C ITY O F MESA, AZ comprehensive annual financial report FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 district map MERIDIAN RD SIGNAL BUTTE RD CRISMON RD ELLSWORTH RD HAWES RD SOSSAMAN RD POWER RD RECKER RD HIGLEY RD GREENFIELD RD VAL VISTA DR LINDSAY RD GILBERT RD STAPLEY DR MESA DR COUNTRY CLUB DR ALMA SCHOOL RD DOBSON RD PRICE / 101 PIMA FRWY CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 THOMAS RD 5 MCDOWELL RD MCKELLIPS RD 1 BROWN RD UNIVERSITY DR MAIN ST 3 4 2 BROADWAY RD SOUTHERN AVE BASELINE RD o Mayor John Giles Vice Mayor Jen Duff – District 4 Councilmember Mark Freeman – District 1 Councilmember Julie Spilsbury – District 2 Councilmember Francisco Heredia – District 3 Councilmember David Luna – District 5 Councilmember Kevin Thompson – District 6 GUADALUPE RD ELLIOT RD 6 Chris Brady, 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 T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 WARNER RD RAY RD WILLIAMS FIELD RD PECOS RD GERMANN RD August 2021 Citizens of Mesa Mayor and City Council City Clerk DeeAnn Mickelsen City Court John Tatz CITY MANAGER Chris Brady City Attorney Jim Smith City Auditor Joe Lisitano Advisory Boards and Committees Downtown Transformation Jeff McVay Economic Development Bill Jabjiniak Diversity and Community Engagement Andrea Alicoate Assistant City Manager John Pombier Deputy City Manager Scott J. Butler Deputy City Manager/ Chief Financial Officer Michael Kennington Transportation RJ Zeder Office of Management and Budget Candace Cannistraro Transit Jodi Sorrell Financial Services Irma Ashworth Falcon Field Corinne Nystrom Business Services Ed Quedens Public Information & Communications Ana Pereira Enterprise Resource Planning (ERP) Valerie McBrien Public Defender Program Meg Leal Community Facilities Districts Mayor and Council Support, Intergovernmental Relations Grants Police Department Ken Cost Fire & Medical Department Mary Cameli Department of Innovation & Technology Travis Cutright Fleet Services Pete Scarafiotti Human Resources Teri Overbey Environmental Management & Sustainability Scott Bouchie Deputy City Manager Marc Heirshberg Deputy City Manager Natalie Lewis Water Resources Jake West Development Services Christine Zielonka Energy Resources Frank McRae Engineering Beth Huning Parks, Recreation & Community Facilities Andrea Moore Arts & Culture Cindy Ornstein Library Services Polly Bonnett Community Services Ruth Giese Code Compliance Ryan Russell Education Initiatives Amy Trethaway Operation Off the Streets Visit Mesa introductory section CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 TABLE OF CONTENTS 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 16 17 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 19 20 21 22 Proprietary Funds Financial Statements Statement of Net Position Statement of Revenues, Expenses and Changes in Net Position Statement of Cash Flows I 23 25 27 TABLE OF CONTENTS (Continued) 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 – Restatement of Beginning Net Position Note 17 – Subsequent Events 29 38 45 46 52 53 55 58 72 74 75 76 76 77 79 96 96 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 – General Fund Budgetary Comparison Schedule (Non-GAAP Basis) – Relief Fund Notes to Budgetary Comparison Schedules – General Fund II 97 99 104 108 109 110 111 112 113 TABLE OF CONTENTS (Continued) Page Combining Statements Non-Major Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances 114 118 Internal Service Funds Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Net Position Combining Statement of Cash Flows 118 120 124 Supplemental Information Budgetary Comparison Schedules – Other Non-major Funds Budgetary Comparison Schedule – Ambulance Transport Budgetary Comparison Schedule – Community Facilities District Budgetary Comparison Schedule – Environmental Compliance Fee Budgetary Comparison Schedule – Development Impact fee Budgetary Comparison Schedule – Grants and Special Programs Budgetary Comparison Schedule – Highway User Revenue Budgetary Comparison Schedule – Mesa Housing Authority Budgetary Comparison Schedule – Public Safety Sales Tax Budgetary Comparison Schedule – Quality of Life Sales Tax Budgetary Comparison Schedule – Street Sales Tax Budgetary Comparison Schedule – Streets III 125 126 128 127 129 130 131 132 133 134 135 TABLE OF CONTENTS (Concluded) Page 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) 136 138 144 146 Revenue Capacity Sales Tax Collections by Category – Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years 148 150 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 151 153 154 155 157 Demographic and Economic Information Demographic and Economic Statistics – Last Ten Fiscal Years Principal Employers – Current Year and Nine Years Ago 159 160 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 161 163 165 Financial Services Department December 21, 2021 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, 2021 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, 2021, 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, 2021, 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, by the 2020 decennial census, is 504,258 compared with the 2010 decennial census count of 439,041. Total land area encompasses 138 square miles. The City is the 37th 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 4,240 full-time (equivalent) City employees working within 28 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, and an airport. 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 past year has showcased the resiliency of the community and the organization through these challenging times. As the City of Mesa continues to prosper and grow, the City continues to push and support the services needed by businesses and citizens for today and the future. The City is committed to ensuring fiscal sustainability and providing essential services to assist with the community’s needs. During this past fiscal year, the financial position of the City has strengthened with a steady increase in both local sales tax revenues due to unanticipated growth in retail and growth in development and construction activity. The City’s economic indicator for commercial construction in fiscal year (FY) 2021 has almost doubled from FY 2020 or an increase of approximately $529 million in commercial valuation. While the COVID-19 health crisis has had an impact on economic activity, the related stay-at-home policy has influenced Mesa residents to buy local and online more than they would have previously. For the year ending June 30, 2021, local retail sales tax revenue was up 24.2% while overall local sales tax revenue was up 15.4%. Not surprisingly, tourism was negatively impacted by the pandemic as evidenced by the relatively flat 2.2% increase 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 2022 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 year as Fitch Ratings reaffirmed the top rating of AAA to the City’s 2021 General Obligation (GO) bonds. S&P maintained their rating of AA for the City’s GO bonds and their AA- rating on the City’s utility revenue bonds and obligations. Moody’s reaffirmed their Aa2 rating on the City’s utility revenue bonds and obligations. • Like the rest of the aviation industry, Phoenix-Mesa Gateway Airport saw a near disappearance of passenger traffic due to the COVID-19 outbreak. But passengers are now making up for lost travel. Phoenix-Mesa Gateway Airport recorded a record number of passengers for the month of June. The airport saw a total of 151,219 passengers travel through its terminal in June. The Gateway Airport is primarily used by leisure travelers, and leisure travel has been one of the bright spots for commercial airlines. • The City of Mesa received CARES Act funding to address community impacts due to the public health emergency COVID-19. With a portion of that funding, the Mesa CARES Small Business Reemergence Program (CARES SBRP) was developed to rapidly assist Mesa-based businesses that were suffering from loss of customers and revenue due to the pandemic, and subsequent closures due to restrictions forcing customers to stay home. The CARES SBRP provided critical support to Mesa small businesses by delivering $4.5 million in financial grants to 525 businesses, more than $1 million in technical assistance and consulting services to 250 businesses, and $300,000 investment in marketing campaigns. Nearly $6 million of federal CARES funds were invested to save small businesses in the short term, accelerate recovery, and build resiliency. • The Falcon Field airport received more than $4.6 million in grant funding from the Federal Aviation Administration (FAA) and the Arizona Department of Transportation for improvements that will ensure safe services for airport tenants and users. • In early 2021, Legacy Sports USA broke ground on an upcoming sports and entertainment center located in Mesa. Legacy Sports Park will cover 320 acres and include a mixture of softball fields, basketball courts, football fields, volleyball courts, arcades, fitness centers and a 20,000 square foot sports bar and restaurant. The entire complex is expected to create over 1,500 jobs. • In February, Banner Health announced the investment of nearly $400 million in expansion projects including the Banner Desert campus in Mesa. This project will include adding adult acute care patient beds and building a new women’s tower. In addition, existing shelled space will be built out to bring on 24 adult acute care beds. • In April, Commercial Metals Company (CMC) received City Council approval to build a new steel mill at just under 500,000 square feet just west of their current mill. CMC is expecting to double its production and hire an additional 242 employees. VIII • In April, Bonelli Doors + Windows relocated its manufacturing headquarters to a 50,000 square foot facility in Mesa. Bonelli is a leading aluminum door and window designer and manufacturer that is planning to create 35 new jobs with the move. • In May, ElectraMeccanica Vehicles Corp. broke ground on its first U.S. based assembly plant in Mesa. The $35 million plant will bring 500 jobs to the community. The 235,000 square foot complex will include light vehicle assembly plant, 22,000 square feet of offices and 19,000 square feet of comprehensive research facilities. • In June, ATLIS Motor Vehicles announced the production of the AMV battery cell at its headquarters in Mesa. ATLIS is a start-up mobility technology company and the AMV batteries will be the first in the industry to charge in less than 15 minutes. • In June, Boeing Co. announced the production of about two dozen AH-64 Apache attack helicopters at its facility in Mesa under a $169.5 million contract with the U.S. Army. • In July, Exro Technologies announced that it will establish its U.S. headquarters in a 15,000 square foot location in Mesa. Exro is a leading clean technology company that has developed a new class of power electronics for electric motors and batteries. Exro is planning on hiring 50 employees over the next 18 months. • In August, Facebook announced its plans to build a 960,000 square foot data center in Mesa. Along with the projected $800 million investment, the Facebook Mesa Data Center is expected to support approximately 100 jobs. The data center will house routers, switches, servers, storage systems and other equipment to keep important applications running and data secure. • In September, the City of Mesa launched the Mesa Business Builder Small Business Technical Assistance Program. This program offers free training, education and one-onone consulting and is targeting businesses with fewer than 25 employees. • In November, Gulfstream Aerospace Corporation announced the construction of a new 225,000 square foot maintenance, repair and overhaul facility at the Phoenix-Mesa gateway Airport. The new facility will represent a $70 million investment in a service center that will offer a broad range of services and add additional capacity for customers in the western United States. 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, 2020. 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. 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, 2020 Executive Director/CEO financial section CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 CliftonLarsonAllen LLP CLAconnect.com 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, 2021, 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. CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details. (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, 2021, 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. Emphasis of a Matter During the fiscal year ended June 30, 2021, the City ceased accounting for the Cubs, Hohokam, Convention Center, and Golf Course activities within the Enterprise Fund and began accounting for these activities within the General Fund. In addition, the City began accounting for the Airport and Utility Funds as separate Enterprise Funds. As a result, the beginning balances of the Utility Fund, Airport Fund, Governmental Activities and Business-Type Activities were restated. See Note 16 for further information on the restatement. Our auditors’ opinion was not modified with respect to the restatement. 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. (2) The Honorable Mayor and Members of City Council City of Mesa, Arizona 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. 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 21, 2021, 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. CliftonLarsonAllen LLP Phoenix, Arizona December 21, 2021 (3) Management Discussion and Analysis For the Fiscal Year Ended June 30, 2021 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, 2021. 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’s total revenues increased by $113.2 million from $1.11 billion to $1.22 billion. The increase in revenues is primarily from Sales Tax revenues ($33.9 million), Unrestricted Intergovernmental revenues ($23.2 million), and Charges for Services ($52.6 million) • The City’s Relief Fund expenditures increased by $63.5 million as the City continued to respond to the COVID-19 pandemic. The City utilized Federal Funds from the Coronavirus Aid Relief and Economic Security Act (CARES Act), Emergency Rental Assistance program (ERAP) and General Fund transfers to meet the needs of the community. • The City’s Governmental Funds reported a combined ending fund balance of $620.2 million, a $176 million increase from the previous year. Approximately 55.1 percent of the total governmental fund balance amount, or $342 million, is designated by the City as committed, assigned and unassigned. The remaining 44.9 percent or $278.2 million is designated as non-spendable or restricted. • Total fund balance for the General Fund was $288.6 million, which represents an increase of $93.5 million over prior year. The increase is a combination of an increase in Sales Tax and Intergovernmental Revenues and a decrease in expenditures, specifically public safety expenditures. Certain public safety expenditures were eligible CARES Act expenditures and were expended out of the Relief Fund instead of the General Fund. • The City’s Enterprise Fund reported combined total net position of $420.4 million, which represents a decrease of $3.2 million over prior year. Although revenue from Charges for Services increased, the increase in operating expenses and the Transfer to the General Fund absorbed the increase in revenues. 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: (1) Government-Wide Financial Statements, (2) Fund Financial Statements, and (3) Notes to the Financial statements. This report also contains other Supplementary Information in addition to the basic financial statements. 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. The Statement of Net Position presents information on all assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference being reported as net position. Over time increases 4 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 shows how the 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 Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (Governmental Activities) from other functions that are intended to recover all or a significant portion of their cost through user fees and charges (Business-Type Activities). The Governmental activities of the City include general government, public safety, community environment and cultural-recreational. The Business-Type activities include private sector type activities such as the City-owned utilities (electric, gas, water, wastewater, solid waste and district cooling), as well as the City-owned airport. Fund Financial Statements The fund financial statements (pages 19-28) focus on individual parts of the City government, reporting the City’s operations in more detail than the Government Wide Financial Statements. They are used to maintain control over resources that have been segregated for specific activities or objectives and to ensure compliance with finance-related legal requirements. Fund financial statements are presented for Governmental Funds and Proprietary Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the Government-Wide Financial Statements. However, unlike the Government-Wide Financial Statements, the Governmental Funds 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 in Note 2 to the basic financial statements. Proprietary funds are generally used to account for services for which the City charges customers (either outside customers, or internal departments of the City). Proprietary Funds provide the same type of information as shown in the Government-Wide Financial Statements only with more detail. Proprietary funds utilize the same method used by the private sector businesses, the accrual basis of accounting. The City maintains the following two types of Proprietary Funds: o Enterprise Funds are used to report the same functions as Business-Type Activities in the Government-Wide Financial Statements. The City uses separate funds to account for the operations of the City-owned utilities (electric, gas, water, wastewater, solid waste and district cooling), as well as the City-owned airport. The Utility fund is considered a major fund and the Airport is a nonmajor Enterprise Fund. o 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 selfinsurance programs. Since the primary customers of the internal service funds are the Governmental Activities, the assets and liabilities of those funds are included in the Governmental Activities’ column of the Government-Wide Statement of Net Position. The Internal Service Funds 5 are combined into a single column on the Proprietary Fund Financial Statements. Individual fund data for the Internal Service Funds can be found in the combining statements. 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 29-96 of this report. Required Supplementary Information (RSI) In addition to the financial statements and accompanying 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 97-113 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, 2021, and 2020. Condensed Statement of Net Position As of June 30 (In thousands of dollars) Cash and Other Assets Capital Assets Total Assets Governmental Activities 2020 As Restated 2021 $ 1,212,196 $1,012,497 1,611,328 1,578,383 2,823,524 2,590,880 Business-Type Activities 2020 As Restated 2021 $ 704,269 $ 587,000 1,372,616 1,388,797 2,076,885 1,975,797 Total Government 2020 As Restated 2021 $ 1,916,465 $ 1,599,497 2,983,944 2,967,180 4,900,409 4,566,677 Deferred Amounts on Refunding Deferred Outflows on Pensions & OPEB Total Deferred Amounts 6,062 314,399 320,461 7,009 284,155 291,164 25,771 26,708 52,479 28,781 22,738 51,519 31,833 341,107 372,940 35,790 306,893 342,683 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 55,935 34,608 48,701 40,278 104,636 74,886 507,280 1,789,600 223,508 2,576,323 458,915 1,652,204 203,052 2,348,779 1,356,669 178,972 122,230 1,706,572 1,280,448 163,426 113,020 1,597,172 1,863,949 1,968,572 345,738 4,282,895 1,739,363 1,815,630 316,072 3,945,951 21,140 42,236 2,397 6,502 23,537 48,738 1,184,908 203,284 (841,670) $ 546,522 1,180,116 143,839 (832,926) $ 491,029 30,965 70,940 318,490 $ 420,395 108,380 63,113 252,149 $ 423,642 1,215,873 274,224 (523,180) $ 966,917 1,288,496 206,952 (580,777) $ 914,671 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 2021 2020 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 $ 404,362 452 34,719 $ 374,855 1,632 35,896 505,109 101,375 45,415 $ 452,514 72,265 60,615 253,825 47,247 3,990 206,397 19,052 2,308 17,229 21,315 783,729 219,932 45,068 2,564 183,189 36,912 16,002 16,374 693,052 45 192 439,770 1,459 7,618 (801) (3,397) 417,262 253,825 47,247 3,990 206,397 19,052 2,353 17,229 21,507 1,223,499 219,932 45,068 4,023 183,189 36,912 23,620 (801) 12,977 1,110,314 175,608 409,549 172,840 66,020 18,201 134,299 384,800 152,847 62,014 17,841 - - - - 175,608 409,549 172,840 66,020 18,201 134,299 384,800 152,847 62,014 17,841 842,218 751,801 30,259 41,386 126,797 77,488 45,848 5,958 1,299 329,035 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 320,208 30,259 41,386 126,797 77,488 45,848 5,958 1,299 1,171,253 25,028 29,096 128,244 80,548 41,719 6,004 1,233 4,150 2,615 408 1,163 1,072,009 Increase (Decrease) in Net Position Before Transfers Transfers (58,489) 113,982 (58,749) 136,394 110,735 (113,982) 97,054 (136,394) 52,246 - 38,305 - Change in Net Position 55,493 77,645 (3,247) (39,340) 52,246 38,305 Net Position - As Adjusted 491,029 413,384 423,642 462,982 914,671 876,366 $ 546,522 $ 491,029 $ 420,395 $ 423,642 966,917 $ 914,671 Net Position - Ending $ Total Government 2021 2020 77,659 70,633 24,719 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 $ 100,747 100,923 10,696 Business-Type Activities 2021 2020 7 $ $ Analysis of Government-Wide Net Position The City’s overall Net Position increased $52.3 million from $914.7 million to $967 million at the end of fiscal year 2021. The Restricted portion of the City's Net Position increased $67.3 million from $207.0 million to $274.2 million. Restricted Net Position represents resources that are subject to external restrictions on how they may be used. The restricted balances that increased in current year include restrictions for debt service, public safety, and transportation programs. The Unrestricted Net Position of ($523.2) million is primarily due to the impact of the long-term liability associated with pensions and OPEB of ($1.97 billion). Several factors contributed to the overall increase in Net Position: • Sales Tax revenues continued to come in strong, increasing $33.9 million. Retail Sales Tax was the largest contributor (increasing 24.2%) as City residents shopped locally and on-line. Restaurants and Bars increased 12.3% as residents enjoyed going out and resuming their preCOVID-19 behavior. • Program Revenues increased $66.5 million because of (1) Increase in the Business-type Activities Charges for Services due to rate increases ($29.5 million); (2) The City began collecting a new InLieu Franchise Fee ($13.3 million); (3) Increase in Federal funding recorded in the Relief Fund related to the CARES act and ERAP ($22.5 million). • Unrestricted Intergovernmental revenues increased $23.2 million. These revenues are State Shared revenues (State Sales Tax, State Income Tax and Highway User tax) and similar to the City Sales Tax revenues, came in stronger than expected. • Community Environment, Public Safety, and General Government all saw an increase in expenses in the current year. The increase can be attributed to CARES act Relief Fund expenditures and an increase in public safety salary and related benefits. The overall increase in revenues in fiscal year 2021 offset this increase in expenses. Governmental Activities In fiscal year 2021, Governmental Activities increased their Net Position by $55.5 million from $491.0 million to $546.5 million. The increase in Net Position for the Governmental Activities is from the overall increase in revenues, as described above. As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are Taxes (36%), Unrestricted Intergovernmental (24%) and Transfers (13%). The largest users of resources for the governmental activities are Public Safety (50%), Community Environment and General Government both at (21%). 8 Governmental Activities Revenues by Source Fiscal Year Ended June 30, 2021 Unrestricted Intergovernmental 24% Transfers 13% Charges for Services 12% Operating Grants & Contributions 12% Capital Grants & Contributions 1% Unrestricted Contributions 2% Taxes 36% Governmental Activities Functional Expenses Fiscal Year Ended June 30, 2021 Public Safety 50% General Government 21% CulturalRecreational 8% Community Environment 21% 9 The following two graphs compare Governmental Activities revenues and expenses from fiscal year 2021 to fiscal year 2020. Governmental Activities - Revenues by Source Two Year Comparison (In thousands of dollars) $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Program Revenues Taxes Unrestricted Intergovernmental 2021 Contributions 2020 Governmental Activities - Functional Expenses Two Year Comparison (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 2021 Community Environment 2020 10 Cultural-Recreational Fund Financial Statement Analysis 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 culturalrecreational. Total fund balance of the General Fund was $288.6 million, while unassigned fund balance was $188.4 million. Total fund balance of the City’s General Fund increased by $93.5 million during the current fiscal year from $195.1 million to $288.6 million. The increase is due to a combination of increased revenues and decreased expenditures, see below for specifics: • • • • • Sales Tax revenues increased $20.3 million and 15.3%. As previously stated, sales tax related to Retail Sales and Restaurant and Bars were the largest contributors. Intergovernmental Revenues increased $18.6 million due to increase in stated shared Sales Tax Revenues ($8.2 million) and State Income Tax ($8.8 million). State revenues have continued to be strong. License and Permits increased primarily due to a new In-Lieu Franchise Fee of $13.3 million. Miscellaneous Revenue increased due to proceeds from the sale of City assets of $21 million. Expenditures decreased by $21.3 million primarily due to Relief Fund eligible expenses being recorded in the Relief Fund instead of the General Fund. Relief Fund The Relief fund is used to account for the City’s response to the COVID-19 pandemic. In fiscal year 2021 the City received and expended federal funds from CARES Act and ERAP. The Fund balance of the Relief Fund decreased slightly $0.8 million from $1.1 million to $0.3 million. Although the net change in the fund balance was minimal, there was a lot of activity in the Relief fund in the current year. The City recognized $66.4 million in federal funds; $60.2 million in CARES Act funds and $6.2 million in ERAP funds. In addition, the General Fund transferred $40.7 million to the Relief Fund to support its continued response to the COVID-19 pandemic. The Relief fund expenditures were $107.6 million. Specifically, the City spent funds on the following activities: • • • • • $56.8 million in public safety payroll expense for patrol officers and first responders who were responding and dedicated to the COVID-19 public health emergency. $25.4 million in Utility and Rental Assistance $6.5 million in grants to local public schools for technology needs for K-6 students. $3.5 million to support local non-profit organizations $3.4 million to improve teleworking capabilities for public employees to enable compliance with COVID-19 public health precautions. 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 $331.3 million, with much of the fund balance in either Restricted or Committed. Total fund balance of the Non-Major Governmental Funds increased by $83.3 million during the current fiscal year. The increase was primarily in the Special Revenue Funds and Capital Project Funds. The Public Safety Tax, Quality of Life Sales Tax, and Highway User Revenue funds contributed to the $38.0 11 million increase in the Special Revenue Funds. Consistent with the General Fund, these funds saw an increase in Sales Tax Revenue and Intergovernmental Revenues. The General Capital Projects fund increased $34.7 million due to Excise Tax Obligations that were issued during the year. 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 the Relief Fund and can be found on pages 110 - 113. These schedules compare 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 $1.91 billion during fiscal year 2021. General Fund revenues of $389.8 million, on a budgetary basis, were more than the budgeted revenues of $361.1 million. The increase in Sales Tax revenues was the largest contributor, followed by miscellaneous revenues. Expenditures of $363.1 million were less than the budgeted expenditures of $433.6 million. Savings were across all areas, with the largest savings in Capital Outlay. Business-type Activities The following graphs present utility revenues and expenses for fiscal year 2021. The City’s largest utility, Water, had a net revenue/expense gain of $42.7 million. Whereas the remaining Utilities saw a more moderate net revenue/expense gain. Utility Revenues Charges for Services and Program Expenses Fiscal Year 2021 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Electric Gas Charges for Services Water Wastewater Program Expenses 12 Solid Waste Total Business-Type Activities program and general revenues increased by $22.5 million from $417.3 million to $439.8 million. The increase is primarily related to an increase in utility rates, which increased Charges for Services by $29.5 million. 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, 2021. 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 on June 30, 2021, and 2020: 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 As Restated 2021 $ 403,086 $ 405,647 3,597 3,597 278,040 286,418 122,980 127,528 75,047 73,017 1,181 420 529,341 515,068 198,056 166,688 $ 1,611,328 $ 1,578,383 Business-Type Activities 2020 As Restated 2021 $ 28,339 $ 28,136 17,666 17,666 30,030 30,936 40,453 41,675 25,219 27,297 5,152 4,025 1,118,925 1,082,919 106,831 156,143 $ 1,372,616 $ 1,388,797 Total Government 2020 As Restated 2021 $ 431,425 $ 433,783 21,263 21,263 308,070 317,354 163,433 169,203 100,266 100,314 6,333 4,445 1,648,266 1,597,987 304,887 322,831 $ 2,983,944 $ 2,967,180 The City’s total capital asset balances on June 30, 2021, were overall consistent with prior year balances. Infrastructure assets increased $50.2 million, primarily due to Water and Streets Infrastructure projects. Construction in Progress, Buildings and Other Improvements decreased a combined $33.2 million. Construction in Progress decreased as it was converted to assets. Buildings and Other Improvements decreased due to depreciation expense exceeding the additions in current year. Additional information on the City’s capital assets can be found in Note 7 of the notes to the basic financial statements. Debt Administration At the end of the fiscal year 2021, the City had total long-term bond obligations and notes payable outstanding of $1.8 billion. Of this amount, $334.4 million comprises debt backed by the full faith and credit of the City and the remaining $1.5 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) increased $98.6 million. The change in 13 debt includes new borrowings during the fiscal year totaling $347.3 million, refundings of $146.1 million, defeasance of $14.9 million, and principal payments of $87.7 million. The City’s total outstanding debt includes $83.9 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, 2021, and 2020. Outstanding Long-term Debt As of June 30 (In thousands of dollars) Governmental Activities 2020 As Restated 2021 $334,377 $ 334,705 General Obligation Bonds Utility System Revenue Bonds Utility Revenue Obligations Highway User Revenue Fund Bonds 49,105 58,750 Excise Tax Obligations 35,365 Special Assessment Bonds with Governmental Commitment 219 Community Facility District 83,948 57,307 Notes Payable Total $502,795 $ 450,981 Business-Type Activities Total Government 28 1,275,640 14,015 - 2020 As Restated $ 55 1,242,670 - 2021 $ 334,405 1,275,640 14,015 49,105 35,365 2020 As Restated $ 334,760 1,242,670 58,750 - 1,285 $ 1,290,968 1,431 $ 1,244,156 83,948 1,285 $ 1,793,763 219 57,307 1,431 $ 1,695,137 2021 $ 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. The City’s total debt margin available on June 30, 2021, was $315.1 million in the 6% capacity and $727.6 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. 14 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET On June 7, 2021, the City Council approved a $2.1 billion budget, which is an increase of $190 million compared to prior year’s budget. The fiscal year 2022 budget includes $1.75 billion for operations and $355 million for scheduled bond capital improvements. The adopted fiscal year 2022 budget continues the City’s fiscally conservative approach. The Governmental Funds financial principles include 10%-15% fund balance over a 5-year forecasted period, sustainability of programs and services, competitive wages and benefits for employees, and investment in capital and lifecycle replacement projects. The Utility Fund financial principles includes 20% or higher reserve fund balance, and affordable utility services. The City’s 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 City received American Rescue Plan Act (ARPA) and Emergency Rental Assistance (ERAP) funds and will use the federal funds to respond to the negative economic impacts of COVID-19. The City is in the process of identifying eligible projects for its ARPA allocation of $105.5 million. Many of these are new initiatives which will require additional time and resources to fully develop and deploy. The City spent $12.2 million in ERAP funds in fiscal year 2021 and anticipates spending $16 million in fiscal year 2022. As of July 2021, the non-seasonally adjusted unemployment rate for Mesa was 5.5%. The City’s current rate remains competitive locally, and sits below the county (5.9%), state (5.9%), and national (8.4%) unemployment rates for August. The fiscal year 2021-22 assessed valuation increased 6.8% to $3.99 billion. On June 7, 2021 the City Council voted to increase the City’ secondary property tax rate to $1.13 from $1.12 per $100 assessed valuation. 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 CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 City of Mesa, Arizona Statement of Net Position June, 30, 2021 (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 Cash with Trustee 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 690,405 5,969 1,693 57,132 8,641 5,167 116,767 40,143 569 3,348 24,119 Total $ 807,172 46,112 2,262 60,480 8,641 29,286 12,672 51,853 36,494 23,145 1,675 317,350 604,739 1,006,589 2,823,524 139,191 67,927 4,452 11,656 296,097 152,836 1,219,780 2,076,885 151,863 119,780 36,494 23,145 1,675 4,452 11,656 613,447 757,575 2,226,369 4,900,409 6,062 314,399 320,461 25,771 26,708 52,479 31,833 341,107 372,940 43,652 48,372 8,731 67,439 55,314 8,551 113,679 52,203 48,372 8,731 67,439 168,993 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 55,935 48,701 104,636 480,885 26,395 1,789,600 2,576,323 1,352,781 3,888 178,972 1,706,572 1,833,666 30,283 1,968,572 4,282,895 Deferred Inflows of Resources Pensions and OPEB Total Deferred Inflows of Resources 21,140 21,140 2,397 2,397 23,537 23,537 1,184,908 30,965 1,215,873 44,268 65,668 84,939 8,409 (841,670) 546,522 38,377 11,656 20,907 318,490 420,395 38,377 11,656 65,175 65,668 84,939 8,409 (523,180) 966,917 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 Statement of Activities For the Fiscal Year Ended June 30, 2021 (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 District Cooling Total Business-type Activities Total Government Charges for Services 175,608 409,549 172,840 66,020 18,201 842,218 $ 30,259 41,386 126,797 77,488 45,848 5,958 1,299 329,035 $ 1,171,253 32,240 40,022 20,114 8,371 100,747 Program Revenues Operating Grants and Contributions Capital Grants and Contributions $ $ 32,666 45,141 169,473 87,573 64,344 4,007 1,158 404,362 $ 505,109 3,508 8,662 86,807 1,946 100,923 452 452 $ 101,375 1,875 1,542 18,346 12,428 396 132 34,719 $ General Revenues: Sales Taxes Property Taxes Occupancy Taxes Unrestricted Intergovernmental Revenues Contributions Not Restricted to Specific Programs Investment Income Gain on Sale of Asset Miscellaneous Revenues (Expenses) Transfers Total General Revenues and Transfers Change in Net Position Net Position - As Restated Net Position - Ending The notes to the financial statements are an integral part of this statement. 17 9,114 437 1,145 10,696 45,415 (Continued) Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type Activities Activities Total * * $ $ (130,746) (360,428) (64,774) (55,703) (18,201) (629,852) $ - $ (130,746) (360,428) (64,774) (55,703) (18,201) (629,852) - 4,282 5,297 61,022 22,513 18,892 (1,367) (141) 110,498 4,282 5,297 61,022 22,513 18,892 (1,367) (141) 110,498 (629,852) 110,498 (519,354) 253,825 47,247 3,990 206,397 19,052 2,308 17,229 21,315 113,982 685,345 45 192 (113,982) (113,745) 253,825 47,247 3,990 206,397 19,052 2,353 17,229 21,507 571,600 55,493 (3,247) 52,246 491,029 423,642 914,671 546,522 $ 420,395 $ 966,917 18 City of Mesa, Arizona Balance Sheet Governmental Funds June, 30, 2021 (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 Cash with Trustee 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 Relief Fund $ $ $ $ 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 $ 274,859 4,035 674 25,273 9,723 2,680 317,244 22,347 1,352 4,114 $ $ Non-major Governmental Funds 61,708 148 14 291,681 1,202 723 31,859 2,786 914 61,870 12,672 51,853 36,494 23,145 1,675 455,004 259 61,313 $ $ 18,110 7,511 2,786 7,379 2,012 Total Governmental Funds $ $ $ 628,248 5,237 1,545 57,132 9,723 2,786 3,608 12,672 51,853 36,494 23,145 1,675 834,118 40,716 7,511 2,786 8,731 67,439 27,813 61,572 9,792 45,522 93,112 9,792 45,522 182,497 823 823 - 30,580 30,580 31,403 31,403 2,680 18,529 79,024 188,375 288,608 14 284 298 914 274,339 66,679 897 (11,517) 331,312 3,608 274,623 85,208 79,921 176,858 620,218 317,244 $ The accompanying notes are an integral part of the financial statements. 19 61,870 $ 455,004 $ 834,118 City of Mesa, Arizona Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position June, 30, 2021 (in thousands) Fund Balances - total governmental funds $ 620,218 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. 1,608,964 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 317,724 Deferred outflows related to deferred amounts on refunding and pensions are not financial resources and therefore not reported in the funds. 314,747 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. (2,313,504) 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. 10,780 Internal service funds are used by management to charge the costs of certain activities to individual funds. (12,407) Net position of the governmental activities - statement of net position The accompanying notes are an integral part of the financial statements. 20 $ 546,522 City of Mesa, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Revenues Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income (Loss) Contributions Miscellaneous Revenue Total Revenues General Fund Relief Fund Non-major 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 152,552 1,086 35,031 167,047 18,873 6,954 1,468 4,706 387,717 66,412 (269) 66,143 101,273 47,253 2,904 1,832 7,604 83,412 22,521 1,619 1,088 130 2,330 271,966 Total Governmental Funds $ 253,825 47,253 3,990 1,832 42,635 316,871 41,394 8,573 2,287 130 7,036 725,826 91,140 205,961 11,894 33,951 56,813 50,687 - 7,283 45,497 64,840 11,645 98,423 308,271 127,421 45,596 21,963 364,909 151 107,651 45,793 17,443 14 2,038 134,871 329,424 45,793 17,443 14 2,038 156,985 801,984 Excess (Deficiency) of Revenues Over (Under) Expenditures 22,808 (41,508) (57,458) (76,158) Other Financing Sources (Uses) Transfers In Transfers Out Sale of Capital Asset Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Issuance of Refunding Bonds Payment to Escrow Agent Total Other Financing Sources (Uses) 117,516 (68,381) 21,597 70,732 40,697 40,697 27,684 (3,534) 106,637 20,193 38,395 (48,661) 140,714 185,897 (71,915) 21,597 106,637 20,193 38,395 (48,661) 252,143 Net Change in Fund Balances 93,540 (811) 83,256 175,985 195,068 1,109 248,056 444,233 Fund Balance - Beginning Fund Balances - Ending $ 288,608 $ The accompanying notes are an integral part of the financial statements. 21 298 $ 331,312 $ 620,218 City of Mesa, Arizona Reconciliation of the Statement of Revenues, Expenditures and Changes In Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2021 (in thousands) Net change in fund balances - total governmental funds $ 175,985 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. 12,942 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. (85,366) 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 $105,037 exceeded depreciation ($67,046) in the current period. 37,991 The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to increase net position. (5,339) Change in equity in Joint Venture (1,865) 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. (50,578) 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. (18,899) 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. (9,378) Change in net position of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 22 $ 55,493 City of Mesa, Arizona Statement of Net Position Proprietary Funds June, 30, 2021 (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 and Deposits Restricted Assets: Pooled Cash and Investments Cash with Fiscal Agents Customer Deposits Joint Venture Construction Deposits Business-type Activities Non-Major Fund Airport Utility Total $ 110,220 40,090 550 3,284 24,119 Noncurrent Assets: Investment in Joint Ventures Capital Assets, Not Being Depreciated Capital Assets, Being Depreciated, Net Total Noncurrent Assets Total Assets $ 116,767 40,143 569 3,348 24,119 138,538 67,927 4,452 11,656 653 - 139,191 67,927 4,452 11,656 - 400,836 7,336 408,172 72,863 296,097 144,749 1,200,525 8,087 19,255 296,097 152,836 1,219,780 2,364 1,641,371 27,342 1,668,713 2,364 2,042,207 34,678 2,076,885 75,227 25,771 26,079 51,850 629 629 25,771 26,708 52,479 5,714 5,714 $ 2,094,057 $ 35,307 $2,129,364 Deferred Outflows of Resources Refundings Pensions and OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Internal Service Funds 6,547 53 19 64 - Total Current Assets $ Governmental Activities $ $ 62,157 526 206 148 8,641 1,185 80,941 (Continued) The accompanying notes are an integral part of the financial statements. 23 City of Mesa, Arizona Statement of Net Position Proprietary Funds June, 30, 2021 (in thousands) Business-type Activities Governmental Activities Non-Major Fund Airport Internal Service Funds Utility LIABILITIES Current Liabilities-Payable From Current Assets: Accounts Payable and Accrued Liabilities Due to Other Funds Claims Payable 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 $ Long-Term Liabilities: Bonds Payable Notes Payable Compensated Absences Net Pension and OPEB Liability Total Long-Term Liabilities Total Liabilities 8,422 - 129 - $ 8,551 - $ 2,936 2,212 48,372 4,477 26,130 41,797 40,831 444 4,477 26,130 41,797 41,275 - 47,918 149 604 170,328 30 603 47,918 149 634 170,931 129 53,649 1,351,645 1,136 3,712 174,742 1,531,235 176 4,230 4,406 1,351,645 1,136 3,888 178,972 1,535,641 830 38,352 39,182 1,701,563 5,009 1,706,572 92,831 2,340 2,340 57 57 2,397 2,397 517 517 3,623 27,342 30,965 2,364 38,377 11,656 20,907 315,591 390,154 2,899 $ 30,241 38,377 11,656 20,907 318,490 $ 420,395 (14,771) (12,407) 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 $ Total $ The accompanying notes are an integral part of the financial statements. 24 $ City of Mesa, Arizona Statement of Revenues, Expenditures and Changes in Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Operating Revenues: Electric Charges Gas Charges Water Sales Wastewater Charges Solid Waste Charges Airport Fees District Cooling Charges Charges For Services Self-Insurance Contributions Other Revenue Total Operating Revenues Business-type Activities Non-Major Fund Airport Utility Total $ 32,666 45,141 169,473 87,573 64,344 1,158 400,355 $ 4,007 4,007 $ 32,666 45,141 169,473 87,573 64,344 4,007 1,158 404,362 Governmental Activities Internal Service Funds $ 30,152 100,491 7,644 138,287 Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport District Cooling Warehouse, Maintenance & Services Self-Insurance Total Operating Expenses 24,682 31,503 68,767 42,694 41,948 902 210,496 4,038 4,038 24,682 31,503 68,767 42,694 41,948 4,038 902 214,534 31,396 116,004 147,400 Operating Income (Loss) Before Depreciation and Amortization 189,859 (31) 189,828 (9,113) Depreciation and Amortization (64,108) (1,920) (66,028) (244) 125,751 (1,951) 123,800 (9,357) Operating Income (Loss) (Continued) The accompanying notes are an integral part of the financial statements. 25 City of Mesa, Arizona Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Nonoperating Revenues (Expenses): Investment Income Intergovernmental Interest Expense: Bonds Notes Payable Gain/(Loss) on Disposal of Capital Assets Net Gain from Joint Venture Utility Development Fees Bond Issuance Costs Miscellaneous Revenue Total Nonoperating Revenues (Expenses) Business-type Activities Non-Major Fund Airport Utility Total $ 15 227 $ 30 585 $ 45 812 Governmental Activities Internal Service Funds $ 21 - (50,392) (31) (4,920) 8,227 20,350 (1,357) 190 (27,691) 2 617 (50,392) (31) (4,920) 8,227 20,350 (1,357) 192 (27,074) (186) (165) 98,060 (1,334) (9,522) Capital Contributions Transfers Out 14,009 (113,982) - 96,726 14,009 (113,982) Change in Net Position (1,913) (1,334) (3,247) (9,378) 392,067 31,575 423,642 (3,029) 390,154 $ 30,241 $ 420,395 Income before Transfers and Capital Contributions Total Net Position - As Restated Total Net Position - Ending $ The accompanying notes are an integral part of the financial statements. 26 144 - $ (12,407) City of Mesa, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) 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 Business-type Activities Non-Major Fund Airport Utility Total $ 403,505 $ Governmental Activities Internal Service Funds 4,306 $ 407,811 (181,132) (42,517) 190 (1,858) (1,998) 2 (182,990) (44,515) 192 138,604 (134,830) (9,476) - Net Cash Provided By (Used For) Operating Activities 180,046 452 180,498 (5,702) Cash Flows From Noncapital Financing Activities: Intergovernmental Investment in Joint Ventures Transfers In from Other Funds Transfers Out to Other Funds (976) (708) (113,982) 740 - (236) (708) (113,982) 1,442 - Net Cash Provided by (Used For) Noncapital Financing Activities (115,666) 740 (114,926) 1,442 Cash Flows From Capital and Related Financing Activities: Proceeds from Bond Sales 247,826 Payment to Refunded Bond Escrow Agent (113,560) Proceeds From Sale of Capital Assets Acquisition and Construction of Capital Assets (69,185) Principal Paid on Bonds and Notes Maturities (36,536) Interest Paid on Bonds and Notes (56,447) Bond Issuance Costs (1,357) Contributions and Capital Grants 49,596 (631) - 247,826 (113,560) (69,816) (36,536) (56,447) (1,357) 49,596 3 - Net Cash Used For Capital and Related Financing Activities 20,337 (631) 19,706 3 Cash Flows From Investing Activities: Interest Received on Investments 269 37 306 129 Net Cash Provided By Investing Activities 269 37 306 129 Net Change in Pooled Cash and Investments 84,986 598 85,584 (4,128) Total Cash and Investments at Beginning of Year 231,699 6,602 238,301 66,285 Total Cash and Investments at End of Year $ 316,685 7,200 $ 323,885 $ $ $ 62,157 (Continued) The accompanying notes are an integral part of the financial statements. 27 City of Mesa, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Reconciliation of Operating Income to Net Cash Provided By (Used For) Operating Activities: Operating Income Business-type Activities Non-Major Fund Airport Utility Total $ 125,751 $ (1,951) $ 123,800 Governmental Activities Internal Service Funds $ (9,357) 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 64,108 190 1,920 2 66,028 192 244 - (724) (16,849) 996 (703) 14,887 (3,837) (4,019) 246 237 62 (170) 659 (133) (86) (88) (487) (16,787) 826 (703) 15,546 (3,970) (4,105) 158 317 (1,054) (238) (825) 3,170 (825) (890) 3,756 Total Adjustments 54,295 2,403 56,698 3,655 Net Cash Provided By (Used For) Operating Activities $ 180,046 $ 452 $ 180,498 $ (5,702) 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 $ (13,179) (4,920) 7,638 (3,018) $ - (13,179) (4,920) 7,638 (3,018) $ 144 (189) - 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, 2021 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. The City’s population as of the 2020 census is 504,258 within an area of approximately 138 square miles. The City’s charter was adopted August 18, 1967 providing for a Council-Manager form of government. The City provides a full range of municipal services including police and fire protection, parks and recreation, library and transportation. In addition, the City owns and operates an airport and a utility whose activities include operations of electricity, gas, water, wastewater, solid waste 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 the Districts and the City Manager currently serves as the Manager of 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. The City contributed $1.7 million to the PMGAA operating and capital budget during this fiscal year. 29 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. 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. As a general rule, the effect of interfund activity has been eliminated from the Government-Wide Financial Statements; the exception is any interfund activity between Governmental and Business-Type Activities, such as transfers. Interfund services provided and used are not eliminated. The Statement of Net Position reports all financial and capital resources of the City. 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, 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 Statement of Activities demonstrates the degree to which the direct expenses of the various functional activities 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.). Expenses reported for the various functional activities 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. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function, 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 not covered by program revenues. 30 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 and proprietary funds. 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 two enterprise funds. The Utility Fund is reported as a major fund and the Airport Fund is a non-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. 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. 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 31 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 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 on the following major Governmental Funds and Proprietary Funds: Major Governmental Funds: 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. The Relief Fund accounts for federal expenditures dedicated to supporting the City’s response to COVID-19. Major Proprietary (Enterprise) Fund: The Utility Fund has been established to account for all utility functions. This includes the City-owned electric, gas, water, wastewater and solid waste systems, plus district cooling. 32 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Non-major Governmental Funds: Thirteen Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specific purposes. Five Capital Project Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Five Debt Service Funds are used to account for the accumulation of resources for the payment of long-term obligation principal, interest, and service charges. Proprietary Funds: The Airport Fund is a Non-major Enterprise Fund and is used to account for the Cityowned airport. 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. 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. On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. Through a Home Rule option, any City can adopt its own alternative expenditure limitation if a majority of the qualified electors vote in favor of the issue at a regular election. On November 6, 2018, the City of Mesa voters approved to continue under Home Rule for the next four years. 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 33 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 accounting principles. For additional detail, see the Notes to Budgetary Comparison Schedule. Budgeted amounts are as originally adopted by the City Council on May 18, 2020. 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. 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 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 34 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 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, long-term 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. 35 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. 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, 2021 as reported in the Budgetary Comparison Schedule is 62.9% of General Fund expenditures budgeted for fiscal year 2020-2021. 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. 36 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 all monies in the State Treasurer’s Local Government Investment Pools 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, 2021 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 levy is “unlimited” and the limited property value is used in determining the tax rate. In fiscal year 2020-2021, current property tax collections were $41,402,234 or 98.88% 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 within 60 days and the remaining balance is reported as unavailable revenue. The receivable at June 30, 2021 was $1,608,399 of which $1,087,751 was recorded as revenue and $520,648 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 2022. 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 37 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 effect for reporting periods beginning after December 31, 2020. The City will implement this Statement in fiscal year 2022. 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. GASB Statement No. 96 Subscription-Based Information Technology provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). The requirements of this Statement are effective for reporting periods beginning after June 15, 2022. The City will implement this Statement in fiscal year 2023. 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, 2021 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 Cash with Trustee 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 $ $ $ $ 12,672 51,853 36,494 23,145 1,675 834,118 317,350 1,608,964 1,926,688 $ 62,157 732 148 8,641 1,185 2,364 75,227 - 6,062 308,685 314,747 5,714 5,714 $ 834,118 $ 2,241,435 $ 80,941 $ (12,509) $ 3,143,985 $ 40,716 7,511 2,786 8,731 67,439 55,314 182,497 $ 1,751,248 562,256 2,313,504 $ 2,936 48,372 2,212 38,352 959 92,831 $ (9,723) (2,786) (12,509) $ 31,403 31,403 (31,403) 20,623 (10,780) 517 517 - 21,140 21,140 620,218 (61,289) (12,407) - 546,522 834,118 $ 2,241,435 $ 80,941 (12,509) $ 3,143,985 Deferred Outflows of Resources Deferred Amounts on Refunding Pensions and OPEB Total Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources Liabilities Accounts Payable and Accrued Liabilities Claims Payable Due To Other Funds Advances from Other Funds Customer and Defendant Deposits Unearned Revenue Liabilities Payable from Restricted Assets Pension and OPEB Long-term Liabilities Total Liabilities Deferred Inflows of Resources Unavailable Revenue Pension Total Deferred Inflows of Resources Fund Balance/Net Position Total Fund Balance/Net Position Total Liabilities and Fund Balance/Net Position $ 628,248 5,237 1,545 57,132 9,723 2,786 3,608 374 $ (9,723) (2,786) - 690,405 5,969 1,693 57,132 8,641 5,167 (12,509) 12,672 51,853 36,494 23,145 1,675 317,350 1,611,328 2,823,524 - 6,062 314,399 320,461 43,652 48,372 8,731 67,439 55,314 1,789,600 563,215 2,576,323 39 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 (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 $ 317,350 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 $ $ 2,849,510 (1,240,546) 1,608,964 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 $ $ 502,795 29,468 810,482 29,993 940,766 2,313,504 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 $ $ 6,062 308,685 314,747 Deferred inflows relating to pensions represent a future acquisition of net position that is not reported in the funds. Deferred Inflows – Pensions & OPEB $ 20,623 40 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Prepaid expense consists of items that will consume net position in a future reporting period(s): Prepaid Cost of Issuance $ 374 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 $ $ (536) (23,145) (7,722) (31,403) (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 $ (12,407) 41 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 Sale of Capital Assets 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 Pmt to Ref Bond Escrow Agent 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) $ $ (6) 6,313 6,635 $ $ $ $ 12,942 (4,368) $ (4,368) $ 27,732 (145,032) (20,193) $ (165,225) $ 9,284 69,847 3,160 3,075 $ 51,718 16,856 37,499 15,757 $ 16,183 14,575 4,760 1,592 $ $ 45,793 17,443 14 2,038 156,985 - (156,985) - 71,915 48,661 - - 922,560 85,366 (72,424) $ $ $ 253,825 47,253 3,990 1,832 42,635 316,871 41,394 8,573 2,287 130 7,036 185,897 21,597 145,032 20,193 1,098,545 98,423 308,271 127,421 45,596 175,985 $ $ $ - 21 20,067 7,644 - Statement of Activities - $ 253,825 47,247 3,990 8,145 42,635 316,871 41,394 8,573 2,308 20,197 21,315 (71,915) (71,915) 113,982 17,229 $ 897,711 - $ 175,608 409,549 172,840 66,020 (45,793) (1,152) (142) - - 16,291 14 1,896 - - (48,661) (71,915) - - (35,155) 37,110 (95,748) (71,915) 842,218 $ 30,787 $ (9,378) $ (69,477) - $ - $ 55,493 42 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 (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 $ $ (6) 6,313 6,635 12,942 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 compensated absences OPEB Expense Pension Expense Total $ $ 765 43,674 40,927 85,366 (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 $ $ 105,037 (67,046) 37,991 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 Donations, transfers and disposals Total $ $ (1,865) (5,339) (7,204) (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 $ $ 27,732 (37,110) (9,378) 43 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 (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. General Obligation Bond Proceeds Excise Tax Obligation Proceeds Community Facilities District Bonds Payments to Escrow Agent Principal repayments Total $ (79,500) (36,010) (29,522) 48,661 45,793 (50,578) 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 Premiums on bonds Amortization of bond issuance costs Prepaid bond issuance costs Amortization of bond premiums Total $ $ (2,174) (20,193) (17) 159 3,326 (18,899) (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 $ $ (71,915) 71,915 - 44 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 3. FUND BALANCE As of June 30, 2021, the fund balance details by classification are listed below (in thousands): Fund Balances: Nonspendable: Prepaid Costs Nonspendable Sub-total General Fund $ Relief Fund 2,680 2,680 $ 14 14 Non-Major Governmental Funds Total Governmental Funds $ $ 914 914 3,608 3,608 Restricted: Capital Projects Community Facility District Coronavirus Relief Court Debt Service Fire Library Police Spring Training & Tourism Transportation Programs Restricted Sub-total - 284 284 100,305 228 1,935 20,587 20,416 177 45,252 6,297 79,142 274,339 100,305 228 284 1,935 20,587 20,416 177 45,252 6,297 79,142 274,623 Committed To: Arts & Culture Capital Projects Cemetery Economic Development Environmental Compliance Fire Parks & Recreation Police Technology Vehicle Replacement Committed To Sub-total 3,832 5,442 1,813 7,442 18,529 - 1,373 33,141 4,581 16,621 147 2,351 8,465 66,679 1,373 33,141 8,413 16,621 5,442 1,960 7,442 2,351 8,465 85,208 Assigned To: Development Services Economic Development Fire General Government Parks & Recreation Police Sustainability Transit Assigned To Sub-total 360 19,514 651 41,535 1,011 15,774 73 106 79,024 - 897 897 360 19,514 651 42,432 1,011 15,774 73 106 79,921 Unassigned 188,375 - (11,517) 176,858 Total Fund Balances $ 288,608 $ 298 $ 331,312 $ 620,218 45 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 Pools Cash with Custodian (1) Cash with Fiscal Agent (2) Cash with Trustee (3) Long-Term Investments Total City Pooled Cash and Investments $ $ 137 71,006 15,873 140,114 15,569 119,780 36,494 716,336 1,115,309 (1) Represents cash sent by the City to Custodian on June 30, 2021 for investing purposes. (2) Represents cash sent by the City to fiscal agents on June 30, 2021 for debt service payments due to bondholders on July 1, 2021. (3) Represents bond and note proceeds held with trustee in compliance with bond / note agreements. The excise tax obligation proceeds with UM B are invested in US Treasury obligations and a US government money market mutual fund. Deposits At year-end, the City’s cash totaled $71,143,489 which included $137,151 of petty cash. The carrying amount of the City’s deposits was $71,006,338 and the bank balance was $76,571,864. The difference of $5,565,526 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, 2021 are covered under House Bill 2619. Investments The City’s Investment Policy is consistent with the City Charter. The investment policy 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 46 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. 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 and 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 Pools 5, 7, 500 and 700. Pool 5 is a short-term fund that invests in a diversified portfolio of high quality fixed income assets, including top-grade corporate debt, commercial paper, and U.S. government and agency securities, similar to a prime money market fund. Pool 5 carries a weighted average credit rating of AAA. Pool 7 is a short-term fund which invests only in products backed by the full faith and credit of the United States Government. Pool 7 carries a weighted average credit rating of AAA. Pool 500 is a medium-term diversified fund containing U.S Government treasuries and agencies, corporate bonds and mortgages. Pool 500 carries a weighted average credit rating of AA. Pool 700 is a medium-term fund that invests in securities backed by the United States government. Pool 700 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. 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. 47 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The City's investments had the following credit risk structure as of June 30, 2021 (in thousands): S&P Fair value Rating U.S. Treasuries AA+ $ 234,235 U.S. Agencies AA+ 310,273 U.S Agency Collateralized Mortgage Obligation AA+ 4,938 Foreign Issues AAA 6,323 Corporate Notes AA+ 3,021 Corporate Notes A25,403 Corporate Notes A 25,608 Corporate Notes AA12,778 Corporate Notes A+ 22,047 Corporate Notes AA 7,629 Corporate Notes AAA 1,231 Corporate Notes BBB+ 21,187 Negotiable Certificate of Deposit A-1 5,963 Negotiable Certificate of Deposit AA4,755 Negotiable Certificate of Deposit A+ 4,623 First American Gov't Obligation MM Fund AAAm 15,569 Municipal Bonds A+ 2,847 Municipal Bonds AA 7,464 Municipal Bonds AA6,046 Municipal Bonds AA+ 3,575 Municipal Bonds AAA 6,390 Total $ 731,905 Investment Type 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. 48 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 On June 30, 2021, the City had the following recurring fair value measurements (in thousands): Fair Value Measurements Using: Fair Value 6/30/2021 Level 1 Level 2 Level 3 $ $ - $ 544,508 $ 4,938 - 4,938 - Corporate Notes 118,904 - 118,904 - Negotiable Certificates of Deposit 15,341 - 15,341 - Foreign Issues 6,323 Investment by Fair Value Level Debt Securities U.S. Treasuries & Agencies Federal Agency Collateralized Mortgage Obligations Municipal Bonds Total Debt Securities at Fair Value $ 544,508 26,322 716,336 - 6,323 $ - 26,322 $ 716,336 $ - Investments Measured at Fair Value Arizona State Treasurers Investment Pools 140,114 First American Gov't Obligation MM Fund 15,569 Total Investments Measured At Fair Value $ 872,019 Amortized Cost Securities FDIC Insured Cash Sweep Money Market Funds $ 15,873 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 on June 30, 2021. The City’s investment maturities on June 30, 2021 are as follows (in thousands): 49 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Investment M aturities (in Years) Investment Type Fair Value Less Than 1 U.S. Treasuries & Agencies $ 544,508 $ Federal Agency Collateralized M ortgage Obligations 67,478 4,938 Corporate Notes 118,904 Negotiable Certificates of Deposit 15,341 2,346 First American Gov't Obligation M M Fund 15,569 15,569 Foreign Issues 3-5 $ 343,642 $ 133,388 74.40% 3,542 1,396 0.67% 48,632 70,272 16.25% 12,995 26,322 $ 731,905 $ 1,847 87,240 2.10% 2.13% 6,323 M unicipal Bonds Total Concentration of Credit Risk % 1-3 12,836 $ 421,647 6,323 0.86% 11,639 $ 223,018 3.60% 100.00% On June 30, 2021 the following investments had callable dates: Corporate Notes Abbott Laboratories Date Fair Value Jun-25 $ 1,785 Bank of America Oct-23 1,204 Bank of America Apr-24 3,009 BMW Bank North America Bristol Myers Squibb Bristol Myers Squibb Burlington Northern Sante Fe Charles Schwab Comcast Corp General Dynamics Goldman Sachs Honeywell JP Morgan Chase & Co JP Morgan Chase & Co Lockheed Martin Merck and Co Inc Microsoft Corp Mitsubishi Ufj Financial Group Morgan Stanley Morgan Stanley National Bank of Canada Pepsico PNC Financial Services The Bank of NY Mellon The Bank of NY Mellon The Bank of NY Mellon US Bancorp Wells Fargo & Co Total Jan-26 Nov-21 Jun-24 Jan-25 Feb-24 Mar-24 Apr-23 Nov-25 Jul-22 Sep-23 Feb-24 Dec-24 Nov-24 Nov-24 Sep-23 Oct-24 May-24 Nov-23 Jan-25 Nov-21 Jan-23 Mar-25 Dec-25 Dec-24 May-24 1,333 1,000 688 1,182 1,498 1,083 929 1,659 1,009 675 974 1,792 1,225 1,231 1,681 1,000 2,396 1,400 1,175 1,164 409 1,538 986 1,227 930 36,182 $ 50 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 U.S. Treasuries & Agencies Fannie Mae Fannie Mae Fannie Mae Fannie Mae DEB Fannie Mae M T N Fannie Mae M T N Fannie Mae M T N Fannie Mae M T N Federal Farm Credit Banks Federal Farm Credit Banks Federal Farm Credit Banks Federal Farm Credit Banks Federal Home Loan Banks Federal Home Loan Banks Federal Home Loan Banks Federal Home Loan Banks Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Federal Home Loan Mortgage Corp. Total Date Jul-22 Aug-22 Nov-22 Oct-21 Oct-21 Dec-21 Aug-22 Oct-22 Nov-21 Dec-21 Sep-21 Mar-23 Jul-21 Aug-21 Sep-21 Mar-22 Sep-21 Oct-21 Nov-21 Dec-21 Jun-22 Sep-22 Fair Value $ 3,480 7,197 4,313 1,486 3,963 5,490 595 1,243 6,632 6,976 994 1,987 2,500 4,971 4,479 992 1,536 1,990 3,985 14,380 997 456 $ 80,642 51 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 9,848 25,273 (5,813) - 4,035 25,273 1,202 23,145 1,675 - 1,202 23,145 1,675 18,379 13,480 - 18,379 13,480 206 526 93,734 (5,813) 206 526 $ 87,921 (1,169) (1) (1,170) $ 36,227 3,916 3,348 $ 43,491 $ Business-Type Activities: Utility Customers Other Customers Due from Other Governments Total Business-type Activities $ $ 37,396 3,917 3,348 44,661 $ $ $ Net Unbilled Accounts Receivable Unbilled utility service receivables are recorded in the year in which the services are provided. At June 30, 2021, unbilled utility service receivables are recorded in the Enterprise Fund as follows (in thousands): Electric $ 2,213 Gas 1,586 Water 10,362 Wastewater 4,734 Solid Waste 3,015 $ 21,910 52 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 General Fund $ 2,545 Governmental Activities Relief Non-Major Fund Funds $ $ 206 1,569 $ 4,114 61,313 61,313 $ General Fund $ 823 $ 823 Non-Major Funds $ 6,899 536 23,145 $ 30,580 $ 1,707 99 2,012 6. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The following interfund activities are included in the fund financial statements at June 30, 2021 (in thousands): Due from Due to Fund Other Funds Other Funds General Fund $ 9,723 $ Non-major Governmental Funds 7,511 Proprietary Funds 2,212 Total Governmental Funds $ 9,723 $ 9,723 Interfund balances at June 30, 2021 are short-term loans used to cover temporary cash deficits in various funds and are expected to be repaid within one year. 53 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Fund Governmental Funds: Ambulance Transport Public Safety Sales Tax Total Governmental Funds Advances to Other Funds Advances from Other Funds $ $ $ 2,786 2,786 $ 2,786 2,786 The Advances on June 30, 2021, are an advance from the Public Safety Sales Tax Fund to the Ambulance Transport Fund for property acquisition. The advances outstanding at June 30, 2021 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, 2021 (in thousands): Transfers Out Non-major General Governmental Enterprise Funds Fund Fund Fund Total General Fund $ $ 3,534 $ 113,982 $ 117,516 Relief Fund 40,697 40,697 Non-major Governmental Funds 27,684 27,684 Total $ 68,381 $ 3,534 $ 113,982 $ 185,897 The transfer from business-type activities to governmental activities on the government-wide statement of activities is a $113,982,000 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. The transfer from the General Fund to the Relief Fund was for continued support for the City’s response to the COVID-19 pandemic. 54 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 7. CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2021 follows (in thousands): Restated Beginning Ending Balance Balance Additions Retirements Governmental Activities: Non-depreciable Assets: Land $ 405,647 $ 1,408 $ (3,969) $ 403,086 Infrastructure 3,597 3,597 Construction-in-Progress 166,688 131,172 (99,804) 198,056 Total Non-depreciable Assets 575,932 132,580 (103,773) 604,739 Depreciable Assets: Buildings 431,269 431,269 Other Improvements 275,414 4,444 (331) 279,527 Machinery & Equipment 255,260 16,553 (1,443) 270,370 Intangibles 24,485 24,485 Infrastructure 1,200,975 50,556 (490) 1,251,041 Total Depreciable Assets 2,187,403 71,553 (2,264) 2,256,692 Less Accumulated Depreciation for: Buildings (144,851) (8,378) (153,229) Other Improvements (147,886) (8,992) 331 (156,547) Machinery & Equipment (182,243) (13,509) 429 (195,323) Intangibles (24,065) (178) 939 (23,304) Infrastructure (685,907) (36,232) 439 (721,700) Total Accum. Depreciation (1,184,952) (67,289) 2,138 (1,250,103) Total Depreciable Assets, net 1,002,451 4,264 (126) 1,006,589 Governmental Activities Capital Assets, net $ 1,578,383 $ 136,844 $ (103,899) $ 1,611,328 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 $ 4,794 11,070 37,291 13,890 244 $ 67,289 55 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 Restated Beginning Balance Additions Retirements $ $ 28,136 17,560 106 156,143 201,945 203 48,062 48,265 $ (97,374) (97,374) Ending Balance $ 28,339 17,560 106 106,831 152,836 46,702 84,618 82,885 27,189 2,043,045 2,284,440 1,245 3,508 94,164 98,917 (280) (1,527) (1,807) 46,702 85,863 86,113 27,189 2,135,682 2,381,550 (15,766) (42,943) (55,588) (23,164) (960,127) (1,097,588) 1,186,852 (906) (2,467) (5,586) (111) (56,630) (65,700) 33,217 280 1,238 1,518 (289) (16,672) (45,410) (60,894) (22,037) (1,016,757) (1,161,770) 1,219,780 $ 1,388,797 $ 81,482 $ (97,663) $ 1,372,616 Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statements as follows (in thousands): Gas Water Wastewater Solid Waste Airport District Cooling $ 4,913 33,295 17,901 3,581 1,883 397 65,700 56 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Construction in progress and related construction commitments are composed of the following (in thousands): Governmental Activities General Government Public Safety Community Environment Cultural-Recreational Total Construction in Progress Commitments $ $ $ Business-type Activities Electric Gas Water Wastewater Solid Waste Airport Total 177,404 8,919 10,264 1,469 198,056 $ 90,525 370 7 1,472 92,374 Construction in Progress Commitments $ $ $ 21,869 22,856 11,721 43,328 1,029 6,028 106,831 $ 2,237 2,049 13,079 2,763 434 419 20,981 57 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 Excise Tax Revenue Obligations Special Assessment Bonds with Governmental Commitment Community Facility District Total Bonds Payable Restated Beginning Balances Additions Reductions $ $ $ 334,705 58,750 - $ 334,377 49,105 35,365 $ 38,047 10,075 1,185 29,522 145,032 (219) (2,881) (93,218) 83,948 502,795 2,596 51,903 13,125 29,417 493,523 20,193 26,785 192,010 (3,325) (25,775) (122,318) $ 29,993 30,427 563,215 4,032 55,935 (155,330) (27) $ 1,275,640 14,015 28 $ Business-type Activities: Bonds Payable: Utility Revenue Bonds Utility Revenue Obligations General Obligation Bonds $ 1,242,670 55 Notes Payable Unamortized Bond Premiums Compensated Absences Business-type Activities Total (79,828) (9,645) (645) Amounts Due Within One Year 219 57,307 450,981 Unamortized Premiums Compensated Absences Governmental Activities Total Total Bonds Payable 79,500 36,010 Ending Balances $ $ 188,300 14,015 - $ $ $ $ 47,890 28 1,242,725 202,315 (155,357) 1,289,683 47,918 1,431 72,007 4,563 $ 1,320,726 45,511 3,596 251,422 (146) (7,638) (3,637) (166,778) 1,285 109,880 4,522 $ 1,405,370 149 634 48,701 $ $ $ 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, $959,000 of internal service funds compensated absences are included in the above amounts. For governmental activities, compensated absences are generally liquidated by the general fund. 58 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 b. Bonds Payable At June 30, 2021, 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. $ 700 $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. 19,175 $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. 2,297 $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. 6,980 $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. 43,275 $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. 24,850 $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. 5,615 $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. 30,950 $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. 19,425 $22,935,000 2016 taxable general obligation refunding serial bonds due in annual installments ranging from $1,000,000 to $3,565,000, plus semi59 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 annual interest ranging from July 1, 2029. 0.85 percent to 3 percent through $ 15,185 $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. 36,780 $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. 41,300 $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. 6,775 $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. 15,725 $22,075,000 2020 general obligation serial and term bonds due in annual installments ranging from $465,000 to $1,920,000, plus semi-annual interest ranging from 1.875 percent to 3 percent through July 1, 2040. 10,745 $23,390,000 2020 general obligation refunding serial bonds due in annual installments ranging from $730,000 to $12,480,000, plus semiannual interest ranging from 4 percent to 5 percent through July 1, 2030. 22,200 $19,030,000 2021 general obligation serial and term bonds due in annual installments ranging from $80,000 to $17,080,000, plus semi-annual interest ranging from 3 percent to 5 percent through July 1, 2041. 19,030 $14,495,000 2021 general obligation refunding serial bonds due in annual installments ranging from $665,000 to $6,380,000, plus semiannual interest ranging of 5 percent through July 1, 2031. 13,370 Total General Obligation Bonds $ 334,377 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. 225 $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. 8,000 60 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 $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. $ 300 $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. 9,700 $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 $ 49,105 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. 1,993 $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. 2,650 $3,367,000 2014 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 2 Special Assessment Revenue 61 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. $ 2,636 $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. 1,611 $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. 5,700 $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. 731 $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. 885 $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. 449 $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. 7,185 $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. 1,214 $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. 682 62 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 $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. $ 324 $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. 9,100 $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. 945 920 $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. 260 $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. 1,764 $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. 235 $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. 1,865 $1,235,000 2019 Second Series, Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds, due in annual principal 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. 1,165 $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. 13,455 63 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 $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. $ 675 $2,803,000 2020 Cadence Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 3 Special Assessment Revenue Bonds, 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. 2,725 $5,935,000 2020 Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $180,000 to $1,410,000, plus semi-annual interest ranging from 2.00 percent to 3.00 percent through July 15, 2044. 5,715 $14,000,000 2020 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $425,000 to $3,250,000, plus semi-annual interest ranging from 2.00 percent to 4.00 percent through July 15, 2044. 13,300 $2,315,000 2020 Eastmark Community Facilities District No. 2 (City of Mesa, Arizona) General Obligation Bonds, due in annual principal installments ranging from $65,000 to $1,105,000, plus semi-annual interest ranging from 2.00 percent to 4.00 percent through July 15, 2044. 2,240 $4,469,000 2021 Eastmark Community Facilities District No. 1 (City of Mesa, Arizona) Assessment District No. 12 Special Assessment Revenue Bonds, due in annual principal installments ranging from $134,000 to $2,300,000, plus semi-annual interest ranging from 1.60 percent to 3.75 percent through July 1, 2045. 4,469 Total Community Facilities District Bonds $ 83,948 Excise Tax Revenue Obligation $36,010,000 2020 excise tax revenue serial obligations, due in annual principal installments ranging from $645,000 to $2,595,000, plus semiannual interest ranging from 3.00 percent to 5.00 percent through July 1, 2040. $ 35,365 Total bonds payable recorded in governmental activities $ 502,795 64 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. Total General Obligation Bonds $ 28 $ 28 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. $ 2,250 $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. 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 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 $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. 53,490 $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 65 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 $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 $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 $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. 85,945 $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. 28,170 $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. 88,475 $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. 121,875 $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. 103,120 $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. 87,825 $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. 53,815 66 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 $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. $ 73,235 $71,070,000 2020 utility systems revenue serial bonds, due in annual principal installments ranging from $1,000,000 to $10,100,000, plus semiannual interest ranging from 3 percent to 5 percent through July 1, 2044. 68,980 $37,675,000 2020 utility systems revenue refunding serial bond due in a single principal installment of $37,675,000 plus semi-annual interest of 4 percent through July 1, 2034. 37,675 $34,685,000 2021 utility systems revenue serial and term bonds, due in annual principal installments ranging from $1,000,000 to $11,395,000 plus semi-annual interest ranging from 3 percent to 5 percent through July 1, 2045. 34,685 $44,870,000 2021 utility systems revenue refunding serial bond due in a single principal installment of $44,870,000 plus semi-annual interest of 4 percent through July 1, 2035. 44,870 Total Utility Systems Revenue Bonds $ 1,275,640 Utility System Revenue Obligations $14,015,000 2021 utility revenue serial and term obligations, due in annual principal installments ranging from $1,000,000 to $4,780,000, plus semi-annual interest ranging from 4.00 percent to 5.00 percent through July 1, 2045. $ Total bonds payable recorded in business-type activities $ 1,289,655 14,015 The following tables summarize the City’s debt service requirements to maturity for its long-term bonds payable at June 30, 2021 (in thousands). The deferred amounts on refundings are not included. 67 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Governmental Activities General Obligation Bonds Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 Principal $ 38,047 21,330 22,165 23,795 25,240 122,040 71,060 10,700 Interest $ 11,576 10,038 9,331 8,597 7,765 25,263 6,682 548 TOTALS $ 334,377 $ 79,800 Highway User Revenue Bonds Total 49,623 31,368 31,496 32,392 33,005 147,303 77,742 11,248 Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 $ 414,177 TOTALS $ $ Principal 10,075 10,000 10,490 10,880 3,755 3,905 - $ 49,105 Excise Tax Revenue Obligations Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2045 TOTALS Principal $ 1,185 1,245 1,305 1,375 1,440 8,365 10,545 9,905 - Interest $ 1,511 1,451 1,389 1,324 1,255 5,120 2,938 882 - $ $ 35,365 15,870 $ $ 6,724 $ Total 12,390 11,812 11,802 11,665 4,099 4,061 - $ 55,829 Community Facilities District Total 2,696 2,696 2,694 2,699 2,695 13,485 13,483 10,787 - Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2045 51,235 TOTALS $ Interest $ 2,315 1,812 1,312 785 344 156 - $ Principal 2,596 2,687 2,769 2,886 2,997 16,827 20,486 22,122 10,578 $ 83,948 Interest $ 3,193 3,116 3,028 2,935 2,836 12,355 8,767 4,308 689 $ 41,227 $ $ Total 5,789 5,803 5,797 5,821 5,833 29,182 29,253 26,430 11,267 125,175 Business-type Activities General Obligation Bonds Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2045 TOTALS Principal $ 28 $ 28 Interest Revenue Bonds Total $ 1 - $ 29 - Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2045 $ 1 $ 29 TOTALS Principal 47,890 47,935 49,390 50,840 52,185 298,455 336,805 311,940 80,200 Interest $ 53,469 50,737 48,351 45,891 43,612 182,935 116,906 50,995 6,467 $ 1,275,640 $ 599,364 $ $ Total 101,359 98,672 97,741 96,731 95,797 481,390 453,711 362,935 86,667 $ 1,875,004 68 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Utility Revenue Obligations Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2045 TOTALS Principal $ 1,000 1,000 1,000 1,000 4,000 1,235 4,780 $ $ 14,015 $ Interest 665 641 591 541 490 1,703 1,153 956 585 7,325 $ $ Total 665 1,641 1,591 1,541 1,490 5,703 2,388 956 5,365 21,340 General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $27,667 of these bonds on June 30, 2021 is carried as a liability of the Enterprise Fund to reflect the intention of retirement from resources of that fund. 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 June 30, 2021 is (in thousands): 6% Bonds 20% Bonds Total Available $ 315,079 727,623 $ 1,042,702 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. 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, 2021, total principal and interest outstanding for CFD general obligation bonds was $89,102,513. 69 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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, 2021, 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 $36,071,928. Principal and interest paid for the current year and total assessments collected were $1,616,101, and $1,599,580 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, 2021, the amount provided in the Replacement and Extension Funds equaled $7,996,180 which is in compliance with the bond provisions. As of June 30, 2021, the amount available is $38,640,262. 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. 70 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2021 (in thousands): Fiscal Year 2022 2023 2024 2025 2026 2027-2029 Totals Business-type Activities Interest Principal & Fees Total $ 149 $ 28 $ 177 153 25 178 156 22 178 159 18 177 163 15 178 505 22 527 $ 1,285 $ 130 $ 1,415 d. Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2021. 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 $1.29 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 2045. Annual principal and interest payments on the bonds were 48.9 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $1.875 billion. Principal and interest paid for the current year and total customer net revenues were $92,868,345 and $189,602,693, respectively. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $49.105 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 71 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 payable through 2027. Annual principal and interest payments on the bonds were 27.6 percent of eligible revenues. The total principal and interest remaining to be paid on the bonds is $55,829,163. Principal and interest paid for the current year and total highway user tax revenues were $12,440,613 and $45,049,168, respectively. 9. REFUNDED, REFINANCED AND DEFEASED OBLIGATIONS On July 9, 2020 the City called for the early redemption of $14,920,000 in utility revenue bonds from existing resources of the City to reduce the City’s Utility System Revenue Bond principal balance that is currently outstanding. This defeasance was funded with Utility Systems Impact fees of $16,048,681 provided to a defeasance escrow agent for the purchase of United States Government securities, and Utility Systems Net Revenues of $40,000 to cover transaction costs. The securities were deposited to an irrevocable trust to provide for all future debt service payments of the defeased bonds totaling $16,161,250. As a result, the liability for the defeased bonds has been removed from the debt of the City. On December 10, 2020 the City issued $37,675,000 of utility revenue bonds with an original issue premium of $8,734,572 to advance refund $44,690,000 of outstanding taxable utility revenue bonds. The refunding bonds were issued with an interest rate of 4.0 percent. Net proceeds in the amount of $46,133,103 (after payment of $91,410 in underwriters’ fees) were provided to a refunding escrow agent to purchase United States Government securities. The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $1,003,165. This difference, reported in the accompanying financial statements as a deduction from utility revenue bonds payable, is charged to operations. The purpose of the refunding was to take advantage of lower interest rates and restructure debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $12,178,123 over the next 14 years producing an economic gain (difference between the present value of old and new debt service payments) of $10,513,434. On December 10, 2020 the City issued $23,900,000 of general obligation bonds with an original issue premium of $6,973,049 to advance refund $29,750,000 of outstanding general obligation bonds. The refunding bonds were issued with an interest rate ranging between 4.0 to 5.0 percent. Net proceeds in the amount of $30,630,609 (after payment of $71,825 in underwriters’ fees) were provided to a refunding escrow agent to purchase United States Government securities. The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $679,689. This difference, reported in the accompanying financial statements as a deduction from general obligation bonds payable, is charged to operations. The purpose of the refunding was to take advantage of lower interest rates and restructure debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $5,627,811 over the next 10 years producing an economic gain (difference between the present value of old and new debt service payments) of $5,295,651. 72 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 On May 27, 2021 the City issued $44,870,000 of utility revenue bonds with an original issue premium of $10,707,777 to advance refund $53,950,000 of outstanding utility revenue bonds. The refunding bonds were issued with an interest rate of 4.0 percent. Net proceeds in the amount of $55,298,750 (after payment of $93,267 in underwriters’ fees) were provided to a refunding escrow agent to purchase United States Government securities. The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $816,334. This difference, reported in the accompanying financial statements as a deduction from utility revenue bonds payable, is being charged to operations. The purpose of the refunding was to take advantage of lower interest rates and restructure debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $22,897,041 over the next 15 years producing an economic gain (difference between the present value of old and new debt service payments) of $20,047,976. On May 27, 2021 the City issued $14,495,000 of general obligation bonds with an original issue premium of $3,721,704 to advance refund $17,675,000 of outstanding general obligation bonds. The refunding bonds were issued with an interest rate of 5.0 percent. Net proceeds in the amount of $18,030,109 (after payment of $56,526 in underwriters’ fees) were provided to a refunding escrow agent to purchase United States Government securities. The cash and securities were deposited in an irrevocable trust to provide for all future debt service payments of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the debt of the City. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $157,151. This difference, reported in the accompanying financial statements as a deduction from general obligation bonds payable, is being charged to operations. The purpose of the refunding was to take advantage of lower interest rates and restructure debt service payments to achieve a more level debt retirement schedule. The refunding will decrease debt service payments by $3,480,723 over the next 11 years producing an economic gain (difference between the present value of old and new debt service payments) of $3,296,572. 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. 73 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 In accordance with GASB Statement No. 7, the refunded debt outstanding on June 30, 2021 as reflected below is not included in the City’s financial statements (in thousands). 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 73,690 Utility System Revenue Refunding Bond Issue dated September 25, 2014 5,120 Utility System Revenue Bond Issue Dated June 5, 2014 9,230 Excise Tax Revenue Obligations dated March 27, 2013 49,025 Total Refunded and Defeased Bonds Outstanding $ 152,780 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, 2021 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. 74 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Changes in the balances of claims liabilities during the past two fiscal years are as follows (in thousands): Property Workers' Employee & Public Liability Compensation Benefits Total Unpaid Claims, 6/30/19 Adjustments to Reserves Claim Expense $ 14,594 282 692 $ Unpaid Claims, 6/30/20 15,568 Adjustments to Reserves Claims Expense (817) 190 Unpaid Claims, 6/30/21 $ 14,941 $ 25,896 1,243 (872) 5,532 68,683 (71,389) $ 46,022 70,208 (71,569) 26,267 2,826 44,661 2,062 194 70,965 (68,883) 72,210 (68,499) 4,908 $ 48,372 28,523 $ $ 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. 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 on June 30, 2021, is $10,291,398. 75 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 12. NET POSITION a. Restricted Net Position The government-wide statement of net position reports $274,224,000 of restricted net position, of which $146,832,000 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 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, Grants and Mesa Housing Authority Special Revenue Funds will be covered by future revenues. 13. ENTERPRISE ACTIVITIES OPERATIONS DETAIL The Enterprise Fund includes operations of electricity, gas, water, wastewater, solid waste, airport 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, 2021 for these services are as follows (in thousands): 76 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Operating Expenses Functions Electric Gas Water Wastewater Solid Waste Airport District Cooling Total Operating Revenues $ 32,666 45,141 169,473 87,573 64,344 4,007 1,158 $ 404,362 Depreciation $ 3,730 4,913 33,295 17,901 3,581 1,883 397 $ 65,700 Other $ 24,682 31,503 68,767 42,694 41,948 4,038 902 $ 214,534 Operating Income (Loss) $ 4,254 8,725 67,411 26,978 18,815 (1,914) (141) $ 124,128 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. The City's investment in these Joint Ventures as of June 30, 2021, 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 $ 311,341 6,009 $ 317,350 Business-Type Activities $ 79,621 51,486 164,990 11,656 $ 307,753 Total $ 311,341 6,009 79,621 51,486 164,990 11,656 $ 625,103 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. The City’s equity in the joint venture is $311,340,889 and is reflected in the governmental activities. Separate financial statements can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. 77 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Separate financial statements 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 $6,008,990 and is reflected in the governmental activities. Separate financial statements are not prepared. Total investment in the joint venture as of June 30, 2021, is (in thousands): TOPAZ Regional Wireless Cooperative City of Mesa $ 6,009 Town of Gilbert 1,433 City of Apache Junction 514 Superstition Fire and Medical 160 Town of Queen Creek 106 Fort McDowell 37 Rio Verde Fire District 12 Total Joint Venture $ 8,271 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 $79,620,806 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. 78 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 was completed May 28th, 2021. 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 $164,990,022 and is reflected in the proprietary funds financial statements. Separate financial statements are not prepared. Total investment in the joint venture as of June 30, 2021, is (in thousands): Greenfield Water Reclamation Project Mesa's Share $ 164,990 Gilbert's Share 107,456 Queen Creek's Share 32,300 Total Joint Venture $ 304,746 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 $51,486,624 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. 79 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 On June 30, 2021, the City reported the following aggregate amounts related to pensions for all plans to which it contributes (in thousands): Statement of Net Position and Statement of Activities Net Pension Liabilities Net OPEB Liabilities Deferred Outflows of Resources - Pension Deferred Outflows of Resources - OPEB Deferred Inflows of Resources - Pension Deferred Inflows of Resources - OPEB Pension Expense OPEB Expense Governmental Activities $ 953,668 835,933 202,024 112,375 5,226 15,914 116,410 61,870 Business-Type Activities $ 61,143 117,829 10,976 15,732 139 2,258 5,398 8,647 Total $ 1,014,811 953,762 213,000 128,107 5,365 18,172 121,808 70,517 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. 80 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 b. Benefits Provided The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: 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, 2021, the city and covered employees were required by state statute to contribute at the actuarially determined rate of 12.22% (12.04% pension plus 0.18% long-term disability) of the active members’ annual covered payroll. The City’s contributions to the System for the year ending June 30, 2021 was $21,322,017, 73.6% paid from governmental funds, 4.6% paid from internal service funds, and 21.80% 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 81 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 who return to work may have on the ASRS Trust Fund. The contribution rate for the year ended June 30, 2021 was 10.21% (10.14% pension plus, 0.07% long-term disability). The City’s ACR contributions to the System for the year ending June 30, 2021 were $77,565. c. Pension Liability On June 30, 2021, the City reported a liability of $280,473,043 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2020. 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, 2019, to the measurement date of June 30, 2020. 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, 2021. The City’s proportion measured as of June 30, 2021, was 1.61875%, which was a decrease of 0.0021% from its proportion measured as of June 30, 2019. d. Pension Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2021, the City recognized pension expense for ASRS of $24,761,985. On June 30, 2021, 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 $ 2,537 - Deferred Inflows of Resources $ - 27,052 - 20,763 50,352 641 641 $ $ 82 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The $20,762,579 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, 2022. 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, 2022 $ 2,615 8,181 2023 2024 9,785 2025 8,367 $ 28,948 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, 2019 June 30, 2020 Entry Age Normal 7.5% 2.7 - 7.2% 2.3% Included 2017 SRA Scale U-MP Actuarial assumptions used in the June 30, 2019 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: 83 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 6.39% 5.44% 0.22% 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 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% $ $ $ 194,312 383,543 280,473 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 multiple84 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 employer 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: 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 of last 20 years on 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 85 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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. Employees Covered by Benefit Terms On June 30, 2021, the following employees were covered by the agent plans’ benefit terms: PSPRS Fire PSPRS Police Pension Pension Health 270 628 628 87 369 726 206 695 1,529 99 695 1,422 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, 2021, 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 57.88% 58.80% 10.66% 10.11% City OPEB 0.47% 1.29% 0.18% 0.12% 86 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 44.37% and 44.78% for City fire and police employees respectively, who were PSPRS Tier 3 members. The City’s contributions to the plans for the year ended June 30, 2021, were: PSPRS - Fire $ PSPRS - Police PSPRS Tier 3 - Fire PSPRS Tier 3 - Police Pension 17,678,482 31,951,593 1,938,168 5,532,627 OPEB $ 143,554 700,979 6,579 12,095 The City’s contribution to the system was paid from the general fund. 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 42.37% and 44.78% for fire and police, respectively. The City did not have any ACR contributions for the year ending June 30, 2021. d. Liability At June 30, 2021, the City reported the following pension liabilities of $246,841,273 and $487,497,043 for fire and police, respectively. The City also reported an OPEB liability of $11,128,245 for police. The net liabilities were measured as of June 30, 2020, and the total liability used to calculate the net liability was determined by an actuarial valuation as of that date. e. Pension/OPEB Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2021, the City recognized pension expense of $33,375,439 and $63,670,683 for fire and police, respectively. City also recognized OPEB expense of $1,338,129 for police. 87 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 On June 30, 2021, 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 $ 9,550 17,042 Deferred Inflows of Resources $ 3,933 - 10,958 - 19,617 57,167 3,933 $ $ Pension OPEB PSPRS - Police Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ $ $ $ Changes in assumptions 24,607 791 684 - 24,178 - 316 115 19,212 - 538 - 37,484 - 713 - Net difference between projected and actual earnings on plan investments City contributions subsequent to the measurement date Total $ 105,481 $ 791 $ 2,251 $ 115 88 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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, 2022. 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, 2022 2023 2024 2025 2026 Thereafter f. PSPRS Fire Pension $ 7,324 8,570 8,369 6,513 2,873 (32) $ 33,617 PSPRS Police Pension $ 19,010 17,929 14,391 12,698 3,178 $ 67,206 PSPRS Police OPEB 311 394 382 273 63 $ 1,423 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, 2020 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 Actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2017. 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: 89 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Target Allocation 1% 2% 7% 12% 15% 18% 22% 23% 100% Asset Class Cash - Mellon Core Bonds Capital Appreciation Diversifying Strategies International Equity Global Private Equity Private Credit U.S. Equity Total Long-Term Expected Geometric Real -0.60% 0.22% 5.61% 3.22% 6.09% 8.42% 5.31% 4.93% 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. 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. 90 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 $ $ 202,777 $ 231,180 Adjustment to Beginning of Year 433,957 - - - Changes for the Year: Service Cost 7,871 - 7,871 Interest on the Total Liability 31,397 - 31,397 - - - (221) - (221) Changes of Assumptions / Other Inputs - - - Contributions - Employer - 18,107 (18,107) Contributions - Employee - 2,845 (2,845) Net Investment Income - 2,587 (2,587) Changes of Benefit Terms Differences Between Expected & Actual Experience in the M easurement of the Liability Benefit Payments, Including Refunds (23,473) (23,473) - Administrative Expenses of Employee Contributions - (211) 211 Other Changes - 58 (58) 15,574 (87) 15,661 449,531 $ 202,690 $ 246,841 Net Changes Balances - End of Year $ 91 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Police Total Pension Liability Plan Fiduciary Net Position Net Position Liability Total OPEB Liability Plan Fiduciary Net Position Net OPEB Liability Balance - Beginning of Year $ 795,963 $ 354,780 $ 441,183 $ $ $ - - - - - - Service Cost 14,016 - 14,016 322 - 322 Interest on the Total Liability 57,794 - 57,794 1,477 - 1,477 - - - - - - 19,067 - 19,067 381 - 381 Changes of Assumptions / Other Inputs - - - - - - Contributions - Employer - 34,340 (34,340) - 934 (934) Adjustment to Beginning of Year 20,372 10,331 10,041 Changes for the Year: Changes of Benefit Terms Differences Between Expected & Actual Experience in the M easurement of the Liability Contributions - Employee - 6,045 (6,045) - 46 (46) Net Investment Income - 4,551 (4,551) - 123 (123) Benefit Payments, Including Refunds of Employee Contributions (36,572) (36,572) - Administrative Expenses - (371) Other Changes - (2) 54,305 $ 850,268 Net Changes Balances - End of Year i. (1,455) (1,455) - 371 - (10) 10 2 - - - 7,991 46,314 725 (362) 1,087 $ 362,771 $ 487,497 $ 21,097 $ 9,969 $ 11,128 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): 1% Decrease Fire Net Pension Liability $ 305,703 Police Net Pension Liability 605,731 Police OPEB Liability 13,346 Current Discount Rate $ 246,841 487,497 11,128 1% Increase $ 198,526 391,411 9,260 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 benefits provided. 92 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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, 2021 is $942,634,229. 93 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The impact of changes from the June 30, 2019 results include the following: • The discount rate was decreased from 2.79% to 2.66% as of June 30, 2020. The 2.66% rate was selected based on the S&P Municipal Bond 20-Year High Grade Rate Index as of June 30, 2020. This caused an increase in liability of $18.9 million. d. OPEB Expense and Deferred Outflows/Inflows of Resources For the year ended June 30, 2021, the City recognized OPEB expense of $69,179,513. On June 30, 2021, 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 City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 22,229 84,678 18,948 $ 125,855 Deferred Inflows of Resources $ 2,668 15,389 $ 18,057 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, 2022. 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, 2022 $ 19,589 2023 19,983 2024 27,347 2025 19,754 2026 2,177 $ 88,850 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 shortterm volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions used for this fiscal year valuation were as follows: 94 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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, 2020 Entry Age Normal 2.66% 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 2.66%. 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 30, 2020. g. Changes in OPEB Liability The below table outlines the changes in OPEB Liability for the fiscal year ending June 30, 2020 (in thousands): $ OPEB Liability at Beginning of Year Service Cost Interest Differences between Expected and Actual Experience Changes in Assumptions Employer contributions * Net Change in Total OPEB Liability OPEB Liability at End of Year $ 897,376 24,165 25,425 (2,548) 18,858 (20,641) 45,259 942,635 * Because the City funds OPEB benefits on a “pay-as-you-go” basis, employer contributions are equal to benefit payments. The City’s contribution to the plan was paid 84.8% from governmental funds, 2.7% from internal service funds, and 12.5% from enterprise funds. 95 (Continued) City of Mesa, Arizona Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 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 $ 1,108,951 Current Municipal Bond Rate $ 942,634 1% Increase $ 811,040 1% Decrease City OPEB Plan $ 805,173 Current Healtchare Trend Rate $ 942,634 1% Increase $ 1,118,211 RESTATEMENT OF BEGINNING NET POSITION As of July 1, 2021, the City changed its accounting policy in regard to its Cubs, Hohokam, Convention Center and Golf Course activities and ceased accounting for them as part of the Enterprise Fund and began accounting for these activities within the General Fund. In addition, the City changed its accounting policy in regard to the Airport and Utility Funds and began accounting for them as separate Enterprise Funds. As a result, the beginning balances of the Governmental Activities, Airport and Business Type Activities were restated as follows: Governmental Activities Beginning Net Position $ 385,721 $ Utility Airport Business-type Activities 528,950 $ $ - 528,950 Adjustments: Capital Assets (Net) 105,597 (105,597) - (105,597) Compensated Absences (200) 200 - 200 Debt and Deferral Balances (89) Airport Net Position - Adjusted Beginning Net Position 17. $ 491,029 - 89 (31,575) 89 31,575 - $ 392,067 $ 31,575 $ 423,642 SUBSEQUENT EVENTS On November 10, 2021, the Cadence Community Facility District issued 2021 Cadence Community Facilities District (City of Mesa, Arizona) General Obligation Bonds in the amount of $1,580,000. These bonds are due in annual principal installments ranging from $65,000 to $695,000, plus semi-annual interest ranging from 3 percent to 4 percent through July 15, 2044. (Concluded) 96 required supplementary information CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 City of Mesa, Arizona Schedule of the City's Proportionate Share Of Net Pension Liability Cost-Sharing Pension Plan June 30, 2021 (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. 97 2021 (2020) 1.6188% $ 280,473 2020 (2019) 1.6209% $ 235,853 2019 (2018) 1.6293% $ 227,233 $ $ 169,900 $ 162,089 159.57% 138.82% 140.19% 69.33% 73.24% 73.40% 175,767 Reporting Fiscal Year (Measurement Date) 2018 (2017) 1.6416% $ 255,729 2017 (2016) 1.6605% $ 268,013 2016 (2015) 1.6393% $ 255,337 2015 (2014) 1.6341% $ 241,792 $ 158,958 $ 155,868 $ 151,154 $ 147,402 160.88% 171.95% 168.93% 164.04% 69.92% 67.06% 68.35% 69.49% 2014 through 2012 Information not available 98 City of Mesa, Arizona Schedule of Changes in the City's Net Pension/OPEB Liability and Related Ratios Agent Plans June 30, 2021 (in thousands) Public Safety Personnel Retirement System - Fire Reporting Fiscal Year (Measurement Date) 2021 (2020) 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) 7,871 31,397 - 2020 (2019) $ 7,663 29,147 - 2019 (2018) $ 7,271 27,446 - (221) - 11,844 8,488 1,951 - (23,473) 15,574 (18,809) 38,333 (16,608) 20,060 433,957 449,531 395,624 433,957 375,564 395,624 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 18,107 2,845 2,587 16,708 2,805 10,339 16,733 3,035 12,464 (23,473) (211) 58 (87) (18,809) (181) 10,862 (16,608) (5,150) (190) 2 10,286 Plan Fiduciary Net Position - As Previously Reported Adjustment to Beginning Balance Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 202,777 202,777 202,690 191,986 (71) 191,915 202,777 181,700 181,700 191,986 City's Net Pension Liability - Ending (a) - (b) $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 246,841 $ 45.09% City's Covered Payroll $ City's Net Pension Liability as a Percentage of its Covered Payroll 32,562 758.06% See accompanying notes to pension plan schedules. 99 231,180 $ 46.73% $ 34,136 677.23% 203,638 48.53% $ 32,445 627.64% Reporting Fiscal Year (Measurement Date) 2018 (2017) $ $ 7,724 25,687 2,125 2017 (2016) $ $ 6,127 23,086 - 2014 through 2012 2015 (2014) $ 6,281 20,708 4,044 (2,670) 12,613 (4,423) 11,970 (3,518) - (6,961) 23,097 (17,095) 28,384 (19,893) 39,127 (17,323) 8,372 (16,309) 30,860 347,180 375,564 308,053 347,180 299,681 308,053 268,821 299,681 13,558 3,923 19,308 12,735 4,396 954 9,828 3,847 5,878 9,157 3,488 19,840 (17,095) (174) 43 19,563 (19,893) (138) (12) (1,958) (17,323) (144) 45 2,131 (16,309) (160) (113) 15,903 162,137 162,137 181,700 164,095 164,095 162,137 161,964 161,964 164,095 146,061 146,061 161,964 193,864 $ 48.38% $ 6,439 23,654 21,380 2016 (2015) 32,941 588.52% 185,043 $ 46.70% $ 32,453 570.19% 143,958 $ 53.27% $ 31,661 454.69% 137,717 54.05% $ 30,782 447.39% 100 Information not available City of Mesa, Arizona Schedule of Changes in the City's Net Pension/OPEB Liability and Related Ratios Agent Plans June 30, 2021 (in thousands) Public Safety Personnel Retirement System - Police Pension Reporting Fiscal Year (Measurement Date) 2021 (2020) 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) 14,016 57,794 - 2020 (2019) $ 15,015 53,953 - 2019 (2018) $ 13,826 50,926 - 19,067 - 10,259 21,092 3,862 - (36,572) 54,305 (36,864) 63,455 (34,755) 33,859 795,963 850,268 732,508 795,963 698,649 732,508 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 34,340 6,045 4,551 32,387 5,718 18,270 31,596 6,058 21,889 (36,572) (371) (2) 7,991 (36,864) (319) 340 19,532 (34,754) (10,096) (333) 514 14,874 Plan Fiduciary Net Position - As Previously Reported Adjustment to Beginning Balance Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 354,780 354,780 362,771 335,631 (383) 335,248 354,780 320,757 320,757 335,631 City's Net Pension Liability - Ending (a) - (b) $ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 487,497 $ 42.67% City's Covered Payroll $ City's Net Pension Liability as a Percentage of its Covered Payroll 63,232 770.97% See accompanying notes to pension plan schedules. 101 441,183 $ 44.57% $ 63,993 689.42% 396,877 45.82% $ 63,003 629.93% Reporting Fiscal Year (Measurement Date) 2018 (2017) $ $ 15,841 47,572 5,718 2017 (2016) $ $ 12,216 41,908 - 2014 through 2012 2015 (2014) $ 12,481 36,514 8,728 365 19,037 (4,001) 23,614 (2,173) - (11,331) 51,228 (32,522) 56,011 (31,689) 77,940 (29,998) 21,953 (27,566) 70,054 642,638 698,649 564,698 642,638 542,745 564,698 472,691 542,745 26,819 7,693 34,221 24,067 8,157 1,667 19,680 7,613 10,065 17,443 6,784 33,360 (32,522) (306) 420 36,325 (31,689) (240) 382 2,344 (29,998) (246) 28 7,142 (27,566) (269) 288 30,040 284,432 284,432 320,757 282,088 282,088 284,432 274,946 274,946 282,088 244,906 244,906 274,946 377,892 $ 45.91% $ 12,438 43,573 34,005 2016 (2015) 64,740 583.71% 358,206 $ 44.26% $ 61,211 585.20% 282,610 $ 49.95% $ 62,461 452.46% 267,799 50.66% $ 59,688 448.66% 102 Information not available City of Mesa, Arizona Schedule of Changes in the City's Net Pension/OPEB Liability and Related Ratios Agent Plans June 30, 2021 (in thousands) Public Safety Personnel Retirement System - Police OPEB Reporting Fiscal Year (Measurement Date) 2021 (2020) 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) $ 322 1,477 - 2020 (2019) $ 200 1,416 - 2019 (2018) $ 190 1,359 - 2018 (2017) $ 213 1,356 35 381 - 43 474 472 - 312 (335) (1,455) 725 20,372 21,097 (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 934 46 123 736 14 530 231 695 639 1,141 (1,455) (10) (362) (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) 10,331 10,331 9,969 10,067 384 10,451 10,331 10,477 10,477 10,067 9,946 9,946 10,477 $ 11,128 $ 10,041 51.29% 51.29% 51.29% 55.33% $ 63,232 $ 63,993 $ 63,003 $ 64,740 17.60% 15.69% 15.18% 13.06% City's Net OPEB Liability - Ending (a) - (b) Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability City's Covered Payroll City's Net OPEB Liability as a Percentage of its Covered Payroll 103 $ 9,563 $ 8,457 2017 through 2012 Information not available City of Mesa, Arizona Schedule of City Pension Contributions June 30, 2021 (in thousands) Arizona State Retirement System Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution (Deficiency) / Excess $ 2021 20,763 $ 2020 20,258 $ 2019 19,124 $ 2018 17,650 $ 20,763 - $ 20,258 - $ 19,124 - $ 17,650 - City's Covered Payroll $ 178,405 $ 175,767 $ 169,900 $ 162,089 11.64% 11.53% City's Contributions as a Percentage of Covered Payroll 11.26% 10.89% 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 $ 2021 19,617 $ 2020 18,035 $ 2019 16,431 $ 2018 14,289 $ 19,617 - $ 18,035 - $ 16,431 - $ 15,509 1,220 City's Covered Payroll $ 34,198 $ 32,562 $ 34,136 $ 32,446 City's Contributions as a Percentage of Covered Payroll 57.36% See accompanying notes to plan schedules. 104 55.39% 48.13% 47.80% $ 2017 17,423 $ 2016 16,955 $ 2015 16,146 $ 2014 15,750 $ 17,423 - $ 16,955 - $ 16,146 - $ 15,750 - $ 158,958 $ 155,868 $ 151,154 $ 147,402 10.96% 10.88% 10.67% 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 39.24% 31.04% Information not available 10.68% $ 40.95% 2013 through 2012 2013 through 2012 Information not available 29.75% 105 City of Mesa, Arizona Schedule of City Pension Contributions June 30, 2021 (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 $ 2021 37,484 $ 2020 34,308 $ 2019 29,314 $ 2018 29,048 $ 37,484 - $ 34,308 - $ 29,314 - $ 21,726 (7,322) City's Covered Payroll $ 64,297 $ 63,232 $ 63,993 $ 63,003 City's Contributions as a Percentage of Covered Payroll 58.30% 54.26% 45.81% 34.48% 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 $ 2021 713 $ 2020 815 $ 2019 733 $ 2018 772 $ 713 - $ 815 - $ 733 - $ 772 - City's Covered Payroll $ 64,297 $ 63,232 $ 63,993 $ 63,003 City's Contributions as a Percentage of Covered Payroll 1.11% See accompanying notes to plan schedules. 106 1.29% 1.15% 1.23% $ 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% $ 2017 641 $ 641 - $ 64,740 39.32% 31.51% 29.22% 2016 through 2012 Information not available 0.99% 107 2013 through 2012 Information not available City of Mesa, Arizona Notes to Pension Plan Schedules June 30, 2021 (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 18 years for unfunded actuarial accrued liability, 18 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. 108 City of Mesa, Arizona Schedule of Changes in the City's Total OPEB Liability June 30, 2021 (in thousands) 2021 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 $ 24,165 25,425 2020 $ 20,818 22,584 2019 $ 19,997 22,447 2018 $ 21,431 20,112 (2,548) 18,858 34,022 92,823 (1,133) 17,023 (46,955) (20,641) 45,259 897,376 $ 942,635 (19,687) 150,560 746,816 $ 897,376 (17,232) 41,102 705,714 $ 746,816 (19,013) (24,425) 730,139 $ 705,714 * Because the City funds OPEB benefits on a “pay-as-you-go” basis, employer contributions are equal to benefit payments. 109 2017 through 2012 Information not available City of Mesa, Arizona Budgetary Comparison Schedule (Non-GAAP Basis) General Fund For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Occupancy Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Revenues Total Revenues $ Actual Budgetary Basis Final 122,904 1,705 30,339 165,924 28,857 8,629 886 1,849 361,092 $ 122,904 1,705 30,339 165,924 28,857 8,629 886 1,849 361,092 $ 152,552 1,086 35,174 167,043 18,806 6,877 3,623 4,661 389,821 Variance with Final Budget $ 29,648 (619) 4,835 1,118 (10,051) (1,752) 2,736 2,812 28,728 Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 104,486 264,420 24,846 52,243 49,525 495,520 101,945 213,769 15,683 50,917 51,296 433,610 90,699 204,905 11,872 33,661 21,963 363,101 11,246 8,864 3,811 17,256 29,333 70,509 Excess (Deficiency) of Revenues Over (Under) Expenditures (134,428) (72,518) 26,720 99,238 - (140,160) (140,160) 117,516 (68,381) 21,597 70,732 117,516 71,779 21,597 210,892 Net Change in Fund Balances (134,428) (212,678) 97,452 310,130 Fund Balance - Beginning 196,739 196,739 196,739 - Other Financing Sources (Uses): Transfers In Transfers Out Sale of Capital Asset Total Other Financing Sources (Uses) Fund Balance - Ending $ 62,312 See accompanying note to budgetary comparison schedule. 110 $ (15,938) $ 294,191 $ 310,130 City of Mesa, Arizona Notes to Budgetary Comparison Schedule June 30, 2021 (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, 2021 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis - $ 97,452 Basis Differences: Compensated Absences Payroll Accrual Recognized Revenue Unavailable Revenue Unrealized Gain on Investments Net Change in Fund Balance-GAAP Basis - (341) (1,467) 137 (86) (2,155) $ 93,540 111 City of Mesa, Arizona Budgetary Comparison Schedule (Non-GAAP Basis) Relief Fund For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ Expenditures: Current: Public Safety Community Environment Capital Outlay Total Expenditures Actual Budgetary Basis Final 70,000 70,000 $ 70,000 70,000 $ 79,757 392 80,149 Variance with Final Budget $ 9,757 392 10,149 70,000 70,000 61,692 62,104 215 124,011 56,813 50,825 151 107,789 4,879 11,279 64 16,222 Excess (Deficiency) of Revenues Over (Under) Expenditures - (54,011) (27,639) 26,372 Other Financing Sources (Uses): Transfers In Total Other Financing Sources (Uses) - - 40,697 40,697 40,697 40,697 Net Change in Fund Balances - (54,011) 13,058 67,069 46,907 46,907 46,907 - Fund Balance - Beginning Fund Balance - Ending $ 46,907 See accompanying note to budgetary comparison schedule. 112 $ (7,104) $ 59,965 $ 67,069 City of Mesa, Arizona Notes to Budgetary Comparison Schedule June 30, 2021 (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, 2021 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis - $ 13,058 Basis Differences: Payroll Accrual Deferred Revenue Unrealized Gain on Investments Net Change in Fund Balance-GAAP Basis - 138 (13,345) (662) $ (811) 113 combining statements CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 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 1, Eastmark 2 and Cadence Community Facilities Districts 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 accounts for federal and state grant expenditures. 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. Restricted Programs Fund accounts for expenditures of legally imposed fees and taxes. 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 bond proceeds to be used for the costs of construction of drains, basins, channels and other storm sewer improvements and street improvements in the Eastmark 1, Eastmark 2 and Cadence Community Facilities Districts. 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 bonds, excise tax obligations and transfers from the City’s General Fund Parks accounts for the bond proceeds to be used for the costs of park facilities and improvements. Public Safety accounts for the bond proceeds to be used for the cost of public safety facilities. Streets accounts for the bond proceeds to be used 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 1, Eastmark 2 and Cadence 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. Excise Tax Obligation accumulates monies for the payment of principal and interest requirements of the City’s Excise Tax Obligation Bonds. 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 Combining Balance Sheet Non-Major Governmental Funds June, 30, 2021 (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 Cash with Trustee 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 $ - Development Impact Fees Environmental Compliance $ $ $ $ - 4,560 11 11 - $ - $ 4,582 $ 88 399 2,786 - $ - Fund Balances Nonspendable Restricted Committed Assigned Unassigned Total Fund Balances $ $ $ 342 1 3 346 - 52 70 3,273 - - (3,273) (3,273) Deferred Inflows of Resources Unavailable Revenue Total Deferred Inflows of Resources Total Liabilities, Deferred Inflows of Resources and Fund Balances Cemetery Community Facilities District - $ 114 10,389 - $ 10,389 $ $ - $ 17,170 1 578 17,749 - 550 - 122 - 550 1 1 - - - 4,581 4,581 228 (4) 224 10,389 10,389 578 16,621 17,199 4,582 $ 346 $ 10,389 $ 17,749 (Continued) Grants Highway User Revenue Special Revenue Funds Public Mesa Arts Mesa Safety Center Housing Sales Restoration Authority Tax $ $ $ $ $ 321 1,390 23 1,734 782 6,022 660 $ $ 32,220 1,196 - 1,573 6 - $ Street Sales Tax Total Special Revenue Funds $ 25 2,249 - $ 35,878 98 5,718 2,786 - $ 11,804 27 5,719 - $ 16,602 126 39 228 5 $ 49,378 719 118 6,942 75 2,274 $ 44,480 $ 17,550 $ 17,000 $ 57,232 1,456 1,090 1,047 $ $ $ 206 $ 1,579 $ $ - $ - Restricted Funds 137 - - 1,458 25 $ 1,391 7,379 - $ $ 175,735 1,202 399 26,332 2,786 681 207,135 7,110 7,511 2,786 7,379 2,008 7,464 1,196 206 3,593 137 - 1,483 8,770 26,794 1,074 1,074 - - - - - 27 27 269 269 1,371 1,371 23 31,024 31,024 1,373 1,373 (1,319) (1,319) 44,343 44,343 17,550 17,550 5 12,184 2,498 897 (94) 15,490 75 48,118 48,193 681 163,836 25,073 897 (11,517) 178,970 2,274 $ 44,480 $ 17,550 $ 17,000 $ 57,232 (6,827) (6,804) $ 28,039 98 4,083 - Quality of Life Sales Tax 1,734 $ 32,220 $ 1,579 $ 115 $ 207,135 City of Mesa, Arizona Combining Balance Sheet Non-Major Governmental Funds June, 30, 2021 (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 Cash with Trustee 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 Public Safety Streets Total Capital Projects Funds $ 297 - $ 40,987 110 233 $ 9,443 22 - $ 8,177 19 - $ 57,042 142 5,527 - $ 115,946 293 5,527 233 $ 297 36,494 $ 77,824 $ 9,465 $ 8,196 $ 62,711 36,494 $ 158,493 $ - $ 8,246 - $ 1,529 - $ $ - 958 - $ 10,927 - - 8,246 1,529 194 958 10,927 - - - - 5,528 5,528 5,528 5,528 403 (106) 297 233 27,739 41,606 69,578 7,936 7,936 8,002 8,002 56,225 56,225 233 100,305 41,606 (106) 142,038 297 $ 77,824 $ 9,465 $ 8,196 $ 62,711 $ 158,493 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 $ 116 194 - (Concluded) Debt Service Funds Community Facilities District $ Highway User Revenue Bonds Special Assessment Bonds Total Debt Service Funds Total Nonmajor Governmental Funds $ $ $ $ $ $ 15 - - 16 - - - 31 - 291,681 1,202 723 31,859 2,786 914 $ 1,506 1,506 $ 6,538 38,165 1,608 46,327 11,043 $ 11,043 - $ 6,134 1,139 23,145 67 30,500 $ - 12,672 51,853 23,145 1,675 $ 89,376 $ 12,672 51,853 36,494 23,145 1,675 455,004 $ - $ - $ $ $ - $ $ $ - Excise Tax Obligation General Obligation Bonds - - 4 - 73 - 1,771 2,829 4,604 861 645 1,506 23,160 23,160 2,630 106 2,736 30,500 $ - - - - 73 4 5,762 32,403 38,238 1,398 9,645 11,043 - 9,792 45,522 55,391 9,792 45,522 93,112 - 521 521 - - 23,681 23,681 30,580 30,580 - 7,568 7,568 - - 10,198 106 10,304 914 274,339 66,679 897 (11,517) 331,312 46,327 $ 11,043 1,506 $ - - $ - 117 $ 89,376 $ 18,110 7,511 2,786 7,379 2,012 455,004 City of Mesa, Arizona Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income (Loss) Contributions Miscellaneous Revenues Total Revenues Special Revenue Funds Ambulance Transport $ 3,672 (23) 3,649 Cemetery Community Facilities District Development Impact Fees Environmental Compliance $ $ $ $ 134 7 141 338 1 339 6,563 6,563 16,905 43 65 17,013 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 155 3,819 - - 225 - - 1,128 55 4,995 7,670 2,538 6,512 - 4 229 - 3,823 17,671 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,863) 141 110 6,563 (658) - (3,442) (3,442) - (3,487) (3,487) - (2,863) (3,301) 110 3,076 (658) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds (Net) Issuance of Refunding Bonds Payment to Refunding Bond Agent Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ (410) (3,273) $ 118 7,882 4,581 $ 114 224 $ 7,313 10,389 $ 17,857 17,199 (Continued) Special Revenue Funds Grants $ 4,697 104 4,801 Public Safety Sales Tax Quality of Life Sales Tax 20,903 1 20,904 $ 31,640 328 31,968 $ 31,651 125 173 31,949 Highway User Revenue Mesa Arts Center Restoration Mesa Housing Authority $ $ $ 45,049 30 45,079 8 2 94 104 Restricted Funds Street Sales Tax Total Special Revenue Funds $ 2,904 671 2,429 523 887 90 130 1,409 9,043 $ 37,982 245 421 1,281 41 403 40,373 $ 101,273 338 2,904 7,604 73,499 22,515 895 693 130 2,075 211,926 7,283 45,497 64,840 11,645 4 33,751 163,020 549 2,109 41 3,088 15,581 - - 21,717 - 11,844 - 25,605 - 2,197 1,778 148 887 5,790 11,577 4,143 19,724 152 152 305 22,022 1,323 13,167 25,605 4,108 9,118 3,029 287 22,358 11,569 37,243 (6,776) 25,355 (48) (1,118) 18,801 6,344 (75) 3,130 48,906 - (12,472) (12,472) - 436 (395) 41 - - 255 255 - 691 (19,796) (19,105) (6,776) 12,883 (48) (1,077) 18,801 6,344 180 3,130 29,801 1,421 1,373 (242) $ (1,319) 25,542 $ 44,343 11,206 $ 17,550 15,310 $ 15,490 45,063 $ 48,193 149,169 $ 178,970 (28) $ (6,804) $ 18,141 31,024 $ 119 City of Mesa, Arizona Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Revenues: Sales Taxes Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income (Loss) Contributions Miscellaneous Revenues Total Revenues Capital Projects Funds Community Facilities District General Capital Projects Parks Public Safety Streets Total Capital Projects Funds $ $ $ $ $ $ - 61 57 118 26 26 5 5 9,909 6 125 198 10,238 9,909 6 217 255 10,387 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 1,036 28,343 29,379 274 36,930 37,204 47 4,865 4,912 106 4,913 5,019 167 26,069 26,236 1,630 101,120 102,750 Excess (Deficiency) of Revenues Over (Under) Expenditures (29,379) (37,086) (4,886) (5,014) (15,998) (92,363) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Face Amount of Notes Issued Premium on Issuance of Bonds (Net) Issuance of Refunding Bonds Payment to Refunding Bond Agent Total Other Financing Sources (Uses) 28,993 443 29,436 25,703 38,921 7,211 71,835 4,916 203 5,119 12,780 523 13,303 (89) 20,498 926 21,335 25,703 (89) 106,108 9,306 141,028 57 34,749 233 8,289 5,337 48,665 240 297 34,829 $ 69,578 7,703 $ 7,936 (287) $ 8,002 50,888 $ 56,225 93,373 $ 142,038 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 120 - (Concluded) Debt Service Funds Community Facilities District $ $ 4,340 1,600 5 5,945 Excise Tax Obligation General Obligation Bonds Highway User Revenue Bonds Special Assessment Bonds Total Debt Service Funds Total Nonmajor Governmental Funds $ $ $ $ $ $ - 42,575 4 724 201 43,504 (29) (29) 232 1 233 46,915 1,832 4 724 178 49,653 101,273 47,253 2,904 1,832 7,604 83,412 22,521 1,619 1,088 130 2,330 271,966 2,881 3,029 3 1 5,914 645 861 1,506 32,403 10,751 5 407 43,566 9,645 2,796 2 12,443 219 6 225 - 7,283 45,497 64,840 11,645 45,793 17,443 10 408 63,654 45,793 17,443 14 2,038 134,871 329,424 31 (1,506) (62) (12,472) 8 (14,001) (57,458) 529 192 721 1,506 1,506 4,397 (731) 10,695 38,395 (48,661) 4,095 12,472 12,472 (3) (3) 18,375 (734) 529 10,887 38,395 (48,661) 18,791 44,769 (20,619) 106,637 20,193 38,395 (48,661) 140,714 752 - 4,033 - 5 4,790 83,256 (5) - 5,514 $ 10,304 1,984 2,736 $ - $ 3,535 7,568 $ - $ 121 $ 248,056 331,312 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 Internal Service Funds Combining Statement of Net Position June, 30, 2021 (in thousands) Assets Current Assets: Pooled Cash and Investments Accounts Receivable Accrued Premiums Receivable Accrued Interest Receivable Inventory Deposits and Prepaid Costs Total Current Assets Warehouse, Maintenance and Services Property and Public Liability Self Insurance Workers' Compensation Self Insurance $ $ $ Noncurrent Assets: Capital Assets, Being Depreciated, Net Total Noncurrent Assets 427 8,641 8 9,076 11,082 26 873 11,981 Employee Benefits Self Insurance Total 7,383 18 235 7,636 $ 43,692 99 206 104 69 44,170 $ 62,157 526 206 148 8,641 1,185 72,863 2,356 2,356 - - 8 8 2,364 2,364 11,432 11,981 7,636 44,178 75,227 4,229 4,229 629 629 403 403 453 453 5,714 5,714 15,661 12,610 8,039 44,631 80,941 Liabilities Current Liabilities Accounts Payable and Accrued Liabilities Claims Payable Due to Other Funds Current Portion of Compensated Absences Total Current Liabilities 585 2,212 90 2,887 128 14,941 15 15,084 108 28,523 9 28,640 2,115 4,908 15 7,038 2,936 48,372 2,212 129 53,649 Long-Term Liabilities Compensated Absences Net Pension and OPEB Liability Total Long-Term Liabilities 623 28,389 29,012 93 4,230 4,323 41 2,726 2,767 73 3,007 3,080 830 38,352 39,182 31,899 19,407 31,407 10,118 92,831 383 383 57 57 38 38 39 39 517 517 2,356 (18,977) (16,621) (6,854) (6,854) (23,406) (23,406) 8 34,466 $ 34,474 2,364 (14,771) $ (12,407) 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 $ $ 122 $ City of Mesa, Arizona Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Position For the Fiscal Year Ended June 30, 2021 (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 $ $ $ $ 8,391 21,060 701 - - - Total $ 8,391 21,060 701 30,152 5,936 5,936 5,488 130 5,618 15,184 69,000 4,883 7,514 96,581 15,184 80,424 4,883 7,644 138,287 Operating Expenses: Warehouse, Maintenance & Services: Warehouse Fleet Support Services Printing and Graphics Self-Insurance: Administrative Costs Claims and Premiums Paid Total Operating Expenses 8,555 21,757 1,084 - - - 8,555 21,757 1,084 31,396 1,646 5,835 7,481 1,714 6,779 8,493 7,096 92,934 100,030 10,456 105,548 147,400 Operating Income (Loss) Before Depreciation (1,244) (1,545) (2,875) (3,449) (9,113) (243) - - (1) (244) (1,487) (1,545) (2,875) (3,450) (9,357) Nonoperating Revenues (Expense): Investment Income Gain/(Loss) on Disposal of Capital Assets Total Nonoperating Revenues (Expenses) (79) (186) (265) 8 8 12 12 80 80 21 (186) (165) Income (Loss) Before Capital Contributions (1,752) (1,537) (2,863) (3,370) (9,522) Capital Contributions 144 - - - 144 Change in Net Position (1,608) (1,537) (2,863) (3,370) (9,378) Total Net Position - Beginning (15,013) (5,317) (20,543) 37,844 (3,029) 34,474 $ (12,407) Depreciation Operating Income (Loss) Total Net Position - Ending $ (16,621) $ 123 (6,854) $ (23,406) $ City of Mesa, Arizona Internal Service Funds Combining Statement of Cash Flows For the Fiscal Year Ended June 30, 2021 (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 $ $ $ 30,552 (22,926) (8,997) 5,936 (8,377) 637 Employee Benefits Self Insurance Total 5,618 (6,038) 12 $ 96,498 (97,489) (1,128) $ 138,604 (134,830) (9,476) (1,371) (1,804) (408) (2,119) (5,702) 1,442 - - - 1,442 1,442 - - - 1,442 3 - - - 3 3 - - - 3 (74) (74) 31 31 23 23 149 149 129 129 Net Change in Cash and Cash Equivalents - (1,773) (385) (1,970) (4,128) Pooled Cash and Investments at Beginning of Year - 12,855 7,768 45,662 66,285 Cash Flows From Noncapital Financing Activities: Operating Transfers-In From Other Funds Net Cash Provided By (Used For) Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities: Proceeds from the Sale of Capital Assets Net Cash Provided By (Used For) Capital and Related Financing Activities Cash Flows from Investing Activities: Interest Received on Investments Net Cash Provided By (Used For) Investing Activities Pooled Cash and Investments at End of Year $ - $ 11,082 $ 7,383 $ 43,692 $ 62,157 $ (1,487) $ (1,545) $ (2,875) $ $ (9,357) 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 243 Total Adjustments - - (3,450) 1 244 (83) 400 (1,054) (8) (522) 2,320 (602) (655) (6) (191) 119 637 (130) (87) (607) (39) (58) 428 (84) (54) 2,274 (364) (215) (9) (94) 2,095 317 (1,054) (238) (825) 3,170 (825) (890) 3,756 116 (259) 2,467 1,331 3,655 Net Cash Provided by (Used for) Operating Activities $ (1,371) $ (1,804) $ (408) $ (2,119) $ (5,702) Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Gain/(Loss) on Disposal of Capital Assets $ 144 (189) $ - $ - $ - $ 144 (189) 124 supplemental information CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Ambulance Transport For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Charges for Services Investment Income Total Revenues $ 3,532 3,532 Actual Budgetary Basis Final $ 3,532 3,532 $ 3,672 (23) 3,649 Variance with Final Budget $ 140 (23) 117 Expenditures: Current: General Government Public Safety Capital Outlay Total Expenditures 3,928 659 4,587 165 4,750 3,280 8,195 147 3,761 2,538 6,446 18 989 742 1,750 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,055) (4,663) (2,797) 1,867 Net Change in Fund Balances (1,055) (4,663) (2,797) 1,867 Fund Balances - Beginning (392) (392) (392) - Fund Balance - Ending $ (1,448) $ (5,056) 125 $ (3,189) $ 1,867 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Community Facilities Districts For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Property Taxes Investment Income Contributions Total Revenues $ Actual Budgetary Basis Variance with Final Budget $ $ Final 339 165 504 $ 339 165 504 338 4 342 (1) 4 (165) (162) Expenditures: Current: General Government Debt Service: Service Charges Cost of Issuance Capital Outlay Total Expenditures 4,785 2,693 225 2,468 1,430 28,439 34,654 4 1,610 30,254 34,561 4 1,036 28,343 29,608 574 1,911 4,953 Excess (Deficiency) of Revenues Over (Under) Expenditures (34,150) (34,057) (29,266) 4,791 Other Financing Uses: Face Amount of Bonds Issued Premium on Issuance of Bonds Total Other Financing Uses - 34,149 34,149 28,993 443 29,436 5,156 (443) 4,713 (34,150) 92 170 78 396 396 396 - Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ (33,754) $ 488 Note: Includes both the Special Revenue and the Capital Projects Funds 126 $ 566 $ 78 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Development Impact Fee For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Licenses and Permits Investment Income Total Revenues $ Expenditures: Current: Total Expenditures Actual Budgetary Basis Final 3,355 95 3,450 $ 3,355 95 3,450 $ - - Excess (Deficiency) of Revenues Over (Under) Expenditures 3,450 3,450 6,563 3,113 Other Financing Sources (Uses): Transfers Out Total Other Financing Uses - 3,750 3,750 (3,487) (3,487) (7,237) (7,237) Net Change in Fund Balances 3,450 7,200 3,076 (4,124) Fund Balances - Beginning 7,322 7,322 7,322 - 10,773 $ - 3,208 (95) 3,113 - $ - 6,563 6,563 - Fund Balance - Ending - $ Variance with Final Budget 14,523 127 $ 10,398 $ (4,124) City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Environmental Compliance Fee For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ 16,696 65 16,761 Actual Budgetary Basis Final $ 16,696 65 16,761 16,905 308 65 17,278 Variance with Final Budget $ 209 243 65 517 Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 1,275 51 6,754 7,424 4,922 20,426 1,289 58 5,562 8,279 5,658 20,846 1,126 56 4,987 7,664 3,823 17,657 163 2 575 615 1,835 3,189 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,665) (4,085) (379) 3,706 Net Change in Fund Balances (3,665) (4,085) (379) 3,706 Fund Balances - Beginning 17,651 17,651 17,651 - Fund Balance - Ending $ 13,986 $ 13,566 128 $ 17,272 $ 3,706 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Grants For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Occupancy Taxes Licenses and Permits Intergovernmental Fines and Forfeitures Contributions Miscellaneous Revenues Total Revenues $ 2,995 482 24,017 1,051 922 3,203 32,670 Actual Budgetary Basis Final $ 2,995 482 24,017 1,051 922 3,203 32,670 1,398 138 1,536 Variance with Final Budget $ (2,995) (482) (22,619) (1,051) (922) (3,065) (31,134) Expenditures: Current: General Government Public Safety Community Environment Cultural-Recreational Capital Outlay Total Expenditures 728 4,864 778 18,966 25,336 782 3,960 114 3,602 20,368 28,826 547 2,103 41 3,087 5,790 11,569 235 1,857 73 515 14,578 17,257 Excess (Deficiency) of Revenues Over (Under) Expenditures 7,334 3,844 (10,033) (13,877) Net Change in Fund Balances 7,334 3,844 (10,033) (13,877) Fund Balances - Beginning 636 636 636 - Fund Balance - Ending $ 7,970 $ 4,480 129 $ (9,397) $ (13,877) City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Highway User Revenue Fund For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ Actual Budgetary Basis Final 38,210 2 38,212 $ 38,210 2 38,212 $ 45,049 446 45,495 Variance with Final Budget $ 6,839 444 7,283 Expenditures: Current: Community Environment Capital Outlay Total Expenditures 17,767 18,589 36,356 16,590 19,603 36,193 15,537 4,143 19,680 1,053 15,460 16,513 Excess (Deficiency) of Revenues Over (Under) Expenditures 1,856 2,019 25,816 23,797 Other Financing Uses: Transfers Out Total Other Financing Uses - (12,600) (12,600) (12,472) (12,472) 128 128 Net Change in Fund Balances 1,856 (10,581) 13,344 23,925 Fund Balances - Beginning 17,854 17,854 17,854 - Fund Balance - Ending $ 19,710 $ 7,273 130 $ 31,197 $ 23,925 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Mesa Housing Authority For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Investment Income Total Revenues $ Actual Budgetary Basis Final 35,456 64 35,520 21,160 1 21,161 16 34,860 943 35,819 16 38,165 953 39,134 21,707 305 22,012 16 16,458 648 17,122 Excess (Deficiency) of Revenues Over (Under) Expenditures (299) (3,614) (850) 2,764 Other Financing Sources (Uses): Transfers In Transfers Out Total Other Financing Uses - - 436 (395) 41 436 (395) 41 Net Change in Fund Balances (299) (3,614) (809) 2,805 Fund Balances - Beginning (414) (414) (414) - Expenditures: Current: General Government Community Environment Capital Outlay Total Expenditures Fund Balance - Ending $ 35,456 64 35,520 (712) $ Variance with Final Budget $ (4,028) 131 $ (1,223) $ $ (14,296) (63) (14,359) 2,805 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Public Safety Sales Tax For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Investment Income Total Revenues $ Expenditures: Current: Public Safety Capital Outlay Total Expenditures 25,605 25,605 Actual Budgetary Basis Final $ 25,605 25,605 $ 31,640 492 32,132 Variance with Final Budget $ 6,035 492 6,527 16,166 9,864 26,030 14,979 10,713 25,693 11,756 1,323 13,079 3,223 9,390 12,614 Excess (Deficiency) of Revenues Over (Under) Expenditures (425) (88) 19,053 19,140 Net Change in Fund Balances (425) (88) 19,053 19,140 Fund Balances - Beginning 25,476 25,476 25,476 - Fund Balance - Ending $ 25,051 $ 25,389 132 $ 44,529 $ 19,140 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Quality of Life Sales Tax For the Fiscal Year Ended June 30, 2021 (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 25,605 25,605 $ 25,605 25,605 $ 31,651 125 252 32,028 Variance with Final Budget $ 6,046 125 252 6,423 25,605 25,605 25,605 25,605 25,605 25,605 - Excess (Deficiency) of Revenues Over (Under) Expenditures - - 6,423 6,423 Net Change in Fund Balances - - 6,423 6,423 11,115 11,115 11,115 - Fund Balances - Beginning Fund Balance - Ending $ 11,115 $ 11,115 133 $ 17,538 $ 6,423 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Street Sales Tax For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Sales Taxes Licenses and Permits Intergovernmental Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ 30,727 222 400 170 372 31,891 Actual Budgetary Basis Final $ 30,727 222 400 170 372 31,891 $ 37,982 245 421 1,281 799 291 41,019 Variance with Final Budget $ 7,255 23 421 881 629 (81) 9,128 Expenditures: Current: General Government Public Safety Community Environment Capital Outlay Total Expenditures 3,788 444 24,399 32,911 61,542 3,812 397 24,058 33,154 61,421 3,028 285 22,351 11,569 37,234 784 112 1,707 21,585 24,187 Excess (Deficiency) of Revenues Over (Under) Expenditures (29,651) (29,530) 3,784 33,314 Net Change in Fund Balances (29,651) (29,530) 3,784 33,314 Fund Balances - Beginning 44,682 44,682 44,682 - Fund Balance - Ending $ 15,031 $ 15,152 134 $ 48,467 $ 33,314 City of Mesa, Arizona Supplemental Information Budgetary Comparison Schedule (Non-GAAP Basis) Streets For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Original Revenues: Intergovernmental Charges for Services Investment Income Miscellaneous Revenues Total Revenues $ Actual Budgetary Basis Final 3,774 3,774 $ 3,774 3,774 $ 9,875 6 720 198 10,799 Variance with Final Budget $ 6,101 6 720 198 7,025 Expenditures: Debt Service: Cost of Issuance Capital Outlay Total Expenditures 392 68,897 69,289 407 68,897 69,304 167 26,069 26,236 240 42,828 43,068 Excess (Deficiency) of Revenues Over (Under) Expenditures (65,515) (65,530) (15,437) 50,093 - 90 47,193 47,283 (89) 20,498 926 21,335 179 26,695 (926) 25,948 Net Change in Fund Balances (65,515) (18,247) 5,898 24,145 Fund Balances - Beginning 50,496 50,496 50,496 - Other Financing Sources (Uses): Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds (Net) Total Other Financing Uses Fund Balance - Ending $ (15,019) $ 135 32,250 $ 56,394 $ 24,145 statistical section CO MP R E HE N SIV E AN N UAL FIN AN C IAL R E P O RT 20 2 1 FO R T HE F IS C A L YE AR E N DED | J UN E 30, 2 0 21 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. 136 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 148 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. 151 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. 159 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. 161 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) 2020-21 2019-20 2018-19 2017-18 GOVERNMENTAL ACTIVITIES Net Investment in Capital Assets Restricted Unrestricted $ 1,184,908 203,284 (841,670) $ 1,075,182 143,839 (833,300) $ 1,038,928 103,164 (834,016) $ 1,019,888 88,305 (858,392) Total Governmental Activities Net Position $ 546,522 $ 385,721 $ 308,076 $ 249,801 $ 30,965 70,940 318,490 $ 213,576 63,113 252,261 $ 170,427 47,857 350,006 $ 266,012 40,440 199,531 Total Business-type Activities $ 420,395 $ 528,950 $ 568,290 $ 505,983 PRIMARY GOVERNMENT Net Investment in Capital Assets Restricted Unrestricted $ 1,215,873 274,224 (523,180) $ 1,288,758 206,952 (581,039) $ 1,209,355 151,021 (484,010) $ 1,285,900 128,745 (658,861) Total Primary Government $ $ $ $ BUSINESS-TYPE ACTIVITIES Net Investment in Capital Assets Restricted Unrestricted 966,917 136 914,671 876,366 755,784 Table I (Concluded) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 $ 986,354 88,721 (711,367) $ 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) $ 363,708 $ 380,103 $ 338,072 $ 806,084 $ 774,761 $ 857,973 $ 247,598 43,046 228,160 $ 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 $ 518,804 $ 510,416 $ 536,253 $ 615,445 $ 655,766 $ 735,944 $ 1,233,952 131,767 (483,207) $ 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 $ $ $ $ 1,421,529 $ 1,430,527 $ 1,593,917 882,512 890,519 874,325 137 City of Mesa, Arizona Table II Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) EXPENSES GOVERNMENTAL ACTIVITIES: General Government Public Safety Community Environment Cultural-Recreational Interest on Long-term Debt 2020-21 $ 2019-20 175,608 409,549 172,840 66,020 18,201 $ 2018-19 2017-18 134,299 384,800 152,847 62,014 17,841 $ 119,819 355,752 119,506 58,345 18,078 $ 105,140 334,905 113,916 54,828 19,514 Total Governmental Activities Expenses 842,218 751,801 671,500 628,303 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 30,259 41,386 126,797 77,488 45,848 5,958 1,299 - 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 - Total Business-type Activities Expenses 329,035 320,208 278,772 292,338 $ 1,171,253 $ 1,072,009 $ 950,272 $ 920,641 Total Primary Government Expenses 138 Table II (Continued) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 $ 101,301 379,505 104,173 55,739 19,279 $ 96,860 305,376 117,120 54,967 20,424 $ 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 21,631 659,997 594,747 582,929 580,839 607,185 521,785 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 - 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 - 291,832 286,291 294,180 277,671 318,842 258,578 $ 951,829 $ 881,038 $ 877,109 $ 858,510 $ 926,027 $ 780,363 139 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 2020-21 $ 42,635 41,394 8,573 8,145 100,923 10,696 212,366 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 32,666 45,141 169,473 87,573 64,344 4,007 1,158 452 34,719 439,533 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 Total Primary Government Program Revenues $ 651,899 $ 585,394 $ 518,071 $ 534,494 NET (EXPENSE) REVENUE Governmental Activities Business-type Activities $ (629,852) 110,498 $ (578,790) 92,175 $ (551,091) 118,890 $ (491,483) 105,336 Total Primary Government Net Expense $ (519,354) $ (486,615) $ (432,201) $ (386,147) 140 Table II (Continued) 2016-17 $ 23,152 38,348 9,873 1,330 26,955 24,451 124,109 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 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 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 $ 512,038 $ 507,679 $ 527,279 $ 442,362 $ 464,044 $ 467,158 $ (535,888) 96,097 $ (450,595) 77,236 $ (407,206) 57,376 $ (469,418) 53,270 $ (468,626) 6,643 $ (387,477) 74,272 $ (439,791) $ (373,359) $ (349,830) $ (416,148) $ (461,983) $ (313,205) 141 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 2020-21 2019-20 2018-19 2017-18 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 $ 253,825 47,247 3,990 206,397 19,052 2,308 21,315 17,229 113,982 $ 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 Total Governmental Activities 685,345 656,435 609,365 575,949 BUSINESS-TYPE ACTIVITIES: Occupancy Taxes Investment Income Gain (Loss) on Sale of Capital Assets Miscellaneous Transfers 45 192 (113,982) 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) Total Business-type Activities (113,745) (131,515) (56,583) (110,947) Total Primary Government $ 571,600 $ 524,920 $ 552,782 $ 465,002 Change in Net Position Governmental Activities Business-type Activities $ 55,493 (3,247) $ 77,645 (39,340) $ 58,275 62,307 $ 84,466 (5,611) Total Primary Government $ 52,246 $ 38,305 $ 120,582 $ 78,855 142 Table II (Concluded) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 $ 159,735 34,684 2,536 158,916 46,817 448 11,161 (1,411) 106,607 $ 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 83,615 519,493 492,626 478,743 504,792 400,299 340,228 1,085 983 16,364 466 (106,607) 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) (87,709) (103,073) (86,897) (88,231) (81,930) (82,765) $ 431,784 $ 389,553 $ 391,846 $ 416,561 $ 318,369 $ 257,463 $ (16,395) 8,388 $ 42,031 (25,837) $ 71,537 (29,521) $ 35,374 (34,961) $ (68,327) (75,287) $ (47,249) (8,493) $ $ 16,194 $ 42,016 $ $ (143,614) $ (55,742) (8,007) 413 143 City of Mesa, Arizona Table III Fund Balance, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) 2020-21 GENERAL FUND Nonspendable Restricted Committed Assigned Unassigned 2,680 18,529 79,024 188,375 Total General Fund $ 288,608 ALL OTHER GOVERNMENTAL FUNDS Nonspendable Restricted (1) Committed Assigned Unassigned Total All Other Governmental Funds 2019-20 $ 928 274,623 66,679 897 (11,517) $ 331,610 2,301 19,910 42,515 130,342 2018-19 $ 794 26 14,016 30,869 90,190 2017-18 $ 2,304 10,377 28,346 89,347 $ 195,068 $ 135,895 $ 130,374 $ $ $ 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 (1) 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. 144 Table III (Concluded) 2016-17 $ 2015-16 2014-15 2013-14 2012-13 2011-12 $ 2,145 146 528 19,367 92,240 $ 4,035 184 227 10,703 79,657 $ 3,490 184 126 74,145 $ 2,956 188 1,484 72,683 $ $ 114,426 $ 94,806 $ 77,945 $ 77,311 $ 53,619 $ 85,793 $ $ 77 95,701 28,580 6 (155) $ 138 172,316 30,092 (31) $ 23 190,609 21,379 (675) $ $ 37 112,105 30,928 2 (69) $ 143,003 $ 124,209 $ 202,515 $ 211,336 1,724 284 1,185 50,426 55 243,831 23,005 (1,177) $ 265,714 145 754 2,012 4,992 78,035 84 211,279 16,360 (1) $ 227,722 City of Mesa, Arizona Table IV Fund Balance, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) REVENUES Sales Taxes (1) Property Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Contributions Miscellaneous Total Revenues 2020-21 2019-20 2018-19 2017-18 2016-17 $ 253,825 47,253 3,990 1,832 42,635 316,871 41,394 8,573 2,287 130 7,036 725,826 $ 219,932 44,970 2,564 1,661 24,126 277,396 40,489 9,253 14,026 2,295 9,487 646,199 $ 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 EXPENDITURES Current General Government Public Safety Community Environment Cultural-Recreational Debt Service Principal Interest Service Charges Cost of Issuance Capital Outlay Total Expenditures 98,423 308,271 127,421 45,596 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 45,793 17,443 14 2,038 156,985 801,984 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 Excess of Revenues Under Expenditures (76,158) (66,053) (112,713) (91,143) (118,025) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Sale of Capital Asset 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) 185,897 (71,915) 21,597 106,637 20,193 38,395 (48,661) 252,143 163,801 (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 89,640 $ 50,135 $ 47,029 $ 38,414 10.39% 10.07% 10.03% 9.88% Net Change in Fund Balances Debt Service as a percentage of Noncapital Expenditures $ 175,985 $ 9.08% (1) During fiscal year 2018-2019, the sales tax rate increased from 1.75% to 2.00%. 146 Table IV (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 $ 151,826 34,765 2,331 1,433 23,254 191,360 38,178 11,049 1,483 961 3,994 460,634 $ 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 79,448 254,528 65,559 43,651 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 43,904 107,383 18,905 14 1,505 91,784 662,777 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 (202,143) (105,355) (181,436) (137,939) (120,101) 122,572 (24,298) 46,530 2,283 43,304 (49,693) 140,698 123,044 (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 (8,187) $ (30,686) 9,555 $ 77,735 10.81% 19.05% 12.20% 11.34% $ (61,445) 22.12% $ $ 147 City of Mesa, Arizona Table V Sales Tax Collections by Category Last Ten Fiscal Years (in thousands) 2020-21 2019-20 2018-19 2017-18 2016-17 Retail Sales Rentals Utilities Restaurants & Bars Communications Amusements Publishing Miscellaneous Printing & Advertising Contracting $ 143,435 38,149 17,511 21,716 4,730 1,351 477 1,154 479 24,821 $ 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 $ 79,716 26,340 13,575 15,002 4,432 1,581 526 1,313 446 16,806 Total $ 253,823 $ 219,915 $ 189,871 $ 169,024 $ 159,737 City Direct Tax Rate (1) 2.00% 2.00% 2.00% (1) Mesa tax rate increased from 1.75% to 2.00% effective March 1, 2019. Note: Amounts shown include penalties and interest. Occupancy tax not included. Source: City of Mesa Tax & Licensing Division 148 1.75% 1.75% Table V (Concluded) 2015-16 2014-15 2013-14 2012-13 2011-12 $ 76,160 25,578 13,251 14,240 4,229 1,561 688 1,068 428 14,623 $ 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 $ 66,790 24,847 12,549 12,577 4,651 1,432 866 732 434 12,402 $ 62,190 22,968 11,878 11,864 4,483 1,434 934 595 336 9,962 $ 151,826 $ 146,337 $ 140,567 $ 137,280 $ 126,644 1.75% 1.75% 1.75% 1.75% 149 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 State of Arizona 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 2.00% 2.00% 2.00% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70% 6.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% (1) (2) (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 Source: City of Mesa Tax & Licensing Office 150 City of Mesa, Arizona Table VII Ratios of Outstanding Debt by Type Last Ten Fiscal Years (in thousands) - 2020-21 Governmental Activities General Obligation Bonds Highway User Revenue Bonds Excise Tax Revenue Obligation Bonds Special Assessment Bonds Community Facilities District Capital Leases Notes Payable Business-type Activities Utility System Revenue Bonds Utility Revenue Obligations General Obligation Bonds Notes Payable Total Primary Government $ $ 334,609 58,750 219 57,307 - 2018-19 $ 370,479 67,905 49,025 438 40,631 - 2017-18 $ 365,519 76,620 4,902 1,005 28,813 - 1,382,558 16,977 28 1,285 $ 1,933,635 1,242,670 151 1,431 $ 1,695,137 1,279,020 191 1,574 $ 1,809,263 1,227,355 236 1,714 $ 1,706,164 12.10% 10.99% 12.26% 12.62% Percentage of Personal Income (1) Per Capita (1) 353,434 51,141 42,078 86,134 - 2019-20 $ 3,726 $ (1) Information on personal income and population is presented on Table XII. 151 3,298 $ 3,541 $ 3,406 Table VII (Concluded) 2016-17 $ 374,443 84,995 94,060 1,340 19,172 - 2015-16 $ 350,560 92,895 94,060 2,085 19,315 - 2014-15 $ 336,716 100,285 94,060 2,830 10,974 77,835 2013-14 $ 344,040 107,705 94,060 3,574 5,897 72 77,835 2012-13 $ 324,682 114,650 94,060 4,318 2,712 140 122,835 2011-12 $ 288,669 121,395 5,062 822 122,835 1,161,755 191 1,851 $ 1,737,807 1,063,710 390 1,985 $ 1,625,000 1,007,455 474 2,116 $ 1,632,745 991,995 605 2,244 $ 1,628,027 978,160 887 2,370 $ 1,644,814 952,500 1,601 2,493 $ 1,495,377 13.74% 13.79% 14.42% 15.23% 15.87% 14.10% $ 3,525 $ 3,421 $ 3,534 $ 3,578 152 $ 3,697 $ 3,390 City of Mesa, Arizona Table VIII Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (in thousands) Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Secondary Assessed Value (1) 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 3,736,210 General Obligation Bonds Less: Amounts Available in Debt Service Fund 290,270 328,152 347,465 338,875 350,983 374,755 365,755 373,827 334,760 353,462 1 138 372 3,584 2,618 4,989 5,384 4,853 3,535 7,568 Total 290,269 328,014 347,093 335,291 348,365 369,766 360,371 368,974 331,225 345,894 Source: (1) Maricopa County Finance Department Assessor's Office. (2) Population figures are found on Table XII. 153 Percentage of Secondary Assessed Value Per Capita (2) 9.17% 11.84% 13.56% 11.88% 12.63% 12.80% 11.82% 11.26% 9.42% 9.26% 658 739 765 726 733 750 719 722 644 666 City of Mesa, Arizona Table IX Direct and Overlapping Governmental Activities Debt June 30, 2021 (in thousands) Debt Outstanding 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 Eastmark Community Facilities District No. 2 Cadence Community Facilities District $ Other Debt: Maricopa County Estimated Percentage Applicable to City of Mesa Percent (1) Amount 250,065 673,195 320,500 132,715 138,515 95,550 82,360 138,845 53,240 2,315 7,375 8.17% 8.15% 86.58% 26.93% 34.60% 1.54% 0.32% 0.76% 100.00% 100.00% 100.00% 20,442 54,891 277,474 35,746 47,933 1,470 261 1,051 53,240 2,315 7,375 170,870 8.17% 13,968 Subtotal, overlapping debt 516,166 City direct debt (2) 532,788 Total Direct and Overlapping Debt $ 1,048,954 (1) Proportion applicable to the City is computed on the ratio of net assessed limited property valuation for fiscal year 2020/2021. (2) Includes: General Obligation Bonds, Highway User Revenue Bonds, Excise Tax Revenue Obligations, Community Facilities District Bonds, and Unamortized Bond Premiums. Source: Hilltop Securities Inc. 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. 154 City of Mesa, Arizona Table X Legal Debt Margin Information Last Ten Fiscal Years (in thousands) 2020-21 2019-20 2018-19 2017-18 6% Limitation (1) Legal Debt Limitation General Obligation Bonds Outstanding $ 317,794 2,715 $ 285,114 450 $ 196,678 518 $ 182,934 724 Total Debt Margin Available $ 315,079 $ 284,664 $ 196,160 $ 182,210 Total Net Debt Applicable to the 6% Limit as A Percentage of the 6% Legal Debt Limitation 0.85% 0.16% 0.26% 0.40% 20% Limitation (2) Legal Debt Limitation General Obligation Bonds Outstanding $ 1,059,313 331,690 $ 950,381 334,609 $ 655,593 370,152 $ 609,779 365,031 Total Debt Margin Available $ $ 615,772 $ 285,441 $ 244,748 Total Net Debt Applicable to the 20% Limit as A Percentage of the 20% Legal Debt Limitation 727,623 31.31% 35.21% Total Margin Available $ 1,042,702 $ 900,436 Full Cash Net Assessed Value $ 5,296,564 $ 4,751,903 56.46% $ 481,601 $ 4,329,347 (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. 155 59.86% $ 426,958 $ 3,983,671 Table X (Concluded) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 $ 173,297 846 $ 165,475 1,047 $ 169,270 1,275 $ 153,578 605 $ 166,225 175 $ 189,857 1,370 $ 172,451 $ 164,428 $ 167,995 $ 152,973 $ 166,050 $ 188,487 0.49% 0.63% 0.75% 0.39% 0.11% 0.72% $ 577,658 373,909 $ 551,583 349,903 $ 564,235 343,370 $ 511,927 344,040 $ 554,084 300,735 $ 632,855 288,900 $ 203,749 $ 201,680 $ 220,865 $ 167,887 $ 253,349 $ 343,955 64.73% $ 376,200 $ 3,707,067 63.44% $ 366,108 $ 2,757,913 60.86% $ 388,860 $ 2,821,173 67.20% $ 320,860 $ 2,559,634 156 54.28% $ 419,399 $ 2,770,422 45.65% $ 532,442 $ 3,164,277 City of Mesa, Arizona Table XI Pledged-Revenue Coverage Last Ten Fiscal Years (in thousands) Debt Service Fiscal Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Operating Revenues (1) 299,356 293,915 295,710 311,506 323,099 348,794 361,863 365,081 366,838 399,197 Operating Expenses Net Available Revenue Principal Interest Coverage Ratio Utility System Revenue Bonds 180,296 119,060 21,365 241,128 52,787 21,630 203,187 92,523 22,550 209,677 101,829 21,860 218,706 104,393 25,800 225,257 123,537 13,885 228,933 132,930 31,354 257,166 107,915 21,450 285,610 81,228 36,350 273,305 125,892 41,770 43,465 46,412 51,927 46,423 44,794 47,187 50,739 50,695 55,061 51,098 1.84 0.78 1.24 1.49 1.48 2.02 1.62 1.50 0.89 1.36 (1) Includes electric, gas, water, wastewater and solid waste systems. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (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. 157 Table XI (Concluded) Debt Service Revenues 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 Principal Interest Special Assessment Bonds 996 744 297 897 744 257 861 744 217 827 744 178 790 745 138 1,041 745 98 289 335 68 261 567 49 288 219 19 6 232 219 Debt Service Coverage Ratio 0.96 0.90 0.90 0.90 0.89 1.23 0.72 0.42 1.21 1.03 Highway Project Advancement Notes 199,949 4,312 46.37 213,309 5,404 39.47 221,355 4,790 46.21 234,183 3,892 60.17 242,020 77,835 324 3.10 Highway User Revenue Fund Revenue Bonds 27,825 3,290 5,563 3.14 30,046 6,145 5,627 2.55 30,923 6,945 5,472 2.49 33,952 6,305 5,158 2.96 35,383 7,390 4,844 2.89 38,048 7,900 4,473 3.08 39,477 8,375 4,080 3.17 42,406 8,715 3,663 3.43 42,099 9,155 3,243 3.40 45,049 9,645 2,796 3.62 158 Revenues Principal Interest Coverage Ratio Community Facility District Bonds 7 195 65 131 672 232 456 1,320 489 832 1,612 645 914 2,261 984 1,197 3,010 2,125 1,690 4,324 1,685 2,321 5,940 2,881 3,029 0.99 0.98 1.00 1.03 1.04 0.79 1.08 1.01 Excise Tax Revenue Obligations Series 2013 221,355 3,318 66.71 234,183 4,703 49.79 242,020 4,703 51.46 254,857 4,703 54.19 269,998 45,035 3,852 5.52 282,502 2,451 115.26 49,025 1,226 5.93 298,110 Excise Tax Revenue Obligations Series 2020 354,315 645 861 235.27 City of Mesa, Arizona Table XII Demographic and Economic Statistics Last Ten Fiscal Years Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Sources: (1) (2) Population 441,160 444,856 454,981 462,376 475,274 493,089 501,137 511,334 514,144 519,384 Personal Income (in thousands) Per Capita Personal Income Median Age Public School Enrollment (1) Unemployment Rate (2) 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 15,975,213 24,035 23,291 23,491 24,485 24,794 25,644 26,983 28,852 29,999 30,758 34.3 34.4 35.3 35.5 35.7 36.0 36.2 36.3 36.3 36.6 65,662 64,892 64,932 64,532 65,049 63,779 67,025 62,593 62,490 57,876 7.5% 7.2% 6.5% 5.4% 5.3% 4.5% 4.3% 4.6% 9.7% 6.6% Arizona Department of Education Bureau of Labor Statistics Beginning in 2011 unemployment rate is not seasonally adjusted. 159 City of Mesa, Arizona Table XIII Principal Employers Current Year and Nine Years Ago 2021 Employer Employees Rank 8,141 6,626 4,042 3,782 3,269 1,401 1,359 1,336 1,200 1,111 1 2 3 4 5 6 7 8 9 10 4.75% 3.86% 2.36% 2.21% 1.91% 0.82% 0.79% 0.78% 0.70% 0.65% Mesa Unified School District 4 Banner Health The Boeing Company City of Mesa Wal-Mart Drivetime Automotive Group Inc Frys Food Stores Gilbert Unified School District 41 24/7 Intouch The Home Depot Maricopa County Government Maricopa Community College West Direct II Inc. Total 2012 Percentage of Total City Employment 32,267 18.82% Source: City of Mesa Office of Economic Development 160 Employees Rank Percentage of Total City Employment 8,042 8,287 4,700 3,491 2,537 2 1 3 4 6 3.96% 4.08% 2.31% 1.72% 1.25% 1,059 1,230 9 8 0.52% 0.61% 2,644 1,951 800 5 7 10 1.30% 0.96% 0.39% 34,741 17.11% City of Mesa, Arizona Table XIV Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 Function/Program General Government Police Fire Community Environment Cultural-Recreational Energy Resources Water Resources Environmental Management & Sustainability Airport 854 1,263 619 194 313 116 265 148 11 848 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 Total 3,782 3,770 3,690 3,582 3,526 3,798 Source: City of Mesa Human Resources 161 Table XIV (Concluded) 2014-15 2013-14 2012-13 2011-12 876 1,154 503 182 338 116 240 127 10 880 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 3,545 3,520 3,485 3,491 162 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) 2020-21 2019-20 2018-19 2017-18 12,132 6,402 11,716 6,267 11,559 6,637 12,347 6,599 1,428 55,878 1,190 543 12,464 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 85,827 116,499 980,380 17,768 71,624 106,062 671,069 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 63,969 175,042 84.66 124.77 175,232 89.77 118.93 157,000 78.66 117.77 146,172 79.26 122.51 130,775 32.40 127,763 33.60 127,000 34.50 130,343 34.60 137,380 282,865 33,323 21,180 134,563 236,682 33,566 20,199 134,777 241,307 32,227 20,236 131,991 232,756 32,367 16,688 821 336,631 724 349,300 752 326,255 717 288,122 * mgd - millions of gallons per day ** mg - millions of gallons 163 Table XV (Concluded) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 13,151 6,966 13,208 6,968 14,795 6,622 14,561 6,107 16,149 6,186 16,740 6,047 1,153 50,024 989 488 14,034 1,053 49,743 1,083 507 10,613 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 11,192 121,340 1,067,207 1,272,859 16,724 62,010 122,810 1,157,394 1,345,977 16,854 60,383 125,336 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 55,828 144,276 78.59 120.35 141,824 78.55 116.62 139,560 79.55 113.45 137,910 80.85 117.13 136,640 81.03 115.68 135,138 81.60 122.30 128,782 34.10 126,359 34.30 124,142 33.30 122,623 33.10 120,953 33.60 119,615 33.40 129,479 232,812 35,546 19,639 127,517 236,849 35,499 20,602 122,552 233,754 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 17,882 689 289,801 663 270,702 702 241,848 729 276,731 700 190,605 749 222,650 164 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 2020-21 2019-20 2018-19 2017-18 8 298 20 3 8 300 20 4 8 287 20 4 8 281 20 4 2,023 394 9 6 2,139 719 9 6 1,929 861 9 6 1,929 861 9 5 1,625 1 405 1,431 1,485 1 402 1,384 1,482 1 398 1,363 1,476 82 397 1,346 2,486 109 2,462 109 2,435 112 2,401 112 1,827 70 1,789 70 1,788 60 1,784 60 91 1 90 1 77 1 77 1 Note: The decrease in water storage capacity is due to Reservoir FFR6 being decommissioned in FY 16/17. 165 Table XVI (Concluded) 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 8 281 20 4 8 287 20 4 8 292 20 4 8 291 20 4 6 267 20 4 5 267 19 4 2,300 475 9 5 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 1,387 82 394 1,325 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 2,398 112 2,364 112 2,364 112 2,315 125 2,284 125 2,270 125 1,778 60 1,781 60 1,781 60 1,677 60 1,677 60 1,652 60 75 1 73 1 74 1 72 1 72 1 70 1 166 F INA NC IA L SERV IC E S DE PARTMEN T P.O. BOX 1466 MESA, A R IZON A , 85 2 1 1 -14 6 6 (4 8 0 ) 6 44 -2275 W W W. MESA A Z . GOV