City of Tempe, Arizona Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2022 City Council: Corey Woods, Mayor Randy Keating, Vice Mayor Jennifer Adams Robin Arredondo-Savage Doreen Garlid Lauren Kuby Joel Navarro Administrative Staff: Andrew Ching, City Manager Presented by: Thomas F. Duensing, CPA, Deputy City Manager – Financial Stability & Vitality and Sustainable Growth & Development Natalie M. Winger, CPA, Accounting Supervisor 1 City of Tempe, Arizona 2 Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal 7 Certificate of Achievement for Excellence in Financial Reporting List of Principal Officials City Organizational Chart 14 15 16 FINANCIAL SECTION Independent Auditor’s Report Management’s Discussion and Analysis (required supplementary information) 17 20 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities 39 40 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 42 44 46 48 49 50 52 54 55 56 56 57 Required Supplementary Information: Schedules of Required Supplementary Information Schedule of Contributions- All Pension Plans - Last Eight Fiscal Years Schedule of the Proportionate Share of the Net Pension Liability- ASRS - Last Eight Fiscal Years Schedule of the Proportionate Share of the Net OPEB Health Insurance Premium Liability (Asset) - ASRS - Last Five Fiscal Years Schedule of the Proportionate Share of the Net OPEB Long-Term Disability Liability-ASRS - Last Five Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Police - Last Eight Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Fire - Last Eight Fiscal Years Schedule of Changes in the Net OPEB Liability and Related Ratios- PSPRS: Police - Last Five Fiscal Years Schedule of Changes in the Net OPEB Liability (Asset) and Related Ratios- PSPRS: Fire - Last Five Fiscal Years 3 118 119 120 121 122 123 124 125 Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona FINANCIAL SECTION (Continued) Required Supplementary Information: (Continued) Schedules of Required Supplementary Information (Continued) Schedule of Contributions- OPEB Plan- Last Six Fiscal Years 126 Schedule of Changes in the Net OPEB Liability and Related Ratios- OPEB PlanLast Six Fiscal Years Schedule of Investment Returns- OPEB Plan- Last Six Fiscal Years 127 128 Notes to Required Supplementary Information 129 Combining Fund Financial Statements: Non-major Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances 134 138 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 143 144 145 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 Arts and Cultural 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 Arts and Culture 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 4 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2022 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-2 174 175 S-3 178 S-4 179 S-5 S-6 S-7 181 182 183 S-8 184 S-9 185 S-10 S-11 S-12 S-13 186 187 188 189 S-14 S-15 S-16 S-17 S-18 S-19 S-20 S-21 190 191 192 193 194 195 196 197 S-22 198 S-23 199 S-24 S-25 200 201 S-26 S-27 S-28 202 203 204 2-29 S-30 S-31 S-32 S-33 205 206 207 208 209 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 Taxpayers, Property Tax - Current Fiscal Year and Nine Years Prior Principal Taxpayers, 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 Water Connections by Customer Type, Sewer Connections and Sewage Treated Last Two Fiscal Years Water Deliveries – Last Two Calendar Years Metered Water Usage Charges – Last Two Fiscal Years Water Rates and Sewer Rates Per Meter Size-Last Two Fiscal Years Sewer Service Rates – Last Two 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 20, 2022 To the Honorable Mayor, Members of the City Council and Residents of the City of Tempe, Arizona: The Annual Comprehensive Financial Report, including the Independent Auditor’s Report, for the fiscal year ended June 30, 2022 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 Annual Comprehensive Financial Report (ACFR) 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 be placed on the City of Tempe’s web site at https://www.tempe.gov/government/financial-services/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 square miles with an estimated population of 186,000 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 Tempe maintains one of the most thriving economic environments in the country. Top research firms, Fortune 500 companies, Arizona State University, and start-ups make up Tempe’s economic fabric. Each of these provides the City with a strong and diversified tax base. In April 2020, at the beginning of the COVID pandemic, Arizona lost 295,000 jobs and the hospitality industry was mostly shut down, creating a dim economic outlook statewide. Tempe took strong measures to maintain financial stability with an uncertain future. As the City recovered from a relatively short economic impact, the City experienced a strong rebound and strong growth in taxable sales and continued recovery in other revenue sources for the fiscal year ended June 30, 2022. The City’s overall revenues outperformed the prior year despite the reduction in COVID-19 Federal grant assistance. The City continues to experience robust development with new residential, hotel and office complex developments under construction or planned for the near future. While the overall recovery was strong, the City continues to monitor supply chain issues, inflationary pressures, stock market volatility, and the end of Federal stimulus funds with the goal of maintaining healthy fund balances 8 in its major operating funds. Commercial and residential development activities continue to provide substantial increases in construction sales tax revenues, and development remains above the long-term historical performance stabilizing Tempe’s revenues. Additionally, current, long-term memoranda of understanding with the City’s four employee groups should stabilize personnel cost increases; however, the impact of inflationary pressures may provide some uncertainty and must be monitored closely. The City prepares a long-term forecast in November and February of each year to determine the financial health of the City’s major operating funds. During fiscal year ended June 30, 2022, sales taxes and property taxes experienced strong growth, and state shared revenue met budget expectations. The latest, November 10, 2022 forecast indicates all major funds are projected to remain stable and forecasted fund balances will be within policy levels. For the General Fund, the largest operating fund, the forecast assumes stable, and moderately increasing revenues over the five-year forecast period with no legislative changes to the tax categories or distribution formulas for State-shared revenue. The largest governmental revenue sources are sales taxes, property taxes, State-shared sales taxes, State-shared income taxes, and State-shared auto lieu taxes. These combined revenues totaled 84.5% of governmental fund revenues in fiscal year 2022. Sales Tax The largest source of revenue for Tempe’s governmental operating funds, sales tax revenue, is driven by taxable sales tax activities and have increased in each of the last five fiscal years. Despite the economic impact of the pandemic primarily being felt in the fiscal years 2020 and 2021, taxable sales increased in 2018 (4.9%), 2019 (5.2%), 2020 (3.2%), 2021 (3.1%) and 2022 (17.3%). The most significant impact was felt in hotel and motel taxable sales; however, taxable sales recovered in fiscal year 2022 to pre-pandemic levels. Overall, General Fund sales tax revenues increased by $22.6 million (or 18.9%) to $142.6 million in fiscal year 2022. Sales tax revenue represented 53.0% of total General Fund revenues for the year. State-Shared Revenue Starting in fiscal year 2017, the population figures used for the distribution of state shared revenues to all incorporated cities and towns in the state are the official U.S. Census Bureau population estimate for each city and town as of July 1 of the prior year, except in the year following a decennial census. The fiscal year 2022 shared revenue allocations were based on the 2020 Decennial Census and Tempe’s relative share of the state’s total population declined and is approximately 3%. State-shared revenues consist of state sales tax, state income tax and auto lieu tax revenues. Total General Fund State-shared revenues from these three revenue sources totaled $59.0 million, which represents a $1.5 million decrease, or 2.6%. This is primarily due to the decline in relative population. Property Tax The city continues to experience continued overall improvement in assessed valuations of taxable property which is the basis for property tax revenue assessments. Additionally, Tempe’s largest electric utility, Salt River Project, contributes an in-lieu property tax to the City. Overall, property tax revenues increased by $7.2 million (13.9%) over the prior year. Property taxes comprised approximately 13.6% of total General Fund revenues for the fiscal year. Federal Grants The City has experienced significant Federal grant revenue impacts due to the COVID-19 pandemic. During fiscal year 2020, 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 for fiscal year 2020 with the remaining $10.6 million in CRF federal grant revenue recognized in fiscal year 2021. During fiscal year 2021, the City was awarded an additional $45.9 million from the American Rescue Plan Act, $22.9 was received in fiscal year 2022 and $22.9 million was received in fiscal year 2023. Of this amount, a total of $11.5 million was recognized as revenue in fiscal year 2022 in the Community Development Capital Projects Fund with $34.4 remaining for future use consistent with requirements set forth by the US Treasury Department. 9 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 conservatively projects a modest growth in sales taxes, property taxes and State-shared revenues in fiscal year 2023. Fortunately, Tempe’s economy continues to outperform the forecasts for state and regional growth. Tempe’s retail and development activities are projected to continue to outperform our surrounding cities for the near term. Revenue related to building permits, plan reviews and other developmentrelated activities are projected to remain relatively stable despite the recent efforts by the U.S. Central Bank to lower inflation by increasing the Federal Funds Rate. 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 continued to be the case during the development of both the fiscal year 2021/22 Annual Operating Budget as well as the Five-Year Capital Improvement Program Budget. Additionally, many non-budgetary decisions of the City Council during the year were made within the context of the identified strategic priorities. 10 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 2021, using the START Tool, the City Council identified 10 performance measures to accelerate during fiscal year 2022. This was used as a guide in the budget development process and the areas of focus are summarized as follows: • Police Trust Score • Ending Homelessness • Tree Coverage • Community Carbon Neutrality • Carbon Neutrality • Pavement Quality Index • Subsidized Housing Funding Usage • Cyber Security • ROW Landscape Maintenance • Enrollment in Early Quality Learning 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 for measuring current budgetary performance and evaluating proposals for future programs. 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. 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 Arts and Culture Fund. • Annual property tax levy increase for existing property shall not exceed the lesser of inflation or 3.3%. MAJOR INITIATIVES Public Safety Personnel Retirement System Measures In July 2021, the City issued $343 million in certificates of participation, at an all-in true interest cost of 2.15%, to fund a significant portion of the City’s unfunded liabilities with respect to its pension plans in the Arizona Public Safety Personnel Retirement System (PSPRS) of which $341.1 million represented a one-time payment to PSPRS to fund the City’s unfunded pension liability. 11 American Rescue Plan Act In the spring of 2021, the City was notified of the pending receipt of $46 million in Coronavirus State and Local Fiscal Recovery Funds as part of the recently passed American Rescue Plan Act (ARPA). Based on Council direction, the entire $46 million was allocated in the City’s capital program to fund crucial infrastructure projects in the current fiscal year 2022 and planned for fiscal year 2023. Emergency Medical Transportation - Update The Fire Medical Rescue Department expanded its Emergency Medical Transportation (EMT) services during the fiscal year, increasing from four active ambulances in service to six active ambulances. 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. These types of 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. On May 20, 2022, the 3.1 mile, 14-stop streetcar opened for service in Tempe. The streetcar travels on Mill and Ash avenues from Rio Salado Parkway and Marina Heights to Dorsey Lane and Apache Boulevard in Tempe and differs from light rail in that it shares the roadway with vehicle traffic. Vehicles are also smaller, with a capacity of 125 people, and travel as a single car. Streetcars arrive at stops every 15-20 minutes. 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 Annual Comprehensive financial report for the fiscal year ended June 30, 2021. 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 Annual Comprehensive 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-six consecutive years (fiscal years 1975/76 through 2020/21). 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. In further demonstration of its’ commitment to financial excellence, the City also received the GFOA's Distinguished Budget Presentation Award for the FY 2021/22 annual budget and the National Purchasing Institute’s Achievement of Excellence in Procurement Award for FY 2021/22. 12 Acknowledgment The preparation of this report could not have been accomplished without the dedicated service of the entire staff of the Financial Services’ 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 Thomas F. Duensing, CPA Deputy City Manager 13 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Tempe Arizona For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021 Executive Director/CEO 14 City of Tempe, Arizona List of Principal Officials City Council Corey Woods, Mayor Randy Keating, Vice Mayor Jennifer Adams Robin Arredondo-Savage Doreen Garlid Lauren Kuby Joel Navarro Administrative Staff For the Fiscal Year Ended June 30, 2022 Andrew Ching, City Manager Rosa Inchausti, Deputy City Manager/Chief Innovation Officer Strong Community Connections Tom Duensing, Deputy City Manager-Financial Stability & Vitality and Sustainable Growth & Development Keith Burke, Deputy City Manager-Quality of Life Jeff Glover, Police Gregory Ruiz, Fire Vacant, Community Services Marilyn DeRosa, Engineering and Transportation Tara Ford, Municipal Utilities Vacant, Community Development Naomi Farrell, Human Services Kevin Kane, Municipal Court Sonia Blaine, City Attorney Bill Greene, Internal Audit Office Mark Day, Municipal Budget Office Donna Kennedy, Economic Development Office Braden Kay, Sustainability Office Vacant, Innovation and Strategic Management Office Carla Reece, City Clerk and Elections Vacant, Financial Services Mark Wittenburg, Information Technology Rebecca Strisko, Human Resources 15 Tempe Community Mayor and City Council City Clerk Assistant City Manager Communications Marketing & 311 Deputy City Manager/Chief Innovation Officer Strong Community Connections Community Development Department City Attorney City Manager Deputy City Manager/Financial Stability & Vitality and Sustainable Growth & Development Deputy City Manager Quality of Life Financial Services Department City Court Chief Equity Officer Community Services Department Fire Medical Rescue Department Government Relations Economic Development Office Human Resources Department Engineering & Transportation Department Mayor and City Council Staff Information Technology Department Municipal Budget Office Human Services Department Innovvation and Strategic Management Office Municipal Utilities Department Internal Audit Office Sustainability & Resilience Office 16 Police Department 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 Honorable Mayor and Members of the City Council City of Tempe, Arizona Report on Audit of Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Tempe, Arizona (City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, the budgetary comparisons for the General Fund, and the Transit Special Revenue and the aggregate remaining fund information of the City of Tempe, Arizona, as of June 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Tempe, Arizona, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 17 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • • • • • Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison information, net pension liability information, and other postemployment benefit plan information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that 18 collectively comprise the City’s basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on other work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2022, on our consideration of 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, Arizona’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Tempe, Arizona’s internal control over financial reporting and compliance. Heinfeld, Meech & Co., P.C. Scottsdale, Arizona December 20, 2022 19 Financial Services MANAGEMENT’S DISCUSSION AND ANALYSIS This section of the City of Tempe’s (the City) Annual Comprehensive Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2022. 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 $1.11 billion (net position) which represents an increase of $61.7 million due to increased sales taxes and unrestricted intergovernmental revenue, offset somewhat by reduction of capital grants and contributions during FY2022. Of the City’s net position, $273.2 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. • The difference between the City’s total net position is an increase of $61.7 million during the current fiscal year compared to an increase of $55.7 million in the prior fiscal year. Of this, the governmental activities experienced an increase in net position of $58.6 million compared to an increase of $47.9 million in the prior year. The business-type activities experienced an increase of $3.1 million compared to an increase of $7.9 million in the prior year. • For the fiscal year ended June 30, 2022, the City’s governmental activities revenues overall increased by $17.8 million to $442.6 million. This was due to increases of $32.2 million in sales taxes and $14.2 million in charges for services. This was offset by a reduction in operating grants and contributions and capital grants and contributions of $10.0 million and $17.8 million, respectively. Overall departmental expenses decreased by $0.9 million which were offset by an increase in interest on long-term debt of $7.8 million. • At June 30, 2022, the City’s governmental funds reported combined ending fund balances of $368.5 million. Approximately 63.1% of this total amount ($232.4 million) is for spending at the government’s discretion (committed, assigned, or unassigned). • In July 2021, the City issued $343 million in certificates of participation, at an all-in true interest cost of 2.15%, to fund a significant portion of the City’s unfunded liabilities with respect to its pension plans in the Arizona Public Safety Personnel Retirement System (PSPRS) that are currently being funded from annual payments from the City’s General Fund. Future debt service payments for the obligations will be made from the City’s General Fund. The June 30, 2022 net pension liability for PSPRS is $311.7, as of the June 30, 2021 measurement date, and the reduction in the net pension liability, resulting from the July 2021 payment, will be reflected as of June 30, 2023. • At June 30, 2022, total fund balance for the General Fund was $172.0 million, which represents an increase of $12.0 million over the prior year’s fund balance as actual revenues exceeded estimated revenues. Revenues increased by $25.2 million, which was primarily due to a $22.6 million increase in sales taxes. Expenditures increased by $348.3 million, of which $341.1 million represented a one-time payment to PSPRS to fund the City’s unfunded pension liability. This was offset by an increase in total other financing sources of $309.3 million primarily from the $343.0 million in certificates of participation debt proceeds offset by an increase in transfers out of $18.8 million. 20 • At June 30, 2022, the City’s enterprise funds reported combined total net position of $300.3 million, and total unrestricted net position of $161.8 million. Of this total, $162.1 million of the unrestricted net position was in the Water and Wastewater Fund. 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 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. 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. 21 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, Transit Capital Projects Fund and the Community Development 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. 22 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. GOVERNMENT-WIDE STATEMENTS FINANCIAL ANALYSIS Net position- June 30, 2022 Governmental Activities Assets Current and other assets Capital assets, net Total assets Deferred outflows of resources Deferred charge on refundings Deferred outflow from pensions Deferred outflow from OPEB Total deferred outflows of resources Liabilities Long-term liabilities Other liabilities Total liabilities Deferred inflows of resources Deferred inflow from leases Deferred inflow from refundings Deferred inflow from pensions Deferred inflow from OPEB Total deferred inflows of resources Net position Net investment in capital assets Restricted Unrestricted Total net position $ 956,207,816 852,910,401 1,809,118,217 Business-type Activities $ Total 280,964,162 449,214,932 730,179,094 $ 1,237,171,978 1,302,125,333 2,539,297,311 3,594,763 398,117,376 14,272,195 415,984,334 6,964,228 4,782,501 1,897,806 13,644,535 10,558,991 402,899,877 16,170,001 429,628,869 1,204,330,523 116,612,907 1,320,943,430 381,503,961 55,174,979 436,678,940 1,585,834,484 171,787,886 1,757,622,370 27,453,455 1,681,432 55,889,631 4,250,141 89,274,659 6,235,411 603,944 6,839,355 27,453,455 1,681,432 62,125,042 4,854,085 96,114,014 538,764,896 164,690,176 111,429,390 $ 814,884,462 138,501,996 161,803,338 $ 300,305,334 677,266,892 164,690,176 273,232,728 $ 1,115,189,796 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 $1.11 billion and $1.05 billion as of June 30, 2022 and 2021, respectively. The largest portion of the City’s net position reflects its investment in capital assets (i.e. 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 $677.3 million and $680.7 million at June 30, 2022 and 2021, respectively. These totals represent 60.7% and 64.6% of total net position at June 30, 2022 and 2021, respectively. The City uses these capital assets to provide services to citizens; 23 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. Net position- June 30, 2021 Governmental Activities Assets Current and other assets Capital assets, net Total assets $ Deferred outflows of resources Deferred charge on refunding Deferred outflow from pensions Deferred outflow from OPEB Total deferred outflows of resources Liabilities Long-term liabilities Other liabilities Total liabilities Deferred inflows of resources Deferred inflow from pensions Deferred inflow from OPEB Total deferred inflows of resources Net position Net investment in capital assets Restricted Unrestricted Total net position $ 834,839,008 828,347,529 1,663,186,537 Business-type Activities $ Total 262,753,177 429,738,095 692,491,272 $ 1,097,592,185 1,258,085,624 2,355,677,809 5,735,824 96,974,208 11,949,994 114,660,026 8,141,222 4,553,798 1,597,151 14,292,171 13,877,046 101,528,006 13,547,145 128,952,197 921,212,250 95,767,281 1,016,979,531 357,895,616 51,119,580 409,015,196 1,279,107,866 146,886,861 1,425,994,727 773,314 3,770,712 4,544,026 109,537 500,761 610,298 882,851 4,271,473 5,154,324 529,205,694 137,153,218 89,964,094 756,323,006 151,450,264 145,707,685 297,157,949 680,655,958 137,153,218 235,671,779 1,053,480,955 $ $ 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 $164.7 million (14.8% of total net position) at June 30, 2022. At June 30, 2021 restricted net position was $137.2 million (13.0% of total net position). The remaining balance of net position is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. The total balance of unrestricted net position was $273.2 million (24.5% of total net position) and $235.7 million (22.4% of total net position) at June 30, 2022 and 2021, respectively. At the end of the current fiscal year, the City reported 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 $61.7 million during the current fiscal year. These changes in net position are explained in the governmental and business-type activities discussion below. 24 Changes in Net Position- Fiscal Year Ended June 30, 2022 Governmental Activities Business-type Activities $ 52,214,975 26,374,825 18,931,868 $ 122,099,916 - 222,951,580 58,954,757 59,488,492 3,055,126 (3,820,904) 3,646,464 767,622 442,564,805 (1,777,102) 788,909 294,562 726,800 122,133,085 222,951,580 58,954,757 59,488,492 3,055,126 (5,598,006) 4,435,373 1,062,184 726,800 564,697,890 106,879,997 48,723,812 39,506,898 79,306,002 301,324 15,739,179 31,970,182 5,048,832 612,841 9,346,396 3,760,903 550,591 425,769 1,512,840 617,053 844,972 997,382 14,399,674 4,425,590 883,020 1,451,338 17,344,833 384,649,428 57,915,377 646,079 58,561,456 756,323,006 $ 814,884,462 89,403,602 19,872,919 5,562,895 3,500,205 118,339,621 3,793,464 (646,079) 3,147,385 297,157,949 $ 300,305,334 106,879,997 48,723,812 39,506,898 79,306,002 301,324 15,739,179 31,970,182 5,048,832 612,841 9,346,396 3,760,903 550,591 425,769 1,512,840 617,053 844,972 997,382 14,399,674 4,425,590 883,020 1,451,338 17,344,833 89,403,602 19,872,919 5,562,895 3,500,205 502,989,049 61,708,841 61,708,841 1,053,480,955 $ 1,115,189,796 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 (loss) Miscellaneous Gain on sale of capital assets Capital contributions Total revenues $ 174,314,891 26,374,825 18,931,868 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 Financial services Human resources Information technology 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 25 Changes in Net Position- Fiscal Year Ended June 30, 2021 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 38,034,873 36,398,251 36,754,274 118,563,624 - $ 156,598,497 36,398,251 36,754,274 190,760,900 60,503,495 52,210,522 2,846,569 829,560 4,770,561 1,692,302 424,801,307 200,724 888,141 266,964 100,000 120,019,453 190,760,900 60,503,495 52,210,522 2,846,569 1,030,284 5,658,702 1,959,266 100,000 544,820,760 109,726,330 46,147,306 35,561,466 87,118,482 746,206 14,320,056 30,905,378 5,076,735 434,128 10,706,914 3,748,159 619,052 106,517 787,640 274,528 899,048 957,257 18,568,233 1,502,243 9,529,375 377,735,053 47,066,254 820,065 47,886,319 708,436,687 756,323,006 86,542,908 17,319,217 4,150,475 3,336,616 111,349,216 8,670,237 (820,065) 7,850,172 289,307,777 297,157,949 109,726,330 46,147,306 35,561,466 87,118,482 746,206 14,320,056 30,905,378 5,076,735 434,128 10,706,914 3,748,159 619,052 106,517 787,640 274,528 899,048 957,257 18,568,233 1,502,243 9,529,375 86,542,908 17,319,217 4,150,475 3,336,616 489,084,269 55,736,491 55,736,491 997,744,464 1,053,480,955 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 $ 26 $ $ Governmental activities. The governmental net position increased by $58.6 million for the fiscal year ended June 30, 2022 compared to a $47.1 million increase in net position for the fiscal year ended June 30, 2021. Overall, revenues increased by $17.8 million (4.2%), and expenses increased by $6.9 million (1.8%) compared to the fiscal year ended June 30, 2021. The key factors contributing to the change in net position compared to the prior year are as follows: • Sales taxes increased by $32.2 million due to continued recovery from the COVID-19 pandemic. • Capital grants and contributions decreased in the amount of $17.8 million (48.5%) to $18.9 due primarily to the prior year recognition of $35.0 million in Federal funding toward the Streetcar capital project. This was offset by current year recognition of $11.5 million in Federal American Rescue Plan Act capital project funding. • Charges for services increased by $14.2 million due to a $5.2 million in increase in Community Development fees and a $2.6 million increase in lease revenue recognized in the fiscal year. • Property taxes increased by $7.3 million due to an increase in Salt River Project (SRP) in-lieu property tax revenue of $3.8 million coupled with an increase in taxable properties added to the property tax rolls. • Operating grants and contributions decreased by $10.0 million mainly due primarily to Federal Arizona Cares Act revenues recognized in the prior fiscal year related to the COVID-19 pandemic funding. • Unrestricted investment earnings revenue recognized a loss of $3.8 in the fiscal year due primarily to the change in fair value of investments at June 30, 2022. • Total program expenses increased by $7.4 million due primarily to increased interest on long-term debt of $7.8 million on the certificates of participation debt issued in the fiscal year. This was offset by net expense reductions in police and engineering and transportation departments of $2.8 million and $7.7 million, respectively. Other departmental expense increases were due primarily to general expense increases from personnel service costs and other operating costs. 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: 27 A comparison of Fiscal Year Ended expenses by function and June 30, 2022 June 30, 2021 the percentage of total expenses for the largest $ 106,879,997 27.8% $ 109,726,330 29.0% functions are presented Police Engineering and transportation 79,306,002 20.6 87,118,482 23.1 in the chart. As stated Fire medical rescue 48,723,812 12.7 46,147,306 12.2 earlier, total expenses for Community services 39,506,898 10.3 35,561,466 9.4 the City’s governmental Human services 31,970,182 8.3 30,905,378 8.2 activities increased from Community development 15,739,179 4.1 14,320,056 3.8 the prior year by $6.9 million (1.8%). The main function which experienced the decrease was Engineering and Transportation totaling $7.8 million and Police totaling $2.8 million. These decreases were offset primarily due to increased expense in interest on long-term debt of $7.8 and general departmental increase in other departments. 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, 2022 June 30, 2021 Sales taxes Intergovernmental revenueunrestricted Property taxes Miscellaneous and other Franchise taxes Unrestricted investment Earnings (loss) $222,951,580 50.4% $190,760,900 44.9% 58,954,757 59,488,492 4,414,086 3,055,126 13.3 13.4 1.0 0.7 60,503,495 52,210,522 6,462,863 2,846,458 14.2 12.3 1.5 0.7 (3,820,904) (0.8) 829,560 0.2 For governmental activities overall, without regard to program, a comparison of the largest general revenues and their percentage of total revenues (excluding transfers) is presented. As stated previously, sales taxes experience growth of 16.9% due to the continued recovery from the pandemic. Unrestricted investment earnings revenue recognized a loss of $3.8 in the fiscal year as noted previously. A summary of the general revenues, excluding the impact of the loss on unrestricted investment earnings is below. Fiscal Year 2022 Revenues by Source - Governmental Activities 1.3% 0.9% Sales taxes 17.1% 16.9% 63.8% Intergovernmental revenue, unrestricted Property taxes Miscellaneous and other Business-type activities. Business-type activities increased the City’s net position by $3.1 million for the year ended June 30, 2022 compared to an increase of $7.9 million for the year ended June 30, 2021. Rate increases were last implemented in January 2021 for the Water and Wastewater Fund and the Solid Waste Fund. 28 For the business-type activities a comparison of revenues by source is provided for each activity. Fiscal Year Ended June 30, 2022 Charges for services Unrestricted investment earnings/ other Total Solid Waste $ 91,475,655 $ 20,627,824 $ 5,990,395 $ 4,006,042 $ 122,099,916 (912,990) $ 90,562,665 51,282 $ 20,679,106 141,243 $ 6,131,638 753,634 $ 4,759,676 33,169 $ 122,133,085 Fiscal Year Ended June 30, 2021 Charges for services Unrestricted investment earnings/ other Total Emergency Medical Transport Water and Wastewater Emergency Medical Transport Golf Total Water and Wastewater Solid Waste $ 90,696,447 $ 19,824,131 $ 4,135,310 $ 3,907,736 $ 118,563,624 1,065,658 $ 91,762,105 107,166 $ 19,931,297 172,856 $ 4,308,166 110,149 $ 4,017,885 1,455,829 $ 120,019,453 Golf Total Each of the business activities saw increased in expenses during the fiscal year. The largest of the City’s businesstype activities, Water and Wastewater, had expenses of $89.4 million for the fiscal year, followed by Solid Waste with $19.9 million, Emergency Medical Transportation with $5.6 million, and Golf with $3.5 million. Prior year expenses were $86.5 million, $17.3 million, $4.2 million, and $3.3 million in Water and Wastewater, Solid Waste, Emergency Medical Transportation, and Golf, respectively. Expenses, both operating and nonoperating, for the Water and Wastewater Fund increased by a total of $2.9 million (3.2%) due to decreases in personnel expenses of $2.1 million, due primarily to a decrease in the pension liability; a $0.5 million increase in supplies and materials; $1.8 million increase in fees and services due to general increased spending; and increased depreciation expense of $4.4 million, due to capitalization of $18.5 million in additional capital improvement projects over the prior fiscal year. This included an infrastructure project of $20 million plus a waterline replacement project of $11.8 million. The Water and Wastewater Fund change in net position was a $0.4 million increase in fiscal year 2022 which is down from $4.4 million increase in fiscal year 2021. The Solid Waste Fund had increased expenses of $2.6 million (14.7%) due to increases personnel services of $1.3 million (24.4%) due primarily to salary adjustments to address employee retention. Net position increased by $0.8 million in fiscal year 2022 while the prior year had an increase of $2.6 million. The Emergency Medical Transportation (EMT) fund had overall increases in expenses of $1.4 million (34.0%) and experienced increases in charges for services in the amount of $1.9 million (44.9%). The increases in revenue and expenses are due to the expansion of the EMT services within the City. The change in net position for the EMT fund for fiscal year 2022 was an increase of $0.6 million compared to an increase of $0.2 million in fiscal year 2021. In the Golf Fund, charges for services increased by $0.1 million (2.5%) and were offset by an increase in expenditures of $0.2 million (4.7%). The total net position of the fund increased by $1.3 million, partially due to contributed capital of $0.7 million, resulting in an ending net position of $1.8 million. 29 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 $368.5 million, an increase of $70.6 million from the prior year. Approximately $232.4 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 $33.2 million over the prior year’s combined balance of $199.2 million. The increase is due primarily to an increase in sales taxes of $31.4 million. These increases are offset by investment losses of $4.4 million due to the primarily to the change in fair value of investments at June 30, 2022. 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, 2022, the nonspendable fund balance included amounts for inventories ($1.0 million), prepaid items ($0.9 million) and a capital improvement note receivable and lease receivable reserve ($0.7 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, totaling $133.5 million consists primarily of amounts for debt service ($8.7 million), engineering and transportation ($93.0 million), and community services ($8.4). Revenues for governmental functions overall totaled $438.8 million in the fiscal year ended June 30, 2022, which represents a net increase of $47.2 million (12.1%) from the fiscal year ended June 30, 2021. This change is primarily due to the increase in the following areas: $31.4 million (17.7%) in sales taxes; and $7.2 million (13.9%) in property taxes. These increases were offset by decreases in investment income of $5.2 million and state income taxes of $3.9 million. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance was $172.0 million, with $1.0 million in non-spendable fund balance and $3.5 million in restricted fund balance. The remaining $167.5 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 $12.0 million compared to a prior year net increase of $25.8 million. Arizona state shared revenues are collected by the state for statewide sales taxes, income taxes and auto lieu taxes (taxes levied on the value of a vehicle). These revenues are distributed to local municipalities based on population. Increased collections by the State of Arizona result in increased revenues for Intergovernmental revenues, unrestricted for the City. For fiscal year 2022, state shared income for state sales taxes, state income taxes and auto lieu taxes decreased by $1.5 million (2.6%) compared to revenues from fiscal year 2021. 30 Total revenues increased by $25.2 million (10.3%) from the prior year. This increase was due primarily to increases in sales taxes, property taxes, charges for services, and property rental of $22.6 million, $5.2 million, $3.6 million, and $3.3 million, respectively. Fiscal Year Ended This was offset by decreases June 30, 2022 June 30, 2021 in Federal grants, investment $ 269,102,480 $ 243,899,086 income and state income Revenues taxes of $10.6 million, $4.0 171,997,399 63.9 % 160,025,916 65.6 % million, and $3.9 million, Total fund balance 142,653,834 53.0 138,855,354 56.9 respectively. The federal grant Unassigned fund balance revenue decrease is due to the recognition of the U.S. Department of the Treasury’s Coronavirus Relief Funds (CRF) distributed through the State of Arizona Governor’s Office in the prior fiscal year. Property rental revenue of $3.3 million is presented separately and included in charges for services in the prior fiscal year. Expenditures increased by $348.3 million (153.7%) due primarily to payment for the unfunded PSPRS pension liabilities, from certificates of participation debt proceeds, on for police and fire totaling $218.1 million and $123.0 million, respectively. The Transit Special Revenue Fund is used to account for revenues and expenditures utilized to provide related transit services. Revenues increased by $5.6 million (9.7%) from the prior year due primarily to increased sales taxes revenue of $7.2 million (15.2%) and charges for services revenue of $2.5 million (38.7%) from the prior year. These increases were offset by a reduction in miscellaneous revenue and investment income of $2.9 million and $1.2 million, respectively. The reduction in miscellaneous revenue was due to a refund from the VMRI joint venture in fiscal year 2021 for prior year expenditures. Total Transit Special Revenue Fund expenditures decreased by $3.4 million (9.7%) due primarily to $6.4 million reductions in fixed route expenditures offset by increases in fuel and other operating costs. At June 30, 2022, the Transit Special Revenue Fund Special Assessment amounts due totaling $11.1 million related special assessment debt previously issued 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 fund balance totaled $90.0 million at June 30, 2022, compared to a $61.3 million fund balance at June 30, 2021. The fund balance increased $28.7 million in the current year as compared to an increase of $15.1 million in the prior year. The General Obligation Debt Service Fund accounts for the accumulation of resources and payments of general obligation debt. Total fund balance increased $1.5 million from $6.9 million at June 30, 2021 to $8.4 million at June 30, 2022. Of this fund balance, $4.9 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 $3.5 million. There was an increase in property tax revenues of $2.1 million (6.6%). This was offset by an increase in fund expenditures totaling $30.5 million compared with prior year expenditures totaling $27.1 million, a 12.4% increase. 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 $0.1 million for fiscal year ended June 30, 2022. There is only one remaining improvement district 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 increased by $2.7 million due to lower than expected expenditures from $4.1 million transfers in from the Transit Special Revenue Fund. The Community Development Capital Projects Fund accounts for the acquisition, reconstruction, and renovation of City buildings housing municipal departments, human service programs and certain general governmental 31 projects. Total expenditures of $36.0 million represents an increase of $26.4 million from the prior fiscal year due primarily to a capital acquisition of $10.6 for redevelopment, $3.4 for the acquisition of a non-congregate shelter affordable housing City building renovations of $2.3 million and construction of a new municipal operations yard totaling $7.8 million. 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, 2022 June 30, 2021 Water and wastewater fund Solid waste fund Emergency Medical Transportation Golf fund Internal service funds $ 287,174,391 9,958,044 $ 286,730,507 9,156,718 1,412,248 1,760,651 13,435,633 843,505 427,219 12,619,674 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 $0.4 million for the fiscal year ended June 30, 2022 versus an increase in net position of $4.4 million for the fiscal year ended June 30, 2021. Charges for services increased by $0.8 million (0.9%) primarily due to no rate adjustment in the fiscal year. Total net operating income was $19.3 million, a decrease of $2.8 million or 12.6% from the prior year. Additionally, the fund also experienced a decrease in investment income of $1.9 million. Rate adjustments are approved with City Council-adopted ordinance changes. The Solid Waste Fund accounts for the provision of solid waste collection and disposal services for both residential and commercial customers. Rate increases were implemented in January 2021 and January 2022. The total solid waste fund net position increased by $0.8 million during the fiscal year ended June 30, 2022 compared to $2.6 million during the fiscal year ended June 30, 2021. This is due to revenues increases of $0.8 million during the current fiscal year offset by expenditure increases of $2.6 million. The Emergency Medical Transportation Fund accounts for the operation of the City’s ambulance services. The fund experienced an increase in operating revenue from $4.3 million in fiscal year 2021 to $6.1 million in fiscal year 2022, a 42.6% increase. Total operating expenses increased by $1.5 million, or 34.0%, compared to the prior fiscal year. The increases in revenue and expenses are due to the expansion of EMT services within the City as discussed previously. Total change in net position of the fund was $0.6 million for the fiscal year ended June 30, 2022. The Golf Fund accounts for the operation of the Rolling Hills and Ken McDonald golf courses. The Golf Fund net position increased by $1.3 million compared to prior year’s decrease in net position of $0.8 million. Total revenue increased by $0.1 million (2.5%) and there was a corresponding increase in total expenses of $0.2 million. Capital contributions of $0.7 were recognized during the year. This is due to voter-approved golf fund capital projects financed by General Obligation bonds during the fiscal year. The net position at June 30, 2022 was $1.8 million. Operations in the golf fund are 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 $0.8 million from $5.7 million in the prior fiscal year. The increase in net position is due primarily to a $2.4 million increase in the City’s self-insured employee health program offset by a $1.5 million decrease in the risk management fund. 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 32 decrease in net position of $2.7 million is due to a loss of investment earnings within the fund. All other benefit payments made were funded with City contributions. At June 30, 2022, the ending net position was $16.4 million. BUDGET HIGHLIGHTS The City’s final General Fund expenditure budget of $599.4 million was an increase over the prior year General Fund budget of $232.0 million. This is due primarily to increased budgeted PSPRS payments of $339.7 million payments during the fiscal year to pay down the unfunded pension liability. Actual budgeted revenues were greater than budgetary estimates by $40.6 million in the General Fund. This is due primarily to actual tax revenues exceeding budget estimates by $28.0 million. Additionally, miscellaneous revenues exceeded budget due to one-time General Fund assessment payments received during the fiscal year. CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The City’s capital assets for its governmental and business-type activities as of June 30, 2022 were $1.3 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 $44.0 million. The tables below reflect the capital assets at the end of the fiscal year June 30, 2022 and 2021, respectively. Capital Assets, Net of Depreciation - June 30, 2022 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 94,494,250 137,419,695 335,897,298 124,607,646 28,175,909 132,315,603 $ 852,910,401 Business-type Activities $ 6,693,377 17,775,779 190,783,761 100,424,965 20,917,821 112,619,229 $ 449,214,932 Total $ 101,187,627 155,195,474 526,681,059 225,032,611 49,093,730 244,934,832 $ 1,302,125,333 Capital Assets, Net of Depreciation - June 30, 2021 Governmental Activities Land Buildings Infrastructure Improvements Machinery and equipment Construction in progress Total $ 91,568,423 139,307,211 347,561,301 124,521,588 27,593,716 97,795,290 $ 828,347,529 33 Business-type Activities $ 6,693,377 19,036,245 171,757,935 98,989,218 20,851,863 112,409,457 $ 429,738,095 Total $ 98,261,800 158,343,456 519,319,236 223,510,806 48,445,579 210,204,747 $ 1,258,085,624 Major capital asset events during the current fiscal year included the following: Governmental Activities • The increase in governmental capital assets of $24.6 million is due primarily to the increase in construction in progress of $34.5 million. Increased construction in progress amounts include expenditures for the Municipal Utility Operations Center of $8.0 million, the Non-Congregate Shelter project of $3.4 million, City Building improvements of $5.3 million, City building capital improvement of $8.6 million and park improvement capital projects of $12.6 million, all of which have yet to be capitalized. Business-type Activities • The enterprise funds (predominately the Water and Wastewater Fund) capitalized $45.0 million in improvement projects during the fiscal year. As discussed previously, the increase in in enterprise capital assets is due primarily to capitalization of an infrastructure project totaling $20.6 million plus a waterline replacement project of $11.8 million during the fiscal year. Increases in construction in progress include a waterline replacement project totaling $9.5 million, a water treatment plant reservoir improvement project totaling $9.3 million, and various other capital projects in process. 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. DEBT ADMINISTRATION At the end of the current fiscal year, the City had total long-term obligations outstanding of $1,585.8 million, which is an increase of $306.7 million over the prior fiscal year. In the current year, the City issued Certificates of Participation, General Obligation Bonds, and Arts and Culture Tax Revenue Obligations totaling $343.0 million, $90.3 million, and $6.2 million, respectively. Additionally, the City issued Transit Excise Tax Revenue Refunding Obligations totaling $28.9 million, which refunded $27.3 million in Transit excise tax obligations, and issued Excise Tax Revenue Refunding Obligations totaling $14.7 million, which refunded $13.8 million in excise tax obligations. The total pension liability and OPEB liability decreased by $76.8 and $6.3 million respectively. It should be noted that the reduction in governmental pension liability, as a result of the $343.0 million Certificates of Participation issuance will be reflected in the pension obligation as of June 30, 2023. Outstanding Long-term Obligations - June 30, 2022 Governmental Activities Business-type Activities Total General obligation bonds Special assessment bonds Excise tax obligations Revenue obligations Premium on debt payable Certificates of participation HUD Section 108 loan WIFA loan Financed purchases Total debt payable $ 212,220,000 23,865,000 69,442,000 24,718,409 343,000,000 1,580,000 8,710 674,834,119 $ 189,535,000 46,703,000 69,570,000 37,695,756 6,351,352 166,851 350,021,959 $ Compensated absences Claims and judgments OPEB Pensions Total long-term obligations 32,633,155 9,455,084 95,706,685 391,701,480 $ 1,204,330,523 12,530,749 18,951,253 $ 381,503,961 32,633,155 9,455,084 108,237,434 410,652,733 $ 1,585,834,484 34 401,755,000 23,865,000 116,145,000 69,570,000 62,414,165 343,000,000 1,580,000 6,351,352 175,561 1,024,856,078 Outstanding Long-term Obligations - June 30, 2021 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 $ 196,865,000 25,755,000 69,582,000 26,374,477 2,062,000 979,231 321,617,708 $ 156,105,000 50,543,000 72,100,000 35,391,535 7,184,583 327,068 321,651,186 $ 352,970,000 25,755,000 120,125,000 72,100,000 61,766,012 2,062,000 7,184,583 1,306,299 638,268,894 Compensated absences Claims and judgments OPEB Pensions Total long-term obligations 36,783,727 9,298,295 85,021,103 468,491,417 $ 921,212,250 11,012,784 25,231,646 $ 357,895,616 36,783,727 9,298,295 96,033,887 493,723,063 $1,279,107,866 The City issued $90.3 million in general obligation debt with an issuance premium of $9.1 million during the current fiscal year. The funding was for water and wastewater; streets, transportation, and storm drains; public safety; parks; and municipal infrastructure preservation in the total amount of $60.4 million, $16.1 million, $5.0 million, $5.7 million, and $12.1 million, respectively. The City issued $343.0 million in taxable Certificates of Participation to fund a significant portion of the City’s unfunded liabilities with respect to its pension plans in the Arizona Public Safety Personnel Retirement System (PSPRS) that are currently being funded from annual payments from the City’s General Fund. The reduction in the net pension liability related to PSPRS will occur in the fiscal year ended June 30, 2023 as the June 30, 2022 pension liability reflects a June 30, 2021 measurement date. The City issued $6.2 million in Arts & Culture Tax Revenue Obligations with an issuance premium of $1.6 million to fund the repair of deficiencies in the roof of the Tempe Center for the Arts. The City has assessed and is responsible for the collection of assessments secured by a lien on the assessed properties related to transit excise tax revenue obligations issued in the amount of $13.2 million, 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, 2022, the Transit Fund special assessments receivable, related to the obligations, on the assessed properties totaled $11.1 million. As development occurs, additional benefitting properties will be assessed in an amount not to exceed $13.0 million for all assessed properties. 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 $56.0 million from the fiscal year ended June 30, 2021 to the fiscal year ended June 30, 2022. 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 is located in the Statistical Section (Exhibit S-15). A comparison of these indicators follows: 35 Fiscal Year Ended June 30, 2022 June 30, 2021 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 $ 444,569,812 2,388 19.5% $ 1.48 $ 396,992,053 2,198 18.7% $ 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, 2022 is $259.3 million under the 20% capacity and $105.2 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-18) of this report. During the year, the City maintained ratings on its outstanding general obligation bonds of AAA from S&P Global Ratings 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. ECONOMIC FACTORS On June 9, 2022, the City Council approved a $1.13 billion budget, which is a decrease of $136.2 million compared to prior year’s budget. The fiscal year 2022 budget includes $665.8 million for operations and $461.1 million for capital improvements. Over the past few years, the City has seen growth in sales and use tax, even despite uncertainty in the economy created by COVID-19 during FY 2020/21 and FY 2021/22. For FY 2022/23, the projections have been increased compared to the prior year due to higher than expected sales tax growth, specifically in retail due to online sales activity. The adopted fiscal year 2022/23 budget strategically implements a measured spend down of accumulated fund balances and reinforces the City’s commitment to invest in safe communities, economic development, sustainable growth, enhanced quality of life for the City’s residents, and development and maintenance of a strong community connection. 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 Financial Services Accounting 20 E. Sixth Street Tempe, AZ 85281 480.350.8256 36 City of Tempe, Arizona 37 City of Tempe, Arizona 38 Statement of Net Position June 30, 2022 City of Tempe, Arizona Governmental Activities Assets Pooled cash and investments Receivables: Taxes Accounts, net Accrued interest Leases 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 $ 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 Deferred inflows from leases Deferred inflows from refundings Deferred inflows from pensions Deferred inflows from OPEB Total inflow of resources Net Position $ 118,868,523 Total $ 498,481,414 27,607,432 10,175,901 613,357 27,893,137 27,968,837 971,331 945,439 59,867,556 23,366,771 1,278,653 4,033,982 391,872,529 18,614,005 407,214 1,255,871 33,610,730 108,331 713,830 107,385,658 27,607,432 28,789,906 1,020,571 27,893,137 27,968,837 2,227,202 945,439 93,478,286 23,366,771 1,386,984 4,747,812 499,258,187 94,494,250 132,315,603 6,693,377 112,619,229 101,187,627 244,934,832 137,419,695 335,897,298 124,607,646 28,175,909 1,809,118,217 17,775,779 190,783,761 100,424,965 20,917,821 730,179,094 155,195,474 526,681,059 225,032,611 49,093,730 2,539,297,311 3,594,763 398,117,376 14,272,195 415,984,334 6,964,228 4,782,501 1,897,806 13,644,535 10,558,991 402,899,877 16,170,001 429,628,869 16,762,417 4,496,954 19,770,212 38,153,880 37,429,444 16,185,264 926,587 4,195,816 256,582 33,610,730 32,947,681 5,423,541 23,966,028 38,410,462 71,040,174 - 1,970,000 21,895,000 55,117,015 1,125,348,508 1,320,943,430 32,092,812 349,411,149 436,678,940 87,209,827 1,474,759,657 1,757,622,370 27,453,455 1,681,432 55,889,631 4,250,141 89,274,659 6,235,411 603,944 6,839,355 27,453,455 1,681,432 62,125,042 4,854,085 96,114,014 538,764,896 138,501,996 677,266,892 4,833,899 1,637,120 14,675,282 116,927,270 3,033,360 1,236,041 337,065 113,940 212,111 21,684,088 111,429,390 814,884,462 161,803,338 300,305,334 4,833,899 1,637,120 14,675,282 116,927,270 3,033,360 1,236,041 337,065 113,940 212,111 21,684,088 273,232,728 $ 1,115,189,796 The notes to the financial statements are an integral part of this statement. 39 $ 1,970,000 21,895,000 Deferred Inflows of Resources Net investment in capital assets Restricted for: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municipal court City manager Office of strategic management and diversity Debt service Unrestricted Total net position 379,612,891 Business-type Activities $ Statement of Activities For the fiscal year ended June 30, 2022 Program Revenues Functions/Programs Charges for Services Expenses Governmental activities: Police $ 106,879,997 Fire medical rescue 48,723,812 Community services 39,506,898 Engineering and transportation 79,306,002 Municipal utilities 301,324 Community development 15,739,179 Human services 31,970,182 Municipal court 5,048,832 Mayor and council 612,841 City manager 9,346,396 City attorney 3,760,903 Internal audit office 550,591 Municipal budget office 425,769 Economic development office 1,512,840 Sustainability office 617,053 Office of strategic management and diversity 844,972 City clerk and elections 997,382 Financial services 14,399,674 Human resources 4,425,590 Information technology 883,020 Internal services Unallocated depreciation 1,451,338 Interest on long-term debt 17,344,833 Total governmental activities 384,649,428 Business-type activities: Water and wastewater Solid waste Emergency medical transportation Golf course Total business-type activities Total government $ 822,007 349,850 3,336,679 15,076,973 22,270,861 2,736,199 1,248,063 2,769,468 6,045 1,000 3,597,830 52,214,975 91,475,655 20,627,824 5,990,395 4,006,042 122,099,916 $ 174,314,891 89,403,602 19,872,919 5,562,895 3,500,205 118,339,621 $ 502,989,049 Operating Grants and Contributions Capital Grants and Contributions $ $ $ 3,585,035 1,060,916 1,187,949 1,261,962 427,549 16,416,913 94,555 1,262,196 12,896 86,587 417,457 560,810 26,374,825 26,374,825 $ 674,652 565,598 727,894 2,760,412 12,074,428 2,369 2,126,515 18,931,868 726,800 726,800 19,658,668 General revenues: Sales taxes Intergovenmental revenue, unrestricted Property taxes Franchise taxes Unrestricted investment earnings (loss) 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. 40 City of Tempe, Arizona Net (Expense) Revenue and Changes in Net Position Governmental Activities $ $ (101,798,303) (46,747,448) (34,254,376) (60,206,655) (301,324) 19,033,659 (12,814,701) (3,706,214) (612,841) (8,084,200) (3,748,007) (550,591) (425,769) 1,256,628 (524,421) (426,515) (997,382) (8,114,519) (4,425,590) (883,020) (1,451,338) (17,344,833) (287,127,760) Business-type Activities $ - Total $ (101,798,303) (46,747,448) (34,254,376) (60,206,655) (301,324) 19,033,659 (12,814,701) (3,706,214) (612,841) (8,084,200) (3,748,007) (550,591) (425,769) 1,256,628 (524,421) (426,515) (997,382) (8,114,519) (4,425,590) (883,020) (1,451,338) (17,344,833) (287,127,760) (287,127,760) 2,072,053 754,905 427,500 1,232,637 4,487,095 4,487,095 2,072,053 754,905 427,500 1,232,637 4,487,095 (282,640,665) 222,951,580 58,954,757 59,488,492 3,055,126 (3,820,904) 3,646,464 767,622 646,079 345,689,216 58,561,456 756,323,006 814,884,462 (1,777,102) 788,909 294,562 (646,079) (1,339,710) 3,147,385 297,157,949 300,305,334 222,951,580 58,954,757 59,488,492 3,055,126 (5,598,006) 4,435,373 1,062,184 344,349,506 61,708,841 1,053,480,955 $ 1,115,189,796 $ 41 Balance Sheet Governmental Funds June 30, 2022 Assets Pooled cash and investments Receivables: Taxes Accounts Accrued interest Leases 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 Transit Special Revenue General $ 160,344,656 $ 17,847,793 5,852,910 406,432 27,523,526 175,980 194,487 100,000 11,225,838 250,000 223,921,622 $ 6,319,774 2,924,789 7,610,312 261,946 3,179,060 20,295,881 General Obligation Debt Service $ 81,198,468 $ 6,172,546 4,222,849 31,262 369,611 2,014,643 4,123,796 11,058,197 1,028,653 110,220,025 $ 936,384 20 78,760 3,465,000 658,795 5,138,959 $ 3,026,365 $ 1,031,284 31,467,846 35,525,495 $ 7,404 22,620,000 3,932,036 26,559,440 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 Leases Total deferred inflows of resources 3,012,937 1,217,809 306,049 27,091,547 31,628,342 1,028,653 2,644,538 11,058,197 361,908 15,093,296 519,014 519,014 Fund Balances Fund balances: Non-spendable Restricted Committed Assigned Unassigned Total fund balances 976,468 3,497,723 24,869,373 142,653,835 171,997,399 357 60,637,705 15,334,776 14,014,932 89,987,770 8,447,041 8,447,041 Total liabilities, deferred inflows of resources, and fund balances $ 223,921,622 $ 110,220,025 The notes to the financial statements are an integral part of this statement. 42 $ 35,525,495 City of Tempe, Arizona Special Assessment Debt Service $ 300,415 $ 169,394 292,500 12,308,574 13,070,883 $ 850 59,500 292,500 352,850 Transit Capital Projects Community Development Capital Projects $ 21,286,154 $ 22,915,971 $ 27,776 21,313,930 $ 22,934,656 45,850,627 $ 12,477,968 12,477,968 13,070,883 $ - 240,065 240,065 $ 178,814 178,814 21,313,930 $ 64,308,998 $ 2,555,809 87,875 5,589 2,991,762 776,844 845,439 12,757,576 84,329,892 $ - 21,135,116 21,135,116 $ 4,780,412 9,552 34,408,046 39,198,010 Non-Major Governmental Funds 77,592 6,575,025 6,652,617 $ 45,850,627 $ 3,989,250 1,562,593 513,960 175,980 3,424,388 3,085,000 197,053 12,948,224 Total Governmental Funds $ 353,381,027 $ 27,607,432 10,163,634 612,677 27,893,137 175,980 27,968,837 971,331 945,439 59,867,556 23,366,771 1,278,653 534,232,474 $ 16,212,888 4,496,954 8,203,032 175,980 38,153,880 29,170,000 8,259,444 104,672,178 664,312 642,551 22,929 1,329,792 3,012,937 664,312 642,551 1,028,653 3,885,276 825,063 23,536,165 27,453,455 61,048,412 1,622,283 39,443,595 28,431,685 1,390,377 (836,064) 70,051,876 2,599,108 133,478,837 50,341,486 40,274,682 141,817,771 368,511,884 84,329,892 43 $ 534,232,474 Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2022 City of Tempe, Arizona Fund balances- total governmental funds $ 368,511,884 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 1,820,175,944 (967,265,543) 852,910,401 The equity in joint venture is not a financial resource and, therefore, is not reported in the funds. 391,872,529 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 23,536,165 4,710,339 1,028,653 3,012,937 1,306,863 33,594,957 Bond premiums and the deferred charge on refundings are not financial resources and, therefore, are not reported in the funds. (22,805,078) 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 (32,633,155) (9,455,084) (48,875,756) (81,556,159) (650,115,710) (822,635,864) 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 13,435,633 $ The notes to the financial statements are an integral part of this statement. 44 814,884,462 City of Tempe, Arizona 45 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2022 Taxes: Sales taxes Property taxes Franchise taxes Intergovernmental: Federal grants State grants State sales tax State income tax Auto lieu tax Other Property rental Interest earnings- leases Investment income (loss) Charges for services Fines and forfeitures Other entities' participation Special assessments Licenses and permits Miscellaneous Total revenues Transit Special Revenue General Revenues: $ General Obligation Debt Service 142,598,695 25,714,815 3,055,126 $ 54,736,977 - $ 33,796,504 - 25,683,520 24,105,004 9,166,233 1,720,125 3,290,820 540,174 (3,467,475) 12,233,636 4,934,285 359,398 7,487,684 11,680,440 269,102,480 456,743 58,688 5,078 (1,049,502) 8,966,282 492,926 105,121 63,772,313 24,944 33,821,448 307,735,548 161,447,104 26,567,730 2,880,608 13,093,004 14,640,888 4,747,969 600,044 8,074,375 4,104,009 573,579 297,671 1,182,756 412,371 724,843 981,782 14,533,212 4,365,764 11,639 26,255,211 - 5,996,990 1,854,850 574,826,736 3,465,000 1,263,223 407,846 31,391,280 22,620,000 7,516,186 354,675 30,490,861 (305,724,256) 32,381,033 3,330,587 20,750 (25,960,406) 343,000,000 635,395 317,695,739 (4,177,241) 96,331 28,890,000 (28,478,322) (3,669,232) 6,048,472 (8,195,452) 267,651 6,315,000 (6,218,160) (1,782,489) 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 Financial services Human resources Information technology Debt service: Principal Interest Fiscal fees Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures before other financing sources (uses) - Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Proceeds from loan Issuance of refunding bonds Payment to refunding bonds escrow agent Total other financing sources (uses) Net change in fund balance 11,971,483 28,711,801 1,548,098 Fund balance at beginning of year Fund balance at end of year 160,025,916 171,997,399 61,275,969 89,987,770 6,898,943 8,447,041 $ The notes to the financial statements are an integral part of this statement. 46 $ $ City of Tempe, Arizona Special Assessment Debt Service $ - Transit Capital Projects Community Development Capital Projects $ $ 2,126,515 8,174 2,134,689 117,264 4,917 528,746 398 651,325 - $ - - Non-Major Governmental Funds $ 11,461,266 3,679 4,954 11,469,899 - - 11,209,835 - Total Governmental Funds $ 208,545,507 59,511,319 3,055,126 17,996,793 2,538,354 14,406,073 3,644,136 117,281 3,288,777 439,711 2,536,743 1,674,711 57,852,414 29,575,323 2,538,354 40,089,593 24,105,004 9,166,233 5,821,004 3,349,508 545,252 (4,366,156) 24,488,695 5,373,996 3,917,813 2,126,515 7,487,684 13,473,798 438,804,568 3,161,012 390,429 7,384,852 10,844,869 2,447,731 16,301,813 246,026 1,269,867 14,546 280,725 119,474 511,545 - 310,896,560 161,837,533 33,952,582 39,980,688 15,540,735 30,942,701 4,993,995 600,044 9,344,242 4,118,555 573,579 297,671 1,463,481 531,845 1,236,388 981,782 14,533,212 4,365,764 11,639 1,370,000 619,250 850 1,990,100 2,074,895 2,074,895 35,987,541 35,987,541 3,567,000 359,872 196,893 35,455,965 82,552,619 31,022,000 15,755,521 2,815,114 73,518,401 759,314,032 144,589 (1,423,570) (24,517,642) (24,700,205) (320,509,464) - 4,135,882 4,135,882 13,057,276 (3,679) 11,030,000 970,000 25,053,597 19,612,921 (3,892,444) 30,156,600 3,659,753 57,575 2,990,000 (2,947,095) 49,637,310 42,875,301 (42,229,222) 384,186,600 4,897,404 789,301 38,195,000 (37,643,577) 391,070,807 144,589 2,712,312 535,955 24,937,105 70,561,343 95,476 240,065 18,422,804 21,135,116 6,116,662 6,652,617 45,114,771 70,051,876 297,950,541 368,511,884 $ $ $ 47 $ Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Net change in fund balances- total governmental funds $ 70,561,343 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) 3,993,783 (5,403,529) (1,409,746) Certain revenues in the statement of activities do not provide current financial resources and, therefore, are not reported as revenues in the governmental funds. Court revenue Grants and contributions Property tax and charges for services revenue Special assessments received/recognized Joint venture contributions (609,427) 99,784 2,149,470 (1,871,801) 3,224,589 2,992,615 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 73,518,401 (7,231,200) (46,399,066) 19,888,135 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 361,824,247 (39,072,193) 322,752,054 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 970,521 970,521 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 Payment to refunded bonds escrow agent (2,141,061) 6,601,872 37,643,577 42,104,388 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 Premium on issuance of debt Deferred inflow- refunding Principal payments made (422,955,000) (6,499,381) (1,681,432) 31,022,000 (400,113,813) 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 815,959 $ The notes to the financial statements are an integral part of this statement. 48 58,561,456 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual General Fund For the Fiscal Year Ended June 30, 2022 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 Financial services Human resources Information technology Contingency Interdepartmental charges Debt service: Interest and fiscal fees Other financing sources (uses) Transfers from other funds Transfers to other funds Issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance City of Tempe, Arizona Budgeted Amounts Original Final Actual Amounts (Budgetary Basis) Variance with Final Budget Positive (Negative) $ 143,321,497 58,547,617 2,171,000 9,156,902 4,220,155 5,426,598 359,315 9,563,430 232,766,514 $ 143,321,497 58,547,617 2,171,000 9,168,902 4,220,155 5,426,598 359,315 9,563,430 232,778,514 171,368,636 60,674,883 1,401,773 11,509,153 4,958,257 8,238,940 359,398 14,928,924 273,439,964 321,944,590 168,147,663 29,641,632 3,270,249 370,530 15,549,121 19,064,736 610,375 5,058,541 7,664,235 3,726,155 633,991 297,802 767,587 462,697 1,672,107 1,507,533 13,523,251 5,410,677 19,461,621 1,500,000 (19,461,621) 309,821,675 161,384,836 29,770,247 3,299,733 342,020 15,102,052 17,884,397 610,375 5,067,187 7,665,735 4,126,383 633,991 297,802 1,297,544 462,697 1,132,999 1,509,567 27,633,776 4,723,607 19,461,621 597,965 (19,461,621) 309,173,236 160,981,669 26,703,881 2,988,110 2,280,475 13,126,889 15,529,650 598,835 4,752,031 8,068,505 4,100,414 573,023 295,771 1,179,835 411,645 725,446 979,992 14,539,618 4,357,324 18,976,524 (18,805,773) 648,439 403,167 3,066,366 311,623 (1,938,455) 1,975,163 2,354,747 11,540 315,156 (402,770) 25,969 60,968 2,031 117,709 51,052 407,553 529,575 13,094,158 366,283 485,097 597,965 (655,848) 6,014,891 606,838,363 6,014,891 599,379,479 7,851,841 579,388,942 (1,836,950) 19,990,537 84,640 343,000,000 439,401 343,524,041 $ (30,547,808) 84,640 (15,198,771) 343,000,000 439,401 328,325,270 $ (38,275,695) 20,750 (25,960,406) 343,000,000 635,395 317,695,739 11,746,761 (63,890) (10,761,635) 195,994 (10,629,531) $ 50,022,456 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 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. 49 (4,869,247) 1,026,657 533,611 3,237,055 296,645 11,971,483 $ 28,047,139 2,127,266 (769,227) 2,340,251 738,102 2,812,342 83 5,365,494 40,661,450 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Transit Special Revenue Fund For the Fiscal Year Ended June 30, 2022 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 from bond refunding Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balance Budgeted Amounts Original Final Variance with Final Budget Positive (Negative) 45,991,972 1,193,990 698,000 7,046,875 862,495 310,000 56,103,332 54,736,977 760,397 531,002 8,662,627 492,926 160,798 65,344,727 53,419,524 500,000 53,924,050 500,000 26,559,553 - 27,364,497 500,000 2,905,000 2,076,598 58,901,122 2,905,000 2,076,598 59,405,648 3,465,000 1,671,069 31,695,622 (560,000) 405,529 27,710,026 (4,177,241) (4,177,241) (4,177,241) (4,177,241) (4,177,241) 96,331 28,890,000 (28,478,322) (3,669,232) 96,331 28,890,000 (28,478,322) 508,009 (7,479,557) 29,979,873 $ 37,459,430 $ 45,991,972 1,193,990 698,000 7,046,875 862,495 310,000 56,103,332 $ (6,975,031) $ Actual Amounts (Budgetary Basis) $ 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 revenues on a cash 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. 50 (1,580,504) 1,215 307,337 8,089 (4,209) 28,711,801 $ 8,745,005 (433,593) (166,998) 1,615,752 (369,569) (149,202) 9,241,395 City of Tempe, Arizona 51 Statement of Fund Net Position Proprietary Funds June 30, 2022 City of Tempe, Arizona Business-type Activities - Enterprise Funds Water and Wastewater Assets Current assets: Pooled cash and investments Restricted cash and investments Accounts receivable, net Accrued interest receivable 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 Deferred Outflows of Resources Deferred charge on refunding Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources $ 107,240,342 33,610,730 14,129,389 369,362 1,255,871 156,605,694 Solid Waste $ 10,205,792 1,717,673 25,184 11,948,649 Emergency Medical Transportation Golf Course $ $ 669,011 2,746,726 3,415,737 Governmental ActivitiesInternal Service Funds Total 753,378 20,217 12,668 786,263 $ 118,868,523 33,610,730 18,614,005 407,214 1,255,871 172,756,343 $ 26,231,864 12,267 680 26,244,811 2,497,885 108,331 437,813 107,385,658 173,330 - 86,726 - 15,961 - 2,497,885 108,331 713,830 107,385,658 20,920 - 6,330,829 46,714,221 402,530,655 217,635,010 24,965,180 111,559,858 (374,058,738) 1,265,783 17,827,210 335,611 (12,162,211) 2,183,986 (810,875) 362,548 1,822,663 3,210,587 1,368,293 2,629,478 723,760 (5,218,916) 6,693,377 49,802,667 405,741,242 219,003,303 47,605,854 112,619,229 (392,250,740) - 435,677,015 546,106,702 7,266,393 7,439,723 1,373,111 1,459,837 4,898,413 4,914,374 449,214,932 559,920,636 20,920 702,712,396 19,388,372 4,875,574 5,700,637 732,676,979 26,265,731 6,964,228 2,933,255 1,292,964 11,190,447 1,161,269 416,519 1,577,788 581,044 119,095 700,139 106,933 69,228 176,161 6,964,228 4,782,501 1,897,806 13,644,535 140,159 20,197 160,356 52 Business-type Activities - Enterprise Funds Current liabilities: Accounts payable Deposits Accrued expenses Unearned revenue Accrued interest payable General obligation bond - current Excise tax revenue obligations- current Water/sewer revenue obligations -current WIFA loan payable Capital leases payable Total current liabilities 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 Solid Waste Golf Course 14,890,870 924,740 2,778,871 256,582 5,615,730 21,310,000 4,155,000 2,530,000 850,961 - 974,812 1,826 1,038,244 - 73,500 21 218,816 - 246,082 159,885 160,217 16,185,264 926,587 4,195,816 256,582 5,615,730 21,310,000 4,155,000 2,530,000 850,961 160,217 549,529 11,567,180 - 53,312,754 2,014,882 292,337 566,184 56,186,157 12,116,709 209,727,092 53,817,869 79,958,795 5,500,391 8,593,381 11,623,384 369,220,912 2,730,852 4,601,674 7,332,526 737,732 2,302,458 3,040,190 2,497,885 6,634 468,784 423,737 3,397,040 2,497,885 209,727,092 53,817,869 79,958,795 5,500,391 6,634 12,530,749 18,951,253 382,990,668 117,907 555,399 673,306 422,533,666 9,347,408 3,332,527 3,963,224 439,176,825 12,790,015 3,824,369 370,417 4,194,786 1,514,060 146,648 1,660,708 757,563 73,375 830,938 139,419 13,504 152,923 6,235,411 603,944 6,839,355 182,739 17,700 200,439 125,089,294 162,085,097 287,174,391 7,266,393 2,691,651 9,958,044 1,373,111 39,137 1,412,248 4,773,198 (3,012,547) $ 1,760,651 138,501,996 161,803,338 $ 300,305,334 13,435,633 13,435,633 Water and Wastewater Liabilities $ Governmental ActivitiesInternal Service Funds Emergency Medical Transportation $ $ The notes to the financial statements are an integral part of this statement. 53 Total $ Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Business-type Activities - Enterprise Funds Operating revenues: Charges for services Miscellaneous Total operating revenues Water and Wastewater $ Operating expenses: Personnel services Supplies and materials Fees and services Depreciation Total operating expenses Operating income (loss) 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 Capital contributions Transfers in Transfers out Change in net position Total net position- beginning Total net position- ending $ Solid Waste Emergency Medical Transportation Golf Course $ $ $ 20,627,824 7,291 20,635,115 14,967,920 5,845,830 26,239,365 25,711,816 72,764,931 19,348,691 6,710,291 737,152 10,967,530 1,457,946 19,872,919 762,196 3,427,259 471,909 1,425,064 238,663 5,562,895 571,149 614,032 597,127 1,733,547 482,978 3,427,684 578,360 25,719,502 7,652,018 40,365,506 27,891,403 101,628,429 21,260,396 45,944,946 45,944,946 902,635 (1,701,884) (9,761,263) 150,927 (6,877,408) (96,762) 140,753 - (2,406) - 23,950 (72,521) 2,882 - (1,777,102) (9,833,784) 294,562 (6,877,408) (86,676) - 1,159,063 806,187 568,743 532,671 3,066,664 815,959 5,288,565 (6,003,744) 443,884 (4,861) 801,326 568,743 726,800 74,000 (39) 1,333,432 726,800 5,362,565 (6,008,644) 3,147,385 815,959 286,730,507 9,156,718 843,505 427,219 297,157,949 12,619,674 $ 9,958,044 $ The notes to the financial statements are an integral part of this statement. 54 1,412,248 $ 4,006,042 2 4,006,044 Total 91,475,655 637,967 92,113,622 287,174,391 5,990,395 143,649 6,134,044 Governmental ActivitiesInternal Service Funds 1,760,651 $ $ 122,099,916 788,909 122,888,825 300,305,334 $ $ 46,847,581 46,847,581 13,435,633 Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2022 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 $ 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 Cash received from capital contributions Proceeds from the sale of capital 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 Reconciliation of cash and cash equivalents at end of year: Pooled cash and investments Restricted Cash and investments Cash and cash equivalents at end of year $ $ 91,310,692 (15,752,944) (35,578,917) 39,978,831 Solid Waste $ 20,543,453 (6,026,231) (11,570,633) 2,946,589 125,821 5,288,565 (6,003,744) (589,358) (4,861) (4,861) 54,740,000 (25,072,010) (8,204,230) (45,095,693) 150,927 (23,481,006) Emergency Medical Transportation $ 5,390,843 (2,879,228) (1,863,086) 648,529 Golf Course $ 3,997,103 (599,535) (2,358,091) 1,039,477 Total $ 121,242,091 (25,257,938) (51,370,727) 44,613,426 Governmental ActivitiesInternal Service Funds $ 46,924,414 (45,491,134) 1,433,280 - (125,821) 74,000 (39) (51,860) 5,362,565 (6,008,644) (646,079) - (1,194,380) 140,753 (1,053,627) (446,601) (446,601) (123,469) (160,217) (72,521) (631,566) 726,800 2,882 (258,091) 54,740,000 (123,469) (25,072,010) (160,217) (8,276,751) (47,368,240) 726,800 294,562 (25,239,325) - (1,678,318) 161,585 (1,516,733) (94,229) (94,229) (2,406) (2,406) 23,852 23,852 (1,751,101) 161,585 (1,589,516) (85,110) (85,110) 14,391,734 126,459,338 140,851,072 1,793,872 8,411,920 10,205,792 199,522 469,489 669,011 753,378 753,378 17,138,506 135,340,747 152,479,253 1,348,170 24,883,694 26,231,864 $ 107,240,342 33,610,730 140,851,072 $ 19,348,691 $ $ $ $ $ 10,205,792 10,205,792 $ 669,011 669,011 $ 762,196 $ 571,149 $ $ $ $ $ 753,378 753,378 $ 578,360 $ $ $ 118,868,523 33,610,730 152,479,253 $ 26,231,864 26,231,864 $ 21,260,396 $ 902,635 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in net OPEB asset Increase (decrease) in deposits Increase (decrease) in unearned revenue (Increase) decrease in joint venture 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: Net loss from joint venture Total noncash investing, capital, and financing activities: The notes to the financial statements are an integral part of this statement. 25,711,816 1,457,946 238,663 482,978 27,891,403 $ (817,537) 345,234 (368,978) 255,485 14,607 (6,088,614) 1,994,173 (113,373) (140,374) 3,784,937 (4,989,380) 1,042,144 39,978,831 $ (91,662) (150,153) 1,826 132,223 187,770 (219,169) 1,526,523 (991,958) 331,047 2,946,589 $ (743,201) (76,535) 21 33,866 63,433 (151,190) 782,731 (157,119) 86,711 648,529 $ (8,941) (13,617) (27,417) (4,254) (18,625) 134,866 (141,936) 58,063 1,039,477 $ (1,661,341) 345,234 (609,283) 257,332 14,607 (6,088,614) 2,132,845 133,576 (529,358) 6,229,057 (6,280,393) 1,517,965 44,613,426 $ $ $ (6,877,408) (6,877,408) $ $ $ $ - $ $ $ $ (6,877,408) (6,877,408) $ $ - 55 - 76,833 (17,587) 157,424 356,820 6,313 187,539 (249,000) 12,303 1,433,280 - Statement of Fiduciary Net Position Fiduciary Trust Fund June 30, 2022 City of Tempe, Arizona Other Employee Benefit Trust Fund Assets Cash and cash equivalents $ 1,013,536 Investments at fair value: Equity Mutual Funds Total investments 10,260,048 5,108,093 15,368,141 Total assets 16,381,677 Net Position Restricted for other post employment benefits Total net position $ 16,381,677 16,381,677 Statement of Changes In Fiduciary Net Position Fiduciary Trust Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Other Employee Benefit Trust Fund Additions: Contributions: Employer contributions $ Investment earnings: Net decrease in fair value of investments Interest, dividends and other Investment costs Net investment earnings 9,642,039 (4,305,207) 1,659,247 (82,686) (2,728,646) Total additions 6,913,393 Deductions: Benefits paid to participants or beneficiaries Medical insurance for retirees Total deductions 8,354,996 1,287,043 9,642,039 Net increase in fiduciary net position (2,728,646) Net position- beginning Net position- ending $ The notes to the financial statements are an integral part of these statements. 56 19,110,323 16,381,677 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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. 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 governmentwide 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. 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. 57 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basic Financial Statements (Continued) 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. 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. 58 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Governmental Funds (Continued) Debt Service (Continued) 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 funds are presented as major funds in the basic financial statements: Transit Capital Projects Fund - used for the acquisition of buses, the light rail system, and other traffic flow improvements. Community Development Capital Projects 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. 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. 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. 59 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) Proprietary Funds (Continued) 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 selfinsurance 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. 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. 60 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) 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. Generally, 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. 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. 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. 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. 61 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Budgetary Data (Continued) 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 2022 Expenditure Limitation is $571,106,148. 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. 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 evidence 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. 62 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 $7.6 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. 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) 10-70 7-70 10-50 3-15 Buildings Infrastructure Improvements Machinery and equipment 63 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Leases During the year ended June 30, 2022, the City implemented the provisions if GASB Statement No.87, Leases. This Statement increases the usefulness of the financial statement by requiring recognitions of certain lease assets and liabilities for leases that previously were classified as operating leases. The statement establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The City’s analysis of contracts and agreements in effect at the beginning of the year resulted in no changes to beginning balances reported in the financial statements due to the implantation of this standard. As a lessor, the City recognizes lease receivables with an initial, individual value of $50,000 or more. If there is no stated rate in the lease contract or the stated rate is not the rate the City charges the lessee and the implicit rate cannot be determined, the City uses its own incremental borrowing rate as the discount rate to measure lease receivables. The City’s incremental borrowing rate is based on the rate used for the City’s Interfund Advance. M. 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. N. 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”. O. 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. 64 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) P. 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. Q. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type. 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. R. 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. S. 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. T. 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). U. 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. 65 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) V. 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. 66 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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 $5,831,735 and the bank balance was $8,688,687; $8,068,687 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 $28,180 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, 2022 are classified in the accompanying financial statements as follows: Carrying amount of investments Carrying amount of cash deposits Total cash and investments $ 602,509,642 5,831,735 $ 608,341,377 Pooled cash and investments – unrestricted Restricted cash and investments Investments in OPEB trust Total cash and investments $ 498,481,414 93,478,286 16,381,677 $ 608,341,377 At June 30, 2022, the City maintained the following investments and maturities: US government treasuries US government treasuries Money market Principal cash Held with trustee State investment pool Mutual funds Remaining Maturity in Months 13 – 24 25 – 36 Months Months $ 104,756,267 $ 99,321,939 Category Level 2 Fair Value $ 288,682,360 12 Months or Less $ 84,604,154 Level 2 124,322,735 65,787,014 48,732,037 9,760,543 43,141 Level 1 Level 1 69,357,151 73,288,211 69,357,151 73,288,211 - - - N/A 31,491,046 31,491,046 - - - 15,368,141 $ 602,509,644 15,368,141 $339,895,717 $153,488,304 $ 109,082,482 Level 1 67 37 - 48 Months $ $ - 43,141 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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 S&P Global. The Arizona Local Government Investment Pool 5 is currently rated AAA by Moody’s. The OPEB Trust has investments with an average quality ranging from AAA to B. 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, 2022, 42.09% of the City’s investments are in US Treasuries, 6.21% of the City’s investments are in Fannie Mae, 10.69% of the City’s investments are in Principal Cash Held with Trustee, 15.80% of the City’s investments are in Federal Home Loan Mortgage Corporation securities, and 10.11% 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 §35313, 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. 68 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2022: Due to $ 175,980 $ 175,980 General fund Non-major governmental funds Total governmental funds Due from $ 175,980 $ 175,980 The interfund balances at June 30, 2022 are short-term transfers to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2022 are expected to be repaid within one year. Transfers Out Transfers In General General Obligation Debt Service Transit Capital Projects Community Development Capital Projects Non-major Governmental General Transit Special Revenue $ $ - - Community Development General Capital Non-major Water and Obligation Projects Governmental Wastewater Debt Service $ - $ - $ - $ Solid Waste 20,750 $ - Golf $ Total - $ 646,788 - - 3,679 7,605 5,385,500 4,861 - 4,135,882 - - - - - - 4,135,882 11,781,098 41,359 - - 711,325 523,494 - - 13,057,276 13,532,520 - 2,906,887 - 3,173,514 - - - 19,612,921 Golf - - 5,288,565 - - - 74,000 - - 5,288,565 74,000 Total $ 25,960,406 $ Water and Wastewater 4,177,241 $ 8,195,452 $ 3,679 $ 3,892,444 $ 6,003,744 $ 4,861 39 20,750 $ 6,048,472 39 $48,237,866 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 2.25% 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 and Golf Enterprise Funds on June 30, 2022 was $2,497,885. 69 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 6 – RECEIVABLES CAPITAL IMPROVEMENT NOTES RECEIVABLE 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, 2022 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, 2022, 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 note receivable was paid in full during the year ended June 30, 2022 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 on June 30, 2022 was $108,331 for this agreement. LEASES RECEIVABLE The City, as a lessor, has entered into lease agreements involving land, baseball facilities and building spaces. The related receivables under the lease agreements have been recorded at the present value of their future minimum lease payments as of the inception date in both the General Fund and the Transit Special Revenue Fund. Lease revenue of $3,290,820 was recorded as Property Rental revenue and the related interest revenue of $540,174 was recorded as Interest earnings-leases revenue in the General Fund. In the Transit Special Revenue Fund, lease revenue of $58,688 was recorded as Property Rental revenue and the associated interest revenue of $5,078 was recorded as Interest earnings-leases. At this time, the City has no variable or other lease matters not previously included in the measurement of the lease receivable. Future minimum lease payments to be received under the lease agreements at year end are summarized below: Governmental Activities $ 3,315,226 2,832,059 2,136,152 1,951,840 1,670,119 6,108,796 6,429,694 6,616,534 2,656,090 144,000 150,000 150,000 132,500 $ 34,293,010 Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053-2057 2058-2062 2063-2067 70 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona 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 the operating budget for the jointly used facilities. As of June 30, 2021 (the latest information available), the City has a 15.11% 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. Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2021 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ Total revenues Total expenses Total non-operating revenues (expenses) Net decrease in net position $ $ $ 671,985 (57,656) 614,329 71,523 (90,393) 237 (18,633) 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 on June 30, 2022, was $107,385,658. The City’s net loss from joint venture was $6,877,408 for the fiscal year ended June 30, 2022. 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. 71 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) 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, 2022, the City has a 16.87% (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, 2021 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ 2,168,180 (189,338) $ 1,978,842 Operating revenues Operating expenses Non-operating revenues Non-operating expenses Capital Contributions Net increase in net position $ 5,226 (114,776) 70,938 (43,566) 396,698 $ 314,520 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 on June 30, 2022 was $385,119,069. During the fiscal year ended June 30, 2022, the equity in joint venture decreased by $732,460. This is primarily due to the funding of the transit streetcar project through capital grants. Separate financial statements may be obtained from Valley Metro Rail, Inc., 411 North Central Avenue, Suite 200, Phoenix, Arizona 85004. 72 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 7 - JOINT VENTURE (Continued) 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 of $1,661,884. As of June 30, 2022, the City’s net investment in RWC was $6,753,460 (unaudited), or 11.75% 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, 2021 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ Total revenues Total expenses Net decrease in net position $ $ $ 66,878 ( 2,692) 64,186 12,349 (16,812) ( 4,463) The Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, for the RWC may be obtained from the Regional Wireless Cooperative, 200 West Washington Street, 14th Floor, Phoenix, Arizona, 85003-1611. 73 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2022 is as follows: Balances June 30, 2021 Governmental activities: Non-depreciable assets: Land Construction-in-progress Total non-depreciable assets Depreciable assets: Buildings Infrastructure Improvements Machinery and equipment Total depreciable assets Less Accumulated depreciation for: Buildings Infrastructure Improvements Machinery and equipment Total accumulated depreciation $ Total Depreciable Assets, net Governmental activities capital assets, net $ 91,568,423 97,795,290 189,363,713 $ Additions Retirements 71,772,207 71,772,207 $ - 2,925,827 (32,592,322) (29,666,495) $ 94,494,250 132,315,603 226,809,853 9,503,282 6,609,435 10,440,303 3,113,475 29,666,495 329,894,421 834,577,511 247,535,220 181,358,939 1,593,366,091 1,240,527 1,240,527 - (192,474,726) (498,680,213) (122,927,574) (153,183,030) (967,265,543) (42,528,084) (21,679) 29,666,495 626,100,548 29,244,123 $ (4,681,251) 13,501 3,857,481 3,870,982 (181,083,928) (480,406,775) (112,559,828) (148,056,473) (922,107,004) (11,390,798) (18,273,438) (10,367,746) (6,367,084) (46,399,066) 638,983,816 $ $ Balances June 30, 2022 (1,262,206) (1,262,206) 320,391,139 827,968,076 237,081,416 175,650,189 1,561,090,820 828,347,529 (4,659,572) (4,659,572) Transfers in (out) $ - $ 852,910,401 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 City clerk Financial services Information technology Unallocated depreciation Total depreciation expense 74 $ $ 4,769,244 1,631,050 5,019,193 30,534,687 17,714 1,330,357 400,857 361,701 32,010 5,158 3,935 209,418 632,404 1,451,338 46,399,066 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 8 - CAPITAL ASSETS (Continued) Balances June 30, 2021 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 Less Accumulated depreciation for: Buildings Infrastructure Improvements Machinery and equipment Total accumulated depreciation $ Total Depreciable Assets, net Business-type activities capital assets, net $ 6,693,377 112,409,457 119,102,834 Additions $ Transfers in (out) Retirements - $ - $ Balances June 30, 2022 - 49,015,610 49,015,610 (3,770,672) (3,770,672) (45,035,166) (45,035,166) $ 6,693,377 112,619,229 119,312,606 34,138,834 9,826,312 1,070,020 45,035,166 49,802,667 405,741,242 219,003,303 47,605,854 722,153,066 (32,026,888) (214,957,481) (118,578,338) (26,688,033) (392,250,740) 49,802,667 371,602,408 209,176,991 45,207,998 675,790,064 - - 2,129,970 2,129,970 (802,134) (802,134) (30,766,422) (199,844,473) (110,187,773) (24,356,135) (365,154,803) (1,260,466) (15,113,008) (8,390,565) (3,127,364) (27,891,403) 795,466 795,466 - 310,635,261 (25,761,433) (6,668) 45,035,166 329,902,326 429,738,095 $ 23,254,177 $ (3,777,340) - $ 449,214,932 $ 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 $ $ 25,711,816 1,457,946 238,663 482,978 27,891,403 A summary of net investment in capital assets, for the government-wide financial statements, for the fiscal year ended June 30, 2022 is as follows: Total Capital Assets Less: Accumulated Depreciation Total Capital Assets, Net Governmental Activities $ 1,820,175,944 (967,265,543) 852,910,401 Business-Type Activities $ 841,465,673 (392,250,741) 449,214,932 Total $ 2,661,641,617 (1,359,516,284) 1,302,125,333 Less: Outstanding Capital Asset Debt Principal Plus: Outstanding Equity in Joint Venture Debt Principal Less: Matured Debt Payable Less: Premiums on Outstanding Debt Plus: Deferred Charge on Refunding Plus: Unspent Debt Proceeds Net investment in capital assets (307,115,710) 40,495,000 (29,170,000) (24,718,409) 3,594,763 2,768,851 $ 538,764,896 (312,326,203) 59,217,991 (27,995,000) (37,695,756) 6,964,228 1,121,804 $ 138,501,996 (619,441,913) 99,712,991 (57,165,000) (62,414,165) 10,558,991 3,890,655 $ 677,266,892 75 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, $90,330,000,000 was issued to finance improvements for Street Improvements and Infrastructure Preservation, Community Services, Parks, Public Safety, with $573,000 of the issuance and $48K from the related premium transferred to the Golf Fund as a capital contribution. 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 on June 30, 2022, were as follows (the 7/1/2022 principal payment was deducted as the Fiscal Year 2022 resources were dedicated): $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% $ 3,320,000 $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% 8,600,000 $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% 2,865,000 $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% 22,855,000 $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% 26,970,000 $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% 10,225,000 $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% 66,005,000 $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% 23,075,000 $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% 32,405,000 $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% 46,320,000 $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% 21,345,000 $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% 21,815,000 $22,545,000 2021 Capital Improvement Serial Bonds due in annual installments of $660,000 to $2,240,000 beginning July 1, 2022 through July 1, 2041; interest at 5% 20,305,000 $90,330,000 2022 Capital Improvement Serial Bonds due in annual installments of $2,910,000 to $6,415,000 beginning July 1, 2023 through July 1, 2042; interest at 3.00% to 5.00% 90,330,000 Total general obligation bonds outstanding (excluding current portion of general obligation bonds outstanding) 76 $ 401,755,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 Principal $ 43,905,000 40,265,000 34,085,000 29,790,000 25,640,000 103,425,000 75,795,000 48,850,000 $ 401,755,000 Interest $ 16,707,398 14,713,463 13,177,498 11,842,195 10,673,485 39,425,069 20,387,057 5,360,730 $ 132,286,895 Total 60,612,398 54,978,463 47,262,498 41,632,195 36,313,485 142,850,069 96,182,057 54,210,730 $ 534,041,895 $ The following is a summary of governmental debt service cash requirements to maturity (net of 35% federal credit): Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 Principal 21,195,000 18,335,000 15,805,000 14,560,000 14,750,000 64,360,000 38,665,000 24,550,000 $ 212,220,000 $ Interest 8,443,857 7,500,078 6,855,568 6,229,715 5,687,350 20,420,281 9,516,308 2,601,045 $ 67,254,202 $ Total 29,638,857 25,835,078 22,660,568 20,789,715 20,437,350 84,780,281 48,181,308 27,151,045 $ 279,474,202 $ The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2042 Principal $ 22,710,000 21,930,000 18,280,000 15,230,000 10,890,000 39,065,000 37,130,000 24,300,000 $ 189,535,000 Interest 8,263,541 7,213,385 6,321,930 5,612,480 4,986,135 19,004,788 10,870,749 2,759,685 $ 65,032,693 $ 77 Total 30,973,541 29,143,385 24,601,930 20,842,480 15,876,135 58,069,788 48,000,749 27,059,685 $ 254,567,693 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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. On June 30, 2022, the special assessments receivable of $12,308,574 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, 2022, there is $79,159 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 $529,415 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 on June 30, 2022, were as follows: $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% $ 11,700,000 Total special assessment bonds outstanding $ 11,700,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2029 Principal $ 1,435,000 1,510,000 1,585,000 1,665,000 1,745,000 3,760,000 $11,700,000 Interest $ 549,125 475,500 398,125 316,875 231,625 190,250 $ 2,161,500 Total $ 1,984,125 1,985,500 1,983,125 1,981,875 1,976,625 3,950,250 $ 13,861,500 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, 2022, the Transit Fund special assessments receivable on the assessed properties totaled $11,058,197, of which $23,275 are delinquent receivables. As development occurs, additional benefitting properties will be assessed in an amount not to exceed $13.0 million for all assessed properties. 78 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (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% $ 12,165,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2040 Principal $ 535,000 550,000 560,000 580,000 595,000 3,220,000 3,675,000 2,450,000 $ 12,165,000 Interest $ 328,455 314,010 299,160 284,040 268,380 1,092,420 633,825 133,515 $ 3,353,805 Total 863,455 864,010 859,160 864,040 863,380 4,312,420 4,308,825 2,583,515 $ 15,518,805 $ 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, stateshared 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. 79 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. $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 $ 7,300,000 Total $ 7,300,000 The following is a summary of total debt service cash requirements to maturity (net of 72.38% federal credit): Fiscal Year Interest Total Ending June 30, Principal 2023 $ - $ 98,258 98,258 $ 2024 98,258 98,258 2025 7,300,000 98,258 7,398,258 $ 7,300,000 $ 294,774 $ 7,594,774 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 80 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Obligations (Continued) 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 7/1/2022 principal payment was deducted as the fiscal year 2022 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% $ 17,850,000 The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033 Principal $ 1,260,000 1,325,000 1,390,000 1,460,000 1,530,000 8,860,000 2,025,000 $ 17,850,000 81 Interest 854,575 791,575 725,325 655,825 582,825 1,713,125 91,125 $ 5,414,375 $ Total $ 2,114,575 2,116,575 2,115,325 2,115,825 2,115,825 10,573,125 2,116,125 $23,264,375 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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 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 7/1/2022 principal payment was deducted as the fiscal year 2022 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% $18,390,000 The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2031 Principal $ 2,830,000 1,665,000 1,745,000 1,785,000 1,875,000 8,490,000 $ 18,390,000 82 Interest $ 919,500 778,000 694,750 607,500 518,250 1,087,000 $ 4,605,000 Total $ 3,749,500 2,443,000 2,439,750 2,392,500 2,393,250 9,577,000 $ 22,995,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2023 2024 2025 Principal $ 400,000 39,000 43,000 $ 482,000 Interest $ 24,100 4,100 2,150 $ 30,350 Total 424,100 43,100 45,150 $ 512,350 $ The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2031 Principal 2,430,000 1,626,000 1,702,000 1,785,000 1,875,000 8,490,000 $ 17,908,000 $ Interest 895,400 773,900 692,600 607,500 518,250 1,087,000 $ 4,574,650 $ Total 3,325,400 2,399,900 2,394,600 2,392,500 2,393,250 9,577,000 $ 22,482,650 $ 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. 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 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. 83 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Transit Excise Tax Revenue and Refunding Obligations (Continued) 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, 2032; interest at 2.87% $ 16,060,000 The following is a summary of debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2035 Principal $ 1,035,000 1,070,000 1,100,000 1,125,000 1,160,000 6,320,000 4,250,000 $ 16,060,000 Interest $ 460,922 431,218 400,509 368,939 336,651 1,164,214 246,390 $ 3,408,843 Total $ 1,495,922 1,501,218 1,500,509 1,493,939 1,496,651 7,484,214 4,496,390 $ 19,468,843 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 taxexempt 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, 2022 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 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 7/1/2022 principal payment was deducted as the fiscal year 2022 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% $ 8,110,000 The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2029 Principal $ 1,200,000 1,255,000 1,320,000 1,380,000 2,955,000 $ 8,110,000 Interest 405,500 405,500 345,500 282,750 216,750 223,500 $ 1,879,500 $ Total 405,500 1,605,500 1,600,500 1,602,750 1,596,750 3,178,500 $ 9,989,500 $ The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2029 Principal 350,000 365,000 385,000 405,000 870,000 $ 2,375,000 $ Interest 118,750 118,750 101,250 83,000 63,750 65,750 $ 551,250 $ Total 118,750 468,750 466,250 468,000 468,750 935,750 $ 2,926,250 $ The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2029 Principal $ 850,000 890,000 935,000 975,000 2,085,000 $ 5,735,000 85 Interest $ 286,750 286,750 244,250 199,750 153,000 157,750 $ 1,328,250 Total 286,750 1,136,750 1,134,250 1,134,750 1,128,000 2,242,750 $ 7,063,250 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) Excise Tax Revenue Refunding Obligations. On August 19, 2021, the City issued $14,695,000 of Excise Tax Revenue Refunding Obligations. The proceeds were used (i) to refund $13,845,000 Excise Tax Revenue Obligations of the City and (ii) to pay the costs of execution and delivery of the obligation. 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 $993,637 which resulted in an economic gain of $956,140. 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% Arts and Culture 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. 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. dedicated. In the following outstanding balance, the 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. $14,695,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $510,000 to $5,460,000 through July 1, 2032; interest at 0.20% to 1.75% $ 14,210,000 The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 Principal $ 5,460,000 2,515,000 2,530,000 510,000 515,000 2,680,000 $14,210,000 86 Interest 95,497 81,847 69,272 51,562 46,870 130,573 $ 475,621 $ Total $ 5,555,497 2,596,847 2,599,272 561,562 561,870 2,810,573 $ 14,685,621 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 Principal $ 3,460,000 1,595,000 1,600,000 325,000 325,000 1,695,000 $ 9,000,000 Interest $ 60,484 51,821 43,830 32,635 29,633 82,700 $ 301,103 Total $ 3,520,484 1,646,821 1,643,830 357,635 354,633 1,777,700 $ 9,301,103 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 Principal $ 2,000,000 920,000 930,000 185,000 190,000 985,000 $ 5,210,000 Interest $ 35,013 30,026 25,442 18,927 17,237 47,873 $ 174,518 Total $ 2,035,013 950,026 955,442 203,927 207,237 1,032,873 $ 5,384,518 Transit Excise Tax Revenue Refunding Obligations. On August 18, 2021, the City issued $28,890,000 of Excise Tax Revenue Obligations. The proceeds were used to refund $27,320,000 of the 2012 Transit Excise Tax Revenue Refunding Obligations and 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 Transit Excise Tax Revenue Refunding Obligations, Series 2017; City of Tempe Transit Excise Tax Revenue Obligations, Series 2020; and any other obligations hereafter executed and delivered on a parity therewith pursuant to the Trust Agreement and the Purchase Agreement. The primary purpose of the refunding was to take advantage of lower interest rates, thereby reducing future debt service in the City’s Transit Special Revenue fund. As a result of the refunding, the City reduced its total debt service requirements by $4,580,676 which resulted in an economic gain of $3,998,597. 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 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. $28,890,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $560,000 to $2,240,000 through July 1, 2037; interest at 0.24% to 2.39% 87 $ 28,330,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Excise Tax Revenue Refunding Obligations (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 Principal $ 1,915,000 1,920,000 1,930,000 1,950,000 1,965,000 10,250,000 8,400,000 $28,330,000 Interest $ 415,115 410,021 399,365 384,543 365,667 1,419,444 465,970 $ 3,860,125 Total $ 2,330,115 2,330,021 2,329,365 2,334,543 2,330,667 11,669,444 8,865,970 $ 32,190,125 Arts and Culture Excise Tax Revenue Obligations. On August 19, 2021, the City issued $6,170,000 of Excise Tax Revenue Obligations. The proceeds (including premium) were used to fund (i) repairs to the deficiencies in the roof of the Tempe Center for the Arts and (ii) pay costs incurred to issue the obligations. The payments to be paid by the City are secured by the City’s pledge of and first lien on all excise taxes collected and paid to the Coty under the 0.10% transaction privilege (sales) and use tax approved by the voters of the City on November 18, 2018 and effective as of January 1, 2021 such taxes and receipts herein referred to as the “Arts and Culture Taxes”), the use of which is restricted to support of arts and culture activities throughout the City. In the following outstanding balance, the 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. $6,170,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $275,000 to $550,000 through July 1, 2036; interest at 1.00% to 5.00% $5,895,000 The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2036 $ Principal 330,000 345,000 365,000 365,000 370,000 2,070,000 2,050,000 $5,895,000 88 Interest 250,750 234,250 217,000 213,350 209,700 833,000 262,500 $ 2,220,550 $ Total $ 580,750 579,250 582,000 578,350 579,700 2,903,000 2,312,500 $ 8,115,550 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Water and Sewer Revenue Obligations 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, 2029. 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% $ 35,115,000 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-20367 2038-2040 Principal $ 1,545,000 1,590,000 1,630,000 1,675,000 1,720,000 9,300,000 10,600,000 7,055,000 $ 35,115,000 Interest $ 930,548 889,605 847,470 804,275 759,887 3,091,490 1,792,063 377,227 $ 9,492,565 Total $2,475,548 2,479,605 2,477,470 2,479,275 2,479,887 12,391,490 12,392,063 7,432,227 $ 44,607,565 Water and Sewer Revenue Obligations. On June 8, 2021, 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, 2041. 89 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Water and Sewer Revenue Obligations (Continued) 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. $35,480,000 2021 Water and Sewer Revenue Obligations due in annual installments of $1,025,000 to $2,715,000 through July 1, 2041; interest at 5.00% $ 34,445,000 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 2038-2041 Principal Interest Total 1,130,000 $ 1,722,750 $ 2,852,750 1,185,000 1,666,250 2,851,250 1,245,000 1,607,000 2,852,000 1,305,000 1,544,750 2,849,750 1,370,000 1,479,500 2,849,500 7,955,000 6,298,250 14,253,250 10,155,000 4,100,000 14,255,000 10,110,000 1,294,500 11,404,500 $ 34,455,000 $ 19,713,000 $ 54,168,000 $ Certificates of Participation. On July 21, 2021, the City issued $343,000,000 in capital lease certificates of participation, Series 2021, for the payment of the Public Safety Personnel Retirement System unfunded accrued pension liability. Principal and interest on the bonds are payable from the capital lease payments and are not considered general obligations of the City. They are appropriated along will all other expenditures of the general government. In the following outstanding balance, the 7/1/2022 principal payment was deducted as the fiscal year 2022 resources were dedicated. $343,000,000 2021 Certificates of Participation due in annual installments of $7,000,000 to $27,810,000 through July 1, 2037; interest at 0.37% to 2.59% 90 $ 343,000,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Certificates of Participation (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027 2028-2032 2033-2037 Principal Interest Total 7,000,000 $ 6,358,120 $ 13,358,120 18,430,000 6,332,360 24,762,360 20,380,000 6,217,542 26,597,542 20,335,000 6,031,065 26,366,065 21,380,000 5,790,095 27,170,095 117,805,000 23,504,753 141,309,753 137,670,000 10,346,340 148,016,340 $ 343,000,000 $ 64,580,275 $ 407,580,275 $ 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% $ 1,580,000 The following discloses debt service requirements as of June 30, 2022 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2023 2024 2025 Principal $ 504,000 527,000 549,000 $ 1,580,000 Interest $ 36,576 23,024 7,823 $ 67,423 91 Total 540,576 550,024 556,823 $ 1,647,423 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) 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 #92A17410 due in annual installments of $69,678 to $123,631 through July 1, 2029; interest at 1.56% and administrative fee at 1.50% $ 791,944 The following discloses debt service requirements on WIFA Loan #92A174-10 as of June 30, 2022 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027-2029 Principal $ 103,154 106,314 109,572 112,929 359,975 $ 791,944 Interest and Administrative Fee $ 24,265 21,105 17,847 14,490 22,281 $ 99,988 Total $ 127,419 127,419 127,419 127,419 382,256 $ 891,932 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 #92A17510 due in annual installments of $578,079 to $842,152 through July 1, 2029; interest at .50% and administrative fee at 1.50% $ 5,559,408 The following discloses debt service requirements on WIFA Loan #92A175-10 as of June 30, 2022 segregating principal and interest, for the next five years and five-year increments thereafter: Fiscal Year Ending June 30, 2023 2024 2025 2026 2027-2029 Principal $ 747,807 762,763 778,018 793,579 2,477,241 $ 5,559,408 Interest and Administrative Fee $ 111,188 96,232 80,977 65,416 99,744 $ 453,557 Total $ 858,995 858,995 858,995 858,995 2,576,985 $ 6,012,965 FINANCED PURCHASES PAYABLE The City, as a lessee, acquired printing and copying equipment, printing software, and golf equipment under the provisions of contracts classified as financed purchases payable. In accordance with GASB Statement No. 87 Leases, contracts previously recorded as capital leases have been reclassified as financed purchases payable in the fiscal year. Revenues from the General Fund are used to pay the debt obligations for the printing and software debt obligations as well as the printing software debt obligation. Revenues from the Golf Fund are used to pay for the golf equipment debt obligation. 92 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) FINANCED PURCHASES PAYABLE (Continued) The following is a summary of total debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 Principal $ 171,047 4,514 $ 175,561 Interest $ 7,566 1,213 $ 8,779 Total $ 178,613 5,727 $ 184,340 The following is a summary of governmental debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 2024 Principal $ 4,196 4,514 $ 8,710 Interest $ 658 1,213 $ 1,871 Total $ 4,854 5,727 $ 10,581 The following is a summary of enterprise debt service cash requirements to maturity: Fiscal Year Ending June 30, 2023 Principal $ 166,851 $ 166,851 Interest $ 6,908 $ 6,908 Total $ 173,759 $ 173,759 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, 2022, the 20 percent debt limitation was $654,092,854 with $394,798,663 of outstanding debt. This provided a 20 percent debt margin of $259,294,191. The 6 percent debt limitation was $196,227,856 with $91,074,059 of outstanding debt. This provided a 6 percent debt margin of $105,153,797. The voter authorized, unissued debt, which is also subject to the statutory limitations of 20 percent and 6 percent, at June 30, 2022, was $399,358,048. 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, 2022. 93 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) 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 $212,220,000 is outstanding in governmental general obligation bonds. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2042. Annual principal and interest payments on the bonds were 81.46% of total fiscal year ended June 30, 2022 General Obligation Debt Service Fund ad valorem taxes. The total principal and interest remaining to be paid on the bonds is $279,474,202. Principal and interest paid for the current year and total ad valorem tax revenues were $27,529,104 and $33,796,504 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 $189,535,000 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, 2042. Annual principal and interest payments on the bonds are expected to require less than 30.09% of total fiscal year ended June 30, 2022 water and wastewater utility system revenue. The total principal and interest remaining to be paid on the bonds is $254,567,693. Principal and interest paid for the current year and water and wastewater system revenues were $27,514,965 and $91,475,655, respectively. Debt Service Coverage for Governmental Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay a total of $19,157,000 in outstanding governmental excise tax obligations. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2032. Annual principal and interest payments on the bonds are expected to require less than 2.74% of total fiscal year ended June 30, 2022 pledged excise taxes. The total principal and interest remaining to be paid on the bonds is $20,334,478. Principal and interest (net of Federal subsidy) paid for the current year and total pledged excise taxes were $6,092,040 and $215,393,496, 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 $46,703,000 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 2.97% of total fiscal year ended June 30, 2022 excise taxes. The total principal and interest remaining to be paid on the bonds is $58,194,795. Principal and interest paid for the current year and total excise taxes were $6,611,015 and $215,393,496, 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 $56,555,000. The bonds are payable through July 1, 2040. Annual principal and interest payments on the bonds are expected to require less than 10.78% of total fiscal year ended June 30, 2022 transit excise taxes. The total principal and interest remaining to be paid on the bonds is $67,177,772. Principal and interest paid for the current year and transit excise taxes were $5,901,166 and $54,736,977 respectively. Debt Service Coverage for Arts and Culture Excise Tax Obligations. For the repayment of arts and culture excise tax obligation bonds, the City has pledged all future excise taxes collected and paid under the 1.0% arts and culture excise tax. Proceeds of the bonds were used for the repair of the roof of the Tempe Center for the Arts. The current balance outstanding is $5,895,000. The bonds are payable through July 1, 2036. Annual principal and interest payments on the bonds are expected to require less than 4.50% of total fiscal year ended June 30, 2022 arts and culture excise taxes. The total principal and interest remaining to be paid on the bonds is $8,115,550. Principal and interest paid for the current year and arts and culture excise taxes were $594,233 and $11,202,441, respectively. 94 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2022 (the ending balance does not include 7/1/2022 “matured” payment for general or excise tax obligations): Governmental activities: Debt payable: General obligation bonds payable Premium on general obligation bonds Special assessments Special assessment 2020 Excise tax obligations (direct placement) Premium on special assessments 2011 Excise tax 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 2021 Excise tax refunding obligations 2021 Excise tax refunding obligations 2021 Excise tax obligations Premium on excise tax obligations 2021 Certificates of Participation 2004 HUD Section 108 loan Financed purchases Capital Asset Debt Principal Compensated absences Claims and judgments OPEB Net pension liability Governmental activities long-term Business-type activities: General obligation bonds payable Premium on general obligation bonds 2011 Excise tax obligations 2012 Excise tax obligations 2013 Excise tax obligations 2016 Excise tax obligations 2019 Excise tax refunding obligations 2021 Excise tax refunding obligations Premium on excise tax obligations 2020 Revenue obligations (direct placement) 2021 Revenue obligations (direct placement) Premium on revenue obligations 2010 WIFA Loan 2010 WIFA Loan Financed purchases Capital Asset Debt Principal OPEB Net pension liability Business-type activities long-term Ending Balance Amounts Due Within One Year $ (20,235,000) (1,716,294) (1,370,000) $212,220,000 22,233,929 11,700,000 $21,195,000 1,435,000 Beginning Balance Additions Reductions $196,865,000 20,572,572 13,070,000 $ 35,590,000 3,377,651 - 12,685,000 401,605 7,340,000 10,565,000 28,695,000 827,000 - (520,000) (50,201) (40,000) (10,565,000) (28,695,000) (345,000) 12,165,000 351,404 7,300,000 482,000 535,000 400,000 17,070,000 - (1,010,000) 16,060,000 1,035,000 9,000,000 28,330,000 5,895,000 2,133,076 343,000,000 1,580,000 8,710 674,834,119 3,460,000 1,915,000 330,000 7,000,000 504,000 4,196 37,813,196 2,710,000 2,375,000 5,400,300 2,062,000 979,231 321,617,708 9,305,000 28,890,000 6,170,000 1,568,153 343,000,000 427,900,804 (2,710,000) (305,000) (560,000) (275,000) (4,835,377) (482,000) (970,521) (74,684,393) 36,783,727 9,298,295 85,021,103 468,491,417 $921,212,250 8,489,014 7,280,117 11,108,235 285,093,178 $ 739,871,348 (12,639,586) (7,123,328) (422,653) (361,883,115) $ (456,753,075) 32,633,155 9,455,084 95,706,685 391,701,480 $1,204,330,523 15,112,410 4,161,409 $57,087,015 $156,105,000 16,264,898 1,530,000 5,475,000 19,050,000 18,753,000 5,735,000 8,191,064 $ 54,740,000 5,673,451 5,390,000 - $ (21,310,000) (1,746,257) (1,530,000) (5,475,000) (1,200,000) (845,000) (180,000) (1,076,195) $189,535,000 20,192,092 17,850,000 17,908,000 5,735,000 5,210,000 7,114,869 $22,710,000 1,260,000 2,430,000 2,000,000 - (1,505,000) 35,115,000 1,545,000 36,620,000 - 35,480,000 10,935,573 892,031 6,292,552 327,068 321,651,186 65,803,451 (1,025,000) (546,778) (100,087) (733,144) (160,217) (37,432,678) 34,455,000 10,388,795 791,944 5,559,408 166,651 350,021,959 1,130,000 103,154 747,807 166,651 32,092,812 11,012,784 25,231,646 $357,895,616 1,549,743 $ 67,353,194 (31,778) (6,280,393) $ (43,744,849) 12,530,749 18,951,253 $381,503,961 $32,092,812 The long-term liabilities at June 30, 2022 have been reduced by deposits made with the City’s fiscal agent for July 1, 2022 maturities. For the governmental activities, claims and judgments and compensated absences are generally liquidated by the General Fund. - 95 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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. Bonds which have been advance refunded (and thus not included in the debt of the City) and are still outstanding as of June 30, 2022 are as follows: $43,965,000 general obligation bonds issued in 2015 and partially defeased in 2018 (final redemption date is 7/1/2025) $ 4,220,000 $30,500,000 excise tax revenue and revenue refunding bonds issued in 2012 (final redemption date is 7/1/2022) 13,845,000 $41,390,000 Transit excise tax revenue obligations and partially defeased in 2018 (final redemption date is 7/1/2022) 27,320,000 $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 $ 17,320,000 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. 96 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 11 – FUND BALANCE CLASSIFICATIONS (Continued) 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. 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, 2022, 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, 2022, the unassigned fund balance is 53.0% of General Fund revenues. Transit Special Revenue General Fund balances: Non-spendable: Leases Inventories Prepaid items Capital improvements notes receivable Restricted: Debt service reserve Police Fire Community services Engineering and transportation Municipal utilities Community development Human services Municipal court Strategic management and diversity Financial services Information technology Committed to: Police Fire Community services Engineering and transportation Community development Human services Municpal court Assigned to: Self-insurance purposes Capital projects Other Transit Debt Service Unassigned: Total fund balances $ 431,981 194,487 100,000 250,000 976,468 $ 357 357 General Obligation Debt Service Special Assessment Debt Service Transit Capital Projects Community Development Capital Projects Total Other Governmental Funds Total Governmental Funds $ $ $ $ $ $ - - - - 776,844 845,439 1,622,283 432,338 971,331 945,439 250,000 2,599,108 172,529 49,380 13,169 1,983,499 254,458 820,149 139,933 64,606 60,637,705 - 8,447,041 - 240,065 - 21,135,116 - 77,592 - 4,833,899 1,637,120 14,675,282 13,364,777 3,033,360 1,236,041 337,065 212,111 113,940 8,687,106 5,006,428 1,686,500 14,675,282 95,228,359 1,983,499 3,287,818 2,056,190 337,065 212,111 139,933 178,546 3,497,723 60,637,705 8,447,041 240,065 21,135,116 77,592 39,443,595 133,478,837 6,575,025 6,575,025 636,288 17,751,094 4,309,464 478,440 4,834,660 421,739 28,431,685 636,288 17,751,094 26,219,265 478,440 4,834,660 421,739 50,341,486 - 6,469,373 4,400,000 14,000,000 24,869,373 142,653,835 $ 171,997,399 15,334,776 15,334,776 - - - 4,700,000 9,314,932 14,014,932 - - - - 1,390,377 1,390,377 6,469,373 9,100,000 1,390,377 9,314,932 14,000,000 40,274,682 - - - - (836,064) 141,817,771 70,051,876 $ 368,511,884 $ 89,987,770 $ 8,447,041 97 $ 240,065 $ 21,135,116 $ 6,652,617 $ Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 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, 2022, the City’s construction commitments are as follows: Governmental funds: Transit Capital Projects Community Development Capital Projects Non-Major governmental funds Proprietary funds: Water/wastewater Solid waste Golf Commitment Construction in Progress $ 3,676,346 $ 11,842,053 18,040,970 $ 33,559,369 44,222,840 77,118,012 $ 132,315,603 Commitment Construction in Progress $ 18,468,209 $ 18,468,209 $ 111,559,858 335,611 723,760 $ 112,619,229 In addition, there were non-construction related commitments as follows: Commitment Governmental funds: General Transit Special Revenue Other governmental funds $ $ 3,376,988 307,336 794,181 4,478,505 Commitment Proprietary funds: Water/wastewater Solid waste Golf 10,974,751 $ $ 603,106 3,709,281 188,953 4,501,340 98 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - 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 singleemployer, post-employment health benefit plan (see Note 14 - OTHER POSTEMPLOYEMENT BENEFITS). Amounts reported at June 30, 2022 represent June 30, 2021 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, 2022, the City reported the following aggregate amounts related to pensions and OPEB for all plans to which it contributes: Pension Net assets Net liabilities Deferred outflows of resources Deferred inflows of resources Expense Contributions $ 410,652,733 402,899,877 62,125,042 41,789,105 363,891,811 $ OPEB 4,747,812 108,237,434 16,170,001 4,854,085 6,756,971 10,297,330 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: Years of service and age required to receive benefit Retirement Initial Membership Date: Before July 1, 2011 Sum of years and age equals 80 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 99 On or After July 1, 2011 30 years age 55 25 years age 60 10 years age 62 5 years age 50* Any years age 65 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) A. Arizona State Retirement System (Continued) Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-ofliving adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the 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, 2022, active ASRS members were required by statute to contribute at the actuarially determined rate of 12.41 percent (12.22 percent for retirement and 0.19 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 12.22 percent (12.01 percent for retirement, 0.21 percent for health insurance premium benefit, and 0.19 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, 2022 were as follows: Contributions $ 10,493,005 183,472 166,000 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 10.13 percent for pensions and 0.9 percent for long-term disability for the ACR. 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, 2021. 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, 2020, to the measurement date of June 30, 2021. The total liability as of June 30, 2021 reflects changes in actuarial assumptions based on the results of an actuarial experience study for the five-year period ended June 30, 2020. 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, 2020 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, 2021. 100 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) A. Arizona State Retirement System (Continued) 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, 2020 June 30, 2021 Entry age normal 7.0% 2.9-8.4% 2.3% Included 2017 SRA Scale U-MP Healthcare cost trend rate Not applicable OPEB June 30, 2020 June 30, 2021 Entry age normal 7.0% Not applicable 2.3% Not applicable Health Ins: 2017 SRA Scale U-MP, LTD: 2012 GLDT Not applicable The long-term expected rate of return on ASRS plan investments was determined to be 7.0 percent using a buildingblock 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 longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, excluding any expected inflation. At June 30, 2022, the City reported the following amounts for its proportionate share of the ASRS plans net assets/liability. In addition, at June 30, 2021, the City’s percentage proportion for each plan and the related change from its proportion measured as of June 30, 2020 was: Pension Health Insurance Premium Long-Term Disability Net (Assets) Liability $ 98,997,357 (3,728,896) 156,759 City % Proportion 0.753% 0.765% 0.759% Increase (Decrease) ( $33,590,372) 3,179,519 (428,085) 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, 2022, the City recognized pension and OPEB expense as follows: Expense $ 8,943,425 (447,920) 115,151 Pension Health Insurance Premium Long-Term Disability 101 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) A. Arizona State Retirement System (Continued) The City reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources: 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 Difference between expected and actual experience Changes of assumptions and other inputs Difference between expected and actual investment earnings Changes in proportion and differences between the City contributions and proportionate share of contributions Total Deferred Outflows of Resources Health Insurance Pensions Premium $ 1,509,124 $ 12,885,297 184,868 95,355 10,493,005 $ 24,982,781 3,587 183,472 $ 371,927 Deferred Inflows of Resources Health Insurance Pensions Premium $ $ 1,293,188 150,761 Long-Term Disability $ 45,281 50,134 3,267 166,000 $ 264,682 Long-Term Disability $ 12,774 197,519 31,365,845 1,383,232 108,566 1,206,636 $ 32,572,481 823 $ 2,828,004 8,015 $ 326,874 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, 2023. 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: 2023 2024 2025 2026 2027 Thereafter Deferred Outflows (Inflows) of Resources Health Insurance Long-Term Pension Premium Disability $ (143,171) $ (618,887) $ (30,614) (216,066) (593,273) (28,726) (6,914,562) (650,622) (32,650) (10,808,906) (718,938) (49,075) (57,829) (19,390) (67,737) 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 102 Long-Term Expected Real Rate of Return 4.90% 5.20 0.70 5.70 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) A. Arizona State Retirement System (Continued) Discount Rate. The discount rate used to measure the ASRS total pension and OPEB asset 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 asset. 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 7.0 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-percentagepoint higher than the current rate: Rate Pension Health Insurance Premium Long-Term Disability Sensitivity of Net Pension and OPEB (Asset) Liability to Changes in the Discount Rate Current Discount 1% Decrease Rate 1% Increase 6.0% 7.0% 8.0% $ 155,714,550 $ 98,997,357 $ 51,710,910 (2,468,918) (3,728,896) (4,800,296) 204,121 156,759 110,934 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). Public safety employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PCPDCRP). 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 cost-sharing plans (PSPRS Tier 3 Risk Pool). The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. 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. 103 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) B. Public Safety Personnel Retirement System (continued) Retirement Initial Membership Date: On or After January 1, On or After January 1, 2012 (Tier 2) 2017 (Tier 3) Before January 1, 2012 (Tier 1) Retirement and Disability: Years of service and age required to receive benefit 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% 1.5% to 2.5% per year of credited service, not to exceed 80% 1.5% to 2.5% per year of credited 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 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments 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. Employees Covered by Benefit Terms. At the June 30, 2021 measurement date, the following employees were covered by the agent pension plans’ benefit terms: 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 104 PSPRS – Fire Pension Health Insurance 290 290 150 150 85 289 664 45 289 624 30 142 322 22 142 314 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) B. Public Safety Personnel Retirement System (continued) 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, 2022, are indicated below. Rates are a percentage of active members’ annual covered payroll both defined benefit (DB) plans, defined contribution (DC) plans and hybrid plans for employees that do not pay into social security. PSPRS Police Tier 2 Tier 1 Available retirement plan Membership on or after Employee Employer DB Only DB Only DB Only Hybrid DB Only Hybrid DC Only 7/1/1968 7.65% 83.38% 7/20/2011 11.65% 83.38% 1/1/2012 11.65% 83.38% 1/1/2012 14.65% 87.38% 7/1/2017 9.60% 78.61% 7/1/2017 12.60% 81.61% 7/1/2017 10.85% 79.86% PSPRS Fire Tier 2 Tier 1 Available retirement plan Membership on or after Employee Employer Tier 3 Tier 3 DB Only DB Only DB Only Hybrid DB Only Hybrid DC Only 7/1/1968 7.65% 83.87% 7/20/2011 11.65% 83.87% 1/1/2012 11.65% 83.87% 1/1/2012 14.65% 87.87% 7/1/2017 10.67% 79.43% 7/1/2017 13.67% 82.43% 7/1/2017 10.85% 79.61% 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, applicable to fiscal year ending June 30, 2022, for Tier 1 and Tier 2 members of 61.49% for police and 67.88% 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. ACR Contributions are included in employer contributions presented below. On July 21, 2021, the City issued $343,000,000 in certificates of participation, Series 2021, for the payment of the Public Safety Personnel Retirement System unfunded accrued pension liability. Contributions to the PSPRS Police and PSPRS Fire pension plans from the proceeds totaled $218.1 million and $123.0 million, respectively. For the agent plans, the total contributions to the pension and OPEB plans for the year ended were: Pension Health insurance PSPRS Police $ 225,770,560 288,431 PSPRS Fire $ 127,628.246 17,387 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, 2022, the City reported the following assets and liabilities. Pension Health insurance Net (Assets) Liabilities PSPRS - Police PSPRS – Fire $ 199,358,810 $ 112,296,566 1,691,401 (1,018,916) The net pension and OPEB assets/liability were measured as of June 30, 2021. The total liability used to 105 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) calculate the net asset or liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability and OPEB asset 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, 2021 Entry age normal 7.3% - Tiers 1 & 2 7.0% - Tier 3 3.5% 2.5% 1.75% PubS-2010 tables using MP-2020 improvement scale OPEB June 30, 2021 Entry age normal 7.3% - Tiers 1 & 2 7.0% - Tier 3 3.5% 2.5% 1.75% PubS-2010 tables using MP-2020 improvement scale B. Public Safety Personnel Retirement System (continued) Actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2016. The long-term expected rate of return on PSPRS plan investments was determined to be 7.30 percent for Tiers 1 and 2 benefits and 7.00 percent for Tier 3 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: Target Allocation 24% 16 20 7 2 20 10 1 100% Asset Class U.S. Public Equity International Public Equity Global Private Equity Other Assets (Capital Appreciation) Core Bonds Private Credit Diversifying Strategies Cash Total Long-Term Expected Real Rate of Return 4.08%% 5.20 7.67 5.43 0.42 5.74 3.99 (0.31) Discount Rates. At the June 30, 2021 valuation date, the discount rate used to measure the total pension and OPEB asset 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 discount rate assumed that plan member contributions will be made at the current contribution rate and that sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the fiduciary net position for Tempe police and fire departments 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 OPEB plan investments (7.30 percent for Tiers 1 and 2 benefits and 7.00 percent for Tier 3 benefits) was applied to all periods of projected benefit payments to determine the total pension and OPEB Liabilities. 106 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) B. Public Safety Personnel Retirement System (continued) Changes in Net (Assets)/Liabilities 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 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 Ending Balance (Asset) Liability PSPRS - Police Health Pension Insurance $ 230,821,321 $ 2,670,436 PSPRS - Fire Pension $ 130,314,013 Health Insurance $ (154,173) 6,444,246 27,218,826 129,581 490,287 3,433,110 15,656,247 51,253 244,908 (876,704) (215,045) (3) (178,564) (19,572,007) 13,214,361 (430,623) (25,800) (13,239,944) 5,849,410 (237,858) (120,261) 20,333,964 2,844,510 10,737,418 278,745 15,529 296,462 11,478,887 1,366,781 6,357,389 19,551 3,082 253,102 30,521,472 (19,572,007) (192,755) 4,270 44,676,872 797,621 (430,623) (4,499) 953,235 18,018,405 (13,239,944) (114,661) 23,866,857 710,567 (237,858) (3,962) 744,482 $ 199,358,810 $ 1,691,401 $ 112,296,566 $ (1,018,916) 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 (asset) liability calculated using the discount rates noted above, as well as what the net (asset) liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1percentage-point higher than the current rate: Sensitivity of Net Pension and OPEB (Asset) Liability to Changes in the Discount Rate Current Discount 1% Decrease Rate 1% Increase PSPRS - Police: Rate Net pension liability Net OPEB liability 6.3% $ 252,309,866 2,413,277 7.3% $ 199,358,810 1,691,401 8.3% $ 156,238,925 1,082,209 PSPRS - Fire: Rate Net pension liability Net OPEB (assets) liability 6.3% $ 141,060,418 (690,484) 7.3% $ 112,296,566 (1,018,916) 8.3% $ 88,641,383 (1,298,465) 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. 107 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) B. Public Safety Personnel Retirement System (continued) Expense. For the year ended June 30, 2022, the City recognized the following as pension and OPEB expense: Expense PSPRS Police $ 20,426,702 76,719 Pension Health insurance PSPRS – Fire $ 12,418,978 (126,809) Deferred Outflows/Inflows of Resources. At June 30, 2022, 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 Outflows of Deferred Inflows Resources of 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 $ 10,866,933 $ 730,585 3,611,919 18,144,129 225,770,560 $ 240,249,412 $ 18,874,714 PSPRS – Police Health Insurance 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 $ $ 37,122 Deferred Outflows of Resources $ Deferred Inflows of Resources $ 540,561 Deferred Inflows of Resources 6,783,588 - - Deferred Outflows of Resources PSPRS - Fire Pension $ 3,255,850 135,450 - - 10,542,397 127,628,246 $ 137,667,684 $ 10,677,847 PSPRS – Fire Health Insurance Deferred Outflows of Deferred Inflows Resources of Resources $ 4,512 $ 281,186 48,372 11,730 23,192 6,119 - 453,508 - 406,103 288,431 373,925 $ 1,005,799 $ 17,387 45,091 $ 693,408 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, 2023. 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: 108 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 13 - PENSION AND OTHER POSTEMPLOYMENT BENEFITS (Continued) B. Public Safety Personnel Retirement System (continued) Fiscal Year Ended June 30 2023 2024 2025 2026 2027 Thereafter PSPRS - Police Health Pension Insurance $ 230,418 $ (196,883) 106,693 (195,381) (645,404) (218,589) (3,941,452) (273,611) (146,117) (35,841) - PSPRS – Fire Pension $ 1,123,583 (385,234) (679,870) (1,722,755) 1,025,867 - Health Insurance $ (139,436) (135,896) (145,583) (189,355) (29,925) (25,509) NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS The City offers (through a single employer defined benefit 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, benefited 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, benefited employees hired after June 30, 1999 are not eligible to participate in the post-employment benefit plan. As of June 30, 2022, 2,046 members met those eligibility requirements to receive post-employment healthcare benefits with 377 eligible retirees waiving coverage, leaving 1,694 members in the program as follows: Active beneficiaries Active employees eligible Total 976 693 1,669 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. 109 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 14 - 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, 2022 were $9,642,039. 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 $16.4 million balance as of June 30, 2022. 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, 2022, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of July 1, 2021. The components of the net OPEB liability at June 30, 2022 were as follows: Total OPEB liability Plan fiduciary net position Net OPEB liability Plan fiduciary net position as a percentage of total OPEB liability $ 122,770,950 16,381,676 $ 106,389,274 13.3% Actuarial Assumptions. The total OPEB liability as of the July 1, 2021 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 Amortization method Asset valuation method Actuarial assumptions: Inflation rate Salary increases Investment rate of return Discount rate Healthcare cost trend Mortality rates June 30, 2022 July 1, 2021 Entry age normal Level percentage of payroll, closed Market value 2.4% 3.0% per annum 6.5% 6.5% ASRS/PSPRS Pre-Medicare, 5.0%; ASRS/ PSPRS Medicare Supplement, 2.5% to 3.0%; City Medicare Supplement, 2.5% to 3.0% General: PubG.H-2010 (general employees) and PubS.H2010 (public safety) Employee and Retiree Mortality Tables, with generational projection using Scale MP-2019 The Total OPEB Liability was updated from the actuarial valuation date to the measurement date using standard actuarial roll-forward techniques. 110 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (Continued) C. Net OPEB Liability (continued) 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 30,2022, the annual money-weighted rate of return on investments, net of investment expense, was -13.87%. 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: Target Allocation 0% Long-Term Expected Real Rates of Return 0.00% Equity 65% 7.50% Fixed Income 35% 5.00% Real Estate 0% 6.00% Other 0% Not applicable 100% 6.63% Asset Class Cash & Equivalents Total 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, 2022 may be obtained from the City's Financial Services Department, 20 East 6th Street, Tempe, Arizona, 85281 111 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (Continued) D. Changes in the Net OPEB Liability The change in the net OPEB liability during the year was as follows: Balance at 6/30/2021 Changes for the year: Service cost Interest Differences between expected and actual experience Changes in Assumptions/ Inputs Contributions for Benefits Due Net Investment Income Benefit payments Net changes Balance at 6/30/2022 Changes in Net OPEB Liability Plan Fiduciary Net Total OPEB Liability Position Net OPEB Liability $ 111,888,929 $ 19,110,322 $ 92,778,607 1,170,996 7,035,529 - 1,170,996 7,035,529 2,629,006 - 2,629,006 9,688,529 - 9,688,529 (9,642,039) 10,882,021 9,642,039 (2,728,646) (9,642,039) (2,728,646) (9,642,039) 2,728,646 13,610,667 $ 122,770,950 $ 16,381,676 $ 106,389,274 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 $ 116,584,258 $ 96,308,922 No Change $ 106,389,274 $ 106,389,274 1% Increase $ 97,516,966 $ 117,944,644 E. OPEB Expense and Deferred Outflows/Inflows of Resources related to OPEB For the year ended June 30, 2022, the City recognized OPEB expense of $7,139,830 for the OPEB plan. At June 30, 2022, 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 $ 6,250,015 7,522,399 1,341,962 $ 15,114,376 Deferred Inflows of Resources $ $ - Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: 112 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (Continued) E. OPEB Expense and Deferred Outflows/Inflows of Resources related to OPEB (continued) Fiscal Year Ended June 30, Deferred Outflow (Inflows) of Resources 2023 $ 9,869,777 2024 4,294,226 2025 156,208 2026 794,165 2027 - Thereafter - NOTE 15 - 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 16 - 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 self-insured 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, 2022, and that the amount was reasonably estimable. A liability for incurred but not reported claims was based on historical experience. 113 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 16 - 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, 2021 $ 1,388,545 1,224,725 127,590 4,413,992 1,751,204 $ 8,906,056 Claims Incurred Net of Change in Estimates $ 1,087,641 511,468 1,471,630 3,275,021 20,236,540 $26,582,300 Payments $ (1,230,309) (1,584,118) (1,560,939) (2,747,962) (19,989,156) $ (27,112,484) June 30, 2022 $ 1,245,877 152,075 38,281 4,941,051 1,998,588 $ 8,375,872 June 30, 2020 $1,187,500 992,120 154,678 5,052,925 1,623,485 $9,010,708 Claims Incurred Net of Change in Estimates $ 1,384,883 396,237 174,599 1,662,918 17,489,411 $21,108,048 Payments $ (1,183,838) (163,632) (201,687) (2,301,851) (17,361,692) $ 21,212,700) June 30, 2021 $ 1,388,545 1,224,725 127,590 4,413,992 1,751,204 $ 8,906,056 At June 30, 2022, the Risk Management Fund had accrued expenses totaled $2,294,801. This balance includes the general liability, automobile liability and property liability of $2,273,284 and other accrued expenses of $21,517. The Worker’s Compensation Fund had accrued expenses totaling $4,912,726. The Health Fund had accrued expenses totaling $4,379,448; of this amount, $1,998,588 is health insurance claims liability and $2,380,860 represents the liability for employee Mediflex benefits. Additionally, at June 30, 2022, the City had $6,469,373 of General Fund assigned fund balance for self-insurance purposes. NOTE 17 - 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. NOTE 18 - 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. 114 Notes to the Financial Statements For Fiscal Year Ended June 30, 2022 City of Tempe, Arizona NOTE 19 – 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, 2022 is $5,115,780. 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, 2022, the difference between property taxes assessed and the GPLET collected totaled $3,191,254 under this program, including the following tax abatement agreements that each exceed 10% of the total amount:  A 13.00% property tax GPLET to a retail development for constructing a retail complex in the City. The GPLET amounted to $415,425.  A 10.72% 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 $341,949. NOTE 20 - DEFICIT IN NET POSITION AND FUND BALANCE The Grants Special Revenue Fund had a deficit fund balance of $38,060. The deficit will be covered by future grant revenues. NOTE 21 - SUBSEQUENT EVENTS On November 29, 2022, the Tempe City Council approved a Development and Disposition Agreement for the sale of approximately 46 acres of City-owned land for a mixed-use project with a focus on creating a sports and entertainment district featuring a professional sports franchise, to include an arena or stadium and practice facility, retail space, residential units, public plaza, and related uses. Contained in the agreement is a provision to create a Community Facilities District (CFD), a separate legal entity formed by the City and allowable under the laws of the State of Arizona, to facilitate financing of certain public infrastructure at the site. The agreement allows the CFD to issue up to $229.0 million in special assessment bonds, which would be repaid from taxes and developer-imposed assessments generated within the CFD, to finance the public infrastructure. The bonds would be secured through liens on property at the site. 115 City of Tempe, Arizona 116 Required Supplementary Information 117 Schedule of Contributions All Pension Plans Last Eight Fiscal Years City of Tempe, Arizona 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 2022 Public Safety Personnel Retirement System- Fire: Actuarially determined contribution Additional contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll 2020 2019 2018 2017 2016 2015 $ 10,493,005 $ 9,740,350 $ 9,474,813 $ 8,950,287 $ 8,163,494 $ 7,887,785 $ 7,731,482 $ 7,738,771 10,493,005 - $ 9,740,350 - $ 9,474,813 - $ 8,950,287 - $ 8,163,494 - $ 7,887,785 - $ 7,731,482 - $ 7,738,771 - $ 80,056,234 $ 74,894,440 $ 73,170,548 $ 71,257,899 $ 71,063,096 $ $ 87,368,901 $ 83,608,155 $ 82,749,459 12.01% 11.65% 11.45% $ 19,873,495 - $ 18,833,432 - Public Safety Personnel Retirement System- Police: Actuarially determined contribution $ 20,333,964 Additional contribution 218,143,845 Contributions in relation to the actuarially determined contribution 7,915,146 Contribution deficiency (excess) $ (205,725,027) Covered payroll Contributions as a percentage of covered payroll 2021 $ 19,873,495 - $ $ 17,208,734 - 10.90% $ 15,962,148 - 10.78% $ 12,852,861 - 10.85% $ 12,604,739 - 10.89% $ 9,727,183 - 18,833,432 - $ 17,208,734 - $ 15,962,148 - $ 12,852,861 - $ 12,604,739 - $ 9,727,183 - $ 28,519,612 $ 28,672,800 $ 28,606,412 $ 28,627,615 $ 28,889,762 $ 27,412,713 $ 28,277,597 $ 28,907,800 869.95% 70.28% 65.15% $ 11,478,887 122,993,405 $ 11,001,668 - $ 10,137,454 - 4,652,228 $ (116,166,746) $ $ 15,290,218 879.47% 11,001,668 - 11.18% 60.34% $ 9,655,204 - 55.67% $ 8,639,228 - 44.93% $ 6,621,730 - 44.03% $ 6,067,633 - 33.67% $ 4,066,636 - 10,137,454 - $ 9,655,204 - $ 8,639,228 - $ 6,621,730 - $ 6,067,633 - $ 4,066,636 - $ 14,489,224 $ 13,881,219 $ 13,477,393 $ 13,373,418 $ 12,337,861 $ 12,215,891 $ 10,958,329 75.93% 73.03% $ 71.64% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 118 64.60% 53.67% 49.67% 37.11% Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System Last Eight Fiscal Years City of Tempe, Arizona 2022 City's proportion of the net pension liability 2021 2020 2019 2018 2017 2016 2015 0.77% 0.77% 0.76% 0.77% 0.76% 0.78% 0.77% 0.76% City's proportion share of the net pension liability $ 98,997,357 $ 132,587,729 $ 111,031,198 $ 108,146,590 $ 118,500,674 $ 126,045,105 $ 119,185,001 $ 112,524,308 Covered payroll $ 83,608,155 $ $ $ $ $ $ $ 82,749,459 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 118.41% 160.23% 138.69% 144.40% 161.95% 176.89% 167.72% 162.65% Plan fiduciary net position as a percentage of the total pension liability 78.58% 69.33% 73.24% 73.40% 69.92% 67.06% 68.35% 69.49% June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 Actuarial roll forward date This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 119 Schedule of the Proportionate Share of the Net OPEB Health Insurance Premium Liability (Asset) Arizona State Retirement System Last Five Fiscal Years City of Tempe, Arizona 2022 City's proportion of the net OPEB health insurance premium liability (asset) 2021 0.77% 2020 0.78% 2019 0.77% 2018 0.78% 0.77% City's proportion share of the net OPEB health insurance premium liability (asset) $ (3,728,896) $ (549,377) $ (213,892) $ (282,642) $ (418,219) Covered payroll $ 83,608,155 $ 82,749,459 $ 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 -4.46% -0.66% -0.27% -0.38% -0.57% Plan fiduciary net position as a percentage of the total OPEB health insurance premium liability (asset) 130.24% 104.33% 101.62% 102.20% 103.57% Actuarial roll forward date 6/30/2021 6/30/2020 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 Schedule of the Proportionate Share of the Net OPEB Long-Term Disability Liability Arizona State Retirement System Last Five Fiscal Years City of Tempe, Arizona 2022 City's proportion of the net OPEB long-term disability liability 2021 0.77% 2020 0.77% 2019 0.77% 2018 0.78% 0.76% City's proportion share of the net OPEB long-term disability liability $ 156,759 $ 584,844 $ 501,196 $ 406,033 $ 276,226 Covered payroll $ 83,608,155 $ 82,749,459 $ 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 0.19% 0.71% 0.63% 0.54% 0.38% Plan fiduciary net position as a percentage of the total OPEB liability long-term disability liability 90.38% 68.01% 72.85% 77.83% 84.44% 6/30/2021 6/30/2020 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. 121 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Police Last Eight Fiscal Years Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds Net change in total pension liability Total pension liability- beginning Total pension liability- ending City of Tempe, Arizona 2022 2021 2020 2019 2018 2017 2016 2015 $ 6,444,246 27,218,826 (876,704) (19,572,007) 13,214,361 376,202,388 $ 389,416,749 $ 6,276,242 25,248,428 13,853,754 (17,537,352) 27,841,072 348,361,316 $ 376,202,388 $ 6,363,446 23,896,706 2,252,812 7,223,840 (15,881,006) 23,855,798 324,505,518 $ 348,361,316 $ 6,266,555 22,579,727 1,492,630 (15,663,112) 14,675,800 309,829,718 $ 324,505,518 $ 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 $ 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 $ 5,468,695 19,315,142 (2,753,278) (14,604,348) 7,426,211 250,620,596 $ 258,046,807 $ 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 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 $ 20,333,964 2,844,510 41,258,890 (19,572,007) (192,755) 4,270 44,676,872 145,381,067 $ 190,057,939 $ 18,813,057 2,760,167 1,807,767 (17,537,352) (147,615) 23,720 5,719,744 139,661,323 $ 145,381,067 $ 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 $ 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 $ 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 $ 12,552,708 3,597,316 653,674 (15,820,570) (94,459) (173,159) 715,510 105,933,583 $ 106,649,093 $ 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 $ Net pension liability- ending $ 199,358,810 $ 230,821,321 $ 208,699,993 $ 195,301,812 $ 187,448,327 $ 178,861,508 $ 152,113,224 $ 147,170,332 48.81% 38.64% 40.09% 39.82% 39.50% 37.35% 41.05% 41.28% Plan fiduciary net position as a percentage of the total pension liability Covered payroll $ 27,412,713 $ 28,741,103 $ 27,841,299 $ 28,672,800 $ 28,606,412 $ 28,627,615 $ 28,889,762 9,132,346 3,253,980 12,456,186 (13,685,124) (3,260,002) 7,897,386 95,552,878 $ 103,450,264 $ 28,717,534 Net pension liability as a percentage of covered payroll 727.25% 803.11% 749.61% 681.14% 655.27% 624.79% 526.53% 512.48% Measurement date 6/30/2021 6/30/2020 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. 122 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Fire Last Eight Fiscal Years Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds Net change in total pension liability Total pension liability- beginning Total pension liability- ending City of Tempe, Arizona 2022 2021 2020 2019 2018 2016 2015 $ 3,433,110 15,656,247 (3) (13,239,944) 5,849,410 217,656,005 $ 223,505,415 $ 3,424,059 14,737,251 7,181,069 (12,284,937) 13,057,442 204,598,563 $ 217,656,005 $ 3,201,998 14,062,552 2,213,604 3,771,807 (10,967,777) 12,282,184 192,316,379 $ 204,598,563 $ 3,184,469 13,505,923 (549,390) (9,489,726) 6,651,276 185,665,103 $ 192,316,379 $ 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 $ 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 $ 2,527,186 11,256,214 (1,631,037) (8,554,561) 3,597,802 146,404,949 $ 150,002,751 $ $ $ $ 7,629,875 1,711,846 8,517,929 (8,942,533) (75,769) 930 8,842,278 69,151,674 77,993,952 $ $ $ 4,553,293 1,627,959 2,537,356 (8,554,561) (62,287) (36,284) 65,476 71,143,492 71,208,968 $ $ 6,665,926 1,620,334 420,827 (10,767,917) (60,954) 64,490 (2,057,294) 71,208,968 69,151,674 $ 4,587,619 1,461,331 8,786,886 (9,805,679) (3,124,665) 1,905,492 69,238,000 71,143,492 $ 99,486,139 $ 78,793,783 $ 75,261,457 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 11,478,887 1,366,781 24,375,794 (13,239,944) (114,661) 23,866,857 87,341,992 $ 111,208,849 $ 10,643,938 1,369,664 1,093,261 (12,284,937) (89,363) 22,391 754,954 86,587,038 $ 87,341,992 $ Net pension liability- ending $ 112,296,566 $ 130,314,013 $ 118,011,525 $ 109,846,006 $ 107,671,151 49.76% 40.13% 42.32% 42.88% 42.01% Plan fiduciary net position as a percentage of the total pension liability Covered payroll 2017 $ 15,290,218 $ 14,413,470 $ $ 9,657,636 1,045,992 4,459,035 (10,967,777) (78,221) 4,116,665 82,470,373 86,587,038 14,442,254 $ $ 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 13,373,418 $ $ 12,337,861 41.01% $ 12,215,891 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 47.47% $ 12,133,956 48.59% $ 12,719,039 Net pension liability as a percentage of covered payroll 734.43% 904.11% 817.13% 821.38% 872.69% 814.40% 649.37% 591.72% Measurement date 6/30/2021 6/30/2020 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. 123 Schedule of Changes in the Net OPEB Liability and Related Ratios Public Safety Personnel Retirement System - Police Last Five Fiscal Years City of Tempe, Arizona 2022 Total OPEB liability Service cost Interest Changes of benefit terms Differences between expected and actual experience 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 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 $ $ $ Net OPEB liability as a percentage of covered payroll Measurement date Note: 129,581 490,287 (215,045) (430,623) (25,800) 6,801,988 6,776,188 $ $ $ $ $ $ $ 294,958 8,990 51,156 (431,587) (4,160) (80,643) 4,212,195 4,131,552 $ 1,691,401 $ 2,670,436 75.04% $ 27,412,713 2020 126,116 483,652 (1,712) (431,587) 176,469 6,625,519 6,801,988 278,745 15,529 1,094,083 (430,623) (4,499) 953,235 4,131,552 5,084,787 Plan fiduciary net position as a percentage of the total OPEB liability Covered payroll 2021 28,741,103 $ $ $ 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 $ $ $ 254,335 2,808 212,423 (436,662) (3,667) 29,237 4,182,958 4,212,195 $ 2,413,324 $ $ 63.58% $ 27,841,299 2018 83,184 489,304 80,581 (417,982) 235,087 6,779,619 7,014,706 84,051 509,152 (630,377) 84,649 (436,662) (389,187) 7,014,706 6,625,519 60.74% $ 2019 $ 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 6.17% 9.29% 8.67% 9.88% 9.46% 6/30/2021 6/30/2020 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. 124 Schedule of Changes in the Net OPEB Liability (Asset) and Related Ratios Public Safety Personnel Retirement System - Fire Last Five Fiscal Years City of Tempe, Arizona 2022 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 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 (asset) - ending $ 51,253 244,908 (178,564) (237,858) (120,261) 3,422,574 3,302,313 $ $ $ 19,551 3,082 963,669 (237,858) (3,962) 744,482 3,576,747 4,321,229 $ (1,018,916) $ $ Plan fiduciary net position as a percentage of the total OPEB liability Covered payroll Net OPEB liability (asset) as a percentage of covered payroll Measurement date Note: 2021 52,953 245,917 (30,913) (231,273) 36,684 3,385,890 3,422,574 $ $ $ 33,080 2,074 46,170 (231,273) (3,755) (153,704) 3,730,451 3,576,747 $ (154,173) $ 130.85% $ 15,290,218 2020 14,413,470 $ $ $ 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) $ $ $ 33,737 563 196,028 (218,954) (3,384) 7,990 3,722,461 3,730,451 $ (344,561) $ $ 110.18% $ 14,442,254 2018 32,536 247,192 (50,860) (216,408) 12,460 3,432,367 3,444,827 32,044 249,187 (161,802) 40,588 (218,954) (58,937) 3,444,827 3,385,890 104.50% $ 2019 $ 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 -6.66% -1.07% -2.39% -2.08% -1.84% 6/30/2021 6/30/2020 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. 125 Schedule of Contributions OPEB Plan Last Six Fiscal Years City of Tempe, Arizona 2022 2021 2020 2019 2018 2017 Actuarially determined contribution Contributions in relation to the actuarially determined contribution $ Contribution deficiency (excess) $ (1,503,039) $ (1,842,605) $ (837,331) $ (1,327,506) $ 449 $ 412,633 Covered-employee payroll $ 61,037,789 $ 62,477,698 $ 60,657,959 $ 35,758,296 $ 34,716,792 $ 41,444,730 Contributions as a percentage of covered-employee payroll Measurement date Note: 8,139,000 $ 9,642,039 7,028,000 $ 8,870,605 7,081,000 $ 7,918,331 7,134,000 $ 8,461,506 6,984,000 $ 6,983,551 7,171,851 6,759,218 15.80% 14.20% 13.05% 23.66% 20.12% 16.31% June 30, 2022 June 30, 2021 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. 126 Schedule of Changes in the Net OPEB Liability and Related Ratios OPEB Plan Last Six Fiscal Years City of Tempe, Arizona 2022 Total OPEB liability Service cost Interest Changes of benefit terms Differences between expected and actual experience 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 for benefits due 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 $ $ $ $ 9,642,039 (2,728,646) (9,642,039) (2,728,646) 19,110,322 16,381,676 $ 106,389,274 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: 1,170,996 7,035,529 2,629,006 9,688,529 (9,642,039) 10,882,021 111,888,929 122,770,950 2021 $ $ $ $ 8,870,605 4,161,448 (8,870,605) 4,161,448 14,948,874 19,110,322 $ 92,778,607 13.34% $ 61,037,789 1,028,565 6,081,440 13,492,032 3,190,142 (8,870,605) 14,921,574 96,967,355 111,888,929 2020 $ $ $ 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 (7,919,331) 761,338 14,187,536 14,948,874 $ 82,018,481 17.08% $ 62,477,698 2019 $ $ $ 60,657,959 $ $ $ $ $ $ 6,759,218 1,211,093 (6,759,218) 1,211,093 11,117,487 12,328,580 $ 78,378,596 $ $ 6,983,551 1,062,670 (6,983,551) 1,062,670 12,328,580 13,391,250 $ 76,065,663 $ 81,763,044 15.72% $ 35,758,296 2017 321,229 5,689,881 4,915,943 503,616 (6,983,551) 4,447,118 90,707,176 95,154,294 8,461,506 796,286 (8,461,506) 796,286 13,391,250 14,187,536 15.42% $ 319,754 5,930,814 (4,271,517) 1,581,360 (8,461,506) (4,901,095) 95,154,294 90,253,199 2018 $ 14.07% $ 34,716,792 300,495 5,742,386 (6,759,218) (716,337) 91,423,513 90,707,176 13.59% $ 41,444,730 174.30% 148.50% 135.21% 212.72% 235.51% 189.12% June 30, 2022 June 30, 2021 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. 127 Schedule of Investment Returns OPEB Plan Last Six Fiscal Years City of Tempe, Arizona 2022 Annual money-weighted rate of return, net of investment expense Note: -13.87% 2021 2020 28.40% 2019 5.84% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 128 6.43% 2018 9.13% 2017 11.41% Notes to Required Supplementary Information June 30, 2022 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. The actuarial assumptions used in the June 30, 2020 valuation for ASRS were based on the results of an actuarial experience study for the five-year period ended June 30, 2020. 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, 2020, actuarial valuation. The total liabilities as of June 30, 2021, reflect changes in actuarial assumptions based on the results of an actuarial experience including a decrease in the discount rate from 7.5 to 7.0 percent and changing the projected salary increases from 2.7-7.2 % to 2.9-8.4%. The actuarial assumptions used in the June 30, 2021, valuation for PSPRS were based on the results of an actuarial experience study. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. In accordance with the PSPRS actuarial funding policy, the actuary shall conduct an experience study every five years. The results of the study shall be the basis for the actuarial assumption changes recommended to the PSPRS Board. Actuarial assumptions used to determine the ASRS and PSPRS sponsored pension and OPEB (assets)/liabilities and the City of Tempe Post Employment Health Plan liabilities are contained in the Notes to the Financial Statements. Factors that Affect Trends - Pensions. For the June 30, 2020 ASRS actuarial valuation, the City’s net pension liability decreased by $33.6 million to $99.0 million, or 25.3% from the prior year. This difference is primarily due to the difference between expected and actual investment earnings, decreased the liability by $31.4 million. For the PSPRS pension plans, the return on the market value of assets for the year ending June 30, 2021 was 26.7% for Tiers 1 and 2 and 32.7% for Tier 3. On a smoothed, actuarial value of assets basis, however, the average return was 7.6% for Tiers 1 and 2 and 11.5% for Tier 3. Those returns exceeded the 2020 assumed earnings rate for Tiers 1 and 2 of 7.3% and for Tier 3 of 7.0%. For the pension liability, The mortality assumptions sufficiently accommodate anticipated future mortality improvements. Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional, or a breach of contract, because those provisions apply to individuals who were members as of the law’s effective date. As a result, the PSPRS changed benefit terms to reflect the prior mechanism for funding permanent benefit increases for those members and revised actuarial assumptions to explicitly value future permanent benefit increases. PSPRS also reduced those members’ employee contribution rates. These changes are reflected in the plan’s pension liabilities for fiscal year 2015 (measurement date 2014) for members who were retired as of the law’s effective date and fiscal year 2018 (measurement date 2017) for members who retired or will retire after the law’s effective date. These changes also increased the PSPRS required pension contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date and beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. Factors that Affect Trends - OPEB. The citywide OPEB liability totaled $108,237,434 at June 30, 2022. Of this amount, the City of Tempe Post Employment Health Plan (City Sponsored Plan) liability totaled $106,389,274 or 98.3% of the total liability. Employee Turnover, Retirement, and Disability Rates. For the City Sponsored Plan, the employee turnover rates, retirement rates, and disability rates were updated to reflect the Arizona State Retirement System (“ASRS”) and Public Safety Personnel Retirement System (“PSPRS”) pension plan valuations as of 6/30/2021. These changes resulted in a decrease in the Total OPEB Liability of approximately $253,000. Mortality Rates. For the City Sponsored Plan, established through an irrevocable trust, The mortality rates, Pub G.H-2010 for general employees and Pub S.H-2010 for public safety employees, remained the same, but the mortality improvement was updated from Scale MP-2020 to MP-2021. This resulted in an increase in the Total OPEB Liability of approximately $135,000. 129 Notes to Required Supplementary Information June 30, 2022 City of Tempe, Arizona Spouse and Dependent HRA Contributions. For the City sponsored plan, prior to 2020, the City had two tiers for pre-65 HRA contributions – retiree only and retiree +1. Effective January 1, 2020, the City added a Retiree +2 or more tier. It was determined that an adjustment to the projected costs to include the impact of these covered dependents. In addition, we were missing some spouses of retirees that we are now including. These adjustments resulted in an increase in the Total OPEB liability of $12 million. City Sponsored Plan - City Contributions and Medicare Supplement Premiums. For the City sponsored plan, the claim costs and trend were updated to reflect actual increases in City-HRA contributions and Medicare Supplement premiums for 2022. This resulted in a decrease in the total OPEB liability of approximately $2.25 million. City Sponsored Plan Schedule of Contributions - OPEB Methods and assumptions used to determine actuarial contribution amounts are as follows: Valuation Date: Actuarially determined contributions are calculated as of June 30, one year prior to the end of the fiscal year in which contributions are reported. Actuarial Cost Method: Entry Age Amortization Method: Level percentage of payroll, closed Amortization Period: 17 years Asset Valuation Method: Market Value Inflation: 2.40% Salary Increases: 3.00% average, including inflation Investment Rate of Return: 6.50%, net of plan investment expenses, including inflation Retirement Rates: From the 2021 ASRS and PSPRS actuarial valuations Mortality Rates: Mortality rates were based on the PubG.H-2010 (general employees) and PubS.H-2010 (public safety) Employee, Retiree and Disabled Mortality Tables, with generational projection using Scale MP-2020 130 Combining Fund Financial Statements 131 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.  Arts and Culture Fund. To account for the receipt and expenditure of the Arts and Culture Tax monies. These monies are restricted to supporting arts and cultural activities throughout the City.  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. 132 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.  Arts and Culture Fund. Used for purchasing, developing or improving projects that allow for the support of the arts and cultural activities in the City.  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.  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. 133 Combining Balance Sheet Non-major Governmental Funds June 30, 2022 Special Revenue 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 Performing Arts $ 7,394 $ 7,026,141 $ 7,394 $ 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 Arts and Culture - $ Highway User Revenue $ 12,237,899 1,233,293 408,006 $ 8,667,440 $ 1,322,516 776,844 14,337,259 $ $ 278,537 200,620 275,000 132,250 886,407 - 340,383 64 136,496 476,943 Community Development $ $ $ - 7,394 7,394 7,781,033 7,781,033 7,394 $ 8,667,440 134 14,337,259 487 207,760 1,885,232 2,093,479 6,499 1,332,507 24,933 175,980 17,813 1,557,732 $ 426,180 $ 64,946 845,439 1,336,565 $ - 776,844 13,083,472 13,860,316 $ - Housing Assistance - 535,747 535,747 $ 2,093,479 5,632 151,911 50,015 207,558 845,439 283,568 1,129,007 $ 1,336,565 City of Tempe, Arizona Special Revenue Housing Affordability $ 19,009 - - $ $ Donations and Court Awards $ 4,742,168 $ 5,020 5,605 25,459 4,778,252 82 19,091 - $ - 19,091 $ 3,366,475 $ 1,643,837 5,010,312 $ - 19,091 19,091 $ 24,520 4,954 29,474 Grants 4,778,252 $ 2,975,079 $ 2,856,990 5,832,069 $ 15,866 2,810,000 46,990 2,872,856 664,312 642,551 1,306,863 2,129,895 1,613,142 1,005,741 4,748,778 $ 142,675 224,461 3,374,373 3,741,509 Community Facilities District 5,010,312 $ 30,800,345 $ 2,555,809 64,946 5,589 1,857,202 776,844 845,439 5,175,687 42,081,861 $ - 166,210 (204,270) (38,060) $ Total 664,312 642,551 1,306,863 2,959,213 2,959,213 $ 5,832,069 (continued) 135 814,112 1,561,986 513,960 175,980 3,424,388 3,085,000 197,053 9,772,479 1,622,283 26,965,623 1,613,142 1,005,741 (204,270) 31,002,519 $ 42,081,861 Combining Balance Sheet Non-major Governmental Funds June 30, 2022 Capital Projects 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 $ 5,062,112 $ 5,062,112 $ 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 Police Protection Streets 752,648 752,648 $ 4,242,335 $ 4,242,335 $ - $ 5,062,112 137,462 607 138,069 $ 1,906,866 $ 1,906,866 $ - 4,309,464 4,309,464 147,242 147,242 $ 338,396 $ 7,581,889 7,920,285 $ - 4,736,060 (631,794) 4,104,266 $ Arts and Culture Fire Protection 4,242,335 136 1,906,866 $ 48,112 $ 48,112 $ - 1,123,336 636,288 1,759,624 $ 561,075 561,075 Storm Sewers - 1,861,665 5,497,545 7,359,210 $ 7,920,285 4,040 4,040 44,072 44,072 $ 48,112 City of Tempe, Arizona Capital Projects Parks $ 17,576,432 $ 22,929 17,599,361 $ 915,227 915,227 Rio Salado $ 384,636 $ 384,636 $ 22,929 22,929 17,599,361 Signals $ 577,699 $ 1,134,560 1,712,259 $ - 4,407,656 12,253,549 16,661,205 $ - 384,636 654,092 654,092 $ 3,372,065 $ 3,372,065 $ - 384,636 384,636 $ Community Facilities District 1,712,259 Total Non-major Governmental Funds $ 33,508,653 $ 64,308,998 $ 22,929 1,134,560 7,581,889 42,248,031 $ 2,555,809 87,875 5,589 2,991,762 776,844 845,439 12,757,576 84,329,892 $ - 305,183 752,984 1,058,167 $ 3,352 3,352 Total 3,368,713 3,368,713 $ 3,372,065 137 $ 3,175,138 607 3,175,745 $ 3,989,250 1,562,593 513,960 175,980 3,424,388 3,085,000 197,053 12,948,224 22,929 22,929 664,312 642,551 22,929 1,329,792 12,477,972 26,818,543 384,636 (631,794) 39,049,357 1,622,283 39,443,595 28,431,685 1,390,377 (836,064) 70,051,876 42,248,031 $ 84,329,892 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Fiscal Year Ended June 30, 2022 Special Revenue Performing Arts Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income (loss) Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ 7,394 Highway User Revenue Arts and Culture $ 11,202,441 $ - Community Development $ - Housing Assistance $ - 7,394 50,287 563,510 20,247 11,836,485 14,406,073 247,930 21,201 14,675,204 3,053,167 25,756 525,694 3,604,617 11,112,785 2,366 17,009 11,132,160 - 6,113,294 - 10,448,422 - 2,929,709 - 11,016,147 - - 275,000 229,233 152,819 6,770,346 10,448,422 482,000 43,694 3,455,403 11,016,147 7,394 5,066,139 4,226,782 149,214 116,013 - 40,000 11,014 - 1,579,500 - - - - (2,002,500) 162,343 8,797 (1,780,346) (4,861) (1,160,000) 48,778 463,417 - - 7,394 3,285,793 4,690,199 149,214 116,013 - 4,495,240 9,170,117 386,533 1,012,994 Expenditures: Current: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municipal court City manager City attorney Sustainability office 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 Capital projects funds Enterprise funds Transfers out: General fund Debt service funds Capital projects funds Enterprise funds Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balances Fund balance at beginning of year Fund balance at end of year $ 7,394 $ 7,781,033 138 $ 13,860,316 $ 535,747 $ 1,129,007 City of Tempe, Arizona Special Revenue Housing Affordability $ $ - Donations and Court Awards $ - Community Facilities District Grants $ - $ - Total $ 11,209,835 (347) (347) 376,384 328,293 (9,084) 55,385 234,276 237,135 137,642 1,360,031 3,808,963 1,027,410 3,311,462 501 5,875 187,826 (9,750) 200,238 8,532,525 1,864,739 600,659 2,465,398 17,974,915 1,403,794 14,406,073 3,639,755 69,479 2,737,439 439,111 227,385 1,505,681 53,613,467 - 57,882 154,051 396,447 179,868 973,108 242,339 18,058 1,650 32,887 94,089 3,161,012 332,547 1,117,507 53,000 1,382,849 3,687 1,251,809 12,896 86,587 417,456 2,214,863 - 3,161,012 390,429 7,384,852 10,844,869 2,447,731 16,301,813 246,026 1,269,867 14,546 119,474 511,545 - 2,431,104 7,819,350 2,810,000 86,945 44,074 5,155,882 3,567,000 359,872 196,893 47,096,654 (347) (1,071,073) 713,175 (2,690,484) 6,516,813 - 745,910 - - 2,906,887 - 2,365,410 2,906,887 11,014 - - (666,225) 79,685 - 2,990,000 (2,947,095) 2,949,792 (4,861) (3,828,725) 162,343 57,575 2,990,000 (2,947,095) 1,712,548 (347) (991,388) 713,175 259,308 8,229,361 19,438 5,740,166 (751,235) 2,699,905 22,773,158 19,091 $ 4,748,778 $ (38,060) $ 2,959,213 (continued) 139 $ 31,002,519 Combining Statement of Revenues, Expenditures and Changes in Fund Balance Non-major Governmental Funds For the Fiscal Year Ended June 30, 2022 Capital Projects Police Protection Streets Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income (loss) Charges for services Fines and forfeitures Other entities' participation Miscellaneous Total revenues $ - $ - Fire Protection Arts and Culture $ $ - - Storm Sewers $ - 493 101,582 297,208 399,283 4,381 15,262 670,271 689,914 2,632 565,598 568,230 17,093 17,093 105 105 - - - - - Expenditures: Current: Police Fire medical rescue Community services Engineering and transportation Community development Human services Municipal court City manager City attorney Sustainability office Office of strategic management and diversity Debt service: Principal retirement Interest Fiscal fees Capital outlay Total expenditures 13,606,078 13,606,078 2,998,865 2,998,865 2,851,890 2,851,890 6,040,429 6,040,429 393,655 393,655 (13,206,795) (2,308,951) (2,283,660) (6,023,336) (393,550) Other financing sources (uses): Transfers in: General fund Special revenue funds Debt service funds Capital projects funds Enterprise funds Transfers out: General fund Debt service funds Capital projects funds Enterprise funds Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Issuance of refunding bonds Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balances Fund balance at beginning of year Fund balance at end of year $ 240,090 1,160,000 - - - 2,002,500 - - (490) 11,021,250 978,750 13,399,600 (1,700) - (1,700) - 2,026,200 173,800 2,198,300 2,578,800 221,200 2,798,300 (51,014) 6,170,000 1,405,810 9,527,296 (105) 551,063 52,200 603,158 192,805 (110,651) 514,640 3,503,960 209,608 4,116,659 4,214,917 1,244,984 3,855,250 (165,536) 4,309,464 $ 4,104,266 140 $ 1,759,624 $ 7,359,210 $ 44,072 City of Tempe, Arizona Capital Projects Parks $ $ Rio Salado - $ - 11,471 600 727,294 3,064 742,429 - - - Community Facilities District Signals $ - $ 21,878 1,134,560 746 48,987 2,560 1,208,731 - Total $ 449,756 163,406 613,162 - Total Non-major Governmental Funds - $ 21,878 1,134,560 4,381 47,802 551,338 600 2,309,358 169,030 4,238,947 - 11,209,835 17,996,793 2,538,354 14,406,073 3,644,136 117,281 3,288,777 439,711 2,536,743 1,674,711 57,852,414 - 3,161,012 390,429 7,384,852 10,844,869 2,447,731 16,301,813 246,026 1,269,867 14,546 119,474 511,545 5,158,099 5,158,099 - 4,306,534 4,306,534 100,415 100,415 35,455,965 35,455,965 3,567,000 359,872 196,893 35,455,965 82,552,619 (4,415,670) - (3,097,803) 512,747 (31,217,018) (24,700,205) 10,927,020 - - - 240,090 14,089,520 - 2,605,500 14,089,520 2,906,887 11,014 - (3,151) 4,686,600 391,600 16,002,069 - (698) 3,122,687 274,050 3,396,039 - (58,368) (490) 30,156,600 3,497,410 47,924,762 (58,368) (5,351) (3,828,725) 30,156,600 3,659,753 57,575 2,990,000 (2,947,095) 49,637,310 11,586,399 - 298,236 512,747 16,707,744 24,937,105 5,074,806 384,636 759,931 2,855,966 22,341,613 45,114,771 3,368,713 $ 39,049,357 16,661,205 $ 384,636 - $ 1,058,167 $ 141 $ 70,051,876 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. 142 Combining Statement of Fund Net Position Internal Service Funds June 30, 2022 City of Tempe, Arizona Assets Current assets: Pooled cash and investments Accounts receivable Accrued interest receivable Net OPEB asset Total assets Risk Management Worker's Compensation $ $ 3,490,508 20,920 3,511,428 Deferred Outflows of Resources Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources 140,159 20,197 160,356 Liabilities Current liabilities: Accounts payable Accrued expenses and claims payable Total current liabilities 503,238 2,294,801 2,798,039 Noncurrent liabilities: Net OPEB liability Net pension liability Total noncurrent liabilities Net Position Unrestricted Total net position $ - 153,149 - 143 $ 153,149 $ 549,529 11,567,180 12,116,709 117,907 555,399 673,306 4,331,328 12,790,015 - 182,739 17,700 200,439 13,282,484 $ 13,282,484 26,231,864 12,267 680 20,920 26,265,731 140,159 20,197 160,356 - 4,987,342 - 17,601,545 12,267 17,613,812 4,331,328 4,331,328 - 182,739 17,700 200,439 Total - 46,291 4,941,051 4,987,342 3,471,345 Deferred Inflows of Resources Deferred inflows related to pensions Deferred inflows related to OPEB Total deferred inflows of resources $ - 117,907 555,399 673,306 Total liabilities 5,139,811 680 5,140,491 Health 13,435,633 $ 13,435,633 Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Risk Management Worker's Compensation Health Total Operating revenues: Contributions Total operating revenues $ 5,608,708 5,608,708 $ 3,275,021 3,275,021 $ 37,963,852 37,963,852 $ 46,847,581 46,847,581 Operating expenses: Fees and services Total operating expenses 7,139,374 7,139,374 3,275,021 3,275,021 35,530,551 35,530,551 45,944,946 45,944,946 Operating income (loss) (1,530,666) 2,433,301 902,635 Nonoperating revenues Investment income Total nonoperating revenues Changes in net position Total net position - beginning Total net position - ending - - (86,676) (86,676) - (86,676) (86,676) (1,530,666) (86,676) 2,433,301 815,959 1,530,666 $ - 239,825 153,149 10,849,183 $ 13,282,484 12,619,674 $ 13,435,633 144 $ Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2022 Cash flows from operating activities: Receipts from other funds Reduction in (payments for) settlement of claims Net cash provided (used) by in operating activities City of Tempe, Arizona Risk Management $ Cash flows from investing activities: Interest received Net cash provided (used) by investing activities $ - Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 5,608,708 (7,366,852) (1,758,144) Worker's Compensation 3,275,021 (2,814,523) 460,498 Health Total $ 38,040,685 (35,309,759) 2,730,926 $ 46,924,414 (45,491,134) 1,433,280 - (85,110) (85,110) (85,110) (85,110) (1,758,144) 375,388 2,730,926 1,348,170 5,248,652 4,764,423 14,870,619 24,883,694 5,139,811 $ 17,601,545 $ 26,231,864 $ $ $ 3,490,508 $ Operating income (loss) Adjustments to reconcile operating income (loss) 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 $ (1,530,666) $ Net cash provided (used) by operating activities $ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: - - (17,587) 299,314 (466,360) 6,313 187,539 (249,000) 12,303 145 (1,758,144) - 76,833 (75,329) 296,121 (66,561) 527,059 - $ 460,498 2,433,301 76,833 (17,587) 157,424 356,820 6,313 187,539 (249,000) 12,303 - $ 2,730,926 902,635 $ 1,433,280 Other Supplementary Information BUDGETARY COMPARISON SCHEDULES 146 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, 2022 City of Tempe, Arizona 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 Financial services Human resources Information technology 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 Premium on issuance of debt Proceeds from bond refunding Payment to refunded bond escrow agent Proceeds (loss) from sale of capital assets Total other financing sources (uses) Net change in fund balance Variance with Final Budget Positive (Negative) Final Budget Amounts Actual Amounts (Budgetary Basis) $ 245,424,034 116,463,482 3,700,131 142,148,200 4,559,565 5,426,598 2,193,557 26,060,459 20,823,727 566,799,753 $ 285,518,026 97,904,575 2,705,582 146,115,896 5,418,542 8,238,940 1,104,709 26,124,118 573,130,388 320,529,318 182,635,513 85,813,255 226,831,767 155,778,730 21,565,430 54,074,954 610,375 6,133,477 11,807,469 4,235,107 633,991 297,802 2,393,454 531,464 1,537,998 1,509,567 27,633,776 4,729,607 19,461,621 22,550,445 (19,461,621) 315,945,860 169,227,588 57,290,258 121,114,758 142,222,088 15,978,980 31,899,248 598,835 4,998,057 9,371,258 4,117,129 573,023 295,771 1,508,340 501,982 1,247,127 979,992 14,539,618 4,357,324 18,976,524 (18,805,773) 4,583,458 13,407,925 28,522,997 105,717,009 13,556,642 5,586,450 22,175,706 11,540 1,135,420 2,436,211 117,978 60,968 2,031 885,114 29,482 290,871 529,575 13,094,158 372,283 485,097 22,550,445 (655,848) 59,351,336 29,967,572 1,221,152,407 59,850,231 30,524,136 987,312,354 (498,895) (556,564) 233,840,053 31,307,134 (44,842,138) 455,831,070 - 61,271,766 (61,271,662) 439,500,000 4,945,804 29,964,632 (16,429,524) (16,331,070) 4,945,804 569,527 442,865,593 $ (211,487,061) 38,195,000 (42,718,577) 1,090,530 441,012,861 $ 26,830,895 38,195,000 (42,718,577) 521,003 (1,852,732) 238,317,956 147 $ $ 40,093,992 (18,558,907) (994,549) 3,967,696 858,977 2,812,342 (1,088,848) 63,659 (20,823,727) 6,330,635 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Property taxes Investment income Total revenues $ Expenditures: Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures 33,620,224 33,620,224 $ 33,796,506 24,944 33,821,450 Variance with Final BudgetPositive (Negative) $ 176,282 24,944 201,226 22,932,105 7,999,253 30,931,358 22,620,000 7,870,861 30,490,861 312,105 128,392 440,497 2,688,866 3,330,589 641,723 6,169,600 (8,329,592) (2,159,992) 6,048,472 (8,195,452) 267,651 6,315,000 (6,218,160) (1,782,489) (121,128) 134,140 267,651 6,315,000 (6,218,160) 377,503 Other financing sources (uses): Transfers in Transfers out Premium on issuance of debt Proceeds from bond refunding Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balance $ 528,874 148 $ 1,548,100 $ 1,019,226 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Special Assessment Debt Service Fund For the Fiscal Year Ended June 30, 2022 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 1,989,250 1,989,250 $ 1,370,000 619,250 1,989,250 $ - 149 3,565 2,126,514 4,610 2,134,689 Variance with Final BudgetPositive (Negative) $ 1,370,000 620,100 1,990,100 $ 144,589 3,565 137,264 4,610 145,439 (850) (850) $ 144,589 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Performing Arts Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Sales taxes Total revenues $ Expenditures: Current: Community services Total expenditures Net change in fund balance - $ $ - 150 Variance with Final BudgetPositive (Negative) 7,394 7,394 $ $ 7,394 7,394 7,394 $ 7,394 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Arts and Culture Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Sales taxes Charges for services Investment income Miscellaneous Total revenues $ Expenditures: Current: Community services Contingency Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Premium on issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 9,464,858 627,015 6,514 1,000 10,099,387 $ 11,202,440 570,014 38,202 13,744 11,824,400 Variance with Final BudgetPositive (Negative) $ 1,737,582 (57,001) 31,688 12,744 1,725,013 7,914,581 1,000,000 6,034,556 - 1,880,025 1,000,000 304,000 579,552 9,798,133 275,000 382,053 6,691,609 29,000 197,499 3,106,524 301,254 5,132,791 4,831,537 250,000 (2,002,500) (1,752,500) 51,014 (2,002,500) 162,343 8,798 (1,780,345) (198,986) 162,343 8,798 (27,845) (1,451,246) 151 $ 3,352,445 $ 4,803,691 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Highway User Revenue Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: State sales tax Charges for services Miscellaneous Total revenues $ Expenditures: Current: Engineering and transportation Contingency Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 13,025,483 232,800 3,000 13,261,283 $ 14,406,073 247,930 21,200 14,675,203 Variance with Final BudgetPositive (Negative) $ 1,380,590 15,130 18,200 1,413,920 12,778,706 500,000 13,278,706 10,589,290 10,589,290 2,189,416 500,000 2,689,416 (17,423) 4,085,913 4,103,336 1,500,000 (1,164,911) 335,089 1,579,500 (1,164,861) 48,777 463,416 79,500 50 48,777 128,327 317,666 152 $ 4,549,329 $ 4,231,663 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Development Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Investment income Contingency Miscellaneous Total revenues $ Expenditures: Current: Human services Contingency Debt service: Principal Interest and fiscal fees Total expenditures Net change in fund balance $ 9,667,583 3,472 9,000,000 855,414 19,526,469 $ 3,053,166 (3,387) 525,694 3,575,473 Variance with Final BudgetPositive (Negative) $ (6,614,417) (6,859) (9,000,000) (329,720) (15,950,996) 9,996,055 9,000,000 3,001,032 - 6,995,023 9,000,000 482,000 48,414 19,526,469 482,000 43,694 3,526,726 4,720 15,999,743 - 153 $ 48,747 $ 48,747 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Housing Assistance Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Contingency Investment income Fines and forfeitures Miscellaneous Total revenues $ Expenditures: Current: Human services Contingency Total expenditures Net change in fund balance 19,135,674 5,000,000 11,145 50,000 228,959 24,425,778 $ 19,425,778 5,000,000 24,425,778 $ - 154 11,112,785 2,366 17,009 11,132,160 Variance with Final BudgetPositive (Negative) $ 11,012,617 11,012,617 $ 119,543 (8,022,889) (5,000,000) (8,779) (32,991) (228,959) (13,293,618) 8,413,161 5,000,000 13,413,161 $ 119,543 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Housing Affordability Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Contingency Total revenues $ Expenditures: Current: Human services Contingency Total expenditures Net change in fund balance 250,000 250,000 $ 19,500 250,000 269,500 $ (19,500) 155 Variance with Final BudgetPositive (Negative) 128 128 $ $ 128 128 (250,000) (249,872) 19,500 250,000 269,500 $ 19,628 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Donations and Court Awards Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: State grants Intergovernmental other Charges for services Investment income Fines and forfeitures Contingency Other entities' participation Miscellaneous Total revenues $ Expenditures: Current: Fire medical rescue Community services Economic development office Engineering and transportation Community development Human services Municipal court City attorney City manager Office of strategic management and diversity Contingency Total expenditures 12,000 66,000 533,501 464,263 6,649,601 7,725,365 376,385 328,293 55,384 4,299 234,275 237,135 5,771,762 7,007,533 $ 376,385 316,293 (10,616) 4,299 234,275 (533,501) (227,128) (877,839) (717,832) 146,878 864,519 1,095,910 365,000 710,905 2,376,666 1,066,290 22,922 240,774 302,000 533,501 7,725,365 57,882 154,051 328,505 396,446 179,867 973,104 242,339 3,819 50,945 94,089 2,481,047 88,996 710,468 767,405 (31,446) 531,038 1,403,562 823,951 19,103 189,829 207,911 533,501 5,244,318 - 4,526,486 4,526,486 - 745,910 (666,225) 79,685 745,910 (666,225) 79,685 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balance $ Variance with Final BudgetPositive (Negative) $ - 156 $ 4,606,171 $ 4,606,171 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Grants Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants State grants Intergovernmental other Other entities' participatoin Investment income Charges for services Fines and forfeitures Contingency Miscellaneous Total revenues $ Expenditures: Current: Police Fire medical rescue Community services Community development Human services Human resources Municipal court City manager City attorney Sustainability office Office of strategic management and diversity Contingency Total expenditures Net change in fund balance 3,884,605 614,159 5,095,033 9,984 6,000 222,410 4,635,694 6,353,158 20,821,043 $ 6,517,913 879,538 1,379,212 117,049 4,372,558 6,000 3,900,960 85,802 68,767 102,999 3,318,979 20,749,777 $ 71,266 157 3,465,343 1,035,142 2,654,023 (9,750) 501 5,875 187,826 1,787,184 9,126,144 Variance with Final BudgetPositive (Negative) $ 3,258,847 333,995 1,132,504 53,000 1,382,845 3,687 1,251,808 12,896 90,337 427,592 7,947,511 $ 1,178,633 (419,262) 420,983 (2,441,010) (19,734) 501 (125) (34,584) (4,635,694) (4,565,974) (11,694,899) 3,259,066 545,543 246,708 64,049 2,989,713 6,000 (3,687) 2,649,152 72,906 (21,570) (324,593) 3,318,979 12,802,266 $ 1,107,367 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Facilities District Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Contingency Total revenues $ Expenditures: Current: C Community development Contingency Debt service: Principal Interest and fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Proceeds from bond refunding Payment to refunded bond escrow agent Total other financing sources (uses) Net change in fund balance $ 2,326,577 200,000 2,526,577 $ 2,465,398 2,465,398 Variance with Final BudgetPositive (Negative) $ 138,821 (200,000) (61,179) 2,776,070 200,000 2,244,930 - 531,140 200,000 2,710,000 196,887 5,882,957 2,810,000 131,020 5,185,950 (100,000) 65,867 697,007 (3,356,380) (2,720,552) 635,828 2,906,887 2,906,887 2,906,887 2,990,000 (2,947,095) 2,949,792 2,990,000 (2,947,095) 42,905 (449,493) 158 $ 229,240 $ 678,733 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Transit Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Charges for services Investment income Miscellaneous Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Net change in fund balance $ 5,867,011 5,867,011 $ 117,264 528,746 4,917 398 651,325 Variance with Final BudgetPositive (Negative) $ (5,749,747) 528,746 4,917 398 (5,215,686) 26,139,754 26,139,754 5,751,238 5,751,238 20,388,516 20,388,516 (20,272,743) (5,099,913) 15,172,830 3,635,882 3,635,882 4,135,882 4,135,882 500,000 500,000 (16,636,861) 159 $ (964,031) $ 15,672,830 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Streets Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Charges for services Investment income Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ 610,500 325,000 935,500 $ 398,790 493 399,283 Variance with Final BudgetPositive (Negative) $ (610,500) 73,790 493 (536,217) 32,634,390 32,634,390 22,121,556 22,121,556 10,512,834 10,512,834 (31,698,890) (21,722,273) 9,976,617 1,160,000 15,697,500 16,857,500 1,400,090 (490) 11,021,250 978,750 13,399,600 240,090 (490) (4,676,250) 978,750 (3,457,900) (14,841,390) 160 $ (8,322,673) $ 6,518,717 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Police Protection Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Miscellaneous Total revenues $ Expenditures: Current: Police Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ - $ 670,271 15,262 4,381 689,914 Variance with Final BudgetPositive (Negative) $ 670,271 15,262 4,381 689,914 4,189,730 4,189,730 3,513,777 3,513,777 675,953 675,953 (4,189,730) (2,823,863) 1,365,867 2,492,391 2,492,391 (1,700) 2,026,200 173,800 2,198,300 (1,700) (466,191) 173,800 (294,091) (1,697,339) 161 $ (625,563) $ 1,071,776 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Fire Protection Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Total revenues $ Expenditures: Current: Fire Medical Rescue Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ - $ 565,598 2,632 568,230 Variance with Final BudgetPositive (Negative) $ 565,598 2,632 568,230 15,504,444 15,504,444 3,214,560 3,214,560 12,289,884 12,289,884 (15,504,444) (2,646,330) 12,858,114 12,087,000 12,087,000 (1,700) 2,578,800 221,200 2,798,300 (1,700) (9,508,200) 221,200 (9,288,700) (3,417,444) 162 $ 151,970 $ 3,569,414 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Arts and Culture Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Investment income Total revenues $ Expenditures: Current: Community services Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ - 17,093 17,093 17,093 17,093 13,010,537 13,010,537 9,863,170 9,863,170 3,147,367 3,147,367 (13,010,537) (9,846,077) 3,164,460 2,002,500 2,002,500 2,002,500 (51,014) 6,170,000 1,405,810 9,527,296 (51,014) 6,170,000 1,405,810 7,524,796 (11,008,037) 163 $ Variance with Final BudgetPositive (Negative) $ (318,781) $ 10,689,256 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Storm Sewers Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Intergovernmental Investment income Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ 500,000 500,000 $ 105 105 Variance with Final BudgetPositive (Negative) $ (500,000) 105 (499,895) 2,122,379 2,122,379 441,492 441,492 1,680,887 1,680,887 (1,622,379) (441,387) 1,180,992 854,340 854,340 551,063 52,200 603,263 (303,277) 52,200 (251,077) (768,039) 164 $ 161,876 $ 929,915 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Parks Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Other entities' participation Investment income Fines and forfeitures Contingency Miscellaneous Total revenues $ Expenditures: Current: Community services Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ 500,000 47,500 1,000,000 1,547,500 $ 702,294 25,000 11,471 600 3,064 742,429 Variance with Final BudgetPositive (Negative) $ 202,294 (22,500) 11,471 600 (1,000,000) 3,064 (805,071) 28,806,726 28,806,726 9,488,149 9,488,149 19,318,577 19,318,577 (27,259,226) (8,745,720) 18,513,506 327,020 12,290,524 12,617,544 10,927,020 (3,151) 4,686,600 391,600 16,002,069 10,600,000 (3,151) (7,603,924) 391,600 3,384,525 (14,641,682) 165 $ 7,256,349 $ 21,898,031 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Community Development Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants Investment income Contingency Miscellaneous Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ 9,264,226 204,532 9,468,758 $ 11,461,266 3,679 4,954 11,469,899 Variance with Final BudgetPositive (Negative) $ 2,197,040 3,679 (204,532) 4,954 2,001,141 86,745,123 86,745,123 47,829,590 47,829,590 38,915,533 38,915,533 (77,276,365) (36,359,691) 40,916,674 20,130,875 20,130,875 13,057,276 (3,679) 11,030,000 970,000 25,053,597 13,057,276 (3,679) (9,100,875) 970,000 4,922,722 (57,145,490) 166 $ (11,306,094) $ 45,839,396 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Signals Capital Projects Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Federal grants State grants Charges for services Other entities' participation Investment income Miscellaneous Total revenues $ Expenditures: Current: Engineering and transportation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Issuance of debt Premium on issuance of debt Total other financing sources (uses) Net change in fund balance $ 743,084 1,223,000 450,000 2,416,084 $ 21,878 1,134,560 48,987 746 2,560 1,208,731 Variance with Final BudgetPositive (Negative) $ (721,206) (88,440) 48,987 (450,000) 746 2,560 (1,207,353) 8,822,632 8,822,632 4,437,483 4,437,483 4,385,149 4,385,149 (6,406,548) (3,228,752) 3,177,796 2,968,604 2,968,604 (698) 3,122,687 274,050 3,396,039 (698) 154,083 274,050 427,435 (3,437,944) 167 $ 167,286 $ 3,605,231 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, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Total revenues $ Expenditures: Current: Community development Total expenditures Net change in fund balance 670,255 670,255 $ 2,859,354 2,859,354 $ (2,189,099) 168 613,162 613,162 Variance with Final BudgetPositive (Negative) $ 374,295 374,295 $ 238,868 (57,093) (57,093) 2,485,059 2,485,059 $ 2,427,967 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Water and Wastewater Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Intergovernmental 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 Payment to refunded bond escrow agent Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 93,809,776 751,000 67,000 13,830 94,641,606 $ 89,883,750 592,605 1,604,190 20,575 617,391 92,718,511 Variance with Final BudgetPositive (Negative) $ (3,926,026) (158,395) 1,604,190 (46,425) 603,561 (1,923,095) 133,232,254 1,000,000 117,550,658 - 15,681,596 1,000,000 28,648,231 12,432,727 175,313,212 28,828,231 11,953,498 158,332,387 (180,000) 479,229 16,980,825 (80,671,606) (65,613,876) 15,057,730 12,591,126 (13,112,393) 45,863,468 44,126 45,386,327 17,716,986 (18,249,716) 54,740,000 (5,075,000) 157,594 49,289,864 5,125,860 (5,137,323) 8,876,532 (5,075,000) 113,468 3,903,537 (35,285,279) 169 $ (16,324,012) $ 18,961,267 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Solid Waste For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Miscellaneous Total revenues $ Expenditures: Current: Municipal utilities Contingency Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 19,961,277 59,000 2,817 20,023,094 $ 20,627,825 57,432 7,291 20,692,548 Variance with Final BudgetPositive (Negative) $ 666,548 (1,568) 4,474 669,454 22,204,456 500,000 22,704,456 22,390,955 22,390,955 (186,499) 500,000 313,501 (2,681,362) (1,698,407) 982,955 605,479 (610,390) 86,000 81,089 605,479 (610,340) 140,753 135,892 (2,600,273) 170 $ (1,562,515) - 50 54,753 54,803 $ 1,037,758 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Emergency Medical Transportation Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Investment income Miscellaneous Total revenues $ Expenditures: Current: Fire Medical Rescue Contingency Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Net change in fund balance $ 4,385,932 90,000 4,475,932 $ Variance with Final BudgetPositive (Negative) 4,550,485 3,301 143,649 4,697,435 $ 164,553 3,301 53,649 221,503 4,719,817 150,000 4,869,817 4,639,482 4,639,482 80,335 150,000 230,335 (393,885) 57,953 451,838 (63,890) (63,890) - 63,890 63,890 (457,775) 171 $ 57,953 $ 515,728 Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget to Actual Golf Course Fund For the Fiscal Year Ended June 30, 2022 City of Tempe, Arizona Actual Amounts (Budgetary Basis) Final Budget Amounts Revenues: Charges for services Intergovernmental other Investment income (loss) Total revenues $ Expenditures: Current: Community services Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Issuance of debt Premium on issuance of debt Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balance $ 3,021,791 105,000 3,126,791 $ 4,006,042 105,000 (3,981) 4,107,061 Variance with Final BudgetPositive (Negative) $ 984,251 (3,981) 980,270 4,067,433 4,067,433 3,913,947 3,913,947 153,486 153,486 (940,642) 193,114 1,133,756 74,000 (182,450) 446,368 337,918 74,000 (182,489) 573,400 48,400 2,882 516,193 - (602,724) 172 $ 709,307 (39) 127,032 48,400 2,882 178,275 $ 1,312,031 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. 173 Net Position by Component (Exhibit S-1) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Governmental activities Net investment in capital assets Restricted Unrestricted Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 $ 538,278,359 164,690,176 111,429,390 $ 529,205,694 135,603,391 89,964,094 $ 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 Total governmental activities net position $ 814,397,925 $ 754,773,179 $ 708,436,687 $ 641,961,976 $ 599,565,477 $ 615,260,525 $ 639,396,166 $ 641,841,925 $ 923,269,707 $ 921,888,051 Business-type activities Net investment in capital assets Unrestricted $ 137,380,192 162,925,142 $ 151,450,264 145,707,685 $ 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 Total business-type activities net position $ 300,305,334 $ 297,157,949 $ 289,307,777 $ 278,043,194 $ 264,562,866 $ 256,291,853 $ 239,873,012 $ 232,785,992 $ 256,697,649 $ 254,989,647 $ 675,658,551 164,690,176 274,354,532 $ 680,655,958 135,603,391 235,671,779 $ 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 $ 1,051,931,128 $ 997,744,464 $ 920,005,170 $ 864,128,343 $ 871,552,378 $ 879,269,178 $ 874,627,918 $ 1,179,967,356 Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position $ 1,114,703,259 174 $ 1,176,877,698 Changes in Net Position (Exhibit S-2a) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 $ 106,879,997 48,723,812 39,506,898 79,306,002 301,324 15,739,179 31,970,182 5,048,832 612,841 9,346,396 3,760,903 550,591 425,769 1,512,840 617,053 844,972 997,382 14,399,674 4,425,590 883,020 1,451,338 17,344,833 $ 109,735,808 46,151,382 35,564,456 88,643,038 746,213 14,321,605 30,908,394 5,077,211 434,176 10,707,904 3,748,495 619,106 106,535 787,714 274,559 899,173 957,343 18,570,150 1,502,243 9,529,375 $ 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 Total governmental activities expenses 384,649,428 379,284,880 392,899,606 372,827,572 369,464,699 374,213,259 342,712,163 331,945,009 314,543,439 308,647,885 Business-type activities: Water and wastewater Solid waste Emergency medical transportation (f) Golf course 89,403,602 19,872,919 5,562,895 3,500,205 86,542,908 17,319,217 4,150,475 3,336,616 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 Total business-type activities expenses 118,339,621 111,349,216 101,959,467 99,602,268 100,226,467 88,803,030 93,131,514 92,102,451 91,387,469 89,834,885 $ 502,989,049 $ 490,634,096 $ 494,859,073 $ 472,429,840 $ 469,691,166 $ 463,016,289 $ 435,843,677 $ 424,047,460 $ 405,930,908 $ 398,482,770 Expenses Governmental activities: Police Fire medical rescue Community services (a) (d) Public works (g) Engineering and transportation (g) Municipal utilities (g) Community development Human services (d) Municipal court Mayor and council City manager (d)(e)(c) City attorney Internal audit office Municipal budget office (d) Economic development office (h) Sustainability office (h) Office of strategic management and diversity (e) City clerk and elections Financial services (i) Human resources (i) Information technology (i) Internal services (b)(d)(i) Unallocated depreciation Interest on long-term debt Total primary government expenses Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) In Fiscal Year 2013, the Cemetery Fund was closed into the General Fund. (b) 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. (c) In Fiscal Year 2015, Economic Development and Community Relations became part of the City Manager's Office. (d) 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. (e) 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. (f) In Fiscal Year 2018, the Emergency Medical Transportation Fund was established. (g) In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilites; Engineering and Transportation. (h) 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. (i) In Fiscal Year 2022, the Internal Services department separated into three new departments: Financial services, Human resources, and Information technology. 175 Changes in Net Position (Exhibit S-2b) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2022 Program Revenues Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Governmental activities: Charges for services: Police $ Fire medical rescue Community services (a) (c) Engineering and transportation (e) Municipal utilities (e) Public works (e) Community development Human services (c) Municipal court City manager (f)(h) City attorney Internal audit office Municipal budget office Economic development office (f) Sustainability office (f) Office of strategic management and diversity (h) City clerk and elections Financial services (g) Human resources (g) Information technology (g) Internal services (b)(g) Operating grants and contributions Captital grants and contributions Total governmental activities program revenues 822,007 349,850 3,336,679 15,076,973 22,270,861 2,736,199 1,248,063 2,769,468 6,045 1,000 3,597,830 26,374,825 18,931,868 97,521,668 Business-type activities: Charges for services: Water and wastewater Solid waste Emergency medical transportation (d) Golf course Total business-type activities program revenues 91,475,655 20,627,824 5,990,395 4,006,042 122,099,916 90,696,447 19,824,131 4,135,310 3,907,736 118,563,624 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 Total primary government program revenues $ 219,621,584 $ 229,751,022 $ 268,677,419 $ 231,435,402 $ 191,963,558 $ 187,503,027 $ 183,872,814 $ 175,141,594 $ 178,376,378 $ 168,222,740 Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense $ (287,127,760) 4,487,095 $ (282,640,665) $ (266,547,655) 7,214,408 $ (259,333,247) $ (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) $ 738,594 297,548 1,909,685 10,492,178 289 16,682,427 1,948,647 2,299,815 30,000 196,462 15,544 3,423,684 36,398,251 36,754,274 111,187,398 $ 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 Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) In Fiscal Year 2013, the Cemetery Fund was closed into the General Fund. (b) In Fiscal Year 2015, Finance and Technology was merged into the Internal Services department. (c) In Fiscal Year 2015, a component of the Community Services department along with Diversity formed a new department called Human Services. (d) In Fiscal Year 2018, the Emergency Medical Transportation Fund was established. (e) In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilites; Engineering and Transportation. (f) 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. (g) In Fiscal Year 2022, the Internal Services department separated into three new departments: Financial services, Human resources, and Information technology. (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. 176 $ 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 Changes in Net Position (Exhibit S-2c) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona 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 Capital contributions Transfers Total business-type activities Total primary government Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 $ 222,951,580 58,954,757 59,488,492 3,055,126 (3,820,904) 3,646,464 767,622 646,079 345,689,216 $ 190,760,900 60,503,495 52,210,522 2,846,569 829,560 4,770,561 1,692,302 820,065 314,433,974 $ 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 (1,777,102) 788,909 294,562 (646,079) (1,339,710) 200,724 888,141 266,964 100,000 (820,065) 635,764 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) $ 344,349,506 $ 315,069,738 $ 303,920,948 $ 296,871,265 $ 276,405,683 $ 267,796,462 $ 256,612,124 $ 241,732,206 $ 236,986,699 $ 217,247,339 $ 58,561,456 3,147,385 $ 61,708,841 $ 47,886,319 7,850,172 $ 55,736,491 $ 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) $ $ (10,486,918) 3,313,258 $ (7,173,660) $ $ (12,276,186) (736,505) $ (13,012,691) Changes in net position Governmental activities Business-type activities Total primary government 3,315,145 10,312,582 $ 13,627,727 $ (2,445,759) 7,087,020 4,641,261 (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 . 177 $ 1,381,656 8,050,513 9,432,169 Fund Balances, Governmental Funds (Exhibit S-3) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2021 Fiscal Year 2022 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 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 $ 976,468 3,497,723 24,869,373 142,653,835 $ 171,997,399 $ 391,694 199,456 20,579,412 138,855,354 $ 160,025,916 $ 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 $ $ $ $ $ $ $ $ $ $ 1,622,640 129,981,114 50,341,486 15,405,309 (836,064) $ 196,514,485 1,670,998 96,536,269 28,925,620 11,880,755 (1,089,017) $ 137,924,625 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) $ 123,868,769 178 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 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 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 Property rental Interest earnings 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 (c) Public works (e) Engineering and transportation (e) Municipal utilities (e) Community development Human services (c) Municipal court Mayor and council City manager (b)(d)(f) City attorney Internal audit office Municipal budget office (c) Economic development office (f) Sustainability office (j) Office of strategic management and diversity City clerk and elections Financial services (g) Human resources (g) Information technology (g) Internal services (c)(a)(g) Debt service: Principal Interest Fiscal fees Capital outlay Total expenditures Deficiency of revenues over expenditures before other financing sources (uses) Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 $ 271,111,952 111,295,511 3,349,508 545,252 (4,366,156) 24,488,695 5,373,996 3,917,813 2,126,515 7,487,684 13,473,798 438,804,568 $ 232,293,514 109,958,549 829,560 17,845,292 4,909,416 4,316,313 2,541,561 6,888,387 11,999,740 391,582,332 $ 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 4,908,914 298,028,741 310,896,560 161,837,533 33,952,582 39,980,688 15,540,735 30,942,701 4,993,995 600,044 9,344,242 4,118,555 573,579 297,671 1,463,481 531,845 1,236,388 981,782 14,533,212 4,365,764 11,639 - 96,040,799 41,303,945 30,307,131 41,665,283 78,310 15,701,904 30,565,705 4,825,954 486,599 10,038,861 3,407,246 542,627 174,398 748,363 309,803 1,258,230 869,904 19,427,458 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 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 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 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 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 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 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 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 31,022,000 15,755,521 2,815,114 73,518,401 759,314,032 27,019,000 10,454,626 300,802 56,128,602 391,655,550 47,107,000 11,350,230 472,785 60,975,054 424,142,534 38,768,000 13,526,198 344,231 53,518,221 420,201,560 31,730,000 11,326,484 331,593 32,418,674 366,207,527 39,547,000 11,688,331 569,367 30,298,582 357,111,080 29,686,000 13,361,380 432,387 45,373,210 354,473,695 41,065,000 13,622,096 542,498 49,626,981 358,839,074 26,105,000 13,857,641 226,658 24,192,621 320,729,317 122,595,000 14,506,672 808,563 20,874,698 402,524,780 (73,218) $ (34,191,287) $ (38,001,315) (3,609,796) $ (12,309,647) $ (16,784,871) $ (33,147,319) (3,974,123) $ (104,496,039) $ (320,509,464) $ $ Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) 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. (b) In Fiscal Year 2015, Economic Development and Community Relations became part of the City Manager's Office. (c) 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. (d) 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. (e) In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilites; Engineering and Transportation. (f) 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. (g) In Fiscal Year 2022, the Internal Services department separated into three new departments: Financial services, Human resources, and Information technology. 179 $ Changes in Fund Balance, Governmental Funds (Exhibit S-4b) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 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 refunding bond escrow agent Total other financing sources $ 42,875,301 (42,229,222) 384,186,600 4,897,404 789,301 38,195,000 (37,643,577) 391,070,807 $ 42,696,445 (41,876,380) 23,862,732 6,515,503 1,740,949 32,939,249 $ 30,942,109 (29,646,936) 37,325,000 74,604 665,377 18,260,000 57,620,154 $ 38,729,874 (38,126,797) 27,130,000 5,655,061 1,220,174 2,665,000 37,273,312 $ 42,297,460 (43,372,403) 25,025,000 4,083,395 87,798 1,685,856 (12,614,996) 17,192,110 $ 27,870,785 (27,442,927) 12,290,000 1,754,028 4,483,481 34,095,000 (19,082,453) 33,967,914 $ 30,410,514 (29,900,824) 13,630,000 5,413,632 5,350,923 34,422,798 (35,888,204) 23,438,839 $ 26,437,046 (25,957,975) 43,965,000 1,269,813 111,827 2,189,572 6,780,000 (4,534,184) 50,261,099 $ 22,217,580 (21,470,678) 11,650,000 880,967 663,658 5,645,000 (4,267,894) 15,318,633 $ 67,438,620 (68,806,307) 13,675,000 6,392,968 270,346 53,910,000 (12,985,558) 59,895,069 Net change in fund balances $ 70,561,343 $ 32,866,031 $ 23,428,867 $ (728,003) $ 13,582,314 $ 21,658,267 $ 6,653,968 $ 17,113,780 $ 11,344,510 $ (44,600,970) 6.8% 11.1% 15.8% 14.2% 16.5% 15.5% 13.8% 17.6% 13.4% 35.7% Debt service as a percentage of noncapital expenditures (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). 180 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Retail $ Utilities and Telecommunications Rental 3,387,223,000 3,566,605,000 3,898,027,000 4,057,021,000 4,323,045,000 4,527,666,000 4,649,114,000 5,075,059,000 5,547,684,000 6,504,492,000 $ 1,200,932,000 1,197,308,000 1,277,164,000 1,342,058,000 1,391,183,000 1,526,503,000 1,755,549,000 1,734,138,000 1,835,514,000 2,047,036,000 $ 533,915,000 557,844,000 583,788,000 548,882,000 539,476,000 552,373,000 554,618,000 427,008,000 420,360,000 433,999,000 Restaurant Contracting Hotel and Motel $ 524,813,000 574,888,000 628,169,000 656,237,000 679,897,000 705,920,000 736,240,000 678,918,000 676,710,000 907,502,000 $ 340,870,000 404,398,000 701,314,000 653,818,000 654,944,000 662,203,000 675,955,000 853,617,000 640,451,000 668,052,000 $ 123,629,000 135,525,000 159,255,000 166,167,000 184,412,000 209,961,000 228,785,000 156,197,000 111,374,000 227,406,000 Restaurant Contracting Hotel and Motel All Other Amusements $ 78,580,000 82,928,000 82,680,000 89,261,000 96,055,000 89,259,000 94,108,000 68,804,000 46,901,000 88,694,000 $ City Direct Sales Tax Rate Total 80,020,000 71,660,000 74,754,000 75,989,000 75,694,000 59,140,000 74,142,000 52,347,000 49,253,000 63,861,000 $ 6,269,982,000 6,591,156,000 7,405,151,000 7,589,433,000 7,944,706,000 8,333,025,000 8,768,511,000 9,046,088,000 9,328,247,000 10,941,042,000 Percentage of Taxable Sales Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Retail Utilities and Telecommunications Rental 54.04 % 54.11 52.64 53.46 54.42 54.33 53.02 56.10 59.47 59.45 19.15 % 18.17 17.25 17.68 17.51 18.32 20.02 19.17 19.68 18.71 8.52 % 8.46 7.88 7.23 6.79 6.63 6.33 4.72 4.51 3.97 8.37 % 8.72 8.48 8.65 8.56 8.47 8.40 7.51 7.25 8.29 5.40 % 6.14 9.47 8.61 8.24 7.95 7.71 9.44 6.87 6.11 1.97 % 2.06 2.15 2.19 2.32 2.52 2.61 1.73 1.19 2.08 Source: City of Tempe, Arizona Tax and License Division (a) 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. (b) Certain prior years' data have been updated based on amended tax returns. 181 Amusements 1.25 % 1.26 1.12 1.18 1.21 1.07 1.07 0.76 0.50 0.81 All Other Total 1.30 % 1.08 1.01 1.00 0.95 0.71 0.85 0.57 0.53 0.58 100 % 100 100 100 100 100 100 100 100 100 2.00 % 2.00 1.80 1.80 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 2013 (a) 2014 2015 (b) 2016 2017 2018 2019 2020 2021 2022 General Fund Sales Tax Rate Transit Special Revenue Fund Sales Tax Rate Arts+Culture/ Performing Arts Special Revenue Fund Sales Tax Rate 1.40 % 1.40 1.20 1.20 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 Maricopa County Sales Tax Rate 2.00 % 2.00 1.80 1.80 1.80 1.80 1.80 1.80 1.80 1.80 0.70 % 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 State Sales Tax Rate 5.60 % 5.60 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) 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. 182 Total Sales Tax Rate 8.30 % 8.30 8.10 8.10 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. 183 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 Owner Occupied Residential Property Rental Residential Property Railroad & Airlines Property Non-commercial Historic Property Less: Tax-Exempt Property 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 $ 650,548,735 667,783,593 Vacant, Agricultural & Governmental Property 2013 Primary Secondary $ 1,134,332,461 1,140,686,523 $ 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 5,503,454 7,172,229 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 2,626,349 2,652,015 2016 Primary Secondary 1,040,045,065 1,119,535,292 604,094,072 681,597,591 458,995,411 569,311,744 303,832,779 395,569,487 2017 Primary Secondary 1,066,869,523 1,066,869,523 604,354,126 604,354,126 480,671,687 480,671,687 2018 Primary Secondary 1,121,945,426 1,121,945,426 655,920,933 655,920,933 2019 Primary Secondary 1,130,477,624 1,130,477,624 2020 Primary Secondary 2021 2022 Net Taxable Assessed Value $ Total Direct Tax Rate Estimated Total Actual Value (a) Assessed Value as a Percentage of Actual Value 1,688,014,795 1,697,237,040 0.79 1.35 $ 12,115,273,950 12,149,064,435 13.93 % 13.97 769,883,275 811,779,331 1,501,436,008 1,513,299,272 0.92 1.57 10,969,708,459 11,047,136,814 13.69 13.70 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 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 12.85 340,922,305 340,922,305 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 10.00 502,268,412 502,268,412 378,171,085 378,171,085 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 9.94 701,270,049 701,270,049 528,812,064 528,812,064 404,759,028 404,759,028 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 Primary Secondary 1,260,003,905 1,260,003,905 789,897,255 789,897,255 580,182,705 580,182,705 494,195,105 494,195,105 2,082,237 2,082,237 5,536,167 5,536,167 1,003,325,543 1,003,325,543 2,128,571,831 2,128,571,831 0.89 1.50 16,641,307,485 23,585,521,332 12.79 9.02 Primary Secondary 1,374,583,030 1,374,583,030 848,054,327 848,054,327 608,638,569 608,638,569 525,409,409 525,409,409 2,228,245 2,228,245 5,725,998 5,725,998 1,081,805,791 1,081,805,791 2,282,833,787 2,282,833,787 0.89 1.48 17,774,367,390 26,023,287,469 12.84 8.77 Source: Maricopa County Assessor - State Abstract 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. (b) Numbers have been updated for Fiscal Year 2021. 184 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 2013 2014 City of Tempe (a) Primary Secondary Total $ 0.79 1.35 2.14 Tempe Union $ 1.81 0.61 2.42 Schools Tempe Elementary (b) East Valley Institute of Technology Maricopa County Community College County Ed Equalization Rate $ $ $ $ $ 3.18 2.39 5.57 0.05 0.05 1.24 1.24 1.16 0.22 1.38 0.47 0.47 County-Wide Jurisdiction Central Fire Flood Arizona District District Water Assistance $ 0.18 0.18 $ 0.10 0.10 $ 0.01 0.01 County Library District $ 0.05 0.05 Special Health Care District $ - 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 - 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 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 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 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 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 2021 Primary Secondary Total 0.89 1.50 2.39 1.87 0.63 2.50 2.62 1.85 4.47 0.05 0.05 1.40 1.40 2022 Primary Secondary Total 0.89 1.48 2.37 1.84 0.60 2.44 2.61 1.84 4.45 0.05 0.05 1.35 1.35 2015 0.17 0.17 0.19 0.19 $ 8.82 4.96 13.78 9.42 5.77 15.19 0.19 9.95 5.23 15.18 0.06 0.06 0.19 0.11 0.30 9.69 5.26 14.95 0.01 0.01 0.06 0.06 0.20 0.11 0.31 9.61 5.23 14.84 0.14 0.14 0.01 0.01 0.06 0.06 0.20 0.09 0.29 9.23 5.00 14.23 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 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 1.13 0.16 1.29 0.44 0.44 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.18 0.12 0.30 8.53 4.71 13.23 1.11 0.11 1.22 0.43 0.43 0.18 0.18 0.14 0.14 0.01 0.01 0.06 0.06 0.18 0.12 0.30 8.41 4.59 13.00 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 $12.24, $12.02 or $15.62, respectively. Also, see the Direct and Overlapping Governmental Activities Debt- Property Tax Supported Schedule (Exhibit S-17). 185 0.19 Total 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) East Valley Institute of Technology Maricopa County Community College Flood District County-Wide Jurisdictions County Ed Central Equalization Arizona Rate Water 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 $ 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 City of Tempe $ Fire District Assistance County Library District Special Health Care District Total 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 2013 Primary Secondary Total 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 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 2015 Primary Secondary Total 14,324,634 24,609,512 38,934,146 71,480,977 19,247,913 90,728,890 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 2016 Primary Secondary Total 14,877,877 25,281,551 40,159,428 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 2017 Primary Secondary Total 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 2018 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 1,514,012,796 391,450,719 1,905,463,515 2021 Primary Secondary Total 18,980,475 32,017,977 50,998,452 73,991,571 25,111,276 99,102,847 43,485,838 30,666,905 74,152,743 11,299,160 11,299,160 640,280,922 640,280,922 514,159,761 74,558,711 588,718,472 75,415,664 75,415,664 202,808,377 202,808,377 64,150,864 64,150,864 4,096,425 4,096,425 25,411,963 25,411,963 84,240,979 55,365,219 139,606,198 1,577,947,923 398,094,164 1,976,042,087 2022 Primary Secondary Total 20,086,813 33,620,224 53,707,037 77,439,694 25,352,189 102,791,883 46,760,224 32,864,175 79,624,399 11,999,126 11,999,126 655,778,021 655,778,021 541,422,496 55,787,637 597,210,133 80,429,826 80,429,826 208,194,759 208,194,759 68,372,664 68,372,664 4,186,635 4,186,635 27,090,614 27,090,614 88,031,823 56,990,223 145,022,046 1,637,713,830 396,693,313 2,034,407,143 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). 186 Property Tax Levies and Collections (Exhibit S-11) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year Total Tax Levy for Fiscal Year (a) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $ 36,402,794 37,675,450 38,916,826 40,471,289 42,580,125 44,161,889 45,529,984 48,265,218 50,936,177 54,040,262 Adjustments $ (419,290) (311,558) (280,856) (362,119) (411,041) (238,388) (262,771) (205,707) (312,221) 54,102 Collected within the Fiscal Year of the Levy % of Amount Original Levy Adjusted Tax Levy for Fiscal Year $ 35,983,504 37,363,892 38,635,970 40,109,170 42,169,084 43,923,501 45,267,213 48,059,511 50,623,956 54,094,364 $ 35,627,136 36,924,892 38,310,425 39,886,362 41,757,608 43,501,882 44,892,921 47,378,445 49,942,161 53,371,592 97.9 % 98.0 98.4 98.6 98.1 98.5 98.6 98.2 98.0 98.8 Total Collections to Date % of Amount Adjusted Levy Collections in Subsequent Years $ 353,275 436,482 323,158 221,644 404,759 414,639 366,026 670,444 570,407 - $ 35,980,411 37,361,374 38,633,583 40,108,006 42,162,367 43,916,521 45,258,947 48,048,889 50,512,568 53,371,592 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. 187 100.0 % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.8 98.7 Principal Tax Payers (Exhibit S-12) Property Tax Current Year and Nine Years Prior City of Tempe, Arizona Net Assessed Limited Property Values Taxpayer: Arizona Public Service Company Verizon Wireless Arizona Mills Mall LLC JP Morgan Chase Bank NA Iridium Satellite LLC Honeywell International Inc Cousins Fund II Phoenix IV LLC JDM II Tempe OC LLC Cousins Fund II Phoenix II LLC KM Sonoma LLC/MT Sonoma LLC Qwest Corporation KBSII Fountainhead LLC Tempe Fountainhead Corporate LLC State Farm Mutual Auto Insurance BreofBnk2 Southwest LLC T-Mobile $ Total $ 82,622,532 24,966,093 22,076,872 21,206,769 16,827,403 13,876,080 10,895,850 9,953,418 9,881,370 9,219,673 - Fiscal Year 2022 Rank Percentage of Net Assessed Limited Property Values 1 2 3 4 5 6 7 8 9 10 221,526,060 Taxable Secondary Assessed Value 3.64 % 1.10 0.97 0.93 0.74 0.61 0.48 0.44 0.44 0.41 - $ 9.76 % $ Fiscal Year 2013 Rank Percentage of Total City Secondary Taxable Assessed Value 22,154,504 16,681,774 24,609,104 2 3 1 0.93 % 0.70 1.04 9,966,855 6 0.42 12,794,159 10,878,779 9,243,000 7,285,008 7,005,964 6,606,203 4 5 7 8 9 10 0.54 0.46 0.39 0.31 0.30 0.28 127,225,350 5.37 % Source 2022: RBC Capital Markets Source 2013: 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. 188 Principal Tax Payers (Exhibit S-13) Sales and Use Tax Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2022 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 Service Electronics/Software Mixed Retail Grocery Mixed Retail Mixed Retail Rental Auto Sales Mixed Retail Electronics/Software Auto Sales Hotel Total Sales and Use Tax Payments $ $ 5,065,574 4,587,089 4,333,760 3,900,828 3,236,280 2,793,943 2,509,160 2,460,079 2,223,987 2,101,261 - Rank 1 2 3 4 5 6 7 8 9 10 33,211,961 Fiscal Year 2013 Percentage of Total Sales and Use Tax Payments Sales and Use Tax Payments 2.66 % 2.40 2.27 2.04 1.70 1.46 1.32 1.29 1.17 1.10 $ 17.41 % $ - 5,318,587 2,821,155 2,694,449 2,994,825 2,501,032 2,131,429 1,775,766 1,090,904 1,142,272 1,123,742 23,594,161 Rank Percentage of Total Sales and Use Tax Payments 2 5 6 3.57 % 1.89 1.81 2.01 1.68 1.43 7 1.19 10 8 9 0.73 0.77 0.75 1 3 4 - 15.83 % Source: City of Tempe, Arizona Tax and License Division Note: 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. 189 Excise Tax Collections (Exhibit S-14) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 $ 140,443,769 $ 118,865,174 $ 113,398,508 $ 111,283,725 $ 105,643,666 State shared sales tax 25,683,520 23,228,957 19,899,062 17,958,644 18,266,956 16,145,681 15,357,220 14,779,296 14,076,468 13,236,998 State shared income tax 24,105,004 27,983,270 24,875,451 22,408,078 22,604,114 21,511,044 19,470,946 19,577,085 18,025,635 16,519,248 Franchise tax 3,055,126 2,846,569 2,772,127 3,036,531 3,290,220 3,182,193 3,363,615 2,933,239 3,310,940 3,253,175 Vehicle license tax 9,166,233 9,291,268 8,165,499 7,657,621 7,532,801 7,015,040 6,644,362 6,215,552 6,053,172 5,165,072 Permits and fees (b) 8,005,559 12,328,064 15,896,029 13,739,509 14,815,290 10,244,664 11,543,817 11,881,915 12,197,631 6,896,214 Fines and forfeitures (c) 4,934,285 4,404,217 5,612,670 6,434,188 6,839,148 8,094,581 8,464,633 8,436,300 8,190,178 8,132,195 $ 215,393,496 $ 198,947,519 $ 190,619,346 $ 182,518,296 $ 178,992,195 $ 166,058,633 $ 160,648,676 $ 156,733,794 $ 159,023,544 $ 142,917,848 Privilege and use tax (a) Total Fiscal Year 2017 $ 99,865,430 Fiscal Year 2016 $ 95,804,083 Fiscal Year 2015 $ 92,910,407 Source: City of Tempe, Arizona Annual Comprehensive 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 (expiring December 2020), the 0.1% Arts and Culture Tax approved by voters in November 2018 (effective January 2021) 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 Engineering and Transportation fees/charges for services. (c) Amounts include fines and forfeitures for General Fund only. 190 Fiscal Year 2014 $ 97,169,520 Fiscal Year 2013 $ 89,714,946 Ratios of Net General Bonded Debt Outstanding (Exhibit S-15) Last Ten Fiscal Years Governmental General Obligation Debt Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $ 164,235,000 163,205,000 181,905,000 180,750,000 178,555,000 180,435,000 183,990,000 191,860,000 196,865,000 212,220,000 City of Tempe, Arizona Enterprise General Obligation Debt and WIFA $ 253,760,904 236,046,554 216,802,282 196,122,761 198,182,660 201,216,644 206,499,363 185,795,463 163,289,583 195,886,352 $ General Obligation Premium Less: Debt Service Reserves 11,561,343 11,610,013 14,741,563 26,115,095 27,517,521 32,224,134 38,801,412 33,458,848 36,837,470 44,910,501 $ 33,262,194 33,699,262 20,960,171 20,693,070 21,456,909 13,114,979 3,463,501 4,158,853 6,898,943 8,447,041 Total $ 396,295,053 377,162,305 392,488,674 382,294,786 382,798,272 400,760,799 425,827,274 406,955,458 396,992,053 444,569,812 Secondary/Limited Assessed Valuation (a) $ 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 2,010,523,406 2,128,571,831 2,282,833,787 Percentage of Percentage of Governmental Total to Debt to Assessed Value Assessed Value (b) of Property 7.7 % 8.6 9.9 10.0 10.0 9.4 9.7 9.3 8.9 8.9 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. 191 23.3 % 24.9 24.1 24.0 22.3 22.9 22.9 20.2 18.7 19.5 Net Direct Debt Per Capita $ 2,424 2,294 2,140 2,213 2,053 2,098 2,214 2,078 2,198 2,686 Ratios of Outstanding Debt by Type (Exhibit S-16) Last Ten Fiscal Years City of Tempe, Arizona Governmental Activities Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $ General Obligation Bonds Special Assessment Bonds Excise Tax Revenue Bonds 164,235,000 163,205,000 181,905,000 180,750,000 178,555,000 180,435,000 183,990,000 191,860,000 196,865,000 212,220,000 $ 25,675,000 23,930,000 21,175,000 19,980,000 18,730,000 17,415,000 16,035,000 27,750,000 25,755,000 23,865,000 $ 154,081,000 144,606,000 134,746,000 123,389,000 116,009,000 97,994,000 87,269,000 76,604,000 69,582,000 69,442,000 HUD Section 108 Loan Premium on Debt Payable $ 20,176,543 19,542,476 18,668,237 22,291,058 20,515,300 21,847,912 25,046,197 21,731,892 26,374,477 24,718,409 $ 5,247,000 4,907,000 4,552,000 4,181,000 3,794,000 3,389,000 2,966,000 2,524,000 2,062,000 1,580,000 Capital Improvement Notes $ 1,009,612 509,804 - Financed Purchases $ 29,645 87,082 61,399 34,743 65,610 40,972 81,216 979,231 8,710 Total GovernmentType Debt Certificates of Participation $ 343,000,000 $ 370,453,800 356,700,280 361,133,319 350,652,457 337,638,043 321,146,522 315,347,169 320,551,108 321,617,708 674,834,119 Business-Type Activities General Obligation Bonds Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $ 240,505,000 223,495,000 204,970,000 185,025,000 187,835,000 191,635,000 197,700,000 177,795,000 156,105,000 189,535,000 Excise Tax Revenue Bonds $ 79,034,000 76,109,000 84,839,000 91,876,000 80,466,000 69,876,000 57,886,000 54,331,000 50,543,000 46,703,000 Premium on Debt Payable Revenue Obligations $ 38,000,000 72,100,000 69,570,000 $ 11,487,656 11,158,485 13,905,912 26,735,479 26,648,171 27,703,607 30,951,583 27,176,457 35,391,535 37,695,756 WIFA Loans $ 13,255,904 12,551,554 11,832,282 11,097,761 10,347,660 9,581,644 8,799,363 8,000,463 7,184,583 6,351,352 192 Financed Purchases $ 711,466 499,476 283,594 63,750 318,834 213,267 736,327 480,916 327,068 166,851 Total BusinessType Debt Total Primary Government $ 344,994,026 323,813,515 315,830,788 314,797,990 305,615,665 305,615,665 296,073,273 305,783,836 321,651,186 350,021,959 $ 715,447,826 680,513,795 676,964,107 665,450,447 643,253,707 643,253,707 611,420,442 626,334,944 643,268,894 1,024,856,078 Per Capita 4,515 4,132 3,822 3,816 3,553 3,525 3,178 3,199 3,562 6,193 Percentage of Personal Income 16.57 % 16.27 14.12 14.23 12.63 12.53 10.23 9.62 10.44 24.38 Direct and Overlapping Governmental Activities Debt (Exhibit S-17) City of Tempe, Arizona 2022 Net Limited Assessed Valuation Governmental Unit: Debt Outstanding Combined Tax Rate per $100 Assessed 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 $ 74,200,233,397 48,724,126,672 48,724,126,672 48,724,126,672 1,778,974,811 3,544,450,333 2,412,625,402 6,125,462,788 4,201,600,213 23,998,252,082 $ None None 640,695,000 184,715,000 154,515,000 358,660,000 213,060,000 304,315,000 76,755,000 None 3.06 % 4.66 4.66 4.66 83.59 0.67 30.36 0.29 53.03 9.46 City direct debt (governmental activities) $ 2,282,833,787 $ 675,320,656 100.00 % Total direct and overlapping debt $ None None 29,856,387 8,607,719 129,159,089 2,403,022 64,685,016 882,514 40,703,177 None 276,296,924 $ 675,320,656 $ 951,617,580 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. 193 0.4263 1.7293 0.1145 1.2881 4.4508 7.0635 3.6784 3.4579 2.4466 0.0500 2.3959 Legal Debt Margin Information (Exhibit S-18) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Assessed Valuation $ 3,270,464,268 $ 2,985,831,463 $ 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 20% Limitation: Debt limit equal to 20% of assessed valuation $ $ $ $ $ $ $ $ $ $ Total net debt applicable to 20% limit Legal 20% debt margin (available borrowing capacity) 394,798,663 $ 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 259,294,191 $ 196,227,856 $ 105,153,797 46.41% 253,066,878 $ 179,149,888 $ 95,099,411 46.92% 186,823,622 $ 163,417,088 $ 87,323,890 46.56% 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 $ $ 95,636,661 $ 62.91% 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. 13,731,661 85.64% - $ 97,663,254 $ 16,168,254 83.44% - $ 90,797,956 $ 51,752,956 43.00% - 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 Source: 194 - 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% 76,093,198 $ 491,419,390 369,823,502 65.70% 84,050,477 $ 544,723,625 357,900,003 57.62% 91,074,059 $ 597,166,293 344,099,415 60.36% Total net debt applicable to 6% limit Legal 6% debt margin (available borrowing capacity) 654,092,854 101,834,222 28,365,000 $ 73,469,222 27.85% Remaining General Obligation Bond Authorizations (Exhibit S-19) City of Tempe, Arizona Authorization Prior Issues Current Year Issue Remaining Authorization 2016 Program: Water/Wastewater Streets/Transportation/Storm Drains Public Safety - Police/Fire Community Services/Park Improvements Municipal Infrastructure Preservation 148,000,000 25,000,000 20,000,000 34,000,000 27,000,000 19,810,302 9,736,050 12,485,550 34,000,000 27,000,000 60,045,000 15,263,950 5,003,500 - 68,144,698 2,510,950 - Total 2016 Program 254,000,000 103,031,902 80,312,450 70,655,648 2020 Program: Water/Wastewater Streets/Transportation/Storm Drains Public Safety - Police/Fire Community Services/Park Improvements Municipal Infrastructure Preservation 134,000,000 74,000,000 34,000,000 45,000,000 62,000,000 108,100 1,728,700 748,050 5,703,750 12,009,000 134,000,000 73,251,950 34,000,000 39,188,150 48,262,300 349,000,000 1,836,800 18,460,800 328,702,400 $ 603,000,000 $ 104,868,702 98,773,250 $ 399,358,048 Grand Total Source: City of Tempe, Arizona Accounting Division 195 $ Pledged-Revenue Coverage (Exhibit S-20) Last Ten Fiscal Years City of Tempe, Arizona Special Assessment Bonds Special Assessment Collections Fiscal Year $ 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 4,442,862 $ 3,605,932 3,862,306 2,439,086 2,173,798 2,027,722 1,990,732 2,442,290 2,143,728 2,126,515 Excise Tax Revenue Obligations Debt Service (d) Coverage 3,448,085 2,959,851 3,884,758 2,214,178 2,209,650 2,212,190 2,211,570 2,207,767 2,210,533 1,989,250 1.29 1.22 0.99 1.10 0.98 0.92 0.90 1.11 0.97 1.07 Excise Tax Revenue Collections (a) $ 142,917,848 $ 165,485,314 156,733,794 160,648,676 166,058,633 178,992,195 182,518,296 190,619,346 198,947,519 206,991,736 Performing Arts/Arts + Culture Excise Tax Obligations 0.1% Privilege and Use Tax Collections (b) Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 (f) 2022 $ 6,236,879 $ 6,921,904 7,460,054 7,656,210 8,084,891 8,436,503 8,823,434 9,131,870 4,895,809 11,202,441 Debt Service (d) Coverage 9,931,262 11,977,968 12,055,250 45,696,593 36,355,425 20,743,689 20,739,629 12,637,348 12,652,543 12,703,056 14.39 13.82 13.00 3.52 4.57 8.63 8.80 15.08 15.72 16.29 Transit Excise Tax Obligations Debt Service (d) Coverage 5,922,350 5,918,250 5,919,026 5,921,676 3,427,850 3,428,850 3,428,100 3,433,850 504,233 1.05 1.17 1.26 1.29 2.36 2.46 2.57 2.66 N/A 22.22 0.5% Privilege and Use Tax Collections (c) $ 30,087,229 $ 33,539,177 36,147,640 37,288,527 39,512,636 41,074,434 43,063,185 44,373,904 47,534,174 54,736,977 Debt Service (d) Coverage 3,685,428 4,655,713 4,655,688 4,658,463 4,372,288 4,311,491 4,116,542 4,118,094 4,978,120 5,901,166 8.16 7.20 7.76 8.00 9.04 9.53 10.46 10.78 9.55 9.28 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 (expiring December 31, 2020) and the 0.1% Arts & Culture Tax approved by voters in November 2018 (effective January 1, 2021). (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. (e) Pledged water/sewer net revenues includes a) operating and non-operating revenues of the system, excluding gain on sale of assets; less b) operating expenses, excluding depreciation. (f) Beginning January 1, 2021, the Performing Arts Excise Tax ended and there was no outstanding Performing Arts Excise Tax Obligation debt service after Fiscal Year 2020. 196 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-21) Excise Tax Obligations (Excluding Transit Excise Tax Obligations) City of Tempe, Arizona Senior Excise Tax Obligations Pledged Excise Tax Revenues (a) Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 $ 206,991,736 Outstanding Senior Excise Tax Obligations Debt Service Requirements (b) $ 12,703,056 11,923,331 8,860,179 16,153,105 6,672,637 6,664,697 6,664,783 6,666,957 5,070,651 5,063,984 2,672,824 2,116,125 Outstanding Senior Excise Tax Obligations Coverage (c) Revenue Available for Debt Service (d) 16.29 17.36 23.36 12.81 31.02 31.06 31.06 31.05 40.82 40.88 77.44 97.82 $ 205,491,121 Outstanding Subordinate Excise Tax Obligations Debt Service Requirements (e) $ Coverage (f) 504,233 580,750 579,250 582,000 578,350 579,700 581,000 582,250 577,500 582,000 580,250 577,500 578,750 578,750 577,500 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues received by the City in Fiscal Year 2022. 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 2013 2016 2019R 2021R 407.53 353.84 354.75 353.08 355.31 354.48 353.69 352.93 355.83 353.08 354.14 355.83 355.06 355.06 355.83 Remaining Obligation $ 7,300,000 17,850,000 18,390,000 8,110,000 14,210,000 $ 65,860,000 (c) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2022 excise tax revenues to total debt service requirements for the City's revenue bonds. (d) Consists of Arts and Culture Excise Taxes and Excise Taxes (net of current year annual debt service on Outstanding Senior Excise Tax Obligations) received in Fiscal Year 2022. (e) Includes the annual debt service requirements of the City of Tempe, Arizona Arts and Culture Excise Tax Obligations, Series 2021, currently outstanding in the principal amount of $5,895,000. Debt service requirements do not include fiscal fees. (f) Pursuant to the Purchase Agreement, the City agrees that the Arts and Culture Excise Taxes and the Excise Taxes presently imposed will continue to be imposed so that the amount of Arts and Culture 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. 197 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-22) Transit Excise Tax Obligations City of Tempe, Arizona Senior Excise Tax Obligations Pledged Excise Tax Revenues (a) Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 $ 54,736,977 Outstanding Senior Excise Tax Obligations Debt Service Requirements (b) $ Outstanding Senior Excise Tax Obligations Coverage (c) 5,901,166 4,689,492 4,695,249 4,689,034 4,692,521 4,690,698 4,693,842 4,686,310 4,699,737 4,693,299 4,692,892 4,692,175 4,695,933 4,695,126 2,019,412 1,568,538 861,150 859,685 862,680 9.28 11.67 11.66 11.67 11.66 11.67 11.66 11.68 11.65 11.66 11.66 11.67 11.66 11.66 27.11 34.90 63.56 63.67 63.45 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues recognized by the City in Fiscal Year 2022. (b) Includes annual remaining debt service requirements for the Series 2017R City of Tempe, Arizona Transit Excise Tax Refunding Obligations in the principal amount outstanding of $16,060,000; the Series 2020 City of Tempe, Arizona Transit Excise Tax Obligations in the principal amount outstandng of $12,165,000; and the Series 2021R City of Tempe, Arizona Transit Excise Tax Refunding Obligations in the principal amount outstanding of $28,330,000. (c) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2022 excise tax revenues to total debt service requirements for the City's Transit excise tax bonds. 198 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-23) Water/Sewer Revenue Obligations City of Tempe, Arizona Senior Excise Tax Obligations Fiscal Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 Pledged Water/Sewer Net Revenues (a) Outstanding Water & Sewer Revenue Obligation Debt Service Requirements (b) $ $ 45,060,507 5,318,780 5,328,298 5,330,855 5,329,470 5,329,025 5,329,388 5,330,308 5,326,535 5,333,070 5,324,280 5,330,548 5,331,108 5,330,843 5,329,620 5,327,190 5,328,303 5,327,458 5,329,523 5,328,998 2,850,750 Outstanding Water & Sewer Revenue Obligation Coverage (c) 8.47 8.46 8.45 8.45 8.46 8.46 8.45 8.46 8.45 8.46 8.45 8.45 8.45 8.45 8.46 8.46 8.46 8.45 8.46 15.81 Source: City of Tempe, Arizona Accounting Division (a) Net Revenues are defined as that portion of the Revenues remaining after providing sufficient funds for the Current Expenses of the System. (b) Debt Service Requirements include actual principal and intest for the Fiscal Year Ended June 30, 2022 plus remaining principal and interest beginning in the Fiscal Year Ended June 30, 2023, forward for the Series 2020 City of Tempe, Arizona Water & Sewer Revenue Obligations in the principal amount outstanding of $33,570,000 and the Series 2021 City of Tempe, Arizona Water & Sewer Revenue Obligations in the principal amount outstanding of $33,325,000. (c) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2022 Pledged Water/Sewer Net Revenues the annual total Debt Service Requirements for the Water & Sewer Revenue Obligations. 199 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) $ $ 91,012 30.5 23,986 58,088 2.90 % 34,110 82,283 29.8 23,838 56,095 6.20 6,511,691,080 33,256 79,758 29.6 25,275 57,009 9.80 192,364 5,975,402,932 31,063 72,792 30.4 25,478 55,224 4.10 2018 185,038 5,594,253,854 30,233 71,916 30.0 25,527 54,456 3.90 2017 182,498 5,134,033,736 28,531 67,501 29.5 24,891 75,729 4.30 2016 173,510 4,881,183,320 28,132 65,814 28.7 25,656 74,293 5.90 2015 169,533 4,546,705,527 26,819 62,291 28.5 25,480 83,301 6.80 2014 170,027 4,601,100,647 27,061 64,714 28.1 25,264 73,378 7.50 2013 165,499 4,203,343,602 25,398 61,201 31.5 25,510 73,378 6.80 Fiscal Year Population (a) 2022 186,194 2021 180,587 6,159,822,570 2020 195,805 2019 Source: $ 7,181,502,580 38,570 (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://www.azcommerce.com/oeo/labor-market/unemployment/#content-block-1 200 Unemployment Rate (f) Principal Employers (Exhibit S-25) Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2022 Employees (a) Employers: Arizona State University State Farm Insurance JPMorgan Chase Bank National Association City of Tempe ABM Industries Inc Honeywell ADP Inc Consumer Cellular Bank of the West Laboratory Sciences of Arizona Chase Manhattan Corporation Kyrene School District Maricopa County Community Colleges Motorola Safeway Inc. SRP US Airways Wells Fargo 8,330 7,540 3,200 2,169 2,000 1,560 1,160 1,080 1,000 1,000 - Total 29,039 Source: Rank 1 2 3 4 5 6 7 8 9 10 - Fiscal Year 2013 Employment 28.69 % 25.97 11.02 7.47 6.89 5.37 3.99 3.72 3.44 3.44 - 11,185 3,000 2,377 2,401 4,611 3,000 3,996 4,374 1,898 3,576 100.00 % 40,418 (a) https://geo.azmag.gov/maps/azemployer/ November 4th, 2022 (b) City of Tempe, Arizona Comprehensive Annual Financial Report, Fiscal Year 2013 201 Employees (b) Rank 1 7 9 8 2 6 4 3 10 5 Employment 27.67 % 7.42 5.88 5.94 11.41 7.42 9.89 10.82 4.70 8.85 100.00 % Full-Time Equivalent City Government Employees by Function (Exhibit S-26) Last Ten Fiscal Years City of Tempe, Arizona Fiscal year 2022 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 Financial services Human resources Information technology Internal services Public works Community relations Diversity program Tempe learning center Finance and technology Human resources Total 520 230 306 118 261 86 190 43 7 32 29 4 4 6 6 2 6 108 20 82 2,060 Fiscal year 2021 - Fiscal year 2020 516 221 283 116 257 82 156 43 7 28 28 4 4 6 3 1 5 207 1,967 - 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 Source: City of Tempe, Arizona Fiscal Year 2022 Annual Budget Note: Fiscal year 2018 See Exhibit S-2a for changes in functions that have occurred in prior years. 202 - - Fiscal year 2017 508 174 304 85 50 43 7 31 25 4 4 6 5 217 431 1,894 - - Fiscal Year 2016 505 155 297 83 46 43 7 33 25 4 4 6 5 206 430 1,849 - - Fiscal Year 2015 500 156 286 88 49 42 7 32 26 4 4 6 4 156 470 1,824 - - Fiscal Year 2014 496 156 286 90 40 42 7 31 26 4 4 4 155 467 1,808 - - 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 Operating Indicators by Function/Program (Exhibit S-27) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2017 Year 2018 Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 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 (f) Annual bus boardings Annual rail 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 4,944 3,833 $ 6:19 85,516 1,167 4,606 3,012 $ 6:24 79,072 1,212 4,247 4,945 6:27 83,427 1,166 $ 9.33 2,369 21,582 2,068 2,746 24,729 2,045 4,752 5,857 $ 9.33 2,207 21,761 2,117 6.66 90,055 1,015 4,478 5,621 $ 9.33 1,980 22,209 2,324 6.6 91,012 968 5,063 5,638 $ 8.86 2,212 22,093 1,916 6.36 88,515 917 4,900 5,376 $ 11.6 2,565 26,633 2,637 6.83 86,229 926 5,110 5,103 $ 8.82 1,944 20,021 1,963 5:13 85,502 926 5,343 4,755 $ 9.45 2,022 19,630 1,853 5:02 84,092 874 5,288 4,825 $ 9.47 1,958 18,119 1,976 5:00 86,996 830 9.44 2,002 17,411 2,033 4:38 4:31 4:31 4:31 4:15 3:36 4:16 4:10 4:08 4:07 80% 82% 80% 80% 75% 74% 73% 75% 76% 76% 85% 2,701,540 1,703,120 1,021,983 87% 1,967,142 1,241,440 720,275 N/A 4,741,442 2,588,121 918,426 92% 6,022,149 3,008,033 1,225,309 92% 6,407,657 3,145,896 736,076 90% 6,484,875 N/A 731,425 90% 6,841,497 N/A 402,900 92% 7,178,128 N/A 302,000 91% 7,897,964 N/A 397,605 93% 8,168,990 N/A 412,739 88,366 763,686 110,808 497,675 104,791 566,745 93,689 743,931 100,155 802,492 97,443 855,055 140,000 800,000 143,000 930,000 143,018 814,199 140,523 933,824 369 $ 570,407,379 1,382 $ 44,418,957 583 $ 24,408,687 447 $ 435,445,691 965 $ 37,855,549 981 $ 32,290,151 476 $ 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 $ $ $ 43,319 15,580 1,167 19.6 232 33,328 20% 1,487 97 $ $ $ 42,949 16,600 1,070 19 258 34,540 18% 1,722 98 $ $ $ (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 Years 2017 and prior, the percents measured were for 5.0 minutes or less. (e) For Fiscal Years 2017 and prior, this data was not requested. (f) Due to a system conversion, data was not available for all of Fiscal Year 2020 and for part of Fiscal Year 2021. 43,724 15,154 783 19 159 33,245 23% 1,491 342 $ $ $ 43,284 15,506 995 19.1 235 33,263 23% 1,565 113 203 $ $ $ 43,214 16,090 979 19.1 111 32,869 28% 1,641 100 $ $ $ 42,647 15,506 953 19.4 139 33,160 19% 1,671 93 $ $ $ 43,061 15,278 941 19.4 138 33,001 21% 1,709 91 $ $ $ 42,678 15,130 878 19.4 140 33,397 19% 1,783 95 $ $ $ 42,555 15,979 309 19.4 108 33,440 15% 2,130 95 $ $ $ 42,351 16,900 (b) 278 18.5 (b) 121 33,405 15% 2,133 81 Capital Asset Statistics by Function/Program (Exhibit S-28) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Police Stations Patrol units (squads) Fire stations Transportation Streets (miles) Streetlights Traffic signals Buses Parks and recreation Acreage (a) Playgrounds Sports fields (b) 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 Year 2021 Fiscal Fiscal Year 2020 Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Fiscal Year 2016 Year 2015 Fiscal Fiscal Year 2013 Year 2014 3 21 7 3 21 7 3 21 7 3 21 6 3 21 6 3 21 6 3 24 6 3 24 6 3 24 6 3 21 6 1,775 12,274 249 120 1,775 11,559 244 124 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 1,519 44 66 5 2 1,519 44 66 5 2 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 2 850 850 850 850 850 850 833 833 833 833 137 54 495 231 137 54 495 231 137 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 29 29 29 29 29 29 29 19 19 19 42 42 42 43 43 43 45 47 52 51 Source: City of Tempe, Arizona Municipal Budget Office and other applicable City departments. 204 Water Connections by Customer Type, Sewer Connections and Sewage Treated (Exhibit S-29) Last Two Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 35,135 1,902 3,946 73 2,014 43,070 35,204 1,907 3,950 73 2,005 43,139 Sewer connections No. of Sewer Connections 40,784 40,596 Sewage treated 91st Avenue Plant (MGD) 19.2 19 Water Connections Customer Type: Single Family Multifamily Commercial Industrial Landscape Total (a) Source: City of Tempe, Municipal Utilities Department. (a) Total number of accounts billed in any month is less than the total number of connections due to vacancies. Note: This schedule is required for the Series 2021 City of Tempe, Arizona Water and Sewer Revenue Obligations and is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 205 Water Deliveries (Exhibit S-30) Last Two Calendar Years City of Tempe, Arizona Water Deliveries Residential (a) Commercial Other (b) Total Calendar Year 2022 (c) Calendar Year 2021 20,077 10,447 10,377 40,931 22,512 11,324 11,617 45,352 Source: City of Tempe, Municipal Utilities Department. (a) (b) (c) Residential includes both single family and multifamily housing. Other includes industrial, landscape and construction. Water Deliveries for calendar year 2022 are from January 1, 2022 through November 30, 2022. Note: This schedule is required for the Series 2021 City of Tempe, Arizona Water and Sewer Revenue Obligations and is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 206 Metered Water Usage Charges (Exhibit S-31) Last Two Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Single Family Residential-Inside City Tier Level (gallons used) 0 - 6,000 6,001 - 8,000 8,001 - 12,000 12,001 - 20,000 20,001 - 40,000 Over 40,000 $ $ $ $ $ $ 1.90 2.91 2.91 4.01 5.08 5.58 $ $ $ $ $ $ 1.90 2.91 5.08 3.89 5.58 5.58 Single Family Residential-Outside City Tier Level (gallons used) 0 - 6,000 6,001 - 8,000 8,001 - 12,000 12,001 - 20,000 20,001 - 40,000 Over 40,000 $ $ $ $ $ $ 2.46 3.79 3.79 5.21 6.60 7.26 $ $ $ $ $ $ 2.46 3.79 6.60 5.06 6.60 7.26 Charges Per Thousand Gallons (a) Customer Class-Inside City Multifamily Commercial Construction Industrial Landscape $ $ $ $ $ 2.11 2.73 4.42 2.85 4.08 $ $ $ $ $ 2.11 2.73 4.42 2.85 4.08 Customer Class-Outside City Multifamily Commercial Construction Industrial Landscape $ $ $ $ $ 2.74 3.55 5.74 3.71 5.30 $ $ $ $ $ 2.74 3.55 5.74 3.71 5.30 Source: City of Tempe, Municipal Utilities Department. (a) Volume charge per one thousand (1,000) gallons usage based on customer class. Note: This schedule is required for the Series 2021 City of Tempe, Arizona Water and Sewer Revenue Obligations and is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 207 Water Rates and Sewer Rates Per Meter Size(Exhibit S-32) Last Two Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Fiscal Year 2021 Inside City 5/8 inch 3/4 inch 1 inch 1 1/2 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch 1.0" installed to accommodate sprinklers $ 13.55 $ 15.30 $ 22.80 $ 48.40 $ 94.35 $ 213.45 $ 307.65 $ 1,183.00 $ 2,064.50 $ 3,092.90 $ 13.55 $ 13.55 $ 15.30 $ 22.80 $ 48.40 $ 94.35 $ 213.45 $ 307.65 $ 1,183.00 $ 2,064.50 $ 3,092.90 $ 13.55 Outside City 5/8 inch 3/4 inch 1 inch 1 1/2 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch 1.0" installed to accommodate sprinklers $ 17.62 $ 19.89 $ 29.64 $ 62.92 $ 122.66 $ 277.49 $ 399.95 $ 1,537.90 $ 2,683.85 $ 4,020.77 $ 17.62 $ 17.62 $ 19.89 $ 29.64 $ 62.92 $ 122.66 $ 277.49 $ 399.95 $ 1,537.90 $ 2,683.85 $ 4,020.77 $ 17.62 $ 10.30 $ 14.00 $ 25.10 $ 46.70 $ 72.60 $ 176.00 $ 349.00 $ 695.00 $ 1,650.00 $ 2,600.00 $ 10.30 $ 14.00 $ 25.10 $ 46.70 $ 72.60 $ 176.00 $ 349.00 $ 695.00 $ 1,650.00 $ 2,600.00 Water Monthly Service Charge Sewer Monthly Base Charge 5/8 inch 3/4 inch 1 inch 1 1/2 inch 2 inch 3 inch 4 inch 6 inch 8 inch 10 inch Source: City of Tempe, Municipal Utilities department. Note: This schedule is required for the Series 2021 City of Tempe, Arizona Water and Sewer Revenue Obligations and is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 208 Sewer Service Rates(Exhibit S-33) Last Two Fiscal Years City of Tempe, Arizona Fiscal Year 2022 Sewage Return Flow Rate of Metered Water Use Customer Class Multifamily Multifamily w/ sprinkler Commercial: self-service laundry Commercial: laundry/dry cleaners Commercial: restaurants/bakeries Commercial: food sales Commercial: hospitals Commercial: other Fiscal Year 2021 95% 95% 95% 95% 75% 75% 85% 90% 95% 95% 95% 95% 75% 75% 85% 90% Volume Charge per 1,000 gallons Customer Class Multifamily Multifamily w/ sprinkler Commercial: self-service laundry Commercial: laundry/dry cleaners Commercial: restaurants/bakeries Commercial: food sales Commercial: hospitals Commercial: other $ $ $ $ $ $ $ $ 1.84 3.28 2.82 7.91 7.91 4.58 3.06 3.06 $ $ $ $ $ $ $ $ 1.84 3.28 2.82 7.91 7.91 4.58 3.06 3.06 Source: City of Tempe, Municipal Utilities Department. Note: This schedule is required for the Series 2021 City of Tempe, Arizona Water and Sewer Revenue Obligations and is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 209 City of Tempe, Arizona 210