507 43,622,807 4,998,779 — — 14,869,670 7,583,513 4,522,345 10,510,464 86,107,578 52,459,720 56,055,131 16,107,922 906,557 1,155,430 7,224,669 18,335,155 152,244,584 $ 267,033,071 $ 235,273,943 $ 255,849,766 $ 247,424,227 $ 246,312,638 $ 238,352,162 $ (205,030,041) 61,958,992 (143,071,049) $ (212,677,705) 21,284,670 (191,393,035) $ (219,682,952) 28,796,880 (190,886,072) $ (261,129,804) $ (235,940,785) $ $ 12,860,478 (248,269,326) $ 10,863,827 (225,076,958) $ (251,015,892) 6,989,403 (244,026,489) $ $ $ 137 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 Governmental Revenues and Other Changes in Net Position Governmental activities: Property taxes $ 40,617,269 $ 36,158,574 $ 31,877,716 $ 29,656,415 Sales taxes 83,019,726 86,523,295 97,485,387 102,200,517 Highway user taxes 13,116,481 13,287,878 11,823,280 12,929,504 Other taxes 13,965,973 88,561 5,979,715 6,295,212 Franchise fees 3,174,390 2,819,521 2,988,456 2,936,533 State shared 54,492,427 47,732,614 45,958,627 51,347,206 Investment income 3,487,145 1,841,244 1,221,923 2,843,417 Miscellaneous 850,191 3,071,588 1,116,832 2,181,627 Transfers in (out) 873,357 (244,702) (74,075) (102,875) 213,596,959 191,278,573 198,377,861 210,287,556 — — — — Total governmental activities Business-type activities: Sales taxes Investment income 756,641 533,313 389,446 1,180,290 Miscellaneous 1,422,790 946,507 1,351,829 1,409,437 Transfers in (out) (873,357) 244,702 74,075 102,875 Total business-type activities: 1,306,074 1,724,522 1,815,350 2,692,602 Total primary government $ 214,903,033 $ 6,821,737 $ 193,003,095 $ 200,193,211 $ 6,237,254 $ 13,251,735 $ 212,980,158 Change in Net Position Governmental activities $ Business-type activities Total primary government (23,773,310) $ (16,951,573) (11,749,327) $ 138 (5,512,073) 9,678,984 $ 22,930,719 347,299 72,196,883 $ 72,544,182 Schedule 2c Fiscal Year 2014 $ 2015 28,348,952 $ 2016 28,708,033 $ 2017 29,214,103 $ 2018 29,837,763 $ 2019 30,816,495 $ 32,550,250 103,880,801 108,657,130 112,250,883 120,189,651 127,584,410 139,851,355 13,352,622 14,633,470 15,303,635 16,683,743 16,135,949 17,301,902 3,243,937 10,106,891 6,100,475 664,616 940,203 866,267 3,145,449 3,300,129 3,344,817 3,285,267 3,571,744 3,567,184 55,423,759 59,236,588 60,712,442 65,924,228 64,723,211 67,156,430 1,869,128 1,763,585 3,834,840 1,063,997 1,531,766 14,822,135 819,766 1,197,215 1,124,559 1,014,665 1,502,418 1,261,279 (132,082) (123,350) (433,282) (159,815) (4,175,579) (90,680) 209,952,332 227,479,691 231,452,472 238,504,115 242,630,617 277,286,122 70,065 10,865 10,391 10,682 13,769 17,347 788,025 819,556 2,180,447 938,491 854,848 7,742,589 1,683,332 2,475,760 2,632,460 2,798,023 14,923,212 2,842,825 132,082 123,350 433,282 159,815 4,175,579 90,680 2,673,504 3,429,531 5,256,580 3,907,011 19,967,408 10,693,441 $ 212,625,836 $ 230,909,222 $ 236,709,052 $ 242,411,126 $ 262,598,025 $ 287,979,563 $ 4,922,291 $ 14,801,986 $ 11,769,520 $ (22,625,689) $ 6,689,832 $ 26,270,230 64,632,496 $ 69,554,787 24,714,201 $ 39,516,187 34,053,460 $ 45,822,980 16,767,489 $ 139 (5,858,200) 30,831,235 $ 37,521,067 17,682,844 $ 43,953,074 CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 General fund Reserved $ Unreserved 62,149,646 $ — (1) $ — $ — 137,041,044 — (1) — — Nonspendable — 893,067 (1) 947,804 938,549 Restricted — 844,754 (1) 939,867 939,867 Assigned — 61,733,537 (1) 102,635,587 101,115,766 98,872,954 (1) Unassigned Total general fund — 69,223,074 66,077,714 $ 199,190,690 $ 162,344,312 $ 173,746,332 $ 169,071,896 $ 61,355,662 $ — (1) $ — $ — All other governmental funds Reserved Unreserved, reported in: Special revenue funds 18,103,651 — (1) — — Capital projects funds 7,379,375 — (1) — — Nonspendable — — (1) — — Restricted — 105,756,072 (1) 111,378,788 111,367,545 Unassigned — (12,315,197) (1) (12,798,348) (13,646,428) Total all other governmental funds $ 86,838,688 $ 93,440,875 $ 98,580,440 $ 97,721,117 (1) In FY 2011 the City implemented GASB Statement No. 54, thus changing how fund balance is categorized. 140 Schedule 3 Fiscal Year 2014 $ 2015 — $ 2016 — $ 2017 — $ 2018 — $ 2019 — $ — — — — — — — 892,533 941,359 907,594 979,446 813,143 866,239 1,166,105 1,792,180 1,566,618 1,451,061 1,980,807 2,179,767 95,185,696 102,222,466 109,958,162 101,620,277 116,359,633 131,214,214 82,453,462 80,152,269 68,567,835 87,492,981 65,182,337 66,035,760 $ 179,697,796 $ 185,108,274 $ 181,000,209 $ 191,543,765 $ 184,335,920 $ 200,295,980 $ — $ — $ — $ — $ — $ — $ — — — — — — — 104,557,663 (11,034,021) 93,523,642 $ — — — — — — — — 7,422 — — 107,173,814 120,201,229 120,640,190 166,570,330 171,310,958 (15,322,260) (11,877,159) (11,350,383) (2,555,420) (5,758,986) 91,851,554 $ 108,324,070 $ 141 109,297,229 $ 164,014,910 $ 165,551,972 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2010 Property taxes $ 2011 40,259,579 $ 2012 36,301,709 $ 32,329,560 2013 $ 29,841,739 Sales taxes 83,019,726 86,523,295 97,485,387 102,200,517 Highway user taxes 13,116,481 13,287,878 11,823,280 12,929,504 Other taxes 13,965,973 88,561 5,979,715 6,295,212 Franchise fees 3,174,390 2,819,521 2,988,456 2,936,533 State shared revenues 54,492,427 47,732,614 45,958,627 51,347,206 Grants and entitlements 10,377,502 14,759,620 13,826,606 9,480,090 System development fees 4,768,306 6,739,920 11,724,823 7,781,083 Special assessments 663,209 673,064 678,027 676,127 Licenses and permits 2,758,392 3,208,944 6,955,605 4,887,466 Charges for services 19,420,434 18,002,168 19,938,566 19,786,513 Fines and forfeitures 5,336,294 4,697,317 4,700,430 5,825,098 Rentals 101,322 387,952 455,842 570,638 Contributions 50,000 100,000 100,000 100,000 Interest revenue 3,171,308 1,635,258 1,034,895 2,529,078 Miscellaneous 1,913,571 4,593,104 1,392,691 1,384,123 Total revenues $ 256,588,914 $ 142 241,550,925 $ 257,372,510 $ 258,570,927 Schedule 4 Fiscal Year 2014 $ $ 28,442,823 2015 $ 28,899,684 2016 $ 2017 29,237,607 $ 29,692,846 2018 $ 30,819,812 2019 $ 32,526,357 103,880,801 108,657,130 112,250,883 120,189,651 127,584,410 139,851,355 13,352,622 14,633,470 6,100,475 16,683,743 16,135,949 17,301,902 3,243,937 10,106,891 3,344,817 664,616 940,203 866,267 3,145,449 3,300,129 15,303,635 3,285,267 3,571,744 3,567,184 55,423,759 59,236,588 60,712,442 65,924,228 64,723,211 67,156,430 10,187,895 10,638,831 16,159,064 12,677,860 12,111,857 11,911,639 11,846,275 10,585,623 16,217,004 14,683,327 13,982,674 9,023,678 678,843 573,438 606,757 607,191 611,499 610,501 5,479,384 5,146,556 6,634,161 7,075,996 6,394,322 7,268,592 20,269,976 20,110,036 19,705,786 20,869,517 21,827,375 21,512,737 4,622,215 4,601,501 4,828,174 3,908,387 4,865,783 4,234,286 732,807 751,163 974,192 678,387 127,575 127,206 100,000 150,000 200,000 200,000 200,000 200,000 1,623,973 1,562,241 3,409,065 921,195 1,398,729 13,268,020 650,117 572,252 897,102 494,984 974,107 923,369 263,680,876 $ 279,525,533 $ 296,581,164 $ 143 298,557,195 $ 306,269,250 $ 330,349,523 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2010 General government $ 2011 44,663,091 $ 2012 43,636,784 Public safety 85,390,303 84,007,752 Community development 11,614,214 — Public works 17,664,633 — — 22,126,233 Community services 30,078,856 Capital improvements $ 2013 48,894,811 $ 44,512,533 82,820,106 89,587,613 (1) — — (1) — — (1) 25,532,739 24,807,578 22,836,317 23,255,568 23,554,854 106,366,737 67,299,941 29,787,069 41,793,319 Principal retirement 17,260,000 15,090,000 15,970,000 26,870,000 Interest and fiscal charges 13,646,479 12,901,616 12,550,323 11,908,025 183,969 278,512 — — Transportation and development Debt service: Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 326,868,282 $ 13.3% 268,177,155 13.3% $ 238,810,616 $ 263,033,922 13.5% 16.4% (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." (2) In FY 2017 the City called the remaining payments for the 2007 GO Refunding issuance totaling $8,110,000. 144 Schedule 5 Fiscal Year 2014 $ $ 2015 46,807,747 $ 2016 46,895,106 $ 2017 52,138,384 $ 2018 50,892,490 $ 2019 55,706,708 $ 58,070,201 90,068,218 93,773,306 104,605,663 103,167,906 109,736,277 111,496,663 — — — — — — — — — — — — 23,418,175 24,769,553 25,471,154 28,294,221 27,750,365 25,871,080 23,771,925 24,569,283 24,988,844 26,605,279 27,088,640 27,712,871 45,657,265 56,539,116 50,009,243 44,712,255 71,268,257 69,006,722 15,955,000 21,490,000 17,465,000 25,240,000 20,264,000 22,820,000 10,682,206 7,737,974 8,635,631 7,689,305 7,918,081 8,270,161 145,970 722,293 — 249,838 252,611 — 256,506,506 11.6% $ 276,496,631 11.7% $ 283,313,919 $ 10.2% 286,851,294 12.9% 145 (2) $ 319,984,939 10.4% $ 323,247,698 11.3% CITY OF CHANDLER, ARIZONA OTHER FINANCING SOURCES AND USES AND NET CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2010 2011 2012 2013 Other Financing Sources (Uses) Bond premium $ Face amount of bonds issued 290,569 $ 1,047,424 $ — $ — 10,450,000 20,285,000 — — 97,609 108,929 89,007 76,381 Payment to escrow agent (10,556,600) (10,816,839) — — Transfers in 46,309,016 41,605,646 20,576,188 32,849,979 Transfers out (39,144,322) (56,040,439) (22,685,504) (33,997,394) 7,446,272 (3,810,279) (2,020,309) (1,071,034) (62,833,096) $ (30,436,509) $ 16,541,585 Proceeds from disposal of capital assets Total other financing sources (uses) Net change in fund balance $ 146 $ (5,533,759) Schedule 6 Fiscal Year 2014 $ $ 562,052 2015 $ 17,045,635 2016 $ 2017 — $ 6,339,230 2018 $ 2019 3,609,365 $ — 8,660,000 128,254,000 — 25,500,000 58,740,000 — 161,126 103,964 463,709 652,882 213,829 1,356,796 (9,061,800) (143,635,520) — (31,589,392) — — 24,586,418 28,717,990 27,885,557 28,116,369 46,032,351 45,484,505 (25,653,741) (29,776,581) (29,252,060) (29,208,275) (47,370,020) (48,005,487) (745,945) 709,488 (902,794) (189,186) 61,225,525 (1,164,186) 6,428,425 $ 3,738,390 $ 12,364,451 $ 147 11,516,715 $ 47,509,836 $ 5,937,639 CITY OF CHANDLER, ARIZONA TAXABLE REVENUE BY CATEGORY LAST TEN FISCAL YEARS Amusements Contracting General Retail Hotel/Motel Miscellaneous Related Revenue (1) Publishing Rentals - Personal Property Rentals - Real Property Restaurant/Bar Telecommunications Use Tax Utilities $ Total Sales and Use Taxes $ City Direct Sales Tax Rate (2) 2010 602,027 6,573,348 36,560,075 1,611,912 2,911,821 382,080 2,389,241 8,921,788 7,436,900 3,974,448 869,092 10,786,994 83,019,726 $ $ 1.75% Fiscal Year 2011 2012 673,666 $ 714,641 6,380,957 10,869,566 38,741,270 42,844,871 1,973,790 2,255,786 2,551,354 2,334,179 351,250 352,550 2,462,219 2,606,371 9,479,850 10,025,726 7,971,183 8,670,199 3,524,076 3,628,007 1,000,342 1,054,968 11,413,338 12,128,475 86,523,295 1.77% $ 97,485,339 1.76% $ $ 2013 717,442 10,408,518 45,331,307 2,288,989 2,937,426 334,981 2,884,618 10,817,611 9,069,109 3,731,350 1,315,599 12,363,565 102,200,515 1.75% Source: City of Chandler, Management Services Department (1) Includes license application fees, annual license fees, audit assessments, penalties and interest. (2) The direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. (3) In Fiscal Year 2018-19 the City did a restatement to record prior year privilege tax receivables not previously accrued, prior years have not been restated. 148 Schedule 7 $ $ 2014 728,110 9,780,645 47,454,682 2,472,754 2,660,201 258,547 2,949,421 11,058,203 9,542,714 3,533,636 1,090,428 12,421,526 103,950,867 1.75% $ $ 2015 895,730 8,870,092 49,740,000 2,892,470 2,815,040 260,712 3,261,716 11,967,509 10,188,718 3,435,949 1,145,534 13,194,526 108,667,996 1.76% $ $ Fiscal Year 2016 2017 1,019,939 $ 1,019,938 8,855,057 11,496,791 51,191,162 53,137,169 2,957,685 3,424,279 2,745,130 2,527,981 248,433 186,862 3,125,459 3,611,180 13,217,561 13,647,156 10,752,479 11,341,714 3,234,369 2,796,065 1,127,257 3,619,340 13,786,741 13,391,857 112,261,272 1.76% $ 120,200,332 1.75% 149 $ $ 2018 1,083,161 12,388,978 56,605,561 3,712,085 2,328,030 182,820 3,676,196 15,134,275 11,872,941 2,395,673 4,394,129 13,824,331 127,598,180 1.74% $ $ 2019 (3) 1,318,195 17,228,786 60,029,293 4,099,450 1,757,235 207,462 4,076,298 16,506,671 12,773,198 2,191,747 5,461,771 14,218,596 139,868,702 1.74% CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING SALES AND USE TAX RATES LAST TEN FISCAL YEARS Schedule 8 Overlapping Rates Fiscal Year City Direct Tax Rate (1) Maricopa County Tax Rate (2) State of Arizona Tax Rate (3) Tourism & Sports Authority Tax Rate (4) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1.75% 1.77% 1.76% 1.75% 1.75% 1.76% 1.76% 1.75% 1.74% 1.74% 0.67% 0.67% 0.67% 0.67% 0.67% 0.67% 0.67% 0.66% 0.65% 0.65% 5.86% 5.85% 5.90% 5.80% 4.99% 4.96% 4.92% 4.95% 4.92% 4.92% 0.02% 0.02% 0.02% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% Source: City of Chandler, Management Services Department (1) The City's direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. City tax rates were last increased effective May 1, 1994. (2) The overlapping County tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 0.5% to 0.77%. No rate changes in the past ten fiscal years. (3) The overlapping State tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 5.5% to 5.6%. State tax rate increases during the past ten fiscal years: 1.0% effective June 1, 2010 through May 31, 2013. (4) The Tourism & Sports Authority (TSA) was authorized by Maricopa County voters on November 7, 2000. An additional tax rate of 1.0% is to be levied from March 1, 2001 through February 28, 2031. The only category the overlapping tax rate applies to is the Hotel/Motel category. The overlapping tax rate is calculated using a weighted average of the actual revenues the City collected for this category. 150 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2019 Sales and Use Taxpayer Business Type Percentage of Percentage of Total Sales Total Sales and Use Tax Sales and Use Rank Payments Tax Payments 11,257,465 1 8.10% Tax Payments $ Fiscal Year 2010 Rank Payments 7,467,639 1 9.00% Taxpayer A Utility Taxpayer B Department Store 4,326,490 2 3.11% 2,569,725 2 3.10% Taxpayer C Grocery Store 3,154,260 3 2.27% 2,212,406 3 2.66% Taxpayer D Department Store 2,392,196 4 1.72% 1,515,144 4 1.83% Taxpayer E Construction 2,145,397 5 1.54% Taxpayer F Home Improvement 2,040,456 6 1.47% 1,267,563 5 1.53% Taxpayer G Construction 1,943,119 7 1.40% Taxpayer H Construction 1,867,502 8 1.34% Taxpayer I Vehicle Dealer 1,696,675 9 1.22% Taxpayer J Utility 1,423,046 10 1.02% 1,164,105 7 1.40% Taxpayer K Telecommunications 1,224,106 6 1.47% Taxpayer L Department Store 1,159,962 8 1.40% Taxpayer M Department Store 1,050,680 9 1.27% Taxpayer N Utility 919,916 10 1.11% $ 32,246,606 23.21% $ and Use Tax $ 20,551,246 24.75% Source: City of Chandler, Management Services Department Note: The identities of the ten largest revenue payers are prohibited from disclosure per State statute. Alternatively, the business type of the top ten taxpayers for each period has been disclosed along with the appropriate data. 151 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Fiscal Year General Obligation Bonds 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $ 282,888,000 279,968,000 268,148,000 256,288,000 233,678,000 222,143,000 205,088,000 186,873,000 223,288,000 205,764,000 Revenue Bonds Special Assessment Bonds General Obligation Bond Issuance Premiums $ $ $ 31,800,000 28,620,000 25,745,000 22,045,000 18,000,000 14,025,000 10,055,000 6,685,000 4,270,000 2,050,000 7,315,000 6,190,000 5,780,000 5,350,000 4,905,000 4,440,000 3,960,000 3,460,000 2,940,000 2,395,000 — — — — 3,539,600 17,244,108 15,663,687 19,829,438 21,269,309 19,097,787 Special Assessment Bonds Issuance Premiums Revenue Bonds Issuance Premiums $ — — — — 707,337 565,869 424,402 282,935 141,468 — $ — — — — 99,258 88,230 77,201 66,172 55,140 44,112 Business-type Activities Fiscal Year General Obligation Bonds 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $ 185,032,000 179,747,000 170,987,000 161,567,000 150,972,000 140,072,000 127,782,000 115,722,000 105,707,000 95,901,000 Fiscal Year General Bonded Debt 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 $ 467,920,000 459,715,000 439,135,000 417,855,000 390,410,407 391,026,194 359,163,743 334,688,362 361,290,196 330,661,357 Revenue Bonds Excise Tax Revenue Obligations General Obligation Bond Issuance Premiums $ $ $ 67,580,000 60,280,000 52,670,000 44,740,000 36,095,000 31,610,000 24,850,000 9,595,000 7,845,000 4,685,000 34,040,000 48,540,000 47,440,000 45,695,000 148,380,000 142,200,000 204,090,000 198,520,000 230,635,000 222,575,000 — — — — 2,220,807 11,567,086 10,630,056 12,263,924 11,025,887 9,898,570 Less Amount Available in Debt Service Fund Net General Bonded Debt Outstanding Estimated Actual Taxable Value of Property $ $ 467,920,000 441,393,462 419,876,316 401,435,614 374,224,235 376,116,177 343,881,961 325,706,663 353,838,207 326,074,795 $31,011,422,761 22,396,334,191 21,102,582,630 21,502,506,694 23,588,561,444 29,230,173,658 31,514,093,091 32,319,847,780 33,265,569,654 36,899,750,596 — 18,321,538 19,258,684 16,419,386 16,186,172 14,910,017 15,281,782 8,981,699 7,451,989 4,586,562 Excise Tax Revenue Obligations Issuance Premiums Revenue Bonds Issuance Premiums $ — — — — 1,705,732 1,324,131 832,855 624,642 416,428 202,401 Percentage of Estimated Actual Taxable Value of Property 1.51% 1.97% 1.99% 1.87% 1.59% 1.29% 1.09% 1.01% 1.06% 0.88% $ — — — — 8,502,636 8,040,688 11,447,974 15,075,185 17,271,299 15,979,766 Total Primary Government (1) $ 608,655,000 603,345,000 570,770,000 535,685,000 608,805,370 593,320,112 614,901,176 568,997,296 624,864,531 578,592,636 Percentage of Personal Income (2) 9.35% 9.22% 7.84% 6.71% 7.76% 7.15% 7.35% 6.20% 6.24% 5.73% Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. (1) Includes general bonded debt, other governmental activities debt and business-type activities debt. (2) Population and personal income data can be found in Schedule 33. 152 Per Capita (2) 2,578 2,535 2,383 2,213 2,521 2,397 2,465 2,128 2,267 2,215 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2019 Schedule 11 Estimated Governmental Unit Debt Outstanding Percentage Estimated Share of Applicable Overlapping Debt Debt repaid with property taxes State of Arizona None 4.83% None Maricopa County None 7.45 None 445,570,000 7.45 Maricopa County Special Healthcare District 475,000,000 7.45 35,382,750 Chandler Unified School District No. 80 300,819,446 69.61 209,403,425 Kyrene Elementary School District No. 28 172,670,000 28.57 49,335,272 Mesa Unified School District No. 4 288,035,000 4.39 12,636,095 Gilbert Unified School District No. 41 135,180,000 2.75 3,720,154 None 11.82 None Maricopa County Community College District $ East Valley Institute of Technology $ Subtotal, overlapping debt 33,190,509 343,668,205 229,350,899 City direct debt 100.00 229,350,899 $ Total direct and overlapping debt 573,019,104 Source: Piper Jaffray & Co. Note: The applicable percentage of overlap for each type of debt was computed on the net limited property assessed valuation as calculated for fiscal year 2018-19 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 153 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2010 2011 2012 2013 6% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 210,484,297 $ 9,494,000 $ 200,990,297 148,117,597 $ 13,361,000 $ 134,756,597 135,310,758 $ 11,840,000 $ 123,470,758 130,522,600 10,869,000 $ 119,653,600 Total net debt applicable to the limit as a percentage of the debt limit 4.51% 9.02% 8.75% 8.33% 20% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 701,614,322 $ 458,426,000 $ 243,188,322 493,725,323 $ 446,354,000 $ 47,371,323 451,035,860 $ 427,295,000 $ 23,740,860 435,075,335 406,986,000 $ 28,089,335 Total net debt applicable to the limit as a percentage of the debt limit 65.34% 90.41% 94.74% 93.54% Source: Piper Jaffray, Inc. Notes: Under Arizona law, cities may issue general obligation bonds for purposes of water, wastewater, artificial light, open space preserves, parks, public safety and emergency services, streets, transportation, playgrounds and recreational facilities up to an amount not to exceed 20 percent of secondary assessed valuation. Cities may issue general obligation bonds for any other purpose up to an amount not to exceed 6 percent of secondary assessed valuation. Prior to Fiscal Year 2016, the Assessed Valuation was based on the Net Assessed Secondary Value. Due to a change in the legislation (Proposition 117), in Fiscal Year 2016, the City is required to use the Limited Property Value. The net (or excess) premium reflected was utilized for project fund purposes and is being amortized according to Arizona Revised Statutes, Title 35, Chapter 3, Article 3, 35-457 (E). 154 Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2019 Full Cash Assessed Valuation as of June 30, 2019 $ Debt limit (6% of assessed value) 3,870,977,820 232,258,669 Debt applicable to limit: 6% general obligation bonds 12,221,000 Excess premium on bonds outstanding 290,300 Legal 6% debt margin $ 219,747,369 Debt limit (20% of assessed value) $ 774,195,564 Debt applicable to limit: 20% general obligation bonds 289,444,000 Excess premium on bonds outstanding 9,437,202 Legal 20% debt margin $ 475,314,362 Fiscal Year 2014 $ 142,895,404 2015 $ 10,198,000 $ 132,697,404 476,318,016 $ 101,866,016 78.61% 132,979,078 $ 476,091,596 $ 123,724,996 74.01% $ 180,597,597 $ 633,416,159 $ 309,973,409 $ 189,480,245 $ 661,442,986 $ 51.06% 360,850,336 45.44% 155 $ 194,395,932 $ 697,900,943 $ 373,734,315 46.45% 219,747,369 5.39% $ 324,166,628 $ 232,258,669 12,511,300 7.15% 300,592,650 $ 209,370,282 2019 14,974,350 4.51% 323,442,750 $ 198,432,895 2018 8,952,650 4.96% 352,366,600 $ 190,024,847 2017 9,427,250 6.90% 374,452,000 $ $ 9,848,400 7.14% $ 142,827,478 2016 774,195,564 298,881,202 $ 475,314,362 38.61% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Less: Fiscal Year 2010 $ Highway User Operating Net Available Taxes Expenses Revenue 13,116,481 2011 13,287,878 2012 2013 $ 9,018,598 $ Debt Service Principal 4,097,883 $ 3,180,000 Interest $ Coverage 1,198,194 0.94 9,336,554 3,951,324 2,875,000 1,176,009 0.98 11,823,280 7,895,663 3,927,617 3,700,000 936,975 0.85 12,929,504 10,893,216 2,036,288 3,830,000 833,475 0.44 2014 13,352,622 10,547,032 2,805,590 3,975,000 515,175 0.62 2015 14,633,470 8,257,078 6,376,392 3,970,000 462,047 1.44 2016 15,303,635 11,951,019 3,352,616 3,370,000 375,650 0.90 2017 16,683,743 10,887,942 5,795,801 2,415,000 256,438 2.17 2018 16,135,949 12,073,072 4,062,877 2,220,000 163,988 1.70 2019 17,301,902 10,724,907 6,576,995 2,050,000 79,200 3.09 Water Revenue Bonds Less: Fiscal Year 2010 $ Utility Service Operating Net Available Charges Expenses Revenue 42,276,145 $ 31,137,157 $ Debt Service Principal 11,138,988 $ 5,471,256 Interest $ Coverage 2,205,623 1.45 2011 43,708,974 26,834,274 16,874,700 6,007,332 1,875,330 2.14 2012 49,556,831 26,351,735 23,205,096 6,498,090 1,641,612 2.85 2013 48,258,282 26,890,219 21,368,063 6,062,435 1,375,854 2.87 2014 49,588,376 27,840,478 21,747,898 3,300,000 869,064 5.22 2015 48,045,103 27,645,076 20,400,027 3,205,000 730,854 5.18 2016 50,483,097 26,907,780 23,575,317 8,408,500 566,680 2.63 2017 53,251,020 34,188,323 19,062,697 1,750,000 307,160 9.27 2018 54,031,592 35,833,361 18,198,231 2,212,000 219,660 7.48 2019 52,459,720 32,395,325 20,064,395 1,641,500 131,180 11.32 Excise Tax Revenue Obligations Less: Fiscal Year 2010 $ Excise Tax Operating Net Available Collections Expenses Revenue 141,025,083 $ — $ Debt Service Principal 141,025,083 $ 500,000 Interest $ Coverage 1,133,063 86.36 2011 136,164,353 — 136,164,353 1,100,000 1,118,063 61.39 2012 148,885,867 — 148,885,867 1,745,000 1,703,358 43.18 2013 156,621,139 — 156,621,139 1,815,000 1,584,863 46.07 2014 162,664,325 — 162,664,325 6,180,000 4,483,662 15.25 2015 170,432,597 — 170,432,597 4,770,000 6,044,175 15.76 2016 175,820,443 — 175,820,443 2,805,000 7,193,019 17.59 2017 188,910,693 — 188,910,693 4,105,000 8,097,704 15.48 2018 195,500,184 — 195,500,184 6,640,000 8,879,859 12.60 2019 209,259,874 — 209,259,874 6,590,000 9,248,264 13.21 Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. Operating expenses do not include interest, depreciation or amortization expenses. 156 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Less: Fiscal Year 2010 $ Utility Service Operating Net Available Charges Expenses Revenue 28,406,808 $ 15,821,939 $ 12,584,869 Debt Service Principal $ Interest 3,678,744 $ Coverage 1,104,530 2.63 2011 31,610,009 15,759,431 15,850,578 1,602,668 947,148 6.22 2012 35,907,085 16,752,467 19,154,618 1,431,910 874,363 8.31 2013 37,690,400 18,879,022 18,811,378 2,197,565 809,286 6.26 2014 40,509,289 18,780,034 21,729,255 1,185,000 585,029 12.28 2015 45,666,777 22,907,111 22,759,666 3,555,000 548,545 5.55 2016 51,321,346 23,054,518 28,266,828 6,846,500 368,470 3.92 2017 53,563,934 23,470,067 30,093,867 — 94,140 319.67 2018 56,367,650 28,967,201 27,400,449 948,000 94,140 26.29 2019 56,055,131 26,507,090 29,548,041 703,500 56,220 38.89 Note: Details regarding the City's outstanding debt can be found in the Notes to the Financial Statements. Operating expenses do not include interest, depreciation or amortization expenses. 157 CITY OF CHANDLER, ARIZONA PROPERTY TAX ASSESSMENT RATIOS LAST FIVE FISCAL YEARS Property Classification Tax Year 2015 Schedule 14 Tax Year 2016 Tax Year 2017 Tax Year 2018 Tax Year 2019 Mining, Utility, Commercial, and Industrial 18.50% 18.00% 18.00% 18.00% 18.00% Agriculture and Vacant Land 16.00 15.00 15.00 15.00 15.00 Owner-Occupied Residential 10.00 10.00 10.00 10.00 10.00 Leased or Rented Residential 10.00 10.00 10.00 10.00 10.00 Railroad, Private Car, and Airline Flight Property 15.00 14.00 15.00 14.00 15.00 Source: Piper Jaffray & Co. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 158 CITY OF CHANDLER, ARIZONA REAL AND SECURED PROPERTY TAXES LEVIED AND COLLECTED LAST FIVE FISCAL YEARS FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 FY 2014-15 $ Tax Rate 1.1386 1.1400 1.1600 1.1792 1.1792 $ Adjusted Tax Levy 31,655,843 30,612,579 29,626,073 28,972,604 27,804,827 Source: Piper Jaffray & Co. as compiled from County Department of Finance. 159 Schedule 15 to 30 June of Initial Fiscal Year Collections % of Levy $ 31,714,236 100.00% 30,321,360 99.05 29,273,316 98.81 28,693,845 99.04 27,511,000 98.94 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING ASSESSED VALUATION AND TOTAL TAX RATES PER $100 ASSESSED VALUATION JUNE 30, 2019 Schedule 16 FY 2018-19 Net Limited Property Assessed Valuation $ 62,328,439,592 40,423,232,423 40,423,232,423 40,423,232,423 37,003,666,851 40,423,232,423 40,423,232,423 40,423,232,423 18,599,330,106 2,691,741,310 3,506,028,130 2,056,567,610 3,030,255,065 1,900,979,361 2,783,830,922 State of Arizona (1) Maricopa County Maricopa County Community College District Maricopa County Library District Maricopa County Flood Control District Maricopa County Fire District Maricopa County Special Health Care District Central Arizona Water Conservation District East Valley Institute of Technology District No. 401 (2) Chandler Unified School District No. 80 Tempe Union High School District No. 213 Kyrene Elementary School District No. 28 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 City of Chandler FY 2018-19 Total Tax Rate per $100 Assessed Valuation $ 0.4741 1.4009 1.3754 0.0556 0.1792 0.0107 0.2941 0.1400 — 6.6649 2.6443 3.9663 7.2163 6.1051 1.1386 Source: Piper Jaffray & Co. as compiled from Property Tax Rates and Assessed Values, Arizona Tax Research Foundation, Maricopa County Levy, and Maricopa County, State and County Abstract of the Assessment Roll (Arizona Department of Revenue). (1) Includes the State Equalization Assistance Property Tax. This rate has been set at $0.4741 for fiscal year 2018-19 and is adjusted annually pursuant to Arizona Revised Statute, Section 41-1276. (2) Includes Net Limited Property Assessed Value for the East Valley Institute of Technology District No. 401 within Pinal County. 160 CITY OF CHANDLER, ARIZONA SECONDARY ASSESSED VALUATION/NET FULL CASH ASSESSED VALUATION BY PROPERTY TAX CLASSIFICATION LAST FIVE FISCAL YEARS Schedule 17 FY 2014-15 Secondary Assessed Valuation (2) Mining, Utility, Commercial, and Industrial $ 708,750,488 FY 2015-16 Net Full Cash Assessed Valuation (1) FY 2016-17 Net Full Cash Assessed Valuation (1) FY 2017-18 Net Full Cash Assessed Valuation (1) FY 2018-19 Net Full Cash Assessed Valuation (1) FY 2018-19 Annual Percentage Change $ $ 929,870,699 $ 1,027,345,765 $ 1,102,515,089 7.32% 784,201,124 Agriculture and Vacant Land 68,493,825 80,816,673 80,660,011 74,055,978 75,266,539 1.63% Owner-Occupied Residential 1,072,861,945 1,316,995,223 1,424,368,802 1,472,336,280 1,574,405,659 6.93% Leased or Rented Residential 368,427,295 474,177,840 537,827,158 574,699,602 646,538,541 12.50% Railroad, Private Car, and Airline Flight Property 2,037,360 1,910,025 1,782,690 1,910,025 1,782,690 (6.67)% 160,702,435 161,203,221 192,089,070 156,435,042 88,612,464 (43.36)% 316,735 440,664 482,365 432,241 383,733 (11.22)% $ 2,381,590,083 $ 2,819,744,770 $ 3,167,080,795 $ 3,307,214,933 $ 3,489,504,715 5.51% Historical Property Commercial Historic Property TOTAL Source: Piper Jaffray & Co. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). (1) Beginning in Fiscal Year 2015-16, taxes were levied against the Net Full Cash Assessed Valuation. (2) Before Fiscal Year 2015-16, taxes were levied against the Secondary Property Assessed Valuation. 161 CITY OF CHANDLER, ARIZONA NET LIMITED PROPERTY ASSESSED VALUE OF MAJOR TAXPAYERS JUNE 30, 2019 Taxpayer Intel Corporation Cyrusone LLC TWC-Chandler LLC Wells Fargo Bank NA Bank Of America NA Iridium Satellite LLC CAZ 1 De LLC Digital 2121 South Price LLC Freescale Semiconductor Inc Realty Associates Fund X L P Description Manufacturing Plant Manufacturing Plant Enclosed Mall Financial Services Mortgage Brokerage Data Center Office Building Office Building Manufacturing Plant Office Building Total City Net Limited Property Assessed Valuation FY 2018-19 Net Limited Property Assessed Value $ $ 133,833,487 22,317,485 20,649,924 18,882,312 13,688,394 12,528,414 10,208,046 8,843,909 7,775,481 7,006,545 255,733,997 $ 2,783,830,922 Schedule 18 As % of Total FY 2018-19 Net Limited Property Assessed Value 4.81% 0.80 0.74 0.68 0.49 0.45 0.37 0.32 0.28 0.25 9.19% Source: County Treasurer's Office. Neither the City nor the Financial Advisor have made an independent determination of the financial position of any of the major taxpayers listed above. 162 CITY OF CHANDLER, ARIZONA COMPARATIVE VALUATION HISTORIES LAST FIVE FISCAL YEARS Schedule 19 The tables below are shown to indicate (1) from Fiscal Year 2015-16, the Net Limited Property Assessed Value of the City, the County, and the State of Arizona, utilizing new constitutional and statutory property valuation requirements, and (2) for fiscal year 2014-15, changes in then-applicable but now-replaced Secondary Property Tax Assessed Values of the City, the County, and the State of Arizona, each on a comparative basis. Comparative Net Limited Property Assessed Value History (1) Fiscal Year FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 City of Chandler Maricopa County State of Arizona $ 2,783,830,922 $ 40,423,232,423 $ 62,328,439,592 2,675,480,112 38,251,891,249 59,404,007,785 2,553,971,787 36,135,494,474 56,564,116,707 2,380,457,981 34,623,670,323 54,838,548,929 Comparative Net Full Cash Assessed Value History Fiscal Year FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 City of Chandler Maricopa County State of Arizona $ 3,489,504,715 $ 51,944,549,119 $ 76,437,036,352 3,307,214,933 48,351,864,363 71,673,967,461 3,167,080,795 44,850,741,762 67,262,138,649 2,819,667,969 41,125,604,014 62,635,586,917 Comparative Secondary Property Assessed Value History (2) Fiscal Year FY 2014-15 City of Chandler Maricopa County State of Arizona $ 2,381,590,083 $ 35,079,646,593 $ 55,352,051,074 Source: Piper Jaffray & Co. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue) and Arizona Tax Research Association. 163 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT RATIOS JUNE 30, 2019 Schedule 20 Per Capita Bonded Debt population Estimates @ 261,173 (1) Direct General Obligation Bond Debt $ Direct Overlapping General Obligation Bond Debt $ 301,665,000 645,333,205 Source: (1) City of Chandler, Development Services Department 164 $ $ 1,155.04 2,470.90 As % of City's 2018-19 Net Full Cash Assessed Value As % of City's 2018-19 Estimated Net Full Cash Value 8.64% 18.49% 1.01% 2.16% CITY OF CHANDLER, ARIZONA ESTIMATED NET FULL CASH VALUE LAST FIVE FISCAL YEARS Fiscal Year 2018-19 2017-18 2016-17 2015-16 2014-15 Schedule 21 Estimated Net Full Cash Value $ 29,847,787,490 29,004,568,096 28,297,114,500 25,007,403,208 21,004,441,911 Source: Piper Jaffray & Co. as compiled from Property Tax Rates and Assessed Values, Arizona Tax Research Foundation, and the State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 165 CITY OF CHANDLER, ARIZONA MONTHLY HIGHWAY USER TAX REVENUES - CALENDAR YEAR CASH BASIS LAST SEVEN YEARS Month 2013 2014 2015 2016 2017 2018 2019 946,980 $ 1,033,980 $ 1,048,496 $ 1,158,689 $ 1,215,671 $ 1,296,536 $ 1,266,830 $ 1,446,371 February 911,103 1,002,875 1,098,559 1,192,313 1,231,841 1,945,977 1,233,000 1,455,486 March 1,026,842 1,059,191 1,060,205 1,198,428 1,242,204 1,280,990 1,272,234 1,419,880 April 1,110,255 1,205,917 1,230,836 1,318,157 1,449,212 1,439,986 1,353,119 1,411,903 May 1,193,915 1,297,009 1,352,359 1,454,506 1,472,271 1,583,971 1,516,006 1,584,927 June 1,015,158 1,210,511 1,212,824 1,316,155 1,346,463 1,421,037 1,350,636 1,383,030 July 1,148,691 1,222,725 1,255,302 1,367,068 1,434,908 1,427,236 1,469,617 964,778 1,069,168 1,166,518 1,198,488 1,303,240 1,202,282 1,358,741 September 1,009,490 985,799 1,109,334 1,150,953 1,211,218 1,746,522 1,353,880 October 1,008,625 1,043,023 1,128,913 1,190,930 1,279,912 1,299,346 1,451,988 November 946,154 1,001,552 1,107,485 1,193,359 1,273,531 1,217,745 1,488,542 December 968,246 994,499 1,115,903 1,177,335 1,220,109 1,208,612 1,401,808 $ 12,250,237 $ 13,126,249 $ 13,886,734 $ 14,916,381 $ 15,680,580 $ 17,070,240 $ 16,516,401 January August TOTAL 2012 Schedule 22 $ 166 CITY OF CHANDLER, ARIZONA POPULATION STATISTICS Schedule 23 Year 2019 estimate 2018 estimate 2017 estimate 2016 estimate 2015 mid-decade 2014 estimate 2013 estimate 2012 estimate 2010 Census 2005 Special Census 2000 Census 1990 Census 1980 Census City of Chandler Maricopa County 261,173 4,367,835 (2) (1) 257,853 4,294,460 (2) (1) 254,239 4,221,684 (2) (1) 248,332 4,155,302 (2) (1) 243,679 4,175,049 (3) (3) 241,264 4,008,651 (2) (1) 240,364 3,944,859 (2) (1) 238,040 3,884,705 (2) (1) 236,479 3,825,191 (3) (3) 230,845 3,700,516 (3) (3) 174,061 2,930,153 (3) (3) 91,149 2,132,249 (3) (3) 29,673 1,521,597 (3) (1) Sources: (1) City of Chandler, Development Services Department (2) Arizona Office of Economic Opportunity (3) U.S. Census Bureau 167 State of Arizona 7,187,990 (2) 7,076,199 (2) 6,965,897 (2) 6,866,195 (2) 6,833,596 (3) 6,662,486 (2) 6,581,054 (2) 6,498,569 (2) 6,407,774 (3) 5,924,476 (2) 4,882,966 (3) 3,679,118 (3) 2,735,840 (3) CITY OF CHANDLER, ARIZONA ACTUAL AND PROJECTED PLEDGED EXCISE TAXES Schedule 24 2014-15 (1) 2015-16 (1) 2016-17 (1) 2017-18 (1) 2018-19 (2) Adopted 2019-20 $ 108,657,130 $ 112,250,883 $ 120,189,651 $ 127,584,410 $ 138,888,825 $ 134,823,900 State Shared Sales Tax 21,597,535 22,471,132 23,768,564 23,821,248 25,525,595 25,000,000 State Shared Income Tax 28,608,724 28,453,619 31,910,426 30,652,381 30,693,731 31,500,000 Franchise Fees 3,289,168 3,333,938 3,272,104 3,560,770 3,556,211 3,300,000 Licenses and Permits 5,310,252 6,761,791 7,209,693 6,512,930 7,398,669 7,036,500 Transaction Privilege Tax Fines and Forfeitures Totals 2,969,788 2,549,080 2,560,255 3,368,445 3,196,843 3,084,650 $ 170,432,597 $ 175,820,443 $ 188,910,693 $ 195,500,184 $ 209,259,874 $ 204,745,050 Note: Includes City transaction privilege sales tax, privilege audit assessments, privilege license fees and privilege tax interest. Excludes excise tax refunds from GPLET program. (1) Amounts are actual collections provided by the City of Chandler, Management Services Department (cash basis). (2) Unaudited FY 2018-19 revenues. 168 CITY OF CHANDLER, ARIZONA TRANSACTION PRIVILEGE (SALES) TAX RATES BY CATEGORY JUNE 30, 2019 Taxable Activities Advertising Amusements Contracting Construction Contracting (non MRRA) (1) Jet Fuel Sales (and Use) Job Printing Manufactured Housing Timber & Extraction Mining Publishing Hotel/Motel (> 30 Days) Rentals - Real Property Residential Commercial Tangible Personal Property Rentals Restaurants/Bars Retail Sales Telecommunications Transportation for Hire Utilities Use Tax Schedule 25 Chandler Tax Rate 1.50% 1.50% 1.50% 1.50% of 65% of gross $0.02300/gallon 1.50% 1.50% 1.50% 0.10% 1.50% 4.40% (1.50% + 2.90%) 1.50% 1.50% 1.50% 1.50% 1.80% 1.50% 2.75% 1.50% 2.75% 1.50% Source: City of Chandler, Management Services Department (1) MMRA - maintenance, repair, replacement and alteration 169 CITY OF CHANDLER, ARIZONA STATE SALES TAX TAXABLE ACTIVITIES, TAX RATES AND DISTRIBUTION SHARE JUNE 30, 2019 Schedule 26 State Transaction Privilege (Sales) Tax Rates Taxable Activities Transporting Utilities Telecommunications Pipeline Private Car Line Publication Job Printing Prime Contracting Owner Builder Sales Amusement Restaurant Personal Property Rental Retail (excluding food sales) Transient Lodging Mining - non-metal, oil/gas Commercial Lease Severance - Metalliferous Mining Use Tax Utilities Jet Fuel Use Tax State Tax Rate 5.600% 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 3.125 0.500 2.500 5.600 (1) Distribution Share 20.000% 20.000 20.000 20.000 20.000 20.000 20.000 20.000 20.000 40.000 40.000 40.000 40.000 50.000 32.000 53.330 80.000 20.000 40.000 Source: City of Chandler, Management Services Department (1) Does not include the $0.0305 per gallon state tax on the retail sale of jet fuel, which tax is only levied on the first ten million gallons sold to each purchaser in each calendar year. 170 CITY OF CHANDLER, ARIZONA COMBINED SCHEDULE OF WATER AND SEWER SYSTEM REVENUES, EXPENSES, NET REVENUES AND DEBT SERVICE COVERAGE LAST SIX FISCAL YEARS Schedule 27 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 $ 90,097,665 $ 93,711,880 $ 101,804,443 $ 106,814,954 $ 110,399,242 $ 108,514,851 104,365 211,891 351,169 63,411 953,964 130,001 System Revenues: Service Fees Miscellaneous Interest Income Total System Revenues 676,977 737,572 1,978,389 875,983 780,250 6,817,699 $ 90,879,007 $ 94,661,343 $ 104,134,001 $ 107,754,348 $ 112,133,456 $ 115,462,551 $ $ $ $ $ $ System Expenditures: General and Administration 6,530,941 6,390,567 6,157,415 6,065,965 6,219,983 6,400,086 Personnel Services 13,113,388 13,287,885 15,159,966 15,489,373 16,343,098 16,548,508 Contractual Services 10,852,823 13,534,510 10,437,077 17,153,121 11,774,018 12,919,313 Commodities 16,160,779 17,339,225 18,207,840 18,949,931 30,463,463 23,034,508 Total System Expenditures $ 46,657,931 $ 50,552,187 $ 49,962,298 $ 57,658,390 $ 64,800,562 $ 58,902,415 Net Income Available for Debt Service $ 44,221,076 $ 44,109,156 $ 54,171,703 $ 50,095,958 $ 47,332,894 $ 56,560,136 Water and Sewer Revenues Bond (Senior Obligation) Debt Service $ $ $ 16,190,150 $ 2,998,630 $ 3,473,800 $ 3,410,600 Approximate Debt Service Coverage for Senior Obligations 5,939,093 7.45x 8,039,398 5.48x 171 3.35x 16.71x 13.63x 16.58x CITY OF CHANDLER, ARIZONA UTILITY RATE INCREASE HISTORY Schedule 28 Effective Date 09/01/80 04/25/83 11/30/83 07/01/84 11/01/84 08/01/85 01/01/89 01/01/90 01/01/91 04/01/92 02/15/93 10/01/94 10/01/07 10/01/09 10/01/13 10/01/15 10/01/17 Water (10,000 gal) (Single Family) 8.40 % 33.80 % —% —% 10.53 % —% 8.33 % 7.69 % 4.28 % 8.05 % 7.75 % 11.55 % (9.00)% (1) 23.64 % (2) —% — % (4) 0.70 % (5) Wastewater (Single Family) 16.67% —% 41.43% 41.47% 13.70% 7.57% 3.95% 5.04% 3.96% 3.97% 3.97% 6.98% 23.90% 13.02% 9.00% (3) 9.00% (3) 3.70% (5) Source: City of Chandler, Management Services Department (1) The water rate structure was changed in the October 1, 2007 rate increase to separate each customer class and move a higher portion of costs from the base charge to the volume charge in a tiered structure. (2) The water rate structure was changed in the October 1, 2009 rate increase to move 20,000 gallons of consumption from tier 4 to tier 3, as well as move a portion of costs back to the base charge from the volume change. (3) The wastewater rates were increased October 1, 2013 and October 1, 2015 to cover additional debt service costs tied to new construction and expansion of facilities. (4) Effective October 1, 2015 the water seasonal rates (Winter/Summer) were eliminated and replaced with a yeararound rate, but the annual cost to rate payers remained unchanged. (5) In 2016, a Cost of Service Study was completed, water consumption rates were not changed, however, effective October 1, 2017 the water base rate increased 0.70% and the wastewater rates were increased by 3.70% to cover debt service costs tied to new construction and expansion of facilities. 172 CITY OF CHANDLER, ARIZONA TOP 10 WATER AND WASTEWATER CUSTOMERS JUNE 30, 2019 Schedule 29 Water Customer name INTEL CORP NXP USA INC. CHANDLER UNIFIED SCHOOL AIR PRODUCTS & CHEMICAL DIGITAL 2121 SOUTH PRICE, LLC TOWNSQUARE APARTMENTS AB/EVEREST WARNER ROAD OWNER LLC CHANDLER REGIONAL HOSPITAL HARDISON/DOWNEY CONST INC TWC-CHANDLER LLC Amount $ 6,066,355 1,171,052 472,380 239,286 218,757 132,017 117,009 111,310 105,841 95,879 Wastewater Customer name INTEL CORP NXP USA INC. DIGITAL 2121 SOUTH PRICE, LLC GILA RIVER INDIAN COMMUNITY (LONE BUTTE) CHANDLER UNIFIED SCHOOL CHANDLER REGIONAL HOSPITAL PIMALCO MICROCHIP TECHNOLOGY IN BKEP TERMINALLING, LLC TWC-CHANDLER LLC Source: City of Chandler, Management Services Department 173 Amount $ 11,853,767 1,746,280 355,262 345,063 173,372 149,804 147,228 108,746 103,358 99,676 CITY OF CHANDLER, ARIZONA NUMBER OF WATER AND WASTEWATER CUSTOMERS LAST TEN FISCAL YEARS 2010 2011 2012 2013 WATER Residential Commercial Multi-Unit Industrial Other 71,446 4,325 990 47 212 72,195 4,369 986 49 196 72,867 4,387 988 49 206 73,551 4,406 991 50 226 70,084 2,215 815 35 222 70,736 2,268 817 38 233 71,508 2,312 811 38 239 72,067 2,358 811 39 252 WASTEWATER Residential Commercial Multi-Unit Industrial Other Source: City of Chandler, Management Services Department 174 Schedule 30 2014 2015 2016 2017 2018 2019 74,319 4,158 1,032 56 1,317 80,882 75,035 4,243 1,043 58 1,536 81,915 75,883 4,309 1,087 61 1,640 82,980 77,062 4,535 1,107 63 2,034 84,801 77,674 4,550 1,128 66 2,116 85,534 78,244 4,927 1,134 67 2,389 86,761 72,862 2,012 878 37 470 76,259 73,363 2,033 887 37 477 76,797 74,346 2,201 920 34 475 77,976 75,761 2,138 915 38 590 79,442 76,517 2,329 952 48 592 80,438 77,089 2,371 956 48 598 81,062 175 CITY OF CHANDLER, ARIZONA SPECIAL ASSESSMENT DELINQUENCIES JUNE 30, 2019 Schedule 31 There were no delinquencies on payments for the assessment. 176 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT OUSTANDING JUNE 30, 2019 Schedule 32 2018-19 Overlapping General Obligation Bonded Debt Overlapping Jurisdiction State of Arizona Maricopa County Maricopa County Community College District Maricopa County Special Healthcare District Chandler Unified School District No. 80 Kyrene Elementary School District No. 28 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 East Valley Institute of Technology District No. 401 City of Chandler 2018-19 Proportion Applicable to City of Chandler Approximate Percent Net Debt Amount None None 445,570,000 475,000,000 300,819,446 172,670,000 288,035,000 135,180,000 None 301,665,000 4.831% 7.449 7.449 $ 7.449 69.611 28.572 4.387 2.752 11.821 100.000 None None 33,190,509 35,382,750 209,403,425 49,335,272 12,636,095 3,720,154 None 301,665,000 Total Direct and Overlapping General Obligation Bonded Debt Outstanding $ 645,333,205 $ Direct and Overlapping Tax Rates Per $100 Assessed Valuation Inside the City, East Valley Institute of Technology and Inside Gilbert Unified School District No. 41 $ 11.1737 Inside Mesa Unified School District No. 4 $ 12.2849 Inside Tempe Union High School District No. 213 and Kyrene Elementary School District No. 28 $ 11.6792 Inside Chandler Unified School District No. 80 11.7335 $ Source: Piper Jaffray & Co. Note: The applicable percentage of overlap for each type of debt was computed on the net limited property assessed valuation as calculated for fiscal year 2018-19 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 177 CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Schedule 33 Total Fiscal Per Capita Personal Median Unemployment Personal Income (2) Age (2) Rate (3) Income (2) $6,516,888,282 32.5 6.9% $27,558 Year Population (1) 2010 236,479 2011 237,145 6,518,878,905 31.7 6.6 27,489 2012 238,040 7,233,559,520 32.4 6.1 30,388 2013 240,364 7,925,281,808 34.9 6.0 32,972 2014 241,264 7,840,356,208 35.0 5.5 32,497 2015 243,679 8,168,120,080 34.9 4.7 33,520 2016 248,332 8,324,088,640 34.9 4.5 33,520 2017 254,239 8,731,329,977 35.2 3.9 34,343 2018 257,853 9,360,321,753 35.3 3.6 36,301 2019 261,173 10,101,649,294 36.0 4.0 38,678 (4) (4) Sources: (1) City of Chandler, Development Services Department (2) City of Chandler, Economic Development Division (3) Arizona Office of Employment and Population Statistics (4) U.S. Census Bureau Notes: Total personal income is composed of earned income, dividends, interest and rents and government transfer payments. Per capita personal income is calculated by dividing total personal income by population; amounts may not be exact due to rounding. 178 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO Schedule 34 2019 Percentage of Total City Employer Employees Rank Employment Intel Corporation 11,000 1 7.36% Wells Fargo 5,500 2 3.68% Chandler Unified School District 4,900 3 3.28% Bank of America 3,800 4 2.54% Chandler Regional Medical Center 2,500 5 1.67% NXP (Formerly Freescale Semiconductor) 1,700 6 1.14% PayPal 1,700 6 1.14% Northrup Grumman 1,650 8 1.10% City of Chandler 1,604 9 1.07% Microchip Technology 1,500 10 1.00% Total 35,854 23.98% 2010 Percentage of Total City Employer Employees Rank Employment Intel Corporation 9,400 1 7.92% Bank of America 3,500 2 2.95% Chandler Unified School District 3,000 3 2.53% Wells Fargo Ocotillo Corporate Campus 2,243 4 1.89% Verizon Wireless 2,000 5 1.68% Chandler Regional Hospital 1,600 6 1.35% Microchip Technology 1,538 7 1.30% Orbital Sciences 1,525 8 1.28% Freescale Semiconductor 1,400 9 1.18% City of Chandler 1,356 10 1.14% Total 27,562 23.22% Source: City of Chandler, Economic Development Division, City of Chandler Human Resources Department and Arizona Office of Employment and Population Statistics. 179 CITY OF CHANDLER, ARIZONA EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Full Time Equivalent Personnel Mayor and council City clerk City manager Communications/public affairs City magistrate Law Management services Total General Government Total Planning and Development Total Transportation and Development Total Community Services Public works administration Streets Airport Engineering, development and real estate Total Public Works Police Fire Total Public Safety Municipal utilities administration Water Wastewater Solid waste Total Municipal Utilities Municipal utilities administration Water Wastewater Solid waste Public works administration Streets Total Public Works and Utilities Total Primary Government 2010 2011 5 6 96 15 41 27 95 285 80 — 226 3 50 6 74 133 478 219 697 6 80 42 20 148 — — — — — — — 1,569 5 5 122 12 40 27 85 296 — 172 229 — — — — — 467 218 685 5 88 42 20 155 — — — — — — — 1,537 Fiscal Year (1) 2012 2013 (1) 6 4 124 14 38 30 72 288 — 170 231 — — — — — 467 238 705 5 89 42 19 155 — — — — — — — 1,549 4 5 178 19 39 29 72 346 — 163 192 — — — — — 468 234 702 4 85 46 18 153 — — — — — — — 1,556 Source: City of Chandler, Human Resources Department (1) The significant changes between 2010 and 2011 are the result of Public Works Department and Planning and Development Department consolidated into one Transportation and Development Department. (2) The significant changes between 2015 and 2016 are a result of Library, Museum and Center for the Arts moving from Community Services to City Manager Department. (3) The significant changes between 2016 and 2017 are a result of Library, Museum and Center for the Arts moving from City Manager Department to Community Services. (4) The significant changes between 2018 and 2019 are a result of the Streets Division and Municipal Utilities consolidating into the Public Works and Utilities Department. Note: The calculation of full time equivalent personnel includes full time and part time regular employees as of the last pay period of the fiscal year. 180 Schedule 35 2014 2015 2016 4 6 174 13 35 29 66 327 — 159 199 — — — — — 467 224 691 5 87 46 16 154 — — — — — — — 1,530 4 6 176 13 37 31 69 336 — 165 198 — — — — — 483 237 720 5 87 62 20 174 — — — — — — — 1,593 4 6 240 15 39 31 67 402 — 150 156 — — — — — 490 240 730 8 87 65 21 181 — — — — — — — 1,619 Fiscal Year (2) 2017 (2) 11 7 206 15 38 31 64 372 — 152 199 — — — — — 491 222 713 7 89 69 20 185 — — — — — — — 1,621 181 (3) 2018 2019 (4) (3) 4 6 199 15 40 30 67 361 — 160 202 — — — — — 501 233 734 7 90 74 18 189 — — — — — — — 1,646 5 6 193 14 37 32 68 355 — 84 195 — — — — — 485 233 718 — — — — — 6 90 66 19 1 70 252 1,604 (4) CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program 2010 2011 2012 2013 General Government Privilege tax licenses 22,715 23,821 25,726 27,387 Meeting notices posted 481 506 599 584 City council actions and agenda items prepared 977 848 908 834 Grant awards received 40 43 26 43 Inventory turnover ratio 2.10 2.22 2.07 1.89 3,883 2,330 5,462 3,785 2,592,243 2,494,009 2,489,741 2,395,192 335 1,050 1,000 1,003 Transportation & Development Building permits issued Community Services Library circulation Center for the Arts events & exhibits Public Safety Crime rate (per 1,000 population) 32 34 33 28 Total calls for police services (estimated) 146,508 141,279 137,170 137,485 Total calls for fire services 16,904 17,892 17,950 18,474 Fire inspections 3,208 4,424 5,188 5,029 Fire investigations 43 46 34 22 76,894 77,408 77,626 79,278 31 30 28 26 Daily pumping capacity - wells (gallons) 70,700,000 64,460,000 61,920,000 64,790,000 Daily pumping capacity - plants (gallons) 72,000,000 72,000,000 72,000,000 72,000,000 73,042 73,118 73,712 74,606 862 866 868 869 Solid waste customers served 68,362 69,480 70,179 70,667 Solid waste refuse collected (tons) 85,160 88,466 85,257 86,557 Solid waste refuse recycled (tons) 22,245 20,832 21,096 20,680 Municipal Utilities Water connections Operating wells Sewer connections Sanitary sewer (miles) Source: City of Chandler Departments 182 Schedule 36 Fiscal Year 2014 2015 2016 2017 2018 2019 27,467 28,224 29,582 28,321 28,046 37,404 564 544 565 535 681 666 780 867 844 860 838 789 53 51 46 43 27 24 2.10 1.57 1.74 1.81 1.79 2.04 5,490 5,170 5,142 4,635 3,944 4,011 2,332,758 2,163,076 2,101,421 2,059,429 2,041,574 1,801,237 938 939 985 1,048 1,177 825 27 23 26 26 25 22 145,400 139,177 145,466 156,186 159,301 154,736 18,865 22,785 23,966 25,072 25,185 26,818 5,442 4,692 5,814 4,635 5,135 6,698 16 27 30 27 41 18 79,766 80,401 83,089 84,670 84,338 85,416 27 28 28 31 32 31 64,710,000 64,400,000 66,300,000 74,400,000 74,100,000 71,300,000 72,000,000 72,000,000 72,000,000 72,000,000 84,000,000 84,000,000 75,564 76,492 78,144 78,972 79,841 81,033 890 911 917 928 933 935 71,269 71,860 73,162 73,288 75,018 75,675 83,950 84,209 81,653 80,069 83,004 84,500 21,046 22,442 22,102 22,305 22,101 22,887 183 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program 2010 2011 2012 2013 Community Services Developed parks 61 61 61 61 Developed acres 1,198 1,192 1,196 1,198 Undeveloped acres 336 342 338 336 Swimming pools 6 6 6 6 Lighted fields 34 34 34 39 446,675 429,604 555,924 550,857 829 829 829 831 26,600 26,600 26,600 26,900 208 208 212 216 Police stations 3 3 3 3 Fire stations 10 10 10 10 449 437 399 388 Water mains (miles) 1,194 1,222.86 1,227 1,227 Fire hydrants 12,318 12,925 10,877 12,553 22 24 24 26 Library bookstock Transportation and Development Total miles streets (center line) Street lights Signalized intersections Public Safety General Government Based aircraft Municipal Utilities Average daily treatment (mgd) Source: City of Chandler Departments 184 Schedule 37 Fiscal Year 2014 2015 2016 2017 2018 2019 62 64 65 65 65 67 1,208 1,232 1,236 1,244 1,244 1,281 325 309 302 299 299 231 6 6 6 6 6 6 39 41 41 43 43 41 595,969 396,773 341,073 360,618 359,445 310,888 838 841 855 855 857 857 27,100 27,700 27,700 27,800 27,199 29,500 216 218 218 218 220 225 3 3 3 3 3 3 10 10 10 10 11 11 415 425 427 455 457 523 1,227 1,278 1,196 1,283 1,212 1,218 12,717 13,118 13,207 15,708 15,970 16,159 26 28 29 29 28 54 185