City of Chandler Annual Comprehensive Financial Report Fiscal Year Ended June 30, 2023 “Staying Connected” CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2023 Prepared by Management Services Department Dawn Lang, Deputy City Manager|CFO Kristi Smith, Financial Services Assistant Director Robert Steele, Accounting Senior Manager CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2023 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ...................................................................................................................................... Elected and Appointed Officials .................................................................................................................. Organizational Chart...................................................................................................................................... Certificate of Achievement for Excellence in Financial Reporting ....................................................... 1 8 9 10 FINANCIAL SECTION Independent Auditor’s Report ..................................................................................................................... Management’s Discussion and Analysis (MD&A) .................................................................................... Basic Financial Statements: Government-wide Financial Statements Statement of Net Position ...................................................................................................................... Statement of Activities ............................................................................................................................ Fund Financial Statements: Balance Sheet - Governmental Funds ................................................................................................. Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position ...................................................................................................................... Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .......................................................................................................................................................... Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-wide Statement of Activities ............................ Statement of Net Position - Proprietary Funds ................................................................................. Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds............. Statement of Cash Flows - Proprietary Funds ................................................................................... Notes to the Financial Statements ......................................................................................................... Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund ............................................................................................................................................ Schedule of the Proportionate Share of the Net Pension Liability - Arizona State Retirement System .................................................................................................................................. Schedule of Contributions - All Pension Plans .................................................................................. Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Police ................................................................................................ Schedule of Changes in the Net Pension Liability and Related Ratios - Public Safety Personnel Retirement System - Fire .................................................................................................... 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 91 92 94 96 98 100 102 CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2023 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 ....................................................................... Grants 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 ................................................................................................ 107 111 114 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 136 139 140 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 144 146 148 150 152 154 156 CITY OF CHANDLER, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2023 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, Direct and Overlapping General Obligation Bonded Debt Outstanding.......... Demographic and Economic Information Schedule 30, Demographic and Economic Statistics ..................................................................... Schedule 31, Principal Employers ...................................................................................................... Operating Information Schedule 32, Employees by Function................................................................................................ Schedule 33, Operating Indicators by Function/Program ............................................................ Schedule 34, Capital Asset Statistics by Function/Program ......................................................... iii 158 160 162 163 164 165 166 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 186 187 189 190 192 194 1 Introductory Section Decades of award-winning budget, financial management, and purchasing practices are indications of our stability and strength. Introductory Section • Letter of Transmittal • Elected and Appointed Officials • Organizational Chart • Certificate of Achievement for Excellence in Financial Reporting Introductory Section December 22, 2023 Honorable Mayor, Members of the City Council, City Manager, and residents of the City of Chandler: The Annual Comprehensive Financial Report of the City of Chandler, Arizona (the city), for the year ended June 30, 2023, 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 282,891 in 2023, 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 17,300 people in the city. Total manufacturing employment is over 29,000 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 Toyota Financial Services establishing corporate offices in Chandler. Information technology is another growth industry with Insight Enterprises Inc., a Fortune 500 company, 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 36.1 years, and the median household income is $101,212. In addition, 77 percent of the adult population has a college degree or some college education. Nearly 27 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 averaged 2.9 percent during fiscal year 2022-23 compared with 3.3 percent for Maricopa County and 3.7 percent for the State of Arizona. The city’s sales tax revenues, which comprise over 54 percent of its general fund, increased by 14.2 percent for fiscal year 2022-23 from the prior year actuals. The city continues to strengthen its financial position and has benefited 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. In March 2023, the City Council re-established and/or altered six Focus Areas, identified below, to provide guidance and direction as to what accomplishments the city should focus on and in what areas. The alterations included an additional focus area added to delineate Community Safety from Quality of Life, and Mobility was re-named Connectivity to focus on transportation and technology networks. Additional, Innovation and Technology was changed to Sustainability and Technology to allow for better alignment of the advancements being made toward sustainability. Good Governance continues to be a philosophy to support the overall goals of the city, while other outlined focus areas concentrate efforts to make progress towards the City Council’s vision. • Community Safety Chandler is recognized among the safest cities in the nation. Our fire and police departments are accredited and elite in their field. We ensure our community's safety with continued investment in people, systems and technology. Innovative partnerships extend our ability to address emerging community safety needs. • Connectivity The ability to connect people, places and commerce through local, regional and virtual networks - is essential. Chandler is served by three major highways, two railroad corridors, a well-planned street and transit network, expending bike and shred-use paths and a municipal airport that efficiently connects people and commerce. Chandler's advanced communication systems enhance our ability to connect through technology and transportation networks. • Economic Vitality Economic vitality includes the use of creative policies and marketing efforts that ensure Chandler remains a world-class community for residents, visitors and businesses. Our approach preserves the viability of employment corridors and positions properties for adaptive reuse, infill and redevelopment. Chandler offers a business-focused environment for global industry leaders, exciting startups and 2 entrepreneurs through every stage of development. Our business climate, talented workforce and lifestyle make Chandler a destination of choice for key industries. • Neighborhoods To sustain an exceptional quality of life for Chandler residents, preservation and enhancement of neighborhoods is paramount. These approaches ensure that all neighborhoods remain safe and vibrant Engaging residents, developers and community stakeholders provides opportunities to achieve this goal, while maintaining each neighborhood's distinct character. • Quality of Life Chandler's commitment to high standards has spanned generations of city leadership and resulted in the safe and beautiful community residents and businesses enjoy today. Our innovative practices maximize cost savings for taxpayers while enhancing the quality of city services. Our unparalleled quality of life includes a focus on arts, culture, learning and recreation. High-quality developments, parks and amenities shape the character of our neighborhoods and commercial centers. • Sustainability and Technology Chandler's high-tech industries, businesses and talented workforce drive the local economy. We recognize the importance of infrastructure, water and streamlined city services that support key industries engaged in the development of current and future technologies. The pursuit of sustainable and technological infrastructure and services advance our ability to meet the unique needs of the community and equip our empowered, talented workforce to serve. 2022-2023 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; • Designed and released the city’s Performance Portal that measures metrics related to the progress of the Strategic Framework; • Increased the State Major Manufacturing Fund from $50M to $100M to fund city infrastructure projects related to Intel; • Military and Veterans Affairs Commission hosted the first ever Town Hall meeting and Military Bound graduation ceremony; • Conducted the 2022 Candidate Election; • Improved court access by implementing an online live chat and autonomous chat feature on the court’s website; • Raised judicial awareness in the community by offering local schools court observations, field trips, inschool presentations, and established a high-school internship program; • Approved the non-discrimination ordinance titled "Chandler Embracing Diversity, Equity, and Inclusion". This ordinance prohibits discrimination due to actual or perceived race, color, religion, sex, age, disability, ethnicity, national origin, sexual orientation, gender identity, veteran status, disability, marital status or familiar status in employment, places of public accommodation and housing in city limits; • Engaged in an eight-month internal and external DEI assessment in Chandler leading to the formation of an official DEI Strategic Plan for the city. DEI Strategic Plan goals include Communicate, Connect, Develop, Innovate and Assess; 3 • Worked with the Human Relations Commission to fund 21 Diversity Mini-Grant applications that foster diversity education for youth ages 5-18. A total of over 6,800 Chandler students benefited from these programs; • Prepared and negotiated a first-of-its-kind overlash agreement for telecommunication/internet services with CenturyLink to increase internet connectivity and availability of these services for central Chandler residents, and telecommunications licenses with Gigapower, Wyyerd, and Google Fiber to increase internet connectivity and availability of these services for Chandler residents; • Added eight EV charging station ports outside Development Services and City Hall parking structure to support city vehicles and added 5 full electric and 8 hybrid vehicles for various departments, bringing total of electric vehicles to 10 and hybrids to 24; • Airport’s total operations were 206,092 (take-offs and landings) in calendar year (CY) 2022, and was the 18th busiest general aviation airport in the U.S. and the 52nd busiest U.S. airport overall; • Supported notable high-tech companies in opening new facilities in Chandler, including Insight, VIAVI, and Edward; • Economic Development-assisted business locate, business retention and expansion projects include Tokyo Electron, Intel’s Fab Construction Enterprise unit, Cirrus Logic, Titan Solar Power, and Raley’s; • Supported the expansion of higher education opportunities in Chandler, including the opening of the University of Arizona’s new location and announcement of Grand Canyon University’s new nursing program location; • Launched Chandler Flex with a ribbon cutting ceremony in July 2022. Over 30,000 rides have been provided to more than 1,700 unique riders; • Awarded $10.5 million in federal grants for use on six transportation projects (Frye Road Protected Bike Lanes, Traffic Signal Detection/ Communication, Alley Paving, Kyrene Branch Canal Shared Use Path, Highline Canal Shared Use Path, Arizona Avenue Shared Use Path); • Implemented new internship partnership with Chandler-Gilbert Community College; • Completed a citywide classification and compensation project; • Implemented nationwide recruitment campaign; • The Chandler Center for the Arts (CCA) served over 160,000 people and continued its commitment to diverse and inclusive programming; • The Vision Gallery hosted 85 free events that included opening receptions, Vision Kids classes, and special events with more than 6,500 attendees. The Vision Gallery was recognized as one of the ten best art galleries in metro Phoenix; • Facilitated ongoing development and redevelopment projects within the Downtown, including the Shops on Frye, Acqua Di Mare, Maple House, Elliot’s, DC Heights, One Chandler, and others; • Completed the Ranch at Tumbleweed Park Master Plan and exterior renovations at the McCroskey & Edwards House; • Completed the construction of Homestead North Park, replaced 12 ramadas at Tumbleweed Park, created an outdoor courtyard at the Sunset Library, and installed new public art in the Downtown Library in partnership with the Chandler Arts Commission; • The Senior Center partnered with AZCEND to serve 7,374 congregate meals and 26,553 homebound meals; • Chandler Nature Center expanded its hours of operation to include Sundays and has hosted over 75,000 visitors this fiscal year; • Issued over 4,300 building permits for over $1.7 billion in construction valuation in calendar year 2022 and conducted 17,690 building inspections. 4 • The Southside Historic Conservation District was established; • Continued to advance city digital capabilities with ArcGIS Pro implementation, deployment of tablets to inspections teams, 10 telecom agreements adopted, continuation of work on fiber system upgrades per the Fiber Master Plan; • The Public Housing Youth Program continues to be a Bookrich Environment PHA serving approximately 300 youth at our sites and secured a grant from Delta Dental for nutritional snacks and oral hygiene education and nutrition; • Received HUD and Council approval for Villas on McQueen as phase one of the city’s redevelopment effort to transform public housing into new and expanded affordable housing through the Rental Assistance Demonstration (RAD) program, with 157 units serving veterans, seniors, disabled individuals, and families earning below 60% AMI; • Allocated $2,291,052 of General Funds to support 56 nonprofit organizations providing human services to residents; • Administered $4.6 million of Emergency Rental Assistance (ERA) Program funds to assist residents impacted by COVID; • The Chandler Cares Team connected over 1,500 residents to resources for rent, utilities, food, and other crisis services; • Provided non-congregate shelter to 214 unhoused residents with 157 individuals transitioning to permanent housing. • Utilized Community Development Block Grant (CDBG) and CDBG-Coronavirus funds for the Community Navigation team which provided outreach and basic needs to over 600 unhoused residents, leading 104 to permanent housing; • The Fire Department responded to 29,000 emergency incidents; • Received a grant from the Federal Emergency Management Agency for $963,400 to conduct a one-time comprehensive cancer screening program for all Chandler Firefighters; • Treated and delivered over 21.8 billion gallons of potable drinking water; • Treated and reclaimed 10 billion gallons of wastewater at the Airport, Lone Butte, and Ocotillo Water Reclamation Facilities, 9.4 billion gallons of which were reused by our customers for irrigation and cooling; • Provided 1,110 residential water audit and high-water use checks, 95 landscape consultations and 229 smart controller conversions for a total water savings of over 57.4 million gallons; • Finalized roadway widening improvement project on Cooper Road (Alamosa Rd to Riggs Rd); • Converted 13,800 street lights to LED; • Completed 140 miles of asphalt repaving, surface seal, and slurry rehabilitation treatments; • Volunteers in the Volunteers in Policing program donated 6,722 hours of service valued at $182,435 in calendar year 2022; • The Commission on Accreditation for Law Enforcement Agencies (CALEA) remotely reviewed and assessed forty-six standards to substantiate ongoing compliance as part of the department’s accreditation process; • Continued developing and maintaining community partnerships, which is the cornerstone of the system of policing resulting in 2022’s crime rate being one of the lowest ever recorded in Chandler. 5 FINANCIAL INFORMATION Internal Control Structure Management of the city is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the city are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state, and county financial assistance, the city is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other city staff, as needed. 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 2022-23, $1.353 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 6 Financial Report for the year ended June 30, 2022, marking the forty-first 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. Additionally, the city was also awarded the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2022 from the GFOA, marking the thirty-fifth 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 Assistant Director; Robert Steele, Accounting Senior Manager; Tracy Schmidt, Accounting Supervisor; Lina Alam, Accounting Supervisor; 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 7 CITY OF CHANDLER, ARIZONA ELECTED AND APPOINTED OFFICIALS JUNE 30, 2023 Kevin Hartke, Mayor Matt Orlando, Vice Mayor Christine Ellis, Councilmember Angel Encinas, Councilmember OD Harris, Councilmember Jane Poston, Councilmember Mark Stewart, Councilmember Executive Staff Joshua H. Wright, City Manager Tadd Wille, Assistant City Manager Dawn Lang, Deputy City Manager I CFO 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 Micah Miranda, Acting 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, Deputy City Manager I CFO as Management Services Director Leah Powell, Neighborhood Resources Director Sean Duggan, Chief of Police John Knudson, Public Works & Utilities Director 8 City of Chandler Organizational Chart Residents of Chandler Mayor and City Council City Manager City Clerk City Magistrate Assistant City Manager Communications and Public Affairs • Mayor and Council Office • Print, Mail, Graphics • Public Information • Video Production Strategic Initiatives • Government Relations • Transportation Policy • Transit • Multimodal Planning • ADA Compliance Human Resources • HR Administration/ HRMS • Benefits & Wellness • Labor Relations • Recruitment & Selection • Classification & Compensation • Organizational Development • Safety • Workers’ Compensation Neighborhood Resources Deputy City Manager | CFO Police Community Services • Communications • Community Services • Criminal Investigations • Field Operations • Forensic Science • Property & Evidence • Libraries • Park Maintenance • Park Development • Recreation/ Aquatics Management Services Fire • Administration • Emergency Management • Health & Medical • Operations • Prevention & Training • Code Enforcement • Community Development • Diversity Office • Housing & Redevelopment • Neighborhood Programs • Diversity, Equity & Inclusion City Attorney/ Risk Mgr. • • • • Accounting Budget Office Central Supply Environmental Management • Purchasing • Tax & Licensing • Utility Services 9 Assistant to the City Manager • Performance Management • Sustainability Information Technology • Service Delivery • Application Support • Infrastructure Support • Information Security Facilities and Fleet Services • Maintenance & Infrastructure • Access/Key Control • Energy Management • Custodial Services • Fleet Services Advisory Boards and Commissions Deputy City Manager Airport Development Services • Building Safety • Engineering • GIS • Planning • Telecommunication & Utility Franchise Public Works and Utilities • Capital Projects • Solid Waste Services • Transportation • Water/Wastewater Cultural Development • Center for the Arts • Vision Gallery • Museum • Downtown • Special Events Economic Development • Tourism 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, 2022 Executive Director/CEO 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 A clear vision, strong reserves, prudent spending and sound financial management 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, 2023, 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, 2023, 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 GASB Statement No. 91, Conduit Debt Obligations, Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements and Statement No. 96, Subscription-Based Information Technology Arrangements, for the year ended June 30, 2023, 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 22, 2023, 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 22, 2023 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, 2023 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, 2023. 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 2023 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 $1.70 billion (net position). This represents an increase of $118.7 million from the prior year. Factors that have contributed to the increase in net position are decreases in total longer term liabilities of the city due to $55.8 million in regularly scheduled principal payments of debt service being made, combined with savings in total debt service due to the recent 2021 bond refunding issuances. The city also saw a decrease in deferred inflows of resources related to OPEB and pension plan items. The decrease in deferred inflow is partially offset by an increase in deferred outflows related to OPEB and pension plan items. The city also saw a decrease in unearned revenue of $18.4 million due to previously deferred revenues related to receipt of American Rescue Plan Act (ARPA) federal funding being recognized as revenue in the current fiscal year. Of this amount, $419.3 million (unrestricted net position) may be used to meet the city’s obligations to residents and creditors. However, $64.8 million is invested in a joint venture with the Town of for the Gilbert San Tan Vista Water Treatment Plant, which decreased $4.6 million from the prior year, and is not available for obligations.on At June 30, 2023, the city’s governmental funds reported combined ending fund balances of $485.1 million, an increase of $12.4 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 when combined with continued inflationary pressures leading to higher average sales which increases tax receipts. The largest driver is the continuation of the $20 billion expansion of Intel Corporation and other related development within Chandler. Approximately 62.3 percent of the total combined fund balance amount, $302.1 million, is available for spending at the city’s discretion (assigned or unassigned). At June 30, 2023, total fund balance for the general fund was $315.9 million which represents an increase of $33.9 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 $391.3 million, or 75.9 percent of all revenues from governmental activities as opposed to 75.5 percent in the prior year. Program specific revenues in the form of charges for services and grants and contributions accounted for $124.0 million or 24.1 percent of total governmental activity revenues, as opposed to 24.5 percent in the prior year. The city had $157.9 million of program revenues ($157.4 million in the prior year) and $19.7 million in general revenues and transfers (was a negative $3.7 million in the prior year) related to business-type activities. At June 30, 2023, the city’s proprietary funds reported combined total net position of $796.7 million as compared to $789.2 million in the prior year; an increase for the current year of $7.5 million. The increase in net position is primarily driven by an increase in revenue from the prior year as a result of a couple one time revenue items, combined with keeping expenses in check year over year. This results in a total unrestricted net position of $250.9 million, of which $128.0 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 17 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 city’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the city’s finances in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the city’s assets, liabilities, and deferred inflows/ outflows of resources with the difference reported as net position. Net position is categorized as capital assets less related debt, restricted by an outside third party and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the city is improving or deteriorating. The Statement of Activities presents information showing how the city’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some 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 and general obligation bonds debt service fund, which are considered to be major funds. Data from the other 18 governmental funds are combined into a single, 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules in the financial section of this report. The city adopts an annual appropriated budget for the general, special revenue, general obligation and highway user revenue debt service, capital projects and proprietary funds. Budgetary comparison statements have been provided in the basic financial statements for the general, general government capital projects and general obligation bonds debt service funds to demonstrate compliance with the budget. Budgetary comparison schedules for other non-major special revenue and non-major capital projects funds are also included in the financial section. Proprietary funds. The city maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The city uses enterprise funds to account for its water, wastewater, 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 $1.70 billion as of June 30, 2023. This reflects continued strong operations in governmental activities, increased revenues from sales tax and state shared revenues, and careful monitoring of expenses in governmental activities combined with decreases in long-term liabilities within governmental and business-type activities. A significant portion of the city’s net position (62.9 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 residents; 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 (12.5 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (24.6 percent) includes $64.8 million which is invested in a joint venture with the Town of Gilbert for the San Tan Vista Water Treatment 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 Plant that may not be used to meet the city’s obligations to residents and creditors. At the end of the current fiscal year, the city is able to report positive balances in all three categories of net position: net investment in capital assets, restricted and unrestricted. The same situation held true for the prior fiscal year. The following table presents a condensed statement of the city's net position for the fiscal years ended June 30, 2023 and 2022. Governmental Business-type Total Activities Activities (Primary Govt.) 2023 2022 2023 2022 2023 2022 $ 629,040,493 $ 612,717,247 $ 270,218,712 $ 302,795,831 $ 899,259,205 $ 915,513,078 Capital assets, net 732,098,852 723,527,045 783,391,742 764,904,850 1,515,490,594 1,488,431,895 Long-term assets 8,157,859 2,055,996 68,887,118 73,608,096 77,044,977 75,664,092 1,369,297,204 1,338,300,288 1,122,497,572 1,141,308,777 2,491,794,776 2,479,609,065 143,138,970 116,486,358 11,931,414 14,771,734 155,070,384 131,258,092 1,512,436,174 1,454,786,646 1,134,428,986 1,156,080,511 2,646,865,160 2,610,867,157 Current liabilities 104,376,853 105,896,083 47,839,159 50,090,319 152,216,012 155,986,402 Long-term liabilities 475,590,860 476,139,376 282,418,414 305,507,307 758,009,274 781,646,683 Total liabilities 579,967,713 582,035,459 330,257,573 355,597,626 910,225,286 937,633,085 26,440,337 77,936,899 7,517,927 11,320,643 33,958,264 89,257,542 606,408,050 659,972,358 337,775,500 366,918,269 944,183,550 1,026,890,627 Net investment in capital assets 555,568,147 536,775,941 514,595,066 473,953,519 1,070,163,213 1,010,729,460 Restricted 182,068,932 194,380,531 31,119,667 31,745,566 213,188,599 226,126,097 Unrestricted 168,391,045 63,657,816 250,938,753 283,463,157 419,329,798 347,120,973 $ 906,028,124 $ 794,814,288 $ 796,653,486 $ 789,162,242 Current assets Total assets Total deferred outflows of resources Total assets and deferred outflows of resources Total deferred inflows of resources Total liabilities and deferred inflows of resources Net position: Total net position $1,702,681,610 $1,583,976,530 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, 2023 Changes in net position. The city’s total revenues for the fiscal year ended June 30, 2023 were $692.1 million. The total cost of all programs and services was $573.4 million, which results in an increase in net position of $118.7 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2023 and 2022. Governmental Business-type Activities Total Activities (Primary Govt.) 2023 2022 2023 2022 2023 2022 Revenues: Program revenues Charges for services $ 80,733,033 $ 67,526,392 $ 135,318,941 $ 135,879,375 $ 216,051,974 $ 203,405,767 Operating grants and contributions 26,999,694 17,863,747 9,124,544 8,598,756 36,124,238 26,462,503 Capital grants and contributions 16,237,742 18,678,027 13,482,347 12,887,544 29,720,089 31,565,571 General revenues Property taxes 41,363,544 39,560,904 — — 41,363,544 39,560,904 Sales taxes 210,027,766 182,028,630 22,063 21,379 210,049,829 182,050,009 Highway user taxes 20,835,558 19,460,326 — — 20,835,558 19,460,326 201,799 2,210,634 — — 201,799 2,210,634 3,838,738 3,861,042 — — 3,838,738 3,861,042 108,187,240 87,038,075 — — 108,187,240 87,038,075 5,427,207 (15,954,424) 3,832,676 (7,617,417) 9,259,883 (23,571,841) Other taxes Franchise Fees State shared revenues Investment income Miscellaneous 1,380,596 1,916,550 15,051,582 2,811,515 16,432,178 4,728,065 515,232,917 424,189,903 176,832,153 152,581,152 692,065,070 576,771,055 General government 195,086,875 157,127,919 — — 195,086,875 157,127,919 Public safety 95,958,948 104,673,550 — — 95,958,948 104,673,550 Transportation and development 60,990,970 56,403,523 — — 60,990,970 56,403,523 Community services 45,928,371 41,563,661 — — 45,928,371 41,563,661 Interest and fiscal charges 5,292,655 6,014,168 — — 5,292,655 6,014,168 Water — — 75,887,686 61,264,619 75,887,686 61,264,619 Wastewater — — 63,849,518 63,037,577 63,849,518 63,037,577 Solid waste — — 17,278,664 16,727,814 17,278,664 16,727,814 Airport — — 2,209,135 1,956,786 2,209,135 1,956,786 Housing authority — — 10,877,168 9,955,131 10,877,168 9,955,131 Total expenses 403,257,819 365,782,821 170,102,171 152,941,927 573,359,990 518,724,748 Excess (deficiency) before transfers 111,975,098 58,407,082 6,729,982 (360,775) 118,705,080 58,046,307 (761,263) (1,103,279) 761,263 1,103,279 — — 111,213,835 57,303,803 7,491,245 742,504 118,705,080 58,046,307 Total revenues Expenses: Transfers in (out) Change in net position Beginning net position Ending net position 794,814,289 737,510,485 789,162,241 788,419,738 1,583,976,530 1,525,930,223 $ 906,028,124 $ 794,814,288 $ 796,653,486 $ 789,162,242 $ 1,702,681,610 $ 1,583,976,530 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 Revenue Sources - Fiscal Year 2023 31.23% 30.35% 15.63% 5.22% 4.29% 5.98% 3.01% 0.55% 0.03% 1.34% 2.37% 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 2023 34.02% 16.74% 10.64% 13.24% 11.13% 8.01% 3.01% 0.92% 0.39% 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 1.90% CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 As evidenced in the previous graph, the largest financing source for the city is charges for services at 31.23 percent, associated with the user fees (i.e., water, wastewater) and General Government charges for services such as permits and recreation/facility uses. Sales taxes and state shared revenues (i.e., sales tax, urban revenue sharing) also comprise a significant portion of the city’s revenues at 30.35 percent and 15.63 percent, respectively, of the total revenues with property taxes accounting for an additional 5.98 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 34.02 percent of the total functional expenses of the city. The next largest users of resources are public safety and water at 16.74 percent and 13.24 percent, respectively, with wastewater accounting for 11.14 percent of the city’s total expenses. Governmental activities. The increase in governmental net position totaled $111.2 million for the year ended June 30, 2023 compared with an increase of $57.3 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 continuation of the $20 billion expansion of Intel Corporation and other developments within Chandler, which has created significant increases in sales taxes in many tax categories. Strong revenue receipts have also been off-set by higher costs to the city for purchasing goods, especially in the construction of capital projects. This can be tied back to the same inflationary pressures that are impacting increased revenue. Business-type activities. The increase in business-type net position totaled $7.5 million for the year ended June 30, 2023 compared with an increase of $0.7 million in the prior year. This increase is a result of strong investment income compared to the prior year recognizing a loss and one-time miscellaneous revenue receipts. Investment income has increased as a result of the higher interest rates being earned due to the Federal Reserve Boards rate increases totaling 3.5% over the course of the fiscal 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 $485.1 million, an increase of $12.4 million in comparison with the prior year increase of $49.7 million. Approximately $302.1 million (62.3 percent) of this amount is combined assigned and unassigned balances, all which may be spent at the city’s discretion. The total compared to the prior years’ assigned and unassigned balances of $277.2 million represents an increase of $24.8 million. The remainder of the fund balance comprising of nonspendable and restricted balances amounts to $183.1 million (37.7 percent of the total fund balance). The nonspendable balance consists of inventories and prepaid amounts. The restricted balance is constrained for specific purposes imposed by external parties or enabling legislation. The total compared to the prior years’ nonspendable and restricted balances of $195.5 million represents a decrease of $12.4 million. 23 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 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 $310.6 million, while total fund balance reached $315.9 million. As a measure of the general fund’s liquidity, it may be useful to compare both assigned and unassigned fund balance and total fund balance to total fund expenditures. Assigned and unassigned fund balance represents 1.07 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 $33.9 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 continued $20 billion expansion of Intel Corporation and related development within Chandler, which has drove significant increases in sales tax receipts in many tax categories. Interest revenue has a has come in stronger than anticipated due to the quick rising of interest rates as the Federal Reserve Board has sought to tame inflation. This has lead to increased returns on the cities portfolio, helping to offset the rising cost of goods and services used to provide services to city residents. Because of the higher one-time fund balance, Mayor and Council were able to use the higher fund balance for additional payments to the Public Safety Personnel Retirement System (PSPRS) to pay-down the unfunded liability, thereby generating ongoing savings in annual contribution rates. 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 $1.9 million during the current fiscal year. The decrease is due to debt service payments made during the fiscal year based on the defined debt service payment schedules having increased over prior fiscal years and being offset by interfund transfers of $5.9 million due to system development fees debt repayment. 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 $796.7 million and $36.5 million, respectively, compared to $789.2 million and $31.8 million in the prior fiscal year. The enterprise funds increase is primarily due to miscellaneous one time payments received in the water and wastewater funds. The water fund received a $5.7 million payment as a result of the sale of a portion of the North Agua Fria Underground Storage Project (NAUSP) to the City of Avondale. The NAUSP is a joint venture between the Salt River Project (SRP) utility and several valley cities for the recharge of water into ground storage. The city retained a portion of the storage but did not need the full amount. Additionally the city received a $7 million payment from SRP that was split between water ($2.2 million) and wastewater ($4.8 million) reimbursing the city for costs associated with undergrounding SRP utility lines relating to power delivered to Intel. The enterprise funds net position is 31.5 percent unrestricted compared to 35.9 percent in the prior fiscal year. Unrestricted net position of the water fund at the end of the year amounted to $128.0 million, and those for the wastewater fund amounted to $99.8 million, compared to $144.9 million and $117.4 million in the prior fiscal year. The balances will support planned utility infrastructure and the related debt service BUDGETARY HIGHLIGHTS For the 2022-23 budget year, the city continued to engage in fiscally responsible budgeting practices, adhered to financial policies, and used conservative budgeting while resetting anticipated revenues based on a growing economic trend. With a continued conservative mindset, the City Council adopted a balanced budget for 2022-23 that allowed for needed improved service levels in many areas adding 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), State Shared TPT Revenue Urban Revenue Sharing (State Shared Income Tax). 24 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 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 2022-23 budget included various salary adjustments based on agreements between bargaining units and the city, and merit and market adjustments for general employees including the incorporation of a completed classification and compensation study. Other ongoing costs, such as maintenance, utilities and supplies were managed closely to ensure they could be covered with ongoing revenues. The FY 2022-23 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, 2023, the city had invested over $1.1 billion in capital assets net of related debt, including buildings, system improvements, vehicles, machinery and equipment, subscription based IT arrangements, water rights and infrastructure assets. Total depreciation/amortization expense for the year was $98.7 million. During fiscal year 2022-23, the city has made substantial progress in advancing numerous capital improvement projects and concluded several noteworthy capital improvement projects. Among the accomplishments are the completion of Veterans Memorial Park, Homestead North Park, and Sunset Park culminating in a total investment of $8.4 million. Significant progress has been made on ongoing projects, with the reconstruction of Fire Station #282, which incurred a total expenditure of $7.7 million. The city has dedicated funds to several infrastructure projects, such as several street improvement projects for the re-pavement of Ocotillo Road-Cooper to 148th Street for $5.7 million, improvements to Chandler Heights Road of $8.9 million, and improvements to Cooper Road totaling $2.6 million, Prioritizing advancement in street lighting, the city has invested $6.7 million towards upgrading to LED streetlights. Ongoing Public Works projects include Water Treatment Plant Improvements to the Pecos Surface Water Treatment Plant costing $7.2 million dollars to date. An additional $29.9 million was accrued towards the Intel FAB 42 project completion, combining with prior fiscal year expenses to represent $56.9 million of the current balance in construction in progress. Many of the infrastructure projects relating to Intel development fall under an Intergovernmental Agreement (IGA) with the Arizona Department of Revenue (ADOR) and Intel, allowing for reimbursement of city infrastructure supporting Intel Corporation directly. 25 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 The following table presents capital asset balances net of accumulated depreciation and amortization for the fiscal years, ended June 30, 2023 and 2022: Governmental Business-type Total Activities Activities (Primary Govt.) 2023 Land $ Land improvements Infrastructure Subscription based IT arrangements $ 2023 92,208,938 $ 2022 57,189,731 $ 57,189,731 2023 2022 $ 146,570,110 $ 149,398,669 — — 200,557 255,657 200,557 255,657 292,559,802 318,148,649 — — 292,559,802 318,148,649 — — 547,513,756 589,322,175 547,513,756 589,322,175 144,530,547 158,211,441 6,912,776 7,438,261 151,443,323 165,649,702 946,490 — — — 946,490 — 17,549,850 20,030,874 3,365,093 2,135,294 20,914,943 22,166,168 System improvements Buildings and improvements 2022 89,380,379 Vehicles, machinery and equipment Water rights Construction in progress Total — — 41,788,743 42,217,346 41,788,743 42,217,346 187,131,784 134,927,143 126,421,086 66,346,386 313,552,870 201,273,529 $ 732,098,852 $ 723,527,045 $ 783,391,742 $ 764,904,850 $1,515,490,594 $1,488,431,895 Additional information on the city’s capital assets can be found in Note 4 of the financial statements. Long-term debt. At the end of the current fiscal year, the city had total bonded debt outstanding of $439.3 million in long-term debt outstanding with $57.3 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, 2023 and 2022. General obligation bonds Governmental Business-type Total Activities Activities (Primary Govt.) 2023 2022 2023 $ 176,702,193 $ 208,979,909 $ 2022 59,712,807 $ 2023 2022 70,380,091 $ 236,415,000 $ 279,360,000 Excise tax revenue obligations — — 202,930,000 215,105,000 202,930,000 215,105,000 Special assessment bonds — 635,000 — — — 635,000 12,825,886 15,054,239 12,344,938 14,522,022 25,170,824 29,576,261 $ 189,528,079 $ 224,669,148 $ 274,987,745 $ 300,007,113 $ 464,515,824 $ 524,676,261 19,771,275 16,911,130 — — 19,771,275 16,911,130 482,119 — — — 482,119 — — — 4,340,000 4,340,000 4,340,000 4,340,000 Issuance premiums Total bonds & obligations payable Claims payable Subscription based IT arrangements Landfill closure/post closure Compensated absences 14,117,796 13,153,929 1,421,206 1,282,749 15,539,002 14,436,678 Net pension liability 237,933,742 196,423,432 19,295,830 16,117,058 257,229,572 212,540,490 Post-employment benefits 64,928,042 72,805,954 8,084,000 9,115,841 73,012,042 81,921,795 Total long-term liabilities $ 526,761,053 $ 523,963,593 $ 308,128,781 $ 330,862,761 $ 834,889,834 $ 854,826,354 The city's total long-term liabilities decreased by $19.9 million during the current fiscal year. The city reported an increase in pension liability of $44.7 million, a decrease in post-employment benefits of $8.9 million and a net decrease of $55.8 million in bonds due to the impact of regularly scheduled payments being made as planned. 26 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 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 $1.3 billion. The city has $242.3 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 $376.8 million. The city has $5.5 million of outstanding general obligation debt for this purpose. As of year-end, the city’s current bond ratings on general obligation bonds were Aaa from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch Ratings. 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 (2023-24) required the combined efforts of residents, the city Council, Executive Leadership team, and staff members throughout the organization. As the financial impacts anticipated during the FY 2022-23 budget year were stronger than anticipated, additional considerable thought and measured change was incorporated into the fiscal year 2023-24 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. 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, retirement vacancies which have become increasingly more difficult 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, the city is still conservative in its approach and continues to look for efficiencies to manage expenditure growth. The budget increased from $1.353 billion in 2022-23 to $1.656 billion (an increase of 22.5 percent) in 2023-24, due to appropriation remaining for grant funding received during FY 2021-22, significant carryforward of capital projects as supply chain delays have slowed spending, and new capital projects identified to continue to provide a high quality of life for residents. With the addition of appropriation, the total department operating budget is increasing from $493 million to $563 million. The total new capital appropriation is increasing from $310 million to $358 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. With a 5.3 percent increase in Limited Property Values (including 1.9% of that from new growth), the City Council chose to reduce the primary property tax rate from $0.2326 to $0.2226 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 2023-24 Budget includes the sale of bonds to fund prior year and current year projects. Additionally, the City Council maintained the General Fund operating contingency at 15 percent of General Fund ongoing 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 low especially as the city made a significant payment of $73 million to essentially pay off the unfunded portion of our pension obligation. Chandler 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 2023, as well as the ETRO ratings reaffirmed as AAA with Fitch and S&P, and Moody's increased from Aa1 to Aaa in November 2023. 27 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2023 CONTACTING THE CITY’S FINANCE OFFICE This financial report is designed to provide our residents, 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. 28 BASIC FINANCIAL STATEMENTS 29 City of Chandler Statement of Net Position June 30, 2023 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 Opioid settlement receivable Notes receivable Other receivables Total current assets Long-term assets: Cash and investments - restricted Leases receivable Opioid settlement receivable Notes receivable Investment in joint venture Capital assets: Non-depreciable Depreciable/amortizable, 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 $ $ 584,845,614 — 3,783,701 22,253,722 492,020 11,110,399 983,691 6,305 2,172,914 192,387 288,606 2,911,134 629,040,493 247,704,890 — 18,577,907 — — 2,091,731 96,948 — 771,908 — — 975,328 270,218,712 Chandler Industrial Development Authority Total Primary Government $ 832,550,504 — 22,361,608 22,253,722 492,020 13,202,130 1,080,639 6,305 2,944,822 192,387 288,606 3,886,462 899,259,205 $ — 1,145,228 — — — — — — — — — — 1,145,228 Component Units Chandler Cultural Foundation $ — 5,673,811 1,830 — — — — 234,021 18,705 — — — 5,928,367 Chandler Museum Foundation $ — 76,033 656 — — — 21,027 — — — — — 97,716 — 5,254,727 2,903,132 — — — 3,981,323 — 154,750 64,751,045 — 9,236,050 2,903,132 154,750 64,751,045 — — — — — 1,433,255 — — — — 278,468 — — — — 276,512,163 455,586,689 732,098,852 740,256,711 1,369,297,204 183,610,817 599,780,925 783,391,742 852,278,860 1,122,497,572 460,122,980 1,055,367,614 1,515,490,594 1,592,535,571 2,491,794,776 — — — — 1,145,228 — 9,668 9,668 1,442,923 7,371,290 — — — 278,468 376,184 138,458,559 4,680,411 143,138,970 5,740,345 6,191,069 11,931,414 144,198,904 10,871,480 155,070,384 — — — — — — — — — 30 LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Unearned revenue Customer advances Subscription based IT arrangement liability Compensated absences payable Bonds payable Landfill closure and postclosure liability Claims and judgements payable Total current liabilities Long-term liabilities: Subscription based IT arrangement liability 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 Leases and Public-Private Partnerships (PPPs) 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 $ 22,620,233 8,411,216 5,218,218 3,274,196 13,682,797 — 151,276 2,225,614 36,325,359 — 12,467,944 104,376,853 11,677,854 849,559 4,601,764 4,223,624 — 775,991 — 226,872 25,389,049 94,446 — 47,839,159 34,298,087 9,260,775 9,819,982 7,497,820 13,682,797 775,991 151,276 2,452,486 61,714,408 94,446 12,467,944 152,216,012 — — — — — — — — — — — — 66,768 — — — 940,021 — — — — — — 1,006,789 1,102 — — — 70 — — — — — — 1,172 330,843 11,892,182 153,202,720 237,933,742 64,928,042 — 7,303,331 475,590,860 579,967,713 — 1,194,334 249,598,696 19,295,830 8,084,000 4,245,554 — 282,418,414 330,257,573 330,843 13,086,516 402,801,416 257,229,572 73,012,042 4,245,554 7,303,331 758,009,274 910,225,286 — — — — — — — — — — — — — — — — — 1,006,789 — — — — — — — — 1,172 21,487,623 4,952,714 3,616,896 3,901,031 25,104,519 8,853,745 — — — — — — 26,440,337 7,517,927 33,958,264 — — — 555,568,147 514,595,066 1,070,163,213 — 9,668 — 120,618,840 21,881,633 32,471,045 352,355 2,427,863 4,317,196 182,068,932 168,391,045 906,028,124 — — — — 31,119,667 — 31,119,667 250,938,753 796,653,486 120,618,840 21,881,633 32,471,045 352,355 33,547,530 4,317,196 213,188,599 419,329,798 $ 1,702,681,610 — — — — — — — 1,145,228 1,145,228 — — — — — 1,433,255 1,433,255 4,921,578 6,364,501 — — — — — 278,468 278,468 96,544 375,012 $ See accompanying Notes to the Financial Statements. 31 $ $ $ City of Chandler Statement of Activities For the year ended June 30, 2023 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 $195,086,875 $ 37,240,071 95,958,948 5,723,124 60,990,970 22,869,091 45,928,371 14,900,747 5,292,655 — 403,257,819 80,733,033 4,761,359 — 11,476,383 — — 16,237,742 $ 56,937,679 13,515,440 37,234,904 16,282,446 — 123,970,469 75,887,686 53,415,725 — 63,849,518 60,884,259 — 17,278,664 18,449,086 — 2,209,135 930,969 — 10,877,168 1,638,902 9,124,544 170,102,171 135,318,941 9,124,544 $573,359,990 $216,051,974 $ 36,124,238 2,136,542 11,345,805 — — — 13,482,347 $ 29,720,089 55,552,267 72,230,064 18,449,086 930,969 10,763,446 157,925,832 $281,896,301 $ $ $ $ 17 2,308,653 55,600 2,364,270 $ $ 140,540 2,699,968 28,536 2,869,044 $ 14,936,249 7,792,316 2,889,430 1,381,699 — 26,999,694 $ $ — 194,000 1,616 195,616 $ $ — — — — General revenues and transfers: General revenues: Property taxes, levied for general purposes Sales taxes Highway user taxes Other taxes Franchise fees State shared revenues (unrestricted) Investment income Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning of year Net position - end of year See accompanying Notes to the Financial Statements. 32 $ 140,540 2,893,968 30,152 3,064,660 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Activities $ $ (138,149,196) $ (82,443,508) (23,756,066) (29,645,925) (5,292,655) (279,287,350) Business-Type Activities — — — — — — Chandler Industrial Development Authority Total $ (138,149,196) $ (82,443,508) (23,756,066) (29,645,925) (5,292,655) (279,287,350) — — — — — — Component Units Chandler Cultural Foundation $ — — — — — — Chandler Museum Foundation $ — — — — — — — — — — — — (279,287,350) (20,335,419) 8,380,546 1,170,422 (1,278,166) (113,722) (12,176,339) (12,176,339) (20,335,419) 8,380,546 1,170,422 (1,278,166) (113,722) (12,176,339) (291,463,689) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 140,523 — — 140,523 — 585,315 — 585,315 — — (25,448) (25,448) — 22,063 — — — — 3,832,676 15,051,582 761,263 19,667,584 7,491,245 789,162,241 796,653,486 41,363,544 210,049,829 20,835,558 201,799 3,838,738 108,187,240 9,259,883 16,432,178 — 410,168,769 118,705,080 1,583,976,530 1,702,681,610 — — — — — — 23,916 — — 23,916 164,439 980,789 1,145,228 — — — — — — 186,074 — — 186,074 771,389 5,593,112 6,364,501 — — — — — — — — — — (25,448) 400,460 375,012 41,363,544 210,027,766 20,835,558 201,799 3,838,738 108,187,240 5,427,207 1,380,596 (761,263) 390,501,185 111,213,835 794,814,289 906,028,124 $ $ $ 33 $ $ City of Chandler Balance Sheet Governmental Funds June 30, 2023 Major Funds General General Obligation Bonds Other Governmental Debt Service Funds Total ASSETS Equity in pooled cash and investments Accounts receivable $ 289,717,541 3,616,290 $ 39,620,914 — $ 199,244,385 165,884 $ 528,582,840 3,782,174 Privilege license tax receivable Property taxes receivable 22,253,722 110,419 — 381,601 — — 22,253,722 492,020 Advances to other funds Due from other funds 6,170,859 2,086,039 — — — — 6,170,859 2,086,039 Due from other governments 5,135,302 — 5,975,097 11,110,399 Inventories Prepaid items 983,691 6,305 — — — — 983,691 6,305 Accrued interest receivable Notes receivable 965,493 — 55,784 — 855,478 288,606 1,876,755 288,606 Leases and PPP receivable Other receivables 5,254,727 6,006,653 — — — — 5,254,727 6,006,653 Total assets $ 342,307,041 $ 40,058,299 $ 206,529,450 $ 588,894,790 4,279,538 $ — $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 18,262,657 $ 22,542,195 8,068,935 5,052,718 — — 267,527 165,500 8,336,462 5,218,218 — — 3,274,196 — — 2,086,039 3,274,196 2,086,039 — 851,018 — — 6,170,859 12,820,286 6,170,859 13,671,304 Bonds payable Total liabilities — 18,252,209 34,108,034 37,382,230 — 39,772,868 34,108,034 95,407,307 Deferred inflows of resources Unavailable revenues - property taxes Leases and Public-Private Partnerships (PPPs) Unavailable revenues - settlements Total deferred inflows of resources 73,278 4,952,714 3,095,519 8,121,511 248,206 — — 248,206 — — — — 321,484 4,952,714 3,095,519 8,369,717 Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances 989,996 4,317,196 251,787,985 58,838,144 315,933,321 — 2,427,863 — — 2,427,863 — 175,323,873 — (8,567,291) 166,756,582 989,996 182,068,932 251,787,985 50,270,853 485,117,766 Total liabilities, deferred inflows and fund balances $ 342,307,041 206,529,450 $ 588,894,790 Accrued payroll Trust liabilities and deposits Accrued interest Due to other funds Advances from other funds Unearned revenue See accompanying Notes to the Financial Statements. 34 $ 40,058,299 $ City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position June 30, 2023 Total Fund Balances - Total Governmental Funds $ 485,117,766 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/Amortizable buildings, vehicles, machinery and equipment and infrastructure, net Total capital assets $ 276,512,163 455,586,689 732,098,852 Certain revenues are not available to pay for current period expenditures and, therefore, are unavailable in the funds. 3,417,011 Deferred amounts on refundings are not financial resources and, therefore, are not reported in the funds. 4,680,411 Deferred outflows related to pensions and OPEB are not financial resources and, therefore, are not reported in the funds. 138,458,559 Deferred inflows related to pensions and OPEB represent a future acquisition of net position that is not reported in the funds. (21,487,623) 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. 36,492,335 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 $19,903,832 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (155,420,045) Net pension liability OPEB liability Subscription based IT arrangement liability Compensated absences Total long-term liabilities Net Position of Governmental Activities (237,933,742) (64,928,042) (482,119) (13,985,239) (472,749,187) $ 906,028,124 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, 2023 Major Funds General Other Obligation Bonds Governmental Debt Service Funds General Total REVENUES: Property taxes $ 8,721,596 $ 32,683,380 $ — $ 41,404,976 210,027,766 — — 210,027,766 Highway user taxes — — 20,835,558 20,835,558 Regional transportation taxes — — 201,799 201,799 Franchise fees 3,838,738 — — 3,838,738 State shared Sales taxes 108,187,240 — — 108,187,240 Grants and entitlements 704,223 — 38,130,102 38,834,325 System development fees — — 8,235,336 8,235,336 Special assessments — — 565,411 565,411 Licenses and permits 8,754,471 — — 8,754,471 Charges for services 26,714,033 — 411,005 27,125,038 Fines and forfeitures 4,127,035 — 293,497 4,420,532 253,543 — — 253,543 Rentals — — 1,040,240 1,040,240 Interest revenue 1,502,098 210,754 3,151,566 4,864,418 Miscellaneous 512,446 — 534,926 1,047,372 373,343,189 32,894,134 73,399,440 479,636,763 General government 104,381,714 — 19,839,868 124,221,582 Public safety 130,895,545 — 6,504,778 137,400,323 Transportation and development 17,348,908 — 15,709,133 33,058,041 Community services 32,195,360 — 3,710,874 35,906,234 5,362,002 — 79,876,998 85,239,000 149,895 34,108,034 635,000 34,892,929 — 6,548,391 12,700 6,561,091 290,333,424 40,656,425 126,289,351 457,279,200 83,009,765 (7,762,291) (52,889,911) 22,357,563 Contributions Total revenues EXPENDITURES: Current: Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCE 2,963,942 — 265,425 3,229,367 — 5,900,000 39,152,169 45,052,169 (58,254,654) (52,078,965) — (6,175,689) (49,115,023) 5,900,000 33,241,905 (9,973,118) 33,894,742 (1,862,291) (19,648,006) 12,384,445 FUND BALANCES: 282,038,579 Beginning of year End of year $ 315,933,321 See accompanying Notes to the Financial Statements. 36 4,290,154 $ 2,427,863 186,404,588 $ 166,756,582 472,733,321 $ 485,117,766 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, 2023 Net Change in Fund Balances - Total Governmental Funds $ 12,384,445 Governmental activities in the Statement of Activities were reported differently because: 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. 62,173,931 Expenditures related to the implementation of subscription based IT arrangements are recorded as an intangible right to use asset on the government wide statements and amortized over the life of the contract 641,873 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. (51,532,558) Subscription Based IT arrangements amortization expenses do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds (327,397) 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 Pension related items Other post employment benefits related items 34,892,929 50,676,906 (2,201,197) 83,368,638 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. 1,268,436 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 (3,016,049) 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. (958,231) 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. 2,500,209 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. 4,710,538 Change in Net Position of Governmental Activities $ 111,213,835 See accompanying Notes to the Financial Statements. 37 City of Chandler Statement of Net Position Proprietary Funds June 30, 2023 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments Accounts receivable $ 91,361,700 $ 123,371,947 $ 32,971,243 $ 247,704,890 $ 56,262,775 7,810,407 8,376,463 2,391,037 18,577,907 1,527 — 2,091,731 — 2,091,731 — Inventories 64,717 — 32,231 96,948 — Accrued interest receivable 259,605 403,505 108,798 771,908 296,159 — 975,295 33 975,328 — 99,496,429 135,218,941 35,503,342 270,218,712 56,560,461 Notes receivable — — 154,750 154,750 — Leases receivable — — 3,981,323 3,981,323 — 64,751,045 — — 64,751,045 — Non-depreciable 41,054,290 112,486,653 30,069,874 183,610,817 — Depreciable, net 191,294,321 384,787,077 23,699,527 599,780,925 — Total capital assets 232,348,611 497,273,730 53,769,401 783,391,742 — Total long-term assets 297,099,656 497,273,730 57,905,474 852,278,860 — Total assets 396,596,085 632,492,671 93,408,816 1,122,497,572 56,560,461 Deferred outflows of OPEB and pension plan items 2,731,954 1,729,032 1,279,359 5,740,345 — Deferred amounts on refundings 2,990,548 3,200,521 — 6,191,069 — 5,722,502 4,929,553 1,279,359 11,931,414 — 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 and PPP Total deferred inflow of resources NET POSITION Net investment in capital assets Restricted for: Debt service Unrestricted Total net position $ 4,488,017 406,872 2,861,827 1,567,255 — 311,722 117,222 11,497,979 — — 21,250,894 5,969,462 337,490 663,197 2,656,369 — 290,941 72,349 13,891,070 — — 23,880,878 1,220,375 105,198 1,076,740 — — 173,328 37,301 — 94,446 — 2,707,388 11,677,854 849,560 4,601,764 4,223,624 — 775,991 226,872 25,389,049 94,446 — 47,839,160 78,046 74,755 — — 11,493 — 20,898 — — 12,467,944 12,653,136 626,368 89,756,961 9,760,170 3,683,055 — — 103,826,554 125,077,448 386,582 159,841,735 5,340,130 2,897,038 — — 168,465,485 192,346,363 181,384 — 4,195,530 1,503,907 4,245,554 — 10,126,375 12,833,763 1,194,334 249,598,696 19,295,830 8,084,000 4,245,554 — 282,418,414 330,257,574 111,659 — — — — 7,303,331 7,414,990 20,068,126 1,744,458 — 1,744,458 887,272 — 887,272 985,166 3,901,031 4,886,197 3,616,896 3,901,031 7,517,927 — 134,084,219 326,741,446 53,769,401 514,595,066 — 13,438,007 127,974,455 275,496,681 17,681,660 99,765,483 444,188,589 — 23,198,814 76,968,215 31,119,667 250,938,752 796,653,485 — 36,492,335 36,492,335 $ 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, 2023 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees 60,884,259 $ 19,380,304 $ 133,680,288 Grants and entitlements $ — — 9,124,544 9,124,544 — Rentals — — 1,638,652 1,638,652 — Sales taxes — — 22,063 22,063 — Self insurance premiums — — — — 31,126,217 Miscellaneous 53,415,725 $ $ 102,140 7,940,349 4,892,446 41,703 12,874,498 333,224 61,356,074 65,776,705 30,207,266 157,340,045 31,561,581 General and administrative 3,744,630 3,127,685 1,092,367 7,964,682 — Personnel services 10,890,055 8,619,783 4,774,225 24,284,063 2,380,913 Contractual services 11,775,620 6,769,127 14,176,127 32,720,874 3,290,070 Commodities 24,564,532 11,099,456 1,524,987 37,188,975 3,887,736 Claims expense — — — — 30,436,931 Housing assistance payments — — 6,783,281 6,783,281 — 16,487,195 28,336,133 1,990,601 46,813,929 — 67,462,032 57,952,184 30,341,588 155,755,804 39,995,650 (6,105,958) 7,824,521 (134,322) 1,584,241 (8,434,069) Interest revenue 1,519,209 1,923,072 390,395 3,832,676 562,786 Interest and fiscal charges (3,689,310) (5,894,334) — (9,583,644) — Accretion of bond premiums 947,679 1,229,405 — 2,177,084 — Gain (loss) on disposal of capital assets (118,026) (3,000) (23,379) (144,405) — (4,618,318) — — (4,618,318) — (5,958,766) (2,744,857) 367,016 (8,336,607) 562,786 (12,064,724) 5,079,664 232,694 (6,752,366) (7,871,283) Capital contributions 2,136,542 11,361,953 124,451 13,622,946 — Transfers in 1,388,800 1,310,250 1,440,251 4,139,301 12,611,429 Transfers out (1,692,365) (1,680,445) (145,827) (3,518,637) (29,608) 1,832,977 10,991,758 1,418,875 14,243,610 12,581,821 (10,231,747) 16,071,422 1,651,569 7,491,244 4,710,538 285,728,428 428,117,167 75,316,646 789,162,241 31,781,797 $ 275,496,681 $ 444,188,589 $ 76,968,215 $ 796,653,485 Total operating revenues OPERATING EXPENSES: Depreciation expense Total 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: Total capital contributions and transfers CHANGE IN NET POSITION NET POSITION: Beginning of year End of year See accompanying Notes to the Financial Statements. 41 $ 36,492,335 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2023 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 Principal paid on bond maturities Interest paid on bonds Cash received from capital contributions Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year $ $ Governmental Activities: Internal Service Fund Total 60,184,445 $ 64,657,837 $ 21,133,939 $ 145,976,221 $ — — 9,229,406 9,229,406 (39,146,712) (22,050,480) (24,708,942) (85,906,134) (10,635,645) (8,474,982) (4,776,721) (23,887,348) 10,402,088 34,132,375 877,682 45,412,145 31,903,723 — (34,921,408) (2,373,233) (5,390,918) 1,388,800 (1,692,365) (303,565) 1,310,250 (1,680,445) (370,195) 1,440,251 (145,827) 1,294,424 4,139,301 (3,518,637) 620,664 12,611,429 (29,608) 12,581,821 (13,136,648) (9,666,617) (3,886,912) 1,944,490 (24,745,687) (41,716,056) (12,039,541) (6,151,691) 2,572,284 (57,335,004) (1,486,350) — — — (1,486,350) (56,339,054) (21,706,158) (10,038,603) 4,516,774 (83,567,041) — — — — — 1,452,256 1,452,256 (13,194,908) 1,800,325 1,800,325 (21,772,499) 344,921 344,921 1,030,677 3,597,502 3,597,502 (33,936,730) 361,291 361,291 7,552,194 104,556,608 91,361,700 145,144,446 $ 123,371,947 31,940,566 32,971,243 281,641,620 $ 247,704,890 42 $ $ 48,710,581 56,262,775 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: Contributions of capital assets from developers Contributions of capital assets from city government Accretion of bond premiums $ $ (6,105,958) $ 7,824,521 16,487,195 (134,322) $ 1,584,241 28,336,133 1,990,601 46,813,929 386,600 — 43,175 — 894,895 165,782 (1,618,094) — — 59,865 553,976 (465,348) — 16,508,046 10,402,088 $ (88,875) (1,490,296) — — (1,054,212) 80,247 404,429 — — 55,874 425,218 (360,664) — 26,307,854 34,132,375 $ 142,487 — (14,868) 167,990 (1,117,312) (39,310) 243,298 — — (88,119) 74,653 (205,829) (141,587) 1,012,004 877,682 $ 440,212 (1,490,296) 28,307 167,990 (1,276,629) 206,719 (970,367) — — 27,620 1,053,847 (1,031,841) (141,587) 43,827,904 45,412,145 $ 192,052 — 947,679 8,773,521 — 1,229,405 — 124,451 — 8,965,573 124,451 2,177,084 $ See accompanying Notes to the Financial Statements. 43 $ $ $ $ $ (8,434,069) — $ 344,716 — — — (166,816) 7,680 — 2,860,145 (2,574) — — — — 3,043,151 (5,390,918) — — — CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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 residents. 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, 2023 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, 2023 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. General Obligation Bonds Debt Service Fund - This fund accumulates monies for the payment of principal and interest requirements of the city’s tax supported general obligation bonds. Revenues for repayment are generated from secondary property taxes. The city reports the following major proprietary funds: Water Fund - This fund is used to account for the provision of water services to the residents of the city and certain county residents within the city’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater Fund - This fund is used to account for the provision of wastewater services to the residents of the city and certain county residents within the city’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Additionally, the city reports the following fund 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. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, continued 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 $7,847,197 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 $9,723,414, for water enterprise fund are $21,893,280, for wastewater enterprise fund are $71,086,308, and for non-major governmental funds are $88,831,544. 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. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, continued 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 $3,353,948 due from the federal government for grants and $6,926,040 due from the State of Arizona for shared revenues and grants, and $2,922,142 due from other governmental agencies. 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. 48 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, continued 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/amortized 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 Subscription based IT arrangements varies based on length of contract 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 re-acquisition 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. 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 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, continued funds balance sheet. The governmental funds report unavailable revenues from property taxes, special assessments, leases and public private partnerships. 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. 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). 50 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, continued 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. T. Leases As lessor, 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. 51 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 1 - Summary of Significant Accounting Policies, concluded U. Subscription Based IT Arrangements (SBITA) As the user of hosted software programs, the city recognizes those agreements that are calculated to have an initial estimated total current value of $100,000 or more for the life of the contract. If there is no stated rate in the subscription 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 SBITA liabilities. V. Public-Private, Public-Public (PPPs) and Availability Payment Arrangements (APAs) The city may at times enter into agreements or arrangements with partners from other public agencies, or private companies to accomplish goals of city leadership and provide services to the residents of Chandler. The city recognizes any agreement that has been entered into and qualifies under the Governmental Accounting Standards Board statement 94 to provide users of the financial statements with details on the agreements. W. Implementation of New Accounting Standards During the year ended June 30, 2023, the Industrial Development Authority implemented the provisions of Governmental Accounting Standards Board Statements No. 91, Conduit Debt Obligations. This Statement establishes a single method of reporting conduit debt obligations by issuers and eliminates diversity in practice. The statement clarifies the existing definition of a conduit debt obligation, establishes that a conduit debt obligation is not a liability of the issuer, establishes standards for accounting and financial reporting of additional commitments and voluntary commitments extend by issuers and arrangements associated with conduit debt obligations, and improves required note disclosures. The city’s analysis of such obligations 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. During the year ended June 30, 2023, the city implemented the provisions of Governmental Accounting Standards Board Statements No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. This Statement is intended to provide guidance around reporting on public-private and public-public partnership arrangements (PPP's) and provide for more detail on their effect to the financial statements. The statement also provides guidance on accounting for availability payment arrangements (APA's) that might exist. The city's analysis of PPP's and APA's 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. During the year ended June 30, 2023, the city implemented the provisions of Governmental Accounting Standards Board Statements No. 96, Subscription-Based Information Technology Arrangements. This Statement is intended to provided increased clarification and information in the financial statements around subscription based information technology arrangements (SBITAs). The statement establishes a uniform accounting and and financial reporting requirement to improve comparability of governmental financial statements for governing agencies that have entered into SBITAs. It is also designed to enhance the understandability, relevance and consistency of information around SBITAs. The city's analysis of SBITAs 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 52 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 2 - Cash and Investments, continued 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 $44,990, the carrying amount of the city deposits was $49,422,449, and the bank balance was $56,399,551. Of the bank balance, $250,000 was covered by federal depository insurance and $56,149,551 was covered by collateral held in the pledging bank’s trust department in the city’s name. In addition, at June 30, 2023, the city had $89,008,377 of restricted cash held by paying agent consisting of $64,817,820 in July 1, 2023 debt service payments, $465 in unspent bond proceeds from the 2019 Excise Tax Revenue Obligation issuances, and $24,190,092 from the 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 At June 30, 2023, the city had the following investments and maturities: Investment Maturities (in Years) Concentration of Credit Risk % 51.39 % S&P/Moody/ Fitch Credit Rating Investment Type U.S. Treasuries U.S. Agencies: Fannie Mae Federal Farm Credit Banks Federal Home Loan Bank Category Level 1 Fair Value $ 356,548,659 Less than 1 Year $ 40,752,918 Level 2 Level 2 Level 2 27,809,521 21,589,315 9,162,122 4,574,548 11,934,078 7,470,509 23,234,973 9,655,237 1,691,613 4.01 3.11 1.32 AA+/Aaa/AAA AA+/Aaa/AAA AA+/Aaa/AAA Freddie Mac Corporate Bonds: Adobe Inc Corp Amazon.com Inc Corp Apple Inc Corp Athene Global Funding Bank Of America Corp Bank Of New York Mellon Corp Brighthouse Financial Global Funding Caterpillar Finl Service Cisco Systems Inc Corp Goldman Sachs Group Inc Home Depot Inc Corp IBM Corp Intel Corp John Deere Capital Corp Level 2 23,451,045 7,380,463 16,070,582 3.38 AA+/Aaa/AAA Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 3,158,605 3,205,687 256,350 5,085,430 10,192,722 9,038,546 1,442,475 4,314,175 223,099 1,961,495 3,392,171 2,062,593 3,284,148 6,315,338 — 1,799,968 — 5,085,430 — 5,551,733 1,442,475 — — 1,961,495 — — — 39,028 3,158,605 1,405,719 256,350 — 10,192,722 3,486,813 — 4,314,175 223,099 — 3,392,171 2,062,593 3,284,148 6,276,310 0.46 0.46 0.04 0.73 1.47 1.30 0.21 0.62 0.03 0.28 0.49 0.30 0.47 0.91 A+/A2 AA/A1 AA+/Aaa A+/A1/A+ A-/A1/AAA/A1/AAA+/A3/NA A/A2/A+ AA-/A1 BBB+/A2/A A/A2 A-/A3 A/A2 A/A2/A+ 53 1-5 Years $ 315,795,741 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 2 - Cash and Investments, continued Investment Maturities (in Years) Concentration of Credit Risk % 0.62 % 0.51 0.66 0.65 0.43 0.83 S&P/Moody/ Fitch Credit Rating A-/A1 Fair Value 4,318,460 3,510,405 4,571,998 4,483,981 2,972,380 5,782,551 Less than 1 Year $ 2,239,674 — — 4,483,981 — — Level 2 Level 2 Level 2 5,794,202 4,405,433 1,055,371 2,908,262 4,405,433 1,055,371 2,885,940 — — 0.83 0.63 0.15 A-/A2/A AA+/Aaa/NA AA+/Aaa/AAA Novartis Captial Corp Paccar Financial Corp Pepsico Inc Corp Pnc Bank Na Qualcomm Inc Cor Corp State Street Corp Target Corp Texas Instruments Inc Corp Toyota Motor Credit Corp Truist Financial Corp Us Bancorp Usaa Capital Corp Wal Mart Stores Inc Global Municipal Bonds: Scottsdale, AZ TXBL GO Bonds Tempe Ariz Ctfs Partn Asset Backed: Amcar 2022-1 A2 Amxca 2021-1 A Amxca 2022-4 A 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 6,346,087 2,677,676 3,345,557 951,963 1,579,354 1,103,408 2,013,057 173,315 4,458,644 2,067,605 3,941,977 3,835,794 10,073,734 — — — — — — — 138,613 208,685 — 3,941,977 3,835,794 — 6,346,087 2,677,676 3,345,557 951,963 1,579,354 1,103,408 2,013,057 34,702 4,249,959 2,067,605 — — 10,073,734 0.91 0.39 0.48 0.14 0.23 0.16 0.29 0.02 0.64 0.30 0.57 0.55 1.45 AA-/A1 A+/A1/NA A+/A1 A/A2/A+ A/A2 A/A1/AAA/A2 A+/Aa3 A+/A1/A+ A-/A3 A/A3/A AA/Aa1/NA AA/Aa2/AA Level 2 Level 2 1,507,758 1,186,663 — — 1,507,758 1,186,663 0.22 0.17 AAA/Aaa AA+/NA/AA+ Level 2 Level 2 Level 2 1,282,682 2,548,456 2,041,123 — — — 1,282,682 2,548,456 2,041,123 0.18 0.37 0.29 NA/Aaa/AAA NA/Aaa/AAA AAA/NA/AAA Bmwot 2022-A A2A Bmwot 2022-A A3 Carmx 2020-1 A3 Carmx 2020-4 A4 Carmx 2021-1 A3 Carmx 2021-2 A3 Carmx 2022-1 A2 Carmx 2022-2 A3 CNH 2021-A A3 Comet 2021-3 A Copar 2023-1 A2A Dcent 2021-A1 A1 Dcent 2022-2 A Fordo 2022-C A2A Gmcar 2020-4 A3 Gmcar 2022-3 A2A 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 2 290,553 1,375,685 92,935 1,689,844 231,721 634,910 139,202 1,363,699 537,971 3,763,919 2,290,185 785,739 3,370,392 1,006,420 653,032 1,429,185 — — — — — — — — — — — — — — — — 290,553 1,375,685 92,935 1,689,844 231,721 634,910 139,202 1,363,699 537,971 3,763,919 2,290,185 785,739 3,370,392 1,006,420 653,032 1,429,185 0.04 0.20 0.01 0.24 0.03 0.09 0.02 0.20 0.08 0.54 0.33 0.11 0.49 0.15 0.09 0.21 AAA/Aaa/NA AAA/Aaa/NA AAA/NR AAA/NA/AAA AAA/NR AAA/NR AAA/Aaa/NA AAA/Aaa/NA AAA/NR AAA/NA/AAA AAA/NA/AAA AAA/Aaa NA/Aaa/AAA AAA/Aaa/NA AAA/NA/AAA NA/Aaa/AAA Investment Type JP Morgan Chase & Co Corp Manufacturers And Traders Trust Co Mastercard Inc Corp Metropolitan Life Global Funding I Microsoft Corp Morgan Stanley Corp Category Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 National Rural Utilities Cooperative Finance Corp National Securities Clearing Corp New York Life Global Funding $ 54 $ 1-5 Years 2,078,786 3,510,405 4,571,998 — 2,972,380 5,782,551 A-/A3/A A+/Aa3 AA-/Aa3/AAAAA/Aaa A-/A1/A+ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 2 - Cash and Investments, continued Investment Maturities (in Years) Investment Type Halst 2022-A A3 Harot 2021-1 A3 Hart 2020-A A3 Hart 2021-A A3 Hart 2021-C A3 Hart 2022-A A2A Hart 2022-C A2A Mbart 2021-1 A3 Narot 2021-A A3 Taot 2020-C A3 Taot 2021-A A3 Taot 2021-C A3 Taot 2022-C A3 Usaot 2022-A A3 Woart 2022-A A2 Woart 2023-A A2A Money Market - Certificates of Deposit Money Market Fund Cash and cash equivalents Total Category Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Fair Value 1,419,299 327,598 677,392 369,128 475,775 329,335 933,408 3,386,513 4,026,161 Less than 1 Year — — — — — — — — — Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 1 Level 1 179,699 907,892 919,593 3,895,730 1,980,260 103,336 921,015 3,382,817 66,091,427 217 — — — — — — — 249,839 66,091,427 217 179,699 907,892 919,593 3,895,730 1,980,260 103,336 921,015 3,132,978 — — $ 694,074,688 $ 181,121,489 $ 512,953,199 1-5 Years 1,419,299 327,598 677,392 369,128 475,775 329,335 933,408 3,386,513 4,026,161 Concentration of Credit Risk % 0.20 0.05 0.10 0.05 0.07 0.05 0.13 0.49 0.58 0.03 0.13 0.13 0.56 0.29 0.01 0.13 0.49 9.52 0.00 S&P/Moody/ Fitch Credit Rating AAA/Aaa/NA NR/Aaa AAA/NA/AAA AAA/NR AAA/Aaa AAA/NA/AAA AAA/NA/AAA AAA/Aaa/NA AAA/Aaa/NA AAA/Aaa/NA NA/Aaa/AAA AAA/Aaa AAA/NA/AAA AAA/Aaa/NA AAA/NA/AAA AAA/NA/AAA A/A1 AAAm/NR AAA/Aaa/AAA 100.00 % 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 BBB+, repurchase agreements and the Local Government Investment Pool. The city’s investment in U.S. Agencies, Corporate Bonds and Money Market Funds were rated no lower than AA+, BBB+ and AAAm by Standard & Poor’s, respectively, as of June 30, 2023. 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. 55 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 2 - Cash and Investments, concluded 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. 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 2022-23, current property tax collections were $40,571,534 or 99 percent of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax expected to be collected within 60 days is recognized as revenue and recorded as a receivable. Property taxes levied in August 2023 are not available for fiscal year 2022-23; accordingly, such taxes will not be recognized as revenue until fiscal year 2023-24. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 4 - Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance Governmental Activities Balance June 30, 2022 Additions Retirements June 30, 2023 Capital assets, not being depreciated/ Amortized: Land $ Construction in progress Total capital assets not being depreciated/ amortized 92,208,938 $ — $ (2,828,559) $ 89,380,379 134,927,143 61,091,015 (8,886,374) 187,131,784 227,136,081 61,091,015 (11,714,933) 276,512,163 Capital assets, being depreciated/ amortized: Infrastructure 780,270,696 971,575 — 781,242,271 Building and improvements 415,567,288 4,772,966 — 420,340,254 Subscription based IT arrangements — 1,273,887 — 1,273,887 Vehicles, machinery and equipment 101,486,978 4,225,476 (1,308,349) 104,404,105 Total capital assets being depreciated/ amortized 1,297,324,962 11,243,904 (1,308,349) 1,307,260,517 Infrastructure (462,122,047) (26,560,422) — (488,682,469) Building and improvements (257,355,847) (18,453,860) — (275,809,707) Less accumulated depreciation/ amortization for: Subscription based IT arrangements — (327,397) — (327,397) Vehicles, machinery and equipment (81,456,104) (6,518,276) 1,120,125 (86,854,255) Total accumulated depreciation/ Amortization (800,933,998) (51,859,955) 1,120,125 (851,673,828) 496,390,964 (40,616,051) (188,224) 455,586,689 (11,903,157) $ 732,098,852 Total capital assets, being depreciated/ amortized, net Governmental activities capital assets, net $ 723,527,045 $ 20,474,964 $ Construction in progress in the governmental activities capital assets is comprised of the following: Streets $ Expended to Remaining June 30, 2023 Commitments 89,712,421 $ 42,493,924 Parks and recreation 13,547,047 26,050,278 Buildings and related improvements 83,872,316 13,697,356 Total $ 57 187,131,784 $ 82,241,558 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 4 - Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Balance Business-Type Activities Balance June 30, 2022 Additions Retirements June 30, 2023 Capital assets, not being depreciated: Land $ Construction in progress 57,189,731 $ — $ — $ 57,189,731 66,346,386 62,535,816 (2,461,116) 126,421,086 123,536,117 62,535,816 (2,461,116) 183,610,817 1,404,841,302 2,949,056 (96,026) 1,407,694,332 Building and improvements 26,815,318 255,395 — 27,070,713 Vehicles, machinery and equipment 20,983,628 2,166,077 (118,480) 23,031,225 Water rights 42,860,250 — — 42,860,250 Total capital assets not being depreciated Capital assets, being depreciated: System improvements Land improvements 2,668,237 — — 2,668,237 1,498,168,735 5,370,528 (214,506) 1,503,324,757 System improvements (815,519,127) (44,661,449) — (860,180,576) Buildings and improvements (19,377,057) (780,880) — (20,157,937) Vehicles, machinery and equipment (18,848,334) (887,897) 70,099 (19,666,132) Water rights (642,904) (428,603) — (1,071,507) Land improvements (2,412,580) (55,100) — (2,467,680) (856,800,002) (46,813,929) 70,099 (903,543,832) 641,368,733 (41,443,401) (144,407) 599,780,925 (2,605,523) $ 783,391,742 Total capital assets being depreciated Less accumulated depreciation for: Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ 764,904,850 $ 21,092,415 $ Construction in progress in the business-type activities capital assets is comprised of the following: Expended to June 30, 2023 Sewer system improvements $ 87,836,297 Water system improvements 35,552,448 Solid waste system improvements 635,763 Airport improvements 2,396,578 Total $ 126,421,086 58 Remaining Commitments $ 67,319,877 18,608,868 229,219 1,377,205 $ 87,535,169 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 4 - Capital Assets, concluded Depreciation/Amortization expense was charged to functions/programs as follows: Governmental activities: General government Public safety Community services Transportation and development Total depreciation/amortization expense governmental activities Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority Total depreciation expense - business-type activities $ 7,067,911 7,023,669 10,099,753 27,669,357 $ 51,860,690 $ 16,487,196 28,336,130 606,342 756,125 628,136 46,813,929 $ Projects are reported as construction in progress when initially identified. Throughout the life of the project, it may be determined that the project does not meet the requirements for capitalization. Once a project is determined to not meet the requirements for capitalization it is removed from construction in progress. As a result, deletions and transfers out from construction in progress may be more than what is reported as additions and transfers in to depreciable capital assets. NOTE 5 - Long-Term Liabilities A. General Obligation Bonds The city issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. Bonds issued for business-type activities are reported in the enterprise funds as they are to be repaid from enterprise revenues. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the city. These bonds are generally issued as 10 to 15 year serial bonds, except for refunding issues, with varying amounts of principal maturing each year. The city has pledged future ad valorem tax revenues and net enterprise revenues to repay a total of $262,723,499 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 96 percent of total ad valorem taxes. The total principal and interest remaining to be paid on the governmental activities portion of the bonds is $197,515,732. Principal and interest paid for the current year and total ad valorem property taxes were $39,597,865 and $41,404,976 respectively. 59 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 5 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2023 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, 2023 $ 42,160,000 25,500,000 35,915,000 27,100,000 $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. 26,757,193 $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. 19,270,000 Total Governmental Activities General Obligation Bonds $ 176,702,193 Business-Type Activity General Obligation Bonds Annual principal and interest payments on the business-type activities bonds were less than 39 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 $65,207,767. Principal and interest paid for the current year and total net water system, wastewater system revenues were $12,982,945 and $33,709,096 respectively. Business-Type Activities General Obligation Bonds: $214,540,000 Refunding Bonds, Series 2014, due in annual installments of $6,895,000 to $11,036,000 through 7/1/28; interest at 3 percent to 5 percent. $39,050,000 Refunding Bonds, Series 2016, due in annual installments of $2,395,000 to $8,650,000 beginning 7/1/25 through 7/1/27; interest at 3 percent to 5 percent. Outstanding June 30, 2023 $ 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 60 25,925,000 20,237,807 $ 59,712,807 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 5 - Long-Term Liabilities, continued 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 less than 56% percent of net system revenues. The total principal and interest to be paid on the obligations is $241,230,115. Principal and interest paid for the current year and net water and wastewater system revenues were $18,762,621 and $33,709,096 respectively. Total excise tax revenues during the fiscal year were $334,935,250. Principal and interest payments were less than 6 percent of total excise tax revenues. Outstanding June 30, 2023 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. $ 8,400,000 $66,660,000 Water & Sewer Excise Tax Revenue Obligations, Series 2015, due in annual installments of $2,635,000 to $5,620,000 through 7/1/35; interest at 3 percent to 5 percent. 52,920,000 $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. 15,860,000 $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. 32,285,000 $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. 9,710,000 $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. 83,755,000 Total Business-Type Activities Excise Tax Revenue Obligations 61 $ 202,930,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 5 - Long-Term Liabilities, continued 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, 2023, the city has no outstanding debt remaining related to improvement districts. Changes in Long-Term Liabilities Balance Governmental Activities: June 30, 2022 Compensated absences $ 13,153,929 Additions $ Reductions 2,476,552 $ Balance Due within June 30, 2023 One Year (1,512,685) $ 14,117,796 $ 2,225,614 Bonds payable: General obligation bonds 208,979,909 — (32,277,716) 176,702,193 34,108,034 Special assessment bonds 635,000 — (635,000) — — Issuance premiums 15,054,239 — (2,228,353) 12,825,886 2,217,325 Total bonds payable 224,669,148 — (35,141,069) 189,528,079 36,325,359 16,911,130 30,366,404 (27,506,259) 19,771,275 12,467,944 — 482,119 — 482,119 151,276 196,423,432 41,510,310 — 237,933,742 — (7,877,912) 64,928,042 Claims payable Subscription based IT liability Net pension liability OPEB liability Totals 72,805,954 $ 523,963,593 — $ 74,835,385 $ (72,037,925) $ 526,761,053 Balance Business-Type Activities: June 30, 2022 Compensated absences $ 1,282,749 Additions $ Reductions 290,736 $ — $ 51,170,193 Balance Due Within June 30, 2023 One Year (152,279) $ 1,421,206 $ 226,872 Bonds & obligations payable: General obligation bonds 70,380,091 (10,667,284) 59,712,807 10,231,966 Excise tax revenue obligations 215,105,000 (12,175,000) 202,930,000 12,980,000 Issuance premiums 14,522,022 — (2,177,084) 12,344,938 2,177,083 Total bonds & obligations payable 300,007,113 — (25,019,368) 274,987,745 25,389,049 Net pension liability 16,117,058 3,178,772 — 19,295,830 — OPEB liability 9,115,841 — (1,031,841) 8,084,000 — Landfill closure/post closure 4,340,000 — — 4,340,000 94,446 Totals $ 330,862,761 $ 3,469,508 62 $ (26,203,488) $ 308,128,781 $ 25,710,367 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 5 - Long-Term Liabilities, continued Compensated Absences The city’s policy relating to compensated absences is described in Note 1. The long-term portion of this debt is expected to be paid in future years from future resources. Compensated absences for governmental activities have been liquidated primarily by the general fund. Statutory Debt Limitation In the absence of more restrictive bond authorization ballot limitations, the city is subject to state limitations on the amount of net bonded debt (exclusive of revenue bonds, excise tax revenue obligations, and improvement district bonds) it may have outstanding. The statutory debt limitation is 20 percent of the full cash property assessed valuation for purposes of water, wastewater, artificial light, acquisition and development of land for open space preserves, recreation facilities, public safety and emergency services, streets and transportation and 6 percent of the full cash property assessed valuation for all other purposes (e.g., library, museum, center for the arts). At June 30, 2023, the 6 percent debt limitation was $376,810,629, providing a debt margin of $371,288,540 and the 20 percent debt limitation was $1,256,035,431, providing a debt margin of $1,013,757,238. Conduit Debt To further economic development in the city, the Industrial Development Authority has issued bonds that meet the definition of a conduit debt obligation. Those bonds have provided private-sector entities with access to capital for the acquisition and construction of industrial and commercial facilities. The bonds are secured by the property they finance and are payable solely from payments received from the privatesector entities on the underlying mortgage or promissory notes. The Industrial Development Authority has not extended any additional commitments for the debt service payments of the bonds beyond the collateral and the payments from the private-sector entities on the underlying mortgage or promissory notes and maintenance of the tax-exempt status of the conduit debt obligation. At June 30, 2023, the bonds have an aggregate outstanding principal amount payable of $1,304,661,563, none of which was recognized as a liability by the Industrial Development Authority. 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 the 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, 2023 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, 2023: 63 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 5 - Long-Term Liabilities, concluded Years Ended June 30 GOVERNMENTAL ACTIVITIES General General Obligation Obligation Principal Interest 2024 $ 34,108,034 2025 2026 5,725,632 $ 39,833,666 26,351,936 4,286,099 30,638,035 22,350,023 3,242,012 25,592,035 2027 21,638,420 2,548,473 24,186,893 2028 21,437,390 1,776,303 23,213,693 2029-2033 44,541,390 3,004,332 47,545,722 2034-2038 6,275,000 230,688 6,505,688 $ 176,702,193 $ 20,813,539 $ 197,515,732 BUSINESS-TYPE ACTIVITIES General Obligation Excise Tax Interest Principal Excise Tax Interest Total Years Ended June 30 General Obligation Principal 2024 $ 10,231,966 2025 2026 1,879,719 $ 12,980,000 9,543,064 1,401,616 9,979,977 986,281 2027 10,096,580 2028 $ 31,117,665 13,910,000 5,398,961 30,253,641 14,570,000 4,816,525 30,352,783 718,376 13,785,000 4,344,559 28,944,515 8,737,610 411,636 16,120,000 3,837,582 29,106,828 2029-2033 11,123,610 97,332 89,730,000 11,876,320 112,827,262 2034-2038 — — 41,835,000 2,000,188 43,835,188 5,494,960 $ 202,930,000 $ 38,300,115 $ 306,437,882 $ 59,712,807 $ $ Total 6,025,980 Total $ $ Total NOTE 6 - Defeased Debt In prior years, the city defeased certain general obligation bonds and certain excise tax obligations by placing the proceeds of new bonds and obligations in an irrevocable trust to provide for all future debt service payments on the old bonds or obligations. Accordingly, the trust account assets and the liability for the defeased bonds and obligations are not included in the city's financial statements. Bonds and obligations that have been advance refunded (defeased) as of June 30, 2023: Refunded Debt Outstanding Excise Tax Revenue Obligations, Series 2013 (Final Redemption 7/1/23) General Obligation Bonds, Series 2014 (Final Redemption 7/1/24) Total Refunded Bonds and Obligations Outstanding 64 Amount $ 78,600,000 43,320,000 $121,920,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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, 2023, the city estimates total costs related to landfill closure and postclosure care is 16,778,357 and has recognized that entire amount since the landfill no longer accepts waste. To date, $12,438,357 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, $16,778,357, 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, 2023. 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, 2022. 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 $ 1,944,490 2,572,284 — Developer Contributions $ 192,052 8,773,521 — Government Contributions $ — 16,148 124,451 Total $ 2,136,542 11,361,953 124,451 Total $ $ $ $ 13,622,946 4,516,774 65 8,965,573 140,599 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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, 2023 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, 2023 NOTE 9 - Fund Balance, concluded General Obligation Bonds Debt Service General Other Governmental Funds Total Nonspendable: Inventories $ Prepaid items 983,691 $ — $ — $ 983,691 6,305 — — 6,305 989,996 — — 989,996 Court enhancement 493,793 — — 493,793 Judicial enhancement 507,212 — — 507,212 Weapons proceeds 151,636 — — 151,636 Citing agency 45,922 — — 45,922 Total nonspendable Restricted for: Opioid Settlement Funds 504,426 — — 504,426 2,614,207 — — 2,614,207 Transportation and development — — 120,618,840 120,618,840 Debt service reserve — 2,427,863 — 2,427,863 Community development — — 352,355 352,355 Community services — — 32,471,045 32,471,045 Other capital projects — — 21,881,633 21,881,633 Total restricted 4,317,196 2,427,863 175,323,873 182,068,932 81 — — 81 10,000,000 — — 10,000,000 Traffic safety reserve 212,000 — — 212,000 PSPRS contribution 73,000,000 — — 73,000,000 Capital improvement projects 149,527,230 — — 149,527,230 Economic development projects 14,831,990 — — 14,831,990 ARPA related projects 4,216,684 — — 4,216,684 Total assigned 251,787,985 — — 251,787,985 58,838,144 — (8,567,291) 50,270,853 58,838,144 — (8,567,291) 50,270,853 Smart and Safe AZ Assigned to: Domestic violence prevention Self-insurance purposes Unassigned Total unassigned Total fund balances $ 315,933,321 $ 2,427,863 $ 166,756,582 $ 485,117,766 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 2022-23. This amounts to $54,790,400 and is included in unassigned above. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 10 - Retirement and Pension Plans The city contributes to the pension plans described below. The city 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, 2023, the city reported the following aggregate amounts related to pensions and other postemployment benefits (OPEB) for all plans to which it contributes. Net pension liability Governmental Activities $ 237,933,742 Pensions Plans Business-type Activities Total $ 19,295,830 $ 257,229,572 Pension deferred outflows of resources Pension deferred inflows of resources Pension expense 119,348,261 5,175,851 26,069,722 3,237,826 1,602,226 6,115,120 122,586,087 6,778,077 32,184,842 Net OPEB liability OPEB deferred outflows of resources OPEB deferred inflows of resources OPEB expense Governmental Activities $ 64,928,042 19,110,298 16,311,772 4,953,299 OPEB Plans Business-type Activities $ 8,084,000 2,502,519 2,014,670 648,778 Total 73,012,042 21,612,817 18,326,442 5,602,077 $ The city reported $80,638,034 and $2,016,962 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 employees not covered by the other pension plans described after this section participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. For governmental activities OPEB and pension liabilities are generally liquidated by the general fund. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. 68 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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 12.17 percent (12.03 percent for retirement and 0.14 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 12.17 percent (11.92 percent for retirement, 0.11 percent for health insurance premium benefit, and 0.14 percent for long-term disability) of the active members’ annual covered payroll. In addition, the city was required by statute to contribute at the actuarially determined rate of 9.68 percent (9.62 percent for retirement and .06 percent for long term disability) 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, 2023, 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’s contributions for the year ended June 30, 2023, were $10,615,589. The city’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, 2023 NOTE 10 - Retirement and Pension Plans, continued D. Pension Liability At June 30, 2023, the city reported a liability of $110,127,657 for its proportionate share of the net pension liability of the ASRS. The net pension liability was measured as of June 30, 2022. 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, 2021, to the measurement date of June 30, 2022. The city’s proportion of the net pension liability was based on a projection of the city’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2022, the city’s proportion was 0.67 percent, which was a decrease of .04 from its proportion measured as of June 30, 2021. E. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2023, the city recognized pension expense for ASRS of $10,098,145 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 $ 938,353 $ — 5,465,849 — $ — 2,900,869 166,026 10,615,589 17,185,817 3,648,796 — 6,549,665 $ 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, 2024. 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: 2023 $ 3,462,069 2024 (3,047,894) 2025 (5,036,590) 2026 4,642,978 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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, 2021 June 30, 2022 Entry age normal 7% 2.9%-8.4% 2.3% Included 2017 SRA Scale U-MP The actuarial assumptions used in the June 30, 2021 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 4.19 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 3.90% 5.30% (0.20)% 6.00% G. Discount Rate The discount rate used to measure the ASRS total pension liability was 7.0 percent, which remained the same when compared to the rated used for June 30, 2021. 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, 2023 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’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's proportionate share of the net pension liability I. 1% Decrease (6.0%) Current Discount Rate (7.0%) $ 162,490,084 $110,127,657 $ 66,465,574 1% Increase (8.0%) 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 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, 2023 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, 2023, 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 219 91 75 280 574 31 195 317 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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, 2023, 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 % 8.94 % 7.65 % 7.65 % 9.29 % 10.85 % 10.85 % 47.10 % 47.10 % 44.06 % 44.79 % 39.37 % 39.37 % 35.17 % 35.26 % In addition, the city was required by statute to contribute at the actuarially determined rate of 33.94 percent for police and 24.41 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 $ 47,644,130 $ 24,395,278 E. Pension Liability At June 30, 2023, the city reported $99,300,601 in net pension liability for police and $47,801,314 in net pension liability for fire. The net pension liabilities were measured as of June 30, 2022, 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, 2022, 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, 2023 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, 2022 Entry age normal 7.2% 7.0% 2.5% 3.5% including inflation Cost of living adjustment 3.25% - 15% 1.85% PubS-2010 tables Mortality rates The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.20 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 0.45% 4.47% 4.83% (0.35)% 2.68% 7.18% 5.10% 3.49% G. Pension Discount Rates The discount rate of 7.20 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, 2023 NOTE 10 - Retirement and Pension Plans, continued Total Pension Liability PSPRS - Police Balances at June 30, 2022 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 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, 2023 PSPRS - Fire Balances at June 30, 2022 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 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, 2023 $ $ 326,117,720 $ 81,695,357 5,687,800 23,623,567 4,884,171 3,565,456 — — — — — 28,044,847 2,844,468 (10,549,363) 4,884,171 3,565,456 (28,044,847) (2,844,468) 10,549,363 (16,390,013) — — 21,370,981 347,488,701 $ (16,390,013) (190,200) 5,998 3,765,737 248,188,100 $ — 190,200 (5,998) 17,605,244 99,300,601 Increase/(Decrease) Plan Fiduciary Net Position $ 157,827,084 Net Pension Liability $ 37,447,855 4,265,733 14,270,752 — — 4,265,733 14,270,752 397,039 1,375,658 — — 15,211,791 1,610,854 (6,745,327) 397,039 1,375,658 (15,211,791) (1,610,854) 6,745,327 (8,101,828) (8,101,828) (121,595) — 121,595 — 10,353,459 47,801,314 — 12,207,3541 207,482,293 $ 76 $ — — 195,274,939 $ 244,422,363 Net Pension Liability 5,687,800 23,623,567 Total Pension Liability $ Increase/(Decrease) Plan Fiduciary Net Position 1,853,895 159,680,979 $ CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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’s net pension liability calculated using the discount rates noted above, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage 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 6.20 $ 148,199,928 $ 7.20 99,300,601 $ 8.20 59,595,719 PSPRS - Fire: Rate Net pension liability 6.20 76,416,872 $ 7.20 47,801,314 $ 8.20 24,346,346 $ 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, 2023, the city recognized the following as pension expense: Pension Expense $ 13,902,149 8,118,703 PSPRS - Police PSPRS - Fire 77 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 10 - Retirement and Pension Plans, concluded K. Pension Deferred Outflows/Inflows of Resources At June 30, 2023, the city reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS - Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments 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 $ 13,657,871 5,783,715 Deferred Inflows of Resources $ 142,752 — 3,620,466 47,644,130 70,706,182 — — 142,752 $ $ Deferred Outflows of Resources $ 4,437,269 3,437,921 Deferred Inflows of Resources $ 85,840 — 2,423,620 24,395,278 34,694,088 — — 85,840 $ $ 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, 2024. 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 2024 $ 5,489,455 2025 5,063,763 2026 3,117,800 2027 7,840,190 2028 1,408,272 Thereafter — PSPRS - Fire $ 2,430,855 1,408,172 (39,700) 5,027,729 942,760 443,174 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 78 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued includes immediate recognition in OPEB expense of the effects of changes of benefit terms, as well as the incorporation of the amortization of deferred inflows of resources and deferred outflows of resources related to OPEB over a defined, closed period. A. Plan Description The city provides post-employment health care (OPEB) for retired employees through a single employer defined benefit health plan. The plan provides health benefits for eligible retirees, their spouses and dependents though the city’s group health insurance plans, which covers active and retired members. The benefits, benefit levels, and contribution rates are determined annually by the city’s Human Resources Department and approved by the City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan and no assets are accumulated. The plan does not issue a separate financial report. Generally, resources from the general fund are used to pay for post-employment benefits. The city also provides a Retirement Health Savings Plan (RHSP) for active employees that may be used upon separation from city employment. The city funds $15 per pay period during the term of employment. The plan provides health expense reimbursements eligible under Internal Revenue Code Section 213, other than direct long-term care expenses. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. 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. 79 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued 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 705 1,632 2,337 D. Total OPEB Liability The city’s total OPEB liability of $73,012,042 was measured as of June 30, 2022 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, 2022 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, 2022 June 30, 2021 3.54% 2.3% - 2.5% Vary depending on retirement plan and years of service from 2.9% - 8.4% 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. 80 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, continued F. Changes in the Total OPEB Liability Total OPEB liability - beginning of year Changes for the year: Service cost Interest $ 81,921,795 4,846,361 1,844,376 Differences between expected and actual experience Changes in assumptions or other inputs Estimated benefit payments Net changes Total OPEB liability - end of year (12,824,888) (2,775,602) (8,909,753) $ 73,012,042 Changes in assumptions reflect the following: 1. The discount rate increased from 2.16% to 3.54% based on the changes in the Bond Buyer 20 GO index municipal bond rate from June 30, 2021 to June 30, 2022. 2. The future trend rates on per capita health costs were updated. 3. The mortality, withdrawal, disability, retirement rates and salary scales for Safety employees were updated based on the results of the recent PSPRS actuarial experience study. 4. The mortality projection scale for General active employees and disabled retirees was updated based on the recent ASRS valuation. 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 (2.54%) Total OPEB liability $ Current Discount Rate (3.54%) 82,236,434 $ 73,012,042 1% Increase (4.54%) $ 65,374,224 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 $ 68,276,793 81 $ 73,012,042 1% Increase (8.50%) $ 78,584,407 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 11 - Post-Employment Benefits Other Than Pensions - Single Employer Plan, concluded I. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2023, the city recognized OPEB expense of $5,602,077. At June 30, 2023, the city reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Contributions subsequent to measurement date Total $ $ — 18,500,248 3,112,569 21,612,817 Deferred Inflows of Resources $ 5,472,245 12,854,197 — $ 18,326,442 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, 2024. 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: 2024 $ 2025 2026 2027 2028 Thereafter (1,088,660) 266,459 1,559,328 1,294,169 (1,246,784) (610,706) 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. 82 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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. 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 2022-23, the Self-Insurance Fund provided coverage for up to a maximum of $100,000 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 $1,500,000 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 2022-23, 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 $19,771,275 reported as claims payable in the Self-Insurance Fund at June 30, 2023, 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. 83 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 13 - Risk Management, concluded Changes in the Funds' claims liability amount in fiscal years 2022 and 2023 were: Year Ended June 30, Risk of Loss 2022 Workers' compensation Property and liability Health Dental Beginning of Fiscal Year Balance $ 10,493,303 2,114,853 6,088,219 189,487 $ 18,885,862 Current Year Claims and Changes in Estimates Claim Payments Balance at Fiscal Year End $ 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 Current Year Year Beginning of Claims and Ended Fiscal Year Changes in Claim Fiscal Year Balance Estimates Payments End June 30, Risk of Loss 2023 Workers' compensation Property and liability Health Dental $ 10,544,362 1,772,560 4,418,590 175,618 $ 16,911,130 $ 2,046,987 1,332,130 24,959,337 2,027,950 $ 30,366,404 Balance at $ (1,476,205) $ 11,115,144 (130,240) 2,974,450 (23,870,356) 5,507,571 (2,029,458) 174,110 $ (27,506,259) $ 19,771,275 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, $20,441,299. The General Fund provides funding for various capital projects, $31,322,299, as well as annual subsidies for the Airport and Public Housing Authority, $1,440,251. Bond payments totaling $5,900,000 to General Obligation Bonds Debt Service Fund from Non-Major Governmental Funds for bond repayments. $1,388,800 from Wastewater Enterprise Fund to Water Enterprise Fund for expenses paid that reclaimed water programs benefit from and $1,310,250 from Water Enterprise Fund to Wastewater Enterprise Fund for subsidies from the water fund as a result of a recent cost-of-service study. 84 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 14 - Interfund Transfers, concluded The interfund transfers in and out at June 30, 2023 are as follows: Transfers In: Transfers out: General Obligation Bonds Debt Service Fund Non-Major Governmental Funds General Fund $ $ 38,122,285 $ — 5,900,000 180,689 — — — 95,000 6,175,689 Water Enterprise Fund — 382,115 — 1,310,250 — — 1,692,365 Wastewater Enterprise Fund — 291,645 1,388,800 — — — 1,680,445 Non-Major Enterprise Funds — 145,827 — — — — 145,827 — 29,608 — — — — 29,608 Non-Major Governmental Funds — Internal Service Fund Total Water Enterprise Fund Wastewater Enterprise Fund Non-Major Enterprise Funds $ $ 1,440,251 $ 12,516,429 $ 52,078,965 — Internal Service Fund Total $ 5,900,000 $ 39,152,169 $ 1,388,800 $ 1,310,250 $ 1,440,251 $ 12,611,429 $ 61,802,899 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 $140,599 (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 $ 4,736,432 1,434,427 $ 6,170,859 Interfund advances were made from governmental funds to capital projects funds to cover expenditures in impact fee funds until impact fees are received. $600,000 of the public safety buildings and improvements capital projects fund advances and $100,000 of the public buildings capital projects fund advance will be repaid within one year. 85 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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 $ 1,435,405 Capital projects - public buildings 104,380 Special revenue - community development 466,747 Debt service - special assessment bonds Total general fund 79,507 $ 2,086,039 Interfund balances at June 30, 2023 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, 2023, is: City of Chandler's Share $ 64,751,045 Town of Gilbert's Share 75,878,049 $ 140,629,094 NOTE 17 - Deficit in Fund Balances The police confiscated property special revenue fund had a deficit fund balance of $64,634. The deficit will be covered by future revenues. The general government capital project fund had a deficit fund balance of $1,164,585. The grants capital project fund had a deficit fund balance of $891,911. The public safety building and improvement capital project fund had a deficit of $4,827,972. The deficit in these funds will be covered by future revenues. The public buildings capital projects fund had deficit fund balance of $1,538,682. The funds were financed by advances of interfund loans and will be paid back by future impact fee revenues. The special assessment bonds debt service fund had a deficit fund balance of $79,507. The deficit in this fund will be covered through a transfer to general fund and close out of the fund. 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 2022-23 is $441,303. 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. 86 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 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, 2023, the city abated property taxes totaling $213,867 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 $139,908 of property tax abated. NOTE 19 - Leases As lessor, the city 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 leaserelated inflows, recognized during the fiscal year was $471,132. NOTE 20 - Subscription Based IT Arrangements The city has entered in subscription-based IT agreements (SBITAs) involving electronic agenda management software, budget management software, fleet inventory software, electronic plans review software and accounting and budgeting reporting software. The total of the city's subscriptions assets are recorded at $1,273,887 less accumulated amortization of $327,397. The future subscription payments under the SBITA agreements are as follows: Principal Interest $ 11,619 Total 2024 $ 151,276 $ 162,895 2025 130,221 7,973 138,194 2026 133,359 4,835 138,194 2027 42,173 1,621 43,794 2028 12,395 605 13,000 In addition to the amount presented above, the city had outflows of resources for the fiscal year totaling $200,988 that were not included in the measurement of the subscription liability. 87 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2023 NOTE 21 - Public Private Partnerships (PPP) The city as transferor has entered into a public-private partnership agreement to operate a golf course. The city owns title to the premise and all improvements therein. The city uses its own estimated incremental borrowing rate as the discount rate to measure PPP receivables. The city's estimated incremental borrowing rate is calculated at 2.41%. The city received $26,665 in variable payments not included in the measurement of the receivable that are determined based on the number of rounds of golf. The amount of asset and deferred inflow of resources recognized during the fiscal year for the PPP were $2,736,611. NOTE 22 - Subsequent Events On December 19, 2023, the city issued General Obligation Bonds, Taxable Series 2023 in the amount of $64,955,000, maturing on July 1, 2034 with an average interest rate of 2.65 percent. Proceeds from the bonds will be used for the purpose of acquiring and constructing improvements to parks and recreation facilities, public facilities and buildings, streets, public safety facilities and storm water management systems. On December 19, 2023, the city issued Excise Tax Revenue Bonds, Taxable Series 2023 in the amount of $106,415,000, maturing on July 1, 2038 with an average interest rate of 3.12 percent. Proceeds from the bonds will be used for the purpose of paying costs associated with various capital improvements to the city water and wastewater system, and to pay costs incurred with the issuance of the obligations. 88 REQUIRED SUPPLEMENTARY INFORMATION 89 90 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund For the year ended June 30, 2023 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 8,663,078 175,545,200 3,659,200 88,220,000 196,500 6,718,500 21,623,182 3,413,800 134,700 2,317,000 301,800 Final $ 8,663,078 175,545,200 3,659,200 88,220,000 196,500 6,718,500 21,623,182 3,413,800 134,700 2,317,000 301,800 $ Over Actual (Under) Amounts Final Budget 8,721,596 210,027,766 3,838,738 108,187,240 704,223 8,754,471 26,714,033 4,127,035 253,543 1,502,082 512,446 $ 58,518 34,482,566 179,538 19,967,240 507,723 2,035,971 5,090,851 713,235 118,843 (814,918) 210,646 310,792,960 310,792,960 373,343,173 62,550,213 1,033,622 5,025,617 18,072,547 2,652,397 29,695,115 3,999,187 9,937,242 39,136,744 16,076,808 4,236,416 139,991,809 1,181,168 4,512,002 81,386,182 10,166,749 1,187,055 5,280,652 20,111,549 3,166,258 33,144,198 4,336,488 10,745,564 45,986,494 17,981,727 4,531,692 106,264,759 1,219,546 9,894,033 94,341,066 11,817,154 967,909 4,042,348 15,836,272 2,545,785 30,844,222 4,259,143 9,098,466 45,619,287 15,871,057 4,468,081 58,985,972 1,110,928 5,749,895 87,592,471 11,887,168 219,146 1,238,304 4,275,277 620,473 2,299,976 77,345 1,647,098 367,207 2,110,670 63,611 47,278,787 108,618 4,144,138 6,748,595 (70,014) 367,103,605 370,008,235 298,879,004 71,129,231 REVENUES OVER (UNDER) EXPENDITURES (56,310,645) (59,215,275) 74,464,169 133,679,444 OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out (200,000) 9,114,624 (107,132,641) (200,000) 9,114,624 (105,579,752) 2,963,942 — (52,078,965) 3,163,942 (9,114,624) 53,500,787 Total other financing sources (uses) (98,218,017) (96,665,128) (49,115,023) 47,550,105 Net change in fund balance (154,528,662) (155,880,403) 25,349,146 181,229,549 Fund balance, July 1, 2022 282,038,579 282,038,579 282,038,579 — 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, 2023 $ 127,509,917 See accompanying notes to this schedule. 91 $ 126,158,176 $ 307,387,725 $ 181,229,549 City of Chandler Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System June 30, 2023 2023 City's proportion of the net pension liability (asset) 2022 0.67 % 0.71 % 2021 0.71 % 2020 0.72 % City's proportionate share of the net pension liability (asset) $110,127,657 $ 93,397,278 $122,547,011 $104,541,379 City's covered payroll $ 79,760,571 $ 79,544,042 $ 76,880,601 $ 75,407,689 City's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 138.07 % 117.42 % 159.40 % 138.63 % Plan fiduciary net position as a percentage of the total pension liability 74.26 % 78.58 % 69.33 % 73.24 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 92 2019 0.76 % 2018 0.74 % 2017 2016 0.75 % 0.73 % 2015 0.71 % $ 106,413,043 $ 115,691,952 $ 121,549,835 $ 113,885,153 $ 105,661,552 $ 75,579,140 $ 72,284,183 $ 70,362,938 $ 67,230,465 $ 64,263,236 140.80 % 160.05 % 172.75 % 169.40 % 164.42 % 73.00 % 69.92 % 67.06 % 68.35 % 69.49 % 93 City of Chandler Schedule of Contributions All Pension Plans June 30, 2023 2023 2022 2021 2020 Arizona State Retirement System: Actuarially determined contribution $ 10,615,589 $ 9,580,356 $ 9,267,255 $ 8,844,068 Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) 10,615,589 $ — 9,580,356 $ — 9,267,255 $ — 8,844,068 $ — $ 89,064,154 $ 79,760,571 $ 79,544,042 $ 76,880,601 City's covered payroll Contributions as a percentage of covered payroll 11.92 % 12.01 % 11.65 % 11.50 % Public Safety Personnel Retirement System - Police: Actuarially determined contribution Contributions in relation to the 1 actuarially determined contribution Contribution deficiency (excess) $ 28,044,847 $ 22,596,733 $ 19,026,392 $ 15,572,686 47,644,130 $ (19,599,283) 28,025,675 $ (5,428,942) 22,619,456 $ (3,593,064) 28,715,343 $ (13,142,657) City's covered payroll Contributions as a percentage of covered payroll $ 30,351,106 $ 27,383,139 $ 26,480,082 $ 28,589,014 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 156.98 % 102.35 % 85.42 % 100.44 % $ 15,211,791 $ 13,299,020 $ 10,427,865 $ 8,004,060 24,395,278 $ (9,183,487) 14,992,742 $ (1,693,722) 13,054,192 $ (2,626,327) 15,566,324 $ (7,562,264) $ 20,259,508 $ 18,946,241 $ 18,187,540 $ 19,154,805 120.41 % 79.13 % 71.78 % 81.27 % 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 2019 2018 2017 2016 2015 $ 8,470,741 $ 8,268,029 $ 7,793,041 $ 7,634,805 $ 7,323,872 8,470,741 $ — 8,268,029 $ — 7,793,041 $ — 7,634,805 $ — 7,323,872 $ — $ 75,407,689 $ 75,579,140 $ 72,284,183 $ 70,362,938 $ 67,230,465 11.23 % 10.94 % 10.78 % 10.85 % 10.89 % $ 12,267,559 $ 10,950,501 $ 8,470,411 $ 8,561,143 $ 6,083,333 15,398,196 $ (3,130,637) 14,300,501 $ (3,350,000) 10,145,411 $ (1,675,000) 8,561,143 $ — 6,083,333 $ — $ 28,848,732 $ 28,294,661 $ 27,058,086 $ 27,946,237 $ 26,187,641 53.38 % 50.54 % 37.49 % $ 7,021,133 $ 6,392,313 $ 4,616,587 8,670,333 $ (1,649,200) 8,042,313 $ (1,650,000) $ $ 19,025,780 $ 18,200,175 $ 17,275,940 45.57 % 44.19 % 5,441,587 (825,000) 30.63 % $ 4,438,495 $ 4,438,495 — $ 16,874,362 31.50 % 26.30 % 95 23.23 % $ 3,193,139 $ 3,193,139 — $ 15,671,133 20.38 % City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Police June 30, 2023 2023 2022 2021 2020 Total pension liability Service cost $ Interest Changes of benefit terms 5,687,800 $ 5,440,836 $ 5,696,125 $ 6,149,336 23,623,567 22,385,115 20,504,731 19,203,025 — — — — Differences between expected and actual experience 4,884,171 3,894,134 12,866,840 1,302,509 Changes of assumptions 3,565,456 — — 6,562,499 Benefit payments, including refunds (16,390,013) (13,613,884) (12,493,545) (10,261,998) Net change in total pension liability 21,370,981 18,106,201 26,574,151 22,955,371 Total pension liability - beginning Total pension liability - ending 326,117,720 308,011,519 281,437,368 258,481,997 $ 347,488,701 $ 326,117,720 $ 308,011,519 $ 281,437,368 $ $ $ $ Plan fiduciary net position Contributions - employer 28,044,847 22,596,733 28,799,919 15,572,686 Contributions - employee 2,844,468 2,424,870 2,909,915 2,206,379 Net investment income (10,549,363) 53,483,321 2,344,516 8,365,394 Benefit payments, including refunds (16,390,013) (13,613,884) (12,493,545) (10,261,998) (190,200) (250,715) (191,143) (146,042) 5,998 2,439 (2,317) (102,911) 3,765,737 64,642,764 21,367,345 15,633,508 Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position - beginning 244,422,363 179,779,599 158,412,254 142,778,746 Plan fiduciary net position - ending $ 248,188,100 $ 244,422,363 $ 179,779,599 $ 158,412,254 Net pension liability - ending $ $ $ 128,231,920 $ 123,025,114 Plan fiduciary net position as a percentage of the total pension liability Covered payroll Net pension liability as a percentage of covered payroll 99,300,601 71.42 % $ 25,840,552 384.28 % 81,695,357 74.95 % $ 26,480,082 308.52 % 58.37 % $ 28,859,014 444.34 % 56.29 % $ 28,848,732 426.45 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 96 2019 $ 2018 5,737,868 $ 6,092,332 2017 $ 5,337,103 2016 $ 2015 4,583,770 $ 4,602,603 17,999,842 17,064,596 14,964,498 13,839,509 11,841,118 — 1,501,042 17,456,919 — 1,741,535 (671,252) (6,211,672) 858,761 4,879,849 567,380 — 6,528,203 8,537,784 — 13,082,165 (9,913,263) (8,254,947) (13,015,625) (5,681,836) (7,054,499) 13,153,195 16,719,554 34,139,440 17,621,292 24,780,302 245,328,802 228,609,248 194,469,808 176,848,516 152,068,214 $ 258,481,997 $ 245,328,802 $ 228,609,248 $ 194,469,808 $ 176,848,516 $ $ $ $ $ 10,296,409 10,247,877 8,728,082 6,155,142 5,465,059 2,765,932 3,244,412 3,633,359 3,308,265 2,675,724 9,301,979 14,017,325 677,501 3,873,466 12,329,319 (9,913,263) (8,254,947) (13,015,625) (5,681,836) (7,054,499) (142,274) (124,430) (97,889) (94,891) — 24,215 (167,280) 238,667 (70,777) (2,733,237) 12,332,998 18,962,957 164,095 7,489,369 10,682,366 130,445,748 111,482,791 111,318,696 103,829,327 93,146,961 $ 142,778,746 $ 130,445,748 $ 111,482,791 $ 111,318,696 $ 103,829,327 $ 115,703,251 $ 114,883,054 $ 117,126,457 $ $ 55.24 % $ 28,294,661 408.92 % 53.17 % $ 27,058,086 424.58 % 48.77 % $ 27,946,237 83,151,112 57.24 % $ 419.11 % 26,187,641 317.52 % 97 73,019,189 58.71 % $ 24,290,497 300.61 % City of Chandler Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System - Fire June 30, 2023 2023 2022 2021 2020 Total pension liability Service cost $ Interest Changes of benefit terms Differences between expected and actual experience 4,265,733 $ 3,923,796 $ 4,025,473 $ 4,353,346 14,270,752 13,243,975 12,453,112 11,689,082 — — — — 397,039 4,097,391 1,086,650 (171,678) — 3,122,509 Changes of assumptions 1,375,658 Benefit payments, including refunds (8,101,828) (6,981,473) (6,278,162) (5,792,594) Net change in total pension liability 12,207,354 14,283,689 11,287,073 13,200,665 Total pension liability - beginning Total pension liability - ending 195,274,939 180,991,250 169,704,177 156,503,512 $ 207,482,293 $ 195,274,939 $ 180,991,250 $ 169,704,177 $ $ $ $ Plan fiduciary net position Contributions - employer 15,211,791 13,299,020 15,654,338 8,004,060 Contributions - employee 1,610,854 1,778,804 1,432,043 1,462,348 Net investment income (6,745,327) 34,335,848 1,488,011 5,389,738 Benefit payments, including refunds (8,101,828) (6,981,473) (6,278,162) (5,792,594) (121,595) (160,215) (121,320) (94,355) — 4,795 5 (42,251) Net change in plan fiduciary net position 1,853,895 42,276,779 12,174,915 8,926,946 Plan fiduciary net position - beginning 157,827,084 115,550,305 103,375,390 94,448,444 Plan fiduciary net position - ending $ 159,680,979 $ 157,827,084 $ 115,550,305 $ 103,375,390 Net pension liability - ending $ $ $ $ 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 47,801,314 76.96 % $ 20,259,508 235.95 % 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 % Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 98 2019 $ 2018 4,014,526 $ 3,863,571 2017 $ 3,174,665 2016 $ 2015 2,915,603 $ 2,949,507 10,794,299 9,983,423 8,707,808 8,264,915 7,191,487 — 753,382 10,272,193 — 930,663 1,014,752 941,823 96,063 (1,037,307) (409,426) — 2,845,297 4,937,927 — 6,465,545 (6,363,418) (5,049,317) (5,647,270) (3,614,319) (3,258,846) 9,460,159 13,338,179 21,541,386 6,528,892 13,868,930 147,043,353 133,705,174 112,163,788 105,634,896 91,765,966 $ 156,503,512 $ 147,043,353 $ 133,705,174 $ 112,163,788 $ 105,634,896 $ $ $ $ $ 5,956,704 5,514,825 4,672,177 3,152,694 2,312,753 2,140,037 1,837,291 1,775,319 6,174,093 9,228,731 440,223 2,568,880 8,217,832 (6,363,418) (5,049,317) (5,647,270) (3,614,319) (3,258,846) (94,669) (82,059) (63,746) (63,063) — 1,035 50,502 38,948 (55,142) (1,798,718) 7,307,488 11,975,435 1,580,369 3,895,938 8,088,281 87,140,956 75,165,521 73,585,152 69,689,214 61,600,933 73,585,152 69,689,214 $ 94,448,444 $ 87,140,956 $ 75,165,521 $ 62,055,068 $ 59,902,397 $ 58,539,653 60.35 % $ 3,222,291 1,633,743 18,200,175 340.96 % 59.26 % $ 17,275,940 346.74 % $ 38,578,636 56.22 % $ 16,874,362 $ 65.61 % $ 15,671,133 346.91 % 246.18 % 99 35,945,682 65.97 % $ 15,691,213 229.08 % City of Chandler Schedule of Changes in OPEB Liabilities and Related Ratios Single Employer Plan June 30, 2023 2023 2022 2021 6/30/2021 6/30/2020 $ 81,921,795 $ 63,003,983 $ 53,112,727 Service cost 4,846,361 3,414,033 2,940,955 Interest 1,844,376 1,440,322 1,921,296 (2,181,125) — (12,824,888) 18,748,388 7,368,121 (2,775,602) (8,909,753) (2,503,806) 18,917,812 (2,339,116) 9,891,256 Total OPEB liability - end of year $ 73,012,042 $ 81,921,795 $ 63,003,983 Total covered employee payroll $142,472,650 $130,254,557 $116,931,839 Measurement date 6/30/2022 Total OPEB liability - beginning of year Changes for the year Differences between expected and actual experience Changes in assumptions or other inputs Benefit payments Net changes Total OPEB liability as percentage of covered employee payroll 51.25 % 62.89 % 53.88 % 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 2020 2019 2018 6/30/2019 6/30/2018 6/30/2017 $ 51,751,856 $ 52,838,811 $ 66,519,700 2,585,397 3,020,484 3,962,284 2,059,914 1,939,376 1,967,447 (5,086,575) (883,708) (8,539,064) 4,021,143 (1,789,527) (8,174,073) (2,219,008) 1,360,871 (3,373,580) (1,086,955) (2,897,483) (13,680,889) $ 53,112,727 $ 51,751,856 $ 52,838,811 $113,713,741 $108,862,317 $106,207,139 46.71 % 47.54 % 49.75 % 101 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2023 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. General Fund Statement of Revenues, Expenditures and Changes in Fund Balances- Net change in fund balance $ Reserved encumbrances at June 30, 2023 recognized as budgetary expenditures in fiscal year ended June 30, 2023 Budgetary Comparison Schedule - Net change in fund balance 33,894,742 (8,545,596) $ 25,349,146 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, 2021 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, 2021 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, 2022 valuation for PSPRS were based on the results of an actuarial experience study for the period ending June 30, 2022. 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, 2022 reflects changes of benefit terms and actuarial assumptions for funding assumed future permanent benefit increases. 102 CITY OF CHANDLER, ARIZONA Notes to the Required Supplementary Information June 30, 2023 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, 2022 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. 103 104 OTHER FINANCIAL STATEMENTS 105 106 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, 2023 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Property taxes $ 32,415,726 $ 32,415,726 $ 32,683,380 $ 267,654 Interest revenue 138,000 138,000 210,754 72,754 Total revenues 32,553,726 32,553,726 32,894,134 340,408 350,000 350,000 — (350,000) Principal 34,108,034 34,108,034 34,108,034 — Interest and fiscal charges 6,548,393 6,548,393 6,548,391 (2) Total expenditures 41,006,427 41,006,427 40,656,425 (350,002) (8,452,701) (8,452,701) (7,762,291) 690,410 Transfers in 6,500,000 6,500,000 5,900,000 (600,000) Total other financing sources (uses) 6,500,000 6,500,000 5,900,000 (600,000) Net change in fund balance (1,952,701) (1,952,701) (1,862,291) 90,410 Fund balance, July 1, 2022 4,290,154 4,290,154 4,290,154 — EXPENDITURES: General government Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2023 $ 2,337,453 107 $ 2,337,453 $ 2,427,863 $ 90,410 City of Chandler Non-Major Governmental Funds NON-MAJOR SPECIAL REVENUE FUNDS A Special Revenue Fund is used to finance particular activities and is created out of receipts of specific taxes or other earmarked revenues. Such funds are authorized by statutory or charter provisions to pay for certain activities with some special form of continuing revenues. Highway User Used to account for the receipt and expenditure of the city’s allocation of state highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets and repayment of transportation-related debt. Local Transportation Assistance Used to account for the receipt and expenditure of the city’s allocation of state lottery monies. State law restricts the use of these monies to street and highway projects in the public right-of-way and to mass transportation purposes. Grants Used to account for the receipt and expenditure of miscellaneous federal, state and local grants awarded to the city for various specific operational purposes. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Police Confiscated Property Used to account for monies confiscated by the Police Department and monies received from the sale of confiscated property. Parks and Recreation Used to account for donations for park improvements and programs restricted pursuant to donor covenants. Museum Used to account for donations for museum improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. 108 City of Chandler Non-Major Governmental Funds NON-MAJOR DEBT SERVICE FUNDS Special Assessment Bonds Accumulates monies for the payment of principal and interest on Special Assessment Bonds that were issued to finance costs of improvements applicable to benefiting properties within certain improvement districts. NON-MAJOR CAPITAL PROJECTS FUNDS General Government Used to account for the acquisition, construction and improvements of general government projects. Public Buildings Used to account for 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. 109 110 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2023 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation ASSETS Equity in pooled cash and investments $ 43,093,720 $ 5,709,536 $31,233,161 $ — $ 119,290 $ 314,902 Receivables (net of allowance for uncollectible): Accounts — — — — — Notes — — — 288,606 — — 146,694 19,696 116,460 — 418 1,067 2,114,607 — 45,740 564,181 — — $31,395,361 $ 852,787 $ 119,708 $ 1,252 $ 18,847 $ Accrued interest Due from other governments Total assets $ 45,355,021 $ 5,729,232 $ $ — 315,969 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 57,833 $ 8,181,654 176,451 — 58,643 Trust liabilities and deposits — — Due to other funds — — Unearned revenue — Accrued payroll Total liabilities 533,992 $ — 32,433 — — — — 165,495 — — 466,747 — — — 12,820,286 — — — 710,443 57,833 21,060,583 500,432 184,342 — 44,644,578 5,671,399 10,334,778 352,355 — 315,969 — — — — (64,634) — 44,644,578 5,671,399 10,334,778 352,355 (64,634) 315,969 5,729,232 $31,395,361 $ 852,787 Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 45,355,021 $ $ 119,708 $ 315,969 (Continued) 111 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2023 Special Revenue Museum Debt Service Special Library Capital Projects Assessment General Public Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ 34,500 $ 84,504 $ — $ 2,116,262 $ — $ — Receivables (net of allowance for uncollectible): Accounts — — — 165,884 — — Notes — — — — — — 121 315 — — 125 — — — — 497,042 — 2,753,527 — $ 2,779,188 $ 125 $ 2,753,527 $ Accrued interest Due from other governments Total assets $ 34,621 $ 84,819 $ — $ 1,461 $ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable — $ 3,943,773 — $ 2,210,033 Accrued payroll $ — — — — — — Trust liabilities and deposits — — — — — — Due to other funds — — 79,507 — 104,380 1,435,405 Advances from other funds — — — — 1,434,427 — Unearned revenue — — — — — — — 1,461 79,507 3,943,773 1,538,807 3,645,438 34,621 83,358 — — — — — — (79,507) (1,164,585) (1,538,682) (891,911) 34,621 83,358 (79,507) (1,164,585) (1,538,682) (891,911) — $ 2,779,188 125 $ 2,753,527 Total liabilities Fund balances (deficits): Restricted Unassigned Total fund balances (deficits) Total liabilities, deferred inflows and fund balances $ 34,621 $ 84,819 112 $ $ Capital Projects Streets $ 60,981,779 $ Public Safety Vehicle and Community Buildings and Capital Equipment Technology Municipal Governmental Services Improvements Replacement Replacement Arts Funds 31,178,515 $ 724,007 $ Total Other 12,902,990 $ 9,861,251 $ $ 199,244,385 — — — — — — 165,884 — — — — — — 288,606 300,568 133,032 56,484 43,452 34,031 3,015 855,478 — — — — — — 5,975,097 $ 61,282,347 $ 31,311,547 $ 780,491 $ 12,946,442 $ 9,895,282 $ $ 1,314,257 $ 167,433 $ 872,031 $ 273,497 $ 686,594 $ $ 889,968 892,983 $ 206,529,450 — $ 18,262,657 — — — — — — 267,527 5 — — — — — 165,500 — — — — — — 2,086,039 — — 4,736,432 — — — 6,170,859 — — — — — — 12,820,286 1,314,262 167,433 5,608,463 273,497 686,594 — 39,772,868 59,968,085 31,144,114 — 12,672,945 9,208,688 892,983 175,323,873 — — (4,827,972) — — — (8,567,291) 59,968,085 31,144,114 (4,827,972) 12,672,945 9,208,688 892,983 166,756,582 61,282,347 $ 31,311,547 $ 780,491 $ 12,946,442 $ 9,895,282 $ 892,983 $ 206,529,450 (Concluded) 113 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2023 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation REVENUES: Highway user taxes $ 20,835,558 $ — $ — $ — $ — $ — Regional transportation taxes — — — — — — Grants and entitlements — 702,551 20,401,418 2,658,809 — 60,166 System development fees — — — — — — Special assessments — — — — — — Charges for services — 157,655 — — — — Fines and forfeitures — — — — 293,497 — Contributions — — — — — — 216,533 39,775 532,681 3 — 3,187 Interest revenue Miscellaneous Total revenues 116,862 — — — — — 21,168,953 899,981 20,934,099 2,658,812 293,497 63,353 — — 13,823,106 2,671,139 — — — EXPENDITURES: Current: General government Public safety — — 5,533,615 — 273,699 8,387,864 596,254 1,833,788 — — — — — 1,096,403 — — 56,848 6,223,334 128,203 309,630 163,617 15,038 — Principal — — — — — — Interest and fiscal charges — — — — — — 14,611,198 724,457 22,596,542 2,834,756 288,737 56,848 6,557,755 175,524 (1,662,443) (175,944) 4,760 6,505 Proceeds from disposal of capital assets — — — 5,655 — — Transfers in — — — — — — (271,477) (4,212) — — — — Total other financing sources (uses) (271,477) (4,212) — 5,655 — — NET CHANGE IN FUND BALANCE 6,286,278 171,312 (1,662,443) (170,289) 4,760 6,505 5,500,087 11,997,221 522,644 (69,394) 309,464 5,671,399 $10,334,778 $ 352,355 (64,634) $ 315,969 Transportation and development Community services Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers out FUND BALANCES (DEFICITS): Beginning of year End of year 38,358,300 $ 44,644,578 $ 114 $ Special Revenue Debt Service Capital Projects Special Museum $ Library — $ $ General Public Bonds Government Buildings — $ — — — — — 4,131 67,100 — — — — — — — — — $ Community Grants — $ Streets — $ Services — $ 201,799 — — — — — 14,225,927 — — — 188,690 — 6,998,800 442,674 565,411 — — — — — — — — 18,993 — — — — — — — — — — — — 1,040,240 — — — — 844 725 (1) 1 11,747 3 1,284,853 668,600 — — — — 379,911 — — — — 4,975 67,825 565,410 1,420,152 200,437 14,244,923 8,485,452 1,111,274 — — — 1,958,547 8,870 34,498 9,249 16,760 — — — 499,459 — — — — — — — 2,648,525 — 1,659,658 583,044 — 18,535 60,028 — 1,004,555 — 21,494 105,787 1,271,717 — — — 27,234,343 — 14,258,958 16,881,067 3,472,614 — — 635,000 — — — — — — — 12,700 — — — — — 18,535 60,028 647,700 33,345,429 8,870 15,974,608 17,579,147 4,761,091 (13,560) 7,797 (82,290) (31,925,277) 191,567 (1,729,685) (9,093,695) (3,649,817) — — — — — — — — — — — 31,322,299 — — — — — — — — — — (3,900,000) (2,000,000) — — — 31,322,299 — — (3,900,000) (2,000,000) (13,560) 7,797 (82,290) (602,978) 191,567 (1,729,685) (12,993,695) (5,649,817) 2,783 (561,607) (1,730,249) 837,774 72,961,780 (79,507) $ (1,164,585) $ (1,538,682) $ (891,911) $ 59,968,085 48,181 $ — Assessment 34,621 75,561 $ 83,358 $ 36,793,931 $ 31,144,114 (Continued) 115 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2023 Capital Projects Public Safety Vehicle and Buildings and Capital Equipment Technology Municipal Governmental Total Other Improvements Replacement Replacement Arts Funds REVENUES: Highway user taxes $ — $ — $ — $ — $ 20,835,558 Regional transportation taxes — — — — 201,799 Grants and entitlements — — — 10,000 38,130,102 System development fees 605,172 — — — 8,235,336 Special assessments — — — — 565,411 Charges for services — — — 234,357 411,005 Fines and forfeitures — — — — 293,497 Contributions — — — — 1,040,240 254,512 93,338 40,197 4,568 3,151,566 Interest revenue Miscellaneous — 38,153 — — 534,926 859,684 131,491 40,197 248,925 73,399,440 General government 18,498 104,907 1,194,294 — 19,839,868 Public safety 198,005 — — — 6,504,778 — — — — 15,709,133 Total revenues EXPENDITURES: Current: Transportation and development Community services — — — 75,507 3,710,874 7,370,858 1,936,944 1,851,227 31,165 79,876,998 Principal — — — — 635,000 Interest and fiscal charges — — — — 12,700 7,587,361 2,041,851 3,045,521 106,672 126,289,351 (6,727,677) (1,910,360) (3,005,324) 142,253 (52,889,911) Capital outlay Debt service: Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets — 259,770 — — 265,425 Transfers in — 3,216,417 4,613,453 — 39,152,169 Transfers out — — — — (6,175,689) — 3,476,187 4,613,453 — 33,241,905 (6,727,677) 1,565,827 1,608,129 142,253 (19,648,006) 1,899,705 11,107,118 (4,827,972) $ 12,672,945 Total other financing sources (uses) NET CHANGE IN FUND BALANCE FUND BALANCES (DEFICITS): Beginning of year End of year $ 7,600,559 $ 9,208,688 750,730 $ 892,983 186,404,588 $ 166,756,582 (Concluded) 116 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Highway user taxes $ Interest revenue 17,744,011 17,744,011 $ 20,835,558 $ 3,091,547 363,000 216,527 (146,473) — — 116,862 116,862 18,107,011 18,107,011 21,168,947 3,061,936 Miscellaneous Total revenues $ 363,000 EXPENDITURES: General government 1,733,800 556,885 — 556,885 Transportation and development 13,298,696 10,206,720 9,112,826 1,093,894 Capital outlay 14,294,186 15,748,479 14,047,325 1,701,154 Total expenditures 29,326,682 26,512,084 23,160,151 3,351,933 (11,219,671) (8,405,073) (1,991,204) 6,413,869 Transfers out (293,559) (293,559) (271,477) 22,082 Total other financing sources (uses) (293,559) (293,559) (271,477) 22,082 Net change in fund balance (11,513,230) (8,698,632) (2,262,681) 6,435,951 Fund balance, July 1, 2022 38,358,300 38,358,300 38,358,300 — Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2023 $ 26,845,070 117 $ 29,659,668 $ 36,095,619 $ 6,435,951 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 673,600 $ 673,600 $ 702,551 $ 28,951 Charges for services 159,600 159,600 157,655 (1,945) Interest revenue 55,000 55,000 39,774 (15,226) 888,200 888,200 899,980 11,780 Total revenues EXPENDITURES: General government 59,300 300 — 300 2,100,330 1,311,678 667,870 643,808 172,000 816,702 158,495 658,207 2,331,630 2,128,680 826,365 1,302,315 (1,443,430) (1,240,480) 73,615 1,314,095 (4,212) (4,212) (4,212) — (4,212) (4,212) (4,212) — Net change in fund balance (1,447,642) (1,244,692) 69,403 1,314,095 Fund balance, July 1, 2022 5,500,087 5,500,087 5,500,087 — 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, 2023 $ 4,052,445 118 $ 4,255,395 $ 5,569,490 $ 1,314,095 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Grants Special Revenue For the year ended June 30, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 59,484,522 20,401,418 $ (39,083,104) — — 532,676 532,676 59,484,522 59,484,522 20,934,094 (38,550,428) 89,686,451 61,115,550 14,982,341 46,133,209 240,651 12,839,569 5,767,589 7,071,980 — 3,550,086 2,898,409 651,677 174,750 2,238,201 1,116,418 1,121,783 — 615,042 827,157 (212,115) 90,101,852 80,358,448 25,591,914 54,766,534 Excess (deficiency) of revenues over expenditures (30,617,330) (20,873,926) (4,657,820) 16,216,106 Net change in fund balance (30,617,330) (20,873,926) (4,657,820) 16,216,106 Fund balance, July 1, 2022 11,997,221 11,997,221 11,997,221 — (8,876,705) $ 7,339,401 Interest revenue Total revenues $ 59,484,522 $ EXPENDITURES: General government Public safety Transportation and development Community services Capital outlay Total expenditures Fund balance (deficit), June 30, 2023 $ (18,620,109) $ 119 $ 16,216,106 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Total revenues 10,260,000 $ 10,260,000 $ 2,658,809 $ (7,601,191) 10,260,000 10,260,000 2,658,809 (7,601,191) 10,260,000 10,287,950 3,133,512 7,154,438 — — 163,617 (163,617) 10,260,000 10,287,950 3,297,129 6,990,821 — (27,950) (638,320) (610,370) Proceeds from disposal of capital assets — — 5,655 5,655 Total other financing sources (uses) — — 5,655 5,655 — (27,950) (632,665) (604,715) 522,644 522,644 522,644 — EXPENDITURES: General government Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance, July 1, 2022 Fund balance (deficit), June 30, 2023 $ 522,644 120 $ 494,694 $ (110,021) $ (604,715) 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Fines and forfeitures $ 750,000 Total revenues $ 750,000 $ 293,497 $ (456,503) 750,000 750,000 293,497 (456,503) General government 22,000 — — — Public safety 645,000 681,949 316,642 365,307 Capital outlay 105,000 105,000 15,038 89,962 Total expenditures 772,000 786,949 331,680 455,269 Net change in fund balance (22,000) (36,949) (38,183) (1,234) Fund balance (deficit), July 1, 2022 (69,394) (69,394) (69,394) — (91,394) $ (106,343) $ (107,577) $ EXPENDITURES: Fund balance (deficit), June 30, 2023 $ 121 (1,234) 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ 80,900 Interest revenue $ 80,900 $ 60,166 $ (20,734) 3,000 3,000 3,189 189 83,900 83,900 63,355 (20,545) General government 3,300 — — — Community services 146,938 147,179 56,848 90,331 Total expenditures 150,238 147,179 56,848 90,331 Net change in fund balance (66,338) (63,279) 6,507 69,786 Fund balance, July 1, 2022 309,464 309,464 309,464 — Total revenues EXPENDITURES: Fund balance, June 30, 2023 $ 243,126 122 $ 246,185 $ 315,971 $ 69,786 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Museum Special Revenue For the year ended June 30, 2023 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue — $ — $ 4,131 $ 4,131 1,000 1,000 845 (155) 1,000 1,000 4,976 3,976 General government 3,100 — — — Community services 29,710 37,188 18,535 18,653 Total expenditures 32,810 37,188 18,535 18,653 Net change in fund balance (31,810) (36,188) (13,559) 22,629 Fund balance, July 1, 2022 48,181 48,181 48,181 — Total revenues EXPENDITURES: Fund balance, June 30, 2023 $ 123 16,371 $ 11,993 $ 34,622 $ 22,629 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Special Revenue For the year ended June 30, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Grants and entitlements $ Interest revenue Total revenues 80,000 $ 80,000 $ 67,100 $ (12,900) 1,000 1,000 724 (276) 81,000 81,000 67,824 (13,176) EXPENDITURES: General government 1,000 1,000 — 1,000 Community services 80,000 80,000 60,028 19,972 Total expenditures 81,000 81,000 60,028 20,972 — — 7,796 7,796 75,561 75,561 75,561 — Net change in fund balance Fund balance, July 1, 2022 Fund balance, June 30, 2023 $ 124 75,561 $ 75,561 $ 83,357 $ 7,796 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Assessment Bond For the year ended June 30, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Special assessments $ Total revenues — $ — $ 565,411 $ 565,411 — — 565,411 565,411 Principal — — 635,000 (635,000) Interest and fiscal charges — — 12,700 (12,700) Total expenditures — — 647,700 (647,700) — — (82,289) (82,289) 2,783 2,783 2,783 — EXPENDITURES: Net change in fund balance Fund balance, July 1, 2022 Fund balance, June 30, 2023 $ 125 2,783 $ 2,783 $ (79,506) $ (82,289) 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Miscellaneous $ — $ — $ 379,911 $ 379,911 Interest Revenue — — 1 1 Total revenues — — 379,912 379,912 General government 25,179,412 16,649,370 3,728,050 12,921,320 Public safety 6,078,560 2,100,539 1,122,344 978,195 Transportation and development 17,083,277 5,950,767 3,508,830 2,441,937 Community services 5,119,265 2,507,123 1,608,107 899,016 Capital outlay 26,925,296 70,419,488 41,792,619 28,626,869 Total expenditures 80,385,810 97,627,287 51,759,950 45,867,337 (80,385,810) (97,627,287) (51,380,038) 46,247,249 — — 1,040,240 1,040,240 Transfers in 80,385,810 80,375,810 31,322,299 (49,053,511) Total other financing sources (uses) 80,385,810 80,375,810 32,362,539 (48,013,271) — (17,251,477) (19,017,499) (1,766,022) (561,607) (561,607) (561,607) — EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Capital contributions Net change in fund balance Fund balance, July 1, 2022 Fund balance (deficit), June 30, 2023 $ 126 (561,607) $ (17,813,084) $ (19,579,106) $ (1,766,022) 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 277,000 Interest revenue $ 277,000 $ 188,690 $ (88,310) 3,300 3,300 11,747 8,447 280,300 280,300 200,437 (79,863) General government 12,500 13,487 13,186 301 Total expenditures 12,500 13,487 13,186 301 267,800 266,813 187,251 (79,562) Transfers out (350,000) (350,000) — 350,000 Total other financing sources (uses) (350,000) (350,000) — 350,000 (82,200) (83,187) 187,251 270,438 (1,730,249) (1,730,249) (1,730,249) — (1,812,449) $ (1,813,436) $ (1,542,998) $ Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Net change in fund balance Fund balance (deficit), July 1, 2022 Fund balance (deficit), June 30, 2023 $ 127 270,438 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Grants Capital Projects For the year ended June 30, 2023 Non-GAAP Budgeted Amounts Over Actual (Under) Original Final Amounts Final Budget REVENUES: Grants and entitlements $ 47,116,975 $ 47,116,975 $ 14,225,927 $ (32,891,048) Charges for services 310,500 310,500 18,993 (291,507) Total revenues 47,427,475 47,427,475 14,244,920 (33,182,555) General government 6,261,140 16,280,798 160,809 16,119,989 Transportation and development 32,717,400 11,411,445 5,517,290 21,856,430 Community services 2,540,377 137,000 63,163 73,837 Capital outlay 38,067,527 52,702,886 22,829,546 29,873,340 Total expenditures 79,586,444 80,532,129 28,570,808 67,923,596 (32,158,969) (33,104,654) (14,325,888) 34,741,041 Transfers out — (120,000) — 120,000 Total other financing sources (uses) — (120,000) — 120,000 Net change in fund balance (32,158,969) (33,224,654) (14,325,888) 34,861,041 Fund balance, July 1, 2022 837,774 837,774 837,774 — EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2023 $ (31,321,195) $ (32,386,880) $ (13,488,114) $ 34,861,041 128 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Streets Capital Projects For the year ended June 30, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Regional transportation taxes $ 302,000 System development fees Interest revenue Total revenues $ 302,000 $ 201,799 $ (100,201) 6,000,000 6,000,000 6,998,800 998,800 906,000 906,000 1,284,851 378,851 7,208,000 7,208,000 8,485,450 1,277,450 EXPENDITURES: General government 11,400 542,356 13,750 528,606 46,292,872 10,309,581 976,924 9,332,657 685,000 685,000 160,845 524,155 Capital outlay 24,801,148 59,362,862 31,247,184 28,115,678 Total expenditures 71,790,420 70,899,799 32,398,703 38,501,096 (64,582,420) (63,691,799) (23,913,253) 39,778,546 Transfers in 2,111,150 2,111,150 — (2,111,150) Transfers out (6,611,150) (6,611,150) (3,900,000) 2,711,150 Total other financing sources (uses) (4,500,000) (4,500,000) (3,900,000) 600,000 Net change in fund balance (69,082,420) (68,191,799) (27,813,253) 40,378,546 Fund balance, July 1, 2022 72,961,780 72,961,780 72,961,780 — 4,769,981 $ 45,148,527 $ 40,378,546 Transportation and development Community services Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2023 $ 129 3,879,360 $ 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, 2023 Budgeted Amounts Original Final Non-GAAP Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 2,994,000 Interest revenue $ 2,994,000 $ 442,674 $ (2,551,326) 430,000 430,000 668,599 238,599 3,424,000 3,424,000 1,111,273 (2,312,727) General government 1,779,980 2,345,879 24,913 2,320,966 Community services 13,087,614 2,868,234 1,746,681 1,121,553 Capital outlay 21,766,315 29,765,792 27,406,653 2,359,139 Total expenditures 36,633,909 34,979,905 29,178,247 5,801,658 (33,209,909) (31,555,905) (28,066,974) 3,488,931 Transfers out (2,000,000) (2,000,000) (2,000,000) — Total other financing sources (uses) (2,000,000) (2,000,000) (2,000,000) — Net change in fund balance (35,209,909) (33,555,905) (30,066,974) 3,488,931 Fund balance, July 1, 2022 36,793,931 36,793,931 36,793,931 — Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2023 $ 130 1,584,022 $ 3,238,026 $ 6,726,957 $ 3,488,931 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: System development fees $ 865,000 Interest revenue $ 865,000 $ 605,172 $ (259,828) 85,000 85,000 254,512 169,512 950,000 950,000 859,684 (90,316) 171,400 176,100 27,500 148,600 Public safety 8,420,696 2,026,844 569,210 1,457,634 Capital outlay 3,540,000 9,512,197 10,701,596 (1,189,399) Total expenditures 12,132,096 11,715,141 11,298,306 416,835 (11,182,096) (10,765,141) (10,438,622) 326,519 Transfers out (900,000) (900,000) — 900,000 Total other financing sources (uses) (900,000) (900,000) — 900,000 Net change in fund balance (12,082,096) (11,665,141) (10,438,622) 1,226,519 Fund balance, July 1, 2022 1,899,705 1,899,705 1,899,705 — $ (10,182,391) $ (9,765,436) $ (8,538,917) $ Total revenues EXPENDITURES: General government Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance (deficit), June 30, 2023 131 1,226,519 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 130,000 Miscellaneous $ 130,000 $ 93,339 $ (36,661) — — 38,153 38,153 130,000 130,000 131,492 1,492 General government 3,199,060 790,930 104,907 686,023 Capital outlay 2,775,264 4,743,431 3,862,287 881,144 Total expenditures 5,974,324 5,534,361 3,967,194 1,567,167 (5,844,324) (5,404,361) (3,835,702) 1,568,659 Total revenues EXPENDITURES: Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets 300,000 300,000 259,770 (40,230) Transfers in 3,216,447 3,216,447 3,216,417 (30) Total other financing sources (uses) 3,516,447 3,516,447 3,476,187 (40,260) Net change in fund balance (2,327,877) (1,887,914) (359,515) 1,528,399 Fund balance, July 1, 2022 11,107,118 11,107,118 11,107,118 — 9,219,204 $ 10,747,603 Fund balance, June 30, 2023 $ 132 8,779,241 $ $ 1,528,399 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Interest revenue $ 90,000 Total revenues $ 90,000 $ 40,197 $ (49,803) 90,000 90,000 40,197 (49,803) 3,434,135 3,123,819 1,237,706 1,886,113 917,654 2,709,251 2,599,759 109,492 4,351,789 5,833,070 3,837,465 1,995,605 (4,261,789) (5,743,070) (3,797,268) 1,945,802 Transfers in 4,238,966 4,238,966 4,613,453 374,487 Total other financing sources (uses) 4,238,966 4,238,966 4,613,453 374,487 Net change in fund balance (22,823) (1,504,104) 816,185 2,320,289 Fund balance, July 1, 2022 7,600,559 7,600,559 7,600,559 — EXPENDITURES: General government Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Fund balance, June 30, 2023 $ 133 7,577,736 $ 6,096,455 $ 8,416,744 $ 2,320,289 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, 2023 Non-GAAP Budgeted Amounts Original Final Over Actual (Under) Amounts Final Budget REVENUES: Charges for services $ Interest revenue 359,000 $ 359,000 $ 234,357 $ (124,643) 8,200 8,200 4,568 (3,632) 367,200 367,200 238,925 (128,275) General government 20,000 — — — Community services 380,000 385,000 76,007 308,993 — — 62,330 (62,330) 400,000 385,000 138,337 246,663 Net change in fund balance (32,800) (17,800) 100,588 118,388 Fund balance, July 1, 2022 750,730 750,730 750,730 — Total revenues EXPENDITURES: Capital outlay Total expenditures Fund balance, June 30, 2023 $ 134 717,930 $ 732,930 $ 851,318 $ 118,388 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. 135 City of Chandler Combining Statement of Net Position Non-Major Proprietary Funds June 30, 2023 Chandler Housing Authority Total Other Proprietary Funds 119,364 20 — 32,231 — — 151,615 $ 9,199,395 32,940 — — 31,086 — 9,263,421 $32,971,243 2,391,037 — 32,231 108,798 33 35,503,342 — — — 3,981,323 154,750 — 154,750 3,981,323 7,043,327 5,868,919 12,912,246 12,912,246 39,000,552 21,275,010 11,198,336 32,473,346 36,454,669 36,606,284 1,751,537 6,632,272 8,383,809 8,538,559 17,801,980 30,069,874 23,699,527 53,769,401 57,905,474 93,408,816 471,410 250,843 557,106 1,279,359 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 $23,652,484 2,358,077 — — 77,712 33 26,088,306 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 136 $ LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Customer advances Compensated absences payable Landfill closure and postclosure liability Total current liabilities 1,031,158 75,214 — 122,053 16,850 94,446 1,339,721 128,435 29,984 72,515 30,416 7,365 — 268,715 60,782 — 1,004,225 20,859 13,086 — 1,098,952 1,220,375 105,198 1,076,740 173,328 37,301 94,446 2,707,388 Long-term liabilities: Compensated absences payable Net pension liability OPEB liability Landfill closure and postclosure liability Total long-term liabilities Total liabilities 90,032 934,213 612,295 4,245,554 5,882,094 7,221,815 39,352 1,150,326 206,297 — 1,395,975 1,664,690 52,000 2,110,991 685,315 — 2,848,306 3,947,258 181,384 4,195,530 1,503,907 4,245,554 10,126,375 12,833,763 424,340 — 424,340 110,523 3,901,031 4,011,554 450,303 — 450,303 985,166 3,901,031 4,886,197 32,473,346 8,383,809 (1,292,463) 5,577,716 $31,180,883 $13,961,525 53,769,401 23,198,814 $76,968,215 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 12,912,246 18,913,561 $31,825,807 137 138 City of Chandler Combining Statement of Revenues, Expenses and Changes in Net Position Non-Major Proprietary Funds For the year ended June 30, 2023 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 18,449,086 250 $ 19,380,304 — 9,124,544 9,124,544 — — 1,638,652 1,638,652 — 22,063 — 22,063 Grants and entitlements — Rentals Sales taxes Miscellaneous Total operating revenues $ 930,968 $ 1,142 4,936 35,625 41,703 18,450,228 957,967 10,799,071 30,207,266 OPERATING EXPENSES: General and administrative 992,367 100,000 — 1,092,367 Personnel services 2,036,329 754,026 1,983,870 4,774,225 Contractual services 12,875,874 350,239 950,014 14,176,127 767,751 248,748 508,488 1,524,987 — — 6,783,281 6,783,281 Commodities Housing assistance payments Depreciation and amortization expense 606,343 756,122 628,136 1,990,601 Total operating expenses 17,278,664 2,209,135 10,853,789 30,341,588 OPERATING INCOME (LOSS) 1,171,564 (1,251,168) (54,718) (134,322) 218,549 97,289 74,557 390,395 NONOPERATING REVENUES (EXPENSES): Interest revenue Gain (loss) on disposal of capital assets Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS — — (23,379) (23,379) 218,549 97,289 51,178 367,016 1,390,113 (1,153,879) (3,540) 232,694 CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions — 124,451 — 124,451 Transfers in — 1,155,251 285,000 1,440,251 Transfers out (113,831) (31,996) — (145,827) Total capital contributions and transfers (113,831) 1,247,706 285,000 1,418,875 CHANGE IN NET POSITION 1,276,282 93,827 281,460 1,651,569 30,549,525 31,087,056 13,680,065 75,316,646 $ 31,825,807 $ 31,180,883 $ 13,961,525 $ 76,968,215 NET POSITION Beginning of year End of year 139 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2023 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 18,390,838 $ 929,739 $ 1,813,362 $ 21,133,939 Cash received from grantors — — 9,229,406 9,229,406 Cash payments to suppliers (15,706,191) (806,000) (8,196,751) (24,708,942) Cash payments to employees for services (1,984,858) (739,058) (2,052,805) (4,776,721) 699,789 (615,319) 793,212 877,682 — 1,155,251 285,000 1,440,251 (113,831) (31,996) — (145,827) (113,831) 1,123,255 285,000 1,294,424 (234,568) (762,634) (489,148) (1,486,350) (234,568) (762,634) (489,148) (1,486,350) 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 186,627 97,289 61,005 344,921 Net cash provided (used) by investing activities 186,627 97,289 61,005 344,921 Net increase (decrease) in cash and cash equivalents 538,017 (157,409) 650,069 1,030,677 23,114,467 276,773 8,549,326 31,940,566 CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 140 23,652,484 $ 119,364 $ 9,199,395 $ 32,971,243 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ 1,171,564 $ (1,251,168) $ (54,718) $ (134,322) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 606,343 756,122 628,136 1,990,601 (Increase) decrease in receivables (68,384) 102,759 108,112 142,487 (Increase) decrease in inventories — (14,868) — (14,868) (Increase) decrease in other assets — — 167,990 167,990 (1,070,199) (92,145) 45,032 (1,117,312) 32,586 10,498 (82,394) (39,310) Changes in assets, liabilities and deferred items: Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits — 9,560 233,738 243,298 Increase (decrease) in customer advances 8,994 1,040 (98,153) (88,119) Increase (decrease) in net pension items 104,994 38,986 (69,327) 74,653 Increase (decrease) in OPEB liability (86,109) (34,516) (85,204) (205,829) — (141,587) — (141,587) (471,775) 635,849 847,930 1,012,004 793,212 $ 877,682 — $ 124,451 Increase (decrease) in lease deferred inflows Total adjustments Net cash provided (used) by operating activities $ 699,789 $ (615,319) $ $ — $ 124,451 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets from city government 141 $ 142 3 Statistical Section • Financial Trends • Revenue Capacity • Debt Capacity • Demographic and Economic Information • Operating Information Statistical Section Strategic infrastructure investments that facilitate business and economic growth are paired with facility, park, and public safety improvements that support the quality of life enjoyed by residents. 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. 144 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. 160 Debt Capacity 164 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 14-29 provide additional information for continuing disclosure purposes. Demographic and Economic Information 187 Schedules 30-31 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 190 Schedules 32-34 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. 143 CITY OF CHANDLER, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2014 Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ 2015 563,033,503 105,723,768 183,088,676 $ 567,041,560 108,965,994 7,709,550 2016 $ 2017 579,591,241 $ 121,767,847 (5,872,464) 587,213,640 122,006,140 (36,358,845) 851,845,947 683,717,104 695,486,624 672,860,935 388,837,444 380,427,606 342,252,306 439,823,546 — 206,284,498 119,075 217,824,645 31,365,801 258,806,679 32,977,926 176,390,803 595,121,942 598,371,326 632,424,786 649,192,275 Primary government Net investment in capital assets Restricted Unrestricted 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 1,027,037,186 155,184,734 139,831,290 Total primary government net position $ 1,446,967,889 $ 1,282,088,430 $ 1,327,911,410 $ 1,322,053,210 Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position 144 Schedule 1 Fiscal Year 2018 $ 536,086,249 168,510,855 (65,575,548) 2019 $ 575,953,033 173,490,725 (72,592,489) 2020 $ 2021 547,511,826 191,839,529 (8,655,932) $ 555,107,220 189,214,016 (6,761,531) 2022 $ 536,775,941 194,380,531 63,657,816 2023 $ 555,568,147 182,068,932 168,391,045 639,021,556 676,851,269 730,695,423 737,559,705 794,814,288 906,028,124 467,799,036 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 31,745,566 283,463,157 514,595,066 31,119,667 250,938,753 744,982,017 762,566,911 778,085,400 790,526,452 789,162,242 796,653,486 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 1,070,163,213 213,188,599 419,329,798 $ 1,384,003,573 $ 1,439,418,180 $ 1,508,780,823 $ 1,528,086,157 $ 1,583,976,530 $ 1,702,681,610 145 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2014 Expenses Governmental activities: General government Public safety Transportation and development Community services Interest and fiscal charges $ 2015 99,231,501 94,738,371 52,183,052 32,331,286 10,044,363 $ 104,456,315 102,050,425 51,714,085 31,784,321 6,986,490 2016 $ 112,514,903 111,568,323 55,012,081 31,441,019 7,884,146 2017 $ 104,998,802 149,366,614 56,752,197 32,599,549 6,623,830 Total governmental activities expenses 288,528,573 296,991,636 318,420,472 350,340,992 Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority 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 63,236,746 58,112,931 14,380,178 1,893,830 7,728,876 Total business-type activities expenses Total primary government expenses 121,575,747 410,104,320 129,675,342 426,666,978 128,315,366 446,735,838 145,352,561 495,693,553 $ 146 $ $ $ Schedule 2a Fiscal Year 2018 $ $ 113,587,478 112,371,723 55,287,494 36,824,102 6,716,119 2019 $ 114,373,302 124,906,187 53,806,473 36,990,853 7,046,655 2020 $ 2021 138,850,297 109,544,169 59,777,330 38,195,563 6,885,184 $ 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 2023 $ 195,086,875 95,958,948 60,990,970 45,928,371 5,292,655 324,786,916 337,123,470 353,252,543 390,061,877 365,782,821 403,257,819 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 75,887,686 63,849,518 17,278,664 2,209,135 10,877,168 146,602,680 471,389,596 $ 145,255,181 482,378,651 $ 154,734,428 507,986,971 $ 147 153,237,120 543,298,997 $ 152,941,927 518,724,748 $ 170,102,171 573,359,990 CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2015 2016 2014 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 $ 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 $ 42,021,638 7,471,344 16,538,175 10,792,114 5,188,787 16,725,462 2017 $ 41,400,079 6,561,052 16,333,273 10,732,351 4,481,750 9,702,683 83,498,332 84,313,931 98,737,520 89,211,188 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 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 53,251,020 53,563,934 15,648,992 950,294 954,070 6,198,797 27,645,932 183,534,739 150,960,012 157,112,246 158,213,039 Total primary government program revenues $ 267,033,071 $ 235,273,943 $ 255,849,766 $ 247,424,227 Net (expense)/revenue Governmental activities Business-type activities Total primary government net (expense) $ (205,030,041) 61,958,992 $ (143,071,049) $ (212,677,705) $ (219,682,952) $ (261,129,804) 21,284,670 28,796,880 12,860,478 $ (191,393,035) $ (190,886,072) $ (248,269,326) 148 Schedule 2b Fiscal Year 2018 $ $ 43,089,930 6,100,584 17,145,894 9,180,276 3,988,629 9,340,818 2019 $ 43,622,807 4,998,779 14,869,670 7,583,513 4,522,345 10,510,464 2020 $ 2021 43,203,865 6,512,002 16,420,652 5,623,796 31,052,185 18,714,457 $ 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 2023 $ 37,240,071 5,723,124 22,869,091 14,900,747 26,999,694 16,237,742 88,846,131 86,107,578 121,526,957 102,057,265 104,068,166 123,970,469 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 53,415,725 60,884,259 18,449,086 930,969 1,638,902 9,124,544 13,482,347 157,466,507 152,244,584 156,408,804 162,685,174 157,365,675 157,925,832 246,312,638 $ (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) $ 264,742,439 $ (288,004,612) 9,448,054 $ (278,556,558) 149 $ 261,433,841 $ (261,714,655) 4,423,748 $ (257,290,907) $ 281,896,301 $ (279,287,350) (12,176,339) $ (291,463,689) CITY OF CHANDLER, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2014 Governmental Revenues and Other Changes in Net Position Governmental activities: Property taxes Sales taxes Highway user taxes Other taxes Franchise fees State shared $ 2015 28,348,952 103,880,801 13,352,622 3,243,937 3,145,449 55,423,759 $ 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 2017 $ 29,837,763 120,189,651 16,683,743 664,616 3,285,267 65,924,228 Investment income Miscellaneous Transfers in (out) Total governmental activities 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 1,063,997 1,014,665 (159,815) 238,504,115 Business-type activities: Sales taxes Investment income Miscellaneous Transfers in (out) Total business-type activities: 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 10,682 938,491 2,798,023 159,815 3,907,011 Total primary government Change in Net Position Governmental activities Business-type activities Total primary government $ 212,625,836 $ 230,909,222 $ 236,709,052 $ 242,411,126 $ 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 $ (22,625,689) 16,767,489 (5,858,200) $ $ 150 $ $ Schedule 2c Fiscal Year 2018 $ 30,816,495 127,584,410 16,135,949 940,203 3,571,744 64,723,211 1,531,766 1,502,418 (4,175,579) 242,630,617 2019 $ 13,769 854,848 14,923,212 4,175,579 19,967,408 32,550,250 139,851,355 17,301,902 866,267 3,567,184 67,156,430 14,822,135 1,261,279 (90,680) 277,286,122 2020 $ 17,347 7,742,589 2,842,825 90,680 10,693,441 2021 34,419,182 140,644,918 16,996,911 1,153,237 3,441,225 70,769,943 16,951,295 2,085,020 (891,991) 285,569,740 $ 15,521 9,974,135 2,962,466 891,991 13,844,113 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 2023 $ 21,379 (7,617,417) 2,811,515 1,103,279 (3,681,244) 41,363,544 210,027,766 20,835,558 201,799 3,838,738 108,187,240 5,427,207 1,380,596 (761,263) 390,501,185 22,063 3,832,676 15,051,582 761,263 19,667,584 $ 262,598,025 $ 287,979,563 $ 299,413,853 $ 304,246,854 $ 315,337,214 $ 410,168,769 $ 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 $ 111,213,835 7,491,245 118,705,080 $ $ $ $ 151 $ $ CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2014 General fund Nonspendable Restricted Assigned Unassigned Total general fund All other governmental funds Nonspendable $ $ $ Restricted Unassigned Total all other governmental funds 2015 892,533 1,166,105 95,185,696 82,453,462 179,697,796 $ — $ $ 104,557,663 (11,034,021) $ 93,523,642 152 2016 940,359 1,792,180 102,222,466 80,152,269 185,107,274 $ — $ $ 107,173,814 (15,322,260) $ 91,851,554 2017 907,594 1,566,618 109,958,162 68,567,835 181,000,209 $ — $ $ 120,201,229 (11,877,159) $ 108,324,070 979,446 1,451,061 101,620,277 87,492,981 191,543,765 7,422 120,640,190 (11,350,383) $ 109,297,229 Schedule 3 Fiscal Year 2018 $ 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 $ 2022 1,051,638 1,711,242 143,763,585 96,065,934 242,592,399 $ $ — 187,759,476 (7,226,577) $ 180,532,899 $ 153 2023 1,103,805 1,324,539 192,983,983 86,626,252 282,038,579 $ $ — 193,055,992 (2,361,250) $ — 175,323,873 (8,567,291) $ 190,694,742 $ 166,756,582 $ $ 989,996 4,317,196 251,787,985 58,838,144 315,933,321 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 2014 28,442,823 103,880,801 13,352,622 3,243,937 3,145,449 55,423,759 10,187,895 11,846,275 678,843 $ 5,479,384 20,269,976 4,622,215 732,807 100,000 1,623,973 650,117 $ 263,680,876 2015 28,899,684 108,657,130 14,633,470 10,106,891 330,129 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 $ 154 276,555,533 2016 29,237,607 112,250,883 15,303,635 6,100,475 3,344,817 60,712,442 16,159,064 16,217,004 606,757 $ 6,634,161 19,705,786 4,828,174 974,192 200,000 3,409,065 897,102 $ 296,581,164 2017 29,692,846 120,189,651 16,683,743 664,616 3,285,267 65,924,228 12,677,860 14,683,327 607,191 7,075,996 20,869,517 3,908,387 678,387 200,000 921,195 494,984 $ 298,557,195 Schedule 4 Fiscal Year $ $ 2018 30,819,812 127,584,410 16,135,949 940,203 3,571,744 64,723,211 12,111,857 13,982,674 611,499 6,394,322 21,827,375 4,865,783 127,575 200,000 1,398,729 974,107 306,269,250 $ $ 2019 32,526,357 139,851,355 17,301,902 866,267 3,567,184 67,156,430 11,911,639 9,023,678 610,501 7,268,592 21,512,737 4,234,286 127,206 200,000 13,268,020 923,369 330,349,523 $ $ 2020 34,334,216 140,644,918 16,996,911 1,153,237 3,441,225 70,769,943 49,719,415 8,730,973 508,485 7,760,403 20,355,702 5,571,322 213,345 596,153 15,017,352 1,471,977 377,285,577 $ $ 155 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 $ $ 2023 41,404,976 210,027,766 20,835,558 201,799 3,838,738 108,187,240 38,834,325 8,235,336 565,411 8,754,471 27,125,038 4,420,532 253,543 1,040,240 4,864,418 1,047,372 479,636,763 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2014 46,807,747 90,068,218 23,418,175 23,771,925 45,657,265 21,490,000 7,737,974 722,293 17,465,000 8,635,631 — 25,240,000 7,689,305 249,838 Total expenditures $ 256,506,506 $ 276,496,631 $ 283,313,919 $ 286,851,294 12.3 % 10.2 % $ 2017 50,892,490 103,167,906 28,294,221 26,605,279 44,712,255 15,955,000 10,682,206 145,970 11.7 % $ 2016 52,138,384 104,605,663 25,471,154 24,988,844 50,009,243 $ Debt service as a percentage of noncapital expenditures $ 2015 46,895,106 93,773,306 24,769,553 24,569,283 56,539,116 General government Public safety Transportation and development Community services Capital improvements Debt service: Principal retirement Interest and fiscal charges Bond issuance costs (1) 12.9 % (1) In FY 2017, the city called the remaining payments for the 2007 GO Refunding issuance totaling $8,110,000. 156 Schedule 5 Fiscal Year 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 27,995,477 30,855,014 63,832,358 2023 $ 124,221,582 137,400,323 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 34,892,929 6,561,091 — $ 319,984,939 $ 323,247,698 $ 358,010,538 $ 394,894,823 $ 377,477,809 $ 457,279,200 10.4 % 11.2 % 9.7 % 157 7.8 % 11.7 % 33,058,041 35,906,234 85,239,000 9.7 % 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 2014 Other Financing Sources (Uses) Bond premium Face amount of bonds issued $ Proceeds from disposal of capital assets Payment to escrow agent Transfers in Transfers out Total other financing sources (uses) Net change in fund balance $ 2015 562,052 8,660,000 $ 17,045,635 128,254,000 2016 $ 2017 — — $ 6,339,230 25,500,000 161,126 (9,061,800) 24,856,418 (25,653,741) 103,964 (143,635,520) 28,717,990 (29,776,581) 463,709 — 27,885,557 (29,252,060) 652,882 (31,589,392) 28,116,369 (29,208,275) (475,945) 709,488 (902,794) (189,186) 6,428,425 158 $ 3,738,390 $ 12,364,451 $ 11,516,715 Schedule 6 Fiscal Year 2018 $ $ 3,609,365 58,740,000 2019 $ 2020 — — $ 2021 2,927,904 30,400,000 $ 2022 — — $ 2,160,918 58,244,909 2023 $ — — 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) 3,229,367 — 45,052,169 (58,254,654) 61,225,525 (1,164,186) 30,218,860 (2,178,013) 31,413,460 (9,973,118) 47,509,836 $ 5,937,639 $ 49,493,899 $ 159 7,783,447 $ 49,657,237 $ 12,384,445 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) 2014 728,110 9,780,645 47,454,682 2,472,754 2,660,201 258,547 2,949,421 11,058,203 9,542,714 3,533,636 1,090,428 — 12,421,526 103,950,867 $ $ 1.75% Fiscal Year 2015 2016 895,730 $ 1,019,939 8,870,092 8,855,057 49,740,000 51,191,162 2,892,470 2,957,685 2,815,040 2,745,130 260,712 248,433 3,261,716 3,125,459 11,967,509 13,217,561 10,188,718 10,752,479 3,435,949 3,234,369 1,145,534 1,127,257 — — 13,194,526 13,786,741 108,667,996 1.76% $ 112,261,272 $ $ 1.76% 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 — 13,391,857 120,200,332 1.75% Source: City of Chandler, Management Services Department (1) Includes license application fees, annual license fees, audit assessments, penalties and interest. (2) The direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. (3) In Fiscal Year 2018-19, the city did a restatement to record prior year privilege tax receivables not previously accrued; prior years have not been restated. (4) In Fiscal Year 2021-22, the city did a restatement due to a utility customer being overbilled; prior years have not been restated. 160 Schedule 7 $ 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 $ 2019 (3) 1,318,195 $ 17,228,786 60,029,293 4,099,450 1,757,235 207,462 4,076,298 16,506,671 12,773,198 2,191,747 5,461,771 — 14,218,596 Fiscal Year 2020 2021 972,105 $ 789,411 12,824,214 14,446,470 64,911,529 75,590,425 3,560,787 3,215,504 1,710,004 2,152,443 177,542 197,578 4,282,451 3,760,815 18,184,361 19,214,217 11,987,625 13,099,159 2,337,375 1,751,284 5,335,557 7,636,473 — 256,702 14,385,889 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) 2023 1,499,745 27,424,398 95,481,330 6,797,429 5,338,248 217,427 5,284,141 23,464,287 17,661,723 1,802,196 6,714,688 1,518,558 16,845,659 $ 127,598,180 $ 139,868,702 $ 140,669,439 $ 157,530,202 $ 182,050,009 $ 210,049,829 1.74% 1.74% 1.73% 1.70% 1.70% 1.68% 161 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) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1.75% 1.76% 1.76% 1.75% 1.74% 1.74% 1.73% 1.70% 1.70% 1.68% 0.67% 0.67% 0.67% 0.66% 0.65% 0.65% 0.65% 0.64% 0.65% 0.65% 4.99% 4.96% 4.92% 4.95% 4.92% 4.93% 4.86% 4.90% 4.94% 5.45% 0.02% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.02% 0.03% 0.03% Source: City of Chandler, Management Services Department (1) The city's direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. city tax rates were last increased effective May 1, 1994. (2) The overlapping County tax rate was calculated using a weighted average of the actual revenues the city collected for each category. Tax rates vary by category, currently ranging from 0.5% to 0.77%. No rate changes have occurred in the past ten fiscal years. (3) The overlapping State tax rate was calculated using a weighted average of the actual revenues the city collected for each category. Tax rates vary by category, currently ranging from 5.5% to 5.6%. State tax rate increases during the past ten fiscal years: 1.0% effective June 1, 2011 through May 31, 2013. (4) The Tourism & Sports Authority (TSA) was authorized by Maricopa County voters on November 7, 2000. An additional tax rate of 1.0% is to be levied from March 1, 2001 through February 28, 2031. The only category the overlapping tax rate applies to is the Hotel/Motel category. The overlapping tax rate is calculated using a weighted average of the actual revenues the city collected for this category. 162 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2023 Taxpayer Taxpayer A Business Type Sales and Use Tax Payments Fiscal Year 2014 Percentage of Total Sales and Use Tax Rank Payments $ 13,295,248 1 6.46% 12,041,863 2 5.85% Rank Percentage of Total Sales and Use Tax Payments 9,489,412 1 9.13% 3,138,381 2 3.02% 2,357,350 3 2.27% 1,492,709 5 1.44% 1,298,513 9 1.25% Sales and Use Tax Payments Taxpayer B Utility Construction Contracting $ Taxpayer C Department Store 5,384,080 3 2.62% Taxpayer D Retailer 3,893,457 4 1.89% Taxpayer E Department Store 3,690,943 5 1.79% Taxpayer F Grocery Store 3,600,611 6 1.75% Taxpayer G Retailer 3,097,032 7 1.51% Taxpayer H Retailer 2,749,326 8 1.34% Taxpayer I Retailer 2,566,407 9 1.25% Taxpayer J Vehicle Dealer 2,139,078 10 1.04% Taxpayer K Telecommunications 1,405,133 6 1.35% Taxpayer L Department Store 1,357,116 7 1.31% Taxpayer M Utility 1,323,354 8 1.27% Taxpayer N 1,116,571 10 1.07% Department Store $ 52,458,045 25.50% $ 24,736,460 23.80% 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. 163 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT LAST TEN FISCAL YEARS Schedule 10 Governmental Activities Special General General Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Obligation $ Revenue Bonds 233,678,000 222,143,000 205,088,000 186,873,000 223,288,000 205,764,000 215,939,000 195,164,000 208,979,909 176,702,193 Bonds $ 18,000,000 14,025,000 10,055,000 6,685,000 4,270,000 2,050,000 — — — — $ Revenue Assessment Special Subscription Obligation Bonds Bonds Assessment Based IT Bond Issuance Issuance Issuance Bonds 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 — Arrangements $ — — — — — — — — — 482,119 $ 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 12,825,886 $ Premiums 707,337 565,869 424,402 282,935 141,468 — — — — — $ Premiums 99,258 88,230 77,201 66,172 55,140 44,112 33,084 22,056 11,028 — Business-type Activities Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Obligation Bonds $ 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 59,712,807 General Bonded Debt $ 390,410,407 391,026,194 359,163,743 334,688,362 361,290,196 330,661,357 330,729,798 297,274,782 299,257,241 253,247,633 Revenue Bonds $ 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 $ 16,186,172 14,910,017 15,281,782 8,981,699 7,451,989 4,586,562 4,693,193 5,758,393 4,290,154 2,427,863 Excise Tax Revenue Obligations $ 148,380,000 142,200,000 204,090,000 198,520,000 230,635,000 222,575,000 228,985,000 219,780,000 215,105,000 202,930,000 Net General Bonded Debt Outstanding $ 374,224,235 376,116,177 343,881,961 325,706,663 353,838,207 326,074,795 326,036,605 291,516,389 294,967,087 250,819,770 General Obligation Bond Issuance Premiums $ 2,220,807 11,567,086 10,630,056 12,263,924 11,025,887 9,898,570 8,772,310 7,647,850 4,854,030 4,006,747 Estimated Actual Taxable Value of Property $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 61,704,952,635 Revenue Bonds Issuance Premiums $ 1,705,732 1,324,131 832,855 624,642 416,428 202,401 — — — — Percentage of Estimated Actual Taxable Value of Property 1.59% 1.29% 1.09% 1.01% 1.06% 0.88% 0.80% 0.65% 0.60% 0.41% Excise Tax Revenue Obligations Issuance Premiums $ Total Primary Government (1) $ 608,805,370 593,320,112 614,901,176 568,997,296 624,864,531 578,592,636 580,768,479 533,634,364 524,676,261 464,515,824 — 8,502,636 8,040,688 11,447,974 15,075,185 17,271,299 15,979,766 15,312,526 9,667,992 8,338,191 Percentage of Personal Income (2) 7.76% 7.15% 7.35% 6.20% 6.24% 5.73% 5.45% 4.56% 3.95% 3.29% 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. 164 Per Capita (2) 2,521 2,397 2,465 2,128 2,267 2,215 2,192 1,905 1,855 1,642 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2023 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 87,320,000 574,205,000 180,475,000 264,330,000 131,680,000 329,255,556 111,280,000 None 4.72 % 7.18 7.18 $ 7.13 28.98 4.44 2.67 75.42 16.60 14.60 Subtotal, overlapping debt None None 13,262,074 42,805,520 34,616,056 11,738,503 3,519,169 248,318,787 18,468,160 None 372,728,269 City direct debt 190,010,198 Total direct and overlapping debt 100.00 190,010,198 $ 562,738,467 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 2022-23 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 165 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2014 2015 2016 2017 $ 142,895,404 $ 142,827,478 $ 190,024,847 $ 198,432,895 10,198,000 9,848,400 9,427,250 8,952,650 $ 132,697,404 $ 132,979,078 $ 180,597,597 $ 189,480,245 7.14% 6.90% 4.96% 4.51% $ 476,318,016 $ 476,091,596 $ 633,416,159 $ 661,443,986 374,452,000 352,366,600 323,442,750 300,592,650 $ 101,866,016 $ 123,724,996 $ 309,973,409 $ 360,851,336 78.61% 74.01% 51.06% 45.44% 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 2014-15 through Fiscal Year 2018-19: Piper Jaffray Inc. Fiscal Year 2019-20 through Fiscal Year 2022-23: 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). 166 Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2023 Full Cash Assessed Valuation as of June 30, 2023 $ 6,280,177,157 Debt limit (6% of assessed value) 376,810,629 Debt applicable to limit: 6% general obligation bonds 5,320,800 Excess premium on bonds outstanding 201,289 Legal 6% debt margin $ 371,288,540 Debt limit (20% of assessed value) Debt applicable to limit: 20% general obligation bonds $ 1,256,035,431 231,094,200 Excess premium on bonds outstanding Legal 20% debt margin $ 11,183,993 1,013,757,238 Fiscal Year 2018 $ 209,370,282 2019 $ 14,974,350 $ 194,395,932 697,900,943 $ 373,734,315 46.45% 219,747,369 $ 774,195,564 $ 475,314,362 38.61% 258,505,031 $ 248,732,453 $ $ $ 274,194,030 861,683,439 $ 557,727,307 $ 35.27% $ $ 294,648,031 376,810,629 5,522,089 $ 371,288,540 2.04% 1.47% 936,511,789 $ 1,002,564,178 $ 1,256,035,431 277,073,742 285,874,432 242,278,193 716,689,746 $ 1,013,757,238 659,438,047 29.59% 167 300,769,253 2023 6,121,222 2.41% 303,956,132 $ 280,953,536 2022 6,759,506 3.78% 298,881,202 $ 2021 9,772,578 5.39% 324,166,628 $ $ 12,511,300 7.15% $ 232,258,669 2020 $ 28.51% 19.29% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Less: Highway User Fiscal Year Operating Taxes 2014 $ 13,352,622 Net Available Expenses $ Debt Service Revenue 10,547,032 $ 2,805,590 Principal $ Interest 3,975,000 $ Coverage 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 2014 $ 49,588,376 $ 27,840,478 $ 21,747,898 Debt Service Principal $ Interest 3,300,000 $ Coverage 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 2014 $ 162,664,325 $ — $ 162,664,325 Debt Service Principal $ 6,180,000 Interest $ Coverage 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 2023 315,153,482 — 315,153,482 12,980,000 6,327,966 16.32 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. 168 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 2014 $ 18,780,034 $ 21,729,255 $ 1,185,000 $ Coverage 585,029 12.28 45,666,777 22,907,111 22,759,666 3,555,000 548,545 5.55 2016 51,321,346 23,054,518 28,266,828 6,846,500 368,470 3.92 2017 53,563,934 23,470,067 30,093,867 — 94,140 319.67 2018 56,367,650 28,967,201 27,400,449 948,000 94,140 26.29 2019 56,055,131 26,507,090 29,548,041 703,500 56,220 38.89 2020 61,531,949 29,092,865 32,439,084 702,000 28,020 44.44 61,971,940 25,520,769 36,451,171 — — (1) 40,509,289 Interest 2015 2021 $ 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. 169 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 2019 2020 2021 2022 2023 Mining, Utility, Commercial, and Industrial 18.00 % 18.00 % 18.00 % 17.50 % 17.00 % Agriculture and Vacant Land 15.00 15.00 15.00 15.00 15.00 Owner-Occupied Residential 10.00 10.00 10.00 10.00 10.00 Leased or Rented Residential 10.00 10.00 10.00 10.00 10.00 15.00 15.00 15.00 15.00 14.00 Railroad, Private Car, and Airline Flight Property Tax Year 2019 Source: Piper Jaffray Inc. as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). Tax Year 2020 through 2023 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 170 CITY OF CHANDLER, ARIZONA PROPERTY TAXES LEVIED AND COLLECTED LAST FIVE FISCAL YEARS 2022-23 2021-22 2020-21 2019-20 2018-19 $ Schedule 15 Tax Rate 1.1026 1.1126 1.1201 1.1281 1.1386 $ Adjusted to 30 June of Initial Fiscal Year Tax Levy Collections % of Levy 40,823,212 $ 40,571,534 99.11 % 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 Fiscal Year 2018-19 Source: Piper Jaffray Inc. as compiled from County Department of Finance. Fiscal Year 2019-20 through 2022-23 Source: Piper Sandler Companies as compiled from County Department of Finance. 171 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING ASSESSED VALUATIONS AND TAX RATES PER $100 ASSESSED VALUATION JUNE 30, 2023 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 2022-23 Net Limited Property Assessed Valuation $ 78,415,651,028 51,575,018,185 51,575,018,185 51,575,018,185 47,553,260,925 51,575,018,185 51,932,898,351 51,932,898,351 FY 2022-23 Total Tax Rate per $100 Assessed Valuation $ — 1.2473 1.1894 0.0505 0.1592 0.0082 0.2488 0.1400 25,369,201,769 3,633,497,350 4,407,553,113 2,524,452,281 3,705,196,585 2,492,478,121 3,702,957,065 0.0500 5.9212 2.3442 3.5680 7.2098 5.8127 1.1026 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 $0.4009 for fiscal year 2022-23 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. 172 CITY OF CHANDLER, ARIZONA PROPERTY VALUE BY PROPERTY CLASSIFICATION LAST FIVE FISCAL YEARS Schedule 17 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 2022-23 Net Full Cash Assessed Valuation FY 2022-23 Annual Percentage Change $ 1,102,515,089 $ 1,246,170,328 $ 1,412,928,374 $ 1,488,882,870 $ 1,534,793,910 2.99% Agriculture and Vacant Land 75,266,539 78,888,739 77,850,859 76,801,910 72,256,990 (6.29)% Owner-Occupied Residential 1,574,405,659 1,681,112,768 1,837,472,779 1,990,237,285 2,135,013,774 6.78% Leased or Rented Residential 646,538,541 738,411,405 847,104,454 946,787,996 1,052,393,288 10.03% Railroad, Private Car, and Airline Flight Property 1,782,690 1,910,025 2,011,500 2,011,500 2,216,430 0.00% Historical Property 88,612,464 124,084,500 130,572,188 177,317,246 215,617,419 17.76% Commercial Historic Property 383,733 400,055 477,042 520,137 529,079 1.69% $ 3,489,504,715 $ 3,870,977,820 $ 4,308,417,196 $ 4,682,558,944 $ 5,012,820,890 7.05% Mining, Utility, Commercial, and Industrial TOTAL Fiscal Year 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 2022-23 Source: Piper Sandler Companies as compiled from State and County Abstract of the Assessment Roll (Arizona Department of Revenue). 173 CITY OF CHANDLER, ARIZONA NET ASSESSED LIMITED PROPERTY ASSESSED VALUE OF MAJOR TAXPAYERS JUNE 30, 2023 FY 2022-23 Net Limited Property Assessed Value $ 265,776,255 32,029,790 26,470,865 18,204,358 17,551,334 Schedule 18 As % of Total FY 2022-23 Net Limited Property Assessed Value 7.18% 0.86 0.71 0.49 0.47 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 Manufacturing Plant Financial Services 16,592,946 16,521,887 0.45 0.45 CAZ 1 DE LLC NXP Semiconductors Digital 2121 South Price LLC Commercial Rental Property Manufacturing Plant Data Center 15,981,295 12,571,668 10,237,930 431,938,328 0.43 0.34 0.28 11.66% $ Total City Net Limited Property Assessed Valuation $ 3,702,957,065 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. 174 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 2022-23 $48,805,511,338 2021-22 40,751,143,934 2020-21 36,949,424,457 2019-20 33,312,389,044 2018-19 29,847,787,490 Fiscal Year 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 2022-23 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 2022-23 FY 2021-22 FY 2020-21 FY 2019-20 FY 2018-19 City of Chandler Maricopa County State of Arizona $ 3,702,957,065 $ 51,575,018,189 $ 78,415,651,028 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 Comparative Net Full Cash Assessed Value History Fiscal Year FY 2022-23 FY 2021-22 FY 2020-21 FY 2019-20 FY 2018-19 $ City of Chandler Maricopa County State of Arizona 5,012,820,890 $ 72,238,314,892 $ 103,872,223,919 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 Fiscal Year 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. 175 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT RATIOS JUNE 30, 2023 Per Capital As % of City's Bonded Debt 2022-23 Population Net Full Cash Estimates @ Assessed 282,891 (1) Value Direct General Obligation Bond Debt Schedule 20 As % of City's 2022-23 Estimated Net Full Cash Value $ 236,415,000 $ 835.71 4.72 0.48 Direct Overlapping General Obligation Bond Debt $ 564,803,269 $ 1,996.54 11.27 1.16 Source: (1) City of Chandler, Development Services Department 176 CITY OF CHANDLER, ARIZONA POPULATION STATISTICS Schedule 21 Year 2023 estimate 2022 estimate 2021 estimate 2020 Census 2019 estimate 2018 estimate 2017 estimate 2016 estimate 2015 mid-decade 2014 estimate 2010 Census 2005 Special Census 2000 Census 1990 Census 1980 Census City of Chandler Maricopa County 282,891 (1) 4,672,900 (2) 282,873 (1) 4,575,603 (2) 280,178 (3) 4,506,505 (3) 275,987 (1) 4,420,568 (2) 261,173 (1) 4,367,835 (2) 257,853 (1) 4,294,460 (2) 254,239 (1) 4,221,684 (2) 248,332 (3) 4,155,302 (3) 243,679 (1) 4,175,049 (2) 241,264 (1) 4,008,651 (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 177 State of Arizona 7,534,922 (2) 7,489,121 (2) 7,387,800 (3) 7,151,502 (2) 7,187,990 (2) 7,076,199 (2) 6,965,897 (2) 6,866,195 (3) 6,833,596 (2) 6,662,486 (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 2019-20 (1) 2020-21 (1) 2021-22 (1) 2022-23 (1) Adopted 2023-24 138,888,825 $ 140,798,389 $ 155,638,444 $ 178,567,736 $ 205,020,881 $ 196,850,200 State Shared Sales Tax 25,525,595 26,597,361 30,982,818 38,801,443 41,309,738 39,000,000 State Shared Income Tax 30,693,731 33,255,159 37,324,127 36,011,056 53,013,618 74,000,000 Franchise Fees 3,556,211 3,432,995 3,615,294 3,652,812 3,630,508 3,471,000 Licenses and Permits 7,398,669 7,908,291 6,835,817 7,086,928 8,742,071 8,593,300 Fines and Forfeitures 3,196,843 2,714,065 2,316,000 2,791,624 4,127,033 3,814,600 209,259,874 $ 214,706,260 $ 236,712,500 $ 266,911,599 $ 315,843,849 $ 325,729,100 2018-19 (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). 178 CITY OF CHANDLER, ARIZONA TRANSACTION PRIVILEGE (SALES) TAX RATES BY CATEGORY JUNE 30, 2023 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 179 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, 2023 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. 180 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 2018-19 2019-20 2020-21 2021-22 2022-23 System Revenues: Service Fees Miscellaneous Interest Income Total System Revenues $108,514,851 $116,254,245 $120,727,939 $116,020,531 $114,299,984 130,001 97,652 35,573 568,571 12,832,795 6,817,699 8,772,310 264,558 (6,810,687) 3,442,281 $115,462,551 $125,124,207 $121,028,070 $109,778,415 $130,575,060 System Expenditures: General and Administration Personnel Services $ 6,400,086 16,548,508 $ 6,511,083 17,613,794 $ 6,510,382 17,923,155 $ 6,533,212 17,632,637 $ Contractual Services Commodities Total System Expenditures 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 18,544,747 35,663,988 $ 80,590,888 Net Income Available for Debt Service $ 56,560,136 $ 62,474,835 $ 60,398,861 $ 46,163,254 $ 49,984,172 Water and Sewer Revenues Bond (Senior Obligation) Debt Service $ 2,532,400 $ 2,433,600 $ $ $ Approximate Debt Service Coverage for Senior Obligations 22.33x 20.39x 181 — N/A — N/A 6,872,315 19,509,838 — 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 07/01/22 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) 2.00 % (6) 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) 9.20 % (6) 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. (6) In January 2022, a Cost of Service Study was completed and base water rates increased 2.0%. Additionally,base wastewater rates were increased by 9.2% cover debt service costs along with rising costs for infrastructure and expansion of facilities. Rate increases were effective July 1, 2022. 182 CITY OF CHANDLER, ARIZONA TOP 10 WATER AND WASTEWATER CUSTOMERS JUNE 30, 2023 Water Customer name Intel Corporation NXP Semiconductors Chandler Unified School District Air Products & Chemical Digital 2121 South Price, LLC Gleiberman Property inc. Townsquare Apartments Chandler Regional Medical Center/Dignity Health TWC Chandler, LLC MG Country Brook Apartments, LLC Wastewater Customer name Intel Corporation NXP Semiconductors Air Products & Chemical Gila River Indian Community (Lone Butte) Digital 2121 South Price, LLC Chandler Unified School District Chandler Regional Medical Center/Dignity Health Microchip Technology Catholic Healthcare West Arizona BMF IV AZ Laguna Village LLC Source: City of Chandler, Management Services Department 183 Schedule 27 Amount $ 6,628,087 1,226,924 596,573 382,566 191,784 148,862 124,841 122,921 119,335 96,638 Amount $ 10,188,154 1,906,558 1,171,660 350,946 267,166 205,109 180,896 109,743 107,451 97,033 CITY OF CHANDLER, ARIZONA NUMBER OF WATER AND WASTEWATER CUSTOMERS LAST TEN FISCAL YEARS 2014 2015 2016 2017 WATER Residential Commercial Multi-Unit Industrial Other 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 77,062 4,535 1,107 63 2,034 WASTEWATER Residential Commercial 72,862 2,012 73,363 2,033 74,346 2,201 75,761 2,138 878 37 470 887 37 477 920 34 475 915 38 590 Multi-Unit Industrial Other Source: City of Chandler, Management Services Department 184 Schedule 28 2018 2019 2020 2021 2022 2023 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 79,970 4,898 1,191 55 800 76,517 77,089 77,797 78,794 79,294 2,329 952 48 592 2,371 956 48 598 2,420 965 48 603 2,450 974 48 603 2,540 999 49 604 79,127 2,528 1,002 48 598 185 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT OUTSTANDING JUNE 30, 2023 Schedule 29 2022-23 Overlapping General Obligation Bonded Debt Overlapping Jurisdiction State of Arizona Maricopa County Maricopa County Community College District Maricopa County Special Health Care District Kyrene Elementary School District No. 28 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 Net Debt Amount None None 87,320,000 574,205,000 180,475,000 264,330,000 131,680,000 4.72 % 7.18 7.18 $ 7.13 28.98 4.44 2.67 None None 13,262,074 42,805,520 34,616,056 11,738,503 3,519,169 329,255,556 75.42 248,318,787 11,128,000,000 16.60 18,468,160 None 192,075,000 14.60 100.00 None 192,075,000 $ Chandler Unified School District No. 80 Tempe Union High School District No. 213 East Valley Institute of Technology District No. 401 City of Chandler 2022-23 Proportion Applicable to City of Chandler Approximate Percent Total Direct and Overlapping General Obligation Bonded Debt Outstanding $ 564,803,269 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 $ $ 10.0087 11.4058 Inside Tempe Union High School District No. 213 and Kyrene Elementary School District No. 28 Inside Chandler Unified School District No. 80 $ $ 10.1082 10.1172 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 2022-23 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 186 CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Fiscal Year Population (1) 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 241,264 243,679 248,332 254,239 257,853 261,173 275,987 2020-21 2021-22 2022-23 280,178 282,873 282,891 Schedule 30 Total Personal Income (2) Median Age (2) Unemployment Rate (3) Per Capita Personal Income (2) $7,840,356,208 8,168,120,080 8,324,088,640 8,731,329,977 9,360,321,753 10,101,649,294 11,088,605,686 35.0 34.9 34.9 35.2 35.3 36.0 36.0 5.5% 4.7 4.5 3.9 3.6 4.0 8.7 $32,497 33,520 33,520 34,343 36,301 38,678 40,178 (4) 11,693,509,008 13,284,564,699 14,130,122,559 36.0 36.0 36.1 5.6 3.0 2.9 41,736 46,963 49,949 (4) Sources: (1) City of Chandler, Development Services Department (2) City of Chandler, Economic Development Division (3) Arizona Office of Employment and Population Statistics (4) U.S. Census Bureau Notes: Total personal income is composed of earned income, dividends, interest and rents and government transfer payments. Per capita personal income is calculated by dividing total personal income by population; amounts may not be exact due to rounding. 187 188 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO Schedule 31 2023 Employees 12,000 5,500 4,900 Rank 1 2 3 Percentage of Total City Employment 7.67% 3.52% 3.13% Chandler Regional Medical Center/Dignity Health Northrup Grumman Chandler-Gilbert Community College 3,800 3,000 2,150 1,900 4 5 6 7 2.43% 1.92% 1.38% 1.22% City of Chandler NXP Semiconductors Microchip Technology PayPal Total 1,800 1,700 1,500 1,500 39,750 8 9 10 10 1.15% 1.09% 0.96% 0.96% 25.43% Employer Intel Corporation Wells Fargo Chandler Unified School District Bank of America 2014 Employer Intel Corporation Bank of America Chandler Unified School District Freescale Semiconductor Wells Fargo Verizon Wireless Chandler Regional Medical Center PayPal Orbital Sciences Microchip Technology Total Employees 11,900 3,800 3,000 3,000 2,600 2,300 2,100 1,900 1,650 1,626 33,876 Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Employment 9.03% 2.88% 2.28% 2.28% 1.97% 1.75% 1.59% 1.44% 1.25% 1.23% 25.70% Source: City of Chandler, Economic Development Division, City of Chandler Human Resources Department and Arizona Office of Employment and Population Statistics. 189 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 2013-14 2014-15 2015-16 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) 2016-17 (2) (1) 11 7 206 15 38 31 64 372 152 199 491 222 713 7 89 69 20 185 — — — — — — — 1,621 (2) 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. 190 Schedule 32 2017-18 2018-19 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 2022-23 (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 5 5 191 14 38 33 66 352 82 219 497 244 741 — — — — — 8 91 74 21 2 82 278 1,672 191 CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program 2013-14 2014-15 2015-16 2016-17 General Government Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio 564 544 565 535 780 53 2.10 867 51 1.57 844 46 1.74 860 43 1.81 Transportation & Development Building permits issued 5,490 5,170 5,142 4,635 Library circulation Center for the Arts events & exhibits 2,332,758 938 2,163,076 939 2,101,421 985 2,059,429 1,048 Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations 27 145,400 18,865 5,442 16 23 139,177 22,785 4,692 27 26 145,466 23,966 5,814 30 26 156,186 25,072 4,635 27 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) 79,766 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 84,670 31 74,400,000 72,000,000 78,972 928 73,288 80,069 22,305 Community Services Source: City of Chandler Departments 192 Schedule 33 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 681 666 542 395 377 210 838 27 1.79 789 24 2.04 739 33 2.40 460 40 1.73 1,299 39 2.00 409 39 2.13 3,944 4,011 4,091 4,601 4,615 3,188 2,041,574 1,177 1,801,237 825 1,415,291 537 1,356,695 389 1,308,861 690 1,581,822 790 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 17 154,890 28,654 3,955 16 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 86,940 31 73,000,000 135,000,000 81,899 958 78,878 86,901 18,359 193 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) 2013-14 2014-15 2015-16 2016-17 62 1,208 325 6 39 595,969 64 1,232 309 6 41 396,773 (1) 65 1,236 302 6 41 341,073 65 1,244 299 6 43 360,618 838 27,100 841 27,700 855 27,700 855 27,800 216 218 218 218 3 10 3 10 3 10 3 10 415 425 427 455 1,227 12,717 26 1,278 13,118 28 1,196 (2) 13,207 29 1,283 15,708 29 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. 194 Schedule 34 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 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 69 1,317 201 6 60 302,599 857 857 858 858 858 1,020 27,199 220 29,500 225 29,500 226 29,731 232 28,515 234 28,462 238 3 11 3 11 3 11 3 11 3 11 3 11 457 523 440 448 441 449 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 1,250 13,371 84 195 196 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