COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Scottsdale, Arizona For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona Comprehensive Annual Financial Report for the fiscal year ended June 30, 2021 Prepared by: City Treasurer’s Office Sonia Andrews, CPA City Treasurer/Chief Financial Officer Anna Marie Henthorn, CPA Accounting Director City of Scottsdale, Arizona Comprehensive Annual Financial Report For the Fiscal Year ended June 30, 2021 Table of Contents INTRODUCTORY SECTION Letter of Transmittal - City Treasurer ...................................................................................................... 1 Certificate of Achievement - Government Finance Officers Association ......................................... 9 List of Elected and Appointed Officials ................................................................................................ 11 Organizational Chart ................................................................................................................................. 13 FINANCIAL SECTION Independent Auditor’s Report ................................................................................................................. 14 Management’s Discussion and Analysis ................................................................................................. 17 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ................................................................................................................ 34 Statement of Activities ...................................................................................................................... 36 Fund Financial Statements: Balance Sheet - Governmental Funds ............................................................................................. 37 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ................................................................................................................................... 39 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ......................................................................................................................... 40 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................. 42 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund .................................................................................................. 43 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ................................................................. 45 Statement of Fund Net Position - Proprietary Funds .................................................................. 46 Reconciliation of the Proprietary Funds Statement of Fund Net Position to the Statement of Net Position ..................................................................................................... 48 City of Scottsdale, Arizona i Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds ............................................................................................................................... 49 Reconciliation of the Proprietary Funds Statement of Revenue, Expenses, and Changes in Fund Net Position to the Statement of Activities ............................................ 50 Statement of Cash Flows - Proprietary Funds .............................................................................. 51 Notes to Financial Statements: I. Summary of Significant Accounting Policies ................................................................................. 53 II. Reconciliation of Government-wide and Fund Financial Statements ........................................ 64 III. Stewardship, Compliance, and Accountability................................................................................ 75 IV. Detailed Notes on All Funds A. Cash and Investments................................................................................................................... 79 B. Endowments................................................................................................................................... 84 C. Receivables ...................................................................................................................................... 84 D. Capital Assets ................................................................................................................................. 86 E. Interfund Balances and Interfund Transfers ............................................................................ 90 F. Leases................................................................................................................................................ 91 G. Subscription-Based Information Technology Arrangements ................................................ 92 H. Service Concession Arrangements ............................................................................................. 93 I. Bonds, Loans, and Other Payables .............................................................................................. 94 V. Other Information A.Risk Management ......................................................................................................................... 109 B. Contingent Liabilities ................................................................................................................. 109 C. Tax Abatement Agreements ..................................................................................................... 110 D. Joint Ventures............................................................................................................................... 111 E. Pollution Remediation ................................................................................................................ 112 F. Related Organization ................................................................................................................... 113 G.Retirement and Pension Plans.................................................................................................... 113 H. Other Postemployment Benefits .............................................................................................. 130 City of Scottsdale, Arizona ii I. Postemployment Benefits Other Than Pensions (OPEB) ..................................................... 131 Required Supplementary Information ........................................................................................... 136 Notes to Required Supplementary Information.......................................................................... 143 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds .......................................................... 147 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds ........................................................................................................... 148 Combining Balance Sheet - Nonmajor Special Revenue Governmental Funds ............................ 149 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds ............................................................................. 151 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Transportation - Special Revenue Fund ........................................................................................ 153 Community Development Block Grant - Special Revenue Fund ............................................. 154 HOME - Special Revenue Fund .................................................................................................... 155 Grants - Special Revenue Fund ...................................................................................................... 156 Section 8 - Special Revenue Fund .................................................................................................. 157 Preserve Privilege Tax - Special Revenue Fund ........................................................................... 158 Streetlight Districts - Special Revenue Fund ................................................................................ 159 Special Programs - Special Revenue Fund .................................................................................... 160 Tourism Development - Special Revenue Fund .......................................................................... 161 Stadium Facility - Special Revenue Fund ...................................................................................... 162 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Debt Service Governmental Funds.................................. 163 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Governmental Funds ................................................................................... 164 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Obligation Bond Debt Service Fund ............................................................................. 165 Municipal Property Corporation Debt Service Fund ................................................................. 166 City of Scottsdale, Arizona iii Scottsdale Preserve Authority Debt Service Fund ...................................................................... 167 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Capital Projects Governmental Funds ............................. 168 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Governmental Funds .............................................................................. 169 Combining Balance Sheet - Nonmajor Permanent Governmental Funds ..................................... 170 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Permanent Governmental Funds....................................................................................... 171 Combining Statement of Fund Net Position - Internal Service Funds .......................................... 173 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds ............................................................................................................................ 174 Combining Statement of Cash Flows - Internal Service Funds....................................................... 175 Other Supplementary Information: Schedule of Changes in Long-Term Debt........................................................................................... 177 STATISTICAL SECTION Financial Trends Net Position by Component - Last Ten Fiscal Years (accrual basis of accounting) ..................... 182 Changes in Net Position - Last Ten Fiscal Years (accrual basis of accounting) ............................ 183 Fund Balances of Governmental Funds - Last Ten Fiscal Years (modified accrual basis of accounting)................................................................................................. 186 Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years (modified accrual basis of accounting)................................................................................................. 187 Tax Revenues by Source - Last Ten Fiscal Years (modified accrual basis of accounting) .......... 190 Revenue Capacity Taxable Sales Subject to Privilege (Sales) Tax by Category - Last Ten Fiscal Years ...................... 191 Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years ..................................................... 192 Sales Tax Revenue Payers by Industry - Current Year and Nine Years Ago .................................. 193 Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years .................. 194 City of Scottsdale, Arizona iv Principal Property Taxpayers - Current Year and Nine Years Ago.................................................. 195 Assessed Value of Taxable Property - Last Ten Fiscal Years............................................................ 196 Property Tax Levies and Collections - Last Ten Fiscal Years ........................................................... 197 Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years .......................................................... 198 Ratios of Net General Bonded Debt Outstanding - Last Ten Fiscal Years ................................... 199 Direct and Overlapping Governmental Activities Debt as of June 30, 2021 ................................ 200 Legal Debt Margin Information - Last Ten Fiscal Years ................................................................... 201 Pledged-Revenue Coverage - Last Ten Fiscal Years .......................................................................... 203 Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years ....................................................... 204 Principal Employers - Current Year and Nine Years Ago ................................................................. 205 Operating Information Full-time Equivalent City Government Employees by Function - Last Ten Fiscal Years............ 206 Operating Indicators by Division - Last Ten Fiscal Years ................................................................. 207 Capital Asset Statistics by Function - Last Ten Fiscal Years ............................................................. 210 City of Scottsdale, Arizona v City of Scottsdale, Arizona vi Table of Contents Letter of Transmittal For the Fiscal Year Ended June 30, 2021 October 20, 2021 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Scottsdale, Arizona: The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2021, is submitted in accordance with City Charter and Arizona Revised Statutes. Both require the City to issue an annual report on its financial position and activity, and to have the report audited by certified public accountants independent of City government. This report was prepared by the City’s Accounting Department in conformity with U.S. generally accepted accounting principles (GAAP) and audited in accordance with U.S. generally accepted auditing standards by a firm of licensed certified public accountants. This report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of the information contained in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework designed for this purpose. Because the cost of internal control should not exceed anticipated benefits the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. To the best of management’s knowledge and belief, the enclosed data is accurate, in all material aspects, and is reported in a manner that presents fairly the financial position and results of operations of the various funds and component units of the City. Heinfeld, Meech & Co., P.C., a firm of licensed certified public accountants, performed the annual independent audit. The goal of the audit was to provide reasonable assurance that the basic financial statements of the City are free of material misstatement. The independent auditor concluded that the City’s financial statements for the fiscal year ended June 30, 2021, are fairly stated in conformity with GAAP. This is the most favorable conclusion and is commonly known as an unmodified or “clean” opinion. The independent auditor’s report is located on the first page of the Financial Section of this report. The independent audit of the financial statements of the City was part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair representation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City’s separately issued Single Audit Report and may be obtained from the City’s website. This letter of transmittal provides a non-technical summary of the City’s profile, economic prospects, and achievements. Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the City’s basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. City of Scottsdale, Arizona 1 Table of Contents CITY OF SCOTTSDALE PROFILE History Scottsdale was founded in 1888 when retired Army Chaplain Major Winfield Scott homesteaded what is now the center of the City. The City incorporated in 1951 and the City Charter, under which it is presently governed, was adopted in 1961. Portions of the City’s charter have been modified several times by vote of the citizens. Current Profile Scottsdale is centrally located in Maricopa County, Arizona, with its boundaries encompassing 184.5 square miles, stretching 31 miles from north to south, and 11.4 miles at its widest point. The City is bordered on the west by Phoenix, the state capital, by Tempe on the south, and by the Salt River-Pima Maricopa Indian Community on the east. Scottsdale and its neighboring cities form the Phoenix Metro area which is the economic, political, and population center of the state. The City has experienced significant increases in population over the years, with the 1950 census reporting 2,021 residents and the 2020 census reporting 241,361 residents. The City is the seventh largest municipality by population in Arizona, and the 84th largest city in the United States. Government and Organization Scottsdale operates under a council-manager form of government as provided by its Charter. The Mayor and six City Council members are elected at large on a non-partisan ballot and serve overlapping four-year terms. The City Council directly appoints six officers (City Attorney, City Auditor, City Clerk, City Manager, City Treasurer, and Presiding Judge) who have full responsibility for carrying out City Council policies and administering day-to-day operations. The City provides a full range of municipal services including police and fire protection, sanitation service, water and sewer services, construction and maintenance of streets, and recreational activities including libraries and cultural events. Budgetary Controls The annual budget serves as the foundation for Scottsdale’s financial planning and control. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the City’s various funds. On or before the second regular Council meeting in May, the City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them. Three public hearings are held prior to the final budget adoption to obtain taxpayer comments. Each year in June, the budget is legally enacted through passage of an ordinance. The ordinance sets the maximum legal expenditure limit for the ensuing fiscal year. Additional expenditures may be authorized if directly necessitated by a natural or man-made disaster as prescribed in the Arizona State Constitution, Article 9, Section 20. During fiscal year 2021, there were no such supplemental budgetary appropriations authorized. City of Scottsdale, Arizona 2 Table of Contents The expenditure appropriations in the adopted budget are by division and fund level; however, divisional appropriations may be amended during the year. On the recommendation of the City Manager and with the approval of the City Council: 1) transfers may be made from the appropriations for contingencies to divisions; and 2) unexpended appropriations may be transferred from one division to another. For example, if the Public Safety Division is over budget and there are savings in the Community Services Division, City Council can authorize a budget transfer between these divisions. LOCAL ECONOMY Business Scottsdale has a diverse economy built on medical research, high-tech innovation, tourism, and corporate headquarters. Prior to the Coronavirus pandemic (COVID-19), the average unemployment rate in Scottsdale was 3.4 percent in fiscal year 2020. In June 2020, Scottsdale’s unemployment rate increased to 8.9 percent, compared to the state’s rate of 10.3 percent, and the national rate of 11.2 percent. As the economy continues to recover, the average unemployment for Scottsdale in fiscal year 2021 decreased to 6.6 percent. The Scottsdale Airpark is one of the largest employment centers in the State of Arizona with more than 2,900 businesses employing over 50,000 employees in 2 million square feet of commercial space. The high-tech innovation center SkySong, located a few miles from downtown Scottsdale, is designed to help companies grow through a unique partnership with nearby Arizona State University. Downtown Scottsdale is home to several technology and healthcare companies and one of the most successful shopping centers in the southwest United States – Scottsdale Fashion Square. Farther north, the Scottsdale Cure Corridor is a partnership of premier healthcare providers and biomedical companies seeking to advance medicine and patient care through cutting-edge research. Tourism Tourism is one of Scottsdale’s largest and most vibrant industries and is a significant contributor to the City’s economy. With a variety of lodging properties in the area, including several world-class resorts and boutique hotels, along with spectacular spas, trend-setting dining, and one-of-a kind Sonoran Desert golf courses, Scottsdale is one of the most popular tourist destinations in Arizona. Despite the continuing negative effects from COVID-19 on key travel and tourism sectors, the City projects revenue growth in fiscal year 2022. Transaction Privilege (Sales) Tax Scottsdale’s largest revenue source is sales tax generated from a variety of business categories including automotive, construction, food stores, hotels, department stores, retail stores, restaurants, utilities, and rentals. Sales tax is generated directly from the City’s own applied tax rate and indirectly as the City receives its share of sales tax generated from the State of Arizona’s applied tax rate. Sales tax is remitted to the City by the state on a weekly basis. City of Scottsdale, Arizona 3 Table of Contents Sales tax revenue represented 45.3 percent of General Fund revenues for fiscal year 2021, totaling $149.9 million. The City continued to recover from the effects of COVID-19 and its impact to many local businesses and travel reductions. The City achieved a year-over-year increase of 11.0 percent in sales tax revenue for fiscal year 2021 which was a result of strong consumer spending boosted by federal stimulus programs aiding economic recovery. Categories with the highest reported tax revenues were miscellaneous retail stores, rentals, and automotive. The City expects an increase in General Fund sales tax revenue across most categories through fiscal year 2022, when compared to fiscal year 2021 levels, due to the continued recovery from COVID-19. Property Values Scottsdale is a safe, family-friendly community and benefits from a robust assessed valuation of the properties contained within its boundaries. These strong assessed valuations contribute to Scottsdale residents experiencing lower property tax rates and higher median housing values than many of the surrounding municipalities in the Phoenix metropolitan area. Scottsdale property owners will see a decrease in the City’s combined property tax rate in the coming year of $0.0235 over the prior year. This decrease in the combined rate is due to an increase in the primary rate caused by tort liability claims and increased property values. LONG-TERM FINANCIAL PLANNING Scottsdale’s Five-Year Financial Plan is based on sound financial reserves, low debt burden, and conservative revenue growth forecasts. As a result of the impact of COVID-19 and the ensuing slowdown of the local economy, the City anticipates a moderate increase in overall revenues for the next fiscal year with a continued focus on efficient spending to maintain essential City services to the community such as police, fire, transportation, and social services. Achieving and maintaining fiscal stability requires many elements all working in concert with each other. The following identifies key elements of our financial plan. Adopted Comprehensive Financial Policies Financial policies establish the guidance for Scottsdale’s overall fiscal planning and management. They set forth guidelines against which current budgetary performance can be measured and proposals for future programs can be evaluated. The City has 46 adopted financial policies governing operations, capital management, debt management, reserves, and financial reporting. Regular review and refinement of these policies is done in conjunction with financial plan development and policies that are adopted annually by the City Council. In fiscal year 2021, the City amended the financial policy to transfer half of the General Fund sales tax collected on sales of food for home consumption to the Capital Improvement Program, which will be reduced by 16.7 percent each fiscal year until the transfer is eliminated completely. The City Council has also adopted a Public Safety Personnel Retirement System (PSPRS) Pension Funding Policy as required by state law. This policy outlines how the City will maintain stability of required contributions, how and when the City’s funding requirements will be met and defines the City’s funded ratio target under the PSPRS and when it will be met. In June 2021, the City adopted the annual policy which included funding an additional one-time contribution of $35 million toward the police pension liability and $5 million toward the fire pension liability in fiscal year 2022. City of Scottsdale, Arizona 4 Table of Contents Financial Resources Planning Scottsdale’s strategic financial planning begins with a determination of the City’s fiscal capacity based on longterm financial forecasts of available revenues. Conservative financial forecasts, coupled with financial trend analysis techniques and reserve analysis, help preserve the fiscal well-being of Scottsdale. Strategic financial planning is a critical element to maintain long-term financial stability. Multi-Year Operating Budget Planning Multi-year budgeting encompasses long-range operating expenditure plans (including the operating impacts of capital projects), which are linked to community expectations and broad goals of the City Council. While the City is required to adopt a one-year budget to meet state statutory requirements, Scottsdale builds a fiveyear financial plan to help anticipate future impacts and ensure achievement of the City’s long-term objectives. Strategic Capital Improvement Project Planning Scottsdale Capital Improvement Projects are planned for five or more years and analyzed using City-specific prioritization criteria. The operating cost impacts of projects are also planned and considered in developing future operating budgets. Projects with significant operating impacts are carefully timed to avoid contingent liabilities that future operating resources cannot meet. All capital funding sources are conservatively estimated to avoid over-committing to capital construction using revenues that are not certain. To the extent debt financing is used, capital project plans are sized to conform to existing debt management policies. Cash Management To capitalize on investment leverage, it is the City’s practice to “pool” available cash from all funds for investment purposes. In accordance with the City’s investment policy, available cash is invested with the goal of safety as the first priority, ensuring adequate liquidity as the second priority, and maximizing yield as the third priority. The City’s investments generally include federal agencies, treasuries, certificates of deposit, and corporate notes. The average duration of the investments in the City’s portfolio as of June 30, 2021, was 2.12 years. The weighted average earnings rate received by the City on its investments decreased from 2.57 percent in fiscal year 2020 to 1.42 percent in fiscal year 2021. Debt Management Scottsdale has a financial policy that prohibits the issuance of debt for operating expenses. With that as a governing framework, all debt issuances are for the purpose of financing infrastructure or long-lived assets. Each debt issuance is evaluated against policies addressing debt service as a percent of operating expenditures; tax and revenue bases for the repayment of debt; overall debt burden on the community; and statutory limitations and market factors affecting interest costs. In all cases, a long-term analysis is made considering the debt capacity that fits the financial wherewithal (and willingness) of the community to pay for the capital projects. Sizing of the City’s Capital Improvement Plan based on debt capacity in conjunction with conservatively estimated revenues helps stabilize per capita debt and lower annual debt service costs to the City over the long-term. City of Scottsdale, Arizona 5 Table of Contents In recent years the City has issued two types of debt: voter-approved General Obligation bonds and non-voterapproved Municipal Property Corporation bonds (see Section IV.I. of the Notes to the Financial Statements for additional information). The City retained credit ratings of “Aaa,” “AAA,” and “AAA” from the three major credit rating agencies (Moody’s Investors Service, Standard and Poor’s Rating Group, and Fitch Investors Services, respectively) on the City’s outstanding General Obligation bonds where debt service is supported by property taxes. Scottsdale is one of a select number of cities in the nation to earn this distinction. Ratings for the City’s revenue bonds, where debt service is supported by enterprise revenues or excise taxes, are also highly rated by the three major credit rating agencies. A summary of the City’s bond ratings follows: City of Scottsdale Bonded Debt Ratings As of June 30, 2021 Moody's Investors Service Standard and Poor's Rating Group Fitch Investors Services General Obligation (GO) Aaa AAA AAA Water and Sewer Revenue (W&S) Aaa AAA AAA Municipal Property Corp (MPC) Aa1 AAA AA+ Scottsdale Preserve Authority (SPA) Aa2 AA+ AA+ MAJOR INITIATIVES The City’s adopted fiscal year 2022 budget reflects increased revenue projections in the local economy as the City continues to recover from the impacts of COVID-19. This budget reflects an increase in the overall General Fund uses of $92.2 million when compared to the fiscal year 2021 adopted budget to provide core services and the priorities/policy direction of the City Council which include: • $40.0 million to pay down unfunded public safety pension liabilities • $10.7 million for market adjustments and the citywide pay for performance program • $3.5 million net increases in funding for pension related costs • $0.9 million for increases in software costs • $0.6 million to upgrade an aging fire truck to reduce maintenance cost Additionally, an estimated $284.4 million will be spent on capital improvements in the upcoming fiscal year. Many of the projects are part of the 2019 bond package approved by voters, which address critical infrastructure needs. Projects also include City Council and citizen priorities throughout the City. Significant projects include: • $40.4 million to build multi-use sports field in the Bell Road area • $27.3 million to replace aging infrastructure and improve public and event spaces on Civic Center Plaza • $11.0 million to repair lakes and irrigation at Vista Del Camino Park at the Indian Bend Wash • $3.7 million to build a new fire department training facility City of Scottsdale, Arizona 6 Table of Contents AWARDS AND ACKNOWLEDGMENTS Certificates of Achievement 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, 2020, marking the forty-eighth consecutive year the City has achieved this prestigious recognition. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Comprehensive Annual Financial Report that satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is only valid for a period of one year. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program’s requirements and will be submitted to the GFOA to determine its eligibility for another certificate. As well, the City received the Distinguished Budget Presentation Award for the fiscal year beginning July 1, 2020, from the GFOA for our conformity in budget presentation. We believe that our current budget continues to conform to the program requirements, and we expect to receive this award again for the fiscal year beginning July 1, 2021. Acknowledgments The preparation of this report would not have been possible without the skill, effort, and dedication of the Accounting Department and the many members of other departments who responded so positively to the requests for detailed information that accompanies each annual audit. I also wish to express my sincere appreciation to the City Council and the City Manager for their support in maintaining the highest standards of professionalism in planning and conducting the financial affairs of the City of Scottsdale. Respectfully submitted, ~ Sonia Andrews, CPA City Treasurer/Chief Financial Officer City of Scottsdale, Arizona 7 Table of Contents This page is intentionally blank. City of Scottsdale, Arizona 8 Table of Contents ® Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Scottsdale Arizona For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2020 ~P-~ Executive Director/CEO City of Scottsdale, Arizona 9 Table of Contents This page is intentionally blank. City of Scottsdale, Arizona 10 Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona List of Elected and Appointed Officials City Council David D. Ortega, Mayor Tammy Caputi Tom Durham Betty Janik Kathy Littlefield Linda Milhaven Solange Whitehead Charter Officers Jim Thompson, City Manager Sherry R. Scott, City Attorney Sharron Walker, City Auditor Ben Lane, City Clerk Joseph Olcavage, Presiding Judge Sonia Andrews, City Treasurer/Chief Financial Officer City of Scottsdale, Arizona 11 Table of Contents Table of Contents This page is intentionally blank. City of Scottsdale, Arizona 12 Table of Contents People of Scottsdale K Mayor & City Council CITY OFP,_ SCOTTSDALE City of Scottsdale, Arizona 13 COMMISSIONS Airport Environmental Historic Preservation Human Relations Human Services McDowell Sonoran Preserve Neighborhood Parks and Recreation Planning Tourism Development Transportation Veterans Citizen Advisory Groups BOARDS Adjustment Building Appeals Development Review Judicial Appointments Library Loss Trust Fund Personnel Public Safety Personnel Retirement - Fire Local Public Safety Personnel Retirement - Police Local CITY MANAGER’S OFFICE ADMINISTRATIVE SERVICES COMMUNITY & ECONOMIC DEVELOPMENT Communications Human Resources Citizen Service Information Technology Aviation Planning, Economic Diversity & Inclusion Development & Tourism Government Relations COMMUNITY SERVICES Human Services Libraries Parks & Recreation Planning & Admin. Preserve WestWorld PUBLIC WORKS Capital Projects Facilities Fleet Solid Waste Transportation & Streets City Court City Treasurer Accounting Budget Business Services Finance Purchasing Asst. City Manager Asst. City Manager WATER Water Quality Reclamation Services Planning & Engineering Technology & Administration Water Services Pipeline & Treatment Agreements City Attorney Presiding Judge Charter Officers City Manager Executive Leadership City Auditor Civil Prosecution Risk Management Victim Services City Clerk Police Chief Fire Chief POLICE Uniformed Services Investigative Services Operational Services FIRE Operations Services Professional Services Fire & Life Safety Emergency Management Table of Contents ~ HeinfeldMeech Tucson • Scottsdale • Flagstaff HeinfeldMeech.com Independent Auditor’s Report Honorable Mayor and Members of the City Council City of Scottsdale, Arizona Report on Audit of Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the budgetary comparison information for the General Fund, and the aggregate remaining fund information of the City of Scottsdale, Arizona (City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. 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, the budgetary comparison information for the General Fund, and the aggregate remaining fund information of the City of Scottsdale, Arizona, as of June 30, 2021, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions 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. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Scottsdale, Arizona, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statements No. 93, Replacement of Interbank Offered Rates, and No. 96, SubscriptionBased Information Technology Arrangements, for the year ended June 30, 2021, which represent changes in accounting principles. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. City of Scottsdale, Arizona 14 Table of Contents In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. 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 is the responsibility of management and, 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. City of Scottsdale, Arizona 15 Table of Contents Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Combining and Individual Fund Financial Statements and Schedules and Changes in Long-Term Debt are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such 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 Combining and Individual Fund Financial Statements and Schedules and Changes in Long-Term Debt information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on other work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 20, 2021, on our consideration of City of Scottsdale, 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 the City of Scottsdale, Arizona’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Scottsdale, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona October 20, 2021 City of Scottsdale, Arizona 16 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 This section of the City of Scottsdale, Arizona’s (the City) Comprehensive Annual Financial Report presents a narrative overview and comparative analysis of the financial activities of the City for the fiscal years ended June 30, 2021, and 2020. Readers are encouraged to consider the information presented here in conjunction with the basic financial statements that immediately follow, along with the letter of transmittal, and other portions of this Comprehensive Annual Financial Report. FINANCIAL HIGHLIGHTS • The City’s total assets and deferred outflows of resources exceeded its total liabilities and deferred inflows of resources at the close of fiscal years 2021 and 2020 by $5.82 billion and $5.37 billion (net position), respectively. Of these amounts, $354.9 million and $325.7 million, respectively, represent unrestricted net position which may be used to meet the City’s ongoing obligations to citizens and creditors. • The City’s total net position increased in fiscal year 2021 by $443.8 million compared to an increase in net position of $156.1 million during fiscal year 2020. Total revenues exceeded total expenses in the current year due primarily to the capital grants and contributions of $339.8 million for fiscal year 2021, compared to $76.7 million in fiscal year 2020. • As of June 30, 2021, and 2020, the City’s governmental funds reported combined ending fund balances of $447.4 million and $327.9 million, respectively. Approximately 37 percent of the current year amount ($164.2 million) is available for spending at the City’s discretion (unassigned fund balance). • At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the General Fund was $171.0 million or approximately 66 percent of total General Fund expenditures of $258.8 million. • The City’s total long-term liabilities increased by $45.8 million to $1.52 billion during the current fiscal year. This increase was primarily due to an increase in the City’s net pension liabilities. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, which include three components: (1) Government-wide Financial Statements (2) Fund Financial Statements (3) Notes to the Financial Statements This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. City of Scottsdale, Arizona 17 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Relationship Between Comprehensive Annual Financial Report and Basic Financial Statements and Required Supplementary Information (RSI) General Information on the government structure, Introductory services, and environment Section + Management's Discussion and Analysis Government-wide Financial Statements Basic Financial Statements and RSI Governmental Fund Financial Statements Proprietary Fund Financial Statements Notes to the Financial Statements Financial Section Required Supplementary Information Information on individual funds and other supplementary information not required by GAAP + Trend data and nonfinancial data Statistical Section Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. These statements provide information about the City as a whole, presenting both an aggregate current view of the City’s finances and a longer-term view of those assets. Major fund financial statements provide the next level of detail. For governmental funds, these statements reflect how services were financed in the short term as well as what dollars remain for future spending. The major fund financial statements also display the City’s most significant funds. The statement of net position presents financial information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that are expected to result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and earned but unused vacation and medical leave. City of Scottsdale, Arizona 18 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all, or a significant portion, of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public works, community and economic development, public safety, community services, administrative services, and Scottsdale AZ CARES. The business-type activities of the City include water and sewer utilities, solid waste management, and airport operations. The government-wide financial statements include not only the City itself (known as the primary government), but also the operations of the City of Scottsdale Municipal Property Corporation (MPC), the Scottsdale Preserve Authority (SPA), and the Scottsdale Mountain, McDowell Mountain Ranch, DC Ranch, Via Linda Road, and Waterfront Commercial Community Facilities Districts. Although legally separate from the City, these component units are blended with the primary government because of their governance or financial relationships to the City. Separate financial statements of the MPC, SPA, and the Scottsdale Mountain, McDowell Mountain Ranch, DC Ranch, Via Linda Road, and Waterfront Commercial Community Facilities Districts may be obtained at the Scottsdale City Treasurer’s Office, 7447 East Indian School Road, Suite 210, Scottsdale, Arizona 85251. The government-wide financial statements can be found on pages 34-36 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The funds of the City can be divided into two categories, governmental funds and proprietary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements; however, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, and provide the balances of spendable resources available at the end of the fiscal year. Such information reflects financial resources available in the near future to finance the City’s programs. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. This comparison highlights the longterm impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. City of Scottsdale, Arizona 19 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 The City maintains several individual governmental funds organized according to their purpose (general, special revenue, debt service, capital projects, and permanent). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, General Obligation Bond Debt Service Fund, and the General Capital Improvement Plan (CIP) Construction Capital Projects Fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental funds is provided in the form of combining statements in the combining and individual funds statements and schedules section of this report. The basic governmental fund financial statements can be found on pages 37-45 of this report. Proprietary Funds. Proprietary funds are generally used to account for services for which the City charges customers; either outside customers or internal units/divisions of the City. Proprietary funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City maintains the following two types of proprietary funds: Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer, solid waste, and aviation services. All enterprise funds are considered to be major funds of the City. Internal service funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses internal service funds to account for its fleet of vehicles, personal computer replacement, and health and general liability insurance activities. Because these services predominantly benefit internal units or divisions of the City rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in a separate section of this report. The basic proprietary fund financial statements can be found on pages 46-52 of this report. Notes to the Financial Statements. The notes to the financial statements provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 53-135 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City’s proportionate share of the cost-sharing multiple-employer pension plan’s net pension liability, the changes in the City’s net pension liabilities regarding the agent multiple-employer pension plans, schedules of contributions to the pension plans, and changes in the City’s total other post-employment benefits (OPEB) liability. Required supplementary information can be found on pages 136-143 of this report. City of Scottsdale, Arizona 20 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Combining Statements. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds can be found on pages 144-175 of this report. Other Supplementary Information. The supplemental schedule of changes in long-term debt provides a comprehensive overview of the City’s total debt and can be found on pages 176-180 of this report. Statistical Information. The statistical section presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information indicates about the City’s overall financial health. This section can be found on pages 181-210 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS While this document contains information about the funds used by the City to provide services to its citizens, the statement of net position and the statement of activities serve to provide an answer to the question of how the City, as a whole, did financially throughout the year. These statements include all assets/deferred outflows of resources and liabilities/deferred inflows of resources using the accrual basis of accounting similar to the private sector. The basis for this accounting considers all of the current year’s revenues and expenses regardless of when the cash is received or paid. These two statements report the City’s net position and change in net position. The change in net position reflects whether the financial position of the City, as a whole, has improved or diminished; however, in evaluating the overall financial position of the City, non-financial information such as changes in the City’s tax base and the condition of the City’s capital assets should also be considered. Analysis of Net Position. As noted earlier, net position over time may serve as a useful indicator of a government’s financial position. For the City, total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $5.82 billion, and $5.37 billion at the close of the fiscal years 2021 and 2020, respectively. City of Scottsdale, Arizona 21 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2021 The following table is a condensed summary of the City’s net position for governmental and business-type activities: Net Position June 30, 2021 and 2020 (in thousands) ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current and other assets Capital assets Total assets Total deferred outflows of resources Total assets and deferred outflows of resources Governmental Activities 2021 2020 $ 796,251 $ 4,708,884 5,505,135 130,740 5,635,875 669,236 4,425,682 5,094,918 92,197 5,187,115 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Long-term liabilities outstanding Other liabilities Total liabilities Total deferred inflows of resources Total liabilities and deferred inflows of resources 1,137,766 145,490 1,283,256 33,993 1,317,249 NET POSITION Net investment in capital assets Restricted Unrestricted Total net position 4,065,844 189,263 63,519 4,318,626 $ $ Business-type Activities 2021 2020 $ Total 2020 1,298,075 $ 6,146,738 7,444,813 151,485 7,596,298 1,181,959 5,832,333 7,014,292 103,553 7,117,845 501,824 $ 1,437,854 1,939,678 20,745 1,960,423 512,723 1,406,651 1,919,374 11,356 1,930,730 1,080,573 144,140 1,224,713 44,231 1,268,944 386,458 50,271 436,729 23,704 460,433 397,340 50,141 447,481 26,550 474,031 1,524,224 195,761 1,719,985 57,697 1,777,682 1,477,913 194,281 1,672,194 70,781 1,742,975 3,748,249 146,017 23,905 3,918,171 1,157,026 51,596 291,368 1,499,990 $ 1,102,183 52,728 301,788 1,456,699 5,222,870 240,859 354,887 5,818,616 $ 4,850,432 198,745 325,693 5,374,870 $ $ 2021 $ The largest portion, 89.8 percent, of the City’s net position reflects its net investment in capital assets (e.g., land, buildings, water and sewer system, and streets and storm drains) less any related outstanding debt used to acquire those assets. These amounted to $5.22 billion and $4.85 billion as of June 30, 2021, and 2020, respectively. Although the City’s investment in capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources because the City uses these assets to provide services to citizens and therefore cannot liquidate them. An additional portion, 4.1 percent, of the City’s net position, $240.9 million at June 30, 2021, and $198.7 million at June 30, 2020, represents resources that are subject to external restrictions on how they may be used. Unrestricted net position, 6.1 percent of the City’s total net position at June 30, 2021, and 6.1 percent at June 30, 2020, $354.9 million and $325.7 million, respectively, may be used to meet the government’s ongoing obligations to its citizens and creditors. Analysis of Changes in Net Position. Total revenues exceeded total expenses in the current year, resulting in an increase in the City’s total net position of $443.8 million in fiscal year 2021 compared to an increase in net position of $156.1 million during fiscal year 2020. The reasons for this overall increase are explained in the governmental and business-type activities discussion herein and depicted in the table that follows. City of Scottsdale, Arizona 22 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2021 Changes in Net Position For the fiscal years ended June 30, 2021 and 2020 (in thousands) REVENUES Program revenues Charges for services Operating grants and contributions Capital grants and contributions General revenues Property taxes Business taxes Intergovernmental - taxes Intergovernmental - other Interest and investment income Other Total revenues Governmental Activities 2021 2020 Business-type Activities 2021 2020 $ $ EXPENSES General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Loss on In-Substance Defeasance of Debt Interest on Long-Term Debt Water Utility Sewer Utility Airport Solid Waste Total expenses Increase in net position before transfers Transfers Change in net position Net position - beginning Net effect of prior period adjustment Net position - beginning restated Net position - ending $ 47,055 52,751 305,241 $ 53,089 55,604 50,088 209,461 34,573 $ 191,893 26,631 Total 2021 $ 256,516 52,751 339,814 2020 $ 244,982 55,604 76,719 71,256 269,303 67,822 17,355 2,487 10,387 843,657 68,591 247,887 59,410 15,890 14,605 7,248 572,412 177 870 245,081 128 10,951 229,603 71,256 269,480 67,822 17,355 3,357 10,387 1,088,738 68,591 248,015 59,410 15,890 25,556 7,248 802,015 725 1,209 6,860 1,069 6,298 3,766 9,688 100,705 35,999 172,141 64,769 19,189 11,742 545 17,043 451,748 391,909 8,546 400,455 770 1,171 6,731 1,045 6,047 4,647 9,825 99,218 41,946 173,352 64,247 19,375 555 34 23,928 452,891 119,521 8,432 127,953 106,778 54,152 7,024 25,290 193,244 51,837 (8,546) 43,291 105,222 57,847 6,764 23,195 193,028 36,575 (8,432) 28,143 725 1,209 6,860 1,069 6,298 3,766 9,688 100,705 35,999 172,141 64,769 19,189 11,742 545 17,043 106,778 54,152 7,024 25,290 644,992 443,746 443,746 770 1,171 6,731 1,045 6,047 4,647 9,825 99,218 41,946 173,352 64,247 19,375 555 34 23,928 105,222 57,847 6,764 23,195 645,919 156,096 156,096 3,918,171 3,790,212 1,456,699 1,428,556 5,374,870 5,218,768 3,918,171 4,318,626 $ 6 3,790,218 3,918,171 1,456,699 1,499,990 $ 1,428,556 1,456,699 6 5,374,870 5,218,774 5,818,616 $ 5,374,870 $ $ Governmental Activities. Net position for governmental activities increased $400.5 million after transfers during fiscal year 2021 compared to an increase of $128.0 million after transfers in fiscal year 2020. Total revenues increased $271.2 million or 47.4 percent from the prior fiscal year and expenses decreased $0.1 million or less than 1 percent. Overall, revenues exceeded expenses resulting in an increase in net position. City of Scottsdale, Arizona 23 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 The City experienced improved total revenues from governmental activities over the prior year due primarily to a 509.4 percent increase in capital grants and contributions, a 14.2 percent increase in intergovernmental taxes, and an 8.6 percent increase in business taxes. The growth in capital grants and contributions was due to an increase in developer contributions from the completion of construction projects in fiscal year 2021. The increase in intergovernmental taxes was primarily due to increases in state shared revenues and state sales tax received over the prior fiscal year. Finally, the increase in business taxes was primarily due to more privilege tax revenues received over the prior year as the City had revenue losses from the economic shutdown in the last quarter of 2020 due to COVID-19. General revenues such as property, franchise, and privilege taxes are not shown by program, but are used to support program activities citywide. Total general revenues for governmental activities were $438.6 million in fiscal year 2021 compared to $413.6 million in fiscal year 2020. As previously noted, business taxes, which include privilege and franchise taxes, increased $21.4 million or 8.6 percent from the previous year. Intergovernmental revenues, which includes state shared revenues, increased $9.9 million or 13.1 percent over fiscal year 2020. Interest and investment income decreased $12.1 million from the prior year due to lower interest rates being received on the City’s long-term investment portfolio and a decrease in the change in fair market value of investments. Additionally, property taxes increased by $2.7 million or 3.9 percent over the prior year due to increases in property values. For governmental activities overall, without regard to program, capital grants and contributions (36 percent), are the largest single source of funds, followed by business taxes (32 percent), intergovernmental (including state shared revenues) (10 percent), property taxes (9 percent), operating grants and contributions (6 percent) and charges for services (6 percent). Governmental Activities Revenues by Source Fiscal Year 2020/21 (in thousands) Interest and Investment Income $2,487 0% Charges for Services $47,055 6% Intergovernmental $85,177 10% Operating Grants and Contributions $52,751 6% Business Taxes $269,303 32% Other Revenue $10,387 1% Capital Grants and Contributions $305,241 36% Property Taxes $71,256 9% City of Scottsdale, Arizona 24 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Another component of the change in net position is expense. The Public Safety Division, which is comprised of the Police and Fire Departments, is the largest expense function (38.1 percent), followed by the Public Works Division (22.3 percent), and the Community Services Division (14.3 percent). The Public Safety Division provides police and fire/emergency services throughout the City. Expenses decreased by $1.2 million or 0.7 percent during fiscal year 2021 due to a decrease in personnel costs resulting from staff vacancies and retirements. The Public Works Division consists of five departments: Capital Project Management, Facilities Management, Fleet Management, Solid Waste Management, and Transportation. Expenses were $1.5 million or 1.5 percent higher than the prior fiscal year due to increases in capital-related expenditures. The City’s Community Services Division is responsible for improving and maintaining facilities and sponsors services that provide opportunities for family interaction, cultural enrichment, development of lifetime skills, and promoting healthy lifestyles. The division consists of: Human Services, Libraries, Parks & Recreation, Planning and Administration, Preserve, and WestWorld. Expenses were $0.5 million or 0.8 percent higher than the prior fiscal year due to increases in capital-related expenditures. Business-type Activities. Net position for business-type activities increased by $43.3 million after transfers during fiscal year 2021 compared to $28.1 million after transfers in fiscal year 2020. Total revenues increased by $15.5 million or 6.7 percent due to an increase in developer contributions, charges for services, and business taxes offset by a decrease in interest and investment income. Overall, total revenues exceeded expenses resulting in an increase in net position for the fiscal year. As shown in the Business-type Activities Revenues by Source chart, charges for services provided the largest share of revenues (86 percent) followed by capital grants and contributions (14 percent). Business-type Activities Revenues by Source Fiscal Year 2020/21 (in thousands) Interest and Investment Income $870 0% Capital Grants and Contributions $34,573 14% Business Taxes $177 0% Charges for Services $209,461 86% City of Scottsdale, Arizona 25 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 As shown below in the Business-type Activities Program Revenues and Expenses chart, the largest of the City’s business-type activities, water utility and sewer utility, had expenses of $106.8 million and $54.2 million, respectively, in fiscal year 2021, followed by solid waste with $25.3 million and airport with $7.0 million. Business-type Activities Program Revenues and Expenses Fiscal Year 2020/21 (in thousands) $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Water Utility Sewer Utility Solid Waste II Program Revenues iii Program Expenses Airport The City’s Water Resources Department manages and operates a safe, reliable water supply and wastewater reclamation system, and in fiscal year 2021 they provided 92,590 water connections to Scottsdale citizens. The Water and Sewer Utility’s combined expenses decreased by 1.3 percent in fiscal year 2021 compared to fiscal year 2020. This was caused primarily by a decrease in debt-related expenditures due to the refundings the City completed in fiscal year 2021. The Solid Waste Department provided delivery of safe, efficient, and environmentally sound refuse collection services to 83,680 residential customers in fiscal year 2021. Total program expenses increased 9.0 percent or $2.1 million in fiscal year 2021 compared to fiscal year 2020 due to increases in contractual expenditures related to recycling and other collection services. The Aviation Department operates the City’s general aviation reliever facility and is home to many local corporate aircraft. More than 192,185 take-offs and landings occurred in fiscal year 2021 at Scottsdale Airport. Total program expenses increased by 3.8 percent or $0.3 million in fiscal year 2021 compared to fiscal year 2020, driven primarily by increased contractual expenditures related to building safety improvements and aircraft inspections. City of Scottsdale, Arizona 26 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Funds are created and segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Activity not required to be reported in a separate fund is included in the General Fund. Governmental funds are used to account for taxsupported activities. Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable and non-spendable resources. Such information may be useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use, as it represents the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City Council, or the City Treasurer who has been delegated authority to assign resources for use for particular purposes by the City Council. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, and Permanent Funds. As of the end of the current fiscal year, the City’s governmental funds reported a combined ending fund balance of $447.4 million, an increase of $119.5 million from the prior year total of $327.9 million. Approximately 37 percent or $164.2 million of the current year amount constitutes unassigned fund balance. The remainder of fund balance is either nonspendable, restricted, or committed to indicate that it is not available for new spending. Revenues for governmental functions totaled $547.0 million in fiscal year 2021, an increase of 2.5 percent, or $13.5 million, from the previous year total of $533.5 million. In fiscal year 2021, expenditures for governmental functions totaled $497.9 million, a decrease of 4.3 percent, or $22.1 million, from the fiscal year 2020 total of $520.0 million. For the current fiscal year, revenues exceeded expenditures for governmental functions by $49.1 million. This was chiefly due to an increase of $23.5 million in privilege taxes received in fiscal year 2021, and an increase of $4.7 million in charges for services, with decreases of $14.1 million in debt service-related expenditures, and a decrease of $9.6 million in capital outlay expenditures. The General Fund is the chief operating fund of the City. At the end of the fiscal year 2021, the unassigned fund balance of the General Fund was $171.0 million, while the total fund balance was $171.3 million; the unassigned and total fund balances for the General Fund at the end of fiscal year 2020 were $136.4 million and $136.7 million, respectively. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 66.1 percent of the total General Fund expenditures of $258.8 million in fiscal year 2021 and represented 51.6 percent of the total General Fund expenditures of $264.1 million in fiscal year 2020. Total fund balance represented 66.2 percent and 51.8 percent of total fund expenditures for fiscal years 2021 and 2020, respectively. City of Scottsdale, Arizona 27 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Overall, the General Fund’s performance resulted in revenues exceeding expenditures in the fiscal year ended June 30, 2021, by $72.0 million. Total revenues increased $10.5 million, or 3.3 percent compared to the prior year while expenditures decreased $5.3 million or 2.0 percent. The most significant reason for the increase in revenues was due to the increased transaction privilege tax over the prior year. Key General Fund revenues showing an increase over the prior year included $14.9 million for transaction privilege tax, $8.1 million for state shared revenues, $2.1 million for property rental, and $1.2 million for WestWorld equestrian facility fees. The significant increase for the transaction privilege tax is a result of the recovery from the shutdown experienced from COVID-19 which negatively impacted privilege and bed tax revenues in the last quarter of the prior fiscal year. The City experienced revenue reductions as well. Most significant was the change in the fair value of investments with a decrease of $10.5 million, followed by a reduction of $3.2 million in other taxes, and $1.2 million in cable TV franchise fees. The Administrative Services Division experienced the largest percentage increase in General Fund expenditures, 22.7 percent, or $3.3 million, primarily due to the purchase of new software solutions. The Public Works Division expenditures increased $0.8 million over the prior year due to an increase in contractual services, primarily for maintaining City buildings. The Community Services Division saw a decrease of $5.9 million in expenditures under the prior year due to the City using special revenues from Scottsdale AZ CARES to fund COVID-19 related mitigation efforts and other community programs to provide assistance to residents in need. As a result of an increase in revenues and a decrease in expenditures the fund balance for the City’s General Fund increased in fiscal year 2021 by $34.6 million. The General Obligation Bond Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general obligation debt principal, interest, and related costs. At the end of the current fiscal year, the fund balance of the General Obligation Bond Debt Service Fund was $3.5 million, an increase of $2.5 million from the $1.0 million balance at June 30, 2020. The increase in fund balance was due to an increase in property tax and the result of issuing refunding bonds offset by the payment to the refunded bonds escrow agent. The General CIP Construction Capital Projects Fund accounts for the resources used to acquire, construct, and improve major capital facilities from amounts transferred from the City’s General Fund. This fund also represents other City Council approved capital programs including transfers for tourism-related capital projects, in-lieu parking, and in-lieu stormwater. At the end of the current fiscal year, the fund balance of the General CIP Construction Capital Projects fund was $51.2 million, an increase of $3.9 million from the $47.3 million at June 30, 2020, caused by increases in building and related permit charges, and other tax revenues. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal years 2021 and 2020, the unrestricted net position for the Water and Sewer Utility Fund was $281.7 million and $289.9 million, respectively; the Airport Fund was $2.8 million and $5.6 million, respectively; and the Solid Waste Fund was $2.3 million and $1.0 million, respectively. The Internal Service Funds, which are used to account for certain governmental activities, had an unrestricted net position of $36.4 million and $27.5 million, respectively. City of Scottsdale, Arizona 28 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 The total growth in net position for the enterprise funds was $43.9 million and $27.0 million for fiscal years 2021 and 2020, respectively. Factors concerning the finances of these funds have been addressed previously in the discussion of the City’s business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget and can be found on page 43 of this report. General Fund revenues on a budgetary basis were $38.3 million more than projected for fiscal year 2021. The increase in revenues was primarily due to the City receiving more in transaction privilege tax, state shared revenues, and fees than budgeted. The privilege tax was the most significant increase consisting of $27.3 million more revenues received than projected as the City recovered from the impacts of the COVID-19 shutdowns, and also from increased consumer spending from the federal stimulus funds. Expenditures of $258.2 million were $13.5 million less than budgeted expenditures of $271.7 million. The largest positive expenditure variance occurred in the Community Services and Public Safety Divisions. The Public Safety Division variance was primarily due to savings recognized in personnel services from vacancies and retirements. The Community Services Division had lower expenditures due to utilizing special revenue funding to provide support for COVID-19 related programs and assistance. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. The City’s total capital assets for its governmental and business-type activities as of June 30, 2021 and 2020 were $6.15 billion and $5.83 billion, respectively (net of accumulated depreciation/ amortization). This investment in capital assets includes land, buildings and improvements, streets and storm drains, water and sewer systems, water rights, vehicles, machinery and equipment, subscription-based information technology arrangements, furniture and fixtures, and construction in progress. The total increase in the City’s capital assets (net of accumulated depreciation/amortization) between fiscal years 2021 and 2020 was $314.4 million or 5.4 percent. Capital Assets, Net of Depreciation/Amortization June 30, 2021 and 2020 (in thousands) Land Buildings and Land Improvements Streets and Storm Drains Machinery and Equipment Water Rights Water System Sewer System Motor Vehicles Furniture, Fixtures, and Office Equipment Construction in Progress Subscription-Based Information Technology Arrangements* Total Governmental Activities Business-type Activities Total 2021 2020 $ 3,427,483 $ 3,220,312 407,498 408,748 734,845 658,444 36,778 37,388 43,152 47,423 54,130 53,367 4,998 $ 4,708,884 $ 4,425,682 2021 2020 52,028 $ 50,536 61,956 57,891 3,698 4,032 87,171 87,171 781,021 785,959 392,724 389,301 362 414 1,073 961 57,730 30,386 91 $ 1,437,854 $ 1,406,651 2021 2020 $ 3,479,511 $ 3,270,848 466,639 469,454 658,444 734,845 41,420 40,476 87,171 87,171 785,959 781,021 389,301 392,724 47,837 43,514 961 1,073 83,753 111,860 5,089 $ 6,146,738 $ 5,832,333 $ *New category for Subscription-Based Information Technology Arrangements due to the implementation of GASB Statement No. 96 Subscription-Based Information Technology Arrangements City of Scottsdale, Arizona 29 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 Significant capital asset events during fiscal year 2021 included the following: • Land: $199.3 million for land donated by developers that coincides with public street improvements for finalized permits, and $6.0 million for state land purchases. • Buildings and Land Improvements: ο $10.6 million for the construction of Fire Stations 603 & 616. ο $4.9 million for the construction of seven airport hangars. • Streets: $96.5 million for new road improvements donated by developers, $24.7 million related to streets, traffic control, sidewalks, and storm drains, and $4.9 million for street preservation. • Vehicles: $2.6 million for public safety vehicles, $1.7 million for three trolleys, $1.3 million for solid waste vehicles, and $0.3 million for water and other City vehicles. As of June 30, 2021, the City has construction commitments of $95.0 million for current projects. Additional information on the City’s capital assets can be found in Note IV.D. on pages 86-89 of this report. Long-term Debt. At the end of the fiscal years 2021 and 2020, the City had total long-term liabilities of $1.52 billion and $1.48 billion, respectively. Of these amounts, $448.2 million and $433.9 million, for fiscal years 2021 and 2020 respectively, are general obligation bonds backed by the full faith and credit of the City. The remainder includes water and sewer revenue bonds, Municipal Property Corporation bonds, Scottsdale Preserve Authority bonds, net pension liabilities, and other obligations of $1.08 billion and $1.05 billion for fiscal years 2021 and 2020, respectively. The State Constitution imposes debt limitations on the City equal to 6 percent and 20 percent of the assessed valuation of properties within the City. The City’s available debt margin at June 30, 2021 and 2020 was $485.0 million and $462.1 million, respectively, in the 6 percent capacity and $1.17 billion and $1.10 billion, respectively, in the 20 percent capacity. Additional information on the debt limitations and capacities may be found in Section IV.I. of the Notes to the Financial Statements and also in Tables XVIa and XVIb in the Statistical Section of this report. City of Scottsdale, Arizona 30 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2021 Long-term Liabilities June 30, 2021 and 2020 (in thousands) Governmental Activities General Obligation Bonds Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Community Facilities Districts General Obligation Bonds - Direct Placements Issuance Premiums Total Bonds Payable Contracts Payable* Leases Service Concession Arrangements Subscriptions** Risk Management Claims Compensated Absences Total Other Postemployment Benefit Liability Net Pension Liabilities Pollution Remediation Obligation $ $ Total Long-term Liabilities 2021 448,225 $ 195,390 1,350 2020 433,865 199,614 2,630 10,826 34,778 690,569 451 1,799 1,914 4,387 22,981 29,907 1,923 383,835 1,137,766 13,488 53,610 703,207 496 2,373 2,068 21,972 27,946 2,177 320,830 1,081,069 $ Business-type Activities $ $ 2021 - $ 8,520 265,565 20,684 294,769 70 4,016 37,748 49,855 386,458 $ 2020 12,450 273,791 26,159 312,400 3,915 31,189 49,836 397,340 Total $ $ 2021 448,225 $ 8,520 460,955 1,350 2020 433,865 12,450 473,405 2,630 10,826 55,462 985,338 451 1,799 1,914 4,457 22,981 33,923 1,923 421,583 49,855 1,524,224 $ 13,488 79,769 1,015,607 496 2,373 2,068 21,972 31,861 2,177 352,019 49,836 1,478,409 *The Contracts Payable category was added due to a change in accounting treatment. **New category for the City's subscription liabilities has been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. During fiscal year 2021, the City’s total long-term liabilities increased overall by $45.8 million due to the City’s issuance of general obligation bonds and increased net pension liabilities, offset by the City making scheduled principal payments on its debt and completing several debt refundings. In accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions, the City’s proportionate share of its unfunded pension liabilities for pension plans in which it participates is included in its outstanding long-term liabilities. The City’s net pension liabilities at the end of fiscal years 2021 and 2020 were $421.6 million and $352.0 million, respectively. This increase was due primarily to changes in assumptions about future economic and demographic factors and differences between expected and actual experience for the Public Safety Personnel Retirement System. Additional information on the City’s pensions can be found starting on page 113. Additional information in the City’s long-term liabilities can be found in Section IV.I. of the Notes to the Financial Statements on pages 94-108 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET Scottsdale’s economy has continued to rebound from the negative effects from COVID-19 and the temporary shutdown of resorts, restaurants, and retail establishments. Scottsdale’s conservative budgeting practices were designed to weather the financial difficulties and the City has emerged on solid financial footing. In June 2021, the City Council approved a $1.79 billion budget, which is a $244.9 million increase from the prior year budget of $1.54 billion. The adopted fiscal year 2022 budget includes $935.8 million for general operations, grants, operating contingencies/reserves, and $849.5 million for capital improvements/capital contingencies. City of Scottsdale, Arizona 31 Management’s Discussion and Analysis Table of Contents For the Fiscal Year Ended June 30, 2021 REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Scottsdale City Treasurer’s Office, 7447 East Indian School Road, Suite 210, Scottsdale, AZ 85251, or visit our website at: https://www.scottsdaleaz. gov/finance. City of Scottsdale, Arizona 32 Table of Contents Basic Financial Statements City of Scottsdale, Arizona 33 Table of Contents Statement of Net Position June 30, 2021 (in thousands) Business-type Activities Governmental Activities ASSETS Cash and Investments Receivables (net of allowance for uncollectibles) Property and Other Local Taxes Charges for Services Fines Intergovernmental and Grants Interest Leases Other Internal Balances Supplies Inventory Prepaid Items Prepayments Pollution Remediation Recoveries Restricted Assets Cash with Fiscal Agent Customer Advances and Deposits Joint Venture Construction Deposits Advanced Construction Payments Advanced Lease Payments Water and Sewer System Replacement Revenue Bond Reserve Service Concession Arrangements Equity in Joint Ventures Capital Assets Not Being Depreciated/Amortized Land, Water Rights, and Construction in Progress Capital Assets, Net of Accumulated Depreciation/Amortization Facilities, Infrastructure, and Equipment Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Amounts on Refundings Pension-Related Amounts OPEB-Related Amounts Total Deferred Outflows of Resources $ $ 525,670 225,244 $ 750,914 37,148 9,786 25,352 1,041 26,504 11,198 (4,586) 1,371 582 26,085 - 29 20,994 2,057 818 24,571 2,381 4,586 988 49,855 37,177 20,994 9,786 27,409 1,859 51,075 13,579 1,371 1,570 26,085 49,855 79,922 54,342 1,836 28,189 1,464 2,853 3,023 1,067 44,051 4,692 84,962 108,111 1,464 2,853 3,023 1,067 44,051 4,692 54,342 86,798 3,481,613 196,929 3,678,542 1,227,271 5,505,135 1,240,925 1,939,678 2,468,196 7,444,813 22,462 107,852 426 130,740 14,011 6,734 20,745 36,473 114,586 426 151,485 (continued) City of Scottsdale, Arizona 34 $ Total $ $ Table of Contents Statement of Net Position June 30, 2021 (in thousands) Business-type Activities Governmental Activities LIABILITIES Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences Interest Payable Matured Bonds, Loans, and Other Payables Due to Other Governments Unearned Revenue Liabilities Payable from Restricted Assets Advanced Construction Payments Advanced Lease Payments Customer Advances & Deposits Other Liabilities Noncurrent Liabilities Due Within One Year Accrued Compensated Absences Bonds, Loans, and Other Payables Due in More Than One Year Accrued Compensated Absences Total Other Postemployment Benefit Liability Net Pension Liabilities Bonds, Loans, and Other Payables Pollution Remediation Obligation Total Noncurrent Liabilities $ Total Liabilities DEFERRED INFLOWS OF RESOURCES Leases Pension-Related Amounts OPEB-Related Amounts Total Deferred Inflows of Resources NET POSITION Net Investment in Capital Assets Restricted Debt Service Transportation and Preserve Privilege Tax Activities Capital Projects Grants Special Programs Streetlight and Services Districts Community Facilities Districts Stadium Facility Endowments Expendable Nonexpendable Repair and Replacement Joint Venture Construction Deposits Unrestricted Total Net Position $ 24,078 7,390 4 10,352 66,994 4,467 26,228 15,513 1,015 5,611 22,578 - $ 39,591 8,405 4 15,963 89,572 4,467 26,228 2,892 3,085 3,023 1,067 1,464 - 3,023 1,067 4,356 3,085 12,386 77,806 1,684 22,301 14,070 100,107 17,521 1,923 383,835 644,295 1,137,766 2,332 37,748 272,538 49,855 386,458 19,853 1,923 421,583 916,833 49,855 1,524,224 1,283,256 436,729 1,719,985 27,350 5,528 1,115 33,993 23,641 63 23,704 50,991 5,591 1,115 57,697 4,065,844 1,157,026 5,222,870 6,892 90,959 78,702 3,332 4,446 57 105 4,062 4,692 - 11,584 90,959 78,702 3,332 4,446 57 105 4,062 27 681 63,519 4,318,626 44,051 2,853 291,368 1,499,990 27 681 44,051 2,853 354,887 5,818,616 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 35 $ Total $ $ Table of Contents Statement of Activities For the Fiscal Year Ended June 30, 2021 (in thousands) Program Revenues FUNCTIONS/PROGRAMS 36 City of Scottsdale, Arizona Governmental Activities General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Interest on Long-Term Debt Total Governmental Activities $ Business-type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-type Activities Total Government Charges for Services Expenses 725 1,209 6,860 1,069 6,298 3,766 9,688 100,705 35,999 172,141 64,769 19,189 11,742 545 17,043 451,748 $ 106,778 54,152 7,024 25,290 193,244 $ 644,992 160 175 741 221 562 3,521 113 17,457 10,251 11,338 1,987 529 47,055 Operating Grants and Contributions Capital Grants and Contributions $ $ 130,843 45,391 7,695 25,532 209,461 $ 256,516 35 27 31 1 647 263 19,231 5 18,437 13,602 472 52,751 - $ 52,751 $ 304,002 903 336 305,241 Governmental Activities $ The notes to the financial statements are an integral part of this statement. (530) (1,034) (6,092) (817) (6,297) (2,557) (5,904) 222,641 (17,634) (143,453) (39,493) (16,730) (11,742) (16) (17,043) (46,701) $ Total - $ (530) (1,034) (6,092) (817) (6,297) (2,557) (5,904) 222,641 (17,634) (143,453) (39,493) (16,730) (11,742) (16) (17,043) (46,701) 18,776 14,210 1,587 34,573 - 42,841 5,449 2,258 242 50,790 42,841 5,449 2,258 242 50,790 339,814 (46,701) 50,790 4,089 71,256 256,329 12,974 177 - 71,256 256,506 12,974 30,615 37,207 17,355 2,487 10,387 8,546 447,156 400,455 3,918,171 4,318,626 870 (8,546) (7,499) 43,291 1,456,699 1,499,990 30,615 37,207 17,355 3,357 10,387 439,657 443,746 5,374,870 5,818,616 General Revenues Taxes Property Taxes Sales and Use Taxes Franchise Taxes Intergovernmental - Unrestricted State Shared Sales State Revenue Sharing Other Interest and Investment Income Other Revenue Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning Net Position - Ending Business-type Activities $ $ $ Table of Contents Balance Sheet Governmental Funds June 30, 2021 (in thousands) ASSETS City of Scottsdale, Arizona 37 Cash and Investments Cash with Fiscal Agent Receivable (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax State Shared Sales Tax Franchise Fee Court Receivable Highway User Tax Auto Lieu Tax Intergovernmental Grants Leases Miscellaneous Due from Other Funds Supplies Inventory Total Assets (continued) General $ $ 159,869 692 17,534 1,277 1,508 3,044 9,732 513 25,204 5,189 4,634 304 229,500 General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ $ 2,864 57,067 1,155 61,086 $ 51,916 134 1,320 53,370 $ 245,412 22,855 215 10,016 1,944 93 64 54 1,623 18,514 5,215 1,300 4,390 311,695 Total Governmental Funds $ $ 460,061 79,922 1,041 27,550 1,944 2,525 1,508 3,108 9,786 1,623 513 18,514 5,215 26,504 10,899 4,634 304 655,651 Table of Contents Balance Sheet Governmental Funds June 30, 2021 (in thousands) City of Scottsdale, Arizona 38 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICITS) Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities General $ Deferred Inflows of Resources Unavailable Revenues Leases Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Fund Balances (Deficits) Nonspendable Restricted Committed Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources, and Fund Balances (Deficits) The notes to the financial statements are an integral part of this statement. $ 5,410 6,778 - General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ 6,961 50,075 2,119 4 - 13,957 440 4,634 3,391 16,919 Total Governmental Funds $ 21,486 7,222 4,634 10,352 66,994 1,738 4,458 2,887 3,008 24,279 57,036 41 2,164 23,749 688 9 5 73 63,865 23,749 2,467 4,467 2,892 3,081 147,344 10,134 23,789 33,923 581 581 18 18 22,847 3,561 26,408 33,580 27,350 60,930 58,202 57,617 2,182 90,273 208,274 304 170,994 171,298 3,469 3,469 1,041 50,147 51,188 681 195,985 31,556 (6,800) 221,422 985 200,495 81,703 164,194 447,377 229,500 $ 61,086 $ 53,370 $ 311,695 $ 655,651 Table of Contents Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2021 (in thousands) Fund Balances - Total Governmental Funds $ 447,377 Amounts reported for governmental activities in the statement of net position are different because (see Note II.A. for the detailed reconciliation): Capital assets used in governmental activities are not financial resources; therefore, are not reported in the funds. 4,643,832 Changes in equity in joint venture are not financial resources; therefore, are not reported in the funds. 1,833 Prepayments, service concession arrangements, leases, and subscription-based information technology arrangements are not financial resources; therefore, are not reported in the funds. 86,992 Deferred outflows relating to deferred amounts on refundings, pensions, and other postemployment benefits are not financial resources; therefore, are not reported in the funds. 129,677 Long-term liabilities, including bonds payable, are not due and payable in the current period; therefore, are not reported in the funds. (1,108,212) Deferred inflows relating to pensions and other postemployment benefits represent a future acquisition of net position that is not reported in the funds. Also, because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current period expenditures. Those assets are offset by unavailable revenue in the funds. 26,947 Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and vehicles to individual funds. The assets and liabilities of the Internal Service Funds are included in governmental activities in the statement of net position. 90,180 Net Position of Governmental Activities $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 39 4,318,626 Table of Contents Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) General REVENUES City of Scottsdale, Arizona 40 Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines, Fees, and Forfeitures Court Parking Photo Radar Court Enhancement Library Police Property Rental Interest Earnings Net Increase/(Decrease) in the Fair Value of Investments Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues (continued) $ $ 33,128 149,917 8,254 4,204 213 946 General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ 33,481 - 3,263 3,217 85,944 18,013 202 - Total Governmental Funds $ 69,826 235,861 18,013 8,456 4,204 213 4,209 30,615 36,882 12,246 1,665 - - 325 17,893 642 43 30,615 37,207 12,246 17,893 642 1,708 17,408 3,833 5,536 2,092 - 3,647 - 51 2,093 42 - 21,106 5,926 5,578 2,092 3,360 243 2,347 90 4,617 4,370 (4,459) - 461 - 123 1,549 104 2,604 1,959 156 3,483 243 2,347 1,549 90 104 7,221 6,790 (4,303) 4,393 1,550 6,917 401 330,768 33,481 557 2 7,930 27,088 359 4,164 2,166 529 4,398 571 453 85 174,773 27,088 359 8,557 2,723 529 4,398 2,121 7,370 488 546,952 $ $ $ $ Table of Contents Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) General EXPENDITURES City of Scottsdale, Arizona 41 Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Outlay Total Expenditures $ 688 1,246 6,369 1,045 4,490 2,953 9,108 21,084 19,722 136,897 34,070 18,070 - General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ - 201 136 21 138 213 785 241 740 - 35 27 1,568 647 172 20,113 11,537 16,072 13,723 497 12,974 545 Total Governmental Funds $ 723 1,246 6,597 1,045 6,194 3,621 9,418 41,410 31,259 153,754 48,034 19,307 12,974 545 1,897 293 876 258,808 50,075 12,533 1,303 63,911 18,666 21,141 16,983 7,808 442 50,875 154,018 68,955 20,634 1,745 70,417 497,878 Excess (Deficiency) of Revenues over (under) Expenditures 71,960 (30,430) (13,211) 20,755 49,074 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Sale of General Capital Assets Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources (Uses) 11,895 (54,292) 122 4,725 220 (37,330) 31,501 168,220 230 130 (167,224) 32,857 18,368 (1,251) 17,117 73,573 (71,331) 21 71,325 50,930 4,070 (70,878) 57,710 135,337 (126,874) 122 4,746 220 239,545 51,160 4,200 (238,102) 70,354 34,630 2,427 3,906 78,465 119,428 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending The notes to the financial statements are an integral part of this statement. $ 136,668 171,298 $ 1,042 3,469 $ 47,282 51,188 $ 142,957 221,422 $ 327,949 447,377 Table of Contents Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2021 (in thousands) Net Change in Fund Balances - Total Governmental Funds $ 119,428 Amounts reported for governmental activities in the statement of activities are different because (see Note II.B. for the detailed reconciliation): Governmental funds report capital outlays as expenditures; however, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. (9,282) Donations of capital assets are not capitalized on the governmental fund statements, but are shown in the statement of activities. 295,984 Some expenses reported in the statement of activities do not require the use of current financial resources; therefore, are not reported as expenditures in governmental funds. (58,959) Current-year pension and other postemployment benefit contributions are reclassified from expenditures in the governmental funds to deferred outflows of resources in the governmentwide statements. 34,117 Current-year joint venture contributions are reclassified from expenditures in the governmental funds to an increase in the investment in the joint venture in the government-wide statements. 217 When leases in which the City is the lessee and for subscription-based information technology arrangements used in governmental activities, an expenditure is recorded in the governmental funds for the amount of the present value of the future lease/subscription payments (PVFLP/PVFSP); however, in the statement of activities, the PVFLP/PVFSP is recognized as an intangible asset and amortized over the lease term. 5,456 The State Treasurer distributes funding directly to the Public Safety Personnel Retirement System that is used to offset the contribution required to be made by the City. The fund financial statements recognize the current year contribution; however, the government-wide statements recognize the prior year contribution. (52) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. (2,418) Prepayments are expended in the governmental funds when paid, and are capitalized and amortized in the statement of net position. This amount represents the current period prepayments that exceed amortization expense. 421 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds; however, neither transaction has any long-term effect on net position. This is the amount by which principal retirement exceeded debt proceeds in the current period. 7,284 Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refundings. 3,591 When lease assets and service concession arrangement assets (SCAs) are retired, a loss is recognized on the statement of activities. (257) The City recognizes an expense in the statement of activities for a long-term contract payable. (496) When lease liabilities are retired, a gain is recognized on the statement of activities. 54 The change in net position of the Internal Service Funds is attributed to governmental activities. Change in Net Position of Governmental Activities 5,367 $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 42 400,455 Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts City of Scottsdale, Arizona 43 REVENUES Taxes - Local Property Transaction Privilege Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State Shared Sales State Revenue Sharing Auto Lieu Tax Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines, Fees, and Forfeitures Court Parking Photo Radar Library Property Rental Interest Earnings Net Decrease in the Fair Value of Investments Intergovernmental Miscellaneous Reimbursements from Outside Sources Indirect Costs Other Total Revenues (continued) Original $ $ 33,065 122,632 8,661 4,206 232 943 Final $ 33,065 122,632 8,661 4,206 232 943 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 33,128 149,917 8,254 4,204 213 946 - 33,128 149,917 8,254 4,204 213 946 63 27,285 (407) (2) (19) 3 24,525 37,082 10,595 1,791 24,525 37,082 10,595 1,791 30,615 36,882 12,246 1,665 - 30,615 36,882 12,246 1,665 6,090 (200) 1,651 (126) 16,518 2,830 5,046 1,767 16,518 2,830 4,398 1,767 17,408 3,833 5,536 2,092 - 17,408 3,833 5,536 2,092 890 1,003 1,138 325 3,379 282 2,656 252 3,326 3,506 - 3,379 282 2,656 252 3,974 3,506 - 3,360 243 2,347 90 4,878 3,441 - (261) 929 (4,459) 3,360 243 2,347 90 4,617 4,370 (4,459) (19) (39) (309) (162) 904 (65) - 4,094 1,473 6,967 422 296,250 4,094 1,473 6,967 422 296,250 4,393 1,550 6,917 401 334,559 (3,791) 4,393 1,550 6,917 401 330,768 299 77 (50) (21) 38,309 $ $ $ $ $ Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts City of Scottsdale, Arizona 44 EXPENDITURES Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures Original $ 845 1,194 6,554 1,103 4,550 3,910 9,992 22,970 20,077 141,427 39,236 13,462 Final $ 825 1,373 6,668 1,121 4,526 3,980 9,751 22,568 19,906 141,797 38,684 20,108 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 687 1,247 6,347 1,043 4,479 2,946 9,284 21,510 19,717 137,182 34,043 19,341 1 (1) 22 2 11 7 (176) (426) 5 (285) 27 (1,271) 688 1,246 6,369 1,045 4,490 2,953 9,108 21,084 19,722 136,897 34,070 18,070 138 126 321 78 47 1,034 467 1,058 189 4,615 4,641 767 154 223 265,697 154 223 271,684 154 223 258,203 1,743 70 876 605 1,897 293 876 258,808 13,481 Excess (Deficiency) of Revenues over (under) Expenditures 30,553 24,566 76,356 (4,396) 71,960 51,790 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Service-Based Information Technology Arrangements Sale of General Capital Assets Total Other Financing Sources (Uses) 10,030 (19,674) 132 (9,512) 10,030 (19,674) 132 (9,512) 11,895 (54,292) 122 4,725 220 (37,330) - 11,895 (54,292) 122 4,725 220 (37,330) 1,865 (34,618) 122 4,725 88 (27,818) Net Change in Fund Balances The notes to the financial statements are an integral part of this statement. $ 21,041 $ 15,054 $ 39,026 $ (4,396) $ 34,630 $ 23,972 Table of Contents General Fund Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Amortized Lease Revenue Lease Interest Revenue Net Decrease in the Fair Value of Investments Total Revenue Adjustments $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Net Decrease in Fund Balance - Budget to GAAP (261) 929 (4,459) (3,791) 605 $ (4,396) Differences in Presentation between Budget and GAAP Basis: The City records principal and interest payments related to the subscription-based information technology arrangements and lease activity on a GAAP basis, however for budget purposes they are included in the associated division's expenditures. Additionally, the City records capitalized expenditures as capital outlay on the GAAP basis, however for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 45 Table of Contents Statement of Fund Net Position Proprietary Funds June 30, 2021 (in thousands) Water and Sewer Utility ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Privilege Tax Charges for Services Intergovernmental Leases Interest Miscellaneous Supplies Inventory Restricted Cash, Cash Equivalents, and Investments Cash with Fiscal Agent Customer Advances and Deposits Prepaid Items Other Restricted Items Joint Venture Construction Deposits Total Current Assets $ Noncurrent Assets Long-Term Receivables Equity in Joint Ventures Pollution Remediation Recoveries Restricted Cash, Cash Equivalents, and Investments Advanced Construction Payments Advanced Lease Payments Water and Sewer System Replacement Revenue Bond Reserve Capital Assets Land Water Rights Water System Sewer System Buildings and Improvements Motor Vehicles Machinery and Equipment Furniture and Fixtures Construction in Progress Subscription-Based Information Technology Arrangements Less Accumulated Depreciation/Amortization Total Capital Assets (net of accumulated depreciation/amortization) Total Noncurrent Assets Total Assets Deferred Outflows of Resources Deferred Amounts on Refundings Pension-Related Amounts Total Deferred Outflows of Resources $ 213,856 Airport $ Solid Waste 3,500 $ Total 7,888 $ 225,244 Governmental Activities Internal Service Funds $ 65,609 18,403 747 2,022 - 29 422 1,053 28 359 - 2,591 43 - 29 20,994 422 1,053 818 2,381 - 299 1,067 26,901 1,128 988 1,288 336 - - 28,189 1,464 988 582 2,853 266,898 7,015 10,522 2,853 284,435 67,557 1,648 84,902 49,855 23,505 5 - 55 - 25,153 84,962 49,855 3 - 3,023 44,051 4,692 1,067 - - 3,023 1,067 44,051 4,692 - 41,353 87,171 1,382,743 682,229 7,453 1,574 54,437 9,564 72,811 1,151 813 220 3,229 1,111 7,004 385 131 64 52,028 87,171 1,382,743 682,229 79,815 1,151 8,651 1,925 57,730 16,325 90,988 6,152 8 99 (896,327) 1,360,732 1,548,903 59 (15,515) 72,332 96,909 9 (3,914) 4,790 4,845 167 (915,756) 1,437,854 1,650,657 168 (55,154) 58,487 58,490 1,815,801 103,924 15,367 1,935,092 126,047 14,011 4,935 18,946 309 309 1,490 1,490 14,011 6,734 20,745 1,063 1,063 $ (continued) City of Scottsdale, Arizona 46 $ $ $ Table of Contents Statement of Fund Net Position Proprietary Funds June 30, 2021 (in thousands) LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Liabilities Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Current Accrued Compensated Absences - Due within one year Unearned Revenue Due to Other Funds Customer Advances and Deposits Interest Payable Matured Bonds and Other Payables Bonds Payable and Other Payables - Due within one year Subscription - Due within one year Other Liabilities Total Current Liabilities Water and Sewer Utility $ Noncurrent Liabilities Accrued Compensated Absences - Due in more than one year Advanced Construction Payments Advanced Lease Payments Net Pension Liabilities Bonds, Loans, and Other Payables - Due in more than one year Pollution Remediation Obligation Subscription - Due in more than one year Total Noncurrent Liabilities 14,407 739 1,234 1,128 5,178 21,723 21,355 14 65,778 Airport $ Solid Waste 710 47 99 336 433 855 900 29 3,409 $ Total 396 229 351 3 979 $ 15,513 1,015 1,684 1,464 5,611 22,578 22,255 46 70,166 Governmental Activities Internal Service Funds $ 2,592 171 1 236 12 7,880 83 4 10,979 1,644 3,023 27,728 251,646 49,855 20 333,916 187 1,067 1,713 20,868 23,835 501 8,307 4 8,812 2,332 `` 3,023 1,067 37,748 272,514 49,855 24 366,563 268 5,986 15,101 21,355 399,694 27,244 9,791 436,729 32,334 46 13 59 3 23,628 23,631 14 14 63 23,641 23,704 10 10 NET POSITION Net Investment in Capital Assets 1,101,708 50,535 4,783 1,157,026 58,404 Restricted for Water and Sewer System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits Unrestricted Total Net Position 44,051 4,692 2,853 281,690 1,434,994 2,823 53,358 2,269 7,052 44,051 4,692 2,853 286,782 1,495,404 36,362 94,766 Total Liabilities Deferred Inflows of Resources Pension-Related Amounts Leases Total Deferred Inflows of Resources $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 47 $ $ $ Table of Contents Reconciliation of the Proprietary Funds Statement of Fund Net Position to the Statement of Net Position June 30, 2021 (in thousands) Total Enterprise Fund Net Position $ 1,495,404 Amounts reported for business-type activities in the government-wide statement of net position are different because: Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and motor vehicles to individual funds. A look-back adjustment applies to business-type activities and creates an internal balance. Net Position of Business-type Activities 4,586 $ 1,499,990 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 48 Table of Contents Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) OPERATING REVENUES Charges for Sales and Services Water Service Fees Sewer Service Fees Proprietary - Non-potable water fees Solid Waste Fees Airport Fees Other Services Other Total Operating Revenues Water and Sewer Utility $ OPERATING EXPENSES Costs for Sales and Services Water Operations Sewer Operations Solid Waste Operations Airport Operations Other Services Indirect Costs Depreciation/Amortization Total Operating Expenses 115,997 42,037 14,041 4,159 176,234 Airport $ Solid Waste 7,587 108 7,695 $ Governmental Activities Internal Service Funds Total 25,490 42 25,532 $ 115,997 42,037 14,041 25,490 7,587 4,309 209,461 $ 63,298 4,811 68,109 57,574 31,347 5,131 56,313 150,365 2,879 555 2,721 6,155 22,177 1,684 346 24,207 57,574 31,347 22,177 2,879 7,370 59,380 180,727 56,457 10,049 66,506 25,869 1,540 1,325 28,734 1,603 NON-OPERATING REVENUES (EXPENSES) Transaction Privilege Tax Property Tax Investment Income Interest Expense Loss on Sale of Capital Assets Net Non-Operating Revenues (Expenses) 839 (9,824) (914) (9,899) 177 17 (783) (97) (686) 14 (266) (252) 177 870 (10,607) (1,277) (10,837) 1,829 (912) 917 Income Before Contributions and Transfers 15,970 854 1,073 17,897 2,520 32,986 (8,546) 1,587 - - 34,573 (8,546) 2,131 88 (5) 40,410 2,441 1,073 43,924 4,734 Operating Income Capital Contributions Transfers In Transfers Out Change in Net Position Total Net Position - Beginning Total Net Position - Ending $ 1,394,584 1,434,994 $ 50,917 53,358 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 49 $ 5,979 7,052 $ 1,451,480 1,495,404 $ 90,032 94,766 Table of Contents Reconciliation of the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position to the Statement of Activities For the Fiscal Year Ended June 30, 2021 (in thousands) Net Change in Total Enterprise Fund Net Position $ 43,924 Amounts reported for business-type activities in the government-wide statement of net position are different because: Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and motor vehicles to individual funds. A look-back adjustment applies to business-type activities and creates an internal balance, which reduced the expenses. Change in Net Position of Business-type Activities (633) $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 50 43,291 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Water and Sewer Utility Cash Flows from Operating Activities Cash Received from Customers Cash Payments to Suppliers for Goods/Services Cash Payments to Employees for Services Other Cash Receipts Net Cash Provided by (Used for) Operating Activities $ 172,500 (61,543) (22,828) 4,026 92,155 Airport $ Solid Waste 7,305 (1,976) (1,427) 108 4,010 $ 25,277 (15,988) (7,884) 42 1,447 Total $ 205,082 (79,507) (32,139) 4,176 97,612 Governmental Activities Internal Service Funds $ 63,317 (49,509) (5,704) 4,811 12,915 Cash Flows from Non-Capital Financing Activities Property Tax Transaction Privilege Tax Transfers In Transfers Out Net Cash Provided by (Used for) Non-Capital Financing Activities (8,546) (8,546) 177 177 - 177 (8,546) (8,369) 1,829 88 (5) 1,912 Cash Flows from Capital and Related Financing Activities Capital Contributions from: Water and Sewer Development Fees Capital Grants Acquisition and Construction of Property and Equipment Water and Sewer Development Fee Credit Agreements Principal Payments on Capital Debt and Other Payables Interest Paid on Capital Debt Investment in Joint Venture Sale of Capital Assets Net Cash Used for Capital and Related Financing Activities 5,417 (57,816) (160) (9,452) (22,745) (4,702) (89,458) 1,259 (7,074) (786) (887) (7,488) (470) (14) (484) 5,417 1,259 (65,360) (160) (10,238) (23,632) (4,716) (97,430) (7,129) 845 (6,284) 976 976 19 19 17 17 1,012 1,012 - Net Increase (Decrease) in Cash and Cash Equivalents (4,873) (3,282) 980 (7,175) 8,543 Cash and Cash Equivalents at Beginning of Year 298,524 9,473 6,908 314,905 57,066 Cash Flows from Investing Activities Income Received on Investments Net Cash Provided by Investing Activities Cash and Cash Equivalents at End of Year $ 293,651 $ 6,191 (continued) City of Scottsdale, Arizona 51 $ 7,888 $ 307,730 $ 65,609 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Water and Sewer Utility Cash and Cash Equivalents at End of Year includes: Cash and Investments Cash with Fiscal Agent Restricted Cash and Investments Total Cash and Cash Equivalents $ $ 213,856 26,901 52,894 293,651 Airport $ $ 3,500 1,288 1,403 6,191 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Cash Flows from Operating Activities Operating Income $ 25,869 $ 1,540 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used for) Operating Activities: Depreciation/Amortization Current Year Pension Contributions Change in Equity in Joint Ventures Change in Accounts Receivable Change in Lease Receivable Change in Miscellaneous Receivable Change in Intergovernmental Receivable Change in Inventories Change in Prepaid Expense Change in Customer Deposits Change in Accounts Payable Change in Unearned Revenue Change in Accrued Payroll and Compensated Absences Change in Claims Payable Change in Advanced Payments Change in Net Pension Liability Change in Deferred Inflows of Resources Leases Change in Deferred Outflows of Resources Related to Pensions Change in Deferred Inflows of Resources Related to Pensions Total Adjustments Net Cash Provided by (Used for) Operating Activities Supplemental Disclosure of Non-Cash Financing Activities Contributions of Capital Assets from Developers Change in Equity in Joint Venture Contributions of Capital Assets from Other Funds Retirement of Assets Total Non-Cash Financing Activities 56,313 (1,998) 7,272 (225) 268 244 303 125 876 85 (133) 5,090 13 (428) (1,519) 66,286 Solid Waste $ Total $ $ 7,888 7,888 $ 1,325 2,721 (127) 24 328 232 (54) 30 (100) 302 (766) (25) (95) 2,470 Governmental Activities Internal Service Funds $ $ 225,244 28,189 54,297 307,730 $ 65,609 65,609 $ 28,734 $ 1,603 346 (610) 11 (213) (85) 107 1,167 (121) (480) 122 59,380 (2,735) 7,283 (414) 328 268 244 303 357 737 222 (233) 6,559 (753) (574) (2,094) 68,878 10,049 (429) 54 (462) 623 12 1,008 886 (87) (342) 11,312 $ 92,155 $ 4,010 $ 1,447 $ 97,612 $ 12,915 $ 27,729 (5,022) (914) $ (97) $ (11) (266) $ 27,729 (5,033) (1,277) $ 2,131 8 $ 21,793 $ (97) $ (277) $ 21,419 $ 2,139 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 52 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Financial Reporting Entity The City of Scottsdale, Arizona (the City) was incorporated in 1951. The current City Charter was adopted in 1961, which established the Council/Manager form of government. The City provides basic government services to its citizens including roads, water, sewer, solid waste management, public transit, parks and recreation facilities, and public safety. The accounting policies of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The financial reporting entity presented in these financial statements consists of the City of Scottsdale, Arizona (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. The City has operational responsibility for the component units. Component Unit City of Scottsdale Municipal Property Corporation (MPC) Scottsdale Preserve Authority (SPA) Scottsdale Mountain Community Facilities District (CFD) Description and Criteria for Inclusion • • Non-profit corporation created in 1967. • • Governed by Board of Directors confirmed by City Council. • • Non-profit corporation created in 1997. • • Governed by a Board of Directors confirmed by City Council. • • Formed by 1992 petition to City Council. • • Able to levy taxes and issue bonds independent of the City. • • • City Council serves as the Board of Directors. Reporting Method For Separate Financial Statements Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Sole purpose is to construct, acquire, and equip buildings, structures, or land improvements for the City. For financial reporting purposes, transactions are included as a governmental and proprietary fund type as if part of the City’s operation. Sole purpose is to finance land acquisitions for McDowell Sonoran Preserve. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. Created to acquire and improve public infrastructure in specified land area. Property owners within the designated area are assessed for District taxes and costs of operation. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. City of Scottsdale, Arizona 53 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Component Unit McDowell Mountain Ranch Community Facilities District (CFD) • • • • • • • DC Ranch Community Facilities District (CFD) • • • • • • • Via Linda Road Community Facilities District (CFD) • • • • • • • Waterfront Commercial Community Facilities District (CFD) Reporting Method For Separate Financial Statements Formed by 1994 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 1997 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 1998 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Formed by 2005 petition to City Council. Created to acquire and improve public infrastructure in specified land area. Able to levy taxes and issue bonds independent of the City. Property owners within the designated area are assessed for District taxes and costs of operation. City Council serves as the Board of Directors. The City has no liability for District debt. For financial reporting purposes, transactions are included as a governmental fund type as if part of the City’s operation. Blended City of Scottsdale City Treasurer’s Office 7447 E. Indian School Rd. Ste. 210 Scottsdale, AZ 85251 Description and Criteria for Inclusion • • • • • • • City of Scottsdale, Arizona 54 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 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 operational or capital requirements of a function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Indirect costs incurred by governmental activities and reimbursed by business-type activities are included in the program expense reported by the individual business-type functions. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. 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 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. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers revenues to be available if they are collected within 31 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting; however, debt service expenditures, as well as expenditures related to vacation, sick leave, claims, and judgments, are recorded only when payment is due. Capital asset acquisitions are reported as expenditures in the governmental funds. Issuance of long-term debt and acquisitions under leases and subscription-based information technology arrangements are reported as other financing sources. 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. City of Scottsdale, Arizona 55 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Property taxes, other local taxes, and licenses available within the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues in the current fiscal period. Interest is accrued in the same fiscal period in which the revenue is earned. All other revenue items are considered to be measurable and available only when the City receives cash. The government reports the following major governmental funds: The General Fund is the government’s primary operating fund and is used to account for and report all financial resources not accounted for and reported in another fund. The General Obligation Bond Debt Service Fund is used to account for and report the accumulation of financial resources that are restricted to expenditures for the payment of long-term obligation debt principal, interest, and related costs. The General CIP Construction Capital Projects Fund is used to account for and report financial resources that are committed to expenditures for capital outlays including the acquisition, construction, and improvements to major capital facilities or capital equipment from amounts transferred from the City’s General Fund in accordance with the City’s comprehensive financial policies adopted by the City Council annually. This fund also represents other City Council approved capital programs including committing funds for tourism-related capital projects as well as activity for the capital in-lieu parking and in-lieu stormwater. The government reports the following major proprietary funds: The Water and Sewer Utility, Airport, and Solid Waste Funds account for the operating revenues and expenses of the City’s water and sewer utility systems, airport, and sanitation services (solid waste, brush removal, container maintenance, etc.), respectively. Additionally, the government reports the following fund types: The Internal Service Funds account for fleet management, computer replacements, and self-insurance services provided to other departments or units of the City on a cost-reimbursement basis. The Permanent Funds account for resources that are legally restricted to the extent that only earnings, not principal, support the City’s programs. In general, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this rule are indirect costs, in-lieu franchise fees, and other charges between the City’s governmental activities and the Water and Sewer Utility Fund, Airport Fund, and Solid Waste Fund, because elimination of these charges would distort the direct costs and program revenues reported in the statement of activities. City of Scottsdale, Arizona 56 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the funds’ principal ongoing operations. The principal operating revenues of the City’s enterprise and internal service funds are charges for customer services including water, sewer, airport, solid waste, vehicle purchase/maintenance, computer replacement, and risk management charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for specified expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed would be considered spent first (if available), followed by assigned (if available), and then unassigned amounts. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance 1. Deposits and Investments The City considers all highly liquid investments (including restricted assets) in money market mutual funds, demand deposits, certificates of deposit, repurchase agreements, commercial paper, and U.S. Treasury bills with an original maturity of three months or less to be cash equivalents. For the purposes of the statements of cash flows, all pooled cash and investments are considered to be cash equivalents. Maturities in excess of three months when purchased may be deposited or withdrawn by the proprietary funds at any time without prior notice or penalty, therefore having the characteristics of demand deposits. GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools provides that governmental entities may report all investments at fair value or they may elect to report certain money market investments and participating interest-earning investment contracts at amortized cost. The City has elected to report all investments at fair value. The City’s policy is to invest in certificates of deposit; repurchase agreements; highly rated commercial paper; money market mutual funds; highly rated corporate bonds/notes/asset-backed securities; obligations of the United States Government, or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities; obligations issued by this state or any political subdivision thereof, or obligations issued by any other municipality and payable from an identified revenue source; and the pooled investment funds established by the Office of the Arizona State Treasurer. 2. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is classified as “due to/from other funds” (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” All accounts receivables are shown net of an allowance for uncollectible amounts. City of Scottsdale, Arizona 57 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The City’s property tax is levied each year on or before the third Monday in August based on the previous January 1 full cash value as determined by the Maricopa County Assessor. Levies are due and payable in two installments, on October 1 and March 1, and become delinquent after November 1 and after May 1, respectively. A lien attaches to the property on the first day of January preceding the assessment and levy of taxes. Delinquent amounts bear interest at the rate of 16 percent. Public auctions of properties which have delinquent real estate taxes are held in February. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Property taxes levied for current operation and maintenance expenses on residential property are limited to one percent of the limited property value of such property. In addition, taxes levied for current operation and maintenance expenses on all types of property are limited to a maximum increase of two percent over the prior-year’s levy, adjusted for new construction and annexations. Property taxes levied to pay principal and interest on bonded indebtedness are not limited. 3. Inventories, Prepayments, and Prepaid Items Inventories of the governmental funds are recorded under the consumption method. Inventories are recorded as expenditures when consumed rather than when purchased. Inventories are valued at year end based on cost, with cost determined using an average cost method. Prepayments of the governmental funds, which are prepared using the modified accrual basis of accounting, are recorded under the purchases method, and are therefore recorded as expenditures when purchased. Within the government-wide statements, which are prepared using the accrual basis of accounting, prepayments are recorded as assets and amortized over the life of the related agreement. Prepaid items contain payments made to vendors applicable to future accounting periods in both the government-wide and proprietary fund financial statements. The cost of a prepaid item is recorded as an expense when consumed rather than purchased. 4. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position because they are maintained in separate bank accounts and their use is limited by applicable debt covenants. The revenue bond reserve and water and sewer replacement accounts are used to report resources set aside to meet unexpected contingencies or to fund asset replacements. The joint venture construction deposits with the City of Phoenix are used for capital expansion, rehabilitation, and expansion of the jointly used facilities. Assets are also restricted in enterprise funds for deposits received from water, sewer, and airport customers, as well as unearned revenues related to cash received in advance of services provided. City of Scottsdale, Arizona 58 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 5. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of two years. Assets contributed (donated) are recorded by reference to historical costs of the donor if recently purchased or constructed, or if such records are not available, at acquisition value. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. The City has elected to exclude the values of the library and art collections held in perpetuity from capitalization as the worth of the collections may change over time and because these collections are maintained in perpetuity to be used for purposes other than financial gain. Depreciation and amortization of all assets are recorded and calculated using the straight-line method over the following estimated useful lives: Water System............................................................................................10 to 75 Years Sewer System............................................................................................25 to 50 Years Buildings and Improvements.................................................................25 to 50 Years Streets and Storm Drains.................................................................................30 Years Land Improvements..........................................................................................25 Years Machinery and Equipment......................................................................5 to 20 Years Motor Vehicles...........................................................................................3 to 15 Years Furniture, Fixtures, and Office Equipment..........................................5 to 10 Years Lease and subscription-based information technology arrangements assets are amortized over the life of the associated contract. The excess purchase price over fair value of assets acquired in the Water and Sewer Utility Enterprise Fund is amortized on the straight-line method over 20 to 60 years. When capital assets are disposed of, the cost and accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is recognized in the government-wide and proprietary fund financial statements. 6. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plans’ fiduciary net position, and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported within the fair value hierarchy established by generally accepted accounting principles. City of Scottsdale, Arizona 59 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 7. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of medical leave earned by employees based on services already rendered. Employees may accumulate up to a maximum number of hours of vacation depending on years of service, but any vacation hours in excess of the maximum amount unused at the calendar year end are forfeited. The City’s policy is to pay employees for unused accumulated vacation hours at termination or retirement. The City’s medical leave policy, however, is that only those employees hired full-time before July 1, 1982, receive cash for a portion of unused medical leave at death or retirement. For employees hired after July 1, 1982, the City funds the value of medical leave balances converted to a retiree health savings account for the participant immediately upon retirement. To be eligible for the medical leave conversion, the employee must retire and have accumulated 300 or more hours of medical leave (420 or more hours for shift fire employees) and will be funded at 100 percent for any medical leave hours accrued prior to July 1, 2011. If an employee has not accrued 1,200 hours before July 1, 2011, the employee will be funded the unused medical leave accrued after July 1, 2011, at 50 percent of the employee’s hourly base rate at the time of retirement, up to and including 1,200 hours accrued both before and after July 1, 2011. Shift fire employees will have the same rules apply, except their cap is 1,680 medical leave hours. Vacation pay is calculated based on vacation used and the medical leave conversion is based on an actuarial valuation dated January 1, 2021. The medical leave conversion and vacation pay amounts are accrued in the government-wide and proprietary fund financial statements. A liability for the current amount of compensated absences is recorded as a current liability as of June 30, 2021, in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30, 2021, that resulted from employee resignations and retirements. The current compensated absences amount in the governmental funds is combined with accrued payroll and other payroll-related amounts in the accrued payroll and benefits line item. There is no long-term liability for compensated absences in the governmental funds. 8. Long-term Obligations Long-term debt and other long-term obligations are reported as liabilities in the governmental activities or business-type activities section, as appropriate, in the statement of net position of the governmentwide financial statements, or in the proprietary fund statement of net position in the proprietary fund financial statements. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount and bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. City of Scottsdale, Arizona 60 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 9. Deferred Outflows/Inflows of Resources In addition to assets, the government-wide financial statements and the proprietary fund financial statements include a section for deferred outflows of resources. This represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The City has three items that qualify for this category: deferred amounts on refundings, pension-related amounts, and other postemployment benefits (OPEB)related amounts. Deferred amounts on refundings result from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The pension and OPEB-related amounts include differences between expected and actual experience, changes of assumptions or other inputs, and contributions made to the pension/OPEB plan by the employer subsequent to the measurement date of the net pension liability/total OPEB liability and before the end of the reporting period. Additionally, the pension-related amounts include the difference between projected and actual investment earnings and changes in proportion and differences between employer contributions and proportionate share of contributions. With the exception of the difference between projected and actual investment earnings and contributions made to the pension/OPEB plan by the employer subsequent to the measurement date of the net pension liability/total OPEB liability and before the end of the reporting period, the pension-and OPEB-related deferred outflows of resources should be recognized in pension/OPEB expense, respectively, beginning in the current reporting period, using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions/OPEB through the pension/OPEB plans (active employees and inactive employees) determined as of the beginning of the measurement period. The deferred outflows of resources relating to the difference between projected and actual investment earnings should be recognized in pension expense using a systematic and rational method over a closed five-year period, beginning in the current reporting period. The deferred outflows of resources relating to contributions made to the pension/OPEB plan by the employer subsequent to the measurement date of the net pension liability/total OPEB liability and before the end of the reporting period will reduce the beginning net pension liability/total OPEB liability in the following fiscal year. In addition to liabilities, the government-wide and fund financial statements include a section for deferred inflows of resources. This represents an acquisition of fund balance or net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has four items that qualify for this category: unavailable revenue, pension-related amounts, OPEB-related amounts, and lease-related amounts. Unavailable revenue, which arises only under the modified accrual basis of accounting, is recognized as an inflow of resources in the period that the related amounts become available. City of Scottsdale, Arizona 61 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The pension-and OPEB-related amounts include differences between expected and actual experience and changes of assumptions or other inputs. Additionally, the pension related amounts include the difference between projected and actual investment earnings and changes in proportion and differences between employer contributions and proportionate share of contributions. With the exception of the difference between projected and actual investment earnings, the pension-and OPEB-related deferred inflows of resources should be recognized in pension/OPEB expense, respectively, beginning in the current reporting period, using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions/ OPEB through the pension/OPEB plans (active employees and inactive employees) determined as of the beginning of the measurement period. The deferred inflows of resources relating to the difference between projected and actual investment earnings should be recognized in pension expense using a systematic and rational method over a closed five-year period, beginning in the current reporting period. Lease-related amounts are recognized at the inception of leases in which the City is the lessor. The deferred inflow of resources is recorded in an amount equal to the corresponding lease receivable plus certain additional amounts received from the lessee at or before the commencement of the lease term that relate to future periods, less any lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term. The inflow of resources is recognized in a systematic and rational manner over the term of the lease. 10. Development Impact Fee Revenue The City has entered into several agreements whereby it will provide a development fee credit to developers for construction of certain public infrastructure improvements. The funding source for the reimbursements will come from Water and Sewer development fees, which are paid when units of the development are connected to the utility system. The City does not become liable under the agreements until the City has accepted the cost, a development fee has been paid, and a water meter has been set. 11. Fund Balance Policies In the fund financial statements, governmental funds report the fund balance into classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purpose for which those funds can be spent. The classifications of fund balance are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable fund 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 remain intact. Restricted fund balances are the portion of a fund balance that have externally enforceable limitations on their usage through legislation or limitations imposed by creditors, grantors, laws and regulations of other governments, or enabling legislation. City of Scottsdale, Arizona 62 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Committed fund balances are self-imposed limitations by the highest level of decision-making authority, namely City Council, prior to the end of the reporting period. City Council approval is required to commit resources or to rescind the commitment through a City Council resolution. Assigned fund balances are limitations imposed internally by management based on the intended use of the funds. In June 2011, through City Council Resolution No. 8751, the City Council authorized the City Treasurer to assign fund balances for specific purposes. 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. When both restricted and unrestricted resources are available for specified expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed would be considered spent first (if available), followed by assigned (if available), and then unassigned amounts. 12. Net Position The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure and capital-related deferred outflows of resources, into one component of net position. Accumulated depreciation/amortization, the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets, and the capital-related deferred inflows of resources reduce the balance in this category. Restricted Net Position – This category represents net position that has external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents net position of the City not restricted for a specific purpose 13. Use of Estimates The preparation of basic 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 amount of assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenue and expenses/expenditures, and the disclosure of contingent assets and liabilities at the date of the basic financial statements. Actual results could differ from those estimates. City of Scottsdale, Arizona 63 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 E. Implementation of New Accounting Principles 1. Governmental Accounting Standards Board Statement No. 93 The City adopted the provisions of GASB Statement No. 93, Replacement of Interbank Offered Rates. This statement established accounting and financial reporting requirements related to the replacement of interbank offered rates, most notably London Interbank Offered Rate, in hedging derivative instruments and leases. This pronouncement did not impact the preparation of these financial statements. 2. Governmental Accounting Standards Board Statement No. 96 The City adopted the provisions of GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs). The objective of this statement is to better meet the information needs of financial statement users by establishing uniform accounting and financial reporting requirements for SBITAs, improving the comparability of financial statements among governments that have entered into SBITAs, and enhancing the understandability, reliability, relevance, and consistency of information about SBITAs. II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental funds balance sheet and the government-wide statement of net position The City’s total governmental fund balances, $447,377,000, differ from the net position of governmental activities, $4,318,626,000 reported in the statement of net position. The difference primarily results from the long-term economic focus in the statement of net position versus the current financial resources focus in the governmental funds balance sheet. City of Scottsdale, Arizona 64 Table of Contents Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) $ $ Total Assets and Deferred Outflows of Resources (continued) $ - $ 65,609 - Statement of Net Position Total (3) Reclassifications and Eliminations $ - $ 525,670 79,922 1,041 27,550 1,944 2,525 1,508 3,108 9,786 1,623 513 18,514 5,215 26,504 10,899 4,634 304 655,651 4,643,832 1,833 1,652 4,913 26,085 54,342 4,732,657 299 1,067 582 58,402 3 85 126,047 (4,634) (4,634) 1,041 27,550 1,944 2,525 1,508 3,108 9,786 1,623 513 18,514 5,215 26,504 11,198 1,371 582 4,702,234 1,836 1,652 4,998 26,085 54,342 5,509,721 - 22,462 106,789 426 129,677 1,063 1,063 - 22,462 107,852 426 130,740 655,651 $ 4,862,334 $ 127,110 $ (4,634) $ 5,640,461 Notes to Financial Statements Deferred Outflows of Resources Deferred Amounts on Refundings Pension-Related Amounts OPEB-Related Amounts Total Deferred Outflows of Resources 460,061 79,922 Internal Service Funds(2) For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona 65 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax State Shared Sales Tax Franchise Fee Court Highway User Tax Auto Lieu Tax Intergovernmental Grants Leases Miscellaneous Due from Other Funds Supplies Inventory Prepaid Items Capital Assets (net of accumulated depreciation) Equity in Joint Venture Lease Assets (net of accumulated amortization) Subscription-Based Information Technology Arrangements (net of accumulated amortization) Prepayments Service Concession Arrangements Total Assets Total Governmental Funds Long-Term Assets and Deferred Outflows/ Liabilities and Deferred Inflows(1) Table of Contents Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE/NET POSITION $ $ Total Liabilities and Deferred Inflows of Resources Fund Balances/Net Position Total Fund Balances/Net Position Total Liabilities, Deferred Inflows of Resources, and Fund Balances/Net Position (continued) $ (3) 3 12,150 17,253 996 - $ Reclassifications and Eliminations Statement of Net Position Total $ $ (3) 2,592 171 4,586 1 236 268 83 - (4,634) - 24,078 7,390 4,586 4 12,386 17,521 1,079 10,352 66,994 23,749 2,467 4,467 2,892 3,081 147,344 1,077,813 1,108,212 12 4 28,967 36,920 (4,634) 23,749 2,479 4,467 2,892 3,085 1,106,780 1,287,842 33,580 27,350 60,930 (33,580) 5,518 1,115 (26,947) 10 10 - 27,350 5,528 1,115 33,993 208,274 1,081,265 36,930 (4,634) 1,321,835 447,377 3,781,069 90,180 - 4,318,626 655,651 $ 4,862,334 $ 127,110 $ (4,634) $ 5,640,461 Notes to Financial Statements Deferred Inflows of Resources Unavailable Revenue Leases Pension-Related Amounts OPEB-Related Amounts Total Deferred Inflows of Resources 21,486 7,222 4,634 10,352 66,994 Internal Service Funds(2) For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona 66 Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Accrued Compensated Absences - Current Accrued Compensated Absences - Due within one year Accrued Compensated Absences - Due in more than one year Subscription - Due within one year Matured Bond Interest Payable Matured Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Bonds, Loans, Capital Leases, and Other Payables Total Liabilities Total Governmental Funds Long-Term Assets and Deferred Outflows/ Liabilities and Deferred Inflows(1) Table of Contents Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) (1) When capital assets (land, buildings, equipment, etc.) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds; however, the statement of net position includes those capital assets among the assets of the City as a whole. Cost of capital assets Accumulated depreciation $ 6,328,665 (1,684,833) $ 4,643,832 Equity in joint ventures that are to be used in governmental activities are reported in the governmental funds as expenditures. These assets are included in the statement of net position for the City as a whole. Prepayments at 7/1/20 Prepayments for fiscal year 2021 Amortization of prepayments $ 25,664 1,388 (967) 26,085 SCAs at 7/1/20 Land improvements net additions for SCAs Amortization of SCAs $ Leases at 7/1/20 Leases for fiscal year 2021 Loss on retirement Amortization of leases $ SBITAs at 7/1/20 SBITAs for fiscal year 2021 Amortization of SBITAs $ Certain items that are recognized as assets on the statement of net position are expended in governmental funds when paid such as long-term prepayments, while others arise from the incurrence of longterm liabilities or the receipt of capital assets from elsewhere within the City, such as service concession arrangements (SCAs), leases, and subscription-based information technology arrangements (SBITAs). These assets are capitalized and amortized over the life of the corresponding agreement. $ $ $ $ 55,421 3,559 (4,638) 54,342 2,295 122 (53) (712) 1,652 638 5,334 (1,059) 4,913 Deferred outflows of resources consist of items that will consume net position in a future reporting period(s) and do not meet the definition of an asset. Deferred amounts on refundings result from the difference between the carrying value of refunded debt and its reacquisition price. The pension and OPEB-related amounts result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and contributions made to the pension/OPEB plan by the employer subsequent to the measurement date of the net pension liability/net OPEB liability and before the end of the reporting period. Deferred amounts on refundings Pension-related amounts OPEB-related amounts (continued) $ $ 22,462 106,789 426 129,677 Notes to Financial Statements 1,833 For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona 67 $ Table of Contents Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities in the governmental funds. All liabilities, both current and long-term, are reported in the statement of net position. Balances at June 30, 2021, were: Leases Bonds Service concession arrangements Subscription-based information technology arrangements Contracts Payable Issuance premium Accrued vacation and sick leave pay Total OPEB liability Net pension liabilities $ $ (1,799) (655,791) (1,914) (4,304) (451) (34,778) (29,403) (1,923) (377,849) (1,108,212) $ $ 3,481 1,180 7,521 510 18,772 2,116 33,580 Deferred inflows of resources represent 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. Deferred inflows of resources related to pensions and OPEB may result from differences between expected and actual experience, changes of assumptions or other inputs, the difference between projected and actual investment earnings, and changes in proportion and differences between employer contributions and proportionate share of contributions. $ (5,518) (1,115) (6,633) $ 90,180 Reduction of amount due from other governmental fund $ (4,634) Reduction of amount due to other governmental fund $ 4,634 Pension-related amounts OPEB-related amounts $ (2) Internal service funds are used by management to charge the costs of certain activities, such as fleet management, computer equipment, and self-insurance, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. (3) When governmental funds have cash timing differences, due to and from balances are established at the fund level. This adjustment eliminates the governmental inter-fund activity. Notes to Financial Statements City of Scottsdale, Arizona 68 Unavailable court revenue Unavailable property tax revenue Unavailable privilege tax revenue Unavailable transient occupancy tax revenue Unavailable intergovernmental revenue Unavailable other revenue For the Fiscal Year Ended June 30, 2021 Because the focus of governmental funds is on a short-term basis, some assets will not be available to pay for current period expenditures. Those assets (for example, receivables) are offset by unavailable revenues in the governmental funds and thus are not included in fund balance. Certain tax and other revenues that are considered unavailable under modified accrual accounting for governmental fund statements are recognized as revenue under accrual accounting for the government-wide statements. Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 B. Explanation of certain differences between the governmental funds statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities The net change in fund balances for governmental funds, $119,428,000, differs from the change in net position for the governmental activities, $400,455,000 reported in the statement of activities. The differences arise primarily from the long-term economic focus in the statement of activities versus the current financial resources focus in the governmental funds. The effect of the differences is illustrated in the next table. City of Scottsdale, Arizona 69 Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) REVENUES $ $ $ 69,826 235,861 18,013 8,456 4,204 213 4,209 (399) 2,112 343 322 (8) 45 Capital Related Items(5) $ Internal Service Funds(6) - $ Reclassifications and Eliminations(7) 1,829 - $ Statement of Activities Long-Term Debt Transactions(8) - $ - $ 71,256 237,973 18,356 8,778 4,196 213 4,254 30,615 37,207 12,246 17,893 642 1,708 (240) - - - - 30,615 37,207 12,246 17,893 642 1,468 21,106 5,926 5,578 2,092 (3,605) (1) (106) (23) - - (44) - - 17,457 5,925 5,472 2,069 3,483 243 2,347 1,549 90 104 7,221 6,790 (4,303) (234) (24) (13) (149) (45) - - - - - 3,249 219 2,334 1,549 (59) 104 7,176 6,790 (4,303) 27,088 359 8,557 2,723 529 4,398 2,121 7,370 488 546,952 (531) 20 724 (1,275) 640 (30) (2,477) - 1,829 (8) (52) - 26,557 379 9,281 1,448 529 4,398 2,761 7,370 450 546,252 $ $ $ $ $ $ Notes to Financial Statements (continued) Long-Term Revenue/ (4) Expenses For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona 70 Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Cable TV Franchise Salt River Project In-Lieu Other Taxes Taxes - Intergovernmental State Shared Sales State Revenue Sharing Auto Lieu Tax Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fire Fees Fines, Fees, and Forfeitures Court Parking Photo Radar Court Enhancement Library Police Property Rental Interest Earnings Net Decrease in Fair Value of Investments Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues Total Governmental Funds Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) EXPENDITURES/EXPENSES Net Change for the Year (continued) $ $ $ 723 1,246 6,597 1,045 6,194 3,621 9,418 41,410 31,259 153,754 48,034 19,307 12,974 545 68,955 20,634 1,745 70,417 497,878 $ Capital Related Items(5) 18 (31) 324 33 135 166 353 911 1,433 15,101 5,906 (3,681) (1,167) 19,501 $ $ 2 15 51 6 37 58,103 3,239 4,662 9,913 3,671 (70,417) 9,282 Internal Service Funds(6) $ $ (16) (8) (76) (9) (82) (27) (112) 39 (140) (1,349) (259) (132) (65) (2,236) Reclassifications and Eliminations(7) Long-Term Debt Transactions(8) Statement of Activities $ $ $ $ (8) (12) (44) (67) (131) $ 254 252 40 1,175 24 (68,955) (3,591) (1,745) (72,546) $ 725 1,209 6,860 1,069 6,298 3,766 9,688 100,705 35,999 172,141 64,769 19,189 11,742 545 17,043 451,748 $ 8,463 122 4,746 220 239,545 51,160 4,200 (238,102) 70,354 $ 7 7 $ 295,984 295,984 $ 83 2,131 (912) 1,302 $ (79) (79) $ (122) (4,746) (239,545) (51,160) (4,200) 54 238,102 (61,617) $ 8,546 298,036 (685) 54 305,951 $ 119,428 $ (21,971) $ 286,702 $ 5,367 $ - $ 10,929 $ 400,455 Notes to Financial Statements OTHER FINANCING SOURCES (USES) / CHANGES IN NET POSITION Net Transfers from Other Funds Capital Contributions Financing of Leases Financing of Subscription-Based Information Technology Arrangements Sale of General Capital Assets Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Gain on Retirement of Lease Liability Payment to Refunded Bonds Escrow Agent Total Long-Term Revenue/ (4) Expenses For the Fiscal Year Ended June 30, 2021 City of Scottsdale, Arizona 71 Current General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Outlay Total Expenditures/Expenses Total Governmental Funds Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) (4) Because some property taxes will not be collected for several months after the City's fiscal year-end, they are not considered as "available" revenues in the governmental funds. Similarly, other revenues are not currently available at year-end and are not reported as revenue in the governmental funds. Taxes-Local Charges for Services/Licenses Fines, Fees, and Forfeitures Intergovernmental Other $ $ 2,415 (3,975) (420) 265 (703) (2,418) Some expenditures reported in the governmental funds are related to benefits that are allocable to periods beyond the end of the City's current fiscal year. Long-term subscription prepayment Amortization of long-term prepaid leases $ City of Scottsdale, Arizona 72 Accrual for long-term compensated absences OPEB expense Pension expense Change in equity interest for joint venture Amortization of service concession arrangements Amortization of leased assets Amortization of subscription-based information technology arrangements $ $ (1,998) (263) (50,236) (53) (4,638) (712) (1,059) (58,959) Current-year pension and OPEB contributions are reclassified to deferred outflows of resources on the statement of activities, and are therefore not a reduction of net position. Current-year pension contributions Current-year OPEB contributions $ $ 33,980 137 34,117 $ 217 Current-year joint venture contributions are reclassified to an increase in the joint venture asset on the statement of net position, and are therefore not a reduction of net position. (continued) For the Fiscal Year Ended June 30, 2021 Some expenses reported in the statement of activities do not require the use of current financial resources, and are therefore not reported as expenditures in governmental funds. Notes to Financial Statements $ 1,388 (967) 421 Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) When leases (in which the City is the lessee) and subscription-based information technology arrangements (SBITAs) are to be used in governmental activities, an expenditure is recorded in the governmental funds in the amount of the Present Value of the Future Lease Payments (PVFLP)/Present Value of the Future Subscription Payments (PVFSP), respectively; however, in the statement of activities, the PVFLP and PVFSP are recognized as intangible assets and amortized over the lease term. Capitalized leases Capitalized SBITAs $ Lease retirements SCA retirements $ $ 122 5,334 5,456 When lease assets and service concession arrangement assets (SCAs) are retired, a loss is recognized on the statement of activities. (496) $ (52) $ $ 70,417 (79,003) (696) (9,282) $ 295,984 73 City of Scottsdale, Arizona The State Treasurer distributes funding directly to the Public Safety Personnel Retirement System (PSPRS) that is used to offset the contributions required to be made by the City to the PSPRS. This amount is recognized as revenue by the City although no cash is received directly from the State Treasurer. (5) When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds; however, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of financial resources expended, whereas net position decreases by the amount of depreciation expense charged for the year and the loss on disposal of capital assets. Capital expenditures Depreciation expense Loss on disposal of capital assets Donations of capital assets are not capitalized on the governmental fund statements, but are included in the assets of the City. On the statement of activities the donations are shown as capital contributions. Capital contributions (continued) Notes to Financial Statements $ At the inception of a contract payable, the City recognizes an expense in the statement of activities. For the Fiscal Year Ended June 30, 2021 $ (53) (204) (257) Table of Contents Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-wide Statement of Activities (in thousands) (6) Internal service funds are used by management to charge the costs of certain activities, such as insurance, computer equipment, and fleet management to the individual funds. The adjustments for internal service funds adjust those funds by charging additional amounts to participating governmental activities and recording an amount due to/from the enterprise funds. Change in net position Internal payable to Enterprise Fund $ $ 4,734 633 5,367 $ $ (131) 131 $ 68,955 238,102 307,057 (7) Interfund transactions between governmental activities are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of revenues and expenditures to eliminate the doubling up effect of these transactions within the governmental activities. 74 City of Scottsdale, Arizona Transferred to the paying agent Principal payments made Payment to refunded bond escrow - funded by refunding bonds $ Interest expense in the statement of activities differs from the amount reported in governmental funds because additional interest was calculated for the amortization of deferred amounts on refundings and accreted interest related to leases and reductions of interest expense were recognized due to the amortization of bond premiums. Amortization of deferred charges on refundings Interest accretion related to leases Amortization of bond premiums and discounts $ $ (3,569) (41) 7,201 3,591 Bond proceeds and the financing of leases and subscription-based information technology arrangements are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the government-wide statements, however, issuing debt increases long-term liabilities in the statement of net position and does not affect the statement of activities. Proceeds were received from: Lease acquisitions Subscription-based information technology arrangements Refunding bonds Long-Term capital-related debt Premium on bonds When lease liabilities are retired, a gain is recognized on the statement of activities. $ $ (122) (4,746) (239,545) (51,160) (4,200) (299,773) $ 54 For the Fiscal Year Ended June 30, 2021 (8) Repayment of principal and defeasance of bond principal via refunding bonds is reported as an expenditure or other financing use, respectively, in governmental funds. These payments have the effect of reducing fund balance because current financial resources have been used. For the government-wide statements, however, these payments reduce the liabilities in the statement of net position and do not result in an expense in the statement of activities. Notes to Financial Statements Reduction in revenues/capital contributions - Governmental Funds Reduction in expenditures/expenses - Governmental Funds Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budget and Budgetary Accounting The City prepared an annual budget that covered fiscal year 2021. The fiscal year 2021 budget appropriation is established and reflected in the financial statements as follows: The City prepares its budget on a basis generally consistent with GAAP, with such exceptions as eliminating the adjustments for fair value of investments, payroll accruals, interest associated with leases, amortized lease revenue, and accrued compensated absences. A budgetary comparison statement for the General Fund is presented in the basic financial statements. This statement displays original budget, amended budget, and actual results. Budgetary comparison schedules are also included as supplementary schedules for certain other governmental funds. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the General Fund, certain Special Revenue Funds (Transportation, Community Development Block Grant, HOME, Grants, Section 8, Preserve Privilege Tax, Streetlight Districts, Special Programs, Tourism Development, and Stadium Facility) and Debt Service Funds (except for the Community Facilities Districts and the Debt Service Stabilization Funds); therefore, these funds have appropriated budgets, and budget to actual information is presented. Community Facilities Districts Funds, Capital Projects Funds, Enterprise Funds, Internal Service Funds, and Permanent Funds have non-appropriated budgets. Accordingly, no comparison of budget to actual is presented in the financial statements for these funds. Budgets for the Community Development Block Grant, HOME, Grants, and Section 8 Funds are established pursuant to the terms of the related grant awards. Budgets for the Community Facilities Districts are established in accordance with Arizona Revised Statutes, which do not require their inclusion in the City budget or adoption by the City Council. Budgets for Capital Projects Funds are established for individual projects and unexpended funds are re-appropriated each year until the project is completed and capitalized. Budgets for Enterprise Funds and Internal Service Funds are established in order to help departments control operational costs. Budgets for Permanent Funds are established in accordance with endowment requirements. On or before the second regular Council meeting in May, the City Manager submits to the City Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them. Three public hearings are held prior to the final budget adoption in order to obtain taxpayer comments. In June, the budget is legally enacted through the passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. Additional expenditures may be authorized beyond the limit for expenditures directly necessitated by a natural or man-made disaster as prescribed in the State Constitution, Article 9, Section 20. During fiscal year 2021, there were no supplemental budgetary appropriations to the original budget. City of Scottsdale, Arizona 75 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The expenditure appropriations in the adopted budget are by division. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Divisional appropriations may be amended during the fiscal year. Upon the recommendation of the City Manager and with the approval of the City Council: 1) transfers may be made from the appropriations for contingencies to divisions and 2) unexpended appropriations may be transferred from one division to another. Management control of budgets is further maintained at a lineitem level within the division. B. Excess of Expenditures over Appropriations The Section 8 Special Revenue Fund and the Preserve Privilege Tax Special Revenue Fund exceeded their expenditure appropriation by $325,000 and $3,000, respectively. The additional expenditures incurred were funded by available fund balances within the respective funds. C. Deficit Fund Equity The HOME Special Revenue Fund, Grants Special Revenue Fund, and the External Sources Capital Project Fund had deficit ending fund balances of $97,000, $1,707,000, and $2,003,000, respectively. These deficits were caused by certain grant reimbursements and pending reimbursements from intergovernmental agreements related to capital projects the City is required to fund. Revenue accruals are not recognized in the current fiscal year due to the unavailability of the funds. These pending reimbursements will be recognized as revenue when received. The Preserve Privilege Tax Capital Projects Fund had a deficit ending fund balance of $494,000 primarily due to timing differences of cash transfers for accruals. D. Fund Balance Classifications The following table details the fund balance categories and classifications for Governmental Funds: City of Scottsdale, Arizona 76 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 General (in thousands) Nonspendable Inventory Endowment Funds Total Nonspendable General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds Total Governmental Funds $ $ FUND BALANCES $ 304 304 $ - $ - 681 681 304 681 985 Restricted Property Tax for Debt Service Transaction Privilege and Highway User Tax for Transportation Improvements Federal Grants for the Community Development Block Grant Program Federal Grants for Section 8 Housing Transaction Privilege Tax for Preserve Land Purchase and Improvements Property Tax for Community Facility Districts Property Tax Levy for the Streetlight Improvement Districts Contributions for Mayor/City Council Special Events and Programs Court Fees for City Court Improvements to Facilities and Operations Contributions for City Court Jury Program Refreshments APS Improvement District Fees for Underground Utility Upgrades Contributions for Community and Economic Development Disbursements from AZ State Crime Laboratory Assessment Fund for Crime Lab Services Annual Payment from IGA with the SRP-MIC for Forensic Lab Services Contributions for the Fire Department Contributions for the Police Department Fees for Police Officer Safety Equipment Contributions for the School Resource Officers Crisis Canine Program Contributions for the Scottsdale Cares Program Contributions for Human Services Facility/Recreation Fees for Senior Center Special Programs Contributions for Parks and Recreation Contributions for the Libraries Disbursements from Endowments for the Libraires Disbursements from the Smart and Safe AZ Fund for the Fire Department Disbursements from the Smart and Safe AZ Fund for the Police Department Attendee Fees for Westworld User Area Improvements Contributions for Stadium Operations Stadium Surcharge for Debt Service Basin Management Property Rental Revenue for Capital Improvements GO Bond Proceeds for Capital Improvements Transaction Privilege Tax for Transportation Capital Improvements MPC Bond Proceeds for Capital Improvements External Contributions for Capital Improvements Endowment Funds Total Restricted - 3,469 3,469 1,041 1,041 32,043 144 624 56,598 546 57 3 2,298 7 36 49 125 396 4 89 148 22 182 19 11 55 91 18 99 226 42 3,817 2,372 29,655 62,411 1,598 2,173 27 195,985 3,469 32,043 144 624 56,598 546 57 3 2,298 7 36 49 125 396 4 89 148 22 182 19 11 55 91 18 99 226 42 3,817 2,372 1,041 29,655 62,411 1,598 2,173 27 200,495 Committed General Fund Contribution for Capital Improvements In-Lieu Parking Fees for Parking Projects In-Lieu Stormwater Fees for Drainage Improvements Tourism Development Capital Projects Court Capital Improvement Enhancement Projects Risk Management Capital Improvement Contribution Stormwater Utility Fee for Capital Improvements Downtown Fees for Capital Improvements Downtown Special Capital Improvements Greater Airpark Special Capital Improvements Airpark Cultural Trust Capital Improvements Scottsdale AZ CARES Capital Improvements Court Enhancement Fees for Upgrades to Court Operations Rent Fees for Loloma School Maintenance and Capital Improvements In-Lieu Stormwater Fees for Area Drainage Master Studies Downtown Cultural Program for Public Works of Art Rent Fees for the Community Arts Trust to Support the Loloma School Historic Preservation Program for Rehabilitation of Buildings License Fees for the Regulation of the Public Safety Pawn Shop Ordinance Cadet Competition Fees for the Scottsdale Police Department Cadet Program Sponsorship Fees for Events at the Senior Centers Sponsorship Fees for Parks and Recreation Programming Golf Course Surcharge for Silverado Golf Course Improvements Retail Sale Revenue for McCormick Stillman Railroad Park Operations Allocation of Youth Sports Fee for Maintenance/Improvements of Athletic Fields Allocation of Aquatic Fee for Maintenance/Improvements of Aquatic Facilities Disbursements from the Scottsdale AZ CARES Fund for COVID-19 Response Transient Occupancy Tax for Tourism Development Excise Tax for Debt Reserve Total Committed - - 36,362 381 451 4,682 395 3 4,318 320 56 520 278 2,381 50,147 6,707 267 47 3,159 190 407 254 14 27 18 866 670 172 38 11,016 5,021 2,683 31,556 36,362 381 451 4,682 395 3 4,318 320 56 520 278 2,381 6,707 267 47 3,159 190 407 254 14 27 18 866 670 172 38 11,016 5,021 2,683 81,703 Unassigned Total Fund Balances $ 170,994 171,298 $ City of Scottsdale, Arizona 77 3,469 $ 51,188 $ (6,800) 221,422 $ 164,194 447,377 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The City Council has established a minimum fund balance policy of 10 percent of annual operating expenditures to be maintained in the General Fund and the Transportation Nonmajor Special Revenue Fund. Additionally, the City Council has adopted a financial policy to hold a minimum of $5.0 million of excise tax reserve in the Debt Stabilization, Nonmajor Debt Service Fund. The reserves in these funds are to be maintained for unforeseen emergencies or catastrophic impacts to the City. E. Net Position Restrictions Only restrictions imposed by external sources are shown as restricted net position on the government-wide financial statements. The following restrictions apply to the Business-type Activities as of June 30, 2021: Net Position Restrictions (in thousands) Water and Sewer Restricted for System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits $ $ City of Scottsdale, Arizona 78 44,051 4,692 2,853 51,596 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 IV. DETAILED NOTES ON ALL FUNDS A. Cash and Investments The City maintains a cash and investment pool for use by most funds. The City holds unexpended General Obligation Bond construction proceeds received at issuance in separate investment accounts. Certain activities of the City’s grant funds are also held in separate bank accounts, as well as the Community Facilities Districts and Municipal Property Corporation. The City’s endowment funds have investments held separately by a trustee. City Charter, ordinance, and trust agreements authorize the City to invest in certificates of deposit; repurchase agreements; highly rated commercial paper issued by corporations organized and doing business in the United States; money market mutual funds; highly rated corporate bonds/notes/asset-backed securities denominated in U.S. dollars; obligations issued or guaranteed by the United States government or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; bonds, notes or other evidences of indebtedness of this state or any of its counties, incorporated cities or towns, school districts, or special taxing districts; bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility, or special taxing district of any state that are payable from revenues, earnings, or a special tax specifically pledged for the payment of the principal and interest on the obligations; bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district; and the pooled investment funds established by the Office of the Arizona State Treasurer. Deposits As of June 30, 2021, the carrying amount of the City’s deposits was $158,038,387 and the bank balance was $163,355,777. The $5,317,390 difference represents outstanding checks, deposits in transit, and other reconciling items. Custodial Credit Risk Custodial credit risk is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. All deposits are required to be fully collateralized per City Charter and City Code. As of June 30, 2021, $64,154,560 of the City’s deposits was exposed to custodial credit risk and was uninsured and collateralized by securities held by the pledging bank’s trust department not in the City’s name. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s investment policy limits its exposure to custodial credit risk by requiring all security transactions entered into by the City be conducted on a delivery-versus-payment basis. Securities are to be held by a third-party custodian. City of Scottsdale, Arizona 79 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits the City’s investment portfolio to maturities of five years or less. The following table summarizes the City’s interest rate risk, based on maturity dates of various investments (in thousands): Investment Maturities (in Years) Investment Type U.S. Government Securities U.S. Government Agencies U.S. Government Instrumentalities Taxable State Bonds Corporate Notes Asset-Backed Securities Negotiable Certificates of Deposit Money Market Mutual Funds Fair Value $ 260,344 256,215 11,274 3,059 87,683 12,068 84,539 39,375 Less than 1 $ 74,261 52,886 19,229 59,990 39,375 Total Investments $ $ 754,557 $ 245,741 1-2 55,145 70,780 6,270 3,059 26,232 24,549 - $ $ 186,035 $ 2-3 46,026 65,310 5,004 17,831 6,319 140,490 3+ 84,912 67,239 24,391 5,749 - $ $ 182,291 Credit Risk Generally, credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its obligations to the holder of the investment. Credit risk is measured by the assignment of a rating by Nationally Recognized Statistical Rating Organizations (NRSROs). The City’s investment policy limits its corporate debt investments to a minimum “A” or better rating, at the time of purchase, from at least two NRSROs; its investments in negotiable certificates of deposit to the top three rating categories by Moody’s Investors Service (Moody’s), Standard and Poor’s Corporation (S&P), or any other NRSRO; its investments in commercial paper to the top two ratings by a NRSRO and to those corporations organized and doing business in the United States; and its investments in money market mutual funds to those funds which are allowed by state law and registered under the Investment Company Act of 1940. The City’s investments in the investment types referenced above as of June 30, 2021, meet the aforementioned criteria. Presented below are the ratings, as determined by S&P unless otherwise noted, as of June 30, 2021, for each investment type (in thousands): Exempt from Disclosure Total A-1 AA A+ AAAA AA+ Aaa AAAm AAA Investment Type ------------------------------------------------$ 260,344 $ $ $ $ $ $ $ $ $ $ $ 260,344 U.S. Government Securities U.S. Government Agencies 256,215 - - - - - - 256,215 - - - - U.S. Government Instrumentalities 11,274 - - - - - - - - - 11,274 - Taxable State Bonds 3,059 - - - - - - 3,059 - - - - Corporate Notes 87,683 - 15,873 11,168 25,393 4,945 16,432 5,607 - - 8,265 - Asset-Backed Securities 12,068 - - - - - - - 4,211 - 7,857 - Negotiable Certificates of Deposit 84,539 64,217 - - 11,558 8,764 - - - - - - Money Market Mutual Funds 39,375 - - - - - - - - 39,375 - - 754,557 $ 64,217 $ 15,873 $ 11,168 $ 36,951 $ 13,709 $ 16,432 4,211 $ 39,375 $ 27,396 $ 260,344 Total Investments $ $ 264,881 Note: A-1 is a S&P short-term credit rating. AAAm is a S&P principal stability fund (i.e. money market fund) credit rating. Aaa is a Moody's rating. City of Scottsdale, Arizona 80 $ Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Concentration of Credit Risk The City investment guidelines place no limit on the amount that the City may invest in any one issuer of obligations of the United States Government, its agencies, and other instrumentalities; however, the overall percentage of callable securities is monitored. Supranational debt (i.e. an instrumentality of the United States Government) of an issuer is limited to 3 percent of the aggregate portfolio and investment in this sector class cannot exceed 10 percent of the current total portfolio. Negotiable or brokered certificates of deposit have a per issuer limit of 5 percent of the aggregate portfolio and investment in this sector is limited to 30 percent of the current total portfolio. Commercial paper and corporate notes are limited to a combined 40 percent of the aggregate portfolio, with no more than 5 percent of the portfolio held in any one issuer or its affiliates or subsidiaries. The following is a listing by issuer of the City’s investments as of June 30, 2021: (dollars in thousands) Percent of Holdings Issuer Investment Type Fair Value United States Treasury U.S. Govt. Securities $ 260,344 36.40% Federal National Mortgage Association (FNMA) U.S. Govt. Agencies 113,210 15.83% Federal Farm Credit Bank (FFCB) U.S. Govt. Agencies 3,255 0.46% Federal Home Loan Bank (FHLB) U.S. Govt. Agencies 24,496 3.42% Federal Home Loan Mortgage Corporation (FHLMC) U.S. Govt. Agencies 115,254 16.11% International Bank of Reconstruction and Development U.S. Govt Instrumentalities 11,274 1.58% Arizona State Transportation Board Taxable State Bonds 3,059 0.43% Adobe Inc. Corporate Notes 3,848 0.54% Amazon.com Inc. Corporate Notes 7,592 1.06% American Honda Finance Corporate Notes 3,543 0.49% Apple Inc. Corporate Notes 5,607 0.78% Bank of America Co. Corporate Notes 4,202 0.59% Bank Of New York Mellon Corp. Corporate Notes 3,199 0.45% Bristol-Myers Squibb Co. Corporate Notes 4,704 0.66% Caterpillar Inc Corporate Notes 4,121 0.58% Exxon Mobil Corp. Corporate Notes 4,945 0.69% JP Morgan Chase & Co. Corporate Notes 8,127 1.14% Mastercard Inc. Corporate Notes 7,038 0.98% Microsoft Corp. Corporate Notes 8,264 1.16% Pepsico Inc. Corporate Notes 2,413 0.34% Pfizer Inc. Corporate Notes 2,063 0.29% Toyota Motor Corp. Corporate Notes 3,891 0.54% Unilever PLC Corporate Notes 555 0.08% 0.66% U.S. Bancorp Corporate Notes 4,731 Wal-Mart Stores Inc. Corporate Notes 8,840 1.24% Carmax Auto Owner Trust Asset-Backed Securities 2,900 0.41% Honda Auto Receivables Asset-Backed Securities 4,211 0.59% Hyundai Auto Receivables Asset-Backed Securities 1,310 0.18% Toyota Motor Corp. Asset-Backed Securities 3,647 0.51% Bank Of Nova Scotia Negotiable Certificates of Deposit 16,006 2.24% Barclays PLC Negotiable Certificates of Deposit 9,004 1.26% Credit Suisse Group RK Negotiable Certificates of Deposit 4,231 0.59% DNB ASA Negotiable Certificates of Deposit 3,612 0.50% Natixis NY Branch Negotiable Certificates of Deposit 15,006 2.10% Nordea Bank ABP Negotiable Certificates of Deposit 5,152 0.72% Rabobank Nederland Negotiable Certificates of Deposit 15,005 2.10% Skandinaviska Enskilda Banken AB Negotiable Certificates of Deposit 7,327 1.02% Societe Generale Negotiable Certificates of Deposit 4,969 0.69% Sumitomo Mitsui Financial Group Inc. Negotiable Certificates of Deposit Total Investments City of Scottsdale, Arizona 81 $ 4,227 0.59% 715,182 100.00% Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Investments Total City cash and investments at fair value are as follows (in thousands): Cash on Hand Carrying Amount of City Deposits Investments Endowments $ 19 158,038 754,557 708 Total Cash and Investments $ 913,322 The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The City has the following recurring fair value measurements as of June 30, 2021: Investments Measured at Fair Value (in thousands) Fair Value Measurements Using Significant Other Observable Inputs (Level 2) Quoted Prices in Active Markets for Identical Assets (Level 1) U.S. Government Securities $ - $ 260,344 Significant Unobservable Inputs (Level 3) $ - U.S. Government Agencies - 256,215 - U.S. Government Instrumentalities - 11,274 - Taxable State Bonds - 3,059 - Corporate Notes - 87,683 - Asset-Backed Securities - 12,068 - Negotiable Certificates of Deposit - 84,539 - $ - City of Scottsdale, Arizona 82 $ 715,182 $ - Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The following pricing methodologies are utilized to value the City’s investments: U.S. Government Securities Securities maturing over one year from issuance are evaluated by gathering information from market sources and integrating relative credit information, observed market movements, and sector news into the evaluated pricing applications and models. U.S. Government Agencies A bullet (non-call) spread scale is created for each issuer for maturities going out to forty years; an Option Adjusted Spread (OAS) model is incorporated to adjusted spreads of issues that have early redemption features; and final spreads are added to a U.S Treasury curve. A special cash discounting yield/price routine calculates prices from final yields to accommodate odd coupon payment dates typical of medium-term notes. U.S. Government Instrumentalities Evaluators gather information from market sources and integrate relative credit information, observed market movements, and sector news into the evaluated pricing applications and models. Taxable State Bonds Multi-dimensional relational model or series of matrices utilizing standard inputs including MSRB reported trades and material event notices plus MMD benchmark yields. Corporate Notes Evaluators gather information from market sources and integrate relative credit information, observed market movements, and sector news into the evaluated pricing applications and models. Asset-Backed Securities A single cash flow stream model is utilized. Negotiable Certificates of Deposit Multi-dimensional relational model and/or OAS. Total City cash and investments are reported as follows (in thousands): Primary Government Cash and Investments Cash with Fiscal Agent Other Restricted Cash Total Cash and Investments $ 750,914 108,111 54,297 $ 913,322 Investment income is comprised of the following for the fiscal year ended June 30, 2021 (in thousands): Net Interest Net Decrease in the Fair Value of Investments Total Net Investment Income $ 10,538 (7,181) $ 3,357 The net decrease in the fair value of investments for the fiscal year was $(7,181,057). This amount takes into account all changes in fair value (realized and unrealized) that occurred during the year. City of Scottsdale, Arizona 83 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 B. Endowments The City is the sole beneficiary of four permanent endowment funds, held and managed by the Arizona Community Foundation (Foundation). The endowment funds are managed in accordance with Arizona Revised Statute 10-11803, which governs the appropriation for expenditure or accumulation of endowment funds. The spending policy of the Foundation is communicated to the City annually. Distribution pursuant to the spending policy shall be based upon recommendation of the City, made by and through the City Council. As of June 30, 2021, the amount of donor-restricted endowment funds available for authorization and expenditure is $26,400. C. Receivables Receivables as of June 30, 2021, for the government’s individual major governmental funds, nonmajor governmental funds, and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows (in thousands): Governmental Activities and Internal Service Funds Receivables Property Taxes and Penalties Property Court Subtotal Property Taxes and Penalties General $ Other Local Taxes Privilege Transient Occupancy State Shared Sales Franchise Fee Auto Lieu Highway User Subtotal Other Local Taxes 1,277 60,570 61,847 General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ 1,155 1,155 Nonmajor and Other Funds - $ 93 54 147 Total Governmental and Internal Service Funds $ 2,525 60,624 63,149 17,678 1,508 3,044 513 22,743 - - 10,048 1,944 64 1,623 13,679 27,726 1,944 1,508 3,108 513 1,623 36,422 - - - 23,729 23,729 Interest and Other Interest Leases Miscellaneous Subtotal Interest and Other 692 25,204 5,273 31,169 - 134 1,320 1,454 215 1,300 4,690 6,205 1,041 26,504 11,283 38,828 Gross Receivables Less: Allowances for Uncollectibles 115,759 (51,066) 1,155 - 1,454 - 43,760 (33) 162,128 (51,099) Intergovernmental/Grants Net Total Receivables $ 64,693 $ 1,155 $ 1,454 $ 43,727 $ 111,029 The City has a development agreement relating to biomedical research activities with the Translational Genomics Research Institute (TGen) to repay $1,280,000 with interest through February 2024. The City has contracts with the Boys and Girls Club to pay a portion of building improvements at the City’s recreation center through November 2024, the amount due as of June 30, 2021, is $76,571. City of Scottsdale, Arizona 84 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The City has an improvement district for underground utilities with expected reimbursements from impacted property owners to pay $461,172 with interest through November 2032. Through the use of Community Development Block Grant (CDBG) funds, the City issues Green Housing Rehabilitation Program loans to qualified Scottsdale homeowners. As of June 30, 2021, the loan balances totaled $2,510,819, of which the majority is not expected to be collected within the next year. The City has an intergovernmental agreement with the Arizona State Land Department to reimburse the City for capital expenditures for street improvements of $12,645,550 after the land on which the improvements were made is sold. This receivable is not expected to be collected within the next year. The City has various long-term lease agreements and therefore the lease receivables are not expected to be collected within the next year. Business-type Activities and Enterprise Funds (in thousands) Water and Sewer Utility Receivables $ Privilege Tax Charges for Services 18,534 Intergovernmental 1,648 Interest 747 Lease Miscellaneous 2,022 Gross Receivables Less: Allowances for Uncollectibles $ 22,820 Solid Waste 29 422 28 24,558 359 22,951 (131) $ Net Total Receivables Airport $ 25,396 $ 25,396 2,611 43 - Total Enterprise Fund $ 2,654 (20) $ 2,634 29 21,145 2,070 818 24,558 2,381 51,001 (151) $ 50,850 The City has an intergovernmental agreement with the Arizona State Land Department to reimburse the City for capital expenditures for water and sewer improvements of $1,635,233 after the land on which the improvements were made is sold. This receivable is not expected to be collected within the next year. Within the business-type activity the City has various long-term lease agreements and therefore the lease receivables are not expected to be collected within the next year Governmental funds report deferred inflows in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Additionally, governmental funds record unearned revenue when resources have been received, but not yet earned. At the end of the fiscal year, the various components of deferred inflows and unearned revenue reported in the governmental funds were as follows (in thousands): Property Tax Court Privilege/Transient Occupancy Tax Intergovernmental Other Unavailable $ 1,180 3,481 8,031 18,772 2,116 Unearned $ 23,749 2,467 Total $ $ 33,580 26,216 City of Scottsdale, Arizona 85 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 D. Capital Assets Capital asset activity for the fiscal year ended June 30, 2021, was as follows (in thousands): Governmental Activities Capital Assets, not being depreciated Land Construction in Progress Total Capital Assets, not being depreciated Beginning Balance, as restated $ 3,220,312 53,367 3,273,679 Increases $ Decreases 207,171 73,536 280,707 $ Ending Balance (72,773) (72,773) $ 3,427,483 54,130 3,481,613 Capital Assets, being depreciated Buildings and Land Improvements Streets and Storm Drains Motor Vehicles Machinery and Equipment Total Capital Assets, being depreciated 804,807 1,843,246 89,644 85,810 2,823,507 25,792 128,625 5,867 6,574 166,858 (16,224) (437) (8,200) (4,979) (29,840) 814,375 1,971,434 87,311 87,405 2,960,525 Less Accumulated depreciation for Buildings and Land Improvements Streets and Storm Drains Motor Vehicles Machinery and Equipment Total Accumulated depreciation 397,353 1,184,802 43,003 48,641 1,673,799 21,959 52,019 8,095 6,897 88,970 (11,417) (232) (6,446) (4,770) (22,865) 407,895 1,236,589 44,652 50,768 1,739,904 1,149,708 77,888 (6,975) 1,220,621 Lease Assets Buildings and Land Improvements Motor Vehicles Machinery and Equipment Total Lease Assets, being amortized 1,570 1,075 312 2,957 122 122 (122) (41) (163) 1,570 1,075 271 2,916 Less Accumulated amortization for Buildings and Land Improvements Motor Vehicles Machinery and Equipment Total Accumulated amortization 276 293 93 662 276 358 78 712 (69) (41) (110) 552 582 130 1,264 2,295 (590) (53) 1,652 Subscription-Based Information Technology Arrangement Assets* Subscription-Based Information Technology Arrangements 806 5,335 - 6,141 Less Accumulated amortization for Subscription-Based Information Technology Arrangements - 1,143 - 1,143 806 4,192 - 4,998 Total Capital Assets, being depreciated, net Total Lease Assets being amortized, net Total Subscription-Based Information Technology Arrangement Assets being amortized, net Governmental Activities Capital Assets, net $ 4,426,488 $ 362,197 $ (79,801) $ 4,708,884 *New category for the City's subscription-based information technology arrangement assets, and the related accumulated amortization, have been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements . City of Scottsdale, Arizona 86 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 (in thousands): Business-type Activities Capital Assets, not being depreciated Land Water Rights Construction in Progress Beginning Balance, as restated $ Total Capital Assets, not being depreciated Increases 50,536 87,171 30,386 $ Decreases 1,631 71,915 $ Ending Balance (139) (44,571) $ 52,028 87,171 57,730 168,093 73,546 (44,710) 196,929 Capital Assets, being depreciated Water System Sewer System Buildings and Land Improvements Machinery and Equipment Motor Vehicles Furniture, Fixtures, and Office Equipment Total Capital Assets, being depreciated 1,350,524 660,691 73,177 8,682 1,151 1,575 2,095,800 33,210 21,538 6,992 619 357 62,716 (991) (354) (650) (7) (2,002) 1,382,743 682,229 79,815 8,651 1,151 1,925 2,156,514 Less Accumulated depreciation for Water System Sewer System Buildings and Land Improvements Machinery and Equipment Motor Vehicles Furniture, Fixtures, and Office Equipment 564,565 271,390 15,286 4,650 737 614 37,382 18,115 2,831 680 52 244 (225) (258) (377) (6) 601,722 289,505 17,859 4,953 789 852 857,242 59,304 (866) 915,680 1,238,558 3,412 (1,136) 1,240,834 Subscription-Based Information Technology Arrangement Assets* Subscription-Based Information Technology Arrangements 114 53 - 167 Less Accumulated amortization for Subscription-Based Information Technology Arrangements - 76 - 76 114 (23) - 91 Total Accumulated depreciation Total Capital Assets, being depreciated, net Total Subscription-Based Information Technology Arrangement Assets being amortized, net Business-type Activities Capital Assets, net $ 1,406,765 $ 76,935 $ (45,846) $ 1,437,854 *New category for the City's subscription-based information technology arrangement assets, and the related accumulated amortization, have been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. City of Scottsdale, Arizona 87 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Depreciation/Amortization expense was charged to functions/programs of the primary government as follows (in thousands): Governmental Activities City Clerk City Attorney City Court City Manager Public Works Community and Economic Development Public Safety City Treasurer Community Services Administrative Services Capital Assets Held by the Government's Internal Service Funds are Charged to the Various Functions Based on their Usage of the Assets $ 2 15 51 6 57,896 3,239 4,321 21 9,912 3,541 9,966 $ Total Depreciation Expense - Governmental Activities 88,970 Business-type Activities Water and Sewer System Airport Solid Waste Total Depreciation Expense - Business-type Activities $ 56,269 2,692 343 $ 59,304 Governmental Activities City Attorney City Manager Public Works Public Safety City Treasurer Community Services Administrative Services Scottsdale AZ CARES Total Amortization Expense - Governmental Activities $ 84 14 20 365 172 44 1,095 61 $ 1,855 Business-type Activities Water and Sewer System Airport Solid Waste Total Amortization Expense - Business-type Activities $ 44 29 3 $ 76 City of Scottsdale, Arizona 88 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Construction Commitments The City has active construction projects as of June 30, 2021. At year end the government’s commitments with contractors for specific projects are as follows (in thousands): Capital Project Program Classification Aviation Drainage and Flood Control Fire Protection Municipal Facilities Neighborhood and Community Parks Police Preservation Streets Technology Traffic Transit Wastewater Water Total Construction Commitments Governmental Activities General CIP Construction Capital Projects Fund Nonmajor Governmental Funds Internal Service Funds Total Governmental Activities Business-type Activities Water and Sewer Utility Airport Solid Waste Total Business-type Activities Total Construction Commitments Spent to Date $ 7,212 7,306 6,125 1,540 2,646 10,169 586 11,371 8,467 1,435 174 1,607 10,616 38,588 $ 107,842 Remaining Commitment $ 13,645 3,557 831 2,438 4,164 14,667 874 1,558 21,508 974 413 1,331 10,064 19,004 $ 95,028 $ $ $ City of Scottsdale, Arizona 89 6,353 44,932 51,285 49,316 7,212 29 56,557 107,842 $ 7,418 44,534 28 51,980 29,345 13,645 58 43,048 95,028 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 E. Interfund Balances and Interfund Transfers Due To and Due From Other Funds “Due to” and “Due from” balances have been recorded to address temporary cash flow needs. The composition of interfund balances as of June 30, 2021, is as follows (in thousands): Receivable Fund General Fund Amount $ 4,634 Payable Fund Nonmajor Governmental Funds Amount $ 4,634 The Municipal Property Corporation Bonds Capital Projects Fund, the External Sources Capital Project Fund, the Community Development Block Grant Special Revenue Fund, and HOME Special Revenue Fund had deficit cash balances of $22,586, $3,683,382, $227,867, and $699,721, respectively, due to pending reimbursements from bonds and grants. Interfund Transfers Transfers are used to fund capital projects and debt service, to administer other operations, and for indirect administrative cost allocations (including in-lieu franchise fees) charged to Enterprise Funds. Net Transfers (in thousands) Transfers Out Governmental Funds General Debt Service - General Obligation Bond Capital Projects - General CIP Construction Nonmajor Governmental Funds Total Governmental Funds $ Enterprise Funds Water and Sewer Utility Total Enterprise Funds Internal Service Funds Self-Insurance Total Internal Service Funds $ Total Transfers City of Scottsdale, Arizona 90 Transfers In 54,292 1,251 71,331 126,874 $ 11,895 31,501 18,368 73,573 135,337 8,546 8,546 - 5 5 88 88 135,425 $ 135,425 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 F. Leases City as Lessee The City, as a lessee, has entered into lease agreements involving a baseball facility, printing and imaging equipment, motor vehicles, a distributed antenna system, and a data center facility space. The City subleases the baseball facility to a professional baseball team. The total of the City’s lease assets are recorded at a cost of $2,915,205, less accumulated amortization of $1,263,534. The future lease payments under lease agreements are as follows (in thousands): 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2053 Total Leases Principal Interest $ 513 $ 66 $ 143 48 53 45 14 44 15 43 73 206 138 187 168 157 232 118 309 66 141 9 Total 579 191 98 58 58 279 325 325 350 375 150 $ 2,788 1,799 $ 989 $ City as Lessor The City, as a lessor, has entered into lease agreements involving land, a baseball facility, airport facilities, and building space. The baseball facility is leased from the City of Phoenix and subleased to a professional baseball team. The total amount of inflows of resources, including lease revenue, interest revenue, and other lease-related inflows, recognized during the fiscal year was $9,082,194. This total includes $5,513,729 of variable and other payments not previously included in the measurement of the lease receivable. City of Scottsdale, Arizona 91 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 G. Subscription-Based Information Technology Arrangements The City has entered into subscription-based information technology arrangements (SBITAs) involving: • A SCADA (Supervisory Control and Data Acquisition) watch service suite regarding the City’s water system • A geospatial technology system • Various desktop and server software subscriptions • Event registration and management software • Electronic workflows software • Information technology security software • Cloud backup services software • Document management software • Computer-aided dispatch software • Payroll and human resources services software • Performance measurement/strategic planning/benchmarking software • Risk management software • A web-based job board software • Public safety allocation and deployment software • Airport agreement tracking software The total of the City’s subscription assets are recorded at a cost of $6,307,696, less accumulated amortization of $1,219,078. The future subscription payments under SBITA agreements are as follows (in thousands): 2022 2023 2024 2025 2026 Subscriptions Principal Interest $ 1,125 $ 175 $ 1,053 130 731 91 761 62 787 31 Total 1,300 1,183 822 823 818 Total $ 4,457 4,946 $ 489 City of Scottsdale, Arizona 92 $ Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 In addition to the amounts presented above, the City also had outflows of resources during the fiscal year totaling $44,600 that were not included in the measurement of the subscription liability. This total consists of a $35,000 variable amount that is based on the number of calls related to the public safety allocation and deployment software and $9,600 for the annual payment related to the City’s usage of the web-based job board software. The period of the web-based job board software subscription is interminable; therefore, a subscription liability cannot be calculated. The City has committed to SBITAs involving an electronic document management software and a public safety records management system/computer aided dispatch software. These SBITAs are currently being implemented, and the City has paid a total of $1,388,002 related to these agreements. These outflows were recorded as prepayments as of June 30, 2021. H. Service Concession Arrangements In 1983, the City entered into a cost-sharing and land use agreement with the United States Bureau of Reclamation (BOR), under which the City would operate and develop the land where the City’s WestWorld operation is located for a period of 50 years (with a mutual option to renew for an additional 25 years). The City entered into this agreement to develop the WestWorld facility for public recreation use and to enhance its revenue stream from rentals, concession sales, and parking fees. Beginning in fiscal year 2001, the BOR required the City to make annual payments for the administration of the agreement, and the present value of those payments as of June 30, 2021, is $880,000. The City has also provided consideration in the form of land improvements with a book value of $10,502,000 as of June 30, 2013, upon implementation of GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements and an additional $54,762,000 through the fiscal year ended June 30, 2021. These improvements are classified as an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $41,131,000 at fiscal year end pursuant to the service concession arrangement. In 1985, the City entered into a recreational land use agreement with the BOR, under which the City would develop, operate, and maintain the land where the City’s Tournament Players Club (TPC) golf complex is located for a period of 50 years (with a mutual option to renew for an additional 25 years). The City entered into this agreement to develop the TPC complex for public recreation use and to enhance its revenue stream from facility usage fees and rentals. Beginning in fiscal year 1999, the BOR required the City to make annual payments for the administration of the agreement, and the present value of those payments as of June 30, 2021, is $1,034,000. The City also provided consideration in the form of land improvements with a book value of $10,127,000 as of June 30, 2013, upon implementation of GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements and an additional $8,542,000 through the fiscal year ended June 30, 2021. These improvements are classified as an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $13,211,000 at fiscal year end pursuant to the service concession arrangement. City of Scottsdale, Arizona 93 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 I. Bonds, Loans, and Other Payables The following are brief descriptions of bonds outstanding as of June 30, 2021. The totals shown are the principal amount outstanding, net of the amount due July 1, 2021. General Obligation Bonds General Obligation (GO) bonds are issued, after approval by City of Scottsdale voters at an authorized bond election, to finance the construction of water and sewer systems, artificial lighting, parks and open spaces, recreational facilities, public safety, and general-purpose improvements. In May 2004, voters authorized $500,000,000 of additional Preservation GO bonds, as well as an additional 0.15 percent sales tax increase to be used to finance Preserve land acquisitions. As of June 30, 2021, the City has $256,544,516 of unissued Preservation GO bonds from the May 2004 authorization. Preservation GO bonds are backed by the full faith and credit of the City and are repaid through the Preserve sales tax approved by voters in May 1995 and May 2004 to be used specifically to finance land acquisitions for the McDowell Sonoran Preserve. As of June 30, 2021, the City has $263,906,600 of unissued various purpose GO bonds that were authorized in November 2019. Municipal Property Corporation Bonds The City of Scottsdale Municipal Property Corporation (MPC) is a non-profit corporation created by the City in 1967 to finance the construction or acquisition of certain capital improvement projects. The MPC issues its own bonds, which are repaid through the City’s excise tax collections and other unrestricted revenues. The use of property taxes to repay these bonds is specifically prohibited by law. These bonds are recorded as both governmental and business-type activities long-term debt. A portion of the 2006 MPC Excise Tax Revenue Refunding Bonds, a portion of the 2015A MPC Excise Tax Revenue Bonds, the 2015 MPC Excise Tax Revenue Refunding Bonds, the 2017 MPC Excise Tax Revenue Refunding Bonds, the 2017A MPC Excise Tax Revenue Bonds, the 2021A MPC Excise Tax Revenue Refunding Bonds, and a portion of the 2021B MPC Taxable Excise Tax Revenue Refunding Bonds are recorded in and paid by the Water and Sewer Enterprise Fund. The 2017B MPC Excise Tax Revenue Bonds are recorded in and paid by the Airport Fund. The City has pledged to repay $585,974,252 in MPC Excise Tax Revenue Bonds issued from 2006 through June 30, 2021, payable through 2039. Bonds issued prior to July 1, 2010, were pledged by revenues that included transient occupancy tax while bonds issued after this date exclude transient occupancy tax. The coverage ratio (revenues to debt service) for 2021 for MPC bonds is 4.99 (excluding the transient occupancy tax). The total principal and interest remaining to be paid on all MPC bonds is $569,988,796. Principal and interest paid for the current year and total excise tax collections (excluding transient occupancy taxes) were $50,366,680 and $251,375,085, respectively. City of Scottsdale, Arizona 94 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The MPC bond issuances, for both governmental and business-type activities, contain the following provisions that would constitute an event of default by the City: • Non-punctual payment of principal or interest. • Default in the performance or observance of any covenant, agreement, or condition in the indenture or in the bonds not cured within 30 days of notice of default. The City is also considered to be in default if the issue is not curable within 30 days and corrective action is not diligently pursued to the satisfaction of the trustee within 30 days. • Bankruptcy, insolvency, and/or receivership. • Default on any bonds which are on a parity basis with the bonds in question. If any of the events of default transpire, the MPC bond trustee may file a suit or suits in equity or at law and appoint a receiver to collect and properly disburse pledged MPC revenues for debt service payments. Any amounts recovered through such proceedings shall be paid first to the costs and expenses incurred by the trustee, its agents, attorneys and counsel, and of all proper expenses, liabilities and advances incurred or made by the trustee or any registered owner(s) of the bonds in question. If a residual amount were to remain, it would be applied to the then-owed or unpaid amount related to the bonds. If insufficient funds were to exist, the residual amount would be allocated on a pro-rata basis to the then-owed or unpaid amount related to the bonds. Scottsdale Preserve Authority Bonds The Scottsdale Preserve Authority (SPA) is a non-profit corporation created by the City in 1997 to finance land acquisitions for the McDowell Sonoran Preserve. The SPA issues its own bonds, which are repaid through the 0.2 percent City sales tax approved by voters in May 1995 to be used specifically for this purpose. In May 2004, voters approved an additional 0.15 percent sales tax increase. SPA bonds are recorded as governmental activities long-term debt and are paid out of the SPA Debt Service Fund. The City has pledged to repay $12,015,000 in SPA bonds issued in 2011. The bonds are payable through 2022. The coverage ratio (revenues to debt service) for 2021 is 33.24. The total principal and interest remaining to be paid on the bonds is $1,418,000. Principal and interest paid for the current year and total sales tax were $1,411,500 and $46,920,906, respectively. City of Scottsdale, Arizona 95 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The SPA bond issuance contains the following provisions that would constitute an event of default by the City: • Non-punctual payment of principal or interest. • Default in the performance or observance of any covenant, agreement, or condition in the indenture or in the bonds not cured within 60 days of notice of default. The City is also considered to be in default if the issue is not curable within 60 days and corrective action is not diligently pursued to the satisfaction of the trustee within 60 days. • Bankruptcy, insolvency, and/or receivership. • Default on any bonds which are on a parity basis with the bonds in question. If any of the events of default transpire, the SPA bond trustee may file a suit or suits in equity or at law and appoint a receiver to collect and properly disburse pledged SPA revenues for debt service payments. Any amounts recovered through such proceedings shall be paid first to the costs and expenses incurred by the trustee, its agents, attorneys and counsel, and of all proper expenses, liabilities and advances incurred or made by the trustee or any registered owner(s) of the bonds in question. If a residual amount were to remain, it would be applied to the then-owed or unpaid amount related to the bonds. If insufficient funds were to exist, the residual amount would be allocated on a pro-rata basis to the then-owed or unpaid amount related to the bonds. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued and authorized by the voters for the construction, acquisition, furnishing, and equipping of water and sewer facilities and related systems. The water and sewer revenue bonds are collateralized by revenue in excess of operating and maintenance expenses of the City’s water and sewer utility system and are repaid via user charges or fees for service. Property taxes cannot be used to pay the debt service on these bonds. Water and sewer revenue bond covenants require that the City accumulate sufficient reserves to cover the eventual replacement of the water and sewer system. The City has continued to meet this reserve requirement. As of June 30, 2021, the funds restricted for this purpose were $44,050,510. The City has pledged to repay $35,290,000 in water and sewer revenue bonds issued in 2008. The bonds are payable through 2023. The coverage ratio (revenues to debt service) for 2021 is 19.26. The total principal and interest remaining to be paid on the bonds is $9,196,788. Principal and interest for the current year and total customer net revenues were $4,583,625 and $88,278,000, respectively. The Water and Sewer Revenue bond issuance contains the following provisions that would constitute an event of default by the City: • Non-punctual payment of principal or interest. • Failure in the performance or observance of any covenants or agreements in the bonds or the authorizing resolution. City of Scottsdale, Arizona 96 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 If any of the events of default transpire, any owner of the bonds then outstanding may appoint a receiver which can take possession of the Water and Wastewater Enterprise System (System); set rates, charges, and tolls; and apply all revenues in the same manner as the City might itself do. The receiver would operate the System for the direct benefit of the owners of the bonds and would use proceeds of System revenue to pay principal and interest on the bonds, as well as all costs incurred in the receivership. The receiver would continue to remain in possession and control of the System until all delinquent amounts and costs of the receivership are paid in full. Community Facilities Districts General Obligation Bonds Community Facilities District General Obligation Bonds are issued by Community Facilities Districts (CFDs), which are special purpose districts created specifically to acquire and improve public infrastructure in specified land areas. CFD bonds are repaid by ad valorem taxes levied directly by the districts and collected by the county. Property owners in the districts are assessed for district taxes and thus for all costs associated with the districts. The City has no liability for CFD bonds. CFDs are created only by petition to the City Council by property owners within the district areas. As the Board of Directors for the CFDs, the City Council has adopted a formal policy that CFD debt will be permitted only when the full cash value of the property, as reported by the Maricopa County Assessor’s Office, to debt ratio (prior to improvements being installed) is a minimum of 3 to 1 prior to issuance of debt and 5 to 1 or higher after construction of improvements. These ratios are verified by an appraisal paid for by the CFD and administered by the City. In addition, cumulative debt of all CFDs cannot exceed 5 percent of the City’s net assessed limited property valuation. Failure to pay the principal and interest when due and payable would constitute an event of default by the City in relation to any of the CFD bond issuances. If such an event of default transpires, the CFD bond trustee may pursue all remedies in law and equity. The following provisions apply only to the 2019 Waterfront Commercial CFD Refunding Bonds: • Default in the performance or observance of any covenant, agreement, or obligation not cured within 30 days of notice of default. No event of default will be deemed to have occurred so long as a course of action has been commenced within 30 days and is diligently prosecuted to completion. • Any representation or warranty by the District that proves to have been materially incorrect when made or confirmed. • Bankruptcy, insolvency, and/or receivership. • Default and/or acceleration of payment of any other District indebtedness. • Actual or asserted invalidity or impairment of the District Documents or the Series 2019 Bonds. If any non-punctual payment of principal or interest occurs, the Waterfront CFD bond trustee may recover the costs and expenses of administration and collection related to the unpaid amounts. Additionally, the Waterfront CFD bond trustee shall be entitled to a writ of mandamus compelling performance. City of Scottsdale, Arizona 97 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Bonds payable as of June 30, 2021, consisted of the following: Classified in Governmental Activities on the Government-wide Financial Statements: General Obligation Bonds Bonds Outstanding (in thousands) 2012 Refunding Bonds (issued July 11, 2012) due in annual installments of $205,000 to $30,045,000 through July 1, 2025; interest at 2 percent to 5 percent. On December 30, 2020, $30,045,000 due in 2025 was refunded. Original issue amount $83,025,000. $ 11,835 2013 Preservation Bonds (issued February 13, 2013) due in annual installments of $1,000,000 to $8,665,000 through July 1, 2034; interest at 2 percent to 4 percent. On December 30, 2020, $63,000,000 due 2025 through 2034 was refunded. Original issue amount $75,000,000. 7,000 2014 Preservation Bonds (issued May 7, 2014) due in annual installments of $465,000 to $945,000 through July 1, 2034; interest at 1.75 percent to 4 percent. On December 30, 2020, $6,690,000 due 2027 through 2034 was defeased. Original issue amount $14,000,000. 3,390 2014 Refunding Bonds (issued May 7, 2014) due in annual installments of $3,845,000 to $12,230,000 through July 1, 2023; interest at 2 percent to 5 percent. Original issue amount $83,150,000. 23,805 2015 Refunding Bonds (issued April 2, 2015) due in annual installments of $500,000 to $30,565,000 through July 1, 2034; interest at 3 percent to 4 percent. On December 30, 2020, $3,290,000 due 2029 through 2034 was refunded. Original issue amount $160,415,000. 102,975 2017A Preservation Bonds (issued March 8, 2017) due in annual installments of $1,825,000 to $2,545,000 through July 1, 2034; interest at 4 percent to 5 percent. Original issue amount $17,410,000. 17,410 2017B Preserve Acquisition Refinancing Bonds (issued May 17, 2017) due in annual installments of $3,510,000 to $5,790,000 through July 1, 2024; interest at 5 percent. Original issue amount $18,495,000. 14,985 2017 Refunding Bonds (issued May 17, 2017) due in annual installments of $1,055,000 to $5,525,000 through July 1, 2034; interest at 3 percent to 5 percent. Original issue amount $39,985,000. 39,985 2017C Various Purpose Bonds (issued December 6, 2017) due in annual installments of $1,690,000 to $6,800,000 through July 1, 2027; interest at 5 percent. Original issue amount $25,500,000. 13,360 2020 Taxable Refunding Bonds (issued December 30, 2020) due in annual installments of $2,155,000 to $33,150,000 through July 1, 2034; interest at 0.15 percent to 1.64 percent. Original issue amount $168,220,000. 164,045 2021 Various Purpose Bonds (issued February 10, 2021) due in annual installments of $1,135,000 to $1,965,000 through July 1, 2040; interest at 2 percent to 4 percent. Original issue amount $31,390,000. 29,990 2021 Various Purpose Taxable Bonds (issued February 10, 2021) due in annual installments of $325,000 to $1,195,000 through July 1, 2040; interest at 1.35 percent to 3 percent. Original issue amount $19,770,000. 19,445 Total General Obligation Bonds Outstanding $ Some of the above General Obligation Bonds are paid from the .2 percent and .15 percent Preservation Sales Taxes. City of Scottsdale, Arizona 98 448,225 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Municipal Property Corporation Bonds Bonds Outstanding (in thousands) 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due in annual installments of $1,200,000 to $4,975,000 through July 1, 2034; interest at 5 percent. Original issue amount $55,450,000. $ 44,920 2013A Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $830,000 to $2,920,000 through July 1, 2028; interest at 3 percent to 5 percent. On February 17, 2021, $12,765,000 due 2024 through 2028 was refunded. Original issue amount $26,295,000. 3,820 2013B Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $45,000 to $100,000 through July 1, 2033; interest at 3 percent to 5 percent. On February 17, 2021, $875,000 due 2024 through 2033 was refunded. Original issue amount $1,440,000. 135 2013C Municipal Property Corporation Excise Tax Revenue Bonds (issued February 13, 2013) due in annual installments of $1,210,000 to $2,855,000 through July 1, 2033; interest at 3 percent to 5 percent. On February 17, 2021, $23,070,000 due 2024 through 2033 was refunded. Original issue amount $37,265,000. 3,350 2014 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued May 29, 2014) due in annual installments of $1,730,000 to $3,040,000 through July 1, 2027; interest at 1.75 percent to 5 percent. Original issue amount $22,735,000. 13,230 2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual installments of $205,000 to $865,000 through July 1, 2034; interest at 3 percent to 5 percent. On February 17, 2021, $685,000 due in 2027 was refunded. Original issue amount $12,200,000. 8,495 2015A Municipal Property Corporation Taxable Excise Tax Revenue Bonds (issued January 6, 2015) due in annual installments of $275,000 to $1,025,000 through July 1, 2034; interest at 2 percent to 4 percent. Original issue amount $14,615,000. 10,735 2019A Municipal Property Corporation Excise Tax Revenue Bonds (issued October 23, 2019) due in annual installments of $205,000 to $645,000 through July 1, 2039; interest at 3 percent to 5 percent. Original issue amount $9,275,000. 8,760 2019B Municipal Property Corporation Taxable Excise Tax Revenue Bonds (issued October 23, 2019) due in annual installments of $940,000 to $2,125,000 through July 1, 2039; interest at 1.85 percent to 2.9 percent. Original issue amount $33,275,000. 30,950 2021B Municipal Property Corporation Taxable Excise Tax Revenue Refunding Bonds (issued February 17, 2021) due in annual installments of $330,000 to $9,410,000 through July 1, 2035; interest at 0.14 percent to 1.91 percent. Original issue amount $71,325,000. 70,995 Total Municipal Property Corporation Bonds Outstanding City of Scottsdale, Arizona 99 $ 195,390 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Scottsdale Preserve Authority Bonds Bonds Outstanding (in thousands) 2011 Scottsdale Preserve Authority Excise Tax Revenue Refunding Bonds (issued on April 6, 2011) due in annual installments of $920,000 to $1,350,000 through July 1, 2022; interest at 2 percent to 5 percent. Original issue amount $12,015,000. $ 1,350 $ 6,875 Community Facilities Districts General Obligation Bonds - Direct Placements 2012 DC Ranch Community Facilities District General Obligation Refunding Bonds (issued September 18, 2012) due in annual installments of $555,000 to $1,245,000 through July 15, 2027; interest at 3.41 percent. Original issue amount $14,670,000. 2012 McDowell Mountain Ranch Community Facilities District General Obligation Refunding Bonds (issued September 18, 2012) due in annual installments of $1,020,000 to $1,335,000 through July 15, 2022; interest at 2.84 percent. Original issue amount $11,555,000. 1,335 2012 Via Linda Community Facilities District General Obligation Refunding Bonds (issued September 18, 2012) due in annual installments of $135,000 to $210,000 through July 15, 2023; interest at 2.60 percent. Original issue amount $2,000,000. 415 2019 Waterfront Commercial Community Facilities District General Obligation Refunding Bonds (issued November 14, 2019) due in annual installments of $172,000 to $225,000 through July 15, 2032; interest at 2.47. Original issue amount $2,563,000. 2,201 Total Community Facilities Districts General Obligation Bonds - Direct Placements Total Bonds Payable Recorded in Governmental Activities City of Scottsdale, Arizona 100 $ 10,826 $ 655,791 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Classified in Business-type Activities on the Government-wide Financial Statements: Water and Sewer Revenue Bonds Bonds Outstanding (in thousands) 2008 Water and Sewer Revenue Refunding Bonds (issued February 6, 2008) due in annual installments of $190,000 to $4,375,000 through July 1, 2023; interest at 3.25 percent to 5.25 percent. Original issue amount $35,290,000. $ 8,520 $ 62,150 Municipal Property Corporation Bonds 2006 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued November 29, 2006) due in annual installments of $3,600,000 to $10,140,000 through July 1, 2030; interest at 5 percent. Original issue amount $110,510,000. 2015A Municipal Property Corporation Excise Tax Revenue Bonds (issued January 6, 2015) due in annual installments of $310,000 to $1,305,000 through July 1, 2034; interest at 3 percent to 5 percent. On February 17, 2021, $1,040,000 due in 2027 was refunded. Original issue amount $18,485,000. 12,865 2015 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 26, 2015) due in annual installments of $3,788,459 to $5,822,479 through July 1, 2028; interest at 5 percent. On February 17, 2021, $11,257,479 due 2027 through 2028 was refunded. Original issue amount $46,811,731. 23,635 2017 Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued March 1, 2017) due in annual installments of $2,015,000 to $12,630,000 through July 1, 2036; interest at 3 percent to 5 percent. On February 17, 2021, $38,350,000 due 2031 through 2033 and 2035 through 2036 was defeased. Original issue amount $79,970,000. 41,620 2017A Municipal Property Corporation Excise Tax Revenue Bonds (issued May 24, 2017) due in annual installments of $1,080,000 to $2,730,000 through July 1, 2037; interest at 3 percent to 5 percent. Original issue amount $39,065,000. 33,890 2017B Municipal Property Corporation Excise Tax Revenue Bonds (issued May 24, 2017) due in annual installments of $645,000 to $1,655,000 through July 1, 2037; interest at 3 percent to 5 percent. Original issue amount $23,520,000. 20,430 2021A Municipal Property Corporation Excise Tax Revenue Refunding Bonds (issued February 17, 2021) due in a single installment of $7,920,000 on July 1, 2030; interest at 5 percent. Original issue amount $7,920,000. 7,920 2021B Municipal Property Corporation Taxable Excise Tax Revenue Refunding Bonds (issued February 17, 2021) due in annual installments of $145,000 to $12,750,000 through July 1, 2036; interest at 0.14 percent to 1.96 percent. Original issue amount $63,860,000. 63,055 Total Municipal Property Corporation Bonds Outstanding Total Bonds Payable Recorded in Business-type Activities Total Long-Term Bonds Payable City of Scottsdale, Arizona 101 $ 265,565 $ 274,085 $ 929,876 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Statutory Debt Limitation Under the provisions of Article 9, section 8 of the Arizona Constitution, outstanding General Obligation (GO) bonded debt (including outstanding “excess premium,” as defined in Arizona Revised Statutes Title 35, Chapter 3, Articles 3 and 4) issued for water, sewers, artificial light, parks, playgrounds and recreational facilities, open space preserves, public safety, and streets and transportation facilities may not exceed 20 percent of a city’s assessed valuation. Outstanding GO bonded debt for all other purposes may not exceed 6 percent of a city’s assessed valuation. GO bonds of community facilities districts are not subject to or included in this calculation. The following summarizes the City’s legal GO bonded debt borrowing capacity as of June 30, 2021: General Obligation Bonds Issued to Provide Water, Sewers, Artificial Light, Parks, Playgrounds and Recreational Facilities, Open Space Preserves, Public Safety, and Streets and Transportation Facilities 20% Constitutional Limit $ 1,630,940,254 Less General Obligation 20% Bonds Outstanding (444,366,000) Excess Premium (12,712,816) General Obligation Bonds Issued for All Other Purposes 6% Constitutional Limit $ 489,282,076 Less General Obligation 6% Bonds Outstanding (3,859,000) Excess Premium (425,619) Available 20% Limitation Borrowing Capacity Available 6% Limitation Borrowing Capacity $ 1,173,861,438 $ 484,997,457 Arbitrage Under U.S. Treasury Department regulations, all governmental tax-exempt debt issued after August 31, 1986, is subject to arbitrage rebate requirements. The requirements stipulate, in general, that the earnings from the investment of tax-exempt bond proceeds which exceed related interest expenditures on the bonds must be remitted to the federal government on every fifth anniversary of each bond issue. The City used an independent consultant to evaluate the City’s outstanding tax-exempt debt for arbitrage liability and determined that there is no arbitrage liability due as of June 30, 2021. Current and Advance Refundings and Defeasances In prior years, the City refinanced other bond issues through the issuance of refunding bonds. The proceeds from the refunding bonds have been deposited in irrevocable trusts at commercial banks and invested in U.S. Government securities which, together with interest earned thereon, will provide amounts sufficient for future redemption or payment of principal and interest of the issues refunded. As a result, the refunded bonds are considered defeased and the liability has been removed from the governmental activities column of the financial statements. City of Scottsdale, Arizona 102 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The City issued $168,220,000 of Taxable General Obligation Refunding Bonds, Series 2020 ($167,900,155 advance refunding, $319,845 current refunding) dated December 30, 2020, with an allin true interest cost of 1.31 percent to refund $154,945,000 of Series 2010, Series 2011 Preservation, Series 2011 Refunding Preservation, Series 2012 Preservation, Series 2012 Refunding Preservation, Series 2013 Preservation, Series 2014 Preservation, and Series 2015 Refunding Preservation Bonds with an average interest rate ranging from 3 percent to 5 percent. The City will reduce its total debt service payments over the next 13 years by approximately $14,485,874 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $13,281,245. The Scottsdale MPC issued $7,920,000 of Refunding Bonds, Series 2021A (current refunding) dated February 17, 2021, with an all-in true interest cost of 0.93 percent to refund $10,710,000 of Series 2010 Bonds with an average interest rate of 4 percent. The City will reduce its total debt service payments over the next 10 years by approximately $2,351,200 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $1,803,960. The Scottsdale MPC issued $135,185,000 of Taxable Refunding Bonds, Series 2021B (advance refunding) dated February 17, 2021, with an all-in true interest cost of 1.58 percent to refund $113,220,000 of Series 2013, Series 2015A, Series 2015 Refunding, and Series 2017 Refunding Bonds with an average interest rate ranging from 3 percent to 5 percent. The City will reduce its total debt service payments over the next 16 years by approximately $10,507,435 and obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of approximately $9,727,987. The following table reflects refunded debt outstanding as of June 30, 2021, net of any amounts to be paid or retired by the trustee on July 1, 2021 (in thousands): Refunded Debt Outstanding 2012 Preservation GO Bonds 2012 GO Refunding Bonds 2013 Preservation GO Bonds 2013A MPC Excise Tax Revenue Bonds 2013B MPC Excise Tax Revenue Bonds 2013C MPC Excise Tax Revenue Bonds 2014 Preservation GO Bonds 2015 GO Refunding Bonds 2015A MPC Excise Tax Revenue Bonds 2015 MPC Excise Tax Revenue Refunding Bonds 2017 MPC Excise Tax Revenue Refunding Bonds City of Scottsdale, Arizona 103 $ 45,600 30,045 63,000 12,765 875 23,070 6,690 3,290 1,725 36,435 38,350 $ 261,845 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Contracts Payable The City has entered into a contract related to the financing of an underground utility facilities improvement district. The following is a summary of debt service to maturity for the long-term contract as of June 30, 2021: Classified in Governmental Activities on the Government-wide Financial Statements: Contracts Payable (in thousands) Contract payable to BBVA USA for the financing of an underground utility facilities improvement district; due in annual installments through 2033; interest at 5.72 percent. $ 451 Changes in Long-Term Liabilities The following is a summary of changes in long-term liabilities reported in the government-wide financial statements for the fiscal year ended June 30, 2021 (in thousands): Beginning Balance, as restated Governmental Activities Bonds Payable General Obligation Bonds Municipal Property Corporation Bonds Scottsdale Preserve Authority Bonds Community Facilities Districts General Obligation Bonds - Direct Placements Add Issuance Premiums Total Bonds Payable $ Contracts Payable* Leases Service Concession Arrangements Subscriptions** Risk Management Claims Compensated Absences Total Other Postemployment Benefit Liability Net Pension Liabilities $ Governmental Activities Long-Term Liabilities 433,865 199,614 2,630 13,488 53,610 703,207 496 2,373 2,068 806 21,972 27,946 2,177 320,830 1,081,875 Additional Obligations and Net Increases Current Maturities, Retirements, and Net Decreases $ $ $ 219,380 71,325 4,200 294,905 163 4,746 36,930 12,387 63,005 412,136 $ (205,020) (75,549) (1,280) (2,662) (23,032) (307,543) (45) (737) (154) (1,165) (35,921) (10,426) (254) (356,245) *The Contracts Payable category beginning balance was added due to a change in accounting treatment. **New category for the City's subscription liabilities have been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. City of Scottsdale, Arizona 104 Ending Balance $ $ 448,225 195,390 1,350 10,826 34,778 690,569 451 1,799 1,914 4,387 22,981 29,907 1,923 383,835 1,137,766 Amounts Due Within One Year $ $ 49,340 14,685 1,350 2,767 68,142 38 513 154 1,079 7,880 12,386 90,192 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Internal service funds serve primarily the governmental funds, the long-term liabilities of which are included as part of the governmental activities. For the fiscal year ended June 30, 2021, $504,000 of accrued compensated absences is included in the above amount for internal service funds. For the governmental activities, the General Fund, special revenue funds, and internal service funds generally liquidate accrued compensated absences, the total OPEB liability, and the net pension liabilities. The compensated absences presented in this note are net of the current liability of $3,000 in the governmental funds and $1,000 in the internal service funds. Business-type Activities Bonds Payable Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Add Issuance Premiums Total Bonds Payable Subscriptions* Compensated Absences Net Pension Liabilities Pollution Remediation Obligation Business-type Activities Long-Term Liabilities Beginning Balance, as restated Additional Obligations and Net Increases Current Maturities, Retirements, and Net Decreases $ $ $ $ 12,450 273,791 26,159 312,400 114 3,915 31,189 49,836 397,454 $ 71,780 2,938 74,718 53 1,721 6,559 19 83,070 $ (3,930) (80,006) (8,413) (92,349) (97) (1,620) (94,066) Ending Balance $ $ 8,520 265,565 20,684 294,769 70 4,016 37,748 49,855 386,458 Amounts Due Within One Year $ $ 4,145 18,110 22,255 46 1,684 23,985 *New category for the City's subscription-based information technology arrangements has been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. City of Scottsdale, Arizona 105 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for long-term liabilities as of June 30, 2021: Governmental Activities (in thousands) Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2053 Total Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2053 Total Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2053 Total General Obligation Bonds Issued to Provide Water, Sewers, Artificial Light, Parks, Playgrounds and Recreational Facilities, Open Space Preserves, Public Safety, and Streets and Transportation Facilities 20% Limitation Principal Interest Total $ 49,194 $ 12,147 $ 61,341 52,823 10,388 63,211 56,352 8,600 64,952 51,506 6,618 58,124 38,230 5,759 43,989 124,418 15,601 140,019 60,536 3,879 64,415 11,307 563 11,870 - General Obligation Bonds Issued For All Other Purposes 6% Limitation Principal Interest Total $ 146 $ 112 $ 258 152 106 258 158 100 258 164 94 258 170 87 257 962 329 1,291 1,124 167 1,291 983 50 1,033 - Total General Obligation Bonds Principal Interest Total $ 49,340 $ 12,259 $ 61,599 52,975 10,494 63,469 56,510 8,700 65,210 51,670 6,712 58,382 38,400 5,846 44,246 125,380 15,930 141,310 61,660 4,046 65,706 12,290 613 12,903 - $ 444,366 $ 507,921 $ $ 448,225 $ Municipal Property Corporation Bonds Principal Interest $ 14,685 $ 5,886 $ 13,255 5,362 13,935 4,804 14,445 4,398 15,020 3,958 75,080 13,225 40,885 3,988 8,085 477 $ 195,390 $ 63,555 42,098 $ $ 3,859 64,600 $ 512,825 Total 20,571 18,617 18,739 18,843 18,978 88,305 44,873 8,562 - Scottsdale Preserve Authority Excise Tax Revenue Bonds Principal Interest Total $ 1,350 $ 68 $ 1,418 - Leases Principal Interest $ 513 $ 66 $ 143 48 53 45 14 44 15 43 73 206 138 187 168 157 232 118 309 66 141 9 Total 579 191 98 58 58 279 325 325 350 375 150 237,488 $ $ 989 $ 2,788 Subscriptions Interest $ 172 $ 129 91 62 31 - Total 1,251 1,158 822 823 818 - 1,350 $ 1,045 $ 68 $ $ 4,904 1,418 1,799 Community Facilities Districts General Obligation Bonds - Direct Placements Principal Interest Total $ 2,767 $ 337 $ 3,104 1,476 254 1,730 1,310 207 1,517 1,355 164 1,519 1,400 120 1,520 2,293 149 2,442 225 6 231 - Service Concession Arrangements Principal Interest Total $ 154 $ 242 $ 396 154 262 416 154 283 437 154 305 459 154 327 481 769 2,023 2,792 375 1,337 1,712 - Principal $ 1,079 1,029 731 761 787 - $ $ $ 10,826 $ 1,237 $ 12,063 1,914 $ 4,779 (continued) City of Scottsdale, Arizona 106 $ 6,693 4,387 $ $ 485 $ 4,872 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Governmental Activities (in thousands) Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2051 2052-2053 Total Contracts Payable Principal Interest $ 38 $ 26 $ 38 24 38 22 38 19 38 17 191 53 70 5 $ 451 $ Total 64 62 60 57 55 244 75 - Total Governmental Activities Principal Interest Total $ 69,926 $ 19,056 $ 88,982 69,070 16,573 85,643 72,731 14,152 86,883 68,437 11,704 80,141 55,814 10,342 66,156 203,786 31,586 235,372 103,353 9,569 112,922 20,543 1,247 21,790 232 118 350 309 66 375 141 9 150 617 $ 664,342 $ 114,422 $ 778,764 166 $ (continued) City of Scottsdale, Arizona 107 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Business-type Activities (in thousands) Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 Total Fiscal Year 2022 2023 2024 2025 2026 2027-2031 2032-2036 2037-2041 Total Water and Sewer Revenue Bonds Principal Interest $ 4,145 $ 447 $ 4,375 230 - Total 4,592 4,605 - Municipal Property Corporation Bonds Principal Interest Total $ 18,110 $ 10,043 $ 28,153 20,915 9,200 30,115 22,000 8,257 30,257 17,450 7,241 24,691 18,440 6,427 24,867 101,055 20,184 121,239 63,210 5,431 68,641 4,385 153 4,538 $ 677 $ 9,197 $ 265,565 $ Subscriptions Principal Interest $ 46 $ 3 $ 24 1 - Total 49 25 - Total Business-type Activities Principal Interest Total $ 22,301 $ 10,493 $ 32,794 25,314 9,431 34,745 22,000 8,257 30,257 17,450 7,241 24,691 18,440 6,427 24,867 101,055 20,184 121,239 63,210 5,431 68,641 4,385 153 4,538 $ 8,520 $ 70 $ 4 $ 74 $ 274,155 $ City of Scottsdale, Arizona 108 66,936 $ 332,501 67,617 $ 341,772 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 V. OTHER INFORMATION A. Risk Management The City is exposed to various risks of loss related to public and aviation liability, self-insured benefits, workers’ compensation, and property and casualty claims. Public liability includes public officials’ errors and omissions, law enforcement liability, premises liability, and automobile and general liability. The City is self-insured for the first $2,000,000 of public liability, the first $100,000 of property coverage, the first $325,000 of health benefits claims for an individual in a fiscal year, and the first $1,000,000 of workers’ compensation claims. Coverage in excess of these respective amounts is provided through the purchase of commercial insurance. As for claim expenditures, settlements for each of the past three fiscal years have not exceeded the City’s excess insurance coverage amounts for any claims. The City reports its self-insurance activity in the Self-Insurance Internal Service Fund. Claims liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. The liability claims amount recorded in the accompanying financial statements is based on reported pending claims and an actuarial analysis and projection of the accrued liability amounts necessary to fund the claims. As of June 30, 2021, the general liability claims payable totaled $20,657,000 and the self-insured benefits claims payable totaled $2,324,000. Fiscal Year Ended June 30 (in thousands) 2021 B. 2020 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 21,972 36,930 (35,921) $ 22,447 37,123 (37,598) Claims Payable, June 30 $ 22,981 $ 21,972 Contingent Liabilities The City is subject to a number of lawsuits, investigations, and other claims that are incidental to its normal operations. Although the outcome of these lawsuits is not presently determinable, in the opinion of City management, based on advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the financial condition of the City. The City is self-insured for the first $2,000,000 of public liability; coverage in excess of this amount is provided through the purchase of commercial insurance. For more information on the City’s self-insurance, refer to Note V.A. above. In January 2013, the City entered into a settlement agreement with Scottsdale Fashion Square LLC to prepay an existing lease. In addition to a cash payment, the settlement included a provision for a waiver of $2.5 million against future City fees associated with the development of the Scottsdale Fashion Square parcel plus any property acquired in the future that is contiguous to the property. The eligible fees to be waived include water and sewer development fees. Per Arizona Revised Statute 9-463.05, “If a municipality agrees to waive any of the development fees assessed on a development, the municipality shall reimburse the appropriate development fee accounts for the amount that was waived.” As of June 30, 2021, approximately $2.2 million in fee waivers have been applied. City of Scottsdale, Arizona 109 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The City has entered into several agreements whereby it will reimburse developers a portion of development costs, interest, or sales tax generated on their site for a period of time and up to a maximum dollar amount. The funding source for the reimbursements will come from sales tax collected on the site over the life of the agreements. Depending on the terms of the agreement, the City does not become liable for payment until certain milestones are met, a certificate of occupancy is issued, or sales tax is generated, collected, and remitted to the City. As of June 30, 2021, these requirements have not been met under any of the agreements. The City’s estimated contingent liability related to the agreements at June 30, 2021, is $56.6 million. C. Tax Abatement Agreements The City enters into transaction privilege tax abatement agreements on an individual basis. The privilege taxes abated consist of a rebate of part of the 1 percent unrestricted portion of the City’s privilege tax rate. These abatement agreements are authorized through City Council resolution. There are no specific criteria against which such agreements are evaluated. Rather, the City Council, exercising the authority granted to it by law, and weighing the projected forsaken tax revenues against the potential benefits that would accrue to the City as a result of a particular tax abatement agreement, concludes whether or not the proposed tax abatement would be sufficiently advantageous to the City to warrant such an accord. For the fiscal year ended June 30, 2021, the City did not abate any eligible privilege taxes in connection with the following tax abatement agreement, which comprises the entirety of the City’s tax abatement agreements: • A rebate of 2/3 of eligible privilege taxes to a developer for constructing and operating facilities for the sale and service of three or more premium brand-new car dealerships. The applicable privilege taxes are derived from: • Prime contracting activities relating to the construction of the dealerships. • Activity transpiring at the dealerships. • Activity transpiring at another location owned by the developer, contingent upon the location remaining a motorized vehicle sales facility. No tax has been abated as of June 30, 2021, as the developer has yet to construct and commence the initial operation of the dealerships. As part of the agreement, the City also agreed to waive any City fees related to the initial design and construction of, or the issuance of a certificate of occupancy for, the dealerships. City of Scottsdale, Arizona 110 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 D. Joint Ventures Sub-Regional Operating Group (SROG) The City participates in the multi-city Sub-Regional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) in order to govern the construction, operation, and maintenance of jointly used sewage treatment and transportation facilities. The facilities include the 91st Avenue Wastewater Treatment Plant, the Salt River Outfall Sewer, the Southern Avenue Interceptor, and related transportation facilities. The City of Phoenix acts as lead agency and is responsible for the planning, budgeting, construction, operation, and maintenance of the facilities. In addition, the City of Phoenix provides all management, personnel, financing arrangements, and accepts federal grants on behalf of the participants. The JEPA requires each city to pay for its share of the actual cash costs of operating and maintaining the facilities based on relative sewage flows and strengths. The City records its share of SROG’s cash operating expenses and its equity in the joint venture in the City’s Water and Sewer Fund. For the fiscal year ended June 30, 2020, the latest audited information available from SROG, the City’s net investment in SROG was $85,374,000. SROG’s net cash operating expenses for the fiscal year ended June 30, 2020, were $38,910,201, of which the City’s share was $3,367,188, or 8.65 percent. For the fiscal year ended June 30, 2021, the City paid $4,679,261 for SROG capital contributions and shared in estimated depreciation/replacement reserve of $5,250,174, resulting in an estimated equity balance as of June 30, 2021, of $84,803,087. The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020, for the multicity Sub-Regional Operating Group (the latest SROG Comprehensive Annual Financial Report available) may be obtained from the Arizona Municipal Water Users Association, 3003 North Central Avenue, Suite 1550, Phoenix, AZ 85012. Regional Wireless Cooperative (RWC) The City participates in the Regional Wireless Cooperative (RWC), an association of municipalities formed in 2008 to oversee the administration, operation, management, and maintenance of an expanding regional communications network. The RWC was formed through a governance structure founded on the principles of cooperation for the mutual benefit of all members and has expanded to serve a still-growing list of cities, towns, and fire districts, along with many other area entities who serve public safety needs. A regional radio communications network was built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around the Greater Phoenix Metropolitan Region. Financial responsibilities are shared by all members based on their relative size and is measured by the number of subscriber units (radios) on the network. The City of Phoenix is responsible for the day-to-day operations and maintenance of the network, as well as the management of the RWC’s organization and finances. City of Scottsdale, Arizona 111 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The City records its share of contributions to the RWC, third party contributions paid to the RWC for the benefit of the City, and equity in the joint venture in the City’s proprietary funds and governmentwide financial statements. The equity balance as of June 30, 2020, the latest audited information available from RWC, was $1,971,110 or 2.87 percent of the RWC’s total net position. The City contributed $255,912 for the fiscal year ended June 30, 2021, and shared in estimated depreciation expenses of $231,828, resulting in an estimated equity balance as of June 30, 2021, of $1,995,194. The RWC Comprehensive Annual Financial Statement is available from the Regional Wireless Cooperative, 200 West Washington Street, 14th Floor, Phoenix, Arizona, 85003-1611. E. Pollution Remediation In the proprietary funds financial statements, a long-term pollution remediation obligation is recognized for the remaining remediation period. In 1981, groundwater contamination was discovered when elevated levels of trichloroethylene (TCE) and other volatile organic chemicals were detected in two active City wells and three future wells. The City immediately shut down the affected wells. Following an investigation by the Environmental Protection Agency (EPA), the North Indian Bend Wash Site which includes the five wells above was placed on the federal Superfund list in 1983. The Superfund law was enacted to provide funding and regulatory authority for the study and cleanup of contaminated sites. The EPA, in conjunction with the State of Arizona, directs the cleanup of the North Indian Bend Wash (NIBW) Site that encompasses a groundwater contamination plume in Scottsdale. Following its investigation, the EPA identified three companies, Motorola Solutions Inc. (MSI), SMI Holdings, LLC, formerly Siemens Corporation, and GlaxoSmithKline Corporation, as the primary parties potentially responsible for causing the contamination and directed the companies to pay the costs associated with the cleanup. In 1991, the City, EPA, State of Arizona, Salt River Project (SRP), and the above-referenced participating companies entered into a Consent Decree in order to begin the containment and remediation of the contaminated groundwater plume and provide Scottsdale citizens with a potable water source. The companies agreed to pay for the construction and operation of the Central Groundwater Treatment Facility (CGTF), an air stripping plant that removes contaminants from the affected wells. As the CGTF operator and drinking water provider, the City ensures the water produced by the plant meets all federal and state water quality standards before water is delivered into the City’s distribution system. An Amended Consent Decree was signed by all parties in 2003 to capture additional voluntary and required work at the NIBW Site. No additional obligations were identified for the City. To facilitate groundwater sustainability and plume management, in 2012 the City voluntarily entered into an agreement with MSI to operate an additional groundwater treatment facility that would be designed and constructed to deliver treated water to the Chaparral Water Treatment Plant (CWTP). The North Indian Bend Wash Granular Activated Carbon Treatment Facility (NGTF) was completed in late 2013 and began delivery of water to the CWTP in August 2014. The facility is a granular activated carbon plant that is owned by MSI but operated and maintained by the City to treat a well owned by SRP. The type of treatment chosen was due to the lower concentration of contaminants in the well. All costs are reimbursed to the City by MSI. City of Scottsdale, Arizona 112 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The measurement of the City’s pollution remediation obligation liability includes all remediation work that the City expects to perform, including work expected to be performed for the participating companies. To estimate the CGTF liability, fourteen projected cash flows, based on the prior 14 years of historical costs and weighted equally, were used to calculate an average annual cost. To estimate the NGTF liability, eight projected cash flows, based on the prior eight years of historical costs and weighted equally, were used to calculate an average annual cost. These average costs were then projected over the remaining remediation period of 53 years for CGTF and the NGTF. The EPA estimated in its September 2011 review that future remediation will be required for approximately 50-70 years at each site; the most recent five-year EPA review, approved in September 2016, was silent on the number of required remediation years. Improvements in technology and changes in laws or regulations did not impact the average annual cost. The liability is revalued annually. The fiscal year 2021 reimbursable outlays for operating and monitoring the CGTF were $858,861 and for the NGTF were $288,873. The City has a reimbursement agreement with the responsible parties and the total liability is expected to be fully recovered by the participating companies and therefore a corresponding pollution remediation recoveries receivable has been accrued. F. Related Organization The Industrial Development Authority (IDA) is a non-profit corporation established by the City and granted incorporation by the Arizona Corporation Commission in 1984. The primary function of the IDA is to promote the retention, expansion, and attraction of businesses and commercial enterprises in Scottsdale. The City Council appoints the Board of Directors of the IDA and is also involved in granting and denying IDA bond applications. G. Retirement and Pension Plans All eligible employees of the City, including the Mayor and the City Council, are covered by one of four pension plans. All full-time City employees, except public safety personnel (police officers and firefighters) and the Mayor and City Council, participate in the Arizona State Retirement System, a cost-sharing multipleemployer defined benefit pension plan. All public safety personnel participate in the Public Safety Personnel Retirement System, which consists of both an agent multiple-employer defined benefit pension plan and a defined contribution plan. The Mayor and City Council participate in either the Elected Officials’ Retirement Plan (a cost-sharing multiple-employer defined benefit pension plan) or the Elected Officials’ Defined Contribution Retirement System (a defined contribution plan). The City contributes to the Elected Officials’ Retirement Plan; however, the plan is not described below because of its relative insignificance to the financial statements. All plans are component units of the State of Arizona. The City reported aggregate pension expense in the amount of $54,817,252 ($50,926,100 related to governmental activities and $3,891,152 related to business-type activities). City of Scottsdale, Arizona 113 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Arizona State Retirement System General Information about the Pension Plan Plan Description All eligible City employees, except public safety personnel and the Mayor and City Council, participate in the Arizona State Retirement System (ASRS). ASRS administers a cost-sharing multiple-employer defined benefit pension plan. ASRS was established by the State of Arizona to provide pension benefits for employees of the State and participating political subdivisions and school districts. ASRS is administered in accordance with Title 38, Chapter 5, Articles 2 and 2.1 of the Arizona Revised Statutes (ARS) and is a component unit of the State of Arizona. ASRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to ASRS Financial Services Division, 3300 North Central Avenue, Phoenix, AZ 85012, or by visiting https://www.azasrs.gov/content/annual-reports. The ASRS other postemployment benefit plans are not further disclosed due to their relative insignificance to the financial statements. Benefits Provided ASRS provides retirement and survivor benefits. State statute establishes benefits terms. A member may retire upon meeting the following age and service requirements: Initial Membership Date Pre-July 1, 2011 July 1, 2011 and after Age Years of Service Age Years of Service 65 N/A 62 10 Age plus years of service total 80 65 62 60 55 N/A 10 25 30 The retirement benefit is based on a percentage of average monthly compensation multiplied by the years of credited service. The compensation generally does not include lump sum payments on termination of employment for accumulated vacation leave, sick leave, compensation time pay, termination incentive pay, or any other form of termination pay (see discussion of pre-January 1, 1984, members below). The multiplier percentage and average monthly compensation are defined in the following schedules: Years of Service 0.00-19.99 years 20.00-24.99 years 25.00-29.99 years 30.00 or more years Multiplier 2.10% 2.15% 2.20% 2.30% Membership Date Pre-July 1, 2011 July 1, 2011 and after City of Scottsdale, Arizona 114 Average Monthly Compensation 36 consecutive months of highest compensation within final 120 months of service 60 consecutive months of highest compensation within final 120 months of service Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Members who began participation in the Plan prior to January 1, 1984, may choose to have average monthly compensation determined based upon the period of 60 consecutive months during which the member receives the highest compensation within the last 120 months of service, including lump sum payments as described above. Members who attain age 50 with at least five years of total credited service may take an early retirement; however, the amount of their retirement benefit is actuarially reduced. Survivor benefits are applicable if death occurs prior to retirement, and are payable, at the option of the beneficiary, by either of the following methods: 1. 2. A lump sum equal to the sum of (a) and (b): a. the sum of the member’s combined (member and employer) accumulated contribution balance with compound interest at a rate determined by the board through the day of the payment of the benefit, and b. the amount of the member’s combined (member and employer) accumulated account, along with any supplemental credits transferred from the System (closed portion of ASRS) to the Plan with compound interest at a rate determined by the board through the day of the payment of the benefit. The beneficiary may elect to receive a monthly income, in the single life form, which is actuarially equivalent to the amount above. Retirees who have been retired one year are eligible for a permanent benefit increase (PBI) up to a maximum of 4 percent. The PBI is paid from a reserve of “Excess Investment Earnings.” If there are no “Excess Investment Earnings” in reserve, then no PBI is paid. Further, PBI enhancements (EPBI) provide retired members with at least ten years of service who have been retired five or more years an additional benefit. For each complete 5-year period the member has been retired, an incremental benefit is paid if monies to pay the benefit are available. This benefit is funded by an interest credit of 8 percent of the reserve for future PBIs. Due to legislation enacted in the 2013 legislative session, PBIs and EPBIs will not be awarded to members hired after September 13, 2013. Contributions The ARS provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of the City’s covered payroll. Although the statutes prescribe the basis of making the actuarial calculation, the Arizona legislature is authorized to approve a contribution rate other than the actuarially determined rate. Employees were required to contribute 12.04 percent of their annual pay for the fiscal year ended June 30, 2021, and the City’s required contribution rate was 11.65 percent during the same period. In addition, the City was required by statute to contribute at the actuarially determined rate of 10.14 percent of annual covered payroll of retired members who worked for the City in positions that would typically be filled by an employee who contributes to the ASRS. The required contribution rate for the fiscal year ended June 30, 2021, was actuarially determined to yield contribution amounts sufficient to finance costs earned by employees during the year and to amortize the Plan’s unfunded actuarially accrued liability over the period specified in the statutes. Contributions to the pension plan from the City were $13,242,000 for the fiscal year ended June 30, 2021. City of Scottsdale, Arizona 115 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions As of June 30, 2021, the City reported a liability of $181,954,450 for its proportionate share of the collective net pension liability of the ASRS. The collective net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the collective net pension liability was determined by an actuarial valuation as of June 30, 2019. Update procedures were used to roll forward the total pension liability to the measurement date. The City’s proportion of the collective net pension liability was based on the City’s proportionate share of accrued contributions to the pension plan relative to the contributions of all participating entities for the fiscal year ended June 30, 2020. As of June 30, 2020, the City’s proportion was 1.05015 percent, which was an increase of 0.00099 percent over its proportion measured as of June 30, 2019. For the fiscal year ended June 30, 2021, the City recognized a collective pension expense of $16,318,472. As of June 30, 2021, the City reported a collective deferred outflow of resources and a collective deferred inflow of resources related to pensions from the following sources (in thousands): Differences between expected and actual experience Deferred Outflows of Resources $ Deferred Inflows of Resources 1,646 Changes in assumptions $ - - - Net difference between projected and actual earnings on pension plan investments 17,550 - Changes in proportion and differences between City contributions and proportionate share of contributions 76 299 City contributions subsequent to the measurement date Total 13,242 32,514 $ $ 299 The $13,242,000 reported as a collective deferred outflow of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the collective net pension liability in the fiscal year ending June 30, 2022. Other amounts reported as a collective deferred outflow of resources and a collective deferred inflow of resources related to pensions will be recognized in pension expense as follows (in thousands): Fiscal year ending June 30: 2022 2023 2024 2025 2026 Thereafter $ 1,780 5,417 6,348 5,428 - City of Scottsdale, Arizona 116 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Actuarial Assumptions The total pension liability in the June 30, 2020, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial valuation date Actuarial roll forward date Actuarial cost method Amortization method Plan amendments Investment gain/loss Assumption gain/loss Experience gain/loss Proportion/proportionate share gain/loss Asset valuation Discount rate Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2019 June 30, 2020 Entry age normal Immediate Five years Average remaining service lives Average remaining service lives Average remaining service lives Fair value 7.5% 2.7-7.2% 2.3% Included 2017 SRA Scale U-MP The actuarial assumptions used in the June 30, 2019, valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017, actuarial valuation. The expected long-term rate of return on ASRS pension plan investments was determined to be 5.48 percent (excluding investment expense and inflation) using a building-block method in which bestestimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the expected long-term rate of return by weighting the expected future real rates of return by the target asset allocation percentage. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Equity Fixed Income - Credit Fixed Income - Interest Rate Sensitive Real estate Total Target Allocation Real Return Geometric Basis 50% 20% 10% 20% 100% 6.39% 5.44% 0.22% 5.85% Long-Term Contribution to Expected Real Return 3.20% 1.09% 0.02% 1.17% 5.48% Discount Rate The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made on the actuarially determined rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. City of Scottsdale, Arizona 117 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Sensitivity of the City’s Proportionate Share of the Collective Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the collective net pension liability calculated using the discount rate of 7.5 percent, as well as what the City’s proportionate share of the collective net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-point higher (8.5 percent) than the current rate (in thousands): City's proportionate share of the collective net pension liability 1% Decrease (6.5%) Discount Rate (7.5%) 1% Increase (8.5%) $ $ $ 248,820 181,954 126,058 Pension Plan Fiduciary Net Position The pension plan’s fiduciary net position has been determined on the same basis used by the pension plan. The financial statements of ASRS are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America that apply to government accounting of fiduciary funds issued by the Governmental Accounting Standards Board. Benefits and refunds are recognized when due and payable. Fair value measurements are categorized 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 and give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). In instances where inputs used to measure fair value fall into different levels in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. Investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Cash and short-term investments generally include cash, foreign currencies, and short-term investment funds. These investments are reported at cost. Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. City of Scottsdale, Arizona 118 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Public Safety Personnel Retirement System General Information about the Pension Plan Plan Description All the City’s sworn public safety personnel participate in the Public Safety Personnel Retirement System (PSPRS). PSPRS administers both an agent multiple-employer defined benefit pension plan and a defined contribution plan. The defined contribution plan is only available to police department members who became a member on or after July 1, 2017, and fire department members who became a member on or after January 1, 2012. The defined benefit and defined contribution pension plans are administered in accordance with Title 38, Chapter 5, Articles 4 and 4.1, respectively, of the Arizona Revised Statutes (ARS). PSPRS acts as a common investment and administrative agent that is jointly administered by the Board of Trustees (the Board) and 229 local boards. PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Suite 200, Phoenix, AZ 85016, calling (602) 255-5575, or by visiting: https://www. psprs.com/investments--financials/annual-reports. The PSPRS other postemployment benefit plan is not further disclosed due to its relative insignificance to the financial statements. Benefits Provided PSPRS provides retirement, disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits for employees who became a member on or before December 31, 2011 (Tier 1 members) commence the first day of the month following termination of employment and are calculated based upon the following age and service requirements: 1. Age 62 with 15 years of service, or 20 years of service with less than 20 years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service. The pension is reduced by 4 percent per year for each year of credited service under 20 years. 2. 20 to 24.99 years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service plus 2 percent of the average monthly benefit compensation for each year of credited service between 20 and 24.99. 3. 25 or more years of credited service: 50 percent of the average monthly benefit compensation for the first 20 years of credited service plus 2.5 percent of the average monthly benefit compensation for each year of credited service above 20 years - up to a maximum of 80 percent of the average monthly benefit compensation. Retirement benefits for employees who became a member on or after January 1, 2012, and on or before June 30, 2017, (Tier 2 members) commence the first day of the month following termination of employment and are calculated based upon the following age and service requirements: 1. Age 52.5 with 15 years of credited service but less than 25 years: average monthly benefit compensation multiplied by a multiplier that varies by years of service, from 1.5 percent to 2.5 percent per year of service, multiplied by the number of years of service. City of Scottsdale, Arizona 119 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 2. Age 52.5 with 25 years of service: 62.5 percent of the average monthly benefit compensation. Benefits will be reduced by 4 percent for each year of credited service under 25 years. 3. 25 or more years of service: 62.5 percent of the average monthly benefit compensation for the first 25 years of credited service plus 2.5 percent of the average monthly benefit compensation for each year over 25 years of credited service - up to a maximum of 80 percent of the average monthly benefit compensation. The pension is reduced by 4 percent per year for each year of credited service under 25 years with a pro-rata reduction for any fractional years. Retirement benefits for employees who became a member on or after July 1, 2017, (Tier 3 members) are contingent upon which retirement plan is chosen by a member. This group of members has an irrevocable choice of enrolling in either the defined benefit plan (police employees) or a hybrid plan, which has elements of both a defined benefit and defined contribution plan (fire employees), or a defined contribution plan in lieu of the respective choices listed above (both police and fire employees). If enrolling in the defined benefit plan or hybrid plan, benefits (defined benefit portion only for the hybrid plan) commence the first day of the month following termination of employment and are based upon the following age and service requirements: 1. Age 55 with 15 or more years of credited service: average monthly benefit compensation times a multiplier that varies by years of service, from 1.5 percent to 2.5 percent per year of service, times the number of years of service - up to a maximum of 80 percent of the average monthly benefit compensation. 2. An individual who became a member on or after July 1, 2017, and reaches age 52.5 with at least 15 years of credited service may take an early retirement; however, the amount of his or her retirement benefit is actuarially reduced. The phrase “average monthly benefit compensation,” as it is used in the above discussion, is defined in the following schedule: Membership Tier Average Monthly Compensation Tier 1 36 consecutive months of highest covered payroll within the last 20 years of service Tier 2 60 consecutive months of highest covered payroll within the last 20 years of service Tier 3 60 consecutive months of highest compensation within the last 15 years of service City of Scottsdale, Arizona 120 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Disability benefits are calculated as follows: Accidental Disability Retirement: Catastrophic Disability Retirement: Ordinary Disability Retirement: 50% of average monthly compensation, or the monthly Normal Retirement pension that the member is entitled to receive if he or she retired immediately, whichever is greater. 90% of Average Monthly Benefit Compensation for the first 60 months. Thereafter, the benefit is the greater of 62.5% of Average Monthly Benefit Compensation or the member’s accrued normal pension. Normal Retirement pension that the member is entitled to receive prorated on Credited Service (maximum of 20 years) over 20. Survivor benefits are paid on behalf of an active member in the amount of 80 percent of the pension based on the calculation for an accidental disability retirement. If the member was killed in the line of duty, the benefit is 100 percent of the member’s Average Monthly Benefit Compensation. The benefit amount is allocated to the surviving spouse and, if applicable, eligible children. If there is no surviving spouse, and there is at least one eligible child, the guardian of the eligible child(ren) and the eligible child(ren) are the recipients of the benefit. If there is no surviving spouse or eligible child(ren), the member’s named refund beneficiary on file will receive the member’s accumulated contributions. Benefits are paid on behalf of an inactive, non-retired member to the member’s named beneficiary in the amount of the member’s accumulated contributions. Death benefits are paid on behalf of a retired member in a manner similar to an active member. The surviving spouse will receive 80 percent of the member’s pension benefit for life. A retired member, or survivor of a retired member, may be eligible for a Cost-of-Living Adjustment (COLA) from the System if monies are available. COLA eligibility and calculation is contingent upon the member’s hire date. Members, or survivors of retired members, who were hired before July 1, 2017, are eligible to receive a compounding COLA on the base benefit of up to 2 percent per year. The COLA will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United States Department of Labor, Bureau of Statistics. City of Scottsdale, Arizona 121 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Members, or survivors of retired members, who were hired on or after July 1, 2017, are eligible to receive a compounding COLA on the base benefit, beginning at the earlier of the first calendar year after the seventh anniversary of the retired member’s retirement or when the retired member is or would have been sixty years of age. The COLA will be based on the average annual percentage change in the Metropolitan Phoenix-Mesa Consumer Price Index published by the United States Department of Labor, Bureau of Statistics. COLA adjustments will be received for this cohort if the following conditions are met: Ratio of Actuarial Value of Assets to Liabilities 70-80% 80-90% >90% Maximum increase 1.00% 1.50% 2.00% Employees Covered by Benefit Terms As of June 30, 2021, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members Total 304 122 604 1,030 Contributions ARS Title 38, Chapter 5, Article 4, Section 38-843 provides the authority for determining the City and active employee contribution requirements to the PSPRS pension plan. The contribution rates for employers are based on an actuarially determined rate recommended by an independent actuary contracted by the Board. The contribution rates for employees are prescribed by the ARS Section referenced above. For Tier 1 and Tier 2 employees, the actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned during the year by these employees, with an additional amount to finance any unfunded accrued liability. The unfunded accrued liability portion of the rate is paid by the City as a percentage of the pay of all of the City’s active PSPRS members, regardless of start date. For Tier 3 employees, each employer shall make contributions sufficient to pay fifty percent of both the normal cost plus the actuarially determined amount required to amortize the total unfunded accrued liability attributable only to those members hired on or after July 1, 2017. As noted above, the City will also pay an amount to finance any unfunded accrued liability relating to employees hired before July 1, 2017. City of Scottsdale, Arizona 122 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 The City’s contribution rates for fiscal year ended June 30, 2021 were: Police Tier 1 Tier 2 Tier 3 7/1/2017 or later Membership date 7/19/2011 or earlier On or after 7/20/2011 1/1/2012 or later Plan type Defined benefit Defined benefit Defined benefit Defined benefit Defined contribution Employee contribution rate 7.65% 11.65% 11.65% 9.73% 9.00% Employer contribution rate 55.72% 55.72% 55.72% 50.66% 49.93% Fire Tier 1 Tier 2 Tier 3 1/1/2012 or later 7/1/2017 or later Membership date 7/19/2011 or earlier On or after 7/20/2011 Plan type Defined benefit Defined benefit Defined benefit (hybrid) Defined contribution (hybrid) Defined benefit (hybrid) Defined contribution (hybrid) Employee contribution rate 7.65% 11.65% 11.65% 3.00% 10.33% 3.00% 9.00% Employer contribution rate 17.68% 17.68% 17.68% 4.00% 13.10% 3.00% 11.77% Defined contribution Participants’ defined contributions and the earnings on those contributions are immediately vested. A participant is fully vested in employer contributions after ten years of service; the vesting occurs at a rate of ten percent per year. If a participant dies or is determined to be eligible for an accidental or catastrophic disability pension before completing ten years of service, the employer contributions are immediately fully vested. In addition, the City was required by statute to contribute an actuarially determined rate (40.93 percent for police employees and 8.00 percent for fire employees) of annual covered payroll of retired members who worked for the City in positions that would typically be filled by an employee who contributes to PSPRS. The City’s contributions to the pension plan for the fiscal year ended June 30, 2021, were $21,874,465. ARS Title 9, Chapter 8, Article 3, Section 9-952 requires the state treasurer to distribute a fire insurance premium tax to the respective incorporated cities and towns and legally organized fire districts in proportion to the full cash value of the real property and improvements in each incorporated city and town and legally organized fire district that procures the services of a private fire company and in each area served by a fire department or legally organized fire district. The warrant issued by the state treasurer is identified as the “fire fighters’ relief and pension fund,” to cover the firefighting personnel deposit into the pension plan. The annual tax provided by law is based on a portion of the premiums received on policies and contracts of fire insurance covering property within the state. PSPRS received $2,027,675 of fire insurance premium tax for the City’s fire pension plan for the fiscal year ended June 30, 2021. PSPRS accounts for the fire insurance premium tax collected for the City as employer contributions. City of Scottsdale, Arizona 123 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Net Pension Liability The City’s net pension liability of $239,628,819 was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The total pension liability in the June 30, 2020, measurement was determined using the following actuarial assumptions: Actuarial Cost Method Inflation Salary Increases Tier 1/2 Investment Rate of Return Tier 3 Investment Rate of Return Mortality rates Entry Age Normal 2.50% 3.50% 7.30% 7.00% Active Lives: PubS-2010 Employee mortality, loaded 110% for males and females, projected with future mortality improvements reflected generationally using 75% of scale MP-2019. 100% of active deaths are assumed to be in the line of duty. Inactive Lives: PubS-2010 Healthy Retiree mortality, loaded 110% for males and females, projected with future mortality improvements reflected generationally using 75% of scale MP-2019. Beneficiaries: PubS-2010 Survivor mortality, projected with future mortality improvements reflected generationally using 75% of scale MP2019. Disabled Lives: PubS-2010 Disabled mortality, projected with future mortality improvements reflected generationally using 75% of scale MP2019. The actuarial assumptions used in the June 30, 2020, valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. City of Scottsdale, Arizona 124 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. 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. Best estimates of geometric real rates of return for each major asset class included in the pension plan’s target asset allocation adopted as of June 30, 2020, as provided by PSPRS, are summarized in the following table: Asset Class Cash - Mellon Core Bonds Other Assets (Capital Appreciation) Diversifying Strategies International Public Equity Global Private Equity Private Credit U.S. Public Equity Target Allocation 1% 2% 7% 12% 15% 18% 22% 23% 100% Long-Term Expected Real Rate of Return -0.60% 0.22% 5.61% 3.22% 6.09% 8.42% 5.31% 4.93% Discount Rate The discount rate used to measure the total pension liability was 7.30 percent for Tier 1/2 members and 7.00 percent for Tier 3 members. The projection of cash flows used to determine the 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 actuarially determined contribution rates and the member rate. Based on those assumptions, the PSPRS plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. City of Scottsdale, Arizona 125 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Changes in the Net Pension Liability Public Safety Personnel Retirement System (Police) Changes in the Net Pension Liability (in thousands) Total Pension Liability (a) Balances at 6/30/20 Adjustment to Beginning of Year $ Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at 6/30/21 $ 378,894 - $ 190,914 (118) Net Pension Liability (a)-(b) $ 187,980 118 7,402 27,559 12,629 - 18,854 3,649 2,471 7,402 27,559 12,629 (18,854) (3,649) (2,471) (17,538) 30,052 408,946 (17,538) (202) 35 7,269 198,065 202 (35) 22,783 210,881 City of Scottsdale, Arizona 126 Increase (Decrease) Plan Fiduciary Net Position (b) $ $ Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Public Safety Personnel Retirement System (Fire) Changes in the Net Pension Liability (in thousands) Total Pension Liability (a) Balances at 6/30/20 Adjustment to Beginning of Year $ Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Contributions-employer Contributions-employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at 6/30/21 $ Increase (Decrease) Plan Fiduciary Net Position (b) 110,280 - $ 98,906 (86) Net Pension Liability (a)-(b) $ 11,374 86 5,457 8,387 11,517 - 4,219 2,653 1,307 5,457 8,387 11,517 (4,219) (2,653) (1,307) (1,705) 23,656 133,936 (1,705) (106) 6,368 105,188 106 17,288 28,748 $ $ Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.30 percent for Tier 1/2 members and 7.00 percent for Tier 3 members, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.30/6.00 percent) or 1-percentage-point higher (8.30/8.00 percent) than the current rate (in thousands): Police net pension liability Fire net pension liability 1% Decrease (6.30%/6.00%) Discount Rate (7.30%/7.00%) 1% Increase (8.30%/8.00%) $ $ $ 267,913 51,046 City of Scottsdale, Arizona 127 210,881 28,748 164,515 10,633 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Pension Plan Fiduciary Net Position The pension plan’s fiduciary net position has been determined on the same basis used by the pension plan. PSPRS financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. Benefits are recognized when due and payable in accordance with the terms of PSPRS. Refunds are due and payable by state law within 20 days of receipt of a written application for a refund. Refunds are recorded when paid. Expenses are recorded when the corresponding liabilities are incurred, regardless of when payment is made. PSPRS investments are reported at fair value. Short-term investments are reported at cost plus accrued interest. Fair value measurements are categorized within the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value. Investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient are not classified in the fair value hierarchy. Fair values are determined as follows: • Level 1 - Unadjusted quoted prices for identical instruments in active markets. • Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable. • Level 3 - Valuations derived from valuation techniques in which significant inputs are unobservable. The fair value of alternative investments is based on the investments’ NAV per share. These are investments for which exchange quotations are not readily available and are valued at estimated fair value, as determined in good faith by the General Partner of each fund or by the investment manager responsible for that sector. Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. City of Scottsdale, Arizona 128 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the fiscal year ended June 30, 2021, the City recognized pension expense of $38,263,426 related to the defined benefit plan and the defined benefit portion of the hybrid plan and $229,205 related to the defined contribution plan and the defined contribution portion of the hybrid plan. As of June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (in thousands): Differences between expected and actual experience Deferred Outflows of Resources Deferred Inflows of Resources $ $ 26,744 5,291 Changes of assumptions 17,358 - Net difference between projected and actual earnings on pension plan investments 16,095 - City contributions subsequent to the measurement date 21,874 - Total $ 82,071 $ 5,291 City contributions subsequent to the measurement date of $21,874,465 were reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the fiscal year ending June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (in thousands): Fiscal year ending June 30: 2022 2023 2024 2025 2026 Thereafter $ 12,187 13,322 11,278 9,295 3,575 5,249 Elected Officials’ Defined Contribution Retirement System The City contributes to the Elected Officials’ Defined Contribution Retirement System (EODCRS), which includes a defined contribution pension plan for elected officials and judges of certain state, county, and local governments. Participants in this plan include only those elected officials who began service subsequent to December 31, 2013, and had no relationship to ASRS or EORP at the inception of service. The Board of Trustees of the PSPRS is also the administrator for the EODCRS. City of Scottsdale, Arizona 129 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Benefit terms, including contribution requirements, for EODCRS are established by Title 38, Chapter 5, Article 3.1 of the Arizona Revised Statutes (ARS) and may be amended by the State of Arizona. For each member of EODCRS, the City is required to contribute 6 percent of gross compensation to an individual member retirement account. Members are required to contribute 8 percent of gross compensation to their retirement account. Members are immediately vested in both their and the City’s contributions and earnings on those contributions. For the fiscal year ended June 30, 2021, the City recognized pension expense of $6,149. H. Other Postemployment Benefits In addition to pension benefits, the City provides an option for post-retirement healthcare benefits, in accordance with Chapter 14 of the City Code. Employees hired before July 1, 1982, receive cash equal to 50 percent of the first 520 hours of unused medical leave plus 25 percent of all hours in excess of 520. The conversion rate is the employee’s average hourly base pay rate for the five years immediately preceding retirement. The medical leave not paid out in cash is applied to a retirement health savings account at the employee’s hourly rate of pay at the time of retirement. For shift fire employees with 420 or more hours and all other retirees with 300 or more hours of accumulated medical leave hired on or after July 1, 1982, the City will apply the value of the medical leave to a retirement health savings account. Medical leave balances accumulated through June 30, 2011, will be paid at 100 percent of the employee’s hourly rate at the time of retirement. Medical leave balances accumulated July 1, 2011, or after will be paid out at 50 percent of the employee’s hourly rate at retirement. Additionally, the payout is limited to the value of 1,200 combined hours for all retirees, except shift fire employees, who are limited to 1,680 hours earned both before and after July 1, 2011, unless more than 1,200 or 1,680 hours, respectively, were accrued prior to July 1, 2011. Total hours accrued before July 1, 2011, will be paid without limitation. The projected liability for active employees, as of June 30, 2021, was $16,114,167. The projected liability was considered payable within one year or greater and was therefore considered noncurrent and included in both the proprietary fund and government-wide financial statements. Significant actuarial assumptions of the January 1, 2021, actuarial valuation include: a) mortality rates based on the SOA Pub-2010 General (for nonPSPRS-eligible personnel)/Public Safety (for PSPRS-eligible personnel) Headcount Weighted Mortality Table fully generational using Scale MP-2020; b) interest compounded 4.0 percent annually; c) salary increases at a rate of 3 percent to 4 percent based on years of service; and d) Traditional Unit Credit cost method based on participant data as of January 1, 2021. City of Scottsdale, Arizona 130 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 I. Postemployment Benefits Other Than Pensions (OPEB) The cost of postemployment healthcare benefits, from an accrual accounting perspective, should be associated with the periods in which the future costs are earned rather than in the future years when they will be paid (similar to the cost of pension benefits). GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions requires the City to recognize the entire OPEB liability and a comprehensive measure of OPEB expense. The comprehensive measure of OPEB expense includes immediate recognition in OPEB expense of the effects of changes of benefit terms, as well as the incorporation of the amortization of deferred inflows of resources and deferred outflows of resources related to OPEB over a defined, closed period. Plan Description The City’s defined benefit OPEB plan (“the Plan”) provides OPEB for eligible retired employees through a single employer defined benefit medical plan administered by the City. The City Council, by way of resolution, grants itself the authority, on an annual basis, to reestablish and amend the benefit terms and financing requirements of the Plan. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Benefits Provided The Plan offers medical benefits to its eligible retirees and their dependents through the City’s selfinsured health plan. An eligible retiree is a Public Safety Personnel Retirement System accidental disability retired employee. Eligible retirees can enroll in a City plan up to 60 days after they retire; after that their eligibility for this benefit ceases. The benefit terms are the same as those afforded to active employees; however, retirees participating in the Plan are required to pay 100 percent of the blended actuarial rate, while employees pay less than the full amount. Upon a retiree reaching 65 years of age, the retiree and related dependents are no longer eligible for City coverage. Employees Covered by Benefit Terms The following employees were covered by the benefit terms: As of June 30, 2021, Membership Consisted of: Inactive Employees or Beneficiaries Currently Receiving Benefits Inactive Employees Entitled to but Not Yet Receiving Benefits Active Employees Total 18 671 689 City of Scottsdale, Arizona 131 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Total OPEB Liability The City’s total OPEB liability of $1,922,986 was measured as of July 1, 2020, and was determined by an actuarial valuation as of that date. Actuarial Assumptions and Other Inputs The total OPEB liability in the July 1, 2020, actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation Salary Increases 2.5% 3.5% wage inflation plus merit and longevity increases ranging from 0.0% to 4.0% Discount Rate Healthcare Cost Trend Rates* 2.66% Retirees' Share of Benefit-Related Costs 0.96% for 2022, 7.50% for 2023, and then decreasing 0.5% per year to an ultimate rate of 4.50% for 2029 and later years 100% *The initial trend rate reflects the City’s actual projected cost increases from fiscal year 2021 to 2022. The discount rate was based on the S&P Municipal Bond 20-Year High Grade Index. Mortality rates were based on the following: Healthy Police and Fire retirees: SOA Pub-2010 Public Safety Headcount Weighted Mortality Table fully generational using Scale MP-2020. Disabled Police and Fire retirees: SOA Pub-2010 Public Safety Disabled Headcount Weighted Mortality Table fully generational using Scale MP-2020. Surviving Spouses: SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2020. City of Scottsdale, Arizona 132 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 Changes in the Total OPEB Liability (in thousands) Total OPEB Liability Balance at 6/30/20 Changes for the year: Service cost Interest Differences between expected and actual experience Changes of assumptions/other inputs Benefit payments Net changes Balance at 6/30/21 $ 2,177 $ 274 83 (587) 121 (145) (254) 1,923 Changes in assumptions reflect the following: 1. Change in the discount rate from 3.51 percent as of the beginning of the year to 2.66 percent as of the end of the year. 2. Mortality table has been updated from SOA Pub-2010 Public Safety Headcount Weighted Mortality Table fully generational using Scale MP-2019 to SOA Pub-2010 Public Safety Headcount Weighted Mortality Table fully generational using Scale MP-2020 for current actives. 3. Mortality table has been updated from SOA Pub-2010 Public Safety Disabled Headcount Weighted Mortality Table fully generational using Scale MP-2019 to SOA Pub-2010 Public Safety Disabled Headcount Weighted Mortality Table fully generational using Scale MP-2020 for disabled retirees. 4. Mortality table has been updated from SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2019 to SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2020 for surviving spouses. 5. Healthcare trend rates have been updated to reflect actual premium increases from fiscal year 2021 to fiscal year 2022, followed by an annual trend of 7.5 percent decreasing by 0.5 percent annually to an ultimate rate of 4.5 percent. City of Scottsdale, Arizona 133 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2021 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (1.66 percent) or 1-percentage-point higher (3.66 percent) than the current discount rate (in thousands): Total OPEB Liability 1% Decrease (1.66%) Discount Rate (2.66%) 1% Increase (3.66%) $ $ $ 1,961 1,923 1,868 Sensitivity of the Total OPEB liability to Changes in the Healthcare Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (-0.04 percent increasing to 3.50 percent) or 1-percentage-point higher (1.96 percent increasing to 5.50 percent) than the current healthcare cost trend rates (in thousands): Total OPEB Liability 1% Decrease (-0.04% increasing to 3.50%) Healthcare Cost Trend Rates (0.96% increasing to 4.50%) 1% Increase (1.96% increasing to 5.50%) $ $ $ 1,702 1,923 2,178 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2021, the City recognized OPEB expense of $263,159. As of June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (in thousands): Differences between expected and actual experience Deferred Outflows of Resources Deferred Inflows of Resources $ $ - 1,087 Change of assumptions or other inputs 288 28 City contributions subsequent to the measurement date 138 - Total $ 426 City of Scottsdale, Arizona 134 $ 1,115 Notes to Financial Statements Table of Contents For the Fiscal Year Ended June 30, 2021 The $137,438 reported as a deferred outflow of resources related to OPEB resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the fiscal year ending June 30, 2022. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows (in thousands): Fiscal year ending June 30: 2022 $ (94) 2023 (94) 2024 (94) 2025 (94) 2026 (94) Thereafter (357) City of Scottsdale, Arizona 135 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Proportionate Share of Collective Net Pension Liability for Cost–Sharing Pension Plan Schedule of the City's Proportionate Share of the Collective Net Pension Liability Arizona State Retirement System Last Seven Fiscal Years (dollars in thousands) City's proportion of the net collective pension liability 2021 2020 2019 2018 2017 2016 2015 1.050150% 1.049160% 1.055510% 1.056820% 1.086990% 1.099760% 1.102563% City's proportionate share of the collective net pension liability $181,954 $152,665 $147,206 $164,632 $175,451 $171,304 $163,142 City's covered payroll $114,944 $110,748 $105,097 $107,259 $101,917 $101,962 $99,077 City's proportionate share of the collective net pension liability as a percentage of its covered payroll 158.30% 137.85% 140.07% 153.49% 172.15% 168.01% 164.66% Plan fiduciary net position as a percentage of the total pension liability 69.33% 73.24% 73.40% 69.92% 67.06% 68.35% 69.49% Note: The Arizona State Retirement System report may be obtained by writing to ASRS Financial Services Division, 3300 North Central Avenue, Phoenix, AZ 85012, or by visiting https://www.azasrs.gov/content/annual-reports. The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information prior to fiscal year 2015 is not available. City of Scottsdale, Arizona 136 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Changes in the City’s Net Pension Liability (Asset) and Related Ratios for Agent Pension Plan Public Safety Personnel Retirement System (Police) Schedule of Changes in the City's Net Pension Liability and Related Ratios Last Seven Fiscal Years (dollars in thousands) 2021 2020 2019 2018 2017 2016 2015 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability-beginning Total pension liability-ending (a) $ 7,402 27,559 12,629 (17,538) 30,052 378,894 $ 408,946 $ 8,154 25,834 3,089 9,123 (16,512) 29,688 349,206 $ 378,894 $ 7,103 24,013 4,880 (15,475) 20,521 328,685 $ 349,206 $ 7,841 22,479 2,584 (921) 9,028 (16,239) 24,772 303,913 $ 328,685 $ 6,603 20,570 17,206 (3,203) 11,023 (14,059) 38,140 265,773 $ 303,913 6,537 19,640 87 (14,835) 11,429 254,344 $ 265,773 6,363 16,898 3,987 (896) 22,122 (12,411) 36,063 218,281 $ 254,344 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 $ 18,854 3,649 2,471 (17,538) (202) 35 7,269 $ 17,387 3,343 9,714 (16,512) (171) 9 13,770 $ 15,491 3,438 11,537 (15,475) (176) (34) 14,781 $ 11,888 3,983 17,104 (16,239) (152) (134) 16,450 $ 11,710 4,230 842 (14,059) (122) (36) 2,565 $ $ Plan fiduciary net position-beginning Adjustment to Beginning of Year Plan fiduciary net position-ending (b) 190,914 (118) $ 198,065 177,208 (64) $ 190,914 162,427 $ 177,208 145,977 $ 162,427 143,412 $ 145,977 140,588 $ 143,412 124,647 $ 140,588 City's net pension liability-ending ((a) - (b)) $ 210,881 $ 187,980 $ 171,998 $ 166,258 $ 157,936 $ 122,361 $ 113,756 48.43% 50.39% 50.75% 49.42% 48.03% 53.96% 55.27% $ 35,069 $ 31,628 $ 34,869 $ 33,896 $ 33,073 $ 33,075 601.33% 594.35% 493.27% 490.49% 477.54% 369.95% Plan fiduciary net position as a percentage of the total pension liability Covered payroll City's net pension liability as a percentage of covered payroll $ 8,970 3,944 5,113 (14,835) (125) (243) 2,824 $ $ 7,997 3,495 17,047 (12,411) (137) (50) 15,941 31,438 361.84% Note: The Public Safety Personnel Retirement System report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Suite 200, Phoenix, AZ 85016, calling (602) 255-5575, or by visiting: http://www.psprs.com/investments--financials/annual-reports. The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information for the prior years is not available. City of Scottsdale, Arizona 137 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Public Safety Personnel Retirement System (Fire) Schedule of Changes in the City's Net Pension Liability (Asset) and Related Ratios Last Seven Fiscal Years (dollars in thousands) 2021 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience 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) 2020 $ 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 4,077 4,655 7,546 (877) 3,303 (1,430) 17,274 57,976 $ 75,250 3,720 4,037 994 (691) 8,060 49,916 $ 57,976 3,509 3,449 (448) 462 1,157 (780) 7,349 42,567 $ 49,916 $ $ $ $ $ $ $ 2,974 2,693 358 (1,430) (52) (53) 4,490 $ 2015 5,009 5,797 639 1,264 1,881 (932) 13,658 75,250 $ 88,908 2,737 2,551 7,822 (932) (70) 1 12,109 $ 2016 5,098 6,729 (2,004) (1,047) 8,776 88,908 $ 97,684 6,061 1,981 5,520 (1,047) (85) 16 12,446 $ 2017 6,378 7,654 (2,821) 2,644 (1,259) 12,596 97,684 $ 110,280 2,830 2,946 4,863 (1,259) (85) 9,295 $ 2018 5,457 8,387 11,517 (1,705) 23,656 110,280 $ 133,936 4,219 2,653 1,307 (1,705) (106) 6,368 $ 2019 2,247 2,337 2,046 (691) (50) 12 5,901 $ 2,392 2,629 6,294 (780) (51) (60) 10,424 Plan fiduciary net position-beginning Adjustment to Beginning of Year Plan fiduciary net position-ending (b) 98,906 (86) $ 105,188 89,627 (16) $ 98,906 77,181 $ 89,627 65,072 $ 77,181 60,582 $ 65,072 54,681 $ 60,582 44,257 $ 54,681 City's net pension liability (asset)-ending ((a) - (b)) $ 28,748 $ 11,374 $ 8,057 $ 11,727 $ 10,178 $ (2,606) $ (4,765) 78.54% 89.69% 91.75% 86.81% 86.47% 104.49% 109.55% $ 25,187 $ 24,376 $ 23,192 $ 23,500 $ 21,498 $ 20,420 $ 19,336 114.14% 46.66% 34.74% 49.90% 47.34% 0.00% 0.00% Plan fiduciary net position as a percentage of the total pension liability (asset) Covered payroll City's net pension liability as a percentage of covered payroll Note: The Public Safety Personnel Retirement System report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Suite 200, Phoenix, AZ 85016, calling (602) 255-5575, or by visiting: http://www.psprs.com/investments--financials/annual-reports. The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information for the prior years is not available. City of Scottsdale, Arizona 138 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Schedule of City Contributions Arizona State Retirement System Last Nine Fiscal Years (dollars in thousands) Statutorily required contribution 2021 $ 13,242 2020 $ 13,151 (13,242) (13,151) Employer contributions in relation to the statutorily required contribution $ - 2019 12,384 $ (12,384) $ - 2018 11,437 $ (11,437) $ - 2017 11,540 $ (11,540) Contribution deficiency (excess) $ Covered payroll $ 110,303 $ 114,944 $ 110,748 $ 105,097 $ 107,259 12.01% 11.44% 11.18% 10.88% 10.76% Contributions as a percentage of covered payroll - $ $ - 2016 11,049 $ (11,049) $ - 2015 11,092 $ (11,092) $ 2014 10,635 $ (10,635) 2013 9,949 (9,949) - $ - $ - $ 101,917 $ 101,962 $ 99,077 $ 97,257 10.84% 10.88% 10.73% 10.23% The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information prior to fiscal year 2013 is not available. City of Scottsdale, Arizona 139 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Schedule of City Contributions Public Safety Personnel Retirement System (Police) Last Eight Fiscal Years (dollars in thousands) Actuarially determined contribution $ Employer contributions in relation to the actuarially determined contribution 2021 19,171 $ (19,171) 2020 18,850 $ (18,850) 2019 17,296 $ (17,296) 2018 15,341 $ (15,341) 2017 12,328 $ (12,328) 2016 11,635 $ (11,635) 2015 8,921 $ (8,921) 2014 7,997 (7,997) Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 33,349 $ 35,069 $ 31,628 $ 34,869 $ 33,896 $ 33,073 $ 33,075 $ 31,438 Contributions as a percentage of covered payroll 57.49% 53.75% 54.69% 44.00% 36.37% 35.18% 26.97% 25.44% The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information prior to fiscal year 2014 is not available. City of Scottsdale, Arizona 140 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Schedule of City Contributions Public Safety Personnel Retirement System (Fire) Last Eight Fiscal Years (dollars in thousands) Actuarially determined contribution $ Employer contributions in relation to the actuarially determined contribution 2021 4,731 $ (4,731) 2020 4,167 $ (4,167) 2019 4,577 $ (4,577) 2018 3,924 $ (3,924) 2017 2,840 $ (2,840) 2016 2,626 $ (2,626) 2015 2,276 $ (2,276) 2014 2,392 (2,392) Contribution deficiency (excess) $ - $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 25,764 $ 25,187 $ 24,376 $ 23,192 $ 23,500 $ 21,498 $ 20,420 $ 19,336 Contributions as a percentage of covered payroll 18.36% 16.54% 18.78% 16.92% 12.09% 12.22% 11.15% 12.37% The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions for the fiscal year ended June 30, 2015. Information prior to fiscal year 2014 is not available. City of Scottsdale, Arizona 141 Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2021 Changes in the City’s Total OPEB Liability and Related Ratios Total OPEB Liability and Related Ratios Last Four Fiscal Years (dollars in thousands) 2021 Total OPEB liability Service cost Interest Differences between expected and actual experience Changes of assumptions/other inputs Benefit payments $ 274 83 (587) 121 (145) 2020 $ 2019 236 89 (261) 126 (116) $ 2018 241 85 (278) (38) (101) $ 260 67 (230) 125 (111) Net change in total OPEB liability (254) 74 (91) 111 Total OPEB liability-beginning 2,177 2,103 2,194 2,083 Total OPEB liability-ending $ 1,923 $ 2,177 $ 2,103 $ 2,194 Covered-employee payroll $ 53,874 $ 55,023 $ 52,970 $ 51,137 Total OPEB liability as a percentage of covered-employee payroll 3.57% 3.96% 3.97% The City implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the fiscal year ended June 30, 2018. Information for the prior years is not available. Note: No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions . City of Scottsdale, Arizona 142 4.29% Notes to Required Supplementary Information Table of Contents For the Fiscal Year Ended June 30, 2021 I. ACTUARIALLY DETERMINED CONTRIBUTION RATES The actuarially determined contribution rates for PSPRS are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial assumptions used are disclosed in the notes to the financial statements. II. FACTORS THAT AFFECT TRENDS Arizona State Retirement System (ASRS) The actuarial assumptions related to funding used in the June 30, 2019, valuation for ASRS were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The major changes in assumptions were the discount rate, the actuarial cost method, the inflation rate, the investment rate, and the mortality table. The ASRS Board adopted the experience study recommended changes, which were first applied to the June 30, 2017, actuarial valuation. Public Safety Personnel Retirement System (PSPRS) The actuarial assumptions used in the June 30, 2020, valuation for PSPRS were based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. Several actuarial assumptions were adjusted as a result of the study, including decreasing wage inflation from 4.0 percent to 3.5 percent. The total pension liability as of June 30, 2021, reflects changes of benefit terms and actuarial assumptions for funding assumed future permanent benefit increases that were adopted by PSPRS in prior years. The PSPRS Board adopted the experience study recommended changes, which were applied to the June 30, 2017, actuarial valuation. The total liabilities as of June 30, 2021, reflect changes of actuarial assumptions to decrease the investment rate of return from 7.4 percent to 7.3 percent and update the mortality rates. Arizona courts have ruled those 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 increased the PSPRS-required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. City of Scottsdale, Arizona 143 Table of Contents NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds have either legal restrictions stipulated by an external party or are committed to a specific purpose through formal action from the City Council to be used for a specified purpose. Transportation Fund. This fund receives and expends the City’s allocation of the Arizona Highway User Revenue tax, 0.2 percent of privilege tax for transportation improvements, and 0.1 percent of privilege tax dedicated to the Arterial Life Cycle Program. The amount of Arizona Highway User Revenue available to each city is allocated on a population basis, which is determined by the latest federal census and must be used for street construction, reconstruction, maintenance, or transit. Community Development Block Grant Fund. This fund receives and expends the City’s Community Development Block Grant revenues. The amount of the grant is awarded annually by the U.S. Department of Housing and Urban Development (HUD). Community Development Block Grant revenues may be used only for those projects approved in the grant budget and are subject to agency expenditure guidelines. HOME Fund. This fund receives and expends monies from the Maricopa County Home Consortium. Expenditures are made to provide affordable housing, expand the capacity of non-profit housing providers, strengthen the ability of local governments to provide housing, and leverage private-sector participation in housing. Grants Fund. This fund receives and expends the City’s grant revenues not accounted for in other funds. The amount of grants received is generally based on applications to granting agencies by the City and on availability of funding by the grantors. Grant revenues may be used only for the stated purpose in the approved grant agreement and are subject to grantor expenditure guidelines. Section 8 Fund. This fund receives and expends the City’s Section 8 Housing revenues. Funding is awarded by the U.S. Department of Housing and Urban Development (HUD) to provide rental housing assistance. Budgets are approved annually by HUD. Section 8 Housing revenues may be used only for assistance approved by HUD and are subject to agency expenditure guidelines. Preserve Privilege Tax Fund. This fund receives voter-approved Preservation Privilege (Sales) Tax of 0.35 (0.2 percent 1995 and 0.15 percent 2004). Revenues are transferred to the Preserve Privilege Tax Capital Projects Funds for land purchases and improvements in the McDowell Sonoran Preserve or are transferred to the Scottsdale Preserve Authority Debt Service Fund to be used for related debt service payments. City of Scottsdale, Arizona 144 Table of Contents NONMAJOR GOVERNMENTAL FUNDS (Continued) Community Facilities Districts (CFD) Funds. These funds account for the non-debt or non-capital related expenditures incurred by community facilities districts. Scottsdale Mountain CFD McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Streetlight Districts Fund. This fund accounts for the property tax revenues received from the streetlight districts generated through the annual streetlight district levy. These funds are restricted for electricity expenditures of each streetlight district. Special Programs Fund. This fund receives monies from a variety of sources. The monies are either restricted by an outside source or committed by City Council and are required to be expended for specific purposes related to the intention of the source of the revenue. Tourism Development Fund. This fund receives revenues generated through transient occupancy taxes and certain lease agreements. The use of these funds has been committed by the City Council for tourismrelated purposes. Stadium Facility Fund. This fund accounts for certain revenue received for the Scottsdale Stadium and contributions from the San Francisco Giants and the Scottsdale Charros. The contributions are restricted by an outside agreement to be used to support the operations, maintenance, and capital improvements for the Scottsdale Stadium. Debt Service Funds Debt Service Funds record the accumulation of resources for, and the payment of, long-term debt principal and interest not serviced by the proprietary funds. Municipal Property Corporation Fund. This fund accounts for the principal and interest requirements of the City’s Municipal Property Corporation bonds. Financing is provided primarily by transaction privilege tax. Debt Service Stabilization Fund. This fund consists of amounts committed by the City Council to be used for the repayment of debt, as well as stadium surcharge amounts restricted for the payment of debt service. Community Facilities Districts (CFD) Funds. These funds account for the principal and interest of general obligation bonds issued by community facilities districts. Although these bonds are not obligations of the City, generally accepted accounting principles indicate that the bonds should be disclosed herein. McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD City of Scottsdale, Arizona 145 Table of Contents NONMAJOR GOVERNMENTAL FUNDS (Continued) Scottsdale Preserve Authority Fund. This fund accounts for the principal and interest requirements of excise tax revenue bonds issued by the Scottsdale Preserve Authority. Financing is provided by a 0.35 percent Preservation Privilege (Sales) Tax revenue approved by the voters in 1995 (0.2 percent) and 2004 (0.15 percent). Capital Projects Funds Capital Projects Funds account for the resources used to acquire, construct, and improve major capital assets other than those financed by proprietary funds. Capital Projects Funds allow the City to compile project cost data and demonstrate that legal or contractual requirements regarding the use of the resources are fully satisfied. General Obligation Bonds Fund. This fund accounts for the proceeds and interest of the sale of voterapproved general obligation bonds that are used for authorized capital improvements. Transportation Privilege Tax Fund. This fund accounts for the portion of Transportation Privilege (Sales) Tax dedicated to transportation capital improvements. Resources are provided by the 0.2 percent 1989 and 0.1 percent 2018 voter-approved privilege tax. Preserve Privilege Tax Fund. This fund accounts for the resources used to acquire and improve land within the McDowell Sonoran Preserve. Resources are provided by the 0.2 percent 1995 and 0.15 percent 2004 voter-approved Preserve Privilege Tax. Municipal Property Corporation Bonds Fund. This fund accounts for the activity related to the Municipal Property Corporation bond proceeds that are used for authorized capital improvements. External Sources Fund. This fund accounts for the activity related to monies received from a variety of external sources including federal and state grants and contributions. The revenues are restricted for specific types of capital improvements. Permanent Funds Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used to support City programs. Rassner Memorial Scottsdale Library Endowment. This fund requires the interest to be used exclusively to support library and literacy programs benefiting the citizens of Scottsdale. Scottsdale Community Endowment. This fund requires the interest to be used exclusively for community projects and programs for the public good within the City. Scottsdale Employee Endowment. This fund requires the interest to be used exclusively to support 501(c)(3) tax-exempt organizations serving the Scottsdale area and City programs. Herbert R. Drinkwater Youth Services Endowment. This fund requires the interest to be used exclusively to support City youth programs. City of Scottsdale, Arizona 146 Table of Contents Combining Balance Sheet Nonmajor Governmental Funds June 30, 2021 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax Franchise Fee Court Highway User Tax Intergovernmental Grants Leases Miscellaneous Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICITS) Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Matured Bond Interest Payable Matured Bonds Payable Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities Special Revenue Funds $ $ $ Deferred Inflows of Resources Unavailable Revenues Leases Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Fund Balances (Deficits) Nonspendable Restricted Committed Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources, and Fund Balances (Deficits) $ 139,673 12 124 8,454 1,944 2 64 54 1,623 4,643 3,470 1,300 4,036 165,399 3,607 391 928 - Debt Service Funds $ $ $ Capital Projects Funds 5,055 20,689 91 25,835 3,391 16,919 $ $ $ 99,976 2,154 91 1,562 13,871 1,745 354 119,753 10,350 49 3,706 - Total Nonmajor Governmental Funds Permanent Funds $ $ $ 708 708 - $ $ $ 245,412 22,855 215 10,016 1,944 93 64 54 1,623 18,514 5,215 1,300 4,390 311,695 13,957 440 4,634 3,391 16,919 23,749 688 9 5 73 29,450 20,310 14,105 - 23,749 688 9 5 73 63,865 8,318 3,561 11,879 29 29 14,500 14,500 - 22,847 3,561 26,408 41,329 20,339 28,605 - 90,273 97,308 28,873 (2,111) 124,070 2,813 2,683 5,496 95,837 (4,689) 91,148 681 27 708 681 195,985 31,556 (6,800) 221,422 165,399 $ 25,835 City of Scottsdale, Arizona 147 $ 119,753 $ 708 $ 311,695 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental State Revenue Sharing Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Property Rental Interest Earnings Net Increase in the Fair Value of Investments Intergovernmental Federal Grants State Grants Miscellaneous Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues Special Revenue Funds $ 120 72,470 18,013 202 Debt Service Funds $ Capital Projects Funds 3,097 - $ Total Nonmajor Governmental Funds Permanent Funds 13,474 - $ - $ 3,217 85,944 18,013 202 325 17,893 642 43 - - - 325 17,893 642 43 51 2,093 42 - - - 51 2,093 42 123 1,549 104 2,604 854 - - 1,105 - 156 123 1,549 104 2,604 1,959 156 25,021 359 1,032 529 4,348 563 453 85 149,518 3,097 2,067 3,132 2,166 50 8 22,002 156 27,088 359 4,164 2,166 529 4,398 571 453 85 174,773 EXPENDITURES Current General Government Mayor and City Council City Attorney City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Capital Outlay Total Expenditures 35 27 1,568 647 172 17,849 11,537 15,481 13,437 35 12,974 545 - 2,264 591 241 462 - 45 - 35 27 1,568 647 172 20,113 11,537 16,072 13,723 497 12,974 545 64 27 2,463 76,861 16,919 7,781 442 25,142 48,412 51,970 45 16,983 7,808 442 50,875 154,018 Excess (Deficiency) of Revenues over (under) Expenditures 72,657 (22,045) (29,968) 111 20,755 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Subscription-Based Information Technology Arrangements Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) 31,655 (68,383) 21 (36,707) 21,614 71,325 (70,878) 22,061 20,304 (2,948) 50,930 4,070 72,356 - 73,573 (71,331) 21 71,325 50,930 4,070 (70,878) 57,710 35,950 16 42,388 111 78,465 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 88,120 124,070 $ 5,480 5,496 City of Scottsdale, Arizona 148 $ 48,760 91,148 $ 597 708 $ 142,957 221,422 Table of Contents Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2021 (in thousands) ASSETS 149 City of Scottsdale, Arizona Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax Franchise Fee Court Highway User Tax Intergovernmental Grants Leases Miscellaneous Total Assets Community Development Block Grant Transportation $ $ 29,527 2,983 1,623 97 34,230 $ $ HOME - 758 2,510 3,268 $ $ Grants 700 700 $ $ Section 8 13,456 2,012 46 15,514 $ $ 735 21 756 Preserve Privilege Tax Scottsdale Mountain CFD McDowell Mountain Ranch CFD $ $ $ $ 52,552 112 5,471 58,135 $ 29 29 $ 13 13 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICITS) Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities $ Deferred Inflows of Resources Unavailable Revenues Leases Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Fund Balances (Deficits) Restricted Committed Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources, and Fund Balances (Deficits) (continued) $ 1,114 239 - $ 65 9 228 $ 700 $ 163 46 - $ 26 12 - $ 53 - $ - $ - 1,353 302 4 1 5 614 700 14,643 629 15,481 2 71 111 53 - - 834 834 2,187 2,649 2,649 3,263 97 97 797 1,740 1,740 17,221 21 21 132 1,484 1,484 1,537 - - 32,043 32,043 144 (139) 5 (97) (97) (1,707) (1,707) 624 624 56,598 56,598 29 29 13 13 34,230 $ 3,268 $ 700 $ 15,514 $ 756 $ 58,135 $ 29 $ 13 Table of Contents Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2021 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Transient Occupancy Tax Property Tax Franchise Fee Court Highway User Tax Intergovernmental Grants Leases Miscellaneous Total Assets City of Scottsdale, Arizona 150 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICITS) Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Unearned Revenue Intergovernmental Other Due to Other Governments Guaranty and Other Deposits Other Total Liabilities DC Ranch CFD Via Linda Road CFD $ $ $ $ Deferred Inflows of Resources Unavailable Revenues Leases Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Fund Balances (Deficits) Restricted Committed Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources, and Fund Balances (Deficits) $ 42 2 44 - $ $ Waterfront Commercial CFD 7 7 - $ $ $ 12 12 - Streetlight Districts $ $ $ Tourism Development Special Programs 48 9 57 - $ $ $ 32,369 12 64 54 4,643 1,300 778 39,220 625 72 - $ $ $ 7,239 1,944 154 9,337 1,551 8 - Stadium Facility $ $ $ 3,656 421 4,077 10 5 - Total $ $ $ 139,673 12 124 8,454 1,944 2 64 54 1,623 4,643 3,470 1,300 4,036 165,399 3,607 391 928 - - - - 8,804 55 6 2 9,564 1,559 15 23,749 688 9 5 73 29,450 - - - - 738 1,314 2,052 510 2,247 2,757 245 245 8,318 3,561 11,879 - - - - 11,616 4,316 260 41,329 44 44 7 7 12 12 57 57 3,920 23,852 (168) 27,604 5,021 5,021 3,817 3,817 97,308 28,873 (2,111) 124,070 44 $ 7 $ 12 $ 57 $ 39,220 $ 9,337 $ 4,077 $ 165,399 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) City of Scottsdale, Arizona 151 REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental State Revenue Sharing Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Property Rental Interest Earnings Intergovernmental Federal Grants State Grants Miscellaneous Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues Community Development Block Grant Transportation $ 25,549 - $ HOME - $ Grants - $ Section 8 - $ - Preserve Privilege Tax Scottsdale Mountain CFD $ $ 46,921 - McDowell Mountain Ranch CFD - $ 24 - 17,893 642 - - - - - - - - - - - - - - - - 5 - 63 - - - - 715 - - 78 381 453 10 45,011 1,458 1,521 604 604 16,381 359 1,024 17,764 6,578 13 6,591 47,636 - 24 EXPENDITURES Current General Government Mayor and City Council City Attorney City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures 62 16,422 1,880 35 - 1,510 - 525 - 10 27 647 1,260 14,137 875 - 6,336 - 3 - 4 - 11 - 19 2,035 20,453 3 1,513 525 61 17,017 18 6,354 3 4 11 Excess (Deficiency) of Revenues over (under) Expenditures 24,558 8 79 747 237 47,633 (4) 13 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Subscription-Based Information Technology Arrangements Total Other Financing Sources (Uses) 1,818 (12,825) 21 (10,986) (6) (6) - 33 (51) (18) - (38,967) (38,967) - - 13,572 2 79 729 237 8,666 (4) 13 Net Change in Fund Balances (Deficits) Fund Balances (Deficits) - Beginning Fund Balances (Deficits) - Ending (continued) $ 18,471 32,043 $ 3 5 $ (176) (97) $ (2,436) (1,707) $ 387 624 $ 47,932 56,598 $ 33 29 $ 13 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) REVENUES City of Scottsdale, Arizona 152 Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Taxes - Intergovernmental State Revenue Sharing Highway User Tax Local Transportation Assistance Fund Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Property Rental Interest Earnings Intergovernmental Federal Grants State Grants Miscellaneous Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Streetlight Districts Special Programs $ $ $ $ $ 69 - 17 - 10 - - 202 Tourism Development $ Stadium Facility 18,013 - $ Total - $ 120 72,470 18,013 202 - - - - 325 43 - - 325 17,893 642 43 - - - - 51 2,093 42 - - 51 2,093 42 - - - - 123 1,549 104 1,304 101 846 12 386 26 123 1,549 104 2,604 854 69 17 10 529 529 954 300 157 75 7,423 12 18,883 3,024 3,436 25,021 359 1,032 529 4,348 563 453 85 149,518 EXPENDITURES Current General Government Mayor and City Council City Attorney City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures 71 - 10 - 11 - 545 25 1,568 167 115 1,344 1,920 12,974 - 11,422 - 391 - 35 27 1,568 647 172 17,849 11,537 15,481 13,437 35 12,974 545 71 10 11 545 45 27 346 18,531 11,422 391 64 27 2,463 76,861 Excess (Deficiency) of Revenues over (under) Expenditures (2) 7 (1) (16) (11,108) 7,461 3,045 72,657 - - - - 29,770 (7,470) 22,300 34 (7,185) (7,151) (1,879) (1,879) 31,655 (68,383) 21 (36,707) (2) 7 (1) (16) 11,192 310 1,166 35,950 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Subscription-Based Information Technology Arrangements Total Other Financing Sources and (Uses) Net Change in Fund Balances (Deficits) Fund Balances (Deficits) - Beginning Fund Balances (Deficits) - Ending $ 46 44 $ 7 $ 13 12 $ 73 57 $ 16,412 27,604 $ 4,711 5,021 $ 2,651 3,817 $ 88,120 124,070 Table of Contents Transportation – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts 153 City of Scottsdale, Arizona REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Property Rental Intergovernmental Miscellaneous Reimbursements from Outside Sources Indirect Costs Other Total Revenues Original $ Final 21,154 $ 21,154 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 25,549 - 25,549 4,395 18,000 655 - 18,000 655 - 17,893 642 5 - 17,893 642 5 (107) (13) 5 120 6 453 40,388 120 6 453 40,388 78 381 453 10 45,011 - 78 381 453 10 45,011 (42) 375 10 4,623 EXPENDITURES Current General Government City Treasurer Public Works Community Services Administrative Services Debt Service Principal Capital Outlay Total Expenditures 60 23,830 1,898 19 62 21,822 1,898 40 62 18,429 1,880 35 (2,007) - 62 16,422 1,880 35 3,393 18 5 25,807 23,822 20,406 19 2,035 47 19 2,035 20,453 3,416 Excess of Revenues over Expenditures 14,581 16,566 24,605 (47) 24,558 8,039 (10,627) (10,627) (10,627) (10,627) 1,818 (12,825) 21 (10,986) - 1,818 (12,825) 21 (10,986) 1,818 (2,198) 21 (359) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of SBITAs Total Other Financing Sources (Uses) Net Change in Fund Balance $ 3,954 $ 47 $ 5,939 $ 13,619 Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals Differences in Presentation between Budget and GAAP Basis: The City records principal and interest payments related to the subscription-based information technology arrangements and lease activity on a GAAP basis; however, for budget purposes they are included in the associated division's expenditures. Additionally, the City records capitalized expenditures as capital outlay on the GAAP basis; however, for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. $ (47) $ 13,572 $ 7,680 Table of Contents Community Development Block Grant – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Property Rental Intergovernmental Federal Grants Total Revenues REVENUES Original $ 154 City of Scottsdale, Arizona EXPENDITURES Current Community Services Capital Outlay Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING USES Transfers Out Total Other Financing Uses Net Change in Fund Balance $ Final 55 $ 55 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 63 - 63 8 1,952 2,007 1,952 2,007 1,458 1,521 - 1,458 1,521 (494) (486) 2,001 2,001 2,715 2,715 1,513 1,513 (3) 3 - 1,510 3 1,513 1,202 1,202 6 (708) 8 - 8 716 (6) (6) (6) (6) (6) (6) - (6) (6) - - $ (714) $ 2 Explanation of Differences: Differences in Presentation between Budget and GAAP Basis: The City records capitalized expenditures as capital outlay on the GAAP basis; however, for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. $ - $ 2 $ 716 Table of Contents HOME – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants Total Revenues Original $ 155 City of Scottsdale, Arizona EXPENDITURES Current Community Services Total Expenditures Excess of Revenues over Expenditures Net Change in Fund Balance $ Final 685 685 $ 685 685 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 604 604 - Actual Amounts GAAP Basis $ 604 604 Variance Between Final Budget and Actual Amounts Budgetary Basis $ (81) (81) 685 685 685 685 525 525 - 525 525 160 160 - - 79 - 79 79 - $ - $ 79 $ - $ 79 $ 79 Table of Contents Grants – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants State Grants Contributions and Donations Total Revenues Original $ City of Scottsdale, Arizona 156 EXPENDITURES Current General Government Mayor and City Council City Attorney City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Capital Outlay Total Expenditures Excess of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance $ Final 8,567 12,901 2,117 23,585 $ 8,567 12,901 2,117 23,585 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 16,381 359 1,024 17,764 - 16,381 359 1,024 17,764 7,814 (12,542) (1,093) (5,821) 5 670 120 5 21,013 1,772 23,585 10 150 647 70 1,253 15,301 1,215 18,646 10 24 647 1,260 14,173 903 17,017 3 (36) (28) 61 - 10 27 647 1,260 14,137 875 61 17,017 126 70 (7) 1,128 312 1,629 - 4,939 747 - 747 (4,192) - - 33 (51) (18) - 33 (51) (18) 33 (51) (18) - $ 4,939 $ 729 Explanation of Differences: Differences in Presentation between Budget and GAAP Basis: The City records capitalized expenditures as capital outlay on the GAAP basis; however, for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. $ - $ 729 $ (4,210) Table of Contents Section 8 – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants Reimbursements from Outside Sources Total Revenues Original $ 157 City of Scottsdale, Arizona EXPENDITURES Current Community Services Capital Outlay Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures Net Change in Fund Balance Final 5,824 5,824 $ 5,824 5,824 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 6,578 13 6,591 $ $ 6,578 13 6,591 754 13 767 5,824 5,824 6,027 6,027 6,352 6,352 (16) 18 2 6,336 18 6,354 (325) (325) - (203) 239 (2) 237 442 $ - $ 2 $ (203) $ 239 Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis Differences in Presentation between Budget and GAAP Basis: The City records capitalized expenditures as capital outlay on the GAAP basis; however, for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. $ (2) $ 237 $ 442 Table of Contents Preserve Privilege Tax – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transaction Privilege Interest Earnings Total Revenues Original $ City of Scottsdale, Arizona 158 EXPENDITURES Current General Government City Treasurer Total Expenditures Final 38,399 745 39,144 $ 38,399 745 39,144 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 46,921 715 47,636 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 46,921 715 47,636 8,522 (30) 8,492 - - 3 3 - 3 3 (3) (3) Excess of Revenues over Expenditures 39,144 39,144 47,633 - 47,633 8,489 OTHER FINANCING USES Transfers Out Total Other Financing Uses (39,031) (39,031) (39,031) (39,031) (38,967) (38,967) - (38,967) (38,967) 64 64 Net Change in Fund Balance $ 113 $ 113 $ 8,666 $ - $ 8,666 $ 8,553 Table of Contents Streetlight Districts – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Streetlight and Services Districts Total Revenues Original $ 159 City of Scottsdale, Arizona EXPENDITURES Current Streetlight and Services Districts Total Expenditures Deficiency of Revenues under Expenditures Net Change in Fund Balance $ Final 553 553 $ 553 553 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 529 529 - 529 529 (24) (24) 610 610 610 610 545 545 - 545 545 65 65 (57) (57) (16) - (16) 41 (57) $ (57) $ (16) $ - $ (16) $ 41 Table of Contents Special Programs – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Taxes - Local Light and Power Franchise Taxes - Intergovernmental State Revenue Sharing Business and Liquor Licenses Charges for Current Services Building and Related Permits Recreation Fees WestWorld Equestrian Facility Fees Fines, Fees, and Forfeitures Court Court Enhancement Police Property Rental Interest Earnings Intergovernmental Miscellaneous Developer Contributions Contributions and Donations Reimbursements from Outside Sources Other Total Revenues Original $ EXPENDITURES Current General Government Mayor and City Council City Court Public Works Community and Economic Development Public Safety Community Services Scottsdale AZ CARES Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance Final 252 $ 252 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 202 Net Decrease in Fund Balance - Budget to GAAP 325 43 - 325 43 325 (12) 15 2,348 - 15 2,348 - 51 2,093 42 - 51 2,093 42 36 (255) 42 155 1,916 146 1,680 123 155 1,916 146 1,680 123 123 1,549 104 1,318 99 (14) 2 123 1,549 104 1,304 101 (32) (367) (42) (362) (24) 238 100 331 112 39 7,510 238 100 331 112 39 7,510 954 300 157 75 7,435 (12) 954 300 157 75 7,423 716 (100) (31) 45 36 (75) 28 1,870 364 3,672 1,662 2,758 - 28 1,893 364 3,491 1,672 2,781 24,183 25 1,567 180 116 1,355 2,043 13,165 1 (13) (1) (11) (123) (191) 25 1,568 167 115 1,344 1,920 12,974 3 326 184 3,375 317 738 11,018 10,354 34,412 45 27 18,523 346 8 45 27 346 18,531 (45) (27) 15,889 (2,844) (26,902) (11,088) (20) (11,108) 15,814 10 (2,144) (2,134) 29,638 (2,144) 27,494 29,770 (7,470) 22,300 - 29,770 (7,470) 22,300 132 (5,326) (5,194) (4,978) $ (14) 2 (12) $ 592 $ 11,212 8 $ (50) 55 $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences 202 55 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Amortized Lease Revenue Lease Interest Revenue Total Revenue Adjustments - (20) Differences in Presentation between Budget and GAAP Basis: The City records capitalized expenditures as capital outlay on the GAAP basis; however, for budget purposes they are included in the associated division's expenditures. These differences have no bearing on the fund balance since the overall total expenditures are the same. City of Scottsdale, Arizona 160 $ (20) $ 11,192 $ 10,620 Table of Contents Tourism Development – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transient Occupancy Tax Property Rental Interest Earnings Reimbursements from Outside Sources Total Revenues Original $ Final 15,020 1,500 16,520 $ 15,020 1,500 16,520 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 18,013 1,696 12 19,721 (850) 12 (838) 18,013 846 12 12 18,883 2,993 196 12 3,201 City of Scottsdale, Arizona 161 EXPENDITURES Current Community and Economic Development Total Expenditures 10,029 10,029 11,760 11,760 11,421 11,421 1 1 11,422 11,422 339 339 Excess of Revenues over Expenditures 6,491 4,760 8,300 (839) 7,461 3,540 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) (7,190) (7,190) (7,190) (7,190) 34 (7,185) (7,151) - 34 (7,185) (7,151) 34 5 39 Net Change in Fund Balance $ (699) $ (850) 12 (838) Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Amortized Lease Revenue Lease Interest Revenue Total Revenue Adjustments The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Net Decrease in Fund Balance - Budget to GAAP 1 $ (839) $ (2,430) $ 1,149 $ (839) $ 310 $ 3,579 Table of Contents Stadium Facility – Special Revenue Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts REVENUES Property Rental Interest Earnings Contributions and Donations Reimbursements from Outside Sources Total Revenues Original $ Final 490 10 3,145 264 3,909 $ 490 10 3,145 264 3,909 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 386 26 3,024 3,436 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 386 26 3,024 3,436 (104) 16 (121) (264) (473) City of Scottsdale, Arizona 162 EXPENDITURES Current Community Services Total Expenditures 684 684 687 687 393 393 (2) (2) 391 391 294 294 Excess of Revenues over Expenditures 3,225 3,222 3,043 2 3,045 (179) (670) (670) (670) (670) (1,879) (1,879) - (1,879) (1,879) (1,209) (1,209) OTHER FINANCING USES Transfers Out Total Other Financing Uses Net Change in Fund Balance $ 2,555 $ (2) Explanation of Differences: The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accruals $ 2,552 $ 1,164 $ 2 $ 1,166 $ (1,388) Table of Contents Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2021 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Property Tax Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Matured Bond Interest Payable Matured Bonds Payable Total Liabilities Municipal Property Corporation $ $ $ 163 City of Scottsdale, Arizona Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources Fund Balances Restricted Committed Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ Debt Service Stabilization 16,093 16,093 3,116 12,977 16,093 $ $ $ 5,055 5,055 - McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Scottsdale Preserve Authority $ $ $ $ $ $ $ 1,494 27 1,521 37 1,280 1,317 $ $ 1,278 57 1,335 135 1,015 1,150 $ $ 230 6 236 8 195 203 $ $ 248 1 249 29 172 201 $ $ 1,346 1,346 66 1,280 1,346 Total $ $ $ 5,055 20,689 91 25,835 3,391 16,919 20,310 16,093 - 9 1,326 17 1,167 2 205 1 202 1,346 29 20,339 - 2,372 2,683 5,055 195 195 168 168 31 31 47 47 - 2,813 2,683 5,496 16,093 $ 5,055 $ 1,521 $ 1,335 $ 236 $ 249 $ 1,346 $ 25,835 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Municipal Property Corporation REVENUES Taxes - Local Property Total Revenues $ Debt Service Stabilization - $ - McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Scottsdale Preserve Authority $ $ $ $ $ 1,351 1,351 1,299 1,299 207 207 240 240 - Total $ 3,097 3,097 City of Scottsdale, Arizona 164 EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures 12,977 7,228 442 20,647 - 1,280 75 1,355 1,015 269 1,284 195 16 211 172 59 231 1,280 134 1,414 16,919 7,781 442 25,142 Excess (Deficiency) of Revenues over (under) Expenditures (20,647) - (4) 15 (4) 9 (1,414) (22,045) OTHER FINANCING SOURCES (USES) Transfers In Issuance of Refunding Bonds Payment to Refunded Bonds Escrow Agent Total Other Financing Sources (Uses) 20,200 71,325 (70,878) 20,647 - - - - - 1,414 1,414 21,614 71,325 (70,878) 22,061 - - (4) 15 (4) 9 - 16 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ - $ 5,055 5,055 $ 199 195 $ 153 168 $ 35 31 $ 38 47 $ - $ 5,480 5,496 Table of Contents General Obligation Bond Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Taxes - Local Property Total Revenues Original REVENUES $ City of Scottsdale, Arizona 165 EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures Final 33,373 33,373 $ 33,373 33,373 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 33,481 33,481 - 33,481 33,481 108 108 47,590 17,650 65,240 47,590 17,650 65,240 50,075 12,533 1,303 63,911 - 50,075 12,533 1,303 63,911 (2,485) 5,117 (1,303) 1,329 Deficiency of Revenues under Expenditures (31,867) (31,867) (30,430) - (30,430) 1,437 OTHER FINANCING SOURCES (USES) Transfers In Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Total Other Financing Sources (Uses) 31,867 31,867 31,867 31,867 31,501 168,220 230 130 (167,224) 32,857 - 31,501 168,220 230 130 (167,224) 32,857 (366) 168,220 230 130 (167,224) 990 Net Change in Fund Balance $ - $ - $ 2,427 $ - $ 2,427 $ 2,427 Table of Contents Municipal Property Corporation Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Total Revenues REVENUES Original $ Final - $ - Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ - - - - City of Scottsdale, Arizona 166 EXPENDITURES Debt Service Principal Interest and Fiscal Charges Bond Issuance Costs Total Expenditures 12,647 8,213 20,860 12,647 8,213 20,860 12,977 7,228 442 20,647 - 12,977 7,228 442 20,647 (330) 985 (442) 213 Deficiency of Revenues under Expenditures (20,860) (20,860) (20,647) - (20,647) 213 20,860 20,860 20,860 20,860 20,200 71,325 (70,878) 20,647 - 20,200 71,325 (70,878) 20,647 (660) 71,325 (70,878) (213) OTHER FINANCING SOURCES (USES) Transfers In Issuance of Refunding Bonds Payment to Refunded Bonds Escrow Agent Total Other Financing Sources (Uses) Net Change in Fund Balance $ - $ - $ - $ - $ - $ - Table of Contents Scottsdale Preserve Authority Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2021 (in thousands) Budgeted Amounts Total Revenues REVENUES Original $ Final - $ - Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ - - - - City of Scottsdale, Arizona 167 EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures 1,280 134 1,414 1,280 134 1,414 1,280 134 1,414 - 1,280 134 1,414 - Deficiency of Revenues under Expenditures (1,414) (1,414) (1,414) - (1,414) - OTHER FINANCING SOURCES Transfers In Total Other Financing Sources 1,414 1,414 1,414 1,414 1,414 1,414 - 1,414 1,414 - Net Change in Fund Balance $ - $ - $ - $ - $ - $ - Table of Contents Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2021 (in thousands) ASSETS 168 City of Scottsdale, Arizona Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Interest Privilege Tax Intergovernmental Grants Miscellaneous Total Assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES (DEFICITS) Liabilities Accounts Payable Accrued Payroll and Benefits Due to Other Funds Total Liabilities General Obligation Bonds Transportation Privilege Tax Preserve Privilege Tax Municipal Property Corporation Bonds $ $ $ $ $ $ Deferred Inflows of Resources Unavailable Revenues Total Liabilities and Deferred Inflows of Resources Fund Balances (Deficits) Restricted Unassigned Total Fund Balances (Deficits) Total Liabilities, Deferred Inflows of Resources, and Fund Balances (Deficits) $ 34,666 34,666 5,016 14 5,030 $ $ 64,547 91 1,562 12,646 78,846 3,338 27 3,365 $ $ 763 763 1,249 8 1,257 $ $ External Sources 2,154 2,154 533 23 556 $ $ $ Total - 1,225 1,745 354 3,324 214 3,683 3,897 $ $ $ 99,976 2,154 91 1,562 13,871 1,745 354 119,753 10,350 49 3,706 14,105 - 13,070 - - 1,430 14,500 5,030 16,435 1,257 556 5,327 28,605 29,655 (19) 29,636 62,411 62,411 (494) (494) 1,598 1,598 2,173 (4,176) (2,003) 95,837 (4,689) 91,148 34,666 $ 78,846 $ 763 $ 2,154 $ 3,324 $ 119,753 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) REVENUES 169 City of Scottsdale, Arizona Taxes - Local Transaction Privilege Interest Earnings Intergovernmental Federal Grants Miscellaneous Developer Contributions Contributions and Donations Reimbursements from Outside Sources Total Revenues General Obligation Bonds $ 6 Transportation Privilege Tax $ 13,474 1,088 Municipal Property Corporation Bonds Preserve Privilege Tax $ - $ External Sources - $ 11 Total $ 13,474 1,105 6 1,275 8 15,845 - - 2,067 3,132 891 50 6,151 2,067 3,132 2,166 50 8 22,002 57 591 1 422 24,555 25,626 583 36 10,755 11,374 240 6,339 6,579 2,411 2,411 1,624 4 4,352 5,980 2,264 591 241 462 48,412 51,970 (25,620) 4,471 (6,579) (2,411) 171 (29,968) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Total Other Financing Sources (Uses) (93) 50,930 4,070 54,907 12,825 (1,817) 11,008 6,140 6,140 (85) (85) 1,339 (953) 386 20,304 (2,948) 50,930 4,070 72,356 Net Change in Fund Balances (Deficits) 29,287 15,479 (439) (2,496) 557 42,388 EXPENDITURES Current Public Works Public Safety Community Services Administrative Services Capital Outlay Total Expenditures Excess (Deficiency) of Revenues over (under) Expenditures Fund Balances (Deficits) - Beginning Fund Balances (Deficits) - Ending $ 349 29,636 $ 46,932 62,411 $ (55) (494) $ 4,094 1,598 $ (2,560) (2,003) $ 48,760 91,148 Table of Contents Combining Balance Sheet Nonmajor Permanent Governmental Funds June 30, 2021 (in thousands) Cash and Investments Total Assets ASSETS 170 City of Scottsdale, Arizona LIABILITIES AND FUND BALANCES Total Liabilities Fund Balances Nonspendable Restricted Total Fund Balances Total Liabilities and Fund Balances Rassner Memorial Scottsdale Library Endowment Scottsdale Community Endowment Herbert R. Drinkwater Youth Services Endowment Scottsdale Employee Endowment Total $ $ 475 475 $ $ 150 150 $ $ 46 46 $ $ 37 37 $ $ 708 708 $ - $ - $ - $ - $ - $ 457 18 475 475 $ 144 6 150 150 $ 44 2 46 46 $ 36 1 37 37 $ 681 27 708 708 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Permanent Governmental Funds For the Fiscal Year Ended June 30, 2021 (in thousands) REVENUES Net Increase in the Fair Value of Investments Total Revenues Rassner Memorial Scottsdale Library Endowment $ 105 105 Scottsdale Community Endowment $ Herbert R. Drinkwater Youth Services Endowment Scottsdale Employee Endowment 33 33 $ 10 10 $ Total 8 8 $ 156 156 City of Scottsdale, Arizona 171 EXPENDITURES Current Community Services Total Expenditures 39 39 4 4 - 2 2 45 45 Excess of Revenues over Expenditures 66 29 10 6 111 Net Change in Fund Balances 66 29 10 6 111 Fund Balances - Beginning Fund Balances - Ending $ 409 475 $ 121 150 $ 36 46 $ 31 37 $ 597 708 Table of Contents INTERNAL SERVICE FUNDS Internal Service Funds are used to report activities that provide goods or services to other funds, departments, or agencies of the primary government and its component units on a cost-reimbursement basis. Fleet Management Fund This fund accounts for the expenses associated with purchasing and maintaining the City’s motor vehicles. Self-Insurance Fund This fund accounts for the administration of the City’s self-insurance program. This fund provides coverage of unemployment, self-insured benefits, workers’ compensation, and property and liability claims. Computer Replacement Fund This fund accounts for the expenses associated with purchasing the City’s computers, monitors, and printers. City of Scottsdale, Arizona 172 Table of Contents Combining Statement of Fund Net Position Internal Service Funds June 30, 2021 (in thousands) Fleet Management ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets Current Assets Cash and Investments Receivables (net of allowance for uncollectibles) Miscellaneous Supplies Inventory Prepaid Items Total Current Assets $ Computer Replacement Self-Insurance 16,990 $ 46,740 $ Total 1,879 $ 65,609 131 1,067 582 18,770 168 46,908 1,879 299 1,067 582 67,557 3 - - 3 16,325 90,988 1,272 8 (52,920) 55,673 55,676 33 168 (94) 107 107 4,847 (2,140) 2,707 2,707 16,325 90,988 6,152 8 168 (55,154) 58,487 58,490 Total Assets 74,446 47,015 4,586 126,047 Deferred Outflows of Resources Pension-Related Amounts 871 192 - 1,063 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Liabilities Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Current Accrued Compensated Absences - Due within one year Other Payables - Due within one year Subscription - Due within one year Unearned Revenue Other Liabilities Total Current Liabilities 1,660 134 184 1,978 882 37 1 52 7,880 83 12 4 8,951 50 50 2,592 171 1 236 7,880 83 12 4 10,979 Noncurrent Liabilities Accrued Compensated Absences - Due in more than one year Net Pension Liabilities Other Payables - Due in more than one year Total Noncurrent Liabilities 208 4,851 5,059 60 1,135 15,101 16,296 - 268 5,986 15,101 21,355 Total Liabilities 7,037 25,247 50 32,334 Deferred Inflows of Resources Pension-Related Amounts 8 2 - 10 55,673 12,599 24 21,934 2,707 1,829 58,404 36,362 Noncurrent Assets Equity in Joint Venture Capital Assets Buildings and Improvements Motor Vehicles Machinery and Equipment Construction in Progress Subscription-Based Information Technology Arrangements Less Accumulated Depreciation/Amortization Total Capital Assets (net of accumulated depreciation/amortization) Total Noncurrent Assets NET POSITION Net Investment in Capital Assets Unrestricted Total Net Position $ 68,272 City of Scottsdale, Arizona 173 $ 21,958 $ 4,536 $ 94,766 Table of Contents Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Fleet Management Operating Revenues Charges for Sales and Services Billings to User Programs Self-Insurance Contributions - Employee Self-Insurance Contributions - Retiree State Contributions Other Total Operating Revenues $ 17,040 2,122 19,162 Computer Replacement Self-Insurance $ 36,676 8,430 274 125 2,689 48,194 $ Total 753 753 $ 54,469 8,430 274 125 4,811 68,109 Operating Expenses Costs of Sales and Services Fleet Management Operations Self-Insurance Administration Self-Insurance Claims Self-Insurance Benefits Insurance and Bond Premiums Computer Replacement Depreciation/Amortization Total Operating Expenses 12,370 9,071 21,441 2,702 8,853 29,100 3,429 90 44,174 3 888 891 12,370 2,702 8,853 29,100 3,429 3 10,049 66,506 Operating Income (Loss) (2,279) 4,020 (138) 1,603 Non-Operating Revenues (Expenses) Property Tax Loss on Sale of Capital Assets Net Non-Operating Revenues (Expenses) (904) (904) 1,829 1,829 (8) (8) 1,829 (912) 917 (3,183) 5,849 (146) 2,520 2,131 - 88 (5) - 2,131 88 (5) (1,052) 5,932 (146) 4,734 Income (Loss) Before Contributions and Transfers Capital Contributions Transfers In Transfers Out Change in Net Position Total Net Position - Beginning Total Net Position - Ending $ 69,324 68,272 $ City of Scottsdale, Arizona 174 16,026 21,958 $ 4,682 4,536 $ 90,032 94,766 Table of Contents Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2021 (in thousands) Fleet Management Cash Flows from Operating Activities Cash Received from Customers Cash Payments to Suppliers for Goods/Services Cash Payments to Employees for Services Other Cash Receipts Net Cash Provided by Operating Activities $ 17,040 (8,184) (4,475) 2,122 6,503 Cash Flows from Non-Capital Financing Activities Property Tax Transfers In Transfers Out Net Cash Provided by Non-Capital Financing Activities Computer Replacement Self-Insurance $ 45,524 (41,322) (1,229) 2,689 5,662 $ Total 753 (3) 750 $ 63,317 (49,509) (5,704) 4,811 12,915 - 1,829 88 (5) 1,912 - 1,829 88 (5) 1,912 Cash Flows from Capital and Related Financing Activities Acquisition of Capital Assets Sale of Capital Assets Net Cash Used for Capital and Related Financing Activities (6,223) 845 (5,378) (88) (88) (818) (818) (7,129) 845 (6,284) Net Increase (Decrease) in Cash and Cash Equivalents 1,125 7,486 (68) 8,543 Cash and Cash Equivalents at Beginning of Year 15,865 39,254 1,947 57,066 Cash and Cash Equivalents at End of Year $ 16,990 $ 46,740 $ 1,879 $ 65,609 $ (2,279) $ 4,020 $ (138) $ 1,603 Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities Operating Income (Loss) Income Provided by Operating Activities Depreciation Current Year Pension Contributions Change in Accounts Receivable Change in Inventories Change in Accounts Payable Change in Unearned Revenue Change in Accrued Payroll Change in Compensated Absences Payable Change in Claims Payable Change in Net Pension Liability Change in Deferred Outflows of Resources Related to Pensions Change in Deferred Inflows of Resources Related to Pensions Total Adjustments Net Cash Provided by Operating Activities Supplemental Disclosure of Non-Cash Financing Activities Changes to Property, Plant, and Equipment Contributions of Capital Assets from Other Funds Retirement of Assets 9,071 (358) (462) 225 17 (42) 681 (70) (280) 8,782 90 (71) 54 398 12 21 4 1,008 205 (17) (62) 1,642 888 888 10,049 (429) 54 (462) 623 12 38 (38) 1,008 886 (87) (342) 11,312 $ 6,503 $ 5,662 $ 750 $ 12,915 $ 2,131 2,131 $ - $ 8 8 $ 2,131 8 2,139 $ $ City of Scottsdale, Arizona 175 $ $ Table of Contents OTHER SUPPLEMENTARY INFORMATION Debt Requirements The Schedule of Changes in Long-Term Debt for the current fiscal year presents the City’s debt by type without regard to fund classification. Debt issued by community facilities districts is included for full disclosure although such debt is not legally an obligation of the City. City of Scottsdale, Arizona 176 Table of Contents Schedule of Changes in Long-Term Debt* For the Fiscal Year Ended June 30, 2021 (in thousands) July 1, 2020 Issued Refunding Bonds Issued Retired Accretions, Amortizations, and Contract Adjustments Bonds Defeased June 30, 2021 Governmental Business-type Activities Activities Final Payment Date GENERAL OBLIGATION BONDS City of Scottsdale, Arizona 177 Governmental Activities 2010 GO Various Purpose 2011 GO Preservation 2011 GO Refunding Preservation 2012 GO Preservation 2012 GO Refunding Various Purpose 2012 GO Refunding Preservation 2013 GO Preservation 2014 GO Preservation 2014 GO Refunding Various Purpose 2014 GO Refunding Preservation 2015 GO Refunding Various Purpose 2015 GO Refunding Preservation 2017A GO Preservation 2017B GO Preservation Acquisition Refinancing 2017 GO Refunding Various Purpose 2017 GO Refunding Preservation 2017C GO Various Purpose 2020 GO Taxable Refunding Various Purpose 2020 GO Taxable Refunding Preservation 2021 GO Various Purpose 2021 GO Taxable Various Purpose 2010 GO Bonds Issuance Premium 2011 GO Preserve Series Issuance Premium 2011 GO Refunding Series Issuance Premium 2012 GO Preserve Issuance Premium 2012 GO Refunding Series Issuance Premium 2013 GO Preserve Issuance Premium 2014 GO Preserve Issuance Premium 2014 GO Refunding Series Issuance Premium 2015 GO Refunding Series Issuance Premium 2017A GO Preserve Series Issuance Premium 2017B GO Preserve Acquisition Refinancing Series Issuance Premium 2017 GO Refunding Series Issuance Premium 2017C GO Various Purpose Issuance Premium 2021 GO Various Purpose Issuance Premium 2021 GO Taxable Various Purpose Issuance Premium Total General Obligation Bonds REVENUE BONDS Business-type Activities 2008 Utility Revenue Series Refunding 2008 Refunding Series Issuance Premium Total Revenue Bonds $ $ $ $ 415 $ 1,845 8,310 47,100 4,238 43,307 71,500 10,690 30,899 4,331 73,915 46,195 17,410 18,495 26,826 13,159 15,230 40 30 1,142 1,522 3,065 2,023 398 3,111 10,354 2,265 1,939 5,476 2,558 467,788 $ - $ 31,390 19,770 3,617 583 55,360 $ - $ 910 3,340 1,500 4,238 1,427 1,500 610 10,066 1,359 6,325 7,520 3,510 1,870 320 3,855 1,400 325 50,075 $ - $ 320 167,900 168,220 $ 415 $ 935 4,970 45,600 30,045 63,000 6,690 3,290 38 11 597 1,421 1,743 1,719 240 274 160,988 $ - $ (2) (19) (545) (101) (476) (124) (34) (1,037) (1,268) (162) (484) (391) (365) (73) (12) (5,093) $ - $ 11,835 7,000 3,390 20,833 2,972 67,590 35,385 17,410 14,985 26,826 13,159 13,360 164,045 29,990 19,445 846 180 124 2,074 8,812 2,103 1,455 5,085 2,193 3,544 571 475,212 $ - $ 11,835 7,000 3,390 20,833 2,972 67,590 35,385 17,410 14,985 26,826 13,159 13,360 164,045 29,990 19,445 846 180 124 2,074 8,812 2,103 1,455 5,085 2,193 3,544 571 475,212 $ 12,450 812 13,262 - 3,930 3,930 - - - $ (270) (270) $ 8,520 542 9,062 - *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). (continued) $ $ $ $ $ $ $ $ $ $ $ $ $ $ - 12/30/20 07/01/21 07/01/21 07/01/21 07/01/21 07/01/24 07/01/24 07/01/26 07/01/23 07/01/23 07/01/28 07/01/28 07/01/34 07/01/24 07/01/29 07/01/34 07/01/27 07/01/21 07/01/34 07/01/40 07/01/40 8,520 542 9,062 07/01/23 Table of Contents Schedule of Changes in Long-Term Debt* For the Fiscal Year Ended June 30, 2021 (in thousands) 178 City of Scottsdale, Arizona MUNICIPAL PROPERTY CORPORATION BONDS Governmental Activities 2006 MPC Refunding 2013A MPC 2013B MPC 2013C MPC 2014 MPC Refunding 2015A MPC 2015A MPC Taxable 2015 MPC Refunding 2019A MPC 2019B MPC Taxable 2021B MPC Taxable Refunding 2006 Refunding Series Issuance Premium 2013A MPC Series Issuance Premium 2013B MPC Series Issuance Premium 2013C MPC Series Issuance Premium 2014 Refunding Series Issuance Premium 2015A Series Issuance Premium 2015A Taxable Series Issuance Premium 2015 Refunding Series Issuance Premium 2019A Series Issuance Premium 2019B Taxable Series Issuance Premium Subtotal Governmental Activities Business-type Activities 2006 MPC Refunding 2010 MPC Bonds Water/Sewer 2015A MPC Bonds Water/Sewer 2015 MPC Refunding 2017 MPC Refunding 2017A MPC Bonds Water 2017B MPC Bonds Aviation 2021A MPC Refunding 2021B MPC Taxable Refunding 2006 Refunding Series Issuance Premium 2010 Water/Sewer Issuance Premium 2015A Series Issuance Premium 2015 Refunding Series Issuance Premium 2017 Refunding Series Issuance Premium 2017A Series Issuance Premium 2017B Series Issuance Premium 2021A Refunding Issuance Premium Subtotal Business-type Activities Total Municipal Property Corporation Bonds SCOTTSDALE PRESERVE AUTHORITY BONDS Governmental Activities 2011 Excise Tax Refunding 2011 Excise Tax Revenue Issuance Premium Total Scottsdale Preserve Authority Bonds July 1, 2020 $ $ $ $ 47,865 18,255 1,075 27,970 15,030 9,700 11,375 26,939 9,070 32,335 3,459 2,568 127 3,206 1,423 823 193 6,097 1,201 75 218,786 71,060 12,440 14,695 39,021 79,970 35,320 21,285 5,635 454 1,246 4,978 8,830 2,782 1,422 299,138 517,924 2,630 195 2,825 *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). (continued) Issued $ $ $ $ Refunding Bonds Issued Retired - - $ $ $ $ 2,945 1,670 65 1,550 1,800 520 640 1,762 310 1,385 330 12,977 8,910 1,730 790 4,128 1,430 855 805 18,648 31,625 1,280 1,280 $ $ $ $ Accretions, Amortizations, and Contract Adjustments Bonds Defeased 71,325 71,325 7,920 63,860 2,938 74,718 146,043 - $ $ $ $ 12,765 875 23,070 685 25,177 1,656 98 2,517 56 5,461 72,360 10,710 1,040 11,258 38,350 367 84 1,324 4,069 67,202 139,562 - $ $ $ $ June 30, 2021 - $ (247) (397) (13) (315) (203) (57) (14) (636) (63) (4) (1,949) 44,920 3,820 135 3,350 13,230 8,495 10,735 8,760 30,950 70,995 3,212 515 16 374 1,220 710 179 1,138 71 202,825 (563) (87) (87) (702) (494) (164) (84) (118) (2,299) (4,248) $ 62,150 12,865 23,635 41,620 33,890 20,430 7,920 63,055 5,072 1,075 2,952 4,267 2,618 1,338 2,820 285,707 488,532 - $ (97) (97) $ 1,350 98 1,448 Governmental Business-type Activities Activities $ $ $ $ 44,920 3,820 135 3,350 13,230 8,495 10,735 8,760 30,950 70,995 3,212 515 16 374 1,220 710 179 1,138 71 202,825 202,825 1,350 98 1,448 $ $ $ $ Final Payment Date - 07/01/34 07/01/23 07/01/23 07/01/23 07/01/27 07/01/34 07/01/34 07/01/21 07/01/39 07/01/39 07/01/35 62,150 12,865 23,635 41,620 33,890 20,430 7,920 63,055 5,072 1,075 2,952 4,267 2,618 1,338 2,820 285,707 285,707 07/01/30 07/01/21 07/01/34 07/01/26 07/01/34 07/01/37 07/01/37 07/01/30 07/01/36 - 07/01/22 Table of Contents Schedule of Changes in Long-Term Debt* For the Fiscal Year Ended June 30, 2021 (in thousands) July 1, 2020 COMMUNITY FACILITIES DISTRICT BONDS Governmental Activities DC Ranch Refunding Series 2012 McDowell Mtn Ranch Refunding Series 2012 Via Linda Road Refunding Series 2012 Waterfront Commercial Refunding Series 2019 DC Ranch 2012 Issuance Premium McDowell Mtn Ranch 2012 Issuance Premium Total Community Facilities District Bonds City of Scottsdale, Arizona 179 $ $ $ $ $ - $ - $ (40) (22) (62) $ Total Bonds $ 1,015,607 $ 55,360 $ 89,572 $ 314,263 $ 300,550 $ (9,770) $ CONTRACTS PAYABLE** Governmental Activities BBVA USA Total Contracts $ $ 496 496 $ $ - $ $ 45 45 $ $ - $ $ - $ $ - $ $ 451 451 $ $ 451 451 $ $ - 01/01/33 $ 153 1,031 61 322 14 792 2,373 $ 122 122 $ 57 5 255 14 406 737 $ - $ - $ 41 41 $ 96 1,072 56 67 508 1,799 $ 96 1,072 56 67 508 1,799 $ - 12/31/22 12/01/52 12/01/29 09/01/21 12/31/20 06/01/24 596 168 42 806 $ 20 83 219 43 4,266 115 4,746 $ 5 195 27 85 28 76 10 718 21 1,165 $ - $ - $ - $ 15 401 56 83 14 143 33 3,548 94 4,387 $ 15 401 56 83 14 143 33 3,548 94 4,387 $ - 01/14/25 04/01/23 07/01/22 07/01/21 04/27/22 12/02/22 07/01/22 08/01/25 08/01/25 29 34 7 70 70 07/01/21 05/22/21 07/01/22 07/01/22 2032 2035 $ Business-type Activities Airport Agreement Tracking - Airport SCADA Watch Service Suite - Water and Sewer Utility Geospatial Technology System - Water and Sewer Utility Geospatial Technology System - Solid Waste Subtotal Business-type Activities Total Subscriptions $ SERVICE CONCESSION ARRANGEMENTS Governmental Activities Bureau of Reclamation\Westworld Bureau of Reclamation\TPC Total Service Concession Arrangements TOTAL BONDS, CONTRACTS, LEASES, SUBSCRIPTIONS, AND SERVICE CONCESSION ARRANGEMENTS 59 55 - 44 9 53 4,799 $ $ 30 55 10 2 97 1,262 $ $ $ - $ $ $ - $ $ - $ 6,875 1,335 415 2,201 236 22 11,084 $ $ $ 6,875 1,335 415 2,201 236 22 11,084 $ - 985,338 $ 690,569 $ 294,769 Final Payment Date - $ $ Governmental Business-type Activities Activities 1,015 1,280 195 172 2,662 $ $ June 30, 2021 - SUBSCRIPTIONS*** Governmental Activities Event Registration and Management System - Public Safety Platform for Payroll and HRIS Services - Administrative Services/City Treasurer Performance Measurement/Strategic Planning/Benchmarking - City Manager/City Treasurer Risk Management Information System - Self Insurance Event Management Software - Community Services Imaging - Administrative Services Geospatial Technology System - Public Works/Administrative Services Enterprise Software - Administrative Services Server Software - Administrative Services Subtotal Governmental Activities $ Retired Accretions, Amortizations, and Contract Adjustments Bonds Defeased 7,890 2,615 610 2,373 276 44 13,808 LEASES Governmental Activities Imaging Equipment - City Treasurer Baseball Facility - Community Services Distributed Antenna System - Administrative Services Data Center Space - Administrative Services Street Maintenance Equipment - Public Works Vehicles - Public Safety Total Leases $ Issued Refunding Bonds Issued $ 29 34 7 70 4,457 $ $ 4,387 $ 114 920 $ 960 1,108 2,068 $ - $ $ $ 80 74 154 $ - $ - $ - $ 880 1,034 1,914 $ 880 1,034 1,914 $ - $ 1,021,464 $ 60,281 $ 91,770 $ 314,263 $ 300,550 $ (9,729) $ 993,959 $ $ $ $ $ $ $ $ $ $ 699,120 $ 294,839 Compensated Absences Total Other Postemployment Benefit Liability Net Pension Liabilities Risk Management Claims Pollution Remediation Obligation $ 29,907 1,923 383,835 22,981 - $ 4,016 37,748 49,855 Total Long-Term Debt $ 1,137,766 $ 386,458 *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). **The Contracts Payable category beginning balance was added due to a change in accounting treatment. ***New category for the City's subscription-based information technology arrangements has been added due to the implementation of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. 07/15/27 07/15/22 07/15/23 07/15/32 Table of Contents City of Scottsdale, Arizona 180 Table of Contents Statistical Section Contents Page Financial Trends 182 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 191 These schedules contain information to help the reader assess the City’s most significant local revenue sources, property tax, and sales and use taxes. Debt Capacity 198 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. Demographic and Economic Information 204 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 206 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. City of Scottsdale, Arizona 181 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (in thousands) 2012 2013 2014 2015 Table I 2016 2017 2018 2019 City of Scottsdale, Arizona 182 Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position $ 2,800,451 100,275 74,124 $ 2,974,850 $ 2,756,186 $ 2,685,105 $ 2,663,269 $ 3,406,976 $ 3,530,134 100,472 109,615 117,485 122,932 125,366 133,897 180,942 (19,464) (3,679) (43,632) $ 2,990,555 (1) $ 2,975,662 (2) $ 2,761,290 (3) $ 3,526,229 (5) $ 3,611,868 $ 3,604,063 $ 123,057 (27,779) $ 3,699,341 (7) $ 3,675,567 119,657 (5,012) 3,790,212 Business-type Activities Net Investment in Capital Assets Restricted Unrestricted Total Business-type Activities Net Position $ 1,036,985 38,576 243,067 $ 1,318,628 $ 1,058,880 41,545 242,763 $ 1,343,188 $ 1,046,345 $ 1,036,650 $ 1,059,001 $ 1,069,475 47,101 46,901 47,521 48,911 273,321 253,109 255,503 256,129 $ 1,366,767 (2) $ 1,336,660 (4) $ 1,362,025 (6) $ 1,374,515 $ 1,099,864 48,926 250,500 $ 1,399,290 1,093,556 52,204 282,796 1,428,556 Primary Government Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position $ 3,837,436 138,851 317,191 $ 4,293,478 $ 3,815,066 142,017 376,660 $ 4,333,743 $ 3,731,450 156,716 454,263 $ 4,342,429 $ 4,703,927 171,983 222,721 $ 5,098,631 (1) $ 3,699,919 164,386 233,645 $ 4,097,950 $ 4,465,977 170,453 251,824 $ 4,888,254 $ 4,599,609 174,277 212,497 $ 4,986,383 In fiscal year 2013, beginning net position was restated due to the implementation of GASB Statements No. 60 and 62. (2) In fiscal year 2014, beginning net position was restated due to the implementation of GASB Statement No. 65. (3) In fiscal year 2015, beginning net position was restated due to the implementation of GASB Statement No. 68 and an adjustment to capital assets. (4) In fiscal year 2015, beginning net position was restated due to the implementation of GASB Statement No. 68 and an adjustment involving prior-year revenue. (5) In fiscal year 2016, beginning net position was restated due to an adjustment to capital assets and the recognition of the City's involvement in a joint venture. (6) In fiscal year 2016, beginning net position was restated due to the recognition of the City's involvement in a joint venture. (7) In fiscal year 2018, beginning net position was restated due to the implementation of GASB Statement No. 75 and to record the City's endowment funds. (8) In fiscal year 2020, beginning net position was restated due to the implementation of GASB Statement No. 87. $ $ $ $ 4,769,123 171,861 277,784 5,218,768 2020 $ $ $ $ $ $ 2021 3,748,249 $ 4,065,844 146,017 189,263 23,905 63,519 3,918,171 (8) $ 4,318,626 1,102,183 52,728 301,788 1,456,699 $ 1,157,026 51,596 291,368 $ 1,499,990 4,850,432 198,745 325,693 5,374,870 $ 5,222,870 240,859 354,887 $ 5,818,616 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) City of Scottsdale, Arizona 183 Expenses Governmental Activities General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Service Districts (Gain) Loss on In-Substance Defeasance of Debt Interest on Long-Term Debt Bond Issuance Costs Total Governmental Activities Expenses 2012 $ Business-type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-type Activities Expenses Total Primary Government Expenses 734 1,118 5,419 617 5,736 842 4,498 34,416 126,622 115,740 54,442 17,318 572 40,647 408,721 $ 90,829 41,218 3,681 17,671 153,399 $ 562,120 2014(1) 2013 791 921 5,778 647 5,621 807 6,420 36,405 147,514 118,033 56,382 16,863 569 38,389 435,140 $ 90,205 43,169 3,785 19,146 156,305 $ 591,445 840 1,042 5,810 754 5,705 864 6,069 43,597 134,626 127,026 55,190 17,552 576 35,486 998 436,135 2015 $ 91,496 45,421 4,014 19,608 160,539 $ 596,674 Table IIa 790 927 6,103 792 5,682 1,828 5,088 40,631 138,899 135,647 55,134 17,849 583 34,134 1,643 445,730 $ 95,958 44,352 3,703 20,911 164,924 $ 610,654 2017(2) 2016 813 1,129 6,893 821 4,964 1,974 5,658 38,291 102,892 136,261 53,322 20,264 589 31,665 405,536 $ 100,854 42,058 3,894 20,786 167,592 $ 573,128 869 845 6,460 802 5,421 2,288 5,792 40,035 102,813 172,452 54,155 19,326 589 (32) 28,462 672 440,949 $ 611,561 In fiscal year 2014, the City adopted GASB Statement No. 65, which mandated the expensing of bond issuance costs as opposed to the previous practice of capitalizing such costs. In fiscal year 2017, the City adopted GASB Statement No. 86, which requires the recognition of a gain/loss when bonds are defeased in-substance using existing resources. (3) In fiscal year 2018, the City instituted the practice of allocating bond issuance costs amongst the relevant functions. $ 95,745 50,535 4,151 20,181 170,612 (1) (2) 2018(3) $ 638 695 6,486 800 5,530 3,062 6,071 42,205 102,153 153,256 54,710 21,173 605 28,724 426,108 2019 $ 704 952 6,890 898 5,509 3,691 8,209 47,420 102,680 153,817 56,730 17,974 584 26,364 432,422 96,493 52,142 7,624 19,735 175,994 96,010 50,462 5,370 21,790 173,632 602,102 $ 606,054 2020 $ $ 770 1,171 6,731 1,045 6,047 4,647 9,825 99,218 41,946 173,352 64,247 19,375 555 34 23,928 452,891 2021 $ 725 1,209 6,860 1,069 6,298 3,766 9,688 100,705 35,999 172,141 64,769 19,189 11,742 545 17,043 451,748 105,222 57,847 6,764 23,195 193,028 106,778 54,152 7,024 25,290 193,244 645,919 $ 644,992 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) City of Scottsdale, Arizona 184 Program Revenue Governmental Activities Charges for Services: General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues 2012 $ Business-type Activities Charges for Services: Water Utility Sewer Utility Airport Solid Waste Capital Grants and Contributions Total Business-type Activities Revenues Total Primary Government Revenues Net (Expense)/Revenue Governmental Activities Business-type Activities Total Primary Government Net Expense 153 245 627 172 300 2,468 3,543 10,958 10,102 5,573 2,549 551 28,144 112,163 177,548 2013 $ 97,944 36,032 3,248 20,744 8,607 166,575 225 299 764 204 250 2,598 1,498 14,736 9,139 5,523 3,155 551 31,255 66,917 137,114 2014 $ 100,615 36,939 3,552 20,458 25,638 187,202 225 279 756 197 219 2,606 1,580 17,981 10,268 5,914 2,890 400 27,710 38,817 109,842 2015 $ 104,722 39,917 3,635 20,162 22,019 190,455 176 227 737 188 232 2,719 1,861 19,474 10,350 6,334 2,827 531 28,397 14,831 88,884 Table IIb 2016 $ 98,495 39,541 4,020 20,232 11,726 174,014 155 148 656 176 225 2,610 6,149 17,464 11,459 6,269 2,926 577 29,708 82,162 160,684 2017 $ 110,560 39,741 4,404 20,120 22,545 197,370 157 178 688 167 226 2,583 2,041 18,455 11,739 6,268 3,096 602 29,724 107,334 183,258 2018 $ 107,031 40,434 4,390 20,269 17,539 189,663 149 165 1,082 181 411 2,688 1,569 19,503 11,203 6,820 3,094 584 30,760 60,819 139,028 2019 $ 117,537 40,666 4,335 19,687 23,865 206,090 142 171 792 203 349 3,036 1,567 20,562 11,107 7,078 2,617 591 34,233 35,620 118,068 2020 $ 109,947 45,419 5,493 21,344 17,833 200,036 146 227 795 210 373 3,045 1,763 22,102 11,088 9,908 2,815 617 55,604 50,088 158,781 2021 $ 119,345 44,047 5,851 22,650 26,631 218,524 160 175 741 221 562 3,521 113 17,457 10,251 11,338 1,987 529 52,751 305,241 405,047 130,843 45,391 7,695 25,532 34,573 244,034 $ 344,123 $ 324,316 $ 300,297 $ 262,898 $ 358,054 $ 372,921 $ 345,118 $ 318,104 $ 377,305 $ 649,081 $ (231,173) 13,176 (217,997) $ (298,026) 30,897 (267,129) $ (326,293) 29,916 (296,377) $ (356,846) 9,090 (347,756) $ (244,852) 29,778 (215,074) $ (257,691) 19,051 (238,640) $ (287,080) 30,096 (256,984) $ (314,354) 26,404 (287,950) $ (294,110) 25,496 (268,614) $ (46,701) 50,790 4,089 $ $ $ $ $ $ $ $ $ $ Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in thousands) General Revenues and Other Changes in Net Position Governmental Activities Taxes Intergovernmental - Unrestricted Interest and Investment Income Miscellaneous and Special Items Transfers Total Governmental Activities 2012 $ City of Scottsdale, Arizona 185 Business-type Activities Taxes Interest and Investment Income Miscellaneous Transfers Total Business-type Activities Total Primary Government Change in Net Position Governmental Activities Business-type Activities Total Primary Government 227,963 44,035 1,063 20,502 7,366 300,929 2013 $ 132 421 7,610 (7,366) 797 234,582 49,054 985 12,557 7,244 304,422 2014 $ 144 763 (7,244) (6,337) 248,642 52,715 1,274 8,422 6,202 317,255 2015 $ 154 964 (6,202) (5,084) 257,860 56,316 1,372 13,829 6,579 335,956 Table IIc 2016 $ 169 1,346 (6,579) (5,064) 265,416 57,630 2,955 9,987 7,174 343,162 2017 $ 145 2,531 (7,174) (4,498) 262,144 61,851 1,132 10,568 7,635 343,330 $ 158 916 (7,635) (6,561) 2018 2019 2020 2021 287,456 66,299 2,218 10,548 7,756 374,277 $ 306,274 70,380 11,860 9,130 7,581 405,225 $ 316,478 75,300 14,605 7,248 8,432 422,063 $ 340,559 85,177 2,487 10,387 8,546 447,156 144 2,291 (7,756) (5,321) 167 10,276 (7,581) 2,862 128 10,951 (8,432) 2,647 177 870 (8,546) (7,499) $ 301,726 $ 298,085 $ 312,171 $ 330,892 $ 338,664 $ 336,769 $ 368,956 $ 408,087 $ 424,710 $ 439,657 $ 69,756 13,973 83,729 $ 6,396 24,560 30,956 $ (9,038) 24,832 15,794 $ (20,890) 4,026 (16,864) $ 98,310 25,280 123,590 $ 85,639 12,490 98,129 $ 87,197 24,775 111,972 $ 90,871 29,266 $ 120,137 $ 127,953 28,143 $ 156,096 $ 400,455 43,291 $ 443,746 $ $ $ $ $ $ $ Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) General Fund Nonspendable Restricted Committed Assigned Unassigned Total General Fund City of Scottsdale, Arizona 186 All Other Governmental Funds Nonspendable Restricted Committed Assigned Unassigned, Reported in: Special Revenue Funds Debt Service Funds Capital Project Funds Total All Other Governmental Funds (1) 2012 $ $ $ 264 260 52,105 52,629 2,980 108,073 7,345 37,183 2013 $ $ $ (447) $ 155,134 265 48,679 48,944 114,676 16,298 39,666 2014 $ $ $ (1,394) $ 169,246 266 52,354 52,620 105,837 20,848 7,362 2015 $ 227 56,017 56,244 $ $ 113,237 49,554 - (1,194) $ 132,853 2016 $ $ $ (1,083) (4,770) $ 156,938 In fiscal year 2018, beginning fund balance was restated due to the recognition of the City's endowment funds. Table III 249 65,347 65,596 116,847 52,508 - $ $ $ (1,010) (4,720) $ 163,625 2018(1) 2017 269 58,518 58,787 105,777 58,644 - $ $ $ (2,175) (11,205) $ 151,041 264 72,809 73,073 619 115,391 62,867 - 2019 $ $ $ (681) (6,957) $ 171,239 271 97,097 97,368 604 112,267 65,100 - 2020 $ $ $ (708) (589) (13,154) $ 163,520 $ 2021 278 136,390 136,668 $ 304 170,994 $ 171,298 555 133,424 67,703 - $ 681 200,495 81,703 - (2,807) (7,594) (2,111) (4,689) 191,281 $ 276,079 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) City of Scottsdale, Arizona 187 Revenues Taxes - Local Taxes - Intergovernmental Business and Liquor Licenses Charges for Current Services Fines, Fees, and Forfeitures Special Assessments Property Rental Interest Earnings Net Increase (Decrease) in the Fair Value of Investments Intergovernmental Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Indirect Costs Other Total Revenues (1) Table IVa 2012 2013 2014 2015 2016(1) 2017 2018 2019 2020 2021 $ 228,823 53,834 1,805 16,985 9,133 719 4,630 2,837 (1,403) 67,725 101 551 2,521 12,642 9,096 3,265 $ 236,652 59,813 1,763 20,870 8,472 591 4,232 2,624 (1,639) 53,462 203 551 2,813 5,934 7,595 2,438 $ 249,289 63,816 1,782 24,078 8,343 4,270 2,974 (1,700) 40,116 64 400 2,178 2,446 7,102 1,652 $ 258,851 68,603 1,925 25,855 10,000 5,282 1,934 (562) 19,846 653 531 3,558 3,445 6,987 5,134 $ 264,414 70,526 1,894 24,404 10,617 4,922 2,373 582 16,070 319 577 2,268 1,942 6,501 954 $ 264,299 75,978 1,861 25,225 10,532 5,854 2,634 (1,502) 20,725 498 602 2,589 2,266 6,993 1,110 $ 288,335 81,197 1,768 27,063 10,387 5,859 4,224 (2,006) 27,335 835 584 2,333 1,840 7,455 869 $ 310,433 83,962 1,918 29,774 8,960 6,089 6,956 4,904 25,479 412 591 2,575 2,415 6,899 751 $ 317,143 87,760 1,869 30,009 8,831 4,031 8,595 6,010 47,850 1,128 617 9,069 2,193 7,614 737 $ 340,782 98,603 1,708 34,702 7,816 7,221 6,790 (4,303) 36,004 2,723 529 4,398 2,121 7,370 488 $ 413,264 $ 406,374 $ 406,810 $ 412,042 $ 408,363 $ 419,664 $ 458,078 $ 492,118 $ 533,456 $ 546,952 In fiscal year 2016, moved "Sale of General Capital Assets" from "Other" within the "Revenues" section to "Sale of General Capital Assets" within the "Other Financing Sources (Uses)" section. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) City of Scottsdale, Arizona 188 Expenditures General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Scottsdale AZ CARES Streetlight and Services Districts Debt Service Principal Interest and Fiscal Charges Payment to Refunded Bonds Escrow Agent Bond Issuance Costs Capital Outlay 2012 $ 711 1,113 5,391 614 5,628 813 4,253 27,307 38,369 107,934 44,762 14,450 572 2013 $ 775 893 5,662 665 5,422 829 5,449 29,658 70,351 111,960 45,346 14,141 569 2014 $ 835 1,035 5,702 740 5,515 842 5,061 33,381 41,063 119,159 45,035 14,950 576 2015 $ 784 917 6,012 782 5,584 1,832 4,904 34,518 44,550 123,761 44,998 15,050 583 Table IVb 2016 $ 818 1,138 7,118 824 4,975 1,965 5,785 32,850 42,735 128,527 45,508 15,648 589 2017 $ 887 873 6,576 823 5,381 2,200 5,657 33,636 46,320 137,304 46,224 15,919 589 44,700 40,487 774 129,025 63,234 38,789 1,915 181,189 59,387 37,323 998 99,722 105,930 36,706 1,643 52,164 53,313 34,664 26,674 57,956 31,285 672 75,099 Total Expenditures $ 466,903 $ 576,847 $ 471,324 $ 480,718 $ 403,131 $ 467,401 Excess (Deficiency) of Revenues over (under) Expenditures $ $ (170,473) $ $ $ $ (53,639) (64,514) (68,676) 5,232 (47,737) 2018 $ 653 735 6,747 816 5,692 3,094 5,979 35,013 47,696 136,075 47,056 16,309 605 2019 $ 747 1,004 7,471 948 5,797 3,746 8,593 35,154 48,860 146,250 48,786 15,279 584 2020 $ 782 1,163 6,826 1,049 5,970 4,531 9,714 44,382 34,431 157,557 52,924 14,727 555 2021 $ 723 1,246 6,597 1,045 6,194 3,621 9,418 41,410 31,259 153,754 48,034 19,307 12,974 545 68,017 32,052 241 54,311 66,053 29,752 64,395 70,076 27,854 6,983 508 80,009 68,955 20,634 1,745 70,417 $ 461,091 $ 483,419 $ 520,041 $ 497,878 $ (3,013) $ $ $ 8,699 13,415 49,074 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) 189 City of Scottsdale, Arizona Other Financing Sources (Uses) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Issuance of Refunding Bonds Issuance of Long-Term Capital-Related Debt Premium on Long-Term Debt Issued Payment to Refunded Bonds Escrow Agent Sale of General Capital Assets 2012 $ Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Non-capital Expenditures (1) $ 81,579 (75,826) - 2013 $ 78,171 (70,919) - 2014 $ 89,669 (82,696) 296 2016(1) 2015 $ 89,806 (83,211) - Table IVc $ 2017 2018 2019 2020 2021 85,080 (79,079) - $ 101,427 (94,074) - $ 103,926 (96,272) - $ 108,177 (100,735) 244 $ 119,124 (110,525) 1,025 $ 135,337 (126,874) 122 50,000 2,448 - 111,250 140,000 22,082 (99,684) - 105,885 14,000 12,742 (108,099) - 207,173 26,815 23,871 (168,069) - 4,806 58,480 17,410 12,955 (68,105) 251 25,500 3,496 214 191 2,563 42,550 1,323 (2,563) 149 4,746 239,545 51,160 4,200 (238,102) 220 58,201 180,900 31,797 96,385 10,807 28,344 36,864 7,877 53,646 70,354 67,061 $ 119,428 22.2% 21.0% 4,562 25.2% $ 10,427 25.8% $ (32,717) 26.0% $ 27,709 33.3% $ 16,039 23.4% $ (19,393) 22.7% $ 33,851 24.3% $ 16,576 $ 22.5% In fiscal year 2016, moved "Sale of General Capital Assets" from "Other" within the "Revenues" section to "Sale of General Capital Assets" within the "Other Financing Sources (Uses)" section. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Tax Revenues By Source Last Ten Fiscal Years (modified accrual basis of accounting) (in thousands) City of Scottsdale, Arizona 190 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1) $ $ Property 65,089 64,908 64,914 64,272 61,956 63,320 63,577 68,738 67,911 69,826 Privilege and Use General $ 84,633 89,002 95,604 100,560 104,995 103,081 116,679 122,152 122,923 136,511 Franchise Taxes Cable TV Light and Power Franchise Franchise 3,445 $ 8,115 3,461 8,424 3,722 8,477 3,748 8,691 3,816 8,826 3,896 8,655 4,391 9,106 3,293 8,832 5,445 8,231 4,204 8,456 Privilege and Use McDowell Mtn Preserve $ 28,809 30,376 32,655 34,429 36,029 35,489 40,089 41,909 42,331 46,921 Sales and Use Taxes Privilege and Use Privilege and Use Transportation Public Safety $ 15,985 $ 8,231 16,852 8,679 18,116 9,330 19,097 9,837 19,938 10,294 19,615 10,140 22,044 11,454 (1) 11,974 27,788 35,022 12,094 39,023 13,406 Intergovernmental State Revenue State Shared Sales Sharing $ 16,987 $ 18,347 17,793 22,205 18,922 24,230 19,867 26,316 20,647 26,173 21,755 28,976 23,719 30,549 25,187 30,269 26,395 33,015 30,615 37,207 The Privilege and Use-Transportation tax rate increased from 0.2 percent to 0.3 percent, effective February 1, 2019. Table V $ Other 1,086 838 900 906 913 921 931 3,102 4,177 4,209 $ Transient Occupancy 13,430 13,852 15,303 17,047 17,397 18,951 19,837 22,407 18,793 18,013 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Taxable Sales Subject to Privilege (Sales) Tax by Category Last Ten Fiscal Years (dollars in thousands) Table VI City of Scottsdale, Arizona 191 2012 Automotive $ 950,450 Construction 786,402 Food Stores 626,883 Hotel/Motel 420,494 Major Department Stores 897,617 Miscellaneous Retail Stores 1,299,083 Other Taxable Activity 525,480 Rentals 1,134,785 Restaurants 799,231 Utilities 430,169 2013 $ 1,074,591 861,934 639,362 440,522 907,857 1,321,572 626,171 1,189,304 794,034 432,356 2014 $ 1,209,388 1,073,279 655,787 488,117 917,406 1,450,611 666,504 1,210,218 844,186 435,579 2015 $ 1,335,511 1,057,986 690,837 525,421 937,370 1,612,954 695,566 1,315,545 925,948 435,879 2016 $ 1,403,834 969,281 713,187 543,121 927,469 1,708,411 728,596 1,417,607 961,340 497,773 2017(1) $ 1,489,632 901,684 677,978 641,146 888,674 1,785,097 756,718 1,380,366 957,757 451,318 2018 $ 1,558,428 962,050 763,117 682,078 966,996 2,010,364 926,445 1,644,191 1,065,825 467,609 2019(2) $ 1,792,335 997,164 796,551 730,329 970,656 2,200,161 1,059,397 1,719,075 1,144,395 455,118 2020 $ 1,725,497 1,044,980 860,447 595,455 944,390 2,438,658 1,119,896 1,747,873 1,008,526 466,345 2021 $ 1,940,656 1,223,155 883,237 551,361 1,037,297 3,054,740 1,368,741 1,746,613 1,170,867 476,372 Total $ 7,870,594 $ 8,287,703 $ 8,951,075 $ 9,533,017 $ 9,870,619 $ 9,930,370 $ 11,047,103 $ 11,865,181 $ 11,952,067 $ 13,453,039 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.75% 1.75% 1.75% City Sales Tax (1) Effective January 1, 2017, the Arizona Department of Revenue took over all collection and administration of privilege, use, jet fuel, and bed taxes. (2) Effective February 1, 2019, the privilege tax rate increased to 1.75%. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years Table VII City of Scottsdale, Arizona 192 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Privilege (Sales) Tax Rates City Direct County Rate Rate 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% 1.65% 0.70% (3) 1.75% 0.70% 1.75% 0.70% 1.75% 0.70% Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Transient Occupancy Tax Rates City Direct County Rate Rate 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% 5.00% 1.77% State Fiscal Rate Year 6.60% 2012 5.60% (1) 2013 5.60% 2014 5.60% 2015 5.60% 2016 5.60% 2017 5.60% 2018 5.60% 2019 5.60% 2020 5.60% 2021 Use Tax Rates City Direct County Rate Rate 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% 1.45% 0.00% (3) 0.00% 1.55% 1.55% 0.00% 1.55% 0.00% State Rate 6.60% 5.60% (1) 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% Jet Fuel Tax Rates (cents per gallon) State Fiscal City Direct County State Rate Year Rate Rate Rate 6.50% 2012 0.0180 0.0031 0.0305 (1) 5.50% 2013 0.0180 0.0031 0.0305 5.50% 2014 0.0180 0.0031 0.0305 5.50% 2015 0.0180 0.0031 0.0305 5.50% 2016 0.0180 0.0031 0.0305 5.50% 2017 0.0180 0.0031 0.0305 5.50% 2018 (2) 0.0180 0.0031 0.0305 5.50% 2019 0.0180 0.0031 0.0305 5.50% 2020 0.0180 0.0031 0.0305 5.50% 2021 0.0180 0.0031 0.0305 Source: City Tax Audit Section Note: The following gives a general description of each tax. Complete details for each tax can be found in Appendix C of the Scottsdale Revised City Code. Privilege (Sales) Tax applies to the sale, lease, license for use, and/or rental transactions. Use Tax applies to the storage or use of items within the City on which no privilege tax has been paid. Transient Occupancy Tax applies to transactions involving transient lodging. Jet Fuel Tax applies to transactions involving the sale of jet fuel. (1) The state tax rate decreased, with the exception of jet fuel, on June 1, 2013, due to approval from the voters in the May 2010 election. (2) Effective August 9, 2017, the City can only tax the first 10 million gallons by each purchaser in a calendar year. (3) Effective February 1, 2019, the City transaction privilege tax rate increased to 1.75% and the use tax rate increased to 1.55%. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Sales Tax Revenue Payers by Industry Current Year and Nine Years Ago (dollars in thousands) Table VIII City of Scottsdale, Arizona 193 Automotive Construction Food Stores Hotel/Motel Major Department Stores Miscellaneous Retail Stores Other Taxable Activity Rentals Restaurants Utilities Total Number of Filers 687 3,295 222 585 56 7,712 9,971 8,642 977 402 32,549 Fiscal Year 2021 Percentage Tax of Total Revenue 2.11% $ 33,434 10.12% 21,555 0.68% 15,489 1.80% 9,296 0.17% 17,775 23.69% 52,294 30.63% 26,845 26.56% 30,472 3.00% 20,483 1.24% 8,395 100.00% $ 236,038 Percentage of Total 14.16% 9.13% 6.56% 3.94% 7.53% 22.16% 11.37% 12.91% 8.68% 3.56% Number of Filers 528 7,219 172 83 29 4,746 3,756 4,014 906 262 100.00% 21,715 Fiscal Year 2012 Percentage Tax of Total Revenue 2.43% $ 16,105 33.25% 13,876 0.79% 10,512 0.38% 7,089 0.13% 14,947 21.86% 23,051 17.30% 12,486 18.48% 19,611 4.17% 12,761 1.21% 7,220 100.00% $ 137,658 Percentage of Total 11.70% 10.08% 7.63% 5.15% 10.86% 16.75% 9.07% 14.25% 9.27% 5.24% 100.00% Note: Due to confidentiality issues, the names of the ten largest revenue payers cannot be disclosed. The categories are intended to provide alternative information regarding the sources of the City's revenue. Transient Occupancy taxes are not included in the Tax Revenue for this table. The "Other Taxable Activity" category includes all license fees, penalties, and interest. Beginning January 1, 2017, the Arizona Department of Revenue took over all collection and administration of privilege, use, and jet fuel taxes. Due to the changes in the source of the data and the tax law, the number and classification of filers for the two years above may have differences. Effective February 1, 2019, the transaction privilege tax rate increased to 1.75% and the use tax rate increased to 1.55%. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Table IX Overlapping Rates City Direct Rate City of Scottsdale, Arizona 194 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Operating $ 0.4412 0.5027 0.5342 0.5580 0.5293 0.5071 0.4956 0.5316 0.5198 0.5039 Debt Service $ 0.6503 0.7225 0.7604 0.6869 0.6244 0.6219 0.5889 0.5705 0.5214 0.5042 Scottsdale Unified School District Total City $ 1.0915 1.2252 1.2946 1.2449 1.1537 1.1290 1.0845 1.1021 1.0412 1.0081 Operating $ 2.7498 3.0875 3.3548 3.1091 2.8332 2.8566 2.7463 2.5675 2.5928 2.6334 Debt Service and Budget Override $ 1.2503 1.3390 1.2239 1.0045 1.0263 1.0033 0.9864 1.1364 1.0538 0.9939 County Free Library $ 0.0492 0.0492 0.0438 0.0556 0.0556 0.0556 0.0556 0.0556 0.0556 0.0556 County Special Health Care $ 0.1494 0.1683 0.1939 0.1856 0.3021 0.3053 0.2851 0.2941 0.3333 0.3046 EVIT 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 Total School $ 4.0501 4.4765 4.6287 4.1636 3.9095 3.9099 3.7827 3.7539 3.6966 3.6773 Total County $ 3.3598 3.5967 3.8560 3.8802 4.0288 4.0583 3.9681 3.9300 3.9036 3.8200 Total Direct and Overlapping $ 8.5014 9.2984 9.7793 9.2887 9.0920 9.0972 8.8353 8.7860 8.6414 8.5054 $ Overlapping Rates County-Wide Jurisdictions Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 County Operating $ 1.2407 1.2407 1.2807 1.3209 1.3609 1.4009 1.4009 1.4009 1.4009 1.4009 Community College $ 1.2082 1.3778 1.5340 1.5187 1.4940 1.4651 1.4096 1.3754 1.3285 1.2881 County Flood $ 0.1780 0.1780 0.1392 0.1392 0.1592 0.1792 0.1792 0.1792 0.1792 0.1792 County Education Equalization $ 0.4259 0.4717 0.5123 0.5089 0.5054 0.5010 0.4875 0.4741 0.4566 0.4426 Fire District Assistance $ 0.0084 0.0110 0.0121 0.0113 0.0116 0.0112 0.0102 0.0107 0.0095 0.0090 Central AZ Project $ 0.1000 0.1000 0.1400 0.1400 0.1400 0.1400 0.1400 0.1400 0.1400 0.1400 Source: Maricopa County Department of Finance Publications On-Line "Tax Rate 2020". Note: The City has Community Facilities Districts (CFDs) that levy property taxes independent of the City to property owners within a designated area. For fiscal year 2021 the rates were as follows: DC Ranch CFD - $0.3843, McDowell Mountain Ranch CFD - $0.6425, Via Linda Road CFD - $1.0244, and the Waterfront Commercial CFD - $3.8963. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Principal Property Taxpayers Current Year and Nine Years Ago (dollars in thousands) Table X 2021 City of Scottsdale, Arizona 195 Taxpayer Arizona Public Service Company Scottsdale Fashion Square LLC SDQ FEE LLC XHR Scottsdale Ranch LLC Excel Promenade LLC Portales Corporate Center LLC (1) Weingarten Nostat Inc. Stockdale Galleria LLC Southwest Gas Corporation SCP 7201 LLC Scottsdale Princess Partnership Qwest Corporation General Dynamics Decision Systems, Inc. WJ Small Grandchildrens Trust Gainey Drive Associates Pacific Promenade LLC Total $ $ Taxable Assessed Value 64,784 44,500 21,556 17,333 15,819 15,792 14,912 12,588 12,523 11,946 231,753 Rank 1 2 3 4 5 6 7 8 9 10 - 2012 Percentage of Total Taxable Assessed Value 0.979% 0.672% 0.326% 0.262% 0.239% 0.239% 0.225% 0.190% 0.189% 0.181% 3.502% $ $ Taxable Assessed Value 60,208 49,818 14,427 14,018 21,788 18,583 15,392 14,949 13,594 12,887 235,664 Rank 1 2 7 8 3 4 5 6 9 10 Percentage of Total Taxable Assessed Value 1.058% 0.875% 0.253% 0.246% 0.383% 0.326% 0.270% 0.263% 0.239% 0.226% 4.139% Source: The Maricopa County Assessor's Office. Note: The Salt River Project Agricultural Improvement and Power District's (SRP) assessed valuation is not reflected in the total assessed valuation of the City. SRP is subject to a "voluntary contribution" in-lieu of ad valorem taxation. The fiscal year 2020 assessed valuation of the SRP within the City is $20,694,520 as provided by SRP. (1) Portales Corporate Center LLC/Etal was renamed Portales Corporate Center LLC in 2016. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Assessed Value of Taxable Property Last Ten Fiscal Years (dollars in thousands, excluding the Total Direct Tax Rate) Fiscal Year Ended June 30th 2012 P 2012 S Residential Property $ 3,521,958 3,524,902 Personal Property Real Property Commercial Vacant Land Property Historic and Special Use Assessed Value $ $ $ 1,615,176 1,623,645 $ 969,618 1,021,533 4,217 4,300 Table XI 224,822 224,822 Less Tax Exempt Property $ (665,901) (707,211) Total Taxable Assessed Value Total Direct Tax Rate $ $ 5,669,890 5,691,991 0.44 0.65 City of Scottsdale, Arizona 196 2013 P 2013 S 3,232,809 3,236,951 1,402,569 1,405,867 845,953 856,609 3,133 3,133 228,843 228,843 (643,724) (651,408) 5,069,583 5,079,995 0.50 0.72 2014 P 2014 S 3,179,924 3,190,808 1,234,395 1,238,888 763,038 793,269 2,810 2,852 213,781 214,245 (591,625) (612,212) 4,802,323 4,827,850 0.53 0.76 2015 P 2015 S 3,400,223 3,542,585 1,211,532 1,228,899 731,585 792,839 2,849 2,986 208,844 209,029 (569,038) (599,560) 4,985,995 5,176,778 0.56 0.69 2016 P 2016 S 3,608,260 4,210,065 1,197,395 1,306,932 759,840 912,980 3,143 3,541 196,631 196,972 (603,538) (674,098) 5,161,731 5,956,392 0.53 0.62 2017 P 2017 S 3,842,636 4,510,655 1,209,059 1,451,267 723,452 996,458 1,075 1,488 217,238 217,243 (594,547) (757,790) 5,398,913 6,419,321 0.51 0.62 2018 P 2018 S 4,071,866 4,794,346 1,268,544 1,650,245 747,981 1,135,084 1,155 1,716 223,277 223,276 (614,085) (876,231) 5,698,738 6,928,436 0.50 0.59 2019 P 2019 S 2020 P 2020 S 4,301,223 5,014,035 4,555,026 5,356,377 1,335,470 1,726,614 1,397,576 1,848,894 737,727 1,137,771 756,975 1,217,117 1,187 1,816 1,266 2,032 221,801 229,030 227,231 236,828 (600,412) (885,997) (614,956) (959,355) 5,996,996 7,223,269 6,323,118 7,701,893 0.53 0.57 0.52 0.52 2021 P 2021 S 4,813,338 5,719,222 1,465,046 1,988,445 770,044 1,215,429 1,207 1,873 241,822 252,043 (674,280) (1,022,311) 6,617,177 8,154,701 0.50 0.50 Source: Arizona Department of Revenue Abstract of the Assessment Roll. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (dollars in thousands) City of Scottsdale, Arizona 197 Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Tax Levy for Fiscal Year $ 62,033 62,187 62,367 63,380 59,553 60,954 61,803 66,092 65,840 68,267 Collected within the Fiscal Year of the Levy $ Amount 60,309 60,630 61,227 62,233 58,714 60,056 60,721 64,982 64,273 67,423 Percentage of Levy 97.2% 97.5% 98.2% 98.2% 98.6% 98.5% 98.2% 98.3% 97.6% 98.8% Collections in Subsequent Years $ 672 791 598 574 544 606 792 726 1,097 - Table XII Total Collections to Date $ Amount 60,981 61,421 61,825 62,807 59,258 60,662 61,513 65,708 65,370 67,423 Percentage of Levy 98.3% 98.8% 99.1% 99.1% 99.5% 99.5% 99.5% 99.4% 99.3% 98.8% Source: "Total Tax Levy for Fiscal Year" amounts = Maricopa County Tax Levy Reports on County Finance website. "Collections" amounts = Maricopa County Finance Office Secured Tax Levy Report. Amounts represent property taxes recorded in the General, Debt Service, and Self-Insurance Funds. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands, except for Per Capita) City of Scottsdale, Arizona 198 Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 General Obligation Bonds $ 603,426 651,224 647,859 624,616 585,931 590,910 568,259 521,632 467,788 475,212 Scottsdale Preserve Authority Bonds $ 60,304 56,154 53,100 48,276 43,489 17,823 13,215 8,432 2,825 1,448 Special Assessment Bonds $ 750 - Governmental Activities Community Facilities District Certificates of Participation Bonds $ 18,031 $ 34,685 16,003 32,083 13,914 30,090 11,762 27,437 9,546 24,694 7,264 21,860 4,914 19,244 2,493 16,707 13,808 11,084 Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Business-type Activities Municipal Property Corporation Revenue Bonds Bonds Subscriptions $ 41,157 $ 313,505 $ 37,803 303,793 34,747 296,418 31,518 309,150 28,176 295,807 24,710 353,773 21,069 336,407 17,258 318,235 13,262 299,138 9,062 285,707 70 Total Primary Government $ 1,235,216 1,325,360 1,298,389 1,298,869 1,223,452 1,240,499 1,174,343 1,080,362 1,020,048 993,959 Percentage of Personal Income 11.09% 11.63% 11.43% 11.26% 10.26% 9.98% 8.96% 7.45% 6.59% 6.57% Municipal Property Corporation Bonds $ 149,983 222,403 218,942 243,044 232,970 221,535 208,828 193,165 218,786 202,825 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Table XVIII - Schedule of Demographic and Economic Statistics for personal income and population data. Per Capita $ 5,667 5,965 5,776 5,689 5,292 5,212 4,843 4,232 3,952 4,118 Table XIII Contracts Payable $ 13,375 2,570 451 $ Leases 183 329 229 156 95 32 219 2,373 1,799 Service Concession Arrangements $ 3,144 2,990 2,837 2,683 2,529 2,375 2,221 2,068 1,914 Subscriptions $ 4,387 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (dollars in thousands, except Per Capita) City of Scottsdale, Arizona 199 Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Governmental Activities General Obligation Bonds $ 603,426 651,224 647,859 624,616 585,931 590,910 568,259 521,632 467,788 475,212 Less: Amounts Available in Debt Service Fund $ 5,789 10,105 9,369 12,172 11,529 11,516 2,471 1,394 1,042 3,469 Net General Bonded Debt $ 597,637 641,119 638,490 612,444 574,402 579,394 565,788 520,238 466,746 471,743 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Schedule of Assessed Value of Taxable Property on Table XI for property value data. See the Schedule of Demographic and Economic Statistics on Table XVIII for population data. Percentage of Total Taxable Assessed Value of Property 10.5% 12.6% 13.2% 11.8% 9.6% 9.0% 8.2% 7.2% 6.1% 5.8% Table XIV Per Capita $ 2,742 2,885 2,840 2,683 2,484 2,434 2,333 2,038 1,808 1,955 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2021 (dollars in thousands) City of Scottsdale, Arizona 200 Governmental Unit Debt repaid with property taxes Maricopa County Community College District Maricopa County Special Healthcare District Tempe Elementary School District No. 3 Balsz Elementary School District No. 31 Scottsdale Unified School District No. 48 Paradise Valley Unified School District No. 69 Cave Creek Unified School District No. 93 Fountain Hills Unified School District No. 98 Phoenix Union High School District No. 210 Tempe Union High School District No. 213 Western Maricopa Education Center District No. 402 Debt Outstanding $ 250,065 429,125 138,845 28,715 259,600 347,418 29,745 7,780 394,405 82,360 157,075 Table XV Estimated Percentage Applicable 14.4800% 16.5500% 0.0000% 6.0300% 69.8100% 30.4400% 62.2100% 3.5000% 0.3700% 0.0000% 6.8500% Estimated Share of Overlapping Debt $ Subtotal, overlapping debt City direct debt Total direct and overlapping debt 36,204 71,014 1,732 181,221 105,744 18,504 273 1,476 10,753 426,921 699,120 100.0000% 699,120 $ 1,126,041 Sources: The various entities, State and County Abstract of the Assessment Roll , Arizona Department of Revenue and Maricopa County 2020 Tax Levy , and the Department of Finance of the County. Notes: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Scottsdale. This process recognizes that, when considering the government'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. The proportion of overlapping debt applicable to the City is computed on the ratio of 2020-21 net assessed limited property valuation for the overlapping jurisdiction within the City to the total net assessed limited property valuation of the overlapping jurisdiction. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands) Table XVIa 20% Limitation Debt Limit Equal to 20% of Assessed Valuation 2012 $ Total Net Debt Applicable to 20% Limit 1,138,398 2013 $ 524,675 1,015,999 2015 2016 (1) 2017 (2) 2018 965,570 $ 1,035,356 $ 1,191,278 $ 1,283,864 $ 1,385,687 553,121 532,888 513,768 521,179 8,180 2014 $ 561,126 Excess Premium Legal 20% Debt Margin (Available Borrowing Capacity) $ 201 City of Scottsdale, Arizona Total Net Debt Applicable to the 20% Limit as a Percentage of 20% Debt Limit 6% Limitation Debt Limit Equal to 6% of Assessed Valuation 613,723 $ 46.09% $ Total Net Debt Applicable to 6% Limit 341,519 454,873 $ 55.23% $ 69,750 304,799 412,449 $ 57.28% $ 78,009 289,671 502,468 $ 51.47% $ 65,944 310,606 677,510 $ 43.13% $ 54,022 357,384 754,505 41.23% $ 37,747 385,159 Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit (1) $ 271,769 20.42% $ 226,790 25.59% $ 223,727 22.77% $ 256,584 17.39% $ 319,637 $ 2021 1,444,654 $ 1,540,379 $ 1,630,940 511,046 479,265 433,865 444,366 10,637 10,415 10,181 12,713 954,974 $ 1,096,333 $ 1,173,861 33.90% 28.83% 28.03% 864,004 $ $ 37.65% $ 415,706 $ 433,396 $ 462,114 $ 489,282 14,419 3,950 - 3,859 - - - - 426 359,043 10.56% Restated fiscal year 2016 debt limit and debt margin amounts to reflect the usage of the secondary, as opposed to the primary, valuation amount. (2) 2020 26,116 Excess Premium Legal 6% Debt Margin (Available Borrowing Capacity) $ 2019 Beginning in fiscal year 2017, a change in state law requires the "Excess Premium" to be included with the debt subject to the legal debt margin limitations. 6.78% $ 401,287 3.47% $ 429,446 0.91% $ 462,114 0.00% $ 484,997 0.88% Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2021 (in thousands) Table XVIb Legal Debt Margin Calculation for Fiscal Year 2021 Assessed Valuation as of June 30, 2021 $ 8,154,701 20% Limitation Debt Limit Equal to 20% of Assessed Valuation $ 1,630,940 202 City of Scottsdale, Arizona Debt applicable to limit: General Obligation Bonds 444,366 Excess Premium 12,713 Legal 20% Debt Margin (Available Borrowing Capacity) $ 1,173,861 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 489,282 Debt applicable to limit: General Obligation Bonds 3,859 Excess Premium Legal 6% Debt Margin (Available Borrowing Capacity) 426 $ 484,997 Source: City of Scottsdale, City Treasurer Notes: Under Arizona law, cities can issue general obligation bonds for purposes of water, sewers, artificial light, parks, playgrounds and recreational facilities, open space preserves, public safety, and streets and transportation facilities, but outstanding bonds issued for such purposes may not exceed 20 percent of the City's net assessed valuation. Outstanding general obligation bonded debt for all other purposes may not exceed 6 percent of the City's net assessed valuation. General obligation bonds of community facilities districts are not subject to or included in this computation since they are not bonds of the City of Scottsdale, Arizona. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (dollars in thousands) Table XVII Water and Sewer Revenue Bonds City of Scottsdale, Arizona 203 Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Operating Revenue(1) $ 134,336 138,224 142,066 139,242 152,612 148,310 160,161 164,487 173,739 177,073 Less: Operating Expenses $ 78,837 73,647 77,891 79,154 81,586 85,909 87,130 82,748 98,549 94,052 Net Operating Revenue $ 55,499 64,577 64,175 60,088 71,026 62,401 73,031 81,739 75,190 83,021 Development Fee Revenue $ 3,073 12,213 15,139 5,326 5,156 6,072 6,525 4,256 7,777 5,257 Net Revenue $ 58,572 76,790 79,314 65,414 76,182 68,473 79,556 85,995 82,967 88,278 Special Assessment Bonds Fiscal Year Ended June 30 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Special Assessment Collections $ 719 591 - Debt Service Principal $ 755 755 - Debt Service Interest $ 52 17 - Municipal Property Corporation Bonds Debt Service Principal $ 3,380 3,115 3,240 2,940 3,055 3,195 3,370 3,540 3,725 3,930 Debt Service Interest $ 2,056 1,891 1,738 1,599 1,487 1,354 1,195 1,026 849 654 Coverage 10.77 15.34 15.93 14.41 16.77 15.05 17.43 18.83 18.14 19.26 Excise Tax(3) $ 157,645 170,227 183,376 195,037 194,560 196,729 216,643 223,668 230,539 251,375 Debt Service Principal(4) $ 11,841 12,355 18,200 16,950 20,215 22,550 26,290 30,210 33,675 31,625 Debt Service Interest(4) $ 21,141 21,480 22,994 22,299 23,220 21,599 23,908 22,474 21,906 18,742 Scottsdale Preserve Authority Bonds Coverage(2) 0.89 0.77 N/A N/A N/A N/A N/A N/A N/A N/A Sales Tax $ 28,809 30,376 32,655 34,429 36,029 35,489 40,089 41,909 42,331 46,921 Debt Service Principal $ 3,655 3,800 3,960 4,140 4,340 4,175 4,365 4,540 4,780 1,280 Debt Service Interest $ 2,835 2,680 2,508 2,330 2,143 1,423 734 577 350 132 Coverage 4.44 4.69 5.05 5.32 5.56 6.34 7.86 8.19 8.25 33.24 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Includes investment income. (2) (3) Coverage ratio is less than 1.0 due to prepayment of amounts that were in fund balance. A de minimis amount of the excise taxes are pledged to specific purposes per various resolutions adopted by the City Council. Due to the immateriality of these amounts, they are not deducted from the pledged revenue calculation above. (4) Includes debt service payments paid out of revenue from the water and sewer fund, the special programs fund, the tourism development fund, and the stadium facility fund. Coverage 4.78 5.03 4.45 4.97 4.48 4.46 4.32 4.25 4.15 4.99 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Demographic and Economic Statistics Last Ten Fiscal Years City of Scottsdale, Arizona 204 Fiscal Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1) Population 217,965 222,200 224,800 228,300 231,200 238,000 242,500 255,300 258,100 241,361 Personal Income(2) (in thousands) $ 11,135,832 11,393,527 11,358,020 11,536,227 11,921,597 12,428,360 13,109,550 14,499,508 15,473,869 15,128,990 Per Capita Personal Income(3) $ 51,090 51,276 50,525 50,531 51,564 52,220 54,060 56,794 59,953 62,682 Median Age(4) 45.4 45.4 45.1 45.4 46.1 46.3 46.3 46.9 47.0 47.7 Table XVIII Charter and Public School Enrollment(5) 28,177 27,816 27,191 26,233 25,979 25,847 25,598 25,281 25,606 25,800 Fiscal Year End Average Unemployment Rate(6) 6.8% 5.7% 5.4% 4.7% 4.2% 3.8% 3.5% 3.5% 3.4% 6.6% Data Sources and Notes: (1) U.S. Census; fiscal years 2012-2020 based on U.S. Census July 1 population estimates. Fiscal years 2013-2020 estimates have been rounded to the nearest hundred. Fiscal year 2021 population is based on the April 1, 2020 Decennial Census results released in August 2021. (2) Calculated by multiplying Per Capita Personal Income by Total Population divided by 1,000. (3) U.S. Census, American Community Survey, 5-Year Estimates. (4) U.S. Census; fiscal year 2012 based on Census 2010; fiscal years 2013-2021 based on U.S. Census, American Community Survey, 5-Year Estimates. (5) Arizona Department of Education based on Oct 1 enrollment of fiscal year for all charter and district schools located within Scottsdale city boundaries; fiscal year 2019 updated to correct prior reporting error. (6) State of Arizona Office of Economic Opportunity, in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics, Local Area Unemployment Statistics. The data is from 2020 calendar year that ended within the 2021 fiscal year. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago 2021 City of Scottsdale, Arizona 205 Employer HonorHealth(2) General Dynamics Mission Systems(3) Vanguard(4) City of Scottsdale (5) CVS Health (6) Scottsdale Unified School District Mayo Clinic Axon Nationwide Specialty(7) Yelp Troon Golf International Cruise and Excursion Total Employees 7,251 2,800 2,800 2,549 2,544 2,108 1,915 1,600 1,474 900 Rank 1 2 3 4 5 6 7 8 9 10 25,941 Percentage of Total City Employment(1) 3.41% 1.32% 1.32% 1.20% 1.20% 0.99% 0.90% 0.75% 0.69% 0.42% 12.20% Table XIX 2012 Employees 6,700 2,700 1,899 2,455 2,238 3,600 2,061 Rank 1 3 7 4 5 2 6 Percentage of Total City Employment(1) 6.04% 2.43% 1.71% 2.21% 2.02% 3.24% 1.86% 1,501 8 1.35% 1,342 1,000 25,496 9 10 1.21% 0.90% 22.97% Source: City of Scottsdale, Economic Development Department communications with employers, June 2021. (1) Annual Employment in 2021 according to ESRI was 212,644; the fiscal year 2012 Annual Financial Report reported annual employment as 110,984. (2) Scottsdale Healthcare was renamed HonorHealth in 2015. (3) General Dynamics C4 Systems was renamed General Dynamics Mission Systems in 2016. (4) The Vanguard Group was renamed Vanguard Insurance in 2013 and was then renamed Vanguard in 2014. (5) CVS Caremark was renamed CVS Health in 2014. (6) Scottsdale Unified School District has administrative offices and some schools outside of Scottsdale city limits. 2021 numbers only report Scottsdale-based employees. (7) Scottsdale Insurance Company was renamed Nationwide Specialty in 2015. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years City of Scottsdale, Arizona 206 Function General Government Mayor and City Council City Clerk City Attorney City Auditor City Court City Manager City Treasurer Public Works Community and Economic Development Public Safety Community Services Administrative Services Water/Sewer Utilities Airport Solid Waste Total Table XX 2012 2013 2014 2015 2016 2017 2018(1) 2019(2) 2020(3) 2021 10.0 8.0 53.0 7.0 58.0 5.0 83.5 205.0 188.5 933.6 459.5 138.8 202.0 14.0 89.0 2,454.9 10.0 8.0 53.5 7.0 56.5 5.0 93.0 204.0 175.5 924.6 454.2 124.6 204.0 14.0 89.0 2,422.9 10.0 8.0 53.5 7.0 56.5 5.0 93.0 204.0 176.5 934.6 454.2 127.4 204.0 14.0 90.0 2,437.7 10.0 8.0 53.5 6.0 55.9 7.0 89.7 205.0 173.0 930.6 448.3 120.9 205.0 14.5 90.0 2,417.4 10.0 7.0 53.5 6.0 58.5 7.2 89.8 205.8 185.1 942.7 469.6 123.6 211.3 14.5 90.8 2,475.4 10.0 7.0 53.5 6.0 58.5 7.2 86.7 206.8 186.6 936.7 474.6 125.1 213.3 14.5 92.8 2,479.3 10.0 7.0 53.5 6.0 58.5 16.2 86.7 210.8 179.6 937.7 476.7 124.1 214.5 15.5 92.8 2,489.6 10.0 7.0 63.5 6.5 58.5 17.2 101.7 210.8 182.2 952.7 476.9 102.1 215.9 15.5 96.8 2,517.3 10.0 7.0 63.5 6.5 61.0 25.3 102.7 237.0 126.3 963.1 511.2 95.5 217.9 15.5 96.4 2,538.9 10.0 7.0 63.5 6.5 60.0 24.2 102.5 238.2 127.3 971.7 502.5 97.5 215.9 15.5 96.4 2,538.7 Source: The City of Scottsdale's Budget Department. (1) Effective fiscal year 2018, Citizen Services was moved from Community and Economic Development to City Manager. (2) (3) Effective fiscal year 2019, Purchasing was moved from Administrative Services to City Treasurer, and Risk Management was moved from City Treasurer to City Attorney. Effective fiscal year 2020, Communications was moved from Administrative Services to City Manager, Emergency Management was moved from City Manager to Public Safety, Transportation was moved from Community and Economic Development to Public Works, and WestWorld was moved from Community and Economic Development to Community Services. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years City of Scottsdale, Arizona 207 Division General Government City Attorney % of cases resolved at first court appearance (arraignment) City Auditor # of reports performed City Clerk # of legal postings # of minutes City Court Charges filed/ charges adjudicated (resolved) City Treasurer # of Accounts Payable checks issued # of customer contacts (utilities and licensing) # of Purchasing purchase orders(2) City Manager % of survey respondents rating the "Overall Quality of Life in Scottsdale" as good to excellent(3) % of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent(3)(4) Total ad value equivalency generated(5) Acres of land acquired for inclusion in the McDowell Sonoran Preserve % increase of Neighborhood Watch groups annually Administrative Services Human Resources Citywide turnover HR operating cost as a % of City payroll Information Technology # of SPAM emails blocked (monthly) from being delivered to the City (An average of 30 seconds per email is expended by staff) Annual disk storage size (DAS, NAS, and SAN) (Terabytes) (continued) Table XXI 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 37% 37% 34% 39% 39% 35% 35% 35% 28% 20% 14 14 14 16 13 13 15 14 11 14 1,185 63 1,124 63 1,080 65 1,005 57 1,000 61 1,067 56 1,033 70 946 63 950 59 912 63 102,953/ 100,929 93,306/ 90,016 99,063/ 83,441 96,741/ 91,200 100,920/ 92,993 100,092/ 85,295 95,301/ 84,602 83,471/ 78,390 88,444/ 77,118 74,419/ 65,915 45,112 246,319 5,018 33,599 254,992 4,678 32,865 209,325 5,019 32,491 196,549 5,064 31,648 190,422 5,078 31,268 195,819 5,143 32,074 256,784 4,989 30,401 140,915 4,984 29,206 96,201 4,725 28,051 101,694 4,356 No Survey No Survey 98% No Survey No Survey 96% No Survey 96% No Survey 97% No Survey $20,000 No Survey $78,861 93% $64,931 No Survey $34,863 No Survey N/A 93% N/A No Survey N/A 97% N/A No Survey N/A 94% N/A 4,419 5% 6,400 5% 2,365 2% 0 0% 0 5% 420 5% 0 2% 0 7% 0 1% 0 2% 7.1% 1.3% 7.3% 1.7% 6.0% 1.4% 7.8% 1.4% 9.6% 1.1% 8.1% 1.2% 9.8% 1.3% 9.3% 1.2% 10.7% 1.2% 9.5% 1.2% 1,870,000 1,588,935 1,335,869 1,395,338 2,686,000 2,117,633 1,512,355 1,026,016 2,032,000 820,000 266.0 167.3 45.8 51.4 58.6 67.2 82.8 86.9 98.3 103.5 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years City of Scottsdale, Arizona 208 Division Community Services Preserve McDowell Sonoran Preserve Annual Visitors – All trailheads Parks and Recreation # of square feet of medians and rights of way maintained WestWorld # of special events at WestWorld(6) Community and Economic Development Planning and Development Services Customer wait-time (in minutes) at One Stop Shop Provide applicant with pre-application meeting within 30 days of submitting request. % of inspections performed within 24 hours of the request # of new Code Enforcement cases processed per year Economic Development Targeted job creation - number of companies/number of jobs(7) Tourism Hotel/Motel average occupancy rate Bed Tax growth (% annual change) # of Downtown special events coordinated Aviation Scottsdale Airport - takeoffs and landings Public Safety Police Scottsdale Uniform Crime Report, Part 1 (crimes per thousand)(8) Achieve the standard of six minutes or less for response to emergency calls for service (includes medical and accident related calls) Percent of Emergency Calls Answered within 10 seconds (Target 91% of the time) Fire Total incidents Responses per capita Travel time (en-route to on-scene) (continued) Table XXI 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 177,922 223,538 325,023 659,882 706,682 698,090 732,510 747,000 936,000 992,000 23,475,510 22,726,329 22,502,626 22,832,327 22,913,730 22,827,842 22,968,631 22,897,463 22,897,463 23,261,040 20 27 24 52 51 55 49 46 30 48 6 12 15 12 12 15 13 14 13 7 100% 100% 16,500 100% 100% 15,603 100% 100% 14,222 100% 100% 15,514 95% 98% 13,781 100% 98% 13,797 99% 98% 12,594 99% 98% 13,676 100% 99% 12,358 100% 99% 12,076 8 / 1,595 36 / 1,593 16 / 1,069 13 / 1,180 9 / 1,183 14 / 1,019 12 / 1,852 14 / 1,531 9 / 603 7 / 1,005 61.5% 5% 119 63.0% 3% 126 65.6% 10% 275 67.8% 12% 325 67.9% 1% 277 75.1% 11% 174 69.1% 5% 173 70.2% 12% 155 55.6% -15% 129 47.1% 4% 43 146,058 137,333 148,971 153,285 162,535 164,622 166,425 176,677 191,284 192,185 32.8 29.1 27.8 25.5 25.6 26.3 24.7 25.2 25.2 22.5 5:11 4:54 5:04 5:25 5:12 4:48 4:57 5:05 5:36 5:30 N/A 96% 90% 95% 91% 93% 98% 94% 88% 91% 26,344 0.10 4:18 27,075 0.12 4:26 28,544 0.13 4:27 32,425 0.14 4:33 35,098 0.15 4:32 36,407 0.16 4:37 36,877 0.15 4:46 37,750 0.15 4:52 37,456 0.15 5:16 37,317 0.14 5:29 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years Division Public Works Public Works Facility inventory maintained (square feet)(9) # of active Capital Projects Solid Waste # of homes serviced by Residential Refuse Collection 209 City of Scottsdale, Arizona # of citizens serviced annually by Household Hazardous Waste collection program Transportation and Street Operations Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies)(10) Total citywide transit ridership(11) Water Resources Water Service Connections Drinking Water Supplied (million gallons per day) Reclaimed Water Supplied (million gallons per day) Sewer Service Connections Sewage Treated (million gallons per day) # of water meters read annually Table XXI 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 3,029,606 162 3,322,968 186 3,313,468 150 3,348,774 120 2,925,697 155 2,925,697 150 2,925,697 161 2,961,661 180 2,978,196 185 2,978,196 190 79,787 80,013 80,354 80,785 81,187 81,665 82,236 82,711 83,189 83,680 2,591 2,691 2,905 2,362 3,345 2,770 2,509 2,629 2,426 2,393 10,500 2,499,000 5,043 2,599,557 3,687 2,589,218 4,252 2,635,739 6,638 2,297,323 9,737 2,186,424 8,697 2,178,152 4,748 1,933,249 2,176 1,501,663 2,657 646,306 87,577 69.2 6.9 78,018 20.9 1,043,335 87,851 67.6 8.9 78,269 20.7 1,055,230 88,348 70.2 9.7 79,014 20.9 1,059,738 88,905 63.9 9.2 79,588 21.2 1,066,385 89,596 67.5 9.1 80,202 20.5 1,078,500 90,172 67.0 11.6 80,704 21.4 1,085,590 90,817 70.9 12.2 81,306 22.1 1,072,498 91,279 66.3 11.9 81,841 22.1 1,099,164 91,802 67.6 11.6 82,320 21.6 1,099,085 92,590 74.0 12.0 82,834 22.2 1,110,050 Source: The City of Scottsdale's Budget department and applicable City divisions. (1) This presentation is consistent with the organizational structure approved as part of the fiscal year 2022 Budget. (2) Effective fiscal year 2019 the # of Purchasing purchase orders was moved from Administrative Services to City Treasurer to align with an organizational change made by the City Manager. (3) The complete results for the most recent survey, as well as archived copies of prior year surveys can be found at https://www.scottsdaleaz.gov, search "citizen survey". (4) Effective fiscal year 2020 the percentage of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent was moved from Administrative Services to City Manager to align with an organizational change made by the City Manager. (5) Effective fiscal year 2012 established more appropriate performance measures for the Communications Department activities and products (ad value equivalency). City ceased tracking this statistic effective fiscal year 2016. (6) Effective fiscal year 2020 the # of special events at WestWorld was moved from Community and Economic Development to Community Services to align with an organizational change made by the City Manager. (7) Effective fiscal year 2014, only jobs verified through employer to be created or retained within the first 12 months were counted in annual metrics; total announced job creation is significantly higher. (8) Crime stats are for the prior calendar year end, rather than fiscal year end. (9) 3.4 million square feet from fiscal year 2015 was calculated manually. The City hired a consultant who completed a building inventory in fiscal year 2016. Square footage was recalculated based on actual measurements. The statistic for "Actions to improve safety and efficiency of traffic flow (signal timing changes and traffic control and speed limit studies)" has decreased due to implementation of predefined special timing plans in response to special events, construction, and accidents. Prior to fiscal year 2019, signal timing was changed from cycle to cycle when needed during special events, construction, or accidents based on observations. (11) Effective fiscal year 2020 Total citywide transit ridership was moved from Community and Economic Development to Public Works to align with an organizational change made by the City Manager. (10) Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Capital Asset Statistics by Function Last Ten Fiscal Years Function Public Safety Police Stations Police Vehicles Fire Stations 2012 2013 2014 2015 2016 Table XXII 2017 2018 2019 2020 2021 4 352 15 4 351 15 4 359 15 4 347 15 4 344 15 4 344 15 4 343 15 4 343 15 4 341 15 4 344 15 20,852,234 2,962 300 20,859,993 2,963 303 20,748,525 2,947 297 20,827,420 2,958 304 21,036,767 2,877 307 21,023,295 2,846 295 21,046,327 2,990 296 20,071,109 2,851 296 19,933,597 2,831 308 20,080,026 2,852 311 Culture and Recreation Parks Parks Acreage Swimming Pools Tennis Courts Community Centers 42 974 4 55 5 42 975 4 55 6 42 975 4 55 6 42 975 4 55 6 42 975 4 55 6 42 975 4 55 6 42 975 4 53 6 42 975 4 53 6 42 975 4 53 6 43 975 4 49 6 Water Water Mains (miles) Fire Hydrants 2,064 10,729 2,070 10,779 2,079 10,874 2,079 10,941 2,094 11,052 2,102 11,135 2,117 11,213 2,124 11,301 2,133 11,375 2,143 11,480 Sewer Sanitary Sewers (miles) Storm Sewers (miles) 1,422.0 168.0 1,424.0 169.0 1,429.0 187.7 1,441.0 275.0 1,452.0 285.0 1,456.0 309.0 1,468.0 316.0 1,483.0 325.0 1,505.0 330.0 1,513.0 337.0 Highways and Streets Square Yards of Pavement Equivalent 12' Wide Lane Miles Traffic Signals City of Scottsdale, Arizona 210 Source: City of Scottsdale's divisions. Table of Contents City of Scottsdale, Arizona City Treasurer’s Office (480) 312-2437 Visit our website www.ScottsdaleAZ.gov/Finance