Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Financial Reports-Comprehensive Annual Financial Report (CAFR) - 6/30/2022
Prepared by: Finance Department of Town of Oro Valley David Gephart, CPA Chief Financial Officer Wendy Gomez, MPA Deputy Finance Director Aaron Van Winkle Senior Accountant Nancy Arvizu, CPA Senior Accountant Suzy Molinar Accounting Specialist Chris Hutchison, CPA Senior Budget Analyst Town of Oro Valley, Arizona 11000 N. La Cañada Drive Oro Valley, AZ 85737 (520)229-4700 https://www.orovalleyaz.gov TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1 Organizational Chart 8 List of Town Officials 9 GFOA Certificate of Achievement 10 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT 12 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 19 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 35 Statement of Activities 36 Fund Financial Statements: Balance Sheet – Governmental Funds 40 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 43 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 47 Statement of Net Position – Proprietary Funds 48 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS FINANCIAL SECTION Page BASIC FINANCIAL STATEMENTS Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds 49 Statement of Cash Flows – Proprietary Funds 50 Notes to Financial Statements 51 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 91 Community Center Fund 92 Pension Schedules 93 Notes to Required Supplementary Information 100 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Governmental Funds: Combining Balance Sheet – All Non-Major Governmental Funds – By Fund Type 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non-Major Governmental Funds – By Fund Type 105 Special Revenue Funds: Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 109 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 110 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS FINANCIAL SECTION Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Debt Service Fund: Combining Balance Sheet 114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 115 Combining Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual 116 Capital Projects Funds: Combining Balance Sheet 120 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 121 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 122 STATISTICAL SECTION Financial Trends: Net Position by Component 129 Changes in Net Position 130 Fund Balances of Governmental Funds 132 Changes in Fund Balances of Governmental Funds 133 Revenue Capacity: Principal Sales Taxpayers 134 Taxable Sales by Category 135 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS STATISTICAL SECTION Page Direct and Overlapping Sales Tax Rates 136 Net Limited and Full Cash Assessed Value of Taxable Property 137 Historical and Projected Excise Tax Collections 138 Debt Capacity: Ratio of Outstanding Debt by Type 139 Direct and Overlapping Governmental Activities Debt 140 Legal Debt Margin Information 141 Calculation of Legal Debt Margin 142 Pledged-Revenue Coverage 143 Historical and Projected Water System Revenues, Expenses, Debt Service and Coverage 144 Demographic and Economic Information: Demographic and Economic Statistics 145 Principal Employers 146 Operating Information: Full-Time Equivalent Town Employees by Function 147 Water Utility Revenues by User Type 148 Operating Indicators by Function 149 Water Rates 150 Capital Assets Statistics by Function 151 INTRODUCTORY SECTION (This page intentionally left blank) Page 1 December 9, 2022 Honorable Mayor, Members of Town Council and Citizens of the Town of Oro Valley, Arizona: State law mandates that cities publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States of America by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the annual comprehensive financial report of the Town of Oro Valley, Arizona (Town) for the fiscal year ended June 30, 2022. This report consists of management’s representations concerning finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all info rmation presented in this report. To provide a reasonable basis for making these representations, management of the Town has established a comprehensive internal control framework designed both to protect the Town’s assets from loss, theft, or misuse and t o compile sufficient reliable information for the preparation of the Town’s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the Town’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free of material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town’s financial statements have been audited by Baker Tilly, LLP, a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2022, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town’s financial statements for the fiscal year ended June 30, 2022, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. Accounting principles generally accepted in the United States of America 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 Town of Oro Valley’s MD&A can be found immediately following the report of the independent auditors. It’s in our nature… www.orovalleyaz.gov 11000 N. La Cañada Drive • Oro Valley, Arizona 85737 phone: (520) 229-4700 • fax: (520) 229-0428 Page 2 PROFILE OF THE TOWN The Town of Oro Valley was incorporated in 1974. Located in northeastern Pima County, three miles north of Tucson, it sits at an elevation of 2,620 feet. The Town currently occupies a land area of more than 36 square miles and serves an estimated population of 48,222. The population of Oro Valley has increased 62% since the 2000 population of 29,700. Based on 2020 Census estimates, Oro Valley has a median household income of $86,863, compared to the median household income for the state of Arizona of $61,529. Oro Valley residents enjoy a comfortable hometown feel with a strong family orientation, excellent education system and abundant opportunities in a safe environment. The Town of Oro Valley operates under the Council-Manager form of government. Policymaking and legislative authority is vested in the Town Council, which consists of a Mayor and six Councilmembers. Councilmembers are elected to four-year staggered terms. The citizens of Oro Valley elect the Mayor. The Council, from among its members, selects the Vice-Mayor. The Town Council is responsible, among other things, for the adoption of local ordinances, budget adoption, the development of citizen advisory committees, the hiring and removal of the Town Manager, the Police Chief, Town Attorney and Town Magistrate. The Town Manager is responsible for implementation of the policies of the Town Council. The Town Manager appoints all other department directors except those mentioned above under Town Council responsibilities. The Town of Oro Valley provides a full range of services including police protection; the construction and maintenance of streets and related infrastructure; proper planning and economic development; the provision of water and stormwater services; public transportation services; recreational activities and cultural events. As with all cities in the State of Arizona, the Town of Oro Valley is required to comply with Article IX, Section 20 (1) of the Arizona Constitution, which sets limits on the Town’s legal budget capacity. Through FY 2022-23, the Town will operate under the Alternative Expenditure Limitation – Home Rule Option. This option allows the Town Council to establish the budgetary limits locally, rather than being restricted by the State-imposed expenditure limitation. The voters must authorize this option every four years. It was last authorized by the citizens of Oro Valley in August of 2018. In August 2020, Oro Valley voters approved a Permanent Base Adjustment for the Town. The Permanent Base Adjustment option permanently increases the Town’s base limit so that when the State’s expenditure limitation formula is applied, it results in a limitation that more closely matches the Town’s annual budget. This permanent adjustment will save the Town the cost of Home Rule elections, and associated staff time, every four years. giving the Town permanent control over expenditures, instead of using a state-calculated formula. The annual operating budget serves as the foundation for the Town’s financial planning and control. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual operating budget approved by the Town Council. The Town’s proposed operating budget is presented to the Town Council for review throughout the budget cycle starting in December and approved in June. The Town Council is required to hold a public hearing on the proposed budget and to adopt the final budget by no later than the second Monday in August. Budget amendments requiring the approval of the Town Council include the following: budget transfers between funds; transfers to fund additional personnel or increased expenditures resulting from personnel reclassifications; transfers that would reduce or eliminate funding for items designated in the adopted Capital Improvement Plan; and transfers that would reduce or eliminate funding for debt service. All other operational budget amendments that involve transfers between line items or expenditure categories require approval by the Town Manager. MAJOR INITIATIVES AND ACCOMPLISHMENTS FOR THE YEAR Page 3 The Council adopted Strategic Leadership Plan for fiscal years 2021-22 through 2022-23 is the culmination of an extensive four-month process involving Town Council, Town staff, and the Oro Valley community. Rooted deeply in the values and priorities of the Your Voice, Our Future 10 -year General Plan, the two-year Strategic Leadership Plan provides organizational direction in seven focus areas: • Economic Vitality • Culture and Recreation • Public Safety • Roads, Water and Town Assets • Land Use and Design • Effective and Efficient Government • Financial Stability and Sustainability While the Strategic Leadership Plan guides short-term decision-making, the General Plan provides a longer term (up to 10 years) direction regarding the growth, development, and redevelopment of the community. Oro Valley is a community defined by the highest standard of environme ntal integrity, education, infrastructure, services, and public safety. It is a community of people working together to create the Town’s future with a government that is responsive to residents and ensures the long -term financial stability of the Town. Shown below are some of the Town’s accomplishments during FY 2021-22. • Through a combination of $10 million in cash reserves and the issuance of $17.6 million in taxable pension obligation bonds, deposited $27.6 million into the Public Safety Pension Retirement System to completely fund the Town’s outstanding pension liability. The bonds were sold at an all-in issuance cost of 2.39%. • Received the Certificate of Achievement for Excellence in Financial Reporting Award, Distinguished Budget Presentation Award and Popular Annual Financial Reporting Award from the Government Finance Officers Association • Issued tax-exempt excise tax bonds to provide $25 million in funding for various parks and recreation amenities and improvements, including Naranja Park improvements, Community Center and golf course irrigation improvements, and multi-use paths at an all-in issuance cost of 2.31%. • Ended FY 2021-22 with a $30.4 million fund balance in the General Fund, exceeding budget expectations by $13.2 million • Revised and updated comprehensive Town Financial and Budgetary Policies • Recorded the second tranche of the Town’s $15.4 million federal American Rescue Plan Act funding • Finalizing the details of an incentive Agreement with Leonardo Electronics US Inc. to build a new state-of-the-art semiconductor laser manufacturing facility in Oro Valley’s Innovation Park. This effort would bring new jobs to the Town and lead to millions of dollars in capital investment and economic impact. ECONOMIC CONDITIONS AND OUTLOOK Page 4 The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Town operates. Healthy economic growth continued through FY 2021-22. Recovery from the COVID-19 pandemic, strong construction activity, and inflation resulted in a 27% year-over-year increase in local sales tax collections. The Town continues to provide services and programs without a property tax to fund operations and, therefore, is dependent upon local sales tax and state shared revenues as major sources of revenue for its operating and capital expenditures. These sources accounted for approximately 76% of total General Fund revenue for FY 2021-22. Total local sales tax collections totaled $30.6 million for FY 21-22, which represents a $6.5 million increase over the last fiscal year. This increase was far greater than anticipated and a nice surprise. Major local sales tax categories experiencing year-over-year increases or changes compared to amounts collected in FY 2020-21 are as discussed below: • Retail tax collections totaled $11.2 million for FY 21-22, up 11.9%, or nearly $1.2 million over last fiscal year • Bed tax collections totaled $2.4 million for the fiscal year, up 129.2%, or $1.3 million over last fiscal year • Restaurant and bar tax collections totaled $3.0 million for the fiscal year, up 38.6%, or $848,000 over last fiscal year • Construction sales tax collections totaled $6.9 million for the fiscal year, up 39.3% or $1.9 million from last fiscal year. The chart below is a look at the past five years’ local sales tax activity by category: In FY 2021-22, the Town received $15.3 million for state shared revenues in the General Fund, up 6.1%, or $882,000 over last fiscal year. The trend chart below depicts the performance of both of these revenue categories since FY 2012-13: Page 5 Critical to success in this area is the preparation of realistic growth assumptions that help guide Town revenue projections. Despite inflation, interest rate hikes and potential recession, there continues to be healthy economic growth in Oro Valley, the Tucson metropolitan region and State-wide. Arizona continues to do well in national economic rankings and remains the fourth-fastest growing state in population growth. Last year, personal income growth in Arizona was the highest in the nation. With Oro Valley’s proximity to the Tucson metro region, it is likely that the Town’s local economy will continue to benefit with increased housing sales, retail and tourism growth, and overall personal income growth. Future population and economic growth of the Town depends largely on continued available land for development; therefore, strategic annexation efforts and discussions are ongoing as a means to address the potential for future buildout within existing town boundaries. While strong state population growth continues to increase shared revenues, legislative changes made at the state level have a far greater potential for impacts to this major revenue source for the Town. Statutory income tax rate reductions and a cap of 2.5% will limit growth in shared income tax revenues to about 2% per year. In the near term, projected commercial and residential development should be steady over the next two to three-year period. Residential activity has returned to a more normal historical pattern, after a 15 -plus year high in FY 2020-21. In FY 2021-22, the Town estimated that 275 single family residential (SFR) building permits would be issued; a total of 198 were issued by year-end. Despite this variance, revenues exceeded budget due to higher construction valuations and greater residential improvement activity. The FY 2022- 23 budget assumes 171 SFRs will be issued during the year. The below chart depicts the local trends in single family residential (SFR) building permits issued and annual permit revenues from both residential and commercial construction activity from FY 201 2-13 through FY 2022-23 budget projections. Page 6 Future Focus During FY 2022-23, the Town will continue to identify and quantify both one -time revenues derived from construction activity and recurring revenues derived from such areas as local sales taxes and state- shared sources. The Town continues to dedicate one-time revenues to funding one-time expenditures in the budget, specifically for capital improvement projects, while ensuring sufficient recurring revenues exist to fund recurring expenditures. With the current growth and activity expectations in future years, it will be important to continue to analyze the budget in this manner to avoid future reliance on one-time revenues to fund recurring costs. For FY 2022-23, the Town will focus its efforts on supporting elements of the Town Council adopted Strategic Leadership Plan all while navigating any potential economic slowdown that may occur. These strategies will be fulfilled in a number of ways as highlighted below: • The FY 2022-23 budget includes $25 million in bond proceeds approved by the Town Council in September 2021 for investments in Naranja Park, Community Center improvements and multi-use paths. Because the bond issuance has a dedicated funding source via the Town’s half - cent sales tax in its Community Center Fund, there is no impact to the Town General Fund. • The FY 2022-23 budget includes $1,850,000 for the Pavement Preservation Program in the Highway Fund, which maintains the current condition of Town streets. • The FY 2022-23 budget includes nearly $4.8 million in capital improvements for the Town’s water system, continuing to ensure a safe, reliable and sustainable water supply to meet community needs. Page 7 The Town also continues to maintain strong investment grade ratings on its outstanding excise tax bonds, rated “AA+” by Standard and Poor’s. This is largely achieved by the Council’s goal of continuing to diversify the Town’s revenue base and maintaining strong fund balance reserves in the General Fund, currently at $30.4 million, or 63% of FY 22-23 adopted expenditures of $48.1 million. This is well above the Council-adopted policy threshold of 25% of expenditures. AWARDS AND ACKNOWLEDGMENTS Award. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Oro Valley for its annual comprehensive financial report for the year ended June 30, 2022. This was the twenty- eighth consecutive year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. The preparation of this Annual Comprehensive Financial Report could not have been accomplished without the efficient and dedicated services of the entire staff of the Finance Department who assisted in and contributed to its preparation. We thank the Mayor and members of the Town Council for their interest and support in planning and conducting the financial affairs of the Town in a responsible and progressive manner. Respectfully submitted, Chris Cornelison David Gephart Interim Town Manager Chief Financial Officer Page 8 Organizational Chart Page 9 TOWN OF ORO VALLEY, ARIZONA LIST OF TOWN OFFICIALS ELECTED OFFICIALS Mayor Mr. Joe Winfield Vice-Mayor Ms. Melanie Barrett Council Member Mr. Timothy Bohen Council Member Mr. Harry Greene Council Member Ms. Joyce Jones-Ivey Council Member Mr. Josh Nicolson Council Member Mr. Steve Solomon TOWN MANAGEMENT Interim Town Manager Chris Cornelison Deputy Town Manager Chris Cornelison Chief Financial Officer David Gephart Human Resources Director Andrew Votava Town Clerk Michael Standish Magistrate James Hazel Legal Services Director Tobin Sidles Water Utility Director Peter Abraham Chief of Police Kara Riley Public Works Director/Town Engineer Paul Keesler Community and Economic Development Director Paul Melcher Parks and Recreation Director Kristy Diaz-Trahan Chief Information Officer Chuck Boyer Page 10 Page 11 FINANCIAL SECTION Page 12 INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and Town Council Town of Oro Valley, Arizona Oro Valley, Arizona Report on the Audit of the 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 Town of Oro Valley, as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the Town of Oro Valley’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 Town of Oro Valley, as of June 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Town of Oro Valley 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. Emphasis of Matter Change in Accounting Principle As discussed in Note 1 to the financial statements, for the year ended June 30, 2022, the Town adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 87, Leases. Our opinion is not modified with respect to this matter. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020-2022 Baker Tilly US, LLP Page 13 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 Town of Oro Valley’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors’ 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 auditors’ 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 Town of Oro Valley’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 Town of Oro Valley’s ability to continue as a going concern for a reasonable period of time. Page 14 Auditors’ Responsibilities for the Audit of the Financial Statements (Continued) 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. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and the post- employment benefit schedules 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 Town of Oro Valley’s basic financial statements. The introductory section, the combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Page 15 Other Matters Compliance over the use of Highway User Revenue Fund and other dedicated State transportation revenue monies In connection with our audit, nothing came to our attention that caused us to believe that the Town of Oro Valley failed to comply with the authorized transportation purposes, insofar as they relate to accounting matters, for Highway User Revenue Fund monies it received pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated State transportation revenues it received. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the Town of Oro Valley’s noncompliance with the authorized transportation purposes referred to above, insofar as they relate to accounting matters. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2022 on our consideration of the Town of Oro Valley’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 Town of Oro Valley’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Town of Oro Valley’s internal control over financial reporting and compliance. Tempe, Arizona December 9, 2022 Page 16 (This page intentionally left blank) Page 17 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) Page 18 (This page intentionally left blank) TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 19 As management of the Town of Oro Valley, Arizona (Town), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2022. The management’s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The financial statements which follow the Management’s Discussion and Analysis, provide key financial highlights for 2021-22 as follows. • The Town’s total net position of governmental activities increased $12.0 million to $202.1 million and business-type activities increased $3.3 million to $115.1 million, representing 64 percent and 36 percent respectively, of the total net position of $317.2 million. • General revenues from governmental activities accounted for $45.4 million in revenue, or 64 percent of all current fiscal year governmental activities revenues. Program specific revenues in the form of charges for services and grants and contributions accounted for $25.8 million or 36 percent of total current fiscal year governmental activities revenues. The Town had $21.5 million of program revenues and ($846,029) in general revenues related to business-type activities. • The Town had $59.0 million in expenses related to governmental activities, a decrease of 1.9 percent from the prior fiscal year. The Town had $17.5 million in expenses related to business- type activities, a decrease of 0.1 percent from the prior fiscal year. • Among major funds, the General Fund had $55.5 million in revenues, which primarily consisted of sales taxes and intergovernmental revenues. The total expenditures of the General Fund were $51.3 million. The General Fund’s fund balance decreased from $32.4 million to $30.4 million. • The Community Center Fund had $9.5 million in revenues, which consisted primarily of charges for services and sales taxes. The total expenditures of the Community Center Fund were $6.0 million. • The General Government CIP Fund had $1.1 million in revenues consisting primarily of charges for services and other revenues. The total expenditures of the General Government CIP Fund were $10.2 million. • The Municipal Debt Service Fund had $136,290 in revenues consisting primarily of intergovernmental and other revenues. The total expenditures of the Municipal Debt Service Fund were $19.5 million. • The Water Fund operating revenues of $18.3 million exceeded operating expenses of $15.6 million. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 20 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private- sector business. The accrual basis of accounting is used for the government-wide financial statements. The statement of net position presents information on all Town 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 Town is improving or deteriorating. The statement of activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). In the government-wide financial statements the Town’s activities are presented in the following categories: • Governmental activities – Most of the Town’s basic services are included here, such as general government, public safety, highways and streets, transit, and culture and recreation. Sales taxes, intergovernmental, and charges for services finance most of these activities. • Business-type activities – The services provided by the Town included here are water and stormwater utilities. The services are primarily financed through user fees and charges. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Town’s near-term financing requirements. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 21 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Town’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Community Center, General Government CIP, and Municipal Debt Service Funds, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Proprietary funds. The Town maintains 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 Town uses enterprise funds to account for its Oro Valley Water Utility and Stormwater Drainage Utility. The Town uses an internal service fund to finance its self- insured employee health benefits. Because these services predominately benefit governmental rather than business-type functions, the internal service fund has been included within governmental activities in the government-wide financial statements. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s budget process, and pension plans. The Town adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances – budget and actual has been provided for the General Fund and the major Special Revenue Fund as required supplementary information. Schedules for the pension plans have been provided as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of a government’s financial position. In the case of the Town, assets and deferred outflows exceeded liabilities and deferred inflows by $317.2 million as of the current fiscal year end. The largest portion of the Town’s net position reflects its investment in capital assets (e.g., land, water rights, buildings and improvements, improvements other than buildings, infrastructure, vehicles, machinery and equipment and construction in progress), less any related outstanding debt used to acquire those assets. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 22 The Town uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related outstanding debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the Town’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance is unrestricted and may be used to meet the Town's ongoing obligations to its citizens and creditors. The following table presents a summary of the Town’s net position for the fiscal years ended June 30, 2022 and June 30, 2021. 2022 2021 2022 2021 2022 Total 2021 Total Current and other assets 79,733,831$ 55,130,944$ 34,584,422$ 36,037,009$ 114,318,253$ 91,167,953$ Capital assets, net 195,997,562 192,584,832 110,547,409 110,774,759 306,544,971 303,359,591 Total assets 275,731,393 247,715,776 145,131,831 146,811,768 420,863,224 394,527,544 Deferred outflows of resources 35,405,005 11,141,057 1,141,654 1,416,116 36,546,659 12,557,173 Current and other liabilities 15,349,588 12,654,541 8,294,584 8,391,565 23,644,172 21,046,106 Long-term liabilities 82,233,359 55,338,843 21,742,999 27,931,751 103,976,358 83,270,594 Total liabilites 97,582,947 67,993,384 30,037,583 36,323,316 127,620,530 104,316,700 Deferred inflows of resources 11,477,494 780,614 1,156,127 133,487 12,633,621 914,101 Net position Net investment in capital assets 179,219,389 184,355,212 87,969,917 84,049,866 267,189,306 268,405,078 Restricted 21,752,087 5,392,323 - - 21,752,087 5,392,323 Unrestricted 1,104,482 335,300 27,109,858 27,721,215 28,214,340 28,056,515 Total net position 202,075,958$ 190,082,835$ 115,079,775$ 111,771,081$ 317,155,733$ 301,853,916$ Governmental Activities Business-type Activities At the end of the current fiscal year the Town reported positive balances in all categories of net position. The Town’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. The following are significant current year transactions that have had an impact on the Statement of Net position. • The addition of $24.6 million in current assets for governmental activities, largely attributable to $21.1 million in parks and recreation bonds issued in November 2021. • The addition of $10.3 million and $3.9 million for governmental activities and business-type activities, respectively, in accumulated depreciation due to depreciation expense. • The addition of $12.8 million and $3.6 million for governmental activities and business- type activities, respectively, in capital assets related to buildings and improvements, infrastructure, and water systems. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 23 Changes in net position. The Town’s total revenues for the current fiscal year were $91.8 million. The total cost of all programs and services was $76.5 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2022 and June 30, 2021. 2022 2021 2022 2021 2022 Total 2021 Total Revenues Program revenues Charges for services 13,273,440$ 12,621,972$ 19,828,827$ 19,671,438$ 33,102,267$ 32,293,410$ Operating grants and contributions 4,040,118 8,171,190 - - 4,040,118 8,171,190 Capital grants and contributions 8,493,664 25,566,365 1,612,125 7,603,672 10,105,789 33,170,037 General revenues Sales taxes 30,583,921 24,056,793 - - 30,583,921 24,056,793 Franchise taxes 756,388 722,700 - - 756,388 722,700 Unrestricted state shared revenues 15,081,806 14,435,336 - - 15,081,806 14,435,336 Miscellaneous 150,100 - 15,404 13,255 165,504 13,255 Investment earnings Interest 287,841 558,400 142,001 400,225 429,842 958,625 Net decrease in fair value (1,469,001) (421,611) (1,003,434) (400,166) (2,472,435) (821,777) Total revenues 71,198,277 85,711,145 20,594,923 27,288,424 91,793,200 112,999,569 Expenses General government 28,083,397 19,633,975 - - 28,083,397 19,633,975 Public safety 8,232,307 18,291,873 - - 8,232,307 18,291,873 Highways and streets 10,234,099 11,629,477 - - 10,234,099 11,629,477 Transit 1,267,596 939,341 - - 1,267,596 939,341 Culture and recreation 10,059,071 9,396,975 - - 10,059,071 9,396,975 Interest on long-term debt 1,149,019 290,251 - - 1,149,019 290,251 Water - - 16,202,611 16,157,523 16,202,611 16,157,523 Stormwater - - 1,282,283 1,368,001 1,282,283 1,368,001 Total expenses 59,025,489 60,181,892 17,484,894 17,525,524 76,510,383 77,707,416 Excess/(Deficiency) before transfers 12,172,788 25,529,253 3,110,029 9,762,900 15,282,817 35,292,153 Transfers (198,665) 2,522 198,665 (2,522) - - Change in net position 11,974,123 25,531,775 3,308,694 9,760,378 15,282,817 35,292,153 Beginning net position, as restated 190,101,835 164,551,060 111,771,081 102,010,703 301,872,916 266,561,763 Ending net position 202,075,958$ 190,082,835$ 115,079,775$ 111,771,081$ 317,155,733$ 301,853,916$ Governmental Activities Business-type Activities TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 24 The following are significant current year transactions that have had an impact on the change in net position. • Total expenses decreased $1.2 million, or 1.5 percent, primarily due to a reduction in the Town’s pension expenses. • Total revenues decreased $21.2 million, or 18.8 percent, primarily due to the prior year recording a property donation and a decrease in federal stimulus funding. Governmental and Business-type activities. The following table presents the cost of the Town’s major functional activities. The table also shows each function’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the Town’s taxpayers by each of these functions. Total Net (Expense)Total Net (Expense) Expenses Revenue Expenses Revenue General government 28,083,397$ (16,548,493)$ 19,633,975$ 8,873,260$ Public safety 8,232,307 (6,958,363) 18,291,873 (12,197,235) Highways and streets 10,234,099 (5,794,545) 11,629,477 (5,116,531) Transit 1,267,596 251,250 939,341 (938,878) Culture and recreation 10,059,071 (3,019,096) 9,396,975 (4,152,731) Interest on long-term debt 1,149,019 (1,149,019) 290,251 (290,251) Total 59,025,489$ (33,218,267)$ 60,181,892$ (13,822,366)$ Water 16,202,611$ 3,726,053$ 16,157,523$ 9,493,072$ Stormwater drainage 1,282,283 230,005 1,368,001 256,514 Total 17,484,894$ 3,956,058$ 17,525,524$ 9,749,586$ Business-type Activities Governmental Activities June 30, 2022 June 30, 2021 • The cost of all governmental activities this year was $59.0 million. The decrease of $1.2 million from the prior year was due primarily to a reduction in pension expenses for the year stemming from historic returns in the pension investment portfolios. • The cost of all business-type activities this year was $17.5 million. The decrease of $24,246 from the prior year was primarily due to a decrease in operating costs in the water utility. • Federal and State government grants, developer contributions, and charges for services subsidized certain governmental programs and business-type programs with revenues of $47.2 million. • Net cost of governmental activities of $33.2 million was financed by general revenues, which are made up of primarily sales taxes and state shared revenues of $45.7 million. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 25 FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds. The focus of the Town’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As the Town completed the year, its governmental funds reported a combined fund balance of $65.5 million, an increase of $22.5 million. This was primarily due to a $21.1 million parks and recreation revenue bond issuance. The General Fund comprises 46.4 percent of the total governmental fund balance. Approximately $16.3 million, or 53.6 percent of the General’s Fund ending fund balance is unassigned. The General Fund is the principal operating fund of the Town. The decrease in fund balance of $2.0 million to $30.4 million as of fiscal year end was primarily a result of a one-time $10.0 million payment from reserves to fund the Town PSPRS pension liability. As a whole, General Fund revenues increased approximately $1.9 million. General Fund expenditures increased $11.7 million, primarily due to planned capital outlay for needed building renovations, as well as a $10.0 million payment to PSPRS. The Community Center Fund’s ending fund balance increased from $2,676,793 to $5,860,458, due to increased sales tax collections and contracted operating revenues, as well as a delay in budgeted capital spending. The General Government CIP Fund’s ending fund balance increased from $2.5 million to $24.0 million due to a $21.1 million parks and recreation bond issuance. The Municipal Debt Service Fund’s ending fund balance decreased from $165,436 to $164,136 due to total outflows slightly exceeding to inflows of resources. Proprietary funds. Net position of the Enterprise Funds at the end of the year amounted to $115.1 million. This increased by $3.3 million during the fiscal year to the extent that revenues exceeded expenses in the fund and from capital contributions of water systems. Net position of the Internal Service Fund at the end of the year amounted to $2.9 million. This increased by $490,932 during the fiscal year to the extent that self-insurance premiums exceeded claim payments and administrative expenses. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 26 BUDGETARY HIGHLIGHTS There were no amendments to the Town of Oro Valley’s fiscal year 2021-22 operating and capital budget. A schedule showing the original and final budget amounts compared to the Town’s actual financial activity for the General Fund is provided in this report as required supplementary information. The significant variances are summarized as follows: • The favorable variance of $6.5 million in sales tax revenue was primarily the result of inflation and conservative budgeting due to COVID-19. • The unfavorable variance of $1.0 million in the net decrease in fair value of investments was a result of a rising interest rate environment. • The favorable expenditure variance of $7.6 million was primarily the result of unutilized budgeted contingency in the fund of $5.0 million, delays in planned capital projects, and vacancy savings from personnel. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. At year end, the Town had invested $306.5 million in capital assets (net of accumulated depreciation), including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. This amount represents a net increase of $2.3 million from last year. This was primarily due to roadway infrastructure. The following schedule presents capital asset balances for the fiscal years ended June 30, 2022 and June 30, 2021. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 27 Increase/ 2022 2021 (Restated)(Decrease) Land and improvements 34,674,821$ 33,972,221$ 702,600$ Infrastructure 242,183,497 214,156,442 28,027,055 Buildings 45,920,567 44,218,568 1,701,999 Machinery, equipment, and vehicles 20,139,411 18,616,508 1,522,903 Right of use asset 851,353 851,353 - Construction in progress 7,135,093 26,256,480 (19,121,387) Accumulated depreciation (154,907,180) (144,635,387) (10,271,793) Net capital assets 195,997,562$ 193,436,185$ 2,561,377$ Increase/ 2022 2021 (Decrease) Land and improvements 2,410,660$ 2,410,660$ -$ Water rights 8,534,490 8,534,490 - Water system 145,877,922 143,246,169 2,631,753 Stormwater system 3,650,716 3,650,716 - Machinery, equipment, and vehicles 6,215,124 6,017,146 197,978 Construction in progress 8,412,006 7,599,940 812,066 Accumulated depreciation (64,553,509) (60,684,362) (3,869,147) Net capital assets 110,547,409$ 110,774,759$ (227,350)$ Business-type Activities Governmental Activities The estimated cost to complete current construction projects is $47.1 million. Additional information on the Town’s capital assets can be found in Note 6. Debt Administration. At year end, the Town had $70.0 million in long-term debt outstanding with $7.7 million due within one year. Long-term debt increased by $33.7 million due to $5.4 million in maturities and redemptions, offset with $39.1 million issued during the fiscal year. The following table presents a summary of the Town’s outstanding long- term debt for the fiscal years ended June 30, 2022 and June 30, 2021. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 28 Increase/ 2022 2021 (Restated)(Decrease) Revenue bonds 46,353,030$ 8,229,620$ 38,123,410$ Leases 769,691 832,353 (62,662) 47,122,721$ 9,061,973$ 38,060,748$ Increase/ 2022 2021 (Decrease) Revenue bonds 20,476,968$ 24,528,378$ (4,051,410)$ Loans payable 2,404,213 2,713,108 (308,895) 22,881,181$ 27,241,486$ (4,360,305)$ Business-type Activities Governmental Activities State statutes currently limit the amount of general obligation debt a Town may issue to 20 percent of its net full cash assessed valuation for water, sewer, lights, open space preserves, parks, playgrounds and recreational facilities. The current debt limitation for the Town is $165.9 million. State statutes also currently limit the amount of general obligation debt a Town may issue to six percent of its net full cash assessed valuation for all other purposes. The current debt limitation for the Town is $49.8 million. The Town does not have any general obligation debt. The Town has a bond rating of “AA+” from Standard & Poor’s and “AA” from Fitch Ratings on outstanding revenue bonds. Additional information on the Town’s long-term debt can be found in Notes 7 through 10. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2022 Page 29 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES Many factors were considered by the Town’s administration during the process of developing the fiscal year 2022-23 budget. Among them: • The unemployment rate for the Town of Oro Valley is currently 3.4 percent. Pima County’s and the State of Arizona’s unemployment rates are 3.9 percent and 3.3 percent, respectively. • The Town’s net full cash assessed valuation for the current year is $829,644,553. • Single family residential (SFR) building permits issued in this fiscal year totaled 198, as compared to 498 SFR building permits issued last fiscal year. Projections for SFR building permits are 171 for fiscal year 2022-23. The adopted combined operating and capital expenditure budget for fiscal year 2022-23 totals $147.7 million, a decrease of $14.3 million, or 8.8 percent over last year’s budget of $162.0 million. This decrease is primarily due to a reduction in planned capital projects and federal stimulus. The budget for fiscal year 2022-23 continues to place emphasis on achieving the goals identified in the Town’s adopted Strategic Plan, which was recently updated in fiscal year 21-22 and includes the following focus areas: economic vitality, culture and recreation, public safety, roads water and Town assets, land use, effective and efficient government, and Town finances. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Town’s finances and to demonstrate the Town’s accountability for the resources it receives. If you have questions about this report or need additional information, contact the Finance Department, Town of Oro Valley, Arizona, 11000 North La Cañada Drive, Oro Valley, Arizona 85737. Page 30 (This page intentionally left blank) Page 31 BASIC FINANCIAL STATEMENTS Page 32 (This page intentionally left blank) Page 33 GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 34 (This page intentionally left blank) Page 35 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2022 ASSETS Current assets: Cash and investments $44,086,726 $31,977,199 $76,063,925 Cash with fiscal agent 25,000,000 - 25,000,000 Taxes receivable 3,586,515 - 3,586,515 Accounts receivable 722,599 2,479,166 3,201,765 Interest receivable 46,913 56,948 103,861 Intergovernmental receivable 3,294,889 - 3,294,889 Lease receivable 1,406,422 - 1,406,422 Inventories 89,249 - 89,249 Prepaid items 1,500,518 71,109 1,571,627 Total current assets 79,733,831 34,584,422 114,318,253 Noncurrent assets: Capital assets, not being depreciated/amortized 41,809,914 19,357,155 61,167,069 Capital assets, being depreciated/amortized (net)154,187,648 91,190,254 245,377,902 Total noncurrent assets 195,997,562 110,547,409 306,544,971 Total Assets 275,731,393 145,131,831 420,863,224 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding - 303,689 303,689 Pension plan items 35,405,005 837,965 36,242,970 Total Deferred Outflows of Resources 35,405,005 1,141,654 36,546,659 LIABILITIES Current liabilities: Accounts payable and accrued expenses 5,458,765 1,125,145 6,583,910 Accrued wages and benefits 1,605,454 160,403 1,765,857 Intergovernmental payable 304,284 1,180,295 1,484,579 Interest payable - 285,897 285,897 Unearned revenue 671,526 - 671,526 Claims payable 302,655 - 302,655 Customer deposits payable 446,294 698,712 1,145,006 Other accrued liabilities 1,203,256 - 1,203,256 Compensated absences 2,264,309 281,705 2,546,014 Loans payable - 317,087 317,087 Leases payable 197,385 - 197,385 Bonds payable 2,895,660 4,245,340 7,141,000 Total current liabilities 15,349,588 8,294,584 23,644,172 Noncurrent liabilities: Noncurrent portion of long-term obligations 82,233,359 21,742,999 103,976,358 Total noncurrent liabilities 82,233,359 21,742,999 103,976,358 Total Liabilities 97,582,947 30,037,583 127,620,530 DEFERRED INFLOWS OF RESOURCES Leases 1,378,896 - 1,378,896 Pension plan items 10,098,598 1,156,127 11,254,725 Total Deferred Inflows of Resources 11,477,494 1,156,127 12,633,621 NET POSITION Net investment in capital assets 179,219,389 87,969,917 267,189,306 Restricted for: Capital projects 19,934,853 - 19,934,853 Debt service 164,136 - 164,136 Public safety 446,113 - 446,113 Highway and streets 1,206,985 - 1,206,985 Unrestricted 1,104,482 27,109,858 28,214,340 Total Net Position $202,075,958 $115,079,775 $317,155,733 Business-type Activities Governmental Activities Total The notes to the basic financial statements are an integral part of this statement. Page 36 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 Functions/Programs Primary Government Governmental activities: General government $28,083,397 $5,519,724 $33,289 $5,981,891 Public safety 8,232,307 341,334 757,704 174,905 Highway and streets 10,234,099 378,585 1,724,101 2,336,868 Transit 1,267,596 - 1,518,846 - Culture and recreation 10,059,071 7,033,797 6,178 - Interest on long-term debt 1,149,019 - - - Total governmental activities 59,025,489 13,273,440 4,040,118 8,493,664 Business-type activities: Water 16,202,611 18,333,445 - 1,595,219 Stormwater 1,282,283 1,495,382 - 16,906 Total business-type activities 17,484,894 19,828,827 - 1,612,125 Total Primary Government $76,510,383 $33,102,267 $4,040,118 $10,105,789 General revenues: Taxes: Sales taxes Franchise taxes Unrestricted state shared revenues Investment income: Interest Net decrease in fair value of investments Miscellaneous Transfers Total general revenues and transfers Changes in net position Net position, beginning of year, as restated Net position, end of year Expenses Services Charges for Operating Grants and Contributions Program Revenues Contributions Grants and Capital The notes to the basic financial statements are an integral part of this statement. Page 37 $(16,548,493) $- $(16,548,493) (6,958,363) - (6,958,363) (5,794,545) - (5,794,545) 251,250 - 251,250 (3,019,096) - (3,019,096) (1,149,019) - (1,149,019) (33,218,267) - (33,218,267) - 3,726,053 3,726,053 - 230,005 230,005 - 3,956,058 3,956,058 $(33,218,267) $3,956,058 $(29,262,209) 30,583,921 - 30,583,921 756,388 - 756,388 15,081,806 - 15,081,806 287,841 142,001 429,842 (1,469,001) (1,003,434) (2,472,435) 150,100 15,404 165,504 (198,665) 198,665 - 45,192,390 (647,364) 44,545,026 11,974,123 3,308,694 15,282,817 190,101,835 111,771,081 301,872,916 $202,075,958 $115,079,775 $317,155,733 Totals Net (Expense) Revenue and Changes in Net Position Net (Expense) Revenue and Changes in Net Position Activities Governmental Activities Business-type Page 38 (This page intentionally left blank) Page 39 FUND FINANCIAL STATEMENTS Page 40 TOWN OF ORO VALLEY, ARIZONA BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2022 Community ASSETS Cash and investments $27,179,827 $6,259,268 $2,342,482 Cash with fiscal agent - - 25,000,000 Taxes receivable 3,308,286 278,229 - Accounts receivable 569,819 152,780 - Interest receivable 18,896 476 11,945 Intergovernmental receivable 2,756,516 - - Lease receivable 952,529 453,893 - Inventories - 89,249 - Prepaid items 1,279,770 38,016 181,682 Total Assets $36,065,643 $7,271,911 $27,536,109 LIABILITIES Accounts payable $1,353,501 $167,242 $3,583,179 Accrued payroll and related benefits 1,605,454 - - Intergovernmental payable 304,284 - - Unearned revenue 201,433 426,313 - Customer deposits payable 446,294 - - Other accrued liabilities 831,244 372,012 - Total Liabilities 4,742,210 965,567 3,583,179 DEFERRED INFLOWS OF RESOURCES Lease related 933,010 445,886 - FUND BALANCES Nonspendable 1,279,770 127,265 181,682 Restricted - - 23,771,248 Committed 12,813,742 5,733,193 - Assigned - - - Unassigned 16,296,912 - - Total Fund Balances 30,390,423 5,860,458 23,952,930 Total Liabilities, Deferred Inflows of Resources and Fund Balances $36,065,643 $7,271,911 $27,536,109 General Center Government CIP General The notes to the basic financial statements are an integral part of this statement. Page 41 $164,136 $4,819,658 $40,765,371 - - 25,000,000 - - 3,586,515 - - 722,599 - 14,911 46,228 - 538,373 3,294,889 - - 1,406,422 - - 89,249 - 1,050 1,500,518 $164,136 $5,373,992 $76,411,791 $- $205,409 $5,309,331 - - 1,605,454 - - 304,284 - 43,780 671,526 - - 446,294 - - 1,203,256 - 249,189 9,540,145 - - 1,378,896 - - 1,588,717 164,136 5,108,186 29,043,570 - 16,617 18,563,552 - - - - - 16,296,912 164,136 5,124,803 65,492,750 $164,136 $5,373,992 $76,411,791 Debt Service Funds Total Funds Non-Major Municipal Governmental Governmental Page 42 (This page intentionally left blank) Page 43 TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2022 Governmental Fund Balances $65,492,750 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/amortization. Capital outlay 350,904,742 Less accumulated depreciation/amortization (154,907,180) 195,997,562 Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. Deferred outflows of resources related to pensions 35,405,005 Deferred inflows of resources related to pensions (10,098,598) 25,306,407 The Internal Service Fund is used by management to charge the cost of insurance to the individual funds. The assets and liabilities of the Internal Service Fund are included in the Statement of Net Position.2,869,951 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences payable (2,441,214) Revenue bonds payable (50,463,247) Leases payable (769,690) Net pension liability (33,916,561) (87,590,712) Net Position of Governmental Activities $202,075,958 The notes to the basic financial statements are an integral part of this statement. Page 44 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2022 REVENUES Sales taxes $27,048,414 $3,535,507 $- Franchise taxes 756,388 - - Development impact fees - - - Intergovernmental 22,998,492 - 263,024 Licenses, fees and permits 2,390,080 - - Fines, forfeitures and penalties 132,636 - - Charges for services 2,658,852 5,964,727 741,012 Investment income: Interest 195,873 28,785 9,949 Net (decrease) in fair value of investments (950,398) (193,826) (67,576) Other 269,342 160,532 147,314 Total Revenues 55,499,679 9,495,725 1,093,723 EXPENDITURES Current: General government 28,445,524 - - Public safety 17,483,890 - - Highway and streets - - - Transit 1,328,131 - - Culture and recreation 3,324,879 5,847,580 112,234 Capital outlay 622,749 139,003 9,712,790 Debt service: Principal retirement 46,927 15,736 - Interest and fiscal charges 2,866 1,345 - Bond issuance costs - - 366,722 Total Expenditures 51,254,966 6,003,664 10,191,746 REVENUES OVER/(UNDER) EXPENDITURES 4,244,713 3,492,061 (9,098,023) OTHER FINANCING SOURCES/(USES) Issuance of revenue bonds - - 21,120,000 Premium on bond issuance - - 4,247,224 Sale of general capital assets - - 150,796 Insurance recoveries - 7,262 13,695 Transfers in/(out), net (6,262,832) (315,658) 5,015,210 Total Other Financing Sources (Uses)(6,262,832) (308,396) 30,546,925 NET CHANGE IN FUND BALANCES (2,018,119) 3,183,665 21,448,902 FUND BALANCES, Beginning of year 32,408,542 2,676,793 2,504,028 FUND BALANCES, End of year $30,390,423 $5,860,458 $23,952,930 CenterGeneral Government CIP Community General The notes to the basic financial statements are an integral part of this statement. Page 45 $- $- $30,583,921 - - 756,388 - 605,406 605,406 33,289 4,250,837 27,545,642 - 28,838 2,418,918 - 100,592 233,228 - 28,125 9,392,716 7,225 31,835 273,667 - (153,035) (1,364,835) 95,776 18,478 691,442 136,290 4,911,076 71,136,493 - - 28,445,524 17,612,366 157,142 35,253,398 - 1,779,889 1,779,889 - - 1,328,131 - - 9,284,693 - 3,071,334 13,545,876 971,586 - 1,034,249 553,007 - 557,218 362,086 - 728,808 19,499,045 5,008,365 91,957,786 (19,362,755) (97,289) (20,821,293) 17,975,000 - 39,095,000 - - 4,247,224 - - 150,796 - - 20,957 1,386,455 (21,840) (198,665) 19,361,455 (21,840) 43,315,312 (1,300) (119,129) 22,494,019 165,436 5,243,932 42,998,731 $164,136 $5,124,803 $65,492,750 Non-Major Funds Governmental Funds Governmental Total Municipal Debt Service Page 46 (This page intentionally left blank) Page 47 TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2022 Net change in fund balances - total governmental funds $22,494,019 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Expenditures for capital assets $12,821,629 Contributed capital 702,600 Less current year depreciation (10,941,199) 2,583,030 Deferred items such as premiums related to the net cost of issuance of bonds are amortized over the life of the associated bond issue in the government-wide statements but not reported in the funds 137,007 Governmental funds report pension contributions as expenditures. However, they are reported as deferred outflows of resources in the Statement of Net Position. The change in the net pension liability, adjusted for deferred pension items, is reported as pension expense in the Statement of Activities.28,636,662 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on disposal of assets $(21,653) Compensated absences (37,902) (59,555) The Internal Service Fund is used by management to charge the cost of insurance to the individual funds. The changes in net position of the Internal Service Fund is reported with governmental activities in the Statement of Activities.490,932 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 increases long-term liabilities in the statement of net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is issued, whereas these amounts are amortized in the statement of activities. Debt issued or incurred $(39,095,000) Premium on bond issuance (4,247,224) Lease principal retirement 62,662 Revenue bond principal retirement 971,590 (42,307,972) Change in net position of governmental activities.$11,974,123 The notes to the basic financial statements are an integral part of this statement. Page 48 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET POSITION - PROPRIETARY FUNDS JUNE 30, 2022 ASSETS Current assets: Cash and investments $30,852,058 $1,125,141 $31,977,199 $3,321,355 Accounts receivable 2,280,555 198,611 2,479,166 - Interest receivable 54,384 2,564 56,948 685 Prepaid items 71,109 - 71,109 - Total current assets 33,258,106 1,326,316 34,584,422 3,322,040 Noncurrent assets: Capital assets, non-depreciable 19,357,155 - 19,357,155 - Capital assets, depreciable (net)87,972,427 3,217,827 91,190,254 - Total noncurrent assets 107,329,582 3,217,827 110,547,409 - Total Assets 140,587,688 4,544,143 145,131,831 3,322,040 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 303,689 - 303,689 - Pension plan items 666,101 171,864 837,965 - Total Deferred Outflows of Resources 969,790 171,864 1,141,654 - LIABILITIES Current liabilities: Accounts payable and accrued expenses 1,120,486 4,659 1,125,145 149,434 Accrued wages and benefits 129,141 31,262 160,403 - Intergovernmental payable 1,180,222 73 1,180,295 - Interest payable 285,897 - 285,897 - Claims payable - - - 302,655 Customer deposits payable 698,712 - 698,712 - Compensated absences 263,312 18,393 281,705 - Loans payable 317,087 - 317,087 - Bonds payable 4,245,340 - 4,245,340 - Total current liabilities 8,240,197 54,387 8,294,584 452,089 Noncurrent liabilities: Noncurrent portion of long-term obligations 21,440,068 302,931 21,742,999 - Total noncurrent liabilities 21,440,068 302,931 21,742,999 - Total Liabilities 29,680,265 357,318 30,037,583 452,089 DEFERRED INFLOWS OF RESOURCES Pension plan items 919,009 237,118 1,156,127 - NET POSITION Net investment in capital assets 84,752,090 3,217,827 87,969,917 - Unrestricted 26,206,114 903,744 27,109,858 2,869,951 Total Net Position $110,958,204 $4,121,571 $115,079,775 $2,869,951 Activities: GovernmentalEnterprise Funds Non-Major Water Enterprise Fund Total Service Fund Internal The notes to the basic financial statements are an integral part of this statement. Page 49 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 OPERATING REVENUES: Charges for services $17,660,709 $1,492,609 $19,153,318 $- Intergovernmental - 16,906 16,906 - Other 672,736 2,773 675,509 - Self insurance premiums - - - 3,850,670 Total Operating Revenues 18,333,445 1,512,288 19,845,733 3,850,670 OPERATING EXPENSES: Costs of sales and services 11,613,865 1,055,421 12,669,286 28,084 Contractual services 394,626 66,436 461,062 856,843 Depreciation and amortization 3,622,325 160,426 3,782,751 - Claims payments - - - 2,384,594 Administrative - - - 225 Total Operating Expenses 15,630,816 1,282,283 16,913,099 3,269,746 OPERATING INCOME/(LOSS)2,702,629 230,005 2,932,634 580,924 NONOPERATING REVENUES (EXPENSES): Development impact fees 1,167,086 - 1,167,086 - Sales of assets 15,404 - 15,404 - Investment income: Interest 137,404 4,597 142,001 14,174 Net decrease in fair value of investments (967,565) (35,869) (1,003,434) (104,166) Interest expense (571,795) - (571,795) - Total Nonoperating Revenues (Expenses)(219,466) (31,272) (250,738) (89,992) INCOME/(LOSS) BEFORE TRANSFERS 2,483,163 198,733 2,681,896 490,932 CAPITAL CONTRIBUTIONS 428,133 - 428,133 - TRANSFERS IN/(OUT), NET 198,665 - 198,665 - NET CHANGE IN NET POSITION 3,109,961 198,733 3,308,694 490,932 NET POSITION, Beginning of year 107,848,243 3,922,838 111,771,081 2,379,019 NET POSITION, End of year $110,958,204 $4,121,571 $115,079,775 $2,869,951 Enterprise Funds Governmental Water Enterprise Fund Total Service Fund Activities: Non-Major Internal The notes to the basic financial statements are an integral part of this statement. Page 50 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 20 22 Increase (Decrease) in Cash and Cash Equivalents Cash flows from operating activities: Cash received from customers $18,388,840 $1,510,837 $19,899,677 $- Cash received from premiums - - - 3,850,670 Cash payments to suppliers for goods and services (8,855,843) (511,839) (9,367,682) (898,583) Cash payments to employees for services (3,406,405) (844,527) (4,250,932) - Cash payments for claims - - - (2,410,291) Net cash provided by (used for) operating activities 6,126,592 154,471 6,281,063 541,796 Cash flows from noncapital and related financing activities: Interfund transfers 198,665 - 198,665 - Net cash provided by (used for) noncapital financing activities 198,665 - 198,665 - Cash flows from capital and related financing activities: Development impact fees 1,167,086 - 1,167,086 - Acquisition of capital assets (3,244,185) - (3,244,185) - Proceeds from sale of capital assets 15,404 - 15,404 - Principal paid on long-term debt (4,360,305) - (4,360,305) - Interest on long-term debt (641,992) - (641,992) - Net cash provided by (used for) capital financing activities (7,063,992) - (7,063,992) - Cash flows from investing activities: Investment income (820,827) (31,070) (851,897) (89,045) Net cash provided by (used for) investing activities (820,827) (31,070) (851,897) (89,045) Net increase (decrease) in cash and cash equivalents (1,559,562) 123,401 (1,436,161) 452,751 Cash and cash equivalents, beginning of year 32,411,620 1,001,740 33,413,360 2,868,604 Cash and cash equivalents, end of year $30,852,058 $1,125,141 $31,977,199 $3,321,355 Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities Operating income (loss)$2,702,629 $230,005 $2,932,634 $580,924 Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 3,622,325 160,426 3,782,751 - Provision for bad debt 13,814 2,570 16,384 - Change in assets and liabilities: Accounts receivable 45,595 (4,021) 41,574 - Prepaid items (51,715) 648 (51,067) 920 Accounts payable (29,374) (201,550) (230,924) (14,351) Claims payable - - - (25,697) Accrued wages and benefits (40,994) 382 (40,612) - Customer deposits payable (4,014) - (4,014) - Pension plan items (131,674) (33,989) (165,663) - Total adjustments 3,423,963 (75,534) 3,348,429 (39,128) Net cash provided by (used for) operating activities $6,126,592 $154,471 $6,281,063 $541,796 Non-cash capital and financing activities Contribution of assets from developers $428,133 $- $428,133 $- Governmental Activities Internal Service FundWater Non-major Enterprise Fund Total Enterprise Funds The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 51 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Town of Oro Valley, Arizona (Town) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Town’s accounting policies are described below. A. Reporting Entity The Town is a municipal entity governed by an elected mayor and council. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The Town is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, there are no component units combined with the Town for financial statement presentation purposes, and the Town is not included in any other governmental reporting entity. Consequently, the Town’s financial statements include the funds of those organizational entities for which its elected governing body is financially accountable. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the nonfiduciary activities of the Town. For the most part, the effect of internal activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the Town. Governmental activities normally are supported by sales taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Sales taxes, franchise taxes, unrestricted state shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 52 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government- wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long - term debt and acquisitions under lease contracts are reported as other financing sources. Sales taxes, franchise taxes, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Unearned revenue arises when resources are received by the Town before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. The Council adopts the budget at the fund level as a total amount of expenditures. Financial control is administered by fund, with budgetary control for operating performance regulated at the departmental level, e.g., finance, development services, police, and parks and recreation. The legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is at the fund level. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 53 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The internal service fund is presented in a single column on the face of the proprietary fund statements. The Town reports the following major governmental funds. General Fund – This fund accounts for all financial resources of the Town, except those required to be accounted for in other funds. Community Center Fund – This fund accounts for the activity of the Oro Valley Community Center, including golf, tennis, food and beverage and fitness revenues and expenditures. This fund also accounts for the half cent sales taxes revenues dedicated to these operations, as well as other Parks and Recreation facilities, amenities or operations as determined by the Town Council. General Government CIP Fund – This fund accounts for governmental capital asset projects. Municipal Debt Service Fund – This fund accounts for debt service payments on the Series 2010 Excise Tax Revenue Obligations, the Series 2012 Excise Tax Revenue Obligations, the Series 2015 Excise Tax Revenue Refunding Obligations, the Series 2016 Excise Tax Revenue Obligations, the Series 2017 Refunding Excise Tax Revenue Obligations, the Series 2018 Excise Tax Revenue Obligations, the Taxable Series 2021 Excise Tax Revenue Obligations and the Tax-Exempt Series 2021 Excise Tax Revenue Obligations. The Town reports the following major proprietary funds. Water Fund – This fund accounts for the costs to operate, construct and finance the Town water system. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Town’s internal service fund is charges for health benefits. The principal operating revenues of the Town’s enterprise funds are charges to customers for water and stormwater drainage services. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, and amortization. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Cash and Investments For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end were cash on hand, cash in bank, and cash and investments held by another governmental entity as the Town's fiscal agent. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 54 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Arizona statute requires a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the publ ic deposits, less any applicable deposit insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. E. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. F. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Interfund balances between governmental funds are eliminated on the Statement of Net Position All receivables are shown net of an allowance for uncollectibles. G. Inventory All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories consist of expendable supplies held for consumption. Inventories are recorded as expenses when consumed on the government-wide financial statements and the fund financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 55 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the government-wide and fund financial statements. Prepaid items are recorded as expenses when consumed in the government-wide financial statements and the fund financial statements. I. Capital Assets Capital assets, which include land, water rights, buildings and improvements, right-to-use lease assets, improvements other than buildings, infrastructure, vehicles, machinery, equipment, and construction in progress, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Capital assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the as set or materially extend the life of the asset are not capitalized. Certain capital assets of the Town are depreciated/amortized using the straight-line method over the following estimated useful lives: Assets Years Buildings 50 Improvements other than buildings 20-30 Infrastructure 20-50 Vehicles 4-6 Machinery and equipment 7-20 Intangible right-to-use lease assets are amortized over the shorter of the lease term or the useful life of the underlying assets above. J. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 56 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. Compensated Absences The Town’s employee annual and sick leave policies generally provide for granting annual and sick leave with pay. Full-time employees accrue annual leave based on the number of years employed. Employees who terminate employment shall be paid in a lump sum. Full-time employees accumulate sick leave at the rate of one work day per month. Part-time employees whose normal week is twenty hours or more receive sick leave at half the rate of full-time employees. Once an employee has exceeded 480 hours of accrued sick leave, one half of the sick leave balance in excess of the 480 hours shall be paid to the employee upon separation from employment. The current and long-term liabilities, including related benefits, for accumulated vacation and sick leave are reported on the government-wide financial statements. A liability for these amounts, including related benefits, is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations and retirements. Generally, resources from the General Fund are used to pay for compensated absences. L. Leases As lessee, the Town recognizes lease liabilities with an initial, individual value of $75,000 or more. The Town uses its estimated incremental borrowing rate to measure lease liabilities unless it can readily determine the interest rate implicit in the lease. The Town's estimated incremental borrowing rate is based on the average interest rate of other financing instruments with similar terms and risks as those currently entered into by the Town. As lessor, the Town recognizes lease receivables with an initial, individual value of $150,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the Town charges the lessee) and the implicit rate cannot be determined, the Town uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. The Town’s estimated incremental borrowing rate is calculated as described above. M. Pensions For purposes of measuring the net pension liabilities, related deferred outflows of resources and deferred inflows of resources, and related expenses, information about the pension plans’ fiduciary net position and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. N. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 57 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. The Town's legal debt limit for water, sewer, lights, open space preserves, parks, playgrounds, and recreational facilities is $165.9 million, and for all other purposes is $49.8 million. The Town does not have any related debt. O. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. P. Net Position Flow Assumption In the government-wide and proprietary fund financial statements the Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. Q. Estimates The preparation of the 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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. R. New Pronouncements For the year ended June 30, 2022, the Town implemented GASB Statement No.87 – Leases, which establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. As a result, the Town’s financial statements have been modified to reflect the recognition of certain lease assets and liabilities for leases that were previously classified as operating leases and recognized as inflows or outflows of resources based on the contract payment provisions. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 58 NOTE 2 – FUND BALANCE CLASSIFICATIONS Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. Restricted. Fund balance is reported as restricted when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Committed. The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by formal action of the Town Council through the approval of a Town resolution. Those committed amounts cannot be used for any other purpose unless the Town Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. The committed fund balance reported in the General Fund is to be used for contingency reserve. The committed fund balance reported in the Townwide Facilities Projects Fund is used for improvements to Town parks. The committed fund balance reported in the Community Center Fund is used for the culture and recreation activity of the Community Center as well as other Parks and Recreation facilities, amenities or operations as determined by the Town Council. Assigned. Amounts in the assigned fund balance classification are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a management official delegated that authority by the formal Town Council action. This authorization has been given to the Town Manager through the approval of Resolution No. (R)21-37, which amended the Town Financial and Budgetary Policies. The assigned fund balance in the General Government CIP Fund is to be used for governmental capital asset projects. Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had be restricted, committed, or assigned. The Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 59 NOTE 2 – FUND BALANCE CLASSIFICATIONS (Continued) The table below provides detail of the major components of the Town’s fund balance classifications at year end. Municipal Fund Balances: Nonspendable: Inventory $- $89,249 $- $- $- Prepaid items 1,279,770 38,016 181,682 - - Restricted: Highway and Streets - - - - 1,206,985 Debt service - - - 164,136 - Capital projects - - 23,771,248 - 3,455,088 Public safety - - - - 446,113 Committed: Contingency reserve 12,813,742 - - - - Culture & recreation - 5,733,193 - - 16,617 Assigned: Townwide capital - - - - - Unassigned:16,296,912 - - - - Total Fund Balances $30,390,423 $5,860,458 $23,952,930 $164,136 $5,124,803 Debt Service Fund Non-Major Governmental Funds General Fund Community Center Fund General Government CIP Fund NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Excess Expenditures Over Budget – At year end, the Town had expenditures that exceeded the budget, however, this does not constitute a violation of legal provisions. NOTE 4 – CASH AND INVESTMENTS A.R.S. authorize the Town to invest public monies in obligations of the U.S. Government and its agencies, obligations of the State and certain local government subdivisions, interest - bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. The statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s investments. Custodial Credit Risk – Deposits. Custodial Credit risk is the risk that in the event of bank failure the Town’s deposits may not be returned to the Town. The Town does not have a deposit policy for custodial credit risk. At year end, the carrying value of the Town’s deposits was $5,308,831 and the bank balance was $5,330,519. Of the bank balance, $750,000 was covered by Federal depository insurance and the remainder was covered by collateral held by the pledging financial institution’s trust department or agent but not in the Town’s name and no amounts were uninsured and uncollateralized. Additionally, the Town had cash on hand of $8,927. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 60 NOTE 4 – CASH AND INVESTMENTS (Continued) Fair Value Measurements. The Town 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 Valuation Techniques. Equity and debt securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Money markets and certificates of deposit securities classified in Level 2 of the of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool – Government (Pool 7), with no regulatory oversight. The pools are as an investment company are not registered with the Securities and Exchange Commission. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools 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. The Arizona State Treasurer has a publicly available financial report that includes financial statements and required supplementary information. Copies may be obtained by contacting the Arizona State Treasurer, 1700 West Washington, Phoenix, AZ 85007 or at www.aztreasury.gov. The County Treasurer’s pool is an external investment pool with no regulatory oversight. The pool is not required to register (and is not registered) with the Securities and Exchange Commission. The fair value of each participants’ position in the County Treasurer investment pool approximates the value of the participants’ 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. Custodial Credit Risk – Investments. The Town’s investment in the State and County Treasurer’s investment pools represents a proportionate interest in the pool’s portfolio; however, the Town’s portion is not identified with specific investments and is not subject to custodial credit risk. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 61 NOTE 4 – CASH AND INVESTMENTS (Continued) All investments in which the fair value hierarchy is applicable are measured at fair value on a recurring basis. At year end, the Town’s investments consisted of the following: Investment Type Fair Value Category Less than 1 1-5 Moody's S&P's Money Market - Wells Fargo 189,344 Level 2 189,344 N/A N/A Money Market - Zion Bank 157,158 Level 2 157,158 N/A N/A Money Market - US Bank 30,879,059 Level 2 30,879,059 N/A N/A Money Market - BNY Mellon 2,067,984 Level 2 2,067,984 N/A N/A U.S. Treasuries 32,452,508 Level 1 4,447,969 28,004,539 Aaa AA+ Supra-National Agency: International Bank of Reconstruction and Dev.342,619 Level 1 342,619 Aaa AAA Asian Development Bank 1,252,997 Level 1 1,252,997 Aaa AAA Inter-American Development Bank 529,412 Level 1 529,412 Collateralized Mortgage Obligation FHMS 6,016 Level 1 6,016 Aaa AA+ Federal Home Loan Mortgage Corporation 414,242 Level 1 414,242 - Aaa AA+ Asset-Backed Security Credit Rating - Aaa and AAA 2,158,861 Level 1 133,601 2,025,260 Aaa AAA Credit Rating - N/A and AAA 2,940,178 Level 1 366,502 2,573,676 N/A AAA Credit Rating - Aaa and N/A 898,974 Level 1 21,379 877,595 Aaa N/A Corporate Notes: Credit Rating - A3 and BBB+886,831 Level 1 886,831 A3 BBB+ Credit Rating - A3 and A+161,967 Level 1 161,967 A3 A+ Credit Rating - A3 and A-1,677,667 Level 1 1,677,667 A3 A- Credit Rating - A3 and AA-113,396 Level 1 113,396 A3 AA- Credit Rating - A2 and BBB+770,749 Level 1 770,749 A2 BBB+ Credit Rating - A2 and A+250,435 250,435 A2 A+ Credit Rating - A2 and A 1,511,831 Level 1 1,511,831 A2 A Credit Rating - A2 and A-2,749,660 Level 1 2,749,660 A2 A- Credit Rating - A1 and BBB+340,350 Level 1 340,350 A1 BBB+ Credit Rating - A1 and A-1,031,634 Level 1 1,031,634 A1 A- Credit Rating - A1 and A 2,102,595 Level 1 2,102,595 A1 A Credit Rating - A1 and A+1,011,107 Level 1 1,011,107 A1 A+ Credit Rating - A1 and AA - Level 1 - A1 AA Credit Rating - A1 and AA-187,472 187,472 A1 AA- Credit Rating - Aa2 and AA-112,486 Level 1 112,486 Aa2 AA- Credit Rating - Aa3 and AA-840,087 840,087 Aa3 AA- 88,037,620 39,019,858 49,017,762 County Treasurer's Investment Pool 317,182 Not applicable 202 days average maturities N/A State Treasurer's Investment Pool 5 7,391,362 Not applicable 47 days average maturities AAA/S1+ Total 95,746,164 Investment Maturities (in Years)Credit Quality Ratings TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 62 NOTE 4 – CASH AND INVESTMENTS (Continued) Interest Rate Risk. The Town has implemented an investment policy that will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates by the following. 1. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and 2. Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools limiting the average maturity in the portfolio in accordance with this policy. Credit Risk. The Town has implemented an investment policy that will minimize credit risk, which is the risk of loss due to the failure of the security or backer by the following: 1. Limiting investments to the types of securities listed in Section 6 of this investment policy; 2. Pre-qualifying financial institutions, broker/dealers, intermediaries, and advisers with which the Town will do business in accordance with Section 5; and 3. Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. Concentration of Credit Risk. The Town places no limit on the amount the Town may invest in any one issuer. The investments in Money Markets, Certificates of Deposit, U.S. Treasuries, Supranational Agency Bonds, Collateralized Mortgage Obligations, Asset-Backed Securities, U.S. Agencies, Corporate Securities, County Treasurer’s Investment Pool, and State Treasurer's Investment Pool 5, represent 35%, 0%, 34%, 2%, 0%, 6%, 0%, 14%, 1%, and 8% of the Town's total investments, respectively. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 63 NOTE 5 – RECEIVABLES Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and presented separately in the financial statements with the exception of intergovernmental receivables. Intergovernmental receivables, net of allowance for uncollectibles, as of year-end for the Town’s individual major funds and non-major governmental funds in the aggregate, were as follows: Intergovernmental receivables: Due from federal government $2,416,074 $54,119 Due from state government 340,443 414,254 Due from other governments 70,000 Net intergovernmental receivables $2,756,516 $538,373 Non-Major General Fund Funds Governmental Lease Receivables – The Town leases cell tower space and building/facility space to third parties under the provisions of various lease agreements. During the fiscal year ended June 30, 2022, the Town recognized total lease-related revenues of $143,805. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 64 NOTE 6 – CAPITAL AND INTANGIBLE ASSETS A summary of capital and intangible asset activity for the current fiscal year follows: Governmental Activities: NON-DEPRECIABLE/AMORTIZABLE Land $33,972,221 $702,600 $- $34,674,821 Construction in progress 26,256,480 7,939,876 (27,061,263) 7,135,093 Total non-depreciable/amortizable 60,228,701 8,642,476 (27,061,263) 41,809,914 DEPRECIABLE/AMORTIZABLE Infrastructure 214,156,442 28,027,055 - 242,183,497 Buildings & improvements 44,218,568 1,701,999 - 45,920,567 Machinery, equipment & vehicles 18,616,508 2,213,962 (691,059) 20,139,411 Right of Use Asset - Equipment 851,353 - - 851,353 Total depreciable/amortizable 277,842,871 31,943,016 (691,059) 309,094,828 ACCUMULATED DEPRECIATION/AMORTIZATION Infrastructure (119,233,273) (8,381,073) - (127,614,346) Buildings & improvements (11,114,106) (1,145,984) - (12,260,090) Machinery, equipment & vehicles (14,288,008) (1,347,396) 669,406 (14,965,998) Right of Use Asset - (66,746) - (66,746) Total accumulated depreciation/amortization (144,635,387) (10,941,199) 669,406 (154,907,180) Total capital assets being depreciated/amortized 133,207,484 21,001,817 (21,653) 154,187,648 Capital assets, net of depreciation/amortization $193,436,185 $29,644,293 $(27,082,916) $195,997,562 Business-type Activities: NON-DEPRECIABLE Land $2,410,660 $- $- $2,410,660 Water rights 8,534,490 - - 8,534,490 Construction in progress 7,599,940 1,826,033 (1,013,967) 8,412,006 Total non-depreciable 18,545,090 1,826,033 (1,013,967) 19,357,156 DEPRECIABLE Water system 143,246,169 2,631,753 - 145,877,922 Stormwater system 3,650,716 - - 3,650,716 Machinery, equipment & vehicles 6,017,146 236,669 (38,691) 6,215,124 Total depreciable 152,914,031 2,868,422 (38,691) 155,743,762 ACCUMULATED DEPRECIATION Water system (55,092,237) (3,515,362) - (58,607,599) Stormwater system (703,674) (76,725) - (780,399) Machinery, equipment & vehicles (4,888,451) (307,583) 30,523 (5,165,511) Total accumulated depreciation (60,684,362) (3,899,670) 30,523 (64,553,509) Total capital assets being depreciated 92,229,669 (1,031,248) (8,168) 91,190,253 Capital assets, net of depreciation $110,774,759 $794,785 $(1,022,135) $110,547,409 Beginning Ending Balance (Restated)Increases Decreases Balance Beginning Ending Balance Increases Decreases Balance TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 65 NOTE 6 – CAPITAL AND INTANGIBLE ASSETS (Continued) Depreciation and amortization expense was charged to functions/programs as follows: Governmental activities: General government $547,042 $48,022 $595,064 Public safety 752,540 - 752,540 Highways & streets 8,611,232 - 8,611,232 Culture & recreation 963,639 18,724 982,363 Total depreciation/amortization expense - governmental activities $10,874,453 $66,746 $10,941,199 Business-type activities: Water $3,739,244 $(116,919) $3,622,325 Stormwater 160,426 - 160,426 Total depreciation/amortization - expense business-type activities $3,899,670 $(116,919) $3,782,751 Depreciation Amortization TotalDepreciation Amortization Total Construction Commitments – As of year-end, the Town had contractual commitments related to park improvements, facility improvements, and water system improvements. At year end the Town had spent $7.8 million on the projects and had estimated remaining contractual commitments of $47.1 million. NOTE 7 – LOAN PAYABLE The Town has a loan from the Water Infrastructure Finance Authority (WIFA) of Arizona for water system projects. The loan payable at current fiscal year end is presented below. Interest Rate (Including Remaining Business-type activities:Fees)Maturities WIFA Loan, 2014 2.65%7/1/22-29 $2,404,213 $317,087 Total $2,404,213 $317,087 Outstanding Principal June 30, 2022 Due Within One Year TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 66 NOTE 7 – LOAN PAYABLE (Continued) Principal and interest payments on the business-type activities loan payable at June 30, 2022 is summarized as follows: Year ending June 30: $317,087 $59,555 325,496 51,034 334,128 42,288 342,989 33,310 352,085 24,093 732,428 19,552 $2,404,213 $229,832 Principal Interest Total 2023 2024 2025 2026 2027 2028-2029 NOTE 8 – REVENUE BONDS PAYABLE Bonds payable at year end, consisted of the following outstanding revenue and refunding bonds. The bonds are both callable and noncallable with interest payable semiannually. Taxes, water revenues, and impact fees are used to pay bonded debt. Purpose Governmental activities: Revenue bonds: Excise Tax Revenue Obligations, 2010 $2,445,000 $940,000 $150,000 Revenue Bonds, 2012 2,580,000 1,215,000 185,000 Pension Obligation Bonds, 2021 17,975,000 17,975,000 940,000 Parks and Recreation, 2021 21,120,000 21,120,000 950,000 Private placement revenue bonds: Refunding Excise Tax Revenue Obligations, 2015 2,529,250 1,176,520 284,750 Excise Tax Revenue Obligations, 2016 2,000,000 1,548,000 140,000 Refunding Excise Tax Revenue Obligations, 2017 1,115,556 653,010 124,410 Excise Tax Revenue Obligations, 2018 2,035,000 1,725,500 121,500 Total $46,353,030 $2,895,660 5.49-6.59% Due Within One Year 3.50-4.00% 1.91% Remaining Maturities 7/1/22-27 7/1/22-25 7/1/22-312.20% 2.43% 3.02% 7/1/22-26 7/1/22-33 7/1/22-42 7/1/22-390.27-2.70% 4.00-5.00% Outstanding Principal June 30, 2022Issued Amount Original Interest Rates 7/1/22-27 Purpose Business-type activities: Revenue bonds: Refunding Revenue Bonds, 2012 $16,595,000 $1,815,000 $1,815,000 Private placement revenue bonds: Refunding Revenue Bonds, 2015 1,245,750 579,480 140,250 Refunding Revenue Bonds, 2017 13,186,444 7,718,984 1,470,590 Excise Tax Revenue Obligations, 2018 6,105,000 5,176,504 364,500 Refunding Revenue Bonds, 2021 5,582,000 5,187,000 455,000 Total $20,476,968 $4,245,340 Rates Maturities Due Within One Year 3.00-5.00%7/1/22-28 1.91%7/1/22-25 3.02% 1.16-1.27% 7/1/22-34 7/1/22-30 2.43%7/1/22-26 Original Amount Issued Interest Remaining Outstanding Principal June 30, 2022 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 67 NOTE 8 – REVENUE BONDS PAYABLE (Continued) Annual debt service requirements to maturity on revenue and refunding bonds for governmental activities at year end are summarized as follows: $2,225,000 $1,318,498 $670,660 $116,900 1,980,000 1,258,121 688,242 101,489 2,030,000 1,201,676 702,974 85,704 2,085,000 1,140,563 717,942 69,565 2,140,000 1,074,363 426,712 55,995 10,040,000 4,364,759 1,564,500 153,629 11,345,000 2,656,020 332,000 10,101 9,405,000 783,278 - - $41,250,000 $13,797,278 $5,103,030 $593,383 Governmental Activities Principal InterestPrincipalInterest Private Placement Revenue BondsRevenue Bonds Year ending June 30: 2023 2024 2025 2026 2027 2028-2032 2033-2037 Total 2038-2042 Annual debt service requirements to maturity on revenue and refunding bonds for business-type activities at year end are summarized as follows: $1,815,000 $81,532 $2,430,340 $367,863 - - 3,046,758 311,895 - - 2,836,026 248,084 - - 2,899,058 186,002 - - 2,812,282 125,317 - - 3,641,500 316,996 - - 996,004 15,266 $1,815,000 $81,532 $18,661,968 $1,571,423 Business-type Activities Total Private Placement Revenue BondsRevenue Bonds Principal Interest Principal Interest 2028-2032 2033-2034 Year ending June 30: 2023 2025 2026 2027 2024 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 68 NOTE 8 – REVENUE BONDS PAYABLE (Continued) Pledged revenues – governmental activities. The Town has pledged future sales (excise) tax revenues to repay outstanding revenue bonds and refunding revenue bonds of $50.5 million as of June 30, 2022. Proceeds from the original bond issuances, including those subsequently refunded, provided financing for land acquisition and facility construction. The bonds are paid solely from the Town’s sales taxes and are payable through 2042. Total annual principal and interest payments for all sales tax revenue bonds are expected to require less than seven percent of gross revenues. The total principal and interest to be paid on the bonds is $60.7 million. The current total sales tax revenues were $30.6 million, and the total principal and interest paid on the bonds was $1.5 million or approximately 4.9 percent of gross revenues. Pledged revenues – business-type activities. The Town has pledged future water revenues to repay outstanding revenue bonds and refunding revenue bonds of $20.5 million as of June 30, 2022. Proceeds from the original bond issuances, including those subsequently refunded, provided financing for the construction and improvements to the Town’s water systems and infrastructure. The bonds are paid solely from water utility revenues and are payable through 2034. Total annual principal and interest payments for all water revenue bond issuances are expected to require approximately 25 percent of gross revenues. The total principal and interest to be paid on the bonds is $22.1 million. The current total customer gross revenues were $19.5 million, and the total principal and interest paid on the bonds was $4.6 million or 23 percent of gross revenues. NOTE 9 – OBLIGATIONS UNDER LEASES Leases – Lease agreements are summarized as follows: Description Copiers 07/01/2021 34 months $4,149 2.5%$136,063 $89,136 Golf carts 03/01/2022 36-54 months 13,259 2.5%637,971 629,211 Fitness equipment 01/15/2022 48 months 1,278 2.5%58,319 51,344 Total lease agreements $832,353 $769,691 Date Liability Lease Beginning Interest Rate Payment Amount June 30, 2022 BalancePayment Terms Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending June 30 2023 $197,385 $15,943 2024 204,042 11,895 2025 157,700 7,329 2026 134,857 3,678 2027 75,707 632 Total $769,691 39,477 Principal Interest TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 69 NOTE 10 – CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the current fiscal year was as follows: Due Within One Year Governmental activities Revenue bonds $2,475,000 $39,095,000 $(320,000) $41,250,000 $2,225,000 Private placement revenue bonds 5,754,620 - (651,590) 5,103,030 670,660 Premium - 4,247,224 (137,007) 4,110,217 - Total bonds payable 8,229,620 43,342,224 (1,108,597) 50,463,247 2,895,660 Leases payable 832,353 - (62,662) 769,691 197,385 Net pension liability 47,607,259 - (13,690,698) 33,916,561 - Compensated absences payable 2,403,311 2,283,260 (2,245,357) 2,441,214 2,264,309 Governmental activities long-term liabilities $59,072,543 $45,625,484 $(17,107,314) $87,590,713 $5,357,354 Business-type activities Revenue bonds $3,545,000 $- $(1,730,000) $1,815,000 $1,815,000 Private placement revenue bonds 20,983,378 - (2,321,410) 18,661,968 2,430,340 Premium 381,457 - (381,457) - - Total bonds payable 24,909,835 - (4,432,867) 20,476,968 4,245,340 Loan payable 2,713,108 - (308,895) 2,404,213 317,087 Net pension liability 4,550,542 - (1,198,225) 3,352,317 - Compensated absences payable 391,711 262,666 (300,744) 353,633 281,705 Business-type activities long-term liabilities $32,565,196 $262,666 $(6,240,731) $26,587,131 $4,844,132 Outstanding Issued Matured/ During Year Outstanding 2022 Due Within One Year July 1,Redeemed June 30, 2021 Outstanding July 1, 2021 (restated) Outstanding June 30, 2022 Matured/ Redeemed During YearIssued New Bond Issuances – In fiscal year 2022, the Town issued $17,975,000 in taxable pension obligation revenue bonds and $21,120,000 in tax-exempt parks and recreation revenue bonds with a premium of $4,247,224. The interest rate for the pension obligation bonds is 2.39%, while the rate for the parks and recreation bonds is 2.31%. Proceeds from the pension obligation bond were used to completely fund the Town’s PSPRS unfunded liability. Proceeds from the parks and recreation bonds are being used to increase amenities at Naranja Park, complete necessary golf irrigation improvements at Town-owned golf courses, and complete multiuse paths. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 70 NOTE 11 – TRANSFERS At year end, transfer activity in the funds was as follows: Interfund transfers: General Fund $- $6,262,832 Community Center Fund - 315,658 General Government CIP 5,015,210 - Municipal Debt Service Fund 1,386,455 - Non-Major Governmental Funds 100,000 121,840 Water Fund 198,665 - $6,700,330 $6,700,330 Transfers In Transfers Out Transfers were made from the General, Community Center, General Impact Fee to the Municipal Debt Service Fund, a non-major governmental fund, for debt service. In addition, transfers were made from the General Fund to the General Government CIP Fund, and from the General Government CIP Fund to the Water Fund to fund capital projects. NOTE 12 – CONTINGENT LIABILITIES Compliance – Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures/expenses that may be disallowed by the grantor cannot be determined at this time, although the Town expects such amounts, if any, to be immaterial. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 71 NOTE 13 – RISK MANAGEMENT The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town’s insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the Town is a participating member. The limit for basic coverage is for $2,000,000 per occurrence on a claims made basis. Excess coverage is for an additional $10,000,000 per occurrence on a follow form, claims made basis. The aggregate limit is also $10,000,000. No significant reduction in insurance coverage occurred during the year and no settlements exceeded insurance coverage during any of the past three fiscal years. The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its members’ additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. The Town is insured by Arizona Municipal Workers Compensation Pool for potential worker related accidents. The Town has established a Self-Insurance Fund to account for and finance its uninsured risks of loss related to its employee health benefits program. The activity is reported in an internal service fund in these financial statements. Under this program, the Fund provides coverage for up to a maximum of $150,000 for each claim, not to exceed an annual aggregate of $2,000,000. The Fund purchases commercial insurance for claims in excess of this coverage. Settled claims have not exceeded this coverage for the past three fiscal years. Liabilities of the fund are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay- outs), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. Changes in the balances of claims liabilities during the past two years are as follows. 2021-22 $328,352 $2,384,594 $2,410,291 $302,655 2020-21 251,704 2,715,039 2,638,391 328,352 Claim Payments Claims Payable at End of Year Claims Payable Beginning of Year Current Year Claims and Changes in Estimates TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 72 NOTE 14 – SUBSEQUENT EVENTS On July 19, 2022, the Town was donated 202 acres of property with a permanent conservation easement from The Conservation Fund. The appraised value of the property was $1.62 million. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 73 NOTE 15 – PENSIONS The Town contributes to the plans described below. The plans are component units of the State of Arizona. Aggregate Amounts. On June 30, 2022, the Town reported the following aggregate amounts related to pensions for all plans to which it contributes. Net pension liability $33,916,561 $3,352,317 $37,268,878 Pension deferred outflows of resources 35,405,005 837,965 36,242,970 Pension deferred inflows of resources 10,098,598 1,156,127 11,254,725 Pension expense 3,094,267 192,424 3,286,691 Total Business-type Activities Governmental Activities The Town reported $31.7 million of pension contributions as expenditures in the governmental funds related to all plans to which it contributes. A. Arizona State Retirement System Plan Description. Town employees not covered by the other pension plans described below participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost - sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple- employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. GASB Statement 75 has not been recorded or further disclosed due to its relative insignificance to the Town’s financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 74 NOTE 15 – PENSIONS (Continued) Benefits Provided. The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: Before July 1, 2011 On or After July 1, 2011 Years of service and age required to receive benefit Sum of years and age equals 80 10 years, age 62 5 years, age 50* Any years, age 65 30 years, age 55 25 years, age 60 10 years, age 62 5 years, age 50* Any years, age 65 Final average salary is based on Highest 36 months of last 120 months Highest 60 months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a 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. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 75 NOTE 15 – PENSIONS (Continued) Active members are eligible for a long-term disability benefit in the event they become unable to perform their work. The monthly benefit is equal to two-thirds of their monthly earnings. Members receiving benefits continue to earn service credit up to their normal retirement dates. Members with long-term disability commencement dates after June 30, 1999, are limited to 30 years of service or the service on record as of the effective disability date if their service is greater than 30 years. Contributions. In accordance with State statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the fiscal year ended June 30, 2022, statute required active ASRS members to contribute at the actuarially determined rate of 12.41 percent (12.22 percent for retirement and 0.19 percent for long-term disability) of the members’ annual covered payroll, and statute required the Town to contribute at the actuarially determined rate of 12.41 percent (12.01 percent for retirement, 0.21 percent for health insurance premium benefit, and 0.19 percent for long-term disability) of the active members’ annual covered payroll. The Town’s contributions for the year ended June 30, 2022, were as follows: Pension $1,746,926 Contributions Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to ASRS. The Town was required by statute to contribute at the actuarially determined rate of 10.22 percent (10.13 for retirement and 0.09 percent for long-term disability) of annual covered payroll. ACR contributions are included in employer contributions presented above. The Town’s pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Contributions from the Water Enterprise Fund were 16%, and contributions from the non-major enterprise fund were 4%. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 76 NOTE 15 – PENSIONS (Continued) Pension Liability. The net pension liability was measured as of June 30, 2021. The total liability used to calculate the net liability was determined using update procedures to roll forward the total liability from an actuarial valuation as of June 30, 2020, to the measurement date of June 30, 2021. The total liabilities as of June 30, 2021, reflect changes in actuarial assumptions based on the results of an actuarial experience study for the 5-year period ended June 30, 2020, including decreasing the discount rate from 7.5 percent to 7.0 percent and changing the projected salary increases from 2.7-7.2 percent to 2.9-8.4 percent. The Town’s proportion of the net assets/liability was based on the Town’s actual contributions to the applicable plan relative to the total of all participating employers’ contributions to the plan for the year ended June 30, 2021. At June 30, 2022, the Town reported the following amounts for its proportionate share of the ASRS plans net assets/liability. In addition, at June 30, 2021, the Town’s percentage proportion for each plan and the related change from its proportion measured as of June 30, 2020 was: Pension $15,876,526 0.121 (0.003) Town % Proportion Increase (Decrease) Net (Asset)/ Liability Pension Expense and Deferred Outflows/Inflows of Resources. The Town has deferred outflows and inflows of resources related to the net pension liability. 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, 2022, the Town recognized pension expense as follows: Pension $931,251 Expense TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 77 NOTE 15 – PENSIONS (Continued) The Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Differences between expected and actual experience $242,023 Changes of assumptions or other inputs 2,066,457 Net difference between projected and actual earnings on pension investments - Changes in proportion and differences between contributions and proportionate share of contributions - Contributions subsequent to the measurement date 1,746,926 Total $4,055,406 Deferred Inflows of Resources Differences between expected and actual experience $- Changes of assumptions or other inputs - Net difference between projected and actual earnings on pension investments 5,030,242 Changes in proportion and differences between contributions and proportionate share of contributions 564,939 Total $5,595,181 Pension Pension 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, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: $(354,018) (90,313) (1,108,911) (1,733,459) - - Thereafter Pension 2023 2024 2025 2026 2027 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 78 NOTE 15 – PENSIONS (Continued) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability are as follows: Pension Actuarial valuation date June 30, 2020 Actuarial roll forward date June 30, 2021 Actuarial cost method Entry age normal Investment rate of return 7.0% Projected salary increases 2.9-8.4% Inflation 2.3% Permanent base increases Included Mortality rates 2017 SRA Scale U-MP Recovery rates 2012 GLTD for long-term di disability Healthcare cost trend rate Not applicable Actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2020. 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 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 of ASRS are summarized in the following table: Asset Class Equity 50%4.90% Fixed income - credit 20%5.20% Interest rate sensitivity bonds 10%0.70% Real estate 20%5.70% Total 100% Target Long-term Expected Real Allocation Rate of Return TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 79 NOTE 15 – PENSIONS (Continued) Discount Rate. At June 30, 2022, the discount rate used to measure the ASRS total pension liability was 7.0 percent, which was a decrease of 0.5 percent from the discount rate used as of June 30, 2020. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following table presents the Town’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 (6.0 percent) or 1-percentage-point higher (8.0 percent) than the current rate: $24,972,445 $15,876,526 $8,293,046 1% Decrease 1% Increase Pension Rate 6.0%7.0%8.0% Proportionate share of the net liability Discount Rate Current 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. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 80 NOTE 15 – PENSIONS (Continued) B. Public Safety Personnel Retirement System and Corrections Officer Retirement Plan Plan Descriptions. Town public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS) or employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PSDCRP). The PSPRS administers an agent and cost- sharing multiple-employer defined benefit pension plan and an agent and cost-sharing 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 the agent plans or cost- sharing plans (PSPRS Tier 3 Risk Pool). Town dispatchers participate in the Corrections Officer Retirement Plan (CORP) or the Public Safety Personnel Defined Contribution Retirement Plan. The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan for dispatchers (agent plans), which were closed to new members as of July 1, 2018. Employees who were CORP members before July 1, 2018, participate in CORP or PSDCRP. Dispatcher employees who became members on or after July 1, 2018, participate in PSDCRP. The PSPRS Board of Trustees described above and the participating local boards govern CORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. The PSPRS and CORP issue a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com. The PSPRS Tier 3 Risk Pool plans and the PSPRS OPEB plans are not further dis closed because of their relative insignificance to the Town’s financial statements. Benefits Provided. The PSPRS and CORP provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows. See the publicly available PSPRS and CORP financial report for additional benefits information. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 81 NOTE 15 – PENSIONS (Continued) Retirement and disability Years of service and age required to receive benefit Final average salary is based on Benefit percent Normal retirement Accidental disability retirement Catastrophic disability retirement Ordinary disability retirement Survivor benefit Retired members Active members 20 years, not to exceed 80% 50% or normal retirement, whichever is greater 90% for the first 60 months then reduced to either 10 years, age 6210 years, age 62 years OR plus 2-2.5% for each year of credited service over monthly compensation if death was the result of injuries received on the job whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20, 62.5% or normal retirement, whichever is greater or 2.5% per year of credited service Normal retirement calculated with actual years of credited service or 20 years of credited service, On or after July 1, 2017 15 years of credited service, age 52.5* Highest 60 consecutive months of last 15 years 1.5-2.5% per year of credited service, not to exceed 80% 15 or more years of service, age 55 months of last 20 years On or after January 1, 2012 and before July 1, 2017 25 years of service or 15 years of credited service, age 52.5 Highest 60 consecutive 20-25 years of service, any age Highest 36 consecutive months of last 20 years 50% less 2% for each year of credited service less than 20 80%-100% of accidental disability retirement benefit or 100% of average 80%-100% of retired member's pension benefit Before January 1, 2012 15 years of service, age 62 Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $100 per month to $260 per month depending on the age of the member and dependents. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 82 NOTE 15 – PENSIONS (Continued) Employees Covered by Benefit Terms. As of June 30, 2022, the following employees were covered by the agent plan’s benefit terms: Retirees & beneficiaries 46 6 Inactive, non-retired members 18 4 Active members 75 2 Total 139 12 Police CORP-Dispatchers Contributions. State statutes establish the pension contribution requirements for active PSPRS and CORP employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS and CORP pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2022, are indicated below. Rates are a percentage of active members’ annual covered payroll. CORP - PSPRS - Police Dispatchers Active members – pension 7.65% to 11.65% 7.96% Town: Pension 43.57% 79.23% Health insurance 0.00% Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to PSPRS or CORP. The Town was required by statute to contribute at the actuarially determined rate of 30.38 percent for the PSPRS and 76.68 percent for the CORP. ACR contributions are included in employer contributions presented above. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 83 NOTE 15 – PENSIONS (Continued) The contributions to the pension plans for the year ended June 30, 2022, were: Pension $30,216,213 $125,878 Contributions PSPRS-Police CORP-Dispatchers The Town’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. As of June 30, 2022, the Town reported the following liabilities. Pension $19,630,665 $1,761,687 PSPRS-Police CORP-Dispatchers Net Liability The net pension liability was measured as of June 30, 2021. The total liability used to calculate the net liability was determined by an actuarial valuation as of that date. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 84 NOTE 15 – PENSIONS (Continued) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability for both the PSPRS and CORP are as follows: Pension Actuarial valuation date June 30, 2021 Actuarial cost method Entry age normal Investment rate of return 7.3% Projected salary increases 3.5% Inflation 2.5% Cost-of-living adjustment 1.75% Mortality rates PubS-2010 tables Healthcare cost trend rate Not applicable Actuarial assumptions used in the June 30, 2021 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2017. The long-term expected rate of return on PSPRS and CORP plan investments was determined to be 7.30 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Cash - Mellon 1%-0.31% Core bonds 2%0.42% Other assets (Capital Appreciation)7%5.43% Diversifying strategies 10%3.99% International public equity 16%5.20% Global private equity 20%7.67% Private credit 20%5.74% U.S. equity 24%4.08% Total 100% Asset Class Expected Real Long-term Target Allocation Rate of Return TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 202 2 Page 85 NOTE 15 – PENSIONS (Continued) Changes in Net Liability PSPRS - Police Balances at June 30, 2021 $67,240,526 $38,507,581 $28,732,945 Changes for the year: Service cost 1,359,359 - 1,359,359 Interest on the total liability 4,928,984 - 4,928,984 Differences between expected and actual experience in the measurement of the total liability (577,199) - (577,199) Changes of assumptions or other inputs - - - Contributions - employer - 3,343,850 (3,343,850) Contributions - employee - 554,204 (554,204) Net investment income - 10,961,057 (10,961,057) Benefit payments, including refunds of employee contributions (2,159,116) (2,159,116) - Administrative expense - (51,282) 51,282 Other - 5,595 (5,595) Net changes 3,552,028 12,654,308 (9,102,280) Balances at June 30, 2022 $70,792,554 $51,161,889 $19,630,665 CORP - Dispatchers Balances at June 30, 2021 $3,374,933 $1,414,170 $1,960,763 Changes for the year: Service cost 22,257 - 22,257 Interest on the total liability 242,038 - 242,038 Differences between expected and actual experience in the measurement of the total liability 75,279 - 75,279 Changes of assumptions or other inputs - - - Contributions - employer - 138,372 (138,372) Contributions - employee - 14,583 (14,583) Net investment income - 387,481 (387,481) Benefit payments, including refunds of employee contributions (163,212) (163,212) - Administrative expense - (1,786) 1,786 Other - - - Net changes 176,362 375,438 (199,076) Balances at June 30, 2022 $3,551,295 $1,789,608 $1,761,687 Liability Net Position Liability Pension Increase/(Decrease) Total Pension Plan Fiduciary Net Pension Plan Fiduciary Net Position Net Pension Liability Pension Increase/(Decrease) Total Pension Liability TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 202 2 Page 86 NOTE 15 – PENSIONS (Continued) Discount Rate. At June 30, 2021, the discount rate used to measure the total pension liability was 7.3 percent, unchanged from the discount rate used as of June 30, 2020. The projection of cash flows used to determine the PSPRS and CORP discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension liability. Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the Town’s net pension liability calculated using the discount rates noted above, as well as what the net 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: PSPRS-Police: Net Pension Liability $29,898,349 $19,630,665 $11,323,026 CORP-Dispatchers: Net Pension Liability $2,202,314 $1,761,687 $1,398,802 6.3%7.3%8.3% 1% Decrease 1% IncreaseDiscount Rate Current Plan Fiduciary Net Position. Detailed information about the plans’ fiduciary net position is available in the separately issued PSPRS and CORP financial report. The report is available on the PSPRS website at www.psprs.com. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 202 2 Page 87 NOTE 15 – PENSIONS (Continued) Expense. For the year ended June 30, 2022, the Town recognized the following as pension expense: Pension Expense $2,210,456 $144,984 PSPRS-Police CORP-Dispatchers Deferred Outflows/Inflows of Resources. As of June 30, 2022, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS-Police: Differences between expected and actual experience $795,930 $654,556 Changes of assumptions or other inputs 1,011,904 - Net difference between projected and actual earnings on plan investments - 4,825,397 Contributions subsequent to the measurement date 30,216,213 - Total $32,024,047 $5,479,953 CORP-Dispatchers: Differences between expected and actual experience $37,640 $- Changes of assumptions or other inputs - - Net difference between projected and actual earnings on plan investments - 179,590 Contributions subsequent to the measurement date 125,878 - Total $163,518 $179,590 Resources Resources Inflows of Deferred Outflows of Deferred TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Page 88 NOTE 15 – PENSIONS (Continued) The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2023 $(603,970) $(1,204) 2024 (740,696) (39,342) 2025 (885,506) (44,467) 2026 (1,345,747) (56,937) 2027 (96,200) - Thereafter - - Year Ending June 30:Pension Pension CORP-DispatchersPSPRS-Police Page 89 REQUIRED SUPPLEMENTARY INFORMATION Page 90 (This page intentionally left blank) Page 91 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 202 2 See notes to required supplementary information Variance Budgeted Amounts with Final Original Final Actual Budget REVENUES Sales taxes $20,542,707 $20,542,707 $27,048,414 $6,505,707 Franchise taxes 615,000 615,000 756,388 141,388 Intergovernmental 21,139,713 21,139,713 22,998,492 1,858,779 Licenses, fees and permits 1,849,000 1,849,000 2,390,080 541,080 Fines, forfeitures and penalties 125,000 125,000 132,636 7,636 Charges for services 2,387,776 2,387,776 2,658,852 271,076 Investment income: Interest 150,000 150,000 195,873 45,873 Net increase in fair value of investments - - (950,398) (950,398) Other 264,000 264,000 269,342 5,342 Total Revenues 47,073,196 47,073,196 55,499,679 8,426,483 EXPENDITURES General government: General government 13,839,484 13,839,484 12,782,733 1,056,751 Town council 188,720 188,720 192,015 (3,295) Town clerk 383,833 383,833 375,998 7,835 Town manager 1,115,224 1,115,224 1,074,628 40,596 Human Resources 535,390 535,390 480,630 54,760 Finance 979,655 979,655 936,561 43,094 Innovation and technology 4,078,783 4,078,783 3,778,957 299,826 Legal services 902,754 902,754 894,601 8,153 Community and economic development 3,044,614 3,044,614 2,902,055 142,559 Magistrate Court 914,796 914,796 822,427 92,369 Public works 4,077,336 4,077,336 4,204,919 (127,583) Public safety: Police 18,131,000 18,131,000 17,483,890 647,110 Transit: Transit 1,259,955 1,259,955 1,328,131 (68,176) Culture and recreation: Parks and recreation 3,305,861 3,305,861 3,324,879 (19,018) Debt service Principal - - 46,927 (46,927) Interest - - 2,866 (2,866) Total debt service - - 49,793 (49,793) Capital outlay 1,095,175 1,095,175 622,749 472,426 Contingency 5,000,000 5,000,000 - 5,000,000 Total Expenditures 58,852,580 58,852,580 51,254,966 7,597,614 REVENUES OVER (UNDER) EXPENDITURES (11,779,384) (11,779,384) 4,244,713 16,024,097 OTHER FINANCING SOURCES (USES) Transfers out (7,408,264) (7,408,264) (6,262,832) 1,145,432 Total Other Financing Sources (Uses)(7,408,264) (7,408,264) (6,262,832) 1,145,432 NET CHANGE IN FUND BALANCE (19,187,648) (19,187,648) (2,018,119) 17,169,529 FUND BALANCE, Beginning of year - - 32,408,542 32,408,542 FUND BALANCE, End of year $(19,187,648) $(19,187,648) $30,390,423 $49,578,071 Page 92 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – COMMUNITY CENTER FUND FOR THE YEAR ENDED JUNE 30, 202 2 Variance Budgeted Amounts with Final Original Final Actual Budget REVENUES Sales taxes $2,932,798 $2,932,798 $3,535,507 $602,709 Charges for services 4,339,467 4,339,467 5,964,727 1,625,260 Investment income:. Interest 1,000 1,000 28,785 27,785 Net decrease in fair value of investments - - (193,826) (193,826) Other 125,000 125,000 160,532 35,532 Total Revenues 7,398,265 7,398,265 9,495,725 2,097,460 EXPENDITURES Current: Culture and recreation 5,788,109 5,788,109 5,847,580 (59,471) Capital outlay 132,500 132,500 139,003 (6,503) Debt service: Principal retirement - - 15,736 (15,736) Interest and fiscal charges - - 1,345 (1,345) Contingency 250,000 250,000 - 250,000 Total Expenditures 6,170,609 6,170,609 6,003,664 166,945 REVENUES OVER (UNDER) EXPENDITURES 1,227,656 1,227,656 3,492,061 2,264,405 OTHER FINANCING SOURCES (USES) Insurance recoveries - - 7,262 7,262 Transfers out (1,868,519) (1,868,519) (315,658) 1,552,861 Total other financing sources (uses)(1,868,519) (1,868,519) (308,396) 1,560,123 NET CHANGE IN FUND BALANCE (640,863) (640,863) 3,183,665 3,824,528 FUND BALANCE, Beginning of year - - 2,676,793 2,676,793 FUND BALANCE, End of year $(640,863) $(640,863) $5,860,458 $6,501,321 See notes to required supplementary information Page 93 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY ARIZONA STATE RETIREMENT SYSTEM LAST EIGHT FISCAL YEARS 2022 2021 2020 2019 2018 Measurement date June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 Town's proportion of the net pension (assets) liability 0.12%0.12%0.13%0.13%0.12% Town's proportionate share of the net pension (assets) liability 15,876,526$ 21,464,093$ 18,808,834$ 18,237,813$ 19,453,870$ Town's covered payroll 14,545,595$ 13,793,013$ 13,630,224$ 13,018,275$ 12,193,145$ Town's proportionate share of the net pension (assets) liability as a percentage of its covered payroll 109.15%155.62%137.99%140.09%159.55% Plan fiduciary net position as a percentage of the total pension liability 78.58%69.33%73.24%73.40%69.92% 2017 2016 2015 Measurement date June 30, 2016 June 30, 2015 June 30, 2014 Town's proportion of the net pension (assets) liability 0.12%0.12%0.11% Town's proportionate share of the net pension (assets) liability 20,050,356$ 18,575,537$ 16,642,712$ Town's covered payroll 11,857,622$ 11,826,486$ 11,086,887$ Town's proportionate share of the net pension (assets) liability as a percentage of its covered payroll 169.09%157.07%150.11% Plan fiduciary net position as a percentage of the total pension liability 67.06%68.35%69.49% Note: The pension schedules in the required supplementary information are intended to show information for ten years, and additional information will be displayed as it becomes available. See notes to required supplementary information Page 94 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - POLICE LAST EIGHT FISCAL YEARS 2022 2021 2020 2019 Measurement date June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Total pension liability Service cost $ 1,359,359 $ 1,418,920 $ 1,552,240 $ 1,515,028 Interest 4,928,984 4,573,136 4,264,774 3,922,057 Changes of benefit terms - - - - (577,199) 1,073,763 (303,721) 136,020 Changes of assumptions or other inputs - - 1,627,934 - (2,159,116) (2,104,146) (1,884,430) (1,588,615) Net change in total pension liability 3,552,028 4,961,673 5,256,797 3,984,490 Total pension liability—beginning 67,240,526 62,278,853 57,022,056 53,037,566 Total pension liability—ending $ 70,792,554 $ 67,240,526 $ 62,278,853 $ 57,022,056 Plan fiduciary net position Contributions—employer $ 3,343,850 $ 3,072,830 $ 2,624,761 $ 1,278,293 Contributions—employee 554,204 563,652 575,136 622,233 Net investment income 10,961,057 479,186 1,843,370 2,159,685 (2,159,116) (2,104,146) (1,884,430) (1,588,615) Administrative expense (51,282) (39,077) (33,037) (33,570) Other 5,595 (52,206) 31,984 107,852 Net change in plan fiduciary net position 12,654,308 1,920,239 3,157,784 2,545,878 Plan fiduciary net position—beginning 38,507,581 36,587,342 33,429,558 30,883,680 Plan fiduciary net position—ending $ 51,161,889 $ 38,507,581 $ 36,587,342 $ 33,429,558 Net pension (assets) liability—ending $ 19,630,665 $ 28,732,945 $ 25,691,511 $ 23,592,498 72.27%57.27%58.75%58.63% Covered payroll $ 7,265,499 $ 6,672,512 $ 6,942,593 $ 7,209,721 270.19%430.62%370.06%327.23% Differences between expected and actual experience Benefit payments, including refunds of employee contributions Benefit payments, including refunds of employee contributions Plan fiduciary net position as a percentage of the total pension liability Net pension (assets) liability as a percentage of covered payroll Note: The pension schedules in the required supplementary information are intended to show information for ten years, and additional information will be displayed as it becomes available. See notes to required supplementary information Page 95 2018 2017 2016 2015 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 $ 1,638,736 $ 1,363,768 $ 1,224,807 $ 1,157,832 3,615,210 3,185,633 2,842,514 2,408,825 435,327 3,164,555 - 444,387 247,905 (548,533) 1,312,293 (356,776) 747,786 1,902,904 - 3,014,125 (2,061,668) (1,106,968) (1,049,346) (1,304,993) 4,623,296 7,961,359 4,330,268 5,363,400 48,414,270 40,452,911 36,122,643 30,759,243 $ 53,037,566 $ 48,414,270 $ 40,452,911 $ 36,122,643 $ 1,811,735 $ 1,505,274 $ 1,669,125 $ 1,211,218 905,024 840,020 794,478 698,036 3,228,386 154,181 874,562 2,774,126 (2,061,668) (1,106,968) (1,049,346) (1,304,993) (28,966) (22,586) (21,722) (22,342) 19,066 38,225 93,803 (93,142) 3,873,577 1,408,146 2,360,900 3,262,903 27,010,103 25,601,957 23,241,057 19,978,154 $ 30,883,680 $ 27,010,103 $ 25,601,957 $ 23,241,057 $ 22,153,886 $ 21,404,167 $ 14,850,954 $ 12,881,586 58.23%55.79%63.29%64.34% $ 7,199,177 $ 7,355,092 $ 7,004,292 $ 6,021,786 307.73%291.01%212.03%213.92% Page 96 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - DISPATCHERS LAST EIGHT FISCAL YEARS 2022 2021 2020 2019 Measurement date June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Total pension liability Service cost $ 22,257 $ 22,224 $ 30,922 $ 34,542 Interest 242,038 233,081 215,182 223,773 Changes of benefit terms - - - (175,686) 75,279 18,688 124,217 (73,061) Changes of assumptions or other inputs - - 61,495 - (163,212) (139,459) (136,724) (141,910) Net change in total pension liability 176,362 134,534 295,092 (132,342) Total pension liability—beginning 3,374,933 3,240,399 2,945,307 3,077,649 Total pension liability—ending $ 3,551,295 $ 3,374,933 $ 3,240,399 $ 2,945,307 Plan fiduciary net position Contributions—employer $ 138,372 $ 122,322 $ 120,338 $ 87,566 Contributions—employee 14,583 16,244 16,099 15,976 Net investment income 387,481 38,182 71,209 89,317 (163,212) (139,459) (136,724) (141,910) Administrative expense (1,786) (1,478) (1,971) (2,051) Other - (264) - (24) Net change in plan fiduciary net position 375,438 35,547 68,951 48,874 Plan fiduciary net position—beginning 1,414,170 1,378,623 1,309,672 1,260,798 Plan fiduciary net position—ending $ 1,789,608 $ 1,414,170 $ 1,378,623 $ 1,309,672 Net pension (assets) liability—ending $ 1,761,687 $ 1,960,763 $ 1,861,776 $ 1,635,635 50.39%41.90%42.54%44.47% Covered payroll $ 180,822 $ 210,542 $ 202,262 $ 201,687 974.27%931.29%920.48%810.98% Differences between expected and actual experience Benefit payments, including refunds of employee contributions Benefit payments, including refunds of employee contributions Plan fiduciary net position as a percentage of the total pension liability Net pension (assets) liability as a percentage of covered payroll NOTE: The pension schedules in the required supplementary information are intended to show information for ten years, and additional information will be displayed as it becomes available. See notes to required supplementary information Page 97 2018 2017 2016 2015 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014 $ 32,541 $ 32,257 $ 52,754 $ 53,985 185,568 182,053 174,403 154,443 395,457 14,504 - 29,545 (12,524) (12,392) 14,554 (48,767) 85,035 64,514 - 174,536 (132,788) (119,180) (148,851) (68,874) 553,289 161,756 92,860 294,868 2,524,360 2,362,604 2,269,744 1,974,876 $ 3,077,649 $ 2,524,360 $ 2,362,604 $ 2,269,744 $ 77,331 $ 52,583 $ 64,005 $ 63,179 18,502 18,982 30,272 32,699 136,094 7,237 45,101 146,441 (132,788) (119,180) (148,851) (68,874) (1,591) (1,423) (1,490) (1,151) (8) (8) (926) - 97,540 (41,809) (11,889) 172,294 1,163,258 1,205,067 1,216,956 1,044,662 $ 1,260,798 $ 1,163,258 $ 1,205,067 $ 1,216,956 $ 1,816,851 $ 1,361,102 $ 1,157,537 $ 1,052,788 40.97%46.08%51.01%53.62% $ 233,934 $ 245,274 $ 380,303 $ 387,839 776.65%554.93%304.37%271.45% Page 98 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF PENSION CONTRIBU TIONS - ALL PENSION PLANS LAST EIGHT FISCAL YEARS 2022 2021 2020 2019 Arizona State Retirement System: Actuarially determined contribution 1,746,926$ 1,574,068$ 1,579,300$ 1,523,859$ Contributions in relation to the actuarially determined contribution 1,746,926 1,574,068 1,579,300 1,523,859 Contribution deficiency (excess)- - - - Town's covered payroll 14,545,595$ 13,511,313$ 13,793,013$ 13,630,224$ Contributions as a percentage of covered payroll 12.01%11.65%11.45%11.18% Public Safety Personnel Retirement System - Police: Actuarially determined contribution 3,165,578$ 2,572,830$ 2,552,903$ 2,548,626$ Contributions in relation to the actuarially determined contribution 30,216,213 3,072,830 3,052,903 2,548,626 Contribution deficiency (excess)(27,050,635) (500,000) (500,000) - Town's covered payroll 7,265,499$ 6,181,716$ 6,672,512$ 6,942,593$ Contributions as a percentage of covered payroll 43.57%41.62%38.26%36.71% Public Safety Personnel Retirement System - Dispatchers Actuarially determined contribution 125,878$ 136,575$ 126,199$ 124,108$ Contributions in relation to the actuarially determined contribution 125,878 136,575 126,199 124,108 Contribution deficiency (excess)- - - - Town's covered payroll 158,877$ 180,822$ 210,542$ 202,262$ Contributions as a percentage of covered payroll 79.23%75.53%59.94%61.36% NOTE: The pension schedules in the required supplementary information are intended to show information for ten years, and additional information will be displayed as it becomes available. See notes to required supplementary information Page 99 2018 2017 2016 2015 1,418,992$ 1,314,421$ 1,286,552$ 1,207,362$ 1,418,992 1,314,421 1,286,552 1,207,362 - - - - 13,018,275$ 12,193,145$ 11,857,622$ 11,826,486$ 10.90%10.78%10.85%10.21% 2,485,191$ 1,679,568$ 1,554,131$ 1,354,630$ 2,485,191 1,679,568 1,554,131 1,354,630 - - - - 7,209,721$ 7,199,177$ 7,355,092$ 7,004,292$ 34.47%23.33%21.13%19.34% 87,996$ 77,830$ 54,083$ 64,005$ 87,996 77,830 54,083 64,005 - - - - 201,687$ 233,934$ 245,274$ 380,303$ 43.63%33.27%22.05%16.83% Page 100 TOWN OF ORO VALLEY, ARIZONA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 202 2 NOTE 1 – BUDGETARY BASIS OF ACCOUNTING The Town budget is prepared on a basis consistent with accounting principles generally accepted in the United States of America. NOTE 2 – PENSION SCHEDULES Actuarial Assumptions for Valuations Performed. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends. The actuarial assumptions used in the June 30, 2020, valuation for ASRS were based on the results of an actuarial experience study for the five -year period ended June 30, 2020. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2020, actuarial valuation. The actuarial assumptions used in the June 30, 2020, valuation for PSPRS were based on the results of an actuarial experience study for the 5-year period ended June 30, 2017. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The PSPRS Board adopted the experience study recommended changes which were applied to the June 30, 2018 actuarial valuation. The total liabilities as of June 30, 2021 reflect an assumed investment rate of return of 7.3 percent and updated mortality rates. Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional 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 contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date. These changes increased the PSPRS-required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. Page 101 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Page 102 (This page intentionally left blank) Page 103 GOVERNMENTAL FUNDS Page 104 TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE JUNE 30, 2022 ASSETS Cash and investments $1,365,672 $- $3,453,986 $4,819,658 Interest receivable 39 - 14,872 14,911 Intergovernmental receivable 468,373 - 70,000 538,373 Prepaid items 1,050 - - 1,050 Total Assets $1,835,134 $- $3,538,858 $5,373,992 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $182,036 $- $23,373 $205,409 Unearned revenue - - 43,780 43,780 Total Liabilities 182,036 - 67,153 249,189 Fund balances: Restricted 1,653,098 - 3,455,088 5,108,186 Committed - - 16,617 16,617 Total Fund Balances 1,653,098 - 3,471,705 5,124,803 Total Liabilities and Fund Balances $1,835,134 $- $3,538,858 $5,373,992 Special Revenue Debt Service Capital Projects Funds Total Non-Major Governmental Page 105 TOWN OF ORO VALLEY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE YEAR ENDED JUNE 30, 2022 REVENUES Development impact fees $- $- $605,406 $605,406 Charges for Services 28,125 28,125 Intergovernmental 4,180,837 - 70,000 4,250,837 Licenses, fees and permits 28,838 - - 28,838 Fines, forfeitures and penalties 100,592 - - 100,592 Investment income: Interest 14,102 20 17,713 31,835 Net decrease in fair value of investments (31,245) (124) (121,666) (153,035) Other 7,260 - 11,218 18,478 Total Revenues 4,300,384 (104) 610,796 4,911,076 EXPENDITURES Current: Public safety 157,142 - - 157,142 Highway and streets 1,779,889 - - 1,779,889 Capital outlay 2,320,043 - 751,291 3,071,334 Total Expenditures 4,257,074 - 751,291 5,008,365 REVENUES OVER/ (UNDER) EXPENDITURES 43,310 (104) (140,495) (97,289) OTHER FINANCING SOURCES/(USES) Transfers in/(out)100,000 (4,090) (117,750) (21,840) Total Other Financing Sources (Uses)100,000 (4,090) (117,750) (21,840) NET CHANGE IN FUND BALANCES 143,310 (4,194) (258,245) (119,129) FUND BALANCES, Beginning of year 1,509,788 4,194 3,729,950 5,243,932 FUND BALANCES, End of year $1,653,098 $- $3,471,705 $5,124,803 Special Revenue Debt Service Capital Projects Funds Total Non-Major Governmental Page 106 (This page intentionally left blank) Page 107 SPECIAL REVENUE FUNDS The Special Revenue Funds account for the proceeds of specific revenue sources, other than major capital projects, that are legally restricted to expenditures for specified purposes. Highway User Revenue – accounts for the Town’s share of motor fuel tax revenues. Grants and Contributions – accounts for Town grant revenues. State Seizures and Forfeitures – accounts for state police seizures and forfeitures received by the Town. Federal Seizures and Forfeitures – accounts for federal police seizures and forfeitures received by the Town. Page 108 TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2022 ASSETS Cash and investments $930,026 $177,860 $144,107 $113,679 $1,365,672 Interest receivable - 39 - - 39 Intergovernmental receivable 414,254 54,119 - - 468,373 Prepaid items 1,050 - - - 1,050 Total Assets $1,345,330 $232,018 $144,107 $113,679 $1,835,134 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $138,345 $23,768 $- $19,923 $182,036 Total Liabilities 138,345 23,768 - 19,923 182,036 Fund balances: Restricted 1,206,985 208,250 144,107 93,756 1,653,098 Total Fund Balances 1,206,985 208,250 144,107 93,756 1,653,098 Total Liabilities and Fund Balances $1,345,330 $232,018 $144,107 $113,679 $1,835,134 Federal Seizures HURF and Forfeitures and Forfeitures TotalsContributions Grants and State Seizures Page 109 TOWN OF ORO VALLEY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 REVENUES Intergovernmental $3,979,751 $201,086 $- $- $4,180,837 Licenses, fees and permits 28,838 - - - 28,838 Fines, forfeitures and penalties - - 19,424 81,168 100,592 Investment income: Interest 12,557 123 1,053 369 14,102 Net decrease in fair value of investments (28,860) (2,385) - - (31,245) Other 7,260 - - - 7,260 Total Revenues 3,999,546 198,824 20,477 81,537 4,300,384 EXPENDITURES Current: Public safety - 26,181 113,605 17,356 157,142 Highway and streets 1,779,889 - - - 1,779,889 Capital outlay 2,255,650 64,393 - - 2,320,043 Total Expenditures 4,035,539 90,574 113,605 17,356 4,257,074 OTHER FINANCING SOURCES Transfers in - 100,000 - - 100,000 NET CHANGE IN FUND BALANCES (35,993) 208,250 (93,128) 64,181 143,310 FUND BALANCES, Beginning of year 1,242,978 - 237,235 29,575 1,509,788 FUND BALANCES, End of year $1,206,985 $208,250 $144,107 $93,756 $1,653,098 State Seizures Federal Seizures HURF and Forfeitures and Forfeitures Totals Grants and Contributions Page 110 TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Actual REVENUES Intergovernmental $3,614,922 $3,979,751 $364,829 Licenses, fees and permits 25,000 28,838 3,838 Fines, forfeitures and penalties - - - Investment income: Interest 6,000 12,557 6,557 Net decrease in fair value of investments - (28,860) (28,860) Other 2,000 7,260 5,260 Total Revenues 3,647,922 3,999,546 351,624 EXPENDITURES Current: Public safety - - - Highway and streets 1,825,525 1,779,889 45,636 Capital outlay 2,265,000 2,255,650 9,350 Contingency 200,000 - 200,000 Total Expenditures 4,290,525 4,035,539 254,986 OTHER FINANCING SOURCES Transfers in - - - NET CHANGE IN FUND BALANCE (642,603) (35,993) 606,610 FUND BALANCE, Beginning of year - 1,242,978 1,242,978 FUND BALANCE, End of year $(642,603) $1,206,985 $1,849,588 HURF Budget Variance with Budget Page 111 Variance Variance with with Actual Budget Actual Budget $454,250 $201,086 $(253,164) $- $- $- - - - - - - - - - 275,000 19,424 (255,576) - 123 123 2,000 1,053 (947) - (2,385) (2,385) - - - 1,500,000 - (1,500,000) - - - 1,954,250 198,824 (1,755,426) 277,000 20,477 (256,523) 1,612,250 26,181 1,586,069 98,000 113,605 (15,605) - - - - - - 342,000 64,393 277,607 - - - 100,000 - 100,000 125,000 - 125,000 2,054,250 90,574 1,963,676 223,000 113,605 109,395 100,000 100,000 - - - - - 208,250 208,250 54,000 (93,128) (147,128) - - - - 237,235 237,235 $- $208,250 $208,250 $54,000 $144,107 $90,107 Grants and Contributions Budget State Seizures and Forfeitures Budget (Continued) Page 112 TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2022 Variance with Actual Actual Budget REVENUES Intergovernmental $- $- $- $4,069,172 $4,180,837 $111,665 Licenses, fees and permits - - - 25,000 28,838 3,838 Fines, forfeitures and penalties 50,000 81,168 31,168 325,000 100,592 (224,408) Investment income: Interest - 369 369 8,000 14,102 6,102 Net decrease in fair value of investments - - - - (31,245) (31,245) Other - - - 1,502,000 7,260 (1,494,740) Total Revenues 50,000 81,537 31,537 5,929,172 4,300,384 (1,628,788) EXPENDITURES Current: Public safety - 17,356 (17,356) 1,710,250 157,142 1,553,108 Highway and streets - - - 1,825,525 1,779,889 45,636 Capital outlay - - - 2,607,000 2,320,043 286,957 Contingency 125,000 - 125,000 550,000 - 550,000 Total Expenditures 125,000 17,356 107,644 6,692,775 4,166,500 2,435,701 OTHER FINANCING SOURCES Transfers in - - - 100,000 100,000 - NET CHANGE IN FUND BALANCE (75,000) 64,181 139,181 (663,603) 143,310 806,913 FUND BALANCE, Beginning of year - 29,575 29,575 - 1,509,788 1,509,788 FUND BALANCE, End of year $(75,000) $93,756 $168,756 $(663,603) $1,653,098 $2,316,701 Totals Budget Federal Seizures and Forfeitures Budget Variance with Budget Page 113 MUNICIPAL DEBT SERVICE FUNDS Municipal Debt Service - to account for the payments of debt service on the Series 2010 Excise Tax Revenue Obligations, the Series 2012 Excise Tax Revenue Obligations, the Series 2015 Excise Tax Revenue Refunding Obligations, the Series 2016 Excise Tax Revenue Obligations, the Series 2017 Refunding Excise Tax Revenue Obligations, the Series 2018 Excise Tax Revenue Obligations, the Series 2021 Parks and Recreation Excise Tax Revenue Obligations, and the 2021 Excise Tax PSPRS Pension Obligation Bonds. Oracle Road Debt Service – to account for the special assessment collections and payment of the outstanding Oracle Road bond issue. Page 114 TOWN OF ORO VALLEY, ARIZONA BALANCE SHEET - NON-MAJOR DEBT SERVICE FUND JUNE 30, 2022 ASSETS Cash and investments $- Total Assets $- LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $- Total Liabilities - Fund balances: Restricted - Total Fund Balances - Total Liabilities and Fund Balances $- Debt Service Oracle Road Page 115 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON- MAJOR DEBT SERVICE FUND YEAR ENDED JUNE 30, 2022 REVENUES Investment income: Interest $20 Net decrease in fair value of investments (124) Total Revenues (104) EXPENDITURES Debt service: Principal retirement - Interest and fiscal charges - Total Expenditures - REVENUES OVER (UNDER) EXPENDITURES (104) OTHER FINANCING USES Transfers out (4,090) Total other financing uses (4,090) NET CHANGE IN FUND BALANCE (4,194) FUND BALANCE, Beginning of year 4,194 FUND BALANCE, End of year $- Debt Service Oracle Road Page 116 TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ALL DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2022 Variance with Actual Budget REVENUES Intergovernmental $34,787 $33,289 $(1,498) Investment income: Interest 5,000 7,225 2,225 Net decrease in fair value of investments - - - Other 100,000 95,776 (4,224) Total Revenues 139,787 136,290 (3,497) EXPENDITURES Current: Public safety 17,000,000 17,612,366 (612,366) Debt service: Principal retirement 3,971,586 971,586 3,000,000 Interest and fiscal charges 253,859 553,007 (299,148) Bond issuance costs - 362,086 (362,086) Contingency 100,000 - 100,000 Total Expenditures 21,325,445 19,499,045 1,826,400 REVENUES OVER (UNDER) EXPENDITURES (21,185,658) (19,362,755) 1,822,903 OTHER FINANCING SOURCES (USES) Issuance of revenue bonds 17,000,000 17,975,000 975,000 Transfers in (out)4,087,499 1,386,455 (2,701,044) Total other financing sources (uses)21,087,499 19,361,455 (1,726,044) NET CHANGE IN FUND BALANCE (98,159) (1,300) 96,859 FUND BALANCE, Beginning of year - 165,436 165,436 FUND BALANCE, End of year $(98,159) $164,136 $262,295 Municipal Debt Service Budget Page 117 Variance Variance with with Actual Budget Actual Budget $- $- $- $34,787 $33,289 $(1,498) - 20 20 5,000 7,245 2,245 - (124) (124) - (124) (124) - - - 100,000 95,776 (4,224) - (104) (104) 139,787 136,186 (3,601) - - - 17,000,000 17,612,366 (612,366) - - - 3,971,586 971,586 3,000,000 - - - 253,859 553,007 (299,148) - - - - 362,086 (362,086) - - - 100,000 - 100,000 - - - 21,325,445 19,499,045 1,826,400 - (104) (104) (21,185,658) (19,362,859) 1,822,799 - - - 17,000,000 17,975,000 975,000 (6,841) (4,090) 2,751 4,080,658 1,382,365 (2,698,293) (6,841) (4,090) 2,751 21,080,658 19,357,365 (1,723,293) (6,841) (4,194) 2,647 (105,000) (5,494) 99,506 - 4,194 4,194 - 169,630 169,630 $(6,841) $- $6,841 $(105,000) $164,136 $269,136 Oracle Road Debt Service Totals Budget Budget Page 118 (This page intentionally left blank) Page 119 CAPITAL PROJECTS FUNDS Capital Projects Funds are created to account for the purchase or construction of major capital facilities which are not financed by the general, enterprise, or special revenue funds. Townwide Roadway Development Impact Fees – to account for the collection and capital expenditures of the Townwide Roadway Development Impact Fees. General Impact Fees – accounts for the collection of development impact fees charged for new residential and nonresidential growth to be used for future general government facilities, vehicles, equipment, and other necessary general government infrastructure needed as a result of new growth. Townwide Facilities Projects – accounts for revenues dedicated to improvements to Town parks. General Government CIP – to account for governmental capital asset projects. PAG/RTA - to account for revenues dedicated to Town improvements funded through Pima Association of Governments and the Regional Transportation Authority. Page 120 TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUNDS JUNE 30, 2022 ASSETS Cash and investments $1,970,306 $640,351 $16,590 $826,739 $3,453,986 Interest receivable 13,162 1,683 27 - 14,872 Intergovernmental receivable - - - 70,000 70,000 Total Assets $1,983,468 $642,034 $16,617 $896,739 $3,538,858 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $- $- $- $23,373 $23,373 Unearned revenue 43,780 - - - 43,780 Total Liabilities 43,780 - - 23,373 67,153 Fund balances: Restricted 1,939,688 642,034 - 873,366 3,455,088 Committed - - 16,617 - 16,617 Total Fund Balances 1,939,688 642,034 16,617 873,366 3,471,705 Total Liabilities and Fund Balances $1,983,468 $642,034 $16,617 $896,739 $3,538,858 Impact Fees Fees Projects Totals Roadway Development PAG/RTA Townwide TownwideGeneral Impact Facilities Page 121 TOWN OF ORO VALLEY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2022 REVENUES Development impact fees $314,412 $290,994 $- $- $605,406 Charges for services - - - 28,125 28,125 Intergovernmental - - - 70,000 70,000 Investment income: Interest 10,017 2,638 80 4,978 17,713 Net decrease in fair value of investments (71,194) (19,257) (508) (30,707) (121,666) Other - - - 11,218 11,218 Total Revenues 253,235 274,375 (428) 83,614 610,796 EXPENDITURES Capital outlay 292,425 - - 458,866 751,291 Total Expenditures 292,425 - - 458,866 751,291 REVENUES OVER (UNDER) EXPENDITURES (39,190) 274,375 (428) (375,252) (140,495) OTHER FINANCING USES Transfers out - (117,750) - - (117,750) NET CHANGE IN FUND BALANCES (39,190) 156,625 (428) (375,252) (258,245) FUND BALANCES, Beginning of year 1,978,878 485,409 17,045 1,248,618 3,729,950 FUND BALANCES, End of year $1,939,688 $642,034 $16,617 $873,366 $3,471,705 Impact Fees Fees Projects Totals Development PAG/RTA Townwide General Townwide Impact Facilities Roadway Page 122 TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2022 Variance with Actual Budget REVENUES Development impact fees $327,190 $314,412 $(12,778) Intergovernmental - - - Charges for services - - - Investment income: Interest 30,000 10,017 (19,983) Net decrease in fair value of investments - (71,194) (71,194) Other - - - Total Revenues 357,190 253,235 (103,955) EXPENDITURES Current: Highway and streets - - - Culture and recreation - - - Capital outlay 200,000 292,425 (92,425) Contingency 250,000 - 250,000 Debt Service: Bond issuance costs - - - Total Expenditures 450,000 292,425 157,575 REVENUES OVER (UNDER) EXPENDITURES (92,810) (39,190) 53,620 OTHER FINANCING SOURCES (USES) Issuance of revenue bonds - - - Premium on bond issuance - - - Sale of general capital assets - - - Insurance recoveries - - - Transfers in (out)- - - Total other financing sources (uses)- - - NET CHANGE IN FUND BALANCE (92,810) (39,190) 53,620 FUND BALANCE, Beginning of year - 1,978,878 1,978,878 FUND BALANCE, End of year $(92,810) $1,939,688 $2,032,498 Budget Townwide Roadway Development Impact Fees Page 123 Variance Variance with with Actual Budget Actual Budget $363,367 $290,994 $(72,373) $- $- $- - - - - - - - - - - - - 5,500 2,638 (2,862) - 80 80 - (19,257) (19,257) - (508) (508) - - - - - - 368,867 274,375 (94,492) - (428) (428) - - - - - - - - - - - - - - - - - - 335,442 - 335,442 16,325 - 16,325 - - - - - - 335,442 - 335,442 16,325 - 16,325 33,425 274,375 240,950 (16,325) (428) 15,897 - - - - - - - - - - - - - - - - - - - - - - - - (117,750) (117,750) - - - - (117,750) (117,750) - - - - (84,325) 156,625 240,950 (16,325) (428) 15,897 - 485,409 485,409 - 17,045 17,045 $(84,325) $642,034 $726,359 $(16,325) $16,617 $32,942 General Impact Fees Budget Townwide Facilities Projects Budget (Continued) Page 124 TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS (Continued) YEAR ENDED JUNE 30, 2022 Variance with Actual Budget REVENUES Development impact fees $- $- $- Intergovernmental - 263,024 263,024 Charges for services - 741,012 741,012 Investment income: Interest 10,000 9,949 (51) Net decrease in fair value of investments - (67,576) (67,576) Other 741,010 147,314 (593,696) Total Revenues 751,010 1,093,723 342,713 EXPENDITURES Current: Highway and streets - - - Culture and recreation 215,146 112,234 102,912 Capital outlay 32,864,456 9,712,790 23,151,666 Contingency 250,000 - 250,000 Debt Service: Bond issuance costs - 366,722 (366,722) Total Expenditures 33,329,602 10,191,746 23,137,856 REVENUES OVER (UNDER) EXPENDITURES (32,578,592) (9,098,023) 23,480,569 OTHER FINANCING SOURCES (USES) Issuance of revenue bonds 25,000,000 21,120,000 (3,880,000) Premium on bond issuance - 4,247,224 4,247,224 Sale of general capital assets 40,000 150,796 110,796 Insurance recoveries - 13,695 13,695 Transfers in (out)5,216,277 5,015,210 (201,067) Total other financing sources (uses)30,256,277 30,546,925 290,648 NET CHANGE IN FUND BALANCE (2,322,315) 21,448,902 23,771,217 FUND BALANCE, Beginning of year - 2,504,028 2,504,028 FUND BALANCE, End of year $(2,322,315) $23,952,930 $26,275,245 General Government CIP Budget Page 125 Variance Variance with with Actual Budget Actual Budget $- $- $- $690,557 $605,406 $(85,151) 675,000 70,000 (605,000) 675,000 333,024 (341,976) 28,125 28,125 - 28,125 769,137 741,012 - 4,978 4,978 45,500 27,662 (17,838) - (30,707) (30,707) - (189,242) (189,242) - 11,218 11,218 741,010 158,532 (582,478) 703,125 83,614 (619,511) 2,180,192 1,704,519 (475,673) 100,000 - 100,000 100,000 - 100,000 - - - 215,146 112,234 102,912 1,375,000 458,866 916,134 34,439,456 10,464,081 23,975,375 - - - 851,767 - 851,767 - - - - 366,722 (366,722) 1,475,000 458,866 1,016,134 35,606,369 10,943,037 24,663,332 (771,875) (375,252) 396,623 (33,426,177) (9,238,518) 24,187,659 - - - 25,000,000 21,120,000 (3,880,000) - - - - 4,247,224 4,247,224 - - - 40,000 150,796 110,796 - - - - 13,695 13,695 - - - 5,098,527 4,897,460 (201,067) - - - 30,138,527 30,429,175 290,648 (771,875) (375,252) 396,623 (3,287,650) 21,190,657 24,478,307 - 1,248,618 1,248,618 - 6,233,978 6,233,978 $(771,875) $873,366 $1,645,241 $(3,287,650) $27,424,635 $30,712,285 PAG/RTA Totals Budget Budget Page 126 (This page intentionally left blank) Page 127 STATISTICAL SECTION The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader’s understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below. Financial Trends These schedules contain information on financial trends to help the reader understand how the Town’s financial position and financial activities have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the Town’s ability to generate property revenue. Debt Capacity These schedules present information to help the reader evaluate the Town’s current levels of outstanding debt as well as assess the Town’s ability to make debt payments and/or issue additional debt in the future. Demographic and Economic Information These schedules present various demographic and economic indicators to help the reader understand the environment in which the Town’s financial activities take place and to help make comparisons with other municipalities. Operating Information These schedules contain information about the Town’s operations and various resources to help the reader draw conclusions as to how the Town’s financial information relates to the services provided by the Town. Note: For locally assessed property (i.e., excluding mines, utilities, etc.) Proposition 117, approved by voters in 2012, amended the Arizona Constitution to require that all property taxes after fiscal year 2014-15 be based upon property values limited to five percent in annual growth. The aggregate assessed value of all taxable properties within a taxing jurisdiction (i.e., after applying assessment ratios based on the use of a property), including property values with a growth limit, is currently referred to as net limited assessed value and formerly as primary assessed value. In accordance with Proposition 117, this value is used for all taxing purposes beginning fiscal year 2015-16. Aggregate assessed value without a growth limit is currently referred to as net full cash assessed value and formerly as secondary assessed value. This remains the value utilized for determining debt capacity limits. Page 128 (This page intentionally left blank) Page 129 TOWN OF ORO VALLEY, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2022 2021 2020 2019 2018 Governmental Activities: Net investment in capital assets $179,219,389 $184,355,212 $152,604,355 $141,506,384 $137,311,856 Restricted 21,752,087 5,392,323 6,601,283 5,752,355 4,424,244 Unrestricted 1,104,482 335,300 (11,756,943) (10,619,492) (11,583,669) Total governmental activities net position $202,075,958 $190,082,835 $147,448,695 $136,639,247 $130,152,431 Business-type Activities: Net investment in capital assets $87,969,917 $84,049,866 $76,933,346 $73,170,068 $69,036,006 Unrestricted 27,109,858 27,721,215 25,077,357 23,499,030 21,397,377 Total business-type activities net position $115,079,775 $111,771,081 $102,010,703 $96,669,098 $90,433,383 Primary Government: Net investment in capital assets $267,189,306 $268,405,078 $229,537,701 $214,676,452 $206,347,862 Restricted 21,752,087 5,392,323 6,601,283 5,752,355 4,424,244 Unrestricted 28,214,340 28,056,515 13,320,414 12,879,538 9,813,708 Total primary government net position $317,155,733 $301,853,916 $249,459,398 $233,308,345 $220,585,814 2017 2016 2015 2014 2013 Governmental Activities: Net investment in capital assets $133,414,691 $132,419,826 $133,800,218 $133,714,821 $134,512,094 Restricted 6,006,584 4,653,905 3,599,966 4,555,138 3,730,312 Unrestricted (15,397,688) (10,883,206) (9,493,907) 18,430,146 18,901,112 Total governmental activities net position $124,023,587 $126,190,525 $127,906,277 $156,700,105 $157,143,518 Business-type Activities: Net investment in capital assets $66,755,370 $61,261,271 $54,858,448 $52,775,561 $48,802,267 Unrestricted 18,721,247 19,504,748 20,092,694 21,541,202 19,501,676 Total business-type activities net position $85,476,617 $80,766,019 $74,951,142 $74,316,763 $68,303,943 Primary Government: Net investment in capital assets $200,170,061 $193,681,097 $188,658,666 $186,490,382 $183,314,361 Restricted 6,006,584 4,653,905 3,599,966 4,555,138 3,730,312 Unrestricted 3,323,559 8,621,542 10,598,787 39,971,348 38,402,788 Total primary government net position $209,500,204 $206,956,544 $202,857,419 $231,016,868 $225,447,461 Source: Town of Oro Valley Finance Department Page 130 TOWN OF ORO VALLEY, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Expenses Governmental activities: General government $28,083,397 $19,633,975 $17,210,855 $14,727,150 $12,639,867 $12,130,905 $11,888,794 $11,533,702 $10,990,007 $9,861,131 Public safety 8,232,307 18,291,873 19,416,010 18,958,436 17,683,197 22,251,172 16,123,500 16,587,168 13,814,914 12,770,224 Highways and streets 10,234,099 11,629,477 10,201,832 10,791,469 7,505,589 9,417,459 9,089,318 9,400,140 8,754,110 9,255,004 Transit 1,267,596 939,341 1,106,750 1,125,490 1,505,341 1,533,258 1,432,910 1,404,646 1,275,093 - Culture and recreation 10,059,071 9,396,975 9,551,170 9,699,357 10,111,731 10,204,276 9,695,639 4,572,490 3,399,623 2,783,633 Interest on long-term debt 1,149,019 290,251 362,651 355,545 350,404 511,502 494,732 439,027 656,260 522,917 Total governmental activities expenses 59,025,489 60,181,892 57,849,268 55,657,447 49,796,129 56,048,572 48,724,893 43,937,173 38,890,007 35,192,909 Business-type activities: Water 16,202,611 16,157,523 15,953,546 15,089,673 15,568,288 14,753,418 14,406,074 13,608,931 13,572,677 13,047,373 Stormwater 1,282,283 1,368,001 1,444,865 1,291,490 1,190,898 1,115,494 917,898 854,510 749,038 983,975 Total business-type activities expenses 17,484,894 17,525,524 17,398,411 16,381,163 16,759,186 15,868,912 15,323,972 14,463,441 14,321,715 14,031,348 Total primary government expenses $76,510,383 $77,707,416 $75,247,679 $72,038,610 $66,555,315 $71,917,484 $64,048,865 $58,400,614 $53,211,722 $49,224,257 Program Revenues Governmental activities: Charges for services General government $5,519,724 $6,305,121 $5,205,012 $4,920,132 $5,084,396 $4,901,504 $4,096,927 $3,516,359 $3,978,117 $3,740,046 Public safety 341,334 340,430 157,312 173,488 128,651 138,075 168,808 29,097 35,976 45,346 Highways and streets 378,585 739,936 1,675,929 754,388 1,039,542 1,052,167 764,397 496,098 546,066 1,052,581 Transit - 463 110,309 138,125 119,536 100,052 88,684 72,783 71,078 - Culture and recreation 7,033,797 5,236,021 4,391,639 5,014,018 5,096,804 4,611,576 4,373,693 1,108,734 435,354 169,965 Operating grants and contributions 4,040,118 8,171,190 3,621,830 4,669,814 4,949,928 4,664,197 5,503,530 5,070,396 4,706,844 5,318,097 Capital grants and contributions 8,493,664 25,566,365 16,338,347 8,302,441 5,529,831 6,749,407 3,602,656 2,456,727 2,919,641 2,920,335 Total governmental activities program revenues 25,807,222 46,359,527 31,500,378 23,972,406 21,948,688 22,216,978 18,598,695 12,750,194 12,693,076 13,246,370 Business-type activities: Charges for services Water 18,333,445 18,199,075 20,218,758 17,519,158 19,455,685 18,158,385 16,739,580 16,088,681 19,286,794 16,732,600 Stormwater 1,495,382 1,472,363 1,443,616 1,426,246 1,386,278 1,314,787 828,258 771,594 759,428 813,400 Operating grants and contributions - - - - - - 35,000.00 - - - Capital grants and contributions 1,612,125 7,603,672 169,194 2,899,213 870,920 1,097,285 3,334,372 1,979,037 179,675 48,871 Total business-type activities program revenues 21,440,952 27,275,110 21,831,568 21,844,617 21,712,883 20,570,457 20,937,210 18,839,312 20,225,897 17,594,871 Total primary government program revenues $47,248,174 $73,634,637 $53,331,946 $45,817,023 $43,661,571 $42,787,435 $39,535,905 $31,589,506 $32,918,973 $30,841,241 Net (expense)/revenue: Governmental activities $(33,218,267) $(13,822,365) $(26,348,890) $(31,685,041) $(27,847,441) $(33,831,594) $(30,126,198) $(31,186,979) $(26,196,931) $(21,946,539) Business-type activities 3,956,058 9,749,586 4,433,157 5,463,454 4,953,697 4,701,545 5,613,238 4,375,871 5,904,182 3,563,523 Total primary government net expense $(29,262,209) $(4,072,779) $(21,915,733) $(26,221,587) $(22,893,744) $(29,130,049) $(24,512,960) $(26,811,108) $(20,292,749) $(18,383,016) Page 131 General Revenues and Other Changes in Net Position Governmental activities: Taxes: Sales $30,583,921 $24,056,793 $22,757,403 $22,924,400 $21,664,398 $19,767,720 $16,998,464 $16,132,159 $15,286,001 $14,241,065 Franchise 756,388 722,700 662,048 635,494 656,664 647,830 621,546 582,064 571,731 539,477 Unrestricted state revenue sharing 15,081,806 14,435,336 12,638,148 11,879,950 11,577,834 11,177,729 10,549,196 10,413,464 9,636,906 9,048,365 Investment earnings (1,181,160) 136,789 1,098,267 1,132,215 74,542 68,435 238,210 216,175 255,702 265,787 Special item - Capital asset conveyance - - - - - - - - - (2,606,804) Miscellaneous 150,100 - - - - - - - - - Transfers (198,665) 2,522 2,472 2,581 2,847 2,942 3,030 3,119 3,178.00 2,319.00 Total governmental activities 45,192,390 39,354,140 37,158,338 36,574,640 33,976,285 31,664,656 28,410,446 27,346,981 25,753,518 21,490,209 Business-type activities: Investment earnings (861,433) 59 910,920 774,842 5,916 11,995 204,669 124,887 111,816 5,471 Miscellaneous 15,404 13,255 - - - - - - - - Transfers 198,665 (2,522) (2,472) (2,581) (2,847) (2,942) (3,030) (3,119) (3,178) (2,319) Total business-type activities (647,364) 10,792 908,448 772,261 3,069 9,053 201,639 121,768 108,638 3,152 Total primary government $44,545,026 $39,364,932 $38,066,786 $37,346,901 $33,979,354 $31,673,709 $28,612,085 $27,468,749 $25,862,156 $21,493,361 Change in Net Position Governmental activities 11,974,123 25,531,775 10,809,448 4,889,599 6,128,844 (2,166,938) (1,715,752) (3,839,998) (443,413) (456,330) Business-type activities 3,308,694 9,760,378 5,341,605 6,235,715 4,956,766 4,710,598 5,814,877 4,497,639 6,012,820 3,566,675 Total primary government $15,282,817 $35,292,153 $16,151,053 $11,125,314 $11,085,610 $2,543,660 $4,099,125 $657,641 $5,569,407 $3,110,345 Source: Town of Oro Valley Finance Department Page 132 TOWN OF ORO VALLEY, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 General fund Nonspendable $1,279,770 $204,193 $45,553 $129,504 $141,676 $130,030 $97,269 $31,278 $- $- Committed 12,813,742 9,883,194 10,485,304 13,608,565 - - - - - - Assigned - - - 2,584,994 1,441,862 1,441,862 1,441,862 1,553,999 1,608,035 1,608,035 Unassigned 16,296,912 22,321,155 10,368,691 3,248,602 14,384,104 11,831,322 8,985,422 8,566,598 9,925,988 11,529,070 Total general fund $30,390,423 $32,408,542 $20,899,548 $19,571,665 $15,967,642 $13,403,214 $10,524,553 $10,151,875 $11,534,023 $13,137,105 All other governmental funds Nonspendable $308,947 $157,497 $73,201 $105,403 $130,202 $132,538 $127,600 $149,348 $- $- Restricted 29,043,570 5,392,323 5,471,396 5,752,355 4,424,244 6,006,584 4,031,923 3,599,966 4,555,138 3,730,312 Committed 5,749,810 2,602,097 805,717 406,247 1,594,293 1,829,232 2,617,856 4,637,773 5,343,506 4,166,818 Assigned - 2,438,272 2,410,736 3,611,045 2,209,618 1,716,361 1,340,991 1,421,593 1,500,000 - Unassigned - - - - (201,765) (237,769) (29,198) - - - Total all other governmental funds $35,102,327 $10,590,189 $8,761,050 $9,875,050 $8,156,592 $9,446,946 $8,089,172 $9,808,680 $11,398,644 $7,897,130 Source: Town of Oro Valley Finance Department Page 133 TOWN OF ORO VALLEY, ARIZONA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Revenues Taxes $31,340,309 $24,779,493 $23,419,451 $23,559,894 $22,321,062 $20,415,550 $17,620,010 $16,714,223 $15,857,732 $14,780,542 Intergovernmental 27,545,642 31,780,507 30,840,092 24,375,992 21,634,143 22,118,633 19,488,066 17,714,991 16,732,631 16,817,756 Fines, forfeitures, & penalties 233,228 233,331 183,381 247,283 529,687 558,692 283,470 221,571 673,336 551,962 Licenses, fees, & permits 2,418,918 3,362,933 2,400,899 2,387,832 2,679,690 2,388,951 1,915,992 1,605,937 2,116,700 1,813,947 Charges for services 9,392,716 7,162,259 7,463,179 7,206,705 6,599,847 6,226,578 5,956,058 2,991,826 1,850,181 1,630,238 Contributions & donations - - - - 133,928 150,000 149,513 - - 27,229 Special assessments - 172,640 175,197 174,066 175,854 175,539 189,525 178,078 1,462,307 365,935 Development impact fees 605,406 1,256,426 980,302 1,039,763 1,346,402 1,348,528 795,471 439,637 569,338 988,342 Investment income (1,091,168) 132,373 1,098,267 1,132,215 74,542 68,435 238,210 216,175 255,702 265,787 Other revenues 691,442 1,024,290 965,588 841,111 576,970 572,886 504,796 141,618 305,489 349,326 Total revenues $71,136,493 $69,904,252 $67,526,356 $60,964,861 $56,072,125 $54,023,792 $47,141,111 $40,224,056 $39,823,416 $37,591,064 Expenditures General government $28,445,524 $17,610,897 $16,531,008 $14,424,463 $11,998,586 $11,098,844 $11,426,687 $10,862,553 $10,610,673 $9,289,771 Public safety 35,253,398 16,438,199 16,767,994 16,250,498 16,731,963 15,725,029 15,494,532 15,071,396 13,539,322 12,342,349 Highways & streets 1,779,889 1,795,203 1,904,698 2,999,923 3,092,143 2,993,402 2,754,413 2,602,321 3,710,577 3,513,479 Transit 1,328,131 930,687 1,110,444 1,150,322 1,536,294 1,528,654 1,432,910 1,404,646 - - Culture & recreation 9,284,693 8,363,664 8,735,394 8,880,611 9,399,598 9,433,339 9,097,752 4,078,817 2,445,131 2,468,129 Capital outlay 13,545,876 9,993,713 20,637,466 15,293,326 10,081,427 9,196,801 7,995,340 8,093,704 5,495,185 11,053,739 Debt service Principal 1,034,249 1,146,027 1,262,487 1,124,885 1,304,226 1,075,466 897,637 649,840 1,867,901 571,910 Interest 557,218 290,251 365,454 327,421 356,661 314,914 336,510 436,010 472,268 498,729 Issuance cost on bonds 728,808 - - 35,000 - 67,959 104,533 - - - Total expenditures $91,957,786 $56,568,641 $67,314,945 $60,486,449 $54,500,898 $51,434,408 $49,540,314 $43,199,287 $38,141,057 $39,738,106 Excess of revenues over (under) expenditures $(20,821,293) $13,335,611 $211,411 $478,412 $1,571,227 $2,589,384 $(2,399,203) $(2,975,231) $1,682,359 $(2,147,042) Other financing sources (uses) Premium on bonds issued 39,095,000 - - - - - - - - - Proceeds from capital lease agreements 4,247,224 - - - - - 1,043,214 - 212,895 - Payment to bond escrow agent - - - - - (1,171,447) (2,523,121) - - - Issuance of long-term debt - - - 2,035,000 - 3,115,556 2,529,250 - - - Sale of general capital assets 150,796 - - - - - - - - - Insurance recoveries 20,957 - - - - - - - - - Transfers in 6,401,665 2,747,343 2,046,718 4,407,180 3,342,890 2,953,072 1,872,026 4,326,627 4,115,152 1,704,272 Transfers out (6,600,330) (2,744,821) (2,044,246) (4,404,599) (3,640,043) (3,250,130) (1,868,996) (4,323,508) (4,111,974) (2,001,953) Total other financing sources (uses)43,315,312 2,522 2,472 2,037,581 (297,153) 1,647,051 1,052,373 3,119 216,073 (297,681) Net change in fund balances $22,494,019 $13,338,133 $213,883 $2,515,993 $1,274,074 $4,236,435 $(1,346,830) $(2,972,112) $1,898,432 $(2,444,723) Debt service as a percentage of noncapital expenditures 1.93%3.06%3.40%3.16%3.66%3.32%3.00%3.17%7.30%3.76% Source: Town of Oro Valley Finance Department Page 134 TOWN OF ORO VALLEY, ARIZONA PRINCIPAL SALES TAXPAYERS CURRENT FISCAL YEAR AND NINE YEARS PRIOR % of Total % of Total Business Sales Tax Business Sales Tax Taxpayer Type Rank Payments Taxpayer Type Rank Payments Taxpayer A Utility $2,252,777 1 7.37%Taxpayer A Utility $1,762,418 1 12.43% Taxpayer B Accomodation 1,941,343 2 6.35%Taxpayer B Retail 839,695 2 5.92% Taxpayer C Retail 1,632,760 3 5.34%Taxpayer C Retail 588,990 3 4.15% Taxpayer D Construction 1,395,256 4 4.56%Taxpayer D Utility 468,554 4 3.30% Taxpayer E Retail 1,328,463 5 4.34%Taxpayer E Construction 461,178 5 3.25% Taxpayer F Retail 1,300,998 6 4.25%Taxpayer F Utility 403,076 6 2.84% Taxpayer G Construction 745,423 7 2.44%Taxpayer G Retail 401,374 7 2.83% Taxpayer H Retail 727,439 8 2.38%Taxpayer H Retail 325,141 8 2.29% Taxpayer I Utility 663,060 9 2.17%Taxpayer I Accomodation 303,832 9 2.14% Taxpayer J Accomodation 630,687 10 2.06%Taxpayer J Construction 301,394 10 2.13% $12,618,206 41.26%$5,855,652 41.30% Sales Tax Payments Sales Tax Payments June 30, 2022 June 30, 2013 Source: Arizona Department of Revenue Page 135 TOWN OF ORO VALLEY, ARIZONA TAXABLE SALES BY CATEGORY LAST TEN FISCAL YEARS ($000's) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Construction $5,804 $3,893 $4,363 $4,191 $4,653 $4,295 $2,131 $3,199 $3,338 $2,842 Manufacturing 639 283 198 173 140 137 156 141 257 258 Transportation, Warehousing, Communications & Utilities 3,771 3,593 3,288 3,335 3,384 3,171 3,133 3,068 2,959 2,785 Wholesale Trade 265 228 211 183 154 136 131 125 103 110 Retail Trade 12,058 10,890 9,830 8,430 7,733 7,086 6,844 5,808 5,243 5,153 Restaurants, Bars & Lodging 5,906 3,374 3,011 4,299 3,907 3,473 3,295 2,803 2,761 2,164 Finance, Insurance & Real Estate 383 313 442 1,114 646 562 443 270 75 335 Services 1,526 1,276 1,004 963 840 702 672 599 529 456 All Other 232 206 409 237 206 202 190 115 60 75 Cable Franchise 756 723 662 635 657 648 622 582 572 540 Total $31,340 $24,779 $23,418 $23,560 $22,320 $20,412 $17,617 $16,710 $15,897 $14,718 Town Sales Tax Rate*2.00%2.00% Fiscal Year 2.50%2.50%2.50%2.50%2.50%2.50%2.50%2.00% Source: Arizona Department of Revenue * Note: .5% Additional Sales Tax Effective March 1, 2015 Page 136 TOWN OF ORO VALLEY, ARIZONA DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS Fiscal Year Ended Utility June 30,Sales Tax Bed Tax Sales Tax Sales Tax 2013 2.00%6.00%4.00%4.00%6.10% 2014 2.00%6.00%4.00%4.00%6.10% 2015*2.50%6.00%4.00%4.00%6.10% 2016 2.50%6.00%4.00%4.00%6.10% 2017 2.50%6.00%4.00%4.00%6.10% 2018 2.50%6.00%4.00%4.00%6.10% 2019 2.50%6.00%4.00%4.00%6.10% 2020 2.50%6.00%4.00%4.00%6.10% 2021 2.50%6.00%4.00%4.00%6.10% 2022 2.50%6.00%4.00%4.00%6.10% Town of Oro Valley Construction Pima County Sales Source: Arizona Department of Revenue * Note: .5% Additional Sales Tax Effective March 1, 2015 Page 137 TOWN OF ORO VALLEY, ARIZONA NET LIMITED & FULL CASH ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS Fiscal Year Net Full Estimated Ended Assessed Cash Assessed Full Cash June 30,Value Value Value 2013 589,160,533 592,761,968 5,461,131,133 - 2014 553,366,744 556,259,856 5,175,406,955 - 2015 556,566,167 560,863,509 5,252,917,489 - 2016 572,696,599 593,299,222 5,616,655,680 - 2017 593,580,247 616,216,705 5,688,443,027 - 2018 612,684,205 633,479,221 6,058,189,523 - 2019 645,311,769 683,985,966 6,456,152,108 - 2020 678,873,768 730,293,104 6,937,292,543 - 2021 758,352,130 813,753,982 7,742,926,046 - 2022 786,505,278 829,644,553 7,551,556,642 - Net Limited Total Outstanding General Obligation Bond Debt Source: State of Arizona Department of Revenue Abstract of the Assessment Roll Note: On November 6, 2012, voters approved Proposition 117, an amendment to the Arizona Constitution. Beginning with Tax Year 2015 (Fiscal Year 2016), both primary and secondary taxes are levied against the net limited assessed value. The net full cash assessed value is used for determining the Town's bonding capacity and as the ceiling for net limited assessed value. Page 138 TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED EXCISE TAX COLLECTIONS JUNE 30, 2022 Fiscal Year Fiscal Year Revenue Source Town Sales Tax $25,815,131 $24,505,959 $27,048,414 $21,109,373 $20,172,487 $20,454,936 $19,333,457 $17,568,254 $14,967,714 $15,625,449 Franchise Fees 775,000 765,000 756,388 722,700 662,048 635,494 656,664 647,830 621,546 582,064 Licenses & Permits 2,302,814 2,248,824 2,418,918 3,362,933 2,400,899 2,387,832 2,679,690 2,313,504 1,915,992 1,605,937 Fines 130,687 125,000 132,636 135,547 111,611 165,669 131,393 131,637 159,154 148,050 State-shared Sales Tax 5,941,790 5,780,575 6,637,079 5,462,343 4,694,491 4,469,774 4,210,168 3,989,179 3,887,673 3,747,944 State-shared Income Tax 6,494,255 9,084,919 6,174,401 6,580,331 5,870,231 5,370,779 5,422,693 5,329,864 4,937,719 4,964,635 Subtotal $41,459,677 $42,510,277 $43,167,836 $37,373,227 $33,911,767 $33,484,484 $32,434,065 $29,980,268 $26,489,798 $26,674,079 Parks and Recreation Sales Tax 3,658,752 3,477,236 3,535,507 2,947,420 2,584,916 2,469,464 2,330,941 2,199,466 2,030,750 506,710 Total $45,118,429 $45,987,513 $46,703,343 $40,320,647 $36,496,683 $35,953,948 $34,765,006 $32,179,734 $28,520,548 $27,180,789 Fiscal YearFiscal Year 2019 Fiscal Year 2022 20202021 AuditedProjected Fiscal Year 2015 Fiscal Year 2023 Fiscal Year 2024 Fiscal Year Fiscal Year 20172018 2016 (a) All revenue sources are presented on a modified accrual basis of accounting except for Town sales taxes which are presented on the cash basis of accounting per the Arizona Department of Revenue Standard Industry Summary Local Taxes Collection Reports Source: Oro Valley Finance Department Note: The above information is provided for bond requirements only and the bond does not require ten years of data. Page 139 TOWN OF ORO VALLEY, ARIZONA RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Special Percentage Fiscal Note Assessment of Personal Year Payable Bonds Income 2013 $- $- $9,155,743 $2,435,000 $43,349,121 $185,307 $5,575,041 $60,700,212 3.59%1,409 2014 168,994 - 8,703,428 1,055,000 40,811,243 93,593 6,371,529 57,203,787 3.41%1,366 2015 128,594 1,000,000 8,215,673 925,000 37,683,805 118,862 8,169,765 56,241,699 3.25%1,331 2016 966,962 700,000 7,716,638 780,000 34,517,647 80,423 8,879,907 53,641,577 2.95%1,231 2017 716,622 350,000 9,341,559 640,000 30,804,327 40,814 8,284,407 50,177,729 2.69%1,146 2018 458,744 - 8,788,954 490,000 28,079,939 - 7,690,874 45,508,511 2.35%1,022 2019 254,070 - 10,051,867 335,000 30,135,034 - 7,079,179 47,855,150 2.37%1,059 2020 33,937 - 9,171,710 170,000 25,669,708 - 6,448,759 41,494,114 1.95%901 2021 - - 8,229,620 - 24,909,835 - 2,713,108 35,852,563 1.62%762 2022 769,691 - 50,463,247 - 20,476,968 - 2,404,213 74,114,119 3.15%1,537 Business-Type Activities Total Primary GovernmentLeases Excise Tax Bonds Governmental Activities Revenue Bonds Per Capita Capital Leases Loan Payable Source: Town of Oro Valley Finance Department and U.S. Census Bureau Page 140 TOWN OF ORO VALLEY, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT JUNE 30, 2022 Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable Debt Pima County $95,961,000 7.60%$7,289,125 Amphitheater Unified School District 78,225,000 42.47%33,220,254 Golder Ranch Fire District 58,779,858 69.95%41,119,082 Subtotal, overlapping debt 81,628,460 Town of Oro Valley 51,232,938 100.00%51,232,938 Total estimated direct and overlapping debt $132,861,398 Source: Pima County, Golder Ranch Fire District and Amphitheater Unified School District No. 10. (1) Estimated percentage of debt outstanding applicable to the Town is calculated based on a portion of the Town's net limited as sessed valuation as a percentage of the net limited assessed valuation of the overlapping jurisdiction. Page 141 TOWN OF ORO VALLEY, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2022 2021 2020 2019 2018 Debt Limit $215,707,584 $211,576,035 $189,876,207 $177,836,351 $164,704,598 Total net debt applicable to limit - - - - - Legal debt margin $215,707,584 $211,576,035 $189,876,207 $177,836,351 $164,704,598 Total net debt applicable to the limit as a percentage of debt limit 0.00%0.00%0.00%0.00%0.00% 2017 2016 2015 2014 2013 Debt Limit $160,216,343 $154,257,798 $145,824,512 $144,627,563 $154,118,112 Total net debt applicable to limit - - - - - Legal debt margin $160,216,343 $154,257,798 $145,824,512 $144,627,563 $154,118,112 Total net debt applicable to the limit as a percentage of debt limit 0.00%0.00%0.00%0.00%0.00% Source: Town of Oro Valley Finance Department Page 142 TOWN OF ORO VALLEY, ARIZONA CALCULATION OF LEGAL DEBT MARGIN JUNE 30, 2022 Net Full Cash Assessed Valuation $829,644,553 Debt Limit - 20% of net full cash assessed valuation $165,928,911 Debt applicable to limit General obligation bonds outstanding $ Less amount set aside for repayment of debt Net debt applicable to limit 20% legal debt margin $165,928,911 Debt Limit - 6% of net full cash assessed valuation $49,778,673 Debt applicable to limit General obligation bonds outstanding $ Less amount set aside for repayment of debt Net debt applicable to limit All other general obligation bonds debt margin $49,778,673 Total legal debt margin $215,707,584 Water, Sewer, Light, Parks, Open Space and Recreational Facility Bonds All other general obligation bonds Source: Pima County Assessor’s Office Page 143 TOWN OF ORO VALLEY, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Water Utility Revenue Bonds Fiscal Year 2013 $16,732,600 $2,536,840 $1,732,008 $4,268,848 3.92 2014 19,397,409 2,406,000 1,429,538 3,835,538 5.06 2015 16,213,273 2,995,560 1,372,024 4,367,584 3.71 2016 16,943,615 3,054,080 1,239,488 4,293,568 3.95 2017 18,169,402 3,054,060 870,547 3,924,607 4.63 2018 19,455,685 2,607,710 897,871 3,505,581 5.55 2019 17,519,158 3,933,228 839,823 4,773,051 3.67 2020 20,218,758 4,348,648 775,538 5,124,186 3.95 2021 22,304,186 3,544,910 661,932 4,206,842 5.30 2022 19,515,935 4,051,414 527,252 4,578,666 4.26 Governmental Revenue Bonds Fiscal Year 2013 $28,135,868 $321,910 $371,951 $693,861 40.55 2014 29,512,099 444,000 382,639 826,639 35.70 2015 31,739,256 479,440 367,991 847,431 37.45 2016 31,883,978 530,920 289,630 820,550 38.86 2017 31,739,256 334,940 281,475 616,415 51.49 2018 34,262,128 544,290 280,170 824,460 41.56 2019 36,414,803 763,772 284,213 1,047,985 34.75 2020 36,511,067 877,352 312,875 1,190,227 30.68 2021 37,951,105 942,090 273,354 1,215,444 31.22 2022 43,590,851 971,586 243,858 1,215,444 35.86 Revenues Debt Service Debt Service Gross Revenues Gross Principal Interest Total Coverage Principal Interest Total Coverage Source: Town of Oro Valley Finance Department Page 144 TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED WATER SYSTEM REVENUES, EXPENSES, DEBT SERVICE AND COVERAGE LAST TEN FISCAL YEARS Revenues: Water revenues $14,406,542 $14,679,253 $13,764,702 $12,413,502 $13,586,667 $12,493,557 $12,018,429 $11,280,269 $12,169,375 $11,585,181 Water connection fees - - 810,689 621,106 816,045 816,353 544,852 591,045 1,413,047 706,159 Alternative water connection fees 1,167,086 4,100,556 1,627,435 1,246,838 1,638,175 1,638,792 1,094,460 1,172,170 2,376,682 1,253,055 Groundwater preservation fees 2,413,719 2,617,452 2,389,953 2,213,303 2,611,075 2,440,045 2,371,100 2,330,231 2,599,718 2,527,524 Other revenues 906,925 906,925 1,625,979 1,024,407 803,723 769,638 710,740 714,965 727,972 660,681 Interest income (830,161) (1,211) 887,772 758,457 - 11,020 203,857 124,593 110,615 - Total Revenues 18,064,111 22,302,975 21,106,530 18,277,613 19,455,685 18,169,405 16,943,438 16,213,273 19,397,409 16,732,600 Expenses: Personnel 3,233,737 3,480,942 3,392,481 3,236,682 3,155,109 3,021,915 2,952,249 2,767,143 2,659,895 2,537,150 Operations & maintenance 5,802,211 4,133,238 4,288,975 3,445,511 3,838,409 4,719,579 5,059,998 4,530,436 4,303,230 4,564,894 CAP water costs 2,355,502 3,736,489 3,696,131 3,393,317 3,523,052 2,892,392 1,952,117 1,570,793 1,499,594 1,093,105 Total Expenses 11,391,451 11,350,669 11,377,587 10,075,510 10,516,570 10,633,886 9,964,364 8,868,372 8,462,719 8,195,149 Net water system revenues 6,672,660 10,952,306 9,728,943 8,202,103 8,939,115 7,535,519 6,979,074 7,344,901 10,934,690 8,537,451 Water supported debt service 2007 WIFA Loan - 2,198,236 306,657 310,866 311,000 311,130 311,256 311,377 311,494 316,763 2009 WIFA Loan - 1,310,973 147,425 149,175 149,226 149,275 149,322 149,367 150,471 186,817 2014 WIFA Loan 372,565 372,867 373,072 377,060 377,158 395,534 361,059 296,972 - - 2003 Revenue bonds - - - - - - - - - 980,000 2003 Refunding revenue bonds - - - - - - - - - 1,243,058 2005 Excise tax bonds - - - - - - - 152,516 152,565 151,245 2007 Excise tax bonds - - - - - 1,245,403 1,197,678 1,255,948 790,822 791,111 2012 Refunding bonds 1,820,750 4,168,782 1,930,382 1,996,381 1,963,731 1,980,781 1,995,481 1,971,082 1,968,281 956,975 2013 Refunding bonds - - 1,010,000 1,024,645 1,024,073 1,033,428 1,022,420 1,046,558 1,513,427 - 2015 Refunding revenue obligations 148,678 148,666 149,924 152,339 150,259 25,101 17,116 - - - 2017 Refunding revenue obligations 1,623,122 1,623,896 1,624,758 1,658,306 235,873 - - - - - 2018 Excise tax revenue obligations 509,580 510,498 409,122 - - - - - - - 2021 Refunding revenue bonds 432,538 18,838 - - - - - - - - 2021 Refunding revenue bonds 24,778 11,081 - - - - - - - - - Total water supported debt service $4,932,011 $10,363,837 $5,951,340 $5,668,772 $4,211,320 $5,140,652 $5,054,332 $5,183,820 $4,887,060 $4,625,969 Debt service coverage 1.35 1.63 1.45 2.12 1.47 1.38 1.42 2.24 1.85 1.75 2022 2019 2018 2017 2016 2015 2014 201320212020 Source: Town of Oro Valley Finance Department Page 145 TOWN OF ORO VALLEY, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Fiscal Year Per Capita Ended Personal Unemployment June 30,Population Income Rate 2013 43,070 1,692,780,210 39,303 6.4% 2014 41,887 1,679,965,408 40,107 6.2% 2015 42,259 1,728,773,431 40,909 5.2% 2016 43,565 1,817,844,597 41,727 5.3% 2017 43,781 1,863,394,821 42,562 4.6% 2018 44,517 1,932,614,654 43,413 4.8% 2019 45,184 2,014,980,480 44,595 4.9% 2020 46,044 2,128,752,252 46,233 8.6% 2021 47,070 2,213,843,310 47,033 5.5% 2022 48,222 2,349,424,062 48,721 3.4% Income Personal Source: US Census Bureau, Arizona Commerce Authority, Arizona Employment statistics, and Pima Association of Governments Page 146 TOWN OF ORO VALLEY, ARIZONA PRINCIPAL EMPLOYERS CURRENT FISCAL YEAR AND FISCAL YEAR NINE YEARS PRIOR Employer Employees Rank Employer Employees Rank Roche Tissue Diagnostics 1,800 1 Ventana Medical Systems 1,500 1 Amphitheater Public Schools 584 2 Oro Valley Hospital 616 2 Simpleview 450 3 Hilton El Conquistador Resort 460 3 Town of Oro Valley 442 4 Amphitheater Public Schools 424 4 Oro Valley Hospital 421 5 Town of Oro Valley 321 5 El Conquistador Tucson 270 6 Wal-Mart Supercenter 249 6 Fry's Food & Drug Store 270 7 Fry's Food & Drug 246 7 Walmart 194 8 Splendido at Rancho Vistoso 176 8 Splendido at Rancho Vistoso 190 9 Kohls 125 9 Casa de la Luz Hospice 160 10 Target 120 10 Total 4,781 4,781 Total 4,237 June 30, 2013June 30, 2022 Source: Town of Oro Valley Finance Department Page 147 TOWN OF ORO VALLEY, ARIZONA FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Function/Program 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Administration Town Clerk 4.73 4.73 4.73 4.73 4.69 4.54 4.56 4.56 4.90 4.54 Town Manager 8.38 8.38 10.38 10.38 7.38 7.38 7.38 8.00 7.00 7.00 Human Resources 4.00 4.00 4.00 4.00 3.48 3.48 3.50 3.50 2.00 5.00 Economic Development 1.00 1.00 1.00 1.00 3.00 3.00 3.00 2.00 2.00 3.00 Finance 8.20 7.20 8.00 8.00 7.00 7.00 7.00 7.00 7.00 7.00 Information Systems 15.80 13.80 9.00 9.00 8.00 7.00 7.00 7.00 7.30 6.50 Legal 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Development & Infrastructure Services 26.78 26.78 27.38 27.38 26.88 103.63 83.76 81.45 78.84 77.22 Parks & Recreation 63.06 63.10 63.10 63.10 60.78 48.02 49.36 36.20 37.61 27.26 Cultural Resources - - - - - - 0.20 - - 1.35 Police Civilians 30.73 30.25 31.25 31.25 30.25 31.25 30.25 30.25 25.93 30.25 Officers 104.00 106.88 106.88 101.88 104.88 101.88 102.88 102.88 101.91 101.44 Town Court 8.50 8.48 8.48 8.00 8.00 8.00 8.00 8.00 8.70 8.00 Public Works 71.37 70.89 70.29 70.29 65.79 - - - - - Water Utility 40.48 40.48 39.48 39.48 39.48 39.48 38.48 37.48 37.00 36.00 Total 393.03 391.97 389.97 384.49 375.61 370.66 351.37 334.32 326.19 320.56 Source: Town of Oro Valley Finance Department Page 148 TOWN OF ORO VALLEY, ARIZONA WATER UTILITY REVENUES BY USER TYPE LAST TEN FISCAL YEARS Fiscal Year Ended June 30, 2013 $7,752,934 $962,824 $1,040,793 $19,000 $196,354 $884 $135,720 $1,507,574 $11,616,083 2014 7,881,436 886,712 1,169,067 187,622 283,632 816 121,108 1,638,981 12,169,374 2015 7,649,136 779,877 981,545 214,848 271,815 - 115,955 1,267,093 11,280,269 2016 8,103,644 778,915 1,129,741 50,479 310,609 - 114,427 1,530,107 12,017,922 2017 8,416,714 814,041 1,170,946 51,373 224,532 8,733 104,880 1,702,338 12,493,557 2018 8,990,121 860,124 1,371,555 61,504 520,324 13,735 103,126 1,666,178 13,586,667 2019 8,849,732 856,941 1,087,648 69,363 302,780 9,627 69,091 1,168,322 12,413,504 2020 9,798,411 925,233 1,193,423 65,007 345,149 8,787 85,600 1,343,092 13,764,702 2021 10,394,919 902,536 1,513,518 65,537 228,950 8,575 65,356 1,499,862 14,679,253 2022 10,287,598 974,823 1,322,881 66,053 378,582 8,682 100,890 1,267,033 14,406,542 TotalResidentialCommercialIrrigation Irrigation Reclaimed Construction Construction Reclaimed Turf Turf Reclaimed Source: Town of Oro Valley Water Utility Department Page 149 TOWN OF ORO VALLEY, ARIZONA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS Function/Program 2021 2020 2019 2018 2017 2016 2015 2014 2013 Police Burglaries 49 41 42 50 77 71 85 77 75 105 Citations (traffic)2,987 3,516 2,681 3,117 2,992 3,446 3,890 4,486 4,668 5,456 Investigations 977 1,164 932 963 915 818 824 832 765 681 Total arrests 1,385 1,438 1,251 1,488 1,786 1,458 1,598 1,721 1,679 1,564 Thefts 544 534 501 504 567 493 586 500 561 563 Development & Infrastructure Services Street resurfacing (miles)69 54 51 88 44 89 92 101 73 31 Parks & Recreation Recreation programs held annually 97 45 105 96 73 55 52 38 30 35 Months of public pool operations 12 11 12 12 12 12 12 12 12 10 Parks maintenance man-hours worked 23,270 18,720 18,220 18,311 17,842 15,463 15,083 16,255 20,000 17,000 Water New connections 183 505 273 264 331 340 176 202 165 213 Total connections 21,149 20,966 20,461 20,188 19,924 19,588 19,355 19,179 18,977 18,812 Transit Total route miles 593,117 350,248 455,777 454,277 468,346 568,657 529,170 392,071 439,512 353,936 Passengers 56,001 28,686 39,902 47,847 49,474 51,131 45,202 39,102 39,196 32,442 2022 Source: Town of Oro Valley Finance Department Page 150 TOWN OF ORO VALLEY, ARIZONA WATER RATES LAST TEN FISCAL YEARS Fiscal Year Ended June 30, 2013 14.19 2.20 2.99 4.03 5.38 0.95 14.19 2014 14.19 2.23 3.01 4.07 5.49 0.95 14.19 2015 14.19 2.27 3.10 4.23 5.76 0.90 14.19 2016 14.19 2.32 3.19 4.40 6.05 0.90 14.19 2017 14.62 2.34 3.25 4.53 6.29 0.90 14.62 2018 16.45 2.34 3.25 4.53 6.29 0.90 14.62 2019 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2020 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2021 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2022 18.99 2.40 3.35 4.80 6.70 0.90 14.62 Per 1,000 Base Rate Monthly Reclaimed WaterPotable Water Tier 3 Per 1,000 Tier 4 Per 1,000 GPF Per 1,000 Base Rate Monthly Tier 1 Per 1,000 Tier 2 Source: Town of Oro Valley Water Utility Note: The rate for all reclaimed water is $2.27 per 1,000 gallons. Page 151 TOWN OF ORO VALLEY, ARIZONA CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARS Function/Program 2021 2020 2019 2018 2017 2016 2015 2014 2013 Police Stations 1 1 1 1 1 1 1 1 1 1 Substations 3 3 3 3 3 3 3 3 3 3 Patrol units 81 84 84 78 78 72 77 74 64 66 Other fleet 57 41 42 46 65 67 44 45 42 43 Development & Infrastructure Services Streets (miles)430 421 421 421 421 421 421 421 421 205 Streetlights 95 95 95 95 95 95 95 95 95 95 Traffic signals 22 22 22 22 22 19 19 19 19 19 Parks & Recreation Acreage 449 449 449 449 449 448 448 448 457 436 Playgrounds 3 3 3 2 2 2 2 2 2 2 Baseball/softball diamonds 7 7 7 7 7 7 7 7 7 7 Community centers 1 1 1 1 1 1 1 1 - - Golf course holes 36 36 45 45 45 45 45 45 - - Tennis courts 31 31 32 32 32 32 32 32 1 1 Swimming pools 2 2 2 3 4 4 4 4 2 2 Water Number of Wells 18 18 18 19 20 20 20 20 18 22 Reservoir Storage Capacity 11 11 11 11 11 11 12 12 13 20 Number of Booster Stations 26 26 26 26 26 26 27 27 26 25 Transit Transit vans 6 6 7 7 7 4 4 7 9 5 Transit mini buses 24 23 21 21 21 22 22 19 17 12 2022 Source: Town of Oro Valley Finance Department Page 152 (This page intentionally left blank)