ANNUALCOMPREHENSI VE FI NANCI ALREPORT Ci t yofScot t sdal e, Ar i z ona Fort heFi scalYearEndedJ une30, 2022 City of Scottsdale, Arizona Annual Comprehensive Financial Report for the fiscal year ended June 30, 2022 Prepared by: City Treasurer’s Office Sonia Andrews, CPA City Treasurer/Chief Financial Officer Anna Marie Henthorn, CPA Accounting Director City of Scottsdale, Arizona Annual Comprehensive Financial Report For the Fiscal Year ended June 30, 2022 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 ................................................................................................................. 15 Management’s Discussion and Analysis ................................................................................................. 18 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ................................................................................................................ 35 Statement of Activities ...................................................................................................................... 37 Fund Financial Statements: Balance Sheet - Governmental Funds ............................................................................................. 38 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ................................................................................................................................... 40 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds ......................................................................................................................... 41 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................. 43 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund .................................................................................................. 44 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ................................................................. 46 Statement of Fund Net Position - Proprietary Funds .................................................................. 47 Reconciliation of the Proprietary Funds Statement of Fund Net Position to the Statement of Net Position ..................................................................................................... 49 City of Scottsdale, Arizona i Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds ............................................................................................................................... 50 Reconciliation of the Proprietary Funds Statement of Revenue, Expenses, and Changes in Fund Net Position to the Statement of Activities ............................................ 51 Statement of Cash Flows - Proprietary Funds .............................................................................. 52 Notes to Financial Statements: I. Summary of Significant Accounting Policies ................................................................................. 54 II. Reconciliation of Government-wide and Fund Financial Statements ........................................ 65 III. Stewardship, Compliance, and Accountability................................................................................ 76 IV. Detailed Notes on All Funds A. Cash and Investments................................................................................................................... 80 B. Endowments................................................................................................................................... 86 C. Receivables ...................................................................................................................................... 86 D. Capital Assets ................................................................................................................................. 88 E. Interfund Balances and Interfund Transfers ............................................................................ 92 F. Leases.............................................................................................................................................. 93 G. Subscription-Based Information Technology Arrangements ................................................ 94 H. Service Concession Arrangements ............................................................................................. 95 I. Bonds, Loans, and Other Payables ............................................................................................. 96 V. Other Information A. Risk Management ....................................................................................................................... 109 B. Contingent Liabilities ................................................................................................................. 109 C. Subsequent Events ..................................................................................................................... 110 D. Tax Abatement Agreements ..................................................................................................... 110 E. Joint Ventures ............................................................................................................................... 111 F. Pollution Remediation ................................................................................................................. 112 G. Related Organization .................................................................................................................. 113 H. Retirement and Pension Plans .................................................................................................. 113 City of Scottsdale, Arizona ii I. Other Postemployment Benefits ................................................................................................ 130 J. 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 City of Scottsdale, Arizona iii Municipal Property Corporation Debt Service Fund ................................................................. 166 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 City of Scottsdale, Arizona iv Property Tax Rates - Direct and Overlapping Governments - Last Ten Fiscal Years .................. 194 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, 2022 ................................ 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, 2022 October 26, 2022 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Scottsdale, Arizona: The Annual Comprehensive Financial Report of the City of Scottsdale, Arizona, (the City) for the fiscal year ended June 30, 2022, 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, 2022, 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, the 2020 census reporting 241,361 residents, and a current estimate of 242,800 residents. The City is the seventh largest municipality by population in Arizona, and the 92nd 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 2022, 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 is one of the state’s leading job centers with a robust economy anchored by biomedical science companies, high-tech innovation, tourism, financial services, and corporate headquarters. The Scottsdale Airpark is one of the largest employment centers in the State of Arizona with more than 3,300 businesses employing over 59,000 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. Prior to the pandemic, 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 continued to rebound, the average unemployment for Scottsdale in fiscal year 2022 was 3.0 percent down from 6.6 percent as reported in 2021. Tourism Tourism is one of Scottsdale’s largest and most vibrant industries and is a significant contributor to the City’s economy. With great weather, fantastic scenery, and a calendar full of special events, Scottsdale is a popular tourist destination in Arizona that welcomes millions of visitors annually. The City has a variety of lodging properties, including several world-class resorts and hotels, along with spectacular spas, trend-setting dining, and one of a kind Sonoran Desert golf courses. The City experienced significant tourism revenues resulting from pent-up demand for travel post pandemic. The City projects revenue growth from tourism to continue in fiscal year 2023. 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 51.3 percent of General Fund revenues for fiscal year 2022, totaling $181.8 million. The year-over-year increase of 21.3 percent in the General Fund sales tax revenue for fiscal year 2022 was caused by unusual circumstances related to the pandemic. The increase in sales tax revenue was attributed to the result of strong consumer spending boosted by federal stimulus programs aiding economic recovery, the rising costs of goods, and the pent-up demand among the public to travel, entertain, and dine out. 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 2023, when compared to fiscal year 2022 levels, due to the continued economic recovery and moderate growth. 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 $0.101 over the prior year. This decrease in the combined rate is primarily due to 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 continued recovery from the pandemic’s impact to 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 adopted 14 comprehensive financial policies governing revenue management, expenditure management, fiscal planning and budgeting, capital assets, cash and investments, debt, grants, risk management, reserves and fund balance, pension funding, tourism development fund, economic development, enterprise funds, and accounting, auditing, 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. Beginning in fiscal year 2023, the City amended the financial policy to increase operating reserves in the General Fund from 10 percent to 25 percent. 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 2022, the City adopted the annual budget which included funding an additional one-time contribution of $12 million toward the PSPRS pension plans in fiscal year 2023. 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. 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. 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). City of Scottsdale, Arizona 5 Table of Contents The City retained credit ratings of “Aaa,” “AAA,” and “AAA” from the three major credit rating agencies (Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings, 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, 2022 Moody's Investors Service S&P Global Ratings Fitch Ratings Aaa AAA AAA General Obligation (GO) 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 2023 budget reflects increased revenue projections in the local economy resulting from consumer spending utilizing stimulus funds in the economy and increased sales tax from higher cost of goods. This budget reflects a net increase in the overall General Fund uses of $35.2 million when compared to the fiscal year 2022 adopted budget to provide core services and the priorities/policy direction of the City Council which include: • $12.0 million to pay down unfunded public safety pension liabilities • $10.3 million for market adjustments and the citywide pay for performance program • $3.2 million net increases in funding for pension-related costs • $1.5 million for increases in health and dental costs • $1.3 million to reinstate the vacation buyback program for eligible employees Additionally, an estimated $256.2 million is included in the capital project budget for 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: • $31.0 million for water distribution system improvements due to system aging and increasing demands including downtown revitalization • $33.2 million to design, acquire right-of-way, and construct a six-lane arterial street at Pima Road: Pinnacle Peak Road to Happy Valley Road • $22.1 million to rebuild the Civic Center Plaza as the community’s signature and public gathering space • $22.4 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 Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021, marking the forty-ninth 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 Annual Comprehensive 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 Annual Comprehensive 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, 2021, 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, 2022. 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 This page is intentionally blank. City of Scottsdale, Arizona 8 Table of Contents City of Scottsdale, Arizona 9 This page is intentionally blank. City of Scottsdale, Arizona 10 Table of Contents Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2022 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 Marianne T. Bayardi, Presiding Judge Sonia Andrews, City Treasurer/Chief Financial Officer City of Scottsdale, Arizona 11 This page is intentionally blank. City of Scottsdale, Arizona 12 Table of Contents People of Scottsdale Mayor & City Council City of Scottsdale, Arizona 13 COMMISSIONS Airport Advisory Scottsdale Environmental Advisory Historic Preservation Human Relations Human Services McDowell Sonoran Preserve Neighborhood Advisory Parks and Recreation Planning Tourism Development Transportation Veterans Advisory 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 Accounting Budget Business Services Finance Purchasing City Treasurer City Attorney Charter Officers City Manager CITY MANAGER’S OFFICE ADMINISTRATIVE SERVICES Human Resources Communications - Citizen Service Information Technology - Diversity & Inclusion Government Relations COMMUNITY & ECONOMIC DEVELOPMENT Aviation Planning & Development Services Economic Development Tourism & Events COMMUNITY SERVICES Human Services Libraries Parks & Recreation Planning & Administration Preserve WestWorld WATER Water Quality Reclamation Services Planning & Engineering Technology & Administration Water Services Pipeline & Treatment Agreements PUBLIC WORKS Capital Project Management Facilities Management Fleet Management Solid Waste Management Transportation & Streets Presiding Judge City Court Assistant City Manager City Auditor City Clerk Police Chief Executive Leadership Assistant City Manager Civil Prosecution Risk Management Victim Services Fire Chief POLICE Office of the Police Chief Uniformed Services Professional Standards & Investigative Services Operational Services FIRE Office of the Fire Chief Emergency Services Professional Services City of Scottsdale, Arizona 14 Table of Contents 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, 2022, 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, 2022, 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 District implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 91, Conduit Debt Obligations, Statement No. 92, Ommibus 2020, Statement No. 97, Certain Component Unit Criteria and Accounting and Financial Reporting for Internal Revenue Code, and Statement No. 98, The Annual Comprehensive Financial Report for the year ended June 30, 2022, which represents a change in accounting principle. 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 15 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 16 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 26, 2022, 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 26, 2022 City of Scottsdale, Arizona 17 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 This section of the City of Scottsdale, Arizona’s (the City) Annual Comprehensive Financial Report presents a narrative overview and comparative analysis of the financial activities of the City for the fiscal years ended June 30, 2022, and 2021. Readers are encouraged to consider the information presented here in conjunction with the basic financial statements that immediately follow, along with the letter of transmittal and other portions of this Annual Comprehensive Financial Report. FINANCIAL HIGHLIGHTS • 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 2022 and 2021 by $6.10 billion and $5.82 billion (net position), respectively. Of these amounts, $416.8 million and $354.9 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 2022 by $277.5 million compared to an increase in net position of $443.8 million during fiscal year 2021. Total revenues exceeded total expenses in the current year due primarily to an increase in business taxes of $66.2 million over the prior year. • As of June 30, 2022, and 2021, the City’s governmental funds reported combined ending fund balances of $512.2 million and $447.4 million, respectively. Approximately 32 percent of the current year amount ($162.5 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 $191.5 million or approximately 58 percent of total General Fund expenditures of $333.0 million. • The City’s total long-term liabilities decreased by $205.1 million to $1.32 billion during the current fiscal year. This decrease was primarily due to the scheduled bond principal payments being made and a decrease 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 18 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 Relationship Between Annual Comprehensive 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 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 19 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 35-37 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 20 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 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 38-46 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 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 47-53 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 54-135 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 21 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 176-179 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, performed 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 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 $6.10 billion, and $5.82 billion at the close of the fiscal years 2022 and 2021, respectively. City of Scottsdale, Arizona 22 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 The following table is a condensed summary of the City’s net position for governmental and business-type activities: Net Position June 30, 2022 and 2021 (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 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 NET POSITION Net investment in capital assets Restricted Unrestricted Total net position Governmental Activities 2022 2021 $ 906,608 $ 4,754,768 5,661,376 148,918 5,810,294 796,251 4,708,884 5,505,135 130,740 5,635,875 968,252 161,193 1,129,445 118,516 1,247,961 1,137,766 145,490 1,283,256 33,993 1,317,249 4,162,863 4,065,844 266,758 189,263 132,712 63,519 $ 4,562,333 $ 4,318,626 Business-type Activities 2022 2021 $ 499,312 $ 1,452,376 1,951,688 19,810 1,971,498 501,824 1,437,854 1,939,678 20,745 1,960,423 350,909 53,063 403,972 33,758 437,730 386,458 50,271 436,729 23,704 460,433 1,195,005 1,157,026 54,717 51,596 284,046 291,368 $ 1,533,768 $ 1,499,990 Total 2022 $ 2021 1,405,920 $ 1,298,075 6,207,144 6,146,738 7,613,064 7,444,813 168,728 151,485 7,781,792 7,596,298 1,319,161 214,256 1,533,417 152,274 1,685,691 1,524,224 195,761 1,719,985 57,697 1,777,682 5,357,868 5,222,870 321,475 240,859 416,758 354,887 $ 6,096,101 $ 5,818,616 The largest portion, 87.9 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 $5.36 billion and $5.22 billion as of June 30, 2022, and 2021, 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, 5.3 percent, of the City’s net position, $321.5 million at June 30, 2022, and $240.9 million at June 30, 2021, represents resources that are subject to external restrictions on how they may be used. Unrestricted net position, 6.8 percent of the City’s total net position at June 30, 2022, and 6.1 percent at June 30, 2021, $416.8 million and $354.9 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 $277.5 million in fiscal year 2022 compared to an increase in net position of $443.8 million during fiscal year 2021. 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 23 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 Changes in Net Position For the fiscal years ended June 30, 2022 and 2021 (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 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 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 position - ending Governmental Activities 2022 2021 Business-type Activities 2022 2021 $ $ 76,905 $ 53,960 87,927 47,055 52,751 305,241 210,849 $ 38,822 209,461 34,573 73,136 335,445 67,965 18,316 (13,201) 16,088 716,541 71,256 269,303 67,822 17,355 2,487 10,387 843,657 232 (7,590) 242,313 894 1,211 7,389 1,103 6,558 5,083 9,593 109,623 46,396 175,466 72,628 24,705 2,555 535 16,857 480,596 235,945 7,762 243,707 725 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 8,546 400,455 109,606 55,167 9,150 26,850 200,773 41,540 (7,762) 33,778 4,318,626 3,918,171 $ 4,562,333 $ 4,318,626 Total 2022 287,754 $ 53,960 126,749 256,516 52,751 339,814 177 870 245,081 73,136 335,677 67,965 18,316 (20,791) 16,088 958,854 71,256 269,480 67,822 17,355 3,357 10,387 1,088,738 106,778 54,152 7,024 25,290 193,244 51,837 (8,546) 43,291 894 1,211 7,389 1,103 6,558 5,083 9,593 109,623 46,396 175,466 72,628 24,705 2,555 535 16,857 109,606 55,167 9,150 26,850 681,369 277,485 277,485 725 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 1,499,990 1,456,699 $ 1,533,768 $ 1,499,990 $ 2021 5,818,616 5,374,870 $ 6,096,101 $ 5,818,616 Governmental Activities. Net position for governmental activities increased $243.7 million after transfers during fiscal year 2022 compared to an increase of $400.5 million after transfers in fiscal year 2021. Total revenues decreased $127.1 million or 15.1 percent from the prior fiscal year and expenses increased $28.8 million or 6.4 percent. Overall, revenues exceeded expenses resulting in an increase in net position. City of Scottsdale, Arizona 24 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 The City experienced a decrease in total revenues from governmental activities over the prior year due primarily to a 71.2 percent decrease in capital grants and contributions and a decrease of interest and investment income of 630.8 percent. The decrease in capital grants and contributions was due to a decrease of 10 miles of streets contributed from developers this year when compared to the prior year. The $15.7 million decrease in interest and investment income from the prior year was largely due to a decrease in the fair market value of the City’s investment portfolio resulting from an overall increase in interest rates. 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 $497.7 million in fiscal year 2022 compared to $438.6 million in fiscal year 2021. Business taxes, which include privilege and franchise taxes, increased $66.1 million or 24.6 percent from the previous year due to increased cost of goods and an overall increase in consumer spending. The charges for services revenue category increased $29.9 million or 63.4 percent over fiscal year 2021, primarily in the Community and Economic Development Division. The other revenue category increased by $5.7 million or 54.9 percent from the previous year, primarily due to an increase in property rental revenues. Additionally, property taxes increased by $1.9 million or 2.6 percent over the prior year due to increases in property values. For governmental activities overall, without regard to program, business taxes was the largest single source of funds, followed by capital grants and contributions, intergovernmental which includes state shared revenues, charges for services, property taxes, and operating grants and contributions. The other revenue and interest and investment income were the least significant sources of revenue. Governmental Activities Revenues by Source Fiscal Year 2021/22 (in thousands) $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $‐ $(50,000) Charges for Services Operating Grants Capital Grants and and Contributions Contributions Property Taxes Other Revenue City of Scottsdale, Arizona 25 Business Taxes Intergovernmental Interest and Investment Income Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 (36.5 percent), followed by the Public Works Division (22.8 percent), and the Community Services Division (15.1 percent). The Public Safety Division provides police and fire/emergency services throughout the City. Expenses increased by $3.3 million, or 1.9 percent, during fiscal year 2022 due to one-time payments made to the City’s pension plans. The Public Works Division consists of five departments: Capital Project Management, Facilities Management, Fleet Management, Solid Waste Management, and Transportation and Streets. Expenses were $8.9 million, or 8.9 percent, higher than the prior fiscal year due primarily from 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 and Recreation, Planning and Administration, Preserve, and WestWorld. Expenses were $7.9 million, or 12.1 percent, higher than the prior fiscal year due to increases in personnel-related expenditures. Business-type Activities. Net position for business-type activities increased by $33.8 million after transfers during fiscal year 2022 compared to $43.3 million after transfers in fiscal year 2021. Total revenues decreased by $2.8 million, or 1.1 percent, due primarily to decreases in the interest and investment income revenue category. 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, followed by capital grants and contributions. The interest and investment income and business taxes were the least significant sources of revenue. Business‐type Activities Revenues by Source Fiscal Year 2021/22 (in thousands) $250,000 $200,000 $150,000 $100,000 $50,000 $‐ $(50,000) Business Taxes Charges for Services Interest and Investment Income City of Scottsdale, Arizona 26 Capital Grants and Contributions Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 $109.6 million and $55.2 million, respectively, in fiscal year 2022, followed by solid waste with $26.9 million and airport with $9.2 million. Business‐type Activities Program Revenues and Expenses Fiscal Year 2021/22 (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 Program Revenues 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 2022 they provided 93,027 water connections to Scottsdale citizens. The water and sewer utility’s combined expenses increased by 2.4 percent or $3.8 million in fiscal year 2022 compared to fiscal year 2021. This was caused primarily by an increase in the cost of goods and services. The Solid Waste Department provided delivery of safe, efficient, and environmentally sound refuse collection services to 83,993 residential customers in fiscal year 2022. Total program expenses increased 6.2 percent or $1.6 million in fiscal year 2022 compared to fiscal year 2021 due to increases in personnel-related costs. The Aviation Department operates the City’s general aviation reliever facility and is home to many local corporate aircraft. More than 155,092 take-offs and landings occurred in fiscal year 2022 at Scottsdale Airport. Total program expenses increased by 30.3 percent or $2.1 million in fiscal year 2022 compared to fiscal year 2021, driven by increased construction expenditures. City of Scottsdale, Arizona 27 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 a particular purpose 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 $512.2 million, an increase of $64.8 million from the prior year total of $447.4 million. Approximately 31.7 percent, or $162.5 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 $616.0 million in fiscal year 2022, an increase of 12.6 percent, or $69.0 million, from the previous year total of $547.0 million. In fiscal year 2022, expenditures for governmental functions totaled $583.2 million, an increase of 17.1 percent, or $85.3 million, from the fiscal year 2021 total of $497.9 million. For the current fiscal year, revenues exceeded expenditures for governmental functions by $32.8 million. This was mainly due to increases of $50.6 million in privilege taxes received in fiscal year 2022, $13.9 million in transient occupancy taxes, intergovernmental revenues of $4.2 million, and property rental of $4.1 million, offset by an increase in operating expenditures, primarily in the Public Safety Division. The General Fund is the chief operating fund of the City. At the end of fiscal year 2022, the unassigned fund balance of the General Fund was $191.5 million, while the total fund balance was $191.9 million; the unassigned and total fund balances for the General Fund at the end of fiscal year 2021 were $171.0 million and $171.3 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 57.5 percent of the total General Fund expenditures of $333.0 million in fiscal year 2022 and represented 66.1 percent of the total General Fund expenditures of $258.8 million in fiscal year 2021. Total fund balance represented 57.6 percent and 66.2 percent of total fund expenditures for fiscal years 2022 and 2021, respectively. City of Scottsdale, Arizona 28 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 Overall, the General Fund’s performance resulted in revenue and other financing sources exceeding expenditures and other financing uses in the fiscal year ended June 30, 2022, by $20.6 million. Total revenues increased $23.6 million, or 7.1 percent compared to the prior year while expenditures increased $74.2 million or 28.7 percent. The most significant reason for the increase in revenues was due to the increased transaction privilege tax over the prior year and the increase in expenditures was primarily due to one-time payments made to the public safety retirement pension plans. Key General Fund revenues showing an increase over the prior year included $31.9 million for transaction privilege tax, $3.6 million in state shared sales tax, and $2.9 million for building and related permits. The significant increase for the transaction privilege tax is a result of increased consumer spending from stimulus funds in the economy and increased tax receipts resulting from the higher cost of goods. The City experienced revenue reductions as well. Most significant was the change in the fair value of investments with a decrease of $15.1 million, followed by a reduction of $4.7 million in state revenue sharing, and $0.6 million in miscellaneous intergovernmental revenue. The Public Safety Division experienced the largest percentage increase in General Fund expenditures, 40.2 percent, or $55.0 million, primarily due to the one-time payments made to the public safety pension retirement plans. The Community Services Division expenditures increased $7.7 million over the prior year due primarily to an increase in personnel-related expenditures resulting from the one-time Scottsdale AZ CARES funding being utilized the previous year. The Administrative Services Division saw a decrease of $1.1 million in expenditures under the prior year due to software acquisition cost incurred in the prior year. As a result of an increase in revenues and other financing sources exceeding expenditures and other financing uses for the fund balance for the City’s General Fund increased in fiscal year 2022 by $20.6 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 $8.7 million, an increase of $5.2 million from the $3.5 million balance at June 30, 2021. The increase in fund balance was due to an increase in property tax and a decrease in debt service expenditures. 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 $72.1 million, an increase of $20.9 million from the $51.2 million at June 30, 2021, caused by increases in cash transfers from the General Fund resulting from increases in construction sales tax, interest income, and sales tax on food as required by the City’s comprehensive financial policies. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. City of Scottsdale, Arizona 29 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 At the end of the fiscal years 2022 and 2021, the unrestricted net position for the Water and Sewer Utility Fund was $272.7 million and $281.7 million, respectively; the Airport Fund was $4.9 million and $2.8 million, respectively; and the Solid Waste Fund was $3.0 million and $2.3 million, respectively. The Internal Service Funds, which are used to account for certain governmental activities, had an unrestricted net position of $30.1 million and $36.4 million, respectively. The total growth in net position for the enterprise funds was $34.8 million and $43.9 million for fiscal years 2022 and 2021, 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 44 of this report. General Fund revenues on a budgetary basis were $48.8 million more than projected for fiscal year 2022. The increase in revenues was primarily due to the City receiving more in transaction privilege tax, state shared revenues, and building and related permits than budgeted. The privilege tax was the most significant increase, consisting of $37.6 million more revenues received than projected as the City continued recovering from the pandemic, increased consumer spending from the federal stimulus funds, and the rising costs of goods. Expenditures of $328.8 million were $5.6 million less than budgeted expenditures of $334.4 million. The largest positive expenditure variances occurred in the Public Safety and Community Services Divisions. Both divisions had positive variances due to savings in personnel services from vacancies and retirements. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. The City’s total capital assets for its governmental and business-type activities as of June 30, 2022 and 2021 were $6.21 billion and $6.15 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 2022 and 2021 was $60.4 million or 1.0 percent. City of Scottsdale, Arizona 30 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 Capital Assets, Net of Depreciation/Amortization June 30, 2022 and 2021 (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 2022 2021 $ 3,461,153 $ 3,427,483 427,564 407,498 710,390 734,845 33,597 36,778 45,365 43,152 72,341 54,130 4,358 4,998 $ 4,754,768 $ 4,708,884 2022 2021 $ 52,061 $ 52,028 72,791 61,956 3,978 3,698 87,171 87,171 792,118 781,021 391,131 392,724 309 362 962 1,073 51,837 57,730 18 91 $ 1,452,376 $ 1,437,854 2022 2021 $ 3,513,214 $ 3,479,511 500,355 469,454 710,390 734,845 37,575 40,476 87,171 87,171 792,118 781,021 391,131 392,724 45,674 43,514 962 1,073 124,178 111,860 4,376 5,089 $ 6,207,144 $ 6,146,738 Significant capital asset events during fiscal year 2022 included the following: • Land: $36.4 million for land donated by developers that coincides with public street improvements for finalized permits • Buildings and Land Improvements: ο $16.7 million for the construction of the Bell Road Sports Complex ο $11.1 million for the rehabilitation of the Airport runway ο $7.9 million for the construction of the Pima-Dynamite trailhead • Streets: $16.3 million for new road improvements donated by developers; $5.6 million related to streets, traffic control, and sidewalks; $4.6 million for McDowell Road bicycle lanes from Pima Road to 64th Street; and $4.2 million for street preservation • Vehicles: $5.8 million for solid waste vehicles, $4.9 million for public safety vehicles, and $0.8 million for water and other city vehicles As of June 30, 2022, the City has construction commitments of $124.8 million for current projects. Additional information on the City’s capital assets can be found in Note IV.D. on pages 88-91 of this report. City of Scottsdale, Arizona 31 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 Long-term Debt. At the end of the fiscal years 2022 and 2021, the City had total long-term liabilities of $1.32 billion and $1.52 billion, respectively. Of these amounts, $398.9 million and $448.2 million, for fiscal years 2022 and 2021 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 $920.3 million and $1.08 billion for fiscal years 2022 and 2021, 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, 2022 and 2021 was $518.5 million and $485.0 million, respectively, in the 6 percent capacity and $1.34 billion and $1.17 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 in Tables XVIa and XVIb in the Statistical Section of this report. Long-term Liabilities June 30, 2022 and 2021 (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 $ $ 2022 398,885 $ 180,705 - 2021 448,225 195,390 1,350 8,059 29,297 616,946 1,314 2,568 1,760 3,417 26,029 33,141 831 282,246 968,252 $ 10,826 34,778 690,569 451 1,799 1,914 4,387 22,981 29,907 1,923 383,835 1,137,766 Business-type Activities $ $ 2022 - $ 4,375 247,455 18,288 270,118 24 4,563 27,400 48,804 350,909 $ 2021 8,520 265,565 20,684 294,769 70 4,016 37,748 49,855 386,458 Total $ $ 2022 398,885 $ 4,375 428,160 - 2021 448,225 8,520 460,955 1,350 8,059 47,585 887,064 1,314 2,568 1,760 3,441 26,029 37,704 831 309,646 48,804 1,319,161 $ 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 During fiscal year 2022, the City’s total long-term liabilities decreased overall by $205.1 million due primarly to the reductions in the City’s net pension liabilities and scheduled principal payments on debt. City of Scottsdale, Arizona 32 Table of Contents Management’s Discussion and Analysis For the Fiscal Year Ended June 30, 2022 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 2022 and 2021 were $309.6 million and $421.6 million, respectively. The decrease was due to actuarial gains experienced in the Arizona State Retirement System and from a one-time excess contribution of $40.0 million to the Public Safety Personnel Retirement System (PSPRS). The City paid contributions to the PSPRS in advance of the incurred contributions in accordance with the budget, resulting in excess contributions of $0.9 million. Additional information on the City’s pensions can be found starting on page 113. Additional information on the City’s long-term liabilities can be found in Section IV.I. of the Notes to the Financial Statements on pages 96-108 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City’s economy has continued to rebound from the effects of the pandemic this past fiscal year. The fiscal year 2023 budget includes moderate increases for privilege tax. In June 2022, the City Council approved a $2.11 billion budget, which is a $0.32 billion increase from the prior year budget of $1.79 billion. The adopted fiscal year 2023 budget includes $0.99 billion for general operations, grants, operating contingencies/reserves, and $1.12 billion for capital improvements/capital contingencies. 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 33 Basic Financial Statements City of Scottsdale, Arizona 34 Table of Contents Statement of Net Position June 30, 2022 (in thousands) 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 $ $ 601,699 $ 221,440 Total $ 823,139 42,663 10,031 45,233 1,377 33,982 9,502 (3,522) 1,791 1,922 25,364 - 29 23,029 2,140 743 25,543 2,202 3,522 1,191 48,804 42,692 23,029 10,031 47,373 2,120 59,525 11,704 1,791 3,113 25,364 48,804 79,130 53,925 3,511 27,500 1,506 4,702 2,998 967 45,410 4,605 82,981 106,630 1,506 4,702 2,998 967 45,410 4,605 53,925 86,492 3,533,494 191,069 3,724,563 1,221,274 5,661,376 1,261,307 1,951,688 2,482,581 7,613,064 19,233 129,347 338 148,918 12,771 7,039 19,810 32,004 136,386 338 168,728 (continued) City of Scottsdale, Arizona 35 Business-type Activities $ $ Table of Contents Statement of Net Position June 30, 2022 (in thousands) 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 $ 36,230 8,935 93 9,274 68,142 4,458 26,386 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 Tourism Development Endowments Expendable Nonexpendable Repair and Replacement Joint Venture Construction Deposits Unrestricted Total Net Position $ $ 18,892 1,197 3 5,245 22,255 - Total $ 55,122 10,132 96 14,519 90,397 4,458 26,386 5,138 2,537 2,998 967 1,506 - 2,998 967 6,644 2,537 15,623 79,365 2,135 25,314 17,758 104,679 17,518 831 282,246 572,669 968,252 2,428 27,400 244,828 48,804 350,909 19,946 831 309,646 817,497 48,804 1,319,161 1,129,445 403,972 1,533,417 34,100 82,215 2,201 118,516 24,219 9,539 33,758 58,319 91,754 2,201 152,274 4,162,863 1,195,005 5,357,868 12,110 120,335 113,362 3,107 5,984 46 155 4,951 6,082 4,605 - 16,715 120,335 113,362 3,107 5,984 46 155 4,951 6,082 27 599 132,712 4,562,333 45,410 4,702 284,046 1,533,768 27 599 45,410 4,702 416,758 6,096,101 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 36 Business-type Activities $ $ Table of Contents Statement of Activities For the Fiscal Year Ended June 30, 2022 (in thousands) Program Revenues FUNCTIONS/PROGRAMS City of Scottsdale, Arizona 37 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 894 1,211 7,389 1,103 6,558 5,083 9,593 109,623 46,396 175,466 72,628 24,705 2,555 535 16,857 480,596 $ 109,606 55,167 9,150 26,850 200,773 $ 681,369 162 173 597 218 529 3,542 167 41,773 11,891 14,375 2,954 524 76,905 Operating Grants and Contributions Capital Grants and Contributions $ $ 124,640 49,823 9,209 27,177 210,849 $ 287,754 14 93 60 1 884 21,348 731 20,770 9,789 270 53,960 - $ 53,960 $ 75,290 12,464 164 9 87,927 Governmental Activities $ The notes to the financial statements are an integral part of this statement. (718) (1,038) (6,699) (825) (6,557) (3,670) (6,051) (12,818) 8,572 (142,641) (48,455) (21,481) (2,555) (11) (16,857) (261,804) $ Total - $ (718) (1,038) (6,699) (825) (6,557) (3,670) (6,051) (12,818) 8,572 (142,641) (48,455) (21,481) (2,555) (11) (16,857) (261,804) 17,224 10,979 10,619 38,822 - 32,258 5,635 10,678 327 48,898 32,258 5,635 10,678 327 48,898 126,749 (261,804) 48,898 (212,906) 73,136 322,452 12,993 232 - 73,136 322,684 12,993 34,247 33,718 18,316 (13,201) 16,088 7,762 505,511 243,707 4,318,626 4,562,333 (7,590) (7,762) (15,120) 33,778 1,499,990 1,533,768 34,247 33,718 18,316 (20,791) 16,088 490,391 277,485 5,818,616 6,096,101 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, 2022 (in thousands) ASSETS City of Scottsdale, Arizona 38 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 Highway User Tax Auto Lieu Tax Intergovernmental Grants Leases Miscellaneous Due from Other Funds Supplies Inventory Total Assets (continued) General $ $ 179,783 885 21,022 1,214 1,266 3,158 9,983 479 32,679 4,460 8,663 404 263,996 General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ $ 8,181 55,469 1,236 64,886 $ 73,753 109 5,325 823 80,010 $ 276,018 23,661 383 12,134 1,996 85 73 48 1,744 32,752 5,412 1,303 3,963 359,572 Total Governmental Funds $ $ 537,735 79,130 1,377 33,156 1,996 2,535 1,266 3,231 10,031 1,744 479 38,077 5,412 33,982 9,246 8,663 404 768,464 Table of Contents Balance Sheet Governmental Funds June 30, 2022 (in thousands) City of Scottsdale, Arizona 39 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. $ 7,069 8,343 - General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ 6,129 49,340 2,555 4 - Total Nonmajor Governmental Funds $ 20,631 479 8,663 3,145 18,802 Total Governmental Funds $ 30,255 8,826 8,663 9,274 68,142 1,499 4,435 5,133 2,468 28,947 55,469 43 2,602 23,984 834 23 5 65 76,631 23,984 2,376 4,458 5,138 2,533 163,649 12,529 30,626 43,155 703 703 5,348 5,348 39,951 3,474 43,425 58,531 34,100 92,631 72,102 56,172 7,950 120,056 256,280 404 191,490 191,894 8,714 8,714 1,045 71,015 72,060 599 240,401 27,503 (28,987) 239,516 1,003 250,160 98,518 162,503 512,184 263,996 $ 64,886 $ 80,010 $ 359,572 $ 768,464 Table of Contents Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2022 (in thousands) Fund Balances - Total Governmental Funds $ 512,184 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. 4,687,122 Changes in equity in joint venture are not financial resources; therefore, are not reported in the funds. 3,506 Prepayments, service concession arrangements, leases, and subscription-based information technology arrangements are not financial resources; therefore, are not reported in the funds. 86,031 Deferred outflows relating to deferred amounts on refundings, pensions, and other postemployment benefits are not financial resources; therefore, are not reported in the funds. 147,809 Long-term liabilities, including bonds payable, are not due and payable in the current-period; therefore, are not reported in the funds. (937,376) 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. (24,390) 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. Net Position of Governmental Activities 87,447 $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 40 4,562,333 Table of Contents Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2022 (in thousands) General REVENUES City of Scottsdale, Arizona 41 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 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) $ $ 34,585 181,824 9,093 3,825 228 956 General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ 34,911 - Total Nonmajor Governmental Funds - $ 3,106 104,599 31,863 397 4,386 Total Governmental Funds $ 72,602 286,423 31,863 9,490 3,825 228 5,342 34,247 32,138 12,081 1,867 - - 1,580 18,988 608 48 34,247 33,718 12,081 18,988 608 1,915 20,293 4,580 5,348 2,328 - 45 - 60 3,318 988 - 20,398 7,898 6,336 2,328 3,325 262 2,942 116 5,597 4,371 (19,535) - 409 - 142 1,776 116 5,769 1,599 (45) 3,467 262 2,942 1,776 116 116 11,366 6,379 (19,580) 3,835 1,881 7,217 967 354,371 34,911 3,020 972 4 4,450 28,068 367 7,887 992 524 3,841 1,205 66 222,248 28,068 367 11,722 4,012 524 3,841 4,058 7,217 1,037 615,980 $ $ $ $ Table of Contents Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2022 (in thousands) General EXPENDITURES City of Scottsdale, Arizona 42 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 Capital Outlay Total Expenditures $ 872 1,256 7,183 1,099 4,892 4,103 9,365 22,279 26,251 191,885 41,786 16,924 - General Obligation Bond Debt Service General CIP Construction Capital Projects Total Nonmajor Governmental Funds $ $ $ - 823 107 327 231 - 6 93 1,636 884 179 22,126 15,722 18,709 14,566 12 2,259 535 Total Governmental Funds $ 878 1,256 7,276 1,099 6,528 4,987 9,544 45,228 41,973 210,701 56,679 17,167 2,259 535 1,911 513 2,645 332,964 49,340 12,264 61,604 16,176 17,664 19,306 6,334 68,596 170,963 70,557 19,111 87,417 583,195 Excess (Deficiency) of Revenues over (under) Expenditures 21,407 (26,693) (13,214) 51,285 32,785 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Sale of General Capital Assets Total Other Financing Sources (Uses) 18,161 (41,425) 1,403 214 72 20,764 (811) 31,938 31,938 37,431 (4,230) 885 34,086 49,045 (83,375) 114 88 937 (33,191) 136,575 (129,030) 1,517 302 1,009 21,649 32,022 20,596 5,245 20,872 18,094 64,807 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending The notes to the financial statements are an integral part of this statement. $ 171,298 191,894 $ 3,469 8,714 $ 51,188 72,060 $ 221,422 239,516 $ 447,377 512,184 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, 2022 (in thousands) Net Change in Fund Balances - Total Governmental Funds $ 64,807 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 and losses from disposals. This is the amount by which capital outlay exceeded depreciation in the current period. (4,940) Donations of capital assets are not capitalized on the governmental fund statements, but are shown in the statement of activities. 52,764 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. (41,030) Current-year pension and other postemployment benefit contributions are reclassified from expenditures in the governmental funds to deferred outflows of resources in the government-wide statements. 78,124 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. 199 When leases in which the City is the lessee and for subscription-based information technology arrangements (SBITAs) 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/subscription term. 2,698 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. 25 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 24,951 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 amortization expense that exceeds prepayments. (721) 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 effect on net position. This is the amount by which principal retirement exceeded debt proceeds in the current period. 67,729 Additional interest accretion calculated on bonds and notes payable and amortization of bond premium and deferred amounts on refundings. 2,254 When lease assets, SBITAs, and service concession arrangement assets (SCAs) are retired, a loss is recognized on the statement of activities. (247) The City recognizes an expense in the statement of activities for a long-term contract payable. (298) When lease liabilities and SBITA liabilities are retired, a gain is recognized on the statement of activities. 125 The change in net position of the Internal Service Funds is attributed to governmental activities. (2,733) Change in Net Position of Governmental Activities $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 43 243,707 Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2022 (in thousands) Budgeted Amounts City of Scottsdale, Arizona 44 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 $ $ 34,767 144,240 8,149 4,000 235 943 Final $ 34,767 144,240 8,149 4,000 235 943 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 34,585 181,824 9,093 3,825 228 956 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 34,585 181,824 9,093 3,825 228 956 (182) 37,584 944 (175) (7) 13 30,301 33,672 11,968 1,783 30,301 33,672 11,968 1,783 34,247 32,138 12,081 1,867 - 34,247 32,138 12,081 1,867 3,946 (1,534) 113 84 17,223 4,460 4,600 1,917 17,223 4,460 4,600 1,917 20,293 4,580 5,348 2,328 - 20,293 4,580 5,348 2,328 3,070 120 748 411 3,473 290 2,343 104 3,811 1,969 - 3,473 290 2,343 104 3,811 1,969 - 3,325 262 2,942 116 5,597 3,355 - 1,016 (19,535) 3,325 262 2,942 116 5,597 4,371 (19,535) (148) (28) 599 12 1,786 1,386 - 4,412 1,296 7,219 407 323,582 4,412 1,296 7,219 407 323,582 3,835 1,881 7,217 428 372,351 539 (17,980) 3,835 1,881 7,217 967 354,371 (577) 585 (2) 21 48,769 $ $ $ $ $ Table of Contents General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended June 30, 2022 (in thousands) Budgeted Amounts City of Scottsdale, Arizona 45 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 $ 1,005 1,215 7,782 1,230 5,041 4,392 11,459 24,093 22,315 210,040 44,132 13,502 Final $ 995 1,269 7,776 1,241 4,980 4,216 10,145 23,801 26,436 193,118 42,952 17,149 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 869 1,252 7,311 1,099 4,879 4,096 9,581 23,332 26,263 191,264 41,569 16,923 3 4 (128) 13 7 (216) (1,053) (12) 621 217 1 872 1,256 7,183 1,099 4,892 4,103 9,365 22,279 26,251 191,885 41,786 16,924 126 17 465 142 101 120 564 469 173 1,854 1,383 226 154 242 346,602 154 242 334,474 154 243 328,835 1,757 270 2,645 4,129 1,911 513 2,645 332,964 (1) 5,639 Excess (Deficiency) of Revenues over (under) Expenditures (23,020) (10,892) 43,516 (22,109) 21,407 54,408 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Sale of General Capital Assets Total Other Financing Sources (Uses) 11,381 (30,953) 373 132 (19,067) 11,381 (37,194) 373 132 (25,308) 18,161 (41,425) 20,764 (2,500) 1,403 214 72 1,689 18,161 (41,425) 1,403 214 72 20,764 (811) 6,780 (4,231) (373) 20,632 22,808 Net Change in Fund Balances The notes to the financial statements are an integral part of this statement. $ (42,087) $ (36,200) $ 41,016 $ (20,420) $ 20,596 $ 77,216 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, 2022 (in thousands) Explanation of Differences: Items recorded as revenues/other financing sources for GAAP purposes that are not recorded for budget purposes: Lease Interest Revenue Net Decrease in the Fair Value of Investments In-Kind Revenue Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Revenue/Other Financing Source Adjustments $ The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Non-Cash Operating Expenditures Non-Cash Debt Service Expenditures Non-Cash Capital Expenditures Inventory Consumption Total Expenditure Adjustments Net Decrease in Fund Balance - Budget to GAAP 1,016 (19,535) 539 1,403 214 72 (16,291) 1,621 1,689 50 868 (99) 4,129 $ (20,420) Differences in Presentation between Budget and GAAP Basis: The City records principal and interest payments related to the subscription-based information technology arrangements, contracts payable, 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 46 Table of Contents Statement of Fund Net Position Proprietary Funds June 30, 2022 (in thousands) 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 Water and Sewer Utility $ 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 $ 208,029 Airport $ Solid Waste 4,684 $ Total 8,727 $ 221,440 Governmental Activities - Internal Service Funds $ 63,964 19,800 129 711 2,193 - 29 393 205 1,410 10 - 2,836 22 9 - 29 23,029 334 1,410 743 2,202 - 256 1,387 26,189 1,133 1,190 1,311 373 - 1 27,500 1,506 1,191 1,922 4,702 264,076 8,415 11,595 4,702 284,086 67,529 1,820 82,858 48,804 24,119 10 - 113 - 25,939 82,981 48,804 5 - 2,998 45,410 4,605 967 - - 2,998 967 45,410 4,605 - 41,386 87,171 1,432,655 699,328 8,344 1,607 51,435 9,564 84,845 1,151 814 220 297 1,111 7,122 475 212 105 52,061 87,171 1,432,655 699,328 91,967 1,151 9,633 2,039 51,837 16,357 99,215 6,978 339 99 (954,673) 1,367,352 1,553,847 59 (16,793) 80,157 105,253 9 (4,167) 4,867 4,980 167 (975,633) 1,452,376 1,664,080 182 (62,167) 60,904 60,909 1,817,923 113,668 16,575 1,948,166 128,438 12,771 5,068 17,839 330 330 1,641 1,641 12,771 7,039 19,810 1,109 1,109 $ (continued) City of Scottsdale, Arizona 47 $ $ $ Table of Contents Statement of Fund Net Position Proprietary Funds June 30, 2022 (in thousands) Water and Sewer Utility 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 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 $ 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 Total Noncurrent Liabilities 18,161 813 3 1,473 1,133 4,834 21,355 24,350 20 72,142 Airport $ Solid Waste 16 54 131 373 411 900 940 2,825 $ 715 330 531 4 1,580 Total $ 18,892 1,197 3 2,135 1,506 5,245 22,255 25,290 24 76,547 Governmental Activities Internal Service Funds $ 5,975 202 292 26 9,544 7 4 16,050 1,645 2,998 20,011 224,983 48,804 298,441 216 967 1,273 19,845 22,301 567 6,116 6,683 2,428 `` 2,998 967 27,400 244,828 48,804 327,425 252 4,296 16,485 21,033 370,583 25,126 8,263 403,972 37,083 Deferred Inflows of Resources Pension-Related Amounts Leases Total Deferred Inflows of Resources 6,967 12 6,979 443 24,207 24,650 2,129 2,129 9,539 24,219 33,758 1,495 1,495 NET POSITION Net Investment in Capital Assets Restricted for Water and Sewer System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits Unrestricted Total Net Position 1,130,770 45,410 4,605 4,702 272,713 1,458,200 59,372 4,850 64,222 4,863 2,961 7,824 1,195,005 45,410 4,605 4,702 280,524 1,530,246 60,904 30,065 90,969 Total Liabilities $ $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 48 $ $ $ Table of Contents Reconciliation of the Proprietary Funds Statement of Fund Net Position to the Statement of Net Position June 30, 2022 (in thousands) Total Enterprise Fund Net Position $ 1,530,246 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 3,522 $ 1,533,768 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 49 Table of Contents Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2022 (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 111,382 47,008 13,508 2,565 174,463 Airport $ Solid Waste 9,195 14 9,209 $ 27,165 12 27,177 Governmental Activities Internal Service Funds Total $ 111,382 47,008 13,508 27,165 9,195 2,591 210,849 $ 68,367 1,352 69,719 59,401 32,390 5,393 58,385 155,569 2,855 614 3,516 6,985 24,938 1,210 253 26,401 59,401 32,390 24,938 2,855 7,217 62,154 188,955 65,877 10,443 76,320 18,894 2,224 776 21,894 (6,601) NON-OPERATING REVENUES (EXPENSES) Transaction Privilege Tax Property Tax Investment Income Interest Expense Loss on Sale of Capital Assets Net Non-Operating Revenues (Expenses) (7,263) (8,604) (12) (15,879) 232 (107) (741) (1,397) (2,013) (220) (220) 232 (7,590) (9,345) (1,409) (18,112) 290 (391) (101) Income (Loss) Before Contributions and Transfers 3,015 211 556 3,782 (6,702) 28,203 497 (8,509) 10,619 34 - 216 - 38,822 747 (8,509) 2,688 239 (22) 23,206 10,864 772 34,842 (3,797) Operating Income (Loss) Capital Contributions Transfers In Transfers Out Change in Net Position Total Net Position - Beginning Total Net Position - Ending $ 1,434,994 1,458,200 $ 53,358 64,222 The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 50 $ 7,052 7,824 $ 1,495,404 1,530,246 $ 94,766 90,969 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, 2022 (in thousands) Net Change in Total Enterprise Fund Net Position $ 34,842 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 (1,064) $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 51 33,778 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2022 (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 $ 170,034 (64,992) (25,690) 2,540 81,892 Airport $ 8,705 (1,920) (1,552) 14 5,247 Solid Waste $ 26,911 (16,675) (9,404) 12 844 Total $ 205,650 (83,587) (36,646) 2,566 87,983 Governmental Activities Internal Service Funds $ 68,302 (58,178) (6,157) 1,352 5,319 Cash Flows from NonCapital Financing Activities Property Tax Transaction Privilege Tax Transfers In Transfers Out Net Cash Provided by (Used for) NonCapital Financing Activities 497 (8,509) (8,012) 232 34 266 216 216 232 747 (8,509) (7,530) 290 239 (22) 507 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 Provided by (Used for) Capital and Related Financing Activities 5,998 (39,944) (96) (21,717) (10,021) (6,165) 5 (71,940) 10,836 (13,395) (884) (846) (1) 10 (4,280) (7) (15) (22) 5,998 10,836 (53,346) (96) (22,601) (10,867) (6,181) 15 (76,242) (8,057) 586 (7,471) Cash Flows from Investing Activities Income from Investments Net Cash Provided by (Used for) Investing Activities (7,227) (7,227) (89) (89) (199) (199) (7,515) (7,515) - Net Increase (Decrease) in Cash and Cash Equivalents (5,287) 1,144 839 (3,304) (1,645) Cash and Cash Equivalents at Beginning of Year 293,651 6,191 7,888 307,730 65,609 Cash and Cash Equivalents at End of Year $ 288,364 $ (continued) City of Scottsdale, Arizona 52 7,335 $ 8,727 $ 304,426 $ 63,964 Table of Contents Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2022 (in thousands) 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 Water and Sewer Utility $ $ 208,029 26,189 54,146 288,364 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Cash Flows from Operating Activities Operating Income (Loss) $ 18,894 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 Airport $ $ $ 4,684 1,311 1,340 7,335 $ 2,224 58,385 (2,153) 6,360 (1,397) (171) (300) (202) 5 955 315 (25) (7,716) 2 2,020 6,920 62,998 $ Solid Waste Total $ $ 8,727 8,727 $ 776 3,516 (144) (4) (34) (971) 36 (46) 68 (100) (440) 579 123 440 3,023 Governmental Activities Internal Service Funds $ $ 221,440 27,500 55,486 304,426 $ 63,964 63,964 $ 21,894 $ (6,601) 253 (750) (43) (254) (1) (7) 346 (2,191) 600 2,115 68 62,154 (3,047) 6,313 (1,685) (971) (171) (300) (203) 41 902 729 (125) (10,347) 581 2,743 9,475 66,089 10,443 (483) (2) (79) (319) (1,340) 336 14 70 3,048 (1,691) 437 1,486 11,920 81,892 $ 5,247 $ 844 $ 87,983 $ 5,319 Supplemental Disclosure of Non-Cash Investing, Capital, and Financing Activities Contributions of Capital Assets from Developers $ Change in Equity in Joint Venture Contributions of Capital Assets from Other Funds Retirement of Assets 22,301 (8,208) (17) $ 4 (1,407) $ 43 - $ 22,301 (8,161) (1,424) $ 2,688 (856) Total Non-Cash Investing, Capital, and Financing Activities 14,076 $ (1,403) $ 43 $ 12,716 $ 1,832 $ The notes to the financial statements are an integral part of this statement. City of Scottsdale, Arizona 53 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 approved by City Council • • Non-profit corporation created in 1997 • • Governed by a Board of Directors approved by City Council • • Formed in 1992 by 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 54 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 in 1994 by 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 in 1997 by 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 in 1998 by 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 in 2005 by 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 55 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, subscription-based information technology arrangements, and contracts payables 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 56 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 or restricted 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 57 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 permits it to invest in certificates of deposit; repurchase agreements; prime quality commercial paper; money market mutual funds; highly rated corporate bonds, debentures, notes, or other evidence of indebtedness; 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; 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 58 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 purchase 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 59 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 60 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022. 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, 2022, in the governmental and proprietary funds. The current liability represents compensated absences that have matured but were not paid as of June 30, 2022, 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 61 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 62 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 63 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 64 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 E. Implementation of New Accounting Principles 1. Governmental Accounting Standards Board Statement No. 91 The City adopted the provisions of GASB Statement No. 91, Conduit Debt Obligations. The primary objective of this Statement is to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with commitments extended by issuers, arrangements associated with conduit debt obligations, and related note disclosures. This pronouncement did not impact the preparation of these financial statements. 2. Governmental Accounting Standards Board Statement No. 92 The City adopted the provisions of GASB Statement No. 92, Omnibus 2020. This Statement establishes accounting and financial reporting requirements for specific issues related to leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing, and insurancerelated activities of public entity risk pools, fair value of investments, and derivative instruments. This pronouncement did not impact the preparation of these financial statements. 3. Governmental Accounting Standards Board Statement No. 97 The City adopted the provisions of GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Report for Internal Revenue Code Section 457 Deferred Compensation Plans -an amendment of GASB Statements No. 14 and 84, and a supersession of GASB Statement No. 32. The requirements of this Statement will result in more consistent financial reporting of defined contribution plans, defined contribution OPEB plans, and other employee benefit plans, while mitigating the costs associated with reporting these plans. This pronouncement did not impact the preparation of these financial statements. 4. Governmental Accounting Standards Board Statement No. 98 The City adopted the provisions of GASB Statement No. 98, The Annual Comprehensive Financial Report. This Statement modified the existing title of the report from comprehensive annual financial report to annual comprehensive financial report and established the acronym ACFR. 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, $512,184,000, differ from the net position of governmental activities, $4,562,333,000 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 65 Table of Contents Reconciliation of Governmental Funds Balance Sheet to the Government-wide Statement of Net Position (in thousands) Internal Service Funds(2) $ $ $ Total Assets and Deferred Outflows of Resources (continued) $ - 63,964 - $ - $ 601,699 79,130 1,377 33,156 1,996 2,535 1,266 3,231 10,031 1,744 479 38,077 5,412 33,982 9,246 8,663 404 768,464 4,687,122 3,506 2,390 4,352 25,364 53,925 4,776,659 256 1,387 1,922 60,896 5 8 128,438 (8,663) (8,663) 1,377 33,156 1,996 2,535 1,266 3,231 10,031 1,744 479 38,077 5,412 33,982 9,502 1,791 1,922 4,748,018 3,511 2,390 4,360 25,364 53,925 5,664,898 - 19,233 128,238 338 147,809 1,109 1,109 - 19,233 129,347 338 148,918 768,464 $ 4,924,468 $ 129,547 $ (8,663) $ 5,813,816 Notes to Financial Statements Deferred Outflows of Resources Deferred Amounts on Refundings Pension-Related Amounts OPEB-Related Amounts Total Deferred Outflows of Resources 537,735 79,130 Reclassifications and Eliminations Statement of Net Position Total (3) For the Fiscal Year Ended June 30, 2022 City of Scottsdale, Arizona 66 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) $ (93) 93 15,331 17,266 1,102 - $ 5,975 202 3,522 292 252 7 - Reclassifications and Eliminations $ Statement of Net Position Total (3) (8,663) - $ 36,230 8,935 3,522 93 15,623 17,518 1,109 9,274 68,142 23,984 2,376 4,458 5,138 2,533 163,649 903,677 937,376 26 4 30,325 40,605 (8,663) 23,984 2,402 4,458 5,138 2,537 934,002 1,132,967 58,531 34,100 92,631 (58,531) 80,720 2,201 24,390 1,495 1,495 - 34,100 82,215 2,201 118,516 256,280 961,766 42,100 (8,663) 1,251,483 512,184 3,962,702 87,447 - 4,562,333 768,464 $ 4,924,468 $ 129,547 $ (8,663) $ 5,813,816 Notes to Financial Statements Deferred Inflows of Resources Unavailable Revenue Leases Pension-Related Amounts OPEB-Related Amounts Total Deferred Inflows of Resources 30,255 8,826 8,663 9,274 68,142 Internal Service Funds(2) For the Fiscal Year Ended June 30, 2022 City of Scottsdale, Arizona 67 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 $ 6,437,551 (1,750,429) $ 4,687,122 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. $ 26,085 246 (967) 25,364 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 long-term 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. 68 City of Scottsdale, Arizona Prepayments at 7/1/21 Prepayments for fiscal year 2022 Amortization of prepayments SCAs at 7/1/21 Land improvements net additions for SCAs Amortization of SCAs Leases at 7/1/21 Leases for fiscal year 2022 Loss on retirement Amortization of leases SBITAs at 7/1/21 SBITAs for fiscal year 2022 Loss on retirement Amortization of SBITAs $ $ $ $ $ $ $ 54,342 4,534 (4,951) 53,925 1,652 1,516 (72) (706) 2,390 4,913 1,182 (175) (1,568) 4,352 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, changes in the proportion and differences between City contributions and proportionate share of contributions, 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) $ $ 19,233 128,238 338 147,809 Notes to Financial Statements 3,506 For the Fiscal Year Ended June 30, 2022 $ 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, 2022, 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 $ $ (2,568) (587,649) (1,760) (3,410) (1,314) (29,297) (32,597) (831) (277,950) (937,376) $ $ 3,713 1,424 11,326 871 39,666 1,531 58,531 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. $ (80,720) (2,201) (82,921) $ 87,447 Reduction of amount due from other governmental fund $ (8,663) Reduction of amount due to other governmental fund $ 8,663 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 interfund activity. Notes to Financial Statements 69 City of Scottsdale, Arizona 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, 2022 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. Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, $64,807,000 differs from the change in net position for the governmental activities, $243,707,000 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 70 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 $ $ $ 72,602 286,423 31,863 9,490 3,825 228 5,342 244 3,805 361 (322) 57 Capital Related Items(5) $ Internal Service Funds(6) - $ Reclassifications and Eliminations(7) 290 - $ Long-Term Debt Transactions(8) - $ Statement of Activities - $ 73,136 290,228 32,224 9,168 3,825 228 5,399 34,247 33,718 12,081 18,988 608 1,915 (27) - - - - 34,247 33,718 12,081 18,988 608 1,888 20,398 7,898 6,336 2,328 13 5 19 99 - - (51) - - 20,360 7,903 6,355 2,427 3,467 262 2,942 1,776 116 116 11,366 6,379 (19,580) 182 (9) 9 1 (208) - - - - - 3,649 253 2,951 1,776 117 116 11,158 6,379 (19,580) 28,068 367 11,722 4,012 524 3,841 4,058 7,217 1,037 615,980 2,582 (935) 6,270 13,002 (145) (13) 24,990 - 290 (7) (58) - 30,650 (568) 17,992 17,014 524 3,841 3,913 7,217 1,017 641,202 $ $ $ $ $ $ Notes to Financial Statements (continued) Long-Term Revenue/ Expenses(4) For the Fiscal Year Ended June 30, 2022 City of Scottsdale, Arizona 71 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) $ $ $ 878 1,256 7,276 1,099 6,528 4,987 9,544 45,228 41,973 210,701 56,679 17,167 2,259 535 70,557 19,111 87,417 583,195 $ (18) (59) (27) (10) (137) 2 (152) (363) 725 (42,784) 4,438 (293) 295 (342) (38,725) Capital Related Items(5) $ $ 15 48 36 17 64,452 3,465 5,498 10,884 7,600 (87,075) 4,940 Internal Service Funds(6) $ $ 34 14 126 14 120 59 193 511 287 3,215 730 233 1 5,537 Reclassifications and Eliminations(7) $ $ Long-Term Debt Transactions(8) (1) (1) (1) (9) (205) (54) (1,164) (103) (2) (1,540) $ $ Statement of Activities (70,557) (2,254) (72,811) $ $ 894 1,211 7,389 1,103 6,558 5,083 9,593 109,623 46,396 175,466 72,628 24,705 2,555 535 16,857 480,596 $ 7,545 1,517 302 1,009 21,649 32,022 $ (14) (14) $ 52,764 52,764 $ 217 2,688 (391) 2,514 $ (1,482) (1,482) $ (1,517) (302) (1,009) 72 53 (2,703) $ 7,762 53,970 21,244 72 53 83,101 $ 64,807 $ 63,701 $ 47,824 $ (2,733) $ - $ 70,108 $ 243,707 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 Financing of Contracts Payable Sale of General Capital Assets Gain on Retirement of Lease Liability Gain on Retirement of Subscription-Based Information Technology Arrangements Liability Total Long-Term Revenue/ Expenses(4) For the Fiscal Year Ended June 30, 2022 72 City of Scottsdale, Arizona 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 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 $ $ 4,145 109 183 7,892 12,622 24,951 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 $ $ 246 (967) (721) $ $ (3,194) (166) (31,919) 1,474 (4,951) (706) (1,568) (41,030) 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 $ $ 78,040 84 78,124 $ 199 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) Notes to Financial Statements 73 City of Scottsdale, Arizona 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 For the Fiscal Year Ended June 30, 2022 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. 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/subscription term. Capitalized leases Capitalized SBITAs $ $ 1,516 1,182 2,698 When lease assets and subscription-based information technology arrangement assets (SBITAs) are retired, a loss is recognized on the statement of activities. City of Scottsdale, Arizona 74 $ (72) (175) (247) $ (298) $ 25 $ $ 87,075 (82,657) (9,358) (4,940) $ 52,764 At the inception of a contract payable, the City recognizes an expense in the statement of activities. 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 $ For the Fiscal Year Ended June 30, 2022 Lease retirements SBITA retirements 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 $ $ (3,797) 1,064 (2,733) $ $ (1,540) 1,540 $ 70,557 $ (3,227) 5,481 2,254 (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. Transferred to the paying agent Principal payments made 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 Amortization of bond premiums and discounts $ 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 Contracts payable $ $ (1,517) (302) (1,009) (2,828) When lease liabilities and subscription-based information technology arrangement (SBITA) liabilities are retired, a gain is recognized on the statement of activities. Retirement of lease liabilities Retirement of SBITA liabilities $ $ 72 53 125 Notes to Financial Statements 75 City of Scottsdale, Arizona (8) Repayment of principal and defeasance of bond principal via refunding bonds are 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. For the Fiscal Year Ended June 30, 2022 Reduction in revenues/capital contributions - Governmental Funds Reduction in expenditures/expenses - Governmental Funds Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budget and Budgetary Accounting The City prepared an annual budget that covered fiscal year 2022. The fiscal year 2022 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, inventory consumption adjustments, inkind revenue and expenditure recognition activity, interest associated with leases, amortized lease revenue, accrued compensated absences, and GAAP entries associated with the financing of leases, subscription-based information technology arrangements, and long-term contracts payable. 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 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 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 2022, there were no supplemental budgetary appropriations to the original budget. City of Scottsdale, Arizona 76 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 Preserve Privilege Tax Special Revenue Fund exceeded its expenditure appropriation by $4,000. The additional expenditures incurred were funded by available fund balances within the respective fund. C. Deficit Fund Equity The Community Development Block Grant Special Revenue Fund, HOME Special Revenue Fund, Grants Special Revenue Fund, and the External Sources Capital Project Fund had deficit ending fund balances of $158,000, $376,000, $2,931,000, and $7,284,000, respectively. These deficits were caused by pending grant reimbursements and 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 or available. The Preserve Privilege Tax Capital Projects Fund and the General Obligation Bonds Capital Projects Fund had deficit ending fund balances of $294,000 and $1,813,000, respectively, primarily due to timing differences of cash transfers for accruals and pending an upcoming bond issuance. D. Fund Balance Classifications The following table details the fund balance categories and classifications for Governmental Funds: City of Scottsdale, Arizona 77 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 $ 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 Franchise Capital Recovery Fees to Offset Relocation Expenses 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 Department 30-Day Tow Program Fees for Police Officer Safety Equipment Contributions for the School Resource Officers Crisis Canine Program Other Forfeitures for Police Department Contributions for the Scottsdale Cares Program Contributions for Human Services Facility/Recreation Fees for Senior Center Special Programs Lease Revenue Restricted for Princess Wall & Sign Lease Lease Revenue Restricted for McDowell Mountain Arcis LLC Lease Contributions for Parks and Recreation Contributions for the Libraries Disbursements from Endowments for the Libraires Disbursements from AZ Supreme Court for Smart and Safe Expungements 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 Transient Occupancy Tax for Destination Marketing 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 $ 404 404 - - $ $ (continued) City of Scottsdale, Arizona 78 - 8,714 8,714 $ $ - 1,045 1,045 $ 599 599 36,967 180 720 79,827 438 46 11 2,298 6 24 36 54 141 423 11 96 110 225 67 2 196 6 11 16 131 59 69 2 1 461 1,096 21 5,646 4,829 2,372 12,310 88,157 176 3,133 27 240,401 $ 404 599 1,003 8,714 36,967 180 720 79,827 438 46 11 2,298 6 24 36 54 141 423 11 96 110 225 67 2 196 6 11 16 131 59 69 2 1 461 1,096 21 5,646 4,829 2,372 1,045 12,310 88,157 176 3,133 27 250,160 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 General Obligation Bond Debt Service General (in thousands) FUND BALANCES 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 Contribution for Habitat Improvements in the Preserve Allocation of Youth Sports Fee for Maintenance/Improvements of Athletic Fields Allocation of Aquatic Fee for Maintenance/Improvements of Aquatic Facilities Attendee Fees for Westworld User Area Improvements Disbursements from the Scottsdale AZ CARES Fund for COVID-19 Response Transient Occupancy Tax for Tourism Development Excise Tax for Debt Reserve Total Committed $ Unassigned Total Fund Balances $ 191,490 191,894 $ 8,714 $ General CIP Construction Capital Projects Total Nonmajor Governmental Funds Total Governmental Funds $ $ $ $ 51,080 429 451 4,379 1,004 21 7,796 711 2,789 1,692 244 419 71,015 72,060 $ 6,224 68 40 2,730 161 387 270 14 40 16 981 1,119 483 253 51 1,008 2,785 8,190 2,683 27,503 (28,987) 239,516 $ 51,080 429 451 4,379 1,004 21 7,796 711 2,789 1,692 244 419 6,224 68 40 2,730 161 387 270 14 40 16 981 1,119 483 253 51 1,008 2,785 8,190 2,683 98,518 162,503 512,184 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, 2022: Net Position Restrictions (in thousands) Water and Sewer Restricted for System Replacement Restricted for Debt Service Restricted for Joint Venture Construction Deposits $ $ 45,410 4,605 4,702 54,717 City of Scottsdale, Arizona 79 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, the carrying amount of the City’s deposits was $170,051,355 and the bank balance was $175,752,828. The $5,701,473 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, 2022, $69,417,845 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 80 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 and the weighted average maturity of the overall investment portfolio to three 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 Commercial Paper Negotiable Certificates of Deposit Fair Value $ 384,636 180,666 19,286 3,015 110,944 14,036 51,183 36,847 Less than 1 $ 100,925 65,260 6,150 3,015 25,459 51,183 36,847 Total Investments $ $ 800,613 288,839 $ $ 1-2 67,332 60,848 4,838 28,401 3,073 164,492 $ $ 2-3 147,653 27,414 8,298 33,357 1,503 218,225 $ 3+ 68,726 27,144 23,727 9,460 - $ 129,057 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 investments in: • 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 with a maximum maturity of five years • Bonds, notes, or other evidence of indebtedness of this state or any of its counties, incorporated cities or towns, school districts or special taxing districts, which carry a minimum “AA-” or “Aa3” or equivalent rating by at least one NRSRO at the time of purchase with a maximum maturity of five years • Fully insured or collateralized certificates of deposit and other evidence of deposit at banks and savings institutions placed in accordance with the procedures prescribed in Arizona Revised Statutes § 35-323.01 with a maximum maturity of 18 months from the time of purchase • Negotiable or brokered certificates of deposit within the top two rating categories by at least two NRSROs, at the time of purchase, and a maximum maturity of three years • Commercial paper within the top two rating categories of a NRSRO at the time of purchase, issued by corporations organized and doing business in the United States, and a maximum maturity of nine months City of Scottsdale, Arizona 81 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 • Bonds, debentures, notes, or other evidence of indebtedness with a minimum “A” or better rating, at the time of purchase, from at least two NRSROs, and a maximum maturity of five years • Money market funds whose underlying investments are securities 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, 2022, meet the aforementioned criteria. Presented below are the ratings, as determined by S&P unless otherwise noted, as of June 30, 2022, for each investment type (in thousands): Investment Type Total U.S. Government Securities $ 384,636 - $ 384,636 U.S. Government Agencies 180,666 - - - - - - - 180,666 - - - - U.S. Government Instrumentalities 19,286 - - - - - - - - - - 19,286 - Taxable State Bonds 3,015 - - - - - - - 3,015 - - - - Corporate Notes 110,944 - - 25,993 11,752 36,366 6,112 21,620 1,312 - - 7,789 - Asset-Backed Securities 14,036 - - - - - - - - 2,844 - 11,192 - Commercial Paper 51,183 34,231 16,952 - - - - - - - - - - Negotiable Certificates of Deposit 36,847 33,320 3,527 - - - - - - - - - - Money Market Mutual Funds 13,948 - - - - - - - - - 13,948 - - $ 814,561 $67,551 $20,479 $25,993 $11,752 $36,366 $ 6,112 $21,620 $ 184,993 $ 2,844 $13,948 $38,267 $ 384,636 Total Investments A-1 $ A-1+ - $ A- $ A - $ A+ - $ AA- $ AA - $ AA+ - $ Aaa - $ AAAm Exempt from Disclosure - $ AAA - $ Note: A-1 and A-1+ are S&P Global Ratings short-term credit ratings. AAAm is a S&P Global Ratings principal stability fund (i.e. money market fund) credit rating. Aaa is a Moody's rating. Concentration of Credit Risk The City’s investment guidelines place the following limits on the amount that the City may invest in various security types: Security Type U.S. Treasury Obligations Federal Agency Obligations With One Agency Instrumentalities (Supranational Debt) With One Issuer Certificates of Deposit With One Financial Institution Negotiable Certificates of Deposit With One Issuer Commercial Paper With One Issuer Corporate Indebtedness With One Issuer Repurchase Agreements With One Counterparty Money Market Funds Arizona Investment Pool Municipal Obligations of State of AZ or Political Subdivisions With One Issuer City of Scottsdale, Arizona 82 Maximum Percent of Portfolio 80% 80% 40% 15% 5% 20% 5% 20% 5% 35% 5% 35% 5% 75% 20% 35% 35% 25% 5% Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 The following is a listing by issuer of the City’s investments as of June 30, 2022: (dollars in thousands) Issuer United States Treasury Federal National Mortgage Association (FNMA) Federal Farm Credit Bank (FFCB) Federal Home Loan Bank (FHLB) Federal Home Loan Mortgage Corporation (FHLMC) Inter-American Development Bank International Bank of Reconstruction and Development Arizona State Transportation Board 3M Company Adobe Inc. Amazon.com Inc. American Honda Finance Apple Inc. Bank of America Co. Bristol-Myers Squibb Co. Caterpillar Inc Deere & Company Exxon Mobil Corp. Home Depot Inc JP Morgan Chase & Co. Merck & Co Inc Microsoft Corp. Morgan Stanley Novartis AG Pepsico Inc. Pfizer Inc. State Street Corporation Target Corp Texas Instruments Inc Toyota Motor Corp. Wal-Mart Stores Inc. Carmax Auto Owner Trust Discover Financial Services Honda Auto Receivables Hyundai Auto Receivables Toyota Motor Corp. Collateralize Commercial Paper V Co, LLC LMA Americas LLC Mitsubishi UFJ Financial Group Inc Old Line Funding LLC Barclays PLC Credit Suisse Group RK DNB ASA Skandinaviska Enskilda Banken AB Sumitomo Mitsui Financial Group Inc. Investment Type U.S. Govt. Securities U.S. Govt. Agencies U.S. Govt. Agencies U.S. Govt. Agencies U.S. Govt. Agencies U.S. Govt Instrumentalities U.S. Govt Instrumentalities Taxable State Bonds Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Corporate Notes Asset-Backed Securities Asset-Backed Securities Asset-Backed Securities Asset-Backed Securities Asset-Backed Securities Commercial Paper Commercial Paper Commercial Paper Commercial Paper Negotiable Certificates of Deposit Negotiable Certificates of Deposit Negotiable Certificates of Deposit Negotiable Certificates of Deposit Negotiable Certificates of Deposit Fair Value $ 384,636 80,824 3,150 6,342 90,350 8,297 10,989 3,015 9,129 3,740 13,095 3,404 1,312 9,941 4,324 4,064 5,262 4,468 554 8,942 4,969 7,789 3,706 1,645 2,224 1,932 1,001 872 4,516 5,530 8,525 2,817 1,849 2,844 2,416 4,110 7,326 19,568 7,337 16,952 8,887 13,029 3,526 7,181 4,224 Total Investments $ City of Scottsdale, Arizona 83 800,613 Percent of Holdings 48.04% 10.10% 0.39% 0.79% 11.29% 1.04% 1.37% 0.38% 1.13% 0.47% 1.64% 0.43% 0.16% 1.24% 0.54% 0.51% 0.66% 0.56% 0.07% 1.12% 0.62% 0.97% 0.46% 0.21% 0.28% 0.24% 0.13% 0.11% 0.56% 0.69% 1.06% 0.35% 0.23% 0.36% 0.30% 0.51% 0.92% 2.43% 0.92% 2.12% 1.11% 1.62% 0.44% 0.90% 0.53% 100.00% Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Investments Total City cash and investments at fair value are as follows (in thousands): Cash on Hand Carrying Amount of City Deposits Investments Endowments $ 17 170,051 814,561 626 Total Cash and Investments $ 985,255 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, 2022: Investments Measured at Fair Value (in thousands) Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) U.S. Government Securities $ - U.S. Government Agencies Significant Other Observable Inputs (Level 2) $ 384,636 Significant Unobservable Inputs (Level 3) $ - - 180,666 - U.S. Government Instrumentalities - 19,286 - Taxable State Bonds - 3,015 - Corporate Notes - 110,944 - Asset-Backed Securities - 14,036 - Commercial Paper - 51,183 - Negotiable Certificates of Deposit - 36,847 - $ - City of Scottsdale, Arizona 84 $ 800,613 $ - Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 The following pricing methodologies are utilized to value the City’s investments: U.S. Government Securities Evaluators gather information from market sources and integrate 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 adjust 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. Commercial Paper Matrix pricing based upon yields and effective maturity. 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 $ 823,139 106,630 55,486 $ 985,255 Investment income is comprised of the following for the fiscal year ended June 30, 2022 (in thousands): Net Interest Net Decrease in the Fair Value of Investments $ 9,223 (30,014) Total Net Investment Income $ (20,791) The net decrease in the fair value of investments for the fiscal year was $30,013,644. This amount takes into account all changes in fair value (realized and unrealized) that occurred during the year. City of Scottsdale, Arizona 85 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, the amount of donor-restricted endowment funds available for authorization and expenditure is $27,300. C. Receivables Receivables as of June 30, 2022, 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 1,214 63,168 64,382 General Obligation Bond Debt Service General CIP Construction Capital Projects $ $ 1,236 1,236 Nonmajor and Other Funds - $ 85 48 133 Total Governmental and Internal Service Funds $ 2,535 63,216 65,751 21,022 1,266 3,158 479 25,925 - - 12,134 1,996 73 1,744 15,947 33,156 1,996 1,266 3,231 479 1,744 41,872 - - 5,325 38,164 43,489 Interest and Other Interest Leases Miscellaneous Subtotal Interest and Other 885 32,679 4,521 38,085 - 109 824 933 383 1,303 4,219 5,905 1,377 33,982 9,564 44,923 Gross Receivables Less: Allowances for Uncollectibles 128,392 (53,246) 1,236 - 6,258 (1) 60,149 - 196,035 (53,247) Intergovernmental/Grants Net Total Receivables $ 75,146 $ 1,236 $ 6,257 $ 60,149 $ 142,788 The City has a development agreement relating to biomedical research activities with the Translational Genomics Research Institute (TGen) to repay $800,000 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, 2022, is $50,755. City of Scottsdale, Arizona 86 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 The City has an improvement district for underground utilities with expected reimbursements from impacted property owners to pay $403,959 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, 2022, the loan balances totaled $2,187,230, 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 and drainage improvements of $25,647,644 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 19,919 Intergovernmental 1,935 Interest 711 Lease 14 Miscellaneous 2,193 Gross Receivables Less: Allowances for Uncollectibles $ 24,653 Solid Waste 29 393 205 10 25,529 - 24,772 (119) $ Net Total Receivables Airport $ 26,166 $ 26,166 2,857 22 9 Total Enterprise Fund $ 2,888 (21) $ 2,867 29 23,169 2,140 743 25,543 2,202 53,826 (140) $ 53,686 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 $1,805,853 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 Transient Occupancy Tax Court Privilege Occupancy Tax Intergovernmental Other Unavailable $ 1,424 871 3,713 11,326 39,666 1,531 Unearned $ 23,984 2,376 Total $ $ 26,360 58,531 City of Scottsdale, Arizona 87 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 D. Capital Assets Capital asset activity for the fiscal year ended June 30, 2022, was as follows (in thousands): Governmental Activities Capital Assets, not being depreciated Land Construction in Progress Total Capital Assets, not being depreciated Beginning Balance $ 3,427,483 54,130 3,481,613 Increases $ Decreases 37,278 84,797 122,075 $ Ending Balance (3,608) (66,586) (70,194) $ 3,461,153 72,341 3,533,494 Capital Assets, being depreciated Buildings and Land Improvements Streets and Storm Drains Motor Vehicles Machinery and Equipment Total Capital Assets, being depreciated 814,375 1,971,434 87,311 87,405 2,960,525 43,075 30,656 11,468 8,321 93,520 (7,673) (178) (4,016) (15,230) (27,097) 849,777 2,001,912 94,763 80,496 3,026,948 Less Accumulated depreciation for Buildings and Land Improvements Streets and Storm Drains Motor Vehicles Machinery and Equipment Total Accumulated depreciation 407,895 1,236,589 44,652 50,768 1,739,904 22,699 54,933 8,329 7,049 93,010 (6,466) (3,165) (10,861) (20,492) 424,128 1,291,522 49,816 46,956 1,812,422 1,220,621 510 (6,605) 1,214,526 Lease Assets Buildings and Land Improvements Motor Vehicles Machinery and Equipment Total Lease Assets, being amortized 1,570 1,075 271 2,916 1,163 353 1,516 (234) (234) 2,733 1,194 271 4,198 Less Accumulated amortization for Buildings and Land Improvements Motor Vehicles Machinery and Equipment Total Accumulated amortization 552 582 130 1,264 266 356 84 706 (162) (162) 818 776 214 1,808 1,652 810 (72) 2,390 6,141 1,195 (207) 7,129 Subscription-Based Information Technology Arrangements 1,143 1,658 (30) 2,771 Total Subscription-Based Information Technology Arrangement Assets being amortized, net 4,998 (463) (177) 4,358 Total Capital Assets, being depreciated, net Total Lease Assets being amortized, net Subscription-Based Information Technology Arrangement Assets Subscription-Based Information Technology Arrangements Less Accumulated amortization for Governmental Activities Capital Assets, net $ 4,708,884 $ City of Scottsdale, Arizona 88 122,932 $ (77,048) $ 4,754,768 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 (in thousands): Business-type Activities Capital Assets, not being depreciated Land Water Rights Construction in Progress Beginning Balance $ Total Capital Assets, not being depreciated 52,028 87,171 57,730 Increases $ Decreases 33 65,455 $ Ending Balance (71,348) $ 52,061 87,171 51,837 196,929 65,488 (71,348) 191,069 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 1,382,743 682,229 49,912 17,099 - 1,432,655 699,328 79,815 8,651 1,151 1,925 2,156,514 15,796 982 171 83,960 (3,644) (57) (3,701) 91,967 9,633 1,151 2,039 2,236,773 Less Accumulated depreciation for Water System Sewer System Buildings and Land Improvements Machinery and Equipment Motor Vehicles Furniture, Fixtures, and Office Equipment 601,722 289,505 17,859 4,953 789 852 38,815 18,692 3,553 702 53 266 (2,236) (41) 640,537 308,197 19,176 5,655 842 1,077 915,680 62,081 (2,277) 975,484 1,240,834 21,879 (1,424) 1,261,289 Subscription-Based Information Technology Arrangement Assets Subscription-Based Information Technology Arrangements 167 - - 167 Less Accumulated amortization for Subscription-Based Information Technology Arrangements 76 73 - 149 91 (73) - 18 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 $ 1,437,854 $ City of Scottsdale, Arizona 89 87,294 $ (72,772) $ 1,452,376 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Depreciation/Amortization expense was charged to functions/programs of the primary government as follows (in thousands): Governmental Activities 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 $ 15 48 36 60,655 3,185 4,796 17 10,652 3,253 10,353 $ Total Depreciation Expense - Governmental Activities 93,010 Business-type Activities Water and Sewer System Airport Solid Waste Total Depreciation Expense - Business-type Activities $ 58,345 3,486 250 $ 62,081 Governmental Activities City Attorney City Manager Public Works Public Safety City Treasurer Community Services Administrative Services Scottsdale AZ CARES Intangible Assets Held by the Government's Internal Service Funds are Charged to the Various Functions Based on their Usage of the Assets $ 41 14 20 373 217 44 1,287 278 90 $ Total Amortization Expense - Governmental Activities 2,364 Business-type Activities Water and Sewer System Airport Solid Waste Total Amortization Expense - Business-type Activities $ 40 30 3 $ 73 City of Scottsdale, Arizona 90 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Construction Commitments The City has active construction projects as of June 30, 2022. 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 Library/Library Improvements 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 $ 297 945 2,692 290 4,835 11,897 12,115 1,137 6,089 17,799 3,352 591 848 15,565 47,517 $ 125,969 Remaining Commitment $ 36 1,287 1,824 8 2,382 26,213 19,365 2,985 702 27,601 2,176 1,299 1,111 5,192 32,644 $ 124,825 $ $ $ City of Scottsdale, Arizona 91 11,158 50,896 87 62,141 63,329 297 202 63,828 125,969 $ 13,325 68,519 4,715 86,559 38,074 43 149 38,266 124,825 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, is as follows (in thousands): Receivable Fund General Fund Amount $ 8,663 Payable Fund Nonmajor Governmental Funds Amount $ 8,663 The Municipal Property Corporation Bonds Capital Projects Fund, the External Sources Capital Project Fund, and HOME Special Revenue Fund had deficit cash balances of $1,263,988, $7,072,199, and $327,048, 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 Airport Solid Waste Total Enterprise Funds Internal Service Funds Fleet Self-Insurance Total Internal Service Funds $ Total Transfers City of Scottsdale, Arizona 92 Transfers In 41,425 4,230 83,375 129,030 $ 18,161 31,938 37,431 49,045 136,575 8,509 8,509 497 34 216 747 22 22 105 134 239 137,561 $ 137,561 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 F. Leases City as Lessee The City, as a lessee, has entered into lease agreements involving a baseball facility, printing and imaging equipment, a street sweeper and accompanying transport trailer, 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 $4,197,884, less accumulated amortization of $1,807,777. The future lease payments under lease agreements are as follows (in thousands): 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053 Total Leases Principal Interest $ 451 $ 94 $ 398 78 301 63 286 52 86 43 83 203 144 181 180 150 246 109 321 54 72 3 Total 545 476 364 338 129 286 325 330 355 375 75 $ 3,598 2,568 $ 1,030 $ City as Lessor The City, as a lessor, has entered into lease agreements involving land, baseball facilities, 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 $12,331,196. This total includes $7,815,969 of variable and other payments not previously included in the measurement of the lease receivable. City of Scottsdale, Arizona 93 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 G. Subscription-Based Information Technology Arrangements The City has entered into subscription-based information technology arrangements (SBITAs) involving: A geospatial technology system • Various desktop and server software subscriptions • Event registration and management software • Electronic workflows software • Cloud backup services software • Document management software • Computer-aided dispatch software • Payroll and human resources services software • Performance measurement/strategic planning/benchmarking software • E-mail/communication management software • Web-based job board software • Public safety allocation and deployment software • Electronic signature software • Public safety detection software • Safety data sheets software • Learning management software • Debt management software • eDiscovery software • Procurement management software • Local business community information and resource service software • Web content management system software • The total of the City’s subscription assets are recorded at a cost of $7,296,131, less accumulated amortization of $2,920,803. The future subscription payments under SBITA agreements are as follows (in thousands): 2023 2024 2025 2026 Subscriptions Principal Interest $ 1,133 $ 135 $ 749 92 766 62 793 32 Total 1,268 841 828 825 Total $ 3,441 3,762 $ 321 City of Scottsdale, Arizona 94 $ Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 In addition to the amounts presented above, the City also had outflows of resources during the fiscal year totaling $36,000 that were not included in the measurement of the subscription liability. This total consists of a $25,000 variable amount that is based on the number of calls related to the public safety allocation and deployment software and $11,000 for the annual payments 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 electronic document management software, public safety records management system/computer aided dispatch software, and web content management system software. These SBITAs are currently being implemented, and the City has paid a total of $1,642,794 related to these agreements. These outflows were recorded as prepayments as of June 30, 2022. 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, 2022, is $800,000. 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 $59,296,000 through the fiscal year ended June 30, 2022. These improvements are classified as an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $41,658,000 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, 2022, is $960,000. 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, 2022. These improvements are classified as an intangible asset. The City has recognized an intangible asset (net of accumulated amortization) in the amount of $12,268,000 at fiscal year end pursuant to the service concession arrangement. City of Scottsdale, Arizona 95 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 I. Bonds, Loans, and Other Payables The following are brief descriptions of bonds outstanding as of June 30, 2022. The totals shown are the principal amount outstanding, net of the amount due July 1, 2022. 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, 2022, 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, 2022, 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 Enterprise Fund. The City has pledged to repay $585,974,252 in MPC Excise Tax Revenue Bonds issued from 2006 through June 30, 2022, 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 2022 for MPC bonds is 5.83 (excluding the transient occupancy tax). The total principal and interest remaining to be paid on all MPC bonds is $521,264,534. Principal and interest paid for the current year and total excise tax collections (excluding transient occupancy taxes) were $48,724,262 and $284,031,792, respectively. City of Scottsdale, Arizona 96 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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. 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. City of Scottsdale, Arizona 97 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, the funds restricted for this purpose were $45,409,857. 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 2022 is 16.53. The total principal and interest remaining to be paid on the bonds is $4,604,688. Principal and interest for the current year and total customer net revenues were $4,592,300 and $75,918,000, 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 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. City of Scottsdale, Arizona 98 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 99 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Bonds payable as of June 30, 2022, 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. $ 8,485 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. 5,000 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. 2,760 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. 12,230 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. 88,200 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. 11,275 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. 37,605 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. 11,200 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. 157,255 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. 28,855 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. 18,610 Total General Obligation Bonds Outstanding $ Some of the above General Obligation Bonds are paid from the 0.2 percent and 0.15 percent Preservation Sales Taxes. City of Scottsdale, Arizona 100 398,885 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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. $ 41,805 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. 1,995 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. 70 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. 1,715 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. 11,300 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. 7,955 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. 10,075 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. 8,435 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. 29,540 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. 67,815 Total Municipal Property Corporation Bonds Outstanding City of Scottsdale, Arizona 101 $ 180,705 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Community Facilities Districts General Obligation Bonds - Direct Placements Bonds Outstanding (in thousands) 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. $ 5,825 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. 210 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. 2,024 Total Community Facilities Districts General Obligation Bonds - Direct Placements Total Bonds Payable Recorded in Governmental Activities City of Scottsdale, Arizona 102 $ 8,059 $ 587,649 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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. $ 4,375 $ 52,850 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. 12,050 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. 19,355 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. 32,390 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. 19,530 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. 61,740 Total Municipal Property Corporation Bonds Outstanding Total Bonds Payable Recorded in Business-type Activities Total Long-Term Bonds Payable City of Scottsdale, Arizona 103 $ 247,455 $ 251,830 $ 839,479 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022: 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 $ 1,742,139,630 Less General Obligation 20% Bonds Outstanding (395,172,000) Excess Premium (11,549,528) General Obligation Bonds Issued for All Other Purposes 6% Constitutional Limit $ 522,641,889 Less General Obligation 6% Bonds Outstanding (3,713,000) Excess Premium (409,511) Available 20% Limitation Borrowing Capacity Available 6% Limitation Borrowing Capacity $ 1,335,418,102 $ 518,519,378 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, 2022. 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 104 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 The following table reflects refunded debt outstanding as of June 30, 2022, net of any amounts to be paid or retired by the trustee on July 1, 2022 (in thousands): Refunded Debt Outstanding 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 $ 63,000 12,765 875 23,070 6,690 3,290 1,725 36,435 38,350 $ 186,200 Contracts Payable The City has entered into contracts related to the financing of an underground utility facilities improvement district, investigative equipment, protective equipment, and field maintenance equipment. The following is a summary of debt service to maturity for the long-term contracts as of June 30, 2022: Classified in Governmental Activities on the Government-wide Financial Statements: Contracts Payable (in thousands) Contract payable to PNC Bank (formerly BBVA USA) for the financing of an underground utility facilities improvement district; due in annual installments through 2033; interest at 5.72 percent. $ 402 Contract payable to Jacobs Technology, Inc. for the financing of investigative equipment; due in annual installments through 2024; interest at 7.50 percent. 550 Contract payable to Axon Enterprise, Inc. for the financing of protective equipment; due in annual installments through 2025; interest at 4.00 percent. 219 Contract payable to John Deere Financial for the financing of field maintenance equipment; due in annual installments through 2027; interest at 2.99 percent. 143 $ City of Scottsdale, Arizona 105 1,314 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022 (in thousands): Beginning Balance 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 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 Current Maturities, Retirements, and Net Decreases Additional Obligations and Net Increases $ 1,307 1,517 315 44,635 15,503 63,277 $ $ $ Amounts Due Within One Year Ending Balance (49,340) (14,685) (1,350) (2,767) (5,481) (73,623) (444) (748) (154) (1,285) (41,587) (12,269) (1,092) (101,589) (232,791) $ $ 398,885 180,705 8,059 29,297 616,946 $ 1,314 2,568 1,760 3,417 26,029 33,141 831 282,246 968,252 $ 52,975 13,255 1,476 67,706 401 451 154 1,109 9,544 15,623 94,988 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, 2022, $544,000 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 $93,000 in the governmental funds. Business-type Activities Bonds Payable Water and Sewer Revenue Bonds Municipal Property Corporation Bonds Add Issuance Premiums Total Bonds Payable Beginning Balance Additional Obligations and Net Increases $ $ 8,520 265,565 20,684 294,769 70 4,016 37,748 49,855 Subscriptions Compensated Absences Net Pension Liabilities Pollution Remediation Obligation Business-type Activities Long-Term Liabilities $ 386,458 - $ 2,332 $ City of Scottsdale, Arizona 106 Current Maturities, Retirements, and Net Decreases 2,332 (4,145) (18,110) (2,396) (24,651) Ending Balance $ (46) (1,785) (10,348) (1,051) $ (37,881) 4,375 247,455 18,288 270,118 Amounts Due Within One Year $ 24 4,563 27,400 48,804 $ 350,909 4,375 20,915 25,290 24 2,135 - $ 27,449 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for long-term liabilities as of June 30, 2022: Governmental Activities (in thousands) Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053 Total Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053 Total Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 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 $ 52,823 $ 10,388 $ 63,211 56,352 8,600 64,952 51,506 6,618 58,124 38,230 5,759 43,989 33,332 4,796 38,128 109,215 12,287 121,502 45,153 2,618 47,771 8,561 342 8,903 - General Obligation Bonds Issued For All Other Purposes 6% Limitation Principal Interest Total $ 152 $ 106 $ 258 158 100 258 164 94 258 170 87 257 178 81 259 1,000 291 1,291 1,147 144 1,291 744 30 774 - Total General Obligation Bonds Principal Interest Total $ 52,975 $ 10,494 $ 63,469 56,510 8,700 65,210 51,670 6,712 58,382 38,400 5,846 44,246 33,510 4,877 38,387 110,215 12,578 122,793 46,300 2,762 49,062 9,305 372 9,677 - $ 395,172 $ 4,646 $ 398,885 $ 51,408 $ 446,580 3,713 $ 933 $ $ 52,341 $ 451,226 Municipal Property Corporation Bonds Principal Interest $ 13,255 $ 5,362 $ 13,935 4,804 14,445 4,398 15,020 3,958 15,680 3,532 71,075 11,108 31,830 2,808 5,465 241 - Total 18,617 18,739 18,843 18,978 19,212 82,183 34,638 5,706 - Leases Principal Interest $ 451 $ 94 $ 398 78 301 63 286 52 86 43 83 203 144 181 180 150 246 109 321 54 72 3 Total 545 476 364 338 129 286 325 330 355 375 75 Community Facilities Districts General Obligation Bonds - Direct Placements Principal Interest Total $ 1,476 $ 254 $ 1,730 1,310 207 1,517 1,355 164 1,519 1,400 120 1,520 1,445 74 1,519 1,073 81 1,154 - $ 180,705 216,916 $ 1,030 $ 3,598 $ 900 $ 8,959 Service Concession Arrangements Principal Interest Total $ 154 $ 262 $ 416 154 283 437 154 305 459 154 327 481 154 351 505 769 2,163 2,932 221 846 1,067 - Subscriptions Principal Interest $ 1,109 $ 134 $ 749 92 766 62 793 32 - Total 1,243 841 828 825 - Contracts Payable Principal Interest $ 401 $ 76 $ 425 50 144 23 69 17 59 13 186 35 30 1 - Total 477 475 167 86 72 221 31 - $ $ 3,737 $ 1,529 $ 36,211 $ 1,760 $ 4,537 $ 6,297 2,568 $ 3,417 $ 320 $ (continued) City of Scottsdale, Arizona 107 8,059 $ 1,314 $ 215 $ Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Governmental Activities (in thousands) Total Governmental Activities Principal Interest Total $ 69,821 $ 16,676 $ 86,497 73,481 14,214 87,695 68,835 11,727 80,562 56,122 10,352 66,474 50,934 8,890 59,824 183,401 26,168 209,569 78,525 6,598 85,123 14,950 763 15,713 246 109 355 321 54 375 72 3 75 Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053 Total $ 596,708 $ 95,554 $ 692,262 Business-type Activities (in thousands) Water and Sewer Revenue Bonds Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 Total Fiscal Year 2023 2024 2025 2026 2027 2028-2032 2033-2037 Total $ Principal 4,375 - $ 4,375 $ $ Interest 230 $ - Total 4,605 - Principal Interest Total $ 20,915 $ 9,200 $ 30,115 22,000 8,257 30,257 17,450 7,240 24,690 18,440 6,427 24,867 19,465 5,561 25,026 99,725 16,455 116,180 49,460 3,754 53,214 230 $ 4,605 $ 247,455 $ Total 25 - Total Business-type Activities Principal Interest Total $ 25,314 $ 9,431 $ 34,745 22,000 8,257 30,257 17,450 7,240 24,690 18,440 6,427 24,867 19,465 5,561 25,026 99,725 16,455 116,180 49,460 3,754 53,214 Subscriptions Principal Interest $ 24 $ 1 $ $ 24 $ Municipal Property Corporation Bonds 1 $ 25 $ 251,854 $ City of Scottsdale, Arizona 108 56,894 $ 304,349 57,125 $ 308,979 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, the general liability claims payable totaled $23,399,000 and the self-insured benefits claims payable totaled $2,630,000. Fiscal Year Ended June 30 (in thousands) 2022 B. 2021 Claims Payable, July 1 Current Year Claims Incurred Current Year Claim Payments $ 22,981 44,635 (41,587) $ 21,972 36,930 (35,921) Claims Payable, June 30 $ 26,029 $ 22,981 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, 2022, approximately $2.3 million in fee waivers have been applied. City of Scottsdale, Arizona 109 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, these requirements have not been met under any of the agreements. The City’s estimated contingent liability related to the agreements at June 30, 2022, is $49.9 million. C. Subsequent Events On July 13, 2022, the City sold 39.085 gross acres of land at 9402 E. Bell Road for $42,667,625. The City Council authorized the Purchase and Sale Agreement, Contract No. 2022-055-COS on May 3, 2022. D. 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, 2022, 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, 2022, 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 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 E. Joint Ventures Sub-Regional Operating Group (SROG) The City participates in the multi-city Subregional Operating Group (SROG). SROG was formed pursuant to the Joint Exercise of Powers Agreement (JEPA) 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, 2021, the latest audited information available from SROG, the City’s net investment in SROG was $82,011,000. SROG’s net cash operating expenses for the fiscal year ended June 30, 2021, were $36,632,146, of which the City’s share was $2,843,354, or 7.76 percent. For the fiscal year ended June 30, 2022, the City paid $6,141,755 for SROG capital contributions and shared in estimated depreciation/replacement reserve of $5,494,042, resulting in an estimated equity balance as of June 30, 2022, of $82,658,713. The Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, for the multicity SROG (the latest SROG Annual Comprehensive Financial Report available) may be obtained from the Finance Department, City of Phoenix, Calvin C. Goode Building, Ninth Floor, 251 West Washington Street, Phoenix, AZ 85003. 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 an intergovernmental 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 as 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2021, the latest audited information available from RWC, was $4,194,277 or 6.53 percent of the RWC’s total net position. The City contributed $237,608 for the fiscal year ended June 30, 2022, and shared in estimated depreciation expenses of $597,455, resulting in an estimated equity balance as of June 30, 2022, of $3,834,430. The RWC Annual Comprehensive Financial Statement is available from the Regional Wireless Cooperative, 200 West Washington Street, 14th Floor, Phoenix, Arizona, 85003-1611. F. 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 (NIBW) 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 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, fifteen projected cash flows, based on the prior 15 years of historical costs and weighted equally, were used to calculate an average annual cost. To estimate the NGTF liability, nine projected cash flows, based on the prior nine 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 52 years for the 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, released in September 2021, did not quantify the remedial time needed to achieve aquifer restoration. Improvements in technology and changes in laws or regulations did not impact the average annual cost. The liability is revalued annually. The fiscal year 2022 reimbursable outlays for operating and monitoring the CGTF were $633,346 and for the NGTF were $274,454. 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. G. 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. H. 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 $34,310,332 ($32,439,202 related to governmental activities and $1,871,130) related to business-type activities). City of Scottsdale, Arizona 113 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 (benefit multiplier) 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 benefit 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 lump sum 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 on or 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 12.22 percent of their annual pay for the fiscal year ended June 30, 2022, and the City’s required contribution rate was 12.01 percent during the same period. In addition, the City was required by statute to contribute at the actuarially determined rate of 10.13 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, 2022, 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 $14,892,000 for the fiscal year ended June 30, 2022. City of Scottsdale, Arizona 115 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions As of June 30, 2022, the City reported a liability of $132,629,364 for its proportionate share of the collective net pension liability of the ASRS. The collective net pension liability was measured as of June 30, 2021, and the total pension liability used to calculate the collective net pension liability was determined by an actuarial valuation as of June 30, 2020. 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, 2021. As of June 30, 2021, the City’s proportion was 1.00939 percent, which was a decrease of 0.04076 percent under its proportion measured as of June 30, 2020. For the fiscal year ended June 30, 2022, the City recognized a collective pension expense of $9,741,912. As of June 30, 2022, 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): Deferred Outflows of Resources Differences between expected and actual experience $ 2,022 Changes in assumptions $ - - 42,022 Changes in proportion and differences between City contributions and proportionate share of contributions 36 14,892 34,213 $ - 17,263 Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Inflows of Resources 4,150 $ 46,172 The $14,892,000 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, 2023. 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: 2023 2024 2025 2026 2027 Thereafter $ (1,617) (1,489) (9,264) (14,481) - City of Scottsdale, Arizona 116 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Actuarial Assumptions The total pension liability in the June 30, 2021, 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, 2020 June 30, 2021 Entry age normal Immediate Five years Average remaining service lives Average remaining service lives Average remaining service lives Fair value 7.0% 2.9-8.4% 2.3% Included 2017 SRA Scale U-MP 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. 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 4.70 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 Asset Allocation Real Return Geometric Basis 50% 20% 10% 20% 100% 4.90% 5.20% 0.70% 5.70% Long-Term Contribution to Expected Real Return 2.45% 1.04% 0.07% 1.14% 4.70% Discount Rate The discount rate used to measure the total pension liability was 7.0 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, 2022 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 7.0 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 (6.0 percent) or 1-percentage-point higher (8.0 percent) than the current rate (in thousands): City's proportionate share of the collective net pension liability 1% Decrease (6.0%) Discount Rate (7.0%) 1% Increase (8.0%) $ $ $ 208,615 132,629 69,278 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 gives 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 230 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 and 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, 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 338 138 599 1,075 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 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, 2022 The City’s contribution rates for fiscal year ended June 30, 2022 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 59.02% 59.02% 59.02% 55.15% 54.42% 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 21.06% 21.06% 21.06% 4.00% 17.89% 3.00% 16.56% 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 (45.42 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, 2022, were $64,675,949. 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 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. The warrant issued by the state treasurer is deposited on the City’s behalf into the pension plan. PSPRS received $2,002,461of fire insurance premium tax for the City’s fire pension plan for the fiscal year ended June 30, 2022. PSPRS accounts for the fire insurance premium tax collected for the City as employer contributions. City of Scottsdale, Arizona 123 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Net Pension Liability The City’s net pension liability of $177,016,409 was measured as of June 30, 2021, 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, 2021, 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-2020. 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-2020. Beneficiaries: PubS-2010 Survivor mortality, projected with future mortality improvements reflected generationally using 75% of scale MP2020. Disabled Lives: PubS-2010 Disabled mortality, projected with future mortality improvements reflected generationally using 75% of scale MP2020. The actuarial assumptions used in the June 30, 2021, 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2021, 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% 10% 16% 20% 20% 24% 100% Long-Term Expected Real Rate of Return -0.31% 0.42% 5.43% 3.99% 5.20% 7.67% 5.74% 4.08% 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, 2022 Changes in the Net Pension Liability Public Safety Personnel Retirement System (Police) Changes in the Net Pension Liability (in thousands) Increase (Decrease) Total Pension Plan Fiduciary Liability Net Position (a) (b) Balances at 6/30/21 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 6/30/22 $ 408,946 $ 7,480 29,613 (4,736) (21,540) 10,817 419,763 City of Scottsdale, Arizona 126 $ 198,065 $ 19,326 3,063 55,286 (21,540) (260) 21 55,896 253,961 Net Pension Liability (a)-(b) $ 210,881 $ 7,480 29,613 (4,736) (19,326) (3,063) (55,286) 260 (21) (45,079) 165,802 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Public Safety Personnel Retirement System (Fire) Changes in the Net Pension Liability (in thousands) Total Pension Liability (a) Balances at 6/30/21 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 6/30/22 $ 133,936 $ 5,565 10,094 4,095 (2,458) 17,296 151,232 Increase (Decrease) Plan Fiduciary Net Position (b) $ 105,188 $ 4,704 2,502 30,222 (2,458) (140) 34,830 140,018 Net Pension Liability (a)-(b) $ 28,748 $ 5,565 10,094 4,095 (4,704) (2,502) (30,222) 140 (17,534) 11,214 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 (asset) 1% Decrease (6.30%/6.00%) Discount Rate (7.30%/7.00%) 1% Increase (8.30%/8.00%) $ $ $ 223,279 35,452 City of Scottsdale, Arizona 127 165,802 11,214 118,952 (8,534) Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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. Derivative instruments’ fair values are determined by the custodial agent. The fair value of limited partnership investments is based on estimated current value and accepted industry practice. 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the fiscal year ended June 30, 2022, the City recognized pension expense of $24,282,251 related to the defined benefit plan and the defined benefit portion of the hybrid plan and $275,253 related to the defined contribution plan and the defined contribution portion of the hybrid plan. As of June 30, 2022, 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 $ $ 25,638 Changes of assumptions 11,859 - - 37,508 64,676 - Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total $ 8,075 102,173 $ 45,583 City contributions subsequent to the measurement date of $64,675,949 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, 2023. 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: 2023 2024 2025 2026 2027 Thereafter $ 306 (1,738) (3,721) (9,441) 925 5,583 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 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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, 2022, the City recognized pension expense of $10,916. I. 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, 2022, was $16,511,185. The projected liability was considered payable within one year or greater, and all but the current portion of $63,826 was therefore considered noncurrent and included in both the proprietary fund and government-wide financial statements. Significant actuarial assumptions of the January 1, 2022, actuarial valuation include: a) mortality rates based on the SOA Pub-2010 General (for non-PSPRS-eligible personnel)/Public Safety (for PSPRS-eligible personnel) Headcount Weighted Mortality Table fully generational using Scale MP-2021; 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, 2022. City of Scottsdale, Arizona 130 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 J. 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, 2022, Membership Consisted of: Inactive Employees or Beneficiaries Currently Receiving Benefits Inactive Employees Entitled to but Not Yet Receiving Benefits Active Employees Total 18 667 685 City of Scottsdale, Arizona 131 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Total OPEB Liability The City’s total OPEB liability of $830,518 was measured as of July 1, 2021, as determined by an actuarial valuation as of that date. Actuarial Assumptions and Other Inputs The total OPEB liability in the July 1, 2021, 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* 2.19% 5.25% for 2022, 7.00% for 2023, and then decreasing 0.5% per year to an ultimate rate of 4.50% for 2028 and later years 100% Retirees' Share of Benefit-Related Costs *The initial trend rate reflects the City’s actual projected cost increases from fiscal year 2022 to 2023. The discount rate was based on the S&P Municipal Bond 20-Year High Grade Rate 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-2021 Disabled Police and Fire retirees: SOA Pub-2010 Public Safety Disabled Headcount Weighted Mortality Table fully generational using Scale MP-2021 Surviving Spouses: SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2021 City of Scottsdale, Arizona 132 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 Changes in the Total OPEB Liability (in thousands) Total OPEB Liability Balance at 6/30/21 Changes for the year: Service cost Interest Differences between expected and actual experience Changes of assumptions/other inputs Benefit payments Net changes Balance at 6/30/22 $ 1,923 $ 323 58 (236) (1,100) (137) (1,092) 831 Changes in assumptions reflect the following: 1. Change in the discount rate from 2.66 percent as of the beginning of the year to 2.19 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-2020 to SOA Pub-2010 Public Safety Headcount Weighted Mortality Table fully generational using Scale MP-2021 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-2020 to SOA Pub-2010 Public Safety Disabled Headcount Weighted Mortality Table fully generational using Scale MP-2021 for disabled retirees. 4. Mortality table has been updated from SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2020 to SOA Pub-2010 Contingent Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2021 for surviving spouses. 5. Healthcare trend rates have been updated to reflect actual premium increases from fiscal year 2022 to fiscal year 2023, followed by an annual trend of 7.0 percent decreasing by 0.5 percent annually to an ultimate rate of 4.5 percent. 6. The disability rates for public safety employees are based on the Maricopa County rates from the Police and Fire Public Safety Personnel Retirement System actuarial valuation as of June 30, 2021, adjusted by 50 percent to reflect the City’s 2022 public safety disability assumption study. 7. The health care coverage election rate for active employees eligible for work-related disability retiree health benefits was updated from 90 percent to 50 percent based on recent experience. City of Scottsdale, Arizona 133 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 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 (1.19 percent) or 1-percentage-point higher (3.19 percent) than the current discount rate (in thousands): Total OPEB Liability 1% Decrease (1.19%) Discount Rate (2.19%) 1% Increase (3.19%) $ $ $ 849 831 807 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 (4.25 percent decreasing to 3.50 percent) or 1-percentage-point higher (6.25 percent decreasing to 5.50 percent) than the current healthcare cost trend rates (in thousands): Total OPEB Liability 1% Decrease (4.25% decreasing to 3.50%) Healthcare Cost Trend Rates (5.25% decreasing to 4.50%) 1% Increase (6.25% decreasing to 5.50%) $ $ $ 757 831 915 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2022, the City recognized OPEB expense of $165,941. As of June 30, 2022, 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 $ $ - 1,176 Change of assumptions or other inputs 253 1,024 City contributions subsequent to the measurement date 84 - Total $ 337 City of Scottsdale, Arizona 134 $ 2,200 Table of Contents Notes to Financial Statements For the Fiscal Year Ended June 30, 2022 The $84,356 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, 2023. 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: 2023 $ (215) 2024 (215) 2025 (215) 2026 (215) 2027 (215) Thereafter (872) City of Scottsdale, Arizona 135 Required Supplementary Information Table of Contents For the Fiscal Year Ended June 30, 2022 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 Eight Fiscal Years (dollars in thousands) 2022 2021 2020 2019 2018 2017 2016 2015 City's proportion of the collective net pension liability 1.009390% 1.050150% 1.049160% 1.055510% 1.056820% 1.086990% 1.099760% 1.102563% City's proportionate share of the collective net pension liability $132,630 $181,954 $152,665 $147,206 $164,632 $175,451 $171,304 $163,142 City's covered payroll $110,303 $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 120.24% 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 78.58% 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 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 Eight Fiscal Years (dollars in thousands) 2022 2021 2020 2019 2018 2017 2016 2015 7,480 29,613 (4,736) (21,540) 10,817 408,946 $ 419,763 $ 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 $ 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 $ 19,326 3,063 55,286 (21,540) (260) 21 55,896 $ 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) 198,065 $ 253,961 190,914 (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)) $ 165,802 $ 210,881 $ 187,980 $ 171,998 $ 166,258 $ 157,936 $ 122,361 $ 113,756 60.50% 48.43% 50.39% 50.75% 49.42% 48.03% 53.96% 55.27% Covered payroll $ 33,349 $ 35,069 $ 31,628 $ 34,869 $ 33,896 $ 33,073 $ 33,075 City's net pension liability as a percentage of covered payroll 497.17% 601.33% 594.35% 493.27% 490.49% 477.54% 369.95% Plan fiduciary net position as a percentage of the total pension liability 8,970 3,944 5,113 (14,835) (125) (243) 2,824 6,363 16,898 3,987 (896) 22,122 (12,411) 36,063 218,281 $ 254,344 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. Required Supplementary Information $ For the Fiscal Year Ended June 30, 2022 City of Scottsdale, Arizona 137 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) Table of Contents Public Safety Personnel Retirement System (Fire) Schedule of Changes in the City's Net Pension Liability (Asset) and Related Ratios Last Eight Fiscal Years (dollars in thousands) 2022 2019 2018 2017 2016 2015 5,565 10,094 4,095 (2,458) 17,296 133,936 $ 151,232 $ 5,457 8,387 11,517 (1,705) 23,656 110,280 $ 133,936 $ 6,378 7,654 (2,821) 2,644 (1,259) 12,596 97,684 $ 110,280 $ 5,098 6,729 (2,004) (1,047) 8,776 88,908 $ 97,684 $ 5,009 5,797 639 1,264 1,881 (932) 13,658 75,250 $ 88,908 $ 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 $ $ $ $ $ $ $ $ $ 4,704 2,502 30,222 (2,458) (140) 34,830 4,219 2,653 1,307 (1,705) (106) 6,368 2,830 2,946 4,863 (1,259) (85) 9,295 6,061 1,981 5,520 (1,047) (85) 16 12,446 2,737 2,551 7,822 (932) (70) 1 12,109 2,974 2,693 358 (1,430) (52) (53) 4,490 2,247 2,337 2,046 (691) (50) 12 5,901 3,509 3,449 (448) 462 1,157 (780) 7,349 42,567 $ 49,916 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) 105,188 $ 140,018 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)) $ 11,214 $ 28,748 $ 11,374 $ 8,057 $ 11,727 $ 10,178 $ (2,606) $ (4,765) 92.58% 78.54% 89.69% 91.75% 86.81% 86.47% 104.49% 109.55% $ 25,764 $ 25,187 $ 24,376 $ 23,192 $ 23,500 $ 21,498 $ 20,420 $ 19,336 43.53% 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. Required Supplementary Information City of Scottsdale, Arizona 138 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 $ 2020 For the Fiscal Year Ended June 30, 2022 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) 2021 Table of Contents Schedule of City Contributions Arizona State Retirement System Last Ten Fiscal Years (dollars in thousands) Statutorily required contribution 2021 $ 13,242 2020 $ 13,151 (14,892) (13,242) (13,151) Employer contributions in relation to the statutorily required contribution - $ - $ (12,384) $ - 2018 11,437 $ (11,437) $ - 2017 11,540 $ (11,540) 139 City of Scottsdale, Arizona $ $ - Covered payroll $ 124,179 $ 110,303 $ 114,944 $ 110,748 $ 105,097 $ 107,259 11.99% 12.01% 11.44% 11.18% 10.88% 10.76% 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% For the Fiscal Year Ended June 30, 2022 $ 2019 12,384 Contribution deficiency (excess) Contributions as a percentage of covered payroll - $ Required Supplementary Information 2022 $ 14,892 Table of Contents Schedule of City Contributions Public Safety Personnel Retirement System (Police) Last Nine Fiscal Years (dollars in thousands) (1) Actuarially determined contribution 2022 $ 20,225 (56,145) 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) $ (35,920) $ - $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 34,540 $ 33,349 $ 35,069 $ 31,628 $ 34,869 $ 33,896 $ 33,073 $ 33,075 $ 31,438 Contributions as a percentage of covered payroll 162.55% 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. (1) City made additional contributions during fiscal year 2022 to pay down total pension liability. For the Fiscal Year Ended June 30, 2022 140 City of Scottsdale, Arizona Contribution deficiency (excess) Required Supplementary Information Employer contributions in relation to the actuarially determined contribution $ Table of Contents Schedule of City Contributions Public Safety Personnel Retirement System (Fire) Last Nine Fiscal Years (dollars in thousands) (1) Actuarially determined contribution 2022 $ 5,533 $ (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) 141 City of Scottsdale, Arizona Contribution deficiency (excess) $ (5,000) $ - $ - $ - $ - $ - $ - $ - $ - Covered payroll $ 27,018 $ 25,764 $ 25,187 $ 24,376 $ 23,192 $ 23,500 $ 21,498 $ 20,420 $ 19,336 Contributions as a percentage of covered payroll 38.99% 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. (1) City made additional contributions during fiscal year 2022 to pay down total pension liability. Required Supplementary Information (10,533) 2021 4,731 For the Fiscal Year Ended June 30, 2022 Employer contributions in relation to the actuarially determined contribution $ Table of Contents Required Supplementary Information For the Fiscal Year Ended June 30, 2022 Changes in the City’s Total OPEB Liability and Related Ratios Total OPEB Liability and Related Ratios Last Five Fiscal Years (dollars in thousands) 2022 Total OPEB liability Service cost Interest Differences between expected and actual experience Changes of assumptions/other inputs Benefit payments $ 323 58 (236) (1,100) (137) 2021 $ 274 83 (587) 121 (145) 2020 $ 2019 236 89 (261) 126 (116) $ 241 85 (278) (38) (101) 2018 $ 260 67 (230) 125 (111) Net change in total OPEB liability (1,092) (254) 74 (91) 111 Total OPEB liability-beginning 1,923 2,177 2,103 2,194 2,083 Total OPEB liability-ending $ 831 $ 1,923 $ 2,177 $ 2,103 $ 2,194 Covered-employee payroll $ 50,459 $ 53,874 $ 55,023 $ 52,970 $ 51,137 Total OPEB liability as a percentage of covered-employee payroll 1.65% 3.57% 3.96% 3.97% 4.29% 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 Table of Contents Notes to Required Supplementary Information For the Fiscal Year Ended June 30, 2022 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, 2020, 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, 2021, valuation for PSPRS were based on the results of an actuarial experience study for the five-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, 2022, 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, 2022, 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 percent (0.2 percent 1995 and 0.15 percent 2004). Revenues are transferred to the Preserve Privilege Tax Capital Projects Fund for land purchases and improvements in the McDowell Sonoran Preserve or are transferred to the General Obligation Bond Debt Service Fund or the Scottsdale Preserve Authority Debt Service Fund to be used for related debt service payments for prior preserve land acquisitions. City of Scottsdale, Arizona 144 Table of Contents NONMAJOR GOVERNMENTAL FUNDS (Continued) Community Facilities Districts (CFD) Funds. These funds account for the nondebt or noncapital 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 restricted or committed by the City Council for tourism-related purposes. Stadium Facility Fund. This fund accounts for certain revenue received for 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 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 require 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, comply with the City’s capitalization policy, and demonstrate that legal or contractual requirements of funding sources 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, 2022 (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) $ 169,932 12 226 10,253 1,996 26 73 48 1,744 5,295 3,824 1,303 3,963 198,695 3,625 434 327 - Debt Service Funds $ $ $ 5,055 22,209 59 27,323 3,145 18,802 Capital Projects Funds $ $ $ 100,405 1,440 157 1,881 27,457 1,588 132,928 17,006 45 8,336 - Total Nonmajor Governmental Funds Permanent Funds $ $ $ 626 626 - $ $ $ 276,018 23,661 383 12,134 1,996 85 73 48 1,744 32,752 5,412 1,303 3,963 359,572 20,631 479 8,663 3,145 18,802 23,984 834 23 5 65 29,297 21,947 25,387 - 23,984 834 23 5 65 76,631 11,326 3,474 14,800 44,097 26 26 21,973 28,599 28,599 53,986 - 39,951 3,474 43,425 120,056 133,931 24,820 (4,153) 154,598 2,667 2,683 5,350 103,776 (24,834) 78,942 599 27 626 599 240,401 27,503 (28,987) 239,516 198,695 $ 27,323 City of Scottsdale, Arizona 147 $ 132,928 $ 626 $ 359,572 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended June 30, 2022 (in thousands) REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Other Taxes 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 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 Other Total Revenues Special Revenue Funds $ 146 88,334 31,863 397 4,386 Debt Service Funds $ Capital Projects Funds 2,960 - $ Total Nonmajor Governmental Funds Permanent Funds 16,265 - $ - $ 3,106 104,599 31,863 397 4,386 1,580 18,988 608 48 - - - 1,580 18,988 608 48 60 3,318 988 - - - 60 3,318 988 142 1,776 116 5,769 987 - - 612 - (45) 142 1,776 116 5,769 1,599 (45) 24,024 367 1,763 722 524 2,553 416 66 189,941 2,960 4,044 6,124 270 1,288 789 29,392 (45) 28,068 367 7,887 992 524 3,841 1,205 66 222,248 6 93 1,636 884 179 21,304 15,722 17,979 14,421 12 2,259 535 - 822 730 108 - 37 - 6 93 1,636 884 179 22,126 15,722 18,709 14,566 12 2,259 535 504 29 3,493 79,056 18,802 6,305 25,107 65,103 66,763 37 19,306 6,334 68,596 170,963 Excess (Deficiency) of Revenues over (under) Expenditures 110,885 (22,147) (37,371) (82) 51,285 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Other Financing Sources (Uses) 1,418 (82,914) 114 88 937 (80,357) 22,001 22,001 25,626 (461) 25,165 - 49,045 (83,375) 114 88 937 (33,191) 30,528 (146) (12,206) (82) 18,094 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 Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 124,070 154,598 $ 5,496 5,350 City of Scottsdale, Arizona 148 $ 91,148 78,942 $ 708 626 $ 221,422 239,516 Table of Contents Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2022 (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 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 Transportation $ $ $ 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) Community Development Block Grant $ 34,573 3,641 1,744 47 40,005 1,485 270 - $ $ $ 441 338 107 2,187 3,073 159 14 - HOME $ $ $ Grants 376 376 49 327 $ $ $ Section 8 12,531 3,110 15,641 191 24 - $ $ $ 810 20 830 33 14 - Preserve Privilege Tax Scottsdale Mountain CFD McDowell Mountain Ranch CFD $ $ $ $ $ 75,283 193 6,612 82,088 3 - $ $ 24 24 - $ $ 46 24 70 - 1,755 417 6 1 5 602 376 14,653 773 15,641 4 39 90 3 - - 1,283 1,283 2,525 104 2,629 376 376 2,931 2,931 20 20 2,258 2,258 12 12 3,038 3,231 752 18,572 110 2,261 - 12 36,967 36,967 180 (338) (158) (376) (376) (2,931) (2,931) 720 720 79,827 79,827 24 24 58 58 40,005 $ 3,073 $ 376 $ 15,641 $ 830 $ 82,088 $ 24 $ 70 Table of Contents Combining Balance Sheet Nonmajor Special Revenue Governmental Funds June 30, 2022 (in thousands) ASSETS 150 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 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) $ 39 2 41 - $ $ Waterfront Commercial CFD 8 8 - $ $ $ 12 12 - Streetlight Districts $ $ $ Tourism Development Special Programs 40 6 46 - $ $ $ 26,020 22 73 48 5,295 1,196 1,305 33,959 1,106 89 - $ $ $ 15,092 1,996 188 17,276 334 14 - Stadium Facility $ $ $ 5,025 11 210 5,246 265 9 - Total $ $ $ 169,932 12 226 10,253 1,996 26 73 48 1,744 5,295 3,824 1,303 3,963 198,695 3,625 434 327 - - - - 8,914 55 2 21 10,187 348 16 5 295 23,984 834 23 5 65 29,297 - - - - 928 1,149 2,077 12,264 871 2,221 3,092 3,440 122 122 417 11,326 3,474 14,800 44,097 41 41 8 8 12 12 46 46 5,573 16,630 (508) 21,695 5,646 8,190 13,836 4,829 4,829 133,931 24,820 (4,153) 154,598 41 $ 8 $ 12 $ 46 $ 33,959 $ 17,276 $ 5,246 $ 198,695 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, 2022 (in thousands) City of Scottsdale, Arizona 151 REVENUES Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Other Taxes 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 Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Other Total Revenues Transportation Community Development Block Grant $ $ 31,321 - HOME - $ Grants - $ Section 8 - $ - Preserve Privilege Tax Scottsdale Mountain CFD $ $ 57,013 - McDowell Mountain Ranch CFD - $ 56 - 18,988 608 - - - - - - - - - - - - - - - - 1 - 119 6 - - - 727 - - 81 82 51,081 960 1,085 269 269 16,638 367 1,114 18,119 6,157 3 6,160 57,740 - 56 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 67 18,734 1,938 12 - 1,246 - 548 - 4 93 884 2,245 15,973 868 - 6,060 - 4 - 5 - 11 - 24 3 1,767 22,545 2 1,248 548 164 20,231 4 6,064 4 5 11 Excess (Deficiency) of Revenues over (under) Expenditures 28,536 (163) (279) (2,112) 96 57,736 (5) 45 173 (23,899) 114 (23,612) - - 945 (57) 888 - (34,507) (34,507) - - 4,924 (163) (279) (1,224) 96 23,229 (5) 45 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Other Financing Sources (Uses) Net Change in Fund Balances (Deficits) Fund Balances (Deficits) - Beginning Fund Balances (Deficits) - Ending (continued) $ 32,043 36,967 $ 5 (158) $ (97) (376) $ (1,707) (2,931) $ 624 720 $ 56,598 79,827 $ 29 24 $ 13 58 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, 2022 (in thousands) REVENUES City of Scottsdale, Arizona 152 Taxes - Local Property Transaction Privilege Transient Occupancy Light and Power Franchise Other Taxes 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 Developer Contributions Streetlight and Services Districts Contributions and Donations Reimbursements from Outside Sources Other Total Revenues DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Streetlight Districts $ $ $ $ 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 Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Other Financing Sources (Uses) Net Change in Fund Balances (Deficits) Fund Balances - Beginning Fund Balances - Ending $ 68 - 11 - 11 - - Special Programs Tourism Development $ $ 397 4,386 Stadium Facility 31,863 - $ Total - $ 146 88,334 31,863 397 4,386 - - - - 1,580 48 - - 1,580 18,988 608 48 - - - - 60 3,067 988 - 251 - 60 3,318 988 - - - - 142 1,776 116 917 213 3,339 - 1,393 41 142 1,776 116 5,769 987 68 11 11 524 524 1,682 722 864 205 66 17,229 38 35,240 575 88 2,348 24,024 367 1,763 722 524 2,553 416 66 189,941 71 - 10 - 11 - 535 2 1,636 325 97 2,006 2,935 2,259 - 15,625 - 826 - 6 93 1,636 884 179 21,304 15,722 17,979 14,421 12 2,259 535 71 10 11 535 475 25 1,473 11,233 1 15,626 5 1 82 914 504 29 3,493 79,056 (3) 1 - (11) 5,996 19,614 1,434 110,885 - - - - 286 (13,135) 88 856 (11,905) 7 (10,806) (10,799) 7 (510) 81 (422) 1,418 (82,914) 114 88 937 (80,357) (3) 1 - (11) (5,909) 8,815 1,012 30,528 44 41 7 8 12 12 57 46 27,604 21,695 5,021 13,836 3,817 4,829 124,070 154,598 $ $ $ $ $ $ $ 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, 2022 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transaction Privilege Taxes - Intergovernmental Highway User Tax Local Transportation Assistance Fund Property Rental Intergovernmental Miscellaneous Reimbursements from Outside Sources Total Revenues Original $ 24,562 City of Scottsdale, Arizona 153 EXPENDITURES Current General Government City Treasurer Public Works Community Services Administrative Services Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures Excess of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Leases Total Other Financing Sources (Uses) Net Change in Fund Balance Final $ 24,562 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 31,321 - 31,321 6,759 17,167 655 - 17,167 655 - 18,988 608 1 - 18,988 608 1 1,821 (47) 1 100 5 42,489 100 5 42,489 81 82 51,081 - 81 82 51,081 (19) 77 8,592 66 25,418 2,020 19 65 21,984 2,020 19 67 20,379 1,935 19 (1,645) 3 (7) 67 18,734 1,938 12 (2) 1,605 85 - 27,523 24,088 22,400 24 3 1,767 145 24 3 1,767 22,545 1,688 14,966 18,401 28,681 (145) 28,536 10,280 (20,519) (20,519) (20,519) (20,519) 173 (23,899) (23,726) 114 114 173 (23,899) 114 (23,612) 173 (3,380) (3,207) $ (5,553) $ 114 114 $ (2,118) $ 4,955 $ (31) $ 4,924 $ 7,073 Explanation of Differences: Items recorded as revenues/other financing sources for GAAP purposes that are not recorded for budget purposes: Financing of Leases Total Revenue/Other Financing Source Adjustments The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Non-Cash Capital Expenditures Total Expenditure Adjustments Net Decrease in Fund Balance - Budget to GAAP 31 114 145 $ (31) 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. 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, 2022 (in thousands) Budgeted Amounts Property Rental Interest Earnings Intergovernmental Federal Grants Total Revenues 154 City of Scottsdale, Arizona Current Community Services Capital Outlay Total Expenditures REVENUES Original $ Final 63 - $ 63 - Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 67 - 52 6 119 6 4 - 2,294 2,357 2,294 2,357 1,014 1,081 (54) 4 960 1,085 (1,280) (1,276) 2,329 2,329 2,914 2,914 1,243 1,243 3 2 5 1,246 2 1,248 1,671 1,671 28 (557) (162) (1) (163) 395 (28) (28) (28) (28) - - - 28 28 EXPENDITURES Excess (Deficiency) of Revenues over (under) Expenditures OTHER FINANCING USES Transfers Out Total Other Financing Uses Net Change in Fund Balance $ - $ 6 (2) 4 $ (585) $ (162) $ (1) $ (163) $ 423 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Lease Interest Revenue Amortized Lease 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 5 $ (1) 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. 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, 2022 (in thousands) Budgeted Amounts REVENUES Intergovernmental Federal Grants Total Revenues Original $ 155 City of Scottsdale, Arizona EXPENDITURES Current Community Services Total Expenditures Deficiency of Revenues under Expenditures Net Change in Fund Balance $ Final 1,275 1,275 $ 1,598 1,598 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 269 269 - 269 269 (1,329) (1,329) 1,275 1,275 1,598 1,598 548 548 - 548 548 1,050 1,050 - - (279) - (279) (279) - $ - $ (279) $ - $ (279) $ (279) 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, 2022 (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 Public Works Community and Economic Development Public Safety Community Services 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 24,213 498 2,205 26,916 $ 23,585 573 2,205 26,363 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 16,638 367 1,114 18,119 - 16,638 367 1,114 18,119 (6,947) (206) (1,091) (8,244) 5 100 570 2,277 5 19,693 4,208 26,858 5 250 884 2,013 5 16,856 1,775 21,788 4 95 884 2,245 16,135 891 20,254 (2) (162) (23) 164 (23) 4 93 884 2,245 15,973 868 164 20,231 1 155 (232) 5 721 884 1,534 58 4,575 (2,135) 23 (2,112) (6,710) (58) (58) (58) (58) 945 (57) 888 - 945 (57) 888 945 1 946 $ - $ (23) $ 4,517 $ (1,247) $ 23 $ (1,224) $ (5,764) 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 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. 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, 2022 (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 of Revenues over Expenditures Net Change in Fund Balance Final 6,393 6,393 $ 6,623 6,623 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 6,157 3 6,160 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 6,157 3 6,160 (466) 3 (463) 6,393 6,393 6,623 6,623 6,062 6,062 (2) 4 2 6,060 4 6,064 561 561 - - 98 (2) 96 98 $ - $ 2 $ - $ 98 $ (2) $ 96 $ 98 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 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. 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, 2022 (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 45,221 403 45,624 $ 45,221 403 45,624 Actual Amounts Budgetary Basis Budget to GAAP Differences $ $ 57,013 727 57,740 - Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ 57,013 727 57,740 11,792 324 12,116 - - 4 4 - 4 4 (4) (4) Excess of Revenues over Expenditures 45,624 45,624 57,736 - 57,736 12,112 OTHER FINANCING USES Transfers Out Total Other Financing Uses (36,527) (36,527) (36,527) (36,527) (34,507) (34,507) - (34,507) (34,507) 2,020 2,020 Net Change in Fund Balance $ 9,097 $ 9,097 $ 23,229 $ - $ 23,229 $ 14,132 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, 2022 (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 530 530 $ 530 530 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 524 524 - 524 524 (6) (6) 582 582 582 582 535 535 - 535 535 47 47 (52) (52) (11) - (11) 41 (52) $ (52) $ (11) $ - $ (11) $ 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, 2022 (in thousands) Budgeted Amounts REVENUES Taxes - Local Light and Power Franchise Other Taxes 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 Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Other Financing Sources (Uses) Net Change in Fund Balance Final 240 4,320 $ 240 4,320 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 397 4,386 - 397 4,386 157 66 56 56 1,580 48 - 1,580 48 1,580 (8) 16 2,492 - 16 2,492 - 60 3,067 988 - 60 3,067 988 44 575 988 124 1,536 95 395 59 124 1,536 95 395 59 142 1,776 116 1,102 80 (185) 133 142 1,776 116 917 213 18 240 21 707 21 1,237 100 426 106 36 11,238 1,237 100 926 106 36 11,738 1,682 722 864 205 66 17,281 (52) 1,682 722 864 205 66 17,229 445 622 (62) 99 30 5,543 28 2,002 381 3,507 3,082 2,961 14,943 28 2,033 381 3,507 3,430 3,499 5,619 2 1,633 545 97 2,419 3,045 2,456 3 (220) (413) (110) (197) 2 1,636 325 97 2,006 2,935 2,259 26 400 (164) 3,410 1,011 454 3,163 26,904 18,497 50 25 10,272 425 1,473 961 475 25 1,473 11,233 (50) (25) 8,225 (15,666) (6,759) 7,009 (1,013) 5,996 13,768 110 (5,779) (5,669) 110 (5,779) (5,669) 286 (13,135) (12,849) 88 856 944 286 (13,135) 88 856 (11,905) 176 (7,356) (7,180) $ (21,335) $ (185) 133 88 856 892 $ (12,428) $ (5,840) $ (69) $ (5,909) $ 6,588 Explanation of Differences: Items recorded as revenues/other financing sources for GAAP purposes that are not recorded for budget purposes: Amortized Lease Revenue Lease Interest Revenue Financing of Subscription-Based Information Technology Arrangements Financing of Contracts Payable Total Revenue/Other Financing Source Adjustments The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Non-Cash Operating Expenditures Toal Expenditures Net Decrease in Fund Balance - Budget to GAAP 17 944 961 $ (69) Differences in Presentation between Budget and GAAP Basis: The City records principal and interest payments related to the subscription-based information technology arrangements, lease activity, and contracts payable 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. City of Scottsdale, Arizona 160 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, 2022 (in thousands) Budgeted Amounts REVENUES Taxes - Local Transient Occupancy Tax Property Rental Reimbursements from Outside Sources Total Revenues Original $ Final 21,637 1,602 10 23,249 $ 21,637 1,602 10 23,249 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 31,863 3,314 38 35,215 25 25 31,863 3,339 38 35,240 10,226 1,712 28 11,966 City of Scottsdale, Arizona 161 EXPENDITURES Current Community and Economic Development Capital Outlay Total Expenditures 15,800 15,800 16,182 16,182 15,620 15,620 5 1 6 15,625 1 15,626 562 562 Excess of Revenues over Expenditures 7,449 7,067 19,595 19 19,614 12,528 (7,995) (7,995) (7,995) (7,995) 7 (10,806) (10,799) - 7 (10,806) (10,799) 7 (2,811) (2,804) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance $ (546) $ 25 $ (928) $ 8,796 $ 19 $ 8,815 $ 9,724 Explanation of Differences: Items recorded as revenues for GAAP purposes that are not recorded for budget purposes: Amortized Lease Revenue The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Net Increase in Fund Balance - Budget to GAAP 6 $ 19 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. 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, 2022 (in thousands) Budgeted Amounts Original REVENUES Charges for Current Services Recreation Fees Property Rental Interest Earnings Contributions and Donations Reimbursements from Outside Sources Total Revenues $ City of Scottsdale, Arizona 162 EXPENDITURES Current Community Services Debt Service Principal Interest and Fiscal Charges Capital Outlay Total Expenditures Excess of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Financing of Contracts Payable Total Other Financing Sources (Uses) Net Change in Fund Balance Final 810 12 575 270 1,667 $ 810 12 575 270 1,667 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 251 1,393 41 575 88 2,348 - 251 1,393 41 575 88 2,348 251 583 29 (182) 681 1,163 1,170 829 (3) 826 341 1,163 1,170 829 5 1 82 85 5 1 82 914 341 504 497 1,519 (85) 1,434 1,022 (510) (510) (510) (510) 7 (510) (503) 81 81 7 (510) 81 (422) 7 7 $ (6) $ 81 81 $ (13) $ 1,016 $ (4) $ 1,012 $ 1,029 Explanation of Differences: Items recorded as revenues/other financing sources for GAAP purposes that are not recorded for budget purposes: Financing of Contracts Payable Total Revenue/Other Financing Source Adjustments The City budgets for certain expenditures on the cash basis, rather than on the modified accrual basis: Payroll Accrual and Compensated Absences Non-Cash Operating Expenditures Total Expenditures Net Decrease in Fund Balance - Budget to GAAP 4 81 85 $ (4) 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. Table of Contents Combining Balance Sheet Nonmajor Debt Service Governmental Funds June 30, 2022 (in thousands) ASSETS Cash and Investments Cash with Fiscal Agent Receivables (net of allowance for uncollectibles) Property Tax Total Assets 163 City of Scottsdale, Arizona LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Matured Bond Interest Payable Matured Bonds Payable Total Liabilities Municipal Property Corporation $ $ $ 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 17,628 17,628 2,943 14,685 17,628 $ $ $ 5,055 5,055 - McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Scottsdale Preserve Authority $ $ $ $ $ $ $ 1,377 1,377 19 1,335 1,354 $ $ 1,310 54 1,364 117 1,050 1,167 $ $ 237 4 241 5 205 210 $ $ 273 1 274 27 177 204 $ $ 1,384 1,384 34 1,350 1,384 Total $ $ $ 5,055 22,209 59 27,323 3,145 18,802 21,947 - - - 24 1 1 - 26 17,628 - 1,354 1,191 211 205 1,384 21,973 - 2,372 2,683 5,055 23 23 173 173 30 30 69 69 - 2,667 2,683 5,350 17,628 $ 5,055 $ 1,377 $ 1,364 $ 241 $ 274 $ 1,384 $ 27,323 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, 2022 (in thousands) Taxes - Local Property Total Revenues Municipal Property Corporation REVENUES $ Debt Service Stabilization - $ - McDowell Mountain Ranch CFD DC Ranch CFD Via Linda Road CFD Waterfront Commercial CFD Scottsdale Preserve Authority $ $ $ $ $ 1,201 1,201 1,290 1,290 215 215 254 254 - Total $ 2,960 2,960 City of Scottsdale, Arizona 164 EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures 14,685 5,896 20,581 - 1,335 38 1,373 1,050 235 1,285 205 11 216 177 55 232 1,350 70 1,420 18,802 6,305 25,107 Excess (Deficiency) of Revenues over (under) Expenditures (20,581) - (172) 5 (1) 22 (1,420) (22,147) OTHER FINANCING SOURCES Transfers In Total Other Financing Sources 20,581 20,581 - - - - - 1,420 1,420 22,001 22,001 - - (172) 5 (1) 22 - (146) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ - $ 5,055 5,055 $ 195 23 $ 168 173 $ 31 30 $ 47 69 $ - $ 5,496 5,350 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, 2022 (in thousands) Budgeted Amounts Taxes - Local Property Total Revenues Original REVENUES $ 165 City of Scottsdale, Arizona EXPENDITURES Debt Service Principal Interest and Fiscal Charges Total Expenditures Final 35,079 35,079 $ 35,079 35,079 Actual Amounts Budgetary Basis Budget to GAAP Differences Actual Amounts GAAP Basis Variance Between Final Budget and Actual Amounts Budgetary Basis $ $ $ $ 34,911 34,911 - 34,911 34,911 (168) (168) 52,840 13,766 66,606 52,840 13,766 66,606 49,340 12,264 61,604 - 49,340 12,264 61,604 3,500 1,502 5,002 Deficiency of Revenues under Expenditures (31,527) (31,527) (26,693) - (26,693) 4,834 OTHER FINANCING SOURCES Transfers In Total Other Financing Sources 31,527 31,527 31,527 31,527 31,938 31,938 - 31,938 31,938 411 411 Net Change in Fund Balance $ - $ - $ 5,245 $ - $ 5,245 $ 5,245 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, 2022 (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 Total Expenditures 14,685 5,898 20,583 14,685 5,898 20,583 14,685 5,896 20,581 - 14,685 5,896 20,581 2 2 Deficiency of Revenues under Expenditures (20,583) (20,583) (20,581) - (20,581) 2 OTHER FINANCING SOURCES Transfers In Total Other Financing Sources 20,583 20,583 20,583 20,583 20,581 20,581 - 20,581 20,581 (2) (2) 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, 2022 (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 1,350 70 1,420 1,350 70 1,420 1,350 70 1,420 - 1,350 70 1,420 - Deficiency of Revenues under Expenditures (1,420) (1,420) (1,420) - (1,420) - OTHER FINANCING SOURCES Transfers In Total Other Financing Sources 1,420 1,420 1,420 1,420 1,420 1,420 - 1,420 1,420 - Net Change in Fund Balance $ - $ - $ - $ - $ - $ - Table of Contents Combining Balance Sheet Nonmajor Capital Projects Governmental Funds June 30, 2022 (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 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) $ 6,290 6,290 8,091 12 8,103 $ $ 94,115 157 1,881 20,323 116,476 7,332 28 7,360 $ $ - 290 4 294 $ $ External Sources 1,440 1,440 1,264 1,264 $ $ $ Total - 7,134 1,588 8,722 1,293 1 7,072 8,366 $ $ $ 100,405 1,440 157 1,881 27,457 1,588 132,928 17,006 45 8,336 25,387 - 20,959 - - 7,640 28,599 8,103 28,319 294 1,264 16,006 53,986 12,310 (14,123) (1,813) 88,157 88,157 (294) (294) 176 176 3,133 (10,417) (7,284) 103,776 (24,834) 78,942 6,290 $ 116,476 $ - $ 1,440 $ 8,722 $ 132,928 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, 2022 (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 $ 19 Transportation Privilege Tax $ 16,265 591 Municipal Property Corporation Bonds Preserve Privilege Tax $ - $ External Sources 1 $ 1 Total $ 16,265 612 45 64 744 17,600 - 1 4,044 6,124 270 1,288 11,727 4,044 6,124 270 1,288 789 29,392 EXPENDITURES Current Public Works Public Safety Community Services Capital Outlay Total Expenditures 725 3 30,374 31,102 822 14,931 15,753 105 1,255 1,360 1,423 1,423 5 17,120 17,125 822 730 108 65,103 66,763 Excess (Deficiency) of Revenues over (under) Expenditures (31,038) 1,847 (1,360) (1,422) (5,398) (37,371) OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) (411) (411) 23,899 23,899 1,560 1,560 - 167 (50) 117 25,626 (461) 25,165 Net Change in Fund Balances (Deficits) (31,449) 25,746 200 (1,422) (5,281) (12,206) Fund Balances (Deficits) - Beginning Fund Balances (Deficits) - Ending $ 29,636 (1,813) $ 62,411 88,157 $ (494) (294) $ 1,598 176 $ (2,003) (7,284) $ 91,148 78,942 Table of Contents Combining Balance Sheet Nonmajor Permanent Governmental Funds June 30, 2022 (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 $ $ 420 420 $ $ 133 133 $ $ 40 40 $ $ 33 33 $ $ 626 626 $ - $ - $ - $ - $ - $ 402 18 420 420 $ 127 6 133 133 $ 38 2 40 40 $ 32 1 33 33 $ 599 27 626 626 Table of Contents Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Permanent Governmental Funds For the Fiscal Year Ended June 30, 2022 (in thousands) REVENUES Net Decrease in the Fair Value of Investments Total Revenues Rassner Memorial Scottsdale Library Endowment $ (30) (30) Scottsdale Community Endowment $ Herbert R. Drinkwater Youth Services Endowment Scottsdale Employee Endowment (10) (10) $ (3) (3) $ Total (2) (2) $ (45) (45) City of Scottsdale, Arizona 171 EXPENDITURES Current Community Services Total Expenditures 25 25 7 7 3 3 2 2 37 37 Deficiency of Revenues under Expenditures (55) (17) (6) (4) (82) Net Change in Fund Balances (55) (17) (6) (4) (82) 475 420 150 133 46 40 37 33 708 626 Fund Balances - Beginning Fund Balances - Ending $ $ $ $ $ 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, 2022 (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 18,146 $ 44,154 $ Total 1,664 $ 63,964 9 1,387 1,922 21,464 247 44,401 1,664 256 1,387 1,922 67,529 5 - - 5 16,357 99,215 1,299 339 (59,152) 58,058 58,063 41 182 (191) 32 32 5,638 (2,824) 2,814 2,814 16,357 99,215 6,978 339 182 (62,167) 60,904 60,909 79,527 44,433 4,478 128,438 Deferred Outflows of Resources Pension-Related Amounts 897 212 - 1,109 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES Liabilities Current Liabilities Accounts Payable Accrued Payroll and Benefits Accrued Compensated Absences - Due within one year Subscription- Due within one year Other Payables - Due within one year Unearned Revenue Other Liabilities Total Current Liabilities 4,780 150 218 5,148 1,073 52 74 7 9,544 26 4 10,780 122 122 5,975 202 292 7 9,544 26 4 16,050 185 3,582 3,767 67 714 16,485 17,266 - 252 4,296 16,485 21,033 8,915 28,046 122 37,083 Deferred Inflows of Resources Pension-Related Amounts 1,247 248 - 1,495 NET POSITION Net Investment in Capital Assets Unrestricted 58,058 12,204 32 16,319 2,814 1,542 60,904 30,065 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 Total Assets 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 Total Liabilities Total Net Position $ 70,262 City of Scottsdale, Arizona 173 $ 16,351 $ 4,356 $ 90,969 Table of Contents Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2022 (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 $ 22,261 404 22,665 Computer Replacement Self-Insurance $ 36,851 8,056 311 138 948 46,304 $ Total 750 750 $ 59,862 8,056 311 138 1,352 69,719 Operating Expenses Costs of Sales and Services Fleet Management Operations Self-Insurance Administration Self-Insurance Claims Self-Insurance Benefits Insurance and Bond Premiums Depreciation/Amortization Total Operating Expenses 13,661 9,421 23,082 3,272 11,208 33,427 4,309 97 52,313 925 925 13,661 3,272 11,208 33,427 4,309 10,443 76,320 Operating Loss (417) (6,009) (175) (6,601) Non-Operating Revenues (Expenses) Property Tax Loss on Sale of Capital Assets Net Non-Operating Revenues (Expenses) (386) (386) 290 290 (5) (5) 290 (391) (101) Loss Before Contributions and Transfers (803) (5,719) (180) (6,702) 2,688 105 - 134 (22) - 2,688 239 (22) 1,990 (5,607) (180) (3,797) Capital Contributions Transfers In Transfers Out Change in Net Position Total Net Position - Beginning Total Net Position - Ending $ 68,272 70,262 $ City of Scottsdale, Arizona 174 21,958 16,351 $ 4,536 4,356 $ 94,766 90,969 Table of Contents Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2022 (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 (Used for) Operating Activities $ 22,261 (10,655) (4,551) 404 7,459 Cash Flows from NonCapital Financing Activities Property Tax Transfers In Transfers Out Net Cash Provided by (Used for) NonCapital Financing Activities Computer Replacement Self-Insurance $ 45,291 (47,523) (1,606) 948 (2,890) $ Total 750 750 $ 68,302 (58,178) (6,157) 1,352 5,319 105 105 290 134 (22) 402 - 290 239 (22) 507 Cash Flows from Capital and Related Financing Activities Acquisition of Capital Assets Sale of Capital Assets Net Cash Provided by (Used for) Capital and Related Financing Activities (6,994) 586 (6,408) (98) (98) (965) (965) (8,057) 586 (7,471) Net Increase (Decrease) in Cash and Cash Equivalents 1,156 (2,586) (215) (1,645) Cash and Cash Equivalents at Beginning of Year 16,990 46,740 1,879 65,609 Cash and Cash Equivalents at End of Year $ 18,146 $ 44,154 $ 1,664 $ 63,964 $ (417) $ (6,009) $ (175) $ (6,601) Reconciliation of Operating Loss to Net Cash Provided by (Used for) Operating Activities Operating Loss Income Provided by (Used for) Operating Activities Depreciation Current Year Pension Contributions Change in Equity in Joint Venture Change in Accounts Receivable Change in Prepaid Expense 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 (Used for) Operating Activities 9,421 (375) (2) (1,340) (319) 145 16 10 (1,269) 350 1,239 7,876 $ Supplemental Disclosure of Non-Cash Investing, Capital, and Financing Activities Changes to Property, Plant, and Equipment Contributions of Capital Assets from Other Funds $ Retirement of Assets Total Non-Cash Investing, Capital, and Financing Activities $ 97 (108) (79) 191 14 15 29 3,048 (422) 87 247 3,119 10,443 (483) (2) (79) (1,340) (319) 336 14 31 39 3,048 (1,691) 437 1,486 11,920 7,459 $ (2,890) $ 750 $ 5,319 2,688 (851) 1,837 $ - $ (5) (5) $ 2,688 (856) 1,832 $ City of Scottsdale, Arizona 175 925 925 $ $ 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, 2022 (in thousands) July 1, 2021 Issued Retired Accretions, Amortizations, Refunding Bonds Bonds and Contract Governmental Business-type Final Issued Defeased Adjustments June 30, 2022 Activities Activities Payment Date GENERAL OBLIGATION BONDS City of Scottsdale, Arizona 177 Governmental Activities 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 Preservation 2021 GO Various Purpose 2021 GO Taxable Various Purpose 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 $ $ $ $ 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 $ - $ - $ 3,350 $ 2,000 630 10,131 1,444 7,060 7,715 3,710 2,380 2,160 6,790 1,135 835 49,340 $ - $ - $ - $ - $ - $ (282) (60) (25) (1,037) (1,259) (161) (485) (391) (366) (187) (30) (4,283) $ 8,485 $ 5,000 2,760 10,702 1,528 60,530 27,670 17,410 11,275 24,446 13,159 11,200 157,255 28,855 18,610 564 120 99 1,037 7,553 1,942 970 4,694 1,827 3,357 541 421,589 $ 8,485 $ 5,000 2,760 10,702 1,528 60,530 27,670 17,410 11,275 24,446 13,159 11,200 157,255 28,855 18,610 564 120 99 1,037 7,553 1,942 970 4,694 1,827 3,357 541 421,589 $ - 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 07/01/34 07/01/40 07/01/40 8,520 $ 542 9,062 $ - $ - $ 4,145 $ 4,145 $ - $ - $ - $ - $ - $ (271) (271) $ 4,375 $ 271 4,646 $ - $ - $ 4,375 271 4,646 07/01/23 *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). (continued) Table of Contents Schedule of Changes in Long-Term Debt* For the Fiscal Year Ended June 30, 2022 (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 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 2019A Series Issuance Premium 2019B Taxable Series Issuance Premium Subtotal Governmental Activities Business-type Activities 2006 MPC Refunding 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 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 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 Total Bonds July 1, 2021 $ Retired Bonds Defeased Accretions, Amortizations, and Contract Adjustments June 30, 2022 Governmental Business-type Final Activities Activities Payment Date 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 - $ - 3,115 $ 1,825 65 1,635 1,930 540 660 325 1,410 3,180 14,685 - $ - - $ - - $ (247) (258) (8) (187) (204) (55) (13) (63) (4) (1,039) 41,805 $ 1,995 70 1,715 11,300 7,955 10,075 8,435 29,540 67,815 2,965 257 8 187 1,016 655 166 1,075 67 187,101 41,805 $ 1,995 70 1,715 11,300 7,955 10,075 8,435 29,540 67,815 2,965 257 8 187 1,016 655 166 1,075 67 187,101 - 07/01/34 07/01/23 07/01/23 07/01/23 07/01/27 07/01/34 07/01/34 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 2,820 285,707 488,532 $ - $ 9,300 815 4,280 1,500 900 1,315 18,110 32,795 $ - $ - $ (564) (83) (591) (328) (163) (83) (313) (2,125) (3,164) $ 52,850 12,050 19,355 41,620 32,390 19,530 7,920 61,740 4,508 992 2,361 3,939 2,455 1,255 2,507 265,472 452,573 $ 187,101 $ 52,850 12,050 19,355 41,620 32,390 19,530 7,920 61,740 4,508 992 2,361 3,939 2,455 1,255 2,507 265,472 265,472 07/01/30 07/01/34 07/01/26 07/01/34 07/01/37 07/01/37 07/01/30 07/01/36 1,350 $ 98 1,448 $ - $ - $ 1,350 $ 1,350 $ - $ - $ - $ - $ - $ (98) (98) $ - $ - $ - $ - $ - 07/01/22 - $ - $ 1,050 $ 1,335 205 177 2,767 $ - $ - $ - $ - $ - $ (39) (22) (61) $ 5,825 $ 210 2,024 197 8,256 $ 5,825 $ 210 2,024 197 8,256 $ - 07/15/27 07/15/22 07/15/23 07/15/32 $ 6,875 $ 1,335 415 2,201 236 22 11,084 $ $ 985,338 $ - $ 90,397 $ - $ - $ (7,877) $ 887,064 $ 616,946 $ 270,118 $ $ $ $ *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). (continued) Issued Refunding Bonds Issued Table of Contents Schedule of Changes in Long-Term Debt* For the Fiscal Year Ended June 30, 2022 (in thousands) July 1, 2021 CONTRACTS PAYABLE Governmental Activities PNC Bank Investigative Equipment - Public Safety Protective Equipment - Public Safety Field Maintenance Equipment - Community Services Total Contracts 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 City of Scottsdale, Arizona 179 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 Safety Data Sheets Software - Self Insurance Debt Management Software - City Treasurer eDiscovery software - City Attorney Imaging - Administrative Services Enterprise Software - Administrative Services Local business community information and resource service software - AZ CARES Subtotal Governmental Activities $ $ $ $ $ Business-type Activities Airport Agreement Tracking - Airport 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 451 451 Issued $ $ 96 1,072 56 67 508 1,799 $ 15 401 56 83 14 143 33 3,548 94 4,387 $ $ 29 34 7 70 4,457 $ $ 880 1,034 1,914 $ 993,959 $ Retired 856 298 153 1,307 $ $ 114 240 354 $ 14 36 63 17 97 88 315 $ $ 315 $ $ - $ 1,976 $ 49 306 79 10 444 Refunding Bonds Issued Bonds Defeased Accretions, Amortizations, and Contract Adjustments June 30, 2022 Governmental Business-type Final Activities Activities Payment Date $ $ $ $ $ $ 63 6 6 212 18 443 748 $ 3 197 27 83 14 70 14 698 18 7 12 63 9 30 40 1,285 $ $ 29 14 3 46 1,331 $ $ 80 74 154 $ 93,074 $ - - - $ $ $ $ - $ $ - $ - $ - - - $ $ $ $ - $ $ - $ - $ - 1,163 1,163 - $ $ $ $ - $ $ - $ $ 402 550 219 143 1,314 33 1,066 50 1,018 96 305 2,568 12 204 29 73 19 2,850 76 7 24 8 67 48 3,417 $ $ $ $ 20 4 24 3,441 $ $ 800 960 1,760 (6,714) $ 896,147 $ 402 550 219 143 1,314 33 1,066 50 1,018 96 305 2,568 12 204 29 73 19 2,850 76 7 24 8 67 48 3,417 $ $ $ $ $ - 01/01/33 04/25/24 01/12/25 03/30/27 - 12/31/22 12/01/52 12/01/29 09/01/26 11/24/24 11/03/24 - 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 08/12/22 12/01/23 01/21/22 12/03/22 08/01/25 12/01/22 20 4 24 24 07/01/21 07/01/22 07/01/22 2032 2035 3,417 $ $ 800 960 1,760 $ - $ $ $ 626,005 $ 270,142 Compensated Absences Total Other Postemployment Benefit Liability Net Pension Liabilities Risk Management Claims Pollution Remediation Obligation $ 33,141 831 282,246 26,029 - $ 4,563 27,400 48,804 Total Long-Term Debt $ 968,252 $ 350,909 *This exhibit includes both Governmental Activities and Business-type Activities debt (paid out of Enterprise Funds). 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) Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position 182 City of Scottsdale, Arizona Business-type Activities Net Investment in Capital Assets Restricted Unrestricted Total Business-type Activities Net Position Primary Government Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position (1) 2013 2014 2015 2016 2017 2018 2019 $ 2,756,186 $ 2,685,105 $ 2,663,269 $ 3,406,976 $ 3,530,134 $ 3,604,063 $ 3,675,567 100,472 133,897 109,615 180,942 117,485 (19,464) 122,932 (3,679) 125,366 (43,632) 123,057 (27,779) 119,657 (5,012) 2020 $ 3,748,249 2021 $ 2022 4,065,844 $ 4,162,863 146,017 23,905 189,263 63,519 266,758 132,712 $ 2,990,555 (1) $ 2,975,662 (2) $ 2,761,290 (3) $ 3,526,229 (5) $ 3,611,868 $ 3,699,341 (7) $ 3,790,212 $ 3,918,171 (8) $ 4,318,626 $ 4,562,333 $ 1,058,880 41,545 242,763 $ 1,046,345 47,101 273,321 $ 1,069,475 48,911 256,129 $ 1,099,864 48,926 250,500 $ 1,093,556 52,204 282,796 $ 1,102,183 52,728 301,788 $ 1,157,026 51,596 291,368 $ 1,195,005 54,717 284,046 $ 1,343,188 $ 1,366,767 (2) $ 1,336,660 (4) $ 1,362,025 (6) $ 1,374,515 $ 1,399,290 $ 1,428,556 $ 1,456,699 $ 1,499,990 $ 1,533,768 $ 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 $ 4,769,123 171,861 277,784 $ 5,218,768 $ 4,850,432 198,745 325,693 5,374,870 $ 5,222,870 240,859 354,887 5,818,616 $ 5,357,868 321,475 416,758 $ 6,096,101 $ 1,036,650 46,901 253,109 $ 3,699,919 164,386 233,645 $ 4,097,950 $ 1,059,001 47,521 255,503 $ 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. 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. (2) Table I $ $ 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 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 $ 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 $ 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 Table IIa 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 $ 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 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 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 2022 $ 894 1,211 7,389 1,103 6,558 5,083 9,593 109,623 46,396 175,466 72,628 24,705 2,555 535 16,857 480,596 Business-type Activities Water Utility Sewer Utility Airport Solid Waste Total Business-type Activities Expenses 90,205 43,169 3,785 19,146 156,305 91,496 45,421 4,014 19,608 160,539 95,958 44,352 3,703 20,911 164,924 100,854 42,058 3,894 20,786 167,592 95,745 50,535 4,151 20,181 170,612 96,493 52,142 7,624 19,735 175,994 96,010 50,462 5,370 21,790 173,632 105,222 57,847 6,764 23,195 193,028 106,778 54,152 7,024 25,290 193,244 109,606 55,167 9,150 26,850 200,773 Total Primary Government Expenses $ 591,445 $ 596,674 $ 610,654 $ 573,128 $ 611,561 $ 602,102 $ 606,054 $ 645,919 $ 644,992 $ 681,369 (1) 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. In fiscal year 2018, the City instituted the practice of allocating bond issuance costs amongst the relevant functions. (2) (3) 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 Revenues 2013 $ 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 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 $ 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 22,019 190,455 100,615 36,939 3,552 20,458 25,638 187,202 176 227 737 188 232 2,719 1,861 19,474 10,350 6,334 2,827 531 28,397 14,831 88,884 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 Table IIb 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 2022 $ 130,843 45,391 7,695 25,532 34,573 244,034 162 173 597 218 529 3,542 167 41,773 11,891 14,375 2,954 524 53,960 87,927 218,792 124,640 49,823 9,209 27,177 38,822 249,671 $ 324,316 $ 300,297 $ 262,898 $ 358,054 $ 372,921 $ 345,118 $ 318,104 $ 377,305 $ 649,081 $ 468,463 $ (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 $ (261,804) 48,898 (212,906) $ $ $ $ $ $ $ $ $ $ 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 2013 $ City of Scottsdale, Arizona 185 Business-type Activities Taxes Interest and Investment Income Transfers Total Business-type Activities Total Primary Government Change in Net Position Governmental Activities Business-type Activities Total Primary Government 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 2016 $ 169 1,346 (6,579) (5,064) 265,416 57,630 2,955 9,987 7,174 343,162 Table IIc 2017 $ 145 2,531 (7,174) (4,498) 262,144 61,851 1,132 10,568 7,635 343,330 2018 $ 158 916 (7,635) (6,561) 287,456 66,299 2,218 10,548 7,756 374,277 2019 $ 144 2,291 (7,756) (5,321) 2020 2021 2022 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 $ 408,581 86,281 (13,201) 16,088 7,762 505,511 167 10,276 (7,581) 2,862 128 10,951 (8,432) 2,647 177 870 (8,546) (7,499) 232 (7,590) (7,762) (15,120) $ 298,085 $ 312,171 $ 330,892 $ 338,664 $ 336,769 $ 368,956 $ 408,087 $ 424,710 $ 439,657 $ 490,391 $ 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 $ 243,707 33,778 $ 277,485 $ $ $ $ $ $ $ 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) 2013 $ $ $ 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 $ $ $ (1,194) $ 132,853 227 56,017 56,244 113,237 49,554 - 2016 $ 249 65,347 65,596 $ $ 116,847 52,508 - (1,083) (4,770) $ 156,938 163,625 In fiscal year 2018, beginning fund balance was restated due to the recognition of the City's endowment funds. 2018(1) 2017 $ $ $ (1,010) (4,720) $ Table III 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 $ $ $ 171,239 604 112,267 65,100 - $ $ $ (708) (589) (13,154) (681) (6,957) $ 271 97,097 97,368 2020 $ 163,520 278 136,390 136,668 555 133,424 67,703 - 2021 $ $ $ (2,807) (7,594) $ 191,281 304 170,994 171,298 681 200,495 81,703 - 2022 $ $ $ (2,111) (4,689) $ 276,079 404 191,490 191,894 599 250,160 98,518 (4,153) (24,834) $ 320,290 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) 2013 2014 2015 2016 $ 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 $ 406,374 $ 406,810 $ 412,042 (1) Table IVa 2017 2018 2019 2020 2021 2022 $ 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 $ 409,773 99,642 1,915 36,960 8,679 11,366 6,379 (19,580) 40,157 4,012 524 3,841 4,058 7,217 1,037 $ 408,363 $ 419,664 $ 458,078 $ 492,118 $ 533,456 $ 546,952 $ 615,980 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 2013 $ 775 893 5,662 665 5,422 829 5,449 29,658 70,351 111,960 45,346 14,141 569 2014 $ 63,234 38,789 1,915 181,189 835 1,035 5,702 740 5,515 842 5,061 33,381 41,063 119,159 45,035 14,950 576 2015 $ 59,387 37,323 998 99,722 784 917 6,012 782 5,584 1,832 4,904 34,518 44,550 123,761 44,998 15,050 583 2016 $ 105,930 36,706 1,643 52,164 818 1,138 7,118 824 4,975 1,965 5,785 32,850 42,735 128,527 45,508 15,648 589 Table IVb 2017 $ 53,313 34,664 26,674 887 873 6,576 823 5,381 2,200 5,657 33,636 46,320 137,304 46,224 15,919 589 2018 $ 57,956 31,285 672 75,099 653 735 6,747 816 5,692 3,094 5,979 35,013 47,696 136,075 47,056 16,309 605 2019 $ 68,017 32,052 241 54,311 747 1,004 7,471 948 5,797 3,746 8,593 35,154 48,860 146,250 48,786 15,279 584 2020 $ 66,053 29,752 64,395 782 1,163 6,826 1,049 5,970 4,531 9,714 44,382 34,431 157,557 52,924 14,727 555 2021 $ 70,076 27,854 6,983 508 80,009 723 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 2022 $ 878 1,256 7,276 1,099 6,528 4,987 9,544 45,228 41,973 210,701 56,679 17,167 2,259 535 68,955 20,634 1,745 70,417 70,557 19,111 87,417 Total Expenditures $ 576,847 $ 471,324 $ 480,718 $ 403,131 $ 467,401 $ 461,091 $ 483,419 $ 520,041 $ 497,878 $ 583,195 Excess (Deficiency) of Revenues over (under) Expenditures $ (170,473) $ (64,514) $ (68,676) $ 5,232 $ (47,737) $ (3,013) $ 8,699 $ 13,415 $ 49,074 $ 32,785 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) (dollars 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 Financing of Contracts Payable 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 2013 $ Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Non-capital Expenditures (1) $ 78,171 (70,919) - 2014 $ 89,669 (82,696) 296 $ 89,806 (83,211) - (1) 2017 2018 2019 2020 2021 2022 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 $ 136,575 (129,030) 1,517 2016 2015 $ Table IVc 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) 220 302 1,009 21,649 180,900 31,797 96,385 10,807 28,344 36,864 7,877 53,646 70,354 32,022 67,061 $ 119,428 22.2% 21.0% 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. $ 64,807 18.1% 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (1) $ $ Property 64,908 64,914 64,272 61,956 63,320 63,577 68,738 67,911 69,826 72,602 Privilege and Use General $ 89,002 95,604 100,560 104,995 103,081 116,679 122,152 122,923 136,511 165,535 Franchise Taxes Cable TV Light and Power Franchise Franchise 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 3,825 9,490 Privilege and Use McDowell Mtn Preserve $ 30,376 32,655 34,429 36,029 35,489 40,089 41,909 42,331 46,921 57,013 Sales and Use Taxes Privilege and Use Privilege and Use Transportation Public Safety $ 16,852 $ 8,679 18,116 9,330 19,097 9,837 19,938 10,294 19,615 10,140 22,044 11,454 11,974 27,788 (1) 35,022 12,094 39,023 13,406 47,586 16,289 Intergovernmental State Revenue State Shared Sales Sharing $ 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 34,247 33,718 The Privilege and Use-Transportation tax rate increased from 0.2 percent to 0.3 percent, effective February 1, 2019. Table V $ Other 838 900 906 913 921 931 3,102 4,177 4,209 5,342 $ Transient Occupancy 13,852 15,303 17,047 17,397 18,951 19,837 22,407 18,793 18,013 31,863 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 2013 Automotive $ 1,074,591 Construction 861,934 Food Stores 639,362 Hotel/Motel 440,522 Major Department Stores 907,857 Miscellaneous Retail Stores 1,321,572 Other Taxable Activity 626,171 Rentals 1,189,304 Restaurants 794,034 Utilities 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 $ 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 2022 $ 1,984,944 1,193,366 878,442 965,649 1,147,151 3,683,694 1,697,911 2,132,353 1,518,421 478,033 Total $ 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 $ 15,679,964 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.75% 1.75% 1.75% 1.75% City Sales Tax (1) (2) Effective January 1, 2017, the Arizona Department of Revenue took over all collection and administration of privilege, use, jet fuel, and bed taxes. Effective February 1, 2019, the privilege tax rate increased to 1.75%. (2) 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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% 1.75% (2) 0.70% 1.75% 0.70% 1.75% 0.70% 1.75% 0.70% 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% 1.55% (2) 0.00% 1.55% 0.00% 1.55% 0.00% 1.55% 0.00% State Rate 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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 Rate 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% Jet Fuel Tax Rates (cents per gallon) Fiscal City Direct County State Year Rate Rate Rate 2013 0.0180 0.0031 0.0305 2014 0.0180 0.0031 0.0305 2015 0.0180 0.0031 0.0305 2016 0.0180 0.0031 0.0305 2017 0.0180 0.0031 0.0305 2018 (1) 0.0180 0.0031 0.0305 2019 0.0180 0.0031 0.0305 2020 0.0180 0.0031 0.0305 2021 0.0180 0.0031 0.0305 2022 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) Effective August 9, 2017, the City can only tax the first 10 million gallons by each purchaser in a calendar year. (2) Effective February 1, 2019, the City transaction privilege tax rate increased to 1.75% and the use tax rate increased to 1.55%. State Rate 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 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) 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 688 3,123 210 453 38 8,638 11,241 7,173 961 420 32,945 Fiscal Year 2022 Percentage Tax of Total Revenue 2.09% $ 35,155 9.48% 22,517 0.64% 16,385 1.37% 17,567 0.12% 20,356 26.22% 65,549 34.12% 34,098 21.77% 38,554 2.92% 27,982 1.27% 8,492 100.00% $ 286,655 Table VIII Percentage of Total 12.26% 7.86% 5.72% 6.13% 7.10% 22.87% 11.89% 13.45% 9.76% 2.96% Number of Filers 524 7,377 191 86 27 4,838 3,846 4,205 916 278 100.00% 22,288 Fiscal Year 2013 Percentage Tax of Total Revenue 2.35% $ 18,179 33.08% 14,871 0.86% 10,675 0.39% 7,447 0.12% 15,109 21.71% 23,647 17.26% 13,764 18.87% 20,710 4.11% 13,279 1.25% 7,228 100.00% $ 144,909 Percentage of Total 12.55% 10.26% 7.37% 5.14% 10.43% 16.31% 9.50% 14.29% 9.16% 4.99% 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 Scottsdale Unified School District City Direct Rate City of Scottsdale, Arizona 194 Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Operating $ 0.5027 0.5342 0.5580 0.5293 0.5071 0.4956 0.5316 0.5198 0.5273 0.5039 Debt Service $ 0.7225 0.7604 0.6869 0.6244 0.6219 0.5889 0.5705 0.5214 0.5043 0.5042 Total City $ 1.2252 1.2946 1.2449 1.1537 1.1290 1.0845 1.1021 1.0412 1.0316 1.0081 Operating $ 3.0875 3.3548 3.1091 2.8332 2.8566 2.7463 2.5675 2.5928 2.6334 2.5261 Debt Service and Budget Override $ 1.3390 1.2239 1.0045 1.0263 1.0033 0.9864 1.1364 1.0538 0.9939 0.9318 County Free Library $ 0.0492 0.0438 0.0556 0.0556 0.0556 0.0556 0.0556 0.0556 0.0556 0.0556 County Special Health Care $ 0.1683 0.1939 0.1856 0.3021 0.3053 0.2851 0.2941 0.3333 0.3046 0.2970 EVIT 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 Total School $ 4.4765 4.6287 4.1636 3.9095 3.9099 3.7827 3.7539 3.6966 3.6773 3.5079 Total County $ 3.5967 3.8560 3.8802 4.0288 4.0583 3.9681 3.9300 3.9036 3.8200 3.6783 Total Direct and Overlapping $ 9.2984 9.7793 9.2887 9.0920 9.0972 8.8353 8.7860 8.6414 8.5289 8.1943 $ Overlapping Rates Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 County Operating $ 1.2407 1.2807 1.3209 1.3609 1.4009 1.4009 1.4009 1.4009 1.4009 1.3459 Community College $ 1.3778 1.5340 1.5187 1.4940 1.4651 1.4096 1.3754 1.3285 1.2881 1.2257 County Flood $ 0.1780 0.1392 0.1392 0.1592 0.1792 0.1792 0.1792 0.1792 0.1792 0.1792 County Education Equalization $ 0.4717 0.5123 0.5089 0.5054 0.5010 0.4875 0.4741 0.4566 0.4426 0.4263 County-Wide Jurisdictions Fire District Assistance $ 0.0110 0.0121 0.0113 0.0116 0.0112 0.0102 0.0107 0.0095 0.0090 0.0086 Central AZ Project $ 0.1000 0.1400 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 2021". 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 2022 the rates were as follows: DC Ranch CFD - $0.3660, McDowell Mountain Ranch CFD - $0.5659, Via Linda Road CFD - $1.0411, and the Waterfront Commercial CFD - $4.2723. 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 2022 City of Scottsdale, Arizona 195 Taxpayer Arizona Public Service Company Scottsdale Fashion Square LLC SDQ FEE LLC XHR Scottsdale Ranch LLC 18700 Hayden Road LLC (Cavasson) Excel Promenade LLC (1) Portales Corporate Center LLC Weingarten Nostat Inc. Stockdale Galleria LLC Southwest Gas Corporation Scottsdale Princess Partnership Qwest Corporation WJ Small Grandchildrens Trust Gainey Drive Associates Scottsdale Fiesta Retail Center Total $ $ Taxable Assessed Value 67,951 46,474 22,634 18,200 16,850 16,601 16,582 16,185 13,218 13,084 247,779 Rank 1 2 3 4 5 6 7 8 9 10 - 2013 Percentage of Total Taxable Assessed Value 0.977% 0.668% 0.325% 0.262% 0.242% 0.239% 0.238% 0.233% 0.190% 0.188% 3.562% $ $ Taxable Assessed Value 60,589 45,007 15,219 15,625 13,552 20,368 18,994 13,679 13,594 11,534 228,161 Rank 1 2 6 5 9 3 4 7 8 10 Percentage of Total Taxable Assessed Value 1.193% 0.886% 0.300% 0.308% 0.267% 0.401% 0.374% 0.269% 0.268% 0.227% 4.493% 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 2021 assessed valuation of the SRP within the City is $22,586,323 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 2013 P 2013 S Residential Property $ 3,232,809 3,236,951 Personal Property Real Property Commercial Vacant Land Property Historic and Special Use Assessed Value $ $ $ 1,402,569 1,405,867 $ 845,953 856,609 3,133 3,133 Table XI 228,843 228,843 Less Tax Exempt Property $ (643,724) (651,408) Total Taxable Assessed Value Total Direct Tax Rate $ $ 5,069,583 5,079,995 0.50 0.72 City of Scottsdale, Arizona 196 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 4,301,223 5,014,035 1,335,470 1,726,614 737,727 1,137,771 1,187 1,816 221,801 229,030 (600,412) (885,997) 5,996,996 7,223,269 0.53 0.57 2020 P 2020 S 2021 P 2021 S 4,555,026 5,356,377 4,813,338 5,719,222 1,397,576 1,848,894 1,465,046 1,988,445 756,975 1,217,117 770,044 1,215,429 1,266 2,032 1,207 1,873 227,231 236,828 241,822 252,043 (614,956) (959,355) (674,280) (1,022,311) 6,323,118 7,701,893 6,617,177 8,154,701 0.52 0.52 0.53 0.50 2022 P 2022 S 5,069,144 6,125,758 1,547,914 2,131,654 799,978 1,263,825 1,280 1,917 232,722 233,873 (694,052) (1,046,330) 6,956,986 8,710,697 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Tax Levy for Fiscal Year $ 62,187 62,367 63,380 59,553 60,954 61,803 66,092 65,840 68,267 70,136 Collected within the Fiscal Year of the Levy $ Amount 60,630 61,227 62,233 58,714 60,056 60,721 64,982 64,273 67,423 69,082 Percentage of Levy 97.5% 98.2% 98.2% 98.6% 98.5% 98.2% 98.3% 97.6% 98.8% 98.5% Collections in Subsequent Years $ 792 598 574 540 597 781 665 1,093 714 - Table XII Total Collections to Date $ Amount 61,422 61,825 62,807 59,254 60,653 61,502 65,647 65,366 68,137 69,082 Percentage of Levy 98.8% 99.1% 99.1% 99.5% 99.5% 99.5% 99.4% 99.3% 98.8% 98.5% 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) 198 City of Scottsdale, Arizona Municipal Property Corporation Bonds $ 222,403 218,942 243,044 232,970 221,535 208,828 193,165 218,786 202,825 187,101 Scottsdale Preserve Authority Bonds $ 56,154 53,100 48,276 43,489 17,823 13,215 8,432 2,825 1,448 - Fiscal Year Ended June 30 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Obligation Bonds $ 651,224 647,859 624,616 585,931 590,910 568,259 521,632 467,788 475,212 421,589 Fiscal Year Ended June 30 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Business-type Activities Municipal Property Corporation Revenue Bonds Subscriptions Bonds $ 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 4,646 265,472 24 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. Table XIII Governmental Activities Community Facilities District Contracts Certificates of Bonds Payable Participation $ 16,003 $ 32,083 $ 2,570 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 11,084 451 8,256 1,314 Total Primary Government $ 1,325,360 1,298,389 1,298,869 1,223,452 1,240,499 1,174,343 1,080,362 1,020,048 993,959 896,147 Percentage of Personal Income 11.63% 11.43% 11.26% 10.26% 9.98% 8.96% 7.45% 6.59% 6.57% 5.68% Per Capita $ 5,965 5,776 5,689 5,292 5,212 4,843 4,232 3,952 4,118 3,691 $ Leases 183 329 229 156 95 32 219 2,373 1,799 2,568 Service Concession Arrangements $ 3,144 2,990 2,837 2,683 2,529 2,375 2,221 2,068 1,914 1,760 Subscriptions $ 4,387 3,417 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Governmental Activities General Obligation Bonds $ 651,224 647,859 624,616 585,931 590,910 568,259 521,632 467,788 475,212 421,589 Less: Amounts Available in Debt Service Fund $ 10,105 9,369 12,172 11,529 11,516 2,471 1,394 1,042 3,469 8,714 Net General Bonded Debt $ 641,119 638,490 612,444 574,402 579,394 565,788 520,238 466,746 471,743 412,875 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 12.6% 13.2% 11.8% 9.6% 9.0% 8.2% 7.2% 6.1% 5.8% 4.7% Table XIV Per Capita $ 2,885 2,840 2,683 2,484 2,434 2,333 2,038 1,808 1,955 1,700 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Direct and Overlapping Governmental Activities Debt As of June 30, 2022 (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 $ 184,715 640,269 125,565 26,445 302,834 326,641 27,205 6,735 386,570 76,755 90,470 Table XV Estimated Percentage Applicable 14.2783% 14.2783% 0.0002% 5.9566% 69.5975% 30.2760% 62.0545% 3.6108% 0.3663% 0.0001% 6.7362% Estimated Share of Overlapping Debt $ Subtotal, overlapping debt City direct debt Total direct and overlapping debt 26,374 91,420 1,575 210,765 98,894 16,882 243 1,416 6,094 453,663 626,005 100.0000% 626,005 $ 1,079,668 Sources: The various entities, State and County Abstract of the Assessment Roll , Arizona Department of Revenue and Maricopa County 2021 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 2021-22 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 2013 $ Total Net Debt Applicable to 20% Limit 1,015,999 2014 $ 561,126 965,570 2016 2015 $ 553,121 (1) 2017 $ 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 454,873 $ 55.23% $ Total Net Debt Applicable to 6% Limit 304,799 412,449 $ 57.28% $ 78,009 289,671 65,944 Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit (1) $ 226,790 25.59% $ 223,727 $ 1,385,687 $ 1,444,654 532,888 513,768 521,179 511,046 479,265 8,180 10,637 10,415 502,468 $ 310,606 677,510 $ 43.13% $ 54,022 22.77% $ 357,384 256,584 17.39% 319,637 10.56% $ 41.23% $ 37,747 $ 754,505 $ 385,159 864,004 $ 37.65% $ 415,706 954,974 $ $ 33.90% $ 433,396 2021 1,540,379 1,630,940 $ 1,742,139 433,865 444,366 395,172 10,181 12,713 11,549 1,173,861 $ 1,335,418 28.03% 23.35% 1,096,333 $ $ 28.83% $ 2022 462,114 $ 489,282 $ 522,642 26,116 14,419 3,950 - 3,859 3,713 - - - - 426 410 359,043 $ 401,287 6.78% 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 $ 1,283,864 Excess Premium Legal 6% Debt Margin (Available Borrowing Capacity) 2019 $ 1,191,278 51.47% $ 2018 1,035,356 Excess Premium Legal 20% Debt Margin (Available Borrowing Capacity) (2) 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. 3.47% $ 429,446 0.91% $ 462,114 0.00% $ 484,997 0.88% $ 518,519 0.79% Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Legal Debt Margin Information As of June 30, 2022 (in thousands) Table XVIb Legal Debt Margin Calculation for Fiscal Year 2022 Assessed Valuation as of June 30, 2022 $ 8,710,697 20% Limitation Debt Limit Equal to 20% of Assessed Valuation $ 1,742,139 202 City of Scottsdale, Arizona Debt applicable to limit: General Obligation Bonds 395,172 Excess Premium 11,549 Legal 20% Debt Margin (Available Borrowing Capacity) $ 1,335,418 6% Limitation Debt Limit Equal to 6% of Assessed Valuation $ 522,642 Debt applicable to limit: General Obligation Bonds 3,713 Excess Premium Legal 6% Debt Margin (Available Borrowing Capacity) 410 $ 518,519 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 203 City of Scottsdale, Arizona Fiscal Year Ended June 30 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Operating Revenue(1) $ 138,224 142,066 139,242 152,612 148,310 160,161 164,487 173,739 177,073 167,200 Less: Operating Expenses $ 73,647 77,891 79,154 81,586 85,909 87,130 82,748 98,549 94,052 97,184 Net Operating Revenue $ 64,577 64,175 60,088 71,026 62,401 73,031 81,739 75,190 83,021 70,016 Development Fee Revenue $ 12,213 15,139 5,326 5,156 6,072 6,525 4,256 7,777 5,257 5,902 Special Assessment Bonds Fiscal Year Ended June 30 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Special Assessment Collections $ 591 - Debt Service Principal $ 755 - Debt Service Interest $ 17 - Net Revenue $ 76,790 79,314 65,414 76,182 68,473 79,556 85,995 82,967 88,278 75,918 Municipal Property Corporation Bonds Debt Service Principal $ 3,115 3,240 2,940 3,055 3,195 3,370 3,540 3,725 3,930 4,145 Debt Service Interest $ 1,891 1,738 1,599 1,487 1,354 1,195 1,026 849 654 447 Coverage 15.34 15.93 14.41 16.77 15.05 17.43 18.83 18.14 19.26 16.53 Excise Tax(3) $ 170,227 183,376 195,037 194,560 196,729 216,643 223,668 230,539 251,375 284,031 Debt Service Principal(4) $ 12,355 18,200 16,950 20,215 22,550 26,290 30,210 33,675 31,625 32,795 Debt Service Interest(4) $ 21,480 22,994 22,299 23,220 21,599 23,908 22,474 21,906 18,742 15,929 Scottsdale Preserve Authority Bonds Coverage(2) 0.77 N/A N/A N/A N/A N/A N/A N/A N/A N/A Sales Tax $ 30,376 32,655 34,429 36,029 35,489 40,089 41,909 42,331 46,921 57,013 Debt Service Principal $ 3,800 3,960 4,140 4,340 4,175 4,365 4,540 4,780 1,280 1,350 Debt Service Interest $ 2,680 2,508 2,330 2,143 1,423 734 577 350 132 68 Coverage 4.69 5.05 5.32 5.56 6.34 7.86 8.19 8.25 33.24 40.21 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Includes investment income. (2) Coverage ratio is less than 1.0 due to prepayment of amounts that were in fund balance. (3) 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 5.03 4.45 4.97 4.48 4.46 4.32 4.25 4.15 4.99 5.83 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (1) Population 222,200 224,800 228,300 231,200 238,000 242,500 255,300 258,100 241,361 242,800 Personal Income(2) (in thousands) $ 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 15,780,058 Per Capita Personal Income(3) $ 51,276 50,525 50,531 51,564 52,220 54,060 56,794 59,953 62,682 64,992 Median Age(4) 45.4 45.1 45.4 46.1 46.3 46.3 46.9 47.0 47.7 47.7 Table XVIII Charter and Public School Enrollment(5) 27,816 27,191 26,233 25,979 25,847 25,598 25,281 25,606 25,800 24,906 Fiscal Year End Average Unemployment Rate(6) 5.7% 5.4% 4.7% 4.2% 3.8% 3.5% 3.5% 3.4% 6.6% 3.0% Data Sources and Notes: (1) U.S. Census; fiscal years 2013-2020 and 2022 based on U.S. Census July 1 population estimates rounded to the nearest hundred. Fiscal year 2021 based on U.S. Census 2020 population for April 1, 2020. (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, 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 2021 calendar year that ended within the 2022 fiscal year. Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Principal Employers Current Year and Nine Years Ago 2022 City of Scottsdale, Arizona 205 Employer HonorHealth(2) Vanguard(3) General Dynamics Mission Systems (4) City of Scottsdale Scottsdale Unified School District (5) Mayo Clinic Axon Nationwide Specialty (6) CVS Health(7) The Hartford Veri Fone Inc International Cruise and Excursion Total Employees 7,131 2,770 2,700 2,612 2,093 1,917 1,600 1,407 1,345 785 Rank 1 2 3 4 5 6 7 8 9 10 24,360 Percentage of Total City Employment(1) 3.40% 1.32% 1.29% 1.24% 1.00% 0.91% 0.76% 0.67% 0.64% 0.37% 11.60% Table XIX 2013 Employees 6,600 2,186 2,764 2,465 1,828 1,972 Rank 1 5 2 3 7 6 Percentage of Total City Employment(1) 5.82% 1.93% 2.44% 2.17% 1.61% 1.74% 1,525 2,400 8 4 1.34% 2.12% 1,431 1,130 24,301 9 10 1.26% 1.00% 21.43% Source: City of Scottsdale, Economic Development Department communications with employers, June 2022. (1) Annual Employment in 2022 according to ESRI was 210,007; the fiscal year 2013 Annual Financial Report reported annual employment as 113,444. (2) Scottsdale Healthcare was renamed HonorHealth in 2015. (3) The Vanguard Group was renamed Vanguard Insurance in 2013 and was then renamed Vanguard in 2014. (4) General Dynamics C4 Systems was renamed General Dynamics Mission Systems in 2016. (5) Scottsdale Unified School District has administrative offices and some schools outside of Scottsdale city limits. 2022 numbers only report Scottsdale-based employees. (6) Scottsdale Insurance Company was renamed Nationwide Specialty in 2015. (7) CVS Caremark was renamed CVS Health in 2014. 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 2013 2014 2015 2016 2017 2018(1) 2019 (2) 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 2020 (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 2021 2022 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 10.0 7.0 63.5 6.8 60.0 26.2 102.5 241.5 129.5 971.9 503.8 100.0 217.9 15.5 99.4 2,555.5 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) Effective fiscal year 2019, Purchasing was moved from Administrative Services to City Treasurer, and Risk Management was moved from City Treasurer to City Attorney. (3) 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 (1) Operating Indicators by Division 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 payments issued(2) # of customer contacts (utilities and licensing) # of Purchasing purchase orders(3) City Manager % of survey respondents rating the "Overall Quality of Life in Scottsdale" as good to excellent(4) % of survey respondents rating "Your Neighborhood as a Place to Live" (4)(5) as good to excellent Total ad value equivalency generated(6) Acres of land acquired for inclusion in the McDowell Sonoran Preserve % increase of Neighborhood Watch groups annually Administrative Services Human Resources Citywide turnover(7) 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 37% 34% 39% 39% 35% 35% 35% 28% 20% 27% 14 14 16 13 13 15 14 11 14 13 1,124 63 1,080 65 1,005 57 1,000 61 1,067 56 1,033 70 946 63 950 59 912 63 882 67 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 96,471/ 83,783 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 29,205 104,226 4,205 No Survey 98% No Survey No Survey 96% No Survey 96% No Survey 97% No Survey 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 No Survey N/A 6,400 5% 2,365 2% 0 0% 0 5% 420 5% 0 2% 0 7% 0 1% 0 2% 0 4% 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% 20.4% 1.0% 1,588,935 167.3 1,335,869 45.8 1,395,338 51.4 2,686,000 58.6 2,117,633 67.2 1,512,355 82.8 1,026,016 86.9 2,032,000 98.3 820,000 103.5 1,562,340 114.0 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(8) 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 - # of companies/# of jobs(9) Tourism Hotel/Motel average occupancy rate # of Downtown special events coordinated Aviation Scottsdale Airport - takeoffs and landings Public Safety Police # of calls for service(10) 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 (enroute to onscene) (continued) Table XXI 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 223,538 325,023 659,882 706,682 698,090 732,510 747,000 936,000 992,000 882,669 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 23,283,195 27 24 52 51 55 49 46 30 48 35 12 15 12 12 15 13 14 13 7 5 100% 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% 12,076 100% 99% 11,226 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 9 / 769 63.0% 126 65.6% 275 67.8% 325 67.9% 277 75.1% 174 69.1% 173 70.2% 155 55.6% 129 47.1% 43 61.9% 188 137,333 148,971 153,285 162,535 164,622 166,425 176,677 191,284 192,185 155,092 226,832 223,534 221,069 233,531 268,767 271,438 267,923 272,696 238,349 255,691 4:54 5:04 5:25 5:12 4:48 4:57 5:05 5:36 5:24 5:36 96% 90% 95% 91% 93% 98% 94% 88% 91% 92% 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 41,353 0.17 5:21 Table of Contents Table of Contents-Statistical Section City of Scottsdale, Arizona Operating Indicators by Division(1) Last Ten Fiscal Years 209 City of Scottsdale, Arizona Division Public Works Public Works Facility inventory maintained (square feet)(11) # of active Capital Projects managed by CPM Solid Waste # of homes serviced by Residential Refuse Collection # 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)(12) Total citywide transit ridership(13) 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 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 3,012,519 196 80,013 80,354 80,785 81,187 81,665 82,236 82,711 83,189 83,680 83,993 2,691 2,905 2,362 3,345 2,770 2,509 2,629 2,426 2,393 2,581 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 2,780 644,306 87,851 88,348 88,905 89,596 90,172 90,817 91,279 91,802 92,590 93,027 67.6 70.2 63.9 67.5 67.0 70.9 66.3 67.6 74.0 67.7 8.9 78,269 9.7 79,014 9.2 79,588 9.1 80,202 11.6 80,704 12.2 81,306 11.9 81,841 11.6 82,320 12.0 82,834 11.1 83,268 20.7 1,055,230 20.9 1,059,738 21.2 1,066,385 20.5 1,078,500 21.4 1,085,590 22.1 1,072,498 22.1 1,099,164 21.6 1,099,085 22.2 1,110,050 22.8 1,112,651 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 2023 Budget. (2) Effective fiscal year 2022 the # of Accounts Payable payments issued figure presented includes all electronic payments. (3) 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. (4) 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 "Scottsdale Community Survey". (5) 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 changes. (6) 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. (7) Effective fiscal year 2022 the increase in the Citywide turnover rate is due to a methodology change. (8) 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. (9) 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. (10) Measure is for the prior calendar year end, rather than fiscal year end. (11) 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. (12) 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. (13) 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. 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 2013 2014 2015 2016 2017 Table XXII 2018 2019 2020 2021 2022 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 4 352 15 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 20,080,026 2,852 315 42 975 4 55 6 42 975 4 55 6 42 975 4 61 6 42 975 4 64 6 42 975 4 64 6 42 975 4 64 6 42 975 4 70 6 42 975 4 70 6 43 975 4 70 6 44 982 4 72 6 Water Water Mains (miles) Fire Hydrants 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 2,148 11,582 Sewer Sanitary Sewers (miles) Storm Sewers (miles) 1,424 169 1,429 188 1,441 275 1,452 285 1,456 309 1,468 316 1,483 325 1,505 330 1,513 337 1,520 342 Highways and Streets Square Yards of Pavement Equivalent 12' Wide Lane Miles Traffic Signals City of Scottsdale, Arizona 210 Culture and Recreation Parks Parks Acreage Swimming Pools (1) Tennis/Pickleball Courts Community Centers Source: City of Scottsdale's divisions. (1) Pickleball courts have been added to the statistics. City of Scottsdale, Arizona City Treasurer’s Office (480) 312-2437 Visit our website www.ScottsdaleAZ.gov/Finance