City of Peoria, Arizona FY18 Comprehensive Annual Financial Report (CAFR) Fiscal Year Ended June 30, 2018 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2018 City of Peoria, Arizona City Council: Cathy Carlat, Mayor Michael Finn, Vice Mayor Bridget Binsbacher Jon Edwards Vicki Hunt Carlo Leone Bill Patena Administrative Staff: Jeff Tyne, City Manager Andrew Granger, Deputy City Manager Katie Gregory, Deputy City Manager Erik Strunk, Deputy City Manager Prepared By: Finance Department Sonia Andrews, Chief Financial Officer Sean Kindell, Deputy Finance Director Brian Richie, Accounting Supervisor City of Peoria Core Values P “The City of Peoria team members share a commitment to provide quality service for our community.” Professional E Demonstrates professional skills and knowledge needed to perform the job; keeps informed of developments in the professional field and applies this knowledge to the job; encourages and supports the development of subordinate personnel. Ethical O Maintains the highest standards of personal integrity, truthfulness, honesty, and fairness in carrying out public duties; avoids any improprieties; trustworthy, maintains confidentiality; never uses City position or power for personal gain. Open R Communicates effectively orally and in writing; involves appropriate individuals and keeps others informed; acts as a team member; participates and supports committees/boards/commissions/task forces; approachable; receptive to new ideas; supports diversity and treats others with respect; actively listens. Responsive I Consistently emphasizes and supports customer service; takes responsibility to respond to all customers in a prompt, efficient, friendly, and patient manner; represents the City in an exemplary manner with civic groups/organizations and the public. Innovative A Demonstrates original thinking, ingenuity, and creativity by introducing new ideas or courses of action; supports innovative problem-solving by identifying and implementing better methods and procedures; takes responsible risks; demonstrates initiative and “follows through” on development and completion of assignments. Accountable Accepts responsibility; committed to providing quality service to our community; plans, organizes, controls and delegates appropriately; work produced is consistent and completed within required timeframes; implements or recommends appropriate solutions to problems; acknowledges mistakes; manages human and financial resources appropriately. Introductory Section CITY OF PEORIA, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting City of Peoria Organizational Chart Principal Officials of the City City Council Pictures and District Map Page v xiii xiv xv xvi II. FINANCIAL SECTION Independent Auditor’s Report 1 A. MANAGEMENT’S DISCUSSION AND ANALYSIS 3 B. BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position Statement of Activities 17 18 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Position - Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Of Governmental Funds to the Statement of Activities - Governmental Activities Budgetary Comparison Statements - General Fund and Major Special Revenue Funds: General Fund Half-Cent Sales Tax Fund Highway User Revenue Fund Transportation Sales Tax Fund Development Fee Fund 20 23 24 27 28 30 31 32 33 Proprietary Fund Financial Statements Statement of Net Position Statement of Revenues, Expenses, and Changes in Fund Net Position Statement of Cash Flows 34 36 38 Fiduciary Fund Financial Statements Statement of Net Position Statement of Changes in Net Position 42 43 Notes to the Financial Statements 45 i CITY OF PEORIA, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of the City’s Proportionate Share of the Net Pension/OPEB Liability Cost-Sharing Pension Plan Schedule of Changes in Net Pension Liability (Asset) and Related Ratios Schedule of Changes in Net OPEB Liability and Related Ratios Schedule of Pension/OPEB Contributions Notes to Pension/OPEB Plan Schedules Page 79 80 82 84 85 D. SUPPLEMENTARY INFORMATION - COMBINING FUND FINANCIAL STATEMENTS AND BUDGETARY SCHEDULES Major Governmental Funds Other Than General Fund and Special Revenue Funds Budgetary Comparison Schedules – Major Debt Service Fund General Obligation Bonds Debt Service Fund 89 Non-Major Governmental Funds Combining Statements Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Budgetary Comparison Schedules Public Transit Fund Other Grants Fund Municipal Development Authority (MDA) Debt, Debt Service Fund Community Facilities District (CFD) Bonds Debt Service Fund Special Assessment Debt Service Fund Non-Bond Debt Service Fund Community Facilities District (CFD) Bonds Capital Projects Fund General Obligation Bonds Capital Projects Fund Non-Bond Capital Projects Fund 92 94 96 97 98 99 100 101 102 103 104 Internal Service Funds Combining Statement of Net Position Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Combining Statement of Cash Flows 107 108 109 Fiduciary Funds Combining Statement of Fiduciary Net Position – Agency Funds Combining Statement of Changes in Assets and Liabilities – Agency Funds ii 111 112 CITY OF PEORIA, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2018 III. STATISTICAL SECTION - Unaudited Net Position By Component Changes in Net Position Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds City Transaction Privilege Taxes By Category Direct and Overlapping Sales Tax Rates Sales Tax Payers - By Category Assessed Values By Property Classification Comparative Assessed Values Direct and Overlapping Property Tax Rates Direct and Overlapping Property Tax Levies Limited Property Value Top Ten Tax Payers Property Tax Levies and Collections Utility Statistical Data Outstanding Debt By Type Ratio of Net General Bonded Debt to Full Cash Value and Net Bonded Debt Per Capita Direct and Overlapping General Obligation Bonded Debt – Current Fiscal Year Direct and Overlapping Governmental Activities Debt – Current Fiscal Year Direct and Overlapping Governmental Activities Debt – Last Ten Fiscal Years Legal Debt Margin Pledged Revenue Coverage – Excise Tax and State Shared Revenue Debt Obligations - Governmental Portion Pledged Revenue Coverage – Water & Wastewater Revenue Bonds Pledged Revenue Coverage – Special Assessment Bonds Special Assessment Collections Demographic and Economic Statistics Major Employers Within the City Authorized Full-time Equivalent City Government Employees By Function Operating Indicators By Function/Program Capital Asset Statistics By Function/Program Table Page I II III IV V VI VII VIII IX X XI XII XIII XIV XV 115 116 118 119 120 121 122 123 124 125 126 129 128 129 132 XVI 133 XVII 134 XVIII 135 XIX XX 136 137 XXI XXII XXIII XXIV XXV XXVI 138 139 140 141 142 143 XXVII XXVIII XXIX 144 145 146 IV. CONTINUING DISCLOSURES Continuing Disclosures Annual Report 148 iii iv December 12, 2018 Honorable Mayor, City Council, City Manager and Citizens of Peoria, Arizona: We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) for the City of Peoria, Arizona (the City) for the fiscal year ended June 30, 2018. This report was prepared by the Financial Services Division of the Finance Department. The CAFR represents management’s report of the City’s complete financial results to its governing body, constituents, legislative and oversight bodies, investors, and creditors. Copies of this report will be sent to elected officials, management personnel, bond rating agencies, Nationally Recognized Municipal Securities Information Repositories, and other agencies that have expressed interest in the City’s financial matters. Copies of this financial report will also be placed in the City’s libraries, as well as on the City’s website, for use by the public. The Management’s Discussion and Analysis presented on pages 3-16 has a different focus and purpose than this transmittal letter and should be read in conjunction with this transmittal. THE FINANCIAL REPORTING ENTITY This CAFR includes financial statements on both a government-wide and fund basis for the City as the primary government, as well as its component units. Component units are separate legal entities included in the reporting entity due to the significance of their financial or operational relationship with the City. Criteria used by the City for inclusion of activities in preparing its financial statements are in conformity with GASB Statement No.14, The Financial Reporting Entity, as amended by GASB Statement No.61. Blended component units, although legally separate entities, are, in substance, part of the primary government’s operations and are included as part of the primary government. Accordingly, the financial reporting entity consists of the City and five blended component units, the City of Peoria Municipal Development Authority, Inc., the Vistancia Community Facilities District, the Vistancia West Community Facilities District, the City of Peoria Employee Benefits Trust and the City of Peoria Workers’ Compensation Trust as discussed further in Note 1.A of the notes to the financial statements. The City, chartered in 1954, has a Council-Manager form of government with the City Council consisting of the Mayor and six Council Members. Pursuant to an amendment to the City Charter approved by the voters in 1997, the Mayor is elected at-large for a four-year term. Council members are elected, by district, for four-year terms. The City Council is vested with policy and legislative authority and is responsible for passing ordinances; adopting the budget; appointing committee, commission, and board members; and appointing the positions of City Manager, City Attorney, and Judge. The City Manager is responsible for carrying out the policies and ordinances of the City Council, as well as overseeing the day-to-day operations of the City. The City encompasses approximately 179 square miles in the northwestern portion of Maricopa County, and is one of several major cities comprising the greater Phoenix metropolitan area. Between the 2010 census and the most current Census Bureau estimate, Peoria’s population increased by 12%, from 154,065 in 2010 to 173,208 in 2017. The City’s growth is attributable to safe, well-planned neighborhoods with a diversity of housing options, excellent school districts, and expansion of the metropolitan freeway v systems, allowing Peoria residents to commute effectively to other cities in the Phoenix metropolitan area. Population growth trends are expected to continue at a similar pace. The City provides a full range of municipal services, including police, fire and emergency medical services, water, sewer and solid waste services, street construction and maintenance, recreational and cultural events, library services, public transportation, planning and zoning services, and general administrative services. In addition, the City offers a wide range of community facilities including two community centers, three swimming pools, two libraries, and 34 neighborhood parks encompassing 305 acres. The Peoria Sports Complex—operated by the City—was the nation’s first two-team baseball spring training facility and the spring training home of the Seattle Mariners and San Diego Padres. The City opened its first large community park, Rio Vista Community Park, in the southern part of the City in fiscal year 2004. This 52 acre facility has athletic fields, playgrounds, ramadas, an urban lake, skate park and other amenities for the citizens’ enjoyment. The City’s second community park, Pioneer Community Park was completed in fiscal year 2014 and includes ball fields, multipurpose fields, a dog park, fishing lake and other amenities. The City is in the construction phase of its third community park, Paloma Community Park which is expected to be completed in 2020. The City also has a performing arts center with a 250-seat main auditorium, 80-seat black box theater, and classroom and administrative space in the downtown area. Another attraction of the City is Lake Pleasant, in northern Peoria’s Lake Pleasant Regional Park. This 10,000 acre lake is the second largest lake in Arizona, providing residents and visitors with boating, fishing, camping and other outdoor recreation activities. LOCAL ECONOMIC CONDITION AND OUTLOOK During fiscal year 2018, Peoria’s economy continued to see healthy home construction activity while commercial development showed expansion and stability. Peoria is part of the metro Phoenix West Valley, which includes Glendale, Goodyear, Surprise and Buckeye. Over the past 10 years, the West Valley has focused on transportation infrastructure and economic development. Homes sales in the West Valley continue to surpass other metro Phoenix regions. The West Valley has the region’s newest freeway (Loop 303) and developments, such as Vistancia, a top selling master-planned community in north Peoria are bringing higher-end homes, golf courses and shopping amenities to attract homebuyers. Home sales are expected to continue growing in Peoria and the West Valley. New residential building permits issued have exceeded 1,500 each year in the last 3 years. For fiscal year 2018, the City issued 1,525 new residential building permits, a little lower than the 1,695 issued in fiscal year 2017. Median home prices for new homes increased from $365,060 in FY2016-17 to $392,422 in FY2017-18. The City’s total property full cash value, which lags the market, increased by 10.8% from $16.6 billion in 2017-18 to $18.4 billion in 2018-19. The highest pre-recession full cash value reached was $18.3 billion in 2008-09 before falling to a low of $10.1 billion in 2013-14 as a result of the housing downturn. The unemployment rate in Peoria improved from 4.2% in June 2017 to 4.0% in June 2018. While wage increases have been offset by cost of living increases, consumer spending remained healthy. The City’s sales and use tax collections in fiscal year 2018 totaled $89.8 million, a 6.6% increase from the $84.2 million in the prior year. Economic Outlook Overall, the outlook for Peoria is positive. Arizona’s economy continues to show improvements in sales and income tax collections, gains in construction and tourism. Local sales tax revenues grew by 6.6 % this year and are expected to continuing growing in FY2018-19, with strong performance in retail (especially auto sales), restaurants and bars, and residential rental categories. Moreover, as mentioned above, building activity continues to be strong and we expect the number of new building permits to remain at or above 1,500 next year. vi MAJOR PROJECTS AND INITIATIVES The Council utilizes a goal setting and strategic planning process to assist in the identification, prioritization, and management of capital projects, initiatives, service efforts and emerging strategic issues. Given the competing priorities for available resources, careful consideration is given to all projects and initiatives to ensure investments of public funds achieve Council objectives and provide a long-term sustainable benefit to the community. Listed below are the Council goals to further the City’s commitment to provide quality service, economic development and improved quality of life for the citizens of Peoria.  Transportation – to provide efficient and effective street systems, affordable and accessible mass transit for access to jobs, schools and recreational facilities and to promote extensive biking and walking opportunities  Public Safety – to promote a community of low crime, strong perception of personal safety, prompt and effective response to medical and fire emergencies and neighborhoods that are free of blighted conditions.  Economic Prosperity – to encourage diversification of industries and retail base, support entrepreneurship and innovation, increase employment opportunities through workforce development and quality educational institutions.  Built and Natural Environment – to maintain infrastructure that is fully functioning and in excellent condition, key natural assets that are preserved and maximized for recreation and facilities that promote health and wellness and enhanced urban environment.  Parks and Recreation – to serve various populations with social, recreational, active and healthy opportunities and provide strategic support of tourism and visitor events.  Arts and Culture – to promote access to arts education and experience for our residents and to enhance the tourism and economic potential of the City.  Communications – to ensure broad civic awareness, promote public trust in their municipal government and promote flow of information among all community stakeholders. Major Initiatives and Accomplishments in 2018 Major initiatives and accomplishments during fiscal 2018 are as follows: Paloma Community Park During FY2017-18, the City began construction of the new Paloma Community Park in the northern part of the City. The park's 85-acre first phase will include a trailhead, fishing pond, dog park, four lighted baseball fields, three soccer fields and open turf space, large ramadas, a playground and splash pad. All park lighting will be energy-efficient LED bulbs. The City's total cost to complete the first phase of the park will be $40.2 million. New Police Building The new police station, located in the northern part of the City, opened in October 2017. This state of the art, 17,000 square foot building features a dedicated training room, prisoner processing area, K-9 training area, modern workout facility and multiple officer workstations. The innovative design combined with many of its unique and sustainable features resulted in the building being the most recent of Peoria’s municipal buildings to receive the Leadership in Energy and Environmental Design (LEED) certification. vii New Bus Service along 83rd A 5-mile extension of Bus Route 83 was completed in October 2017. As part of the Valley Metro service changes across the Valley, the extension of Route 83 is one of the largest, starting at Camelback Road on 83rd Avenue to the Arrowhead Transit Center just north of Bell Road. New Trailhead along New River Trail The City completed the second river trailhead along the New River Trail System on August 3, 2017. The New River Trailhead at Fletcher Heights provides access to the New River Trail that connects several miles of trail through the Valley and includes stretching areas, benches and bike stands, large shaded ramada, a chilled drinking fountain, dog baggie station, and a parking area. Energy Efficiency Project During FY2017-18, the City continued its retrofitting of interior and exterior lighting with energy efficient LED bulbs throughout 13 city facilities and installation of solar photovoltaic on roofs, parking canopies and on the ground at eight sites throughout the City. Upon completion, the city anticipates lower energy expenses over the next 20 years or more. This project was financed with New Clean Renewable Energy Bonds. Peoria Shakespeare in the Park and Film Festival For the first time, the City held a Shakespeare in the Park festival in March 2018, featuring Shakespeare’s “Twelfth Night” and a menagerie of other Renaissance-themed entertainment and festivities. In October 2018, the City will also host its first film festival the Peoria Film Festival in partnership with the Phoenix Film Foundation. Accreditations and Awards In September 2017, the City was awarded the Traffic Engineering Council Technical Achievement Award from the Institute of Transportation Engineers (ITE) for designing an innovative pilot program that archived intersection video footage to aid police investigations of serious fatal and injury crashes and felonies. A two-pronged approach was used when developing the program to provide policy guidance and a technically feasible approach for improving the investigations of serious collisions and intersection safety for police and traffic departments worldwide. In January 2018, Peoria was ranked the fourth best place to find a job in America in 2018 by WalletHub.com, a personal finance outlet. To determine their rankings, WalletHub compared more than 180 U.S. cities across 26 key indicators of job-market strength. They range from job opportunities to employment growth to monthly average starting salary. In February 2018, the City was awarded a 3-STAR Community Rating from STAR Communities for national leadership in sustainability. Peoria is the 69th city in the nation to receive recognition from STAR Communities for its participation in the STAR Community Rating System (STAR), which evaluates the livability and sustainability of U.S. communities. In May 2018, the City received the GFOA Excellence in Government Finance Award for its Economic Development Monitoring system. BOND RATING In August 2017, Fitch Ratings upgraded its long-term rating from AA+ to AAA for the City’s General Obligation Bonds and designated the ratings outlook as stable as a result of amendments to the Arizona Revised Statutes that provided general obligation bondholders with a statutory lien on ad valorem taxes of the City. In April 2018, Fitch Ratings affirmed the City’s Water and Sewer Revenue Bonds’ AA rating, designating the rating outlook is stable. These ratings reflect the city’s economic prospects, sound financial management practices, solid reserves and manageable debt levels. viii FINANCIAL CONTROLS Internal Controls The management of the City of Peoria is responsible for establishing and maintaining a system of internal controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: 1) the safeguarding of assets against loss from unauthorized use or disposition, and 2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the valuation of costs and benefits requires estimates and judgments by management. The system of internal control is subject to periodic evaluation by management and is also considered by the independent auditors in connection with the annual audit of the City’s financial statements. All internal control evaluations occur within the above framework. The City's internal accounting controls are considered to adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary Controls The City, like all cities in the State of Arizona, is subject to numerous budget and related legal requirements. Article IX, Section 20 (1) of the Arizona Constitution sets limits on the City's legal budget capacity. At a general election held in March 2003, the citizens of Peoria approved a permanent adjustment of the expenditure base from the original 1979-80 base of $3,247,857 to a new base of $18,247,857. The permanent adjustment eliminated the need for voter approval every four years. After adjustment for inflation and population growth, the City’s expenditure limitation for fiscal year 2017-18 was $855,005,604. The City may utilize the additional expenditure authority for any local budgetary purposes. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated operating budget approved by the Mayor and Council. Activities of the general fund, special revenue funds, debt service funds, capital project funds, enterprise funds, and internal service funds are included in the annual appropriated budget. The legal level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted by the City Council. The City additionally exercises management control and oversight of the budget at the department level within each fund. In addition to maintaining budgetary control via a formal appropriation, the City maintains an encumbrance accounting system. Encumbrances are made against appropriations upon the issuance of a purchase order. Encumbered appropriations lapse at fiscal year-end and are rebudgeted as needed in the next fiscal year. Financial Policies The City has an important responsibility to its citizens to carefully account for public funds, to manage its finances wisely, and to plan for the adequate funding of services desired by the public, including the provision and maintenance of public facilities. The City needs to ensure that it is capable of adequately funding and providing those government services desired by the community. Ultimately, the City’s reputation and success depends on the public’s awareness and acceptability of the management and delivery of these services. The City operates under a comprehensive set of financial policies adopted by Council. The Principles of Sound Financial Management establishes guidelines for the City’s overall fiscal planning and management. These principles are intended to foster and support the continued financial strength and stability of the City of Peoria as reflected in its financial goals. The City’s financial goals are broad, fairly timeless statements of the financial position the City seeks to attain:  To deliver quality services in an affordable, efficient and cost-effective basis providing full value for each tax dollar. ix    To maintain an adequate financial base to sustain a sufficient level of municipal services, thereby preserving the quality of life in the City of Peoria. To have the ability to withstand local and regional economic fluctuations, to adjust to changes in the service requirements of our community, and to respond to changes in Federal and State priorities and funding as they affect the City's residents. To maintain a high bond credit rating to ensure the City’s access to the bond markets and to provide assurance to the City's taxpayers that the City government is well managed and financially sound. These policies establish minimum and recommended fund balance/net position and reserves, as well as establishing policies on the use of one-time revenues (to be used for one-time expenditures), fiscal planning and budgeting, expenditure control, capital improvement program, cash management, debt management, and economic development. Long Term Financial Planning The City annually updates a five‐year long‐range forecast, incorporating both projected revenues and expenditures for the City’s major operating funds. The five‐year revenue forecast only includes revenues that are anticipated to be sustainable over the five‐year period. Expenditure projections include anticipated operating impacts of the adopted capital improvement program. Additionally, the City maintains a 10-year Capital Improvement Program that the City Manager submits annually for review by the City Council. The program is updated annually and includes the cost of construction and operating expenditures. No capital improvement project will be authorized or awarded until the funding sources have been established to finance the project. When current revenues or resources are available for Capital Improvement Projects, consideration will be given first to those capital assets with the shortest useful life, and for assets whose nature make them comparatively more difficult to finance with bonds or lease financing. OTHER INFORMATION Responsibility for the accuracy of the presented data and the completeness and fairness of the presentations in this CAFR, including all disclosures, rests with the management of the City. The City has established and maintains a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to allow the compilation of sufficient reliable information for the preparation of financial statements. We believe the data, as presented in this report, is accurate in all material respects and is presented in a manner that fairly sets forth the financial position and results of operations of the City on both a government-wide and fund basis. Furthermore, we believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activity and financial stability have been included. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for local governments as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA). Independent Audit The basic financial statements and related notes have been audited by an independent firm of certified public accountants, Heinfeld, Meech & Co., P.C., whose report is included herein. The audit satisfies Article VI, Section 7, of the City Charter, which requires an annual audit of all accounts of the City by an independent certified public accountant. As stated in the independent auditors’ report, the goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Peoria, Arizona, for the fiscal year ended June 30, 2018, are free from material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors x concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the financial statements of the City for the fiscal year ended June 30, 2018, are fairly presented, in all material respects, in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. Additionally, the City is required to have an independent audit (“Single Audit”) of federal financial assistance received by the City directly from federal agencies, or passed through to the City by the State of Arizona or other governmental entities during the fiscal year. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the government’s internal controls and compliance with legal requirements having a direct and material impact on major programs, with special emphasis on internal controls and compliance requirements involving the administration of major federal awards. The results of the City’s single audit for the fiscal year ended June 30, 2018, found no instances of material weakness or significant deficiencies in the internal controls. The reports from Heinfeld, Meech & Co., P.C. are available in the City of Peoria, Arizona’s separately issued Single Audit Report. Award The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017. This is the 33rd consecutive year the City of Peoria has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. That report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. We believe our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement program's requirements. As such, we are submitting this report to the GFOA to determine its eligibility for a certificate. Acknowledgments The preparation of this Comprehensive Annual Financial Report could not have been accomplished without the efficient and dedicated services of the staff of the Finance Department, especially the Financial Services Division. We want to give special recognition to the City’s accounting team for their diligent efforts and superior contributions to this report. We also wish to thank the members of the City Council for their interest and support in planning and conducting the financial affairs of the City in a responsible and progressive manner. Sincerely, Sonia K. Andrews Chief Financial Officer xi xii Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Text38: City of Peoria Arizona For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2017 Executive Director/CEO xiii City of Peoria Organizational Chart Peoria Citizens Citizens Advisory Boards and Commissions Municipal Court Mayor and City Council City Manager City Attorney Assistant to the City Manager Human Resources Director Senior Policy Advisor for the Mayor Intergovernmental Affairs Director Strategic Support Officer Office of Communications Director Real Estate Development Office Deputy City Manager Police Chief Deputy City Manager Planning & Community Development Director Deputy City Manager Parks, Recreation and Community Facilities Director Fire Chief Information Technology Director Finance and Budget Director Economic Development Director Development and Engineering Director City Clerk xiv Neighborhood and Human Services Director Public Works Director Water Services Director City of Peoria Principal Officials of the City Fiscal Year 2018 Cathy Carlat Mayor Michael Finn Bridget Binsbacher Vicki Hunt Carlo Leone Vice Mayor Councilmember Councilmember Councilmember Jon Edwards Councilmember Bill Patena Councilmember Jeff Tyne City Manager Andrew Granger Deputy City Manager Katie Gregory Deputy City Manager Erik Strunk Deputy City Manager George Anagnost Thomas Adkins John Imig Municipal Judge Governmental Affairs Director Information Technology Director Vanessa Hickman Bobby Ruiz Jennifer Stein City Attorney Fire Chief Director of Communications John Sefton Art Miller Kevin Burke Parks, Recreation and Community Facilities Director Police Chief Public Works Director Rhonda Geriminsky City Clerk Adina Lund Development and Engineering Director Rick Buss Economic Development Services Director Laura Ingegneri Chris Jacques Sonia Andrews Human Resources Director Planning and Community Development Director Finance and Budget Director Tammy Shreeve Chris Hallett Water Services Director Neighborhood and Human Services Director xv City of Peoria Council Districts Lake Pleasant Mayor Cathy Carlat Vice Mayor Michael Finn Palo Verde District Carefree Hwy 67th Ave. Mayor Pro-Tem Vicki Hunt Acacia District Pinnacle Peak Rd. Councilmember Jon Edwards Willow District Councilmember Bill Patena Ironwood District Councilmember Bridget Binsbacher Mesquite District Bell Rd. Youth Council Liaison Leah Gilbertson xvi 115th Ave. Youth Council Liaison Frank Johnson Peoria Ave. Northern Ave. 67th Ave. Councilmember Carlo Leone Pine District Financial Section INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Peoria, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Peoria, Arizona (the City), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Peoria, Arizona, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General, Half-Cent Sales Tax, Highway User Revenue, Transportation Sales Tax, and Development Fee Funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 1.I., the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, and Statement No. 86, Certain Debt Extinguishment Issues, for the year ended June 30, 2018, which represent changes in accounting principles. Our opinion is not modified with respect to this matter. 1 Emphasis of Matters As described in Note 15, the City restated net position beginning balances due to adjustments to the accumulated depreciation balances for the City’s capital asset balances and to eliminate amounts previously reported as cash with fiscal agents. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, net pension liability information and other postemployment benefit plan information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, Supplementary Information, Statistical Section, and Continuing Disclosures listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Supplementary Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section, Statistical Section and Continuing Disclosures have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2018, on our consideration of City of Peoria, Arizona’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Peoria, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Phoenix, Arizona December 12, 2018 2 Management’s Discussion & Analysis MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Peoria, Arizona (the City), we offer this narrative overview and analysis of the financial activities of the City of Peoria, Arizona for the fiscal year ended June 30, 2018. This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the City’s financial activity, (3) identify changes in the City’s financial position, (4) identify any material deviations from the financial plan (the approved annual budget), and (5) identify individual fund issues or concerns. This discussion and analysis (MD&A) has a different focus and purpose than the transmittal letter presented on pages v-xi of this report. It is designed to be read in conjunction with the transmittal letter as well as the financial statements and the accompanying notes to the financial statements. The City also issues separate financial reports, including management’s discussion and analysis, for the Vistancia Community Facilities District, Vistancia West Community Facilities District, the Employee Benefit Trust, and the Workers’ Compensation Trust, which are blended component units of the City. Financial Highlights  The City’s total net position, as restated, decreased $92.4 million in fiscal year 2018, a decrease of $105.2 million in governmental activities offset by an increase of $12.8 million in business-type activities. The net position decrease in governmental activities was driven by a restatement of the City’s capital asset balances as of July 1, 2017. This restatement corrected the cumulative effect of prior year errors in useful life calculation.  Total net position of the City is $1,448.1 million, of which $7.0 million is unrestricted with a deficit unrestricted balance in governmental activities as a result of the inclusion and presentation of net pension/OPEB liabilities.  The governmental activities program revenues of $72.0 million were in line with prior year revenues of $72.6 million.  The business-type activities program revenues decreased by $2.8 million from the previous year. Fees, Fines & Charges for Services increased by $5.4 million but were offset by a decrease in Capital Grants and Contributions by $8.2 million.  At June 30, 2018, total fund balance of the governmental funds was $238.9 million, a decrease of $7.3 million from the previous year. Of this, $33.8 million or 26.6% of General Fund expenditures for fiscal year 2018 was unassigned in the general fund and available for spending at the government’s discretion.  General Fund revenues (on a budgetary basis) were higher than budgeted inflows by $7.0 million for fiscal year 2018. Budgetary basis expenditures of the General Fund were 90.7% ($14.6 million in savings) of the final budgeted expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS As pictured in the following table, the financial section of the Comprehensive Annual Financial Report (CAFR) for the City of Peoria, Arizona consists of this discussion and analysis, the basic financial statements, other required supplementary information and other non-required financial schedules. The basic financial statements include the government-wide financial statements, fund financial statements, including the budgetary statements for the general fund and major special revenue funds, and notes to the financial statements. Other required supplementary information includes the schedules and notes related to pension requirements. The additional non-required information includes combining schedules and other supplementary schedules presented after the basic financial statements (Combining Statements and Statistical Sections of this report). 3 Required Components of the Annual Financial Report Management’s Discussion and Analysis Basic Financial Statements Required Supplementary Information Governmentwide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail Government-wide Financial Statements The government-wide financial statements are designed to provide a broad overview of the City’s finances in a manner similar to those used by private businesses. All of the activities of the City, except those of a fiduciary nature, are included in these statements. The activities of the City are broken into two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided.  The governmental activities include the basic services of the City including general government (administration), culture and recreation, public safety, development services, highways and streets, public works, and human services. These activities are generally supported by taxes and general revenues.  The business-type activities include the private sector type activities such as the water, wastewater solid waste, and storm drain utilities, and the stadium. These activities are primarily supported through user charges or fees. The statement of net position presents information on all of the City’s assets and liabilities (excluding fiduciary funds), both current and long-term and deferred inflows/outflows of resources, with the difference reported as net position. The focus on net position is designed to be similar to the emphasis for businesses. Over time, increases or decreases in net position may serve as a useful indicator of how the financial position of the City may be changing. Increases in net position may indicate an improved financial position; however, even decreases in net position may reflect a changing manner in which the City may have used previously accumulated funds (i.e. cash funding of capital projects). To assess the overall health of the City, other indicators, including non-financial indicators such as the City’s property tax base and condition of its infrastructure, should also be considered. The statement of activities presents information showing how the City’s net position changed over the most recent fiscal year. Since full accrual accounting is used for the government-wide financial statements, all changes to net position are reported at the time the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the City, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support. 4 Fund Financial Statements Also presented are fund financial statements for governmental funds, proprietary funds and fiduciary funds. The fund financial statements focus on major funds of the City. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or conditions. Funds are used to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the City. Governmental funds – Governmental funds are used to account for most of the City’s basic services. These are essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the governmental activities column on the government-wide financial statements, these fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs. Since the governmental fund financial statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer-term focus, it may be useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. To facilitate this comparison, reconciliations of the differences between the two are provided immediately following the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances. The City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects). Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Half-Cent Sales Tax Fund, Highway User Revenue Fund, Transportation Sales Tax Fund, GO Bond Debt Service Fund, and Development Fee Fund which are considered to be major funds of the City. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements. Proprietary funds – Proprietary funds are used to account for services primarily supported by user fees. The proprietary fund financial statements are prepared with the same long-term focus as the governmentwide financial statements. The City maintains the following two types of proprietary funds. Enterprise funds are used for activities that primarily serve customers outside the governmental unit. The enterprise funds generally provide information similar to the business-type activities column of the government-wide financial statements, but provide more detail and additional information such as cash flows. Any reconciliation necessary between the enterprise funds and the business-type activities column of the government-wide financial statements is provided on the face of the fund statements. The City’s enterprise funds are the Water, Wastewater, Storm Drain and Solid Waste utilities, as well as the sports complex (Stadium Fund). All of the enterprise funds are considered to be major funds of the City. Internal service funds are used for activities where the primary customer is the City itself. Because the primary customers of the internal service funds are the governmental activities, the assets and liabilities of those funds are included in the governmental activities column of the government-wide statement of net position. The costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. The internal service funds are combined into a single column on the proprietary fund statements. Additional detail of the internal service funds is provided in combining statements. The internal service funds of the City include the Motor Pool, Self-Insurance, Facilities Maintenance, and Information Technology Funds. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of others. Fiduciary funds are not included in the government-wide financial statements because the resources of 5 those funds are not available to support programs of the City. The fiduciary fund statements are prepared on the same basis as the government-wide and proprietary fund statements. Notes to the financial statements – The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. Required supplementary information other than MD&A – Schedules for pension/OPEB plans have been provided as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis discuss the financial position and changes to the financial position for the City as a whole as of and for the year ended June 30, 2018, with comparative information for the previous year. Net Position Net position may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Position of the City for June 30, 2018, compared to the prior year. Statement of Net Position As of June 30 Current and other assets Capital assets Total assets (in millions of dollars) Governmental Business-type Activities Activities 2018 2017 2018 2017 (restated) (restated) $ 295.9 $ 298.4 $ 120.9 $ 110.9 872.7 996.5 681.5 688.5 1,168.6 1,294.9 802.4 799.4 Total Primary Government 2018 2017 (restated) $ 416.8 $ 409.3 1,554.2 1,685.0 1,971.0 2,094.3 Total deferred outflows of resources 54.3 50.4 5.0 5.8 59.3 56.2 Other liabilities Long-term liabilities outstanding Total liabilities 25.1 436.0 461.1 23.6 453.7 477.3 7.9 101.0 108.9 8.0 110.5 118.5 33.0 537.0 570.0 31.6 564.2 595.8 Total deferred inflows of resources 11.2 12.2 1.0 1.9 12.2 14.1 Net position: Net investment in capital assets Restricted Unrestricted Total net position 635.8 121.8 (7.0) 750.6 747.3 149.7 (41.2) $ 855.8 600.5 29.5 67.5 697.5 597.7 27.6 59.4 684.7 1,236.3 151.3 60.5 $ 1,448.1 1,345.0 177.3 18.2 $ 1,540.5 $ $ $ The net position of the City decreased $92.4 million in fiscal year 2018. Net position of governmental activities decreased $105.2 million due mainly from the aforementioned capital asset restatement, while the business-type activities increased $12.8 million. The Water Fund net position increased by $10.3 million, accounting for the majority of the rise in net position for business-type activities. Net position consists of three components. The largest portion of net position, $1,236.3 million reflects the City’s investment in capital assets net of accumulated depreciation and any related outstanding debt used to acquire or construct those assets. The City uses these capital assets to provide services to its residents. Consequently, it is not the City’s intention to sell these assets, and they are therefore not available for future spending. Although the capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves are not intended to be used to liquidate these liabilities. The $151.3 million restricted portion of the City’s net position represents resources that are subject to external restrictions on how they may be used. The decrease of $26.0 million is primarily due to General Obligation (G.O.) bond debt service payments disbursed and bonds redeemed prior to maturity. 6 The third portion consists of Unrestricted Net Position of $60.5 million. This category of net position may be used to meet the City’s ongoing obligations to residents and creditors. Unrestricted net position is the balance of net position remaining after calculating the other two categories discussed above. Changes in Net Position The following table compares the government-wide revenue and expenses for the current and previous fiscal year. Changes in Net Position REVENUES: Program revenues: Fees, fines & charges for services $ Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales and use taxes Franchise taxes State shared sales tax Urban revenue sharing Auto-in-lieu taxes Investment earnings Gain on sale of capital assets Miscellaneous and Special Items Total revenues EXPENSES: Program activities: Governmental activities: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Interest expense on debt Business-type activities: Water utility Wastewater utility Solid Waste utility Stadium Storm Drain utility Total expenses Excess (deficit) before transfers Transfers Increase (decrease) in net position Net position – beginning, as restated Net position - ending $ (in millions of dollars) Governmental Business-type Activities Activities 2018 2017 2018 2017 35.0 16.6 20.4 $ 32.3 14.7 25.6 $ 85.6 12.5 $ 80.2 20.7 Total Primary Government 2018 2017 $ 120.6 16.6 32.9 $ 112.5 14.7 46.3 23.7 89.8 5.0 15.9 20.3 6.8 2.2 4.9 240.6 21.7 84.2 4.5 15.6 21.0 6.7 1.7 4.1 232.1 0.7 98.8 0.5 0.1 101.5 23.7 89.8 5.0 15.9 20.3 6.8 2.9 4.9 339.4 21.7 84.2 4.5 15.6 21.0 6.7 2.2 0.1 4.1 333.6 20.4 28.0 81.7 5.7 54.7 5.7 2.5 8.0 21.6 28.4 97.7 6.6 44.9 6.7 1.3 8.5 - - 20.4 28.0 81.7 5.7 54.7 5.7 2.5 8.0 21.6 28.4 97.7 6.6 44.9 6.7 1.3 8.5 206.7 33.9 (4.8) 29.1 721.5 750.6 215.7 16.4 (6.3) 10.1 845.7 855.8 40.8 25.7 13.0 7.7 3.3 90.5 8.3 4.8 13.1 684.4 697.5 39.3 24.0 11.9 7.6 3.5 86.3 15.2 6.3 21.5 663.2 684.7 40.8 25.7 13.0 7.7 3.3 297.2 42.2 42.2 1,405.9 $ 1,448.1 39.3 24.0 11.9 7.6 3.5 302.0 31.6 31.6 1,508.9 $ 1,540.5 $ $ $ For fiscal year 2018, total governmental activities revenues increased $8.5 million while total businesstype activities revenues decreased $2.7 million. Expenses decreased $9.0 million for the governmental activities and increased $4.2 million for the business-type activities. Governmental activities expenses decreased primarily from the public safety function; down $16.0 million versus prior year. This decrease was offset by an increase in highways and streets expense of $9.8 million. The decrease in public safety expense was driven principally by lower pension expense; down $8.8 million versus the prior year. The increase in highways and streets expense was due to higher capital related costs; up $9.8 million versus prior year primarily due to increased depreciation expense. The increase in the business-type activities expenses was primarily in the Water Utility, Wastewater Utility and Solid Waste Utility Funds. For further explanation of these expense changes, refer to the financial analysis of the City’s funds later in this document. 7 The general revenues of governmental activities increased $9.0 million from the previous year as consumer confidence improved during the year. The primary drivers were increases in property tax and sales taxes. Property tax revenues increased by $2.0 million in fiscal year 2018 as assessed values showed an increase. Local sales and use taxes increased $5.6 million as retail, contracting, retail and restaurant & bar sales taxes increased $1.6 million, $1.5 million, $1.0 million, respectively. Program revenues of governmental activities were $72.0 million; in line with prior year revenues of $72.6 million. The program revenues of business-type activities decreased by $2.8 million primarily due to lower developer capital contributions versus prior year. The following graph shows the functional revenues and expenses of governmental activities to demonstrate the extent to which the governmental functions produce direct revenues to offset the program costs. It should be noted that this is not intended to represent full cost allocation to these Governmental Activities Program Revenues & Expenses 70 (millions $) 60 50 40 30 20 10 0 Program revenues Expenses functions. Expenses not covered by direct program revenues are covered by general revenues of the City, primarily taxes and state shared revenues. In the governmental activities, the program revenues of $72.0 million are 34.9% of the governmental activities expenses for fiscal year 2018, down from 33.7% in fiscal year 2017. In the business-type activities, program revenues of $98.1 million are 108.4% of the business-type expenses for fiscal year 2018. This compares to $100.9 million and 116.8% in fiscal year 2017. Governmental activities account for 70.9% of the total revenues of the City and 69.5% of the total expenses in fiscal year 2018. These percentages were 69.6% and 71.4% respectively in fiscal year 2017. As seen in the following graph, one of the largest financing sources for the City in fiscal year 2018 is charges for services (35.5%), primarily because this is the major funding source of the business-type activities (80.2% of business-type total revenues in fiscal year 2018). The major funding sources of the governmental activities are property, sales/use taxes, contributed capital and state shared revenues. 8 Government-Wide Revenue Sources Fiscal Year 2018 Investment earnings Other grants & 0.9% Property taxes 7.0% entitlements 4.9% Sales & use taxes 26.4% State shared revenues 12.7% Charges for services 35.5% Franchise taxes 1.5% Other 1.4% Contributed capital 9.7% Property taxes increased from fiscal year 2017 with an increase in assessed value. The tax rates did not change in fiscal year 2018 compared to the previous year. Total government-wide expenses (not including transfers out) of the City decreased $4.9 million in fiscal year 2018. Expenses of the governmental activities decreased $9.0 million. This primarily includes a decrease of $16.0 million for public safety, offset by a $9.8 million increase in highways and streets expense. As mentioned above, public safety expenses decreased primarily due to lower pension expense in fiscal year 2018 versus prior year. Highways and streets expenses rose chiefly to increases for depreciation expense as street assets increased substantially during the last two fiscal years and prior year useful life assumptions were corrected resulting in an accelerated depreciation rate. Business-type activity expenses increased $4.1 million versus prior year due mainly to rising depreciation expense, increased CAP water delivery fees, and higher wastewater system repair and maintenance costs. As shown in the following Government-Wide Functional Expenses graph, business-type activities account for 30.5% of the functional expenses of the City for fiscal year 2018, while governmental activities account for 69.5% of the functional expenses. For the governmental activities, the largest users of resources are public safety (27.5% of total expense, 39.5% of governmental expenses), highways and streets (18.4% of total expenses, 26.4% of governmental expenses), culture and recreation (9.4% of total expenses, 13.5% of governmental expenses), and general government (6.8% of total expenses, 9.8% of governmental expenses). 9 Government-Wide Functional Expenses Fiscal Year 2018 Business-type activities 30.5% General government 6.8% Culture & recreation 9.4% Other 0.9% Highways & streets 18.4% Public safety 27.5% Interest 2.7% Development services 1.9% Public works 1.9% FINANCIAL ANALYSIS OF THE CITY’S FUNDS The City 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 fund financial statements is to provide information on near-term inflows, outflows and balances of spendable resources. All major governmental funds are discretely presented on these financial statements, while the non-major funds are combined into a single column. Combining statements for the non-major funds may be found in the section of the CAFR immediately following the Required Supplementary Information. Although the Highway User Revenue Fund, Transportation Sales Tax Fund, and Development Fee Fund do not meet the GASB 34 quantitative criteria of a major fund, the City has chosen to present them as major funds due to local significance or outstanding debt. The fund balance of the governmental funds is $238.9, a decrease of $7.3 million from the previous year. Of this, $115.5 million (a decrease of $22.9 million from the previous year) is classified as Nonspendable or Restricted because it is not appropriable for expenditure or is legally segregated for a specific future use. The decrease in restricted fund balance is primarily due to general obligation bond proceeds being spent for the construction and acquisition of capital projects along with general obligation debt service payments disbursed during the fiscal year. An additional $89.6 million of the governmental fund balance (an increase of $7.5 million from the previous year) has been committed or assigned for specific purposes by council or administrative action. These commitments include various stabilization reserves ($43.8 million), debt service reserves ($1.0 million), capital projects ($21.1 million) and arts capital and various other purposes ($23.6 million). The remaining $33.8 million of governmental fund balance is classified as Unassigned. This balance may serve as a useful indicator of a government’s net resources available for spending at the end of the year. By Council policy, these resources are used to fund one-time needs of the City including capital facilities and transportation improvements. The unassigned fund balance increased by $8.2 million compared to the prior year. 10 Governmental Funds - Fund Balance 80 70 Millions 60 50 40 30 20 FY17 10 FY18 0 The General Fund is the chief operating fund of the City and accounts for many of the major functions of the government including public safety, parks and recreation, community development and general administrative services. General Fund revenues increased $8.2 million over the prior fiscal year driven mainly from an increase in overall sales tax of $2.9 million or 6.2%. Specifically, Construction sales tax accounted for the largest impact with revenues $0.9 million or 22.1% higher than prior year. Favorability was also seen in retail sales tax; up $0.7 million or 3.2% versus prior year, and Restaurants and Bars; up $0.7 million or 10.7% versus prior year. The City also generated increases in Charges for services revenue due mainly from a boost in ambulance service revenue of $2.5 million versus prior. Ambulance services began in March of 2017, therefore fiscal year 2018 marked the first time a full year’s worth of revenue was recorded. This also explains part of the upturn in public safety costs due to the recording of a full year’s worth of payroll expenditures within the ambulance operations division for fiscal year 2018 versus only four months in fiscal year 2017. Licenses and permits revenue increased $0.7 million versus prior year due mainly from an increase in sales tax license revenue ($1.0 million in fiscal year 2018 versus $0.3 million in fiscal year 2017). Total General Fund expenditures increased $7.6 million versus prior year; driven primarily from a $6.1 million increase in public safety expenditures. This was due to the aforementioned ambulance services division, along with budgeted wage increases and a rise in public safety retirement and workers compensation costs versus prior year. The unassigned fund balance of the General Fund increased to 26.6% of expenditures at June 30, 2018, compared to 21.5% at June 30, 2017. The Half-Cent Sales Tax Fund tracks the revenues from a 0.5% sales tax committed for specific purposes by Council policy. Revenues in this fund increased $1.3 million versus the previous year due to increases mainly within the retail and construction sales categories; up a combined $0.9 million. Expenditures in this fund decreased $4.3 million versus prior year largely from one-time capital outlay costs of $2.6 million incurred in fiscal year 2017 to purchase property on the southwest corner of 83rd Avenue and Mariners Way. The purpose of this acquisition is to ensure that property is available for commercial/office opportunities in the P83 district. Economic development program expenditures were also down within the Half-Cent Sales Tax Fund by $1.7 million over prior year driven mainly by $0.9 million in expenditures incurred prior year toward the recruitment initiatives of Huntington University to support economic development and job growth through technology commercialization efforts. Fund balance increased $6.2 million in fiscal year 2018. 11 The Highway User Revenue Fund (HURF Fund) is required by state statute to track the receipt of the state allocation of gasoline taxes and other state revenues shared with local governments that are required to be used for transportation purposes. Also, there is a sales tax on utilities and property tax revenues from street light improvement districts included in this fund. Revenues increased by $0.5 million due to an increase of $0.4 million in sales tax on utilities, and $0.1 million in property tax revenues from street light improvement districts. Expenditures increased by $4.7 million in fiscal year 2018 primarily from increased amounts spent on street repairs. Fund balance decreased $2.6 million in fiscal year 2018. The Transportation Sales Tax Fund tracks the collection and expenditure of the 0.3% voter approved sales tax to address transportation issues. Revenues in this fund increased $1.0 million while expenditures of $7.4 million were in line with prior year. The increased revenues were due to improved sales tax revenue. The fund balance increased $1.0 million in fiscal year 2018. All fund balance in this fund is restricted. Another major governmental fund of the City is the Development Fee Fund, which collects governmental impact fees for parks and recreational facilities, public safety, and streets and intersections. Revenues of $9.7 million in the Development Fee Fund for fiscal year 2018 were in line with prior year revenues. Expenditures decreased $6.8 million in fiscal year 2018 primarily from a reduction in capital outlay for the construction of the new patrol service building versus fiscal year 2017, along with a reduction in development fee repayments versus prior year. Fund balance increased $2.5 million versus prior year. All fund balance in this fund is restricted. The GO Bond Debt Service Fund accounts for the payment of general obligation bonds and the related interest. Revenues in this fund increased $1.2 million due to increased property tax revenues. The property assessed value of the City increased 7.7% in fiscal year 2018 while the tax rate was unchanged. Expenditures increased by $9.0 million versus the prior year driven by a $10.5 million GO Bond defeasance payment to bond escrow, offset by a $1.3 million decrease in debt service payments versus prior year. Fund balance decreased $9.6 million in fiscal year 2018. All non-major governmental funds of the City are combined into one column on the governmental fund statements. Proprietary funds The proprietary fund financial statements are prepared on the same accounting basis and measurement focus as the government-wide financial statements but provide additional detail since each major enterprise fund is shown discretely. Although the Solid Waste Fund, Stadium Fund, and Storm Drain Utility Fund, do not meet the quantitative criteria of a major fund, the City has chosen to present these funds as major funds due to local significance. Total net position of the enterprise funds increased $12.8 million in fiscal year 2018, including the restatement of beginning net position balances. Net investment in capital assets increased $2.7 million primarily from a reduction of water and wastewater bonds and loans payable liabilities as a result of debt service payments made in fiscal year 2018. Net position restricted for capital projects increased by $1.9 million and unrestricted net position increased by $8.2 million driven primarily from increases in the Water Utility fund of $1.6 million and $7.0 million respectively. In accordance with the City’s Principles of Sound Financial Management, the City continues to maintain appropriate levels of stabilization reserves. Operating revenues of the enterprise funds increased $5.4 million in fiscal year 2018. Charges for services increased $4.2 million in the Water Utility fund, $0.8 million in the Wastewater Fund, and $0.5 million in the Solid Waste Fund due to rate increases, increases in the number of accounts, as well as increased usage. Operating expenses of the enterprise funds increased $4.5 million in fiscal year 2018. Contractual services/commodities increased $1.5 million in the Water Utility Fund due to an increase in Central Arizona Project (CAP) related expenses. Increased contractual service/commodities of $1.9 million in the Wastewater Utility Fund derived mainly from higher wastewater system repair & maintenance costs. Depreciation and amortization expense rose $1.0 million versus prior year; driving the remainder of the operating expense increase. The changes in operating revenues and expenses discussed above 12 resulted in an enterprise funds operating income loss of $2.6 million in fiscal year 2018 compared to an operating income loss of $3.5 million prior year. The following graph shows the operating revenues and expenditures for the enterprise funds for fiscal year 2018. Fiscal Year 2018 Enterprise Fund Operating Revenues and Expenses 50 Millions 40 Revenues 30 Expenses 20 10 0 BUDGETARY HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison statements, required for the General Fund and all major special revenue funds, may be found on pages 28-33. These statements compare the original adopted budget, the budget as amended throughout the fiscal year, and the actual expenditures prepared on a budgetary basis. Budgetary schedules for the other governmental funds are also presented on page 89, and pages 96-104. General Fund revenues of $144.2 million, on a budgetary basis, exceeded budgeted revenues of $137.2 million by $7.0 million while budgetary basis expenditures of $142.4 million were 90.7% of final budgeted amounts. Revenues, on a budgetary basis, exceeded budgeted revenues in sales tax, auto in-lieu tax, licenses and permits, charges for services, fines and forfeitures, and rents, while falling short in property tax revenues, state shared sales tax, urban revenue sharing, and investments earnings. There were no expenditure overages for any of the functional departmental categories. During the fiscal year, the original General Fund expenditures and contingencies budget of $177.7 million was amended by $17.9 million to the final expenditure and contingencies budget of $159.8 million. Notable transfers during the year were as follows:   $5.2 million transfer from the Half Cent Fund to the General Fund for the purchase of public safety vehicles and public safety operating costs. $2.0 million transfer from the Half Cent Fund to the Stadium Fund as a subsidy in support of the Peoria Sports Complex. 13 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As of June 30, 2018, the City had $1.2 billion invested in various capital assets, net of accumulated depreciation and related debt, down 8.3% from the previous year. The capital assets of the City (net of depreciation, but not capital debt) are $1.6 billion. This is a net decrease of $130.8 million from June 30, 2017. Net capital assets of business-type activities decreased $7.0 million while governmental activities decreased $123.8 million. The overall decrease is primarily due to a restatement of capital assets. Notable additions to capital assets during the fiscal year included the following:      The City invested $3.6 million into the implementation of energy efficiency and solar energy projects. These projects reduce the City’s impact on the environment, conserve energy, and encourage citizens to engage in sustainability efforts. The City invested $1.5 million into the construction of a new building on the campus of the Pinnacle Peak Public Safety Facility. This building creates additional space for police employees providing services to the northern reaches of the city. The City invested $1.3 million in land acquisition for the Sonoran Preservation Program. The program identifies areas that merit special consideration and then outlines how the city can strategically assemble them over time into a meaningful network of connected open spaces. Due to growth primarily in the northern part of the City, developers contributed a total of $18.8 million in land and public infrastructure. The following table provides a breakdown of the capital assets of the City at June 30, 2018, and 2017. Additional information on the City’s capital assets may be found in Note 6. Capital Assets at June 30 (Net of depreciation) Buildings and building improvements Equipment; Furniture Vehicles Surface water system Street system Park system Water system Water rights Wastewater system Land Work in progress Total (in millions) Governmental Business-type Activities Activities 2018 2017 2018 2017 $ 110.7 $ 108.1 $ 55.0 $ 56.6 4.8 4.4 6.5 9.0 11.3 11.3 10.5 9.6 61.8 63.1 273.2 419.2 65.1 63.8 226.7 232.8 11.4 10.3 263.8 271.3 384.3 367.1 17.5 16.7 23.3 22.6 28.3 19.1 $ 872.7 $ 996.5 $ 681.5 $ 688.5 Total Primary Government 2018 2017 $ 165.7 $ 164.7 11.3 13.4 21.8 20.9 61.8 63.1 273.2 419.2 65.1 63.8 226.7 232.8 11.4 10.3 263.8 271.3 401.8 383.8 51.6 41.7 $ 1,554.2 $ 1,685.0 The City has adopted a ten year capital improvement plan budgeted at $730.6 million, including $277.1 million in fiscal year 2019. Anticipated funding for this plan for fiscal year 2019 is through a combination of impact fees, utility revenue bonds, general obligation bonds, operating revenues, City and County transportation sales taxes and other outside funding sources. The estimated operating budget impact of the capital improvement program over the next five fiscal years is expected to be $8.9 million. The capital improvement plan is updated annually as part of the City’s budget process. Long-term Debt The City’s outstanding non-current long-term debt, including bonds and loans, compensated absences, and deferred bond premiums was $303.2 million at June 30, 2018. Of this total, $229.5 million was in governmental activities and $73.7 million was in business-type activities. The City’s outstanding noncurrent debt (excluding claims and net pension liability) decreased by $36.8 million in fiscal year 2018. This decrease is related to scheduled debt service payments, along with the refinancing of Series 2006 and 2008 MDA bonds through an advanced refunding arrangement, and the defeasance of Series 2007B and 2010 general obligation bonds. 14 Of the total outstanding bonds and loans of $314.6 million, $127.0 million is general obligation bonds backed by the full faith and credit of the City. The outstanding debt also includes $34.3 million in Community Facilities District bonds where the City has no obligation for payment. All other outstanding debt is secured by pledges of specific revenue sources of the City. The State constitution imposes certain debt limitations on the City of six percent (6%) and twenty percent (20%) of the assessed valuation of the City. Additional information on the debt limitations and capacities may be found in Table XX in the statistical section of this report. The following schedule shows the outstanding debt of the City (both current and long-term, excluding net pension liability and claims payable) as of June 30, 2018, and 2017. Further detail on the City’s outstanding debt may be found in Note 7. Information on the City’s net pension/OPEB liability may be found in the Required Supplementary Section of the report and in Note 9. Outstanding Debt (in millions) Governmental Activities 2018 2017 General obligation debt $ Municipal Development Authority debt Direct Purchase and Loan Obligations Special assessment debt Water/Sewer Revenue bonds and loans Community Facilities District bonds Compensated absences Total $ 127.1 34.1 36.5 34.3 13.8 245.8 $ $ Business-type Activities 2018 2017 148.2 67.6 2.1 37.1 13.4 268.4 $ $ 82.6 1.5 84.1 $ $ 92.3 1.5 93.8 Total Primary Government 2018 2017 $ $ 127.1 34.1 36.5 82.6 34.3 15.3 329.9 $ $ 148.2 67.6 2.1 92.3 37.1 14.9 362.2 The City currently maintains the following ratings on its general obligation debt: “AA+” from Standard & Poor’s, “Aa1” from Moody’s and “AAA“ from Fitch. For the water and sewer revenue bonds, the ratings are “AA” from Standard & Poor’s, “Aa3” from Moody’s and “AA” from Fitch. ECONOMIC FACTORS The City of Peoria continues to enjoy one of the lowest unemployment rates in the Phoenix metropolitan area while the City’s population continues to increase creating demand for housing. Steady job growth and meaningful wage growth is expected to boost consumer spending and business investments over the next several years. Locally improving consumer confidence has resulted in higher sales tax revenues and is forecasted to increase by 3.5% in fiscal year 2019. New residential construction in Peoria is growing, while commercial construction has begun to show expansion and stability. Existing home valuations have continued to increase and the City’s primary assessed valuation in FY 2019 is estimated to increase slightly from the previous year’s valuation. This marks the fifth consecutive year of modest increases following the low collection point in FY 2014. Future valuations should continue to increase, resulting in sufficient tax collections in subsequent years. The adopted fiscal year 2019 budget is $660 million, an increase of 11.86% from the fiscal year 2018 budget. The operating budget totals $382.9 million, which is an increase of 1.35% from 2018. The capital projects portion of the budget, $277.1 million, is divided in the following manner: $10.0 million for drainage projects, $22.2 million for operational facilities, $52.4 million for parks, trails, open space and libraries, $3.1 million for public safety projects, $70.5 million for streets and traffic control projects, $30.6 million for economic development projects, $17.7 million for wastewater projects, and $70.6 million for water projects. The General Fund operating budget is $154.5 million, up 5.6% from the prior year budget. With the modest economic recovery, resident needs for City services were balanced with a slowly increasing 15 revenue base. The budget continues to focus on preserving the City’s excellent quality of life, while preserving our future financial viability. The City has maintained cash balances over the last few years, both for financial stability and in anticipation of the capital and ongoing operational needs of an ever-changing city. The City has maintained several stabilization reserves within the General Fund and Half-Cent Sales Tax Fund in accordance with the City’s adopted financial policies – The Principles of Sound Financial Management. The City also maintains working capital policy reserve, rate stabilization, and debt stabilization reserves in the Utility Funds. It should be noted that while these reserves are established to address immediate and dramatic fiscal difficulties, they are not intended to cover structural budget shortfalls. With this in mind, the fiscal year 2019 budget does not anticipate the use of reserves to address recurring expenses. FINANCIAL CONTACT This financial report is designed to provide a general overview of the City of Peoria, Arizona’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to the City’s Finance Director at the following address: City of Peoria, 8401 W. Monroe Street, Peoria, Arizona 85345. 16 Basic Financial Statements CITY OF PEORIA, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2018 Governmental Activities ASSETS Pooled cash and investments Accounts receivable, net Interest receivable Internal balances Due from other governments Prepaid items Supply inventories Restricted pooled cash and investments Restricted cash with fiscal agents Restricted investments Net pension and other postemployment benefits asset Capital assets: Non-depreciable Depreciable (net) Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions and other postemployment benefits Deferred loss on bond refunding Excess consideration provided for acquisition Total deferred outflows of resources LIABILITIES Accounts payable Accrued payroll Interest payable Due to other governments Customer deposits Other liabilities Unearned revenue-other Non-current liabilities: Due within one year: Current portion of claims payable Current portion of compensated absences Current portion of bonds & loans payable Due in more than one year: Noncurrent portion of claims payable Noncurrent portion of compensated absences Noncurrent portion of bonds & loans payable Net pension and other postemployment benefits liablilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions and other postemployment benefits Total deferred inflow of resources NET POSITION Net investment in capital assets Restricted for: Debt service Capital projects Development fees Transportation purposes Grant purposes Facilities maintenance Trust purpose Unrestricted Total net position $ $ 236,773,276 13,501,275 645,336 (3,123,381) 7,154,709 65,200 385,985 8,998,677 18,564,036 12,678,870 257,914 Primary Government Business-type Activities $ $ 334,941,594 25,353,593 876,395 7,154,709 65,379 847,827 8,998,677 25,553,149 12,678,870 314,631 407,685,111 465,013,018 1,168,600,026 45,797,149 635,738,050 802,418,126 453,482,260 1,100,751,068 1,971,018,152 49,489,547 4,796,378 54,285,925 2,709,060 94,801 2,233,667 5,037,528 52,198,607 4,891,179 2,233,667 59,323,453 10,449,316 2,409,453 4,120,548 2,917,150 3,567 3,256,907 1,899,541 3,850,957 327,489 1,290,348 287,897 2,047,388 76,957 50,654 14,300,273 2,736,942 5,410,896 3,205,047 2,050,955 3,333,864 1,950,195 4,595,196 6,677,370 22,022,957 777,090 10,412,536 4,595,196 7,454,460 32,435,493 1,363,386 7,105,710 222,414,855 171,841,371 461,077,327 735,020 72,976,148 16,084,386 108,916,870 1,363,386 7,840,730 295,391,003 187,925,757 569,994,197 11,180,300 11,180,300 1,030,521 1,030,521 12,210,821 12,210,821 635,872,778 600,474,983 1,236,347,761 27,896,473 32,195,066 49,849,357 2,632,830 40,488 9,182,340 (7,041,008) 750,628,324 29,356,418 100,000 67,576,862 697,508,263 27,896,473 29,356,418 32,195,066 49,849,357 2,632,830 140,488 9,182,340 60,535,854 $ 1,448,136,587 $ The accompanying notes are an integral part of the financial statements 17 98,168,318 11,852,318 231,059 3,123,381 179 461,842 6,989,113 56,717 Total CITY OF PEORIA, ARIZONA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Net (Expense) Revenue and Changes in Net Position Program Revenues Expenses Functions/Programs Governmental activities: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Interest on long-term debt $ Total governmental activities Business-type activities: Water Utility Wastewater Utility Solid Waste Utility Stadium Storm Drain Utility Total business-type activities Total primary government $ 20,343,398 28,003,374 81,720,528 5,731,857 54,647,432 5,694,902 2,527,213 8,011,112 Fees, Fines & Charges for Services Operating Grants and Contributions $ $ 3,100,180 8,802,920 6,640,226 5,341,708 6,819,430 4,217,649 32,461 - 206,679,816 34,954,574 40,780,445 25,732,376 13,033,364 7,679,587 3,278,552 46,909,063 22,077,294 12,231,349 3,419,642 920,026 90,504,324 85,557,374 297,184,140 $ 120,511,948 846,360 3,611,852 638,997 838,053 10,705,087 - Capital Grants and Contributions $ 16,640,349 $ 20,441,205 - 12,517,749 $ 32,958,954 Total general revenues and transfers Change in net position Net position - beginning Cumulative effect of restatement $ The accompanying notes are an integral part of the financial statements 18 $ - Total $ - (5,358,321) (15,588,602) (74,428,062) 447,904 (27,733,490) (1,477,253) (2,494,752) (8,011,112) (134,643,688) 9,974,630 873,382 (802,015) (4,151,042) 1,675,844 - 9,974,630 873,382 (802,015) (4,151,042) 1,675,844 - 7,570,799 7,570,799 7,570,799 (127,072,889) (134,643,688) General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales and use taxes Franchise taxes Intergovernmental: State shared sales taxes- unrestricted Urban revenue sharing- unrestricted Auto in-lieu taxes- unrestricted Donations of capital assets Investment earnings Gain on sale of capital assets Expired development agreement debt Miscellaneous Special item -loss on extinguishment of debt Transfers in (out) Net position - beginning - restated Net position - ending (5,358,321) (15,588,602) (74,428,062) 447,904 (27,733,490) (1,477,253) (2,494,752) (8,011,112) Business-type Activities (134,643,688) 3,846,012 4,528,464 108,903 4,034,370 $ 16,640,349 11,038,537 13,243 9,389,425 - Governmental Activities 3,522,321 20,152,280 89,781,248 5,035,331 - 3,522,321 20,152,280 89,781,248 5,035,331 15,894,140 20,334,388 6,799,997 2,172,236 - 5,383,459 (450,797) (4,803,295) 4,803,295 15,894,140 20,334,388 6,799,997 2,873,145 13,305 5,383,459 (450,797) - 163,821,308 5,517,509 169,338,817 29,177,620 13,088,308 42,265,928 855,814,528 684,703,212 1,540,517,740 700,909 13,305 - (134,363,824) (283,257) (134,647,081) 721,450,704 750,628,324 684,419,955 697,508,263 1,405,870,659 1,448,136,587 $ $ 19 CITY OF PEORIA, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2018 Major Funds Half-Cent Sales Tax Fund Highway User Revenue Fund Transportation Sales Tax Fund 73,151,894 8,056,635 184,998 4,395,980 2,596,054 123,939 88,509,500 $ 18,674,801 2,799,528 23,059 $ 21,497,388 $ 19,354,589 519,939 49,893 980,178 78,068 $ 20,982,667 $ $ 1,846,140 2,097,355 2,917,150 3,567 2,903,917 691,785 10,459,914 $ $ $ General Fund ASSETS & DEFERRED OUTFLOWS Assets: Pooled cash and investments Accounts receivable, net Interest receivable Due from other funds Due from other governments Supply inventories Restricted cash with fiscal agents Restricted investments Total assets $ $ LIABILITIES, DEFERRED INFLOWS & FUND BALANCES Liabilities: Accounts payable Accrued payroll Due to other funds Due to other governments Customer deposits Other liabilities Unearned revenue-other Total liabilities Deferred Inflows of Resources: Unavailable revenue-property taxes Total deferred inflows of resources Fund balances: Nonspendable: Supply inventories Restricted for: Debt service Capital projects Development fees Transportation purposes Grant purposes Arts Center maintenance Committed to: Debt service Economic development Arts capital Operating reserve Emergency reserve Budget stabilization reserve Assigned to: Capital projects Municipal Complex reserve Other purposes Unassigned: Total fund balance Total liabilities, deferred inflows & fund balance $ $ 144,278 144,278 2,038,923 81,011 2,119,934 29,855,289 1,715,573 66,311 31,637,173 572,481 572,481 25,956 25,956 - 17,885 17,885 - 123,939 - 78,068 - 40,488 - 18,766,780 - 4,986,847 15,969,609 10,646,406 10,646,406 1,000,000 6,571,426 1,760,838 33,849,097 78,023,630 88,509,500 13,781,684 21,353,110 $ 21,497,388 18,844,848 $ 20,982,667 The accompanying notes are an integral part of the financial statements 20 31,064,692 - $ 31,064,692 31,637,173 (continued) CITY OF PEORIA, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2018 Major Funds ASSETS & DEFERRED OUTFLOWS Assets: Pooled cash and investments Accounts receivable, net Interest receivable Due from other funds Due from other governments Supply inventories Restricted cash with fiscal agents Restricted investments Total assets LIABILITIES, DEFERRED INFLOWS & FUND BALANCES Liabilities: Accounts payable Accrued payroll Due to other funds Due to other governments Customer deposits Other liabilities Unearned revenue-other Total liabilities Deferred Inflows of Resources: Unavailable revenue-property taxes Total deferred inflows of resources Fund balances: Nonspendable: Supply inventories Restricted for: Debt service Capital projects Development fees Transportation purposes Grant purposes Arts Center maintenance Committed to: Debt service Economic development Arts capital Operating reserve Emergency reserve Budget stabilization reserve Assigned to: Capital projects Municipal Complex reserve Other purposes Unassigned: Total fund balance Total liabilities, deferred inflows & fund balance GO Bond Debt Service Fund Development Fee Fund Non-Major Governmental Funds Total Governmental Funds $ 8,650,068 149,221 38,642 279,683 6,918,803 $ 16,036,417 $ 33,197,809 76,182 $ 33,273,991 $ $ 29,008,426 251,338 87,432 3,298,794 11,645,233 4,928,360 49,219,583 $ 211,892,876 13,492,234 526,517 4,395,980 7,154,709 202,007 18,564,036 4,928,360 $ 261,156,719 $ $ $ 1,676,598 34,030 4,395,980 352,990 1,207,756 7,667,354 $ - 1,078,925 1,078,925 7,357,345 2,212,396 4,395,980 2,917,150 3,567 3,256,907 1,899,541 22,042,886 149,223 149,223 - 6,232 6,232 199,296 199,296 - - - 202,007 15,887,194 - 32,195,066 - 15,887,194 $ 16,036,417 32,195,066 $ 33,273,991 $ 11,860,056 2,816,083 2,632,830 - 27,747,250 2,816,083 32,195,066 49,831,472 2,632,830 40,488 3,092,469 - 1,000,000 4,986,847 3,092,469 15,969,609 10,646,406 17,217,832 21,144,559 41,545,997 49,219,583 21,144,559 1,760,838 13,781,684 33,849,097 238,914,537 $ 261,156,719 The accompanying notes are an integral part of the financial statements 21 22 CITY OF PEORIA, ARIZONA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES JUNE 30, 2018 Fund balances - total governmental funds balance sheet $ 238,914,537 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 Less accumulated depreciation $ 1,468,045,829 (609,586,728) 858,459,101 Other assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Other post employment benefits asset Deferred loss on bond refunding 222,258 4,796,378 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the governmental funds. Governmental bonds payable Compensated absences (231,954,304) (12,633,850) (244,588,154) Bond premiums are recognized at the time of issuance in the governmental funds, but recognized over the life of the bonds for goverrnment-wide reporting (12,483,508) Property tax revenue earned but not received within 60 days of year-end is a deferred inflow of resources for the governmental statements, but is recognized as revenue for the government-wide statements 199,296 Interest payable on long-term debt is not reported in the governmental funds. (4,120,548) Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are reported with the governmental activities. 33,704,290 Long-term liabilities , such as net pension and OPEB liabilities are not due and payable in the current period and, therefore, are not reported as a liability in the funds. (161,729,291) Deferred outflows and inflows of resources related to pensions/OPEB are applicable to future reporting periods and, therefore, are not reported in the funds. Deferred outflows related to pension/OPEB Deferred inflows related to pension/OPEB 47,786,390 (10,532,425) Total net position of governmental activities - statement of net position The accompanying notes are an integral part of the financial statements 23 37,253,965 $ 750,628,324 CITY OF PEORIA, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS JUNE 30, 2018 Major Funds Highway User Revenue Fund Transportation Sales Tax Fund $ 4,856,776 10,705,087 255,119 153,760 312 15,971,054 $ 13,612,922 198,790 166,165 13,977,877 3,348,829 - 17,429,142 - 3,985,090 - 1,201,728 127,229,572 327,118 3,675,947 1,037,774 18,466,916 3,415,403 7,400,493 1,816,672 18,772,009 (2,495,862) 6,577,384 7,557,555 (343,962) 7,213,593 (12,580,973) (12,580,973) (88,100) (88,100) 100,260 (5,664,845) (5,564,585) 9,030,265 6,191,036 (2,583,962) 1,012,799 Fund balances - beginning 68,993,365 15,162,074 21,428,810 30,051,893 Restatement Fund balances (deficit) - beginning - restated 68,993,365 15,162,074 21,428,810 30,051,893 78,023,630 $ 21,353,110 $ 18,844,848 $ 31,064,692 (continued) REVENUES: Taxes Intergovernmental Charges for services Licenses and permits Fines and forfeitures Rents Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Debt service: Principal payments Interest and other charges Payment to bond escrow agent Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Refunding bonds issued Issuance of debt Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - ending $ General Fund Half-Cent Sales Tax Fund 57,432,608 43,374,595 16,503,398 5,509,240 1,728,303 1,002,948 294,509 3,200,643 129,046,244 $ 22,403,904 20,330 23,722 22,447,956 13,692,624 23,266,995 78,261,280 5,424,921 5,382,024 - The accompanying notes are an integral part of the financial statements 24 CITY OF PEORIA, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS JUNE 30, 2018 Major Funds REVENUES: Taxes Intergovernmental Charges for services Licenses and permits Fines and forfeitures Rents Investment earnings Miscellaneous Total revenues EXPENDITURES: Current: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Debt service: Principal payments Interest and other charges Payment to bond escrow agent Capital outlay Total expenditures GO Bond Debt Service Fund Development Fee Fund Non-Major Governmental Funds Total Governmental Funds $ 16,868,610 153,219 17,021,829 $ $ 3,178,023 7,563,942 451,157 87,341 645,867 1,916,581 13,842,911 $ 118,352,843 61,643,624 26,637,159 5,509,240 1,815,644 1,002,948 1,709,765 5,307,423 221,978,646 102,120 157,807 2,126,220 - 452,326 831,812 1,095,073 510,206 2,125,611 33,767 2,447,943 17,493,779 24,200,927 79,514,160 5,935,127 25,666,063 5,415,791 2,447,943 11,160,000 5,448,719 10,475,797 27,084,516 4,807,122 7,193,269 8,323,000 4,256,536 3,128,884 15,106,857 38,312,015 19,483,000 9,705,255 13,604,681 25,896,002 229,362,728 (10,062,687) 2,477,506 (24,469,104) (7,384,082) 28,975,000 5,199,304 (28,814,053) 9,606,816 (1,108,246) 13,858,821 28,975,000 5,199,304 (28,814,053) 17,684,545 (19,786,126) 3,258,670 - Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Refunding bonds issued Issuance of debt Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances 9,427,485 243,290 9,670,775 419,914 419,914 - (9,642,773) 2,477,506 (10,610,283) (4,125,412) Fund balances - beginning 25,529,967 29,717,560 55,315,937 246,199,606 Restatement Fund balances (deficit) - beginning - restated 25,529,967 29,717,560 (3,159,657) 52,156,280 (3,159,657) 243,039,949 $ 15,887,194 $ 32,195,066 $ 41,545,997 $ 238,914,537 Fund balances - ending The accompanying notes are an integral part of the financial statements 25 26 CITY OF PEORIA, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Net change in fund balances - total governmental funds $ (4,125,412) Amounts reported for governmental activities in the statement of activities are different because: Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (460,560) Certain revenues are advances in the governmental funds because they do not provide current financial resources, but are considered revenue on the statement of activities. 138,337 Interest expense in the statement of activities differs from the amount reported in governmental funds because accrued interest was calculated for bonds and notes payable for the statement of activities, but is expensed when due for the governmental fund statements. 1,011,376 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($25,896,002), plus other capital $0, is exceeded by depreciation ($39,549,409) in the current period. (13,653,407) In the statement of activities, only the gain on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale of capital assets increase financial resources Thus, the change in net position differs from the change in fund balance by the cost of the assets sold or disposed of. Also gains/losses on sales of capital assets are not shown in the governmental funds, but are revenues or expenses on the statement of activities. 76,036 Donations of capital assets are not reflected on the governmental fund statements but are shown in the statement of activities. 18,750,645 The issuance of long-term debt provides current financial resources in the governmental funds, but creates a long-term liability in the statement of activities. (5,199,304) The issuance of refunding bonds provides both a financial resource (the sale) and an other financing use (payment to bond escrow agent) in the governmental statements but these debt transactions do not create sources or uses on the statement of activities. (28,975,000) Repayment of bonds principal is an expenditure in the governmental funds, but reduces long-term liabilities in the statement of net position. No effect on net position. 61,901,734 The net carrying amount of refunded general obligation bonds exceeded the reaquistion price. This partial defeasance is not reported in governmental funds but is reported as a special item on the Statement of Activities. (450,797) Bond premiums or discounts and gains or losses on bond refunding are sources or uses of current financial resources for governmental fund reporting but are deferred outflows or inflows of resources for government-wide reporting. 682,767 The contribution of governmental capital assets to Proprietary Funds is not shown in the governmental fund statements but is a transfer in in the statement of activities (3,952,995) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 3,845,554 Governmental funds report pension/OPEB contributions as expenditures. However, in the Statement of Activities, pension/OPEB service costs, interest on the pension liability, current year benefit changes, member contributions, expected earnings on plan investments, administrative expenses and recognition of deferred outflows and inflows from pension and OPEB is reported as pension/OPEB expense. (411,354) Change in net position of governmental activities- statement of activities The accompanying notes are an integral part of the financial statements 27 $ 29,177,620 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Intergovernmental Charges for services Licenses and permits Fines and forfeitures Rents Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government: Mayor and council City manager Human resources Attorney City clerk Court Economic development Finance Non-departmental Culture and recreation Public safety: Police Fire Development services Public works Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 54,033,935 45,358,653 30,244,379 3,991,558 1,536,380 656,903 300,000 1,057,730 137,179,538 $ 54,033,935 45,358,653 30,244,379 3,991,558 1,536,380 656,903 300,000 1,057,730 137,179,538 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 57,432,608 43,374,595 31,668,966 5,509,240 1,728,303 1,002,948 294,509 3,200,643 144,211,812 $ 3,398,673 (1,984,058) 1,424,587 1,517,682 191,923 346,045 (5,491) 2,142,913 7,032,274 734,412 4,881,506 3,392,258 3,376,223 918,624 2,052,320 2,075,271 10,646,198 2,114,718 24,475,301 734,412 4,881,506 3,435,558 3,486,223 928,624 2,052,320 2,179,446 10,734,348 3,281,072 24,942,000 668,208 4,575,985 2,691,569 3,358,012 915,374 1,932,957 1,749,714 9,613,928 3,352,445 23,266,995 (66,204) (305,521) (743,989) (128,211) (13,250) (119,363) (429,732) (1,120,420) 71,373 (1,675,005) 46,977,762 32,390,086 9,000,386 5,701,300 4,490,943 153,227,308 46,892,173 33,274,844 8,771,650 5,821,135 5,604,952 157,020,263 46,711,477 31,549,803 5,424,921 5,382,024 1,201,728 142,395,140 (180,696) (1,725,041) (3,346,729) (439,111) (4,403,224) (14,625,123) (16,047,770) (19,840,725) 1,816,672 21,657,397 (24,500,000) 7,568,547 (359,255) (17,290,708) (2,815,222) 7,568,547 (359,255) 4,394,070 7,557,555 (343,962) 7,213,593 2,815,222 (10,992) 15,293 2,819,523 (33,338,478) (15,446,655) 9,030,265 24,476,920 57,467,797 57,467,797 68,993,365 11,525,568 24,129,319 $ 42,021,142 $ 78,023,630 The accompanying notes are an integral part of the financial statements 28 $ 36,002,488 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2018 Explanation of differences between budgetary basis and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "Total revenues" from the budgetary comparison statement Differences - budget to GAAP: Interdepartmental service charges are revenue on a budgetary basis, but are eliminated from the financial statements under GASB34's allocation rules Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds Uses/outflows of resources: Actual amounts (budgetary basis) "Total expenditures" from the budgetary comparison statement Differences - budget to GAAP: Certain interdepartmental service charges are recognized as expenditures for budgetary purposes but are eliminated from the financial statements under GASB34's allocation rules Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds $ 144,211,812 (15,165,568) $ 129,046,244 $ 142,395,140 (15,165,568) $ 127,229,572 The accompanying notes are an integral part of the financial statements 29 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT HALF-CENT SALES TAX FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 20,838,765 70,000 20,908,765 $ 20,838,765 70,000 20,908,765 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 22,403,904 20,330 23,722 22,447,956 $ 1,565,139 (49,670) 23,722 1,539,191 3,520,771 1,050,000 4,570,771 4,997,822 3,859,348 8,857,170 3,348,829 327,118 3,675,947 (1,648,993) (3,532,230) (5,181,223) 16,337,994 12,051,595 18,772,009 6,720,414 (7,450,000) (12,580,973) (20,030,973) (3,319,365) (12,580,973) (15,900,338) (12,580,973) (12,580,973) 3,319,365 3,319,365 (3,692,979) (3,848,743) 6,191,036 10,039,779 13,793,191 13,793,191 15,162,074 1,368,883 10,100,212 $ 9,944,448 $ 21,353,110 The accompanying notes are an integral part of the financial statements 30 $ 11,408,662 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT HIGHWAY USER REVENUE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: Highways and streets Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 4,727,874 10,256,086 382,000 105,500 15,471,460 $ 4,727,874 10,256,086 382,000 105,500 15,471,460 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 4,856,776 10,705,087 550,119 153,760 312 16,266,054 $ 128,902 449,001 168,119 48,260 312 794,594 10,793,970 10,768,348 21,562,318 10,749,366 11,405,892 22,155,258 17,724,142 1,037,774 18,761,916 6,974,776 (10,368,118) (3,393,342) (6,090,858) (6,683,798) (2,495,862) 4,187,936 (1,000,000) 829,228 (917,328) (1,088,100) (363,356) 829,228 (917,328) (451,456) (88,100) (88,100) 363,356 (829,228) 829,228 363,356 (7,178,958) (7,135,254) (2,583,962) 4,551,292 18,811,709 18,811,709 21,428,810 2,617,101 11,632,751 $ 11,676,455 Explanation of differences between budgetary basis and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "Total revenues" from the budgetary comparison schedule Differences - budget to GAAP: Interdepartmental service charges are revenue on a budgetary basis, but are eliminated from the financial statements under GASB 34's allocation rules. Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds Uses/outflows of resources: Actual amounts (budgetary basis) "Total expenditures" from the budgetary comparison statement Differences - budget to GAAP: Certain interdepartmental service charges are recognized as expenditures for budgetary purposes but are eliminated from the financial statements under GASB34's allocation rules Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds $ 18,844,848 $ 16,266,054 (295,000) $ 15,971,054 $ 18,761,916 (295,000) $ 18,466,916 The accompanying notes are an integral part of the financial statements 31 $ 7,168,393 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT TRANSPORTATION SALES TAX FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: Highways and streets Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 12,559,677 100,000 12,659,677 $ 12,559,677 100,000 12,659,677 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 13,612,922 198,790 166,165 13,977,877 $ 1,053,245 98,790 166,165 1,318,200 614,084 23,197,930 23,812,014 613,577 21,996,228 22,609,805 3,985,090 3,415,403 7,400,493 3,371,513 (18,580,825) (15,209,312) (11,152,337) (9,950,128) 6,577,384 16,527,512 (1,500,000) (5,411,126) (6,911,126) (282,739) (5,411,126) (5,693,865) 100,260 (5,664,845) (5,564,585) 282,739 100,260 (253,719) 129,280 (18,063,463) (15,643,993) 1,012,799 16,656,792 30,398,812 30,398,812 30,051,893 (346,919) 12,335,349 $ 14,754,819 $ 31,064,692 The accompanying notes are an integral part of the financial statements 32 $ 16,309,873 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON STATEMENT DEVELOPMENT FEE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Charges for services Investment earnings Total revenues $ EXPENDITURES: Current: Culture and recreation Public safety Highways and streets Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 7,961,703 195,200 8,156,903 $ 7,961,703 195,200 8,156,903 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 9,427,485 243,290 9,670,775 $ 1,465,782 48,090 1,513,872 601,468 33,000 5,082,147 14,090,486 19,807,101 1,963,161 33,000 5,084,826 14,807,536 21,888,523 102,120 157,807 2,126,220 4,807,122 7,193,269 (1,861,041) 124,807 (2,958,606) (10,000,414) (14,695,254) (11,650,198) (13,731,620) 2,477,506 16,209,126 (1,150,000) (1,150,000) (1,058,184) (1,058,184) - 1,058,184 1,058,184 (12,800,198) (14,789,804) 2,477,506 17,267,310 27,191,025 27,191,025 29,717,560 2,526,535 14,390,827 $ 12,401,221 $ 32,195,066 The accompanying notes are an integral part of the financial statements 33 $ 19,793,845 CITY OF PEORIA, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2018 Business-type Activities Major Enterprise Funds Water Utility Wastewater Solid Waste Fund Utility Fund Utility Fund ASSETS Current assets: Pooled cash and investments Restricted pooled cash and investments Accounts receivable, net Interest receivable Prepaid items Supplies inventory Total current assets Non-current assets: Restricted assets: Cash with fiscal agents Investments Net restricted assets Capital assets: Buildings and improvements Distribution and collection systems Water rights Equipment & furniture Vehicles Less accumulated depreciation and amortization Land and improvements Construction in progress Capital assets, net Net pension and other postemployment benefits asset Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions and other postemployment benefits Deferred loss on bond refunding Excess consideration provided for acquisition Total deferred outflows of resources $ LIABILITIES Current liabilities: Accounts payable Accrued payroll Interest payable Due to other governments Customer deposits Other liabilities Current portion of claims payable Current portion of compensated absences Current portion of bonds & loans payable Unearned revenue-other Total current liabilities Non-current liabilities: Long-term portion of claims payable Long-term portion of compensated absences Long-term portion of bonds & loans payable Net pension and other postemployment benefits liablilities Total non-current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions and other postemployment benefits Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted: Capital projects Facilities maintenance Trust purpose Unrestricted Total net position $ 53,161,172 6,900,932 124,859 179 279,228 60,466,370 $ 28,134,703 2,841,867 61,217 31,037,787 14,647,066 1,546,223 38,671 182,614 16,414,574 6,266,574 6,266,574 722,539 722,539 1,662,522 381,439,796 14,301,442 14,434,642 1,603,096 (168,470,672) 6,867,999 18,323,973 270,162,798 21,004 336,916,746 7,612,045 401,137,140 2,395,572 1,224,921 (142,234,761) 3,878,001 5,864,216 279,877,134 11,582 311,649,042 211,038 14,701,448 (5,779,112) 9,133,374 16,350 25,564,298 1,003,268 88,965 2,233,667 3,325,900 553,214 5,836 559,050 780,924 780,924 1,852,001 138,130 409,646 262,496 2,047,388 76,957 336,700 5,132,689 10,256,007 1,425,849 52,841 880,702 138,800 5,279,847 7,778,039 403,388 86,581 - 305,470 23,410,084 5,956,661 29,672,215 39,928,222 129,560 49,566,064 3,284,577 52,980,201 60,758,240 115,990 4,636,546 4,752,536 5,411,355 381,642 381,642 210,442 210,442 297,061 297,061 243,942,657 225,037,059 9,133,374 17,571,266 38,418,859 299,932,782 6,018,631 20,183,720 $ 251,239,410 5,076,919 6,426,513 20,636,806 (continued) The accompanying notes are an integral part of the financial statements 34 $ - 168,850 658,819 $ CITY OF PEORIA, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2018 Business-type Activities Major Enterprise Funds Stadium Storm Drain Fund Utility Fund ASSETS Current assets: Pooled cash and investments Restricted pooled cash and investments Accounts receivable, net Interest receivable Prepaid items Supplies inventory Total current assets Non-current assets: Restricted assets: Cash with fiscal agents Investments Net restricted assets Capital assets: Buildings and improvements Distribution and collection systems Water rights Equipment & furniture Vehicles Less accumulated depreciation and amortization Land and improvements Construction in progress Capital assets, net Net pension and other postemployment benefits asset Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions and other postemployment benefits Deferred loss on bond refunding Excess consideration provided for acquisition Total deferred outflows of resources $ 1,710,163 448,029 5,112 2,163,304 - $ 515,214 115,267 1,200 631,681 $ - 98,168,318 11,852,318 231,059 179 461,842 110,713,716 $ 24,880,400 8,998,677 9,041 118,819 65,200 183,978 34,256,115 6,989,113 6,989,113 7,750,510 7,750,510 70,823,207 1,753,887 138,245 (23,035,278) 6,703,349 56,383,410 6,721 58,553,435 97,942,012 (36,123,140) 4,159,611 65,978,483 1,060 66,611,224 80,097,774 880,518,948 14,301,442 18,795,139 17,667,710 (375,642,963) 17,449,349 28,347,800 681,535,199 56,717 799,294,745 148,102 37,344,445 28,157,459 (51,639,099) 228,121 14,239,028 35,656 56,281,309 321,012 321,012 50,642 50,642 2,709,060 94,801 2,233,667 5,037,528 1,703,157 1,703,157 117,937 44,381 25,401 116,200 50,654 354,573 51,782 5,556 16,540 73,878 3,850,957 327,489 1,290,348 287,897 2,047,388 76,957 777,090 10,412,536 50,654 19,121,316 3,091,971 197,057 4,595,196 605,450 8,489,674 154,770 1,905,933 2,060,703 2,415,276 29,230 300,669 329,899 403,777 735,020 72,976,148 16,084,386 89,795,554 108,916,870 1,363,386 543,780 10,112,080 12,019,246 20,508,920 122,112 122,112 19,264 19,264 1,030,521 1,030,521 647,875 647,875 56,383,410 65,978,483 600,474,983 14,239,028 689,602 100,000 (835,953) 56,337,059 260,342 66,238,825 29,356,418 100,000 64,453,481 694,384,882 9,182,340 13,406,303 36,827,671 LIABILITIES Current liabilities: Accounts payable Accrued payroll Interest payable Due to other governments Customer deposits Other liabilities Current portion of claims payable Current portion of compensated absences Current portion of bonds & loans payable Unearned revenue-other Total current liabilities Non-current liabilities: Long-term portion of claims payable Long-term portion of compensated absences Long-term portion of bonds & loans payable Net pension and other postemployment benefits liablilities Total non-current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions and other postemployment benefits Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted: Capital projects Facilities maintenance Trust purpose Unrestricted Total net position $ Total Governmental Activities Internal Service Funds $ Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterprise funds over time. $ The accompanying notes are an integral part of the financial statements 35 3,123,381 697,508,263 $ CITY OF PEORIA, ARIZONA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Water Utility Wastewater Solid Waste Fund Utility Fund Utility Fund OPERATING REVENUES Charges for services Rents Miscellaneous Total operating revenues OPERATING EXPENSES Salaries, wages and employee benefits Contractual services, materials and supplies Insurance claims and expenses Depreciation and amortization Total operating expenses Operating income (loss) $ 45,274,479 1,634,584 46,909,063 $ 22,060,852 16,442 22,077,294 $ 12,220,874 10,475 12,231,349 5,064,978 20,766,278 14,310,687 40,141,943 6,767,120 2,742,806 10,090,233 11,182,018 24,015,057 (1,937,763) 4,465,058 7,691,232 852,620 13,008,910 (777,561) NON-OPERATING REVENUES (EXPENSES) Investment income Interest expense Gain(loss) on sale of capital assets Total non-operating revenues (expenses) Income (loss) before contributions and transfers 348,133 (638,507) (290,374) 178,216 (1,700,335) 7,571 (1,514,548) 138,685 5,734 144,419 6,476,746 (3,452,311) (633,142) Capital contributions Transfers in Transfers out Change in net position 7,799,007 211,826 (4,201,784) 10,285,795 4,528,464 3,197,653 (357,395) 3,916,411 6,064 (6,064) (633,142) Total net position - beginning 289,645,833 247,322,360 21,555,423 Cumulative effect of changes in accounting principle Total net position - beginning, restated 1,154 289,646,987 639 247,322,999 (285,475) 21,269,948 $ 299,932,782 $ 251,239,410 $ 20,636,806 (continued) Total net position - ending The accompanying notes are an integral part of the financial statements 36 CITY OF PEORIA, ARIZONA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Stadium Storm Drain Fund Utility Fund OPERATING REVENUES Charges for services Rents Miscellaneous Total operating revenues $ OPERATING EXPENSES Salaries, wages and employee benefits Contractual services, materials and supplies Insurance claims and expenses Depreciation and amortization Total operating expenses Operating income (loss) 1,311,261 2,107,678 703 3,419,642 $ 920,026 920,026 $ Total Governmental Activities Internal Service Funds 81,787,492 2,107,678 1,662,204 85,557,374 $ 45,005,203 641,975 45,647,178 1,926,603 3,449,778 2,343,380 7,719,761 (4,300,119) 199,137 624,172 2,453,307 3,276,616 (2,356,590) 14,398,582 42,621,693 31,142,012 88,162,287 (2,604,913) 8,211,194 14,200,044 21,661,955 2,842,507 46,915,700 (1,268,522) NON-OPERATING REVENUES (EXPENSES) Investment income Interest expense Gain(loss) on sale of capital assets Total non-operating revenues (expenses) Income (loss) before contributions and transfers 29,057 29,057 6,818 6,818 700,909 (2,338,842) 13,305 (1,624,628) 462,471 12,678 475,149 (4,271,062) (2,349,772) (4,229,541) (793,373) Capital contributions Transfers in Transfers out Change in net position 108,903 2,000,000 (2,162,159) 4,034,370 1,684,598 16,470,744 5,415,543 (4,565,243) 13,091,503 617,978 2,160,984 (909,703) 1,075,886 Total net position - beginning 58,498,864 64,554,156 681,576,636 35,741,670 Cumulative effect of changes in accounting principle Total net position - beginning, restated 354 58,499,218 71 64,554,227 (283,257) 681,293,379 10,115 35,751,785 $ 56,337,059 $ 66,238,825 694,384,882 $ 36,827,671 Total net position - ending Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds. Change in net position of business-type activities (3,195) $ 13,088,308 The accompanying notes are an integral part of the financial statements 37 CITY OF PEORIA, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Water Utility Wastewater Solid Waste Fund Utility Fund Utility Fund CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Self-insurance costs Payments to internal service funds Net cash provided (used) by operating activities $ 45,970,244 (18,562,748) (5,213,578) (2,564,504) 19,629,414 $ 21,765,676 (8,290,170) (2,848,031) (1,155,852) 9,471,623 $ 12,103,432 (2,506,724) (4,190,389) (5,171,174) 235,145 211,826 (4,201,784) (3,989,958) 3,197,653 (357,395) 2,840,258 6,064 (6,064) - (8,433,330) 4,673,086 1,323,913 (5,838,780) (678,433) (2,978,719) 7,571 1,361,338 (5,421,995) (1,786,630) (2,678,952) 292,026 (594) - (8,953,544) (8,818,435) (2,387,520) 295,453 295,453 147,807 147,807 126,417 126,417 6,981,365 52,446,380 $ 59,427,745 3,641,253 25,215,989 $ 28,857,242 (2,025,958) 16,673,024 $ 14,647,066 (continued) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in Transfers out Net cash provided (used) by non-capital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from disposal of capital assets Capital contributions Proceeds from loans Principal payments on capital debt Interest paid on capital debt Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year The accompanying notes are an integral part of the financial statements 38 CITY OF PEORIA, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Stadium Storm Drain Fund Utility Fund CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Self-insurance costs Payments to internal service funds Net cash provided (used) by operating activities $ 908,831 (441,412) (266,709) (196,061) 4,649 $ 84,635,293 (32,866,207) (14,405,860) (9,741,540) 27,621,686 $ 45,639,297 (12,652,710) (8,963,687) (20,624,482) 3,398,418 2,000,000 2,000,000 - 5,415,543 (4,565,243) 850,300 2,160,984 (909,703) 1,251,281 (25,477) - - (14,116,478) 299,597 6,033,830 1,323,913 (11,260,775) (2,465,063) (1,660,410) 37,831 - (25,477) - (20,184,976) (1,622,579) 25,897 25,897 6,597 6,597 602,171 602,171 (55,050) 436,582 381,532 281,275 1,428,888 1,710,163 11,246 503,968 515,214 8,889,181 96,268,249 $105,157,430 3,408,652 30,470,425 $ 33,879,077 (continued) 3,887,110 (3,065,153) (1,887,153) (653,949) (1,719,145) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in Transfers out Net cash provided (used) by non-capital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from disposal of capital assets Capital contributions Proceeds from loans Principal payments on capital debt Interest paid on capital debt Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Total Governmental Activities Internal Service Funds $ $ $ The accompanying notes are an integral part of the financial statements 39 CITY OF PEORIA, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Water Utility Wastewater Solid Waste Fund Utility Fund Utility Fund 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 by (used in) operating activities: Depreciation and amortization Add: Pension expense Subtract: Employer pension contributions (Increase) decrease in assets: Accounts receivable Prepaid items Supplies inventory Other assets Increase (decrease) in liabilities: Accounts payable Accrued payroll Due to other governments Other liabilities Deposits payable Claims payable Unearned revenue - other Compensated absences Total adjustments Net cash provided (used) by operating activities Non-cash investing, capital and financing activities: Capital assets acquired through contributions from developers and City governmental funds Increase in fair market value of investments Total non-cash investing, capital and financing activities 6,767,120 $ (1,937,763) $ 14,310,687 232,018 (417,196) 11,182,018 113,344 (230,047) 852,620 560,263 (324,737) (958,890) 107,755 (63,308) (10,000) (311,618) - (127,917) (62,022) - (420,572) 27,348 21,485 3,666 20,071 9,230 12,862,294 644,211 2,638 8,840 11,409,386 75,356 21,413 17,730 1,012,706 $ 19,629,414 $ 9,471,623 $ $ $ 3,167,126 (169,741) 2,997,385 $ $ 3,125,921 (361,568) 2,764,353 $ The accompanying notes are an integral part of the financial statements 40 (777,561) 235,145 594 (81,121) $ (80,527) (continued) CITY OF PEORIA, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Business-type Activities Major Enterprise Funds Stadium Storm Drain Fund Utility Fund Total Governmental Activities Internal Service Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) $ (4,300,119) $ (2,356,590) $ (2,604,913) $ (1,268,522) 2,343,380 145,305 (133,489) 2,453,307 (50,040) (21,058) 31,142,012 1,000,890 (1,126,527) 2,842,507 19,425 (708,236) 488,671 - (11,195) - (920,949) 107,755 (125,330) (10,000) (7,881) 13,774 - (292,619) 5,134 23,295 (21,203) 22,500 2,580,974 (13,301) (264) 3,790 2,361,239 (6,925) 56,269 44,780 3,666 20,071 (21,203) 62,090 30,226,599 1,533,560 938 1,037,473 (64,620) 4,666,940 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization Add: Pension expense Subtract: Employer pension contributions (Increase) decrease in assets: Accounts receivable Prepaid items Supplies inventory Other assets Increase (decrease) in liabilities: Accounts payable Accrued payroll Due to other governments Other liabilities Deposits payable Claims payable Unearned revenue - other Compensated absences Total adjustments Net cash provided (used) by operating activities Non-cash investing, capital and financing activities: Capital assets acquired through contributions from developers and City governmental funds Increase in fair market value of investments Total non-cash investing, capital and financing activities $ (1,719,145) $ 4,649 $ 27,621,686 $ $ $ 4,034,370 4,034,370 $ 10,436,914 (612,430) $ 9,824,484 $ $ 108,903 108,903 $ The accompanying notes are an integral part of the financial statements 41 3,398,418 617,978 (36,632) $ 581,346 (concluded) CITY OF PEORIA, ARIZONA STATEMENT OF NET POSITION FIDUCIARY FUNDS JUNE 30, 2018 Firemen's Pension Fund ASSETS Pooled cash and investments Interest receivable Total assets $ LIABILITIES Other liabilities Total liabilities NET POSITION Net position restricted for pensions 11,324 51 11,375 Agency Funds $ - $ 11,375 The accompanying notes are an integral part of the financial statements 42 73,374 60 73,434 73,434 73,434 CITY OF PEORIA, ARIZONA STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Firemen's Pension Fund ADDITIONS Contributions: State insurance premium tax rebate Total contributions Investment earnings: Interest and investment income Total investment earnings $ 383 383 289 289 Total additions 672 DEDUCTIONS Retirement payments Total deductions 20,400 20,400 Change in net position Net position - beginning of the year Net position - end of the year (19,728) $ 31,103 11,375 The accompanying notes are an integral part of the financial statements 43 Notes to the Financial Statements The Notes to the Basic Financial Statements include a summary of significant accounting policies and other disclosures considered necessary for a clear understanding of the accompanying financial statements. Note Page 1 Summary of Significant Accounting Policies 45 2 Deposits and Inve stments 54 3 Deficits in Fund Equity/Exce ss of Expenditure s Over Appropriations 56 4 Accounts Receivable and Allowance for Doubtful Accounts 56 5 Due from Other Governments 56 6 Capital Asse ts 57 7 Long-term Debt 58 8 Ri sk Financing Activitie s 63 9 Pensions and Other Postemployment Benefits 64 10 Deferred Compensation Plan 74 11 Contingencie s, Commitments and Other Claims 75 12 Interfund Transactions, Receivable and Payable Balances 75 13 Stabilization Arrangements 76 14 Segment Information for Enterpri se Funds 77 15 Restatement of Beginning Balances 77 44 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the City of Peoria, Arizona (City) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A summary of the City’s more significant policies follows. A. Financial Reporting Entity The City of Peoria (City) was incorporated in 1954 under the Arizona Revised Statutes. The current City charter provides for the Council - Manager form of government and provides such services as authorized by the charter as limited by the constitution of the State of Arizona. The City's major operations include police protection and fire and medical services, parks and recreation, development services, public works, certain social services and general administrative services. In addition, the City owns and operates enterprise funds, which include water, wastewater, solid waste and storm drain operations, and a baseball stadium complex. The financial reporting entity presented in these financial statements consists of the City and its blended component units for which the City is financially accountable. The blended component units are, in substance, part of the primary government’s operations, even though they are legally separate entities. These component units are governed by boards, wholly or substantially, comprised of the government’s elected council. Individual Component Units - Blended City of Peoria Municipal Development Authority, Inc. City of Peoria Municipal Development Authority, Inc. (Authority), an Arizona not-for-profit corporation, was organized for the purpose of financing the construction of municipal facilities within the City through the issuance of bonds. Concurrent with these bond issues, the City entered into contracts with the Authority whereby the City will pay, to the Authority, amounts sufficient to retire the Authority's bonds and related interest. The outstanding Municipal Development Authority, Inc. bonds are reported as a debt service fund in the City’s financial statements. All of the outstanding debt of the Authority will be repaid by revenues of the City. No separate financial statements are prepared for the Municipal Development Authority, Inc. Vistancia Community Facilities District The Vistancia Community Facilities District (Vistancia) was formed by petition to the City Council in 2002. Vistancia’s purpose is to acquire or construct public infrastructure in a specified area of the City. As a special purpose district and separate political subdivision under the Arizona Constitution, Vistancia can levy taxes and issue bonds independently of the City. Property owned in the designated areas is assessed for Vistancia’s property taxes, and thus for the costs of operating the district. The City Council serves as the Board of Directors of Vistancia and City management has operational responsibility for Vistancia. The City has no liability for the district’s debt. For reporting purposes, the transactions of Vistancia are included as governmental funds as if they were part of the City’s operations. Vistancia West Community Facilities District The Vistancia West Community Facilities District (Vistancia West) was formed by petition to the City Council in 2014. Vistancia West’s purpose is to acquire or construct public infrastructure in a specified area of the City. As a special purpose district and separate political subdivision under the Arizona Constitution, Vistancia West can levy taxes and issue bonds independently of the City. Property owned in the designated areas is assessed for Vistancia West’s property taxes, and thus for the costs of operating the district. The City Council serves as the Board of Directors of Vistancia West and City management has operational responsibility for Vistancia West. The City has no liability for the district’s debt. For reporting purposes, the transactions of Vistancia West are included as governmental funds as if they were part of the City’s operations. 45 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 City of Peoria Employee Benefit Trust The City of Peoria Employee Benefit Trust (the Trust) was formed by petition to the City Council on January 1, 2010. The Trust’s purpose is to fund health, welfare and related benefit programs by the City in accordance with the provisions of Arizona law. Plan premiums are paid by Participants and the City. The City Council Sub Committee on Boards and Commissions nominate individuals to serve as Trustees overseeing the management and administration of the Trust. For financial reporting purposes, the transactions of the Trust are included as part of the Self-Insurance Fund, an internal service fund in the City’s financial statements. City of Peoria Workers’ Compensation Trust The City of Peoria Workers’ Compensation Trust (the Trust) was formed by petition to the City Council in 2009. The Trust’s purposes is to fund workers’ compensation benefit programs by the City in accordance with the provisions of Arizona law. Plan premiums are paid by the City. The City Council Sub Committee on Boards and Commissions nominate individuals to serve as Trustees overseeing the management and administration of the Trust. For financial reporting purposes, the transactions of the Trust are included as part of the Self-Insurance Fund, an internal service fund in the City’s financial statements. Stand-alone financial statements are prepared for Vistancia, Vistancia West and the two trusts above. The accounting records of these are maintained by the City and the financial statements are available by contacting the City’s Finance Department, 8401 West Monroe Street, Peoria, AZ 85345. B. Basis of Presentation – Government-wide and Fund Financial Statements The government-wide financial statements (i.e. the statement of net position and the statement of activities) report financial information on all of the non-fiduciary activities of the primary government and its component units. Governmental activities which are normally supported by taxes and intergovernmental revenues are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses for a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operation or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. The City does not currently employ an indirect cost allocation system. The General Fund and certain other funds charge administrative service fees to other operating funds to support general services used by the other operating funds (like purchasing, accounting and administration). These administrative fees are eliminated from the financial statements at both the government-wide and fund level like a reimbursement, by reducing revenues and expenditures/expenses in the allocating fund. Separate financial statements are provided for governmental funds (general fund, special revenue funds, debt service funds and capital projects funds), proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund and is used to account for and report all financial resources not accounted for and reported in another fund. 46 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The Half-Cent Sales Tax Fund, a special revenue fund, accounts for the revenues generated from a sales tax increase designated for specific uses per Council policy. The Highway User Revenue Fund, a special revenue fund, is required by state statute to track receipts of specific state shared revenues and the expenditure of those funds. The Transportation Sales Tax Fund, a special revenue fund, accounts for the revenues generated from a sales tax increase designated by public vote for use in funding transportation needs throughout the City. The Development Fee Fund, a special revenue fund, accounts for the receipt and expenditure of development impact or expansion fees for all governmental activities as governed by state statutes. The GO Bond Debt Service Fund accounts for the principal and interest requirements of the City’s general obligation bonds, with revenues generated from the general property tax levy sufficient to meet the debt service. The City reports the following major proprietary funds: The Water Utility, Wastewater Utility, Solid Waste Utility and Storm Drain Utility Funds all account for the revenues from charges to the customers of these services and the costs of these services. The Stadium Fund accounts for the revenues generated by and the costs of operation of a sports complex owned by the City. This facility is used for spring training by two major league baseball teams as well as multiple other uses throughout the year. Additionally, the City reports the following fund types: The Internal Service Funds account for (1) Motor Pool, (2) Facilities Maintenance, (3) Self-Insurance which includes workers’ compensation and health insurance programs, and (4) Information Technology which includes a computer replacement program. The Firemen’s Pension Fund, a trust fund, is used to account for assets held in a trustee capacity for the volunteer firemen’s retirement plan. Trust funds can be expended for the trusts’ intended purposes. The Agency Funds are purely custodial (assets equal liabilities) and do not involve measurement of operations. The City currently maintains 2 agency funds. One fund, PLAY Peoria, accounts for monies held on behalf of separate not-for-profit agencies for which the City operates as an administrator. Another fund accounts for monies held on behalf of Westside Fire Training IGA, a consortium of area fire departments that pool monies for training activities, for which the City acts as the administrator. For the most part, the effect of the interfund activity has been removed from these statements. Quasiexternal transactions, like the sale of utility services from the Enterprise Funds to the other funds, are not eliminated for the financial statements as elimination of these charges would distort the direct costs and program revenue reported for the various functions. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise and internal service funds are charges for customer services including: water, sewer, solid waste, storm drain, vehicle purchase/maintenance, computer replacement and risk management charges. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for specified expenditures, generally, the City would first apply restricted resources when an expense is incurred. 47 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 C. Measurement Focus and Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and trust financial statements. Agency funds do not have a measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are earned and available to pay liabilities of the current period (generally these revenues are earned by June 30 and are expected to be collected within six months after year-end, except for property taxes). For property taxes, the City uses a 60 day collection period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting, except expenditures related to debt service, compensated absences and claims and judgments, which are recorded only when payment is due. Entitlements, other taxes and shared revenues are all considered to be susceptible to accrual and revenue recognition in the current fiscal period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. For the governmental fund statements, grant revenue earned but not expected to be received within six months of year end is a deferred inflow of resources. Changes in fair value of investments are recognized in investment income at the end of the year. All other revenue items are considered to be measurable and available only when the City receives cash. Because different measurement focuses and bases of accounting are used in the government-wide statement of net position and in governmental fund balance sheets, amounts reported as restricted fund balances in governmental funds may be different from amounts reported as restricted net position in the statement of net position. D. Budgets and Budgetary Accounting The City prepares its annual budget on a basis consistent with generally accepted accounting principles with such exceptions as eliminating compensated absences. The City uses the following procedures in establishing the budgetary data reflected in the accompanying financial statements: • According to the laws of the State of Arizona, all operating budgets must be approved by their governing board on or before the second Monday in August to allow sufficient time for legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. • In April, the proposed budget for the following fiscal year is presented by the City Manager to the City Council. The budget includes proposed expenditures and the means of financing them. Public meetings are held to obtain citizen comment. • Prior to June 30, the City Council legally enacts the budget, through the passage of a resolution. The resolution sets the limit for expenditures for the year, within the voter mandated state expenditure limitation. Additional expenditures may be authorized if directly necessitated by a natural or man-made disaster as prescribed in the state constitution. • The maximum legal expenditure permitted for the year is the total budget as adopted. The expenditure appropriations in the adopted budget are maintained in the City’s financial system by department within individual funds. Departmental appropriations may be amended during the year, within administrative guidelines and adopted Council policies. • The initial budget for the fiscal year may be amended during the year in a legally permissible manner. 48 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 • The City Manager is generally authorized to transfer budgeted amounts within any specific fund’s expenditure appropriation. Any budget revisions requiring a transfer between funds must be approved by the City Council. Additionally, budget revisions involving the use of contingency budgets must be approved by the City Council. • All unencumbered expenditure appropriations expire at the end of the fiscal year. • Encumbered amounts are re-budgeted in the following year as deemed appropriate and necessary after review by the Budget Office staff. Budgetary carry forwards are approved by the City Council. • All funds of the City, except the agency funds, have legally adopted budgets. Formal integration of these budgets into the City’s financial systems is employed as a management control device during the year for all funds. E. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance I. Deposits and Investments Cash Equivalents The City considers short-term investments (including restricted assets) in the State of Arizona investment pool, mutual fund money market, U.S. Treasury bills and notes with maturities of three months or less at acquisition date to be cash equivalents. Investments The City’s funds are invested in accordance with the City’s investment policy and Arizona Revised Statutes. The City's policy is to invest in obligations of the U.S. Government or any of its agencies and instrumentalities, certificates of deposit, bankers’ acceptances, commercial paper, money market funds, repurchase agreements, corporate securities, the State of Arizona local government investment pool and State of Arizona debt including counties, incorporated cities, towns or duly organized school districts. Funds held by trustees related to the issuance of bonds and certain loan programs are invested in accordance with contractual agreements and trust documents. The City generally reports investments at fair value in the balance sheet and recognizes the corresponding change in the fair value of investments in the year in which the change occurred. The fair value of participants’ position in the Local Government Investment Pool approximates the value of the pool shares. Other non-pooled investments are also generally carried at fair value. The fair value of non-pooled investments is determined annually and is based on current market prices. The fair value of investments in open-end mutual funds is determined based on the funds’ current share price. Except for certain specific investments, generally those held in trust for a specific purpose, the City maintains pooled cash and investments, and allocates interest income based on a fund’s proportionate cash balance. Investment income related to certain special revenue funds is allocated to the General Fund. Non-pooled investment income is recorded in the fund that held the specific investments. II. Receivables All receivables are shown net of an allowance for uncollectible accounts. For trade accounts receivable (miscellaneous receivables and utility billing receivables), amounts outstanding in excess of 90 days are included in the allowance. III. Inventory Inventories are valued at cost and the City uses the first-in, first-out (FIFO) flow assumption in determining cost and consist of expendable supplies. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased. 49 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 IV. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net position, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants. V. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $100,000 for Buildings and Improvements, Water and Sewer Systems, Storm Drainage Systems and Infrastructure systems (streets, etc.) and $25,000 for all other asset categories (except land) and an estimated useful life of greater than one year. Capital assets are recorded at the cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives: Assets Water rights Buildings and improvements Water and sewer systems Storm drainage systems Park facilities and landscape Street system Streetlights and traffic control devices Equipment, furniture and fixtures Vehicles Computers/software Useful life (Years) 50 20-40 5-40 40 40 20 10 7 3-15 3 Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation) or net realizable value, if lower, as of the date of the transfer. VI. Compensated Absences The liability for compensated absences reported in the government-wide and proprietary statements consists of unpaid, accumulated leave balances. Annual leave, based on a graduated scale of years of employment, is credited to each employee as it accrues. The maximum annual leave accrual for permanent employees is 360 hours while Fire department employees accrue at a maximum rate of 544 hours. Upon employment termination, payment is made to the employee for the unused leave. City employees are granted 8 hours of sick leave per month. The maximum an employee may accumulate varies according to union status. Upon resignation, employees who have at least five years of employment with the City and accumulated 200 hours or more of sick leave are entitled to a 50% payout. Additionally upon retirement, employees who have accumulated 200 hours or more of sick leave are entitled to a 50% payout. Any sick time accrued above the maximum allowed to be carried is paid out annually in December or May at a rate of 25%, or 50%, according to union or employment status, and the corresponding employees’ sick leave is reduced to the allowable maximum. For the governmental fund financial statements, compensated absences are accrued only when due. For the government-wide financial statements, as well as the proprietary fund financial statements, all of the outstanding vacation, compensatory time and benefits, as well as an estimate of the retirement sick-time 50 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 payout for eligible employees, are recorded as a liability. Compensated absences are liquidated when mature by the various operating funds accruing the liability. VII. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts in the period in which the bonds are issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. The long-term debt of the City is serviced by various debt service funds, according to the type of debt and the funds benefiting from that debt. VIII. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future periods(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City reports deferred outflows related to pensions and other postemployment benefits (OPEB), deferred outflows related to bond refunding and excess consideration provided for acquisitions. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City reports deferred inflows related to pensions, OPEB, and unavailable revenue reported from property taxes. IX. 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 or 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. X. Net Position In the government-wide and proprietary fund financial statements, net position is reported in three categories: net investment in capital assets, restricted, and unrestricted. The net investment in capital assets balances are separately reported because capital assets make up a significant portion of net position. Restricted balances account for the portion of net position restricted by external resource providers or through enabling legislation. Unrestricted balances are the remaining balances not included in the previous two categories. XI. Fund Balance policies In the fund financial statements, governmental funds distinguish between nonspendable and spendable fund balances. Nonspendable balances include amounts that cannot be spent because they are not in a spendable form, such as inventory or prepaid items, or because resources legally or contractually must 51 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 remain intact. Spendable balances are further classified as restricted, committed, assigned and unassigned based on the relative strength of the constraints that control how specific amount can be spent. Restricted fund balances include amounts that can be spent only for the specific purposes stipulated by external resource providers (creditors, grantors, etc.) or through enabling legislation. Committed fund balances includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority. Such commitments are created by legislative action of the City Council, the City’s highest level of decision making authority, by resolution or ordinance and would require the same legislative action to reverse. Ordinances and resolutions both require public votes of the Council and, although the uses may differ, they are both considered to be of the highest level of decision making authority for the City. Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. The authority to make assignments has been delegated by the City Council to the Chief Financial Officer. Much of the authority to commit fund balance is established in the City’s Principals of Sound Financial Management. Unassigned fund balances represent the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. As previously noted above, generally, the City would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available. The order in which the City would apply resources when multiple categories of unrestricted fund balance are available is as follows: committed, assigned and unassigned. XII. Stabilization arrangements The City has set aside funds for various stabilization arrangements. It is the City’s intent that situations allowing for the use of stabilization resources will be for non-routine situations. The authority for the stabilization arrangements is in the Council adopted Principles of Sound Financial Management. The governmental fund stabilization arrangements are shown as committed fund balance on the governmental fund financial statements. The City has the following stabilization arrangements at June 30, 2018: • Budget stabilization reserve – Maintained in the General Fund (10% of the average general fund revenues for the preceding five years) and the Half-Cent Sales Tax Fund (35% of the average fund revenues for the preceding five years). These reserves may be used to provide funding to deal with fluctuations in fiscal cycles and operating requirements that exceed $500,000. Any use of these reserves must be formally approved by the City Council and include a repayment plan to restore the reserve within the three fiscal years following the year in which the event occurred. Funding in excess of the stabilization reserve may be assigned by management for other purposes as approved by City Council, including debt service capital, economic development, community promotions or other specific city operational expenditures. • Emergency reserve – Maintained in the General Fund (10% of the average general fund revenues for the preceding five years) and is for unexpected, large-scale events where damage in excess of $250,000 is incurred and immediate remedial action must be taken to protect the health and safety of residents (e.g. floods, fires, storm damage). Usage of the emergency reserve must be approved by City Council, but the City Manager may utilize these funds when immediate action must be taken to protect the health and safety of residents. The City Manager must then provide a summary report to the City Council as soon as practical on the usage of these funds. The City shall strive to restore the Emergency Reserve to the 10% level within the next fiscal year following the fiscal year in which the event occurred. • Operating Reserve - Maintained in the General Fund (15% of the average general fund revenues for the preceding five years) and is for unexpected events whose impact exceeds $500,000, such as failure of the State to remit shared revenues, unexpected mandates, unexpected loss of State Shared revenues, continuance of critical city services due to unanticipated events, or to offset unexpected loss 52 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 of a significant funding source for the remainder of the fiscal year. Any use of these reserves must be formally approved by the City Council and include a repayment plan to restore the reserve within the two fiscal years following the year in which the event occurred. • Enterprise Operating Fund Working Capital Reserve – Maintained in the Water Utility Fund (25% of the operating expenditures of the fund for the fiscal year), the Wastewater Utility Fund (25% of the operating expenditures of the fund for the fiscal year), and the Solid Waste Utility Fund (20% of the operating expenditures of the fund for the fiscal year). These reserves are to provide the City with a comfortable margin of safety to address emergencies and unexpected declines in revenue without borrowing. • Rate Stabilization Reserve – In the Water and Wastewater Utility Funds (5% of the average fund revenues for the preceding three fiscal years). These funds may be used to moderate significant rate increases. In the event these funds are used, the City shall strive to restore the reserve to the 5% level within the next three fiscal years following the year in which the funds were used. • Debt Stabilization Reserve – In the Water and Wastewater Utility Funds (50% of the maximum annual debt service payment of the fund in the next five fiscal years) and the Half-Cent Sales Tax fund ($1,000,000). The Debt Stabilization Reserve is intended to provide additional security to insure the City’s ability to meet debt service obligations. In the event the Debt Stabilization Reserve is used, the City shall strive to restore the fund to the defined level within the three fiscal years following the year in which the funds were used. • Asset Maintenance Reserve - In the Water and Wastewater Utility Funds (2% of the enterprise fund infrastructure assets). The Asset Maintenance Reserve may be used to provide funding for the repair and maintenance of critical enterprise infrastructure. In the event the Asset Maintenance Reserve is used, the City shall strive to restore the fund to the defined level within the three fiscal years following the year in which the funds were used. • Capital Equipment Replacement Reserves – The City maintains various capital equipment replacement reserves to fund future replacement of certain capital equipment, primarily vehicles and computers. The annual internal charges to the operating funds are determined as part of the annual budget process. F. Property taxes The City Council adopts the annual tax levy each year on or before the third Monday in August as determined by the Maricopa County Assessor. For locally assessed property, the value is determined as of January 1 of the preceding year, known as the valuation year. For utilities and other centrally valued properties, the value is determined as of January 1 of the tax year. The City has an enforceable claim on the property when the property tax is levied. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent on November 1 and May 1, respectively. Delinquent amounts bear interest at the rate of 16 percent. A lien is placed on the property at the time the tax bill is sold. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions for sale of delinquent real estate taxes are held in February following the May 1 date upon which the second half taxes become delinquent. G. Tax Abatements The City has entered into tax abatement agreements as defined by GASB Statement 77. The tax abatements include sales tax reimbursement incentives and the activation of a Foreign Trade Zone which reduces the property tax assessment ratio on commercial property from 18% to 5%. It’s the City’s policy to review each agreement individually and in the aggregate annually. For the fiscal year ended June 30, 2018, each agreement and all agreements in the aggregate are deemed immaterial for financial reporting purposes. H. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported 53 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 amount of assets and liabilities 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 expenses/expenditures during the reporting period. Actual results could differ from those estimates. I. New Accounting Principles For the year ended June 30 2018, the City implemented the provisions of the following GASB Statements: • GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, as amended by GASB Statement No. 85, Omnibus 2017. GASB Statement No. 75 established standards for measuring and recognizing net assets or liabilities, deferred outflows of resources, deferred inflows of resources, and expenses/expenditures related to other postemployment benefits (OPEB) provided through defined benefit OPEB plans. In addition, Statement No. 75 requires disclosure of information related to OPEB. • GASB Statement No. 86, Certain Debt Extinguishment Issues, established standards of accounting and financial reporting for in-substance defeasance transactions in which cash and other monetary assets acquired with only existing resources, or resources other than the proceeds of refunding debt, are placed in an irrevocable trust for the sole purpose of extinguishing debt. In addition, Statement No. 86 improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. 2. DEPOSITS AND INVESTMENTS A. Deposits The City maintains a cash and investment pool that is available for use by all funds. Certain restricted funds are not part of the City’s pool, but rather are maintained with trustees as required by contractual commitments. At June 30, 2018, the carrying amount of the City's deposits was $62,686,883 and the bank balance was $63,134,571. The entire bank balance was covered by federal depository insurance or collateralized by the City’s agent in the City’s name or in the Municipal Development Authority, Inc.'s name. The difference between the City’s carrying amount and the bank balance of $447,688 represents deposits in transit, outstanding checks and other reconciling items. The City maintains cash on hand balances in the form of petty cash and change funds. At June 30, 2018, the total amount of these balances was $7,431. In addition, the City has deposited $2,044,988 in a developer trust account with a fiscal agent in accordance with developer agreements for the construction and acquisition of water projects. B. Investments The City invests in obligations that fall within the authorization of State of Arizona laws, the City’s regulations and investment policy and applicable legal and contractual commitments. Interest rate risk: In order to limit interest and market rate risk, State law and the City’s investment policy sets a maximum maturity on any investment of five years with a minimum of 35% invested for a period of one year or less and no more than 20% of the City’s portfolio be invested for a period greater than three years. At June 30, 2018, 54.4% of the City’s investments have a maturity of less than one year and 4.4% of investments have a maturity of greater than three years. The City’s investment policy also sets a maximum weighted average maturity (WAM) not to exceed three years. The WAM at June 30, 2018 was 463 days. Credit risk: State law and the City’s investment policy limits the purchase of Commercial Paper to those securities rated A-1/P-1 or the equivalent by two nationally recognized statistical rating agencies. The City’s investment policy also limits the purchase of Corporate Bonds or Notes and Banker’s Acceptances to those securities rated AA-/Aa3 and Aa or better at the time of purchase by two nationally recognized rating agencies and with a maximum maturity of two years and 180 days, respectively. At June 30, 2018, the City’s investments include $58.1 million in Commercial Paper, $35.6 million in Corporate Notes and no Banker’s Acceptance securities. State law and the City’s investment policy also restricts investments in certificates of deposit (CD) to fully collateralized or insured from eligible Arizona depositories limited on a 54 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 statewide basis by their capital structure on a quarterly basis. Such CDs are further collateralized to 110% with pledged securities held by an independent custodian approved by the City. City policy requires that securities underlying repurchase agreements must have a collateralization level of at least 102 percent of the market value of principal and accrued interest. Investment Type Agency coupon securities Commercial Paper Corporate Bonds S&P Ratings range AA+ A-1 to A-1+ A to AAA The City’s investment in the State of Arizona local government investment pool is limited to a pool (Pool 7) that invests only in government securities. Pool 7 is not rated. Concentration of credit risk: The City’s investment policy sets diversification limits on both security types and length of maturity. As of June 30, 2018, the City’s investments include 42.6% invested in U.S. Agency Coupon securities, 18.3% in Commercial Paper, 5.9% in Money Market investments, 21.6% in U.S. Treasury Notes and 11.2% in Corporate securities. Custodial credit risk: To control custodial credit risk, State law and the City’s investment policy requires all securities and collateral to be held by an independent third party custodian in the City’s name. The custodian provides the City with monthly safekeeping statements. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments classified as Level 2 inputs are valued using a matrix pricing model. The City has the following recurring fair value measurements as of June 30, 2018: • • • • All U.S. Treasury securities are valued using other observable inputs (Level 2) All agency coupon securities are valued using other observable inputs (Level 2) All commercial paper is valued using other observable inputs (Level 2) All corporate bonds are valued using other observable inputs (Level 2) The City's investment in the State of Arizona's local government investment pool and the money market funds are stated at fair value, which also approximates the value of the investment upon withdrawal. At June 30, 2018, the City’s total investments of $317,517,686 included the following: Investment Maturities in Years Less than 1 1-2 2-3 Over 3 28,020,610 10,252,392 30,352,931 Agency coupon securities 66,738,838 36,929,423 17,623,773 Commercial paper 58,072,040 Fair Value Investments: U.S Treasury notes Corporate notes $ 14,108,772 - 68,625,933 135,400,806 58,072,040 - - 35,606,883 18,663,016 - - - 18,663,016 State of Arizona LGIP 1,149,008 - - - 1,149,008 $ 172,643,512 35,606,883 - $ Mutual fund-money market Total Investments - - - 82,788,698 55 47,976,704 14,108,772 $ 317,517,686 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 3. DEFICITS IN FUND EQUITY/EXCESS OF EXPENDITURES OVER APPROPRIATIONS At June 30, 2018, the following fund reported a deficit in net position. • Internal Service Fund: Facilities Maintenance Fund The Facilities Maintenance Fund deficit resulted from the implementation of accounting guidance related to reporting for pensions and OPEB which requires liabilities to be presented on the face of financial statements. For the year ended June 30, 2018, expenditures, including capital outlay and transfers, did not exceed budget at the fund level (i.e. the level of budgetary control) in any funds. 4. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are recorded in the various funds and displayed in the financial statements net of an allowance for uncollectible accounts as follows at June 30, 2018. Fund Governmental activities: General Fund Half-Cent Sales Tax Fund Highway User Revenue Fund Transportation Sales Tax Fund GO Bond Debt Service Fund Other Governmental Funds Total governmental funds Internal Service Funds Business-type activities: Water Utility Fund Wastewater Utility Fund Solid Waste Utility Fund Stadium Fund Storm Drain Utility Fund Total enterprise funds Grand totals Receivables Allowance Net $ 8,149,112 2,799,528 525,329 1,715,573 321,089 262,276 13,772,907 92,477 5,390 171,868 10,938 280,673 8,056,635 2,799,528 519,939 1,715,573 149,221 251,338 13,492,234 $ 9,041 - 9,041 $ 8,016,492 3,468,729 1,946,706 448,029 148,900 14,028,856 27,810,804 1,115,560 626,862 400,483 33,633 2,176,538 2,457,211 6,900,932 2,841,867 1,546,223 448,029 115,267 11,852,318 25,353,593 $ $ 5. DUE FROM OTHER GOVERNMENTS The City has due from other government receivables from various governments, including the Federal, State and County government. At June 30, 2018, significant receivables due to the City included $1,960,350 from the State of Arizona for State Shared Sales Tax revenues, $263,568 for Auto Tax In-Lieu revenues recorded in the General fund, $975,117 Highway User Revenue Fees revenues recorded in the Highway User Revenue Fund, $1,210,583 due from the Arizona Department of Revenue, $700,929 from Regional Public Transit Authority, under Intergovernmental agreements recorded in the Non-Bond Fund, and $471,760 from federal agencies for housing grant related revenues. Most other receivables are comprised of taxes or various grants due from other governments and agencies. 56 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 6. CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2018, follows: 57 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 *The City’s agreement with the Gila River Indian Community provides water rights to 7,000 acre-feet of water each year through 2057. Depreciation expense was charged to governmental functions in the government-wide financial statements as follows: General government Culture and recreation Public safety Development services Highways and streets Public works Human services $ 2,900,085 4,398,031 2,512,327 45,429 29,452,193 146,970 94,374 Total depreciation expense $ 39,549,409 For the year ended June 30, 2018, the City did not capitalize any net interest costs in the business-type activities of the government-wide financial statements (also in the Enterprise Funds on the proprietary fund statements). Total interest incurred, not including agent fees or other costs, of the business-type activities (and the Enterprise Funds on the proprietary fund statements) before capitalization was $2,338,842. 7. LONG-TERM DEBT A. General obligation bonds General: General obligation (GO) bonds are issued, after approval of the City of Peoria voters at an authorized bond election, to finance the purchase or construction of major capital facilities. GO bonds are backed by the “full faith and credit” of the City and are repaid through the City’s levying of property (ad valorem) taxes. There is no legal limit on the secondary property tax used for debt service on GO bonds. Statutory Debt Limitation: Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for combined water, sewer, light, (after January 1, 1974) parks and open space, and (after December 7, 2006) public safety and transportation purposes may not exceed 20 percent of a City's net limited assessed valuation. Also, outstanding general obligation bonded debt for all other purposes may not exceed 6 percent of a City's net limited assessed valuation. B. Revenue bonds Water and Sewer Revenue Bonds: Water and Wastewater Revenue Bonds are issued, pursuant to voter authorization, for the construction, acquisition, and equipping of water and wastewater facilities and related systems and infrastructure. The bonds are backed by the revenues of the water and wastewater utilities. C. Municipal Development Authority debt obligations Municipal Development Authority (MDA) debt obligations are issued by a non-profit corporation created by the City for the purpose of financing certain capital construction projects. The MDA issues its own debt obligations, which are repaid through a lease purchase agreement with the City equal to the debt service requirements. The City can utilize the City’s excise tax, state shared revenues and other unrestricted revenues for lease payments. D. Special assessment bonds with governmental commitment Special Assessment Bonds are used to construct projects within special assessment districts created by the City after property owners within these districts agree to be assessed for the costs of debt service on these bonds. Payments made by the assessed property owners within the districts are pledged to pay the debt service on the bonds. In the event of default by a property owner, the lien created by the assessment is sold at public auction, and the proceeds are used to offset the defaulted assessment. If there is no purchase at 58 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 the public auction, the City is required to buy the property, and pay off the assessment, with funds appropriated from the General Fund. As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. At June 30, 2018, all outstanding amounts related to special assessments receivable were paid and the outstanding special assessment bonds were fully redeemed. E. Community Facilities District bonds Community Facilities Districts (CFD’s), are special purpose districts created specifically to acquire or construct public infrastructure within specified areas of the City. CFD’s are authorized under state law to issue general obligation (GO) or revenue bonds to be repaid by property (ad valorem) taxes levied on property within the district (for GO debt), or by specified revenues generated within the districts (revenue bonds). CFD’s are created by petition to the City Council by property owners within the area to be covered by the district, and debt may be issued in accordance with relevant state laws and regulations. Operation and maintenance expenditures, bonds and the repayment of bonds issued by these separate legal entities is the responsibility of the district, not the City. As the administrator for the district, the City collects the property taxes and makes the debt payments on behalf of the district. The City Council formed the Vistancia Community Facilities District (VCFD) in October 2002. VCFD was subsequently authorized, by the voters of the district in November 2002, to issue up to $100,000,000 in general obligation bonds to construct public infrastructure within VCFD. VCFD issued general obligations bonds of $21,250,000, $23,550,000 and $22,760,000 in fiscal years 2003, 2005, and 2007, respectively, against this authorization. The VCFD refunded all these obligations during fiscal year 2016 through the issuance of $36,985,000 in general obligation bonds. The City Council formed the Vistancia West Community Facilities District (VWCFD) in August 2014. In December 2014, the VWCFD was authorized through an election to issue up to $9,000,000 of general obligation bonds to construct public infrastructure within the district. VWCFD issued taxable general obligation bonds of $35,000 in fiscal year 2015 and $3,000,000 in fiscal year 2017. F. Pledged revenues The City has pledged certain future revenues to repay specific bonded debt as follows: The City has pledged future water utility and wastewater utility revenues, net of specific operating expenses, to repay $15,780,000 in Revenue Refunding Bonds issued in 2010, $23,280,000 in Revenue Refunding Bonds issued in 2012 and $110,475,883 in Water Infrastructure Financing Authority loans issued between 2002-2016. The various bonds and loans were issued for the purchase or construction of various water or wastewater infrastructure including wells, treatment plants, pumping stations, a water utility and water and wastewater distribution or collection lines. At June 30, 2018, $82,604,830 in bonds and loans remain outstanding to be repaid by future water and wastewater revenues. For the fiscal year ended June 30, 2018, the pledged revenues, net of operating expenses available for service of this debt were $36,882,836. The debt principal and interest paid on this debt in fiscal year 2018 was $13,551,617. The City has pledged certain revenues for the repayment of $43,430,000 and $3,220,000 in Municipal Development Authority (MDA) Bonds issued in 2011 and 2012 and the Pledged Excise 2018 refunding obligations, respectively. Pledged revenues for these obligations include excise taxes and state shared revenues not specifically reserved by law or other regulation to be expended for other purposes. At June 30, 2018, $3,220,000 of the Pledged Excise 2018 obligation and $34,060,000 of the MDA bonds remained outstanding to be repaid by these future revenues. The obligations were issued to construct various City operational facilities and refund prior MDA bonds. For the fiscal year ended June 30, 2018, the pledged revenues, net of operating expenses available to service this debt were $146,124,469. The debt principal and interest paid on this debt in fiscal year 2018 was $3,746,892. 59 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The City has pledged certain revenues for the repayment of $25,755,000 of the Pledged Transportation 2018 refunding obligations. The obligations were issued to refund prior MDA bonds originally issued to construct transportation infrastructure. Pledged revenues for this obligation include transportation sales tax, excise taxes and state shared revenues. At June 30, 2018, $25,755,000 of the Pledged Transportation 2018 obligations remained outstanding to be repaid by future revenues. For the fiscal year ended June 30, 2018, the pledged revenues, net of operating expenses available to service this debt were $156,355,454. The debt principal and interest paid on this debt in fiscal year 2018 was $3,779,408. G. Advance Refundings & Defeasance Municipal Development Authority Debt Obligations During fiscal year 2018, the city issued $3,220,000 and $25,755,000 in pledged excise and pledged transportation direct purchase obligations for the purpose of refinancing the MDA Series 2006 and Series 2008 bonds through an advanced refunding arrangement. The net proceeds from the refunding plus an additional $3,128,884 of pledged revenues, which were available for upcoming debt service payments for the debt being refunded, have been placed in an irrevocable trust account at a commercial bank and invested in U.S. Government Securities which, together with interest earned thereon, will provide amounts sufficient for future payment of principal and interest of the issues refunded. The new debt is no longer an obligation of the MDA. The advanced refunding reduces total debt service payments by $3,478,112 and results in an economic benefit of $3,209,926. The refunded obligations have been called as of June 30, 2018. In prior years, the City refinanced various bond issues through advance refunding arrangements. Prior year refundings (amounts not yet callable) included: Series 2009A General Obligation Bonds $ 26,165,000 During the year ended June 30, 2018, the City partially defeased $10,025,000 in Series 2007B and 2010 General Obligation bonds. Existing city resources (after payment of underwriting fees, insurance, and other issuance costs) were used to purchase U.S. government securities, which are essentially risk-free as to amount, timing, and collection of interest and principal. Those securities were deposited in an irrevocable trust with an escrow agent, to provide for all future debt service payments of the refunded general obligation bonds. As a result, the refunded general obligation bonds are considered to be defeased, and the liability for those bonds has been removed from the government-wide financial statements. The net carrying amount of the old debt exceeded the reacquisition price by $450,797. This amount is reported as a special item on the Statement of Activities in the current year. This partial defeasance was undertaken to reduce total debt service payments. H. Direct Purchase and Loan Obligations The City completed the purchase of the Sunrise Mountain through the use of a secured promissory note in the amount of $3,510,000 at an annual interest rate of 4%. The obligation will be funded from the City’s Non-Bond Capital Project Fund with the last payment due in December of 2018. In September 2017, the City entered into a New Clean Renewable Energy Bond (NCREB) agreement to provide financing for solar renewable energy projects at several locations throughout the City. The City borrowed $5,199,304 for a term of 20 years, at a rate of 4.23%. The majority of the debt service payments will be funded from expected savings on the City’s electricity bills. 60 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 I. Tables The following schedule summarizes the City’s long-term liability activity for the year ended June 30, 2018: Beginning Balance Governmental activities: Bonds payable: General obligation bonds $ 148,240,000 MDA debt obligations 67,605,000 Direct Purchase and Loan Obligations 3,510,000 Special assessment bonds 2,130,000 CFD bonds 37,098,000 Total bonds payable 258,583,000 Net pension and other postemployment benefits liability 163,193,318 Compensated absences 13,387,140 Deferred bond premium 14,026,285 Governmental activities totals $ 449,189,743 Business-type activities: Bonds and loans payable: Revenue bonds $ 18,035,000 WIFA loans 74,229,903 Net pension and other postemployment benefits liability 15,831,769 Compensated absences 1,450,020 Deferred bond premium 1,060,644 Business-type activities totals $ 110,607,336 $ $ $ $ Additions Reductions Ending Balance Due Within One Year 34,174,304 34,174,304 $ 21,185,000 33,545,000 $ 127,055,000 34,060,000 $ 11,295,000 1,990,000 1,170,000 2,130,000 2,773,000 60,803,000 36,514,304 34,325,000 231,954,304 5,752,957 2,985,000 22,022,957 9,463,403 9,592,640 53,230,347 815,350 9,196,700 1,542,777 $ 72,357,827 171,841,371 13,783,080 12,483,508 $ 430,062,263 6,677,370 $ 28,700,327 1,323,912 $ $ $ 282,342 2,871,732 4,477,986 29,725 2,809,642 276,790 $ 14,100,142 5,435,000 5,548,985 12,600,000 70,004,830 16,084,386 1,512,110 783,854 $ 100,985,180 4,695,000 5,717,536 777,090 $ 11,189,626 Bonds and loans payable at June 30, 2018 are comprised of the following: Governmental Activities Debt General Obligation Bonds Series 2007B Series 2009 Series 2010 Series 2012A Series 2012B Series 2015A Series 2015B Maturity Dates Net Interest Rate 7/1/07-20 7/1/09-18 7/1/10-30 7/1/12-32 7/1/12-22 7/15/16-35 7/15/16-28 4.00 3.86 4.03 3.32 1.75 2.98 2.29 Total General Obligation Bonds Issue Amount Outstanding June 30, 2018 $ $ 18,365,000 68,440,000 29,170,000 14,715,000 13,690,000 30,325,000 66,425,000 1,925,000 2,110,000 10,120,000 11,725,000 7,285,000 28,510,000 65,380,000 $ 335,510,000 $ 127,055,000 $ 7,920,000 35,510,000 $ 5,255,000 28,805,000 $ 43,430,000 $ 34,060,000 Municipal Development Authority Debt Obligations Series 2011 Series 2012 7/1/12-26 7/1/13-32 3.9 3.3 Total Municipal Development Authority Debt Obligations 61 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Direct Purchase and Loan Obligations Secured Promissory Note Taxable NCREBs Pledged Excise 2018 Pledged Transportation 2018 12/21/18 9/1/37 7/15/25 4.00 4.23 2.01 1/15/26 1.97 $ 3,510,000 5,199,304 3,220,000 $ 2,340,000 5,199,304 3,220,000 25,755,000 Total Direct Purchase and Loan Obligations $ 25,755,000 36,514,304 $ 36,514,304 Community Facility District Bonds VCFD – Series 2015 VWCFD – Series 2016 7/15/16-26 7/15/18-29 3.47 4.15 Total Community Facility District Bonds $ 36,985,000 3,000,000 $ 31,325,000 3,000,000 $ 40,020,000 $ 34,325,000 Business-Type Activities Debt Revenue Bonds Maturity Dates Net Interest Rate WWW Series 2010 WWW Series 2012 7/1/11-20 7/1/12-21 3.21 1.60 Total Revenue Bonds Issue Amount Outstanding June 30, 2018 $ 15,780,000 23,280,000 $ 5,335,000 7,265,000 $ 39,060,000 $ 12,600,000 $ $ WIFA Loans WIFA Series 2002 WIFA Series 2006 WIFA Series 2008 WIFA Series 2008 WIFA Series 2009 WIFA Series 2009 WIFA Series 2009 WIFA Series 2009 WIFA Series 2009 WIFA Series 2015 7/1/03-22 7/1/08-26 7/1/09-27 7/1/10-28 7/1/10-28 7/1/10-29 7/1/10-28 7/1/10-29 7/1/10-29 7/15/16-35 3.94 3.06 3.30 3.48 3.48 2.00 2.00 3.27 3.23 2.40 Total WIFA loans 1,964,789 27,183,342 42,741,541 8,575,253 727,612 8,030,340 3,733,794 4,371,597 757,624 12,389,991 $ 110,475,883 641,277 15,426,288 25,735,085 5,626,691 469,145 5,133,682 2,313,612 2,894,460 495,404 11,269,186 $ 70,004,830 The following table discloses the bond debt service requirements as of June 30, 2018, segregating principal and interest, for the next five years and in five-year increments thereafter. Governmental Activities Business-type Activities Fiscal year Principal Interest Total Principal Interest Total 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Totals $ 19,682,957 20,361,060 18,889,912 19,524,051 20,203,485 88,679,808 34,494,749 7,778,282 $229,614,304 $ 8,281,671 7,512,932 6,843,233 6,173,806 5,436,208 15,246,177 4,140,114 505,967 $54,140,108 $ 27,964,628 27,873,992 25,733,145 25,697,857 25,639,693 103,925,985 38,634,863 8,284,249 $283,754,412 $ 10,412,536 9,361,324 9,705,515 7,055,281 6,445,797 32,516,190 6,173,134 935,054 $82,604,831 $ 2,446,974 2,110,060 1,785,982 1,509,641 1,300,159 3,484,670 589,508 51,078 $13,278,072 $ 12,859,511 11,471,384 11,491,497 8,564,922 7,745,955 36,000,861 6,762,642 986,134 $95,882,902 62 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Long-term compensated absences and net pension and OPEB liabilities of governmental activities are expected to be liquidated by the operating funds (primarily the General Fund, Highway User Revenue Fund, Transit Fund and utility funds) as they come due. 8. RISK FINANCING ACTIVITIES The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters; workers’ compensation; and health insurance. The City maintains a Risk Management Fund, an Employee Benefits Trust Fund and a Workers’ Compensation Trust Fund (presented in the Self-Insurance Fund of the Internal Service Funds) to account for and finance its uninsured risks of loss. Premiums are paid into the internal service funds by the other operating funds and are available to pay claims, claim reserves and administrative costs of the program. These interfund premiums are used to fund claim expenses reported in the internal service funds. The City uses third party administrators to monitor the workers’ compensation and health insurance claims programs. As with any risk retention program, the City is contingently liable with respect to claims beyond those actuarially projected. Risk management The City is self-insured for public liability up to $1,000,000 with excess coverage insurance policies purchased through commercial insurance carriers covering individual claims in excess of these amounts up to $25,000,000. Also, the City is self-insured for damage to City vehicles valued up to $100,000. Vehicles with a value in excess of $100,000 have a $5,000 deductible. City property is insured through commercial insurance carriers with a $50,000 deductible. The operating funds of the City pay monthly premiums to the risk management fund based upon a model taking into consideration multiple factors including prior loss experience, staffing, liability exposures, and operating budget. Premium payments to insurance carriers are made directly from the risk management fund. There have been no settlements paid in excess of insurance in any of the past three years nor has insurance coverage been significantly reduced in recent years. Workers’ compensation On July 1, 2009, the City established a workers’ compensation trust fund for work-related injuries to employees. For workers’ compensation insurance, the City is self-insured up to $1,000,000 per claim on public safety employees and $1,000,000 for all other employees up to an aggregate stop loss of $4,091,661 for fiscal year 2018. Commercial insurance is purchased to cover claims above the self-insurance amounts. Operating funds with employees covered under the workers’ compensation insurance program pay monthly premiums to the workers’ compensation fund based upon staffing levels. Premium payments to insurance carriers, as well as third party administrator costs are made directly from the workers’ compensation trust fund. Employee wages while off work for workers’ compensation injuries (2/3rds of weekly wages) are also paid from this fund. There have been no settlements paid in excess of insurance in the last three years, nor has insurance coverage been significantly reduced in recent years. Health insurance On January 1, 2010, the City established a health insurance trust fund for health insurance coverage for City employees and dependents. The City is self-insured for employee health claims up to $200,000 per claimant. Commercial insurance is purchased for claims in excess of those limits. Premiums are collected through contributions from employee paychecks and department budgets. COBRA participants contribute 100% of the premiums for their insurance coverage. Premiums for the medical, vision, dental, and life insurance plans are determined prior to each renewal period by estimating the costs of claims and administration of the plan based on a number of factors including: the demographics of the group, previous claims history, plan design changes and any new mandated benefits. 63 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Premium payments to insurance carriers, as well as third party administrator costs are made directly from the health insurance trust fund. There have been no settlements in excess of insurance in the past three years, nor has insurance coverage been significantly reduced in recent years. Estimated liability – The total claims liability of $5,958,582 reported in the Self-Insurance Fund at June 30, 2018, is based on the requirements of Governmental Accounting Standards Board Statement #10, which requires that liabilities be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. The claims liability consists of $1,122,419 for liability/property claims, $3,460,659 for workers’ compensation claims and $1,375,504 for health insurance claims. The claims liability includes an estimated amount for claims that have been incurred but not reported (IBNR). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends, including frequency and amount of payouts, and other economic and social factors. Non-incremental claims adjustment expenses are not included in the calculation. Changes in the Self-Insurance Fund’s claims liability amount (claims only, exclusive of other insurance expenses) during the last two fiscal years are as follows: Fiscal Year 2017: Risk management Workers' comp Health insurance Beginning of Fiscal Year Liability $ 972,368 2,434,992 690,511 $ 4,097,871 Changes in Estimates $ 141,016 85,849 596,373 $ 823,238 Current Year Claims $ 1,188,374 1,192,337 13,802,358 $ 16,183,069 Claims Payments $ (1,188,374) (1,192,337) (13,802,358) $(16,183,069) Balance at Fiscal Year-end $ 1,113,384 2,520,841 1,286,884 $ 4,921,109 Beginning of Fiscal Year Liability $ 1,113,384 2,520,841 1,286,884 $ 4,921,109 Changes in Estimates $ 9,035 939,818 88,620 $ 1,037,473 Current Year Claims $ 424,960 1,382,139 16,500,272 $ 18,307,371 Claims Payments $ (424,960) (1,382,139) (16,500,272) $(18,307,371) Balance at Fiscal Year-end $ 1,122,419 3,460,659 1,375,504 $ 5,958,582 Fiscal Year 2018: Risk management Workers' comp Health insurance 9. PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS The City of Peoria contributes to the pension plans described below. The City of Peoria contributes to the Elected Officials Retirement Plan; however the plan is not described below because of its relative insignificance to the financial statements. The plans are component units of the State of Arizona. The City of Peoria reported $16,792,782 of pension and OPEB contributions as expenditures in the governmental funds related to all plans to which it contributes. A. Arizona State Retirement System Plan Description. City of Peoria employees not covered by the other pension plans described after this section participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial 64 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 report that includes its financial statements and required supplementary information. The report is available on the ASRS 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: Years of service and age required to receive benefit Retirement Initial Membership Date: 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 is based on Highest 36 months of last 120 months Highest 60 months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a members’ 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. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. For members with 10 or more years of service, benefits range from $150 per month to $260 per month depending on the age of the member and dependents. For members with 5 to 9 years of service, the benefits are the same dollar amounts as above multiplied by a vesting fraction based on completed years of service. Active members are eligible for a monthly long-term disability benefit equal to two-thirds of monthly earnings. Members receiving benefits continue to earn service credit up to their normal retirement dates. Members with long-term disability commencement dates after June 30, 1999, are limited to 30 years of service or the service on record as of the effective disability date if their service is greater than 30 years. Contributions. In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the current fiscal year, statute required active ASRS members to contribute at the actuarially determined rate of 11.5 percent (11.34 percent for retirement & health insurance benefits and 0.16 percent for long-term disability) of the members’ annual covered payroll, and the City of Peoria was required by statute to contribute at the actuarially determined rate of 11.5 percent (10.9 percent for retirement, 0.44 percent for health insurance premium benefit, and 0.16 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the pension, health insurance premium benefit, and long-term disability plans for the year ended June 30, 2018 were $5,923,393, $239,109, and $86,949 respectively. In addition, the City of Peoria was required by statute to contribute at the actuarially determined rate of 9.49 percent (9.26 percent for retirement, 0.1 percent for health insurance premium benefit, and 0.13 percent for long-term disability) of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to ASRS. 65 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Liability. At June 30, 2018, the City of Peoria reported the following asset and liabilities for its proportionate share of the ASRS’ net/pension/OPEB asset or liability. ASRS Net pension/OPEB (asset) liability Pension Health insurance premium benefit Long-term disability $89,022,329 (314,630) 206,344 The net asset and net liabilities were measured as of June 30, 2017. The total liability used to calculate the net asset or liability was determined using update procedures to roll forward the total liability from an actuarial valuation as of June 30, 2016, to the measurement date of June 30, 2017. The total pension liability as of June 30, 2017, reflects a change in actuarial assumption related to changes in loads for future potential permanent benefit increases. The City of Peoria’s proportion of the net asset or liability was based on a projection of the City’s long-term share of contributions to the plan relative to the projected contributions of all participating employers, actuarially determined. The City of Peoria’s proportions measured as of June 30, 2017 and the change from its proportions measured as of June 30, 2016 were: ASRS Proportion June 30, 2017 % Pension Health insurance premium benefit Long-term disability 0.57146 0.57794 0.56926 Increase (decrease) from June 30, 2016 0.029 0.000 0.000 Pension/OPEB Expense and Deferred Outflows/Inflows of Resources. For the year ended June 30, 2018, the City of Peoria recognized the following pension and OPEB expense for ASRS. ASRS Pension Health insurance premium benefit Long-term disability Pension/OPEB expense $5,164,277 184,028 110,090 66 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Liability. At June 30, 2018, the City of Peoria reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: The deferred outflows of resources related to ASRS pensions and OPEB resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an increase of the net asset or a reduction of the net liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions and OPEB will be recognized as expenses as follows: Year ending June 30 2019 2020 2021 2022 2023 Thereafter Pension $ (1,226,396) 5,337,122 1,384,900 (2,047,779) Health insurance premium benefit $ (88,644) (88,644) (88,644) (88,644) (67) Long-term disability $ (7,721) (7,721) (7,721) (7,721) (4) (9) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Discount rate Projected salary increases Inflation Permanent base increases Mortality rates Healthcare cost trend rate June 30, 2016 June 30, 2017 Entry age normal 8.0% 3.0-6.75% for pensions/not applicable for OPEB 3% Included for pensions/not applicable for OPEB 1994 GAM Scale BB Not applicable 67 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2012. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.7 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by 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 arithmetic real rates of return for each major asset class of ASRS are summarized in the following table: Target Allocation 58% 25% 10% 2% 5% 100% Asset Class Equity Fixed income Real estate Commodities Multi-asset class Total Long-Term Expected Arithmetic Real Rate of Return 6.73% 3.70% 4.25% 3.41% 3.84% Discount Rate. The discount rate used to measure the ASRS total pension/OPEB liability was 8 percent, which is less than the long-term expected rate of return of 8.7 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension/OPEB liability. Sensitivity of the Proportionate Share of the Net Pension/OPEB (Asset) Liability to Changes in the Discount Rate. The following presents the City of Peoria’s proportionate share of the net pension/OPEB (asset) liability calculated using the discount rate of 8 percent, as well as what the proportionate share of the net pension/OPEB (asset) liability would be if it were calculated using a discount rate that is 1percentage-point lower or 1-percentage-point higher than the current rate: City’s Proportionate share of the Net pension liability Net insurance premium benefit liability (asset) Net long-term disability liability 1% Decrease (7%) $ 114,261,706 522,510 246,736 Current discount rate (8%) $ 89,022,329 (314,630) 206,344 1% Increase (9%) $ 67,932,668 (1,026,058) 172,097 Plan Fiduciary Net Position. Detailed information about the plans’ 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 Descriptions. City of Peoria public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers agent and cost-sharing multiple-employer defined benefit pension plans and agent and cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plans. A nine-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. 68 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com. Benefits Provided. The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Certain retirement and disability benefits are calculated on the basis of age, average monthly compensation, and service credit as follows. See the publicly available PSPRS financial report for additional benefits information. Years of service and age required to receive benefit Retirement Initial Membership Date: On or After January 1, 2012 and Before January 1, 2012 before July 1, 2017 20 years of service, any age 25 years of service or 15 years of 15 years of service, age 62 credited service, and age 52.5 Final average salary is based on Highest 36 months of last 20 years Highest 60 months of last 20 years 50% less 2.0% for each year of credited service less than 20 years or plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 1.5 to 2.5% per year of credited service, not to exceed 80% Normal retirement Accidental disability retirement 50% or normal retirement, whichever is greater Survivor benefit: Retired members Active members 80% to 100% of retired member’s pension benefit 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments. The adjustments are based on inflation for PSPRS. In addition, the Legislature may enact permanent one-time benefit increases after a Joint Legislative Budget committee analysis of the increase’s effect on the plan. PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $150 per month to $260 per month depending on the age of the member and dependents. Employees Covered by Benefit Terms. At June 30, 2018, the following employees were covered by the agent pension plan’s benefit terms: PSPRS - POLICE Pension Health Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total PSPRS - FIRE Pension Health 90 90 31 31 36 7 21 18 170 296 170 267 155 207 155 204 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 69 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 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. Contributions rates for the year ended June 30, 2018, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active members - pension City of Peoria Pension Health Insurance PSPRS Police PSPRS Fire 11.65% 11.65% 41.07% 0.49% 31.40% 0.29% In addition, the City of Peoria was required by statute to contribute at the actuarially determined rate of 26.15 percent for the PSPRS Police, and 16.12 percent for the PSPRS Fire, of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to the PSPRS. For the agent plans, the contributions to the pension plan and contributions for the health insurance premium benefit for the year ended were: PSPRS Police PSPRS Fire $6,634,245 $3,794,886 79,152 35,048 Pension: Contributions made Health insurance premium benefit: Contributions made Liability. At June 30, 2018, the City of Peoria reported the following assets and liabilities. PSPRS - Police PSPRS – Fire Net pension(asset) liability Net OPEB (asset) liability $63,267,924 35,060,592 $288,666 79,902 The net assets and net liabilities were measured as of June 30, 2017, and the total liability used to calculate the net asset or liability was determined by an actuarial valuation as of that date. The total liabilities as of June 30, 2017, reflect changes of actuarial assumptions based on the results of an actuarial experience study for the 5-year period ended June 30, 2016, including decreasing the investment rate of return from 7.5 percent to 7.4 percent, decreasing the wage inflation from 4 percent to 3.5 percent, and updating mortality, withdrawal, disability, and retirement assumptions. The total pension liabilities for PSPRS also reflect changes of benefit terms for legislation that changed benefit eligibility and multipliers for employees who became members on or after January 1, 2012, and before July 1, 2017, and a court decision that decreased the contribution rates for employees who became members before July 20, 2011. The court decision will also affect the PSPRS net pension liabilities measured as of June 30, 2018, because of refunds of excess member contributions. The change in the City’s PSPRS net pension liabilities as a result of the refunds is not known. 70 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows: Actuarial valuation date Actuarial cost method Discount rate Wage inflation Price Inflation Permanent benefit increase Mortality rates Healthcare cost trend rate June 30, 2017 Entry age normal 7.40% 3.5% for pensions/not applicable for OPEB 2.5% for pensions/not applicable for OPEB Included for pensions/not applicable for OPEB RP-2014 tables using MP-2016 improvement scale with adjustments to match current experience. Not applicable Actuarial assumptions used in the June 30, 2017, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.40 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Long-Term Expected Target Geometric Real Allocation Rate of Return Asset Class 2% 0.25% Short-term investments 2% 3.75% Absolute return 4% 5.00% Risk parity 5% 1.25% Fixed income 9% 4.52% Real assets 10% 3.96% GTAA 16% 5.83% Private credit 10% 3.75% Real estate 12% 6.75% Private Equity 14% 8.70% Non-U.S. equity 16% 7.60% U.S. equity 100% Total Discount Rates. At June 30 2017, the discount rate used to measure the PSPRS total pension/OPEB liabilities was 7.40%, which was a decrease of 0.1 from the discount rate used as of June 30, 2016. The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, PSPRS plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension/OPEB liability. 71 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Changes in the Net Pension/OPEB Liability Sensitivity of the Net Pension/OPEB (Asset) Liability to Changes in the Discount Rate. The following table presents City of Peoria’s net pension/OPEB (assets) liabilities calculated using the discount rates noted above, as well as what the net pension/OPEB (asset) liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: 72 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 1% Decrease Current Discount Rate 1% Increase PSPRS – Police Rate Net pension (asset) liability Net OPEB (asset) liability 6.40% $ 82,238,575 575,771 7.40% $ 63,267,924 288,666 8.40% $ 47,985,572 50,914 PSPRS – Fire Rate Net pension (asset) liability Net OPEB (asset) liability 6.40% $ 49,679,379 312,324 7.40% $ 35,060,592 79,902 8.40% $ 23,261,571 (111,639) 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. Expense. For the year ended June 30, 2018, the City of Peoria recognized the following pension and OPEB expense: Pension Expense $ 9,315,620 5,422,462 PSPRS – Police PSPRS – Fire OPEB Expense $ 55,701 44,397 Deferred Outflows/Inflows of Resources. At June 30, 2018, the City of Peoria reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: PSPRS – Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on plan investments Contributions subsequent to the measurement date Total Pension Deferred Deferred Outflows of Inflows of Resources Resources Health Insurance Benefit Premium Deferred Deferred Outflows of Inflows of Resources Resources $ 4,364,590 $ 1,103,126 $ 7,371,785 - - 132,303 3,105,310 2,630,015 - 60,592 6,634,245 - 79,152 - $ 21,475,930 $ 3,733,141 73 $ 16,301 95,453 $ $ - 192,895 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Health Insurance Benefit Premium Deferred Deferred Outflows of Inflows of Resources Resources Pension PSPRS – Fire Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on plan investments Contributions subsequent to the measurement date Total Deferred Outflows of Resources Deferred Inflows of Resources $ 2,579,524 $ - $ 156,527 $ - 6,066,841 - - 124,854 2,963,701 2,391,998 - 51,088 3,794,886 - 35,048 - $ 15,404,952 $ 2,391,998 $ 191,575 $ 175,942 The amounts reported as deferred outflows of resources related to pension and OPEB resulting from contributions subsequent to the measurement date will be recognized as an increase in the net asset or a reduction of the net liability in the year ended June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized as expenses as follows: Pension Year ending June 30: 2019 2020 2021 2022 2023 Thereafter PSPRS Police $3,376,597 3,712,689 2,169,622 1,202,156 647,480 - OPEB PSPRS - Fire $1,594,097 2,036,751 1,648,000 919,267 1,272,132 1,747,821 PSPRS Police $(38,564) (38,564) (38,564) (38,564) (22,338) - PSPRS Fire $ (8,913) (8,913) (8,913) (8,913) 3,859 12,378 10. DEFERRED COMPENSATION PLAN The City offers deferred compensation plans to its employees and management employees, created in accordance with Internal Revenue Code Section 457 and Section 401a. The plans permit participants to defer contributions into the plan until future years. The deferred compensation is not available to employees, under either plan, until termination, retirement, death or unforeseeable emergency. The City’s fiduciary responsibility is that of exercising “due care” in selecting a third-party administrator. Federal legislation requires that Section 457 and 401a plan assets be held in trust for employees. This means that employee assets held in Section 457 and 401a plans are not the property of the City and are not subject to claims of the City’s general creditors. Also, the City exercises no administrative control nor makes investment decisions. Therefore, the deferred compensation assets are not included in the City’s Basic Financial Statements. 74 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 11. CONTINGENCIES, COMMITMENTS AND OTHER CLAIMS The City is involved in litigation arising in the ordinary course of its operations. The City believes that its ultimate liability, if any, in connection with these matters will not have a material adverse effect on the City's financial position, changes in financial position, or liquidity. The City is self-insured for the first $1,000,000 of any occurrence and then has additional coverage up to $25.0 million. Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. The City has development agreements where, in return for developers constructing public infrastructure, the City agreed to reimburse the developer for the cost of such infrastructure at some future time contingent on the collection of impact fees and sales tax revenues. The City had the following significant commitments as of June 30, 2018: • • • • • • $1,830,245 in the Water utility fund for the construction of rehabilitated wells. $1,024,082 in the Wastewater utility fund for construction of new sewer lines and operational equipment replacement at the Beardsley Water Reclamation Facility. $757,535 in the Transportation Sales Tax fund for streets improvements. $19,508,751 in the GO Bond fund for streets improvements and for the construction of the Northern Community Park. $7,706,035 in the Development Fee fund for construction of the Northern Community Park and the Thunderbird road corridor improvements. $10,000,000 in the Non-Bond fund for construction or the Northern Community Park. 12. INTERFUND TRANSACTIONS, RECEIVABLE AND PAYABLE BALANCES At June 30, 2018, there was an interfund loan from the General Fund to several other funds to cover a deficit cash balance in those funds. The loan is expected to be repaid in the following year. Interfund loans were also recorded for Non-bond Capital Projects and Other Grant Funds in the fiscal year. The interfund transfers generally fall within one of the following categories: 1) debt service payments made from a debt service fund but funded from an operating fund; 2) subsidy transfers; 3) transfers to fund internal service equipment replacement funds; or 4) capital assets purchased or constructed in one fund, but capitalized in another. There were no significant transfers during fiscal year 2018 that were either nonroutine in nature or inconsistent with the activities of the fund making the transfer. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2018: 75 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Fund Governmental funds: General Fund Half-Cent Sales Tax Fund Highway User Revenue Fund Transportation Sales Tax Fund GO Bond Debt Service Non-Major Governmental Funds Total governmental funds Enterprise funds: Water Utility Fund Wastewater Utility Fund Solid Waste Utility Fund Stadium Fund Total enterprise funds Internal Service funds Grand totals $ $ Transfers out Transfers in 343,962 12,580,973 88,100 5,664,845 1,108,246 19,786,126 7,557,555 100,260 419,914 9,606,816 17,684,545 4,201,784 357,395 6,064 4,565,243 909,703 25,261,072 211,826 3,197,653 6,064 2,000,000 5,415,543 2,160,984 25,261,072 13. STABILIZATION ARRANGEMENTS The committed and assigned fund balances of the governmental funds are shown on the fund financial statements. The following table presents the City’s stabilization reserves included in the proprietary fund financial statements at June 30, 2018: Water Utility Fund: Working capital policy reserve Rate stabilization Debt stabilization System asset maintenance Capital equipment replacement $ Wastewater Utility Fund: Working capital policy reserve Rate stabilization Debt stabilization System asset maintenance Capital equipment replacement 6,457,814 1,912,648 5,823,969 8,349,281 880,571 23,424,283 3,208,260 1,039,026 2,159,787 8,364,678 759,768 15,531,519 Solid Waste Utility Fund: Working capital policy reserve Capital equipment replacement 2,431,258 1,777,103 4,208,361 Stadium Fund: Capital equipment replacement Total enterprise funds 495,898 43,688,293 Internal Service Funds: Capital equipment replacement Risk management purpose Total internal service funds 11,272,365 9,777,300 21,049,665 76 CITY OF PEORIA, ARIZONA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 14. SEGMENT INFORMATION FOR ENTERPRISE FUNDS Both the Water Utility Fund and the Wastewater Utility Fund have revenue streams pledged in support of outstanding revenue bonds but since both segments are discretely presented in the proprietary fund financial statements, all required segment information is presented on the face of those statements. 15. RESTATEMENT OF BEGINNING BALANCES Net position beginning balances on the government-wide Statement of Activities and on the Statement of Revenues, Expenses and Changes in Fund Net Position have been restated as of July 1, 2017 due to the following reasons: 1) A change in accounting principle for the implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB), as amended by GASB Statement No. 85, Omnibus 2017. 2) Prior-period adjustments to the City’s capital asset balances reporting the cumulative effect of prior year errors in useful life calculation, vehicle disposals, and land purchased. 3) Prior-period adjustment for unrecorded secured promissory note. 4) Prior-period adjustment correcting an error in the reporting of restricted cash with fiscal agents in the City’s Non-major CFD bond fund. The table below summarizes the changes. 77 78 Required Supplementary Information CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION/OPEB LIABILITY COST-SHARING PLANS JUNE 30, 2018 ASRS-Pension Reporting Fiscal Year (Measurement Date) 2017 (2016) 2016 (2015) 2018 (2017) Proportion of the net pension liability Proportionate share of the net pension liability Covered payroll Proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability $ $ 0.571460% 89,022,329 53,419,833 166.65% 69.92% $ $ 0.542460% 87,558,493 50,820,065 172.29% 67.06% $ $ 0.526670% 82,036,552 47,561,194 0.520455% $ 77,009,675 $ 46,266,286 172.49% 68.35% 166.45% 69.49% NOTE: The pension schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. Reporting Fiscal Year (Measurement Date) 2018 (2017) ASRS-Health insurance premium benefit Proportion of the net OPEB (assset) Proportionate share of the net OPEB (asset) Covered payroll Proportionate share of the net OPEB (asset) as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total OPEB liability $ $ 0.577940% (314,630) 53,419,833 -0.59% 103.57% NOTE: The health insurance premium benefit schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. Reporting Fiscal Year (Measurement Date) 2018 (2017) ASRS-Long-term disability Proportion of the net OPEB liability Proportionate share of the net OPEB liability Covered payroll Proportionate share of the net OPEB liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total OPEB liability $ $ 0.569260% 206,344 53,419,833 0.39% 84.44% NOTE: The long-term disability benefit schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension/OPEB plan schedules 79 2015 (2014) CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2018 Public Safety Personnel Retirement System Reporting Fiscal Year (Measurement Date) 2017 (2016) 2016 (2015) 2018 (2017) Peoria Police Department Total pension liability Service cost Interest on the total pension liability Changes in benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ $ $ $ 3,497,564 8,207,737 1,019,089 $ 2,658,484 7,450,121 6,569,592 $ 2,557,053 7,075,581 - 2015 (2014) $ 2,556,976 6,074,980 1,228,208 5,141,159 2,469,996 (1,372,059) 4,270,128 341,776 - (672,105) 8,103,978 (5,213,832) 15,121,713 110,294,625 125,416,338 (5,716,802) 13,859,464 96,435,161 110,294,625 (4,791,028) 5,183,382 91,251,779 96,435,161 (4,300,112) 12,991,925 78,259,854 91,251,779 5,122,411 2,723,948 6,734,348 (5,213,832) (59,988) (21,848) 9,285,039 52,863,375 62,148,414 $ $ $ 4,729,872 1,732,502 320,234 (5,716,802) (46,480) 37,100 1,056,426 51,806,949 52,863,375 $ $ $ 3,254,563 1,689,030 1,821,818 (4,791,028) (44,835) (56,762) 1,872,786 49,934,163 51,806,949 $ $ $ 2,907,800 1,491,406 5,954,387 (4,300,112) (1,313,936) 4,739,545 45,194,618 49,934,163 Net pension liability/(asset) - ending (a)-(b) 63,267,924 57,431,250 44,628,212 41,317,616 Plan fiduciary net position as a percentage of the total pension liability 49.55% 47.93% 53.72% 54.72% Covered valuation payroll Net pension liability/(asset) as a percentage of covered-employee payroll $ 15,387,963 411.15% $ 13,992,947 410.43% $ 13,449,859 331.81% NOTE: The pension schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension/OPEB plan schedules 80 $ 13,035,510 316.96% CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET PENSION LIABIILTY AND RELATED RATIOS AGENT PLANS JUNE 30, 2018 Public Safety Personnel Retirement System Reporting Fiscal Year (Measurement Date) 2017 (2016) 2016 (2015) 2018 (2017) Peoria Fire Department Total pension liability Service cost Interest on the total pension liability Changes in benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ $ $ $ 3,111,892 6,395,230 466,111 $ 2,379,652 5,434,649 6,700,272 $ 2,056,517 4,952,998 - 2015 (2014) $ 2,013,025 4,197,224 453,523 1,834,916 1,708,934 86,478 3,273,059 809,490 - 660,641 3,815,327 (2,663,473) 10,853,610 85,045,529 95,899,139 (1,739,905) 16,134,205 68,911,324 85,045,529 (1,949,881) 5,869,124 63,042,200 68,911,324 (1,117,704) 10,022,036 53,020,164 63,042,200 3,596,394 1,593,634 6,425,067 (2,663,473) (57,251) 671 8,895,042 51,943,505 60,838,547 $ $ $ 3,162,518 1,375,202 298,901 (1,739,905) (43,410) 87,273 3,140,579 48,802,926 51,943,505 $ $ $ 1,866,365 1,238,541 1,710,692 (1,949,881) (42,126) (35,356) 2,788,235 46,014,691 48,802,926 $ $ $ 1,885,422 1,168,186 5,369,649 (1,117,704) (1,063,021) 6,242,532 39,772,159 46,014,691 Net pension liability/(asset) - ending (a)-(b) 35,060,592 33,102,024 20,108,398 17,027,509 Plan fiduciary net position as a percentage of the total pension liability 63.44% 61.08% 70.82% 72.99% Covered valuation payroll Net pension liability/(asset) as a percentage of covered-employee payroll $ 11,543,146 303.74% $ 11,796,929 280.60% $ 11,068,029 181.68% NOTE: The pension schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension/OPEB plan schedules 81 $ 10,934,868 155.72% CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2018 Public Safety Personnel Retirement System Reporting Fiscal Year (Measurement Date) 2018 (2017) Peoria Police Department Total OPEB liability Service cost Interest on the total OPEB liability Changes in benefit terms Differences between expected and actual experience in the measurement of the OPEB liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ 50,779 167,590 6,476 19,591 (159,009) $ $ $ (111,290) (25,863) 2,264,788 2,238,925 66,083 208,162 (111,290) (1,842) 161,113 1,789,146 1,950,259 Net OPEB liability/(asset) - ending (a)-(b) 288,666 Plan fiduciary net position as a percentage of the total OPEB liability 87.11% Covered valuation payroll Net OPEB liability/(asset) as a percentage of covered-employee payroll $ 15,387,963 1.88% NOTE: The OPEB schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension/OPEB plan schedules 82 CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS AGENT PLANS JUNE 30, 2018 Reporting Fiscal Year (Measurement Date) 2018 (2017) Public Safety Personnel Retirement System Peoria Fire Department Total OPEB liability Service cost Interest on the total OPEB liability Changes in benefit terms Differences between expected and actual experience in the measurement of the OPEB liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total OPEB liability Total OPEB liability - beginning Total OPEB liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) $ 39,357 119,494 5,572 175,598 (140,066) $ $ $ (66,108) 133,847 1,606,635 1,740,482 31,072 176,536 (66,108) (1,563) 139,937 1,520,643 1,660,580 Net OPEB liability/(asset) - ending (a)-(b) 79,902 Plan fiduciary net position as a percentage of the total OPEB liability 95.41% Covered valuation payroll Net OPEB liability/(asset) as a percentage of covered-employee payroll $ 11,543,146 0.69% NOTE: The OPEB schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension/OPEB plan schedules 83 CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION/OPEB CONTRIBUTIONS JUNE 30, 2018 2018 2017 Reporting Fiscal Year 2016 2015 2014 Arizona State Retirement System - Pension Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll $ 5,923,393 $ 5,758,658 $ 5,513,977 $ 5,458,945 $ $ $ 5,923,393 54,343,055 $ $ 5,758,658 53,419,833 5,513,977 $ $ 50,820,065 $ $ 5,458,945 47,561,194 5,019,946 $ $ 46,266,286 10.78% 10.85% 11.48% 10.85% 10.90% 5,019,946 Arizona State Retirement System - Health Insurance Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll $ 239,109 $ $ 239,109 54,343,055 0.44% Arizona State Retirement System - Long-term disability Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll $ 86,949 $ $ 86,949 54,343,055 0.16% Public Safety Personnel Retirement System - Pension Peoria Police Department Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll Peoria Fire Department Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll $ 8,917,938 $ 5,039,558 $ 4,406,379 $ 3,235,398 $ $ $ 6,634,245 2,283,693 16,153,506 $ $ 5,039,558 15,387,963 4,696,546 $ (290,167) $ 13,992,947 $ $ 3,235,398 13,449,859 2,907,800 $ $ 13,035,510 32.75% 33.56% 24.06% 22.31% 41.07% $ 5,721,681 $ 2,711,485 $ 2,568,191 $ 1,842,016 $ $ $ 3,794,886 1,926,795 12,085,624 $ $ 2,976,968 (265,483) 11,543,146 2,747,609 $ (179,418) $ 11,796,929 $ $ 1,842,016 11,068,029 1,885,422 $ $ 10,934,868 25.79% 23.29% 16.64% 17.24% 31.40% Public Safety Personnel Retirement System - OPEB Peoria Police Department Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll Peoria Fire Department Statutorily required contribution Actual contributions in relation to the statutorily required contribution Contribution deficiency (excess) Covered payroll Actual contribution as a percentage of covered payroll 2,907,800 $ 79,152 $ $ 79,152 16,153,506 0.49% $ 35,048 $ $ 35,048 12,085,624 0.29% NOTE: The pension/OPEB schedules in the required supplementary information are intended to show information for ten years and additional information will be displayed as it becomes available. See accompanying notes to pension plan schedules 84 1,885,422 CITY OF PEORIA, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO PENSION/OPEB PLAN SCHEDULES JUNE 30, 2018 Note 1 – Actuarially Determined Contribution Rates Actuarial determined contribution rates for PSPRS are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: Actuarial cost method Entry age method Amortization method Level percent-of-pay, Closed Remaining amortization period 20 years Asset valuation method 7-year smoothed market value 80%/120% market corridor Actuarial assumptions: Investment rate of return 7.40% Projected salary increases 3.5%-7.5% Wage growth 3.5% Retirement age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 to June 30, 2011 Mortality RP-2000 mortality table (adjusted by 105% for both males and females) Note 2 – Factors that Affect Trends Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional or a breach of contract because those provisions apply to individuals who were members as of the law’s effective date. As a result, the PSPRS changed benefit terms to reflect the prior mechanism for funding permanent benefit increases for those members and revised actuarial assumptions to explicitly value future permanent benefit increases. PSPRS also reduced those members’ employee contribution rates. These changes are reflected in the plans’ pension liabilities for fiscal year 2015 (measurement date 2014) for members who were retired as of the law’s effective date and fiscal year 2018 (measurement date 2017) for members who retired or will retire after the law’s effective date. These changes also increased the PSPRS required pension contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date. These changes will increase the PSPRS required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. The City refunded excess employee contributions to PSPRS members. PSPRS allowed the City to reduce its actual employer contributions for the refund amounts. As a result, the City’s pension contributions were less than the actuarially or statutorily determined contributions for 2018. 85 86 Combining Statements & Budgetary Schedules Combining Fund Financial Statements and Budgetary Schedules This section contains the combining financial statements for non-major governmental funds, internal service funds and fiduciary funds as well as the budget schedules other than those for the general fund and major special revenue funds (which may be found immediately following the governmental fund financial statements). Page Major Governmental Funds Other than General Fund & Special Revenue Funds Budgetary Comparison Schedules General Obligation Bonds Debt Service Fund 89 Non-Major Governmental Funds Combining Statements Combining Balance Sheet 92 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 94 Budgetary Comparison Schedules Public Transit Fund 96 Other Grants Fund 97 Municipal Development Authority (MDA) Debt, Debt Service Fund 98 Community Facilities District (CFD) Bonds Debt Service Fund 99 Special Assessment Debt Service Fund 100 Non-Bond Debt Service Fund 101 Community Facilities District (CFD) Bonds Capital Projects Fund 102 General Obligation Bonds Capital Projects Fund 103 Non-Bond Capital Projects Fund 104 Internal Service Funds Combining Statements Combining Statement of Net Position 107 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 108 Combining Statement of Cash Flows 109 Fiduciary Funds Combining Statement of Fiduciary Net Position – Agency Funds Combining Statement of Changes in Assets and Liabilities – Agency Funds 87 111 112 MAJOR GOVERNMENTAL FUNDS OTHER THAN GENERAL FUND & SPECIAL REVENUE FUNDS Budgetary Comparison Schedules Debt Service Funds Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest payments on debt. This includes financial resources that are being accumulated for principal and interest maturing in future years. Principal payments are due annually. Interest is due semiannually. General Obligation (GO) Bonds Debt Service Fund This fund accounts for the principal and interest requirements of the City's general obligation bonds. Provisions are made in the City's general property tax levy for funds sufficient to meet the general obligation debt service. 88 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE GENERAL OBLIGATION BONDS DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Investment earnings Total revenues $ EXPENDITURES: Current: Debt service: Principal payments Interest and other charges Payment to bond escrow agent Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 16,782,346 125,000 16,907,346 $ 16,782,346 125,000 16,907,346 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 16,868,610 153,219 17,021,829 $ 86,264 28,219 114,483 11,160,000 6,345,824 17,505,824 21,660,000 6,345,824 28,005,824 11,160,000 5,448,719 10,475,797 27,084,516 (10,500,000) (897,105) 10,475,797 (921,308) (598,478) (11,098,478) (10,062,687) 1,035,791 (500,000) (500,000) (500,000) (500,000) 419,914 419,914 500,000 419,914 919,914 (1,098,478) (11,598,478) (9,642,773) 1,955,705 21,091,728 21,091,728 25,529,967 4,438,239 19,993,250 89 $ 9,493,250 $ 15,887,194 $ 6,393,944 NON-MAJOR GOVERNMENTAL FUNDS OTHER GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Public Transit Fund This fund receives and expends the City's allocation of Federal Transit Authority grant money as well as the City's allocation of the Local Transportation Assistance Fund money. The amount of Federal Transportation Authority funds available to each city is based on the total funding available and the total requests for funds. The amount of Local Transportation Assistance funds available to each city is allocated on a population basis, which is determined by the latest federal census. Expenditures are for the administration and operating costs of the public transit system. Other Grants Fund This fund receives and expends much of the City's grant fund money. The amount of grants received is generally based upon application to granting agencies by the City and availability of funding by grantors. Grant money may be used only for the purpose of the approved budget and is subject to grantor expenditure guidelines. Debt Service Funds Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest payments on debt. This includes financial resources that are being accumulated for principal and interest maturing in future years. Principal payments are due annually. Interest is due semiannually. Municipal Development Authority (MDA) Bonds Debt Service Fund This fund accounts for the principal and interest requirements of the Municipal Development Authority's bonds. Provisions are made in the City's transaction privilege tax for funds sufficient to meet the Municipal Development Authority's debt service. Community Facilities District (CFD) Bonds Debt Service Fund This fund accounts for the principal and interest requirements of the Vistancia Communities Facilities District and Vistancia West Communities Facilities District (blended component units) general obligation bonds. Provisions are made in the District's general property tax levy for funds sufficient to meet the general obligation debt service. Special Assessment Bonds Debt Service Fund This fund accounts for the collection of special assessment district revenues and the payment of the special assessment bonds. Non-Bond Debt Service Fund This fund accounts for all non-general obligation bond debt service payments of the City. 90 Capital Projects Funds A capital project fund is established to account for the acquisition and construction of major capital facilities other than those financed by Special Revenue Fund and Enterprise Fund resources. A capital project fund enhances reporting to ensure that requirements regarding the use of the revenue were fully satisfied. Community Facilities District (CFD) Bonds Capital Projects Fund This fund accounts for the expenditure of Vistancia Community Facilities District and Vistancia West Community Facilities District bond proceeds for the construction of capital assets for the District. Once the capital assets are completed, they are turned over to the City for operation and maintenance. General Obligation (GO) Bond Capital Projects Fund This fund accounts for the receipt of proceeds from General Obligation bonds and the expenditure of those funds to purchase or construct capital assets for the City. Non-Bond Capital Projects Fund This fund accounts for the purchase or construction of capital assets with funds other than bond proceeds. This includes monies received from outside sources, i.e. developers or other governments, and also City pay-as-you-go monies. 91 CITY OF PEORIA, ARIZONA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2018 Special Revenue Funds Public Transit Fund ASSETS & DEFERRED OUTFLOWS Pooled cash and investments Accounts receivable, net Interest receivable Due from other governments Restricted cash with fiscal agents Restricted investments Total assets LIABILITIES, DEFERRED INFLOWS & FUND BALANCES Liabilities: Accounts payable Accrued payroll Due to other funds Other liabilities Unearned revenue-other Total liabilities Deferred inflows of resources: Unavailable revenue-property taxes Total deferred inflows of resources Fund balances: Restricted for: Debt service Capital projects Grant purposes Committed for: Arts capital Assigned to: Capital projects Total fund balance Total liabilities, deferred inflows & fund balance $ $ $ 1,305,316 236,454 4,592 57,832 1,604,194 $ 217,870 9,670 227,540 $ $ $ 63,329 24,360 33,767 20,929 142,385 $ $ - 1,376,654 $ 92 - $ $ $ $ 166,015 6,232 2,461 24,756 3,871,269 4,070,733 900 900 4,063,601 - 7,784,484 7,784,484 Non-Bond 6,232 6,232 7,784,484 - 3,092,469 4,348,645 4,491,030 5,166,537 20,258 2,597,689 7,784,484 CFD Bonds - 1,256,176 1,376,654 1,604,194 Municipal Development Authority Debt 3,255,845 8,652 10,480 1,216,053 4,491,030 - $ Debt Service Funds Other Grants Fund - $ 4,063,601 4,070,733 $ $ $ 11,971 11,971 - 11,971 11,971 $ 11,971 (continued) CITY OF PEORIA, ARIZONA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2018 Capital Project Funds GO Bond Capital Projects Fund ASSETS & DEFERRED OUTFLOWS Pooled cash and investments Accounts receivable, net Interest receivable Due from other governments Restricted cash with fiscal agents Restricted investments Total assets LIABILITIES, DEFERRED INFLOWS & FUND BALANCES Liabilities: Accounts payable Accrued payroll Due to other funds Other liabilities Unearned revenue-other Total liabilities Deferred inflows of resources: Unavailable revenue-property taxes Total deferred inflows of resources Fund balances: Restricted for: Debt service Capital projects Grant purposes Committed for: Arts capital Assigned to: Capital projects Total fund balance Total liabilities, deferred inflows & fund balance $ $ $ 112,538 3,273 4,928,360 5,044,171 1,172,409 929,569 126,110 2,228,088 Non-Bond $ $ 19,002,175 46,368 2,000,153 5,164,304 26,213,000 $ 222,090 3,432,644 226,880 1,186,827 5,068,441 $ $ - 2,816,083 - $ 2,816,083 5,044,171 Total $ Non-Major Governmental Funds 1,676,598 34,030 4,395,980 352,990 1,207,756 7,667,354 - 6,232 6,232 - 11,860,056 2,816,083 2,632,830 - 3,092,469 21,144,559 21,144,559 26,213,000 93 $ 29,008,426 251,338 87,432 3,298,794 11,645,233 4,928,360 49,219,583 $ 21,144,559 41,545,997 49,219,583 CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Special Revenue Funds Public Other Transit Grants Fund Fund REVENUES: Taxes Intergovernmental Charges for service Fines and forfeitures Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Debt service: Principal payments Interest and other charges Payment to bond escrow agent Capital outlay Total expenditures 655,475 32,461 26,101 234,800 948,837 $ 3,192,413 418,696 87,341 59,573 224,896 3,982,919 Debt Service Funds Municipal Development Authority Debt $ 115,144 115,144 CFD Bonds $ 3,178,023 Non-Bond $ 13,990 1,431,648 4,623,661 42 42 2,159,206 385,619 831,812 1,095,073 510,206 33,767 288,737 3,699 - 29,532 - - 203,352 2,362,558 1,679,141 4,824,355 2,250,000 2,149,842 3,128,884 7,532,425 2,773,000 1,716,290 4,518,822 156,549 156,549 (1,413,721) (841,436) (7,417,281) 104,839 (156,507) 1,500,000 1,500,000 (291,333) (291,333) 28,975,000 (28,814,053) 7,560,658 (168,478) 7,553,127 123,961 123,961 168,478 168,478 86,279 (1,132,769) 135,846 228,800 11,971 Fund balances - beginning 1,290,375 5,481,414 7,648,638 3,834,801 - Restatement Fund balances - beginning - restated 1,290,375 5,481,414 7,648,638 3,834,801 - Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Refunding bonds issued Issuance of debt Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - ending $ 1,376,654 $ 4,348,645 94 $ 7,784,484 $ 4,063,601 $ 11,971 (continued) CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Debt Service Fund Special Assessment Bonds REVENUES: Taxes Intergovernmental Charges for service Fines and forfeitures Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Culture and recreation Public safety Development services Highways and streets Public works Human services Debt service: Principal payments Interest and other charges Payment to bond escrow agent Capital outlay Total expenditures 14,078 14,078 Capital Project Funds GO Bond Capital Projects Fund CFD Bonds $ 1,491 1,491 $ 117,291 25,237 142,528 Non-Bond $ 3,716,054 298,157 4,014,211 Total Non-Major Governmental Funds $ 3,178,023 7,563,942 451,157 87,341 645,867 1,916,581 13,842,911 - 1,498,416 - 33,476 627,195 - 452,326 831,812 1,095,073 510,206 2,125,611 33,767 2,447,943 2,130,000 90,825 2,220,825 - 6,916,523 8,414,939 1,170,000 143,030 6,307,841 8,281,542 8,323,000 4,256,536 3,128,884 15,106,857 38,312,015 (2,206,747) 1,491 (8,272,411) (4,267,331) (24,469,104) (104,561) (104,561) (123,960) (123,960) (419,914) (419,914) 5,199,304 253,719 5,453,023 28,975,000 5,199,304 (28,814,053) 9,606,816 (1,108,246) 13,858,821 (2,311,308) (122,469) (8,692,325) 1,185,692 (10,610,283) Fund balances - beginning 2,311,308 3,282,126 11,508,408 19,958,867 55,315,937 Restatement Fund balances - beginning - restated 2,311,308 (3,159,657) 122,469 11,508,408 19,958,867 (3,159,657) 52,156,280 2,816,083 $ 21,144,559 - Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Refunding bonds issued Issuance of debt Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - ending $ - $ 95 - $ $ 41,545,997 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE PUBLIC TRANSIT FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Intergovernmental Charges for services Investment earnings Miscellaneous Total inflows $ EXPENDITURES: Current: Human services Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 745,000 241,000 3,000 20,000 1,009,000 $ 745,000 241,000 3,000 20,000 1,009,000 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 655,475 32,461 26,101 234,800 948,837 $ (89,525) (208,539) 23,101 214,800 (60,163) 2,825,407 7,930 2,833,337 2,825,914 223,609 3,049,523 2,159,206 203,352 2,362,558 (666,708) (20,257) (686,965) (1,824,337) (2,040,523) (1,413,721) 626,802 (100,000) 1,500,000 1,400,000 (37,000) 1,500,000 1,463,000 1,500,000 1,500,000 37,000 37,000 (424,337) (577,523) 86,279 663,802 1,062,361 1,062,361 1,290,375 228,014 638,024 96 $ 484,838 $ 1,376,654 $ 891,816 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE OTHER GRANTS FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Intergovernmental Charges for services Fines and forfeitures Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Culture and recreation Public safety Development services Public works Human Services Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 6,334,881 1,765,825 160,000 31,900 16,433 8,309,039 $ 6,334,881 1,765,825 160,000 31,900 16,433 8,309,039 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 3,192,413 418,696 87,341 59,573 224,896 3,982,919 $ (3,142,468) (1,347,129) (72,659) 27,673 208,463 (4,326,120) 374,674 923,017 681,949 1,352,064 659,877 1,545,702 5,537,283 911,719 969,015 1,580,589 1,572,668 442,699 2,069,100 7,545,790 385,619 831,812 1,095,073 510,206 33,767 288,737 1,679,141 4,824,355 (526,100) (137,203) (485,516) (1,062,462) 33,767 (153,962) (389,959) (2,721,435) 2,771,756 763,249 (841,436) (1,604,685) (3,200,000) (291,333) (3,491,333) (1,051,759) (291,333) (1,343,092) (291,333) (291,333) 1,051,759 1,051,759 (719,577) (579,843) (1,132,769) (552,926) 5,208,214 5,208,214 5,481,414 273,200 4,488,637 97 $ 4,628,371 $ 4,348,645 $ (279,726) CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE MUNICIPAL DEVELOPMENT AUTHORITY (MDA) DEBT, DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Actual Amounts (budgetary basis) Budgeted Amounts Original Final REVENUES: Investment earnings Total revenues $ EXPENDITURES: Current: General government Debt service: Principal payments Interest and other charges Payment to bond escrow agent Total expenditures $ - Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Refunding bonds issued Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending 15,000 15,000 $ Variance with Final Budget Over (Under) 15,000 15,000 $ - 115,144 115,144 $ 100,144 100,144 3,699 3,699 4,850,000 3,450,733 8,300,733 4,850,000 3,294,183 8,144,183 2,250,000 2,149,842 3,128,884 7,532,425 (2,600,000) (1,144,341) 3,128,884 (611,758) (8,285,733) (8,129,183) (7,417,281) 711,902 (210,000) 7,560,658 7,350,658 (210,000) 7,560,658 7,350,658 28,975,000 (28,814,053) 7,560,658 (168,478) 7,553,127 210,000 28,975,000 (28,814,053) (168,478) 202,469 (935,075) (778,525) 135,846 914,371 7,619,596 7,619,596 7,648,638 29,042 6,684,521 98 $ 6,841,071 $ 7,784,484 $ 943,413 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE COMMUNITY FACILITIES DISTRICT (CFD) BONDS DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Taxes Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Debt service: Principal payments Interest and other charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Contingencies Transfers in Total other financing sources and uses 3,186,371 1,971,419 5,157,790 Fund balances - ending $ 3,178,023 13,990 1,431,648 4,623,661 $ (8,348) 13,990 (539,771) (534,129) 570,000 29,532 (540,468) 2,873,000 1,709,790 5,152,790 2,873,000 1,709,790 5,152,790 2,773,000 1,716,290 4,518,822 (100,000) 6,500 (633,968) 5,000 5,000 104,839 99,839 (5,000) (5,000) (5,000) (5,000) 123,961 123,961 5,000 123,961 128,961 - - 228,800 228,800 3,834,801 3,834,801 $ 3,186,371 1,971,419 5,157,790 570,000 Net change in fund balances Fund balances - beginning $ Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) - $ 99 - $ 4,063,601 $ 4,063,601 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE SPECIAL ASSESSMENT DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Investment earnings Total revenues $ EXPENDITURES: Debt service: Principal payments Interest and other charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources and uses $ Fund balances - beginning $ - $ - 14,078 14,078 $ 14,078 14,078 2,151,300 145,526 2,296,826 2,151,300 145,526 2,296,826 2,130,000 90,825 2,220,825 (21,300) (54,701) (76,001) (2,296,826) (2,296,826) (2,206,747) 90,079 (104,561) (104,561) - Net change in fund balances Fund balances - ending - Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) - - (104,561) (104,561) (2,296,826) (2,296,826) (2,311,308) (14,482) 2,296,989 2,296,989 2,311,308 14,319 163 100 $ 163 $ - $ (163) CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE NON-BOND DEBT SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Investment earnings Total revenues $ EXPENDITURES: Debt service: Interest and other charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources and uses $ - $ 42 42 $ 42 42 - - 156,550 156,550 156,549 156,549 (1) (1) - (156,550) (156,507) 43 - 168,478 168,478 168,478 168,478 - (156,550) 11,971 168,521 - - - - - Fund balances - beginning $ - - Net change in fund balances Fund balances - ending - Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) - 101 $ (156,550) $ 11,971 $ 168,521 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE COMMUNITY FACILITIES DISTRICT (CFD) BONDS CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2018 Actual Amounts (budgetary basis) Budgeted Amounts Original Final REVENUES: Investment earnings Total revenues $ - $ - EXPENDITURES: Current: Debt service: Interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Issuance of debt Transfers out Total other financing sources and uses Net change in fund balances Variance with Final Budget Over (Under) - $ - 1,491 1,491 $ 1,491 1,491 400,000 2,600,000 3,000,000 400,000 2,600,000 3,000,000 - (400,000) (2,600,000) (3,000,000) (3,000,000) (3,000,000) 1,491 3,001,491 3,000,000 3,000,000 3,000,000 3,000,000 (123,960) (123,960) (3,000,000) (123,960) (3,123,960) - - (122,469) (122,469) Fund balances - beginning - - 3,282,126 3,282,126 Restatement Fund balances - beginning - restated - - (3,159,657) 122,469 (3,159,657) 122,469 Fund balances - ending $ - 102 $ - $ - $ - CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE GENERAL OBLIGATION (GO) BOND CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: Highways and streets Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Issuance of debt Contingencies Transfers out Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 60,000 60,000 $ 60,000 60,000 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 117,291 25,237 142,528 $ 57,291 25,237 82,528 1,508,501 42,751,547 44,260,048 1,213,162 42,233,137 43,446,299 1,498,416 6,916,523 8,414,939 285,254 (35,316,614) (35,031,360) (44,200,048) (43,386,299) (8,272,411) 35,113,888 29,726,471 (400,000) 29,326,471 29,726,471 (255,905) 29,470,566 (419,914) (419,914) (29,726,471) 255,905 (419,914) (29,890,480) (14,873,577) (13,915,733) (8,692,325) 5,223,408 15,798,579 15,798,579 11,508,408 (4,290,171) 925,002 103 $ 1,882,846 $ 2,816,083 $ 933,237 CITY OF PEORIA, ARIZONA BUDGETARY COMPARISON SCHEDULE NON-BOND CAPITAL PROJECTS FUND FOR THE YEAR ENDED JUNE 30, 2018 Budgeted Amounts Original Final REVENUES: Intergovernmental revenue Investment earnings Miscellaneous Total revenues $ EXPENDITURES: Current: General government Highways and streets Debt service: Principal payments Interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Issuance of debt Contingencies Transfers in Total other financing sources and uses Net change in fund balances Fund balances - beginning Fund balances - ending $ 84,800 8,653,601 8,738,401 $ 84,800 8,653,601 8,738,401 Actual Amounts (budgetary basis) Variance with Final Budget Over (Under) $ $ 3,716,054 298,157 4,014,211 3,716,054 213,357 (8,653,601) (4,724,190) 278,354 40,457 265,645 33,476 627,195 (6,981) 361,550 26,083,258 26,361,612 34,973,649 35,279,751 1,170,000 143,030 6,307,841 8,281,542 1,170,000 143,030 (28,665,808) (26,998,209) (17,623,211) (26,541,350) (4,267,331) 22,274,019 (2,000,000) (2,000,000) (1,393,472) (1,393,472) 5,199,304 253,719 5,453,023 5,199,304 1,393,472 253,719 6,846,495 (19,623,211) (27,934,822) 1,185,692 29,120,514 23,565,229 23,565,229 19,958,867 (3,606,362) 3,942,018 104 $ (4,369,593) $ 21,144,559 $ 25,514,152 105 INTERNAL SERVICE FUNDS Motor Pool Fund The Motor Pool Fund is responsible for the maintenance and operation of the City’s fleet of vehicles and various other equipment. Self-Insurance Fund The Self-Insurance Fund is responsible for the administration of the self-insurance programs, including liability and property damage, workers’ compensation insurance, and employee health insurance. This fund provides the excess insurance coverage for claims over the self-insurance limits; claims under the limits are charged directly to the SelfInsurance Fund. Facilities Maintenance Fund The Facilities Maintenance Fund is responsible for the maintenance and operations of the City's buildings and grounds. Information Technology Fund The Information Technology Fund is responsible for the maintenance and operations of the City's computer hardware and software systems. 106 CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2018 ASSETS Current assets: Pooled cash and investments Restricted pooled cash and investments Accounts receivable, net Interest receivable Prepaid items Supplies inventory Total current assets Non-current assets: Restricted assets: Investments Total restricted assets Capital assets: Buildings and improvements Equipment & furniture Vehicles Less accumulated depreciation Construction in progress Total capital assets, net Net pension and other postemployment benefits asset Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions Total deferred outflows of resources LIABILITIES Current liabilities: Accounts payable Accrued payroll Current portion of claims payable Current portion of compensated absences Total current liabilities Non-current liabilities: Long-term portion of claims payable Compensated absences Net pension and other postemployment benefits liability Total non-current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted - trust purpose Unrestricted Total net position Motor Pool Fund SelfInsurance Fund Facilities Maintenance Fund Information Technology Fund Total $ 9,596,670 21,482 183,978 9,802,130 $ 10,935,003 8,998,677 97 88,560 65,200 20,087,537 $ $ 4,037,975 8,944 7,927 4,054,846 $ 24,880,400 8,998,677 9,041 118,819 65,200 183,978 34,256,115 598,089 28,157,459 (16,852,716) 11,902,832 4,076 21,709,038 194,686 194,686 310,752 850 311,602 7,750,510 7,750,510 - 27,838,047 11,779 323,381 148,102 36,746,356 (34,786,383) 228,121 2,336,196 19,801 6,410,843 148,102 37,344,445 28,157,459 (51,639,099) 228,121 14,239,028 35,656 56,281,309 562,641 562,641 945,830 945,830 1,703,157 1,703,157 - - 7,750,510 7,750,510 93,726 22,053 71,240 187,019 2,890,711 3,124 4,595,196 13,180 7,502,211 58,787 59,300 203,730 321,817 48,747 112,580 317,300 478,627 3,091,971 197,057 4,595,196 605,450 8,489,674 55,060 1,363,386 12,810 224,220 251,690 1,363,386 543,780 1,155,899 1,210,959 1,397,978 1,376,196 8,878,407 3,340,547 3,564,767 3,886,584 5,615,634 5,867,324 6,345,951 10,112,080 12,019,246 20,508,920 214,026 214,026 359,791 359,791 647,875 647,875 (3,214,588) $ (3,214,588) 2,336,196 (1,685,265) $ 650,931 14,239,028 9,182,340 13,406,303 $ 36,827,671 74,058 74,058 11,902,832 8,528,856 $ 20,431,688 107 9,182,340 9,777,300 $ 18,959,640 CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2018 OPERATING REVENUES Charges for services Miscellaneous Total operating revenues Motor Pool Fund Facilities Maintenance Fund Information Technology Fund Total $ 6,307,548 1,505 6,309,053 $ 10,120,657 35,047 10,155,704 $ 45,005,203 641,975 45,647,178 7,471,906 41,711 7,513,617 $ 21,105,092 563,712 21,668,804 OPERATING EXPENSES Salaries, wages and employee benefits Contractual services, materials and supplies Insurance claims and expenses Depreciation and amortization Total operating expenses Operating income (loss) 1,073,461 4,262,386 2,005,828 7,341,675 171,942 237,719 956,290 21,661,955 22,855,964 (1,187,160) 2,796,367 3,382,849 6,179,216 129,837 4,103,647 5,598,519 836,679 10,538,845 (383,141) 8,211,194 14,200,044 21,661,955 2,842,507 46,915,700 (1,268,522) NON-OPERATING REVENUES (EXPENSES) Investment income Gain (Loss) on sale of capital assets Total non-operating revenues Income (loss) before transfers 122,106 12,678 134,784 306,726 290,481 290,481 (896,679) 4,829 4,829 134,666 45,055 45,055 (338,086) 462,471 12,678 475,149 (793,373) Capital contributions Transfers in Transfers out Change in net position 489,832 1,140,303 (6,064) 1,930,797 (310,056) (1,206,735) 134,666 128,146 1,020,681 (593,583) 217,158 617,978 2,160,984 (909,703) 1,075,886 Total net position - beginning 18,492,608 20,166,375 (3,349,909) 432,596 35,741,670 Cumulative effect of change in accounting principle Total net position - beginning, restated 8,283 18,500,891 20,166,375 655 (3,349,254) 1,177 433,773 10,115 35,751,785 $ 20,431,688 $ 18,959,640 650,931 $ 36,827,671 Total net position - ending $ SelfInsurance Fund 108 $ (3,214,588) $ CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Increase (decrease) in cash and cash equivalents CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Self-insurance costs Net cash provided (used) by operating activities SelfInsurance Fund Motor Pool Fund $ Facilities Maintenance Fund Information Technology Fund Total $ $ 10,147,581 (5,700,782) (4,796,992) (350,193) $ 45,639,297 (12,652,710) (8,963,687) (20,624,482) 3,398,418 7,513,617 (4,324,815) (1,000,876) 2,187,926 $ 21,668,804 739,745 (221,823) (20,624,482) 1,562,244 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in Transfers out Net cash provided (used) by non-capital financing activities 1,140,303 (6,064) 1,134,239 (310,056) (310,056) - 1,020,681 (593,583) 427,098 2,160,984 (909,703) 1,251,281 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from disposal of capital assets Net cash flows used by capital and related financing activities (2,098,090) 37,831 (2,060,259) - - 437,680 437,680 (1,660,410) 37,831 (1,622,579) 112,725 112,725 (55,050) 277,957 222,907 4,456 4,456 41,444 41,444 (55,050) 436,582 381,532 $ 1,374,631 8,222,039 9,596,670 1,475,095 18,458,585 $ 19,933,680 $ 2,897 307,855 310,752 $ 556,029 3,481,946 4,037,975 3,408,652 30,470,425 $ 33,879,077 $ 171,942 $ $ 129,837 $ (383,141) $ (1,268,522) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 6,309,295 (3,366,858) (2,943,996) (1,559) 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 by (used in) operating activities: Depreciation and amortization Add: Pension expense Subtract: Employer pension contributions (Increase) decrease in assets: Accounts receivable Supplies inventory Increase (decrease) in liabilities: Accounts payable Accrued payroll Claims payable Compensated absences Total adjustments (1,187,160) 2,005,828 135,988 (80,958) - 91,967 (233,967) 836,679 (208,530) (393,311) 2,842,507 19,425 (708,236) 13,774 - 242 - (8,123) - (7,881) 13,774 15,991 2,291 (7,920) (131,396) (102,263) (5,764) (85,740) 32,948 1,533,560 938 1,037,473 (64,620) 4,666,940 (76,203) 3,055 14,500 2,015,984 1,696,035 1,356 1,037,473 14,540 2,749,404 Net cash provided (used) by operating activities $ 2,187,926 $ 1,562,244 $ (1,559) $ (350,193) $ 3,398,418 Non-cash investing, capital and financing activities: Capital assets acquired through contributions from developers and City governmental funds Decrease in fair market value of investments Total non-cash investing, capital and financing activities $ 489,832 489,832 $ (37,384) (37,384) $ - $ 128,146 752 128,898 $ $ 109 $ $ $ $ 617,978 (36,632) 581,346 FIDUCIARY FUNDS Fiduciary funds account for assets held by the City in a trustee or agency capacity on behalf of others and therefore are not available to support City programs. The reporting focus is upon net position and changes in net position and employs accounting principles similar to proprietary funds. Fiduciary funds are not included in the government-wide financial statements since they are not assets of the City available to support City programs. Agency Funds Account for assets the City holds as an agent for individuals, private organizations, other governments or other funds in a temporary custodial capacity. PLAY Peoria NFP Fund Accounts for monies held on behalf of PLAY Peoria, a separate not-for profit agency for which the City operates as the administrator. PLAY Peoria was formed for the purpose of accepting charitable donations and seeking grants that require a not-for-profit status, for the benefit of recreation programs and participants. Westside Fire Training IGA Fund Accounts for monies on behalf of the Westside Fire Training, a consortium of west valley fire departments for which the City operates as the administrator. This consortium was formed through an intergovernmental agreement to fund joint training opportunities for the member fire departments. 110 CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS JUNE 30, 2018 Westside Fire Training IGA Fund PLAY Peoria NFP Fund ASSETS Pooled cash and investments Interest receivable Total assets LIABILITIES Other liabilities Total liabilities $ $ 33,980 60 34,040 $ 34,040 34,040 $ 111 39,394 39,394 39,394 39,394 Total $ $ 73,374 60 73,434 73,434 73,434 CITY OF PEORIA, ARIZONA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Balance June 30, 2017 PLAY Peoria NFP Fund - 8155 Assets: Pooled cash and investments Interest receivable Total Assets $ 26,052 33 26,085 Additions $ 28,521 60 28,581 Deductions Balance June 30, 2018 $ $ 20,593 33 20,626 33,980 60 34,040 Liabilities: Accounts payable Other liabilities Total Liabilities 1,107 24,978 26,085 970 36,779 37,749 2,077 27,717 29,794 34,040 34,040 Westside Fire Training IGA Fund - 8159 Assets: Pooled cash and investments Interest receivable Total Assets 33,397 51 33,448 8,337 8,337 2,340 51 2,391 39,394 39,394 Liabilities: Accounts payable Other liabilities Total Liabilities 33,448 33,448 2,339 5,946 8,285 2,339 2,339 39,394 39,394 Assets: Pooled cash and investments Interest receivable Total Assets 59,449 84 59,533 36,858 60 36,918 22,933 84 23,017 73,374 60 73,434 Liabilities: Accounts payable Other liabilities Total Liabilities 1,107 58,426 59,533 3,309 42,725 46,034 4,416 27,717 32,133 73,434 73,434 Totals - All Agency Funds 112 Statistical Section Statistical Section The Statistical Section presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplemental information says about the government’s overall financial health. Statistical information is different from financial statements in that the statistics usually cover more than one fiscal year and may present non-accounting information. The following tables present financial trends, information about the fiscal capacity of the government, and social and economic information, as necessary for complete disclosure and understanding of the City’s financial activity. The information presented in these tables is not required for fair presentation in conformity with accounting principles generally accepted in the United States of America and is therefore not covered by the auditor’s opinion. Contents Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue sources - sales and use taxes, property taxes and utility user fees. Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Economic and Demographic Information These schedules offer economic and demographic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 113 Statistical Section Table Page Financial Trends I Net Position By Component II Changes in Net Position III Fund Balances, Governmental Funds IV Changes in Fund Balances, Governmental Funds 115 116 118 119 Revenue Capacity V City Transaction Privilege Taxes By Category VI Direct and Overlapping Sales Tax Rates VII Sales Tax Payers - By Category VIII Assessed Values By Property Classification IX Comparative Assessed Values X Direct and Overlapping Property Tax Rates XI Direct and Overlapping Property Tax Levies XII Limited Property Value Top Ten Tax Payers XIII Property Tax Levies and Collections XIV Utility Statistical Data 120 121 122 123 124 125 126 127 128 129 Debt Capacity XV Outstanding Debt By Type XVI Ratio of Net General Bonded Debt to Full Cash Value and Net Bonded Debt Per Capita XVII Direct and Overlapping General Obligation Bonded Debt – Current Fiscal Year XVIII Direct and Overlapping Governmental Activities Debt – Current Fiscal Year XIX Direct and Overlapping Governmental Activities Debt – Last Ten Fiscal Years XX Legal Debt Margin XXI Pledged Revenue Coverage – Excise Tax and State Shared Revenue Debt Obligations - Governmental Portion XXII Pledged Revenue Coverage – Water and Wastewater Revenue Bonds XXIII Pledged Revenue Coverage – Special Assessment Bonds XXIV Special Assessment Collections 132 133 134 135 136 137 138 139 140 141 Economic and Demographic Information XXV Demographic and Economic Statistics XXVI Major Employers Within the City 142 143 Operating Information XXVII Authorized Full-time Equivalent City Government Employees By Function XXVIII Operating Indicators By Function/Program XXIX Capital Asset Statistics By Function/Program 144 145 146 114 CITY OF PEORIA, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Table I Fiscal Year 2009 Governmental Activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ $ 2013 816,149,271 118,105,425 111,579,103 $ 1,045,833,799 829,001,871 131,550,563 149,159,571 $ 1,109,712,005 855,286,264 151,624,692 84,211,745 $ 1,091,122,701 $ 429,764,018 33,558,490 36,507,370 499,829,878 $ $ $ $ $ $ Primary Government Net investment in capital assets Restricted Unrestricted Total primary government net position $ 1,120,472,512 88,504,134 244,466,027 $ 1,453,442,673 $ $ 1,252,059,372 57,123,435 245,701,059 $ 1,554,883,866 $ 478,230,446 22,733,731 54,791,580 555,755,757 $ 1,282,066,150 141,115,975 164,342,264 $ 1,587,524,389 $ $ 478,738,661 24,912,356 61,033,753 564,684,770 $ 1,294,887,932 143,017,781 172,612,856 $ 1,610,518,569 $ $ 493,788,885 21,575,445 71,130,874 586,495,204 $ 1,322,790,756 153,126,008 220,290,445 $ 1,696,207,209 $ $ 533,623,141 23,153,024 68,382,971 625,159,136 $ 1,388,909,405 174,777,716 152,594,716 $ 1,716,281,837 (1) Decrease in unrestricted net position is due to the implementation of GASB Statement No. 68. (2) Beginning net position was restated due to implementation of GASB Statement No. 75 and adjustments to capital assets and restricted cash with fiscal agents. Source: 2015 (1) 2014 803,835,704 118,382,244 109,550,684 $ 1,031,768,632 469,854,140 19,474,349 53,422,064 542,750,553 $ 2012 782,205,232 37,649,086 192,278,995 $ 1,012,133,313 $ $ 2011 690,708,494 54,945,644 207,958,657 953,612,795 Business-type Activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position $ 2010 Statement of Net Position City financial records and reports 115 $ $ 2016 885,716,419 139,143,949 (29,002,988) 995,857,380 899,648,174 162,959,546 (32,938,378) $ 1,029,669,342 $ 568,223,130 23,830,354 54,351,770 646,405,254 $ $ $ 1,453,939,549 162,974,303 25,348,782 $ 1,642,262,634 $ $ 589,629,061 31,926,587 49,023,256 670,578,904 $ 1,489,277,235 194,886,133 16,084,878 $ 1,700,248,246 2018 (2) 2017 $ $ 747,243,866 149,717,064 (41,146,402) 855,814,528 597,736,728 27,590,003 59,376,481 684,703,212 $ 1,344,980,594 177,307,067 18,230,079 $ 1,540,517,740 $ $ $ $ 635,872,778 121,796,554 (7,041,008) 750,628,324 600,474,983 29,456,418 67,576,862 697,508,263 $ 1,236,347,761 151,252,972 60,535,854 $ 1,448,136,587 CITY OF PEORIA, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2013 2012 Table II 2018 2011 Expenses Governmental Activities General Government Culture & Recreation Public Safety* Development Services Highways & Streets Public Works Human Services Interest on long-term debt Unallocated Depreciation Total governmental activities expenses $ 23,226,263 23,185,665 58,702,675 6,354,769 24,046,432 7,688,062 2,382,604 12,610,988 574,550 $ 158,772,008 $ 24,518,718 21,167,750 56,118,123 6,539,886 22,414,044 9,642,355 2,188,730 12,571,503 574,550 $ 155,735,659 $ 27,523,428 21,066,722 56,780,852 6,135,184 25,598,067 8,441,912 1,992,977 12,616,562 574,550 $ 160,730,254 $ 20,935,141 23,499,906 58,218,954 5,437,784 31,778,203 7,416,026 1,655,935 12,595,752 574,550 $ 162,112,251 $ 19,175,790 22,434,968 56,757,540 8,374,619 29,967,207 6,989,988 2,196,801 12,739,029 574,557 $ 159,210,499 $ 20,038,112 25,559,518 60,213,181 9,193,743 31,411,752 7,015,316 1,629,118 12,009,243 574,550 $ 167,644,533 $ 21,210,452 25,982,440 64,261,923 9,544,919 33,658,672 7,259,675 1,177,275 11,373,755 $ 174,469,111 $ 22,250,673 26,447,013 70,342,389 7,123,106 34,620,944 7,507,311 1,788,130 11,549,457 $ 181,629,023 $ 21,623,532 28,371,539 97,665,783 6,630,945 44,979,242 6,705,095 1,283,420 8,451,596 $ 215,711,152 $ Business-type Activities Water Utility Wastewater Utility Solid Waste Utility Stadium Storm Drain Utility Housing Total business-type activities expenses Total primary government expenses $ 32,164,325 31,039,534 10,624,589 5,235,258 331,785 $ 79,395,491 $ 238,167,499 $ 29,715,038 30,212,381 9,985,889 5,186,732 368,007 $ 75,468,047 $ 231,203,706 $ 29,582,708 19,891,729 9,773,553 5,019,605 367,644 $ 64,635,239 $ 225,365,493 $ 30,777,765 21,923,061 10,859,872 5,284,940 802,246 400,405 $ 70,048,289 $ 232,160,540 $ 29,094,123 20,342,376 10,503,928 5,140,500 806,658 273,528 $ 66,161,113 $ 225,371,612 $ 30,836,235 21,083,666 10,806,101 5,176,689 823,780 $ 68,726,471 $ 236,371,004 $ 34,566,373 21,737,995 10,939,896 6,372,954 813,636 $ 74,430,854 $ 248,899,965 $ 33,221,797 22,001,744 11,137,739 6,742,573 1,052,977 $ 74,156,830 $ 255,785,853 $ 39,316,668 24,075,245 11,867,773 7,579,975 3,497,956 $ 86,337,617 $ 302,048,769 $ 40,780,445 25,732,376 13,033,364 7,679,587 3,278,552 $ 90,504,324 $ 297,184,140 Program Revenues Governmental Activities Charges for services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 20,130,962 12,574,749 51,366,296 $ 84,072,007 $ 17,489,464 13,096,036 55,978,635 $ 86,564,135 $ 17,722,889 13,709,669 34,932,888 $ 66,365,446 $ $ $ $ $ $ $ Business-type Activities Charges for services Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $ 59,577,008 158,627 12,186,331 $ 71,921,966 $ 155,993,973 $ 62,457,821 177,710 50,899,343 $ 113,534,874 $ 200,099,009 $ 60,595,686 209,878 5,408,859 $ 66,214,423 $ 132,579,869 $ 66,048,140 140,461 8,418,314 $ 74,606,915 $ 133,074,557 $ 67,197,303 67,915 7,323,482 $ 74,588,700 $ 127,259,612 $ 69,499,963 9,325,636 $ 78,825,599 $ 122,444,502 $ 68,417,721 29,760,720 $ 98,178,441 $ 160,269,615 $ 76,106,994 17,518,669 $ 93,625,663 $ 164,535,739 $ 80,152,247 20,698,020 $ 100,850,267 $ 173,465,664 85,557,374 12,517,749 $ 98,075,123 $ 170,111,251 Net (Expense)/Revenue Governmental Activities Business-type Activities Total primary government net expense $ (74,700,001) (7,473,525) $ (82,173,526) $ (69,171,524) 38,066,827 $ (31,104,697) $ (94,364,808) 1,579,184 $ (92,785,624) $ (103,644,609) 4,558,626 $ (99,085,983) $ (106,539,587) 8,427,587 $ (98,112,000) $ (124,025,630) 10,099,128 $ (113,926,502) $ (112,377,937) 23,747,587 $ (88,630,350) $ (110,718,947) 19,468,833 $ (91,250,114) $ (143,095,755) 14,512,650 $ (128,583,105) $ (134,643,688) 7,570,799 $ (127,072,889) $ $ 18,745,123 12,440,760 21,485,029 52,670,912 * Beginning in fiscal year 2015, the Police and Fire line items have been combined and are being presented in the Public Safety line item. 116 $ 19,221,921 12,693,535 11,703,447 43,618,903 2015 2017 2010 17,331,656 11,071,988 30,063,998 58,467,642 2014 2016 2009 $ 25,696,523 13,485,788 22,908,863 62,091,174 $ 29,321,181 14,329,168 27,259,727 70,910,076 $ 32,311,277 14,666,090 25,638,030 72,615,397 20,343,398 28,003,374 81,720,528 5,731,857 54,647,432 5,694,902 2,527,213 8,011,112 $ 206,679,816 $ 34,954,574 16,640,349 20,441,205 72,036,128 $ CITY OF PEORIA, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2009 General Revenues and Other Changes in Net Position Governmental Activities Taxes Property taxes, levied for general purposes $ 3,629,629 Property taxes, levied for debt service 28,162,003 Sales and use taxes 59,004,816 Franchise taxes 4,019,182 Intergovernmental State shared sales taxes - unrestricted 10,991,095 Urban revenue sharing - unrestricted 20,395,663 Auto in-lieu taxes - unrestricted 5,018,384 Investment Earnings 7,896,100 Gain on sale of capital assets 115,412 Elimination of development agreement debt Miscellaneous 3,528,043 Special Item: Close out of Section 8 Housing Special Item: Defeasance of G.O. debt Transfers in (out) (3,066,497) Total governmental activities $ 139,693,830 2011 2010 $ 3,833,445 26,225,535 56,276,937 3,955,416 $ 3,628,286 22,406,879 58,082,217 4,037,897 Fiscal Year 2013 2012 $ 3,187,679 19,030,940 60,719,648 4,084,163 $ 2,848,691 16,628,634 65,950,235 4,136,004 Table II 2014 $ 2,744,900 15,479,771 70,213,953 4,194,371 2016 2015 $ 2,889,150 16,891,026 74,556,024 4,312,836 $ 2,994,905 17,537,813 79,410,364 4,461,864 2017 $ 2018 3,207,433 18,532,683 84,236,770 4,501,681 $ 3,522,321 20,152,280 89,781,248 5,035,331 10,137,682 17,469,936 4,634,263 2,199,984 102,409 5,885,847 - 11,649,489 13,408,996 4,548,154 1,354,607 76,640 801,394 5,124,916 - 12,087,651 13,231,006 4,944,181 959,479 50,192 3,965,187 (464,390) 12,665,191 14,425,958 5,155,206 599,263 66,465 630,104 4,397,616 - 13,431,637 17,172,500 5,495,225 878,164 111,342 3,920,109 - 14,139,128 18,650,521 5,886,971 843,648 3,216,595 - 14,760,029 18,549,406 6,385,294 1,693,475 2,732,726 - 15,631,512 20,949,613 6,728,814 1,667,892 4,120,882 - (3,029,412) $ 127,692,042 (11,119,348) $ 114,000,127 (3,335,912) $ 118,459,824 (9,394,454) $ 118,108,913 (28,205,646) $ 105,436,326 (11,931,172) $ 129,454,727 (3,994,967) $ 144,530,909 (6,346,374) $ 153,230,906 15,894,140 20,334,388 6,799,997 2,172,236 5,383,459 (450,797) (4,803,295) $ 163,821,308 $ $ $ $ $ $ $ Business-type Activities Investment Earnings Gain on sale of capital assets Forgiveness of debt Special Item: Close out of Public Housing Transfers in (out) Total business-type activities Total primary government $ 1,970,474 3,066,497 $ 5,036,971 $ 144,730,801 $ 444,698 1,379,738 3,029,412 $ 4,853,848 $ 132,545,890 $ 306,672 11,119,348 $ 11,426,020 $ 125,426,147 284,427 3,335,912 $ 3,620,339 $ 122,080,163 176,176 (2,101,809) 9,394,454 $ 7,468,821 $ 125,577,734 359,158 28,205,646 $ 28,564,804 $ 134,001,130 348,717 11,931,172 $ 12,279,889 $ 141,734,616 709,850 3,994,967 $ 4,704,817 $ 149,235,726 519,774 109,744 6,346,374 $ 6,975,892 $ 160,206,798 700,909 13,305 4,803,295 $ 5,517,509 $ 169,338,817 Change in Net Position Governmental Activities Business-type Activities Total primary government $ 70,522,306 43,103,798 $ 113,626,104 $ 33,327,234 6,433,032 $ 39,760,266 $ 10,355,518 15,984,646 $ 26,340,164 $ $ $ $ $ $ $ Source: $ 11,920,237 12,047,926 23,968,163 Statement of Activities City financial records and reports 117 $ 11,569,326 15,896,408 27,465,734 $ (18,589,304) 38,663,932 20,074,628 $ 17,076,790 36,027,476 53,104,266 $ 33,811,962 24,173,650 57,985,612 $ 10,135,151 21,488,542 31,623,693 $ 29,177,620 13,088,308 42,265,928 CITY OF PEORIA, ARIZONA FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Table III Fiscal Year 2009 General Fund Reserved Unreserved Nonspendable Restricted Committed Assigned Unassigned Total General Fund 537,000 30,671 34,288,769 3,891,174 13,429,595 52,177,209 108,919 169,837,817 11,040,682 30,055,251 - 95,828 168,127,814 10,064,814 40,566,996 (84,673) 98,819 188,434,944 10,004,379 25,988,041 - 131,641 145,352,432 10,300,556 23,410,508 - 70,579 127,294,490 10,572,297 22,821,310 (6,638,667) 67,986 150,498,066 10,885,668 30,353,689 - 69,711 137,842,918 11,315,062 27,978,550 - 78,068 115,222,701 10,663,895 34,926,243 - Total All Other Governmental Funds $ 252,064,731 $ 225,725,301 $ 211,042,669 $ 218,770,779 $ 224,526,183 $ 179,195,137 $ 154,120,009 $ 191,805,409 $ 177,206,241 $ 160,890,907 - $ $ 259,643 108,517 33,229,466 3,330,705 13,996,657 50,924,988 - $ $ $ 262,852 54,193 37,028,922 3,340,512 17,308,306 57,994,785 - $ $ $ 163,703 67,084 36,911,493 3,056,458 21,584,005 61,782,743 - $ $ $ 115,042 388,375 38,464,678 2,859,523 20,816,526 62,644,144 - $ 2018 55,546,744 22,203,699 - $ $ 2017 57,506,689 29,428,677 - $ 1,163,721 70,016 33,590,254 3,705,809 12,878,675 51,408,475 2016 $ - $ 2015 $ 147,974,858 $ $ 2014 $ 165,129,365 * $ 2013 $ $ 275,184 67,102,145 67,377,329 2012 241,678 60,238,418 60,480,096 All Other Governmental Funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Nonspendable Restricted Committed Assigned Unassigned $ 2011 * 2010 $ $ The City implemented GASB Statement 54 - Fund Balance Reporting and Governmental Fund Type Definitions in 2011. Previous years have not been restated to the new required format. Source: Statement of Revenue, Expenditures and Changes in Fund Balances - Governmental Funds Balance Sheet - Governmental Funds City financial records and reports 118 113,859 354,566 40,221,571 2,618,447 25,684,922 68,993,365 - $ $ $ 123,939 40,488 42,249,268 1,760,838 33,849,097 78,023,630 - CITY OF PEORIA, ARIZONA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2009 Revenues Taxes Intergovernmental Charges for Services Licenses and Permits Fines and Forfeitures Rents Investment Earnings Special Asessments Miscellaneous Total Revenues Expenditures General Government Culture & Recreation Public Safety (1) Development Services Highways & Streets Public Works Human Services Capital Outlay Debt Service Interest Principal Payment to bond escrow agent $ 93,896,013 62,718,223 18,479,664 1,802,759 3,733,047 395,834 7,174,109 2,200,782 7,488,740 2011 2010 $ 90,783,641 45,621,921 18,137,718 1,599,957 2,755,104 421,289 1,992,817 2,214,167 8,485,570 $ 88,244,772 43,917,343 16,356,566 1,672,072 3,068,861 403,321 1,238,174 2,201,463 18,441,696 Fiscal Year 2013 2012 $ 87,203,131 54,562,371 18,359,757 2,106,545 2,757,022 486,932 859,146 2,069,613 4,588,218 $ 89,948,724 49,831,144 21,405,623 2,564,075 2,257,477 1,101,082 537,732 1,217,271 5,880,511 Table IV 2014 $ 93,731,980 50,132,922 17,684,357 2,800,894 2,128,289 731,901 757,747 1,137,018 5,060,343 2016 2017 2018 98,629,880 55,289,472 19,355,378 3,132,178 1,856,640 889,053 725,208 381,761 3,536,024 $ 104,369,837 65,237,794 21,812,733 4,080,210 1,747,528 915,846 1,462,408 381,950 3,278,730 $ 110,535,434 60,096,580 24,367,635 4,778,632 1,571,788 908,678 1,320,578 2,171,319 4,411,440 $ 118,352,843 61,643,624 26,637,159 5,509,240 1,815,644 1,002,948 1,709,765 5,307,423 2015 $ $ 197,889,171 $ 172,012,184 $ 175,544,268 $ 172,992,735 $ 174,743,639 $ 174,165,451 $ 183,795,594 $ 203,287,036 $ 210,162,084 $ 221,978,646 $ $ $ $ $ $ $ $ $ $ 17,798,947 22,303,852 56,974,453 6,489,199 15,469,695 6,187,633 2,343,847 77,515,142 16,330,159 19,475,634 53,876,911 6,529,594 13,070,648 7,955,394 2,145,702 60,269,181 15,818,173 18,784,735 53,390,368 6,051,667 13,891,078 6,748,102 1,952,861 29,176,335 14,470,822 18,396,187 54,390,977 5,328,403 14,754,432 4,884,713 1,586,315 26,336,595 15,094,866 19,668,598 56,702,266 8,568,013 16,355,505 4,914,720 2,213,374 39,612,698 15,866,612 21,762,725 58,976,873 9,311,964 17,098,590 5,110,924 1,604,288 17,728,188 17,085,501 22,181,064 60,840,413 9,714,954 19,400,893 5,261,842 1,147,341 26,491,974 19,424,865 21,797,069 68,151,428 7,129,814 19,086,404 5,325,264 1,725,328 12,332,241 18,216,483 23,862,880 73,087,082 6,291,295 21,610,293 6,384,151 1,184,926 29,367,979 17,493,779 24,200,927 79,514,160 5,935,127 25,666,063 5,415,791 2,447,943 25,896,002 11,917,582 25,988,554 - 13,166,242 44,700,092 - 12,658,032 34,309,287 - 13,098,263 25,566,028 - 12,534,039 20,120,163 - 12,543,974 21,937,761 - 11,933,264 17,305,000 - 10,606,558 18,010,000 6,707,216 11,336,938 19,867,000 - 9,705,255 19,483,000 13,604,681 Total Expenditures $ 242,988,904 $ 237,519,557 $ 192,780,638 $ 178,812,735 $ 195,784,242 $ 181,941,899 $ 191,362,246 $ 190,296,187 $ 211,209,027 $ 229,362,728 Excess of Revenues over (under) Expenditures $ (45,099,733) $ (65,507,373) $ (17,236,370) $ (5,820,000) $ (21,040,603) $ (7,776,448) $ (7,566,652) $ 12,990,849 $ (1,046,943) $ (7,384,082) $ 68,440,000 808,192 18,855,279 (30,928,896) $ 29,170,000 495,890 23,567,886 (20,963,066) $ 7,920,000 16,960 28,388,910 (42,075,019) $ 13,690,000 14,715,000 645,188 (13,690,000) (464,390) 16,740,587 (18,106,961) $ 35,510,000 1,039,481 16,968,105 (27,205,066) $ 112,000 20,159,941 (48,650,688) $ 35,000 16,357,492 (30,113,010) $ 103,410,000 30,325,000 14,096,688 (114,802,841) 12,890,960 (20,363,855) $ 3,000,000 108,061 17,925,171 (28,236,236) $ 28,975,000 5,199,304 (28,814,053) 17,684,545 (19,786,126) Total Other Financing Sources (Uses) $ 57,174,575 $ 32,270,710 $ (5,749,149) $ 13,529,424 $ 26,312,520 $ (28,378,747) $ (13,720,518) $ 25,555,952 $ (7,203,004) $ 3,258,670 Net Change in Fund Balance $ 12,074,842 $ (33,236,663) $ (22,985,519) $ 7,709,424 $ 5,271,917 $ (36,155,195) $ (21,287,170) $ 38,546,801 $ (8,249,947) $ (4,125,412) 22.91% 32.65% 28.71% 20.91% 21.00% 17.73% Other Financing Sources (Uses) Refunding bonds issued Issuance of debt Premium on bonds issued Payments to bond refunding escrow agent Special Item: Close out Section 8 Housing Transfers In Transfers Out Debt Service as a percentage of noncapital expenditures (1) 25.36% Beginning in Fiscal Year 2015, Police and Fire expenditures were combined into the Public Safety category. Source: Statement of Revenue, Expenditures and Changes in Fund Balances - Governmental Funds City financial records and reports 119 19.85% 17.16% 21.03% CITY OF PEORIA, ARIZONA CITY TRANSACTION PRIVILEGE TAXES BY CATEGORY LAST TEN FISCAL YEARS Table V Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Retail Sales Contracting Rentals Utilities Telecom/Cable TV Restaurant/Bar Amusement Use Other $ 26,694,348 7,014,131 7,107,109 6,836,000 1,437,589 7,026,265 727,023 599,537 1,562,814 $ 26,857,263 4,550,512 6,927,724 6,906,904 1,405,352 7,114,625 814,694 374,659 1,325,204 $ 29,247,900 3,611,614 6,980,633 6,917,391 1,294,565 7,469,189 856,274 426,017 1,278,634 $ 31,483,859 3,305,409 7,414,803 7,232,286 1,304,092 7,776,190 896,320 566,453 740,236 $ 34,115,601 4,716,985 7,918,121 7,343,965 1,258,991 8,168,064 992,752 474,842 960,914 $ 36,878,825 6,301,005 7,214,392 7,388,831 1,262,651 8,505,082 960,332 624,795 2,101,228 $ 38,908,327 6,257,112 7,522,177 7,498,115 1,217,583 9,284,232 1,036,941 718,931 2,112,606 $ 41,216,781 7,394,036 8,123,884 7,904,665 1,151,941 9,833,912 1,034,959 740,179 2,010,007 $ 43,666,206 8,587,978 8,383,946 8,022,722 942,239 10,335,218 1,021,968 1,243,655 2,032,838 $ 45,112,750 10,219,772 8,823,620 8,911,107 816,179 11,388,465 979,386 1,707,181 1,822,787 Total $ 59,004,816 $ 56,276,937 $ 58,082,217 $ 60,719,648 $ 65,950,235 $ 71,237,141 $ 74,556,024 $ 79,410,364 $ 84,236,770 $ 89,781,247 % Growth by Year Retail Sales Contracting Rentals Utilities Telecom/Cable TV Restaurant/Bar Amusement Use Other -13.1% -37.8% -1.2% 3.8% -3.7% -0.1% -13.3% -39.2% -33.5% 0.6% -35.1% -2.5% 1.0% -2.2% 1.3% 12.1% -37.5% -15.2% 8.9% -20.6% 0.8% 0.2% -7.9% 5.0% 5.1% 13.7% -3.5% 7.6% -8.5% 6.2% 4.6% 0.7% 4.1% 4.7% 33.0% -42.1% 8.4% 42.7% 6.8% 1.5% -3.5% 5.0% 10.8% -16.2% 29.8% 8.1% 33.6% -8.9% 0.6% 0.3% 4.1% -3.3% 31.6% 118.7% 5.5% -0.7% 4.3% 1.5% -3.6% 9.2% 8.0% 15.1% 0.5% 5.9% 18.2% 8.0% 5.4% -5.4% 5.9% -0.2% 3.0% -4.9% 5.9% 16.1% 3.2% 1.5% -18.2% 5.1% -1.3% 68.0% 1.1% 3.3% 19.0% 5.2% 11.1% -13.4% 10.2% -4.2% 37.3% -10.3% Total -13.8% -4.6% 3.2% 4.5% 8.6% 8.0% 4.7% 6.5% 6.1% 6.6% Note: Includes all governmental fund types Source: City financial records and reports 120 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS Table VI 2009 2010 2011 Year Taxes Are Payable 2012 2013 2014 2015 2016 2017 2018 City Direct Rates (1): Retail Sales (excluding groceries) Groceries Contracting Rentals Hotel/Transient Lodging Utilities Telecommunications Restaurant/Bar Amusement All Others 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.80% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.60% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.60% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.60% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% 1.80% 1.60% 1.80% 1.80% 5.60% 3.30% 1.80% 2.80% 2.80% 1.80% County Rates: Retail Sales (excluding groceries) Groceries Hotel/Transient Lodging Mining - Nonmetal All Others 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% 0.70% 0.70% 1.77% 0.44% 0.70% State Rates (2): Retail Sales (excluding groceries) Hotel/Transient Lodging Mining - Nonmetal Mining - Severance All Others 5.60% 5.50% 3.13% 2.50% 5.60% 6.60% 6.50% 3.13% 2.50% 6.60% 6.60% 6.50% 3.13% 2.50% 6.60% 6.60% 6.50% 3.13% 2.50% 6.60% 5.60% 5.50% 3.13% 2.50% 5.60% 5.60% 5.50% 3.13% 2.50% 5.60% 5.60% 5.50% 3.13% 2.50% 5.60% 5.60% 5.50% 3.13% 2.50% 5.60% 5.60% 5.50% 3.13% 2.50% 5.60% 5.60% 5.50% 3.13% 2.50% 5.60% Notes: (1) Pursuant to City Charter, increases in the City transaction privilege (sales) tax rates are subject to voter approval. Prior to January 2017, the City collected its own sales tax. In January 2017, the state began collecting and remitting the sales tax to the City. The City has earmarked 0.8% of its sales tax for payment of Excise Tax and State Shared Revenue Obligations. (2) The State transaction privilege (sales) tax is levied against the same categories of business activity as the City's sale tax with the exception of groceries and prescription drugs, which the State exempts from tax. The State collects and distributes a portion of its sales tax revenues to all cities and towns based on the city or town's population relative to the aggregate population of all cities and towns as shown by the latest census. Source: ADOR Transaction Privilege And Other Tax Rate Tables 121 CITY OF PEORIA, ARIZONA SALES TAX PAYERS - BY CATEGORY CURRENT YEAR AND NINE YEARS AGO Table VII 2018 Category # of Payers Percentage of Total Payers 2009 Sales Tax Paid Percentage of Total City Sales Tax Revenue # of Payers Percentage of Total Payers Sales Tax Paid Percentage of Total City Sales Tax Revenue Retail Sales Contracting Restaurant/Bar Rental Utilities Telecom/Cable TV Use Amusement Others 3,784 2,681 499 6,526 18 161 844 65 102 25.8% 18.3% 3.4% 44.5% 0.1% 1.1% 5.7% 0.4% 0.7% 45,112,750 10,219,772 11,388,465 8,823,620 8,911,107 816,179 1,707,181 979,386 1,822,787 50.2% 11.4% 12.7% 9.8% 9.9% 0.9% 1.9% 1.1% 2.0% 3,343 4,280 338 4,977 15 131 1,175 62 82 23.2% 29.7% 2.3% 34.6% 0.1% 0.9% 8.2% 0.4% 0.6% $ 26,694,348 7,014,131 7,026,265 7,107,109 6,836,000 1,437,589 599,537 727,023 1,562,814 45.2% 11.9% 11.9% 12.0% 11.6% 2.4% 1.0% 1.2% 2.6% Total 14,680 100.00% $ 89,781,247 100.000% 14,403 100.00% $ 59,004,816 100.00% Source: City Sales Tax system City financial records 122 CITY OF PEORIA, ARIZONA ASSESSED VALUES BY PROPERTY CLASSIFICATION LAST TEN FISCAL YEARS Table VIII Fiscal Year 2012 2014 2015 2017 2016(b) 2018 2010 Residential (Owner occupied) Residential (Renter occupied) Commercial, Industrial, Mining & Utilities Agriculture & Vacant Railroad Historic & Environmental Public Property Improvements $ 1,219,595,280 146,413,989 $ 1,048,710,389 155,720,660 419,192,584 207,476,727 1,837,324 76,020 - 495,336,050 193,685,182 1,647,040 64,530 - 495,318,990 147,216,152 1,563,689 53,641 - 378,992,788 85,330,391 1,429,130 140,493 7,869 341,042,160 54,523,204 1,399,678 103,122 7,964 304,844,019 43,659,181 1,118,206 83,177 7,124 298,078,633 42,347,136 1,205,775 59,907 48,182 291,761,032 44,305,284 1,137,482 24,540 5,100 297,883,403 40,513,630 1,040,707 396,725 - 310,764,850 44,053,047 1,065,441 305,265 25,390 Net Assessed Value % Growth $ 1,994,591,924 21.5% $ 1,895,163,851 -5.0% $ 1,609,972,512 -15.0% $ 1,276,335,862 -20.7% $ 1,137,434,740 -10.9% $ 1,057,413,204 -7.0% $ 1,155,587,438 9.3% $ 1,178,016,995 1.9% $ 1,244,679,295 5.7% $ 1,340,068,217 7.7% Net Assessed Value Per Capita Population $ $ $ $ $ $ $ $ $ $ Total Direct Secondary Tax Rate Full Cash Value % Growth Full Cash Value Per Capita Net Assessed Value as a Percentage of Full Cash Value $ 12,524 159,263 2011 2013 2009 12,301 154,065 $ 818,535,888 147,284,152 10,377 155,148 $ 687,456,278 122,978,913 8,141 156,780 $ 620,970,965 119,387,647 7,087 160,504 $ 546,593,560 161,107,937 6,444 164,104 $ 614,234,433 199,613,372 6,860 168,450 $ 626,696,840 214,086,717 6,879 171,237 674,378,782 230,466,048 7,186 173,208 $ 740,037,974 243,816,250 7,632 175,585 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 18,279,838,277 20.9% 17,162,776,025 -6.1% 14,588,623,722 -15.0% 11,862,384,776 -18.7% 10,635,350,631 -10.3% 10,057,364,678 -5.4% 11,162,489,178 11.0% 13,968,351,523 25.1% 15,264,587,035 9.3% 16,607,545,225 8.8% 114,778 10.9% $ 111,400 11.0% $ 94,030 11.0% $ 75,663 $ 10.8% 66,262 10.7% $ 61,287 10.5% $ 66,266 $ 10.4% Note: All property, both real and personal, is assigned a classification to determine its assessed valuation for tax purposes. Each classification is defined by property use and has an assessment ratio that is multiplied by the taxable value of the property to obtain the assessed valuation. The assessment ratios for the major classes of property are as follows: Property Tax Assessment Ratios (a) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ Commercial, Industrial, Mining & Utilities 23.0% 22.0% 21.0% 20.0% 20.0% 19.5% 19.0% 18.5% 18.0% 18.0% Residential 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Agriculture and Vacant Land 16% 16% 16% 16% 16% 16% 16% 16% 15% 15% Railroad 20% 18% 17% 15% 15% 15% 16% 15% 14% 15% (a) Several additional classes of property exist, but seldom amount to a significant portion of an entity's total valuation. (b) Prior to FY2015-16, Primary or Limited Property Values were used for primary ad valorem taxes which are levied for operations of the city and Secondary Assessed Values were used for secondary ad valorem taxes which are levied for debt service. Beginning in FY2015-16, with a voter approved constitutional amendment, both primary and secondary ad valorem taxes are now levied on the Limited Property Values. Because FY2015-16 is the first year for implementation of the constitutional amendment and use of Limited Property Values, there is no comparative data from prior years and accordingly the Net Assessed Values presented for years prior to FY2015-16 represent Secondary Assessed Values based on the then-applicable but now replaced valuation rules. Source: Arizona Department of Revenue - Property Tax Division-Abstract of the Assessment Roll City Financial Records 123 81,573 8.4% $ 88,129 8.2% $ 94,584 8.1% CITY OF PEORIA, ARIZONA COMPARATIVE ASSESSED VALUES LAST TEN FISCAL YEARS Table IX Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 (a) 2017 2018 $ 1,994,591,924 $ 1,895,163,851 $ 1,609,972,512 $ 1,276,335,862 $ 1,137,434,740 $ 1,057,413,204 $ 1,155,587,438 $ 1,178,016,995 $ 1,244,679,295 $ 1,340,068,217 Peoria Unified School District No. 11 2,484,660,275 2,393,720,410 2,030,314,508 1,581,371,147 1,460,442,551 1,350,310,615 1,471,213,352 1,475,721,803 1,549,607,885 1,649,351,547 Maricopa County 58,303,635,287 57,984,051,727 49,662,543,618 38,760,296,498 34,400,455,712 32,229,006,810 35,079,646,593 34,623,670,323 36,135,494,474 38,251,891,249 State of Arizona 86,183,351,753 86,525,272,506 75,664,423,588 61,764,402,437 56,283,023,907 52,598,341,678 55,349,948,120 54,840,074,052 56,573,588,295 59,404,007,785 City of Peoria (a) Prior to FY2015-16, Primary or Limited Property Values were used for primary ad valorem taxes which are levied for operations of the city and Secondary Assessed Values were used for secondary ad valorem taxes which are levied for debt service. Beginning in FY2015-16, with a voter approved constitutional amendment, both primary and secondary ad valorem taxes are now levied on the Limited Property Values. Because FY2015-16 is the first year for implementation of the constitutional amendment and use of Limited Property Values, there is no comparative data from prior years and accordingly the Net Assessed Values presented for years prior to FY2015-16 represent Secondary Assessed Values based on the then-applicable but now replaced valuation rules. Source: Arizona Department of Revenue - Property Tax Division Abstract of the Assessment Roll City financial records 124 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (rate per $100 assessed value) Total Direct City Primary Secondary Total Table X 2009 2010 2011 2012 Fiscal Year 2013 2014 2015 2016 2017 2018 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 $ 0.19 1.25 1.44 3.77 1.90 5.67 2.99 2.46 5.45 3.24 2.09 5.33 3.71 1.68 5.39 4.01 3.02 7.03 4.18 3.35 7.53 4.43 2.84 7.27 4.93 2.84 7.77 4.78 3.26 8.04 4.51 3.03 7.54 1.78 0.59 2.37 2.05 0.59 2.64 2.20 0.64 2.84 2.68 0.54 3.22 2.87 0.78 3.65 3.08 0.79 3.87 3.11 0.86 3.98 3.13 0.97 4.10 3.14 1.01 4.15 3.09 1.07 4.16 5.74 3.74 9.48 5.23 4.30 9.53 5.63 3.98 9.61 6.58 3.47 10.05 7.07 5.05 12.12 7.45 5.39 12.84 7.73 4.95 12.69 8.25 5.06 13.31 8.11 5.52 13.63 7.79 5.35 13.14 Peoria Unified School District No. 11 (1) Primary Secondary Total Maricopa County (2) Primary Secondary Total Total Primary Secondary Total (1) Peoria Unified School District serves the majority of the City of Peoria. Other areas of the City are served by the Deer Valley Unified School District whose most recent rates are as follows: Primary Secondary Deer Valley Unified School District $ 4.28 $ 2.47 (2) The Maricopa County rates includes the rates for the County, State Education Equalization Assistance and other county districts and special districts as follows: Maricopa County State Education Equalization Asistance Maricopa County Community College District Maricopa County Flood Control District Maricopa County Fire District Assistance Maricopa County Library District Maricopa County Special Health Care District West Maricopa Education Center Central Arizona Water Conservation District Fiscal Year 2018 Tax Rate Primary $ 1.40 0.49 1.20 $ 3.09 Secondary $ 0.21 0.18 0.01 0.06 0.29 0.18 0.14 $ 1.07 Note: All rates rounded to two decimal places from the four shown by the County Source: Maricopa County Assessor - Tax Rates Publication 125 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING PROPERTY TAX LEVIES LAST TEN FISCAL YEARS 2009 Total Direct City Primary Secondary Total $ 2,849,397 24,932,399 27,781,796 2010 $ 3,202,665 23,689,548 26,892,213 2011 $ 2,901,540 20,124,656 23,026,196 Tax Levy Fiscal Year 2013 2012 $ 2,411,739 15,954,198 18,365,937 $ 2,154,484 14,217,934 16,372,418 Table XI 2014 $ 1,998,305 13,217,665 15,215,970 2015 $ 2,115,212 14,444,843 16,560,055 2016 $ 2,238,232 14,725,212 16,963,444 2017 $ 2,364,891 15,558,491 17,923,382 2018 $ 2,546,130 16,750,853 19,296,983 Peoria Unified School District No. 11 (1) Primary Secondary 71,071,459 47,095,296 63,259,063 58,903,282 63,956,114 43,487,879 60,801,278 27,635,770 58,370,644 44,104,877 56,069,720 45,266,377 62,749,751 41,807,627 72,782,246 41,966,017 74,140,908 50,494,525 74,370,911 50,046,959 Maricopa County (2) Primary Secondary 811,397,481 312,172,569 1,016,398,826 312,960,824 1,030,448,332 295,233,122 1,031,164,830 264,170,408 982,926,843 249,995,761 986,315,014 251,345,124 1,043,203,072 274,744,408 1,083,409,268 234,978,404 1,134,787,546 337,146,316 1,179,611,336 356,706,002 885,318,337 384,200,264 1,269,518,601 1,082,860,554 395,553,654 1,478,414,208 1,097,305,986 358,845,657 1,456,151,643 1,094,377,847 307,760,376 1,402,138,223 1,043,451,971 308,318,572 1,351,770,543 1,044,383,039 309,829,166 1,354,212,205 1,108,068,035 330,996,878 1,439,064,913 1,158,429,746 291,669,633 1,450,099,379 1,211,293,345 403,199,332 1,614,492,677 1,256,528,377 423,503,814 1,680,032,191 Total Primary Secondary Total (1) The Peoria Unified School District serves the majority of the City of Peoria. Other ares of the City are served by Deer Valley Unified School District, whose most recent tax levies are as follows: Deer Valley Unified School District $ Primary 104,476,755 $ Secondary 60,329,985 (2) The tax levies for Maricopa County include those for the County, State Education Equalization, and other county and special districts whose most recent tax levies are as follows: Maricopa County State Education Equalization Asistance Maricopa County Community College District Maricopa County Flood Control District Maricopa County Fire District Assistance Maricopa County Library District Maricopa County Special Health Care District West Maricopa Education Center Central Arizona Water Conservation District Fiscal Year 2018 Tax Levy Source: Primary 535,870,745 186,400,980 457,339,611 $ 1,179,611,336 $ Secondary 81,872,034 62,198,813 3,893,879 21,268,052 109,012,094 24,930,385 53,530,745 $ 356,706,002 $ Maricopa County Assessor - Tax Rates and Levies publication 126 CITY OF PEORIA, ARIZONA LIMITED PROPERTY VALUE TOP TEN TAX PAYERS CURRENT YEAR AND NINE YEARS AGO Table XII 2018 (a) Taxpayer Arizona Public Service Vestar LPTC LLC Sprint Wireless Parke West Retail I LLC Southwest Gas Corporation DDRA Arrowhead Crossing LLC Miller Family Real Estate LLC BCC Development Inc Freedom Plaza Limited Partnership Lease Peoria Center Apartments South LLC Arizona State Land Department Vistancia LLC Vestar Arizona XLVIII LLC Sprint Nextel Wireless LP Qwest Corporation Plaza III Limited Partnership Total Type of Business Gas & Electric Utility Property Development Telecommunications Shopping Center Gas Utility Shopping Center Shopping Center Property Development Retirement Housing Multi-family Housing Government Multi-family Housing Property Development Telecommunications Telecommunications Nursing Home/Apartments Limited Property Assessed Value $ 25,180,398 9,132,413 6,995,982 5,711,473 4,907,602 4,714,819 4,624,704 3,961,811 3,666,360 3,502,554 $ 72,398,116 Rank 1 2 3 4 5 6 7 8 9 10 2009 % of Limited Property Assessed Value 1.88% 0.68% 0.52% 0.43% 0.37% 0.35% 0.35% 0.30% 0.27% 0.25% 5.40% Taxable Secondary Assessed Value $ 20,300,229 10,462,263 7,828,875 6,130,813 19,562,225 13,745,350 12,245,102 8,918,055 8,086,064 6,881,353 $ 114,160,329 (a) Prior to FY2015-16, Primary or Limited Property Values were used for primary ad valorem taxes which are levied for operations of the city and Secondary Assessed Values were used for secondary ad valorem taxes which are levied for debt service. Beginning in FY2015-16, with a voter approved constitutional amendment, both primary and secondary ad valorem taxes are now levied on the Limited Property Values Because FY2015-16 is the first year for implementation of the constitutional amendment and use of Limited Property Values, there is no comparative data from prior years and accordingly the Net Assessed Values presented for years prior to FY2015-16 represent Secondary Assessed Values based on the then-applicable but now replaced valuation rules. Note - As a quasi-governmental entity, Salt River Project pays in-Lieu taxes, rather than property taxes. For fiscal year 2018, the assessed value of Salt River Project property within the City of Peoria is $19,404,047. Source - Maricopa County Treasurer's or Assessor's Office 127 Rank 1 % of Taxable Secondary Assessed Value 1.02% 5 0.52% 8 0.39% 10 0.31% 2 3 4 6 7 9 0.98% 0.69% 0.61% 0.45% 0.41% 0.35% 5.73% CITY OF PEORIA, ARIZONA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Fiscal Year Ended June 30, Taxes Levied for the (1) Fiscal Year 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Notes: $ (1) (2) Source: 19,296,983 17,923,382 16,963,444 16,560,055 15,215,970 16,372,418 18,365,937 23,026,196 26,892,213 27,781,796 Collected with the (2) Fiscal Year of the Levy Percentage Amount of Levy $ 18,955,264 17,596,843 16,695,651 16,290,571 14,882,168 15,962,490 17,628,300 21,884,397 25,561,505 26,280,210 98.23% 98.18% 98.42% 98.37% 97.81% 97.50% 95.98% 95.04% 95.05% 94.60% Table XIII Collections in Subsequent Years (2) $ 203,688 156,495 179,380 229,063 247,157 373,768 544,602 788,706 933,627 Levy figures obtained from Maricopa County Tax Levy Books-February Publication. Collection amount obtained from Maricopa County Treasurer's Secured Levy Report at 6/30/2018. Maricopa County Treasurer's Office Maricopa County Assessor's Office City financial records and reports 128 Total Collections To Date Percentage Amount of Levy $ 18,955,264 17,800,531 16,852,146 16,469,951 15,111,231 16,209,647 18,002,068 22,428,999 26,350,211 27,213,837 98.23% 99.31% 99.34% 99.46% 99.31% 99.01% 98.02% 97.41% 97.98% 97.96% CITY OF PEORIA, ARIZONA UTILITY STATISTICAL DATA LAST TEN FISCAL YEARS Average Utility Bill Amounts Last Ten Fiscal Years 2012 2013 2009 2010 2011 $36.73 3.20% $35.46 -3.46% $34.36 -3.10% $38.00 10.59% 21.36 0.56% 21.45 0.42% 20.45 -4.66% 15.18 2.22% 15.36 1.19% 15.35 -0.07% Table XIV 2014 2015 2016 (c) 2017 2018 $37.41 -1.55% $37.31 -0.27% $35.54 -4.74% $37.53 5.60% $39.13 4.26% $41.44 5.90% 21.49 5.09% 24.16 12.42% 23.36 -3.31% 23.99 2.70% 24.64 2.71% 25.22 2.35% 25.26 0.16% 15.40 0.33% 13.38 -13.12% 13.38 0.00% 13.35 -0.22% 13.44 0.67% 13.39 -0.37% 14.23 6.27% 2014 2015 2016 (c) 2017 2018 Water Average bill % Increase Wastewater Average bill % Increase Residential Solid Waste Average bill % Increase Water # of Accounts % Increase Wastewater # of Accounts % Increase Residential Solid Waste # of Accounts % Increase Utility Service Connections Last Ten Fiscal Years 2012 2013 2009 2010 2011 46,902 1.64% 47,606 1.50% 47,793 0.39% 48,509 1.50% 49,416 1.87% 50,399 1.99% 51,405 2.00% 55,558 8.08% 57,011 2.62% 58,061 1.84% 49,923 2.39% 50,383 0.92% 50,715 0.66% 51,527 1.60% 52,674 2.23% 53,548 1.66% 54,599 1.96% 56,235 3.00% 57,909 2.98% 59,499 2.75% 48,006 1.82% 48,382 0.78% 48,752 0.76% 49,506 1.55% 50,727 2.47% 51,609 1.74% 52,640 2.00% 54,262 3.08% 55,828 2.89% 57,452 2.91% Charges for Water Services Base Minimum Monthly Bill As of June 30, 2018 Charges for Wastewater Services Base Minimum Monthly Bill As of June 30, 2018 Resid., Commerc. & Landscape Customers Multi Family Customers Base Charge per Meter $9.60 Charge per Dwelling Unit $3.61 Meter Size 5/8"-3/4" 1" 1 1/2" 2" 3" 4" 6" 8" Resid., Commerc. & Landscape Customers Multi Family Customers Charge $ 15.88 18.94 30.13 42.36 75.02 111.71 213.60 335.92 Base Charge per Meter $4.14 Charge per Dwelling Unit $2.97 Meter Size 5/8"-3/4" 1" 1 1/2" 2" 3" 4" 6" 8" Charge $ 9.38 (& Resid. 1") 11.79 20.62 30.27 56.03 84.97 165.34 261.82 (a) Base service charge is based on each bill rendered. (b) For residential & multi-plex users, volume is measured as the rate per 1,000 gallons of a four-month winter average (December - March). For commercial customers, the volume charge is based on actual monthly usage. (c) Water account total includes the acquisition of New River System. These accounts were excluded from the FY16 average water bill calculation, but included beginning in FY17. Source: City customer service and billing records (continued) 129 Table XIV CITY OF PEORIA, ARIZONA UTILITY STATISTICAL DATA Volume Consumption (gallons) 0 - 4,000 4,001 - 10,000 10,001 - 20,000 10,001 - 25,000 Volume Charges for Water Services Usage Per Month As of June 30, 2018 Residential Multiplex (per 1,000 gallons) (per 1,000 gallons) $ 1.13 $ 2.92 4.12 4.50 - Commercial (per 1,000 gallons) $ - 1,000+ - 2.92 - 0 - 10,000 10,001 - 50,000 50,001+ - - 1.13 2.92 4.12 Water Meter Permit Charges As of June 30, 2018 Meter Size Charge 317 3/4" $ 1 1/2" 493 2" 629 - 1,033 3" 1,751 - 2,662 4" 2,231 - 3,172 6" 3,781 - 5,086 Hydrant meter 1,280 Commercial accounts By meter size Charges for Residential Solid Waste As of June 30, 2018 Monthly fee Single container & recycling $ 13.60 Additional container 11.00 Charges for Storm Water As of June 30, 2018 Monthly All Customers Base charge $ (a) Base service charge is based on each bill rendered. (b) For residential & multiplex users, volume is measured as the rate per 1,000 gallons of a three-month winter average (December - February). For commercial customers, the volume charge is based on actual monthly usage. Source: City customer service and billing records (continued) 130 1.00 CITY OF PEORIA, ARIZONA UTILITY STATISTICAL DATA TEN LARGEST WATER USERS CURRENT YEAR AND TEN YEARS AGO Entity Desert Harbor Lake City of Peoria Padre's Pump Station Trilogy at Vistancia Ventana Lakes N. of Beardsley Lake Sun Garden Park II HOA Sun Garden Mobile Home Park Desert Harbor Landscape Freedom Plaza Care Center Equity Lifestyle Prop Inc - Casa Del Sol East Polynesian Village Centennial High School 5 Star Quality Care - Desert Harbor Type of User Homeowner's Association Sports Complex Commercial Landscape Homeowner's Association Homeowner's Association Homeowner's Association Homeowner's Association Healthcare Facility Multi-Family Residential Homeowner's Association Public School Healthcare Facility Source: City customer service and billing records (concluded) 131 2018 Avg Monthly Water Usage Rank 7,780 1 7,349 2 2,565 3 2,072 4 1,889 5 1,643 6 1,607 7 1,433 8 1,416 9 1,293 10 Table XIV Monthly Water Usage 0.94% 0.89% 0.31% 0.25% 0.23% 0.20% 0.19% 0.17% 0.17% 0.16% 2009 Avg Monthly Water Usage Rank 7,162 1 5,959 2 3,070 3 1,398 7 2,168 4 1,884 1,362 1,303 1,529 1,343 5 8 10 6 9 Monthly Water Usage 0.99% 0.82% 0.42% 0.19% 0.30% 0.26% 0.19% 0.18% 0.21% 0.19% CITY OF PEORIA, ARIZONA OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS 2009 Governmental Activities General Obligation Bonds Municipal Development Authority Debt Obligations Highway User Revenue Bonds Direct Purchase and Loan Obligations Special Assessment Bonds Community Facilities District Bonds $ Business-type Activities Water and Sewer Revenue Bonds WIFA Loans Municipal Development Authority Debt Obligations Long-Term Loan Payable 2010 183,060,000 60,985,393 3,005,000 10,402,812 63,060,000 $ 18,000,000 117,346,302 1,229,607 1,064,632 2011 184,960,000 55,943,338 8,042,321 60,890,000 $ 15,780,000 130,298,508 861,662 6,883,276 Fiscal Year 2013 2012 167,580,000 58,365,965 6,155,000 58,615,000 $ 15,780,000 121,975,538 449,034 - 170,960,000 52,480,000 4,660,000 56,230,000 $ 38,480,000 89,803,906 - 162,375,000 85,230,000 3,520,000 53,725,000 Table XV 2014 $ 37,295,000 82,212,652 - 2015 152,820,000 81,035,000 3,195,000 51,095,000 $ 32,720,000 77,780,535 - 2016 145,088,146 77,797,482 2,865,416 48,409,540 $ 29,669,224 73,235,496 - 2017 170,995,550 73,257,994 2,508,814 40,575,685 $ 24,622,433 78,549,337 - 2018 158,031,697 68,529,573 2,137,211 40,400,804 $ 19,095,643 74,229,903 - 135,863,947 34,792,700 36,514,304 37,266,862 13,383,853 70,004,831 - Total Primary Government $ 458,153,746 $ 463,659,105 $ 428,920,537 $ 412,613,906 $ 424,357,652 $ 398,645,535 $ 377,065,304 $ 390,509,813 $ 362,424,831 $ 327,826,497 Total Debt Per Capita $ 2,876.71 $ 3,009.50 $ 2,764.59 $ 2,631.80 $ 2,643.91 $ 2,429.22 $ 2,238.44 $ 2,280.52 $ 2,092.43 $ 1,867.05 Total Debt as a % of Personal Income 7.6% 8.5% 7.8% 7.4% Source: City financial records. Debt schedule exhibits and Long-term liability activity footnote 132 7.1% 6.4% 5.8% 5.7% 5.1% 4.4% CITY OF PEORIA, ARIZONA RATIO OF NET GENERAL BONDED DEBT TO FULL CASH VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Table XVI Fiscal Year 2009 Bonded Debt (1) Less: Debt Service Reserves (2) $ Net Bonded Debt $ 2010 183,060,000 $ 184,960,000 44,978,714 138,081,286 2011 $ 35,352,142 $ 149,607,858 2012 167,580,000 $ 31,849,469 $ 135,730,531 2013 170,960,000 $ 30,782,503 $ 140,177,497 2014 162,375,000 $ 30,825,566 $ 131,549,434 2015 152,820,000 $ 28,924,537 $ 123,895,463 2016 145,088,146 $ 25,859,071 $ 119,229,075 2017 170,995,550 $ 26,583,502 $ 144,412,048 2018 158,031,697 $ 135,863,947 $ 119,976,753 25,529,967 $ 132,501,730 15,887,194 Percentage of Net Bonded Debt to Full Cash Value 0.8% 0.9% 0.9% 1.2% 1.2% 1.2% 1.1% 1.0% 0.9% 0.7% Percentage of Net Bonded Debt to Assessed Value (3) 6.9% 7.9% 8.4% 11.0% 11.6% 11.7% 10.3% 12.3% 10.6% 9.0% Net Bonded Debt Per Capita $867 $971 $875 $894 $820 $755 $708 $843 $765 $683 Net Bonded Debt as a % of Personal Income 2.30% 2.74% 2.47% 2.53% 2.20% 1.99% 1.83% 2.12% 1.87% 1.62% (1) Represents face value of general obligation debt outstanding plus deferred bond premiums (2) Fund balance of GO Bond Debt Service Fund per the fund financial statements (3) Prior to FY2015-16, Primary or Limited Property Values were used for primary ad valorem taxes which are levied for operations of the city and Secondary Assessed Values were used for secondary ad valorem taxes which are levied for debt service. Beginning in FY2015-16, with a voter approved constitutional amendment, both primary and secondary ad valorem taxes are now levied on the Limited Property Values. Because FY2015-16 is the first year for implementation of the constitutional amendment and use of Limited Property Values, there is no comparative data from prior years and accordingly the Net Assessed Values presented for years prior to FY2015-16 represent Secondary Assessed Values based on the then-applicable but now replaced valuation rules. Note: Personal income and population information may be found on Table XXV Full cash value information may be found on Table VIII Sources - City debt service schedules & Long-term liability footnote. 133 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT - CURRENT FISCAL YEAR AS OF JUNE 30, 2018 Limited Assessed Valuation Governmental Unit Overlapping: State of Arizona Maricopa County Maricopa County Community College District Maricopa County Flood Control District Maricopa County Library District Maricopa County Fire District Assistance Maricopa County Special Health Care District Central AZ Water Conservation West MEC Vocational District Sub-total - City-wide overlapping Total City-wide debt levies (3) $ 59,404,007,785 38,251,891,249 38,251,891,249 34,709,158,781 38,251,891,249 38,251,891,249 38,236,246,402 38,236,246,402 14,005,834,321 General Obligation Bonds Outstanding (2) $ Unified School Districts: Peoria No. 11 1,145,771,520 Deer Valley No. 97 183,633,141 Nadaburg No. 81 1,360,574 Sub-total - Unified school district overlapping Total overlapping Percentage Applicable to City of Peoria (1) Table XVII Secondary Tax Rate per $100 Assessed Amount Applicable to City of Peoria 445,570,000 112,000,000 138,655,000 2.26% 3.50% 3.50% 3.86% 3.50% 3.50% 3.50% 3.50% 9.57% $ 15,609,534 3,925,271 13,266,411 32,801,216 168,665,163 231,560,000 215,155,000 535,000 69.50% 7.57% 2.34% 160,934,200 16,287,234 12,519 177,233,953 210,035,169 135,863,947 100.00% 135,863,947 $ 0.21 0.18 0.06 0.01 0.29 0.14 0.18 3.03 2.47 0.30 Direct: City of Peoria $ 1,340,068,217 $ Total direct and overlapping debt $ 345,899,116 Notes: Overlapping governments are those that coincide, at least in part, with the geographical boundaries of the city. This table estimates the portion of outstanding debt of those overlapping governments that is borne by the residents and businesses in the city. This process recognizes that, when considering the city's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Does not include debt amount of Vistancia Community Facilities District ($34,175,425) or Vistancia West Community Facilities District ($3,091,437). (1) Percentage applicable to the City is computed on the ratio of secondary assessed valuation. (2) Includes total stated principal amount of general obligation bonds outstanding. Does not include certificates of participation, revenue obligations or loan obligations outstanding for the jurisdictions listed. (3) Total City-wide debt levies are County debt plus City debt. Sources: - City of Peoria financial records - Maricopa County Treasurer - Maricopa County Assessor - State of Arizona, Department of Revenue, Abstract of the Assessment Roll - Individual jurisdictions' CAFRs and official statements 134 $ 1.25 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT - CURRENT FISCAL YEAR AS OF JUNE 30, 2018 Governmental Unit Overlapping: State of Arizona Maricopa County Maricopa County Community College District Maricopa County Flood Control District Maricopa County Library District Maricopa County Fire District Assistance Maricopa County Special Health Care District Central AZ Water Conservation West MEC Vocational District Sub-total - City-wide overlapping Total City-wide debt levies (3) Limited Assessed Valuation $ 59,404,007,785 38,251,891,249 38,251,891,249 34,709,158,781 38,251,891,249 38,251,891,249 38,236,246,402 38,236,246,402 14,005,834,321 Debt Outstanding (2) $ Unified School Districts: Peoria No. 11 1,145,771,520 Deer Valley No. 97 183,633,141 Nadaburg No. 81 1,360,574 Sub-total - Unified school district overlapping Total overlapping Direct: City of Peoria 1,340,068,217 $ Total direct and overlapping debt Percentage Applicable to City of Peoria (1) Table XVIII Secondary Tax Rate per $100 Assessed Amount Applicable to City of Peoria 445,570,000 138,655,000 2.26% 3.50% 3.50% 3.86% 3.50% 3.50% 3.50% 3.50% 9.57% $ 231,560,000 215,155,000 535,000 69.50% 7.57% 2.34% 160,934,200 16,287,234 12,519 177,233,953 206,109,898 207,170,951 100.00% 207,170,951 $ 15,609,534 13,266,411 28,875,945 236,046,896 $ 3.26 2.47 0.30 $ 413,280,849 Notes: Overlapping governments are those that coincide, at least in part, with the geographical boundaries of the city. This table estimates the portion of outstanding debt of those overlapping governments that is borne by the residents and businesses in the city. This process recognizes that, when considering the city's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. Does not include debt amount of Vistancia Community Facilities District ($34,175,425) or Vistancia West Community Facilities District ($3,091,437). (1) Percentage applicable to the City is computed on the ratio of secondary assessed valuation. (2) Includes total stated principal amount of general obligation bonds outstanding. Does not include certificates of participation, revenue obligations or loan obligations outstanding for the jurisdictions listed. (3) Total City-wide debt levies are County debt plus City debt. Sources: - City of Peoria financial records - Maricopa County Treasurer - Individual jurisdictions' CAFRs and official statements - Maricopa County Assessor - State of Arizona, Department of Revenue, Abstract of the Assessment Roll 135 0.21 0.18 0.06 0.01 0.29 0.14 0.18 1.25 CITY OF PEORIA, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT LAST TEN FISCAL YEARS Governmental Unit 2009 Overlapping: State of Arizona Maricopa County Community College District County Flood Control District County Free Library Fire District Assistance Education Equalization West MEC Vocational District Central AZ Water Conservation Sub-total - City-wide overlapping Total City-wide levies (1) Unified School Districts: Peoria No. 11 Deer Valley No. 97 Nadaburg No. 81 Sub-total - Unified school district overlapping $ 17,301,999 17,301,999 393,645,062 2010 $ 21,354,408 21,354,408 405,549,288 2011 $ 23,908,932 23,908,932 384,534,551 Fiscal Year 2013 2012 $ 22,084,125 22,084,125 371,967,077 $ 25,357,414 3,241,000 28,598,414 394,056,576 2014 $ 23,384,382 3,198,843 26,583,225 317,946,402 Table XIX 2015 $ 21,550,210 3,025,964 24,576,174 298,736,758 2016 $ 20,203,810 6,722,916 26,926,726 314,264,769 2017 $ 17,547,206 13,247,434 30,794,640 188,826,337 2018 $ 15,609,534 13,266,411 28,875,945 236,046,896 210,241,616 21,558,687 - 166,217,415 26,201,313 - 196,735,864 24,618,198 7,800 177,729,492 25,445,126 4,524 163,033,794 25,160,995 284,900 208,200,535 27,264,686 2,286 180,916,246 25,506,618 1,212 219,811,259 26,927,344 789 186,654,480 30,347,141 579 160,934,200 16,287,234 12,519 231,800,303 192,418,728 221,361,862 203,179,142 188,479,689 235,467,507 206,424,076 246,739,392 217,002,200 177,233,953 Total overlapping 249,102,302 213,773,136 245,270,794 225,263,267 217,078,103 262,050,732 231,000,250 273,666,118 247,796,840 206,109,898 Direct (2): City of Peoria 376,343,063 384,194,880 360,625,619 349,882,952 365,458,162 291,363,177 274,160,584 287,338,043 158,031,697 207,170,951 $ 625,445,365 $ 597,968,016 $ 605,896,413 $ 575,146,219 $ 582,536,265 $ 553,413,909 $ 505,160,834 $ 561,004,161 $ 405,828,537 $ 413,280,849 Total direct and overlapping debt (1) - Total City-wide debt levies are County debt plus City debt. (2) - Due to a recommended change in accounting principle, the contracts payable category is no longer being used to calculate direct governmental activities debt. Sources: City Financial Records Individual jurisdictions' CAFRs and official statements for debt of other entities 136 CITY OF PEORIA, ARIZONA LEGAL DEBT MARGIN LAST TEN FISCAL YEARS 2009 2011 2010 Fiscal Year 2013 2012 Table XX 2014 2017 2016 2015 2018 Property Assessed Value (1) $ 1,994,591,924 $ 1,895,163,851 $ 1,609,972,512 $ 1,276,335,862 $ 1,137,434,740 $ 1,057,413,204 $ 1,155,587,438 $ 1,178,016,995 $ 1,244,679,295 $ 1,340,068,217 6% Limitation Debt limit $ 119,675,515 $ 113,709,831 $ 96,598,351 $ 76,580,152 $ 68,246,084 $ 63,444,792 $ 69,335,246 $ 70,681,020 $ 74,680,758 $ 80,404,093 Total net debt applicable to limit Legal 6% Debt Margin 6,745,000 $ Total net debt applicable to the limit as a percentage of debt limit 20% Limitation Debt limit $ 5.6% $ Total net debt applicable to limit Legal 20% Debt Margin 112,930,515 5,565,000 398,918,385 Total net debt applicable to the limit as a percentage of debt limit 222,603,385 44.2% $ 4.9% $ 176,315,000 $ 108,144,831 4,570,000 379,032,770 199,637,770 47.3% $ 4.7% $ 179,395,000 $ 92,028,351 2,735,000 321,994,502 158,984,502 50.6% $ 3.6% $ 163,010,000 $ 73,845,152 1,665,000 255,267,172 87,042,172 $ 2.4% $ 168,225,000 $ 66,581,084 350,000 227,486,948 65.9% 66,776,948 70.6% $ 69,335,246 0.6% $ 160,710,000 $ 63,094,792 - 211,482,641 59,012,641 $ 231,117,488 $ 88,192,488 72.1% 137 61.8% 65,866,293 4,149,727 $ 6.8% $ 142,925,000 (1) Prior to FY2015-16, Primary or Limited Property Values were used for primary ad valorem taxes which are levied for operations of the city and Secondary Assessed Values were used for secondary ad valorem taxes which are levied for debt service. Beginning in FY2015-16, with a voter approved constitutional amendment, both primary and secondary ad valorem taxes are now levied on the Limited Property Values. Because FY2015-16 is the first year for implementation of the constitutional amendment and use of Limited Property Values, there is no comparative data from prior years and accordingly the Net Assessed Values presented for years prior to FY2015-16 represent Secondary Assessed Values based on the then-applicable but now replaced valuation rules. Source: Maricopa County Assessor and City records $ 0.0% 152,470,000 $ 4,814,727 235,603,399 80,258,126 65.9% $ 5.6% $ 155,345,273 $ 70,531,031 2,999,727 248,935,859 3.7% $ 144,090,273 $ 104,845,586 57.9% 77,404,366 268,013,643 124,055,273 $ 143,958,370 46.3% CITY OF PEORIA, ARIZONA PLEDGED REVENUE COVERAGE - EXCISE TAX AND STATE SHARED REVENUE DEBT OBLIGATIONS GOVERNMENTAL PORTION LAST TEN FISCAL YEARS Fiscal Year 2013 2014 2015 Table XXI 2009 2010 2011 2012 2016 2017 2018 (6) 50,215,336 10,991,095 20,395,663 4,019,182 1,802,759 3,309,210 11,420,810 3,781,537 $ 105,935,592 $ 47,957,886 10,137,682 17,469,936 3,955,416 1,599,957 2,525,753 10,185,728 1,674,775 $ 95,507,133 $ 49,541,810 11,649,489 13,408,996 4,037,897 1,672,072 2,813,535 10,502,078 2,692,430 $ 96,318,307 $ 51,737,833 12,087,651 13,231,006 4,084,163 2,106,545 2,521,407 10,895,825 1,656,235 $ 98,320,665 3,400,000 842,867 4,242,867 3,575,000 670,386 4,245,386 3,990,000 482,594 4,472,594 1,569,999 505,827 2,075,826 665,000 1,065,571 1,730,571 2,010,000 1,708,383 3,718,383 2,020,000 1,642,083 3,662,083 2,085,000 1,567,808 3,652,808 2,165,000 1,483,533 3,648,533 2,361,806 1,385,086 3,746,892 24.97 22.50 21.54 47.36 61.49 30.67 32.80 34.28 37.31 39.00 101,692,725 9,356,675 111,049,400 91,261,747 8,491,097 99,752,844 91,845,713 8,682,846 100,528,559 96,244,839 9,088,210 105,333,049 104,688,686 9,927,436 114,616,122 110,317,038 10,861,145 121,178,183 116,455,084 11,334,889 127,789,973 121,566,339 12,231,059 133,797,398 132,480,184 12,939,338 145,419,522 142,377,577 13,977,877 156,355,454 1,760,000 1,659,171 3,419,171 1,835,000 2,005,188 3,840,188 1,920,000 1,940,963 3,860,963 2,005,000 1,873,763 3,878,763 2,095,000 1,803,588 3,898,588 2,185,000 1,730,263 3,915,263 2,285,000 1,648,325 3,933,325 2,385,000 1,545,500 3,930,500 2,490,000 1,438,175 3,928,175 2,665,000 1,114,408 3,779,408 32.48 25.98 26.04 27.16 29.40 30.95 32.49 34.04 37.02 41.37 Senior Lien Excise Tax and State Shared Revenue Debt Obligations Pledged Revenues Sales and use taxes (1) State-shared sales tax Urban revenue sharing Franchise taxes License and permits Fines and forfeitures User fees and charges Miscellaneous Total Pledged Revenues Senior Lien Debt Service Requirements Principal (2) Interest (2) Total Senior Lien Debt Service Requirements Estimated Coverage $ $ 56,145,066 12,665,191 14,425,958 4,136,004 2,564,075 2,058,925 11,889,776 2,534,262 $ 106,419,257 $ 60,587,446 13,431,637 17,172,500 4,194,371 2,800,894 1,933,142 12,535,479 1,379,952 $ 114,035,421 $ 63,331,915 14,139,128 18,650,521 4,312,836 3,132,178 1,699,818 12,703,987 2,146,784 $ 120,117,167 $ 67,425,794 14,760,029 18,549,406 4,461,864 4,080,210 1,601,014 11,998,841 2,341,988 $ 125,219,146 $ 71,476,726 15,631,512 20,949,613 4,501,681 4,778,632 1,433,868 14,376,186 2,980,499 $ 136,128,717 $ 76,168,326 15,894,140 20,334,388 5,035,331 5,509,240 1,728,303 16,758,517 4,696,224 $ 146,124,469 Other Excise Tax and State Shared Revenue Debt Obligations (3) Net Pledged Revenues from above (4) Additional Pledged Revenues (5) Total Debt Service Requirements Principal Interest Total Annual Requirements Estimated Coverage Note: (1) Excludes the 0.3% Transportation Sales Tax approved by voters in September 2005. (2) Although the pledged revenues for all Senior Lien Debt Obligations are excise taxes and state shared revenues (excluding the 0.3% Transportation Sales Tax), some debt service payments, including the 2011 MDA Debt Obligation, are funded by Enterprise Funds. (3) Other Excise Tax and State Shared Revenue Debt Obligations are backed by a senior lien on the .03% transaction privilege tax approved by voters in 2005 and a subordinated lien on the Excise Taxes and State Shared revenues listed above. (4) Pledged revenues on the Senior Lien Debt Obligations, less the debt requirements for the Senior Lien Debt Obligations (5) Revenues of the Transportation Sales Tax Fund, primarily consisting of the 0.3% transaction privilege tax in Note (1). (6) During FY2018, the 2006 and 2008 MDA debt obligations were refunded using direct purchase obligations. As part of the refunding the City deposited $3,128,884, which was available for upcoming debt service payments for the debt being refunded, with the bond escrow agent. This amount is included in debt principal and interest listed above. Source: Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Debt service schedules, City financial records 138 CITY OF PEORIA, ARIZONA PLEDGED REVENUE COVERAGE - WATER AND WASTEWATER REVENUE BONDS LAST TEN FISCAL YEARS Fiscal Year 2013 (6) Table XXII 2009 (2) 2010 2011 2012 Gross Revenue (1) Operating and Maintenance Expenses (2) Net Revenue Available for Debt Service $ 46,956,831 33,751,517 $ 13,205,314 $ 48,087,688 28,067,908 $ 20,019,780 $ 46,141,098 28,610,625 $ 17,530,473 $ 50,720,705 28,823,261 $ 21,897,444 $ 52,680,761 28,974,990 $ 23,705,771 $ 54,515,296 30,942,736 $ 23,572,560 Development Fee Revenue Total Net Revenue 1,841,126 $ 15,046,440 1,616,718 $ 21,636,498 1,899,935 $ 19,430,408 2,820,416 $ 24,717,860 3,205,623 $ 26,911,394 4,311,153 $ 27,883,713 4,372,224 4,852,315 9,224,539 7,362,889 4,332,089 $ 11,694,978 7,025,129 4,501,266 $ 11,526,395 7,941,123 4,242,754 $ 12,183,877 8,776,254 3,579,904 $ 12,356,158 9,007,117 3,343,413 $ 12,350,530 Ratio of Total Net Revenue/ Total Bond Expense 1.63 1.85 1.69 2.03 2.18 2.26 1.78 2.57 2.60 2.72 Ratio of Net Available/ Total Bond Expense (5) 1.43 1.71 1.52 1.80 1.92 1.91 1.42 2.16 2.13 2.28 Debt Service Requirements Principal (3) Interest (4) Total Debt Service Requirements $ (1) Includes total operating revenues and investment income of the Water Utility and Wastewater Utility Enterprise Funds. (2) Includes total operating expenses of the Water Utility and Wastewater Utility Enterprise Funds, less depreciation amortization. For FY09 also excludes a one-time insurance claim ($7,930,000) and a one-time charge from Central Arizona Project for back billed water capital recovery charges ($3,670,364). (3) Includes principal for Water and Sewer Revenue bonds and Water Infrastructure Finance Authority loans. Although some MDA bonds are financed by the Utility Funds, the pledged revenue is excise tax therefore the debt is included in the MDA Bond debt coverage calculations on Table XXI. (4) Bond interest payments only. Does not include amortization of loss on refunding, capitalized interest, agent fees or amortization of bond issuance costs that are included in interest expense on the statement of revenues, expenses, and changes in net position. (5) Excludes Development Fee Revenue. (6) In FY2012 $24,810,509 in principal and $405,829 in interest were defeased. These additional debt payments have been removed from the FY12 debt service requirements so as not to distort the ratios. Source: Statement of Revenues, Expenses, and Changes in Fund Net Position Repayment schedules for debt serviced by Water and Wastewater Utility Enterprise funds 139 2014 2015 $ 2017 2016 $ 52,770,260 35,326,061 17,444,199 $ 4,418,565 21,862,764 $ 9,210,038 3,097,542 12,307,580 $ $ 60,010,324 33,060,448 26,949,876 $ 5,116,972 32,066,848 $ 9,456,159 3,026,940 12,483,099 $ 2018 $ 64,032,933 35,787,927 28,245,006 $ 6,268,689 34,513,695 $ 10,635,513 2,621,761 13,257,274 $ $ 69,512,706 38,664,295 30,848,411 $ 6,034,425 36,882,836 $ 10,983,985 2,567,632 13,551,617 CITY OF PEORIA, ARIZONA PLEDGED REVENUE COVERAGE - SPECIAL ASSESSMENT BONDS LAST TEN FISCAL YEARS Table XXIII 2009 2010 2011 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 Pledged Revenues (1) $ 3,365,342 $ 3,402,865 $ 2,645,451 $ 2,262,112 $ 1,484,283 $ 1,259,303 $ 1,168,526 $ 1,078,196 $ 2,787,558 $ 2,130,000 Debt Service Requirements Principal Interest (2) Total Annual Requirements 1,624,615 675,958 $ 2,300,573 2,360,492 559,205 $ 2,919,697 1,887,322 432,302 $ 2,319,624 1,495,000 316,720 $ 1,811,720 1,140,000 222,820 $ 1,362,820 325,000 149,600 474,600 340,000 135,788 475,788 355,000 121,338 476,338 370,000 106,250 476,250 2,130,000 90,825 $ 2,220,825 1.46 1.17 1.14 1.25 1.09 5.85 0.96 Estimated Coverage $ 2.65 $ 2.46 $ $ 2.26 (1) - Pledged revenues equals Special Assessment Debt Service Fund current year fund balance plus current year principal & interest payments. (2) - Bond interest payments only. Does not include agent fees included in interest expense on the Statement of Revenues, Expenditures and Changes in Fund Balance. Source: City financial records Governmental Fund Financial Statements GASB Ref: 2800.129 140 CITY OF PEORIA, ARIZONA SPECIAL ASSESSMENT COLLECTIONS LAST TEN FISCAL YEARS Table XXIV Current Assessments Due 2009 $ 2,196,027 2010 $ 2,211,609 2011 $ 2,171,435 Fiscal Year 2012 2013 $ 1,849,026 $ 1,213,646 $ Assessments Collected Prepaid Assessments Collected Total Assessments Collected (1) 2,193,992 2,041 $ 2,196,033 2,211,599 38,301 $ 2,249,900 2,171,435 $ 2,171,435 1,848,788 205,901 $ 2,054,689 1,213,646 $ 1,213,646 455,116 675,958 $ 1,131,074 99.9% 100.0% 100.0% 100.0% 100.0% 100.0% $ 9,871,061 $ 8,141,515 $ 6,328,423 $ 4,551,324 $ 3,520,000 $ 2,603,127 Ratio of Current Collections to Amount Due Outstanding Assessment Principal (2) 2014 (3) 455,116 $ 2015 (4) 381,761 $ 2016 (5) 381,950 2017 (6) $344,741 $ 381,761 381,761 $ 381,950 381,950 344,741 1,809,173 $2,153,914 100.0% 100.0% 100.0% $ 2,326,112 $ 2,036,876 (1) Does not include penalties or administrative fees which are included in special assessment revenues on the Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds. (2) Principal only. Assessments Receivable on Balance Sheet-Governmental Funds may include delinquent administrative charges, interest and penalties. (3) These Special Assessments relate to Improvement District 0601 which includes three lots. The tax rolls of Maricopa County Assessor's Office indicate that the current full cash value of the Assessed Property is approximately $25,957,000 for Lot No. 1, $17,577,500 for Lot No. 2 and $669,500 for Lot No. 3. There are no overlapping Assessment Districts and all lots are current in their assessment payments. (4) These Special Assessments relate to Improvement District 0601 which includes three lots. The tax rolls of Maricopa County Assessor's Office indicate that the current full cash value of the Assessed Property is approximately $25,957,000 for Lot No. 1, $23,400,000 for Lot No. 2 and $669,500 for Lot No. 3. There are no overlapping Assessment Districts and all lots are current in their assessment payments. (5) These Special Assessments relate to Improvement District 0601 which includes three lots. The tax rolls of Maricopa County Assessor's Office indicate that the current full cash value of the Assessed Property is approximately $30,000,000 for Lot No. 1, $21,066,600 for Lot No. 2 and $770,300 for Lot No. 3. There are no overlapping Assessment Districts and all lots are current in their assessment payments. (6) These Special Assessments relate to Improvement District 0601 which includes three lots. The tax rolls of Maricopa County Assessor's Office indicate that the current full cash value of the Assessed Property is approximately $30,000,000 for Lot No. 1, $25,285,800 for Lot No. 2 and $733,200 for Lot No. 3. There are no overlapping Assessment Districts and all lots are current in their assessment payments. Source: City financial records and reports 141 $0.00 $ 2018 - $ - N/A $0.00 CITY OF PEORIA, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Population (1) 159,263 154,065 155,148 156,780 160,504 164,104 168,450 171,237 173,208 175,585 Personal Income (in thousands) (2) 5,998,322 5,462,529 5,489,757 5,547,504 5,966,094 6,236,937 6,526,595 6,823,110 7,068,792 7,412,848 Per Capita Personal Income (3) 37,663 35,456 35,384 37,171 38,006 38,745 39,846 40,811 42,218 N/A Median Age (4) 36.2 35.5 38.4 39.4 38.3 40.2 40.5 36.9 41.6 41.0 Table XXV Public School Enrollment (5) 36,180 35,978 35,334 35,095 35,231 34,952 34,897 34,966 34,912 35,388 (1) City population for most current year based on City staff estimates based on building permit activity. (2) Peoria personal income calculated by multiplying Phoenix Metropolitan Statistical Area (MSA) per capita income times Peoria population divided by 1,000. Current year calculated by multiplying current year population by prior year per capital personal income. (3) Bureau of Economic Analysis - Phoenix Metropolitan Statista Area (MSA) (4) US Census Bureau - American Community Surveys (5) Arizona Department of Education (6) US Bureau of Labor Statistics 142 Unemployment Rate (6) 6.7% 7.0% 8.7% 7.1% 6.8% 6.0% 5.0% 4.9% 4.2% 4.0% CITY OF PEORIA, ARIZONA MAJOR EMPLOYERS WITHIN THE CITY CURRENT YEAR AND TEN YEARS AGO Table XXVI 2018 Employer Peoria Unified School District City of Peoria Fry's Food Stores (Multiple Locations) Walmart (Multiple Locations) Target Stores Inc (Multiple Locations) Oak Craft Inc Banner Health McDonalds (Multiple Locations) Immanuel Campus of Care The Antigua Group Inc Plaza Del Rio Campus/Freedom Plaza & Care Center Larry Miller Dodge/Hyundai Safeway (4 Locations) Good Shepherd Care Center Total Total City Employment # of Employees 3,945 1,204 894 698 411 376 354 345 330 324 8,881 2009 Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Employment 4.7% 1.4% 1.1% 0.8% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 10.6% # of Employees 3,776 1,236 533 635 492 350 700 263 301 250 8,536 83,513 71,868 Sources: City of Peoria Economic Development Department & Maricopa Association of Governments Employer Database 2017 Arizona Unemployment Statistics Program Special Employment Report www.azstats.gov 143 Rank 1 2 5 4 6 7 3 9 8 10 Percentage of Total City Employment 5.3% 1.7% 0.7% 0.9% 0.7% 0.0% 0.0% 0.0% 0.5% 0.0% 1.0% 0.4% 0.4% 0.3% 11.9% CITY OF PEORIA, ARIZONA AUTHORIZED FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Table XXVII Full-time Equivalent Employees as of June 30, 2018 General Government Mayor & Council City Manager Office of Communications Human Resources Attorney City Clerk Court Economic Development*** Finance & Budget Culture & Recreation Police Fire Community Development Development and Engineering*** Highways & Streets Public Works Human Services Water Utility Wastewater Utility Solid Waste Utility Information Technology Stadium Total FTE** Note: 2009 2010 2011 * 2012 2013 2014 2015 2016 2017 2018 6.00 13.00 9.50 17.00 26.00 9.00 22.00 5.00 96.00 142.04 287.00 170.00 49.80 45.25 43.00 69.50 14.50 72.75 28.25 45.00 47.00 19.00 6.00 10.00 8.50 19.00 26.00 9.00 22.00 13.30 89.75 125.47 271.00 167.00 51.00 39.75 41.00 63.75 11.75 60.75 29.25 45.00 46.00 19.00 15.00 8.00 18.00 26.00 9.00 21.00 27.80 86.75 115.97 287.00 164.00 15.50 39.75 44.00 56.75 10.00 57.75 29.25 43.25 41.60 15.50 15.00 7.00 17.00 26.00 8.00 20.90 26.00 80.75 113.57 289.00 162.00 12.50 33.25 38.80 57.95 7.50 56.50 29.50 45.00 39.00 15.50 16.00 8.00 17.50 26.00 7.00 20.90 26.00 80.75 111.97 288.00 167.50 12.50 33.25 38.80 57.95 7.50 55.50 29.50 45.00 39.00 16.50 16.00 8.00 17.50 26.00 7.00 20.90 28.00 80.00 115.97 292.00 168.50 13.50 33.25 38.80 57.95 7.50 55.50 29.50 45.50 40.00 17.50 16.00 8.00 17.50 26.00 7.00 20.90 30.50 80.00 115.97 292.00 168.50 14.00 33.25 38.80 57.95 7.50 55.50 29.50 45.50 40.00 17.50 16.00 9.00 19.00 26.00 7.00 20.90 31.50 79.00 119.22 295.00 175.50 15.00 33.25 38.80 57.95 7.50 55.50 31.50 49.50 41.00 17.50 18.00 9.00 19.00 26.00 7.00 20.90 8.00 79.00 121.47 299.00 194.50 16.00 65.00 38.80 57.95 7.50 58.50 32.50 53.25 42.00 18.50 18.00 9.00 20.00 26.00 7.00 20.90 8.00 80.00 121.20 306.00 194.50 16.00 65.00 38.80 57.95 7.50 58.50 32.50 56.25 42.00 18.50 1,236.59 1,174.27 1,131.87 1,100.72 1,105.12 1,118.87 1,121.87 1,145.62 1,191.87 1,203.60 Counts do include part-time non-seasonal benefitted employees. * Interdepartmental reorganization is reflected in FY2011 numbers. This will explain some of the significant changes in departments such as Mayor and Council, City Manager, Economic Development and Community Development. **The Total FTE presentation for years 2008-2013 was updated to reflect a calculation correction. ***The presentation was updated in fiscal year 2017 to reflect the renaming of departments. Source: City budget office 144 Governmental Activities: General Government Registered Voters in City Voter Participation (last election) Culture & Recreation Recreation Participants New Recreation Accounts Special Event Participants Police Calls for Service Avg Response Time (minutes) Fire Number of Incidents Avg Response Time (minutes) Development Services Building Permits Issued Value of Building Permits (millions $) Highways & Streets Asphalt Used (in tons) Centerline Miles Swept Miles Inspected Public Works Number of Vehicle Work Orders Human Services Number of Dial-a-Ride users Number of Annual Trips Business-type Activities (E) Water Utility Annual Consumption (000's gal) Wastewater Utility Wastewater Treated (billion gal) Solid Waste Utility Residential Tonnage Processed Commercial Tonnage Processed Recycle Tonnage Processed Stadium Spring Training Attendance Sporting Rentals Days Non-Sporting Rentals Days CITY OF PEORIA, ARIZONA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year 2011 2012 2013 2014 2015 2009 2010 76,323 81.2% 82,578 29.2% 86,803 29.2% 85,592 23.7% 87,432 23.7% 89,604 24.9% 131,372 6,237 * 132,391 5,903 46,578 134,661 5,968 60,715 136,200 6,106 65,347 134,045 5,396 73,800 60,219 5.47 56,683 5.65 56,764 5.87 57,184 6.01 13,361 4.43 14,874 5.02 15,403 5.19 1,486 $84.5 1,497 $131.8 2,441 7,526 423 Table XXVIII 2016 2017 2018 87,541 31.3%(F) 93,916 N/A 101,881 76.7% 102,460 N/A 122,318 5,533 74,950 120,232 5,483 79,550 104,544 5,166 71,300 109,220 5,396 102,938 112,802 5,029 95,822 54,159 4.52 (C) 52,193 4.39 (C) 47,612 4.55 (C) 53,256 5.13 (C) 55,136 5.40 (C) 5.33 (C) 17,717 5.08 18,719 5.14 19,312 5.30 20,873 5.24 23,824 5.38 23,726 5:16(A) 5:24(A) 1,401 $63.8 2,371 $111.2 3,625(D) $169.0 3,993 $188.3 (D) 4,534 $221.1 (D) 5,818 $311.9 (D) 6,336 $393.3 (D) 6,231(D) $355.0 2,832 5,935 422 2,677 6,159 85 (B) 2,038 6,202 163 3,122 6,143 187 2,227 5,660 205 2,302 4,968 211 1,289 4,118 296 1,930 6,199 (G) 1,551 1,566 5,052 5,917 5,697 5,856 5,608 5,899 5,464 5,493 5,558 5,732 5,416 6,174 43,263 899 31,568 747 27,440 759 31,082 830 32,101 836 33,308 850 30,212 749 30,756 585 27,241 599 28,033 8,674,450 8,212,711 8,003,947 8,448,795 8,405,929 8,662,507 8,090,136 8,650,664 9,488,059 9,950,302 3.90 3.70 3.50 3.61 3.64 3.69 3.74 3.78 3.87 3.98 48,970 22,856 16,084 47,540 21,981 15,516 47,989 20,340 16,277 46,299 19,700 15,715 47,717 20,561 15,184 47,987 21,176 15,155 51,666 25,227 16,077 52,593 23,309 16,447 54,967 20,895 16,698 55,757 20,974 17,109 211,243 246 66 200,029 208 74 188,244 336 108 190,643 350 134 196,881 290 143 192,513 322 146 238,847 297 151 240,111 339 204 227,646 333 210 201,272 335 196 Notes: * Information is not available for these fiscal years. (A) Decrease in Fire Average Response time reflects change in calculation. Beginning in FY17, average response time is calculated 1st unit on scene and only includes code 3 (emergency calls). (B) Changed from lane miles to center line miles in FY11 to be consistent with other highway (C) Decrease in Police Average Response time reflects calculation change. New Calculation=Dispatch to Arrival. Previous calculation=Call for Service to Arrival. (D) Beginning FY13, this number includes all permits issued including tenant improvements, C of O permits, and spec suite permits. (E) Beginning in FY15, Average Gallons/Household/Year is no longer being presented. (F) Percentage reflects voter participation in March 2015 Special General Election for Mesquite District Council. Eligible registered voters = 16,582. (G) Starting In FY17 an electronic survey of every road is completed every third year. Source: Various City Departments 145 53,574 24,932 0(G) CITY OF PEORIA, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Governmental Activities: General Government Annexed Area (square miles) Culture & Recreation # of Neighborhood Parks Total Neighborhood Park Acreage # of Community Parks Total Community Park Acreage Public Safety Police Stations Marked Patrol Vehicles (units) Fire Stations (full-time / part-time) (B) Number of Fire Engines Number of Ladder Trucks Highways & Streets Streets (miles maintained) Crack Seal Application (linear feet) Surface Treatments (lane miles) Public Works Street Lights Vehicles in Fleet Water Services Number of Pump Stations Number of Lift Stations Number of Wells Number of Reservoirs Human Services Dial-a-Ride Buses Business-type Activities Water Utility Number of Water Accounts Storage Capacity (million gal) Wastewater Utility Number of Wastewater Accounts Treatment Capacity (billion gal) Solid Waste Utility Number of Solid Waste Accounts Stadium Number of Practice Fields Number of Clubhouses Total Complex Acreage (C) Table XXIX 2009 2010 2011 2012 Fiscal Year 2013 2014 2015 2016 2017 2018 177.9 179.0 179.1 179.1 179.1 179.1 179.1 179.1 179.1 179.1 28 314 1 52 28 322 1 52 28 322 1 52 32 285 1 52 33 294 1 52 33 294 2 139 34 305 2 139 34 301 2 139 34 301 2 139 34 301 2 139 2 92 2 86 2 86 2 86 2 86 2 88 2 88 2 90 2 91 2 92 7/1 9 2 7/1 9 2 7/1 7 2 7/1 7 2 7/1 7 2 7/1 7 2 7/1 7 2 8/0 7 2 8/0 7 2 8/0 7 2 622 (A) * * * * * * * * 1452 1,165,460 88 (A) * * 1505 1,156,722 96 1,534 2,144,476 60 1,551 2,007,173 99 1,559 3,381,554 153 13,726 683 13,901 670 14,093 673 14,333 687 15,006 714 14,786 738 14,945 732 15,565 778 15,722 795 15,973 840 * * * * * * * * * * * * * * * * * * * * 25 15 38 30 25 14 40 30 30 13 46 33 30 13 47 33 30 13 47 33 551 554 584 590 11 9 7 7 7 6 5 5 5 5 46,902 42.0 47,606 42.0 47,793 42.0 48,509 42.0 49,516 42.0 50,399 42.0 51,405 42.0 55,558 42.0 57,011 42.0 58,061 42.0 49,923 16.25 50,383 16.25 50,715 16.25 51,527 16.25 52,674 16.25 53,548 16.25 54,599 16.25 56,235 16.25 57,909 16.25 59,499 16.00 48,006 43,382 48,752 49,506 50,727 51,609 52,640 54,262 55,828 57,452 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 13 3 125 Notes: * Information not tracked during this fiscal year. (A) Measurement changed from centerlane miles to lane miles in FY14. (B) Number of fire engines reported in FY13, FY14, FY15 and FY16 was restated to exclude a bush truck previously reported as a fire engine. (C) Number updated in FY17 for all years presented to reflect land owned by the City which was used to construct office space, and thus not part of Stadium complex acreage. Source: Various City Departments 146 Continuing Disclosures Continuing Disclosure Section SEC Rule 15c2-12, as amended, requires the City to provide Continuing Disclosure Annual Reports that include audited financial statements and other financial information for the benefit of owners and holders of bond obligations issued by the City. The Continuing Disclosure Annual Report shall contain or incorporate by reference certain information as set forth in the Continuing Disclosure Agreements and Undertakings executed by the City with the issuance of its municipal bond obligations. Information in this section is provided solely pursuant to the requirements of SEC Rule 15c2-12 and Continuing Disclosure Agreements and Undertakings and include financial information that is not required for fair presentation in conformity with accounting principles generally accepted in the United States of America and is therefore unaudited and not covered by the auditor’s opinion. Annual continuing disclosure information is filed with the Municipal Securities Rulemaking Board (MSRB) for public access via their Electronic Municipal Market Access (EMMA) system at www.emma.msrb.org. 147 Continuing Disclosures Annual Report For the Year Ended June 30, 2018 Audited Financial Statements The City’s Comprehensive Annual Financial Report for fiscal year ended June 30, 2018, is included as part of this submittal. Other Financial Information Information concerning the outstanding debt by type of bond can be found in the Notes to the Financial Statements, Note 7 Long Term Debt. Other financial information required per the City’s Continuing Disclosure Agreements and Undertakings for each type of bond obligation is incorporated by reference as follows: Statistical Section Page General Obligation Bonds (CUSIP 712838) Assessed values by property classification Table VIII 123 Comparison of assessed value to full cash value Table VIII 123 Comparative assessed values Table IX 124 Direct and overlapping assessed values Direct and overlapping tax rates Table XVII Table X 134 125 Property tax levies and collections Table XIII 128 Direct and overlapping general obligation bonds Direct general obligation debt ratios Table XVII Table XVI 134 133 Legal debt margin and unused borrowing capacity Table XX 137 Net revenues and debt service coverage Table XXII 139 Number of utility service connections Table XIVa 129 Ten largest water users Table XIVc 131 Municipal Development Authority Bonds (CUSIP 71284R and 71285A) Excise tax and state shared revenues and debt service coverage Table XXI 138 Privilege and use tax rates by category Table VI 121 Annual debt service requirements Table XXI 140 Legal debt margin and unused borrowing capacity Table XX 137 Assessed values by property classification Table VIII 123 Property tax levies and collections Table XIII 128 Special assessment collections Table XXIV 141 Water and Wastewater Revenue Bonds (CUSIP 712851) Improvement District Bonds (CUSIP 712844) 148 City of Peoria FINANCE AND BUDGET DEPARTMENT 8401 West Monroe Street Peoria, Arizona 85345 www.peoriaaz.gov