City of Tempe, Arizona Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2024 City Council: Corey Woods, Mayor Doreen Garlid, Vice Mayor Arlene Chin Berdetta Hodge Randy Keating Jennifer Adams Nikki Amberg Administrative Staff: Rosa Inchausti, City Manager Presented by: Lisette Camacho, CPA, Deputy City Manager, CFO 1 City of Tempe, Arizona 2 Annual Comprehensive Financial Report City of Tempe, Arizona For Fiscal Year Ended June 30, 2024 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal 8 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) 18 21 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities 34 35 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 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 36 37 39 40 42 43 44 45 45 46 Required Supplementary Information: Schedules of Required Supplementary Information Schedule of Contributions- All Pension Plans - Last Ten Fiscal Years Schedule of the Proportionate Share of the Net Pension Liability- ASRS - Last Ten Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Police - Last Ten Fiscal Years Schedule of Changes in the Net Pension Liability and Related Ratios- PSPRS: Fire - Last Ten Fiscal Years 3 89 90 91 92 Annual Comprehensive Financial Report City of Tempe, Arizona For Fiscal Year Ended June 30, 2024 FINANCIAL SECTION (Continued) Required Supplementary Information: (Continued) Schedules of Required Supplementary Information (Continued) Schedule of Contributions- OPEB Plan- Last Eight Fiscal Years 93 Schedule of Changes in the Net OPEB Liability and Related Ratios- OPEB PlanLast Eight Fiscal Years Schedule of Investment Returns- OPEB Plan- Last Eight Fiscal Years 94 95 Notes to Required Supplementary Information 96 City Wide Operating Budget 98 City Wide Capital Projects Budget 99 Combining Fund Financial Statements: Non-major Governmental Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances 104 107 Non-Major Enterprise Funds: Combining Statement of Fund Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows 111 112 113 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 115 116 117 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-2 120 121 S-3 126 S-4 127 S-5 S-6 S-7 130 131 132 S-8 S-9 S-10 S-11 S-12 133 134 136 137 138 S-13 S-14 S-15 S-16 S-17 S-18 139 140 141 142 143 144 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 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 Legal Debt Margin Information - Last Ten Fiscal Years Remaining General Obligation Bond Authorizations 4 Annual Comprehensive Financial Report City of Tempe, Arizona For Fiscal Year Ended June 30, 2024 Statistical Section Con't/Debt Capacity Cont'd 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 Pledged Revenue, Projected Debt Service and Estimated Coverage - Water/Sewer Revenue Obligation S-19 145 S-20 147 S-21 147 S-22 149 S-23 S-24 151 152 S-25 S-26 S-27 153 154 156 S-28 S-29 S-30 S-31 S-32 157 158 159 160 161 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 Four Fiscal Years Water Deliveries – Last Four Calendar Years Metered Water Usage Charges – Last Four Fiscal Years Water Rates and Sewer Rates Per Meter Size-Last Four Fiscal Years Sewer Service Rates – Last Four Fiscal Years 5 6 This section provides general information on the government’s structure and information useful in assessing the City’s financial condition. Introductory Section 7 CITY OF TEMPE P.O. BOX 5002 20 EAST SIXTH STREET TEMPE, AZ 85281 480.350.8350 CITY MANAGER’S OFFICE December 11, 2024 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, 2024 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 Report 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. 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. 8 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 Council Members 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, culturalrecreational, 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. The local economy is based primarily on commercial and retail trade, higher education, manufacturing, and tourism. Top research firms, Fortune 500 companies, and start-ups make up Tempe’s economic fabric. The City is also the home of Arizona State University, which is one of the largest institution of higher education in the United States and the largest employer in the City. Each of these provides the City with a strong and diversified tax base. Tourism plays an important role in the City’s local economy, offering a wide range of accommodations, restaurants, and attractions. Tempe hosts spring training for the Los Angeles Angels Major League Baseball team, Ironman Arizona Triathlon, Pat’s Run, and the Rock ‘N’ Roll Arizona Marathon and 1/2 Marathon. Also popular are the City’s spring and fall Festival of the Arts, featuring more than 350 artists’ booths, entertainment, food vendors, and free admission. The Festival of the Arts attracts approximately 150,000 visitors over the three-day weekend. Adjacent to Tempe Town Lake, the Tempe Center for the Arts features a 600-seat performance theater, visual arts gallery, and meeting facilities. 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. Although inflationary pressures have eased over the past twelve months, worker shortages and supply chain issues continue to put pressure on the overall economy. On August 1, 2023, Senate Bill 1131 was signed into law. Effective January 1, 2025, Arizona cities and towns are prohibited from taxing residential rental activities. Early estimates indicate recurring sales tax revenue reductions of approximately 9% in the City’s General Fund, Transit Fund, and Arts and Culture Fund, or approximately $21 million across all funds. To address the residential rental sales tax loss, budget reduction measures will be necessary in both the General Fund and the Transit Fund. 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. The latest revenue forecast in February 2024 indicated the City’s overall financial condition continues to be strong and stable. The revenue forecast included the loss of residential rental sales tax, which impacts local taxes. All remaining local tax category remain stable over the forecast period. The forecasted fund balances for all other major funds will be within policy levels. 9 Sales Tax The largest source of revenue for Tempe’s governmental operating funds, sales tax revenue, is driven by taxable sales tax activities. Sales tax revenue represented 49.0% of total General Fund revenues for the fiscal year. Despite the economic impact of the pandemic primarily being felt in the fiscal years 2020 and 2021, taxable sales recovered in fiscal year 2022 to pre-pandemic levels. Taxable sales increased in 2020 (3.2%), 2021 (3.1%), 2022 (17.3%) and 2023 (4.7%). In fiscal year 2024, taxable sales decreased slightly by 0.9% and overall General Fund sales tax revenues were essentially flat at $151.6 million. 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 2024 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 $86.8 million, which represents a $15.5 million increase, or 21.8%. 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 slightly decreased by $551 thousand (0.9%) over the prior year. Property taxes comprised approximately 7.8% 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 Coronavirus Relief Fund (CRF) funding 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 $22.8 million was recognized as revenue in fiscal year 2023 in the Community Development Capital Projects Fund with $11.6 remaining for future use consistent with requirements set forth by the US Treasury Department. 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. Despite the loss of residential rental tax (effective January 1, 2025), the latest forecast conservatively projects a modest growth in sales taxes, property taxes and State-shared revenues in fiscal year 2025. 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 development- related activities are projected to remain relatively stable. Additionally, the recent Federal Reserve interest rate increases have resulted in increased interest income from the City’s cash and investments. 10 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 2023/24 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. 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 March 2023, using the START Tool, the City Council identified 15 performance measures to accelerate during fiscal year 2024. This was used as a guide in the budget development process and the areas of focus are summarized as follows: • • • • • • • • • • • • • • Ending Homelessness (3.28) Pavement Quality Index (1.22) Feeling of Safety in Parks (1.23) Housing Inventory Ratio (4.09) Police Services Satisfaction (1.07) Quality of City Services (3.36) Tree and Shade Canopy (4.11) Quality Pre-K Enrollment (3.06) Disability Social Inclusion (3.13) Feeling of Safety in Your Neighborhood (1.05) City Website Satisfaction (2.04) High School Graduation Rate (3.08) Employee Turnover (5.07) Kid Zone Participation (5.07) 11 • Transportation System Satisfaction (3.29) 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. • 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 Homeless Solutions The City is committed to five strategic priorities that enhance the lives of all in Tempe. Achieving an end to homelessness is one measure of improving community quality of life. The City has invested heavily to serve those in need and is committed to making homelessness a rare, brief and one-time experience in our community. To do that, the city offers a comprehensive system of support that includes: street outreach, case management, connection to social services, crisis response, mental health resources, emergency and transitional shelter, and housing. The City’s Homeless Solutions Task Force includes Human Services, Community Services, Tempe Police, Tempe Fire Medical Rescue, the City Attorney's office, Tempe Municipal Court, and Communication and Media Relations. The task force addresses topics such as: • • • • • • Encampments in desert parks and preserves Annual Point-in-Time Homeless Count Emergency shelter Healthy Giving Heat relief Park safety and community wellness Affordable Housing The Hometown for All initiative was introduced by Mayor Woods and approved by the City Council in 2021. Hometown for All provides a dedicated funding stream to accelerate the growth of affordable and workforce housing to ensure that Tempe has a variety of housing types. For every new development project built in Tempe, an amount equivalent to 50% of certain permitting fees paid to the city’s General Fund goes to support the nonprofit Tempe Coalition for Affordable Housing. Those funds are used to purchase land and properties and reimagine city-owned parcels for future development. 12 American Rescue Plan Act - Update 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 prior fiscal year 2022 and 2023 and the current fiscal year 2024. AWARDS AND ACKNOWLEDGMENTS Certificates of Achievement The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Annual Comprehensive financial report for the fiscal year ended June 30, 2023. 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-eight consecutive years (fiscal years 1975/76 through 2022-2023). 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 2023-24 annual budget and the National Purchasing Institute’s Achievement of Excellence in Procurement Award for FY 2023-24. 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, Rosa Inchausti City Manager Lisette Camacho, 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, 2023 Executive Director/CEO 14 City of Tempe, Arizona List of Principal Officials City Council Corey Woods, Mayor Doreen Garlid, Vice Mayor Arlene Chin Berdetta Hodge Randy Keating Nikki Amberg Jennifer Adams Administrative Staff For the Fiscal Year Ended June 30, 2024 Rosa Inchausti, City Manager Lisette Camacho, Deputy City Manager Keith Burke, Deputy City Manager Chief Greg Ruiz, Deputy City Manager/Fire Chief Craig Hayton, Community Services Tara Ford, Public Works Jeffrey Tamulevich, Community Development Tim Burch, Community Health and Human Services Kevin Kane, Municipal Court Sonia Blaine, City Attorney Bill Greene, Internal Audit Office Julie Hietter, Municipal Budget Office Mike DiDomenico, Economic Development Office Wydale Holmes, Innovation and Strategic Management Office Kara DeArrastia, City Clerk and Elections Laura Calder, Financial Services Jared Morris, Information Technology Rebecca Strisko, Human Resources 15 16 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 17 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 business‐type 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, 2024, 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, and the aggregate remaining fund information of the City of Tempe, Arizona, as of June 30, 2024, 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. 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 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 11, 2024, 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 11, 2024 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, 2024. 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 this fiscal year by $1.1 billion (net position). This is a increase of $28.8 million over the prior year’s net position primarily due to a $15.8 million increase in state income tax revenues. Of the City’s net position, $335.4 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. • For the fiscal year ended June 30, 2024, the City’s governmental activities revenues increased by $15.7 million to $517.9 million. This was primarily due to increases of $15.8 million in intergovernmental revenues and $3.0 million in operating grants and contribution. Expenses increased by $36.1 million mainly due to an increase in Transportation of $21.2 million, $13.7 million in community enrichment, and $4.2 million in public safety. • At June 30, 2024, the City’s governmental funds reported combined ending fund balances of $406.6 million. Approximately 58% of this total amount ($234.7 million) was for spending at the government’s discretion (committed, assigned, or unassigned). • At June 30, 2024, total fund balance for the General Fund was $165.6 million, which represents a decrease of $6.1 million over the prior year’s fund balance. Revenues increased by $34.7 million, this is primarily due to a $18.3 million increase in intergovernmental revenues. Expenditures increased by $32.6 million, mainly due to increase of $5.1 million in community enrichment and $12.4 million in public safety. • At June 30, 2024, the City’s enterprise funds reported combined total net position of $277.2 million, and total unrestricted net position of $139.1 million. Of this total, $132.8 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. 21 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 public safety, general government, transportation, criminal justice, and community enrichment. The business-type activities of the City include water and wastewater, solid waste, and emergency medical transportation, and golf operations (closed in fiscal year 2023-2024). 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 finance- related 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. 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, 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’s annual budget is the legally adopted expenditure control document of the City. The legally adopted budget is at a citywide level that includes all Governmental and Enterprise Funds. A budget schedule at the citywide level is presented in the Required Supplementary Information Section. The 22 schedule compares the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. 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. Water and wastewater fund was considered a major fund of the City. • Internal Service funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses internal service funds to account for its employee and retiree health insurance programs, its workers’ compensation claims, and its risk management services including general liability and property liability claims. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. The City uses a fiduciary fund to account for other post-employment benefits provided to retirees. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City's own programs. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. COMBINING STATEMENTS The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the Notes to the Financial Statements. 23 GOVERNMENT-WIDE STATEMENTS FINANCIAL ANALYSIS Governmental Activities 2024 Business-type Activities 2023 2024 Total 2023 2024 2023 Assets Current and other assets 265,901,988 $ 260,452,937 $ 1,284,923,449 $ 1,282,832,465 Capital assets, net $ 1,019,021,461 $ 1,022,379,528 $ 868,049,848 815,912,432 438,876,051 410,526,682 1,306,925,899 1,226,439,114 Total assets 1,887,071,309 1,838,291,960 704,778,039 670,979,619 2,591,849,348 2,509,271,579 84,797,039 82,674,209 7,750,221 10,121,088 92,547,260 92,795,297 1,007,315,901 981,679,307 382,079,031 367,747,072 1,389,394,932 1,349,426,379 122,274,453 120,627,911 51,129,833 47,531,170 173,404,286 168,159,081 1,129,590,354 1,102,307,218 433,208,864 415,278,242 1,562,799,218 1,517,585,460 43,935,387 35,953,403 2,162,943 1,807,233 46,098,330 37,760,636 Net investment in capital assets 441,875,868 435,421,987 102,002,361 97,816,016 543,878,229 533,238,003 Restricted 160,088,789 141,175,028 36,091,495 25,963,094 196,180,284 167,138,122 Unrestricted 196,377,950 206,108,533 139,062,597 140,236,122 335,440,547 346,344,655 798,342,607 $ 782,705,548 $ 277,156,453 $ 264,015,232 $ 1,075,499,060 $ 1,046,720,780 Total deferred outflows of resources Liabilities Long-term liabilities Other liabilities Total liabilities Total deferred inflows of resources Net position Total net position $ 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 $1.1 billion and $1.0 billion as of June 30, 2024 and 2023, 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 $543.9 million and $533.2 million at June 30, 2024 and 2023, respectively. These totals represent 50.6% and 50.9% of total net position at June 30, 2024 and 2023, respectively. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities. 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 $196.2 million (18.2% of total net position) at June 30, 2024. At June 30, 2023 restricted net position was $167.1 million (16.0% 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 $335.4 million (31.2% of total net position) and $346.3 million (33.1% of total net position) at June 30, 2024 and 2023, 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. 24 ANALYSIS OF CHANGE IN NET POSITION The City’s total net position increased by $28.8 million during the current fiscal year. These changes in net position are explained in the governmental and business-type activities discussion below. Governmental Activities Business-type Activities Total 2024 2023 2024 2023 2024 2023 128,150,321 $ 123,803,981 $ 185,287,414 $ 181,307,105 Revenues Program revenues: Charges for services 57,137,093 $ 57,503,124 $ Operating grants and contributions $ 39,108,463 36,149,703 - - 39,108,463 36,149,703 Capital grants and contributions 11,887,956 22,911,000 - - 11,887,956 22,911,000 Sales taxes 220,706,908 222,221,888 - - 220,706,908 222,221,888 Intergovernmental revenue, unrestricted 100,839,012 84,994,033 - - 100,839,012 84,994,033 Property taxes 63,045,369 63,596,741 - - 63,045,369 63,596,741 Franchise taxes 3,255,826 2,742,874 - - 3,255,826 2,742,874 Unrestricted investment earnings (loss) 9,260,955 4,594,728 7,175,090 1,866,714 16,436,045 6,461,442 Miscellaneous 12,670,187 7,524,676 730,341 697,005 13,400,528 8,221,681 Total revenues 517,911,769 502,238,767 136,055,752 126,367,700 653,967,521 628,606,467 General revenues: Expenses General government 52,332,996 57,489,311 - - 52,332,996 57,489,311 Public safety 181,268,814 177,106,183 - - 181,268,814 177,106,183 Transportation 119,214,368 98,054,788 - - 119,214,368 98,054,788 Criminal justice 5,769,865 5,417,328 - - 5,769,865 5,417,328 Community enrichment 126,782,592 113,071,086 - - 126,782,592 113,071,086 Interest on long-term debt 19,891,073 18,057,610 19,891,073 18,057,610 Water and wastewater - - 92,323,601 96,368,865 92,323,601 96,368,865 Solid waste - - 20,428,137 21,167,692 20,428,137 21,167,692 Emergency medical transportation - - 7,005,235 6,907,615 7,005,235 6,907,615 Golf course - - 172,560 3,554,898 172,560 3,554,898 Total expenses 505,259,708 469,196,306 119,929,533 127,999,070 625,189,241 597,195,376 Increase in net position before transfers and special item 12,652,061 33,042,461 16,126,219 (1,631,370) 28,778,280 31,411,091 Transfers and special item 2,984,998 (65,221,375) (2,984,998) (34,658,732) - (99,880,107) Change in net position 15,637,059 (32,178,914) 13,141,221 (36,290,102) 28,778,280 (68,469,016) Net position- beginning 782,705,548 814,884,462 264,015,232 300,305,334 1,046,720,780 1,115,189,796 798,342,607 $ 782,705,548 $ 277,156,453 $ 264,015,232 $ 1,075,499,060 $ 1,046,720,780 Net position- ending $ Governmental activities. The governmental net position increased by $15.6 million for the fiscal year ended June 30, 2024 compared to a $32.2 million decrease in net position for the fiscal year ended June 30, 2023. Overall, revenues increased by $15.7 million or 3.1%, and expenses increased by $36.1 million or 7.7% compared to the fiscal year ended June 30, 2023. The key factors contributing to the change in net position compared to the prior year are as follows: • Intergovernmental revenues increased by $15.8 million or 18.6% due to an increase in state income tax as the economy continued to recover from the pandemic. • Total program expenses increased by $36.1 million due primarily to increased maintenance and repair expenditures in transportation of $21.2 million and in community enrichment of $13.7 million. • Fiscal year 2023 recognized a one time special item of $65.2 million for the write-off of certain construction in progress projects. 25 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: Fiscal Year 2024 Expenses and Program Revenues Governmental Activities 180,000,000 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 Expenses de bt lo ng -te rm on In te re st C om m un ity en ric hm en t ic e C rim in al ju st Tr an sp or ta tio n go ve rn m en t en er al G Pu bl ic sa fe ty – Program Revenues A comparison of expenses by function and the percentage of total expenses for the largest functions are presented in the chart. As stated earlier, total expenses for the City’s governmental activities increased from the prior year by $36.1 million (7.7%). The main function which experienced the increase was transportation totaling $21.2 million and community enrichment totaling $13.7 million. Fiscal Year Ended June 30, 2024 General revenues such as sales taxes, property taxes unrestricted investment earnings, intergovernmental revenue- unrestricted, miscellaneous and other and franchise taxes are not shown by program but are effectively used to support program activities citywide. June 30, 2023 Public safety $181,268,814 35.9% $177,106,183 Criminal justice 5,769,865 1.1 5,417,328 37.7% 1.2 General government 52,332,996 10.4 57,489,311 12.3 Transportation 119,214,368 23.6 98,054,788 20.9 Community enrichment 126,782,592 25.1 113,071,086 24.1 Fiscal Year Ended June 30, 2024 26 June 30, 2023 Sales taxes $220,706,908 42.6% $222,221,888 50.8% Intergovernmental revenue-unrestricted 100,839,012 19.5 84,994,033 13.3 Property taxes 63,045,369 12.2 63,596,741 14.5 Miscellaneous and other 12,670,187 2.4 10,704,301 2.4 Franchise taxes 3,255,826 0.6 2,742,874 0.6 Unrestricted investment earnings (loss) 9,260,955 1.8 4,594,728 1.4 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, intergovernmental revenues experiences growth of 18.6% due to the continued recovery from the pandemic. A summary of the general revenues is below. Fiscal Year 2024 Revenues by Source - Governmental Activities Miscellaneous and other, 5.3% Franchise taxes, 0.8% Property taxes, 15.4% Sales taxes, 53.8% Intergovernmental revenue, unrestricted, 24.7% Business-type activities. The net position of the City’s business-type activities increased by $13.1 million for the year ended June 30, 2024 compared to a decrease of $36.3 million for the year ended June 30, 2023. The total business-type activities program and general revenues increased by $9.7 million from $136.1 million, which was comparable to prior year. The largest of the City’s business-type activities, Water and Wastewater, had an increase of $8.8 million in operating revenues and $2.3 million decrease in operating expenses. The remaining non-major enterprise funds’s net change in net position remain comparable to prior year. 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 $406.6 million, a decrease of $2.7 million from the prior year. Approximately $234.7 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 $1.4 million over the prior year’s combined balance of $233.3 million. 27 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, 2024, the non-spendable fund balance included amounts for inventories ($1.0 million), prepaid items ($1.7 million) and a lease receivable reserve ($1.1 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 $168.0 million consists primarily of amounts for debt service ($7.2 million), capital projects ($128.8 million), highway user revenue ($12.2 million), development impact fees ($10.9 million), and other ($8.8 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 $165.6 million, with $1.4 million in non-spendable fund balance. The remaining $164.2 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 decreased in the current year by $6.1 million compared to a prior year net decrease of $0.3 million. Arizona state shared revenues are collected by the state for statewide sales taxes, income taxes and auto inlieu 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 resulted in increased revenues for intergovernmental revenues, unrestricted for the City. For fiscal year 2024, state shared income for state sales taxes, state income taxes and auto in-lieu of taxes are comparable to revenues from fiscal year 2023. Total revenues increased by $34.7 million (11.9%) from the prior year. This increase was due to increases in state and other agency revenues of $18.3 million. Fiscal Year Ended June 30, 2024 June 30, 2023 Revenues $326,181,510 Total fund balance 165,593,133 50.8 % $291,516,906 171,692,175 58.9 % Unassigned fund balance 120,298,222 36.9 126,393,523 43.4 Expenditures increased by $32.6 million (12.4%) primarily due to increase in public safety spending of $12.4 million and $11.5 million in bond defeasance. The Transit Special Revenue Fund is used to account for revenues and expenditures utilized to provide related transit services. Revenues increased by $3.6 million (5.0%) from the prior year due primarily to increased investment income of $5.5 million from the prior year. Total Transit Special Revenue Fund expenditures increased by $6.6 million (12.5%) due primarily to $6.5 million increase in fixed route expenditures. At June 30, 2024, the Transit Special Revenue Fund special assessment amounts due totaling $9.3 million, is related to 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 benefiting properties from the streetcar project. The fund balance totaled $110.4 million at June 30, 2024, compared to a $102.6 million fund balance at June 30, 2023. The fund balance increased $7.8 million in the current year as compared to an increase of $12.6 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 decreased $2.6 million from $9.5 million at June 30, 2023 to $6.9 million at June 30, 2024. Of this fund balance, $5.4 million represents accumulation of non-secondary property taxes set aside for future payment of Qualified Energy Conservation Bonds (QECB’s). Therefore, the amount of unspent secondary property taxes, used for interest, principal redemption and related fees for General Obligation debt service totals $1.5 million. 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 projects. Total expenditures of $61.5 million represents an increase of $20.8 million from the prior fiscal year due primarily to capital acquisitions. Total revenues decreased by $10.3 million due to final revenue recognition of the ARPA grant for Tempe Municipal Operating Center. Other Non-Major Governmental Funds had a fund balance increase of $20.8 million to $116.2 million at the end of the fiscal year. 28 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, 2024 June 30, 2023 Water and Wastewater Fund Non-Major Enterprise Funds $ 260,765,239 $ 248,445,273 16,391,214 15,569,959 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 a decrease in total net position of $12.3 million for the fiscal year ended June 30, 2024. Charges for services increased by $8.9 million primarily due to increase in utility consumption. Total net operating income was $16.5 million, an increase of $11.2 million from the prior year. The Non-major enterprise funds include solid waste fund, emergency medical transportation fund, and golf fund. The total fund net position increased by $0.8 million during the fiscal year ended June 30, 2024 compared to $2.4 million in fiscal year ended June 30, 2023. Total operating revenues and expenses decreased by $4.6 million and $4.0 million, respectively, compared to the prior fiscal year. BUDGET HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. The legally adopted budget is at a citywide level that includes all Governmental and Enterprise Funds. A budget schedule at the citywide level is presented in the Required Supplementary Information Section. The schedule compares the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. Operating budget actual revenues were less than budgetary estimates by $198.9 million and actual expenditures were less than budgetary estimates by $222.7 million . The capital budget reported $411.7 million less than estimated budget. 29 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS The City’s capital assets for its governmental and business-type activities as of June 30, 2024 were $1.3 billion (net of accumulated depreciation). Capital assets include land, buildings, infrastructure, improvements, machinery and equipment, SBITAs, Leases, and construction in progress. The total increase in the City’s capital assets for the current fiscal year was $80.5 million. The tables below reflect the capital assets at the end of the fiscal year June 30, 2024 and 2023, respectively. Governmental Activities Land 2023 2024 2023 Total 2024 2023 95,915,313 $ 95,393,127 $ 6,330,829 $ 6,693,377 $ 102,246,142 $ Construction in progress 104,767,994 63,800,621 26,892,100 29,006,309 131,660,094 92,806,930 Buildings 126,321,244 137,494,955 15,100,509 16,723,869 141,421,753 154,218,824 Infrastructure 324,835,057 324,198,244 231,533,002 209,420,571 556,368,059 533,618,815 Improvements 164,853,370 147,638,805 134,486,326 127,340,651 299,339,696 274,979,456 Machinery and equipment 47,311,284 43,337,101 24,172,250 20,777,671 71,483,534 64,114,772 SBITA Assets 3,228,932 2,994,098 361,035 564,234 3,589,967 3,558,332 Lease Assets 816,654 868,049,848 $ 1,055,481 815,912,432 $ 438,876,051 $ Total $ 2024 Business-type Activities $ 102,086,504 816,654 1,055,481 410,526,682 $ 1,306,925,899 $ 1,226,439,114 Major capital asset events during the current fiscal year included the following: Governmental Activities • The increase in governmental capital assets of $52.1 million is due primarily to the increase in construction in progress of $72.5 million and completed construction in progress of $28.8 million transferred into depreciable assets net with current year depreciation expense of $60.6 million. Business-type Activities • The increase in enterprise capital assets of $28.3 million is due primarily to increase in completed construction in progress of $21.6 million transferred into depreciable assets and assets additions of $23.1 million then offset by depreciation of $30.8 million 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. 30 DEBT ADMINISTRATION At the end of the current fiscal year, the City had total long-term obligations outstanding of $1.0 billion, which is a increase of $21.0 million over the prior fiscal year. Governmental Activities 2024 General obligation bonds Business-type Activities 2023 2024 Total 2023 2023 475,425,000 $ 421,175,000 Special assessment bonds 8,755,000 10,265,000 - - 8,755,000 10,265,000 Excise tax obligations 66,128,000 72,417,000 37,557,000 42,528,000 103,685,000 114,945,000 Revenue obligations $ 271,690,000 $ 243,407,158 $ 203,735,000 $ 177,767,842 $ 2024 - - 64,120,000 66,895,000 64,120,000 66,895,000 Premium on debt payable 30,392,466 28,097,020 35,884,021 35,672,156 66,276,487 63,769,176 Certificates of participation 317,570,000 336,000,000 - - 317,570,000 336,000,000 549,000 1,076,000 - - 549,000 1,076,000 HUD Section 108 loan WIFA loan - - 4,631,315 5,500,392 4,631,315 5,500,392 Financed purchases - 4,514 - - - 4,514 Total debt payable $ 698,552,030 $ 694,990,272 $ 346,269,791 $ 328,857,755 $ 1,044,821,821 $ 1,023,848,027 On May 29, 2024, the City issued Tax-Exempt $110,675,000 Series 2024 General Obligation Bonds were issued with maturities ranging from $3,905,000 to $7,625,000 to fund various project costs related to streets, public safety, parks, and water/wastewater. The bond matures on 7/1/2044 with interest rate of 4.125-5.0%. The Series 202 General Obligation Bonds were publicly sold and are repaid from the HURF Fund, General Obligation Debt Service Fund and Water and Wastewater Fund. On June 20, 2024, the City issued $14,595,000 Series 2024 Excise Tax Revenue Refunding Obligation Bond was issued with maturities ranging from 1,305,000 to $1,960,000 to refund 2013 Excise Tax Obligation Bond. The bond matures on 7/1/2033 with interest rate of 5.00%. 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 $11.1 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, 2024, the Transit Fund special assessments receivable, related to the obligations, on the assessed properties totaled $10.6 million. As development occurs, additional benefiting 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 $21.0 million from the fiscal year ended June 30, 2023 to the fiscal year ended June 30, 2024. 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: Fiscal Year Ended June 30, 2024 June 30, 2023 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 $523,015,404 $462,681,585 2,755 2,488 21.1% 19.4% $ 1.48 $ 1.48 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, 2024 is $432.3 million under the 20% capacity and $142.4 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. 31 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 As we continue to navigate the post-pandemic economic environment, the City’s financial position for FY 2023-24 reflects a stable foundation. Revenues, particularly from taxable sales, show moderate growth and remain ahead of prior-year levels, signaling sustained consumer confidence and economic resilience. The City continues to benefit from robust development activities, with new residential, hotel, and office complexes under construction, which contribute positively to the city’s revenue stream. The FY 2024-25 budget reflects both opportunities and challenges. The city realized 11% growth in FY 2022-23, driven by post COVID-19 demand and inflation. However, future projections include slight revenue decline for FY 2024-25 due to the impending cessation of the residential rental sales tax on December 31, 2024, which will impact local tax revenues. Despite the forecasted revenue decline, the City remains focused on mitigating its impact through strategic budgeting and planning. Our 5-year financial outlook anticipates stable revenue growth after the full phase-in of the residential rental tax elimination. Forecasts also show moderate growth across other revenue categories, supported by continued commercial and residential development and bolstered by higher interest income due to recent Federal Reserve rate increases. The City is mindful of inflationary and economic pressures, particularly in the form of workforce shortages and supply chain constraints, which could continue impacting costs. Overall, the City’s FY 2023-24 budget remains conservative, focused on fiscal stability, and aligned with long-term goals for continued economic vitality. Adjustments in response to legislative and economic developments will continue to be monitored closely to maintain a balanced budget and provide high-quality services to residents. On April 18, 2024 the City Council approved the FY 2024-25 Budget. The total adopted budget approximates $1.59 billion and includes funding for both operating and capital purposes. This amount represents a $238.7 million or 17.7% increase in the total financial program from the prior year. The operating budget of $812.2 million increased by $85.1 million or 11.7%, and the capital budget of $775.1 million increased by $153.6 million or 24.7% this fiscal year. The adopted fiscal year 2024-25 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. QUESTS 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 32 City of Tempe, Arizona 33 Statement of Net Position June 30, 2024 City of Tempe, Arizona Governmental Activities Business-type Activities Total Assets Pooled cash and investments $ 423,236,716 $ 87,761,317 $ 510,998,033 Receivables: Taxes 31,861,654 - 31,861,654 Accounts, net 31,112,603 17,837,486 48,950,089 Accrued interest 2,762,717 874,511 3,637,228 Special assessment 18,653,647 - 18,653,647 Leases 24,434,154 - 24,434,154 Due from other governments 11,403,048 - 11,403,048 Inventories 1,043,988 1,391,277 2,435,265 Prepaid items 1,701,613 Restricted cash and investments 77,692,593 35,401,902 113,094,495 Restricted assets 10,657,913 - 10,657,913 Capital improvement notes receivable 1,607,391 - 1,607,391 Net OPEB assets 3,866,896 771,516 4,638,412 - 35,319,979 35,319,979 Equity in joint venture 378,986,528 86,544,000 465,530,528 Non-depreciable capital assets 200,683,307 33,222,929 233,906,236 Depreciable assets (net) 667,366,541 405,653,122 1,073,019,663 1,887,071,309 704,778,039 2,591,849,348 Deferred charge on refundings 2,613,695 4,717,641 7,331,336 Deferred outflows from pensions 81,212,977 2,905,615 84,118,592 Restricted joint venture construction deposit Total assets 1,701,613 Deferred Outflows of Resources Deferred outflows from OPEB 970,367 126,965 1,097,332 84,797,039 7,750,221 92,547,260 Accounts payable 40,050,989 13,353,762 53,404,751 Deposits 3,712,021 1,231,112 4,943,133 Accrued expenses 10,617,394 937,630 11,555,024 Total deferred outflow of resources Liabilities Unearned revenue 6,852,884 213,025 7,065,909 Matured bonds payable 51,628,999 29,296,000 80,924,999 15,510,470 Interest payable 9,412,166 6,098,304 Net OPEB liabilities 81,700,693 10,177,382 91,878,075 Net pension liabilities 168,830,867 22,748,204 191,579,071 119,452,987 Long term liabilities due within one year 90,163,841 29,289,146 Long term liabilities due more than one year 666,620,500 319,864,299 986,484,799 1,129,590,354 433,208,864 1,562,799,218 Deferred inflows from leases 23,288,743 - 23,288,743 Deferred inflows from PPP 6,265,614 - 6,265,614 Deferred inflows from refundings 1,307,780 - 1,307,780 Deferred inflows from pensions 4,996,631 1,074,724 6,071,355 Deferred inflows from OPEB 8,076,619 1,088,219 9,164,838 43,935,387 2,162,943 46,098,330 441,875,868 102,002,361 543,878,229 Capital projects 84,577,745 - 84,577,745 Debt service 50,574,896 - 50,574,896 Transportation 12,245,136 - 12,245,136 OPEB 3,866,896 771,516 4,638,412 Other 8,824,116 - 8,824,116 - 35,319,979 35,319,979 Total liabilities Deferred Inflows of Resources Total deferred inflow of resources Net Position Net investment in capital assets Restricted for: Joint venture Unrestricted Total net position 196,377,950 $ 798,342,607 The notes to the financial statements are an integral part of this statement. 34 139,062,597 $ 277,156,453 335,440,547 $ 1,075,499,060 Statement of Activities For the fiscal year ended June 30, 2024 City of Tempe, Arizona Net (Expense) Revenue and Changes in Net Position Program Revenues Expenses Charges for Services Operating Grants and Contributions 52,332,996 $ $ Capital Grants and Contributions Governmental Activities $ Business-type Activities Total Functions Governmental activities: General government - $ (43,567,624) $ - Public safety 181,268,814 2,512,811 6,204,660 - (172,551,343) - (172,551,343) Transportation 119,214,368 16,724,639 1,011,454 10,757,813 (90,720,462) - (90,720,462) Criminal justice 5,769,865 1,539,433 90,313 - (4,140,119) - (4,140,119) 126,782,592 27,708,900 31,687,974 1,130,143 (66,255,575) - (66,255,575) Community enrichment $ 8,651,310 114,062 $ (43,567,624) Interest on long-term debt 19,891,073 - - - (19,891,073) - (19,891,073) Total governmental activities 505,259,708 57,137,093 39,108,463 11,887,956 (397,126,196) - (397,126,196) Water and wastewater 92,323,601 99,078,192 - - - 6,754,591 6,754,591 Solid waste 20,428,137 21,488,728 - - - 1,060,591 1,060,591 Emergency medical transportation Golf course 7,005,235 7,583,401 - - - 578,166 578,166 172,560 - - - - (172,560) (172,560) 119,929,533 128,150,321 - - - 8,220,788 8,220,788 625,189,241 185,287,414 39,108,463 11,887,956 8,220,788 $ (388,905,408) Business-type activities: Total business-type activities Total government (397,126,196) $ General revenues: Sales taxes 220,706,908 - 220,706,908 Intergovernmental revenue, unrestricted Property taxes 100,839,012 - 100,839,012 63,045,369 - 63,045,369 3,255,826 - 3,255,826 Unrestricted investment earnings (loss) 9,260,955 7,175,090 16,436,045 Miscellaneous 12,670,187 730,341 13,400,528 Transfers 2,984,998 (2,984,998) 417,683,688 Franchise taxes Total general revenues and transfers Change in net position 412,763,255 4,920,433 15,637,059 13,141,221 28,778,280 Net position - beginning 782,705,548 264,015,232 1,046,720,780 Net position - ending $ 798,342,607 $ 277,156,453 $ 1,075,499,060 The notes to the financial statements are an integral part of this statement. 35 Balance Sheet Governmental Funds June 30, 2024 City of Tempe, Arizona General Transit Special Revenue 157,069,538 $ General Obligation Debt Service Community Development Capital Projects Non-Major Governmental Funds Total Governmental Funds Assets Pooled cash and investments $ 93,326,468 $ 1,409,977 $ 12,112,328 $ 124,533,298 $ 388,451,609 Receivables: Taxes 20,665,821 7,204,913 1,121,289 - 2,869,631 31,861,654 Accounts 15,550,368 7,455,985 - - 7,840,029 30,846,382 - 9,290,073 - - 9,363,574 18,653,647 Accrued interest 1,850,197 589,265 - - 297,569 2,737,031 Leases 24,174,582 259,572 - - - 24,434,154 1,924,816 - - - - 1,924,816 - 6,816,314 - - 4,586,734 11,403,048 Inventories 198,746 - - - 845,242 1,043,988 Prepaid items 61,131 - - - 1,640,482 1,701,613 21,596,337 4,117,624 40,522,640 - 1,874,569 68,111,170 - - - 10,657,913 - 10,657,913 250,000 1,357,391 - - - Special assessments Due from other funds Due from other governments Restricted cash and investments Restricted assets Capital improvement notes receivable Total assets 1,607,391 $ 243,341,536 $ 130,417,605 $ 43,053,906 $ 22,770,241 $ 153,851,128 $ 593,434,416 $ 9,667,222 $ 4,859,047 $ - $ 12,710,073 $ 12,528,443 $ 39,764,785 Liabilities Accounts payable Deposits 2,972,224 - - 11,108 728,686 3,712,018 Accrued expenditures 6,355,106 102,842 897,415 - 582,347 7,937,710 Due to other funds - - - - 1,864,203 1,864,203 Unearned revenue 174,224 - - 2,550,000 4,128,660 6,852,884 18,430,000 3,540,000 29,314,000 - 345,000 51,629,000 Matured bonds payable Matured interest payable Total liabilities 3,166,180 577,624 5,325,842 40,764,956 - 9,079,513 - 35,537,257 - 15,271,181 - 342,519 9,412,165 20,519,858 121,172,765 Deferred Inflows of Resources Unavailable revenue- courts 6,728,109 - - - - 6,728,109 Unavailable revenue- PPP 6,265,614 - - - - 6,265,614 - 1,357,391 - - - 1,357,391 Unavailable revenue- other 581,899 - - - 7,534,972 8,116,871 Unavailable revenue- property tax 363,614 - 620,084 - - 983,698 Unavailable revenue- special assessments - 9,290,073 - - 9,605,118 18,895,191 Unavailable revenue- leases 23,044,211 244,532 - - - 23,288,743 36,983,447 - 10,891,996 - 17,140,090 65,635,617 Unavailable revenue- notes receivable Total deferred inflows of resources 620,084 - - - Fund Balances Fund balances: Non-spendable 1,390,248 15,040 - - 2,485,724 3,891,012 - 68,504,621 6,896,565 12,149,114 80,453,147 168,003,447 Committed 5,279,326 18,517,723 - 24,635,217 35,426,957 83,859,223 Assigned 38,625,337 23,761,057 - - 21,901,739 84,288,133 Unassigned 120,298,222 (352,345) - (29,285,271) (24,076,387) Restricted 66,584,219 Total fund balances $ 165,593,133 $ 110,446,096 $ 6,896,565 $ 7,499,060 $ 116,191,180 $ 406,626,034 Total liabilities, deferred inflows of resources, and fund balances $ 243,341,536 $ 130,417,605 $ 43,053,906 $ 22,770,241 $ 153,851,128 $ 593,434,416 The notes to the financial statements are an integral part of this statement. 36 Reconciliation of the Balance Sheet to the Statement of Net Position June 30, 2024 City of Tempe, Arizona Fund balances- total governmental funds $ 406,626,034 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 1,944,458,889 (1,076,409,041) 868,049,848 The equity in joint venture is not a financial resource and, therefore, is not reported in the funds. Net OPEB assets (excluding internal service) 378,986,528 3,844,352 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 Bond premiums and the deferred charge on refundings are not financial resources and, therefore, are not reported in the funds. Bond premiums Deferred inflows from refundings Deferred outflows from refundings Deferred inflows related to pension and OPEB Deferred outflows related pension and OPEB 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 (excluding internal service) Net pension liabilities (excluding internal service) Other post employment benefits liabilities (excluding internal service) Lease and SBITA liabilities Bonds payable 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 18,895,191 9,100,589 1,357,391 6,728,109 36,081,280 (30,392,466) (1,307,780) 2,613,695 (13,023,892) 82,095,462 39,985,019 (34,055,124) (168,166,169) (81,601,347) (3,467,564) (664,692,000) (951,982,204) 16,751,750 $ 798,342,607 The notes to the financial statements are an integral part of this statement. 37 City of Tempe, Arizona 38 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona General Transit Special Revenue General Obligation Debt Service Community Development Capital Projects Non-Major Governmental Funds 151,636,673 $ $ $ $ Total Governmental Funds Revenues: Taxes: Sales taxes $ 57,413,170 - - 11,482,634 $ 220,532,477 Property taxes 25,379,796 - 37,379,216 - - 62,759,012 Franchise taxes 3,430,257 - - - - 3,430,257 Intergovernmental: Federal agency State and other agency Property rental 65,111 - - 10,757,813 31,618,536 42,441,460 87,751,323 458,380 - - 21,456,656 109,666,359 4,099,430 3,739,809 359,621 - - - Interest earnings- leases 719,984 3,786 - - - 723,770 Investment income (loss) 13,633,679 6,236,226 286,058 143,983 1,303,673 21,603,619 Charges for services 21,624,168 9,088,830 - - 4,382,212 35,095,210 Fines and forfeitures 5,043,072 - - 2 563,931 5,607,005 355,436 591,764 - 39,052 2,973,986 3,960,238 Special assessments - - - - 2,057,895 2,057,895 Licenses and permits 8,850,681 - - - 202,979 9,053,660 Miscellaneous 3,951,521 968,066 - 5,957 2,084,572 7,010,116 326,181,510 75,119,843 37,665,274 10,946,807 78,127,074 528,040,508 General government 40,762,342 - - - 1,544,223 42,306,565 Public safety 146,075,356 - - - 11,472,780 157,548,136 Transportation - 54,778,090 - 13,785,714 20,977,212 89,541,016 Criminal justice 5,354,078 - - - 166,322 5,520,400 Community enrichment 70,684,369 - - 881,760 47,732,725 119,298,854 Principal 19,983,656 3,540,000 29,314,000 - 2,402,218 55,239,874 Interest 6,413,727 1,155,249 10,584,036 - 728,608 18,881,620 8,870 5,700 1,469,046 - 2,655 1,486,271 7,133,870 165,790 - 46,831,706 48,996,749 103,128,115 296,416,268 59,644,829 41,367,082 61,499,180 134,023,492 592,950,851 29,765,242 15,475,014 (3,701,808) (50,552,373) (55,896,418) (64,910,343) Other entities' participation Total revenues Expenditures: Current: Debt service: Bond issuance costs Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in 2,310,367 - 545,045 8,885,940 44,679,490 56,420,842 Transfers out (40,192,973) (7,608,937) - - (8,428,017) (56,229,927) Issuance of debt - - - 17,720,000 37,675,000 55,395,000 Premium on issuance of debt - - 1,018,129 1,280,000 2,725,000 5,023,129 701,691 16,908 - - 83,757 802,356 1,316,631 - - - - 1,316,631 - - 6,910,000 - - 6,910,000 - - (7,399,000) - - (7,399,000) (35,864,284) (7,592,029) 1,074,174 27,885,940 76,735,230 62,239,031 (6,099,042) 7,882,985 (2,627,634) (22,666,433) 20,838,812 (2,671,312) 171,692,175 102,563,111 9,524,199 30,165,493 95,352,368 409,297,346 7,499,060 $ 116,191,180 Proceeds from sale of capital assets Proceeds from SBITA Issuance of refunding bonds Payment to refunding bonds escrow agent Total other financing sources (uses) Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 165,593,133 $ 110,446,096 $ 6,896,565 The notes to the financial statements are an integral part of this statement. 39 $ $ 406,626,034 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Net change in fund balances- total governmental funds $ (2,671,312) Amounts reported for the governmental activities in the statement of activities are different because: 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. Expenditures for capitalized assets 108,553,628 Special item (1,438,322) Depreciation and amortization expense (56,875,781) 50,239,525 Certain revenues in the statement of activities do not provide current financial resources and, therefore, are not reported as revenues in the governmental funds. Property tax and charges for services revenue (1,128,414) Court revenue (1,512,668) Notes receivable (92,756) Special assessments received/recognized (2,777,084) Joint venture (13,066,434) Capital asset and long term liability transferred from proprietary activities 3,605,071 (14,972,285) Government funds report pension and OPEB 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 and OPEB contributions 20,279,264 Pension and OPEB expense (36,603,236) (16,323,972) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Also, government funds report the effect of premiums and similar items when debt is issued, whereas these amounts are amortized in the statement of activities. Issuance of debt (62,305,000) Subscription-based information technology arrangements incurred (1,315,404) Premium on issuance of debt (5,023,129) Compensated absences (661,355) Principal payments made 62,533,647 Amortization of deferred inflow- refunding 186,826 Amortization of deferred outflow- deferred charges (456,122) Amortization of bond premium 2,745,314 (4,295,223) Internal service funds are used by management to charge the costs of self-insurance to individual funds. The adjustments for internal service funds close those funds by charging additional amounts to participating governmental activities to completely cover the internal service funds' costs. Change in net position of governmental activities 3,660,326 $ The notes to the financial statements are an integral part of this statement. 40 15,637,059 City of Tempe, Arizona 41 Statement of Fund Net Position Proprietary Funds June 30, 2024 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 Non-current assets: Net OPEB assets Restricted joint venture construction deposit Equity in joint venture Capital assets: Non-depreciable assets Depreciable assets, net Total capital assets, net Total non-current 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 Liabilities Current liabilities: Accounts payable Deposits Accrued expenses Due to other funds Unearned revenue Accrued interest payable Matured bonds payable WIFA loan payable Claims liability Compensated absence SBITA liability Bonds and loans payable Total current liabilities Non-current liabilities: Claims Liability Compensated Absence Bonds and loans payable WIFA loan payable SBITA liability Net OPEB liabilities Net pension liabilities Total non-current 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 Restricted Unrestricted Total net position $ 73,913,488 35,401,902 11,887,303 788,569 1,391,277 123,382,539 Total Non-Major Enterprise Funds $ 13,847,829 5,950,183 85,942 19,883,954 Total $ 87,761,317 35,401,902 17,837,486 874,511 1,391,277 143,266,493 Governmental ActivitiesInternal Service Funds $ 34,785,107 9,581,423 266,221 25,685 44,658,436 462,272 35,319,979 86,544,000 309,244 - 771,516 35,319,979 86,544,000 22,544 - 33,222,929 395,112,903 428,335,832 550,662,083 674,044,622 10,540,219 10,540,219 10,849,463 30,733,417 33,222,929 405,653,122 438,876,051 561,511,546 704,778,039 22,544 44,680,980 4,717,641 1,740,970 80,312 6,538,923 1,164,645 46,653 1,211,298 4,717,641 2,905,615 126,965 7,750,221 84,901 2,981 87,882 12,162,522 1,231,103 567,001 213,025 6,098,304 29,296,000 887,590 737,147 27,262,000 78,454,692 1,191,240 9 370,629 291,949 110,460 1,964,287 13,353,762 13,353,762 286,362 1,231,112 937,630 2,679,548 60,613 213,025 6,098,304 29,296,000 887,590 15,459,107 1,029,096 51,970 110,460 27,262,000 80,418,979 18,537,600 1,328,429 314,034,022 3,743,724 7,250,743 13,630,139 339,987,057 418,441,749 526,129 231,995 2,926,639 9,118,065 12,802,828 14,767,115 1,854,558 314,034,022 3,743,724 231,995 10,177,382 22,748,204 352,789,885 433,208,864 8,572,454 93,656 99,346 664,698 9,430,154 27,967,754 643,947 732,610 1,376,557 430,777 355,609 786,386 1,074,724 1,088,219 2,162,943 31,403 17,955 49,358 92,148,411 35,782,251 132,834,577 260,765,239 9,853,950 309,244 6,228,020 16,391,214 102,002,361 36,091,495 139,062,597 277,156,453 22,544 16,729,206 16,751,750 $ The notes to the financial statements are an integral part of this statement. 42 $ $ Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Business-type Activities - Enterprise Funds Total NonMajor Water and Enterprise Wastewater Funds Total Governmental ActivitiesInternal Service Funds Operating revenues: Charges for services Miscellaneous Total operating revenues $ 99,078,192 449,055 99,527,247 $ 29,072,129 9,623 29,081,752 $ 128,150,321 458,678 128,608,999 Operating expenses: Personnel services Supplies and materials Fees and services Depreciation and amortization Total operating expenses Operating income 17,246,736 1,355,654 35,777,963 28,619,304 82,999,657 16,527,590 10,676,494 1,472,039 13,272,995 2,169,552 27,591,080 1,490,672 27,923,230 2,827,693 49,050,958 30,788,856 110,590,737 18,018,262 50,471,365 50,471,365 1,973,116 $ 52,383,868 60,613 52,444,481 Non-operating revenues (expenses): Investment income Interest and fiscal fees Gains on sale of capital assets Income (loss) before transfers 6,434,463 (9,323,944) 107,040 740,627 (14,852) 164,623 7,175,090 (9,338,796) 271,663 286,437 - 13,745,149 2,381,070 16,126,219 2,259,553 Transfers in Transfers out Total transfers Change in net position (1,425,183) (1,425,183) 12,319,966 2,422,652 (3,982,467) (1,559,815) 821,255 2,422,652 (5,407,650) (2,984,998) 13,141,221 1,400,773 1,400,773 3,660,326 248,445,273 $ 260,765,239 15,569,959 $ 16,391,214 264,015,232 $ 277,156,453 Total net position- beginning Total net position- ending The notes to the financial statements are an integral part of this statement. 43 $ 13,091,424 16,751,750 Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Business-type Activities- Enterprise Funds Total Non-Major Enterprise Funds Water and Wastewater Total Governmental ActivitiesInternal Service Funds 128,556,491 $ Cash flows from operating activities: Receipts from customers $ 100,192,108 $ 28,364,383 $ 52,224,339 Payments to employees for services (17,192,744) (12,157,736) (29,350,480) (1,080,166) Payments to suppliers for goods and services (40,109,300) (14,646,325) (54,755,625) (44,624,348) Receipts from other Net cash provided (used) by operating activities 449,055 9,623 458,678 60,613 43,339,119 1,569,945 44,909,064 6,580,438 Cash flows from noncapital financing activities: Advances from/(to) other funds 2,364,936 - 2,364,936 - Transfers in - 2,422,652 2,422,652 1,400,773 Transfers out (1,425,183) (1,777,114) (3,202,297) - 939,753 645,538 1,585,291 1,400,773 Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Proceeds from issuance of bonds 67,997,950 - 67,997,950 - Principal paid on long-term debt (45,493,603) (200,474) (45,694,077) - Interest and fiscal fees (13,544,081) (14,852) (13,558,933) - Purchase of capital assets (52,037,967) (4,654,087) (56,692,054) - Investment in joint venture (8,668,656) - (8,668,656) - 107,040 164,623 271,663 - (51,639,317) (4,704,790) (56,344,107) - 6,399,902 745,276 7,145,178 281,122 6,399,902 745,276 7,145,178 281,122 Proceeds from the sale of capital assets Net cash provided (used) by capital and related financing activities Cash flows from investing activities: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents (960,543) (1,744,031) (2,704,574) 8,262,333 Cash and cash equivalents at beginning of year 110,275,933 15,591,860 125,867,793 36,104,197 Cash and cash equivalents at end of year $ 109,315,390 $ 13,847,829 $ 73,913,488 $ 13,847,829 $ 123,163,219 $ 44,366,530 87,761,317 $ 34,785,107 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 35,401,902 - 35,401,902 9,581,423 $ 109,315,390 $ 13,847,829 $ 123,163,219 $ 44,366,530 $ 16,527,590 $ 1,490,672 $ 18,018,262 $ 1,973,116 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/amortization 28,619,304 2,169,552 30,788,856 - (Increase) decrease in receivables 989,420 (707,588) 281,832 (159,529) (Increase) decrease in inventories 191,855 - 191,855 - (Increase) decrease in net OPEB asset 20,135 51,121 71,256 693 Increase (decrease) in deposits 155,456 (158) 155,298 - Increase (decrease) in unearned revenue (30,960) - (30,960) - (3,167,538) 98,709 (3,068,829) 53,373 (39,785) (35,626) (75,411) 129,071 - - - 4,564,298 Increase (decrease) in compensated absence 51,379 (144,506) (93,127) 5,353 (Increase) decrease in deferred outflows related to pension and OPEB 725,265 576,009 1,301,274 21,054 Change in assets and liabilities: Increase (decrease) in payables Increase (decrease) in accrued expenses Increase (decrease) in claims payable Increase (decrease) in deferred inflows related to pension and OPEB 294,553 61,155 355,708 7,152 Increase (decrease) in net pension liabilities (742,748) (1,254,197) (1,996,945) (4,124) Increase (decrease) in net OPEB liabilities Net cash provided (used) by operating activities (254,807) (735,198) (990,005) (10,019) $ 43,339,119 $ 1,569,945 $ 44,909,064 $ 6,580,438 $ 7,168,370 $ 343,814 $ 7,512,184 $ - $ 7,168,370 $ 343,814 $ 7,512,184 $ - Noncash investing, capital, and financing activities: Accounts payable related to capital assets Total noncash investing, capital, and financing activities: The notes to the financial statements are an integral part of this statement. 44 Statement of Fiduciary Net Position Fiduciary Trust Fund June 30, 2024 City of Tempe, Arizona Other Employee Benefit Trust Fund Assets Cash and cash equivalents Investments at fair value: Mutual Funds Total investments Total assets $ 53,130 20,101,802 20,101,802 20,154,932 Net Position Restricted for other post employment benefits Total net position 20,154,932 $ 20,154,932 Statement of Changes In Fiduciary Net Position Fiduciary Trust Fund For the Fiscal Year Ended June 30, 2024 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 9,552,753 1,402,986 986,791 (69,911) 2,319,866 Total additions 11,872,619 Deductions: Benefits paid to participants or beneficiaries Medical insurance for retirees Total deductions 8,258,661 1,294,092 9,552,753 Net increase in fiduciary net position 2,319,866 Net position- beginning Net position- ending $ The notes to the financial statements are an integral part of these statements. 45 17,835,066 20,154,932 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 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, culturalrecreational, 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 government-wide financial statements exclude the fiduciary fund. The government-wide Statement of Activities demonstrates the degree to which the direct expenses, including depreciation, of the various departments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific department. Interest on long-term debt and depreciation expense on assets shared by multiple departments, are not allocated to the various departments. Program revenues include revenues from fines and forfeitures, licenses and permit fees, special assessment taxes, certain intergovernmental grants, other entities participation and charges for services. Taxes and other items not properly included among program revenues are reported as general revenues. Generally, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. The City does not currently utilize an indirect cost allocation system. The General Fund charges certain administrative fees to departments within other operating funds to support general services used by those funds. The expenditures/expenses are recorded as a reduction of expense in the allocating fund. Therefore, no elimination is required from either the government-wide or fund level financial statements. 46 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Basic Financial Statements (Continued) 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. There is one debt service fund presented as a major fund in the basic financial statements: General Obligation Debt Service Fund - accounts for the accumulation of resources and payments of general obligation and other debt. Capital Projects - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and improvements (other than those financed by Enterprise Funds). The following capital project fund is presented as a major fund in the basic financial statements: 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. 47 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation (Continued) 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. 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 fund is reported as a major fund 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. 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. 48 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting The government-wide, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to 1) demonstrate legal and covenant compliance, 2) demonstrate the source and use of liquid resources, and 3) demonstrate how the City’s actual experience conforms to the annual budget. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" is defined as collectible within the current period or within 60 days of the end of the current fiscal period, except for grant revenue which are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Expenditures, other than interest on long-term debt, are recorded when the related fund liability is incurred, if measurable. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgements, are recorded only when payment is due. As permitted by generally accepted accounting principles the City applies the “early recognition” option for debt service payments. Resources are provided during the current year for the payment of debt service principal and interest due early in the following year (less than one month). Therefore, the expenditures and related liabilities have been recognized in the current period. Revenues susceptible to accrual include property tax, local sales tax, state-shared sales tax, highway user tax, vehicle license tax, franchise fees, special assessments and interest earned on pooled investments. Licenses and permits, charges for services, fines and forfeitures and miscellaneous revenues are generally recorded as revenues when received in cash because they are not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended for a specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to the purpose of expenditure and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. The City reports unearned revenues in the governmental funds if the potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the occurrence 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. 49 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (continued) Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing goods and services of the fund’s principal ongoing operations. Operating expenses include the cost of providing the goods and services, administrative expenses, and depreciation on capital assets. Non-operating revenues and expenses are items such as investment income and interest expense, which are not a result of the direct operations of the activity. 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. 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. The separately issued annual budget may be obtained from the City's Municipal Budget Office, 31 East 5th Street, Tempe, Arizona, 85281. The City adheres to the following procedures in establishing the budgetary data: 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. 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. G. Receivables For accounts receivable, all amounts are net of allowance for doubtful accounts. 50 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. 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. H. 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, Statement of Fund Net Position, 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 $8.1 million is included in restricted assets in the Worker’s Compensation Fund. The City purchased two housing properties at end of fiscal year 2024 and placed $10.7 million in escrow awaiting transaction completion. The cash in escrow was reported as restricted asset in the financail statements. I. 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 or in aggregate of similar items 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 Buildings Infrastructure Improvements Machinery and equipment Intangible: Right-to-use subscription assets Right-to-use lease assets Useful Life (years) 10-70 7-70 10-50 3-15 Varies Varies Intangible right-to-use lease assets are amortized over the shorter of the lease term or the useful life of the underlying asset, unless the lease contains a purchase option that the City is reasonably certain of being exercised―then the lease asset is amortized over the useful life of the underlying asset. Intangible right-to-use subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT assets. 51 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. Leases The city has entered into lease agreements and are accounted for based on the principle that leases are financings of the right to use an underlying asset. 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. K. Subscription based information technology agreement Subscription based information technology agreement (SBITA) related amounts are recognized at the inception of SBITA in which the City is the lessor. The deferred inflow of resources is recorded in an amount equal to the corresponding lease receivable plus certain additional amounts received from the SBITA at or before the commencement of the subscription term that relate to future periods, less any incentives paid to, or on behalf of the lessee at or before the commencement of the lease term. The inflow of resources is recognized in a systematic and rational manner over the term of the SBITA L. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflow of resources represent a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has two items that qualify for reporting in this category. It is the deferred charge on refunded debt and deferred outflows related to pensions and OPEB reported in the government-wide statement of net position. In addition to liabilities, the statement of net position will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources represent an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The government has four items that qualify for reporting in this category. Unavailable revenue, which arises only under a modified accrual basis of accounting, deferred inflow related to leases, the deferred inflow related to pensions and other post-employment benefits, and amounts resulting from refunded debt. Amounts that are reported as deferred outflows are shown as a separate balance sheet section following the assets. Similarly, amounts shown as deferred inflows are shown in a separate balance sheet section following liabilities. Under the GASB 94 - “Public-Private and Public-Public Partnerships (PPPs) and Availability Payment Arrangements (APAs)", the City’s golf courses met the definition of a PPP-Service Concession Arrangement. There were $6.3 million of related deferred inflows of resources recognized in the current year. M. Compensated Absences Accumulated unpaid vacation, vested sick pay and earned compensatory time are accrued in the Governmentwide 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 nonreimbursed 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”. 52 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Post-Employment Benefits For purposes of measuring the net pension and other postemployment benefits (OPEB) assets and liabilities, deferred outflows of resources and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense, information about the plan’s fiduciary net assets and additions to/deductions from the plan’s fiduciary net assets have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value except for money market investments and interest earnings from inv contracts that have a maturity at the time of purchase of 1 year or less which are reported at cost. O. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, in the period in which the bonds are issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. P. 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. Q. 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. R. 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 13). S. 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. T. 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. 53 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) U. Implementation of New GASB Pronouncement For the year ended June 30, 2024, the City implemented the provisions of GASB Statement No. 100, Accounting Changes and Error Corrections - an amendment of GASB Statement No. 62, which is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. There is no financial impact to the City’s financial statements. NOTE 2 - BUDGET BASIS OF ACCOUNTING Arizona state statutes require accounting for certain transactions to be on a basis other than GAAP. Legal control over the budget derives from State statues that prohibits the City from exceeding it’s adopted budget in total. The legally adopted budget is at the citywide level that includes operating budget and capital budget. The budgetary comparison schedule at the citywide level is presented in the Required Supplementary Information section. There are certain differences between the budgetary basis and the basis used for reporting under GAAP. 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. 54 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 3 - PROPERTY TAXES (Continued) 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. 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 fair market value. Deposits At year-end, the carrying amount of the City's deposits with financial institutions was $9,435,434 and the bank balance was $6,991,598; $6,491,598 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 $26,180 in petty cash. The City also reported construction deposit of $35.3 million which is money set-aside for joint venture contribution. 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, 2024 are classified in the accompanying financial statements as follows: Carrying amount of investments Carrying amount of cash deposits Total cash and investments $ 644,008,209 239,251 $ 644,247,460 Pooled cash and investments – unrestricted Restricted cash and investments Investments in OPEB trust Total cash and investments $ 510,998,033 113,094,495 20,154,932 $ 644,247,460 55 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS (Continued) At June 30, 2024, the City maintained the following investments and maturities: Remaining Maturity in Months Category 12 Months or Less Fair Value Level 2 140,223,442 48,094,975 48,102,866 28,756,344 13,485,419 1,783,838 Money market Level 1 102,889,666 102,889,666 - - - - N/A 72,553,224 72,553,224 - - - - Level 1 20,101,802 20,101,802 - - - 644,008,209 $ 115,327,250 358,966,917 $ $ 98,559,999 146,662,865 $ $ 94,352,826 123,109,170 $ Greater than 48 months US government agencies $ $ 37 - 48 Months Level 2 Mutual funds 308,240,075 25 – 36 Months US government treasuries State investment pool $ 13 – 24 Months $ - 13,485,419 $ - $ 1,783,838 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 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 AAAf 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, 2024, 67.91% of the City’s investments are in US Treasuries, 21.09% of the City’s investments are in Federal Home Loan Mortgage Corporation securities, and 9.07% in Federal Home Loan Mortgage Bank. 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 56 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 4 - CASH AND INVESTMENTS (Continued) and §35-313, regulate authorized investments. The Arizona State Legislature has created the Arizona Board of Investments which reviews the investment of state monies, serves as trustees of the Permanent Land Trust Funds, and approves the State Treasurer’s Office Investment Policy. NOTE 5 - DUE TO/FROM OTHER FUNDS, INTERFUND TRANSFERS AND ADVANCES Due to/from other funds consisted of the following at June 30, 2024: Due to General fund Non-major governmental funds Internal service funds $ 1,864,203 60,613 $ Total governmental funds $ 1,924,816 $ Due from 1,924,816 1,924,816 The interfund balances at June 30, 2024 are short-term transfers to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2024 are expected to be repaid within one year. Transfers Out Transit Special Revenue General General Transfers In General Obligation Debt Service $ - $ 454,376 NonMajor Enterprise Total 94,750 $1,348,012 $ 2,310,367 4,673 81,323 4,673 545,045 Non-Major Governmental - $ - Water and Wastewater 867,605 $ Community Development Capital Projects 7,559,146 77,684 - 1,249,110 - 8,885,940 Non-Major Governmental 28,356,026 7,531,253 7,555,739 - 1,236,472 44,679,490 Non-major Enterprise 2,422,652 - - - - 2,422,652 Internal Service Funds 1,400,773 - - - - 1,400,773 - - - - 1,393,310 1,393,310 $3,982,467 $ 61,637,577 Government-Wide Total $ 40,192,973 $ 7,608,937 $ 8,428,017 $ 1,425,183 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/expenses in accordance with City policy. Golf fund transfers a net $1,393,3310 in assets and liabilities to government-wide activities as the operation closed at end of fiscal year 2024. Interfund Advance. In two installment payments in Fiscal Year 2016, the Water and Wastewater Fund advanced the Golf 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 between the Water and Wastewater fund and Golf Fund was paid off as of June 30, 2024. NOTE 6 – 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, 2024 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, 2024, the note receivable balance in the Transit Special Revenue fund is $1,357,391 and the corresponding revenue has been reported as a deferred inflow of resources. 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 57 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 6 – RECEIVABLES (Continued) 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, 2024 was $69,758 for this agreement. NOTE 7 - JOINT VENTURE The City currently participates in three joint ventures, the Subregional Operating Group, Valley Metro Rail, Inc and Regional Wireless Cooperative. Subregional Operating Group (SROG) The City participates with the cities of Phoenix, Mesa, Scottsdale, and Glendale in an intergovernmental agreement for the construction, operation and maintenance of jointly used facilities including the 91st Avenue Wastewater Treatment Plant, the Salt River Project Outfall Sewer, the Southern Avenue Interceptor and related transportation facilities. The City of Phoenix is the management agency who has agreed to be responsible for the planning, designing, constructing, operating and maintaining of the jointly used sewage facilities and to perform the required accounting, administrative and other support functions. The agreement provides for the formation of a Multicity Subregional Operating Group Committee ("Multicity SROG"), whose members are composed of a representative officially appointed upon motion and order of each city, for the specific purpose of making recommendations concerning specific decisions or courses of action for the jointly used facilities. The Multicity SROG annually reviews and approves the capital improvements and replacements budget and the operating budget for the jointly used facilities. As of June 30, 2023 (the latest information available), the City has a 14.82% 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, 2023 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ $ 669,911 (85,030) 584,881 Total revenues $ Total expenses Total non-operating revenues (expenses) Net decrease in net position $ 85,007 (95,242) (1,609) (11,844) 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, 2023, was $86,544,000. Separately audited financial statements for the jointly used wastewater treatment and transportation facilities may be obtained from the Arizona Municipal Water Users Associations, 3003 North Central, Suite 1550, Phoenix, Arizona, 85012. Valley Metro Rail, Inc. (VMRI) The City currently participates with the cities of Phoenix, Mesa and Glendale in a joint powers agreement for the design, construction and operation of a light rail transit system. Valley Metro Rail, Inc. (VMRI) is the management agency that was incorporated to administer the joint powers agreement between the cities. In addition, VMRI has oversight responsibility for the planning, designing, construction and operation of a regional mass transit light rail system. The agreement provides voting rights for members of the representative cities related to strategic initiatives including passage of an annual capital program and annual operating budget. 58 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona As of June 30, 2023, the City has a 14.74% 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. NOTE 7 - JOINT VENTURE (Continued) Summary financial information on the joint venture (GAAP basis) as of and for the fiscal year ended June 30, 2023 (the latest information available) is as follows (in thousands): Total assets Total liabilities Total net position $ 2,837,406 (305,813) $ 2,531,593 Operating revenues Operating expenses Non-operating revenues Capital Contributions Net increase in net position $ $ 9,517 (141,168) 54,244 327,389 249,982 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, 2023 was $373,154,845. 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. 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. 59 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona The City records its share of contributions to the RWC and the equity in the joint venture in the government-wide financial statements. As of June 30, 2023, the City’s net investment in RWC was 5,831,683 or 11.12% 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, 2023 (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 $ 56,063 (3,619) 52,444 $ $ 11,651 (17,447) (5,796) The Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2023, for the RWC may be obtained from the Regional Wireless Cooperative, 200 West Washington Street, 14th Floor, Phoenix, Arizona, 85003-1611. NOTE 8 - CAPITAL ASSETS A summary of capital asset activity, for the government-wide financial statements, for the fiscal year ended June 30, 2024 is as follows: Balances June 30, 2023 Additions Retirements Governmental activities: Non-depreciable assets: Land $ 95,393,127 $ 522,186 $ Construction-in-progress 63,800,621 72,504,204 Total non-depreciable assets 159,193,748 73,026,390 Depreciable assets: Buildings 341,681,358 1,981,337 Infrastructure 841,144,736 6,089,015 Improvements 282,410,989 15,991,194 Machinery and equipment 203,336,134 18,065,594 SBITA assets 4,129,839 1,337,372 Lease assets 1,294,308 Total depreciable assets 1,673,997,364 43,464,512 Less Accumulated depreciation/amortization for: Buildings (204,186,403) (13,155,048) Infrastructure (516,946,492) (19,009,926) Improvements (134,772,184) (13,750,206) Machinery and equipment (159,999,033) (13,378,642) SBITA assets (1,135,741) (1,102,539) Lease assets (238,827) (238,827) Total accumulated depreciation/amortization (1,017,278,680) (60,635,188) Total Depreciable assets, net Governmental activities capital assets, net 656,718,684 (17,170,676) $ 815,912,432 $ 55,855,714 60 $ Transfers in (out) Balances June 30, 2024 - $ - $ (2,715,310) (28,821,521) 95,915,313 104,767,994 (2,715,310) (28,821,521) 200,683,307 (2,068,786) (439,029) (2,507,815) 13,557,724 14,973,577 290,220 28,821,521 343,662,695 860,791,475 313,375,760 219,623,162 5,028,182 1,294,308 1,743,775,582 1,065,797 439,030 - - (217,341,451) (535,956,418) (148,522,390) (172,311,878) (1,799,250) (477,654) 1,504,827 - (1,076,409,041) (1,002,988) 28,821,521 667,366,541 (3,718,298) $ - $ 868,049,848 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 8 - CAPITAL ASSETS (Continued) Depreciation/amortization expense was charged to the governmental functions in the government-wide financial statements as follows: Public safety General government Transportation Criminal Justice Community enrichment Total depreciation/amortization expense Balances June 30, 2023 Additions $ 10,976,426 14,226,687 29,498,319 29,171 5,904,585 $ 60,635,188 Retirements Transfers in (out) Balances June 30, 2024 Business-type activities: Non-depreciable assets: Land $ 6,693,377 $ - $ (362,548) $ - $ 6,330,829 Construction-in-progress 29,006,309 21,627,134 (592,309) (23,149,034) 26,892,100 Total non-depreciable assets 35,699,686 21,627,134 (954,857) (23,149,034) 33,222,929 Depreciable assets: Buildings 50,012,096 (1,822,663) 48,189,433 Infrastructure 437,383,676 28,050,481 (3,210,587) 9,321,249 471,544,819 Improvements 255,767,845 4,668,875 (1,368,293) 13,827,785 272,896,212 Machinery and equipment 50,353,904 10,022,818 (4,360,203) 56,016,519 SBITA assets 788,307 (74,248) 714,059 Total depreciable assets 794,305,828 42,742,174 (10,835,994) 23,149,034 849,361,042 Less Accumulated depreciation/amortization for: Buildings (33,288,227) (1,233,427) 1,432,730 (33,088,924) Infrastructure (227,963,105) (13,025,264) 976,552 (240,011,817) Improvements (128,427,194) (11,118,912) 1,136,220 (138,409,886) Machinery and equipment (29,576,233) (5,208,054) 2,940,018 (31,844,269) SBITA assets (224,073) (203,199) 74,248 (353,024) Total accumulated depreciation/amortization (419,478,832) (30,788,856) 6,559,768 (443,707,920) Total depreciable assets, net Governmental activities capital assets, net 374,826,996 11,953,318 $ 410,526,682 $ 33,580,452 (4,276,226) $ 23,149,034 405,653,122 - $ 438,876,051 (5,231,083) $ Depreciation/amortization 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 Total depreciation/amortization expense 61 $ 28,619,304 1,897,133 272,419 $ 30,788,856 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT Changes in Long-term Liabilities. The following is a summary of changes in long-term liabilities for the fiscal year ended June 30, 2024: Beginning Balance 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 Excise tax obligations Excise tax obligations - direct Premium on excise tax obligations 2021 Certificates of Participation 2004 HUD Section 108 loan Debt Principal Compensated absences Claims and judgments Financed purchase Leases SBITAs Governmental activities long-term $ 243,407,158 25,851,079 10,265,000 11,630,000 301,203 45,762,000 15,025,000 1,944,738 336,000,000 1,076,000 691,266,692 33,539,395 19,467,263 4,514 1,085,876 2,637,704 $ 747,996,930 Additions $ Reductions Ending Balance 62,487,842 5,040,760 - $ (34,205,000) $ 271,690,000 (2,506,775) 28,385,064 (1,510,000) 8,755,000 67,528,602 661,355 30,640,595 (550,000) 11,080,000 (50,201) 251,002 (4,669,000) 41,093,000 (1,070,000) 13,955,000 (188,338) 1,756,400 (18,430,000) 317,570,000 (527,000) 549,000 (63,706,314) 695,084,466 34,200,750 (26,076,297) 24,031,561 (4,514) (232,152) 853,724 (1,340,495) 2,613,840 $ (91,359,772) $ 756,784,341 1,316,631 $ 100,147,183 Business-type activities: Debt payable: General obligation bonds payable Premium on general obligation bonds Excise tax obligations Premium on excise tax obligations Revenue obligations - direct placement Premium on revenue obligations 2010 WIFA Loan 2010 WIFA Loan Debt Principal Compensated absences SBITAs $ 177,767,842 19,679,314 42,528,000 6,150,826 66,895,000 9,842,016 688,790 4,811,602 328,363,390 2,976,781 494,365 $ 48,187,158 3,989,746 14,595,000 1,226,046 67,997,950 Business-type activities long-term $ 331,834,536 $ Amounts Due Within One Year $ $ 24,445,000 1,585,000 560,000 12,583,000 1,100,000 20,380,000 549,000 61,202,000 12,205,283 15,459,107 237,287 1,060,164 90,163,841 $ - $ (22,220,000) $ 203,735,000 (2,198,470) 21,470,590 (19,566,000) 37,557,000 (2,258,678) 5,118,194 (2,775,000) 64,120,000 (546,779) 9,295,237 (106,314) 582,476 (762,763) 4,048,839 (50,434,004) 345,927,336 (93,127) 2,883,654 (151,910) 342,455 19,980,000 4,407,000 2,875,000 109,572 778,018 28,149,590 1,029,096 110,460 67,997,950 $ (50,679,041) $ 349,153,445 $ 29,289,146 The long-term liabilities at June 30, 2024 have been reduced by deposits made with the City’s fiscal agent for July 1, 2024 maturities. For the governmental activities, claims and judgments and compensated absences are generally liquidated by the General Fund. 62 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Bonds payable on June 30, 2024, are comprised of the following: Purpose Original Amount Interest Rate Maturity Date Outstanding Balance General Obligation Bonds 2015A Capital Improvement Serial Bonds due in annual installments of $1,740,000 to $2,925,000 43,965,000 1.0-3.75% 7/1/2035 $ 22,950,000 2016A Capital Improvement Serial Bonds due in annual installments of $540,000 to $880,000 $ 13,630,000 2.0-3.0% 7/1/2036 9,000,000 2016B Capital Improvement Refunding Serial Bonds due in annual installments of $3,550,000 to $17,935,000 86,440,000 2.0-4.0% 7/1/2029 52,000,000 2017 Capital Improvement Serial Bonds due in annual installments of $970,000 to $2,390,000 32,810,000 2.0-5.0% 7/1/2037 20,355,000 2018 Capital Improvement Serial Bonds due in annual installments of $1,365,000 to $3,640,000 47,560,000 2.0-5.0% 7/1/2038 28,805,000 2019 Capital Improvement Serial Bonds due in annual installments of $1,635,000 to $3,785,000 52,120,000 2.0-5.0% 7/1/2039 42,620,000 2020A Capital Improvement Serial Bonds due in annual installments of $750,000 to $1,430,000 24,165,000 2.6 % 7/1/2040 18,985,000 2020B Capital Improvement Refunding Serial Bonds due in annual installments of $2,355,000 34,580,000 1.3 % 7/1/2030 16,415,000 2021 Capital Improvement Serial Bonds due in annual installments of $660,000 to $2,240,000 22,545,000 ‘5.0% 7/1/2041 18,945,000 2022 Capital Improvement Serial Bonds due in annual installments of $2,910,000 to $6,415,000 90,330,000 3.0-5.0% 7/1/2042 80,215,000 2023 Capital Improvement Serial Bonds due in annual installments of $1,745,000 to $8,865,000 54,460,000 63,325,000 ‘5.0% 7/1/2043 2024 Capital Improvement Serial Bonds due in annual installments of $5,630,000 to $7,625,000 Total General Obligation Bonds $ Special Assessment Bonds 110,675,000 622,145,000 ‘4.1-5.0% 7/1/2044 ID 180 Special Assessment Bonds Payable with Governmental Commitment due in annual installments of $760,000 to $1,925,000 Total Special Assessment Bonds Excise Tax Revenue Bonds $ $ 25,190,000 25,190,000 $ 2011B Excise Tax Revenue Obligation due in one installment of $7,300,000 $ 110,675,000 475,425,000 5.0 % 1/1/2029 $ $ 8,755,000 8,755,000 annual 7,300,000 4.9 % 7/1/2025 $ 7,300,000 2016 Excise Tax Revenue and Refunding Obligations due in annual installments of $1,135,000 to $7,510,000 42,485,000 2.0-5.0% 7/1/2031 13,895,000 2017 Transit Excise Tax Revenue Refunding Obligations due in annual installments of $150,000 to $1,460,000 19,305,000 2.8 % 7/1/2032 13,955,000 2019 Excise Tax Revenue Refunding Obligations due in annual installments of $1,000,000 to $1,515,000 9,110,000 5.0-6.5% 7/1/2029 6,910,000 2020 Excise Tax Revenue Obligation due in annual installments of $475,000 to $840.000 13,160,000 2.7 % 7/1/2040 11,080,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $510,000 to $5,460,000 14,695,000 0.2-1.8% 7/1/2032 6,235,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $560,000 to $2,240,000 28,890,000 0.2-2.4% 7/1/2037 24,495,000 2021 Excise Tax Revenue Refunding Obligations due in annual installments of $275,000 to $550,000 6,170,000 1.0-5.0% 7/1/2036 5,220,000 2024 Excise Tax Revenue Refunding Obligations due in annual installments of $275,000 to $550,000 14,595,000 1.0-5.0% 7/1/2036 14,595,000 Total Excise Tax Revenue Bonds $ 63 155,710,000 $ 103,685,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Purpose Original Amount Interest Rate Maturity Date Outstanding Balance Water And Sewer Revenue Obligation Bonds 2020 Water and Sewer Revenue Obligations due in annual installments of $1,380,000 to $2,415,000 $ 2021 Water and Sewer Revenue Obligations due in annual installments of $1,025,000 to $2,715,000 Total Water and Sewer Revenue Obligation Bonds $ 38,000,000 2.7 % 7/1/2040 $ 31,980,000 35,480,000 5.0 % 7/1/2041 32,140,000 73,480,000 $ 64,120,000 7/1/2037 $ 317,570,000 $ 317,570,000 8/1/2024 $ 549,000 $ 549,000 Certificates of Participation Certificate of Participation due in annual installments of $7,000,000 to $27,810,000 $ 343,000,000 Total Certificates of Participation $ 343,000,000 0.4-2.6% Section 108 Guaranteed Loan HUD Section 108 Guaranteed Loan due in annual installments of $261,000 to $549,000 $ 7,000,000 Total Section 108 Guaranteed Loan $ 7,000,000 1.3-2.4% Water Infrastructure Finance Authority Loans WIFA loan #92A174-10 due in annual installments of $69,678 to $123,631 $ 1,884,503 1.5-1.56% 7/1/2029 $ 582,476 WIFA loan #92A175-10 due in annual installments of $578,079 to $842,152 14,045,799 0.5-1.5% 7/1/2029 4,048,839 Total WIFA Loans $ 15,930,302 $ 4,631,315 Total Debt $ 1,242,455,302 $ 974,735,315 Debt Service Requirements The following is a summary of total debt service cash requirements to maturity: General Obligation Fiscal Year 2025 Principal $ Interest Governmental Activities Special Assessment Principal Excise Tax Obligation Interest Principal Interest 24,445,000 $ 11,886,361 $ 1,585,000 $ 398,125 $ 13,683,000 $ 1,803,952 2026 17,590,000 10,722,034 1,665,000 316,875 4,405,000 1,333,871 2027 17,935,000 10,021,019 1,745,000 231,625 4,495,000 1,244,148 2028 18,655,000 9,303,829 1,835,000 142,125 4,595,000 1,148,342 2029 18,265,000 8,562,066 1,925,000 48,125 4,705,000 1,030,810 2030-2034 73,770,000 32,518,911 - - 22,960,000 3,410,036 2035-2039 59,625,000 17,678,874 - - 10,455,000 705,161 2040-2044 41,405,000 4,883,236 - - 840,000 22,680 271,690,000 $ 105,576,330 $ $ 8,755,000 $ 64 1,136,875 $ 66,138,000 $ 10,699,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) Fiscal Year 2025 Certificates of Participation Governmental Activities Section 108 Loan Principal Principal $ Interest 20,380,000 $ 6,217,542 $ 2026 20,335,000 6,031,065 2027 21,380,000 2028 22,225,000 Interest 549,000 $ Total principal Total interest 7,823 $ 60,642,000 $ 20,313,803 - - 43,995,000 18,403,845 5,790,095 - - 45,555,000 17,286,887 5,491,630 - - 47,310,000 16,085,926 2029 23,075,000 5,141,364 - - 47,970,000 14,782,365 2030-2034 125,885,000 18,936,427 - - 222,615,000 54,865,374 2035-2039 84,290,000 4,281,672 - - 154,370,000 22,665,707 2039-2043 - - - - 42,245,000 4,905,916 7,823 $ 664,702,000 $ 169,309,823 $ 51,889,795 $ $ 549,000 $ Business-Type Activities Excise Tax Obligation Principal Interest General Obligation Principal Interest Fiscal Year 2025 317,570,000 $ Revenue Obligation Principal Interest 19,980,000 $ 9,303,673 $ 4,407,000 $ 1,729,453 $ 2,875,000 $ 2,454,470 2026 17,135,000 8,385,986 4,620,000 1,523,312 2,980,000 2,349,025 2027 12,890,000 7,664,391 4,825,000 1,313,120 3,090,000 2,239,388 2028 13,485,000 7,109,651 5,045,000 1,091,955 3,205,000 2,125,308 2029 10,245,000 6,549,016 5,280,000 859,130 3,320,000 2,006,535 2030-2034 46,220,000 26,414,404 13,370,000 1,325,488 18,575,000 8,074,848 2035-2039 52,110,000 14,320,831 - - 22,360,000 4,282,093 2040-2044 31,670,000 3,678,864 - - 7,715,000 464,748 $ 203,735,000 $ 83,426,816 $ 37,547,000 $ 7,842,458 $ 64,120,000 $ 23,996,415 Business-Type Activities WIFA Fiscal Year 2025 Principal $ Interest Total principal Total interest 887,590 $ 29,354 $ 28,149,590 $ 13,516,950 2026 906,508 23,750 25,641,508 12,282,073 2027 925,839 18,016 21,730,839 11,234,915 2028 945,595 12,149 22,680,595 10,339,063 2029 965,783 6,144 19,810,783 9,420,825 2030-2034 - - 78,165,000 35,814,740 2035-2039 - - 74,470,000 18,602,924 2040-2044 $ 4,631,315 $ 89,413 $ 39,385,000 4,143,612 310,033,315 $ 115,355,102 New bonds On May 29, 2024, the City issued Tax-Exempt $110,675,000 Series 2024 General Obligation Bonds were issued with maturities ranging from $3,905,000 to $7,625,000 to fund various project costs related to streets, public safety, parks, and water/wastewater. The bond matures on 7/1/2044 with interest rate of 4.125-5.0%. The Series 2024 General Obligation Bonds were publicly sold and are repaid from the HURF Fund, General Obligation Debt Service Fund and Water and Wastewater Fund. On June 20, 2024, the City issued $14,595,000 Series 2024 Excise Tax Revenue Refunding Obligation Bond was issued with maturities ranging from 1,305,000 to $1,960,000 to refund 2013 Excise Tax Obligation Bond. The bond matures on 7/1/2033 with interest rate of 5.00%. As a result of the refunding, the City reduced its total debt service requirements by $888,090, which resulted in an economic gain of $810,000. 65 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) 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, 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, 2024, the 20 percent debt limitation was $842,278,925 with $409,957,304 of outstanding debt. This provided a 20 percent debt margin of $432,321,621. The 6 percent debt limitation was $252,683,677 with $110,312,688 of outstanding debt. This provided a 6 percent debt margin of $142,370,989. The voter authorized, unissued debt, which is also subject to the statutory limitations of 20 percent and 6 percent, at June 30, 2024, was $218,402,989. 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. 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. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2044. Annual principal and interest payments on the bonds were 146.63% of total fiscal year ended June 30, 2024 General Obligation Debt Service Fund ad valorem taxes. The total principal and interest remaining to be paid on the bonds is $377,266,330. Principal and interest paid for the current year and total ad valorem tax revenues were $37,213,544 and $25,379,796 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. 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, 2044. Annual principal and interest payments on the bonds are expected to require less than 30.29% of total fiscal year ended June 30, 2024 water and wastewater utility system revenue. The total principal and interest remaining to be paid on the bonds is $287,161,816. Principal and interest paid for the current year and water and wastewater system revenues were $30,007,252 and $99,078,192, respectively. Debt Service Coverage for Governmental Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay outstanding governmental excise tax obligations. Proceeds of the bonds were used for general governmental purposes. The bonds are payable through July 1, 2034. Annual principal and interest payments on the bonds are expected to require less than 1.22% of total fiscal year ended June 30, 2024 pledged excise taxes. The total principal and interest remaining to be paid on the bonds is $12,078,419. Principal and interest (net of Federal subsidy) paid for the current year and total pledged excise taxes were $2,927,356 and $240,428,133, respectively. Debt Service Coverage for Business-type Activities Excise Tax Obligations. The City has pledged all future unrestricted excise taxes to repay 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, 2034. Annual principal and interest payments on the bonds are expected to require less than 2.42% of total fiscal year ended June 30, 2024 excise taxes. The total principal and interest remaining to be paid on the bonds is $45,399,458. Principal and interest paid for the current year and total excise taxes were $5,827,706 and $240,428,133, 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 bonds are payable through July 1, 2037. Annual principal and interest payments on the bonds are expected to require less than 10.78% of total fiscal year ended June 30, 2024 transit excise taxes. The total principal and interest remaining to be paid on the bonds is $57,793,031. Principal and interest paid for the current year and transit excise taxes were $4,695,249 and $57,413,170 respectively. 66 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 9 - LONG-TERM DEBT (Continued) 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 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, 2024 arts and culture excise taxes. The total principal and interest remaining to be paid on the bonds is $6,955,550. Principal and interest paid for the current year and arts and culture excise taxes were $579,250 and $11,482,634, respectively. 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, 2024. 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, 2024 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 $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 67 $ 17,320,000 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 11 – LEASES City as Lessor 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. The leases have interest rates between 0.316% and 3.397%. The General Fund reported lease revenue of $2,640,979 and the related interest revenue of $500,753. Transit Special Revenue Fund reported lease revenue of $58,688 and the associated interest revenue of $3,786. At this time, the City has no variable or other lease matters not previously included in the measurement of the lease receivable. The leasing of asset is not the City’s principal operation. City as Lessee The City, as a lessee, has entered into a lease agreement for the use of Hohokam Court. An initial lease liability was recorded in the amount of $1,294,308. As of June 30, 2024, the value of the lease liability is $853,724 City of Tempe, AZ is required to make monthly fixed payments of $21,134. The lease has an interest rate of 2.19%. The buildings estimated useful life was 60 months as of the contract commencement. The value of the right to use asset as of June 30, 2024 of $1,294,308 with accumulated amortization of $477,654. Fiscal Year Principal Payments Interest Payments Total Payments 2025 $237,287 $16,324 $253,611 2026 242,536 11,075 253,611 2027 247,901 5,710 253,611 2028 126,000 806 126,806 NOTE 12 – SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENT (SBITA) The City has obtained the right to use various desktop and server software subscriptions, cloud backup service software, document management software, computer-aided dispatch software, web-based job performance software, debt management software, public safety management software under the provision of various subscription-based information technology arrangements. The total amount of subscription assets and the related accumulated amortization are as follows: $ Total intangible right-to-use subscription assets 5,742,241 (2,152,274) Less: accumulated amortization $ Carrying value 3,589,967 The following schedule details minimum subscription payments to maturity for the City’s subscription liability at June 30, 2024: Governmental Activities Fiscal Year Principal Payments Interest Payments Total Payments 2025 $ 1,060,164 $ 55,456 $ 1,115,620 2026 944,641 33,717 978,358 2027 444,797 12,931 457,728 2028 49,197 2,403 51,600 2029 50,045 1,555 51,600 2030-2031 64,996 729 65,725 Business-Type Activities Fiscal Year Principal Payments Interest Payments Total Payments 2025 $ 110,460 $ 11,318 $ 121,778 2026 114,111 7,667 121,778 2027 117,884 3,896 121,780 68 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 13 – PUBLIC-PRIVATE AND PUBLIC-PUBLIC PARTNERSHIPS GASB 94, “Public-Private and Public-Public Partnerships (PPPs) and Availability Payment Arrangements (APAs)" (GASB 94) defines a PPP as an arrangement in which the government (the transferor) contracts with an operator to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction type of public-private or public-public partnership. The City determined that golf courses met the criteria set forth in GASB 94 and therefore included the agreement in the financial statements as deferred inflows of resources. The City manages a public golf course system, which offers affordable greens fees and discount programs. Rolling Hill golf course is leased under agreement with an operator, which provides for activities such as golf course management, clubhouse operation, and food and beverage concession. The operator collects user fees and are responsible for the day-to-day operations of the golf courses. The operator is required to operate and maintain the golf courses and make installment payments to the City, in accordance with the contract. As of June 30, 2024, the present value of the installment payments under contract is estimated to be $6.3 million and reported as deferred inflows of resources in the statement of net position. The present values of the installment payments were calculated using discount rate of 3.6% for the term of the agreement. The lease term is 31 years as of June 30, 2024. The monthly installment payment was not expected to start until September 30, 2024. The City primarily uses the proceeds to fund future golf course capital improvements. The acquisition value of the golf courses, including land and buildings, is reported at $3.8 million as of June 30, 2024. NOTE 14 – FUND BALANCE/NET POSITION CLASSIFICATIONS During the year ended June 30, 2011, the City implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 establishes standards for financial reporting, including note disclosure requirements, for fund balance classifications of the governmental funds, and clarifies existing governmental fund type definitions. In the fund financial statements, fund balance is reported in classifications that comprise a hierarchy based on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The classifications of fund balance are Non-spendable, Restricted, Committed, Assigned, and Unassigned. Committed, Assigned, and Unassigned represent the amount that is available for discretionary spending. Non-spendable fund balance includes amounts that cannot be spent because either 1) it is not in a spendable form, such as inventory or prepaid items or 2) legally or contractually required to be maintained intact. Restricted fund balance is externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation (changes in City Charter). Committed fund balance is self-imposed limitations imposed at the highest level of decision-making authority, namely, Mayor and Council. Mayor and Council approval (through ordinance or resolution, both of which are considered the highest level of decision-making authority of the City) is required to commit resources or to rescind the commitment. Assigned fund balance represents limitations imposed by management. In June 2011, through resolution 2011.56, the Mayor and Council authorized the Chief Financial Officer to assign fund balance amounts for specific purposes. 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. 69 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 14 – FUND BALANCE CLASSIFICATIONS/NET POSITION (Continued) As of June 30, 2024, 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, 2024, the unassigned fund balance is 72.6% of General Fund revenues. Transit Special Revenue General General Obligation Debt Service Community Development Capital Projects Total Other Governmental Funds Total Governmental Funds Non-spendable: Inventory $ 198,746 $ - $ - $ - $ 845,242 $ 1,043,988 Prepaid Items 61,131 - - - 1,640,482 1,701,613 Leases - net 1,130,371 15,040 - - - 1,145,411 1,390,248 15,040 - - 2,485,724 3,891,012 Debt Service - - 6,896,565 - 254,130 7,150,695 Highway User Revenue - - - - 12,245,136 12,245,136 Other - - - - 8,824,116 8,824,116 Capital projects development impact fees - - - - 10,936,037 10,936,037 Capital projects - bonds - 68,504,621 - 12,149,114 48,193,728 128,847,463 - 68,504,621 6,896,565 12,149,114 80,453,147 168,003,447 5,011,299 367,547 - 24,635,217 35,042,321 65,056,384 268,027 - - - - 268,027 - 18,150,176 - - 384,636 18,534,812 5,279,326 18,517,723 - 24,635,217 35,426,957 83,859,223 Restricted: Committed to: Encumbrance MaryAnne Corder Neighborhood Program Capital projects Assigned to: Debt Service Reserve 25,000,000 - - - - 25,000,000 Capital Project Reserve 10,625,337 23,760,700 - - 21,901,739 56,287,776 Other 3,000,000 - - - - 3,000,000 38,625,337 23,760,700 - - 21,901,739 84,287,776 Unassigned: Total fund balances 120,298,222 $ 165,593,133 (351,988) $ Water/ Proprietary Funds wastewater Joint venture construction deposit $ 35,319,979 OPEB 462,272 Restricted net position $ 35,782,251 - 110,446,096 $ Solid Waste 6,896,565 (29,285,271) $ 7,499,060 Emergency Medical Transportation - $ - $ 188,088 $ 188,088 $ 121,156 121,156 $ $ 70 (24,076,387) $ Total 35,319,979 771,516 36,091,495 116,191,180 66,584,576 $ 406,626,034 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 15 - COMMITMENTS The City has active construction projects as of June 30, 2024. At year end the government’s commitments with contractors are as follows: Construction in Progress Commitment Governmental funds: Transit capital projects Community development capital projects Non-Major governmental funds $ 9,379,522 $ $ 44,619,522 69,750,304 40,629,861 28,744,870 94,628,905 $ 104,767,993 Construction in Progress Commitment Proprietary funds: Water and wastewater $ $ 6,272,819 85,725,129 $ 85,725,129 $ 25,225,823 25,225,823 NOTE 16 - RETIREMENT PLANS The City contributes to the Arizona State Retirement System (ASRS) and the Public Safety Personnel Retirement System (PSPRS) for police officers and fire fighters. The plans are component units of the State of Arizona. 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 City has also established a single-employer, postemployment health benefit plan (see Note 16 - OTHER POSTEMPLOYEMENT BENEFITS). Amounts reported at June 30, 2024 represent June 30, 2023 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, 2024, the City reported the following amounts related to pensions and OPEB for all plans to which it contributes. The ASRS and PSPRS OPEB plans are not included in the notes as the liability and related deferred inflows of resources, deferred outflows of resources, and OPEB expense are not material to the financial statements. Net pension liabilities Deferred outflows of resources Deferred inflows of resources Expense Deferred outflows of resources Contributions Net OPEB assets Net OPEB liabilities $ ASRS $ 119,231,359 2,694,153 5,633,004 14,227,459 PSPRS - Fire $ 26,846,749 22,323,861 9,516,688 12,535,206 3,011,464 PSPRS - Police $ 45,500,963 $ 36,499,150 438,351 17,166,753 Total 191,579,071 61,517,164 6,071,355 40,910,900 7,054,758 22,601,428 ASRS City OPEB PSPRS - Fire PSPRS - Police plan (Note 16) 4,043,785 $ 594,627 $ - $ - $ 4,638,412 97,186 - 1,959,140 Deferred outflows of resources 314,810 119,585 162,962 330,246 927,603 Deferred inflows of resources 1,981,763 253,590 650,815 6,278,670 9,164,838 Expense Deferred outflows of resources - Contributions (384,148) (52,274) (129,720) 7,617,143 7,051,001 154,883 - 14,846 - 169,729 71 89,821,749 Total 91,878,075 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) 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. ASRS is a component of the State of Arizona. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. Benefits Provided. The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: Before July 1, 2011 Years of service and age required to Sum of years and age equals 80 receive benefit 10 years age 62 5 years age 50* Any years age 65 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 Final average salary is based on Highest 36 months of last 120 months Highest 60 months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a 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. 72 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) A. Arizona State Retirement System (continued) 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, 2024, active ASRS members were required by statute to contribute at the actuarially determined rate of 12.14 percent of the members’ annual covered payroll, and the City was required by statute to contribute at the actuarially determined rate of 12.03 percent of the active members’ annual covered payroll. The City’s contributions to the pension plan for the year ended June 30, 2024 was $12,535,206. 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. ACR contributions are included in employer contributions presented above. The City’s pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Pension Liability. At June 30, 2023, the City reported $119,231,359 for its proportionate share of the ASRS’ net pension liability. The net asset and net liabilities were measured as of June 30, 2023. 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, 2022, to the measurement date of June 30, 2023. The City’s proportion of the net 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, 2023. The City’s proportions measured as of June 30, 2023, and the change from its proportions measured as of June 30, 2022, were 0.7482500% decreased (0.01141%) from last year. Actuarial Assumptions. The significant actuarial assumptions used to measure the total ASRS pension 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 June 30, 2022 June 30, 2023 Entry age normal 7.0% 2.9-8.4% 2.3% Included 2017 SRA Scale U-MP Actuarial assumptions used in the June 30, 2022 valuation were based on the results of an actuarial experience study for the 5-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, 2022 actuarial evaluation. 73 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) A. Arizona State Retirement System (Continued) The long-term expected rate of return on ASRS plan investments was determined to be 7.0 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage excluding any expected inflation. 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 44% 23 17 10 6 100% Asset Class Public equity Credit Real estate Private equity Interest rate sensitive Total Long-Term Expected Real Rate of Return 3.50% 5.90 5.90 6.70 1.50 Pension Expense and Deferred Outflows/Inflows of Resources. The City has deferred outflows and inflows of resources related to the net pension liabilities. Certain changes in the net pension liability are recognized as pension expense over a period of time rather than the year of occurrence. For the year ended June 30, 2024, the City recognized $14,227,459 in pension expense. The City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Difference between expected and actual experience Difference between expected and actual investment earnings Changes in proportion and differences between the City contributions and proportionate share of contributions Contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 2,694,153 Deferred Inflows of Resources $ - - 4,218,509 12,535,206 15,229,359 1,414,495 5,633,004 $ $ 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 liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense for the following June 30 roll forward dates: 2025 2026 2027 2028 Deferred Outflows (Inflows) of Resources $ (1,505,547) (5,455,393) 4,546,305 (524,216) 74 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) Discount Rate. At June 30, 2023, the discount rate used to measure the ASRS total pension liability was 7.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.0 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage point higher than the current rate: 1% Decrease 6.0% $ 178,591,064 Current Discount Rate 7.0% $ 119,231,359 1% Increase 8.0% $ 69,735,865 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 costsharing plans (PSPRS Tier 3 Risk Pool). The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. This report is available on the PSPRS website at www.psprs.com. 75 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) B. Public Safety Personnel Retirement System (continued) Benefits Provided. The PSPRS provide retirement, 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. Retirement Initial Membership Date: Before January 1, 2012 On or After January 1, On or After January 1, (Tier 1) 2012 (Tier 2) 2017 (Tier 3) 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 15 years and age 55 credited service and age 52.5 Final average salary is based on Highest 36 months of last 20 years Highest 60 months of last 20 years Normal retirement 50% less 2.0% for each 1.5% to 2.5% per year of 1.5% to 2.5% per year of year of credited service credited service, not to credited service, not to less than 20 years or plus exceed 80% exceed 80% 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% Accidental disability retirement 50% or normal retirement, whichever is greater Catastrophic Disability: Highest 60 months of last 15 years 90% of average monthly benefit compensation. After 60 months, member receives greater of 62.5% average monthly benefit compensation and accrued normal pension. Survivor benefit: Retired members 80%-100% of retired member’s pension benefit Active members 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. 76 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) B. Public Safety Personnel Retirement System (continued) 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, 2024, the following employees were covered by the agent pension plans’ benefit terms: PSPRS – Police PSPRS – Fire 318 150 107 281 706 42 138 330 Inactive plan members or beneficiaries currently receiving benefits Inactive, entitled plan members not yet receiving benefits Active plan members Total 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, 2024, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active City Portion PSPRS – Police 7.65-11.65% 16.69-21.90% PSPRS – Fire 7.65-11.65% 16.72-24.03% In addition, statue required the City to contribute at the actuarially determined rate of 16.69% for police and 16.72% for fire of annual covered payroll of retired members who worked for the City in positions that an employee who contributes to the PSPRS would typically fill and employees participating in the PSPRS Tier 3 Risk Pool in addition to the City’s required contributions to the PSPRS Tier 3 Risk Pool. The City’s contribution to the plans for the year ended June 30, 2024 were: PSPRS – Police PSPRS – Fire $ 7,054,758 $ 3,011,464 The City pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Pension Liability. At June 30, 2024, the City reported the following liabilities. PSPRS - Police $ 45,500,963 $ PSPRS - Fire 26,846,749 The net pension liabilities were measured as of June 30, 2023, and the total liability used to calculate the net asset or liability was determined by an actuarial valuation as of that date. 77 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) B. Public Safety Personnel Retirement System (continued) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability for both police and fire are as follows: Actuarial valuation date Actuarial cost method Investment rate of return Wage inflation Price inflation Cost-of-living adjustment Mortality rates June 30, 2023 Entry age normal 7.20% 2.75-15.0% 2.5% 1.85% PubS-2010 tables Actuarial assumptions used in the June 30, 2023 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2021. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. Teh PSPRS Board adopted the experience study recommended changes which were applied to the June 30, 2022 actuarial valuation. The long-term expected rate of return on PSPRS plan investments was determined to be 7.20 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Allocation Asset Class U.S. Public Equity International Public Equity Global Private Equity Other Assets (Capital Appreciation) Core Bonds Private Credit Diversifying Strategies Cash Total 24% 16 20 7 6 20 5 2 100% Long-Term Expected Geometric Real Rate of Return 24% 16 20 7 2 20 10 1 3.98% 4.49 7.28 4.49 1.90 6.19 3.68 0.69 Discount Rates. At June 30, 2023, the discount rate used to measure the total pension liability was 7.20 percent, which was a decrease of 0.1 from the discount rate used as of June 30, 2021. 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 employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investment was applied to all periods of projected benefit payments to determine the total pension liability. 78 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) B. Public Safety Personnel Retirement System (continued) Changes in Net Pension Liabilities PSPRS - Police $28,414,866 Beginning Balance (Assets) Liability Total Liability Factors: PSPRS - Fire $ 17,628,706 Service cost 6,304,384 4,055,208 Interest 29,170,652 17,104,173 Difference between expected and actual experience with regard to economic and 17,455,976 8,933,850 Benefit payments Net change (22,036,266) 30,894,746 (11,358,400) 18,734,831 4,074,213 3,031,658 26,921,997 2,608,611 1,503,324 15,688,649 1,934,167 (22,036,266) (129,999) 12,879 13,808,649 $45,500,963 1,138,845 (11,358,400) (64,241) 9,516,788 $ 26,846,749 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 Sensitivity of the Net Pension (Assets)/Liabilities to Changes in the Discount Rate. The following presents the City’s net pension (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: PSPRS - Police PSPRS - Fire Current Discount Rate 7.2% $ 45,500,963 $ 26,846,749 1% Decrease 6.2% $ 105,664,189 $ 59,837,706 1% Increase 8.2% $ (3,466,562) $ (255,854) 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. Expense. For the year ended June 30, 2024, the City recognized the following as pension expense: PSPRS Police $ 17,166,753 PSPRS Fire $ 9,516,688 79 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 16 - RETIREMENT PLANS (Continued) B. Public Safety Personnel Retirement System (continued) Deferred Outflows/Inflows of Resources. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS - Police Deferred Outflows 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 $ $ 21,476,332 PSPRS - Fire Deferred Outflows of Resources Deferred Inflows of Resources $ 438,351 $ 13,337,902 4,770,969 - 3,117,672 10,251,849 - 5,868,289 7,054,758 43,553,908 $ 438,351 $ 3,011,464 25,335,327 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 liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PSPRS - Police PSPRS - Fire 2025 $ 10,684,197 $ 5,951,695 2026 7,388,149 4,908,810 2027 11,183,484 7,657,432 2028 3,895,640 2,316,951 2029 2,909,329 1,488,975 80 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 17 - 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, 2024, eligible members in the program are as follows: Active beneficiaries Active employees eligible Total 1,045 648 1,693 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. 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, 2024 were $9,552,753. 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 $20.1 million balance as of June 30, 2024. 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. 81 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 17 - OTHER POST-EMPLOYMENT BENEFITS (Continued) B. Net OPEB Liability The City’s net OPEB liability was measured as of June 30, 2024, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of July 1, 2023. The components of the net OPEB liability at June 30, 2024 were as follows: Total OPEB liability Plan fiduciary net position Net OPEB liability Plan fiduciary net position as a percentage of total OPEB liability $ 109,976,679 (20,154,930) $ 89,821,749 (18.3%) Actuarial Assumptions. The total OPEB liability as of the July 1, 2023 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, 2024 July 1, 2023 Entry age normal Level percentage of payroll, closed Market value 2.6% 3.0% per annum 6.5% 6.5% ASRS/PSPRS Pre-Medicare, 5.0%; ASRS/ PSPRS Medicare Supplement, 2.5% to 2.9%; City Medicare Supplement, (2.0)% to 2.5% General: PubG.H-2010 Employee Public Safety: PubS.H-2010 Employee Male/Female and Generational with Projection Scale MP-2021 The Total OPEB Liability was updated from the actuarial valuation date to the measurement date using standard actuarial roll-forward techniques. Investment policy. The City’s policy in regard to the allocation of invested assets is established and may be amended by the OPEB Retirement Investment Committee by a majority of vote of its members. It is the policy of the committee to pursue an investment strategy that reduces risk through the prudent diversification of the portfolio. Rate of return. 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: 82 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 17 - OTHER POST-EMPLOYMENT BENEFITS (Continued) B. Net OPEB Liability (Continued) Asset Class Equity Fixed Income Real Estate Total Target Allocation 65% 35 100% Long-Term Expected Real Rates of Return 7.5% 5.0 6.0 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, 2024 may be obtained from the City's Financial Services Department, 20 East 6th Street, Tempe, Arizona, 85281. The change in the net OPEB liability during the year was as follows: Balance at 6/30/2023 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 6/30/2024 Changes in Net OPEB Liability Plan Fiduciary Net Total OPEB Liability Position Net OPEB Liability $ 116,911,843 $ 17,835,065 $ 99,076,778 1,185,445 7,365,859 $ 495,369 (6,429,084) (9,552,753) (6,935,164) 109,976,679 $ 9,552,753 2,319,865 (9,552,753) 2,319,865 20,154,930 $ 1,185,445 7,365,859 495,369 (6,429,084) (9,552,753) (2,319,865) (9,255,029) 89,821,749 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 5.5% 1% Decrease $ 98,856,353 $ 81,051,110 83 6.5% No Change $ 89,821,749 $ 89,821,749 7.5% 1% Increase $ 81,990,981 $ 99,879,785 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 17 - OTHER POST-EMPLOYMENT BENEFITS (Continued) C. OPEB Expense and Deferred Outflows/Inflows of Resources related to OPEB For the year ended June 30, 2024, the City recognized OPEB expense of $7,617,143 for the OPEB plan. At June 30, 2024, 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 $ 330,246 — — $ 330,246 Deferred Inflows of Resources $ 296,261 5,771,165 211,244 $ 6,278,670 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ended June 30, 2025 2026 2027 2028 Deferred Outflow (Inflows) of Resources $ (3,912,900) (1,493,573) (309,833) (232,118) NOTE 18 - 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 thirdparty 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 19 - 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. 84 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 19 - RISK FINANCING ACTIVITIES (Continued) The City is a self-insured entity with excess commercial insurance coverage purchased for general and automobile liability, property, workers' compensation/employers’ liability, crime, cyber liability, fiduciary liability and group health coverage. The coverage is as follows: for general and automobile liability the City’s self-insured retention is $2.0 million with layered excess insurance coverage to $40.0 million; for property coverage the City’s per occurrence deductible is $100,000 with a policy limit of $825.0 million; for workers’ compensation, the selfinsured retention is $750,000 for public safety employees, and $500,000 for all other employees, with the maximum limit of indemnity per occurrence meeting the Arizona Statutory requirements and Employers Liability maximum limit of $2 million per occurrence; and for group health the self-insurance retention is $275,000 per individual, with an aggregate stop loss of $183,000. 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, 2024, and that the amount was reasonably estimable. A liability for incurred but not reported claims was based on historical experience. There were no settlement amounts exceeded insurance coverage in the past three fiscal years. 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 Workers' compensation Health insurance $ $ General liability Workers' compensation Health insurance $ $ June 30, 2023 6,341,136 11,373,962 1,752,165 19,467,263 Claims Incurred Net of Change in Estimates $ 2,281,973 7,608,640 20,749,982 $ 30,640,595 June 30, 2022 3,929,083 11,903,286 1,998,588 8,375,872 Claims Incurred Net of Change in Estimates $ 4,228,464 2,812,792 22,191,251 $ 38,687,592 $ $ $ $ Payments (489,121) $ (4,909,669) (20,677,507) (26,076,297) $ June 30, 2024 8,133,988 14,072,933 1,824,640 24,031,561 Payments (1,816,411) $ (3,342,116) (22,437,674) (27,596,201) $ June 30, 2023 6,341,136 11,373,962 1,752,165 19,467,263 NOTE 20 - 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. 85 Notes to the Financial Statements For Fiscal Year Ended June 30, 2024 City of Tempe, Arizona NOTE 21 - RELATED ORGANIZATION The Industrial Development Authority (IDA) is a non-profit corporation established by the City in 1981 to promote industry and develop trade by inducing manufacturing, industrial and commercial enterprises to locate and remain in Tempe. The Board of Directors of the IDA is appointed by the City Council; however, the City does not have a financial benefit/burden relationship nor is the City able to impose its will on the IDA as defined in GASB Statement No. 14; therefore, data for the IDA is not included in the City’s basic financial statements. Separately issued financial statements are not available for the IDA. NOTE 22 – 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, 2024 is $1,331,355. 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, 2024, the difference between property taxes assessed and the GPLET collected totaled $2,420,329 under this program, including the following tax abatement agreements that each exceed 10% of the total amount. 1) A 19.6% property tax GPLET to a retail development for constructing a retail complex in the City. The GPLET amounted to $474,491. 2) A 17.3% property tax GPLET to a hotel development in the the City. The difference between property taxes assessed and the GPLET collected amounted to $1,088,974. NOTE 23 - DEFICIT IN NET POSITION AND FUND BALANCE The Streets CIP fund had a deficit fund balance of $5,614,598. The deficits will be covered by future grant revenues. Risk Management fund also reported a deficit net position of $2,898,845, the deficit will be covered by future interdepartmental charges for services. NOTE 24 - SUBSEQUENT EVENTS On November 5, 2024, Tempe voters authorized the issuance of $581,500,000 in General Obligation bonds to finance the City's capital improvement program in the following categories: • Enhance Community Safety Through Public Safety and Roadway Improvements ($301 Million) • Improve Quality of Life in Tempe Neighborhoods ($248.5 Million) • Increase Supply of Affordable Housing ($32 Million) 86 87 Required Supplementary Information 88 Schedule of Contributions All Pension Plans Last Ten Fiscal Years City of Tempe, Arizona Reporting year Arizona State Retirement System: Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) 2024 2023 $12,535,206 $11,406,242 12,535,206 $ - Covered payroll $105,637,990 Contributions as a percentage of covered payroll 11.87% Public Safety Personnel Retirement SystemPolice: Actuarially determined contribution Additional contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) $ 7,054,758 - $ 7,054,758 - Covered payroll $34,454,610 Contributions as a percentage of covered payroll 20.48% Public Safety Personnel Retirement SystemFire: Actuarially determined contribution Additional contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) $ 3,011,464 - $ 3,011,464 - Covered payroll $17,179,361 Contributions as a percentage of covered payroll 17.53% 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 11,406,242 $ - 10,493,005 $ - 9,474,813 $ - 8,950,287 $ - 8,163,494 $ - 7,887,785 $ - 7,731,482 $ - 7,738,771 $ - $96,364,011 11.84% $87,368,901 $83,608,155 $82,749,459 $80,056,234 $74,894,440 $73,170,548 $71,257,899 $71,063,096 12.01% 11.65% 11.45% 11.18% 10.90% 10.78% 10.85% 10.89% $ 4,437,226 - $20,333,964 $19,873,495 $18,833,432 $17,208,734 $15,962,148 $12,852,861 $12,604,739 $9,727,183 218,143,845 - $ 4,437,226 - 2022 2021 9,740,350 $ - 7,915,146 19,873,495 $(205,725,027)$ - 18,833,432 $ - 17,208,734 $ - 15,962,148 $ - 12,852,861 $ - 12,604,739 $ - 9,727,183 $ - $31,613,970 14.04% $27,412,713 $28,277,597 $28,907,800 $28,519,612 $28,672,800 $28,606,412 $28,627,615 $28,889,762 869.95% 70.28% 65.15% 60.34% 55.67% 44.93% 44.03% 33.67% $ 1,847,318 - $11,478,887 $11,001,668 $10,137,454 $9,655,204 122,993,405 - $8,639,228 - $6,621,730 - $6,067,633 - $4,066,636 - 4,652,228 11,001,668 $(116,166,746)$ - 8,639,228 $ - 6,621,730 $ - 6,067,633 $ - 4,066,636 $ - $ 1,847,318 - $17,035,385 10.84% 10,137,454 $ - 9,655,204 $ - $15,290,218 $14,489,224 $13,881,219 $13,477,393 $13,373,418 $12,337,861 $12,215,891 $10,958,329 879.47% 75.93% 73.03% 71.64% 64.60% 53.67% 49.67% 37.11% 89 Schedule of the Proportionate Share of the Net Pension Liability Arizona State Retirement System Last Ten Fiscal Years City of Tempe, Arizona Reporting year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Measurement year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 City's proportion of the net pension liability 0.74% 0.75% 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 $ 119,231,359 $ 122,131,018 $ 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 $ 96,364,011 $ 87,368,901 $ 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 123.73% 139.79% 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 75.47% 74.26% 78.58% 69.33% 73.24% 73.40% 69.92% 67.06% 68.35% 69.49% 90 Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Police Last Ten Fiscal Years City of Tempe, Arizona Reporting year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Measurement year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Total pension liability Service cost $ Interest 6,304,384 $ 6,278,066 $ 6,444,246 $ 6,276,242 $ 6,363,446 $ 6,266,555 $ 6,639,904 $ 5,378,159 $ 5,468,695 $ 5,447,093 29,170,652 28,077,273 27,218,826 25,248,428 23,896,706 22,579,727 21,145,695 19,846,810 19,315,142 16,537,700 - - - - - - 2,664,893 13,183,597 - 4,426,439 17,455,976 2,888,372 (876,704) 13,853,754 2,252,812 1,492,630 (215,490) (5,746,957) (2,753,278) (2,351,309) - 5,350,492 - - 7,223,840 - 7,860,019 10,622,755 - 25,455,442 Benefit payments, including refunds (22,036,266) (22,149,263) (19,572,007) (17,537,352) (15,881,006) (15,663,112) (13,775,904) (15,820,570) (14,604,348) (13,685,124) Net change in total pension liability 30,894,746 20,444,940 13,214,361 27,841,072 23,855,798 14,675,800 24,319,117 27,463,794 7,426,211 35,830,241 Total pension liability- beginning 409,861,689 389,416,749 376,202,388 348,361,316 324,505,518 309,829,718 285,510,601 258,046,807 250,620,596 214,790,355 $ 440,756,435 $ 409,861,689 $ 389,416,749 $ 376,202,388 $ 348,361,316 $ 324,505,518 $ 309,829,718 $ 285,510,601 $ 258,046,807 $ 250,620,596 $ $ $ $ $ $ $ $ $ Changes of benefit terms Differences between expected and actual experience Changes of assumptions Total pension liability- ending Plan fiduciary net position Contributions- employer 4,074,213 $ 226,589,257 Contributions- employee 3,031,658 2,961,098 2,844,510 2,760,167 2,187,943 2,811,219 3,579,664 3,597,316 3,641,788 3,253,980 Net investment income 26,921,997 (15,735,726) 41,258,890 1,807,767 7,119,271 8,386,647 13,507,120 653,674 3,769,779 12,456,186 Difference between expected and actual experience Benefit payments, including refunds Administrative expense Other Net change in plan fiduciary net position net position- beginning Plan fiduciary 20,333,964 18,813,057 17,153,330 11,403,472 12,486,872 12,552,708 9,804,542 9,132,346 1,934,167 - - - - - - - - - (22,036,266) (22,149,263) (19,572,007) (17,537,352) (15,881,006) (15,663,112) (13,775,904) (15,820,570) (14,604,348) (13,685,124) (129,999) (281,893) (192,755) (147,615) (124,419) (128,344) (119,915) (94,459) (92,360) - 12,879 5,411 4,270 23,720 2,498 12,433 54,461 (173,159) (36,082) (3,260,002) 13,808,649 191,388,884 44,676,872 5,719,744 10,457,617 6,822,315 15,732,298 715,510 2,483,319 7,897,386 381,446,823 190,057,939 145,381,067 139,661,323 129,203,706 122,381,391 106,649,093 105,933,583 103,450,264 95,552,878 Plan fiduciary net position- ending $ 395,255,472 $ 381,446,823 $ 190,057,939 $ 145,381,067 $ 139,661,323 $ 129,203,706 $ 122,381,391 $ 106,649,093 $ 105,933,583 $ 103,450,264 Net pension liability- ending $ 45,500,963 $ $ 199,358,810 $ 230,821,321 $ 208,699,993 $ 195,301,812 $ 187,448,327 $ 178,861,508 $ 152,113,224 $ 147,170,332 Plan fiduciary net position as a percentage of the total pension liability Covered payroll 89.68% $ 31,613,970 28,414,866 93.07% $ 27,412,713 48.81% $ 28,277,597 38.64% $ 28,907,800 40.09% $ 28,519,612 39.82% $ 28,672,800 39.50% $ 28,606,412 37.35% $ 28,627,615 41.05% $ 28,889,762 41.28% $ 28,982,166 Net pension liability as a percentage of covered payroll 143.93% 103.66% 705.01% 798.47% 91 731.78% 681.14% 655.27% 624.79% 526.53% 512.48% Schedule of Changes in the Net Pension Liability and Related Ratios Public Safety Personnel Retirement System- Fire Last Ten Fiscal Years City of Tempe, Arizona Reporting year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Measurement year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Total pension liability Service cost $ Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds 4,055,208 $ 3,674,351 $ 3,433,110 $ 3,424,059 $ 3,201,998 $ 3,184,469 $ 3,288,107 $ 2,601,714 $ 2,527,186 $ 2,541,502 17,104,173 16,199,706 15,656,247 14,737,251 14,062,552 13,505,923 12,435,795 11,454,692 11,256,214 9,938,885 - - - - - - 1,132,919 9,445,952 - 2,317,758 8,933,850 3,274,449 (3) 7,181,069 2,213,604 (549,390) 2,381,447 177,366 (1,631,037) (861,599) - 3,060,017 - - 3,771,807 - 6,731,555 5,723,255 - 12,031,993 (11,358,400) (10,531,983) (13,239,944) (12,284,937) (10,967,777) (9,489,726) (8,942,533) (10,767,917) (8,554,561) (9,805,679) Net change in total pension liability 18,734,831 15,676,540 5,849,410 13,057,442 12,282,184 6,651,276 17,027,290 18,635,062 3,597,802 16,162,860 Total pension liability- beginning 239,181,955 223,505,415 217,656,005 204,598,563 192,316,379 185,665,103 168,637,813 150,002,751 146,404,949 130,242,089 $ 257,916,786 $ 239,181,955 $ 223,505,415 $ 217,656,005 $ 204,598,563 $ 192,316,379 $ 185,665,103 $ 168,637,813 $ 150,002,751 $ 146,404,949 $ $ $ $ $ $ $ $ $ Total pension liability- ending Plan fiduciary net position Contributions- employer 2,608,611 $ 128,684,062 Contributions- employee 1,503,324 1,450,567 11,478,887 1,366,781 10,643,938 1,369,664 9,657,636 1,045,992 7,471,162 1,274,574 7,629,875 1,711,846 6,665,926 1,620,334 4,553,293 1,627,959 4,587,619 1,461,331 Net investment income 15,688,649 (9,095,275) 24,375,794 1,093,261 4,459,035 5,290,034 8,517,929 420,827 2,537,356 8,786,889 Difference between expected and actual experience 1,138,845 - - - - - - - - - Benefit payments, including refunds (11,358,400) (10,531,983) (13,239,944) (12,284,937) (10,967,777) (9,489,726) (8,942,533) (10,767,917) (8,554,561) (9,805,679) (64,241) (162,971) (114,661) (89,363) (78,221) (81,213) (75,769) (60,954) (62,287) - - - - 22,391 - 11,590 930 64,490 (36,284) (3,124,665) Administrative expense Other Net change in plan fiduciary net position 9,516,788 110,344,400 23,866,857 754,954 4,116,665 4,476,421 8,842,278 (2,057,294) 65,476 1,905,492 Plan fiduciary net positionbeginning 221,553,249 111,208,849 87,341,992 86,587,038 82,470,373 77,993,952 69,151,674 71,208,968 71,143,492 69,238,000 Plan fiduciary net positionending $ 231,070,037 $ 221,553,249 $ 111,208,849 $ Net pension liability- ending $ 26,846,749 $ 17,628,706 $ 112,296,566 $ 130,314,013 $ 17,035,385 $ 15,290,218 87,341,992 $ 86,587,038 $ 118,011,525 $ 82,470,373 $ 109,846,006 $ 77,993,952 $ 69,151,674 $ 71,208,968 $ 71,143,492 $ 107,671,151 $ 99,486,139 $ 78,793,783 $ 75,261,457 $ 12,215,891 $ 10,958,329 $ 12,316,358 Plan fiduciary net position as a percentage of the total pension liability Covered payroll 89.59% 92.63% 49.76% $ 14,489,224 40.13% $ 13,881,219 42.32% $ 13,477,393 42.88% $ 13,373,418 42.01% $ 12,337,861 41.01% 47.47% 48.59% Net pension liability as a percentage of covered payroll 157.59% 115.29% 775.04% 938.78% 875.63% 92 821.38% 872.69% 814.40% 719.03% 611.07% Schedule of Contributions Single Employer OPEB Plan Last Eight Fiscal Years City of Tempe, Arizona Reporting/Measurement year 2024 2023 2022 2021 2020 2019 2018 2017 Actuarially determined Contributions in relation to the actuarially determined $ 9,432,000 $ 9,614,000 $ 8,139,000 $ 7,028,000 $ 7,081,000 $ 7,134,000 $ 6,984,000 $ 7,171,851 9,552,753 9,437,959 9,642,039 8,870,605 7,918,331 8,461,506 6,983,551 6,759,218 Contribution deficiency $ (120,753) $ 176,041 $ (1,503,039) $ (1,842,605) $ (837,331) $ (1,327,506) $ Covered-employee payroll Contributions as a percentage covered-employee payroll $64,716,022 $62,868,923 $61,037,789 $62,477,698 $60,657,959 $35,758,296 $34,716,792 Note: 14.80% 15.00% 15.80% 14.20% 13.05% 23.66% 449 20.12% $ 412,633 $41,444,730 16.31% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 93 Schedule of Changes in the Net OPEB Liability and Related Ratios Single Employer OPEB Plan Last Eight Fiscal Years City of Tempe, Arizona Reporting/Measurement year 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 495,369 (6,429,084) (9,552,753) (6,935,164) 116,911,843 $ 109,976,679 (888,785) (4,455,325) (9,437,959) (5,859,107) 122,770,950 $ 116,911,843 2,629,006 9,688,529 (9,642,039) 10,882,021 111,888,929 $ 122,770,950 13,492,032 3,190,142 (8,870,605) 14,921,574 96,967,355 $ 111,888,929 267,000 753,880 (7,918,332) 6,714,156 90,253,199 $ 96,967,355 (4,271,517) 1,581,360 (8,461,506) (4,901,095) 95,154,294 $ 90,253,199 4,915,943 503,616 (6,983,551) 4,447,118 90,707,176 $ 95,154,294 (6,759,218) (716,337) 91,423,513 $ 90,707,176 $ $ $ $ $ $ $ $ Plan fiduciary net position Contributions for benefits due Net investment income Benefit payments, including refunds 2024 Net change in plan fiduciary net position 1,185,445 7,365,859 - 9,552,753 2,319,865 (9,552,753) 2023 $ 2,319,865 1,173,318 7,749,644 - 9,437,959 1,453,389 (9,437,959) 2022 $ 1,453,389 1,170,996 7,035,529 - 9,642,039 (2,728,646) (9,642,039) 2021 $ 1,028,565 6,081,440 - 8,870,605 4,161,448 (8,870,605) 2020 $ 329,347 5,630,520 7,651,741 7,918,331 762,338 (7,919,331) 2019 $ 319,754 5,930,814 - 8,461,506 796,286 (8,461,506) 2018 $ 321,229 5,689,881 - 6,983,551 1,062,670 (6,983,551) 2017 $ 300,495 5,742,386 - 6,759,218 1,211,093 (6,759,218) (2,728,646) 4,161,448 761,338 796,286 1,062,670 1,211,093 Plan fiduciary net position- beginning Plan fiduciary net position- ending $ 17,835,065 20,154,930 $ 16,381,676 17,835,065 $ 19,110,322 16,381,676 14,948,874 $ 19,110,322 14,187,536 $ 14,948,874 13,391,250 $ 14,187,536 12,328,580 $ 13,391,250 11,117,487 $ 12,328,580 Net OPEB liability- ending $ 89,821,749 $ 99,076,778 $ 106,389,274 $ 92,778,607 $ 82,018,481 $ 76,065,663 $ 81,763,044 $ 78,378,596 Plan fiduciary net position as a percentage of the total OPEB liability Covered-employee payroll Net OPEB liability as a percentage of coveredemployee payroll 18.33% $ 64,716,022 138.80% 15.26% $ 62,868,923 157.60% 13.34% $ 61,037,789 174.30% 17.08% $ 62,477,698 148.50% 15.42% $ 60,657,959 15.72% $ 35,758,296 135.21% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 94 212.72% 14.07% $ 34,716,792 235.51% 13.59% $ 41,444,730 189.12% Schedule of Investment Returns Single Employer OPEB Plan Last Eight Fiscal Years City of Tempe, Arizona 2024 Annual moneyweighted rate of return, net of investment 13.41% 2023 9.33% 2022 2021 -13.87% 28.40% 2020 2019 5.84% 6.43% 2018 9.13% 2017 11.41% This schedule is intended to show information for ten years. Additional years' information will be displayed as it becomes available. 95 Notes to Required Supplementary Information June 30, 2024 City of Tempe, Arizona Note 1 - Actuarially determined contribution rates Actuarially determined contribution rates. Actuarial determined contribution rates for PSPRS are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: PSPRS Actuarial Methods and Assumptions: Actuarial Cost Method Amortization Level Entry age normal Members with initial membership date before July 1, 2017: Level percent-of-pay, closed Members with initial membership on or after July 1, 2017: Level dollar closed Remaining Amortization Period as of the 2021 Actuarial Valuation Members with initial membership date before July 1, 2017: 18 years for unfunded actuarial accrued liability, 20 years for excess Members with initial membership on or after July 1, 2017: 10 years Asset Valuation Method Members with initial membership date before July 1, 2017: 7-year smoothed fair value; 80%/120% market corridor Members with initial membership on or after July 1, 2017: 5-year smoothed fair value; 80%120% market corridor Actuarial Assumptions: Investment Rate of Return Members with initial membership date before July 1, 2017: In the 2019 actuarial valuation, the investment rate of return was decreased from 7.40% to 7.30%. In the 2017 actuarial valuation, the investment rate of return was decreased from 7.50% to 7.40%. In the 2016 actuarial valuation, the investment rate of return was decreased from 7.85% to 7.50%. In the 2013 actuarial valuation, the investment rate of return was decreased from 8.00% to 7.85%. Members with initial membership on or after July 1, 2017: 7% Projected Salary Increases In the 2017 actuarial valuation, projected salary increases were decreased from 4.0%-8.0% to 3.5%-7.5%. In the 2014 actuarial valuation, projected salary increases were decreased from 4.5%– 8.5% to 4.0%–8.0%. In the 2013 actuarial valuation, projected salary increases were decreased from 5.0%–9.0% to 4.5%–8.5%. Wage Growth In the 2017 actuarial valuation, wage growth was decreased from 4.0% to 3.5%. Retirement Age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 - June 30, 2011 Mortality In the 2019 actuarial valuation, changed to PUbS-2010 tables. In the 2017 actuarial valuation, changed to RP-2014 tables, with 75% of MP-2016 fully generational projection scales. RP-2000 mortality table (adjusted by 105% for both males and females) 96 Notes to Required Supplementary Information June 30, 2024 City of Tempe, Arizona Note 2 - Factors that affect trends Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional or a breach of contract because those provisions apply to individuals who were members as of the law’s effective date. As a result, the PSPRS changed benefit terms to reflect the prior mechanism for funding permanent benefit increases for those members and revised actuarial assumptions to explicitly value future permanent benefit increases. PSPRS also reduced those members’ employee contribution rates. These changes are reflected in the plan’s OR plans’ pension liabilities for fiscal year 2015 (measurement date 2014) for members who were retired as of the law’s effective date and fiscal year 2018 (measurement date 2017) for members who retired or will retire after the law’s effective date. These changes also increased the PSPRS-required pension contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date. These changes increased the PSPRSrequired contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. PSPRS allowed the City to phase in the increased contributions for members who were retired as of the law’s effective date over three years. As a result, the City’s pension contributions were less than the actuarially determined contributions for 2016 and 2017. The City refunded excess employee contributions to PSPRS members. PSPRS allowed the City to reduce its actual employer contributions for the refund amounts. As a result, the City’s pension contributions were less than the actuarially or statutorily determined contributions for 2018 and 2019. 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: 16 years Asset Valuation Method: Fair Value Inflation: 2.60% 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-2021. 97 Budgetary Comparison Schedule (Non-GAAP Basis) City Wide Operating Budget For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Final Budget Amounts Actual Amounts (Budgetary Basis) Variance with Final BudgetPositive (Negative) City total resources $ 721,513,817 $ 522,594,451 $ 198,919,366 Total revenues 721,513,817 522,594,451 198,919,366 City total expenditures Total expenditures Net change in fund balance $ 727,118,638 727,118,638 (5,604,821) $ 504,428,957 504,428,957 222,689,681 222,689,681 18,165,494 $ 23,770,315 Note: The City’s legally adopted budget is at the Citywide level and includes all governmental and proprietary funds. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget. Transfers between funds and departmental groups may be made upon City Manager approval and do not require Council action or approval. 98 Budgetary Comparison Schedule (Non-GAAP Basis) City Wide Capital Projects Budget For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Final Budget Amounts City total resources Total revenues $ City total expenditures Total expenditures Net change in fund balance $ Variance with Final BudgetPositive (Negative) Actual Amounts (Budgetary Basis) 482,421,254 482,421,254 $ 621,508,957 621,508,957 (139,087,703) 99 209,771,526 209,771,526 $ 209,771,526 209,771,526 $ – 272,649,728 (272,649,728) 411,737,431 411,737,431 $ 139,087,703 100 Combining Fund Financial Statements 101 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. ▪ Opioid Settlement Fund. To account for revenue and expenditure of One Arizona Distribution of Opioid Settlement Funds Agreement. DEBT SERVICE FUNDS 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. ▪ Special Assessment Debt Service Fund - accounts for the accumulation of resources and payments of special assessment debt. 102 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. ▪ Transit Fund - used for the acquisition of buses, the light rail system, and other traffic flow improvements. ▪ 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. 103 Combining Balance Sheet Non-major Governmental Funds June 30, 2024 City of Tempe, Arizona Special Revenue Performing Arts Assets Pooled cash and investments Receivables: Taxes Accounts Special assessment Accrued interest Due from other governments Inventories Prepaid items Restricted cash and investments Total assets $ - $ Arts and Culture Highway User Revenue Community Development 11,101,227 $ $ 11,338,787 - 1,439,766 - - 1,429,865 7,634 - $ - $ 49,167 462,125 13,052,285 $ 845,242 13,621,528 $ $ - $ 304,143 $ 348,996 $ 98,729 Housing Assistance $ Donations and Court Awards Housing Affordability - $ 20,359 $ Community Facilities District Grants 3,332,684 $ 2,738,570 $ Total Special Revenue Funds Opioid Settlement 2,859,225 $ 1,768,546 $ 33,258,127 7,520,778 9,289,324 $ 2,869,631 7,825,835 56,024 3,175,467 845,242 1,640,482 1,640,657 51,311,465 - - 85,925 - - 211,498 - (1,102) 635,935 81,615 1,147,841 1,963,018 $ 5,541 1,558,867 1,650,333 $ 170 20,529 $ 7,789 6,478 30,490 3,377,441 $ 2,527,513 5,477,581 $ 201 2,859,426 $ 6,731 $ - $ 60,054 $ 409,309 $ 10,307 $ Liabilities Accounts payable - $ 1,174,520 Deposits - - - 550,304 34,980 $ - - 4,709 172,957 - - 727,970 Accrued expenditures - 156,882 182,154 13,463 229,848 - - - - - 582,347 Due to other funds - - - - 331,763 - - - - - 331,763 Unearned revenue - - - - 64,089 - - 4,022,071 - - 4,086,160 Matured bonds payable - 345,000 - - - - - - - - 345,000 Matured interest payable - 117,125 - 6,519 - - - - - - 123,644 Total liabilities - 923,150 531,150 605,266 632,431 - 64,763 4,604,337 10,307 - 7,371,404 Unavailable revenue- special assessment - - - - - - - - - - - Unavailable revenue- other - - - - - - - - - 7,520,778 7,520,778 - - - - - - - - - 7,520,778 7,520,778 Deferred Inflows of Resources Total deferred inflows of resources Fund Balances Non-spendable - - 845,242 81,615 1,558,867 - - - - - 2,485,724 Restricted - 12,129,135 12,245,136 1,276,137 - 20,529 3,312,678 873,244 2,849,119 1,768,546 34,474,524 Committed - - - - - - - - - - - Assigned - - - - - - - - - - - Unassigned - - - - (540,965) - - - - - (540,965) - 12,129,135 13,090,378 1,357,752 1,017,902 20,529 3,312,678 873,244 2,849,119 1,768,546 36,419,283 9,289,324 $ 51,311,465 Total fund balances Total liabilities, deferred inflows of resources, and fund balances $ - $ 13,052,285 $ 13,621,528 $ 1,963,018 $ 104 1,650,333 $ 20,529 $ 3,377,441 $ 5,477,581 $ 2,859,426 $ Combining Balance Sheet Non-major Governmental Funds June 30, 2024 City of Tempe, Arizona Debt Service Fund Special Assessment Debt Service Assets Pooled cash and investments $ 296,629 Receivables: Taxes - Accounts - Special assessment 9,363,574 Accrued interest 241,545 Due from other governments - Inventories - Prepaid items - Restricted cash and investments Total assets 218,875 $ 10,120,623 Liabilities Accounts payable $ - Deposits - Accrued expenditures - Due to other funds - Unearned revenue 42,500 Matured bonds payable - Matured interest payable 218,875 Total liabilities 261,375 Deferred Inflows of Resources Unavailable revenue- special assessment 9,605,118 Unavailable revenue- other - Total deferred inflows of resources 9,605,118 Fund Balances Fund balance: Non-spendable - Restricted 254,130 Committed - Assigned - Unassigned - Total fund balances Total liabilities, deferred inflows of resources, and fund balances 254,130 $ 10,120,623 105 Combining Balance Sheet Non-major Governmental Funds June 30, 2024 City of Tempe, Arizona Capital Projects Total Nonmajor Governmental Funds Signals 384,636 $ 5,434,153 $ 4,076,575 - - - - - 2,662,900 2,869,631 14,194 - - - 14,194 322,022 7,840,029 - - - - - 10,873,574 9,363,574 - - - - 1,411,267 - - - - - - - - - - - - - - - - - - 663,936 1,640,482 15,037 - - - - - - 15,037 1,171,067 1,874,569 $ 159,516 $ 28,071,032 $ 13,737,828 $ 384,636 $ 5,434,153 $ 4,076,575 $ 92,419,040 5,327,146 $ 153,851,128 $ $ - $ $ Police Protection Fire Protection Arts and Culture - $ 23,543,690 $ 12,676,755 $ 4,319,818 Taxes - - - Accounts - - - Special assessment - - Accrued interest - - Due from other governments - Inventories Streets Total Capital Projects Funds Community Facilities District Storm Sewers Transit Parks Rio Salado 159,516 $ 26,659,765 $ 13,723,634 - - - - - - - - - - - - - - - - - - - - - - Prepaid items - - - Restricted cash and investments Total assets - - - - $ 23,543,690 $ 12,676,755 $ 4,334,855 $ $ $ Assets Pooled cash and investments $ $ $ $ 90,978,542 $$100,829,352 124,533,298 Receivables: $ - 284,994 297,569 1,411,267 - 4,586,734 - 2,970,808 845,242 Liabilities Accounts payable 98,038 $ 1,235,592 $ 3,145,237 195,477 $ 11,353,923 Deposits $ 4,082,158 - - 154 562 - - - - - - 716 Accrued expenditures - - - - - - - - - - - 582,347 Due to other funds 1,532,440 - - - - - - - - - 1,532,440 1,864,203 Unearned revenue - - - - - - - - - - - 4,128,660 Matured bonds payable - - - - - - - - - - - 345,000 Matured interest payable - - - - - - - - - - - 342,519 5,614,598 601,773 1,837,733 81,705 98,038 1,235,592 3,145,237 - 76,926 195,477 12,887,079 20,519,858 Deferred Inflows of Resources Unavailable revenue- special assessment - - - - - - - - - - - 9,605,118 Unavailable revenue- other - - - - - - 14,194 - - - 14,194 7,534,972 Total deferred inflows of resources - - - - - - 14,194 - - - 14,194 17,140,090 Total liabilities 601,773 1,837,579 81,143 76,926 $ 12,528,443 728,686 Fund Balances Non-spendable - - - - - - - - - - - 2,485,724 Restricted 1,623,583 8,006,342 1,482,896 - 231,409 27,539,446 2,888,316 - 71,403 3,881,098 45,724,493 80,453,147 Committed - 2,429,973 9,003,696 341,215 479,004 - 21,427,667 384,636 154,052 1,206,714 35,426,957 35,426,957 Assigned - 12,505,602 352,430 3,911,935 - - - - 5,131,772 - 21,901,739 21,901,739 (7,238,181) - - - (648,935) (704,006) (13,737,586) - - (1,206,714) (23,535,422) (24,076,387) (5,614,598) 22,941,917 10,839,022 4,253,150 61,478 26,835,440 10,578,397 384,636 5,357,227 3,881,098 79,517,767 116,191,180 - $ 23,543,690 $ 12,676,755 $ 4,334,855 159,516 $ 28,071,032 $ 13,737,828 384,636 $ 5,434,153 $ 4,076,575 $ 92,419,040 $ 153,851,128 Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances $ $ 106 $ Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona 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 Licenses and permits Miscellaneous Total revenues $ Expenditures: Current: General government Public safety Transportation Criminal justice Community enrichment Debt service: Principal retirement Interest Fiscal fees Capital outlay 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 balances Fund balance at beginning of year Fund balance at end of year $ Highway User Revenue Arts and Culture $ Community Development - $ - Housing Assistance $ Donations and Court Awards Housing Affordability - $ - $ Community Facilities District Grants - $ - $ Total Special Revenue Funds Opioid Settlement - $ 11,482,634 - - 712,837 974,672 28,241 13,198,384 14,022,757 202,979 2,717 14,228,453 3,075,021 33,233 574,399 3,682,653 18,292,466 52,226 18,363 18,363,055 662 662 479,010 55,676 57,707 48,788 324,612 200,858 56,569 1,223,220 8,344,533 2,745,351 3,859,268 1,006 220,456 12,381 15,182,995 119 2,532,527 2,532,646 1,191,807 1,191,807 29,712,020 3,224,361 14,022,757 3,914,944 856,784 3,556,993 563,431 200,858 202,979 1,866,114 69,603,875 - 9,433,117 11,897,279 - 3,043,342 18,688,350 - 17,880 517,762 166,322 512,010 1,526,343 4,675,970 8,402,084 2,605,785 - 1,544,223 5,193,732 11,897,279 166,322 42,684,688 - - 345,000 234,250 1,500 142,768 10,156,635 - 415,855 12,313,134 - 527,000 16,876 8,792 3,596,010 - 2,676 18,691,026 - - - 6,638 1,220,612 - 374,875 14,979,272 - 305 10,395 2,616,485 - - 872,000 251,126 1,805 961,999 63,573,174 - 3,041,749 1,915,319 - 86,643 - (327,971) - 203,723 - (83,839) 1,191,807 6,030,701 2,228,765 (8,428,017) 82,974 (6,116,278) 662 - 2,608 - - - - - - - $ - $ 11,482,634 (16,061) 152,026 (1,337,939) 1,500,000 (5,629,673) - - - (1,242,964) (201,380) - 576,739 - (16,061) - 3,238 (1,182,675) - 59,951 (4,069,722) - - - 2,537 2,537 - - - (1,242,964) - 17,248 (184,132) - - - 576,739 (1,240,356) 4,553,034 3,312,678 $ 19,591 853,653 873,244 (16,061) 1,859,074 16,061 10,270,061 - $ 12,129,135 (2,154,403) 15,244,781 $ 13,090,378 $ 86,643 1,271,109 1,357,752 $ (325,434) 1,343,336 1,017,902 $ 107 662 19,867 20,529 $ $ (83,839) 2,932,958 2,849,119 $ 1,768,546 (85,577) 36,504,860 1,768,546 $ 36,419,283 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Debt Service Special Assessment Debt Service Revenues: Property taxes Investment income (loss) Special assessment Miscellaneous Total revenues $ Expenditures: Debt service: Principal retirement Interest Fiscal fees Total expenditures Excess (deficiency) of revenues over expenditures 2,057,895 15,536 2,073,431 1,510,000 475,500 850 1,986,350 87,081 Other financing sources (uses): Transfers in Transfers out Premium on issuance of debt Total other financing sources - Net change in fund balances 87,081 Fund balance at beginning of year Fund balance at end of year 108 $ 167,049 254,130 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Governmental Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Capital Projects Police Protection Streets Fire Protection Arts and Culture Storm Sewers Transit Parks Rio Salado Community Facilities District Signals Total Capital Projects Funds Total Non-major Governmental Funds Revenues: Sales taxes Intergovernmental: Federal grants State grants State sales tax Other Investment income (loss) Charges for services Fines and forfeitures Other entities' participation Special assessment License and permits Miscellaneous Total revenues $ - $ 1,379 276 4,645 58,258 219,479 - - 284,037 - $ 189,736 464,553 - - 654,289 - $ 47,283 303,987 - - 351,270 - $ 886 - - 886 - $ - $ - $ - 263 53 290,858 332 - - 291,506 1,883,475 91,359 518,957 - - 2,448 2,496,239 18,410 3,407 112,034 500 1,233,801 - - 200,474 1,568,626 - - - $ - $ 2,989 614 11,000 32,351 - - 46,954 - $ - $ 11,482,634 755,961 - - 755,961 1,906,516 3,736 290,858 446,889 825,219 500 2,773,128 202,922 6,449,768 31,618,536 3,228,097 14,022,757 4,205,802 1,303,673 4,382,212 563,931 2,973,986 2,057,895 202,979 2,084,572 78,127,074 Expenditures: Current: General government Public safety Transportation Criminal justice Community enrichment Debt service: Principal retirement Interest Fiscal fees Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 5,047,860 - 5,379,751 - 899,297 - 679,849 656,381 - 2,186,626 - 4,303,702 - 1,189,066 - 64,486 6,279,048 9,079,933 5,048,037 1,544,223 11,472,780 20,977,212 166,322 47,732,725 14,197,593 19,245,453 20,218 1,982 2,868,435 8,270,386 9,533,474 10,432,771 1,627,045 2,306,894 146,767 803,148 6,236,639 8,423,265 12,505,242 16,808,944 - 432,703 1,621,769 486,852 551,338 20,218 1,982 48,034,750 68,463,968 2,402,218 728,608 2,655 48,996,749 134,023,492 (18,961,416) (7,616,097) (10,081,501) (2,306,008) (511,642) (5,927,026) (15,240,318) - (1,574,815) 204,623 (62,014,200) (55,896,418) 100,000 - 15,650,000 - 11,738,776 - 1,354,000 - - 7,531,253 - 551,696 - - 5,525,000 - - 42,450,725 - 44,679,490 (8,428,017) Other financing sources (uses): Transfers in Transfers out Issuance of debt 10,070,000 9,700,000 8,205,000 - 560,000 - 7,460,000 - 1,680,000 - 37,675,000 37,675,000 Premium on issuance of debt 730,000 700,000 595,000 - 40,000 - 540,000 - 120,000 - 2,725,000 2,725,000 Proceeds from sale of capital - 783 - - - - - - - - 783 83,757 Total other financing sources (uses) 10,900,000 26,050,783 20,538,776 - 1,354,000 - 600,000 - 7,531,253 - 8,551,696 0 - - Net change in fund balances Fund balance at beginning of year (8,061,416) 2,446,818 18,434,686 4,507,231 10,457,275 381,747 (952,008) 5,205,158 88,358 (26,880) 1,604,227 25,231,213 (6,688,622) 17,267,019 Fund balance at end of year $ (5,614,598) $ 22,941,917 $ 10,839,022 $ 4,253,150 $ 61,478 $ 26,835,440 109 $ 10,578,397 7,325,000 384,636 $ 384,636 — 5,750,185 (392,958) $ 5,357,227 - 204,623 3,676,475 $ 3,881,098 $ 82,851,508 - 76,735,230 20,837,308 58,680,459 20,838,812 95,352,368 79,517,767 $ 116,191,180 NON-MAJOR ENTERPRISE FUNDS Proprietary funds are used to account for City operations that are run like a business. These funds are responsible for providing enough operational revenue to cover all expenses. ▪ Solid Waste Fund. Accounts for the provision of refuse collection and disposal services for both residential and commercial customers. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, billing and collection. ▪ Emergency Medical Transportation Fund. accounts for the operation of emergency medical transportation services. Revenues are derived from the user fees collected for ambulance services. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation and maintenance. ▪ Golf Course Fund. accounts for the operation of the Rolling Hills and Ken McDonald golf courses. All activities necessary to provide such services are accounted for in this fund, including but not limited to administration, operation, maintenance and financing. 110 Combining Statement of Fund Net Position Non-major Enterprise Funds June 30, 2024 City of Tempe, Arizona Solid Waste Emergency Medical Transportation Golf Course Total Assets Current assets: Pooled cash and investments Accounts receivable, net Accrued interest receivable Total current assets $ 12,953,318 1,596,416 79,667 14,629,401 $ 894,511 4,353,767 6,275 5,254,553 $ - $ 13,847,829 5,950,183 85,942 19,883,954 Noncurrent assets: Net OPEB assets 188,088 9,233,503 9,233,503 9,421,591 24,050,992 121,156 1,306,716 1,306,716 1,427,872 6,682,425 708,360 30,302 738,662 456,285 16,351 472,636 - 1,164,645 46,653 1,211,298 Current liabilities: Accounts payable Deposits Accrued expenses Compensated absences SBITA Liability Total current liabilities 1,118,304 211,073 240,460 110,460 1,680,297 72,936 9 159,556 51,489 283,990 - 1,191,240 9 370,629 291,949 110,460 1,964,287 Noncurrent liabilities: Compensated absences SBITA Liability Total OPEB liability Pensions Total noncurrent liabilities Total liabilities 433,338 231,995 2,303,957 5,545,782 8,515,072 10,195,369 92,791 622,682 3,572,283 4,287,756 4,571,746 - 526,129 231,995 2,926,639 9,118,065 12,802,828 14,767,115 262,007 252,911 514,918 168,770 102,698 271,468 - 430,777 355,609 786,386 8,547,234 188,088 5,344,045 14,079,367 1,306,716 121,156 883,975 2,311,847 — 9,853,950 309,244 6,228,020 $ 16,391,214 Depreciable assets,net Total capital assets,net Total noncurrent assets Total assets 309,244 10,540,219 - — 10,540,219 - — 10,849,463 - — 30,733,417 Deferred Outflows of Resources Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources 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 Restricted Unrestricted Total net position $ 111 $ $ Combining Statement of Revenues, Expenses and Changes in Fund Net Position Non-major Enterprise Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Solid Waste Operating revenues: Charges for services Miscellaneous Total operating revenues $ Operating expenses: Personnel services Supplies and materials Fees and services Depreciation/amortization Total operating expenses Operating income (loss) 21,488,728 9,623 21,498,351 Emergency Medical Transportation $ 7,583,401 7,583,401 Total Non-Major Proprietary Funds Golf Course $ - $ 29,072,129 9,623 29,081,752 6,377,405 721,069 11,417,678 1,897,133 20,413,285 1,085,066 4,299,089 583,744 1,849,983 272,419 7,005,235 578,166 167,226 5,334 172,560 (172,560) 10,676,494 1,472,039 13,272,995 2,169,552 27,591,080 1,490,672 Nonoperating revenues (expenses): Investment income (loss) Interest and fiscal fees Gain (loss) on sale of capital assets Income (loss) before operating transfers and special item 588,301 (14,852) 155,279 97,573 - 54,753 9,344 740,627 (14,852) 164,623 1,813,794 675,739 (108,463) 2,381,070 Transfers Transfers in Transfers out Total transfers 1,879,652 (4,673) 1,874,979 (1,084,776) (1,084,776) 543,000 (2,893,018) (2,350,018) 2,422,652 (3,982,467) (1,559,815) Change in net position 3,688,773 (409,037) (2,458,481) 821,255 Total net position- beginning Total net position- ending $ 10,390,594 14,079,367 112 $ 2,720,884 2,311,847 $ 2,458,481 - $ 15,569,959 16,391,214 Combining Statement of Cash Flows Non-major Enterprise Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Emergency Medical Solid Waste Transportation Golf Course Total Cash flows from operating activities: Receipts from customers 43,912 $ 28,364,383 Payments to employees for services $ (7,057,721) (4,287,973) (812,042) (12,157,736) Payments to suppliers for goods and services (11,507,759) (2,414,677) (723,889) (14,646,325) 9,623 - - 9,623 2,846,566 215,398 (1,492,019) 1,569,945 Receipts from other Net cash provided (used) by operating activities 21,402,423 $ 6,918,048 $ Cash flows from noncapital financing activities: Transfers in 1,879,652 - 543,000 2,422,652 Transfers out (4,673) (1,084,776) (687,665) (1,777,114) 1,874,979 (1,084,776) (144,665) 645,538 (200,474) Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Principal paid on long-term debt Interest and fiscal fees Acquisition of capital assets Proceeds from the sale of capital assets Net cash provided (used) by capital and related financing activities - - (200,474) (14,852) — — (14,852) (4,189,403) (464,684) - (4,654,087) 155,279 - 9,344 164,623 (4,048,976) (464,684) (191,130) (4,704,790) 578,467 Cash flows from investing activities: 578,467 96,193 96,193 70,616 70,616 745,276 Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents 1,251,036 (1,237,869) (1,757,198) (1,744,031) Investment income Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 11,702,282 2,132,380 745,276 1,757,198 15,591,860 $ 12,953,318 $ 894,511 $ - $ 13,847,829 $ 1,085,066 $ 578,166 $ (172,560) Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ 1,490,672 Net cash provided (used) by operating activities: 1,897,133 272,419 - 2,169,552 (Increase) decrease in receivables (86,220) (665,280) 43,912 (707,588) (Increase) decrease in net OPEB asset 27,857 7,974 15,290 51,121 Increase (decrease) in deposits (85) (73) - (158) Increase (decrease) in payables 630,988 19,050 (551,329) 98,709 Increase (decrease) in accrued expenses (52,947) 17,321 Increase (decrease) in compensated absence (167,072) 22,566 - (144,506) (Increase) decrease in deferred outflows related to pension and OPEB 349,573 136,618 89,818 576,009 Depreciation/amortization Change in assets and liabilities: Increase (decrease) in deferred inflows related to pension and OPEB Increase (decrease) in pension Increase (decrease) in net OPEB liability Net cash provided (used) by operating activities (35,626) 67,906 34,119 (40,870) 61,155 (669,686) (144,419) (440,092) (1,254,197) (235,947) (63,063) (436,188) $ 2,846,566 $ 215,398 $ $ 343,814 $ - $ (735,198) (1,492,019) $ - $ 1,569,945 Noncash investing, capital, and financing activities: Accounts payable related to capital assets - Liabilities transfer to governmental activities Capital assets transfer to governmental activities Total noncash investing, capital, and financing activities: $ 343,814 113 $ 2,364,936 4,177,867 $ 6,542,803 343,814 2,364,936 4,177,867 $ 6,886,617 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. 114 Combining Statement of Fund Net Position Internal Service Funds June 30, 2024 City of Tempe, Arizona Risk Management Assets Current assets: Pooled cash and investments Restricted cash and investments Accounts receivable Accrued interest receivable Net OPEB asset Total assets $ Deferred Outflows of Resources Deferred outflows related to pensions Deferred outflows related to OPEB Total deferred outflows of resources 6,186,670 22,544 6,209,214 Worker's Compensation $ Health 8,182,207 9,581,423 60,613 25,685 17,849,928 $ Total 20,416,230 $ 205,608 20,621,838 34,785,107 9,581,423 266,221 25,685 22,544 44,680,980 84,901 2,981 - - 84,901 2,981 87,882 - - 87,882 Liabilities Current liabilities: Accounts payable Accrued expense Due to other funds Compensated absences Claims payable Total current liabilities 77,136 25,789 51,970 5,582,718 5,737,613 17,517 60,613 8,051,749 8,129,879 191,709 2,653,759 1,824,640 4,670,108 286,362 2,679,548 60,613 51,970 15,459,107 18,537,600 Noncurrent liabilities: Compensated absences Claims payable Net OPEB liability Net pension liability Total noncurrent liabilities Total liabilities 93,656 2,551,270 99,346 664,698 3,408,970 9,146,583 6,021,184 6,021,184 14,151,063 4,670,108 93,656 8,572,454 99,346 664,698 9,430,154 27,967,754 31,403 17,955 - - 31,403 17,955 49,358 - - 49,358 3,698,865 3,698,865 15,951,730 15,951,730 22,544 16,729,206 16,751,750 Deferred Inflows of Resources Deferred inflows related to pensions Deferred inflows related to OPEB Total deferred inflows of resources Net Position Restricted Unrestricted Total net position $ 22,544 (2,921,389) (2,898,845) $ 115 $ $ Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Risk Management Operating revenues: Contributions Miscellaneous Total operating revenues $ Worker's Compensation 7,158,036 7,158,036 $ 5,931,589 60,613 5,992,202 Health $ Total 39,294,243 39,294,243 $ 52,383,868 60,613 52,444,481 Operating expenses: Fees and services Total operating expenses 7,158,036 7,158,036 6,278,639 6,278,639 37,034,690 37,034,690 50,471,365 50,471,365 Operating income (loss) - (286,437) 2,259,553 1,973,116 - 286,437 - 286,437 - 286,437 - 286,437 - 1,400,773 - 1,400,773 - 1,400,773 2,259,553 3,660,326 2,298,092 3,698,865 13,692,177 15,951,730 13,091,424 16,751,750 Nonoperating revenues Investment income Total nonoperating revenues Transfers in Changes in net position Total net position - beginning Total net position - ending $ (2,898,845) (2,898,845) $ 116 $ $ Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2024 City of Tempe, Arizona Risk Management Worker's Compensation Health Total Cash flows from operating activities: Receipts from other funds $ 7,158,036 $ 5,931,589 $ 39,134,714 $ 52,224,339 Payments to employees (786,574) (183,151) (110,441) (1,080,166) Payments made for claims (3,202,809) (4,721,362) (36,700,177) (44,624,348) - 60,613 3,168,653 1,087,689 2,324,096 6,580,438 - 1,400,773 - 1,400,773 - 1,400,773 - 1,400,773 Miscellaneous cash receipts Net cash provided (used) by in operating activities 60,613 Cash flows from noncapital financing activities: Transfer in Net cash provided (used) by noncapital financing activities Cash flows from investing activities: Investment income - 281,122 - 281,122 Net cash provided (used) by investing activities - 281,122 - 281,122 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year 3,168,653 3,018,017 2,769,584 14,994,046 2,324,096 18,092,134 8,262,333 36,104,197 Cash and cash equivalents, end of year $ 6,186,670 $ 17,763,630 $ 20,416,230 $ 44,366,530 $ 6,186,670 $ 8,182,207 $ 20,416,230 $ 34,785,107 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 - 9,581,423 $ 6,186,670 $ $ - $ 17,763,630 - 9,581,423 $ 20,416,230 $ 44,366,530 (286,437) $ 2,259,553 $ 1,973,116 693 28,135 (2,443) 3,122,852 5,353 5,155 1,368,971 - (159,529) 20,083 131,514 72,475 - (159,529) 693 53,373 129,071 4,564,298 5,353 21,054 - - 21,054 7,152 (4,124) (10,019) - - 7,152 (4,124) (10,019) 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: 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 claims payable Increase (decrease) in compensated absence (Increase) decrease in deferred outflows related to pension and OPEB Increase (decrease) in deferred inflows related to pension and OPEB Increase (decrease) in net pension liability Increase (decrease) in net OPEB liability Net cash provided (used) by operating activities $ 3,168,653 $ 117 1,087,689 $ 2,324,096 $ 6,580,438 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 118 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. 119 Net Position by Component (Exhibit S-1) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 $ 441,875,868 $ 435,421,987 $ 538,278,359 $ 529,205,694 $ 523,422,276 $ 491,949,237 $ 483,438,668 $ 519,530,983 $ 564,120,959 $ 519,040,090 Restricted 160,088,789 141,175,028 164,690,176 135,603,391 99,053,439 79,370,511 102,808,694 117,866,229 102,095,778 141,565,366 Unrestricted 196,377,950 206,108,533 111,429,390 89,964,094 85,960,972 70,642,228 13,318,115 (22,136,687) (26,820,571) (18,763,531) $ 798,342,607 $ 782,405,548 $ 814,397,925 $ 754,773,179 $ 708,436,687 $ 641,961,976 $ 599,565,477 $ 615,260,525 $ 639,396,166 $ 641,841,925 $ 102,002,361 $ $ 137,380,192 $ 151,450,264 $ 140,978,804 $ 124,836,951 $ 111,354,858 $ 104,387,674 $ $ 142,208,059 Governmental activities Net investment in capital assets Total governmental activities net position Business-type activities Net investment in capital assets 97,816,016 69,467,178 Restricted 36,091,495 25,963,094 - - - - - - - - Unrestricted 139,062,597 140,236,122 162,925,142 145,707,685 148,328,973 153,206,243 153,208,008 151,904,179 170,405,834 90,577,933 $ 277,156,453 $ 264,015,232 $ 300,305,334 $ 297,157,949 $ 289,307,777 $ 278,043,194 $ 264,562,866 $ 256,291,853 $ 239,873,012 $ 232,785,992 Total business-type activities net position Primary government Net investment in capital assets $ 543,878,229 $ 533,238,003 $ 675,658,551 $ 680,655,958 $ 664,401,080 $ 616,786,188 $ 594,793,526 $ 623,918,657 $ 633,588,137 $ 661,248,149 Restricted 196,180,284 167,138,122 164,690,176 135,603,391 99,053,439 79,370,511 102,808,694 117,866,229 102,095,778 141,565,367 Unrestricted 335,440,547 346,344,655 274,354,532 235,671,779 234,289,945 223,848,471 166,526,123 129,767,492 143,585,263 71,814,402 $1,075,499,060 $1,046,720,780 $1,114,703,259 $1,051,931,128 $ 997,744,464 $ 920,005,170 $ 864,128,343 $ 871,552,378 $ 879,269,178 $ 874,627,918 Total primary government net position 120 Changes in Net Position (Exhibit S-2a) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Expenses Governmental activities: Police (j) Fire medical rescue (j) Public safety (j) Community services (a) (d) Public works (g) $ - - $ 106,879,997 $ 109,735,808 $ 107,096,572 $ 101,620,981 $ 107,357,688 $ 111,570,351 - $ - 48,723,812 46,151,382 49,941,616 44,646,087 40,900,261 48,345,996 $ 93,057,663 34,319,479 $ 92,214,451 181,268,814 177,106,183 - - - - - - - - - - 39,506,898 35,564,456 36,442,527 28,463,648 29,739,525 27,956,647 27,402,656 29,239,583 32,914,994 - - - - - 110,725,592 102,940,790 103,728,249 112,589,913 107,411,254 119,214,368 98,054,788 - - - - - - - - Engineering and transportation (g) (k) - - 79,306,002 88,643,038 102,020,829 - - - - - Municipal utilities (g) (k) - - 301,324 746,213 506,510 - - - - - Community development (a) - - 15,739,179 14,321,605 18,005,337 17,550,896 17,270,124 16,521,932 18,372,515 18,832,177 Transportation (k) Human services (d) (a) - - 31,970,182 30,908,394 26,614,653 21,669,347 22,505,753 17,777,825 17,430,250 13,374,117 126,782,592 113,071,086 - - - - - - - - Criminal justice (l) 5,769,865 5,417,328 - - - - - - - - Municipal court (l) - - 5,048,832 5,077,211 5,257,225 4,985,853 5,007,487 4,909,370 4,354,299 4,028,068 Community enrichment (a) General government (b) 52,332,996 57,489,311 Mayor and council (b) - - 612,841 434,176 461,629 491,026 405,716 473,324 337,046 330,042 City manager (d)(e)(c) (b) - - 9,346,396 10,707,904 7,455,774 7,150,485 7,045,025 6,815,022 7,371,101 7,045,783 City attorney (b) - - 3,760,903 3,748,495 3,724,210 3,137,658 3,283,818 3,160,056 2,961,497 3,712,245 Internal audit office (b) - - 550,591 619,106 516,840 434,770 476,584 376,249 425,674 433,339 Municipal budget office (d) (b) - - 425,769 106,535 269,344 172,182 288,182 261,313 259,133 415,774 Economic development office (h) (a) - - 1,512,840 787,714 771,575 - - - - - Sustainability office (h) (b) - - 617,053 274,559 174,109 - - - - - Office of strategic management and diversity (e) (b) - - 844,972 899,173 1,186,219 1,079,461 981,169 1,055,075 - - City clerk and elections (b) - - 997,382 957,343 1,036,845 829,499 979,356 815,016 868,596 751,331 Financial services (i) (b) - - 14,399,674 - - - - - - - Human resources (i) (b) - - 4,425,590 - - - - - - - Information technology (i) (b) - - 883,020 - - - - - - - Internal services (b)(d)(i) (b) - - - 18,570,150 19,779,369 15,650,001 16,749,283 18,821,669 8,252,013 6,403,407 121 Unallocated depreciation - - 1,451,338 1,502,243 1,716,431 1,716,431 1,716,725 1,777,887 1,785,487 1,955,520 Interest on long-term debt 19,891,073 18,057,610 17,344,833 9,529,375 9,921,992 12,503,655 11,817,213 9,847,278 12,924,841 12,882,924 505,259,708 469,196,306 384,649,428 379,284,880 392,899,606 372,827,572 369,464,699 374,213,259 342,712,163 331,945,009 Water and wastewater 92,323,601 96,368,865 89,403,602 86,542,908 77,716,351 77,906,953 76,903,243 70,364,126 75,515,527 73,548,319 Solid waste 20,428,137 21,167,692 19,872,919 17,319,217 16,909,091 15,791,378 17,494,354 15,918,430 14,881,636 15,868,498 Emergency medical transportation (f) 7,005,235 6,907,615 5,562,895 4,150,475 4,295,939 2,966,379 3,026,686 - - - 172,560 3,554,898 3,500,205 3,336,616 3,038,086 2,937,558 2,802,184 2,520,474 2,734,351 2,685,634 Total business-type activities expenses 119,929,533 127,999,070 118,339,621 111,349,216 101,959,467 99,602,268 100,226,467 88,803,030 93,131,514 92,102,451 Total primary government expenses $ 625,189,241 $ 597,195,376 $ 502,989,049 $ 490,634,096 $ 494,859,073 $ 472,429,840 $ 469,691,166 $ 463,016,289 $ 435,843,677 $ 424,047,460 Total governmental activities expenses Business-type activities: Golf course Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) In Fiscal Year 2023 the Community development, Community services, Human services and the economic development departments were reported under the Community enrichment function for financial reporting purposes only. In Fiscal Year 2023 Mayor and Council. City Manager, City Attorney, Internal Audit, Municipal Budget, Sustainability, Office of Strategic Management and Diversity, City Clerk and Elections, Financial Services, Human Resources, and Information Technology were reported under the General Government function for financial reporting purposes only. In Fiscal Year 2015, Economic Development and Community Relations became part of the City Manager's Office. 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. 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. In Fiscal Year 2018, the Emergency Medical Transportation Fund was established. In Fiscal Year 2020, the Public Works department separated into two new departments: Municipal Utilities; Engineering and Transportation. 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. In Fiscal Year 2022, the Internal Services department separated into three new departments: Financial services, Human resources, and Information technology. In Fiscal Year 2023 the Police and Fire medical rescue departments were reported under the Public safety function for financial reporting purposes only. In Fiscal Year 2023 the Engineering and transportation and municipal utilities departments were reported under the Transportation function for financial reporting purposes only. In Fiscal Year 2023 the Municipal court department was reported under the Criminal Justice function for financial reporting purposes only. 122 Changes in Net Position (Exhibit S-2b) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Program Revenues Governmental activities: Charges for services: Police (j) Fire medical rescue (j) Public Safety (j) Community services (a) (c) (m) Transportation (k) $ - $ - $ 822,007 $ 738,594 $ 790,792 $ 1,298,812 $ 977,914 $ 1,021,670 $ 1,444,986 $ 1,712,306 - - 349,850 297,548 330,441 200,378 858,577 1,869,840 1,536,642 2,512,811 2,010,414 - - - - - - - 334,158 - - - 3,336,679 1,909,685 3,249,544 7,714,161 8,323,732 8,283,698 7,812,755 7,589,603 16,724,639 20,177,263 - - - - - - - - Engineering and transportation (e) (k) - - 15,076,973 10,492,178 16,315,473 - - - - - Municipal utilities (e) (k) - - - 289 5,897 - - - - - Public works (e) - - - - - 17,797,231 16,011,590 16,585,374 17,740,856 19,786,216 Community development (m) - - 22,270,861 16,682,427 21,113,072 14,283,336 15,684,471 13,250,819 12,665,828 13,065,445 Human services (c) (m) - - 2,736,199 1,948,647 3,285,787 10,031 9,501 7,820 13,926 80,237 Community enrichment (m) 27,708,900 21,068,644 - - - - - - - - Criminal justice (l) 1,539,433 7,935,474 - - - - - - - - Municipal court (l) - - 1,248,063 2,299,815 2,289,026 4,457,922 3,559,861 5,852,849 6,372,719 8,302,032 General government (n) 8,651,310 6,311,329 - - - - - - - - City manager (f)(h) (n) - - - - - - - 7,597 - - City attorney (n) - - - 30,000 27,013 23,487 19,361 16,940 14,174 - Internal audit office (n) - - - - - - - - - - Municipal budget office (n) - - - - - - - - - - Economic development office (f) (m) - - 2,769,468 196,462 - - - - - - Sustainability office (f) (n) - - 6,045 15,544 - - - - - - Office of strategic management and diversity (h) (n) - - 1,000 - - - - - - - City clerk and elections (n) - - - - - 2,056 3,140 - - - Financial services (g) (n) - - 3,597,830 - - - - - - - Human resources (g) (n) - - - - - - - - - - Information technology (g) (n) - - - - - - - - - - Internal services (b)(g) (n) - - - 3,423,684 1,804,246 2,827,988 3,000,921 1,797,928 2,186,635 2,212,402 Operating grants and contributions 39,108,463 36,149,703 26,374,825 36,398,251 32,178,593 34,467,594 30,237,598 27,582,362 26,831,238 19,784,859 Capital grants and contributions 11,887,956 22,911,000 18,931,868 36,754,274 76,680,266 39,638,190 4,094,624 6,355,742 8,091,341 7,258,243 108,133,512 116,563,827 97,521,668 111,187,398 158,070,150 122,721,186 82,781,290 82,632,639 84,711,100 80,125,501 Total governmental activities program revenues 123 Business-type activities: Charges for services: Water and wastewater 99,078,192 90,130,138 91,475,655 90,696,447 85,057,003 85,339,513 87,807,953 86,273,324 81,265,973 78,043,384 Solid waste 21,488,728 20,843,436 20,627,824 19,824,131 18,394,311 17,306,244 16,706,706 16,274,287 15,319,833 14,216,743 Emergency medical transportation (d) 7,583,401 8,226,766 5,990,395 4,135,310 4,375,755 3,442,151 2,280,247 - - - - 4,603,641 4,006,042 3,907,736 2,780,200 2,626,308 2,387,362 2,322,777 2,575,908 2,755,966 Total business-type activities program revenues 128,150,321 123,803,981 122,099,916 118,563,624 110,607,269 108,714,216 109,182,268 104,870,388 99,161,714 95,016,093 Total primary government program revenues $ 236,283,833 $ 240,367,808 $ 219,621,584 $ 229,751,022 $ 268,677,419 $ 231,435,402 $ 191,963,558 $ 187,503,027 $ 183,872,814 $ 175,141,594 Governmental activities $ (397,126,196) $ (352,632,479) $ (287,127,760) $ (266,547,655) $ (234,829,456) $ (250,106,386) $ (287,933,728) $ (291,580,620) $ (258,001,063) $ (251,819,508) Business-type activities 8,220,788 (4,195,089) 4,487,095 7,214,408 8,647,802 9,111,948 10,206,120 16,067,358 6,030,200 2,913,642 $ (388,905,408) $ (356,827,568) $ (282,640,665) $ (259,333,247) $ (226,181,654) $ (240,994,438) $ (277,727,608) $ (275,513,262) $ (251,970,863) $ (248,905,866) Golf course Net (expense)/revenue Total primary government net expense Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) Tickmark not utilized (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 Utilities; 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. (i) not used in program revenues. (j) In Fiscal Year 2023 the Police and Fire medical rescue departments were reported under the Public safety function for financial reporting purposes only. (k) In Fiscal Year 2023 the Engineering and transportation and municipal utilities departments were reported under the Transportation function for financial reporting purposes only. (l) In Fiscal Year 2023 the Municipal court department was reported under the Criminal Justice function for financial reporting purposes only. (m) In Fiscal Year 2023 the Community development, Community services, Human services and the economic development departments were reported under the Community enrichment function for financial reporting purposes only. (n) In Fiscal Year 2023 Mayor and Council. City Manager, City Attorney, Internal Audit, Municipal Budget, Sustainability, Office of Strategic Management and Diversity, City Clerk and Elections, Financial Services, Human Resources, and Information Technology were reported under the General Government function for financial reporting purposes only. 124 Changes in Net Position (Exhibit S-2c) Last Ten Fiscal Years Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 General revenues and other changes in net position Governmental activities: General revenues: Sales taxes $ 220,706,908 $ 222,221,888 $ 222,951,580 $ 190,760,900 $ 180,941,410 $ 177,596,413 $ 168,650,143 $ 160,218,570 $ 152,492,065 $ 147,787,315 Intergovernmental revenue, unrestricted (a) 100,839,012 84,994,033 58,954,757 60,503,495 52,940,012 48,024,343 48,403,871 44,671,765 41,472,528 40,571,933 Property taxes 63,045,369 63,596,741 59,488,492 52,210,522 51,525,619 48,706,817 47,495,555 45,308,519 43,316,151 41,457,646 Franchise taxes 3,255,826 2,742,874 3,055,126 2,846,569 2,772,127 3,036,531 3,290,220 3,182,193 3,363,615 2,933,239 Unrestricted investment earnings 9,260,955 4,594,728 (3,820,904) 829,560 7,950,512 7,936,949 1,489,603 662,115 1,683,445 889,594 Miscellaneous 12,670,187 7,524,676 3,646,464 4,770,561 3,241,181 5,924,186 5,506,328 5,435,113 7,419,129 5,042,875 Gain on sale of capital assets - - 767,622 1,692,302 638,133 674,569 1,667,264 7,538,846 5,298,681 2,170,917 2,984,998 (193,514) 646,079 820,065 1,295,173 603,077 (1,454,082) 427,858 509,690 479,071 - (65,027,861) - - - - - - - - 412,763,255 320,453,565 345,689,216 314,433,974 301,304,167 292,502,885 275,048,902 267,444,979 255,555,304 241,332,590 7,175,090 1,866,714 (1,777,102) 200,724 3,504,059 3,614,531 697,388 351,831 841,726 488,477 730,341 697,005 788,909 888,141 326,138 1,124,986 651,500 299,116 152,428 142,914 Gain (loss) on sale of capital assets - - 294,562 266,964 81,757 231,940 33,015 128,394 572,356 247,296 Capital contributions - - - 100,000 - - - - (2,984,998) 193,514 (646,079) (820,065) (25,122) (427,858) (509,690) (479,071) Transfers Special Item Total governmental activities Business-type activities: Unrestricted investment earnings Miscellaneous Transfers Special Item (603,077) - (34,852,246) - - - - - - - - 4,920,433 (32,095,013) (1,339,710) 635,764 2,616,781 4,368,380 1,356,781 351,483 1,056,820 399,616 $ 417,683,688 $ 288,358,552 $ 344,349,506 $ 315,069,738 $ 303,920,948 $ 296,871,265 $ 276,405,683 $ 267,796,462 $ 256,612,124 $ 241,732,206 $ $ $ $ $ $ 3,315,145 $ (24,135,641) $ $ (10,486,918) 10,312,582 16,418,841 Total business-type activities Total primary government (1,295,173) Changes in net position Governmental activities Business-type activities Total primary government (a) $ 15,637,059 $ (32,178,914) 13,141,221 (36,290,102) 28,778,280 $ (68,469,016) 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 $ 13,627,727 $ (7,716,800) (2,445,759) 7,087,020 $ 4,641,261 3,313,258 $ (7,173,660) 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. 125 Fund Balances, Governmental Funds (Exhibit S-3) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 General fund Fund balances: Non-spendable $ 1,390,248 $ 1,211,974 $ 976,468 $ 391,694 $ 396,885 $ 491,024 $ 711,092 $ 638,685 $ 782,276 $ 346,364 Restricted - - 3,497,723 199,456 154,819 106,684 154,667 100,000 100,000 - Committed 5,279,326 4,586,678 - - - 480,675 - 475,531 147,036 520,770 Assigned 38,625,337 39,500,000 24,869,373 20,579,412 17,408,412 18,713,280 15,336,906 14,762,667 10,291,768 8,800,833 Unassigned 120,298,222 126,393,523 142,653,835 138,855,354 116,285,953 97,995,211 93,995,709 80,099,820 78,629,198 73,879,480 Total general fund $ 165,593,133 $ 171,692,175 $ 171,997,399 $ 160,025,916 $ 134,246,069 $ 117,786,874 $ 110,198,374 $ $ $ $ $ $ $ $ $ 96,076,703 $ 1,623,799 $ 89,950,278 $ 1,594,761 $ 83,547,447 All other governmental funds Fund balances: Non-spendable 2,500,764 1,850,205 1,622,640 1,670,998 1,458,623 1,527,574 1,553,045 1,952,950 Restricted 168,003,447 172,889,384 129,981,114 96,536,269 68,712,850 65,121,669 80,434,422 88,581,119 82,863,821 80,049,732 Committed 78,579,897 30,466,106 50,341,486 28,925,620 39,133,751 46,353,146 39,232,880 26,744,884 20,404,290 21,925,153 Assigned 45,662,796 36,469,492 15,405,309 11,880,755 23,310,919 12,308,616 11,261,680 15,774,827 15,186,266 15,935,817 Unassigned (53,714,003) (4,070,016) (836,064) (1,089,017) (1,777,702) (1,442,236) (296,755) - (2,856,351) (2,922,001) $ 241,032,901 $ 237,605,171 $ 196,514,485 $ 137,924,625 $ 130,838,441 $ 123,868,769 $ 132,185,272 $ 132,724,629 $ 117,192,787 $ 116,941,651 Total all other governmental funds 126 Changes in Fund Balance, Governmental Funds (Exhibit S-4a) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 $ 286,721,746 $ 285,491,863 $ 271,111,952 $ 232,293,514 $ 222,478,903 $ 216,680,985 $ 207,580,582 $ 197,341,071 $ 188,672,865 $ 182,323,977 152,107,819 138,933,245 111,295,511 109,958,549 101,776,973 99,111,729 90,577,368 89,383,867 85,856,572 78,988,805 Property rental 4,099,430 3,172,790 3,349,508 - - - - - - - Interest earnings 723,770 521,950 545,252 - - - - - - - Investment earnings 21,603,619 3,892,348 (4,366,156) 829,560 7,950,512 7,936,949 1,489,603 662,115 1,683,445 889,594 Charges for services 35,095,210 33,010,063 24,488,695 17,845,292 27,538,387 29,552,529 30,445,583 30,134,108 31,752,038 33,520,741 Fines and forfeitures 5,607,005 4,605,768 5,373,996 4,909,416 6,154,697 7,191,904 7,670,630 8,982,209 9,357,450 9,986,226 Other entities' participation 3,960,238 2,631,499 3,917,813 4,316,313 4,755,503 3,778,658 5,972,968 1,916,336 1,751,971 1,093,272 Special assessments 2,057,895 1,911,731 2,126,515 2,541,561 2,442,290 1,990,732 2,027,722 2,173,798 2,439,086 3,862,306 Licenses and permits 9,053,660 7,633,873 7,487,684 6,888,387 7,400,258 6,951,095 8,330,276 5,446,638 6,308,241 6,828,905 Miscellaneous 7,010,116 9,544,794 13,473,798 11,999,740 9,453,724 9,005,664 8,502,999 8,761,291 9,867,156 8,197,929 528,040,508 491,349,924 438,804,568 391,582,332 389,951,247 382,200,245 362,597,731 344,801,433 337,688,824 325,691,755 Police (h) - - 310,896,560 96,040,799 96,427,720 93,078,088 87,341,647 82,429,673 81,154,550 78,102,044 Fire medical rescue (h) - - 161,837,533 41,303,945 40,622,999 38,797,039 33,159,702 31,383,875 30,724,706 26,802,154 157,548,136 144,936,068 - - - - - - - - - - 33,952,582 30,307,131 30,336,733 25,228,594 25,507,377 23,770,512 22,516,873 22,240,413 Transportation (i) 89,541,016 80,198,409 - - - - - - - - Public works (e) - - - - - 79,092,222 72,517,143 70,604,468 73,771,025 72,414,122 Engineering and transportation (e) (i) - - 39,980,688 41,665,283 54,873,909 - - - - - Municipal utilities (e) (i) - - - 78,310 377,524 - - - - - Community development (k) - - 15,540,735 15,701,904 16,438,644 16,624,962 16,408,645 15,336,696 16,321,778 17,432,661 Revenues: Taxes Intergovernmental Total revenues Expenditures: Public safety (h) Community services (c) (k) Human services (c) (k) - - 30,942,701 30,565,705 26,679,827 26,244,724 20,428,462 17,589,585 17,388,871 13,471,552 119,298,854 106,326,931 - - - - - - - - Criminal justice (j) 5,520,400 5,222,882 - - - - - - - - Municipal court (j) - - 4,993,995 4,825,954 5,105,605 5,133,357 5,158,342 4,886,110 4,262,778 4,058,927 Community enrichment (k) General government (l) 42,306,565 39,897,072 - - - - - - - - Mayor and council (l) - - 600,044 486,599 457,553 495,829 403,658 417,734 342,645 345,501 City manager (b)(d)(f) (l) - - 9,344,242 10,038,861 7,427,628 7,397,648 7,182,164 6,800,149 7,292,703 6,583,633 City attorney (l) - - 4,118,555 3,407,246 3,571,789 3,515,785 3,261,843 3,098,124 2,920,857 3,790,479 Internal audit office (l) - - 573,579 542,627 506,977 459,746 490,396 408,867 403,108 432,384 Municipal budget office (c) (l) - - 297,671 174,398 255,729 261,798 294,404 262,696 236,768 323,676 Economic development office (f) (k) - - 1,463,481 748,363 738,759 - - - - - 127 Sustainability office (f) (l) - - 531,845 309,803 160,406 - - - - Office of strategic management and diversity (l) - - 1,236,388 1,258,230 1,244,678 1,088,773 987,828 932,200 - - City clerk and elections (l) - - 981,782 869,904 1,006,212 910,335 995,339 752,876 850,235 751,978 Financial services (g) (l) - - 14,533,212 - - - - - - - Human resources (g) (l) - - 4,365,764 - - - - - - - Information technology (g) (l) - - 11,639 - - - - - - - Internal services (c)(a)(g) - - - 19,427,458 18,004,773 15,716,010 16,263,826 16,334,235 7,433,821 7,232,975 Principal 55,239,874 40,826,740 31,022,000 27,019,000 47,107,000 38,768,000 31,730,000 39,547,000 29,686,000 41,065,000 Interest 18,881,620 17,228,445 15,755,521 10,454,626 11,350,230 13,526,198 11,326,484 11,688,331 13,361,380 13,622,096 Fiscal fees 1,486,271 491,045 2,815,114 300,802 472,785 344,231 331,593 569,367 432,387 542,498 Capital outlay 103,128,115 73,242,561 73,518,401 56,128,602 60,975,054 53,518,221 32,418,674 30,298,582 45,373,210 49,626,981 Total expenditures $ 592,950,851 $ 508,370,153 $ 759,314,032 $ 391,655,550 $ 424,142,534 $ 420,201,560 $ 366,207,527 $ 357,111,080 $ 354,473,695 $ 358,839,074 Deficiency of revenues over expenditures before other financing sources (uses) $ (64,910,343) $ (17,020,229) $ (320,509,464) $ $ (34,191,287) $ (38,001,315) $ $ (12,309,647) $ (16,784,871) $ (33,147,319) Debt service: (73,218) (3,609,796) Note: To assist with comparability, certain prior year expenses have been recategorized as listed below. (a) Tickmark not used (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. (h) In Fiscal Year 2023 the Police and Fire medical rescue departments were reported under the Public safety function for financial reporting purposes only. (i) In Fiscal Year 2023 the Engineering and transportation and municipal utilities departments were reported under the Transportation function for financial reporting purposes only. (j) In Fiscal Year 2023 the Municipal court department was reported under the Criminal Justice function for financial reporting purposes only. (k) In Fiscal Year 2023 the Community development, Community services, Human services and the economic development departments were reported under the Community enrichment function for financial reporting purposes only. (l) In Fiscal Year 2023 Mayor and council. City manager, city Attorney, Internal Audit, Municipal budget, Sustainability, Office of strategic management and diversity, City Clerk and Elections, Financial services, human resources, Information technology, and Internal services were reported under the General government function for financial reporting purposes only. 128 Changes in Fund Balance, Governmental Funds (Exhibit S-4b) Last Ten Fiscal Years Modified Accrual Basis of Accounting City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Transfers in $ 56,420,842 $ 42,065,224 $ 42,875,301 $ 42,696,445 $ 30,942,109 $ 38,729,874 $ 42,297,460 $ 27,870,785 $ 30,410,514 $ 26,437,046 Transfers out (56,229,927) (50,439,388) (42,229,222) (41,876,380) (29,646,936) (38,126,797) (43,372,403) (27,442,927) (29,900,824) (25,957,975) Issuance of debt 55,395,000 52,382,158 384,186,600 23,862,732 37,325,000 27,130,000 25,025,000 12,290,000 13,630,000 43,965,000 Premium on issuance of debt 5,023,129 5,395,948 4,897,404 6,515,503 - 5,655,061 4,083,395 1,754,028 5,413,632 1,269,813 - 1,294,308 - - 74,604 - 87,798 - - 111,827 1,316,631 3,927,816 - - - - - - - - 802,356 3,179,625 789,301 1,740,949 665,377 1,220,174 1,685,856 4,483,481 5,350,923 2,189,572 Issuance of refunding bonds 6,910,000 - 18,260,000 2,665,000 - 34,095,000 34,422,798 6,780,000 Payment to refunding bond escrow agent (7,399,000) - (37,643,577) - - - (12,614,996) (19,082,453) (35,888,204) (4,534,184) Total other financing sources 62,239,031 57,805,691 391,070,807 32,939,249 57,620,154 37,273,312 17,192,110 33,967,914 23,438,839 50,261,099 Net change in fund balances $ (2,671,312) $ 40,785,462 $ 70,561,343 $ 32,866,031 $ 23,428,867 (728,003) $ 13,582,314 $ 21,658,267 $ 6,653,968 $ 17,113,780 Other financing sources (uses): Lease proceeds Sbita lease proceeds Proceeds from sale of capital assets Debt service as a percentage of noncapital expenditures 15.1% 13.3% 6.8% 11.2% 129 16.1% $ 14.3% 12.9% 15.7% 13.9% 17.7% Taxable Sales and Percentage of Taxable Sales by Category (Exhibit S-5) Last Ten Fiscal Years Cash Basis City of Tempe, Arizona Taxable Sales Fiscal Year Retail Rental 2015 $ 3,898,027,000 $ 1,277,164,000 2016 4,057,021,000 1,342,058,000 2017 4,323,045,000 1,391,183,000 2018 4,527,666,000 2019 Utilities and Telecommunications Restaurant Contracting 583,788,000 $ 628,169,000 $ 701,314,000 $ 159,255,000 74,754,000 $ 7,405,151,000 1.80 % 548,882,000 656,237,000 653,818,000 166,167,000 89,261,000 75,989,000 7,589,433,000 1.80 539,476,000 679,897,000 654,944,000 184,412,000 96,055,000 75,694,000 7,944,706,000 1.80 1,526,503,000 552,373,000 705,920,000 662,203,000 209,961,000 89,259,000 59,140,000 8,333,025,000 1.80 4,649,114,000 1,755,549,000 554,618,000 736,240,000 675,955,000 228,785,000 94,108,000 74,142,000 8,768,511,000 1.80 2020 5,075,059,000 1,734,138,000 427,008,000 678,918,000 853,617,000 156,197,000 68,804,000 52,347,000 9,046,088,000 1.80 2021 5,547,684,000 1,835,514,000 420,360,000 676,710,000 640,451,000 111,374,000 46,901,000 49,253,000 9,328,247,000 1.80 2022 6,504,492,000 2,047,036,000 433,999,000 907,502,000 668,052,000 227,406,000 88,694,000 63,861,000 10,941,042,000 1.80 2023 6,274,459,000 2,366,430,000 460,900,000 983,173,000 685,242,000 281,700,000 118,813,000 70,734,000 11,241,451,000 1.80 2024 6,112,329,000 2,471,466,000 483,729,000 1,016,272,000 744,178,000 275,234,000 151,742,000 62,454,000 11,317,404,000 1.80 Restaurant Contracting Hotel and Motel Amusements $ All Other City Direct Sales Tax Rate Hotel and Motel Amusements $ 82,680,000 $ Total Percentage of Taxable Sales Fiscal Year Retail Rental Utilities and Telecommunications All Other Total 2015 52.64 % 17.25 % 7.88 % 8.48 % 9.47 % 2.15 % 1.12 % 1.01 % 100 % 2016 53.46 17.68 7.23 8.65 8.61 2.19 1.18 1.00 100 2017 54.42 17.51 6.79 8.56 8.24 2.32 1.21 0.95 100 2018 54.33 18.32 6.63 8.47 7.95 2.52 1.07 0.71 100 2019 53.02 20.02 6.33 8.40 7.71 2.61 1.07 0.85 100 2020 56.10 19.17 4.72 7.51 9.44 1.73 0.76 0.57 100 2021 59.47 19.68 4.51 7.25 6.87 1.19 0.50 0.53 100 2022 59.45 18.71 3.97 8.29 6.11 2.08 0.81 0.58 100 2023 55.82 21.03 4.10 8.75 6.10 2.51 1.06 0.63 100 2024 54.01 21.84 4.27 8.98 6.58 2.43 1.34 0.55 100 Source: City of Tempe, Arizona Tax and License Division 130 Direct and Overlapping Sales Tax Rates (Exhibit S-6) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2015 (a) 2016 2017 2018 2019 2020 2021 2022 2023 2024 General Fund Sales Tax Rate 1.20 % 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 City Sales Tax Rates Arts+Culture/ Performing Arts Transit Special Special Revenue Fund Revenue Fund Sales Tax Rate Sales Tax Rate 0.50 % 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Total City Direct Sales Tax Rate 0.10 % 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 1.80 % 1.80 1.80 1.80 1.80 1.80 1.80 1.80 1.80 1.80 Maricopa County Sales Tax Rate 0.70 % 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 State Sales Tax Rate 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) In Fiscal Year 2015, the City of Tempe, Arizona voters approved 0.2% temporary sales tax expired, effective June 30, 2014. 131 Total Sales Tax Rate 8.10 % 8.10 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 fair 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 16% 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. 132 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 2015 2016 2017 2018 2019 2020 2021 2022 (b) 2023 2024 Primary $ 1,018,312,716 Vacant, Agricultural & Governmental Property $ 582,528,256 Owner Occupied Residential Property $ 445,788,470 Rental Residential Property $ 279,658,188 Railroad & Airlines Property $ Non-commercial Historic Property 2,626,349 $ 5,660,031 Less: Tax-Exempt Property $ Net Taxable Assessed Value Total Direct Tax Rate Estimated Total Actual Value (a) Assessed Value as a Percentage of Actual Value 786,460,357 $ 1,548,113,653 0.92 $11,632,254,953 13.31 % Secondary 1,030,441,480 605,931,213 472,413,709 317,364,940 2,652,015 7,102,655 812,188,311 1,623,717,701 1.51 12,317,499,077 13.18 Primary 1,040,045,065 604,094,072 458,995,411 303,832,779 2,453,154 5,495,047 820,971,174 1,593,944,354 0.93 12,152,815,646 13.12 Secondary 1,119,535,292 681,597,591 569,311,744 395,569,487 2,501,825 6,440,828 901,610,148 1,873,346,619 1.59 14,573,138,077 12.85 Primary 1,066,869,523 604,354,126 480,671,687 340,922,305 2,213,159 5,507,068 831,185,771 1,669,352,097 0.94 12,936,980,827 12.90 Secondary 1,066,869,523 604,354,126 480,671,687 340,922,305 2,213,159 5,507,068 831,185,771 1,669,352,097 1.59 16,688,127,422 10.00 Primary 1,121,945,426 655,920,933 502,268,412 378,171,085 2,238,277 5,400,480 891,707,903 1,774,236,710 0.92 13,773,672,226 12.88 Secondary 1,121,945,426 655,920,933 502,268,412 378,171,085 2,238,277 5,400,480 891,707,903 1,774,236,710 1.57 17,858,194,237 9.94 Primary 1,130,477,624 701,270,049 528,812,064 404,759,028 2,063,797 3,229,286 907,642,388 1,862,969,460 0.92 14,500,815,905 12.85 Secondary 1,130,477,624 701,270,049 528,812,064 404,759,028 2,063,797 3,229,286 907,642,388 1,862,969,460 1.50 19,292,541,580 9.66 Primary 1,226,011,101 724,469,285 549,262,440 452,477,990 2,106,703 5,460,842 949,264,953 2,010,523,408 0.90 15,652,812,327 12.84 Secondary 1,226,011,101 724,469,285 549,262,440 452,477,990 2,106,703 5,460,842 949,264,953 2,010,523,408 1.50 21,407,207,731 9.39 Primary 1,260,003,905 789,897,255 580,182,705 494,195,105 2,082,237 5,536,167 1,003,325,543 2,128,571,831 0.89 16,641,307,485 12.79 Secondary 1,260,003,905 789,897,255 580,182,705 494,195,105 2,082,237 5,536,167 1,003,325,543 2,128,571,831 1.50 23,585,521,332 9.02 Primary 1,374,583,030 848,054,327 608,638,569 525,409,409 2,228,245 5,725,998 1,081,805,791 2,282,833,787 0.89 17,774,367,390 12.84 Secondary 1,374,583,030 848,054,327 608,638,569 525,409,409 2,228,245 5,725,998 1,081,805,791 2,282,833,787 1.48 26,023,287,469 8.77 Primary 1,392,066,474 892,654,128 637,487,403 575,020,890 2,799,655 5,877,028 1,120,498,024 2,385,407,554 0.88 18,860,241,682 12.65 Secondary 1,392,066,474 892,654,128 637,487,403 575,020,890 2,799,655 5,877,028 1,120,498,024 2,385,407,554 1.50 27,897,790,751 8.55 Primary 1,434,029,632 930,177,005 666,181,366 620,087,504 3,941,671 5,865,630 1,175,912,652 2,484,370,156 0.88 19,894,637,071 1249.00 Secondary 1,434,029,632 930,177,005 666,181,366 620,087,504 3,941,671 5,865,630 1,175,912,652 2,484,370,156 1.53 34,616,715,701 718.00 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) FY2022 data was obtained from the August abstract because February was unavailable. All other years are based on the February abstract. 133 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 Schools Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 City of Tempe (a) Primary $ 0.92 Tempe Elementary (b) Tempe Union $ 2.43 $ 3.30 County-Wide Jurisdiction East Valley Institute of Technology Maricopa County $ $ - 1.32 Community College County Ed Equalization Rate $ $ 1.28 0.51 Central Arizona Water Flood District $ - $ Fire District Assistance - $ - County Library District $ Special Health Care District - $ 0.19 Total $ 9.95 Secondary 1.51 0.63 2.45 0.05 - 0.24 - 0.14 0.14 0.01 0.06 - 5.23 Total 2.43 3.06 5.75 0.05 1.32 1.52 0.51 0.14 0.14 0.01 0.06 0.19 15.18 Primary 0.93 2.22 3.22 - 1.36 1.26 0.51 - - - - 0.19 9.69 Secondary 1.59 0.66 2.25 0.05 - 0.23 - 0.16 0.14 0.01 0.06 0.11 5.26 Total 2.52 2.88 5.47 0.05 1.36 1.49 0.51 0.16 0.14 0.01 0.06 0.30 14.95 Primary 0.94 2.24 3.09 - 1.40 1.24 0.50 - - - - 0.20 9.61 Secondary 1.59 0.66 2.20 0.05 - 0.23 - 0.18 0.14 0.01 0.06 0.11 5.23 Total 2.53 2.90 5.29 0.05 1.40 1.47 0.50 0.18 0.14 0.01 0.06 0.31 14.84 Primary 0.92 2.06 2.96 - 1.40 1.20 0.49 - - - - 0.20 9.23 Secondary 1.57 0.60 2.09 0.05 - 0.21 - 0.18 0.14 0.01 0.06 0.09 5.00 Total 2.49 2.66 5.05 0.05 1.40 1.41 0.49 0.18 0.14 0.01 0.06 0.29 14.23 Primary 0.92 1.99 2.05 - 1.40 1.17 0.47 - - - - 0.19 8.19 Secondary 1.50 0.66 2.85 0.05 - 0.20 - 0.18 0.14 0.01 0.06 0.10 5.75 Total 2.42 2.65 4.90 0.05 1.40 1.37 0.47 0.18 0.14 0.01 0.06 0.29 13.94 Primary 0.90 1.93 2.70 - 1.40 1.16 0.46 - - - - 0.19 8.74 Secondary 1.50 0.64 2.01 0.05 - 0.17 - 0.18 0.14 0.01 0.06 0.15 4.92 Total 2.40 2.57 4.71 0.05 1.40 1.33 0.46 0.18 0.14 0.01 0.06 0.34 13.65 Primary 0.89 1.87 2.62 - 1.40 1.13 0.44 - - - - 0.18 8.53 Secondary 1.50 0.63 1.85 0.05 - 0.16 - 0.18 0.14 0.01 0.06 0.12 4.71 Total 2.39 2.50 4.47 0.05 1.40 1.29 0.44 0.18 0.14 0.01 0.06 0.30 13.23 Primary 0.89 1.84 2.61 - 1.35 1.11 0.43 - - - - 0.18 8.41 Secondary 1.48 0.60 1.84 0.05 - 0.11 - 0.18 0.14 0.01 0.06 0.12 4.59 Total 2.37 2.44 4.45 0.05 1.35 1.22 0.43 0.18 0.14 0.01 0.06 0.30 13.00 134 2023 2024 Primary 0.88 1.75 2.51 - 1.25 1.09 - - - - - 0.18 Secondary 1.50 0.60 1.97 0.05 - 0.10 - 0.16 0.14 0.01 0.05 0.07 7.66 4.65 Total 2.38 2.35 4.48 0.05 1.25 1.19 - 0.16 0.14 0.01 0.05 0.25 12.31 Primary 0.88 1.70 2.42 - 1.20 1.08 - - - - - 0.17 7.45 Secondary 1.53 0.72 1.93 0.05 - 0.06 - 0.15 0.14 0.01 0.05 0.10 4.74 Total 2.41 2.42 4.35 0.05 1.20 1.14 - 0.15 0.14 0.01 0.05 0.27 12.19 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 $11.40, $11.18 or $15.04, respectively. Also, see the Direct and Overlapping Governmental Activities Debt- Property Tax Supported Schedule (Exhibit S-17). 135 Property Tax Levies - All Direct and Overlapping Governments (Exhibit S-10) Last Ten Fiscal Years City of Tempe, Arizona Schools Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 City of Tempe Primary $ 71,480,977 $ 40,508,811 $ Maricopa County Community College County Ed Equalization Rate Flood District $ Fire District Assistance - $ - County Library District $ Special Health Care District - $ Total - $ 442,762,977 $ 429,857,856 - $ 170,582,239 19,247,913 31,649,661 7,676,815 - 82,901,341 43,660,332 - 49,076,612 3,946,541 19,504,284 - 282,273,011 Total 38,934,146 90,728,890 72,158,472 7,676,815 442,762,977 512,759,197 43,660,332 170,582,239 49,076,612 3,946,541 19,504,284 65,124,108 1,516,914,613 Primary 14,877,877 67,301,586 40,281,153 - 471,193,529 437,227,709 - 174,988,030 - - - 67,273,204 1,273,143,088 Secondary 25,281,551 19,895,071 28,161,726 7,614,014 - 80,036,848 49,512,136 - 48,660,147 4,013,398 19,250,761 37,341,000 319,766,652 Total 40,159,428 87,196,657 68,442,879 7,614,014 471,193,529 517,264,557 49,512,136 174,988,030 48,660,147 4,013,398 19,250,761 104,614,204 1,592,909,740 Primary 15,690,240 70,920,943 40,273,959 - 506,222,142 447,212,880 - 181,352,524 - - - 70,777,141 1,332,449,829 Secondary 26,577,755 20,881,916 28,658,765 8,034,256 - 82,211,035 58,463,580 - 50,677,352 4,030,569 20,091,335 39,747,000 339,373,563 Total 42,267,995 91,802,859 68,932,724 8,034,256 506,222,142 529,423,915 58,463,580 181,352,524 50,677,352 4,030,569 20,091,335 110,524,141 1,671,823,392 Primary 16,404,593 68,659,932 40,876,811 - 535,870,745 457,339,611 - 186,400,980 - - - 73,820,558 1,379,373,230 Secondary 27,834,226 19,909,974 28,971,774 8,489,725 - 81,872,034 62,198,813 - 53,530,745 3,893,879 21,268,052 35,191,536 343,160,758 Total 44,238,819 88,569,906 69,848,585 8,489,725 535,870,745 539,211,645 62,198,813 186,400,980 53,530,745 3,893,879 21,268,052 109,012,094 1,722,533,988 Primary 17,118,826 69,668,285 29,725,536 - 566,289,063 473,275,205 - 191,959,243 - - - 76,921,021 1,424,957,179 Secondary 28,030,238 23,042,843 41,355,451 9,005,606 - 82,713,190 66,310,571 - 56,684,864 4,319,354 22,475,317 42,153,890 376,091,324 Total 45,149,064 92,711,128 71,080,987 9,005,606 566,289,063 555,988,395 66,310,571 191,959,243 56,684,864 4,319,354 22,475,317 119,074,911 1,801,048,503 Primary 18,114,816 72,156,009 42,303,940 - 605,109,318 499,542,385 - 196,326,940 - - - 80,459,388 1,514,012,796 Secondary 30,177,956 23,880,002 31,468,300 9,617,828 - 74,279,486 70,887,943 - 60,196,609 4,082,918 24,016,045 62,843,632 391,450,719 Total 48,292,772 96,036,011 73,772,240 9,617,828 605,109,318 573,821,871 70,887,943 196,326,940 60,196,609 4,082,918 24,016,045 143,303,020 1,905,463,515 Primary 18,980,475 73,991,571 43,485,838 - 640,280,922 514,159,761 - 202,808,377 - - - 84,240,979 1,577,947,923 Secondary 32,017,977 25,111,276 30,666,905 11,299,160 - 74,558,711 75,415,664 - 64,150,864 4,096,425 25,411,963 55,365,219 398,094,164 Total 50,998,452 99,102,847 74,152,743 11,299,160 640,280,922 588,718,472 75,415,664 202,808,377 64,150,864 4,096,425 25,411,963 139,606,198 1,976,042,087 Primary 20,086,813 77,439,694 46,760,224 - 655,778,021 541,422,496 - 208,194,759 - - - 88,031,823 1,637,713,830 Secondary 33,620,224 25,352,189 32,864,175 11,999,126 - 55,787,637 80,429,826 - 68,372,664 4,186,635 27,090,614 56,990,223 396,693,313 Total 53,707,037 102,791,883 79,624,399 11,999,126 655,778,021 597,210,133 80,429,826 208,194,759 68,372,664 4,186,635 27,090,614 145,022,046 2,034,407,143 Primary 20,948,649 77,052,844 47,230,052 - 643,295,202 560,363,573 - - - - - 92,081,287 1,440,971,607 Secondary 35,773,957 26,264,408 37,005,233 12,684,601 - 53,051,463 75,704,791 - 72,706,057 4,252,620 26,045,384 37,132,768 380,621,282 Total 56,722,606 103,317,252 84,235,285 12,684,601 643,295,202 613,415,036 75,704,791 - 72,706,057 4,252,620 26,045,384 129,214,055 1,821,592,889 Primary 21,802,825 78,024,561 47,274,546 - 659,075,503 590,508,449 - - - - - 96,224,945 1,492,910,829 Secondary 37,983,522 33,196,482 37,795,010 13,397,769 - 32,680,233 77,344,624 - 77,038,310 4,421,757 26,704,487 53,203,259 393,765,453 59,786,347 $ 111,221,043 85,069,556 $ 13,397,769 $ 659,075,503 $ 623,188,682 $77,344,624 $ - $77,038,310 $4,421,757 $26,704,487 $ 149,428,204 $1,886,676,282 $ $ Central Arizona Water 24,609,512 $ 14,324,634 East Valley Institute of Technology Secondary Total $ Tempe Union County-Wide Jurisdiction Tempe Elementary (a) 65,124,108 $1,234,641,602 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). (b) 2022 Tax Levy Rate for County Ed Equalization (State Equalization Tax) was 0.00. 136 Property Tax Levies and Collections (Exhibit S-11) Last Ten Fiscal Years City of Tempe, Arizona Collected within the Fiscal Year of the Levy Fiscal Year 2015 Total Tax Levy for Fiscal Year (a) $ 38,916,826 Adjusted Tax Levy for Fiscal Year Adjustments $ (280,960) $ 38,635,866 Amount $ Total Collections to Date % of Original Levy Collections in Subsequent Years $ Amount 323,164 $ % of Adjusted Levy 38,310,425 98.4 % 38,633,589 100.0 % 2016 40,471,289 (362,147) 40,109,142 39,886,362 98.6 221,625 40,107,987 100.0 2017 42,580,125 (411,041) 42,169,084 41,757,608 98.1 404,759 42,162,367 100.0 2018 44,161,889 (242,341) 43,919,548 43,501,882 98.5 414,683 43,916,565 100.0 2019 45,529,984 (266,244) 45,263,740 44,892,921 98.6 366,136 45,259,057 100.0 2020 48,265,218 (204,779) 48,060,439 47,378,445 98.2 675,444 48,053,889 100.0 2021 50,936,177 (315,300) 50,620,877 49,942,161 98.0 653,044 50,595,205 99.9 2022 54,040,262 24,951 54,065,213 53,371,592 98.8 548,859 54,005,758 99.9 2023 57,217,825 (530,451) 56,687,374 55,973,207 97.8 390,197 55,973,207 98.7 2024 60,312,401 (792,768) 59,519,633 58,550,432 97.1 - 58,550,432 98.4 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. 137 Principal Tax Payers (Exhibit S-12) Property Tax Current Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2024 Net Assessed Limited Property Values Taxpayer: Salt River Project (T&D) $ Rank Fiscal Year 2015 Percentage of Net Assessed Limited Property Values Taxable Secondary Assessed Value Rank Percentage of Total City Secondary Taxable Assessed Value 194,642,919 1 754.00 % $ Arizona Public Service Company 88,875,069 2 345.00 27,461,046 — 1 1.69 JP Morgan Chase Bank NA 19,981,837 3 77.00 7,070,939 10 0.43 Arizona Mills Mall LLC 19,068,132 4 74.00 JDM II Tempe OC LLC 10,364,244 5 40.00 Cousins Fund II Phoenix IV LLC 10,348,965 6 40.00 KM Sonoma LLC/MT Sonoma LLC 10,164,689 7 39.00 University House Tempe LLC 9,778,752 8 38.00 Cousins Fund II Phoenix II LLC 8,770,419 9 34.00 PR II TRG Watermark LLC 8,252,379 10 32.00 — Verizon Wireless - - 19,994,293 3 1.23 KBSII Fountainhead LLC - - 17,035,781 4 1.05 Qwest Corporation - - 11,545,434 5 0.71 Honeywell Internation Inc - - 10,291,550 6 0.63 Tempe Campus - - 8,325,000 7 0.51 Sci Real Estate Investments LLC - - 8,098,330 9 0.50 14.73 % $ 144,909,095 Total $ 380,247,405 8.90 % Source 2024: 2024 data was not available at the time of ACFR preparation from Maricopa County Treasurer Office. 2023 data is presented. Source 2015: 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. 138 Excise Tax Collections (Exhibit S-13) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2024 Privilege and use tax (a) $ 135,520,956 Fiscal Year 2023 $ 137,347,979 Fiscal Year 2022 $ 140,443,769 Fiscal Year 2021 $ 118,865,174 Fiscal Year 2020 $ 113,398,508 Fiscal Year 2019 $ 111,283,725 Fiscal Year 2018 $ 105,643,666 Fiscal Year 2017 $ 99,865,430 Fiscal Year 2016 $ 95,804,083 Fiscal Year 2015 $ 92,910,407 State shared sales tax 49,275,176 34,924,472 25,683,520 23,228,957 19,899,062 17,958,644 18,266,956 16,145,681 15,357,220 14,779,296 State shared income tax 28,128,266 27,216,492 24,105,004 27,983,270 24,875,451 22,408,078 22,604,114 21,511,044 19,470,946 19,577,085 Franchise tax 3,430,257 2,863,995 3,055,126 2,846,569 2,772,127 3,036,531 3,290,220 3,182,193 3,363,615 2,933,239 Vehicle license tax 9,412,813 9,132,854 9,166,233 9,291,268 8,165,499 7,657,621 7,532,801 7,015,040 6,644,362 6,215,552 Permits and fees (b) 9,053,660 17,733,066 8,005,559 12,328,064 15,896,029 13,739,509 14,815,290 10,244,664 11,543,817 11,881,915 Fines and forfeitures (c) Total 5,607,005 $ 240,428,133 4,144,727 $ 233,363,585 4,934,285 $ 215,393,496 4,404,217 $ 198,947,519 5,612,670 $ 190,619,346 6,434,188 $ 182,518,296 6,839,148 $ 178,992,195 8,094,581 $ 166,058,633 8,464,633 $ 160,648,676 8,436,300 $ 156,733,794 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. 139 Ratios of Net General Bonded Debt Outstanding (Exhibit S-14) Last Ten Fiscal Years City of Tempe, Arizona Governmental General Obligation Debt Fiscal Year 2015 $ 181,905,000 Enterprise General Obligation Debt and WIFA $ 216,802,282 General Obligation Premium $ 14,741,563 Less: Debt Service Reserves $ 20,960,171 Secondary/Limited Assessed Valuation (a) Total $ 392,488,674 $ Percentage of Governmental Debt to Assessed Value (b) Percentage of Total to Assessed Value of Property Net Direct Debt Per Capita 1,627,720,901 9.9 % 24.1 % 2016 180,750,000 196,122,761 26,115,095 20,693,070 382,294,786 1,593,944,354 10.0 24.0 $ 2,140 2,213 2017 178,555,000 198,182,660 27,517,521 21,456,909 382,798,272 1,669,352,097 10.0 22.3 2,053 2018 180,435,000 201,216,644 32,224,134 13,114,979 400,760,799 1,774,236,710 9.4 22.9 2,098 2019 183,990,000 206,499,363 38,801,412 3,463,501 425,827,274 1,862,969,450 9.7 22.9 2,214 2020 191,860,000 185,795,463 33,458,848 4,158,853 406,955,458 2,010,523,406 9.3 20.2 2,078 2021 196,865,000 163,289,583 36,837,470 6,898,943 390,093,110 2,128,571,831 8.9 18.7 2,198 2022 212,220,000 195,886,352 44,910,501 8,447,041 444,569,812 2,282,833,787 8.9 19.5 2,686 2023 243,407,158 183,268,233 45,530,393 9,524,199 462,681,585 2,385,407,554 9.8 19.4 2,488 2024 271,690,000 208,366,315 49,855,654 6,896,565 523,015,404 2,484,369,283 10.7 21.1 2,755 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. 140 Ratios of Outstanding Debt by Type (Exhibit S-15) Last Ten Fiscal Years City of Tempe, Arizona Governmental Activities Fiscal Year General Obligation Bonds Special Assessment Bonds 2015 $ 181,905,000 21,175,000 $ 134,746,000 2016 180,750,000 19,980,000 123,389,000 22,291,058 4,181,000 - – – 61,399 - 350,652,457 2017 178,555,000 18,730,000 116,009,000 20,515,300 3,794,000 - – – 34,743 - 337,638,043 2018 180,435,000 17,415,000 97,994,000 21,847,912 3,389,000 - – – 65,610 - 321,146,522 2019 183,990,000 16,035,000 87,269,000 25,046,197 2,966,000 - – – 40,972 - 315,347,169 2020 191,860,000 27,750,000 76,604,000 21,731,892 2,524,000 - – – 81,216 - 320,551,108 2021 196,865,000 25,755,000 69,582,000 26,374,477 2,062,000 - – – 979,231 - 321,617,708 2022 212,220,000 23,865,000 69,442,000 24,718,409 1,580,000 - – – 8,710 343,000,000 674,834,119 2023 243,407,158 21,895,000 60,787,000 28,097,020 1,076,000 - 2,637,704 1,085,876 4,514 336,000,000 694,990,272 2024 271,690,000 19,835,000 55,048,000 30,392,466 549,000 - 2,613,840 853,724 – 317,570,000 698,552,030 Fiscal Year General Obligation Bonds 2015 $ 204,970,000 676,964,107 3,822 14.12 % 2016 185,025,000 91,876,000 - 26,735,479 11,097,761 63,750 – 314,797,990 665,450,447 3,816 14.23 2017 187,835,000 80,466,000 - 26,648,171 10,347,660 318,834 – 305,615,665 643,253,707 3,553 12.63 2018 191,635,000 69,876,000 - 27,703,607 9,581,644 213,267 – 299,009,518 643,253,707 3,525 12.53 2019 197,700,000 57,886,000 - 30,951,583 8,799,363 736,327 – 296,073,273 611,420,442 3,178 10.23 2020 177,795,000 54,331,000 38,000,000 27,176,457 8,000,463 480,916 – 305,783,836 626,334,944 3,199 9.62 2021 156,105,000 50,543,000 72,100,000 35,391,535 7,184,583 327,068 – 321,651,186 643,268,894 3,562 10.44 2022 189,535,000 46,703,000 69,570,000 37,695,756 6,351,352 166,851 – 350,021,959 1,024,856,078 6,193 24.38 2023 177,767,872 42,528,000 66,895,000 35,672,156 5,500,392 – 494,365 328,857,785 1,019,630,082 5,483 13.38 2024 203,735,000 37,557,000 64,120,000 35,884,021 4,631,315 – 342,455 346,269,791 1,044,821,821 5,504 12.48 $ Excise Tax Revenue Bonds HUD Section 108 Loan Premium on Debt Payable $ 18,668,237 $ 4,552,000 Capital Improvement Notes $ SBITA – Financed Purchases Leases $ – $ – $ Total GovernmentType Debt Certificates of Participation 87,082 $ - $ 361,133,319 Business-Type Activities Excise Tax Revenue Bonds $ 84,839,000 Revenue Obligations $ Premium on Debt Payable - $ 13,905,912 WIFA Loans $ 11,832,282 Financed Purchases $ SBITA 283,594 141 Total BusinessType Debt $ – $ 315,830,788 Total Primary Government $ Per Capita Percentage of Personal Income Direct and Overlapping Governmental Activities Debt (Exhibit S-16) City of Tempe, Arizona Governmental Unit: 2024 Net Limited Assessed Valuation Debt Outstanding Portion Applicable To City of Tempe Percent Amount Combined Tax Rate per $100 Assessed Debt repaid with property taxes: State of Arizona Maricopa County Maricopa Special Health Care District Maricopa County Community College Tempe Elementary School District No. 3 Mesa Unified School District No. 4 Kyrene Elementary School District No. 28 Scottsdale Unified School District No. 48 Tempe Union High School District No. 213 East Valley Institute of Technology Subtotal overlapping debt $ 83,026,530,244 54,722,326,231 47,553,260,925 54,722,326,231 1,954,706,143 3,879,528,058 2,627,428,186 6,708,326,903 4,582,134,328 26,795,538,826 City direct debt (governmental activities) $ 2,484,370,156 $ $ Total direct and overlapping debt 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 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 0.4263 1.7293 0.1145 1.2881 4.4508 7.0635 3.6784 3.4579 2.4466 0.0500 698,552,030 100.00 % 698,552,030 2.3959 $ 974,848,954 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. 142 Legal Debt Margin Information (Exhibit S-17) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 Assessed Valuation $5,002,722,528 $3,445,248,462 $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 20% Limitation: Debt limit equal to 20% of assessed valuation $ 842,278,925 $ 689,049,692 $ 654,092,854 $ 597,166,293 $ 544,723,625 $ 491,419,390 $ 457,098,588 $ 425,141,029 $ 318,788,871 $ 325,554,180 409,957,304 367,391,618 394,798,663 344,099,415 357,900,003 369,823,502 353,760,024 337,734,652 330,432,281 361,721,555 $ 432,321,621 $ 321,658,074 $ 259,294,191 $ 253,066,878 $ 186,823,622 $ 121,595,888 $ 103,338,564 Total net debt applicable to 20% limit Legal 20% debt margin (available borrowing capacity) Total net debt applicable to the 20% limit as a percentage of 20% debt limit 48.67% 53.32% 60.36% 57.62% 65.70% 75.26% $ 77.39% 87,406,377 $ 79.44% - $ 103.65% - 111.11% 6% Limitation: Debt limit equal to 6% of assessed valuation Total net debt applicable to 6% limit Legal 6% debt margin (available borrowing capacity) Total net debt applicable to the 6% limit as a percentage of 6% debt limit $ 252,683,677 $ 206,714,908 $ 196,227,856 $ 179,149,888 $ 163,417,088 $ 147,425,817 $ 137,129,577 $ 127,542,309 110,312,688 97,469,864 91,074,059 84,050,477 76,093,198 77,915,351 77,206,874 80,243,108 $ 142,370,989 $ 109,245,044 $ 105,153,797 43.66% 47.15% 46.41% $ 95,099,411 $ 87,323,890 46.92% 46.56% $ 69,510,466 52.85% $ 59,922,703 56.30% $ 47,299,201 62.91% $ 95,636,661 $ 81,905,000 $ 13,731,661 85.64% 97,663,254 81,495,000 $ 16,168,254 83.44% Source: Maricopa County Assessor's Office City of Tempe, Arizona Accounting Division Note 1: Prior to Fiscal Year 2016, the Assessed Valuation was based on the Net Assessed Secondary Value . Due to a change in the legislation (Proposition 117), in Fiscal Year 2016, the City was required to use the Limited Property Value. In Fiscal Year 2017, the law changed again to allow the Full Cash Value to be used in the legal debt margin calculation. 143 Remaining General Obligation Bond Authorizations (Exhibit S-18) City of Tempe, Arizona 2016 Program: Water/Wastewater Streets/Transportation/Storm Drains Public Safety - Police/Fire Community Services/Park Improvements Municipal Infrastructure Preservation Total 2016 Program 2020 Program: Water/Wastewater Streets/Transportation/Storm Drains Public Safety - Police/Fire Community Services/Park Improvements Municipal Infrastructure Preservation Grand Total Authorization Prior Issues Current Year Issue $ 148,000,000 $ 91,864,657 $ Remaining Authorization 52,000,000 $ 4,135,343 25,000,000 20,000,000 20,000,000 34,000,000 - - 34,000,000 27,000,000 - - 27,000,000 254,000,000 25,000,000 197,864,657 52,000,000 4,135,343 134,000,000 - - 134,000,000 74,000,000 34,000,000 8,454,171 8,297,636 13,200,000 19,200,000 52,345,829 6,502,364 45,000,000 24,826,953 8,000,000 12,173,047 62,000,000 33,753,594 19,000,000 9,246,406 349,000,000 75,332,354 59,400,000 214,267,646 $ 603,000,000 $ 273,197,011 $ 111,400,000 $ 218,402,989 Source: City of Tempe, Arizona Accounting Division 144 Pledged-Revenue Coverage (Exhibit S-19) Last Ten Fiscal Years City of Tempe, Arizona Special Assessment Bonds Fiscal Year Special Assessment Collections 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $ 3,862,306 $ 3,884,758 2,439,086 2,214,178 2,173,798 2,209,650 2,027,722 2,212,190 1,990,732 2,211,570 2,442,290 2,207,767 2,143,728 2,210,533 2,126,515 1,989,250 1,911,731 1,984,125 1,582,150 1,985,500 Debt Service (d) Excise Tax Revenue Obligations Excise Tax Revenue Collections Debt (a) Service (d) Coverage Coverage 0.99 $156,733,794 $ 12,055,250 1.10 160,648,676 45,696,593 0.98 166,058,633 36,355,425 0.92 178,992,195 20,743,689 0.90 182,518,296 20,739,629 1.11 190,619,346 12,637,348 0.97 198,947,519 12,652,543 1.07 206,991,736 12,703,056 0.96 233,366,585 11,938,011 0.80 240,428,133 8,755,062 13.00 3.52 4.57 8.63 8.80 15.08 15.72 16.29 19.55 27.46 Performing Arts/Arts + Culture Excise Tax Obligations Transit Excise Tax Obligations 0.1% 0.5% Privilege Privilege and Use Tax and Use Tax Fiscal Collections Debt Collections Debt Year (b) Service (d) Coverage (c) Service (d) Coverage 2015 2016 2017 2018 2019 2020 2021 (e) 2022 2023 2024 $ 7,460,054 $ 5,919,026 7,656,210 5,921,676 8,084,891 3,427,850 8,436,503 3,428,850 8,823,434 3,428,100 9,131,870 3,433,850 4,895,809 — 11,202,441 504,233 11,647,867 580,750 11,482,634 579,250 1.26 $ 36,147,640 $ 4,655,688 1.29 37,288,527 4,658,463 2.36 39,512,636 4,372,288 2.46 41,074,434 4,311,491 2.57 43,063,185 4,116,542 2.66 44,373,904 4,118,094 N/A 47,534,174 4,978,120 22.22 54,736,977 5,901,166 20.06 57,815,447 4,689,492 19.82 57,413,170 4,695,249 7.76 8.00 9.04 9.53 10.46 10.78 9.55 9.28 12.33 12.23 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. 145 (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) 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. 146 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-20) Excise Tax Obligations (Excluding Transit Excise Tax Obligations) City of Tempe, Arizona Senior Excise Tax Obligations Fiscal Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Pledged Excise Tax Revenues (a) Outstanding Senior Excise Tax Obligations Debt Service Requirements (b) $ 240,428,133 $ 8,755,062 16,352,372 6,611,312 6,606,870 6,605,455 6,606,380 5,014,078 5,007,535 2,615,875 2,058,000 — Outstanding Senior Excise Tax Obligations Coverage (c) Revenue Available for Debt Service (d) 27.46 $ 14.70 36.37 36.39 36.40 36.39 47.95 48.01 91.91 116.83 Outstanding Subordinate Excise Tax Obligations Debt Service Requirements (e) 243,155,705 $ 147 579,250 582,000 578,350 579,700 581,000 582,250 577,500 582,000 580,250 577,500 578,750 578,750 577,500 Coverage (f) 419.78 % 417.79 420.43 419.45 418.51 417.61 421.05 417.79 419.05 421.05 420.14 420.14 421.05 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues received by the City in Fiscal Year 2024. 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 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 2024 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 2024. (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. 148 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-21) Transit Excise Tax Obligations City of Tempe, Arizona Senior Excise Tax Obligations Pledged Excise Tax Revenues (a) Fiscal Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 $ Outstanding Senior Excise Tax Obligations Debt Service Requirements (b) 57,413,170 $ Outstanding Senior Excise Tax Obligations Coverage (c) 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 12.31 12.33 12.32 12.33 12.32 12.34 12.30 12.32 12.32 12.32 12.31 12.31 28.63 36.86 67.14 67.25 66.55 Source: City of Tempe, Arizona Accounting Division (a) Excise Tax Revenues recognized by the City in Fiscal Year 2024. (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 outstanding 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 2024 excise tax revenues to total debt service requirements for the City's Transit excise tax bonds. 149 Pledged Revenue, Projected Debt Service and Estimated Coverage (Exhibit S-22) Water/Sewer Revenue Obligations City of Tempe, Arizona Senior Excise Tax Obligations Pledged Water/Sewer Net Revenues (a) Fiscal Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 $ Outstanding Water & Sewer Revenue Obligation Debt Service Requirements 32,039,318 $ 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 (b) 6.01 6.01 6.01 6.01 6.01 6.02 6.01 6.02 6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01 11.24 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) The estimated coverage figures shown reflect the ratio of actual Fiscal Year 2024 Pledged Water/Sewer Net Revenues the annual total Debt Service Requirements for the Water & Sewer Revenue Obligations. 150 Demographic and Economic Statistics (Exhibit S-23) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year Population (a) Total Personal Income (b) Per Capita Personal Income (c) Average Household Income (c) Median Age (c) ASU School School Enrollment (d) Enrollment (e) Unemployment Rate (f) 2024 189,834 $ 8,374,337,076 $ 44,114 $ 102,861 30.1 22,268 60,731 3.10 % 2023 185,950 7,622,648,350 40,993 96,012 30.7 23,806 60,839 3.10 2022 186,194 7,181,502,580 38,570 91,012 30.5 23,986 58,088 2.90 2021 180,587 6,159,822,570 34,110 82,283 29.8 23,838 56,095 6.20 2020 195,805 6,511,691,080 33,256 79,758 29.6 25,275 57,009 9.80 2019 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 Source: (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-1 151 Principal Employers (Exhibit S-24) Current Fiscal Year and Nine Years Prior City of Tempe, Arizona Fiscal Year 2024 Employers: Arizona State University State Farm Insurance City of Tempe ABM Industries Inc Kyrene School District 28 Wells Fargo Honeywell Adp Inc Laboratory Sciences of Arizona Maricopa Community Colleges SRP Safeway Inc. Motorolla Chase Manhattan Corporation US Airways Total Source: Employees (a) Rank 8,330 7,540 2,231 2,000 1,930 1,440 1,240 1,200 1,190 0 27,101 1 2 4 5 6 7 8 9 10 0 - Fiscal Year 2015 Employment Employees (b) Rank 11,185 2,401 3,576 3,000 4,611 4,374 3,996 3,000 2,377 1,898 40,418 1 8 5 7 2 3 4 6 9 10 27.2 % 24.6 7.3 6.5 6.3 4.7 4.1 3.9 3.9 100.0 % (a) https://geo.azmag.gov/maps/azemployer (b) City of Tempe, Arizona Comprehensive Annual Financial Report, Fiscal Year 2015 152 Employment 27.7 % 5.9 8.9 7.4 11.4 10.8 9.9 7.4 5.9 4.7 100.0 % Full-Time Equivalent City Government Employees by Function (Exhibit S-25) Last Ten Fiscal Years City of Tempe, Arizona Fiscal year 2024 Fiscal year 2023 Fiscal year 2022 Fiscal year 2021 Fiscal year 2020 Fiscal year 2019 Fiscal year 2018 Fiscal year 2017 Fiscal Year 2016 Fiscal Year 2015 Police Fire medical rescue Community services Community development Municipal court Mayor and council City manager City attorney Internal audit office Municipal budget office Economic development office City clerk and elections Financial services Human resources Information technology Strategic Management & Government Relations Diversity, Equity & Inclusion Communication Marketing Education, Career & Family Community Health & Human Public works Transportation & Sustainability Engineering and transportation Municipal utilities Internal services Human services 525 244 384 86 44 7 30 31 4 5 7 6 110 23 88 6 1 3 14 106 103 278 126 - 519 241 349 89 44 7 26 30 3 4 6 6 108 23 85 6 1 3 13 108 95 - 520 230 306 86 43 7 32 29 4 4 6 6 108 20 82 - 516 221 283 82 43 7 28 28 4 4 3 5 - 516 220 297 84 43 7 31 28 4 4 3 5 - 512 214 305 79 43 7 32 27 4 4 5 429 508 174 304 85 43 7 31 25 4 4 5 431 505 155 297 83 43 7 33 25 4 4 5 430 500 156 286 88 42 7 32 26 4 4 4 470 496 156 286 90 42 7 31 26 4 4 4 467 121 277 - 118 261 190 116 257 207 156 106 267 212 147 21054- 21750- 20646- 15649- 155 40 Office of strategic management and diversity Total 2,231 2,170 6 2,060 6 1,967 8 1,983 7 1,932 6 1,894 6 1,843 6 1,824 1,808 Source: City of Tempe, Arizona Fiscal Year 2024 Annual Budget Note: See Exhibit S-2a for changes in functions that have occurred in prior years. 153 Operating Indicators by Function/Program (Exhibit S-26) Last Ten Fiscal Years City of Tempe, Arizona Year 2024 Year 2023 Year 2022 Year 2021 Year 2020 Year 2019 Year 2018 Year 2017 Year 2016 Year 2015 Function /Program Police Crime rate (per 100,000 population) 5,880 4,237 4,944 4,606 4,247 4,752 4,478 5,063 4,900 5,110 Traffic accidents 4,632 4,818 3,833 3,012 4,945 5,857 5,621 5,638 5,376 5,103 Emergency service average response time (minimum) 6:35 6:23 6:19 6:24 6:27 6.66 6.60 6.36 6.83 5:13 Citizen calls for police service 81,061 83,813 85,516 79,072 83,427 90,055 91,012 88,515 86,229 85,502 Operating expenditures per citizen calls (a) $ 1,499 $ 1,282 $ 1,167 $ 1,212 $ 1,166 $ 1,015 $ 968 $ 917 $ 926 $ 926 Fire Firefighters per capita (10,000) 9.33 9.33 9.3 8.86 11.60 8.82 9.45 Number of fire calls 2,546 2,532 9.52 2,746 2,369 2,207 1,980 2,212 2,565 1,944 2,022 Number of medical calls 23,311 24,533 24,729 21,582 21,761 22,209 22,093 26,633 20,021 19,630 Number of other assistance calls 2,098 1,991 2,045 2,068 2,117 2,324 1,916 2,637 1,963 1,853 Emergency service average response time (minimum) 4:43 4:40 4:38 4:31 4:31 4:31 4:15 3:36 4:16 4:10 Percent of emergency responses taking 6.0 minutes or less (d) 79% 79% 80% 82% 80% 80% 75% 74% 73% 75% Transportation Percent of on-time bus performance (f) 82% 83% 85% 87% N/A 92% 92% 90% 90% 92% Annual bus boardings 3,909,167 3,676,750 2,701,540 1,967,142 4,741,442 6,022,149 6,407,657 6,484,875 6,841,497 7,178,128 Annual rail boardings (e) 2,823,038 2,511,247 1,703,120 1,241,440 2,588,121 3,008,033 3,145,896 N/A N/A N/A Number of square yards of asphalt repaired 1,177,933 1,062,443 1,021,983 720,275 918,426 1,225,309 736,076 731,425 402,900 302,000 Library Registered borrowers 73,305 87,848 88,366 110,808 104,791 93,689 100,155 97,443 140,000 143,000 Circulation 992,008 914,753 763,686 497,675 566,745 743,931 802,492 855,055 800,000 930,000 Community development Number of permits issued for commercial / industrial Valuation of commercial/industrial permits 460 $ 649,286,761 Number of permits issued for residential Valuation of residential permits 805 $ Number of permits issued other Valuation of other permits 464 $409,458,156 36,587,866 1,247 $ 32,319,819 548 $ 102,205,815 369 $570,407,379 1,382 $ 44,418,957 390 $ 73,063,218 447 $435,445,691 965 $ 37,855,549 583 $ 24,408,687 476 $725,909,656 603 $ 40,035,903 981 $ 32,290,151 541 $790,508,270 573 $ 32,849,626 1102 $ 25,876,027 503 $739,627,514 532 $ 35,888,436 1053 $ 35,278,125 644 $270,664,400 122 $157,887,839 1165 $ 40,037,341 775 $333,250,987 474 $274,402,813 1 $ 60,000 678 $527,389,841 646 $173,004,137 1 $ 150,000 4 $ 8,758,218 Water/wastewater Number of customer accounts (annual average) 42,932 43,327 43,319 42,949 43,724 43,284 43,214 42,647 43,061 42,678 Total water gallons treated (million gallons - mg) 14,339 14,190 15,580 16,600 15,154 15,506 16,090 15,506 15,278 15,130 Operating and maintenance cost per customer account $ Total wastewater gallons treated (million gallons per day) 1,396 $ 19.0 1,305 $ 19.4 1,167 $ 19.6 1,070 $ 19.0 783 $ 19.0 995 $ 19.1 979 $ 19.1 953 $ 19.4 941 $ 19.4 878 19.4 Solid waste collection Residential container/recycling cost per ton $ 77 $ 177 $ 232 $ 258 $ 154 159 $ 235 $ 111 $ 139 $ 138 $ 140 Number of residential accounts 33,574 33,326 33,328 34,540 33,245 33,263 32,869 33,160 33,001 Residential recycling diversion rate (c) 21% 18% 20% 18% 23% 23% 28% 19% 21% 19% Number of commercial accounts 1,471 1,454 1,487 1,722 1,491 1,565 1,641 1,671 1,709 1,783 Commercial collection cost per ton $ 131 $ 103 $ (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. 97 $ 98 $ 155 342 $ 113 $ 100 $ 93 $ 91 33,397 $ 95 Capital Asset Statistics by Function/Program (Exhibit S-27) Last Ten Fiscal Years City of Tempe, Arizona Fiscal Year 2024 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 2023 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Fiscal Year 2016 Fiscal Year 2015 3 21 7 3 21 7 3 21 7 3 21 7 3 21 7 3 21 6 3 21 6 3 21 6 3 24 6 3 24 6 1,321 12,267 249 118 1,321 12,301 254 118 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 1,519 44 66 6 2 1,519 44 66 5 2 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 2 850 850 850 850 850 850 850 850 833 833 137 137 137 137 137 137 137 137 125 125 54 495 231 54 495 231 54 495 231 54 495 231 54 495 231 54 495 231 54 495 231 54 495 231 54 495 231 42 549 173 29 29 29 29 29 29 29 29 29 19 42 42 42 42 42 43 43 43 45 47 Source: City of Tempe, Arizona Municipal Budget Office and other applicable City departments. 156 Water Connections by Customer Type, Sewer Connections and Sewage Treated (Exhibit S-28) Last Four Fiscal Years City of Tempe, Arizona Fiscal Year 2024 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Water Connections Customer Type: Single Family Multifamily Commercial Industrial Landscape Total (a) 35,038 1,936 3,878 73 2,007 42,932 35,007 1,933 3,946 73 2,000 42,959 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 40,699 40,707 40,784 40,596 Sewage treated 91st Avenue Plant (MGD) 19.0 19.4 19.2 19 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. 157 Water Deliveries (Exhibit S-29) Last Four Calendar Years City of Tempe, Arizona Calendar Year 2024 (c) Water Deliveries Residential (a) Commercial Other (b) Total Calendar Year 2023 (c) 21,785 10,884 11,336 44,005 20,257 10,245 10,475 40,977 Calendar Year 2022 (c) 20,077 10,447 10,377 40,901 Calendar Year 2021 22,512 11,324 11,617 45,453 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 are from January through November 30 each calendar year. 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. 158 Metered Water Usage Charges (Exhibit S-30) Last Four Fiscal Years City of Tempe, Arizona Fiscal Year 2024 Single Family Residential-Inside City Tier Level (gallons used) 0 - 6,000 6,001 - 8,000 8,001 - 12,000 12,001 - 16,000 16,001 - 20,000 20,001 - 36,000 36,001 - 40,000 Over 40,000 Single Family Residential-Outside City Tier Level (gallons used) 0 - 6,000 6,001 - 8,000 8,001 - 12,000 12,001 - 16,000 16,001 - 20,000 20,001 - 36,000 36,001 - 40,000 Over 40,000 Charges Per Thousand Gallons (a) Customer Class-Inside City Multifamily Commercial Construction Industrial Landscape Customer Class-Outside City Multifamily Commercial Construction Industrial Landscape Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 $ 2.90 2.90 4.51 4.51 5.74 5.74 6.64 6.64 $ 2.53 2.53 3.93 3.93 5.00 5.00 5.79 5.79 $ 1.90 2.91 2.91 4.01 4.01 5.08 5.08 5.58 $ 1.84 2.83 2.83 3.89 3.89 4.93 4.93 5.42 $ 3.29 3.29 5.11 5.11 6.50 6.50 7.53 7.53 $ 3.29 3.29 5.11 5.11 6.50 6.50 7.53 7.53 $ 2.46 3.79 3.79 5.21 5.21 6.60 6.60 7.26 $ 2.39 3.68 3.68 5.06 5.06 6.41 6.41 7.05 $ 2.81 3.16 4.66 3.12 4.26 $ 2.81 3.16 4.66 3.12 4.26 $ 2.11 2.73 4.42 2.85 4.08 $ 2.11 2.73 4.42 2.85 4.08 $ 3.65 4.11 6.06 4.06 5.54 $ 3.65 4.11 6.06 4.06 5.54 $ 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. 159 Water Rates and Sewer Rates Per Meter Size(Exhibit S-31) Last Four Fiscal Years City of Tempe, Arizona Fiscal Year 2024 Water Monthly Service Charge 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 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 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 Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 $ 11.75 13.20 19.30 39.75 75.10 112.35 261.75 753.85 1,168.15 1,750.20 11.75 $ 10.25 11.50 16.80 34.65 65.45 97.90 228.10 656.95 1,018.85 1,525.25 10.25 $ 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 $ 15.28 17.16 25.09 51.68 97.63 146.06 340.28 980.01 1,518.60 2,275.26 15.28 $ 13.35 14.95 21.85 45.05 85.10 127.25 296.55 854.05 1,324.50 1,982.85 13.35 $ 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 9.90 $ 9.30 $ 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 $ 11.40 17.70 39.00 75.75 114.55 269.95 782.00 1,214.10 1,818.75 10.70 16.65 36.70 71.30 107.80 254.05 736.00 1,142.65 1,711.75 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. 160 Sewer Service Rates(Exhibit S-32) Last Four Fiscal Years City of Tempe, Arizona Fiscal Year 2024 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 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 Fiscal Year 2023 95% 95% 95% 95% 95% 95% 95% 95% $ 2.54 3.28 3.22 4.72 4.72 4.72 3.22 3.22 Fiscal Year 2022 95% 95% 95% 95% 95% 95% 95% 95% $ 2.39 2.39 3.03 4.44 4.44 4.44 3.03 3.03 Fiscal Year 2021 95% 95% 95% 95% 75% 75% 85% 90% $ 1.84 3.28 2.82 7.91 7.91 4.58 3.06 3.06 95% 95% 95% 95% 75% 75% 85% 90% $ 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. 161 City of Tempe, Arizona 162