CIT Y OF M ESA , A Z COMPREHENSIVE ANNUAL FINANCIAL REPORT FO R TH E F I S C A L YEAR ENDED | JU NE 30, 2020 DISTRICT MAP COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 District District District 4 District 1 District 5 2 3 District Mayor John Giles Vice Mayor Mark Freeman – District 1 Councilmember Jeremy Whittaker – District 2 Councilmember Francisco Heredia – District 3 Councilmember Jen Duff – District 4 Vice Mayor David Luna – District 5 Councilmember Kevin Thompson – District 6 Chris Brady, City Manager Kari Kent, Assistant City Manager John Pombier, Assistant City Manager Prepared by: Financial Services Department P.O. Box 1466 Mesa, Arizona 85211-1466 (480) 644-2275 www.mesaaz.gov FO R TH E F I S C A L YEAR ENDED | JU NE 30, 2020 6 Citizens of Mesa Mayor and City Council City Clerk DeeAnn Mickelsen City Court Matt Tafoya CITY MANAGER Chris Brady City Attorney Jim Smith City Auditor Jennifer Ruttman Advisory Boards and Committees Economic Development Bill Jabjiniak Assistant City Manager Kari Kent Assistant City Manager John Pombier Development Services Christine Zielonka Deputy City Manager/ Chief Financial Officer Michael Kennington Deputy City Manager Scott J. Butler Deputy City Manager Natalie Lewis Energy Resources Frank McRae Office of Management and Budget Candace Cannistraro Transit Jodi Sorrell Falcon Field Corinne Nystrom Fire & Medical Department Mary Cameli Mayor and City Council Support Arts & Culture Cindy Ornstein Information Technology Travis Cutright Mesa Counts on College Library Heather Wolf Fleet Services Pete Scarafiotti Grants Community Services Ruth Giese Human Resources Teri Overbey Federal and State Affairs Downtown Coordination, DMA Engineering Beth Huning Financial Services Irma Ashworth Parks, Recreation & Community Facilities Marc Heirshberg Business Services Ed Quedens Transportation RJ Zeder Enterprise Resource Planning (ERP) Water Resources Jake West U.S. Conference of Mayors/ National League of Cities Regional Initiatives, Maricopa Association of Governments Police Department Ken Cost - Interim Public Information & Communications Steve Wright Environmental Management & Sustainability Scott Bouchie INTRODUCTORY SECTION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 M E SA C A R E S SM ALL BU SI NESS GR ANTS TABLE OF CONTENTS Exhibit Page SECTION I – INTRODUCTORY SECTION Table of Contents Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting I V X SECTION II - FINANCIAL SECTION Independent Auditors’ Report 1 Management’s Discussion and Analysis 4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position Statement of Activities A-1 A-2 16 17 A-3 19 A-4 A-5 20 21 A-6 22 A-7 A-8 A-9 23 25 27 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds Financial Statements Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows I TABLE OF CONTENTS (Continued) Exhibit Page Notes to the Financial Statements Note 1 – Summary of Significant Accounting Policies Note 2 – Reconciliation of Governmental Fund Financial Statements to Government-wide Financial Statements Note 3 – Fund Balance Note 4 – Pooled Cash and Investments Note 5 – Accounts Receivable and Due from Other Governments Note 6 – Interfund Receivables, Payables and Transfers Note 7 – Capital Assets Note 8 – Long-term Obligations Note 9 – Refunded, Refinanced and Defeased Obligations Note 10 – Self-Insurance Internal Service Fund Note 11 – Commitments and Contingent Liabilities Note 12 – Net Position Note 13 – Enterprise Activities Operations Detail Note 14 – Joint Ventures Note 15 – Pensions and Other Postemployment Benefits Note 16 – Subsequent Events 29 38 45 46 51 53 54 57 70 72 73 73 74 74 77 92 Required Supplementary Information Schedule of the City’s Proportionate Share of Net Pension Liability Cost-Sharing Pension Plan Schedule of Changes in the City’s Net Pension/OPEB Liability and Related Ratios Agent Plans Schedule of City Pension Contributions Notes to Pension Plan Schedules Schedule of Changes in the City’s Total OPEB Liability Budgetary Comparison Schedule (Non-GAAP Basis) – General Fund Notes to Budgetary Comparison Schedules II B-1 93 B-2 B-3 95 100 104 103 104 107 B-4 B-5 TABLE OF CONTENTS (Continued) Exhibit Page C-1 108 C-2 112 C-3 C-4 C-5 116 117 118 D-1 D-2 D-3 D-4 D-5 D-6 D-7 D-8 D-9 119 120 121 122 123 124 125 126 127 Combining Statements Non-Major Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Internal Service Funds Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Net Position Combining Statement of Cash Flows Supplemental Information Budgetary Comparison Schedules – Other Non-major Funds Budgetary Comparison Schedule – Community Facilities District Budgetary Comparison Schedule – Environmental Compliance Budgetary Comparison Schedule – Grants and Special Programs Budgetary Comparison Schedule – Highway User Revenue Budgetary Comparison Schedule – Mesa Housing Authority Budgetary Comparison Schedule – Quality of Life Sales Tax Budgetary Comparison Schedule – Street Sales Tax Budgetary Comparison Schedule – General Capital Projects Budgetary Comparison Schedule – Streets III TABLE OF CONTENTS (Concluded) Exhibit Page I II 128 130 III 136 IV 138 V VI 140 142 VII VIII IX X XI 143 144 145 146 148 XII XIII 151 152 XIV XV XVI 153 155 157 SECTION III – STATISTICAL SECTION Financial Trends Net Position by Components – Last Ten Fiscal Years (Accrual Basis of Accounting) Changes in Net Position – Last Ten Fiscal Years (Accrual Basis of Accounting) Fund Balance, Governmental Funds – Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Changes in Fund Balance, Governmental Funds – Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Revenue Capacity Sales Tax Collections by Category – Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years Debt Capacity Ratios of Outstanding Debt by Type – Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information – Last Ten Fiscal Years Pledged-Revenue Coverage – Last Ten Fiscal Years Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years Principal Employers – Current Year and Nine Years Ago Operating Information Full-Time Equivalent City Government Employees by Function/Program – Last Ten Fiscal Years Operating Indicators by Function/Program – Last Ten Fiscal Years Capital Asset Statistics by Function/Program – Last Ten Fiscal Years IV Financial Services Department December 24, 2020 To the Citizens, Honorable Mayor, City Council and City Manager: The Comprehensive Annual Financial Report of the City of Mesa (the “City”) for the fiscal year ended June 30, 2020 is hereby submitted. Prepared by the Financial Services Department, this report consists of management’s representations concerning the finances of the City of Mesa. Consequently, management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to 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 accounting principles generally accepted in the United States of America. 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 will be free from material misstatement. As management, we assert that to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by CliftonLarsonAllen, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the City for the fiscal year ended June 30, 2020, 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 independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the fiscal year ended June 30, 2020, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. 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, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A) and should be read in V conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. Profile of the City The City was founded in 1878 and incorporated July 15, 1883 with an approximate population of 300 and an area of one square mile. Today, the City’s estimated population is 514,144 compared with the 2010 decennial census count of 439,041. Total land area encompasses 138 square miles. The City is the 35th largest city in the United States and is the third largest city in the State of Arizona. Mesa is located 16 miles east of Phoenix, the State Capitol. The City operates under a charter form of government with citizens electing a Mayor and six Councilmembers to set policy for the City. City Councilmembers are elected from districts and serve terms of four years, with three members being elected every two years. The Mayor is elected at-large every four years. The Mayor and Council are elected on a non-partisan basis, and the Vice Mayor is selected by the City Council. The Mayor and City Council are responsible for appointing the City Manager, City Attorney, City Auditor, City Clerk and the Presiding City Magistrate. The City Manager has full responsibility for carrying out City Council policies and administering City operations and is responsible for the hiring of City employees. Additionally, City employees are hired under merit system procedures as specified in the City Charter. An allocated staff of 4,135 full-time (equivalent) City employees working within 27 different City departments undertakes the various functions of Mesa’s city government and its operation. The City provides a full range of municipal services, including police and fire protection, parks and recreation, library, transportation, health and certain social services and general administration; and, the City owns and operates enterprises including operations of electric, gas, water, wastewater, solid waste, airport and a golf course. The Mesa Art Center, which includes 212,755 square feet of performing arts, visual arts and art education facilities, is the largest comprehensive arts campus in the Southwest. The Mesa Art Center was awarded the Venue Excellence Award by the International Association of Venue Managers. This prestigious award recognizes venues such as stadiums, convention centers, arenas, performing arts centers, and academic institutions that demonstrate excellence in the following four criteria: service to the community, team building/professional development, safety and security, and operational excellence. The annual budget serves as the foundation for the City’s financial planning and control. Historical data is analyzed during the creation of a multi-year financial forecast. The forecast provides a framework to assist Mesa’s elected officials and executive team make important decisions about the direction of the City. The City Council sets the City’s long-term strategic direction and provides staff with budget priorities for the upcoming fiscal year. A proposed budget is presented to the City Council for review and discussion in mid spring with the final adoption of the operating budget by resolution in late spring. The City of Mesa begins the fiscal year on July 1st. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget in total, and from the resolution itself that sets the limit. The residents of Mesa VI approved a Home Rule exemption to the State of Arizona’s expenditure limitation requirement. The City can determine the budget level as long as the City can identify resources to cover the expenses. The budget is annually appropriated for all funds by the City Council and consists of all planned expenditures and the associated resources to cover them. While the State does not require trust fund expenditures to be appropriated, the City chooses to include them in order to fully represent City activity. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. Local Economy The COVID-19 pandemic put an end to the nation’s longest modern economic expansion. Over the past several months, citizens and small businesses across Arizona have been impacted by the various policies regarding business closures and stay-at-home policies. The City of Mesa received support from the Federal Government from the Coronavirus Aid, Relief, and Economic Security Act to support the City and the community during the COVID-19 emergency. The Mesa CARES program was implemented using the federal funds to support City services and programs such as the Feeding Mesa Program which supplies additional food distribution through non-profits and Mesa-based restaurants and the Small Business Reemergence Program which provides financial assistance to businesses to cover operating expenses such as utilities and rent. Due to the economic challenges brought on by the pandemic, the City’s economic indicator for commercial construction in fiscal year (FY) 2020 fell around 40% from FY 2019 or approximately $400 million in commercial valuation. Residential construction, however, increased by 1.5% from FY 2019. This represents an increase of approximately $12 million in dollar valuation. While the COVID-19 health crisis has had an impact on economic activity, the related stay-athome policy has influenced Mesa residents to buy local and online more than they would have previously. Beginning in May, we have seen over 20% year over year increases in retail sales tax through the month of September. For the year ending June 30, 2020, retail sales tax was up 20.6% while overall sales tax revenues were up 15.8%. Not surprisingly, tourism was negatively impacted by the pandemic as evidenced by a 15.5% decrease in the transient lodging (‘bed’) tax. Conservative budget practices and willingness to respond to economic indicators continues to allow the City to maintain unrestricted fund balance reserve levels as established in the City’s financial policies. The FY 2021 budget continues the City’s fiscally conservative approach and reinforces the City’s effort to invest in economic development, improve public safety and attract and retain excellent employees. All fund balances were maintained at or above the levels prescribed by financial policy and prudent practice. VII Major Initiatives During the year, various major accomplishments were realized. Some of these were: • Mesa’s strong and resilient financial position was recognized this fall as Fitch Ratings assigned the top rating of AAA to the City’s 2020 General Obligation (GO) bonds. S&P maintained their rating of AA for the City’s GO bonds and reaffirmed their AA- rating on the City’s utility revenue bonds. Moody’s maintained their Aa2 rating to both our general obligation and utility revenue bonds. • At the end of last year, Mesa became the first ever Autism Certified City in the nation by the International Board of Credentialing and Continuing Education Standards (IBCCES). This recognition was the result of nearly a year-long quest to tailor travel experiences for individuals with autism and their families. In total, almost 60 businesses and organizations in Mesa and the surrounding area completed autism certification training. • Norwegian company Nammo announced its intentions to merge all of its existing smaller units in the U.S. into a single entity in the City of Mesa. The new entity will be called Nammo Defense Systems and will combine the company’s manufacturing operations from Arizona, Mississippi, Utah, Pennsylvania and Maryland. • In March, the Associated General Contractors of America announced that the Gilbert Road Light Rail Extension (GRLRE) was among the most significant construction projects of 2020, and awarded the project the Construction Risk Partners Build America Merit Award for best new highway and transportation project. Just a month prior, the GRLRE project also won the Arizona Chapter of the Associated General Contractors of America Build Arizona Award for Public-New Construction Project over $50 million. • In July, Davcon Aviation in partnership with the City began construction of nearly 400,000 square feet of hanger and office space in the Falcon Field district. The 23-acre development will offer significant opportunities for new and expanding aviation businesses. • Like the rest of the aviation industry, Phoenix-Mesa Gateway Airport saw a near disappearance of passenger traffic due to the COVID-19 outbreak. When compared to the same months a year before, passenger traffic at the airport was down 93% in April and 61% in May. This trend paralleled airport activity throughout the country as people stayed home. However, beginning in June, Gateway Airport started to reverse that trend and has continued to show significant gains in passenger activity throughout the summer. In August 2020, the Airport was down only 35% when compared to last year. In fact, by Labor Day Weekend, more travelers passed through Gateway Airport than last year. • In August, Amazon announced it will make a significant investment in facilities across the Phoenix-Mesa metro area including a 150,000-square-foot delivery station in Mesa’s Falcon District, just east of Boeing’s manufacturing facility. Delivery stations power the last mile of Amazon’s order fulfillment process. Packages are transported to delivery VIII stations from Amazon fulfillment and sortation centers, and then loaded into vehicles for delivery to customers. • In August, Commercial Metals Company (CMC) announced that it will be building its second micro mill in Mesa. The mill represents a $300 million investment by CMC, which expects to create 185 jobs once the plant is fully operational. • In September, Boeing unveiled plans to build a new fabrication center that will be approximately 155,000 square feet and will be located on 21.5 acres of vacant land within the western part of the existing Boeing campus. • In September, the International City/County Management Association (ICMA) recognized the City of Mesa for its commitment to data-driven government management and reporting with a Certificate of Distinction in Performance Management. Mesa is among 19 jurisdictions receiving the Certificate of Distinction, and one of only 60 recognized overall. ICMA awards Certificates of Distinction to those agencies that collect and verify data to ensure reliability, train staff in performance measurement, and report data to the public through budgets, newsletters, and/or information provided to elected officials. • In September, the Center for Digital Government announced the winners of its 4th annual competition, honoring U.S. governments who are leveraging innovative digital services to enhance services and citizen experience. The awards recognize the achievements and best practices of states, cities, and counties that are radically improving the experience of government interaction and pushing the boundaries of how citizen services are delivered. The City of Mesa placed 4th for Overall Government Experience. In addition, special awards were given this year to state, local, and federal government agencies and departments whose methods of response and assistance to employees and citizens in coping with the COVID-19 pandemic were innovative and effective. Mesa was one of five cities to receive this special COVID-19 Response Award for using various digital platforms to deliver Mesa CARES information and encourage program participation via online methods. 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 for the fiscal year ended June 30, 2019. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report 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. IX Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Mesa Arizona For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Executive Director/CEO FINANCIAL SECTION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 U N ITED FOOD BANK INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and Members of City Council City of Mesa, 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 Mesa, Arizona (City) as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. 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 entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. (1) The Honorable Mayor and Members of City Council City of Mesa, 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 Mesa, Arizona as of June 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the Schedule of the City’s Proportionate Share of Net Pension Liability, Schedule of Changes in the City’s Net Pension/OPEB Liability and Related Ratios, Schedule of City Pension Contributions, Schedule of Changes in the City’s Total OPEB Liability, and the budgetary comparison information, 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 fund financial statements and schedules 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 fund financial statements and 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 combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. (2) The Honorable Mayor and Members of City Council City of Mesa, Arizona 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 them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 24, 2020, 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 result 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 Phoenix, Arizona December 24, 2020 (3) MANAGEMENT’S DISCUSSION AND ANALYSIS For the Fiscal Year Ended June 30, 2020 As management of the City of Mesa, Arizona (the City), we offer this discussion and analysis of the financial activities of the City for the fiscal year ended June 30, 2020. The reader is encouraged to consider the information presented here in conjunction with the transmittal letter presented on pages V-IX, as well as the financial statements beginning on page 16 and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS • The City was a direct recipient of Coronavirus Aid Relief and Economic Security Act “CARES Act”. As part of the CARES Act, the Relief Fund was established, and the City received $90 million to assist with its response to the COVID-19 virus. As of June 30, 2020, the City’s Relief Fund eligible expenditures were $42.4 million. • The City’s total revenues increased by $39.5 million from $1.07 billion to $1.11 billion. The increase is primarily from two revenue sources Sales Taxes and Intergovernmental Revenue. The Relief Funds received contributed to the increase in Intergovernmental Revenues. • The City’s Governmental Funds reported a combined ending fund balance of $444.2 million, a $89.6 million increase from the previous year. Approximately 57.7 percent of the total governmental fund balance amount, or $256.4 million, is designated by the City as committed, assigned and unassigned. The remaining 42.3 percent or $187.9 million is designated as nonspendable or restricted. • Total fund balance for the General Fund was $195.1 million, which represents an increase of $59.2 million over prior year. The increase is a combination of an increase in revenues and a decrease in expenditures, specifically public safety expenditures. • The City’s Enterprise Fund reported combined total net position of $529 million, which represents a decrease of $39.3 million over prior year. The decrease is primarily due to an increase in operating expenses and depreciation expense. OVERVIEW OF THE FINANCIAL STATEMENTS This management discussion and analysis serves as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: Government-Wide Financial Statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements The Government-Wide Financial Statements (pages 16-18) are designed to provide a broad overview of the City’s finances in a manner similar to private businesses. All the activities of the City are included in these statements. 4 The Statement of Net Position, Exhibit A-1, presents information on all the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference being reported as net position. Over time increases and 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, Exhibit A-2, presents information showing how the City’s net position changed over the most recent fiscal year. All changes to net position are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This is the accrual basis of accounting. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both the Government-Wide 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 cost through user fees and charges (Business-Type Activities):  The Governmental Activities include the City’s basic services including general government (administration), public safety, community environment and cultural-recreational. Taxes and general revenues generally support these activities.  The Business-Type Activities include private sector type activities such as the City-owned electric, gas, water, wastewater, and solid waste systems, as well as the City-owned airport, golf course, stadiums, convention center, and district cooling. These activities are primarily supported by user charges and fees. Fund Financial Statements The fund financial statements are presented in Exhibits A-3 through A-9 beginning on page 19 of this report. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the City. Traditional fund financial statements are presented for Governmental Funds (Exhibits A-3 through A-6) and Proprietary Funds (Exhibits A-7 through A-9). Governmental funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmentwide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in evaluating the City’s near-term financing requirements. Since the governmental fund financial statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer-term focus, a reconciliation of the differences between the two is provided with the fund financial statements and also in Note 2 to the basic financial statements. 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, only with more detail. Internal Service Funds are used to accumulate and allocate costs internally among the City’s various functions. The Internal Service Funds are used to account for its fleet support; materials and supplies; printing and graphics; property and public liability; workers’ compensation; and employee benefits self-insurance programs. Since the primary customers of the internal service funds are the governmental activities, the 5 assets and liabilities of those funds are included in the governmental activities’ column of the governmentwide statement of net position. The costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. The Internal Service Funds are combined into a single column on the proprietary funds statements. Additional detail of the internal service funds can be found in the combining statements (Exhibits C-3 through C-5). Notes to the financial statements The notes to the financial statements provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. The notes to the financial statements can be found on pages 29-92 of this report. Required Supplementary Information (RSI) In addition to the financial statements and notes, this report presents certain required supplementary information including the budgetary comparison schedule for the General Fund, changes in net pension liability, employer pension contributions, and changes in other post-employment benefits (OPEB) liability. RSI and accompanying notes can be found on pages 93-107 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis discuss the financial position and changes to the financial position for the City as a whole as of and for the years ending June 30, 2020 and 2019. Condensed Statement of Net Position As of June 30 (In thousands of dollars) Cash and Other Assets Capital Assets Total Assets Governmental Activities 2020 2019 $ 1,011,788 $ 844,824 1,473,360 1,452,714 2,485,148 2,297,538 Business-Type Activities 2020 2019 $ 587,709 $ 692,000 1,494,082 1,498,916 2,081,791 2,190,916 Total Government 2020 2019 $ 1,599,497 $ 1,536,824 2,967,442 2,951,630 4,566,939 4,488,454 Deferred Amounts on Refunding Deferred Outflows on Pensions & OPEB Total Deferred Amounts 7,001 284,155 291,156 7,964 172,454 180,418 28,789 22,738 51,527 34,583 11,064 45,647 35,790 306,893 342,683 42,547 183,518 226,065 Non-Current Liabilities, Due Within One Year Non-Current Liabilities, Due In M ore Than One Year Net Pension & OPEB Liability Other Liabilities Total Liabilities 34,608 50,068 40,278 37,097 74,886 87,165 458,819 1,652,204 202,716 2,348,347 473,609 1,440,768 140,505 2,104,950 1,280,544 163,426 113,618 1,597,866 1,382,361 143,356 95,183 1,657,997 1,739,363 1,815,630 316,334 3,946,213 1,855,970 1,584,124 235,688 3,762,947 42,236 64,930 6,502 10,276 48,738 75,206 1,075,182 143,839 (833,300) $ 385,721 1,038,928 103,164 (834,016) $ 308,076 213,576 63,113 252,261 $ 528,950 170,427 47,857 350,006 $ 568,290 1,288,758 206,952 (581,039) $ 914,671 1,209,355 151,021 (484,010) $ 876,366 Deferred Inflows on Pensions & OPEB Net Investment in Capital Assets Restricted Net Position Unrestricted Net Position Total Net Position 6 Changes in Net Position Year Ended June 30 (In thousands of dollars) Governmental Activities 2020 2019 Program Revenues: Charges for Services Operating Grants & Contributions Capital Grants & Contributions General Revenues: Sales Taxes Property Taxes Occupancy Taxes Unrestricted Intergovernmental Contributions Unrestricted Investment Income Gain on Disposal of Capital Assets M iscellaneous Total Revenues $ 77,659 70,633 24,719 $ Business-Type Activities 2020 2019 Total Government 2020 2019 81,303 25,326 13,780 $ 374,855 1,632 35,896 $ 375,654 2,316 19,692 $ 452,514 72,265 60,615 $ 456,957 27,642 33,472 219,932 45,068 2,564 183,189 36,912 16,002 16,374 693,052 189,871 36,013 3,246 175,278 65,189 13,729 (27) 11,531 615,239 1,459 7,618 (801) (3,397) 417,262 1,602 8,004 44,056 4,290 455,614 219,932 45,068 4,023 183,189 36,912 23,620 (801) 12,977 1,110,314 189,871 36,013 4,848 175,278 65,189 21,733 44,029 15,821 1,070,853 119,819 355,752 119,506 58,345 18,078 Governmental Activities Expenses: General Government Public Safety Community Environment Cultural-Recreational Interest on Long-Term Debt Business-Type Activities: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Total Expenses 134,299 384,800 152,847 62,014 17,841 119,819 355,752 119,506 58,345 18,078 - - - - 134,299 384,800 152,847 62,014 17,841 751,801 671,500 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 320,208 22,475 33,124 103,821 57,468 38,524 5,029 2,117 4,413 2,748 7,867 1,186 278,772 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 1,072,009 22,475 33,124 103,821 57,468 38,524 5,029 2,117 4,413 2,748 7,867 1,186 950,272 Increase (Decrease) in Net Position Before Transfers Transfers (58,749) 136,394 (56,261) 114,535 97,054 (136,394) 176,842 (114,535) 38,305 - 120,582 - Change in Net Position 77,645 58,275 (39,340) 62,307 38,305 120,582 Net Position - Beginning 308,076 249,801 568,290 505,983 876,366 755,784 Net Position - Ending $ 385,721 $ 308,076 $ 528,950 $ 568,290 $ 914,671 $ 876,366 7 Analysis of Government-Wide Net Position As noted earlier, Net Position may serve over time as a useful indicator of a government’s financial position. The City’s Net Position increased $38.3 million from $876.4 million to $914.7 million at the end of fiscal year 2020. This is primarily due to an overall increase in revenues of $39.5 million, primarily from Governmental Activities. The restricted portion of the City's Net Position saw the largest increase. Restricted Net Position increased $56 million from $151 million to $207 million. Restricted Net Position represents resources that are subject to external restrictions on how they may be used. Such restrictions include debt service payments, public safety, transportation programs, other capital projects and required reserves. The Unrestricted Net Position of ($581.0) million is primarily due to the impact of the long-term liability associated with pensions and OPEB of ($1.8 billion). Governmental Activities As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are Taxes (34%), Unrestricted Intergovernmental (23%) and Transfers (17%). The largest users of resources for the governmental activities are Public Safety (51%), Community Environment (20%), and General Government (18%). Revenues by Source Including Transfers – Governmental Activities For the Fiscal Year Ended June 30, 2020 Operating Grants & Contributions 9% Taxes 34% Capital Grants & Contributions 3% Unrestricted Contributions 5% Charges for Services 9% Transfers 17% Unrestricted InterGovernmental 23% 8 Functional Expenses – Governmental Activities For the Fiscal Year Ended June 30, 2020 Public Safety 51% Community Environment 20% General Government 18% CulturalRecreational 8% Interest on LongTerm Debt 3% The following two graphs compare Governmental Activities revenues and expenses from fiscal year 2020 to fiscal year 2019. Governmental Activities Revenues For Fiscal Years 2020 and 2019 (In thousands of dollars) $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Program Revenues Taxes 2019 Unrestricted Intergovernmental 2020 9 Contributions Governmental Activities Functional Expenses For Fiscal Years 2020 and 2019 (In thousands of dollars) $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 General Government Public Safety Community Environment 2019 Cultural-Recreational 2020 Total governmental activities revenues increased $77.9 million from $615.2 million to $693.1 million. Total governmental expenses increased by $80.3 million from $671.5 million to $751.8 million. Key factors in this change include: • Sales Tax revenues were stronger than expected, increasing $30 million. The COVID-19 pandemic contributed to larger than expected retail sales, as City residents stayed home and shopped locally. • Program Revenues, which include federal grants, increased $52.6 million. $42.4 million of this increase is attributed to the CARES act Relief Fund revenues recognized. • Community Environment and Public Safety were the two largest functional expenses in current year. The increase can be attributed to CARES act Relief Fund expenditures and an increase in public safety salary and related benefits. Fund Financial Statement Analysis As previously mentioned, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The following is a brief discussion of some of the funds within the Governmental Activities. General Fund The General Fund is the chief operating fund of the City and accounts for many of the major functions of the government including general government, public safety, community environment and cultural- 10 recreational. Total fund balance of the General Fund was $195.1 million, while unassigned fund balance was $130.3 million. Total fund balance of the City’s General Fund increased by $59.2 million during the current fiscal year from $135.9 million to $195.1 million. The combination of an increase in revenues and decrease in expenditures contributed to the overall increase: • • • Revenues increased by $14.4 million primarily in Sales Tax revenues ($7.8 million) due to better than expected retail sales; and in Intergovernmental Revenues ($10 million) due to increase in urban shared revenues and state shared sales tax. Expenditures decreased by $21.6 million primarily due to Relief Fund eligible expenses being recorded in the Relief Fund instead of the General Fund. Net Transfers into the General Fund increased by $17.7 million, this is primarily due to an increase in the transfers from the Enterprise Fund. Non-Major Governmental Funds The Non-Major Governmental Funds include special revenue, capital project and debt service funds. The fund balance of the Non-Major Governmental Funds was $249.2 million, with much of the fund balance in either Restricted or Committed. Total fund balance of the Non-Major Governmental Funds increased by $30.5 million during the current fiscal year from $218.7 million to $249.2 million. The increase is in the Public Safety Tax, Quality of Life Sales Tax and Street Sales Tax funds. Consistent with the General Fund, these funds saw an increase in sales tax revenue. Budgetary Highlights The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison schedules are required for the General Fund and can be found in Exhibit B-5. This schedule compares the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see Note 1.f. of the notes to the financial statements for more information on budget policies). Budgeted amounts may change within funds and between funds. There were no budget amendments that increased the overall City adopted budget of $1.83 billion during fiscal year 2020. General Fund revenues of $336.9 million, on a budgetary basis, were less than the budgeted revenues of $351.4 million. Intergovernmental revenues and Charges for Services came in under budgeted. Expenditures of $384.5 million were less than the budgeted expenditures of $469.8 million. Savings were primarily in capital outlay, general government, and public safety. 11 Business-type Activities The following two graphs compare Business-Type Activities revenues and expenses from fiscal year 2020 to fiscal year 2019. As presented the charts, the largest funding sources and users of resources for the Business-Type Activities are Electric, Gas, Water, Wastewater, and Solid Waste. Charges for Services – Business-type Activities 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Electric Gas Water 2019 Wastewater Solid Waste Other Programs 2020 Expenses – Business-Type Activities 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Electric Gas Water 2019 Wastewater 2020 12 Solid Waste Other Programs Total Business-Type Activities program and general revenues decreased by $38.3 million from $455.6 million to $417.3 million. The decrease is primarily related to fiscal year 2019 having a higher than expected gain on sale of assets of $44 million. In fiscal year 2020, there was a small loss on sale of assets of $801 thousand. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental and business-type activities amounts to $3.0 billion (net of accumulated depreciation/amortization) as of June 30, 2020. This net investment in capital assets includes land, buildings, other improvements, machinery and equipment, intangibles, and infrastructure. Infrastructure assets are items that are normally immovable and have value only to the City, such as streets, street lighting systems, and storm drainage systems. The following table provides a breakdown of the City’s capital assets at June 30, 2020 and 2019: Capital Assets (net of accumulated depreciation/amortization) As of June 30 (In thousands of dollars) Land Infrastructure - Nondepr Buildings Other Improvements M achinery & Equipment Intangibles Infrastructure Construction-in-Progress Total Governmental Activities 2020 2019 $ 401,549 $ 391,527 3,597 3,585 230,125 235,341 98,412 94,070 62,416 62,762 420 177 510,861 527,116 165,980 138,136 $ 1,473,360 $ 1,452,714 Business-Type Activities 2020 2019 $ 32,234 $ 32,234 17,666 17,666 87,300 87,608 70,892 73,335 37,955 37,500 4,025 4,152 1,087,158 1,100,685 156,851 145,736 $ 1,494,082 $ 1,498,916 Total Government 2020 2019 $ 433,783 $ 423,761 21,263 21,251 317,425 322,949 169,304 167,405 100,371 100,262 4,445 4,329 1,598,019 1,627,801 322,831 283,872 $ 2,967,442 $ 2,951,630 The City’s total capital asset balances at June 30, 2020 were overall consistent with prior year balances. Increases in Construction-in-progress ($39.0 million) and Land ($10.0 million) were offset by decreases in Infrastructure assets ($29.8 million). Some of the larger current year project expenditures include Mesa Drive Phase II ($14.3 million); State Route 24 Williams Field Road Enhancements ($6.5 million); City Center ASU Master Plan and Utility Improvements ($7.7 million); Fire Apparatus Replacement ($5.3 million); and Police Radios ($4.0 million). The remaining projects primarily relate to street and transportation projects, water projects and wastewater projects. The Land acquisitions in current year are parcel and easement acquisitions related to the extension of the light rail. The decrease in Infrastructure is due to depreciation expense exceeding the additions in current year by $32 million. Additional information on the City’s capital assets can be found in Note 7 of the notes to the basic financial statements. 13 Debt Administration At the end of the fiscal year 2020, the City had total long-term bond obligations and notes payable outstanding of $1.7 billion. Of this amount, $334.8 million comprises debt backed by the full faith and credit of the City and the remaining $1.36 billion represents bonds secured by specified revenue sources (i.e., Utility System Revenue, Highway User Revenue, Sales Tax). The City’s outstanding long-term debt (considering new borrowings, debt retirements, and defeasance) decreased $114 million. The change in debt includes new borrowings during the fiscal year totaling $18.4 million, defeasance of $49 million, and principal payments of $83.5 million. The City’s total outstanding debt includes $57.3 million in Community Facility District (CFD) bonds. Special Assessment revenues and secondary property tax are collected to make the annual Community Facility District bond debt payments. The City has no liability for the Community Facility District bonds. However, the City is contingently liable in the event that the Special Assessment revenues are insufficient to satisfy the Special Assessment Bond debt payments. The following schedule shows the outstanding long-term debt of the City as of June 30, 2020 and 2019. Outstanding Long-term Debt As of June 30 (In thousands of dollars) Governmental Activities 2020 2019 General Obligation Bonds $334,609 $ 370,479 Utility System Revenue Bonds Highway User Revenue Fund Bond 58,750 67,905 Excise Tax Obligations Special Assessment Bonds with Governmental Commitment 219 438 Community Facility District 57,307 40,631 Notes Payable Total $450,885 $ 479,453 Business-Type Activities 2020 2019 $ 151 191 $ 1,242,670 1,279,020 49,025 Total Government 2020 2019 $ 334,760 $ 370,670 1,242,670 1,279,020 58,750 67,905 49,025 1,431 $ 1,244,252 219 57,307 1,431 $ 1,695,137 1,574 $ 1,329,810 438 40,631 1,574 $ 1,809,263 The City’s current bond ratings are as follows: General Obligation Bonds Highway User Revenue Bonds Utility Systems Revenue Bonds Standard and Poor’s Corporation AA AA AA- Moody’s Investors Service Aa2 A2 Aa2 Fitch Ratings AAA N/A N/A Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for combined water, sewer, light, parks, open space preserves, playgrounds, recreational facilities, public safety, law enforcement, fire emergency, streets and transportation may not exceed 20% of a City’s full cash net assessed valuation, nor may outstanding general obligation bonded debt for all other purposes exceed 6% of a City’s full cash net assessed valuation. 14 The City’s total debt margin available at June 30, 2020 was $284.7 million in the 6% capacity and $615.8 million in the 20% capacity. Additional information on the City’s long-term obligations can be found in Note 8 of the notes to the basic financial statements and Table X in the Statistical Section. ECONOMIC FACTORS On May 4, 2020, the City Council approved a $1.9 billion budget, which is an increase of $80 million compared to prior year’s budget. The fiscal year 2021 budget includes $1.58 billion for operations and $330.7 million for scheduled bond capital improvements. The adopted fiscal year 2021 budget continues the City’s fiscally conservative approach and reinforces the City’s effort to invest in economic development, improve public safety and attract and retain excellent employees. Conservative budget practices and willingness to respond to economic indicators continues to allow the City to maintain unrestricted fund balance reserve levels as established in the City’s financial policies. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Mesa, Arizona’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Mesa Finance Director, P.O. Box 1466, Mesa, Arizona, 85211-1466. 15 BASIC FINANCIAL SECTION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 C A N NED FOOD DR I VE CITY OF MESA, ARIZONA EXHIBIT A-1 STATEMENT OF NET POSITION JUNE 30, 2020 (in thousands) ASSETS Pooled Cash and Investments Accounts Receivable, Net Accrued Interest Receivable Due from Other Governments Inventory Prepaid and Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable, Net Due from Other Governments Customer Deposits Joint Venture Construction Deposits Investment in Joint Ventures Capital Assets, Not Being Depreciated Capital Assets, Being Depreciated, Net Total Assets Primary Government Governmental Activities Business-Type Activities $ $ DEFERRED OUTFLOWS OF RESOURCES Debt Refunding Pensions and OPEB Total Deferred Outflows of Resources 544,298 10,464 1,984 45,409 7,587 4,055 71,213 39,656 830 2,300 2,693 Total $ 615,511 50,120 2,814 47,709 7,587 6,748 6,703 53,860 16,825 1,388 319,215 571,126 902,234 2,485,148 103,164 63,924 4,403 9,326 290,200 206,751 1,287,331 2,081,791 109,867 117,784 16,825 1,388 4,403 9,326 609,415 777,877 2,189,565 4,566,939 7,001 284,155 291,156 28,789 22,738 51,527 35,790 306,893 342,683 42,553 44,661 7,956 51,637 55,909 7,726 703 105,189 50,279 44,661 7,956 52,340 161,098 LIABILITIES Accounts Payable and Accrued Liabilities Claims Payable Customer and Defendant Deposits Unearned Revenue Liabilities Payable from Restricted Assets Noncurrent Liabilities: Due Within One Year Due in More Than One Year: Bonds Payable Compensated Absences Net Pension and OPEB Liability Total Liabilities 34,608 40,278 74,886 432,056 26,763 1,652,204 2,348,347 1,276,390 4,154 163,426 1,597,866 1,708,446 30,917 1,815,630 3,946,213 DEFERRED INFLOWS OF RESOURCES Pensions and OPEB Total Deferred Inflows of Resources 42,236 42,236 6,502 6,502 48,738 48,738 1,075,182 213,576 1,288,758 30,206 43,529 63,436 6,668 (833,300) 385,721 34,664 9,326 19,123 252,261 528,950 34,664 9,326 49,329 43,529 63,436 6,668 (581,039) 914,671 NET POSITION Net Investment in Capital Assets Restricted For: Bond Indentures Construction Debt Service Public Safety Transportation Programs Other Programs Unrestricted Total Net Position $ The accompanying notes are an integral part of the financial statements. 16 $ $ CITY OF MESA, ARIZONA EXHIBIT A-2 STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Functions/Programs: Governmental Activities: General Government Public Safety Community Environment Cultural-Recreational Interest on Long-Term Debt Total Governmental Activities Expenses $ Business-type Activities: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Total Business-type Activities Total Government Charges for Services 134,299 384,800 152,847 62,014 17,841 751,801 $ 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 320,208 $ 1,072,009 14,211 33,235 19,757 10,456 77,659 Program Revenues Operating Grants and Contributions Capital Grants and Contributions $ $ 29,855 39,986 152,266 81,464 63,267 4,018 2,595 40 221 1,143 374,855 $ 452,514 859 7,359 61,414 1,001 70,633 83 82 1,112 355 1,632 $ 72,265 346 3,230 18,974 10,716 1,287 1,343 35,896 $ General Revenues: Sales Taxes Property Taxes Occupancy Taxes Unrestricted Intergovernmental Revenues Contributions Not Restricted to Specific Programs Investment Income Gain (Loss) on Sale of Capital Assets Miscellaneous Revenues (Expenses) Transfers Total General Revenues and Transfers Change in Net Position Total Net Position - Beginning Net Position - Ending The notes to the financial statements are an integral part of this statement. 17 23,114 300 1,227 78 24,719 60,615 EXHIBIT A-2 (Continued) Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type Activities Activities Total * * $ $ (96,115) (343,906) (70,449) (50,479) (17,841) (578,790) $ - $ (96,115) (343,906) (70,449) (50,479) (17,841) (578,790) - 5,256 14,202 44,108 11,987 22,835 (643) (1,233) (1,555) (2,575) (187) (20) 92,175 5,256 14,202 44,108 11,987 22,835 (643) (1,233) (1,555) (2,575) (187) (20) 92,175 (578,790) 92,175 (486,615) 219,932 45,068 2,564 183,189 36,912 16,002 16,374 136,394 656,435 1,459 7,618 (801) (3,397) (136,394) (131,515) 219,932 45,068 4,023 183,189 36,912 23,620 (801) 12,977 524,920 77,645 (39,340) 38,305 308,076 568,290 876,366 385,721 $ 528,950 $ 914,671 18 CITY OF MESA, ARIZONA EXHIBIT A-3 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2020 (in thousands) ASSETS Pooled Cash and Investments Accounts Receivable, Net Accrued Interest Receivable Due from Other Governments Due from Other Funds Advances to Other Funds Prepaid Costs Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments Total Assets LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Advances from Other Funds Customer and Defendant Deposits Unearned Revenue Payable from Restricted Assets: Accrued Interest Payable Matured Bonds Payable Total Liabilities General Fund Non-major Governmental Funds Total Governmental Funds $ $ $ $ $ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue Total Deferred Inflows of Resources FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 189,167 1,980 628 21,065 1,031 2,301 216,172 17,833 830 1,704 $ $ 288,846 7,435 1,100 24,344 495 576 6,703 53,860 16,825 1,388 401,572 20,959 261 495 7,126 49,933 $ $ 478,013 9,415 1,728 45,409 1,031 495 2,877 6,703 53,860 16,825 1,388 617,744 38,792 261 495 7,956 51,637 20,367 9,300 46,609 134,683 9,300 46,609 155,050 737 737 17,724 17,724 18,461 18,461 2,301 19,910 42,515 130,342 195,068 576 184,980 63,866 786 (1,043) 249,165 2,877 184,980 83,776 43,301 129,299 444,233 216,172 $ The accompanying notes are an integral part of the financial statements. 19 401,572 $ 617,744 CITY OF MESA, ARIZONA EXHIBIT A-4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2020 (in thousands) Fund Balances - total governmental funds $ 444,233 Amounts reported for governmental activities in the statement of net position are different because (also see Note 2 to the basic financial statements): Capital assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 1,470,707 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 319,446 Deferred outflows related to deferred amounts on refunding and pensions are not financial resources and therefore not reported in the funds. 286,267 Long-term liabilities, including bonds payable and net pension liabilities are not due and payable in the current period and therefore not reported in the governmental funds. (2,109,535) Deferred inflows relating to pensions represent a future acquisition of net position that is not reported in the funds. Also, because the focus of governmental funds is on short term financing, some assets will not be available to pay for current period expenditures. Those assets are offset by unavailable revenue in the funds. (22,368) Internal service funds are used by management to charge the costs of certain activities to individual funds. (3,029) Net position of the governmental activities - statement of net position The accompanying notes are an integral part of the financial statements. 20 $ 385,721 CITY OF MESA, ARIZONA EXHIBIT A-5 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) REVENUES Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenue Total Revenues General Fund Non-major Governmental Funds Total Governmental Funds $ $ $ EXPENDITURES Current: General Government Public Safety Community Environment Cultural-Recreational Debt Service: Principal Interest on Bonds Service Charges Cost of Issuance Capital Outlay Total Expenditures 132,277 27 19,057 148,478 20,403 7,284 4,894 6,048 338,468 87,655 44,970 2,537 1,661 5,069 128,918 20,086 1,969 9,132 2,295 3,439 307,731 219,932 44,970 2,564 1,661 24,126 277,396 40,489 9,253 14,026 2,295 9,487 646,199 86,829 226,388 22,244 39,164 9,312 65,286 67,963 8,475 96,141 291,674 90,207 47,639 11,678 386,303 46,929 18,208 14 838 108,924 325,949 46,929 18,208 14 838 120,602 712,252 Excess (Deficiency) of Revenues Over (Under) Expenditures (47,835) (18,218) (66,053) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Total Other Financing Sources (Uses) 134,084 (27,076) 107,008 29,717 (331) 18,361 938 48,685 163,801 (27,407) 18,361 938 155,693 Net Change in Fund Balances 59,173 30,467 89,640 135,895 218,698 354,593 Fund Balance - Beginning Fund Balances - Ending $ 195,068 $ The accompanying notes are an integral part of the financial statements. 21 249,165 $ 444,233 CITY OF MESA, ARIZONA EXHIBIT A-6 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, 2020 (in thousands) Net change in fund balances - total governmental funds $ 89,640 Amounts reported for governmental activities in the statement of activities are different because (also see Note 2 to the basic financial statements): Revenues in the statement of activities that do not provide current financial resources are not reported in the governmental funds. 2,479 Some expenses 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. (75,734) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay $85,108 exceeded depreciation ($64,330) in the current period. 20,778 The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to increase net position. (287) Change in equity in Joint Venture 13,349 The issuance of long-term debt (e.g., bonds and capital leases) provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes financial resources of governmental funds. Neither transaction has any effect on net position. 28,568 Governmental funds report the effect of premiums and deferred amounts related to refunding when the new debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 281 Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. (1,429) Change in net position of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 22 $ 77,645 CITY OF MESA, ARIZONA EXHIBIT A-7 STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2020 (in thousands) ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable (Net of Allowances) Accrued Premiums Receivable Accrued Interest Receivable Due from Other Governments Inventory Prepaid Costs Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agents Customer Deposits Joint Venture Construction Deposits Total Current Assets Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds $ $ Noncurrent Assets: Investment in Joint Ventures Capital Assets, Not Being Depreciated Captial Assets, Being Depreciated, Net Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Refundings Pensions and OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources $ 71,213 39,656 830 2,300 2,648 45 66,285 852 197 256 7,587 878 69 103,164 63,924 4,403 9,326 297,509 76,124 290,200 206,751 1,287,331 1,784,282 419 2,234 2,653 2,081,791 78,777 28,789 22,738 51,527 4,889 4,889 2,133,318 $ 83,666 (Continued) The accompanying notes are an integral part of the financial statements. 23 CITY OF MESA, ARIZONA EXHIBIT A-7 (Continued) STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2020 (in thousands) LIABILITIES Current Liabilities-Payable From Current Assets: Accounts Payable and Accrued Liabilities Due to Other Funds Claims Payable Unearned Revenue Current Liabilities-Payable From Restricted Assets: Accounts Payable and Accrued Liabilities Interest Payable Matured Bonds Payable Customer Deposits and Prepayments Current Portion of Long-Term Liabilities: Current Portion of Bonds Payable Current Portion of Notes Payable Current Portion of Compensated Absences Total Current Liabilities Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds $ $ Long-Term Liabilities: Bonds Payable Notes Payable Compensated Absences Net Pension and OPEB Liability Total Long-Term Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Pensions and OPEB Total Deferred Inflows of Resources NET POSITION Net Investment in Capital Assets Restricted For: Bond Indentures Construction Debt Service Unrestricted Total Net Position $ 7,726 703 4,678 27,534 36,390 36,587 - 39,723 146 409 153,896 143 49,334 1,275,105 1,285 4,154 163,426 1,443,970 771 35,182 35,953 1,597,866 85,287 6,502 6,502 1,407 1,407 213,576 2,653 34,664 9,326 19,123 252,261 528,950 (5,682) (3,029) The accompanying notes are an integral part of the financial statements. 24 3,760 770 44,661 - $ CITY OF MESA, ARIZONA EXHIBIT A-8 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Operating Revenues: Electric Sales Pledged as Security for Revenue Bonds Gas Sales Pledged as Security for Revenue Bonds Water Sales Pledged as Security for Revenue Bonds Wastewater Charges Pledged as Security for Revenue Bonds Solid Waste Charges Pledged as Security for Revenue Bonds Airport Fees Convention Center Fees Hohokam Stadium/Fitch Complex Fees Cubs Stadium Fees District Cooling Charges Charges For Services Self-Insurance Contributions Other Revenue Total Operating Revenues Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds $ $ 29,855 39,986 152,266 81,464 63,267 4,018 2,595 40 221 1,143 374,855 30,118 97,653 6,636 134,407 Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Warehouse, Maintenance & Services Self-Insurance Total Operating Expenses 20,134 20,346 61,941 77,894 38,191 3,683 1,111 3,866 936 2,633 754 231,489 31,200 106,587 137,787 Operating Income (Loss) Before Depreciation and Amortization 143,366 (3,380) (75,456) (263) 67,910 (3,643) Depreciation and Amortization Operating Income (Loss) (Continued) The accompanying notes are an integral part of the financial statements. 25 CITY OF MESA, ARIZONA EXHIBIT A-8 (Continued) STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds Nonoperating Revenues (Expenses): Investment Income Pledged as Security for Revenue Bonds Investment Income Unpledged Intergovernmental Interest Expense: Bonds Notes Payable and Other Long-Term Obligations Bond Administrative Costs Gain/(Loss) on Disposal of Capital Assets Net Gain from Joint Venture Utility Development Fees Bond Issuance Costs Occupancy Tax Miscellaneous Revenue Total Nonoperating Revenues (Expenses) 6,614 1,004 1,632 1,976 - (52,927) (35) (11) (801) 36,272 14,601 (34) 1,459 75 7,849 177 2,153 Income before Transfers and Capital Contributions 75,759 (1,490) Capital Contributions Transfers In Transfers Out 21,295 377 (136,771) 61 - Change in Net Position (39,340) (1,429) Total Net Position - Beginning 568,290 (1,600) Total Net Position - Ending $ The accompanying notes are an integral part of the financial statements. 26 528,950 $ (3,029) CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Business-type Activities Cash Flows From Operating Activities: Cash Received from Customers Cash Received from Users Cash Payments to Suppliers Cash Payments to Employees Other Non-Operating Revenue Enterprise Fund Governmental Activities Internal Service Funds $ $ 375,061 (182,572) (43,398) 75 134,164 (130,024) (8,590) Net Cash Provided By (Used For) Operating Activities 149,166 (4,450) Cash Flows From Noncapital Financing Activities: Intergovernmental Transient Occupancy Tax Transfers In from Other Funds Transfers Out to Other Funds 815 1,459 377 (136,771) 770 - Net Cash Provided by (Used For) Noncapital Financing Activities (134,120) 770 Cash Flows From Capital and Related Financing Activities: Payment to Refunded Bond Escrow Agent Proceeds From Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Bonds and Notes Maturities Interest Paid on Bonds and Notes Bond Issuance Costs Developer Contributions and Capital Grants (54,233) 14 (54,514) (21,639) (52,662) (34) 17,618 (180) - Net Cash Used For Capital and Related Financing Activities (165,450) (180) Cash Flows From Investing Activities: Interest Received on Investments 8,076 2,036 Net Cash Provided By Investing Activities 8,076 2,036 Net Change in Pooled Cash and Investments (142,328) (1,824) Total Cash and Investments at Beginning of Year 380,629 68,109 Total Cash and Investments at End of Year $ 238,301 - $ 66,285 (Continued) The accompanying notes are an integral part of the financial statements. 27 CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Reconciliation of Operating Income to Net Cash Provided By (Used For) Operating Activities: Operating Income Business-type Activities Enterprise Fund Governmental Activities Internal Service Funds $ $ 67,910 (3,643) Adjustments to Reconcile Operating Income to Net Cash Provided By Operating Activities: Depreciation and Amortization Miscellaneous Revenue Changes in Assets and Liabilities: (Increase)/Decrease in Receivables (Increase)/Decrease in Inventory (Increase)/Decrease in Deposits and Prepaid Costs Increase/(Decrease) in Accounts Payable Increase/(Decrease) in Unearned Revenue Increase/(Decrease) in Pension and OPEB Liability Increase (Decrease) in Deferred Outflows Increase (Decrease) in Deferred Inflows Increase/(Decrease) in Other Accrued Expenses 75,456 75 263 - (2,449) 3,418 (346) 414 20,070 (11,674) (3,774) 66 (242) (851) (223) 969 3,849 (2,472) (837) (1,263) Total Adjustments 81,256 (807) Net Cash Provided By (Used For) Operating Activities Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Gain (Loss) on Disposal of Capital Assets Amortization of Bond Premium Amortization of Deferred Amounts on Refunding $ 149,166 $ (4,450) $ 18,278 (801) 13,144 (11,002) $ - The accompanying notes are an integral part of the financial statements. 28 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City of Mesa, Arizona, (the City) was incorporated July 15, 1883 with an approximate population of 300 and an area of one square mile. Today, the City’s estimated population is 514,144 within an area of approximately 141 square miles. The City’s charter was adopted August 18, 1967 providing for a CouncilManager form of government. The City provides a full range of municipal services including police and fire protection, parks and recreation, library, transportation, health and certain social services and general administration. In addition, the City owns and operates an enterprise whose activities include operations of electricity, gas, water, wastewater, and solid waste utilities, an airport, golf course, convention center, two stadiums and district cooling. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The City’s other significant accounting policies are described below: a. Reporting Entity The accompanying financial statements include the City and its blended component units, Eastmark and Cadence Community Facilities Districts, collectively referred to as “the financial reporting entity”. In accordance with GASB Statement No. 14, and as amended by GASB Statements No. 61 and No. 80, the component units discussed below have been included in the City’s reporting entity because of the significance of their operational or financial relationship with the City. Community Facilities District (“Districts”) The City has three municipal corporation political subdivisions of the State of Arizona that are organized to provide a vehicle for financing certain public infrastructure that is necessary for development of the land within the boundaries of the Districts. The City Council serves as the board of directors of Eastmark Community Facilities District #1. The board of directors for Eastmark Community Facilities District #2 and Cadence Community Facilities District include the City Council plus two additional members from the public. The City Manager of the City currently serves as the Manager for all the Districts Although the Districts are legally separate from the City, the Districts are reported as if they are part of the primary government because the District’s governing body is substantively the same as the governing body of the City and management of the City has operational responsibility for the Districts. Separate financial statements for Eastmark Community Facilities District #1 can be obtained from the City’s Finance Department, through Accounting Services at 20 E. Main Street, 3rd Floor, Mesa, Arizona 85211. Separate financial statements for Eastmark Community Facilities District #2 and Cadence Community Facilities District are not prepared. b. Jointly Governed Organizations Phoenix – Mesa Gateway Airport Authority (“PMGAA”) is a Joint-Powers Airport Authority established and funded by the City, the City of Phoenix, the Towns of Gilbert and Queen Creek, and the Gila River Indian Community. The purpose of the entity is the redevelopment of Williams Air Force Base that was closed in September of 1993 to become PMGAA. The Board of Directors consists of the mayors for the respective municipalities and the governor of the tribal community. 29 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City contributed $1.5 million to the PMGAA operating and capital budget during this fiscal year. Regional Public Transportation Authority (“RPTA”) is a voluntary association of local governments, including the cities of Mesa, Tempe, Scottsdale, Glendale, Phoenix and Maricopa County. Its purpose is to create a regional public transportation plan for Maricopa County. 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 nonprofit 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. AMWUA performs certain accounting, administrative and support services for the cities who are jointly using a multi-city sanitary sewer system. c. Basic Financial Statements Government-wide Financial Statements: The government-wide financial statements (the statement of net position and the statement of activities) report on the City as a whole, excluding fiduciary activities. 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 services. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. Certain charges between the Enterprise Fund’s utility systems and the various functional activities are not eliminated, as this would distort the direct costs and program revenues reported for the various functions concerned. The government-wide statement of net position reports all financial and capital resources of the City, excluding fiduciary funds. It is presented in a format of assets plus deferred outflows of resources less liabilities plus deferred inflows of resources equals net position, with the assets and liabilities shown in order of their relative liquidity. Net position is required to be presented in three components: net investment in capital assets, restricted and unrestricted. Net investment in capital assets is capital assets net of accumulated depreciation and reduced by outstanding balances of bonds, capital leases, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position are those with constraints placed on their use externally either imposed by creditors (such as bond covenants), grantors, contributors, laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position are those not otherwise classified as restricted, and are shown as unrestricted. Generally, the City would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position is available. The government-wide statement of activities demonstrates the degree to which the direct expenses of the various functional activities and segments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific functional activity (General Government, Public Safety, Cultural-Recreational, etc.) or segment. Expenses reported for the 30 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 various functional activities or segments include indirect expenses, such as overhead costs. Interest on long-term debt is not allocated to the various functions in the governmental activities. Program revenues include charges to customers or applicants who directly benefit from goods, services or privileges provided by a given function or segment. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment, including special assessments. Taxes and other items not properly included as program revenues are reported as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. Fund Financial Statements: The fund financial statements are, in substance, very similar to the financial statements presented in the previous model. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. However, the fiduciary funds are not included in the government-wide financial statements. The focus of the fund financial statements is on major funds, as defined by GASB Statement No. 34. Major individual governmental funds are reported as separate columns in the fund financial statements. The City has only one enterprise fund, which is reported as a major fund. Non-major governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in combining statements included as supplementary information after the basic financial statements. d. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-wide Financial Statements: The government-wide 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 the liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Governmental Fund Financial Statements: The governmental fund financial statements are reported using the current financial resources measurement focus and modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become susceptible to accrual, i.e., measurable and available to finance the City’s operations. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers revenues to be available if they are collected within 60 days of the end of the current period. Principal revenue sources considered to be susceptible to accrual are City sales taxes, property taxes, intergovernmental revenues and interest on investments. In applying the susceptible to accrual concept to intergovernmental revenues pursuant to GASB Statement No. 33, receivables and revenues are recognized when all the applicable eligibility requirements, including time requirements, have been met. Resources transmitted before the eligibility requirements are met are reported as unearned revenue. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. City sales taxes, State shared revenues, including sales and income taxes, highway user and auto lieu taxes, and lottery distributions for transportation assistance, which are collected and held by the State at year-end, on behalf of the City, are also recognized as revenue. Special assessments are recognized as revenue only to the extent that individual installments are considered current assets. Annual installments not currently receivable are reflected as unavailable revenue. 31 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Licenses and permits, charges for services and miscellaneous revenues are recorded as revenue when received as cash because they are generally not available until actually received. Changes in the fair value of investments are recognized in revenue at the end of each year. Expenditures are generally recognized when the related fund liability is incurred, as under accrual accounting. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide financial statements, a reconciliation is presented on the page following each governmental fund financial statement, which briefly explains the adjustments necessary to transform the fund-based financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. Proprietary Funds Financial Statements: The financial statements of the proprietary fund are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements described above. The proprietary fund financial statements distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting this definition, such as investment income and interest expense are reported as non-operating revenues and expenses. Internal service funds of the City, which provide services primarily to the other funds of the City, are presented in summary form as part of the proprietary fund financial statements. Since the principal users of internal services are the City’s governmental activities, financial statements of the internal service funds are consolidated into the governmental activities column when presented at the government-wide level. The costs of these services are reflected in the appropriate functional activity on the government-wide statement of activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling up effect of these revenues and expenses. e. Fund Accounting The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the fund financial statements. GASB Statement No. 34 sets forth minimum criteria for the determination of major funds. The non-major funds are combined in a column in the fund financial statements and detailed in the combining section. The City reports the following major governmental 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. 32 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City reports the following non-major governmental funds: Thirteen non-major Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specific purposes. Five non-major Capital Project Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Four non-major Debt Service Funds are used to account for the accumulation of resources for the payment of long-term obligation principal, interest and service charges. The City reports the following major proprietary fund: The Enterprise Fund has been established to account for all enterprise functions. This includes the City-owned electric, gas, water, wastewater and solid waste systems, as well as the City-owned airport, golf course, convention center, stadiums and district cooling. Additionally, the City reports the following fund types: The Internal Service Funds are used to account for operations that provide services to other departments of the government on a cost-reimbursement basis. These services include fleet support, materials and supply, printing and graphics, self-insurance for property and public liability, workers’ compensation and employee benefit programs. f. Budgets and Budgetary Accounting Each year the City Manager issues a budget calendar giving specific completion dates for various phases of the budget preparation process. The final adoption of the operating budget is by ordinance. Prior to June 1, the City Manager submits a proposed operating budget to the City Council for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted by the City to obtain citizen comments. Prior to June 30, the budget for the ensuing year is legally adopted through passage of an ordinance; these appropriations lapse at the end of each fiscal year. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget in total and from the resolution itself that limits expenditures by fund and by departmental groupings. Transfers of sums within a specific fund or departmental group may be made upon City Manager approval. The legally adopted budget consists of all funds. Governmental debt service expenditures are budgeted in the Special Revenue Funds or Debt Service Funds. A budget schedule for the General Fund is presented in the Required Supplementary Information Section, and the other funds are located in the Supplementary Information Section. 33 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. The State Economic Estimates Commission determines and publishes, prior to April 1st of each year, the expenditure limitation for the following fiscal year for each governmental unit. Fiscal year 1979-80 is the base year for calculations. Budgets for all funds are adopted in accordance with the requirements of the Arizona Constitution, Arizona Revised Statutes and the Mesa City Charter. There are certain differences between the basis used for budgetary purposes and that used for reporting in accordance with generally accepted accounting principles. For additional detail, see the notes to budgetary comparison schedule. Budgeted amounts are as originally adopted by the City Council on June 3, 2019. g. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make a number of estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. h. Pooled Cash and Investments The City maintains an invested pool that is available for use by all City funds. Each fund’s portion of this pool is reported on the financial statements as “pooled cash and investments”. Assets related to long-term investments of the invested pool are held by a single master custodian. In addition, certain cash deposits and short-term investments are held separately in State of Arizona Local Government Investment Pools (LGIP), and FDIC Insured Cash Sweep accounts with one local bank. The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Investments are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income. Interest income from investments is recorded as revenue within the fund that made the investment. i. Inventories Inventories consist of expendable supplies held for consumption. The warehouse inventory is valued at the lower of average cost or market, while fleet support services inventory is valued at cost on a first-in, first out (FIFO) basis. The cost of inventory is reported as an expenditure at the time individual items are consumed. 34 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 j. Capital Assets Capital assets, including infrastructure (streets, sidewalks, street lighting, storm drainage and other assets that are immovable and of value only to the City) are defined as assets with an initial cost of $5,000 or more and an estimated useful life of more than one year. Intangible assets for the City include goodwill, right of way, easements and computer software. The City has elected to capitalize software with an initial cost of $100,000 or more. All capital assets, whether owned by governmental activities or business-type activities, are required to be recorded and depreciated in the government-wide financial statements. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Contributions of assets are stated at fair market value based on appraisals or engineering estimates of acquisition value at the time of receipt. When assets are retired or sold, the costs of the assets and the related accumulated depreciation are eliminated from the accounts, and any resultant gain or loss is charged to income or expense. Depreciation has been provided using the straight-line method based on the estimated useful lives of the assets. The estimated useful lives are as follows: Buildings Other Improvements Machinery and Equipment Intangibles Infrastructure 15-50 Years 5-50 Years 3-30 Years 6-15 Years 5-50 Years Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation) or net realizable value, if lower, as of the date of the transfer. k. Compensated Absences Vacation, compensatory time and sick leave benefits are accrued as liabilities as employees earn the benefits to the extent that they meet both of the following criteria: 1) the City’s obligation is attributable to employees’ services already rendered; and 2) it is probable that the City will compensate the employees for the benefits through paid time off or some other means, such as cash. For governmental funds a liability for vacation, compensatory time and sick leave are reported only if they have matured, for example, as a result of employee resignations and retirements. The entire amount of accumulated unpaid vested vacation pay, compensatory time and an estimated amount for sick leave related to the proprietary funds is included as a liability in the fund financial statements. The remaining long-term balances related to governmental activities are included in the government-wide financial statement. l. Reserve for Loss and Loss Adjustment Expenses The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds establish claim liabilities based on actuarial estimates of the ultimate cost of claims (including future claim adjustment expenses) that have been reported but not settled, and of claims 35 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 that have been incurred but not reported. Adjustments to claim liabilities are charged or credited to expenses in the periods in which they are made. m. Long-Term Obligations In the government-wide financial statements and the proprietary fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line 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 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 issuance are reported as other financing uses. n. Pension and Postemployment Benefits For purposes of measuring the net pension and other postemployment benefits (OPEB) liabilities, deferred outflows of resources and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense, information about the plans’ fiduciary net position and additions to/deductions from the plans’ 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. o. Fund Balance Policies In the fund financial statements, fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable and Restricted fund balances represent restricted classifications and Committed, Assigned, and Unassigned represent unrestricted classifications. Nonspendable fund balance includes amounts that cannot be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) it is legally or contractually required to be maintained intact. Restricted fund balance has externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation (changes in City Charter). Committed fund balance has self-imposed limitations imposed at the highest level of decision making authority, namely, Mayor and Council. Mayor and Council approval is required by resolution to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. Assigned fund balance requests are submitted to the Chief Financial Officer for approval/nonapproval. City Charter authorizes the City Manager or Designee the authority to perform all financial transactions. The City Manager has authorized the Chief Financial Officer this responsibility. Unassigned fund balance represents the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. 36 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 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. The Mayor and Council has established a minimum fund balance policy for the General Fund of eight to ten percent of budgeted expenditures. The fund balance in the General Fund as of June 30, 2020 as reported in Exhibit B-5 is 43.2% of General Fund expenditures budgeted for fiscal year 2019-2020. p. Statement of Cash Flows A statement of cash flows classifies cash receipts and payments according to whether they stem from operating, non-capital financing, capital and related financing, or investing activities. For purposes of the statements of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. This includes repurchase agreements and all monies in the State Treasurer’s Local Government Investment Pool since the City may deposit or withdraw cash at any time without prior notice or penalty. q. Contingency Services The principal purpose of a contingency is to cover any unforeseen expenditures that may arise after the budget is adopted, and to cover expenditures resulting from prior year encumbrances. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditure of each program or activity for the ensuing year. Thus, a contingency is essential for budgetary purposes. Any balance of a contingency fund not used during one fiscal year is available to help finance the following year’s budget. The contingency applications are reflected in the budget basis financial statements for the fiscal year ended June 30, 2020 and are made in accordance with State Statutes. r. Property Taxes The City’s secondary property tax is levied each year on or before the third Monday in August based on the previous February limited property values as determined by the Maricopa County Assessor. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent after November 1 and after May 1, respectively. A lien attaches to the property on the first day of January preceding the assessment and levy of taxes. Delinquent amounts bear interest at the rate of 16.0%. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions of tax liens on properties which have delinquent real estate taxes are held in February. Secondary property taxes are levied to pay principal and interest on bonded indebtedness. The dollar amount of the secondary property tax is “unlimited” and the limited property value is used in determining the tax rate. In fiscal year 2019-2020, current property tax collections were $40,724,766 or 98.72% of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax is recorded as a receivable. Revenue is recognized for those payments expected to be collected 37 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 within 60 days and the remaining balance is reported as unavailable revenue. The receivable at June 30, 2020 was $1,099,177 of which $557,293 was recorded as revenue and $541,884 as unavailable revenue. s. New Accounting Pronouncements GASB Statement No. 87, Leases, provides new guidance for recognition of operating leases and the related assets. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. The City will implement this Statement in fiscal year 2021. GASB Statement No. 90, Majority Equity Interest, modifies previous guidance for reporting a government’s majority interest in a legally separate organization. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. The City implemented this Statement in fiscal year 2020 with no effect. GASB Statement No. 91, Conduit Debt Obligations. This Statement defines conduit debt obligations for accounting and financial reporting purposes and establishes related standards for recognition, measurement, and disclosure for issuers. The requirements of this Statement will take effect for financial statements starting with the fiscal year that ends December 31, 2022. GASB Statement No. 92 Omnibus 2020, establishes accounting and financial reporting requirements for specific issues related to leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing and insurance-related activities of public entity risk pools, fair value measurements, and derivative instruments. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. The City will implement this Statement in fiscal year 2021. Implementation Guide No. 2020-1, Implementation Guidance Update – 2020, provides guidance that clarifies, explains or elaborates on GASB Statements and Interpretations. The requirements of this Implementation Guide are effective for reporting periods beginning after June 15, 2021. The requirements of this Implementation Guide will be implemented in fiscal year 2022. Although expected to be significant, the City has not fully determined the effects that implementation of Statement No. 87 will have on the City’s financial statements. 2. RECONCILIATION OF GOVERNMENTAL FUND FINANCIAL STATEMENTS TO GOVERNMENT-WIDE FINANCIAL STATEMENTS The governmental fund financial statements are presented on a current financial resources measurement focus and modified accrual accounting basis while the government-wide financial statements are prepared on a long-term economic resources measurement focus and accrual accounting basis. Reconciliations briefly explaining the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements immediately follow each governmental fund financial statement. 38 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position (in thousands): Assets Pooled Cash and Investments Account and M isc Receivables, Net Accrued Interest Receivable Due from Other Governments Due from Other Funds Advances to Other Funds Inventory Prepaid and Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments Investment in Joint Ventures Capital Assets Total Assets Total Governmental Funds Long-term Assets/ Liabilities (1) Internal Service Funds (2) Reclassifications and Eliminations Statement of Net Position Total $ $ $ $ 6,703 53,860 16,825 1,388 617,744 319,215 1,470,707 1,790,153 $ 66,285 1,049 256 7,587 947 2,653 78,777 - 7,001 279,266 286,267 4,889 4,889 $ 617,744 $ 2,076,420 $ 83,666 $ (1,526) $ 2,776,304 Liabilities Accounts Payable and Accrued Liabilities $ Claims Payable Due To Other Funds Advances from Other Funds Customer and Defendant Deposits Unearned Revenue Restricted Bond Interest Payable M atured Bonds Payable Pension and OPEB Long-term Liabilities Total Liabilities 38,792 261 495 7,956 51,637 9,300 46,609 155,050 $ 1,617,022 492,513 2,109,535 $ 3,761 44,661 770 35,182 914 85,288 $ (1,031) (495) (1,526) $ Deferred Inflows of Resources Unavailable Revenue Pension Total Deferred Inflows of Resources 18,461 18,461 (18,461) 40,829 22,368 1,407 1,407 - 42,236 42,236 444,233 (55,483) (3,029) - 385,721 617,744 $ 2,076,420 $ 83,666 (1,526) $ 2,776,304 Deferred Outflows of Resources Deferred Amounts on Refunding Pensions and OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Fund Balance/Net Position Total Fund Balance/Net Position Total Liabilities and Fund Balance/Net Position $ 478,013 9,415 1,728 45,409 1,031 495 2,877 231 $ (1,031) (495) - 544,298 10,464 1,984 45,409 7,587 4,055 (1,526) 6,703 53,860 16,825 1,388 319,215 1,473,360 2,485,148 - 7,001 284,155 291,156 42,553 44,661 7,956 51,637 9,300 46,609 1,652,204 493,427 2,348,347 39 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (1) Investment in joint ventures that are to be used in governmental activities are also reported in the governmental funds as expenditures as constructed. These assets are included in the statement of net position for the City as a whole. Investment in joint ventures $ 319,215 When capital assets (land, buildings, equipment, etc.) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds, and thus a reduction in fund balance. However, the statement of net position includes those capital assets among the assets of the City as a whole. Costs of capital assets Accumulated depreciation Total $ $ 2,584,433 (1,113,726) 1,470,707 Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period, and accordingly are not reported as fund liabilities in the governmental fund statement. Bonds payable Compensated absences Post-employment benefits Unamortized bond premiums Pension liability Total $ $ 450,885 28,503 769,201 13,125 847,821 2,109,535 Deferred outflows consist of items that will consume net position in a future reporting period(s) and do not meet the definition of an asset. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. The pension-related amounts result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and contributions made to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period. Deferred charge on refunding Pensions and OPEB Total $ $ 7,001 279,266 286,267 Deferred inflows relating to pensions represent a future acquisition of net position that is not reported in the funds. Deferred Inflows – Pensions & OPEB $ 40,829 40 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Prepaid expense consists of items that will consume net position in a future reporting period(s): Prepaid Cost of Issuance $ 231 Unavailable revenues shown on the governmental fund statements are not deferred on the statement of net position. Unavailable property tax revenues Unavailable special assessment revenue Receivables not yet collected Total $ $ (542) (16,832) (1,087) (18,461) (2) Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The assets, liabilities, deferred inflows and deferred outflows of the internal service funds are included in the governmental activities in the statement of net position, but are not included on the governmental funds balance sheet. Internal Service Funds total $ (3,029) 41 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government-wide Statement of Activities (in thousands): Re ve nue s and O the r Source s Revenues: Sales T axes Property T axes Occupancy T axes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Other Sources: T ransfers In Face Amount of Bonds Issued Premiums on Issuance of Bonds T otal Revenue and Other Sources Expe nditure s/Expe nse s and O the r Financing Use s Expenditures/Expenses: Current: General Government Public Safety Community Environment Cultural-Recreational Debt Service: Principal Interest on Bonds Service Charge Cost of Issuance Capital Outlay Other Financing Uses: T ransfers Out T otal Expenditures\Expenses & Other Financing Uses Net Change for the Year T otal Governmental Funds Long-term Revenues/ Expenses(1) Capital Related Items(2) Internal Service Funds(3) Long-term Debt (4) Eliminations (5) $ $ 98 2,130 251 $ $ $ $ 2,479 $ 14,602 $ 29,772 (18,361) (938) $ (19,299) 96,141 291,674 90,207 47,639 8,351 62,228 2,218 2,937 16,126 19,057 56,280 9,901 13,681 11,841 4,142 1,537 - 46,929 18,208 14 838 120,602 - (120,602) - 27,407 - - 739,659 75,734 (73,255) $ $ $ 219,932 44,970 2,564 1,661 24,126 277,396 40,489 9,253 14,026 2,295 9,487 163,801 18,361 938 829,299 89,640 $ $ 14,602 - 1,976 21,160 6,636 - $ 219,932 45,068 2,564 3,791 24,126 277,396 40,489 9,253 16,002 38,057 16,374 (27,407) (27,407) 136,394 $ 829,446 - $ 134,299 384,800 152,847 62,014 (46,929) (988) (231) - - 17,220 14 607 - - - (27,407) - (19,238) 31,201 (48,148) (27,407) 751,801 $ 33,840 $ (1,429) - $ 77,645 $ - Statement of Activities 28,849 $ $ $ 42 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (1) Revenues in the statement of activities that do not provide current financial resources include unavailable revenues. Revenues that are “unavailable” and do not provide current financial resources are not reported in the governmental funds. However, the subsequent collection of these revenues in the governmental funds will reduce the amount reported in the statement of activities. Property tax revenue Special assessment revenue Unavailable revenue Total $ $ 98 2,130 251 2,479 Some expenses 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. Accrual of long-term compensation absences $ OPEB Expense Pension Expense Total $ (767) 37,384 39,117 75,734 (2) When capital assets that are to be used in the governmental activities are purchased or constructed the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of the financial resources expended, whereas net position decreases by the amount of depreciation expense charged for the year. Capital outlay for capital assets Depreciation expense Total $ $ 85,108 (64,330) 20,778 The net effect of miscellaneous transactions involving capital assets (donations, transfers and disposals) and investment in joint venture activity is to increase net position. Change in equity interest for joint venture Loss on Disposal Total $ $ 13,349 (287) 13,062 (3) Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The adjustments for internal service funds “close” those funds by charging the additional amounts to participating governmental activities to completely cover the internal service funds’ costs for the year. Revenue and other sources Expenditures and other uses Change in net position $ $ 29,772 (31,201) (1,429) 43 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (4) Bond and note proceeds are reported as financing sources and the repayment of principal consumes financial resources in the governmental funds. Neither transaction has any effect on the statement of activities. Community Facilities District Bonds Principal repayments Total $ (18,361) 46,929 28,568 Governmental funds report bond premium, deferred amounts and prepaids relating to refunding when first issued. In the statement of activities these amounts are amortized. Amortization of deferred refunding amounts Amortization of bond premiums Premiums on bonds Prepaid bond issuance costs Amortization of bond issuance costs Total $ $ (963) 1,951 (938) 241 (10) 281 (5) Interfund transfers between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of transfers in and transfers out to eliminate the doubling up effect of these transactions within the governmental activities. Elimination of transfers to/from the Internal Service Funds is netted into the results of the Internal Service Funds in (3) above. Transfers out Transfers in Total $ $ (27,407) 27,407 - 44 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 3. FUND BALANCE As of June 30, 2020, the fund balance details by classification are listed below (in thousands): Fund Balances: Nonspendable: Prepaid Costs Nonspendable Sub-total General Fund $ 2,301 2,301 Non-Major Governmental Funds Total Governmental Funds $ $ 576 576 2,877 2,877 Restricted: Capital Projects Community Facility District Coronavirus Relief Court Debt Service Fire Library Police Spring Training & Tourism Transportation Programs Restricted Sub-total - 58,831 114 873 1,749 12,832 11,497 126 32,032 3,792 63,134 184,980 58,831 114 873 1,749 12,832 11,497 126 32,032 3,792 63,134 184,980 Committed To: Arts & Culture Capital Projects Cemetery Economic Development Environmental Compliance Fire Parks & Recreation Police Technology Vehicle Replacement Committed To Sub-total 667 45 8,799 10,399 19,910 1,477 26,726 7,882 17,857 117 1,966 7,841 63,866 1,477 26,726 8,549 45 17,857 8,799 117 10,399 1,966 7,841 83,776 Assigned To: Development Services Economic Development Fire General Government Parks & Recreation Police Sustainability Transit Assigned To Sub-total 279 4,651 398 34,639 846 1,470 148 84 42,515 786 786 279 4,651 398 35,425 846 1,470 148 84 43,301 Unassigned 130,342 (1,043) 129,299 Total Fund Balances $ 195,068 $ 249,165 $ 444,233 45 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 4. POOLED CASH AND INVESTMENTS Total Pooled City Cash and Investments at fair value are as follows (in thousands): Cash on Hand Carrying Amount of City Deposits Investment in Insured Cash Sweep Accounts Investments in Local Govt Invest Pool Cash with Custodian (1) Cash with Fiscal Agent (2) Long-Term Investments Total City Pooled Cash and Investments $ $ 137 27,097 15,827 132,772 20,000 117,784 529,545 843,162 (1) Represents cash sent by the City to Custodian on June 30, 2020 for investing purposes (2) Represents cash sent by the City to fiscal agents on June 30, 2020 for debt service payments due to bondholders on July 1, 2020. Deposits At year-end, the City’s cash totaled $27,234,550 which included $137,151 of petty cash. The carrying amount of the City’s deposits was $27,097,399 and the bank balance was $28,432,364. The difference of $1,334,965 represents outstanding checks and deposits in transit. Custodial Risk Cash deposits are subject to custodial risk. Custodial risk is the risk that in the event of bank failure, the City’s deposits may not be returned. To mitigate this risk, on July 1, 2014 Arizona House Bill 2619 Arizona Revised Statute (§35-1201 et. seq.) went into effect establishing a pooled collateral program for public deposits and creating a Statewide Collateral Pool Administrator (the “Administrator”) in the State Treasurer’s Office. The purpose of this Bill is to ensure that public deposits of governmental entities placed with participating banks are backed with collateral of 102% of the amount on deposit less applicable FDIC Deposit Insurance. The Administrator will monitor, audit and report on each bank’s compliance. Collateral under this program is pledged in the name of the Administrator and the City’s current bank is a participant in this program. The City’s cash balances on deposit as of June 30, 2020 are covered under House Bill 2619. Investments The City’s Investment Policy is consistent with the City Charter which authorizes the investment of City funds in accordance with Arizona Revised Statute §35-323. These investments include obligations of the U.S. Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase agreements, obligations of the State of Arizona or any of its counties or incorporated cities, towns or duly organized school districts, improvement districts in this state, State Treasurer’s Investment Pool, and investment grade corporate bonds, debentures, notes and other evidence of indebtedness issued or guaranteed by solvent U.S. corporations which are not in default as to principal or interest. Interest Rate Risk The City’s investment policy for limiting its exposure from rising interest rates complies with Arizona Revised Statute §35-323, which limits investments of public monies to maturities of five years or less. 46 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City’s investment policy for credit risk complies with Arizona Revised Statute §35-323. The City’s portfolio is primarily invested in securities issued by the U.S. Treasury and by U.S. Government agencies that carry a minimum “A” or better rating, at the time of purchase, from Moody’s or Standard & Poor’s or other nationally recognized rating agency. The City’s portfolio also invests in Corporate Notes rated “A” or better by Moody’s or Standard & Poor’s and participates in the State Treasurer’s Investment Pool (LGIP), which is overseen according to Arizona State Statute by the State Board of Investment. Within the State Treasurer’s Investment Pools, the City participates in Investment Pool 7. Pool 7 is a short-term fund which invests only in products backed by the full faith and credit of the United States Government. The Pool carries a weighted average credit rating of AAA. The City also maintains short-term investments in FDIC Insured Cash Sweep Accounts held by one local bank. The City invests in its own Special Improvement District bonds that have no credit rating. Associated with credit risk is concentration of credit risk and custodial credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. Custodial credit risk is the risk that in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City's investments had the following credit risk structure as of June 30, 2020 (in thousands): S&P Investment Type Fair value Rating U.S. Treasuries AA+ $ 238,150 U.S. Agencies AA+ 166,653 U.S Agency Collateralized Mortgage Obligation AA+ 3,593 U.S Treasury & Agency Short Term Obligation AA+ 929 Corporate Notes AA+ 4,574 Corporate Notes A24,933 Corporate Notes A 18,136 Corporate Notes AA8,704 Corporate Notes A+ 16,249 Corporate Notes AA 4,826 Corporate Notes BBB+ 12,850 Corporate Notes NR* 2,498 Corporate Notes BBB2,353 Negotiable Certificate of Deposit A 2,339 Negotiable Certificate of Deposit A-1 7,963 Negotiable Certificate of Deposit AA4,810 Negotiable Certificate of Deposit A+ 2,396 Negotiable Certificate of Deposit A-1+ 1,979 First American Gov't Obligation MM Fund AAAm 5,386 City of Mesa Special Imp District Bonds NR 224 Total $ 529,545 47 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Fair Value of Investments The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines 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. At June 30, 2020, the City had the following recurring fair value measurements (in thousands): Fair Value Measurements Using: Fair Value 6/30/2020 Level 1 Level 2 Level 3 $ $ - $ 404,803 $ 929 - 929 - Federal Agency Collateralized Mortgage Obligations 3,593 - 3,593 - Corporate Notes 95,124 - 95,124 - Negotiable Certificates of Deposit 19,486 - 19,486 - - 224 $ 524,159 Investment by Fair Value Level Debt Securities U.S. Treasuries & Agencies U.S. Treasury & Agency Short Term Obligation City of Mesa Special Improvement District Bonds Total Debt Securities at Fair Value $ 404,803 224 524,159 $ $ - - Investments Measured at Fair Value Arizona State Treasurers Investment Pool 7 132,772 First American Gov't Obligation MM Fund 5,386 Total Investments Measured At Fair Value $ 662,317 Amortized Cost Securities FDIC Insured Cash Sweep Money Market Funds $ 15,827 Debt securities classified in Level 2 are valued using quoted prices for similar securities in active markets. Investments valued using the net asset value (NAV) per share (or its equivalent) are City investments in Arizona State Treasurers Investment Pool (LGIP) and unlike more traditional investments, generally do not have readily obtainable fair values. Investments valued at NAV utilized Net Asset Values as provided by State of Arizona Treasurer’s Office at June 30, 2020. 48 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City’s investment maturities on June 30, 2020 are as follows (in thousands): Investment Maturities (in Years) Investment T ype Fair Value Less T han 1 U.S. T reasuries & Agencies $ 404,803 $ U.S. T reasury & Agency Short T erm Obligation 31,097 929 1-2 2-3 More than 3 $ 147,857 $ 201,513 $ 24,336 929 3,593 Corporate Notes 95,124 7,596 55,707 26,561 3,593 Negotiable Certificates of Deposit 19,486 9,941 2,339 7,206 First American Gov't Obligation MM Fund 5,386 5,386 224 $ 529,545 224 55,173 $ 76.44% 0.18% Federal Agency Collateralized Mortgage Obligations City of Mesa Special Imp District Bonds T otal Concentration of Credit Risk % 0.68% 5,260 17.96% 3.68% 1.02% $ 205,903 $ 238,873 $ 29,596 0.04% 100.00% On June 30, 2020 the following investments had callable dates: Corporate Notes 3M Date Fair Value 2/1/2022 $ 732 American Express Credit 4/20/2022 23,440 Bank of America 10/1/2020 2,234 Chevron Cisco Systems Citigroup Exxon Mobil Goldman Sachs US Bancorp United Parcel Service General Dynamics Honeywell JP Morgan Chase PNC Financial Services Charles Schwab 2/3/2022 8/20/2021 11/8/2021 1/6/2022 4/26/2021 2/15/2022 4/16/2022 4/15/2023 7/8/2022 4/1/2022 11/9/2021 4/21/2021 1,161 2,035 1,159 1,542 1,267 2,427 932 950 1,024 3,215 1,190 1,263 U.S. Treasuries & Agencies Federal Farm Credit Banks Federal Farm Credit Banks Federal Farm Credit Banks Federal Farm Credit Banks Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Date 7/21/2020 8/4/2020 4/22/2021 7/21/2020 10/30/2020 10/29/2020 10/21/2020 10/23/2020 Fair Value $ 2,000 2,500 3,002 4,000 4,000 4,000 2,000 4,000 49 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 5. ACCOUNTS RECEIVABLE AND DUE FROM OTHER GOVERNMENTS Accounts receivable are recorded in the various funds and displayed in the financial statements net of an allowance for uncollectible accounts as follows (in thousands): Fund Governmental Activities: General Fund: Other Customers Due from Other Governments: Non-Major Governmental Funds: Other Customers Restricted-Spec. Assessments Restricted-Due from Other Governments Due from Other Governments Sales Tax Revenues Other Internal Service Funds: Premiums Other Customers Total Governmental Activities Receivables Allowance 7,439 21,065 (5,459) 1,980 21,065 7,435 16,825 1,388 - 7,435 16,825 1,388 16,042 8,302 $ Business-Type Activities: Utility Customers Other Customers Due from Other Governments Total Business-type Activities $ $ 197 852 79,545 36,532 5,092 2,300 43,924 Net 16,042 8,302 $ $ $ (5,459) 197 852 $ 74,086 (1,857) (111) (1,968) $ 34,675 4,981 2,300 $ 41,956 Unbilled Accounts Receivable Unbilled utility service receivables are recorded in the year in which the services are provided. At June 30, 2020, unbilled utility service receivables are recorded in the Enterprise Fund as follows (in thousands): Electric $ 2,218 Gas 1,123 Water 9,385 Wastewater 4,496 Solid Waste 2,923 $ 20,145 50 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Additionally, governmental and business-type funds record unearned revenue when resources have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable and unearned revenue reported were as follows (in thousands): Unearned Revenue Advance ticket sales Grants received prior to meeting all eligibility requirements Amounts paid in advance Unavailable Revenue Receivables not yet collected Delinquent Property Taxes Special Assessments not yet due Governmental Activities General Non-Major Fund Funds $ 186 $ 10 1,518 $ 1,704 49,850 73 49,933 $ General Fund $ 737 $ 737 Non-Major Funds $ 350 542 16,832 $ 17,724 Business Type Activities Enterprise Funds $ 220 $ 483 703 6. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The following interfund activities are included in the fund financial statements at June 30, 2020 (in thousands): Fund General Fund Non-major Governmental Funds Proprietary Funds Total Governmental Funds Due from Other Funds $ 1,031 1,031 Due to Other Funds $ 261 770 1,031 Interfund balances at June 30, 2020 are short-term loans used to cover temporary cash deficits in various funds and are expected to be repaid within one year. 51 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Fund Governmental Funds: Ambulance Transport Public Safety Sales Tax Total Governmental Funds Advances to Other Funds Advances from Other Funds 495 495 495 495 The Advances at June 30, 2020 are an advance from the Public Safety Sales Tax Fund to the Ambulance Transport Fund for property acquisition. The advances outstanding at June 30, 2020 are not expected to be repaid within one year. Transfers In The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2020 (in thousands): Transfers Out Non-major General Governmental Enterprise Funds Fund Fund Fund Total General Fund $ $ 331 $ 133,753 $ 134,084 Non-major Governmental Funds 26,699 3,018 29,717 Enterprise Fund 377 377 Total $ 27,076 $ 331 $ 136,771 $ 164,178 The transfer from business-type activities to governmental activities on the government-wide statement of activities is a $122,802,000 operational subsidy from the Enterprise Fund to the General Fund. The remaining interfund transfers generally fall within one of the two following categories: 1) debt service payments made from a debt service fund but funded from an operating fund; and 2) subsidy transfers. Other items transferred from the Enterprise Fund to the Governmental Funds that don’t fall into the above categories include proceeds from a land sale and the operations of non-utility funds. 52 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 7. CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2020 follows (in thousands): Governmental Activities: Non-depreciable Assets: Land Infrastructure Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Depreciable Assets Less Accumulated Depreciation for: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Accum. Depreciation Total Depreciable Assets, net Governmental Activities Capital Assets, net Balance July 1, 2019 Additions Retirements Balance June 30, 2020 $ 391,527 3,585 138,136 533,248 $ 13,510 12 90,826 104,348 $ $ 351,749 210,596 218,096 23,397 1,176,299 1,980,137 1,945 11,748 13,757 728 19,469 47,647 (813) (1,605) (79) (2,497) 353,694 221,531 230,248 24,125 1,195,689 2,025,287 (116,408) (116,526) (155,334) (23,220) (649,183) (1,060,671) 919,466 (7,161) (7,224) (13,999) (485) (35,724) (64,593) (16,946) 631 1,501 79 2,211 (286) (123,569) (123,119) (167,832) (23,705) (684,828) (1,123,053) 902,234 $1,452,714 $ 87,402 $ (66,756) $ 1,473,360 (3,488) (62,982) (66,470) 401,549 3,597 165,980 571,126 Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statements as follows (in thousands): General Government Public Safety Community Environment Cultural-Recreational Capital assets held by the City's Internal Service funds are charged to the various functions based on their usage of assets $ 6,502 11,497 36,741 9,590 263 $64,593 53 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Business-type Activities: Non-depreciable Assets: Land Water Rights Collections of Art Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Depreciable Assets Less Accumulated Depreciation for: Buildings Other Improvements Machinery & Equipment Intangibles Infrastructure Total Accum. Depreciation Total Depreciable Assets, net Business-type Activities Capital Assets, net Balance July 1, 2019 Additions Retirements Balance June 30, 2020 $ $ $ $ 32,234 17,560 106 145,736 195,636 60,168 60,168 (49,053) (49,053) 32,234 17,560 106 156,851 206,751 121,807 136,607 101,424 27,549 2,001,333 2,388,720 2,470 1,894 7,463 48,255 60,082 (990) (1,274) (2,264) 124,277 138,501 107,897 27,549 2,048,314 2,446,539 (34,199) (63,272) (63,924) (23,397) (900,649) (1,085,441) 1,303,279 (2,778) (4,337) (7,008) (127) (61,206) (75,456) (15,374) 990 699 1,689 (575) (36,977) (67,609) (69,942) (23,524) (961,156) (1,159,208) 1,287,331 $1,498,916 $ 44,794 $ (49,628) $ 1,494,082 Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statements as follows (in thousands): Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling $ $ 3,287 4,300 37,346 18,978 3,191 2,321 118 286 1,796 3,424 409 75,456 54 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Construction in progress and related construction commitments are composed of the following (in thousands): Governmental Activities General Government Public Safety Community Environment Cultural-Recreational Warehouse, Maintenance & Services Total Business-type Activities Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Spring Training Total Construction in Progress Commitments $ $ $ 134,043 14,554 12,459 4,505 419 165,980 $ 56,288 2,005 3,035 2,723 64,051 Construction in Progress Commitments $ $ $ 16,868 29,338 52,564 48,909 2,121 6,325 628 98 156,851 $ 6,793 2,232 9,773 4,019 3,373 481 54 292 50 27,067 55 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 8. LONG-TERM OBLIGATIONS a. Changes in Long-Term Obligations The following is a summary of changes in long-term obligations (in thousands). Governmental Activities: Bonds Payable: General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds with Governmental Commitment Community Facility District Total Bonds Payable Beginning Balances Additions Reductions $ $ $ 370,479 67,905 - (35,870) (9,155) Amounts Due Within One Year Ending Balances $ 334,609 58,750 $ 20,407 9,645 438 40,631 479,453 18,361 18,361 (219) (1,685) (46,929) 219 57,307 450,885 219 1,683 31,954 14,138 30,086 523,677 938 23,078 42,377 (1,951) (23,747) (72,627) $ 13,125 29,417 493,427 2,654 34,608 (36,350) (40) (49,025) (85,415) $ 1,242,670 151 1,242,821 (143) (13,144) (3,779) (102,481) 1,431 72,007 4,563 $ 1,320,822 Unamortized Premiums Compensated Absences Governmental Activities Total $ Business-type Activities: Bonds Payable: Revenue Bonds General Obligation Bonds Excise Tax Revenue Obligations Total Bonds Payable $ 1,279,020 191 49,025 1,328,236 Notes Payable Unamortized Bond Premiums Compensated Absences Business-type Activities Total 1,574 85,151 4,497 $ 1,419,458 $ $ $ - 3,845 3,845 $ $ $ $ $ $ 39,680 43 39,723 146 409 40,278 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for internal service funds are included as part of the above totals for governmental activities. At year-end, $914,000 of internal service funds compensated absences are included in the above amounts. For governmental activities, compensated absences are generally liquidated by the general fund. 56 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 b. Bonds Payable At June 30, 2020, long-term bonds payable consisted of: Classified in Governmental Activities on the government-wide financial statements: General Obligation Bonds Bonds Outstanding (In Thousands) $15,915,000 2007 general obligation serial bonds, (partially refunded by 2016 general obligation refunding bonds), due in annual installments ranging from $615,000 to $5,500,000, plus semi-annual interest ranging from 4.125 percent to 6.0 percent through July 1, 2022. $ 1,400 $15,450,000 2008 general obligation serial bonds, (partially refunded by 2017 general obligation refunding bonds), due in annual installments ranging from $375,000 to $6,675,000, plus semi-annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2021. 625 $30,865,000 2010 general obligation bonds due in annual installments ranging from $1,115,000 to $13,225,000, plus semi-annual interest ranging from 4.75 percent to 5.85 percent through July 1, 2030. 29,750 $29,320,000 2011 general obligation serial bonds due in annual installments ranging from $800,000 to $6,825,000, plus semi-annual interest ranging from 2 percent to 4.25 percent through July 1, 2031. 17,675 $27,290,000 2012 general obligation serial bonds due in annual installments ranging from $840,000 to $8,550,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2032. 20,150 $31,665,000 2012 general obligation refunding serial bonds due in annual installments ranging from $270,000 to $7,620,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2022. 4,515 $8,915,000 2013 general obligation refunding serial bonds due in annual installments ranging from $30,000 to $3,250,000, plus semi-annual interest ranging from .7 percent to 5 percent through July 1, 2024. 7,590 $59,960,000 2013 general obligation serial bonds due in annual installments ranging from $1,635,000 to $12,675,000, plus semi-annual interest ranging from 1.5 percent to 4 percent through July 1, 2033. 45,700 $37,550,000 2014 general obligation serial bonds due in annual installments ranging from $1,050,000 to $5,575,000, plus semi-annual interest ranging from 2 percent to 3.6 percent through July 1, 2034. 26,175 57 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 $13,690,000 2015 general obligation serial bonds due in annual installments ranging from $250,000 to $6,700,000, plus semi-annual interest ranging from 2 percent to 5 percent through July 1, 2035. $ 5,915 $37,700,000 2016 general obligation serial bonds due in annual installments ranging from $825,000 to $2,775,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2036. 32,525 $20,475,000 2016 general obligation refunding serial bonds due in annual installments ranging from $60,000 to $5,300,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2027. 20,235 $22,935,000 2016 taxable general obligation refunding serial bonds due in annual installments ranging from $1,000,000 to $3,565,000, plus semiannual interest ranging from 0.85 percent to 3 percent through July 1, 2029. 16,479 $47,180,000 2017 general obligation serial bonds due in annual installments ranging from $1,500,000 to $5,725,000, plus semi-annual interest ranging from 3 percent to 3.25 percent through July 1, 2037. 38,405 $47,450,000 2017 general obligation refunding serial bonds due in annual installments ranging from $50,000 to $9,920,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2029. 44,055 $16,120,000 2018 general obligation serial bonds due in annual installments ranging from $275,000 to $8,795,000, plus semi-annual interest ranging from 3 percent to 4 percent through July 1, 2038. 7,050 $33,065,000 2019 general obligation serial bonds due in annual installments ranging from $640,000 to $16,700,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2039. Total General Obligation Bonds $ 16,365 $ 334,609 Street and Highway User Revenue Bonds $9,585,000 2004 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2005), due in annual principal installments ranging from $100,000 to $225,000, plus semi-annual interest ranging from 4.00 percent to 5.00 percent through July 1, 2022. $23,800,000 2005 street and highway user revenue refunding bonds, due in annual principal installments ranging from $25,000 to $8,000,000, plus semi-annual interest ranging from 2.75 percent to 5.0 percent through July 1, 2023. $ 375 8,000 58 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 $10,225,000 2005 street and highway user revenue bonds, partially refunded by street and highway users revenue refunding bond series 2013, due in annual principal installments ranging from $50,000 to $8,500,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2023. $ 400 $11,675,000 2006 street and highway user revenue bonds, partially refunded by street and highway users revenue refunding bond series 2015, due in annual installments ranging from $850,000 to $9,850,000, plus semi-annual interest ranging from 4.50 percent to 5.25 percent through July 1, 2024. 1,825 $10,675,000 2007 street and highway user revenue bonds, partially refunded by street and highway users revenue refunding bond series 2015, due in annual principal installments ranging from $1,000,000 to $3,900,000, plus semi-annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2025. 3,000 $36,090,000 2012 street and highway user revenue refunding bonds, due in annual installments ranging from $665,000 to $9,700,000, plus semiannual interest ranging from 3.0 percent to 5.0 percent through July 1, 2022. 19,095 $8,500,000 2013 street and highway user revenue refunding bonds, due in one installment of $8,500,000 plus semi-annual interest of 5 percent through July 1, 2024. 8,500 $17,555,000 2015 street and highway user revenue refunding bonds, due in annual installments ranging from $15,000 to $9,880,000 plus semiannual interest of 3 to 5 percent through July 1, 2027. $ 17,555 Total Street and Highway User Revenue Bonds $ 58,750 Special Assessment Bonds (payable from special assessments levied on the benefited properties) $5,025,000 2005 special assessment district bonds, due in annual principal installments of $219,000, plus semi-annual interest of 5.80 percent, through January 1, 2021. $ 219 Community Facilities District $2,712,000 2013 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 1 Special Assessment Revenue Bonds, due in annual principal installments ranging from $62,000 to $180,000, plus semi-annual interest ranging from 2 percent to 5.25 percent through July 1, 2038. $ 2,080 59 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 $3,250,000 2014 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $65,000 to $225,000, plus semi-annual interest ranging from 3 percent to 5 percent through July 15, 2038. $ 2,750 $3,367,000 2014 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 2 Special Assessment Revenue Bonds, due in annual principal installments ranging from $85,000 to $225,000, plus semi-annual interest ranging from 2 percent to 5.375 percent through July 1, 2039. 2,732 $1,942,000 2015 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 3 Special Assessment Revenue Bonds, due in annual principal installments ranging from $52,000 to $135,000, plus semi-annual interest ranging from 2.3 percent to 5.2 percent through July 1, 2039. 1,685 $6,800,000 2015 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $165,000 to $680,000, plus semi-annual interest ranging from 4 percent to 5 percent through July 15, 2039. 5,890 $970,000 2015 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 4 Special Assessment Revenue Bonds, due in annual principal installments ranging from $15,000 to $65,000, plus semi-annual interest ranging from 2 percent to 5 percent through July 1, 2040. 765 $1,060,000 2016 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 5 Special Assessment Revenue Bonds, due in annual principal installments ranging from $30,000 to $70,000, plus semi-annual interest ranging from 1.85 percent to 4.75 percent through July 1, 2040. 914 $502,000 2017 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 6 Special Assessment Revenue Bonds, due in annual principal installments ranging from $7,000 to $35,000, plus semi-annual interest ranging from 3.5 percent to 5.25 percent through July 1, 2041. 460 $8,160,000 2017 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $215,000 to $510,000, plus semi-annual interest ranging from 2 percent to 5 percent through July 15, 2042. 7,415 $1,326,500 2017 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 7 Special Assessment Revenue Bonds, due in annual principal installments ranging from $36,500 to $85,000, plus semi-annual interest ranging from 2 percent to 4.5 percent through July 1, 2042. 1,252 60 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 $770,000 2018 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 8 Special Assessment Revenue Bonds, due in annual principal installments ranging from $21,000 to $49,000, plus semi-annual interest ranging from 2.5 percent to 4.5 percent through July 1, 2042. $ 711 $368,000 2018 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 9 Special Assessment Revenue Bonds, due in annual principal installments ranging from $8,000 to $24,000, plus semi-annual interest ranging from 2.85 percent to 4.75 percent through July 1, 2042. 345 $10,830,000 2018 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $240,000 to $1,240,000, plus semi-annual interest ranging from 3.75 percent to 5.0 percent through July 15, 2043. 9,350 $969,000 2018 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 11 Special Assessment Revenue Bonds, due in annual principal installments ranging from $24,000 to $65,000, plus semi-annual interest ranging from 3.00 percent to 5.00 percent through July 1, 2043. 945 945 $287,000 2019 Cadence Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 2 Special Assessment Revenue Bonds, due in annual principal installments ranging from $7,000 to $20,000, plus semi-annual interest ranging from 3.25 percent to 4.50 percent through July 1, 2043. 280 $1,883,000 2019 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 10 Special Assessment Revenue Bonds, due in annual principal installments ranging from $48,000 to $130,000, plus semi-annual interest ranging from 2.75 percent to 5.20 percent through July 1, 2043. 1,822 $261,000 2019 Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $5,000 to $16,000, plus semi-annual interest ranging from 2.00 percent to 5.00 percent through July 15, 2043. 240 $2,012,000 2019 Cadence Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 1 Special Assessment Revenue Bonds, due in annual principal installments ranging from $55,000 to $130,000, plus semi-annual interest ranging from 2.25 percent to 4.50 percent through July 1, 2043. 1,929 $1,235,000 2019 Second Series, Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds, due in annual principal 61 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 installments ranging from $35,000 to $350,000, plus semi-annual interest ranging from 3.00 percent to 4.00 percent through July 15, 2044. $ 1,200 $14,120,000 2019 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $285,000 to $3,950,000, plus semi-annual interest ranging from 3.00 percent to 4.00 percent through July 15, 2044. 13,835 $707,000 2020 Eastmark Community Facilities District No. 2 (City of Mesa, Arizona) Assessment District "A" Special Assessment Revenue Bonds, due in annual principal installments ranging from $20,000 to $270,000, plus semi-annual interest ranging from 2.00 percent to 4.00 percent through July 1, 2044. 707 Total Community Facilities District Bonds Total bonds payable recorded in governmental activities $ 57,307 $ 450,885 Classified in Business-type Activities on the government-wide financial statements: General Obligation Bonds $516,840 2012 general obligation refunding serial bonds, due in annual principal installments ranging from $15,399 to $269,748, plus semiannual interest ranging from 2 percent to 4 percent through July 1, 2022. $ $105,501 2016 general obligation refunding serial bonds, due in annual principal installments ranging from $4,600 to $16,399, plus semi-annual interest ranging from .85 percent to 3 percent through July 1, 2029. 75 76 Total General Obligation Bonds $ 151 Utility Systems Revenue Bonds $64,625,000 2004 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) and 2016 utility systems revenue refunding bonds), due in annual principal installments ranging from $1,125,000 to $11,000,000, plus semi-annual interest ranging from 5.00 percent to 6.00 percent through July 1, 2022. $91,200,000 2005 utility systems revenue serial bonds, (partially refunded by 2006, 2012 & 2016 utility systems revenue refunding bonds), due in annual principal installments ranging from $750,000 to $24,000,000, plus semi-annual interest ranging from 4.125 percent to 5.0 percent through July 1, 2023. $ 2,250 10,750 $105,400,000 2006 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2), 2014, 2016, 2017 and 2018 utility systems revenue refunding bonds), due in annual principal installments ranging 62 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 from $8,650,000 to $36,750,000, plus semi-annual interest ranging from 4.375 percent to 5.0 percent through July 1, 2024. $ 7,595 $61,300,000 2006 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $2,075,000 to $18,000,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2021. 18,000 $127,260,000 2006 (Series 2) utility systems revenue refunding serial and term bonds, (partially refunded by 2017 utility systems revenue refunding bonds), due in annual principal installments ranging from $50,000 to $25,845,000, plus semi-annual interest ranging from 4.0 percent to 5.25 percent through July 1, 2024. 53,670 $65,550,000 2007 utility systems revenue serial bonds, (partially refunded by 2016 and 2017 utility systems revenue refunding bonds), due in annual principal installments ranging from $2,500,000 to $41,800,000, plus semiannual interest ranging from 4.25 percent to 6.25 percent through July 1, 2025. 6,315 $52,875,000 2008 utility systems revenue serial bonds, (partially refunded by 2016 and 2018 utility systems revenue refunding bonds), due in annual principal installments ranging from $700,000 to $44,675,000, plus semiannual interest ranging from 4.875 percent to 5.25 percent through July 1, 2029. 2,125 $50,380,000 2010 utility systems revenue serial bonds, due in one principal installment, plus semi-annual interest of 6.10 percent through July 1, 2034. 50,380 $53,950,000 2011 utility systems revenue serial bonds, due in one principal installment, plus semi-annual interest of 5.0 percent through July 1, 2035. 53,950 $67,300,000 2012 utility systems revenue serial bonds, due in one principal installment, plus semi-annual interest of 4.0 percent through July 1, 2036. 67,300 $31,580,000 2012 utility systems revenue refunding serial bonds, (partially refunded by 2017 utility systems revenue refunding bonds), due in annual principal installments ranging from $7,440,000 to $9,150,000, plus semi-annual interest ranging from 4.0 percent to 5 percent through July 1, 2021. 7,465 $47,290,000 2013 utility systems revenue bonds, due in one principal installment plus semi-annual interest of 4.0 percent through July 1, 2037. 47,290 $36,385,000 2014 utility systems revenue bonds, due in two principal installments of $20,000,000 and $16,385,000, plus semi-annual interest of 4.0 percent through July 1, 2038. 36,385 63 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 $102,945,000 2014 utility systems revenue refunding serial bonds, (partially refunded by 2018 utility systems revenue refunding bonds) due in annual principal installments ranging from $475,000 to $31,345,000, plus semi-annual interest ranging from 2 percent to 4 percent through July 1, 2030. $ 95,775 $30,220,000 2015 utility systems revenue bonds, due in principal installments ranging from $1,000,000 to $2,375,000, plus semi-annual interest of 2 percent to 5 percent through July 1, 2039. 29,220 $90,500,000 2016 utility systems revenue serial bonds, due in annual principal installments ranging from $1,000,000 to $22,550,000, plus semiannual interest ranging from 3 percent to 5 percent through July 1, 2040. 89,500 $138,035,000 2016 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $3,375,000 to $44,890,000, plus semi-annual interest ranging from 4 percent to 5 percent through July 1, 2032. 138,035 $123,875,000 2017 utility systems revenue serial bonds, due in annual principal installments ranging from $2,000,000 to $18,900,000, plus semiannual interest ranging from 3 percent to 5 percent through July 1, 2041. 123,875 $75,435,000 2017 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $885,000 to $26,565,000, plus semi-annual interest of 4 percent through July 1, 2028. 75,435 $112,120,000 2018 utility systems revenue serial and term bonds, due in annual principal installments ranging from $3,000,000 to $12,825,000, plus semi-annual interest ranging from 3 percent to 5 percent through July 1, 2042. 106,120 $93,825,000 2019A utility systems revenue serial and term bonds, due in annual principal installments ranging from $850,000 to $13,455,000, plus semi-annual interest of 5 percent through July 1, 2043. 90,825 $54,225,000 2019B utility systems revenue refunding serial bonds, due in annual principal installments ranging from $200,000 to $42,420,000, plus semi-annual interest 3 percent to 5 percent through July 1, 2033. 54,025 $79,335,000 2019C utility systems revenue refunding serial bonds, due in annual principal installments ranging from $2,950,000 to $7,800,000 plus semi-annual interest of 5 percent through July 1, 2035. Total Utility Systems Revenue Bonds $ 76,385 $ 1,242,670 Total bonds payable recorded in business-type activities $ 1,242,821 64 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The following tables summarize the City’s debt service requirements to maturity for its long-term bonds payable at June 30, 2020 (in thousands). The deferred amounts on refundings are not included. Governmental Activities General Obligation Bonds Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Principal $ 20,407 21,121 21,820 22,654 24,290 129,217 80,470 14,630 Interest $ 11,635 10,953 10,257 9,511 8,743 29,917 8,607 819 TOTALS $ 334,609 $ 90,442 Highway User Revenue Bonds Total 32,042 32,074 32,077 32,165 33,033 159,134 89,077 15,449 Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 $ 425,051 TOTALS $ $ Principal 9,645 10,075 10,000 10,490 10,880 7,660 - $ 58,750 S pecial Assessment Bonds Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 TOTALS Principal $ 219 - Interest $ 6 - $ $ 219 6 $ $ $ 9,520 Total 12,441 12,390 11,812 11,802 11,665 8,160 - $ 68,270 Community Facilities District Total 225 - Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 225 TOTALS $ Interest $ 2,796 2,315 1,812 1,312 785 500 - $ Principal 1,683 1,747 1,812 1,878 1,965 11,067 13,659 15,686 7,810 $ 57,307 Interest $ 2,420 2,364 2,303 2,238 2,171 9,632 7,063 3,624 647 $ 32,462 $ $ Total 4,103 4,111 4,115 4,116 4,136 20,699 20,722 19,310 8,457 89,769 Business-type Activities General Obligation Bonds Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 TOTALS Principal $ 43 44 5 5 5 49 $ 151 Interest Revenue Bonds Total $ 5 3 2 2 1 3 - $ 48 47 7 7 6 52 - Fiscal Year 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 2041-2045 $ 16 $ 167 TOTALS $ $ Principal 39,680 44,200 44,735 42,990 48,340 271,635 332,995 333,410 84,685 Interest $ 53,312 51,355 49,135 46,909 44,769 191,243 129,380 54,436 6,544 1,242,670 $ 627,083 $ $ Total 92,992 95,555 93,870 89,899 93,109 462,878 462,375 387,846 91,229 1,869,753 65 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $150,970 of these bonds at June 30, 2020 is carried as a liability of the Enterprise Fund to reflect the intention of retirement from resources of that fund. All bonds, except Special Assessment Bonds, are callable by the City at various dates and at various premiums. The Arizona Constitution provides that the general obligation bonded indebtedness of a city for general municipal purposes may not exceed 6 percent of the secondary assessed valuation of the taxable property in that city. In addition to the 6 percent limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20 percent of the secondary assessed valuation for supplying such city with water, artificial light or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreation facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. General obligation bonds of community facilities districts are not subject to or included in this calculation. The total debt margin available July 1, 2020 is (in thousands): 6% Bonds 20% Bonds Total Available $ 284,664 615,772 $ 900,436 Special Assessment Bonds The City acts as trustee for Special Assessment districts whereby it collects special assessments levied against owners of property within established districts and disburses the amounts collected to retire bonds issued to finance improvements. The improvement bonds are collateralized by these properties. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment revenues collected by the City are pledged to repay $9.1 million of improvement bonds issued since 2005. Proceeds from the bonds are used to finance improvements that property owners have agreed to pay. In the event of default by the property owner, an auction sale may be enforced by the City. If collections and auction proceeds are not sufficient to retire outstanding bonds, the City is contingently liable. These bonds are payable through 2021. Annual principal and interest payments on the bonds are expected to be covered 100% with collections from the property owners. The total principal and interest remaining to be paid on the bonds is $225,351. Principal and interest paid for the current year and total assessments collected were $238,053, and $288,508, respectively. Community Facilities Districts Special Assessment and General Obligation Bonds Community Facilities District Special Assessment and General Obligation Bonds are issued by Community Facilities Districts (CFDs), which are special purpose districts created specifically to acquire and improve public infrastructure in specified land areas. The City has no liability for CFD bonds. 66 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 CFD general obligation bonds are repaid by ad valorem taxes levied directly by the districts and collected by the county. Property owners in the districts are assessed for district taxes and thus for all costs associated with the districts. As of June 30, 2020, total principal and interest outstanding for CFD general obligation bonds was $63,230,913. CFD special assessment bonds are collateralized by properties within established districts. In the event of default by the property owner, the CFD may enforce an auction sale to satisfy the debt service requirements of the assessment bonds. At June 30, 2020, the special assessments receivable for CFDs, together with amounts paid in advance and interest to be received over the life of the assessment period, is adequate for the scheduled maturities of the bonds payable and the related interest. The total principal and interest remaining to be paid on the bonds is $26,538,174. Principal and interest paid for the current year and total assessments collected were $1,374,912, and $1,372,570 respectively. Utility System Revenue Bonds City revenue bond indenture ordinances require that the net amount of revenues of the electric, gas, water, wastewater and solid waste systems (total revenues less operations and maintenance expenses) equal 120 percent of the principal and interest requirement in each fiscal year. The above covenant and all other bond covenants have been met. Pursuant to the provisions of the Bond Resolution of the City of Mesa Utility System Revenue and Refunding bonds, Replacement and Reserve Funds are required to be established, into which a sum equal to 2 percent of the gross revenues – as determined on a modified accrual basis – must be deposited until a sum equal to 2 percent of all tangible assets of the Utility System is accumulated. For the year ended June 30, 2020, the amount provided in the Replacement and Extension Funds equaled $7,464,481 which is in compliance with the bond provisions. As of June 30, 2020, the amount available is $34,663,589. c. Notes Payable Business Type Activities The City entered into four separate loan agreements with the Water Infrastructure Finance Authority of Arizona. The purposes of the loans are to make improvements and upgrades to existing water and wastewater projects. The loans utilize funds from the United States Environmental Protection Agency pursuant to the Federal American Reinvestment and Recovery Act of 2009. Subject to the City meeting the required specifications of the loan documents, two of the loans include a combined interest and fee rate subsidy and the two remaining loans include a principal forgiveness portion. Total principal (without principal forgiveness) is $3,486,902 and the loans have a 20-year repayment period. The total principal forgiveness is $626,000. Total interest over the 20 years with principal forgiveness and the combined interest and fee rate subsidy is $635,736. The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2020 (in thousands): 67 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Fiscal Year 2021 2022 2023 2024 2025 2026-2030 Totals Business-type Activities Interest Principal & Fees Total $ 146 $ 31 $ 177 149 28 177 153 25 178 156 22 178 159 18 177 668 38 706 $ 1,431 $ 162 $ 1,593 d. Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2020. e. Series 2012 Special Activity Revenue Bonds PMGAA issued $19,220,000 in special facility Revenue Bonds on February 29, 2012. The City has entered into a memorandum of understanding (MOU) with PMGAA and Able Engineering and Component Services for the development, construction and lease of an aircraft maintenance repair and overhaul facility at Phoenix-Mesa Gateway Airport. In general, the MOU addresses PMGAA issuing Special Facility Revenue Bonds, constructing the facility and leasing the facility to the City. The City, in turn, will sublease the facility to Able Engineering. The City pledged a portion of its excise taxes as security for payment of the base rent. The pledge of such excise taxes will be a junior lien subordinate to certain outstanding senior obligations. The bonds are payable from the future revenues from the City through 2038. During that time frame, total principal and interest to be paid on the bonds will be $35,216,300. The bonds are not considered the debt of the City. f. Pledged Revenues Utility System Revenue Bonds The City has pledged future utility customer revenues, net of specified operating expenses, to repay approximately $1.24 billion in utility system revenue bonds issued since 2004. Proceeds from the bonds provided financing for the construction of various utility related projects including new gas pipelines and water and wastewater treatment plants. The bonds are payable solely from utility customer net revenues and are payable through 2043. Annual principal and interest payments on the bonds were 62.3 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $1.862 billion. Principal and interest paid for the current year and total customer net revenues were $91,411,192 and $146,770,967, respectively. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $58.750 million in highway user revenue bonds issued since 2004. Proceeds from the bonds provided financing for streets projects. The bonds are payable solely from the state shared Highway User Tax revenues and are payable through 2027. Annual principal and interest payments on the bonds were 29.5 percent of eligible revenues. The total principal and interest remaining to be paid on the bonds is $68,269,775. 68 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Principal and interest paid for the current year and total highway user tax revenues were $12,397,938 and $41,837,748, respectively. 9. REFUNDED, REFINANCED AND DEFEASED OBLIGATIONS On September 5, 2019, the City called for the early redemption of $49,025,000 in Excise Tax Revenue Obligations from existing resources of the City to payoff the Excise Tax Revenue Obligation Bond principal balance that is currently outstanding. This defeasance was funded with City cash and provided to a defeasance escrow agent for the purchase of United States Government securities. The securities were deposited to an irrevocable trust to provide for all future debt service payments of the defeased bonds totaling $54,233,707. As a result, the liability for the defeased bonds will be removed from the debt of the City. Liabilities to be Paid from Assets Held in Escrow Liabilities to be paid from assets held in escrow include bonded debt of the City that has been provided for through an Advanced Refunding Bond Issue or a Defeasance. Under an advanced refunding arrangement, refunding bonds are issued and the net proceeds, plus additional resources that may be required, are used to purchase securities issued or guaranteed by the United States Government. Under a Defeasance City resources are used to purchase securities issued or guaranteed by the United States Government. These securities are then deposited in an irrevocable trust under an escrow agreement which provides that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued bonded debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flow generated by the securities, will be sufficient to service the previously issued bonds. In accordance with GASB Statement No. 7, the refunded debt outstanding at June 30, 2020 as reflected below is not included in the City’s financial statements (in thousands). Utility System Revenue Bond Issue dated June 1, 2004 $ 1,500 Utility System Revenue Bond Issue dated June 1, 2005 1,000 Utility System Revenue Bond Issue dated June 28, 2006 10,055 Utility System Revenue Bond Issue dated May 30, 2007 1,685 Utility System Revenue Bond Issue dated May 29, 2008 3,975 Utility System Revenue Refunding Bond, Taxable Series 2012 77,070 Utility System Revenue Refunding Bond Issue dated September 25, 2014 5,260 Excise Tax Revenue Obligations dated March 27, 2013 49,025 Total Refunded and Defeased Bonds Outstanding $ 149,570 69 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 10. SELF-INSURANCE INTERNAL SERVICE FUND The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds have been established to account for the costs of claims incurred by the City under self-insurance programs. The City is fully self-insured for all public liability risks, up to a maximum of $3,000,000 per occurrence, for the current policy year under the Property and Public Liability Insurance program. In addition, the City carries full property insurance with a $50,000 per occurrence deductible. Under the Workers’ Compensation Program, the City is subject to a maximum deductible of $1,000,000 liability per occurrence. In the Employee Benefits Fund, the City has excess insurance coverage when an individual’s claims exceed $225,000 per contract year. There were no changes in insurance coverage during this fiscal year for any of the three Self-Insurance Funds. The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds do not have stop loss receivables at June 30, 2020 and did not received any settlements in excess of insurance coverage over the past three fiscal years. The various funds of the City include, as expenditures, amounts contributed to each of the selfinsurance funds during the fiscal year. The estimated liability for claims outstanding is determined by a yearly actuarial study in the Property and Public Liability Fund and the Workers Compensation Fund. The claims liability in the Employee Benefits Fund is generated by a third-party claims processing company. Changes in the balances of claims liabilities during the past two fiscal years are as follows (in thousands): Property & Public Workers' Employee Liability Compensation Benefits Total Unpaid Claims, 6/30/18 Adjustments to Reserves Claim Expense $ 9,256 4,132 1,206 Unpaid Claims, 6/30/19 14,594 Adjustments to Reserves Claims Expense 282 692 Unpaid Claims, 6/30/20 $ 15,568 $ $ 23,707 1,628 561 4,066 71,389 (69,923) $ 37,029 77,149 (68,156) 25,896 5,532 46,022 1,243 (872) 68,683 (71,389) 70,208 (71,569) 2,826 $ 44,661 26,267 $ $ All unpaid claims are reported as current liabilities in the Statement of Net Position as the change in these amounts have already been expensed in the statement of activities. 70 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 11. COMMITMENTS AND CONTINGENT LIABILITIES a. Pending Litigation The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. b. Sick Leave Benefits Sick leave benefits provided for ordinary sick pay are not vested with the employee. Fifty percent of unused benefits are payable only upon retirement of an employee. In accordance with the criteria, sick leave paid within 60 days of the year-end has been recorded as a liability in the governmental fund financial statements. Long-term liabilities of governmental funds are not shown on the fund financial statements. In the government-wide financial statements as well as the proprietary fund financial statements, an amount of estimated sick leave payable to employees has been expensed and the liability is shown in the appropriate funds. These amounts have been calculated based on the vested method. The total sick leave balance recorded as a liability at June 30, 2020, is $10,033,849. 12. NET POSITION a. Restricted Net Position The government-wide statement of net position reports $207 million of restricted net position, of which $100 million is restricted by enabling legislation. b. Designated Net Position The net position in the Employee Benefits Self Insurance Fund is designated for anticipated future losses and is a result of excess premiums charged to increase the fund balance specifically for this purpose. c. Deficit in Net Position and Fund Balance The deficit in the Worker’s Compensation Self-Insurance Fund consists of prior years’ deficit where claims expenses exceeded revenues received and other postemployment benefit charges and pension expense. The City’s funding plan calls for yearly contributions from various funds to equal the years estimated claims and claim related expenses. Future claim liabilities are not considered in determining funding for each year. The deficit in the Property and Public Liability Fund was a result of other post-employment benefit charges and pension expense. The City’s funding plan calls for yearly contributions from the 71 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 general fund to equal the years estimated claims and claim related expenses. Post-employment benefit charges and pension expense are not considered in determining funding for each year. The deficit in the Warehouse, Maintenance and Services fund was a result of other postemployment benefit charges and pension expense. The City’s funding plan calls for Charges for Services to cover operational expenses. Post-employment benefit charges and pension expense are not considered in determining Charges for Services. The deficit in the Ambulance Transport and Mesa Housing Authority Special Revenue Funds will be covered by future revenues. The Public Safety Capital Projects Fund will be covered by future bond issuances. The Special Assessment Bonds Debt Service Fund’s deficit will be covered by future Special Assessment revenues. 13. ENTERPRISE ACTIVITIES OPERATIONS DETAIL The Enterprise Fund includes operations of electricity, gas, water, wastewater, solid waste, airport, golf course, convention center, stadiums and district cooling. Although the City’s Enterprise Fund does not meet the requirements for disclosing segment information, the services provided by the City are of such significance as to warrant certain additional disclosures. Operating revenue, expenses and operating income (loss) for the year ended June 30, 2020 for these services are as follows (in thousands): Functions Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam /Fitch Complex Cubs Stadium District Cooling Total Operating Expenses Depreciation and Amortization Other $ 3,287 $ 20,134 4,300 20,346 37,346 61,941 18,978 77,894 3,191 38,191 2,321 3,683 118 1,111 286 3,866 1,796 936 3,424 2,633 409 754 $ 75,456 $ 231,489 Operating Revenues $ 29,855 39,986 152,266 81,464 63,267 4,018 2,595 40 221 1,143 $ 374,855 Operating Income (Loss) $ 6,434 15,340 52,979 (15,408) 21,885 (1,986) (1,229) (1,557) (2,692) (5,836) (20) $ 67,910 14. JOINT VENTURES The City currently participates in five joint ventures. The Greenfield Water Reclamation Plant and TOPAZ Regional Wireless Cooperative are managed by the City of Mesa, while the Subregional Operating Group, the Val Vista Water Treatment Plant, and Valley Metro Rail, Inc. are managed externally. 72 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City's investment in these Joint Ventures as of June 30, 2020, is as follows (in thousands): Valley Metro Rail Inc. TOPAZ Regional Wireless Cooperative Subregional Operating Group Val Vista Water Treatment Plant Greenfield Water Reclamation Plant Joint Ventures Construction Deposits Total Investment in Joint Ventures Governmental Activities $ 312,509 6,706 $ 319,215 Business-Type Activities $ 82,955 46,099 161,146 9,326 $ 299,526 Total $ 312,509 6,706 82,955 46,099 161,146 9,326 $ 618,741 Valley Metro Rail, Inc. “VMRI” The City currently participates in the Central Phoenix/East Valley Light Rail Transit (LRT) along with the cities of Phoenix, Tempe and Glendale. Valley Metro Rail, Inc. (VMRI) is the management agency that was incorporated to administer the joint agreement between the cities and has oversight responsibility for the planning, design, construction and operation of the system. The agreement provides voting rights for members of the representative cities, including passage of an annual budget. The City has ongoing financial responsibility as a result of the joint agreement including participation in the cost to construct and to operate the light rail project less any Federal reimbursements and operating fares. A total of $1,664,321,782 has been spent on this project through the fiscal year ended June 30, 2020, of which the City’s share and equity interest is $312,508,846. The City has received and accrued $29.4 million of funding from the Federal Transit Administration (FTA), Congestion Mitigation Air Quality (CMAQ) and Public Transit Funds (PTF) related to this project. Separate financial statements for the activity can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. TOPAZ Regional Wireless Cooperative The City of Mesa currently participates with the City of Apache Junction, Superstition Fire and Medical, the Town of Gilbert, the Town of Queen Creek, Fort McDowell and Rio Verde Fire District (the Parties) in an intergovernmental agreement to plan, design, construct, operate, maintain and finance the TOPAZ Regional Wireless Cooperative Network (TOPAZ). TOPAZ is a 700/800 MHz Network procured and built by the City of Mesa. The City acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the network. As lead agent, the City provides all management personnel and financing arrangements. The Parties participate in ownership of the network and are charged for operating and capital expenses based on six month rolling average of airtime. The City’s equity in the joint venture is $6,706,083 and is reflected in the governmental funds financial statements. Separate financial statements are not prepared. 73 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Total investment in the joint venture as of June 30, 2020, is (in thousands): TOPAZ Regional Wireless Cooperative City of Mesa $ 6,706 Town of Gilbert 1,601 City of Apache Junction 598 Superstition Fire and Medical 168 Town of Queen Creek 112 Fort McDowell 51 Rio Verde Fire District 13 Total Joint Venture $ 9,249 Wastewater Subregional Operating Group The City participates with the cities of Phoenix, Glendale, Scottsdale and Tempe in the Subregional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) in order to govern the construction, operation and maintenance of a multi-city sanitary sewer system (the “System”). The System includes the 91st Avenue Wastewater Treatment Plant, the Salt River Outfall Sewer, the Southern Avenue Interceptor and related transportation facilities. The City of Phoenix acts as the lead agency in SROG and is responsible for the planning, budgeting, construction, operation and maintenance of the plant in addition to providing all management personnel and financing arrangements. The various cities participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The different agencies participate in each facility at varying rates depending on their needs at the time each facility was constructed. The City’s equity in the joint venture is $82,954,610 and is reflected in the proprietary funds financial statements. SROG has no bonded debt outstanding. Separate financial statements for the activity under the joint venture agreement can be obtained through the AMWUA office at 3003 N. Central Avenue, Suite 1550, Phoenix, Arizona, 85012. Greenfield Water Reclamation Project Construction of a joint water reclamation plant with the Towns of Gilbert and Queen Creek was completed on December 2, 2006. An expansion of the plant is expected to be completed in 2020. The City acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agent, the City provides all management personnel and financing arrangements. Mesa, Gilbert and Queen Creek participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The City’s equity in the joint venture is $161,146,530 and is reflected in the proprietary funds financial statements. Separate financial statements are not prepared. 74 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Total investment in the joint venture as of June 30, 2020, is (in thousands): Greenfield Water Reclamation Project Mesa's Share $ 161,146 Gilbert's Share 106,446 Queen Creek's Share 32,713 Total Joint Venture $ 300,305 Water Val Vista Water Treatment Plant The City also participates with the City of Phoenix in the Val Vista Water Treatment Plant and Transmission Line. The City of Phoenix is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agency, Phoenix provides all management personnel and financing arrangements. Phoenix and Mesa participate in ownership of the plant and are charged for operating expenses based on gallons of water treated. The City’s investment in the joint venture is $46,099,081 and is reflected in the proprietary funds financial statements. The water treatment plant has no bonded debt outstanding. Separate financial statements for the activity can be obtained through the City of Phoenix, Finance Department, Financial Accounting and Reporting Division at 251 W. Washington Street, 9th Floor, Phoenix, Arizona, 85003. 15. PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS All benefitted employees of the City are covered by one of three pension systems. The Arizona State Retirement System (ASRS) is for the benefit of the employees of the state and certain other governmental jurisdictions. All benefited City employees, except sworn fire and police personnel and the Mayor and City Council Members, are included in the plan that is a multiple-employer cost-sharing defined benefit pension plan. All sworn fire and police personnel participate in the Public Safety Personnel Retirement System that is an agent plan. The Mayor and City Council Members contribute to the State’s Elected Officials Retirement Plan that is also a multiple-employer cost-sharing pension plan. The Elected Officials Retirement Plan is not described below because of its relative insignificance to the financial statements. In addition, eligible employees are covered by other postemployment benefit plans. All sworn fire and police personnel participate in the Public Safety Personnel Retirement System (PSPRS) that is an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan. Eligible City employees also participate in the City’s OPEB plan. Eligible City employees covered by Arizona State Retirement System also participate in the ASRS OPEB plan. The ASRS OPEB plan is not described below because of its relative insignificance to the financial statements. At June 30, 2020, the City reported the following aggregate amounts related to pensions for all plans to which it contributes (in thousands): 75 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Statement of Net Position and Statement of Activities Net Pension and OPEB Liabilities Deferred Outflows of Resources related to pensions and OPEB Deferred Inflows of Resources related to pensions and OPEB Pension and OPEB Expense Governmental Activities $ 1,652,204 Business-Type Activities $ 163,426 Total $ 1,815,630 284,155 22,738 306,893 42,236 163,874 6,502 12,271 48,738 176,145 Arizona State Retirement System Defined Benefit Plan: a. Plan Description All of the City’s eligible benefitted general employees participate in the Arizona State Retirement System (“ASRS”), a multiple-employer, cost-sharing defined benefit pension plan. ASRS was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. ASRS is administered by the ASRS Governing Board in accordance with Title 38, Chapter 5 Articles 2 and 2.1 of the Arizona Revised Statutes (“A.R.S.”). ASRS provides for retirement, disability, and death and survivor benefits. ASRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Arizona State Retirement System, P.O. Box 33910, Phoenix, Arizona, 85067-3910 or by calling 1-800-621-3778. b. Benefits Provided The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: 76 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Retirement Initial Membership Date: On or After Before July 1, 2011 July 1, 2011 Years of service and age Sum of years and 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 Highest 60 consecutive months of last 120 months months of last 120 months 2.1% to 2.3 % 2.1% to 2.3 % Benefit percentage per year of service * With actuarially reduced benefits. Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a 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. Contributions The A.R.S. provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. 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, 2020, the city and covered employees were required by state statute to contribute at the actuarially determined rate of 12.11% (11.94% pension plus 0.17% long-term disability) of the active members’ annual covered payroll. The City’s contributions to the System for the year ending June 30, 2020 was $21,047,487, 74.3% paid from governmental funds, 4.6% paid from internal service funds, and 21.1% paid from enterprise funds. Additionally, the City is required by Statute to pay an ASRS Alternate Contribution Rate (ACR) for retired members who return to work on or after July 1, 2012, in any capacity and in a position ordinarily filled by an employee of the City to mitigate the potential impact that retired members who return to work may have on the ASRS Trust Fund. The contribution rate for the year ended June 30, 2020 was 10.41% (10.29% retirement, 0.05% health, 0.07% long-term disability). The City’s ACR contributions to the System for the year ending June 30, 2020 were $80,897. 77 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 c. Pension Liability At June 30, 2020, the City reported a liability of $235,852,534 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2019. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2018, to the measurement date of June 30, 2019. The total liabilities as of June 30, 2020, reflect changes in actuarial assumptions based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. The City’s proportion of the net pension 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, 2019. The City’s proportion measured as of June 30, 2019, was 1.62085%, which was a decrease of 0.00847% from its proportion measured as of June 30, 2018. d. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2020, the City recognized pension expense for ASRS of $22,062,395. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (in thousands): Differences between expected and actual experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 4,261 997 Deferred Inflows of Resources $ 44 9,392 - 5,301 21,069 26,327 1,689 $ 16,426 $ The $21,069,470 reported as deferred outflows of resources related to ASRS pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows (in thousands): Year Ended June 30, 2021 $ (4,888) 2022 (6,682) 2023 (1,018) 2024 1,420 $ (11,168) 78 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 e. Actuarial Assumptions The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial Assumptions Actuarial Valuation Date Actuarial Roll Forward Date Actuarial Cost Method Investment Rate of Return Projected Salary Increases Inflation Permanent Benefit Increase Mortality Rates June 30, 2018 June 30, 2019 Entry Age Normal 7.5% 2.7 - 7.2% 2.3% Included 2017 SRA Scale U-MP Actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial study for the 5-year period ended June 30, 2016. The long-term expected rate of return on ASRS pension plan investments was determined to be 7.5% using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Allocation Equity 50% Credit 20% Interest Rate Sensitive Bonds 10% Real Estate 20% Total 100% Asset Class f. Long-Term Expected Geometric Real Rate of Return 6.09% 5.36% 1.62% 5.85% Discount Rate The discount rate used to measure the ASRS total pension liability was 7.5%. 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 pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected 79 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. g. Sensitivity of the City’s Proportionate Share of the ASRS Net Pension Liability to Changes in the Discount Rate The following table presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.5 %, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5 %) than the current rate (in thousands): City's proportionate share of the net pension liability 1% Decrease 6.5% Current Discount Rate 7.5% 1% Increase 8.5% $ $ $ 152,429 335,673 235,853 h. Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. Public Safety Personnel Retirement System: a. Plan Description All sworn fire and police personnel regularly assigned hazardous duty are eligible to participate in the Public Safety Personnel Retirement System (“PSPRS”). The PSPRS administers agent and cost-sharing multiple-employer defined benefit pension plan and agent and cost-sharing multipleemployer defined benefit health insurance premium benefit (OPEB) plan. The PSPRS is jointly administered by a nine-member board known as the Board of Trustees, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. Employees who were PSPRS members before July 1, 2017, participate in the agent plans, and those who became PSPRS members on or after July 1, 2017, participate in the cost-sharing plans (PSPRS Tier 3 Risk Pool). The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report is available on the PSPRS website at www.psprs.com. b. Benefits Provided The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: 80 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Initial Membership Date Before January 1, 2012 On or after January 1, 2012 and before July 1, 2017 20 years of service, any age 15 years of service, age 62 25 years of service or 15 years of credited service, age 52.5 15 years of credited service, age 52.5*; 15 or more years of service, age 55 Final average salary is based Highest 36 consecutive months on of last 20 years Highest 60 consecutive months of last 20 years Highest 60 consecutive months of last 15 years On or After July 1, 2017 Retirement and Disability Years of service and age required to receive benefit Benefit percentage Normal Retirement 1.5% to 2.5% for each year of credited service not to exceed 80% 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, 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 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 Survivor Benefit Retired M embers 80% to 100% of retired member's pension benefit Active M embers 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 * With actuarially reduced benefits Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50 percent of the member’s compensation for up to 12 months. 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 $100 per month to $260 per month depending on the age of the member and dependents. The PSPRS-Fire OPEB plan is not presented because of its relative insignificance to the financial statements. 81 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Employees Covered by Benefit Terms At June 30, 2020, the following employees were covered by the agent plans’ benefit terms: PSPRS PSPRS Police Pension Pension Health 253 604 604 81 359 693 178 695 1,477 75 695 1,374 Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total c. 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, 2020, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active Member Pension PSPRS - Fire 7.65% - 11.65% PSPRS - Police 7.65% - 11.65% PSPRS Tier 3 - Fire 10.84% PSPRS Tier 3 - Police 10.23% City Pension 55.60% 54.63% 10.59% 10.07% City OPEB 0.41% 1.40% 0.25% 0.16% Also, statute required the City to contribute a legacy cost of pension unfunded liability at the actuarially determined rate expressed as a percent of annual covered payroll of 40.78% and 40.23% for City police and fire employees respectively, who were PSPRS Tier 3 members. The City’s contributions to the plans for the year ended June 30, 2020, were: Pension PSPRS - Fire $ 17,297,277 PSPRS - Police 31,469,695 PSPRS Tier 3 - Fire 737,759 PSPRS Tier 3 - Police 2,177,098 OPEB $ 127,552 806,472 3,629 8,889 The City’s contribution to the system was paid from the general fund. 82 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City is also required to pay a PSPRS Alternate Contribution Rate (ACR) for retired members who return to work in any capacity and in a position ordinarily filled by an employee of the City, unless the retired member is required to participate in another state retirement system and the retired member returned to work before July 20, 2011. The ACR rate is equal to the portion of the total required contribution that is applied to the amortization of the unfunded actuarial accrued liability for the fiscal year beginning July 1, based on the actuarial calculation of the total required contribution for the preceding fiscal year ended on June 30. The contribution rate for the year ended June 30, 2020 was 40.23% and 40.78% for fire and police, respectively. The City’s ACR contributions for the year ending June 30, 2020 were $0 for fire and $29,064 for police. d. Liability At June 30, 2020, the City reported the following pension liabilities of $231,179,861 and $441,183,384 for fire and police, respectively. The City also reported an OPEB liability of $10,040,985 for police. The net liabilities were measured as of June 30, 2019, and the total liability used to calculate the net liability was determined by an actuarial valuation as of that date. The total liabilities as of June 30, 2019, reflect changes of actuarial assumptions to decrease investment rate of return from 7.4 percent to 7.3 percent and update the mortality rates. e. Pension/OPEB Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2020, the City recognized pension expense of $30,409.388 and $62,492,550 for fire and police, respectively. City also recognized OPEB expense of $1,015,319 for police. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources (in thousands): PSPRS - Fire Pension Differences between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 11,530 24,634 Deferred Inflows of Resources $ 6,097 - 3,157 - 18,035 57,356 6,097 $ $ 83 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Pension Deferred Deferred Inflows of Outflows of Resources Resources $ 11,190 $ 2,012 35,835 - PSPRS - Police Differences between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on plan investments City contributions subsequent to the measurement date Total 5,210 $ 33,647 85,882 OPEB Deferred Deferred Outflows of Inflows of Resources Resources $ 507 $ 395 170 - $ 2,012 10 $ 815 1,727 - $ 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 a reduction of the net liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized in pension expense as follows (in thousands): Year Ended June 30, 2021 2022 2023 2024 2025 Thereafter f. PSPRS Fire Pension $ 9,111 4,932 6,178 5,977 4,121 2,905 $ 33,224 PSPRS Police Pension $ 16,085 11,538 10,457 6,918 5,225 $ 50,223 PSPRS Police OPEB 125 125 209 196 87 $ 742 Actuarial Methods and Assumptions The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows: Actuarial Assumptions: Actuarial Valuation Date Actuarial Cost Method Investment Rate of Return Wage Inflation Price Inflation Cost-of-living adjustment Mortality Rates for Pension and OPEB Healthcare cost trend rate June 30, 2019 Entry Age Normal 7.3% for contribution rates, 3.5%, N/A for OPEB 2.5%, N/A for OPEB 1.75%, N/A for OPEB PubS-2010 tables N/A 84 (Continued) 170 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Actuarial assumptions used in the June 30, 2019 valuation were 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 7.3 % 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: Target Allocation 2% 4% 5% 9% 12% 16% 10% 12% 14% 16% 100% Asset Class Short Term Investments Risk Parity Fixed Income Real Assets GTS Private Credit Real Estate Private Equity Non-U.S. Equity U.S. Equity Total Long-Term Expected Geometric Real 0.25% 4.01% 3.00% 6.75% 4.01% 5.36% 4.50% 8.40% 5.00% 4.75% g. Discount Rate A discount rate of 7.30% for Tier 1 and Tier 2 members was used to measure the total pension/OPEB liability, which was a decrease of 0.1 from the discount rate used as of June 30, 2018. A discount rate of 7.00% for Tier 3 members was used to measure the total Pension/OPEB Liability. The projection of cash flows used to determine this 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 actuarially determined contribution rates and the member rate. Based on these assumptions, the plans’ 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. 85 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 h. Changes in the Net Pension/OPEB Liability The following tables present changes in the City’s net pension/OPEB liability for the PSPRS – Fire and Police plans as follows (in thousands): Fire Total Pension Liability Plan Fiduciary Net Position Net Position Liability Balance - Beginning of Year $ 395,624 $ 191,986 $ 203,638 - (71) 71 Service Cost 7,663 - 7,663 Interest on the Total Liability 29,147 - 29,147 - - - 11,844 - 11,844 Adjustment to Beginning of Year Changes for the Year: Changes of Benefit Terms Differences Between Expected & Actual Experience in the M easurement of the Liability Changes of Assumptions / Other Inputs 8,488 - 8,488 Contributions - Employer - 16,708 (16,708) Contributions - Employee - 2,805 (2,805) Net Investment Income - 10,339 (10,339) (18,809) (18,809) - Administrative Expenses - (181) 181 Other Changes - - - Benefit Payments, Including Refunds of Employee Contributions Net Changes Balances - End of Year $ 38,333 10,862 27,471 433,957 $ 202,777 $ 231,180 86 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Plan Fiduciary Net Position Net Position Liability Total OPEB Liability $ Police Total Pension Liability Balance - Beginning of Year $ 732,508 $ 335,631 $ 396,877 - (383) 383 Service Cost 15,015 - Interest on the Total Liability 53,953 - - 10,259 Adjustment to Beginning of Year 19,630 Plan Fiduciary Net Position Net OPEB Liability $ $ 10,067 9,563 - 384 (384) 15,015 200 - 200 53,953 1,416 - 1,416 - - - - - - 10,259 43 - 43 Changes for the Year: Changes of Benefit Terms Differences Between Expected & Actual Experience in the M easurement of the Liability Changes of Assumptions / Other Inputs 21,092 - 21,092 474 - 474 Contributions - Employer - 32,387 (32,387) - 736 (736) Contributions - Employee - 5,718 (5,718) - 14 (14) Net Investment Income - 18,270 (18,270) - 530 (530) Benefit Payments, Including Refunds of Employee Contributions (36,864) (36,864) Administrative Expenses - (319) Other Changes - 340 Net Changes Balances - End of Year i. - (1,391) (1,391) - 319 - (9) 9 (340) - - - 63,455 19,532 43,923 $ 795,963 $ 354,780 $ 441,183 742 $ 20,372 (120) $ 10,331 862 $ 10,041 Sensitivity of the City’s Net Pension/OPEB Liability to Changes in the Discount Rate The following table presents the City’s net pension/ OPEB liabilities calculated using the discount rates noted above, as well as what the City’s net pension/OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.3%) or 1 percentage point higher (8.3%) than the current rate (in thousands): Fire Net Pension Liability Police Net Pension Liability Police OPEB Liability 1% Decrease $ 288,581 552,778 12,186 Current Discount Rate $ 231,180 441,183 10,041 1% Increase $ 184,121 350,532 8,234 Regarding the sensitivity of the net OPEB liability to changes in the healthcare cost trend rates, note that trend rates are not applied in the valuation due to the nature of the benefit provide 87 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 j. Plan Fiduciary Net Position Detailed information about the pension/OPEB plan’s fiduciary net position is available in the separately issued PSPRS financial report. City of Mesa OPEB: a. Plan Description The City provides post-employment medical care (OPEB) for retired employees through a singleemployer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents through the City’s self-insurance health insurance plan which covers both active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Benefits Advisory Board and approved by the Mesa City Council. The plan is not accounted for as a trust fund, and an irrevocable trust has not been established to account for the plan. b. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Employees must enroll in a City plan immediately after they retire or their eligibility for this benefit ceases. All medical care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Upon a retiree’s death, the retiree’s dependents are no longer eligible for City coverage. To receive maximum benefits an employee must meet the following: • • • • Ten years of service for employees hired prior to January 1, 2001 Fifteen years of service for employees hired at January 1, 2001 but before January 1, 2006. Twenty years of service for employees hired on or after January 1, 2006. As of January 1, 2009, new hires are no longer eligible for benefits. Employees Covered by Benefit Terms As of July 1, 2019 (Date of most recent valuation), membership consisted of: Active Employees Retirees Spouses Total 3,356 2,179 1,353 6,888 c. OPEB Liability The plan operates on a pay-as-you-go basis and thus has no assets. The total OPEB liability measured as of June 30, 2019 is $897,375,371. 88 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The impact of changes from the June 30, 2017 results include the following: • The discount rate was decreased from 2.98% to 2.79% as of June 30, 2019. The 2.79% rate was selected based on the S&P Municipal Bond 20-Year High Grade Rate Index as of June 28, 2019. This caused an increase in liability of $26.5 million. d. OPEB Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2020, the City recognized OPEB expense of $60,164,636. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (in thousands): Differences between expected and actual experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 28,126 88,036 Deferred Inflows of Resources $ 752 23,280 - 19,438 $ 135,600 $ 24,032 The amounts reported as deferred outflows of resources resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized in pension expense as follows (in thousands): Year Ended June 30, 2021 $ 16,762 2022 16,762 2023 17,157 2024 24,521 2025 16,928 $ 92,130 e. Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short- 89 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions used for this fiscal year valuation were as follows: Actuarial Assumptions: Actuarial Valuation Date Measurement Date Actuarial Cost Method Discount Rate Consumer Price Index Projected Salary Increases Mortality Rates June 30, 2019 June 30, 2019 Entry Age Normal 2.79% 3.00% 2.70 - 7.50% Based on the rates used for the June 30, 2019 valuations of the ASRS Plan and the PSPRS Plan. Health care cost trend rate: Medical, Drugs 4.50 -7.50% Dental, Mental Health, Vision 4.50% Actuarial assumptions used in the June 30, 2019 valuation were projected on an on-going plan basis. This assumption does not necessarily imply that an obligation to continue the plan actually exists. f. Discount Rate The discount rate at the measurement date is 2.79%. Benefit payments are funded on a pay-as-you go basis. The discount rate is based on the S&P Municipal Bond 20 Year High Grade Rate Index as of June 28, 2019. g. Changes in OPEB Liability The below table outlines the changes in OPEB Liability for the fiscal year ending June 30, 2019 (in thousands): OPEB Liability at Beginning of Year Service Cost Interest Changes in Benefit Terms Differences between Expected and Actual Experience Changes in Assumptions Employer contributions * Net Change in Total OPEB Liability OPEB Liability at End of Year $ $ 746,816 20,818 22,584 34,022 92,823 (19,687) 150,560 897,376 * Because the City funds OPEB benefits on a “pay-as-you-go” basis, employer contributions are equal to benefit payments. 90 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The City’s contribution to the plan was paid 84.6% from governmental funds, 2.7% from internal service funds, and 12.7% from enterprise funds. h. Sensitivity of the City’s OPEB Liability to Changes in the Discount Rate and the Healthcare Cost Trend Rates The following table presents the City’s net OPEB liabilities calculated using the municipal bond rates and healthcare cost trend rates noted above, as well as what the City’s net OPEB liability would be if it were calculated using rate that is 1 percentage point lower or 1 percentage point higher than the current rate (in thousands): 16. 1% Decrease City OPEB Plan $ 1,057,021 Current Municipal Bond Rate $ 897,376 1% Increase $ 771,127 1% Decrease City OPEB Plan $ 771,127 Current Healtchare Trend Rate $ 897,376 1% Increase $ 1,057,021 SUBSEQUENT EVENTS On July 7, 2020 the Cadence Community Facility District issued 2020 Cadence Community Facilities District (City of Mesa, Arizona) Special Assessment District No. 3 Special Assessment Bonds in the amount of $2,803,000. These bonds are due in annual principal installments ranging from $78,000 to $170,000, plus semi-annual interest ranging from 1.50% percent to 4.00% percent through July 1, 2045. On July 9, 2020, the City called for the early redemption of $5,690,000 in Taxable Utility System Revenue Bond and $9,230,000 in Utility Systems Revenue Refunding Bond obligations from existing resources of the City to payoff the Taxable Utility System Revenue Bond and Utility Systems Revenue Refunding Bond principal balances that are currently outstanding. These defeasances were funded with City cash and provided to a defeasance escrow agent for the purchase of United States Government securities. The securities were deposited to an irrevocable trust to provide for all future debt service payments of the defeased bonds totaling $5,727,049 for the Taxable Utility System Revenue Bonds and $10,321,632 for the Utility Systems Revenue Refunding Bonds. As a result, the liabilities for these defeased bonds will be removed from the debt of the City. On October 22, 2020, the Cadence Community Facility District issued 2020 Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds in the amount of $5,935,000. These bonds are due in annual principal installments ranging from $180,000 to $1,410,000, plus semi-annual interest ranging from 2 percent to 3 percent through July 15, 2044. 91 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 On October 22, 2020, the Eastmark Community Facility District No.1 issued 2020 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds in the amount of $14,000,000. These bonds are due in annual principal installments ranging from $425,000 to $3,250,000, plus semiannual interest ranging from 2 percent to 4 percent through July 15, 2044. On October 22, 2020, the Eastmark Community Facility District No.2 issued 2020 Eastmark Community Facilities District No. 2 (City of Mesa, Arizona) General Obligation Bonds in the amount of $2,315,000. These bonds are due in annual principal installments ranging from $75,000 to $1,105,000, plus semiannual interest ranging from 2 percent to 4 percent through July 15, 2044. On December 10, 2020, The City issued $22,075,000 of Series 2020 City of Mesa, Arizona General Obligation Bonds. These bonds are due in annual principal installments ranging from $465,000 to $11,330,000, plus semi-annual interest ranging from 1.875 percent to 3 percent through July 1, 2040. On December 10, 2020, The City issued $85,000,000 of Series 2020 City of Mesa, Arizona Utility System Revenue Bonds. These bonds are due in annual principal installments ranging from $1,000,000 to $10,100,000, plus semi-annual interest ranging from 3 percent to 5 percent through July 1, 2040. On December 10, 2020, the City issued $37,675,000 of Series 2020 Utility System Revenue Refunding Bonds (refunding $44,690,000 of the Series 2010 Taxable Utility System Revenue Bonds and accrued interest). The purpose of the issuance was to take advantage of lower interest rates and reduce future payments. On December 10, 2020, the City issued $23,900,000 of Series 2020 General Obligation Refunding Bonds (refunding $29,750,000 of the Series 2020 Taxable General Obligation Bonds and accrued interest). The purpose of the issuance was to take advantage of lower interest rates and reduce future payments. On December 10, 2020, The City issued $36,010,000 of Series 2020 City of Mesa, Arizona Excise Tax Obligations. These obligations are due in annual principal installments ranging from $645,000 to $2,595,000, plus semi-annual interest ranging from 3 percent to 5 percent through July 1, 2040. (Concluded) 92 REQUIRED SUPPLEMENTARY INFORMATION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 S TA FF S E W I N G M A SKS AND 3D P R I NTI NG FACE SHI ELD S CITY OF MESA, ARIZONA EXHIBIT B-1 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF NET PENSION LIABILITY COST-SHARING PENSION PLAN JUNE 30, 2020 (in thousands) Arizona State Retirement System Reporting Fiscal Year* (Measurement Date) City's Proportion of Net Pension Liability City's Proportionate Share of Net Pension Liability City's Covered Payroll City's Proportionate Share of Net Pension Liability as a Percentage of its Covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability See accompanying notes to pension plan schedules. 93 2020 (2019) 1.6209% $ 235,853 2019 (2018) 1.6293% $ 227,233 2018 (2017) 1.6416% $ 255,729 $ 169,900 $ 162,089 $ 158,958 138.82% 140.19% 160.88% 73.24% 73.40% 69.92% Reporting Fiscal Year* (Measurement Date) 2017 (2016) 1.6605% $ 268,013 2016 (2015) 1.6393% $ 255,337 2015 (2014) 1.6341% $ 241,792 $ 155,868 $ 151,154 $ 147,402 171.95% 168.93% 164.04% 67.06% 68.35% 69.49% 2014 through 2011 Information not available 94 CITY OF MESA, ARIZONA EXHIBIT B-2 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET PENSION/OPEB LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2020 (in thousands) Public Safety Personnel Retirement System - Fire Reporting Fiscal Year * (Measurement Date) 2020 2019 2018 (2019) (2018) (2017) Total Pension Liability Service Cost Interest on the Total Pension Liability Changes of Benefit Terms Diff 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) 7,663 29,147 - $ 7,271 27,446 - $ 7,724 25,687 2,125 11,844 8,488 1,951 - (2,670) 12,613 (18,809) 38,333 (16,608) 20,060 (17,095) 28,384 395,624 433,957 375,564 395,624 347,180 375,564 Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Hall/Parker Settlement Administrative Expense Other Changes Net Change in Plan Fiduciary Net Position 16,708 2,805 10,339 16,733 3,035 12,464 13,558 3,923 19,308 (18,809) (181) 10,862 (16,608) (5,150) (190) 2 10,286 (17,095) (174) 43 19,563 Plan Fiduciary Net Position - As Previously Reported Adjustment to Beginning Balance Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 191,986 (71) 191,915 202,777 181,700 181,700 191,986 162,137 162,137 181,700 City's Net Pension Liability - Ending (a) - (b) $ 231,180 $ 203,638 $ 193,864 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 46.73% 48.53% 48.38% $ 34,136 $ 32,445 $ 32,941 677.23% 627.64% 588.52% City's Covered Payroll City's Net Pension Liability as a Percentage of its Covered Payroll See accompanying notes to pension plan schedules. 95 2017 (2016) $ 6,439 23,654 21,380 Reporting Fiscal Year * (Measurement Date) 2014 through 2016 2015 (2015) (2014) 2011 Information $ 6,127 $ 6,281 not 23,086 20,708 available 4,044 (4,423) 11,970 (3,518) - (6,961) 23,097 (19,893) 39,127 (17,323) 8,372 (16,309) 30,860 308,053 347,180 299,681 308,053 268,821 299,681 12,735 4,396 954 9,828 3,847 5,878 9,157 3,488 19,840 (19,893) (138) (12) (1,958) (17,323) (144) 45 2,131 (16,309) (160) (113) 15,903 164,095 164,095 162,137 161,964 161,964 164,095 146,061 146,061 161,964 $ 185,043 $ 143,958 $ 137,717 46.70% 53.27% 54.05% $ 32,453 $ 31,661 $ 30,782 570.19% 454.69% 447.39% 96 CITY OF MESA, ARIZONA EXHIBIT B-2 (continued) REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET PENSION/OPEB LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2020 (in thousands) Public Safety Personnel Retirement System - Police Pension Reporting Fiscal Year * (Measurement Date) 2020 2019 2018 (2019) (2018) (2017) Total Pension Liability Service Cost Interest on the Total Liability Changes of Benefit Terms Diff Between Expected and Actual Experience in the Measurement of the 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) $ 15,015 53,953 - $ 13,826 50,926 - $ 15,841 47,572 5,718 10,259 21,092 3,862 - 365 19,037 (36,864) 63,455 (34,755) 33,859 (32,522) 56,011 732,508 795,963 698,649 732,508 642,638 698,649 Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Hall/Parker Settlement Administrative Expense Other Changes Net Change in Plan Fiduciary Net Position 32,387 5,718 18,270 31,596 6,058 21,889 26,819 7,693 34,221 (36,864) (319) 340 19,532 (34,754) (10,096) (333) 514 14,874 (32,522) (306) 420 36,325 Plan Fiduciary Net Position - As Previously Reported Adjustment to Beginning Balance Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 335,631 (383) 335,248 354,780 320,757 320,757 335,631 284,432 284,432 320,757 City's Net Pension Liability - Ending (a) - (b) $ 441,183 $ 396,877 $ 377,892 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 44.57% 45.82% 45.91% $ 63,993 $ 63,003 $ 64,740 689.42% 629.93% 583.71% City's Covered Payroll City's Net Pension Liability as a Percentage of its Covered Payroll See accompanying notes to pension plan schedules. 97 2017 (2016) Reporting Fiscal Year * (Measurement Date) 2016 2015 (2015) (2014) $ 12,438 43,573 34,005 $ 12,216 41,908 - $ 12,481 36,514 8,728 (4,001) 23,614 (2,173) - (11,331) 51,228 (31,689) 77,940 (29,998) 21,953 (27,566) 70,054 564,698 642,638 542,745 564,698 472,691 542,745 24,067 8,157 1,667 19,680 7,613 10,065 17,443 6,784 33,360 (31,689) (240) 382 2,344 (29,998) (246) 28 7,142 (27,566) (269) 288 30,040 282,088 282,088 284,432 274,946 274,946 282,088 244,906 244,906 274,946 $ 358,206 $ 282,610 $ 267,799 44.26% 49.95% 50.66% $ 61,211 $ 62,461 $ 59,688 585.20% 452.46% 448.66% 2014 through 2011 98 CITY OF MESA, ARIZONA EXHIBIT B-2 (concluded) REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET PENSION/OPEB LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2020 (in thousands) Public Safety Personnel Retirement System - Police OPEB Reporting Fiscal Year * (Measurement Date) 2020 (2019) Total Liability Service Cost Interest on the Total Liability Changes of Benefit Terms Difference Between Expected and Actual Experience in the Measurement of the 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) $ 200 1,416 - 2019 (2018) $ 190 1,359 - 2018 (2017) $ 213 1,356 35 43 474 472 - 312 (335) (1,391) 742 19,630 20,372 (1,325) 696 18,934 19,630 (1,239) 342 18,592 18,934 Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Net Change in Plan Fiduciary Net Position 736 14 530 231 695 639 1,141 (1,391) (9) (120) (1,325) (11) (410) (1,239) (10) 531 Plan Fiduciary Net Position - As Previously Reported Adjustment to Beginning Balance Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 10,067 384 10,451 10,331 10,477 10,477 10,067 9,946 9,946 10,477 City's Net OPEB Liability - Ending (a) - (b) $ Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability City's Covered Payroll 10,041 $ 51.29% $ City's Net OPEB Liability as a Percentage of its Covered Payroll 63,808 15.74% 99 9,563 $ 51.29% $ 63,003 15.18% 8,457 55.33% $ 64,740 13.06% 2017 through 2011 Information not available CITY OF MESA, ARIZONA EXHIBIT B-3 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY PENSION CONTRIBUTIONS JUNE 30, 2020 (in thousands) Arizona State Retirement System Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution (Deficiency) / Excess $ 2020 21,069 $ 21,069 - $ 19,124 - $ 17,650 - City's Covered Payroll $ 176,563 $ 171,141 $ 160,986 City's Contributions as a Percentage of Covered Payroll $ 2019 19,124 $ 2018 17,650 11.93% 11.18% 10.96% $ 2019 16,431 $ 2018 14,289 Public Safety Personnel Retirement System - Fire Pension Actuarially Determined Contribution City's Contribution in Relation to the Actuarially Determined Contribution City's Contribution (Deficiency) / Excess $ 2020 18,035 $ 18,035 - $ 16,431 - $ 15,509 1,220 City's Covered Payroll $ 32,562 $ 34,136 $ 32,446 City's Contributions as a Percentage of Covered Payroll See accompanying notes to plan schedules. 100 55.39% 48.13% 47.80% EXHIBIT B-3 (continued) 2017 $ 17,423 $ 17,423 - 2016 $ 16,955 $ 16,955 - 2015 $ 16,146 $ 16,146 - 2014 $ 15,750 $ 15,750 - $ 158,958 $ 155,868 $ 151,154 $ 147,402 10.96% 10.88% 10.67% 10.68% 2017 $ 13,490 2016 $ 11,197 2015 $ 9,827 2014 $ 9,157 $ 13,490 - $ 12,735 1,538 $ 9,827 - $ 9,157 - $ 32,941 $ 32,453 $ 31,661 $ 30,782 40.95% 39.24% 31.04% 29.75% 101 2013 through 2011 Information not available 2013 through 2011 Information not available CITY OF MESA, ARIZONA EXHIBIT B-3 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY PENSION CONTRIBUTIONS JUNE 30, 2020 (in thousands) Public Safety Personnel Retirement System - Police Pension Actuarially Determined Contribution City's Contribution in Relation to the Actuarially Determined Contribution City's Contribution (Deficiency) / Excess $ 2020 33,647 $ 33,647 - $ 29,314 - $ 21,726 (7,322) City's Covered Payroll $ 63,187 $ 63,808 $ 63,003 City's Contributions as a Percentage of Covered Payroll $ 2019 29,314 2018 $ 29,048 53.25% 45.94% 34.48% $ 2019 733 2018 $ 772 Public Safety Personnel Retirement System - Police OPEB Actuarially Determined Contribution City's Contribution in Relation to the Actuarially Determined Contribution City's Contribution (Deficiency) / Excess $ 2020 815 $ 815 - $ 733 - $ 772 - City's Covered Payroll $ 63,161 $ 63,808 $ 63,003 City's Contributions as a Percentage of Covered Payroll See accompanying notes to plan schedules. 102 1.29% 1.15% 1.23% EXHIBIT B-3 (concluded) 2017 $ 26,809 2016 $ 21,697 $ 2015 19,680 $ 2014 17,443 $ 26,809 - $ 24,067 2,370 $ 19,680 - $ 17,443 - $ 64,740 $ 61,211 $ 62,461 $ 59,688 41.41% 39.32% 2017 $ 641 2016 through 2011 Information not available $ 641 - $ 64,740 31.51% 29.22% 0.99% 103 2013 through 2011 Information not available CITY OF MESA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO PENSION PLAN SCHEDULES JUNE 30, 2020 (in thousands) Note 1 - Actuarially determined contribution rates Actuarially 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: Actuarial Cost Method Amortization Method Remaining Amort Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Wage Growth Retirement Age Mortality Entry age normal Level percent of payroll, closed 19 years for unfunded actuarial accrued liability, 19 years for excess 7-year smoothed market value; 80%/120% market corridor. PSPRS members with initial membership date before July 1, 2017: In the 2017 actuarial valuation, the investment rate of return was decreased from 7.5% to 7.4%. 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%. PSPRS members with initial membership on or after July 1, 2017: 7% In the 2017 actuarial valuation, projected salary increases were decreased from 4.0%–8.0 to 3.5%–7.5%. 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%. In the 2017 actuarial valuation, wage growth was decreased from 4.0%–3.5%. In the 2014 actuarial valuation, projected salary increases were decreased from 4.5% to 4.0%. 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. RP-2000 mortality table (adjusted by 105% for both males and females). In the 2017 actuarial valuation, changed to RP 2014 tables with 75% of MP 2016 fully generational projection scales. Note 2 - 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. 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. 104 CITY OF MESA, ARIZONA EXHIBIT B-4 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S TOTAL OPEB LIABILITY 2020 Total Liability Service Cost Interest on the Total Liability Differences Between Expected and Actual Experience in the Measurement of the 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) $ $ 20,818 22,584 2019 $ 19,997 22,447 2018 $ 21,431 20,112 34,022 92,823 (1,133) 17,023 (46,955) (19,687) 150,560 746,816 897,376 (17,232) 41,102 705,714 746,816 (19,013) (24,425) 730,139 $ 705,714 $ 2017 through 2011 Information not available ** Because the City funds OPEB benefits on a “pay-as-you-go” basis, employer contributions are equal to benefit payments. 105 CITY OF MESA, ARIZONA EXHIBIT B-5 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE (NON-GAAP BASIS) GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Occupancy Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Miscellaneous Revenues Total Revenues $ Actual Budgetary Basis Final 126,268 25 17,396 160,949 26,301 8,677 341 11,456 351,413 $ 126,268 25 17,396 160,949 26,301 8,677 341 11,456 351,413 $ 132,277 27 18,866 148,445 20,485 7,504 2,857 6,432 336,893 Variance with Final Budget $ 6,009 2 1,470 (12,504) (5,816) (1,173) 2,516 (5,024) (14,520) Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 112,435 258,361 23,504 44,847 42,676 481,823 106,641 250,462 23,588 45,364 43,788 469,843 86,549 224,974 22,203 39,095 11,678 384,499 20,092 25,488 1,385 6,269 32,110 85,344 Excess (Deficiency) of Revenues Over (Under) Expenditures (130,410) (118,430) (47,606) 70,824 Other Financing Sources (Uses): Transfers In Transfers Out Total Other Financing Sources (Uses) 109,868 (10,129) 99,739 109,868 (96,214) 13,654 134,084 (27,076) 107,008 24,216 69,138 93,354 Net Change in Fund Balances (30,671) (104,776) 59,402 164,178 Fund Balance - Beginning 138,575 138,575 143,580 5,005 Fund Balance - Ending $ 107,904 See accompanying note to budgetary comparison schedule. 106 $ 33,799 $ 202,982 $ 169,183 CITY OF MESA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO BUDGETARY COMPARISON SCHEDULE JUNE 30, 2020 (in thousands) The financial statements for the City are prepared in accordance with generally accepted accounting principles – “GAAP basis”. Since Mesa, like most other Arizona cities, prepares its annual budget on a modified cash basis that differs from the “GAAP basis”, additional schedules of revenues and expenditures are presented for the General Fund to provide a meaningful comparison of actual results to budget on the “budget basis”. Adjustments necessary to convert the results of operations of the General Fund for the year ended June 30, 2020 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis Exhibit B-5 $ 59,402 Basis Differences: Compensated Absences Payroll Accrual Unavailable Revenue Unrealized Gain on Investments Net Change in Fund Balance-GAAP Basis Exhibit A-5 47 (1,851) (462) 2,037 $ 59,173 107 COMBINING STATEMENTS COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 F R E E COVI D TESTI NG NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Ambulance Transport accounts for the expenditures of the Mesa Fire and Medical Ambulance Transport program. Cemetery is designed to provide an accumulation of monies from which the interest earnings will provide perpetual care of the Cemetery. Community Facilities District accounts for the operations of the Eastmark and other Community Facilities District which are paid from special assessments levied against the benefited properties. Development Impact Fees is designed to provide a balance of monies to ensure that new development bears a proportionate share of the cost of improvements to the City’s parks, libraries, fire facilities and equipment, police facilities and equipment, and storm sewers. These funds are provided through the collection of development impact fees. Environmental Compliance accounts for expenditures that are a result of federal and state environmental requirements. Financing for this fund is derived from a monthly environmental compliance fee that is charged to each utility customer. Grants and Special Programs accounts for federal and state grant expenditures and other City programs. The principle financing source is federal and state grant revenues. Highway User Revenue accounts for capital projects and maintenance of the City’s streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by the state shared fuel taxes. Mesa Arts Center Restoration is designed to provide an accumulation of monies to be used to replace or refurbish the Mesa Arts Center facilities. These funds are provided through a fee on all ticketed events at the facility. Mesa Housing Authority accounts for federal expenditures of the City’s housing assistance programs that provide rent subsidy payments to private sector owners of dwelling units. Public Safety Sales Tax accounts for expenditures of the voter-approved sales tax dedicated to Public Safety. Quality of Life Sales Tax accounts for expenditures of the voter-approved sales tax to improve the quality of life for Mesa residents. Relief Fund accounts for expenditures of the Coronavirus Relief Act dedicated to supporting the City’s response to COVID-19. Street Sales Tax accounts for expenditures of the voter-approved sales tax that is used as the City match for the MAG Proposition 400 sales tax funds and also provides a local revenue source that is dedicated for street programs. Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and special revenue funds. Community Facilities District accounts for the costs of construction of drains, basins, channels and other storm sewer improvements and street improvements in the Eastmark and other Community Facilities District. General Capital Projects accounts for the costs of general City construction projects and for expenditures related to the acquisition of replacement vehicles for the City’s governmental funds. The funds are provided through transfers from the City’s General Fund Parks accounts for the costs of park facilities and improvements. Public Safety accounts for the cost of public safety facilities. Streets accounts for the cost of right-of-way acquisitions and street improvements. Debt Service Funds These funds are established to account for the accumulation of resources for, and the payment of, principal and interest not serviced by the Enterprise Fund. Community Facilities District accumulates monies for the payment of Eastmark and other Community Facilities District Bonds that are issued to finance the costs of improvements which are to be paid from special assessments levied against the benefited properties. General Obligation Bonds accumulates monies for the payment of principal and interest requirements of the City’s General Obligation Bonds. Highway User Revenue Bonds accumulates monies for the payment of principal and interest requirements of the City’s Highway User Revenue Bonds. Special Assessment Bonds accumulates monies for the payment of the Special Assessment Bonds that are issued to finance the costs of improvements which are to be paid from special assessments levied against the benefited properties. CITY OF MESA, ARIZONA EXHIBIT C-1 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 (in thousands) ASSETS Pooled Cash and Investments Accounts Receivable, Net Accrued Interest Receivable Due from Other Governments Advances to Other Funds Prepaid Costs Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments Total Assets LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Advances from Other Funds Customer and Defendant Deposits Unearned Revenue Payable from Restricted Assets: Accrued Interest Payable Matured Bonds Payable Total Liabilities Special Revenue Funds Ambulance Transport $ $ $ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue Total Deferred Inflows of Resources FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 130 130 45 495 - Cemetery Community Facilities District Development Impact Fees Environmental Compliance $ $ $ $ $ $ 7,842 11 29 7,882 - $ $ 227 1 228 44 70 $ $ 7,313 7,313 - $ $ 18,378 5 71 18,454 597 - 540 - 114 - 597 - - - - - (410) (410) 7,882 7,882 114 114 7,313 7,313 17,857 17,857 130 $ 108 7,882 $ 228 $ 7,313 $ 18,454 EXHIBIT C-1 (Continued) Special Revenue Funds Grants and Special Programs $ 15,464 360 43 1,036 8 Highway User Revenue $ $ 16,911 $ $ $ 523 1,092 18,275 117 3,280 21,672 3,531 - Mesa Arts Center Restoration Mesa Housing Authority $ $ $ $ 1,426 6 1,432 1 10 $ $ Public Safety Tax Quality of Life Sales Tax $ 22,386 55 4,928 495 - $ 6,219 23 4,964 - $ 49,854 184 236 $ 53,264 1,394 203 6,150 70 1,136 $ 27,864 $ 11,206 $ 50,274 $ 61,081 588 790 $ - 1,198 47,967 8,590 7,126 - 49,165 15,716 74,989 - 302 302 316 316 314 120,630 29,299 786 (751) 150,278 $ 225,583 11 1,378 2,322 - 14 14 - - - - - 8 12,448 2,139 786 (99) 15,282 18,141 18,141 1,421 1,421 (242) (242) 1,136 21,672 $ 1,432 $ $ 201,348 1,793 732 20,901 495 314 $ 225,583 2,322 - 3,531 $ Street Sales Tax 570 23 543 - 1,615 $ 16,911 Relief Fund Total Special Revenue Funds - - - 25,542 25,542 11,206 11,206 236 873 1,109 70 44,993 45,063 $ 27,864 $ 11,206 $ 50,274 $ 61,081 109 $ 17,439 495 7,126 49,929 CITY OF MESA, ARIZONA EXHIBIT C-1 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 (in thousands) ASSETS Pooled Cash and Investments Accounts Receivable, Net Accrued Interest Receivable Due from Other Governments Advances to Other Funds Prepaid Costs Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agent Accounts Receivable Due from Other Governments Total Assets LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Advances from Other Funds Customer and Defendant Deposits Unearned Revenue Payable from Restricted Assets: Accrued Interest Payable Matured Bonds Payable Total Liabilities Capital Projects Funds Community Facilities District General Capital Projects Parks $ 240 - $ 35,378 9 136 262 $ 8,006 30 - 240 $ 35,785 $ 8,036 $ $ $ $ $ $ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue Total Deferred Inflows of Resources FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ - 956 - Public Safety 333 - $ Streets 10 - $ 43,874 5,633 167 3,443 - 10 $ 53,117 36 261 - $ 2,195 - Total Capital Projects Funds $ $ $ 87,498 5,642 343 3,443 262 97,188 3,520 261 - - 956 333 297 2,195 3,781 - - - - 34 34 34 34 240 240 262 34,567 34,829 7,703 7,703 (287) (287) 50,888 50,888 262 58,831 34,567 (287) 93,373 240 $ 35,785 $ 8,036 10 $ 53,117 110 $ $ 97,188 EXHIBIT C-1 (Concluded) Community Facilities District Debt Service Funds Highway General User Obligation Revenue Bonds Bonds Special Assessment Bonds Total Debt Service Funds Total Nonmajor Governmental Funds $ $ $ $ $ $ $ $ 16 4,009 901 16,613 7 21,546 4 - $ 9 - $ $ 2,686 42,183 1,381 46,259 - - 10,776 $ 10,776 $ $ $ - 1,361 1,584 2,949 6,312 35,870 42,182 1,621 9,155 10,776 16,613 16,613 542 542 1,984 1,984 21,546 $ - 25 - 8 212 220 6,703 53,860 16,825 1,388 $ 78,801 $ - $ $ 6 4 288,846 7,435 1,100 24,344 495 576 6,703 53,860 16,825 1,388 401,572 20,959 261 495 7,126 49,933 6 9,300 46,609 55,913 9,300 46,609 134,683 - 219 219 17,374 17,374 17,724 17,724 3,535 3,535 - (5) (5) 5,519 (5) 5,514 576 184,980 63,866 786 (1,043) 249,165 46,259 $ 10,776 220 $ 78,801 - $ 111 $ 401,572 CITY OF MESA, ARIZONA EXHIBIT C-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues Total Revenues Ambulance Transport $ 2,017 3 2,020 Special Revenue Funds Cemetery Community Facilities District Development Impact Fees Environmental Compliance $ $ $ $ 96 225 321 230 7 237 4,036 4,036 16,600 610 490 17,700 Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Debt Service: Principal Retirement Interest on Bonds Service Charges Cost of Issuance Capital Outlay Total Expenditures 1,363 - - 224 - - 1,111 59 4,642 7,151 1,343 2,706 - 3 227 - 2,625 15,588 Excess (Deficiency) of Revenues Over (Under) Expenditures (686) 321 10 4,036 2,112 Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Total Other Financing Sources (Uses) 276 276 - 25 25 (3,428) (3,428) - Net Change in Fund Balances (410) 321 35 608 2,112 Fund Balances - Beginning - 7,561 79 6,705 15,745 Fund Balances - Ending $ (410) $ 112 7,882 $ 114 $ 7,313 $ 17,857 EXHIBIT C-2 (Continued) Special Revenue Funds Grants and Special Programs Highway User Revenue Mesa Arts Center Restoration Mesa Housing Authority Public Safety Tax Quality of Life Sales Tax $ $ $ $ 19,326 20 19,346 $ 27,208 373 27,581 $ 27,476 101 114 27,691 2,537 623 4,817 707 992 363 2,295 1,672 14,006 42,099 858 42,957 296 49 345 $ Relief Fund Street Sales Tax Total Special Revenue Funds 42,422 1,249 43,671 $ 32,971 309 6,871 657 1,776 414 42,998 $ 87,655 230 2,537 5,069 115,535 20,077 1,288 5,647 2,295 2,576 242,909 3,043 3,598 59 1,324 19,764 - - 5 19,162 - 5,571 - 18,347 - 36,029 8,128 - 4,929 319 16,208 - 9,312 65,286 67,963 8,475 2,691 10,715 11,367 31,131 228 228 1,571 20,738 4,830 10,401 18,347 44,157 14,698 36,154 3 39,353 190,392 3,291 11,826 117 (1,392) 17,180 9,344 (486) 6,844 52,517 3,029 3,029 (12,401) (12,401) - - 9,392 (9,392) - - 1,595 1,595 (75) (75) 14,317 (25,296) (10,979) 6,320 (575) 117 (1,392) 17,180 9,344 1,109 6,769 41,538 8,962 18,716 1,304 1,150 8,362 1,862 - 38,294 108,740 (242) $ 25,542 $ 11,206 1,109 $ 45,063 $ 150,278 $ 15,282 $ 18,141 $ 1,421 $ 113 $ CITY OF MESA, ARIZONA EXHIBIT C-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues Total Revenues Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Debt Service: Principal Retirement Interest on Bonds Service Charges Cost of Issuance Capital Outlay Total Expenditures Capital Projects Funds Community Facilities District General Capital Projects Parks Public Safety Streets Total Capital Projects Funds $ $ $ $ $ $ - 256 256 92 92 12,819 1,573 14,392 12,819 9 2,820 863 16,511 648 17,654 18,302 24,146 24,146 3,587 3,587 8,106 8,106 16,078 16,078 648 69,571 70,219 Excess (Deficiency) of Revenues Over (Under) Expenditures (18,302) (22,375) (3,331) (8,014) (1,686) (53,708) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Total Other Financing Sources (Uses) 18,148 243 18,391 24,714 24,714 300 (100) 200 (300) (300) (256) (256) 25,014 (656) 18,148 243 42,749 Net Change in Fund Balances 89 2,339 (3,131) (8,314) (1,942) (10,959) Fund Balances - Beginning 151 32,490 10,834 8,027 52,830 104,332 240 $ 34,829 $ 7,703 (287) $ 50,888 $ 93,373 Fund Balances - Ending - 9 899 863 1,771 $ 114 $ EXHIBIT C-2 (Concluded) Debt Service Funds Community Facilities District General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds Total Debt Service Funds Total Nonmajor Governmental Funds $ $ $ $ $ $ $ 2,951 1,373 103 4,427 41,789 564 681 562 43,596 - 288 288 44,740 1,661 564 681 665 48,311 87,655 44,970 2,537 1,661 5,069 128,918 20,086 1,969 9,132 2,295 3,439 307,731 1,685 2,321 2 190 4,198 35,870 12,625 6 48,501 9,155 3,243 3 12,401 219 19 238 - 9,312 65,286 67,963 8,475 46,929 18,208 11 190 65,338 46,929 18,208 14 838 108,924 325,949 229 (4,905) (12,401) 50 (17,027) (18,218) 213 695 908 4,283 (696) 3,587 12,401 12,401 19 19 16,703 (696) 213 695 16,915 56,034 (26,648) 18,361 938 48,685 1,137 (1,318) - 69 (112) 30,467 847 4,853 - (74) 5,626 218,698 1,984 $ 3,535 $ - $ (5) $ 115 5,514 $ 249,165 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. Warehouse, Maintenance and Services Fund was established to finance and account for services and commodities furnished by Fleet Support, Materials and Supply, and Printing and Graphics. Property and Public Liability Self-Insurance Fund was established to account for the cost of claims incurred by the City under a self-insurance program. Workers’ Compensation Self-Insurance Fund was established to account for the costs of maintaining a self-insurance program for industrial insurance at the City. Employee Benefits Self-Insurance Fund was established to account for the costs of maintaining the City’s self-insurance health program. CITY OF MESA, ARIZONA EXHIBIT C-3 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2020 (in thousands) ASSETS Current Assets: Pooled Cash and Investments Accounts Receivable Accrued Premiums Receivable Accrued Interest Receivable Inventory Prepaid Costs Deposits Total Current Assets Warehouse, Maintenance and Services Property and Public Liability Self Insurance Workers' Compensation Self Insurance $ $ $ Noncurrent Assets: Capital Assets, Not Being Depreciated Captial Assets, Being Depreciated, Net Total Noncurrent Assets 827 5 7,587 8,419 12,855 49 682 13,586 Employee Benefits Self Insurance Total 7,768 29 196 7,993 $ 45,662 25 197 173 69 46,126 $ 66,285 852 197 256 7,587 878 69 76,124 419 2,225 2,644 - - 9 9 419 2,234 2,653 11,063 13,586 7,993 46,135 78,777 3,627 3,627 499 499 319 319 444 444 4,889 4,889 14,690 14,085 8,312 46,579 83,666 LIABILITIES Current Liabilities Accounts Payable and Accrued Liabilities Claims Payable Due to Other Funds Current Portion of Compensated Absences Total Current Liabilities 1,106 770 121 1,997 9 15,568 9 15,586 166 26,267 4 26,437 2,479 2,826 9 5,314 3,760 44,661 770 143 49,334 Long-Term Liabilities Compensated Absences Net Pension and OPEB Liability Total Long-Term Liabilities 598 26,069 26,667 79 3,593 3,672 28 2,298 2,326 66 3,222 3,288 771 35,182 35,953 28,664 19,258 28,763 8,602 85,287 1,038 1,038 144 144 92 92 133 133 1,407 1,407 2,644 (17,657) (15,013) (5,317) (5,317) (20,543) (20,543) 9 37,835 $ 37,844 2,653 (5,682) $ (3,029) Total Assets DEFERRED OUTFLOWS OF RESOURCES Pensions and OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Total Liabilities DEFERRED INFLOWS OF RESOURCES Pensions and OPEB Total Deferred Inflows of Resources NET POSITION Net Investment in Capital Assets Unrestricted Total Net Position $ $ 116 $ CITY OF MESA, ARIZONA EXHIBIT C-4 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Operating Revenues: Charges For Services: Warehouse Fleet Support Services Printing and Graphics Self-Insurance Contributions: Employee City State Retirement System Other Total Operating Revenues Warehouse, Maintenance and Services Property and Public Liability Self Insurance Workers' Compensation Self Insurance Employee Benefits Self Insurance $ $ $ $ 7,935 21,365 818 - - - Total $ 7,935 21,365 818 30,118 5,893 4 5,897 4,138 109 4,247 16,407 66,462 4,753 6,523 94,145 16,407 76,493 4,753 6,636 134,407 Operating Expenses: Warehouse, Maintenance & Services: Warehouse Fleet Support Services Printing and Graphics Self-Insurance: Administrative Costs Claims and Premiums Paid Total Operating Expenses 8,457 22,155 588 - - - 8,457 22,155 588 31,200 1,085 6,852 7,937 1,175 3,910 5,085 6,973 86,592 93,565 9,233 97,354 137,787 Operating Income (Loss) Before Depreciation (1,082) (2,040) (838) 580 (3,380) (221) - - (42) (263) (1,303) (2,040) (838) 538 (3,643) Nonoperating Revenues (Expense): Investment Income Gain/(Loss) on Disposal of Capital Assets Total Nonoperating Revenues (Expenses) (61) 177 116 403 403 253 253 1,381 1,381 1,976 177 2,153 Income (Loss) Before Capital Contributions (1,187) (1,637) (585) 1,919 (1,490) Capital Contributions 51 - - 10 61 Change in Net Position (1,136) (1,637) (585) 1,929 (1,429) Total Net Position - Beginning (13,877) (3,680) (19,958) 35,915 (1,600) Depreciation Operating Income (Loss) Total Net Position - Ending $ (15,013) $ 117 (5,317) $ (20,543) $ 37,844 $ (3,029) CITY OF MESA, ARIZONA EXHIBIT C-5 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Cash Flows from Operating Activities: Cash Received from Users Cash Payments to Suppliers Cash Payments to Employees Net Cash Provided by (Used For) Operating Activities Warehouse, Maintenance and Services Property and Public Liability Self Insurance Workers' Compensation Self Insurance $ $ $ Cash Flows From Noncapital Financing Activities: Operating Transfers-In From Other Funds Net Cash Provided By (Used For) Noncapital Financing Activities 29,904 (23,422) (7,604) 5,897 (7,422) 283 Employee Benefits Self Insurance Total 4,246 (4,524) (295) $ 94,117 (94,656) (974) $ 134,164 (130,024) (8,590) (1,122) (1,242) (573) (1,513) (4,450) 770 - - - 770 770 - - - 770 Cash Flows from Capital and Related Financing Activities: Acquisition and Construction of Capital Assets Net Cash Provided By (Used For) Capital and Related Financing Activities (180) - - - (180) (180) - - - (180) Cash Flows from Investing Activities: Interest Received on Investments Net Cash Provided By (Used For) Investing Activities (59) (59) 414 414 257 257 1,424 1,424 2,036 2,036 Net Change in Cash and Cash Equivalents (591) (828) (316) (89) (1,824) Pooled Cash and Investments at Beginning of Year 591 13,683 8,084 45,751 68,109 Pooled Cash and Investments at End of Year $ - $ 12,855 $ 7,768 $ 45,662 $ 66,285 $ (1,303) $ (2,040) $ (838) $ $ (3,643) Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase)/Decrease in Receivables (Increase)/Decrease in Inventory (Increase)/Decrease in Deposits and Prepaid Costs (Decrease)/Increase in Accounts Payable (Decrease)/Increase in Pension and OPEB Liability (Decrease)/Increase in Deferred Outflows (Decrease)/Increase in Deferred Inflows (Decrease)/Increase in Other Accrued Expenses 221 - (214) (851) Total Adjustments Net Cash Provided by (Used for) Operating Activities - $ 538 42 263 (28) (91) 3,506 (1,875) (589) 74 (130) 1 283 (247) (90) 981 (129) 106 121 (155) (60) 382 36 953 (61) (195) (98) (2,700) (242) (851) (223) 969 3,849 (2,472) (837) (1,263) 181 798 265 (2,051) (807) (1,122) 118 $ (1,242) $ (573) $ (1,513) $ (4,450) SUPPLEMENTAL INFORMATION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 L I B R A RY CU R BSI DE SERVI CE CITY OF MESA, ARIZONA EXHIBIT D-1 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE COMMUNITY FACILITIES DISTRICT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Property Taxes Investment Income Contributions Total Revenues $ Actual Budgetary Basis Variance with Final Budget $ $ Final 234 207 441 $ 234 207 441 230 4 234 (4) 4 (207) (207) Expenditures: Current: General Government Service Charges Cost of Issuance Capital Outlay Total Expenditures 7,971 1,480 20,330 29,781 2,969 5 1,690 25,118 29,782 223 3 648 17,654 18,528 2,746 2 1,042 7,464 11,254 Excess (Deficiency) of Revenues Over (Under) Expenditures (29,340) (29,341) (18,294) 11,047 Other Financing Uses: Transfers In Face Amount of Bonds Issued Premium on Issuance of Bonds Total Other Financing Uses 29,340 29,340 29,340 29,340 25 18,148 243 18,416 25 11,192 (243) 10,974 - (1) 122 123 144 144 230 86 Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ 144 $ 143 Note: Includes both the Special Revenue and the Capital Projects Funds 119 $ 352 $ 209 CITY OF MESA, ARIZONA EXHIBIT D-2 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE ENVIRONMENTAL COMPLIANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ 16,344 64 16,408 Actual Budgetary Basis Final $ 16,344 64 16,408 $ 16,600 443 490 17,533 Variance with Final Budget $ 256 379 490 1,125 Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 1,279 67 6,791 7,401 5,956 21,494 1,280 67 5,587 7,318 7,580 21,832 1,109 52 4,632 7,145 2,625 15,563 171 15 955 173 4,955 6,269 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,086) (5,424) 1,970 7,394 Net Change in Fund Balances (5,086) (5,424) 1,970 7,394 Fund Balances - Beginning 14,059 14,059 15,686 1,627 Fund Balance - Ending $ 8,973 $ 8,635 120 $ 17,656 $ 9,021 CITY OF MESA, ARIZONA EXHIBIT D-3 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE GRANTS AND SPECIAL PROGRAMS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Occupancy Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues Total Revenues $ Actual Budgetary Basis Final 2,875 531 23,159 990 2,205 3,464 33,224 $ 2,875 531 23,159 990 2,205 3,464 33,224 $ 2,537 623 5,357 709 992 254 2,295 1,542 14,309 Variance with Final Budget $ (338) 92 (17,802) 709 2 254 90 (1,922) (18,915) Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 3,430 10,017 249 2,467 23,723 39,886 3,459 9,477 380 2,631 24,347 40,294 3,041 3,598 59 1,322 2,691 10,711 418 5,879 321 1,309 21,656 29,583 Excess (Deficiency) of Revenues Over (Under) Expenditures (6,662) (7,070) 3,598 10,668 Other Financing Sources (Uses): Transfers In Total Other Financing Uses - - 3,029 3,029 3,029 3,029 Net Change in Fund Balances (6,662) (7,070) 6,627 13,697 Fund Balances - Beginning 8,169 8,169 9,207 1,038 Fund Balance - Ending $ 1,507 $ 1,099 121 $ 15,834 $ 14,735 CITY OF MESA, ARIZONA EXHIBIT D-4 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE HIGHWAY USER REVENUE FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ Actual Budgetary Basis Final 41,655 2 41,657 $ 41,655 2 41,657 $ 42,099 605 42,704 Variance with Final Budget $ 444 603 1,047 Expenditures: Current: Community Environment Capital Outlay Total Expenditures 21,254 23,395 44,649 21,305 23,375 44,680 19,717 11,367 31,084 1,588 12,008 13,596 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,992) (3,023) 11,620 14,643 Other Financing Uses: Transfers Out Total Other Financing Uses (12,441) (12,441) (12,441) (12,441) (12,401) (12,401) 40 40 Net Change in Fund Balances (15,433) (15,464) (781) 14,683 Fund Balances - Beginning 15,433 15,433 18,636 3,203 Fund Balance - Ending $ - $ (31) 122 $ 17,855 $ 17,886 CITY OF MESA, ARIZONA EXHIBIT D-5 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE MESA HOUSING AUTHORITY FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ Expenditures: Current: General Government Community Environment Capital Outlay Total Expenditures Actual Budgetary Basis Final 33,624 54 33,678 $ 33,624 54 33,678 $ 19,675 20 19,695 Variance with Final Budget $ (13,949) (34) (13,983) 32,264 1,414 33,678 32,284 1,414 33,698 5 19,158 1,571 20,734 (5) 13,126 (157) 12,964 Excess (Deficiency) of Revenues Over (Under) Expenditures - (20) (1,039) (1,019) Net Change in Fund Balances - (20) (1,039) (1,019) Fund Balances - Beginning 147 147 358 211 Fund Balance - Ending $ 148 $ 127 123 $ (681) $ (808) CITY OF MESA, ARIZONA EXHIBIT D-6 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE QUALITY OF LIFE SALES TAX FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Licenses and Permits Investment Income Total Revenues $ Expenditures: Current: Public Safety Total Expenditures Actual Budgetary Basis Final 26,306 26,306 $ 26,306 26,306 $ 27,476 101 18 27,595 Variance with Final Budget $ 1,170 101 18 1,289 26,306 26,306 19,729 19,729 18,347 18,347 1,382 1,382 Excess (Deficiency) of Revenues Over (Under) Expenditures - 6,577 9,248 2,671 Net Change in Fund Balances - 6,577 9,248 2,671 1,844 1,844 1,867 23 Fund Balances - Beginning Fund Balance - Ending $ 1,844 $ 8,421 124 $ 11,115 $ 2,694 CITY OF MESA, ARIZONA EXHIBIT D-7 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE STREET SALES TAX FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Licenses and Permits Intergovernmental Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ Actual Budgetary Basis Final 31,567 195 400 166 350 32,678 $ 31,567 195 400 166 350 32,678 $ 42,407 639 229 43,275 Variance with Final Budget $ (31,567) (195) 42,407 (400) 473 (121) 10,597 Expenditures: Current: General Government Public Safety Community Environment Capital Outlay Total Expenditures 3,474 376 21,912 30,728 56,490 3,474 377 20,871 32,008 56,730 36,030 8,110 44,140 3,474 (35,653) 12,761 32,008 12,590 Excess (Deficiency) of Revenues Over (Under) Expenditures (23,812) (24,052) (865) 23,187 Other Financing Sources(Uses): Transfers In Transfers Out Total Other Financing Uses - (75) (75) 1,595 1,595 1,595 75 1,670 Net Change in Fund Balances (23,812) (24,127) 730 24,857 Fund Balances - Beginning 35,109 35,109 38,276 3,167 Fund Balance - Ending $ 11,297 $ 10,982 125 $ 39,006 $ 28,024 CITY OF MESA, ARIZONA EXHIBIT D-8 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL CAPITAL PROJECTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ 110 110 Actual Budgetary Basis Variance with Final Budget $ $ Final 110 110 $ (293) (293) (293) (110) (403) Expenditures: Current: General Government Public Safety Community Environment Capital Outlay Total Expenditures 13 275 250 47,434 47,972 823 278 100 52,843 54,044 17,654 17,654 823 278 100 35,189 36,390 Excess (Deficiency) of Revenues Over (Under) Expenditures (47,862) (53,934) (17,947) 35,987 Other Financing Sources (Uses): Transfers In Total Other Financing Uses 19,096 19,096 19,096 19,096 - 19,096 19,096 Net Change in Fund Balances (28,766) (34,838) (17,947) 16,891 Fund Balances - Beginning 34,392 34,392 32,226 (2,166) Fund Balance - Ending $ 5,626 $ (446) 126 $ 14,279 $ 14,725 CITY OF MESA, ARIZONA EXHIBIT D-9 SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE STREETS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ 25,165 25,165 Actual Budgetary Basis Variance with Final Budget $ $ Final $ 25,165 25,165 18 (256) (238) (25,147) (256) (25,403) Expenditures: Debt Service: Cost of Issuance Capital Outlay Total Expenditures 289 62,842 63,131 289 62,842 63,131 8,106 8,106 289 54,736 55,025 Excess (Deficiency) of Revenues Over (Under) Expenditures (37,966) (37,966) (8,344) 29,622 Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Total Other Financing Uses 27,247 27,247 (769) 27,247 26,478 300 (300) - (300) (469) 27,247 26,478 Net Change in Fund Balances (10,719) (11,488) (8,344) 3,144 Fund Balances - Beginning 88,572 88,572 52,512 (36,060) Fund Balance - Ending $ 77,853 $ 127 77,084 $ 44,168 $ (32,916) STATISTICAL SECTION COM P R EHENS IV E A NNUA L F INA NCI AL R EPORT 2 0 2 0 ARI ZONA C E L E B R ATI O N OF F R EEDOM EVENT | F I ESTA M AL L STATISTICAL SECTION This part of the City of Mesa’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 128 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 140 Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current level of outstanding debt and the City’s ability to issue additional debt in the future. 143 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. 151 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. 153 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. CITY OF MESA, ARIZONA TABLE I NET POSITION BY COMPONENTS LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands) 2019-20 2018-19 2017-18 GOVERNMENTAL ACTIVITIES Net Investment in Capital Assets Restricted Unrestricted $ 1,075,182 143,839 (833,300) $ 1,038,928 103,164 (834,016) $ 1,019,888 88,305 (858,392) $ 986,354 88,721 (711,367) Total Governmental Activities Net Position $ 385,721 $ 308,076 $ 249,801 $ 363,708 $ 213,576 63,113 252,261 $ 170,427 47,857 350,006 $ 266,012 40,440 199,531 $ 247,598 43,046 228,160 Total Business-type Activities $ 528,950 $ 568,290 $ 505,983 $ 518,804 PRIMARY GOVERNMENT Net Investment in Capital Assets Restricted Unrestricted $ 1,288,758 206,952 (581,039) $ 1,209,355 151,021 (484,010) $ 1,285,900 128,745 (658,861) $ 1,233,952 131,767 (483,207) Total Primary Government $ $ $ $ BUSINESS-TYPE ACTIVITIES Net Investment in Capital Assets Restricted Unrestricted 914,671 128 876,366 755,784 2016-17 882,512 TABLE I (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 $ 965,148 81,941 (666,986) $ 932,660 72,170 (666,758) $ 866,332 60,555 (120,803) $ 902,397 56,719 (184,355) $ 913,702 41,257 (96,986) $ 872,302 39,296 (6,376) $ 380,103 $ 338,072 $ 806,084 $ 774,761 $ 857,973 $ 905,222 $ 302,521 49,139 158,756 $ 327,743 47,576 160,934 $ 393,720 43,023 178,702 $ 346,352 37,795 271,619 $ 412,016 69,739 254,189 $ 430,436 55,873 258,131 $ 510,416 $ 536,253 $ 615,445 $ 655,766 $ 735,944 $ 744,440 $ 1,267,669 131,080 (508,230) $ 1,260,403 119,746 (505,824) $ 1,260,052 103,578 57,899 $ 1,248,749 94,514 87,264 $ 1,325,718 110,996 157,203 $ 1,302,738 95,169 251,755 $ $ $ 1,421,529 $ 1,430,527 $ 1,593,917 $ 1,649,662 890,519 874,325 129 CITY OF MESA, ARIZONA TABLE II CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands) EXPENSES 2018-19 2017-18 2016-17 2015-16 134,299 384,800 152,847 62,014 17,841 $ 119,819 355,752 119,506 58,345 18,078 $ 105,140 334,905 113,916 54,828 19,514 $ 101,301 379,505 104,173 55,739 19,279 $ 96,860 305,376 117,120 54,967 20,424 Total Governmental Activities Expenses 751,801 671,500 628,303 659,997 594,747 BUSINESS-TYPE ACTIVITIES: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Interest on Long-term Debt 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 - 22,475 33,124 103,821 57,468 38,524 5,029 2,117 4,413 2,748 7,867 1,186 - 25,573 31,636 101,005 74,157 37,988 5,308 1,965 4,481 3,174 5,870 1,181 - 26,561 37,109 95,608 71,782 37,911 5,125 2,028 4,711 3,687 6,042 1,268 - 27,647 31,549 95,574 73,877 36,586 4,865 2,575 4,252 2,913 5,271 1,182 - Total Business-type Activities Expenses 320,208 278,772 292,338 291,832 286,291 $ 1,072,009 $ 950,272 $ 920,641 $ 951,829 $ 881,038 GOVERNMENTAL ACTIVITIES: General Government Public Safety Community Environment Cultural-Recreational Interest on Long-term Debt Total Primary Government Expenses 2019-20 $ 130 TABLE II (Continued) 2014-15 2013-14 2012-13 2011-12 2010-11 $ 102,396 302,633 101,531 52,430 23,939 $ 103,819 277,614 125,700 49,275 24,431 $ 105,410 287,451 129,164 61,717 23,443 $ 57,472 287,918 97,593 57,171 21,631 $ 59,552 273,320 106,434 54,550 21,078 582,929 580,839 607,185 521,785 514,934 28,495 32,104 101,863 71,161 36,979 2,863 2,210 3,715 1,200 8,581 885 4,124 30,044 35,020 93,871 65,637 32,908 4,343 2,555 3,060 2,879 6,201 1,153 - 28,897 35,653 103,432 91,739 33,694 4,300 3,353 3,946 9,094 1,081 3,653 29,751 34,275 74,162 68,540 32,485 3,737 2,589 3,486 8,525 54 974 - 26,817 36,020 82,378 63,613 31,462 3,972 2,679 3,849 8,324 15 965 - 294,180 277,671 318,842 258,578 260,094 $ 877,109 $ 858,510 $ 926,027 $ 780,363 $ 775,028 131 CITY OF MESA, ARIZONA TABLE II (Continued) CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands) PROGRAM REVENUES GOVERNMENTAL ACTIVITIES: Charges for services: Licenses and Permits Charges for Services Fines and Forfeitures Other activities Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues BUSINESS-TYPE ACTIVITIES: Charges for services: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center Hohokam Stadium/Fitch Complex Cubs Stadium District Cooling Economic Investment Operating Grants and Contributions Capital Grants and Contributions Total Business-type Activities Program Revenues 2019-20 $ 24,126 40,489 9,253 3,791 70,633 24,719 173,011 2018-19 $ 23,812 43,214 10,838 3,439 25,326 13,780 120,409 2017-18 $ 25,119 40,222 10,436 2,979 34,446 23,618 136,820 2016-17 $ 23,152 38,348 9,873 1,330 26,955 24,451 124,109 29,855 39,986 152,266 81,464 63,267 4,018 2,595 40 221 1,143 1,632 35,896 412,383 29,986 43,547 144,896 84,220 62,432 4,339 1,608 3,153 75 250 1,148 2,316 19,692 397,662 31,425 39,171 147,667 83,078 60,522 3,983 1,635 2,809 51 238 1,215 2,406 23,474 397,674 33,534 39,752 138,335 79,056 58,117 3,846 1,545 3,299 54 291 1,231 158 28,711 387,929 Total Primary Government Program Revenues $ 585,394 $ 518,071 $ 534,494 $ 512,038 NET (EXPENSE) REVENUE Governmental Activities Business-type Activities $ (578,790) 92,175 $ (551,091) 118,890 $ (491,483) 105,336 $ (535,888) 96,097 Total Primary Government Net Expense $ (486,615) $ (432,201) $ (386,147) $ (439,791) 132 TABLE II (Continued) 2015-16 $ 23,254 38,178 11,049 9,385 26,361 35,925 144,152 2014-15 $ 20,892 36,260 10,505 5,741 26,418 75,907 175,723 2013-14 $ 18,797 32,106 9,890 400 29,514 20,714 111,421 2012-13 $ 17,693 27,675 9,885 2,945 55,312 25,049 138,559 2011-12 $ 13,359 25,779 11,294 18 60,355 23,503 134,308 2010-11 $ 12,577 20,304 11,820 8 65,284 31,461 141,454 32,254 38,962 130,674 79,523 55,354 3,623 1,645 2,798 63 201 1,234 267 16,929 363,527 33,601 39,422 121,205 77,172 52,748 3,454 1,737 2,475 2 202 1,274 157 18,107 351,556 31,198 38,600 112,003 66,457 47,452 3,813 1,622 2,057 36 174 1,142 9,056 17,331 330,941 31,075 39,125 111,933 64,413 47,369 3,484 1,472 2,597 5,496 975 148 9,401 7,997 325,485 34,625 39,139 113,418 64,544 47,631 3,271 2,169 2,122 6,074 825 1,092 2,126 15,814 332,850 33,138 41,370 102,215 59,659 47,538 3,318 2,250 2,826 6,161 52 945 25 10,774 310,271 $ 507,679 $ 527,279 $ 442,362 $ 464,044 $ 467,158 $ 451,725 $ (450,595) 77,236 $ (407,206) 57,376 $ (469,418) 53,270 $ (468,626) 6,643 $ (387,477) 74,272 $ (373,480) 50,177 $ (373,359) $ (349,830) $ (416,148) $ (461,983) $ (313,205) $ (323,303) 133 CITY OF MESA, ARIZONA TABLE II (Continued) CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands) GENERAL REVENUES AND OTHER CHANGES IN NET POSITION 2019-20 2018-19 2017-18 2016-17 GOVERNMENTAL ACTIVITIES: Sales Taxes Property Taxes Occupancy Taxes Unrestricted Intergovernmental Revenues Contributions Not Restricted to Specific Programs Investment Income Miscellaneous Gain (Loss) on Sale of Capital Assets Transfers $ 219,932 45,068 2,564 183,189 36,912 16,002 16,374 136,394 $ 189,871 36,013 3,246 175,278 65,189 13,729 11,531 (27) 114,535 $ 169,024 35,571 2,628 167,540 80,312 1,912 5,418 (2,462) 116,006 $ 159,735 34,684 2,536 158,916 46,817 448 11,161 (1,411) 106,607 Total Governmental Activities 656,435 609,365 575,949 519,493 BUSINESS-TYPE ACTIVITIES: Occupancy Taxes Investment Income Gain (Loss) on Sale of Capital Assets Miscellaneous Transfers 1,459 7,618 (801) (3,397) (136,394) 1,602 8,004 44,056 4,290 (114,535) 1,192 1,691 261 1,915 (116,006) 1,085 983 16,364 466 (106,607) Total Business-type Activities (131,515) (56,583) (110,947) (87,709) Total Primary Government $ 524,920 $ 552,782 $ 465,002 $ 431,784 Change in Net Position Governmental Activities Business-type Activities $ 77,645 (39,340) $ 58,275 62,307 $ 84,466 (5,611) $ (16,395) 8,388 Total Primary Government $ 38,305 $ 120,582 $ 78,855 $ 134 (8,007) TABLE II (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 $ 151,826 33,825 2,331 149,350 44,928 2,210 6,008 102,148 $ 146,337 33,241 2,081 145,266 47,761 1,786 7,844 94,427 $ 140,567 22,549 1,919 135,075 88,646 966 5,550 109,520 $ 137,280 14,354 1,903 104,462 49,569 1,692 7,424 83,615 $ 126,644 14,234 2,019 86,103 17,171 1,503 8,939 83,615 $ 121,046 14,244 2,148 92,613 15,610 617 7,060 83,334 492,626 478,743 504,792 400,299 340,228 336,672 1,161 3,020 (6,145) 1,039 (102,148) 999 1,141 5,157 233 (94,427) 851 1,453 18,697 288 (109,520) 825 860 (83,615) 850 (83,615) 839 (83,334) (103,073) (86,897) (88,231) (81,930) (82,765) (82,495) $ 389,553 $ 391,846 $ 416,561 $ 318,369 $ 257,463 $ 254,177 $ 42,031 (25,837) $ 71,537 (29,521) $ 35,374 (34,961) $ (68,327) (75,287) $ (47,249) (8,493) $ (36,808) (32,318) $ 16,194 $ 42,016 $ $ (143,614) $ (55,742) $ (69,126) 413 135 CITY OF MESA, ARIZONA TABLE III FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) (in thousands) 2019-20 GENERAL FUND Nonspendable Restricted Committed Assigned Unassigned Total General Fund ALL OTHER GOVERNMENTAL FUNDS Nonspendable Restricted (1)(2) Committed Assigned Unassigned Total All Other Governmental Funds $ 2018-19 2,301 19,910 42,515 130,342 $ 794 26 14,016 30,869 90,190 2017-18 $ 2,304 10,377 28,346 89,347 2016-17 $ 2,145 146 528 19,367 92,240 $ 195,068 $ 135,895 $ 130,374 $ 114,426 $ $ $ $ 576 184,980 63,866 786 (1,043) $ 249,165 1,196 159,745 57,432 459 (134) $ 218,698 135 132,462 41,641 22 (176) $ 174,084 37 112,105 30,928 2 (69) $ 143,003 (1) Effective with fiscal year 2010-11 the fund balance related to the sales tax for street improvements was moved to the Special Revenue funds. (2) Effective with fiscal year 2011-12 the fund balance related to the sales tax for Quality of Life projects was moved to the Special Revenue funds. 136 TABLE III (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 $ $ 4,035 184 227 10,703 79,657 $ 3,490 184 126 74,145 $ 2,956 188 1,484 72,683 $ $ 94,806 $ 77,945 $ 77,311 $ 53,619 $ 85,793 $ 101,170 $ 77 95,701 28,580 6 (155) $ 138 172,316 30,092 (31) $ 23 190,609 21,379 (675) $ $ $ $ 124,209 $ 202,515 $ 211,336 1,724 284 1,185 50,426 55 243,831 23,005 (1,177) $ 265,714 754 2,012 4,992 78,035 2010-11 84 211,279 16,360 (1) $ 227,722 137 $ 405 1,992 4,898 93,875 2,906 112,538 19,166 - $ 134,610 CITY OF MESA, ARIZONA TABLE IV CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) (in thousands) 2019-20 REVENUES Sales Taxes (1) $ 219,932 Property Taxes 44,970 Occupancy Taxes 2,564 Special Assessments 1,661 Licenses and Permits 24,126 Intergovernmental 277,396 Charges for Services 40,489 Fines and Forfeitures 9,253 Investment Income 14,026 Contributions 2,295 Miscellaneous 9,487 Total Revenues 646,199 2018-19 2017-18 2016-17 2015-16 $ 189,871 36,005 3,246 1,274 23,812 213,051 43,214 10,838 10,840 255 6,688 539,094 $ 169,024 35,616 2,628 1,174 25,119 223,800 40,222 10,436 1,608 429 5,547 515,603 $ 159,735 34,675 2,536 2,125 23,152 200,820 38,348 9,873 331 360 4,348 476,303 $ 151,826 34,765 2,331 1,433 23,254 191,360 38,178 11,049 1,483 961 3,994 460,634 EXPENDITURES Current General Government Public Safety Community Environment Cultural-Recreational Debt Service Principal Interest Service Charges Cost of Issuance Capital Outlay Total Expenditures 96,141 291,674 90,207 47,639 98,009 277,313 76,623 48,636 90,209 266,459 73,404 46,143 86,360 261,892 68,403 43,744 79,448 254,528 65,559 43,651 46,929 18,208 14 838 120,602 712,252 39,511 18,185 19 874 92,637 651,807 34,738 18,477 14 1,023 76,279 606,746 32,587 17,994 15 1,271 82,062 594,328 107,383 18,905 14 1,505 91,784 662,777 Excess of Revenues Under Expenditures (66,053) (112,713) (91,143) (118,025) (202,143) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds (Net) Premium on Issuance of Notes Issuance of Refunding Bonds Payment to Refunding Bond Agent Total Other Financing Sources (Uses) 163,801 (27,407) 18,361 938 155,693 147,590 (33,055) 47,008 1,305 162,848 176,572 (66,208) 26,745 1,063 138,172 139,516 (31,931) 47,682 4,613 47,450 (50,891) 156,439 122,572 (24,298) 46,530 2,283 43,304 (49,693) 140,698 89,640 $ 50,135 $ 47,029 $ 38,414 $ (61,445) 10.28% 10.07% 9.98% 9.88% 22.12% Net Change in Fund Balances Debt Service as a percentage of Noncapital Expenditures $ (1) During fiscal year 2018-2019, the sales tax rate increased from 1.75% to 2.00%. 138 TABLE IV (Concluded) 2014-15 2013-14 2012-13 2011-12 2010-11 $ 146,337 34,022 2,081 1,264 20,892 185,529 36,260 10,505 1,793 1,344 6,587 446,614 $ 140,567 22,500 1,919 1,062 18,797 185,303 32,106 9,890 589 1,212 4,524 418,469 $ 137,280 14,404 1,903 897 17,693 184,823 27,675 9,885 1,501 2,264 5,940 404,265 $ 126,644 14,323 2,019 996 13,359 168,433 25,779 11,294 1,284 7,573 371,704 $ 121,046 14,274 2,148 1,069 12,577 174,781 20,304 11,820 587 7,417 366,023 81,066 243,570 60,512 40,365 75,077 231,364 56,573 38,788 74,596 226,677 55,197 37,787 41,083 226,429 64,404 43,904 38,843 215,166 68,463 42,191 28,367 23,269 13 657 74,150 551,969 71,015 23,704 727 102,657 599,905 31,519 23,433 10 1,448 91,537 542,204 25,513 22,643 8 870 66,951 491,805 31,690 21,211 10 29 60,173 477,776 (105,355) (181,436) (137,939) (120,101) (111,753) 123,044 (45,324) 18,999 2,952 17,555 (20,058) 97,168 141,909 (32,389) 40,800 430 150,750 147,818 (64,203) 62,672 3,681 17,415 (19,889) 147,494 121,459 (38,136) 27,290 77,835 8,027 8,250 67,238 (74,127) 197,836 128,065 (44,418) 29,320 360 113,327 (8,187) $ (30,686) 9,555 $ 77,735 10.81% 19.05% 12.20% 11.34% $ $ $ 1,574 12.67% 139 CITY OF MESA, ARIZONA TABLE V SALES TAX COLLECTIONS BY CATEGORY LAST TEN FISCAL YEARS (in thousands) 2019-20 Retail Sales Rentals Utilities Restaurants & Bars Communications Amusements Publishing Miscellaneous Printing & Advertising Contracting Total City Direct Tax Rate (1) $ $ 2018-19 2017-18 2016-17 2015-16 115,525 35,885 16,287 19,345 5,162 1,755 463 1,131 495 23,867 $ 95,806 31,754 14,964 17,961 4,365 1,941 408 943 507 21,222 $ 84,640 28,003 14,199 16,065 3,876 1,624 362 986 413 18,856 $ 79,715 26,340 13,575 15,002 4,432 1,581 526 1,313 446 16,806 $ 76,160 25,578 13,251 14,240 4,229 1,561 688 1,068 428 14,623 219,915 $ 189,871 $ 169,024 $ 159,736 $ 151,826 2.00% 2.00% 1.75% Note: Amounts shown include penalties and interest. Occupancy tax not included. (1) Mesa tax rate increased from 1.75% to 2.00% effective March 1, 2019. Source: City of Mesa Tax & Licensing Division 140 1.75% 1.75% TABLE V (Concluded) 2014-15 2013-14 2012-13 2011-12 2010-11 $ 71,996 25,102 13,111 13,708 4,796 1,542 747 771 461 14,103 $ 69,276 24,374 12,344 12,972 4,230 1,469 830 823 455 13,794 $ 66,789 24,847 12,549 12,577 4,651 1,432 866 732 434 12,402 $ 62,191 22,968 11,878 11,864 4,483 1,434 934 595 336 9,962 $ 60,266 22,219 11,104 11,165 4,456 1,433 999 674 342 8,388 $ 146,337 $ 140,567 $ 137,279 $ 126,645 $ 121,046 1.75% 1.75% 1.75% 1.75% 141 1.75% CITY OF MESA, ARIZONA TABLE VI DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS Fiscal Year City Direct Rate Maricopa County 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 2.00% 2.00% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% State of Arizona 6.60% (1) 6.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% (2) 5.60% Source: City of Mesa Tax & Licensing Office (1): The State of Arizona increased its tax to 6.60% effective 6/1/10 for a 3 year period (2): The City of Mesa increased its tax to 2.00% effective 3/1/19 142 CITY OF MESA, ARIZONA TABLE VII RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (in thousands) 2019-20 Governmental Activities General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds Community Facilities District Capital Leases Notes Payable Business-type Activities Utility System Revenue Bonds General Obligation Bonds Excise Tax Revenue Obligation Bonds Notes Payable Total Primary Government $ $ 370,479 67,905 438 40,631 - 2017-18 $ 365,519 76,620 1,005 28,813 - 2016-17 $ 374,443 84,995 1,340 19,172 - 1,242,670 151 1,431 $ 1,695,137 1,279,020 191 49,025 1,574 $ 1,809,263 1,227,355 236 4,902 1,714 $ 1,706,164 1,161,755 191 94,060 1,851 $ 1,737,807 10.99% 12.26% 12.62% 13.74% Percentage of Personal Income (1) Per Capita (1) 334,609 58,750 219 57,307 - 2018-19 $ 3,298 (1) Information on personal income and population is presented on Table XII. 143 $ 3,541 $ 3,406 $ 3,525 TABLE VII (Concluded) 2015-16 $ 350,560 92,895 2,085 19,315 - 2014-15 $ 336,716 100,285 2,830 10,974 77,835 2013-14 $ 344,040 107,705 3,574 5,897 72 77,835 2012-13 $ 324,682 114,650 4,318 2,712 140 122,835 2011-12 $ 288,669 121,395 5,062 822 122,835 2010-11 $ 281,514 128,515 5,806 2,166 45,000 1,063,710 390 94,060 1,985 $ 1,625,000 1,007,455 474 94,060 2,116 $ 1,632,745 991,995 605 94,060 2,244 $ 1,628,027 978,160 887 94,060 2,370 $ 1,644,814 952,500 1,601 2,493 $ 1,495,377 898,800 2,221 2,731 $ 1,366,753 13.79% 14.42% 15.23% 15.87% 14.10% 13.06% $ 3,421 $ 3,534 $ 3,578 $ 3,697 144 $ 3,390 $ 3,101 CITY OF MESA, ARIZONA TABLE VIII RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (in thousands) Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Secondary Assessed Value (1) 4,094,037 3,164,277 2,770,422 2,559,634 2,821,173 2,757,913 2,888,291 3,048,893 3,277,965 3,516,377 General Obligation Bonds Less: Amounts Available in Debt Service Fund 283,735 290,270 328,152 347,465 338,875 350,983 374,755 365,755 373,827 334,760 134 1 138 372 3,584 2,618 4,989 5,384 4,853 3,535 Total 283,601 290,269 328,014 347,093 335,291 348,365 369,766 360,371 368,974 331,225 Source: (1) Maricopa County Finance Department Assessor's Office. (2) Population figures are found on Table XII. 145 Percentage of Secondary Assessed Value Per Capita (2) 6.93% 9.17% 11.84% 13.56% 11.88% 12.63% 12.80% 11.82% 11.26% 9.42% 645 658 739 765 726 733 750 719 722 644 CITY OF MESA, ARIZONA TABLE IX DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (1) JUNE 30, 2020 (in thousands) Governmental Unit Debt repaid with property taxes Maricopa County Community College District Maricopa Special Health Care District Mesa Unified School District No. 4 Gilbert Unified School District No. 41 Queen Creek Unified School District No. 95 Higley Unified School District No. 60 Tempe Union High School District No. 213 Tempe Elementary School District No. 3 Eastmark Community Facilities District No. 1 Cadence Community Facilities District Debt Outstanding (2) $ Other Debt: Maricopa County Estimated Percentage Applicable to City of Mesa Percent (2)(3) Amount 312,450 459,125 316,135 117,425 132,910 103,045 82,925 152,320 40,265 1,480 8.14% 8.18% 86.44% 26.71% 33.05% 0.92% 0.32% 0.76% 100.00% 100.00% 25,436 37,548 273,270 31,364 43,925 953 264 1,158 40,265 1,480 102,685 8.14% 8,359 Subtotal, overlapping debt 464,022 City direct debt 334,760 Total Direct and Overlapping Debt $ 798,782 (1) Does not include debt issued by the Salt River Project Agricultural Improvement and Power District, which is considered self-supporting from earnings of the district or special assessment debt issued by City of Mesa, which is considered a junior lien. (2) Source: Hilltop Securities, Inc. (3) Proportion applicable to the City is computed on the ratio of net assessed limited property valuation for fiscal year 2019/2020. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Mesa. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. 146 CITY OF MESA, ARIZONA TABLE X LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (in thousands) 2019-20 2018-19 2017-18 2016-17 6% Limitation (1) Legal Debt Limitation General Obligation Bonds Outstanding $ 285,114 450 $ 196,678 518 $ 182,934 724 $ 173,297 846 Total Debt Margin Available $ 284,664 $ 196,160 $ 182,210 $ 172,451 Total Net Debt Applicable to the 6% Limit as A Percentage of the 6% Legal Debt Limitation 0.16% 0.26% 0.40% 0.49% 20% Limitation (2) Legal Debt Limitation General Obligation Bonds Outstanding $ 950,381 334,609 $ 655,593 370,152 $ 609,779 365,031 $ 577,658 373,909 Total Debt Margin Available $ 615,772 $ 285,441 $ 244,748 $ 203,749 Total Net Debt Applicable to the 20% Limit as A Percentage of the 20% Legal Debt Limitation 35.21% Total Margin Available $ 900,436 Full Cash Net Assessed Value $ 4,751,903 56.46% $ 481,601 $ 4,329,347 59.86% $ 426,958 $ 3,983,671 (1) Under Arizona law, cities can issue General Obligation Bonds for general municipal purposes up to an amount not exceeding 6 percent of the full cash net valuation. (2) Under Arizona law, cities can issue General Obligation Bonds for purposes of water, artificial light or sewers, land for open space preserves, parks, playgrounds and recreational facilities, public safety, fire, streets and transportation up to an amount not exceeding 20 percent of the full cash net valuation. 147 64.73% $ 376,200 $ 3,707,067 TABLE X (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 $ 165,475 1,047 $ 169,270 1,275 $ 153,578 605 $ 166,225 175 $ 189,857 1,370 $ 245,642 5,326 $ 164,428 $ 167,995 $ 152,973 $ 166,050 $ 188,487 $ 240,316 0.63% 0.75% 0.39% 0.11% 0.72% 2.17% $ 551,583 349,903 $ 564,235 343,370 $ 511,927 344,040 $ 554,084 300,735 $ 632,855 288,900 $ 818,807 278,409 $ 201,680 $ 220,865 $ 167,887 $ 253,349 $ 343,955 $ 540,398 63.44% $ 366,108 $ 2,757,913 60.86% $ 388,860 $ 2,821,173 67.20% $ 320,860 $ 2,559,634 54.28% $ 419,399 $ 2,770,422 148 45.65% $ 532,442 $ 3,164,277 34.00% $ 780,714 $ 4,094,037 CITY OF MESA, ARIZONA TABLE XI PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (in thousands) 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Operating Revenues (1) Operating Expenses 283,921 299,356 293,915 295,710 311,506 323,099 348,794 361,863 365,081 366,838 190,441 180,296 241,128 203,187 209,677 218,706 225,257 228,933 257,166 285,610 Utility System Revenue Bonds Net Revenue Available for Debt Debt Service Service Principal Interest 93,480 119,060 52,787 92,523 101,829 104,393 123,537 132,930 107,915 81,228 12,585 21,365 21,630 22,550 21,860 25,800 13,885 31,354 21,450 36,350 Coverage Ratio 42,814 43,465 46,412 51,927 46,423 44,794 47,187 50,739 50,695 55,061 Highway User Revenue Fund Revenue Bonds Highway User Fund Revenues 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 32,053 27,825 30,046 30,923 33,952 35,383 38,048 39,477 42,406 42,099 Debt Service Principal Interest 6,030 3,290 6,145 6,945 6,305 7,390 7,900 8,375 8,715 9,155 6,365 5,563 5,627 5,472 5,158 4,844 4,473 4,080 3,663 3,243 Coverage Ratio 2.59 3.14 2.55 2.49 2.96 2.89 3.08 3.17 3.43 3.40 (1) Includes electric, gas, water, wastewater and solid waste systems. (2) Excise tax revenues include city use and sales taxes, unrestricted license, fees and permits, fines and forfeitures, state-shared sales tax, state revenue sharing, and state shared vehicle license tax. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 149 1.69 1.84 0.78 1.24 1.49 1.48 2.02 1.62 1.50 0.89 TABLE XI (Concluded) Special Assessment Bonds Special Assessment Collections 1,088 996 897 861 827 790 1,041 289 261 288 Debt Service Principal Interest 744 744 744 744 744 745 745 335 567 219 Community Facility District Bonds Coverage Ratio Community Facility District Collections 1.01 0.96 0.90 0.90 0.90 0.89 1.23 0.72 0.42 1.21 195 672 1,320 1,612 2,261 3,010 4,324 337 297 257 217 178 138 98 68 49 19 Highway Project Advancement Notes Excise Tax Revenues (2) 200,873 199,949 213,309 221,355 234,183 242,020 - Debt Service Principal Interest 77,835 - 1,576 4,312 5,404 4,790 3,892 324 - Coverage Ratio 127.48 46.37 39.47 46.21 60.17 3.10 - 150 Debt Service Principal Interest 65 232 489 645 984 2,125 1,685 7 131 456 832 914 1,197 1,690 2,321 Coverage Ratio 0.99 0.98 1.00 1.03 1.04 0.79 1.08 CITY OF MESA, ARIZONA TABLE XII DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sources: (1) (2) Population 440,677 441,160 444,856 454,981 462,376 475,274 493,089 501,137 511,334 514,144 Personal Income (in thousands) Per Capita Personal Income Median Age Public School Enrollment (1) Unemployment Rate (2) 10,465,197 10,603,281 10,361,141 10,687,959 11,321,276 11,783,944 12,644,774 13,522,180 14,753,009 15,423,806 23,748 24,035 23,291 23,491 24,485 24,794 25,644 26,983 28,852 29,999 32.6 34.3 34.4 35.3 35.5 35.7 36.0 36.2 36.3 36.3 66,144 65,662 64,892 64,932 64,532 65,049 63,779 67,025 62,593 62,490 9.0% 7.5% 7.2% 6.5% 5.4% 5.3% 4.5% 4.3% 4.6% 9.7% Arizona Department of Education Bureau of Labor Statistics Beginning in 2011 unemployment rate is not seasonally adjusted. 151 CITY OF MESA, ARIZONA TABLE XIII PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2020 Employer Employees Rank 8,321 7,994 4,600 4,135 2,853 1,401 1,400 1,359 1,311 1,111 1 2 3 4 5 6 7 8 9 10 Banner Health Mesa Public Schools The Boeing Company City of Mesa Wal-Mart Drivetime Automotive Group Inc 24-7 Intouch Frys Food Stores (The Kroger Company) AT&T The Home Depot Mesa Community College Maricopa County Government Mountain Vista Medical Center Total 34,485 Source: City of Mesa Office of Economic Development 152 2011 Percentage of Total City Employment Employees Rank Percentage of Total City Employment 5.22% 5.01% 2.88% 2.59% 1.79% 0.88% 0.88% 0.85% 0.82% 0.70% 0.00% 0.00% 0.00% 8,650 9,500 4,260 3,442 2,503 2 1 3 4 5 1,276 7 4.24% 4.65% 2.09% 1.69% 1.23% 0.00% 0.00% 0.63% 826 2,201 720 627 8 6 9 10 0.40% 1.08% 0.35% 0.31% 21.63% 34,005 16.67% CITY OF MESA, ARIZONA TABLE XIV FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 Function/Program General Government Police Fire Community Environment Cultural-Recreational Energy Resources Water Resources Environmental Management & Sustainability Airport 848 1,290 580 187 320 116 271 147 11 865 1,212 546 189 340 117 264 147 12 826 1,189 522 195 315 120 257 148 11 811 1,189 518 194 289 118 249 147 11 860 1,155 492 189 599 116 238 138 11 876 1,154 503 182 338 116 240 127 10 Total 3,770 3,690 3,582 3,526 3,798 3,545 Source: City of Mesa Human Resources 153 TABLE XIV (Concluded) 2013-14 2012-13 2011-12 2010-11 880 1,173 482 178 317 117 238 125 10 864 1,163 479 183 313 117 229 127 10 870 1,158 473 184 332 115 233 117 9 824 1,163 457 189 334 116 230 120 9 3,520 3,485 3,491 3,442 154 CITY OF MESA, ARIZONA TABLE XV OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program Police Major Crimes Traffic Accidents Fire Fires Rescue or Emergency False Alarms Hazardous Conditions Other Calls Libraries Number of Registered Borrowers Total Attendance Access to Electronic Resources Electric Connections Gas Connections Water Connections Average Daily Consumption (mgd)* Peak Daily Consumption (mg)** Wastewater Connections Average Daily Sewage Treatment (mgd)* Solid Waste Customers Served Refuse Collected (tons) Recyclables Collected (tons) Green Waste Collected (tons) Falcon Field Average Number of Aircraft Based Aircraft Operations (annual) 2019-20 2018-19 2017-18 2016-17 2015-16 11,716 6,267 11,559 6,637 12,347 6,599 13,151 6,966 13,208 6,968 1,113 54,478 1,210 518 15,520 1,004 54,139 1,373 505 14,337 1,144 53,183 1,087 471 11,536 1,153 50,024 989 488 14,034 1,053 49,743 1,083 507 10,613 106,062 671,069 1,073,373 17,695 76,888 117,974 1,131,120 1,159,536 17,018 65,993 119,489 1,061,875 1,131,101 17,066 63,969 121,340 1,067,207 1,272,859 16,724 62,010 122,810 1,157,394 1,345,977 16,854 60,383 175,232 76.52 118.93 157,000 78.66 117.77 146,172 81.84 122.51 144,276 79.78 120.35 141,824 78.55 116.62 127,763 33.20 127,000 34.50 130,343 34.06 128,782 34.28 126,359 34.60 134,563 236,682 33,566 20,199 134,777 241,307 32,227 20,236 131,991 232,756 32,367 16,688 129,479 232,812 35,546 19,639 127,517 236,849 35,499 20,602 724 349,300 752 326,255 717 288,122 689 289,801 663 270,702 * mgd - millions of gallons per day ** mg - millions of gallons 155 TABLE XV (Concluded) 2014-15 2013-14 2012-13 2011-12 2010-11 14,795 6,622 14,561 6,107 16,149 6,186 16,740 6,047 16,623 5,952 1,083 45,832 1,106 534 8,964 1,075 44,885 1,176 477 9,403 929 43,416 1,255 454 11,803 1,012 42,925 1,292 446 11,192 981 38,788 1,478 478 11,840 125,336 1,166,131 1,549,150 16,703 59,214 196,020 1,166,560 1,541,323 16,460 58,011 166,492 1,178,137 1,515,299 13,815 55,544 142,943 1,143,718 1,566,775 15,841 55,828 220,812 1,095,196 1,691,966 15,064 53,434 139,560 79.55 113.45 137,910 80.85 117.13 136,640 81.03 115.68 135,138 81.60 122.30 134,072 76.23 114.30 124,142 33.30 122,623 33.10 120,953 33.60 119,615 33.40 118,413 33.70 122,552 233,754 35,541 21,151 121,674 217,745 34,629 18,854 119,142 215,463 34,616 19,878 118,949 209,116 34,443 17,882 115,811 223,217 35,486 19,149 702 241,848 729 276,731 700 190,605 749 222,650 789 221,910 156 CITY OF MESA, ARIZONA TABLE XVI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program Police Stations Stations Vehicular Patrol Units Fire Stations Libraries Parks and Recreation Developed Parks (acres) Undeveloped Acres Swimming Pools Recreation Facilities Community Environment Streets (miles) Paved Unpaved Storm Sewers (miles) Gas Mains (miles) Water Mains (miles) Storage Capacity (millions of gallons) Wastewater Mains (miles) Treatment Capacity (millions of gallons per day) Solid Waste Collection Trucks Golf Courses 2019-20 2018-19 2017-18 2016-17 8 300 20 4 8 287 20 4 8 281 20 4 8 281 20 4 2,139 719 9 6 1,929 861 9 6 1,929 861 9 5 2,300 475 9 5 1,485 1 402 1,384 1,482 1 398 1,363 1,476 82 397 1,346 1,387 82 394 1,325 2,462 109 2,435 112 2,401 112 2,398 109 1,789 60 1,788 60 1,784 60 1,778 60 90 1 77 1 77 1 75 1 Note: The decrease in water storage capacity is due to Reservoir FFR6 being decommissioned in FY 16/17. 157 TABLE XVI (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 8 287 20 4 8 292 20 4 8 291 20 4 6 267 20 4 5 267 19 4 4 290 18 4 1,901 633 9 4 1,901 633 9 4 1,232 1,157 9 4 1,177 1,104 9 6 1,553 705 9 6 1,154 1,074 13 6 1,427 1 423 1,311 1,427 1 423 1,311 1,418 1 440 1,256 1,307 1 432 1,256 1,303 1 438 1,240 1,190 12 329 1,247 2,364 112 2,364 112 2,315 125 2,284 125 2,270 125 2,136 125 1,781 60 1,781 60 1,677 60 1,677 60 1,652 60 1,613 60 73 1 74 1 72 1 72 1 70 1 69 2 158 Financial Services Department P.O. Box 1466 Mesa, Arizona, 85211-1466 (480) 644-2275 www.mesaaz.gov FO R TH E F I S C A L YEAR ENDED | JU NE 30, 2020