City of Chandler Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2020 Chandler’s Rock Solid Fiscal Foundations CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 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, 2020 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................................................................................. 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................................................................................................. i 11 15 28 30 32 33 34 35 36 39 40 42 89 90 92 94 96 CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Schedule of Changes in OPEB Liabilities and Related Ratios - Single Employer Plan................ 98 Notes to the Required Supplementary Information...................................................................... 99 Other Financial Statements: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Streets Capital Projects.................................................................................................................... 103 General Obligation Bonds Debt Service........................................................................................ 104 Non-Major Governmental Funds: Combining Balance Sheet................................................................................................................ 107 Combining Statement of Revenues, Expenditures and Changes in Fund Balances................ 110 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Highway User Special Revenue..................................................................................................... 113 Local Transportation Assistance Special Revenue...................................................................... 114 Grants Special Revenue.................................................................................................................. 115 Community Development Special Revenue................................................................................ 116 Police Confiscated Property Special Revenue............................................................................. 117 Parks and Recreation Special Revenue........................................................................................ 118 Museum Special Revenue.............................................................................................................. 119 Library Special Revenue................................................................................................................. 120 Special Assessment Bonds............................................................................................................. 121 General Government Capital Projects.......................................................................................... 122 Public Buildings Capital Projects................................................................................................... 123 Grants Capital Projects................................................................................................................... 124 Community Services Capital Projects........................................................................................... 125 Public Safety Buildings and Improvements Capital Projects..................................................... 126 Vehicle and Capital Equipment Replacement Capital Projects................................................. 127 Technology Replacement Capital Projects................................................................................... 128 Municipal Arts Capital Projects...................................................................................................... 129 Non-Major Proprietary Funds: Combining Statement of Net Position........................................................................................... 132 Combining Statement of Revenues, Expenses and Changes in Net Position........................... 135 Combining Statement of Cash Flows............................................................................................. 136 ii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS, continued STATISTICAL SECTION Financial Trends Schedule 1, Net Position by Component....................................................................................... 140 Schedule 2a, Changes in Net Position............................................................................................ 142 Schedule 2b, Changes in Net Position........................................................................................... 144 Schedule 2c, Changes in Net Position............................................................................................ 146 Schedule 3, Fund Balances of Governmental Funds.................................................................... 148 Schedule 4, Governmental Funds Revenues................................................................................. 150 Schedule 5, Governmental Funds Expenditures and Debt Service Ratio.................................. 152 Schedule 6, Other Financing Sources and Uses and Net Changes in Fund Balance Governmental Funds........................................................................................................................ 154 Revenue Capacity Schedule 7, Taxable Revenue by Category.................................................................................... 156 Schedule 8, Direct and Overlapping Sales and Use Tax Rates.................................................... 158 Schedule 9, Principal Sales and Use Taxpayers............................................................................ 159 Debt Capacity Schedule 10, Ratios of Outstanding Debt...................................................................................... 160 Schedule 11, Direct and Overlapping Governmental Activities Debt......................................... 161 Schedule 12, Legal Debt Margin Information............................................................................... 162 Schedule 13a, Pledged-Revenue Coverage................................................................................... 164 Schedule 13b, Pledged-Revenue Coverage................................................................................... 165 Schedule 14, Property Tax Assessment Ratios............................................................................. 166 Schedule 15, Real and Secured Property Taxes Levied and Collected...................................... 167 Schedule 16, Direct and Overlapping Assessed Valuation and Total Tax Rates Per $100 Assessed Valuation........................................................................................................................... 168 Schedule 17, Secondary Assessed Valuation/Net Full Cash Value Assessed Valuation by Property Tax Classification.............................................................................................................. 169 Schedule 18, Net Limited Property Assessed Value of Major Taxpayers.................................. 170 Schedule 19, Comparative Valuation Histories............................................................................. 171 Schedule 20, Direct and Overlapping General Obligation Bonded Debt Ratios....................... 172 Schedule 21, Estimated Net Full Cash Value................................................................................. 173 Schedule 22, Monthly Highway User Tax Revenues - Calendar Year Cash Basis..................... 174 Schedule 23, Population Statistics.................................................................................................. 175 Schedule 24, Actual and Projected Pledged Excise Taxes........................................................... 176 Schedule 25, Transaction Privilege (Sales) Tax Rates by Category............................................. 177 Schedule 26, State Sales Tax Taxable Activities, Tax Rates and Distribution Share................. 178 iii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS, continued STATISTICAL SECTION, continued Schedule 27, Combined Schedule of Water and Sewer System Revenues, Expenses, Net Revenues and Debt Service Coverage........................................................................................... 179 Schedule 28, Utility Rate Increase History..................................................................................... 180 Schedule 29, Top 10 Water and Wastewater Customers............................................................ 181 Schedule 30, Number of Water and Wastewater Customers..................................................... 182 Schedule 31, Special Assessment Delinquencies......................................................................... 184 Schedule 32, Direct and Overlapping General Obligation Bonded Debt Outstanding............ 185 Demographic and Economic Information Schedule 33, Demographic and Economic Statistics.................................................................... 186 Schedule 34, Principal Employers................................................................................................... 187 Operating Information Schedule 35, Employees by Function............................................................................................. 188 Schedule 36, Operating Indicators by Function/Program........................................................... 190 Schedule 37, Capital Asset Statistics by Function/Program........................................................ 192 iv Introductory Section Chandler’s Rock Solid Fiscal Foundations The Chandler Center for the Arts celebrates its 30th anniversary this season. This unique facility is shared with the Chandler Unified School District and continues to be a cornerstone for art and culture in Downtown Chandler. Introductory Section Letter of Transmittal Elected and Appointed Officials Organizational Chart Certificate of Achievement for Excellence in Financial Reporting Introductory Section December 3, 2020 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, 2020, 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 fairly presents the financial position and results of operations of the various funds and component units of the City. Generally accepted accounting principles (GAAP) in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). 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, 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 125 percent, from an estimated 115,900 in 1994 to more than 261,100 in 2019. 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 16,000 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, GM Financial Services, and Liberty Mutual Insurance, together employing over 13,000 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 $86,658. 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 3.74 percent during fiscal year 2018-19 compared with 4.19 percent for Maricopa County and 4.90 percent for the State of Arizona. The City’s sales tax revenues, which comprise over 50 percent of its general fund, increased by 1.4 percent for fiscal year 2019-20 from the prior year actuals. The City continues to strengthen its financial position and has benefitted from one-time revenues created by new development. With only slow and steady operating revenue growth anticipated, managing costs of services and maintaining existing infrastructure continues to be critical even as the City navigates the impacts of the COVID-19 pandemic. 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. The City enters into tax abatement agreements as part of economic development programs. Long-term impacts from tax abatements are considered immaterial. Additional tax abatement details are included in Note 18. The City of Chandler’s continued goal is to provide the highest quality services to the community in the most cost-effective manner. These services include Public Safety: Police and Fire; Community Services: Park and Recreation and Libraries; Cultural Development: Center for the Arts and Museum; Public Works: Streets and Traffic; Utilities: Water, Wastewater, Reclaimed Water and Solid Waste; Neighborhood Resources; Development Services; Airport; Tax and Licensing and numerous internal services. 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 Chandler Industrial Development Authority and the Chandler Cultural Foundation are two legally separate entities, both of which are reported separately within the City's financial statements. Additional detail on these entities can be found in Note 1. 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 ratings 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. 2 • 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. 2019-2020 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 (GO) bond credit ratings with stable outlooks from all three rating agencies, making Chandler one of a select few municipalities in the U.S. with this distinction; • Completed $33 million GO Bond and $15 million Excise Tax Revenue Obligation (ETRO) sales to fund City infrastructure projects; • Implemented additional enhancements to the internally developed Transaction Privilege Tax (TPT) and Licensing System to manage taxpayer data from the State with historical taxpayer data, and developed an online licensing and registration portal to be deployed in the fall of 2020 to allow taxpayers to apply and renew online; • Promoted public participation in the 2020 Census by working with the City’s Complete Count Committee to educate residents about the importance of completing the census. Produced communication materials that explained the significance of the census; • Provided communication support throughout the City’s response to the COVID-19 pandemic by producing videos, broadcasting meetings, and creating digital content on the City’s websites and social medial platforms; creating graphics, signs, and printed materials to support the City’s response; monitoring and responding to constituent and employee inquiries; and producing FAQ materials; • Published the City Council Strategic Framework in print and digital formats as well as launched the City’s new brand as part of the roll-out of the City Council vision. Published branding guidelines with an updated City logo, tagline, and brand elements, and launched videos and digital content to promote the Council vision and City brand; • Economic Development’s combined business attraction/retention efforts have supported projects that are anticipated to provide 4,900 jobs in Chandler within the next year and up to 5,800 jobs in the next three years. Three new hotels opened, including the City’s first four-star hotel, the Marriott Phoenix Chandler, with significant meeting space to better serve the meetings market; • Completed the Transportation Master Plan 2019 update; • Nozomi Aquatic Center’s Fun Run was recognized as the Best of Aquatics Training Program by the Association of Aquatic Professionals, and Chandler Aquatics is the first in the state to offer expanded aqua fitness programming, debuting Aqua Tone (AquaPole) and Aqua Boxing. Chandler Aquatics #WaterYouDoing water safety campaign has garnered over 2 million impressions and continues to make water safety a national everyday prevention effort; • Chandler Public Library partnered with Economic Development for a unique program outside of the library walls, titled “Tapped: A conversation with Chandler’s Craft Brew Pubs.” The program highlighted Downtown Chandler’s craft brew pubs: San Tan Brewery, Flix Brewhouse, Craft 64, The Sleepy Whale, and QuartHaus, and focused on how these local businesses are helping to spur Downtown Chandler’s economic resurgence. The program also provided information on how to become a successful start-up; • The Chandler Museum saw its first full year of operation with expanded family programs, exhibits, and rentals. New programming included a monthly speaker series called “History Bites,” formation of the Chandler Museum Foundation, and opening the Museum Gift Shop; 3 • Downtown improvements included construction of Oregon Street Parking Garage bringing over 900 new parking spaces to Downtown, the widening of sidewalks, addition of a median, and pedestrian amenities on Arizona Avenue (Frye Road to Pecos Road); • Implemented building permit text messaging service to provide contractors and homeowners the option to schedule inspections and receive inspection results through their smart phone, issued 3,481 construction permits with a construction value of $907,394,806, and completed 19,584 building inspections and 4,000 plan reviews; • Successfully enabled over 700 employees to work remote during the COVID-19 pandemic utilizing industry recognized solutions safely, securely, and effectively for collaboration and connectivity, and despite supply chain challenges, implemented infrastructure upgrades, rapid computing deployments, City COVID-19 Information Hotline, a dynamic/scalable/distributed call center environment, Employee COVID-19 Information Portal, and Online Appointment Scheduling based on resource availability; • Information Technology successfully delivered over one hundred innovative solutions in alignment with the City’s Strategic Framework. A few of those solutions include Event Management, Mobile Inspection Scheduling, Smart Parking, and an Artificial Intelligence (AI) data aggregation solution for data driven decision making; • The Public Housing Division was acclaimed by Housing and Urban Development (HUD) as High Performing and an exemplary Public Housing Authority in the State; • Completed Chandler Heights Road (Arizona Avenue to McQueen Road) and Queen Creek Road Improvements (McQueen Road to Gilbert Road), as well as 59 lane miles of asphalt repaving; • Treated and reclaimed 11.2 billion gallons of wastewater at the Airport, Lone Butte, and Ocotillo Water Reclamation Facilities, 9.5 billion gallons of which were reused for irrigation and cooling; • Pecos Treatment Plant treated and delivered 11.8 billion gallons of potable drinking water; • Implemented online bulk collections for residents to schedule collections; • Worked collaboratively with WAYMO engineers to test and better understand how their vehicles would react to emergency response vehicles and develop an emergency response guidebook for Fire and Police Departments responding to use in an emergency involving autonomous vehicles on a national level; • Activated and staffed the Emergency Operations Center in response to the COVID-19 pandemic; • Continued developing and maintaining community partnerships, which is the cornerstone of system of policing resulting in crime being down again in 2019, making it one of the safest years in Chandler’s th history. Chandler was rated the 9 safest City in the nation by WalletHub; and • Completed construction of the 19,982 square foot Public Safety Training Center multi-purpose building which consists of an indoor 25-yard firing range, shoot house training room, range classroom, weapons cleaning room, armorer’s work shop, storage, office space, and training space that will allow the Fire Department to more consistently perform training exercises during the summer months. 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. 4 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. 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 2019-20, $927,046,172). 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., P.C. 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, 2019, marking the thirty-eighth 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, 2019 from the GFOA, marking the thirty-second consecutive year of receiving this award. The award reflects the commitment of staff to meeting the highest principles of governmental budgeting. 5 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. 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; and Joanne Chang, Senior Accountant. 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, 2020 Kevin Hartke, Mayor Rene’ Lopez, Vice Mayor Sam Huang, Councilmember Jeremy McClymonds, Councilmember Matt Orlando, Councilmember Terry Roe, 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 Andy Bass, Community Services Director Kim Moyers, Cultural Development Director Derek Horn, Development Services Director Micah Miranda, Economic Development Director Tom Dwiggins, Fire Chief Rae Lynn Nielsen, Human Resources Director 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 Organizational Chart Effective: 01/14/2020 Citizens of Chandler Mayor and City Council Advisory Boards and Commissions City Clerk City Manager City Attorney/Risk Mgr. Assistant City Manager Neighborhood Resources • Code Enforcement • Community Development • Diversity Office • Housing & Redevelopment • Neighborhood Programs Human Resources City Magistrate Assistant City Manager Management Services Communications and Public Affairs • HR • Mayor and Council Administration/HRMS Office • Benefits & Wellness • Print, Mail, Graphics • Labor Relations • Public Information • Recruitment & • Video Production Selection • Accounting • Classification & Compensation • Tax & Licensing • Budget Office • Central Supply • Environmental Management • Purchasing • Utility Services • Organizational Development Development Services Public Works and Utilities • Building Safety • Capital Projects • Engineering • GIS • Solid Waste Services • Planning • Water/Wastewater • Telecommuni cation & Utility Franchise • Safety • Workers’ Compensation Airport Information Technology Facilities and Fleet Police Fire • Communications • Administration • Service Delivery • Maintenance & Infrastructure • Community Services • Emergency Management • Access/Key Control • Criminal Investigations • Health & Medical • Energy Management • Field Operations • Forensic Science • Prevention & Training • Custodial Services • Property & Evidence • Application Support • Infrastructure Support • Information Security Economic Development • Tourism • Operations Sustainability • Center for the Arts • Vision Gallery Government Relations and Policy • ASU Marvin Andrews Fellowship Intern • ADA Coordinator • Multimodal Planning • Museum • Downtown • Special Events 8 8 Community Services • Libraries • Park Maintenance • Park Development • Recreation/ Aquatics • Fleet Services Cultural Development • Transportation Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Chandler Arizona For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Executive Director/CEO 9 10 Financial Section Independent Auditor’s Report Management’s Discussion and Analysis (MD&A) Basic Financial Statements Required Supplementary Information Other Financial Statements The City’s Budget Division has earned the Distinguished Budget Presentation Award from the Government Finance Officers Association for 31 consecutive years. Financial Section Chandler’s Rock Solid Fiscal Foundations 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, 2020, 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, 2020, 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 3, 2020, 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 3, 2020 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, 2020 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, 2020. 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 2020 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 $1.51 billion (net position) which represents an increase of $69.4 million from the prior year primarily due to increases in due from other governments of $27.3 million for AZCares funding, an increase in deferred outflows of OPEB and pension plan items and $15.0 million of capital contributions in enterprise funds. Of this amount, $258.3 million (unrestricted net position) may be used to meet the City’s obligations to citizens and creditors. However, $78.6 million is invested in a joint venture with the Town of Gilbert, which decreased $2.9 million from the prior year, and is not available for obligations. At June 30, 2020, the City’s governmental funds reported combined ending fund balances of $415.3 million, an increase of $49.5 million in comparison with the prior year primarily due to AZCares funding, increases in property taxes, state shared revenues, fines and forfeitures and investment income. Approximately 53.6 percent of the total amount, $222.5 million, is available for spending at the City’s discretion (assigned or unassigned). At June 30, 2020, total fund balance for the general fund was $232.9 million which represents an increase of $32.6 million from the prior year; this is primarily due to AZCares funding and an increase in state shared revenues. General revenues from governmental activities accounted for $286.5 million, or 70.2 percent of all revenues from governmental activities as opposed to 76.3 percent in the prior year. Program specific revenues in the form of charges for services and grants and contributions accounted for $121.5 million or 29.8 percent of total governmental activity revenues, as opposed to 23.7 percent in the prior year. The City had $156.4 million of program revenues ($152.2 million in the prior year) and $13.8 million in general revenues and transfers ($10.7 million in the prior year) related to business-type activities. At June 30, 2020, the City’s proprietary funds reported combined total net position of $778.1 million as compared to $762.6 million in the prior year; an increase for the current year of $15.5 million. This increase is primarily due to increases in service fee revenues and capital contributions and a reduction in long-term liabilities. This results in a total unrestricted net position of $267.0 million, of which $139.8 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. 15 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 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 items that will 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, reclaimed water, 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 two categories: governmental funds and proprietary 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 governmentwide 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 20 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, streets capital projects fund and general obligation bonds debt service fund, which are considered to be major funds. Data from the other 17 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 16 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 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, reclaimed water, 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. 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. 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 $1.51 billion as of June 30, 2020. This reflects continued strong operations in governmental activities, an increase in privilege 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 (67.9 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 (15.0 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (17.1 percent) includes $78.6 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. 17 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 The following table presents a condensed statement of the City's net position for the fiscal years ended June 30, 2020 and 2019. Governmental Activities Current assets Business-type Activities Total (Primary Govt.) 2020 2019 2020 2019 2020 2019 $ 513,542,103 $ 465,370,449 $ 295,098,831 $ 262,716,865 $ 808,640,934 $ 728,087,314 Capital assets, net 755,678,611 754,138,521 787,509,917 806,195,465 1,543,188,528 1,560,333,986 Long-term assets — — 78,760,749 81,779,588 78,760,749 81,779,588 1,269,220,714 1,219,508,970 1,161,369,497 1,150,691,918 2,430,590,211 2,370,200,888 93,134,294 71,366,897 9,443,309 10,798,709 102,577,603 82,165,606 1,362,355,008 1,290,875,867 1,170,812,806 1,161,490,627 2,533,167,814 2,452,366,494 Total assets Total deferred outflows of resources Total assets and deferred outflows of resources Current liabilities 55,896,207 60,048,014 39,535,670 37,067,826 95,431,877 97,115,840 Long-term liabilities 548,432,242 525,094,144 349,437,685 357,860,887 897,869,927 882,955,031 Total liabilities 604,328,449 585,142,158 388,973,355 394,928,713 993,301,804 980,070,871 27,331,136 28,882,440 3,754,051 3,995,003 31,085,187 32,877,443 631,659,585 614,024,598 392,727,406 398,923,716 1,024,386,991 1,012,948,314 Net investment in capital assets 547,511,826 575,953,033 477,329,239 481,911,949 1,024,841,065 1,057,864,982 Restricted 191,839,529 173,490,725 33,750,526 31,523,149 225,590,055 205,013,874 Unrestricted (8,655,932) (72,592,489) 267,005,635 249,131,813 258,349,703 176,539,324 $ 730,695,423 $ 676,851,269 $ 778,085,400 $ 762,566,911 Total deferred inflows of resources Total liabilities and deferred inflows of resources Net position: Total net position $1,508,780,823 $1,439,418,180 Total assets and deferred outflows of resources Total liabilities and deferred inflows of resources Total net position $0 $500 $1,000 $1,500 $2,000 $ (Millions) Governmental Activities 18 Business-type Activities $2,500 $3,000 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 Changes in net position. The City’s total revenues for the fiscal year ended June 30, 2020 were $577.3 million. The total cost of all programs and services was $508.0 million, which results in an increase in net position of $69.4 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2020 and 2019. Governmental Activities Business-type Activities Total (Primary Govt.) 2020 2019 2020 2019 2020 2019 Revenues: Program revenues Charges for services $ 71,760,315 $ 71,074,769 $ 135,080,838 $ 126,684,760 $ 206,841,153 $ 197,759,529 Operating grants and contributions 31,052,185 4,522,345 7,137,950 7,224,669 38,190,135 11,747,014 Capital grants and contributions 18,714,457 10,510,464 14,190,016 18,335,155 32,904,473 28,845,619 General revenues Property taxes 34,419,182 32,550,250 — — 34,419,182 32,550,250 Sales taxes 140,644,918 139,851,355 15,521 17,347 140,660,439 139,868,702 Highway user taxes 16,996,911 17,301,902 — — 16,996,911 17,301,902 Other taxes 1,153,237 866,267 — — 1,153,237 866,267 Franchise Fees 3,441,225 3,567,184 — — 3,441,225 3,567,184 State shared revenues 70,769,943 67,156,430 — — 70,769,943 67,156,430 Investment income 16,951,295 14,822,135 9,974,135 7,742,589 26,925,430 22,564,724 Miscellaneous 2,085,020 1,261,279 2,962,466 2,842,825 5,047,486 4,104,104 407,988,688 363,484,380 169,360,926 162,847,345 577,349,614 526,331,725 General government 138,850,297 114,373,302 — — 138,850,297 114,373,302 Public safety 109,544,169 124,906,187 — — 109,544,169 124,906,187 Transportation and development 59,777,330 53,806,473 — — 59,777,330 53,806,473 Community services 38,195,563 36,990,853 — — 38,195,563 36,990,853 Interest and fiscal charges Total revenues Expenses: 6,885,184 7,046,655 — — 6,885,184 7,046,655 Water — — 60,330,758 58,297,769 60,330,758 58,297,769 Wastewater — — 66,788,084 61,218,775 66,788,084 61,218,775 Solid waste — — 16,522,728 15,221,985 16,522,728 15,221,985 Airport — — 2,382,288 2,038,417 2,382,288 2,038,417 — — 8,710,570 8,478,235 8,710,570 8,478,235 Total expenses Housing authority 353,252,543 337,123,470 154,734,428 145,255,181 507,986,971 482,378,651 Excess (deficiency) before transfers 54,736,145 26,360,910 14,626,498 17,592,164 69,362,643 43,953,074 (891,991) (90,680) 891,991 90,680 — — 53,844,154 26,270,230 15,518,489 17,682,844 69,362,643 43,953,074 Transfers in (out) Change in net position Beginning net position Ending net position 676,851,269 650,581,039 762,566,911 744,884,067 1,439,418,180 1,395,465,106 $ 730,695,423 $ 676,851,269 $ 778,085,400 $ 762,566,911 $ 1,508,780,823 $ 1,439,418,180 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 Revenue Sources - Fiscal Year 2020 Other taxes 0.20% State shared revenues 12.26% Franchise Fees 0.60% Investment income 4.66% Highway user fees 2.94% Miscellaneous 0.88% Sales taxes 24.36% Charges for services 35.83% Property taxes 5.96% Capital grants and contributions 5.70% Operating grants and contributions 6.61% Functional Expenses - Fiscal Year 2020 Wastewater 13.15% Solid waste 3.25% Water 11.88% Airport 0.47% Interest and fiscal charges 1.36% Housing authority 1.71% Community services 7.52% General government 27.33% Transportation and development 11.77% Public safety 21.56% 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 As evidenced in the previous graph, the largest financing source for the City is charges for services at 35.83 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 24.36 percent and 12.26 percent, respectively, of the total revenues with property taxes accounting for an additional 5.96 percent of the City’s total revenues. The City as a whole uses the largest amount of resources for general government functions at 27.33 percent of the total functional expenses of the City. The next largest users of resources are public safety and wastewater at 21.56 percent and 13.15 percent, respectively, with water accounting for 11.88 percent of the City’s total expenses. Governmental activities. The increase in governmental net position totaled $53.8 million for the year ended June 30, 2020 compared with an increase of $26.3 million in the prior year. The increase is primarily due to AZCares funding and increases in state shared revenues and investment income. Business-type activities. The increase in business-type net position totaled $15.5 million for the year ended June 30, 2020 compared with an increase of $17.7 million in the prior year. This increase is primarily due to increases in water and wastewater service fee revenues and capital contributions and a reduction 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 $415.3 million, an increase of $49.5 million in comparison with the prior year increase of $5.9 million. Approximately $222.5 million (53.6 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 $191.5 million represents an increase of $31.0 million. The remainder of the fund balance comprising of nonspendable and restricted balances amounts to $192.8 million (46.4 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 $174.4 million represents an increase of $18.5 million. This increase is primarily due to unspent bond proceeds in the community services and streets capital projects funds, highway user tax revenues exceeding expenditures and transfers out in the highway user special revenue fund. 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 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 $230.2 million, while total fund balance reached $232.9 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 0.96 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 (e.g., economic development and capital projects, compensated absences). The City’s general fund balance increased by $32.6 million during the current fiscal year primarily due to AZCares funding and an increase in state shared revenues. The streets capital projects fund accounts for the acquisition, construction and improvements of the City’s street projects. At the end of the current fiscal year total fund balance was $81.7 million. The fund balance of the City’s streets capital project fund increased by $8.0 million during the current fiscal year due to unspent bond proceeds. 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 increased by $0.1 million during the current fiscal year. The increase is due to higher than anticipated interest revenue for the year ended June 30, 2020. 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 $778.1 million and $44.9 million, respectively, compared to $762.6 million and $39.8 million in the prior fiscal year. The enterprise funds increase is primarily due to an increases in water and wastewater service fee revenues and capital contributions and a reduction in long-term liabilities. The enterprise funds net position is 34.3 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 $139.8 million, and those for the wastewater fund amounted to $108.2 million, compared to $144.7 million and $87.7 million in the prior fiscal year. BUDGETARY HIGHLIGHTS For the 2019-20 budget year, the City of Chandler continued to engage in fiscally responsible budgeting practices although potential State legislative actions continued to keep Chandler cautious. With steady economic growth in the City and the region, the City Council adopted a balanced budget for 2019-20 that included slightly higher planned operating expenditures based upon anticipated increases to the ongoing revenue streams from sustainable economic development. Overall planned capital expenditures increased slightly as additional projects were added to address our aging infrastructure. 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 or exceeded during the year despite the COVID-19 pandemic. 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 6.6 percent from the previous year, and the total City budget increased by 5.9 percent from 2018-19. 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 2019-20 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. 22 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 Initially, the original budget projected some growth in revenues, however, the budget was revised mid-year to account for higher than actual revenues which exceeded projections based on the strong economy. Then by March of 2020, revenues were again revised based on anticipated impacts of COVID-19. In consideration of the business closures, reduced consume confidence, and anticipated reductions that would be felt in the last quarter of the fiscal year, the budget was reduced by $10.5 million. With the anticipated revenue shortfalls many cost reduction measures were put in place to limit spending in the final quarter of the year until the impacts to revenues were understood. Additionally, unanticipated state AZCares funds of $29.9 million were awarded in May to assist the City with COVID-19 expenditures and impacts. The actual COVID-19 impacts on revenue more negatively impacted specific Transaction Privilege Tax categories, such as restaurants and bars, hotel/motels, and amusements, but the City saw shifts in that spending which increased retail and other categories. Revenues ended up coming in only slightly under the originally revised revenues and with expenditure reduction measures in place, General Fund spending came in lower than anticipated. This resulted in increased General Fund balance of $48.4 million including the AZCares revenue. Without these AZCares funds, the actual increase to fund balance for the year would have been $21.1 million. The FY 2019-20 budget continued to emphasize its strong financial policies and economic vitality, 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 $10 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, unexpected decreases in property values, or other economic conditions cause revenues to suddenly decrease. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets. As of June 30, 2020, the City had invested $1.0 billion in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $102.8 million. During fiscal year 2019-20, there were $1 million of costs associated with construction of additional capacity at the joint venture water treatment plant with the Town of Gilbert. The additional capacity project was completed during the fiscal year. Additionally there was a purchase of 33 acres of land from the wastewater fund totaling $5.5 million next to the Airport Water Reclamation Facility (AWRF) for future advanced water treatment possibilities at the AWRF. There were several governmental activities improvement projects including the completion of the new 10,000 square foot Chandler Museum building next to the McCullough-Price House totaling $6.6 million, continued work on a new parking garage in downtown Chandler of $5 million with anticipated final completion in early fiscal year 2020-21 and continued work on a new public safety training facility totaling $7.2 million. There were also other various infrastructure and system improvement projects for parks, streets and water and wastewater infrastructure including work on Queen Creek road adding $10 million to construction in progress on its own. 23 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2020 and 2019: Governmental Activities 2020 Land $ Infrastructure $ 2020 92,482,104 $ Total (Primary Govt.) 2019 51,669,315 $ 2020 46,148,899 $ 2019 144,197,832 $ 138,631,003 — — 198,852 230,828 198,852 230,828 336,308,826 360,459,636 — — 336,308,826 360,459,636 System improvements Buildings and improvements 2019 92,528,517 Land improvements Business-type Activities — — 665,926,957 693,613,670 665,926,957 693,613,670 189,978,030 197,745,342 8,931,001 9,483,052 198,909,031 207,228,394 23,332,690 27,096,772 3,218,082 4,181,698 26,550,772 31,278,470 113,530,548 76,354,667 57,565,710 52,537,318 171,096,258 128,891,985 806,195,465 $ 1,543,188,528 $ 1,560,333,986 Vehicles, machinery and equipment Construction in progress Total $ 755,678,611 $ 754,138,521 $ 787,509,917 $ Additional information on the City’s capital assets can be found in Note 4 of the financial statements. Long-term debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $535.4 million in long-term debt outstanding with $42.2 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, 2020 and 2019. Governmental Business-type Total Activities Activities (Primary Govt.) 2020 2019 $ 215,939,000 $ 205,764,000 Revenue bonds — 2,050,000 2,340,000 4,685,000 2,340,000 6,735,000 Excise tax revenue obligations — — 228,985,000 222,575,000 228,985,000 222,575,000 Special assessment bonds 1,830,000 2,395,000 — — 1,830,000 2,395,000 Issuance premiums 19,789,672 19,141,899 25,623,807 26,080,737 45,413,479 45,222,636 $ 237,558,672 $ 229,350,899 $ 343,209,807 $ 349,241,737 $ 580,768,479 $ 578,592,636 7,258,294 6,718,226 — — 7,258,294 6,718,226 — — 4,340,000 4,340,000 4,340,000 4,340,000 Compensated absences 13,811,004 10,981,265 1,388,807 1,168,263 15,199,811 12,149,528 Net pension liability 275,257,904 265,163,827 18,637,376 19,007,535 293,895,280 284,171,362 Post employment benefits 47,361,614 46,161,607 5,751,113 5,590,249 53,112,727 51,751,856 Total long term liabilities $ 581,247,488 $ 558,375,824 $ 373,327,103 $ 379,347,784 $ 954,574,591 $ 937,723,608 General obligation bonds Total bonds & obligations payable Claims payable Landfill closure/post closure 2020 $ 2019 86,261,000 $ 95,901,000 2020 2019 $ 302,200,000 $ 301,665,000 The City of Chandler’s total long term liabilities increased by $16.9 million during the current fiscal year, due mainly to the issuance of 2019 General Obligation bonds and ETRO debt. The City reported an increase in pension liability of $9.7 million, post employment benefits of $1.4 million and principal repayments of $41.4 million. 24 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 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 $861.7 million. The City has $304.0 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 $258.5 million. The City has $9.8 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 (2020-21) required the combined efforts of citizens, the City Council, Executive Leadership team, and staff members throughout the organization. The City’s overall budget is very different than anticipated at the start the budget process, as the impacts of the COVID-19 pandemic were not foreseen in the initial financial projections. With considerable thought and measured changes, next year’s budget contains a variety of reductions to revenues and expenditures to help mitigate possible financial impacts of the pandemic while still maintaining service levels and quality infrastructure in the most cost effective way. This year again included diligent monitoring of legislative bills that could impact our ongoing revenues, as well as focused review of expenditure impacts that could potentially cause higher costs if not contained. This included the Public Safety Personnel Retirement System (PSPRS) rates and its unfunded liability, minimum wage increases, retirement vacancies causing overtime in public safety, additional staff or contract needs, workers’ compensation self-insurance claims, fleet and equipment sustainability, aging infrastructure, and addressing various capital needs under a higher construction cost environment. Monitoring the impacts of the COVID-19 pandemic both internal and external became a new focus, with quarterly financial updates to Mayor and Council and reduced spending through expenditure measures put in place beginning in 2019-20 and continuing into 2020-21. Although general economic conditions are anticipated to show some recovery during the budget year, the City is operating in a more constrained financial environment and continues to look for efficiencies to manage expenditure growth. The budget increased from $927 million in 2019-20 to $931 million (an increase of 0.46 percent) in FY 2020-21, due mostly to grant funding received at the end of FY 2019-20 through AZCARES which added $29.9 million in appropriation to the current year’s budget. Prior to the announcement of this additional grant funding and the subsequent addition of appropriation, the budget showed a reduction of 2.8 percent or almost $26 million. Even with this addition of appropriation, the total operating budget is decreasing 3.9 percent, while the total capital budget is increasing by 2.9 percent as the City continues a healthy capital improvement program to ensure existing infrastructure is well maintained and new facilities are planned when growth or need dictates. With a 7.71 percent increase in Limited Property Values (including new growth), the City Council chose to reduce the primary property tax rate from $0.2581 to $0.2501, and keep the secondary property tax rate at $0.87 per $100 of assessed valuation. This planned rate reduction will help minimize the impact of higher values on property owner’s tax payment. 25 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2020 The 2020-21 Budget does not include any anticipated bond sales, however, refunding opportunities for outstanding bonds are planned in 2021, as well as a potential bond election as the ongoing focus on ensuring strong debt management continues. 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. Chandler continues maintaining and adhering to strong financial policies, has updated the Pension Funding Policy to ensure ongoing focus on managing pension costs, and remains in a solid financial position to continue its tradition of strong fiscal management as reflected by maintaining AAA bond ratings with all three rating agencies. 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. 26 BASIC FINANCIAL STATEMENTS 27 City of Chandler Statement of Net Position June 30, 2020 ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Privilege license tax receivable Property taxes receivable Due from other governments Inventories Prepaid items Accrued interest receivable Special assessments receivable Notes receivable Other receivables Total current assets Long-term assets: Cash and investments - restricted Notes receivable Investment in joint venture 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 Governmental Activities $ Total Primary Government Business-Type Activities 457,490,792 — 1,907,789 14,859,600 498,552 32,941,619 979,664 5,732 1,406,636 1,661,634 448,503 1,341,582 513,542,103 $ 272,131,400 — 20,272,145 — — 65,242 108,126 — 778,655 — — 1,743,263 295,098,831 $ 729,622,192 — 22,179,934 14,859,600 498,552 33,006,861 1,087,790 5,732 2,185,291 1,661,634 448,503 3,084,845 808,640,934 Component Units Chandler Industrial Chandler Development Cultural Authority Foundation $ — 912,762 2,000 — — — — — — — — — 914,762 $ — 2,673,727 451 — — — — 66,565 8,658 — — — 2,749,401 — — — — 154,750 78,605,999 — 154,750 78,605,999 — — — 1,415,008 — — 206,059,065 549,619,546 755,678,611 755,678,611 1,269,220,714 109,235,025 678,274,892 787,509,917 866,270,666 1,161,369,497 315,294,090 1,227,894,438 1,543,188,528 1,621,949,277 2,430,590,211 — — — — 914,762 — 20,895 20,895 1,435,903 4,185,304 84,517,407 8,616,887 93,134,294 2,818,548 6,624,761 9,443,309 87,335,955 15,241,648 102,577,603 — — — — — — 28 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 $ 8,419,327 5,106,668 4,839,776 4,334,789 380,401 — 2,532,069 23,600,684 — 6,682,493 55,896,207 3,403,500 579,728 4,412,137 6,665,888 — 584,999 254,620 23,540,352 94,446 — 39,535,670 11,822,827 5,686,396 9,251,913 11,000,677 380,401 584,999 2,786,689 47,141,036 94,446 6,682,493 95,431,877 — — — — — — — — — — — 11,278,935 213,957,988 275,257,904 47,361,614 — 575,801 548,432,242 604,328,449 1,134,187 319,669,455 18,637,376 5,751,113 4,245,554 — 349,437,685 388,973,355 12,413,122 533,627,443 293,895,280 53,112,727 4,245,554 575,801 897,869,927 993,301,804 — — — — — — — — 34,663 — — — 378,043 — — — — — 412,706 — — — — — — — — 412,706 27,331,136 3,754,051 31,085,187 — — 547,511,826 477,329,239 1,024,841,065 — 20,895 122,516,563 17,037,460 45,236,846 545,715 4,792,337 1,710,608 — 191,839,529 (8,655,932) 730,695,423 $ — — — — 33,750,526 — — 33,750,526 267,005,635 778,085,400 122,516,563 17,037,460 45,236,846 545,715 38,542,863 1,710,608 — 225,590,055 258,349,703 1,508,780,823 — — — — — — — — 914,762 914,762 — — — — — 1,415,008 — 1,415,008 2,336,695 3,772,598 See accompanying Notes to the Financial Statements. 29 $ $ $ City of Chandler Statement of Activities For the year ended June 30, 2020 Program Revenues Function/Programs Charges for Services Expenses Operating Capital Grants and Grants and Contributions Contributions Total 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 $138,850,297 $ 43,203,865 109,544,169 6,512,002 59,777,330 16,420,652 38,195,563 5,623,796 6,885,184 — 353,252,543 71,760,315 396,153 — 18,318,304 — — 18,714,457 $ 45,234,540 34,892,400 35,412,554 5,987,463 — 121,526,957 60,330,758 54,722,296 — 66,788,084 61,531,949 — 16,522,728 16,757,829 — 2,382,288 880,194 — 8,710,570 1,188,570 7,137,950 154,734,428 135,080,838 7,137,950 $507,986,971 $206,841,153 $ 38,190,135 6,128,036 8,061,980 — — — 14,190,016 $ 32,904,473 60,850,332 69,593,929 16,757,829 880,194 8,326,520 156,408,804 $277,935,761 $ $ $ $ 153,865 2,320,623 2,474,488 $ $ 101,039 2,210,494 2,311,533 $ $ $ 1,634,522 28,380,398 673,598 363,667 — 31,052,185 — 364,923 364,923 $ $ — — — General revenues and transfers: General revenues: Property taxes, levied for general purposes Sales taxes Highway user taxes Other 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 Net position - end of year See accompanying Notes to the Financial Statements. 30 $ 101,039 2,575,417 2,676,456 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Activities $ $ (93,615,757) $ (74,651,769) (24,364,776) (32,208,100) (6,885,184) (231,725,586) Business-Type Activities — — — — — — Component Units Chandler Industrial Chandler Development Cultural Authority Foundation Total $ (93,615,757) $ (74,651,769) (24,364,776) (32,208,100) (6,885,184) (231,725,586) — — — — — — $ — — — — — — — — — — — — (231,725,586) 519,574 2,805,845 235,101 (1,502,094) (384,050) 1,674,376 1,674,376 519,574 2,805,845 235,101 (1,502,094) (384,050) 1,674,376 (230,051,210) — — — — — — — — — — — — — — — — — — — — — — — (52,826) — (52,826) — 254,794 254,794 — 15,521 — — — — 9,974,135 2,962,466 891,991 13,844,113 15,518,489 762,566,911 778,085,400 34,419,182 140,660,439 16,996,911 1,153,237 3,441,225 70,769,943 26,925,430 5,047,486 — 299,413,853 69,362,643 1,439,418,180 1,508,780,823 — — — — — — 23,148 — — 23,148 (29,678) 944,440 914,762 $ — — — — — — 108,595 — — 108,595 363,389 3,409,209 3,772,598 34,419,182 140,644,918 16,996,911 1,153,237 3,441,225 70,769,943 16,951,295 2,085,020 (891,991) 285,569,740 53,844,154 676,851,269 730,695,423 $ $ $ 31 City of Chandler Balance Sheet Governmental Funds June 30, 2020 Major Funds 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 Prepaid Items Accrued interest receivable Special assessments receivable Notes receivable Other receivables Total assets 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 Streets Capital General Obligation Bonds Other Governmental General Projects Debt Service Funds Total $188,160,813 1,804,458 14,859,600 120,569 9,735,859 191,438 29,208,225 979,664 5,732 637,689 — — 1,341,582 $247,045,629 $ 82,426,030 — — — — — 130,440 — — 207,870 — — — $ 82,764,340 $ 29,617,291 — — 377,983 — — — — — 55,880 — — — $ 30,051,154 $ 105,100,517 23,975 — — — — 3,602,954 — — 310,774 1,661,634 448,503 — $ 111,148,357 $ 405,304,651 1,828,433 14,859,600 498,552 9,735,859 191,438 32,941,619 979,664 5,732 1,212,213 1,661,634 448,503 1,341,582 $ 471,009,480 $ $ $ $ $ 4,292,711 4,905,710 4,478,712 — — — 362,610 — 14,039,743 Deferred inflows of resources Unavailable revenues - special assessments Unavailable revenues - property taxes Total deferred inflows of resources Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows and fund balances 1,055,330 10,178 — — — — — — 1,065,508 — — — 4,298,189 — — — 20,775,000 25,073,189 2,981,414 139,058 361,064 36,600 191,438 9,735,859 2,186 — 13,447,619 8,329,455 5,054,946 4,839,776 4,334,789 191,438 9,735,859 364,796 20,775,000 53,626,059 — 95,164 95,164 — — — — 284,772 284,772 1,661,634 — 1,661,634 1,661,634 379,936 2,041,570 985,396 1,710,608 139,326,860 90,887,858 — 81,698,832 — — — 4,693,193 — — — 103,736,896 — (7,697,792) 985,396 191,839,529 139,326,860 83,190,066 232,910,722 81,698,832 4,693,193 96,039,104 415,341,851 $247,045,629 $ 82,764,340 $ 30,051,154 $ 111,148,357 $ 471,009,480 See accompanying Notes to the Financial Statements. 32 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position June 30, 2020 Total Fund Balances - Total Governmental Funds $ 415,341,851 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 Depreciable buildings, property, equipment and infrastructure, net Total capital assets $ 206,059,065 549,619,546 755,678,611 Certain revenues are not available to pay for current period expenditures and, therefore, are unavailable in the funds. 2,041,564 Deferred amounts on refundings are not financial resources and, therefore, are not reported in the funds. 8,616,887 Deferred outflows related to pensions and OPEB are not financial resources and, therefore, are not reported in the funds. 84,517,407 Deferred inflows related to pensions and OPEB represent a future acquisition of net position that is not reported in the funds. (27,331,136) 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 funds are included in governmental activities in the Government-wide Statement of Net Position. 44,945,874 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 (216,783,672) Net pension liability OPEB liability Compensated absences Total long-term liabilities Net Position of Governmental Activities (275,257,904) (47,361,614) (13,712,445) (553,115,635) $ 730,695,423 See accompanying Notes to the Financial Statements. 33 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2020 Major Funds General General Obligation Other Streets Bonds Governmental Capital Projects Debt Service Funds Total REVENUES: Property taxes $ Sales taxes 7,851,085 $ — $ 26,483,131 $ — $ 34,334,216 140,644,918 — — — 140,644,918 Highway user taxes — — — 16,996,911 16,996,911 Regional transportation taxes — 1,153,237 — — 1,153,237 Franchise fees 3,441,225 — — — 3,441,225 State shared 70,769,943 — — — 70,769,943 Grants and entitlements 27,468,966 — — 22,250,449 49,719,415 System development fees — 5,576,240 — 3,154,733 8,730,973 Special assessments — — — 508,485 508,485 Licenses and permits 7,760,403 — — — 7,760,403 Charges for services 19,886,072 — — 469,630 20,355,702 Fines and forfeitures 3,321,253 — — 2,250,069 5,571,322 Rentals 213,345 — — — 213,345 Contributions 200,000 — — — 200,000 Interest revenue 7,289,643 3,000,534 652,639 4,074,536 15,017,352 Miscellaneous 360,246 467,441 — 644,290 1,471,977 289,207,099 10,197,452 27,135,770 50,349,103 376,889,424 General government 74,898,568 — — 4,725,606 79,624,174 Public safety 112,062,422 — — 1,104,178 113,166,600 Transportation and development 20,129,549 747,983 — 9,240,203 30,117,735 Community services 27,261,577 — — 1,083,088 28,344,665 5,034,358 20,118,282 — 51,871,773 77,024,413 21,340,000 Total revenues EXPENDITURES: Current: Capital outlay Debt service: Principal — — 20,775,000 565,000 Bond issuance costs — 182,821 — 136,810 319,631 Interest and fiscal charges — — 7,988,820 84,500 8,073,320 239,386,474 21,049,086 28,763,820 68,811,158 358,010,538 49,820,625 (10,851,634) (1,628,050) (18,462,055) 18,878,886 Capital contributions — — — 396,153 396,153 Proceeds from disposal of capital assets — — — 396,924 396,924 Bond premium — 1,674,610 — 1,253,294 2,927,904 30,400,000 Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Face amount of bonds issued — 17,387,233 — 13,012,767 Transfers in 11,835,859 — 1,734,681 25,711,756 39,282,296 Transfers out (29,041,742) (200,000) — (13,546,522) (42,788,264) (17,205,883) 18,861,843 1,734,681 27,224,372 30,615,013 32,614,742 8,010,209 106,631 8,762,317 49,493,899 Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES: Beginning of year End of year 200,295,980 $ 232,910,722 73,688,623 $ 81,698,832 See accompanying Notes to the Financial Statements. 34 4,586,562 $ 4,693,193 87,276,787 $ 96,039,104 365,847,952 $ 415,341,851 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, 2020 Net Change in Fund Balances - Total Governmental Funds Governmental activities in the Statement of Activities were reported differently because: $49,493,899 Governmental funds report capital outlay as expenditures. However, in the Government-wide 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. 54,873,794 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. (54,227,540) 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 Face amount of bonds issued Bond premium Pension related items Other post employment benefits obligation $21,340,000 (30,400,000) (2,927,904) 12,686,454 430,159 1,128,709 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. Certain revenues in the Statement of Activities do not provide current financial resources and therefore are not reported as revenues in the governmental funds. 1,188,136 (466,000) 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. (2,809,383) 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. (1,851,645) 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. 1,359,830 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. 5,154,354 Change in Net Position of Governmental Activities $53,844,154 See accompanying Notes to the Financial Statements. 35 City of Chandler Statement of Net Position Proprietary Funds June 30, 2020 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments Accounts receivable $ 97,659,558 $ 146,109,413 $ 28,362,429 $ 272,131,400 $ 52,186,141 9,020,257 8,820,264 2,431,624 20,272,145 79,356 — — 65,242 65,242 — Inventories 100,636 — 7,490 108,126 — Accrued interest receivable 261,149 420,954 96,552 778,655 194,423 Due from other governments Other receivables — 1,743,230 33 1,743,263 — 107,041,600 157,093,861 30,963,370 295,098,831 52,459,920 — — 154,750 154,750 — Advances to other funds 3,900,000 — — 3,900,000 — Investment in joint venture 78,605,999 — — 78,605,999 — Non-depreciable 56,109,587 25,932,775 27,192,663 109,235,025 — Depreciable, net 191,607,016 458,241,406 28,426,470 678,274,892 — Total capital assets 247,716,603 484,174,181 55,619,133 787,509,917 — Total long-term assets 330,222,602 484,174,181 55,773,883 870,170,666 — Total assets 437,264,202 641,268,042 86,737,253 1,165,269,497 52,459,920 Deferred outflows of OPEB and pension plan items 1,400,706 700,328 717,514 2,818,548 — Deferred amounts on refundings 3,491,933 3,132,828 — 6,624,761 — 4,892,639 3,833,156 717,514 9,443,309 — Total current assets Long-term assets: Notes receivable Capital assets: DEFERRED OUTFLOWS OF RESOURCES Total deferred outflow of resources 36 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 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 Unrestricted Total net position $ 1,299,010 265,076 3,621,543 2,588,347 — 214,346 132,589 11,021,050 — — 19,141,961 939,641 207,329 167,436 4,077,541 — 200,056 82,368 12,519,302 — — 18,193,673 1,164,849 107,323 623,158 — — 170,597 39,663 — 94,446 — 2,200,036 3,403,500 579,728 4,412,137 6,665,888 — 584,999 254,620 23,540,352 94,446 — 39,535,670 89,866 51,722 — — 15,605 — 18,070 — — 6,682,493 6,857,756 590,618 — 121,349,537 9,424,709 2,649,276 — — 134,014,140 153,156,101 366,903 3,900,000 198,319,918 4,949,091 2,034,163 — — 209,570,075 227,763,748 176,666 — — 4,263,576 1,067,674 4,245,554 — 9,753,470 11,953,506 1,134,187 3,900,000 319,669,455 18,637,376 5,751,113 4,245,554 — 353,337,685 392,873,355 80,489 — — — — — 575,801 656,290 7,514,046 1,796,607 1,119,630 837,814 3,754,051 — 132,610,984 289,099,122 55,619,133 477,329,239 — 14,798,141 139,795,008 287,204,133 18,952,385 108,166,313 416,217,820 — 19,044,314 74,663,447 33,750,526 267,005,635 778,085,400 — 44,945,874 44,945,874 $ See accompanying Notes to the Financial Statements. 37 $ $ $ 38 City of Chandler Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the year ended June 30, 2020 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees 61,531,949 $ 17,638,173 $ 133,892,418 Grants and entitlements $ — — 7,137,950 7,137,950 — Rentals — — 1,188,420 1,188,420 — Sales taxes — — 15,521 15,521 — Self insurance premiums — — — — 28,550,029 Miscellaneous 54,722,296 $ $ 97,911 50,009 47,643 123,888 221,540 613,042 54,772,305 61,579,592 26,103,952 142,455,849 29,260,982 General and administrative 3,470,499 3,040,584 1,135,590 7,646,673 551 Personnel services 9,863,441 7,750,353 4,188,574 21,802,368 2,151,502 Total operating revenues OPERATING EXPENSES: Contractual services 7,853,958 5,386,720 13,279,625 26,520,303 2,420,851 Commodities 12,368,609 12,915,208 1,833,819 27,117,636 2,094,268 Claims expense — — — — 22,803,678 Housing assistance payments — — 4,914,609 4,914,609 — Depreciation and amortization expense 17,194,951 29,126,514 2,246,369 48,567,834 — Total operating expenses 50,751,458 58,219,379 27,598,586 136,569,423 29,470,850 4,020,847 3,360,213 (1,494,634) 5,886,426 (209,868) OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): Interest revenue 3,356,943 5,415,367 1,201,825 9,974,135 1,933,950 Interest and fiscal charges (5,430,744) (8,442,201) — (13,872,945) — Accretion of bond premiums 1,258,771 1,482,155 — 2,740,926 — Bond issuance costs (129,374) (81,504) — (210,878) — Gain (loss) on disposal of capital assets (63,345) (45,000) (17,000) (125,345) — (3,955,837) — — (3,955,837) — (4,963,586) (1,671,183) 1,184,825 (5,449,944) 1,933,950 (942,739) 1,689,030 (309,809) 436,482 1,724,082 6,128,036 8,061,980 816,295 15,006,311 — — 6,500 739,474 745,974 3,450,000 Equity interest in joint venture Total Nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in Transfers out (326,584) (219,929) (123,765) (670,278) (19,728) Total capital contributions and transfers 5,801,452 7,848,551 1,432,004 15,082,007 3,430,272 CHANGE IN NET POSITION 4,858,713 9,537,581 1,122,195 15,518,489 5,154,354 NET POSITION: Beginning of year End of year 282,345,420 406,680,239 73,541,252 762,566,911 $ 287,204,133 $ 416,217,820 $ 74,663,447 $ 778,085,400 See accompanying Notes to the Financial Statements. 39 39,791,520 $ 44,945,874 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2020 Other Proprietary Funds Major Funds Water Wastewater CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out 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 of excise tax bonds Principal paid on bond maturities Interest paid on bonds Cash received from capital contributions Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year $ $ Governmental Activities: Internal Service Fund Total 55,244,501 $ 60,702,149 $ 19,008,248 $ 134,954,898 $ — — 7,165,403 7,165,403 (24,251,682) (21,206,180) (21,105,056) (66,562,918) (9,655,944) (7,605,976) (4,132,472) (21,394,392) 21,336,875 31,889,993 936,123 54,162,991 29,262,072 — (26,753,734) (2,110,084) 398,254 — (326,584) (326,584) 6,500 (219,929) (213,429) 739,474 (123,765) 615,709 745,974 (670,278) 75,696 3,450,000 (19,728) 3,430,272 (20,946,221) 7,845,626 (7,462,021) (5,363,806) 5,410,398 (20,516,024) (7,415,391) 4,943,496 (7,910,213) (8,483,584) 7,188,125 (11,677,567) (258,979) — — — — (258,979) (28,620,591) 12,789,122 (15,372,234) (13,847,390) 12,598,523 (32,452,570) — — — — — — 3,442,818 3,442,818 3,937,085 5,464,095 5,464,095 25,463,092 1,222,911 1,222,911 2,515,764 10,129,824 10,129,824 31,915,941 1,944,106 1,944,106 5,772,632 93,722,473 97,659,558 120,646,321 $ 146,109,413 25,846,665 28,362,429 240,215,459 $ 272,131,400 40 $ $ 46,413,509 52,186,141 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Changes in assets, liabilities and deferred items: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in claims payable Increase (decrease) in unearned revenue Increase (decrease) in customer advances Increase (decrease) in net pension items Increase (decrease) in OPEB liability Total adjustments Net cash provided (used) by operating activities 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 $ $ $ 4,020,847 $ 3,360,213 $ (1,494,634) $ 5,886,426 $ (209,868) 17,194,951 29,126,514 2,246,369 48,567,834 199,569 (5,345) — (553,271) 213,454 245,169 — — 27,458 (77,605) 71,648 17,316,028 21,336,875 $ (796,629) — — 136,332 149,023 (114,296) — — 33,482 (61,905) 57,259 28,529,780 31,889,993 $ 71,996 22,681 38,570 35,906 59,116 1,680 — — (3,977) (73,541) 31,957 2,430,757 936,123 $ (525,064) 17,336 38,570 (381,033) 421,593 132,553 — — 56,963 (213,051) 160,864 48,276,565 54,162,991 $ (2,256) — — 25,546 41,418 — 540,068 3,346 — — — 608,122 398,254 717,638 $ — (63,345) 1,258,771 873,855 $ — (45,000) 1,482,155 — $ 816,295 (17,000) — 1,591,493 $ 816,295 (125,345) 2,740,926 — — — — See accompanying Notes to the Financial Statements. 41 — CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 columns in the basic financial statements include the financial data of the Chandler Industrial Development Authority (Authority) and the Chandler Cultural Foundation (Foundation). 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. 42 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued The 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. 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. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments where the amounts are reasonably equivalent in value to the interfund services provided, and other charges. Elimination of these charges would distort the direct costs and program revenues reported. 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 financial statements. 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. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued 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. 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. Streets Capital Projects Fund - This fund is used to account for the acquisition, construction, reconstruction, improvement, and and renovation of street 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. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued Additionally, the City reports the following fund type: 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. 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. 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. 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 $9,109,210 were transferred from the contingency reserves within the general, special revenue, capital projects and internal service 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 $8,299,618, for the streets capital projects fund are $10,207,692, for water enterprise fund are $6,185,632, for wastewater enterprise fund are $8,414,896, and for non-major governmental funds are $24,123,589. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued 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. 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 uncollectible accounts. All other funds’ trade receivables are shown net of an allowance for uncollectible accounts. Trade accounts receivable in excess of 90 days comprise the trade accounts receivable allowance for uncollectible accounts. Amounts due from other governments include receivables from other governmental entities including, but not limited to federal, state, or county entities. At year-end the receivables included $29.3 million due from federal government for AZCares and other grants and $3.4 million from the State of Arizona for shared revenues and grants. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued 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 $10,000 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. 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 Years Buildings 20-40 Building improvements 20 Infrastructure 12-50 Machinery and equipment 5-15 System improvements 25 Vehicles 4-7 J. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position, and deferred amounts related to pension and OPEB. The deferred charge on refunding resulted from the difference between the carrying value of the refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred amounts related to pension and OPEB relate differences between estimated and actual investment earnings, changes in actuarial assumptions and other pension and OPEB related changes. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued In addition to liabilities, the statement of financial position includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for reporting in this category. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. In the government-wide financial statement the City reports deferred amounts related to pension and OPEB. K. 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. L. 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. 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. 48 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 1 - Summary of Significant Accounting Policies, continued M. 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). N. 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). O. 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. P. 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. Q. 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. R. 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 non-operating revenues/expenses in proprietary funds. S. 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. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 and the Chandler Health Care Benefits 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 $45,765, the carrying amount of the City deposits was $11,367,517, and the bank balance was $11,591,962. Of the bank balance, $250,000 was covered by federal depository insurance and $11,341,962 was covered by collateral held in the pledging bank’s trust department in the City’s name. In addition, at June 30, 2020, the City had $121,187,477 of restricted cash held by paying agent consisting of $52,645,677 in July 1, 2020 debt service payments, $27,009,098 in unspent bond proceeds from the 2017 & 2019 Excise Tax Revenue Obligation issuances, and $41,532,702 from the 2017 & 2019 General Obligation Bond issuances. 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 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 2 - Cash and Investments, continued At June 30, 2020, the City had the following investments and maturities: Investment Maturities (in Years) Concentration of Credit Risk % 38.27 % S&P/Moody/ Fitch Credit Rating Category Level 1 Fair Value $ 228,568,499 Less than 1 Year $ 13,784,400 Level 2 34,292,288 6,307,093 27,985,195 5.74 AA+/Aaa/AAA Level 2 Level 2 Level 2 36,704,916 21,874,710 22,977,627 4,000,000 7,000,000 60,824 32,704,916 14,874,710 22,916,803 6.15 3.66 3.85 AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA African Development Bank Asian Development Bank Inter-American Development Bank International Finance Corp Intl Bank of Reconstruction & Dev Corporate Bonds: Adobe Inc Corp Amazon.com Inc Corp American Honda Finance Apple Inc Corp Bank of America Corp Bank of New York Mellon Corp Berkshire Hathaway Branch Banking & Trust Burlingtn North Santa Fe Corp Caterpillar Finl Service Charles Schwab Corp Cisco Systems Inc Corp Citibank Na Level 2 Level 2 Level 2 Level 2 Level 2 1,805,040 121,300 152,802 5,766,515 3,648,593 1,805,040 121,300 152,802 5,766,515 — — — — — 3,648,593 0.30 0.02 0.03 0.97 0.61 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 2 725,115 4,281,836 2,760,087 7,990,562 2,337,267 7,780,846 3,195,868 1,164,777 787,157 6,399,530 4,092,351 3,104,025 4,016,347 — — — — 2,337,267 3,649,004 3,195,868 1,164,777 — 1,784,580 4,092,351 — 926,881 725,115 4,281,836 2,760,087 7,990,562 — 4,131,842 — — 787,157 4,614,950 — 3,104,025 3,089,466 0.12 0.72 0.46 1.34 0.39 1.30 0.54 0.20 0.13 1.07 0.69 0.52 0.67 A/A2 AA-/A2 A-/A3 AA+/Aa1 A-/A2 A/A1/AAAA/Aa2/A+ A-/A3 A+/A3 A/A3/A A/A2/A AA-/A1 A+/Aa3/A+ Exxon Mobil Corp Hershey Company Intercontinental Exchange Inc John Deere Capital JP Morgan Chase & Co Corp Massmutual Global Funding Mastercard Inc Corp Microsoft Corp Northern Trust Oracle Corp Paccar Financial Corp PNC Bank Na Toyota Motor Credit Corp United Parcel Service US Bank Na US Bank Na Cincinnati USAA Capital Corp Wal Mart Stores Inc Global 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 4,622,588 270,048 4,154,280 4,714,697 5,865,860 2,330,644 3,315,114 307,039 4,078,962 2,532,133 4,564,042 4,529,881 4,698,862 2,758,454 3,242,782 3,209,636 1,684,346 2,295,067 364,044 — — — 2,176,804 2,330,644 — 307,039 4,258,544 270,048 4,154,280 4,714,697 3,689,056 — 3,315,114 — 4,078,962 2,532,133 3,439,439 1,499,478 2,150,471 2,758,454 — 3,209,636 — 2,295,067 0.77 0.05 0.70 0.79 0.98 0.39 0.56 0.05 0.68 0.42 0.76 0.76 0.79 0.46 0.54 0.54 0.28 0.38 AA/Aa1 A/A1 A/A2/NA A/A2/A A-/A2/AAAA+/Aa3/AA+ A+/A1 AAA/Aaa A+/A2/AAA/A3 A+/A1 A/A2/A+ A+/A1/A+ A-/A2 AA-/A1/AAA+/A1 AA/Aa1/NA AA/Aa2 Investment Type U.S. Treasuries U.S. Agencies: Fannie Mae Federal Farm Credit Banks Funding Corp Federal Home Loan Bank Freddie Mac Supra-National Agency: 51 — 1,124,603 3,030,403 2,548,391 — 3,242,782 — 1,684,346 — 1-5 Years $ 214,784,099 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 2 - Cash and Investments, continued Investment Maturities (in Years) 1-5 Years 173,958 234,259 Concentration of Credit Risk % 0.46 0.04 S&P/Moody/ Fitch Credit Rating A-/A2 A-/A2 Investment Type Walt Disney Company Wells Fargo & Company Corp Municipal Bond: AZ Tran Board TXBL REV Bonds Asset Backed: Ally Abs 2017-2 A3 Allya 2017-5 A3 Allya 2019-3 A3 Amxca 2019-2 A Bacct 2018-2 A Category Level 2 Level 2 Fair Value 2,740,911 234,259 Less than 1 Year 2,566,953 — Level 2 1,604,959 — 1,604,959 0.27 AA+/Aa1 Level 2 Level 2 Level 2 Level 2 Level 2 24,015 466,538 2,552,433 2,061,353 3,152,987 — — — — — 24,015 466,538 2,552,433 2,061,353 3,152,987 0.00 0.08 0.43 0.35 0.53 NR/Aaa AAA/Aaa AAA/Aaa/NA NA/Aaa/AAA AAA/Aaa/NA Bmwot 2019-A A3 Carmx 2018-4 A3 Carmx 2019-2 A3 Carmx 2020-1 A3 Chait 2014-2 A Comet 2019-2 A Copar 2019-1 A3 Fordo 2019-A A3 Gmcar 2020-1 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 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 3,378,385 5,567,679 897,089 879,699 2,520,333 2,055,623 4,115,123 2,994,945 1,611,787 344,433 688,392 1,405,964 607,940 70,237 338,966 49,646 444,471 1,076,256 70,177 — — — — 2,520,333 — — — — — — — — — — — — — — 3,378,385 5,567,679 897,089 879,699 — 2,055,623 4,115,123 2,994,945 1,611,787 344,433 688,392 1,405,964 607,940 70,237 338,966 49,646 444,471 1,076,256 70,177 0.57 0.93 0.15 0.15 0.42 0.34 0.69 0.50 0.27 0.06 0.12 0.24 0.10 0.01 0.06 0.01 0.07 0.18 0.01 AAA/NA/AAA AAA/NA/AAA AAA/NR AAA/NR AAA/NR/AAA AAA/NA/AAA AAA/Aaa/AAA NA/Aaa/AAA AAA/Aaa/NA NR/Aaa AAA/NR NR/Aaa AAA/Aaa NR/Aaa AAA/Aaa AAA/NR AAA/Aaa AAA/NR NR/Aaa 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 Taot 2020-A A3 Usaot 2019-1 A3 Woart 2019-B A3 Money Market - Certificates of Deposit Money Market Fund Cash and cash equivalents 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 2,126,924 366,023 1,241,021 1,653,340 1,502,539 604,762 667,317 1,826,460 3,047,647 5,547,921 34,090,205 38,658,611 11,570 — — — — — — — — — — 21,713,879 38,658,611 11,570 2,126,924 366,023 1,241,021 1,653,340 1,502,539 604,762 667,317 1,826,460 3,047,647 5,547,921 12,376,326 — — 0.36 0.06 0.21 0.28 0.25 0.10 0.11 0.31 0.51 0.93 5.71 6.48 0.00 AAA/Aaa NR/Aaa AAA/Aaa NR/Aaa NR/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa/NA AAA/NA/AAA A-1/P-1 AAAm/NR AAA/Aaa/AAA $ 597,021,433 $ 138,429,104 $ 458,592,329 100.00 % Total 52 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 2 - Cash and Investments, concluded 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, volatility, prepayment speeds, loss severity, credit risks and default rates) or other market corroborated inputs. 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 A-, 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 AAA, A- and AAAm by Standard & Poor’s, respectively, as of June 30, 2020. Custodial Credit Risk - Investments. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. To limit its exposure, the City's investment policy requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the City's agent separate from where the investment was purchased or by the trust department of the bank where purchased, in the City's name. 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, U.S. Treasuries and 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. 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. 53 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 3 - Property Taxes, concluded 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 2019-20, current property tax collections were $33,597,189 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 2020 are not available for fiscal year 2019-20; accordingly, such taxes will not be recognized as revenue until fiscal year 2020-21. NOTE 4 - Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance Governmental Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Balance June 30, 2019 $ 92,482,104 Additions $ 46,413 Retirements $ — Transfers $ June 30, 2020 — — — $ 92,528,517 76,354,667 168,836,771 69,855,058 69,901,471 (32,679,177) (32,679,177) Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment Total capital assets being depreciated 739,598,534 399,450,754 99,552,800 1,238,602,088 3,549,111 10,620,852 4,842,102 19,012,065 — — (7,500,646) (7,500,646) — (62,483) 62,483 — 743,147,645 410,009,123 96,956,739 1,250,113,507 Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net (379,138,898) (201,705,412) (72,456,028) (653,300,338) 585,301,750 (27,699,921) (18,340,260) (8,187,359) (54,227,540) (35,215,475) — — 7,033,917 7,033,917 (466,729) — 14,579 (14,579) — — (406,838,819) (220,031,093) (73,624,049) (700,493,961) 549,619,546 Governmental activities capital assets, net $ 754,138,521 $ 54 34,685,996 $ (33,145,906) $ — 113,530,548 206,059,065 $ 755,678,611 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 4 - Capital Assets, continued Construction in progress in the governmental activities capital assets is comprised of the following: Streets Parks and recreation Buildings and related improvements Total Expended to June 30, 2020 $ 45,927,897 8,332,925 59,269,726 $ 113,530,548 Remaining Commitments $ 5,855,153 2,935,433 22,846,494 $ 31,637,080 A summary of changes in capital assets for business-type activities is as follows: Balance Business-Type Activities Balance June 30, 2019 Additions Deletions June 30, 2020 Capital assets, not being depreciated: Land $ Construction in progress Total capital assets not being depreciated 46,148,899 $ 5,520,416 $ — $ 51,669,315 52,537,318 33,016,814 (27,988,422) 57,565,710 98,686,217 38,537,230 (27,988,422) 109,235,025 Capital assets, being depreciated: System improvements 1,371,023,407 18,840,563 — 1,389,863,970 Building and improvements 26,125,514 219,889 — 26,345,403 Vehicles, machinery and equipment 20,267,211 388,525 (430,936) 20,224,800 Land improvements 2,482,034 13,500 — 2,495,534 1,419,898,166 19,462,477 (430,936) 1,438,929,707 System improvements (677,409,737) (46,527,276) — (723,937,013) Buildings and improvements (16,642,462) (771,940) — (17,414,402) Vehicles, machinery and equipment (16,085,513) (1,223,142) 301,937 (17,006,718) Total capital assets being depreciated Less accumulated depreciation for: Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ (2,251,206) (45,476) — (2,296,682) (712,388,918) (48,567,834) 301,937 (760,654,815) 707,509,248 (29,105,357) (128,999) 678,274,892 (28,117,421) $ 787,509,917 806,195,465 $ 9,431,873 $ Construction in progress in the business-type activities capital assets is comprised of the following: Expended to June 30, 2020 Sewer system improvements $ 6,802,835 Water system improvements 50,607,745 Solid waste system improvements 106,468 Airport improvements 48,662 Total $ 57,565,710 55 Remaining Commitments $ 5,536,766 3,053,914 12,092 558,156 $ 9,160,928 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 $ $ $ $ 7,330,320 7,111,380 10,433,252 29,352,588 54,227,540 17,194,951 29,126,514 610,112 1,045,038 591,219 48,567,834 Projects are reported as construction in progress when initially identified. Throughout the life of the project, it may be determined that the project does not meet the requirements for capitalization. Once a project is determined to not meet the requirements for capitalization it is removed from construction in progress. As a result, deletions and transfers out from construction in progress may be more than what is reported as additions and transfers in to depreciable capital assets. 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 $363,577,084 in outstanding general obligation bonds and are payable through July 1, 2035. 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 were approximately 81 percent of total ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $260,586,239. Principal and interest paid for the current year and total ad valorem property taxes were $27,957,760 and $34,334,216 respectively. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2020 were as follows: Outstanding Governmental Activities General Obligation Bonds: $9,925,000 Capital Improvement Bonds, Series 2011A, due in an annual installment of $3,300,000 on 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. $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. $58,740,000 Capital Improvement Bonds, Series 2017, due in annual installments of $3,075,000 to $4,160,000 through 7/1/32; interest at 2.3 percent to 4 percent. $30,400,000 Capital Improvement Bonds, Series 2019, due in annual installments of $1,000,000 to $2,325,000 through 7/1/35; interest at 2.3 percent to 4 percent. Total Governmental Activities General Obligation Bonds June 30, 2020 $ 3,300,000 109,449,000 25,500,000 47,290,000 30,400,000 $ 215,939,000 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds were approximately 25 percent of net water and wastewater system revenues. The total principal and interest remaining to be paid on the business-type activities portion of the general obligation bonds is $102,990,845. Principal and interest paid for the current year and total net water system, wastewater system revenues were $13,364,050 and $53,147,817 respectively. 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 57 Outstanding June 30, 2020 $ 72,711,000 13,550,000 $ 86,261,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued B. Street and Highway Revenue Bonds Street and highway revenue bonds were issued specifically for the purpose of constructing street and highway projects. These bonds were 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 pledged highway user revenues to repay 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 were payable solely from state shared gasoline tax revenues. The total principal and interest was paid off July 1, 2019. Annual principal and interest payments on the bonds were approximately 12 percent of eligible revenues. Principal and interest paid for the current year and street and highway user revenue taxes were $2,089,600 and $16,996,911, respectively. 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 $2,340,000 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 were less than 5 percent of net water and wastewater system revenues.The total principal and interest remaining to be paid on the bonds is $2,386,800. Principal and interest paid for the current year and net water and wastewater system revenues were $2,485,500 and $53,604,873, respectively. Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2020 were as follows: Outstanding June 30, 2020 Business-Type Activities Revenue Bonds: $15,400,000 Water & Sewer Refunding Bonds, Series 2014, due in an annual installment of $2,340,000 on 7/1/20; interest at 4 percent. $ 2,340,000 Total Business-Type Activities Revenue Bonds $ 2,340,000 58 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued 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 were approximately 29% percent of net system revenues. The total principal and interest to be paid on the obligations is $306,035,338. Principal and interest paid for the current year and net water and wastewater system revenues were $15,647,610 and $53,604,873 respectively. Total excise tax revenues during the fiscal year were $225,937,742. Principal and interest payments were less than 7 percent of total excise tax revenues. Outstanding June 30, 2020 Business-Type Activities Excise Tax Revenue Obligations: $15,000,000 Water & Sewer Excise Tax Revenue Obligations, Series 2011, due in annual installments of $835,000 to $905,000 through 7/1/22; interest at 3 percent to 4 percent. $ 2,610,000 $104,500,000 Water & Sewer Excise Tax Revenue Obligations, Series 2013, due in annual installments of $3,100,000 to $12,000,000 through 7/1/33; interest at 4 percent to 5 percent. 97,400,000 $66,660,000 Water & Sewer Excise Tax Revenue Obligations, Series 2015, due in annual installments of $2,635,000 to $5,620,000 through 7/1/35; interest at 3 percent to 5 percent. 61,245,000 $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 $775,000 to $4,045,000 through 7/1/37; interest at 3 percent to 5 percent. 35,220,000 $13,000,000 Water & Sewer Excise Tax Revenue Obligations, Series 2019, due in annual installments of $1,270,000 to $1,765,000 through 7/1/28; interest at 5 percent. 13,000,000 Total Business-Type Activities Excise Tax Revenue Obligations 59 $ 228,985,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued 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, 2020, 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, 2020 were as follows: Outstanding June 30, 2020 Special Assessment Bonds with Governmental Commitment: $7,370,000 Spectrum Improvement District Bonds, due in annual installments of $585,000 to $635,000 through 1/1/23; interest at 4 percent. Total Special Assessment Bonds with Governmental Commitment 60 $ 1,830,000 $ 1,830,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Governmental Activities: Compensated absences Bonds payable: General obligation bonds Revenue bonds Special assessment bonds Issuance premiums Total bonds payable Claims payable Net pension liability OPEB liability Totals Balance June 30, 2019 $ 10,981,265 Additions $ 4,561,840 Balance Reductions June 30, 2020 $ (1,732,101) $ 13,811,004 Due within One Year $ 2,532,069 205,764,000 2,050,000 2,395,000 19,141,899 229,350,899 30,400,001 — — 2,927,905 33,327,906 (20,225,000) (2,050,000) (565,000) (2,280,132) (25,120,132) 215,939,001 — 1,830,000 19,789,672 237,558,673 20,775,000 — 585,000 2,240,684 23,600,684 6,718,226 265,163,827 46,161,607 22,762,653 10,094,077 1,200,007 (22,222,585) — — 7,258,294 275,257,904 47,361,614 6,682,493 — — $ 558,375,824 $ 71,946,483 $ (49,074,818) $ 581,247,489 $ Balance June 30, 2019 $ 1,168,263 Additions $ 394,720 Balance Reductions June 30, 2020 $ (174,176) $ 1,388,807 Due Within One Year $ 254,620 95,901,000 4,685,000 222,575,000 26,080,737 — — 13,000,000 2,283,996 (9,640,000) (2,345,000) (6,590,000) (2,740,926) 86,261,000 2,340,000 228,985,000 25,623,807 9,325,000 2,340,000 9,205,000 2,670,352 Total bonds & obligations payable 349,241,737 15,283,996 (21,315,926) 343,209,807 23,540,352 Net pension liability OPEB liability Landfill closure/post closure Totals 19,007,535 5,590,249 4,340,000 $ 379,347,784 — 160,864 — 15,839,580 (370,159) 18,637,376 — 5,751,113 — 4,340,000 $ (21,860,261) $ 373,327,103 — — 94,446 23,889,418 Business-Type Activities: Compensated absences Bonds & obligations payable: General obligation bonds Revenue bonds Excise tax revenue obligations Issuance premiums $ $ 32,815,246 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. 61 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, continued 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, 2020, the 6 percent debt limitation was $258,505,031, providing a debt margin of $248,732,453 and the 20 percent debt limitation was $861,683,439, providing a debt margin of $557,727,307. 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. 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. Arbitrage Arbitrage is the ability to obtain tax-exempt bond proceeds and invest the funds in higher yielding taxable securities, resulting in a profit. The City monitors compliance with federal arbitrage regulations. Arbitrage liability as of June 30, 2020 is $0. Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for all bonds payable as of June 30, 2020: GOVERNMENTAL ACTIVITIES General Improvement Obligation Districts Interest Principal Years Ended June 30 General Obligation Principal 2021 $ 20,775,000 2022 19,395,000 7,370,030 2023 20,060,000 2024 20,860,000 2025 8,168,382 $ $ 29,601,582 610,000 49,800 27,424,830 6,598,475 635,000 25,400 27,318,875 5,702,900 — — 26,562,900 21,610,000 4,695,275 — — 26,305,275 2026-2030 88,829,000 10,683,378 — — 99,512,378 2031-2035 22,285,000 1,402,237 — — 23,687,237 2036-2040 2,125,000 26,562 — — 2,151,562 $ 215,939,000 $ 44,647,239 148,400 $ 262,564,639 $ 585,000 1,830,000 62 $ Total 73,200 Total $ Improvement Districts Interest $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 5 - Long-Term Liabilities, concluded BUSINESS-TYPE ACTIVITIES Years Ended June 30 2021 General Obligation Principal $ 9,325,000 General Obligation Interest $ 3,439,575 Revenue Principal $ Revenue Interest 2,340,000 $ Excise Tax Principal 46,800 $ 9,205,000 Excise Tax Interest $ 9,394,151 Total $ 33,750,526 2022 9,525,000 3,120,630 — — 10,630,000 8,878,475 32,154,105 2023 9,650,000 2,748,560 — — 11,375,000 8,353,925 32,127,485 2024 9,555,000 2,316,685 — — 11,940,000 7,781,975 31,593,660 2025 9,475,000 1,840,935 — — 12,865,000 7,161,850 31,342,785 2026-2030 38,731,000 3,263,460 — — 73,740,000 25,931,725 141,666,185 2031-2035 — — — — 84,965,000 9,052,100 94,017,100 2036-2040 — — — — 14,265,000 496,137 14,761,137 46,800 $ 228,985,000 77,050,338 $ 411,412,983 Total $ 86,261,000 $ 16,729,845 $ 2,340,000 $ $ 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, 2020: 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, 2020, the City estimates total costs related to landfill closure and postclosure care is $16,016,869 and has recognized that entire amount since the landfill no longer accepts waste. To date, $11,676,869 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. 63 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 7 - Landfill Closure and Postclosure Costs, concluded The estimated total current cost of the landfill closure and postclosure, $16,016,869, 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, 2020. 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, 2019. 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, i.e., due to changes in technology or more rigorous environmental regulations, may need to be covered by additional charges to future taxpayers. 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: System Development Fees Water $ 5,410,398 Wastewater 7,188,125 Solid Waste — Airport — Total $ 12,598,523 Developer Contributions $ 717,638 873,855 — — $ 1,591,493 Government Contributions $ — — 1,557 814,738 $ 816,295 Total 6,128,036 8,061,980 1,557 814,738 $ 15,006,311 $ 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. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 9 - Fund Equity, continued 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. As of June 30, 2020 the constraints placed on fund balance for the major governmental funds and other non-major governmental funds are presented in the following table: 65 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 9 - Fund Equity, concluded General Obligation Bonds Debt Service Streets Capital Projects General Other Governmental Total Nonspendable: Inventories $ Prepaid items 979,664 $ — $ — $ — $ 979,664 5,732 — — — 5,732 985,396 — — — 985,396 Court enhancement 1,090,615 — — — 1,090,615 Judicial enhancement 461,942 — — — 461,942 Weapons proceeds 113,084 — — — 113,084 Citing agency Total nonspendable Restricted for: 44,967 — — — 44,967 Transportation and development — 81,698,832 — 40,817,731 122,516,563 Debt service reserve — — 4,693,193 99,144 4,792,337 Community development — — — 545,715 545,715 Community services — — — 45,236,846 45,236,846 Other capital projects — — — 17,037,460 17,037,460 Total restricted 1,710,608 81,698,832 4,693,193 103,736,896 191,839,529 Domestic violence prevention 74,294 — — — 74,294 1,396,555 — — — 1,396,555 Traffic safety reserve 447,885 — — — 447,885 PSPRS contribution 20,500,000 — — — 20,500,000 Capital improvement projects 81,187,948 — — — 81,187,948 Economic development projects 5,736,722 — — — 5,736,722 Assigned to: Self-insurance purposes AZCares projects Total assigned Unassigned Total unassigned Total fund balances 29,983,456 — — — 29,983,456 139,326,860 — — — 139,326,860 90,887,858 — — (7,697,792) 83,190,066 90,887,858 $ 232,910,722 — $ 81,698,832 — $ 4,693,193 (7,697,792) $ 96,039,104 83,190,066 $ 415,341,851 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 2019-20. This amounts to $34,833,900 and is included in unassigned above. 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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, 2020, 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 $ 275,257,904 Net pension liability Pension deferred outflows of resources Pension deferred inflows of resources Pension expense Net OPEB liability OPEB deferred outflows of resources OPEB deferred inflows of resources OPEB expense Pensions Plans Business-type Activities Total $ 18,637,376 $ 293,895,280 79,391,929 12,907,482 31,993,522 2,171,653 1,983,447 7,998,380 81,563,582 14,890,929 39,991,902 Governmental Activities $ 47,361,614 5,125,478 14,423,654 1,629,138 OPEB Plans Business-type Activities $ 5,751,113 646,895 1,770,604 222,155 Total 53,112,727 5,772,373 16,194,258 1,851,293 $ The City of Chandler reported $51,376,646 and $1,749,089 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 multipleemployer 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. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 Years of service and age required to receive benefit On or After July 1, 2011 Sum of years and age equals 80 10 years, age 62 5 years, age 50* 30 years, age 55 25 years, age 60 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 Benefit percent per year of Highest 60 months of last 120 months months 2.1% to 2.3% 2.1% to 2.3% service *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living 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 12.11 percent (11.94 percent for retirement and 0.17 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 12.11 percent (11.45 percent for retirement, 0.49 percent for health insurance premium benefit, and 0.17 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 10.41 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, 2020, 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, 2020, were $8,844,068. 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. 68 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 10 - Retirement and Pension Plans, continued D. Pension Liability At June 30, 2020, the City of Chandler reported a liability of $104,541,379 for its proportionate share of the net pension liability of the ASRS. The net pension liability was measured as of June 30, 2019. 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, 2018, to the measurement date of June 30, 2019. 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, 2019, the City of Chandler’s proportion was 0.72 percent, which was a decrease of 0.04 percent from its proportion measured as of June 30, 2018. E. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2020, the City of Chandler recognized pension expense for ASRS of $9,066,793 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 $ 1,888,568 441,900 Deferred Inflows of Resources $ 19,655 4,163,043 — 2,349,729 1,062,443 8,844,068 12,236,979 4,449,203 — 10,981,630 $ $ 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, 2021. 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: 2020 $(2,924,764) 2021 (4,842,028) 2022 (451,248) 2023 629,321 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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, 2018 June 30, 2019 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, 2018 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 5.45 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: Asset Class Equity Credit Interest Rate Sensitive Bond Real estate Total Target Allocation 50% 20% 10% 20% 100% Real Rate of Return 6.09% 5.36% 1.62% 5.85% G. Discount Rate The discount rate used to measure the ASRS total pension liability was 7.5 percent, which was not changed from the discount rate used as of June 30, 2018. 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. 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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%) $ 148,786,597 $104,541,379 $ 67,563,764 1% Increase (8.5%) 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 seven-member 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. 71 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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. Retirement Initial Membership Date: Years of service and age required to receive benefit Final average salary is based on Normal retirement Before January 1, 2012 On or After January 1, 2012 On or After July 1, 2017 20 years, any age 15 years and age 52.5 15 years and age 55 Highest 36 months of Highest 60 months of last Highest 60 months of last 20 years 20 years last 15 years 50% less 2.0% for each year 1.5% to 2.5% per year of 1.5% to 2.5% per year of of credited service less than credited service, not to credited service, not to 20 years or plus 2.0% to exceed 80% exceed 80% 15 years age 62 2.5% for each year of credited service over 20 years, not to exceed 80% Accidental disability retirement 50% or normal retirement, whichever is greater Survivor benefit: Retired members Active members 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, 2020, the following employees were covered by the agent pension plan’s benefit terms: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total 72 PSPRS - Police PSPRS - Fire 164 71 51 294 509 30 189 290 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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, 2020, are indicated below. Rates are a percentage of active members’ annual covered payroll. PSPRS - Police Active members - pension Tier 1 Tier 2 Tier 3 DB Tier 3 DC Employer rates - pension Tier 1 Tier 2 Tier 3 DB Tier 3 DC PSPRS - Fire 7.65 % 11.65 % 10.12 % 7.65 % 11.65 % 10.76 % 10.51 % 10.51 % 46.79 % 46.79 % 41.66 % 42.05 % 40.12 % 40.12 % 34.87 % 34.62 % In addition, the City of Chandler was required by statute to contribute at the actuarially determined rate of 31.54 percent for police and 24.11 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 $ 28,715,343 PSPRS - Fire $ 15,566,324 E. Pension Liability At June 30, 2020, the City of Chandler reported $123,025,114 in net pension liability for police and $66,328,787 in net pension liability for fire. The net pension liabilities were measured as of June 30, 2019, 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, 2019, 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. 73 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 June 30, 2019 Entry age normal 6.7% 7.3% 2.5% - 2.7% 3.5% 2.7% - 7.5% 1.75% PubS-2010 tables Mortality rates The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.30 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% 74 Long-Term Expected Real Rate of Return 0.25% 4.01% 3.00% 6.75% 4.01% 4.50% 8.40% 5.36% 5.00% 4.75% CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 10 - Retirement and Pension Plans, continued G. Pension Discount Rates The discount rate of 7.30 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. Total Pension Liability PSPRS - Police Balances at June 30, 2019 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 Changes of assumptions or other inputs Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2020 $ 258,481,997 $ 75 Increase/(Decrease) Plan Fiduciary Net Position $ 142,778,746 Net Pension Liability $ 115,703,251 6,149,336 19,203,025 — — — — 6,149,336 19,203,025 — 1,302,509 6,562,499 — — — — — 15,572,686 2,206,379 8,365,394 1,302,509 6,562,499 (15,572,686) (2,206,379) (8,365,394) (10,261,998) — — 22,955,371 281,437,368 $ (10,261,998) (146,042) (102,911) 15,633,508 158,412,254 $ — 146,042 102,911 7,321,863 123,025,114 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 10 - Retirement and Pension Plans, continued PSPRS - Fire Balances at June 30, 2019 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 Changes of assumptions or other inputs Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2020 Total Pension Liability $ $ 156,503,512 Increase/(Decrease) Plan Fiduciary Net Position $ 94,448,444 Net Pension Liability $ 62,055,068 4,353,346 11,689,082 — — — — 4,353,346 11,689,082 — (171,678) 3,122,509 — — — — — 8,004,060 1,462,348 5,389,738 (171,678) 3,122,509 (8,004,060) (1,462,348) (5,389,738) (5,792,594) — — 13,200,6651 169,704,177 $ (5,792,594) (94,355) (42,251) 8,926,946 103,375,390 $ — 94,355 42,251 4,273,719 66,328,787 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 1percentage-point lower or 1-percentage-point higher than the current rate: Tier 1-2/Tier 3 1% Decrease PSPRS - Police: Rate Net pension liability PSPRS - Fire: Rate Net pension liability I. Current Discount Rate Tier 1-2/Tier 3 1% Increase 6.3/6.0 7.3/7.0 $ 163,595,210 $ 123,025,114 $ $ 6.3/6.0 90,714,349 $ 7.3/7.0 66,328,787 $ 8.3/8.0 90,154,025 8.3/8.0 46,435,336 Pension Plan Fiduciary Net Position 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. 76 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 10 - Retirement and Pension Plans, continued J. Pension Expense For the year ended June 30, 2020, the City of Chandler recognized the following as pension expense: Pension Expense $ 19,552,827 11,371,925 PSPRS - Police PSPRS - Fire K. Pension Deferred Outflows/Inflows of Resources At June 30, 2020, the City of Chandler reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of PSPRS - Police Resources Resources Differences between expected and actual experience $ 1,852,214 $ 3,346,087 Changes of assumptions or other inputs 11,061,934 — Net difference between projected and actual earnings on pension plan investments 1,676,096 — Changes in proportion and differences between contributions and proportionate share of — — contributions Contributions subsequent to the measurement date 28,715,343 — Total $ 43,305,587 $ 3,346,087 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 77 Deferred Outflows of Resources $ 1,330,327 7,868,281 Deferred Inflows of Resources $ 563,212 — 1,256,084 — — 15,566,324 26,021,016 — — 563,212 $ $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 10 - Retirement and Pension Plans, concluded The amounts reported as deferred outflows of resources related to pension are resulting from contributions made subsequent to the measurement date but before the end of the City's fiscal year and will be recognized as a reduction of the net pension liability in the subsequent year ended June 30, 2021. 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 2021 $ 4,357,390 2022 1,524,884 2023 1,639,144 2024 1,512,429 2025 1,086,737 Thereafter 1,123,573 PSPRS - Fire $ 3,186,103 1,646,267 2,080,357 1,604,468 581,805 792,480 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 long-term 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. 78 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued 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. 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 607 1,631 2,238 E. Total OPEB Liability The City’s total OPEB liability of $53,112,727 was measured as of June 30, 2019 and was determined by an actuarial valuation as of that date. 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, 2019 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: 79 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued Measurement date Actuarial valuation date Discount Rate Inflation rate Projected salary increases Health care cost trend rates Medical and prescription drug Retiree contribution increase June 30, 2019 June 30, 2019 3.5% 2.5% - 2.7% Vary depending on retirement plan and years of service from 2.7% - 7.5% 0% in 2019/20, then 7.75% graded down to an ultimate rate of 4.5% over 13 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. 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 $ 51,751,856 2,585,397 2,059,914 (5,086,575) 4,021,143 (2,219,008) 1,360,871 $ 53,112,727 Changes in assumptions reflect the following: 1. The discount rate decreased from 3.87% to 3.5% based on the changes in the Bond Buyer 20 index municipal bond rate from June 30, 2018 to June 30, 2019. 2. The per capita health costs were updated based on more recent data. 3. The future trend on per capita health costs were updated. The first year of which was updated to reflect actual premiums for calendar year 2020. 4. The percentage of active participants that elect spouse coverage at retirement decreased from 75% male and 50% female to 70% male and 45% female. 5. The relative age difference between future retirees and their spouses decreased from 3 years to 2. 6. The percentage of active participants that elect medical coverage decreased from 55% to 50%. 7. The percentage of active participants that elect life insurance decreased from 90% to 85%. 8. The Safety mortality tables were updated based on Arizona PSPRS actuarial valuation report as of June 30, 2019 dated November 22, 2019. 9. The General salary scale assumptions were updated based on the ASRS actuarial valuation funding report as of June 30, 2019 dated December 13, 2019. 80 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, concluded 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% Decrease (2.50%) Total OPEB liability $ I. Current Discount Rate (3.50%) 60,241,457 $ 53,112,727 1% Increase (4.50%) $ 47,371,538 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-percentagepoint higher than the current rate: Current Healthcare Cost Trend Rates (6.75%) 1% Decrease (5.75%) Total OPEB liability $ J. 49,760,179 $ 1% Increase (7.75%) 53,112,727 $ 57,066,534 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2020, the City recognized OPEB expense of $1,851,293. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Contributions subsequent to measurement date Total $ $ — 3,443,257 2,339,116 5,782,373 Deferred Inflows of Resources $ 10,052,858 6,141,400 — $ 16,194,258 The deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the previous table will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2021. 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: 2021 $ 2022 2023 2024 2025 Thereafter 81 (2,794,018) (2,794,018) (2,794,018) (2,794,018) (1,438,899) (146,030) CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 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 selfinsures 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. 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 2019-20, 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 2019-20, 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 $350,000 within the plan year, and aggregate (plan wide) coverage for health insurance claims incurred above 125 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. 82 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 13 - Risk Management, concluded The claims liability of $7,258,294 reported as claims payable in the Self-Insurance Fund at June 30, 2020, is based on the requirements of GASB 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 Funds' claims liability amount in fiscal years 2019 and 2020 were: Beginning of Fiscal Year Balance Current Year Claims and Changes in Estimates 2019 Workers' compensation Property and liability Health Dental $ 1,869,023 1,687,414 2,713,763 151,089 6,421,289 $ 3,222,254 $ (2,278,587) $ (164,683) (214,776) 18,987,679 (19,255,993) 1,995,048 (1,994,005) $ 24,040,298 $ (23,743,361) $ 2,812,690 1,307,955 2,445,449 152,132 6,718,226 2020 Workers' compensation Property and liability Health Dental $ 2,812,690 1,307,955 2,445,449 152,132 6,718,226 $ 2,939,672 1,290,393 2,871,966 156,263 7,258,294 Year Ended June 30, Risk of Loss $ $ 2,049,391 211,609 18,731,377 1,770,276 $ 22,762,653 Claim Payments $ (1,922,409) $ (229,171) (18,304,860) (1,766,145) $ (22,222,585) $ Balance at Fiscal Year End NOTE 14 - Interfund Transfers 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. The interfund transfers in and out at June 30, 2020 are as follows: 83 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 14 - Interfund Transfers Fund General Transfer Detail Non-major governmental Non-major enterprise Internal service Transfers In $ 11,835,859 — — Transfers Out $ 24,852,268 739,474 3,450,000 11,835,859 29,041,742 Debt service - general obligation — 200,000 Total capital projects - streets — 200,000 Capital projects - streets 200,000 — Non-major governmental 1,534,681 — Total debt service - general obligation 1,734,681 — General Debt service - general obligation Non-major governmental Enterprise - water Enterprise - wastewater Non-major enterprise Internal service 24,852,268 — 175,982 320,084 219,929 123,765 19,728 11,835,859 1,534,681 175,982 — — — — Total non-major governmental funds 25,711,756 13,546,522 Enterprise - wastewater Non-major governmental — — 6,500 320,084 Total water fund — 326,584 Enterprise - water Non-major governmental 6,500 — — 219,929 Total wastewater fund 6,500 219,929 General Non-major governmental 739,474 — — 123,765 Total non-major enterprise funds 739,474 123,765 General Non-major governmental 3,450,000 — — 19,728 Total internal service funds 3,450,000 19,728 Total $ 43,478,270 $ 43,478,270 Total general fund Capital projects - streets Debt service - general obligation Non-major governmental Water Wastewater Non-major enterprise Internal service In addition to the cash transfers, the City had capital contributions from the government-type activities into the business type activities in the amount of $816,295 (see Note 8). 84 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 15 - Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances to other funds Advances from other funds Total Governmental funds: General Enterprise funds: Water Capital projects - public safety buildings and improvements Capital projects - public buildings Total governmental funds $ 7,546,432 2,189,427 9,735,859 Enterprise - wastewater Total all funds 3,900,000 $ 13,635,859 Interfund advances were made from governmental funds to capital projects funds to cover expenditures in impact fee funds until impact fees are received. $1,350,000 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 Special revenue - community development Total $ 191,438 Interfund balances at June 30, 2020 are short-term loans used to cover temporary cash deficits in various funds and are expected to be repaid within one year. 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. 85 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2020 NOTE 16 - Joint Venture, concluded Total investment in joint venture as of June 30, 2020, is: City of Chandler's Share Town of Gilbert's Share $ 78,605,999 85,347,711 $ 163,953,710 NOTE 17 - Deficit in Fund Balances The police confiscated property special revenue fund had a deficit fund balance of $36,316. The deficit will be covered by future revenues. The public buildings capital projects fund had deficit fund balance of $2,113,164. The funds were financed by advances of interfund loans and will be paid back by future impact fee revenues. The public safety buildings and improvement capital projects fund had deficit fund balance of $5,548,312. The deficit 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 2019-2020 is $540,766. 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 Statute 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, 2020, the City abated property taxes totaling $154,640 under this program, including the following tax abatement agreement that exceeds $100,000: Property Tax GPLET to a residential rental development for constructing a multi-family residential complex. The GPLET amounted to $120,857 of property tax abated. 86 REQUIRED SUPPLEMENTARY INFORMATION 87 88 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund For the year ended June 30, 2020 Budgeted Amounts Original 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 $ Total Revenues 7,821,800 134,823,900 3,308,200 67,800,000 328,212 6,905,500 20,541,594 3,763,650 130,000 200,000 3,259,000 184,000 Final $ 7,821,800 134,823,900 3,308,200 67,800,000 328,212 6,905,500 20,541,594 3,763,650 130,000 200,000 3,259,000 184,000 $ Non-GAAP Over Actual (Under) Amounts Final Budget 7,851,085 140,644,918 3,441,225 70,769,943 27,468,966 7,760,403 19,886,072 3,317,940 213,345 200,000 7,289,634 360,246 $ 29,285 5,821,018 133,025 2,969,943 27,140,754 854,903 (655,522) (445,710) 83,345 — 4,030,634 176,246 249,065,856 249,065,856 289,203,777 40,137,921 749,869 4,607,201 16,863,061 2,544,801 26,812,696 3,647,316 8,816,282 36,458,192 11,655,399 3,795,202 96,211,691 1,047,902 3,973,852 75,354,272 11,169,250 1,180,676 4,667,631 19,278,363 2,936,424 27,695,942 3,860,360 9,004,542 37,673,157 12,658,945 3,862,945 79,562,427 1,057,235 4,228,434 77,638,553 14,493,716 1,098,686 4,494,305 17,695,249 2,444,083 25,767,343 3,602,056 8,101,391 37,373,414 10,988,148 3,818,046 35,893,496 988,683 3,366,253 76,082,558 13,507,439 81,990 173,326 1,583,114 492,341 1,928,599 258,304 903,151 299,743 1,670,797 44,899 43,668,931 68,552 862,181 1,555,995 986,277 303,706,986 299,799,350 245,221,150 54,578,200 REVENUES OVER (UNDER) EXPENDITURES (54,641,130) (50,733,494) 43,982,627 94,716,121 OTHER FINANCING SOURCES (USES): Transfers in Transfers out 71,215,157 (7,551,592) 71,215,157 (7,551,592) 11,835,859 (29,041,742) (59,379,298) (21,490,150) EXPENDITURES: City clerk City magistrate City manager Communications and public affairs Community services Cultural development Development services Fire Information technology Law Management services Mayor and council Neighborhood Resources Police Public works Total expenditures 63,663,565 63,663,565 (17,205,883) (80,869,448) Net change in fund balance Total other financing sources (uses) 9,022,435 12,930,071 26,776,744 13,846,673 Fund balance, July 1, 2019 200,295,980 200,295,980 200,295,980 — Fund balance, June 30, 2020 $ 209,318,415 See accompanying notes to this schedule. 89 $ 213,226,051 $ 227,072,724 $ 13,846,673 City of Chandler Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System For the year ended June 30, 2020 2020 City's proportion of the net pension liability (asset) 2019 0.72 % 0.76 % 2018 0.74 % 2017 0.75 % City's proportionate share of the net pension liability (asset) $104,541,379 $106,413,043 $115,691,952 $121,549,835 City's covered payroll $ 75,407,689 $ 75,579,140 $ 72,284,183 $ 70,362,938 City's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 138.63 % 140.80 % 160.05 % 172.75 % Plan fiduciary net position as a percentage of the total pension liability 73.24 % 73.00 % 69.92 % 67.06 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 90 2016 0.73 % 2015 0.71 % $ 113,885,153 $ 105,661,552 $ 67,230,465 $ 64,263,236 169.40 % 164.42 % 68.35 % 69.49 % 91 City of Chandler Schedule of Contributions All Pension Plans For the year ended June 30, 2020 2020 2019 2018 2017 Arizona State Retirement System: Actuarially determined contribution $ 8,844,068 $ 8,470,741 $ 8,268,029 $ 7,793,041 Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) $ City's covered payroll Contributions as a percentage of covered payroll 8,844,068 — $ 76,880,601 11.50 % $ 8,470,741 — $ 75,407,689 11.23 % $ 8,268,029 — $ 75,579,140 10.94 % $ 7,793,041 — $ 72,284,183 10.78 % Public Safety Personnel Retirement System - Police: Actuarially determined contribution Contributions in relation to the 1 actuarially determined contribution Contribution deficiency (excess) $ 15,572,686 $ 12,267,559 $ 10,950,501 $ 8,470,411 28,715,343 $ (13,142,657) 15,398,196 $ (3,130,637) 14,300,501 $ (3,350,000) 10,145,411 $ (1,675,000) City's covered payroll Contributions as a percentage of covered payroll $ 28,589,014 $ 28,848,732 $ 28,294,661 $ 27,058,086 Public Safety Personnel Retirement System - Fire: Actuarially determined contribution Contributions in relation to the 1 actuarially determined contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll 54.47 % 42.52 % 38.70 % 31.30 % $ 8,004,060 $ 7,021,133 $ 6,392,313 $ 4,616,587 15,566,324 $ (7,562,264) 8,670,333 $ (1,649,200) 8,042,313 $ (1,650,000) 5,441,587 $ (825,000) $ 19,154,805 $ 19,025,780 $ 18,200,175 $ 17,275,940 41.79 % 36.90 % 35.12 % 26.72 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 1 Additional contributions above the actuarially determined contributions were made beginning with fiscal year 2016-17 and continue. 92 2016 2015 $ 7,634,805 $ 7,323,872 $ 7,634,805 — $ 70,362,938 10.85 % $ 7,323,872 — 67,230,465 10.89 % $ 8,561,143 $ 6,083,333 8,561,143 $ — 6,083,333 $ — $ 27,946,237 $ 26,187,641 30.63 % 23.23 % $ 4,438,495 $ 3,193,139 4,438,495 $ — 3,193,139 $ — $ 16,874,362 $ 15,671,133 26.30 % 20.38 % 93 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, 2020 2020 2019 2018 2017 Total pension liability Service cost $ Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions 6,149,336 $ 5,737,868 $ 6,092,332 $ 5,337,103 19,203,025 17,999,842 17,064,596 14,964,498 — — 1,501,042 17,456,919 1,302,509 (671,252) (6,211,672) 858,761 6,562,499 — 6,528,203 8,537,784 Benefit payments, including refunds (10,261,998) (9,913,263) (8,254,947) (13,015,625) Net change in total pension liability 22,955,371 13,153,195 16,719,554 34,139,440 Total pension liability - beginning 258,481,997 245,328,802 228,609,248 194,469,808 $ 281,437,368 $ 258,481,997 $ 245,328,802 $ 228,609,248 $ $ $ $ Total pension liability - ending Plan fiduciary net position Contributions - employer 15,572,686 10,296,409 10,247,877 8,728,082 Contributions - employee 2,206,379 2,765,932 3,244,412 3,633,359 Net investment income 8,365,394 9,301,979 14,017,325 677,501 (10,261,998) (9,913,263) (8,254,947) (13,015,625) Administrative expense (146,042) (142,274) (124,430) (97,889) Other (102,911) 24,215 (167,280) 238,667 Net change in plan fiduciary net position 15,633,508 12,332,998 18,962,957 164,095 Plan fiduciary net position - beginning 142,778,746 130,445,748 111,482,791 111,318,696 Plan fiduciary net position - ending $ 158,412,254 $ 142,778,746 $ 130,445,748 $ 111,482,791 Net pension liability - ending $ 123,025,114 $ 115,703,251 $ 114,883,054 $ 117,126,457 Benefit payments, including refunds Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll 56.29 % $ 28,848,732 426.45 % 55.24 % $ 28,294,661 408.92 % 53.17 % $ 27,058,086 424.58 % 48.77 % $ 27,946,237 419.11 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 94 2016 $ 2015 4,583,770 $ 4,602,603 13,839,509 11,841,118 — 1,741,535 4,879,849 567,380 — 13,082,165 (5,681,836) (7,054,499) 17,621,292 24,780,302 176,848,516 152,068,214 $ 194,469,808 $ 176,848,516 $ $ 6,155,142 5,465,059 3,308,265 2,675,724 3,873,466 12,329,319 (5,681,836) (7,054,499) (94,891) — (70,777) (2,733,237) 7,489,369 10,682,366 103,829,327 93,146,961 $ 111,318,696 $ 103,829,327 $ $ 83,151,112 57.24 % $ 26,187,641 317.52 % 73,019,189 58.71 % $ 24,290,497 300.61 % 95 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, 2020 2020 2019 2018 2017 Total pension liability Service cost $ Interest Changes of benefit terms Differences between expected and actual experience 4,353,346 $ 4,014,526 $ 3,863,571 $ 3,174,665 11,689,082 10,794,299 9,983,423 8,707,808 — — 753,382 10,272,193 (171,678) 1,014,752 941,823 96,063 Changes of assumptions 3,122,509 — 2,845,297 4,937,927 Benefit payments, including refunds (5,792,594) (6,363,418) (5,049,317) (5,647,270) Net change in total pension liability 13,200,665 9,460,159 13,338,179 21,541,386 Total pension liability - beginning 156,503,512 147,043,353 133,705,174 112,163,788 $ 169,704,177 $ 156,503,512 $ 147,043,353 $ 133,705,174 $ $ $ $ Total pension liability - ending Plan fiduciary net position Contributions - employer 8,004,060 5,956,704 5,514,825 4,672,177 Contributions - employee 1,462,348 1,633,743 2,312,753 2,140,037 Net investment income 5,389,738 6,174,093 9,228,731 440,223 Benefit payments, including refunds (5,792,594) (6,363,418) (5,049,317) (5,647,270) (94,355) (94,669) (82,059) (63,746) Administrative expense Other (42,251) 1,035 50,502 38,948 Net change in plan fiduciary net position 8,926,946 7,307,488 11,975,435 1,580,369 Plan fiduciary net position - beginning 94,448,444 87,140,956 75,165,521 73,585,152 Plan fiduciary net position - ending $ 103,375,390 $ 94,448,444 $ 87,140,956 $ 75,165,521 Net pension liability - ending $ $ 62,055,068 $ 59,902,397 $ 58,539,653 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll 66,328,787 60.92 % $ 19,025,780 348.63 % 60.35 % $ 18,200,175 340.96 % 59.26 % $ 17,275,940 346.74 % 56.22 % $ 16,874,362 346.91 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 96 2016 $ 2015 2,915,603 $ 2,949,507 8,264,915 7,191,487 — 930,663 (1,037,307) (409,426) — 6,465,545 (3,614,319) (3,258,846) 6,528,892 13,868,930 105,634,896 91,765,966 $ 112,163,788 $ 105,634,896 $ $ (63,063) 3,152,694 1,775,319 8,217,832 (3,258,846) — 3,222,291 1,837,291 2,568,880 (3,614,319) (55,142) (1,798,718) 3,895,938 8,088,281 69,689,214 61,600,933 $ 73,585,152 $ 69,689,214 $ 38,578,636 $ 35,945,682 65.61 % $ 15,671,133 246.18 % 65.97 % $ 15,691,213 229.08 % 97 City of Chandler Schedule of Changes in OPEB Liabilities and Related Ratios Single Employer Plan For the year ended June 30, 2020 2020 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 6/30/2019 $ 51,751,856 6/30/2018 $ 52,838,811 6/30/2017 $ 66,519,700 2,585,397 2,059,914 (5,086,575) 4,021,143 (2,219,008) 1,360,871 $ 53,112,727 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 $113,713,741 $108,862,317 $106,207,139 Total OPEB liability as percentage of covered payroll 46.71 % 47.54 % 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. Notes: 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. This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 98 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2020 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 $ 32,614,742 Reserved encumbrances at June 30, 2020 recognized as budgetary expenditures in fiscal year ended June 30, 2020 Budgetary Comparison Schedule for the General Fund (5,837,998) $ 26,776,744 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, 2018 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, 2019 valuation for PSPRS were based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. 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, 2019 reflects changes of benefit terms and actuarial assumptions for funding assumed future permanent benefit increases. 99 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2020 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, 2019 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. 100 OTHER FINANCIAL STATEMENTS 101 102 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Streets Capital Projects For the year ended June 30, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Regional transportation taxes $ 664,000 $ 664,000 $ 1,153,237 $ 489,237 System development fees 5,999,600 5,999,600 5,576,240 (423,360) Interest revenue 1,156,000 1,156,000 3,000,534 1,844,534 — — 467,441 467,441 7,819,600 7,819,600 10,197,452 2,377,852 General government 8,830,253 14,589,926 — 14,589,926 Transportation and development 37,750,465 4,148,583 1,019,030 3,129,553 Capital outlay 12,499,530 44,086,447 30,054,925 14,031,522 Bond issuance costs — — 182,821 (182,821) Total expenditures 59,080,248 62,824,956 31,256,776 31,568,180 (51,260,648) (55,005,356) (21,059,324) 33,946,032 — — 1,674,610 1,674,610 Miscellaneous Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Bond premium Face amount of bonds issued 18,775,000 18,775,000 17,387,232 (1,387,768) Transfers in 664,000 664,000 — (664,000) Transfers out (1,664,000) (1,664,000) (200,000) 1,464,000 Total other financing sources (uses) 17,775,000 17,775,000 18,861,842 1,086,842 Net change in fund balance (33,485,648) (37,230,356) (2,197,482) 35,032,874 Fund balance, July 1, 2019 73,688,623 73,688,623 73,688,623 — $ 40,202,975 $ 36,458,267 $ 71,491,141 $ 35,032,874 Fund balance, June 30, 2020 103 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Property taxes $ 26,347,000 $ 26,347,000 $ 26,483,131 $ 136,131 Interest revenue 226,000 226,000 652,639 426,639 Total revenues 26,573,000 26,573,000 27,135,770 562,770 General government 2,500,000 1,892,440 — (1,892,440) Principal 20,775,000 20,775,000 20,775,000 — EXPENDITURES: Interest and fiscal charges 7,381,261 7,988,821 7,988,820 (1) Total expenditures 30,656,261 30,656,261 28,763,820 (1,892,441) (4,083,261) (4,083,261) (1,628,050) 2,455,211 Transfers in 2,500,000 2,500,000 1,734,681 (765,319) Total other financing sources (uses) 2,500,000 2,500,000 1,734,681 (765,319) Net change in fund balance (1,583,261) (1,583,261) 106,631 1,689,892 Fund balance, July 1, 2019 4,586,562 4,586,562 4,586,562 — Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2020 $ 3,003,301 104 $ 3,003,301 $ 4,693,193 $ 1,689,892 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 transportation-related 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. 105 City of Chandler Non-Major Governmental Funds NON-MAJOR DEBT SERVICE 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 General Government Used to account for the acquisition, construction and improvements of general government 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. 106 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2020 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Museum ASSETS Equity in pooled cash and investments $ 30,507,061 $ 4,398,709 $ 2,426,702 $ — $ 328,879 $ 285,249 $ 43,314 Receivables (net of allowance for uncollectible): Accounts — — 5,751 — — — — Special assessments — — — — — — — Notes — — — 448,503 — — — 95,829 13,939 8,966 — 970 975 148 1,317,683 — 206,773 343,778 — — — 4,412,648 $ 2,648,192 $ 792,281 $ 329,849 $ $ $ 38,660 $ 5,101 $ Accrued interest Due from other governments Total assets $ 31,920,573 $ $ $ 286,224 $ — $ 43,462 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 524,198 541 71,062 — 113,291 275 8,065 16,468 — — — Trust liabilities and deposits — — — — 361,064 — — Accrued interest — — — — — — — Due to other funds — — — 191,438 — — — Advances from other funds — — — — — — — Unearned revenue — — 2,186 — — — — 637,489 816 81,313 246,566 366,165 — — — — — — — — — — — — — — — — 31,283,084 4,411,832 2,566,879 545,715 — 286,224 43,462 — — — — (36,316) — — 31,283,084 4,411,832 2,566,879 545,715 (36,316) 286,224 43,462 4,412,648 $ 2,648,192 Total liabilities Deferred inflows of resources: Unavailable revenues - special assessments Total deferred inflows of resources Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 31,920,573 $ $ 792,281 $ 329,849 $ 286,224 $ 43,462 (Continued) 107 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2020 Special Revenue Debt Service Special Library Capital Projects Assessment General Public Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ 49,116 $ 135,744 $ 941,504 $ 75,664 $ 1,082,204 Receivables (net of allowance for uncollectible): Accounts — — 18,224 — — Special assessments — 1,661,634 — — — Notes — — — — — 195 — — 599 — — — 70,178 — 1,664,542 Accrued interest Due from other governments Total assets $ 49,311 $ — $ 1,797,378 $ 1,029,906 $ — $ 1,028,239 $ 76,263 $ 2,746,746 — $ 191,781 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ — — — 696 — — — — — — 36,600 — — — Due to other funds — — — — — Advances from other funds — — — 2,189,427 — Unearned revenue — — — — — — 36,600 1,028,239 2,189,427 192,477 — 1,661,634 — — — — 1,661,634 — — — 49,311 99,144 1,667 — 2,554,269 — — — (2,113,164) — 49,311 99,144 1,667 (2,113,164) 2,554,269 Accrued payroll — Trust liabilities and deposits Accrued interest Total liabilities Deferred inflows of resources: Unavailable revenues - special assessments Total deferred inflows of resources Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 49,311 108 $ 1,797,378 $ 1,029,906 $ 76,263 $ 2,746,746 Capital Projects Public Safety Vehicle and Community Buildings and Capital Equipment Technology Municipal Governmental Services Improvements Replacement Replacement Arts Funds 5,818,231 $ 664,051 $ 105,100,517 $ 44,953,926 $ 2,009,522 $ Total Other 11,380,641 $ — — — — — 23,975 — — — — — 1,661,634 448,503 — — — — — 122,509 3,608 40,739 20,023 2,274 310,774 — — — — — 3,602,954 $ 666,325 $ 111,148,357 $ $ $ 45,076,435 $ 2,013,130 $ 11,421,380 $ 5,838,254 $ $ 15,010 $ 56,319 $ 165,855 884,648 — 2,981,414 263 — — — — 139,058 — — — — — 361,064 — — — — — 36,600 — — — — — 191,438 — 7,546,432 — — — 9,735,859 — — — — — 2,186 884,911 7,561,442 56,319 165,855 — 13,447,619 — — — — — 1,661,634 — — — — — 1,661,634 44,191,524 — 11,365,061 5,672,399 666,325 103,736,896 — (5,548,312) — — — (7,697,792) 44,191,524 (5,548,312) 11,365,061 5,672,399 666,325 96,039,104 5,838,254 $ 666,325 $ 111,148,357 $ 45,076,435 $ 2,013,130 $ 11,421,380 $ (Concluded) 109 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2020 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Museum REVENUES: Highway user taxes $ 16,996,911 $ — $ — $ — $ — $ — $ — Grants and entitlements — 673,598 1,735,564 1,261,085 — 80,386 5,543 System development fees — — — — — — — Special assessments — — — — — — — Charges for services — 217,875 — — — — — Fines and forfeitures — — — — 2,250,069 — — Interest revenue 1,119,028 176,277 114,289 4 2 12,093 1,827 Miscellaneous 47,070 — — — — — — 18,163,009 1,067,750 1,849,853 1,261,089 2,250,071 92,479 7,370 — — 333,390 1,280,368 — — — — Total revenues EXPENDITURES: Current: General government Public safety — — 809,292 — 31,248 — 7,465,372 1,190,961 — — — — — — — 105,446 — — 64,645 1,159 35,416 95,963 75,338 — 2,215,079 — — Principal — — — — — — — Bond issuance costs — — — — — — — Interest and fiscal charges — — — — — — — 7,500,788 1,286,924 1,323,466 1,280,368 2,246,327 64,645 1,159 10,662,221 (219,174) 526,387 (19,279) 3,744 27,834 6,211 Capital Contributions — — — — — — — Proceeds from disposal of capital assets — — — — — — — Bond premium — — — — — — — Face amount of bonds issued — — — — — — — Transfers in — — — — — — — (171,770) (4,212) — — — — — (171,770) (4,212) — — — — — 10,490,451 (223,386) 526,387 (19,279) 3,744 27,834 6,211 (40,060) 258,390 (36,316) $ 286,224 Transportation and development Community services Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES (DEFICITS): Beginning of year End of year 20,792,633 $ 31,283,084 $ 4,635,218 2,040,492 4,411,832 $ 2,566,879 110 564,994 $ 545,715 $ 37,251 $ 43,462 Special Revenue Debt Service Capital Projects Special Library $ — $ 42,816 General Public Bonds Government Buildings — $ — $ Community Grants — $ Services — $ — — — — 18,451,457 — — — — 237,020 — 2,116,308 — 508,485 — — — — — — — — 118,762 — — — — — — — 2,874 — — 6,151 1 1,684,612 — — 481,272 — — — 45,690 508,485 481,272 243,171 18,570,220 3,800,920 — — 2,109,030 — 33,513 — — — 145,024 — — — — — 525,416 — 58,454 — 28,917 — 362,632 — 108,526 401,479 — — 16,603,566 — 15,596,903 6,073,689 — 565,000 — — — — — — — — — 136,810 — 84,500 — — — — 28,917 649,500 19,745,668 — 15,797,396 6,611,978 16,773 (141,015) (19,264,396) 243,171 2,772,824 (2,811,058) — — 396,153 — — — — — — — — — — — — — — 1,253,294 — — — — — 13,012,767 — — 19,011,858 — — — — — (11,835,859) — — (1,534,681) — — 7,572,152 — — 12,731,380 16,773 (141,015) (11,692,244) 243,171 2,772,824 9,920,322 32,538 $ Assessment 49,311 240,159 $ 99,144 11,693,911 $ 1,667 $ (2,356,335) (218,555) (2,113,164) $ 2,554,269 34,271,202 $ 44,191,524 (Continued) 111 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2020 Capital Projects Public Safety Vehicle and Total Other Buildings and Capital Equipment Technology Municipal Governmental Improvements Replacement Replacement Arts Funds REVENUES: Highway user taxes $ — $ — $ — $ — $ 16,996,911 Grants and entitlements — — — — 22,250,449 System development fees 801,405 — — — 3,154,733 Special assessments — — — — 508,485 Charges for services — — — 132,993 469,630 Fines and forfeitures — — — — 2,250,069 71,091 550,977 308,708 26,602 4,074,536 — 115,948 — — 644,290 872,496 666,925 308,708 159,595 50,349,103 — — 969,305 — 4,725,606 Interest revenue Miscellaneous Total revenues EXPENDITURES: Current: General government Public safety 118,614 — — — 1,104,178 Transportation and development — — — — 9,240,203 Community services — — — 10,284 1,083,088 3,158,158 4,124,342 3,893,319 — 51,871,773 Principal — — — — 565,000 Bond issuance costs — — — — 136,810 Interest and fiscal charges — — — — 84,500 3,276,772 4,124,342 4,862,624 10,284 68,811,158 (2,404,276) (3,457,417) (4,553,916) 149,311 (18,462,055) 396,153 Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Capital Contributions — — — — Proceeds from disposal of capital assets — 396,924 — — 396,924 Bond premium — — — — 1,253,294 Face amount of bonds issued — — — — 13,012,767 Transfers in — 3,405,200 3,294,698 — 25,711,756 Transfers out — — — — (13,546,522) — 3,802,124 3,294,698 — 27,224,372 (2,404,276) 344,707 (1,259,218) 149,311 8,762,317 (3,144,036) 11,020,354 (5,548,312) $ 11,365,061 Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES (DEFICITS): Beginning of year End of year $ 6,931,617 $ 5,672,399 517,014 $ 666,325 87,276,787 $ 96,039,104 (Concluded) 112 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Highway user taxes $ Interest revenue 16,500,000 $ 16,500,000 $ 16,996,911 $ 496,911 329,000 329,000 1,119,026 790,026 — — 47,070 47,070 16,829,000 16,829,000 18,163,007 1,334,007 General government 4,042,000 3,504,519 — 3,504,519 Transportation and development 12,611,430 8,864,534 7,996,459 868,075 Capital outlay 4,777,969 4,286,095 3,351,669 934,426 Total expenditures 21,431,399 16,655,148 11,348,128 5,307,020 (4,602,399) 173,852 6,814,879 6,641,027 Transfers out (173,852) (173,852) (171,770) 2,082 Total other financing sources (uses) (173,852) (173,852) (171,770) 2,082 Net change in fund balance (4,776,251) — 6,643,109 6,643,109 Fund balance, July 1, 2019 20,792,633 20,792,633 20,792,633 — Miscellaneous Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2020 $ 16,016,382 113 $ 20,792,633 $ 27,435,742 $ 6,643,109 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 700,000 $ 700,000 $ 673,598 $ (26,402) Charges for services 221,000 221,000 217,875 (3,125) Interest revenue 80,000 80,000 176,277 96,277 1,001,000 1,001,000 1,067,750 66,750 General government 2,012,200 1,363,589 — 1,363,589 Transportation and development 1,899,512 2,133,266 1,231,185 902,081 172,000 586,857 161,137 425,720 4,083,712 4,083,712 1,392,322 2,691,390 (3,082,712) (3,082,712) (324,572) 2,758,140 (4,409) (4,409) (4,212) 197 (4,409) (4,409) (4,212) 197 Net change in fund balance (3,087,121) (3,087,121) (328,784) 2,758,337 Fund balance, July 1, 2019 4,635,218 4,635,218 4,635,218 — Total revenues EXPENDITURES: Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources (uses) Fund balance, June 30, 2020 $ 1,548,097 114 $ 1,548,097 $ 4,306,434 $ 2,758,337 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Grants Special Revenue For the year ended June 30, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 5,009,478 Interest revenue $ 5,009,478 $ 1,735,564 $ (3,273,914) 43,000 43,000 114,287 71,287 5,052,478 5,052,478 1,849,851 (3,202,627) 5,000,000 2,660,341 337,606 2,322,735 52,478 1,855,750 876,060 979,690 Community services — 337,553 107,946 229,607 Capital outlay — 200,000 279,082 (79,082) 5,052,478 5,053,644 1,600,694 3,452,950 — (1,166) 249,157 250,323 2,040,492 2,040,492 2,040,492 — Total revenues EXPENDITURES: General government Public safety Total expenditures Net change in fund balance Fund balance, July 1, 2019 Fund balance, June 30, 2020 $ 2,040,492 115 $ 2,039,326 $ 2,289,649 $ 250,323 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Total revenues 2,730,000 $ 2,730,000 $ 1,261,085 $ (1,468,915) 2,730,000 2,730,000 1,261,085 (1,468,915) 3,293,200 3,525,260 1,574,455 1,950,805 240,000 10,000 — 10,000 3,533,200 3,535,260 1,574,455 1,960,805 Excess (deficiency) of revenues over expenditures (803,200) (805,260) (313,370) 491,890 Net change in fund balance (803,200) (805,260) (313,370) 491,890 Fund balance, July 1, 2019 564,994 564,994 564,994 — (238,206) $ (240,266) $ 251,624 EXPENDITURES: General government Capital outlay Total expenditures Fund balance (deficit), June 30, 2020 $ 116 $ 491,890 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Fines and forfeitures $ 965,000 Total revenues $ 965,000 $ 2,250,070 $ 1,285,070 965,000 965,000 2,250,070 1,285,070 30,000 29,999 — 29,999 Public safety 2,507,897 645,000 31,248 613,752 Capital outlay 320,000 2,182,898 2,215,079 (32,181) 2,857,897 2,857,897 2,246,327 611,570 (1,892,897) (1,892,897) 3,743 1,896,640 (40,060) (40,060) (40,060) — (1,932,957) $ (1,932,957) $ (36,317) $ EXPENDITURES: General government Total expenditures Net change in fund balance Fund balance (deficit), July 1, 2019 Fund balance (deficit), June 30, 2020 $ 117 1,896,640 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 111,600 Interest revenue $ 111,600 $ 80,165 $ (31,435) 5,000 5,000 12,090 7,090 116,600 116,600 92,255 (24,345) General government 17,000 17,000 — 17,000 Community services 194,011 194,011 64,645 129,366 Total expenditures 211,011 211,011 64,645 146,366 Net change in fund balance (94,411) (94,411) 27,610 122,021 Fund balance, July 1, 2019 258,390 258,390 258,390 — Total revenues EXPENDITURES: Fund balance, June 30, 2020 $ 163,979 118 $ 163,979 $ 286,000 $ 122,021 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Museum Special Revenue For the year ended June 30, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 2,800 $ 1,000 Miscellaneous 2,800 $ 1,000 5,543 $ 1,827 2,743 827 400 400 — (400) 4,200 4,200 7,370 3,170 General government 4,000 4,000 — 4,000 Community services 35,295 35,295 1,159 34,136 Total expenditures 39,295 39,295 1,159 38,136 Net change in fund balance (35,095) (35,095) 6,211 41,306 Fund balance, July 1, 2019 37,251 37,251 37,251 — Total revenues EXPENDITURES: Fund balance, June 30, 2020 $ 119 2,156 $ 2,156 $ 43,462 $ 41,306 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Special Revenue For the year ended June 30, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue 80,000 $ 80,000 $ 42,816 $ (37,184) 1,000 1,000 2,878 1,878 81,000 81,000 45,694 (35,306) General government 1,000 1,000 — 1,000 Community services 81,215 81,215 28,917 52,298 Total expenditures 82,215 82,215 28,917 53,298 Net change in fund balance (1,215) (1,215) 16,777 17,992 Fund balance, July 1, 2019 32,538 32,538 32,538 — Total revenues EXPENDITURES: Fund balance, June 30, 2020 $ 120 31,323 $ 31,323 $ 49,315 $ 17,992 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Bonds For the year ended June 30, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Special assessments $ Total revenues — $ — $ 508,485 $ 508,485 — — 508,485 508,485 Principal — — 565,000 (565,000) Interest and fiscal charges — — 84,500 (84,500) Total expenditures — — 649,500 (649,500) Net change in fund balance — — (141,015) (141,015) Fund balance, July 1, 2019 — — 240,159 240,159 EXPENDITURES: Fund balance, June 30, 2020 $ 121 — $ — $ 99,144 $ 99,144 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Miscellaneous $ 450,000 Total revenues $ 450,000 $ 481,272 $ 31,272 450,000 450,000 481,272 31,272 General government 32,501,863 15,738,504 3,086,364 12,652,140 Public safety 5,546,992 806,972 227,860 579,112 Transportation and development 11,411,694 1,905,478 808,281 1,097,197 Community services 4,534,027 491,616 543,047 (51,431) Capital outlay 8,558,069 45,996,951 20,701,195 25,295,756 Total expenditures 62,552,645 64,939,521 25,366,747 39,572,774 (62,102,645) (64,489,521) (24,885,475) 39,604,046 EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Capital Contributions Transfers in — — 396,153 396,153 62,102,645 62,102,645 19,011,858 (43,090,787) — — (11,835,859) (11,835,859) 62,102,645 62,102,645 7,572,152 (54,530,493) — (2,386,876) (17,313,323) (14,926,447) 11,693,911 11,693,911 11,693,911 — Transfers out Total other financing sources (uses) Net change in fund balance Fund balance, July 1, 2019 Fund balance (deficit), June 30, 2020 $ 11,693,911 122 $ 9,307,035 $ (5,619,412) $ (14,926,447) 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 254,700 Interest revenue $ 254,700 $ 237,020 $ (17,680) 5,500 5,500 6,151 651 260,200 260,200 243,171 (17,029) General government 169,700 169,700 — 169,700 Total expenditures 169,700 169,700 — 169,700 90,500 90,500 243,171 152,671 Transfers out (100,000) (100,000) — 100,000 Total other financing sources (uses) (100,000) (100,000) — 100,000 (9,500) (9,500) 243,171 252,671 (2,356,335) (2,356,335) (2,356,335) — (2,365,835) $ (2,365,835) $ (2,113,164) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance (deficit), July 1, 2019 Fund balance (deficit), June 30, 2020 $ 123 252,671 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Grants Capital Projects For the year ended June 30, 2020 Budgeted Amounts Non-GAAP Over Actual (Under) Final Budget Original Final Amounts $ 13,043,262 $ 13,043,262 $ 18,451,457 REVENUES: Grants and entitlements Charges for services $ 5,408,195 — — 118,762 118,762 13,043,262 13,043,262 18,570,219 5,526,957 General government 5,037,440 5,265,684 33,513 5,232,171 Transportation and development 32,816,400 2,141,149 58,454 2,082,695 Total revenues EXPENDITURES: Community services 1,513,347 — 108,526 (108,526) Capital outlay 10,545,218 42,385,572 23,133,088 19,252,484 Total expenditures 49,912,405 49,792,405 23,333,581 26,458,824 (36,869,143) (36,749,143) (4,763,362) 31,985,781 Transfers out — (120,000) — 120,000 Total other financing sources (uses) — (120,000) — 120,000 (36,869,143) (36,869,143) (4,763,362) 32,105,781 (218,555) (218,555) (218,555) — Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance (deficit), July 1, 2019 Fund balance (deficit), June 30, 2020 $ (37,087,698) $ (37,087,698) $ 124 (4,981,917) $ 32,105,781 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 1,618,200 Interest revenue $ 1,618,200 $ 2,116,308 $ 498,108 642,600 642,600 1,684,613 1,042,013 2,260,800 2,260,800 3,800,921 1,540,121 General government 9,075,281 10,013,961 — 10,013,961 Community services 1,982,072 504,230 461,259 42,971 Capital outlay 12,448,548 12,987,710 8,027,470 4,960,240 Total revenues EXPENDITURES: Bond issuance costs — — 136,810 (136,810) Total expenditures 23,505,901 23,505,901 8,625,539 14,880,362 (21,245,101) (21,245,101) (4,824,618) 16,420,483 — — 1,253,294 1,253,294 Face amount of bonds issued 14,200,000 14,200,000 13,012,767 (1,187,233) Transfers out (1,500,000) (1,500,000) (1,534,681) (34,681) Total other financing sources (uses) 12,700,000 12,700,000 12,731,380 31,380 Net change in fund balance (8,545,101) (8,545,101) 7,906,762 16,451,863 Fund balance, July 1, 2019 34,271,202 34,271,202 34,271,202 — $ 25,726,101 $ 25,726,101 $ 42,177,964 $ 16,451,863 Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Bond premium Fund balance, June 30, 2020 125 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 880,900 Interest revenue Total revenues $ 880,900 $ 801,405 $ (79,495) 89,000 89,000 71,091 (17,909) 969,900 969,900 872,496 (97,404) 175,012 5,332,438 — 5,332,438 8,522,200 154,885 157,276 (2,391) EXPENDITURES: General government Public safety Capital outlay — 3,209,889 3,160,334 49,555 8,697,212 8,697,212 3,317,610 5,379,602 (7,727,312) (7,727,312) (2,445,114) 5,282,198 Transfers out (2,000,000) (2,000,000) — 2,000,000 Total other financing sources (uses) (2,000,000) (2,000,000) — 2,000,000 Net change in fund balance (9,727,312) (9,727,312) (2,445,114) 7,282,198 Fund balance (deficit), July 1, 2019 (3,144,036) (3,144,036) (3,144,036) — Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2020 $ (12,871,348) $ (12,871,348) $ 126 (5,589,150) $ 7,282,198 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 275,000 Miscellaneous $ 275,000 $ 550,977 $ 275,977 — — 115,948 115,948 275,000 275,000 666,925 391,925 General government 1,699,066 1,852,166 — 1,852,166 Public safety 5,377,910 — — — Capital outlay 6,475,950 11,699,517 8,352,677 3,346,840 Total expenditures 13,552,926 13,551,683 8,352,677 5,199,006 (13,277,926) (13,276,683) (7,685,752) 5,590,931 Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets 300,000 300,000 396,924 96,924 Transfers in 3,291,200 3,291,200 3,405,200 114,000 Total other financing sources (uses) 3,591,200 3,591,200 3,802,124 210,924 Net change in fund balance (9,686,726) (9,685,483) (3,883,628) 5,801,855 Fund balance, July 1, 2019 11,020,354 11,020,354 11,020,354 — Fund balance, June 30, 2020 $ 127 1,333,628 $ 1,334,871 $ 7,136,726 $ 5,801,855 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 168,000 Total revenues $ 168,000 $ 308,707 $ 140,707 168,000 168,000 308,707 140,707 General government 1,610,000 1,462,452 987,265 475,187 Capital outlay 4,343,761 4,492,552 4,034,681 457,871 Total expenditures 5,953,761 5,955,004 5,021,946 933,058 (5,785,761) (5,787,004) (4,713,239) 1,073,765 Transfers in 3,285,586 3,285,586 3,294,698 9,112 Total other financing sources (uses) 3,285,586 3,285,586 3,294,698 9,112 Net change in fund balance (2,500,175) (2,501,418) (1,418,541) 1,082,877 Fund balance, July 1, 2019 6,931,617 6,931,617 6,931,617 — EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2020 $ 128 4,431,442 $ 4,430,199 $ 5,513,076 $ 1,082,877 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, 2020 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Charges for services $ Interest revenue 136,663 $ 136,663 $ 132,993 $ (3,670) 4,500 4,500 26,602 22,102 141,163 141,163 159,595 18,432 General government 20,000 20,000 — 20,000 Community services 230,000 230,000 10,284 219,716 Total expenditures 250,000 250,000 10,284 239,716 Net change in fund balance (108,837) (108,837) 149,311 258,148 Fund balance, July 1, 2019 517,014 517,014 517,014 — Total revenues EXPENDITURES: Fund balance, June 30, 2020 $ 129 408,177 $ 408,177 $ 666,325 $ 258,148 130 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. 131 City of Chandler Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2020 Chandler Housing Authority Total Other Proprietary Funds 98,469 740 — 7,490 — — 106,699 $ 7,274,593 16,253 65,242 — 24,882 — 7,380,970 $28,362,429 2,431,624 65,242 7,490 96,552 33 30,963,370 — — 154,750 154,750 6,514,032 7,256,469 13,770,501 13,770,501 37,246,202 18,927,094 13,736,359 32,663,453 32,663,453 32,770,152 1,751,537 7,433,642 9,185,179 9,339,929 16,720,899 27,192,663 28,426,470 55,619,133 55,773,883 86,737,253 157,463 154,185 405,866 717,514 Solid Waste Airport ASSETS Current assets: Equity in pooled cash and investments Accounts receivable Due from other governments Inventories Accrued interest receivable Other receivables Total current assets $20,989,367 2,414,631 — — 71,670 33 23,475,701 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 132 $ LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Customer advances Compensated absences payable Landfill closure and postclosure liability Total current liabilities 1,074,510 47,165 — 74,322 16,249 94,446 1,306,692 29,204 14,099 47,760 29,733 4,934 — 125,730 61,135 46,059 575,398 66,542 18,480 — 767,614 1,164,849 107,323 623,158 170,597 39,663 94,446 2,200,036 Long-term liabilities: Compensated absences payable Net pension liability OPEB liability Landfill closure and postclosure liability Total long-term liabilities Total liabilities 72,376 989,791 422,175 4,245,554 5,729,896 7,036,588 21,979 1,094,463 149,265 — 1,265,707 1,391,437 82,311 2,179,322 496,234 — 2,757,867 3,525,481 176,666 4,263,576 1,067,674 4,245,554 9,753,470 11,953,506 256,010 143,376 438,428 837,814 32,663,453 9,185,179 (1,273,929) 3,977,677 $31,389,524 $13,162,856 55,619,133 19,044,314 $74,663,447 DEFERRED INFLOWS OF RESOURCES Deferred inflows of OPEB and pension plan items NET POSITION Net investment in capital assets Unrestricted Total net position 13,770,501 16,340,566 $30,111,067 133 134 City of Chandler Combining Statement of Revenues, Expenses and Changes in Net Position Non-Major Proprietary Funds For the year ended June 30, 2020 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 16,757,829 150 $ 17,638,173 — 7,137,950 7,137,950 — — 1,188,420 1,188,420 — 15,521 — 15,521 15 15,232 108,641 123,888 16,757,844 910,947 8,435,161 26,103,952 1,033,249 102,341 — 1,135,590 Personnel services 1,811,285 532,998 1,844,291 4,188,574 Contractual services 12,414,140 49,517 815,968 13,279,625 636,942 652,394 544,483 1,833,819 — — 4,914,609 4,914,609 Grants and entitlements — Rentals Sales taxes Miscellaneous Total operating revenues $ 880,194 $ OPERATING EXPENSES: General and administrative Commodities Housing assistance payments Depreciation and amortization expense 610,112 1,045,038 591,219 2,246,369 Total operating expenses 16,505,728 2,382,288 8,710,570 27,598,586 OPERATING INCOME (LOSS) 252,116 (1,471,341) (275,409) (1,494,634) 891,684 1 310,140 1,201,825 NONOPERATING REVENUES (EXPENSES): Interest revenue Gain (loss) on disposal of capital assets Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (17,000) — — (17,000) 874,684 1 310,140 1,184,825 1,126,800 (1,471,340) 34,731 (309,809) 1,557 814,738 — 816,295 — 454,474 285,000 739,474 (98,512) (25,253) — (123,765) (96,955) 1,243,959 285,000 1,432,004 1,029,845 (227,381) 319,731 1,122,195 CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions Transfers in Transfers out Total capital contributions and transfers CHANGE IN NET POSITION NET POSITION Beginning of year End of year 135 29,081,222 31,616,905 12,843,125 73,541,252 $ 30,111,067 $ 31,389,524 $ 13,162,856 $ 74,663,447 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2020 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 16,659,416 $ 914,079 $ 1,434,753 $ 19,008,248 Cash received from grantors — — 7,165,403 7,165,403 Cash payments to suppliers (14,009,634) (780,233) (6,315,189) (21,105,056) Cash payments to employees for services (1,789,367) (519,999) (1,823,106) (4,132,472) 860,415 (386,153) 461,861 936,123 — 454,474 285,000 739,474 (98,512) (25,253) — (123,765) (98,512) 429,221 285,000 615,709 (103,249) (15,918) (139,812) (258,979) (103,249) (15,918) (139,812) (258,979) 908,655 1 314,255 1,222,911 908,655 1 314,255 1,222,911 1,567,309 27,151 921,304 2,515,764 Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out Net cash provided (used) by 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: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year 19,422,058 End of year $ 136 20,989,367 71,318 $ 98,469 6,353,289 $ 7,274,593 25,846,665 $ 28,362,429 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 252,116 $ (1,471,341) $ (275,409) $ (1,494,634) 610,112 1,045,038 591,219 2,246,369 (Increase) decrease in receivables (37,434) 419 109,011 71,996 (Increase) decrease in inventories — 22,681 — 22,681 (Increase) decrease in other assets — — 38,570 38,570 Increase (decrease) in payables 74,697 1,338 (40,129) 35,906 Increase (decrease) in accrued payroll and compensated absences 23,477 13,308 22,331 59,116 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Changes in assets, liabilities and deferred items: Increase (decrease) in deposits — 3,490 (1,810) 1,680 Increase (decrease) in customer advances (60,994) (777) 57,794 (3,977) Increase (decrease) in net pension items (15,220) (4,648) (53,673) (73,541) Increase (decrease) in OPEB liability 13,661 4,339 13,957 31,957 Total adjustments 608,299 Net cash provided (used) by operating activities $ 1,085,188 737,270 860,415 $ (386,153) $ 461,861 $ 2,430,757 936,123 1,557 $ 814,738 — $ 816,295 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from city government $ Gain (loss) on disposal of capital assets (17,000) 137 — $ — (17,000) 138 Statistical Section Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information Chandler’s Rock Solid Fiscal Foundations Statistical Section Libraries, parks, and recreational programs are a vital part of enjoying the Chandler lifestyle and leisure time from resident’s busy lives. 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 m Schedules e 1-6 contain information to help the reader understand how the City’s financial . performance and well-being have changed over time. 140 Revenue Capacity a Schedules x 7-9 contain information to help the reader assess the factors affecting the City's . ability to generate its sales and use tax. 156 Debt Capacity 160 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 186 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 188 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. 139 CITY OF CHANDLER, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2011 Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ 2012 534,292,488 41,906,129 260,307,288 $ 545,926,100 44,047,942 259,783,598 2013 $ 558,279,485 112,307,412 179,518,042 2014 $ 563,033,503 105,723,768 183,088,676 836,505,905 849,757,640 850,104,939 851,845,947 281,936,017 280,440,445 355,015,004 388,837,444 — 168,164,942 — 179,339,498 — 176,961,822 — 206,284,498 450,100,959 459,779,943 531,976,826 595,121,942 Primary government Net investment in capital assets Restricted Unrestricted 816,228,505 41,906,129 428,472,230 826,366,545 44,047,942 439,123,096 913,294,489 112,307,412 356,479,864 951,870,947 105,723,768 389,373,174 Total primary government net position $ 1,286,606,864 $ 1,309,537,583 $ 1,382,081,765 $ 1,446,967,889 Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position 140 Schedule 1 Fiscal Year 2015 $ 567,041,560 108,965,994 7,709,550 2016 $ 579,591,241 121,767,847 (5,872,464) 2017 $ 2018 587,213,640 122,006,140 (36,358,845) $ 536,086,249 168,510,855 (65,575,548) 2019 $ 575,953,033 173,490,725 (72,592,489) 2020 $ 547,511,826 191,839,529 (8,655,932) 683,717,104 695,486,624 672,860,935 639,021,556 676,851,269 730,695,423 380,427,606 119,075 217,824,645 342,252,306 31,365,801 258,806,679 439,823,546 32,977,926 176,390,803 467,799,036 33,447,434 243,735,547 481,911,949 31,523,149 249,131,813 477,329,239 33,750,526 267,005,635 598,371,326 632,424,786 649,192,275 744,982,017 762,566,911 778,085,400 947,469,166 109,085,069 225,534,195 921,843,547 153,133,648 252,934,215 1,027,037,186 155,184,734 139,831,290 1,003,885,285 201,958,289 178,159,999 1,057,864,982 205,013,874 176,539,324 1,024,841,065 225,590,055 258,349,703 $ 1,282,088,430 $ 1,327,911,410 $ 1,322,053,210 $ 1,384,003,573 $ 1,439,418,180 $ 1,508,780,823 141 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2011 Expenses Governmental activities: General government Public safety Transportation and development Community services Interest and fiscal charges $ 2012 67,808,567 90,738,477 50,909,361 28,919,560 12,767,934 $ 88,876,901 89,141,559 52,111,019 28,966,271 12,425,819 2013 $ 90,143,339 95,974,126 55,846,316 30,979,208 11,777,701 2014 $ 99,231,501 94,738,371 52,183,052 32,331,286 10,044,363 Total governmental activities expenses 251,143,899 271,521,569 284,720,690 288,528,573 Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority 57,452,876 37,896,180 13,443,102 2,107,354 7,580,783 56,277,327 38,804,360 13,756,352 1,941,752 7,642,503 55,440,712 40,401,849 13,974,858 1,960,788 7,473,891 55,877,774 41,969,764 14,131,202 1,980,706 7,616,301 Total business-type activities expenses Total primary government expenses $ 118,480,295 369,624,194 142 $ 118,422,294 389,943,863 $ 119,252,098 403,972,788 $ 121,575,747 410,104,320 Schedule 2a Fiscal Year 2015 $ $ 104,456,315 102,050,425 51,714,085 31,784,321 6,986,490 2016 $ 112,514,903 111,568,323 55,012,081 31,441,019 7,884,146 2017 $ 2018 104,998,802 149,366,614 56,752,197 32,599,549 6,623,830 $ 113,587,478 112,371,723 55,287,494 36,824,102 6,716,119 2019 $ 114,373,302 124,906,187 53,806,473 36,990,853 7,046,655 2020 $ 138,850,297 109,544,169 59,777,330 38,195,563 6,885,184 296,991,636 318,420,472 350,340,992 324,786,916 337,123,470 353,252,543 55,470,724 50,823,497 14,087,780 1,860,057 7,433,284 54,075,742 51,034,921 13,925,017 2,011,880 7,267,806 63,236,746 58,112,931 14,380,178 1,893,830 7,728,876 61,513,990 60,605,779 14,531,558 1,841,718 8,109,635 58,297,769 61,218,775 15,221,985 2,038,417 8,478,235 60,330,758 66,788,084 16,522,728 2,382,288 8,710,570 129,675,342 426,666,978 128,315,366 446,735,838 145,352,561 495,693,553 146,602,680 471,389,596 145,255,181 482,378,651 154,734,428 507,986,971 $ $ $ 143 $ $ CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2012 2013 2011 Program Revenues Governmental activities: Charges for services: General government Public safety Transportation and development Community services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 22,548,679 5,658,628 11,884,554 4,079,359 5,890,147 $ 31,381,062 5,794,329 27,905,311 4,136,285 6,162,320 $ 35,898,378 7,375,050 10,150,102 8,240,732 3,999,536 2014 $ 38,832,217 5,861,044 16,145,692 7,744,507 4,744,636 16,041,213 11,016,136 9,116,635 10,170,236 66,102,580 86,395,443 74,780,433 83,498,332 Business-type activities: Charges for services: Water Wastewater Solid waste Airport Chandler housing authority Operating grants and contributions Capital grants and contributions Total business-type activities program revenues 43,708,974 31,610,009 13,277,403 995,307 457,781 6,297,200 8,659,772 49,565,071 35,907,085 13,890,957 996,605 466,556 6,341,087 19,118,567 48,258,282 37,690,400 13,836,363 976,102 637,329 5,785,335 81,572,568 49,588,376 40,509,289 14,034,894 961,067 806,540 5,457,991 72,176,582 105,006,446 126,285,928 188,756,379 183,534,739 Total primary government program revenues $ 171,109,026 $ 212,681,371 $ 263,536,812 $ 267,033,071 Net (expense)/revenue Governmental activities Business-type activities Total primary government net (expense) $ (185,041,319) (13,473,849) $ (198,515,168) $ (185,126,126) $ (209,940,257) $ (205,030,041) 7,863,634 69,504,281 61,958,992 $ (177,262,492) $ (140,435,976) $ (143,071,049) 144 Schedule 2b Fiscal Year 2015 $ $ 39,207,061 6,469,215 14,438,138 7,551,166 3,514,714 2016 $ 42,021,638 7,471,344 16,538,175 10,792,114 5,188,787 2017 $ 2018 41,400,079 6,561,052 16,333,273 10,732,351 4,481,750 $ 43,089,930 6,100,584 17,145,894 9,180,276 3,988,629 2019 $ 43,622,807 4,998,779 14,869,670 7,583,513 4,522,345 2020 $ 43,203,865 6,512,002 16,420,652 5,623,796 31,052,185 13,133,637 16,725,462 9,702,683 9,340,818 10,510,464 18,714,457 84,313,931 98,737,520 89,211,188 88,846,131 86,107,578 121,526,957 48,045,103 45,666,777 14,140,246 1,010,288 877,380 5,862,477 35,357,741 50,483,097 51,321,346 14,940,591 946,419 946,408 5,784,021 32,690,364 53,251,020 53,563,934 15,648,992 950,294 954,070 6,198,797 27,645,932 54,031,592 56,367,650 16,307,409 963,827 1,085,013 6,350,858 22,360,158 52,459,720 56,055,131 16,107,922 906,557 1,155,430 7,224,669 18,335,155 54,722,296 61,531,949 16,757,829 880,194 1,188,570 7,137,950 14,190,016 150,960,012 157,112,246 158,213,039 157,466,507 152,244,584 156,408,804 235,273,943 $ (212,677,705) 21,284,670 $ (191,393,035) $ 255,849,766 $ (219,682,952) 28,796,880 $ (190,886,072) $ 247,424,227 $ (261,129,804) 12,860,478 $ (248,269,326) $ 246,312,638 $ (235,940,785) 10,863,827 $ (225,076,958) 145 $ 238,352,162 $ (251,015,892) 6,989,403 $ (244,026,489) $ 277,935,761 $ (231,725,586) 1,674,376 $ (230,051,210) CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2011 Governmental Revenues and Other Changes in Net Position Governmental activities: Property taxes Sales taxes Highway user taxes Other taxes Franchise fees $ 2012 36,158,574 86,523,295 13,287,878 88,561 2,819,521 $ 31,877,716 97,485,387 11,823,280 5,979,715 2,988,456 2013 $ 29,656,415 102,200,517 12,929,504 6,295,212 2,936,533 2014 $ 28,348,952 103,880,801 13,352,622 3,243,937 3,145,449 State shared Investment income Miscellaneous Transfers in (out) Total governmental activities 47,732,614 1,841,244 3,071,588 (244,702) 191,278,573 45,958,627 1,221,923 1,116,832 (74,075) 198,377,861 51,347,206 2,843,417 2,181,627 (102,875) 210,287,556 55,423,759 1,869,128 819,766 (132,082) 209,952,332 Business-type activities: Sales taxes Investment income Miscellaneous Transfers in (out) Total business-type activities: — 533,313 946,507 244,702 1,724,522 — 389,446 1,351,829 74,075 1,815,350 — 1,180,290 1,409,437 102,875 2,692,602 70,065 788,025 1,683,332 132,082 2,673,504 Total primary government Change in Net Position Governmental activities Business-type activities Total primary government $ 193,003,095 $ 200,193,211 $ 212,980,158 $ 212,625,836 $ 6,237,254 (11,749,327) (5,512,073) $ 13,251,735 9,678,984 22,930,719 $ 347,299 72,196,883 72,544,182 $ 4,922,291 64,632,496 69,554,787 $ $ 146 $ $ Schedule 2c Fiscal Year 2015 $ 28,708,033 108,657,130 14,633,470 10,106,891 3,300,129 59,236,588 1,763,585 1,197,215 (123,350) 227,479,691 2016 $ 10,865 819,556 2,475,760 123,350 3,429,531 29,214,103 112,250,883 15,303,635 6,100,475 3,344,817 60,712,442 3,834,840 1,124,559 (433,282) 231,452,472 2017 $ 10,391 2,180,447 2,632,460 433,282 5,256,580 2018 29,837,763 120,189,651 16,683,743 664,616 3,285,267 65,924,228 1,063,997 1,014,665 (159,815) 238,504,115 $ 10,682 938,491 2,798,023 159,815 3,907,011 30,816,495 127,584,410 16,135,949 940,203 3,571,744 64,723,211 1,531,766 1,502,418 (4,175,579) 242,630,617 2019 $ 13,769 854,848 14,923,212 4,175,579 19,967,408 32,550,250 139,851,355 17,301,902 866,267 3,567,184 67,156,430 14,822,135 1,261,279 (90,680) 277,286,122 2020 $ 17,347 7,742,589 2,842,825 90,680 10,693,441 34,419,182 140,644,918 16,996,911 1,153,237 3,441,225 70,769,943 16,951,295 2,085,020 (891,991) 285,569,740 15,521 9,974,135 2,962,466 891,991 13,844,113 $ 230,909,222 $ 236,709,052 $ 242,411,126 $ 262,598,025 $ 287,979,563 $ 299,413,853 $ 14,801,986 24,714,201 39,516,187 $ 11,769,520 34,053,460 45,822,980 $ (22,625,689) 16,767,489 (5,858,200) $ 6,689,832 30,831,235 37,521,067 $ 26,270,230 17,682,844 43,953,074 $ 53,844,154 15,518,489 69,362,643 $ $ $ $ 147 $ $ CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2011 General fund Nonspendable Restricted Assigned Unassigned Total general fund $ $ 2012 893,067 844,754 61,733,537 98,872,954 162,344,312 $ $ 947,804 939,867 102,635,587 69,223,074 173,746,332 2013 $ $ 938,549 939,867 101,115,766 66,077,714 169,071,896 2014 $ $ 892,533 1,166,105 95,185,696 82,453,462 179,697,796 All other governmental funds Nonspendable Restricted Unassigned Total all other governmental funds — 105,756,072 (12,315,197) $ 93,440,875 148 — 111,378,788 (12,798,348) $ 98,580,440 — 111,367,545 (13,646,428) $ 97,721,117 — 104,557,663 (11,034,021) $ 93,523,642 Schedule 3 Fiscal Year 2015 $ 2016 941,359 1,792,180 102,222,466 80,152,269 185,108,274 $ $ — 107,173,814 (15,322,260) $ 91,851,554 $ 2017 907,594 1,566,618 109,958,162 68,567,835 181,000,209 $ $ — 120,201,229 (11,877,159) $ 108,324,070 $ 2018 979,446 1,451,061 101,620,277 87,492,981 191,543,765 $ $ 7,422 120,640,190 (11,350,383) $ 109,297,229 $ 2019 813,143 1,980,807 116,359,633 65,182,337 184,335,920 $ $ — 166,570,330 (2,555,420) $ 164,014,910 $ 149 2020 866,239 2,179,767 131,214,214 66,035,760 200,295,980 $ $ — 171,310,958 (5,758,986) $ — 190,128,921 (7,697,792) $ 165,551,972 $ 182,431,129 $ $ 985,396 1,710,608 139,326,860 90,887,858 232,910,722 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year Property taxes Sales taxes Highway user taxes Other taxes Franchise fees State shared revenues Grants and entitlements System development fees $ Special assessments Licenses and permits Charges for services Fines and forfeitures Rentals Contributions Interest revenue Miscellaneous Total revenues 2011 36,301,709 86,523,295 13,287,878 88,561 2,819,521 47,732,614 14,759,620 6,739,920 $ 673,064 3,208,944 18,002,168 4,697,317 387,952 100,000 1,635,258 4,593,104 $ 241,550,925 2012 32,329,560 97,485,387 11,823,280 5,979,715 2,988,456 45,958,627 13,826,606 11,724,823 $ 678,027 6,955,605 19,938,566 4,700,430 455,842 100,000 1,034,895 1,392,691 $ 150 257,372,510 2013 29,841,739 102,200,517 12,929,504 6,295,212 2,936,533 51,347,206 9,480,090 7,781,083 $ 676,127 4,887,466 19,786,513 5,825,098 570,638 100,000 2,529,078 1,384,123 $ 258,570,927 2014 28,442,823 103,880,801 13,352,622 3,243,937 3,145,449 55,423,759 10,187,895 11,846,275 678,843 5,479,384 20,269,976 4,622,215 732,807 100,000 1,623,973 650,117 $ 263,680,876 Schedule 4 Fiscal Year $ $ 2015 28,899,684 108,657,130 14,633,470 10,106,891 3,300,129 59,236,588 10,638,831 10,585,623 573,438 5,146,556 20,110,036 4,601,501 751,163 150,000 1,562,241 572,252 279,525,533 $ $ 2016 29,237,607 112,250,883 15,303,635 6,100,475 3,344,817 60,712,442 16,159,064 16,217,004 606,757 6,634,161 19,705,786 4,828,174 974,192 200,000 3,409,065 897,102 296,581,164 $ $ 2017 29,692,846 120,189,651 16,683,743 664,616 3,285,267 65,924,228 12,677,860 14,683,327 607,191 7,075,996 20,869,517 3,908,387 678,387 200,000 921,195 494,984 298,557,195 $ $ 151 2018 30,819,812 127,584,410 16,135,949 940,203 3,571,744 64,723,211 12,111,857 13,982,674 611,499 6,394,322 21,827,375 4,865,783 127,575 200,000 1,398,729 974,107 306,269,250 $ $ 2019 32,526,357 139,851,355 17,301,902 866,267 3,567,184 67,156,430 11,911,639 9,023,678 610,501 7,268,592 21,512,737 4,234,286 127,206 200,000 13,268,020 923,369 330,349,523 $ $ 2020 34,334,216 140,644,918 16,996,911 1,153,237 3,441,225 70,769,943 49,719,415 8,730,973 508,485 7,760,403 20,355,702 5,571,322 213,345 200,000 15,017,352 1,471,977 376,889,424 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year General government Public safety Transportation and development Community services Capital improvements Debt service: Principal retirement Interest and fiscal charges Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 2011 43,636,784 84,007,752 22,126,233 22,836,317 67,299,941 $ 2012 48,894,811 82,820,106 25,532,739 23,255,568 29,787,069 $ 2013 44,512,533 89,587,613 24,807,578 23,554,854 41,793,319 $ 2014 46,807,747 90,068,218 23,418,175 23,771,925 45,657,265 15,090,000 12,901,616 15,970,000 12,550,323 26,870,000 11,908,025 15,955,000 10,682,206 278,512 — — 145,970 $ 268,177,155 $ 238,810,616 $ 263,033,922 $ 256,506,506 13.3 % 13.5 % 16.4 % (1) In FY 2017, the City called the remaining payments for the 2007 GO Refunding issuance totaling $8,110,000. 152 11.6 % Schedule 5 Fiscal Year 2015 46,895,106 93,773,306 24,769,553 24,569,283 56,539,116 2016 $ 52,138,384 104,605,663 25,471,154 24,988,844 50,009,243 2017 $ 50,892,490 103,167,906 28,294,221 26,605,279 44,712,255 21,490,000 7,737,974 722,293 17,465,000 8,635,631 — 25,240,000 7,689,305 249,838 $ 276,496,631 $ 283,313,919 $ 286,851,294 $ 11.7 % 10.2 % (1) 12.9 % 2018 $ 55,706,708 109,736,277 27,750,365 27,088,640 71,268,257 2019 $ 58,070,201 111,496,663 25,871,080 27,712,871 69,006,722 2020 $ 79,624,174 113,166,600 30,117,735 28,344,665 77,024,413 20,264,000 7,918,081 252,611 22,820,000 8,270,161 — 21,340,000 8,073,320 319,631 $ 319,984,939 $ 323,247,698 $ 358,010,538 10.4 % 153 11.3 % 9.5 % 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 2011 Other Financing Sources (Uses) Bond premium Face amount of bonds issued $ 2012 1,047,424 20,285,000 $ 2013 — — $ 2014 — — $ 562,052 8,660,000 Proceeds from disposal of capital assets Payment to escrow agent Capital contributions Transfers in Transfers out 108,929 (10,816,839) — 41,605,646 (56,040,439) 89,007 — — 20,576,188 (22,685,504) 76,381 — — 32,849,979 (33,997,394) 161,126 (9,061,800) — 24,586,418 (25,653,741) Total other financing sources (uses) (3,810,279) (2,020,309) (1,071,034) (745,945) (30,436,509) $ 16,541,585 (5,533,759) $ 6,428,425 Net change in fund balance $ 154 $ Schedule 6 Fiscal Year 2015 $ $ 17,045,635 128,254,000 2016 $ 2017 — — $ 2018 6,339,230 25,500,000 $ 3,609,365 58,740,000 2019 $ 2020 — — $ 2,927,904 30,400,000 103,964 (143,635,520) — 463,709 — — 652,882 (31,589,392) — 213,829 — — 1,356,796 — — 396,924 — 396,153 28,717,990 (29,776,581) 27,885,557 (29,252,060) 28,116,369 (29,208,275) 46,032,351 (47,370,020) 45,484,505 (48,005,487) 39,282,296 (42,788,264) 709,488 (902,794) (189,186) 61,225,525 (1,164,186) 30,615,013 3,738,390 $ 12,364,451 $ 11,516,715 $ 155 47,509,836 $ 5,937,639 $ 49,493,899 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) 2011 673,666 6,380,957 38,741,270 1,973,790 2,551,354 351,250 2,462,219 9,479,850 7,971,183 3,524,076 1,000,342 11,413,338 86,523,295 $ $ 1.77% Fiscal Year 2012 2013 714,641 $ 717,442 10,869,566 10,408,518 42,844,871 45,331,307 2,255,786 2,288,989 2,334,179 2,937,426 352,550 334,981 2,606,371 2,884,618 10,025,726 10,817,611 8,670,199 9,069,109 3,628,007 3,731,350 1,054,968 1,315,599 12,128,475 12,363,565 97,485,339 1.76% $ 102,200,515 $ $ 1.75% 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% 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. 156 Schedule 7 $ 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 $ 2016 1,019,939 8,855,057 51,191,162 2,957,685 2,745,130 248,433 3,125,459 13,217,561 10,752,479 3,234,369 1,127,257 13,786,741 $ Fiscal Year 2017 2018 1,019,938 $ 1,083,161 11,496,791 12,388,978 53,137,169 56,605,561 3,424,279 3,712,085 2,527,981 2,328,030 186,862 182,820 3,611,180 3,676,196 13,647,156 15,134,275 11,341,714 11,872,941 2,796,065 2,395,673 3,619,340 4,394,129 13,391,857 13,824,331 $ 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 2020 972,105 12,824,214 64,911,529 3,560,787 1,710,004 177,542 4,282,451 18,184,361 11,978,625 2,337,375 5,335,557 14,385,889 $ 108,667,996 $ 112,261,272 $ 120,200,332 $ 127,598,180 $ 139,868,702 $ 140,660,439 1.76% 1.76% 1.75% 1.74% 1.74% 1.73% 157 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) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1.77% 1.76% 1.75% 1.75% 1.76% 1.76% 1.75% 1.74% 1.74% 1.73% 0.67% 0.67% 0.67% 0.67% 0.67% 0.67% 0.66% 0.65% 0.65% 0.65% 5.85% 5.90% 5.80% 4.99% 4.96% 4.92% 4.95% 4.92% 4.92% 4.86% 0.02% 0.02% 0.02% 0.02% 0.03% 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 have occurred 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, 2011 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. 158 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2020 Taxpayer Business Type Taxpayer A Utility Taxpayer B Sales and Use Tax Payments Fiscal Year 2011 Percentage of Total Sales and Use Tax Rank Payments Rank Percentage of Total Sales and Use Tax Payments 8,553,000 1 9.89% Sales and Use Tax Payments $ 11,161,762 1 7.94% $ Department Store 4,754,630 2 3.38% 2,632,948 2 3.04% Taxpayer C Grocery Store 3,454,253 3 2.46% 2,200,339 3 2.54% Taxpayer D Department Store 2,672,365 4 1.90% 1,579,991 4 1.83% Taxpayer E Construction 2,313,129 5 1.64% Taxpayer F Retailer 2,253,970 6 1.60% 1,242,538 6 1.44% Taxpayer G Retailer 1,821,423 7 1.29% Taxpayer H Vehicle Dealer 1,697,588 8 1.21% 905,145 10 1.05% Taxpayer I Construction Contracting 1,645,644 9 1.17% Taxpayer J Commercial Leasing 1,624,306 10 1.15% Taxpayer K Telecommunications 1,317,922 5 1.52% Taxpayer L Department Store 1,183,404 7 1.37% Taxpayer M Utility 1,060,554 8 1.23% Taxpayer N 1,041,631 9 1.20% Department Store $ 33,399,070 23.74% $ 21,717,472 25.11% 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. 159 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General Obligation Bonds $ 279,968,000 268,148,000 256,288,000 233,678,000 222,143,000 205,088,000 186,873,000 223,288,000 205,764,000 215,939,000 Revenue Bonds $ 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 — Special Assessment Bonds $ 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 1,830,000 General Obligation Bond Issuance Premiums $ — — — 3,539,600 17,244,108 15,663,687 19,829,438 21,269,309 19,097,787 19,756,588 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 33,084 Business-type Activities Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General Obligation Bonds $ 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 86,261,000 General Bonded Debt $ 459,715,000 439,135,000 417,855,000 390,410,407 391,026,194 359,163,743 334,688,362 361,290,196 330,661,357 330,729,798 Revenue Bonds $ 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 2,340,000 Less Amount Available in Debt Service Fund $ 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 4,693,193 Excise Tax Revenue Obligations $ 48,540,000 47,440,000 45,695,000 148,380,000 142,200,000 204,090,000 198,520,000 230,635,000 222,575,000 228,985,000 Net General Bonded Debt Outstanding $ 441,393,462 419,876,316 401,435,614 374,224,235 376,116,177 343,881,961 325,706,663 353,838,207 326,074,795 326,036,605 General Obligation Bond Issuance Premiums $ — — — 2,220,807 11,567,086 10,630,056 12,263,924 11,025,887 9,898,570 8,773,210 Estimated Actual Taxable Value of Property $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 40,890,232,930 Excise Tax Revenue Obligations Issuance Premiums Revenue Bonds Issuance Premiums $ Percentage of Estimated Actual Taxable Value of Property 1.97% 1.99% 1.87% 1.59% 1.29% 1.09% 1.01% 1.06% 0.88% 0.80% — — — 1,705,732 1,324,131 832,855 624,642 416,428 202,401 — $ Total Primary Government (1) $ 603,345,000 570,770,000 535,685,000 608,805,370 593,320,112 614,901,176 568,997,296 624,864,531 578,592,636 580,768,479 — — — 8,502,636 8,040,688 11,447,974 15,075,185 17,271,299 15,979,766 16,850,597 Percentage of Personal Income (2) 9.22% 7.84% 6.71% 7.76% 7.15% 7.35% 6.20% 6.24% 5.73% 5.45% 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. 160 Per Capita (2) 2,535 2,383 2,213 2,521 2,397 2,465 2,128 2,267 2,215 2,191 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2020 Debt Outstanding Governmental Unit Schedule 11 Estimated Percentage Applicable Estimated Share of Overlapping Debt Debt repaid with property taxes 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 $ None None 312,450,000 437,000,000 274,941,668 186,920,000 316,135,000 117,425,000 None 4.55 % 6.97 6.97 $ 6.97 6.97 6.97 6.97 6.97 6.97 Subtotal, overlapping debt None None 21,781,441 30,464,041 19,166,669 13,030,523 22,038,329 8,185,904 None 114,666,907 City direct debt 237,558,672 Total direct and overlapping debt 100.00 237,558,672 $ 352,225,579 Source: Piper Sandler Companies 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 2019-20 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 161 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2011 2012 2013 2014 $ 148,117,597 $ 135,310,758 $ 130,522,600 $ 142,895,404 13,361,000 11,840,000 10,869,000 10,198,000 $ 134,756,597 $ 123,470,758 $ 119,653,600 $ 132,697,404 9.02% 8.75% 8.33% 7.14% $ 493,725,323 $ 451,035,860 $ 435,075,335 $ 476,318,016 446,354,000 427,295,000 406,986,000 374,452,000 $ 47,371,323 $ 23,740,860 $ 28,089,335 $ 101,866,016 90.41% 94.74% 93.54% 78.61% 6% General Obligation Bond Limitation Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of the debt limit 20% General Obligation Bond Limitation Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of the debt limit Fiscal Year 2010-11 through Fiscal Year 2018-19: Piper Jaffray Inc. Fiscal Year 2019-20: Piper Sandler Companies Note: 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). 162 Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2020 Full Cash Assessed Valuation as of June 30, 2020 $ 4,308,417,196 Debt limit (6% of assessed value) 258,505,031 Debt applicable to limit: 6% general obligation bonds 9,507,600 Excess premium on bonds outstanding 264,978 Legal 6% debt margin $ 248,732,453 Debt limit (20% of assessed value) Debt applicable to limit: 20% general obligation bonds Excess premium on bonds outstanding Legal 20% debt margin $ 861,683,439 $ 292,692,400 11,263,732 557,727,307 Fiscal Year 2015 $ 142,827,478 2016 $ 9,848,400 $ 132,979,078 476,091,596 $ 123,724,996 74.01% 180,597,597 $ 633,416,159 $ 309,973,409 51.06% 198,432,895 $ 189,480,245 $ $ $ 194,395,932 661,442,986 $ 360,850,336 697,900,943 $ 45.44% 373,734,315 46.45% 163 $ 219,747,369 $ 774,195,564 $ 475,314,362 38.61% 248,732,453 3.78% $ 298,881,202 $ 258,505,031 9,772,578 5.39% 324,166,628 $ 232,258,669 2020 12,511,300 7.15% 300,592,650 $ 209,370,282 2019 14,974,350 4.51% 323,442,750 $ 2018 8,952,650 4.96% 352,366,600 $ $ 9,427,250 6.90% $ 190,024,847 2017 861,683,439 303,956,132 $ 557,727,307 35.27% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Less: Fiscal Highway User Operating Net Available Year Taxes Expenses Revenue 2011 $ 13,287,878 $ 9,336,554 $ 3,951,324 Debt Service Principal $ Interest 2,875,000 $ Coverage 1,176,009 0.98 2012 11,823,280 7,895,663 3,927,617 3,700,000 936,975 0.85 2013 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 17,301,902 10,724,907 6,576,995 2,050,000 79,200 3.09 16,996,911 7,500,788 9,496,123 — — — 2019 2020 (1) Water Revenue Bonds Less: Fiscal Utility Service Operating Net Available Year Charges Expenses Revenue 2011 $ 43,708,974 $ 26,834,274 $ 16,874,700 Debt Service Principal $ 6,007,332 Interest $ Coverage 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 2020 54,722,296 33,556,507 21,165,789 1,638,000 65,520 12.42 Excise Tax Revenue Obligations Less: Fiscal Excise Tax Operating Net Available Year Collections Expenses Revenue 2011 $ 136,164,353 $ — $ 136,164,353 Debt Service Principal $ 1,100,000 Interest $ Coverage 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 2020 214,706,260 — 214,706,260 8,525,000 8,911,325 12.31 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. (1) Street and highway revenue bonds matured on 7/1/2019. 164 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Less: Fiscal Utility Service Operating Net Available Year Charges Expenses Revenue 2011 $ 31,610,009 $ 15,759,431 $ 15,850,578 Debt Service Principal $ Interest 1,602,668 $ Coverage 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 2020 61,531,949 29,092,865 32,439,084 702,000 28,020 44.44 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. 165 CITY OF CHANDLER, ARIZONA PROPERTY TAX ASSESSMENT RATIOS LAST FIVE FISCAL YEARS Property Classification Tax Year 2016 Schedule 14 Tax Year 2017 Tax Year 2018 Tax Year 2019 Tax Year 2020 Mining, Utility, Commercial, and Industrial 18.00 % 18.00 % 18.00 % 18.00 % 18.00 % Agriculture and Vacant Land 15.00 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 14.00 15.00 14.00 15.00 15.00 Railroad, Private Car, and Airline Flight Property Tax Year 2016 through 2019 Source: Piper Jaffray Inc. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). Tax Year 2020 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 166 CITY OF CHANDLER, ARIZONA REAL AND SECURED PROPERTY TAXES LEVIED AND COLLECTED LAST FIVE FISCAL YEARS FY 2019-20 FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 $ Tax Rate 1.1281 1.1386 1.1400 1.1600 1.1792 $ Schedule 15 Adjusted to 30 June of Initial Fiscal Year Tax Levy Collections % of Levy 34,039,034 $ 33,597,309 98.70 % 31,655,843 31,714,236 100.00 30,612,579 30,321,360 99.05 29,626,073 29,273,316 98.81 28,972,604 28,693,845 99.04 Fiscal Year 2015-16 through 2018-19 Source: Piper Jaffray Inc. as compiled from County Department of Finance. Fiscal Year 2020 Source: Piper Sandler Companies as compiled from County Department of Finance. 167 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING ASSESSED VALUATION AND TOTAL TAX RATES PER $100 ASSESSED VALUATION JUNE 30, 2020 Schedule 16 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 2019-20 Net Limited Property Assessed Valuation $ 66,157,223,639 43,194,326,395 43,194,326,395 43,194,326,395 39,558,003,840 FY 2019-20 Total Tax Rate per $100 Assessed Valuation $ 0.4566 1.4009 1.3285 0.0556 0.1792 43,194,326,395 43,194,326,395 43,194,326,395 19,868,037,167 2,918,163,525 3,746,807,002 2,179,588,085 3,205,267,510 2,066,469,120 3,011,152,689 0.0095 0.3333 0.1400 0.0500 6.4698 2.5631 3.8650 6.9816 5.9023 1.1281 Source: Piper Sandler Companies 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. 168 CITY OF CHANDLER, ARIZONA SECONDARY ASSESSED VALUATION/NET FULL CASH ASSESSED VALUATION BY PROPERTY TAX CLASSIFICATION LAST FIVE FISCAL YEARS Schedule 17 FY 2015-16 Net Full Cash Assessed Valuation FY 2016-17 Net Full Cash Assessed Valuation FY 2017-18 Net Full Cash Assessed Valuation FY 2018-19 Net Full Cash Assessed Valuation FY 2019-20 Net Full Cash Assessed Valuation FY 2019-20 Annual Percentage Change $ 784,201,124 $ 929,870,699 $ 1,027,345,765 $ 1,102,515,089 $ 1,246,170,328 13.03% Agriculture and Vacant Land 80,816,673 80,660,011 74,055,978 75,266,539 78,888,739 4.81% Owner-Occupied Residential 1,316,995,223 1,424,368,802 1,472,336,280 1,574,405,659 1,681,112,768 6.78% Leased or Rented Residential 474,177,840 537,827,158 574,699,602 646,538,541 738,411,405 14.21% Railroad, Private Car, and Airline Flight Property 1,910,025 1,782,690 1,910,025 1,782,690 1,910,025 7.14% Historical Property 161,203,221 192,089,070 156,435,042 88,612,464 124,084,500 40.03% 440,664 482,365 432,241 383,733 400,055 4.25% $ 2,819,744,770 $ 3,167,080,795 $ 3,307,214,933 $ 3,489,504,715 $ 3,870,977,820 10.93% Mining, Utility, Commercial, and Industrial Commercial Historic Property TOTAL Fiscal Year 2015-16 through 2018-19 Source: Piper Jaffray Inc. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). Fiscal Year 2019-20 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 169 CITY OF CHANDLER, ARIZONA NET LIMITED PROPERTY ASSESSED VALUE OF MAJOR TAXPAYERS JUNE 30, 2020 Taxpayer Intel Corporation Cyrusone LLC Wells Fargo Bank NA TWC-Chandler LLC Bank of America NA Description Manufacturing Plant Manufacturing Plant Financial Services Enclosed Mall Financial Services Microchip Technology Incorporated NXP USA, Inc. CAZ 1 DE LLC Digital 2121 South Price LLC SWVP Continuum Office LLC Manufacturing Plant Manufacturing Plant Office Building Office Building Business Park FY 2019-20 Net Limited Property Assessed Value $ 155,572,256 26,198,240 23,272,604 20,338,866 14,611,815 $ Total City Net Limited Property Assessed Valuation 13,188,105 12,619,511 10,718,449 9,286,105 8,359,957 294,165,908 Schedule 18 As % of Total FY 2019-20 Net Limited Property Assessed Value 5.17% 0.87 0.77 0.68 0.49 0.44 0.42 0.36 0.31 0.28 9.79% $ 3,011,152,689 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. 170 CITY OF CHANDLER, ARIZONA COMPARATIVE VALUATION HISTORIES LAST FIVE FISCAL YEARS Schedule 19 Comparative Net Limited Property Assessed Value History Fiscal Year FY 2019-20 FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 City of Chandler Maricopa County State of Arizona $ 3,011,152,689 $ 43,194,326,395 $ 66,157,223,639 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 2019-20 FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16 $ City of Chandler Maricopa County State of Arizona 3,870,977,820 $ 56,588,192,576 $ 82,730,928,616 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 Fiscal Year 2015-16 through 2018-19 Source: Piper Jaffray Inc. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue) and Arizona Tax Research Association. Fiscal Year 2019-20 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue) and Arizona Tax Research Association. 171 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT RATIOS JUNE 30, 2020 Per Capital As % of City's Bonded Debt 2019-20 Population Net Full Cash Estimates @ Assessed 266,804 (1) Value Direct General Obligation Bond Debt Schedule 20 As % of City's 2019-20 Estimated Net Full Cash Value $ 302,200,000 $ 1,132.67 7.81 0.91 Direct Overlapping General Obligation Bond Debt $ 631,514,162 $ 2,366.96 16.31 1.90 Source: (1) City of Chandler, Development Services Department 172 CITY OF CHANDLER, ARIZONA ESTIMATED NET FULL CASH VALUE LAST FIVE FISCAL YEARS Fiscal Year 2019-20 2018-19 2017-18 2016-17 2015-16 Schedule 21 Estimated Net Full Cash Value $ 33,312,389,044 29,847,787,490 28,994,768,811 28,297,114,500 25,007,403,208 Fiscal Year 2015-16 through 2018-19 Source: Piper Jaffray Inc. 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). Fiscal Year 2019-20 Source: Piper Sandler Companies 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). 173 CITY OF CHANDLER, ARIZONA MONTHLY HIGHWAY USER TAX REVENUES - CALENDAR YEAR CASH BASIS LAST SEVEN YEARS Month Schedule 22 2013 2014 2015 2016 2017 2018 2019 2020 January $ 1,033,980 $ 1,048,496 $ 1,158,689 $ 1,215,671 $ 1,296,536 $ 1,266,830 $ 1,446,371 $1,524,413 February 1,002,875 1,098,559 1,192,313 1,231,841 1,945,977 1,233,000 1,455,486 1,475,878 March 1,059,191 1,060,205 1,198,428 1,242,204 1,280,990 1,272,234 1,419,880 1,489,729 April 1,205,917 1,230,836 1,318,157 1,449,212 1,439,986 1,353,119 1,411,903 1,354,146 May 1,297,009 1,352,359 1,454,506 1,472,271 1,583,971 1,516,006 1,584,927 1,082,446 June 1,210,511 1,212,824 1,316,155 1,346,463 1,421,037 1,350,636 1,383,030 1,317,683 July 1,222,725 1,255,302 1,367,068 1,434,908 1,427,236 1,469,617 1,680,966 August 1,069,168 1,166,518 1,198,488 1,303,240 1,202,282 1,358,741 1,293,772 September 985,799 1,109,334 1,150,953 1,211,218 1,746,522 1,353,880 1,468,761 October 1,043,023 1,128,913 1,190,930 1,279,912 1,299,346 1,451,988 1,434,844 November 1,001,552 1,107,485 1,193,359 1,273,531 1,217,745 1,488,542 1,463,921 December 994,499 1,115,903 1,177,335 1,220,109 1,208,612 1,401,808 1,410,353 TOTAL $13,126,249 $13,886,734 $14,916,381 $15,680,580 $17,070,240 $16,516,401 $17,454,214 174 CITY OF CHANDLER, ARIZONA POPULATION STATISTICS Schedule 23 Year 2020 estimate 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 265,075 (1) 4,439,863 (2) 261,173 (1) 4,367,835 (2) 257,853 (1) 4,294,460 (2) 254,239 (1) 4,221,684 (2) 248,332 (1) 4,155,302 (2) 243,679 (3) 4,175,049 (3) 241,264 (1) 4,008,651 (2) 240,364 (1) 3,944,859 (2) 238,040 (1) 3,884,705 (2) 236,479 (3) 3,825,191 (3) 230,845 (3) 3,700,516 (3) 174,061 (3) 2,930,153 (3) 91,149 (3) 2,132,249 (3) 29,673 (1) 1,521,597 (3) Sources: (1) City of Chandler, Development Services Department (2) Arizona Office of Economic Opportunity (3) U.S. Census Bureau 175 State of Arizona 7,189,020 (2) 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 2015-16 (1) Transaction Privilege Tax 2017-18 (1) 2018-19 (1) 2019-20 (2) Adopted 2020-21 112,250,883 $ 120,189,651 $ 127,584,410 $ 138,888,825 $ 140,798,389 $ 123,562,552 State Shared Sales Tax 22,471,132 23,768,564 23,821,248 25,525,595 26,597,361 23,410,000 State Shared Income Tax 28,453,619 31,910,426 30,652,381 30,693,731 33,255,159 37,000,000 Franchise Fees 3,333,938 3,272,104 3,560,770 3,556,211 3,432,995 3,375,000 Licenses and Permits 6,761,791 7,209,693 6,512,930 7,398,669 7,908,291 6,781,000 Fines and Forfeitures 2,549,080 2,560,255 3,368,445 3,196,843 2,714,065 3,011,908 175,820,443 $ 188,910,693 $ 195,500,184 $ 209,259,874 $ 214,706,260 $ 197,140,460 Totals $ 2016-17 (1) $ 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 2019-20 revenues. 176 CITY OF CHANDLER, ARIZONA TRANSACTION PRIVILEGE (SALES) TAX RATES BY CATEGORY JUNE 30, 2020 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) Hotel/Motel (> 30 Days) Rentals - Real Property Residential Commercial Tangible Personal Property Rentals Restaurants/Bars Retail Sales Telecommunications Transportation for Hire Utilities Use Tax Source: City of Chandler, Management Services Department (1) MMRA - maintenance, repair, replacement and alteration 177 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 % CITY OF CHANDLER, ARIZONA STATE SALES TAX TAXABLE ACTIVITIES, TAX RATES AND DISTRIBUTION SHARE JUNE 30, 2020 Schedule 26 State Transaction Privilege (Sales) Tax Rates Taxable Activities Transporting Utilities Telecommunications Pipeline Private Car Line Publication State Tax Rate 5.600 % 5.600 5.600 5.600 5.600 5.600 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 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. 178 CITY OF CHANDLER, ARIZONA COMBINED SCHEDULE OF WATER AND SEWER SYSTEM REVENUES, EXPENSES, NET REVENUES AND DEBT SERVICE COVERAGE LAST FIVE FISCAL YEARS Schedule 27 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 System Revenues: Service Fees Miscellaneous Interest Income Total System Revenues $101,804,443 $106,814,954 $110,399,242 $108,514,851 $116,254,245 351,169 63,411 953,964 130,001 97,652 1,978,389 875,983 780,250 6,817,699 8,772,310 $104,134,001 $107,754,348 $112,133,456 $115,462,551 $125,124,207 System Expenditures: General and Administration $ 6,157,415 $ 6,065,965 $ 6,219,983 $ 6,400,086 $ Personnel Services Contractual Services Commodities Total System Expenditures 15,159,966 10,437,077 18,207,840 $ 49,962,298 15,489,373 17,153,121 18,949,931 $ 57,658,390 16,343,098 11,774,018 30,463,463 $ 64,800,562 16,548,508 12,919,313 23,034,508 $ 58,902,415 17,613,794 13,240,678 25,283,817 $ 62,649,372 Net Income Available for Debt Service $ 54,171,703 $ 50,095,958 $ 47,332,894 $ 56,560,136 $ 62,474,835 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 3.35x 16.71x 13.63x 16.58x 179 6,511,083 2,485,500 25.14x CITY OF CHANDLER, ARIZONA UTILITY RATE INCREASE HISTORY Schedule 28 Effective Date 09/01/80 04/25/83 11/30/83 07/01/84 11/01/80 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 charge. (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 year-round 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. 180 CITY OF CHANDLER, ARIZONA TOP 10 WATER AND WASTEWATER CUSTOMERS JUNE 30, 2020 Water Customer name Schedule 29 INTEL CORP NXP USA, INC. CHANDLER UNIFIED SCHOOL AIR PRODUCTS & CHEMICAL DIGITAL 2121 SOUTH PRICE, LLC TOWNSQUARE APARTMENTS CHANDLER REGIONAL HOSPITAL Amount $ 7,076,665 1,163,349 568,624 298,195 173,273 137,027 102,664 KYRENE SCHOOL DIST #28 BKEP TERMINALLING, LLC BMF IV AZ LAGUNA VILLAGE LLC 96,128 95,044 88,394 Wastewater Customer name INTEL CORP NXP USA, INC. DIGITAL 2121 SOUTH PRICE, LLC GILA RIVER COMMUNITY (LONE BUTTE) CHANDLER UNIFIED SCHOOL AIR PRODUCTS & CHEMICAL CHANDLER REGIONAL HOSPITAL PIMALCO BKEP TERMINALLING, LLC MICROCHIP TECHNOLOGY IN Source: City of Chandler, Management Services Department 181 Amount $ 14,305,766 1,681,247 277,421 251,887 155,916 139,979 130,948 127,696 119,032 94,779 CITY OF CHANDLER, ARIZONA NUMBER OF WATER AND WASTEWATER CUSTOMERS LAST TEN FISCAL YEARS 2011 2012 2013 2014 WATER Residential Commercial Multi-Unit Industrial Other 72,195 4,369 986 49 196 72,867 4,387 988 49 206 73,551 4,406 991 50 226 74,319 4,158 1,032 56 1,317 WASTEWATER Residential Commercial Multi-Unit Industrial Other 70,736 2,268 817 38 233 71,508 2,312 811 38 239 72,067 2,358 811 39 252 72,862 2,012 878 37 470 Source: City of Chandler, Management Services Department 182 Schedule 30 2015 2016 2017 2018 2019 2020 75,035 4,243 1,043 58 1,536 75,883 4,309 1,087 61 1,640 77,062 4,535 1,107 63 2,034 77,674 4,550 1,128 66 2,116 78,244 4,927 1,134 67 2,389 78,928 2,546 1,115 63 647 73,363 74,346 75,761 76,517 77,089 2,033 887 37 477 2,201 920 34 475 2,138 915 38 590 2,329 952 48 592 2,371 956 48 598 77,797 2,420 965 48 603 183 CITY OF CHANDLER, ARIZONA SPECIAL ASSESSMENT DELINQUENCIES JUNE 30, 2020 Schedule 31 There were no delinquencies on payments for the assessment. 184 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT OUTSTANDING JUNE 30, 2020 Schedule 32 2019-20 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 2019-20 Proportion Applicable to City of Chandler Approximate Percent Net Debt Amount None None 312,450,000 437,000,000 274,941,668 186,920,000 316,135,000 4.551 % 6.971 6.971 $ 6.971 6.971 6.971 6.971 None None 21,781,441 30,464,041 19,166,669 13,030,523 22,038,329 117,425,000 6.971 8,185,904 None 302,200,000 6.971 100.000 None 302,200,000 Total Direct and Overlapping General Obligation Bonded Debt Outstanding $ 416,866,907 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 $ 10.9840 Inside Mesa Unified School District No. 4 12.0633 $ Inside Tempe Union High School District No. 213 and Kyrene Elementary School District No. 28 $ 11.5098 Inside Chandler Unified School District No. 80 11.5515 $ Source: Piper Sandler Companies 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 2019-20 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 185 CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Fiscal Year Population (1) 2011 2012 2013 2014 2015 2016 237,145 238,040 240,364 241,264 243,679 248,332 2017 2018 2019 2020 254,239 257,853 261,173 265,075 Total Personal Income (2) Schedule 33 Median Age (2) Unemployment Rate (3) Per Capita Personal Income (2) $6,518,878,905 7,233,559,520 7,925,281,808 7,840,356,208 (4) 8,168,120,080 8,324,088,640 31.7 32.4 34.9 35.0 34.9 34.9 6.6% 6.1 6.0 5.5 4.7 4.5 $27,489 30,388 32,972 32,497 33,520 33,520 8,731,329,977 9,360,321,753 10,101,649,294 10,650,183,350 35.2 35.3 36.0 36.0 3.9 3.6 4.0 8.7 34,343 36,301 38,678 40,178 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. 186 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO Schedule 34 2020 Employer Intel Corporation Wells Fargo Chandler Unified School District Employees 11,000 5,500 4,900 Rank 1 2 3 Percentage of Total City Employment 7.95% 3.97% 3.54% 3,600 2,500 2,150 4 5 6 2.6% 1.81% 1.55% 1,700 1,700 1,617 1,500 1,400 36,167 7 7 8 9 10 1.23% 1.23% 1.17% 1.08% 1.01% 26.13% Bank of America Chandler Regional Medical Center/Dignity Health Northrop Grumman NXP PayPal City of Chandler Microchip Technology Verizon Wireless Total 2011 Employer Intel Corporation Bank of America Chandler Unified School District Wells Fargo Ocotillo Corporate Campus Ebay/Paypal Chandler Regional Hospital Microchip Technology City of Chandler Verizon Wireless Freescale Semiconductor Total Employees 9,700 3,500 3,000 2,600 2,000 1,600 1,538 1,511 1,500 1,450 28,399 Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Employment 7.94% 2.86% 2.46% 2.13% 1.64% 1.31% 1.26% 1.24% 1.23% 1.19% 23.26% Source: City of Chandler, Economic Development Division, City of Chandler Human Resources Department and Arizona Office of Employment and Population Statistics. 187 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 Transportation and Development Total Community Services 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 2011 Fiscal Year 2012 2013 2014 5 5 122 12 40 27 85 296 172 229 467 218 685 5 88 42 20 155 — — — — — — — 1,537 6 4 124 14 38 30 72 288 170 231 467 238 705 5 89 42 19 155 — — — — — — — 1,549 4 6 174 13 35 29 66 327 159 199 467 224 691 5 87 46 16 154 — — — — — — — 1,530 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 2015 and 2016 are a result of Library, Museum and Center for the Arts moving from Community Services to City Manager Department. (2) 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. (3) 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. 188 Schedule 35 2015 2016 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 (1) 2017 Fiscal Year (2) 2018 2019 (1) 11 7 206 15 38 31 64 372 152 199 491 222 713 7 89 69 20 185 — — — — — — — 1,621 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 (2) 189 (3) 2020 (3) 5 6 194 15 40 32 67 359 77 199 488 229 717 — — — — — 6 90 68 21 2 78 265 1,617 CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program General Government Privilege tax licenses Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio 2011 2012 2013 2014 23,821 506 25,726 599 27,387 584 27,467 564 848 43 2.22 908 26 2.07 834 43 1.89 780 53 2.10 2,330 5,462 3,785 5,490 2,494,009 1,050 2,489,741 1,000 2,395,192 1,003 2,332,758 938 Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations 34 141,279 17,892 4,424 46 33 137,170 17,950 5,188 34 28 137,485 18,474 5,029 22 27 145,400 18,865 5,442 16 Municipal Utilities Water connections Operating wells Daily pumping capacity - wells (gallons) Daily pumping capacity - plants (gallons) Sewer connections Sanitary sewer (miles) Solid waste customers served Solid waste refuse collected (tons) Solid waste refuse recycled (tons) 77,408 30 64,460,000 72,000,000 73,118 866 69,480 88,466 20,832 77,626 28 61,920,000 72,000,000 73,712 868 70,179 85,257 21,096 79,278 26 64,790,000 72,000,000 74,606 869 70,667 86,557 20,680 79,766 27 64,710,000 72,000,000 75,564 890 71,269 83,950 21,046 Transportation & Development Building permits issued Community Services Library circulation Center for the Arts events & exhibits Source: City of Chandler Departments 190 Schedule 36 Fiscal Year 2015 2016 2017 2018 2019 2020 28,224 544 29,582 565 28,321 535 28,046 681 37,404 666 41,290 542 867 51 1.57 844 46 1.74 860 43 1.81 838 27 1.79 789 24 2.04 739 33 2.40 5,170 5,142 4,635 3,944 4,011 4,091 2,163,076 939 2,101,421 985 2,059,429 1,048 2,041,574 1,177 1,801,237 825 1,415,291 537 23 139,177 22,785 4,692 27 26 145,466 23,966 5,814 30 26 156,186 25,072 4,635 27 25 159,301 25,185 5,135 41 22 154,736 26,818 6,698 18 23 146,859 26,371 6,641 23 80,401 28 64,400,000 72,000,000 76,492 911 71,860 84,209 22,442 83,089 28 66,300,000 72,000,000 78,144 917 73,162 81,653 22,102 84,670 31 74,400,000 72,000,000 78,972 928 73,288 80,069 22,305 84,338 32 74,100,000 84,000,000 79,841 933 75,018 83,004 22,101 85,416 31 71,300,000 84,000,000 81,033 935 75,675 84,500 22,887 86,098 31 71,800,000 84,000,000 81,796 941 76,773 86,950 21,800 191 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program Community Services Developed parks Developed acres Undeveloped acres Swimming pools Lighted fields Library bookstock Transportation and Development Total miles streets (center line) Street lights Signalized intersections Public Safety Police stations Fire stations General Government Based aircraft Municipal Utilities Water mains (miles) Fire hydrants Average daily treatment (mgd) 2011 2012 2013 2014 61 1,192 342 6 34 429,604 61 1,196 338 6 34 555,924 61 1,198 336 6 39 550,857 62 1,208 325 6 39 595,969 829 26,600 208 829 26,600 212 831 26,900 216 838 27,100 216 3 10 3 10 3 10 3 10 437 399 388 415 1,223 12,925 24 1,227 10,877 24 1,227 12,553 26 1,227 12,717 26 Source: City of Chandler Departments 192 Schedule 37 Fiscal Year 2015 2016 2017 2018 2019 2020 64 1,232 309 6 41 396,773 65 1,236 302 6 41 341,073 65 1,244 299 6 43 360,618 65 1,244 299 6 43 359,445 67 1,281 231 6 41 310,888 67 1,281 231 6 43 310,812 841 27,700 218 855 27,700 218 855 27,800 218 857 27,199 220 857 29,500 225 858 29,500 226 3 10 3 10 3 10 3 11 3 11 3 11 425 427 455 457 523 440 1,278 13,118 28 1,196 13,207 29 1,283 15,708 29 1,212 15,970 28 1,218 16,159 54 1,228 16,296 31 193 194 Phone (480) 782-2333 chandleraz.gov/Accounting Mailing Address Mail Stop 702 P.O. Box 4008 Chandler, Arizona 85244-4008 Accounting Division Fourth Floor 175 S Arizona Avenue Chandler, Arizona 85225