City of Chandler Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2022 “Moving Forward Together” CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2022 Prepared by Management Services Department Dawn Lang, Deputy City Manager|CFO Kristi Smith, Financial Services Officer Robert Steele, Accounting Manager CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2022 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 Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Special Revenue .......................................................................................................................... Schedule of the Proportionate Share of the Net Pension Liability - Arizona State Retirement System .................................................................................................................................. Schedule of Contributions - All Pension Plans .................................................................................. Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Police ................................................................................................ Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Fire .................................................................................................... Schedule of Changes in OPEB Liabilities and Related Ratios - Single Employer Plan .............. Notes to the Required Supplementary Information ........................................................................ i 11 17 30 32 34 35 36 37 38 41 42 44 89 91 92 94 96 98 100 101 CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Other Financial Statements: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Obligation Bonds Debt Service ........................................................................................... Non-Major Governmental Funds: Combining Balance Sheet.................................................................................................................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances .............. Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: Highway User Special Revenue......................................................................................................... Local Transportation Assistance Special Revenue ....................................................................... Community Development Special Revenue .................................................................................. Police Confiscated Property Special Revenue ............................................................................... Parks and Recreation Special Revenue ........................................................................................... Museum Special Revenue .................................................................................................................. Library Special Revenue ..................................................................................................................... Special Assessment Bonds ................................................................................................................ General Government Capital Projects ............................................................................................ Public Buildings Capital Projects ...................................................................................................... Grants Capital Projects ....................................................................................................................... Streets Capital Projects....................................................................................................................... Community Services Capital Projects .............................................................................................. Public Safety Buildings and Improvements Capital Projects ..................................................... Vehicle and Capital Equipment Replacement Capital Projects ................................................. Technology Replacement Capital Projects ..................................................................................... Municipal Arts Capital Projects ......................................................................................................... Non-Major Proprietary Funds: Combining Statement of Net Position .............................................................................................. Combining Statement of Revenues, Expenses and Changes in Net Position.......................... Combining Statement of Cash Flows ................................................................................................ 105 109 112 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 134 137 138 STATISTICAL SECTION Financial Trends Schedule 1, Net Position by Component ......................................................................................... Schedule 2a, Changes in Net Position .............................................................................................. Schedule 2b, Changes in Net Position .............................................................................................. Schedule 2c, Changes in Net Position............................................................................................... Schedule 3, Fund Balances of Governmental Funds ..................................................................... Schedule 4, Governmental Funds Revenues ................................................................................... Schedule 5, Governmental Funds Expenditures and Debt Service Ratio ................................. ii 142 144 146 148 150 152 154 CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS, continued STATISTICAL SECTION, continued Financial Trends, Continued Schedule 6, Other Financing Sources and Uses and Net Changes in Fund Balance Governmental Funds ............................................................................................................................ Revenue Capacity Schedule 7, Taxable Revenue by Category ...................................................................................... Schedule 8, Direct and Overlapping Sales and Use Tax Rates .................................................... Schedule 9, Principal Sales and Use Taxpayers .............................................................................. Debt Capacity Schedule 10, Ratios of Outstanding Debt ........................................................................................ Schedule 11, Direct and Overlapping Governmental Activities Debt ........................................ Schedule 12, Legal Debt Margin Information ................................................................................. Schedule 13a, Pledged-Revenue Coverage ..................................................................................... Schedule 13b, Pledged-Revenue Coverage ..................................................................................... Schedule 14, Property Tax Assessment Ratios ............................................................................... Schedule 15, Property Taxes Levied and Collected ....................................................................... Schedule 16, Direct and Overlapping Assessed Valuations and Tax Rates Per $100 Assessed Valuation ............................................................................................................................... Schedule 17, Property Value by Property Classification ............................................................... Schedule 18, Net Assessed Limited Property Assessed Value of Major Taxpayers ............... Schedule 19, Estimated Net Full Cash Value and Assessed Values............................................ Schedule 20, Direct and Overlapping General Obligation Bonded Debt Ratios ..................... Schedule 21, Population Statistics ..................................................................................................... Schedule 22, Excise Tax Collections .................................................................................................. Schedule 23, Transaction Privilege (Sales) Tax Rates by Category ............................................. Schedule 24, State Sales Tax Taxable Activities, Tax Rates and Distribution Share ............... Schedule 25, Combined Schedule of Water and Sewer System Revenues, Expenses, Net Revenues and Debt Service Coverage .............................................................................................. Schedule 26, Utility Rate Increase History ....................................................................................... Schedule 27, Top 10 Water and Wastewater Customers ............................................................. Schedule 28, Number of Water and Wastewater Customers ..................................................... Schedule 29, Delinquencies on Payments for the Assessments ................................................ Schedule 30, Direct and Overlapping General Obligation Bonded Debt Outstanding.......... Demographic and Economic Information Schedule 31, Demographic and Economic Statistics ..................................................................... Schedule 32, Principal Employers ...................................................................................................... Operating Information Schedule 33, Employees by Function................................................................................................ Schedule 34, Operating Indicators by Function/Program ............................................................ Schedule 35, Capital Asset Statistics by Function/Program ......................................................... iii 156 158 160 161 162 163 164 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 184 185 186 187 188 190 192 1 - Introductory Section • Elected and Appointed Officials • Organizational Chart • Certificate of Achievement for Excellence in Financial Reporting “Moving Forward Together” Chandler’s commitment to innovation, thoughtful planning, and wise investment enables our businesses and residents to receive quality services at some of the lowest tax and utility rates in the Valley. Introductory Section • Letter of Transmittal Introductory Section December 16, 2022 Honorable Mayor, Members of the City Council, City Manager, and Citizens of the City of Chandler: The Annual Comprehensive Financial Report of the City of Chandler, Arizona (the City), for the year ended June 30, 2022, 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 99 percent, from an estimated 142,486 in 1997 to 282,873 in 2022, based on intercensal population estimates published by the State of Arizona. The City’s manufacturing sector has been a major driver of economic growth during this time and includes high-tech industrial companies such as Intel Corporation, Northrop Grumman, Microchip Technology, and NXP Semiconductors. These four companies combine to employ over 17,000 people in the City. Total manufacturing employment is over 25,000 with many companies in the supply chain also operating in Chandler. Another industry that has experienced strong growth is financial services with companies such as Wells Fargo, Bank of America, GM Financial Services and Allstate establishing corporate offices in Chandler. Information technology is another growth industry with Insight Enterprises Inc., a Fortune 500 company, recently relocating its corporate headquarters to Chandler. Mailing Address Mail Stop 609 PO Box 4008 Chandler, AZ 85244-4008 Management Services Administration (480)782-2250 (480) 782-2253 Fax chandleraz.gov 1 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 $96,948. In addition, 77 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 2.8 percent during fiscal year 2021-22 compared with 3.0 percent for Maricopa County and 3.7 percent for the State of Arizona. The City’s sales tax revenues, which comprise over 55 percent of its general fund, increased by 14 percent for fiscal year 2021-22 from the prior year actuals. The City continues to strengthen its financial position and has benefitted from ongoing and one-time revenues created by increased retail spending and new development, including the $20 billion Intel expansion that kicked off in February 2022. With increased operating revenue growth anticipated, managing costs of services during a time of inflation and higher cost of personnel in the market is critical. As the City ages, maintaining existing infrastructure is also a focus to ensure quality amenities for residents and businesses. 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, the Chandler Cultural Foundation, and the Chandler Museum Foundation are three legally separate entities, all 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. 2021-2022 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 refundings of GO Bonds ($48.2 million) and Excise Tax Revenue Obligations ($85.46 million), generating $9.1million in present value savings, and issued new GO Bonds ($31.295 million) with a historic low True Interest Cost (TIC) of 0.327643%; • Held a successful 2021 bond election with extensive public involvement and education that added needed authorization for multiple capital projects with no planned increase to the secondary property tax rate; • Implemented a Cost-of-Service study and related public outreach for Water, Wastewater, Reclaimed Water, and Solid Waste rate adjustments designed to re-allocate revenue requirements across all customer classes and updated the Citywide Fee Schedule and Chapters 44 and 50 of the City Code; • Worked with the Human Relations Commission to fund 11 Diversity Mini-Grant applications that foster diversity education for youth ages 5-18, in which a total of over 3,886 Chandler students benefited; • Established a Military and Veterans Affairs Commission and completed the Veteran’s Memorial Field of Honor; • Prepared agreement and helped obtain Arizona Corporation Commission approval with Salt River Project (SRP) for High-Tech Interconnect Project to serve Intel Corporation’s Chandler Campus, and negotiated a development agreement with Intel Corporation for additional water and wastewater infrastructure to support their Ocotillo campus expansion which qualifies for the state’s Transaction Privilege Tax (TPT) statute, allowing for reimbursement from Intel Corporation and the Arizona Department of Revenue (ADOR); • Actively monitored federal, state, and local legislation for impacts on City revenue, and secured $8 million in state funding for the Loop 101/202 water main repair and $1 million in federal funding for the advanced metering infrastructure; • Tracked total Airport take-offs and landings of 225,303 in calendar year 2021, making it the 13 busiest th general aviation airport in the U.S. and the 38 busiest U.S. airport overall; • Economic Development’s combined business attraction/retention efforts have supported projects that are anticipated to provide 1,849 jobs in Chandler within the next year and up to 3,164 jobs within three years. Key Economic Development assisted business locate projects include Cirrus Aircraft, EMD Electronics, Edwards, NEHP, Stryker, and VirTra, and retention and expansion projects include Applied Materials, GM IT Innovation Center, Mr. Cooper, Optima Tax Relief, Port Plastics, and Vensure; • The Parks Strategic Master Plan was completed, as well as the development of phase 1 of Lantana Ranch Park, Hoopes Park playground, and Homestead North Park began construction; • The Chandler Library implemented a dynamic digital experience with a new website, catalog, mobile app, email, and events calendar, and opened the Makery at the Downtown Library October 2021; • The Chandler Center for the Arts (CCA) served over 120,000 people and continued its commitment to diverse and inclusive programming with a focused reach to Black, Spanish/Hispanic/Latino, and family th 3 audiences. Free programs were offered to over 7,500 attendees and over 50 nonprofit and cultural institutions utilized the CCA for their activities; • The Vision Gallery hosted 90 free events that included opening receptions, Vision Kids classes, and special events with more than 4,300 attendees. The gallery was recognized as one of the ten best art galleries in metro Phoenix; • The Chandler Museum accepted a $250,000 donation from the Chandler Historical Society that created the Chandler Museum Foundation Endowment Fund and an additional $80,000 for the oral history program, supporting public programs and new exhibits. The Museum offered 256 programs on Chandler culture, history, and art that had an attendance of 10,596; • Facilitated ongoing downtown Chandler development and redevelopment projects to include the Shops on Frye, The Tipsy Egg, The Uncommon, Recreo, The Religion Store, Acqua di Mare, DC Heights, ImprovMania, and space on Boston Street; • Issued 4,600 building permits for over $1.2 billion in construction in calendar year 2021 and conducted 23,790 building inspections; • Created an online open data portal to share City GIS data with residents and the online performance measure dashboards displaying various metrics across all departments; • Municipal Court implemented Community Support Court in partnership with criminal justice and the legal community, giving defendants experiencing homelessness facing criminal charges a specialized court calendar; • Created campaigns and materials for the Neighborhood Resources Department to promote grant and housing programs for residents in need, and the Chandler Cares Team assisted over 1,400 residents seeking resources for rent, utilities, food, and other crisis services to connect to potential resources; • Neighborhood Programs awarded 36 neighborhood grants totaling over $64,000 for cleanup events, common wall, and landscaping improvements, and to humanely address the overpopulation of feral cats; • Received and administered the distribution of $7.6 million of reallocated Emergency Rental Assistance (ERA) Program funds to assist Chandler residents impacted by COVD-19 with rent and utility payments; • The Fire Department responded to 29,000 emergency incidents, including a significant battery storage facility fire mitigated through the coordination and collaboration of public safety, City staff, state, federal, tribal, and private sector resources; • Treated and reclaimed 10.9 billion gallons of wastewater at the Airport, Lone Butte, and Ocotillo Water Reclamation Facilities, 10.2 billion gallons of which were reused for irrigation and cooling; • Treated and delivered over 23.7 billion gallons of potable drinking water; • Completed 256 miles of asphalt repaving, surface seal, and slurry rehabilitation treatments, and completed ADA upgrades to 708 sidewalk/driveway locations and 726 corner ramps; • Successfully achieved law enforcement accreditation for the 9 consecutive time demonstrating that Chandler is a modern, transparent, and community focused agency utilizing the best practices in policing; and • Continued developing and maintaining community partnerships, which is the cornerstone of system of policing resulting in overall Part One crime being down again in 2021, making it one of the safest years in Chandler’s history. th 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 4 internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state, and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other City staff, as needed. 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 2021-22, $1.058 billion). 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 Annual Comprehensive Financial Report for the year ended June 30, 2021, marking the fortieth 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 Annual Comprehensive Financial Report whose contents conform to program standards. Such reports must satisfy both GAAP and applicable legal requirements. 5 Additionally, the City of Chandler was also awarded the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2021 from the GFOA, marking the thirty-fourth consecutive year of receiving this award. The award reflects the commitment of staff to meeting the highest principles of governmental budgeting. In order to be awarded a Distinguished Budget Presentation Award, the City had to satisfy nationally recognized guidelines for effective budget presentation. The guidelines are designed to assess how well an entity’s budget serves as a policy document, financial plan, operational guide, and communications device. The City’s budget presentation receives an outstanding rating in many of the areas rated. The Certificate of Achievement and Distinguished Budget Presentation Awards are valid for a period of one year only. 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, Financial Services Officer; Robert Steele, Accounting Manager; Tracy Schmidt, Accounting Supervisor; Lina Alam, Senior Accountant; Debbie Motta, Senior Accountant; and Joanne Chang, Senior Accountant. Finally, I wish to thank the Mayor and Council, City Manager, Assistant City Manager, Deputy City Manager, Directors, and City staff for their continued support in promoting sound financial policies and internal controls. Respectfully submitted, Dawn Lang Deputy City Manager | CFO 6 CITY OF CHANDLER, ARIZONA ELECTED AND APPOINTED OFFICIALS JUNE 30, 2022 Kevin Hartke, Mayor Terry Roe, Vice Mayor Christine Ellis, Councilmember OD Harris, Councilmember Rene’ Lopez, Councilmember Matt Orlando, Councilmember Mark Stewart, Councilmember Executive Staff Joshua H. Wright, City Manager Tadd Wille, Assistant City Manager Dawn Lang, Deputy City Manager Andy Bass, Deputy City Manager Department Heads and Directors Kelly Schwab, City Attorney Dana DeLong, City Clerk Alicia M. Skupin, Presiding City Magistrate Matt Burdick, Communications and Public Affairs Director John Sefton, 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 Citizens of Chandler Mayor and City Council City Manager City Clerk City Magistrate Assistant City Manager Police Fire • Communications • Administration • Community Services • Emergency Management • Criminal Investigations • Health & Medical • Field Operations • Prevention & Training • Forensic Science • Property & Evidence • Operations City Attorney/Risk Mgr. Deputy City Manager | CFO • Libraries • Performance Management Development Services • Sustainability • Building Safety City Manager • Park Maintenance • Park Development Management Services • Recreation/ Aquatics • Planning • Telecommunication & Utility Franchise • HR Administration/ • Code Enforcement • Purchasing • Recruitment & Selection • Classification & Compensation • Organizational Development • Safety • Workers’ Compensation Communications and Public Affairs • Mayor and Council Office • Tax & Licensing • Utility Services • Diversity Office Information Technology • Housing & Redevelopment • Service Delivery • Neighborhood Programs • Application Support • Diversity, Equity & Inclusion Cultural Development • Museum • Special Events • Custodial Services • Public Information • Video Production 8 • Capital Projects • Water/Wastewater • Energy Management • Print, Mail, Graphics Public Works and Utilities • Information Security • Access/Key Control • Downtown • Tourism • Solid Waste Services • Maintenance & Infrastructure • Vision Gallery Economic Development • Infrastructure Support Facilities and Fleet • Center for the Arts • GIS • Budget Office • Environmental Management • Community Development • Engineering • Accounting Human Resources • Labor Relations Airport Assistant to the • Central Supply • Benefits & Wellness Deputy City Manager Community Services Neighborhood Resources HRMS Advisory Boards and Commissions • Fleet Services • Transportation Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Chandler Arizona For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021 Executive Director/CEO 9 10 2 - Financial Section • Independent Auditor's Report • Management's Discussion and Analysis (MD&A) • Basic Financial Statements • Required Supplementary Information • Other Financial Statements Financial Section “Moving Forward Together” A clear vision, strong reserves, prudent spending, and sound financial management policies have enabled Chandler to deliver a balanced budget and maintain AAA bond ratings from all three rating agencies. Financial Section Independent Auditor’s Report Honorable Mayor and Members of the City Council City of Chandler, Arizona Report on Audit of Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the businesstype 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, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. 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, Arizona, as of June 30, 2022, 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. Basis for Opinions 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. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Chandler, Arizona, Arizona, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, for the year ended June 30, 2022, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. 11 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:      Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit 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 City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. 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, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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. 12 Supplementary 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 Other Financial Statements, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Other Financial Statements, are fairly stated in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on other work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2022, 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. Scottsdale, Arizona December 16, 2022 13 14 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 15 16 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 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, 2022. 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 2022 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 $1.58 billion (net position). This represents an increase of $58.0 million from the prior year. Factors that have contributed to this are increases in equity in pooled cash and investments due to higher sales taxes and state shared revenue collections from strong development and consumer spending, as well as related inflation impacts, the recognition of new lease receivables based on the new GASB statement 87, and an increase in deferred outflows of OPEB and pension plan items. These items are offset by increases to total bonds outstanding after selling bonds at the end of 2021, an increase in the City's recognized OPEB liability, and higher unearned revenue amounts. Of this amount, $347.1 million (unrestricted net position) may be used to meet the City’s obligations to citizens and creditors. However, $69.4 million is invested in a joint venture with the Town of Gilbert, which decreased $4.6 million from the prior year, and is not available for obligations. At June 30, 2022, the City’s governmental funds reported combined ending fund balances of $472.7 million, an increase of $49.7 million in comparison with the prior year primarily due to increases in sales taxes and state shared revenue collections. Much of this change is attributed to healthy development and retail sales combined with inflationary pressures leading to higher average sales which increases tax receipts. The largest driver is the $20 billion expansion of Intel Corporation and other related development within Chandler. This has created significant increases in transaction privilege taxes in many tax categories. Approximately 58.6 percent of the total amount, $277.2 million, is available for spending at the City’s discretion (assigned or unassigned). At June 30, 2022, total fund balance for the general fund was $282.0 million which represents an increase of $39.4 million from the prior year; again this is primarily due to increases in sales taxes and state shared revenues as noted previously. General revenues from governmental activities accounted for $320.1 million, or 75.5 percent of all revenues from governmental activities as opposed to 74.7 percent in the prior year. Program specific revenues in the form of charges for services and grants and contributions accounted for $104.1 million or 24.5 percent of total governmental activity revenues, as opposed to 25.3 percent in the prior year. The City had $157.4 million of program revenues ($162.7 million in the prior year) and $(3.7) million in general revenues and transfers ($3.0 million in the prior year) related to business-type activities. At June 30, 2022, the City’s proprietary funds reported combined total net position of $789.2 million as compared to $788.4 million in the prior year, as restated; an increase for the current year of $0.7 million. The increase in net position is a result of keeping expenses in check year over year to offset a reduction in revenue and transfers received in the business type funds. This results in a total unrestricted net position of $283.5 million, of which $144.9 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. 17 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/ outflows of resources with the difference reported as net position. Net position is categorized as capital assets less related debt, restricted by an outside third party and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some 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, the Chandler Cultural Foundation and the Chandler Museum 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, grants special revenue 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. 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 The City adopts an annual appropriated budget for the general, special revenue, general obligation and highway user revenue debt service, capital projects and proprietary funds. Budgetary comparison statements have been provided in the basic financial statements for the general, general government capital projects and general obligation bonds debt service funds to demonstrate compliance with the budget. Budgetary comparison schedules for other non-major special revenue and non-major capital projects funds are also included in the financial section. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, wastewater, 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 $1.58 billion as of June 30, 2022. This reflects continued strong operations in governmental activities, reduced expenses in governmental activities and decreases in long-term liabilities within governmental and businesstype activities. A significant portion of the City’s net position (63.8 percent) reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, improvements other than buildings, vehicles, machinery and equipment, water rights and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position (14.3 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (21.9 percent) includes $69.4 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. 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 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. The following table presents a condensed statement of the City's net position for the fiscal years ended June 30, 2022 and 2021. Governmental Business-type Total Activities Activities (Primary Govt.) 2022 2021 2022 2021 2022 2021 $ 612,717,247 $ 542,856,043 $ 302,795,831 $ 318,881,326 $ 915,513,078 $ 861,737,369 Capital assets, net 723,527,045 742,145,317 764,904,850 759,679,559 1,488,431,895 1,501,824,876 Long-term assets 2,055,996 — 73,608,096 74,142,431 75,664,092 74,142,431 1,338,300,288 1,285,001,360 1,141,308,777 1,152,703,316 2,479,609,065 2,437,704,676 116,486,358 112,346,305 14,771,734 11,193,113 131,258,092 123,539,418 1,454,786,646 1,397,347,665 1,156,080,511 1,163,896,429 2,610,867,157 2,561,244,094 123,597,167 Current assets Total assets Total deferred outflows of resources Total assets and deferred outflows of resources Current liabilities 105,896,083 83,422,091 50,090,319 40,175,076 155,986,402 Long-term liabilities 476,139,376 559,698,199 305,507,307 331,393,867 781,646,683 891,092,066 Total liabilities 582,035,459 643,120,290 355,597,626 371,568,943 937,633,085 1,014,689,233 77,936,899 16,667,670 11,320,643 1,801,034 89,257,542 18,468,704 659,972,358 659,787,960 366,918,269 373,369,977 1,026,890,627 1,033,157,937 Net investment in capital assets 536,775,941 555,107,220 473,953,519 458,616,595 1,010,729,460 1,013,723,815 Restricted 194,380,531 189,214,016 31,745,566 32,154,205 226,126,097 221,368,221 Unrestricted 63,657,816 (6,761,531) 283,463,157 299,755,652 347,120,973 292,994,121 $ 794,814,288 $ 737,559,705 $ 789,162,242 $ 790,526,452 Total deferred inflows of resources Total liabilities and deferred inflows of resources Net position: Total net position $1,583,976,530 $1,528,086,157 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 20 Business-type Activities $2,500 $3,000 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 Changes in net position. The City’s total revenues for the fiscal year ended June 30, 2022 were $576.8 million. The total cost of all programs and services was $518.7 million, which results in an increase in net position of $58.0 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2022 and 2021. Governmental Business-type Activities Total Activities (Primary Govt.) 2022 2021 2022 2021 2022 2021 Revenues: Program revenues Charges for services $ 67,526,392 $ 66,789,357 $ 135,879,375 $ 140,364,223 $ 203,405,767 $ 207,153,580 Operating grants and contributions 17,863,747 18,694,567 8,598,756 7,965,078 26,462,503 26,659,645 Capital grants and contributions 18,678,027 16,573,341 12,887,544 14,355,873 31,565,571 30,929,214 General revenues Property taxes 39,560,904 36,371,978 — — 39,560,904 36,371,978 Sales taxes 182,028,630 157,513,686 21,379 16,516 182,050,009 157,530,202 Highway user taxes 19,460,326 18,108,310 — — 19,460,326 18,108,310 Other taxes 2,210,634 2,226,568 — — 2,210,634 2,226,568 Franchise Fees 3,861,042 3,823,524 — — 3,861,042 3,823,524 State shared revenues 87,038,075 80,699,253 — — 87,038,075 80,699,253 Investment income (15,954,424) 584,026 (7,617,417) 249,448 (23,571,841) 833,474 Miscellaneous 1,916,550 1,820,520 2,811,515 2,833,025 4,728,065 4,653,545 424,189,903 403,205,130 152,581,152 165,784,163 576,771,055 568,989,293 General government 157,127,919 162,849,542 — — 157,127,919 162,849,542 Public safety 104,673,550 122,146,366 — — 104,673,550 122,146,366 Transportation and development 56,403,523 58,847,053 — — 56,403,523 58,847,053 Community services 41,563,661 39,565,719 — — 41,563,661 39,565,719 Interest and fiscal charges 6,014,168 6,653,197 — — 6,014,168 6,653,197 Water — — 61,264,619 62,049,102 61,264,619 62,049,102 Wastewater — — 63,037,577 62,753,454 63,037,577 62,753,454 Solid waste — — 16,727,814 17,040,309 16,727,814 17,040,309 Airport — — 1,956,786 2,186,724 1,956,786 2,186,724 Housing authority — — 9,955,131 9,207,531 9,955,131 9,207,531 Total expenses 365,782,821 390,061,877 152,941,927 153,237,120 518,724,748 543,298,997 Excess (deficiency) before transfers 58,407,082 13,143,253 (360,775) 12,547,043 58,046,307 25,690,296 Transfers in (out) (1,103,279) 105,991 1,103,279 (105,991) — — Change in net position 57,303,803 13,249,244 742,504 12,441,052 58,046,307 25,690,296 Total revenues Expenses: Beginning net position, as restated Ending net position 737,510,485 724,310,461 788,419,738 778,085,400 1,525,930,223 1,502,395,861 $ 794,814,288 $ 737,559,705 $ 789,162,242 $ 790,526,452 $ 1,583,976,530 $ 1,528,086,157 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 Revenue Sources - Fiscal Year 2022 35.27% 31.56% 15.09% 4.59% 5.47% 6.86% 3.37% 0.82% 0.67% 0.38% (4.09)% Percent Of Total Revenue Charges for services Capital grants and contributions Sales taxes Franchise fees State shared revenues Miscellaneous Operating grants and contributions Property taxes Highway user fees Other taxes Investment income Functional Expenses - Fiscal Year 2022 30.29% 20.18% 11.81%12.15% 10.87% 8.01% 3.22% 1.17% 0.38% Percent of Total Expenses General government Transportation and development Interest and fiscal charges Wastewater Airport 22 Public safety Community services Water Solid waste Housing authority 1.92% CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 As evidenced in the previous graph, the largest financing source for the City is charges for services at 35.27 percent, associated with the user fees (i.e., water, wastewater) and charges for services. Sales taxes and state shared revenues (i.e., sales tax, urban revenue sharing) also comprise a significant portion of the City’s revenues at 31.56 percent and 15.09 percent, respectively, of the total revenues with property taxes accounting for an additional 6.86 percent of the City’s total revenues. The City as a whole uses the largest amount of resources for general government functions (i.e. cultural development, information technology, neighborhood resources, law, etc.) at 30.29 percent of the total functional expenses of the City. The next largest users of resources are public safety and wastewater at 20.18 percent and 12.15 percent, respectively, with water accounting for 11.81 percent of the City’s total expenses. Governmental activities. The increase in governmental net position totaled $57.3 million for the year ended June 30, 2022 compared with an increase of $13.2 million in the prior year. This increase is primarily in the sales tax and state shared revenues, mainly due to healthy development and retail sales combined with inflationary pressures leading to higher average sales which increases tax receipts. The largest driver is the $20 billion expansion of Intel Corporation and other developments within Chandler, which has created significant increases in transaction privilege taxes in many tax categories. Additionally, overall expenditures have decreased. Business-type activities. The increase in business-type net position totaled $0.7 million for the year ended June 30, 2022 compared with an increase of $12.4 million in the prior year. This increase is a result of keeping expenses in check offset by a reduction in revenue and transfers from the prior year. 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 $472.7 million, an increase of $49.7 million in comparison with the prior year increase of $7.8 million. Approximately $277.2 million (58.6 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 $232.6 million represents an increase of $44.6 million. The remainder of the fund balance comprising of nonspendable and restricted balances amounts to $195.5 million (41.4 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 $190.5 million represents an increase of $5.0 million. This increase is primarily due to the issuance of $31.3 million in General Obligation bonds in December 2021, combined with continued spending of bond proceeds in the general government, community services and streets capital projects funds netting to the increase of $5.0 million. 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 $279.6 million, while total fund balance reached $282.0 million. As a measure of the general fund’s liquidity, it may be useful to compare both assigned and unassigned 23 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 fund balance and total fund balance to total fund expenditures. Assigned and unassigned fund balance represents 1.14 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, capital projects and compensated absences). The City’s general fund balance increased by $39.4 million during the current fiscal year primarily due to increases in sales taxes and state shared revenues received mainly due to healthy development and consumer spending, compounded by inflation. The largest driver is the $20 billion expansion of Intel Corporation and related development within Chandler, which has drove significant increases in transaction privilege taxes in many tax categories. Interest revenue has a large loss due to the increased interest rates rising steadily throughout the fiscal year and the associated realized and unrealized losses on long term investments held by the city. Transfers from the general fund to other funds also decreased in the current fiscal year due to the one-time nature of the transfers in FY 2020-21 and spending of federal grant funds received. The grants special revenue fund accounts for the receipt and expenditure of miscellaneous federal, state and local grants awarded to the City for various specific operational purposes. The fund balance restricted for grants special revenue fund activities decreased by $4.3 million during the current fiscal year. This change represents the usage of grant funding (i.e., AZ Cares and American Rescue Plan Act) that has been received in prior fiscal years. The general obligation bonds debt service fund accounts for the accumulation of resources for and payments of general obligation bonded debt. The fund balance restricted for general obligation debt service payments decreased by $1.5 million during the current fiscal year. The decrease is due to increased debt service payments made during the fiscal year based on the defined debt service payment schedules and offset by repayment of interfund transfers of $7.5 million and lower debt interest payments due to bond refunding for the year ended June 30, 2022. 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 $789.2 million and $31.8 million, respectively, compared to $788.4 million, as restated and $33.4 million in the prior fiscal year. The enterprise funds increase is primarily due to a reduction of overall expenditures compared to prior year and combined with revenues that fell to a larger degree against prior year revenues, The enterprise funds net position is 35.9 percent unrestricted compared to 38.0 percent in the prior fiscal year. Unrestricted net position of the water fund at the end of the year amounted to $144.9 million, and those for the wastewater fund amounted to $117.4 million, compared to $152.0 million and $127.6 million in the prior fiscal year. BUDGETARY HIGHLIGHTS For the 2021-22 budget year, the City of Chandler continued to engage in fiscally responsible budgeting practices, adhered to financial policies, and used conservative budgeting as the anticipated economic impacts of the COVID-19 pandemic were removed from the budget to show actual economic activity in the City. With a continued conservative mindset, the City Council adopted a balanced budget for 2021-22 that removed the reductions added to mitigate any COVID-19 impacts, and added back in spending for a variety of operating and capital needs. Overall planned capital expenditures increased as additional projects were added to address our aging infrastructure and one-time revenues were applied to select capital projects and planned Public Safety Personnel Retirement System (PSPRS) unfunded liability pay down. The City’s major sources of General Fund revenues include Local Sales Tax (Transaction Privilege Tax), Voter Approved Local Revenue (also known as State Shared Revenue) and Urban Revenue Sharing (State Shared Income Tax). 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 2021-22 budget included various salary 24 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 adjustments based on agreements between bargaining units and the City, and merit and market adjustments for general employees. Other ongoing costs, such as maintenance, utilities and supplies were managed closely to ensure they could be covered with ongoing revenues. The FY 2021-22 budget continued to emphasize adherence to strong financial policies allowing 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, 2022, the City had invested over $1.0 billion in capital assets net of related debt, including buildings, system improvements, vehicles, machinery and equipment, water rights and infrastructure assets. Total depreciation expense for the year was $101.7 million. During fiscal year 2021-22, the City completed several street improvements projects, most notably a project totaling $3.4 million on Old Price Road near the Intel Corporation FAB 42 plant. It should be noted that the City infrastructure needed to support the $20 billion Intel Corporation expansion is being offset through reimbursements by Intel Corporation and the Arizona Department of Revenue under A.R.S. Title 42. The City also purchased several public safety equipment assets totaling $467 thousand dollars and remodeled space in the Neighborhood Resources Department to add a new bathroom facility for the un-housed in Chandler. Work has also begun, or continues, on a number of governmental activity projects including street projects to improve Cooper Road ($8.9 million added in FY 22) and Alma School Road ($2.3 million added in FY 22), parks projects including costs accrued to complete Phase 2 of the Veterans Memorial ($3.7 million added in FY 22) and Lantana Ranch Park ($2.3 million added in FY 22). Business-type activities have seen an increase in construction in progress due to work that has been started to relocate utilities along Chandler Heights Road totaling $3.8 million in FY 22 and $22.3 million in work to increase the capacity of the wastewater facility servicing the Intel Corporation FAB 42 plant. The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2022 and 2021: Governmental Business-type Activities 2022 Land $ Land improvements Infrastructure System improvements Buildings and improvements Activities 2021 92,208,938 $ Total 2022 92,528,517 — — 318,148,649 341,516,567 — — 158,211,441 176,774,747 20,030,874 $ (Primary Govt.) 2021 57,189,731 $ 255,657 2022 57,189,731 $ 149,398,669 2021 $ 149,718,248 317,087 255,657 317,087 — — 318,148,649 341,516,567 589,322,175 630,911,926 589,322,175 630,911,926 7,438,261 8,049,845 165,649,702 184,824,592 25,315,499 2,135,294 2,541,320 22,166,168 27,856,819 — — 42,217,346 42,645,949 42,217,346 42,645,949 134,927,143 106,009,987 66,346,386 18,023,701 201,273,529 124,033,688 759,679,559 $ 1,488,431,895 $ 1,501,824,876 Vehicles, machinery and equipment Water rights Construction in progress Total $ 723,527,045 $ 742,145,317 $ 764,904,850 $ Additional information on the City’s capital assets can be found in Note 4 of the financial statements. 25 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 Long-term debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $495.1 million in long-term debt outstanding with $55.8 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, 2022 and 2021. General obligation bonds Excise tax revenue obligations Special assessment bonds Issuance premiums Governmental Business-type Total Activities Activities (Primary Govt.) 2022 2021 $ 208,979,909 $ 195,164,000 2022 — — 635,000 1,245,000 $ 2022 2021 76,936,000 2021 $ 279,360,000 $ 272,100,000 215,105,000 219,780,000 215,105,000 219,780,000 — — 635,000 1,245,000 70,380,091 $ 15,054,239 17,548,988 14,522,022 22,960,376 29,576,261 40,509,364 $ 224,669,148 $ 213,957,988 $ 300,007,113 $ 319,676,376 $ 524,676,261 $ 533,634,364 Claims payable (as restated) 16,911,130 18,885,862 — — 16,911,130 18,885,862 Landfill closure/post closure — — 4,340,000 4,340,000 4,340,000 4,340,000 Compensated absences 13,153,929 13,679,502 1,282,749 1,408,776 14,436,678 15,088,278 Net pension liability 196,423,432 293,981,374 16,117,058 22,238,502 212,540,490 316,219,876 Total bonds & obligations payable Post-employment benefits 72,805,954 56,105,261 9,115,841 6,898,722 81,921,795 63,003,983 Total long-term liabilities $ 523,963,593 $ 596,609,987 $ 330,862,761 $ 354,562,376 $ 854,826,354 $ 951,172,363 The City of Chandler’s total long-term liabilities decreased by $96.3 million during the current fiscal year. The City reported a decrease in pension liability of $103.7 million, an increase in post-employment benefits of $18.9 million and a net increase of $2.0 million in bonds due to the impact of new bonds issued, bonds refunded and regularly scheduled payments being made as planned. 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 $1.0 billion. The City has $285.9 million of outstanding general obligation debt for these purposes. State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $300.8 million. The City has $6.1 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. 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 (2022-23) required the combined efforts of citizens, the City Council, Executive Leadership team, and staff members throughout the organization. As the financial impacts anticipated during the FY 2021-22 budget year were stronger than anticipated, additional considerable thought and measured change was incorporated into the Fiscal Year 2022-23 budget. The budget contains a variety of increases to revenues and expenditures to mitigate inflationary pressures being felt across all departments, and allows for a continued focus on providing high service levels and quality infrastructure in a cost effective way. 26 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2022 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 which have become increasingly harder to fill, 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. Even though general economic conditions are anticipated to continue at their current levels, and potentially increase during the budget year, the City is still conservative in its approach and continues to look for efficiencies to manage expenditure growth. The budget increased from $1.058 billion in 2021-22 to $1.35 billion (an increase of 27.8 percent) in 2022-23, due to appropriation remaining for grant funding received during FY 2021-22, significant carryforward of capital projects, and new capital projects identified to aid in the expansion of a large regional employment partner, Intel Corporation. With the addition of appropriation, the total operating budget is increasing from $412 million to $493 million. The total new capital appropriation is increasing from $113 million to $310 million, as the City continues a healthy capital improvement program to ensure existing infrastructure is well maintained and the needs of residents can be met, and added projects related to development agreements. With a 6.9 percent increase in Limited Property Values (including 5.4% of that from new growth), the City Council chose to reduce the primary property tax rate from $0.2426 to $0.2326, 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. The 2022-23 Budget does not include bond sales as we plan sales every-other year. Additionally, the City Council maintained the General Fund operating contingency at 15 percent of General Fund operating revenues to provide a 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 its AAA GO bond ratings with all three rating agencies which were reaffirmed in November of 2021. 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. 27 28 BASIC FINANCIAL STATEMENTS 29 City of Chandler Statement of Net Position June 30, 2022 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 Leases Receivable 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 Business-Type Activities $ $ 571,092,547 — 1,819,385 21,864,077 510,535 11,250,571 1,099,330 4,475 1,057,267 576,578 318,929 3,123,553 612,717,247 281,641,620 — 18,502,243 — — 706,297 125,255 — 536,734 — — 1,283,682 302,795,831 Chandler Industrial Development Authority Total Primary Government $ 852,734,167 — 20,321,628 21,864,077 510,535 11,956,868 1,224,585 4,475 1,594,001 576,578 318,929 4,407,235 915,513,078 $ — 978,789 2,000 — — — — — — — — — 980,789 Component Units Chandler Cultural Foundation $ — 5,073,002 4,855 — — — — 144,731 10,964 — — — 5,233,552 Chandler Museum Foundation $ — 102,602 257 — — — 18,212 — — — — — 121,071 — 2,055,996 — — — 4,083,983 154,750 69,369,363 — 6,139,979 154,750 69,369,363 — 1,422,755 280,000 — — — — — — 227,136,081 496,390,964 723,527,045 725,583,041 1,338,300,288 123,536,117 641,368,733 764,904,850 838,512,946 1,141,308,777 350,672,198 1,137,759,697 1,488,431,895 1,564,095,987 2,479,609,065 — — — — 980,789 — 13,410 13,410 1,436,165 6,669,717 — — — 280,000 401,071 110,846,030 5,640,328 116,486,358 7,444,539 7,327,195 14,771,734 118,290,569 12,967,523 131,258,092 — — — — — — — — — 30 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 Deferred inflows of leases Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Transportation and development Capital improvements Community services Community development Debt service Legal restrictions Total restricted Unrestricted Total net position 10,690,034 6,738,817 4,478,984 4,058,651 32,105,380 — 2,477,891 35,141,069 — 10,205,257 105,896,083 12,954,483 781,297 5,572,131 4,678,583 — 748,371 241,640 25,019,368 94,446 — 50,090,319 23,644,517 7,520,114 10,051,115 8,737,234 32,105,380 748,371 2,719,531 60,160,437 94,446 10,205,257 155,986,402 — — — — — — — — — — — 60,167 — — — 1,016,438 — — — — — 1,076,605 231 — — — 380 — — — — — 611 10,676,038 189,528,079 196,423,432 72,805,954 — 6,705,873 476,139,376 582,035,459 1,041,109 274,987,745 16,117,058 9,115,841 4,245,554 — 305,507,307 355,597,626 11,717,147 464,515,824 212,540,490 81,921,795 4,245,554 6,705,873 781,646,683 937,633,085 — — — — — — — — — — — — — — — 1,076,605 — — — — — — — 611 75,983,201 1,953,698 7,278,025 4,042,618 83,261,226 5,996,316 — — — — — — 77,936,8997 11,320,643 89,257,542 — — — 536,775,941 473,953,519 1,010,729,460 — 13,410 — 128,817,388 21,445,156 37,977,867 522,644 4,292,937 1,324,539 194,380,531 63,657,816 794,814,288 — — — — 31,745,566 — 31,745,566 283,463,157 789,162,242 128,817,388 21,445,156 37,977,867 522,644 36,038,503 1,324,539 226,126,097 347,120,973 $ 1,583,976,530 — — — — — — — 980,789 980,789 — — — — — 1,422,755 1,422,755 4,156,947 5,593,112 — — — — — 280,000 280,000 120,460 400,460 7 $ $ See accompanying Notes to the Financial Statements. 31 $ $ $ City of Chandler Statement of Activities For the year ended June 30, 2022 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 Chandler Museum Foundation Total component units $157,127,919 $ 42,734,281 104,673,550 5,714,382 56,403,523 13,044,002 41,563,661 6,033,727 6,014,168 — 365,782,821 67,526,392 1,302,964 — 17,375,063 — — 18,678,027 $ 56,022,407 8,909,138 31,958,777 7,177,844 — 104,068,166 61,264,619 54,911,138 — 63,037,577 61,109,393 — 16,727,814 17,629,367 — 1,956,786 813,683 — 9,955,131 1,415,794 8,598,756 152,941,927 135,879,375 8,598,756 $518,724,748 $203,405,767 $ 26,462,503 4,451,743 8,435,801 — — — 12,887,544 $ 31,565,571 59,362,881 69,545,194 17,629,367 813,683 10,014,550 157,365,675 $261,433,841 $ $ $ 2,055 2,168,569 431 $ 2,171,055 $ 101,039 2,020,266 29,904 $ 2,151,209 $ 11,985,162 3,194,756 1,539,712 1,144,117 — 17,863,747 $ $ — 1,977,146 370,987 2,348,133 $ $ — — — — $ 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, as restated Net position - end of year See accompanying Notes to the Financial Statements. 32 101,039 3,997,412 400,891 4,499,342 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Activities $ $ (101,105,512) $ (95,764,412) (24,444,746) (34,385,817) (6,014,168) (261,714,655) Business-Type Activities — — — — — — Chandler Industrial Development Authority Total $ (101,105,512) $ (95,764,412) (24,444,746) (34,385,817) (6,014,168) (261,714,655) — — — — — — Component Units Chandler Cultural Foundation $ — — — — — — Chandler Museum Foundation $ — — — — — — — — — — — — (261,714,655) (1,901,738) 6,507,617 901,553 (1,143,103) 59,419 4,423,748 4,423,748 (1,901,738) 6,507,617 901,553 (1,143,103) 59,419 4,423,748 (257,290,907) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 98,984 — — 98,984 — 1,828,843 — 1,828,843 — — 400,460 400,460 — — — — — — (17,283) — — (17,283) 81,701 899,088 980,789 $ — — — — — — (64,179) — — (64,179) 1,764,664 3,828,448 5,593,112 $ — — — — — — — — — — 400,460 — 400,460 39,560,904 182,028,630 19,460,326 2,210,634 3,861,042 87,038,075 (15,954,424) 1,916,550 (1,103,279) 319,018,458 57,303,803 737,510,485 794,814,288 $ — 21,379 — — — — (7,617,417) 2,811,515 1,103,279 (3,681,244) 742,504 788,419,738 789,162,242 $ 39,560,904 182,050,009 19,460,326 2,210,634 3,861,042 87,038,075 (23,571,841) 4,728,065 — 315,337,214 58,046,307 1,525,930,223 1,583,976,530 $ 33 City of Chandler Balance Sheet Governmental Funds June 30, 2022 Major Funds General Grants Special Obligation Bonds Other Governmental General Revenue Debt Service Funds Total $257,079,960 1,703,811 $ 43,159,639 — $ 40,462,732 — $ 181,679,634 5,710 $ 522,381,965 1,709,521 Privilege license tax receivable Property taxes receivable 21,864,077 117,882 — — — 392,653 — — 21,864,077 510,535 Advances to other funds Due from other funds 7,360,859 4,796,096 — — — — — — 7,360,859 4,796,096 Due from other governments 1,941,808 49,658 — 9,259,105 11,250,571 Inventories Prepaid items 1,099,330 4,475 — — — — — — 1,099,330 4,475 527,132 — 76,975 — 36,190 — 322,306 576,578 962,603 576,578 Notes receivable Leases receivable — 2,055,996 — — 318,929 318,929 2,055,996 Other receivables Total assets 2,770,708 $301,322,134 — $ 43,286,272 — $ 40,891,575 116,466 $ 192,278,728 2,887,174 $ 577,778,709 $ $ $ $ 4,714,947 182,052 $ 10,445,170 6,666,107 ASSETS Equity in pooled cash and investments Accounts receivable Accrued interest receivable Special assessments receivable LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 5,666,626 6,405,802 63,597 78,253 — — Trust liabilities and deposits Accrued interest 4,228,155 — — — — 4,045,951 250,829 12,700 4,478,984 4,058,651 Due to other funds Advances from other funds — — — — — — 4,796,096 7,360,859 4,796,096 7,360,859 Unearned revenue Bonds payable Total liabilities 944,112 — 17,244,695 31,147,201 — 31,289,051 — 32,277,716 36,323,667 — — 17,317,483 32,091,313 32,277,716 102,174,896 Deferred inflows of resources Unavailable revenues - special assessments Unavailable revenues - property taxes Unavailable revenues - leases Total deferred inflows of resources — 85,162 1,953,698 2,038,860 — — — 277,754 553,878 — — 277,754 553,878 553,878 362,916 1,953,698 2,870,492 Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances 1,103,805 1,324,539 192,983,983 86,626,252 282,038,579 — 11,997,221 — — 11,997,221 — 4,290,154 — — 4,290,154 — 176,768,617 — (2,361,250) 174,407,367 1,103,805 194,380,531 192,983,983 84,265,002 472,733,321 Total liabilities, deferred inflows and fund balances $301,322,134 $ 43,286,272 $ 40,891,575 $ 192,278,728 $ 577,778,709 See accompanying Notes to the Financial Statements. 34 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position June 30, 2022 Total Fund Balances - Total Governmental Funds $ 472,733,321 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, vehicles, machinery and equipment and infrastructure, net Total capital assets $ 227,136,081 496,390,964 723,527,045 Certain revenues are not available to pay for current period expenditures and, therefore, are unavailable in the funds. 916,794 Deferred amounts on refundings are not financial resources and, therefore, are not reported in the funds. 5,640,328 Deferred outflows related to pensions and OPEB are not financial resources and, therefore, are not reported in the funds. 110,846,030 Deferred inflows related to pensions and OPEB represent a future acquisition of net position that is not reported in the funds. (75,983,201) 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. 31,781,797 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 $17,038,051 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (192,391,432) Net pension liability OPEB liability Compensated absences Total long-term liabilities Net Position of Governmental Activities (196,423,432) (72,805,954) (13,027,008) (474,647,826) $ 794,814,288 See accompanying Notes to the Financial Statements. 35 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2022 Major Funds General Grants General Other Special Obligation Bonds Governmental Revenue Debt Service Funds Total REVENUES: Property taxes $ 8,622,918 $ — $ 30,917,639 $ — $ 39,540,557 182,028,630 — — — 182,028,630 Highway user taxes — — — 19,460,326 19,460,326 Regional transportation taxes — — — 2,210,634 2,210,634 Franchise fees 3,861,042 — — — 3,861,042 State shared 87,038,075 — — — 87,038,075 Grants and entitlements 181,869 14,918,829 — 20,921,372 36,022,070 System development fees — — — 5,031,031 5,031,031 Special assessments — — — 610,719 610,719 Licenses and permits 6,915,745 — — — 6,915,745 Charges for services 22,245,251 — — 319,821 22,565,072 Fines and forfeitures 3,365,892 — — 73,886 3,439,778 119,710 — — — 119,710 Sales taxes Rentals — — — 254,874 254,874 (7,832,935) (1,177,656) (548,004) (5,129,011) (14,687,606) Contributions Interest revenue 703,417 1,637 — 605,875 1,310,929 307,249,614 13,742,810 30,369,635 44,359,527 395,721,586 General government 72,907,160 12,679,188 — 4,825,885 90,412,233 Public safety 119,891,551 3,456,698 — 642,949 123,991,198 Transportation and development 17,230,227 651,592 — 10,113,658 27,995,477 Community services 29,170,793 879,807 — 804,414 30,855,014 5,667,999 259,746 — 57,904,613 63,832,358 Principal — — 32,277,716 610,000 32,887,716 Bond issuance costs — — 228,393 172,891 401,284 Interest and fiscal charges — — 7,064,929 37,600 7,102,529 244,867,730 17,927,031 39,571,038 75,112,010 377,477,809 62,381,884 (4,184,221) (9,201,403) (30,752,483) 18,243,777 1,273,075 — — 293,380 1,566,455 Bond premium — — — 2,160,918 2,160,918 Face amount of bonds issued — — 26,949,909 31,295,000 58,244,909 Payment to escrow agent — — (26,716,745) — (26,716,745) Transfers in — — 7,500,000 20,749,623 28,249,623 (24,245,503) (74,281) — (7,771,916) (32,091,700) (22,972,428) (74,281) 7,733,164 46,727,005 31,413,460 39,409,456 (4,258,502) (1,468,239) 15,974,522 49,657,237 242,629,123 16,255,723 5,758,393 158,432,845 423,076,084 Miscellaneous Total revenues EXPENDITURES: Current: Capital outlay Debt service: Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES: Beginning of year, as restated End of year $ 282,038,579 $ 11,997,221 See accompanying Notes to the Financial Statements. 36 $ 4,290,154 $ 174,407,367 $ 472,733,321 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, 2022 Net Change in Fund Balances - Total Governmental Funds Governmental activities in the Statement of Activities were reported differently because: $49,657,237 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 in the current period. 35,394,963 Depreciation expense on capital assets is reported in the Government-wide Statement of Net Position and Statement of Activities, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in the governmental funds. (53,895,688) 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 Bond payment to escrow agent Pension related items Other post employment benefits related items 32,887,716 (58,244,909) (2,160,918) 26,716,745 30,237,509 (2,671,175) 26,764,968 Accrued interest payable, bond premium allocation and allocation of deferred outflows from bond refundings related to long-term debt is recognized as an expense in the Statement of Activities, however is not recognized in the governmental funds because it is not payable from current financial resources. 1,088,361 Gain or Loss on sale of capital assets in the statement of activities do not provide current financial resources and therefore are not reported as revenues in the governmental funds (564,242) 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. 538,850 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. (556,231) 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. 446,699 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. (1,571,114) Change in Net Position of Governmental Activities $57,303,803 See accompanying Notes to the Financial Statements. 37 City of Chandler Statement of Net Position Proprietary Funds June 30, 2022 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments Accounts receivable $ 104,556,608 $ 145,144,446 $ 31,940,566 $ 281,641,620 $ 48,710,581 8,197,007 7,979,234 2,326,002 18,502,243 109,864 — 601,435 104,862 706,297 — Inventories 107,892 — 17,363 125,255 — Accrued interest receivable 192,652 280,758 63,324 536,734 94,664 — 1,283,649 33 1,283,682 236,379 113,054,159 155,289,522 34,452,150 302,795,831 49,151,488 Notes receivable — — 154,750 154,750 — Leases receivable — — 4,083,983 4,083,983 — 69,369,363 — — 69,369,363 — Non-depreciable 29,510,835 64,817,763 29,207,519 123,536,117 — Depreciable, net 206,114,297 410,289,375 24,965,061 641,368,733 — Total capital assets 235,625,132 475,107,138 54,172,580 764,904,850 — Total long-term assets 304,994,495 475,107,138 58,411,313 838,512,946 — Total assets 418,048,654 630,396,660 92,863,463 1,141,308,777 49,151,488 Deferred outflows of OPEB and pension plan items 3,464,548 2,347,405 1,632,586 7,444,539 — Deferred amounts on refundings 3,545,331 3,781,864 — 7,327,195 — 7,009,879 6,129,269 1,632,586 14,771,734 — Due from other governments Other receivables Total current assets Long-term assets: Investment in joint venture Capital assets: DEFERRED OUTFLOWS OF RESOURCES Total deferred outflow of resources 38 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 Deferred inflows of leases Total deferred inflow of resources NET POSITION Net investment in capital assets Restricted for: Debt service Unrestricted Total net position $ 3,593,122 335,286 4,479,921 1,764,857 — 251,857 122,329 11,169,079 — — 21,716,451 7,023,674 293,091 258,768 2,913,726 — 235,067 79,699 13,850,289 — — 24,654,314 2,337,687 152,921 833,442 — — 261,447 39,612 — 94,446 — 3,719,555 12,954,483 781,298 5,572,131 4,678,583 — 748,371 241,640 25,019,368 94,446 — 50,090,320 244,862 72,711 — — 14,067 — 23,910 — — 10,205,257 10,560,807 527,065 101,254,940 8,421,740 4,148,403 — — 114,352,148 136,068,599 343,384 173,732,805 4,169,004 3,257,702 — — 181,502,895 206,157,209 170,660 — 3,526,314 1,709,736 4,245,554 — 9,652,264 13,371,819 1,041,109 274,987,745 16,117,058 9,115,841 4,245,554 — 305,507,307 355,597,627 103,011 — — — — 6,705,873 6,808,884 17,369,691 3,261,506 — 3,261,506 2,251,553 — 2,251,553 1,764,966 4,042,618 5,807,584 7,278,025 4,042,618 11,320,643 — 127,292,091 292,488,848 54,172,580 473,953,519 — 13,553,743 144,882,594 285,728,428 18,191,823 117,436,496 428,117,167 — 21,144,066 75,316,646 31,745,566 283,463,156 789,162,241 — 31,781,797 31,781,797 $ See accompanying Notes to the Financial Statements. 39 $ $ — $ 40 City of Chandler Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the year ended June 30, 2022 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees 61,109,393 $ 18,430,024 $ 134,450,555 Grants and entitlements $ — — 8,598,756 8,598,756 10,251 Rentals — — 1,428,819 1,428,819 — Sales taxes — — 21,379 21,379 — Self insurance premiums — — — — 29,126,777 Miscellaneous 54,911,138 $ $ 102,018 482,122 86,449 48,964 617,535 605,621 55,393,260 61,195,842 28,527,942 145,117,044 29,844,667 General and administrative 3,478,857 3,054,355 1,129,562 7,662,774 551 Personnel services 9,652,357 7,980,280 4,166,134 21,798,771 2,295,284 Contractual services 10,377,908 6,220,018 13,424,137 30,022,063 2,981,934 Commodities 12,085,477 10,765,909 1,869,930 24,721,316 3,839,085 Claims expense — — — — 24,555,740 Housing assistance payments — — 5,803,477 5,803,477 — Depreciation and amortization expense 16,946,752 28,605,729 2,246,491 47,798,972 — Total operating expenses 52,541,351 56,626,291 28,639,731 137,807,373 33,672,594 2,851,909 4,569,551 (111,789) 7,309,671 (3,827,927) Interest revenue (2,767,835) (4,042,852) (806,730) (7,617,417) (1,266,824) Interest and fiscal charges (3,777,257) (5,921,971) — (9,699,228) — Accretion of bond premiums 954,085 1,239,895 — 2,193,980 — Bond issuance costs (327,693) (489,315) — (817,008) — (4,618,318) — — (4,618,318) — (10,537,018) (9,214,243) (806,730) (20,557,991) (1,266,824) (7,685,109) (4,644,692) (918,519) (13,248,320) (5,094,751) 4,451,743 8,435,801 784,839 13,672,383 — — — 1,126,340 1,126,340 3,554,405 Total operating revenues OPERATING EXPENSES: OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): 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 (372,512) (289,561) (145,827) (807,900) (30,768) Total capital contributions and transfers 4,079,231 8,146,240 1,765,352 13,990,823 3,523,637 CHANGE IN NET POSITION (3,605,878) 3,501,548 846,833 742,503 (1,571,114) 289,334,306 424,615,619 74,469,813 788,419,738 33,352,911 $ 285,728,428 $ 428,117,167 $ 75,316,646 $ 789,162,241 NET POSITION: Beginning of year, as restated End of year See accompanying Notes to the Financial Statements. 41 $ 31,781,797 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2022 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 payments from other funds Cash payments to other funds 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 54,611,545 $ 59,978,847 $ 20,065,803 $ 134,656,195 $ — — 8,576,950 8,576,950 (23,993,541) (14,488,145) (21,230,115) (59,711,801) (9,829,131) (8,139,270) (4,273,284) (22,241,685) 20,788,873 37,351,432 3,139,354 61,279,659 29,502,763 — (33,236,255) (2,262,915) (5,996,407) — (372,512) (372,512) — (289,561) (289,561) 1,126,340 (145,827) 980,513 1,126,340 (807,900) 318,440 3,554,405 (30,768) 3,523,637 (15,641,324) (327,693) (8,506,671) (4,394,693) (32,906,876) (489,315) (10,589,817) (6,840,589) 3,900,000 — 4,239,339 (20,731,042) (3,900,000) 6,289,392 (48,437,205) (1,332,411) — — — — — — (1,332,411) (49,880,611) (817,008) (19,096,488) (11,235,282) 3,900,000 (3,900,000) 10,528,731 (70,500,658) — — — — — — — — (2,767,564) (2,767,564) (3,082,245) (4,032,828) (4,032,828) (15,408,162) (812,086) (812,086) 1,975,370 (7,612,478) (7,612,478) (16,515,037) (1,268,921) (1,268,921) (3,741,691) 107,638,853 $ 104,556,608 160,552,608 $ 145,144,446 29,965,196 31,940,566 298,156,657 $ 281,641,620 42 — $ $ 52,452,272 48,710,581 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 due from other governments (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 and OPEB items Increase (decrease) in OPEB liability Increase (decrease) in deferred inflow leases Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Proceeds Received from Refunding Bond Bond Principal Retired from Refunding Bond Contributions of capital assets from developers Contributions of capital assets from city government Accretion of bond premiums $ $ $ 2,851,909 $ 4,569,551 $ (111,789) $ 7,309,671 $ (3,827,927) 16,946,752 28,605,729 2,246,491 47,798,972 (1,262,466) — (17,224) — 1,965,925 (16,549) 466,428 — — 14,323 (1,139,600) 979,375 — 17,936,964 20,788,873 $ (738,993) (601,435) — — 5,552,137 (41,891) 110,065 — — 13,368 (925,859) 808,760 — 32,781,881 37,351,432 $ (4,057,905) 33,600 19,245 (168,375) 977,746 276 157,809 — — (61,311) (368,035) 428,984 4,042,618 3,251,143 3,139,354 $ (6,059,364) (567,835) 2,021 (168,375) 8,495,808 (58,164) 734,302 — — (33,620) (2,433,494) 2,217,119 4,042,618 53,969,988 61,279,659 $ (253,754) — — — 115,787 32,369 — (1,974,732) (88,150) — — — — (2,168,480) (5,996,407) 29,056,400 $ 56,403,600 (26,724,000) (51,876,000) 212,404 2,146,409 $ — — 954,085 1,239,895 $ 85,460,000 (78,600,000) 2,358,813 $ 784,839 2,193,980 — — — See accompanying Notes to the Financial Statements. 43 — 784,839 — — CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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), the Chandler Cultural Foundation (Cultural Foundation), and the Chandler Museum Foundation (Museum 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. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 1 - Summary of Significant Accounting Policies, continued The Cultural 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 Cultural Foundation’s budget is annually reviewed and approved by the City Council and the Cultural Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Foundation are available from the Chandler, Cultural Foundation, 250 N Arizona Ave, Chandler, AZ 85225. The Museum Foundation oversees the operations of the Chandler Museum 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 Museum Foundation’s budget is annually reviewed and approved by the City Council and the Museum Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Museum Foundation are available from the Chandler Museum Foundation, 300 S Chandler Village Dr., Chandler, AZ 85226. B. Government-Wide and Fund Financial Statements The government-wide financial statements (e.g., 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 and 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. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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. Grants Special Revenue Fund - This fund is used to account for the receipt and expenditure of miscellaneous federal, state and local grants awarded to the City for various specific operational purposes. 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. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 shortterm 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 $33,321,565 were transferred from the contingency reserves within the general, special revenue, capital project 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 $8,028,012, for grant special revenue fund are $7,251,308, for water enterprise fund are $25,369,465, for wastewater enterprise fund are $55,086,537, and for non-major governmental funds are $68,981,089. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 2, 2022, 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, Chandler Museum Foundation 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 $7,312,893 due from the federal government for grants and $4,586,980 due from the State of Arizona for shared revenues and grants, $43,260 due from Maricopa County for grants and $13,735 due from other governmental agencies. 48 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 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 Water rights 1-99 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: 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. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 three 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 property taxes, special assessments and leases. 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 OPEB and pension plan items and leases. 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. 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 1 - Summary of Significant Accounting Policies, continued M. Fund Balance 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 for additional details). N. Capital Contributions 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. 51 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 1 - Summary of Significant Accounting Policies, concluded T. Leases As lessor, the City of Chandler recognizes lease receivables with an initial, individual value of $100,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the City charges the lessee) and the implicit rate cannot be determined, the City uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. U. Implementation of New Accounting Standards During the year ended June 30, 2022, the City implemented the provisions of Governmental Accounting Standards Board Statements No. 87, Leases. This Statement increases the usefulness of the financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases. The statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The City's analysis of contracts and agreements in effect at the beginning of the year resulted in no changes to beginning balances reported in the financial statements due to the implementation of this standard. NOTE 2 - Cash and Investments The City maintains a cash and investment pool that is available for use by all funds, except for the Chandler Industrial Development Authority, the Chandler Cultural Foundation, the Chandler Museum 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 Museum Foundation, separately hold investments and are not included in the subsequent disclosures. Deposits At year-end, cash on hand was $45,675, the carrying amount of the City deposits was $378,132, and the bank balance was $4,804,773. Of the bank balance, $250,000 was covered by federal depository insurance and $4,554,773 was covered by collateral held in the pledging bank’s trust department in the City’s name. In addition, at June 30, 2022, the City had $96,568,535 of restricted cash held by paying agent consisting of $63,857,234 in July 1, 2022 debt service payments, $1,728,587 in unspent bond proceeds from the 2019 Excise Tax Revenue Obligation issuances, and $30,982,714 from the 2017, 2019 and 2021 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 52 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 2 - Cash and Investments, continued At June 30, 2022, the City had the following investments and maturities: Investment Maturities (in Years) Investment Type U.S. Treasuries U.S. Agencies: Fannie Mae Federal Farm Credit Banks Federal Home Loan Bank Freddie Mac Corporate Bonds: Adobe Inc Corp Category Level 1 Fair Value $ 347,715,212 Less than 1 Year $ 73,874,005 Level 2 Level 2 Level 2 Level 2 53,584,316 13,645,606 6,251,892 65,161,073 6,144,459 — 6,251,892 27,004,744 Concentration of Credit Risk % 46.01 % S&P/Moody/ Fitch Credit Rating 1-5 Years $ 273,841,207 47,439,857 13,645,606 — 38,156,329 7.09 1.81 0.83 8.62 AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA Level 2 693,823 693,823 — 0.09 A+/A2 National Rural Utilities Cooperative Finance Corp National Securities Clearing Corp Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 5,441,163 1,790,588 2,722,413 4,974,325 10,186,963 9,033,600 1,416,057 2,221,092 3,548,670 3,192,873 251,785 264,251 3,359,428 7,791,672 3,036,909 4,389,427 2,789,466 1,693,204 5,836,164 4,304,205 2,300,771 1,790,588 2,722,413 — — — — 226,246 — 3,192,873 251,785 — 1,971,432 3,483,659 — — — — — — 3,140,392 — — 4,974,325 10,186,963 9,033,600 1,416,057 1,994,846 3,548,670 — — 264,251 1,387,996 4,308,013 3,036,909 4,389,427 2,789,466 1,693,204 5,836,164 4,304,205 0.72 0.24 0.36 0.66 1.35 1.20 0.19 0.29 0.47 0.42 0.03 0.03 0.44 1.03 0.40 0.58 0.37 0.22 0.77 0.57 AA/A1 A-/A3 AA+/Aaa/NA A+/NA/A+ A-/A2/AAA/A1/AAA+/A3/NA A/A2/A A/A2/A AA-/Aa2/NA A/A1 A/A2 A/A2/A A-/A2/AAA+/A1 AA-/Aa3/AAAAA/Aaa A-/A1 A-/A2/A AA+/Aaa/NA New York Life Global Funding Novartis Capital Corp Level 2 Level 2 4,259,407 1,641,830 — — 4,259,407 1,641,830 0.56 0.22 AA+/Aaa/AAA AA-/A1 Nvidia Corp PNC Bank Na Qualcomm Inc Corp State Street Corp Corporate Target corp Texas Instruments Inc Corp Toyota Motor Credit Corp Truist Financial Corp US Bancorp USAA Capital Corp Wal-Mart Store Inc Corp Walt Disney Company Municipal Bonds: AZ Tran Board TXBL REV Bonds Scottsdale, AZ TXBL GO Bonds Tempe Ariz Ctfs Partn Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 1,944,902 974,344 1,627,089 441,849 2,036,929 140,690 6,297,176 4,972,845 3,990,892 3,799,712 2,173,728 169,813 1,944,902 — — — — — — 4,972,845 — — 2,173,728 169,813 — 974,344 1,627,089 441,849 2,036,929 140,690 6,297,176 — 3,990,892 3,799,712 — — 0.26 0.13 0.22 0.06 0.27 0.02 0.83 0.66 0.53 0.50 0.29 0.02 A/A2/NA A/A2/A+ A/A2 A/A1 A/A2 A+/Aa3 A+/A1/A+ A-/A3/A A+/A2/A+ AA/Aa1/NA AA/Aa2 BBB+/A2 Level 2 Level 2 Level 2 1,560,000 1,524,602 1,186,913 1,560,000 — — — 1,524,602 1,186,913 0.21 0.20 0.16 AA+/Aa1 AAA/Aaa AA+/NA/AA+ Amazon.com Inc Corp American Honda Finance Corp Apple Inc Corp Athene Global Funding Bank Of America Corp Bank Of New York Mellon Corp Brighthouse Financial Global Funding Caterpillar Finl Service Charles Schwab Corp Exxon Mobil Corp Hershey Company Home Depot Inc Corp John Deere Captial Corp JPMorgan Chase & CO Corporate Mastercard Inc Corp Metropolitan Life Global Funding I Microsoft Corp Morgan Stanley Corp 53 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 2 - Cash and Investments, continued Investment Maturities (in Years) S&P/Moody/ Fitch Credit Rating Category Level 2 Level 2 Level 2 Level 2 6,629,426 510,638 738,891 1,399,111 — — — — 6,629,426 510,638 738,891 1,399,111 0.88 0.07 0.10 0.19 NA/Aaa/AAA AAA/NA/AAA AAA/Aaa/NA AAA/Aaa/NA CARMX 2019-2 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 Level 2 Level 2 Level 2 Level 2 161,007 498,242 472,780 965,912 1,392,240 5,003,649 799,073 2,000,100 59,431 782,150 1,742,828 128,772 810,537 1,337,927 3,377,824 619,854 472,238 989,358 3,927,823 105,043 216,982 5,272,736 1,733,752 — — — — — 5,003,649 — 2,000,100 — — — 128,772 — — — — — — — — — — — 161,007 498,242 472,780 965,912 1,392,240 — 799,073 — 59,431 782,150 1,742,828 — 810,537 1,337,927 3,377,824 619,854 472,238 989,358 3,927,823 105,043 216,982 5,272,736 1,733,752 0.02 0.07 0.06 0.13 0.18 0.66 0.11 0.26 0.01 0.10 0.23 0.02 0.11 0.18 0.45 0.08 0.06 0.13 0.52 0.01 0.03 0.70 0.23 AAA/NR AAA/NR AAA/NR AAA/NR AAA/Aaa/NA AAA/Aaa/NA AAA/NR AAA/NA/AAA AAA/Aaa AAA/Aaa AAA/NA/AAA NR/Aaa NR/Aaa AAA/NA/AAA AAA/NA/AAA AAA/Aaa AAA/NR AAA/NA/AAA AAA/Aaa/NA NR/Aaa NR/Aaa AAA/Aaa/NA NA/Aaa/AAA Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 1 Level 1 857,804 993,092 2,245,874 995,307 3,052,114 717,495 443,371 12,091,026 83,309,224 4,849,296 — — — — — — — 12,091,026 83,309,224 4,849,296 857,804 993,092 2,245,874 995,307 3,052,114 717,495 443,371 — — — 0.11 0.13 0.30 0.13 0.40 0.09 0.06 1.60 11.02 0.64 AAA/Aaa AAA/Aaa/NA NA/Aaa/AAA AAA/Aaa AAA/NA/AAA AAA/NA/AAA AAA/NA/AAA A-1/P-1 AAAm/NR AAA/Aaa/AAA $ 755,741,825 $ 248,112,045 $ 507,629,780 CNH 2021-A A3 COMET 2019-2 A COPAR 2019-1 A3 DCENT 2021-A1 A1 GMCAR 2020-4 A3 HAROT 2019-2 A3 HAROT 2021-1 A3 HAROT 2021-3 A2 HART 2020-A A3 HART 2021-A A3 HART 2021-C A3 HART 2022-A A2A MBART 2021-1 A3 NAROT 2019-A A3 NAROT 2019-B A3 NAROT 2021-A A3 SDART 2021-2 A3 TAOT 2020-A A3 TAOT 2020-C A3 TAOT 2021-A A3 TAOT 2021-C A3 WOART 2019-A A4 WOART 2019-B A3 WOART 2022-A A2 Money Market - Certificates of Deposit Money Market Fund Cash and cash equivalents Total 54 1-5 Years Concentration of Credit Risk % Investment Type Asset Backed: AMCAR 2022-1 A2 BMWOT 2019-A A3 BMWOT 2022-A A2A BMWOT 2022-A A3 CARMX 2020-1 A3 CARMX 2021-1 A3 CARMX 2021-2 A3 CARMX 2022-2 A3 CCCIT 2018-A3 A3 Fair Value Less than 1 Year 100.00 % CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 A-1 or P-1, 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, BBB+ and AAAm by Standard & Poor’s, respectively, as of June 30, 2022. 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 issued 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. 55 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 2021-22, current property tax collections were $38,437,603 or 100 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 2022 are not available for fiscal year 2021-22; accordingly, such taxes will not be recognized as revenue until fiscal year 2022-23. 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, 2021 $ 92,528,517 106,009,987 198,538,504 Additions $ — 33,393,584 33,393,584 Retirements $ June 30, 2022 (319,579) $ (4,476,428) (4,796,007) 92,208,938 134,927,143 227,136,081 Capital assets, being depreciated: Infrastructure Building and improvements Vehicles, machinery and equipment Total capital assets being depreciated 775,946,670 415,436,331 101,075,411 1,292,458,412 4,324,026 130,957 2,470,255 6,925,238 — — (2,058,688) (2,058,688) 780,270,696 415,567,288 101,486,978 1,297,324,962 Less accumulated depreciation for: Infrastructure Building and improvements Vehicles, machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net (434,430,103) (238,661,584) (75,759,912) (748,851,599) 543,606,813 (27,691,944) (18,694,263) (7,509,481) (53,895,688) (46,970,450) — — 1,813,289 1,813,289 (245,399) (462,122,047) (257,355,847) (81,456,104) (800,933,998) 496,390,964 (13,576,866) $ (5,041,406) $ 723,527,045 Governmental activities capital assets, net $ 742,145,317 56 $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 4 - Capital Assets, continued Construction in progress in the governmental activities capital assets is comprised of the following: Expended to Remaining June 30, 2022 Streets $ Commitments 58,150,500 $ 48,049,663 Parks and recreation 17,230,478 6,402,755 Buildings and related improvements 59,546,165 8,646,715 Total $ 134,927,143 $ 63,099,133 A summary of changes in capital assets for business-type activities is as follows: Balance Business-Type Activities Balance June 30, 2021 Additions Retirements June 30, 2022 Capital assets, not being depreciated: Land $ Construction in progress Total capital assets not being depreciated 57,189,731 $ — $ — $ 57,189,731 18,023,701 51,754,155 (3,431,470) 66,346,386 75,213,432 51,754,155 (3,431,470) 123,536,117 Capital assets, being depreciated: System improvements 1,401,070,404 3,770,898 — 1,404,841,302 Building and improvements 26,438,539 376,779 — 26,815,318 Vehicles, machinery and equipment 20,487,727 553,901 (58,000) 20,983,628 Water rights 42,860,250 — — 42,860,250 Land improvements 2,668,237 — — 2,668,237 1,493,525,157 4,701,578 (58,000) 1,498,168,735 System improvements (770,158,478) (45,360,649) — (815,519,127) Buildings and improvements (18,388,694) (988,363) — (19,377,057) Vehicles, machinery and equipment (17,946,407) (959,927) 58,000 (18,848,334) (214,301) (428,603) — (642,904) Total capital assets being depreciated Less accumulated depreciation for: Water rights Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ (2,351,150) (61,430) — (2,412,580) (809,059,030) (47,798,972) 58,000 (856,800,002) 684,466,127 (43,097,394) — 641,368,733 759,679,559 57 $ 8,656,761 $ (3,431,470) $ 764,904,850 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 4 - Capital Assets, concluded Construction in progress in the business-type activities capital assets is comprised of the following: Expended to June 30, 2022 Sewer system improvements $ 40,167,407 Water system improvements 24,008,993 Solid waste system improvements 436,538 Airport improvements 1,733,448 Total $ 66,346,386 Remaining Commitments $ 48,422,895 22,112,732 197,932 312,597 $ 71,046,156 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 $ $ $ $ 7,058,701 7,464,590 10,413,693 28,958,704 53,895,688 16,946,752 28,605,729 615,023 1,014,173 617,295 47,798,972 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. 58 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 $315,304,307 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 less than 69 percent of total ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $237,113,595. Principal and interest paid for the current year and total ad valorem property taxes were $27,170,399 and $39,540,557 respectively. General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2022 were as follows: Outstanding Governmental Activities General Obligation Bonds: $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. June 30, 2022 $ 56,795,000 25,500,000 39,040,000 29,400,000 $48,205,000 Refunding Bonds, Series 2021, due in annual installments of $117,390 to $14,781,390 beginning 7/1/22 through 7/1/28; interest at 0.4 percent to 1.75 percent. 26,949,909 $31,295,000 Capital Improvement Bonds, Series 2021, due in annual installments of $250,000 to $13,120,000 beginning 7/1/22 through 7/1/28; interest at 5 percent. 31,295,000 Total Governmental Activities General Obligation Bonds $ 208,979,909 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds were less than 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 $78,190,712. Principal and interest paid for the current year and total net water system, wastewater system revenues were $12,851,192 and $52,405,370 respectively. 59 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 5 - Long-Term Liabilities, continued 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. Outstanding June 30, 2022 $ 13,550,000 $48,205,000 Refunding Bonds, Series 2021, due in annual installments of $68,064 to $11,123,610 beginning 7/1/22 through 7/1/28; interest at 0.4 percent to 1.75 percent. Total Business-Type Activities General Obligation Bonds 35,575,000 21,255,091 $ 70,380,091 B. 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 36% percent of net system revenues. The total principal and interest to be paid on the obligations is $259,993,807. Principal and interest paid for the current year and net water and wastewater system revenues were $19,020,495 and $52,405,370 respectively. Total excise tax revenues during the fiscal year were $283,209,384. Principal and interest payments were less than 7 percent of total excise tax revenues. 60 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 5 - Long-Term Liabilities, continued Outstanding June 30, 2022 Business-Type Activities Excise Tax Revenue Obligations: $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. $ 12,200,000 $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. 55,835,000 $19,510,000 Water & Sewer Excise Tax Revenue Refunding Obligations, Series 2016, due in annual installments of $1,180,000 to $3,050,000 7/1/20 through 7/1/28; interest at 4 percent to 5 percent. 17,140,000 $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. 33,420,000 $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. 11,050,000 $85,460,000 Water & Sewer Excise Tax Revenue Refunding Obligations, Series 2021, due in annual installments of $1,040,000 to $11,965,000 beginning 7/1/22 through 7/1/33; interest at 0.42 percent to 2.3 percent. 85,460,000 Total Business-Type Activities Excise Tax Revenue Obligations $ 215,105,000 C. 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, 2022, 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, 2022 were as follows: Outstanding June 30, 2022 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 61 $ 635,000 $ 635,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 5 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Balance Governmental Activities: June 30, 2021 Compensated absences $ 13,679,502 Additions $ Reductions 1,886,315 $ Balance Due within June 30, 2022 One Year (2,411,888) $ 13,153,929 $ 2,477,891 Bonds payable: General obligation bonds 195,164,000 58,244,909 (44,429,000) 208,979,909 32,277,716 Special assessment bonds 1,245,000 — (610,000) 635,000 635,000 Issuance premiums 17,548,988 2,160,919 (4,655,668) 15,054,239 2,228,353 Total bonds payable 213,957,988 60,405,828 (49,694,668) 224,669,148 35,141,069 Claims payable 18,885,862 22,769,700 (24,744,432) 16,911,130 10,205,257 Net pension liability 293,981,374 — (97,557,942) 196,423,432 — — 72,805,954 OPEB liability Totals 56,105,261 16,700,693 $ 596,609,987 $ 101,762,536 $ (174,408,930) $ 523,963,593 Balance Business-Type Activities: June 30, 2021 Compensated absences $ 1,408,776 — $ Balance Additions $ Reductions 109,177 $ Due Within June 30, 2022 (235,204) $ 1,282,749 47,824,217 One Year $ 241,640 Bonds & obligations payable: General obligation bonds 76,936,000 21,255,091 (27,811,000) 70,380,091 10,667,284 Excise tax revenue obligations 219,780,000 85,460,000 (90,135,000) 215,105,000 12,175,000 Issuance premiums 22,960,376 — (8,438,354) 14,522,022 2,177,084 Total bonds & obligations payable 319,676,376 106,715,091 (126,384,354) 300,007,113 25,019,368 Net pension liability 22,238,502 — (6,121,444) 16,117,058 — OPEB liability 6,898,722 2,217,119 — 9,115,841 — — 4,340,000 Landfill closure/post closure Totals 4,340,000 — $ 354,562,376 $ 109,041,387 $ (132,741,002) $ 330,862,761 94,446 $ 25,355,454 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. 62 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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, 2022, the 6 percent debt limitation was $300,769,253, providing a debt margin of $294,648,031 and the 20 percent debt limitation was $1,002,564,178, providing a debt margin of $716,689,746. 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, 2022 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, 2022: GOVERNMENTAL ACTIVITIES General Improvement Obligation Districts Interest Principal Years Ended June 30 General Obligation Principal 2023 $ 32,277,716 2024 34,108,034 5,725,632 2025 26,351,936 4,286,099 2026 22,350,023 2027 7,320,146 $ $ 40,258,262 — — 39,833,666 — — 30,638,035 3,242,012 — — 25,592,035 21,638,420 2,548,473 — — 24,186,893 2028-2032 59,818,780 4,550,980 — — 64,369,760 2033-2037 12,435,000 460,343 — — 12,895,343 $ 208,979,909 $ 28,133,685 25,400 $ 237,773,994 $ 63 635,000 635,000 $ Total 25,400 Total $ Improvement Districts Interest $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 5 - Long-Term Liabilities, concluded Years Ended June 30 General Obligation Principal 2023 $ 10,667,284 2024 2025 BUSINESS-TYPE ACTIVITIES General Obligation Excise Tax Interest Principal 2,315,661 $ 12,175,000 10,231,966 1,879,720 9,543,064 1,401,616 2026 9,979,977 2027 $ 31,745,564 12,980,000 6,027,054 31,118,740 13,910,000 5,398,961 30,253,641 986,281 14,570,000 4,816,525 30,352,783 10,096,580 718,376 13,785,000 4,344,559 28,944,515 2028-2032 19,861,220 508,968 86,595,000 14,282,030 121,247,218 2033-2037 — — 58,130,000 3,385,810 61,515,810 2038-2042 — — 2,960,000 46,250 3,006,250 7,810,622 $ 215,105,000 $ 44,888,808 $ 338,184,521 $ 70,380,091 $ $ Total 6,587,619 Total $ Excise Tax Interest NOTE 6 - Defeased Debt Current Year Defeasance On December 1, 2021, the City issued $48,205,000 in General Obligation Refunding Bonds with an average interest rate of 1.68 percent. This issuance was used to advance refund $43,320,000 of Series 2014 General Obligation Refunding Bonds with an average interest rate of 4.25%. The advanced refunding portion of the total net proceeds totaling $47,787,943 (after payment of $417,057 in underwriting fees, insurance, and other issuance costs) was used to purchase $47,787,078 in U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 2014 General Obligation Refunding Bonds. As a result the liability for these bonds has been removed from the government-wide and statement of net assets. The refunding issuance resulted in a deferred outflow of $3,552,964. This difference will be allocated to operations through the fiscal year 2028 using the straight-line amortization method. The City completed the refunding to decrease its total debt service payments over the next 7 years by $1,583,329 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $1,510,831. On December 1, 2021, the City also issued $85,460,000 in Excise Tax Revenue Refunding Bonds with an average interest rate of 2.06 percent. This issuance was used to advance refund $78,600,000 of Series 2013 Excise Tax Revenue Bonds with an average interest rate of 4.46 percent. The advanced refunding portion of the total net proceeds totaling $84,816,508 (after payment of $643,492 in underwriting fees, insurance, and other issuance costs) was used to purchase $84,815,823 in U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 2013 Excise Tax Revenue Bonds. As a result the liability for these bonds has been removed from the government-wide and statement of net assets. The refunding issuance resulted in a deferred outflow of $1,918,671. This difference will be allocated to operations through the fiscal year 2033 using the straightline amortization method. The City completed the refunding to decrease its total debt service payments over the next 12 years by $8,554,041 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $7,621,519. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 6 - Defeased Debt, concluded Bonds and obligations that have been advance refunded (defeased) as of June 30, 2022: Refunded Debt Outstanding Amount Excise Tax Revenue Obligations, Series 2013 (Final Redemption 7/1/23) $ 78,600,000 General Obligation Bonds, Series 2014 (Final Redemption 7/1/24) 43,320,000 Total Refunded Bonds and Obligations Outstanding $121,920,000 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, 2022, the City estimates total costs related to landfill closure and postclosure care is 16,588,256 and has recognized that entire amount since the landfill no longer accepts waste. To date, $12,248,256 has been paid. The remaining balance of $4,340,000 consists of a current liability of $94,446 and $4,245,554 recorded as a long-term liability on the City’s financial statements. The estimated total current cost of the landfill closure and postclosure, $16,588,256, 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, 2022. However, the actual cost of closure and postclosure care may differ due to inflation, deflation, 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, 2021. 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, and, Airport funds are the result of system development fees, developer contributions and government contributions. Total capital contributions amounted to the following: Water Wastewater Airport System Development Fees $ 4,239,339 6,289,392 — Developer Contributions $ 212,404 2,146,409 — Government Contributions $ — — 784,839 $ Total $ $ $ $ 13,672,383 10,528,731 65 2,358,813 784,839 Total 4,451,743 8,435,801 784,839 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 9 - Fund Balance In the fund financial statements, fund balances are reported in five classifications that comprise a hierarchy based on spending constraints placed on the purposes for which resources can be used for better consistency and clarification. The classifications of fund balance are explained below: Nonspendable fund balance includes amounts that cannot be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) it is legally or contractually required to be maintained intact. Restricted fund balance includes amounts constrained to specific purposes by their providers which are either imposed 1) by external parties (grantors, bondholders and higher levels of government), 2) by law through constitutional provisions or 3) by enabling legislation legally enforceable by external parties. Committed fund balance includes amounts with self-imposed limitations to be used only for a specific purpose pursuant to constraints by formal action of the highest level of decision making authority, namely Mayor and Council. Mayor and Council approval is required to commit resources and amounts cannot be used for any other purpose unless Mayor and Council take the same formal action to remove or change the commitment. Assigned fund balance includes amounts intended to be used for a specific purpose. For the general fund, the assigned fund balance must be for a specific purpose and for all other governmental funds the assigned fund balance represents the residual balance of the fund. Fund balance assignments are approved through the Annual Budget Fund Policies section by Mayor and Council. Unlike committed fund balances, assigned fund balance amounts can be changed without formal action by the City Manager. Unassigned fund balance includes amounts available for any purpose; these amounts are reported only in the general fund. In addition, other governmental funds that result in a negative fund balance are presented in this classification. Generally, the City would first apply restricted resources, then committed, assigned and unassigned resources when an expense is incurred for purposes for which more than one classification of fund balance is available. As of June 30, 2022 the constraints placed on fund balance for the major governmental funds and other non-major governmental funds are presented in the following table: 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 9 - Fund Balance, concluded General Obligation Bonds Debt Service Grant Special Revenue General Other Governmental Total Nonspendable: Inventories $ Prepaid items 1,099,330 $ — $ — $ — $ 1,099,330 4,475 — — — 4,475 1,103,805 — — — 1,103,805 Court enhancement 493,793 — — — 493,793 Judicial enhancement 507,212 — — — 507,212 Weapons proceeds 151,636 — — — 151,636 Citing agency 45,922 — — — 45,922 Smart and Safe AZ 125,976 — — — 125,976 Transportation and development — 11,997,221 — 116,820,167 128,817,388 Debt service reserve — — 4,290,154 2,783 4,292,937 Community development — — — 522,644 522,644 Community services — — — 37,977,867 37,977,867 Other capital projects — — — 21,445,156 21,445,156 Total restricted 1,324,539 11,997,221 4,290,154 176,768,617 194,380,531 81 — — — 81 Total nonspendable Restricted for: Assigned to: Domestic violence prevention Self-insurance purposes 3,000,000 — — — 3,000,000 Traffic safety reserve 212,000 — — — 212,000 PSPRS contribution 50,000,000 — — — 50,000,000 Capital improvement projects 130,124,529 — — — 130,124,529 Economic development projects 5,982,500 — — — 5,982,500 ARPA related projects 3,664,873 — — — 3,664,873 Total assigned 192,983,983 — — — 192,983,983 86,626,252 — — (2,361,250) 84,265,002 86,626,252 — — (2,361,250) 84,265,002 Unassigned Total unassigned Total fund balances $ 282,038,579 $ 11,997,221 $ 4,290,154 $ 174,407,367 $ 472,733,321 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 2021-22. This amounts to $45,454,300 and is included in unassigned above. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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, 2022, the City of Chandler reported the following aggregate amounts related to pensions and other postemployment benefits (OPEB) for all plans to which it contributes. 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 Governmental Activities $ 196,423,432 Pensions Plans Business-type Activities Total $ 16,117,058 $ 212,540,490 87,899,955 65,914,761 17,508,032 4,439,613 6,081,100 4,377,008 92,339,568 71,995,861 21,885,040 Governmental Activities $ 72,805,954 22,946,075 10,068,440 5,121,484 OPEB Plans Business-type Activities $ 9,115,841 3,004,926 1,196,925 679,908 Total 81,921,795 25,951,001 11,265,365 5,801,392 $ The City of Chandler reported $50,585,898 and $2,011,875 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. 68 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 12.41 percent (12.22 percent for retirement and 0.19 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 12.41 percent (12.01 percent for retirement, 0.21 percent for health insurance premium benefit, and 0.19 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 10.22 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, 2022, 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, 2022, were $9,580,356. 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. 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 10 - Retirement and Pension Plans, continued D. Pension Liability At June 30, 2022, the City of Chandler reported a liability of $93,397,278 for its proportionate share of the net pension liability of the ASRS. The net pension liability was measured as of June 30, 2021. 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, 2020, to the measurement date of June 30, 2021. 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, 2021, the City of Chandler’s proportion was 0.71 percent, which was no change from its proportion measured as of June 30, 2020. E. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2022, the City of Chandler recognized pension expense for ASRS of $6,059,571 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 Deferred Inflows of Resources of Resources $ 1,423,755 $ — 12,156,402 — $ — 29,591,543 350,501 9,580,356 23,511,014 531,142 — 30,122,685 $ 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, 2023. 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: 2022 $ 27,446 2023 501,414 2024 (6,523,419) 2025 (10,197,468) 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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, 2020 June 30, 2021 Entry age normal 7% 2.9%-8.4% 2.3% Included 2017 SRA Scale U-MP The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2020. 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, 2020, 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 4.70 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 Fixed Income - Credit Fixed Income - Interest Rate Sensitive Real estate Total Target Allocation 50% 20% 10% 20% 100% Real Rate of Return 4.90% 5.20% 0.70% 5.70% G. Discount Rate The discount rate used to measure the ASRS total pension liability was 7.0 percent, which decreased by 0.5 percent from the discount rate used as of June 30, 2020. 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. 71 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 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 (6.0%) Current Discount Rate (7.0%) 1% Increase (8.0%) $ 146,906,096 $ 93,397,278 $ 48,785,729 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. For governmental activities OPEB and pension liabilities are generally liquidated by the general fund. 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. 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 in the table on the following page. See the publicly available PSPRS financial report for additional benefits information. 72 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 10 - Retirement and Pension Plans, continued 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 4.0% 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 80% of retired member’s pension benefit Active members 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 earnings. 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, 2022, 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 73 PSPRS - Police PSPRS - Fire 201 82 74 272 547 34 181 297 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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, 2022, 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 % 7.65 % 10.12 % 9.56 % 9.56 % 10.76 % 9.88 % 9.88 % 49.12 % 49.12 % 45.46 % 45.22 % 41.67 % 41.67 % 36.78 % 35.90 % In addition, the City of Chandler was required by statute to contribute at the actuarially determined rate of 35.34 percent for police and 26.02 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 PSPRS - Fire Pension: Contributions made $ 28,025,675 $ 14,991,742 E. Pension Liability At June 30, 2022, the City of Chandler reported $81,695,357 in net pension liability for police and $37,447,855 in net pension liability for fire. The net pension liabilities were measured as of June 30, 2021, 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, 2021, 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. 74 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 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 June 30, 2021 Entry age normal 7.3% 7.0% 2.5% 3.5% including inflation Cost of living adjustment 3.5% - 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 for Tiers 1 and 2 and 7.0 percent for Tier 3 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 Core Bonds International Public Equity Other Assets (Capital Appreciation) Cash - Mellon Diversifying Strategies Global Private Equity Private Credit U.S. Public Equity Total Target Allocation 2% 16% 7% 1% 10% 20% 20% 24% 100% Long-Term Expected Real Rate of Return 0.42% 5.20% 5.43% (0.31)% 3.99% 7.67% 5.74% 4.08% 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. 75 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 10 - Retirement and Pension Plans, continued Total Pension Liability PSPRS - Police Balances at June 30, 2021 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, 2022 PSPRS - Fire Balances at June 30, 2021 Changes for the year: Service cost Interest on the total pension liability Differences between expected and actual experience in the measurement of the pension liability Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2022 $ $ 308,011,519 76 179,779,599 $ 128,231,920 — — — 5,440,836 22,385,115 — 3,894,134 — — — — — — 22,596,733 2,424,870 53,483,321 3,894,134 — (22,596,733) (2,424,870) (53,483,321) (13,613,884) — — 18,106,201 326,117,720 $ (13,613,884) (250,715) 2,439 64,642,764 244,422,363 $ — 250,715 (2,439) (46,536,563) 81,695,357 180,991,250 $ $ Net Pension Liability 5,440,836 22,385,115 — Total Pension Liability $ Increase/(Decrease) Plan Fiduciary Net Position Increase/(Decrease) Plan Fiduciary Net Position $ 115,550,305 Net Pension Liability $ 65,440,945 3,923,796 13,243,975 — — 3,923,796 13,243,975 4,097,391 — — — — 13,299,020 1,778,804 34,335,848 4,097,391 (13,299,020) (1,778,804) (34,335,848) (6,981,473) — — 14,283,6891 195,274,939 $ (6,981,473) (160,215) 4,795 42,276,779 157,827,084 $ — 160,215 (4,795) (27,993,090) 37,447,855 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 10 - Retirement and Pension Plans, continued H. Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the City of Chandler’s net pension liability calculated using the discount rates noted above, as well as what the net pension liability would be if it were calculated using a discount rate that is 1percentage-point lower or 1-percentage-point higher than the current rate: I. Tier 1-2/Tier 3 1% Decrease Current Discount Rate Tier 1-2/Tier 3 1% Increase PSPRS - Police: Rate Net pension liability 6.30 $ 127,388,510 $ 7.30 81,695,357 $ 8.30 44,587,678 PSPRS - Fire: Rate Net pension liability 6.30 64,705,674 $ 7.30 37,447,855 $ 8.30 15,145,161 $ 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. J. Pension Expense For the year ended June 30, 2022, the City of Chandler recognized the following as pension expense: Pension Expense $ 10,428,960 5,354,473 PSPRS - Police PSPRS - Fire K. Pension Deferred Outflows/Inflows of Resources At June 30, 2022, the City of Chandler reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 77 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 10 - Retirement and Pension Plans, continued PSPRS - Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Contributions subsequent to the measurement date Total PSPRS - Fire Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 12,567,294 4,453,508 Deferred Inflows of Resources $ 917,705 — — 28,025,675 45,046,477 24,931,559 — 25,849,264 $ $ Deferred Outflows of Resources $ 5,093,143 3,697,192 Deferred Inflows of Resources $ 160,176 — — 14,991,742 23,782,077 15,863,736 — 16,023,912 $ $ 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, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending June 30: PSPRS - Police PSPRS - Fire 2023 $ (1,574,998) $ (1,030,978) 2024 (1,701,713) (1,506,867) 2025 (2,127,405) (2,529,530) 2026 (4,073,368) (3,977,402) 2027 649,022 1,090,027 Thereafter — 721,173 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. 78 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued 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. Generally, resources from the general fund are used to pay for post-employment benefits. A. Benefits Provided The City provides post-employment health care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s health plan during their active status. Upon retirement, the City deposits a one-time payment of $800 per year of City service in the retiree’s RHSP account. The retiree must have a minimum of five years of City service to receive this contribution. B. 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. C. 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 79 705 1,632 2,337 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued D. Total OPEB Liability The City’s total OPEB liability of $81,921,795 was measured as of June 30, 2021 and was determined by an actuarial valuation as of that date. E. 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, 2021 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Measurement date Actuarial valuation date Discount Rate Inflation rate Projected salary increases Health care cost trend rates Medical and prescription drug Retiree contribution increase June 30, 2021 June 30, 2021 2.21% 2.5% - 2.7% Vary depending on retirement plan and years of service from 2.7% - 7.5% 0% in 2020/21, then 7.5% graded down to an ultimate rate of 4.5% over 12 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. F. 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 Estimated benefit payments Net changes Total OPEB liability - end of year 80 $ 63,003,983 3,414,033 1,440,322 (2,181,125) 18,748,388 (2,503,806) 18,917,812 $ 81,921,795 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued Changes in assumptions reflect the following: 1. The discount rate decreased from 2.21% to 2.16% based on the changes in the Bond Buyer 20 GO index municipal bond rate from June 30, 2020 to June 30, 2021. 2. The per capita health costs were updated based on recent experience. 3. The life insurance premium was updated to current rates. 4. The mortality, withdrawal, disability, retirement rates and salary scales for General employees were updated based on the results of the recent ASRS experience study. 5. The mortality projection scale for public safety employees was updated based on the recent PSPRS valuation. 6. The percentage of future retirees assumed to cover their spouse was decreased from 70% to 65% for males and 45% to 40% for females based on recent experience. G. 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 (1.16%) Total OPEB liability $ Current Discount Rate (2.16%) 93,689,930 $ 81,921,795 1% Increase (3.16%) $ 72,410,422 H. 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 (7.50%) 1% Decrease (6.50%) Total OPEB liability $ I. 76,492,373 $ 81,921,795 1% Increase (8.50%) $ 88,396,541 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2022, the City recognized OPEB expense of $5,801,392. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: 81 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, concluded Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Contributions subsequent to measurement date Total $ — 23,175,399 2,775,602 25,951,001 $ Deferred Inflows of Resources $ 7,841,561 3,423,804 — $ 11,265,365 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, 2023. 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: 2023 $ 2024 2025 2026 2027 Thereafter 947,037 947,037 2,302,156 3,595,025 3,329,866 788,913 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 $30,000,000 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 with personnel services 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. 82 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 13 - Risk Management, concluded 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 2021-22, 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 $3,000,000 in Public Safety and up to $1,000,000 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 2021-22, 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. The claims liability of $16,911,130 reported as claims payable in the Self-Insurance Fund at June 30, 2022, 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 2021 and 2022 were: Year Ended June 30, Risk of Loss 2021 Workers' compensation Property and liability Health Dental Beginning of Fiscal Year Balance, as Restated Current Year Claims and Changes in Estimates $ $ 8,798,989 1,816,038 2,871,966 156,263 $ 13,643,256 Claim Payments Balance at Fiscal Year End 3,530,748 $ (1,836,434) $ 10,493,303 1,845,747 25,772,727 1,844,565 $ 32,993,787 (1,546,932) 2,114,853 (22,556,474) 6,088,219 (1,811,341) 189,487 $ (27,751,181) $ 18,885,862 Current Year Year Beginning of Claims and Ended Fiscal Year Changes in Claim Fiscal Year Balance Estimates Payments End June 30, Risk of Loss 2022 Workers' compensation Property and liability Health Dental $ 10,493,303 2,114,853 6,088,219 189,487 $ 18,885,862 83 $ Balance at 2,255,779 $ (2,204,720) $ 10,544,362 (161,929) (180,364) 1,772,560 18,732,049 (20,401,678) 4,418,590 1,943,801 (1,957,670) 175,618 $ 22,769,700 $ (24,744,432) $ 16,911,130 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 14 - Interfund Transfers Interfund transfers are made from the General Fund and Non-Major Governmental Funds to fund costs including property and liability insurance, technology replacement and vehicle and equipment replacement, $10,448,641. The General Fund provides funding for various capital projects, $13,696,106, as well as annual subsidies for the Airport and Public Housing Authority, $1,126,340. Bond payments totaling $7,500,000 to General Obligation Bonds Debt Service Fund from Non-Major Governmental Funds for bond repayments. $74,281 from Grants Capital Project Fund to Non-major Governmental Funds for AZCARES funding. $85,000 from Grants Capital Project Fund to General Fund for AZCARES funding as well. The interfund transfers in and out at June 30, 2022 are as follows: Transfers In: Transfers out: General Fund Grants Special Revenue Fund Non-Major Governmental Funds Water Enterprise Fund Wastewater Enterprise Fund Non-Major Enterprise Funds Internal Service Fund Total General Obligation Bonds Debt Service Fund Non-Major Governmental Funds Non-Major Enterprise Funds Internal Service Fund Total $ — $ 19,655,985 $ 1,126,340 $ 3,463,178 $ 24,245,503 — 74,281 — — 74,281 7,500,000 180,689 — 91,227 7,771,916 — 372,512 — — 372,512 — 289,561 — — 289,561 — 145,827 — — 145,827 — 30,768 — — 30,768 $ 7,500,000 $ 20,749,623 $ 1,126,340 $ 3,554,405 $ 32,930,368 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 $784,839 (see Note 8). NOTE 15 - Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances to other funds Advances from other funds Total Governmental funds: General Capital projects - public safety buildings and improvements Capital projects - public buildings Total governmental funds $ 5,596,432 1,764,427 $ 7,360,859 Interfund advances were made from governmental funds to capital projects funds to cover expenditures in impact fee funds until impact fees are received. $900,000 of the public safety buildings and improvements capital projects fund advances and $350,000 of the public buildings capital projects fund advance will be repaid within one year. 84 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 15 - Interfund Receivables and Payables, concluded B. Interfund Due To/Due From Due from other funds General Due to other funds Total Capital projects - grants $ 4,720,581 Special revenue - community development 68,298 Debt service - special assessment bonds Total general fund 7,217 $ 4,796,096 Interfund balances at June 30, 2022 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. Total investment in joint venture as of June 30, 2022, is: City of Chandler's Share $ 69,369,363 Town of Gilbert's Share 75,878,049 $ 145,247,412 NOTE 17 - Deficit in Fund Balances The police confiscated property special revenue fund had a deficit fund balance of $69,394. The deficit will be covered by future revenues. The general government capital project fund had a deficit fund balance of $561,607. The deficit will be covered by future revenues. The public buildings capital projects fund had deficit fund balance of $1,730,249. The funds were financed by advances of interfund loans and will be paid back 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 2021-22 is $719,689. 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. 85 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2022 NOTE 18 - Tax Abatements, concluded 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, 2022, the City abated property taxes totaling $203,291 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 $133,245 of property tax abated. NOTE 19 - Leases As lessor, the City of Chandler has entered into lease agreements involving land for wireless towers and airport land and facilities. The City recognizes lease receivables with an initial, individual value of $100,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the City charges the lessee) and the implicit rate cannot be determined, the City uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. The City's estimated incremental borrowing rate is calculated at 2.41%. The total amount of inflows of resources, including lease revenue, interest revenue, and other lease-related inflows, recognized during the fiscal year was $471,132. NOTE 20 - Prior Period Adjustments Prior year financial statements did not reverse a receivable in the Water Fund timely, adjust notes receivable timely within the Community Services Capital Project Fund, and a utility account was overcharged impacting the General Fund and Wastewater Fund. As a result of the restatement of beginning balances, the following reconciles the previously reported July 1, 2021 balances. Fund Balance July 1, 2021 as previously reported General Fund Prior Period Adjustment Fund Balance July 1, 2021 as Restated $ 242,592,399 $ 36,724 $ 242,629,123 Non-Major Governmental Funds $ 158,518,783 $ (85,938) $ 158,432,845 Net Position July 1, 2021 as previously reported Prior Period Adjustment Net Position July 1, 2021 as Restated Water Fund $ 290,669,734 $ (1,335,428) $ 289,334,306 Wastewater Fund $ 425,386,905 $ (771,286) $ 424,615,619 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, 2022 Non-GAAP 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 Interest revenue Miscellaneous $ Total Revenues 8,453,200 148,370,000 3,188,200 74,390,000 163,500 6,129,000 19,221,841 3,581,300 116,700 2,316,000 175,000 Final $ 8,453,200 148,370,000 3,188,200 74,390,000 163,500 6,129,000 19,221,841 3,581,300 116,700 2,316,000 175,000 $ Over Actual (Under) Amounts Final Budget 8,622,918 $ 182,028,630 3,861,042 87,038,075 181,869 6,915,745 22,245,251 3,365,892 119,710 (7,832,935) 703,417 169,718 33,658,630 672,842 12,648,075 18,369 786,745 3,023,410 (215,408) 3,010 (10,148,935) 528,417 266,104,741 266,104,741 307,249,614 41,144,873 1,197,666 4,996,699 17,590,588 2,859,066 27,423,841 3,777,181 9,394,217 38,151,332 12,623,995 3,915,729 88,438,420 1,039,756 3,991,049 77,498,767 10,694,700 1,326,170 5,109,053 18,202,743 3,333,382 29,615,479 4,004,665 9,853,187 41,989,720 14,748,313 4,076,974 70,529,039 1,064,708 9,859,474 83,854,448 13,422,352 1,239,371 3,768,895 15,658,744 2,860,837 27,848,906 3,920,694 8,583,994 41,903,161 12,921,149 4,082,717 31,044,022 906,161 5,077,941 79,719,410 12,454,205 86,799 1,340,158 2,543,999 472,545 1,766,573 83,971 1,269,193 86,559 1,827,164 (5,743) 39,485,017 158,547 4,781,533 4,135,038 968,147 303,593,006 310,989,707 251,990,207 58,999,500 REVENUES OVER (UNDER) EXPENDITURES (37,488,265) (44,884,966) 55,259,407 100,144,373 OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out (400,000) 8,521,086 (67,953,676) (400,000) 8,521,086 (67,953,676) 1,273,075 — (24,245,503) 1,673,075 (8,521,086) 43,708,173 Total other financing sources (uses) (59,832,590) (59,832,590) (22,972,428) 36,860,162 Net change in fund balance (97,320,855) (104,717,556) 32,286,979 137,004,535 Fund balance, July 1, 2021 242,629,123 242,629,123 242,629,123 — 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 Fund balance, June 30, 2022 $ 145,308,268 See accompanying notes to this schedule. 89 $ 137,911,567 $ 274,916,102 $ 137,004,535 90 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Grants Special Revenue For the year ended June 30, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 57,650,000 14,918,829 $ (20,292,998) 190,000 190,000 (1,177,661) (1,367,661) — — 1,637 1,637 57,840,000 35,401,827 13,742,805 (21,659,022) 74,762,956 26,819,935 17,592,739 9,227,196 56,464 8,654,321 3,457,311 5,197,010 Transportation and development — 2,651,675 2,540,249 111,426 Community services — 1,030,352 939,474 90,878 Interest revenue Miscellaneous Total revenues $ 35,211,827 $ EXPENDITURES: General government Public safety Capital outlay — 307,115 648,561 (341,446) 74,819,420 39,463,398 25,178,334 14,285,064 (16,979,420) (4,061,571) (11,435,529) (7,373,958) — — (74,281) 74,281 — — (74,281) 74,281 Net change in fund balance (16,979,420) (4,061,571) (11,509,810) (7,299,677) Fund balance, July 1, 2021 16,255,723 16,255,723 16,255,723 — Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfers Out Total other financing sources (uses) Fund balance (deficit), June 30, 2022 $ (723,697) $ See accompanying notes to this schedule. 91 12,194,152 $ 4,745,913 $ (7,299,677) City of Chandler Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System June 30, 2022 2022 City's proportion of the net pension liability (asset) 2021 0.71 % 0.71 % 2020 0.72 % 2019 0.76 % City's proportionate share of the net pension liability (asset) $ 93,397,278 $122,547,011 $104,541,379 $106,413,043 City's covered payroll $ 79,544,042 $ 76,880,601 $ 75,407,689 $ 75,579,140 City's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 117.42 % 159.40 % 138.63 % 140.80 % Plan fiduciary net position as a percentage of the total pension liability 78.58 % 69.33 % 73.24 % 73.00 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 92 2018 0.74 % 2017 0.75 % 2016 2015 0.73 % 0.71 % $ 115,691,952 $ 121,549,835 $ 113,885,153 $ 105,661,552 $ 72,284,183 $ 70,362,938 $ 67,230,465 $ 64,263,236 160.05 % 172.75 % 169.40 % 164.42 % 69.92 % 67.06 % 68.35 % 69.49 % 93 City of Chandler Schedule of Contributions All Pension Plans June 30, 2022 2022 2021 2020 2019 Arizona State Retirement System: Actuarially determined contribution $ 9,580,356 $ 9,267,255 $ 8,844,068 $ 8,470,741 Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) 9,580,356 $ — 9,267,255 $ — 8,844,068 $ — 8,470,741 $ — $ 79,760,571 $ 79,544,042 $ 76,880,601 $ 75,407,689 City's covered payroll Contributions as a percentage of covered payroll 12.01 % 11.65 % 11.50 % 11.23 % Public Safety Personnel Retirement System - Police: Actuarially determined contribution Contributions in relation to the 1 actuarially determined contribution Contribution deficiency (excess) $ 22,596,733 $ 19,026,392 $ 15,572,686 $ 12,267,559 28,025,675 $ (5,428,942) 22,619,456 $ (3,593,064) 28,715,343 $ (13,142,657) 15,398,196 $ (3,130,637) City's covered payroll Contributions as a percentage of covered payroll $ 27,383,139 $ 26,480,082 $ 28,589,014 $ 28,848,732 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 102.35 % 85.42 % 100.44 % 53.38 % $ 13,299,020 $ 10,427,865 $ 8,004,060 $ 7,021,133 14,991,742 $ (1,692,722) 13,054,192 $ (2,626,327) 15,566,324 $ (7,562,264) 8,670,333 $ (1,649,200) $ 18,946,241 $ 18,187,540 $ 19,154,805 $ 19,025,780 79.13 % 71.78 % 81.27 % 45.57 % 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. 94 2018 2017 2016 2015 $ 8,268,029 $ 7,793,041 $ 7,634,805 $ 7,323,872 8,268,029 $ — 7,793,041 $ — 7,634,805 $ — 7,323,872 $ — $ 75,579,140 $ 72,284,183 $ 70,362,938 $ 67,230,465 10.94 % 10.78 % 10.85 % 10.89 % $ 10,950,501 $ 8,470,411 $ 8,561,143 $ 6,083,333 14,300,501 $ (3,350,000) 10,145,411 $ (1,675,000) 8,561,143 $ — 6,083,333 $ — $ 28,294,661 $ 27,058,086 $ 27,946,237 $ 26,187,641 50.54 % 37.49 % $ 6,392,313 $ 4,616,587 8,042,313 $ (1,650,000) $ $ 18,200,175 $ 17,275,940 44.19 % 5,441,587 (825,000) 31.50 % 30.63 % $ 4,438,495 $ 4,438,495 — $ 16,874,362 23.23 % $ 3,193,139 $ 3,193,139 — $ 15,671,133 26.30 % 20.38 % 95 City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Police June 30, 2022 2022 2021 2020 2019 Total pension liability Service cost $ Interest 5,440,836 $ 5,696,125 $ 6,149,336 $ 5,737,868 22,385,115 20,504,731 19,203,025 17,999,842 — — — — 3,894,134 12,866,840 1,302,509 (671,252) — — 6,562,499 — Benefit payments, including refunds (13,613,884) (12,493,545) (10,261,998) (9,913,263) Net change in total pension liability 18,106,201 26,574,151 22,955,371 13,153,195 Changes of benefit terms Differences between expected and actual experience Changes of assumptions Total pension liability - beginning Total pension liability - ending 308,011,519 281,437,368 258,481,997 245,328,802 $ 326,117,720 $ 308,011,519 $ 281,437,368 $ 258,481,997 $ $ $ $ Plan fiduciary net position Contributions - employer 22,596,733 28,799,919 15,572,686 10,296,409 Contributions - employee 2,424,870 2,909,915 2,206,379 2,765,932 Net investment income 53,483,321 2,344,516 8,365,394 9,301,979 Benefit payments, including refunds (13,613,884) (12,493,545) (10,261,998) (9,913,263) (250,715) (191,143) (146,042) (142,274) 2,439 (2,317) (102,911) 24,215 64,642,764 21,367,345 15,633,508 12,332,998 Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning 179,779,599 158,412,254 142,778,746 130,445,748 Plan fiduciary net position - ending $ 244,422,363 $ 179,779,599 $ 158,412,254 $ 142,778,746 Net pension liability - ending $ $ 128,231,920 $ 123,025,114 $ 115,703,251 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll 81,695,357 74.95 % $ 26,480,082 308.52 % 58.37 % $ 28,859,014 444.34 % 56.29 % $ 28,848,732 426.45 % 55.24 % $ 28,294,661 408.92 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 96 2018 $ 6,092,332 2017 $ 5,337,103 2016 $ 2015 4,583,770 $ 4,602,603 17,064,596 14,964,498 13,839,509 11,841,118 1,501,042 17,456,919 — 1,741,535 (6,211,672) 858,761 4,879,849 567,380 6,528,203 8,537,784 — 13,082,165 (8,254,947) (13,015,625) (5,681,836) (7,054,499) 16,719,554 34,139,440 17,621,292 24,780,302 228,609,248 194,469,808 176,848,516 152,068,214 $ 245,328,802 $ 228,609,248 $ 194,469,808 $ 176,848,516 $ $ $ $ 10,247,877 8,728,082 6,155,142 5,465,059 3,244,412 3,633,359 3,308,265 2,675,724 14,017,325 677,501 3,873,466 12,329,319 (8,254,947) (13,015,625) (5,681,836) (7,054,499) (124,430) (97,889) (94,891) — (167,280) 238,667 (70,777) (2,733,237) 18,962,957 164,095 7,489,369 10,682,366 111,482,791 111,318,696 103,829,327 93,146,961 $ 130,445,748 $ 111,482,791 $ 111,318,696 $ 103,829,327 $ 114,883,054 $ 117,126,457 $ $ 53.17 % $ 27,058,086 424.58 % 48.77 % $ 27,946,237 419.11 % 83,151,112 57.24 % $ 26,187,641 73,019,189 58.71 % $ 317.52 % 24,290,497 300.61 % 97 City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Fire June 30, 2022 2022 2021 2020 2019 Total pension liability Service cost $ Interest 3,923,796 $ 4,025,473 $ 4,353,346 $ 4,014,526 13,243,975 12,453,112 11,689,082 10,794,299 — — — — 4,097,391 1,086,650 (171,678) 1,014,752 — — 3,122,509 — Benefit payments, including refunds (6,981,473) (6,278,162) (5,792,594) (6,363,418) Net change in total pension liability 14,283,689 11,287,073 13,200,665 9,460,159 Changes of benefit terms Differences between expected and actual experience Changes of assumptions Total pension liability - beginning Total pension liability - ending 180,991,250 169,704,177 156,503,512 147,043,353 $ 195,274,939 $ 180,991,250 $ 169,704,177 $ 156,503,512 $ $ $ $ Plan fiduciary net position Contributions - employer 13,299,020 15,654,338 8,004,060 5,956,704 Contributions - employee 1,778,804 1,432,043 1,462,348 1,633,743 Net investment income 34,335,848 1,488,011 5,389,738 6,174,093 Benefit payments, including refunds (6,981,473) (6,278,162) (5,792,594) (6,363,418) (160,215) (121,320) (94,355) (94,669) 4,795 5 (42,251) 1,035 Net change in plan fiduciary net position 42,276,779 12,174,915 8,926,946 7,307,488 Plan fiduciary net position - beginning 115,550,305 103,375,390 94,448,444 87,140,956 Plan fiduciary net position - ending $ 157,827,084 $ 115,550,305 $ 103,375,390 $ 94,448,444 Net pension liability - ending $ $ $ $ 62,055,068 Administrative expense Other Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll 37,447,855 80.82 % $ 18,187,540 205.90 % 65,440,945 63.84 % $ 19,154,805 341.64 % 66,328,787 60.92 % $ 19,025,780 348.63 % 60.35 % $ 18,200,175 340.96 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 98 2018 $ 3,863,571 2017 $ 3,174,665 2016 $ 2015 2,915,603 $ 2,949,507 9,983,423 8,707,808 8,264,915 7,191,487 753,382 10,272,193 — 930,663 941,823 96,063 (1,037,307) (409,426) 2,845,297 4,937,927 — 6,465,545 (5,049,317) (5,647,270) (3,614,319) (3,258,846) 13,338,179 21,541,386 6,528,892 13,868,930 133,705,174 112,163,788 105,634,896 91,765,966 $ 147,043,353 $ 133,705,174 $ 112,163,788 $ 105,634,896 $ $ $ $ 5,514,825 4,672,177 3,222,291 2,140,037 1,837,291 1,775,319 9,228,731 440,223 2,568,880 8,217,832 (5,049,317) (5,647,270) (3,614,319) (3,258,846) (82,059) (63,746) (63,063) — 50,502 38,948 (55,142) (1,798,718) 11,975,435 1,580,369 3,895,938 8,088,281 75,165,521 73,585,152 69,689,214 61,600,933 69,689,214 $ 87,140,956 $ 75,165,521 $ 73,585,152 $ 59,902,397 $ 58,539,653 $ 38,578,636 59.26 % $ 3,152,694 2,312,753 17,275,940 346.74 % 56.22 % $ 16,874,362 346.91 % $ 35,945,682 65.61 % $ 15,671,133 65.97 % $ 15,691,213 246.18 % 229.08 % 99 City of Chandler Schedule of Changes in OPEB Liabilities and Related Ratios Single Employer Plan June 30, 2022 2022 2021 2020 2019 2018 Measurement date 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Total OPEB liability beginning of year Changes for the year $ 63,003,983 $ 53,112,727 $ 51,751,856 $ 52,838,811 $ 66,519,700 Service cost 3,414,033 2,940,955 2,585,397 3,020,484 3,962,284 Interest 1,440,322 1,921,296 2,059,914 1,939,376 1,967,447 Differences between expected and actual experience (2,181,125) — (5,086,575) (883,708) (8,539,064) Changes in assumptions or other inputs 18,748,388 7,368,121 4,021,143 (1,789,527) (8,174,073) (2,503,806) 18,917,812 (2,339,116) 9,891,256 (2,219,008) 1,360,871 (3,373,580) (1,086,955) (2,897,483) (13,680,889) Total OPEB liability - end of year $ 81,921,795 $ 63,003,983 $ 53,112,727 $ 51,751,856 $ 52,838,811 Total covered employee payroll $116,931,839 $113,713,741 $108,862,317 $106,207,139 Benefit payments Net changes Total OPEB liability as percentage of covered employee payroll $130,254,557 62.89 % 53.88 % 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. 100 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2022 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. Statement of Revenues, Expenditures and Changes in Fund Balances- Net change in fund balance General Fund Grants Special Revenue Fund $ $ Reserved encumbrances at June 30, 2022 recognized as budgetary expenditures in fiscal year ended June 30, 2022 Budgetary Comparison Schedule- Net change in fund balance 39,409,456 (7,122,477) $ 32,286,979 (4,258,502) (7,251,308) $ (11,509,810) 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, 2020 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, 2021 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, 2021 reflects changes of benefit terms and actuarial assumptions for funding assumed future permanent benefit increases. 101 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2022 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, 2021 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. 102 OTHER FINANCIAL STATEMENTS 103 104 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, 2022 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Property taxes $ 30,310,000 $ 30,310,000 $ 30,917,639 $ 607,639 Interest revenue 169,500 169,500 (548,003) (717,503) Total revenues 30,479,500 30,479,500 30,369,636 (109,864) 334,584 334,584 — (334,584) 33,145,240 33,145,240 32,277,716 (867,524) — — 228,393 228,393 Interest and fiscal charges 6,999,676 6,999,676 7,064,929 65,253 Total expenditures 40,479,500 40,479,500 39,571,038 (908,462) (10,000,000) (10,000,000) (9,201,402) 798,598 Transfers in 10,000,000 10,000,000 7,500,000 (2,500,000) Total other financing sources (uses) 10,000,000 10,000,000 7,500,000 (2,500,000) — — (1,701,402) (1,701,402) 5,758,393 5,758,393 5,758,393 — EXPENDITURES: General government Principal Bond issuance costs Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance, July 1, 2021 Fund balance, June 30, 2022 $ 5,758,393 105 $ 5,758,393 $ 4,056,991 $ (1,701,402) 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. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Police Confiscated Property Used to account for monies confiscated by the Police Department and monies received from the sale of confiscated property. Parks and Recreation Used to account for donations for park improvements and programs restricted pursuant to donor covenants. Museum Used to account for donations for museum improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. NON-MAJOR DEBT SERVICE FUNDS 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. 106 City of Chandler Non-Major Governmental Funds 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 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. Streets Used to account for the acquisition, construction and improvements of City streets projects. 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. 107 108 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2022 Special Revenue Local Police Highway Transportation Community Confiscated Parks and User Assistance Development Property Recreation Museum ASSETS Equity in pooled cash and investments $ 36,547,493 $ 5,491,022 $ — $ 180,998 $ 308,828 $ 48,083 Receivables (net of allowance for uncollectible): Accounts — — — — — — Special assessments — — — — — — Notes — — 318,929 — — — 75,140 10,669 — 432 636 98 — — — — — — 2,008,825 — 351,030 — — — Accrued interest Other Due from other governments Total assets $ 38,631,458 $ 5,501,691 $ 669,959 $ $ $ 1,604 $ 48,602 $ 181,430 $ — $ 309,464 $ — $ 48,181 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll 137,133 — 136,025 — 30,415 — — — Trust liabilities and deposits — — — 250,824 — — Accrued interest — — — — — — Due to other funds — — 68,298 — — — Advances from other funds — — — — — — 273,158 1,604 147,315 250,824 — — — — — — — — — — — — — — 38,358,300 5,500,087 522,644 — 309,464 48,181 — — — (69,394) — — 38,358,300 5,500,087 522,644 (69,394) 309,464 48,181 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 $ 38,631,458 $ 5,501,691 $ 669,959 $ 181,430 $ 309,464 $ 48,181 (Continued) 109 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2022 Special Revenue Debt Service Special Library Capital Projects Assessment General Public Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ 76,385 $ — $ 782,025 $ 33,589 $ — Receivables (net of allowance for uncollectible): Accounts — — 5,710 — — Special assessments — 576,578 — — — Notes — — — — — 156 — — 589 — — — 116,466 — — — — — — 6,634,089 Accrued interest Other Due from other governments Total assets $ 76,541 $ $ 980 $ 576,578 $ 904,201 $ — $ 1,465,808 $ 34,178 $ 6,634,089 — $ 1,072,211 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll — — — — 3,523 Trust liabilities and deposits — — — — — Accrued interest — 12,700 — — — Due to other funds — 7,217 — — 4,720,581 Advances from other funds — — — 1,764,427 — 980 19,917 1,465,808 1,764,427 5,796,315 — 553,878 — — — — 553,878 — — — 75,561 2,783 — — 837,774 — — (561,607) (1,730,249) — 75,561 2,783 (561,607) (1,730,249) 837,774 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 $ 76,541 110 $ 576,578 $ 904,201 $ 34,178 $ 6,634,089 Capital Projects Streets $ 73,616,087 $ Public Safety Vehicle and Community Buildings and Capital Equipment Technology Municipal Governmental Services Improvements Replacement Replacement Arts Funds 37,467,780 $ 7,578,064 $ Total Other 11,117,545 $ 7,682,256 $ 749,479 $ 181,679,634 — — — — — — 5,710 — — — — — — 576,578 — — — — — — 318,929 125,955 66,678 1,977 22,721 15,704 1,551 322,306 — — — — — — 116,466 265,161 — — — — — 9,259,105 $ 74,007,203 $ 37,534,458 $ 7,580,041 $ 11,140,266 $ 7,697,960 $ 751,030 $ 192,278,728 $ 1,036,849 $ 737,761 $ 83,150 $ 33,148 $ 97,401 $ 300 $ 4,714,947 $ 8,569 2,766 754 — — — 182,052 250,829 5 — — — — — — — — — — — 12,700 — — — — — — 4,796,096 — — 5,596,432 — — — 7,360,859 1,045,423 740,527 5,680,336 33,148 97,401 300 17,317,483 — — — — — — 553,878 — — — — — — 553,878 72,961,780 36,793,931 1,899,705 11,107,118 7,600,559 750,730 176,768,617 — — — — — — (2,361,250) 72,961,780 36,793,931 1,899,705 11,107,118 7,600,559 750,730 174,407,367 74,007,203 $ 37,534,458 $ 7,580,041 $ 11,140,266 $ 7,697,960 $ 751,030 $ 192,278,728 (Concluded) 111 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2022 Special Revenue Local Police Highway Transportation Community Confiscated Parks and User Assistance Development Property Recreation Museum REVENUES: Highway user taxes $ 19,460,326 $ — $ — $ — $ — $ — Regional transportation taxes — — — — — — Grants and entitlements — 697,052 2,118,430 — 75,044 1,939 System development fees — — — — — — Special assessments — — — — — — Charges for services — 188,675 — — — — Fines and forfeitures — — — 73,886 — — Contributions — — — — — — (1,074,885) (155,448) (2) (1) (9,209) (1,427) Interest revenue Miscellaneous Total revenues 58,814 84,854 — — — — 18,444,255 815,133 2,118,428 73,885 65,835 512 — — 2,195,934 — — — — EXPENDITURES: Current: General government Public safety — — — 58,247 — 7,320,610 180,479 — — — — — — — — 55,868 1,240 6,501,564 292,829 — 49,727 — — Principal — — — — — — Bond issuance costs — — — — — — Interest and fiscal charges — — — — — — 13,822,174 473,308 2,195,934 107,974 55,868 1,240 4,622,081 341,825 (77,506) (34,089) 9,967 (728) Proceeds from disposal of capital assets — — — — — — Bond premium — — — — — — Face amount of bonds issued — — — — — — Transfers in — — — — — — Transportation and development Community services Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out (267,704) (4,212) — — — — Total other financing sources (uses) (267,704) (4,212) — — — — NET CHANGE IN FUND BALANCE 4,354,377 337,613 (77,506) (34,089) 9,967 (728) (35,305) 299,497 (69,394) $ 309,464 FUND BALANCES (DEFICITS): Beginning of year, as restated End of year 34,003,923 $ 38,358,300 5,162,474 $ 112 5,500,087 600,150 $ 522,644 $ 48,909 $ 48,181 Special Revenue Debt Service Capital Projects Special Library $ — $ General Public Bonds Government Buildings — $ — — — — 52,453 — — — — — $ Community Grants — $ Streets — $ Services — $ 2,210,634 — — — — — 17,976,454 — — — 196,850 — 2,701,703 1,502,613 610,719 — — — — — — — — 13,735 — — — — — — — — — — — 254,874 — — — — (2,074) — — (8,416) (3) (2,128,778) (1,075,790) — — — 441,740 — — — — 50,379 610,719 696,614 188,434 17,990,186 2,783,559 426,823 — — 1,594,070 514 81,281 1,550 4,087 — — 49,428 — — — — — — 625,188 — 655,413 1,331,968 — 36,847 — 336,928 — 13,735 — 305,050 30 — 12,088,156 — 16,722,897 14,609,284 6,158,554 — 610,000 — — — — — — — — — — 112,889 24,084 — 37,600 — — — — — 36,877 647,600 14,693,770 514 17,473,326 16,055,691 6,491,775 13,502 (36,881) (13,997,156) 187,920 516,860 (13,272,132) (6,064,952) — — 109,479 — — — — — — — — — 1,412,281 300,489 — — — — — 20,453,040 4,351,758 — — 13,696,106 — 159,281 — — — — — — — (3,026,096) (4,473,904) — — 13,805,585 — 159,281 18,839,225 178,343 13,502 (36,881) (191,571) 187,920 676,141 5,567,093 (5,886,609) (370,036) (1,918,169) 161,633 (561,607) $ (1,730,249) $ 837,774 62,059 $ Assessment 75,561 39,664 $ 2,783 $ 67,394,687 $ 72,961,780 42,680,540 $ 36,793,931 (Continued) 113 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2022 Capital Projects Public Safety Vehicle and Buildings and Capital Equipment Technology Municipal Governmental Total Other Improvements Replacement Replacement Arts Funds REVENUES: Highway user taxes $ — $ — $ — $ — $ 19,460,326 Regional transportation taxes — — — — 2,210,634 Grants and entitlements — — — — 20,921,372 System development fees 629,865 — — — 5,031,031 Special assessments — — — — 610,719 Charges for services — — — 117,411 319,821 Fines and forfeitures — — — — 73,886 Contributions — — — — 254,874 (154,348) (289,459) (207,211) (21,960) (5,129,011) Interest revenue Miscellaneous Total revenues — 20,467 — — 605,875 475,517 (268,992) (207,211) 95,451 44,359,527 3,100 — 945,349 — 4,825,885 535,274 — — — 642,949 — — — — 10,113,658 EXPENDITURES: Current: General government Public safety Transportation and development Community services Capital outlay — — — 54,746 804,414 36,803 1,360,083 84,686 — 57,904,613 Debt service: Principal Bond issuance costs Interest and fiscal charges Total expenditures — — — — 610,000 35,918 — — — 172,891 — — — — 37,600 611,095 1,360,083 1,030,035 54,746 75,112,010 (135,578) (1,629,075) (1,237,246) 40,705 (30,752,483) — 183,901 — — 293,380 448,148 — — — 2,160,918 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Bond premium Face amount of bonds issued Transfers in Transfers out 6,490,202 — — — 31,295,000 — 3,040,290 3,853,946 — 20,749,623 — — — — (7,771,916) Total other financing sources (uses) 6,938,350 3,224,191 3,853,946 — 46,727,005 NET CHANGE IN FUND BALANCE 6,802,772 1,595,116 2,616,700 40,705 15,974,522 FUND BALANCES (DEFICITS): Beginning of year, as restated End of year (4,903,067) $ 1,899,705 9,512,002 $ 11,107,118 4,983,859 $ 7,600,559 710,025 $ 750,730 158,432,845 $ 174,407,367 (Concluded) 114 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Highway user taxes $ Interest revenue 17,373,409 $ 17,373,409 $ 19,460,326 $ 2,086,917 415,000 415,000 (1,074,881) (1,489,881) — — 58,814 58,814 17,788,409 17,788,409 18,444,259 655,850 General government 1,693,400 3,505,351 — 3,505,351 Transportation and development 16,018,368 9,202,036 8,500,607 701,429 Capital outlay 5,981,065 8,078,304 7,468,926 609,378 Total expenditures 23,692,833 20,785,691 15,969,533 4,816,158 (5,904,424) (2,997,282) 2,474,726 5,472,008 Transfers out (297,286) (297,286) (267,704) 29,582 Total other financing sources (uses) (297,286) (297,286) (267,704) 29,582 Net change in fund balance (6,201,710) (3,294,568) 2,207,022 5,501,590 Fund balance, July 1, 2021 34,003,923 34,003,923 34,003,923 — Miscellaneous Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2022 $ 27,802,213 115 $ 30,709,355 $ 36,210,945 $ 5,501,590 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 673,600 $ 673,600 $ 697,052 $ 23,452 Charges for services 153,600 153,600 188,675 35,075 Interest revenue 60,000 60,000 (155,448) (215,448) — — 84,854 84,854 887,200 887,200 815,133 (72,067) 54,200 36,744 — 36,744 2,012,719 1,217,331 328,460 888,871 172,000 954,879 533,933 420,946 2,238,919 2,208,954 862,393 1,346,561 (1,351,719) (1,321,754) (47,260) 1,274,494 (4,409) (4,409) (4,212) 197 (4,409) (4,409) (4,212) 197 Net change in fund balance (1,356,128) (1,326,163) (51,472) 1,274,691 Fund balance, July 1, 2021 5,162,474 5,162,474 5,162,474 — Miscellaneous Total revenues EXPENDITURES: General government Transportation and development 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, 2022 $ 3,806,346 116 $ 3,836,311 $ 5,111,002 $ 1,274,691 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 2,975,950 Interest Revenue Total revenues $ 2,975,950 $ 2,118,430 $ (857,520) 29,000 29,000 — (29,000) 3,004,950 3,004,950 2,118,430 (886,520) 3,253,325 6,575,399 2,858,764 3,716,635 EXPENDITURES: General government Capital outlay — — 163,617 (163,617) 3,253,325 6,575,399 3,022,381 3,553,018 Net change in fund balance (248,375) (3,570,449) (903,951) 2,666,498 Fund balance, July 1, 2021 600,150 600,150 600,150 — (2,970,299) $ (303,801) $ Total expenditures Fund balance (deficit), June 30, 2022 $ 351,775 117 $ 2,666,498 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Fines and forfeitures $ 750,000 Total revenues $ 750,000 $ 73,886 $ (676,114) 750,000 750,000 73,886 (676,114) General government 22,000 — — — Public safety 645,000 645,000 95,196 549,804 Capital outlay 105,000 105,000 49,727 55,273 Total expenditures 772,000 750,000 144,923 605,077 Net change in fund balance (22,000) — (71,037) (71,037) Fund balance (deficit), July 1, 2021 (35,305) (35,305) (35,305) — (57,305) $ (35,305) $ (106,342) $ EXPENDITURES: Fund balance (deficit), June 30, 2022 $ 118 (71,037) 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 85,900 Interest revenue $ 85,900 $ 75,044 $ (10,856) 4,000 4,000 (9,209) (13,209) 89,900 89,900 65,835 (24,065) Community services 151,036 151,036 55,868 95,168 Total expenditures 151,036 151,036 55,868 95,168 Net change in fund balance (61,136) (61,136) 9,967 71,103 Fund balance, July 1, 2021 299,497 299,497 299,497 — Total revenues EXPENDITURES: Fund balance, June 30, 2022 $ 238,361 119 $ 238,361 $ 309,464 $ 71,103 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Museum Special Revenue For the year ended June 30, 2022 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue — $ — $ 1,939 $ 1,939 1,000 1,000 (1,428) (2,428) 1,000 1,000 511 (489) General government 4,000 4,000 — 4,000 Community services 24,710 24,710 8,659 16,051 Total expenditures 28,710 28,710 8,659 20,051 Net change in fund balance (27,710) (27,710) (8,148) 19,562 Fund balance, July 1, 2021 48,909 48,909 48,909 — Total revenues EXPENDITURES: Fund balance, June 30, 2022 $ 120 21,199 $ 21,199 $ 40,761 $ 19,562 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Special Revenue For the year ended June 30, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue Total revenues 80,000 $ 80,000 $ 52,453 $ (27,547) 1,000 1,000 (2,073) (3,073) 81,000 81,000 50,380 (30,620) EXPENDITURES: General government 8,000 8,000 — 8,000 Community services 80,000 80,000 36,847 43,153 — — 30 (30) 88,000 88,000 36,877 51,123 Net change in fund balance (7,000) (7,000) 13,503 20,503 Fund balance, July 1, 2021 62,059 62,059 62,059 — Capital outlay Total expenditures Fund balance, June 30, 2022 $ 121 55,059 $ 55,059 $ 75,562 $ 20,503 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Bonds For the year ended June 30, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Special assessments $ Total revenues — $ — $ 610,719 $ 610,719 — — 610,719 610,719 Principal — — 610,000 (610,000) Interest and fiscal charges — — 37,600 (37,600) Total expenditures — — 647,600 (647,600) — — (36,881) (36,881) 39,664 39,664 39,664 — EXPENDITURES: Net change in fund balance Fund balance, July 1, 2021 Fund balance, June 30, 2022 $ 122 39,664 $ 39,664 $ 2,783 $ (36,881) 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Miscellaneous $ — Total revenues $ — $ 441,740 $ 441,740 — — 441,740 441,740 19,095,249 10,622,705 2,064,477 8,558,228 Public safety 5,578,513 1,448,627 91,537 1,357,090 Transportation and development 12,794,049 3,084,562 668,144 2,416,418 Community services 6,290,985 2,021,840 1,408,382 613,458 Capital outlay 11,243,819 48,482,461 22,186,982 26,295,479 Total expenditures 55,002,615 65,660,195 26,419,522 39,240,673 (55,002,615) (65,660,195) (25,977,782) 39,682,413 Capital contributions — — 254,874 254,874 Proceeds from sale of capital assets — — 109,479 109,479 Transfers in 55,002,615 55,002,615 13,696,106 (41,306,509) Total other financing sources (uses) 55,002,615 55,002,615 14,060,459 (40,942,156) — (10,657,580) (11,917,323) (1,259,743) (370,036) (370,036) (370,036) — EXPENDITURES: General government Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance, July 1, 2021 Fund balance (deficit), June 30, 2022 $ 123 (370,036) $ (11,027,616) $ (12,287,359) $ (1,259,743) 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 184,300 Interest revenue $ 184,300 $ 196,850 $ 12,550 3,400 3,400 (8,417) (11,817) 187,700 187,700 188,433 733 General government 17,000 17,000 13,700 3,300 Total expenditures 17,000 17,000 13,700 3,300 170,700 170,700 174,733 4,033 Transfers out (250,000) (250,000) — 250,000 Total other financing sources (uses) (250,000) (250,000) — 250,000 (79,300) (79,300) 174,733 254,033 (1,918,169) (1,918,169) (1,918,169) — (1,997,469) $ (1,997,469) $ (1,743,436) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance (deficit), July 1, 2021 Fund balance (deficit), June 30, 2022 $ 124 254,033 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Grants Capital Projects For the year ended June 30, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 14,700,224 $ 14,700,224 $ 17,976,454 — — 13,735 13,735 14,700,224 14,700,224 17,990,189 3,289,965 General government 2,879,122 1,838,965 81,281 1,757,684 Transportation and development 27,788,694 8,344,816 1,970,495 7,672,178 Community services 2,001,041 27,983 13,735 14,248 Capital outlay 11,977,382 56,692,567 32,790,496 23,902,071 Total expenditures 44,646,239 66,904,331 34,856,007 33,346,181 (29,946,015) (52,204,107) (16,865,818) 36,636,146 Transfers in — — 159,281 159,281 Transfers out — (120,000) — 120,000 Total other financing sources (uses) — (120,000) 159,281 279,281 Net change in fund balance (29,946,015) (52,324,107) (16,706,537) 36,915,427 Fund balance, July 1, 2021 161,633 161,633 161,633 — Charges for services Total revenues $ 3,276,230 EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2022 $ (29,784,382) $ (52,162,474) $ (16,544,904) $ 36,915,427 125 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Streets Capital Projects For the year ended June 30, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Regional transportation taxes $ 200,000 System development fees Interest revenue Total revenues $ 200,000 $ 2,210,634 $ 2,010,634 4,440,700 4,440,700 2,701,703 (1,738,997) 932,000 932,000 (2,128,790) (3,060,790) 5,572,700 5,572,700 2,783,547 (2,789,153) EXPENDITURES: General government 47,799 2,539,625 15,300 2,524,325 Transportation and development 44,964,305 3,836,889 1,537,979 2,298,910 Capital outlay 10,978,702 49,614,292 42,830,190 6,784,102 Bond issuance costs — — 112,889 (112,889) Total expenditures 55,990,806 55,990,806 44,496,358 11,494,448 (50,418,106) (50,418,106) (41,712,811) 8,705,295 — — 1,412,281 1,412,281 Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Bond premium Face amount of bonds issued 23,480,000 23,480,000 20,453,040 (3,026,960) Transfers in 200,000 200,000 — (200,000) Transfers out (8,450,000) (4,218,415) (3,026,096) 1,192,319 Total other financing sources (uses) 15,230,000 19,461,585 18,839,225 (622,360) Net change in fund balance (35,188,106) (30,956,521) (22,873,586) 8,082,935 Fund balance, July 1, 2021 67,394,687 67,394,687 67,394,687 — $ 32,206,581 $ 36,438,166 $ 44,521,101 Fund balance, June 30, 2022 126 $ 8,082,935 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, 2022 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 2,177,200 Interest revenue $ 2,177,200 $ 1,502,613 $ (674,587) 595,000 595,000 (1,075,792) (1,670,792) 2,772,200 2,772,200 426,821 (2,345,379) General government 36,600 1,616,452 29,000 1,587,452 Community services 13,837,656 2,074,678 982,955 1,091,723 Capital outlay Total revenues EXPENDITURES: 3,862,376 14,039,738 9,650,734 4,389,004 Bond issuance costs — — 24,084 (24,084) Total expenditures 17,736,632 17,730,868 10,686,773 7,044,095 (14,964,432) (14,958,668) (10,259,952) 4,698,716 Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Bond premium — — 300,489 300,489 Face amount of bonds issued 4,700,000 4,700,000 4,351,758 (348,242) Transfers out (1,750,000) (5,981,585) (4,473,904) 1,507,681 Total other financing sources (uses) 2,950,000 (1,281,585) 178,343 1,459,928 Net change in fund balance (12,014,432) (16,240,253) (10,081,609) 6,158,644 Fund balance, July 1, 2021 42,680,540 42,680,540 42,680,540 — $ 30,666,108 $ 26,440,287 $ 32,598,931 Fund balance, June 30, 2022 127 $ 6,158,644 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 608,000 Interest revenue $ 608,000 $ 629,865 $ 21,865 20,000 20,000 (154,346) (174,346) 628,000 628,000 475,519 (152,481) 247,600 265,640 30,600 235,040 Public safety 1,772,835 1,750,714 1,019,657 731,057 Capital outlay 5,993,000 5,997,081 82,490 5,914,591 Bond issuance costs — — 35,918 (35,918) Total expenditures 8,013,435 8,013,435 1,168,665 6,844,770 (7,385,435) (7,385,435) (693,146) 6,692,289 — — 448,148 448,148 6,980,000 6,980,000 6,490,202 (489,798) Total revenues EXPENDITURES: General government Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Bond premium Face amount of bonds issued Transfers out (700,000) (700,000) — 700,000 Total other financing sources (uses) 6,280,000 6,280,000 6,938,350 658,350 Net change in fund balance (1,105,435) (1,105,435) 6,245,204 7,350,639 Fund balance (deficit), July 1, 2021 (4,903,067) (4,903,067) (4,903,067) — (6,008,502) $ (6,008,502) $ 1,342,137 Fund balance (deficit), June 30, 2022 $ 128 $ 7,350,639 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 171,000 (289,460) $ (460,460) — — 20,467 20,467 171,000 171,000 (268,993) (439,993) General government 1,102,977 622,296 — 622,296 Capital outlay 2,705,683 3,364,587 2,777,772 586,815 Total expenditures 3,808,660 3,986,883 2,777,772 1,209,111 (3,637,660) (3,815,883) (3,046,765) 769,118 Miscellaneous Total revenues $ 171,000 $ EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets 300,000 300,000 183,901 (116,099) Transfers in 3,040,289 3,040,289 3,040,290 1 Total other financing sources (uses) 3,340,289 3,340,289 3,224,191 (116,098) Net change in fund balance (297,371) (475,594) 177,426 653,020 Fund balance, July 1, 2021 9,512,002 9,512,002 9,512,002 — Fund balance, June 30, 2022 $ 129 9,214,631 $ 9,036,408 $ 9,689,428 $ 653,020 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ (207,211) $ (310,211) 103,000 103,000 103,000 (207,211) (310,211) General government 2,716,495 2,029,153 995,033 1,034,120 Capital outlay 1,253,240 1,911,769 1,876,282 35,487 Total expenditures 3,969,735 3,940,922 2,871,315 1,069,607 (3,866,735) (3,837,922) (3,078,526) 759,396 Transfers in 3,837,922 3,837,922 3,853,946 16,024 Total other financing sources (uses) 3,837,922 3,837,922 3,853,946 16,024 Net change in fund balance (28,813) — 775,420 775,420 Fund balance, July 1, 2021 4,983,859 4,983,859 4,983,859 — Total revenues $ 103,000 $ EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2022 $ 130 4,955,046 $ 4,983,859 $ 5,759,279 $ 775,420 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, 2022 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Charges for services $ Interest revenue 115,400 $ 115,400 $ 117,411 $ 2,011 9,400 9,400 (21,960) (31,360) 124,800 124,800 95,451 (29,349) General government 51,000 — — — Community services 650,000 650,000 59,746 590,254 Total expenditures 701,000 650,000 59,746 590,254 Net change in fund balance (576,200) (525,200) 35,705 560,905 Fund balance, July 1, 2021 710,025 710,025 710,025 — Total revenues EXPENDITURES: Fund balance, June 30, 2022 $ 131 133,825 $ 184,825 $ 745,730 $ 560,905 132 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. 133 City of Chandler Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2022 Chandler Housing Authority Total Other Proprietary Funds 276,773 119 — 17,363 — — 294,255 $ 8,549,326 36,190 104,862 — 17,534 — 8,707,912 $31,940,566 2,326,002 104,862 17,363 63,324 33 34,452,150 — — — 4,083,983 154,750 — 154,750 4,083,983 6,844,102 6,439,919 13,284,021 13,284,021 38,734,004 20,611,880 11,730,503 32,342,383 36,426,366 36,720,621 1,751,537 6,794,639 8,546,176 8,700,926 17,408,838 29,207,519 24,965,061 54,172,580 58,411,313 92,863,463 576,589 330,901 725,096 1,632,586 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 $23,114,467 2,289,693 — — 45,790 33 25,449,983 Long-term assets: Notes receivable Leases 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 134 $ LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Customer advances Compensated absences payable Landfill closure and postclosure liability Total current liabilities 2,101,357 64,505 — 113,059 16,013 94,446 2,389,380 220,580 25,158 62,955 29,376 7,732 — 345,801 15,750 63,258 770,487 119,012 15,867 — 984,374 2,337,687 152,921 833,442 261,447 39,612 94,446 3,719,555 Long-term liabilities: Compensated absences payable Net pension liability OPEB liability Landfill closure and postclosure liability Total long-term liabilities Total liabilities 68,992 766,909 698,404 4,245,554 5,779,859 8,169,239 33,313 983,022 240,813 — 1,257,148 1,602,949 68,355 1,776,383 770,519 — 2,615,257 3,599,631 170,660 3,526,314 1,709,736 4,245,554 9,652,264 13,371,819 591,829 — 591,829 318,899 4,042,618 4,361,517 854,238 — 854,238 1,764,966 4,042,618 5,807,584 32,342,383 8,546,176 (1,255,327) 5,133,889 $31,087,056 $13,680,065 54,172,580 21,144,066 $75,316,646 DEFERRED INFLOWS OF RESOURCES Deferred inflows of OPEB and pension plan items Deferred inflows of leases Total deferred inflows of resources NET POSITION Net investment in capital assets Unrestricted Total net position 13,284,021 17,265,504 $30,549,525 135 136 City of Chandler Combining Statement of Revenues, Expenses and Changes in Net Position Non-Major Proprietary Funds For the year ended June 30, 2022 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees 175 $ 18,430,024 Grants and entitlements $ 17,629,367 — — 8,598,756 8,598,756 Rentals — 13,200 1,415,619 1,428,819 Sales taxes — 21,379 — 21,379 Miscellaneous $ 800,482 $ 520 5,880 42,564 48,964 17,629,887 840,941 10,057,114 28,527,942 General and administrative 1,027,221 102,341 — 1,129,562 Personnel services 1,789,679 554,368 1,822,087 4,166,134 Contractual services 12,426,796 95,169 902,172 13,424,137 869,095 190,735 810,100 1,869,930 — — 5,803,477 5,803,477 Total operating revenues OPERATING EXPENSES: Commodities Housing assistance payments Depreciation and amortization expense 615,023 1,014,173 617,295 2,246,491 Total operating expenses 16,727,814 1,956,786 9,955,131 28,639,731 OPERATING INCOME (LOSS) 902,073 (1,115,845) 101,983 (111,789) (665,372) 99,731 (241,089) (806,730) (665,372) 99,731 (241,089) (806,730) 236,701 (1,016,114) (139,106) (918,519) — 784,839 — 784,839 NONOPERATING REVENUES (EXPENSES): Interest revenue Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions Transfers in — 841,340 285,000 1,126,340 (113,831) (31,996) — (145,827) Total capital contributions and transfers (113,831) 1,594,183 285,000 1,765,352 CHANGE IN NET POSITION 122,870 578,069 145,894 846,833 Transfers out NET POSITION Beginning of year End of year 137 30,426,655 30,508,987 13,534,171 74,469,813 $ 30,549,525 $ 31,087,056 $ 13,680,065 $ 75,316,646 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2022 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 17,738,008 $ 808,006 $ 1,519,789 $ 20,065,803 Cash received from grantors — 33,600 8,543,350 8,576,950 Cash payments to suppliers (13,478,539) (201,633) (7,549,943) (21,230,115) Cash payments to employees for services (1,833,706) (567,830) (1,871,748) (4,273,284) 2,425,763 72,143 641,448 3,139,354 — 841,340 285,000 1,126,340 (113,831) (31,996) — (145,827) (113,831) 809,344 285,000 980,513 (221,443) (734,189) (376,779) (1,332,411) (221,443) (734,189) (376,779) (1,332,411) 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 (669,073) 99,731 (242,744) (812,086) Net cash provided (used) by investing activities (669,073) 99,731 (242,744) (812,086) Net increase (decrease) in cash and cash equivalents 1,421,416 247,029 306,925 1,975,370 21,693,051 29,744 8,242,401 29,965,196 CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 138 23,114,467 $ 276,773 $ 8,549,326 $ 31,940,566 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 902,073 $ (1,115,845) $ 101,983 $ (111,789) 615,023 1,014,173 617,295 2,246,491 76,083 (4,083,714) (50,274) (4,057,905) (Increase) decrease in due from other governments — 33,600 — 33,600 (Increase) decrease in inventories — 19,245 — 19,245 (Increase) decrease in other assets — — (168,375) (168,375) 844,573 167,367 (34,194) 977,746 (2,781) 12,268 (9,211) 276 — 5,425 152,384 157,809 Increase (decrease) in customer advances 32,038 2,736 (96,085) (61,311) Increase (decrease) in net pension items (223,624) (84,980) (59,431) (368,035) Increase (decrease) in OPEB liability 182,378 59,250 187,356 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 payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in lease deferred inflows 428,984 4,042,618 Total adjustments 1,523,690 Net cash provided (used) by operating activities 4,042,618 1,187,988 539,465 3,251,143 $ 2,425,763 $ 72,143 $ 641,448 $ 3,139,354 $ — $ 784,839 $ — $ 784,839 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from city government 139 140 3 - Statistical Section • Financial Trends • Revenue Capacity • Debt Capacity • Demographic and Economic Information • Operating Information “Moving Forward Together” Statistical Section Decades of award-winning budget, financial management, and procurement practices are indications of our fiscal stability and strength. Statistical Section CITY OF CHANDLER, ARIZONA Statistical Section This part of the City of Chandler’s annual comprehensive 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. 142 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. 158 Debt Capacity 162 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 14-30 provide additional information for continuing disclosure purposes. Demographic and Economic Information 186 Schedules 31-32 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 33-35 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 annual comprehensive financial reports for the relevant year. 141 CITY OF CHANDLER, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2013 Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ 2014 558,279,485 112,307,412 179,518,042 $ 563,033,503 105,723,768 183,088,676 2015 $ 567,041,560 108,965,994 7,709,550 2016 $ 579,591,241 121,767,847 (5,872,464) 850,104,939 851,845,947 683,717,104 695,486,624 355,015,004 388,837,444 380,427,606 342,252,306 — 176,961,822 — 206,284,498 119,075 217,824,645 31,365,801 258,806,679 531,976,826 595,121,942 598,371,326 632,424,786 Primary government Net investment in capital assets Restricted Unrestricted 913,294,489 112,307,412 356,479,864 951,870,947 105,723,768 389,373,174 947,469,166 109,085,069 225,534,195 921,843,547 153,133,648 252,934,215 Total primary government net position $ 1,382,081,765 $ 1,446,967,889 $ 1,282,088,430 $ 1,327,911,410 Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position 142 Schedule 1 Fiscal Year 2017 $ 587,213,640 122,006,140 (36,358,845) 2018 $ 536,086,249 168,510,855 (65,575,548) 2019 $ 2020 575,953,033 173,490,725 (72,592,489) $ 547,511,826 191,839,529 (8,655,932) 2021 $ 555,107,220 189,214,016 (6,761,531) 2022 $ 536,775,941 194,380,531 63,657,816 672,860,935 639,021,556 676,851,269 730,695,423 737,559,705 794,814,288 439,823,546 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 33,750,526 267,005,635 458,616,595 32,154,205 299,755,652 473,953,519 31,745,566 283,463,157 649,192,275 744,982,017 762,566,911 778,085,400 790,526,452 789,162,242 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 1,013,723,815 221,368,221 292,994,121 1,010,729,460 226,126,097 347,120,973 $ 1,322,053,210 $ 1,384,003,573 $ 1,439,418,180 $ 1,508,780,823 $ 1,528,086,157 $ 1,583,976,530 143 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2013 Expenses Governmental activities: General government Public safety Transportation and development Community services Interest and fiscal charges $ 2014 90,143,339 95,974,126 55,846,316 30,979,208 11,777,701 $ 99,231,501 94,738,371 52,183,052 32,331,286 10,044,363 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 Total governmental activities expenses 284,720,690 288,528,573 296,991,636 318,420,472 Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority 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 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 Total business-type activities expenses Total primary government expenses 119,252,098 403,972,788 121,575,747 410,104,320 129,675,342 426,666,978 128,315,366 446,735,838 $ 144 $ $ $ Schedule 2a Fiscal Year 2017 $ $ 104,998,802 149,366,614 56,752,197 32,599,549 6,623,830 2018 $ 113,587,478 112,371,723 55,287,494 36,824,102 6,716,119 2019 $ 2020 114,373,302 124,906,187 53,806,473 36,990,853 7,046,655 $ 138,850,297 109,544,169 59,777,330 38,195,563 6,885,184 2021 $ 162,849,542 122,146,366 58,847,053 39,565,719 6,653,197 2022 $ 157,127,919 104,673,550 56,403,523 41,563,661 6,014,168 350,340,992 324,786,916 337,123,470 353,252,543 390,061,877 365,782,821 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 62,049,102 62,753,454 17,040,309 2,186,724 9,207,531 61,264,619 63,037,577 16,727,814 1,956,786 9,955,131 145,352,561 495,693,553 $ 146,602,680 471,389,596 $ 145,255,181 482,378,651 $ 145 154,734,428 507,986,971 $ 153,237,120 543,298,997 $ 152,941,927 518,724,748 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2014 2015 2013 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 $ 35,898,378 7,375,050 10,150,102 8,240,732 3,999,536 9,116,635 $ 38,832,217 5,861,044 16,145,692 7,744,507 4,744,636 10,170,236 $ 39,207,061 6,469,215 14,438,138 7,551,166 3,514,714 13,133,637 2016 $ 42,021,638 7,471,344 16,538,175 10,792,114 5,188,787 16,725,462 74,780,433 83,498,332 84,313,931 98,737,520 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 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 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 32,690,364 188,756,379 183,534,739 150,960,012 157,112,246 Total primary government program revenues $ 263,536,812 $ 267,033,071 $ 235,273,943 $ 255,849,766 Net (expense)/revenue Governmental activities Business-type activities Total primary government net (expense) $ (209,940,257) 69,504,281 $ (140,435,976) $ (205,030,041) $ (212,677,705) $ (219,682,952) 61,958,992 21,284,670 28,796,880 $ (143,071,049) $ (191,393,035) $ (190,886,072) 146 Schedule 2b Fiscal Year 2017 $ $ 41,400,079 6,561,052 16,333,273 10,732,351 4,481,750 9,702,683 2018 $ 43,089,930 6,100,584 17,145,894 9,180,276 3,988,629 9,340,818 2019 $ 2020 43,622,807 4,998,779 14,869,670 7,583,513 4,522,345 10,510,464 $ 43,203,865 6,512,002 16,420,652 5,623,796 31,052,185 18,714,457 2021 $ 42,011,670 5,073,984 14,266,302 5,437,401 18,694,567 16,573,341 2022 $ 42,734,281 5,714,382 13,044,002 6,033,727 17,863,747 18,678,027 89,211,188 88,846,131 86,107,578 121,526,957 102,057,265 104,068,166 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 58,755,999 61,971,940 17,480,050 893,268 1,262,966 7,965,078 14,355,873 54,911,138 61,109,393 17,629,367 813,683 1,415,794 8,598,756 12,887,544 158,213,039 157,466,507 152,244,584 156,408,804 162,685,174 157,365,675 247,424,227 $ (261,129,804) 12,860,478 $ (248,269,326) $ 246,312,638 $ (235,940,785) 10,863,827 $ (225,076,958) $ 238,352,162 $ (251,015,892) 6,989,403 $ (244,026,489) $ 277,935,761 $ (231,725,586) 1,674,376 $ (230,051,210) 147 $ 264,742,439 $ (288,004,612) 9,448,054 $ (278,556,558) $ 261,433,841 $ (261,714,655) 4,423,748 $ (257,290,907) CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2013 Governmental Revenues and Other Changes in Net Position Governmental activities: Property taxes Sales taxes Highway user taxes Other taxes Franchise fees State shared $ 2014 29,656,415 102,200,517 12,929,504 6,295,212 2,936,533 51,347,206 $ 28,348,952 103,880,801 13,352,622 3,243,937 3,145,449 55,423,759 2015 $ 28,708,033 108,657,130 14,633,470 10,106,891 3,300,129 59,236,588 2016 $ 29,214,103 112,250,883 15,303,635 6,100,475 3,344,817 60,712,442 Investment income Miscellaneous Transfers in (out) Total governmental activities 2,843,417 2,181,627 (102,875) 210,287,556 1,869,128 819,766 (132,082) 209,952,332 1,763,585 1,197,215 (123,350) 227,479,691 3,834,840 1,124,559 (433,282) 231,452,472 Business-type activities: Sales taxes Investment income Miscellaneous Transfers in (out) Total business-type activities: — 1,180,290 1,409,437 102,875 2,692,602 70,065 788,025 1,683,332 132,082 2,673,504 10,865 819,556 2,475,760 123,350 3,429,531 10,391 2,180,447 2,632,460 433,282 5,256,580 Total primary government Change in Net Position Governmental activities Business-type activities Total primary government $ 212,980,158 $ 212,625,836 $ 230,909,222 $ 236,709,052 $ 347,299 72,196,883 72,544,182 $ 4,922,291 64,632,496 69,554,787 $ 14,801,986 24,714,201 39,516,187 $ 11,769,520 34,053,460 45,822,980 $ $ 148 $ $ Schedule 2c Fiscal Year 2017 $ 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 2018 $ 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 2020 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 $ 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 2021 $ 15,521 9,974,135 2,962,466 891,991 13,844,113 36,371,978 157,513,686 18,108,310 2,226,568 3,823,524 80,699,253 584,026 1,820,520 105,991 301,253,856 2022 $ 16,516 249,448 2,833,025 (105,991) 2,992,998 39,560,904 182,028,630 19,460,326 2,210,634 3,861,042 87,038,075 (15,954,424) 1,916,550 (1,103,279) 319,018,458 21,379 (7,617,417) 2,811,515 1,103,279 (3,681,244) $ 242,411,126 $ 262,598,025 $ 287,979,563 $ 299,413,853 $ 304,246,854 $ 315,337,214 $ (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 $ 13,249,244 12,441,052 25,690,296 $ 57,303,803 742,504 58,046,307 $ $ $ $ 149 $ $ CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2013 General fund Nonspendable Restricted Assigned Unassigned Total general fund $ $ All other governmental funds Nonspendable Restricted Unassigned Total all other governmental funds $ 2014 938,549 939,867 101,115,766 66,077,714 169,071,896 $ $ 2015 892,533 1,166,105 95,185,696 82,453,462 179,697,796 $ $ 2016 941,359 1,792,180 102,222,466 80,152,269 185,108,274 $ $ 907,594 1,566,618 109,958,162 68,567,835 181,000,209 — — — — 111,367,545 (13,646,428) 104,557,663 (11,034,021) 107,173,814 (15,322,260) 120,201,229 (11,877,159) 97,721,117 150 $ 93,523,642 $ 91,851,554 $ 108,324,070 Schedule 3 Fiscal Year 2017 $ 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 $ 2020 866,239 2,179,767 131,214,214 66,035,760 200,295,980 $ $ — 171,310,958 (5,758,986) $ 165,551,972 $ 2021 985,396 1,710,608 139,326,860 90,887,858 232,910,722 $ $ — 190,128,921 (7,697,792) $ 182,431,129 $ 151 2022 1,051,638 1,711,242 143,763,585 96,065,934 242,592,399 $ $ — 187,759,476 (7,226,577) $ — 193,055,992 (2,361,250) $ 180,532,899 $ 190,694,742 $ $ 1,103,805 1,324,539 192,983,983 86,626,252 282,038,579 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 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 $ 152 263,680,876 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 Schedule 4 Fiscal Year $ $ 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 $ $ 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 $ $ 153 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 5,571,322 213,345 596,153 15,017,352 1,471,977 377,285,577 $ $ 2021 36,409,345 157,513,686 18,108,310 2,226,568 3,823,524 80,699,253 29,417,028 8,207,728 587,020 6,656,737 19,631,389 2,920,173 174,766 5,201,737 533,383 1,105,070 373,215,717 $ $ 2022 39,540,557 182,028,630 19,460,326 2,210,634 3,861,042 87,038,075 36,022,070 5,031,031 610,719 6,915,745 22,565,072 3,439,778 119,710 254,874 (14,687,606) 1,310,929 395,721,586 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2013 44,512,533 89,587,613 24,807,578 23,554,854 41,793,319 15,955,000 10,682,206 145,970 21,490,000 7,737,974 722,293 17,465,000 8,635,631 — Total expenditures $ 263,033,922 $ 256,506,506 $ 276,496,631 $ 283,313,919 11.7 % 12.3 % $ 2016 52,138,384 104,605,663 25,471,154 24,988,844 50,009,243 26,870,000 11,908,025 — 16.4 % $ 2015 46,895,106 93,773,306 24,769,553 24,569,283 56,539,116 $ Debt service as a percentage of noncapital expenditures $ 2014 46,807,747 90,068,218 23,418,175 23,771,925 45,657,265 General government Public safety Transportation and development Community services Capital improvements Debt service: Principal retirement Interest and fiscal charges Bond issuance costs 10.2 % (1) In FY 2017, the City called the remaining payments for the 2007 GO Refunding issuance totaling $8,110,000. 154 Schedule 5 Fiscal Year 2017 $ 50,892,490 103,167,906 28,294,221 26,605,279 44,712,255 25,240,000 7,689,305 249,838 $ 286,851,294 12.9 % (1) 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 2021 $ 93,482,842 119,357,759 63,281,132 29,084,081 61,907,124 2022 $ 90,412,233 123,991,198 20,264,000 7,918,081 252,611 22,820,000 8,270,161 — 21,340,000 8,073,320 319,631 19,980,000 7,801,885 — 32,887,716 7,102,529 401,284 $ 319,984,939 $ 323,247,698 $ 358,010,538 $ 394,894,823 $ 377,477,809 10.4 % 11.2 % 155 9.7 % 7.8 % 27,995,477 30,855,014 63,832,358 10.8 % 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 2013 Other Financing Sources (Uses) Bond premium Face amount of bonds issued $ 2014 — — $ 562,052 8,660,000 2015 $ 17,045,635 128,254,000 2016 $ — — Proceeds from disposal of capital assets Payment to escrow agent Transfers in Transfers out 76,381 — 32,849,979 (33,997,394) 161,126 (9,061,800) 24,586,418 (25,653,741) 103,964 (143,635,520) 28,717,990 (29,776,581) 463,709 — 27,885,557 (29,252,060) Total other financing sources (uses) (1,071,034) (745,945) 709,488 (902,794) (5,533,759) $ 6,428,425 Net change in fund balance $ 156 $ 3,738,390 $ 12,364,451 Schedule 6 Fiscal Year 2017 $ $ 6,339,230 25,500,000 2018 $ 3,609,365 58,740,000 2019 $ 2020 — — $ 2,927,904 30,400,000 2021 $ 2022 — — $ 2,160,918 58,244,909 652,882 (31,589,392) 28,116,369 (29,208,275) 213,829 — 46,032,351 (47,370,020) 1,356,796 — 45,484,505 (48,005,487) 396,924 — 39,282,296 (42,788,264) 225,081 — 44,961,787 (47,364,881) 1,566,455 (26,716,745) 28,249,623 (32,091,700) (189,186) 61,225,525 (1,164,186) 30,218,860 (2,178,013) 31,413,460 11,516,715 $ 47,509,836 $ 5,937,639 $ 157 49,493,899 $ 7,783,447 $ 49,657,237 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 Proposition 207 Utilities $ Total Sales and Use Taxes $ City Direct Sales Tax Rate (2) 2013 717,442 10,408,518 45,331,307 2,288,989 2,937,426 334,981 2,884,618 10,817,611 9,069,109 3,731,350 1,315,599 — 12,363,565 102,200,515 $ $ 1.75% Fiscal Year 2014 2015 728,110 $ 895,730 9,780,645 8,870,092 47,454,682 49,740,000 2,472,754 2,892,470 2,660,201 2,815,040 258,547 260,712 2,949,421 3,261,716 11,058,203 11,967,509 9,542,714 10,188,718 3,533,636 3,435,949 1,090,428 1,145,534 — — 12,421,526 13,194,526 103,950,867 1.75% $ 108,667,996 $ $ 1.76% 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 — 13,786,741 112,261,272 1.76% 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. (4) In Fiscal Year 2021-22, the City did a restatement due to a utility customer being overbilled; prior years have not been restated. 158 Schedule 7 $ 2017 1,019,938 11,496,791 53,137,169 3,424,279 2,527,981 186,862 3,611,180 13,647,156 11,341,714 2,796,065 3,619,340 — 13,391,857 $ 2018 1,083,161 12,388,978 56,605,561 3,712,085 2,328,030 182,820 3,676,196 15,134,275 11,872,941 2,395,673 4,394,129 — 13,824,331 $ Fiscal Year 2019 2020 (3) 1,318,195 $ 972,105 17,228,786 12,824,214 60,029,293 64,911,529 4,099,450 3,560,787 1,757,235 1,710,004 207,462 177,542 4,076,298 4,282,451 16,506,671 18,184,361 12,773,198 11,978,625 2,191,747 2,337,375 5,461,771 5,335,557 — — 14,218,596 14,385,889 $ 2021 789,411 14,446,470 75,590,425 3,215,504 2,152,443 197,578 3,760,815 19,214,217 13,099,159 1,751,284 7,636,473 256,702 15,419,721 $ 2022 1,348,862 17,894,817 85,823,599 5,980,467 3,983,534 204,025 4,207,664 20,876,574 16,324,360 1,571,877 6,966,021 1,276,846 15,591,363 (4) $ 120,200,332 $ 127,598,180 $ 139,868,702 $ 140,660,439 $ 157,530,202 $ 182,050,009 1.75% 1.74% 1.74% 1.73% 1.70% 1.70% 159 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) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1.75% 1.75% 1.76% 1.76% 1.75% 1.74% 1.74% 1.73% 1.70% 1.70% 0.67% 0.67% 0.67% 0.67% 0.66% 0.65% 0.65% 0.65% 0.64% 0.65% 5.80% 4.99% 4.96% 4.92% 4.95% 4.92% 4.93% 4.86% 4.90% 4.94% 0.02% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.02% 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. 160 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2022 Taxpayer Business Type Taxpayer A Utility Taxpayer B Sales and Use Tax Payments Fiscal Year 2013 Percentage of Total Sales and Use Tax Rank Payments Rank Percentage of Total Sales and Use Tax Payments 9,485,155 1 9.28% Sales and Use Tax Payments $ 12,391,436 1 6.85% $ Department Store 5,026,561 2 2.78% 3,026,748 2 2.96% Taxpayer C Grocery Store 3,480,849 3 1.93% 2,318,356 3 2.27% Taxpayer D Department Store 3,453,166 4 1.91% 1,872,702 4 1.83% Taxpayer E Retailer 3,429,997 5 1.90% Taxpayer F Construction 3,006,417 6 1.66% 1,359,768 6 1.33% Taxpayer G Retailer 2,890,231 7 1.60% 1,442,618 5 1.41% Taxpayer H Retailer 2,366,238 8 1.31% Taxpayer I Vehicle Dealer 2,139,093 9 1.18% Taxpayer J Commercial Leasing 1,622,400 10 0.90% Taxpayer K Telecommunications 1,325,562 7 1.30% Taxpayer L Department Store 1,315,231 8 1.29% Taxpayer M Utility 1,288,135 9 1.26% Taxpayer N 1,198,573 10 1.17% Department Store $ 39,806,388 22.02% $ 24,632,848 24.10% 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. 161 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Obligation Bonds $ 256,288,000 233,678,000 222,143,000 205,088,000 186,873,000 223,288,000 205,764,000 215,939,000 195,164,000 208,979,909 Revenue Bonds $ 22,045,000 18,000,000 14,025,000 10,055,000 6,685,000 4,270,000 2,050,000 — — — Special Assessment Bonds $ 5,350,000 4,905,000 4,440,000 3,960,000 3,460,000 2,940,000 2,395,000 1,830,000 1,245,000 635,000 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 17,526,932 15,043,211 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 22,056 11,028 Business-type Activities Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Obligation Bonds $ 161,567,000 150,972,000 140,072,000 127,782,000 115,722,000 105,707,000 95,901,000 86,261,000 76,936,000 70,380,091 General Bonded Debt $ 417,855,000 390,410,407 391,026,194 359,163,743 334,688,362 361,290,196 330,661,357 330,729,798 297,274,782 299,257,241 Revenue Bonds $ 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 $ 16,419,386 16,186,172 14,910,017 15,281,782 8,981,699 7,451,989 4,586,562 4,693,193 5,758,393 4,290,154 Excise Tax Revenue Obligations $ 45,695,000 148,380,000 142,200,000 204,090,000 198,520,000 230,635,000 222,575,000 228,985,000 219,780,000 215,105,000 Net General Bonded Debt Outstanding $ 401,435,614 374,224,235 376,116,177 343,881,961 325,706,663 353,838,207 326,074,795 326,036,605 291,516,389 294,967,087 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 7,647,850 4,854,030 Estimated Actual Taxable Value of Property $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 44,808,678,880 48,805,511,338 Excise Tax Revenue Obligations Issuance Premiums Revenue Bonds Issuance Premiums $ Percentage of Estimated Actual Taxable Value of Property 1.87% 1.59% 1.29% 1.09% 1.01% 1.06% 0.88% 0.80% 0.65% 0.60% — 1,705,732 1,324,131 832,855 624,642 416,428 202,401 — — — $ Total Primary Government (1) $ 535,685,000 608,805,370 593,320,112 614,901,176 568,997,296 624,864,531 578,592,636 580,768,479 533,634,364 524,676,261 — — 8,502,636 8,040,688 11,447,974 15,075,185 17,271,299 15,979,766 15,312,526 9,667,992 Percentage of Personal Income (2) 6.71% 7.76% 7.15% 7.35% 6.20% 6.24% 5.73% 5.45% 4.56% 3.95% 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 31. 162 Per Capita (2) 2,213 2,521 2,397 2,465 2,128 2,267 2,215 2,192 1,905 1,855 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2022 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 Tempe Union High School District No. 213 East Valley Institute of Technology $ None None 184,715,000 640,695,000 385,946,112 213,060,000 358,660,000 156,110,000 76,755,000 None 4.67 % 7.09 7.09 $ 7.09 75.35 28.96 4.46 2.74 16.63 14.43 Subtotal, overlapping debt None None 13,099,988 45,438,089 290,818,114 61,706,437 15,989,063 4,271,170 12,764,357 None 444,087,218 City direct debt 224,669,148 Total direct and overlapping debt 100.00 224,669,148 $ 668,756,366 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 2021-22 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 163 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2013 2014 2015 2016 $ 130,522,600 $ 142,895,404 $ 142,827,478 $ 190,024,847 10,869,000 10,198,000 9,848,400 9,427,250 $ 119,653,600 $ 132,697,404 $ 132,979,078 $ 180,597,597 8.33% 7.14% 6.90% 4.96% $ 435,075,335 $ 476,318,016 $ 476,091,596 $ 633,416,159 406,986,000 374,452,000 352,366,600 323,442,750 $ 28,089,335 $ 101,866,016 $ 123,724,996 $ 309,973,409 93.54% 78.61% 74.01% 51.06% 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 2012-13 through Fiscal Year 2018-19: Piper Jaffray Inc. Fiscal Year 2019-20 through Fiscal Year 2021-22: 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). 164 Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2022 Full Cash Assessed Valuation as of June 30, 2022 $ 5,012,820,890 Debt limit (6% of assessed value) 300,769,253 Debt applicable to limit: 6% general obligation bonds 5,900,750 Excess premium on bonds outstanding 220,472 Legal 6% debt margin $ 294,648,031 Debt limit (20% of assessed value) Debt applicable to limit: 20% general obligation bonds $ 1,002,564,178 273,459,250 Excess premium on bonds outstanding Legal 20% debt margin 12,415,182 716,689,746 $ Fiscal Year 2017 $ 198,432,895 2018 $ 8,952,650 $ 189,480,245 661,442,986 $ 360,850,336 45.44% 194,395,932 $ 697,900,943 $ 373,734,315 46.45% 232,258,669 $ 219,747,369 $ $ $ 248,732,453 774,195,564 $ 475,314,362 861,683,439 $ 38.61% 557,727,307 35.27% 165 $ 274,194,030 $ $ 300,769,253 6,121,222 $ 2.41% 303,956,132 $ 280,953,536 2022 6,759,506 3.78% 298,881,202 $ 258,505,031 2021 9,772,578 5.39% 324,166,628 $ 2020 12,511,300 7.15% 300,592,650 $ $ 14,974,350 4.51% $ 209,370,282 2019 294,648,031 2.04% 936,511,789 $ 1,002,564,178 277,073,742 285,874,432 659,438,047 29.59% $ 716,689,746 28.51% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Less: Highway User Fiscal Year Operating Taxes 2013 $ 12,929,504 Net Available Expenses $ Debt Service Revenue 10,893,216 $ 2,036,288 Principal $ Interest 3,830,000 $ Coverage 833,475 0.44 2014 13,352,622 10,547,032 2,805,590 3,975,000 515,175 0.62 2015 14,633,470 8,257,078 6,376,392 3,970,000 462,047 1.44 2016 15,303,635 11,951,019 3,352,616 3,370,000 375,650 0.90 2017 16,683,743 10,887,942 5,795,801 2,415,000 256,438 2.17 2018 16,135,949 12,073,072 4,062,877 2,220,000 163,988 1.70 2019 17,301,902 10,724,907 6,576,995 2,050,000 79,200 3.09 16,996,911 7,500,788 9,496,123 — — — 2020 (1) Water Revenue Bonds Less: Fiscal Utility Service Operating Net Available Year Charges Expenses Revenue 2013 $ 48,258,282 $ 26,890,219 $ 21,368,063 Debt Service Principal $ Interest 6,062,435 $ Coverage 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 54,722,296 33,556,507 21,165,789 1,638,000 65,520 12.42 58,755,999 35,088,440 23,667,559 — — 2020 2021 (2) — Excise Tax Revenue Obligations Less: Fiscal Excise Tax Operating Net Available Year Collections Expenses Revenue 2013 $ 156,621,139 $ — $ 156,621,139 Debt Service Principal $ 1,815,000 Interest $ Coverage 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 9,205,000 9,274,665 11.62 2021 236,712,500 — 236,712,500 10,630,000 9,129,575 11.98 2022 266,906,299 — 266,906,299 12,175,000 7,326,414 13.69 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. (2) Water and sewer revenue bonds matured on 7/1/2020. 166 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 2013 $ 809,286 6.26 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 61,531,949 29,092,865 32,439,084 702,000 28,020 44.44 61,971,940 25,520,769 36,451,171 — — (1) 18,879,022 $ 18,811,378 $ 2,197,565 $ Coverage 40,509,289 2021 $ Interest 2014 2020 37,690,400 Debt Service Principal — 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) Water and sewer revenue bonds matured on 7/1/2020. 167 CITY OF CHANDLER, ARIZONA PROPERTY TAX ASSESSMENT RATIOS LAST FIVE FISCAL YEARS Property Classification Schedule 14 Tax Year Tax Year Tax Year Tax Year Tax Year 2018 2019 2020 2021 2022 Mining, Utility, Commercial, and Industrial 18.00 % 18.00 % 18.00 % 18.00 % 17.50 % 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 15.00 15.00 15.00 Railroad, Private Car, and Airline Flight Property Tax Year 2018 through 2019 Source: Piper Jaffray Inc. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). Tax Year 2020 through 2022 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 168 CITY OF CHANDLER, ARIZONA PROPERTY TAXES LEVIED AND COLLECTED LAST FIVE FISCAL YEARS 2021-22 2020-21 2019-20 2018-19 2017-18 $ Schedule 15 Tax Rate 1.1126 1.1201 1.1281 1.1386 1.1400 $ Adjusted to 30 June of Initial Fiscal Year Tax Levy Collections % of Levy 38,884,287 $ 38,437,588 98.85 % 36,379,535 36,041,018 99.07 34,039,034 33,597,309 98.70 31,655,843 31,714,236 100.00 30,612,579 30,321,360 99.05 Fiscal Year 2017-18 through 2018-19 Source: Piper Jaffray Inc. as compiled from County Department of Finance. Fiscal Year 2019-20 through 2021-22 Source: Piper Sandler Companies as compiled from County Department of Finance. 169 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING ASSESSED VALUATIONS AND TAX RATES PER $100 ASSESSED VALUATION JUNE 30, 2022 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 2021-22 Net Limited Property Assessed Valuation $ 74,200,233,397 48,724,126,672 48,724,126,672 48,724,126,672 42,084,633,673 48,724,126,672 48,724,126,672 48,834,616,505 FY 2021-22 Total Tax Rate per $100 Assessed Valuation $ — 1.7722 1.2257 0.0556 0.1792 0.0086 0.2970 0.1400 23,998,252,082 3,374,230,827 4,201,600,213 2,412,625,402 3,544,450,333 2,356,761,360 3,463,794,661 0.0500 6.0780 2.4466 3.6784 7.0635 6.0292 1.1126 Source: Piper Sandler Companies as compiled from Maricopa County Tax Levy and 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 $0.4263 for fiscal year 2021-22 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. 170 CITY OF CHANDLER, ARIZONA PROPERTY VALUE BY PROPERTY CLASSIFICATION LAST FIVE FISCAL YEARS Schedule 17 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 2020-21 Net Full Cash Assessed Valuation FY 2021-22 Net Full Cash Assessed Valuation FY 2021-22 Annual Percentage Change $ 1,027,345,765 $ 1,102,515,089 $ 1,246,170,328 $ 1,412,928,374 $ 1,488,882,870 5.10% Agriculture and Vacant Land 74,055,978 75,266,539 78,888,739 77,850,859 76,801,910 (1.37)% Owner-Occupied Residential 1,472,336,280 1,574,405,659 1,681,112,768 1,837,472,779 1,990,237,285 7.68% Leased or Rented Residential 574,699,602 646,538,541 738,411,405 847,104,454 946,787,996 10.53% Railroad, Private Car, and Airline Flight Property 1,910,025 1,782,690 1,910,025 2,011,500 2,011,500 0.00% Historical Property 156,435,042 88,612,464 124,084,500 130,572,188 177,317,246 26.36% 432,241 383,733 400,055 477,042 520,137 8.29% $ 3,307,214,933 $ 3,489,504,715 $ 3,870,977,820 $ 4,308,417,196 $ 4,682,558,944 8.68% Mining, Utility, Commercial, and Industrial Commercial Historic Property TOTAL Fiscal Year 2017-18 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 through 2021-22 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 171 CITY OF CHANDLER, ARIZONA NET ASSESSED LIMITED PROPERTY ASSESSED VALUE OF MAJOR TAXPAYERS JUNE 30, 2022 Taxpayer Intel Corporation CyrusOne LLC Wells Fargo TWC-Chandler LLC CAZ 7 LLC Description Manufacturing Plant Data Center Financial Services Commercial Rental Property Manufacturing Plant Microchip Technology Bank of America CAZ 1 DE LLC NXP Semiconductors Digital 2121 South Price LLC Manufacturing Plant Financial Services Commercial Rental Property Manufacturing Plant Data Center FY 2021-22 Net Limited Property Assessed Value $ 228,775,877 32,821,538 23,782,384 20,416,068 16,254,315 $ Total City Net Limited Property Assessed Valuation 14,386,637 13,937,934 12,571,668 11,331,274 10,237,930 384,515,625 Schedule 18 As % of Total FY 2021-22 Net Limited Property Assessed Value 6.60% 0.95 0.69 0.59 0.47 0.42 0.40 0.36 0.33 0.30 11.11% $ 3,463,794,661 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. 172 CITY OF CHANDLER, ARIZONA ESTIMATED NET FULL CASH VALUE AND ASSESSED VALUES LAST FIVE FISCAL YEARS Schedule 19 Estimated Net Full Cash Value Fiscal Year City of Chandler 2021-22 $40,751,143,934 2020-21 36,949,424,457 2019-20 33,312,389,044 2018-19 29,847,787,490 2017-18 28,994,768,811 Fiscal Year 2017-18 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 through 2021-22 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). Comparative Net Limited Property Assessed Value History Fiscal Year FY 2021-22 FY 2020-21 FY 2019-20 FY 2018-19 FY 2017-18 City of Chandler Maricopa County State of Arizona $ 3,463,794,661 $ 48,724,126,672 $ 74,200,233,397 3,243,434,243 45,704,969,813 69,914,521,042 3,011,152,689 43,194,326,395 66,154,632,834 2,783,830,922 40,423,232,423 62,328,439,592 2,675,480,112 38,251,891,249 59,404,007,785 Comparative Net Full Cash Assessed Value History Fiscal Year FY 2021-22 FY 2020-21 FY 2019-20 FY 2018-19 FY 2017-18 $ City of Chandler Maricopa County State of Arizona 4,682,558,944 $ 67,535,008,138 $ 97,282,221,465 4,308,417,196 61,824,712,434 90,007,317,461 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 Fiscal Year 2017-18 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 through 2021-22 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue) and Arizona Tax Research Association. 173 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT RATIOS JUNE 30, 2022 Per Capital As % of City's Bonded Debt 2021-22 Population Net Full Cash Estimates @ Assessed 282,873 (1) Value Direct General Obligation Bond Debt Schedule 20 As % of City's 2021-22 Estimated Net Full Cash Value $ 279,360,000 $ 987.58 5.97 0.69 Direct Overlapping General Obligation Bond Debt $ 709,798,933 $ 2,509.25 15.16 1.74 Source: (1) City of Chandler, Development Services Department 174 CITY OF CHANDLER, ARIZONA POPULATION STATISTICS Schedule 21 Year 2022 estimate 2021 estimate 2020 Census 2019 estimate 2018 estimate 2017 estimate 2016 estimate 2015 mid-decade 2014 estimate 2013 estimate 2010 Census 2005 Special Census 2000 Census 1990 Census 1980 Census City of Chandler Maricopa County 282,873 (1) 4,575,603 (2) 280,178 (1) 4,506,505 (2) 275,987 (3) 4,420,568 (3) 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) 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 and Arizona Commerce Authority (3) U.S. Census Bureau 175 State of Arizona 7,489,121 (2) 7,387,800 (2) 7,151,502 (3) 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) 6,407,774 (3) 5,924,476 (2) 4,882,966 (3) 3,679,118 (3) 2,735,840 (3) CITY OF CHANDLER, ARIZONA EXCISE TAX COLLECTIONS Schedule 22 2018-19 (1) 2019-20 (1) 2020-21 (1) 2021-22 (1) Adopted 2022-23 127,584,410 $ 138,888,825 $ 140,798,389 $ 155,638,444 $ 178,567,736 $ 174,940,200 State Shared Sales Tax 23,821,248 25,525,595 26,597,361 30,982,818 38,801,443 32,000,000 State Shared Income Tax 30,652,381 30,693,731 33,255,159 37,324,127 36,011,056 42,720,000 Franchise Fees 3,560,770 3,556,211 3,432,995 3,615,294 3,652,812 3,451,000 Licenses and Permits 6,512,930 7,398,669 7,908,291 6,835,817 7,086,928 6,903,500 Fines and Forfeitures 3,368,445 3,196,843 2,714,065 2,316,000 2,791,624 2,827,400 195,500,184 $ 209,259,874 $ 214,706,260 $ 236,712,500 $ 266,911,599 $ 262,842,100 2017-18 (1) Transaction Privilege Tax Totals $ $ 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). 176 CITY OF CHANDLER, ARIZONA TRANSACTION PRIVILEGE (SALES) TAX RATES BY CATEGORY JUNE 30, 2022 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 23 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, 2022 Schedule 24 State Transaction Privilege (Sales) Tax Rates Taxable Activities Transporting Utilities Telecommunications Pipeline Private Car Line Publication Job Printing Prime Contracting Owner Builder Sales Amusement Restaurant Personal Property Rental Retail (excluding food sales) Transient Lodging Mining - non-metal, oil/gas Commercial Lease Severance - Metalliferous Mining Use Tax Utilities Jet Fuel Use Tax State Tax Rate 5.600 % 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.600 5.500 3.125 — 2.500 5.600 (2) Education Tax Rate (1) 0.600 % 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 N/A N/A N/A N/A 0.600 N/A 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: Arizona Department of Revenue (1) Represents that State transaction privilege (sales) tax rate approved by voters of the State in November 2000 (the "Education Tax") on certain of the categories of business activity at six-tenths of one percent (0.6%). The Education Tax collections are dedicated exclusively to education and are not distribued to the City or pledged to the payment of debt service. The effective dates for the Education Tax are June 1, 2001 through June 30, 2041. (2) 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 25 2017-18 2018-19 2019-20 2020-21 2021-22 System Revenues: Service Fees Miscellaneous Interest Income Total System Revenues $110,399,242 $108,514,851 $116,254,245 $120,727,939 $116,020,531 953,964 130,001 97,652 35,573 568,571 780,250 6,817,699 8,772,310 264,558 (6,810,687) $112,133,456 $115,462,551 $125,124,207 $121,028,070 $109,778,415 System Expenditures: General and Administration Personnel Services $ 6,219,983 16,343,098 $ 6,400,086 16,548,508 $ 6,511,083 17,613,794 $ 6,510,382 17,923,155 $ Contractual Services Commodities Total System Expenditures 11,774,018 30,463,463 $ 64,800,562 12,919,313 23,034,508 $ 58,902,415 13,240,678 25,283,817 $ 62,649,372 14,338,257 21,857,415 $ 60,629,209 16,597,926 22,851,386 $ 63,615,161 Net Income Available for Debt Service $ 47,332,894 $ 56,560,136 $ 62,474,835 $ 60,398,861 $ 46,163,254 Water and Sewer Revenues Bond (Senior Obligation) Debt Service $ 3,473,800 $ 2,532,400 $ 2,433,600 $ $ Approximate Debt Service Coverage for Senior Obligations 13.63x 22.33x 20.39x 179 — N/A 6,533,212 17,632,637 — N/A CITY OF CHANDLER, ARIZONA UTILITY RATE INCREASE HISTORY Schedule 26 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, 2022 Water Customer name Intel Corporation NXP Semiconductors Chandler Unified School District Air Products & Chemical Digital 2121 South Price, LLC Townsquare Apartments TWC Chandler, LLC Chandler Regional Medical Center/Dignity Health Gleiberman Property inc. MG Country Brook Apartments, LLC Wastewater Customer name Intel Corporation NXP Semiconductors Air Products & Chemical Digital 2121 South Price, LLC Chandler Unified School District Gila River Indian Community (Lone Butte) Chandler Regional Medical Center/Dignity Health Microchip Technology Ergon Asphalt and Emulsions BMF IV AZ Laguna Village LLC Source: City of Chandler, Management Services Department 181 Schedule 27 Amount $ 7,539,451 1,170,537 568,916 384,589 170,484 132,287 118,593 113,566 109,229 89,340 Amount $ 10,525,045 1,778,410 666,212 276,528 258,237 179,142 155,765 98,838 89,922 89,597 CITY OF CHANDLER, ARIZONA NUMBER OF WATER AND WASTEWATER CUSTOMERS LAST TEN FISCAL YEARS 2013 2014 2015 2016 WATER Residential Commercial Multi-Unit Industrial Other 73,551 4,406 991 50 226 74,319 4,158 1,032 56 1,317 75,035 4,243 1,043 58 1,536 75,883 4,309 1,087 61 1,640 WASTEWATER Residential Commercial 72,067 2,358 72,862 2,012 73,363 2,033 74,346 2,201 811 39 252 878 37 470 887 37 477 920 34 475 Multi-Unit Industrial Other Source: City of Chandler, Management Services Department 182 Schedule 28 2017 2018 2019 2020 2021 2022 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 79,961 2,577 1,124 63 647 79,873 4,919 1,151 54 800 75,761 76,517 77,089 77,797 78,794 2,138 915 38 590 2,329 952 48 592 2,371 956 48 598 2,420 965 48 603 2,450 974 48 603 79,294 2,540 999 49 604 183 CITY OF CHANDLER, ARIZONA DELINQUENCIES ON PAYMENTS FOR THE ASSESSMENTS JUNE 30, 2022 There were no delinquencies on payments for the assessment. 184 Schedule 29 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT OUTSTANDING JUNE 30, 2022 Schedule 30 2021-22 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 Net Debt Amount None None 184,715,000 640,695,000 385,946,112 213,060,000 358,660,000 4.668 % 7.092 7.092 $ 7.092 75.352 28.962 4.458 156,110,000 2.736 4,271,170 7,675,500,000 16.630 12,764,357 None 279,360,000 14.434 100.000 None 279,360,000 $ Gilbert Unified School District No. 41 Tempe Union High School District No. 213 East Valley Institute of Technology District No. 401 City of Chandler 2021-22 Proportion Applicable to City of Chandler Approximate Percent Total Direct and Overlapping General Obligation Bonded Debt Outstanding $ None None 13,099,988 45,438,089 290,818,114 61,706,437 15,989,063 723,447,218 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 Inside Mesa Unified School District No. 4 $ $ 10.8701 11.9044 Inside Tempe Union High School District No. 213 and Kyrene Elementary School District No. 28 Inside Chandler Unified School District No. 80 $ $ 10.9659 10.9189 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 2021-22 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) 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 240,364 241,264 243,679 248,332 254,239 257,853 261,173 2019-20 2020-21 2021-22 275,987 280,178 282,873 Total Personal Income (2) Schedule 31 Median Age (2) Unemployment Rate (3) Per Capita Personal Income (2) $7,925,281,808 7,840,356,208 (4) 8,168,120,080 8,324,088,640 8,731,329,977 9,360,321,753 10,101,649,294 34.9 35.0 34.9 34.9 35.2 35.3 36.0 6.0% 5.5 4.7 4.5 3.9 3.6 4.0 $32,972 32,497 33,520 33,520 34,343 36,301 38,678 11,088,605,686 (4) 11,693,509,008 13,284,564,699 36.0 36.0 36.0 8.7 5.6 3.0 40,178 41,736 46,963 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 32 2022 Employees 12,000 5,500 4,900 Rank 1 2 3 Percentage of Total City Employment 7.92% 3.63% 3.24% Chandler Regional Medical Center/Dignity Health Northrup Grumman NXP Semiconductors 3,800 2,600 2,150 1,700 4 5 6 7 2.51% 1.72% 1.42% 1.12% City of Chandler Microchip Technology PayPal Verizon Wireless Bashas Corporation Total 1,700 1,500 1,500 1,400 1,100 39,850 7 8 8 9 10 1.12% 0.99% 0.99% 0.92% 0.73% 25.58% Employer Intel Corporation Wells Fargo Bank Chandler Unified School District Bank of America 2013 Employer Intel Corporation Bank of America Chandler Unified School District Wells Fargo Chandler Regional Medical Center/Dignity Health PayPal Verizon Wireless City of Chandler Microchip Technology Freescale Semiconductor Total Employees 11,000 3,600 3,000 2,600 2,100 2,000 1,695 1,567 1,540 1,450 30,552 Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Employment 8.77% 2.87% 2.39% 2.07% 1.67% 1.59% 1.35% 1.25% 1.23% 1.16% 24.35% 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 2012-13 2013-14 2014-15 2015-16 (1) 4 5 178 19 39 29 72 346 163 192 468 234 702 4 85 46 18 153 — — — — — — — 1,556 4 6 174 13 35 29 66 327 159 199 467 224 691 5 87 46 16 154 — — — — — — — 1,530 4 6 176 13 37 31 69 336 165 198 483 237 720 5 87 62 20 174 — — — — — — — 1,593 4 6 240 15 39 31 67 402 150 156 490 240 730 8 87 65 21 181 — — — — — — — 1,619 (1) 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 33 2016-17 11 7 206 15 38 31 64 372 152 199 491 222 713 7 89 69 20 185 — — — — — — — 1,621 (2) 2017-18 2018-19 (2) 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 (3) 2019-20 2020-21 2021-22 (3) 5 6 194 15 40 32 67 359 77 199 488 229 717 — — — — — 6 90 68 21 2 78 265 1,617 5 6 198 14 33 31 66 353 76 194 477 228 705 — — — — — 7 89 71 21 2 79 269 1,597 6 4 196 12 35 32 59 344 77 194 476 235 711 — — — — — 5 28 47 21 2 58 161 1,487 189 CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program General Government Privilege tax licenses Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio 2012-13 2013-14 2014-15 2015-16 27,387 584 27,467 564 28,224 544 29,582 565 834 43 1.89 780 53 2.10 867 51 1.57 844 46 1.74 3,785 5,490 5,170 5,142 2,395,192 1,003 2,332,758 938 2,163,076 939 2,101,421 985 Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations 28 137,485 18,474 5,029 22 27 145,400 18,865 5,442 16 23 139,177 22,785 4,692 27 26 145,466 23,966 5,814 30 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) 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 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 Transportation & Development Building permits issued Community Services Library circulation Center for the Arts events & exhibits Source: City of Chandler Departments 190 Schedule 34 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 28,321 535 28,046 681 37,404 666 41,290 542 45,590 395 48,878 377 860 43 1.81 838 27 1.79 789 24 2.04 739 33 2.40 460 40 1.73 1,299 39 2.00 4,635 3,944 4,011 4,091 4,601 4,615 2,059,429 1,048 2,041,574 1,177 1,801,237 825 1,415,291 537 1,356,695 389 1,308,861 690 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 19 139,236 26,676 3,257 17 20 146,008 28,582 3,389 14 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 87,251 30 71,800,000 84,000,000 82,895 945 77,297 94,218 22,775 83,237 30 69,000,000 84,000,000 81,419 947 76,249 93,487 20,876 191 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 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) 2012-13 2013-14 2014-15 2015-16 61 1,198 336 6 39 550,857 62 1,208 325 6 39 595,969 64 1,232 309 6 41 396,773 831 26,900 838 27,100 841 27,700 855 27,700 216 216 218 218 3 10 3 10 3 10 3 10 388 415 425 427 1,227 12,553 26 1,227 12,717 26 1,278 13,118 28 1,196 (2) 13,207 29 (1) 65 1,236 302 6 41 341,073 Source: City of Chandler Departments (1) The 2014-15 decrease in library bookstock is due to less demand from the increase usage of digital materials and removal of damaged, outdated and obsolete material no longer being circulated. (2) Beginning in 2015-16, City staff is updating the Geographic Information System through a review of over 700 As-builts, so a revised figure is reflected. The revised figure consists of active and City owned utilities. 192 Schedule 35 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 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 67 1,301 219 6 50 294,276 68 1,309 209 6 51 295,573 855 857 857 858 858 858 27,800 218 27,199 220 29,500 225 29,500 226 29,731 232 28,515 234 3 10 3 11 3 11 3 11 3 11 3 11 455 457 523 440 448 441 1,283 15,708 29 1,212 15,970 28 1,218 16,159 54 1,228 16,296 31 1,232 16,492 31 1,237 13,780 28 193 194 Phone (480) 782-2333 www.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