Annual Comprehensive Financial Report Year Ended June 30, 2024 Brigette Peterson, Mayor Scott Anderson, Vice Mayor Yung Koprowski, Council Member Chuck Bongiovanni, Council Member Kathy Tilque, Council Member Bobbi Buchli, Council Member Jim Torgeson, Council Member Patrick Banger, Manager Prepared by the Finance & Management Services Department Håkon Johanson, Finance & Management Services Director TOWN OF GILBERT, ARIZONA Annual Comprehensive Financial Report For the Year Ended June 30, 2024 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal Organizational Report Chart FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis (required supplementary information) Basic Financial Statements: Government-wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position 1 8 11 15 29 30 32 35 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 39 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund 40 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Streets Special Revenue Fund 41 Statement of Net Position - Proprietary Funds 42 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds 43 Statement of Cash Flows - Proprietary Funds 44 Notes to the Financial Statements Summary of Significant Accounting Policies Deposits and Investments Taxes Receivable and Due from Other Governments Interfund Receivables and Payables Lease Receivable Capital Assets Construction-in-Progress and Commitments Judgements Payable Long-Term Debt Risk Management Pensions and Other Post employment Benefits Postemployment Healthcare Benefits Fund Balance Classifications of the Governmental Funds 47 56 59 60 61 61 63 63 63 70 71 82 85 Capital Contributions Interfund Transfers Individual Fund Disclosures Contingent Liabilities Pledged Revenues Investment in Joint Venture Tax Abatement Subsequent Event Required Supplementary Information Schedule of the Proportionate Share of the Net Pension Liability - ASRS Schedule of Changes in the Net Pension Liability and Related Ratios - PSPRS - Police 85 86 86 87 87 87 88 89 93 94 Schedule of Changes in the Net Pension Liability and Related Ratios - PSPRS - Fire 96 Schedule of Pension Contributions - ASRS 98 Schedule of Pension Contributions - PSPRS 99 Schedule of Changes in the Town’s Total OPEB Liability and Related Ratios 100 Notes to Pension Plan Schedules - Actuarially Determined Contribution Rates 101 Combining and Individual Fund Statements and Schedules Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual: Streets and Traffic Capital Projects Fund Parks Capital Projects Fund Municipal Facilities Capital Projects Fund Debt Service Fund Special Assessments Debt Service Fund Grants Fund Special Districts Fund Other Special Revenue Fund Other Capital Projects Fund Combining Statement of Net Position - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds 104 105 108 109 110 111 112 113 114 115 116 118 119 120 STATISTICAL SECTION Financial Trends Net Position by Component - Last Ten Fiscal Years Changes in Net Position - Last Ten Fiscal Years Program Revenues by Function - Last Ten Fiscal Years Fund Balances of Governmental Funds - Last Ten Fiscal Years Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years Revenue Capacity Sales Tax Collections by Category - Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt - Current Fiscal YearEnd Legal Debt Margin Information - Last Ten Fiscal Years Pledged-Revenue Coverage - Last Ten Fiscal Years Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years Principal Employers - Current Fiscal Year and Nine Years Ago Operating Information Full-time Equivalent Employees by Function - Last Ten Fiscal Years Operating Indicators by Function - Last Ten Fiscal Years Capital Asset Statistics by Function - Last Ten Fiscal Years Other Information Property Value, Construction and Bank Deposits - Last Ten Fiscal Years System Development Fees - Current Fiscal Year-End Property Tax Levies and Collections - Last Ten Fiscal Years Principal Property Taxpayers - Current Fiscal Year-End 123 124 126 127 128 130 132 133 134 135 136 137 138 139 140 141 143 144 145 146 147 Introductory Section Letter of Transmittal Organizational Report Chart Table of Contents Shaping a new tomorrow, today January 30, 2025 Honorable Mayor, Members of the Council, and Gilbert Citizens: I am pleased to submit to you the Annual Comprehensive Financial Report for the Town of Gilbert (Gilbert), for the fiscal year ended June 30, 2024. State law (Arizona Revised Statutes §9-481) requires that local governments publish a complete set of audited financial statements within six months of the close of each fiscal year However, for this fiscal year, Gilbert received a one-month extension from the Government Finance Officers Association due to the implementation of a new financial reporting software. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are fairly stated in all material respects. Heinfeld, Meech & Company, a firm of licensed certified public accountants, has issued an unmodified opinion on Gilbert’s financial statements for the year ended June 30, 2024. The independent auditor’s report is located in the Financial Section of this report. This letter of transmittal is designed to complement Management’s Discussion and Analysis (MD&A) and should be read in conjunction with it. MD&A can be found in the Financial Section of this report. GILBERT PROFILE Governmental Structure Gilbert is an Arizona Municipal Corporation, operating as a general law community as prescribed in the Arizona Revised Statutes. Gilbert was incorporated July 6, 1920, and operates under the Council-Manager form of government. The Mayor is a member of the Council and is elected by the voters for a four-year term. Six additional council members are elected at-large to staggered four-year terms. The Mayor is chairperson of the Council. The Town Manager (Manager) is appointed by the Council and serves as the chief executive officer to oversee and carry out operations. During fiscal year 2024, the Manager administered Gilbert's operations through a staff of 1,721 budgeted full-time equivalent positions. Gilbert provides or administers a full range of services including public safety (police and fire protection and ambulance transport), development services (planning, code enforcement, and engineering), public works (water, wastewater, solid waste and recycling, environmental compliance, and streets), and parks and recreation services among others. Transit and “dial-a-ride” services are provided through an intergovernmental agreement with the Regional Public Transportation Authority. Library services, incarceration and animal control are provided through intergovernmental agreements with Maricopa County. Geography and Population Gilbert is located in the southeastern section of the greater Phoenix metropolitan area in Maricopa County, bounded on the north and east by the City of Mesa, on the west by the City of Chandler, on the southeast by the Town of Queen Creek, and on the south by the Gila River Indian Community. Gilbert has a planning area of 72.6 square miles. The most recent estimate of population as of July 1, 2024 is 292,711, which was derived from the Maricopa Association of Governments population estimates. The following graph depicts the ten-year population trend for Gilbert. 50 E. Civic Center Drive Gilbert, AZ 85296 (480) 503-6000 gilbertaz.gov 1 Table of Contents Population 300,000 275,000 250,000 225,000 200,000 175,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 FACTORS AFFECTING FINANCIAL CONDITION Public Safety Personnel Retirement System (PSPRS) Funding Gilbert’s goal is to be at least 90% funded in both police and fire pension systems. After years of dedicated effort to pay down large unfunded liabilities in the PSPRS, Gilbert fell slightly below the 90% goal in fiscal year 2024 with fire and police funded at 84.3% and 85.6%, respectively. To increase our funding levels, Gilbert sent $10.0 million to PSPRS in fiscal year 2025. Public Infrastructure Financing Gilbert has significant transportation and water-related infrastructure needs and was able to secure bond funding necessary to move forward with necessary projects. In the 2021 fall election, Gilbert citizens voted and approved $515.0 million in transportation bonds; $188.9 million of which were issued in the spring of 2022. As of June 30, 2024, there remained $150.1 million of unspent bond proceeds. Furthermore, in the Spring of 2022, the Water Resources Municipal Property Corporation Board and Gilbert’s Town Council approved additional bond funding for water projects in the amount of $473.0 million. The full amount was issued in June 2022. As of June 30, 2024, there remained $342.5 million in unspent bond proceeds. Utility Rates After successful completion of a utility rate study, new water and solid waste rates were approved by Council and became effective in April of 2024 to support the infrastructure and operational needs for these funds. In 2024, another utility rate study was conducted, which resulted in a recommendation to increase wastewater rates, which would take effect late in fiscal year 2025 if approved by Council. Growth and Construction System Development Fees (SDFs) are collected for capital needs related to growth in the community. Council has adopted SDFs for police, fire, road maintenance, traffic signals, parks and recreation, water, water resources, and wastewater. The fees are based on build-out system requirements to serve the projected population and land uses. During fiscal year 2024, a total of $25.4 million was collected in SDFs compared to $25.0 million in fiscal year 2023. The total value of all new construction in fiscal year 2024, including commercial, was $306.4 million, representing a decrease of $117.7 million from fiscal year 2023. This decrease was primarily due to a slow down in residential permits issued from 854 in fiscal year 2023 to 619 in fiscal year 2024 due as Gilbert approaches buildout. 2 Table of Contents Economic Development With over 290,000 residents, Gilbert is focused on sustaining the thriving community seen today well into the future. This aim is supported through a commitment to develop a prosperous community, strong economy, and exceptional built environment. Over the past few years, Gilbert has received numerous awards and recognitions, a few of which are included below. • • • • • • • • • AAA Bond rating from all three major rating agencies (S&P, Moody’s, and Fitch) Best Place to Live in Arizona (Ranking Arizona, 2022) #1 City for Economic Growth, 250K - 500K Population (CoworkingCafe, 2024) 2nd Safest Place Among 100 Largest Cities (FBI Uniform Crime Reporting Program, 2022) 2nd Fastest-Rising City in the United States (FinanceBuzz, 2023) 2nd America's Best Cities to Start a Side Hustle (LLC.org, 2023) 6th Best Place to Raise a Family (WalletHub, 2024) 7th Best City for First-Time Home Buyers (WalletHub, 2023) 12th Best Big City to Live in America (Stacker, 2023) Gilbert is a community committed to education; 49.1% of residents aged 25 and older hold a bachelor’s degree or higher, compared with about 34.3% statewide and 36.8% nationally. Notable employers like Banner Health, Dignity Health, Deloitte, Footprint, Silent-Aire, Northrop Grumman, Li-Cycle, Lockheed Martin, and the worldwide headquarters of Isagenix, benefit from this commitment to education and have helped keep Gilbert’s 2024 annual average unemployment rate at 3.0%, as compared to 3.9% for the state. Knowledge assets that support the community include Park University, the University of Arizona, Arizona State University Polytechnic Campus, Chandler-Gilbert Community College, A.T. Still University, and numerous other colleges, universities, and technical schools within a 30-minute commute. Additionally, there are more than 40 charter/private schools in Gilbert and three A+ rated school districts – Gilbert, Higley, and Chandler, that serve the citizens of Gilbert. The Gilbert Office of Economic Development (OED) is one of approximately 73 Accredited Economic Development Organizations in the nation. Gilbert achieved re-accreditation through the International Economic Development Council in 2022, after initially being accredited in 2013, and was the first Arizona economic development organization and the second municipality in the nation, to do so. In fiscal year 2024, the business development lines of service saw strong performance, with continued focus on building inventory to support employment-oriented users and increased support for Gilbert’s small business community. In fiscal year 2024, Gilbert’s economic development initiatives continued to yield positive results for the community. In the northwest employment area, SunCap Property Group completed construction of a new 120,000 square-foot building in support of Northrop Grumman’s continued investment in the community. In the Germann Road employment area, ATLAS initiated construction on a new 60,000 square-foot industrial facility. The Gateway employment area saw the completion of Phase I of Power Gateway 202, a 265,000 square-foot employment industrial park near the southwest corner of Warner and Power Roads. Long-term Gilbert based business resiliency efforts continued as well, with the Gilbert Town Council approving the creation of the Catalyst Business Resource Center, which officially launched in fiscal year 2024, providing a one-stop location for Gilbert businesses to access valuable resources to help thrive in the community. 3 Table of Contents Investment in the downtown Heritage District during fiscal year 2024 focused largely on critical infrastructure projects, enacting strategies of the 10-year redevelopment plan, and planning entitlements for private projects. Gilbert continued investment in design of two major roadways that will improve traffic circulation and will provide opportunities to diversify the downtown Heritage District with additional retail, entertainment, and higher education uses. Additionally, the Town is nearing completion of redevelopment of the Water Tower Plaza. The design of a new comprehensive wayfinding system was completed and will be installed in the next fiscal year. Finally, new private projects which have approved design review include a bowling alley and arcade, a pizza restaurant, an adaptive reuse of an automotive garage to restaurant and retail, and a mixed-use office and retail building. These continued investments to the downtown are key to sustaining the more than 5.5 million visits annually to the Heritage District (Placer.ai, 2023). Redevelopment efforts in Gilbert will also be expanding in the coming years with Council approving a boundary for a new northwest Gilbert redevelopment area. This is the first step in this public process to focus on the northwest part of the community and support reinvestment that will ensure this important economic engine thrives for years to come. Discover Gilbert also had a big year, capped by hosting the LPGA Ford Championship in March at Gilbert’s own Seville Golf and Country Club. Over the seven days of activity, there were approximately 4,735 unique visitors to the event with a total estimated visitor spending of $1.7 million over those seven days. Hotel demand was down slightly in the first two quarters before showing strong growth in the second half of the fiscal year and room rates corrected from record highs. Marketing campaigns continue to keep Gilbert top-of-mind for overnight and regional day visitors, and large events brought added exposure to Gilbert. The short-term rental market showed similar trends. That market continues to grow with new rental listings remaining high, while new hotel projects are likely to begin development in fiscal years 2025 and 2026. Gilbert’s connectivity to major markets is provided through a comprehensive transportation network which includes the SanTan Loop 202 and US-60 Superstition Freeways, Sky Harbor International Airport (Sky Harbor), and Phoenix-Mesa Gateway Airport. This network provides access to Gilbert-based businesses while connecting the community to local, national and international markets. Located just over 10 miles west of Gilbert, Sky Harbor Airport offers non-stop service to more than 140 destinations. Sky Harbor is one of the busiest airports in the nation for passenger traffic, seeing over 48 million passengers in fiscal year 2024. Mesa Gateway Airport is located on Gilbert’s eastern border and handled just over 1.8 million passengers in fiscal year 2024 with flights to over 45 destinations throughout the United States and Canada. The airport also provides air cargo services and is located within a Foreign Trade Zone. Transaction Privilege (Sales) Tax Trend Sales tax revenues represented 45.7% of General Fund revenues for fiscal year 2024, totaling approximately $155.7 million. Local sales taxes are collected by the Arizona Department of Revenue and remitted to Gilbert weekly. The graph below depicts sales tax receipts by source for the past five fiscal years. Privilege Tax by Source (in millions) $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 2020 2021 Property Rental Retail 2022 Utilities 4 2023 All Other Construction 2024 Table of Contents Property Taxes State law requires municipalities to adopt a property tax levy based on the amount of scheduled and projected debt service for the year plus a reasonable amount for delinquencies and certain costs. For fiscal year 2024, Gilbert’s property tax rate was $0.98 per $100 of limited property valuation and was used exclusively for the payment of voter approved general obligation bond debt. Gilbert does not levy a primary property tax for general operating purposes. Property Value The value of real property within the Gilbert annexed area is a vital economic forecast variable. Taking the market value of a property and applying the statutory assessment rate derives the property value, which is limited to increase by a maximum of 5% per year. Residential properties are assessed at 10%, vacant land is assessed at 15%, and commercial properties are assessed at 17.5%. This illustrates how crucial the additions of commercial properties are to the tax base. The limited property valuation increased by 7.3% in fiscal year 2024 from $2.999 billion to $3.217 billion. The following graph depicts the changes in the limited property value in Gilbert for the past ten years: Limited Property Value (in millions) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 State-Shared Revenues State-shared revenues totaled $128.5 million for the General Fund and $20.8 million for the Streets Special Revenue Fund in fiscal year 2024. Excluding the change in fair market value of investments, state-shared revenues represented approximately 38.0% of total General Fund revenues and 96.7% of total Streets Special Revenue Fund revenues. State-shared revenues include allocations of state sales tax, income tax, gas tax, motor vehicle in-lieu tax, vehicle license tax, and lottery funds. These revenues are shared based upon relative population in the State as determined by the most recent population estimates of the United States Census Bureau. Budget and Financial Policies Gilbert’s financial policies establish the framework for overall fiscal planning and management. The policies set forth guidelines for both current activities and long-range planning. The purposes of the financial policies are: Balanced Budget – Gilbert is required by Arizona Revised Statutes to adopt a balanced budget each fiscal year. All funds are appropriated annually. A balanced budget is one in which the sum of estimated revenues and appropriated fund balances is equal to appropriations. 5 Table of Contents Fiscal Conservatism – To ensure that Gilbert is always in solid financial condition, defined as: Maximum efficiency – best possible service at the lowest possible cost Cash solvency – the ability to pay bills Budgetary solvency – the ability to balance the budget Long-term solvency – the ability to pay future costs Service level solvency – the ability to provide needed and desired services Flexibility – To ensure Gilbert can respond to changes in the economy or new service challenges without an undue amount of financial stress. Transparency and Communication – To utilize best practices in communicating financial information to facilitate sound decision-making, promote openness and transparency, and inspire public confidence and trust. Adherence to the Highest Accounting and Management Practices – As set by the Governmental Accounting Standards Board and the Government Finance Officers Association standards for financial reporting and budgeting. A five-year financial plan is developed for each operating fund, and current year decisions are made with a forecasted future impact. Other financial policies that guide the budget include: maintaining a minimum general fund balance sufficient to cover 90 days of ongoing operating expenditures and annual debt service payments, one-time revenues are not applied toward ongoing expenditures, and an economic development reserve. Gilbert’s Council adopted a comprehensive listing of policies of responsible financial management in November of 2011, with the latest revision adopted in March of 2024. These policies are reviewed annually to ensure their continued relevance and adherence. The Town Council sets policy and adopts the annual budget at the fund level as a total amount of expenditures. Financial control is set by the Council at the fund level, with budgetary control for operating performance administered at the department level by the Town Manager. All annual appropriations lapse at year-end and are considered for inclusion in the subsequent year’s budget on a case-by-case basis. Long-Term Financial Planning In addition to Gilbert’s General Plan and Capital Improvement Plan, Gilbert is developing infrastructure inventories (including repair and replacement plans) and functional area master plans. Gilbert staff and Council also align both short-term goals and resources toward the long-term realization of Gilbert’s established strategic focus areas: Strong Economy, Prosperous Community and Exceptional Built Environment. Gilbert’s mission and vision is to be the “City of the Future” as we anticipate change, create solutions and help people. Gilbert has implemented Franklin Covey’s The 4 Disciplines of Execution, providing an exceptional tool for advancing these goals while managing the challenges of the daily whirlwind, and Lean Six Sigma (Lean) process improvement events to optimize processes throughout the organization to further enhance Gilbert’s long-term financial resiliency. Gilbert also focuses on continuous improvements through its Employees Driving Gilbert’s Excellence (EDGE) program, which takes the best parts of Continuous Quality Improvement and Lean Six Sigma. It teaches our employees to participate in organizational transformation by aligning people, process, and technology in an ongoing effort to deliver efficiency and effectiveness from a customer-centric point of view. When combined with clearly defined Wildly Important Goals, (WIGs), a concept in the 4 Disciplines of Execution, we are constantly evaluating the work we do and asking ourselves, “Is this the most important thing we can do right now for our customer?” Since departments are so diverse, it is hard to find a “one size fits all” approach. We believe that through the marrying of our organizational transformation approach (EDGE) and The 4 Disciplines of Execution WIGs, we are equipping the organization with a variety of quality tools and agile techniques in to: 6 Table of Contents • • • • Improve Service Delivery Increase Customer Satisfaction Empower Staff to Innovate Enhance the Organizational Culture • • • Yield a Return on Investment Reduce Costs Increase Staff Capacity to Deliver Results Gilbert continues to update its Long-Term Financial Plan, which includes an interactive Excel model. The model looks at revenue and spending trends to predict what the financial sustainability of Gilbert would look like if those trends were to continue or change. The main dashboard contains live “what if” variables that can be easily changed to help decision-makers see the financial impact that individual changes make to the overall budget health into the future. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (Certificate of Achievement) to the Town of Gilbert for its Annual rd Comprehensive Financial Report for the fiscal year ended June 30, 2023. This was the 33 consecutive year that Gilbert has received this prestigious award. To be awarded a Certificate of Achievement, we must publish an easily readable and efficiently organized Annual Comprehensive Financial Report that satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting this year’s report to the GFOA to determine its eligibility for another certificate. Gilbert also received the GFOA’s Distinguished Budget Presentation Award for our annual budget document. To qualify for this award, our budget document was judged to be proficient as a policy document, a financial plan, an operations guide, and a communications device. Gilbert has received this award for 25 consecutive years. ACKNOWLEDGMENTS The completion of this report is the result of the efficient and dedicated services of the entire staff of the Accounting Division. I would like to give special recognition to Tanya Wright, Financial Services Officer; Anthony St. George, Accounting Manager; Emily Harmon, Accounting Supervisor; and Matthew Masters, Accounting Supervisor, who were primarily responsible for preparing this document. In addition, I would like to thank staff from all Town departments for their contributions and assistance. Finally, I wish to acknowledge the continued support of the Council and the Manager in providing the leadership necessary for sound financial management. Respectfully submitted, Håkon Johanson Finance & Management Services Director 7 ORGANIZATIONAL REPORT CHART 8 ORGANIZATIONAL REPORT CHART 9 Table of Contents Financial Section Independent Auditor’s Report Management's Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Required Supplementary Information Combining and Individual Fund Statements and Schedules 11 12 13 Table of Contents 14 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS This section of Gilbert’s Annual Comprehensive Financial Report presents a narrative overview and comparative analysis of the financial activities of Gilbert for the fiscal years ended June 30, 2024 and 2023. Readers are encouraged to consider the information presented here in conjunction with the basic financial statements that immediately follow, along with the letter of transmittal and other portions of this Annual Comprehensive Financial Report. Financial Highlights • • • • • • • • Gilbert’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the end of the fiscal year by $2.4 billion, which is an increase over the prior year of $131.0 million due to increases in both governmental and business-type activities. Included in net position of $2.4 billion is $1.6 billion of net investment in capital assets, $136.7 million of amounts restricted for various purposes, and $694.8 million of unrestricted net position. Included in unrestricted net position is $161.6 million invested in joint ventures with the Cities of Mesa, Chandler, and the Town of Queen Creek, and $533.1 million which may be used to fund ongoing operations in future years. Governmental activities increased net position by $58.6 million, which was primarily due to taxes totaling $308.5 million and investment income of $31.8 million, offset by net program expenses of $263.0 million. The business-type activities increased net position by $72.3 million, primarily due to higher charges for services revenue as a result of rate increases of $9.7 million, $8.3 million, and $5.0 million in the Water, Wastewater, and Solid Waste funds, respectively, capital contributions from developers of $10.1 million, and investment income and changes in fair market value of investments totaling $34.0 million. These were offset by increased operation and maintenance costs mainly due to increased cost of purchased water and effects of inflation of $6.4 million, $1.1 million, and $1.2 million in the Water, Wastewater, and Solid Waste funds, respectively. Net position includes $933.3 million net investment in capital assets in governmental activities such as streets, parks, and municipal buildings and a $644.1 million net investment in business-type activities in water, wastewater and solid waste infrastructure and equipment. Amounts increased in the governmental activities by $13.4 million from the prior year, which is attributed to ongoing capital projects including various street improvements ($40.1 million), police dispatch center expansion ($10.3 million), and water tower plaza renovations ($5.4 million), offset by current year depreciation of $66.6 million. Amounts increased in the business-type activities by $66.8 million in fiscal year 2024 primarily due to the construction of various capital projects including waterline replacements ($3.1 million), recovery well renovation ($2.7 million) and water main repairs ($1.7 million), which were offset by depreciation expense of $30.7 million. The combined fund balance for all governmental funds is $635.5 million. Unrestricted fund balance is classified as Committed, Assigned, and Unassigned. The unrestricted portion of all governmental funds is $340.6 million, which represents an increase of $32.8 million from the prior year. The increase is primarily due to increases in the following compared to prior year: state-shared income tax of $21.2 million, investment earnings of $8.3 million, and change in the fair market value of investments of $5.3 million. The General Fund unrestricted fund balance is $350.0 million, of which $175.5 million has been assigned for capital replacement, capital improvement projects, highways and streets, and debt service. The General Fund unassigned fund balance of $174.4 million is 69.1% of total fund expenditures. Gilbert’s total bonded debt outstanding at the end of the fiscal year was $873.4 million, as compared to $922.0 million at the end of fiscal year 2023. This represents a decrease of $48.6 million due to regularly scheduled debt payments made throughout the fiscal year. Gilbert’s total net pension liability at the end of the fiscal year was $150.1 million, as compared to $132.1 million at the end of fiscal year 2023. Gilbert made contributions in excess of the annual required contribution to the Public Safety Personnel Retirement System (PSPRS) of $340 thousand during the fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Gilbert’s basic financial statements, which 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. 15 Table of Contents Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the finances of Gilbert as a whole, in a manner similar to a private-sector business. The statement of net position presents information on all of Gilbert’s assets, liabilities, and deferred inflows/ outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether Gilbert’s financial position is improving or declining. The statement of activities presents the changes in net position from the previous year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). Both government-wide financial statements distinguish functions of Gilbert that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover a majority, or all, of their costs through user fees and charges (business-type activities). The governmental activities of Gilbert include general government, public safety, highways and streets, parks and recreation, and transportation. The business-type activities include water, wastewater, and solid waste. The government-wide financial statements also include the Industrial Development Authority (IDA) as a component unit of Gilbert. The IDA provides financing for eligible private sector entities to acquire and construct facilities deemed to be in the public interest. The financial information for the IDA is presented separately in the statements. The government-wide financial statements can be found beginning on page 29 of this report. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources segregated for specific activities or objectives. Gilbert, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of Gilbert’s funds can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds account for essentially the same functions reported as governmental activities in the government-wide financial statements. Unlike the government-wide financial statements, however, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at fiscal year-end. This information may be useful in evaluating a government’s near-term financing ability. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of Gilbert’s near-term financing decisions. To facilitate this comparison, reconciliations are provided with the fund financial statements. The basic governmental fund financial statements can be found beginning on page 32 of this report. Proprietary Funds Gilbert maintains two different types of proprietary funds; Enterprise funds and Internal Service fund types. Enterprise funds report the same functions presented as business-type activities in the government-wide financial statements, which include water, wastewater, and solid waste. Internal service funds accumulate and allocate costs internally among the various functions. Gilbert uses internal service funds to account for maintenance of its fleet of vehicles, and employee health, dental, workers’ compensation, and general liability self-insurance. 16 Table of Contents The assets and liabilities of the internal service funds are included in the governmental activities column of the government-wide statement of net position. Costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. Enterprise funds provide the same information as the government-wide financial statements, only with more detail. Internal service funds are combined into a single column on the proprietary funds statements. Additional detail for the internal service funds can be found on pages 118-120. The proprietary fund statements can be found beginning on page 42 of this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to obtain a 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 beginning on page 47 of this report. Government-wide Financial Analysis Net position serves as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Position as of June 30, 2024 and 2023. Town of Gilbert Condensed Statement of Net Position Governmental Activities 2024 Current and other assets $ 744,001,127 Business-type Activities 2023 $ 2024 726,323,032 $ 849,631,263 Total 2023 $ 899,548,442 2024 $ 1,593,632,390 2023 $ 1,625,871,474 Capital assets 1,132,090,294 1,098,279,359 907,524,532 773,678,440 2,039,614,826 1,871,957,799 Total assets 1,876,091,421 1,824,602,391 1,757,155,795 1,673,226,882 3,633,247,216 3,497,829,273 Deferred outflows of resources 54,835,600 48,899,016 5,426,647 6,128,587 60,262,247 55,027,603 Long-term liabilities 497,466,133 511,873,238 630,484,026 651,579,815 1,127,950,159 1,163,453,053 Other liabilities 74,861,013 61,469,588 59,684,772 27,890,322 134,545,785 89,359,910 Total liabilities 572,327,146 573,342,826 690,168,798 679,470,137 1,262,495,944 1,252,812,963 Deferred inflows of resources 20,992,635 21,184,235 1,074,736 867,985 22,067,371 22,052,220 Net investment in capital assets 933,340,392 919,930,069 644,115,990 577,320,244 1,577,456,382 1,497,250,313 Restricted 126,759,600 123,034,184 9,950,411 10,630,053 136,710,011 133,664,237 Unrestricted 277,507,248 236,010,093 417,272,507 411,067,050 694,779,755 Net position: Total net position $ 1,337,607,240 $ 1,278,974,346 $ 1,071,338,908 $ 999,017,347 $ 2,408,946,148 647,077,143 $ 2,277,991,693 Net position consists of three components. The largest portion of Gilbert’s net position (65.5%) is its investment in capital assets (land, buildings, infrastructure, equipment, etc.), less depreciation and any related debt used to acquire those assets that is still outstanding. Gilbert uses these capital assets to provide services to citizens; consequently, these assets are not available for appropriation. Although Gilbert’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt are provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 17 Table of Contents An additional portion of Gilbert’s net position (5.7%) represents resources that are subject to external restrictions on how they may be used. The remaining portion of net position (28.8%) includes $161.6 million which is invested in joint ventures with the Cities of Mesa, Chandler, and the Town of Queen Creek. The remaining $533.1 million may be used to meet Gilbert’s ongoing obligations to citizens, customers, and creditors. Governmental Activities Governmental activities in fiscal year 2024 increased Gilbert’s net position by $58.6 million. Taxes and program revenues (charges for services and grants and contributions that are clearly identifiable to operating functions) were Gilbert’s most significant revenue sources comprising 92.4% of total revenues for governmental activities, which is consistent with prior years. Taxes (local and state-shared) were $308.5 million, which represents an increase of $24.4 million from the prior year primarily due to an increase in unrestricted state-shared revenue of $22.3 million. Program revenues were $95.6 million, a decrease of $12.8 million from the prior year, which was mostly due to a decrease in capital grants and contributions specifically related to highways and streets. The other component of the change in net position is expenses. The largest expense functions were public safety, which represented 43.8%, and highways and streets, which represented 19.9% of total governmental activities expenses, which is consistent with prior year. Total expenses increased $44.8 million (14.3%) over the prior fiscal year, which was mostly due to increases in police and parks and recreation expenditures. Police expenses increased due to the purchase of 2-way public safety radios along with increases in salary and related expenses. Park expenses increased due to costs associated with infrastructure repairs and maintenance related to the installation of new closed-circuit television cameras as well as an increase in salary and related expenses compared to the prior year. 18 Table of Contents The following table details the changes in net position for governmental and business-type activities. Changes in Net Position Governmental Activities 2024 Business-type Activities 2023 2024 Total 2023 2024 2023 Revenues Program revenues Charges for services $ 24,363,420 $ 23,484,910 $ 151,448,996 $ 128,401,689 $ 175,812,416 $ 151,886,599 Operating grants and contributions 43,307,417 41,985,234 2,744,840 3,104,074 46,052,257 45,089,308 Capital grants and contributions 27,914,663 42,935,057 26,444,901 24,865,411 54,359,564 67,800,468 Sales taxes 156,171,430 155,493,976 – – 156,171,430 155,493,976 Property taxes 34,006,483 32,588,000 – – 34,006,483 32,588,000 Unrestricted state-shared revenue 114,537,943 92,189,540 – – 114,537,943 92,189,540 3,793,472 3,800,885 – – 3,793,472 3,800,885 101,202 895,733 – – 101,202 895,733 31,840,195 17,805,233 33,953,799 10,509,505 65,793,994 28,314,738 Gain on sale of capital assets 150,621 1,152,603 122,201 74,984 272,822 1,227,587 Other 978,678 1,030,614 57,745 462,841 1,036,423 1,493,455 437,165,524 413,361,785 214,772,482 167,418,504 651,938,006 580,780,289 Management and policy 42,529,033 34,670,470 – – 42,529,033 34,670,470 Finance and management services 3,813,341 3,395,952 – – 3,813,341 3,395,952 Court 5,371,881 4,983,766 – – 5,371,881 4,983,766 Development services 13,323,240 12,751,814 – – 13,323,240 12,751,814 Police 95,543,636 81,159,390 – – 95,543,636 81,159,390 Fire 61,582,326 54,960,568 – – 61,582,326 54,960,568 Highways and streets 71,350,575 67,635,517 – – 71,350,575 67,635,517 Parks and recreation 46,504,795 37,450,429 – – 46,504,795 37,450,429 Transportation 1,047,456 725,221 – – 1,047,456 725,221 Non departmental 7,158,988 4,016,081 – – 7,158,988 4,016,081 Interest and fiscal charges on long-term debt General revenues Other taxes Grants/contributions not restricted Investment income Total revenues Expenses 10,351,814 12,075,106 – – 10,351,814 12,075,106 Water – – 86,878,800 67,785,692 86,878,800 67,785,692 Wastewater – – 42,031,775 38,774,386 42,031,775 38,774,386 Solid Waste – – 33,495,891 31,843,418 33,495,891 31,843,418 358,577,085 313,824,314 162,406,466 138,403,496 520,983,551 452,227,810 Increase in net position before transfers 78,588,439 99,537,471 52,366,016 29,015,008 130,954,455 128,552,479 Transfers (19,955,545) (5,273,067) 19,955,545 5,273,067 – – Change in net position 58,632,894 94,264,404 72,321,561 34,288,075 130,954,455 128,552,479 Total expenses Net position, beginning Net position, ending 1,278,974,346 1,184,709,942 999,017,347 $ 1,337,607,240 $ 1,278,974,346 $ 1,071,338,908 $ 964,729,272 2,277,991,693 2,149,439,214 999,017,347 $ 2,408,946,148 $ 2,277,991,693 Business-type Activities Gilbert’s net position for business-type activities increased by $72.3 million during the fiscal year. The revenues for business-type activities increased 28.3% over the prior year mainly due to an increase in charges for service in the Water and Wastewater funds which was due to rate increases for wastewater of 32% in April of last fiscal year and water and solid waste both rate increases of 46% in April 2024. Additionally, revenue from development related growth increased, including $9.3 million in system development fee collections and $10.1 million in water, wastewater, and solid waste infrastructure contributed by developers. Expenses increased $24.0 million (17.3%) from the prior year primarily due to the impacts of inflation, which increased costs of operation and maintenance such as purchased water and fuel, accompanied by an increase in depreciation expense. 19 Table of Contents Financial Analysis of Gilbert’s Funds As noted earlier, Gilbert maintains fund accounting to demonstrate compliance with budgetary and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental Funds The focus of the governmental funds is to provide information on near-term inflows, outflows, and balances of resources available for spending. Such information is useful in assessing Gilbert’s financing requirements. Unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Gilbert operated and separately reported the following major governmental funds: • • • • • • • General Streets Special Revenue Streets and Traffic Capital Projects Parks Capital Projects Municipal Facilities Capital Projects Debt Service Special Assessments Debt Service All nonmajor funds are combined for reporting purposes captioned “Other Governmental Funds”. As of the end of fiscal year 2024, the governmental funds reported ending unrestricted fund balances totaling $340.6 million, an increase of $32.8 million from the prior fiscal year. See explanations of variances below. General Fund The General Fund is the primary operating fund. At the end of fiscal year 2024, the fund balance of the General Fund was $368.9 million, compared to $319.2 million in the prior year. The unrestricted portion of the fund balance was $350.0 million, of which $33.4 million has been assigned for capital replacement, $132.9 million for future capital projects, $9.3 million for highways and streets, and for debt service. The remainder of $174.4 million supports our minimum fund balance policy and can be used for future operations. As a measure of the General Fund’s liquidity, it is useful to compare its available fund balance to total fund expenditures. The General Fund’s unassigned fund balance represents 69.1% of total General Fund expenditures for the current year, which is lower than the prior year of 77.1%. Overall, the General Fund’s performance resulted in revenues and other financing sources exceeding expenditures and other financing uses by $49.7 million. Total revenues increased $17.6 million, or 5.5% compared to the prior year, while expenditures increased $17.8 million, or 7.6%. Gilbert’s largest revenue sources are local sales tax and intergovernmental revenues, which accounted for 85.2% of the total revenues in fiscal year 2024, which is consistent with the prior year. The largest General Fund expenditures are salaries, benefits, and associated costs, representing 65.1% of total expenditures, which is also consistent with prior year. General Fund revenues showing an increase over the prior year were from intergovernmental sources, the largest of which was in state shared income tax of $21.2 million. This increase is attributable to an increase in per capita income to $51,739 in fiscal year 2024 compared to $48,791 in fiscal year 2023. Other revenue sources that contributed to the increase over the prior year were investment earnings of $4.8 million and change in fair value of investments of $2.6 million. These increases were offset by a decrease in revenues tied to other entities’ participation of $15.3 million, where $11.3 million was received in fiscal year 2023 as contributions for the completion of the Lindsay Road and Loop 202 Interchange. 20 Table of Contents These increases in revenue were offset by increases in expenditures over the prior year of $17.8 million primarily due to increases in police, parks and recreation, and management and policy expenditures of $8.8 million, $7.4 million, and $5.9 million, respectively. These increases were primarily the result of increased salary and related expenditures from market adjustments and annual performance review pay increases. These increases were offset by a decrease of $10.1 million in capital outlay expenditures in the current year, due primarily to subscriptionbased information technology agreements recorded in the prior year. The graphs below depicts General Fund revenues by source and General Fund expenditures by function. General Fund Revenues $340.8 million Sales tax 45.7% All other 6.0% Charges for services 7.1% Licenses, permits & fees 1.7% Intergovernmental 39.5% General Fund Expenditures $252.4 million Non departmental 2.1% All other 4.3% Capital outlay 3.8% Police 32.1% Highways and streets 3.0% Development services 4.2% Parks and recreation 14.2% Fire 20.4% Management and policy 15.9% 21 Table of Contents Streets Special Revenue The Streets Fund contains state-shared highway user revenues funds (HURF) that are required by state statute to be used for highways and street related purposes. Total revenues in the Streets Fund remained relatively stable from prior year, with a $696 thousand (3.3%) increase due to receiving additional HURF funds. Total expenditures increased $1.9 million (10.2%) compared to the prior fiscal year due to one-time costs incurred in the current year to install new management units and controllers software, as well as overall increased operating expenditures due to the effects of inflation. Streets and Traffic Capital Projects The Streets and Traffic Capital Projects Fund consists of system development fees and intergovernmental revenues and the expenditure of those funds to purchase or construct capital assets. The fund balance decreased by $37.8 million during the year. This was due to planned capital outlay expenditures towards completion of various projects. The larger projects with capital expenditures during the year were related to the road work on Ocotillo Road from Greenfield Road to 148th Street totaling $13.3 million and significant work performed on Guadalupe Road from Arizona Avenue to McQueen Road totaling $11.4 million. Capital outlay was partially offset by system development fee collections of $4.9 million, interest earnings of $9.1 million, and intergovernmental proceeds of $3.3 million to fund capital projects. Parks Capital Projects The Parks Capital Projects Fund accounts for system development fee revenue and the expenditure of those funds for parks infrastructure. The fund balance increased by $5.5 million during the year, which was primarily due to the collection of system development fees of $7.9 million and transfers in of $7.4 million to fund capital projects. These were offset by capital outlay of $8.1 million. The largest projects with capital expenditures during the year were water tower plaza repairs and renovations of $5.8 million and renovations to Gilbert Regional Park of $787 thousand. The remaining fund balance of $40.9 million will be used to fund future parks needs related to growth in Gilbert. Municipal Facilities Capital Projects The Municipal Facilities Capital Projects Fund consists of system development fee revenue and Public Facilities Municipal Property Corporation bond proceeds and the expenditure of those funds to purchase or construct municipal capital assets. The fund balance decreased by $2.6 million during the year, resulting in a deficit in fund balance at fiscal year-end of $5.7 million. The deficiency in this fund is primarily due to long-term loans from the General Fund to cover cash deficits for previous capital expenditures where future system development fee revenue is expected to eliminate the deficiency. The decrease in fund balance was primarily due to capital outlay expenditures of $21.5 million. The largest projects with capital expenditures during the year were the Police Dispatch Center Renovation of $10.3 million, Emergency Operations Center renovation and expansion of $3.5 million, and construction of the Gilbert Victim Advocacy Center of $3.2 million. Total expenditures of $22.1 million were offset by transfers in of $18.1 million. Debt Service The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, principal, interest, and related costs for outstanding bonds. The fund balance decreased by $6.7 million during the year. Revenues and other financing sources and expenditures offset each other, where property tax revenue and transfers from other funds totaled $40.4 million, while debt service payments were $40.4 million. See Note 9 for additional information on debt service payments. Special Assessments Debt Service The Special Assessments Debt Service Fund is used to account for the accumulation of resources for, and the payment of, principal, interest, and related costs for outstanding improvement district bonds. The fund balance of $125 thousand increased from the prior fiscal year by $25 thousand due to regularly scheduled debt payments, offset by the administrative fee charged for early redemption of a portion of the special assessment debt. See Note 9 for additional information. 22 Table of Contents Nonmajor Governmental Funds All nonmajor governmental funds are combined into one column on the governmental fund statements. The combined fund balance of these funds decreased $1.7 million from the prior year to a balance at year-end of $5.6 million. Nonmajor funds represent less than 1% of the total governmental funds balance. Proprietary Funds Gilbert’s proprietary funds statements are prepared on the same basis as the government-wide financial statements (accrual basis). Gilbert operates, and separately reports, the following proprietary funds: • • • Water Wastewater Solid Waste Water Fund The Water Fund is responsible for producing and distributing potable water that exceeds all county, state and federal drinking water standards. The water system is also sized and pressurized to provide adequate fire suppression to the entire planning area and operates two surface water treatment facilities capable of producing 69 million gallons per day (mgd), and 17 ground water wells capable of producing 43.5 mgd. The SanTan Vista Water Treatment Plant is jointly owned with the City of Chandler, with Gilbert acting as the lead agent. The North Water Treatment Plant has reached its useful life and a new treatment plant located directly east of the current plant is under construction, with a planned completion in early 2027. Net position increased by $58.1 million to $616.2 million primarily due to an increase in charges for services over the prior year of $9.7 million due to a base water rate increase of 46% combined with incremental increases based on total use implemented in April of fiscal year 2024, an increase in investment earnings of $5.7 million, an increase of $15.9 million for change in fair market value of investments, and an increase in the annual transfer from the General Fund to support Water SDF expenses not covered by SDF revenue of $15.0 million over the prior year. Operating income was $12.8 million, which is slightly lower than prior year of $13.5 million. Wastewater Fund The Wastewater Fund provides wastewater collection and treatment services to residents and businesses in Gilbert through the operation of two wastewater treatment facilities. The services also include the storage and distribution of effluent water (treated wastewater). The Greenfield Water Reclamation Plant (GWRP) is a joint venture with the Cities of Mesa and Queen Creek, with Mesa acting as the lead agent and plant operator. Net position increased $11.5 million to $404.7 million primarily due to charges for services increasing $8.3 million resulting from a rate increase of 32% in the late portion of fiscal year 2023. The operating income of $2.3 million was primarily due to the rate increase, which was offset by an increase in salaries and related costs of $1.2 million, along with the impact of inflation increasing the operation and maintenance costs of the two treatment plants by $1.1 million. Solid Waste Fund Gilbert operates the Solid Waste Fund to provide residential and commercial refuse collection, residential recycling services, street cleaning, storm water infrastructure, and environmental compliance. Residential services are provided exclusively by Gilbert, while the commercial service competes with the private sector for customers. Net position increased by $3.0 million, to $50.4 million. The operating income of $828 thousand was due to an increase in charges for services over the prior year of $5.0 million primarily resulting from a 45% rate increase in April 2024 . This revenue increase was offset by an increase in various operating costs including salaries and related costs of $579 thousand and operation and maintenance such as fuel and equipment of $1.2 million. 23 Table of Contents The following graph compares the fiscal year revenues to expenses for the Water, Wastewater and Solid Waste Funds. Proprietary Funds Operating Revenues and Expenses Millions $80 Revenues $60 Expenses $40 $20 $— Water Wastewater Solid Waste General Fund Budgetary Highlights There was a difference of $21.2 million between the original adopted expenditure budget and the final amended expenditure budget. The final amended budget projected that expenditures would exceed revenues by $15.1 million resulting in a $163.4 million reduction to fund balance after other financing sources and uses. The difference between the original adopted budget and final amended budget was mainly due to the utilization of $11.1 million in contingency during the year which was primarily allocated to governmental capital project funds in addition to increases in General Fund budgets for police ($3.8 million) and fire ($1.3 million). During the year, actual revenues exceeded the budgeted amount by $32.3 million (10.6%) mainly due to higher than expected sales taxes collected of $17.7 million, interest earnings of $12.0 million, and intergovernmental revenues of $7.4 million. Actual expenditures were less than budgeted by $70.8 million (22.0%) mainly due to lower than expected expenditures in non-departmental ($22.9 million), capital outlay ($28.0 million), and unused contingency ($8.7 million). This resulted in an excess of revenues over expenditures of $103.0 million more than budgeted. Other financing sources and uses came in $108.1 million lower than expected as a result of the timing of transfers related to redevelopment, municipal facilities, and streets and traffic capital projects. This also resulted in the actual net change in fund balance being $211.1 million more than budgeted. Capital Asset and Debt Administration Capital Assets. As of June 30, 2024, Gilbert had $2.0 billion in capital assets, net of accumulated depreciation, which is an increase of $167.7 million (9.0%) over prior year. This was due to increases in construction-in-progress for streets, redevelopment districts, municipal facilities, water, and wastewater projects. These increases were offset by the depreciation expense taken. Major capital improvement projects completed during the year included the following: Governmental Activities • • • • Municipal Center II Renovation of $19.7 million Guadalupe Road Improvements of $12.3 million Elliot and Cooper Intersection of $10.2 million Fuel Dispensing Pump of $1.5 million Business-type Activities • • • • Higley Road Waterline Replacement of $3.1 million Elliot Road District Park Recovery Well of $2.7 million Western Canal Force Main Repair of $1.7 million Blending Control for Wells 20 and 22 of $702 thousand 24 Table of Contents The following table presents capital asset balances, net of accumulated depreciation, for the fiscal years ended June 30, 2024 and 2023. Town of Gilbert Capital Assets (net of depreciation) Governmental Activities 2024 Land Nondepreciable water rights $ Business-type Activities 2023 159,855,162 $ 2024 146,430,538 $ Total 2023 25,565,804 $ 2024 24,188,051 $ 185,420,966 2023 $ 170,618,589 – – 65,898,010 65,898,010 65,898,010 65,898,010 Construction-in-progress 85,694,065 61,616,133 256,831,729 118,648,153 342,525,794 180,264,286 Buildings 204,603,709 198,680,268 – – 204,603,709 198,680,268 Improvements other than buildings 80,071,095 84,383,711 – – 80,071,095 84,383,711 Plant, machinery & equipment 37,870,682 33,108,306 47,727,904 51,959,870 85,598,586 85,068,176 Infrastructure 552,892,605 562,498,213 475,506,935 476,579,777 1,028,399,540 1,039,077,990 624,471 – – – 624,471 – 11,562,190 Right-to-use leased equipment Intangible right-to-use subscription assets 10,478,505 11,562,190 – – 10,478,505 Depreciable water rights – – 35,994,150 36,404,579 35,994,150 36,404,579 Total Capital Assets $ 1,132,090,294 $ 1,098,279,359 773,678,440 $ 2,039,614,826 $ 1,871,957,799 $ 907,524,532 $ Total governmental capital assets and business-type capital assets increased by $33.8 million and $133.8 million, respectively. The change in governmental capital assets can be attributed to the addition of land of $13.4 million, construction-in-progress of $76.1 million, buildings of $20.5 million, machinery and equipment of $9.9 million, infrastructure of $29.4 million, and intangible right-to-use subscription assets of $1.0 million. These were offset by construction-in-progress deletions of $52.0 million and depreciation taken of $66.6 million. Most of the increase for the business-type capital assets can be attributed to the addition of construction-in-progress of $148.2 million and infrastructure of $21.0 million, which were offset by depreciation taken of $30.7 million and construction-inprogress deletions of $10.0 million. See Note 6 on page 61 for further information regarding capital assets. Long-term Debt. At June 30, 2024, Gilbert had total bonded debt obligations of $311.1 million related to governmental activities and $562.3 million in business-type activities. Of the total debt outstanding, $258.1 million is general obligation (GO) bonds backed by the full faith and credit of Gilbert, $2.1 million is special assessment bonds secured by a lien against the land of the benefited property owners in Improvement Districts #19 and #20, all other outstanding debt is secured by pledges of specific revenue sources. The Arizona Constitution and state statutes limit a municipality’s bonded debt capacity to certain percentages of its limited property valuation and by the type of project to be constructed with GO bonds. For projects involving water, wastewater, artificial lighting, parks, open space, recreational facility improvements, streets, public safety, and fire and emergency facilities, Gilbert can issue GO bonds up to 20% of its limited property valuation. For any other general-purpose improvements, Gilbert may issue bonds up to 6% of its limited property valuation. Gilbert’s available debt margin at June 30, 2024, was $323.9 million in the 6% capacity and $803.6 million in the 20% capacity. See Note 9 on page 63 for additional information on debt. 25 Table of Contents The following schedule shows Gilbert’s outstanding debt as of June 30, 2024 and 2023. Town of Gilbert Outstanding Debt Governmental Activities 2024 General Obligation $ 258,130,000 Business-type Activities 2023 $ 279,935,000 2024 $ Total 2023 – $ 2024 – $ 258,130,000 2023 $ 279,935,000 Special Assessment 2,120,000 2,490,000 – – 2,120,000 2,490,000 Revenue Obligations 31,790,000 32,640,000 – – 31,790,000 32,640,000 Revenue Bonds Totals 19,095,000 $ 311,135,000 24,865,000 $ 339,930,000 562,285,000 $ 562,285,000 582,020,000 $ 582,020,000 581,380,000 $ 873,420,000 606,885,000 $ 921,950,000 Gilbert’s bonds are rated by leading rating agencies that assess the risk of default based on Gilbert’s financial condition. The following schedule shows Gilbert’s bond ratings as of June 30, 2024. Town of Gilbert Long-term Debt Ratings As of June 30, 2024 Moody's Investor Service Standard and Poors' Ratings Service Fitch Ratings General Obligation Aaa AAA AAA Public Facilities Municipal Property Corporation (Revenue Bonds) Aa1 AAA AAA Water Resources Municipal Property Corporation (Revenue Bonds) Not rated AAA AAA Revenue Obligations Aa1 AAA AAA Improvement Districts (Special Assessment) Aa1 AA- Not rated Economic Factors and Next Year’s Budget Gilbert continued to grow during fiscal year 2024, although growth is slowing as the inventory of available land declines. Gilbert citizens and businesses are continuing to receive high quality services as the Town focuses on making long-term quality of life decisions for the future. Inflation was a significant hurdle for many departments and some rates had to be adjusted to compensate for the changes in operational costs. Gilbert is also keeping a close eye on regional water discussions to ensure that our water portfolio and infrastructure are ready for the future. We want to ensure that a shortage at the river does not equal a shortage at the tap for our residents and businesses. We will also remain financially prepared to meet economic challenges that may arise as the economy evolves and potentially transitions into a slower growth or recessionary phase of the typical cycle. With a population of 292,711 residents, Gilbert is Arizona’s fifth largest city and has received many accolades. Cactus Yards was named Outstanding Park of the year again in 2024. Gilbert stands proud as the #2 Best Place to Raise a Family in Arizona (Niche, 2024) and the #2 Fastest Growing City in the U.S. (Ranking Arizona, 2024). Gilbert was also ranked the #1 Best City for Early Retirement (Smart Asset, 2022) and the #3 Healthiest Midsize Employer in Arizona (Phoenix Business Journal, 2023). From fiscal year 2013 to fiscal year 2023, private investment in Gilbert’s four employment areas exceeded over $1.35 billion. Science, technology, engineering and mathematics (STEM) and STEM related job growth has outpaced total job growth in the community over the last five years which represents a 24.0% increase for STEM/STEM related jobs compared to 12.0% total job growth (Lightcast, Inc., 2018-2023). Over the last five years, Gilbert has added 4.4 million square-feet of office, industrial/flex, and retail space to its inventory, representing an increase of 16.6%. (Costar, Q2 2019 – Q2 2024). 26 Table of Contents In fiscal year 2024, Gilbert’s economic development initiatives continued to yield positive results for the community. In the northwest employment area, SunCap Property Group completed construction of a new 120,000 square-foot building in support of Northrop Grumman’s continued investment in the community. In the central employment area, ATLAS initiated construction on a new 60,000 square-foot industrial facility in the Germann Road Employment Corridor and the Gateway employment area saw the completion of Phase I of Power Gateway 202, a 265,000 square-foot employment industrial park near the southwest corner of Warner and Power Roads. Longterm Gilbert based business resiliency efforts continued as well, with the Gilbert Town Council approving the creation of the Catalyst Business Resource Center, which will officially launch in fiscal year 2025 and provide a onestop location for Gilbert businesses to access valuable resources to help thrive in the community. Redevelopment efforts also saw significant advancements with Town Council approving a boundary for a new northwest Gilbert redevelopment area, which is the first step in this public process to focus on the northwest part of the community and support reinvestment that will ensure this important economic engine thrives for years to come. Discover Gilbert also had a big year, capped by hosting the LPGA Ford Championship in March 2024 at the Seville Golf and Country Club in Gilbert. Over the seven days of activity, there were approximately 4,735 unique visitors to the event with a total estimated visitor spending of $1.7 million over those seven days. A community of excellence demands exceptional governance. Gilbert undertakes a zero-based process for one third of the organization every year, and always applies priority, program, and performance-based approaches. Since 2018, over $4.4 million has been removed due to the zero-based efforts which was a decrease from the prior year accumulated amount of $7.6 million. Due to inflation, the cumulative zero-based savings reduced from the prior year. Directors are tasked with balancing the budget through consensus, rather than presenting requests and waiting to hear back. This helps build a leadership team that is working together and focused on outcomes that will best meet citizen needs. Only once the directors achieve consensus is the Town Manager presented with the recommended budget. This collaborative and teamwork-focused approach allows Gilbert to promote transparency, the importance of short- and long-term planning, and maintain a strong return on investment for the zero-based process while staying focused on the citizens and businesses that we all serve in different capacities. Additionally, Gilbert staff and Council align both short-term goals and resources toward the long-term realization of Gilbert’s established strategic initiatives: Strong Economy, Prosperous Community and Exceptional Built Environment. These strategic initiatives guide the formulation of organizational goals and corresponding budget for the following fiscal year. Council retreats, as well as the budget kickoff in September 2023, allow staff to initiate the process with clear direction and focus governing the priorities for service delivery in fiscal year 2025. Gilbert has a “City of the Future” initiative which focuses on maintaining community health in the coming decades by making strategic, future-focused decisions today. Use of performance management and data analytics help the Town make informed decisions on how to best meet citizen needs and prepare for the future. The budget for fiscal year 2025 reflects an effort to deliver both effective and efficient services to our community. Even given Gilbert’s growth, the budget is balanced, and applies the non-recurring level of construction-related revenues toward non-recurring costs. The adopted budget is based off conservative revenue estimates which provide flexibility in responding to possible economic volatility. Budget Highlights for Fiscal Year 2025 With carry forwards and contingency adjustments, the maximum budget of $2,344,218,800 was adopted for fiscal year 2025. Most of the increase from fiscal year 2024 is from increased activity in the Capital Improvement Program, especially related to the voter-approved transportation bond projects and additional water projects. The budget includes a capital projects contingency budget of $100 million to allow Council the flexibility and legal authority to respond to community needs. This contingency is consistent with practice in prior years. Tax Rates: The budget reflects a levy of $33.3 million which maintains the property tax rate of $0.98 per $100 of assessed value. Balanced Financial Plan: The fiscal year 2025 budget is balanced based upon identified revenues and expenditures. 27 Table of Contents Constitutional Expenditure Limit: The fiscal year 2025 budget reflects expenses that will be under the constitutional expenditure limitation. Staff regularly monitors conformity with the constitutional expenditure requirements and will recommend, if necessary, continuing adjustments and modifications necessary to comply with expenditure limitation requirements. The prior state-imposed expenditure limit was insufficient to cash fund necessary capital improvements. As such, two adjustments were included for voter consideration on the November 2023 General Election Ballot (permanent base adjustment and capital projects accumulation fund) with both passing. State Shared Revenues: The fiscal year 2025 budget reflects state shared revenues based upon Census population adjustments and statutory distribution formulas, taking into account currently projected State sales and income tax collections (provided by the Arizona League of Cities and Towns), which reflect the state’s budgeted HURF distributions. Fund Balance: The Revenue Summary in the Annual Budget lists the use of carry over funds in an amount of $1.2 billion. This reflects use of revenues which were received in prior fiscal years in excess of minimum fund balance. Unspent proceeds from the bonds sold in 2022 for both transportation and water related projects are included in this carry over number. Capital Project Financing – System Development Fees: The fiscal year 2025 budget reflects revenues projected from the continued collection of System Development Fees as allowed under current State Law. Financial Contact This financial report is designed to provide a general overview of Gilbert’s finances and to demonstrate accountability for the use of public funds. This report is also available on Gilbert’s website at www.gilbertaz.gov. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to: Town of Gilbert Tanya Wright, Financial Services Officer 50 East Civic Center Drive Gilbert, AZ 85296 (480)503-6000 28 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Net Position June 30, 2024 Component Unit Industrial Development Authority Primary Government Governmental Activities Assets Pooled cash and investments Restricted cash and investments Receivables, net Taxes Special assessments Accrued interest Restricted accrued interest Accounts Due from other governments Leases Prepaid items Deposits Inventories Internal balances Investment in joint venture Capital assets Non-depreciable Depreciable, net Total assets $ Deferred outflows of resources Deferred charge on refundings Pensions and other postemployment benefits Total deferred outflows of resources 665,873,373 6,499,349 Business-type Activities $ 666,175,303 11,317,046 Total $ 1,332,048,676 17,816,395 $ 17,186 – 21,493,991 2,113,877 2,694,356 – 12,630,600 5,864,855 15,531,615 6,552,693 50,000 1,246,269 1,475,277 1,974,872 – – 2,670,484 36,543 10,655,954 404,107 – 113,198 – 65,367 (1,475,277) 159,668,538 21,493,991 2,113,877 5,364,840 36,543 23,286,554 6,268,962 15,531,615 6,665,891 50,000 1,311,636 – 161,643,410 245,549,227 886,541,067 1,876,091,421 348,295,543 559,228,989 1,757,155,795 593,844,770 1,445,770,056 3,633,247,216 – – – – – – – – – – – – – – – 17,186 1,323,936 53,511,664 54,835,600 1,557,431 3,869,216 5,426,647 2,881,367 57,380,880 60,262,247 – – – Liabilities Accounts payable Accrued liabilities Judgements payable Claims payable Deposits held for others Utility deposits Bond interest payable Unearned revenue Noncurrent liabilities Due within one year Due in more than one year Total liabilities 28,827,998 7,730,111 1,611,245 12,560,000 2,083,628 – 683,103 21,364,928 33,611,741 610,790 – – – 2,023,716 2,116,906 21,321,619 62,439,739 8,340,901 1,611,245 12,560,000 2,083,628 2,023,716 2,800,009 42,686,547 – – – – – – – – 39,515,688 457,950,445 572,327,146 21,879,181 608,604,845 690,168,798 61,394,869 1,066,555,290 1,262,495,944 – – – Deferred inflows of resources Leases Pensions and other postemployment benefits Total deferred inflows of resources 15,430,477 5,562,158 20,992,635 – 1,074,736 1,074,736 15,430,477 6,636,894 22,067,371 – – – 933,340,392 644,115,990 1,577,456,382 – 102,733,819 2,208,797 6,099,276 11,258,550 1,434,232 1,331,298 1,693,628 277,507,248 1,337,607,240 9,950,411 – – – – – – 417,272,507 1,071,338,908 112,684,230 2,208,797 6,099,276 11,258,550 1,434,232 1,331,298 1,693,628 694,779,755 2,408,946,148 – – – – – – – 17,186 17,186 Net position Net investment in capital assets Restricted for Capital projects Court/police programs Debt service Highway and streets Other purposes Tourism Transportation Unrestricted Total net position $ The notes to financial statements are an integral part of this statement. 29 $ $ $ Table of Contents TOWN OF GILBERT, ARIZONA Statement of Activities For the Year Ended June 30, 2024 Program Revenues Functions/Programs Operating Grants and Contributions Charges for Services Expenses Capital Grants and Contributions Primary government Governmental activities General government Management and policy $ 42,529,033 Finance and management services $ 77,166 3,813,341 $ 2,719,676 $ – 21,788 – – Court 5,371,881 592,426 – – Development services 13,323,240 4,812,910 – – Police 95,543,636 3,018,850 2,484,130 5,221,214 Fire 61,582,326 7,434,600 3,077,769 1,419,267 Public safety Highways and streets 71,350,575 35,683 34,769,563 12,287,025 Parks and recreation 46,504,795 8,077,662 206,435 8,014,260 Transportation 1,047,456 – – 972,897 Non departmental 7,158,988 292,335 49,844 – Interest and fiscal charges on long-term debt 10,351,814 – – – 358,577,085 24,363,420 43,307,417 27,914,663 Water 86,878,800 74,046,397 2,431,331 21,828,529 Wastewater 42,031,775 43,098,034 293,294 3,780,410 Solid Waste 33,495,891 34,304,565 20,215 835,962 Total governmental activities Business-type activities Total business-type activities Total primary government 162,406,466 151,448,996 2,744,840 26,444,901 $ 520,983,551 $ 175,812,416 $ 46,052,257 $ 54,359,564 $ 10 $ – $ – $ – Component unit Industrial Development Authority General revenues and transfers Sales taxes Property taxes In-Lieu property taxes Franchise taxes Unrestricted state-shared revenue Grants and contributions not restricted to specific programs Investment income Gain on sale of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending The notes to financial statements are an integral part of this statement. 30 Table of Contents Net (Expense) Revenue and Changes in Net Position Primary Government Component Unit Business-type Activities Industrial Development Authority Governmental Activities $ Total (39,732,191) $ – (39,732,191) $ – (3,791,553) – $ (3,791,553) – (4,779,455) – (4,779,455) – (8,510,330) – (8,510,330) – (84,819,442) – (84,819,442) – (49,650,690) – (49,650,690) – (24,258,304) – (24,258,304) – (30,206,438) – (30,206,438) – (74,559) – (74,559) – (6,816,809) – (6,816,809) – (10,351,814) – (10,351,814) – (262,991,585) – (262,991,585) – – 11,427,457 11,427,457 – – 5,139,963 5,139,963 – – 1,664,851 1,664,851 – – 18,232,271 18,232,271 – (262,991,585) 18,232,271 (244,759,314) – $ $ (10) 156,171,430 – 156,171,430 – 34,006,483 – 34,006,483 – 1,089,079 – 1,089,079 – 2,704,393 – 2,704,393 – 114,537,943 – 114,537,943 – 101,202 – 101,202 – 31,840,195 33,953,799 65,793,994 92 150,621 122,201 272,822 – – 978,678 57,745 1,036,423 (19,955,545) 19,955,545 – – 321,624,479 54,089,290 375,713,769 92 58,632,894 72,321,561 130,954,455 82 1,278,974,346 999,017,347 2,277,991,693 17,104 1,337,607,240 $ 1,071,338,908 $ 2,408,946,148 $ 17,186 31 Table of Contents TOWN OF GILBERT, ARIZONA Balance Sheet Governmental Funds June 30, 2024 Streets Special Revenue General Assets Pooled cash and investments Restricted cash and investments Receivables, net Taxes Special assessments Accrued interest Accounts Due from other governments Lease Due from other funds Prepaid items Advances to other funds Total assets Liabilities Accounts payable Accrued liabilities Judgments payable Deposits held for others Due to other funds Interest payable Advances from other funds Unearned revenue Bonds payable Total liabilities $ $ $ 340,036,909 2,362,456 $ Streets and Traffic Capital Projects 10,818,389 – $ Parks Capital Projects 216,796,245 – $ 44,090,575 – 21,131,901 – 1,479,459 11,938,584 774,725 – – 45,475 – 2,121,474 – – 876,814 – – – – 178,326 – – 15,531,615 793,460 5,543,380 11,249,679 410,842,168 – – – – 12,985,338 – – – – 217,673,059 – – – – 44,268,901 8,901,952 7,415,310 – 2,083,628 – – – 1,090,952 – 19,491,842 $ $ 752,105 123,027 – – – – – – – 875,132 $ $ 8,017,400 – – – – – – – – 8,017,400 $ $ 3,351,885 – – – – – – – – 3,351,885 Deferred inflows of resources Unavailable revenue - sales tax Unavailable revenue - special assessments Unavailable revenue - court fines Unavailable revenue - grants Unavailable revenue - ambulance Deferred inflows related to leases Total deferred inflows of resources 57,929 – 5,614,931 – 1,321,356 15,430,477 22,424,693 – – – – – – – – – – – – – – – – – – – – – Fund balances (deficits) Nonspendable Restricted Assigned Unassigned Total fund balances (deficits) 16,793,059 2,179,464 175,530,719 174,422,391 368,925,633 – 12,110,206 – – 12,110,206 – 209,655,659 – – 209,655,659 – 40,917,016 – – 40,917,016 Total liabilities, deferred inflows of resources and fund balances (deficits) $ 410,842,168 The notes to financial statements are an integral part of this statement. 32 $ 12,985,338 $ 217,673,059 $ 44,268,901 Table of Contents Municipal Facilities Capital Projects $ $ $ $ Special Assessments Debt Service Debt Service 6,775,037 – $ 2,493,487 4,136,893 $ Other Governmental Funds 125,336 – $ 25,343,869 – Total Governmental Funds $ 646,479,847 6,499,349 – – 8,400 – – 275,605 – 11,184 – – – 2,113,877 507 – – 86,485 – 22,109 2,489 2,929,764 21,493,991 2,113,877 2,622,274 11,941,073 5,825,963 – – 1,009,313 – 7,792,750 – – – – 6,917,169 – – – – 2,239,720 – – – – 28,384,716 15,531,615 793,460 6,552,693 11,249,679 731,103,821 6,039,629 – – – – – 7,449,679 – – 13,489,308 $ $ – – 1,479,510 – – 683,103 – – 895,000 3,057,613 $ $ – – – – – – – – – – $ $ 910,237 125,469 131,735 – 793,460 – – 20,273,976 – 22,234,877 $ $ 27,973,208 7,663,806 1,611,245 2,083,628 793,460 683,103 7,449,679 21,364,928 895,000 70,518,057 – – – – – – – – – – – – – – – 2,113,839 – – – – 2,113,839 – – – 527,376 – – 527,376 57,929 2,113,839 5,614,931 527,376 1,321,356 15,430,477 25,065,908 1,009,313 2,085,267 – (8,791,138) (5,696,558) – 3,859,556 – – 3,859,556 – 125,881 – – 125,881 – 6,178,511 – (556,048) 5,622,463 17,802,372 277,111,560 175,530,719 165,075,205 635,519,856 7,792,750 $ 6,917,169 $ 2,239,720 $ 28,384,716 $ 731,103,821 Table of Contents 34 Table of Contents TOWN OF GILBERT, ARIZONA Reconciliation of Balance Sheet To the Statement of Net Position June 30, 2024 Fund balances of governmental funds $ 635,519,856 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. Governmental capital assets 2,204,577,105 Accumulated depreciation/amortization (1,073,969,841) 1,130,607,264 The investment in joint venture is not a financial resource and, therefore, is not reported in the funds. 1,974,872 Some receivables are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the governmental funds. 9,635,431 Internal service funds are used by management to charge the costs of certain activities, such as equipment maintenance, to the individual funds. The assets, deferred outflows, liabilities, and deferred inflows 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. 4,676,599 Deferred outflows and inflows of resources related to pensions, other postemployment benefits, and deferred charges on debt refundings are applicable to future reporting periods and, therefore, are not reported in the funds. Unamortized deferred outflow on bond refunding 1,323,936 Pension and other postemployment benefits-related items 47,684,264 49,008,200 Certain liabilities applicable to the Town's governmental activities are not due and payable in the current period, and accordingly are not reported as fund liabilities in the governmental funds balance sheet. Bonds payable (310,240,000) Bonds premium (28,574,999) Compensated absences (21,900,293) Leases (426,325) Subscription-based information technology arrangements (10,423,061) Net other postemployment benefits (549,630) Net pension (121,700,674) Net position of governmental activities - statement of net position The notes to financial statements are an integral part of this statement. 35 (493,814,982) $ 1,337,607,240 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2024 Streets Special Revenue General Revenues Taxes Sales Property Special assessments Franchise Licenses and permits Charges for services Intergovernmental Fines and forfeitures Other entities' participation $ System development fees Gifts and donations Interest earnings Net change in fair value of investments Miscellaneous Total revenues 155,711,223 – – 2,704,393 3,081,985 24,107,015 134,713,301 2,911,827 1,340,573 $ Streets and Traffic Capital Projects – – – – – – 20,805,401 2,274 – $ Parks Capital Projects – – – – – – 3,287,741 – – $ – – – – – – – – – – 203,748 12,884,966 2,411,952 722,584 340,793,567 – – 481,703 136,303 232,168 21,657,849 4,931,404 – 9,051,652 2,835,149 3,132 20,109,078 7,948,998 – 1,540,988 223,844 – 9,713,830 40,167,593 4,023,860 4,219,356 10,628,032 – – – – – – – – – – – – Expenditures Current General government Management and policy Finance and management services Court Development services Public safety Police Fire Highways and streets Parks and recreation Transportation Non departmental Debt service Principal Interest Fiscal and other charges Capital outlay Total expenditures 81,131,640 51,428,989 7,462,454 35,878,406 – 5,355,775 – – 20,899,338 – – – – – 73,660 – – – – – – 631,057 – – 2,150,104 355,686 – 9,578,066 252,379,961 – – – 57,347 20,956,685 – – – 53,392,445 53,466,105 – – – 8,097,085 8,728,142 Excess (deficiency) of revenues over expenditures 88,413,606 701,164 (33,357,027) 985,688 Other financing sources (uses) Transfers in Transfers out Leases Subscription-based information technology arrangements Proceeds from the sale of capital assets Total other financing sources (uses) 10,035,436 (50,368,045) 654,135 905,361 98,202 (38,674,911) – (1,836,055) – – 4,619 (1,831,436) 2,426,704 (6,865,459) – – – (4,438,755) 7,427,226 (2,873,419) – – – 4,553,807 49,738,695 319,186,938 368,925,633 (1,130,272) 13,240,478 12,110,206 $ (37,795,782) 247,451,441 209,655,659 $ 5,539,495 35,377,521 40,917,016 Net change in fund balances Fund balances - beginning Fund balances - ending $ The notes to financial statements are an integral part of this statement. 36 $ Table of Contents Municipal Facilities Capital Projects $ $ Special Assessments Debt Service Debt Service – – – – – – – – – 3,180,036 – 160,771 58,162 – 3,398,969 $ – 31,144,173 – – – – – – – – – 181,349 365,650 12,988 31,704,160 $ Other Governmental Funds – – 505,895 – – 2,223 – – – – – 4,667 632 – 513,417 $ 482,207 2,862,310 – – – 167,939 7,174,515 363,976 – – 88,403 565,779 78,621 638,927 12,422,677 Total Governmental Funds $ 156,193,430 34,006,483 505,895 2,704,393 3,081,985 24,277,177 165,980,958 3,278,077 1,340,573 16,060,438 292,151 24,871,875 6,110,313 1,609,799 440,313,547 – – – – – – – – – – – – 2,461,321 – 448,801 – 42,628,914 4,023,860 4,668,157 10,628,032 30,929 – – – – 489,365 – – – – – 1,479,510 – – – – – – 764,554 169,995 2,229,736 1,238,278 1,047,456 341,084 81,927,123 51,598,984 30,665,188 37,747,741 1,047,456 7,665,734 – – – 21,543,431 22,063,725 28,470,000 11,910,406 5,375 – 41,865,291 370,000 117,595 1,107 – 488,702 – – – 8,083,529 16,784,754 30,990,104 12,383,687 6,482 100,751,903 416,733,365 (18,664,756) (10,161,131) 24,715 (4,362,077) 23,580,182 18,116,256 (2,068,267) – – – 16,047,989 9,266,101 (5,790,756) – – – 3,475,345 – – – – – – 8,113,691 (5,489,948) – – – 2,623,743 55,385,414 (75,291,949) 654,135 905,361 102,821 (18,244,218) (2,616,767) (3,079,791) (5,696,558) $ (6,685,786) 10,545,342 3,859,556 $ (1,738,334) 7,360,797 5,622,463 $ 5,335,964 630,183,892 635,519,856 24,715 101,166 125,881 $ 37 Table of Contents 38 Table of Contents TOWN OF GILBERT, ARIZONA Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities For the Year Ended June 30, 2024 Net change in fund balances - total governmental funds $ 5,335,964 Amounts reported for governmental activities in the statement of net position are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation/amortization expense. Capital outlay 100,751,903 Depreciation/amortization expense (66,523,907) 34,227,996 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to decrease net position. (3,431,549) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is issued, whereas these amounts are amortized in the statement of activities. Leases incurred (654,135) Subscription-based information technology arrangements incurred (905,361) Principal repaid 30,990,104 Amortization of bond premium 2,479,667 Amortization of deferred charge on bond refunds (441,312) 31,468,963 Internal service funds are used by management to charge the costs of certain activities, such as equipment maintenance 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. (1,211,467) Capital assets contributed by developers are not shown on the governmental fund statements but are included in the assets of the Town. On the statement of activities, these donations are shown as capital contributions. 2,444,777 Compensated absence expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (742,370) Pension/OPEB contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the statement of net position because the reported net pension/OPEB liability is measured a year before the report date. Pension/OPEB expense, which is the change in the net pension/OPEB liability adjusted for changes in deferred outflows and inflows of resources related to pensions/OPEB, is reported in the statement of activities. Pension contributions 15,641,416 Pension/OPEB expense (26,069,544) (10,428,128) Certain revenues are not reported in the governmental funds because they do not provide current financial resources due to unavailability but are recognized as revenue in the statement of activities. However, other revenues in the governmental funds that provide current financial resources are not included in the statement of activities because they were recognized in a prior period. Special assessments (387,757) Court fines 79,127 Sales tax (22,000) Grants 338,469 Ambulance 1,321,356 Other (360,487) Change in net position of governmental activities - statement of activities 968,708 $ The notes to financial statements are an integral part of this statement. 39 58,632,894 Table of Contents TOWN OF GILBERT, ARIZONA General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues Taxes Sales $ 138,000,000 Franchise $ 138,000,000 $ 155,711,223 $ 17,711,223 2,350,000 2,350,000 2,704,393 354,393 Licenses and permits 2,610,000 2,610,000 3,081,985 471,985 Charges for services 23,879,900 23,879,900 24,107,015 227,115 Intergovernmental 127,345,300 127,345,300 134,713,301 7,368,001 Fines and forfeitures 2,510,000 2,510,000 2,911,827 401,827 Other entities' participation 7,899,000 7,899,000 1,340,573 (6,558,427) Gifts and donations 80,000 80,000 203,748 123,748 Interest earnings 695,000 695,000 12,705,502 12,010,502 Miscellaneous 556,000 556,000 722,584 166,584 305,925,200 305,925,200 338,202,151 32,276,951 Management and policy 43,192,920 44,744,550 40,167,593 4,576,957 Finance and management services 4,363,840 4,320,240 4,023,860 296,380 Court 3,852,750 4,300,440 4,219,356 81,084 Development services 10,828,600 11,124,780 10,628,032 496,748 Police 77,218,830 81,003,862 81,131,640 (127,778) Fire 50,877,900 52,177,220 51,428,989 748,231 Highways and streets 7,715,290 7,815,290 7,462,454 352,836 Parks and recreation 39,859,060 40,687,930 35,878,406 4,809,524 Non departmental Total revenues Expenditures Current General government Public safety 32,797,260 30,226,539 7,355,775 22,870,764 Capital outlay 9,412,200 36,001,450 8,018,570 27,982,880 Contingency 19,800,000 8,668,395 – 8,668,395 299,918,650 321,070,696 250,314,675 70,756,021 6,006,550 (15,145,496) 87,887,476 103,032,972 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in 2,190,960 10,202,236 10,035,436 (166,800) Transfers out (157,501,414) (158,501,414) (50,368,045) 108,133,369 Proceeds from the sale of capital assets – – 98,202 98,202 Total other financing sources (uses) (155,310,454) (148,299,178) (40,234,407) 108,064,771 (149,303,904) $ (163,444,674) 47,653,069 Net change in fund balances $ Explanation of difference between budgetary ending fund balance at June 30, 2024, and GAAP ending fund balance: Fair market value adjustments on investments are recorded on the GAAP basis but are not recognized on the budget basis 2,411,952 Contributions and interest related to the Arizona State Retirement System (ASRS) Contribution Prepayment Program (CPP) 2,179,464 Capital outlay related to leases and subscription-based information technology arrangements (1,559,496) Debt service principal and interest related to leases and subscription-based information technology arrangements (2,505,790) Other financing sources related to leases and subscription-based information technology arrangements 1,559,496 Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance The notes to financial statements are an integral part of this statement. 40 $ 49,738,695 $ 211,097,743 Table of Contents TOWN OF GILBERT, ARIZONA Streets Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Revenues Intergovernmental Fines and forfeitures Interest earnings Miscellaneous Total revenues $ 20,300,000 – 65,000 – 20,365,000 Expenditures Current Highways and streets Capital outlay Contingency Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers out Proceeds from the sale of capital assets Total other financing sources (uses) Net change in fund balances $ Non-GAAP Actual Final $ 20,300,000 – 65,000 – 20,365,000 $ 20,805,401 2,274 481,703 232,168 21,521,546 505,401 2,274 416,703 232,168 1,156,546 21,380,490 295,560 – 21,676,050 20,899,338 57,347 – 20,956,685 481,152 238,213 – 719,365 (924,520) (1,311,050) 564,861 1,875,911 (1,731,960) – (1,731,960) (1,836,055) – (1,836,055) (1,836,055) 4,619 (1,831,436) – 4,619 4,619 (2,656,480) $ (3,147,105) (1,266,575) $ Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 41 $ 20,530,190 259,330 500,000 21,289,520 Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: The notes to financial statements are an integral part of this statement. Variance with Final Budget Positive (Negative) 136,303 $ (1,130,272) 1,880,530 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Net Position Proprietary Funds June 30, 2024 Governmental Activities Business-type Activities - Enterprise Funds Water Wastewater Total Enterprise Funds Solid Waste Internal Service Funds Assets Current assets Pooled cash and investments $ Restricted cash and investments 550,243,671 $ 85,953,527 $ 29,978,105 $ 666,175,303 $ 19,393,526 8,281,887 3,035,159 – 11,317,046 – 2,220,520 317,256 132,708 2,670,484 72,082 – 36,543 – 36,543 – 6,637,353 1,899,038 2,119,563 10,655,954 689,527 404,107 – – 404,107 38,892 113,198 – – 113,198 – – – – – 50,000 Receivables, net Accrued interest Restricted accrued interest Accounts Due from other governments Prepaid items Deposits Inventories Total current assets 65,367 – – 65,367 1,246,269 567,966,103 91,241,523 32,230,376 691,438,002 21,490,296 66,408,388 93,260,150 – 159,668,538 – 901,456 Noncurrent assets Investment in joint venture Capital assets Non-depreciable 284,127,559 62,896,773 1,271,211 348,295,543 Depreciable, net 336,807,717 193,661,643 28,759,629 559,228,989 581,574 687,343,664 349,818,566 30,030,840 1,067,193,070 1,483,030 1,255,309,767 441,060,089 62,261,216 1,758,631,072 22,973,326 Total noncurrent assets Total assets Deferred outflows of resources Deferred charge on refundings 1,557,431 – – 1,557,431 – Pensions and other post-employment benefits 1,813,081 716,787 1,339,348 3,869,216 368,559 3,370,512 716,787 1,339,348 5,426,647 368,559 Accounts payable 27,800,704 4,789,301 1,021,736 33,611,741 854,790 Accrued liabilities 292,134 110,014 208,642 610,790 66,305 – – 1,500,000 1,500,000 2,300,000 Total deferred outflows of resources Liabilities Current liabilities Advances from other funds Unearned revenue Accrued compensated absences Claims payable 21,321,619 – – 21,321,619 – 566,923 248,982 348,276 1,164,181 98,994 – – – – 12,560,000 Bond interest payable 1,531,781 585,125 – 2,116,906 – Bonds payable 18,265,000 2,450,000 – 20,715,000 – Utility deposits 1,962,729 – 60,987 2,023,716 – 71,740,890 8,183,422 3,139,641 83,063,953 15,880,089 Utility revenue bonds payable 556,987,107 23,368,776 – 580,355,883 – Accrued compensated absences 1,090,122 489,817 635,345 2,215,284 177,322 Total current liabilities Noncurrent liabilities Net other post-employment benefits 57,996 21,861 44,883 124,740 12,667 12,141,147 4,800,943 8,966,848 25,908,938 2,467,168 570,276,372 28,681,397 9,647,076 608,604,845 2,657,157 642,017,262 36,864,819 12,786,717 691,668,798 18,537,246 503,063 197,599 374,074 1,074,736 103,317 503,063 197,599 374,074 1,074,736 103,317 385,498,895 228,604,458 30,012,637 644,115,990 1,434,523 878,470 9,071,941 – 9,950,411 – 229,782,589 167,038,059 20,427,136 417,247,784 3,266,799 50,439,773 1,071,314,185 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 24,723 Net pension liability Total noncurrent liabilities Total liabilities Deferred inflows of resources Pensions and other post-employment benefits Total deferred inflows of resources Net position Net investment in capital assets Restricted for capital projects Unrestricted Total net position $ 616,159,954 $ 404,714,458 $ Net position of business-type activities The notes to financial statements are an integral part of this statement. 42 $ 1,071,338,908 $ 4,701,322 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Business-type Activities - Enterprise Funds Water Wastewater Total Enterprise Funds Solid Waste Internal Service Funds Operating revenues Charges for services Intergovernmental Other Total operating revenues $ 74,046,397 2,431,331 48,966 76,526,694 $ 43,098,034 293,294 8,449 43,399,777 $ 34,304,565 20,215 330 34,325,110 $ 151,448,996 2,744,840 57,745 154,251,581 $ 46,151,563 438,432 1,909,146 48,499,141 Operating expenses General and administrative Personnel services Operation and maintenance Claims incurred Depreciation Allocation of indirect expenses Total operating expenses 2,562,373 12,694,358 24,230,186 – 20,833,759 3,454,860 63,775,536 1,519,259 6,947,951 15,573,249 – 15,257,138 1,829,080 41,126,677 2,106,922 11,525,639 12,993,038 – 4,480,932 2,390,360 33,496,891 6,188,554 31,167,948 52,796,473 – 40,571,829 7,674,300 138,399,104 8,406,304 3,390,181 8,830,472 30,111,677 93,008 – 50,831,642 12,751,158 2,273,100 828,219 15,852,477 (2,332,501) Interest expense Intergovernmental Interest earnings Net change in fair value of investments Gain (loss) on sale of capital assets Total nonoperating revenues (expenses) (22,545,328) 6,829,114 22,435,251 6,054,132 (325,679) 12,447,490 (827,025) – 3,404,500 820,999 32,550 3,431,024 – 211,250 1,071,829 167,088 71,079 1,521,246 (23,372,353) 7,040,364 26,911,580 7,042,219 (222,050) 17,399,760 – – 686,751 171,236 21,299 879,286 Income (loss) before contributions and transfers 25,198,648 5,704,124 2,349,465 33,252,237 (1,453,215) Capital contributions Transfers in Transfers out 14,999,415 20,000,000 (2,065,462) 3,780,410 1,973,462 – 624,712 104,095 (56,550) 19,404,537 22,077,557 (2,122,012) – – (49,010) Change in net position 58,132,601 11,457,996 3,021,722 72,612,319 (1,502,225) Total net position - beginning 558,027,353 393,256,462 47,418,051 998,701,866 6,203,547 50,439,773 1,071,314,185 Operating income (loss) Nonoperating revenues (expenses) Total net position - ending $ 616,159,954 $ 404,714,458 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Changes in net position of business-type activities The notes to financial statements are an integral part of this statement. 43 $ (290,758) 72,321,561 $ 4,701,322 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2024 Governmental Activities Business-type Activities - Enterprise Funds Water Wastewater Total Enterprise Funds Solid Waste Internal Service Funds Cash flows from operating activities Cash receipts from customers Other operating cash receipts Cash receipts from other funds for services Cash receipts from deposits Proceeds from intergovernmental agreements $ 72,379,387 231,966 – 29,976 2,959,809 $ 43,207,511 8,449 – – 293,294 $ 33,631,409 $ 330 – (3,190) 20,215 149,218,307 240,745 – 26,786 3,273,318 $ 419,072 1,909,146 45,890,228 – – Cash payments to suppliers for goods and services (25,101,581) (17,558,988) (15,687,548) (58,348,117) (45,279,878) Cash payments to employees for services Cash payments to other funds for services (11,834,987) (3,454,860) (6,312,884) (1,829,080) (10,880,794) (2,390,360) (29,028,665) (7,674,300) (3,133,244) – Net cash provided (used) by operating activities 35,209,710 17,808,302 4,690,062 57,708,074 (194,676) – 20,000,000 (2,065,462) – 1,973,462 – 1,500,000 104,095 (56,550) 1,500,000 22,077,557 (2,122,012) 1,000,000 – (49,010) 17,934,538 1,973,462 1,547,545 21,455,545 950,990 Acquisition and construction of capital assets Proceeds from intergovernmental agreements (118,336,158) 27,933,073 (21,654,817) – (4,217,875) 211,250 (144,208,850) 28,144,323 (781,170) – Acquisition and construction of investment in joint venture – (1,216,349) – (1,216,349) – Proceeds from development fees Cash paid for interest and fiscal charges Principal payments on bonds Proceeds from sale of capital assets 7,458,535 (24,759,162) (17,400,000) 17,136 1,838,009 (1,230,225) (2,335,000) 37,321 – – – 78,147 9,296,544 (25,989,387) (19,735,000) 132,604 – – – 21,299 Net cash provided (used) by capital and related financing (125,086,576) (24,561,061) (3,928,478) (153,576,115) (759,871) 27,669,849 4,079,562 1,169,818 32,919,229 828,657 27,669,849 4,079,562 1,169,818 32,919,229 828,657 Net increase (decrease) in cash and cash equivalents (44,272,479) (699,735) 3,478,947 (41,493,267) 825,100 Balances - beginning of year 602,798,037 89,688,421 26,499,158 718,985,616 18,568,426 Cash flows from noncapital financing activities Changes in advances from other funds Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities Cash flows from investing activities Investment income Net cash provided (used) by investing activities Balances - end of the year $ 558,525,558 $ The notes to financial statements are an integral part of this statement. 44 88,988,686 $ 29,978,105 $ 677,492,349 $ 19,393,526 Table of Contents Governmental Activities Business-type Activities - Enterprise Funds Water Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating Income Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources Accounts receivable Due from other governments Prepaid items Inventories Deferred outflows of resources Accounts payable Claims payable Deposits Accrued expenses Unearned revenue Other post-employment benefits Net pension liability Deferred inflows of resources Net cash provided (used) by operating activities $ 12,751,158 Wastewater $ 2,273,100 Total Enterprise Funds Solid Waste $ 828,219 $ 15,852,477 Internal Service Funds $ 20,833,759 15,257,138 4,480,932 40,571,829 $ (1,667,010) 528,478 588,614 2,451 260,203 1,099,913 – 29,976 294,173 183,000 (38,535) 252,892 90,638 35,209,710 $ 109,477 – 176,701 – 51,187 (643,181) – – 155,699 – (14,526) 398,470 44,237 17,808,302 $ (673,156) – – – 168,060 (587,588) – (3,190) 105,010 – (27,782) 327,681 71,876 4,690,062 $ (2,230,689) 528,478 765,315 2,451 479,450 (130,856) – 26,786 554,882 183,000 (80,843) 979,043 206,751 57,708,074 $ $ 7,540,880 1,942,401 624,712 (2,332,501) 93,008 (264,789) (15,906) – (164,891) 34,635 (93,534) 2,327,000 – 50,235 – (7,057) 156,908 22,216 (194,676) Schedule of non-cash capital and related financing activities Contributions of capital assets Purchase of machinery, equipment, and vehicles on account 25,289,039 $ 3,306,251 $ – $ 10,107,993 28,595,290 $ – – Table of Contents Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 The Town of Gilbert, Arizona (Gilbert) was incorporated on July 6, 1920, under the provisions of Article 13, Section 1 of the Constitution of the State of Arizona. Gilbert operates as a general law community, under the provisions of Title 9, Chapter 2, Article 3 (Common Council provision). Gilbert operates under the Council- Manager form of government, as empowered in Chapter 2, Article 2-51 of the Code of the Town of Gilbert, Arizona. There are seven members of the Council, elected to staggered four-year terms. The voters select the Mayor and the Council membership annually elects the Vice Mayor. Note 1 – Summary of Significant Accounting Policies Gilbert’s accounting policies conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity Gilbert’s operations include public safety (police, fire, ambulance transport, and animal control), parks and recreation (parks, recreation, library, culture and arts, and social services), highways and streets (street and rightof-way maintenance, traffic control, and transportation), development services (planning, code enforcement, and engineering), and general administration in support of operations. Gilbert also operates three enterprise funds to provide water, wastewater, and solid waste, and two internal service funds that provide equipment and fleet maintenance and employee self-insurance for medical, dental, workers’ compensation, and general liability claims. The accompanying financial statements present the activities of Gilbert (the primary government) and its component units. Component units are legally separate entities for which Gilbert is financially accountable. Blended component units, although legally separate entities, are in substance part of Gilbert’s operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the Town of Gilbert. Each blended and discretely presented component unit discussed below has a June 30 year-end. Blended Component Units – The Water Resources Municipal Property Corporation (Water MPC) is a legally separate, non-profit corporation. The Water MPC is an integral part of the Town of Gilbert and exists solely for the purpose of financing the construction or acquisition of water and wastewater capital improvement projects. The Public Facilities Municipal Property Corporation (Public Facilities MPC) is a legally separate, non-profit corporation which exists solely for the purpose of financing construction of municipal facilities. Each is considered a blended component unit because the Council appoints the five-member board of directors of each MPC, the Council must approve any amendments to the articles of incorporation of each MPC, the Council must approve any debt issues of each MPC, and each MPC provides services solely to the Town of Gilbert. At June 30, 2024, the Water MPC bonded debt is reported within the Water and Wastewater Funds and the Public Facilities MPC bonded debt is reported within the Debt Service Fund (current portion only) and within the governmental activities in the government-wide statement of net position. The SPARK App League (SPARK) is a legally separate, non-profit organization which exists solely for the purpose of driving invention and innovation in computer programming for Gilbert junior high and high school students. SPARK was created in 2012 and is the first mobile development contest, hosted in partnership with Arizona State University’s Ira A. Fulton Schools of Engineering, in collaboration with the Smithsonian’s Lemelson Center for the Study of Invention and Innovation, and sponsored by Waymo. The contest focuses on the thinking behind programming by helping teachers and students create a working video game while collaborating with teams. Students compete against each other in a two-day Game Jam. At June 30, 2024, the SPARK activity is reported within the Other Special Revenue funds in the Nonmajor Fund Financial Statements and within the governmental activities in the government-wide statement of net position. 47 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Discretely Presented Component Unit – The Industrial Development Authority (IDA) issues industrial revenue bonds to provide financial assistance to private sector entities for the acquisition and construction of eligible industrial and commercial facilities deemed to be in the public interest. The IDA is considered a component unit because the Council appoints the board of directors of the IDA, the Council must approve any amendments to the articles of incorporation of the IDA, and the Council must approve any debt issues of the IDA. The IDA is discretely presented in these combined financial statements because the IDA does not provide services solely to Gilbert. Separate financial statements for the IDA are prepared and presented to the IDA Board annually and can be found on Gilbert’s website. B. Jointly Governed Organizations Phoenix-Mesa Gateway Airport Authority (PMGAA) is a non-profit corporation established and funded by the Towns of Gilbert and Queen Creek, the Cities of Mesa, Phoenix, and Apache Junction, and the Gila River Indian Community. The purpose of the entity is the development of Phoenix-Mesa Gateway Airport. The airport has three runways, a passenger terminal and is positioned to be a reliever airport to Phoenix’s Sky Harbor International Airport. The Board of Directors consists of the mayors of the respective communities and the governor of the Gila River Indian Community. Gilbert contributed $350,000 in fiscal year 2024 to the PMGAA operating and capital budget. Regional Public Transportation Authority (RPTA) is a voluntary association of local governments, including Maricopa County, Chandler, Mesa, Tempe, Scottsdale, Glendale, Phoenix, and Gilbert. Its purpose is to create a regional public transportation plan for Maricopa County. The Board of Directors consists of the mayors of those municipalities and a member of the County Board of Supervisors. C. Government-wide and Fund Financial Statements The government-wide financial statements (Statement of Net Position and Statement of Activities) report on Gilbert and its component units 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. The government-wide Statement of Net Position reports all financial and capital resources of the government. It is displayed in a format of assets and deferred outflows of resources, less liabilities and 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 displayed in three components: 1) net investment in capital assets, 2) restricted and 3) unrestricted. Net investment in capital assets is capital assets net of accumulated depreciation, reduced by outstanding balances of any bonds, mortgages, notes, capital related accounts payable, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position has constraints placed on its use by either: 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation. All net position not otherwise classified as restricted, is shown as unrestricted. The government-wide Statement of Activities demonstrates the degree to which the direct expenses of the various functions or departments are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or department. Interest and fiscal charges on long-term debt are not allocated to the various functions. Program revenues include charges for services, fines and forfeitures, licenses and permit fees, special assessment fees, system development fees, intergovernmental grants and other entities participation. Taxes, investment earnings, and other revenues not identifiable with a particular function or department are included as general revenues. The general revenues support the net costs of the functions and departments not covered by program revenues. For the most part, the effect of internal activity has been removed from the government-wide financial statements. Net internal activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. However, certain charges between the enterprise funds’ utility systems and the various functional activities are not eliminated in the government-wide statements, as this would distort the direct costs and program revenues reported for the various functions concerned. 48 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Separate financial statements are provided for the governmental funds and proprietary funds. The focus of the fund financial statements is on major funds. Major individual governmental funds and proprietary funds are reported as separate columns in the fund financial statements. Other nonmajor governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in the combining statements included as supplementary information. The internal service funds, which provide services to the other funds of the government, are presented in a single combined column in the proprietary fund financial statements. Because the principal users of the internal service funds are the governmental activities, the assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are consolidated into the governmental activities column of the government-wide Statement of Net Position. The costs of the internal service fund services are spread to the appropriate function or department on the government-wide Statement of Activities. The revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling up effect from these revenues and expenses. D. Measurement Focus and Basis of Accounting The government-wide and proprietary fund statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become both measurable and available. Gilbert considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. Gilbert’s major revenue sources that are susceptible to accrual are property taxes, sales taxes, franchise taxes, licenses and permits, intergovernmental revenue and investment earnings associated with the current fiscal period. Charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenue when received as cash because they are generally not measurable until received. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgements, and compensated absences, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long-term debt, acquisitions under lease contracts, and subscription-based information technology arrangements are reported as other financing sources. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental activities column, a reconciliation is presented on the page following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide presentation. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of Gilbert’s enterprise funds are user fees and charges to customers for water, wastewater, and solid waste. Operating expenses for these funds include the cost of supplies and repair and maintenance, administrative and payroll expenses, and depreciation/ amortization. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The principal operating revenue of Gilbert’s internal service funds are charges to user departments for services provided. 49 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 E. Fund Accounting Gilbert uses funds to report its financial position and the results of its operations. Fund accounting segregates funds according to their intended purpose and is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, which includes assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues and expenditures/expenses. Gilbert uses the following fund categories, further divided by fund type: Governmental Funds Governmental funds are those through which most of the governmental functions are financed. The measurement focus is based upon determination of changes in financial position rather than upon net income determination. Gilbert reports the following major governmental funds: General – The General Fund is the primary operating fund and is used to account for all financial resources except those required to be accounted for in another fund. The General Fund will always be considered a major fund in the basic financial statements. Streets Special Revenue – The Streets Special Revenue Fund accounts for Gilbert’s portion of the Arizona Highway User Revenue Tax. The revenue is used exclusively for the maintenance and improvement of highways and streets. Streets and Traffic Capital Projects – The Streets and Traffic Capital Projects Fund accounts for the receipt of proceeds restricted or assigned for expenditure on street and traffic capital improvements. Proceeds recorded in this fund include general obligation bonds for street projects, roads and traffic system development fees collected from building permits, and state funds in accordance with the Maricopa Association of Governments Regional Transportation Plan approved by voters as Proposition 400. Parks Capital Projects – The Parks Capital Projects Fund accounts for the receipt of parks system development fees collected from building permits paid and the expenditure of those funds for parks capital improvements. Municipal Facilities Capital Projects – The Municipal Facilities Capital Projects Fund accounts for the receipt of proceeds restricted for expenditure on municipal facilities capital improvements. Proceeds recorded in this fund include general obligation bonds for municipal projects, police and fire SDFs, and previously collected general government SDFs from building permits. Debt Service – The Debt Service Fund accounts for the principal and interest requirements of general obligation, public facilities municipal property corporation revenue bonds, and revenue obligations not recorded in proprietary funds. Financing is provided from the levy of secondary property taxes and revenuesupported transfers. Special Assessments Debt Service – The Special Assessments Debt Service Fund accounts for the principal and interest requirements of special assessment bonds not recorded in proprietary funds. Financing is provided by special assessment levies against benefited property owners. 50 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Proprietary Funds Proprietary funds are used to account for Gilbert's ongoing activities which are similar to those found in the private sector, where cost-recovery and the determination of net income is useful or necessary for sound fiscal management. The measurement focus is based upon determination of net income, changes in net position, financial position and cash flows. Gilbert reports the following major proprietary funds: Water – The Water Fund accounts for the revenues and expenses from the operation and maintenance of the domestic water system. Wastewater – The Wastewater Fund accounts for the revenues and expenses from the operation of the sanitary wastewater collection and treatment and reclaimed water distribution system. Solid Waste – The Solid Waste Fund accounts for the revenues and expenses of operating the solid waste collection system and environmental compliance. Additionally, Gilbert reports the following fund type: Internal Service – The Internal Service Funds account for operations that provide services to other departments on a cost-reimbursement basis. These services include maintenance of Gilbert’s motorized equipment and self-insurance for property, liability, health, dental, and workers’ compensation insurance programs. F. Budgetary Data In December of each year, the Office of Management & Budget (OMB) prepares a revenue estimate based upon local and state-shared revenue forecasts, historic trends, economic indicators, anticipated growth, and year-todate revenue performance to develop guidelines for departments to follow in prioritizing budget requests. Simultaneously, departments develop operating budget requests and submit them to the OMB. Departments work with the Capital Improvement Program (CIP) Division to finalize project estimates for the CIP and submit them to the OMB for funding. Estimates for debt service, maintenance improvement districts, and internal service funds are prepared by respective departments and submitted to the OMB for review. In April, Council is presented with a working budget request for preliminary review and discussion and approves a schedule of hearings and dates for adoption of the budget. A public hearing is held in May for discussion and adoption of the preliminary budget. The preliminary budget sets the maximum legal expenditure limit for the upcoming year. A second public hearing is held in June for discussion and adoption of the final budget. The Council typically adopts the final tax levy in June and reports the levy amounts to Maricopa County for collection not later than the third Monday in August. On June 3, 1980, Arizona voters approved Arizona Constitution, Article IX, §20, prescribing an expenditure limitation for all local governments. The expenditure limitation’s purpose is to control expenditures of local revenues and limit future increases in spending to adjustments for inflation and population growth. Certain types of expenditures are excluded from the limitation. Article 9, Sections 20 and 21 of the Arizona Constitution require the Economic Estimates Commission to determine each year the expenditure limitation for the following fiscal year for each local government. The limitation is calculated based upon the amount of fiscal year 1979-80 actual payments of local revenues, referred to as the “base limit”. Each year, the base limits for local jurisdictions are adjusted for population and inflation to reach the current expenditure limitations. Gilbert’s fiscal year 2024 Expenditure Limitation was $544,824,047. Local governments may carry forward to future years’ revenues, which are not subject to the expenditure limitation and were not expended in the year of receipt. 51 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 The Council sets policy and adopts the annual budget at the fund level as a total amount of expenditures. Financial control is set by Council at the fund level, with budgetary control for operating performance administered at the departmental level. Budget adjustments for special revenue funds, excluding the Streets Special Revenue Fund, will be administered by the OMB and will not exceed the available revenues. Grants and restricted appropriations are administered by OMB. Directors may authorize transfers within non- personnel budget lines at the same fund, department, and project level while the Town Manager or his/her designee may authorize transfers between personnel and non-personnel budget lines within the same fund. The OMB Director or his/her designee is authorized to approve any adjustments between funds, projects, or contingency transactions up to $50,000. Council action is required to approve adjustments between funds, projects, or contingency transactions over $50,000. All annual appropriations lapse at year-end and are considered for inclusion in the subsequent year’s budget on a case-by-case basis. Gilbert prepares its budget on a basis generally consistent with GAAP, with certain exceptions such as long- term liability activity, capital outlay activity, depreciation expense, fair market value adjustments and developer contributions. Budgetary comparison statements for the General Fund and major special revenue funds are presented in the basic financial statements. These statements display original budget, amended budget, and actual results. Budgetary comparison schedules are also included as supplementary schedules for the other governmental funds. G. Pooled Cash and Investments Gilbert maintains pooled cash and investment accounts for funds that are not legally required to be maintained separately. Each fund's equity in pooled cash and investments represents that fund's position in the consolidated accounts and determines that fund's allocation of interest earned in the pool. The Arizona Revised Statutes require a pooled collateral program for public deposits and regulate the investment of surplus cash. Gilbert limits its investments to the Local Government Investment Pool (managed by the Arizona State Treasurer), U.S. government securities, certificates of deposit, bonds, repurchase agreements, corporate notes, asset-backed securities, commercial paper, and money market accounts. Investments are stated at fair market value. H. Inventories and Prepaid Items Inventories are recorded as assets when purchased and expensed when consumed. These inventories are valued at cost using the weighted average method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are recorded as expenses when consumed in the government-wide financial statements and fund financial statements. I. Capital Assets Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and similar assets), are defined as assets with an initial, individual cost of more than $10,000 and an estimated useful life greater than one year. All infrastructure, including infrastructure acquired prior to June 30, 1980, is reported. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets (including streets, water and wastewater lines installed by developers) are recorded at acquisition value. A gain or loss is recognized when assets are retired from service or otherwise disposed. 52 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend its life are not capitalized. Major improvements are capitalized and depreciated/amortized over the remaining useful lives of the related capital assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Capital assets are depreciated using the straight-line method based on the following estimated useful lives (land, certain water rights, and construction-in-progress are not depreciated): Buildings 10 to 50 years Improvements 5 to 30 years Infrastructure 3 to 80 years Machinery and equipment 2 to 25 years Water rights 80 to 100 years Intangible right-to-use assets are amortized over the shorter of the contract term or the useful life of the underlying assets. J. Deferred Outflows/Inflows of Resources On the government-wide and proprietary funds Statement of Net Position, deferred outflows of resources are reported and represent a consumption of net assets that applies to a future period and so will not be recognized as an outflow of resources (expenditure/expense) until then. Gilbert has two items that qualify for reporting in this category. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. A deferred charge on pension and other postemployment-related items results from the difference between expected and actual experience, changes in assumptions and other inputs, and changes in proportion and differences between Gilbert contributions and proportionate share of contributions. These amounts are deferred and will be recognized as an expenditure/expense in future periods. On the government-wide and proprietary funds Statement of Net Position, deferred inflows of resources are reported and represent an acquisition of net assets that applies to a future period and so will not be recognized as an inflow of resources (revenue) until then. Gilbert has two items that qualify for reporting in this category. A deferred inflow of pension and other postemployment-related items is reported for the net difference between projected and actual investment earnings on pension, changes in proportion and differences between Gilbert's proportionate share of contributions, and other postemployment plan investments. These amounts are amortized as an expenditure/expense in future periods. A deferred inflow for leases is reported for the fair value of lease receivables plus any payments received at or prior to the commencement of the lease term that relate to future periods. The amounts are deferred and will be recognized as revenue in future periods. On the governmental funds Balance Sheet, deferred inflows of resources are reported and represent an acquisition of net assets that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The governmental funds report unavailable revenues from several sources: special assessments, court fines, sales tax, grants, and other. These amounts are deferred and recognized as an inflow of resources in the period that the amount becomes available. K. Compensated Absences Compensated absences payable consists of vacation leave and a calculated amount of sick leave employees earned based on services already rendered. Vacation is based on a graduated scale of years of employment and is credited to each employee as it accrues. Vacation hours vary according to years of employment and job class, and are either taken as time off from work or paid to employees upon separation or retirement. Sick leave accumulated in excess of 520 hours (728 hours for fire personnel) is convertible annually to a partial cash benefit. Sick leave is convertible to a cash benefit upon retirement or death of the employee (at 100%) or upon resignation (at 50%) when the employee has ten or more years of service calculated at the current hourly rate of pay. 53 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 For the governmental funds, an expenditure for compensated absences is reported only if they have matured, for example, as a result of employee resignations and retirements. For the government-wide financial statements, as well as the proprietary fund financial statements, all of the outstanding compensated absences are recorded as a liability. L. Leases and subscription-based information technology arrangements Leases As lessee, the Town recognizes lease liabilities with an initial, individual value of $10,000 or more. The Town uses its estimated incremental borrowing rate to measure lease liabilities unless it can readily determine the interest rate implicit in the lease. The Town’s estimated incremental borrowing rate is based on the Daily Treasury Par Yield Curve Rates at the date of inception of the lease. As lessor, Gilbert recognizes lease receivables for building space, cell tower, license, and right-of-way use agreements as the primary types of lessor activities. As lessee, Gilbert recognizes a lease payable for a contract to work with a company to test, develop, and utilize a reduced carbon emissions fire apparatus. If there is no stated value in the lease contract (or if the stated rate is not the rate Gilbert charges the lessee) and the implicit rate cannot be determined, Gilbert uses its own estimated incremental borrowing rate based on the Daily Treasury Par Yield Curve Rate obtained from the U.S. Treasury as the discount rate to measure the lease receivables. Subscription-based information technology arrangements Gilbert recognizes subscription liabilities with an initial, individual value of $10,000 or more. Gilbert uses its estimated incremental borrowing rate to measure subscription liabilities unless it can readily determine the interest rate implicit in the arrangement. Gilbert’s estimated incremental borrowing rate is calculated as described above. M. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and 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, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as another financing source. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether withheld from the actual debt proceeds received, are reported as debt service expenditures. The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds that benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other longterm obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. 54 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 N. Postemployment Benefits For purposes of measuring the net pension and other postemployment benefits (OPEB) assets and liabilities, deferred outflows of resources and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense, information about the 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. Restricted Assets Certain bond proceeds, as well as certain resources set aside for their repayment, are classified as restricted on the Balance Sheet, or Statement of Net Position, because they are maintained separately, and their use is limited by applicable debt covenants. P. Fund Balance Classifications Fund balance classifications comprise a hierarchy based primarily on the extent to which Gilbert is bound to observe constraints imposed upon the use of the resources reported in the governmental funds. Nonspendable and Restricted fund balances represent the restricted classifications and Committed, Assigned, and Unassigned represent the unrestricted classifications. Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form such as inventory or (b) legally or contractually required to be maintained intact. Restricted fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed externally by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Committed fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed internally by formal action of the Council. Formal action by Council through resolution is required to establish, modify or rescind committed fund balance. Assigned fund balance includes amounts that are limited to specific purposes by management. Per the Policies of Responsible Financial Management, Council has authorized the Finance & Management Services Director to assign fund balance amounts to a specific purpose. 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 other governmental fund can report a negative unassigned fund balance. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, as a general rule, restricted resources are considered spent before unrestricted. Within unrestricted, committed amounts would be reduced first, followed by assigned amounts (if available) and then unassigned amounts. Q. Statement of Cash Flows A statement of cash flows classifies cash receipts and payments according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. For purposes of the statement of cash flows, all highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased are considered cash equivalents. R. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the amounts reported as assets, liabilities, and deferred outflows/inflows of resources and disclosure of contingent assets and liabilities at the date of the Statement of Net Position/Balance Sheet and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 55 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 S. Transactions Between Funds Transactions that would be recorded as revenues and expenditures/expenses if they involved entities external to the governmental unit are recorded as revenues and expenditures/expenses in the respective funds. Transactions constituting a reimbursement of a fund for expenditures/expenses originally recorded in that fund, but properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund, and as reductions of the expenditures/expenses in the fund which is reimbursed, excluding indirect administrative costs which are recorded as revenues and expenditures/expenses in the related funds. Indirect administrative expenses represent overhead costs which have been allocated to the enterprise funds based upon a formula approved with the budget. All other interfund transactions are reported as transfers. Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., short-term interfund loans due to timing differences) or “advances to/from other funds” (i.e., loans adopted by Council for a particular purpose). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in the applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. See Note 4 for further discussion of the interfund receivables/payables at June 30. T. Property Tax Gilbert's property tax levy is adopted by the Council each year and the County levies the taxes on or before the third Monday of August, based on the previous year's limited property value as of the lien date (January 1). Maricopa County, at no charge, levies, collects, and remits all property taxes. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent on November 1 and May 1, respectively. Public auctions of properties that have delinquent real estate taxes are held in February following the May 1 delinquency of the second installment. The purchaser is given a certificate of purchase, issued by the County Treasurer. Five years from the date of sale, the holder of a certificate of purchase, which has not been redeemed, may demand of the County Treasurer, a County Treasurer's Deed. Gilbert does not levy property taxes for general operations (primary tax). Secondary property taxes are levied solely for the purpose of retiring the principal, interest, and servicing fees on voter approved general obligation bonded indebtedness. State law requires municipalities to adopt a property tax levy based on the amount of scheduled and projected debt service for the year plus a reasonable amount for delinquencies and certain costs. For fiscal year 2024, Gilbert’s property tax rate is $0.98 per $100 of limited property value. Note 2 – Deposits and Investments The Arizona Revised Statutes require a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102% of the public deposits, less any applicable deposit insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. 56 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 The investment of public monies is also regulated by the Arizona Revised Statutes Title 35. Gilbert limits its investments to the Local Government Investment Pools 7 and 700 (that only invest in U.S. government securities and managed by the Arizona State Treasurer), U.S. government securities, certificates of deposit, bonds, corporate notes, asset-backed securities, commercial paper, and money market accounts. The State Board of Investment provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares, and the participant’s shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. Gilbert categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Investments categorized as Level 1 are valued using prices quoted in active markets for those investments. Investments categorized as Level 2 are valued based on significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. Gilbert had total investments of $1,341,783,266 at June 30, 2024. Gilbert categorizes certain investments within the fair value hierarchy established by generally accepted accounting principles as follows: Fair Value Measurement Using Investment Type Fair Value U.S. Government Treasuries $ 823,070,648 Level 1 $ Level 2 823,070,648 $ – U.S. Government Agencies 61,801,669 – 61,801,669 Federal Agency Collateralized Mortgage Obligations 57,122,562 – 57,122,562 Municipal Bonds 2,248,059 – 2,248,059 Corporate Notes 105,819,216 – 105,819,216 Commercial Paper 148,367,025 – 148,367,025 Asset Backed Securities 3,224,017 – 3,224,017 Money Market 75,217,564 – 75,217,564 Total Investments Categorized by Fair Value Level 1,276,870,760 $ 823,070,648 $ 453,800,112 External Investment Pools Measured at Fair Value State Treasurer's Investment Pool 64,912,506 Total Investments Measured at Fair Value $ 1,341,783,266 Interest rate risk – Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from rising interest rates, Gilbert’s investment policy limits its investment portfolio to maturities of five years or less. 57 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 At June 30, 2024, Gilbert’s investment maturities were as follows: Investment Maturities (in Years) Investment Type U.S. Government Treasuries Fair Value $ 823,070,648 Less than 1 $ 1-5 377,804,467 $ 445,266,181 U.S. Government Agencies 61,801,669 30,156,244 31,645,425 Federal Agency Collateralized Mortgage Obligations 57,122,562 – 57,122,562 Municipal Bonds 2,248,059 – 2,248,059 Corporate Notes 105,819,216 455,925 105,363,291 Commercial Paper 148,367,025 148,367,025 – Asset Backed Securities 3,224,017 – 3,224,017 State Treasurer's Investment Pool 64,912,506 37,106,262 27,806,244 Money Market 75,217,564 75,217,564 – Total $ 1,341,783,266 $ 669,107,487 $ 672,675,779 Credit risk – Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. Gilbert addresses credit risk through its investment policy by restricting the allowable investment instruments. As of June 30, 2024, the investments were rated as follows: U.S. Government Treasuries ranged from A-1+ to AA+, Federal Agencies AA+, Federal Agency Collateralized Mortgage Obligations AA+, Municipal Bonds AAA, Corporate Notes ranged from A- to AAA, Commercial Paper ranged from A-1 to A-1+, and Asset Backed Securities AAA. Gilbert’s investment in the State Treasurer’s Investment Pool did not receive a credit quality rating from a national rating agency. Custodial credit risk – deposits – Custodial credit risk is the risk that in the event of a bank failure, Gilbert’s deposits may not be returned. As of June 30, 2024, Gilbert’s bank balance with JP Morgan was $16,179,230 of which $15,929,230 was exposed to custodial credit risk. JP Morgan’s balance was uninsured but collateralized with securities held by the pledging financial institution’s trustee. These securities are not in Gilbert’s name, but cannot be released without Gilbert’s authorization. At the end of each day, a portion of Gilbert’s bank balance is transferred to a sweep investment account. Custodial credit risk – investments – The custodial credit risk for investments is the risk that, in the event of the failures of the counterparty (e.g. broker-dealer) to a transaction, Gilbert will not be able to recover the value of its investment or collateral securities that are in the possession of another party. Gilbert’s investment policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by Gilbert be conducted on a delivery-versus-payment basis. Securities are to be held by a third-party custodian. Gilbert’s investment in the State Treasurer’s Investment Pool represents a proportionate interest in the Pool’s portfolio; however, Gilbert’s portion is not identified with specific investments and is not subject to custodial credit risk. Concentration of credit risk – Gilbert’s investment policy limits corporate notes to 20% of total funds and 3% per issuer. As of June 30, 2024, of Gilbert’s investments, 65% were in U.S. Government Treasuries, 12% were in Commercial Paper, 8% were in Corporate Notes, 5% were in U.S. Government Agencies, 5% were in Federal Agency Collateralized Mortgage Obligations, and 5% were in the State Treasurer’s Investment Pool. 58 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Reconciliation of pooled cash and investments as reported on the Statement of Net Position: Primary government: Carrying amount of cash $ Carrying amount of deposits/investments 5,902,329 1,341,783,266 Cash held by ASRS related to CPP pension program Total cash and investments Pooled cash and investments 2,179,476 $ 1,349,865,071 $ 1,332,048,676 Restricted cash and investments 17,816,395 Total cash and investments $ 1,349,865,071 The Town has also had restricted cash and investments of $2,179,476 held by the ASRS pension plan, related to the CPP. The employer pension plan contributions prepaid by the Town and the related accrued earnings are managed at the discretion of ASRS. Note 3 – Taxes Receivable and Due from Other Governments The General Fund taxes receivable amount of $21,131,901 at June 30, 2024, includes $1,297,823 in state-shared sales tax and $19,834,078 in local sales tax. Amounts reported as due from other governments for governmental funds at June 30, 2024, are summarized as follows: General Fund Vehicle License Tax $ 529,720 Chandler Unified School District - school resource officers 217,474 Other intergovernmental 27,531 Total General Fund 774,725 Streets Special Revenue Fund Highway User Revenue Funds 2,121,474 Total Streets Special Revenue Fund 2,121,474 Nonmajor Funds Maricopa County Attorney's Office - Racketeer Influenced Corrupt Organization Funds 1,844,326 U.S. Department of Housing and Urban Development CDBG and HOME 819,142 Other grant reimbursements 266,296 Total Nonmajor Funds 2,929,764 Total Governmental Funds $ 59 5,825,963 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Amounts reported as due from other governments for proprietary funds at June 30, 2024, are summarized as follows: Water Fund City of Chandler - joint operation of SanTan Vista Water Treatment Plant $ 361,826 City of Chandler - cost share for capital project 34,660 Other intergovernmental 7,621 Total Enterprise Funds $ 404,107 $ 19,805 Internal Service Funds Chandler Unified School District - fuel charges Town of Queen Creek - vehicle repairs 19,087 Total Internal Service Funds $ 38,892 Note 4 – Interfund Receivables and Payables The composition of interfund balances as of June 30, 2024, is shown below. Due to/from other funds are short-term loans that cover cash deficits and are recorded in the following Governmental Funds (cash deficits are temporary until reimbursements are received): Due To General $ Due From 793,460 Other Governmental Funds $ – Total $ 793,460 – 793,460 $ 793,460 Advances to/from other funds are long-term loans that cover various purposes. The loan to the Municipal Facilities Capital Project fund is to cover cash deficits related to capital expenditures. The loan to the Solid Waste Fund and the Self-Insurance fund is to maintain the minimum fund balance while a rate study is being conducted and to offset an increase in the IBNR, respectively. Advances To Advances From Governmental Funds General $ Municipal Facilities Capital Projects Total Governmental Funds 11,249,679 $ – – 7,449,679 11,249,679 7,449,679 Proprietary Funds Solid Waste $ Self-Insurance – $ – 1,500,000 2,300,000 Total Proprietary Funds $ – $ 3,800,000 Total all Funds $ 11,249,679 $ 11,249,679 60 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 5 – Lease Receivables Gilbert leases building space, cell tower, parking spaces, and right-of-way use to third parties under the provisions of various agreements. Gilbert’s agreements that meet the definition of a lease according to GASB Statement No. 87, convey to its lessees the right to use certain assets that Gilbert owns in exchange-like transactions for consideration in amounts that are fixed in substance, other than short-term leases. Gilbert has various long-term lease agreements and therefore the total lease receivable balance at June 30, 2024, is not expected to be collected within the next year. During the fiscal year ended June 30, 2024, Gilbert recognized total lease-related revenues of $2,600,533. This was comprised of lease revenue of $2,295,812 and interest revenue of $304,721. Lease-related revenues are recorded as charges for service in the General Fund. Gilbert’s lease contracts include variable lease payments, that are not included in the lease receivable because they are not fixed in substance. During the fiscal year ended June 30, 2024, Gilbert recognized revenues of $3,122,357 for variable lease payments not included in the measurement of the lease receivables. Note 6 – Capital Assets A summary of changes in capital assets for governmental activities, for the fiscal year ended June 30, 2024, is as follows: July 1, 2023 Additions Deletions June 30, 2024 Non-depreciable assets: Land $ Construction-in-progress 146,430,538 $ 13,424,624 $ – $ 159,855,162 61,616,133 76,090,929 (52,012,997) 85,694,065 208,046,671 89,515,553 (52,012,997) 245,549,227 Buildings 372,344,694 20,539,513 – 392,884,207 Improvements other than buildings 147,137,508 1,424,249 – 148,561,757 Machinery and equipment 92,263,743 9,927,999 (1,626,960) 100,564,782 1,274,519,693 29,449,608 – 1,303,969,301 – 657,338 – 657,338 13,293,983 954,961 – 14,248,944 1,899,559,621 62,953,668 (1,626,960) 1,960,886,329 Buildings (173,664,426) (14,616,072) – (188,280,498) Improvements other than buildings (62,753,797) (5,736,865) – (68,490,662) Machinery and equipment (59,155,437) (5,137,249) 1,598,586 (62,694,100) Infrastructure (712,021,480) (39,055,216) – (751,076,696) – (32,867) – (32,867) Intangible right-to-use subscription assets (1,731,793) (2,038,646) – (3,770,439) Total accumulated depreciation/amortization (1,009,326,933) (66,616,915) 1,598,586 (1,074,345,262) 890,232,688 (3,663,247) (28,374) 886,541,067 (52,041,371) $ 1,132,090,294 Total non-depreciable assets Depreciable assets: Infrastructure Right-to-use leased equipment Intangible right-to-use subscription assets Total depreciable assets Less accumulated depreciation/amortization Right-to-use leased equipment Total depreciable assets, net Governmental activities capital assets, net $ 1,098,279,359 61 $ 85,852,306 $ Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Depreciation and amortization expense were charged to governmental functions in the government-wide financial statement as follows: Management and policy $ 4,001,496 Finance and management services 366,101 Legal and court 459,261 Development services 2,022,978 Police 4,908,973 Fire 5,612,225 Highways and streets 40,291,009 Parks and recreation 8,861,864 Total depreciation expense not including internal service funds 66,523,907 Capital assets held by Gilbert's internal service funds are charged to the various functions based on their usage of the assets 93,008 Total depreciation/amortization expense - governmental activities $ 66,616,915 A summary of changes in capital assets for business-type activities, for the fiscal year ended June 30, 2024, is as follows: July 1, 2023 Additions Deletions June 30, 2024 Non-depreciable assets: Land $ 24,188,051 $ 1,377,753 $ – $ 25,565,804 Water rights 65,898,010 – – 65,898,010 Construction-in-progress 118,648,153 148,195,432 (10,011,856) 256,831,729 208,734,214 149,573,185 (10,011,856) 348,295,543 Plant and equipment 156,864,738 3,996,036 (509,738) 160,351,036 Infrastructure 777,576,736 21,018,357 – 798,595,093 Water rights 40,354,519 – – 40,354,519 974,795,993 25,014,393 (509,738) 999,300,648 Plant and equipment (104,904,868) (8,217,021) 498,757 (112,623,132) Infrastructure (300,996,959) (22,091,199) – (323,088,158) Water rights (3,949,940) (410,429) – (4,360,369) Total accumulated depreciation (409,851,767) (30,718,649) 498,757 (440,071,659) Total depreciable assets, net 564,944,226 (5,704,256) (10,981) 559,228,989 (10,022,837) $ 907,524,532 Total non-depreciable assets Depreciable assets: Total depreciable assets Less accumulated depreciation: Business-type activities capital assets, net $ 773,678,440 62 $ 143,868,929 $ Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 7 – Construction-in-Progress and Commitments Governmental activities construction-in-progress and related construction commitments at June 30, 2024, were as follows: Constructionin-progress Redevelopment $ 3,951,284 Commitments $ 4,172,328 Municipal facilities 28,883,783 7,976,512 Streets & traffic 42,167,861 9,084,237 Parks 9,789,681 27,967,185 Fleet 901,456 437,295 Total $ 85,694,065 $ 49,637,557 Business-type activities construction-in-progress and related construction commitments at June 30, 2024, were as follows: Constructionin-progress Water system $ 204,131,415 Commitments $ 461,496,491 Wastewater system 51,429,103 19,763,192 Solid waste 1,271,211 517,751 Total $ 256,831,729 $ 481,777,434 Note 8 – Judgements Payable The final judgment in the class action property-related lawsuit known as Qasimyar vs. Maricopa County was entered on February 5, 2024. The judgement requires the County to issue all property tax refunds related to the case to the taxpayers by December 31, 2024. Gilbert’s portion of the judgement was $1,479,510 for secondary property tax and $131,735 for assessments on Street Light Improvement Districts plus 8.0% interest until paid. These amounts are reflected as Judgements Payable in the Debt Service Fund and Other Governmental Funds on the Governmental Funds Balance Sheet. It is expected that the liability will be paid in the next fiscal year. 63 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 9 – Long-Term Debt General Obligation Bonds Gilbert issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities, street improvements, transportation, and infrastructure-related improvements. One example is the Public Safety Training Facility. General obligation bonds have been issued for both governmental and businesstype activities. Currently, there are no outstanding general obligation bonds for business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of Gilbert.General obligation bonds outstanding at June 30, 2024, were as follows: Governmental 2017 General Obligation and General Obligation Refunding Bonds, Series 2017, 3.0% to 5.0%, original amount $121,670,000, annual retirements due July 1, 2017, through July 1, 2036 $ 39,945,000 2020 General Obligation and General Obligation Refunding Bonds, Series 2020, 2.0% to 4.0%, original amount $76,750,000, annual retirements due July 1, 2020, through July 1, 2039 46,910,000 2022 General Obligation Bonds, Series 2022 Bonds, 3.375% to 5.0%, original amount $188,910,000, annual retirements due July 15, 2023, through July 15, 2041 171,275,000 Total $ Annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Year Ending 2025 Principal $ 22,630,000 Interest $ 10,011,675 2026 25,440,000 8,832,600 2027 10,470,000 7,958,350 2028 10,980,000 7,446,600 2029 11,455,000 6,970,000 2030-34 65,785,000 26,339,050 2035-39 79,695,000 12,444,597 2040-42 31,675,000 1,750,240 Totals $ 258,130,000 64 $ 81,753,112 258,130,000 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for combined water, wastewater, electric, parks and open space, streets, and public safety purposes may not exceed 20% of Gilbert's net full cash (NFC) valuation, nor may outstanding general obligation bonded debt for all other purposes exceed 6% of Gilbert's NFC valuation. The following is a summary of legal borrowing capacity at June 30, 2024: Water, Wastewater, Electric, Streets, Fire, Police, and Parks and Open Space Special Purpose Bonds All Other General Obligation Bonds NFC - Assessed Valuation $ 5,398,512,772 NFC - Assessed Valuation $ 5,398,512,772 20% constitutional limit $ 1,079,702,554 6% constitutional limit $ 323,910,766 Less general obligation bonds outstanding (258,130,000) Less general obligation bonds outstanding – Less premium adjustment (17,939,159) Less premium adjustment – 803,633,395 Available 6% limitation borrowing capacity Available 20% limitation borrowing capacity $ $ 323,910,766 Special Assessment Bonds with Governmental Commitment As trustee for the improvement districts, Gilbert is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2024, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, were adequate for the scheduled maturities of the bonds payable and the related interest. Special assessment bonds are collateralized by properties within the districts. In the event of default by the owner, Gilbert may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. Gilbert is contingently liable for special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds outstanding at June 30, 2024, were as follows: Governmental 2002 Improvement District #19 Bonds, 5.2%, original amount $6,510,000, annual retirements due January 1, 2005, through January 1, 2027 $ 2009 Improvement District #20 Bonds, 5.1%, original amount $8,675,000, annual retirements due January 1, 2012, through January 1, 2029 Total 2,085,000 $ 65 35,000 2,120,000 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Annual debt service requirements to maturity for special assessment bonds are as follows: Governmental Activities Year Ending 2025 Principal $ 390,000 Interest $ 98,203 2026 405,000 77,918 2027 425,000 56,743 2028 440,000 34,680 2029 460,000 11,730 Totals $ 2,120,000 $ 279,274 Municipal Property Corporation (MPC) Revenue Bonds The Public Facilities MPC exists solely for the purpose of financing the cost of acquisition and construction of real property for public safety and parks and recreation facilities. The Water MPC exists solely for the purpose of financing the construction of water and wastewater capital improvement projects. Also, see Note 18 regarding Pledged Revenues. Municipal property corporation revenue bonds outstanding at June 30, 2024, were as follows: Governmental 2017 Public Facilities Municipal Property Corporation Revenue Refunding Bonds, 3.0% to 5.0%, original amount $43,075,000, annual retirements due July 1, 2018 through July 1, 2027 $ Business-Type 15,645,000 $ – 2017 Public Facilities Municipal Property Corporation Revenue Bonds, 4.0% to 5.0%, original amount $6,450,000, annual retirements due July 1, 2022 through July 1, 2027 3,450,000 – 2016 Water Resources Municipal Property Corporation, Senior Lien Utility System Revenue and Revenue Refunding Bonds, 2.25% to 5.0%, original amount $115,940,000, annual retirements due July 1, 2017 through July 1, 2036 – 76,830,000 2018 Water Resources Municipal Property Corporation, Senior Lien Utility System Revenue Bonds, 3.0% to 5.0%, original amount $37,460,000, annual retirements due July 1, 2018 through July 1, 2031 – 23,405,000 2022 Water Resources Municipal Property Corporation, Senior Lien Utility System Revenue Bonds, 4.0% to 5.0%, original amount $473,005,000, annual retirements due July 15, 2023 through July 15, 2047 – 462,050,000 Totals $ 66 19,095,000 $ 562,285,000 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Annual debt service requirements to maturity for MPC revenue bonds are as follows: Governmental Activities Year Ending 2025 Principal $ Business-type Activities Interest 6,055,000 $ Principal 954,750 $ Interest 20,715,000 $ 24,973,338 2026 6,360,000 652,000 21,760,000 23,911,463 2027 6,680,000 334,000 22,885,000 22,832,613 2028 – – 23,955,000 21,698,888 2029 – – 25,170,000 20,582,481 2030-2034 – – 135,835,000 84,408,200 2035-2039 – – 142,475,000 51,187,675 2040-2044 – – 136,830,000 18,475,400 2045-2048 – – 32,660,000 2,677,800 Totals $ 19,095,000 $ 1,940,750 $ 562,285,000 $ 270,747,858 University Revenue Obligations Bonds The University Revenue Obligations were issued specifically for the purpose of providing funds to design and construct a four-story building to be utilized for educational purposes. These obligations are payable solely from the revenues generated from excise taxes and state-shared revenue. Subordinate lien pledged revenue obligations outstanding at June 30, 2024, were as follows: Governmental Subordinate Lien Pledged Revenue Obligations, Series 2015, 3.0% to 5.0%, original amount $36,980,000, annual retirements due July 1, 2017 through July 1, 2045 $ 31,790,000 Annual debt service requirements to maturity for subordinate lien pledged revenue obligations are as follows: Governmental Activities Year Ending 2025 Principal $ 895,000 Interest $ 1,343,831 2026 935,000 1,298,081 2027 985,000 1,250,081 2028 1,035,000 1,199,581 2029 1,085,000 1,146,581 2030-2034 6,165,000 5,010,609 2035-2039 7,355,000 3,797,697 2040-2044 9,040,000 2,203,266 2045-2046 4,295,000 217,375 Totals $ 31,790,000 67 $ 17,467,102 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Leases Gilbert, as a lessee, has entered into a lease agreement involving an electric fire truck. The total of Gilbert’s lease assets are recorded at a cost of $657,338 less accumulated amortization of $32,867. The General Fund is used to pay the lease obligation. The future lease payments under lease agreements are as follows: Governmental Activities Year Ending 2025 Principal $ 209,311 2026 Totals Interest $ 15,689 217,014 $ 426,325 7,986 $ 23,675 Subscription-based Information Technology Arrangements Gilbert has obtained the right to use software primarily related to electronic control weapons and body worn cameras used by the police department, an enterprise resource planning software, and other software under the provisions of various subscription-based information technology arrangements. The total amount of subscription assets and the related accumulated amortization are as follows: Total intangible right-to-use subscription assets $ Less: accumulated amortization 14,248,944 (3,770,439) Carrying value $ 10,478,505 The following schedule details minimum subscription payments to maturity for the SBITAs liability at June 30, 2024 which are paid out of the General Fund: Year Ending 2025 Principal $ 1,769,459 Interest $ 291,322 2026 1,764,536 240,424 2027 1,814,580 190,381 2028 960,881 138,891 2029 987,141 112,630 3,126,464 172,850 2030-33 Totals $ 10,423,061 68 $ 1,146,498 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2024, was as follows: Balance July 1, 2023 Additions Reductions Balance June 30, 2024 Due Within One Year Governmental activities Bonds payable General obligation bonds $ 279,935,000 $ – $ (21,805,000) $ 258,130,000 $ 22,630,000 Special assessment bonds with government commitment 2,490,000 – (370,000) 2,120,000 390,000 Revenue bonds 24,865,000 – (5,770,000) 19,095,000 6,055,000 Revenue obligations 32,640,000 – (850,000) 31,790,000 895,000 Unamortized bond premium 31,054,666 – (2,479,667) 28,574,999 – Total bonds payable 370,984,666 – (31,274,667) 339,709,999 29,970,000 Compensated absences 21,400,567 14,069,867 (13,293,825) 22,176,609 7,566,918 – 654,135 (227,810) 426,325 209,311 11,439,995 905,361 (1,922,295) 10,423,061 1,769,459 920,946 – (358,649) 562,297 – 107,127,064 17,040,778 – 124,167,842 – Leases Subscriptions liabilities OPEB liability Net pension liability Total long-term liabilities $ 511,873,238 $ 32,670,141 $ (47,077,246) $ 497,466,133 $ 39,515,688 $ 582,020,000 $ – $ (19,735,000) $ 562,285,000 $ 20,715,000 Business-type activities Bonds payable Revenue bonds Unamortized bond premium 41,405,908 – (2,620,025) 38,785,883 – Total bonds payable 623,425,908 – (22,355,025) 601,070,883 20,715,000 Compensated absences 3,018,429 2,772,356 (2,411,320) 3,379,465 1,164,181 205,583 – (80,843) 124,740 – 24,929,895 979,043 – 25,908,938 – OPEB liability Net pension liability Total long-term liabilities $ 651,579,815 $ 3,751,399 $ (24,847,188) $ 630,484,026 $ 21,879,181 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At year-end, $276,316 of internal service funds compensated absences, $2,467,168 of net pension liability, and $12,667 of other postemployment benefits liability are included in the above amounts. Long-term compensated absences, other postemployment benefits, and the net pension liability of governmental activities are expected to be liquidated by the operating funds (primarily the General Fund and the Streets Special Revenue Fund) as they come due. Gilbert does not have any outstanding notes from direct borrowings or direct placements, no assets pledged as collateral for debt, nor any outstanding lines of credit. 69 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 10 – Risk Management Traditional Commercial Insurance Programs Gilbert operates with traditional commercial insurance programs to protect against major losses in cybercrime, property, public entity, storage tank, drone, and equipment liability. Administrative responsibility for the safety program resides with the Office of the Town Manager, and administrative responsibility for risk management (including education) resides with the Risk Management Division of the Town Attorney’s Office. Insurance is procured annually on a competitive quotation basis, using the services of an independent broker as a consultant. Risk Management processes all claims and evaluates their validity to determine if insurance reporting is warranted, or if the claim can be resolved administratively. Claims settled administratively, which are generally less than the deductibles of the appropriate policy, are paid from the funds where the claims occurred. During fiscal year 2024, there was no reduction in insurance coverage from prior years. Additionally, settlements and judgements have not exceeded insurance coverage during any of the last three fiscal years. Self-Insurance Gilbert established an Internal Service Fund to account for the Self-Insurance Trusts (Trusts), which finance the uninsured risk of loss related to medical, dental, workers' compensation, and general liability claims. The Trusts are overseen by the Health Trust Board, the Workers’ Compensation Trust Board, and the General Liability Trust Board. Gilbert purchases commercial stop loss insurance to limit the claims liability to the Trusts. The stop loss insurance provides reimbursement to the Trusts for medical claims incurred by an individual member in excess of $250,000 after an additional $150,000 aggregate plan risk retention, workers’ compensation claims in excess of $2,000,000 for presumptive loss claims and $750,000 per occurrence for other types of claims, and general liability claims in excess of $5,000,000 per occurrence. Premiums are paid into the Trusts by funds and are available to pay claims and administrative costs of the program and fund claim reserves. As with any risk retention program, Gilbert is contingently liable with respect to claims beyond those actuarially projected. The claims liability of $12,560,000 reported as claims payable in the Trusts at June 30, 2024, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Liabilities include an amount for claims that have been incurred but not reported (IBNR). 70 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Changes in the Trusts’ claim liability amount in fiscal years 2024 and 2023 were: Year Ended June 30, 2024 Beginning Balance Risk of Loss Health $ (23,719,820) $ 2,868,950 (1,372,519) 54,050 Workers' Compensation 4,863,000 3,828,936 (2,142,936) 6,549,000 General Liability 2,368,000 1,269,401 (549,401) 3,088,000 Health 23,683,770 $ $ 10,233,000 $ 30,111,676 $ (27,784,676) $ 12,560,000 $ 3,572,000 $ 23,096,037 $ (23,763,037) $ 2,905,000 Dental Workers' Compensation 96,000 1,284,071 (1,283,071) 97,000 3,701,518 2,835,268 (1,673,786) 4,863,000 General Liability Totals $ Ending Balance 1,329,569 Totals 2,905,000 Claim Payments 97,000 Dental 2023 Current Year Claims and Changes in Estimates – $ 7,369,518 2,807,154 $ 30,022,530 $ (439,154) 2,368,000 (27,159,048) $ 10,233,000 Note 11 – Pensions and Other Postemployment Benefits Gilbert contributes to the following pension and OPEB plans: • • • • • • Elected Officials Retirement Plan (EORP) Pension Arizona State Retirement System (ASRS) Pension ASRS Health Insurance Premium Supplement (OPEB) ASRS Long-Term Disability (OPEB) Public Safety Personnel Retirement System (PSPRS) Pension PSPRS Health Insurance Premium Benefit (OPEB) Gilbert also provides postemployment medical care, prescription drug, and dental care for retired employees through a single employer defined benefit medical and dental plan. The ASRS, PSPRS, and EORP OPEB plan information is not disclosed in detail in this note due to their relative insignificance to the financial statements. See Note 12 for information on Gilbert’s OPEB plan. The ASRS and PSPRS plans are component units of the State of Arizona. 71 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Pension and OPEB Statement of Net Position and Statement of Activities Governmental Activities Business-Type Activities $ $ Total Deferred Outflow of Resources OPEB - Town 81,588 18,099 $ 99,687 Pension - ASRS 11,267,629 3,851,117 15,118,746 Pension - PSPRS Fire 22,425,199 – 22,425,199 Pension - PSPRS Police 19,614,704 – 19,614,704 Pension - EORP 122,544 Total $ – 53,511,664 $ 562,297 $ 122,544 3,869,216 $ 124,740 $ 57,380,880 Liabilities OPEB - Town $ 687,037 Pension - ASRS 68,678,083 25,908,938 94,587,021 Pension - PSPRS Fire 24,991,427 – 24,991,427 Pension - PSPRS Police 29,864,616 – 29,864,616 633,716 – 633,716 Pension - EORP Total $ 124,730,139 $ 26,033,678 $ 150,763,817 $ 695,490 $ 154,289 $ 849,779 Deferred Inflow of Resources OPEB - Town Pension - ASRS 2,439,874 920,447 3,360,321 Pension - PSPRS Fire 1,982,672 – 1,982,672 444,122 – 444,122 Pension - EORP Total $ 5,562,158 $ $ (378,952) $ 1,074,736 $ 6,636,894 (86,227) $ (465,179) Pension/OPEB Expense OPEB - Town Pension - ASRS 11,920,414 4,151,223 16,071,637 Pension - PSPRS Fire 7,224,159 – 7,224,159 Pension - PSPRS Police 8,083,198 – 8,083,198 Pension - EORP (224,303) – (224,303) Total $ 26,624,516 $ 4,064,996 $ 30,689,512 Gilbert reported $15,641,416 of pension and OPEB contributions as expenditures in the governmental funds related to all pension plans to which it contributed for fiscal year 2024. 72 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 A. Arizona State Retirement System Plan Description – Gilbert employees not covered by the other pension plans described below participate in the ASRS. The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium supplement (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes financial statements and required supplementary information. This report is available on their website at www.azasrs.gov. 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: Years of service and age required to receive benefit Before July 1, 2011 On or After July 1, 2011 Sum of years and age equals 80 30 years, age 55 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 based on Benefit percent per year of service Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months 2.1% to 2.3% 2.1% to 2.3% * With actuarially reduced benefits. Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic costof-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 retirement benefit option chosen determines the survivor benefit. 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. Pursuant to Senate Bill 1082 and Arizona Revised Statute Title 38 § 737, the Arizona State Retirement System has implemented an innovative program for employers to voluntarily prepay future pension contribution obligations while maintaining future budget flexibility. The Contribution Prepayment Program (CPP) is a voluntary program available to ASRS employers. The CPP allows the Town to maintain budget flexibility by allowing employers to determine when to utilize the prepaid CPP balances (possibly during future economic downturns when budgets are more restricted). Employers may deposit a lump-sum payment to the ASRS which is credited with actual ASRS investment returns. Employers determine when, in the future, to utilize their prepaid contributions. Utilization occurs when an employer decides to offset their future contribution payments. Employers determine the length of time (amortization period) over which to utilize their prepaid contributions. Any pre-contributions made to the ASRS Trust pool will be invested pursuant to their investment policies and so there exists some risk to loss of principal. In fiscal year 2024, Gilbert contributed $2.2 million to the Contribution Prepayment Program. 73 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Contributions – In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2024, statute required active ASRS members to contribute at the actuarially determined rate of 12.29% (12.14% for retirement and 0.15% for long term disability) of the members’ annual covered payroll, and statute required Gilbert to contribute at the actuarially determined rate of 12.29% (12.03% for retirement, 0.11% for health insurance premium benefit, and 0.15% for long-term disability) of the members’ annual covered payroll. In addition, Gilbert was required by statute to contribute at the actuarially determined rate of 9.99% (9.94% for retirement and 0.05% for long-term disability) of annual covered payroll of retired members who worked for Gilbert in positions that an employee who contributes to the ASRS would typically fill. During fiscal year 2024, Gilbert paid for ASRS pension contributions as follows: 70% from the general fund, 27% from major funds, and 3% from other funds. The contributions to the pension plan for fiscal year 2024 were $10,115,314. Pension Liability – At June 30, 2024, Gilbert reported a liability of $94,587,021 for its proportionate share of the ASRS’ net pension liability. The net pension liability were measured as of June 30, 2023. The total liability used to calculate the net pension liability was determined using updated procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2022, to the measurement date of June 30, 2023. Gilbert’s proportion of the net pension liability was based on Gilbert’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2023. Gilbert’s proportion measured as of June 30, 2023, was 0.585%, which represents a slight increase of 0.029% from its proportion measured as of June 30, 2022. Gilbert’s reported liability at June 30, 2024, increased by $3,786,506 from the prior year liability of $90,800,515 because of changes in ASRS’ total net pension liability and Gilbert’s share of the net pension liability. The ASRS’ publicly available financial report provides details on the change in the net pension liability. The allocation of pension liability to the funds is based on employer contributions for the fiscal year. Pension Expense and Deferred Outflows/Inflows of Resources – For the year ended June 30, 2024, Gilbert recognized pension expense for ASRS of $16,071,637. At June 30, 2024, Gilbert reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Differences between expected and actual experience $ 2,137,289 Deferred Inflows of Resources $ – Changes in assumptions – – Net difference between projected and actual earnings on pension plan investments – 3,346,571 2,866,143 13,750 Changes in proportion and differences between Gilbert contributions and proportionate share of contributions Gilbert contributions subsequent to the measurement date Total 10,115,314 $ 15,118,746 – $ 3,360,321 The $10,115,314 reported as deferred outflows of resources related to ASRS pensions resulting from Gilbert’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2025. 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: 74 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Year Ending June 30 Amount 2025 $ 1,096,380 2026 (2,644,019) 2027 3,606,614 2028 (415,864) 2029 – Thereafter – Actuarial Assumptions – The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date June 30, 2022 Actuarial rollforward date June 30, 2023 Actuarial cost method Entry age normal Investment rate of return 7.0% Projected salary increases 2.9% - 8.4% Inflation 2.3% Permanent benefit increase Included Mortality rates 2017 SRA Scale U-MP Actuarial assumptions used in the June 30, 2022 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2020. The long-term expected rate of return on ASRS pension plan investments was determined to be 7.0% 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: Asset Class Target Allocation Long-Term Expected Geometric Real Rate of Return Public equity 44% 3.50% Credit 23% 5.90% Real estate 17% 5.90% Private equity 10% 6.70% Interest rate sensitive 6% 1.50% 100% 75 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Discount Rate – At June 30, 2023, the discount rate used to measure the ASRS total pension liability was 7.0%. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of Gilbert’s Proportionate Share of the ASRS Net Pension Liability to Changes in the Discount Rate – The following presents Gilbert’s proportionate share of the net pension liability calculated using the discount rate of 7.0%, as well as what Gilbert’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.0%) or 1 percentage point higher (8.0%) than the current rate: 1% Decrease (6.0%) Gilbert's proportionate share of the net pension liability $ 141,677,461 Current Discount Rate (7.0%) $ 94,587,021 1% Increase (8.0%) $ 55,321,919 Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. The report is available on the ASRS website at www.azasrs.gov. B. Public Safety Personnel Retirement System Plan Description – The PSPRS administers agent and cost-sharing multiple-employer defined benefit pension plans and agent multiple-employer defined benefit health insurance premium benefit (OPEB) plans. Gilbert public safety employees who are regularly assigned hazardous duty participate in the PSPRS or employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PSPDCRP). A nine-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. Employees who became PSPRS members on or after July 1, 2017, participate in the cost-sharing plans (PSPRS Tier 3 Risk Pool) which are not further disclosed because of their relative insignificance to Gilbert’s financial statements. The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report is available on their website at www.psprs.com. Benefits Provided – The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Retirement and disability benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: 76 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Initial Membership Date: On or after January 1, 2012 and before July 1, 2017 Before January 1, 2012 On or after July 1, 2017 Retirement and Disability: Years of service and age required to receive benefit 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 based on Highest 36 months of last 20 years Highest 60 months of last 20 years Highest 60 months of last 15 years Benefit percent Normal retirement 50% less 2.0% for each year 1.5% to 2.5% per year of credited service, not to exceed 80% of credited service less than 20 years OR plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% Accidental disability retirement 50% plus normal retirement, whichever is greater Catastrophic disability retirement 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Ordinary disability retirement Survivor Benefit: Retired members Active members Normal retirement calculated with actual years of credited service or 20 years of credited service, 80% to 100% of retired member's pension benefit 80% to 100% of accidental disability benefit or 100% of average monthly compensation if death was * With actuarially reduced benefits. Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50% of the member’s compensation for up to 12 months. Employees Covered by Benefit Terms – At June 30, 2024, the following employees were covered by the agent pension plan’s benefit terms: Police Fire Inactive employees or beneficiaries currently receiving benefits 109 40 Inactive employees entitled to but not yet receiving benefits 53 27 Active employees 163 134 325 201 Total 77 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 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, 2024, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active MemberPension Active MemberHealth GilbertPension GilbertHealth Police PSPRS Tier 1 7.65% 19.44% 0.37% PSPRS Tier 2 10.65% 19.44% 0.37% 14.42% 0.12% PSPRS Tier 3 Defined benefit only 8.69% 0.12% PSPRS Tier 3 Defined contribution only 10.60% 15.58% PSPRS Tier 1 7.65% 23.15% 0.35% PSPRS Tier 2 10.65% 23.15% 0.35% 16.62% 0.12% Fire PSPRS Tier 3 Defined benefit only 8.69% 0.12% PSPRS Tier 3 Defined contribution only 10.60% 17.78% In addition, the statute required Gilbert to contribute at the actuarially determined rate indicated above for employees participating in the PSPRS Tier 3 Risk Pool and PSPDCRP members in addition to Gilbert’s required contributions to the PSPRS Tier 3 Risk Pool and PSPDCRP. For the agent plans, actual contributions made to the pension plan for the year ended June 30, 2024, exceeded the annual pension cost due to an additional payment made towards the unfunded liability (100% from the General Fund): Police Pension contributions made $ 3,980,988 Fire $ 4,142,036 Pension Liability – At June 30, 2024, Gilbert reported $29,864,616 and $24,991,427 in net pension liabilities for PSPRS Police and Fire, respectively. The net pension liabilities were measured as of June 30, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. 78 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Actuarial Assumptions – The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date June 30, 2023 Actuarial cost method Entry age normal Investment rate of return 7.20% Wage inflation 3.0 - 6.25% Price inflation 2.5% Cost-of-living adjustment 1.85% Mortality rates PubS-2010 tables Actuarial assumptions used in the June 30, 2023, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2021. The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.2% using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Allocation Long-Term Expected Geometric Real Rate of Return U.S. Public Equity 24% 3.98% International public equity 16% 4.49% Global private equity 20% 7.28% Other assets (capital appreciation) 7% 4.49% Core bonds 6% 1.90% Private credit 20% 6.19% Diversifying strategies 5% 3.68% Cash 2% 0.69% Asset Class 100% Pension Discount Rates – At June 30, 2023, the discount rate used to measure total pension liability was 7.2%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 79 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Changes in the Agent Plans Net Pension Liability/(Asset) Increase / (Decrease) Police Total Pension Liability Balances at June 30, 2023 $ Plan Fiduciary Net Position 189,998,178 $ Net Pension Liability / (Asset) 168,434,161 $ 21,564,017 Changes for the year Service cost 4,301,964 – 4,301,964 Interest on the total pension liability 13,663,633 – 13,663,633 Differences between expected results and actual experience 9,177,297 – 9,177,297 Changes of assumptions – – – Contributions - employer – 4,480,117 (4,480,117) Contributions - employee – 1,705,844 (1,705,844) Net investment income – 12,760,073 (12,760,073) (9,054,910) (9,054,910) – Administrative expense – (78,538) 78,538 Tiers 1 & 2 Adjustments – (14,411) 14,411 Other – (10,790) 10,790 Benefit payments, including refunds of employee contributions Net changes 18,087,984 Balances at June 30, 2024 $ 208,086,162 9,787,385 $ 178,221,546 8,300,599 $ 29,864,616 Increase / (Decrease) Fire Total Pension Liability Balances at June 30, 2023 $ Plan Fiduciary Net Position 139,835,987 $ Net Pension Liability 121,722,541 $ 18,113,446 Changes for the year Service cost 4,182,713 – 4,182,713 Interest on the total pension liability 10,223,868 – 10,223,868 Differences between expected results and actual experience 9,378,715 – 9,378,715 Changes of assumptions – – – Contributions - employer – 6,112,737 (6,112,737) Contributions - employee – 1,522,036 (1,522,036) Net investment income – 9,474,106 (9,474,106) (4,041,079) (4,041,079) – Administrative expense – (43,518) 43,518 Tiers 1 & 2 Adjustments – (158,081) 158,081 Other – 35 (35) Benefit payments, including refunds of employee contributions Net changes 19,744,217 Balances at June 30, 2024 $ 80 159,580,204 12,866,236 $ 134,588,777 6,877,981 $ 24,991,427 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The following presents Gilbert’s net pension liability calculated using the discount rate of 7.2%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.2%) or 1 percentage point higher (8.2%) than the current rate: 1% Decrease (6.2%) Police net pension liability / (asset) $ 61,373,276 Fire net pension liability / (asset) Current Discount Rate (7.2%) $ 29,864,616 49,814,521 1% Increase (8.2%) $ 4,446,595 24,991,427 4,819,995 Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. The report is available on the PSPRS website at www.psprs.com. Pension Expense – For the year ended June 30, 2024, Gilbert recognized $8,083,198 as pension expense for Police and $7,224,159 as pension expense for Fire. Pension Deferred Outflows/Inflows of Resources – At June 30, 2023, Gilbert reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Police Differences between expected and actual experience $ 11,868,592 Deferred Inflows of Resources $ – Changes in assumptions or other inputs 2,002,138 – Net difference between projected and actual earnings on pension plan investments 1,762,986 – Gilbert contributions subsequent to the measurement date 3,980,988 – Total $ 19,614,704 $ Deferred Outflows of Resources Fire Differences between expected and actual experience $ 14,799,360 – Deferred Inflows of Resources $ 1,982,672 Changes in assumptions or other inputs 2,303,846 – Net difference between projected and actual earnings on pension plan investments 1,179,957 – Gilbert contributions subsequent to the measurement date 4,142,036 – Total $ 22,425,199 $ 1,982,672 The $3,980,988 for Police and the $4,142,036 for Fire reported as deferred outflows of resources related to PSPRS pension resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 81 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Year Ending June 30 2025 Police $ Fire 3,763,722 $ 2,946,939 2026 2,350,664 1,827,443 2027 6,979,407 5,289,935 2028 2,539,923 2,327,599 2029 – 2,568,759 Thereafter – 1,339,816 Note 12 – Postemployment Healthcare Benefits Under authority of Town Council, Gilbert provides postretirement insurance benefits, for certain retirees and their dependents in accordance with the Town of Gilbert, Arizona Self-Insured Trust Fund for Health Insurance Benefits. The plan is a single employer defined benefit OPEB plan administered by Gilbert. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. Generally, retiree contributions are used to pay for postemployment benefits. Benefits Provided – Gilbert provides postemployment medical care, prescription drug, and dental care for retired employees through a single-employer defined benefit medical and dental plan (the Plan). The Plan provides medical and dental benefits for eligible retirees, their spouses and dependents through Gilbert’s group health and dental insurance plans, which cover active and retired members. To be eligible for benefits, the retired employee must retire under one of the state retirement plans for public employees, must have a minimum of ten years of service with Gilbert, and be covered under Gilbert’s medical plan during their active status. Plan benefits and coverage levels are reviewed annually by Town staff and the Board of Trustees for recommendation to and approval from Town Council. The Board of Trustees makes corresponding premium recommendations to the Town Council based on revenues needed to cover the projected cost to operate the plan which are subject to approval by the Town Council. As of June 30, 2024, there were 50 retirees currently receiving medical and/or dental benefits. Contributions – Gilbert requires retirees to pay 125% of the premium of the plan selected by the retiree. Gilbert makes no contributions for retirees other than allowing them to participate through Gilbert’s pooled benefits. Town retirees are eligible to receive benefits through age 65, up until they have access to Medicare. By providing retirees access to Gilbert’s healthcare plans, Gilbert is in effect providing a subsidy to retirees. This implied subsidy exists because on average, retiree healthcare costs are higher than active employee healthcare costs. Gilbert pays for and reports retiree benefits on a pay-as-you-go basis, which is the practice of paying for these benefits as they become due each year. As of June 30, 2024, retirees contributed $575,582, which was in excess of claims paid by $318,754. Gilbert’s regular insurance providers underwrite the retiree policies. Retirees may not convert the benefit into an in-lieu payment to secure coverage under independent plans. The Plan does not issue a separate financial report. Employees Covered by Benefit Terms – The following employees were covered as of the effective date of the OPEB valuation: Inactive employees or beneficiaries currently receiving benefits 50 Inactive employees entitled to but not yet receiving benefits – Active employees 1,434 Total 1,484 Total OPEB Liability – The Plan’s total OPEB liability of $687,037 was measured as of June 30, 2024. 82 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Actuarial Assumptions and Other Inputs – Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the employer and plan members to that point. The total OPEB liability in the June 30, 2024 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Measurement date June 30, 2024 Actuarial valuation date June 30, 2023 Interest rate 3.97% Inflation rate 2.40% Projected salary increases 3.00% Health care cost trend rate Medical and prescription drug 19.85% graded down to an ultimate rate of 5.00% over 4 years Retiree contribution increase Consistent with medical/drug trends ASRS subsidy increases None The discount rate was based on the Fidelity General Obligation AA 20-year yield as of the measurement date. Mortality rates for active employees were based on the PubG.H-2010 (general employees) and PubS.H-2010 (public safety) Employee Mortality Table, Generational with Projection Scale MP-2021 for males/females. Mortality rates for retirees were based on the PubG.H-2010 (current retirees and general employees) PubS.H- 2010 (public safety) Healthy Retiree Mortality Table, Generational with Projection Scale MP-2021 for males/females. Changes in the Total OPEB Liability Balances at June 30, 2023 $ 1,126,529 Changes for the year Service cost 104,164 Interest 52,688 Differences between expected and actual experience (283,022) Changes in assumptions/inputs (21,591) Changes in benefit terms (560,598) Benefit payments 268,867 Net changes (439,492) Balances at June 30, 2024 $ 687,037 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate – The following presents the total OPEB liability of the Plan, as well as what the Plan’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: Current Discount Rate (3.97%) 1% Decrease (2.97%) Total OPEB Liability $ 662,176 83 $ 687,037 1% Increase (4.97%) $ 487,450 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates – The following presents the total OPEB liability of the Plan, as well as what the Plan’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current rate: Current Trend Rate 1% Decrease Total OPEB Liability $ 465,407 $ 687,037 1% Increase $ 772,124 OPEB Expense and Deferred Outflows/Inflows of Resource Related to OPEB – For the year ended June 30, 2024, the Plan recognized OPEB expense of ($465,179). At June 30, 2024, the Plan reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Differences between expected and actual experience $ 64,447 Changes in assumptions or other inputs Deferred Inflows of Resources $ 35,240 Total $ 99,687 644,574 205,205 $ 849,779 The amounts reported as deferred outflows of resources and inflows of resources will be recognized in pension expense as follows: Year Ending June 30 2025 Amount $ (314,297) 2026 (124,378) 2027 (122,104) 2028 (72,898) 2029 (72,898) Thereafter (43,515) 84 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 13 – Fund Balance Classifications of the Governmental Funds The fund balance classifications of the governmental funds as of June 30, 2024, were as follows: Major Capital Project Funds Fund Balances Streets Special Revenue General Streets & Traffic Major Debt Service Funds Municipal Facilities Parks Debt Service Special Assessments Other Gov't Total Nonspendable Advances – $ 11,249,679 – 6,552,693 – – 252,657,942 – 2,241,820 2,241,820 3,859,556 125,881 – 3,985,437 – – – – 12,110,206 – – – – 110,373 110,373 – – – – 719,123 719,123 – – – – – 77,385 77,385 – – – – – – 1,693,628 1,693,628 – – – – – – – 1,334,280 1,334,280 – – – – – – – 602 602 2,179,464 – – – – – – – 2,179,464 – – – – – – – 1,300 1,300 Capital replacement 33,416,177 – – – – – – – 33,416,177 Capital projects 132,851,550 – – – – – – – 132,851,550 9,253,146 – – – – – – – 9,253,146 9,846 – – – – – – – 9,846 174,422,391 – – – (8,791,138) – – (556,048) 165,075,205 125,881 $ 5,622,463 $635,519,856 Prepaid items $ 11,249,679 $ – $ – $ – $ – $ – $ – 5,543,380 – – – 1,009,313 – – Capital projects – – 209,655,659 40,917,016 2,085,267 – Court/public safety programs Debt service – – – – – – – – – – – Highways and streets – 12,110,206 – – Contract agreements – – – Settlement agreements – – – Parks & recreation programs Transportation – – – Tourism Special districts $ Restricted for ASRS CPP Other purposes Assigned to Highways and streets Mgmt and policy Unassigned Total fund balances $368,925,633 $ 12,110,206 $209,655,659 $ 40,917,016 $ (5,696,558) $ 3,859,556 $ It is Gilbert’s policy to maintain a minimum unrestricted fund balance of the General Fund of 90 days working capital of the current fiscal year, which is equal to approximately 25% of General Fund budgeted ongoing expenditures, plus one year’s worth of General Fund debt service payments. Note 14 – Capital Contributions During the year ended June 30, 2024, the enterprise funds external capital contributions consisted of the following: Water Contributions from developers $ Development fees Total Wastewater 7,540,880 $ 7,458,535 $ 14,999,415 85 1,942,401 Solid Waste $ 1,838,009 $ 3,780,410 Total 624,712 $ – $ 624,712 10,107,993 9,296,544 $ 19,404,537 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 15 – Interfund Transfers As of June 30, 2024, interfund transfers were as follows: Transfers In Transfers Out Governmental Funds General $ Streets Special Revenue 10,035,436 $ 50,368,045 – 1,836,055 Streets and Traffic Capital Projects 2,426,704 6,865,459 Parks Capital Projects 7,427,226 2,873,419 Municipal Facilities Capital Projects 18,116,256 2,068,267 Debt Service 9,266,101 5,790,756 Other Governmental Funds 8,113,691 5,489,948 Total Governmental Funds 55,385,414 75,291,949 Water 20,000,000 2,065,462 Wastewater 1,973,462 – Solid Waste 104,095 56,550 22,077,557 2,122,012 – 49,010 – 49,010 Enterprise Funds Total Enterprise Funds Internal Service Funds Self-Insurance Total Internal Service Funds Total Transfers $ 77,462,971 $ 77,462,971 The interfund transfers generally fall within one of the following categories: 1) transfers to cover debt service payments primarily from the General Fund to the Debt Service Fund; 2) transfers to fund capital project costs primarily from the General Fund and Capital Projects Funds to other Capital Projects Funds; 3) transfers from the General Fund to the Water SDF Fund to support Water SDF expenses not covered by the SDF revenue, or 4) charge for reclaimed water usage primarily from the Water Fund to the Wastewater Fund. There were no significant transfers during fiscal year 2024 that were either non-routine in nature or inconsistent with the activities of the fund making the transfer. Note 16 – Individual Fund Disclosures Individual funds with deficiencies in fund balance/net position at June 30, 2024, were as follows: Governmental funds Municipal Facilities Capital Projects $ 5,696,558 Grants 497,791 Other Capital Projects 58,257 86 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 The deficiency in the Municipal Facilities Capital Projects Fund, a major governmental fund, is primarily due to longterm loans that cover cash deficits for capital expenditures. Future system development fee revenue is expected to eliminate the deficiency. The deficiency in the Grants Fund, a non-major governmental fund, is primarily due to unavailable revenue related to various grants. Future grant revenue is expected to eliminate the deficiency. The deficiency in the Other Capital Projects Fund, a non-major governmental fund, is primarily due to the recording of retainage for capital projects. Future transfers are expected to eliminate the deficiency when the capital projects approach completion. Note 17 – Contingent Liabilities Gilbert is a defendant in various lawsuits. Although the outcomes of these lawsuits are not presently determinable, in the opinion of Gilbert’s legal counsel, the resolution of these matters will not have a material adverse effect on the financial condition of Gilbert. Note 18 – Pledged Revenues Gilbert has pledged future water system development fees revenue and future water and wastewater revenues, net of specified operating expenses, to repay $626,405,000 in utility system revenue and revenue refunding bonds issued since 2016. Proceeds from the utility system revenue bonds provided financing for water and wastewater system improvements, and the proceeds from the 2016 revenue refunding bonds were used to advance refund $75,326,000 of outstanding 2007 utility system revenue bonds. The bonds are payable from water and wastewater system development fees and water and wastewater net revenues and are payable through 2048. Principal and interest payments on the bonds are expected to require less than 38 percent of revenue described above. The total principal and interest remaining to be paid on the bonds is $833,032,856. Principal and interest paid for the current year was $45,920,088. Total water and wastewater system SDF revenue was $9,296,544 and water and wastewater net revenues were $93,637,849. Gilbert has pledged future excise taxes and state-shared revenues to repay $49,525,000 in public facilities municipal property corporation (MPC) revenue bonds issued since 2017; $43,075,000 in public facilities MPC revenue refunding bonds issued in 2017, and $6,450,000 in public facilities MPC revenue bonds issued in 2017. Proceeds from the 2017 revenue bonds provided financing of a fire and rescue station. Proceeds from the 2017 refunding bonds were used to advance refund $56,845,000 of outstanding 2009 public facilities MPC revenue bonds. The bonds are payable through 2027. In addition, Gilbert has pledged future excise taxes and state-shared revenues to repay $36,980,000 in revenue obligations issued in 2015. Proceeds from the obligations provided financing to design and construct a four-story building for educational purposes. Principal and interest payments on the bonds and obligations are expected to require less than 4 percent of excise taxes and state-shared revenues. The total principal and interest remaining to be paid on the bonds and obligations is $70,292,852. Principal and interest paid for the current year was $9,274,456, and the total excise taxes and state-shared revenues were $303,138,725. Note 19 – Investment in Joint Venture In fiscal year 2021, Gilbert, in joint effort with Mesa and Queen Creek, completed improvements as part of the Phase III Expansion for the Greenfield Water Reclamation Plant (GWRP) located on the northwest corner of Greenfield and Queen Creek Roads. This project included process improvements and upgrades to increase the plant’s capacity from 16 million gallons per day (mgd) to 30 mgd, as well as maintenance and improvements to the existing infrastructure of the plant. Mesa, Gilbert and Queen Creek participate in ownership of the plant and are charged for operating expenses based on gallons of flow. Gilbert’s investment in joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. 87 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Total investment (net of depreciation) as of June 30, 2024, was: Mesa's share $ 140,151,075 Gilbert's share 93,260,150 Queen Creek's share 27,269,007 Total $ 260,680,232 Gilbert and the City of Chandler entered into an agreement to build a joint water treatment plant to provide each with 24 mgd of water. The plant was completed in two phases with each phase providing 12 mgd to both Gilbert and Chandler. Phase I was completed in fiscal year 2009 and Phase II in fiscal year 2018. Gilbert’s investment in joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total investment (net of depreciation) as of June 30, 2024, was: Gilbert's share $ Chandler's share 66,408,388 60,132,728 Total $ 126,541,116 In August 2008, Gilbert entered into an Intergovernmental Agreement with the Cities of Mesa and Apache Junction, Superstition Fire & Medical (F&M), and the Town of Queen Creek (the Parties) to plan, design, construct, operate, maintain and finance the TOPAZ Regional Wireless Cooperative Network (Trunked Open Arizona Network – 700/800 MHz Network procured and built by the City of Mesa). On May 1, 2012 and October 26, 2015, Rio Verde Fire District (FD) and Fort McDowell Yavapai Nation (Fort McDowell), respectively, joined TOPAZ. The City of Mesa acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the network, in addition to providing all management personnel and financing arrangements. The Parties participate in ownership of the network and are charged for operating and capital expenses based on a six-month rolling average of airtime. Gilbert’s investment in joint venture is reflected within the governmental activities in the government-wide statement of net position. Separate financial statements are not prepared. Total investment (net of depreciation) as of June 30, 2024, was: Mesa's share $ Gilbert's share 6,118,794 1,974,872 Apache Junction's share 571,232 Queen Creek's share 199,648 Superstition F&M's share 169,686 Fort McDowell's share 60,270 Rio Verde FD's share 15,429 Total $ 9,109,931 Note 20 – Tax Abatements Gilbert has made a commitment as part of our economic development program to reimburse certain public improvement costs through transaction privilege taxes generated out of the respective development area. Additional information regarding this agreement may only be disclosed when a sufficient number of participants can be aggregated together. Gilbert has an insufficient number of participants within the development area to authorize such disclosure, as detailed information on such commitments is prohibited from disclosure under Arizona Revised Statute 42-2002 Disclosure of Confidential Information Prohibited. 88 Table of Contents TOWN OF GILBERT, ARIZONA NOTES TO THE FINANCIAL STATEMENTS June 30, 2024 Note 21 – Subsequent Event The Gilbert Town Council approved the increase of Gilbert’s sales tax, use tax, and bed tax rates, with the new rates going into effect January 1, 2025. With the new tax rate structure, Gilbert’s sales tax rate will increase from 1.5% to 2.0%. Use tax is paid for by residents and businesses when purchases are made online with out-of-state vendors who do less than $100K of sales in Arizona per year. Gilbert’s use tax rate will increase from 0% to 2.0%. Bed tax is paid for by travelers who rent accommodations in a hotel, motel, or other lodging in Gilbert. Gilbert’s bed tax rate will increase from 2.8% to 5.0%. 89 Table of Contents 90 Table of Contents REQUIRED SUPPLEMENTARY INFORMATION 91 Table of Contents 92 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System Fiscal Year 2024 Proportion of the net pension liability Proportionate share of the net pension liability 2023 0.58 % $ Covered payroll (1) 94,587,021 2022 0.56 % $ 79,341,485 90,800,515 2021 0.56 % $ 65,568,734 73,124,257 2020 0.52 % $ 62,344,498 90,610,769 0.52 % $ 55,508,515 75,693,697 52,965,805 Proportionate share of the net pension liability as a percentage of covered payroll 119 % 138 % 117 % 163 % 143 % Plan fiduciary net position as a percentage of the total pension liability 74.47 % 74.26 % 78.58 % 69.33 % 73.24 % Fiscal Year 2019 Proportion of the net pension liability Proportionate share of the net pension liability Covered payroll (1) 2018 0.49 % $ 69,364,217 49,511,839 2017 0.49 % $ 76,832,504 48,187,902 2016 0.49 % $ 78,813,297 45,764,166 2015 0.49 % $ 75,695,863 43,765,044 0.47 % $ 69,412,268 42,295,765 Proportionate share of the net pension liability as a percentage of covered payroll 140 % 159 % 172 % 172 % 164 % Plan fiduciary net position as a percentage of the total pension liability 73.40 % 69.92 % 67.06 % 68.35 % 69.49 % (1) The covered payroll amount will be as of the measurement date of the net pension liability. For fiscal year 2024, the measurement date of the net pension liability is June 30, 2023. 93 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System – Police 2024 Fiscal Year 2022 2023 2021 2020 Total pension liability Service cost $ Interest on the total pension liability 4,301,964 $ 4,152,107 $ 4,070,093 $ 4,166,829 $ 4,173,615 13,663,633 12,796,854 12,099,505 11,233,464 10,325,605 – – – – – Differences between expected and actual experience in the measurement of the total pension liability 9,177,297 3,763,762 97,134 3,349,250 1,313,900 Changes in assumptions or other inputs – 1,349,730 – – 3,858,110 Benefit payments, including refunds of employee contributions (9,054,910) (6,423,066) (7,168,987) (6,409,473) (4,223,688) Net change in total pension liability 18,087,984 15,639,387 9,097,745 12,340,070 15,447,542 Total pension liability - beginning 189,998,178 174,358,791 165,261,046 152,920,976 137,473,434 Total pension liability - ending (a) 208,086,162 189,998,178 174,358,791 165,261,046 152,920,976 4,480,117 5,239,645 19,610,018 25,390,957 7,682,173 Changes in benefit terms Plan fiduciary net position Contributions - employer Contributions - employee 1,705,844 1,728,667 1,581,158 1,845,450 1,487,218 Net investment income 12,760,073 (6,937,364) 36,645,254 1,512,207 5,637,557 Benefit payments, including refunds of employee contributions (9,054,910) (6,423,066) (7,168,987) (6,409,473) (4,223,688) Administrative expense (78,538) (125,217) (172,063) (123,284) (98,934) Tiers 1 & 2 Adjustment (14,411) – – – – Other changes (10,790) – – – – Net change in plan fiduciary net position 9,787,385 (6,517,335) 50,495,380 22,215,857 10,484,326 Plan fiduciary net position - beginning 168,434,161 174,951,496 124,456,116 103,632,748 93,189,007 Adjustment to beginning of year Plan fiduciary net position - ending (b) Net pension liability / (asset) - ending (a) (b) $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll (1) Gilbert's net pension liability / (asset) as a percentage of covered payroll – – – (1,392,489) (40,585) 178,221,546 168,434,161 174,951,496 124,456,116 103,632,748 29,864,616 $ 21,564,017 85.65 % $ 20,667,258 $ 88.65 % $ 18,498,054 144.50 % 116.57 % (592,705) $ 100.34 % $ 17,797,726 (3.33)% 40,804,930 $ 75.31 % $ 17,973,970 227.02 % 49,288,228 67.77 % $ 20,212,530 243.85 % (1) The covered payroll amount will be as of the measurement date of the net pension liability. For fiscal year 2024, the measurement date of the net pension liability is June 30, 2023. 94 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 2019 $ $ 2018 4,056,282 $ 4,361,408 $ 3,466,239 2016 $ 2015 3,570,214 $ 3,293,404 9,457,916 8,535,995 7,222,969 6,604,564 5,414,469 – 1,136,619 9,149,421 – 605,849 847,849 928,575 547,040 713,111 2,479,128 – 3,680,906 4,549,861 – 5,473,070 (5,340,286) (3,648,774) (3,515,621) (2,400,631) (2,087,138) 9,021,761 14,994,729 21,419,909 8,487,258 15,178,782 128,451,673 113,456,944 92,037,035 83,549,777 68,370,995 137,473,434 128,451,673 113,456,944 92,037,035 83,549,777 7,551,083 12,682,256 4,426,923 3,280,061 3,103,356 1,973,907 2,271,326 2,243,118 2,107,439 2,088,159 6,242,434 8,763,809 365,916 2,037,534 6,306,779 (5,340,286) (3,648,774) (3,515,621) (2,400,631) (2,087,138) (95,708) (77,945) (53,053) (50,099) (50,793) – – – – – 106,036 153,768 113,260 75,447 49,298 10,437,466 20,144,440 3,580,543 5,049,751 9,409,661 82,751,541 62,607,101 59,026,558 53,976,807 44,567,146 – – – – – 93,189,007 82,751,541 62,607,101 59,026,558 53,976,807 44,284,427 $ 67.79 % $ Fiscal Year 2017 18,572,542 238.44 % 45,700,132 $ 64.42 % $ 18,694,661 244.46 % 50,849,843 $ 55.18 % $ 19,247,567 264.19 % 33,010,477 $ 64.13 % $ 19,071,843 173.08 % 95 29,572,970 64.60 % $ 18,990,156 155.73 % Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System – Fire Fiscal Year 2024 2023 2022 2021 2020 Total pension liability Service cost $ Interest on the total pension liability 4,182,713 $ 3,888,663 $ 3,607,805 $ 3,696,610 $ 3,690,094 10,223,868 9,387,813 8,442,872 7,536,882 7,024,670 – – – – – Differences between expected and actual experience in the measurement of the total pension liability 9,378,715 2,203,529 3,168,376 3,919,493 (1,850,677) Changes in assumptions or other inputs – 804,047 – – 1,934,990 Changes in benefit terms Benefit payments, including refunds of employee contributions (4,041,079) (2,319,150) (2,791,898) (2,514,806) (2,462,421) Net change in total pension liability 19,744,217 13,964,902 12,427,155 12,638,179 8,336,656 Total pension liability - beginning 139,835,987 125,871,085 113,443,930 100,805,751 92,469,095 Total pension liability - ending (a) 159,580,204 139,835,987 125,871,085 113,443,930 100,805,751 Contributions - employer 6,112,737 3,792,437 5,838,307 11,097,287 3,866,247 Contributions - employee 1,522,036 1,388,147 1,341,353 1,297,110 1,241,407 Net investment income 9,474,106 (4,987,202) 26,646,654 1,130,134 4,444,022 Benefit payments, including refunds of employee contributions (4,041,079) (2,319,150) (2,791,898) (2,514,806) (2,462,421) Administrative expense (43,518) (89,964) (125,013) (92,147) (78,196) Tiers 1 & 2 Adjustment (158,081) – – – – 35 – – – – Plan fiduciary net position Other changes Net change in plan fiduciary net position 12,866,236 (2,215,732) 30,909,403 10,917,578 7,011,059 Plan fiduciary net position - beginning 121,722,541 123,938,273 93,028,870 82,657,955 75,671,432 – – (546,663) (24,536) 134,588,777 121,722,541 123,938,273 93,028,870 82,657,955 Adjustment to beginning of year Plan fiduciary net position - ending (b) Net pension liability - ending (a) - (b) $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll (1) Gilbert's net pension liability as a percentage of covered payroll 24,991,427 $ 18,113,446 84.34 % $ 18,437,853 $ 87.05 % $ 16,768,912 135.54 % 108.02 % 1,932,812 $ 98.46 % $ 16,301,459 11.86 % 20,415,060 $ 82.00 % $ 15,790,177 129.29 % 18,147,796 82.00 % $ 16,590,770 109.38 % (1) The covered payroll amount will be as of the measurement date of the net pension liability. For fiscal year 2024, the measurement date of the net pension liability is June 30, 2023. 96 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Fiscal Year 2019 $ $ 2018 3,661,929 $ 3,652,130 $ 2016 2,728,554 $ 2015 2,785,128 $ 2,545,607 6,428,184 5,586,910 4,550,994 4,138,400 3,408,433 – 434,841 7,610,545 – (131,651) (1,694,618) 3,761,967 (1,091,858) (1,235,512) 2,247,902 – 444,609 3,069,903 – 1,333,403 (1,925,561) (1,094,738) (529,722) (277,805) (171,217) 6,469,934 12,785,719 16,338,416 5,410,211 9,232,477 85,999,161 73,213,442 56,875,026 51,464,815 42,232,338 92,469,095 85,999,161 73,213,442 56,875,026 51,464,815 5,035,275 5,192,069 3,183,837 1,845,382 1,954,145 1,365,916 1,860,471 1,792,809 1,903,578 1,667,772 4,953,004 6,959,055 300,260 1,653,304 5,045,090 (1,925,561) (1,094,738) (529,722) (277,805) (171,217) (76,084) (61,976) (43,606) (40,728) (40,631) – – – – – 7,224 636 96,335 (229,513) – 9,359,774 12,855,517 4,799,913 4,854,218 8,455,159 66,311,658 53,456,141 48,656,228 43,802,010 35,346,851 – – – – – 75,671,432 66,311,658 53,456,141 48,656,228 43,802,010 16,797,663 $ 81.83 % $ 2017 16,176,854 103.84 % 19,687,503 $ 77.11 % $ 16,132,031 122.04 % 19,757,301 $ 73.01 % $ 15,444,728 127.92 % 8,218,798 $ 85.55 % $ 15,274,115 53.81 % 97 7,662,805 85.11 % $ 15,508,151 49.41 % Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of Pension Contributions Arizona State Retirement System 2024 Actuarially determined contribution $ Contributions in relation to the actuarially determined contributions Fiscal Year 2022 2023 10,115,314 $ 9,457,505 10,115,314 $ 9,457,505 7,874,805 2021 $ 7,874,805 2020 7,263,134 $ 7,263,134 6,355,725 6,355,725 Contribution deficiency (excess) $ – $ – $ – $ – $ – Covered payroll $ 82,305,240 $ 79,341,485 $ 65,568,734 $ 62,344,498 $ 55,508,515 Contributions as a percentage of covered payroll 12.29 % 11.92 % 2019 Actuarially determined contribution $ Contributions in relation to the actuarially determined contributions 12.01 % Fiscal Year 2017 2018 5,921,577 $ 5,338,739 5,921,577 11.65 % $ 5,338,739 5,187,460 11.45 % 2016 $ 5,187,460 2015 5,278,569 $ 5,278,569 5,137,457 5,137,457 Contribution deficiency (excess) $ – $ – $ – $ – $ – Covered payroll $ 52,965,805 $ 49,511,839 $ 48,187,902 $ 45,764,166 $ 43,765,044 Contributions as a percentage of covered payroll 11.18 % 10.78 % 98 10.77 % 11.53 % 11.74 % Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of Pension Contributions Public Safety Retirement System – Police 2024 Actuarially determined contribution $ Contributions in related to the actuarially determined contributions 3,810,988 Fiscal Year 2022 2023 $ 4,009,448 3,980,988 $ 4,009,448 4,446,932 2021 $ 4,446,932 5,652,558 2020 $ 18,652,558 5,649,219 20,376,341 Contribution deficiency (excess) $ (170,000) $ – $ – $ (13,000,000) $ (14,727,122) Covered payroll $ 19,603,849 $ 20,667,258 $ 18,498,054 $ 17,797,726 $ 17,973,970 Contributions as a percentage of covered payroll 20.31 % 19.40 % 2019 Actuarially determined contribution $ Contributions in related to the actuarially determined contributions 6,410,919 24.04 % Fiscal Year 2017 2018 $ 6,170,252 11,245,894 104.80 % $ 7,330,436 4,501,937 113.37 % 2016 $ 12,700,837 4,021,770 2015 $ 4,449,337 3,414,607 3,414,607 Contribution deficiency (excess) $ (4,834,975) $ (1,160,184) $ (8,198,900) $ (427,567) $ – Covered payroll $ 20,212,530 $ 18,572,542 $ 18,694,661 $ 19,247,567 $ 19,071,843 Contributions as a percentage of covered payroll 55.64 % 39.47 % 67.94 % 23.12 % 17.90 % Public Safety Retirement System – Fire 2024 Actuarially determined contribution $ Contributions in related to the actuarially determined contributions 3,972,036 Fiscal Year 2022 2023 $ 3,958,607 4,142,036 $ 5,760,518 3,513,087 2021 $ 3,513,087 3,715,102 2020 $ 5,715,102 3,495,945 6,652,405 Contribution deficiency (excess) $ (170,000) $ (1,801,911) $ – $ (2,000,000) $ (3,156,460) Covered payroll $ 17,157,824 $ 18,437,853 $ 16,768,912 $ 16,301,459 $ 15,790,177 Contributions as a percentage of covered payroll 24.14 % 31.24 % 2019 Actuarially determined contribution $ Contributions in related to the actuarially determined contributions 4,009,743 20.95 % Fiscal Year 2017 2018 $ 4,644,867 7,556,014 35.06 % $ 5,096,285 3,266,367 42.13 % 2016 $ 5,307,483 2,241,688 2015 $ 3,088,477 1,982,159 1,982,159 Contribution deficiency (excess) $ (3,546,271) $ (451,418) $ (2,041,116) $ (846,789) $ – Covered payroll $ 16,590,770 $ 16,176,854 $ 16,132,031 $ 15,444,728 $ 15,274,115 Contributions as a percentage of covered payroll 45.54 % 31.50 % 99 32.90 % 20.00 % 12.98 % Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Schedule of Changes in the Town’s Total OPEB Liability and Related Ratios: Town of Gilbert Defined Benefit Plan Fiscal Year 2024 2023 2022 2021 2020 Total OPEB liability Service cost $ Interest on the total OPEB liability 104,164 $ 85,927 $ 101,360 $ 88,914 $ 69,208 52,688 45,046 23,174 22,369 17,841 Changes of benefit terms (560,598) — — — — Differences between expected and actual experience in the measurement of the total OPEB liability (283,022) (67,481) (249,173) 181,231 24,230 Changes in assumptions/inputs (21,591) (138,189) (46,068) (194,875) 74,733 Benefit payments, including refunds of employee contributions 268,867 131,304 270,009 97,744 176,849 (439,492) 56,607 99,302 195,383 362,861 Net change in total OPEB liability Total OPEB liability - beginning 1,126,529 1,069,922 970,620 775,237 412,376 Total OPEB liability - ending $ 687,037 $ 1,126,529 $ 1,069,922 $ 970,620 $ 775,237 Covered-employee payroll (1) $ 116,353,301 $ 112,964,370 $ 92,479,026 $ 89,785,462 $ 83,544,308 Gilbert's total OPEB liability as a percentage of covered payroll 0.6 % 1.0 % 1.2 % 1.1 % 0.9 % Fiscal Year 2019 2017 through 2015 2018 Total OPEB liability Service cost $ Interest on the total OPEB liability Differences between expected and actual experience in the measurement of the total OPEB liability 87,269 $ 84,727 54,575 58,026 (1,604,373) (1,296,953) Changes in assumptions/inputs 159,488 1,184,917 Benefit payments, including refunds of employee contributions 118,124 96,758 Net change in total OPEB liability (1,184,917) 127,475 Total OPEB liability - beginning 1,597,293 1,469,818 Total OPEB liability - ending $ 412,376 $ 1,597,293 Covered-employee payroll (1) $ 81,110,979 $ 72,406,115 Gilbert's total OPEB liability as a percentage of covered payroll 0.5 % Information not available (2) 2.2 % (1) The covered-employee payroll amount will be as of the measurement date of the total OPEB liability. For fiscal year 2024, the measurement date of the total OPEB liability is June 30, 2024. (2) The OPEB schedule in this required supplementary information is intended to show information for ten years. Additional years’ information will be displayed as it becomes available. (3) No assets are accumulated in a trust that meets the criteria of a trust as defined in GASB Statement No. 75, Accounting and Reporting for Postemployment Benefits Other than Pensions, to pay for the related benefits of this plan. 100 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Notes to Pension Plan Schedules Note 1 – Actuarially Determined Contribution Rates Arizona State Retirement System (ASRS) The actuarial assumptions used in the June 30, 2022 valuation for ASRS were based on the results of an actuarial five-year period ended June 30, 2020. The major changes in assumptions were decreasing the discount rate from 7.5% to 7.0% and changing the projected salary increases from 2.7%-7.2% to 2.9%-8.4%. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2020 actuarial valuation. Public Safety Personnel Retirement System (PSPRS) Actuarial determined contribution rates for the Public Safety Personnel Retirement System 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 Entry age normal Amortization method PSPRS members with initial membership date before July 1, 2017: Level percent-of-pay, closed PSPRS members with initial membership on or after July 1, 2017: Level dollar closed Remaining amortization period as of the 2022 actuarial valuation Asset valuation method 10 years PSPRS members with initial membership date before July 1, 2017: 7-year smoothed market value; 80%/120% market corridor PSPRS members with initial membership on or after July 1, 2017: 5-year smoothed market value; 80%/120% market corridor Actuarial assumptions: Investment rate of return PSPRS members with initial membership date before July 1, 2017: In the 2022 actuarial valuation, the investment rate of return was decreased from 7.3% to 7.2%. In the 2019 actuarial valuation, the investment rate of return was decreased from 7.4% to 7.3%. 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: 7.0%. Projected salary increases 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%. Wage growth In the 2022 actuarial valuation, wage growth was changed from 3.5% to a range of 3.0 – 6.25%. In the 2017 actuarial valuation, wage growth was decreased from 4.0% to 3.5%. In the 2014 actuarial valuation, wage growth was decreased from 4.5% to 4.0%. In the 2013 actuarial valuation, wage growth was decreased from 5.0% to 4.5%. Retirement age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to the experience study of the period July 1, 2006 – June 30, 2011. Mortality In the 2019 actuarial valuation, changed to PubS-2010 tables. In the 2017 actuarial valuation, changed to RP-2014 tables, with 75% of MP-2016 fully generational projection scales. RP-2000 mortality table (adjusted by 105% for both males and females). 101 Table of Contents TOWN OF GILBERT, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION June 30, 2024 Note 2 – Factors That Affect Trends Pensions 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 and EORP 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 and EORP 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 increased the PSPRS required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. OPEB The following changes were made to assumptions in the actuarial valuation for the fiscal year ending June 30, 2023: 1) the discount rate was increased from 3.86% to 3.97% and 2) there was a change in benefit terms effective July 1, 2024 whereby the Town added a high-deductible health plan for actives and retirees to the current offering and a third tier was added to the retiree contribution rate. 102 Table of Contents NONMAJOR FUNDS OTHER GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for revenues and expenditures from specific taxes or other earmarked sources. Such funds are usually required by statute or ordinance to finance particular functions or activities. Grants – accounts for miscellaneous grants received from federal, state and local governments that require segregation of revenues and expenditures. Special Districts – accounts for taxes received from and expenditures of the street light maintenance improvement districts and parkway maintenance improvement districts. Other Special Revenue – accounts for revenues received from various agencies and sources, including seized funds from law enforcement agencies that are required to be used for specific purposes. Capital Projects Funds Capital Projects Funds are established to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. Other Capital Projects – accounts for the design and construction of redevelopment infrastructure and related funding. 103 Table of Contents TOWN OF GILBERT, ARIZONA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 Special Revenue Capital Projects Special Districts Grants Other Special Revenue Total Nonmajor Governmental Funds Other Capital Projects Assets Pooled cash and investments $ 18,995,589 $ 209,625 $ 5,501,454 $ 637,201 $ 25,343,869 Receivables, net Taxes – 20,191 66,294 – 86,485 Accrued interest – – 22,109 – 22,109 – – 2,489 – 2,489 1,085,438 – 1,844,326 – 2,929,764 Accounts Due from other governments Total assets $ 20,081,027 $ 229,816 $ $ 135,696 $ 23,629 $ 7,436,672 $ 637,201 $ 55,454 $ 695,458 $ 28,384,716 Liabilities Accounts payable Accrued liabilities 4,842 3,889 Judgments payable – Due to other funds 718,998 Unearned revenue Total liabilities 910,237 116,738 – 125,469 131,735 – – 131,735 69,961 4,501 – 793,460 19,191,906 – 1,082,070 – 20,273,976 20,051,442 229,214 1,258,763 695,458 22,234,877 Unavailable revenue - grants 527,376 – – – 527,376 Total deferred inflows of resources 527,376 – – – 527,376 – 602 6,177,909 – 6,178,511 (497,791) – – (58,257) (556,048) (497,791) $ 602 $ 6,177,909 $ (58,257) 5,622,463 229,816 $ 7,436,672 $ 637,201 Deferred inflows of resources Fund balances (deficits) Restricted Unassigned Total fund balances (deficits) Total liabilities and fund balances (deficits) $ 20,081,027 $ 104 $ 28,384,716 Table of Contents TOWN OF GILBERT, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2024 Special Revenue Capital Projects Special Districts Grants Other Special Revenue Total Nonmajor Governmental Funds Other Capital Projects Revenues Taxes Sales $ Property – $ – $ 482,207 $ – $ 482,207 – 2,862,310 – – 2,862,310 Charges for services – – 167,939 – 167,939 Intergovernmental 6,136,638 – 1,037,877 – 7,174,515 Fines and forfeitures – – 363,976 – 363,976 Gifts and donations – – 88,403 – 88,403 Interest earnings – – 565,779 – 565,779 – – 78,621 – 78,621 9,136 – 629,791 – 638,927 6,145,774 2,862,310 3,414,593 – 12,422,677 2,239,728 – 221,593 – 2,461,321 – – 448,801 – 448,801 Police 340,612 – 423,942 – 764,554 Fire 150,176 – 19,819 – 169,995 Highways and streets – 2,047,804 – 181,932 2,229,736 Parks and recreation 18,411 1,203,506 16,361 – 1,238,278 – – 1,047,456 – 1,047,456 159,465 131,735 49,884 – 341,084 Net change in fair value of investments Miscellaneous Total revenues Expenditures Current General government Management and policy Court Public safety Transportation Non departmental Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 51,856 – 116,657 7,915,016 8,083,529 2,960,248 3,383,045 2,344,513 8,096,948 16,784,754 3,185,526 (520,735) 1,070,080 (8,096,948) (4,362,077) Other financing sources (uses) Transfers in – – 75,000 8,038,691 8,113,691 (3,504,631) – (1,985,317) – (5,489,948) (3,504,631) – (1,910,317) 8,038,691 2,623,743 Net change in fund balances (319,105) (520,735) (840,237) (58,257) (1,738,334) Fund balances - beginning (178,686) 521,337 7,018,146 – 7,360,797 (58,257) $ 5,622,463 Transfers out Total other financing sources (uses) Fund balances - ending $ (497,791) $ 602 105 $ 6,177,909 $ Table of Contents 106 Table of Contents BUDGETARY COMPARISON SCHEDULES 107 Table of Contents TOWN OF GILBERT, ARIZONA Streets and Traffic Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues Intergovernmental $ System development fees 9,502,000 9,502,000 $ 3,287,741 $ (6,214,259) 2,750,000 2,750,000 4,931,404 2,181,404 70,000 70,000 9,051,652 8,981,652 Interest earnings Miscellaneous Total revenues $ – – 3,132 3,132 12,322,000 12,322,000 17,273,929 4,951,929 Expenditures Current Highways and streets Capital outlay 1,002,700 996,987 73,660 923,327 385,596,690 285,180,554 53,392,445 231,788,109 Contingency – 36,120,407 – 36,120,407 386,599,390 322,297,948 53,466,105 268,831,843 (374,277,390) (309,975,948) (36,192,176) 273,783,772 Transfers in 30,301,743 30,301,743 2,426,704 (27,875,039) Transfers out (90,272,150) (90,272,150) (6,865,459) 83,406,691 (59,970,407) (59,970,407) (4,438,755) 55,531,652 (434,247,797) $ (369,946,355) (40,630,931) $ 329,315,424 Total expenditures Excess (deficiency) of revenues over expenditures Other financing source (uses) Total other financing sources (uses) Net change in fund balances $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis. Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 108 2,835,149 $ (37,795,782) Table of Contents TOWN OF GILBERT, ARIZONA Parks Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues System development fees $ 5,000,000 $ 5,000,000 $ 7,948,998 $ 2,948,998 Interest earnings 65,000 65,000 1,540,988 1,475,988 Total revenues 5,065,000 5,065,000 9,489,986 4,424,986 2,603,736 1,090,415 631,057 459,358 71,932,224 77,800,415 8,097,085 69,703,330 Expenditures Current Parks and recreation Capital outlay Contingency – 10,015,183 – 10,015,183 74,535,960 88,906,013 8,728,142 80,177,871 (69,470,960) (83,841,013) 761,844 84,602,857 Transfers in 57,491,137 60,491,137 7,427,226 (53,063,911) Transfers out (2,895,850) (2,895,850) (2,873,419) 22,431 54,595,287 57,595,287 4,553,807 (53,041,480) (14,875,673) $ (26,245,726) 5,315,651 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Total other financing sources (uses) Net change in fund balances $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 109 223,844 $ 5,539,495 $ 31,561,377 Table of Contents TOWN OF GILBERT, ARIZONA Municipal Facilities Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues System development fees $ 1,750,000 $ 1,750,000 $ 3,180,036 $ 1,430,036 Interest earnings 5,000 5,000 160,771 155,771 Total revenues 1,755,000 1,755,000 3,340,807 1,585,807 Police 31,641 29,758 30,929 (1,171) Fire 150,000 150,000 – 150,000 394,577 1,198,089 489,365 708,724 Capital outlay 79,806,366 70,907,550 21,543,431 49,364,119 Contingency – 9,957,116 – 9,957,116 80,382,584 82,242,513 22,063,725 60,178,788 (78,627,584) (80,487,513) (18,722,918) 61,764,595 Transfers in 71,263,529 71,263,529 18,116,256 (53,147,273) Transfers out (1,917,670) (2,070,970) (2,068,267) 2,703 69,345,859 69,192,559 16,047,989 (53,144,570) (9,281,725) $ (11,294,954) $ (2,674,929) $ Expenditures Current Public safety Non departmental Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Total other financing sources (uses) Net change in fund balances $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 110 58,162 $ (2,616,767) 8,620,025 Table of Contents TOWN OF GILBERT, ARIZONA Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues Property taxes $ 31,600,000 Interest earnings $ 31,600,000 $ 31,144,173 $ (455,827) 35,000 35,000 181,349 146,349 – – 12,988 12,988 31,635,000 31,635,000 31,338,510 (296,490) – 1,479,510 1,479,510 – Principal 28,470,000 28,470,000 28,470,000 – Interest 11,910,420 11,910,420 11,910,406 14 35,000 35,000 5,375 29,625 40,415,420 41,894,930 41,865,291 29,639 (8,780,420) (10,259,930) (10,526,781) (266,851) 17,289,500 17,289,500 9,266,101 8,023,399 – (5,790,756) (5,790,756) – 17,289,500 11,498,744 3,475,345 8,023,399 1,238,814 (7,051,436) $ 8,290,250 Miscellaneous Total revenues Expenditures Current Non departmental Debt service Fiscal and other charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances $ 8,509,080 $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis. Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 111 365,650 $ (6,685,786) Table of Contents TOWN OF GILBERT, ARIZONA Special Assessments Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues Special assessments $ 2,542,100 $ 2,542,100 $ 505,895 $ (2,036,205) Charges for services – – 2,223 2,223 Interest earnings – – 4,667 4,667 Total revenues 2,542,100 2,542,100 512,785 (2,029,315) Principal 2,490,000 2,490,000 370,000 2,120,000 Interest 117,600 117,600 117,595 5 Fiscal and other charges 35,000 35,000 1,107 33,893 Total expenditures 2,642,600 2,642,600 488,702 2,153,898 (100,500) (100,500) 24,083 124,583 (100,500) $ (100,500) 24,083 Expenditures Debt service Excess (deficiency) of revenues over expenditures Net change in fund balances $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 112 632 $ 24,715 $ 124,583 Table of Contents TOWN OF GILBERT, ARIZONA Grants Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual – Budgetary Basis For the Year Ended June 30, 2024 Variance with Final Budget Positive (negative) Budgeted Amounts Original Final Actual Revenues Intergovernmental $ 35,121,690 Miscellaneous Total revenues $ 35,121,690 $ 6,136,638 $ (28,985,052) – – 9,136 9,136 35,121,690 35,121,690 6,145,774 (28,975,916) 2,202,010 4,405,474 2,239,728 2,165,746 128,940 379,549 340,612 38,937 – 45,625 150,176 (104,551) Expenditures Current General government Management and policy Public safety Police Fire Parks and recreation 52,150 52,150 18,411 33,739 Non departmental 862,790 862,790 159,465 703,325 Capital outlay 55,140 1,389,794 51,856 1,337,938 Contingency 5,000,000 1,127,848 – 1,127,848 8,301,030 8,263,230 2,960,248 5,302,982 26,820,660 26,858,460 3,185,526 (23,672,934) (27,354,542) (30,354,542) (3,504,631) 26,849,911 (27,354,542) (30,354,542) (3,504,631) 26,849,911 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers out Total other financing sources (uses) Net change in fund balances $ (533,882) $ 113 (3,496,082) $ (319,105) $ 3,176,977 Table of Contents TOWN OF GILBERT, ARIZONA Special Districts Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Budgetary Basis For the Year Ended June 30, 2024 Variance with Final Budget Positive (Negative) Budgeted Amounts Original Final Actual Revenues Property taxes $ Total revenues 2,879,980 $ 2,879,980 $ 2,862,310 $ (17,670) 2,879,980 2,879,980 2,862,310 (17,670) Highways and streets 2,016,400 2,050,000 2,047,804 2,196 Parks and recreation 1,219,580 1,219,580 1,203,506 16,074 Non departmental 20,000 151,735 131,735 20,000 3,255,980 3,421,315 3,383,045 38,270 (376,000) (541,335) (520,735) 20,600 (376,000) $ (541,335) $ (520,735) $ 20,600 Expenditures Current Total expenditures Excess (deficiency) of revenues over expenditures Net change in fund balances $ 114 Table of Contents TOWN OF GILBERT, ARIZONA Other Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Budgetary Basis For the Year Ended June 30, 2024 Budgeted Amounts Original Variance with Final Budget Positive (Negative) Non-GAAP Actual Final Revenues Sales taxes $ 1,000,000 $ 1,000,000 $ 482,207 $ (517,793) Charges for services 140,000 140,000 167,939 27,939 Intergovernmental 713,380 713,380 1,037,877 324,497 Fines and forfeitures 285,000 285,000 363,976 78,976 Gifts and donations 1,086,140 1,086,140 88,403 (997,737) 1,000 1,000 565,779 564,779 Interest earnings Miscellaneous – – 629,791 629,791 3,225,520 3,225,520 3,335,972 110,452 Management and policy 442,900 552,200 221,593 330,607 Court 555,600 605,800 448,801 156,999 Police 454,170 560,919 423,942 136,977 Fire 56,610 56,610 19,819 36,791 Parks and recreation 20,000 28,080 16,361 11,719 Transportation 842,840 1,047,460 1,047,456 4 Non departmental 66,840 66,840 49,884 16,956 Capital outlay – 129,039 116,657 12,382 Contingency 1,010,000 306,445 – 306,445 Total expenditures 3,448,960 3,353,393 2,344,513 1,008,880 (223,440) (127,873) 991,459 1,119,332 Total revenues Expenditures Current General government Public safety Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in 150,000 150,000 75,000 (75,000) Transfers out (1,494,000) (3,442,220) (1,985,317) 1,456,903 (1,344,000) (3,292,220) (1,910,317) 1,381,903 (1,567,440) $ (3,420,093) Total other financing sources (uses) Net change in fund balances $ (918,858) $ Explanation of difference between budgetary change in fund balance at June 30, 2024, and GAAP change in fund balance: Changes in fair value of investments are recognized as revenue for GAAP purposes but are not recognized as revenue on the budget basis Change in fund balance as reported on the statement of revenues, expenses and changes in fund balance 115 78,621 $ (840,237) 2,501,235 Table of Contents TOWN OF GILBERT, ARIZONA Other Capital Projects Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - Budgetary Basis For the Year Ended June 30, 2024 Variance with Final Budget Positive (Negative) Budgeted Amounts Original Final Actual Revenues Total revenues $ – $ – $ – $ – Expenditures Current Highways and streets Capital outlay 367,609 322,868 181,932 140,936 86,598,371 46,796,588 7,915,016 38,881,572 Contingency Total expenditures Excess (deficiency) of revenues over expenditures – 12,199,248 – 12,199,248 86,965,980 59,318,704 8,096,948 51,221,756 (86,965,980) (59,318,704) (8,096,948) (51,221,756) 86,965,980 86,965,980 8,038,691 (78,927,289) 86,965,980 86,965,980 8,038,691 (78,927,289) Other financing sources (uses) Transfers in Total other financing sources (uses) Net change in fund balances $ – 116 $ 27,647,276 $ (58,257) $ (27,705,533) Table of Contents INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the government, on a cost reimbursement basis. Equipment Maintenance – to account for the revenues and expenses from the maintenance of Gilbert's motorized vehicles and equipment. Self-Insurance – to account for and finance Gilbert’s uninsured risks of loss for medical, dental, workers’ compensation, and general liability claims. 117 Table of Contents TOWN OF GILBERT, ARIZONA Combining Statement of Net Position Internal Service Funds June 30, 2024 Equipment Maintenance Total Internal Service Funds Self-Insurance Assets Current assets Pooled cash and investments $ 2,064,037 $ 17,329,489 $ 19,393,526 Receivables, net Accrued interest 8,430 63,652 72,082 Accounts 3,454 686,073 689,527 Due from other governments 38,892 – 38,892 – 50,000 50,000 Deposits Inventories Total current assets 1,246,269 – 1,246,269 3,361,082 18,129,214 21,490,296 901,456 – 901,456 Noncurrent assets Non-depreciable Depreciable, net 581,574 – 581,574 1,483,030 – 1,483,030 4,844,112 18,129,214 22,973,326 368,559 – 368,559 368,559 – 368,559 Accounts payable 617,283 237,507 854,790 Accrued liabilities 58,524 7,781 66,305 – 2,300,000 2,300,000 Total noncurrent assets Total assets Deferred outflows of resources Pensions and other post-employment benefits Total deferred outflows of resources Liabilities Current liabilities Advances from other funds Accrued compensated absences 98,994 – 98,994 – 12,560,000 12,560,000 774,801 15,105,288 15,880,089 Accrued compensated absences 177,322 – 177,322 Net other post-employment benefits 12,667 – 12,667 2,467,168 – 2,467,168 Claims payable Total current liabilities Noncurrent liabilities Net pension liability Total noncurrent liabilities Total liabilities 2,657,157 – 2,657,157 3,431,958 15,105,288 18,537,246 103,317 – 103,317 103,317 – 103,317 1,434,523 – 1,434,523 242,873 3,023,926 3,266,799 Deferred inflows of resources Pensions and other post-employment benefits Total deferred inflows of resources Net position Net investment in capital assets Unrestricted Total net position $ 118 1,677,396 $ 3,023,926 $ 4,701,322 Table of Contents TOWN OF GILBERT, ARIZONA Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2024 Equipment Maintenance Total Internal Service Funds Self-Insurance Operating revenues Charges for services $ 12,220,597 $ 33,930,966 $ 46,151,563 Intergovernmental 438,432 – 438,432 Other 66,538 1,842,608 1,909,146 12,725,567 35,773,574 48,499,141 259,104 8,147,200 8,406,304 Personnel services 3,009,879 380,302 3,390,181 Operation and maintenance 8,830,472 – 8,830,472 – 30,111,677 30,111,677 93,008 – 93,008 12,192,463 38,639,179 50,831,642 533,104 (2,865,605) (2,332,501) Interest earnings 91,338 595,413 686,751 Net change in fair value of investments 19,171 152,065 171,236 Gain (loss) on sale of capital assets 21,299 – 21,299 131,808 747,478 879,286 664,912 (2,118,127) (1,453,215) – (49,010) (49,010) 664,912 (2,167,137) (1,502,225) 1,012,484 5,191,063 6,203,547 Total operating revenues Operating expenses General and administrative Claims incurred Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses) Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Transfers out Change in net position Total net position - beginning Total net position - ending $ 119 1,677,396 $ 3,023,926 $ 4,701,322 Table of Contents TOWN OF GILBERT, ARIZONA Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2024 Equipment Maintenance Total Internal Service Funds Self-Insurance Cash flows from operating activities Cash receipts from customers $ Other operating cash receipts 419,072 $ 66,538 – $ 1,842,608 419,072 1,909,146 Cash receipts from other funds for services 12,220,597 33,669,631 45,890,228 Cash payments to suppliers for goods and services (9,357,749) (35,922,129) (45,279,878) Cash payments to employees for services (2,755,558) (377,686) (3,133,244) 592,900 (787,576) (194,676) Change in due to other funds – 1,000,000 1,000,000 Transfers to other funds – (49,010) (49,010) – 950,990 950,990 Acquisition and construction of capital assets (781,170) – (781,170) Proceeds from the sale of capital assets 21,299 – 21,299 (759,871) – (759,871) 106,992 721,665 828,657 Net cash provided (used) by investing activities 106,992 721,665 828,657 Net increase (decrease) in cash and cash equivalents (59,979) 885,079 825,100 Net cash provided (used) by operating activities Cash flows from noncapital financing activities Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities Net cash provided (used) by capital and related financing activities Cash flows from investing activities Investment income Balances - beginning of year 2,124,016 Balances - end of the year 16,444,410 18,568,426 $ 2,064,037 $ 17,329,489 $ 19,393,526 $ 533,104 $ (2,865,605) $ (2,332,501) Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income / (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 93,008 – 93,008 (3,454) (261,335) (264,789) Due from other governments (15,906) – (15,906) Inventories (164,891) – (164,891) Changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources Accounts receivable Deferred outflows of resources Accounts payable Claims payable 34,635 – 34,635 (103,282) 9,748 (93,534) – 2,327,000 2,327,000 Accrued expenses 47,619 2,616 50,235 Other post-employment benefits (7,057) – (7,057) Net pension liability 156,908 – 156,908 Deferred inflows of resources 22,216 – 22,216 Net cash provided (used) by operating activities $ 120 592,900 $ (787,576) $ (194,676) Table of Contents STATISTICAL SECTION This part of Gilbert's Annual Comprehensive Financial Report presents detailed information as a context for understanding what the information in the financial statements and note disclosures says about Gilbert's overall financial health. Contents Page Financial Trends 123 These schedules contain trend information to help the reader understand how Gilbert's financial performance has changed over time. Revenue Capacity 130 These schedules contain information to help the reader assess Gilbert's most significant local revenue source, sales tax. Debt Capacity 133 These schedules present information to help the reader assess the affordability of Gilbert's current levels of outstanding debt and Gilbert's ability to issue additional debt in the future. Demographic and Economic Information 138 These schedules offer demographic and economic indicators to help the reader understand the environment within which Gilbert's financial activities take place. Operating Information 140 These schedules contain service and infrastructure data to help the reader understand how the information in Gilbert's financial report relates to the services Gilbert provides and the activities it performs. Other Information 144 Sources: Unless otherwise noted, the information in these schedules is derived from the Annual Comprehensive Financial Report for the relevant year. 121 Table of Contents 122 Table of Contents Schedule 1 Town of Gilbert, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (1,000's) 2015 2016 2017 2018 2019 2020 2021 (as restated) 804,917 $ 2022 2023 2024 Governmental activities Net investment in capital assets $ 688,900 $ 735,369 $ 753,973 $ 790,285 $ 792,864 $ 844,068 $ 885,750 $ 919,930 $ 933,340 Restricted 82,546 83,227 72,780 76,701 87,450 72,943 91,917 115,550 123,034 126,760 Unrestricted 30,276 49,960 60,983 45,964 67,904 132,638 162,177 183,410 236,010 277,507 $ 1,278,974 $ 1,337,607 $ $ Total governmental activities net position $ 801,722 $ 868,556 $ 887,736 $ 912,950 $ 948,218 $ 1,010,498 $ 1,098,162 $ 1,184,710 $ 363,333 $ 411,831 $ 399,537 $ 392,632 $ 462,857 $ $ $ 541,025 Business-type activities Net investment in capital assets 468,440 506,807 577,320 644,116 Restricted 54,084 34,054 42,814 34,499 30,972 24,873 22,717 13,500 10,630 9,950 Unrestricted 290,870 304,198 342,616 389,336 379,636 408,154 418,159 410,204 411,067 417,273 999,017 $ 1,071,339 Total business-type activities net position $ 708,287 $ 750,083 $ 784,967 $ 816,467 $ 873,465 $ 901,467 $ 947,683 $ 964,729 $ $ 1,426,775 $ 1,497,250 $ 1,577,456 Primary government Net investment in capital assets $ 1,052,233 $ 1,147,200 $ 1,153,510 $ 1,182,917 $ 1,255,721 $ 1,273,357 $ 1,350,875 Restricted 136,630 117,281 115,594 111,200 118,422 97,816 114,633 129,050 133,664 136,710 Unrestricted 321,146 354,158 403,599 435,299 447,540 540,792 580,336 593,614 647,077 694,780 $ 1,510,009 $ 1,618,639 $ 1,672,703 $ 1,729,416 $ 1,821,683 $ 1,911,965 $ 2,045,844 2,149,439 $ 2,277,992 $ 2,408,946 Total primary government net position 123 $ Table of Contents Schedule 2 Town of Gilbert, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (1,000's) Expenses 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Governmental activities General government Management and policy $ 19,090 $ 20,049 $ 19,454 $ 19,176 $ 24,948 $ 23,430 $ 41,161 $ 32,299 $ 34,670 $ 42,529 Finance and management services 1,814 2,110 2,109 2,000 1,883 2,591 2,943 3,090 3,396 Court 4,053 4,164 4,300 4,078 3,898 3,947 4,356 4,623 4,984 3,813 5,372 Development services 7,082 7,611 9,400 10,312 9,449 10,898 11,389 11,876 12,752 13,323 Police 47,541 50,115 63,151 54,117 55,328 65,972 65,100 67,492 81,159 95,544 Fire 28,071 31,972 42,513 34,969 35,263 41,373 38,174 48,220 54,961 61,582 Highways and streets 46,932 48,726 51,931 52,545 54,632 61,414 62,501 63,022 67,636 71,351 Parks and recreation 28,429 25,647 25,202 29,985 35,840 26,844 28,975 32,719 37,450 46,505 1,047 Public safety Transportation 778 1,051 1,132 1,151 886 655 609 – 725 Non departmental 4,423 5,311 13,690 7,976 3,915 5,076 6,495 3,523 4,016 7,159 Interest and fiscal charges on long-term debt 12,780 12,911 10,506 10,793 9,890 9,641 8,716 8,221 12,075 10,352 200,993 209,667 243,387 227,103 235,932 251,842 270,419 275,085 313,824 358,577 Water 41,817 44,360 42,329 44,605 47,167 49,373 52,259 55,761 67,786 86,879 Wastewater 25,620 26,530 26,791 27,244 27,844 30,930 31,224 36,908 38,774 42,032 Solid Waste 16,720 17,719 16,857 18,183 21,689 22,928 25,644 27,861 31,843 33,496 84,157 88,609 85,977 90,033 96,700 103,231 109,127 120,530 138,403 162,406 $ 285,150 $ 298,276 $ 329,365 $ 317,135 $ 332,632 $ 355,072 $ 379,546 $ 395,614 $ 452,228 $ 520,984 $ $ $ $ $ $ $ $ $ $ Total governmental activities expenses Business-type activities Total business-type activities expenses Total primary government expenses Program Revenues Governmental activities Charges for services Development services 6,608 6,826 6,900 7,227 8,318 6,867 8,121 5,864 5,350 4,813 Police 4,526 5,343 7,484 3,826 3,609 1,827 2,024 3,338 3,195 3,019 Fire 224 197 231 360 386 827 1,208 4,908 6,144 7,435 Parks and recreation 4,146 4,366 4,603 4,700 4,355 4,800 5,419 7,036 7,954 8,078 Other activities 2,472 2,618 2,795 2,635 1,152 966 1,027 1,076 841 1,019 Operating grants and contributions 24,171 38,666 33,204 28,381 30,012 53,661 43,619 40,309 41,985 43,307 Capital grants and contributions 37,214 65,535 41,877 32,904 36,203 39,675 57,447 61,139 42,935 27,915 79,361 123,551 97,094 80,033 84,035 108,623 118,865 123,670 108,405 95,586 Total governmental activities program revenues 124 Table of Contents Schedule 2 Continued 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Business-type activities Charges for services Water $ 37,501 $ 39,457 $ 40,696 $ 42,868 $ 45,508 $ 48,782 $ 52,890 $ 55,270 $ 64,346 $ 74,046 Wastewater 24,625 25,116 26,032 26,517 28,686 29,772 30,847 31,695 34,753 43,098 Solid Waste 18,007 18,141 18,270 18,437 20,633 21,918 22,460 24,187 29,302 34,305 – 1,051 953 1,184 1,720 1,698 1,960 2,607 3,104 2,745 29,017 43,655 34,134 30,615 27,032 18,319 22,186 29,360 24,865 26,445 Operating grants and contributions Capital grants and contributions Total business-type activities program revenues 109,150 127,420 120,085 119,621 123,579 120,489 130,343 143,119 156,371 180,639 Total primary government program revenues $ 188,511 $ 250,971 $ 217,179 $ 199,654 $ 207,614 $ 229,112 $ 249,208 $ 266,789 $ 264,776 $ 276,224 Net (Expense)/Revenue Governmental activities $ (121,632) $ (86,116) $ (146,293) $ (147,070) $ (151,897) $ (143,219) $ (151,555) $ (151,415) $ (205,419) $ (262,992) Business-type activities Total primary government net expense 24,993 38,811 34,108 29,588 26,879 17,258 21,215 22,589 17,968 18,232 $ (96,639) $ (47,305) $ (112,185) $ (117,482) $ (125,018) $ (125,961) $ (130,340) $ (128,825) $ (187,451) $ (244,759) General Revenues and Other Changes in Net Position Governmental activities Taxes Sales taxes 98,648 $ 107,534 $ 123,930 $ 142,901 $ 155,494 $ 156,171 Property taxes $ 71,773 19,423 $ 77,070 19,424 $ 82,797 20,761 $ 89,497 21,549 $ 25,220 26,570 28,603 30,356 32,588 34,006 In-Lieu property taxes 1,201 1,187 1,159 1,124 1,024 1,015 1,009 1,086 1,040 1,089 Franchise taxes 2,737 2,989 2,814 2,911 2,954 2,744 2,669 2,660 2,761 2,704 Unrestricted state-shared revenue 44,263 45,028 52,861 52,193 53,777 57,802 66,463 72,667 92,190 114,538 Unrestricted grants and contributions 2,595 3,204 2,400 2,444 3,036 2,762 4,140 2,125 896 101 Unrestricted investment earnings 1,224 2,651 859 1,549 10,153 10,467 526 (14,993) 17,805 31,840 Gain/(loss) on sale of capital assets 106 136 154 1,333 1,466 (3,973) (4,508) 238 1,153 151 Miscellaneous 847 1,162 1,224 1,352 1,153 674 936 1,080 1,031 979 Transfers 184 98 446 (64) (242) (96) (2,665) (158) (5,273) (19,956) 144,354 152,949 165,475 173,888 197,189 205,499 221,103 237,962 299,684 321,624 1,457 2,666 1,009 1,894 11,494 9,820 32 (6,500) 10,510 33,954 172 158 92 39 183 148 405 241 75 122 Miscellaneous 1,310 259 121 172 366 680 75 559 463 58 Transfers (184) (98) (446) 64 242 96 2,665 158 5,273 19,956 Total governmental activities Business-type activities Unrestricted investment earnings Gain on sale of capital assets Total business-type activities Total primary government 2,755 2,985 776 2,169 12,285 10,744 3,177 (5,543) 16,320 54,089 $ 147,109 $ 155,934 $ 166,251 $ 176,057 $ 209,474 $ 216,243 $ 224,280 $ 232,419 $ 316,004 $ 375,714 $ $ $ $ $ $ $ $ $ $ Change in Net Position Governmental activities Business-type activities Total primary government $ 22,722 66,833 27,748 41,796 50,470 $ 108,629 19,182 34,884 $ 54,066 125 26,818 31,757 $ 58,575 45,292 39,164 $ 84,456 62,280 28,002 $ 90,282 $ 69,548 86,548 94,264 58,633 24,392 17,046 34,289 72,322 93,940 $ 103,594 $ 128,553 $ 130,954 Table of Contents Schedule 3 Town of Gilbert, Arizona Program Revenues by Function Last Ten Fiscal Years (accrual basis of accounting) (1,000's) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Function/Program Governmental activities General government Management and policy $ 962 $ 690 $ 991 $ 2,235 $ 1,830 $ 1,503 $ 4,862 $ 5,651 $ 3,212 $ 2,797 Finance and management services 27 24 20 27 7 12 – 4 – 22 Court 824 859 831 731 700 573 629 679 519 592 6,608 6,826 6,900 7,227 8,318 7,145 8,641 5,864 5,350 4,813 8,975 10,645 11,551 7,829 8,544 18,366 9,757 6,495 7,227 10,724 Development services Public safety Police 3,766 4,170 3,877 4,203 4,687 13,783 8,384 9,000 10,168 11,932 Highways and streets Fire 44,497 69,791 54,059 44,943 43,133 50,476 62,153 76,106 60,933 47,092 Parks and recreation 13,012 29,861 18,190 12,158 15,035 15,561 23,312 16,230 20,005 16,298 Transportation 639 635 626 630 648 643 643 3,241 678 973 Non departmental 51 50 50 50 1,136 562 484 400 314 342 79,361 123,551 97,095 80,033 84,038 108,624 118,865 123,670 108,405 95,586 Water 55,590 68,102 61,546 64,056 65,489 64,204 70,973 78,518 85,990 98,306 Wastewater 35,552 41,178 37,232 36,232 36,344 34,111 36,354 40,082 40,737 47,172 Solid Waste 18,008 18,141 21,307 19,334 21,746 22,173 23,016 24,519 29,644 35,161 109,150 127,421 120,085 119,622 123,579 120,488 130,343 143,119 156,371 180,639 $ 188,511 $ 250,972 $ 217,180 $ 199,655 $ 207,617 $ 229,112 $ 249,208 $ 266,789 $ 264,776 $ 276,224 Subtotal governmental activities Business-type activities Subtotal business-type activities Total primary government 126 Table of Contents Schedule 4 Town of Gilbert, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (1,000's) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 General fund Nonspendable $ 24,470 $ 19,866 $ 18,995 $ 17,877 $ 23,061 $ 15,833 $ 11,561 $ 11,722 $ 9,742 $ 16,793 Restricted – – – – – – – – – 2,179 Assigned 17,046 13,681 32,766 41,371 41,631 68,002 76,747 86,881 128,525 175,531 Unassigned 67,057 85,498 82,885 72,453 89,787 133,901 139,520 153,384 180,920 174,422 $ 108,573 $ 119,045 $ 134,646 $ 131,701 $ 154,479 $ 217,736 $ 227,828 $ 251,987 $ 319,187 $ 368,926 $ $ $ $ $ $ $ $ $ $ Total general fund All other governmental funds Nonspendable 2 4 2 1 – – – 70 – 1,009 Restricted 96,837 87,005 139,725 134,441 110,470 101,628 95,704 311,522 312,616 274,932 Assigned 22,462 38,337 34,387 15,971 – – – 5,369 5,362 – Unassigned Total all other governmental funds $ (23,981) (19,897) (19,353) (18,311) 95,320 $ 105,449 $ 154,761 $ 132,102 127 (17,424) $ 93,046 (16,448) $ 85,180 $ (9,259) (6,686) (6,981) (9,347) 86,445 $ 310,275 $ 310,997 $ 266,594 Table of Contents Schedule 5 Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (1,000's) Revenues Taxes Sales Property Special assessments Franchise Licenses and permits Charges for services Intergovernmental Fines and forfeitures Other entities' participation System development fees Gifts and donations Investment earnings a Net change in fair value of investments Miscellaneous Total revenues Expenditures Current General government Management and policy Finance and management services Court Development services Public safety Police Fire Highways and streets Parks and recreation Transportation Non departmental Debt service Principal Interest Payment to refunded bond escrow agent Bond issuance costs Fiscal and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $ 71,794 21,953 1,184 2,737 4,791 10,440 76,284 4,476 382 18,836 192 1,210 n/a 953 215,232 $ 77,108 22,000 2,233 3,389 4,787 11,147 77,007 4,618 1,666 22,944 187 2,639 n/a 14,797 244,522 $ 82,980 23,707 696 2,814 4,785 11,161 87,364 4,336 2,252 18,101 120 836 n/a 5,683 244,835 $ 89,516 24,468 958 2,911 4,645 12,151 84,923 4,065 1,585 17,617 195 1,523 n/a 1,796 246,353 $ 98,671 25,220 818 2,954 5,735 12,816 86,480 3,305 4,380 21,966 183 9,890 n/a 1,153 273,571 $107,552 26,570 744 2,744 4,689 13,154 117,277 3,084 9,799 20,971 280 10,085 n/a 674 317,623 $123,932 28,603 617 2,669 5,868 14,884 132,388 3,259 919 38,771 163 4,205 (3,714) 936 353,500 $142,924 30,356 1,351 2,660 4,068 20,552 141,466 3,231 5,280 19,270 281 3,527 (18,134) 1,383 358,215 $155,510 32,588 490 2,761 2,884 24,190 136,417 3,059 16,657 15,312 304 16,569 813 1,332 408,887 $156,193 34,006 506 2,704 3,082 24,277 165,981 3,278 1,341 16,060 292 24,872 6,110 1,610 440,314 20,485 1,943 3,493 6,069 20,997 2,134 3,608 6,239 22,001 2,270 3,657 7,049 21,858 2,338 3,600 7,200 22,942 2,396 3,752 7,701 26,854 2,681 3,491 8,194 28,747 3,003 3,731 8,526 30,834 3,162 4,037 8,949 36,057 3,567 4,390 9,715 42,629 4,024 4,668 10,628 43,084 25,631 12,478 21,836 774 4,423 44,402 28,295 12,831 18,591 1,046 5,311 54,397 32,048 14,680 19,660 1,135 13,690 53,174 35,698 14,545 24,351 1,151 7,976 58,327 35,828 15,769 30,482 888 3,915 69,450 35,883 23,184 20,588 652 5,076 72,453 38,003 24,892 23,051 606 22,090 62,456 42,359 24,480 26,627 – 8,178 73,195 50,172 27,615 31,078 725 5,065 81,927 51,599 30,665 37,748 1,047 7,666 23,750 13,108 – 209 307 58,849 236,439 30,105 13,773 – – 37 36,573 223,942 34,935 11,583 – 779 9 34,111 252,004 33,965 11,758 12,096 408 14 50,895 281,027 34,190 11,242 – – 35 71,644 299,111 49,055 9,868 – 853 13 127,093 382,935 35,615 10,068 – – 13 79,273 350,071 29,495 8,312 – 662 15 60,593 310,159 27,084 14,116 – – 10 68,415 351,205 30,990 12,384 – – 6 100,752 416,733 (21,207) 20,580 (7,169) (34,674) (25,540) (65,312) 3,429 48,056 57,682 23,580 128 Other financing sources (uses) Transfers in Transfers out Proceeds from sale of capital assets Revenue obligations issued Premium on revenue obligations Bonds issued Premium on bonds Payment to refunded bond escrow agent Leases Subscription-based information technology arrangements Total other financing sources and uses Net change in fund balances Debt service as a percentage of noncapital expenditures a 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 23,401 (23,216) – 36,980 2,706 28,080 4,417 (32,211) 21,406 (21,385) – – – – – – 23,334 (22,881) – – – 121,670 14,139 (64,182) 29,999 (30,063) 1,226 – – 49,525 7,546 (49,162) 63,086 (63,324) 1,691 – – – – – 36,774 (36,871) 38,470 – – 76,750 5,577 – 46,987 (49,652) 10,594 – – – – – 62,268 (64,425) 262 – – 188,910 12,917 – 42,631 (50,109) 4,777 – – – – – 55,385 (75,292) 103 – – – – – – – – – – – – – – 654 – – – – – – – – – 905 40,157 21 72,080 9,071 1,453 120,700 7,929 199,932 (2,700) $ 18,950 $ 20,601 $ 64,911 $ (25,603) $ (24,087) $ 55,388 $ 11,358 $247,988 $ 54,981 20.8 % 23.4 % 21.3 % Previous years' fair market value adjustment was netted with investment earnings 129 19.9 % 20.0 % 23.0 % 16.9 % 15.1 % 14.6 % (18,244) $ 5,336 13.7 % Table of Contents Schedule 6 Town of Gilbert, Arizona Sales Tax Collections by Category Fiscal Years 2015 - 2016ª 2015 Construction $ Manufacturing Communications & Utilities 7,663,801 2016 $ 7,326,040 882,509 1,042,710 6,342,578 6,327,257 Wholesale 1,320,977 1,486,450 Retail 37,463,617 40,406,219 Restaurant & Bar 5,526,275 6,177,869 Real Estate, Rental & Leasing 8,286,878 9,290,919 Accommodation b 533,870 569,390 Services 2,018,647 2,223,706 b 629,740 784,957 Transportation & Warehousing 30,529 37,823 Finance & Insurance 438,257 557,582 Public Administration 3,020 18,977 Arts & Entertainment 652,973 858,177 $ 71,793,671 $ 77,108,076 Other Total Gilbert's local sales tax rate 1.5 % 1.5 % Source: Arizona Department of Revenue a Effective July 1, 2016, the Arizona Department of Revenue changed the way taxpayers report city tax on their tax returns and simultaneously changed the manner in which they summarize the tax data in their reports to the cities. As a result, Gilbert no longer receives the tax data in the same categories that were recorded in the past. See Schedule 6B for fiscal years 2017 forward. b Effective July 1, 2020, Accommodation (Bed Tax), Accommodation (Base 1.5% Tax) and Retail - Food for Home Consumption categories have passed the confidentiality requirements and now are separately stated. Note: State and local laws prohibit the disclosure of individual taxpayer information. 130 Table of Contents Schedule 6 Town of Gilbert, Arizona Sales Tax Collections by Category Fiscal Years 2017 - 2024ª 2017 Accommodation (Bed Tax) Accommodation (Base 1.5% Tax) $ b Amusement 2018 599,950 $ 2019 598,668 $ 2020 728,224 $ 2021 820,336 $ 2022 955,504 $ 2023 1,798,155 $ 2024 1,824,487 $ 1,687,807 – – – – 531,419 994,743 1,012,435 992,887 793,681 844,634 922,856 709,163 587,909 1,063,321 1,216,207 1,493,426 Communications & Utilities 5,625,248 5,763,531 5,707,201 5,784,555 5,860,873 5,992,184 6,586,617 7,264,146 Construction Contracting 9,611,076 10,833,291 13,167,940 12,919,742 12,949,937 14,942,241 16,546,790 15,255,757 89,165 – – – – – – – 1,392,591 1,535,298 1,706,431 1,755,690 1,973,489 2,514,789 4,042,002 3,821,589 174,054 165,942 166,146 140,170 124,149 171,133 169,121 100,591 Rental of Commercial Property/Non-Residential 4,116,417 4,435,844 4,790,946 4,944,404 5,368,895 6,080,132 6,649,908 7,210,621 Residential Rental 3,367,073 3,652,056 4,238,867 4,569,549 5,149,541 6,143,339 7,818,929 8,420,032 c Maintenance, Repair, Replacement & Alteration Personal Property Rental Publications, Advertising & Job Printing Restaurant & Bar 6,974,438 7,638,319 8,549,495 8,442,741 9,968,916 13,025,145 13,606,325 14,485,853 Retail 49,491,813 53,366,713 57,710,844 66,602,568 66,654,843 75,134,162 79,354,172 78,204,929 b Retail - Food for Home Consumption – – – – 13,722,892 14,986,376 16,686,956 17,233,431 Tax License Fees 14,632 13,246 9,646 – – – – – Other 730,191 668,812 972,655 863,073 83,565 55,700 (3,973) 22,361 $ 82,980,329 $ 89,516,354 $ 98,671,251 $ 107,551,991 $ 123,931,932 $ 142,901,420 $ 155,509,976 $ 156,193,430 d Total Gilbert's local sales tax rate 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % 1.5 % Source: Arizona Department of Revenue a Effective July 1, 2016, the Arizona Department of Revenue changed the way taxpayers report city tax on their tax returns and simultaneously changed the manner in which they summarize the tax data in their reports to the cities. As a result, Gilbert no longer receives the tax data in the same categories that were reported in the past. See Schedule 6A for fiscal years 2015 2016 data. b Effective July 1, 2020, Accommodation (Bed Tax), Accommodation (Base 1.5% Tax) and Retail - Food for Home Consumption categories have passed the confidentiality requirements and now are separately stated. c Maintenance, Repair, Replacement & Alteration has been combined with Construction Contracting due to disclosure laws concerning confidentiality. d Effective July 1, 2019, Tax License Fees were combined with Other due to disclosure laws concerning confidentiality. Note: State and local laws prohibit the disclosure of individual taxpayer information. 131 Table of Contents Schedule 7 Town of Gilbert, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Town Direct Rates: Hotel/Transient Lodging 4.50 % 4.50 % 4.50 % 4.30 % 4.30 % 4.30 % 4.30 % 4.30 % 4.30 % 4.30 % All Others 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % Hotel/Transient Lodging 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % 1.77 % All Others 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % 0.70 % Hotel/Transient Lodging 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % 5.50 % All Others 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % 5.60 % County Rates: State Rates: Source: Gilbert Finance & Management Services Department Note: Gilbert sales tax rate may be changed with the approval of Council. 132 Table of Contents Schedule 8 Town of Gilbert, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years Business-Type Activities Governmental Activities Fiscal Year General Obligation Bonds Special Assessment Bonds Street and Highway User Revenue Bonds 2015 $123,420,395 $8,306,402 $13,754,807 $126,607,711 $39,685,688 – – $98,190,924 $409,965,927 5.89% 1,804 2016 105,296,311 6,504,185 10,538,003 118,310,093 39,685,688 – – 135,410,861 415,745,141 5.52 1,789 2017 157,102,290 6,126,440 7,174,209 109,229,636 39,637,764 – – 134,594,390 453,864,729 5.30 1,833 2018 140,551,095 5,464,645 3,664,605 95,342,840 38,887,844 – – 170,517,212 454,428,241 5.13 1,835 2019 122,209,904 4,912,850 – 81,835,435 38,122,923 – – 160,502,481 407,583,593 4.64 1,571 2020 168,454,903 4,526,056 – 64,161,400 37,328,003 – – 151,742,751 426,213,113 4.17 1,618 2021 147,475,574 4,014,261 – 49,482,365 36,498,083 – – 142,648,020 380,118,303 3.58 1,388 2022 326,043,366 2,852,466 – 34,137,804 35,633,163 – – 634,385,933 1,033,052,732 9.53 3,723 2023 305,883,180 2,490,000 – 27,883,243 34,728,243 – $13,293,983 623,425,908 1,007,704,557 7.37 3,594 2024 282,447,994 2,120,000 – 21,358,682 33,783,323 $426,325 10,423,061 601,070,883 951,630,268 6.28 3,251 Municipal Property Corporation Revenue Bonds Revenue Obligations Leases SubscriptionBased Information Technology Arrangements Municipal Property Corporation Revenue Bonds Total Primary Government Percentage of Personal Income Per Capita Notes: See Schedule 13 for personal income and population data. Details regarding Gilbert's outstanding debt can be found in the notes to the financial statements. Amounts include unamortized bond discounts/premiums. 133 Table of Contents Schedule 9 Town of Gilbert, Arizona Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Fiscal Year General Bonded Debt a Outstanding Less Amount Available in Debt Service Fund Net General Bonded Debt Outstanding Secondary Assessed b Property Value 2015 $ $ $ $ 123,420,395 10,165,593 113,254,802 1,829,471,839 Limited Property b Value n/a Percentage of Applicable Property Value Per Capita 6.19 % $ 498 2016 105,296,311 6,952,183 98,344,128 n/a 1,845,325,449 5.33 423 2017 157,102,290 2,186,272 154,916,018 n/a 1,979,359,269 7.83 626 2018 140,551,095 6,020,480 134,530,615 n/a 2,105,762,268 6.39 543 2019 122,209,904 1,870,513 120,339,391 n/a 2,256,162,227 5.33 464 2020 168,454,903 1,846,926 166,607,977 n/a 2,428,289,285 6.86 632 2021 147,475,574 1,925,381 145,550,193 n/a 2,618,569,519 5.56 532 2022 326,043,366 2,392,952 323,650,414 n/a 2,807,360,551 11.53 1,166 2023 305,883,180 2,692,144 303,191,036 n/a 2,998,786,660 10.11 1,081 2024 282,447,994 1,299,666 281,148,328 n/a 3,216,754,422 8.74 960 a Includes unamortized bond discounts/premiums b Maricopa County Assessor's Office Notes: In accordance with Proposition 117, The Arizona Property Tax Assessed Valuation Amendment, property taxes are calculated based on the limited property value beginning with tax year 2015. See Schedule 13 for population data. General obligation bonds principal and interest payments are paid for with secondary property taxes. 134 Table of Contents Schedule 10 Town of Gilbert, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2024 Debt Outstanding Governmental Unit Estimated Share of Direct and Overlapping Debt Estimated Percentage a Applicable Debt repaid with property taxes Maricopa County b None Maricopa County Community College District c $ 5.85 % None 57,615,000 5.85 % $ 3,370,478 Maricopa County Special Health District 544,135,000 5.85 % 31,831,898 Gilbert Unified School District No. 41 108,900,000 68.72 % 74,836,080 Higley Elementary School District No. 60 61,210,000 86.99 % 53,246,579 Chandler Unified School District No. 80 379,607,778 14.02 % 53,221,010 211,485,000 0.35 % 740,198 None 11.94 % None Mesa Unified School District No. 4 East Valley Institute of Technology District No. 401 d Subtotal, overlapping debt Town of Gilbert direct debt 217,246,242 e 339,709,999 100.00 % Total direct and overlapping debt 339,709,999 $ 556,956,241 Source: The various jurisdictions a Proportion applicable to Town of Gilbert, Arizona is computed on the ratio of limited property valuation for fiscal year 2024 b Excludes various other non-property tax supported debt such as Public Finance Corporation lease revenue bonds, Stadium District revenue bonds and loans, Housing Authority loans and capital leases. c Excludes non-property tax supported debt such as revenue bonds. d Based on the East Valley Institute of Technology's secondary assessed valuation and does not include amount of secondary assessed valuation in Pinal County. e Includes: General Obligation bonds, Special Assessments bonds, Revenue Obligation bonds, Revenue bonds and unamortized bond premiums. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of Gilbert. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Gilbert. This process recognizes that, when considering Gilbert'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. 135 Table of Contents Schedule 11 Town of Gilbert, Arizona Legal Debt Margin Information Last Ten Fiscal Years 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt limit equal to 20% of net full cash assessed valuation $346,856,631 $369,065,090 $395,871,854 $524,748,518 $566,219,031 $622,820,366 $695,490,004 $761,061,261 $821,925,801 $1,079,702,554 Total net debt applicable to 20% limit 122,715,000 105,250,000 143,945,000 128,090,000 110,445,000 151,825,000 131,830,000 298,465,000 279,935,000 258,130,000 – – 9,675,637 9,516,726 8,090,801 11,071,074 9,400,564 20,134,505 19,026,138 17,939,159 $224,141,631 $263,815,090 $242,251,217 $387,141,792 $447,683,230 $459,924,292 $554,259,440 $442,461,756 $522,964,663 $803,633,395 35.38 % 28.52 % 38.81 % 26.22 % 20.93 % 26.15 % 20.31 % 41.86 % 36.37 % Debt limit equal to 6% of net full cash assessed valuation $104,056,989 $110,719,527 $118,761,556 $157,424,555 $169,865,709 $186,846,110 $208,647,001 $228,318,378 $246,577,740 $323,910,766 Total net debt applicable to 6% limit – – – – – – – – – – Legal 6% debt margin (available borrowing capacity) $104,056,989 $110,719,527 $118,761,556 $157,424,555 $169,865,709 $186,846,110 $208,647,001 $228,318,378 $246,577,740 $323,910,766 Total net debt applicable to the 6% limit as a percentage of 6% 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 20% Limitation Premium adjustment Legal 20% debt margin (available borrowing capacity) Total net debt applicable to the 20% limit as a percentage of 20% debt limit 25.57 % 6% Limitation 0.00 % Note: The Constitution of the State of Arizona establishes two levels of bonded indebtedness limits based upon the type of improvement constructed with the debt. The twenty percent bond type is restricted to water, wastewater, electric, parks and open space improvements, streets, public safety, and fire and emergency facilities. The six percent bond type is for all other general purpose improvements. In 2017, HB 2452: bonding; amortized premium; segregated fund passed, requiring the net premium associated with a general obligation bond to be amortized for all debt limitation purposes on a pro-rata basis each year. 136 Table of Contents Schedule 12 Town of Gilbert, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years Special Assessment Bonds Special Assessment Collections Fiscal Year 2015 $ 1,184,368 Debt Service Principal Interest $ 1,135,000 $ Public Facilities Municipal Property Corp. Revenue Bonds & Subordinate Lien Pledged Revenue Obligations Excise Taxes & Debt Service State-Shared Revenues Principal Interest Coverage Coverage 470,225 0.74 $ 125,743,087 $ 7,515,000 $ 6,030,998 9.28 2016 2,232,678 1,795,000 394,755 1.02 133,104,631 8,000,000 7,457,791 8.61 2017 695,541 375,000 321,073 1.00 146,007,063 9,660,000 6,877,081 8.83 2018 952,679 660,000 294,670 1.00 159,912,939 14,355,000 4,721,073 8.38 2019 818,092 550,000 264,095 1.00 170,885,312 12,745,000 5,213,731 9.52 2020 744,007 385,000 239,908 1.19 193,995,174 13,300,000 4,610,856 10.83 2021 617,024 510,000 217,075 0.85 222,921,775 15,110,000 3,958,981 11.69 2022 1,351,411 1,160,000 193,350 1.00 245,000,143 6,060,000 3,210,356 26.43 2023 490,470 350,000 135,965 1.01 278,807,974 6,350,000 2,916,956 30.09 2024 505,895 370,000 117,595 1.04 303,138,724 6,665,000 2,609,456 32.69 Water Resources Municipal Property Corp. Revenue Bonds Operating a Revenue Fiscal Year 2015 $ 63,338,422 Less: Operating a expenses $ 40,316,645 Net Available b Revenue $ 23,021,777 Wastewater System Dev't Fee Water System Dev't Fee $ 10,461,708 $ Debt Service Principal – $ 4,075,000 Interest $ Coverage 4,894,864 3.73 2016 64,659,329 42,119,371 22,539,958 11,873,824 – 4,275,000 4,683,019 3.84 2017 66,788,603 41,921,216 24,867,387 9,914,166 – 4,830,000 4,984,570 3.54 2018 69,487,792 45,014,122 24,473,670 9,944,975 5,308,292 8,480,000 4,970,948 2.95 2019 74,465,811 44,686,700 29,779,111 9,434,032 5,189,779 7,225,000 6,207,163 3.31 2020 78,919,231 48,227,311 30,691,920 6,679,195 3,394,980 7,560,000 5,865,313 3.04 2021 83,775,290 50,449,389 33,325,901 8,936,917 5,295,232 7,950,000 5,487,313 3.54 2022 84,754,618 53,871,428 30,883,190 9,634,948 3,022,095 8,340,000 5,089,813 3.24 2023 112,578,635 56,403,489 56,175,146 7,514,174 2,187,503 8,780,000 17,453,053 2.51 2024 159,177,338 65,539,489 93,637,849 7,458,535 1,838,009 20,155,000 25,765,088 2.24 a Combined operating revenues and expenses for the Water and Wastewater Funds. b Combined operating revenues and expenses for the Water and Wastewater Funds less debt service payments for the Water and Wastewater Revenue Bonds. Note: Details regarding Gilbert's outstanding debt can be found in the notes to the financial statements. 137 Table of Contents Schedule 13 Town of Gilbert, Arizona Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year Population a 2015 227,217 2016 232,399 2017 Personal b Income Per Capita (in thousands) Income (estimate) $ 6,962,000 c (estimate) $ Median Age c School Enrollment Unemployment d Rate e 30,639 32.7 37,240 4.30 % 7,534,000 32,418 33.2 34,079 4.20 247,600 8,558,000 34,565 33.1 35,449 3.70 2018 247,600 8,858,000 35,777 34.4 34,552 3.50 2019 259,386 8,775,000 33,831 35.2 33,393 3.80 2020 263,461 10,222,000 38,800 34.8 34,188 8.00 2021 273,796 10,623,000 38,800 34.8 33,055 4.90 2022 277,486 10,843,000 39,073 35.3 33,644 2.80 2023 280,391 13,680,000 48,791 36.4 33,210 3.30 2024 292,711 15,144,000 51,739 36.1 32,332 3.00 Sources: a Fiscal years 2015 through 2016 Census.gov; fiscal years 2017 and 2018 Office of Management & Budget; fiscal years 2019-2024 Maricopa Association of Governments. b Estimated based on population and per capita income. c Fiscal year 2015: American Community Survey; fiscal years 2016 through 2024: Census.gov d Gilbert Public Schools through 2021; 2022-2024 obtained from AZ Department of Education e AZ Office of Economic Opportunity through fiscal year 2019; AZ Commerce Authority fiscal years 2020 through 2024 138 Table of Contents Schedule 14 Town of Gilbert, Arizona Top Ten Principal Employers Current Fiscal Year Compared to Nine Years Ago Fiscal Year 2024 Employer Employees Fiscal Year 2015 Percentage of Total Town Employment Rank Employees Rank Percentage of Total Town Employment Gilbert Public Schools 3,417 1 3.26 % 3,657 1 4.23 % Banner Health/MD Anderson 2,537 2 2.42 2,811 2 3.25 Town of Gilbert 1,877 3 1.79 1,126 5 1.30 Frys Food Stores 1,496 4 1.43 988 8 1.14 Northrop Grumman 1,374 5 1.31 --- Higley Unified School District 1,333 6 1.27 848 9 0.98 Walmart Inc. (Walmart/Sam's Club) 1,070 7 1.02 1,398 3 1.62 Dignity Health 1,059 8 1.01 1,093 6 1.26 Deloitte 860 9 0.82 --- --- Silent Aire USA Inc 778 10 0.74 --- --- GoDaddy Software --- 1,346 4 1.56 BH Drywall --- 997 7 1.15 Hunter Contracting --- 650 10 0.75 Totals 15,801 15.07 % 14,914 Source: Maricopa Association of Governments (MAG) 2024 and 2015 Employer Database; Total Employment - Lightcast 2024 Total Jobs 139 --- 17.24 % Table of Contents Schedule 15 Town of Gilbert, Arizona Full-time Equivalent Employees by Function Last Ten Fiscal Years 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Management and policy 120.0 128.6 131.6 132.6 136.1 142.5 155.8 157.8 166.1 171.3 Finance and management services Court 19.0 21.0 21.0 25.0 25.5 26.5 28.5 28.5 29.0 30.0 32.9 32.9 32.9 33.9 33.9 33.9 34.1 34.1 34.1 34.1 Development services 73.3 66.7 68.7 83.7 84.5 93.3 94.3 98.3 102.3 108.3 Police 354.0 358.0 369.0 385.5 409.5 429.5 447.5 466.5 489.5 496.5 Fire 201.0 203.0 210.0 217.0 216.0 223.0 256.6 264.6 283.6 292.6 Highways and streets 58.0 51.7 51.7 53.7 55.7 55.7 57.7 57.7 59.7 59.7 Parks and recreation 118.7 125.3 126.2 128.3 128.5 169.1 176.4 182.4 186.2 188.9 Water 116.5 125.0 130.0 131.0 133.5 135.7 135.9 136.9 141.9 141.9 Wastewater 45.4 42.5 42.5 43.5 45.5 48.5 49.5 49.5 53.5 53.5 Solid Waste 84.0 94.3 96.3 97.3 100.3 101.8 103.8 106.8 106.8 109.8 26.0 26.0 26.0 26.0 26.0 26.0 26.0 26.0 29.0 31.0 – – – – – – – – 2.0 3.0 1,248.8 1,275.0 1,305.9 1,357.5 1,395.0 1,485.5 1,566.1 1,609.1 1,683.7 1,720.6 Function Governmental Funds General government Public safety Enterprise Funds Internal Service Funds Equipment maintenance Self-Insurance Total Source: Gilbert Office of Management & Budget 140 Table of Contents Schedule 16 Town of Gilbert, Arizona Operating Indicators by Function Fiscal Years 2015 - 2019 2015 Function General government: Management and policy a % of population satisfied with value received from tax dollar Number of recruitments Employee turnover Legal and court Case filings Development services Building permits issued Value of permits issued (in millions) Public Safety Police e Number of arrests Crimes per 1,000 population Fire Number of emergency calls b Response time average (en-route to on-scene) b Total dispatch time (dispatch to on scene) 2016 n/a 148 8.3 % 74 % 175 9.7 % 29,499 $ 3,364 496.00 8,900 15.5 17,777 3 min 57 sec n/a 2017 n/a 149 9.3 % 32,091 $ 3,584 553.8 8,702 15.3 18,923 3 min 55 sec n/a 2018 71 % 156 10.3 % 29,501 $ 4,157 532.2 8,250 15.5 19,422 n/a 5 min 9 sec 2019 79 % 199 10.4 % 26,147 $ 4,607 531.6 8,360 15.2 20,506 3 min 32 sec 4 min 48 sec 24,244 $ 4,441 746.3 8,061 13.2 20,903 3 min 25 sec 4 min 44 sec Highways and streets Average pavement condition index 75 72 74 72 73 Parks and recreation c Facility reservation requests c Facility reservations d Participants in recreation programs n/a 11,747 62,815 n/a 19,835 69,423 n/a 18,000 71,651 n/a 16,000 98,286 n/a 16,670 113,245 687 669 679 784 668 Water Daily average water production (mg) Average # of meters read per month Number of utility locates 43 73,199 20,100 43 82,871 21,197 46 83,945 26,850 47 84,243 27,380 47 84,147 23,157 Wastewater Daily average wastewater effluent (mg) Annual effluent produced/reused (mg) 13.21 4,822 14.03 4,815 14.91 4,931 15.41 5,115 16.20 5,784 112,778 19,418 114,144 19,894 110,520 22,567 113,745 24,058 129,737 21,120 Transportation Average daily ridership Solid Waste & Recycle (SWR) Solid waste tonnage Recycle tonnage Source: Various Town departments a Survey completed every other year; 2024 results not available at time of compilation Beginning in 2017, the Fire Department began reporting total dispatch time instead of average time en-route to on-scene Indicator no longer being tracked; beginning in 2015, tracking actual facility reservations d Only includes adult sports, youth ball programs, adaptive recreation, and town-sponsored special events. Effective July 1, 2021, participants are accounted for per session instead of per meeting date. e Excludes warrants b c 141 Table of Contents Schedule 16 Town of Gilbert, Arizona Operating Indicators by Function (continued) Fiscal Years 2020 - 2024 2020 Function General government: Management and policy a % of population satisfied with value received from tax dollar Number of recruitments Employee turnover Legal and court Case filings Development services Building permits issued Value of permits issued (in millions) 2021 n/a 200 9.6 % 69 % 210 9.8 % 20,813 $ Public Safety Police e Number of arrests Crimes per 1,000 population Fire Number of emergency calls b Response time average (en-route to on-scene) b Total dispatch time (dispatch to on scene) 4,278 607.80 7,889 13.0 20,680 3 min 25 sec 4 min 46 sec 2022 n/a 261 14.6 % 21,620 $ 6,060 702.5 8,275 12.1 22,160 3 min 36 sec 5 min 01 sec 2023 72 % 282 10.7 % 19,102 $ 4,655 441.5 7,997 12.0 24,672 3 min 53 sec 5 min 08 sec 2024 n/a 284 12.8 % 23,181 $ 3,073 424.1 7,648 11.0 25,437 3 min 30 sec 4 min 48 sec 26,076 $ 3,087 306.4 8,445 10.1 25,396 3 min 27 sec 4 min 44 sec Highways and streets Average pavement condition index 72 72 73 73 73 Parks and recreation c Facility reservation requests c Facility reservations d Participants in recreation programs n/a 14,993 133,868 n/a 14,976 34,697 n/a 16,305 122,581 n/a 18,380 124,865 n/a 21,364 124,668 522 296 322 385 401 Water Daily average water production (mg) Average # of meters read per month Number of utility locates 50 83,650 22,357 54 86,038 29,719 50 91,196 31,943 48 91,595 25,191 50 95,102 26,148 Wastewater Daily average wastewater effluent (mg) Annual effluent produced/reused (mg) 16.54 5,307 17.32 5,162 17.21 5,852 18.13 5,867 17.34 6,190 130,713 22,325 137,888 22,252 142,802 19,131 138,850 18,944 133,619 17,871 Transportation Average daily ridership Solid Waste & Recycle (SWR) Solid waste tonnage Recycle tonnage 142 Table of Contents Schedule 17 Town of Gilbert, Arizona Capital Asset Statistics by Function Last Ten Fiscal Years 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Function Public safety Police Number of police cars 185 217 224 251 249 263 299 309 332 346 10 10 10 10 11 11 11 11 11 11 1,032 1,055 908 920 926 943 945 980 1,001 1,004 185 185 194 201 206 210 214 222 224 227 605 605 645 645 645 725 725 693 693 828 1,304 1,660 1,322 1,335 1,366 1,100 701 710 728 748 1,019 1,038 887 896 923 774 795 802 811 820 67 57 56 71 63 62 63 70 73 80 Fire Fire stations Highways and streets Street centerline miles (estimate) a Traffic control signals Parks and recreation Total acres of park land, trails, open space, municipal areas and support facilities, operated and maintained Water Miles of water main b, c, d Wastewater Miles of wastewater main b, c Solid Waste Garbage trucks e Source: Various Town departments a The street centerline miles were previously estimated using different methods, such as end of warranty and beginning of Town ownership. Beginning in 2015, the estimate is based on acceptance letter date. b Beginning in 2017, estimates were updated to exclude miles not owned by Gilbert c Beginning in 2020, estimates were updated to exclude preliminary miles (Initial Acceptance Letter is not completed) d Beginning in 2021, estimates were updated to exclude water mains less than 8" in diameter e Prior to fiscal year 2016, wheel loaders were included in the statistic Note: No capital asset statistics are available for the general government or transportation functions. 143 Table of Contents Schedule 18 Town of Gilbert, Arizona Property Value, Construction and Bank Deposits Last Ten Fiscal Years Residential Construction Fiscal Year Number of Permits 2015 1,668 2016 a Value $ Commercial Construction Number of Permits 350,707,421 268 1,764 402,071,499 2017 1,754 2018 a Value $ Other Construction Number of Permits $ a Value Secondary Assessed b Property Value 63,344,257 $ 81,934,987 1,428 278 71,594,349 1,542 80,164,565 n/a 336,676,752 264 119,477,874 2,139 76,023,423 1,604 312,805,353 199 129,703,582 2,804 2019 1,535 467,961,355 155 164,601,167 2020 1,194 435,133,652 208 2021 2,161 495,787,159 2022 1,358 2023 2024 Maricopa County Bank c Deposits Limited Property b Value 1,829,471,839 n/a $ $ 76,889,448,000 1,845,325,449 84,014,143,000 n/a 1,979,359,269 92,567,543,000 89,093,501 n/a 2,105,762,268 98,288,781,000 2,751 113,774,277 n/a 2,256,162,227 107,879,366,000 85,390,836 2,876 87,276,267 n/a 2,428,289,285 132,017,181,000 219 103,066,452 3,680 103,670,431 n/a 2,618,569,519 158,003,339,000 263,268,046 133 55,502,862 3,164 122,769,529 n/a 2,807,360,551 178,327,411,000 854 332,291,531 144 34,633,762 2,075 57,173,755 n/a 2,998,786,660 163,826,070,000 619 209,549,137 194 51,504,944 2,274 45,360,288 n/a 3,216,754,422 168,514,956,000 Sources: a Development Services Department b Maricopa County Assessor's Office c Federal Deposit Insurance Corporation Note: In accordance with Proposition 117, The Arizona Property Tax Assessed Valuation Amendment, property taxes are calculated based on the limited property value beginning with tax year 2015. 144 Table of Contents Schedule 19 Town of Gilbert, Arizona System Development Fees Fiscal Year 2024 System Development Fee Type Police System Development Fees Collected Beginning Balance $ Fire 3,709,916 $ 1,693,776 Other Revenue $ Expenditures 202,579 $ Ending Balance (3,521,002) $ 2,085,269 (5,864,026) 1,385,058 11,276 (2,981,987) (7,449,679) General Government – 101,202 5,078 (106,280) – Parks and Recreation 35,377,521 7,948,998 1,764,832 (3,667,370) 41,423,981 Roads 13,899,507 3,634,882 702,673 (6,603,141) 11,633,921 Traffic Signal 13,974,152 1,296,522 674,675 (2,676,350) 13,268,999 Water (9,477,808) 4,520,514 20,523,425 (14,687,661) 878,470 Water Resources (15,680,640) 2,938,021 23,049 (1,631,459) (14,351,029) Wastewater 10,630,053 1,838,009 553,656 (3,949,777) 9,071,941 (39,825,027) $ 56,561,873 Totals $ 46,568,675 $ 25,356,982 Wastewater system development fee - Greenfield $ 2,856 Wastewater system development fee - Neely $ 157 $ 24,461,243 $ Equivalent Residential Unit Source: Gilbert Finance & Management Services Department a The negative ending balance for the fire system development fees is funded by the general fund. The general fund had a cash balance of $340,036,909 at June 30, 2024. b The negative ending balance for the water resources system development fees are funded by the water replacement and repair fund. The water replacement and repair fund had a cash balance of $92,063,348 at June 30, 2024. 145 a b Table of Contents Schedule 20 Town of Gilbert, Arizona Property Tax Levies and Collections Last Ten Fiscal Years Initial Year Collections Fiscal Year Tax Levy County Resolutions 2015 $ 19,487,085 $ 2016 19,495,256 (32,290) 2017 20,913,149 2018 Cumulative Collections Net Tax Levy Current Collections Percent of Levy County Resolutions (72,483) $ 19,414,602 $ 19,230,809 99.05 % 19,462,966 19,286,314 99.09 (83,434) (80,844) 20,832,305 20,645,301 99.10 21,667,785 (53,647) 21,614,138 21,411,196 2019 22,353,420 (44,819) 22,308,601 2020 24,017,440 (28,727) 2021 25,917,731 2022 $ Percent of Levy $ 19,357,547 100.00 % 19,411,822 124,984 19,411,298 100.00 (142,292) 20,770,857 125,054 20,770,355 100.00 99.06 (87,156) 21,580,629 168,611 21,579,807 100.00 22,129,563 99.20 (100,692) 22,252,728 120,302 22,249,865 99.99 23,988,713 23,702,115 98.81 (36,693) 23,980,747 276,091 23,978,206 99.99 (28,414) 25,889,317 25,661,002 99.12 (50,547) 25,867,184 202,509 25,863,511 99.99 27,784,120 (87,560) 27,696,560 27,432,417 99.05 (91,415) 27,692,705 251,980 27,684,397 99.97 2023 29,686,793 (85,585) 29,601,208 29,316,884 99.04 (85,585) 29,601,208 192,931 29,509,815 99.69 2024 31,514,100 (191,281) 31,322,819 30,971,115 98.88 (191,281) 31,322,819 – 30,971,115 98.88 146 (128,928) $ 19,358,157 Delinquent Total Collections Collections 126,738 Source: Maricopa County Assessor $ Net Tax Levy Table of Contents Schedule 21 Town of Gilbert, Arizona Principal Property Taxpayers Fiscal Year 2024 Principal Taxpayer Limited Property Valuation Type of Business $ As % of Gilbert's Total Limited Property Valuation Westcor SanTan Village LLC Shopping Center 16,720,972 0.52% American Furniture Warehouse Co Retail 7,768,530 0.24 SP TIC 3 LLC/SP TIC 2 LLC/SP TIC 1 LLC/ETAL Real Estate Development / Holdings 7,405,836 0.23 BCI IV Gilbert Commerce Park LLC Real Estate Development / Holdings 5,958,390 0.19 IH6 Property Phoenix LP Real Estate Development / Holdings 5,909,264 0.18 Gilbert Gateway Towne Center Holdings LLC Real Estate Development / Holdings 5,518,101 0.17 Target Corporation Retail 5,439,857 0.17 LIV Northgate LLC Real Estate Development / Holdings 7,087,368 0.22 Breit Olympus MF Redstone LLC Real Estate Development / Holdings 5,526,743 0.17 Vestar Crossroads Gilbert LLC Real Estate Development / Holdings 5,114,771 0.16 Breit Olympus MF Vistara LLC Real Estate Development / Holdings 5,342,358 0.17 AZ Flats at San Tan Apartments LLC Real Estate Development / Holdings 5,301,587 0.16 Salt River Project (T&D) Utility 10,341,592 0.32 Eastgroup Properties LP Real Estate Development / Holdings 4,879,288 0.15 SanTan MP LP Real Estate Development / Holdings 4,759,362 0.15 Frankel Family Trust Real Estate Development / Holdings 6,955,789 0.22 Eleven San Tan LLC Real Estate Development / Holdings 6,833,583 0.21 USCIF Artis Park Lucero Venture Real Estate Development / Holdings 6,748,223 0.21 TGA Germann Road Apartments LLC Real Estate Development / Holdings 6,264,482 0.19 Epicenter Residential Owner Real Estate Development / Holdings 6,120,000 0.19 Elevation SanTan Apartments LLC Real Estate Development / Holdings 5,694,165 0.18 PS Mountain West LLC Real Estate Development / Holdings 5,465,488 0.17 2350 South Wade Drive Investors LLC Real Estate Development / Holdings 5,323,215 0.17 Acero Val Vista LLC Real Estate Development / Holdings 5,247,516 0.16 Smiths Food & Drug Centers Inc Retail 4,989,582 0.16 162,716,062 5.06% Total $ Source: Maricopa County Assessor. Top taxpayers based on Net Assessed Limited Property Value of Real and Secured Personal Property for tax year 2024. Notes: Information included for current fiscal year only as this is what is required for continuing disclosure requirements for Gilbert's bond issues. Only the top 24 taxpayer's information was available at the time of this report. 147 Table of Contents 148