This page left blank intentionally. City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 Prepared by: Department of Budget and Finance This page left blank intentionally. City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTRODUCTORY SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 Mayor Jerry Weiers Councilmembers Lauren Tolmachoff - Vice Mayor, Cholla District Bart Turner - Barrel District Ian Hugh – Cactus District Jamie Aldama - Ocotillo District Ray Malnar - Sahuaro District Joyce Clark - Yucca District Management Staff Kevin Phelps - City Manager Tom Duensing - Assistant City Manager Jack Friedline - Assistant City Manager Prepared by Budget and Finance Department Vicki L. Rios, Director i This page left blank intentionally. ii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION Title Page ......................................................................................................................................... i Table of Contents ........................................................................................................................... iii Letter of Transmittal ....................................................................................................................... 1 GFOA Certificate of Achievement.................................................................................................. 5 Glendale, Arizona and Neighboring Communities ......................................................................... 6 Glendale City Officials ................................................................................................................... 7 Glendale Council District Boundaries ............................................................................................. 8 Organization Chart .......................................................................................................................... 9 II. FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................. 11 A. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) ............................................. 15 B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position .............................................................................................................. 27 Statement of Activities .................................................................................................................. 28 Fund Financial Statements: Balance Sheet – Governmental Funds ........................................................................................... 30 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................................... 31 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds .................................................................................................................. 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................. 33 Statement of Net Position – Proprietary Funds ............................................................................. 34 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ........ 35 Statement of Cash Flows – Proprietary Funds .............................................................................. 36 Notes to the Financial Statements ..................................................................................................... 38 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of Net Pension/OPEB (Asset)/Liability ......................................................................... 97 iii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 TABLE OF CONTENTS Schedule of OPEB Liability – City Plan .................................................................................... 106 Schedule of Pension/OPEB Contributions .................................................................................. 107 Notes to Pension/OPEB Liability and Contributions .................................................................. 111 Budgetary Comparison Schedule – General Fund ...................................................................... 113 Notes to Required Supplementary Information ........................................................................... 115 D. COMBINING STATEMENTS Budgetary Comparison Schedule – Municipal Property Corporation Debt Service Fund .......... 118 Non-Major Governmental Funds Combining Balance Sheet........................................................................................................ 121 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................ 125 Budgetary Comparison Schedules Transportation Fund ............................................................................................................. 128 Community Development Block Grants Fund ..................................................................... 129 Highway Users Gas Tax Fund ............................................................................................. 130 Police and Fire Sales Tax Fund ............................................................................................ 131 Other Special Revenue Fund ................................................................................................ 132 Highway User Debt Service Fund ........................................................................................ 134 Transportation Debt Service Fund ....................................................................................... 135 Excise Tax Revenue Debt Service Fund .............................................................................. 136 General Obligation Debt Service Fund ................................................................................ 137 Cemetery Perpetual Care Fund ............................................................................................ 138 Development Impact Fees Fund........................................................................................... 139 Streets Construction Fund .................................................................................................... 140 Fire and Police Construction Fund ....................................................................................... 141 Parks Bond Construction Fund ............................................................................................ 142 Other Construction Fund ...................................................................................................... 143 Non-Major Proprietary Funds – Business-Type Activities Combining Statement of Net Position ..................................................................................... 145 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 146 Combining Statement of Cash Flows ...................................................................................... 147 Budgetary Comparison Schedules Water and Sewer Fund (a Major Fund) ................................................................................ 149 Landfill Fund ....................................................................................................................... 151 Solid Waste Fund ................................................................................................................. 152 Housing Fund ....................................................................................................................... 153 iv City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 TABLE OF CONTENTS Internal Service Funds Combining Statement of Net Position ..................................................................................... 154 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 155 Combining Statement of Cash Flows ...................................................................................... 156 Budgetary Comparison Schedules Risk Management Fund ....................................................................................................... 157 Workers’ Compensation Fund ............................................................................................. 158 Employee Benefits Fund ...................................................................................................... 159 Fleet Services Fund .............................................................................................................. 160 Technology Fund ................................................................................................................. 161 E. SUPPLEMENTARY INFORMATION Federal Financial Data Schedule .......................................................................................... 162 III. STATISTICAL SECTION Schedule Page Net Position by Component ............................................................................................... 1 ............. 168 Changes in Net Position ..................................................................................................... 2 ............. 170 Fund Balances – Governmental Funds ............................................................................... 3 ............. 173 Changes in Fund Balances – Governmental Funds ............................................................ 4 ............. 174 Assessed and Estimated Actual Value of Taxable Property ............................................... 5 ............. 176 Direct and Overlapping Governments Property Tax Rates ................................................ 6 ............. 177 Principal Property Taxpayers ............................................................................................. 7 ............. 178 Property Tax Levies and Collections ................................................................................. 8 ............. 179 City Transaction Privilege Taxes (Sales Tax) by Category ................................................ 9 ............. 181 Ratio of Outstanding Debt by Type.................................................................................. 10 ............. 182 Ratios of Net General Bonded Debt Outstanding............................................................. 11 ............. 184 Net Direct and Overlapping Governmental Activities Debt ............................................. 12 ............. 185 Legal Debt Margin Information ....................................................................................... 13 ............. 186 Pledged-Revenue Coverage ............................................................................................. 14 ............. 188 Demographic and Economical Statistics .......................................................................... 15 ............. 190 Principal Employers ......................................................................................................... 16 ............. 191 Full-Time Equivalent City Government Employees by Function/Program ..................... 17 ............. 192 Operating Indicators by Function/Program ...................................................................... 18 ............. 193 Capital Asset Statistics by Function/Program .................................................................. 19 ............. 194 Miscellaneous Water and Sewer Rate Statistics ............................................................... 20 ............. 195 Miscellaneous Water and Sewer Statistics ....................................................................... 21 ............. 196 v This page left blank intentionally. vi December 21, 2018 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Glendale, Arizona: The Budget and Finance Department is pleased to submit the City of Glendale, Arizona’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2018. The CAFR includes a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). The financial statements are audited by a firm of licensed certified public accountants in accordance with generally accepted auditing standards (GAAS). City Management assumes full responsibility for the accuracy and completeness of the data, including all disclosures presented in this report. To provide a reasonable basis for making these representations, Management has established a comprehensive internal control framework that is designed to both protect the government’s assets from loss, theft, or misuse; and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements are free of material misstatement. To the best of our knowledge and belief, this financial report is complete and reliable in all material respects and is designed to fairly represent the financial position of the operations of the various funds of the City. This letter of transmittal is best reviewed in conjunction with the Management’s Discussion and Analysis (MD&A) beginning on page 15. The MD&A provides a narrative introduction, overview, and analysis of the basic financial statements of the City. Independent Audit The City’s financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2018, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The City’s independent auditors also perform the Single Audit of the City’s federal grant programs. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements involving the administration of federal awards. The Single Audit Reporting Package is issued separately from this financial report and is available upon request. Budgetary Controls The annual budget serves as the foundation for the City’s financial planning and control. City departments are required to submit requests for appropriation to the City Manager on or before the last week of December each year. Management uses these requests to develop a budget to propose to the City Council for review and adoption. The City Council is required to hold public hearings on the proposed budget and adopt the final budget by the first Monday in August. The City maintains budgetary controls that are designed to ensure compliance with budgetary and legal provisions contained in the annually appropriated operating and capital project budgets approved by the City Council. The legal level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the city-wide level consisting of the total operating budget and the total capital projects budget, as adopted by 1 the City Council. For budget administrative purposes, the City maintains budgetary controls at the fund and department level. Department Heads may request transfers of appropriations within the same fund for his/her department. However, transfers of appropriations between funds and departments require approval of the City Council and can only occur in the last quarter of the fiscal year. Budget-to-actual comparisons are provided in this report for each individual fund for which an appropriated annual budget has been adopted. Arizona state law and Glendale City financial policies require that each annual city budget be a balanced budget. A balanced budget means the total expenditures cannot exceed the budgeted period’s total financial resources available. The adopted FY17-18 budget complies with the balanced budget requirement in all City funds. Additionally, the State of Arizona sets a limit on the expenditures of local jurisdictions. Compliance with these expenditure limitations is required. The City submits an expenditure limitation report as defined by the Uniform Expenditure Reporting System (A.R.S. Section 41-1279.07) along with audited financial statements to the State Auditor General within the required timeframe. City of Glendale Profile The City of Glendale, Arizona is the fifth largest city in the state with a population of approximately 240,000 people. Located in the northwestern part of the metropolitan Phoenix area and occupying approximately 62 square miles of land, the City is home to the Arizona Cardinals and the Arizona Coyotes. The City is also the owner of Camelback Ranch, the spring training facility for the Los Angeles Dodgers and the Chicago White Sox. The City was incorporated in 1910 and has operated under the council-manager form of government since its incorporation. Policy-making and legislative authority are vested in the City Council which consists of the Mayor and six other members. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Clerk, Attorney, Municipal Judge and City Auditor (Internal). The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year terms, with three Council members elected every two years. The Mayor is elected to serve a four-year term. The City provides a full range of services including: police and fire services; water, sewer, and solid waste services; the construction and maintenance of highways, streets, public facilities, and other infrastructure; and recreational activities and cultural events. Certain housing services are provided by the City’s public housing authority, which functions, in essence, as a department of the City and therefore has been included as an integral part of the City’s financial statements. The City also is financially accountable for the Municipal Property Corporation, a legally separate entity, that is reported within the City’s financial statements. Economic Conditions and Strategies Before reviewing the presented financial statements, it is important to consider the local and global economic factors that have impacted the City’s financial position. Primary Revenue Sources The City relies on local and state shared sales tax as well as state shared income tax as primary revenue sources for the City’s operating budget. Local sales tax revenues increased 4.2% this fiscal year when compared to the last fiscal year. The growth can be attributed to the improving economy and economic development activities which generated additional construction sales tax revenue. The city’s state shared sales tax revenues also increased 7.3% compared to last fiscal year. 2 Workforce and Unemployment Glendale’s unemployment rate for the month of June 2018 was 4.3% which is lower than the statewide unemployment rate of 4.7%. Glendale’s workforce is concentrated in the following nonfarm sectors: retail (14.85%), health care services (15.15%), consumer services (11.10%), government and social advocacy services (15.76%), education (9.47%), construction (7.52%), finance, insurance and real estate (6.34%), business services (6.51%), and transportation and distribution (4.29%). Arizona’s nonfarm employment grew 2.6% over the last year with education and health services, construction, professional & business services, manufacturing, and leisure & hospitality leading the growth. Economic Development Business attraction, business retention & expansion, redevelopment and business assistance (ombudsman), comprise the four pillars of Glendale’s economic development program. In 2018, the City was awarded its third Super Bowl which will be hosted in 2023 at the newly renamed State Farm Stadium. Glendale was also awarded the NCAA Final Four tournament for 2024. These mega events bring millions of dollars in revenue to the City of Glendale. Recently, economic development efforts have been focused on adding hotel rooms in the Sports & Entertainment District that would increase accommodations for visitors during these and other large events. Major business attraction and retention projects include Topgolf, Holiday Inn, Aloft, Avanti Windows and Bechtel. Swire Coca-Cola is planning an expansion of more than 12,000 square feet in the Yucca District. Alaska USA Federal Credit Union expanded their corporate foot print in Glendale’s Talavi Business Park with their $17 million purchase of the 185,000 square feet Talavi Tech building which opened in October of 2018. This new facility along with their existing data center and newly acquired branch location will provide hundreds of new finance, IT, and customer service positions. Downtown Glendale has seen a surge in vegan options available. Veggie Rebellion, the first vegan grocery store in Arizona opened in February of 2018 and has surpassed everyone’s expectations. In addition to the foot traffic they bring, other local eateries took notice of the market void and as many as seven of the small businesses in Downtown Glendale have added vegan options to their menu. Downtown now has its very own vegan Mexican restaurant. This movement has organically added new life to Downtown which continues to grow. Glendale truly is a major-league city that continues to attract high-quality development and amenities to the region to further support the growing West Valley. Financial Strategy As part of the annual budget process, the city prepares a five-year financial forecast for each of the City’s major operating funds. The forecast provides a long-term view of current year budget decisions affecting the City and provides an estimate of fund balance and sensitivity to revenue and expenditure changes over the forecast period. Through sound financial planning and positive economic conditions, the City’s General Fund balance continues to improve and increased $3.8 million in fiscal year 2018. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2017. This was the thirtieth consecutive year the City has received this prestigious award, and the thirty-second year overall. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City also received the GFOA’s Distinguished Budget Presentation Award for its fiscal year beginning July 1, 2017. This was the thirty-first consecutive year that the City has received the highest form of recognition in governmental budgeting. 3 The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Budget and Finance Department. I would like to express appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor, Council, and City Manager for their unfailing support in maintaining the highest standards of professionalism in the management of the City’s finances. Respectfully submitted, Vicki L. Rios, CPA Budget and Finance Director 4 5 Glendale, Arizona & Neighboring Communities To Flagstaff Cave Creek e fre re Ca 17 Scottsdale 60 Phoenix Glendale 51 El Mirage Peoria Sun City Surprise 303 Luke AFB Fountain Hills Paradise Valley 101 101 10 Goodyear 85 202 Sky Harbor Airport Mesa 89 60 Tempe Chandler 10 To Tucson 6 Gilbert GLENDALE CITY OFFICIALS Jerry Weiers Mayor Lauren Tolmachoff Bart Turner Ian Hugh Vice Mayor/Councilmember Cholla District Councilmember Barrel District Councilmember Cactus District Jamie Aldama Ray Malnar Joyce Clark Councilmember Ocotillo District Councilmember Sahuaro District Councilmember Yucca District 7 Kevin Phelps City Manager Glendale Council District Boundaries Pinnacle Peak Rd. Deer Valley Rd. Cholla Beardsley Rd. Union Hills Dr. Bell Rd. Saquaro Greenway Rd. Thunderbird Rd. Cactus Rd. Peoria Ave. Olive Ave. Barrell Cactus Yucca Yucca Northern Ave. Glendale Ave. Ocotillo Bethany Home Rd. 43rd Ave. 51st Ave. 59th Ave. 67th Ave. 75th Ave. 83rd Ave. 91st Ave. 99th Ave. 107th Ave. 115th Ave. El Mirage Rd. Dysart Rd. Litchfield Rd. Bullard Ave. Reems Rd. Sarival Ave. Cotton Ln. e. Av 8 nd ra G Citrus Rd. Camelback Rd. 9 Traffic Engineering Transit Fleet Management Landfill Solid Waste Water Field Operations Water Plant Operations Code Compliance Planning Volunteer Services Library and Arts Human Services Community Services Department Stephanie Small Director Risk Management Human Resources Human Resources Department Jim Brown Director Information Technology Innovation and Technology Department Chuck Murphy Chief Information Officer Special Events Procurement Finance Convention and Visitor’s Bureau/ Tourism Parks and Recreation Budget Civic Center Budget and Finance Department Vicki Rios Director City Auditor Candace MacLeod Public Facilities, Recreation & Special Events Department Jim Burke Director Strategic Initiatives and Special Projects Jean Moreno Executive Officer Presiding City Judge Elizabeth Finn COMMUNITY INTEGRITY EXCELLENCE INNOVATION LEARNING We improve the lives of the people we serve every day. Street Maintenance Engineering Airport Facilities Management Environmental Resources Building Safety Engineering Department David Beard City Engineer Field Operations Department Michelle Woytenko Director Water Services Department Craig Johnson Director Development Services Department Sam McAllen Director Transportation Department Trevor Ebersole Director Fire Department Terry Garrison Fire Chief Police Department Rick St. John Police Chief Office of Economic Development Brian Friedman Director City Clerk Julie Bower Assistant City Manager Tom Duensing City Manager Kevin R. Phelps Assistant City Manager Jack Friedline City Attorney Michael D. Bailey Public Affairs Department Brent Stoddard Director Boards & Commissions City Council CITIZENS OF GLENDALE This page left blank intentionally. 10 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ FINANCIAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City Council City of Glendale, Arizona Glendale, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona (City), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 11 The Honorable Mayor and Members of City Council City of Glendale, Arizona Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona as of June 30, 2018, 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information for the City’s pension plans, other postemployment benefits, and budgetary comparison schedule for the general fund (as listed in the table of contents) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements, supplementary information, and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the supplementary information (the federal financial data schedules) are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 12 The Honorable Mayor and Members of City Council City of Glendale, Arizona Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2018, on our consideration of the City’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 the City’s 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 the City’s internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Phoenix, Arizona December 21, 2018 13 This page left blank intentionally. 14 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ MANAGEMENT’S DISCUSSION & ANALYSIS (Required Supplementary Information) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Management’s Discussion and Analysis The following discussion and analysis is provided to readers of the City’s financial statements as a narrative overview of the financial activities of the City for the fiscal year ended June 30, 2018. This discussion and analysis is designed to assist the reader in focusing on significant financial highlights; provide an overview of the City’s financial activity; identify changes in the City’s financial position; identify material deviations from the financial plan (the approved annual budget); and identify individual fund issues or concerns. The Management’s Discussion and Analysis (MD&A) has a different focus and purpose than the letter of transmittal presented on pages 1-4. It is designed to be read in conjunction with the transmittal letter, the financial statements beginning on page 27, and the accompanying notes to the financial statements. Significant Financial Highlights The financial statements illustrate the following significant financial highlights for FY 2017-18: • The City’s total net position increased by $52,876 or 7.3%. The governmental net position increased by $40,062 or 11.4%, and the business-type net position increased by $12,814 or 3.4%. The increase in total net position is primarily due to a decrease in other post-employment benefit (OPEB) liability. The city closed its postretirement health care plan to new retirees effective July 1, 2018. Only those who retired prior to July 1, 2018 are eligible to continue to receive coverage under the OPEB plan. • The City’s total revenues increased by $21,782 or 5.0%. Program revenues in the form of charges for services, grants, and contributions increased by $8,661 or 4.6%. General revenues increased by $13,121 or 5.4%. • Program revenues from governmental activities increased $2,237 or 3.2%. Program revenues for business-type activities increased $6,424 or 5.3%. This increase is primarily due to an increase in water, sewer, and solid waste rates that became effective in January 2018. • Capital grants and contributions from governmental activities increased $5,713 or 85.7%. This increase was due to $2,219 in additional contributed capital of right-of way, public utility easements, and landscape easements for roadways, and $3,414 for a capital grant to rehabilitate the North Apron at the Airport. • General revenues from governmental activities increased $10,028 or 4.2%. The primary reason for this increase was an increase of $6,520 or 4.2% in sales tax revenues. In addition, state shared sales tax increased $1,603 or 7.3%, and state shared income tax increased $1,078 or 3.7%. • The total cost of all City programs decreased by $60,990 or 13.2%. The decrease to a majority of the City programs is primarily due to the decrease in other post-employment benefit (OPEB) liability. • The General Fund, a major governmental fund, collected $232,104 in revenues which is an increase of $7,290 or 3.2% from the prior year. This increase was primarily due to an increase in taxes and intergovernmental revenues. The total expenditures of the General Fund were $202,303, which is an increase of $8,328 or 4.3%. A significant portion of this increase is related to an increase in public safety retirement expenditures. 15 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information intended to provide additional detail to support the basic financial statements. 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 accrual basis of accounting is used for governmentwide financial statements. The Statement of Net Position presented on page 27, provides information on all the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Net position is categorized as net investment in capital assets, restricted by an outside 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 found on page 28, presents information that illustrates how the City’s net position changed during the 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 only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused compensated absences. Both of the Government-Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, community environment, street maintenance, and interest on long-term debt. The business-type activities of the City include water and sewer services, landfill, solid waste, and housing. Fund Financial Statements The Fund Financial Statements found on page 30, provide more detailed information about the major funds within the City. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All 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 government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows and outflows 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 a government’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 decisions. 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. 16 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The City maintains 16 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 2 major funds. Data from the other 14 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. 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 and sewer, landfill, solid waste, 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 internal service funds to account for its fleet, technology, risk management, workers’ compensation and employee benefit activities. Because these services predominantly benefit governmental rather than business-type functions, they have 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 information for the water and sewer fund, while data from the other three enterprise funds is combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds is provided in the form of combining statements and schedules. Conversely, all five internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Additional Required Supplementary Information Following the basic financial statements is Required Supplementary Information (RSI) that further explains and supports the financial information in the financial statements. RSI presents the budgetary comparison schedules for the general fund, as well as other required supplementary information related to the City’s pensions and other postemployment benefits. Other The Combining Statements and Individual Fund Statements and Schedules section presents combining statements for non-major governmental funds, non-major enterprise funds, and internal service funds, along with budget to actual comparisons on individual funds. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $777,267 as of June 30, 2018. By far the largest portion of the City’s net position reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 17 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The City’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. At the end of the current fiscal year, the City is able to report positive balances in the categories of net investment in capital assets and restricted net position. Unrestricted net position for the governmental activities increased by $32,070 or 11.5% over the prior year. The City is addressing the negative unrestricted net position for the governmental activities by holding the line on expenditures and decreasing debt service payments as a result of bond refundings in fiscal years 2015, 2016, 2017, and 2018. The chart below is a comparison of the City’s net position for fiscal years 2018 and 2017: Condensed Statement of Net Position As of June 30, 2018, and 2017 (in thousands) Governmental Activities 2018 2017 Current and other assets Capital Assets: Non-depreciable Depreciable (net) Non-current OPEB assets Equity in joint venture $ 336,914 $ T otal Primary Government 2018 2017 Business-T ype Activities 2018 2017 299,556 $ 130,092 $ 137,420 $ 467,006 $ 436,976 Total assets 146,500 986,646 1,340 3,142 1,474,542 132,255 1,007,060 3,359 1,442,230 45,278 462,806 109 46,363 684,648 42,145 463,149 48,448 691,162 191,778 1,449,452 1,449 49,505 2,159,190 174,400 1,470,209 51,807 2,133,392 Deferred Outflows of Resources 89,547 101,981 13,698 15,849 103,245 117,830 Total liabilities 64,706 1,087,076 1,151,782 75,389 1,098,558 1,173,947 32,019 274,839 306,858 29,134 298,691 327,825 96,725 1,361,915 1,458,640 104,523 1,397,249 1,501,772 Deferred Inflows of Resources 21,782 19,801 4,746 5,258 26,528 25,059 451,826 185,396 (246,697) 471,979 157,251 (278,767) 280,920 27,550 78,272 267,111 22,897 83,920 732,746 212,946 (168,425) 739,090 180,148 (194,847) 386,742 $ 373,928 Current liabilities Noncurrent liabilities Net position: Net investment in capital assets Restricted Unrestricted Total net position $ 390,525 $ 350,463 $ 18 $ 777,267 $ 724,391 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The following presents a summary of the changes in net position compared to the prior year: Changes in Net Position As of June 30, 2018, and 2017 (in thousands) Governmental Activities 2018 2017 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions T otal program revenues General revenues: Property taxes Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Miscellaneous T otal revenues Expenses: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Water and sewer Landfill Solid Waste Housing Total expenses Excess before transfers Transfers in (out) Increase (decrease) in net position Net position beginning Net position ending $ 32,683 26,523 12,382 71,588 $ 35,163 27,519 6,669 69,351 T otal Primary Government 2018 2017 Business-T ype Activities 2018 2017 $ 115,135 9,682 2,054 126,871 $ 107,402 10,230 2,815 120,447 $ 147,818 36,205 14,436 198,459 $ 142,565 37,749 9,484 189,798 25,519 162,299 23,627 24,955 155,779 22,024 - - 25,519 162,299 23,627 24,955 155,779 22,024 30,456 10,166 (694) 1,490 324,451 29,378 9,458 (253) 1,400 312,092 1,368 2,628 130,867 883 114 121,444 30,456 10,166 674 4,118 455,318 29,378 9,458 630 1,514 433,536 42,915 134,977 25,072 30,885 3,290 20,976 24,916 283,031 41,420 61,373 166,790 24,768 33,752 3,930 21,848 27,827 340,288 (28,196) 81,911 9,852 15,150 12,498 119,411 11,456 83,500 11,302 15,698 12,644 123,144 (1,700) 42,915 134,977 25,072 30,885 3,290 20,976 24,916 81,911 9,852 15,150 12,498 402,442 52,876 61,373 166,790 24,768 33,752 3,930 21,848 27,827 83,500 11,302 15,698 12,644 463,432 (29,896) (1,358) (1,264) 1,358 1,264 - - 40,062 350,463 $ 390,525 (29,460) 379,923 350,463 12,814 373,928 386,742 (436) 374,364 $ 373,928 52,876 724,391 777,267 (29,896) 754,287 724,391 $ 19 $ $ $ CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Changes in Net Position The net position of the governmental activities increased by $40,062 and business-type activities’ net position increased by $12,814. Net Position 390,525 Governmental Activities 350,463 386,742 Business-Type Activities 373,928 330,000 340,000 350,000 2018 360,000 370,000 380,000 390,000 400,000 2017 Revenues and Expenditures The chart below shows the performance of the revenues in the governmental activities versus expenses: Expenses and Program Revenues Governmental Activities $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $General Public safety Public works Community Community Street Interest on government services environment maintenance long-term debt expenses program revenues 20 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The City’s total revenues from governmental activities for the fiscal year ended June 30, 2018 increased $12,359 or 4.0%. The increase in revenues is due to an increase of $5,713 in capital grants and contributions, $6,520 in local sales tax, $1,603 in state shared sales tax, and $1,078 in state shared income taxes. The increase to capital grants and contributions was primarily due to $2,219 in additional contributed capital of right-of way, public utility easements, and landscape easements for roadways, and $3,414 for a capital grant to rehabilitate the North Apron at the Airport. The increases to tax revenue reflect the continuing economic growth the City and State of Arizona have experienced over the past several years. The cost of programs and services for governmental activities decreased $57,257 or 16.8%. The decrease is primarily due to the decrease in other post-employment benefit (OPEB) liability. The chart below shows the performance of the expenses and revenues in the business-type activities: $100,000 Expenses and Program Revenues Business-Type Activities $80,000 $60,000 $40,000 $20,000 $Water and sewer Landfill expenses Solid Waste Housing program revenues The City’s total revenues from business-type activities for the fiscal year ended June 30, 2018 increased $9,423 or 7.8%. These increases are primarily due to an increase in water, sewer, and solid waste rates that became effective in January 2018. The cost of programs and services decreased $3,733 or 3.0%. Water and sewer expenses decreased $1,589 or 1.9% and landfill expenses decreased $1,450 or 12.8%. The decrease in cost of programs and services for business-type activities is mainly contributable to the change in other post-employment benefit (OPEB) liablity. 21 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) City Revenue Categories REVENUES BY SOURCE FISCAL YEAR 2017-18 Urban revenue sharing (state shared income tax) 6.7% State shared sales tax 5.2% Auto in-lieu taxes 2.2% Miscellaneous 1.1% Charges for services 32.5% Grants and contributions 11.1% Sales taxes 35.6% Property taxes 5.6% The pie chart above shows the different types of revenue the City receives and the proportion of each. The majority (68.1%) of the total revenue the City receives comes from charges for services and local sales tax. The second most significant source is grants and contributions (11.1%). City Expense Categories EXPENSES BY FUNCTION FISCAL YEAR 2017-18 Landfill 2.4% Solid Waste 3.8% Housing General 3.1% government 10.7% Water and sewer 20.4% Public safety 33.5% Interest on longterm debt 6.2% Street maintenance 5.2% Community environment 0.8% Public works 6.2% Community services 7.7% The majority of the City’s expenses (53.9%) are incurred in the public safety and water and sewer categories. Public safety expenses include those related to police and fire protection services provided to the community and are funded by the general fund. Water and sewer expenses are paid by the enterprise fund which is funded primarily through user paid fees for services. 22 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) 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 As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $192,471, an increase of $34,424 or 21.8% in comparison with the prior year. The City implemented Governmental Accounting Standards Board Statement (GASB) 54 during the 2011 fiscal year which impacted the presentation of fund balance components by more accurately classifying the fund balances into five categories: non-spendable, restricted, committed, assigned and unassigned; Note K in the summary of significant accounting policies addresses this in greater detail. In fiscal year 2018 and 2017, $42,821 and $36,789 respectively, of the total fund balance constituted unassigned fund balance. Revenues for governmental functions overall totaled $315,542 in fiscal year 2018, an increase of $9,039 or 2.9% from the previous years’ total of $306,503. The increase is primarily due to an increase in taxes and special assessments revenue of $6,977 or 3.8% and an increase in intergovernmental revenue of $4,507 or 5.0%. Expenditures for governmental functions totaled $328,395 in fiscal year 2018, a decrease of $4,242 or 1.3% from the previous year total of $332,637. The decrease is primarily due to a decrease in debt service payments of $19,501 or 25.3%. The General Fund is the main operating fund of the City. The General Fund balance increased $3,762 or 6.1%. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $43,474 while total fund balance was $65,345. The General Fund has $2,919 of its fund balance as non-spendable; $6,274 as restricted; and $12,678 assigned. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $23,210 has been earmarked as the Budget Stabilization Reserve and $20,264 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2018 to commit these funds; therefore, the funds are reported as unassigned. Overall, the General Fund’s performance resulted in revenues over expenditures of $29,801 in fiscal year 2018. In the prior year, revenues exceeded expenditures by $30,839. The Municipal Property Corporation (MPC) debt service fund was established to account for the debt service payments on the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, and convention center. The fund had a balance of $3,606 at the end of the fiscal year. Proprietary Funds Net position of the enterprise funds increased $12,154 or 3.2%. The enterprise funds’ total net position was $27,550 restricted, $78,799 unrestricted, and $280,920 invested in capital assets. This increase is primarily due to an increase in water, sewer, and solid waste rates that became effective in January 2018. The water and sewer fund accounts for operations, maintenance and construction projects of city-owned water and sewer systems. The fund saw an increase in net position of $9,988 or 2.7% for the fiscal year ended June 30, 2018. The internal service funds account for fleet, technology, risk management, workers’ compensation, and employee benefits provided to other departments. The funds saw an increase in fund balance of $121 for the fiscal year ended June 30, 2018. The City’s policy is to fund the worker’s compensation and risk management funds at a 55% confidence level based on the most recent actuarial valuations. 23 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) General Fund Budgetary Highlights • The City’s budgeted revenues exceeded expectations and were $6,450 higher than the final budgeted amounts. Positive economic trends resulted in taxes and intergovernmental revenues that were $2,338 and $1,123 greater than the final budget, respectively. Fines and forfeitures were $307 lower than the final budget. Miscellaneous revenues were $81 lower than the final budget. • General Fund expenditures were lower than the final budget by $6,272. The most significant reduction was in capital outlay which was $3,240 lower than the budgeted amount due to capital project expenditures that did not occur during the fiscal year. • General Fund budgetary fund balance increased by $7,725 or 13.8%. This increase is due to tax revenues, intergovernmental revenues, and proceeds from disposal of assets being higher than originally expected. Capital Asset and Debt Administration Capital Assets The City’s investment in capital assets (net of accumulated depreciation) as of June 30, 2018, for its governmentaltype activities was $1,133,146 and for the business-type activities was $508,084. The investment in governmental and business-type capital assets consisted of land, buildings, machinery and equipment, and infrastructure for streets, parks, airport and street lighting, water, and wastewater treatment plants. Major capital asset projects capitalized during the current fiscal year included the following: • • • • • • • • Streetlighting LED conversion $4,626 PMP Mill & Overlay $3,431 Airport North Apron $2,603 Northern Parkway Erosion Prevention $451 Thunderbird Reservoir Improvement $1,461 City Wide Manhole Rehabilitation $2,639 Water Line Improvements $3,072 Water Line Extension Loop 101 and Beardsley $1,524 24 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The following table is a summary of capital assets reflected in the June 30, 2018, financial statements as compared to last year’s financial statements. Capital Assets at Year End (Net of depreciation) (in thousands) Governmental Activities 2018 2017 Construction in progress $ 23,481 $ 10,459 Land 120,604 119,381 Water storage rights Artwork 2,415 2,415 Buildings 242,217 252,074 Improvements other than buildings 131,109 141,294 Infrastructure-streets 457,515 457,766 Infrastructure-parks 45,126 48,003 Infrastructure-flood/storm drains 66,464 67,439 Infrastructure-airport 10,843 8,628 Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment 11,665 10,599 Computer equipment 1,562 1,142 System Purchase Software 2,699 3,253 Automotive equipment 17,446 16,862 T otal $ 1,133,146 $ 1,139,315 T otal Primary Government 2018 2017 $ 51,019 $ 26,305 138,344 145,680 7,043 7,222 2,415 2,415 248,012 258,293 178,641 186,938 457,515 457,766 45,126 48,003 66,464 67,439 10,843 8,628 82,814 79,463 74,909 75,133 132,903 138,830 84,196 85,028 16,287 14,073 2,364 2,463 12,692 11,389 1,747 1,213 337 477 2,699 3,253 24,860 24,598 $ 1,641,230 $ 1,644,609 Business-T ype Activities 2018 2017 $ 27,538 $ 15,846 17,740 26,299 7,043 7,222 5,795 6,219 47,532 45,644 82,814 79,463 74,909 75,133 132,903 138,830 84,196 85,028 16,287 14,073 2,364 2,463 1,027 790 185 71 337 477 7,414 7,736 $ 508,084 $ 505,294 The construction commitments at June 30, 2018 were $63,191. Additional information on capital assets can be found in Note V of the financial statements. Long-Term Debt At the end of the current fiscal year, the City had total debt outstanding of $844,802 compared to $857,921 last year, a 1.5% net decrease. General obligation T ransportation revenue bond Excise tax revenue bonds Municipal Property revenue bonds Capital lease obligation Note payable Settlement obligation Water and sewer revenue bonds/obligations T otal $ Governmental Activities 2018 2017 146,985 $ 120,000 70,745 74,670 211,755 147,960 203,365 2,278 1,839 8,100 $ 645,067 $ Business-T ype Activities 2018 2017 $ $ - 283,515 4,484 3,677 11,100 - - 645,406 199,735 $ 199,735 212,515 $ 212,515 25 $ T otal Primary Government 2018 2017 146,985 $ 120,000 70,745 74,670 211,755 147,960 203,365 2,278 1,839 8,100 $ 199,735 844,802 283,515 4,484 3,677 11,100 $ 212,515 857,921 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) The City received a “A+” underlying rating from Standard & Poor’s, an “A1” underlying rating from Moody’s Investor Services, and an “AAA” underlying rating from Fitch Ratings for its general obligation debt. The senior excise tax bonds are rated “AA+” by Standard and Poor’s and an “A1” by Moody’s. The subordinate excise tax bonds are rated “AA” by Standard and Poor’s and an “A1” by Moody’s. The subordinate lien water and sewer revenue bonds are rated “A1” by Moody’s and “AA” by Standard & Poor’s. Transportation bonds were assigned an underlying rating of “AA” by Standard & Poor’s and “A2” by Moody’s. The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes, libraries, economic development, historic preservation, and cultural facilities may not exceed 6% of the total limited property value of the taxable property in that city. Cities may also issue general obligation bonds up to 20% of the total limited property value for supplying water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s current unused 6% and 20% debt limitation on June 30, 2018, were $78,417 and $146,583, respectively. Additional information on long-term debt can be found in Note X of the financial statements. Next Year’s Budget and Economic Factors The City of Glendale is continuing its efforts to make sound financial decisions that focus on prudent long-range planning in order to achieve $50,000 in unassigned fund balance by fiscal year 2020. The overall goals underlying the city’s financial policies include fiscal responsibility, flexibility, and adherence to the highest accounting and management practices. The adopted fiscal year 2018-19 budget is $689,000, an increase of 2.5% from 2017-18. The increase is mainly attributable to an increase in debt service payments and Public Safety Personnel Retirement contribution costs. Overall, the goal of the FY18‐19 budget is to continue to improve the city’s financial position while maintaining a high quality of service delivery, improving public safety, encouraging development, maintaining neighborhoods and continuing progress toward the development of a strategic plan to ensure service delivery and resource allocation is aligned with City Council policy throughout the entire organization. Total revenues for fiscal year 2018-19 are projected at $557,625. The major sources of revenue for the City continue to be sales tax, property taxes, and state shared revenues with projected revenues of $111,207, $5,760, and $66,319 respectively. For fiscal year 2018-19, City sales tax is expected to grow by 4.5%. This expectation is based on the continued expansion of Glendale’s sports, entertainment, office and retail destination area, continued attraction of diverse job growth industries to the city, and modest but sustainable economic recovery. Request for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Budget & Finance, 5850 West Glendale Avenue, Suite 302, Glendale, Arizona 85301. 26 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ BASIC FINANCIAL STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. City of Glendale, Arizona Statement of Net Position June 30, 2018 (amounts expressed in thousands) 178,533 Primary Government Business-Type Activities $ 95,384 709 9,191 51,308 587 27,510 527 3,113 65,436 14,812 938 (527) 3,484 3,350 12,651 709 24,003 51,308 587 28,448 6,597 3,350 78,087 146,500 986,646 1,340 3,142 1,474,542 45,278 462,806 109 46,363 684,648 191,778 1,449,452 1,449 49,505 2,159,190 73,161 16,386 89,547 5,763 7,935 13,698 78,924 24,321 103,245 14,326 1,101 1,025 25,315 14,707 482 2,883 4,867 8,240 97 102 12,780 4,930 318 5,531 21 22,566 1,198 1,127 38,095 19,637 800 8,414 4,888 78,243 1,008,833 1,151,782 20,576 254,263 306,858 98,819 1,263,096 1,458,640 21,782 21,782 4,746 4,746 26,528 26,528 451,826 280,920 732,746 24,260 87,909 48,936 7,160 5,861 6,289 1,340 3,641 (246,697) 390,525 12,780 9,538 109 5,123 78,272 386,742 24,260 100,689 48,936 7,160 9,538 5,861 6,289 1,449 8,764 (168,425) 777,267 Governmental Activities ASSETS Investments Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Property taxes Accounts Note Accrued interest Intergovernmental receivable Internal balances Inventories and prepaid items Restricted deposits Restricted cash and investments Capital assets: Non-depreciable Depreciable (net) Non current OPEB assets Equity in joint venture Total assets $ DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions and OPEB Debit amounts resulting from refunded debt Total deferred outflows of resources LIABILITIES Vouchers payable Accounts payable Retainage payable Matured bonds payable Accrued interest payable Intergovernmental payable Deposits payable Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities DEFERRED INFLOW OF RESOURCES Credit amounts related to pensions and OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Capital projects Debt service Transportation Highway and streets Revenue bond retirement, replacement, and extension Perpetual care - nonexpendable Police and Fire OPEB benefits Other purposes Unrestricted Total net position $ The notes to the financial statements are an integral part of this statement. 27 $ Total $ $ 273,917 City of Glendale, Arizona Statement of Activities For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Charges for Services Expenses Functions/Programs Primary government: Governmental activities: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Total governmental activities Business-type activities: Water and sewer Landfill Solid Waste Housing Total business-type activities Total primary government $ $ 42,915 134,977 25,072 30,885 3,290 20,976 24,916 283,031 $ 81,911 9,852 15,150 12,498 119,411 402,442 $ 17,847 2,295 651 10,890 338 662 32,683 86,288 9,444 16,048 3,355 115,135 147,818 Program Revenues Operating Grants and Contributions $ $ 629 4,671 70 880 3,329 16,944 26,523 536 9,146 9,682 36,205 General revenues: Taxes: Property taxes levied for: General purposes Debt service Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Miscellaneous Transfers Total general revenues, special items, and transfers Change in net position Net position - beginning Net position - ending The notes to the financial statements are an integral part of this statement. 28 Net (E Capital Grants and Contributions $ $ 3,614 43 2,908 691 5,126 12,382 1,921 133 2,054 14,436 Governme Activitie Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total $ $ (20,825) (127,968) (21,443) (18,424) 377 1,756 (24,916) (211,443) $ - $ (20,825) (127,968) (21,443) (18,424) 377 1,756 (24,916) (211,443) (211,443) 6,834 (408) 898 136 7,460 7,460 6,834 (408) 898 136 7,460 (203,983) 5,686 19,833 162,299 23,627 30,456 10,166 (694) 1,490 (1,358) 251,505 40,062 350,463 390,525 1,368 2,628 1,358 5,354 12,814 373,928 386,742 5,686 19,833 162,299 23,627 30,456 10,166 674 4,118 256,859 52,876 724,391 777,267 $ 29 $ City of Glendale, Arizona Balance Sheet Governmental Funds June 30, 2018 (amounts expressed in thousands) Major Funds Municipal Property Corporation General Debt Service ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Note Accrued interest Due from other funds Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets 105,385 $ 153,399 $ 555 4,529 6,016 136 52,330 168,951 $ 709 9,191 51,308 587 3,619 27,501 3,055 63,859 313,228 $ 154 4,662 587 3,619 21,485 2,919 1,040 79,272 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable $ Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities 6,921 803 1,435 481 2,816 33 12,489 Deferred Inflows of Resources - Unavailable Revenue 1,438 51,308 633 53,379 2,919 6,274 12,678 43,474 65,345 79,272 3,606 3,606 65,005 5,810 115,385 2,548 430 (653) 123,520 168,951 8,729 125,265 2,548 13,108 42,821 192,471 313,228 $ The notes to the financial statements are an integral part of this statement. 30 $ 51,308 10,489 65,005 $ 44,806 Total liabilities, deferred inflows of resources and fund balances 3,208 Total Governmental Funds $ Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances $ Other Non-Major Governmental Funds $ $ 5,101 4,990 10,091 $ $ 5,117 68 1,025 136 1 3,619 67 4,834 9,606 20,325 44,798 $ $ 12,038 871 1,025 1,571 482 3,619 2,883 4,867 14,707 25,315 67,378 City of Glendale, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2018 (amounts expressed in thousands) Amounts reported for governmental activities in the statement of net position are different because: Fund balances - total governmental funds balance sheet $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 192,471 1,915,389 (783,999) 1,131,390 Net OPEB asset 1,316 Adjustment to reflect the government joint venture 3,142 Deferred outflow of resouces related to pensions and OPEB 71,363 Deferred outflow reacquisition price of refunding outstanding debt 16,386 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds and shown as an internal balance item. 527 Internal service funds are used by management to charge the costs of workers' compensation, risk management, employee benefits, fleet services and IT projects to individual funds. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the statement of net position. Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported in the funds. Bonds payable Net pension liability Net OPEB liability Capital lease obligations Developer payable obligations Compensated absences Bond discount Settlement obligation Unamortized premium on debt issuance Note payable 7,932 (632,850) (329,878) (6,351) (2,278) (4,126) (25,304) 504 (8,100) (56,573) (1,839) (1,066,795) Deferred inflows of resources related pensions and OPEB (20,586) Deferred inflows of resources is unavailable revenue that is measurable but not yet available for governmental fund activities is recognized as revenue for governmental-wide activities 53,379 Net position of governmental activities $ 31 390,525 City of Glendale, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Major Funds Municipal Property Corporation General Debt Service REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income(loss) Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Payment to refunded bonds escrow agent Refunding bonds issued Loan proceeds Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 $ $ 141,091 10,267 64,370 53 9,824 2,965 (811) 4,345 232,104 $ 81 81 Other Non-Major Governmental Funds Total Governmental Funds $ $ 47,462 2,267 29,821 5 426 372 859 2,145 83,357 188,553 12,534 94,191 58 10,250 3,337 129 6,490 315,542 29,634 133,113 11,369 17,546 763 11 - 1,316 6,174 31 14,408 3,621 10,098 30,961 139,287 11,400 31,954 3,621 10,861 9,878 202,303 4,990 10,202 15,203 24,369 18,098 32,774 110,889 29,359 28,300 42,652 328,395 29,801 (15,122) (27,532) (12,853) 2,831 600 (29,470) (26,039) 3,762 61,583 65,345 18,180 (2,894) 15,286 164 3,442 3,606 (77,139) 91,940 15,240 15,686 79 43,147 (30,923) 58,030 30,498 93,022 123,520 (77,139) 91,940 15,240 15,686 2,910 61,927 (63,287) 47,277 34,424 158,047 192,471 $ The notes to the financial statements are an integral part of this statement. 32 $ $ City of Glendale, Arizona Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Amounts for governmental activities in the statement of net position are different because: Net change in fund balances - total governmental funds $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives as depreciation expense. Expenditures for capitalized assets Less current year depreciation $ 34,424 42,652 (51,623) (8,971) The net effect of various transactions involving capital is to increase net position. Capital contributions Disposals Gain (loss) on sales 4,971 (2,910) (419) 1,642 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. The net effect of long-term obligations and the related transactions is to increase net assets. Long term debt issued Net bond premium and discount amortized Net bond premium Payment to refunded bonds escrow agent Principal paid on bonds and notes 4,160 (107,180) 4,753 (15,686) 77,139 29,359 (11,615) Compensated absences reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (2,381) Other post employment benefits reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. 35,743 Net pension expense reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. (10,440) Internal service funds are used by management to charge the costs of workers' compensation, risk management, employee benefits, fleet services, and technology projects to individual funds. (539) Expenses on the statement of activities differ from governmental funds because of the portion not accrued on the governmental funds. Change in net position of governmental activities (1,961) $ The notes to the financial statements are an integral part of this statement. 33 40,062 City of Glendale, Arizona Statement of Net Position Proprietary Funds June 30, 2018 (amounts expressed in thousands) ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ 84,084 $ 11,300 $ 95,384 25,134 14,475 (2,286) 917 3,464 100,654 3,132 (509) 21 20 13,964 17,607 (2,795) 938 3,484 114,618 9 59 25,202 Noncurrent assets: Restricted deposits Restricted cash and investments OPEB assets Capital assets: Capital assets Accumulated depreciation Capital assets, net 3,350 12,651 72 37 3,350 12,651 109 1,575 24 841,634 (360,572) 481,062 62,147 (35,125) 27,022 903,781 (395,697) 508,084 5,397 (3,641) 1,756 Equity in joint venture Total noncurrent assets Total assets 46,363 543,498 644,152 27,059 41,023 46,363 570,557 685,175 3,355 28,557 DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions and OPEB Debit amounts resulting from refunded debt Total deferred outflows of resources 3,787 7,935 11,722 1,976 1,976 5,763 7,935 13,698 1,798 1,798 LIABILITIES Current liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences Matured bonds payable Intergovernmental payable Deposits Unearned revenue Unearned rent Estimated claims payable Bonds payable-current Interest payable Total current liabilities 7,106 63 102 1,654 12,780 308 5,233 11 18,300 4,930 50,487 1,134 34 622 10 298 10 2,108 8,240 97 102 2,276 12,780 318 5,531 11 10 18,300 4,930 52,595 2,285 230 582 13,915 17,012 Noncurrent liabilities: Compensated absences Bonds payable Net pension liability Net OPEB liability Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities 982 203,917 21,032 440 226,371 276,858 535 11,278 815 29 15,235 27,892 30,000 1,517 203,917 32,310 1,255 29 15,235 254,263 306,858 369 3,463 383 4,215 21,227 3,068 3,068 1,678 1,678 4,746 4,746 1,196 1,196 253,898 27,022 280,920 1,756 12,780 9,538 72 5,123 94,537 375,948 37 (15,738) 11,321 12,780 9,538 109 5,123 78,799 387,269 24 6,152 7,932 DEFERRED INFLOWS Credit amounts related to pensions and OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Debt service Revenue bond retirement, replacement and extension OPEB benefits Other purposes Unrestricted Total net position $ $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities The notes to the financial statements are an integral part of this statement. 34 $ (527) 386,742 $ City of Glendale, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Operating revenues: Intergovernmental Metered water sales Sewer service charges Container service Curb service Landfill user fees Self-insurance premium Charges for Services Recycling sales Other fees Total operating revenues $ 536 49,082 33,465 4,939 88,022 $ 9,146 4,016 12,032 8,241 1,099 3,458 37,992 $ 9,682 49,082 33,465 4,016 12,032 8,241 1,099 8,397 126,014 Governmental Activities Internal Service Funds $ 34,860 21,353 205 56,418 Operating expenses: Water Sewer Landfill Housing Closure/post-closure care adjustment Solid Waste Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) 23,933 12,732 14,297 23,305 74,267 13,755 9,112 12,669 538 15,291 2,606 40,216 (2,224) 23,933 12,732 9,112 12,669 538 15,291 14,297 25,911 114,483 11,531 17,953 37,426 563 55,942 476 Nonoperating revenues (expenses): Impact fees Investment income Interest expense Net loss from joint venture Gain/(loss) on disposal of assets OPEB income (expense) 1,558 1,264 (8,544) (2,627) (2,847) 5,334 104 43 2,924 1,558 1,368 (8,544) (2,627) (2,804) 8,258 263 (6) (612) Total nonoperating revenues (expenses) (5,862) 3,071 (2,791) (355) Income (loss) before contributions and transfers 7,893 847 8,740 121 Capital contributions Transfers in Transfers out Change in net position 1,921 420 (246) 9,988 133 1,191 (5) 2,166 2,054 1,611 (251) 12,154 121 Total net position - beginning Total net position - ending $ 365,960 375,948 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. 35 9,155 11,321 $ $ 660 12,814 7,811 7,932 City of Glendale, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services Net cash provided (used) by operating activities Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ 86,547 - $ 28,761 9,151 $ 115,308 9,151 56,419 - (9,741) (24,223) (10,190) (16,841) (19,931) (41,064) (303) (11,698) (19,084) 33,499 (10,028) 853 (29,112) 34,352 (33,616) (6,015) 4,787 Cash flows from noncapital financing activities: Transfers in Transfers out Net cash provided (used) by noncapital financing activities 420 (246) 1,191 (5) 1,611 (251) - 174 1,186 1,360 - Cash flows from capital and related financing activities: Proceeds from sale of capital assets Principal payments on obligations Acquisition of capital assets and rights Impact fees Interest payments on obligations Contributions to Joint Venture Net cash (used) by capital and related financing activities (9,805) (28,831) 1,558 (10,090) (542) 37 (1,096) - 37 (9,805) (29,927) 1,558 (10,090) (542) (1,058) - (47,710) (1,059) (48,769) (1,058) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 1,264 1,264 95 95 1,359 1,359 263 263 Net increase (decrease) in cash and cash equivalents during fiscal year (12,773) 1,075 (11,698) 3,992 Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ 109,508 96,735 The notes to the financial statements are an integral part of this statement. 36 $ 10,225 11,300 $ 119,733 108,035 $ 21,142 25,134 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 operations: Amortization and depreciation Net pension and OPEB contributions Change in net OPEB asset Change in net pension and OPEB liability Net change in deferred outflows related to pensions and OPEB Net change in deferred inflows related to pensions and OPEB Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Restricted deposits Vouchers and accounts payable Intergovernmental payable Deposits Unearned rent Unearned revenue Compensated absences Claims payable Estimated closure and post-closure costs Net cash provided (used) by operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents Noncash investing, capital, and financing activities: Contributions of capital assets Loss on joint venture Amortization of bond premium/discount Amortization of debit amounts resulting from refunded debt Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ $ $ $ $ 13,755 $ (2,224) $ 11,531 476 23,305 6,320 (71) (7,140) 2,606 3,441 (38) (3,882) 25,911 9,761 (109) (11,022) 563 (292) (23) 76 799 420 1,219 259 (350) (162) (512) (164) (1,410) (917) (903) (402) 33 (33) 326 11 176 - (88) 10 (2) 268 (24) 1 (4) (7) - (1,498) (907) (905) (402) 301 (57) 327 (4) 11 169 - 1 50 (339) 105 4,075 33,499 $ 84,084 12,651 96,735 $ 1,921 (2,627) 2,250 $ 934 37 $ 538 853 $ 11,300 11,300 $ 133 - $ - $ 538 34,352 $ 95,384 12,651 108,035 $ 2,054 (2,627) 2,250 $ 934 $ 4,787 25,134 25,134 - CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Notes to the Financial Statements The Notes to the Basic Financial Statements include a summary of significant accounting policies and other disclosures considered necessary for a clear understanding of the accompanying financial statements. Index Note Page Summary of Significant Accounting Policies ............................................................................. I ............................. 39 Compliance – Excess of Expenditures Over Appropriations/Deficits in Fund Equity ............. II ............................. 49 Deposits and Investments ........................................................................................................ III ............................. 50 Note Receivable ....................................................................................................................... IV ............................. 52 Capital Assets ........................................................................................................................... V ............................. 53 Construction Commitments ..................................................................................................... VI ............................. 55 Internal Service Funds ............................................................................................................VII ............................. 55 Leases ................................................................................................................................... VIII ............................. 58 Short-Term Debt ...................................................................................................................... IX ............................. 59 Long-Term Debt ....................................................................................................................... X ............................. 59 Landfill Obligations ................................................................................................................. XI ............................. 69 Inter-fund Transactions ...........................................................................................................XII ............................. 70 Encumbrances....................................................................................................................... XIII ............................. 72 Equity in Joint Venture ......................................................................................................... XIV ............................. 72 Jointly Governed Organizations ............................................................................................ XV ............................. 74 Governmental Fund Balance Components and Fund Type Definitions ............................... XVI ............................. 74 Pensions and Other Postemployment Benefits .................................................................... XVII ............................. 76 Contingent Liabilities and Commitments .......................................................................... XVIII ............................. 91 Tax Abatement ..................................................................................................................... XIX ............................. 92 Implementation of New Accounting Principles ..................................................................... XX ............................. 93 Subsequent Events ................................................................................................................ XXI ............................. 93 38 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) I. Summary of significant accounting policies A. Reporting entity The City of Glendale, Arizona (City) was incorporated June 18, 1910, under the provisions of Article 13, Sections 1 through 6 of the Constitution of Arizona and Title 9 of the Arizona Revised Statutes. It is governed by a Mayor elected at large, and six district council members. The City operates under a Council-Manager form of government. The major operations of the City include providing police, fire, water, and sewer services to citizens. As required by GAAP, these financial statements present the government and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of a government’s operations, so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in combined financial statements to emphasize that it is legally separate from the government. The City has no discretely presented component units. Blended component units City of Glendale, Arizona, Municipal Property Corporation (MPC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. The MPC is governed by a board of directors who are responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, MPC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. The total debt outstanding, including leases, of the MPC is expected to be repaid entirely or almost entirely with the resources of the primary government. MPC does not issue separate audited financial statements. However, it does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Budget and Finance Department. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. There are several types of transactions that are reported in the financial statements as inter-fund items. Transactions that would be treated as revenue, expenditures or expenses if they involved organizations external to the governmental unit, like the sale of water from the water & sewer fund to various functions of the general fund, are accounted for as revenue & expenditures or expenses in the funds involved. These revenue & expense transactions are reflected in the appropriate functional activity on the government-wide statement of activities and are not eliminated in consolidation. Transactions that constitute reimbursement to a fund for expenditures or expenses initially made from that fund, which are properly applicable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is being reimbursed. Governmental Accounting Standards Board (GASB) Statement 34 also requires that administrative service fees charged to other operating funds to support general services used by the other operating funds (like purchasing, accounting & administration) should be treated as reimbursement transactions and the revenue & expenditures/expenses reduced in the allocating fund. The costs of these services are reflected in the appropriate functional activity within the government-wide statement of activities and the revenues & expenses are eliminated from the government-wide financial statements to avoid any doubling up effect of these revenues & expenses. Transfers between funds are included in the results of both governmental & proprietary funds (as other sources/uses in governmental funds). 39 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds.” Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. These transactions include transfers between funds and interdepartmental service charges. All internal balances in the statement of net position have been eliminated, with the exception of those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total governmental column. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is 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 and other items not properly 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. The internal service funds are eliminated on an entity-wide basis as per GASB Statement 34. C. Form of presentation – fund financial statements The City reports the following major governmental funds: The general fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. The municipal property corporation debt service fund (MPC) accounts for the debt service payments for the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center and convention center. The City reports the following major proprietary fund: The water and sewer fund accounts for operations, maintenance and construction projects of the Cityowned water and sewer systems. Additionally, the City reports internal service funds. Internal service funds account for risk management, workers’ compensation, employee benefits, fleet and technology services provided to other departments. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures/expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following funds are presented in the accompanying financial statements: 40 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Governmental funds Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City’s expendable financial resources and related liabilities (except those accounted for in proprietary funds) are accounted for through governmental funds. The measurement focus is based upon determination of financial position and changes in financial position rather than upon the determination of net income. The following governmental funds are presented in the accompanying financial statements. General fund: The general fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special revenue funds: Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt service funds: Debt service funds are used to account for the accumulation of financial resources for the payment of long-term debt principal, interest, and related costs, except the debt service accounted for in the enterprise funds. Debt service funds also include the debt payable from highway user’s gas tax revenues and unrestricted excise tax revenues as well as debt funded by property taxes levied by the City on property located within the City. Capital projects funds: Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Permanent fund: Permanent fund is used to account for financial resources to be used by the cemetery fund. Proprietary funds Proprietary funds are used to account for the City’s ongoing operations and activities, which are similar to those found in the private sector. The measurement focus is based upon the determination of net income. Enterprise funds: Enterprise funds are used to account for operations, including debt service, 1) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or 2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The enterprise funds, which the City currently maintains, are the water and sewer, landfill, solid waste, and housing funds. Internal service funds: Internal service funds are used to account for the financing of self-insurance and fleet and technology services provided by one City department to other City departments on a costreimbursement basis. D. Measurement focus and basis of accounting The City-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 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 provider have been met. 41 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) 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 except as described below in relation to grants. Revenues are considered to be available when they are collected 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, principal and interest on long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the related debt service fund for payments to be made shortly after fiscal year-end. Revenues susceptible to accrual because of their availability include property tax, sales tax, highway user’s tax, state shared sales tax, vehicle license tax, and interest earned on investments. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the decision to accrue depends on the terms of the arrangement or agreement. Generally, these resources are reflected as revenue at the time of receipt or earlier if they meet the available criterion. Certain grant revenues are recognized based on expenditures recorded. Resources that have been received before time requirements are met but after all other eligibility requirements have been met are recorded as a deferred inflow. However, resources transmitted before time requirements are met but after eligibility requirements have been met are recorded as deferred outflows. This practice is defined and supported by GASB Statement 63, as it pertains to Financial reporting of deferred outflows of resources, deferred inflows of resources and net position. E. Statement of cash flows The City considers short-term investments (including restricted assets) in the State of Arizona Local Government Investment Pool (LGIP), mutual fund-money market, U.S. Treasury bills and notes with original maturities of three months or less at acquisition date to be cash equivalents. F. Inter-fund transactions Inter-fund transactions, consisting of services performed for other funds or costs billed to other funds are treated as expenditures in the fund receiving the services and as a reimbursement reducing expenditures in the fund performing the services, except for sales of water to other City departments, which are recorded as revenue in the Water Enterprise funds. In addition, operating transfers are made between funds to shift resources from a fund legally authorized to receive revenue to a fund authorized to expend the revenue. Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is classified as due to/from other funds (current portion of inter-fund advances) and advances to/from other funds (noncurrent portion of inter-fund advances). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. G. Inventories and prepaid items Inventories of the governmental and enterprise funds consist primarily of expendable supplies held for consumption. These inventories are maintained on a perpetual system verified through cyclical physical counts and are valued using a weighted average cost. Generally, expenditures are recorded at the time 42 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) inventories are used (i.e., the consumption method) for both GAAP reporting and budgetary purposes. However, the City postage inventory is recorded as expenditure at time of purchase (i.e., the purchase method) for budgetary purposes. At June 30, 2018, the postage portion of the general fund supplies inventory was $9. Certain expenditures are recorded for financial reporting purposes as prepaid items. Special reporting treatment is applied to governmental fund inventories and prepaid items to indicate that they represent amounts that are not in spendable form, even though they are a component of current assets. Such amounts are presented as a component of non-spendable fund balance. H. Restricted assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net position, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants and the escrow agreement. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. Restricted assets also include cash held at the Maricopa County Treasurer for the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO funds are limited by state and federal law to qualified expenses related to fighting and preventing drug use and organized crime. I. Capital assets The City has chosen not to apply the modified approach to any networks or subsystems of infrastructure assets. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City) are defined as assets with an initial, individual cost of more than $5 and an estimated useful life greater than three years. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Improvements other than buildings Infrastructure Machinery and equipment Automotive equipment Software Computer equipment Useful Life (Years) 30 10-20 10-100 5-8 6-8 3 3-5 Capital assets transferred between funds are transferred at their carrying value (cost less accumulated depreciation) as of the date of the transfer. 43 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) J. Water rights The City has entered into a lease agreement with Salt River Pima-Maricopa Indian Community (SRPMIC) for the rights to 1,814 acre-feet of water each year through 2099. These rights, costing $2,694, are being amortized over 40 years on a straight-line basis starting January 1, 2000. Current year amortization was $67. The net book value of water rights as of June 30, 2018, is $1,447. In addition, the City will be responsible for paying for the cost of water delivered each year. The City participates in the Plan Six cost sharing agreement to construct the Waddell Dam on the Agua Fria River and modify the Roosevelt and Stewart Mountain Dams on the Salt River. The parties to this agreement include the United States government, State of Arizona, Central Arizona Water Conservation District, Salt River Project, and the cities of Phoenix, Chandler, Glendale, Mesa, Scottsdale, Tempe and Tucson. The federal government has determined that this agreement does not constitute a joint venture. As of June 30, 2018, the City has capitalized payment of $4,463 for these water rights. Current year amortization was $112. The net book value of these water rights as of June 30, 2018, is $3,570. The City purchased Central Arizona Project water rights as part of the Salt River Pima-Maricopa Indian Community Water Rights Settlement in November 2007. These rights, as of June 30, 2018, costing $2,026, are a permanent right and are considered to have an indefinite useful life. As such, they are not amortized; therefore, cost and net book value are equal to $2,026. K. Governmental fund balance components The components of governmental fund balance consist of the following: Non-spendable amounts are the portion of net resources that cannot be spent because of their form such as inventories and prepaid items. Also included is the portion of net resources that cannot be spent because they must be maintained intact pursuant to legal and contractual requirements such as the cemetery permanent fund. Restricted are amounts that are subject to externally enforceable legal restrictions imposed by parties outside the government such as creditors, grantors, contributors, and other governments through laws and regulations. Examples of restricted fund balance are amounts held to pay for bonded construction projects, debt service, and excise tax revenues collected for voter approved transportation expenditures. Committed are amounts that are constrained by limitations imposed by the highest level of decision making authority, namely Mayor and Council and require approval by the same level of authority through an ordinance to remove. Amounts must be committed prior to the fiscal year end. An example of committed fund balance is amounts for artwork. Assigned are amounts that are constrained by limitations imposed by management based on the intended use of the funds. The city manager has been given authority to assign funds as needed through the financial policies adopted in the annual Budget Book approved by Mayor and Council. An example of assigned fund balance are amounts for equipment replacement or general government capital projects. Unassigned are amounts for any other purpose. If resources were not assigned, they could not be properly reported in a fund other than the general fund. Therefore, only the general fund can report a positive amount of unassigned fund balance. Any governmental fund in a deficit position could report a negative amount of unassigned fund balance. 44 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. On the government-wide financial statements, only restrictions imposed by external sources are shown as restricted net position. L. Net position The government-wide and proprietary fund financial statements use a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Position – This category represents net position that has external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose. M. Property tax The City levies taxes on real and personal property located within its boundaries. Property values are assessed by the Maricopa County Tax Assessor. The tax levy is then approved by the State of Arizona Property Tax Oversight Commission. The County Treasurer bills and collects property taxes and remits them to the City monthly. City property tax revenues are recognized when levied to the extent that they are received within the current period, or soon enough thereafter (within 30 days of year-end), to pay liabilities of the current period. Remaining collectible taxes are accrued and reflected as deferred inflows of resources. Property Tax Calendar Lien date Levy (assessment) date (third Monday in August) Due dates: First half of assessment Second half of assessment Penalties and interest added (collection dates): First half of assessment Second half of assessment January 2, 2017 August 21, 2017 October 2, 2017 March 1, 2018 November 1, 2017 May 1, 2018 The City currently levies less than the maximum allowed by State Statutes for primary property taxes. The City is permitted to levy an increase of two percent over the previous year’s maximum allowable primary levy plus an increased dollar amount due to a net gain in property not taxed the previous year. The secondary property tax levy is made for the purpose of retiring the principal, interest and servicing fees on bonded indebtedness. The City may levy the amount deemed necessary to meet its bonded debt service requirements. The debt service fund balance cannot exceed 10% of the next year’s debt service payment. Assessed values are established by the Maricopa County Tax Assessor each year on a uniform basis ratio to full cash value of each property class as required by State Statutes. 45 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The distribution of the City’s levy (tax rate per $100 assessed value) to its funds for the year ended June 30, 2018, is as follows: Fund General fund General obligation debt service fund Total Rate 0.46 1.61 $ 2.07 $ N. Compensated absences Vacation time is accumulated up to a maximum of 10 workweeks and compensatory time is earned in lieu of cash payment for overtime. Both vacation and compensatory time can either be taken as time off from work, within certain limitations, or may be payable to employees upon termination or retirement. Employees who have ten or more years of service will receive upon retirement 100% of up to 160 hours of vacation accrued. Any remaining vacation time above 160 hours will be 100% contributed to a mandatory Retiree Health Savings plan for the employee. Employees separating from the City receive 100% of accrued vacation time. Sick leave is accumulated without limit and can be used in the event of an illness of the employee or their immediate family. Accumulated sick leave can be converted to a cash benefit on a biannual basis for employees based on one-third of the average hourly rate the last 36 months. Employees must maintain a minimum sick leave balance on the books. Employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Employees who separate from service and have five or more years of service will receive one-third of their sick leave balance based on their average hourly wage over the last 36 months in a cash payout. Represented Fire and Police MOU employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Represented Fire and Police MOU employees who retire are paid 100% of accrued vacation time. The current portion of the liability for compensated absences recorded in the governmental fund is equal to: 1) vacation and compensatory time taken and paid during the thirty days following the year ended June 30, 2018, and 2) sick leave, taken and paid for illness during that period, paid to terminating employees or paid under the optional annual declaration. Long-term liabilities of governmental funds are not shown on the fund financial statements. All of the outstanding vacation, compensatory time, and sick leave are recorded as a liability on the government-wide financial statements, and the proprietary fund financial statements, according to payment policy. O. Deferred outflow and deferred inflow of resources In addition to assets, the statement of net position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflow of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has two items that qualify for reporting in this category. It is the deferred charge on refunded debt and deferred outflows related to pensions and OPEB reported in the government-wide statement of net position. In addition to liabilities, the statement of net position will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government only has two items that qualify for reporting in this category. It is unavailable revenue, which arises only under a modified accrual basis of accounting, and the deferred inflow related to pensions and other post-employment benefits. 46 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Amounts that are reported as deferred outflows are shown as a separate balance sheet section following the assets. Similarly, amounts shown as deferred inflows are shown in a separate balance sheet section following liabilities. P. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are reported as a long-term liability and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types 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. Q. Operating revenues and expenses Proprietary funds distinguish operating revenues and expenses from non-operating 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 enterprise funds and the City’s internal service funds are charges to customers for sales and services, or housing operational grants from a federal agency. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. R. Postemployment benefits For purposes of measuring the net pension and other postemployment benefits (OPEB) assets and liabilities, deferred outflows of resources and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense, information about the 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 plans. 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. S. Deferred compensation The Voluntary Deferred Compensation Plan for Employees of the City of Glendale, State of Arizona; Restated Plan Document (the “Plan document”) was adopted by the Mayor and City Council on November 10, 1998, and amended on January 8, 2002 to incorporate the Federal Economic Growth and Tax Relief Reconciliation Act of 2001. In addition, the Mayor and City Council adopted a defined contribution deferred compensation plan document on April 9, 2002, under the Internal Revenue Code Section 401(a). On February 12, 2013 the adoption of a new contract was approved by the Mayor and City Council which allowed the plan to be administered solely by the third-party administrator Empower Retirement (Empower) a division of Great West Life & Annuity Insurance Co (Great West). Through the Plan document, the City offers its employees a deferred compensation plan that permits them to defer 47 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 and 401(a) of the Internal Revenue Code, are not available to employees until termination of employment, retirement, death or an unforeseen emergency. The plan assets are in custodial or trust accounts for the exclusive benefit of the plans’ participants and beneficiaries. The City provides neither administrative services nor investment advice to the plans; therefore, no fiduciary relationship exists between the City and the deferred compensation pension plan. In addition, the plan assets are not included as a fund of the City. The Retiree Health Savings (RHS) Plan was originally adopted on July 1, 2008, and amended and restated on February 12, 2013, by Mayor and Council. The purpose of the Plan is to provide certain Employees with an opportunity to receive reimbursement for certain Health Care Expenses as provided in this Plan. It is the intention of the Adopting Employer that the benefits payable under this Plan be eligible for exclusion from the gross income of Participants as provided by Sections 105(b) and 106 of the Code. In addition, it is the intention of the Adopting Employer that the Plan qualify as a Health Reimbursement Arrangement (HRA) under IRS Revenue Ruling 202-41 (June 26, 2002) and IRS Notice 2002-45 (June 26, 2002). The provider for this RHS plan is Educator Benefit Consultants (EBC). The contributions to this Plan are detailed in the Compensated Absences (N) section on this document. T. Elected Officials’ Defined Contribution Retirement System (EODCRS) HB 2608 signed in July of 2013 closed the Elected Officials’ Retirement Plan (EORP) to new members and established the new Elected Officials’ Defined Contribution Retirement System (EODCRS) effective January 1, 2014 (A.R.S. Title 38, Chapter 5, Article 3.1). In addition to this new plan, the EODCRS Disability Program was also established (A.R.S. Title 38, Chapter 5, Article 3.2). EODCRS is a nonERISA 401(a) plan type. If a person is elected, appointed, or hired on or after January 1, 2014, does not have money on account with EORP, does not have money on account with ASRS or does not timely opt out of the EODCRS to return to ASRS, if applicable, the elected official must be automatically enrolled in the EODCRS. This includes any elected official who has already retired from EORP and/or ASRS. The investment options available to EODCRS members will be administered by Nationwide Retirement Solutions (NRS). The elected official will also contribute to and participate in the EODCRS Disability Program administered by PSPRS. As prescribed in ARS § 38‐727, if a person is appointed, elected, or hired on or after January 1, 2014 and does not have money on account with the EORP, but has money on account with the ASRS, that person has the option to return to the ASRS. The member has the option to participate in either the EODCRS or the ASRS Plan with each term. That decision is irrevocable during the term in which that election was made. Additionally, the elected official will contribute to and participate in the Long‐Term Disability Program administered by ASRS. To choose the ASRS, the person must fill out a form provided by PSPRS opting out of the EODCRS. This election must be made within 30 days after that person’s term begins and returned to PSPRS. The City was required by statute to contribution 12.16 percent of elected officials participating as an ASRS members’ annual covered payroll to the ASRS Legacy As of January 1, 2014, the employer rate for all employers contributing on behalf of their elected officials, regardless of what plan they are in, will be 23.5%. However, pursuant to ARS § 38‐810, subsection C, and as described above, that rate may be split a number of ways depending on which plan (or path) your elected official will belong to. Employee rates will vary, also dependent upon the path your elected official is on, and all are pre‐tax contributions. The rates for the respective disability programs are separate from the 23.5% employer rate and are contributed on an after‐tax basis. The 23.5% employer rate is set by statute; however, the Board of Trustees of PSPRS is required to monitor this rate to inform the Legislature annually of its continued ability to pay the unfunded liability of the EORP 48 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) legacy costs, so there is the possibility of this rate changing from time‐to‐time. Additionally, the rate for the disability program will also be reviewed and revised annually to meet its actuarially determined costs. For the year ended June 30, 2017 active EODCRS members were required by statue to contribute at the rate of 8.125 percent (8 percent to the DC plan and .125 percent for the disability program) of the members’ annual covered payroll. The City was required by statue to contribute at the rate 6.125 percent (6 percent to the DC plan and .125 percent for the disability program) of the active members’ annual covered payroll. The maximum annual contribution limits are in accordance with the IRS regulation for defined contribution plans. Employee and employer contributions are immediately vested. In addition, the City was required by statute to contribution 17.50 percent of the EODC members’ annual covered payroll to the EORP Legacy. The Elected Officials Retirement Plan is not reported in the financial statements because of its relative insignificance to the financial statements. U. Investments The City uses the following methods and assumptions to account for its investments: 1. 2. 3. Aside from investments clearly identified as belonging to a specific fund, any unrealized gain/loss resulting from the valuation is recognized within the general fund as investment revenue. Investments are recorded at fair value, which is based on quoted market prices as of the valuation date. Pooled investment income is allocated to various funds monthly based on the average equity balances maintained during the month. Arizona Revised Statutes require the City to deposit certain crime-related forfeitures with the County Treasurer. The County Treasurer determines the fair value of those pooled investments. The structure of the pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer is not subject to custodial credit risk. The City’s investment in LGIP represents shares of the pool’s portfolio. The fair value of each share in the LGIP is one dollar. These shares are not identified with specific investments and are not subject to custodial credit risk. Neither the County nor LGIP are registered with the Securities and Exchange Commission as investment companies. The State Board of Deposits provides oversight, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the LGIP. There is no regulatory oversight of the County Treasurer’s operations. The net decrease in the fair value of investments during the fiscal year ended June 30, 2018, was $1,490. II. Compliance - Excess of expenditures over appropriations/deficits in fund equity The City ended the fiscal year June 30, 2018, with a deficit fund balance/net position in the following funds: Fire and Police construction fund The deficit fund will be funded by bond proceeds in 2019 Fleet services internal service fund Deficit will be funded by increases in user premium charges in next fiscal year. 49 $ 653 3,124 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) III. Deposits and investments The City maintains a cash management pool for its cash and cash equivalents in which each fund and/or account or sub-account of a fund participates on a dollar equivalent basis. Deposits At year-end, the carrying amount of the City’s deposits was $68,711 and the bank balances were $72,727. The difference of $4,016 represents deposits in transit, outstanding checks, and other reconciling items. At year-end, all of the City's deposits were covered by Federal depository insurance and collateral held in the City’s name. City deposits held with fiscal agents at June 30, 2018, were $101,207 and were uncollateralized. Investments State Statutes and the City’s investment policy authorize the City to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, repurchase agreements, commercial paper (A-1/P-1 rated), interest-earning money market accounts, certificates of deposit, and the State of Arizona Local Government Investment Pool (LGIP). Investments may not exceed five years to maturity from the date of purchase. The City’s investment in the LGIP is valued using net asset value (NAV) per share (or its equivalent), which approximates the fair value of the holdings provided by the Arizona State Treasurer’s Office at June 30, 2018. Unlike more traditional investments, the City’s holdings in the LGIP, measured at a NAV approximately $1 per share (or equivalent) are not individually identifiable. As of June 30, 2018, the City had the following investments: Investment Type Corporate bonds U.S. Agencies U.S. Treasuries Arizona LGIP - State Pool Grand total investments Cash deposits Cash with fiscal agents Total deposits and investments Investment Maturities (in years) 1-2 2-3 Over 3 $ 10,838 $ 5,021 $ 39,498 2,481 9,846 16,724 $ 60,182 $ 24,226 $ - 0-1 $ 4,992 19,905 42,301 33,830 $ 101,028 Fair Value $ 20,851 61,884 68,871 33,830 $ 185,436 68,711 101,207 $ 355,354 Investment Fair Value Level: Investments using fair value measurement guidelines established by generally accepted accounting principles recognize a three-tiered fair value hierarchy as follows: • Level 1 – Quoted prices for identical investments in active markets, • Level 2 – Observable inputs other than quoted market prices, and • Level 3 – Unobservable inputs Debt securities classified in Level 2 are valued using quoted prices for similar securities in active markets. The remainder of this page left blank intentionally. 50 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The City’s investments are classified as follows: Fair Value Measurements Using Levels Investment at fair value level Level 1 Corporate Bonds $ U.S. Agencies U.S. Treasury Total Investments at fair value level $ - Level 2 $ 20,851 61,884 68,871 $ 151,606 Level 3 $ $ External Investment Pools Measured at Fair Value State Treauser's Investment Pool Total Investments - Totals $ 20,851 61,884 68,871 151,606 33,830 $ 185,436 Interest rate risk: As a means of limiting its exposure to interest rate risk the City’s investment policy requires all securities to mature in no more than five years. The City also purchases securities to be laddered with staggered maturity dates. Credit risk: The City’s investment policy requires commercial paper to have a rating of at least A-1 by Standard and Poor’s, P-1 by Moody’s, or F1 by Fitch. Corporate bonds must have a rating of at least A or better by Standard and Poor’s, A2 by Moody’s, or A by Fitch. As of June 30, 2018, the City’s investments were rated by Moody’s Investor Service and Standard & Poor’s as follows: Investment Type U.S. Treasury U.S. Agencies Arizona LGIP Corporate Corporate U.S. Treasury Corporate Corporate U.S. Agencies S&P Rating AA+ AA+ NR A+ AAA A-1+ AAAA AA+ Moody's Rating Aaa Aaa NR A2 Aaa P-1 Aa3 Aa2 WR % of Total Investments 34.45% 30.71% 18.24% 3.16% 2.71% 2.70% 2.69% 2.68% 2.66% Weighted Average Maturity (Years) 2.30 1.23 0.10 1.93 2.47 0.42 0.32 1.12 1.09 The remainder of this page left blank intentionally. 51 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Concentration of credit risk: The investment policy of the City contains no limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of the total investments are as follows: Issuer United States Treasury Total FNMA Total Arizona LGIP Total Freddie Mac Total Investment Type U.S. Treasury U.S. Agencies Arizona LGIP U.S. Agencies $ Amount 68,871 34,657 33,830 19,755 Custodial credit risk: To control custodial credit risk, the City’s investment policy requires all securities and collateral to be held by an independent third-party custodian in the City’s name. The custodian provides the City with monthly market values along with original safekeeping receipts. IV. Note receivable On October 22, 2008, the Western Loop 101 Public Facilities Corporation (PFC), a blended component of the City dissolved in fiscal year 2016, issued $199,750 in third lien excise tax revenue bonds to construct a baseball spring training facility. On October 1, 2009, the City finalized an Intergovernmental Agreement with the Arizona Sports and Tourism Authority (AZSTA) for the Glendale Spring Training Facility Project. The AZSTA agreed to contribute to the City $60,000 for the construction costs plus interest at 4.13% per annum payable semi-annually. A note receivable for the agreed upon contribution amount plus accrued interest on the note in the amount of $30,668 less an allowance for doubtful accounts in the amount of $39,360 has been recorded at June 30, 2018. No payments have been received by the City on the note as of June 30, 2018. At the Glendale City Council workshop session held on August 5, 2014, the AZSTA presentation included projections for the AZSTA to begin making payments to the City in the year 2021. On December 27, 2012, the City of Glendale Municipal Property Corporation (MPC), a blended component unit of the City, issued subordinate excise tax revenue bonds to refund the $199,750 third lien excise tax revenue bonds that were previously issued by the Western Loop 101 Public Facilities Corporation (PFC). The issuance of $183,405 in tax-exempt bonds and $16,850 in taxable bonds achieved debt service savings and lowered the next five fiscal years’ annual rental payments under the Lease Agreement. In fiscal year 2016, the AZSTA receivable was recorded in the MPC debt service fund. The remainder of this page left blank intentionally. 52 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) V. Capital assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2018, is as follows: Balances June 30, 2017 Governmental activities Non-depreciable assets: Construction in progress Land Artwork Total non-depreciable assets $ Increase 10,459 119,381 2,415 132,255 $ 19,769 3,631 Balances June 30, 2018 Decrease $ 23,400 (6,747) (2,408) (9,155) $ 23,481 120,604 2,415 146,500 Depreciable assets: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total depreciable assets at historical cost 387,865 287,649 771,592 91,088 78,606 18,726 51,471 4,563 6,086 48,434 1,746,080 1,695 19,792 241 138 2,613 3,686 981 39 4,066 33,251 (1,338) (1,017) (118) Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total accumulated depreciation (135,791) (146,355) (313,826) (43,085) (11,167) (10,098) (40,872) (3,421) (2,833) (31,572) (739,020) (9,857) (10,542) (20,043) (3,118) (1,113) (398) (2,588) (553) (593) (3,381) (52,186) - 2,473 3,568 (145,648) (156,897) (333,869) (46,203) (12,280) (10,496) (42,475) (3,864) (3,426) (32,480) (787,638) Total depreciable assets, net 1,007,060 (18,935) (1,479) 986,646 Governmental activities capital assets, net $ 1,139,315 $ 53 4,465 387,865 288,006 791,384 91,329 78,744 21,339 54,140 5,426 6,125 49,926 1,774,284 (2,574) (5,047) 985 110 $ (10,634) $ 1,133,146 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Balances June 30, 2017 Business-Type activities: Non-depreciable assets: Construction in progress - water and sewer $ Construction in progress - landfill Construction in progress - solid waste Construction in progress - housing authority Land Total non-depreciable assets 14,882 357 35 572 26,299 42,145 Depreciable assets: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total depreciable assets at historical cost Increase 159 24,124 (8,559) (20,991) 16,914 9,183 77,676 129,847 141,615 254,747 139,234 29,734 5,187 4,034 1,003 1,163 23,409 833,746 5,129 6,346 3,179 2,875 3,216 3,021 520 130 1,337 25,753 (450) (546) (996) 16,914 9,183 82,805 136,193 144,794 257,622 142,450 32,755 5,187 4,104 1,133 1,163 24,200 858,503 Less accumulated depreciation for: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total accumulated depreciation (10,695) (1,961) (32,032) (50,384) (66,482) (115,917) (54,206) (15,661) (2,724) (3,244) (932) (686) (15,673) (370,597) (424) (179) (3,241) (2,995) (3,403) (8,802) (4,048) (807) (99) (240) (16) (140) (1,517) (25,911) 407 404 811 (11,119) (2,140) (35,273) (53,379) (69,885) (124,719) (58,254) (16,468) (2,823) (3,077) (948) (826) (16,786) (395,697) Total depreciable assets, net 463,149 (158) (185) 462,806 $ 505,294 54 $ 23,331 634 23,966 $ $ (12,239) (158) (35) Balances June 30, 2018 25,974 833 731 17,740 45,278 Business-Type activities capital assets, net $ Decrease (21,176) $ $ 508,084 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Depreciation was charged to functions/programs as follows: Governmental activities: General Public safety Public works Street maintenance Community services Total depreciation expense $ $ Business-Type activities: Water and sewer Landfill Solid Waste Housing Total depreciation expense $ $ 16,066 5,912 14,686 10,976 4,546 52,186 23,305 1,086 1,207 313 25,911 Included in the water and sewer depreciation amount is $179 amortization of water storage rights. VI. Construction commitments The City has active construction projects as of June 30, 2018. The projects include street construction, park facilities, and the construction of additional water and sewer facilities. At year-end, the government’s commitments with contractors are as follows: Project General government Community services Public safety Public works Street maintenance Water and sewer facilities Landfill Housing ISF Total primary government Spent-to-Date $ 8,940 18 3,322 10,719 25,974 833 731 481 $ 51,018 Construction Commitment $ 55 1,166 8,149 21,376 31,669 776 $ 63,191 VII. Internal service funds The City is exposed to various risks of loss. Certain of these risks are accounted for within the internal service fund type. A. Risk management On January 1, 1987, the City established a risk management fund for torts, and loss and destruction of assets. The City’s risk management fund purchases excess or commercial insurance as follows: automobile and general liability, errors and omissions, employment practices liability, employee benefit liability, employee benefits wrongful acts, and products completed operations hazards with limits up to $50,000. The risk management fund was fully self-insured through June 30, 1998, for tort liability 55 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) losses. Effective July 1, 1998, the City purchased excess insurance. Currently the excess insurance liability coverage has a $1,000 self-insured retention. The fund also purchased commercial insurance for airport owners and operators’ liability with limits up to $20 and no deductible, crime coverage with limits up to $10,000 with a $50 deductible, fiduciary liability covering the Deferred Compensation Committee with limits up to $5,000 and no deductible, and public employees blanket bond covering the Risk Management and Workers’ Compensation Trust Fund Board with limits up to $10. Property coverage for damage or destruction of city assets is up to $1,000,000 with varying deductibles from $25 up to $500. The property coverage includes builders risk, automobile physical damage, boiler and machinery, pollution and cyber. An excess cyber liability policy was also purchased with limits up to $5,000 and a $25 deductible or 100 notified individuals. Funds receiving insurance coverage pay monthly premiums to the risk management fund based upon a budget model taking into consideration actuarial analysis and projections, prior loss experience, staffing, and operating budget. Premium payments to insurance carriers, loss control, and risk management expenses are made directly from the risk management fund. Insurance coverage has not been significantly reduced in recent years. B. Workers’ compensation On July 1, 1994, the City established a workers’ compensation fund for work-related injuries to employees. The workers’ compensation fund provides statutory coverage up to a maximum of $2,000 for each workers’ compensation claim with an $800 self-insured retention. Funds receiving insurance coverage pay monthly premiums to the workers’ compensation fund based upon a budget model taking into consideration actuarial analysis and projections prior loss experience, staffing level, operating budget and the National Council on Compensation Insurance workers’ compensation manual rates. Premium payments to insurance carriers and loss control and workers’ compensation expenses are made directly from the workers’ compensation fund. There have been no settlements paid in excess of insurance. C. Employee benefits On July 1, 2000, the City established an employee benefits fund to meet future cost increases for healthrelated insurance. For active employees’ premiums are collected through contributions from employee paychecks and department budgets. Retirees contribute anywhere from 75% to 100% of the premiums, depending on the plan and coverage level they enroll in, and the city subsidizes the remainder. COBRA participants contribute 100% of premiums plus 2% administration fee for their insurance benefit coverage. Premiums for the medical, vision, dental, and life insurance plans are determined prior to each renewal period based on the actuarial valuation of the costs of claims, administration of the plan, demographics of the group, plan design changes and any new mandated benefits. These insurance benefits are provided through fully insured and self-insured insurance plans. The City is responsible for the first $200 in medical claims per individual per plan year. Claims exceeding $200 for an individual are paid by the reinsurance plan. Premiums for the self-insured medical plan are set prior to the beginning of each plan year equal to 125% of the expected claims liability. 56 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Premium payments to insurance carriers are made directly from the fund. There have been no settlements paid in excess of insurance in any of the past three years nor has insurance coverage been significantly reduced in recent years. D. Estimated liability Based on information provided by the actuary, liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported, the effects of specific, incremental claim adjustment expenses, and other allocated claim adjustment expenses. The City’s workers’ compensation self-insurance program liability includes recoveries related to subrogation. Salvage and subrogation are immaterial to both risk management and employee benefits self-insurance programs and are not incorporated into the liability. The risk management trust fund and workers’ compensation self-insurance programs do include a provision for unallocated claim adjustment expenses. The workers’ compensation fund includes payment of Industrial Commission taxes and fees. The City claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and societal factors. The risk management fund and the workers’ compensation fund are funded to meet a 55% confidence level of the most recent actuarial report. The City reports the estimated liability in net present value dollars using a future investment yield assumption of .51%. These liabilities are reported in the internal service funds at their actuarial determined liability of $13,915 as of June 30, 2018. Changes in the balances of claims liabilities during the past two years are as follows: Risk Management 2018 2017 Workers' Compensation 2018 2017 Unpaid claims, beginning of fiscal year $ 2,758 Current year claims and changes in estimate 3,143 Claims payments (1,858) $ 2,810 $ 5,021 $ 3,831 1,096 (1,148) 2,828 (1,518) 2,548 (1,358) Balance at fiscal year end $ 2,758 $ 6,331 $ 5,021 $ 4,043 Employee Benefits 2018 2017 $ 2,061 $ 29,499 (28,019) $ 3,541 1,914 27,266 (27,119) $ E. Fleet Services The Fleet Services Fund was established to track income and expenses of the internal services provided to city departments. The Fleet Services Fund specifically covers vehicle maintenance needs and fuel purchased for city vehicles. F. Technology The Technology Fund and the Technology Projects Fund are used to track income and expenses of the internal services provided to city departments for telephone services, information technology services, and support. The Technology Fund specifically supports all the city’s computers, hardware, and software. The Technology Fund is designed to balance, with the rates (revenues) set to recover the actual expenses each year. The Technology Projects Fund may accrue a fund balance in anticipation of future upgrades and potential carry over of project funding. 57 2,061 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) VIII. Leases A. Capital leases The City’s capital lease activity consists principally of leasing various types of light equipment such as radios for the Police Department and a photocopier for the Fire Department. Leases vary in terms of 3 to 5 years for photocopier and radios. Current year principal expenditures are $2,206 for governmental activities. The future minimum lease obligation and net present value of lease payments at June 30, 2018, are as follows: Governmental Activities 2,353 2,353 (75) $ 2,278 Year Ending June 30 2019 Total minimum lease payments Less: Amount representing interest Present value of net minimum lease payments The assets acquired through capital leases are as follows: Governmental Activities $ 6,624 (1,331) $ 5,293 Class of Property Equipment Less: Accumulated depreciation Total B. Operating lease revenue The City also leases various City-owned properties and buildings under cancelable and non-cancelable long-term lease agreements through fiscal year 2018 and beyond. The carrying value of leased assets is $286,176 (cost of $501,299 less accumulated depreciation of $215,123). The leased properties and buildings are included as capital assets in the government-wide financial statements. Certain leases contain provisions for future increased revenues based upon changes in the Consumer Price Index. The remainder of this page left blank intentionally. 58 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Scheduled minimum revenues for non-cancelable leases for succeeding fiscal years ending June 30 are as follows: Total Revenues $ 2,676 2,672 2,042 1,687 1,395 32,052 $ 42,524 Fiscal Year 2019 2020 2021 2022 2023 2024 and beyond Total IX. Short-term debt The City did not issue short-term debt for the year ended June 30, 2018. X. Long-term debt A. General obligation bonds (GO) 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. General obligation bonds are direct obligations and pledge the full faith and credit of the City and are repaid through the City’s levying of property taxes. Retirement of the general obligation bonds in the business-type activities are intended to be paid back by the revenues of the business-type activities. B. Revenue bonds The transportation revenue bonds are special revenue obligations of the City and are used to construct various transportation projects such as roadway widening, intersection improvements, and right-of-way acquisitions. The $70,745 in bonds outstanding is secured by the City’s pledge of a 0.50% transportation excise tax approved by voters on November 6, 2001. The debt service payments are also secured by the same excise tax. The total remaining principal and interest to be paid to a trustee under a trust agreement is $94,970. The current year revenues of $27,571 collected in the transportation special revenue fund paid the current year principal and interest amounts of $3,925 and $3,114 respectively. For transportation revenue bonds, the pledged revenue coverage covenants in the purchase agreements require the transportation excise taxes received must be equal to or at least one and one-half times the total interest and principal payment required in the current fiscal year. The Excise Tax Revenue Refunding bonds are special obligations of the City and are not a general obligation of the City. Under a purchase agreement the City makes monthly payments to a trustee. The payments are secured by a senior claim and pledge by the City of all of the City’s unrestricted excise tax revenues which comprise of all excise tax, transaction privilege, franchise and income tax which it collects or is apportioned by the State or political subdivision of the State. The $211,755 in bonds outstanding was issued to refund senior and subordinate excise tax revenue bonds issued by the MPC. The total principal and interest remaining on the bonds to be paid is $300,032. The current year principal and interest amount of $1,590 and $9,340 were funded with a transfer from the General fund. 59 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The $199,735 in water and sewer revenue bonds/obligations outstanding has been issued for the construction, acquisition, and equipping of water and sewer facilities and related systems and infrastructure. These are special revenue obligations and are pledged and secured solely by the net revenues of the system. The net revenues of the system consist of revenues collected from customers including development impact fees and interest income less such necessary expenses of operation, maintenance, and repair of the system excluding depreciation, amortization and debt service. The total principal and interest remaining to be paid is $259,310. The current year principal and interest on the bonds were $22,640 and net revenues of the system were $39,882. For water and sewer revenue bond senior obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations. For water and sewer revenue bond subordinate obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations and subordinate obligations. C. Municipal Property Corporation (MPC) bonds In 1982, 2002, 2003, 2006 and 2008 the MPC, a non-profit corporation, issued bonds to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively. On October 19, 1982, July 31, 2002, May 1, 2003, and June 1, 2006, the City entered into a lease purchase agreement with MPC, whereby, the City purchased the constructed municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively, from MPC. In addition, on April 1, 2004, the City entered into a lease agreement with the MPC to issue bonds to finance an escrow account to refund certain outstanding City improvement district bonds. In June 2008, the City entered into a lease agreement with the MPC to issue bonds to refund outstanding 2006B bonds. In February 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003, 2004, and 2006. In December 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003 and 2004, and to fully refund outstanding maturities of the Western Loop 101 Public Facilities Corporation bond series 2008. In March 2015, senior excise tax revenue bonds were issued to refund MPC bonds series 2002B, 2003B, 2006A, and series 2012D, respectively. In April 2016, senior excise tax revenue bonds were issued to refund MPC bond series 2003 D in full as well as several maturities of the MPC bond series 2008A. An amount equal to the MPC debt service and related miscellaneous fees, is payable to the MPC in monthly installments by the City. Under the provisions of the purchase agreement, the City has pledged for the payment of the purchase price: 1) all net revenues derived from the municipal office complex and arena, and 2) all excise, transaction, privilege and franchise taxes which the City currently collects, may collect or are allocated to the City by any other governmental unit or municipal corporation, except the City’s share of such amounts which by state law, rule or regulation must be expended for other purposes. However, under no circumstances shall such pledge constitute a general obligation of the City nor will the purchase price be payable from the proceeds of ad valorem taxes. The total principal and interest remaining to be paid is $337,675. Excise tax revenues pledged for repayment of MPC was $168,214. The current year principal and interest paid was $15,192. For senior liens, the pledged revenue coverage covenants in the lien agreements require the unrestricted excise taxes received must be equal to or at least three times the senior excise tax obligation payment required in any current fiscal year. The requirement for subordinate liens is the unrestricted excise taxes received must be equal to at least two times the combined total payment on senior excise tax obligations and subordinate lien excise tax obligations in any current fiscal year. 60 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) D. Changes in long-term liabilities The following is a summary of changes in long-term liabilities reported in the governmental activities financial statements for the year ended June 30, 2018: June 30, 2017 General obligation (GO) bonds Revenue bonds: Excise Tax Revenue bonds Transportation bonds M unicipal Property Corporation Total bonds payable $ Other long-term obligations: Capital lease obligations Note payable Net OPEB liabilities Settlement obligations Compensated absences Claims and judgments Unamortized premium on debt issuance Discount on debt issuance Net pension liabilities Developer payable obligations Total other long-term obligations Total $ 120,000 Increases Decreases $ $ 41,795 (14,810) June 30, 2018 $ Amounts Due Within One Year 146,985 $ 18,910 147,960 74,670 283,515 626,145 65,385 107,180 (1,590) (3,925) (80,150) (100,475) 211,755 70,745 203,365 632,850 6,700 4,035 5,945 35,590 4,484 3,677 49,542 11,100 25,183 9,840 9,207 35,382 (2,206) (1,838) (42,808) (3,000) (6,566) (31,307) 2,278 1,839 6,734 8,100 27,824 13,915 2,278 1,839 3,000 16,775 13,915 52,066 15,686 (11,179) 56,573 4,846 (1,277) 313,900 3,898 472,413 19,441 228 79,944 773 (98,131) (504) 333,341 4,126 454,226 42,653 1,098,558 $ 187,124 (198,606) $ 1,087,076 $ 78,243 $ General, transportation, and police and fire sales tax special revenue funds typically have been used to liquidate compensated absences in prior years, since most employees engaged in governmental activities are paid from those funds. Paychecks include payment for leave taken during the current pay period. Of the $1,087,076 in the total liabilities, 697,162 is related to net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are OPEB obligations, compensated absences, and claims and judgments. No governmental funds cash has been used to fund the net other post-employment benefit obligation (OPEB). The net annual OPEB cost for the current fiscal year was funded by the employee benefits internal service fund. This fund receives money from employee contributions as well as general and water and sewer fund contributions. The remainder of this page left blank intentionally. 61 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The following is a summary of changes in long-term liabilities reported in the business-type activities financial statements for the year ended June 30, 2018: June 30, 2017 Water and sewer revenue/obligation bonds Total bonds payable $ Other long-term obligations: Estimated closure and post-closure costs Unamortized premium on debt issuance Net pension liabilities Net OPEB liabilities Compensated absences Housing noncurrent liabilities Total other long-term obligations Total $ 212,515 212,515 June 30, 2018 Amounts Due Within One Year (12,780) (12,780) $ 199,735 199,735 $ 16,050 16,050 Additions Reductions $ $ - 14,697 538 - 15,235 - 24,732 32,015 11,083 3,624 25 86,176 295 1,192 4 2,029 (2,250) (9,828) (1,023) (13,101) 22,482 32,310 1,255 3,793 29 75,104 2,250 2,276 4,526 (25,881) $ 274,839 $ 20,576 298,691 $ 2,029 $ Of the $274,839 in total liabilities, $222,217 (including matured bonds payable) is included in the calculation of net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are estimated landfill closure and post-closure costs, OPEB obligations, compensated absences, and housing noncurrent liabilities. The remainder of this page left blank intentionally. 62 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) E. Current and advance refunded bonds The City issued refunding bonds to defease certain outstanding bonds, thus achieving debt service savings. The City has placed the proceeds from the refunding issues in an irrevocable escrow account with a trust agent, which will provide amounts sufficient for future payment of principal and interest of the issue refunded. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City’s financial statements. Although defeased, the refunded debt from this issue will not be actually retired until the call dates have come due or until maturity if they are not callable issues. Issue Refunded Date Refunded Remaining Balance Municipal Property Corporation Bonds Series 2008A June 1, 2016 1,530 The remainder of this page left blank intentionally. 63 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) F. Bonds payable Bonds payable at June 30, 2018, are comprised of the following: Classified in governmental activities on the government-wide financial statements: Purpose Issued Fiscal Year Ending June 30 Interest Rate Year Series M atures Amount of Original Issue Bonds Outstanding June 30, 2018 GO bonds payable from secondary assessed property taxes Various Taxable Direct Pay BAB 1.50-5.63 2010 Refunding Tax-Exempt 4.00-5.00 2011 Refunding Tax-Exempt 2.00-5.00 2015 Various Tax-Exempt(A), Taxable(B) 1.54-4.00 2016 Refunding Taxable BAB 2017 3.16 2018 Various Tax-Exempt 2018 5.00 2018 Total 2030 2022 2022 2036 2030 2037 41,650 38,300 39,490 27,285 26,555 15,240 29,385 14,830 34,510 26,465 26,555 15,240 146,985 Revenue bonds payable from the 0.5% transportation sales tax Refunding Tax-Exempt Excise Tax Rev 2.00-5.00 2015 Refunding Tax-Exempt Excise Tax Rev 2.62 2017 Total 2032 2032 55,635 19,330 55,340 15,405 70,745 Excise Tax bonds payable from general fund sales tax Refunding Tax-Exempt 2015A 5.00 Refunding Taxable 2015B 3.93-4.03 Refunding Tax-Exempt 2016 3.00-5.00 Sub Refunding Tax-Exempt 2017 5.00 Total 2031 2033 2033 2032 100,430 13,700 33,830 65,385 99,315 13,700 33,830 64,910 211,755 M unicipal Property Corporation payable from general fund lease payments M PC Taxable excise tax 2003B 1.46-5.58 2003 2033 M PC Taxable excise tax 2008B 5.45-6.16 2008 2033 M PC Tax-Exempt refunding 2012A 3.00-5.00 2012 2021 M PC Tax-Exempt refunding 2012B 5.00 2013 2033 M PC Tax-Exempt refunding 2012C 5.00 2013 2038 M PC Taxable refunding 2012D 1.30-3.125 2013 2020 Total 105,260 52,780 8,665 39,620 183,405 16,850 1,480 42,995 4,540 39,620 108,245 6,485 203,365 2015 2015 2016 2018 Total bonds payable recorded in governmental activities Less current portion Long-term portion of bonds payable recorded in governmental activities 64 $ 632,850 (35,590) 597,260 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Classified in business-type activities on the government-wide financial statements: Issued Fiscal Year Ending June 30 Year Series Matures Amount of Original Issue Revenue bonds/obligations payable from water and sewer fund Various 6.20-6.55 2011 2030 Various refunding 2.00-5.00 2012 2028 Various refunding 2.50-5.00 2015 2028 Total 25,685 77,635 121,245 Purpose Interest Rate Bonds Outstanding June 30, 2018 25,685 57,640 116,410 199,735 Total bonds payable recorded in business-type activities Less current portion Long-term portion of bonds payable recorded in business-type activities $ 199,735 (16,050) 183,685 The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the limited assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to 20% of the limited assessed valuation for supplying such city with water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s unused bonded debt borrowing capacity as of June 30, 2018, is as follows: 6% Capacity to incur bonded debt Less: Bonded debt applicable to limit Unused bonded debt capacity $ $ 78,417 78,417 20% $ $ 261,389 (114,807) 146,582 The various bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, and minimum revenue and bond coverage. The City is in compliance with all such significant limitations and restrictions. 65 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) G. Bonds authorized, issued and unissued Bonds authorized but not fully issued as of June 30, 2018, are shown below: GO bonds Authorized Amount Issued through June 30, 2018 Authorized but Unissued Voter authorized October 20, 1981 Operations center $ $ $ 6,750 Voter authorized March 10, 1987 Library 550 6,200 9,698 8,000 1,698 Cultural facility (1) Economic development 18,215 50,500 4,494 28,453 13,721 22,047 Governmental facilities (1) 40,910 16,910 24,000 17,000 15,398 53,700 64,801 1,460 3,175 64,414 15,540 15,398 50,525 387 6,935 185 6,750 20,554 16,155 102,638 79,065 502,319 10,522 1,518 44,188 183,869 10,032 14,637 102,638 34,877 318,450 Voter authorized November 2, 1999 Landfill development Library Open spaces Public safety (1) Transit (1) Voter authorized May 15, 2007 Flood control Parks and recreation Public safety Streets and parking Total GO bonds $ $ $ Revenue bonds Voter authorized November 2, 1999 Water and sewer(1) Total revenue bonds $ 10,000 10,000 $ - $ 10,000 10,000 Total bonds $ 512,319 $ 183,869 $ 328,450 (1) Certain general obligation bonds or revenue bonds can be issued as general obligation bonds, revenue bonds or a combination thereof. 66 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) H. Other debt (developer, notes, long-term) Classified in the governmental activities in the government-wide financial statements: Developer Payable Obligation - On December 1, 2005, the City entered into a development and ground lease agreement with Cabela’s whereby Cabela’s has the option to purchase the City owned property 90 days after the expiration of the 20-year ground lease (option date). In addition, the City entered into a site improvement management agreement on July 1, 2006, whereby Cabela’s accrues a management compensation amount for their actual costs of operation, maintenance, and repair of site improvements. The management compensation amount accrues annually with interest. At the option date Cabela’s can purchase the property at Fair Market Value and receive a credit against the purchase price for the accrued management compensation amount. $ 4,126 Note Payable Obligation - On December 16, 2015, the City entered into an agreement with Conair Corporation which determined compensation for the transfer of fee title interest of about 38.5 acres of Conair Property for an Airport runway protection zone and related purposes. The first of four annual payments was made on January 14, 2016. $1,839 Less current portion Note payable long-term portion ($1,839) $0 Settlement Obligation - On November 14, 2016, the City entered into a settlement agreement with the Arizona Sports and Tourism Authority, the Arizona Cardinals Football Club, LLC, the New Cardinals Stadium LLC, and the Stadium Development LLC, which determined compensation for the City's failure to provide adequate assurance for Stadium parking. The first of five payments was made on November 15, 2016. Three additional $3,000 payments are due annually in July and a $2,100 payment is due prior to July 1, 2019, with an option for later payment. $8,100 Total settlement obligation Less current portion Settlement obligation long-term portion 8,100 (3,000) 5,100 $ 67 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) I. Future year debt service requirements Fiscal Year Ending Transportation Bonds MPC Bonds Excise Tax Bonds G.O. Bonds Water and Sewer Revenue Bonds/ Obligations 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total 7,034 7,033 6,700 6,699 6,694 6,699 6,703 6,700 6,701 6,699 6,699 6,696 6,699 7,214 94,970 15,944 16,950 14,844 14,476 13,150 13,134 13,096 13,092 13,090 13,074 13,836 13,799 13,792 14,915 27,821 22,533 22,533 22,532 22,532 22,532 337,675 16,805 16,901 20,292 20,658 21,987 22,000 22,033 22,049 22,041 22,059 21,300 21,338 21,342 20,224 9,003 300,032 25,209 22,603 22,619 20,740 9,513 9,470 9,439 9,407 9,358 9,309 9,444 9,208 3,164 3,168 3,171 3,175 3,164 3,164 1,013 186,338 25,448 25,080 24,409 24,079 25,290 25,288 25,285 25,289 24,162 20,302 7,411 7,267 259,310 90,440 88,567 88,864 86,652 76,634 76,591 76,556 76,537 75,352 71,443 58,690 58,308 44,997 45,521 39,995 25,708 25,697 25,696 23,545 22,532 1,178,325 Less interest 24,225 134,310 88,277 39,353 59,575 345,740 Principal $ 70,745 $ 203,365 $ 211,755 $ 146,985 $ 199,735 The remainder of this page left blank intentionally. 68 $ Total 832,585 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The following table discloses the debt service requirements as of June 30, 2018, segregating principal and interest, for the next five years and in five-year increments thereafter. Fiscal Year 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Total J. Principal 51,640 52,205 54,760 55,115 47,725 265,415 197,225 108,500 $ 832,585 Interest 38,800 36,362 34,103 31,537 28,909 111,063 50,289 14,677 $ 345,740 Total 90,440 88,567 88,863 86,652 76,634 376,478 247,514 123,177 $ 1,178,325 $ New bonds On October 4, 2017, the City issued $65,385 in Subordinate Excise Tax revenue refunding obligations. Proceeds of the bonds current refunded $75,160 of Municipal Property Corporation Subordinate Excise Tax revenue refunding bonds, series 2012C, with bonds maturing in 2021-2032. The 2017 bonds mature on various dates starting 2018 to 2032 with a fixed interest rate of 5.00%. The refunding resulted in a deferred outflow of $984 and will be amortized over the life of the new refunding bonds. The City realized a future cash flow savings of $15,761. The bonds are not a general obligation of the City but are a limited obligation of the City and are payable from and secured by a subordinate lien pledge of the city’s Unrestricted Excise Taxes. On December 27, 2017, the City issued $26,555 in General Obligation refunding bonds. Proceeds of the bonds advance refunded $27,360 of General Obligation Taxable Direct-Pay Build America Bonds, series 2009B, with bonds maturing 2020-30. The 2017 bonds mature on various dates starting 2020 to 2030 with a fixed interest rate of 3.157%. The bonds have a crossover date of January 1, 2020. The City realized a future cash flow savings of $1,855. The bonds were purchased as a single obligation by Texas Capital Bank, N.A, a wholly owned subsidiary of TCBI. The bonds are a direct general obligation of the City and pledged by the full faith and credit of the City. They are repaid through the levying of property taxes by the City. On April 3, 2018, the City issued $15,240 in General Obligation bonds to fund streets and parking construction, reconstruction or other improvements and to construct or reconstruct public safety facilities. The 2018 bonds mature on various dates starting 2019 to 2037 with a fixed interest rate of 5.00%. The bonds are a direct general obligation of the City and pledged by the full faith and credit of the City. They are repaid through the levying of property taxes by the City. XI. Landfill obligations The City operates a municipal sanitary landfill under an Aquifer Protection Permit and Solid Waste Facility Plan approval issued by the Arizona Department of Environmental Quality requiring future closure work and post-closure monitoring. The permit meets federal and state regulations. These 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 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and post-closure costs as an operating expense in each period based on landfill capacity used. 69 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The landfill closure and post-closure care liability at June 30, 2018, calculated below, represents the cumulative amount reported to date based on the use of estimated capacity of the landfill. North Cell South Cell 29,598 - 24,215 20,964 87% Capacity (cubic yards) Capacity used to date Percentage of capacity used Total closure and post-closure costs in present dollars: as of June 30, 2018 as of June 30, 2017 $ $ 18,739 18,419 $ $ 17,598 17,297 Closure and post-closure care costs: Amount remaining to be recognized as of June 30, 2018 $ 18,739 $ 2,363 Liability recognized as of June 30, 2018 $ - $ 15,235 These amounts are based on what it would cost to perform all closure and post-closure care in fiscal year 2017-18. The estimated costs are subject to changes due to inflation, deflation, new technology, and applicable laws and regulations. Assets are not restricted to fund the obligations. The estimated remaining life of the landfill is approximately 50 years. According to state and federal laws and regulations, the City must comply with the local government financial test requirements that assure the City can meet the cost of landfill closure, post-closure, and corrective action when needed. The City is in compliance with these requirements. XII. Inter-fund transactions Inter-fund balances at June 30, 2018, consisted of the following: A. Due to/due from Due to general fund from: Other non-major governmental funds Community development block grant Other special revenue Capital Project Fire and Police Construction Total due to general fund $ $ 859 1,856 904 3,619 The inter-fund balances at June 30, 2018, include short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to bond sales or grant reimbursements. All inter-fund balances outstanding at June 30, 2018, are expected to be repaid within one year. 70 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) B. Inter-fund transfers Inter-fund transfers for the year ended June 30, 2018, consisted of the following: Transfers to general fund from: Street Construction Fund 600 Total transfers to general fund 600 Transfers to Municipal Property Corporation debt service fund from: General fund 18,180 Total transfers to Municipal Property Corporation debt service fund 18,180 Transfers to non-major special revenue fund from: General fund 1,639 Street Construction Fund 227 Other Construction Fund 3 246 Water and Sewer 5 Other Non-Major Proprietary Funds 2,120 Total transfers to non-major special revenue fund Transfers to non-major debt service funds from: General fund 8,040 MPC Special Revenue Fund 2,894 Transportation Special Revenue Fund 7,147 Total transfers to non-major debt service funds 18,081 Transfers to non-major capital projects fund from: Transportation Special Revenue Fund 5,411 Highway users gas tax 17,535 Total transfers to non-major capital projects fund 22,946 Transfers to Water and Sewer Proprietary Fund from: General Fund 420 Total transfers to water and Sewer proprietary fund 420 Transfers to non-major proprietary funds from: General fund 1,191 Total transfers to other non-major proprietary fund 1,191 $ Grand total all transfers 71 63,538 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Transfers are used to: 1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and 3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The inter-fund transfers are all classified as transfers and are included in the results of operations of both governmental and proprietary funds. XIII. Encumbrances The Arizona Revised Statutes allow cities to encumber unused appropriations for up to sixty days after the end of the fiscal year. However, effective July 1, 1987, the City adopted a policy of not recognizing encumbrances at year-end. All appropriations lapse on the last day of the fiscal year. Any outstanding commitments that the City intends to honor are budgeted in the new fiscal year. At June 30, 2018, the City intended to honor $4,037 of outstanding encumbrances in the new fiscal year. Fund Major: General Water and sewer Non-Major: Other special revenue Streets capital Other capital Landfill Sanitation Total XIV. $ $ 104 2,161 58 1,204 50 435 25 4,037 Equity in joint ventures A. Sub-Regional Operating Group (SROG) The City, along with the cities of Phoenix, Mesa, Scottsdale and Tempe participates in the Sub-Regional Operating Group (SROG), a joint venture. SROG constructs, operates and maintains jointly used facilities including the 91st Avenue Waste Water Treatment Plant (Plant) and certain sewage transportation facilities. The City of Phoenix acts as lead agency, and as such, is responsible for the planning, budgeting, construction, operation and maintenance of the Plant. In addition, the City of Phoenix provides all management personnel and financing arrangements and accepts federal grants on behalf of the participants. Each participant pays for its costs of operation and maintenance based on relative sewage flows and strengths and for purchased capacity in the plant and related transportation facilities based on ownership. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2017. The City accounts for its approximate 6.7% investment using the equity method in the water and sewer fund. For the year ended June 30, 2018, the City recognized a loss in the joint venture of $2,627. The City has financed its share of construction costs through the issuance of revenue bonds, development fees and grants. The bonds are collateralized by a pledge of water revenues and are reflected in the financial statements of the water and sewer fund. The joint venture itself has not issued any debt. 72 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) A summary of the audited financial information on the joint venture as of and for the fiscal year ended June 30, 2017, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets Liabilities Net assets $ $ Total revenues Total expenses Decrease in net assets $ $ 48,390 680,953 729,343 33,872 695,471 57,599 (84,032) (26,433) Copies of separate financial statements of the joint venture can be obtained from Arizona Municipal Water Users Association, 4041 North Central Avenue, Phoenix, Arizona 85012. B. Regional Wireless Cooperative (RWC) The City currently participates with twenty Arizona cities and districts in the Regional Wireless Cooperative agreement for the construction, operation and maintenance of a regional communications network, a joint venture. The City of Phoenix is both the Network and the Administrative Managing Member. As the Network Managing Member, Phoenix operates and maintains the network. As the Administrative Managing Member, Phoenix is responsible for accounting, budgeting, procurement and contracting for the RWC. The City has an ongoing financial responsibility as a result of the agreement to participate in the cost to construct, operate and maintain the network. The city’s share of costs is determined based on the proportionate number of subscriber units in use at the time of assessment. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2017. The equity interest for the City at June 30, 2017, was $3,142. The City accounts for its approximate 3.8% investment using the equity method in the Public Safety fund. For the year ended June 30, 2018, the City recognized a loss in the joint venture of $265. The remainder of this page left blank intentionally. 73 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) A summary of the audited financial information on the joint venture as of and for the fiscal year ended June 30, 2017, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets Liabilities and Deferred Inflows of Resources Net assets $ $ Total revenues Total expenses Decrease in net assets $ $ 6,998 80,098 87,096 5,418 81,678 9,333 (16,307) (6,974) Copies of separate financial statements of the joint venture can be obtained from RWC Director’s Office, 200 W. Washington Street, 12th Floor, Phoenix, Arizona 85003 XV. Jointly governed organizations The Regional Public Transit Authority (RPTA) is a voluntary association of local governments, including Glendale, Phoenix, Mesa, Tempe, Scottsdale, and Maricopa County. Its purpose is to ensure that a viable public transportation system is provided as an alternative for regional mobility and to ease the traffic congestion and air pollution caused by over-reliance on the single occupant vehicle. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (AMWUA) is a non-profit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities' interests before the Arizona legislature. In addition, AMWUA contracts with the cities jointly using the 91st Avenue Waste Water Treatment Plant to perform certain accounting, administrative and support services. XVI. Governmental fund balance components and fund type definitions The City has a formally adopted minimum fund balance policy for the general fund. This policy was adopted though the annual budget process. The policy states that the general fund should maintain a minimum total unassigned fund balance of 25% of the projected annual ongoing revenues. The City’s general fund, unassigned fund balance at June 30, 2018 is $43,474. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $23,210 has been earmarked as the Budget Stabilization Reserve and $20,264 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2018 to commit these funds; therefore, the funds are reported as unassigned. 74 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) M unicipal Property Corporation Debt Service General Nonspendable Inventories and prepaid items Cemetery perpetual care Total Nonspendable Restricted Public transit State drug enforcement U.S. drug enforcement Debt service Court security Court time payments Court computer upgrade HOM E program Highway user gas tax Police activities Fire activities Development impact fees Park bond construction Economic development Open space/trails Cultural and historical projects Government facilities Garden for visually impaired Neighborhood stabilization Flood control construction Total restricted Committed Artwork Pool/park repair Other Total committed Assigned Equipment replacement General government capital projects Bed tax/tourism Public safety training facility Total assigned Unassigned fund balance $ $ 2,919 2,919 $ Other Non-M ajor Governmental Funds - $ 5,810 5,810 Total Governmental Funds $ 2,919 5,810 8,729 5,354 920 6,274 3,606 3,606 54,098 2,348 269 32,610 256 19 98 151 7,160 15,908 115 1,007 227 189 36 50 273 571 115,385 54,098 2,348 269 36,216 256 19 98 151 7,160 5,354 920 15,908 115 1,007 227 189 36 50 273 571 125,265 - - 1,390 150 1,008 2,548 1,390 150 1,008 2,548 595 3,606 430 430 (653) 123,520 595 10,394 1,689 12,678 43,474 65,345 75 $ $ $ 10,394 1,689 430 13,108 42,821 192,471 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Enterprise Fund Type Water and Sewer Fund Restricted for debt service $ 12,780 Restricted for revenue bond retirement/replacement and extension Two percent of net water revenues must be, by bond ordinance, reserved for the replacement and extension of the City’s water distribution system, or for the retirement of water revenue bonds. The reservation is only required to the extent that the reserve equals two percent of the value of net capital assets of the water and sewer fund. 9,538 Restricted for OPEB benefits 72 Restricted for other purposes 5,123 Total restricted for water and sewer $ 27,513 $ 37 Other Enterprise Funds Restricted for OPEB benefits Total restricted for other enteprise funds 37 Total restricted for enterprise fund types XVII. $ 27,550 Pensions and other postemployment benefits The City contributes to the Arizona State Retirement System (ASRS) and the Public Safety Personnel Retirement System (PSPRS) for police officers and fire fighters. The plans are component units of the State of Arizona. At June 30, 2018, the City reported the following aggregate amounts related to pensions and other postemployment benefits (OPEB) for all plans to which it contributes: Statement of net position and statement of activities Net pension and OPEB asset Net pension and OPEB liability Deferred outflows of resources related to pensions and OPEB Deferred inflows of resources related to pensions and OPEB Pension and OPEB expense (income) Governmental activities $ 1,340 340,075 Business-type activities $ 109 33,565 73,161 5,763 78,924 21,782 4,746 26,528 5,560 (5,584) (24) Total $ 1,449 373,640 A. Arizona State Retirement System (ASRS) Plan Description - City employees not covered by the other pension plans described on the following pages participate in the Arizona State Retirement System (ASRS). The ASRS administers a costsharing 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. 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 76 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) publicly available financial report that includes its financial statements and required supplementary information. The report is available on its Web site at www.azasrs.gov. Benefits Provided - The ASRS provides retirement, disability, health insurance premium supplemental benefits, and survivor benefits. State statute establishes benefits terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and total credited service as follows: Retirement initial membership date: Before July 1, 2011 On or after July 1, 2011 Years of service and age Sum of years, age equals 80 30 years, age 55 required to receive benefit 10 years, age 62 25 years, age 60 5 years, age 50* 10 years, age 62 any years, age 65 5 years, age 50* any years, age 65 Final average salary is based on Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-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 member’s 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. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. For members with 10 or more years of service, benefits range from $150 per month to $260 per month depending on the age of the member and dependents. For members with 5 to 9 years of service, the benefits are the same dollar amounts as above multiplied by a vesting fraction based on completed years of service. Active members are eligible for a monthly long-term disability benefit equal to two-thirds of monthly earnings. Members receiving benefits continue to earn service credit up to their normal retirement dates. Members with long-term disability commencement dates after June 30, 1999, are limited to 30 years of service or the service on record as of the effective disability date if their service is greater than 30 years. 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 year ended June 30, 2018, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.5 percent (11.34 percent for retirement and 0.16 percent for long-term disability) of the members’ annual covered payroll. The City was required by statute to contribute at the actuarially determined rate of 11.5 percent (10.9 percent for retirement, 0.44 percent for health insurance premium benefit, and 0.16 percent for long-term disability) of the active members’ annual covered payroll. In addition, the City was required by statute to contribute at the actuarially determined rate of 9.49 percent (9.26 percent for retirement, 0.1 percent for health insurance premium benefit and 0.13 percent for long-term disability) 77 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) of annual covered payroll of retired members who worked for the City in positions that would typically be filled by an employee who contributes to the ASRS. The City’s contributions to the pension, health insurance premium benefit, and long-term disability plans for the year ended June 30, 2018, were $7,414, $385, and $96, respectively. During fiscal year 2018, the City paid for ASRS pension and OPEB contributions as follows: 64% from the governmental funds and 36% from the enterprise funds. Liability – At June 30, 2018, the City reported the following asset and liabilities for its proportionate share of the ASRS’ net pension/OPEB asset or liability: Net pension/OPEB (asset) liability ASRS Pension Health insurance premium benefit Long-term disability 103,812 (365) 242 The net asset and net liabilities were measured as of June 30, 2017. The total liability used to calculate the net asset or net liability was determined using update procedures to roll forward the total liability from an actuarial valuation as of June 30, 2016, to the measurement date of June 30, 2017. The total pension liability as of June 30, 2017, reflects a change in actuarial assumption related to changes in loads for future potential permanent benefit increases. The City’s proportionate share of the net asset or net liability was based on the City’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2017. The City’s proportions measured as of June 30, 2017, and the change from its proportions measured as of June 30, 2016 were: ASRS Proportion June 30, 2017 Pension Health insurance premium benefit Long-term disability Increase from June 30, 2016 0.66640% 0.67058% 0.66674% 0.02934 - The net asset and net liabilities measured as of June 30, 2018, will reflect changes of actuarial assumptions based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. The change in the City’s net asset and net liabilities as a result of these changes is not known. Expense - For the year ended June 30, 2018, the City recognized the following pension and OPEB expense: ASRS Pension/OPEB expense Pension Health insurance premium benefit Long-term disability 5,326 46 278 78 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Deferred outflows/inflows of resources - At June 30, 2018 the City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB 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 City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Pension Deferred Deferred outflows inflows of resources of resources Health insurance premium benefit Deferred Deferred outflows inflows of resources of resources Long-term disability Deferred Deferred outflows inflows of resources of resources $ $ $ - 3,113 - $ - - 4,509 3,104 - - - 745 - - 411 - 5,235 151 - 1 - 7,414 17,903 $ $ $ 6,368 $ 385 385 $ 412 $ $ - 36 - 96 96 $ The amounts reported as deferred outflows of resources related to ASRS pensions and OPEB resulting from city contributions subsequent to the measurement date will be recognized as an increase of the net asset or a reduction of the net liability in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions and OPEB will be recognized as expenses as follows: Year Ended June 30, 2019 2020 2021 2022 Health insurance premium benefit Pension $ (1,195) 6,134 1,569 (2,387) 79 $ (103) (103) (103) (103) Long-term disability $ - (9) (9) (9) (9) 36 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Actuarial Assumptions –The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates Healthcare cost trend rate June 30, 2016 June 30, 2017 Entry age normal 8% 3 - 6.75% for pensions/not applicable for OPEB 3% Included for pensions/not applicable for OPEB 1994 GAM Scale BB Not applicable Actuarial assumptions used in the June 30, 2016, valuation were based on results of an actuarial experience study for the five-year period ending June 30, 2012. The long-term expected rate of return on ASRS plan investments was determined to be 8.7 percent using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of 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 weighing 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 arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Equity Fixed income Real estate Multi-asset Commodities Total Long-term expected arithmetic real rate of return 6.73% 3.70% 4.25% 3.41% 3.84% Target Allocation 58% 25% 10% 5% 2% 100% Discount Rate - The discount rate used to measure the ASRS total pension/OPEB liability was 8 percent, which is less than the long-term expected rate of return of 8.7 percent. 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 statutes. Based on those assumptions, the 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 plan investments was applied to all periods of projected benefit payments to determine the total pension/OPEB liability. 80 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Sensitivity of the City’s proportionate share of the ASRS net pension/OPEB (asset) liability to changes in the discount rate - The following table presents the City’s proportionate share of the net pension/OPEB (asset) liability calculated using the discount rate of 8 percent, as well as what the City’s proportionate share of the net pension/OPEB (asset) liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate. ASRS City's proportionate share of the Net pension liability Net insurance premium benefit liability (asset) Net long-term disability liability 1% Decrease (7%) Current Discount Rate (8%) 1% Increase (9%) $ $ $ 133,245 606 289 103,812 (365) 242 79,219 (1,191) 202 Plan Fiduciary Net Position - Detailed information about the plan’s fiduciary net position is available in the separately issued ASRS financial report. B. Public Safety Personnel Retirement System (PSPRS) Plan Description - City public safety personnel who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent and cost sharing multiple-employer defined benefit pension plans and an agent and cost-sharing multipleemployer defined benefit health insurance premium benefit (OPEB) plans. A nine-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 reports are available on the PSPRS website at www.psprs.com. The remainder of this page left blank intentionally. 81 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Benefits Provided - The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Initial Membership Date Retirement and Disability Years of service and age required to receive benefit Final average salary is based on Benefit percentage Normal Retirement Before January 1, 2012 20 years of service, any age 15 years of service, age 62 On or after January 1, 2012 and before July 1,2017 25 years of service or 15 years of credited service, and age 52.5 Highest 36 consecutive months of last 20 years Highest 60 consecutive months of last 20 years 50% less 2.0% for each year of credited service less than 20 years OR plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 1.5% to 2.5% for each year of credited service, not to exceed 80% Accidental Disability Retirement 50% or normal retirement, whichever is greater Catastrophic Disability Retirement 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Ordinary Disability Retirement Survivor Benefit Retired Members Active Members Normal retirement calculated with actual years of credited service or 20 years of credited service, whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20 80% to 100% of retired member's pension benefit 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. In addition, the Legislature may enact permanent one-time benefits increases after a Joint Legislative Budget Committee analysis of the increase’s effects on the plan. PSPRS also provides temporary disability benefits of 50 percent of the member’s compensation for up to 12 months. 82 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $150 per month to $260 per month depending on the age of the member and dependents. Employees Covered by Benefit Terms - At June 30, 2018, the following employees were covered by the agent plans’ benefit terms: PSPRS PSPRS Police Firefighters Pension Health Pension Health Inactive employees or beneficiaries currently receiving benefits 197 197 93 93 Inactive employees entitled to but not yet receiving benefits 57 25 35 30 Active employees 394 394 220 220 Total 648 616 348 343 Contributions and annual OPEB cost - 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 and health insurance premium benefits. 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. Contribution rates for the year ended June 30, 2018, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active memberActive memberhealth insurance City-health insurance pension premium benefit City-pension premium benefit PSPRS Police 7.14%-7.65% 0%-0.17% 36.56%-44.82% 0.41%-0.56% PSPRS Firefighters 7.14%-7.65% 0%-0.17% 32.58%-42.08% 0.0%-0.17% The City’s contributions to the plans for the year ended June 30, 2018, were: PSPRS-Police PSPRS-Fire Pension $ 10,828 5,607 Health insurance premium benefit $ 135 - During fiscal year 2018, the City paid for PSPRS pension and OPEB contributions 100 percent from the General Fund. Liability - At June 30, 2018, the City reported the following assets and liabilities: PSPRS Police PSPRS Firefighters Net pension (asset) liability $ 173,223 88,615 Net OPEB (asset) liability $ 1,371 (1,084) 83 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) The net assets and net liabilities were measured as of June 30, 2017, and the total liability used to calculate the net asset or liability was determined by an actuarial valuation as of that date. The total liabilities as of June 30, 2017, reflect changes of actuarial assumptions based on the results of an actuarial experience study for the 5-year period ended June 30, 2016, including decreasing the investment rate of return from 7.5 percent to 7.4 percent, decreasing the wage inflation from 4 percent to 3.5 percent, and updating mortality, withdrawal, disability, and retirement assumptions. The total pension liabilities for PSPRS also reflect changes of benefit terms for legislation that changed benefit eligibility and multipliers for employees who became members on or after January 1, 2012, and before July 1, 2017, and a court decision that decreased the contribution rates for employees who became members before July 20, 2011. The court decision will also affect the PSPRS net pension liabilities measured as of June 30, 2018, because of refunds of excess member contributions. The change in the City’s PSPRS net pension liabilities as a result of the refunds is not known. Actuarial Assumptions - The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows: Actuarial valuation date Actuarial cost method Investment rate of return Wage inflation Price inflation Permanent benefit increase Mortality rates Healthcare cost trend rate June 30, 2017 Entry age normal 7.4% 3.5% for pensions/not applicable for OPEB 2.5% for pensions/not applicable for OPEB Included for pensions/not applicable for OPEB RP-2014 tables using MP-2016 improvement scale with adjustments to match current experience Not applicable Actuarial assumptions used in the June 30, 2017, valuation was based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. The long-term expected rate of return on PSPRS plan investments was determined to be 7.40 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of 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: Long-term Target expected geometric Asset class allocation real rate of return Short term investments 2% 0.25% Absolute return 2% 3.75% Risk parity 4% 5.00% Fixed income 5% 1.25% Real assets 9% 4.52% GTAA 10% 3.96% Real estate 10% 3.75% Private equity 12% 6.75% Non-U.S. equity 14% 8.70% U.S. equity 16% 7.60% Private credit 16% 5.83% Total 100% 84 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Discount Rate – At June 30, 2017, the discount rate used to measure the PSPRS total pension/OPEB liability was 7.4 percent, which was a decrease of 0.1 from the discount rate used as of June 30, 2016. The projection of cash flows used to determine the discount rate 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 rate and the member rate. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the longterm expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension/OPEB liability. Changes in the net pension/OPEB liability - The following tables present changes in the City’s net pension/OPEB liability for the PSPRS pension plans (Police and Firefighters): PSPRS - Police Balance at June 30, 2017 Changes for the year: Service cost Pension Health insurance premium benefit Increase (decrease) Total Plan Net pension fiduciary pension liability net liability (asset) position (asset) (a) (b) (a) - (b) $ 282,017 $ 122,409 $ 159,608 Increase (decrease) Total Plan Net OPEB fiduciary OPEB liability net liability (asset) position (asset) (a) (b) (a) - (b) $ 6,312 $ 4,649 $ 1,663 8,582 - 8,582 119 - 119 Interest on the total liability 20,971 - 20,971 464 - 464 Changes of benefit terms Differences between expected and actual experience in the measurement of the liability Changes of assumptions or other inputs 2,583 - 2,583 11 - 11 6,973 - 6,973 211 - 211 8,114 - 8,114 (359) - (359) Contributions - employer - 13,678 (13,678) - 202 (202) Contributions - employee - 4,549 (4,549) - - - Net investment income Benefit payments, including refunds of employee contributions - 15,468 (15,468) - 541 (541) (13,390) (13,390) - (359) (359) - - (137) 137 - (5) 5 50 20,218 $ 142,627 (50) 13,615 $ 173,223 379 5,028 (292) 1,371 Administrative expenses Other changes Net changes Balance as of June 30, 2018 33,833 $ 315,850 85 $ 87 6,399 $ $ CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) PSPRS - Firefighters Balance at June 30, 2017 Changes for the year: Service cost Pension Health insurance premium benefit Increase (decrease) Total Plan Net pension fiduciary pension liability net liability (asset) position (asset) $ 175,978 $ 92,501 $ 83,477 Increase (decrease) Total Plan Net OPEB fiduciary OPEB liability net liability (asset) position (asset) $ 3,285 $ 4,026 $ (741) 5,062 - 5,062 56 - 56 Interest on the total liability 13,114 - 13,114 243 - 243 Changes of benefit terms 1,055 - 1,055 3 - 3 Differences between expected and actual experience in the measurement of the liability Changes of assumptions or other inputs 787 - 787 (39) - (39) 5,437 - 5,437 (145) - (145) Contributions - employer - 6,578 (6,578) - - - Contributions - employee - 2,604 (2,604) - - - Net investment income - 11,234 (11,234) - 465 (465) (7,304) (7,304) - (153) (153) - - (100) 100 - (4) 4 1 13,013 $ 105,514 (1) 5,138 $ 88,615 308 4,334 (343) $ (1,084) Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net changes Balance as of June 30, 2018 18,151 $ 194,129 $ (35) 3,250 $ Sensitivity of the City’s net pension/OPEB (asset) liability to changes in the discount rate - The following table presents the City’s net pension/OPEB (assets) liabilities calculated using the discount rate of 7.4 percent, as well as what the City’s net pension/OPEB (asset) 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: PSPRS Police Net pension (asset) liability Net OPEB (asset) liability PSPRS Firefighters Net pension (asset) liability Net OPEB (asset) liability 1% Decrease (6.4%) Current discount rate (7.4%) 1% Increase (8.4%) $ $ $ 219,046 2,135 116,127 (679) 173,223 1,371 88,615 (1,084) 136,085 734 66,186 (1,421) Plan fiduciary net position - Detailed information about the plans’ fiduciary net position is available in the separately issued PSPRS financial report. 86 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Expense - For the year ended June 30, 2018, the City recognized the following pension and OPEB expense: Pension OPEB Expense Expense (Income) PSPRS Police $ 25,957 $ 1,651 PSPRS Firefighters 12,750 (787) Deferred outflows/inflows of resources - At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: PSPRS - Police Health insurance premium Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on plan investments City contributions subsequent to the measurement date Total Pension Deferred Deferred outflow inflows of resources of resources benefit Deferred Deferred outflow inflows of resources of resources $ $ 7,046 2,403 174 $ - - - 295 1,038 - - 158 10,828 38,233 $ $ 19,321 2,403 $ 135 309 $ PSPRS - Firefighters $ 453 Health insurance premium Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on plan investments City contributions subsequent to the measurement date Total Pension Deferred Deferred outflow inflows of resources of resources benefit Deferred Deferred outflow inflows of resources of resources $ $ 1,347 2,750 - $ 34 13,863 - - 127 1,181 - - 136 5,607 21,998 $ $ 2,750 $ - $ $ 297 The amounts reported as deferred outflows of resources related to pensions and OPEB resulting from City contributions subsequent to the measurement date will be recognized as an increase in the net asset or a reduction of the net liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized as expenses as follows: Year Ending June 30, 2019 2020 2021 2022 2023 Thereafter PSPRS Police Pension Health PSPRS Firefighters Pension Health $ $ 8,395 8,515 4,633 2,359 1,100 - $ 87 (66) (66) (66) (66) (15) - 2,889 3,813 3,087 724 1,137 1,991 $ (56) (56) (56) (56) (22) (51) CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) C. City of Glendale post-employment healthcare plan The City of Glendale post-employment healthcare plan is a single-employer defined benefit plan administered by the City of Glendale. The plan provides medical, dental, and vision coverage for eligible retirees and their dependents through the City’s group health insurance plans. By continuing to provide eligible 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 blended rate to eligible retirees. This blended rate or implicit rate exists because on average retiree healthcare costs are higher than active employee healthcare costs. Retirees can also continue their basic life insurance benefit. Retirees contribute anywhere from 75% to 100% of the premiums, depending on the plan and coverage level they enroll in, and the city subsidizes the remainder. In order for employees to be eligible for this benefit, they need 5 years of service if they were hired prior to July 1, 2005, and 10 years of service if they were hired after July 1, 2005. Effective July 1, 2018 the plan is closed to new retirees. Only those who retired prior to July 1, 2018 are eligible to continue coverage under the City of Glendale OPEB plan. The Mayor and Council have authority each budget year to establish, eliminate, or amend benefit provisions through the annual budget process. A separate report is not provided as the plan financial information is included in the governmental-wide basis and proprietary funds as part of the City of Glendale reporting entity. Funding policy and employees covered The City pays for and reports retiree health care benefits on a pay-as-you-go basis, which is the practice of paying for these benefits as they become due each year. Contributions to the plan by retirees are established at the beginning of each fiscal year through the annual budget process. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. For the fiscal year ending June 30, 2018, the number of employees covered by the plan totaled 614. Inactive employees or beneficiaries currently receiving benefits Active employees Total 614 614 Actuarial methods and assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Healthcare costs were derived from age-neutral premiums, trended to the valuation date and adjusted for the risk characteristics of the group. Medical healthcare trends were projected at 7.50%, decreasing annually by 0.25%, down to an ultimate rate of 5.0%. Effective July 1, 2018, the city discontinued benefits for any future retirees. Only those already retired as of June 30, 2018 are eligible for OPEB benefits. In 2017, amounts reflect updated mortality improvement assumptions and adjustments to assumptions regarding future retiree participation and spousal coverage to better reflect plan experience. In 2018, amounts reflect updated mortality. 88 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) For June 30, 2018, the last actuarial valuation, the actuarial cost method used is the entry age normal method. A 3.62% pay as you go discount/investment rate was used. 2016 2017 2018 Discount rate 2.85% 3.43% 3.62% No actuarial valuation of assets was done as there were no assets at the valuation date and the plan does not have a trust established to hold assets. The amortization method is level percent of payroll amortized over 30 years and the period is open. Actuarial valuation date Inflation Salary Increases Discount rate Mortality rates Pre-retirement Post-retirement Health care cost trend rates June 30, 2018 2.4% 3.5% including inflation 3.62% RPH-2014 employee mortality table, generational with projection scale MP-2017 RPH-2014 heatlhy annuitant mortality table, generational with projection scale MP-2017 5.0%-7.0% Change in total OPEB liability A change in the net OPEB liability was determined by an actuarial valuation as of June 30, 2018. The following table shows the changes in OPEB liability as of June 30, 2018. Total OPEB Liability balance at June 30, 2017 $ Changes for the Year Service Cost Interest Changes of benefit terms Differences betweeen expected and actual experience Changes in assumptions or other inputs Benefit payments Net Changes Total OPEB Liability balance at June 30, 2018 60,625 3,083 2,183 (47,511) (11,823) (174) (6) (54,248) $ 6,377 Multi-year schedule of changes in the net OPEB liability is available in the Required Supplementary Information. 89 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Discount rate sensitivity The discount rate of 3.62% was used to measure the total OPEB liability. This discount rate is the Fidelity General Obligation AA 20 Year Yield as of June 30, 2018. The following table presents the City’s net OPEB liability calculated using the discount rate noted above, as well as what the City’s 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. Current Discount 1% Decrease Rate 1% Increase Discount Rate Total OPEB Liability $ 2.62% 6,820 $ 3.62% 6,377 $ 4.62% 6,019 Healthcare cost trend rate sensitivity The following table presents the total OPEB liability of the City, as well as the City’s total OPEB liability if it were calculated using healthcare cost trend rates that are 1 percentage point lower or higher than current rates. Healthcare Cost Trend Rates 6.50% 7.50% 8.50% Total OPEB Liability $ 6,110 $ 6,377 $ 6,701 OPEB expense The following table shows the components of the City’s annual OPEB expense for the year. Service Cost $ 3,083 Interest 2,183 Difference between Actual and Expected Experience (2,638) Changes in Assumptions/Inputs (362) Change in Benefit Terms (47,511) Total FY18 OPEB Expense $ (45,245) The remainder of this page left blank intentionally. 90 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) Deferred outflows/inflows of resources At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB as shown in the following table. Differences between expected and actual experience Changes of assumptions or other inputs Total Deferred Outflows of Resources $ $ - Deferred Inflows of Resources $ 11,374 2,435 $ 13,809 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: OPEB Expense Year Ending June 30, 2019 2020 2021 2022 2023 XVIII. $ (3,001) (3,001) (3,001) (3,001) (1,805) $ (13,809) Contingent liabilities and commitments Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the city expects such amounts, if any, to be immaterial. The City is subject to claims and litigation, which arise in the ordinary course of its operations. In the opinion of City management, based on the advice of the City attorney, the resolution of such claims and litigation are believed to either have no material adverse effect on the financial position or the future operations of the City or likelihood of a negative outcome to the City is not determinable. The City, under the memorandum of agreement with the Arizona Sports and Tourism Authority (AZSTA) and B & B Holdings (DBA Arizona Cardinals), irrevocably assigns, transfers, and pledges unrestricted excise taxes collected at the Multipurpose Facility site (Stadium) to AZSTA. In consideration for the pledge of unrestricted excise tax revenues, the AZSTA issued bonds to improve the Stadium infrastructure. The City’s obligation is to make monthly payments to the AZSTA for sales tax payments collected from the site only. The AZSTA bonds do not constitute a legal debt of the City. 91 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) XIX. Tax Abatement The City implemented GASB Statement No. 77. This statement requires government’s that enter into tax abatement agreements to disclose information about the agreements. The tax abatement is listed by program for the year ended June 30,2018. Primary Government City of Glendale, AZ Purpose of Program Economic Development Tax being abated Sales tax reimbursements Authority under which the abatement agreement is entered Criteria to be eligible to receive abatement Mechanism by which the taxes are abated How amount of abatement is determined The City is authorized pursuant to Article 1, Section3 of its Charter and ARS 9-500.05 and 9-500.11, ARS 11-952 to enter into economic development agreements with businesses located in the City and to appropriate and spend public monies for and in conjunction with economic development activities. The City analyses the economic development benefits and determines that such public benefits support and justify the economic development incentives provided by each agreement. The public benefits anticipated are indirect economic and non-economic benefits such as increasing City's residents access to goods and services, enhancing public infrastructure, increasing the City's employment base, increasing the City's assessed property valuation and increasing the City's general tax revenues. The City shall make periodic payments based on a percentage of transaction privilege taxes received by the City for a certain length of time as entered into the agreement after occupancy. Based on a percentage of transaction privilege taxes received by the City for a certain length of time as entered into the agreement or capped at a certain dollar amount. City will abandon real property adjacent to the property for Types of commitments made by the right of way , modifying and rezoning use permit of City other than to reduce taxes property. Amount of sales tax reimbursements for the fiscal year ended June 30,2018 $ 1,398 92 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2018 (amounts expressed in thousands) XX. Implementation of new accounting principles GASB statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. GASB statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. The objectives of GASB 89 are to enhance the relevance and comparability of information about capital assets and cost of borrowing for a reporting period and to simplify accounting for certain interest costs by requiring interest costs incurred before the end of a construction period to be recognized as an expense/expenditure in governmental fund and government-wide financial statements. The requirements of GASB 89 are effective for fiscal years beginning after December 15, 2019. The City has elected early application of GASB 89 for the fiscal year ended June 30, 2018. The requirements will be applied prospectively. XXI. Subsequent events On October 23, 2018 the Mayor and City Council approved the authorization to enter into a settlement agreement with Traverse Bay Properties, LLC. This agreement supersedes Development Agreement C4857 for amounts due to Traverse Bay Properties, L.L.C. The agreement was approved for the amount of $7,500. This payment will be reflected in the fiscal year ending June 30, 2019. On June 26, 2018 the Mayor and City Council approved an ordinance authorizing the sale of land by the city to the Tohono O’Odham Nation for the amount of $3,100. The closing on the sale of the land and proceeds were received in November 2018. The remainder of this page left blank intentionally. 93 This page left blank intentionally. 94 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION (other than MD&A) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. 95 REQUIRED SUPPLEMENTARY INFORMATION SECTION This part of the City of Glendale’s comprehensive annual financial report presents detailed information for pension plans, OPEB plans, and the general fund budgetary schedule as a context for understanding the information presented in the financial statements and note disclosures. Contents Pages Schedule of the City’s Proportionate Share of the Net Pension/OPEB (Asset)/Liability Cost-Sharing Plans 97-98 Schedule of Changes in the City’s Net Pension/OPEB (Asset)/Liability and Related Ratios Agent Plans 99-105 Schedule of OPEB Liability-City Plan 106 Schedule of City Pension/OPEB Contributions 107-110 Notes to Pension/OPEB Plan Schedules 111-112 Budgetary Comparison Schedule-General Fund 113-114 Notes to Budgetary Comparison Schedule-General Fund 115-116 96 CITY OF GLENDALE, ARIZONA Schedule of the City's proportionate share of the net pension/OPEB (asset)/liability Cost-sharing plans June 30, 2018 (amounts expressed in thousands) ASRS-Pension City's proportion of the net pension liability City's proportionate share of the net pension liability City's covered payroll City's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability ASRS-Health insurance premium benefit City's proportion of the net OPEB (asset) City's proportionate share of the net OPEB (asset) City's covered payroll City's proportionate share of the net OPEB (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total OPEB liability ASRS-Long-term disability City's proportion of the net OPEB liablity City's proportionate share of the net OPEB liability City's covered payroll City's proportionate share of the net OPEB liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total OPEB liability 2018 (2017) 0.666400% $ 103,812 $ 64,059 2017 (2016) 0.637060% $ 102,830 $ 58,301 2016 (2015) 0.605260% $ 94,278 $ 54,853 162.06% 176.38% 171.87% 69.92% 67.06% 68.35% Reporting Fiscal Year (Measurement Date) 2018 2017 - 2009 (2017) (2016 - 2008) 0.67058% Information $ (365) Not Available $ 64,059 (0.57%) 103.57% Reporting Fiscal Year (Measurement Date) 2018 2017 - 2009 (2017) (2016 - 2008) 0.66674% Information $ 242 Not Available $ 64,059 0.38% 84.44% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 97 Reporting fiscal year (measurement date) 2015 2014 2013 - 2009 (2014) (2013) (2012 - 2008) 0.619749% 0.656524% Information $ 91,702 $ 109,143 Not Available $ 54,523 $ 57,475 168.19% 189.90% 69.49% N/A 98 CITY OF GLENDALE, ARIZONA Schedule of changes in the City's net pension/OPEB (assets)/liability and related ratios Agent plans June 30, 2018 (amounts expressed in thousands) Public Safety Personnel Retirement System - Police: Pension Total pension liability: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) 2018 (2017) $ 8,582 20,971 2,583 2017 (2016) $ 6,644 18,964 16,926 6,973 8,114 (3,593) 10,446 (13,390) 33,833 282,017 315,850 (11,246) 38,139 243,876 282,015 $ Plan fiduciary net position: Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ $ 13,678 4,549 15,468 (13,390) (137) 50 20,218 122,409 142,627 $ $ $ 13,527 4,299 729 (11,246) (105) (2) 7,202 115,207 122,409 City's net pension liability (asset) - ending (a) - (b) 173,223 159,606 Plan fiduciary net position as a percentage of the total pension liability 45.16% 43.40% Covered payroll 37,234 34,196 City's net pension liability (asset) as a percentage of covered payroll 465.22% 466.74% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 99 Reporting fiscal year (measurement date) 2016 2015 2014 - 2009 (2015) (2014) (2013 - 2008) $ 6,083 $ 5,483 Information 17,857 14,973 not available 3,331 $ $ $ 1,067 - 2,845 19,686 (11,143) 13,864 230,012 243,876 (8,616) 37,702 192,310 230,012 9,691 4,009 4,023 (11,143) (99) (6) 6,475 108,732 115,207 $ $ $ 8,221 3,432 12,960 (8,616) (104) (124) 15,769 92,963 108,732 128,669 121,280 47.24% 47.27% 33,350 31,815 385.81% 381.20% 100 CITY OF GLENDALE, ARIZONA Schedule of changes in the City's net pension/OPEB (assets)/liability and related ratios Agent plans June 30, 2018 (amounts expressed in thousands) Public Safety Personnel Retirement System - Police: OPEB Reporting fiscal year (measurement date) 2018 2017 - 2009 (2017) (2016 - 2008) Information $ 119 464 not available 11 Total OPEB Liability: Service cost Interest on the total OPEB liability Changes of benefit terms Differences between expected and actual experience in the measurement of the OPEB liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) 211 (359) $ Plan fiduciary net position: Contributions - employer Contributions - employee Net investment income Benefit payments Administrative expenses Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ $ (359) 87 6,312 6,399 202 541 (359) (5) 379 4,649 5,028 City's net OPEB liability (asset) - ending (a) - (b) 1,371 Plan fiduciary net position as a percentage of the total OPEB liability 78.58% Covered payroll 37,234 City's net OPEB liability (asset) as a percentage of covered payroll 3.68% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 101 This page left blank intentionally. 102 CITY OF GLENDALE, ARIZONA Schedule of changes in the City's net pension/OPEB (asset)/liability and related ratios Agent plans June 30, 2018 (amounts expressed in thousands) Public Safety Personnel Retirement System - Fire: Pension Total pension liability: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position: Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) 2018 (2017) $ 5,062 13,114 1,055 2017 (2016) $ 4,065 11,801 12,497 787 5,437 (2,923) 6,345 (7,304) 18,151 175,978 194,129 (8,199) 23,586 152,392 175,978 $ $ $ 6,578 2,604 11,234 (7,304) (100) 1 13,013 92,501 105,514 $ $ $ 7,339 2,649 547 (8,199) (79) (232) 2,025 90,476 92,501 City's net pension liability (asset) - ending (a) - (b) 88,615 83,477 Plan fiduciary net position as a percentage of the total pension liability 54.35% 52.56% Covered payroll 20,840 20,296 City's net pension liability (asset) as a percentage of covered payroll 425.22% 411.30% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 103 Reporting fiscal year (measurement date) 2016 2015 2014 - 2009 (2015) (2014) (2013 - 2008) $ 3,858 $ 3,805 Information 11,230 9,672 not available 1,658 $ $ $ (823) - 1,452 9,623 (5,996) 8,269 144,123 152,392 (6,800) 19,410 124,713 144,123 4,942 2,380 3,189 (5,996) (78) (389) 4,048 86,428 90,476 $ $ $ 4,630 2,265 10,457 (6,800) (84) 10,468 75,960 86,428 61,916 57,695 59.37% 59.97% 20,570 19,291 301.00% 299.08% 104 CITY OF GLENDALE, ARIZONA Schedule of changes in the City's net pension/OPEB (asset)/liability and related ratios Agent plans June 30, 2018 (amounts expressed in thousands) Public Safety Personnel Retirement System - Fire: OPEB Reporting fiscal year (measurement date) 2018 2017 - 2009 (2017) (2016 - 2008) Information $ 56 243 not available 3 Total OPEB Liability: Service cost Interest on the total OPEB liability Changes of benefit terms Differences between expected and actual experience in the measurement of the OPEB liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) (39) (145) $ Plan fiduciary net position: Contributions - employer Contributions - employee Net investment income Benefit payments Administrative expenses Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ $ (153) (35) 3,285 3,250 465 (153) (4) 308 4,026 4,334 City's net OPEB liability (asset) - ending (a) - (b) (1,084) Plan fiduciary net position as a percentage of the total OPEB liability 133.36% Covered payroll 20,840 City's net OPEB liability (asset) as a percentage of covered payroll -5.20% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 105 CITY OF GLENDALE, ARIZONA Schedule of OPEB Liability-City Plan June 30, 2018 (amounts expressed in thousands) Total OPEB Liability-City Plan June 30, 2018 June 30, 2017 June 30, 2016 2015 - 2009 Service Cost Interest Changes of benefit terms Differences betweeen expected and actual experience Changes in assumptions or other inputs Benefit payments Net Changes $ 3,083 2,183 (47,511) (11,823) (174) (6) (54,248) $ 3,494 2,311 (3,580) (2,463) (2,952) (237) (3,427) $ 3,376 1,792 (620) 4,548 Information Not Available Total OPEB Liability balance at June 30, 2017 $ 60,625 $ 64,052 $ 59,504 Total OPEB Liability balance at June 30, 2018 $ 6,377 $ 60,625 $ 64,052 Covered Employee Payroll $ - $ 113,677 $ 93,944 Total OPEB Liability as a percentage of covered employee payroll N\A 53.3% 68.2% Discount Rate 3.62% 3.43% 2.85% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 106 CITY OF GLENDALE, ARIZONA Schedule of city pension/OPEB contributions June 30, 2018 (amounts expressed in thousands) ASRS-Pension: Statutorily required contribution City's contribution in relation to the statutorily required contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of coveredpayroll $ 2018 7,414 $ 2017 7,007 $ 2016 6,472 $ $ 7,414 67,340 $ $ 7,007 64,059 $ $ 6,472 58,301 11.01% ASRS-Health insurance premium benefit: Statutorily required contribution City's contribution in relation to the statutorily required contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of coveredpayroll 10.94% 11.10% Reporting fiscal year 2017 2016-2009 $ 361 Information not available 385 361 $ 67,340 $ 64,059 2018 $ 385 $ $ 0.57% 0.56% Reporting fiscal year 2018 2017 2016-2009 $ 96 $ 91 Information not available 96 91 $ $ $ 67,340 $ 64,059 ASRS-Long-term disability: Statutorily required contribution City's contribution in relation to the statutorily required contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of coveredpayroll 0.14% 0.14% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 107 2015 $ 6,071 $ $ 6,071 54,853 11.07% Reporting fiscal year 2014 2013 $ 5,978 $ 5,971 $ $ 5,978 54,523 10.96% $ $ 5,971 57,475 10.39% $ 2012 5,743 $ 2011 5,685 $ 2010 6,479 $ 2009 6,045 $ $ 5,743 65,443 $ $ 5,685 65,143 $ $ 6,479 71,338 $ $ 6,045 81,655 8.77% 108 8.73% 9.08% 7.40% CITY OF GLENDALE, ARIZONA Schedule of city pension/OPEB contributions June 30, 2018 (amounts expressed in thousands) Reporti PSPRS Police-Pension: Actuarially determined contribution City's contribution in relation to the actuarially determined contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of covered payroll 2018 $ 16,296 PSPRS Police-OPEB: Actuarially determined contribution City's contribution in relation to the actuarially determined contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of covered payroll 2018 $ 204 0.37% 0.54% PSPRS Fire-Pension: Actuarially determined contribution City's contribution in relation to the actuarially determined contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of covered payroll 2018 $ 9,127 2017 $ 6,578 PSPRS Fire-OPEB: Actuarially determined contribution City's contribution in relation to the actuarially determined contribution City's contribution deficiency (excess) City's covered payroll City's contributions as a percentage of covered payroll 2018 $ $ 10,828 5,468 36,201 2017 $ 13,678 $ $ 29.91% $ $ 13,678 37,234 2016 $ 13,527 $ $ 36.74% 13,527 34,196 39.56% Reporting fiscal year 2017 2016-2009 $ 202 Information not available 135 202 69 $ 36,201 $ 37,234 Reporti $ $ 5,607 3,520 21,360 26.25% $ $ $ $ $ 6,578 20,840 31.56% 2016 $ 7,339 $ $ 7,339 20,296 36.16% Reporting fiscal year 2017 2016-2009 $ Information not available $ 21,360 $ 20,840 0.00% 0.00% The notes to pension/OPEB plan schedules are an integral part of this schedule. Note: This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 109 2015 $ 9,691 $ $ 9,691 33,350 Reporting fiscal year 2014 2013 $ 8,221 $ 6,787 $ $ 29.06% 2015 $ 4,942 $ $ 4,942 20,570 24.03% 8,221 31,815 $ $ 25.84% 6,787 28,336 $ 2012 5,907 $ 2011 5,248 $ $ 5,907 29,356 $ $ 5,248 27,576 23.95% 20.12% 19.03% Reporting fiscal year 2014 2013 $ 4,630 $ 3,454 2012 $ 2,828 2011 $ 2,546 $ $ 4,630 19,291 24.00% $ $ 3,454 18,547 18.62% $ $ 2,828 18,406 15.36% 110 $ $ 2,546 16,811 15.14% 2010 - 2009 Information Not Available 2010 - 2009 Information Not Available CITY OF GLENDALE, ARIZONA Notes to pension/OPEB (assets)/liability and contributions June 30, 2018 (amounts expressed in thousands) I. Actuarially determined contribution rates Actuarial determined contribution rates for PSPRS are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: PSPRS Actuarial Methods and Assumptions: Actuarial Cost Method Entry age normal Amortization Level Level percent-of-pay, closed Remaining Amortization Period as of the 2016 Actuarial Valuation 20 years for unfunded actuarial accrued liability, 20 years for excess Asset Valuation Method 7-year smoothed market value; 80%/120% market corridor Actuarial Assumptions: Investment Rate of Return Members with initial membership date before July 1, 2017: In the 2016 actuarial valuation, the investment rate of return was decreased from 7.85% to 7.5%. In the 2013 actuarial valuation, the investment rate of return was decreased from 8.0% to 7.85%. Members with initial membership on or after July 1, 2017: 7% Projected Salary Increases In the 2014 actuarial valuation, projected salary increases were decreased from 4.5%–8.5% to 4.0%–8.0%. In the 2013 actuarial valuation, projected salary increases were decreased from 5.0%–9.0% to 4.5%–8.5%. Wage Growth In the 2014 actuarial valuation, wage growth was decreased from 4.5% to 4.0%. In the 2013 actuarial valuation, wage growth was decreased from 5.0% to 4.5%. Retirement Age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 - June 30, 2011 Mortality RP-2000 mortality table (adjusted by 105% for both males and females) 111 CITY OF GLENDALE, ARIZONA Notes to pension/OPEB (assets)/liability and contributions June 30, 2018 (amounts expressed in thousands) II. Factors that affect trends Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional or a breach of contract because those provisions apply to individuals who were members as of the law’s effective date. As a result, the PSPRS changed benefit terms to reflect the prior mechanism for funding permanent benefit increases for those members and revised actuarial assumptions to explicitly value future permanent benefit increases. PSPRS also reduced those members’ employee contribution rates. These changes are reflected in the plans’ pension liabilities for fiscal year 2015 (measurement date 2014) for members who were retired as of the law’s effective date and fiscal year 2018 (measurement date 2017) for members who retired or will retire after the law’s effective date. These changes also increased the PSPRS-required pension contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date. These changes will increase the PSPRS-required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. Also, the City refunded excess employee contributions to PSPRS members. PSPRS allowed the City to reduce its actual employer contributions for the refund amounts. As a result, the City’s pension contributions were less than the actuarially or statutorily determined contributions for 2018. The remainder of this page left blank intentionally. 112 City of Glendale, Arizona Budgetary Comparison Schedule General Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Final Actual Amounts (budgetary basis) Variance with Final Budget Positive (Negative) 49,337 $ $ Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income (loss) Proceeds from disposal of assets Local revenue Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 49,337 $ 56,164 6,827 113,630 9,618 63,247 19,786 3,272 462 250 4,426 214,691 33,109 (37,469) 259,668 113,630 9,618 63,247 19,786 3,272 462 250 4,426 214,691 33,109 (37,469) 259,668 115,968 10,267 64,370 19,957 2,965 572 2,644 53 4,345 221,141 34,444 (36,910) 274,839 2,338 649 1,123 171 (307) 110 2,394 53 (81) 6,450 1,335 559 15,171 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 37,204 Public safety 131,528 Public works 13,122 Community services 18,099 Street maintenance 873 Contingencies 2,000 Capital outlay 14,396 Total charges to appropriations 217,222 37,204 132,799 14,409 18,195 860 1,733 12,022 217,222 36,404 132,757 14,408 17,836 763 8,782 210,950 800 42 1 359 97 1,733 3,240 6,272 Budgetary fund balance, June 30, 2018 $ 42,446 113 $ 42,446 $ 63,889 $ 21,443 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 274,839 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (56,164) Indirect cost allocation (10,000) Interest earned on restricted investments not available for appropriation (1,383) Proceeds from disposal of assets. (2,644) Revenue reported on a GAAP basis. (245) Police and fire sales tax revenue. 25,235 Less: Transfers in. (34,444) Add: Transfers out. 36,910 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 232,104 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay funded by long-term debt. Salaries payable. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. The notes to the financial statements are an integral part of this statement. 114 $ 210,950 1,096 (9,743) $ 202,303 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2018 (amounts expressed in thousands) I. Basis of accounting The City prepares its annual budget on a basis which differs from the GAAP basis. A budgetary comparison schedule for the general fund is included as required supplementary information to provide a meaningful comparison of actual results to budget on a budget basis. Budgetary comparison schedules for all other funds are presented as other supplemental information after the combining statements. In all cases, the budgetary schedules include a reconciliation of the adjustments required to convert the budgetary revenues and expenditures or changes in net position on a budgetary basis, to revenues and expenditures/expenses or changes in net position on a GAAP basis. In the fund financial statements, the revenues and expenses relating to police and fire sales tax is included in general fund and reflected as a reconciling item in the budgetary comparison schedule for the general fund. II. Budgetary information The City utilizes the following procedures in establishing the budgetary data reflected in the financial statements. 1. 2. 3. 4. 5. 6. Prior to the first of June of each year, the City Manager submits to the Mayor and Council a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed operating, capital and debt service expenditures and the means of financing them. The projected beginning budgeted fund balances for each fund are based on preliminary estimates of the June 30th ending actual budget basis fund balances rather than the June 30th ending budgeted fund balances. These two amounts will differ because of differences in actual results for the year versus planned results and by unused contingency appropriations. The legal level of budgetary control is the total budget as adopted. This is the level at which expenditures cannot legally exceed the appropriated amount. Prior to July 1, after receiving comments in a public hearing, a tentative budget is adopted by the City Council, which sets an upper-dollar limit for all funds combined, beyond which the City may not increase appropriations. After two weeks of legal advertising, the City Council legally adopts a final budget ordinance, which sets appropriations for each fund. Budget basis expenditures may not exceed appropriations for each fund, except in conjunction with the transfer of contingency funds and/or unused appropriation authority from another fund that is backed by additional revenue or fund balance in the fund receiving the appropriation. Contingency funds are appropriated for several funds as identified in the budget basis schedules and may only be transferred with City Council approval. The City Council may reallocate appropriations through budget amendments, but may not increase total appropriations above the total budget, which was legally adopted for the fiscal year. The City Council may authorize a transfer of unencumbered appropriation balanced within an individual city office, department or agency at any time during the fiscal year. During the last three months of the fiscal year, the City Council may approve transfers among city offices, departments, and agencies as necessary. Interfund transfers (i.e., transfers between funds) must be specifically approved by City Council. Procedures for requesting City Council approval of appropriation transfers and delegation of budget responsibility will be set by the City Manager. Budgetary authorization and spending management controls are employed during the year for all funds. 115 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2018 (amounts expressed in thousands) III. Contingency appropriation The principal purpose of a contingency appropriation is to cover any unforeseen expenditure, which may arise after the budget is adopted. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditures of each program or activity for the ensuing year. Thus, a contingency is essential for budgetary purposes. Contingency appropriation is re-established each fiscal year based on available fund balance and balancing needs of the budget year. The unused balances of contingency appropriations are reflected in the budget basis financial statements. The remainder of this page left blank intentionally. 116 This page left blank intentionally. 117 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ COMBINING STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. City of Glendale, Arizona Budgetary Comparison Schedule Municipal Property Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Investments Add: Transfers in Less: Transfers out Amounts available for appropriation 2,624 Final $ 18,180 20,804 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 30 Debt service: Principal 4,990 Interest 13,960 Total charges to appropriations 18,980 Budgetary fund balance, June 30, 2018 $ 1,824 Actual Amounts (budgetary basis) $ 2,624 $ 3,442 Variance with Final Budget Positive (Negative) $ 818 18,180 (2,900) 17,904 81 18,180 (2,894) 18,809 81 6 905 30 11 19 4,990 13,960 18,980 4,990 10,202 15,203 3,758 3,777 (1,076) $ 3,606 $ 4,682 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 18,809 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,442) Plus: Transfer out. 2,894 Less: Transfers in. (18,180) Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 81 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 118 $ 15,203 $ 15,203 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for revenues from specific taxes or other earmarked revenue sources, which by law are designated to finance particular functions or activities of government and which, therefore, cannot be diverted to other uses. Transportation Fund This fund accounts for the City’s public transit program and transportation improvement projects. Community Development Block Grants Fund This fund accounts for a series of ongoing entitlements received directly from the U. S. Department of Housing and Urban Development (HUD). This fund also includes the HUD Rental Rehabilitation and HOME programs. Highway User Gas Tax Fund This fund accounts for capital outlay and maintenance of municipal streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by state-shared fuel taxes. Other Special Revenue Fund This fund accounts for various activities, including the airport, miscellaneous grants, and other recreation programs. Debt Service Funds Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Highway User Debt Service Fund This fund accumulates monies for payment of all street and highway revenue bonds of the City. Highway user fuel taxes are transferred from other funds to fund this debt. Transportation Debt Service Fund This fund accumulates monies for payment of the transportation revenue bonds. Transportation excise taxes are transferred from a special revenue fund to fund this debt. Excise Tax Revenue Debt Service Fund This fund accounts for the debt that was issued to refund the senior and subordinate excise tax revenue bonds issued by the Municipal Property Corporation. General Obligation Debt Service Fund This fund accounts for the resources received from a secondary property tax levy used to repay general obligation debt. 119 Permanent Fund Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting City’s programs. Cemetery Perpetual Care Fund This fund is used to account for the revenues received by the City from the sale of cemetery lots and other related services. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Development Impact Fees Fund This fund accounts for fees covered by Chapter 28, Article VI of the Municipal Code and is restricted in use by ARS 9-463.05. The fees are used exclusively to provide the necessary public facilities and services for development. Residential development impact fees may be spent only in the district (residential development district, not political district) in which they are collected. Streets Construction Fund This fund accounts for the construction of streets, sidewalks, streetlights, traffic signals, and street landscaping funded through GO and revenue bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. In addition, this fund accounts for transportation projects funded by transportation excise tax revenue bonds issued on October 27, 2007. Fire and Police Construction Fund This fund accounts for the construction of fire and police department facilities. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. Parks Bond Construction Fund This fund accounts for the construction of parks and recreation improvements. Other Construction Fund This fund accounts for the construction of various City projects. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999, and the Federal Aviation Administration. • • • • • • • Flood control facilities Library Transit projects Economic development Open space/trails Government facilities Cultural facilities 120 1 of 3 City of Glendale, Arizona Combining Balance Sheet Non-Major Governmental Funds June 30, 2018 (amounts expressed in thousands) ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets Transportation Special Revenue Funds Community Highway Development User Block Gas Grants Tax $ 48,876 $ 272 $ 20 411 136 49,443 $ 4,270 1,287 5,829 $ 6,166 $ 1,431 7,597 Other $ 2,740 $ 188 2,887 3,337 9,152 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities 457 35 15 507 Deferred Inflows of Resources 20 - - 177 48,916 48,916 421 421 7,160 7,160 3,043 2,548 430 6,021 Fund balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources $ and fund balances 49,443 $ $ 121 276 3 859 4,270 5,408 5,829 $ $ 396 41 437 7,597 $ $ 437 8 57 1 1,856 67 528 2,954 9,152 Highway User 2 of 3 Highway User $ 43 $ 43 $ $ Permanent Fund Debt Service Funds Western Loop 101 Excise Tax Transportation Revenue - $ 2,023 $ 4,178 6,201 $ 1 1,551 3,925 5,477 $ 4,539 $ 2,237 6,776 $ Cemetery Perpetual Care General Obligation 1 5,092 1,590 6,683 $ 6,775 $ 555 42,578 49,908 $ 2,963 14,810 17,773 $ 5,810 $ 51 5,861 $ - - - - 385 51 43 43 724 724 93 - 31,750 31,750 5,810 5,810 43 $ 6,201 93 $ 6,776 $ 49,908 $ 5,861 (Continued) 122 3 of 3 City of Glendale, Arizona Combining Balance Sheet (continued) Non-Major Governmental Funds June 30, 2018 (amounts expressed in thousands) Capital Project Funds Fire Total Development and Parks Non-Major Impact Streets Police Bond Other Governmental Fees Construction Construction Construction Construction Funds ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ 16,486 $ 16,486 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources 457 60 61 578 $ 9,230 $ 9,230 $ 3,063 964 21 4,048 - Fund balances: Nonspendable 15,908 Restricted Committed Assigned Unassigned 15,908 Total fund balances Total liabilities, deferred outflows of resources $ 16,486 and fund balances $ $ 251 $ 251 $ 904 904 $ 115 $ 115 $ - $ 2,059 $ 105,385 $ 2,059 $ 555 4,529 6,016 136 52,330 168,951 $ 29 $ 29 5,117 68 1,025 136 1 3,619 67 4,834 9,606 20,325 44,798 - - - - 633 5,182 5,182 (653) (653) 115 115 2,030 2,030 5,810 115,385 2,548 430 (653) 123,520 9,230 123 $ 251 $ 115 $ 2,059 $ 168,951 This page left blank intentionally. 124 City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed is thousands) Special Revenue Funds Community Highway Development User Block Gas Grants Tax Transportation REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures 27,571 1,553 136 507 93 29,860 1 of 3 $ 1,990 262 2,252 $ 16,003 589 16,592 Other $ User 3 9,746 5 290 372 54 802 11,272 13,022 303 40 2,170 - 9,670 523 6,174 11 1,315 1,451 - 2 13,327 2 6 2,218 172 9,842 3,400 12,874 16,533 34 6,750 (1,602) OTHER FINANCING SOURCES (USES) Payment to refunded bonds escrow agent Refunding bonds issued Long-term debt issued Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses 2 (12,558) (12,556) - (17,535) (17,535) 77 2,120 2,197 Net change in fund balances 3,977 34 (10,785) 595 Fund balances, July 1 Fund balances, June 30 $ 44,939 48,916 $ 125 387 421 $ 17,945 7,160 $ 5,426 6,021 2 of 3 Permanent Fund Debt Service Funds Highway User $ $ Excise Tax Revenue Transportation - $ 5 6 11 $ Cemetery Perpetual Care General Obligation 29 8 37 $ 19,891 529 20,420 $ 70 70 - 3 - 489 - 33 - - - 3,925 3,114 7,042 1,590 9,340 11,419 14,810 5,497 20,340 - - (7,031) (11,382) 80 70 - 7,147 7,147 (76,909) 65,385 12,010 10,934 11,420 (230) 26,555 1,688 28,013 - - 116 38 28,093 70 43 43 $ 608 724 $ 55 93 $ 3,657 31,750 126 $ 5,740 5,810 (Continued) City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed is thousands) REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investments Miscellaneous Total revenues 3 of 3 Development Impact Fees Capital Projects Funds Fire and Parks Streets Police Bond Other Construction Construction Construction Construction Total Non-Major Governmental Funds $ $ $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures 2,264 194 2,458 385 385 $ - $ - 47,462 2,267 29,821 5 426 372 859 2,145 83,357 6 125 6 - 25 - 1,316 6,174 31 14,408 3,621 10,098 1,475 1,524 1,838 27,137 29,322 2,204 147 2,368 1 7 581 606 24,369 18,098 32,774 110,889 934 (28,937) (2,368) (7) (606) (27,532) OTHER FINANCING SOURCES (USES) Payment to refunded bonds escrow agent Refunding bonds issued Long-term debt issued Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses - 13,950 1,820 22,946 (827) 37,889 1,290 168 1,458 - (3) (3) (77,139) 91,940 15,240 15,686 79 43,147 (30,923) 58,030 Net change in fund balances 934 8,952 (910) (7) (609) 30,498 $ 216 - - 17 - Fund balances, July 1 Fund balances, June 30 4 20 25 - $ 14,974 15,908 (3,770) 5,182 $ 127 $ 257 (653) $ 122 115 $ 2,639 2,030 $ 93,022 123,520 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Taxes Intergovernmental Charges for services Investments Miscellaneous revenues Total revenues Less: Transfers out Amounts available for appropriation 30,471 Final $ 30,471 Actual Amounts (budgetary basis) $ 44,873 Variance with Final Budget Positive (Negative) $ 14,402 25,930 1,000 124 140 218 27,412 (23,672) 34,211 25,930 1,000 124 140 218 27,412 (23,672) 34,211 27,600 1,553 136 507 93 29,889 (12,558) 62,204 1,670 553 12 367 (125) 2,477 11,114 27,993 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services 15,523 Street maintenance 568 Capital outlay 1,150 Total charges to appropriations 17,241 15,493 761 957 17,211 13,014 303 2 13,319 2,479 458 955 3,892 Budgetary fund balance, June 30, 2018 $ 16,970 $ 17,000 $ 48,885 $ 31,885 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 62,204 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (44,873) Revenue reported on a GAAP basis. (29) Add: Transfers out. 12,558 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 29,860 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Internal charges for services provided. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 128 $ 13,319 8 $ 13,327 City of Glendale, Arizona Budgetary Comparison Schedule Community Development Block Grants Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation 303 Final $ Actual Amounts (budgetary basis) 303 $ 392 Variance with Final Budget Positive (Negative) $ 89 6,308 142 6,450 6,753 6,308 142 6,450 6,753 1,990 262 2,252 2,644 (4,318) 120 (4,198) (4,109) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community environment 6,344 Community services Principal paid 3 Interest expense 1 Capital Outlay Total charges to appropriations 6,348 6,344 3 1 6,348 2,173 40 2 5 2,220 4,171 (40) 1 1 (5) 4,128 Budgetary fund balance, June 30, 2018 $ 405 $ 405 $ 424 $ 19 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 2,644 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (392) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fundbalance - governmental funds. $ 2,252 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Community environment. Capital outlay. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 129 $ 2,220 (3) 1 $ 2,218 City of Glendale, Arizona Budgetary Comparison Schedule Highway Users Gas Tax Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation 18,901 Final $ Actual Amounts (budgetary basis) 18,901 $ 18,089 Variance with Final Budget Positive (Negative) $ (812) 15,609 8 15,617 34,518 15,609 8 15,617 34,518 16,003 589 16,592 34,681 394 581 975 163 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Street maintenance 11,184 Capital outlay 133 Transfers out 17,535 Total charges to appropriations 28,852 10,733 184 17,535 28,452 9,617 173 17,535 27,325 1,116 11 1,127 Budgetary fund balance, June 30, 2018 $ 5,666 $ 6,066 $ 7,356 $ 1,290 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 34,681 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (18,089) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 16,592 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Street maintenance. Capital outlay. Transfers out Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 130 $ 27,325 53 (1) (17,535) $ 9,842 City of Glendale, Arizona Budgetary Comparison Schedule Police and Fire Sales Tax Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Taxes Total revenues Less: Transfers out Amounts available for appropriation Budgetary fund balance, June 30, 2018 7,220 Final $ 25,033 25,033 (26,403) 5,850 $ 5,850 7,220 Actual Amounts (budgetary basis) $ 25,033 25,033 (26,403) 5,850 $ 5,850 7,291 Variance with Final Budget Positive (Negative) $ 25,263 25,263 (26,404) 6,150 $ 6,150 71 230 230 (1) 300 $ 300 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 6,150 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (7,291) Revenue reported on a GAAP basis. (28) Add: Transfers out. 26,404 Total revenues of the police and fire sales tax fund included in the general fund. $ 25,235 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 131 $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Other Special Revenue Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Licenses and permits Intergovernmental Charges for services Fines and Forteitures Investments Local Miscellaneous Total revenues Add: Transfers in Amounts available for appropriation 6,316 Final $ 6,316 Actual Amounts (budgetary basis) $ 4,759 Variance with Final Budget Positive (Negative) $ (1,557) 5 9,744 114 417 7 16,922 27,209 1,967 35,492 5 9,744 114 417 7 16,922 27,209 1,967 35,492 3 9,774 290 372 54 1 808 11,302 2,120 18,181 (2) 30 176 (45) 47 1 (16,114) (15,907) 153 (17,311) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 656 Public safety 19,368 Public works 44 Community services 1,866 Community environment 1,533 Capital outlay 10,098 Total charges to appropriations 33,565 699 21,818 44 1,849 1,533 10,801 36,744 528 6,185 11 1,315 1,438 3,321 12,798 171 15,633 33 534 95 7,480 23,946 Budgetary fund balance, June 30, 2018 $ 1,927 132 $ (1,252) $ 5,383 $ 6,635 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 18,181 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,759) Intergovernmental. 45 Local (4) Procceds from equipment disposal. (77) Miscellaneous. 6 Less: Transfers in. (2,120) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 11,272 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 133 $ 12,798 76 $ 12,874 City of Glendale, Arizona Budgetary Comparison Schedule Highway User Debt Service Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous Debt service: Principal Interest Total charges to appropriations Budgetary fund balance, June 30, 2018 $ Actual Amounts (budgetary basis) Final - $ - $ 43 Variance with Final Budget Positive (Negative) $ 43 - - 43 43 - - - - - - - - - $ - $ 43 $ 43 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 43 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (43) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 134 $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Transportation Debt Service Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Investments Miscellaneous Total revenues Add: Transfers in Amounts available for appropriation 194 Final $ 7,147 7,341 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 5 Debt service: Principal 3,730 Interest 3,417 Total charges to appropriations 7,152 Budgetary fund balance, June 30, 2018 $ 189 Actual Amounts (budgetary basis) $ 194 $ 608 Variance with Final Budget Positive (Negative) $ 414 7,147 7,341 5 6 11 7,147 7,766 5 6 11 425 5 3 2 3,730 3,417 7,152 3,925 3,114 7,042 (195) 303 110 189 $ 724 $ 535 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 7,766 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (608) Less: Transfers in. (7,147) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 11 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 135 $ 7,042 $ 7,042 City of Glendale, Arizona Budgetary Comparison Schedule Excise Tax Revenue Debt Service Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Investments Miscellaneous revenue Total revenues Add: Transfers in Amounts available for appropriation 23 Final $ 8,041 8,064 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 10 Debt service: Principal 1,115 Interest 6,916 Total charges to appropriations 8,041 Budgetary fund balance, June 30, 2018 $ 23 Actual Amounts (budgetary basis) $ 23 $ 55 Variance with Final Budget Positive (Negative) $ 32 10,941 10,964 29 8 37 10,934 11,026 29 8 37 (7) 62 10 4 6 1,590 9,341 10,941 1,590 9,340 10,934 1 7 23 $ 92 $ 69 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 11,026 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (55) Less: Transfers in. (10,934) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 37 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Difference in general government recognized on a GAAP basis Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 136 $ 10,934 485 $ 11,419 City of Glendale, Arizona Budgetary Comparison Schedule General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Taxes Intergovernmental Total inflows Add: Transfers in Amounts available for appropriation 3,040 Final $ 19,807 570 20,377 23,417 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 325 Debt service: Principal 14,810 Interest 5,068 Total charges to appropriations 20,203 Budgetary fund balance, June 30, 2018 $ 3,214 $ 3,040 Actual Amounts (budgetary basis) $ 3,656 Variance with Final Budget Positive (Negative) $ 616 19,807 570 20,377 23,417 19,891 529 20,420 24,076 84 (41) 43 659 325 33 292 14,810 5,068 20,203 14,810 5,068 19,911 292 3,214 $ 4,165 $ 951 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 24,076 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,656) Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 20,420 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Other financing uses on bond refunding. Interest - current bond refunding. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 137 $ 19,911 429 $ 20,340 City of Glendale, Arizona Budgetary Comparison Schedule Cemetery Perpetual Care Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final 5,710 $ 5,710 $ 5,740 Variance with Final Budget Positive (Negative) $ 30 26 26 5,736 26 26 5,736 70 70 5,810 44 44 74 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public works 5,736 Total charges to appropriations 5,736 5,736 5,736 - 5,736 5,736 Budgetary fund balance, June 30, 2018 $ - $ - $ 5,810 $ 5,810 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 5,810 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (5,740) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 70 138 City of Glendale, Arizona Budgetary Comparison Schedule Development Impact Fees Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Licenses and permits Investments Total revenues Less: Transfers out Amounts available for appropriation Final 14,026 $ 1,304 68 1,372 (44) 15,354 CHARGES TO APPROPRIATIONS (OUTFLOWS): General administration 177 Public safety 2,539 Street maintenance Public works 3,623 Capital outlay 9,015 Total charges to appropriations 15,354 Budgetary fund balance, June 30, 2018 $ - Actual Amounts (budgetary basis) 14,026 $ $ 947 1,304 68 1,372 (44) 15,354 2,264 194 2,458 17,431 960 126 1,086 44 2,077 177 2,539 4 20 25 1,475 1,524 173 2,539 (20) 3,559 7,084 13,335 3,584 8,559 14,859 $ 14,973 Variance with Final Budget Positive (Negative) 495 $ 15,907 $ 15,412 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 17,431 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (14,973) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 2,458 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fundbalances - governmental funds. 139 $ 1,524 $ 1,524 City of Glendale, Arizona Budgetary Comparison Schedule Streets Construction Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Miscellaneous Long-term debt issued Premium on long-term debt issued Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 847 $ 847 Actual Amounts (budgetary basis) $ (3,830) Variance with Final Budget Positive (Negative) $ (4,677) 11,625 11,625 33,766 (302) 45,936 11,625 11,625 33,766 (302) 45,936 385 13,950 1,820 16,155 22,946 (827) 34,444 385 2,325 1,820 4,530 (10,820) (525) (11,492) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Community services Street maintenance 338 Capital outlay 45,598 Total charges to appropriations 45,936 216 304 51,934 52,454 216 6 125 28,975 29,322 (6) 179 22,959 23,132 Budgetary fund balance, June 30, 2018 $ - $ (6,518) $ 5,122 $ 11,640 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 34,444 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. 3,830 Less: Transfers In. (22,946) Add: Transfers out. 827 Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 385 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 140 $ 29,322 $ 29,322 City of Glendale, Arizona Budgetary Comparison Schedule Fire and Police Construction Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Long-term debt issued Premium on long-term debt issued Total revenues Amounts available for appropriation Final 358 $ 358 2,351 2,351 2,351 2,709 CHARGES TO APPROPRIATIONS (OUTFLOWS): General administration Public safety 358 Capital outlay 2,351 Total charges to appropriations 2,709 Budgetary fund balance, June 30, 2018 $ - $ Actual Amounts (budgetary basis) $ 257 Variance with Final Budget Positive (Negative) $ (101) 2,351 2,709 1,290 168 1,458 1,715 (1,061) 168 (893) (994) 18 358 2,351 2,727 18 2,351 2,369 358 358 (18) $ (654) $ (636) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 1,715 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (257) Long-term debt issued. (1,290) Premium on long-term debt issued. (168) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: General admin reported on a GAAP basis. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 141 $ 2,369 (1) $ 2,368 City of Glendale, Arizona Budgetary Comparison Schedule Parks Bond Construction Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Amounts available for appropriation Actual Amounts (budgetary basis) Final 122 $ 122 $ 122 Variance with Final Budget Positive (Negative) $ - 122 122 122 - CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 72 Capital outlay 50 Total charges to appropriations 122 72 50 122 6 1 7 66 49 115 Budgetary fund balance, June 30, 2018 $ - $ - $ 115 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fundbalances - governmental funds. 142 115 122 (122) - $ 7 $ 7 City of Glendale, Arizona Budgetary Comparison Schedule Other Construction Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Long-term debt issued Total revenues Less: Transfers out Amounts available for appropriation Final 2,618 $ Actual Amounts (budgetary basis) 2,618 $ 2,640 Variance with Final Budget Positive (Negative) $ 22 7,000 7,000 (148) 9,470 7,000 7,000 (78) 9,540 (3) 2,637 (7,000) (7,000) 75 (6,903) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Community services 239 Capital outlay 9,231 Total charges to appropriations 9,470 239 2,194 2,433 25 581 606 (25) 239 1,613 1,827 Budgetary fund balance, June 30, 2018 $ - $ 7,107 $ 2,031 $ (5,076) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 2,637 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,640) Add: Transfers out 3 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 143 $ 606 $ 606 NON-MAJOR PROPRIETARY FUNDS – BUSINESS-TYPE ACTIVITIES Proprietary funds are used to account for City operations that are run like a business. These funds are responsible for providing enough operational revenue to cover all expenses. Landfill This fund accounts for the operation of the City owned landfill and recycling operations. Fees charged for the use of the landfill are used to maintain and improve the landfill operations as well as fund future closure costs. Solid Waste This fund accounts for the City’s trash collection services including curb, roll-off, bulk, and front-load services to individuals and businesses. Revenues collected are used to keep the City clean. Housing This fund accounts for operations to provide affordable housing to those who cannot afford it in the private market. This is done through administration of Federal Section 8 Housing Choice and Conventional Public Housing programs. 144 City of Glendale, Arizona Combining Statement of Net Position Non-Major Proprietary Funds - Business-Type Activities June 30, 2018 (amounts expressed in thousands) Landfill ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets $ Noncurrent assets: OPEB assets Capital assets: Capital assets Accumulated depreciation Capital assets, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current liabilities: Vouchers payable Accounts payable Compensated absences Intergovernmental payable Deposits Unearned Rent Total current liabilities Noncurrent liabilities: Compensated absences Net pension liability Net OPEB liability Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Credit amounts related to pensions and OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: OPEB benefits Unrestricted Total net position $ Solid Waste 8,016 $ 616 Housing $ Total 2,668 $ 11,300 636 (6) 8,646 2,494 (503) 2,607 2 21 20 2,711 3,132 (509) 21 20 13,964 12 20 5 37 33,179 (14,775) 18,404 18,416 27,062 665 14,140 (9,741) 4,399 4,419 7,026 1,002 14,828 (10,609) 4,219 4,224 6,935 309 62,147 (35,125) 27,022 27,059 41,023 1,976 1,017 289 142 1,448 117 315 109 541 34 18 10 47 10 119 1,134 34 622 10 298 10 2,108 195 3,699 272 15,235 19,401 20,849 178 5,776 440 6,394 6,935 162 1,803 103 29 2,097 2,216 535 11,278 815 29 15,235 27,892 30,000 467 467 912 912 299 299 1,678 1,678 18,404 4,399 4,219 27,022 12 (12,005) 6,411 20 (4,238) 181 5 505 4,729 37 (15,738) 11,321 $ 145 $ $ City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Business-Type Activities Enterprise Funds Landfill Operating revenues: Intergovernmental Container service Curb service Landfill user fees Recycling sales Other fees Total operating revenues $ Operating expenses: Landfill Housing Closure/post-closure care adjustment Solid Waste Depreciation Total operating expenses Operating income (loss) Solid Waste 8,241 1,099 105 9,445 $ 4,016 12,032 16,048 Housing $ 9,146 3,353 12,499 Total $ 9,146 4,016 12,032 8,241 1,099 3,458 37,992 9,112 538 1,086 10,736 (1,291) 15,291 1,207 16,498 (450) 12,669 313 12,982 (483) 9,112 12,669 538 15,291 2,606 40,216 (2,224) Nonoperating revenues (expenses): Investment income Gain (loss) on disposal of assets OPEB income (expense) Total nonoperating revenue (expenses) 97 9 765 871 (2) 34 1,670 1,702 9 489 498 104 43 2,924 3,071 Income (loss) before contributions and transfers (420) 1,252 15 847 Capital contributions Transfers in Transfers out 675 (5) 129 - 133 387 - 133 1,191 (5) 250 1,381 535 2,166 Change in net position Total net position - beginning Total net position - ending $ 6,161 6,411 146 $ (1,200) 181 $ 4,194 4,729 $ 9,155 11,321 City of Glendale, Arizona Combining Statement of Cash Flows Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Landfill Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid to employees for services Net cash provided (used) by operating activities $ 9,622 - Solid Waste $ 15,781 - Housing $ Total 3,358 9,151 $ 28,761 9,151 (1,629) (4,049) (3,156) 788 (8,561) (1,466) (5,400) 354 (11,326) (1,472) (289) (10,190) (16,841) (10,028) 853 675 (5) 129 - 387 - 1,191 (5) 670 129 387 1,186 (1,081) 37 (15) - 37 (1,096) (1,081) 22 - (1,059) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 97 97 (2) (2) - 95 95 Net increase (decrease) in cash and cash equivalents during fiscal year 474 503 98 1,075 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: Proceeds from sale of capital assets Acquisition of capital assets and rights Net cash used capital and related financing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ 7,542 8,016 147 $ 113 616 $ 2,570 2,668 $ 10,225 11,300 Landfill 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 operations: Depreciation Net pension and OPEB contributions Net change in OPEB asset Net change in pension and OPEB liability Net change in deferred outflows related to pensions and OPEB Net change in deferred inflows related to pensions and OPEB Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Vouchers and accounts payable Intergovernmental payable Deposits Unearned rent Compensated absences Proceeds from disposal of assets Estimated closure and post-closure costs Net cash provided by (used) operating activities $ Solid Waste (1,291) $ (450) Housing $ (483) Total $ (2,224) 1,086 928 (12) (1,040) 1,207 1,949 (20) (2,212) 313 564 (6) (630) 2,606 3,441 (38) (3,882) 132 227 61 420 (82) (69) (11) (162) $ 176 349 (3) 3 4 538 788 $ (263) (63) (1) (1) 54 (4) 354 $ (1) 10 (2) (18) (23) 5 (4) (64) (289) $ (88) 10 (2) 268 (24) 1 (4) (7) 538 853 Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combining statement of net position: Equity in pooled cash and investments Total cash and cash equivalents $ $ 8,016 8,016 $ $ 616 616 $ $ 2,668 2,668 $ $ 11,300 11,300 Noncash investing, capital, and financing activities: Contributions of capital assets $ - $ - $ 133 $ 133 148 City of Glendale, Arizona Budgetary Comparison Schedule Water and Sewer Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Intergovernmental Charges for services: Metered water sales Sewer service charges Impact fees Other fees Investments Miscellaneous Proceeds from equipment disposal Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 99,307 $ $ Variance with Final Budget Positive (Negative) $ $ 93,194 (6,113) 400 400 536 136 43,506 31,904 1,820 1,690 254 3,771 10 83,355 420 (1,886) 181,196 43,506 31,904 1,820 1,690 254 3,771 10 83,355 420 (1,876) 181,206 48,934 33,465 1,558 1,667 1,264 2,437 5,715 95,576 420 (246) 188,944 5,428 1,561 (262) (23) 1,010 (1,334) 5,705 12,221 1,630 7,738 14,889 23,623 14,662 8,836 56,450 14,868 24,122 12,991 35,059 21 (499) 1,671 8,836 21,391 12,780 9,860 141,100 12,780 9,860 109,680 31,420 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 14,889 Water 23,623 Sewer 14,662 Contingencies 11,236 Capital outlay 55,672 Debt service: Principal 12,780 Interest 9,860 Total charges to appropriations 142,722 Budgetary fund balance, June 30, 2018 99,307 Actual Amounts (budgetary basis) 38,474 149 $ 40,106 $ 79,264 $ 39,158 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Revenues offset directly by bad debt expense on budgetary basis. Revenue reported on a GAAP basis. Proceeds from equipment disposals. Internal staff and administrative charges reported as revenue only on budgetary basis. OPEB income. Less: Transfers in. Add: Transfers out. Total revenues as reported on the statement of revenues, expenses, and changes in fund net position, excluding capital contributions. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Amortization of capitalized bond issuance expense. Capital outlay expenditure. Accrued payroll expense. Amortization and depreciation expense. Loss on Joint Venture. Loss on disposal of assets. Principal payments on long-term obligations. Interest expense. Indirect cost allocation. Total expenses as reported in the statement of revenues, expenses, and changes in fund net position. 150 $ 188,944 (93,194) 148 917 (5,715) (82) 5,334 (420) 246 $ 96,178 $ 109,680 (35,059) (175) 23,305 2,627 2,847 (12,780) (1,316) (844) $ 88,285 City of Glendale, Arizona Budgetary Comparison Schedule Landfill Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Charges for services: Landfill user fees Recycling fees Other fees Proceeds from equipment disposal Investments Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 9,050 Final $ 9,050 Actual Amounts (budgetary basis) $ 7,653 Variance with Final Budget Positive (Negative) $ (1,397) 8,001 1,581 738 19 45 10,384 675 (225) 19,884 8,001 1,581 738 19 45 10,384 675 (225) 19,884 8,242 1,098 536 9 97 9,982 675 (5) 18,305 241 (483) (202) (10) 52 (402) 220 (1,579) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Contingencies 700 Landfill 10,144 Capital outlay 7,088 Total charges to appropriations 17,932 10,330 6,850 17,180 9,609 1,087 10,696 721 5,763 6,484 Budgetary fund balance, June 30, 2018 $ 1,952 $ 2,704 $ 7,609 $ 4,905 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 18,305 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (7,653) Internal staff and administrative charges reported as revenue only on budgetary basis. (431) OPEB income. 765 Less: Transfers in (675) Add: Transfers out. 5 Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 10,316 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditures. Accrued payroll expense. Landfill post-closure expense. Depreciation expense. Pension expense. Internal staff and administrative charges reported as revenue only on budgetary basis. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 151 $ 10,696 (1,087) (250) 538 1,086 184 (431) $ 10,736 City of Glendale, Arizona Budgetary Comparison Schedule Solid Waste Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Charges for services: Container service Curb service Investments Proceeds from equipment disposal Total revenues Add: Transfers in Amounts available for appropriation 1,910 Final $ 1,910 Actual Amounts (budgetary basis) $ 1,872 Variance with Final Budget Positive (Negative) $ (38) 3,886 11,415 7 32 15,340 128 17,378 3,886 11,415 7 32 15,340 128 17,378 4,016 11,993 (2) 34 16,041 129 18,042 130 578 (9) 2 701 1 664 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Solid Waste 14,638 Capital outlay 589 Total charges to appropriations 15,227 14,327 1,600 15,927 15,315 15 15,330 (988) 1,585 597 Budgetary fund balance, June 30, 2018 $ 2,151 $ 1,451 $ 2,712 $ 1,261 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 18,042 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (1,872) Revenues offset directly by bad debt expense on budgetary basis. 39 Proceeds from disposal of capital assets. (34) OPEB income. 1,670 Gain on disposal of assets. 34 Less: Transfers in. (129) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 17,750 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Capital outlay. Accrued payroll expense. Depreciation expense. Pension expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position 152 $ 15,330 39 (15) (379) 1,207 316 $ 16,498 City of Glendale, Arizona Budgetary Comparison Schedule Housing Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Investments Total revenues Add: Transfers in Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 2,894 Variance with Final Budget Positive (Negative) $ 2,894 15,519 15,519 387 15,906 15,519 15,519 387 15,906 9,279 3,354 8 12,641 387 15,922 (6,240) 3,354 8 (2,878) 16 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Housing 15,695 Capital outlay 211 Total charges to appropriations 15,906 15,695 211 15,906 12,703 12,703 2,992 211 3,203 Budgetary fund balance, June 30, 2018 $ - $ - $ 3,219 $ 3,219 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 15,922 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,894) OPEB income. 489 Capital Contributions (133) Less: Transfers in. (387) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 12,997 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Depreciation expense. Pension expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 153 $ 12,703 313 (34) $ 12,982 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTERNAL SERVICE FUNDS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. City of Glendale, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2018 (amounts expressed in thousands) Risk Management ASSETS Current assets: Equity in pooled cash and investments Intergovernmental Receivable Inventories and prepaid items Total current assets $ Noncurrent assets: Restricted deposits OPEB asset Capital assets: Capital assets Accumulated depreciation Capital assets, net Workers' Compensation 5,181 10 5,191 $ 7,810 7,810 Employee Benefits $ Fleet Services 4,893 4,893 $ Technology 506 9 49 564 $ 6,744 6,744 Total $ 25,134 9 59 25,202 1 150 1 1,425 - 9 13 1,575 24 - - - 823 (743) 80 4,574 (2,898) 1,676 5,397 (3,641) 1,756 Total assets 5,192 7,961 6,318 653 8,433 28,557 Deferred Outflows of Resources 63 29 - 928 778 1,798 LIABILITIES Current liabilities: Vouchers payable Accounts payable Compensated absences Estimated claims payable Total current liabilities 39 23 4,043 4,105 136 24 6,331 6,491 1,747 3,541 5,288 308 172 232 712 55 58 303 416 2,285 230 582 13,915 17,012 Noncurrent liabilities: Compensated absences Net pension liability Net OPEB liability Total noncurrent liabilities Total liabilities 10 48 15 73 4,178 14 16 11 41 6,532 5,288 150 2,822 181 3,153 3,865 195 577 176 948 1,364 369 3,463 383 4,215 21,227 23 23 15 15 - 840 840 318 318 1,196 1,196 - - - 80 1,676 1,756 1 1,053 1 1,442 1,030 9 (3,213) 13 5,840 24 6,152 DEFERRED INFLOWS Amounts related to pensions and OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: OPEB benefits Unrestricted Total net position $ 1,054 $ 1,443 154 $ 1,030 $ (3,124) $ 7,529 $ 7,932 City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Operating revenues: Self-insurance premiums Charges for Service Other fees Total operating revenues Risk Management Workers' Compensation $ $ Operating expenses: Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Loss on disposal of assets OPEB expense Total nonoperating revenues and expenses Change in net position Net position - beginning Net position - ending $ 3,845 177 4,022 1,278 2 1,280 Employee Benefits $ 29,737 4 29,741 Fleet Services $ 9,232 2 9,234 Technology $ 12,121 20 12,141 Total $ 34,860 21,353 205 56,418 234 4,474 4,708 192 3,286 3,478 25 29,666 29,691 9,200 13 9,213 8,302 550 8,852 17,953 37,426 563 55,942 (686) (2,198) 50 21 3,289 476 57 (17) 40 101 (18) 83 79 79 (278) (278) 26 (6) (299) (279) 263 (6) (612) (355) (646) (2,115) 129 (257) 3,010 121 1,700 1,054 $ 3,558 1,443 155 $ 901 1,030 $ (2,867) (3,124) $ 4,519 7,529 $ 7,811 7,932 City of Glendale, Arizona Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Cash flows from operating activities: Cash received from customers Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services Risk Management Workers' Compensation $ $ 4,022 1,280 Employee Benefits $ Fleet Services 29,741 $ Technology 9,235 $ 12,141 Total $ 56,419 - - - (251) (6,416) (52) (5,282) (303) (11,698) (3,133) (233) (1,874) (187) (28,609) - (2,399) (3,196) (33,616) (6,015) 656 (781) 1,132 169 3,611 4,787 Cash flows from capital and related financing activities: Acquisition of capital assets and rights - - - - (1,058) (1,058) Cash flows from investing activities: Interest received from investments 57 101 79 - 26 263 Net increase (decrease) in cash during fiscal year 713 (680) 1,211 169 2,579 3,992 Net cash provided by (used for) operating activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ 4,468 5,181 $ 8,490 7,810 $ 3,682 4,893 $ 337 506 $ 4,165 6,744 $ 21,142 25,134 $ (686) $ (2,198) $ 50 $ 21 $ 3,289 $ 476 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operations: Amortization and depreciation Net pension and OPEB contributions Net change in OPEB asset Net change in pension and OPEB liability Net change in deferred outflows related to pensions and OPEB Net change in deferred inflows related to pensions and OPEB Changes in assets and liabilities: Change in intergovernmental receivable Change in inventories and prepaid items Change in vouchers payable Change in compensated absences Change in claims payable Net cash provided by (used for) operating activities $ 656 $ (781) $ 1,132 $ 169 $ 3,611 $ 4,787 Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Total cash and cash equivalents $ $ 5,181 5,181 $ $ 7,810 7,810 $ $ 4,893 4,893 $ $ 506 506 $ $ 6,744 6,744 $ $ 25,134 25,134 (5) (1) (1) (9) (1) 2 - 13 (154) (9) 49 550 (124) (12) 26 563 (292) (23) 76 10 8 - 100 141 259 (9) (4) - (41) (110) (164) - - - 1 - 1 41 15 7 1,285 102 9 1,310 (398) 1,480 9 169 11 - (227) 78 - 50 (339) 105 4,075 156 City of Glendale, Arizona Budgetary Comparison Schedule Risk Management Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Self-insurance premiums Investments Other Total revenues Amounts available for appropriation 1,963 Final $ 1,963 Actual Amounts (budgetary basis) $ 4,449 Variance with Final Budget Positive (Negative) $ 2,486 3,852 20 130 4,002 5,965 3,852 20 130 4,002 5,965 3,845 57 177 4,079 8,528 (7) 37 47 77 2,563 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 1,234 Insurance and claims 2,734 Total charges to appropriations 3,968 734 3,234 3,968 231 3,148 3,379 503 86 589 Budgetary fund balance, June 30, 2018 $ 1,997 $ 1,997 $ 5,149 $ 3,152 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 8,528 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,449) Total revenues as reported on the combining statement of revenues, expenses, and changes in fund net position. $ 4,079 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Pension contributions that were reclassified as deferred outflows of resources. Accrued payroll expense. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 157 $ 3,379 1,326 14 (11) 17 $ 4,725 City of Glendale, Arizona Budgetary Comparison Schedule Workers' Compensation Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Other Total revenues Amounts available for appropriation 7,654 Final $ 7,654 Actual Amounts (budgetary basis) $ 8,610 Variance with Final Budget Positive (Negative) $ 956 1,299 26 30 1,355 9,009 1,299 26 30 1,355 9,009 1,278 2 101 1,381 9,991 (21) 2 75 (30) 26 982 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 1,175 Insurance and claims 2,104 Total charges to appropriations 3,279 1,175 2,104 3,279 181 1,981 2,162 994 123 1,117 Budgetary fund balance, June 30, 2018 $ 5,730 $ 5,730 $ 7,829 $ 2,099 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 9,991 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (8,610) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 1,381 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Pension contributions that were reclassified as deferred outflows of resources. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 158 $ 2,162 1,305 11 18 $ 3,496 City of Glendale, Arizona Budgetary Comparison Schedule Employee Benefits Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 2,962 Variance with Final Budget Positive (Negative) $ 2,962 28,856 106 1 28,963 28,963 28,856 106 1 28,963 28,963 29,737 4 79 29,820 32,782 881 (102) 78 857 3,819 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 169 Insurance and claims 28,794 Total charges to appropriations 28,963 169 28,794 28,963 25 28,186 28,211 144 608 752 Budgetary fund balance, June 30, 2018 $ - $ - $ 4,571 $ 4,571 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 32,782 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes. (2,962) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 29,820 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 159 $ 28,211 1,480 $ 29,691 City of Glendale, Arizona Budgetary Comparison Schedule Fleet Services Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 101 Variance with Final Budget Positive (Negative) $ 101 9,239 9,239 9,239 9,239 9,239 9,239 9,232 2 9,234 9,335 (7) 2 (5) 96 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 9,239 Total charges to appropriations 9,239 9,239 9,239 9,246 9,246 (7) (7) Budgetary fund balance, June 30, 2018 $ - $ - $ 89 $ 89 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 9,335 Differences - budget to GAAP: Beginning fund balance restated (101) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 9,234 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Amortization and depreciation expense. Pension contributions that were reclassified as deferred outflows of resources. Accrued payroll expense. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 160 $ 9,246 13 (56) 10 278 $ 9,491 City of Glendale, Arizona Budgetary Comparison Schedule Technology Fund For the Fiscal Year Ended June 30, 2018 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2017 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Total revenues Add: Transfers in Amounts available for appropriation 2,050 Actual Amounts (budgetary basis) Final $ 2,050 $ 3,858 Variance with Final Budget Positive (Negative) $ 1,808 9,230 9,230 2,940 14,220 9,230 9,230 2,940 14,220 12,121 20 26 12,167 16,025 2,891 20 26 2,937 (2,940) 1,805 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 10,573 Capital outlay 3,570 Total charges to appropriations 14,143 10,573 3,570 14,143 8,294 1,059 9,353 2,279 2,511 4,790 Budgetary fund balance, June 30, 2018 $ 77 $ 77 $ 6,672 $ 6,595 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 16,025 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes. (3,858) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 12,167 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditure. Amortization and depreciation expense. Loss on disposal of assets. Pension contributions that were reclassified as deferred outflows of resources. Accrued payroll expense. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 161 $ 9,353 (1,059) 550 6 (76) 84 299 $ 9,157 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ SUPPLEMENTARY INFORMATION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 1 of 6 The following is the schedule of Federal Financial Data as required by the United States Department of Housing and Urban Development under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H. Balance Sheet Line Item No. 111 112 113 114 115 100 Account Description ASSETS: Current assets: Cash: Cash - unrestricted Cash - restricted - modernization and development Cash - other restricted Cash - tenant security deposits Cash - restricted for payment of current liability Total cash Project Total Housing Choice Vouchers Eliminations $ $ $ 1,049,692 46,825 1,096,517 1,311,297 260,321 1,571,618 - Total $ 2,360,989 260,321 46,825 2,668,135 121 122 124 125 126 126.1 126.2 127 128 128.1 129 120 Accounts receivables: Accounts receivable - PHA projects Accounts receivable - HUD other projects Accounts receivable - other government Accounts receivable - miscellaneous Accounts receivable - tenants Allowance for doubtful accounts - tenants Allowance for doubtful accounts - other Notes, loans, & mortgages receivable - current Fraud recovery Allowance for doubtful accounts - fraud Accrued interest receivable Total receivables, net of allowances for doubtful accounts 21,445 4,764 (2,181) 24,028 3,250 (3,250) - - 21,445 8,014 (5,431) 24,028 131 132 135 142 143 143.1 144 145 150 Current investments: Investments - unrestricted Investments - restricted Investments - restricted for payment of current liability Prepaid expenses and other assets Inventories Allowance for obsolete inventories Inter program - due from Assets held for sale Total current assets 20,969 (1,048) 1,140,466 1,571,618 - 20,969 (1,048) 2,712,084 161 162 163 164 165 166 167 168 160 Non-current assets: Capital assets: Land Buildings Furniture, equipment & machinery - dwellings Furniture, equipment & machinery - administration Leasehold improvements Accumulated depreciation Construction in progress Infrastructure Total capital assets, net of accumulated depreciation 135,533 10,696,556 533,024 186,097 2,293,168 (10,426,398) 730,612 4,148,592 149,998 102,908 (183,050) 69,856 - 135,533 10,846,554 533,024 289,005 2,293,168 (10,609,448) 730,612 4,218,448 2,204 4,150,796 5,291,262 123,531 5,414,793 3,306 73,162 1,644,780 185,296 1,830,076 - 5,510 4,223,958 6,936,042 308,827 7,244,869 171 172 173 174 176 180 190 200 290 Notes, loans, & mortgages receivable - non-current Notes, loans, & mortgages receivable - non-current - past due Grants receivable - non-current Other assets Investment in joint venture Total non-current assets Total assets Deferred outflow of resources Total assets and deferred outflow of resources $ $ $ $ (continued) 162 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 2 of 6 (continued) Balance Sheet Line Item No. Account Description Project Total Housing Choice Vouchers Eliminations $ $ $ Total 311 312 313 321 322 324 325 331 332 333 341 342 343 344 345 346 347 348 310 LIABILITIES AND EQUITY-NET ASSETS/POSITION: LIABILITIES: Current liabilities: Bank Overdraft Accounts payable <= 90 days Accounts payable > 90 days past due Accrued wage/payroll taxes payable Accrued compensated absences - current portion Accrued contingency liability Accrued interest payable Accounts payable - HUD PHA Programs Accounts payable - PHA projects Accounts payable - other government Tenant security deposits Unearned revenues Total current portion of L/T debt - capital projects/mortgage revenue Current portion of L/T debt - operating borrowings Other current liabilities Accrued liabilities - other Inter program - due to Loan liability - current Total current liabilities 351 352 353 354 355 356 357 350 300 Noncurrent liabilities: Long-term debt, net of current - capital projects/mortgage revenue Long-term debt, net of current - operating borrowings Noncurrent liabilities - other Accrued compensated absences - noncurrent Loan liability - noncurrent FASB 5 liabilities Accrued pension and OPEB liabilities Total noncurrent liabilities Total liabilities 73,527 762,665 836,192 931,223 28,405 88,421 1,143,997 1,260,823 1,284,244 - 28,405 161,948 1,906,662 2,097,015 2,215,467 400 Deferred inflow of resources 119,725 179,588 - 299,313 4,148,592 215,253 4,363,845 5,414,793 69,855 231,916 64,473 366,244 1,830,076 - 4,218,447 231,916 279,726 4,730,089 7,244,869 508.4 511.4 512.4 513 600 EQUITY - NET ASSETS/POSITION: Net investment in capital assets Restricted net position Unrestricted net position Total equity - net assets/position Total liabilities, deferred inflow of resources and equity - net assets/position $ 30,215 8,170 46,825 9,821 95,031 $ 4,204 9,825 9,392 23,421 $ - $ $ 34,419 17,995 9,392 46,825 9,821 118,452 (continued) 163 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 3 of 6 (continued) Income Statement Line Item No. Account Description 70300 70400 70500 REVENUE: Net tenant rental revenue Tenant revenue - other Total tenant revenue 70600 70610 HUD PHA operating grants Capital grants 70710 70720 70730 70740 70750 70700 Management fee Asset management fee Bookkeeping fee Front line service fee Other fees Total fee revenue 70800 71100 71200 71300 71310 71400 71500 71600 72000 70000 Other government grants Investment income - unrestricted Mortgage interest income Proceeds from disposition of assets held for sale Cost of sale of assets Fraud recovery Other revenue Gain or loss on sale of capital assets Investment income - restricted Total revenue Project Total Housing Choice Vouchers Eliminations $ $ $ $ 385,522 8,409 393,931 - - Total $ 385,522 8,409 393,931 556,838 132,676 8,589,909 - - 9,146,747 132,676 - - - - 4,169 257,119 1,344,733 4,367 10,278 3,160,473 $ 11,765,027 - 8,536 10,278 3,417,592 $ 13,109,760 $ (continued) 164 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 4 of 6 (continued) Income Statement Line Item No. Account Description 91100 91200 91300 91310 91400 91500 91600 91700 91800 91810 91900 91000 EXPENSES: Administrative salaries Auditing fees Management fee Bookkeeping fee Advertising and marketing Employee benefit contributions - administrative Office expenses Legal expense Travel Allocated overhead Other Total operating - administrative 92000 92100 92200 92300 92400 92500 Asset management fee Tenant services - salaries Relocation costs Employee benefit contributions - tenant services Tenant services - other Total Tenant services 93100 93200 93300 93400 93500 93600 93700 93800 93000 94100 94200 94300 94500 94000 Project Total Housing Choice Vouchers Eliminations $ $ $ 257,392 173,089 19,003 86 29 89,994 539,593 505,854 205,689 45,160 300 80,347 837,350 - Total $ 763,246 378,778 64,163 386 29 170,341 1,376,943 6,000 6,000 - - 6,000 6,000 Water Electricity Gas Fuel Labor Sewer Employee benefit contributions - utilities Other utilities expense Total utilities 74,447 23,224 1,744 34,368 133,783 - - 74,447 23,224 1,744 34,368 133,783 Ordinary maintenance and operations - labor Ordinary maintenance and operations - materials & other Ordinary maintenance and operations - contract costs Employee benefit contributions - ordinary maintenance Total maintenance 268,798 76,392 128,173 149,414 622,777 2,216 2,216 - 268,798 78,608 128,173 149,414 624,993 $ $ $ $ (continued) 165 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 5 of 6 (continued) Income Statement Line Item No. Account Description Project Total Housing Choice Vouchers Eliminations $ $ $ Total 95100 95200 95300 95500 95000 Protective services - labor Protective services - other contract costs Protective services - other Employee benefit contributions - protective services Total protective services 96110 96120 96130 96140 96100 Property insurance Liability insurance Workmen's compensation All other insurance Total insurance premiums 12,777 4,185 16,962 8,518 2,790 11,308 - 21,295 6,975 28,270 96200 96210 96300 96400 96500 96600 96800 96000 Other general expenses Compensated absences Payments in lieu of taxes Bad debt - tenant rents Bad debt - mortgages Bad debt - other Severance expense Total other general expenses 159 159 9,072 9,072 - 9,072 159 9,231 96710 96720 96730 96700 Interest on mortgage (or bonds) payable Interest on notes payable (short and long term) Amortization of bond issue costs Total Interest expense and amortization cost - - - - 96900 Total operating expenses 1,319,274 859,946 - 2,179,220 25,459 10,905,081 - 10,930,540 97000 Excess of operating revenue over operating expenses - - - $ - 97100 97200 Extraordinary maintenance Casualty losses - non-capitalized - - - - 97300 Housing assistance payments - 7,905,321 - 7,905,321 308,558 1,627,832 2,566,310 4,238 $ 11,335,815 - 2,566,310 312,796 $ 12,963,647 97350 97400 97500 97600 97700 97800 90000 HAP Portability-in Depreciation expense Fraud losses Capital outlays - governmental funds Debt principal payment - governmental funds Dwelling units rent expense Total expenses $ $ (continued) 166 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2018 (rounded to nearest dollar) 6 of 6 (continued) Income Statement Line Item No. Account Description 10010 10020 OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out 10030 10040 10050 10060 10070 10080 10091 10092 10093 10094 10100 10000 Operating transfers from/to primary government Operating transfers from/to component unit Proceeds from notes, loans and bonds Proceeds from property sales Extraordinary items, net gain/loss Special items, net gain/loss Inter project excess cash transfer in Inter project excess cash transfer out Transfers between program and project - in Transfers between program and project - out Total other financing sources (uses) Excess (deficiency) of total revenues over (under) total expenses Project Total Housing Choice Vouchers Eliminations $ $ $ $ 1,580 (1,580) 213,981 213,981 (69,118) $ - $ 172,582 172,582 601,794 - (1,580) 1,580 Total $ $ - $ $ - $ 386,563 386,563 532,676 MEMO ACCOUNT INFORMATION 11020 Required annual debt principal payments 11030 Beginning equity 11040 11050 11060 11070 11080 11090 11100 11170 11180 11190 11210 11270 Prior period adjustments, equity transfers & correction of errors Changes in compensated absence balance Changes in contingent liability balance Changes in unrecognized pension transition liability Changes in special term/severance benefits liability Changes in allowance for doubtful accounts - dwelling rents Changes in allowance for doubtful accounts - other Administrative fee equity Housing assistance payments equity Unit months available Unit months leased Excess cash 11610 11620 11630 11640 11650 11660 13510 13901 Land purchases Building purchases Furniture & equipment - dwelling purchases Furniture & equipment - administrative purchases Leasehold improvements purchases Infrastructure purchases CFFP debt service payments Replacement housing factor funds $ 167 - 4,429,493 (235,550) - 4,193,943 3,470 1,830 1,793 935,760 134,328 231,916 12,607 12,248 - - 3,470 134,328 231,916 14,437 14,041 935,760 - - - - City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ STATISTICAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2018 This page left blank intentionally. STATISTICAL SECTION This part of the City of Glendale’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Contents Pages Financial Trends These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. 168-175 Revenue Capacity These schedules contain information to help the reader assess the city’s local revenue source, the property tax and sales tax. 176-181 Debt Capacity These schedules 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. 182-189 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. 190-192 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. 193-197 City of Glendale, Arizona Net Position by Component Last Ten Fiscal Years (amounts expressed in thousands) 2018 Government activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ 451,826 185,396 (246,697) 2017 $ 471,979 157,251 (278,767) 2016 $ 456,001 163,592 (239,670) 2015 $ 456,897 168,714 (240,749) 390,525 350,463 379,923 384,862 Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position 280,920 27,550 78,272 267,111 22,897 83,920 256,488 21,576 96,300 253,134 24,090 92,357 386,742 373,928 374,364 369,581 Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position 732,746 212,946 (168,425) 739,090 180,148 (194,847) 712,489 185,168 (143,370) 710,031 192,804 (148,392) $ 777,267 $ 168 724,391 $ 754,287 $ 754,443 Schedule 1 2014 $ $ 448,083 161,027 (277,093) 2013 $ 438,366 186,106 (59,797) 2012 $ 460,639 183,829 (73,375) 2011 $ 463,961 204,645 (22,532) 2010 $ 457,773 176,400 11,684 2009 $ 471,484 144,422 51,500 332,017 564,675 571,093 646,074 645,857 667,406 256,164 22,300 123,699 251,765 12,264 161,999 262,554 12,921 139,934 271,708 29,988 112,323 271,969 13,988 124,550 286,452 13,249 114,814 402,163 426,028 415,409 414,019 410,507 414,515 704,247 183,327 (153,394) 690,131 198,370 102,202 723,193 196,750 66,559 735,669 234,633 89,791 729,742 190,388 136,234 757,936 157,671 166,314 986,502 $ 1,060,093 $ 1,056,364 $ 1,081,921 734,180 $ 990,703 $ 169 Total business-type activities expenses Total primary government expenses Housing Solid Waste Landfill Water and sewer $ Capital grants and contributions Total governmental activities program revenues 69,351 6,669 71,588 12,382 357 308 13,490 536 5,445 15,027 27,519 $ 26,523 662 Operating grants and contributions 338 Street maintenance 10,890 Community environment Community services 651 Public works 17,847 2,295 $ 123,144 463,432 12,644 11,302 83,500 340,288 27,827 - 21,848 3,930 33,752 24,768 12,498 119,411 402,442 Public safety General government Charges for services: Governmental activities: Program revenues 61,373 166,790 15,698 $ $ 2017 15,150 9,852 81,911 283,031 Total governmental activities expenses Business-type activities: 24,916 Interest on long-term debt - 20,976 Street maintenance Other 3,290 30,885 Community services Community environment 25,072 Public works 42,915 134,977 $ 2018 Public safety General government Governmental activities: Expenses City of Glendale, Arizona Changes in Net Position Last Ten Fiscal Years (amounts expressed in thousands) 170 $ $ $ 66,154 6,603 26,225 193 305 9,649 650 6,148 16,381 117,170 424,964 12,730 15,016 9,049 80,375 307,794 27,932 - 21,219 4,262 32,796 24,859 132,498 64,228 2016 $ $ $ 74,319 11,403 25,665 25 309 11,704 631 6,084 18,498 110,752 408,171 13,159 15,059 7,727 74,807 297,419 32,106 - 19,180 4,980 31,311 21,482 127,870 60,490 2015 $ $ $ 71,563 10,748 25,168 - - 10,486 1,126 6,369 17,666 112,356 419,293 13,088 14,471 7,554 77,243 306,937 34,808 - 25,207 5,895 30,796 20,524 116,070 73,637 2014 $ $ $ 63,510 7,904 25,156 - - 11,003 1,149 5,778 12,520 111,105 385,375 14,037 16,122 7,486 73,460 274,270 42,413 - 20,000 5,655 33,831 19,230 115,694 37,447 2013 $ $ $ 69,290 5,274 27,636 - - 17,910 512 5,624 12,334 116,783 392,133 14,827 15,437 7,602 78,917 275,350 41,913 - 20,045 6,828 39,478 18,435 112,689 35,962 2012 $ $ $ 139,833 70,552 27,137 - - 11,733 495 5,094 24,822 116,225 405,659 14,687 14,814 7,280 79,444 289,434 41,967 - 21,721 7,061 41,136 20,099 111,217 46,233 2011 $ $ $ 72,774 3,755 29,596 2 - 11,918 7,447 5,824 14,232 118,637 402,286 14,180 14,093 8,454 81,910 283,649 42,286 - 23,058 6,316 44,524 16,627 108,308 42,530 2010 $ $ $ 62,625 2,600 24,146 36 3,045 15,661 588 4,670 11,879 108,348 386,711 11,840 14,039 8,045 74,424 278,363 38,982 - 23,978 3,539 48,143 15,040 109,136 39,545 2009 Schedule 2 $ 198,459 Total primary government program revenues 25,519 Transfers $ $ Governmental activities Business-type activities Total primary government Changes in net position Total business-type activities Total primary government $ 24,955 12,814 52,876 40,062 $ $ (436) (29,896) (29,460) 2,261 243,738 1,264 5,354 256,859 1,358 - - 883 241,477 - (1,264) 1,400 - (253) 9,458 29,378 22,024 155,779 114 $ $ (273,634) (2,697) (270,937) 189,798 120,447 2,815 2,628 - Loss on joint venture Miscellaneous - 1,368 251,505 Gain (loss) on disposal of capital assets Investment earnings, unrestricted Business-type activities: Total governmental activities - (1,358) Special item Transfers - (694) 10,166 30,456 23,627 162,299 1,490 $ $ Miscellaneous Gain (loss) on disposal of capital assets Investment earnings, unrestricted Auto in-lieu taxes (state shared income tax) Unrestricted urban revenue sharing Unrestricted state shared sales tax Sales taxes Property taxes Taxes: Governmental activities: General revenues and other changes in net position (203,983) 7,460 Business-type activities Total primary government net expense (211,443) Governmental activities Net (expense)/revenue 126,871 Total business-type activities program revenues 2,054 Capital grants and contributions 2,876 10,230 3,355 9,682 14,856 9,451 80,219 2017 16,048 9,444 86,288 2018 Operating grants and contributions Housing Solid Waste Landfill Water and sewer Charges for services: Business-type activities: 171 $ $ $ $ $ 4,782 (157) (4,939) 1,480 238,181 803 63 - - 614 236,701 - (803) 3,417 - 1,225 9,351 27,297 21,482 150,201 24,531 (238,338) 3,302 (241,640) 186,626 120,472 815 9,809 2,980 15,181 9,858 81,829 2016 $ $ $ $ $ (34,499) 10,362 44,861 (41,671) 226,290 (39,198) 86 (3,329) 127 643 267,961 - 39,198 520 (688) 1,070 8,664 27,446 20,695 147,175 23,881 (215,928) 7,172 (223,100) 192,243 117,924 2,562 8,855 3,265 14,944 9,757 78,541 2015 $ $ $ $ $ 8,236 (17,060) (25,296) 761 210,839 64 67 - 167 463 210,078 - (64) 687 78 726 8,086 25,271 19,734 131,983 23,577 (227,899) 7,475 (235,374) 191,394 119,831 2,423 9,357 3,504 14,836 8,646 81,065 2014 $ $ $ $ $ 10,619 4,201 (6,418) 2,632 206,974 641 70 - 43 1,878 204,342 - (641) 367 353 716 7,586 23,159 18,558 132,872 21,372 (202,773) 7,987 (210,760) 182,602 119,092 831 9,376 4,137 14,791 7,994 81,963 2013 $ $ $ $ $ 4,173 (63,863) (68,036) 1,465 139,489 307 72 - (40) 1,126 138,024 (25,000) (307) 489 56 975 7,277 19,135 17,716 97,451 20,232 (203,352) 2,708 (206,060) 188,781 119,491 705 9,423 4,886 14,562 7,185 82,730 2012 $ $ $ $ $ 3,512 3,729 217 1,138 150,956 317 70 - 137 614 149,818 (25,000) (317) 3,936 (677) 1,482 7,917 23,590 18,438 93,260 27,189 (147,227) 2,374 (149,601) 258,432 118,599 1,155 9,342 4,829 14,733 8,027 80,513 2011 $ $ $ $ $ (4,008) (25,557) (21,549) 1,100 190,426 370 83 - 187 460 189,326 - (370) 5,406 330 286 8,130 31,292 17,786 92,717 33,749 (215,983) (5,108) (210,875) 186,303 113,529 690 9,331 4,870 15,048 6,987 76,603 2010 $ $ $ $ $ (3,034) (20,495) (17,461) 2,992 201,269 551 90 - 282 2,069 198,277 - (551) 2,872 (52) 1,668 8,808 36,267 19,321 97,054 32,890 (221,764) (6,026) (215,738) 164,947 102,322 1,207 8,701 2,042 15,258 7,304 67,810 2009 This page left blank intentionally. 172 173 $ $ $ $ $ $ $ $ 5,810 118,991 2,548 430 (653) 127,126 - 2,919 6,274 12,678 43,474 65,345 - $ $ $ $ $ $ $ $ - 5,861 91,908 2,295 170 (3,770) 96,464 - 2,934 7,443 10,647 40,559 61,583 2017(1) $ $ $ $ $ $ $ $ - 5,818 97,170 1,273 319 104,580 - 2,940 8,495 12,483 35,226 59,144 2016(1) $ $ $ $ $ $ $ $ - 5,768 99,970 1,945 107,683 - 216 10,313 1,114 8,563 26,033 46,239 2015(1) $ $ $ $ $ $ $ $ - 5,801 102,241 123 202 108,367 - 600 688 1,554 (4,835) (1,993) 2014(1) Note: (1) Changes made per GASB 54 requirement fund balance reporting, effective June 30, 2011. All other governmental funds Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds All other governmental funds Reserved Unreserved, report in: Special revenue funds Capital projects funds Total all other governmental funds General fund Nonspendable Restricted Committed Assigned Unassigned Total general fund General fund Reserved Unreserved Total general fund 2018(1) City of Glendale, Arizona Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ $ $ $ $ $ $ $ - 5,774 103,772 115 144 109,805 - 650 311 1,676 (14,438) (11,801) 2013(1) $ $ $ $ $ $ $ $ - 5,829 117,964 129 82 124,004 - 197 368 2,351 (29,565) (26,649) 2012(1) $ $ $ $ $ $ $ $ - 5,822 129,635 11,464 199 147,120 - 463 5,403 1,965 9,253 (5,414) 11,670 2011(1) $ $ $ $ $ $ $ $ $ $ $ 50,478 41,046 167,579 - $ $ $ $ $ 76,055 - 9,383 29,463 38,846 2010 - 57,555 27,474 168,995 83,966 - 10,450 42,180 52,630 2009 Schedule 3 174 Total expenditures Excess of revenues over (under) expenditures General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Capital outlay Debt service: Principal Interest Expenditures Total revenues Taxes and special assessments Licenses and permits Intergovernmental Local revenues Charges for services Fines and forfeitures Investment income (loss) Miscellaneous Revenues $ 332,637 (26,134) 328,395 (12,853) 46,456 30,704 29,359 28,300 306,503 181,576 12,403 89,684 300 13,486 3,699 276 5,079 29,531 131,576 9,484 30,659 3,979 11,195 39,053 $ 2017 30,961 139,287 11,400 31,954 3,621 10,861 42,652 315,542 188,553 12,534 94,191 58 10,250 3,337 129 6,490 2018 City of Glendale, Arizona Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ (39,285) 338,852 35,650 30,382 34,671 126,498 9,429 28,461 4,285 10,260 27 59,189 299,567 176,489 11,951 86,273 17 12,613 3,857 1,517 6,850 2016 $ 4,535 292,478 37,251 32,870 33,494 114,143 8,673 26,379 4,977 7,951 5,791 20,949 297,013 170,605 10,610 87,112 525 17,685 3,556 1,258 5,662 2015 $ 8,252 267,896 30,043 35,628 29,666 108,397 7,463 25,536 5,826 8,352 2,323 14,662 276,148 159,328 11,522 81,364 18 14,781 3,735 900 4,500 2014 $ (852) 257,435 26,441 43,038 16,065 103,610 7,859 27,966 5,554 8,305 4,617 13,980 256,583 149,705 10,373 76,520 36 11,896 3,469 762 3,822 2013 $ (33,947) 263,713 24,947 42,515 18,147 100,368 7,709 33,597 6,703 8,311 1,782 19,634 229,766 118,218 10,798 73,009 11,487 3,374 1,180 11,700 2012 $ (23,215) 271,478 31,640 42,593 19,668 95,270 8,859 33,887 6,853 9,038 1,577 22,093 248,263 120,974 9,367 79,760 10,461 3,806 1,841 22,054 2011 $ (60,262) 322,800 29,451 42,913 23,085 96,161 11,569 37,518 6,160 10,388 2,026 63,529 262,538 126,291 9,734 90,047 13,640 4,052 774 18,000 2010 $ (196,139) 455,499 29,670 39,571 26,048 103,624 11,072 42,294 3,478 11,901 1,666 186,175 259,360 130,119 10,503 91,642 9,881 4,064 3,805 9,346 2009 Schedule 4 175 $ 20.18% 26.28% 23.61% 9,802 $ 25.82% 48,256 43,721 (131,966) (110,145) (1,022) 240,694 (201,496) - 209,255 35,751 2,650 - 2015 $ 25.93% 8,370 118 48,704 (48,768) - 174 8 2014 $ 28.54% 649 1,501 (256,054) 52,136 (53,267) - (1,557) 239,875 19,779 589 - 2013 $ 27.64% (59,100) (25,153) (9,320) 32,977 (33,919) (25,000) 8,665 898 546 - 2012 $ 29.77% (34,138) (10,923) (41,251) 38,728 (39,045) (25,000) 11,503 38,300 (11,355) 3,369 331 - 2011 $ 27.91% (15,200) 45,062 36,306 (33,430) - 41,650 10 482 44 2010 $ 25.71% 2,162 198,301 21,914 (22,465) - (3,136) 199,750 1,894 344 - 2009 Note: The debt service percentage of noncapital expenditures does not include other financing sources/uses. The percentage equals the total principal and interest expenditures divided by the total expenditures less capital outlay. Debt service as a percentage of noncapital expenditures (5,677) 34,424 Net change in fund balances $ 20,457 47,277 $ (30,470) 84,460 (85,263) - 48,450 (49,714) 49,087 27,285 33,830 4,948 329 6,615 7,353 2016 19,330 2,391 - 2017 91,940 15,686 2,910 15,240 (77,139) 61,927 (63,287) - 2018 Refunding lease issued Discount on long-term debt Long-term debt issued Refunding bonds issued Payment to redeem lease Premium on long-term debt issued Proceeds from equipment disposal Capital lease proceeds Proceeds from loans Payment to redeem/refunded bonds escrow agent Current bond refunding principal Current bond refunding interest Transfers in Transfers out Special item Total other financing sources (uses) Other financing sources (uses) 176 316,206 379,087 403,055 499,308 535,252 2013-14 2014-15 2015-16 2016-17 2017-18 1,771,647 1,635,370 1,546,186 1,451,325 1,213,829 1,130,460 $ 60,918 60,892 37,350 49,605 59,918 40,431 53,581 53,158 53,746 56,217 62,176 61,347 55,687 $ 40,191 41,750 45,507 49,391 59,049 60,888 56,528 Personal (3) Utilities Rails and Wires $ 596,446 579,745 529,361 518,191 477,258 485,894 473,388 609,782 576,051 485,193 Less: Tax Exempt Property $ 1,820,976 1,653,175 1,520,229 1,408,099 1,148,108 1,047,273 1,149,524 1,753,570 2,130,907 2,193,675 Net Assessed Value (1) 2.07 2.14 2.20 2.15 2.29 1.90 1.59 1.59 1.59 1.59 Total Direct Tax Rate $ 19,526,518 13,617,839 13,046,428 12,452,875 12,489,163 11,471,039 12,040,482 17,333,074 20,635,557 21,034,639 Estimated Actual Value(1) 12.380 16.397 15.708 15.469 13.014 13.366 13.479 13.635 13.118 12.736 % Assessed Value as a Percentage of Actual Value(2) Schedule 5 Source: Maricopa County Assessor's Office and Maricopa County's Department of Finance Notes: (1) Assessed values are established each year by the County. The tax rate is $100 per assessed value (reference note I. L). (2) The assessed value as a percentage of actual value does not include tax exempt property. (3) The Assessor's Office no longer breaks down the secured and unsecured personal property as of 2013. All prior years secured and unsecured have been combined. 304,041 1,189,718 330,057 2011-12 2012-13 1,593,536 654,550 1,821,057 2010-11 $ 1,844,506 739,936 Improvements 739,388 $ Real Estate 2009-10 2008-09 Fiscal Year Major Components City of Glendale, Arizona Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) 177 0.48 0.46 2016-17 2017-18 1.61 1.67 1.71 1.66 1.79 1.68 1.37 1.37 1.37 1.35 2.07 2.15 2.20 2.15 2.29 1.90 1.59 1.59 1.59 1.59 City of Glendale 23.61 23.29 22.54 23.58 25.06 22.93 20.69 16.35 15.18 15.85 Glendale Elementary and High School Districts 20.02 20.82 20.66 19.64 19.82 18.08 15.54 14.13 13.81 14.09 Peoria Unified School Districts Overlapping Rates* * Overlapping rates are those of local and county governments that apply to property owners within the City of Glendale. Not all overlapping rates apply to all City of Glendale property owners (e.g., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). Source: Maricopa County 2017 Tax Rates Note: The City rounds the rates to two digits from the four presented by the county. 0.49 0.22 2012-13 2015-16 0.22 2011-12 0.49 0.22 2010-11 2014-15 0.22 2009-10 0.50 0.24 2008-09 2013-14 Basic Rate Fiscal Year General Obligation Debt Service City of Glendale, Arizona Direct and Overlapping Governments Property Tax Rates Last Ten Fiscal Years Per $100 Assessed Valuation 19.10 19.16 18.86 18.85 18.91 17.75 16.47 14.18 12.74 13.03 Deer Valley Unified School Districts Schedule 6 178 Rank 1 2 3 4 5 6 7 8 9 10 $ $ 104,671 Assessed Valuation 20,479 17,862 11,668 10,366 9,852 8,213 7,017 6,967 6,148 6,099 5.74 % Percentage of Total City Taxable Assessed Value 1.12 % 0.98 0.64 0.57 0.54 0.45 0.39 0.38 0.34 0.33 Tax Year 2018 11,147 14,842 14,522 9,561 7,886 6,700 7 3 4 8 9 10 131,045 14,198 5 $ 12,501 6 18,475 21,213 $ 1 2 Rank Assessed Valuation Schedule 7 5.99 % 0.51 0.68 0.66 0.44 0.36 0.31 0.65 0.57 0.97 0.84 % Percentage of Total City Taxable Assessed Value Tax Year 2009 Notes: The Salt River Project Agriculture Improvement and Power District assessed valuation is not reflected in the total assessed valuation of the City of Glendale. The Project is subject to "voluntary contribution" in lieu of ad valorem taxation. The percentage of Total City Taxable Assessed Value is based on the Net Assessed Value. Source: Maricopa County Treasurer's Office Total principal taxpayers Taxpayer Yam Westgate LLC Arizona Public Service Company Arrowhead Towne Center LLC VHS of Arrowhead, Inc. Outlets At Westgate LLC JQH-Glendale Az Development LLC Lexington Glendale LLC Wal-Mart Stores, Inc. Stadium Development LLC Qwest Corporation (US West) New River Associates Entertainment Center Development LLC IED Glendale LLC Opus West Corporation Coyote Center Development LLC City of Glendale, Arizona Principal Property Taxpayers Current Year and Nine Years Ago June 30, 2018 (amounts expressed in thousands) 179 24,850 25,253 25,592 2015-16 2016-17 2017-18 (1) Total levy includes only secured property. (2) Includes collections and resolutions. Source: Maricopa County Treasurer's Office 24,429 2014-15 20,787 2011-12 23,943 27,534 2010-11 2013-14 33,617 2009-10 21,841 33,927 2008-09 2012-13 Total Tax Levy(1) Fiscal Year City of Glendale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) 25,202 24,638 24,255 23,729 23,490 21,268 20,090 26,469 32,260 32,411 Amount 98.48 97.56 97.61 97.13 98.11 97.38 96.65 96.13 95.96 95.53 Percent of Levy Collected within the Fiscal Year of Levy - 386 235 238 142 (9) 66 65 534 995 in Subsequent Years(2) Collections 25,202 25,024 24,490 23,967 23,632 21,259 20,194 26,534 32,794 33,406 Amount 98.48 99.09 98.55 98.11 98.70 97.34 97.15 96.37 97.55 98.46 Percent of Levy Total Collections to Date Schedule 8 This page left blank intentionally. 180 181 $ $ 3.0 % 4.8 % 15.6 4.9 2.7 (17.0) 6.9 (13.4) (16.5) 155,087 88,804 5,559 17,394 8,775 3,523 20,070 3,615 7,347 2017 $ $ 3.8 % 7.1 % (25.5) 2.7 (1.5) (11.1) 6.3 (26.4) 31.6 150,634 84,710 4,810 16,581 8,544 4,244 18,767 4,176 8,802 2016 $ $ 8.4 % 7.0 % (18.8) 11.3 (0.6) (5.9) 11.4 168.9 15.1 145,126 79,062 6,457 16,146 8,678 4,773 17,651 5,673 6,686 2015 $ $ 8.9 % 10.1 % 38.9 2.3 8.8 (8.4) 10.9 (2.0) (1.8) 133,938 73,924 7,948 14,502 8,732 5,072 15,842 2,110 5,808 2014 $ $ 27.3 % 35.2 % 10.7 22.8 25.6 7.7 19.3 (25.6) 55.1 122,986 67,157 5,724 14,182 8,028 5,540 14,284 2,154 5,917 2013 $ $ (1.3) % 3.3 % (23.3) (2.6) (0.9) (15.6) 6.9 55.7 (31.5) 96,630 49,686 5,170 11,550 6,393 5,144 11,975 2,896 3,816 2012 $ $ 0.1 % (2.0) % 51.0 (7.0) (6.0) (1.0) 4.0 (50.0) 39.0 97,862 48,089 6,742 11,854 6,449 6,093 11,207 1,860 5,568 2011 $ $ (0.1) % 1.6 % (30.1) 10.6 5.9 (8.4) (0.7) 1.0 0.4 97,805 49,127 4,458 12,729 6,829 6,156 10,791 3,697 4,018 2010 Note: The 2012 and prior years tax rate for City activities is 2.2% except for telecommunications which is 5.4%, restaurant bars 3.2%, hotel/motel 5.6%, and retail sales food for home consumption 1.8%. The 2013 and later years tax rate for City activities is 2.9% except for telecommunications which is 6.1%, restaurant/bars 3.9%, hotel/motel 7.9%, retail sales food for home consumption 2.5%, and retail sales of individual items over $5,000 2.2%. The amounts represent sales tax dollars collected for the fiscal year presented. Source: City of Glendale Tax and License Division 4.2 % Total 161,548 1.1 % 20.2 7.1 2.5 (1.1) 2.1 36.1 16.7 $ Total 89,762 6,684 18,629 8,995 3,486 20,498 4,920 8,574 % Growth by year Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other $ Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other 2018 City of Glendale, Arizona City Transaction Privilege Taxes (Sales Tax) by Category Last Ten Fiscal Years (amounts expressed in thousands) $ $ (6.9) % (11.1) % (33.1) (4.7) 20.3 8.9 (1.2) 20.6 11.9 97,937 48,353 6,378 11,511 6,449 6,722 10,863 3,659 4,002 2009 Schedule 9 182 1,912 (4) (5) - (4) (5) - (4) (5) - (4) (5) 133,168 (4) (5) 141,553 (4) (5) 125,384 (4) (5) 154,834 (4) (5) 2014-15 2015-16 2016-17 2017-18 8,055 (4) 163,130 (4) 2012-13 3,736 (4) (5) 12,250 (4) 179,010 (4) 2011-12 151,206 (4) (5) 16,290 (4) 194,270 (4) 2010-11 2013-14 23,910 225,595 2009-10 27,480 197,738 Street and Highway Revenue Bonds 2008-09 Fiscal Year General Obligation Bonds City of Glendale, Arizona Ratio of Outstanding Debt by Type(1) Last Ten Fiscal Years (amounts expressed in thousands) 455,495 (4) (5) 468,431 (4) (5) 475,918 (4) (5) 477,747 (4) (5) 477,736 (4) (5) 468,875 474,840 481,705 487,305 493,880 Excise Tax Revenue Bonds 78,590 (4) (5) 83,119 (4) (5) 87,031 (4) (5) 91,047 (4) (5) 89,317 (4) (5) 91,140 97,035 99,815 102,490 105,035 Transportation Bonds Government Activities 2,278 4,484 6,620 57 10,361 11,094 11,667 11,833 7,493 9,076 Capital Leases 1,839 3,677 5,515 - - - - - 6,288 7,637 Notes Payable Schedule 10 Busi 183 - - 2016-17 2017-18 - - - - - - - - 260,967 (4) (5) 249,302 (4) (5) 237,247 (4) (5) 222,217 (4) (5) - 708 11,901 14,278 12,425 267,254 (4) (5) 273,080 282,625 289,175 273,140 282,345 Notes Payable - - - - - - - 151 592 1,080 Capital Leases 4,901 4,694 1,113,440 (1) 1,064,620 (1) 915,253 (5) 922,342 (5) 965,939 (5) 964,898 (5) 999,610 (5) 3,814 3,875 4,255 4,141 4,327 4,471 4,601 1,150,251 (1) 1,020,889 (1) 4,587 Total Debt per Capita(3) 1,146,823 (1) Total Primary Government 9.18 9.14 10.81 10.18 11.52 12.21 13.27 14.12 13.56 13.11 Percentage of Personal Income(2) (1) Does not include other long-term obligations such as compensated absences, unamortized premiums, claims/judgments, arbitrage, post-closure costs, etc. (2) Calculate by dividing Glendale population with Maricopa County population and multiplying by total personal income to arrive at Glendale personal income (data from Schedule 15). Then divide total primary government amount by Glendale personal income to arrive at percentage of personal income. (3) Numbers not expressed in thousands. (4) Amounts outstanding less July 1. (5) Includes unamortized premiums of debt issuance and discount on debt issuance. - 2015-16 2012-13 - 5,515 (4) 2011-12 2014-15 6,485 2010-11 - (4) - 8,300 2009-10 2013-14 - 9,160 2008-09 132 9,995 Fiscal Year Landfill G.O. Bonds Water Sewer G.O. Bonds Business Activities Water Sewer Revenue Bonds City of Glendale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year General Obligation Bonds Less: Amounts Available in Debt Service Funds Schedule 11 Total Percentage of Net Assessed Value of Property(6) Per Capita(3) 2008-09 207,865 (1) 37,418 170,447 7.77 682.30 2009-10 234,755 (1) 41,934 192,821 9.05 770.75 2010-11 201,680 (1) 21,250 (2) 180,430 10.29 794.09 2011-12 185,495 (1) (4) 16,765 (2) 168,730 14.68 744.22 2012-13 168,645 (1) (4) 12,641 (2) 156,004 14.90 681.22 2013-14 147,810 (4) 9,310 (2) 138,500 12.06 599.28 2014-15 126,305 (4) 8,270 (2) 118,035 10.43 (5) 507.29 2015-16 135,130 (4) 4,511 (2) 130,619 11.12 (5) 556.38 2016-17 120,000 (4) 3,657 (2) 116,343 7.04 (5) 488.84 2017-18 146,985 (4) 31,750 (2) 115,235 8.82 (5) 480.43 Source: Maricopa County - Abstract by tax authority and class ADOA Office of Employment and Population Statistics - Population estimates for July 1, 2018 Notes: (1) Includes general obligation water and sewer bonds. (2) Includes the general obligation debt service fund balance at June 30. (3) Per capita is in actual dollars. Population estimates per ADOA. (4) Includes the July 1 payment. (5) Beginning with FY 2015, based on limited assessed value instead of secondary full cash value. (6) Beginning with FY 2017, calculation uses Feb State Abstract instead of Aug State Abstract. 184 City of Glendale, Arizona Net Direct and Overlapping Governmental Activities Debt June 30, 2018 (amounts expressed in thousands) Schedule 12 Net Debt Outstanding(3) Percentage Applicable to Glendale Amount Applicable to Glendale (2) $ 217,615 22.6488 % $ Glendale Elementary School District No. 40 25,905 99.1605 25,688 Deer Valley Unified School District No. 97 193,715 19.2382 37,267 Alhambra Elementary School District No. 68 - 16.1092 - Glendale Union High School District No. 205 98,915 21.8885 21,651 - 3.4952 - Maricopa County Community College District 445,570 3.4952 15,574 Phoenix Union High School District No. 210 273,636 1.2224 3,345 Pendergast Elementary School District No. 92 32,405 26.0303 8,435 Tolleson Union High School District No. 214 21,200 7.6337 1,618 Washington Elementary School District No. 6 95,780 2.9404 2,816 Dysart Unified School District No. 89 141,793 0.0849 120 Agua Fria Union High School District No. 216 82,825 0.1175 97 Litchfield Elementary School District No. 79 40,110 0.1741 70 Cartwright Elementary School District No. 83 22,980 - - Jurisdiction Peoria Unified School District No. 11 Maricopa County 49,287 Total Overlapping Debt 1,692,449 165,968 City of Glendale Debt(1) 664,920 664,920 Total $ 2,357,369 $ 830,888 Source: Maricopa County - Abstract by tax authority and class, Abstract by tax area code and Annual Report of Bonded Indebtedness. (1) The City of Glendale debt includes total General Obligation (GO) and government revenue bonds debt outstanding, capital leases, notes payable, settlement obligation, bond premiums and discounts, less debt service fund balances for current year. (2) Calculation based on Net Debt Outstanding multiplied by Percentage Applicable to Glendale, which is determined by dividing the tax area code net secondary assessed value by the tax authority net secondary assessed value. (3) Prior fiscal year data used due to unavailability of current fiscal year Bonded Indebtedness Report from ADOA. 185 186 38.44% (1) (1) 47.34% $ 184,683 166,031 $ 350,714 2011 13.69% $ 90,815 14,399 $ 105,214 2011 (1) (1) 69.29% $ 70,599 159,306 $ 229,905 2012 16.61% $ 57,516 11,455 $ 68,971 2012 (1) (1) 3.51% $ 66,471 2,415 $ 68,886 2014 $ $ (1) (2) -0.24% 68,042 (165) 67,877 2015 $ $ (1) (2) 0.00% 70,496 - 70,496 2016 $ $ (1) 70.99% $ 60,760 148,695 $ 209,455 2013 (1) 59.26% $ 93,537 136,085 $ 229,622 2014 $ $ (1) (2) 52.24% 108,057 118,200 226,257 2015 $ $ (1) (2) 55.59% 104,367 130,619 234,986 2016 $ - 47.40% 129,101 116,343 245,444 (1)(2)(3) 0.00% 73,633 2017 $ (1)(2)(3) 73,633 2017 Assessed value Debt limit (20% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin 11.63% $ 55,527 7,309 $ 62,836 2013 Schedule 13 0.00% 78,417 - 78,417 (1)(2)(3) $ $ (1)(2)(3) 43.92% 146,582 114,807 261,389 2018 $ 1,306,946 261,389 146,985 (32,178) 114,807 $ 146,582 $ $ 2018 $ 1,306,946 78,417 $ 78,417 Legal Debt Margin Calculation for Fiscal Year 2018 Assessed value Debt limit (6% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin (1) Debt applicable to limit: General obligation bonds net of July 1 payment made prior to June 30. (2) Beginning in FY 2015, based on limited assessed value instead of secondary full cash value. (3) Beginning in FY 2017, the assessed value is from Maricopa County Assessor's Office February State Abstract report 31.53% $ 300,409 Legal debt margin Total net debt applicable to the limit as a percentage of debt limit 163,811 138,326 $ 262,370 $ 426,181 2010 22.69% $ 438,735 2009 24.40% $ 98,844 29,010 32,121 $ 99,500 $ 127,854 2010 $ 131,621 2009 Debt limit Total net debt applicable to limit 20% Type Bonds Total net debt applicable to the limit as a percentage of debt limit Legal debt margin Debt limit Total net debt applicable to limit 6% Type Bonds City of Glendale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (amounts expressed in thousands) This page left blank intentionally. 187 188 Utility Service Charges(1) 69,300 76,987 81,127 83,496 83,454 81,733 79,325 83,088 83,442 90,844 Fiscal Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 City of Glendale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (amounts expressed in thousands) 50,962 49,005 45,431 41,712 42,544 39,203 41,555 41,550 43,628 40,175 Less: Operating Expenses(2) 39,882 34,437 37,657 37,613 39,189 44,251 41,941 39,577 33,359 29,125 13,598 (3) 13,306 (3) 11,107 (3) 9,545 (5) 12,780 9,805 9,415 13,170 10,210 9,860 10,321 10,719 10,918 12,706 13,152 13,082 (3) 10,347 (3) 9,755 13,539 (3) 9,876 (3) Water and Sewer Revenue Bonds Net Available Debt Service Revenue Principal Interest 1.76 1.71 1.87 1.56 1.71 1.93 1.84 1.60 1.42 1.24 Coverage Schedule 14 189 19,488 19,486 20,665 21,691 23,112 24,690 25,566 26,362 27,571 2009-10 2010-11 2011-12 2012-13 2014-15 2014-15 2015-16 2016-17 2017-18 3,925 3,550 3,380 3,545 3,125 3,005 2,890 2,780 2,675 2,545 3,114 3,594 3,763 3,597 4,201 4,321 4,437 4,548 4,655 4,782 Debt Service Principal Interest 3.92 3.69 3.58 3.46 3.15 2.96 2.82 2.66 2.66 2.85 Coverage 170,484 160,534 156,210 151,963 141,674 131,931 100,081 102,962 109,536 118,277 Excise Tax Revenue 2,590 2,790 6,500 2,585 10,025 5,075 6,580 (6) (6) (6) (6) (6) (6) (6) 6,585 5,600 6,575 30,713 (5) 19,542 21,033 20,984 21,175 22,951 27,279 (5) 27,612 27,812 24,074 Debt Service Principal Interest Excise Tax Revenue Bonds (4) (7) Source: City of Glendale Finance Department Notes: (1) Operating revenues and nonoperating revenues excluding non-cash contributions, gains and losses. (2) Excluding depreciation. (3) Principal and interest amounts include debt service on the note payable to the Water Infrastructure Financing Authority of Arizona for the 00-01 loan and the 09-10 loan for fiscal years through 2011-12. (4) Excise tax revenue bonds include the Municipal Property Corporation and the Western Loop 101 Public Facilities Corporation (FY 2008-09 to FY 2012-13). (5) Excluding reductions to principal by refunded bonds - 2011-12 Water & Sewer Revenue Bond $74,050 and Excise Tax Revenue Bonds $8,945; and 2012-13 Excise Tax Revenue Bonds $243,250. (6) Excise tax revenue amounts include state shared revenues. (7) Includes interest expense from refunding the Western Loop 101 Public Facilities Bonds in December 2012. 20,875 Transportation Sales Tax 2008-09 Fiscal Year Transportation Bonds 6.53 6.15 5.04 6.40 4.81 3.94 3.35 3.01 3.28 3.86 Coverage City of Glendale, Arizona Demographic and Economical Statistics Last Ten Fiscal Years (amounts expressed in thousands) Schedule 15 Fiscal Year City of Glendale Population(2) Maricopa County Population(6) 2008-09 250 4,116 146,898,132 35,690 8.4 2009-10 250 4,023 140,351,646 34,887 9.1 2010-11 227 3,817 147,724,392 38,701 9.2 2011-12 229 (5) 3,885 156,763,179 40,350 8.6 (5) 2012-13 231 (5) 3,934 160,497,824 40,798 7.6 (5) 2013-14 233 (5) 3,945 167,439,604 42,443 6.6 (5) 2014-15 233 (5) 4,064 175,437,829 43,169 5.6 (5) 2015-16 227 4,153 175,437,829 (3) 42,244 5.6 (5) 2016-17 238 4,233 175,437,829 (3) 41,445 4.9 (8) 2017-18 240 175,437,829 (3) 41,445 4.3 (8) (7) 4,233 (3) Personal Income (1) Per Capita Personal Income(1)(4) Unemployment Rate Note: (1) Personal Income and Per Capita Income figures are for Maricopa County. City of Glendale is one of several Valley cities that comprise Maricopa County, including Phoenix, Mesa and Scottsdale. (2) Estimate provided by City of Glendale Planning Department. (3) The previous fiscal year Maricopa County CAFR provides the most current number. (4) Calculation based on personal income divided by Maricopa County population. (5) Estimate provided by Arizona Department of Administration, Office of Employment and Population Statistics website for the prior fiscal year. (6) Maricopa County population extracted from Maricopa County CAFR statistical section. (7) Estimate from the Arizona Office of Economic Opportunity website, Arizona population estimates, for the fiscal year as of July 1. (8) Unemployment rate from the Arizona Office of Economic Opportunity website, LAUS data. 190 % City of Glendale, Arizona Principal Employers Current Year and Nine Years Ago Schedule 16 2018 Employer Luke Air Force Base Banner Thunderbird Health System Arrowhead Towne Center Walmart Glendale Union High School District Glendale Community College City of Glendale Deer Valley Unified School District Glendale Elementary School District Tanger Outlets AAA Younger Brothers Contruction Co Inc Total Employees 5,100 3,000 2,650 2,175 1,974 1,948 1,693 1,594 1,400 1,200 Rank 1 2 3 4 5 6 7 8 9 10 2009 Percentage of Total City Employment 3.98 % 2.34 2.07 1.70 1.54 1.52 1.32 1.24 1.10 0.94 22,734 17.75 % Source: City of Glendale Economic Development Department Department of Economic Security, Research Administration City of Glendale Human Resources Department 191 Rank 1 2 Percentage of Total City Employment 5.50 % 1.71 2,020 1,862 1,220 1,960 1,432 1,684 3 5 9 4 7 6 1.38 1.27 0.84 1.34 0.98 1.15 1,323 850 8 10 0.91 0.58 Employees 8,037 2,500 22,038 15.66 % 192 27.00 57.00 12.00 24.00 73.00 70.00 529.00 276.00 53.00 68.00 35.00 188.00 26.00 60.00 185.00 1,683.00 General government Management services Finance Planning Building Legal Other Police Fire Homeland security Community service Parks and recreation Library Public works Engineering Transportation Utilities Total 29.00 55.00 14.00 22.00 71.00 68.00 530.00 282.00 54.00 73.00 35.00 183.00 24.00 59.00 186.00 1,685.00 2017 Sources: City of Glendale Human Resources Department 2018 Function/Program 28.00 53.00 13.00 22.00 67.00 68.00 522.00 262.00 55.00 66.00 34.00 184.00 18.00 57.00 184.00 1,633.00 2016 City of Glendale, Arizona Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 24.00 56.00 11.00 22.00 69.00 66.00 517.00 259.00 57.00 58.00 31.00 180.00 19.00 56.00 185.00 1,610.00 31.00 49.00 10.00 21.00 69.00 63.00 534.00 253.00 48.00 59.00 32.00 173.00 17.00 57.00 176.00 1,592.00 34.00 54.00 13.00 21.00 67.00 73.00 505.00 260.00 56.00 75.00 32.00 165.00 18.00 60.00 172.00 1,605.00 36.00 57.00 14.00 24.00 66.00 77.00 534.00 269.00 60.00 92.00 48.00 179.00 19.00 65.00 185.00 1,725.00 Full-Time Equivalent Employees as of June 30 2015 2014 2013 2012 45.00 59.00 15.00 26.00 70.00 90.00 544.00 270.00 72.00 123.00 56.00 203.00 26.00 69.00 167.00 1,835.00 2011 43.00 61.00 24.00 32.00 73.00 96.00 554.00 276.00 72.00 122.00 57.00 225.00 27.00 63.00 170.00 1,895.00 2010 38.00 69.00 33.00 43.00 70.00 104.00 567.00 278.00 6.00 69.00 85.00 65.00 256.00 39.00 67.00 171.00 1,960.00 2009 Schedule 17 193 48,346 41,026 75,561 6,234 514,197 71,912 86,187 5,804 498,092 69,934 57,037 6,289 57,206 6,045 46,338 39,744 61,270 13,672 31,502 3,093 35,482 3,661 61,463 13,755 187,645 9,030 30,146 2017 187,645 (3) 9,030 (3) 30,146 (3) 2018 74,256 568,653 5,488 78,977 48,971 46,086 56,700 6,229 60,921 13,864 34,518 3,371 190,074 8,445 32,732 2016 77,318 528,835 5,449 74,217 48,993 45,693 56,491 6,117 60,679 12,057 32,250 3,467 174,535 17,871 31,873 2015 Note: Water and sewer statistics are contained in Schedule 20 and 21. (1) Departures/arrivals are based on fiscal year as of 2009-2010. The 2009 figures are through October 30, 2009. (2) Includes all formats: books, magazines, CD's, DVD's and electronic/downloadable collection. (3) FY 2018 police stats same as FY 2017, PD rebuilding data views (4) Water and sewer numbers updated to exclude duplicate account number Source: Various city departments and FAA ATADS report Water (4) Number of billed accounts Water produced (million gallons) Sewer (4) Number of billed accounts Treated influent (million gallons) Refuse collection Residential curb service (tons per year) Commercial container service (tons per year) Airport Departures/arrivals (1) General government Building permits Library Volumes in collection (2) Transit Dial-A-Ride passengers Police Calls for service Bookings Criminal offense reports Fire EMS calls Fire calls Function/Program City of Glendale, Arizona Operating Indicators by Function/Program Last Ten Fiscal Years 78,271 408,516 4,799 70,679 45,942 41,879 56,313 6,244 60,436 13,768 30,262 3,461 146,538 18,939 31,481 85,798 415,695 6,383 76,390 46,833 40,272 55,980 6,065 60,062 13,667 30,082 3,478 127,333 8,588 34,995 Fiscal Year 2014 2013 90,577 446,010 5,304 80,416 48,187 39,722 55,528 5,970 59,633 14,064 29,321 3,495 127,829 7,083 33,938 2012 92,134 529,113 5,619 80,291 49,784 40,451 54,805 5,998 58,889 13,569 27,751 3,573 129,161 9,902 27,304 2011 89,808 523,512 5,194 69,834 52,634 41,797 54,854 6,405 58,964 14,284 26,591 3,847 129,868 11,015 29,765 2010 91,841 540,352 5,289 91,998 53,493 44,600 54,875 6,570 58,975 15,375 24,419 3,900 137,586 11,990 32,599 2009 Schedule 18 194 Source: Various city departments Note: Landfill capacity in thousands Police Stations Patrol vehicles Fire stations General government City square miles Water Treatment capacity (millions gallons per day) Storage capacity (millions gallons) Miles of water mains Sewer Treatment capacity (millions gallons per day) Miles of sewer lines Landfill Landfill capacity - south cell Landfill capacity used - south cell Other public works Streets (miles) Parks and recreation Number of parks/retention basins/facilities Acres of parks Transit Dial-A-Ride minibuses Function/Program City of Glendale, Arizona Capital Asset Statistics by Function/Program Last Ten Fiscal Years 3 183 9 60 104.1 67 994 29.2 707 24,215 20,575 748 102 2,192 22 60 104.1 67 994 29.2 707 24,234 20,983 748 102 2,192 22 2017 3 194 9 2018 20 101 2,192 718 24,215 20,137 29.2 707 104.1 67 994 60 3 193 9 2016 22 100 2,189 718 22,429 19,687 29.2 707 104.1 67 994 59 3 178 9 2015 20 100 2,189 718 21,493 19,220 29.2 707 104.1 67 994 59 3 176 9 21 100 2,189 718 21,218 18,849 29.2 707 104.1 67 994 59 3 139 9 Fiscal Year 2014 2013 21 100 2,189 717 22,065 19,257 29.2 700 104.1 67 994 59 3 154 9 2012 21 100 2,189 802 21,912 18,444 29.2 690 104.1 67 994 59 3 174 9 2011 22 100 2,189 736 21,666 18,529 29.2 680 94.1 67 994 59 3 157 9 2010 23 99 2,199 736 21,666 18,126 29.2 670 94.1 67 850 59 3 159 9 2009 Schedule 19 City of Glendale, Arizona Miscellaneous Water and Sewer Rate Statistics June 30, 2018 Schedule 20 WATER RATES PER METER SIZE Meter Size (inch) Commercial and Residential Monthly Base Charge Inside Outside City City 5/8" 3/4" 3/4" 1" 1 1/2" 2" 3" 4" 6" 8" 10" 12" 10.20 13.00 18.30 37.20 66.30 112.00 199.00 396.00 587.00 944.00 1,397.00 13.26 16.90 23.79 48.36 86.19 145.60 258.70 514.80 763.10 1,227.20 1,816.10 Residential Commercial 3/4 inch Meter Size Meter Size and Greater (1) Gallons per Month All Year Inside Outside City City All Year Inside Outside City City Summer Excess Rate Inside Outside City City 0 - 6,000 6,001 - 15,000 15,001 - 30,000 over 30,000 2.26 2.83 3.97 5.59 $ 2.43 2.43 2.43 2.43 $ 3.04 3.04 3.04 3.04 2.94 3.68 5.17 7.27 $ 3.16 3.16 3.16 3.16 SEWER SERVICE RATES Type of Service Inside City Outside City Single Family Dwelling Unit Office Building Apartment - Average 5 units Apartment - Average 35 units Retail/Wholesale 32.90 60.00 86.82 597.14 68.93 35.98 N/A 131.09 191.87 N/A (1) Per 1,000 gallons SOURCE: City of Glendale Finance as of May 2018 195 $ 3.96 3.96 3.96 3.96 City of Glendale, Arizona Miscellaneous Water and Sewer Statistics June 30, 2018 Schedule 21 HISTORICAL AVERAGE NUMBER OF WATER CONNECTIONS (1) Fiscal Year Ending June 30 2009 (3) 2010 (3) 2011 (3) 2012 (4) 2013 (3) 2014 (3)(5) 2015 (3) 2016 (3) 2017 (3) 2018 Residential 53,523 53,522 53,663 53,858 54,056 53,914 54,126 54,266 54,448 54,686 Multi-Family (2) 1,672 1,674 1,673 1,680 1,799 1,800 1,800 1,799 1,790 Commercial 5,556 4,247 4,264 4,281 4,296 4,264 4,379 4,492 4,632 4,390 Sprinkler (2) 1,647 1,655 1,666 1,669 1,819 1,862 1,885 1,910 1,863 Total 59,079 61,088 61,256 61,478 61,701 61,796 62,167 62,443 62,789 62,729 (1) In comparison to the number of billed accounts, total connections includes inactive "vacant" properties. (2) Starting in FY 2010, the schedule is revised to separate into their own categories Sprinkler from Residential and Multi-Family from Commercial. (3) As of October following the fiscal year ended. (4) As of August 2012. (5) Review determined 269 residential connections should be classified as multi-family or sprinklers. Source: City of Glendale Water Services Department WATER DELIVERIES Acre Feet Calendar Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Residential (1) 32,278 31,457 27,537 27,409 27,695 26,921 26,946 26,595 27,193 27,150 Commercial 10,764 10,122 8,130 8,459 8,630 8,221 8,176 8,704 8,748 8,834 (1) Residential includes both Single and Multi-family deliveries. (2) Other include unbilled water and recovered effluent groundwater. (3) Starting in 2010, Sprinkler is broken out from Commercial. (4) Sprinkler Column added per water department. Source: FY report to Arizona Department of Water Resources 196 Other (2) 2,818 5,606 1,305 1,634 2,647 3,050 2,467 2,092 2,743 2,365 Sprinkler (3)(4) 2,352 2,684 2,648 2,413 2,411 2,327 2,581 2,564 Total 45,860 47,185 39,324 40,186 41,620 40,605 40,000 39,718 41,265 40,913 SEWERAGE CONNECTIONS BILLED AND SEWAGE TREATED Fiscal Year Ending June 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 No. of Connections 54,936 56,709 56,868 57,087 57,300 57,385 57,588 57,758 57,953 58,155 91st Ave WWTP (2) (MGD) Actual 6.8 6.8 8.3 7.9 7.3 8.4 6.9 7.5 7.4 6.7 Arrowhead WRF (MGD) 2.8 2.8 2.3 2.3 2.5 2.7 2.7 2.7 2.7 2.6 West Area WRF (MGD) 8.6 8.4 5.4 4.4 5.8 6.0 7.2 6.9 7.2 7.2 Total Treated 18.2 18.0 16.0 14.6 15.6 17.1 16.8 17.1 17.3 16.5 (1) In comparison to the number of billed accounts, total connections includes inactive "vacant" properties. (2) The 91st Avenue Wastewater Treatment Plant is a regional plant servicing five cities. Previously listed as "Multi-City Plant" (SROG) SOURCE: City of Glendale Water Services Department 197 This page left blank intentionally. 198 City of Glendale Finance Division 5850 West Glendale Avenue, Suite 302 Glendale, Arizona 85301 (623) 930-2480