City of Tempe, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2020 City Council: Mark Mitchell, Mayor Lauren Kuby, Vice Mayor Jennifer Adams Robin Arredondo-Savage Arlene Chin Randy Keating Joel Navarro Administrative Staff: Andrew Ching, City Manager Presented by: Kenneth Jones, Deputy City Manager - Chief Financial Officer Renie Broderick, Internal Services Director Thomas F. Duensing, CPA, Deputy Internal Services Director - Finance 1 City of Tempe, Arizona 2 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting List of Principal Officials City Organizational Chart 7 14 15 16 FINANCIAL SECTION Independent Auditor’s Report Management’s Discussion and Analysis (required supplementary information) 17 19 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities 37 38 Fund Financial Statements: Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - General Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - Transit Special Revenue Fund Statement of Fund Net Position - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Position - Fiduciary Trust Fund Statement of Changes in Fiduciary Net Position - Fiduciary Trust Fund Notes to the Financial Statements 40 42 44 46 47 48 50 52 53 54 54 55 Required Supplementary Information: Schedules of Required Supplementary Information Schedule of Contributions- All Pension Plans - Last Six Fiscal Years Schedule of the Proportionate Share of the Net Pension Liability- ASRS - Last Six Fiscal Years Schedule of the Proportionate Share of the Net OPEB Health Insurance Premium Liability (Asset) - ASRS - Last Three Fiscal Years Schedule of the Proportionate Share of the Net OPEB Long-Term Disability Liability-ASRS - Last Three Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Police - Last Six Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Fire - Last Six Fiscal Years Schedule of Changes in the Net OPEB Liability and Related Ratios- PSPRS: Police - Last Three Fiscal Years Schedule of Changes in the Net OPEB Liability (Asset) and Related Ratios- PSPRS: Fire - Last Three Fiscal Years 3 114 115 116 117 118 119 120 121 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona FINANCIAL SECTION (Continued) Required Supplementary Information: (Continued) Schedules of Required Supplementary Information (Continued) Schedule of Contributions- OPEB Plan- Last Four Fiscal Years Schedule of Changes in the Net OPEB Liability and Related Ratios- OPEB PlanLast Four Fiscal Years Schedule of Investment Returns- OPEB Plan- Last Four Fiscal Years Notes to Required Supplementary Information 122 123 124 125 Combining Fund Financial Statements: Non-major Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Internal Service Funds: Combining Statement of Fund Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows 130 134 139 140 141 Other Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual: General, Debt Service, Special Revenue, Capital Projects and Enterprise Fund Types General Obligation Debt Service Fund Special Assessment Debt Service Fund Performing Arts Fund Highway User Revenue Fund Community Development Fund Housing Assistance Fund Housing Affordability Fund Donations and Court Awards Fund Grants Fund Community Facilities District Fund Transit Capital Projects Fund Streets Capital Projects Fund Police Protection Capital Projects Fund Fire Protection Capital Projects Fund Storm Sewers Capital Projects Fund Parks Capital Projects Fund Community Development Capital Projects Fund Signals Capital Projects Fund Community Facilities District Capital Projects Fund Water and Wastewater Fund Solid Waste Fund Emergency Medical Transportation Fund Golf Fund 4 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 Comprehensive Annual Financial Report For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona STATISTICAL SECTION Financial Trends Net Position by Component - Last Ten Fiscal Years (accrual basis of accounting) Changes in Net Position - Last Ten Fiscal Years (accrual basis of accounting) Fund Balances, Governmental Funds - Last Ten Fiscal Years (modified accrual basis of accounting) Changes in Fund Balance, Governmental Funds - Last Ten Fiscal Years (modified accrual basis of accounting) S-1 S-2 168 169 S-3 172 S-4 173 S-5 S-6 S-7 175 176 177 S-8 178 S-9 179 S-10 S-11 S-12 S-13 180 181 182 183 S-14 S-15 S-16 S-17 S-18 S-19 S-20 S-21 184 185 186 187 188 189 190 191 S-22 192 S-23 193 S-24 S-25 194 195 S-26 S-27 S-28 196 197 198 Revenue Capacity Taxable Sales and Percentage of Taxable Sales by Category - Last Ten Fiscal Years (cash basis) Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years General Property Tax Information Primary and Secondary Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates - All Direct and Overlapping Governments - Last Ten Fiscal Years Property Tax Levies - All Direct and Overlapping Governments - Last Ten Fiscal Years Property Tax Levies and Collections - Last Ten Fiscal Years Principal Tax Payers, Property Tax - Current Fiscal Year and Nine Years Prior Principal Tax Payers, Sales and Use Tax - Current Fiscal Year and Nine Years Prior Debt Capacity Excise Tax Collections - Last Ten Fiscal Years Ratios of Net General Bonded Debt Outstanding - Last Ten Fiscal Years Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt Total Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information - Last Ten Fiscal Years Remaining General Obligation Bond Authorizations Pledged-Revenue Coverage - Last Ten Fiscal Years Pledged Revenue, Projected Debt Service and Estimated Coverage - Excise Tax Obligation (Excluding Transit Excise Tax Obligations) Pledged Revenue, Projected Debt Service and Estimated Coverage - Transit Excise Tax Obligations Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years Principal Employers - Current Fiscal Year and Nine Years Prior Operating Information Full-Time Equivalent City Government Employees by Function - Last Ten Fiscal Years Operating Indicators by Function/Program - Last Ten Fiscal Years Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 5 City of Tempe, Arizona 6 This section provides general information on the government’s structure and information useful in assessing the City’s financial condition. Introductor y Section CITY OF TEMPE P.O. BOX 5002 20 EAST SIXTH STREET TEMPE, AZ 85281 480.350.8350 CITY MANAGER’S OFFICE December 10, 2020 To the Honorable Mayor, Members of the City Council and Residents of the City of Tempe, Arizona: The Comprehensive Annual Financial Report, including the Independent Auditor’s Report, for the fiscal year ended June 30, 2020 is submitted in accordance with Article V of the City Charter for your review. Responsibility for the accuracy and completeness of the presented data, including all disclosures, rests with management. To the best of our knowledge and belief, this report is accurate in all material respects and is presented in a manner designed to fairly set forth the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. This Comprehensive Annual Financial Report represents management's report to its governing body, constituents, legislative and oversight bodies, investors and creditors. Copies of this report will be sent to elected officials, City management personnel, bond rating agencies, nationally recognized municipal securities information repositories and other agencies that have expressed an interest in Tempe's financial condition. Copies of this financial report will also be placed in the City library and on the City’s web site at https://www.tempe.gov/government/internal-services/finance/open-book for use by the general public. Management is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and that adequate accounting data are compiled to allow for the preparation of the basic financial statements in conformity with generally accepted accounting principles (GAAP). The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived and the valuation of costs and benefits requires estimates and judgments by management. The accounting firm of Heinfeld, Meech & Co., P.C., an independent certified public accounting firm, performed the City’s annual financial statement audit. The auditor’s unmodified “clean” Independent Auditor’s Report on the financial statements is included in the financial section of this report. The City’s independent auditors also perform the Single Audit of the City's federal grant programs. The Single Audit Reporting Package is issued separately from this financial report and is available upon request. Generally Accepted Accounting Principles (GAAP) require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the Independent Auditors’ Report. 7 CITY OF TEMPE PROFILE History - Tempe’s history dates back to 1867 when Mr. Charles T. Hayden, father of former U.S. Senator Carl Hayden, constructed a cable ferry on the then uncontrollable waters of the Salt River. In 1871, Mr. Hayden and four others organized the Hayden Milling operations and related agricultural enterprises. Soon after, the Town of Hayden’s Ferry was founded. The name of the town was changed from Hayden’s Ferry to Tempe in 1880 and was incorporated in 1894. Current Profile - The boundaries of Tempe encompass an area approximately 40.22 square miles with an estimated population of 192,000 residents. Tempe offers more than 330 days of sunshine each year with rainfall amounts of approximately 7 inches a year. The City is located in Maricopa County, Arizona and is bordered by the cities of Phoenix, Scottsdale, Mesa, Chandler and the Town of Guadalupe. Tempe is surrounded by five major freeways and is only minutes away from Phoenix Sky Harbor International Airport, making it the most accessible City in the metropolitan Phoenix area. Government and Organization - On October 19, 1964, the electors in accordance with Arizona State Law ratified a Home Rule City Charter. The City operates under a Council-Manager form of government. The Mayor is elected for four years and six Councilmembers are elected at large on a non-partisan ballot for staggered four-year terms. The City Council appoints the City Manager who has full responsibility for carrying out Council policies and administering City operations. The City provides services as authorized by its charter including: public safety (police, fire, building inspection), highways and streets, public transit, sanitation, water and wastewater, cultural-recreational, human services, community development and general administration. The Rio Salado Community Facilities District is a separate component unit of the City and facilitates the development around Tempe Town Lake. Budgetary Controls - The City maintains budgetary controls that are designed to ensure compliance with budgetary and legal provisions embodied in the annually appropriated operating and capital project budgets approved by the City Council. Activities of the General Fund, Special Revenue Funds, General Obligation Debt Service Fund, Special Assessments Debt Service Fund, and Proprietary Funds are included in the annually appropriated operating budget. Project-length budgets are developed for capital projects and appropriated annually in the Capital Projects Funds. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is at the city-wide level consisting of the total operating budget and the total capital projects budget, as adopted by the City Council. However, for budget administrative purposes, the City maintains budgeting controls at department appropriation levels. In addition to maintaining budgetary control via a formal appropriation, the City maintains an encumbrance accounting system. Encumbrances are made against appropriations upon the issuance of a purchase order. As part of the annual budgeting process, encumbrances outstanding at each fiscal year end are re-appropriated through City Council action in order to be included in the adopted budget of the following year. LOCAL ECONOMY The City's overall financial condition continues to be strong and stable despite the local impact of the COVID-19 pandemic. The City’s five-year Long-Range Financial Forecast remains positive, anticipating moderate growth in taxable sales and other revenue sources. However, these projections are volatile due to unknown future COVID-19 impacts. Economic conditions have varied widely and have been impacted significantly by Federal policies, including CARES Act funds, taxpayer stimulus payments and temporary unemployment benefit increases. Revenue projections remain uncertain with the wide-ranging potential for a depressed economy due to the on-going COVID-19 pandemic and an unpredictable Federal response. Commercial and residential development activity has provided a significant increase in construction sales tax revenues in recent years and is projected to decline slightly over the next several years, but development remains above the long-term historical performance. Increases in other local tax revenues will be the key to the City's revenue stream in the near term. Many economic experts are projecting economic growth in FY 2020/21 and subsequent years of the forecast. The current economic downturn is playing-out differently than any other in recent history due to the unknown factors associated with the COVID-19 pandemic and the unpredictable Federal funding possibilities. In order to mitigate the effects of the pandemic, the City reduced expenditures in the last quarter of FY 2019/20 and has 8 made the necessary FY 2020/21 budget adjustments in an effort to stay in front of declining revenues that began to occur at the start of the pandemic in FY 2019/20. At the fiscal year end, the City has maintained healthy fund balances which shields the City from emergency budget reductions. Revenues will continue to be monitored closely and necessary budget adjustments will be made accordingly. During fiscal year ended June 30, 2020, the City experienced increases in three of the largest categories of revenue including sales taxes, state shared revenue and property taxes as indicated below. For the current year, these three revenue sources comprised 77.0% of total General Fund revenue. However, the City began to see noticeable revenue impacts beginning in March 2020 due to the pandemic. Offsetting the revenue impact, the General Fund recognized significant federal grant revenue due to the U.S. Department of the Treasury’s Coronavirus Relief Funds (CRF) distributed through the Arizona Governor’s Office as explained below. Sales Tax The City experienced growth in year-over-year local sales tax revenue in FY2019/20. However, beginning March 2020 through the end of the fiscal year, significant year-over-year reductions began due to the pandemic. Specifically, restaurant, hotel/motel and amusements saw the largest decline in taxable sales during that time period. Despite these reductions, General Fund sales tax revenues increased by $1.8 million (or 1.6%) to $114.9 million. Sales tax revenue represented 46.7% of total General Fund revenues for the year. State-Shared Revenue The United States Census counts are used in the distribution formula for state-shared revenues. As the City’s proportionate share of total state population continues to decline over time due to its landlocked status, the percentage of state-shared revenues allocated to the City also declines. However, a strong pre-pandemic economy coupled with expected state income tax increases resulted in increases in state sales tax, state income tax and auto lieu tax revenues during the year by $4.9 million or 9.3% over the prior fiscal year. These stateshared revenues combined represented about 21.5% of General Fund revenue for the year. Property Tax Property tax revenues grew by $0.9 million (or 4.3%) to $21.4 million and by $1.7 million (or 6.2%) to $29.9 million over the prior year in the General Fund and General Obligation Debt Service Fund, respectively. The city continues to experience continued overall improvement in property valuations. General Fund property tax comprised approximately 8.7% of total General Fund revenues for the year. Federal Grants During the fiscal year, the City was awarded $22.5 million in CRF to offset the economic impact of COVID-19. Of this amount, a total of $11.9 million was recognized as revenue in the General Fund and funded public safety costs due to the pandemic. The City anticipates recognizing the remaining $10.6 million in CRF federal grant revenue in FY 2020/21. The impact of the pandemic has created an unprecedented impact on the economy; however, sound management of resources and a continued focus on long-range financial planning will allow the City to continue to adapt to the changing conditions and maintain a strong foundation for the future. LONG-TERM FINANCIAL PLANNING The City prepares a five-year, comprehensive long-range financial forecast for each of its major operating funds in the fall and spring of each fiscal year. In addition, the city annually updates the debt management plan. These forecasts are critical to identifying and establishing the budgetary parameters that guide management and policy makers in the budget allocation process. The forecast provides a long-term view of how current-year decisions will impact the City of Tempe’s future finances, and is consistent with the City Council’s stated strategic priority of achieving long-term financial stability and vitality. The latest forecast projects a decline in the sales taxes offset by modest growth in state shared, and property tax revenues. Fortunately, Tempe’s economy continues to outperform the forecasts for state and regional 9 growth. Tempe’s retail and development activity are projected to continue to outperform our surrounding cities for the near term. Revenue related to building permits, plan reviews and other development-related activities are conservatively projected to decline by 35%; however, actual revenue typically outperforms projected revenues and modest increases are expected in the next five years. An economic downturn from the pandemic continues to be a major concern, we continue to watch economic trends for indications of any economic recovery. Fortunately, healthy fund balances are projected in the General Fund throughout the forecast period, which would help offset the financial impact of the pandemic. CITY COUNCIL STRATEGIC PRIORITIES Realization of the City Council’s strategic priorities for Tempe is ongoing. During the year, city departments, led by the Office of Strategic Management and Diversity, continued working collaboratively to align City operations and measure actual progress towards achieving the identified strategic priorities which are as follows: • Safe and Secure Communities -- Ensuring a safe and secure community through a commitment to public safety and justice. • Strong Community Connections -- Developing and maintaining a strong community connection by emphasizing the importance of open government, customer service and communication with community members. • Quality of Life -- Enhancing the quality of life for all Tempe residents and workers through investment in neighborhoods, parks, the arts, human services, and city amenities, with an emphasis on equity and diversity. • Sustainable Growth & Development -- Implementing sustainable growth and development strategies to improve Tempe’s environment, quality of life and economic outcomes. Tempe strives to make long-term generational investments in technology, infrastructure and public transit that create a safe, clean, equitable and healthy city. • Financial Stability and Vitality -- Maintaining long-term financial stability and vitality by focusing on economic development, business retention and generating employment to create a robust and diverse economic base. The associated performance measures, which continue to evolve, reflect the various strategies by which achievement of the strategic priorities will be made possible. The strategic priorities and associated performance measures are incorporated into the decision-making processes within the City. To the extent possible, public meeting agenda items requiring explicit council direction and/or action must identify the related strategic priorities. This was particularly the case during the development of both the fiscal year 2019/20 Annual Operating Budget as well as the Five-Year Capital Improvement Program Budget. Additionally, many nonbudgetary decisions of the City Council during the year were made within the context of the identified strategic priorities. Important tools utilized in the continual evolution of strategic planning are three separate biennial surveys of the community, businesses and employees. Another tool used to align the budget with City Council priorities is the Strategic Tool for Aligning Resources for Tempe (START). This tool provides the Mayor and Council an early opportunity to communicate the areas of focus for the upcoming budget year. In February 2019, using the START Tool, the City Council identified 3 performance measures to accelerate during FY 2019/20. This was used as a guide in the budget development process and the areas of focus are summarized as follows: • Feeling of Safety in the City • Achieving Adopted Standards for Pavement Quality Index • Feeling of Safety in City Parks 10 To ensure transparency, the progress towards the achievement of the identified strategic priorities and performance measures are openly displayed through dashboards on the city’s public-facing website. These dashboards also assist in fostering improved accountability to the residents of Tempe. FINANCIAL POLICIES The City’s financial policies provide a general framework of goals and objectives for the operating budget, debt management, financial reserves, financial reporting and the capital budget. Strong policies provide a standard against which current budgetary performance can be measured and proposals for future programs evaluated. Notable policies to ensure financial stability are summarized as follows: • Revenue and expenditures will be projected for the next five years and will be updated biannually. • Long-term debt will not be issued to finance current operations and capital projects financed through the issuance of bonds will be financed for a period not to exceed the expected useful life of the project. • The City will coordinate development of a five-year capital improvements budget with development of the operating budget. Future operating costs associated with new capital improvements will be projected and included in operating budget forecasts. • Unassigned fund balance coverage for the General Fund will maintain a range of 20% to 30% of General Fund revenue. • The City will maintain an unrestricted fund balance of no less than 25% of current revenue, plus 2% of the gross book value of tangible assets in the Water and Wastewater Fund, and a minimum of 15% of anticipated revenue in the Solid Waste and Golf Funds. • The City will maintain total fund balance in the Transit Special Revenue Fund of at least 25% of current revenue operating revenues, 10% of current year operating revenues for the Highway User Revenue Special Revenue Fund and 10% for the Performing Arts Fund. • Annual property tax levy increase for existing property shall not exceed the lesser of inflation or 3.3%. MAJOR INITIATIVES COVID-19 Pandemic Measures The reductions in local sales tax revenues impacted the General, Transit Special Revenue, Performing Arts Special Revenue Funds, and Highway User Revenue Special Revenue Funds. These funds are the most impacted by declining tax revenues. In order to adjust to the economic impact of the pandemic, the City implemented General Fund spending measures beginning in FY 2019/20 which included $3.6 million spending reductions during the last quarter of the fiscal year. Additionally, any hiring required the approval of the City Manager’s Office. Beginning in FY 2020/21, the amount of cash funded capital improvement projects was limited, and a number of one-time spending reductions were implemented resulting in General Fund, Performing Arts Fund and Highway User Revenue Fund reductions of $13.0 million, $1.0 million and $1.3 million, respectively. The City will continue to monitor In addition to the $11.9 million in CRF revenue recognized in FY 2019/20 and the $10.6 million revenue anticipated in FY 2020/21 in the City’s General Fund, Valley Metro, the regional public transportation agency providing coordinated transit services to Tempe and the Phoenix metropolitan area, received Federal CRF funding which is expected to offset Tempe’s FY 2020/21 Transit Fund operating expenditures by $21 million. This expenditure offset coupled with anticipated budget reductions beginning in FY 2021/22 is estimated to keep the Transit Fund within the established fund balance policy over the next several years. Bond Election On November 3, 2020, Tempe voters authorized the issuance of $349,000,000 in General Obligation bonds anticipated to be issued over a period of five years to finance a significant portion of the City’s capital improvement program in the following categories: 11 • • • • • Water and Sewer Improvements -- $134,000,000 Street Improvements/Storm Drains -- $74,000,000 Public Safety -- $34,000,000 Park Improvements/Community Services -- $45,000,000 Municipal Infrastructure Preservation -- $62,000,000 Although General Obligation bonds are secured and repaid from secondary property taxes. General Obligation bonds issued for Water and Sewer Improvements are anticipated to be repaid from Water and Wastewater Enterprise Fund revenues. Reorganization Based on Council approval for FY 2019/20, the City replaced the Public Works Department with the newly established Engineering and Transportation Department and Municipal Utilities Department. Additionally, the City established the Economic Development Office and the Sustainability Office, reorganized the former Parks Maintenance Division of Public Works into the Community Services Department, consolidated Adult Programming into the Community Services Department, and reorganized Kids Zone into the Human Services Department. Emergency Medical Transportation - Update The Fire Medical Rescue Department expanded its emergency medical transportation (EMT) services during the fiscal year growing from 25 full-time personnel to 31 full-time personnel. EMT services had previously been contracted out, but due to concerns regarding the long-term viability of the service providers within the past few years, the city began taking the necessary steps towards direct provision of this critical service. Private ambulance companies will continue to provide the city with backup when needed and will continue to provide convalescent or inter-facility transport such as rides to doctor appointments or hospital. Those transportation needs are arranged through health care providers. Service fees for Tempe 9-1-1 Ambulance are set by the Arizona Department of Health Services. The fees are the same as those for the private ambulance companies. Tempe Fire Medical Rescue uses the service fees to support its ambulance service with a long-term goal of becoming self-sustaining through those revenues. Streetcar - Update On November 28, 2018, the Federal Transit Administration (FTA) announced that Tempe Streetcar has been allocated the full $75 million through the Federal Transit Administration (FTA) Capital Investment Grants (CIG). In August 2018, Valley Metro received approval from the Federal Transit Administration (FTA) to begin the initial phase of significant construction on the Tempe Streetcar. With this approval, Valley Metro began work in fall 2018 to build the system’s rail trackway, power systems and street improvements. During FY 2019/20, the City issued $13.2 million in Transit Excise Tax Revenue Obligation, Special Assessment debt to finance additional costs of the Tempe Streetcar project. The City has assessed and is responsible for the collection of assessments secured by a lien on the benefitting properties from the streetcar project. The Tempe Streetcar is scheduled to open in 2021. AWARDS AND ACKNOWLEDGEMENTS Certificates of Achievement The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2019. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards in the preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. This report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City has received a Certificate of Achievement for the last forty-four consecutive years (fiscal years 1975/76 through 2018/19). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to the GFOA for award consideration. 12 In further demonstration of its’ commitment to financial excellence, the City also received the GFOA's Distinguished Budget Presentation Award for FY 2019/20 annual budget and the National Purchasing Institute’s Achievement of Excellence in Procurement Award for FY 2019/20. Acknowledgment The preparation of this report could not have been accomplished without the dedicated service of the entire staff of the Accounting Division and the competent service of our independent auditors. Credit also must be given to the Mayor and City Councilmembers for their continued support for maintaining the highest standards of professionalism in the management of the City of Tempe’s finances. For all those involved, we express our sincerest appreciation. Respectfully submitted, Andrew B. Ching City Manager Kenneth Jones Deputy City Manager/Chief Financial Officer 13 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Tempe Arizona For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Executive Director/CEO 14 City of Tempe, Arizona List of Principal Officials City Council Mark Mitchell, Mayor Lauren Kuby, Vice Mayor Jennifer Adams Robin Arredondo-Savage Arlene Chin Randy Keating Joel Navarro Administrative Staff For the Fiscal Year Ended June 30, 2020 Andrew Ching, City Manager Ken Jones, Deputy City Manager-Chief Financial Officer Steven Methvin, Deputy City Manager-Chief Operating Officer Sylvia Moir, Police Gregory Ruiz, Fire Keith Burke, Community Services Marilyn DeRosa, Engineering and Transportation Terry Piekarz, Municipal Utilities Chad Weaver, Community Development Naomi Farrell, Human Services Kevin Kane, Municipal Court Judith R. Baumann, City Attorney Bill Greene, Internal Audit Office Mark Day, Municipal Budget Office Donna Kennedy, Economic Development Office Braden Kay, Sustainability Office Rosa Inchausti, Office of Strategic Management and Diversity Carla Reece, City Clerk and Elections Renie Broderick, Internal Services 15 City Organizational Chart Residents of Tempe Mayor and City Council City Attorney City Clerk City Manager Deputy City Manager, Chief Operating Officer Deputy City Manager, Chief Financial Officer Internal Services Department Finance Human Resources Information Technology Municipal Budget Office City Court Community Development Department Municipal Utilities Department Field Operations Water/Sewer Utilities Building Safety Planning Special Projects Engineering & Transportation Department Strategic Management & Diversity Office Construction Management/Engineering Traffic, Transportation & Transit Government Relations Internal Audit Office Police Department Fire Medical Rescue Department Investigations/ Organizational Services Operations Support Services Admin Services Emergency Services Community Risk Reduction Management Services Communication & Media Relations Economic Development Office Mayor & Council Staff/311 16 Community Services Department Arts & Cultural Services Library Services Parks & Recreation Human Services Department Community Partnerships & Resources Social Services Sustainability Office This section contains the independent auditor’s report, management’s discussion and analysis, and basic financial statements. Also included are financial statements for individual funds and a component unit for which data is not provided separately in the basic financial statements, and other useful supplementary information. Financial Section INDEPENDENT AUDITOR’S REPORT The Honorable Mayor and Members of the City Council City of Tempe, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the budgetary comparisons for the General Fund and the Transit Special Revenue Fund, and the aggregate remaining fund information of the City of Tempe, Arizona, (the City), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the budgetary comparisons for the General Fund and Transit Special Revenue Fund and the aggregate remaining fund information of the City of Tempe, Arizona, as of June 30, 2020, 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. 17 Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities, for the year ended June 30, 2020, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, net pension liability information, and other postemployment benefit plan information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, Combining and Individual Fund Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2020, on our consideration of the City of Tempe, 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 Tempe’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Tempe, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Phoenix, Arizona December 10, 2020 18 Internal Services Department MANAGEMENT’S DISCUSSION AND ANALYSIS This section of the City of Tempe’s (the City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2020. Readers are encouraged to consider the information presented here in conjunction with additional information that has been furnished in the letter of transmittal. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $997.7 million (net position). Of this amount, $234.3 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. • The City’s total net position increased by $77.7 million during the fiscal year compared to an increase of $55.9 million in the prior year. The governmental activities experienced an increase in net position of $66.5 million compared to an increase of $42.4 million in the prior year and the business-type activities experienced an increase of $11.3 million compared to an increase of $13.5 million in the prior year. • For the fiscal year ended June 30, 2020, the City’s governmental revenues overall increased by $43.5 million. This was predominately due to an increase of $37.0 million in capital grants and contributions and $4.9 million in intergovernmental revenue, unrestricted offset by a decrease of $2.3 million in operating grants and contributions, and $2.7 million in miscellaneous revenue. Expenses for Police, Fire Medical Rescue and Internal Services increased by $5.5 million, $5.3 million and $4.1 million, respectively; while, Interest on Long-Term Debt expense decreased by $2.6 million. • At June 30, 2020, the City’s governmental funds reported combined ending fund balances of $265.1 million. Approximately 73.3% of this total amount ($194.4 million) is for spending at the government’s discretion (committed, assigned, or unassigned). • At June 30, 2020, total fund balance for the General Fund was $134.2 million, which represents an increase of $16.5 million over the prior year’s fund balance as revenues continued to exceed expenditures. Revenues increased by $15.5 million, while related expenditures increased by $6.4 million. Net other financing uses increased by $0.3 million. • At June 30, 2020, the City’s enterprise funds reported combined total net position of $289.3 million, and total unrestricted net position of $148.3 million. Of this total, $156.1 million of the unrestricted net position was in the Water and Wastewater Fund. 19 OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: (1) Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the financial statements. This report also contains required supplementary information and other supplementary information in addition to the basic financial statements themselves. 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. The statement of net position presents information on all of the City’s assets, liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether or not 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 current 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 will only result in cash flows in future periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. Both of the government-wide 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 police, fire medical rescue, community services, engineering and transportation, municipal utilities, community development, human services, municipal court, mayor and council, city manager, city attorney, internal audit office, municipal budget office, economic development office, sustainability office, office of strategic management and diversity, city clerk and elections, and internal services. The business-type activities of the City include water and wastewater, solid waste, emergency medical transportation, and golf operations. Included within the government-wide financial statements are the operations of the Rio Salado Community Facilities District. Although legally separate from the City, this component unit is blended with the primary government (the City) because of its governance or financial relationships with the City. FUND FINANCIAL STATEMENTS The fund financial statements are designed to report information about groupings of related accounts that are 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 financerelated legal requirements. All the funds of the City can be divided into the following three categories: governmental, proprietary, and fiduciary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Most of the City’s basic services are reported in governmental funds. These statements, however, focus on near-term inflows and outflows of spendable resources and spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City’s programs. 20 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of 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. Other than the General Fund, the City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General Fund, Transit Special Revenue Fund, General Obligation Debt Service Fund, Special Assessment Debt Service Fund and the Transit Capital Projects Fund which are all considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for the General, Special Revenue, Debt Service, and Proprietary Funds along with a Capital Improvement Program Budget for the Capital Projects Funds. The legal level of budgetary control is at the citywide level (incorporating both the operating and capital budgets). Budgetary comparison statements have been provided in the basic financial statements for the General Fund and the Transit Special Revenue Fund to demonstrate compliance with the budget. Budgetary comparison schedules for other non-major Special Revenue, Debt Service, Capital Projects, and Enterprise Funds are included in Other Supplementary Information. Proprietary funds. Proprietary funds are generally used to account for services provided to customers to whom the City charges user fees that are designed to fully recover the cost of providing the service. Proprietary fund statements provide the same type of information 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 and wastewater, solid waste, emergency medical transportation and golf course operations. 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 employee and retiree health insurance programs, its workers’ compensation claims, and its risk management services including general liability and property liability claims. Because these services predominantly benefit governmental 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 elsewhere in this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The City uses a fiduciary fund to account for other post-employment benefits provided to retirees. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. COMBINING STATEMENTS The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the Notes to the Financial Statements. 21 GOVERNMENT-WIDE STATEMENTS FINANCIAL ANALYSIS Net position- June 30, 2020 Governmental Activities Assets Current and other assets Capital assets, net Total assets $ 752,582,216 820,595,816 1,573,178,032 Business-type Activities $ Total 266,247,734 395,247,734 661,495,468 $ 1,018,829,950 1,215,843,550 2,234,673,500 Deferred outflows of resources Deferred charge on refunding Deferred outflow from pensions Deferred outflow from OPEB Total deferred outflows of resources 6,407,689 68,560,373 1,648,513 76,616,575 9,318,217 2,336,284 223,497 11,877,998 15,725,906 70,896,657 1,872,010 88,494,573 Liabilities Long-term liabilities Other liabilities Total liabilities 857,038,325 74,050,117 931,088,442 335,908,022 46,492,552 382,400,574 1,192,946,347 120,542,669 1,313,489,016 Deferred inflows of resources Deferred inflow from pensions Deferred inflow from OPEB Total deferred inflows of resources 8,760,442 1,509,036 10,269,478 1,535,488 129,627 1,665,115 10,295,930 1,638,663 11,934,593 Net position Net investment in capital assets Restricted Unrestricted Total net position 523,422,276 99,053,439 85,960,972 708,436,687 140,978,804 148,328,973 289,307,777 664,401,080 99,053,439 234,289,945 997,744,464 $ $ $ ANALYSIS OF NET POSITION As noted earlier, net position may serve as a useful indicator of a government’s financial position. For the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $997.7 million and $920.0 million as of June 30, 2020 and 2019, respectively. The largest portion of the City’s net position reflects its investment in capital assets (e.g. land, buildings, infrastructure, improvements, machinery and equipment and construction in progress) less any related debt used to acquire those assets. The net position invested in capital assets, net of related debt was $664.4 million and $616.8 million at June 30, 2020 and 2019, respectively. These totals represent 66.6% and 67.0% of total net position at June 30, 2020 and 2019, respectively. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities. 22 Net position- June 30, 2019 Assets Current and other assets Capital assets, net Total assets Governmental Activities Business-type Activities $ $ 657,413,508 822,291,754 1,479,705,262 264,300,437 374,025,745 638,326,182 Total $ 921,713,945 1,196,317,499 2,118,031,444 Deferred outflows of resources Deferred charge on refunding Deferred outflow from pensions Deferred outflow from OPEB Total deferred outflows of resources 7,820,971 64,623,464 2,121,951 74,566,386 11,014,756 3,058,485 303,060 14,376,301 18,835,727 67,681,949 2,425,011 88,942,687 Liabilities Long-term liabilities Other liabilities Total liabilities 819,612,790 73,653,632 893,266,422 325,087,551 46,515,661 371,603,212 1,144,700,341 120,169,293 1,264,869,634 Deferred inflows of resources Deferred inflow from pensions Deferred inflow from OPEB Total deferred inflows of resources 15,671,091 3,372,159 19,043,250 2,593,456 462,621 3,056,077 18,264,547 3,834,780 22,099,327 Net position Net investment in capital assets Restricted Unrestricted Total net position 491,949,237 79,370,511 70,642,228 641,961,976 124,836,951 153,206,243 278,043,194 616,786,188 79,370,511 223,848,471 920,005,170 $ $ $ An additional portion of the City’s net position represents resources that are subject to external restriction on their usage. The net position subject to external restrictions was $99.1 million (9.9% of total net position) at June 30, 2020. At June 30, 2019 restricted net position was $79.4 million (8.6% of total net position). The remaining balance of net position is also and may be used to meet the government’s ongoing obligations to citizens and creditors. The total balance of unrestricted net position was $234.3 million (23.5% of total net position) and $223.8 million (24.3% of total net position) at June 30, 2020 and 2019, respectively. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position for the governmental as well as for the business-type activities as a whole. The same situation held true for the previous fiscal year. ANALYSIS OF CHANGE IN NET POSITION The City’s total net position increased by $77.7 million during the current fiscal year. These changes in net position are explained in the governmental and business-type activities discussion below. 23 Changes in Net Position- Fiscal Year Ended June 30, 2020 Governmental Activities Business-type Activities $ $ Total Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Intergovernmental revenue, unrestricted Property taxes Franchise taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Total revenues 49,211,291 32,178,593 76,680,266 110,607,269 - $ 159,818,560 32,178,593 76,680,266 180,941,410 52,940,012 51,525,619 2,772,127 7,950,512 3,241,181 638,133 458,079,144 3,504,059 326,138 81,757 114,519,223 180,941,410 52,940,012 51,525,619 2,772,127 11,454,571 3,567,319 719,890 572,598,367 107,096,572 49,941,616 36,442,527 102,020,829 506,510 18,005,337 26,614,653 5,257,225 461,629 7,455,774 3,724,210 516,840 269,344 771,575 174,109 1,186,219 1,036,845 19,779,369 1,716,431 9,921,992 392,899,606 77,716,351 16,909,091 4,295,939 3,038,086 101,959,467 107,096,572 49,941,616 36,442,527 102,020,829 506,510 18,005,337 26,614,653 5,257,225 461,629 7,455,774 3,724,210 516,840 269,344 771,575 174,109 1,186,219 1,036,845 19,779,369 1,716,431 9,921,992 77,716,351 16,909,091 4,295,939 3,038,086 494,859,073 65,179,538 1,295,173 66,474,711 641,961,976 708,436,687 12,559,756 (1,295,173) 11,264,583 278,043,194 289,307,777 77,739,294 77,739,294 920,005,170 997,744,464 Expenses Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Municipal court Mayor and council City manager City attorney Internal audit office Municipal budget office Economic development office Sustainability office Office of strategic management and diversity City clerk and elections Internal services Unallocated depreciation Interest on long-term debt Water and wastewater Solid waste Emergency medical transportation Golf Total expenses Increase in net position before transfers Transfers Change in net position Net position- beginning Net position- ending $ 24 $ $ Changes in Net Position- Fiscal Year Ended June 30, 2019 Governmental Activities Business-type Activities $ $ Total Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Intergovernmental revenue, unrestricted Property taxes Franchise taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Capital contributions Total revenues 48,615,402 34,467,594 39,638,190 177,596,413 48,024,343 48,706,817 3,036,531 7,936,949 5,924,186 674,569 414,620,994 108,714,216 - $ 3,614,531 1,124,986 199,388 32,552 113,685,673 157,329,618 34,467,594 39,638,190 177,596,413 48,024,343 48,706,817 3,036,531 11,551,480 7,049,172 873,957 32,552 528,306,667 Expenses Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Municipal court Mayor and council City manager City attorney Internal audit office Municipal budget office Economic development office Sustainability office Office of strategic management and diversity City clerk and elections Internal services Unallocated depreciation Interest on long-term debt Water and wastewater Solid waste Emergency medical transportation Golf Total expenses Increase in net position before transfers Transfers Change in net position Net position- beginning, restated Net position- ending $ 25 101,620,981 44,646,087 35,337,000 99,207,606 388,461 17,550,896 25,925,520 4,985,853 491,026 6,601,371 3,137,658 434,770 172,182 546,256 2,858 1,079,461 829,499 15,650,001 1,716,431 12,503,655 372,827,572 - 77,906,953 15,791,378 2,966,379 2,937,558 99,602,268 101,620,981 44,646,087 35,337,000 99,207,606 388,461 17,550,896 25,925,520 4,985,853 491,026 6,601,371 3,137,658 434,770 172,182 546,256 2,858 1,079,461 829,499 15,650,001 1,716,431 12,503,655 77,906,953 15,791,378 2,966,379 2,937,558 472,429,840 41,793,422 603,077 42,396,499 599,565,477 641,961,976 14,083,405 (603,077) 13,480,328 264,562,866 278,043,194 55,876,827 55,876,827 864,128,343 920,005,170 - $ $ Governmental activities. The governmental net position increased by $66.5 million for the fiscal year ended June 30, 2020 compared to a $42.4 million increase in net position for the fiscal year ended June 30, 2019. Overall, revenues increased by $43.5 million (10.5%) and expenses increased by $20.1 million (5.4%) compared to the fiscal year ended June 30, 2019. The key factors contributing to the change in net position compared to the prior year are as follows: • Capital grants and contributions, increased in the amount of $37.0 million (93.5%) due primarily to an increase of Federal and regional funding to Valley Metro Rail, Inc. (VMRI) toward the City’s Streetcar capital project. The City’s equity interest in VMRI totals $359.5 million, an increase of $61.0 million from the prior year. • Intergovernmental, unrestricted revenue increased by $4.9 million (10.2%). This increase is due to increases in state sales tax, state income tax and auto lieu tax, which are state-share revenues collected by the state and distributed to Arizona cities based on population estimates. • The positive change in net position was due primarily to continued increases in program and general revenues totaling $35.3 million and $8.1 million, respectively, and continued moderate expense increases in total program expenses or $20.1 million. This, combined with the increases in net position for the fiscal year ended June 30, 2019 of $42.4 million, resulted in increases in net assets of $65.2 million. The following charts, over the next few pages, illustrate the City’s governmental expenses and program revenues by function and its revenues by source for the current fiscal year: 26 A comparison of Fiscal Year Ended expenses by function and June 30, 2020 June 30, 2019 the percentage of total expenses for the largest $ 107,096,572 27.3% $ 101,620,981 27.3% functions are presented Police 101,020,829 26.0 99,207,606 26.6 in the chart. As stated Engineering and transportation Fire medical rescue 49,941,616 12.7 44,646,087 12.0 earlier, total expenses for Community services 36,442,527 9.3 35,337,000 9.5 the City’s governmental Human services 26,614,653 6.8 25.925.520 7.0 activities increased from Internal services 19,779,369 5.0 15,650,001 4.2 prior year by $20.1 million Community development 18,005,337 4.6 17,550,896 4.7 (5.4%). The main functions which experienced the increases were Police, Fire Medical Rescue, Internal Services and Engineering and Transportation totaling $5.5 million, $5.3 million, $4.1 million and $1.8 million, respectively. General revenues such as sales taxes, property taxes, unrestricted investment earnings, intergovernmental revenueunrestricted, miscellaneous and other and franchise taxes are not shown by program but are effectively used to support program activities citywide. Fiscal Year Ended June 30, 2020 June 30, 2019 Sales taxes Intergovernmental revenueunrestricted Property taxes Unrestricted investment earnings Miscellaneous and other Franchise taxes $180,941,410 45.3% $177,596,413 42.8% 52,940,012 51,525,619 13.3 12.9 48,024,343 48,706,817 11.6 11.7 7,950,512 3,879,314 2,772,127 2.0 1.0 0.6 7,936,949 6,598,755 3,036,531 1.9 1.6 0.7 For governmental activities overall, without regard to program, a comparison of the largest general revenues and their percentage of total revenues (excluding 27 transfers) is presented. As stated previously, sales taxes, intergovernmental revenue- unrestricted, property taxes and unrestricted investment earnings each displayed growth. The categories of miscellaneous and other and franchise taxes decreased slightly. Business-type activities. Business-type activities increased the City’s net position by $11.3 million for the year ended June 30, 2020 compared to an increase of $13.5 million for the year ended June 30, 2019. Rate increases were last implemented in January 2018 for the Water and Wastewater Fund. Rate increases for the Solid Waste were implemented January 1, 2020. For the business-type activities a comparison of revenues by source is provided for each activity. Fiscal Year Ended June 30, 2020 Charges for services Unrestricted investment earnings/ other Total Emergency Medical Transport Water and Wastewater Solid Waste $ 85,057,003 $ 18,394,311 $ 4,375,755 $ 2,780,200 $ 110,607,269 3,517,316 $ 88,574,319 223,198 $ 18,617,509 149,007 $ 4,524,762 22,433 $ 2,802,633 3,911,954 $ 114,519,223 Golf Total Fiscal Year Ended June 30, 2019 Charges for services Unrestricted investment earnings/ other Total Emergency Medical Transport Water and Wastewater Solid Waste $ 85,339,513 $ 17,306,244 $ 3,442,151 $ 2,626,308 $ 108,714,216 4,285,469 $ 89,624,982 185,199 $ 17,491,443 296,858 $ 3,739,009 171,379 $ 2,797,687 4,938,905 $ 113,653,121 28 Golf Total The largest of the City’s business-type activities, Water and Wastewater, had expenses of $77.7 million for the fiscal year, followed by Solid Waste with $16.9 million, Emergency Medical Transportation with $4.3 million, and Golf with $3.0 million. Expenses, both operating and nonoperating, for the Water and Wastewater Fund decreased by a total of $0.2 million (-0.2%) due to slight increases in personnel expenses offset by reductions in supplies and materials expenses. Charges for services decreased by $0.3 million (0.3%) due to a relatively stable water consumption when coupled with no rate increases for the fiscal year ended June 30, 2020. The change in net position was a $9.8 million increase in fiscal year 2020 which is down slightly from $10.6 million increase in fiscal year 2019. The Solid Waste Fund had increased expenses of $1.1 million (7.1%) primarily due to increases in personnel expenses of 6.6% coupled with increases in fees and services expenses of 10.1% due primarily to increased risk management charges of $0.5 million from the prior year. Charges for services increased by $1.1 million (6.3%) due to a January 1, 2020 rate increase. The change in net position increased by $2.1 million in fiscal year 2020 while the prior year had an increase of $2.2 million. In Fiscal Year 2018, the City created Emergency Medical Transportation (EMT) operations to provide ambulance services. During Fiscal Year 2019, service was expanded, and the number of authorized, full-time equivalent positions grew from 13 to 25 as a result of the transfer of 12 full-time equivalent positions from Governmental Activities. The service expansion resulted in an increase in the operating revenue from $3.7 million in fiscal year 2019 to $4.5 million in fiscal year 2020. The fund also realized an increase in operating expenses from $3.0 million during fiscal year 2019 to $4.3 million during fiscal year 2020. Fiscal year operating income totaled $0.2 million. During the fiscal year, a $0.7 million transfer was made to non-major, Fire Protection capital improvement project fund for EMT station renovation costs. In the Golf Fund, charges for services increased by 5.9% but were offset by a reduction in unrestricted investment earnings, resulting in a total revenue increase of 0.2%. The total net position of the fund decreased by $161,453, resulting in a deficit ending net position of $0.3 million. Operations in the golf fund will be monitored closely to ensure viability of operations. FUND STATEMENTS FINANCIAL ANALYSIS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. GOVERNMENTAL FUNDS The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the City’s financing requirements. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds and Capital Project Funds. Fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Non-spendable, Restricted, Committed, Assigned, and Unassigned. The amount that represents available resources for spending is the total of committed, assigned, and unassigned. This unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at each fiscal year end. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $265.1 million, an increase of $23.4 million from the prior year. Approximately $194.4 million of this total amount pertained to the categories of committed, assigned or unassigned, all of which is available for spending at the City’s discretion. The combined categories reflect an increase of $20.0 million over the prior year’s combined balance of $174.4 million. The increase is due primarily to a combination of increases in federal grants, sales taxes, property taxes, and property tax, and state income taxes. The remainder of fund balance contains two components: non-spendable and restricted. Non-spendable fund balance includes amounts that cannot be spent as they are not in a spendable form. At June 30, 2020, the non29 spendable fund balance included amounts for inventories ($0.9 million), prepaid items ($0.7 million) and a capital improvement note receivable reserve ($0.3 million). Restricted fund balances are amounts that have externally (outside the City) enforceable limitations or enabling legislation (City Charter) that govern their use. The restricted portion of fund balance consists primarily of amounts for debt service ($4.2 million), Engineering and Transportation ($54.7 million) and Police ($3.8 million). Revenues for governmental functions overall totaled $390.0 million in the fiscal year ended June 30, 2020, which represents a net increase of $7.8 million (2.0%) from the fiscal year ended June 30, 2019. This change is primarily due to the increase in the following areas: $7.8 million (33.7%) in Federal grants; $4.8 million (8.0%) in state sales tax, state income tax and auto lieu tax (state-shared revenues); $3.4 million (2.1%) in sales taxes; and $2.6 million (5.4%) in property taxes. These increases were offset by a decrease in other IGA of $4.8 million (-52.1%) due mainly to decreases in this revenue in the General Fund. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance was $134.2 million, with $0.4 million in non-spendable fund balance and $0.2 million in restricted fund balance. The remaining $133.7 million is available for spending at the City’s discretion. As a measure of the General Fund’s liquidity, it may be useful to compare fund balances to total fund revenues. The total fund balance in the City’s General Fund experienced an increase in the current year of $16.5 million compared to a prior year the net increase of $7.6 million. Total revenues increased by $15.5 million (6.7%) from the prior year. This increase in revenue was due primarily to increases in state sales taxes, state income taxes and auto lieu taxes by $4.9 million or a 10.2% increase and recognition of federal grants Fiscal Year Ended revenue of $11.9 million in June 30, 2020 June 30, 2019 fiscal year 2020 compared to Revenues $ 245,823,304 $ 230,323,385 no revenue in fiscal year 2019. This federal grant revenue is Total fund balance 134,246,069 54.6 % 117,786,874 51.0 % due to the recognition of the Unassigned fund balance 116,285,953 47.3 97,995,211 42.5 U.S. Department of the Treasury’s Coronavirus Relief Funds (CRF) distributed through the State of Arizona Governor’s Office. The City was awarded $22.5 million in CRF for eligible public safety expenditures recognized from March 1, 2020 through December 30, 2020. Overall, sales taxes, the largest General Fund revenue source increases by $1.8 million or 1.6% due to significant reductions beginning in March 2020 and continuing through the end of fiscal year 2020. This is due to the economic impact of the COVID-19 pandemic. These revenue increases were offset by a reduction in other IGA revenue of $3.9 million due almost exclusively to anticipated reductions in amounts paid by the Arizona Sports and Tourism authority for repayment of renovations at the Tempe Diablo Stadium. Expenditures increased by $6.4 million (2.9%) due primarily to increases in employee compensation and increased costs offset by planned reductions in Human Services and Community Services totaling $1.9 million and $1.1 million, respectively due to COVID-19 pandemic budget reduction efforts. The Transit Special Revenue Fund is used to account for revenues and expenditures utilized to provide related transit services. Revenues decreased by $7.4 million due primarily to increases in sales tax revenue of $1.3 million offset by decreased in charges for services of $2.0 million and other intergovernmental of $5.6 million. Expenditures decreased by $3.0 million (6.0%). The reduction in expenditures is due primarily to $2.9 million in reductions to fixed route and dial-a-ride bus services and security expenditures. During the year, the City issued $13.2 million in Transit Excise Tax Revenue Obligation, Special Assessment debt to finance the Tempe Streetcar project. The City has assessed and is responsible for the collection of assessments secured by a lien on the benefitting properties from the streetcar project. The special assessments due at June 30, 2020 total $11.9 million. The fund balance totaled $46.2 million at June 30, 2020, compared to a $45.9 million fund balance at June 30, 2019. The fund balance increased $0.3 million in the current year as compared to a decrease of $1.6 million in the prior year. 30 The General Obligation Debt Service Fund accounts for the accumulation of resources for and payments of general obligation debt. Total fund balance increased $0.7 million from $3.5 million at June 30, 2019 to $4.2 million at June 30, 2020. Of this fund balance, $4.0 million represents accumulation of non-secondary property taxes set aside for future payment of Qualified Energy Conservation Bonds (QEBC’s). Therefore, the amount of unspent secondary property taxes, used for interest, principal redemption and related fees for General Obligation debt service totals $0.1 million. There was an increase in property tax revenues ($1.7 million). In addition, there was an increase in expenditures of $6.1 million due primarily to payment of refunding bonds totaling $18.3 million, which is an increase over the prior year $2.7 million in bond refundings and $9.0 million in bond defeasances. The total debt service fund balance will be used for future debt service payments consistent with the City’s Debt Management Plan. The Special Assessment Debt Service Fund accounts for the accumulation of resources for and payments of special assessment debt to which the City acts as a trustee for the established improvement districts. Total fund balance (restricted for special assessment debt service payments) increased by $0.2 million for fiscal year ended June 30, 2020. There are only two remaining improvement districts with debt outstanding (refer to Note 9 of the Notes to the Financial Statements). The Transit Capital Projects Fund accounts for the acquisition of buses, streetscapes, the East Valley Bus Maintenance Facility upgrades, the Tempe Streetcar project and other transit improvements. Total fund balance had a $1.7 million increase in fund balance from $17.1 million at June 30, 2019 to $18.8 million at June 30, 2020. Increases in expenditures of $14.9 million were due primarily to the increased project expenditures for the Tempe Streetcar project ($10.3 million increase), the Rio Salado S. Bank at McClintock Dr Underpass project ($1.7 million increase), the Rio Salado Parkway and Ash Ave Intersection Roundabout project ($2.8 million increase). Expenditures will be more than revenues when cash transfers are used to fund the projects. PROPRIETARY FUNDS The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year indicated, the total net positions for the proprietary funds were as follows: Fiscal Year Ended June 30, 2020 June 30, 2019 Water and wastewater fund Solid waste fund Emergency Medical Transportation Golf fund Internal service funds $ 282,373,483 6,587,887 $ 272,579,833 4,484,324 685,814 (339,407) 6,945,292 1,156,991 (177,954) 3,925,191 The Water and Wastewater Fund accounts for the provision of water and sewer services to the City and the adjoining Town of Guadalupe. The fund experienced an increase in total net position of $9.8 million for the fiscal year ended June 30, 2020 versus an increase in net position of $10.6 million for the fiscal year ended June 30, 2019. Charges for services decreased by $0.3 million (0.3%) due to a decrease in water consumption coupled with no rate increases for the fiscal year. Total expenses also decreased by $0.2 million (0.2%) due to $1.1 million increases in operating costs offset by a $1.3 million reduction in nonoperating expenses. The Solid Waste Fund accounts for the provision of solid waste collection and disposal services for both residential and commercial customers. Rate increase were implemented in January 2019 and January 2020. The total solid waste fund net position increased by $2.1 million during the fiscal year ended June 30, 2020 compared to $2.2 million during the fiscal year ended June 30, 2019. Total revenues increased by $1.1 million during the current fiscal year offset by expenditure increases of $1.1. 31 The Emergency Medical Transportation Fund accounts for the operation of the City’s ambulance services. As mentioned earlier, service expansions resulted in an increase in the operating revenue from $3.7 million in fiscal year 2019 to $4.5 million in fiscal year 2020. The fund also realized an increase in operating expenses from $3.0 million during fiscal year 2019 to $4.3 million during fiscal year 2020. Fiscal year operating income totaled $0.2 million. During the fiscal year, a $0.7 million transfer was made to non-major, Fire Protection capital improvement project fund for EMT station renovation costs resulting in a reduction in the ending net position of $0.5 million at June 30, 2020 from $1.2 to $0.7 million. The Golf Fund accounts for the operation of the Rolling Hills and Ken McDonald golf courses. The Golf Fund net position decreased by $161,000 compared to prior year’s decrease in net position of $29,000. Total revenue increased by $5,000 (0.7%) and there was a corresponding increase in total expenses of $0.1 million. The net position at June 30, 2020 was a deficit of $339,000. Operations in the golf fund will be monitored closely to ensure viability of operations. The Internal Service Funds account for the risk management, worker’s compensation and health insurance activities of the City. The current ending net position increased by $3.0 million from $3.9 million to $6.9 million. The increase in net position is due primarily to a $2.9 increase in the City’s self-insured employee health program. FIDUCIARY FUND The Other Post-Employment Benefits, Fiduciary Trust Fund accounts for activities of the Other PostEmployment Benefits Plan and accumulates resources for health care benefit payments to qualified retirees. The increase in net position of $0.8 million is due to investment earnings within the fund. All other benefit payments were made funded with City contributions. At June 30, 2020, the ending net position was $14.9 million. BUDGET HIGHLIGHTS The City’s final General Fund expenditure budget of $235.5 million differs slightly from the original budget of $235.6 million due to budget appropriation transfers from other funds. During the year, actual revenues were greater than budgetary estimates by $18.4 million (8.2% of total budgeted revenue) in the General Fund. This is due primarily to the positive variance in intergovernmental revenue and licenses and permits, and charges for services. Actual expenditures were under budget by $9.7 million due to planned expenditure reductions resulting from the COVID-19 pandemic during the fiscal year. Economic Factors and Next Year’s Budget. The economic conditions in fiscal year 2020 have varied widely and have been impacted significantly by Federal policies, including CARES Act funds, taxpayer stimulus payments and temporary unemployment benefit increases. The current economic downturn is unlike any other in recent history due to the unknown factors associated with the COVID-19 pandemic and the unpredictable Federal funding possibilities. The City reduced expenditures in the last quarter of fiscal year 2020 and has made fiscal year 2021 budget adjustments to adjust to anticipated declining revenues that began to occur at the start of the pandemic. CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The City’s capital assets for its governmental and business-type activities as of June 30, 2020 were $1.2 billion (net of accumulated depreciation). Capital assets include land, buildings, infrastructure, improvements, machinery and equipment, and construction in progress. The total increase in the City’s capital assets for the current fiscal year was $19.5 million. The tables below reflect the capital assets at the end of the fiscal year June 30, 2020 and 2019, respectively. 32 Capital Assets, Net of Depreciation - June 30, 2020 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 91,314,323 148,158,635 360,735,333 118,970,243 30,234,153 71,183,129 $ 820,595,816 Business-type Activities $ 6,693,377 20,296,711 158,392,031 107,365,440 16,684,112 85,816,063 $ 395,247,734 Total $ 98,007,700 168,455,346 519,127,364 226,335,683 46,918,265 156,999,192 $ 1,215,843,550 Capital Assets, Net of Depreciation - June 30, 2019 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 91,314,323 152,970,611 376,087,235 116,012,468 28,202,694 57,704,423 $ 822,291,754 Business-type Activities $ 6,693,377 21,557,177 165,620,014 114,452,149 13,493,144 52,209,884 $ 374,025,745 Total $ 98,007,700 174,527,788 541,707,249 230,464,617 41,695,838 109,914,307 $ 1,196,317,499 Major capital asset events during the current fiscal year included the following: Governmental Activities • The City completed several improvement projects including the $6.2 million Fire Station #7 construction project, $9.8 million in park, playground and recreation improvements, $5.0 million in street, transit and streetlight improvements, $4.0 million in computer replacements. Business-type Activities • The enterprise funds (predominately the Water and Wastewater Fund) incurred $41.2 million in construction in progress (CIP) costs in the current year and capitalized a total of $7.4 million in assets. The major CIP projects completed and capitalized in the Water and Wastewater Fund included $3.5 million in waterline replacements, $1.7 million in sewer lift station projects, $1.2 million water treatment plant equipment and improvements, and $0.6 million in sewer collection projects. For government-wide financial statement presentation, all depreciable capital assets are depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. Please refer to Note 8 of the Notes to the Financial Statements for further information regarding capital assets. 33 DEBT ADMINISTRATION At the end of the current fiscal year, the City had total long-term obligations outstanding of $1,192.9 million, which is an increase of $48.2 million over the prior fiscal year. In the current year, the City issued general obligation bonds, transit excise tax revenue obligations, and water and sewer revenue obligations for $24.2 million, $13.2 million and $38.0 million, respectively. Additionally, the City refunded $34.6 million in general obligation bonds. The total pension liability and OPEB liability increased by $24.7 and $5.4 million respectively. Outstanding Long-term Obligations - June 30, 2020 Governmental Activities Business-type Activities Total General obligation bonds Special assessment bonds Excise tax obligations Revenue obligations Premium on debt payable HUD Section 108 loan WIFA loan Capital Leases Total debt payable $ 191,860,000 27,750,000 76,604,000 21,731,892 2,524,000 81,216 320,551,108 $ 177,795,000 54,331,000 38,000,000 27,176,457 8,000,463 480,916 305,783,836 $ 369,655,000 27,750,000 130,935,000 38,000,000 48,908,349 2,524,000 8,000,463 562,132 626,334,944 Compensated absences Claims and judgments OPEB Pensions Total long-term obligations 35,565,054 8,370,632 75,203,766 417,347,765 $ 857,038,325 9,729,235 20,394,951 $ 335,908,022 35,565,054 8,370,632 84,933,001 437,742,716 $1,192,946,347 Outstanding Long-term Obligations - June 30, 2019 Governmental Activities Business-type Activities Total General obligation bonds Special assessment bonds Excise tax obligations Premium on debt payable HUD Section 108 loan WIFA loan Capital Leases Total debt payable $ 183,990,000 16,035,000 87,269,000 25,046,197 2,966,000 40,972 315,347,169 $ 197,700,000 57,886,000 30,951,583 8,799,363 736,327 296,073,273 $ 381,690,000 16,035,000 145,155,000 55,997,780 2,966,000 8,799,363 777,299 611,420,442 Compensated absences Claims and judgments OPEB Pensions Total long-term obligations 32,030,165 8,677,577 70,478,941 393,078,938 $ 819,612,790 9,012,781 20,001,497 $ 325,087,551 32,030,165 8,677,577 79,491,722 413,080,435 $1,144,700,341 The City issued $24.2 million in general obligation debt during the current fiscal year. The funding was for public safety, parks, municipal infrastructure preservation, and street improvements in the amounts of $2.7 million, $5.8 million, $6.7 million, and $8.8 million, respectively. 34 For the water and sewer capital program, the City issued $38.0 million in water and sewer revenue obligations to finance a variety of projects including waterline transmission and distribution projects ($12.7 million); water pumping reservoirs and tanks ($1.7 million); sewer mechanical station upgrades ($2.5 million); water plant maintenance and upgrades ($3.8 million); sewer collection systems ($2.6 million); and sewer capacity projects ($6.7 million). The City issued $13.2 million in transit excise tax revenue obligations. These obligations were issued as special assessment bonds payable with governmental commitment. These obligations were issued to finance a portion of the City’s Streetcar project. The City has assessed and is responsible for the collection of assessments secured by a lien on the assessed properties, for which the primary source of repayment is the assessments levied against the benefiting properties for the additional streetcar capital improvement project costs. At June 30, 2020, the Transit Fund special assessments receivable, related to the obligations, on the assessed properties totaled $11.9. As development occurs, additional benefitting properties will be assessed in an amount not to exceed $13.0 million for all assessed properties. During the year, the City refunded $34.6 million in general obligation refunding bonds. The bonds refunded $26.2 million in taxable General Obligations Bonds, Series 2010B and $7.3 million in General Obligation Refunding Bonds, Series 2010C. The City’s total net general obligation bonded debt (total bonded debt, including the enterprise funds and Water Infrastructure Finance Authority loans, general obligation premiums less debt service reserves) outstanding increased by $25.1 million from the fiscal year ended June 30, 2019 to the fiscal year ended June 30, 2020. The ratio of net general obligation bonded debt for governmental purposes to taxable valuation and the amount of bonded debt per capita are useful indicators of the City’s debt position to management, citizens, oversight bodies and investors. Additional information can be located in the Statistical Section (Exhibit S-15). A comparison of these indicators follows: Fiscal Year Ended June 30, 2020 June 30, 2019 Net general bonded debt Net general bonded debt per capita Ratio of net general bonded debt to total assessed value Debt service secondary tax rate per $100 of taxable valuation $ 406,955,458 2,078 20.2% $ 1.50 $ 425,827,274 2,214 22.9% $ 1.50 The State constitution imposes certain debt limitations on the City of 6% and 20% of the assessed valuation of the City. The City’s available debt margin at June 30, 2020 is $186.8 million under the 20% capacity and $82.9 million under the 6% limitation. Additional information on the statutory debt limitations may be found in Note 9 of the Notes to the Financial Statements and the Statistical Section (Exhibit S-19) of this report. During the year, the City maintained ratings on its outstanding general obligation bonds of AAA from Standard & Poors Corporation and AAA from Fitch Ratings. Additional information on the City’s long-term debt can be found in Note 9 of the Notes to the Financial Statements. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, city council, customers, investors and creditors with a general overview of the City’s finances. If you have questions about this report or need additional information, contact: City of Tempe Internal Services Department Accounting Division 20 E. Sixth Street Tempe, AZ 85281 480.350.8256 35 City of Tempe, Arizona 36 Statement of Net Position June 30, 2020 City of Tempe, Arizona Governmental Activities Business-type Activities Total Assets Pooled cash and investments Receivables: Taxes Accounts, net Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Special assessment receivables Capital improvement notes receivable Total OPEB assets Equity in joint venture Capital assets not being depreciated: Land Construction in progress Capital assets (net of accumulated depreciation): Buildings Infrastructure Improvements Machinery and equipment Total assets $ 263,318,277 $ 105,204,608 $ 368,522,885 22,980,647 8,161,520 668,440 16,746,619 872,450 733,058 41,834,373 27,081,653 1,638,653 519,164 368,027,362 14,297,144 464,433 1,262,438 33,805,684 323,925 39,289 110,850,213 22,980,647 22,458,664 1,132,873 16,746,619 2,134,888 733,058 75,640,057 27,081,653 1,962,578 558,453 478,877,575 91,314,323 71,183,129 6,693,377 85,816,063 98,007,700 156,999,192 148,158,635 360,735,333 118,970,243 30,234,153 1,573,178,032 20,296,711 158,392,031 107,365,440 16,684,112 661,495,468 168,455,346 519,127,364 226,335,683 46,918,265 2,234,673,500 6,407,689 68,560,373 1,648,513 76,616,575 9,318,217 2,336,284 223,497 11,877,998 15,725,906 70,896,657 1,872,010 88,494,573 18,539,124 3,366,633 16,901,273 2,452,949 32,790,138 12,425,652 781,707 3,978,231 204,151 29,102,811 30,964,776 4,148,340 20,879,504 2,657,100 61,892,949 Deferred Outflows of Resources Deferred charge on refundings Deferred outflows from pensions Deferred outflows from OPEB Total outflow of resources Liabilities Accounts payable Deposits Accrued expenses Unearned revenue Liabilities payable from restricted assets Long-term liabilities: Special assessment debt with a governmental commitment: Due within one year Due in more than one year Other long-term liabilities: Due within one year Due in more than one year Total liabilities 1,920,000 25,830,000 - 1,920,000 25,830,000 40,666,937 788,621,388 931,088,442 27,827,729 308,080,293 382,400,574 68,494,666 1,096,701,681 1,313,489,016 8,760,442 1,509,036 10,269,478 1,535,488 129,627 1,665,115 10,295,930 1,638,663 11,934,593 523,422,276 140,978,804 664,401,080 3,776,288 504,268 524,912 69,721,730 2,107,283 2,224,693 428,438 122,263 2,000 19,641,564 85,960,972 708,436,687 148,328,973 289,307,777 3,776,288 504,268 524,912 69,721,730 2,107,283 2,224,693 428,438 122,263 2,000 19,641,564 234,289,945 997,744,464 Deferred Inflows of Resources Deferred inflows from pensions Deferred inflows from OPEB Total inflow of resources Net Position Net investment in capital assets Restricted for: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municpal court City manager Office of strategic management and diversity Debt service Unrestricted Total net position $ The notes to the financial statements are an integral part of this statement. 37 $ $ Statement of Activities For the fiscal year ended June 30, 2020 Program Revenues Charges for Services Expenses Operating Grants and Contributions Capital Grants and Contributions $ $ Functions/Programs Governmental activities: Police $ 107,096,572 Fire medical rescue 49,941,616 Community services 36,442,527 Engineering and transportation 102,020,829 Municipal utilities 506,510 Community development 18,005,337 Human services 26,614,653 Municipal court 5,257,225 Mayor and council 461,629 City manager 7,455,774 City attorney 3,724,210 Internal audit office 516,840 Municipal budget office 269,344 Economic development office 771,575 Sustainability office 174,109 Office of strategic management and diversity 1,186,219 City clerk and elections 1,036,845 Internal services 19,779,369 Unallocated depreciation 1,716,431 Interest on long-term debt 9,921,992 Total governmental activities 392,899,606 Business-type activities: Water and wastewater Solid waste Emergency medical transportation Golf course Total business-type activities Total government 77,716,351 16,909,091 4,295,939 3,038,086 101,959,467 $ 494,859,073 $ 790,792 330,441 3,249,544 16,315,473 5,897 21,113,072 3,285,787 2,289,026 27,013 1,804,246 49,211,291 85,057,003 18,394,311 4,375,755 2,780,200 110,607,269 $ 159,818,560 $ 11,728,439 3,980,566 801,488 233,247 50,000 14,040,196 74,153 566,923 6,427 134,345 562,809 32,178,593 32,178,593 $ 900,941 700,334 74,433,798 645,193 76,680,266 76,680,266 General revenues: Sales taxes Intergovenmental revenue, unrestricted Property taxes Franchise taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending The notes to the financial statements are an integral part of this statement. 38 City of Tempe, Arizona Net (Expense) Revenue and Changes in Net Position Governmental Activities $ $ (93,676,400) (44,930,275) (32,391,495) (11,038,311) (500,613) 3,802,928 (9,288,670) (2,894,046) (461,629) (6,888,851) (3,690,770) (516,840) (269,344) (771,575) (174,109) (1,051,874) (1,036,845) (17,412,314) (1,716,431) (9,921,992) (234,829,456) Business-type Activities $ - Total $ (93,676,400) (44,930,275) (32,391,495) (11,038,311) (500,613) 3,802,928 (9,288,670) (2,894,046) (461,629) (6,888,851) (3,690,770) (516,840) (269,344) (771,575) (174,109) (1,051,874) (1,036,845) (17,412,314) (1,716,431) (9,921,992) (234,829,456) (234,829,456) 7,340,652 1,485,220 79,816 (257,886) 8,647,802 8,647,802 7,340,652 1,485,220 79,816 (257,886) 8,647,802 (226,181,654) 180,941,410 52,940,012 51,525,619 2,772,127 7,950,512 3,241,181 638,133 1,295,173 301,304,167 66,474,711 641,961,976 708,436,687 3,504,059 326,138 81,757 (1,295,173) 2,616,781 11,264,583 278,043,194 289,307,777 180,941,410 52,940,012 51,525,619 2,772,127 11,454,571 3,567,319 719,890 303,920,948 77,739,294 920,005,170 997,744,464 $ $ 39 Balance Sheet Governmental Funds June 30, 2020 General Obligation Debt Service Transit Special Revenue General Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other funds Due from other governments Inventories Prepaid items Restricted cash and investments Special assessments Capital improvement notes receivable Total assets Liabilities Accounts payable Deposits Accrued expenditures Due to other funds Unearned revenue Matured bonds payable Matured interest payable Total liabilities $ 113,975,910 $ 13,959,224 6,841,675 415,571 2,092,166 11,896,830 146,885 3,808,572 610,000 153,746,833 $ Deferred Inflows of Resources Unavailable revenue- courts Unavailable revenue- federal grants Unavailable revenue- grants Unavailable revenue- notes receivable Unavailable revenue- other Unavailable revenue- property tax Unavailable revenue- special assessments Total deferred inflows of resources Fund Balances Fund balances: Non-spendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances $ The notes to the financial statements are an integral part of this statement. 40 6,562,507 2,601,027 5,356,539 141,354 14,661,427 $ 43,184,663 $ 6,173,085 1,149,339 75,604 1,669,331 3,162,054 11,948,956 1,028,653 68,391,685 $ 3,557,963 66,815 2,215,000 929,864 6,769,642 $ $ $ 898,651 27,200,047 28,098,698 166,797 85,308 19,415,000 3,711,619 23,378,724 3,446,669 360,000 694,412 338,256 4,839,337 1,028,653 2,456,888 11,948,956 15,434,497 561,121 561,121 396,885 154,819 17,408,412 116,285,953 134,246,069 26,952,171 11,201,499 8,033,876 46,187,546 4,158,853 4,158,853 153,746,833 $ 68,391,685 $ 28,098,698 City of Tempe, Arizona Special Assessment Debt Service $ 239,416 $ 168,393 363,783 15,132,697 15,904,289 $ 76,500 363,783 440,283 $ 21,768,434 $ 692,000 22,460,434 $ 15,301,090 15,301,090 15,904,289 3,665,693 3,665,693 $ 65,314,052 $ 1,949,687 57,781 5,458 2,488,458 725,565 733,058 7,299,917 78,573,976 $ - 162,916 162,916 $ Other Governmental Funds Transit Capital Projects 18,794,741 18,794,741 $ 22,460,434 $ 4,364,583 765,606 395,995 2,006,858 2,235,095 5,910,000 244,872 15,923,009 Total Governmental Funds $ 244,482,475 $ 22,980,647 8,048,795 665,026 2,092,166 16,746,619 872,450 733,058 41,834,373 27,081,653 1,638,653 367,175,915 $ 18,317,543 3,366,633 5,819,349 2,092,166 2,452,949 27,540,000 5,250,138 64,838,778 996,355 88,564 31,663 1,116,582 3,446,669 996,355 88,564 1,388,653 3,182,963 899,377 27,250,046 37,252,627 1,458,623 18,644,169 27,932,252 15,277,043 (1,777,702) 61,534,385 1,855,508 68,867,669 39,133,751 40,719,331 114,508,251 265,084,510 78,573,976 41 $ 367,175,915 Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2020 City of Tempe, Arizona Fund balances- total governmental funds $ 265,084,510 Amounts reported for the governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Accumulated depreciation 1,697,817,098 (877,221,282) 820,595,816 The equity in joint venture is not a financial resource and, therefore, is not reported in the funds. 368,027,362 Other assets are not available to pay current-period expenditures and, therefore, are offset by unavailable revenue. Unavailable special assessment revenue Unavailable tax and other revenue Unavailable notes receivable revenue Unavailable court revenue Grant monies not received within 60 days 27,250,046 4,082,340 1,388,653 3,446,669 1,084,919 37,252,627 Bond premiums and the deferred charge on refundings are not financial resources and, therefore, are not reported in the funds. (15,324,203) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. Compensated absences Claims and judgments Net pension liability (excluding internal service) Other post employment benefits (excluding internal service) Bonds, capital improvement notes and capital leases (35,565,054) (8,370,632) (356,933,435) (74,456,380) (298,819,216) (774,144,717) Internal service funds are used by management to charge the costs of self insurance to individual funds. The assets and liabilities of the internal service funds are reported with governmental activities. Net position of governmental activities 6,945,292 $ The notes to the financial statements are an integral part of this statement. 42 708,436,687 City of Tempe, Arizona 43 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2020 General General Obligation Debt Service Transit Special Revenue Revenues: Taxes: Sales taxes Property taxes Franchise taxes Intergovernmental: Federal grants State grants State sales tax State income tax Auto lieu tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Special assessments Licenses and permits Miscellaneous Total revenues $ 114,867,599 21,422,046 2,772,127 $ 44,373,904 - 11,896,830 19,899,062 24,875,451 8,165,499 878,707 5,779,061 13,439,955 5,612,670 359,315 7,400,258 8,454,724 245,823,304 299,936 577,202 1,879,942 9,474,241 200,000 334,570 57,139,795 $ 29,911,357 88,701 30,000,058 Expenditures: Current: Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Municipal court Mayor and council City manager City attorney Internal audit office Municipal budget office Economic development office Sustainability office Office of strategic management and diversity City clerk and elections Internal services Debt service: Principal Interest Fiscal fees Capital outlay Total expenditures 93,059,763 40,224,223 25,255,280 2,651,178 377,524 13,823,023 12,385,234 4,656,785 457,553 6,807,196 3,553,943 506,977 255,729 738,759 160,406 1,112,377 1,006,212 18,004,773 42,637,286 - 225,036,935 2,215,000 1,881,411 162,160 46,895,857 37,095,000 8,157,560 304,439 45,556,999 Excess (deficiency) of revenues over expenditures before other financing sources (uses) 20,786,369 10,243,938 (15,556,941) 20,750 (5,025,303) 74,604 602,775 (4,327,174) (10,173,922) 160,000 35,886 (9,978,036) 6,719,323 (8,892,030) 165,000 18,260,000 16,252,293 - Other financing sources (uses): Transfers in Transfers out Issuance of debt Capital lease proceeds Proceeds from sale of capital assets Issuance of refunding bonds Total other financing sources (uses) Net change in fund balance 16,459,195 265,902 695,352 Fund balance at beginning of year Fund balance (deficit) at end of year 117,786,874 134,246,069 45,921,644 46,187,546 3,463,501 4,158,853 $ The notes to the financial statements are an integral part of this statement. 44 $ $ City of Tempe, Arizona Special Assessment Debt Service $ - $ 1,576 2,442,290 5,636 2,449,502 - $ 3,081,657 15,769 462,537 3,559,963 - $ Other Governmental Funds Transit Capital Projects - 9,131,870 - Total Governmental Funds $ 168,373,373 51,333,403 2,772,127 15,456,647 1,097,241 12,568,037 2,980,704 187,039 4,622,615 542,027 3,733,651 658,794 50,978,625 30,735,070 1,097,241 32,467,099 24,875,451 8,165,499 4,436,613 7,950,512 27,538,387 6,154,697 4,755,503 2,442,290 7,400,258 9,453,724 389,951,247 3,367,957 398,776 5,081,453 9,585,445 2,615,621 14,294,593 448,820 620,432 17,846 132,301 - 96,427,720 40,622,999 30,336,733 54,873,909 377,524 16,438,644 26,679,827 5,105,605 457,553 7,427,628 3,571,789 506,977 255,729 738,759 160,406 1,244,678 1,006,212 18,004,773 1,445,000 762,767 1,500 2,209,267 24,905,895 24,905,895 6,352,000 548,492 4,686 36,069,159 79,537,581 47,107,000 11,350,230 472,785 60,975,054 424,142,534 240,235 (21,345,932) (28,558,956) (34,191,287) - 10,068,240 13,000,000 23,068,240 14,133,796 (5,555,681) 24,000,000 26,716 32,604,831 30,942,109 (29,646,936) 37,325,000 74,604 665,377 18,260,000 57,620,154 240,235 1,722,308 4,045,875 23,428,867 (77,319) 162,916 17,072,433 18,794,741 57,488,510 61,534,385 241,655,643 265,084,510 $ $ $ 45 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Net change in fund balances- total governmental funds $ 23,428,867 Amounts reported for the governmental activities in the statement of activities are different because: Certain expenditures reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences and long-term claims and judgements Other post employment benefits (excluding internal service) (3,227,944) (3,294,872) (6,522,816) Certain revenues in the statement of activities do not provide current financial resources and, therefore, are not reported as revenues in the governmental funds. Property tax and charges for services revenue Court revenue Grants and contributions Special assessments received/recognized 126,721 (266,311) 68,272,047 (1,825,994) 66,306,463 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. Capital outlay Miscellaneous net capital expenditures Depreciation expense 60,975,054 (14,569,003) (46,111,229) 294,822 Government funds report pension contributions as expenditures. However, they are reported as deferred outflows of resources in the Statement of Net Position. The change in the net pension liability, adjusted for deferred pension items, is reported as pension expense in the Statement of Activities. Current year pension contributions Pension expense 36,650,730 (50,086,235) (13,435,505) Lease payments are reported as expenditures in the governmental funds when paid. For the City as a whole, however, the principal portion of the payments serve to reduce the liability in the statement of net position while the acquisition of new leases increase the liability. Principal payments made Capital lease proceeds 34,360 (74,604) (40,244) Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Amortization of deferred outflow- refunding Amortization of bond premium (1,413,282) 3,314,305 1,901,023 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 the governmental funds. Neither transaction, however, has any effect on net position. Issuance of debt Principal payments made (55,585,000) 47,107,000 (8,478,000) Internal service funds are used by management to charge the costs of self-insurance to individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs. Change in net position of governmental activities 3,020,101 $ The notes to the financial statements are an integral part of this statement. 46 66,474,711 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual General Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Revenues Taxes Intergovernmental Investment income Charges for services Fines and forfeitures Licenses and permits Other entities' participation Miscellaneous Total revenues Expenditures Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Mayor and council Municipal court City manager City attorney Internal audit office Municipal budget office Economic development office Sustainability office Office of strategic management and diversity City clerk and elections Internal services Contingency Interdepartmental charges Total expenditures Other financing sources (uses) Transfers from other funds Transfers to other funds Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance Budgeted Amounts Original Final Actual Amounts (Budgetary Basis) Variance with Final Budget Positive (Negative) $ 139,125,919 54,148,051 2,400,000 10,738,490 5,389,064 4,543,000 359,315 8,381,237 225,085,076 $ 139,125,919 54,148,051 2,400,000 10,738,490 5,389,064 4,543,000 359,315 8,381,237 225,085,076 $ 139,061,772 65,715,549 3,415,681 13,439,955 5,612,670 7,400,258 359,315 8,454,724 243,459,924 94,408,306 40,181,996 28,518,641 2,790,378 440,463 15,742,066 15,248,582 501,658 4,823,929 7,344,930 3,414,516 549,505 276,396 701,399 159,529 1,170,377 1,574,225 33,505,569 1,500,000 (17,285,154) 235,567,311 94,658,155 40,721,333 27,221,508 2,692,757 432,770 15,746,731 13,505,862 491,658 4,806,053 7,060,717 3,441,147 536,005 276,396 691,399 159,529 1,037,451 1,299,095 37,326,299 710,864 (17,285,154) 235,530,575 93,739,926 39,765,320 25,537,579 2,559,365 700,709 13,853,118 12,424,643 463,775 4,655,567 6,802,724 3,551,642 506,244 255,358 736,409 159,683 1,111,163 1,006,227 34,470,411 (16,460,551) 225,839,312 918,229 956,013 1,683,929 133,392 (267,939) 1,893,613 1,081,219 27,883 150,486 257,993 (110,495) 29,761 21,038 (45,010) (154) (73,712) 292,868 2,855,888 710,864 (824,603) 9,691,263 302,675 (2,689,223) 357,137 (2,029,411) $ (12,511,646) 302,675 (2,689,223) 357,137 (2,029,411) $ (12,474,910) 20,750 (5,025,303) 602,775 (4,401,778) 13,218,834 (281,925) (2,336,080) 245,638 (2,372,367) 25,693,744 Explanation of differences between budgetary revenues and expenditures, and GAAP revenues and expenditures: The City does not budget for the change in the fair value of investment, but recognizes the change for GAAP purposes The City budgets for claims and other accrued expenses on a cash basis, rather than on a modified accrual basis The City recognizes encumbrances as expenditures for budgetary purposes but not for GAAP purposes The City recognizes certain other expenditures on a cash basis, rather than on a modified accrual basis Net change in fund balance as reported on the statement of revenues, expenditures and changes in fund balances- governmental funds The notes to the financial statements are an integral part of this statement. 47 2,363,380 206,396 547,050 123,535 $ 16,459,195 $ $ (64,147) 11,567,498 1,015,681 2,701,465 223,606 2,857,258 73,487 18,374,848 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Transit Special Revenue Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Revenues Sales taxes Intergovernmental revenue Investment income Charges for services Other entities' participation Miscellaneous Total revenues Expenditures Current: Engineering and transportation Contingency Debt service: Principal retirement Interest and fiscal fees Total expenditures Other financing sources (uses) Transfers to other funds Proceeds from sale of capital assets Proceeds of bonds Total other financing sources (uses) Net change in fund balance Budgeted Amounts Final Original Actual Amounts (Budgetary Basis) Variance with Final Budget Positive (Negative) $ $ $ 43,693,520 9,011,254 920,000 11,740,706 130,000 639,875 66,135,355 $ 43,693,520 9,011,254 920,000 11,740,706 130,000 639,875 66,135,355 44,373,904 1,378,384 1,103,216 9,008,586 200,000 293,406 56,357,496 60,504,378 188,000 60,504,378 188,000 43,818,109 - 16,686,269 188,000 2,215,000 1,908,594 64,815,972 2,215,000 1,908,594 64,815,972 2,215,000 2,043,571 48,076,680 (134,977) 16,739,292 (10,673,922) (10,673,922) (10,673,922) (10,673,922) (10,173,922) 35,886 160,000 (9,978,036) 500,000 35,886 160,000 695,886 $ (9,354,539) $ (9,354,539) (1,697,220) $ 7,657,319 Explanation of differences between budgetary revenues and expenditures, and GAAP revenues and expenditures: The City does not budget for the change in the fair value of investment, but recognizes the change for GAAP purposes The City budgets for claims and other accrued expenses on a cash basis, rather than on a modified accrual basis The City recognizes certain other revenues on a budget basis, rather than on a modified accrual basis The City recognizes certain other expenditures on a budget basis, rather than on a modified accrual basis Net change in fund balance as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds The notes to the financial statements are an integral part of this statement. 48 734,487 (1,471) 47,812 1,182,294 $ 265,902 680,384 (7,632,870) 183,216 (2,732,120) 70,000 (346,469) (9,777,859) City of Tempe, Arizona 49 Statement of Fund Net Position Proprietary Funds June 30, 2020 City of Tempe, Arizona Business-type Activities - Enterprise Funds Water and Wastewater Solid Waste Emergency Medical Transportation $ $ $ Golf Course $ Total Governmental ActivitiesInternal Service Funds Assets Current assets: Pooled cash and investments Restricted cash and investments Accounts receivable, net Accrued interest receivable Due from other funds Inventories Total current assets Noncurrent assets: Advance to other funds Notes receivable Total OPEB assets Equity in joint venture Capital assets: Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets 99,323,811 33,805,684 11,224,064 422,276 1,111,567 1,262,438 147,149,840 5,824,440 1,241,703 29,821 7,095,964 56,357 1,829,678 46 1,886,081 1,699 12,290 13,989 $ 105,204,608 33,805,684 14,297,144 464,433 1,111,567 1,262,438 156,145,874 $ 18,835,802 112,725 3,414 18,951,941 2,748,828 323,925 25,330 110,850,213 9,412 - 3,634 - 913 - 2,748,828 323,925 39,289 110,850,213 1,232 - 6,330,829 46,714,221 344,044,918 207,808,698 18,342,489 85,005,951 (328,208,485) 1,265,783 17,994,492 761,467 (11,149,835) 1,689,573 (370,537) 362,548 1,822,663 3,210,587 1,368,293 2,425,568 48,645 (4,220,134) 6,693,377 49,802,667 347,255,505 209,176,991 40,452,122 85,816,063 (343,948,991) - 380,038,621 493,986,917 8,871,907 8,881,319 1,319,036 1,322,670 5,018,170 5,019,083 395,247,734 509,209,989 1,232 641,136,757 15,977,283 3,208,751 5,033,072 665,355,863 18,953,173 9,318,217 1,506,193 144,928 10,969,338 559,678 53,098 612,776 216,116 19,987 236,103 54,297 5,484 59,781 9,318,217 2,336,284 223,497 11,877,998 73,257 6,559 79,816 Deferred Outflows of Resources Deferred charge on refunding Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources 50 Business-type Activities - Enterprise Funds Water and Wastewater Solid Waste Emergency Medical Transportation Golf Course Total Governmental ActivitiesInternal Service Funds Liabilities Current liabilities: Accounts payable Deposits Accrued expenses Due to other funds Unearned revenue Accrued interest payable General obligation bonds- current Excise tax revenue obligations- current WIFA loan payable- current Capital leases payable- current 10,632,752 727,930 2,868,776 204,151 5,117,811 20,430,000 3,555,000 815,881 - 1,697,353 53,777 845,254 - 24,230 120,694 - 71,317 143,507 1,111,567 153,848 12,425,652 781,707 3,978,231 1,111,567 204,151 5,117,811 20,430,000 3,555,000 815,881 153,848 221,581 11,081,924 - Total current liabilities 44,352,301 2,596,384 144,924 1,480,239 48,573,848 11,303,505 195,806,155 63,496,302 38,000,000 7,184,582 6,670,042 13,148,543 324,305,624 368,657,925 2,121,728 4,885,794 7,007,522 9,603,906 574,444 1,886,619 2,461,063 2,605,987 2,748,828 327,068 363,021 473,995 3,912,912 5,393,151 2,748,828 195,806,155 63,496,302 38,000,000 7,184,582 327,068 9,729,235 20,394,951 337,687,121 386,260,969 93,107 639,509 732,616 12,036,121 989,923 84,764 1,074,687 367,840 30,426 398,266 142,039 11,014 153,053 35,686 3,423 39,109 1,535,488 129,627 1,665,115 48,147 3,429 51,576 126,250,607 156,122,876 $ 282,373,483 8,871,907 (2,284,020) 6,587,887 1,319,036 (633,222) 685,814 4,537,254 (4,876,661) (339,407) 140,978,804 148,328,973 $ 289,307,777 6,945,292 6,945,292 Noncurrent liabilities: Advance from other funds General obligation bonds payable Excise tax revenue obligations Water/sewer revenue obligations WIFA loan payable Capital leases payable Total OPEB liability Pensions Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Deferred inflows related to pensions Deferred inflows related to OPEB Total deferred inflows of resources Net Position Net investment in capital assets Unrestricted Total net position $ The notes to the financial statements are an integral part of this statement. 51 $ $ $ Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2020 City of Tempe, Arizona Business-type Activities - Enterprise Funds Golf Course Total Governmental ActivitiesInternal Service Funds 4,375,755 147,614 4,523,369 $ 2,780,200 12,077 2,792,277 $ 110,607,269 326,138 110,933,407 $ 41,509,523 41,509,523 5,428,092 582,237 9,632,692 1,266,070 16,909,091 1,485,220 3,165,823 284,544 673,194 172,378 4,295,939 227,430 589,355 312,415 1,515,602 535,080 2,952,452 (160,175) 24,033,926 6,033,406 33,667,647 23,053,564 86,788,543 24,144,864 38,609,005 38,609,005 2,900,518 Water and Wastewater Solid Waste Operating revenues: Charges for services Miscellaneous Total operating revenues $ 85,057,003 166,447 85,223,450 $ 18,394,311 18,394,311 Operating expenses: Personnel services Supplies and materials Fees and services Depreciation Total operating expenses Operating income (loss) 14,850,656 4,854,210 21,846,159 21,080,036 62,631,061 22,592,389 Emergency Medical Transportation $ Nonoperating revenues (expenses): Investment income (loss) Interest and fiscal fees Gain (loss) on sale of capital assets Net loss from joint venture Income (loss) before contributions and operating transfers 3,311,140 (9,575,949) 39,729 (5,509,341) 191,526 31,672 - 1,393 - (85,634) 10,356 - 3,504,059 (9,661,583) 81,757 (5,509,341) 119,583 - 10,857,968 1,708,418 228,823 (235,453) 12,559,756 3,020,101 Transfers in Transfers out Change in net position 5,978,824 (7,043,142) 9,793,650 400,000 (4,855) 2,103,563 (700,000) (471,177) 74,000 (161,453) 6,452,824 (7,747,997) 11,264,583 3,020,101 272,579,833 $ 282,373,483 4,484,324 $ 6,587,887 (177,954) (339,407) 278,043,194 $ 289,307,777 3,925,191 $ 6,945,292 Total net position- beginning Total net position- ending The notes to the financial statements are an integral part of this statement. 52 $ 1,156,991 685,814 $ Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2020 City of Tempe, Arizona Business-type Activities- Enterprise Funds Cash flows from operating activities: Receipts from customers Receipts from other funds Payments to employees for services Payments to suppliers for goods and services Payment for premiums and settlement of claims Net cash provided (used) by operating activities Water and Wastewater Solid Waste Emergency Medical Transportation $ $ $ Cash flows from noncapital financing activities: Advances from/(to) other funds Transfers in Transfers out Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Proceeds from issuance of bonds Principal paid on advances Principal paid on long-term debt Principal paid on capital leases Interest and fiscal fees Change in capital assets Investment in joint venture Unearned revenue Proceeds from the sale of assets Net cash provided (used) by capital and related financing activities Cash flows from investing activities: Interest received Issuance of notes receivable Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 85,540,306 (14,917,466) (22,085,691) 48,537,149 18,399,765 (5,521,394) (8,917,442) 3,960,929 4,254,036 (2,008,647) (956,436) 1,288,953 Golf Course $ 2,793,336 (561,144) (1,830,587) 401,605 Total $ 110,987,443 (23,008,651) (33,790,156) 54,188,636 Governmental ActivitiesInternal Service Funds $ 41,851,415 (39,368,702) 2,482,713 194,850 5,978,824 (7,043,142) (869,468) 400,000 (4,855) 395,145 (289,045) (700,000) (989,045) 94,195 74,000 168,195 6,452,824 (7,747,997) (1,295,173) - 54,320,000 (50,304,026) (8,158,818) (40,841,465) (4,358,442) (966) 39,729 (49,303,988) (3,101,865) 56,496 (3,045,369) (244,898) (244,898) (124,974) (255,411) (85,634) (112,149) 10,356 (567,812) 54,320,000 (124,974) (50,304,026) (255,411) (8,244,452) (44,300,377) (4,358,442) (966) 106,581 (53,162,067) - 3,462,890 297,032 3,759,922 198,721 198,721 1,347 1,347 (1,988) (1,988) 3,660,970 297,032 3,958,002 124,157 124,157 2,123,615 131,005,880 1,509,426 4,315,014 56,357 - - 3,689,398 135,320,894 2,606,870 16,228,932 $ 133,129,495 $ 5,824,440 $ 56,357 $ - $ 139,010,292 $ 18,835,802 Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in prepaid expenses (Increase) decrease in inventories (Increase) decrease in net OPEB asset Increase (decrease) in deposits Increase (decrease) in payables Increase (decrease) in accrued expenses (Increase) decrease in deferred outflows Increase (decrease) in deferred inflows Increase (decrease) in pension Increase (decrease) in net OPEB liability Net cash provided (used) by operating activities Noncash investing, capital, and financing activities: $ 22,592,389 $ 1,485,220 $ 227,430 $ (160,175) $ 24,144,864 $ 2,900,518 $ 341,892 431 (212,148) (536,744) 16,547 (38,759) 3,930 7,046 2,482,713 Net loss from joint venture Total noncash investing, capital, and financing activities: Reconciliation of operating income (loss) to net cash provided (used) by operating activities: The notes to the financial statements are an integral part of this statement. 21,080,036 1,266,070 172,378 535,080 23,053,564 $ 316,856 (88,337) 10,394 (72,608) 4,775,623 375,451 603,549 (1,015,676) (528,358) 487,830 48,537,149 $ 5,454 3,794 53,777 1,243,710 41,036 231,933 (362,720) (162,821) 155,476 3,960,929 (269,333) (1,565) 1,302 52,373 (55,757) 25,637 1,089,869 46,619 1,288,953 $ 1,059 283,569 342 (286,139) 22,740 22,039 (38,203) (5,236) 26,529 401,605 $ 54,036 283,569 (88,337) 12,965 (18,831) 5,734,496 491,600 801,764 (1,390,962) 393,454 716,454 54,188,636 $ $ $ (5,509,341) (5,509,341) $ $ $ $ - $ $ (5,509,341) (5,509,341) $ $ 53 - $ $ - - - Statement of Fiduciary Net Position Fiduciary Trust Fund June 30, 2020 City of Tempe, Arizona Other Employee Benefit Trust Fund Assets Cash and cash equivalents $ 43,337 Investments at fair value: Equity Mutual Funds Total investments 8,986,369 5,919,168 14,905,537 Total assets 14,948,874 Net Position Restricted for other post employment benefits Total net position $ 14,948,874 14,948,874 Statement of Changes In Fiduciary Net Position Fiduciary Trust Fund For the Year Ended June 30, 2020 City of Tempe, Arizona Other Employee Benefit Trust Fund Additions: Employer contributions $ Investment earnings: Net decrease in fair value of investments Interest, dividends and other Investment costs Net investment earnings 7,918,331 (140,498) 967,894 (66,058) 761,338 Total additions 8,679,669 Deductions: Benefits paid to participants or beneficiaries Medical insurance for retirees Total deductions 6,623,470 1,294,861 7,918,331 Net increase in fudiciary net position 761,338 Net position- beginning Net position- ending $ The notes to the financial statements are an integral part of these statements. 54 14,187,536 14,948,874 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona The City of Tempe, Arizona (the "City") was incorporated on November 26, 1894. On October 19, 1964, the electors in accordance with Arizona State Law ratified a Home Rule City Charter. The City operates under a Council-Manager form of government and provides services as authorized by its charter including: public safety (police, fire, building inspection), highways and streets, public transit, sanitation, water and wastewater, cultural-recreational, community development, and administrative. NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying summary of the City's significant accounting policies is presented to assist the reader in interpreting the basic financial statements. The basic financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") as applied to governmental units. During the year ended June 30, 2020, the City implemented the provisions of GASB Statement No. 84, Fiduciary Activities. The objective of this statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The City maintains one Fiduciary Fund, the Other Post Employment Benefits Trust Fund. A. Reporting Entity The accompanying basic financial statements include the City and its component unit, collectively referred to as "the financial reporting entity". In accordance with the Governmental Accounting Standards Board's ("GASB") Statement 14, as amended, the component unit discussed below has been included in the City's financial reporting entity because of the significance of its financial relationships with the City. Rio Salado Community Facilities District: The Rio Salado Community Facilities District (CFD) was organized on February 20, 1997, under the laws of the State of Arizona to facilitate development of the Rio Salado Town Lake project. The board of the district is comprised of the same members as the City’s council. Data for this component unit has been included in the City's basic financial statements utilizing the "blending" method because its sole purpose is to finance public facilities and facilitate development for the City. Blending involves aggregating the component unit’s data and data from the City at the government-wide and fund financial statement level. Separately issued financial statements are not available for the City's component unit. B. Basic Financial Statements The basic financial statements include both government-wide (based on the City as a whole and its component unit) and fund financial statements. Both the government-wide and fund financial statements categorize activities as either governmental activities or business-type activities. Governmental activities are normally supported by taxes and intergovernmental revenues. Business-type activities rely to a significant extent, on fees and charges for support. All activities, both governmental and business-type, are reported in the government-wide financial statements using the economic resources measurement focus and the accrual basis of accounting, which includes long-term assets as well as long-term obligations. The government-wide financial statements focus more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The government-wide financial statements exclude the fiduciary fund. The government-wide Statement of Activities demonstrates the degree to which the direct expenses, including depreciation, of the various departments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific department. Interest on long-term debt and depreciation expense on assets shared by multiple departments, are not allocated to the various departments. 55 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basic Financial Statements (Continued) Program revenues include revenues from fines and forfeitures, licenses and permit fees, special assessment taxes, certain intergovernmental grants, other entities participation and charges for services. Taxes and other items not properly included among program revenues are reported as general revenues. Generally, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. The City does not currently utilize an indirect cost allocation system. The General Fund charges certain administrative fees to departments within other operating funds to support general services used by those funds. The expenditures/expenses are recorded as a reduction of expense in the allocating fund. Therefore, no elimination is required from either the government-wide or fund level financial statements. The fund financial statements are, in substance, very similar to the financial statements presented prior to the adoption of GASB Statement 34. Emphasis here is on the major funds in either the governmental, business-type or fiduciary categories. Non-major funds are summarized into a single column. Unless an internal service fund is combined with the business-type activities (deemed to be an infrequent event), totals on the proprietary fund statement should directly reconcile to the business-type activity column presented in the government-wide statements. Internal service funds of a government (which traditionally provide services primarily to other funds of the City) are presented as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements of internal service funds are consolidated into the governmental activities column when presented at the government-wide level. To the extent possible, the costs of these services are reflected in the appropriate department. C. Basis of Presentation The City uses funds to report on its financial position and the results of its operations. A fund is a separate accounting entity with a self-balancing set of accounts. Fund accounting is designed to demonstrate legal compliance and to aid in the City's financial management by segregating transactions related to certain functions or activities. The following fund categories are used by the City: Governmental Funds Governmental Funds are those through which most of the governmental functions of the City are financed. The focus of Governmental Fund measurement, in the fund financial statements, is upon determination of financial position and changes in financial position rather than upon net income. Governmental Funds include the following fund types: General - The General Fund is the general operating fund of the City. It is used to account for all activities of the City not accounted for in some other fund. 56 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Governmental Funds (Continued) Special Revenue - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally or otherwise restricted to expenditures for specified purposes. There is one special revenue fund presented as a major fund in the basic financial statements, it is as follows: Transit Special Revenue Fund - accounts for the receipt and expenditures of the Transit Tax monies. These monies are restricted to financing transit operations and improvements. Debt Service - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, long term debt not being accounted for in the Special Revenue Funds and Enterprise Funds. Both debt service funds are presented as major funds in the basic financial statements: General Obligation Debt Service Fund - accounts for the accumulation of resources and payments of general obligation and other debt. Special Assessment Debt Service Fund - accounts for the accumulation of resources and payments of special assessment debt. Capital Projects - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and improvements (other than those financed by Enterprise Funds). The following capital project fund is presented as a major fund in the basic financial statements: Transit Capital Projects Fund - used for the acquisition of buses, the light rail system, and other traffic flow improvements. Proprietary Funds Proprietary funds are used to account for the City's ongoing operations and activities, which are similar to those often found in the private sector. The focus of Proprietary Fund measurement is upon the determination of operating income, changes in net position, financial position and cash flows. Each proprietary fund is reported as a major fund in the basic financial statements. Proprietary funds include the following fund types: Enterprise - Enterprise Funds are used to account for operations, including debt service, (a) that are financed and operated in a manner similar to private businesses - where the intent of the government body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis is financed or recovered primarily through user charges; or (b) where the governing body has determined that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Equity in Joint Venture - The equity method is used to account for the City's equity interest in a joint venture (See Note 7). Under this method, the equity interest is recorded in the balance sheet as a single amount. In addition, the City's share of the net income or loss is reported in the Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds, as a nonoperating revenue or expense. 57 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Proprietary Funds (Continued) The following enterprise funds are used by the City: Water and Wastewater Fund – accounts for the provision of water and sewer services to the residents of the City and some residents in the adjoining Town of Guadalupe. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance, financing and related debt service, billing and collection. Solid Waste Fund – accounts for the provision of refuse collection and disposal services for both residential and commercial customers. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, billing and collection. Emergency Medical Transportation Fund – accounts for the operation of emergency medical transportation services. Revenues are derived from the user fees collected for ambulance services. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation and maintenance. Golf Course Fund - accounts for the operation of the Rolling Hills and Ken McDonald golf courses. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance and financing. Internal Service - Internal Service Funds account for operations that provide services to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. The following internal service funds are used by the City: Risk Management Fund – accounts for expenses incurred for automobile liability, general liability, and property claims under the City’s self-insurance program. Worker’s Compensation Fund – accounts for expenses incurred for worker’s compensation claims under the City’s self-insurance program. Health Fund – accounts for the expenses incurred for employee health related costs under the City’s self-insurance program. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside of the City. The fiduciary fund is reported by fund type. The following fiduciary fund is used by the City. Other Post Employment Benefits Trust Fund – accounts for activities of the Other Post Employment Benefits Plan, which accumulates resources for health care benefit payments to qualified retirees. 58 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting The government-wide, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to 1) demonstrate legal and covenant compliance, 2) demonstrate the source and use of liquid resources, and 3) demonstrate how the City’s actual experience conforms to the annual budget. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" is defined as collectible within the current period or within 60 days of the end of the current fiscal period. Expenditures, other than interest on long-term debt, are recorded when the related fund liability is incurred, if measurable. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded only when payment is due. As permitted by generally accepted accounting principles the City applies the “early recognition” option for debt service payments. Resources are provided during the current year for the payment of debt service principal and interest due early in the following year (less than one month). Therefore, the expenditures and related liabilities have been recognized in the current period. Revenues susceptible to accrual include property tax, local sales tax, state-shared sales tax, highway user tax, vehicle license tax, franchise fees, special assessments and interest earned on pooled investments. Licenses and permits, charges for services, fines and forfeitures and miscellaneous revenues are generally recorded as revenues when received in cash because they are not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended for a specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to the purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. The City reports unearned revenues in the governmental funds if the potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for the unearned revenue is removed and revenue is recognized. Since the governmental fund financial statements are presented on a basis different than the governmental activities column of the government-wide financial statements, a reconciliation is provided immediately following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the governmental fund financial statements into the governmental activities column of the government-wide financial statements. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. An exception to this rule is charges between the government’s water and sewer function and various functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the applicable functions. Amounts reported as program revenue include 1) charges to customers or users who purchase, use or directly benefit from goods or services provided by a particular department 2) operating grants and contributions that are restricted to meeting the operational requirements of a particular department and 3) capital grants and contributions that are restricted. Taxes, investment income and other revenues not identifiable with a particular department are included as general revenues. The general revenues support the net costs of the departments not covered by program revenues. 59 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing goods and services of the fund’s principal ongoing operations. Operating expenses include the cost of providing the goods and services, administrative expenses, and depreciation on capital assets. Non-operating revenues and expenses are items such as investment income and interest expense, which are not a result of the direct operations of the activity. E. Budgetary Data State law mandates that cities and towns adopt a budget annually. As a result, an operating budget is legally adopted each fiscal year for the General, Special Revenue, Debt Service, and Proprietary Funds on a modified accrual basis plus encumbrances. The separately issued annual budget may be obtained from the City's Municipal Budget Office, 31 East 5th Street, Tempe, Arizona, 85281. Certain differences as described in Note 2 exist between the basis of accounting used for budgetary purposes and that used for reporting purposes in accordance with GAAP. The legal level of budgetary control is at the city-wide level consisting of the total operating budget and the total capital projects budget, as adopted. Management may amend the budget at any level below the total budget as adopted. The total budget can only be amended by the City Council subject to limitations in the State law (see Note 1F). At the end of each fiscal year, all amounts encumbered are reappropriated as part of the following year’s operating or capital projects budget. Any appropriations that are either unexpended or unencumbered, lapse at fiscal year-end. No supplemental appropriations were necessary during the year. The City adheres to the following procedures in establishing the budgetary data reflected in the basic financial statements: 1) Prior to May 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed revenues and expenditures. 2) Public hearings are conducted to obtain taxpayer comments. 3) Prior to July 1, the budget is legally enacted through passage of a resolution. F. Expenditure Limitation On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments, which restricts the annual growth of expenditures to a percentage determined by population and inflation. Certain types of expenditures are excluded from the limitation. Article 9, Sections 20 and 21 of the Arizona Constitution require the Economic Estimates Commission to determine each year the expenditure limitation for the following fiscal year for each city. The limitation is calculated based upon the amount of FY 1979-80 actual payments of local revenues, referred to as the “base limit”. Each year, the base limits for local jurisdictions are adjusted for population and inflation to reach the expenditure limitations. The City of Tempe’s 2020 Expenditure Limitation is $535,190,184. Local governments may carry forward to future years’ revenues, which are not subject to the expenditure limitation and were not expended in the year of receipt. G. Pooled Cash and Investments Cash resources of the City are combined to form a pool of cash and investments managed by the Accounting Division. Excluded from this pool are certain legally restricted cash resources. In accordance with the City’s legally adopted budget, the interest earned on pooled investments is recorded in the General Fund, except for the earnings of Enterprise Funds and other funds whose interest earnings are specifically mandated by law or an outside regulating agency to remain in those funds. Investments are stated at fair value. 60 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Pooled Cash and Investments (Continued) The City's investment policy permits investment in the following instruments: 1) Obligations of the United States Government, its agencies and instrumentalities; 2) Fully insured or collateralized certificates of deposit and other evidences of deposit at banks and savings and loan associations; 3) Bankers' acceptances issued by the 10 largest domestic banks and the 20 largest international banks, provided collateral meets the standards set by the Investment Advisory Committee; 4) A-1/P-1 rated commercial paper secured by an irrevocable line of credit or collateralized by U.S. government securities; 5) Repurchase agreements whose underlying collateral consist of the foregoing; 6) Money market funds whose portfolios consist of the foregoing; and 7) The State of Arizona's Local Government Investment Pools 5 and 7. Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. Investment income is included in other local revenue in the governmental fund financial statements and in nonoperating revenues in the proprietary fund financial statements. H. Receivables For accounts receivable, all amounts are net of allowance for doubtful accounts. I. Inventories and Prepaid Items All inventories are valued using the average cost method. They consist of expendable supplies held for consumption and are accounted for using the consumption method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Prepaid items are recorded as expenses when consumed in the government-wide financial statements. Prepaid items are recorded as expenditures when consumed in the fund financial statements. In fund financial statements, inventory and prepaid items represent amounts that are not in spendable form, even though they are a component of assets. Such amounts are presented as a component of non-spendable fund balance. J. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the Balance Sheet, or Statement of Net Position, because they are maintained in trust accounts and their use is limited by applicable debt covenants. In addition, the Industrial Commission of Arizona requires a restricted security for self-insured entities. As the City is self-insured, a security of $2.6 million is included in restricted assets in the General Fund. K. Capital Assets Capital assets, including public domain infrastructure (e.g., roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $10,000 ($25,000 for infrastructure assets) and an estimated useful life greater than three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of arts and capital assets received in a service concession arrangement are recorded at acquisition value at the date of donation. 61 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. Capital Assets (Continued) The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend its life, are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives (land and construction-in-progress are not depreciated): Assets Useful Life (years) Buildings Infrastructure Improvements Machinery and equipment 10-70 7-70 10-50 3-15 L. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. M. Compensated Absences Accumulated unpaid vacation, vested sick pay and earned compensatory time are accrued in the Government-wide and all Proprietary Fund statements. Compensated absences are only reported in the governmental funds if they have matured (i.e. unused reimbursable leave still outstanding following an employee’s resignation or retirement). These long-term liabilities of the governmental funds are not shown on the fund financial statements, as the benefits are not expected to be liquidated with expendable available financial resources. Vacation leave will be absorbed by time off from work or, within certain limitations, may be payable to the employees. Sick leave is accumulated at the rate of 96 hours (or a proportionate equivalent for employees with workweeks other than 40 hours) per year up to a maximum of 480 hours. Each year, hours accumulated in excess of 480 hours are either converted to cash at a 4-for-1 rate or accumulated in a “sick bank”. Generally, upon retirement or resignation, employees with at least 10 or 20 years of service are eligible for compensation of up to 50 percent, or 60 percent respectively, of accumulated sick leave. Each employee receives a $500 "Mediflex" allowance each year as reimbursement for all otherwise non-reimbursed health maintenance costs. Unused balances are accumulated. Upon termination, for employees with at least 10 years of service, the balance is transferred to a “Retiree Funded Health Savings Account”. N. 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 plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 62 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) O. Other Post-Employment Benefits (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. P. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, in the period in which the bonds are issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Q. Net Position Flow Assumption In the government-wide and proprietary fund financial statements the City applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. R. Interfund Transactions Interfund transactions consist of identified services performed for other funds or costs billed to other funds and are recorded as expenditures in the fund receiving the services and as a reimbursement, reducing expenditures, in the fund performing the services except for sales of water, sewer and refuse services to other City departments and the internal service risk management, worker’s compensation or health charges which are recorded as revenue and expenditures in the appropriate funds. All other interfund transactions are reported as transfers. S. Fund Equity In the fund financial statements, the classifications of fund balance are Nonspendable, Restricted, Committed, Assigned, and Unassigned. Nonspendable and Restricted fund balances represent the “restricted” classifications and Committed, Assigned, and Unassigned represent the “unrestricted” classifications (see Note 11). T. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. For the purposes of the statement of cash flows, all pooled cash and investments are also considered to be cash equivalents, although there are investments with maturities in excess of three months when purchased in the portfolio. This is due to the fact that the Proprietary funds may deposit or withdraw cash at any time without prior notice or penalty, having the characteristics of demand deposits. In a statement of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. 63 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) U. 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, liabilities, 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. NOTE 2 - BUDGET BASIS OF ACCOUNTING Arizona state statutes require accounting for certain transactions to be on a basis other than GAAP. The actual results of operations, in accordance with state statutes ("budget basis") are presented in the Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual for the General Fund and Transit Special Revenue Fund (major funds) to provide a meaningful comparison of actual results with the budget. Budgetary statements include a reconciliation of the adjustments required to convert the budgetary basis to GAAP basis. The major differences between the budget and GAAP bases are: 1) Encumbrances are recorded as the equivalent of expenditures (budget) as opposed to a reservation of fund balance (GAAP). 2) Certain revenues and expenditures not recognized in the budgetary year are accrued (GAAP). 3) Changes in the fair value of investments (GAAP) are not budgeted. NOTE 3 - PROPERTY TAXES Under Arizona law a two-tiered tax system exists: (1) a primary system for taxes levied to pay for current operation and maintenance expenses, and (2) a secondary system for taxes levied to pay principal and interest on bonded indebtedness as well as for the determination of the maximum permissible bonded indebtedness. In Fiscal Year 2016, with the passage of Proposition 117, the limited property tax value was required to be used in determining and levying primary and secondary taxes on all property. In May 2016, legislation was passed by the Arizona State Legislature, effective August 2016, which clarifies that the valuation for the calculation of the debt limit is the full cash (secondary) property value rather than the limited property value. Primary levies are limited to a 2% increase annually plus levies attributable to assessed valuation added as a result of growth and annexation. Secondary tax levies do not have a limitation. The City's property tax is levied each year on or before the third Monday in August based on the previous January 1 Limited Property Tax 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 on November 1 and May 1, respectively. Delinquent amounts bear interest at the rate of 16%. Maricopa County, at no charge to the taxing entities, bills and collects all property taxes. Public auctions of properties which have delinquent real estate taxes are held in February following the May 1 date upon which the second installment becomes delinquent. The purchaser is given a Certificate of Purchase issued by the County Treasurer. Five years from the date of sale, the holder of a Certificate of Purchase, which has not been redeemed, may demand of the County Treasurer a County Treasurer's Deed. Additionally, a lien against property assessed attaches on the first day of January preceding the assessment and levy thereof. 64 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the Statement of Net Position and on the Balance Sheet as "Pooled cash and investments." Pooled cash and investments are stated at fair value, with accrued interest shown under “Accrued interest receivable”. The change in fair value of the investments is recorded in investment income. Restricted cash and investments are amounts held separately by trustees and segregated due to their source and future intent. Amounts held by trustees are invested in money market securities, maturing within one year from the time of purchase, or US treasury obligations and are reported at amortized cost. Deposits At year-end, the carrying amount of the City's deposits with financial institutions was $5,567,336 and the bank balance was $9,323,412; $8,823,412 of that amount was exposed to custodial risk because it was uninsured and is collateralized with securities held by the pledging financial institution. In addition, the City holds $29,630 in petty cash. Investments City Charter, Ordinance, and Trust Agreements authorize the City to invest in US treasury obligations, US agency obligations, certificates of deposit that are fully insured or collateralized, banker’s acceptances issued by the 10 largest domestic banks and the 20 largest international banks, A-1/P-1 rated commercial paper secured by an irrevocable line of credit or collateralized by US government securities, repurchase agreements whose underlying collateral consist of the foregoing, money market funds whose portfolios consist of the foregoing and the Arizona Local Government Investment Pools 5 and 7. Cash and investments as of June 30, 2020 are classified in the accompanying financial statements as follows: Carrying amount of investments Carrying amount of cash deposits Total cash and investments $453,544,480 5,567,336 $459,111,816 Pooled cash and investments – unrestricted Restricted cash and investments Investments in OPEB trust Total cash and investments $368,522,885 75,640,057 14,948,874 $459,111,816 The City had a net increase in the fair value of investments during Fiscal Year 2020 of $4,515,044. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. At June 30, 2020, the City maintained the following investments and maturities: US government treasuries US government agencies Money market Principal cash held with trustee State investment pool Mutual funds Remaining Maturity in Months 13 – 24 25 – 36 37 - 48 Months Months Months 49 – 60 Months Category Fair Value 12 Months or Less Level 2 $127,329,958 $ 55,814,761 $ 45,682,734 $25,832,463 $ Level 2 Level 1 171,851,158 104,532,848 24,065,999 104,532,848 77,397,013 - 63,549,465 - 3,776,452 - 3,062,229 - Level 1 4,729,540 4,729,540 - - - - N/A Level 1 30,195,440 14,905,536 $453,544,480 30,195,440 14,905,536 $234,244,124 $3,776,452 $3,062,229 $123,079,747 65 $89,381,928 - $ - Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS (Continued) Fair Value Measurements. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. • • • Level 1 inputs are quoted prices in active markets for identical assets Level 2 inputs are significant other observable inputs Level 3 inputs are significant unobservable inputs For level 2 investments, one method used to establish fair market value is the evaluators gather information from market sources and integrate relative credit information, observed market movements, and sector news into the evaluated pricing applications and models. Another method is a volatility-driven, multi-dimensional single cash flow stream model or option-adjusted spread (OAS) model is used. The State Treasurer’s pool is an external investment pool, the Local Government Investment Pool (Pool 5), with no regulatory oversight. The pool is not required to register (and is not registered) with the Securities and Exchange Commission. The activity and performance of the pool is reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pool approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. Interest rate risk. One of the ways the City limits its exposure to fair value losses arising from rising interest rates is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. Although the City’s formal investment policy allows for investment maturities up to 5 years from the date of purchase, in general, the City limits all securities to a final maturity of no more than three years and assumes that its callable investments will not be called. In general, it is the City’s intent to hold investments to maturity. Credit risk. The City addresses credit risk through the investment policy by restricting the allowable investment instruments. The investments in the US agency obligations and US government treasuries were rated AA+ and money market funds were rated AAA by Standard & Poor’s. The Arizona Local Government Investment Pool 5 is currently rated AAA by Moody’s. The mutual funds in the OPEB Trust ranged from AA to BB. Concentration of Credit Risk. The City policy places no limit on the amount that the City may invest in any one issuer of the US treasury obligations and the US agency obligations. The investment policy does establish a maximum percentage of 10% in banker’s acceptances, 20% in commercial paper and 25% in repurchase agreements. The maximum investment in any one issuer for certificates of deposits is 33% and for repurchase agreements is 10%. The City is required to disclose if 5% or more of its investments are in securities of a single issuer. As of June 30, 2020, 28.07% of the City’s investments are in US Treasuries, 7.23% of the City’s investments are in Federal Farm Credit Bank, 6.80% of the City’s investments are in Federal Home Loan Bank, 19.25% of the City’s investments are in Federal Home Loan Mortgage Corporation securities, and 23.05% in money market funds. Custodial Credit Risk. The City’s investment in the State of Arizona Local Government Investment Pool (LGIP) is stated at fair value, which approximates the value of the City’s pool shares. The LGIP is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statutes, §35-326. Arizona Revised Statutes, §35-312 and §35-313, regulate authorized investments. The Arizona State Legislature has created the Arizona Board of Investments which reviews the investment of state monies, serves as trustees of the Permanent Land Trust Funds, and approves the State Treasurer’s Office Investment Policy. 66 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 5 - DUE TO/FROM OTHER FUNDS, INTERFUND TRANSFERS AND ADVANCES Due to/from other funds consisted of the following at June 30, 2020: Due to 85,308 2,006,858 $ 2,092,166 Due from $ 2,092,166 $ 2,092,166 Due to 1,111,567 1,111,567 Due from $ 1,111,567 $ 1,111,567 General fund General obligation debt service fund Other governmental funds Total governmental funds $ Water and wastewater fund Golf fund Total enterprise funds $ $ The interfund balances at June 30, 2020 are short-term transfers to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2020 are expected to be repaid within one year. Transfers Out Transit Special Revenue General General Transfers In General Obligation Debt Service $ - $ 646,294 - General Obligation Debt Service Non-major Governmental Water and Wastewater Solid Waste $ $ $ - - 20,750 $ - 4,855 6,063,319 4,855 - - - - $ - Total $ 20,750 - 6,719,323 - 10,068,240 Transit Capital Projects - 10,068,240 Non-major Governmental 4,379,009 105,682 2,913,206 5,550,826 485,073 - 700,000 14,133,796 Water and Wastewater - - 5,978,824 - - - - 5,978,824 - 400,000 - - 400,000 - 74,000 - - 4,855 $ 700,000 Solid Waste - - - Golf - - - Total $ 5,025,303 $ 10,173,922 $ 8,892,030 $ 5,555,681 - Emergency Medical Transportation $ 7,043,142 $ 74,000 $ 37,394,933 The interfund transfers generally fall within one of the following categories: 1) pay-as-you-go financing transfers into capital project funds; 2) transfers to cover debt service payments; or 3) transfers to cover operating expenditures in accordance with City policy. Interfund Advance. In two installment payments in Fiscal Year 2016, the Water and Wastewater Enterprise Fund advanced the Golf Enterprise Fund a total of $2.5 million for an irrigation system at Rolling Hills Golf Course. In Fiscal Year 2017, an additional $825,000 was advanced. Currently the interest rate is 2.0% and can fluctuate based on the City’s average earnings on its investments. The advance is repaid in an annual installment of $182,450 commencing June 30, 2017 through June 30, 2038. The advance balance in the Water and Wastewater Enterprise Fund at June 30, 2020 was $2,748,828. NOTE 6 – CAPITAL IMPROVEMENT NOTES RECEIVABLE On November 10, 2004, the City entered into an intergovernmental agreement with the Arizona Sports and Tourism Authority (“AZSTA”) for the renovation of the Tempe Diablo Stadium Complex. On September 1, 2005, the City funded the project through the issuance of municipal bonds (see Note 9). The AZSTA agreed to reimburse the City $12,000,000 for their contribution, plus interest at the bond rate (3.50% to 5.00%). A note receivable was recorded in the General Fund for the AZSTA’s portion. Payments are received semi-annually, and any unpaid interest is capitalized. At June 30, 2020, the General Fund capital improvement note receivable balance for this agreement is $360,000. 67 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 6 – CAPITAL IMPROVEMENT NOTES RECEIVABLE (Continued) In August 2008, the City advanced to the Downtown Tempe Authority (DTA) $250,000 to begin operations. The DTA is to repay the advance at zero percent interest rate when the district is terminated. At June 30, 2020 the General Fund capital improvement note receivable balance for this agreement is $250,000. During the construction of the light rail, the City entered into a development agreement to add a light rail station at Washington and Center Parkway. The agreement has total contributions to the City of $1.3 million, payable at $130,000 annually over a five and six-year period with the remaining balance due the following year. At June 30, 2020, the note receivable balance in the Transit Special Revenue fund is $1,028,653 and the corresponding revenue has been reported as a deferred inflow of resources. In accordance with a development agreement, the City has deferred certain water and sewer development fees. Commencing in August 2011, the City receives $12,324 monthly over a 10-year period with an interest rate of 4.00%. The notes receivable balance in the Water and Wastewater Enterprise Fund at June 30, 2020 was $168,294 for this agreement. In August 2011, in accordance with a development agreement, the City has deferred certain water and sewer development fees. The City will use the sales tax rebate due to the developer to pay for the deferred development fees. The outstanding fees accrue at an interest rate of 2.00%. The notes receivable balance in the Water and Wastewater Enterprise Fund at June 30, 2020 was $155,631 for this agreement. NOTE 7 - JOINT VENTURE The City currently participates in three joint ventures, the Subregional Operating Group, Valley Metro Rail, Inc and Regional Wireless Cooperative. Subregional Operating Group (SROG) The City participates with the cities of Phoenix, Mesa, Scottsdale, and Glendale in an intergovernmental agreement for the construction, operation and maintenance of jointly used facilities including the 91st Avenue Wastewater Treatment Plant, the Salt River Project Outfall Sewer, the Southern Avenue Interceptor and related transportation facilities. The City of Phoenix is the management agency who has agreed to be responsible for the planning, designing, constructing, operating and maintaining of the jointly used sewage facilities and to perform the required accounting, administrative and other support functions. The agreement provides for the formation of a Multicity Subregional Operating Group Committee ("Multicity SROG"), whose members are composed of a representative officially appointed upon motion and order of each city, for the specific purpose of making recommendations concerning specific decisions or courses of action for the jointly used facilities. The Multicity SROG annually reviews and approves the capital improvements and replacements budget and also the operating budget for the jointly used facilities. As of June 30, 2019 (the latest information available), the City has a 15.42% equity interest or purchased capacity in the 91st Avenue Wastewater Treatment Plant and other varied, yet less significant percentages of equity interest in the other jointly used facilities. Purchased capacity is a measure of the right of use owned by the City in the total capacity of the wastewater treatment plant. The City contributes to capital improvements based upon equity interest and contributes to operating and maintenance expenses based upon proportional flow and sewage strength. The City has financed its share of capital improvement costs through the issuance of general obligation bonds, excise tax bonds, development fees and grants. The joint venture has not issued any debt. 68 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) Subregional Operating Group (SROG) (Continued) Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2019 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ 697,821 (41,687) $ 656,134 Total revenues Total expenses Total non-operating revenues (expenses) Net decrease in net position $ 65,247 (93,645) 706 ($ 27,692) The City's net investment and its share of operating and maintenance expenses are recorded in the Water and Wastewater Enterprise Fund. The City's equity in joint venture at June 30, 2020, was $110,850,213. The City’s net loss from joint venture was $5,509,341 for the fiscal year ended June 30, 2020. Separately audited financial statements for the jointly used wastewater treatment and transportation facilities may be obtained from the Arizona Municipal Water Users Associations, 3003 North Central, Suite 1550, Phoenix, Arizona, 85012. Valley Metro Rail, Inc. (VMRI) The City currently participates with the cities of Phoenix, Mesa and Glendale in a joint powers agreement for the design, construction and operation of a light rail transit system. Valley Metro Rail, Inc. (VMRI) is the management agency that was incorporated to administer the joint powers agreement between the cities. In addition, VMRI has oversight responsibility for the planning, designing, construction and operation of a regional mass transit light rail system. The agreement provides voting rights for members of the representative cities related to strategic initiatives including passage of an annual capital program and annual operating budget. As of June 30, 2020, the City has a 21.60% (unaudited) equity interest in the joint venture. The light rail project was completed and began operations in December 2008. Member contributions to the joint venture were offset by a Federal funding agreement from the U.S. Department of Transportation. These contributions were recognized as intergovernmental revenue in the Transit Capital Projects fund. Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2020 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ 1,809,952 (145,630) $ 1,664,322 Operating revenues Operating expenses Non-operating revenues Non-operating expenses Capital Contributions Net increase in net position $ 13,008 (114,114) 62,368 (22,913) 214,833 $ 153,182 69 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) Valley Metro Rail, Inc. (VMRI) (Continued) The City has an ongoing financial responsibility as a result of the joint powers agreement to participate in the cost to construct and operate the light rail project and related improvements less any federal reimbursements and operating fares. The equity interests will be determined, and periodically adjusted, based on the number of rail mileage located within each city. The City’s equity in joint venture at June 30, 2020 was $359,527,625. During the fiscal year ended June 30, 2020, the equity in joint venture increased by $60,974,013. This is primarily due to the funding of the transit streetcar project through capital grants and contributions toward the project. Separate financial statements may be obtained from Valley Metro Rail, Inc., 411 North Central Avenue, Suite 200, Phoenix, Arizona 85004. Regional Wireless Cooperative (RWC) The City participates in the Regional Wireless Cooperative (RWC), an association of municipalities formed in 2008 to oversee the administration, operation, management, and maintenance of an expanding regional communications network. The RWC was formed through a governance structure founded on the principles of cooperation for the mutual benefit of all members and has expanded to serve a still-growing list of cities, towns, and fire districts, along with many other area entities who serve public safety needs. A regional radio communications network was built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around the Phoenix Metropolitan Region. Financial responsibilities are shared by all members based on their relative size and is measured by the number of subscriber units (radios) on the network. Currently, 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. The City records its share of contributions to the RWC and the equity in the joint venture in the government-wide financial statements. The City made current year contributions $870,727. As of June 30, 2020, the City’s net investment in RWC was $8,499,737 (unaudited), or 12.5% of the RWC’s total net position. Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2019 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ 74,612 (3,714) $ 70,898 Total revenues Total expenses Net decrease in net position $ 13,790 (18,104) ($ 4,314) The Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2019, for the RWC may be obtained from the Regional Wireless Cooperative, 200 West Washington Street, 7th Floor, Phoenix, Arizona, 85003-1611. 70 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 8 - CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the fiscal year ended June 30, 2020 is as follows: Balances June 30, 2019 Governmental activities: Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets $ 91,314,323 57,704,423 149,018,746 $ Additions Retirements 46,956,930 46,956,930 $ Transfers in (out) Balances June 30, 2020 $ $ 91,314,323 (6,357,984) (27,120,240) 71,183,129 (6,357,984) (27,120,240) 162,497,452 Depreciable assets: Buildings Infrastructure Improvements Machinery and equipment Total depreciable assets 311,642,968 819,246,195 209,481,086 165,087,698 1,505,457,947 72,107 25,872 3,745,610 3,843,589 (1,102,130) (1,102,130) Accumulated depreciation: Buildings Infrastructure Improvements Machinery and equipment Total accumulated depreciation (158,672,357) (443,158,960) (93,468,618) (136,885,004) (832,184,939) (11,095,645) (18,671,008) (9,303,146) (7,041,430) (46,111,229) 1,074,886 1,074,886 - (169,768,002) (461,829,968) (102,771,764) (142,851,548) (877,221,282) $ (6,385,228) $ - $ 820,595,816 Governmental activities capital assets, net $ 822,291,754 $ 4,689,290 6,211,562 3,319,106 12,235,049 5,354,523 27,120,240 317,926,637 822,565,301 221,742,007 173,085,701 1,535,319,646 Depreciation expense was charged to the governmental functions in the government-wide financial statements as follows: Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Municipal court City manager City attorney Internal services Unallocated depreciation Total depreciation expense 71 $ $ 4,806,091 1,822,983 4,305,537 31,167,173 1,957 1,394,179 93,308 71,885 997 659 730,029 1,716,431 46,111,229 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 8 - CAPITAL ASSETS (Continued) Balances June 30, 2019 Business-type activities: Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets Depreciable assets: Buildings Infrastructure Improvements Machinery and equipment Total depreciable assets Accumulated depreciation: Buildings Infrastructure Improvements Machinery and equipment Total accumulated depreciation Business-type activities capital assets, net $ 6,693,377 52,209,884 58,903,261 $ Additions Retirements 41,201,111 41,201,111 $ (238,148) (238,148) Transfers in (out) $ Balances June 30, 2020 $ 6,693,377 (7,356,784) 85,816,063 (7,356,784) 92,509,440 49,802,667 343,639,855 207,948,051 35,021,320 636,411,893 3,337,414 3,337,414 (418,806) (418,806) 3,615,650 1,228,940 2,512,194 7,356,784 49,802,667 347,255,505 209,176,991 40,452,122 646,687,285 (28,245,490) (178,019,841) (93,495,902) (21,528,176) (321,289,409) (1,260,466) (10,843,633) (8,315,649) (2,633,816) (23,053,564) 393,982 393,982 - (29,505,956) (188,863,474) (101,811,551) (23,768,010) (343,948,991) $374,025,745 $21,484,961 $ (262,972) $ - $395,247,734 Depreciation expense was charged to the proprietary funds in the government-wide and fund financial statements as follows: Water and wastewater Solid waste Emergency medical transportation Golf course Total depreciation expense $ $ 21,080,036 1,266,070 172,378 535,080 23,053,564 A summary of net investment in capital assets, for the government-wide financial statements, for the fiscal year ended June 30, 2020 is as follows: Total Assets Less: Accumulated Depreciation Total Capital Assets, Net Governmental Activities $ 1,697,817,098 (877,221,282) 820,595,816 Business-Type Activities $ 739,196,725 (343,948,991) 395,247,734 Total $ 2,437,013,823 (1,221,170,273) 1,215,843,550 Less: Outstanding Capital Asset Debt Principal Plus: Outstanding Equity in Joint Venture Debt Principal Less: Matured Debt Payable Plus: Deferred Charge on Refundings Plus: Unspent Debt Proceeds Net investment in capital assets (320,551,108) 43,165,000 (27,540,000) 6,407,689 1,344,879 $ 523,422,276 (305,783,836) 66,181,689 (23,985,000) 9,318,217 $ 140,978,804 (626,334,944) 109,346,689 (51,525,000) 15,725,906 1,344,879 $ 664,401,080 72 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both general government and proprietary activities. Bonds issued for proprietary activities are reported in the Proprietary Funds as they are to be repaid from proprietary revenues. In the current year, $24,165,000 was issued to finance improvements for Street Improvements and Infrastructure Preservation, Community Services, Parks, Public Safety and Water and Wastewater improvements. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds are generally issued as 10-20 year serial bonds with varying amounts of principal maturing each year. General obligation bonds outstanding at June 30, 2020, were as follows (the 7/1/2020 principal payment was deducted as the Fiscal Year 2020 resources were dedicated): $5,375,000 2011A Capital Improvement Serial Bonds due in annual installments of $475,000 to $605,000 beginning July 1, 2013 through July 1, 2021; interest at 2.00% to 4.00% $ 605,000 $7,005,000 2012A Capital Improvement Serial Bonds due in annual installments of $635,000 to $765,000 beginning July 1, 2013 through July 1, 2022; interest at 2.00% to 2.25% 1,515,000 $12,765,000 2012B Capital Improvement Refunding Serial Bonds due in annual installments of $1,055,000 to $3,320,000 beginning July 1, 2013 through July 1, 2023; interest at 2.00% to 3.50% 9,530,000 $13,675,000 2013A Capital Improvement Serial Bonds due in annual installments of $515,000 to $940,000 beginning July 1, 2014 through July 1, 2033; interest at 1.00% to 4.00% 9,820,000 $41,070,000 2013B Capital Improvement Refunding Serial Bonds due in annual installments of $90,000 to $8,205,000 beginning July 1, 2014 through July 1, 2024; interest at 1.00% to 5.00% 16,080,000 $15,550,000 2014B Capital Improvement Refunding Serial Bonds due in annual installments of $1,025,000 to $5,320,000 beginning July 1, 2015 through July 1, 2023; interest at 2.00% to 4.00% 5,320,000 $45,675,000 2014C Capital Improvement Refunding Serial Bonds due in annual installments of $1,095,000 to $14,190,000 beginning July 1, 2015 through July 1, 2024; interest at 1.00% to 4.00% 35,810,000 $43,965,000 2015A Capital Improvement Serial Bonds due in annual installments of $1,740,000 to $2,925,000 beginning July 1, 2016 through July 1, 2035; interest at 1.00% to 3.75% 30,785,000 $13,630,000 2016A Capital Improvement Serial Bonds due in annual installments of $540,000 to $880,000 beginning July 1, 2017 through July 1, 2036; interest at 2.00% to 3.00% 11,405,000 $86,440,000 2016B Capital Improvement Refunding Serial Bonds due in annual installments of $3,550,000 to $17,935,000 beginning July 1, 2017 through July 1, 2029; interest at 2.00% to 4.00% 79,165,000 $32,810,000 2017 Capital Improvement Serial Bonds due in annual installments of $970,000 to $2,390,000 beginning July 1, 2018 through July 1, 2037; interest at 2.00% to 5.00% 25,540,000 $47,560,000 2018 Capital Improvement Serial Bonds due in annual installments of $1,365,000 to $3,640,000 beginning July 1, 2019 through July 1, 2038; interest at 2.00% to 5.00% 35,660,000 $52,120,000 2019 Capital Improvement Serial Bonds due in annual installments of $1,635,000 to $3,785,000 beginning July 1, 2020 through July 1, 2039; interest at 2.00% to 5.00% 49,675,000 $24,165,000 2020A Capital Improvement Serial Bonds due in annual installments of $750,000 to $1,430,000 beginning July 1, 2021 through July 1, 2040; interest at 2.60% 24,165,000 $34,580,000 2020B Capital Improvement Refunding Serial Bonds due in annual installments of $2,355,000 beginning July 1, 2021 through July 1, 2030; interest at 1.30% 34,580,000 Total general obligation bonds outstanding (excluding current portion of general obligation bonds outstanding) 73 $ 369,655,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) General Obligation Bonds (Continued) The following is a summary of total debt service cash requirements to maturity (net of 35% federal credit): Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Principal Interest Total $ 39,230,000 39,305,000 37,760,000 34,935,000 30,440,000 102,895,000 55,190,000 29,900,000 $ 13,573,212 12,324,850 11,072,728 9,741,383 8,471,918 27,677,044 12,438,812 2,811,315 $ 52,803,212 51,629,850 48,832,728 44,676,383 38,911,918 130,572,044 67,628,812 32,711,315 $ 369,655,000 $ 98,111,262 $ 467,766,262 The following is a summary of governmental debt service cash requirements to maturity (net of 35% federal credit): Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Principal Interest Total $ 17,540,000 17,995,000 16,585,000 14,830,000 14,025,000 60,880,000 34,990,000 15,015,000 $ 6,695,039 6,119,885 5,599,063 5,026,518 4,557,258 15,465,844 6,000,199 1,343,915 $ 24,235,039 24,114,885 22,184,063 19,856,518 18,582,258 76,345,844 40,990,199 16,358,915 $ 191,860,000 $ 50,807,721 $ 242,667,721 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Principal Interest Total $ 21,690,000 21,310,000 21,175,000 20,105,000 16,415,000 42,015,000 20,200,000 14,885,000 $ 6,878,173 6,204,965 5,473,665 4,714,865 3,914,660 12,211,200 6,438,613 1,467,400 $ 28,568,173 27,514,965 26,648,665 24,819,865 20,329,660 54,226,200 26,638,613 16,352,400 $ 177,795,000 $ 47,303,541 $ 225,098,541 74 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Special Assessment Bonds Payable with Governmental Commitment Improvement Districts. As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2020, the special assessments receivable of $15,132,697, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and the related interest. Improvement bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. As of June 30, 2020, there is $582,337 in delinquent receivables. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. In addition, there are $484,979 in special assessments that are due to be received upon meeting the conditions in the development agreement. Special assessment bonds payable with governmental commitment outstanding at June 30, 2020, were as follows: $4,405,000 ID 179 Special Assessment Bonds Payable with Governmental Commitment issued June 1, 2005; maturing January 1, 2021; due in annual installments of $220,000 to $385,000; interest at 4.10% $25,190,000 ID 180 Special Assessment Bonds Payable with Governmental Commitment issued February 27, 2008; maturing January 1, 2029; due in annual installments of $760,000 to $1,925,000; interest at 5.00% Total special assessment bonds outstanding $ 215,000 14,375,000 $ 14,590,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 2023 2024 2025 2026-2029 $ 1,520,000 1,370,000 1,435,000 1,510,000 1,585,000 7,170,000 $ 690,533 619,250 549,125 475,500 398,125 738,750 $ 2,210,533 1,989,250 1,984,125 1,985,500 1,983,125 7,908,750 $ 14,590,000 $ 3,471,283 $ 18,061,283 Interest Total Transit Excise Tax Revenue Obligations. On May 28, 2020, the City issued $13,160,000 of direct placement, Excise Tax Revenue Obligations. The proceeds were used to fund the costs associated with a portion of the City’s streetcar project benefitting certain properties and to pay the costs incurred to execute and deliver the obligations. The obligations are secured by a first lien upon the Transit Excise Taxes on a parity with the outstanding City of Tempe, Arizona Transit Excise Tax Revenue Refunding Obligations, Series 2012; the City of Tempe, Arizona Transit Excise Tax Revenue Refunding Obligations, Series 2017; and any other obligations hereafter executed and delivered on a parity therewith pursuant to the Trust Agreement and the Purchase Agreement. The City has assessed and is responsible for the collection of assessments secured by a lien on the assessed properties, for which the primary source of repayment is the assessments levied against the benefiting properties for the additional streetcar capital improvement project costs. At June 30, 2020, the Transit Fund special assessments receivable on the assessed properties totaled $11,948,956. As development occurs, additional benefitting properties will be assessed in an amount not to exceed $13.0 million for all assessed properties. 75 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Special Assessment Bonds Payable with Governmental Commitment (Continued) Transit Excise Tax Revenue Obligations (Continued) The City covenants and agrees that, so long as any of the Parity Obligations remain outstanding and the principal and interest shall be unpaid, it will not further encumber the Transit Excise Taxes on a parity basis unless the Transit Excise Taxes collected in the immediately preceding fiscal year shall have amounted to at least two times the highest combined principal and interest debt service payments, or any required deposits, for any succeeding fiscal year for with respect to the transit excise tax revenue Parity Obligations. The City’s outstanding obligations from the direct placement contain a provision that, in an event of default or covenant violation with this obligation, or default of any parity obligation that has not been cured by the City, the trustee may require performance and observance of any pledge and any outstanding amounts due may immediately become payable. $13,160,000 2020 Excise Tax Revenue Obligations due in annual installments of $475,000 to $840,000 through July 1, 2040; interest at 2.70% $ 13,160,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Principal $ Interest 475,000 520,000 535,000 550,000 560,000 3,055,000 3,485,000 3,980,000 $ 13,160,000 $ 387,891 342,495 328,455 314,010 299,160 1,259,550 824,580 328,050 $ 4,084,191 Total $ 862,891 862,495 863,455 864,010 859,160 4,314,550 4,309,580 4,308,050 $ 17,244,191 Excise Tax Revenue and Refunding Obligations Excise Tax Revenue Obligations. On June 23, 2011, the City issued $39,125,000 of Excise Tax Revenue Obligations: $31,825,000 of tax-exempt obligations (Series 2011A) and $7,300,000 of taxable obligations (Series 2011B) referred to as Qualified Energy Conservation Bonds. As an issuer of these bonds, the City qualifies, and intends to apply, for the interest subsidy payment directly from the US Treasury. The amount of the interest subsidy payment is 72.38% of the corresponding interest payable on the Series 2011B taxable obligations on any interest payment date. The proceeds were used to finance the construction of energy retrofit improvements and various projects for the Tempe Water/Wastewater Department and to pay costs incurred to issue the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. 76 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue and Refunding Obligations (Continued) The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. $31,825,000 2011A Excise Tax Revenue Obligations due in annual installments of $1,030,000 to $2,375,000 through July 1, 2022; interest at 2.00% to 5.00% $7,300,000 2011B Excise Tax Revenue Obligations due in one installment of $7,300,000 on July 1, 2025; interest due semi-annually at 4.87%, net of 72.38% federal credit Total $ 3,070,000 7,300,000 $ 10,370,000 The following is a summary of total debt service cash requirements to maturity (net of 72.38% federal credit): Fiscal Year Ending June 30, Principal 2021 2022 2023 2024 2025 $ 1,500,000 1,570,000 7,300,000 $ 251,758 176,758 98,258 98,258 98,258 $ 1,751,758 1,746,758 98,258 98,258 7,398,258 $ 10,370,000 $ 723,290 $ 11,093,290 Interest Total The following is a summary of governmental debt service cash requirements to maturity (net of 72.38% federal credit): Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 Principal $ Interest Total 35,000 40,000 7,300,000 $ 102,258 100,258 98,258 98,258 98,258 $ 137,258 140,258 98,258 98,258 7,398,258 $ 7,375,000 $ 497,290 $ 7,872,290 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 $ 1,465,000 1,530,000 $ 149,500 76,500 $ 1,614,500 1,606,500 $ 2,995,000 $ 226,000 $ 3,221,000 Interest 77 Total Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue and Refunding Obligations (Continued) Excise Tax Revenue and Refunding Obligations. On June 11, 2012, the City issued $30,500,000 of Excise Tax Revenue and Revenue Refunding Obligations: $8,390,000 of revenue obligations and $22,110,000 of revenue refunding obligations. The proceeds were used (i) to refund in advance of maturity certain outstanding Excise Tax Revenue Obligations of the City, (ii) finance the construction and acquisition of certain water and wastewater improvements, and (iii) to pay the costs of execution and delivery of the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the taxes collected and paid to the City under the 0.50% transportation privilege (sales) and use tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, the 0.10% Performing Arts Center Excise Taxes approved by voters of the City on May 16, 2000, which are restricted to the Tempe Center for the Arts Project, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. $30,500,000 2012 Excise Tax Revenue and Refunding Obligations due in annual installments of $280,000 to $5,125,000 through July 1, 2032; interest at 1.50% to 5.00% The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 2023 2024 2025 2026-2030 2031-2032 $ 2,090,000 2,195,000 5,125,000 2,425,000 2,545,000 2,590,000 1,160,000 $ 842,625 738,125 628,375 372,125 250,875 461,863 61,250 $ 2,932,625 2,933,125 5,753,375 2,797,125 2,795,875 3,051,863 1,221,250 $ 18,130,000 $ 3,355,238 $ 21,485,238 Interest 78 Total $ 18,130,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue and Refunding Obligations (Continued) The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 Principal $ Interest 1,710,000 1,795,000 4,705,000 1,985,000 2,080,000 $ 12,275,000 $ 613,750 528,250 438,500 203,250 104,000 $ 1,887,750 Total $ 2,323,750 2,323,250 5,143,500 2,188,250 2,184,000 $ 14,162,750 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2032 Principal $ Interest 380,000 400,000 420,000 440,000 465,000 2,590,000 1,160,000 $ 5,855,000 $ 228,875 209,875 189,875 168,875 146,875 461,863 61,250 $ 1,467,488 Total $ 608,875 609,875 609,875 608,875 611,875 3,051,863 1,221,250 $ 7,322,488 Excise Tax Revenue Refunding Obligations. On September 12, 2012, the City issued $41,390,000 of Excise Tax Revenue Obligations. The proceeds (including the premium) were used to refund $45,295,000 of the 2007 Variable Rate Demand Excise Tax Revenue Obligations and pay costs incurred to issue the obligations. The payments required to be made by the City to the Trustee under the Purchase Agreement are payable from and secured by a pledge of revenues from an excise tax collected by the City under a 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which is restricted to public transit use (the “Transit Excise Taxes”). Such tax is levied by the City upon persons on account of their business activities within the City. The amount of taxes due are calculated by applying the 0.50% tax rate against the gross proceeds of sales or gross income derived from the business activities. Such taxes are collected by the City on a monthly basis. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. On May 9, 2018, the City advanced defeased $2,860,000 of these obligations (see Note 10). $41,390,000 2012 Excise Tax Revenue Refunding Obligations due in annual installments of $430,000 to $2,645,000 through July 1, 2037; interest at 1.50% to 5.00% $ 30,005,000 79 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue and Refunding Obligations (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2037 $ 1,310,000 1,375,000 1,445,000 1,520,000 1,595,000 9,250,000 11,195,000 2,315,000 $ 1,307,194 1,241,694 1,172,944 1,100,694 1,024,694 3,862,119 1,914,844 124,631 $ 2,617,194 2,616,694 2,617,944 2,620,694 2,619,694 13,112,119 13,109,844 2,439,631 $ 30,005,000 $ 11,748,814 $ 41,753,814 Interest Total Excise Tax Revenue Obligations. On June 26, 2013, the City issued $27,240,000 of Excise Tax Revenue Obligations to finance the construction and acquisition of various water and wastewater improvements for the City and to pay the costs of execution and delivery of the Obligations. The payments to be made by the City will be secured by a pledge by the City of all unrestricted excise, transaction, franchise, privilege and business taxes, State-shared sales and income taxes, fees for licenses and permits, and State revenue-sharing now or hereafter validly imposed by the City or contributed, allocated and paid over to the City and not earmarked by the contributor for a contrary or inconsistent purpose, including, without limitation, all fines and forfeitures (all such taxes and receipts herein referred to as “Excise Taxes”), but not (i) excise taxes collected and paid to the City under the 0.50% transaction privilege (sales) and use tax approved by the voters of the City on September 10, 1996, which are restricted to improvement and operation of the public transit system (such taxes and receipts herein referred to as “Transit Excise Taxes”), (ii) excise taxes collected and paid to the City under the 0.10% transaction privilege (sales) and use tax approved by the voters of the City on May 16, 2000, the use of which is restricted to the construction and operation of a performing arts center (such taxes and receipts herein referred to as the “Performing Arts Center Excise Taxes”), (iii) excise taxes collected and paid to the City under the 1.00% increase in the transient lodging tax on hotels approved by the voters of the City on September 10, 2002, which are restricted to funding programs of the Tempe Convention and Visitor’s Bureau (such taxes and receipts herein referred to as “Convention and Visitor’s Bureau Taxes”) or (iv) any other similar tax restricted as to its use. The pledge of the Excise Taxes is on a parity pledge with the Existing Obligations. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. $27,240,000 2013 Excise Tax Revenue Obligations due in annual installments of $905,000 to $2,025,000 through July 1, 2033; interest at 1.75% to 5.00% $ 20,190,000 80 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 2023 2024 2025 2026-2030 2031-2033 $ 1,140,000 1,200,000 1,260,000 1,325,000 1,390,000 8,065,000 5,810,000 $ $ 20,190,000 Interest Total 971,575 914,575 854,575 791,575 725,325 2,512,125 530,775 $ 2,111,575 2,114,575 2,114,575 2,116,575 2,115,325 10,577,125 6,340,775 $ 7,300,525 $ 27,490,525 Excise Tax Revenue and Refunding Obligations. On June 22, 2016, the City issued $42,485,000 of Excise Tax Revenue and Revenue Refunding Obligations: $21,770,000 of revenue obligations and $20,715,000 of revenue refunding obligations. The proceeds were used (i) to refund in advance of maturity certain outstanding Excise Tax Revenue Obligations of the City, (ii) finance the construction and acquisition of certain water and wastewater improvements, and (iii) to pay the costs of execution and delivery of the obligations. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the taxes collected and paid to the City under the 0.50% transportation privilege (sales) and use tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, the 0.10% Performing Arts Center Excise Taxes approved by voters of the City on May 16, 2000, which are restricted to the Tempe Center for the Arts Project, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed so that the amount of Excise Taxes for any fiscal year of the City shall be equal to at least three times the total of the Debt Service on all Parity Obligations in such Fiscal Year. The City further covenants and agrees that if receipts for any current Fiscal Year shall not equal three times such Debt Service or will not be sufficient to meet such Fiscal Year’s actual Debt Service with respect to Parity Obligations, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) such revenues for the current Fiscal Year will be sufficient to meet such Fiscal Year's Debt Service with respect to Parity Obligations, and (ii) such revenues for the next succeeding Fiscal Year will be equal to at least three times the next succeeding Fiscal Year's Debt Service with respect to Parity Obligations. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. $42,485,000 2016 Excise Tax Revenue and Refunding Obligations due in annual installments of $1,135,000 to $7,510,000 through July 1, 2031; interest at 2.00% to 5.00% 81 $ 20,715,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue and Refunding Obligations (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal Interest Total 2021 2022 2023 2024 2025 2026-2030 2031 $ 1,135,000 1,190,000 2,830,000 1,665,000 1,745,000 9,870,000 2,280,000 $ 1,035,750 979,000 919,500 778,000 694,750 2,098,750 114,000 $ 2,170,750 2,169,000 3,749,500 2,443,000 2,439,750 11,968,750 2,394,000 $ 20,715,000 $ 6,619,750 $ 27,334,750 The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 Principal $ Interest Total 332,000 345,000 400,000 39,000 43,000 $ 57,950 41,350 24,100 4,100 2,150 $ 389,950 386,350 424,100 43,100 45,150 $ 1,159,000 $ 129,650 $ 1,288,650 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031 Principal $ 803,000 845,000 2,430,000 1,626,000 1,702,000 9,870,000 2,280,000 $ 19,556,000 Interest Total 977,800 937,650 895,400 773,900 692,600 2,098,750 114,000 $ 1,780,800 1,782,650 3,325,400 2,399,900 2,394,600 11,968,750 2,394,000 $ 6,490,100 $ 26,046,100 $ Transit Excise Tax Revenue Refunding Obligations. On March 29, 2017, the City issued $19,305,000 of direct placement, Excise Tax Revenue Refunding Obligations. The proceeds were used to refund $18,050,000 of the 2008 Excise Tax Revenue Obligations and pay costs incurred to issue the obligations. 82 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Transit Excise Tax Revenue and Refunding Obligations (Continued) The City covenants and agrees that, so long as any of the Parity Obligations remain outstanding and the principal and interest shall be unpaid, it will not further encumber the Transit Excise Taxes on a parity basis unless the Transit Excise Taxes collected in the immediately preceding fiscal year shall have amounted to at least two times the highest combined principal and interest debt service payments, or any required deposits, for any succeeding fiscal year for with respect to the transit excise tax revenue Parity Obligations. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. The City’s outstanding obligations from the direct placement contain a provision that, in an event of default or covenant violation with this obligation, or default of any parity obligation that has not been cured by the City, the trustee may require performance and observance of any pledge and any outstanding amounts due may immediately become payable. $19,305,000 2017 Transit Excise Tax Revenue Refunding Obligations due in annual installments of $150,000 to $1,460,000 through July 1, 2035; interest at 2.87% $ 18,050,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2030 2031-2035 Principal $ Interest 980,000 1,010,000 1,035,000 1,070,000 1,100,000 5,970,000 6,885,000 $ 18,050,000 $ 518,035 489,909 460,922 431,218 400,509 1,511,916 604,279 $ 4,416,788 Total $ 1,498,035 1,499,909 1,495,922 1,501,218 1,500,509 7,481,916 7,489,279 $ 22,466,788 Excise Tax Revenue Refunding Obligations. On April 5, 2017, the City issued $14,790,000 of direct placement, Excise Tax Revenue Refunding Obligations. The proceeds were used to refund $14,275,000 of the 2007R Excise Tax Refunding Revenue Obligations and pay costs incurred to issue the obligations. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s Debt Service and Community Facilities District funds. As a result of the refunding, the City reduced its total debt service requirements by $908,114, which resulted in an economic gain of $873,351. The City has collateralized the obligations by a pledge of all unrestricted excise taxes (transaction, franchise, privilege, business taxes, State-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future validly imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The Excise Taxes do not include the 0.10% Performing Arts Center Excise Taxes, the excise taxes collected and paid to the City under the 0.50% transportation excise tax approved by the voters of the City on September 10, 1996 which are restricted to public transit use, or the excise taxes collected under the 1.00% increase in the transient lodging tax on hotels approved by the voters on September 10, 2002, which are restricted to fund programs of the Tempe Convention and Visitor’s Bureau. 83 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for, it will not further encumber the excise taxes on a parity basis unless the excise taxes collected in the next preceding fiscal year of the City shall have amounted to at least three times the highest combined debt service requirements for any succeeding fiscal year for all obligations and outstanding parity obligations, including the additional parity obligations proposed to be secured by a pledge or the excise taxes. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. The City’s outstanding obligations from the direct placement contain a provision that, in an event of default or covenant violation with this obligation, or default of any parity obligation that has not been cured by the City, the trustee may require performance and observance of any pledge and any outstanding amounts due may immediately become payable. $14,790,000 2017 Excise Tax Revenue Refunding Obligations due in annual installments of $2,655,000 to $3,200,000 through July 1, 2022; interest at 1.97% $ 5,365,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal 2021 2022 $ 2,655,000 2,710,000 $ $ 5,365,000 $ 159,078 Interest 105,691 53,387 Total $ 2,760,691 2,763,387 $ 5,524,078 Excise Tax Revenue Refunding Obligations. On June 26, 2019, the City issued $9,110,000 of Excise Tax Revenue Refunding Obligations. The proceeds (including the premium) were used to (i) refund $1,170,000 of the 2009A tax-exempt Excise Tax Revenue Obligations, (ii) refund $9,315,000 of the 2009B taxable Excise Tax Revenue Obligations referred to as Build America Bonds and (iii)) to pay costs incurred to execute and deliver the obligations. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s Debt Service and Enterprise funds. As a result of the refunding, the City reduced its total debt service requirements by $1,645,317, which resulted in an economic gain of $1,498,204. The Payments to be made by the City will be secured by a pledge by the City of all unrestricted excise, transaction, franchise, privilege and business taxes, State-shared sales and income taxes, fees for licenses and permits, and State revenue-sharing now or hereafter validly imposed by the City or contributed to the extent permitted by law, allocated and paid over to the City and not earmarked by the contributor for a contrary or inconsistent purpose, including, without limitation, all fines and forfeitures (all such taxes and receipts herein referred to as “Excise Taxes”), but not (i) excise taxes collected and paid to the City under the 0.50% transaction privilege (sales) and use tax approved by the voters of the City on September 10, 1996, which are restricted to improvement and operation of the public transit system (such taxes and receipts herein referred to as “Transit Excise Taxes”), (ii) excise taxes collected and paid to the City under the 0.10% transaction privilege (sales) and use tax approved by the voters of the City on May 16, 2000, the use of which is restricted to the construction and operation of a performing arts center (such taxes and receipts herein referred to as the “Performing Arts Center Excise Taxes”), (iii) excise taxes collected and paid to the City under the 1.00% increase in the transient lodging tax on hotels approved by the voters of the City on September 10, 2002, which are restricted to funding programs of the Tempe Convention and Visitor’s Bureau (such taxes and receipts herein referred to as “Convention and Visitor’s Bureau Taxes”) or (iv) any other similar tax restricted as to its use. 84 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) The City covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed in each fiscal year so that the amount of Excise Taxes, all within and for such fiscal year of the City, shall be equal to at least three times the total Debt Service for all Outstanding Parity Obligations in such fiscal year. The City further covenants and agrees that if such receipts for any such fiscal year shall not equal three times such Debt Service for such fiscal year, or if at any time it appears that the current fiscal year’s receipts will not be sufficient to meet such fiscal year’s actual Debt Service, the City will either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (i) the current fiscal year’s receipts will be sufficient to meet all such fiscal year’s Debt Service requirements and (ii) the next succeeding fiscal year’s receipts will be equal to at least three times the next succeeding fiscal year’s Debt Service requirements. In the following outstanding balance, the 7/1/2020 principal payment was deducted as the fiscal year 2020 resources were dedicated. $9,110,000 2019 Excise Tax Revenue Refunding Obligations due in annual installments of $1,000,000 to $1,515,000 through July 1, 2029; interest at 5.00% to 6.50% The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2029 Principal $ Interest 1,200,000 1,255,000 5,655,000 $ 405,500 405,500 405,500 405,500 345,500 723,000 $ 8,110,000 $ 2,690,500 Total $ 405,500 405,500 405,500 1,605,500 1,600,500 6,378,000 $ 10,800,500 The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2029 Principal $ Interest Total 350,000 365,000 1,660,000 $ 118,750 118,750 118,750 118,750 101,250 212,500 $ $ 2,375,000 $ 788,750 $ 3,163,750 85 118,750 118,750 118,750 468,750 466,250 1,872,500 $ 8,110,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2029 Principal $ Interest 850,000 890,000 3,995,000 $ 5,735,000 $ 286,750 286,750 286,750 286,750 244,250 510,500 $ 1,901,750 Total $ 286,750 286,750 286,750 1,136,750 1,134,250 4,505,500 $ 7,636,750 Water and Sewer Revenue Obligations. On May 28, 2020, the City issued $38,000,000 of direct placement, Water and Sewer Revenue Obligations. The proceeds were used to fund the costs associated with (i) the acquisition and construction of various improvements to the City’s water and sewer systems and (ii) to pay the costs incurred to execute and deliver the obligations. Water and sewer revenue bonds are issued to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these systems, and do not constitute a general obligation of the City backed by the general taxing authority. The City has pledged future water and wastewater system revenues, net of operating expenses, to repay outstanding water and wastewater system revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater systems. The bonds are payable solely from net water and wastewater system revenues and are payable through July 1, 2020. Buyer covenants and agrees that it shall at all times establish, fix, maintain and collect rates, fees and other charges for all water and services furnished by the Water and Sewer Systems fully sufficient at all times to produce Net Revenues will equal at least 120% of the debt service coming due in the corresponding Bond Year on all Senior Obligations then Outstanding. The net revenues of the system consist of revenues collected from customers including development impact fees and interest income less such necessary expenses of operation, maintenance, and repair of the system excluding depreciation, amortization and debt service. $38,000,000 2020 Water and Sewer Revenue Obligations due in annual installments of $1,380,000 to $2,415,000 through July 1, 2040; interest at 2.65% The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, Principal Interest 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 $ 1,380,000 1,505,000 1,545,000 1,590,000 1,630,000 8,830,000 10,060,000 11,460,000 $ 1,099,308 970,430 930,548 889,605 847,470 3,565,575 2,332,398 926,969 $ $ 38,000,000 $ 11,562,303 $ 49,562,303 86 Total 2,479,308 2,475,430 2,475,548 2,479,605 2,477,470 12,395,575 12,392,398 12,386,969 $ 38,000,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Section 108 Guaranteed Loan. In July 2004, the City entered into a Section 108 guaranteed loan agreement with the U.S. Department of Housing and Urban Development (HUD) for funding of $7,000,000 for on-site environmental remediation of the University/Hayden Butte Redevelopment Area 5 (Rio Salado Marketplace Redevelopment). The note required interest only payments until August 2007. At that time the note was due in annual installments of $261,000 to $549,000 through August 1, 2024; interest at 5.37% to 6.01%. On May 28, 2015, HUD refinanced the loan lowering the interest rate to 1.25% to 2.35%. The City has pledged its Community Development Block Grants as security for HUD’s guaranteed loan. The City was awarded a $1,000,000 HUD Brownfield Economic Development Initiative grant to be used to pay interest on the HUD Section 108 loan until such time the development generates sufficient tax revenue to cover the debt service of the development. $7,000,000 HUD Section 108 Guaranteed Loan due in annual installments of $261,000 to $549,000 through August 1, 2024; interest at 1.25% to 2.35% $ 2,524,000 The following discloses debt service requirements as of June 30, 2020 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 Principal $ 462,000 482,000 504,000 527,000 549,000 $ 2,524,000 Interest $ 58,651 48,414 36,576 23,024 7,823 $ 174,488 Total $ 520,651 530,414 540,576 550,024 556,823 $ 2,698,488 Water Infrastructure Finance Authority Loans. In September 2009, the City signed two capitalization grant agreements with the Water Infrastructure Finance Authority (WIFA). The funding from these agreements was derived from the United States Environmental Protection Agency pursuant to the federal American Recovery and Reinvestment Act (ARRA) of 2009, Public Law 111-5. The loan agreement for Loan #92A174-10 is in the principal amount of $4,084,503 of which $2,200,000 will be forgivable principal and the remaining balance bears interest and administrative fees at a combined rate of 3.06%. $1,884,503 Water Infrastructure Finance Authority Loan #92A174-10 due in annual installments of $69,678 to $123,631 through July 1, 2029; interest at 1.56% and administrative fee at 1.50% $ 989,144 The following discloses debt service requirements on WIFA Loan #92A174-10 as of June 30, 2020 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2029 Principal $ 97,112 100,087 103,154 106,314 109,572 472,904 $ 989,143 Interest and Administrative Fee $ $ 30,307 27,332 24,265 21,105 17,847 36,771 157,627 87 Total $ 127,419 127,419 127,419 127,419 127,419 509,675 $ 1,146,770 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Water Infrastructure Finance Authority Loans (Continued) The loan agreement for Loan #92A175-10 is in the principal amount of $14,045,799 and bears interest and administrative fees at a reduced ARRA rate of 2.00%. $14,045,799 Water Infrastructure Finance Authority Loan #92A175-10 due in annual installments of $578,079 to $842,152 through July 1, 2029; interest at .50% and administrative fee at 1.50% $ 7,011,320 The following discloses debt service requirements on WIFA Loan #92A175-10 as of June 30, 2020 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2021 2022 2023 2024 2025 2026-2029 Principal $ 718,769 733,144 747,807 762,763 778,018 3,270,819 $ 7,011,320 Interest and Administrative Fee $ $ 140,226 125,851 111,188 96,232 80,977 165,160 719,634 Total $ 858,995 858,995 858,995 858,995 858,995 3,435,979 $ 7,730,954 Capital Leases. The City has entered into capital lease agreements for equipment. These lease agreements generally require annual payments and the lease term varies from 4 to 5 years. The lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the date of inception. The governmental assets acquired through capital leases are for equipment with an original cost of $174,194. Accumulated depreciation as of June 30, 2020 totaled $31,289. The following is a schedule of future minimum lease payments, together with the net present value of the minimum lease payments as of June 30, 2020. These amounts will be paid for by the General Fund. Fiscal Year Ending June 30, 2021 2022 2023 2024 $ 92,529 (11,313) Less: remaining interest at varying interest rate (0% to 19.57%) Present value of future minimum lease payments Total 34,839 23,132 17,279 17,279 $ 81,216 The proprietary assets acquired through capital leases are for equipment with an original cost of $1,197,838. Accumulated depreciation as of June 30, 2020 totaled $437,525. The following is a schedule of future minimum lease payments, together with the net present value of the minimum lease payments as of June 30, 2020. These amounts will be paid for by the Golf Fund. 88 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Capital Leases (Continued) Fiscal Year Ending June 30, 2021 2022 2023 Total minimum lease payments Less: remaining interest at 1.24% to 2.90% Total $ 173,758 173,758 173,758 521,274 (40,358) Present value of future minimum lease payments $ 480,916 Statutory Debt Limitation. In the absence of more restrictive bond authorization ballot limitations, the City is subject to state statutory limitations on the amount of net bonded debt (exclusive of revenue and special assessment bonds and purchase contracts) it may have outstanding. The statutory debt limitation is 20 percent of the secondary assessed valuation for purposes of water, wastewater, open space preserves, artificial lighting, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities and 6 percent of the secondary assessed valuation for all other purposes. At June 30, 2020, the 20 percent debt limitation was $544,723,625 with $357,900,003 of outstanding debt. This provided a 20 percent debt margin of $186,823,622. The 6 percent debt limitation was $163,417,088 with $80,503,178 of outstanding debt. This provided a 6 percent debt margin of $82,913,910. The authorized, unissued debt subject to the statutory limitations of 20 percent and 6 percent at June 30, 2020, was $177,974,698. Bond Covenants. The various bond indentures contain certain limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds, and minimum revenue bond coverages. Arbitrage. Under U.S. Treasury Department regulations, all government tax-exempt debt issued after August 31, 1986 is subject to arbitrage rebate requirements. The requirements stipulate, in general, the earnings from the investment of tax-exempt bond proceeds that exceed related interest expenditures on the bonds must be remitted to the Federal government on every fifth anniversary of each bond issue. The City has evaluated each general obligation bond and revenue bond issue subject to the arbitrage rebate requirements and has determined that no liability exists at June 30, 2020. Debt Service Coverage for Governmental General Obligation Bonds. The governmental general obligations are payable from ad valorem tax revenues to be levied on all taxable property within the City. A total of $191,860,000 is outstanding in governmental general obligation bonds. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2040. Annual principal and interest payments on the bonds were 80.66% of total 2020 General Obligation Debt Service Fund ad valorem taxes. The total principal and interest remaining to be paid on the bonds is $242,667,721. Principal and interest paid for the current year and total ad valorem tax revenues were $29,905,766 and $29,911,357, respectively. Debt Service Coverage for Business-type Activities General Obligation Bonds. The business-type general obligations are paid from the water and wastewater utility system revenues of the City. A total of $177,795,000 is outstanding in business-type general obligation bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater system. The bonds are payable through July 1, 2039. Annual principal and interest payments on the bonds are expected to require less than 33.8% of 2020 water and wastewater utility system revenue. The total principal and interest remaining to be paid on the bonds is $225,098,541. Principal and interest paid for the current year and water and wastewater system revenues were $28,254,924 and $85,057,003, respectively. 89 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Debt Service Coverage for Governmental Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay a total of $28,549,000 in outstanding governmental excise tax obligations. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2029. Annual principal and interest payments on the bonds are expected to require less than 3.32% of total 2020 pledged excise taxes. The total principal and interest remaining to be paid on the bonds is $32,011,518. Principal and interest (net of Federal subsidy) paid for the current year and total pledged excise taxes were $6,307,218 and $190,619,346, respectively. Debt Service Coverage for Business-type Activities Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay a total of $54,331,000 in outstanding business-type activities excise tax obligations. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater system. The bonds are payable through July 1, 2033. Annual principal and interest payments on the bonds are expected to require less than 3.32% of total 2020 excise taxes. The total principal and interest remaining to be paid on the bonds is $71,716,863. Principal and interest paid for the current year and total excise taxes were $6,330,130 and $190,619,346, respectively. Debt Service Coverage for Transit Excise Tax Obligations. For the repayment of transit excise tax obligation bonds, the City has pledged all future excise taxes collected and paid under the 0.50% transportation excise tax. Proceeds of the bonds were used for the construction of the City’s portion of the light rail system. The current balance outstanding is $61,215,000. The bonds are payable through July 1, 2040. Annual principal and interest payments on the bonds are expected to require less than 9.28% of total 2020 transit excise taxes. The total principal and interest remaining to be paid on the bonds is $81,464,793. Principal and interest paid for the current year and transit excise taxes were $4,118,094 and $44,373,904 respectively. Debt Service Coverage for Performing Arts Center Excise Taxes. For repayment of performing arts excise tax obligations, the City has pledged all future excise taxes collected and paid under a 0.10% performing arts center tax. Proceeds of the bonds were used for the construction of the Tempe Performing Arts Center. The bonds are payable primarily from performing arts excise taxes and are secured by a subordinate lien pledge of all future unrestricted excise taxes through the fiscal year ended June 30, 2020. Principal and interest paid for the current year and total available performing arts excise taxes were $3,433,850 and $9,131,870, respectively. 90 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Changes in Long-term Liabilities. The following is a summary of changes in long-term liabilities for the fiscal year ended June 30, 2020 (the ending balance does not include 7/1/2020 “matured” payment for general or excise tax obligations): Governmental activities: Debt payable: General obligation bonds payable Special assessments Special assessment 2020 Excise tax obligations (direct placement) 2011 Excise tax obligations 2011 Excise tax refunding obligations 2012 Excise tax obligations 2012 Excise tax refunding obligations 2016 Excise tax refunding obligations 2017 Excise tax refunding obligations (direct placement) 2017 Excise tax refunding obligations (direct placement) 2019 Excise tax refunding obligations 2004 HUD Section 108 loan Premium on debt payable Capital leases Capital Asset Debt Principal Compensated absences Claims and judgments OPEB Net pension liability Governmental activities long-term Business-type activities: General obligation bonds payable General obligation premium 2011 Excise tax obligations 2012 Excise tax obligations 2013 Excise tax obligations 2016 Excise tax obligations 2019 Excise tax refunding obligations Excise premium 2020 Revenue obligations (direct placement) 2010 WIFA Loan 2010 WIFA Loan Capital leases Capital Asset Debt Principal OPEB Net pension liability Business-type activities long-term Beginning Balance Additions Reductions Ending Balance Amounts Due Within One Year $183,990,000 16,035,000 $ 42,425,000 - $ (34,555,000) (1,445,000) $191,860,000 14,590,000 $17,540,000 1,445,000 7,410,000 3,295,000 13,905,000 31,270,000 1,159,000 13,160,000 - (35,000) (3,295,000) (1,630,000) (1,265,000) - 13,160,000 7,375,000 12,275,000 30,005,000 1,159,000 475,000 35,000 1,710,000 1,310,000 332,000 19,000,000 - (950,000) 18,050,000 980,000 8,565,000 2,665,000 2,966,000 25,046,197 40,972 315,347,169 74,604 55,659,604 (3,200,000) (290,000) (442,000) (3,314,305) (34,360) (50,455,665) 5,365,000 2,375,000 2,524,000 21,731,892 81,216 320,551,108 2,655,000 462,000 30,473 26,974,473 32,030,165 8,677,577 70,478,941 393,078,938 $819,612,790 14,679,663 5,704,715 5,143,191 60,974,129 $ 142,161,302 (11,144,774) (6,011,660) (418,366) (36,705,302) $(104,735,767) 35,565,054 8,370,632 75,203,766 417,347,765 $857,038,325 11,981,359 3,631,105 $42,586,937 $197,700,000 20,812,042 4,385,000 6,220,000 21,280,000 19,556,000 6,445,000 10,139,541 $ 16,320,000 - $ (36,225,000) (2,800,887) (1,390,000) (365,000) (1,090,000) (710,000) (974,239) $177,795,000 18,011,155 2,995,000 5,855,000 20,190,000 19,556,000 5,735,000 9,165,302 $21,690,000 1,465,000 380,000 1,140,000 803,000 - 1,083,368 7,715,995 736,327 296,073,273 38,000,000 54,320,000 (94,225) (704,675) (255,411) (44,609,437) 38,000,000 989,143 7,011,320 480,916 305,783,836 1,380,000 97,112 718,769 153,848 27,827,729 9,012,781 20,001,497 742,294 2,133,851 (25,840) (1,740,397) 9,729,235 20,394,951 - $325,087,551 $ 57,196,145 $ (46,375,674) $335,908,022 $27,827,729 The long-term liabilities at June 30, 2020 have been reduced by deposits made with the City’s fiscal agent for July 1, 2020 maturities. For the governmental activities, claims and judgments and compensated absences are generally liquidated by the General Fund. 91 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 10 - BONDS TO BE PAID FROM ASSETS HELD IN TRUST Advance Bond Refundings Future debt service on refunded bonds has been provided through advance refunding bond issues. Under an advance refunding arrangement, refunding bonds are issued and the net proceeds, plus any additional resources that may be required, are used to purchase securities issued or guaranteed by the United States government. These securities are then deposited in an irrevocable trust under an escrow agreement which provides that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued bonded debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flow generated by the securities, will be sufficient to service the previously issued bonds. On June 22, 2016, the City issued $20,715,000 of excise tax revenue refunding obligation with a premium of $5,179,065 to partially advance refund $3,860,000 of Series 2009 and $17,850,000 of Series 2011A outstanding excise tax revenue obligations. The bonds were issued with an average interest rate of 4.93%. The net proceeds of $25,894,065 after the payment of $77,916 in issuance costs and an underwriter’s discount of $134,648 were used to purchase State and local government securities. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s Debt Service and Water and Wastewater funds. As a result of the advance refunding, the City reduced its total debt service requirements by $1,818,444, which resulted in an economic gain (the difference between the present values of the debt service payment on the old and new debt) of $1,631,429. On May 9, 2018, the City defeased $8,045,000 of Transit excise tax revenue obligations. This transaction partially advanced defeased $2,860,000 of Series 2012 outstanding obligations and contained a current defeasance of $5,185,000 of Series 2008 obligations. The primary purpose of the defeasance was to lower debt service in the Transit fund. As a result of the defeasance, the City reduced its total debt service requirements in the Transit fund by $15,584,956, which resulted in an economic gain of $7,089,619. On May 8, 2018, the City defeased $8,290,000 of general obligation bonds. This transaction partially advanced defeased $4,220,000 of Series 2015 outstanding obligations and $4,070,000 of Series 2017 obligations. The primary purpose of the defeasance was to lower the balance in the debt service fund. As a result of the defeasance, the City reduced its total debt service requirements in the debt service fund by $14,591,813, which resulted in an economic gain of $5,092,510. On June 18, 2019, the City defeased $9,030,000 of general obligation bonds. This transaction was a cash defeasance and advanced defeased Series 2018 outstanding obligations. The primary purpose of the defeasance was to lower the balance in the debt service fund. As a result of the defeasance, the City reduced its total debt service requirements in the debt service fund by $16,925,500, which resulted in an economic gain of $1,498,204. 92 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 10 - BONDS TO BE PAID FROM ASSETS HELD IN TRUST (Continued) Advance Bond Refundings (Continued) Bonds which have been advance refunded (and thus not included in the debt of the City) and are still outstanding as of June 30, 2020 are as follows: $31,825,000 excise tax revenue obligations issued in 2011 and partially refunded in 2016 (final redemption date is 7/1/2021) $ 17,850,000 $41,390,000 Transit excise tax revenue obligations issued in 2012 and partially defeased in 2018 (final redemption date is 7/1/2022) 2,860,000 $43,965,000 general obligation bonds issued in 2015 and partially defeased in 2018 (final redemption date is 7/1/2025) 4,220,000 $32,810,000 general obligation bonds issued in 2017 and partially defeased in 2018 (final redemption date is 7/1/2027) 4,070,000 $47,560,000 general obligation bonds issued in 2018 and partially defeased in 2019 (final redemption date is 7/1/2028) 9,030,000 Total bonds advance refunded $ 38,030,000 NOTE 11 – FUND BALANCE CLASSIFICATIONS During the year ended June 30, 2011, the City implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 establishes standards for financial reporting, including note disclosure requirements, for fund balance classifications of the governmental funds, and clarifies existing governmental fund type definitions. In the fund financial statements, fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Non-spendable, Restricted, Committed, Assigned, and Unassigned. Committed, Assigned, and Unassigned represent the amount that is available for discretionary spending. Non-spendable fund balance includes amounts that cannot be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) legally or contractually required to be maintained intact. Restricted fund balance is externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation (changes in City Charter). Committed fund balance is self-imposed limitations imposed at the highest level of decision-making authority, namely, Mayor and Council. Mayor and Council approval (through ordinance or resolution, both of which are considered the highest level of decision-making authority of the City) is required to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. In June 2011, through resolution 2011.56, the Mayor and Council authorized the Chief Financial Officer to assign fund balance amounts for specific purposes. 93 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 11 – FUND BALANCE CLASSIFICATIONS (Continued) Unassigned fund balance represents the residual net resources in excess of the other classifications. The General Fund is the only fund that can report a positive unassigned fund balance and any governmental fund can report a negative unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. As of June 30, 2020, the fund balance details by classification are listed as follows: The Mayor and Council have established a minimum unassigned fund balance policy for the General Fund of 20% to 30% of current year operating revenues. As of June 30, 2020, the unassigned fund balance is 47.30% of General Fund revenues. General Fund balances: Non-spendable: Inventories Prepaid items Capital improvements notes receivable Restricted: Debt service reserve Police Fire Community services Engineering and transportation Community development Human services Municipal court City manager Strategic management and diversity Committed to: Police Fire Engineering and transportation Community development Municpal court Assigned to: Self-insurance purposes Capital projects Other Transit TSA Unassigned: Total fund balances $ 146,885 $ 250,000 396,885 Transit Special Revenue - General Special Obligation Assessment Debt Service Debt Service $ - $ - Transit Capital Projects $ - Total Other Total Governmental Governmental Funds Funds $ 725,565 $ 733,058 1,458,623 872,450 733,058 250,000 1,855,508 154,819 - 26,952,171 - 4,158,853 - 162,916 - 18,794,741 - 3,776,288 504,268 524,912 8,954,024 2,107,283 2,224,693 428,438 122,263 2,000 4,321,769 3,776,288 504,268 524,912 54,700,936 2,262,102 2,224,693 428,438 122,263 2,000 154,819 26,952,171 4,158,853 162,916 18,794,741 18,644,169 68,867,669 - 11,201,499 11,201,499 - - - 156,984 936,037 15,985,751 10,417,113 436,367 27,932,252 156,984 936,037 27,187,250 10,417,113 436,367 39,133,751 8,033,876 8,033,876 - - - 15,024,224 252,819 15,277,043 6,841,391 15,024,224 252,819 8,033,876 10,567,021 40,719,331 - - - (1,777,702) 114,508,251 162,916 $ 18,794,741 $ 6,841,391 10,567,021 17,408,412 116,285,953 - $ 134,246,069 $ 46,187,546 $ 4,158,853 $ 94 61,534,385 $ 265,084,510 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 12 - COMMITMENTS In the Governmental fund financial statements, construction commitments (encumbrances) are included in either the restricted or committed fund balances. At June 30, 2020, the City’s construction commitments are as follows: Governmental funds: Transit Other governmental funds Proprietary funds: Water/wastewater Solid waste Golf Commitment Construction in Progress $ 5,446,522 18,130,160 $ 23,576,682 $ 21,711,933 49,471,196 $ 71,183,129 Commitment Construction in Progress $ 30,546,473 $ 30,546,473 $ 85,005,951 761,467 48,645 $ 85,816,063 In addition, there were non-construction related commitments as follows: Commitment Governmental funds: General Other governmental funds $ $ 547,050 152,601 699,651 Commitment Proprietary funds: Water/wastewater $ $ 220,102 220,102 NOTE 13 - OPERATING LEASES The City leases copiers under certain non-cancelable leases accounted for as operating leases. Operating leases do not give rise to property rights or lease obligations, and therefore the results of the lease agreements are not reflected in the City’s Statement of Net Position. Current year lease costs for the fiscal year ended June 30, 2020 were $25,535. The following is a schedule by year of future minimum lease payments: Fiscal Year Ending June 30, 2021 2022 Amount $ 1,408 1,056 Total minimum payments required $ 95 2,464 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS The City contributes to the pension and other, multi-employer post-employment benefit (OPEB) plans described below. The City also contributes to the Elected Officials Retirement Plan; however, the plan is not described below because of its relative insignificance to the financial statements. The plans are component units of the State of Arizona. All amounts reported in this footnote relate to the multi-employer OPEB plans. The City has also established a single-employer, post-employment health benefit plan (see Note 15 - OTHER POSTEMPLOYEMENT BENEFITS). Amounts reported at June 30, 2020 represent June 30, 2019 measurement dates for both the Arizona State Retirement System and the Public Safety Personnel Retirement System, which is the latest information available. Aggregate Amounts. At June 30, 2020, the City reported the following aggregate amounts related to pensions and OPEB for all plans to which it contributes: Net assets Net liabilities Deferred outflows of resources Deferred inflows of resources Expense Contributions $ Pension 437,742,716 70,896,657 10,295,930 51,924,648 38,445,699 $ OPEB 558,453 84,933,001 1,872,010 1,638,663 4,258,661 8,799,940 A. Arizona State Retirement System Plan Description. City employees not covered by the other pension plans described after this section participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. Benefits Provided. The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: Before July 1, 2011 On or After July 1, 2011 Years of service and age required to receive benefit Sum of years and age equals 80 10 years age 62 5 years age 50* Any years age 65 30 years age 55 25 years age 60 10 years age 62 5 years age 50* Any years age 65 Final average salary is based on Highest 36 months of last 120 months Highest 60 months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a 96 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) member’s death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. Retired and disabled members, with at least five years of credited service, are eligible to receive health insurance premium benefits. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. For members with 10 or more years of service, benefits range from $100 per month to $260 per month depending on the age of the member and dependents. For members with five to nine years of service, the benefits are the same dollar amounts as above multiplied by a vesting fraction based on completed years of service. Active members are eligible for a long-term disability benefit in the event they become unable to perform their work. The monthly benefit is equal to two-thirds of their monthly earnings. Members receiving benefits continue to earn service credit up to their normal retirement dates. Members with long-term disability commencement dates after June 30, 1999 are limited to 30 years of service or the service on record as of the effective disability date, if their service is greater than 30 years. Contributions. In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2020, active ASRS members were required by statute to contribute at the actuarially determined rate of 12.11 percent (11.94 percent for retirement and 0.17 percent for long-term disability) of the members’ annual covered payroll, and the City was required by statute to contribute at the actuarially determined rate of 12.11 percent (11.45 percent for retirement, 0.49 percent for health insurance premium benefit, and 0.17 percent for long-term disability) of the active members’ annual covered payroll. The City’s contributions to the pension plan for the year ended June 30, 2020 were as follows: Contributions $ 9,474,813 405,474 140,674 Pension Health Insurance Premium Long-Term Disability Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to ASRS. The City was required by statute to contribute at the actuarially determined rate of 10.41 percent (10.29 for retirement, 0.05 percent for health insurance premium benefit, and 0.07 percent for long-term disability). ACR contributions are included in employer contributions presented above. The City’s pension and OPEB contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Pension and OPEB Assets/Liability. The net pension and OPEB assets/liability were measured as of June 30, 2019. The total liability used to calculate the net asset or net liability was determined using update procedures to roll forward the total liability from an actuarial valuation as of June 30, 2018, to the measurement date of June 30, 2019. The total liability as of June 30, 2019 reflects changes in actuarial assumptions based on the results of an actuarial experience study for the five-year period ended June 30, 2016, with a discount rate assumption of 7.5 percent, projected salary increases from 2.7-7.2 percent, an inflation rate of 2.3 percent, and updated mortality rates. The purpose of the experience study was to review actual experience in relation to actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017 actuarial valuation. The City’s proportion of the net assets/liability was based on the City’s actual contributions to the applicable plan relative to the total of all participating employers’ contributions to the plan for the year ended June 30, 2019. 97 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) At June 30, 2020, the City reported the following amounts for its proportionate share of the ASRS plans net assets/liability. In addition, at June 30, 2019, the City’s percentage proportion for each plan and the related change from its proportion measured as of June 30, 2018 was: Pension Health Insurance Premium Long-Term Disability Net (Assets) Liability $ 111,031,198 (213,892) 501,196 City % Proportion 0.763% 0.774% 0.769% Increase (Decrease) $2,884,608 68,750 95,163 Pension/OPEB Expense and Deferred Outflows/Inflows of Resources. The City has deferred outflows and inflows of resources related to the net pension and OPEB assets/liabilities. Certain changes in the net pension and OPEB assets/liability are recognized as pension and OPEB expense over a period of time rather than the year of occurrence. For the year ended June 30, 2020, the City recognized pension and OPEB expense as follows: Expense $ 10,468,356 227,024 156,674 Pension Health Insurance Premium Long-Term Disability The City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: Deferred Outflows of Resources Health Insurance Long-Term Pensions Premium Disability $ 2,005,808 $ $ 59,214 469,332 420,637 74,977 Difference between expected and actual experience Changes of assumptions and other inputs Changes in proportion and differences between the City contributions and proportionate share of contributions Contributions subsequent to the measurement date Total 768,903 9,474,813 $ 12,718,856 444 405,473 $ 826,554 4,532 140,674 $ 279,397 Deferred Inflows of Resources Health Insurance Long-Term Pensions Premium Disability $ 20,875 $ 255,683 $ 4,421,480 - Difference between expected and actual experience Changes of assumptions and other inputs Net difference between projected and actual earnings on plan investments Changes in proportion and differences between the City contributions and proportionate share of contributions Total 98 2,495,598 278,153 1,421,328 $ 8,359,281 550 $ 534,386 10,691 $ 3,164 13,855 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension and OPEB assets/liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized in pension and OPEB expense for the following June 30 roll forward dates: 2021 2022 2023 2024 2025 Thereafter Deferred Outflows (Inflows) of Resources Health Insurance Long-Term Pension Premium Disability $(1,770,987) $ (92,595) $ 12,440 (3,533,379) (92,596) 12,440 (479,261) 20,026 22,869 668,389 51,927 24,782 (6,067) 20,807 31,530 Actuarial Assumptions. The significant actuarial assumptions used to measure the total ASRS pension and OPEB liabilities are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent base increases Mortality rates Pension June 30, 2018 June 30, 2019 Entry age normal 7.5% 2.7-7.2% 2.3% Included 2017 SRA Scale U-MP Healthcare cost trend rate Not applicable OPEB June 30, 2018 June 30, 2019 Entry age normal 7.5% Not applicable 2.3% Not applicable Health Ins: 2017 SRA Scale U-MP, LTD: 2012 GLDT Not applicable The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017, actuarial valuation. The long-term expected rate of return on ASRS plan investments was determined to be 7.5 percent using a building-block method in which best-estimate 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 long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, excluding any expected inflation. 99 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) On June 29, 2018, the ASRS Board approved updated strategic asset allocation targets, to be effective beginning July 2018. The target allocation and best estimates of geometric real rates of return for each major asset class for all ASRS plans are summarized in the following table: Target Allocation 50% 20% 10% 20% 100% Asset Class Equity Credit Interest Rate Sensitive Bonds Real estate Total Long-Term Expected Real Rate of Return 6.09% 5.36 1.62 5.85 Discount Rate. The discount rate used to measure the ASRS total pension and OPEB liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on investments was applied to all periods of projected benefit payments to determine the total pension and OPEB liability. Sensitivity of the Proportionate Share of the Net Pension and OPEB Asset/Liability to Changes in the Discount Rate. The following presents the City’s proportionate share of the net pension and OPEB assets/liability calculated using the discount rate of 7.5 percent, as well as what the proportionate share of the net pension and OPEB asset/liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: Rate Pension Health Insurance Premium Long-Term Disability Sensitivity of Net OPEB (Asset) Liability to Changes in the Discount Rate Current 1% Decrease Discount Rate 1% Increase 6.5% 7.5% 8.5% $ 158,023,113 $ 111,031,198 $ 71,758,051 1,083,466 (213,892) (1,319,306) 554,686 501,196 449,327 Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. The report is available on the ASRS website at www.azasrs.gov. B. Public Safety Personnel Retirement System Plan Descriptions. City public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS), or employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PSDCRP). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan. A nine-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. Employees who were PSPRS members before July 1, 2017, participate in the agent plans, and employees who became PSPRS members on or after July 1, 2017, participate in either agent plans or costsharing plans (PSPRS Tier 3 Risk Pool). The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. 100 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) The PSPRS issues publicly available financial reports that include their financial statements and required supplementary information. This report is available on the PSPRS website at www.psprs.com. Benefits Provided. The PSPRS provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Certain retirement and disability benefits are calculated on the basis of age, average monthly compensation, and service credit as follows. See the publicly available PSPRS financial reports for additional benefits information. Before January 1, 2012 (Tier 1) Retirement and Disability: Years of service and age required to receive benefit Retirement Initial Membership Date: On or After January 1, On or After January 1, 2012 (Tier 2) 2017 (Tier 3) 20 years any age 15 years age 62 25 years or 15 years of credited service and age 52.5 15 years and age 55 Final average salary is based on Highest 36 months of last 20 years Highest 60 months of last 20 years Highest 60 months of last 15 years Normal retirement 50% less 2.0% for each year of credited service less than 20 years or plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 2.5% per year of credited service, not to exceed 80% 1.5% to 2.5% per year of service, not to exceed 80% Accidental disability retirement Catastrophic Disability: Survivor benefit: Retired members Active members 50% or normal retirement, whichever is greater 90% of average monthly benefit compensation. After 60 months, member receives greater of 62.5% average monthly benefit compensation and accrued normal pension. 80%-100% of retired member’s pension benefit 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $100 per month to $260 per month depending on the age of the member and dependents. 101 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) Employees Covered by Benefit Terms. As of June 30, 2020, the following employees were covered by the agent pension plans’ benefit terms: PSPRS – Fire PSPRS - Police Health Pension Insurance Inactive plan members or beneficiaries currently receiving benefits Inactive, entitled plan members not yet receiving benefits Active plan members Total Pension Health Insurance 262 262 138 138 75 308 645 36 308 606 33 144 315 25 144 307 Contributions. State statutes establish the pension contribution requirements for active PSPRS employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2020, are indicated below. Rates are a percentage of active members’ annual covered payroll for both defined benefit (DB) plans and defined contribution (DC) plans. Employee Employer Tier 1 DB 7.65% 66.20% PSPRS – Police Tier 2 Tier 3 DB DB 11.65% 9.60% 66.20% 60.62% Tier 3 DC 10.51% 61.53% Tier 1 DB 7.65% 73.26% PSPRS – Fire Tier 2 Tier 3 DB DB 11.65% 10.67% 73.26% 67.97% Tier 3 DC 10.51% 67.81% Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to PSPRS. The City was required by statute to contribute at the actuarially determined rate for Tier 1 and Tier 2 members of 55.85% for police and 59.67% for fire of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to the PSPRS. For the agent plans, the contributions to the pension and OPEB plans for the year ended were: Pension Health insurance PSPRS Police $ 18,833,432 303,532 PSPRS Fire $ 10,137,454 31,927 The City pension and OPEB contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Pension and OPEB Assets/Liability. At June 30, 2020, the City reported the following assets and liabilities. Pension Health insurance Net (Assets) Liabilities PSPRS - Police PSPRS – Fire $ 208,699,993 $ 118,011,525 2,413,324 (344,561) The net pension and OPEB assets/liability were measured as of June 30, 2019. The total liability used to calculate the net asset or liability was determined by an actuarial valuation as of that date. 102 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability for both police and fire are as follows: Actuarial valuation date Actuarial cost method Investment rate of return Projected salary increases Inflation Cost-of-living adjustment Mortality rates Pension June 30, 2019 Entry age normal 7.3% - Tiers 1 & 2 7.0% - Tier 3 3.5% - 7.5% 2.5% 1.75% PubS-2010 tables using MP2018 improvement scale OPEB June 30, 2019 Entry age normal 7.3% - Tiers 1 & 2 7.0% - Tier 3 3.5% - 7.5% 2.5% 1.75% PubS-2010 tables using MP2018 improvement scale Actuarial assumptions used in the June 30, 2019 valuation were based on an actuarial experience study for the five year period ended June 30, 2016 using actual plan experience, consisting of 3.5% for wage inflation with the remaining portion for merit / seniority increases. The long-term expected rate of return on PSPRS plan investments was determined to be 7.30 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Short-term investments Risk parity Fixed income Real assets GTS Private credit Real estate Private equity Non-U.S. equity U.S. equity Total Target Allocation 2% 4 5 9 12 16 10 12 14 16 100% Long-Term Expected Real Rate of Return 0.25%% 4.01% 3.00% 6.75% 4.01% 5.36% 4.50% 8.40% 5.00% 4.75% Discount Rates. At the June 30, 2019 valuation date, the discount rate used to measure the total pension and OPEB liability was 7.3 percent for Tiers 1 and 2 benefits and 7.0 percent for Tier 3 benefits. The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension and OPEB liability. 103 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) Changes in Net (Assets)/Liabilities PSPRS - Police Beginning Balance (Assets) Liability $ Total Liability Factors: Service cost Interest Difference between expected and actual experience with regard to economic and demographic assumptions Changes in assumptions about future economic or demographic factors and other inputs Benefit payments Net change Plan Fiduciary Net Position: Contributions - employer Contributions - employee Projected net investment income Difference between projected and actual earnings on plan investments Benefit payments Administrative expenses Other Net change Adjustment to Beginning of Year Ending Balance (Assets) Liability $ PSPRS - Fire Pension 195,113,534 Health Insurance $ 3,020,026 6,363,446 23,896,706 Pension 109,820,311 Health Insurance $ (251,939) 84,051 509,152 3,201,998 14,062,552 32,044 249,187 2,252,812 (630,377) 2,213,604 (161,802) 7,223,840 (15,881,006) 23,855,798 84,649 (436,662) (389,187) 3,771,807 (10,967,777) 12,282,184 40,588 (218,954) (58,937) 17,153,330 2,187,943 9,698,433 254,335 2,808 288,828 9,657,636 1,045,992 6,092,041 33,737 563 266,603 (2,579,162) (15,881,006) (124,419) 2,498 10,457,617 (188,278) 208,699,993 (76,405) (436,662) (3,667) 29,237 188,278 2,413,324 (1,633,006) (10,967,777) (78,221) 4,116,665 (25,695) 118,011,525 (70,575) (218,954) (3,384) 7,990 25,695 (344,561) $ $ $ $ Sensitivity of the Net Pension and OPEB Assets (Liabilities) to Changes in the Discount Rate. The following presents the City’s net pension and OPEB assets (liabilities) calculated using the discount rates noted above, as well as what the net assets (liability) would be if it were calculated using a discount rate that is 1percentage-point lower or 1-percentage-point higher than the current rate: Sensitivity of Net OPEB (Asset) Liability to Changes in the Discount Rate Current 1% Decrease Discount Rate 1% Increase PSPRS - Police: Rate Net pension liability Net OPEB liability 6.3% $ 256,985,308 3,124,810 7.3% $ 208,699,993 2,413,324 8.3% $ 169,473,711 1,813,677 PSPRS - Fire: Rate Net pension liability Net OPEB (assets) liability 6.3% $ 144,113,012 (9,111) 7.3% $ 118,011,525 (344,561) 8.3% $ 96,564,176 (629,883) Pension Plan Fiduciary Net Position. Detailed information about the pension plans’ fiduciary net position is available in the separately issued PSPRS financial report. The report is available on the PSPRS website at www.psprs.com. 104 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) Expense. For the year ended June 30, 2020, the City recognized the following as pension and OPEB expense: Expense PSPRS - Police PSPRS - Fire $ 25,073,885 $ 16,382,414 22,150 (49,948) Pension Health insurance Deferred Outflows/Inflows of Resources. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: PSPRS - Police Pension Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Contributions subsequent to the measurement date Total $ 2,876,005 $ 1,274,102 $ 3,141,733 $ 662,547 11,248,521 - 8,878,828 - 1,797,411 - 1,264,417 - 10,137,454 $ 23,422,432 $ 662,547 18,833,432 $ 34,755,369 $ 1,274,102 PSPRS – Police Health Insurance Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Contributions subsequent to the measurement date Total PSPRS - Fire Pension Deferred Deferred Outflows of Inflows of Resources Resources $ 125,552 $ 540,324 72,558 5,271 303,532 $ 506,913 PSPRS – Fire Health Insurance Deferred Deferred Outflows of Inflows of Resources Resources 12,684 $ 170,916 115,832 34,788 17,199 - 6,578 - $ 656,156 $ $ 31,927 85,977 $ 188,115 The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension and OPEB assets/liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized in pension and OPEB expense as follows: 105 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 14 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) Fiscal Year Ended 2021 2022 2023 2024 2025 Thereafter PSPRS - Police Health Pension Insurance $ 5,396,318 ($ 99,998) 2,853,112 (99,998) 2,465,984 (51,538) 2,342,259 (50,036) 1,590,162 (73,244) (77,961) PSPRS – Fire Health Pension Insurance $ 4,152,825 ($ 40,316) 2,951,281 (40,316) 2,658,512 (11,170) 1,149,695 (7,630) 855,059 (17,317) 855,059 (17,316) NOTE 15 - OTHER POST-EMPLOYMENT BENEFITS The City offers (through a single employer defined contribution plan, the “City of Tempe Post-Employment Health Plan”) additional post-employment health insurance benefits through an irrevocable trust. Other post-employment healthcare benefits, like the cost of pension benefits, constitute an exchange of compensation for employee services rendered. Like pension benefits, the cost of other post-employment benefits (OPEB) generally should be associated with the periods in which the exchange occurs rather than in future periods in which the benefits are provided. GASB Statement No. 74, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”, effective with fiscal years beginning after June 15, 2016, requires certain financial reporting disclosures by plans that administer OPEB benefits; those disclosures have been incorporated throughout this report. GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”, effective with fiscal years beginning after June 15, 2017, requires certain financial reporting disclosures for employers which also have been incorporated throughout this report. A. Plan Description The City’s single-employer Post-Employment Health Plan is administered by the City’s Human Resources Division, in accordance with Resolution 2019.75 of the City Council, to all retired, benefitted employees who meet the following eligibility requirements: (a) have at least 10 years of service, (b) be enrolled in one of the City's group health insurance plans, and (c) at the time of retirement, be or have been eligible to receive benefits from one of the City sponsored state retirement plans. Due to changes effective July 1, 2009, benefitted employees hired after June 30, 1999 are not eligible to participate in the post-employment benefit plan. As of June 30, 2020, 1,796 members met those eligibility requirements to receive post-employment healthcare benefits with 102 eligible retirees waiving coverage. Total membership in the program is as follows: Active beneficiaries Active employees eligible Total 962 732 1,694 Benefits provided. The plan provides benefits to eligible retirees, their spouses and dependents through monthly City contributions to a health reimbursement account established for each retiree. The plan benefits and contribution amounts are annually determined by the City’s Human Resources Division, in accordance with the approved OPEB Health Plan, based on the costs of coverage that is available through the health plans offered by the ASRS. Coverage for Medicare-eligible retirees is provided through fully-insured, City-sponsored Medicare Supplemental plans. Medicare-eligible retirees who formally waive the coverage of the Medicare Supplemental plans are eligible to receive a $100 monthly contribution to a health reimbursement account established for the retiree. The provision of these benefits is discretionary, and the City is not legally or contractually obligated to continue them. 106 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 15 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Contributions. Contributions for benefits due are based on actual benefit payments during the fiscal year and are not based on a measure of pay. Additional contributions to the trust can only be authorized by a majority of the City Council. The total contributions for the year ended June 30, 2020 were $7,918,333. B. Basis of Accounting and Valuation of Investments An irrevocable trust fund (Other Post Employment Benefit Trust) has been established for the purpose of advance funding the OPEB liability; the trust has a $14.9 million balance as of June 30, 2020. The investments of the trust are overseen by the OPEB Retirement Investment Committee, consisting of three city employees appointed by the City’s Deputy City Manager/Chief Financial Officer. Separate financial statements are not available for the trust. The Other Post Employment Benefit Trust financial statements are prepared on the accrual basis of accounting. The City’s contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits are recognized when due and payable in accordance with the terms of the plan. All trust investments are reported at fair value. Fair value is determined based on quoted market prices. C. Net OPEB Liability The City’s net OPEB liability was measured as of June 30, 2020, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of July 1, 2019. The components of the net OPEB liability at June 30, 2020 were as follows: Total OPEB liability Plan fiduciary net position Net OPEB liability Plan fiduciary net position as a percentage of total OPEB liability $ 96,967,355 14,948,874 $ 82,018,481 15.4% Actuarial Assumptions. The total OPEB liability as of the July 1, 2019 actuarial valuation date was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Measurement date Actuarial valuation date Actuarial cost method Asset valuation method Actuarial assumptions: Salary increases Investment rate of return Discount rate Inflation rate Healthcare cost trend Mortality rates June 30, 2020 July 1, 2019 Entry age normal Market value 3.0% per annum 6.63% 6.5% 2.6% ASRS/PSPRS Pre-Medicare, 5.0% to 5.5%; ASRS/ PSPRS Medicare Supplement, 2.50% to 3.5%; City Medicare Supplement, 2.5% to 3.5% General: PubG.H-2010 Employee Public Safety: PubS.H-2010 Employee Male/Female and Generational with Projection Scale MP-2019 107 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 15 - OTHER POST-EMPLOYMENT BENEFITS (Continued) The Total OPEB Liability was updated from the actuarial valuation date to the measurement date using standard actuarial roll-forward techniques. Investment policy. The City’s policy in regard to the allocation of invested assets is established and may be amended by the OPEB Retirement Investment Committee by a majority of vote of its members. It is the policy of the committee to pursue an investment strategy that reduces risk through the prudent diversification of the portfolio. Rate of return. For the year ended June 30,2020, the annual money-weighted rate of return on investments, net of investment expense, was 5.84%. The money-weighted return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. The long-term rate of return on OPEB plan investments was determined using the building-block method in which best-estimate ranges of expected future real rates of return (expected returns net of OPEB 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. The target allocation and best estimates of the geometric real rates of return for each major asset class are summarized in the following table: Asset Class Cash & Equivalents Equity Fixed Income Real Estate Other Total Target Allocation 0% 65% 35% 0% 0% 100% Long-Term Expected Real Rates of Return 0.00% 7.50% 5.00% 6.00% Not applicable 6.63% Discount rate. The discount rate used to measure the Total OPEB Liability is 6.5%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's Fiduciary Net Position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the Total OPEB Liability. The separately issued actuarial valuation report for the fiscal year ended June 30, 2020 may be obtained from the City's Internal Services Department, 20 East 6th Street, Tempe, Arizona, 85281 D. Changes in the Net OPEB Liability The change in the net OPEB liability during the year was as follows: 108 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 15 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Balance at 6/30/2019 Changes for the year: Service cost Interest Differences between expected and actual Experience Changes in Assumptions/ Inputs Change in Benefit Terms Contributions for Benefits due Net Investment Income Benefit payments Net changes Balance at 6/30/2020 Changes in Net OPEB Liability Total OPEB Plan Fiduciary Net Liability Position $ 90,253,199 $ 14,187,536 Net OPEB Liability $ 76,065,663 329,347 5,630,520 - 329,347 5,630,520 267,000 - 267,000 753,880 7,651,740 - 753,880 7,651,740 (7,918,331) 6,714,156 $ 96,967,355 7,918,331 761,338 (7,918,331) 761,338 $ 14,948,874 (7,918,331) (761,338) 5,952,818 $ 82,018,481 Sensitivity of the net OPEB liability. The following presents the net OPEB liability, as well as what the net OPEB liability would be if it were calculated using a discount or healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current discount or healthcare cost trend rates: Discount Rate: Healthcare Cost Trend Rate 1% Decrease No Change 1% Increase $ 91,014,975 $ 73,218,998 $ 82,018,481 $ 82,018,481 $ 74,285,678 $ 92,241,738 E. OPEB Expense and Deferred Outflows/Inflows of Resources related to OPEB. For the year ended June 30, 2020, the City recognized OPEB expense of $4,299,997. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between expected and actual experience Changes of assumptions or other inputs Difference between actual and expected investment earnings Total Deferred Outflows of Resources $ 173,169 $ 173,169 Deferred Inflows of Resources $ 246,151 $ 246,151 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: 109 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 15 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Fiscal Year Ended June 30, 2021 2022 2023 2024 2025 Thereafter Deferred Outflow (Inflows) of Resources ($ 146,888) (5,263) 46,999 32,170 - NOTE 16 - DEFERRED COMPENSATION PLANS The City offers its employees three compensation plans created in accordance with Internal Revenue Code, Section 457 and 401(K). The plans, available to all City employees, permit them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. The City’s fiduciary responsibility is that of exercising “due care” in selecting a third-party administrator. Federal legislation requires that Section 457 and 401(k) plan assets be held in trust for employees. As a result, the employee assets held in Section 457 plans are neither the property of the City nor subject to claims of the City’s general creditors. Therefore, the plan assets are not included in the City’s basic financial statements. NOTE 17 - RISK FINANCING ACTIVITIES The City is exposed to risks arising from general liability, automobile liability (physical damage and bodily injury), property liability, workers compensation, and employee health claims. The City has established a Risk Management Fund, Worker’s Compensation Fund and Health Fund (all internal service funds) to account for and finance its uninsured risks of loss. Amounts are paid into the internal service funds by all other funds and are available to pay claims and to fund claim reserves. As with any risk retention program, the City is contingently liable in respect to claims beyond those actuarially projected. These interfund premiums are used to cover the amount of claim expenditures reported in the internal service funds. The City is a self-insured entity with excess commercial insurance coverage purchased for general and automobile liability, property, workers' compensation/employers’ liability, crime, cyber liability, fiduciary liability and group health coverage. The coverage is as follows: for general and automobile liability the City’s self-insured retention is $2.0 million with layered excess insurance coverage to $40.0 million; for property coverage the City’s per occurrence deductible is $100,000 with a policy limit of $825.0 million; for workers’ compensation, the selfinsured retention is $750,000 for public safety employees, and $500,000 for all other employees, with the maximum limit of indemnity per occurrence meeting the Arizona Statutory requirements and Employers Liability maximum limit of $2 million per occurrence; and for group health the self-insurance retention is $275,000 per individual, with an aggregate stop loss of $460,000. During the year there were no significant reductions in the amounts of excess coverage purchased. At fiscal year end, the estimated, unpaid insurance claims liability was based on a case-by-case review of actual pending claims and an estimated amount for incurred but not reported claims. A liability for a known claim was established if information indicated that it was probable that a loss had been incurred as of June 30, 2020, and that the amount was reasonably estimable. A liability for incurred but not reported claims was based on historical experience. 110 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 17 - RISK FINANCING ACTIVITIES (Continued) The following is a summary of changes in insurance claims liabilities, accounted for in the governmental and proprietary funds, for the last two fiscal years: General liability Automobile liability Property liability Workers' compensation Health insurance General liability Automobile liability Property liability Workers' compensation Health insurance June 30, 2019 $ 3,395,000 1,155,150 228,115 3,475,780 1,567,394 $ 9,821,439 Claims Incurred Net of Change in Estimates $ 39,102 393,831 265,130 4,446,774 18,867,272 $24,012,109 Payments $ (2,246,602) (556,861) (338,567) (2,869,629) (18,811,181) $(24,822,840) June 30, 2020 $1,187,500 992,120 154,678 5,052,925 1,623,485 $9,010,708 June 30, 2018 $ 2,254,402 1,819,200 134,200 2,504,377 1,383,143 $ 8,095,322 Claims Incurred Net of Change in Estimates $ 1,603,437 (315,662) 513,607 2,872,394 20,217,631 $ 24,891,407 Payments $ (462,839) (348,388) (419,692) (1,900,991) (20,033,380) $(23,165,290) June 30, 2019 $ 3,395,000 1,155,150 228,115 3,475,780 1,567,394 $ 9,821,439 At June 30, 2020, the Risk Management Fund accrued expenses totaled $2,350,859. This balance includes the general liability, automobile liability and property liability of $2,334,298 and other accrued expenses of $16,561. The Worker’s Compensation Fund had accrued expenses totaling $5,052,926. The Health Fund had accrued expenses totaling $3,678,139; of this amount, $1,623,485 is health insurance claims liability and $2,054,654 represents the liability for employee mediflex benefits. Additionally, at June 30, 2020, the City had $6,841,391 of General Fund assigned fund balance for self-insurance purposes. NOTE 18 - CONTINGENT LIABILITIES The City is subject to a number of lawsuits, investigations, and other claims that are incidental to the ordinary course of its operations. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a materially adverse effect on the City’s financial position. The City participates in federally funded and state-funded programs administered by various government agencies. The programs included in these financial statements may be subject to program compliance and/or financial monitoring by the granting agency or its representatives. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. 111 Notes to the Financial Statements For Fiscal Year Ended June 30, 2020 City of Tempe, Arizona NOTE 19 - RELATED ORGANIZATION The Industrial Development Authority (IDA) is a non-profit corporation established by the City in 1981 to promote industry and develop trade by inducing manufacturing, industrial and commercial enterprises to locate and remain in Tempe. The Board of Directors of the IDA is appointed by the City Council; however, the City does not have a financial benefit/burden relationship nor is the City able to impose its will on the IDA as defined in GASB Statement No. 14; therefore, data for the IDA is not included in the City’s basic financial statements. Separately issued financial statements are not available for the IDA. NOTE 20 – TAX ABATEMENTS The City has made commitments as part of our economic development programs to reimburse certain public improvement costs through transaction privilege taxes generated out of the respective development area. The total amount rebated for the fiscal year ended June 30, 2020 is $4,443,691. Detailed information on such commitments is prohibited from disclosure under Arizona Revised Statute 42-2002 Disclosure of Confidential Information Prohibited. In addition, the City enters into property tax abatement agreements with local businesses under Arizona Revised Statutes 42-6201 through 42-6210 Government Property Lease Excise Tax (GPLET). State law imposes an excise tax on buildings that are owned by the City, leased by a private party and occupied/used for commercial, residential rental or industrial purposes. The City is allowed to abate the tax for a period of eight years for both existing and new projects within redevelopment areas that are part of a single central business district. For the fiscal year ended June 30, 2020, the difference between property taxes assessed and the GPLET collected totaled $2,544,520 under this program, including the following tax abatement agreements that each exceed 10% of the total amount: • A 16.3% property tax GPLET to a retail development for constructing a retail complex in the City. The GPLET amounted to $413,613. • A 12.6% property tax GPLET to a retail development in the northern portion of the City. The difference between property taxes assessed and the GPLET collected amounted to $320,271. NOTE 21 - DEFICIT IN NET POSITION AND FUND BALANCE The Golf Course Enterprise Fund had a deficit balance of $339,407. The deficit will be covered by increases in revenues and payments from other funds. The Performing Arts Special Revenue Fund had a deficit fund balance of $757,805. The deficit will be covered by the continuing Performing Arts sales tax revenues beyond the final July 1, 2020 debt service payment of the 2011 Excise Tax Revenue Refunding Obligations. The Grants Special Revenue Fund had a deficit fund balance of $893,113. The deficit will be covered by future grant revenues. The Storm Sewers Capital Project Fund had a deficit fund balance of $94,108. This deficit will be covered by future debt issuances. NOTE 22 - SUBSEQUENT EVENT On November 3, 2020, Tempe voters authorized the issuance of $349,000,000 in General Obligation bonds to finance the City's capital improvement program in the following categories: • • • • • Water and Sewer Improvements - $134,000,000 Street Improvements/Storm Drains - $74,000,000 Public Safety - $34,000,000 Park Improvements/Community Services - $45,000,000 Municipal Infrastructure Preservation - $62,000,000 112 Required Supplementary Information 113 Schedule of Contributions All Pension Plans Last Six Fiscal Years City of Tempe, Arizona 2020 Arizona State Retirement System: Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Public Safety Personnel Retirement System- Police: Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll Public Safety Personnel Retirement System- Fire: Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll 2019 2018 2017 2016 2015 $ 9,474,813 $ 8,950,287 $ 8,163,494 $ 7,887,785 $ 7,731,482 $ 7,738,771 $ 9,474,813 - $ 8,950,287 - $ 8,163,494 - $ 7,887,785 - $ 7,731,482 - $ 7,738,771 - $ 82,749,459 $ 80,056,234 $ 74,894,440 $ 73,170,548 $ 71,257,899 $ 71,063,096 11.45% 11.18% 10.90% 10.78% 10.85% 10.89% $ 18,833,432 $ 17,208,734 $ 15,962,148 $ 12,852,861 $ 12,604,739 $ 9,727,183 $ 18,833,432 - $ 17,208,734 - $ 15,962,148 - $ 12,852,861 - $ 12,604,739 - $ 9,727,183 - $ 28,907,800 $ 28,519,612 $ 28,672,800 $ 28,606,412 $ 28,627,615 $ 28,889,762 65.15% 60.34% 55.67% 44.93% 44.03% 33.67% $ 10,137,454 $ 9,655,204 $ 8,639,228 $ 6,621,730 $ 6,067,633 $ 4,066,636 $ 10,137,454 - $ 9,655,204 - $ 8,639,228 - $ 6,621,730 - $ 6,067,633 - $ 4,066,636 - $ 13,881,219 $ 13,477,393 $ 13,373,418 $ 12,337,861 $ 12,215,891 $ 10,958,329 73.03% 71.64% 64.60% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 114 53.67% 49.67% 37.11% Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System Last Six Fiscal Years City of Tempe, Arizona 2020 City's proportion of the net pension liability 2019 0.76% 2018 0.77% 2017 0.76% 2016 0.78% 2015 0.77% 0.76% City's proportion share of the net pension liability $ 111,031,198 $ 108,146,590 $ 118,500,674 $ 126,045,105 $ 119,185,001 $ 112,524,308 Covered payroll $ 80,056,234 $ 74,894,440 $ 73,170,548 $ 71,257,899 $ 71,063,096 $ 69,182,112 City's proportionate share of the net pension liability as a percentage of its covered payroll 138.69% 144.40% 161.95% 176.89% 167.72% 162.65% Plan fiduciary net position as a percentage of the total pension liability 73.24% 73.40% 69.92% 67.06% 68.35% 69.49% Actuarial roll forward date June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 115 June 30, 2015 June 30, 2015 Schedule of the Proportionate Share of the Net OPEB Health Insurance Premium Liability (Asset) Arizona State Retirement System Last Three Fiscal Years City of Tempe, Arizona 2020 City's proportion of the net OPEB health insurance premium liability (asset) 2019 0.77% 2018 0.78% 0.77% City's proportion share of the net OPEB health insurance premium liability (asset) $ (213,892) $ (282,642) $ (418,219) Covered payroll $ 80,056,234 $ 74,894,440 $ 73,170,548 City's proportionate share of the net OPEB health insurance premium liability (asset) as a percentage of its covered payroll -0.27% -0.38% -0.57% Plan fiduciary net position as a percentage of the total OPEB health insurance premium liability (asset) 101.62% 102.20% 103.57% Actuarial roll forward date 6/30/2019 6/30/2018 6/30/2017 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 116 Schedule of the Proportionate Share of the Net OPEB Long-Term Disability Liability Arizona State Retirement System Last Three Fiscal Years City of Tempe, Arizona 2020 City's proportion of the net OPEB long-term disability liability 2019 0.77% 2018 0.78% 0.76% City's proportion share of the net OPEB long-term disability liability $ 501,196 $ 406,033 $ 276,226 Covered payroll $ 80,056,234 $ 74,894,440 $ 73,170,548 City's proportionate share of the net OPEB long-term disability liability as a percentage of its covered payroll 0.63% 0.54% 0.38% Plan fiduciary net position as a percentage of the total OPEB liability long-term disability liability 72.85% 77.83% 84.44% 6/30/2019 6/30/2018 6/30/2017 Actuarial roll forward date This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 117 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Police Last Six Fiscal Years City of Tempe, Arizona 2020 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual Changes of assumptions Benefit payments, including refunds Net change in total pension liability Total pension liability- beginning Total pension liability- ending Plan fiduciary net position Contributions- employer Contributions- employee Net investment income Benefit payments, including refunds Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position- beginning Plan fiduciary net position- ending Net pension liability- ending $ 6,363,446 23,896,706 2,252,812 7,223,840 (15,881,006) 23,855,798 324,505,518 348,361,316 $ $ $ 17,153,330 2,187,943 7,119,271 (15,881,006) (124,419) 2,498 10,457,617 129,203,706 139,661,323 $ 208,699,993 $ $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll 2019 6,266,555 22,579,727 1,492,630 (15,663,112) 14,675,800 309,829,718 324,505,518 $ $ $ 11,403,472 2,811,219 8,386,647 (15,663,112) (128,344) 12,433 6,822,315 122,381,391 129,203,706 $ 195,301,812 $ 40.09% $ 28,519,612 2018 6,639,904 21,145,695 2,664,893 (215,490) 7,860,019 (13,775,904) 24,319,117 285,510,601 309,829,718 $ $ $ 12,486,872 3,579,664 13,507,120 (13,775,904) (119,915) 54,461 15,732,298 106,649,093 122,381,391 $ 187,448,327 $ 39.82% $ 28,672,800 2017 5,378,159 19,846,810 13,183,597 (5,746,957) 10,622,755 (15,820,570) 27,463,794 258,046,807 285,510,601 $ $ $ 12,552,708 3,597,316 653,674 (15,820,570) (94,459) (173,159) 715,510 105,933,583 106,649,093 $ 178,861,508 $ 39.50% $ 28,606,412 2016 5,468,695 19,315,142 (2,753,278) (14,604,348) 7,426,211 250,620,596 258,046,807 $ $ $ 9,804,542 3,641,788 3,769,779 (14,604,348) (92,360) (36,082) 2,483,319 103,450,264 105,933,583 $ 9,132,346 3,253,980 12,456,186 (13,685,124) (3,260,002) 7,897,386 95,552,878 103,450,264 $ 152,113,224 $ 147,170,332 $ 37.35% $ 28,627,615 2015 $ 41.05% $ 28,889,762 5,447,093 16,537,700 4,426,439 (2,351,309) 25,455,442 (13,685,124) 35,830,241 214,790,355 250,620,596 41.28% $ 28,717,534 Net pension liability as a percentage of covered payroll 731.78% 681.14% 655.27% 624.79% 526.53% 512.48% Measurement date 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 118 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Fire Last Six Fiscal Years City of Tempe, Arizona 2020 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual Changes of assumptions Benefit payments, including refunds Net change in total pension liability Total pension liability- beginning Total pension liability- ending Plan fiduciary net position Contributions- employer Contributions- employee Net investment income Benefit payments, including refunds Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position- beginning Plan fiduciary net position- ending Net pension liability- ending $ 3,201,998 14,062,552 2,213,604 3,771,807 (10,967,777) 12,282,184 192,316,379 204,598,563 $ $ $ 9,657,636 1,045,992 4,459,035 (10,967,777) (78,221) 4,116,665 82,470,373 86,587,038 $ 118,011,525 $ $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll 2019 3,184,469 13,505,923 (549,390) (9,489,726) 6,651,276 185,665,103 192,316,379 $ $ $ 7,471,162 1,274,574 5,290,034 (9,489,726) (81,213) 11,590 4,476,421 77,993,952 82,470,373 $ 109,846,006 $ 42.32% $ 13,477,393 2018 3,288,107 12,435,795 1,132,919 2,381,447 6,731,555 (8,942,533) 17,027,290 168,637,813 185,665,103 $ $ $ 7,629,875 1,711,846 8,517,929 (8,942,533) (75,769) 930 8,842,278 69,151,674 77,993,952 $ 107,671,151 $ 42.88% $ 13,373,418 2017 2,601,714 11,454,692 9,445,952 177,366 5,723,255 (10,767,917) 18,635,062 150,002,751 168,637,813 $ $ $ 6,665,926 1,620,334 420,827 (10,767,917) (60,954) 64,490 (2,057,294) 71,208,968 69,151,674 $ 99,486,139 $ 42.01% $ 12,337,861 2016 2,527,186 11,256,214 (1,631,037) (8,554,561) 3,597,802 146,404,949 150,002,751 $ $ $ 4,553,293 1,627,959 2,537,356 (8,554,561) (62,287) (36,284) 65,476 71,143,492 71,208,968 $ 4,587,619 1,461,331 8,786,886 (9,805,679) (3,124,665) 1,905,492 69,238,000 71,143,492 $ 78,793,783 $ 75,261,457 $ 41.01% $ 12,215,891 2015 $ 47.47% $ 12,133,956 2,541,502 9,938,885 2,317,758 (861,599) 12,031,993 (9,805,679) 16,162,860 130,242,089 146,404,949 48.59% $ 12,719,039 Net pension liability as a percentage of covered payroll 875.63% 821.38% 872.69% 814.40% 649.37% 591.72% Measurement date 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 119 Schedule of Changes in the Net OPEB Liability and Related Ratios Public Safety Personnel Retirement System - Police Last Three Fiscal Years City of Tempe, Arizona 2020 Total OPEB liability Service cost Interest Changes of benefit terms Differences between expected and actual Changes of assumptions Benefit payments, including refunds Net change in total OPEB liability Total OPEB liability- beginning Total OPEB liability- ending $ 84,051 509,152 (630,377) 84,649 (436,662) (389,187) 7,014,706 6,625,519 $ $ $ 254,335 2,808 212,423 (436,662) (3,667) 29,237 4,182,958 4,212,195 $ 2,413,324 $ Plan fiduciary net position Contributions- employer Contributions- employee Net investment income Benefit payments, including refunds Administrative expense Net change in plan fiduciary net position Plan fiduciary net position- beginning Plan fiduciary net position- ending $ Net OPEB liability- ending Plan fiduciary net position as a percentage of the total OPEB liability $ Net OPEB liability as a percentage of covered payroll Measurement date 28,519,612 $ $ $ 258,367 182 272,884 (417,982) (4,153) 109,298 4,073,660 4,182,958 $ 216,193 443,606 (436,179) (3,925) 219,695 3,853,965 4,073,660 $ 2,831,748 $ 2,705,959 $ $ 59.63% $ 28,672,800 87,521 491,831 11,390 164,972 (271,985) (436,179) 47,550 6,732,069 6,779,619 60.09% $ 28,606,412 8.46% 9.88% 9.46% 6/30/2019 6/30/2018 6/30/2017 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 120 2018 83,184 489,304 80,581 (417,982) 235,087 6,779,619 7,014,706 63.58% Covered payroll Note: 2019 Schedule of Changes in the Net OPEB Liability (Asset) and Related Ratios Public Safety Personnel Retirement System - Fire Last Three Fiscal Years City of Tempe, Arizona 2020 Total OPEB liability Service cost Interest Changes of benefit terms Differences between expected and actual Changes of assumptions Benefit payments, including refunds Net change in total OPEB liability Total OPEB liability- beginning Total OPEB liability- ending $ 32,044 249,187 (161,802) 40,588 (218,954) (58,937) 3,444,827 3,385,890 $ $ $ 33,737 563 196,028 (218,954) (3,384) 7,990 3,722,461 3,730,451 $ (344,561) $ Plan fiduciary net position Contributions- employer Contributions- employee Net investment income Benefit payments, including refunds Administrative expense Net change in plan fiduciary net position Plan fiduciary net position- beginning Plan fiduciary net position- ending $ Net OPEB asset- ending Plan fiduciary net position as a percentage of the total OPEB liability $ Net OPEB liability (asset) as a percentage of covered payroll Measurement date 13,477,393 $ $ $ 34,679 105 248,942 (216,408) (3,789) 63,529 3,658,932 3,722,461 $ 398,603 (219,393) (3,526) 175,684 3,483,248 3,658,932 $ (277,634) $ (226,565) $ $ 108.06% $ 13,373,418 33,870 246,243 4,522 24,942 (33,819) (219,393) 56,365 3,376,002 3,432,367 106.60% $ 12,337,861 -2.56% -2.08% -1.84% 6/30/2019 6/30/2018 6/30/2017 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 121 2018 32,536 247,192 (50,860) (216,408) 12,460 3,432,367 3,444,827 110.18% Covered payroll Note: 2019 Schedule of Contributions OPEB Plan Last Four Fiscal Years City of Tempe, Arizona 2020 Contribution deficiency (excess) $ (837,331) $ (1,327,506) $ 449 $ 412,633 Covered-employee payroll $ 36,831,045 $ 35,758,296 $ 34,716,792 $ 41,444,730 Note: 7,918,331 7,134,000 $ 2017 $ Measurement date $ 2018 Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contributions as a percentage of covered-employee payroll 7,081,000 2019 8,461,506 6,984,000 $ 6,983,551 7,171,851 6,759,218 21.50% 23.66% 20.12% 16.31% June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 122 Schedule of Changes in the Net OPEB Liability and Related Ratios OPEB Plan Last Four Fiscal Years City of Tempe, Arizona 2020 Total OPEB liability Service cost Interest Changes of benefit terms Differences between expected and actual Changes of assumptions Benefit payments, including refunds Net change in total OPEB liability Total OPEB liability- beginning Total OPEB liability- ending Plan fiduciary net position Contributions- employer Net investment income Benefit payments, including refunds Net change in plan fiduciary net position Plan fiduciary net position- beginning Plan fiduciary net position- ending Net OPEB liability- ending $ 329,347 5,630,520 7,651,741 267,000 753,880 (7,918,332) 6,714,156 90,253,199 96,967,355 $ $ $ 7,918,331 762,338 (7,918,331) 762,338 14,187,536 14,949,874 $ 82,017,481 $ $ Plan fiduciary net position as a percentage of the total OPEB liability Covered-employee payroll Net OPEB liability as a percentage of covered-employee payroll Measurement date Note: 2019 319,754 5,930,814 (4,271,517) 1,581,360 (8,461,506) (4,901,095) 95,154,294 90,253,199 $ $ $ 8,461,506 796,286 (8,461,506) 796,286 13,391,250 14,187,536 $ 76,065,663 $ 15.42% $ 36,831,045 2018 321,229 5,689,881 4,915,943 503,616 (6,983,551) 4,447,118 90,707,176 95,154,294 $ $ $ 6,983,551 1,062,670 (6,983,551) 1,062,670 12,328,580 13,391,250 $ 6,759,218 1,211,093 (6,759,218) 1,211,093 11,117,487 12,328,580 $ 81,763,044 $ 78,378,596 $ 15.72% $ 35,758,296 2017 $ 14.07% $ 34,716,792 300,495 5,742,386 (6,759,218) (716,337) 91,423,513 90,707,176 13.59% $ 41,444,730 222.69% 212.72% 235.51% 189.12% June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 123 Schedule of Investment Returns OPEB Plan Last Four Fiscal Years City of Tempe, Arizona 2020 Annual money-weighted rate of return, net of investment expense Note: 2019 5.84% 6.43% 2018 9.13% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 124 2017 11.41% Notes to Required Supplementary Information June 30, 2020 City of Tempe, Arizona Actuarial Assumptions for Valuations Performed. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends - Pensions. The actuarial assumptions used in the June 30, 2018 valuation for ASRS were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2017, actuarial valuation. The actuarial assumptions used in the June 30, 2019, valuation for PSPRS were based on the results of an actuarial experience study for the five-year period ended June 30, 2016. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. 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, 2019 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 that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional. 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. 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. In addition, the City refunded excess employee contributions to PSPRS members. PSPRS allowed the City to reduce its actual employer contributions for the refund amounts. Schedule of Changes in City Sponsored OPEB Plan Liability. Mortality Rates. The mortality rates, Pub G.H-2010 for general employees and Pub S.H-2010 for public safety employees, remained the same. The mortality improvement was updated from Scale MP-2018 to MP-2019. This resulted in an increase in the Total OPEB Liability of approximately $500,000 which is a component of changes in assumptions or other inputs. Disability Benefits. In prior valuations, a liability for disabled retirees was not included. The inclusion of these benefits resulted in an increase in the Total OPEB Liability of approximately $210,000. Benefit Changes. Post Medicare Beneficiaries - Effective January 1, 2010, the City subsidizes up to $350 per month of the Citysponsored post-Medicare health plan premium for Group 2 retirees. Beginning July 1, 2019, the maximum subsidy increased 2% and will continue to increase 2% each year on July 1. This benefit change increased the Total OPEB Liability by $5.7 million. PSPRS Employees - Effective July 31, 2019, PSPRS employees hired after June 30, 2011 who are granted a job-related disability pension from the PSPRS for a line of duty injury will receive the following benefits which resulted in an increase in liability of $1.9 million. If the disability pension is granted prior to 10 years of service, the disabled retiree will receive the initial lump sum contribution of $10,000 (increased 2% per year beginning July 1, 2019) into their Health Retirement Account (HRA). If not in the PSPRS Deferred Retirement Option Plan (DROP), the disabled retiree will continue to get monthly deposits of $175.00 (increased 2% per year beginning July 1, 2019) until they reach the greater of what would be 25 years of service in PSPRS or 10 years (but not beyond 32 years of service in PSPRS). If in DROP, the disabled retiree will continue to get monthly deposits of $175.00 (increased 2% per year beginning July 1, 2019) until they would leave DROP, not to exceed 5 years. 125 Notes to Required Supplementary Information June 30, 2020 City of Tempe, Arizona For the same period of time as the HRA contributions above, pre-Medicare eligible disabled retirees, will also receive certain additional contribution benefits. For the same period of time as the HRA contributions, Medicare-eligible disabled retiree will also receive certain benefits which include a premium subsidy up to $350 per month (adjusted annually) if enrolled in one of the City’s post-Medicare plans or $100/month waive stipend. Schedule of Contributions – OPEB. Methods and assumptions used to determine actuarial contribution amounts were as follows: Measurement date Actuarial valuation date Actuarial cost method Asset valuation method Actuarial assumptions: Salary increases Investment rate of return Discount rate Inflation rate Healthcare cost trend Mortality rates June 30, 2020 July 1, 2019 Entry age normal Market value 3.0% per annum 6.63% 6.5% 2.6% ASRS/PSPRS Pre-Medicare, 5.0% to 5.5%; ASRS/ PSPRS Medicare Supplement, 2.50% to 3.5%; City Medicare Supplement, 2.5% to 3.5% General: PubG.H-2010 Employee Public Safety: PubS.H-2010 Employee Male/Female and Generational with Projection Scale MP2019 126 Combining Fund Financial Statements 127 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for specific revenues used to finance certain projects or activities as required by law or contractual agreement. ▪ Performing Arts Fund. To account for the receipt and expenditure of the Performing Arts Tax monies. These monies are restricted to financing the performing and visual arts center. ▪ Highway User Revenue Fund. To account for the receipt and expenditure of the City's share of the highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets, and repayment of transportation-related general obligation debt. ▪ Community Development Fund. To account for the receipt and expenditure of U.S. Department of Housing and Urban Development Community Development Block Grant and Home Program monies. ▪ Housing Assistance Fund. To account for the receipt and expenditure of U.S. Department of Housing and Urban Development Lower Income Housing Assistance Program grant monies. ▪ Housing Affordability Fund. To account for the receipt and expenditure from contributions to assist in the development of long-term housing affordability solutions. ▪ Donations and Court Awards Fund. To account for the receipt and expenditure of miscellaneous donations and revenue received from court awarded confiscated property under both the Federal and State Organized Crime Acts. ▪ Grants Fund. To account for the receipt and expenditure of miscellaneous grant monies. ▪ Community Facilities District Fund. To account for the receipt and expenditure of monies for the Rio Salado Community Facilities District. 128 NON-MAJOR GOVERNMENTAL FUNDS (Continued) CAPITAL PROJECTS FUNDS Capital Projects Funds account for all current financial resources used for the acquisition of capital facilities except those financed by Enterprise Funds. Disbursements from these funds are primarily for property acquisition and the construction of permanent public improvements. The major sources of financing are derived from bond proceeds and special revenues. ▪ Streets Fund. Used for improving, constructing and reconstructing major streets, highways, collector and local streets within the City, and to acquire rights-of-way. ▪ Police Protection Fund. Used for purchasing, constructing and equipping police functions. ▪ Fire Protection Fund. Used for purchasing, constructing and equipping fire functions. ▪ Storm Sewers Fund. Used for planning, constructing, extending and improving storm drain trunk lines and detention basins. ▪ Parks Fund. Used for acquiring, developing and equipping parks, playgrounds and recreation facilities. ▪ Rio Salado Fund. Used for consulting and engineering studies necessary for the design of the Rio Salado projects and for constructing a wildlife habitat. ▪ Community Development Fund. Used for acquiring, reconstructing, remodeling, renovating and equipping existing buildings that house municipal departments, and for acquiring and constructing housing for the elderly and the redevelopment of the downtown area. ▪ Signals Fund. Used for purchasing, constructing and equipping street light and traffic signal upgrades and for the planning of an overall transportation plan. ▪ Community Facilities District Fund. Used for the improving and constructing in the Rio Salado Community Facilities District. 129 Combining Balance Sheet Non-major Governmental Funds June 30, 2020 Special Revenue Highway User Revenue Performing Arts Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Total assets Liabilities Accounts payable Deposits Accrued expenditures Due to other funds Unearned revenue Matured bonds payable Matured interest payable Total liabilities $ $ $ Deferred Inflows of Resources Unavailable revenue- federal grants Unavailable revenue- grants Unavailable revenue- other Total deferred inflows of resources Fund Balances Fund balance: Non-spendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances 961,809 3,364,425 4,326,234 47,478 107,826 1,564,310 3,295,000 69,425 5,084,039 $ 4,789,792 $ 987,878 10,176 725,565 6,513,411 $ - 4,326,234 $ $ $ - (757,805) (757,805) $ 318,261 107,395 425,656 Community Development 130 6,513,411 598,158 8,731 1,152,738 1,759,627 46,645 592,414 17,096 442,548 26,344 1,125,047 $ 1,460,573 $ 10,729 711,910 2,183,212 $ - 725,565 5,362,190 6,087,755 $ - Housing Assistance - 8,731 625,849 634,580 $ 1,759,627 71,297 158,066 229,363 711,910 1,241,939 1,953,849 $ 2,183,212 City of Tempe, Arizona Special Revenue Housing Affordability $ 19,324 Donations and Court Awards $ 2,812,145 $ 5,364 7,429 18,651 2,843,589 - $ $ 94 19,418 - $ - 19,418 $ 970,109 $ 5,213 1,882,871 12,417 2,870,610 $ - 19,418 19,418 $ 23,399 4,724 28,123 Grants 2,843,589 $ 2,075,711 $ 2,764,103 4,839,814 $ 18,428 2,615,000 149,103 2,782,531 996,355 88,564 1,084,919 1,506,629 1,056,018 252,819 2,815,466 $ 269,629 173,192 888 2,235,095 2,678,804 Community Facilities District 2,870,610 $ 12,127,654 $ 1,949,687 26,118 5,458 2,488,458 725,565 733,058 7,299,917 25,355,915 $ - 12,417 20,259 (925,789) (893,113) $ Total 996,355 88,564 1,084,919 2,057,283 2,057,283 $ 4,839,814 (continued) 131 795,137 765,606 395,995 2,006,858 2,235,095 5,910,000 244,872 12,353,563 1,458,623 10,833,567 1,056,018 252,819 (1,683,594) 11,917,433 $ 25,355,915 Combining Balance Sheet Non-major Governmental Funds June 30, 2020 rizona Capital Projects Police Protection Streets Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Total assets Liabilities Accounts payable Deposits Accrued expenditures Due to other funds Unearned revenue Matured bonds payable Matured interest payable Total liabilities $ 17,870,027 $ 17,870,027 $ Deferred Inflows of Resources Unavailable revenue- federal grants Unavailable revenue- grants Unavailable revenue- other Total deferred inflows of resources Fund Balances Fund balance: Non-spendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances 1,289,198 1,289,198 $ 4,231,469 $ 4,231,469 $ 44,017 44,017 - 17,870,027 Storm Sewers $ 1,953,670 $ 89,434 $ 1,953,670 $ 89,434 $ - 8,958 12,523,957 4,047,914 16,580,829 $ Fire Protection 4,231,469 132 $ - 3,769,580 156,984 260,888 4,187,452 $ 8,462 8,462 1,953,670 $ 13,667,940 $ 31,663 13,699,603 $ - 449,188 936,037 559,983 1,945,208 $ 183,542 183,542 Parks 31,663 31,663 (94,108) (94,108) $ 89,434 910,081 910,081 2,959,561 2,723,066 7,075,232 12,757,859 $ 13,699,603 City of Tempe, Arizona Capital Projects Community Development Rio Salado $ 384,636 $ 384,636 $ - $ 10,791,857 $ 10,791,857 $ - 384,636 Signals $ 1,641,473 $ 1,641,473 $ - 384,636 384,636 $ 794,369 794,369 10,791,857 279,430 279,430 $ 2,555,892 $ 2,555,892 $ - 7,301,917 2,695,571 9,997,488 $ Community Facilities District 1,641,473 Total $ 53,186,398 $ 31,663 53,218,061 $ - 623,315 738,728 1,362,043 $ 60,347 60,347 2,495,545 2,495,545 $ 2,555,892 133 Total Non-major Governmental Funds $ 3,569,446 3,569,446 $ 65,314,052 $ 1,949,687 57,781 5,458 2,488,458 725,565 733,058 7,299,917 78,573,976 $ 4,364,583 765,606 395,995 2,006,858 2,235,095 5,910,000 244,872 15,923,009 31,663 31,663 996,355 88,564 31,663 1,116,582 7,810,602 26,876,234 15,024,224 (94,108) 49,616,952 1,458,623 18,644,169 27,932,252 15,277,043 (1,777,702) 61,534,385 53,218,061 $ 78,573,976 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Fiscal Year Ended June 30, 2020 Special Revenue Highway User Revenue Performing Arts Community Development Housing Assistance Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ 9,131,870 $ - $ - $ - 564,706 7,785 3,662 9,708,023 12,568,037 343,829 3,381 12,915,247 1,792,531 15,220 541,685 2,349,436 10,855,859 36,398 83,833 10,976,090 4,684,668 - 9,585,380 - 2,021,682 - 10,482,715 - 3,295,000 186,368 2,376 8,168,412 9,585,380 442,000 63,918 2,527,600 10,482,715 1,539,611 3,329,867 (178,164) 493,375 1,500,000 - - - (1,226,438) (1,226,438) (4,855) (4,149,388) 10,176 (2,644,067) - - 313,173 685,800 (178,164) 493,375 Expenditures: Current: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municipal court City manager City attorney Office of strategic management and diversity Debt service: Principal retirement Interest Fiscal fees Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures before other financing sources (uses) Other financing sources (uses): Transfers in: General fund Special revenue funds Debt service funds Enterprise funds Transfers out: Debt service funds Capital projects funds Issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) - Net change in fund balances Fund balance at beginning of year Fund balance at end of year (1,070,978) $ (757,805) 5,401,955 $ 6,087,755 134 812,744 $ 634,580 1,460,474 $ 1,953,849 City of Tempe, Arizona Special Revenue Housing Affordability $ - Donations and Court Awards $ $ - $ - Total $ 9,131,870 606 606 2,000 26,274 311,367 342,615 420,167 25,393 1,127,816 1,629,546 899,439 2,975,204 58 2,830 199,412 43,530 5,750,019 2,799,551 2,799,551 14,277,936 899,439 12,568,037 2,977,204 78,556 4,022,283 542,027 471,482 657,954 45,626,788 8,971 - 33,880 169,943 65 201,560 198,149 390,531 43,282 - 3,367,957 364,896 226,842 1,583,076 58,289 577,150 17,846 132,301 2,414,061 - 3,367,957 398,776 5,081,453 9,585,445 2,615,621 14,294,593 448,820 620,432 17,846 132,301 8,971 1,037,410 6,328,357 2,615,000 298,206 2,310 5,329,577 6,352,000 548,492 4,686 43,468,422 (8,365) 90,406 (578,338) (2,530,026) 2,158,366 - - 29,786 - 2,913,206 - 1,529,786 2,913,206 - - - (175,000) (145,214) 16,540 2,929,746 (4,855) (5,550,826) 26,716 (1,085,973) (8,365) 90,406 (723,552) 399,720 1,072,393 27,783 $ - Community Facilities District Grants 19,418 2,725,060 $ 2,815,466 (169,561) $ (893,113) 1,657,563 $ 2,057,283 (continued) 135 10,845,040 $ 11,917,433 Combining Statement of Revenues, Expenditures and Changes in Fund Balance Non-major Governmental Funds For the Fiscal Year Ended June 30, 2020 Capital Projects Police Protection Streets Fire Protection Storm Sewers Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ - $ 503,973 197,802 3,456 13,556 701,764 1,420,551 - $ - $ - 50,231 900,941 951,172 11,029 700,334 711,363 1,840 1,840 - - - Expenditures: Current: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municipal court City manager City attorney Office of strategic management and diversity Debt service: Principal retirement Interest Fiscal fees Capital outlay Total expenditures 8,888,306 8,888,306 3,361,855 3,361,855 2,386,492 2,386,492 234,299 234,299 Excess (deficiency) of revenues over expenditures before other financing sources (uses) (7,467,755) (2,410,683) (1,675,129) (232,459) 4,149,388 - 175,000 - 700,000 - 6,800,000 10,949,388 1,900,000 2,075,000 800,000 1,500,000 - 3,481,633 (335,683) (175,129) (232,459) - Other financing sources (uses): Transfers in: General fund Special revenue funds Debt service funds Enterprise funds Transfers out: Debt service funds Capital projects funds Issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balances Fund balance at beginning of year Fund balance at end of year 13,099,196 $ 16,580,829 4,523,135 $ 4,187,452 136 2,120,337 $ 1,945,208 138,351 $ (94,108) City of Tempe, Arizona Capital Projects Parks $ Rio Salado - $ - $ - Community Facilities District Signals $ - $ - 41,629 854,475 840 896,944 - 3,500 35 54,917 58,452 674,738 263 49,738 724,739 586,776 586,776 - - - - - Total Non-major Governmental Funds Total $ - $ 1,178,711 197,802 3,500 108,483 600,332 3,262,169 840 5,351,837 9,131,870 15,456,647 1,097,241 12,568,037 2,980,704 187,039 4,622,615 542,027 3,733,651 658,794 50,978,625 - 3,367,957 398,776 5,081,453 9,585,445 2,615,621 14,294,593 448,820 620,432 17,846 132,301 6,313,564 6,313,564 - 12,779,344 12,779,344 1,836,892 1,836,892 268,407 268,407 36,069,159 36,069,159 6,352,000 548,492 4,686 36,069,159 79,537,581 (5,416,620) - (12,720,892) (1,112,153) 318,369 (30,717,322) (28,558,956) 32,000 - - 2,817,223 1,332,120 485,073 - 2,849,223 5,656,508 1,185,073 4,379,009 5,656,508 2,913,206 1,185,073 5,800,000 5,832,000 - 6,700,000 11,334,416 2,000,000 2,000,000 - 24,000,000 33,690,804 (4,855) (5,550,826) 24,000,000 26,716 32,604,831 415,380 - (1,386,476) 887,847 318,369 2,973,482 4,045,875 12,342,479 $ Community Development 12,757,859 384,636 $ 384,636 - 11,383,964 $ 9,997,488 474,196 $ 1,362,043 137 2,177,176 $ 2,495,545 46,643,470 $ 49,616,952 57,488,510 $ 61,534,385 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the government and to other government units, on a cost reimbursement basis. ▪ Risk Management Fund. Used to account for the costs of general liability, automobile liability, and property liability claims by the City under a self-insurance program. ▪ Worker’s Compensation Fund. Used to account for the costs incurred for worker’s compensation claims by the City under a self-insurance program. ▪ Health Fund. Used to account for the expenses incurred for employee health related costs under the City’s self-insurance program. 138 Combining Statement of Fund Net Position Internal Service Funds June 30, 2020 City of Tempe, Arizona Assets Current assets: Pooled cash and investments Accounts receivable Accrued interest receivable Net OPEB asset Total assets Deferred Outflows of Resources Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources Liabilities Current liabilities: Accounts payable Due to other funds Accrued expenses and claims payable Total current liabilities Noncurrent liabilities: Net OPEB liability Net pension liability Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Deferred inflows related to pensions Deferred inflows related to OPEB Total deferred inflows of resources Net Position Unrestricted Total net position Risk Management Worker's Compensation $ 4,599,878 1,232 4,601,110 $ 5,368,353 3,414 5,371,767 73,257 6,559 79,816 $ 224,243 221,581 0 11,081,924 11,303,505 93,107 639,509 732,616 12,036,121 - 224,243 48,147 3,429 51,576 5,190,383 $ 5,190,383 18,835,802 112,725 3,414 1,232 18,953,173 73,257 6,559 79,816 3,789,913 - 1,530,666 $ - 5,147,524 48,147 3,429 51,576 8,867,571 112,725 8,980,296 111,774 0 3,678,139 3,789,913 - 3,098,684 Total - 94,598 5,052,926 5,147,524 93,107 639,509 732,616 139 $ - 15,209 2,350,859 2,366,068 $ 1,530,666 Health 6,945,292 $ 6,945,292 Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Risk Management Worker's Compensation Health Total Operating revenues: Contributions Total operating revenues $ 2,361,322 2,361,322 $ 4,446,774 4,446,774 $ 34,701,427 34,701,427 $ 41,509,523 41,509,523 Operating expenses: Fees and services Total operating expenses 2,361,322 2,361,322 4,446,774 4,446,774 31,800,909 31,800,909 38,609,005 38,609,005 2,900,518 2,900,518 Operating income (loss) Nonoperating revenues Investment income Total nonoperating revenues Changes in net position Total net position - beginning Total net position - ending - - - 119,583 119,583 - 119,583 2,900,518 3,020,101 104,660 224,243 2,289,865 $ 5,190,383 3,925,191 $ 6,945,292 1,530,666 $ 1,530,666 140 $ - 119,583 119,583 Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Cash flows from operating activities: Receipts from other funds Reduction in (payments for) settlement of claims Net cash provided (used) by in operating activities Risk Management Worker's Compensation $ $ Cash flows from investing activities: Interest received Net cash provided (used) by investing activities 2,361,322 (4,837,357) (2,476,035) - Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 4,446,774 (2,799,292) 1,647,482 Health Total $ 35,043,319 (31,732,053) 3,311,266 $ 41,851,415 (39,368,702) 2,482,713 - 124,157 124,157 124,157 124,157 (2,476,035) 1,771,639 3,311,266 2,606,870 7,075,913 3,596,714 5,556,305 16,228,932 $ 4,599,878 $ 5,368,353 $ 8,867,571 $ 18,835,802 $ - $ - $ 2,900,518 $ 2,900,518 $ 341,892 431 (212,148) (536,744) 16,547 (38,759) 3,930 7,046 2,482,713 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Change in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in net OPEB asset Increase (decrease) in accounts payable Increase (decrease) in accrued expenses (Increase) decrease in deferred outflows Increase (decrease) in deferred inflows Increase (decrease) in net pension liability Increase (decrease) in net OPEB liability Net cash provided (used) by operating activities - $ 141 431 (28,532) (2,436,698) 16,547 (38,759) 3,930 7,046 (2,476,035) - 341,892 (253,952) 322,808 70,336 1,577,146 $ 1,647,482 $ 3,311,266 Other Supplementary Information BUDGETARY COMPARISON SCHEDULES 142 Combined Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual General, Debt Service, Special Revenue, Capital Projects and Enterprise Fund Types For the Fiscal Year Ended June 30, 2020 Revenues Taxes Intergovernmental Investment income Charges for services Fines and forfeitures Licenses and permits Other entities' participation Miscellaneous Contingency Total revenues Expenditures Current: Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Mayor and council Municipal court City manager City attorney Internal audit office Municipal budget office Economic development office Sustainability office Office of strategic management and diversity City clerk and elections Internal services Contingency Interdepartmental charges Debt Service: Principal Interest and fiscal fees Total expenditures Other financing sources (uses) Transfers from other funds Transfers to other funds Issuance of debt Proceeds (loss) from sale of capital assets Total other financing sources (uses) Net change in fund balance City of Tempe, Arizona Variance with Final Budget Positive (Negative) Final Budget Amounts Actual Amounts (Budgetary Basis) $ 234,560,291 95,012,642 4,880,000 136,368,095 9,880,506 4,543,000 7,408,839 27,485,258 3,985,108 524,123,739 $ 235,046,940 89,717,759 6,852,108 133,460,204 10,112,220 7,400,258 4,284,021 12,834,920 499,708,430 107,884,148 51,796,672 54,857,557 185,337,067 162,892,580 21,678,880 36,160,735 491,658 6,368,034 11,375,581 3,511,147 536,005 276,396 691,399 173,529 1,197,042 1,299,095 37,326,299 7,291,590 (17,285,154) 100,536,632 47,018,069 42,696,935 123,950,196 142,393,560 16,818,751 26,720,107 463,775 5,104,387 7,423,156 3,569,488 506,244 255,358 736,409 159,683 1,243,464 1,006,227 34,470,411 (16,460,551) 7,347,516 4,778,603 12,160,622 61,386,871 20,499,020 4,860,129 9,440,628 27,883 1,263,647 3,952,425 (58,341) 29,761 21,038 (45,010) 13,846 (46,422) 292,868 2,855,888 7,291,590 (824,603) 55,073,285 23,286,418 752,219,963 53,630,900 23,465,054 615,708,255 1,442,385 (178,636) 136,511,708 38,510,431 (36,850,356) 125,132,979 495,563 127,288,617 $ (100,807,607) 37,394,933 (37,972,055) 75,015,000 747,134 75,185,012 $ (40,814,813) (1,115,498) (1,121,699) (50,117,979) 251,571 (52,103,605) 59,992,794 143 $ $ 486,649 (5,294,883) 1,972,108 (2,907,891) 231,714 2,857,258 (3,124,818) (14,650,338) (3,985,108) (24,415,309) Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2020 Revenues: Property taxes Investment income Total revenues City of Tempe, Arizona $ Expenditures: Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Total other financing sources (uses) Net change in fund balance $ Final Budget Amounts Actual Amounts (Budgetary Basis) 30,177,956 30,177,956 $ 29,911,357 88,701 30,000,058 19,877,105 8,555,265 28,432,370 18,835,000 8,461,999 27,296,999 1,042,105 93,266 1,135,371 1,745,586 2,703,059 957,473 6,796,755 (8,962,907) (2,166,152) 6,719,323 (8,892,030) 165,000 (2,007,707) (77,432) 70,877 165,000 158,445 695,352 $ 1,115,918 (420,566) 144 $ Variance with Final BudgetPositive (Negative) $ (266,599) 88,701 (177,898) Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Special Assessment Debt Service Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Special assessments Miscellaneous Total revenues $ Expenditures: Debt service: Principal Interest and fiscal fees Total expenditures Net change in fund balance 2,207,768 2,207,768 $ 1,445,000 762,768 2,207,768 $ - $ 1,445,000 764,267 2,209,267 $ 145 1,576 2,442,290 5,636 2,449,502 Variance with Final BudgetPositive (Negative) 240,235 1,576 234,522 5,636 241,734 (1,499) (1,499) $ 240,235 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Performing Arts Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Sales taxes Charges for services Miscellaneous Total revenues $ Expenditures: Current: Community services Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balance $ 9,019,211 717,500 17,500 9,754,211 $ 9,131,870 564,706 11,447 9,708,023 Variance with Final BudgetPositive (Negative) $ 112,659 (152,794) (6,053) (46,188) 5,385,634 4,680,330 705,304 3,295,000 142,250 8,822,884 3,295,000 176,247 8,151,577 (33,997) 671,307 931,327 1,556,446 625,119 (1,226,438) (1,226,438) (1,226,438) (1,226,438) - (295,111) 146 $ 330,008 $ 625,119 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Highway User Revenue Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 12,543,685 122,500 2,000 12,668,185 $ 12,568,037 343,829 3,381 12,915,247 $ 11,715,566 11,715,566 9,828,082 9,828,082 1,887,484 1,887,484 Excess (deficiency) of revenues over expenditures 952,619 3,087,165 2,134,546 Other financing sources (uses): Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses) 1,500,000 (4,138,911) (2,638,911) 1,500,000 (4,154,243) 10,176 (2,644,067) (15,332) 10,176 (5,156) Net change in fund balance $ (1,686,292) Revenues: State sales tax Charges for services Miscellaneous Total revenues Expenditures: Current: Engineering and transportation Total expenditures 147 $ 443,098 $ 24,352 221,329 1,381 247,062 2,129,390 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Development Fund For the Fiscal Year Ended June 30, 2020 Revenues: Federal grants Investment income Miscellaneous Total revenues Expenditures: Current: Human services Debt service: Principal Interest and fiscal fees Total expenditures Net change in fund balance City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 6,952,507 1,959,380 8,911,887 $ 1,792,531 15,220 541,685 2,349,436 $ 6,929,655 2,022,595 4,907,060 442,000 67,380 7,439,035 442,000 63,918 2,528,513 3,462 4,910,522 $ 1,472,852 $ (179,077) 148 $ (5,159,976) 15,220 (1,417,695) (6,562,451) (1,651,929) Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Housing Assistance Fund For the Fiscal Year Ended June 30, 2020 Revenues: Federal grants Investment income Miscellaneous Total revenues City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 12,895,814 25,000 12,920,814 $ 10,855,859 36,398 83,833 10,976,090 $ (2,039,955) 36,398 58,833 (1,944,724) 12,920,814 12,920,814 10,482,673 10,482,673 2,438,141 2,438,141 Expenditures: Current: Human services Total expenditures Net change in fund balance $ - 149 $ 493,417 $ 493,417 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Housing Affordability Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Miscellaneous Total revenues $ Expenditures: Current: Human services Contingency Total expenditures Net change in fund balance 250,000 250,000 $ 28,000 250,000 278,000 $ (28,000) 150 339 339 Variance with Final BudgetPositive (Negative) $ 8,971 8,971 $ (8,632) 339 (250,000) (249,661) 19,029 250,000 269,029 $ 19,368 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Donations and Court Awards Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental other Investment income Charges for services Fines and forfeitures Miscellaneous Total revenues $ 12,000 183,812 452,203 4,565,525 5,213,540 Expenditures: Current: Fire medical rescue Community services Municipal Utilities Community development Human services Municipal court City manager Office of strategic management and diversity Contingency Total expenditures 93,056 836,500 5,000 710,032 666,333 1,344,559 239,387 2,000 1,316,673 5,213,540 Excess (deficiency) of revenues over expenditures - Net change in fund balance - 151 $ $ 2,000 18,541 311,367 342,615 445,560 1,120,083 Variance with Final BudgetPositive (Negative) $ (10,000) 18,541 127,555 (109,588) (4,119,965) (4,093,457) 33,880 169,943 65 201,560 198,149 390,531 43,282 1,037,410 59,176 666,557 4,935 508,472 468,184 954,028 196,105 2,000 1,316,673 4,176,130 82,673 82,673 82,673 $ 82,673 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Grants Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants State grants Intergovernmental other Investment income Charges for services Fines and forfeitures Miscellaneous Total revenues $ 2,682,543 1,306,697 5,452,279 10,500 271,800 8,542,143 18,265,962 $ 2,271,022 888,999 2,895,700 58 2,830 199,412 43,530 6,301,551 Variance with Final BudgetPositive (Negative) $ (411,521) (417,698) (2,556,579) 58 (7,670) (72,388) (8,498,613) (11,964,411) Expenditures: Current: Police Fire medical rescue Community services Municipal utilities Community development Human services Municipal court City manager City attorney Sustainability office Office of strategic management and diversity Contingency Total expenditures 6,194,429 917,380 1,105,706 500 7,155 2,110,071 217,422 4,075,477 70,000 14,000 157,591 3,176,053 18,045,784 3,374,665 364,896 238,093 1,583,076 58,289 577,150 17,846 132,301 6,346,316 2,819,764 552,484 867,613 500 7,155 526,995 159,133 3,498,327 52,154 14,000 25,290 3,176,053 11,699,468 Excess (deficiency) of revenues over expenditures 220,178 (44,765) (264,943) 29,786 (250,000) (220,214) 29,786 (175,000) (145,214) 75,000 75,000 Other financing uses: Transfers in Transfers out Total other financing uses Net change in fund balance $ 152 (36) $ (189,979) $ (189,943) Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Facilities District Fund For the Fiscal Year Ended June 30, 2020 Revenues: Charges for services Miscellaneous Total revenues City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ 2,775,891 200,000 2,975,891 $ 2,799,551 2,799,551 $ 3,175,690 2,413,597 762,093 2,530,000 514,250 6,219,940 2,615,000 300,516 5,329,113 (85,000) 213,734 890,827 (3,244,049) (2,529,562) 714,487 3,040,950 3,040,950 2,913,206 16,540 2,929,746 (127,744) 16,540 (111,204) Expenditures: Current: Community development Debt service: Principal Interest and fiscal fees Total expenditures Deficiency of revenues over expenditures Other financing sources: Transfers in Proceeds from sale of capital assets Total other financing sources Net change in fund balance $ (203,099) 153 $ 400,184 $ 23,660 (200,000) (176,340) 603,283 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Transit Capital Projects Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Intergovermental other Investment income Other entities' participation Contingency Total revenues $ 721,362 953,612 6,065,260 2,500,000 10,240,234 $ 3,081,657 15,769 462,537 3,559,963 Variance with Final BudgetPositive (Negative) $ 2,360,295 (953,612) 15,769 (5,602,723) (2,500,000) (6,680,271) Expenditures: Current: Engineering and transportation Total expenditures 51,086,550 51,086,550 30,352,417 30,352,417 20,734,133 20,734,133 Deficiency of revenues over expenditures (40,846,316) (26,792,454) 14,053,862 Other financing sources (uses): Transfers in Issuance of debt Total other financing sources (uses) 10,068,240 10,068,240 10,068,240 13,000,000 23,068,240 13,000,000 13,000,000 Net change in fund balance $ (30,778,076) (3,724,214) $ 27,053,862 154 $ Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Streets Capital Projects Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Intergovernmental other Investment income Charges for services Other entities' participation Contingency Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Deficiency of revenues over expenditures Other financing sources (uses): Transfers in Issuance of debt Total other financing sources (uses) Net change in fund balance $ 480,955 6,764 485,108 972,827 $ 503,973 197,802 3,456 13,556 701,764 1,420,551 Variance with Final BudgetPositive (Negative) $ 23,018 197,802 3,456 13,556 695,000 (485,108) 447,724 30,468,322 30,468,322 18,720,162 18,720,162 11,748,160 11,748,160 (29,495,495) (17,299,611) 12,195,884 4,134,000 9,248,305 13,382,305 4,149,388 6,800,000 10,949,388 15,388 (2,448,305) (2,432,917) (16,113,190) $ (6,350,223) 155 $ 9,762,967 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Police Protection Capital Projects Fund For the Fiscal Year Ended June 30, 2020 Revenues: Investment income Other entities' participation Total revenues Expenditures: Current: Police Total expenditures City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ $ $ - 50,231 900,941 951,172 50,231 900,941 951,172 7,031,564 7,031,564 3,422,041 3,422,041 3,609,523 3,609,523 (7,031,564) (2,470,869) 4,560,695 Other financing sources (uses): Transfers in Issuance of debt Total other financing sources (uses) 77,165 3,620,466 3,697,631 175,000 1,900,000 2,075,000 97,835 (1,720,466) (1,622,631) Net change in fund balance $ (3,333,933) (395,869) $ 2,938,064 Deficiency of revenues over expenditures 156 $ Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Fire Protection Capital Projects Fund For the Fiscal Year Ended June 30, 2020 Revenues: Investment income Other entities' participation Total revenues Expenditures: Current: Fire medical rescue Total expenditures City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ $ $ - 11,029 700,334 711,363 11,029 700,334 711,363 5,847,825 5,847,825 3,771,717 3,771,717 2,076,108 2,076,108 (5,847,825) (3,060,354) 2,787,471 Other financing sources(uses): Transfers in Issuance of debt Total other financing sources (uses) 700,000 972,301 1,672,301 700,000 800,000 1,500,000 (172,301) (172,301) Net change in fund balance $ (4,175,524) $ (1,560,354) $ 2,615,170 Deficiency of revenues over expenditures 157 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Storm Sewers Capital Projects Fund For the Fiscal Year Ended June 30, 2020 Revenues: Investment income Total revenues City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ $ $ - 1,840 1,840 1,840 1,840 Expenditures: Current: Engineering and transportation Total expenditures 992,824 992,824 294,485 294,485 698,339 698,339 Defiiency of revenues over expenditures (992,824) (292,645) 700,179 Other financing sources: Issuance of debt Total other financing sources 305,814 305,814 - (305,814) (305,814) Net change in fund balance $ (687,010) 158 $ (292,645) $ 394,365 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Parks Capital Projects Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Other entities' participation Miscellaneous Contingency Total revenues Expenditures: Current: Community services Total expenditures $ 447,500 1,000,000 1,447,500 $ 41,629 854,475 840 896,944 Variance with Final BudgetPositive (Negative) $ 41,629 406,975 840 (1,000,000) (550,556) 17,385,609 17,385,609 9,124,543 9,124,543 8,261,066 8,261,066 (15,938,109) (8,227,599) 7,710,510 Other financing sources (uses): Transfers in Issuance of debt Total other financing sources (uses) 7,367,863 7,367,863 32,000 5,800,000 5,832,000 32,000 (1,567,863) (1,535,863) Net change in fund balance $ (8,570,246) $ (2,395,599) $ 6,174,647 Deficiency of revenues over expenditures 159 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Development Capital Projects Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental Investment income Other entities' participation Total revenues $ - $ 3,500 35 54,917 58,452 Variance with Final BudgetPositive (Negative) $ 3,500 35 54,917 58,452 Expenditures: Current: Engineering and transportation Total expenditures 21,307,590 21,307,590 15,279,559 15,279,559 6,028,031 6,028,031 Deficiency of revenues over expenditures (21,307,590) (15,221,107) 6,086,483 Other financing sources (uses): Transfers in Issuance of debt Total other financing sources (uses) 4,474,416 7,830,477 12,304,893 4,634,416 6,700,000 11,334,416 160,000 (1,130,477) (970,477) Net change in fund balance $ (9,002,697) 160 $ (3,886,691) $ 5,116,006 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Signals Capital Projects Fund For the Fiscal Year Ended June 30, 2020 Revenues: Federal grants Investment income Other entities' participation Total revenues City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) $ $ $ 395,568 400,000 795,568 130,783 263 49,738 180,784 (264,785) 263 (350,262) (614,784) Expenditures: Current: Engineering and transportation Total expenditures 6,563,580 6,563,580 3,097,952 3,097,952 3,465,628 3,465,628 Deficiency of revenues over expenditures (5,768,012) (2,917,168) 2,850,844 Other financing sources (uses) : Issuance of debt Total other financing sources (uses) 2,194,756 2,194,756 2,000,000 2,000,000 (194,756) (194,756) Net change in fund balance $ (3,573,256) (917,168) $ 2,656,088 161 $ Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Facilities District Capital Projects Fund For the Fiscal Year Ended June 30, 2020 Revenues: Charges for services Total revenues Expenditures: Current: Community development Total expenditures Net change in fund balance City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) $ $ 593,000 593,000 2,039,272 2,039,272 $ (1,446,272) 162 586,776 586,776 Variance with Final BudgetPositive (Negative) $ 350,476 350,476 $ 236,300 (6,224) (6,224) 1,688,796 1,688,796 $ 1,682,572 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Water and Wastewater Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Fines and forfeitures Miscellaneous Total revenues $ Expenditures: Current: Municipal utilities Contingency Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 88,974,000 1,500,000 68,500 528,830 91,071,330 $ 85,212,961 1,933,772 348,897 87,495,630 Variance with Final BudgetPositive (Negative) $ (3,761,039) 433,772 (68,500) (179,933) (3,575,700) 143,111,906 1,000,000 122,651,668 - 20,460,238 1,000,000 25,269,180 11,335,911 180,716,997 24,783,900 11,654,536 159,090,104 485,280 (318,625) 21,626,893 (89,645,667) (71,594,474) 18,051,193 6,335,322 (7,114,997) 93,517,997 28,426 92,766,748 5,978,824 (7,043,142) 37,690,000 39,729 36,665,411 (356,498) 71,855 (55,827,997) 11,303 (56,101,337) (34,929,063) $ (38,050,144) 3,121,081 163 $ Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Solid Waste Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) $ 17,767,984 60,000 1,000 17,828,984 $ 18,394,311 114,537 18,508,848 19,347,904 500,000 19,847,904 19,041,183 19,041,183 306,721 500,000 806,721 Deficiency of revenues over expenditures (2,018,920) (532,335) 1,486,585 Other financing sources (uses): Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses) 977,122 (582,033) 110,000 505,089 400,000 (581,977) 31,672 (150,305) (577,122) 56 (78,328) (655,394) Revenues: Charges for services Investment income Miscellaneous Total revenues Expenditures: Current: Municipal Utilities Contingency Total expenditures Net change in fund balance $ (1,513,831) 164 $ (682,640) Variance with Final BudgetPositive (Negative) $ $ 626,327 54,537 (1,000) 679,864 831,191 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Emergency Medical Transportation Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Fines and forfeitures Miscellaneous Total revenues Expenditures: Current: Fire medical rescue Contingency Total expenditures Deficiency of revenues over expenditures Other financing uses: Transfers out Total other financing uses Net change in fund balance $ 3,698,939 165,000 3,863,939 $ 1,393 3,957,523 147,614 4,106,530 Variance with Final BudgetPositive (Negative) $ 1,393 258,584 (17,386) 242,591 4,217,078 150,000 4,367,078 3,082,256 3,082,256 1,134,822 150,000 1,284,822 (503,139) 1,024,274 1,527,413 (1,211,925) (1,211,925) (700,000) (700,000) 511,925 511,925 $ (1,715,064) 165 $ 324,274 $ 2,039,338 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Golf Fund For the Fiscal Year Ended June 30, 2020 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Miscellaneous Total revenues $ Expenditures: Current: Community services Total expenditures Deficiency of revenues over expenditures Other financing sources: Transfers in Issuance of debt Proceeds from sale of capital assets Total other financing sources Net change in fund balance $ 2,743,712 2,743,712 $ 2,780,200 12,077 2,792,277 Variance with Final BudgetPositive (Negative) $ 36,488 12,077 48,565 2,922,600 2,922,600 2,946,447 2,946,447 (23,847) (23,847) (178,888) (154,170) 24,718 74,000 75,000 149,000 74,000 10,356 84,356 (75,000) 10,356 (64,644) (29,888) 166 $ (69,814) $ (39,926) This section provides a broad range of trend data covering key financial indicators including general governmental revenues and expenditures, property taxes, debt burden, demographics and miscellaneous data useful in assessing the City’s financial condition. Statistical Section STATISTICAL SECTION The Statistical Section presents detailed information as a context for understanding the information in the financial statements, note disclosures and required supplementary information in regards to the City’s overall financial health. ▪ Financial Trends. These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. ▪ Revenue Capacity. These schedules contain information to help the reader assess the City’s most significant local revenue sources, property tax and sale and use taxes. ▪ Debt Capacity. These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. ▪ Economic and Demographic Information. These schedules offer economic and demographic indicators to help the reader understand the environment within which the City’s financial activities take place. ▪ Operating Information. These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 167 Net Position by Component (Exhibit S-1) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2020 Governmental activities Net investment in capital assets Restricted Unrestricted Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 523,422,276 99,053,439 85,960,972 $ 491,949,237 79,370,511 70,642,228 $ 483,438,668 102,808,694 13,318,115 $ 519,530,983 117,866,229 (22,136,687) $ 564,120,959 102,095,778 (26,820,571) $ 519,040,090 141,565,366 (18,763,531) $ 537,940,057 148,338,902 236,990,748 $ 548,739,169 119,845,935 253,302,947 $ 560,427,507 124,800,334 248,936,397 $ 571,925,061 114,643,888 259,250,692 Total governmental activities net position $ 708,436,687 $ 641,961,976 $ 599,565,477 $ 615,260,525 $ 639,396,166 $ 641,841,925 $ 923,269,707 $ 921,888,051 $ 934,164,238 $ 945,819,641 Business-type activities Net investment in capital assets Unrestricted $ 140,978,804 148,328,973 $ 124,836,951 153,206,243 $ 111,354,858 153,208,008 $ 104,387,674 151,904,179 $ 69,467,178 170,405,834 $ 142,208,059 90,577,933 $ 137,971,614 118,726,035 $ 149,782,240 105,207,407 $ 162,774,388 92,951,764 $ 175,625,967 73,018,010 Total business-type activities net position $ 289,307,777 $ 278,043,194 $ 264,562,866 $ 256,291,853 $ 239,873,012 $ 232,785,992 $ 256,697,649 $ 254,989,647 $ 255,726,152 $ 248,643,977 $ 664,401,080 99,053,439 234,289,945 $ 616,786,188 79,370,511 223,848,471 $ 594,793,526 102,808,694 166,526,123 $ 623,918,657 117,866,229 129,767,492 $ 633,588,137 102,095,778 143,585,263 $ 661,248,149 141,565,367 71,814,402 $ 675,911,671 148,338,902 355,716,783 $ 698,521,409 119,845,935 358,510,354 $ 723,201,895 124,800,334 341,888,161 $ 747,551,028 114,643,888 332,268,702 $ 997,744,464 $ 920,005,170 $ 864,128,343 $ 871,552,378 $ 879,269,178 $ 874,627,918 $ 1,179,967,356 $ 1,176,877,698 $ 1,189,890,390 $ 1,194,463,618 Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position 168 Changes in Net Position (Exhibit S-2a) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 107,096,572 49,941,616 36,442,527 102,020,829 506,510 18,005,337 26,614,653 5,257,225 461,629 7,455,774 3,724,210 516,840 269,344 771,575 174,109 1,186,219 1,036,845 19,779,369 1,716,431 9,921,992 $ 101,620,981 44,646,087 28,463,648 110,725,592 17,550,896 21,669,347 4,985,853 491,026 7,150,485 3,137,658 434,770 172,182 1,079,461 829,499 15,650,001 1,716,431 12,503,655 $ 107,357,688 40,900,261 29,739,525 102,940,790 --17,270,124 22,505,753 5,007,487 405,716 7,045,025 3,283,818 476,584 288,182 --981,169 979,356 16,749,283 1,716,725 11,817,213 $ 111,570,351 48,345,996 27,956,647 103,728,249 --16,521,932 17,777,825 4,909,370 473,324 6,815,022 3,160,056 376,249 261,313 --1,055,075 815,016 18,821,669 1,777,887 9,847,278 $ 93,057,663 34,319,479 27,402,656 112,589,913 --18,372,515 17,430,250 4,354,299 337,046 7,371,101 2,961,497 425,674 259,133 --868,596 8,252,013 1,785,487 12,924,841 $ 92,214,451 32,914,994 29,239,583 107,411,254 --18,832,177 13,374,117 4,028,068 330,042 7,045,783 3,712,245 433,339 415,774 --751,331 6,403,407 1,955,520 12,882,924 $ 78,658,426 31,103,237 29,363,339 102,892,245 --30,234,017 463,969 4,288,787 408,196 7,220,482 2,844,965 392,629 --844,934 7,343,357 1,331,649 17,153,207 $ 76,585,163 32,594,512 28,592,571 103,586,986 --26,757,509 449,428 3,900,928 223,472 7,654,913 2,963,058 393,471 --481,374 6,454,535 3,662,321 14,347,644 $ 76,799,591 28,156,863 31,069,618 98,915,390 --25,113,273 476,011 3,934,716 356,468 7,535,214 2,854,168 338,059 --910,616 7,890,835 2,301,194 14,894,293 $ 72,492,475 27,499,884 27,031,973 94,687,386 - - 30,778,689 447,287 4,179,694 316,531 5,020,144 2,659,312 477,080 - - 403,792 10,826,877 5,733,128 18,453,487 Total governmental activities expenses 392,899,606 372,827,572 369,464,699 374,213,259 342,712,163 331,945,009 314,543,439 308,647,885 301,546,309 301,007,739 Business-type activities: Water and wastewater Solid waste Emergency medical transportation (j) Golf course Cemetery (e) 77,716,351 16,909,091 4,295,939 3,038,086 - 77,906,953 15,791,378 2,966,379 2,937,558 - 76,903,243 17,494,354 3,026,686 2,802,184 - 70,364,126 15,918,430 2,520,474 - 75,515,527 14,881,636 2,734,351 - 73,548,319 15,868,498 2,685,634 - 73,208,373 15,379,174 2,799,922 - 72,352,330 14,758,133 2,724,422 - 72,156,412 14,626,578 2,658,416 129,849 67,505,481 13,784,106 2,011,316 176,553 Total business-type activities expenses 101,959,467 99,602,268 100,226,467 88,803,030 93,131,514 92,102,451 91,387,469 89,834,885 89,571,255 83,477,456 Total primary government expenses $ 494,859,073 $ 472,429,840 $ 469,691,166 $ 463,016,289 $ 435,843,677 $ 424,047,460 $ 405,930,908 $ 398,482,770 $ 391,117,564 $ 384,485,195 Expenses Governmental activities: Police Fire medical rescue Community services (a) Public works (a)(k) Engineering and transportation (k) Municipal utilities (k) Community development (b) Human services(h) Municipal court Mayor and council City manager (g)(h)(i) City attorney Internal audit office Municipal budget office (h) Economic development office (l) Sustainability office (l) Office of strategic management and diversity (i) City clerk and elections Internal services (c)(d)(f)(h) Unallocated depreciation Interest on long-term debt Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) In Fiscal Year 2011, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. (b) In Fiscal Year 2011, the Development Services department was merged into Community Development. (c) In Fiscal Year 2011, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. In Fiscal Year 2015, Finance and Technology was merged into the Internal Services department. (d) In Fiscal Year 2011, Tempe Learning Center was disaggregated from Human Resources. In Fiscal Year 2015, Finance and Technology was merged into the Internal Services department. (e) In Fiscal Year 2013, the Cemetery Fund was closed into the General Fund. (f) In Fiscal Year 2014, Tempe Learning Center was reincorporated into Human Resources. In Fiscal Year 2015, Human Resources was merged into the Internal Services department. (g) In Fiscal Year 2015, Economic Development and Community Relations became part of the City Manager's Office. (h) In Fiscal Year 2015, Finance and Technology and Human Resources were combined to form the Internal Services Department. A component of the Community Services Department along with Diversity formed a new department called Human Services. The budget office became a stand alone office now known as Municipal Budget Office. Economic Development and Community Relations became a part of the City Manager Office. (i) In Fiscal Year 2017, the Office of Strategic Management and Diversity was created. The Diversity office which was under the City Manager's office was moved into the new office. (j) In Fiscal Year 2018, the Emergency Medical Transportation Fund was established. (k) In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilites; Engineering and Transportation. (l) In Fiscal Year 2020, the Sustainability Office and the Economic Development Office were created. Both offices were previously part of the City Manager's office. 169 Changes in Net Position (Exhibit S-2b) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 Program Revenues Governmental activities: Charges for services: Police Fire medical rescue Community services (a)(e) Engineering and transportation (g) Municipal utilities (g) Public works (a)(g) Community development (b) Human services (e) Municipal court City manager (h) City attorney City clerk and elections Internal services (c) Operating grants and contributions Captital grants and contributions Total governmental activities program revenues $ 790,792 330,441 3,249,544 16,315,473 5,897 21,113,072 3,285,787 2,289,026 27,013 1,804,246 32,178,593 76,680,266 158,070,150 $ 1,298,812 200,378 7,714,161 17,797,231 14,283,336 10,031 4,457,922 23,487 2,056 2,827,988 34,467,594 39,638,190 122,721,186 $ 977,914 858,577 8,323,732 --16,011,590 15,684,471 9,501 3,559,861 19,361 3,140 3,000,921 30,237,598 4,094,624 82,781,290 $ 1,021,670 1,869,840 8,283,698 --16,585,374 13,250,819 7,820 5,852,849 7,597 16,940 1,797,928 27,582,362 6,355,742 82,632,639 $ 1,444,986 1,536,642 7,812,755 --17,740,856 12,665,828 13,926 6,372,719 14,174 2,186,635 26,831,238 8,091,341 84,711,100 $ 1,712,306 334,158 7,589,603 --19,786,216 13,065,445 80,237 8,302,032 2,212,402 19,784,859 7,258,243 80,125,501 $ 1,320,177 268,938 7,445,319 --19,681,176 12,035,033 6,747,891 2,224,489 24,668,792 5,933,017 80,324,832 $ 1,506,807 153,903 6,988,375 --18,536,983 6,815,190 6,426,389 13,310 2,140,898 27,287,325 6,551,849 76,421,029 $ 1,649,775 1,642,702 7,101,043 --18,136,860 7,088,168 7,826,823 2,623,338 22,450,002 15,961,785 84,480,496 $ 1,657,335 2,107,133 6,453,226 - - 19,582,397 4,484,572 8,413,798 8,682 2,624,190 22,131,520 24,708,317 92,171,170 Business-type activities: Charges for services: Water and wastewater Solid waste Emergency medical transportation (f) Golf course Cemetery (d) Capital grants and contributions Total business-type activities program revenues 85,057,003 18,394,311 4,375,755 2,780,200 110,607,269 85,339,513 17,306,244 3,442,151 2,626,308 108,714,216 87,807,953 16,706,706 2,280,247 2,387,362 109,182,268 86,273,324 16,274,287 2,322,777 104,870,388 81,265,973 15,319,833 2,575,908 99,161,714 78,043,384 14,216,743 2,755,966 95,016,093 80,989,551 14,400,476 2,661,519 98,051,546 74,979,069 14,341,827 2,480,815 91,801,711 73,392,328 14,866,281 2,344,355 144,242 1,988,550 92,735,756 70,094,034 15,326,780 1,562,489 110,196 1,691,429 88,784,928 Total primary government program revenues $ 268,677,419 $ 231,435,402 $ 191,963,558 $ 187,503,027 $ 183,872,814 $ 175,141,594 $ 178,376,378 $ 168,222,740 $ 177,216,252 $ 180,956,098 Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense $ (234,829,456) 8,647,802 $ (226,181,654) $ (250,106,386) 9,111,948 $ (240,994,438) $ (287,933,728) 10,206,120 $ (277,727,608) $ (291,580,620) 16,067,358 $ (275,513,262) $ (258,001,063) 6,030,200 $ (251,970,863) $ (251,819,508) 2,913,642 $ (248,905,866) $ (234,218,607) 6,664,077 $ (227,554,530) $ (232,226,856) 1,966,826 $ (230,260,030) $ (217,065,813) 3,164,501 $ (213,901,312) $ (208,836,569) 5,307,472 $ (203,529,097) Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) In Fiscal Year 2011, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. (b) In Fiscal Year 2011, the Development Services department was merged into Community Development. (c) In Fiscal Year 2011, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. In Fiscal Year 2015, Finance and Technology was merged into the Internal Services department. (d) In Fiscal Year 2013, the Cemetery Fund was closed into the General Fund. (e) In Fiscal Year 2015, a component of the Community Services department along with Diversity formed a new department called Human Services. (f) In Fiscal Year 2018, the Emergency Medical Transportation Fund was established. 170 Changes in Net Position (Exhibit S-2c) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 180,941,410 52,940,012 51,525,619 2,772,127 7,950,512 3,241,181 638,133 1,295,173 301,304,167 $ 177,596,413 48,024,343 48,706,817 3,036,531 7,936,949 5,924,186 674,569 603,077 292,502,885 $ 168,650,143 48,403,871 47,495,555 3,290,220 1,489,603 5,506,328 1,667,264 (1,454,082) 275,048,902 $ 160,218,570 44,671,765 45,308,519 3,182,193 662,115 5,435,113 7,538,846 427,858 267,444,979 $ 152,492,065 41,472,528 43,316,151 3,363,615 1,683,445 7,419,129 5,298,681 509,690 255,555,304 $ 147,787,315 40,571,933 41,457,646 2,933,239 889,594 5,042,875 2,170,917 479,071 241,332,590 $ 147,815,825 38,155,275 40,074,441 3,310,940 725,099 4,114,557 657,224 746,902 235,600,263 $ 149,078,044 21,684,320 38,644,241 3,253,175 278,102 2,987,769 261,764 3,763,255 219,950,670 $ 142,985,910 19,086,404 35,899,010 3,428,125 822,900 3,199,954 496,911 (508,805) 205,410,409 $ 141,844,739 21,562,285 35,501,233 3,821,436 1,229,447 2,991,971 133,677 293,418 207,378,206 3,504,059 326,138 81,757 (1,295,173) 2,616,781 3,614,531 1,124,986 231,940 (603,077) 4,368,380 697,388 651,500 33,015 (25,122) 1,356,781 351,831 299,116 128,394 (427,858) 351,483 841,726 152,428 572,356 (509,690) 1,056,820 488,477 142,914 247,296 (479,071) 399,616 436,821 1,643,570 52,947 (746,902) 1,386,436 115,362 923,413 21,149 (3,763,255) (2,703,331) 335,297 3,032,990 40,582 508,805 3,917,674 459,759 1,976,132 (5,563,191) (293,418) (3,420,718) $ 303,920,948 $ 296,871,265 $ 276,405,683 $ 267,796,462 $ 256,612,124 $ 241,732,206 $ 236,986,699 $ 217,247,339 $ 209,328,083 $ 203,957,488 $ 66,474,711 11,264,583 $ 77,739,294 $ 42,396,499 13,480,328 $ 55,876,827 $ $ (24,135,641) 16,418,841 $ (7,716,800) $ (2,445,759) 7,087,020 $ 4,641,261 $ (10,486,918) 3,313,258 $ (7,173,660) $ $ (12,276,186) (736,505) $ (13,012,691) $ (11,655,404) 7,082,175 $ (4,573,229) $ (1,458,363) 1,886,754 $ 428,391 General revenues and other changes in net position Governmental activities: General revenues: Sales taxes Intergovernmental revenue, unrestricted (a) Property taxes Franchise taxes Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Transfers Total governmental activities Business-type activites: Unrestricted investment earnings Miscellaneous Gain (loss) on sale of capital assets Transfers Total business-type activities Total primary government Changes in net position Governmental activities Business-type activities Total primary government 3,315,145 10,312,582 $ 13,627,727 $ 1,381,656 8,050,513 9,432,169 (a) To assist with comparability, in Fiscal Year 2015, State shared income taxes, unrestricted and Auto-lieu taxes were combined under the category Intergovernmental revenue, unrestricted . 171 Fund Balances, Governmental Funds (Exhibit S-3) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2020 General fund Fund balances: Non-spendable Restricted Committed Assigned Unassigned Total general fund All other governmental funds Fund balances: Non-spendable Restricted Committed Assigned Unassigned Total all other governmental funds Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 396,885 154,819 17,408,412 116,285,953 $ 134,246,069 $ 491,024 106,684 480,675 18,713,280 97,995,211 $ 117,786,874 $ 711,092 154,667 15,336,906 93,995,709 $ 110,198,374 $ 638,685 100,000 475,531 14,762,667 80,099,820 $ 96,076,703 $ 782,276 100,000 147,036 10,291,768 78,629,198 $ 89,950,278 $ 346,364 520,770 8,800,833 73,879,480 $ 83,547,447 $ 653,365 338,193 9,884,517 63,878,841 $ 74,754,916 $ 643,980 8,127,268 52,658,705 $ 61,429,953 $ 634,526 9,967,268 50,954,570 $ 61,556,364 $ $ $ $ $ $ $ $ $ $ $ 1,458,623 68,712,850 39,133,751 23,310,919 (1,777,702) $ 130,838,441 1,527,574 65,121,669 46,353,146 12,308,616 (1,442,236) $ 123,868,769 1,553,045 80,434,422 39,232,880 11,261,680 (296,755) $ 132,185,272 1,623,799 88,581,119 26,744,884 15,774,827 $ 132,724,629 172 1,594,761 82,863,821 20,404,290 15,186,266 (2,856,351) $ 117,192,787 1,952,950 80,049,732 21,925,153 15,935,817 (2,922,001) $ 116,941,651 1,947,082 77,724,151 14,295,999 15,326,386 (673,217) $ 108,620,401 1,733,749 75,566,724 19,054,131 14,817,549 (571,299) $ 110,600,854 1,765,739 76,139,830 67,195,597 11,707,666 (1,733,419) $ 155,075,412 650,506 13,783,790 39,604,103 $ 54,038,399 1,826,335 75,275,738 75,446,158 10,614,331 (1,097,095) $ 162,065,467 Changes in Fund Balance, Governmental Funds (Exhibit S-4a) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Revenues: Taxes Intergovernmental Investment earnings Charges for services Fines and forfeitures Other entities' participation Special assessments Licenses and permits Miscellaneous Total revenues Expenditures: Police Fire medical rescue Community services (a) Public works (a)(i) Engineering and transportation (i) Municipal utilities (i) Community development (b) Human services (g) Municipal court Mayor and council City manager (f)(g) City attorney Internal audit office Municipal budget office (g) Economic development office (j) Sustainability office (j) Office of strategic management and diversity (h) City clerk and elections Internal services (c)(d)(e)(g) Debt service: Capital outlay Total expenditures Deficiency of revenues over expenditures before other financing sources (uses) Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 222,478,903 101,776,973 7,950,512 27,538,387 6,154,697 4,755,503 2,442,290 7,400,258 9,453,724 389,951,247 $ 216,680,985 99,111,729 7,936,949 29,552,529 7,191,904 3,778,658 1,990,732 6,951,095 9,005,664 382,200,245 $ 207,580,582 90,577,368 1,489,603 30,445,583 7,670,630 5,972,968 2,027,722 8,330,276 8,502,999 362,597,731 $ 197,341,071 89,383,867 662,115 30,134,108 8,982,209 1,916,336 2,173,798 5,446,638 8,761,291 344,801,433 $ 188,672,865 85,856,572 1,683,445 31,752,038 9,357,450 1,751,971 2,439,086 6,308,241 9,867,156 337,688,824 $ 182,323,977 78,988,805 889,594 33,520,741 9,986,226 1,093,272 3,862,306 6,828,905 8,197,929 325,691,755 $ 182,032,821 74,692,323 725,099 33,268,236 8,909,849 174,954 3,605,932 6,638,496 6,707,484 316,755,194 $ 168,974,511 76,651,736 278,102 30,183,216 8,537,078 196,106 4,442,862 3,856,216 4,908,914 298,028,741 $ 162,157,488 72,701,235 822,900 29,451,269 8,198,638 3,542,185 2,526,283 3,814,753 7,021,832 290,236,583 $ 158,749,333 87,180,913 1,229,966 28,981,943 8,235,437 622,543 3,867,979 2,969,580 7,209,565 299,047,259 96,427,720 40,622,999 30,336,733 54,873,909 377,524 16,438,644 26,679,827 5,105,605 457,553 7,427,628 3,571,789 506,977 255,729 738,759 160,406 1,244,678 1,006,212 18,004,773 58,930,015 60,975,054 424,142,534 93,078,088 38,797,039 25,228,594 79,092,222 -16,624,962 26,244,724 5,133,357 495,829 7,397,648 3,515,785 459,746 261,798 -1,088,773 910,335 15,716,010 52,638,429 53,518,221 420,201,560 87,341,647 33,159,702 25,507,377 72,517,143 -16,408,645 20,428,462 5,158,342 403,658 7,182,164 3,261,843 490,396 294,404 -987,828 995,339 16,263,826 56,003,073 32,418,674 378,822,523 82,429,673 31,383,875 23,770,512 70,604,468 -15,336,696 17,589,585 4,886,110 417,734 6,800,149 3,098,124 408,867 262,696 -932,200 752,876 16,334,235 51,804,698 30,298,582 357,111,080 81,154,550 30,724,706 22,516,873 73,771,025 -16,321,778 17,388,871 4,262,778 342,645 7,292,703 2,920,857 403,108 236,768 -850,235 7,433,821 43,479,767 45,373,210 354,473,695 78,102,044 26,802,154 22,240,413 72,414,122 -17,432,661 13,471,552 4,058,927 345,501 6,583,633 3,790,479 432,384 323,676 -751,978 7,232,975 55,229,594 49,626,981 358,839,074 75,135,489 28,887,609 25,579,134 72,739,804 --29,460,993 451,293 4,325,838 368,846 7,549,687 2,912,507 426,006 --885,350 7,624,841 40,189,299 24,192,621 320,729,317 72,709,534 28,056,149 24,551,075 70,784,480 25,253,707 441,212 3,830,508 244,837 8,124,262 3,037,216 388,263 511,960 5,806,644 137,910,235 20,874,698 402,524,780 67,325,484 25,871,390 23,473,722 66,845,601 23,572,565 457,292 3,874,634 440,161 7,697,656 2,648,388 393,958 899,917 5,659,471 41,250,153 29,512,675 299,923,067 65,289,995 25,639,288 22,010,148 67,998,367 22,946,249 427,103 4,051,517 318,282 5,299,616 2,564,283 379,752 395,778 8,565,765 45,051,909 35,348,520 306,286,572 $ (34,191,287) $ (38,001,315) $ (16,224,792) $ (12,309,647) $ (16,784,871) $ (33,147,319) (3,974,123) $(104,496,039) $ $ (9,686,484) $ (7,239,313) Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) In Fiscal Year 2011, the Parks and Recreation department was split; the Parks component was merged into Public Works and the Recreation component was merged into Community Services. (b) In Fiscal Year 2011, the Development Services department was merged into Community Development. (c) In Fiscal Year 2011, the Financial Services department and the Information Technology department were merged into one department, Finance and Technology. In Fiscal Year 2015, Finance and Technology was merged into the Internal Services department. (d) In Fiscal Year 2011, Tempe Learning Center was disaggregated from Human Resources. (e) In Fiscal Year 2014, Tempe Learning Center was reincorporated into Human Resources. In Fiscal Year 2015, Human Resources was merged into the Internal Services department. (f) In Fiscal Year 2015, Economic Development and Community Relations became part of the City Manger's Office. (g) In Fiscal Year 2015, Finance & Technology and Human Resources were combined to form the Internal Services Department. A component of the Community Services Department along with Diversity formed a new department called Human Services. The budget office became a stand alone department now known as Municipal Office. Economic Development and Community Relations became a part of the City Manager Office. (h) In Fiscal Year 2017, the Office of Strategic Management and Diversity was created. The Diversity office which was under the City Manager's office was moved into the new office. (i) In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilites; Engineering and Transportation. (j) In Fiscal Year 2020, the Sustainability Office and the Economic Development Office were created. Both offices were previously part of the City Manager's office. 173 Changes in Fund Balance, Governmental Funds (Exhibit S-4b) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Capital lease proceeds Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded/defeased bond escrow agent Total other financing sources Net change in fund balances Debt service as a percentage of noncapital expenditures Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 $ 30,942,109 (29,646,936) 37,325,000 74,604 665,377 18,260,000 $ 38,729,874 (38,126,797) 27,130,000 5,655,061 1,220,174 2,665,000 $ 42,297,460 (43,372,403) 25,025,000 4,083,395 87,798 1,685,856 - $ 27,870,785 (27,442,927) 12,290,000 1,754,028 4,483,481 34,095,000 $ 30,410,514 (29,900,824) 13,630,000 5,413,632 5,350,923 34,422,798 $ 26,437,046 (25,957,975) 43,965,000 1,269,813 111,827 2,189,572 6,780,000 $ 22,217,580 (21,470,678) 11,650,000 880,967 663,658 5,645,000 $ 67,438,620 (68,806,307) 13,675,000 6,392,968 270,346 53,910,000 $ 18,104,564 (18,613,369) 7,005,000 6,668,536 534,963 45,181,900 $ 16,912,259 (16,618,841) 13,146,000 2,401,827 110,617 328,593 26,040,000 57,620,154 37,273,312 29,807,106 (19,082,453) 33,967,914 (35,888,204) 23,438,839 (4,534,184) 50,261,099 (4,267,894) 15,318,633 (12,985,558) 59,895,069 (48,667,199) 10,214,395 (27,936,582) 14,383,873 (728,003) $ 13,582,314 $ 21,658,267 6,653,968 $ 17,113,780 $ 11,344,510 $ (44,600,970) 527,911 $ 14,383,873 14.2% 16.5% 15.5% 13.8% 17.6% 13.4% 14.5% 16.0% $ 23,428,867 15.8% $ $ 35.7% (a) (a) In Fiscal Year 2013 the substantial increase in the Debt Service as a Percentage of Non-capital Expenditures was due to debt service expenditures containing the Transit Fund defeasance of the 2006 Variable Rate Demand Excise Tax Revenue Obligations ($53,670,000) and a current refunding of the 2007 Variable Rate Demand Excise Tax Revenue Obligations ($45,295,000). 174 $ Taxable Sales and Percentage of Taxable Sales by Category (Exhibit S-5) Last Ten Fiscal Years Cash Basis City of Tempe, Arizona Taxable Sales Fiscal Year Retail 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 3,117,950,000 3,248,736,000 3,387,223,000 3,566,605,000 3,898,027,000 4,057,021,000 4,323,056,000 4,693,944,000 4,855,444,000 5,075,059,000 Utilities and Telecommunications Rental $ 1,133,200,000 1,175,200,000 1,200,932,000 1,197,308,000 1,277,164,000 1,342,058,000 1,391,167,000 1,484,611,000 1,669,278,000 1,734,138,000 $ 515,000,000 522,095,000 533,915,000 557,844,000 583,788,000 548,882,000 539,500,000 452,167,000 442,278,000 427,008,000 Amusements All Other Total City Direct Sales Tax Rate Restaurant Contracting Hotel and Motel $ 479,150,000 514,519,000 524,813,000 574,888,000 628,169,000 656,237,000 679,889,000 738,056,000 752,778,000 678,918,000 $ 298,450,000 341,542,000 340,870,000 404,398,000 701,314,000 653,818,000 654,944,000 731,333,000 784,278,000 853,617,000 $ 112,600,000 123,981,000 123,629,000 135,525,000 159,255,000 166,167,000 184,389,000 167,167,000 182,056,000 156,197,000 $ 89,850,000 87,663,000 78,580,000 82,928,000 82,680,000 89,261,000 96,056,000 77,000,000 86,944,000 68,804,000 $ 68,550,000 66,141,000 80,020,000 71,660,000 74,754,000 75,989,000 75,667,000 59,444,000 60,778,000 52,347,000 $ 5,814,750,000 6,079,877,000 6,269,982,000 6,591,156,000 7,405,151,000 7,589,433,000 7,944,668,000 8,403,722,000 8,833,834,000 9,046,088,000 Restaurant Contracting Hotel and Motel Amusements All Other Total Percentage of Taxable Sales Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Retail 53.62 % 53.43 54.04 54.11 52.64 53.46 54.42 55.86 54.96 56.10 Rental 19.49 % 19.33 19.15 18.17 17.25 17.68 17.51 17.67 18.90 19.17 Utilities and Telecommunications 8.86 % 8.59 8.52 8.46 7.88 7.23 6.79 5.38 5.01 4.72 8.24 % 8.46 8.37 8.72 8.48 8.65 8.56 8.78 8.52 7.51 5.13 % 5.60 5.40 6.14 9.47 8.61 8.24 8.70 8.88 9.44 1.94 % 2.04 1.97 2.06 2.15 2.19 2.32 1.99 2.06 1.73 Source: City of Tempe, Arizona Tax and License Division Note: In Fiscal Year 2011, City of Tempe, Arizona voters approved a 0.2% temporary (4 years) increase in the City sales tax. The tax expired on June 30, 2014. 175 1.55 % 1.44 1.25 1.26 1.12 1.18 1.21 0.92 0.98 0.76 1.17 % 1.11 1.30 1.08 1.01 1.00 0.95 0.71 0.69 0.57 100 % 100 100 100 100 100 100 100 100 100 2.00 % 2.00 2.00 2.00 1.80 1.80 1.80 1.80 1.80 1.80 Direct and Overlapping Sales Tax Rates (Exhibit S-6) Last Ten Fiscal Years City of Tempe, Arizona City Sales Tax Rates Fiscal Year 2011 (a) 2012 2013 (b) 2014 2015 (c) 2016 2017 2018 2019 2020 General Fund Sales Tax Rate Transit Special Revenue Fund Sales Tax Rate Preforming Arts Special Revenue Fund Sales Tax Rate 1.40 % 1.40 1.40 1.40 1.20 1.20 1.20 1.20 1.20 1.20 0.50 % 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.10 % 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 Total City Direct Sales Tax Rate 2.00 % 2.00 2.00 2.00 1.80 1.80 1.80 1.80 1.80 1.80 Maricopa County Sales Tax Rate 0.70 % 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 State Sales Tax Rate 6.60 % 6.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 5.60 Source: City of Tempe, Arizona Tax and License Division (a) (b) (c) In Fiscal Year 2011, City of Tempe, Arizona voters approved a 0.2% temporary (4 years) increase in the City sales tax. In Fiscal Year 2013, State of Arizona decreased the State sales tax rate by 1.0%, effective June 1, 2013. In Fiscal Year 2015, the City of Tempe, Arizona voters approved 0.2% temporary sales tax expired, effective June 30, 2014. 176 Total Sales Tax Rate 9.30 % 9.30 8.30 8.30 8.10 8.10 8.10 8.10 8.10 8.10 General Property Tax Information (Exhibit S-7) City of Tempe, Arizona Tax Levy Limitations Beginning in 1980-81, the total tax levy is comprised of two elements: a primary levy for operating costs and a secondary levy for general obligation bond debt service requirements. The primary levy was limited to a 7% increase for 1980-81 and a 2% annual increase thereafter. In addition, the primary levy on residential property only is limited to an amount not more than 1% of market value. The secondary levy is unlimited. Assessments and Collections Since 1950-51, Maricopa County, at no charge to the cities, has assessed and collected all municipal property taxes. Remittances are made to the respective cities periodically as collections accrue. Taxes Due First installment is due October 1st; second installment is due March 1st. Taxes Payable City property taxes are payable at the office of the County Treasurer. Taxes for the first half of the year can be paid on the first of September through the first of November. Second half taxes can be paid on the first of March through the first of May. Taxes Delinquent The first half becomes delinquent on the first day of November at 5 p.m. The second half becomes delinquent on the first day of May at 5 p.m. Interest at the rate of 16% per annum attaches on the first and second installments following the delinquent dates. Tax Sale The sale of delinquent tax bills is begun on a date not earlier than February 1 nor later than March 1 following the May 1 date upon which the second half taxes become delinquent. The sale is made at public auction in the office of the County Treasurer. Tax bills are sold to the highest bidder who offers to pay the accumulated amount of tax and to charge thereon the lowest rate of interest. The maximum amount of interest allowed by law is 12% per annum. The purchaser is given a Certificate of Purchase for each parcel. Tax Deed Five years subsequent to the tax sale, the holder of a Certificate of Purchase which has not been redeemed by the delinquent property owner may demand a County Treasurer's Deed. However, at the end of three full years, a holder of a Certificate of Purchase may institute quiet title action and the court will instruct the County Treasurer to issue a County Treasurer's Deed if the suit is successful. Redemption Redemption may be made by the delinquent property owner or any interested party by payment in full of all accumulated charges at any time before issuance of the tax deed. Payment may be made to the County Treasurer. 177 Primary and Secondary Assessed Value and Estimated Actual Value of Taxable Property (Exhibit S-8) Last Ten Fiscal Years Rate per $100 of Assessed Value City of Tempe, Arizona Commercial, Manufacturing, Telecommunications Property Fiscal Year Vacant, Agricultural & Governmental Property $ Owner Occupied Residential Property Rental Residential Property Railroad & Airlines Property Non-commercial Historic Property Less: Tax-Exempt Property 491,365,479 598,845,876 $ 714,116,748 718,136,239 $ 297,885,542 321,946,932 $ 2,487,354 2,984,727 $ 6,031,888 8,869,602 $ 664,036,520 772,654,291 2011 Primary Secondary $ 1,516,407,070 1,634,522,147 2012 Primary Secondary 1,215,073,855 1,225,527,325 507,897,174 558,393,732 601,231,081 601,912,854 260,011,506 261,295,232 2,447,610 2,740,384 5,848,137 7,897,668 652,320,790 700,438,585 2013 Primary Secondary 1,134,332,461 1,140,686,523 474,229,052 492,511,871 499,166,936 499,439,182 222,440,746 222,488,879 2,784,852 2,839,643 5,609,483 7,054,535 2014 Primary Secondary 1,013,888,495 1,019,499,265 590,348,150 627,596,276 422,097,495 422,373,499 237,011,004 245,942,542 2,470,685 2,494,792 2015 Primary Secondary 1,018,312,716 1,030,441,480 582,528,256 605,931,213 445,788,470 472,413,709 279,658,188 317,364,940 2016 Primary Secondary 1,040,045,065 1,119,535,292 604,094,072 681,597,591 458,995,411 569,311,744 2017 Primary Secondary 1,066,869,523 1,066,869,523 604,354,126 604,354,126 2018 Primary Secondary 1,121,945,426 1,121,945,426 2019 Primary Secondary 2020 Primary Secondary Total Direct Tax Rate Net Taxable Assessed Value $ 2,364,257,561 2,512,651,232 $ Estimated Total Actual Value (a) Assessed Value as a Percentage of Actual Value 0.52 0.88 $ 16,647,684,537 17,474,298,161 14.20 % 14.38 1,940,188,573 1,957,328,610 0.66 1.13 14,108,227,934 14,184,312,548 13.75 13.80 650,548,735 667,783,593 1,688,014,795 1,697,237,040 0.79 1.35 12,115,273,950 12,149,064,435 13.93 13.97 5,503,454 7,172,229 769,883,275 811,779,331 1,501,436,008 1,513,299,272 0.92 1.57 10,969,708,459 11,047,136,814 13.69 13.70 2,626,349 2,652,015 5,660,031 7,102,655 786,460,357 812,188,311 1,548,113,653 1,623,717,701 0.92 1.51 11,632,254,953 12,317,499,077 13.31 13.18 303,832,779 395,569,487 2,453,154 2,501,825 5,495,047 6,440,828 820,971,174 901,610,148 1,593,944,354 1,873,346,619 0.93 1.59 12,152,815,646 14,573,138,077 13.12 12.85 480,671,687 480,671,687 340,922,305 340,922,305 2,213,159 2,213,159 5,507,068 5,507,068 831,185,771 831,185,771 1,669,352,097 1,669,352,097 0.94 1.59 12,936,980,827 16,688,127,422 12.90 10.00 655,920,933 655,920,933 502,268,412 502,268,412 378,171,085 378,171,085 2,238,277 2,238,277 5,400,480 5,400,480 891,707,903 891,707,903 1,774,236,710 1,774,236,710 0.92 1.57 13,773,672,226 17,858,194,237 12.88 9.94 1,130,477,624 1,130,477,624 701,270,049 701,270,049 528,812,064 528,812,064 404,759,028 404,759,028 2,063,797 2,063,797 3,229,286 3,229,286 907,642,388 907,642,388 1,862,969,460 1,862,969,460 0.92 1.50 14,500,815,905 19,292,541,580 12.85 9.66 1,226,011,101 1,226,011,101 724,469,285 724,469,285 549,262,440 549,262,440 452,477,990 452,477,990 2,106,703 2,106,703 5,460,842 5,460,842 949,264,953 949,264,953 2,010,523,408 2,010,523,408 0.90 1.50 15,652,812,327 21,407,207,731 12.84 9.39 Source: Arizona Departmart of Revenue - State and County Abstract of the Assessment Roll Maricopa County Tax Levy. Maricopa County Tax Levy - Schedule B & C: Cities and Towns Tax Levies, Primary & Secondary Note: The total tax levy was comprised of two elements: a primary levy for operating costs and a secondary levy for general obligation bond debt service requirements. The primary levy is limited to a 2% increase plus new construction. The secondary levy is unlimited. In Fiscal Year 2016, with the passage of Proposition 117, the limited property tax value is required to be used in determining and levying primary and secondary taxes on all property. Prior to Fiscal Year 2016, the primary levy was based on the limted property tax value and the secondary levy was based on the secondary property tax value. (a) Estimated Total Actual Value is the calculated value of the actual full cash value net of estimated value of property exempt from taxation. 178 Property Tax Rates - All Direct and Overlapping Governments (Exhibit S-9) Last Ten Fiscal Years Rate per $100 of Assessed Value City of Tempe, Arizona Fiscal Year 2011 2012 City of Tempe (a) Primary Secondary Total $ 0.52 0.88 1.40 Tempe Union $ 1.47 0.83 2.30 Schools Tempe Elementary (b) East Valley Institute of Technology Maricopa County Community College County Ed Equalization Rate $ $ $ $ $ 2.31 1.29 3.60 0.05 0.05 1.05 1.05 0.79 0.18 0.97 0.36 0.36 County-Wide Jurisdiction Central Fire Flood Arizona District District Water Assistance $ $ 0.15 0.15 0.10 0.10 $ 0.01 0.01 County Library District $ 0.04 0.04 Special Health Care District $ 0.11 0.11 $ 6.61 3.53 10.14 Primary Secondary Total 0.66 1.13 1.79 1.61 0.96 2.57 2.65 1.34 3.99 0.05 0.05 1.24 1.24 1.01 0.20 1.21 0.43 0.43 0.18 0.18 0.10 0.10 0.01 0.01 0.05 0.05 - Primary Secondary Total 0.79 1.35 2.14 1.81 0.61 2.42 3.18 2.39 5.57 0.05 0.05 1.24 1.24 1.16 0.22 1.38 0.47 0.47 0.18 0.18 0.10 0.10 0.01 0.01 0.05 0.05 - Primary Secondary Total 0.92 1.57 2.49 2.01 0.64 2.65 3.22 2.94 6.16 0.05 0.05 1.28 1.28 1.29 0.24 1.53 0.51 0.51 0.14 0.14 0.14 0.14 0.01 0.01 0.04 0.04 - Primary Secondary Total 0.92 1.51 2.43 2.43 0.63 3.06 3.30 2.45 5.75 0.05 0.05 1.32 1.32 1.28 0.24 1.52 0.51 0.51 0.14 0.14 0.14 0.14 0.01 0.01 0.06 0.06 0.19 9.95 5.23 15.18 2016 Primary Secondary Total 0.93 1.59 2.52 2.22 0.66 2.88 3.22 2.25 5.47 0.05 0.05 1.36 1.36 1.26 0.23 1.49 0.51 0.51 0.16 0.16 0.14 0.14 0.01 0.01 0.06 0.06 0.19 0.11 0.30 9.69 5.26 14.95 2017 Primary Secondary Total 0.94 1.59 2.53 2.24 0.66 2.90 3.09 2.20 5.29 0.05 0.05 1.40 1.40 1.24 0.23 1.47 0.50 0.50 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.20 0.11 0.31 9.61 5.23 14.84 2018 Primary Secondary Total 0.92 1.57 2.49 2.06 0.60 2.66 2.96 2.09 5.05 0.05 0.05 1.40 1.40 1.20 0.21 1.41 0.49 0.49 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.20 0.09 0.29 9.23 5.00 14.23 2019 Primary Secondary Total 0.92 1.50 2.42 1.99 0.66 2.65 2.05 2.85 4.90 0.05 0.05 1.40 1.40 1.17 0.20 1.37 0.47 0.47 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.19 0.10 0.29 8.19 5.75 13.94 2020 Primary Secondary Total 0.90 1.50 2.40 1.93 0.64 2.57 2.70 2.01 4.71 0.05 0.05 1.40 1.40 1.16 0.17 1.33 0.46 0.46 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.19 0.15 0.34 8.74 4.92 13.65 2013 2014 2015 Source: Maricopa County Assessor's Office Maricopa County Tax Levy Publication (a) Primary levies are limited to a 2% increase annually plus levies attributable to assessed valuation added as a result of growth and annexation. Secondary tax levies do not have a limitation. (b) Tempe property owners residing within the Kyrene Elementary School District No. 28, Scottsdale Unified School District No. 48 or Mesa Unified School District No. 4 have combined rates of $12.81, $12.59 or $15.93, respectively. Also, see the Direct and Overlapping Governmental Activities Debt- Property Tax Supported Schedule (Exhibit S-17). 179 0.15 Total 0.15 0.17 0.17 0.19 0.19 0.19 7.75 4.02 11.77 8.82 4.96 13.78 9.42 5.77 15.19 Property Tax Levies - All Direct and Overlapping Governments (Exhibit S-10) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year Tempe Union Schools Tempe Elementary (a) 12,238,972 22,174,672 34,413,644 $ 64,028,512 38,435,006 102,463,518 $ 44,984,350 26,867,644 71,851,994 City of Tempe $ East Valley Institute of Technology $ Maricopa County Community College 10,970,238 10,970,238 $ 492,224,342 492,224,342 $ 371,276,183 89,482,591 460,758,774 2011 Primary Secondary Total 2012 Primary Secondary Total 12,751,029 22,100,197 34,851,226 58,076,820 34,886,097 92,962,917 41,459,414 21,157,373 62,616,787 8,672,478 8,672,478 477,571,468 477,571,468 2013 Primary Secondary Total 13,271,172 23,000,956 36,272,128 56,711,827 19,078,254 75,790,081 42,911,003 32,431,353 75,342,356 7,428,442 7,428,442 2014 Primary Secondary Total 13,778,678 23,766,365 37,545,043 56,857,111 18,307,254 75,164,365 38,477,473 35,425,302 73,902,775 2015 Primary Secondary Total 14,324,634 24,609,512 38,934,146 71,480,977 19,247,913 90,728,890 2016 Primary Secondary Total 14,877,877 25,281,551 40,159,428 2017 Primary Secondary Total 2018 Flood District $ County-Wide Jurisdictions County Ed Central Equalization Arizona Rate Water $ 49,581,306 49,581,306 Fire District Assistance $ 3,265,310 3,265,310 Special Health Care District Total 20,479,676 20,479,676 $ 55,722,300 55,722,300 $ 1,207,422,466 329,276,035 1,536,698,501 68,019,592 68,019,592 $ 166,947,807 166,947,807 389,655,514 75,935,239 465,590,753 62,401,172 62,401,172 163,937,848 163,937,848 38,781,832 38,781,832 3,251,752 3,251,752 19,070,066 19,070,066 57,895,470 57,895,470 1,201,347,563 286,256,206 1,487,603,769 425,111,491 425,111,491 396,192,808 76,200,590 472,393,398 54,584,578 54,584,578 161,622,544 161,622,544 34,465,535 34,465,535 3,782,401 3,782,401 16,925,024 16,925,024 57,895,470 57,895,470 1,153,716,315 267,897,133 1,421,613,448 7,214,753 7,214,753 409,775,397 409,775,397 412,623,059 78,752,950 491,376,009 39,842,985 39,842,985 163,916,558 163,916,558 45,136,223 45,136,223 3,913,249 3,913,249 14,116,305 14,116,305 62,499,144 62,499,144 1,157,927,420 266,475,386 1,424,402,806 40,508,811 31,649,661 72,158,472 7,676,815 7,676,815 442,762,977 442,762,977 429,857,856 82,901,341 512,759,197 43,660,332 43,660,332 170,582,239 170,582,239 49,076,612 49,076,612 3,946,541 3,946,541 19,504,284 19,504,284 65,124,108 65,124,108 1,234,641,602 282,273,011 1,516,914,613 67,301,586 19,895,071 87,196,657 40,281,153 28,161,726 68,442,879 7,614,014 7,614,014 471,193,529 471,193,529 437,227,709 80,036,848 517,264,557 49,512,136 49,512,136 174,988,030 174,988,030 48,660,147 48,660,147 4,013,398 4,013,398 19,250,761 19,250,761 67,273,204 37,341,000 104,614,204 1,273,143,088 319,766,652 1,592,909,740 15,690,240 26,577,755 42,267,995 70,920,943 20,881,916 91,802,859 40,273,959 28,658,765 68,932,724 8,034,256 8,034,256 506,222,142 506,222,142 447,212,880 82,211,035 529,423,915 58,463,580 58,463,580 181,352,524 181,352,524 50,677,352 50,677,352 4,030,569 4,030,569 20,091,335 20,091,335 70,777,141 39,747,000 110,524,141 1,332,449,829 339,373,563 1,671,823,392 Primary Secondary Total 16,404,593 27,834,226 44,238,819 68,659,932 19,909,974 88,569,906 40,876,811 28,971,774 69,848,585 8,489,725 8,489,725 535,870,745 535,870,745 457,339,611 81,872,034 539,211,645 62,198,813 62,198,813 186,400,980 186,400,980 53,530,745 53,530,745 3,893,879 3,893,879 21,268,052 21,268,052 73,820,558 35,191,536 109,012,094 1,379,373,230 343,160,758 1,722,533,988 2019 Primary Secondary Total 17,118,826 28,030,238 45,149,064 69,668,285 23,042,843 92,711,128 29,725,536 41,355,451 71,080,987 9,005,606 9,005,606 566,289,063 566,289,063 473,275,205 82,713,190 555,988,395 66,310,571 66,310,571 191,959,243 191,959,243 56,684,864 56,684,864 4,319,354 4,319,354 22,475,317 22,475,317 76,921,021 42,153,890 119,074,911 1,424,957,179 376,091,324 1,801,048,503 2020 Primary Secondary Total 18,114,816 30,177,956 48,292,772 72,156,009 23,880,002 96,036,011 42,303,940 31,468,300 73,772,240 9,617,828 9,617,828 605,109,318 605,109,318 499,542,385 74,279,486 573,821,871 70,887,943 70,887,943 196,326,940 196,326,940 60,196,609 60,196,609 4,082,918 4,082,918 24,016,045 24,016,045 80,459,388 62,843,632 143,303,020 1,433,553,408 391,450,719 1,825,004,127 Source: Maricopa County Assessor's Office Maricopa County Tax Levy Publication (a) For levies for Tempe property owners residing within Kyrene, Scottsdale or Mesa School Districts, see the Direct and Overlapping Governmental Activities Debt- Property Tax Supported Schedule (Exhibit S-17). 180 $ County Library District Property Tax Levies and Collections (Exhibit S-11) Last Ten Fiscal Years City of Tempe, Arizona Collected within the Fiscal Year of the Levy Fiscal Year Total Tax Levy for Fiscal Year (a) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 34,455,730 34,856,232 36,402,794 37,675,450 38,916,826 40,471,289 42,580,125 44,161,889 45,529,984 48,265,218 Adjustments $ (656,995) (439,230) (407,875) (301,692) (264,496) (334,259) (373,570) (205,795) (139,010) (168,061) Adjusted Tax Levy for Fiscal Year Amount $ 33,798,735 34,417,002 35,994,919 37,373,758 38,652,330 40,137,030 42,206,555 43,956,094 45,390,974 48,097,157 $ 33,299,312 33,860,185 35,627,136 36,924,892 38,310,425 39,886,362 41,757,608 43,501,882 44,892,921 47,378,445 % of Original Levy 96.6 % 97.1 97.9 98.0 98.4 98.6 98.1 98.5 98.6 98.2 Total Collections to Date Collections in Subsequent Years $ 485,647 546,699 353,258 436,451 328,819 237,724 429,882 443,363 484,906 - Amount $ 33,784,959 34,406,884 35,980,394 37,361,343 38,639,244 40,124,086 42,187,490 43,945,245 45,377,827 47,378,445 % of Adjusted Levy 100.0 % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 98.5 Source: Maricopa County Treasurer (a) The amounts listed in this column do not tie directly to the amount listed for City of Tempe in Exhibit S-10 for total of Primary and Secondary Property Tax Levy. Due to a timing difference, the amount listed on the Maricopa County Secured Tax Levy Report , from the Maricopa County Treasurer's office, is at the time the levy is placed on the Tax Levy report (in May/June when the property tax rate is set). The amount listed on the Secured Tax Levy Report , from the Maricopa County Treasuer's office, is at the time the levy is placed on the actual tax rolls in August. 181 Principal Tax Payers (Exhibit S-12) Property Tax Current Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2020 Net Assessed Limited Property Values Taxpayer: Verizon Wireless Arizona Public Service Company Arizona Mills Mall LLC JP Morgan Chase Bank NA Iridium Satellite LLC Cousins Fund II Phoenix IV LLC Honeywell International Inc Qwest Corporation JDM II Tempe OC LLC KM Sonoma LLC/Mt Sonoma LLC Tempe Fountainhead Corporate LLC Fly (CD) LLC / AWHQ LLC State Farm Mutual Auto Insurance Breof BNK 2 Southwest LLC St. Paul Properties $ Total $ 42,556,992 28,538,638 20,262,837 17,531,278 12,169,939 11,374,772 10,989,638 9,544,023 9,028,043 8,362,515 - Rank 1 2 3 4 5 6 7 8 9 10 170,358,675 Fiscal Year 2011 Percentage of Net Assessed Limited Property Values Taxable Secondary Assessed Value 2.12 % 1.42 1.01 0.87 0.61 0.57 0.55 0.47 0.45 0.42 - $ 8.49 % $ 12,142,093 21,974,623 39,107,974 16,500,274 19,193,511 14,111,013 10,226,585 13,655,256 9,639,000 11,420,499 Rank Percentage of Total City Secondary Taxable Assessed Value 7 2 1 4 3 0.66 0.76 - 5 9 6 10 8 0.56 0.41 0.54 0.38 0.45 167,970,828 Source 2020: RBC Capital Markets Source 2011: RBC Capital Markets Note: Beginning in Fiscal Year 2016, a voter-approved constitutional amendment and related enabling legislation changed the property valuation for assessing property taxes. Property taxes are now levied based on a revised "Limited Property Value" which is generally (a) the Full Cash Value of a property or (b) an amount of percent greater than the Limited Property Value as determined for the prior year. 182 0.48 % 0.87 1.56 - 6.67 % Principal Tax Payers (Exhibit S-13) Sales and Use Tax Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2020 Taxpayer Business Type Taxpayer A Taxpayer B Taxpayer C Taxpayer D Taxpayer E Taxpayer F Taxpayer G Taxpayer H Taxpayer I Taxpayer J Taxpayer K Taxpayer L Taxpayer M Service Grocery Stores Electronics/Software Mixed Retail Mixed Retail Auto Sales Rental Mixed Retail Mixed Retail Mixed Retail Petroleum Products Construction Electronics/Software Total Sales and Use Tax Payments $ $ 4,903,539 4,236,771 2,765,955 2,663,703 2,615,821 2,025,118 1,970,743 1,768,081 1,760,508 1,742,004 - Rank Fiscal Year 2011 Percentage of Total Sales and Use Tax Payments 2.71 % 2.34 1.53 1.47 1.45 1.12 1.09 0.98 0.97 0.96 1 2 3 4 5 6 7 8 9 10 Sales and Use Tax Payments $ - 26,452,243 14.62 % $ 4,880,674 2,794,195 1,877,817 2,233,102 2,024,110 1,525,196 1,933,721 2,343,853 1,389,376 1,396,938 Rank Percentage of Total Sales and Use Tax Payments 1 2 7 4 5 8 6 3 10 9 22,398,982 The identities of the ten largest revenue payers are prohibited from disclosure per State Statute. The business type of the top ten taxpayers has been disclosed along with the appropriate data. 183 1.36 - Source: City of Tempe, Arizona Tax and License Division Note: 3.44 % 1.97 1.32 1.57 1.43 1.08 1.65 0.98 0.98 15.78 % Excise Tax Collections (Exhibit S-14) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 $ 113,398,508 $ 111,283,725 $ 105,643,666 State shared sales tax 19,899,062 17,958,644 18,266,956 16,145,681 15,357,220 14,779,296 14,076,468 13,236,998 12,636,771 12,656,738 State shared income tax 24,875,451 22,408,078 22,604,114 21,511,044 19,470,946 19,577,085 18,025,635 16,519,248 13,649,203 16,137,383 Franchise tax 2,772,127 3,036,531 3,290,220 3,182,193 3,363,615 2,933,239 3,310,940 3,253,175 3,428,125 3,821,436 Vehicle license tax 8,165,499 7,657,621 7,532,801 7,015,040 6,644,362 6,215,552 6,053,172 5,165,072 5,437,201 5,424,902 Permits and fees (b) 15,896,029 13,739,509 14,815,290 10,244,664 11,543,817 11,881,915 12,197,631 6,896,214 7,139,843 5,491,077 Fines and forfeitures 5,612,670 6,434,188 6,839,148 8,094,581 8,464,633 8,436,300 8,190,178 8,132,195 7,731,585 7,576,496 $ 190,619,346 $ 182,518,296 $ 178,992,195 $ 166,058,633 $ 160,648,676 $ 156,733,794 $ 159,023,544 $ 142,917,848 $ 134,960,101 $ 134,366,920 Privilege and use tax (a) Total Fiscal Year 2017 $ 99,865,430 Fiscal Year 2016 $ 95,804,083 Fiscal Year 2015 $ 92,910,407 Fiscal Year 2014 $ 97,169,520 Fiscal Year 2013 $ 89,714,946 Source: City of Tempe, Arizona Comprehensive Annual Financial Report City of Tempe, Arizona "Revenue and Expenditure by Account by Fund" report. (a) Amounts exclude the 0.5% Excise Tax approved by voters on September 10, 1996 as a dedicated "transit tax", the 0.1% Performing Arts Center Tax approved by voters in September 2000, and the 1.0% increase in the transient lodging tax on hotels approved by the voters in September 2002, which are restricted to fund programs of the Tempe Convention and Visitor's Bureau. (b) Amounts include all licenses/permits and Community Development and Public Works fees/charges for services. 184 Fiscal Year 2012 $ 84,937,373 Fiscal Year 2011 $ 83,258,888 Ratios of Net General Bonded Debt Outstanding (Exhibit S-15) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Governmental General Obligation Debt Enterprise General Obligation Debt and WIFA General Obligation Premium Less: Debt Service Reserves $ $ 287,621,092 270,715,646 253,760,904 236,046,554 216,802,282 196,122,761 198,182,660 201,216,644 206,499,363 185,795,463 $ 10,094,930 9,793,498 11,561,343 11,610,013 14,741,563 26,115,095 27,517,521 32,224,134 38,801,412 33,458,848 $ 25,526,885 32,062,939 33,262,194 33,699,262 20,960,171 20,693,070 21,456,909 13,114,979 3,463,501 4,158,853 166,680,000 162,200,000 164,235,000 163,205,000 181,905,000 180,750,000 178,555,000 180,435,000 183,990,000 191,860,000 Total $ 438,869,137 410,646,205 396,295,053 377,162,305 392,488,674 382,294,786 382,798,272 400,760,799 425,827,274 406,955,458 Percentage of Percentage of Secondary/Limited Governmental Total to Net Direct Assessed Debt to Assessed Value Debt Per Valuation (a) Assessed Value (b) of Property Capita $ 2,512,995,468 1,957,328,610 1,697,237,040 1,513,299,272 1,627,720,901 1,593,944,354 1,669,352,097 1,774,236,710 1,862,969,450 2,010,523,408 5.6 % 6.6 7.7 8.6 9.9 10.0 9.4 9.4 9.7 9.3 17.5 % 21.0 23.3 24.9 24.1 22.3 22.9 22.6 22.9 20.2 Source: Secondary assessed valuation from Maricopa County Assessor's Office for fiscal years prior to Fiscal Year 2016. In Fiscal Year 2016, the assessed valuation used is the Limited Property Value from Maricopa County Assessor's office Net Assessed Value Detail schedule. (a) In Fiscal Year 2016, with the passage of Proposition 117, the Limited Assessed Value is required to be used for the calculation of the tax levy. (b) General obligation debt for business-type activities is not paid by property taxes and therefore the "Percentage of Governmental Debt to Assessed Value " is disclosed. 185 $ 2,595 2,424 2,294 2,140 2,213 2,053 2,098 2,166 2,214 2,078 Ratios of Outstanding Debt by Type (Exhibit S-16) Last Ten Fiscal Years City of Tempe, Arizona Governmental Activities Fiscal Year General Obligation Bonds Special Assessment Bonds Excise Tax Revenue Bonds 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 166,580,000 162,200,000 164,235,000 163,205,000 181,905,000 180,750,000 178,555,000 180,435,000 183,990,000 191,860,000 $ 29,875,000 27,815,000 25,675,000 23,930,000 21,175,000 19,980,000 18,730,000 17,415,000 16,035,000 27,750,000 $ 228,746,000 218,522,900 154,081,000 144,606,000 134,746,000 123,389,000 116,009,000 97,994,000 87,269,000 76,604,000 HUD Section 108 Loan Premium on Debt Payable $ 9,234,152 15,054,997 20,176,543 19,542,476 18,668,237 22,291,058 20,515,300 21,847,912 25,046,197 21,731,892 $ 5,883,000 5,572,000 5,247,000 4,907,000 4,552,000 4,181,000 3,794,000 3,389,000 2,966,000 2,524,000 Capital Improvement Notes $ 1,009,612 509,804 - Capital Leases $ 96,735 57,921 29,645 87,082 61,399 34,743 65,610 40,972 81,216 Total GovernmentType Debt $ 440,414,887 429,222,818 370,453,800 356,700,280 361,133,319 350,652,457 337,638,043 321,146,522 315,347,169 320,551,108 Business-Type Activities Fiscal Year General Obligation Bonds Excise Tax Revenue Bonds 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 273,000,000 256,770,000 240,505,000 223,495,000 204,970,000 185,025,000 187,835,000 191,635,000 197,700,000 177,795,000 $ 48,827,424 55,505,432 79,034,000 76,109,000 84,839,000 91,876,000 80,466,000 69,876,000 57,886,000 54,331,000 $ Revenue Obligations Premium on Debt Payable 38,000,000 $ 8,932,839 8,579,661 11,487,656 11,158,485 13,905,912 26,735,479 26,648,171 27,703,607 30,951,583 27,176,457 WIFA Loans $ 14,621,092 13,945,646 13,255,904 12,551,554 11,832,282 11,097,761 10,347,660 9,581,644 8,799,363 8,000,463 186 Capital Leases $ 97,439 45,352 711,466 499,476 283,594 63,750 318,834 213,267 736,327 480,916 Total BusinessType Debt Total Primary Government $ 345,478,794 334,846,091 344,994,026 323,813,515 315,830,788 314,797,990 305,615,665 299,009,518 296,073,273 305,783,836 $ 785,893,681 764,068,909 715,447,826 680,513,795 676,964,107 665,450,447 643,253,707 620,156,040 611,420,442 626,334,944 Per Capita $ 4,860 4,515 4,132 3,822 3,816 3,553 3,525 3,352 3,178 3,199 Percentage of Personal Income 15.31 % 16.57 16.27 14.12 14.23 12.63 12.53 11.09 10.23 9.62 Direct and Overlapping Governmental Activities Debt (Exhibit S-17) City of Tempe, Arizona 2020 Net Limited Assessed Valuation Governmental Unit: Debt Outstanding Portion Applicable To City of Tempe Percent Amount Combined Tax Rate per $100 Assessed Debt repaid with property taxes: State of Arizona Maricopa County Maricopa Special Health Care District Maricopa County Community College Tempe Elementary School District No. 3 Mesa Unified School District No. 4 Kyrene Elementary School District No. 28 Scottsdale Unified School District No. 48 Tempe Union High School District No. 213 East Valley Institute of Technology Subtotal overlapping debt $ 66,157,223,639 43,194,326,395 42,997,577,641 43,194,326,395 1,567,218,917 3,205,267,510 2,179,588,085 5,579,885,797 3,746,807,002 19,868,037,167 City direct debt (governmental activities) $ 2,010,523,408 $ $ Total direct and overlapping debt None None 459,125,000 312,450,000 153,535,000 245,505,000 186,920,000 260,580,000 83,045,000 None 3.04 % 4.65 4.68 4.65 83.92 0.67 30.25 0.26 52.70 10.12 320,551,108 100.00 % $ None None 21,487,050 14,528,925 128,846,572 1,644,884 56,543,300 677,508 43,764,715 None 267,492,954 $ 320,551,108 $ 588,044,062 Source: RBC Capital Markets and Maricopa County Assessor Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Tempe. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. The applicable percentage of each jurisdiction's assessed valuation which lies within the City's boundaries (see "Percent" column above) was derived from information obtained from the County Assessor's Office. 187 2.25 0.34 1.33 4.71 6.98 3.86 3.64 2.57 0.05 Total Direct and Overlapping Governmental Activities Debt (Exhibit S-18) City of Tempe, Arizona Governmental Unit: Debt Outstanding Portion Applicable To City of Tempe Percent Amount Debt repaid with property taxes: State of Arizona Maricopa County Maricopa Special Health Care District Maricopa County Community College Tempe Elementary School District No. 3 Mesa Unified School District No. 4 Kyrene Elementary School District No. 28 Scottsdale Unified School District No. 48 Tempe Union High School District No. 213 East Valley Institute of Technology Subtotal overlapping debt $ None None 459,125,000 312,450,000 153,535,000 245,505,000 186,920,000 260,580,000 83,045,000 None 3.04 % 4.65 4.68 4.65 83.92 0.67 30.25 N/A N/A N/A City direct debt $ 320,551,108 100.00 % Total direct and overlapping debt $ None None 21,487,050 14,528,925 128,846,572 1,644,884 56,543,300 677,508 43,764,715 None 267,492,954 320,551,108 $ 588,044,062 Source: RBC Capital Markets and Maricopa County Assessor Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Tempe. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. The applicable percentage of each jurisdiction's assessed valuation which lies within the City's boundaries (see "Percent" column above) was derived from information obtained from the County Assessor's Office. 188 Legal Debt Margin Information (Exhibit S-19) City of Tempe, Arizona Last Ten Fiscal Years Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 Assessed Valuation $ 2,723,618,126 $ 2,457,096,949 $ 2,285,492,942 $ 2,125,705,145 $ 1,593,944,354 $ 1,627,720,901 $ 1,513,299,272 $ 1,697,237,040 $ 1,957,328,610 $ 2,512,995,468 20% Limitation: Debt limit equal to 20% of assessed valuation $ $ $ $ $ $ $ $ $ $ Total net debt applicable to 20% limit Legal 20% debt margin (available borrowing capacity) 357,900,003 $ 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 Total net debt applicable to the 6% limit as a percentage of 6% debt limit 186,823,622 $ 163,417,088 82,913,910 49.26% 121,595,888 $ 147,425,817 69,510,466 52.85% 103,338,564 $ 137,129,577 59,922,703 56.30% 87,406,377 $ 127,542,309 47,299,201 62.91% - $ 95,636,661 13,731,661 85.64% - $ 97,663,254 16,168,254 83.44% Source: Maricopa County Assessor's Office City of Tempe, Arizona Accounting Division Note 1: Prior to Fiscal Year 2016, the Assessed Valuation was based on the Net Assessed Secondary Value . Due to a change in the legislation (Proposition 117), in Fiscal Year 2016, the City was required to use the Limited Property Value. In Fiscal Year 2017, the law changed again to allow the Full Cash Value to be used in the legal debt margin calculation. 189 - $ 90,797,956 51,752,956 43.00% - $ 101,834,222 73,469,222 27.85% - $ 117,439,717 102,409,717 12.80% 27,711,549 94.49% $ 15,030,000 $ 502,599,094 474,887,545 $ 114.00% 28,365,000 $ 391,465,722 446,276,092 $ 123.21% 39,045,000 $ 339,447,408 418,225,647 $ 129.06% 81,495,000 $ 302,659,854 390,600,904 $ 111.11% 81,905,000 $ 325,554,180 361,721,555 $ 103.65% 80,243,108 $ 318,788,871 330,432,281 $ 79.44% 77,206,874 $ 425,141,029 337,734,652 $ 77.39% 77,915,351 $ 457,098,588 353,760,024 $ 75.26% 80,503,178 $ 491,419,390 369,823,502 $ 65.70% Total net debt applicable to 6% limit Legal 6% debt margin (available borrowing capacity) 544,723,625 150,779,728 8,330,000 $ 142,449,728 5.52% Remaining General Obligation Bond Authorizations (Exhibit S-20) City of Tempe, Arizona Authorization WIFA Funding (a) Prior Issues 2008 Program: Water/Wastewater $ 113,300,000 Streets/Transportation/Storm Drains 44,200,000 Public Safety - Police/Fire 32,010,000 Community Services/Park Improvements 51,800,000 $ 18,130,302 - $ 95,169,698 35,260,000 32,010,000 51,800,000 18,130,302 214,239,698 8,861,050 78,950 - 19,810,302 4,860,000 22,560,000 13,570,000 2,718,150 5,839,600 6,746,200 128,189,698 25,000,000 12,421,850 5,600,400 6,683,800 - 60,800,302 15,303,950 177,895,748 $ 275,040,000 $ 24,165,000 $ 177,974,698 Total 2008 Program 241,310,000 2016 Program: Water/Wastewater 148,000,000 Streets/Transportation/Storm Drains 25,000,000 Public Safety - Police/Fire 20,000,000 Community Services/Park Improvements 34,000,000 Municipal Infrastructure Preservation 27,000,000 Total 2016 Program Grand Total 254,000,000 $ 495,310,000 $ 18,130,302 Current Year Issue Remaining Authorization $ $ 8,861,050 - 78,950 - Source: City of Tempe, Arizona Accounting Division (a) The WIFA funding includes a "forgivable" principal portion of $2.2 million. Per the loan agreement, the forgivable portion could be added back should the City not comply with the terms of the agreement. As some of the terms are not fulfilled until the end of the loan period, the forgivable portion will continue to utilize authorization until the loan is paid off (FY 2028-29). At that time, the authorization will be restored. 190 Pledged-Revenue Coverage (Exhibit S-21) Last Ten Fiscal Years City of Tempe, Arizona Special Assessment Bonds Special Assessment Collections Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 3,867,979 $ 2,526,283 4,442,862 3,605,932 3,862,306 2,439,086 2,173,798 2,027,722 1,990,732 2,442,290 Excise Tax Revenue Obligations Debt Service (d) Coverage 4,697,441 3,469,611 3,448,085 2,959,851 3,884,758 2,214,178 2,209,650 2,212,190 2,211,570 2,207,767 0.82 0.73 1.29 1.22 0.99 1.10 0.98 0.92 0.90 1.11 Excise Tax Revenue Collections (a) $ Performing Arts Excise Tax Obligations 0.1% Privilege and Use Tax Collections (b) Fiscal Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $ 5,979,900 $ 6,236,500 6,236,879 6,921,904 7,460,054 7,656,210 8,084,891 8,436,503 8,823,434 9,131,870 Debt Service (d) Coverage 6,761,359 9,399,739 9,931,262 11,977,968 12,055,250 45,696,593 36,355,425 20,743,689 20,739,629 12,637,348 19.07 13.78 14.39 13.82 13.00 3.52 4.57 8.63 8.80 15.08 128,942,018 $ 129,522,900 142,917,848 165,485,314 156,733,794 160,648,676 166,058,633 178,992,195 182,518,296 190,619,346 Transit Excise Tax Obligations Debt Service (d) Coverage 6,016,226 5,377,764 5,922,350 5,918,250 5,919,026 5,921,676 3,427,850 3,428,850 3,428,100 3,433,850 0.99 1.16 1.05 1.17 1.26 1.29 2.36 2.46 2.57 2.66 0.5% Privilege and Use Tax Collections (c) $ Debt Service (d) Coverage 4,428,049 4,410,547 3,685,428 4,655,713 4,655,688 4,658,463 4,372,288 4,311,491 4,116,542 4,118,094 6.55 6.84 8.16 7.20 7.76 8.00 9.04 9.53 10.46 10.78 29,012,370 $ 30,172,338 30,087,229 33,539,177 36,147,640 37,288,527 39,512,636 41,074,434 43,063,185 44,373,904 Source: City of Tempe, Arizona Accounting Division (a) Excise tax revenue collections include privilege and use tax, state shared privilege and use tax, state shared income tax, franchise tax, permits and fees, and fines and forfeitures. Note that the privilege and use tax exclude the 0.5% excise tax approved by voters on September 10, 1996 as a dedicated "transit tax", the 0.1% Performing Arts Center Tax approved by voters in September 2000, and the 1.0% increase in the transient lodging tax on hotels approved by the voters in September 2002, which is restricted to fund programs of the Tempe Convention and Visitor's Bureau. (b) The 0.1% privilege and use tax is a Performing Arts Center Tax approved by voters in September 2000. (c) The 0.5% privilege and use tax is a Transit Tax approved by voters in September 1996. (d) The debt service amount does not include fiscal agent fees. 191 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-22) Excise Tax Obligations (Excluding Transit Excise Tax Obligations) City of Tempe, Arizona Senior Excise Tax Obligations Fiscal Year 2020 2021 Pledged Excise Tax Revenues (a) $ 190,619,346 Subordinate Excise Tax Obligations Outstanding Senior Excise Tax Outstanding Obligations Senior Excise Tax Debt Service Obligations Requirements (b) Coverage (c) $12,637,348 12,132,899 15.08 15.71 12,132,345 12,121,208 9,060,458 16,349,708 6,719,700 6,711,900 6,712,025 6,714,125 5,117,988 5,116,050 2,723,850 2,116,125 15.71 15.73 21.04 11.66 28.37 28.40 28.40 28.39 37.24 37.26 69.98 90.08 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Revenue Available for Debt Service (d) $ 187,113,868 Outstanding Subordinate Excise Tax Obligations Debt Service Requirements (e) $ Coverage (f) 3,433,850 54.49 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues received by the City in Fiscal Year 2020. See Excise Tax Collection schedule (Exhibit S-14). (b) Consists of the annual debt service requirements (not including fiscal fees) of the following Excise Tax Revenue/Refunding Obligations: Series 2011A+B 2012 2013 2016 2017R 2019R Remaining Obligation $ 10,370,000 18,130,000 20,190,000 20,715,000 5,365,000 8,110,000 $ 82,880,000 (c) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2020 excise tax revenues to total debt service requirements for the (d) Consists of Performing Arts Center Excise Taxes and Excise Taxes (net of current year annual debt service on Outstanding Senior Excise Tax Obligations) received in Fiscal Year 2020. (e) (f) Includes the annual debt service requirements of the City of Tempe, Arizona Excise Tax Refunding Obligations, Series 2011, currently outstanding in the principal amount of $3,295,000. Debt service requirements do not include fiscal fees. Pursuant to the Purchase Agreement, the City agrees that the Performing Arts Center Excise Taxes and the Excise Taxes presently imposed will continue to be imposed so that the amount of Performing Arts Center Excise Taxes and the Excise Taxes (net of maximum annual debt service on the Outstanding Senior Excise Tax Obligations) collected for any fiscal year shall be equal to at least three times the total Debt Service requirements for the Obligations and other Parity Obligations in such fiscal year. 192 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-23) Transit Excise Tax Obligations City of Tempe, Arizona Senior Excise Tax Obligations Pledged Excise Tax Revenues (a) Fiscal Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 $ 44,373,904 Outstanding Senior Excise Tax Obligations Debt Service Requirements (b) $ Outstanding Senior Excise Tax Obligations Coverage (c) 4,118,094 4,978,120 4,979,098 4,977,321 4,985,921 4,979,362 4,982,922 4,980,975 4,983,618 4,975,351 4,985,719 4,983,873 4,980,981 4,979,431 4,981,685 4,982,732 2,307,291 1,856,875 861,150 10.78 8.91 8.91 8.92 8.90 8.91 8.91 8.91 8.90 8.92 8.90 8.90 8.91 8.91 8.91 8.91 19.23 23.90 51.53 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues recognized by the City in Fiscal Year 2020. (b) Includes annual remaining debt service requirements for the Series 2012 City of Tempe, Arizona Transit Excise Tax Revenue Obligations in the principal amount outstanding of $31,270,000; the Series 2017R City of Tempe, Arizona Transit Excise Tax Refunding Obligations in the principal amount outstanding of $19,000,000. (c) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2020 excise tax revenues to total debt service requirements for the City's Transit excise tax bonds. 193 Demographic and Economic Statistics (Exhibit S-24) Last Ten Fiscal Years City of Tempe, Arizona Total Personal Income (b) Per Capita Personal Income (c) Average Household Income (c) Median Age (c) School Enrollment (d) ASU School Enrollment (e) 5,133,769,655 $ 31,745 $ 68,427 35.2 26,670 70,440 8.00 % 4,469,848,173 27,257 63,881 31.3 28,136 72,254 8.20 165,499 4,203,343,602 25,398 61,201 31.5 25,510 73,378 6.80 2014 170,027 4,601,100,647 27,061 64,714 28.1 25,264 73,378 7.50 2015 169,533 4,546,705,527 26,819 62,291 28.5 25,480 83,301 6.80 2016 173,510 4,881,183,320 28,132 65,814 28.7 25,656 74,293 5.90 2017 182,498 5,134,033,736 28,531 67,501 29.5 24,891 75,729 4.30 2018 185,038 5,594,253,854 30,233 71,916 30.0 25,527 54,456 3.90 2019 192,364 5,975,402,932 31,063 72,792 30.4 25,478 55,224 4.10 2020 195,805 6,511,691,080 33,256 79,758 29.6 25,275 57,009 9.80 Fiscal Year Population (a) 2011 161,719 2012 163,989 2013 Source: $ Unemployment Rate (f) (a) Estimate obtained from Sites USA through Fiscal Year 2015. From Fiscal Year 2016 and forward the estimate is obtained from State Shared Revenue Report published by the League of Arizona Cities & Towns. (b) Amount is calculated using population times per capita personal income. (c) Estimate is provided by Sites USA through FY 18-19 and by ESRI beginning FY 19-20. (d) Arizona Department of Education (Azed.gov) (e) ASU - Office of Institutional Analysis. Fiscal Year 2018 and going forward the amount is for the ASU Tempe campus only. (f) https://oeoapps.az.gov/laus-data-query-tool/laus.aspx (Annual 2017) 194 Principal Employers (Exhibit S-25) Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2020 Employees (a) Employers: Arizona State University State Farm Insurance Freedom Financial Network JPMorgan Chase Bank National Association ABM Industries Inc City of Tempe Honeywell Total Events Management LLC Wells Fargo ADP Inc Bank of the West Freescale Semiconductor (Motorola) Kyrene School District US Airways Maricopa County Community Colleges Safeway Inc. SRP 8,010 6,550 2,300 2,220 2,000 1,983 1,540 1,040 1,030 1,000 1,000 - Total 28,673 Source: Rank 1 2 3 4 5 6 7 8 9 10 10 - Fiscal Year 2011 Employment 27.94 % 22.84 8.02 7.74 6.98 6.91 5.37 3.63 3.59 3.49 3.49 - 10,089 2,377 3,000 4,236 3,000 2,559 1,898 4,703 3,996 3,331 100.00 % 39,189 (a) Maricopa Association of Governments; https://geo.azmag.gov/maps/azemployment/ (b) City of Tempe, Arizona Comprehensive Annual Financial Report, Fiscal Year 2011 195 Employees (b) Rank 1 9 7 3 6 8 10 2 4 5 Employment 25.74 % 6.07 7.66 10.81 7.66 6.53 4.84 12.00 10.20 8.50 100.00 % Full-Time Equivalent City Government Employees by Function (Exhibit S-26) Last Ten Fiscal Years City of Tempe, Arizona Fiscal year 2020 Police Fire medical rescue Community services Engineering and transportation Municipal utilities Community development Human services Municipal court Mayor and council City manager City attorney Internal audit office Municipal budget office Office of strategic management and diversity Economic development office Sustainability office City clerk and elections Internal services Public works Community relations Diversity program Tempe learning center Finance and technology Human resources Total 516 220 297 106 267 84 147 43 7 31 28 4 4 8 3 1 5 212 1,983 Fiscal year 2019 512 214 305 79 54 43 7 32 27 4 4 7 5 210 429 1,932 Fiscal year 2018 508 174 304 85 50 43 7 31 25 4 4 6 5 217 431 1,894 Fiscal year 2017 505 155 297 83 46 43 7 33 25 4 4 6 5 206 430 1,849 Source: City of Tempe, Arizona Fiscal Year 2020 Annual Budget Note: See Exhibit S-2a for changes in functions that have occurred in prior years. 196 Fiscal Year 2016 500 156 286 88 49 42 7 32 26 4 4 6 4 156 470 1,824 Fiscal Year 2015 496 156 286 90 40 42 7 31 26 4 4 4 155 467 1,808 Fiscal Year 2014 Fiscal Year 2013 497 156 314 90 42 7 11 25 4 5 486 3 139 20 1,799 497 182 288 82 42 7 4 25 3 5 484 24 3 3 132 17 1,798 Fiscal Year 2012 494 182 287 83 42 7 4 25 3 5 485 25 3 3 132 17 1,797 Fiscal Year 2011 499 182 289 88 42 7 4 25 3 5 489 25 3 3 132 17 1,813 Operating Indicators by Function/Program (Exhibit S-27) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Fiscal Fiscal Year 2020 Year 2019 Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 Function /Program Police Crime rate (per 100,000 population) Traffic accidents Emergency service average response time (minimum) Citizen calls for police service Operating expenditures per citizen calls (a) Fire Firefighters per capita (10,000) Number of fire calls Number of medical calls Number of other assistance calls Emergency service average response time (minimum) Percent of emergency responses taking 6.0 minutes or less (d) Transportation Percent of on-time bus performance Annual bus boardings (e) Number of square yards of asphalt repaired Library Registered borrowers Circulation Community development Number of permits issued for commercial /industrial Valuation of commercial/industrial permits Number of permits issued for residential Valuation of residential permits Number of permits issued other Valuation of other permits Water/wastewater Number of customer accounts (annual average) Total water gallons treated (million gallons - mg) Operating and maintenance cost per customer account Total wastewater gallons treated (million gallons per day) Solid waste collection Residential container/recycling cost per ton Number of residential accounts Residential recycling diversion rate (c) Number of commercial accounts Commercial collection cost per ton $ 4,247 4,945 4,752 5,857 4,478 5,621 5,063 5,638 4,900 5,376 5,110 5,103 5,343 4,755 5,288 4,825 5,800 4,834 5,898 4,693 6:27 83,427 1,166 6.66 90,055 1,015 6.6 91,012 968 6.36 88,515 917 6.83 86,229 926 5:13 85,502 926 5:02 84,092 874 5:00 86,996 830 6:35 87,730 725 5:30 85,673 749 $ 9.33 2,207 21,761 2,117 $ 9.33 1,980 22,209 2,324 $ 8.86 2,212 22,093 1,916 $ 11.6 2,565 26,633 2,637 $ 8.82 1,944 20,021 1,963 $ 9.45 2,022 19,630 1,853 $ 9.47 1,958 18,119 1,976 $ 9.44 2,002 17,411 2,033 $ 9.45 2,167 17,156 1,336 8.95 2,208 15,264 1,275 4:31 4:31 4:15 3:36 4:16 4:10 4:08 4:07 4:10 4:20 80% 80% 75% 74% 73% 75% 76% 76% 76% 74% N/A 7,329,563 918,426 92% 9,030,182 1,225,309 92% 9,553,553 736,076 90% 6,484,875 731,425 90% 6,841,497 402,900 92% 7,178,128 302,000 91% 7,897,964 397,605 93% 8,168,990 412,739 95% 8,430,857 569,600 95% 7,971,817 64,665 104,791 566,745 93,689 743,931 100,155 802,492 97,443 855,055 140,000 800,000 143,000 930,000 143,018 814,199 140,523 933,824 145,948 1,015,578 140,600 937,500 476 $ 725,909,656 603 $ 40,035,903 1102 $ 25,876,027 541 $ 790,508,270 573 $ 32,849,626 1053 $ 35,278,125 503 $ 739,627,514 532 $ 35,888,436 1165 $ 40,037,341 644 $ 270,664,400 122 $ 157,887,839 1 $ 60,000 775 $ 333,250,987 474 $ 274,402,813 1 $ 150,000 678 $ 527,389,841 646 $ 173,004,137 4 $ 8,758,218 30 $ 211,281,465 451 $ 235,037,289 660 $ 156,702,779 18 $ 26,619,100 271 $ 96,518,351 647 $ 54,339,500 18 $ 88,812,800 297 $ 68,954,800 600 $ 99,407,953 43,724 15,154 783 19 43,284 15,506 995 19.1 43,214 16,090 979 19.1 42,647 15,506 953 19.4 43,061 15,278 941 19.4 42,678 15,130 878 19.4 42,555 15,979 309 19.4 42,351 16,900 278 18.5 0 121 33,405 15% 2,133 81 42,398 16,700 249 18.6 $ $ $ 159 33,245 23% 1,491 342 $ $ $ 235 33,263 23% 1,565 113 $ $ $ $ 111 32,869 28% 1,641 100 $ $ 139 33,160 19% 1,671 93 $ $ $ 138 33,001 21% 1,709 91 $ $ $ 140 33,397 19% 1,783 95 (a) Source: City of Tempe, Arizona Municipal Budget Office and other applicable City departments. (b) The numbers are revised by department to reflect change in methodology in tracking. (c) This calculation consists of the blue container program and green organics. (d) For Fiscal Year 2017 and prior, the percents measured were for 5.0 minutes or less. (e) For Fiscal Years 2018 through 2020, the numbers included rail boardings also. The bus boardings alone for Fiscal Year 2018 and Fiscal Year 2019 are 6,407,657 and 6,022,149, respectively. 197 $ $ $ 108 33,440 15% 2,130 95 $ $ $ $ $ $ 115 33,759 15% 2,030 78 8 6,874,200 314 $ 18,260,624 521 $ 77,951,841 $ $ $ $ 42,218 15,877 (b) 217 18.6 (b) 112 33,927 29% 1,940 73 Capital Asset Statistics by Function/Program (Exhibit S-28) Last Ten Fiscal Years City of Tempe, Arizona Police Stations Patrol units (squads) Fire stations Transportation Streets (miles) Streetlights Traffic signals Buses Parks and recreation Acreage Playgrounds Sports fields Community centers Golf courses Water/wastewater Water mains (miles) Water production capacity (million gallons per day) Water storage capacity (million gallons) Sanitary sewers (miles) Storm sewers (miles) Wastewater treatment capacity (million gallons per day) Solid waste collection Collection trucks Fiscal Fiscal Fiscal Year 2020 Year 2019 Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Fiscal Year 2015 Year 2014 Fiscal Year 2013 Fiscal Year 2012 Fiscal Year 2011 3 21 7 3 21 6 3 21 6 3 21 6 3 24 6 3 24 6 3 24 6 3 21 6 3 20 6 3 20 6 1,241 11,483 235 124 1,241 11,414 230 124 1,241 12,048 230 124 1,241 12,026 229 125 1,241 11,969 228 125 1,241 11,904 223 125 1,241 11,849 222 124 1,241 11,797 221 135 1,241 11,778 221 140 1,241 11,778 221 188 1,875 45 200 5 2 1,875 45 200 5 2 1,875 45 200 5 2 1,875 45 200 5 2 1,872 45 200 5 2 1,872 45 200 5 2 1,872 45 200 5 2 1,872 45 200 5 2 1,872 45 200 5 2 1,872 45 200 5 2 850 850 850 850 833 833 833 833 839 839 137 54 495 231 137 54 495 231 137 54 495 231 137 54 495 231 125 54 495 231 125 42 549 173 125 42 549 173 125 42 496 173 125 42 498 194 125 42 498 194 29 29 29 29 29 19 19 19 33 33 42 43 43 43 45 47 52 51 58 58 Source: City of Tempe, Arizona Municipal Budget Office and other applicable City departments. 198