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AGENDA
ORO VALLEY TOWN COUNCIL
REGULAR SESSION
FEBRUARY 6, 2019
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CAÑADA DRIVE
Executive Sessions – Upon a vote of the majority of the Town Council, the Council may enter into Executive
Sessions pursuant to Arizona Revised Statues §38-431.03 (A)(3) to obtain legal advice on matters listed on the
Agenda.
REGULAR SESSION AT OR AFTER 6:00 PM
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
UPCOMING MEETING ANNOUNCEMENTS
COUNCIL REPORTS
TOWN MANAGER'S REPORT
The Mayor and Council may consider and/or take action on the items listed below:
ORDER OF BUSINESS: MAYOR WILL REVIEW THE ORDER OF THE MEETING
INFORMATIONAL ITEMS
CALL TO AUDIENCE – At this time, any member of the public is allowed to address the Mayor and Town Council
on any issue not listed on today’s agenda. Pursuant to the Arizona Open Meeting Law, individual Council
Members may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to
criticism made by speakers. However, the Mayor and Council may not discuss or take legal action on matters
raised during “Call to Audience.” In order to speak during “Call to Audience” please specify what you wish to
discuss when completing the blue speaker card.
PRESENTATIONS
1.Proclamation - Celebrating Oro Valley as a Romantic Destination
2.Presentation and discussion of the Town's Annual Financial Audit for Fiscal Year ending June 30, 2018
CONSENT AGENDA
(Consideration and/or possible action)
A.Minutes - January 16 and January 23, 2019
B.Resolution No. (R)19-03, authorizing and approving an Intergovernmental Agreement between the Town
of Oro Valley and Pima County for the installation and maintenance of Emergency Vehicle Preemption
(EVP) equipment at signalized intersections and the installation of related EVP equipment on emergency
response vehicles
REGULAR AGENDA
FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may
not discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)
CALL TO AUDIENCE – At this time, any member of the public is allowed to address the Mayor and Town Council
on any issue not listed on today’s agenda. Pursuant to the Arizona Open Meeting Law, individual Council
Members may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to
criticism made by speakers. However, the Mayor and Council may not discuss or take legal action on matters
raised during “Call to Audience.” In order to speak during “Call to Audience” please specify what you wish to
discuss when completing the blue speaker card.
ADJOURNMENT
POSTED: 1/30/19 at 5:00 p.m. by pp
When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior
to the Council meeting in the office of the Town Clerk between the hours of 8:00 a.m. – 5:00p.m.
The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs
any type of accommodation, please notify the Town Clerk’s Office at least five days prior to the Council meeting at
229-4700.
INSTRUCTIONS TO SPEAKERS
Members of the public have the right to speak during any posted public hearing. However, those items not
listed as a public hearing are for consideration and action by the Town Council during the course of their
business meeting. Members of the public may be allowed to speak on these topics at the discretion of the
Chair.
If you wish to address the Town Council on any item(s) on this agenda, please complete a speaker card located on
the Agenda table at the back of the room and give it to the Town Clerk. Please indicate on the speaker card
which item number and topic you wish to speak on, or if you wish to speak during “Call to Audience”,
please specify what you wish to discuss when completing the blue speaker card.
Please step forward to the podium when the Mayor announces the item(s) on the agenda which you are interested
in addressing.
1. For the record, please state your name and whether or not you are a Town resident.
2. Speak only on the issue currently being discussed by Council. Please organize your speech, you will only be
allowed to address the Council once regarding the topic being discussed.
3. Please limit your comments to 3 minutes.
4. During “Call to Audience” you may address the Council on any issue you wish.
5. Any member of the public speaking must speak in a courteous and respectful manner to those present.
Thank you for your cooperation.
Town Council Regular Session 1.
Meeting Date:02/06/2019
Proclamation - Celebrating Oro Valley as a Romantic Destination
Information
Subject
Proclamation - Celebrating Oro Valley as a Romantic Destination
Summary
Attachments
Proclamation
Town Council Regular Session 2.
Meeting Date:02/06/2019
Requested by: Stacey Lemos Submitted By:Stacey Lemos, Finance
Department:Finance
Information
SUBJECT:
Presentation and discussion of the Town's Annual Financial Audit for Fiscal Year ending June 30, 2018
RECOMMENDATION:
This item is for presentation and discussion.
EXECUTIVE SUMMARY:
The certified public accounting firm of Heinfeld, Meech & Co., P.C. has completed the financial audit of the Town for
the fiscal year ending June 30, 2018. The audit was conducted in accordance with generally accepted auditing
standards, and the auditors have rendered an opinion that the Town's general purpose financial statements fairly
present the Town's financial position as of June 30, 2018. This is also known as an unmodified, or clean, audit
opinion, which is the highest form of audit opinion given.
Attached is a copy of the Comprehensive Annual Financial Report (CAFR), which contains the audited financial
statements. The CAFR has been submitted to the Government Finance Officers Association (GFOA) for the
Excellence in Financial Reporting Award program for the 25th consecutive year. Additional attachments to this
communication, the Audit Communication Letter and the Report on Internal Controls, are standard auditor
communications to the Town Council which outline various aspects of the audit process.
The attached Report on Internal Controls identifies an issue that arose during the course of auditing development
impact fee revenues. It was found that infrastructure contributed by developers through the granting of impact fee
credits was not included in the Town's capital asset listing, and the impact fee credits granted were not properly
recorded in the Town's general ledger. Also, a cash contribution was incorrectly recorded in the general ledger. It is
important to note that these findings did not cause a material misstatement of the Town's financial statements. To
address these findings and prevent future occurrences, Town staff from the Community and Economic
Development Department, Public Works Department, Legal Department and Finance Department are developing
formal written procedures and forms necessary to properly account for impact fee credit agreements. These
procedures will be completed by mid-February, and will be followed by training with all key staff involved in
collecting, approving, managing and accounting for impact fees and impact fee credit agreements. It is important to
note that while the Town did not have formal written procedures in place, all information related to the value of
infrastructure constructed and impact fee credits was readily accessible and able to be entered into the Town's
financial records through journal entry posting.
Mr. Corey Arvizu, CPA, with the firm of Heinfeld, Meech & Co., P.C. will be present to provide an overview of the
audit to Town Council and answer questions.
BACKGROUND OR DETAILED INFORMATION:
Key sections of the attached CAFR for Town Council's review include the Letter of Transmittal located in the
Key sections of the attached CAFR for Town Council's review include the Letter of Transmittal located in the
beginning of the report (pages 1 - 8); the Independent Auditors' Report (pages 15 - 16); and Management's
Discussion and Analysis (pages 19 - 28). Additionally, the Notes to the Financial Statements section (pages 52 - 88)
provides a more detailed explanation of significant accounting policies, Town investments, capital assets and debt,
and pension plan information. Finally, the Statistical Section (pages 141 - 166) provides various schedules of
historical financial trend data, as well as demographic and economic information.
The following is an overview of the Town's financial operations for the fiscal year ending June 30, 2018:
On June 30, 2018, the General Fund's end-of-year fund balance was $15,967,642, which increased by
$2,564,428 compared to last year (page 42). This increase was due to increased sales tax collections and
increased license and permit revenues from development activity, in addition to department expenditure
savings.
The Highway Fund's end-of-year fund balance was $960,719, which decreased by $390,184 compared to last
year (page 114). This was due to the planned use of contingency reserves approved by Town Council to
support operations during the fiscal year.
The Community Center Fund's end-of-year fund balance was ($71,563), which increased, or improved, by
$25,594 compared to last year (page 42). This was primarily due to increased revenues from dedicated sales
tax collections and charges for services.
The following is the financial position of the Oro Valley Water Utility at June 30, 2018:
Net income of $3,887,397 and capital contributions of $870,920 increased the Utility's net position by $4.8
million. Total net position at year-end was $87 million (page 48). Net position is defined as the difference
between assets and liabilities in the Water Utility Fund and is one indicator of the utility's financial position.
The largest portion of the Utility's net position reflects its investment in capital assets (e.g. land, buildings and
improvements, infrastructure, vehicles, etc.).
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
This item is for presentation and discussion.
Attachments
FY 2017/18 CAFR
Audit Communication Letter
Report on Internal Control
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2018
TOWN OF ORO VALLEY, ARIZONA
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
Prepared by:
Finance Department
Stacey Lemos, CPA
Chief Financial Officer
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TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal 1
Organization Chart 9
List of Town Officials 10
GFOA Certificate of Achievement 11
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 15
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 19
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position 33
Statement of Activities 34
Fund Financial Statements:
Balance Sheet – Governmental Funds 38
Reconciliation of the Balance Sheet –
Governmental Funds to the Statement of Net Position 41
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds 42
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds to the
Statement of Activities 45
Statement of Net Position – Proprietary Funds 46
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
FINANCIAL SECTION Page
BASIC FINANCIAL STATEMENTS
Statement of Revenues, Expenses and Changes in Fund Net Position –
Proprietary Funds 48
Statement of Cash Flows – Proprietary Funds 50
Notes to Financial Statements 52
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues Expenditures and Changes in Fund Balances –
Budget and Actual:
General Fund 90
Community Center Fund 91
Pension Schedules 92
OPEB Schedules 96
Notes to Required Supplementary Information 101
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Governmental Funds:
Combining Balance Sheet – All Non-Major Governmental Funds
By Fund Type 106
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – All Non-Major Governmental Funds – By Fund Type 108
Special Revenue Funds:
Combining Balance Sheet 112
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 114
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 116
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
FINANCIAL SECTION Page
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Debt Service Fund:
Combining Balance Sheet 122
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 126
Combining Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual 124
Capital Projects Funds:
Combining Balance Sheet 128
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 130
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances – Budget and Actual 132
Internal Service Funds:
Combining Statement of Net Position 138
Combining Statement of Revenues, Expenses and
Changes in Fund Net Position 139
Combining Statement of Cash Flows 140
Financial Trends:
Net Position by Component 143
Changes in Net Position 144
Fund Balances of Governmental Funds 147
Changes in Fund Balances of Governmental Funds 148
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
STATISTICAL SECTION
Revenue Capacity:
Principal Employers 149
Principal Sales Taxpayers 150
Taxable Sales by Category 151
Direct and Overlapping Sales Tax Rates 152
Limited and Full Cash Assessed Property Values 153
Historical and Projected Excise Tax Collections 154
Debt Capacity:
Ratio of Outstanding Debt by Type 155
Direct and Overlapping Governmental Activities Debt 156
Legal Debt Margin Information 157
Calculation of Legal Debt Margin 158
Pledged-Revenue Coverage 159
Historical and Projected Water System Revenues, Expenses,
Debt Service and Coverage 160
Demographic and Economic Information:
Demographic and Economic Statistics 161
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2018
TABLE OF CONTENTS
STATISTICAL SECTION Page
Operating Information:
Full-Time Equivalent Town Employees by Function 162
Water Utility Revenues by User Type 163
Operating Indicators by Function 164
Water Rates 165
Capital Assets Statistics by Function 166
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INTRODUCTORY SECTION
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Town of Oro Valley
January 8, 2019
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 comprehensive annual financial report of the Town of Oro Valley, Arizona (Town) for the fiscal
year ended June 30, 2018.
This report consists of management’s representations concerning the finances of the Town.
Consequently, management assumes full responsibility for the completeness and reliability of all of
the information presented in this report. To provide a reasonable basis for making these
representations, management of the Town has established a comprehensive internal control framework
that is designed both to protect the Town’s assets from loss, theft, or misuse and to 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 Heinfeld, Meech & Co., P.C., 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, 2018, 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, 2018, 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.
Caring for our heritage, our community, our future.
www.orovalleyaz.gov
11000 N. La Cañada Drive • Oro Valley, Arizona 85737
phone: (520) 229-4700 • fax: (520) 229-0428
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.
PROFILE OF THE TOWN
The Town of Oro Valley was incorporated in 1974. It is located in northeastern Pima County, three
miles north of Tucson and 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 45,184. The population of Oro
Valley has increased 52% since the 2000 population of 29,700.
Based on 2016 Census estimates, Oro Valley has a median household income of $75,966, compared
to the median household income for the state of Arizona of $51,340. 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; 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.
The Town currently operates 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.
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 as a result of 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
Oro Valley’s Strategic Plan was updated during FY 2016-17 and is centered around the vision
expressed in the Council-adopted and voter-ratified Oro Valley General Plan. The Strategic Plan is
organized around the framework of the following ten (10) focus areas:
Economic Development
Focusing on long-term financial and economic stability and sustainability, Oro Valley recognizes that
a robust local economy and job market provide opportunities for quality employment.
Complete Community
Oro Valley continues to be a community with a wide range of services, amenities, shopping and dining
opportunities and housing types that meet the needs of current and future residents.
Parks and Recreation
Oro Valley recognizes the need for a high-quality parks, recreation and open space system that is
accessible, comprehensive and connected.
Public Safety
Oro Valley will continue its commitment to being a safe community with low crime, safe
neighborhoods and positive relationships between law enforcement and community members.
Town Assets
Oro Valley provides high-quality and well-maintained Town assets, including streets, infrastructure
and facilities.
Water Resources and Energy
Oro Valley delivers a high-quality, safe and reliable water supply that meets the long-term needs for
the community while considering the natural environment.
Cultural Resources
Oro Valley protects and preserves its significant cultural sites, properties and resources to enhance our
community character and heritage.
Land Use and Design
Oro Valley focuses on a built environment that creatively integrates landscape, architecture, open space
and conservation elements to increase the sense of place, community interaction and quality of life.
Transportation
Oro Valley will provide an integrated and connected transportation network that enhances mobility for
people and goods while providing diverse transportation choices that are safe, user-friendly, efficient
and accessible.
Cost of Services
Oro Valley will seek full recovery of the costs of services that serve new development.
While the Strategic 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 environmental 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 2017-18.
Simpleview relocated their headquarters from Pima County to Oro Valley, bringing 184
employees
Successfully integrated community development and economic development divisions into
new Community and Economic Development Department
Collected over $2 million in plan review and permit fees representing more than $223 million
in work valuation for new private construction
Issued a total of 2,357 permits – almost identical to the number of permits issued the previous
year
Completed four major General Plan Amendments
Performed approximately 28,000 building inspections at 9,200 locations
Received the Achievement of Excellence in Financial Reporting Award, Distinguished
Budget Presentation Award with special recognition for the Town’s Capital Improvement
Program and Popular Annual Financial Reporting Award from the Government Finance
Officers Association
Received the Achievement of Excellence in Procurement Award from the National
Procurement Institute
Ended FY 2017-18 with a nearly $2.6 million increase in the General Fund ending fund
balance
Adopted a balanced budget for FY 2018-19 in the amount of $142.9 million, reflecting the
community’s and Town Council’s values and priorities
Updated the Town’s financial and investment policy to reflect best practices
Expanded and improved the Economic Expansion Zone to help attract primary employers
Honored with Safety Leadership Award by American Society of Safety Engineers Southern
Arizona Chapter specific to the hands-free driving ordinance adoption
Implemented Alternative to Jail Video Court to reduce jail costs to the Town
Hosted the first Celebrate Oro Valley festival at Steam Pump Ranch
Worked with user groups, property owners and Pima County Flood Control District to
develop and open the Big Wash trailhead
Installed two additional multi-sport lighted fields at Naranja Park
Hosted the 4th of July celebration at Naranja Park with the first ever Town-sponsored
fireworks
Achieved full deployment of the Axon body worn camera program in patrol division of
Police Department
Created the Southern Arizona Law Enforcement Explorer Academy incorporating six
agencies
Completed the Lambert Lane Phase II roadway widening
Installed new traffic signal at the entrance to the Oro Valley Community Center
Installed new multi-use path for pedestrian access into Naranja Park
Delivered a combined total of 3.18 billion gallons of water to water utility customers
ECONOMIC CONDITIONS AND OUTLOOK
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 is being observed at both the local and state levels, which has impacted the
Town’s revenue collections for FY 2017-18 and is expected to continue into FY 2018-19. The Town
continues to provide services and programs without a property tax to fund operations and, therefore, is
dependent upon state shared revenues and local sales tax as major sources of revenue for its operating
and capital expenditures. These sources accounted for approximately 78% of total General Fund
revenue for FY 2017-18.
All of the major local sales tax categories experienced year-over-year increases compared to amounts
collected in FY 2016-17, as discussed below:
Retail tax collections totaled $7.7 million for FY 17-18, up 9.1%, or nearly $650,000 over last
fiscal year.
Restaurant and bar tax collections totaled $1.8 million for the fiscal year, up 5.9%, or $100,000
over last fiscal year.
Construction sales tax collections totaled $4.7 million for the fiscal year, up 8.4%, or nearly
$360,000 from last fiscal year.
Utility tax collections totaled $3.1 million for the fiscal year, up 7%, or $200,000 from last
fiscal year.
The chart below is a look at the past five years’ local sales tax activity by category:
In FY 2017-18, the Town received $11.6 million for state shared revenues in the General Fund, up
3.6%, or $400,000 over last fiscal year. The trend chart below depicts the performance of both of these
revenue categories since FY 2008-09:
$‐
$1
$2
$3
$4
$5
$6
$7
$8
Utility Taxes Retail Taxes Restaurant/Bar Taxes Construction TaxesMillionsSales Tax Activity by Sector ‐ FY 13/14 through FY 17/18
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Critical to our success in this area is the preparation of realistic growth assumptions that help guide the
Town’s revenue projections. There continues to be healthy economic growth in Oro Valley, the Tucson
metropolitan region and State-wide. Arizona remains well-positioned to outpace the nation and most
states in job, income and population. The Tucson Metropolitan Statistical Area (MSA-region) is on
pace for its fastest growth since 2006. According to the University of Arizona’s Eller College, it is
projected that the Tucson region will see 19,000 net new jobs over the next two years. With Oro
Valley’s close 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.
April 1, 2020 will mark the day in which the U.S. takes its decennial census. The data collected in this
effort is a significant foundation for Oro Valley’s state-shared revenues, as well as other economic
considerations. The Town is actively participating in the regional census planning and marketing
efforts led by the Pima Association of Governments (PAG). For the upcoming fiscal year, 2018-19,
state-shared revenues are projected to remain relatively flat to collections in the current year.
Anticipated growth in state sales tax is expected to be offset by a decrease in state income tax and
vehicle license tax collections.
In the near term, the projected residential development is strong over the next two to three-year period.
In FY 2017-18, the Town estimated that 300 single family residential (SFR) building permits would
be issued; a total of 325 were issued by year-end. The FY 2018-19 budget includes the assumption that
306 SFRs will be issued during the year as many developments have made their way through the
planning and approval process and are in the building phase.
Commercial development activity continues to be relatively strong in the community, supporting the
continued growth in construction sales taxes and healthy growth in utility, bed tax, retail and restaurant
tax collections projected in the FY 2018-19 budget. License and permit revenues are projected to grow
by 3.5% in the FY 2018-19 budget as well.
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 2008-09
through FY 2018-19 projections.
Future Focus
During FY 2018-19, 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 that sufficient recurring
revenues exist to fund recurring expenditures in the budget. With the expectation of sustained and
moderately increasing development activity continuing 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 2018-19, the Town will focus its efforts on supporting the elements of its adopted Strategic
Plan in the areas previously outlined earlier in this transmittal letter.
These strategies will be fulfilled in a number of different ways as highlighted below:
Employee performance merit and step increases have been budgeted for FY 2018-19 to
maintain fair and competitive compensation to its employees.
The FY 2018-19 budget includes continued funding for its vehicle replacement program, which
includes the replacement of several vehicles town-wide, as well as setting aside funding for the
future replacement of vehicles at the end of their useful lives.
The FY 2018-19 budget includes $800,000 for the Pavement Preservation Program in the
Highway Fund, which maintains the current condition of Town streets and roads.
The FY 2018-19 budget includes investments in Town facilities and infrastructure including
the completion of a Police Evidence and Substation Building, ballfield renovations at James
D. Kriegh Park, town-wide facility roof replacements, courtroom remodeling, Rancho Vistoso
streetlight repairs, and the widening of La Cholla Boulevard from Overton Rd. to Tangerine
Rd.
The Town also continues to maintain strong investment grade ratings on its outstanding excise tax
bonds, rated “AA” by Standard and Poor’s and “AA-“ by Fitch Ratings. 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 $16 million, or 38% of FY 2018-19 adopted
expenditures of $42 million. This is well above the Council-adopted policy threshold of 25% of
adopted 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 comprehensive annual financial report for the year ended June 30, 2017. This was the twenty-
fourth 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
comprehensive annual 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
comprehensive annual 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 Comprehensive Annual Financial Report could not have
been accomplished without the efficient and dedicated services of the entire staff of the Finance
Department who assisted and contributed in 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,
Mary Jacobs Stacey Lemos, CPA
Town Manager Chief Financial Officer
Organizational Chart
TOWN OF ORO VALLEY, ARIZONA
LIST OF TOWN OFFICIALS
ELECTED OFFICIALS
Mayor Dr. Satish Hiremath
Vice-Mayor Mr. Lou Waters
Councilmember Mr. Joe Hornat
Councilmember Ms. Rhonda Piña
Councilmember Mr. Bill Rodman
Councilmember Ms. Mary Snider
Councilmember Mr. Steve Solomon
TOWN MANAGEMENT
Town Manager Mary Jacobs
Assistant Town Manager Chris Cornelison
Chief Financial Officer Stacey Lemos, CPA
Human Resources Director Chris Brady
Town Clerk Michael Standish
Magistrate George Dunscomb
Legal Services Director Tobin Sidles
Water Utility Director Peter Abraham
Chief of Police Daniel Sharp
Public Works Director/Town
Engineer
Paul Keesler
Parks and Recreation Director Kristy Diaz-Trahan
Chief Information Officer Chuck Boyer
Community and Economic Development J.J. Johnston
Director
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and Members of the Town Council
Town of Oro Valley, Arizona
Report on the Financial Statements
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, Arizona
(the Town), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which
collectively comprise the Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, business-type activities, each major fund, and the aggregate
remaining fund information of the Town of Oro Valley, Arizona, as of June 30, 2018, 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.
Change in Accounting Principle
As described in Note 1, the Town implemented the provisions of the Governmental Accounting Standards Board
(GASB) Statement No. No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions, for the year ended June 30, 2018, which represents a change in accounting principle. Our opinion is
not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis, budgetary comparison information, net pension liability information, and other
postemployment benefit plan information, as listed in the table of contents, be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about
the methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of
the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The Introductory Section, Combining and Individual Fund
Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and
are not a required part of the basic financial statements.
The Combining and Individual Fund Financial Statements and Schedules are the responsibility of management
and were derived from and relate directly to the underlying accounting and other records used to prepare the
basic financial statements. Such information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the Combining and Individual
Fund Financial Statements and Schedules Information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 8, 2019, on
our consideration of the Town of Oro Valley, Arizona’s internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is 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 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, Arizona’s internal control over financial reporting
and compliance.
Heinfeld, Meech & Co., P.C.
Tucson, Arizona
January 8, 2019
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
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TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
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, 2018. 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 those
significant key financial highlights for 2017-18 as follows.
The Town’s total net position of governmental activities increased $6.1 million to $130.2 million
and business-type activities increased $5.0 million to $90.4 million representing 59 percent and 41
percent respectively, of the total net position of $220.6 million.
General revenues from governmental activities accounted for $34.0 million in revenue, or 61
percent of all revenues from governmental activities. Program specific revenues in the form of
charges for services and grants and contributions accounted for $21.9 million or 39 percent of total
governmental activities revenues. The Town had $21.7 million of program revenues and $5,916 in
general revenues related to business-type activities.
The Town had $49.8 million in expenses related to governmental activities, a decrease of 11
percent from the prior fiscal year. The Town had $16.8 million in expenses related to business-
type activities, an increase of six percent from the prior fiscal year.
Among major funds, the General Fund had $37.7 million in revenues, which primarily consisted
of sales taxes and intergovernmental revenues. The total expenditures of the General Fund were
$32.9 million. The General Fund’s fund balance increased from $13.4 million to $16.0 million.
The Community Center Fund had $6.7 million in revenues, which consisted primarily of sales
taxes and charges for services. The total expenditures of the Community Center Fund were $6.5
million.
The Water Fund operating revenues of $17.0 million exceeded operating expenses of $14.4 million.
The increase in net position of $4.8 million was primarily due to revenues from charges for services
exceeding operating expenses.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
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 statement of net position presents information on all of the Town’s assets liabilities, and deferred
inflows/outflows of resources with the difference between the two 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, 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 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, 2018
OVERVIEW OF FINANCIAL STATEMENTS
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 and
Community Center Funds, both 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 internal service funds to account for its fleet
maintenance services and to finance its self-insured employee health benefits. Because these
services predominately benefit governmental rather than business-type functions, the internal
service funds have 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 plan. 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 and other postemployment benefit 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 $220.6 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,
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, 2018
GOVERNMENT-WIDE FINANCIAL ANALYSIS
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.
The following table presents a summary of the Town’s net position for the fiscal years ended
June 30, 2018 and June 30, 2017.
2018
Governmental
Activities
2017
Governmental
Activities
2018
Business-type
Activities
2017
Business-type
Activities 2018 Total 2017 Total
Current and other assets $ 32,737,844 $ 29,374,923 $ 29,838,278 $ 26,954,464 $ 62,576,122 $ 56,329,387
Capital assets, net 147,049,468 143,894,535 103,479,996 104,318,221 250,529,464 248,212,756
Total assets 179,787,312 173,269,458 133,318,274 131,272,685 313,105,586 304,542,143
Deferred outflows 9,274,610 11,291,054 1,948,784 2,570,024 11,223,394 13,861,078
Current and other liabilities 8,789,630 6,204,548 9,122,772 4,173,610 17,912,402 10,378,158
Long-term liabilities 48,458,901 51,682,850 35,445,781 43,660,596 83,904,682 95,343,446
Total liabilities 57,248,531 57,887,398 44,568,553 47,834,206 101,817,084 105,721,604
Deferred inflows 1,660,960 2,649,527 265,122 531,886 1,926,082 3,181,413
Net investment in capital assets 137,311,856 133,414,691 69,036,006 66,755,370 206,347,862 200,170,061
Restricted 4,424,244 6,006,584 4,424,244 6,006,584
Unrestricted (11,583,669) (15,397,688) 21,397,377 18,721,247 9,813,708 3,323,559
Total net position $ 130,152,431 $124,023,587 $ 90,433,383 $ 85,476,617 $ 220,585,814 $ 209,500,204
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.
An increase of $3.4 million of governmental activities current assets primarily due to an
increase in cash and investments from construction sales tax collections and license and permit
revenue collections.
The addition of $2.7 million in business-type activities capital assets through improvements to
the existing water system.
The addition of $12.5 million in governmental activities capital assets, consisting of the
completion of several road improvement projects as follows: Lambert Lane widening, Naranja
Road left turn lane into Naranja Park, and installation of the traffic signal at Oro Valley
Community Center entrance. Also, additional multi-use fields at Naranja Park and energy
efficiency upgrades at the Oro Valley Community Center were completed during the fiscal
year.
The decrease of $3.3 million in business-type activities long-term liabilities was primarily due
to annual debt service payments.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Changes in net position. The Town’s total revenues for the current fiscal year were $77.6 million.
The total cost of all programs and services was $66.6 million. The following table presents a summary
of the changes in net position for the fiscal years ended June 30, 2018 and June 30, 2017.
2018
Governmental
Activities
2017
Governmental
Activities
2018
Business-type
Activities
2017
Business-type
Activities
2018
Total
2017
Total
Revenues:
Program revenues:
Charges for services $ 11,468,929 $ 10,803,374 $ 20,841,963 $ 19,473,172 $ 32,310,892 $ 30,276,546
Operating grants and contributions 4,949,928 4,664,197 4,949,928 4,664,197
Capital grants and contributions 5,529,831 6,749,407 870,920 1,097,285 6,400,751 7,846,692
General revenues:
Sales taxes 21,664,398 19,767,720 21,664,398 19,767,720
Franchise taxes 656,664 647,830 656,664 647,830
Unrestricted state shared revenues 11,577,834 11,177,729 11,577,834 11,177,729
Investment earnings 74,542 68,435 5,916 11,995 80,458 80,430
Total revenues 55,922,126 53,878,692 21,718,799 20,582,452 77,640,925 74,461,144
Expenses:
General government 12,639,867 12,130,905 12,639,867 12,130,905
Public safety 17,683,197 22,251,172 17,683,197 22,251,172
Highways and streets 7,505,589 9,417,459 7,505,589 9,417,459
Transit 1,505,341 1,533,258 1,505,341 1,533,258
Culture and recreation 10,111,731 10,204,276 10,111,731 10,204,276
Interest on long-term debt 350,404 511,502 350,404 511,502
Water 15,568,288 14,753,418 15,568,288 14,753,418
Stormwater drainage 1,190,898 1,115,494 1,190,898 1,115,494
Total expenses 49,796,129 56,048,572 16,759,186 15,868,912 66,555,315 71,917,484
Excess (deficiency) before transfers 6,125,997 (2,169,880) 4,959,613 4,713,540 11,085,610 2,543,660
Transfers 2,847 2,942 (2,847) (2,942)
Changes in net position 6,128,844 (2,166,938) 4,956,766 4,710,598 11,085,610 2,543,660
Net position, beginning 124,023,587 126,190,525 85,476,617 80,766,019 209,500,204 206,956,544
Net position, ending $ 130,152,431 $124,023,587 $ 90,433,383 $ 85,476,617 $ 220,585,814 $ 209,500,204
Total expenses decreased $5.4 million, or seven percent, primarily due to changes in public safety-
related pension obligations and contributions for the Public Safety Personnel Retirement System.
The increase of $3.2 million in total revenues was largely due to sales tax collections from construction
and residential building permit revenues coming in higher than anticipated.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
GOVERNMENT-WIDE FINANCIAL ANALYSIS
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 State and Town’s taxpayers by each of these
functions.
2018 2017
Governmental Activities
Total
Expenses
Net (Expense)/
Revenue
Total
Expenses
Net (Expense)/
Revenue
General government $ 12,639,867 $ (7,370,961) $ 12,130,905 $ (6,835,638)
Public safety 17,683,197 (16,620,321) 22,251,172 (21,068,318)
Highways and streets 7,505,589 1,542,310 9,417,459 173,707
Transit 1,505,341 (46,533) 1,533,258 (14,466)
Culture and recreation 10,111,731 (5,001,532) 10,204,276 (5,575,377)
Interest on long-term debt 350,404 (350,404) 511,502 (511,502)
Total $ 49,796,129 $ (27,847,441) $ 56,048,572 $ (33,831,594)
Business-type Activities
Water $ 15,568,288 $ 4,758,317 $ 14,753,418 $ 4,502,252
Stormwater drainage 1,190,898 195,380 1,115,494 199,293
Total $ 16,759,186 $ 4,953,697 $ 15,868,912 $ 4,701,545
The cost of all governmental activities this year was $49.8 million. The decrease of $6.3 million
from the prior year was due primarily to public safety activities related to changes in net
pension obligations and contributions for the Public Safety Personnel Retirement System.
The cost of all business-type activities this year was $16.8 million. The increase of $890,274
from the prior year was primarily due to an increase in operation and maintenance costs
associated with the Water Utility Department.
Federal and State government grants, developer contributions, and charges for services
subsidized certain governmental programs and business-type programs with revenues of $43.7
million.
Net cost of governmental activities of $27.8 million was financed by general revenues, which
are made up of primarily sales taxes and state shared revenues of $33.2 million.
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.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
FINANCIAL ANALYSIS OF THE TOWN’S FUNDS
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 $24.1 million, an
increase of $1.3 million. This was primarily due to an increase in sales tax collections.
The General Fund is the principal operating fund of the Town. The increase in fund balance of $2.6
million to $16.0 million as of fiscal year end was a result of an increase in sales tax collections. General
Fund revenues increased $2.0 million as a result of better than anticipated sales tax collections from
construction and license and permit revenues. General Fund expenditures increased $2.3 million as
primarily due to the repayment of excess Public Safety Personnel Retirement System (PSPRS)
contributions to members as a result of the Hall and Parker lawsuit settlements, the consolidation of
all telecommunications costs town-wide and capital outlay in the Information Technology Department
budget, and the addition of several new departmental positions in fiscal year 2017-18.
The Community Center Fund’s fund balance increased $25,594 to a deficit of $71,563 as of fiscal year
end.
Proprietary funds. Net position of the Enterprise Funds at the end of the year amounted to $90.4
million. This increased by $5.0 million during the fiscal year to the extent that revenues exceeded
expenses in the fund and from development impact fees.
BUDGETARY HIGHLIGHTS
There were no amendments to the Town of Oro Valley’s fiscal year 2017-18 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 $1.4 million in sales taxes was a result of was a result of increased
construction sales tax collections due to commercial and residential development.
The favorable variance of $571,453 in licenses, fees, and permits was a result of residential
and commercial building permit activity exceeding projections.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. At year end, the Town had invested $250.5 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 road
improvement projects and expansion of the Town’s water system, as well as depreciation expense of
$12.9 million.
The following schedule presents capital asset balances for the fiscal years ended June 30, 2018 and
June 30, 2017.
Governmental Activities
As of
June 30, 2018
As of
June 30, 2017
Land $ 19,518,801 $ 19,518,801
Infrastructure 185,768,295 173,893,147
Buildings and improvements 34,019,586 30,461,644
Machinery, equipment, and vehicles 17,243,799 16,611,079
Construction in progress 5,426,591 9,248,205
Less: Accumulated depreciation (114,927,604) (105,838,341)
Total $ 147,049,468 $143,894,535
Business-type Activities
Land $ 2,410,660 $ 2,410,660
Water rights 8,534,490 8,534,490
Water system 133,215,431 130,279,801
Stormwater system 2,956,995 2,846,177
Equipment and vehicles 5,752,158 5,520,902
Construction in progress 310,223 921,300
Less: Accumulated depreciation (49,699,961) (46,195,109)
Total $ 103,479,996 $ 104,318,221
Additional information on the Town’s capital assets can be found in Note 6.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
CAPITAL ASSETS AND DEBT ADMINISTRATION
Debt Administration. At year end, the Town had $44.3 million in long-term debt outstanding, $5.7
million due within one year. The following table presents a summary of the Town’s outstanding long-
term debt for the fiscal years ended June 30, 2018 and June 30, 2017.
Governmental Activities 2018 2017
Revenue bonds $ 8,777,836 $ 9,322,126
Special assessment bonds 490,000 640,000
Note payable 350,000
Capital leases 458,744 716,622
Total $ 9,726,580 $ 11,028,748
Business-type Activities
Revenue bonds $ 26,913,164 $ 29,520,874
Loan payable 7,690,874 8,284,407
Capital leases 40,814
Total $ 34,604,038 $ 37,846,095
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 $126.7 million.
The Town of Oro Valley has a bond rating of “AA-” rating from both Standard & Poor’s and Fitch
Ratings on its excise tax revenue bonds and an “AA” rating from Standard & Poor’s on outstanding
water revenue bonds.
Additional information on the Town’s long-term debt can be found in Notes 7 through 11.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
The unemployment rate for the Town of Oro Valley is currently 4.3 percent. Pima County’s
and the State of Arizona’s unemployment rates are 4.4 percent and 4.8 percent, respectively.
The Town’s net full cash assessed valuation for the current year is $633,479,221.
Single family residential (SFR) building permits issued in this fiscal year totaled 325, as
compared to 339 SFR building permits issued last fiscal year. Projections for SFR building
permits are 306 for fiscal year 2018-19.
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2018
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES
The adopted combined operating and capital expenditure budget for fiscal year 2018-19 totals $142.9
million, an increase of $14.3 million, or 11 percent over last year’s budget of $128.6 million. This
increase is primarily due to bond-funded projects for the police evidence facility, water utility and
facility improvements and grant-funded roadway widening projects. The budget for fiscal year 2018-
19 continues to place emphasis on achieving the goals identified in the Town’s adopted Strategic Plan,
which was recently updated in fiscal year 2016-17 and includes the following focus areas: economic
development, complete community, parks and recreation, public safety, Town assets, water resources
and energy, cultural resources, land use and design, transportation and cost of services.
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.
BASIC FINANCIAL STATEMENTS
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GOVERNMENT-WIDE FINANCIAL STATEMENTS
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ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and investments
Taxes receivable
Accounts receivable
Intergovernmental receivable
Special assessments
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets, non-depreciable
Capital assets, depreciable (net)
Net other postemployment benefit assets
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding
Pension and other postemployment benefit plan items
Total deferred outflows of resources
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Intergovernmental payable
Interest payable
Unearned revenue
Customer deposits payable
Other accrued liabilities
Compensated absences
Capital leases payable
Notes, loans and bonds payable
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term obligations
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Pension and other postemployment benefit plan items
NET POSITION
Net investment in capital assets
Restricted for:
Public safety
Capital outlay
Debt service
Unrestricted
Total net position
Governmental
Activities
$ 28,169,386
956,856
552,833
2,093,206
495,000
102,133
169,745
32,539,159
24,945,392
122,104,076
198,685
147,248,153
179,787,312
9,274,610
9,274,610
2,432,468
1,469,385
169,895
997,818
234,075
670,505
1,692,038
204,674
918,772
8,789,630
48,458,901
48,458,901
57,248,531
1,660,960
137,311,856
406,104
3,921,928
96,212
(11,583,669)
$130,152,431
Business-type
Activities
$ 26,128,626
924,000
2,768,083
2,975
29,823,684
11,255,373
92,224,623
14,594
103,494,590
133,318,274
1,326,823
621,961
1,948,784
679,402
109,570
1,357,328
528,491
924,000
751,348
227,710
4,544,923
9,122,772
35,445,781
35,445,781
44,568,553
265,122
69,036,006
21,397,377
$90,433,383
Total
$ 54,298,012
924,000
956,856
3,320,916
2,093,206
495,000
102,133
172,720
62,362,843
36,200,765
214,328,699
213,279
250,742,743
313,105,586
1,326,823
9,896,571
11,223,394
3,111,870
1,578,955
1,527,223
528,491
1,921,818
985,423
670,505
1,919,748
204,674
5,463,695
17,912,402
83,904,682
83,904,682
101,817,084
1,926,082
206,347,862
406,104
3,921,928
96,212
9,813,708
$220,585,814
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF NET POSITION
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Program Revenues
Net (Expense)
Revenue and
Changes in Net
Position
Functions/Programs
Primary Government
Governmental activities:
General government
Public safety
Highway and streets
Transit
Culture and recreation
Interest on long-term debt
Total governmental activities
Business-type activities:
Water
Stormwater drainage
Total business-type activities
Total primary government
Expenses
$ 12,639,867
17,683,197
7,505,589
1,505,341
10,111,731
350,404
49,796,129
15,568,288
1,190,898
16,759,186
$66,555,315
Charges for
Services
$ 5,084,396
128,651
1,039,542
119,536
5,096,804
11,468,929
19,455,685
1,386,278
20,841,963
$32,310,892
Operating
Grants and
Contributions
$ 184,510
800,547
2,612,204
1,339,272
13,395
4,949,928
$4,949,928
Capital Grants
and
Contributions
$
133,678
5,396,153
5,529,831
870,920
870,920
$6,400,751
Governmental
Activities
$ (7,370,961)
(16,620,321)
1,542,310
(46,533)
(5,001,532)
(350,404)
(27,847,441)
(27,847,441)
General revenues:
Taxes:
Sales taxes
Franchise taxes
Unrestricted state shared revenues
Investment earnings
Transfers
Total general revenues and transfers
Changes in net position
Net position, beginning of year
Net position, end of year
21,664,398
656,664
11,577,834
74,542
2,847
33,976,285
6,128,844
124,023,587
$130,152,431
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Net (Expense) Revenue and
Changes in Net Position
Business-type
Activities
$
4,758,317
195,380
4,953,697
4,953,697
Totals
$ (7,370,961)
(16,620,321)
1,542,310
(46,533)
(5,001,532)
(350,404)
(27,847,441)
4,758,317
195,380
4,953,697
(22,893,744)
5,916
(2,847)
3,069
4,956,766
85,476,617
$90,433,383
21,664,398
656,664
11,577,834
80,458
33,979,354
11,085,610
209,500,204
$220,585,814
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FUND FINANCIAL STATEMENTS
ASSETS
Cash and cash equivalents
Taxes receivable
Accounts receivable
Intergovernmental receivable
Special assessments
Due from other funds
Inventories
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Intergovernmental payable
Sales tax payable
Unearned revenue
Due to other funds
Customer deposits payable
Other accrued liabilities
Total liabilities
Deferred inflows of resources:
Unavailable revenues - special assessments
Fund balances (deficits):
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
General Fund
$ 17,182,389
956,856
376,067
338,746
138,019
141,676
$19,133,753
$ 881,858
1,414,506
169,895
187,706
278,071
234,075
3,166,111
141,676
1,441,862
14,384,104
15,967,642
$19,133,753
Community
Center
$ 102,049
117,957
102,133
28,069
$350,208
$ 70,116
156,185
195,470
421,771
130,202
(201,765)
(71,563)
$350,208
Non-Major
Governmental
Funds
$ 8,566,878
58,809
1,754,460
495,000
$10,875,147
$ 1,395,532
54,879
563,562
138,019
2,151,992
495,000
4,424,244
1,594,293
2,209,618
8,228,155
$10,875,147
TOWN OF ORO VALLEY, ARIZONA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Total
Governmental
Funds
$ 25,851,316
956,856
552,833
2,093,206
495,000
138,019
102,133
169,745
$30,359,108
$ 2,347,506
1,469,385
169,895
187,706
997,818
138,019
234,075
195,470
5,739,874
495,000
271,878
4,424,244
1,594,293
3,651,480
14,182,339
24,124,234
$30,359,108
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Total governmental fund balances 24,124,234$
Amounts reported for governmental activities in the Statement of
Net Position are different because:
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Governmental capital assets 261,977,072$
Less accumulated depreciation (114,927,604)147,049,468
Special assessments receivable are not available to pay for current
period expenditures and, therefore, are reported as unavailable
revenues in the funds.495,000
Deferred items 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.(11,118)
Deferred outflows and inflows of resources related to
pensions/OPEB are applicable to future periods and,
therefore, are not reported in the funds.
Deferred outflows of resources related to pensions/OPEB 9,259,263
Deferred inflows of resources related to pensions/OPEB (1,654,419)7,604,844
The Net OPEB asset is not a current financial resource and,
therefore, is not reported in the funds.198,325
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.1,850,617
Long-term liabilities are not due and payable in the current
period and, therefore, are not reported in the funds.
Special assessment bonds (490,000)
Compensated absences payable (2,169,279)
Obligations under capital leases (458,744)
Net OPEB liability (35,755)
Net pension liability (39,227,325)
Revenue bonds payable (8,777,836)(51,158,939)
Net position of governmental activities 130,152,431$
TOWN OF ORO VALLEY, ARIZONA
RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Revenues:
Sales taxes
Franchise taxes
Development impact fees
Special assessments
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Charges for services
Contributions and donations
Investment earnings
Other
Total revenues
Expenditures:
Current -
General government
Public safety
Highway and streets
Transit
Culture and recreation
Capital outlay
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances (deficits), end of year
General Fund
$ 17,961,199
656,664
13,740,676
2,634,574
131,831
2,217,259
390,030
37,732,233
11,070,844
16,551,778
1,536,294
3,174,753
569,014
44,134
1,320
32,948,137
4,784,096
305,000
(2,524,668)
(2,219,668)
2,564,428
13,403,214
$15,967,642
Community
Center
$ 2,330,941
4,382,588
963
6,714,492
6,224,845
45,464
215,802
36,831
6,522,942
191,550
(165,956)
(165,956)
25,594
(97,157)
$(71,563)
Non-Major
Governmental
Funds
$ 1,372,258
1,346,402
175,854
7,893,467
45,116
397,856
133,928
74,542
185,977
11,625,400
927,742
180,185
3,092,143
9,466,949
1,044,290
318,510
15,029,819
(3,404,419)
3,037,890
(949,419)
2,088,471
(1,315,948)
9,544,103
$8,228,155
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Total
Governmental
Funds
$ 21,664,398
656,664
1,346,402
175,854
21,634,143
2,679,690
529,687
6,599,847
133,928
74,542
576,970
56,072,125
11,998,586
16,731,963
3,092,143
1,536,294
9,399,598
10,081,427
1,304,226
356,661
54,500,898
1,571,227
3,342,890
(3,640,043)
(297,153)
1,274,074
22,850,160
$24,124,234
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Changes in fund balances - total governmental funds 1,274,074$
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 capitalized assets 9,166,358$
Less current year depreciation (9,355,784) (189,426)
Donated items are not reported in the governmental funds. However, in the Statement of
Activities, the costs of those assets are reported as capital grants and contributions. 3,345,233
Special assessment revenues in the Statement of Activities do not provide current financial
resources and therefore are not reported as revenues in the governmental funds. (149,999)
Repayments of long-term debt principal are expenditures in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of
Net Position.
Capital lease principal retirement 257,878
Note payable principal retirement 350,000
Revenue bond principal retirement 544,290
Special assessment bond principal retirement 150,000 1,302,168
Governmental funds report pension/OPEB contributions as expenditures. However,
they are reported as deferred outflows of resources in the Statement of Net Position.
The change in the net pension/OPEB liability, adjusted for deferred items, is reported
as pension/OPEB expense in the Statement of Activities.
Current year pension/OPEB contributions 3,772,150
Pension/OPEB expense (5,373,179) (1,601,029)
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.
Judgments 1,087,345
Loss on disposal of assets (874)
Amortization of deferred bond items 8,315
Compensated absences (131,327) 963,459
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. 1,184,364
Changes in net position in governmental activities 6,128,844$
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, 2018
The notes to the basic financial statements are an integral part of this statement.
Enterprise Funds
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and investments
Accounts receivable
Prepaid items
Total current assets
Noncurrent assets:
Capital assets, non-depreciable
Capital assets, depreciable (net)
Net other postemployment benefit assets
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred charge on refunding
Pension and other postemployment benefit plan items
Total deferred outflows of resources
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Intergovernmental payable
Interest payable
Unearned revenue
Customer deposits payable
Compensated absences
Loans payable
Bonds payable
Claims payable
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term obligations
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Pension and other postemployment benefit plan items
NET POSITION
Net investment in capital assets
Unrestricted
Total net position
Water
$ 25,347,879
924,000
2,583,219
2,975
28,858,073
11,255,373
89,178,564
12,029
100,445,966
129,304,039
1,326,823
512,671
1,839,494
572,604
88,065
1,357,328
528,491
924,000
751,348
215,031
611,695
3,933,228
8,981,790
34,993,129
34,993,129
43,974,919
218,535
65,989,947
20,960,132
$86,950,079
Non-Major
Enterprise Funds
$ 780,747
184,864
965,611
3,046,059
2,565
3,048,624
4,014,235
109,290
109,290
106,798
21,505
12,679
140,982
452,652
452,652
593,634
46,587
3,046,059
437,245
$3,483,304
Totals
$ 26,128,626
924,000
2,768,083
2,975
29,823,684
11,255,373
92,224,623
14,594
103,494,590
133,318,274
1,326,823
621,961
1,948,784
679,402
109,570
1,357,328
528,491
924,000
751,348
227,710
611,695
3,933,228
9,122,772
35,445,781
35,445,781
44,568,553
265,122
69,036,006
21,397,377
$90,433,383
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Governmental
Activities:
Internal Service
Funds
$ 2,318,070
2,318,070
360
360
2,318,430
15,347
15,347
84,962
287,329
372,291
104,328
104,328
476,619
6,541
1,850,617
$1,850,617
Enterprise Funds
Operating revenues:
Charges for services
Other
Self insurance premiums
Total operating revenues
Operating expenses:
Costs of sales and services
Contractual services
Depreciation and amortization
Claims payments
Administrative
Reinsurance premiums
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Development impact fees
Connection fees
Investment earnings
Interest expense
Total nonoperating revenues (expenses)
Income (loss) before transfers
Capital contributions
Transfers in
Transfers out
Changes in net position
Total net position, beginning of year
Total net position, end of year
Water
$ 16,998,711
2,754
17,001,465
10,829,298
41,132
3,565,217
14,435,647
2,565,818
1,638,175
816,045
(1,132,641)
1,321,579
3,887,397
870,920
(2,847)
4,755,470
82,194,609
$86,950,079
Non-Major
Enterprise Funds
$ 1,385,811
467
1,386,278
1,020,935
160,557
1,181,492
204,786
5,916
(9,406)
(3,490)
201,296
201,296
3,282,008
$3,483,304
Totals
$ 18,384,522
3,221
18,387,743
11,850,233
41,132
3,725,774
15,617,139
2,770,604
1,638,175
816,045
5,916
(1,142,047)
1,318,089
4,088,693
870,920
(2,847)
4,956,766
85,476,617
$90,433,383
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Governmental
Activities:
Internal Service
Funds
$ 1,235,167
82,429
3,592,298
4,909,894
1,283,097
1,985,456
99,949
657,028
4,025,530
884,364
884,364
300,000
1,184,364
666,253
$1,850,617
Water
Non-Major
Enterprise Funds Total
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers 17,002,164$ 1,385,062$ 18,387,226$
Cash received from premiums
Cash payments to suppliers for goods and services (7,730,661) (381,438) (8,112,099)
Cash payments to employees for services (3,113,626) (653,554) (3,767,180)
Cash payments for claims
Net cash provided by (used for) operating activities 6,157,877 350,070 6,507,947
Cash flows from noncapital and related financing activities:
Interfund transfers (2,847) (2,847)
Connection fees 816,045 816,045
Net cash provided by (used for) noncapital financing activities 813,198 813,198
Cash flows from capital and related financing activities:
Development impact fees 1,638,175 1,638,175
Acquisition of capital assets (1,719,910) (143,515) (1,863,425)
Principal paid on long-term debt (3,201,244) (40,814) (3,242,058)
Interest on long-term debt (1,064,559) (9,844) (1,074,403)
Net cash provided by (used for) capital and related
financing activities (4,347,538) (194,173) (4,541,711)
Cash flows from investing activities:
Investment income 5,916 5,916
Net cash provided by (used for) investing activities 5,916 5,916
Net increase (decrease) in cash and cash equivalents 2,623,537 161,813 2,785,350
Cash and cash equivalents, beginning of year 22,724,342 618,934 23,343,276
Cash and cash equivalents, end of year 25,347,879$ 780,747$ 26,128,626$
Reconciliation of Operating Income (Loss) to
Net Cash Provided by (Used for) Operating Activities
Operating income (loss)2,565,818$ 204,786$ 2,770,604$
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:
Depreciation and amortization 3,565,217 160,557 3,725,774
Change in assets and liabilities:
Accounts receivable (82,654) (1,216) (83,870)
Accounts payable (15,340) (17,470) (32,810)
Claims payable
Accrued payroll and related benefits 27,364 11,112 38,476
Deposits held for others 83,353 83,353
Pension/OPEB items 14,119 (7,699) 6,420
Total adjustments 3,592,059 145,284 3,737,343
Net cash provided by (used for) operating activities 6,157,877$ 350,070$ 6,507,947$
6,157,877 350,070
Non-cash capital and financing activities
Contribution of assets from developers 870,920$ 870,920$
Enterprise Funds
TOWN OF ORO VALLEY, ARIZONA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2018
The notes to the basic financial statements are an integral part of this statement.
Governmental
Activities
Internal Service
Funds
1,317,596$
3,592,298
(1,953,999)
(94,461)
(2,021,204)
840,230
300,000
300,000
1,140,230
1,177,840
2,318,070$
884,364$
(7,241)
(35,748)
(1,145)
(44,134)
840,230$
840,230
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
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.
During the year ended June 30, 2018, the Town implemented the provisions of GASB Statement
No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions. This Statement requires governments providing defined benefit postemployment
benefits other than pensions to recognize the long-term obligation for those benefits as a
liability, and to more comprehensively and comparably measure the annual costs of those
benefits. This Statement also enhances accountability and transparency through revised note
disclosures and new required supplementary information. 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. As required by
accounting principles generally accepted in the United States of America, these financial
statements present the Town and its component units, entities for which the Town is considered
to be financially accountable. Blended component units, although legally separate entities, are,
in substance, part of the Town’s operations and so data from these units are combined with data
of the Town, the primary government. The blended component units presented have a June 30
year end.
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 activities of the Town and its component units. 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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. Grants and similar
awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor
or provider have been met. 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.
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 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.
The Town reports the following major proprietary funds.
Water Fund – This fund accounts for the costs to operate, construct and finance the Town’s
water system.
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 are charges for health benefits
and charges to user departments for fleet maintenance services. The principal operating
revenues of the Town’s enterprise fund 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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 public 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 trade 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
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 property, plant, and equipment, 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 asset or
materially extend the life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
Certain capital assets of the Town are depreciated 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
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 position that applies to a future period and so
will not be recognized as an outflow of resources (expense/expenditure) until then.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In addition to liabilities, the statement of financial position may report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period and so will
not be recognized as an inflow of resources (revenue) until that time.
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. Pensions and Other Postemployment Benefits
For purposes of measuring the net pension and other postemployment benefit (OPEB) assets
and liabilities, related deferred outflows of resources and deferred inflows of resources, and
related expenses, information about the pension and OPEB 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.
M. Long-term Obligations
In the government-wide financial statements and proprietary fund financial statements, long-
term debt and other long-term obligations are reported as liabilities in the applicable business-
type activities and proprietary fund type statement of net position.
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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
N. 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.
O. 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.
P. 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.
NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Individual Deficit Fund Balance – At year end, the Community Center Fund, a major
governmental fund, reported a deficit in fund balance of $71,563. The deficit arose because of
operations during prior years. Additional revenues received in fiscal year 2018-19 are expected
to eliminate the deficit.
Excess Expenditures Over Budget – At year end, the Town had expenditures in the
Community Center Fund that exceeded the budget, however, this does not constitute a violation
of any legal provisions.
NOTE 3 – 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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 3 – 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
Bed Tax Fund is to be used for local economic development purposes. The committed fund
balance reported in the Highway User Revenue Fund is to be used for roadway maintenance
and preservation purposes. 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.
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)11-30, which
amended the Town Financial and Budgetary Policies. The assigned fund balance in the General
Fund is set aside for the payout of compensated absences and for unemployment compensation
claims. 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
JUNE 30, 2018
NOTE 3 – FUND BALANCE CLASSIFICATIONS
The table below provides detail of the major components of the Town’s fund balance
classifications at year end.
General
Fund
Community
Center Fund
Non-Major
Governmental
Funds
Fund Balances:
Nonspendable:
Inventory $ $ 102,133 $
Prepaid items 141,676 28,069
Restricted:
Debt service 96,212
Capital projects 3,921,928
Public safety 406,104
Committed
Economic development 617,856
Roadway maintenance 960,719
Park improvements 15,718
Assigned:
Compensated absences 1,244,471
Unemployment claims 197,391
Townwide capital 2,209,618
Unassigned 14,384,104 (201,765)
Total fund balances $ 15,967,642 $ (71,563) $ 8,228,155
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.
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. No regulatory
oversight is provided for the County Treasurer’s investment pool and that pool’s structure does
not provide for shares. Participants in the pool are not required to categorize the value of shares
in accordance with the fair value hierarchy.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 4 – CASH AND INVESTMENTS
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. Participants in the
pool are not required to categorize the value of shares in accordance with the fair value
hierarchy
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
$2,160,656 and the bank balance was $1,502,834.
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 securities classified in Level 1 of the fair value hierarchy are
valued using prices quoted in active markets for those securities. Debt securities classified in
Level 2 of the of the fair value hierarchy are valued using a matrix pricing techniques. Matrix
pricing is used to value securities based on the securities’ relationship to benchmark quoted
prices.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 4 – CASH AND INVESTMENTS
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:
Investments Maturities
(in Years)
Investment Type Category Fair Value Less than 1 1-5
Money Market - U.S. Treasuries Level 2 $ 3,672,828 $ 3,672,828 $
Commercial Paper Level 2 3,367,253 3,367,253
Asset-Backed Securities Level 2 1,316,656 1,316,656
U.S Treasury Bonds/Notes Level 2 20,878,604 20,878,604
U.S. Agencies Bonds/Notes Level 2 10,012,693 10,012,693
Corporate Notes Level 2 3,625,098 3,625,098
Supranational Agency Bonds Level 2 4,430,685 4,430,685
$ 8,356,737 $ 38,947,080
County Treasurer’s investment pool Not Applicable 542,458 270 days average maturities
State Treasurer’s investment pool 5 Not Applicable 5,208,331 33 days average maturities
Total $ 53,054,606
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.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 4 – CASH AND INVESTMENTS
As of year end, the Town’s investment in the State and County Treasurers’ investment pools
did not receive a credit quality rating from a national rating agency. The State Treasurer’s
investment pool 5 was rated AAAf/S1+ by Standard and Poor’s at year end. Of the Town’s
remaining investments, 97 percent were rated A/A-1 or higher.
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.
Concentration of Credit Risk. The Town places no limit on the amount the Town may invest
in any one issuer. More than five percent of the Town’s investments are in Federal Home Loan
Mortgage Corporation notes and FNMA notes, which make up 7 and 10 percent of the Town’s
total investments.
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 fund in the aggregate, were as follows:
General
Fund
Non-Major
Governmental
Funds
Intergovernmental receivables:
Due from federal government $ 75,516 $
Due from state government 237,680 301,333
Due from other governments 25,550 1,453,127
Net intergovernmental receivables $ 338,746 $ 1,754,460
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 6 – CAPITAL ASSETS
A summary of capital asset activity for the current fiscal year follows:
Governmental Activities
Beginning
Balance Increase Decrease
Ending
Balance
Capital assets, not being depreciated:
Land $ 19,518,801 $ $ $ 19,518,801
Construction in progress 9,248,205 6,420,492 10,242,106 5,426,591
Total capital assets, not being depreciated 28,767,006 6,420,492 10,242,106 24,945,392
Capital assets, being depreciated:
Infrastructure 173,893,147 11,875,148 185,768,295
Buildings and improvements 30,461,644 3,557,942 34,019,586
Machinery, equipment, and vehicles 16,611,079 900,115 267,395 17,243,799
Total capital assets being depreciated 220,965,870 16,333,205 267,395 237,031,680
Less accumulated depreciation for:
Infrastructure (86,939,177) (6,775,408) (93,714,585)
Buildings and improvements (7,257,274) (835,576) (8,092,850)
Machinery, equipment, and vehicles (11,641,890) (1,744,800) (266,521) (13,120,169)
Total accumulated depreciation (105,838,341) (9,355,784) (266,521) (114,927,604)
Total capital assets, being depreciated, net 115,127,529 6,977,421 874 122,104,076
Governmental activities capital assets, net $ 143,894,535 $ 13,397,913 $10,242,980 $ 147,049,468
Business-Type Activities
Beginning
Balance Increase Decrease
Ending
Balance
Capital assets, not being depreciated:
Land $ 2,410,660 $ $ $ 2,410,660
Water rights 8,534,490 8,534,490
Construction in progress 921,300 898,546 1,509,623 310,223
Total capital assets, not being depreciated 11,866,450 898,546 1,509,623 11,255,373
Capital assets, being depreciated:
Water system 130,279,801 2,935,630 133,215,431
Stormwater system 2,846,177 110,818 2,956,995
Equipment and vehicles 5,520,902 298,977 67,721 5,752,158
Total capital assets being depreciated 138,646,880 3,345,425 67,721 141,924,584
Less accumulated depreciation for:
Water system (41,960,774) (3,187,046)(45,147,820)
Stormwater system (432,602) (60,810)(493,412)
Equipment and vehicles (3,801,733) (324,717) (67,721) (4,058,729)
Total accumulated depreciation (46,195,109) (3,572,573) (67,721) (49,699,961)
Total capital assets, being depreciated, net 92,451,771 (227,148) 92,224,623
Business-type activities capital assets, net $ 104,318,221 $ 671,398 $ 1,509,623 $ 103,479,996
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 6 – CAPITAL ASSETS
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 920,977
Public Safety 737,702
Highways and streets 6,916,244
Culture and recreation 780,861
Total depreciation expense – governmental activities $ 9,355,784
Business-type activities:
Water $ 3,412,016
Stormwater 160,557
Total depreciation expense – business-type activities $ 3,572,573
Construction Commitments – As of year end, the Town was involved in several construction
projects. The estimated cost to complete the construction projects is $______ million.
NOTE 7 – LOANS PAYABLE
The Town has loans from the Water Infrastructure Finance Authority of Arizona for water
system projects. The loans payable at current fiscal year end are presented below.
Business-type activities:
Interest Rate
(Including
Fees)
Remaining
Maturities
Outstanding
Principal
June 30, 2018
Due Within
One Year
WIFA Loan, 2007 2.04% 7/1/18-27 $ 2,613,310 $ 222,392
WIFA Loan, 2009 2.75% 7/1/18-29 1,484,834 103,736
WIFA Loan, 2014 2.65% 7/1/18-25 3,592,730 285,567
Total $ 7,690,874 $ 611,695
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 7 – LOANS PAYABLE
Principal and interest payments on the business-type activities loans payable at June 30, 2018
are summarized as follows:
Business-type Activities
Year ending June 30: Principal Interest
2019 $ 611,695 $ 225,134
2020 630,420 206,387
2021 649,730 186,780
2022 669,642 166,557
2023 690,175 145,705
2024-28 3,781,991 225,167
2029-30 657,221 11,750
Total $ 7,690,874 $ 1,167,480
NOTE 8 – 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
Original
Amount
Issued
Interest
Rates
Remaining
Maturities
Outstanding
Principal
June 30, 2018
Due Within
One Year
Governmental activities:
Excise Tax Revenue Obligations, 2010 $ 2,445,000 5.18-6.59% 7/1/18-27 $ 1,510,000 $ 140,000
Revenue Bonds, 2012 2,580,000 3.50-4.00% 7/1/18-27 1,885,000 160,000
Refunding Excise Tax Revenue
Obligations, 2015 2,529,250 1.91% 7/1/18-25 2,267,280 265,990
Excise Tax Revenue Obligations, 2016 2,000,000 2.20% 7/1/18-31 2,000,000 91,000
Refunding Excise Tax Revenue
Obligations, 2017 1,115,556 2.43% 7/1/18-26 1,115,556 106,782
Total $ 8,777,836 $ 763,772
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 8 – BONDS PAYABLE
Annual debt service requirements to maturity on revenue and refunding bonds for governmental
activities at year end are summarized as follows:
Governmental Activities
Year ending June 30: Principal Interest
2019 $ 763,772 $ 264,898
2020 800,102 240,975
2021 827,590 215,959
2022 853,836 189,970
2023 884,160 162,849
2024-28 3,988,376 392,810
2029-32 660,000 36,674
Total $ 8,777,836 $ 1,504,135
Purpose
Original
Amount
Issued
Interest
Rates
Remaining
Maturities
Outstanding
Principal
June 30, 2018
Due Within
One Year
Business-type activities:
Refunding Revenue Bonds, 2012 $ 16,595,000 3.00-5.00% 7/1/18-28 $ 10,605,000 $ 1,545,000
Refunding Revenue Bonds, 2013 6,355,000 1.45% 7/1/18-19 2,005,000 995,000
Refunding Revenue Bonds, 2015 1,245,750 1.91% 7/1/18-25 1,116,720 131,010
Refunding Revenue Bonds, 2017 13,186,444 2.43% 7/1/18-26 13,186,444 1,262,218
Total $ 26,913,164 $ 3,933,228
Annual debt service requirements to maturity revenue and refunding bonds for business-type
activities at year end are summarized as follows:
Business-type Activities
Year ending June 30: Principal Interest
2019 $ 3,933,228 $ 767,514
2020 4,116,898 655,490
2021 3,201,410 546,549
2022 3,303,164 432,927
2023 3,425,840 306,340
2024-28 8,567,624 530,951
2029 365,000 6,159
Total $ 26,913,164 $ 3,245,930
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 8 – BONDS PAYABLE
Pledged revenues – governmental activities. The Town has pledged future sales (excise) tax revenues
to repay outstanding revenue bonds and refunding revenue bonds of $8.8 million as of June 30, 2018.
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 2032. 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 $10.3 million. The current total sales tax revenues were $21.7 million and the total
principal and interest paid on the bonds was $824,460 or four 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 $26.9 million as of
June 30, 2018. 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 2029. 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
$30.2 million. The current total customer gross revenues were $19.5 million and the total principal and
interest paid on the bonds was $3.5 million or 18 percent of gross revenues.
NOTE 9 – SPECIAL ASSESSMENT BONDS
Special assessment bonds at year end consisted of the following outstanding bonds. The bonds are
both callable and noncallable with interest payable semiannually. Special assessments from the
Oracle Road Debt Service Fund are used to pay bonded debt.
Purpose
Original
Amount
Issued
Interest
Rates
Remaining
Maturities
Outstanding
Principal
June 30, 2018
Due Within
One Year
Governmental activities:
Special assessments debt $3,945,000 4.60-4.75% 1/1/19-21 $ 490,000 $ 155,000
Annual debt service requirements to maturity on special assessment bonds at year end are
summarized as follows:
Governmental Activities
Year ending June 30: Principal Interest
2019 $ 155,000 $ 19,428
2020 165,000 11,912
2021 170,000 4,038
Total $ 490,000 $ 35,378
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 10 – OBLIGATIONS UNDER CAPITAL LEASES
The governmental activities of the Town have acquired police motorcycles and community
center utility vehicles under the provisions of long-term lease agreements classified as capital
leases. The lease agreements qualify as capital leases for accounting purposes and, therefore,
have been recorded at the present value of their future minimum lease payments as of the
inception date. Revenues from the General Fund and Community Center Fund are used to pay
the capital lease obligations. Amortization of assets recorded under capital leases is included
with depreciation expense.
Governmental
Activities
Asset:
Vehicles $ 1,341,558
Less: Accumulated depreciation 467,035
Total $ 874,523
The future minimum lease obligations and the net present value of these minimum lease
payments at year end were as follows:
Year Ending June 30:
Governmental
Activities
2019 $ 216,133
2020 213,008
2021 46,470
Total minimum lease payments 475,611
Less: amount representing interest 16,867
Present value of minimum lease payments $ 458,744
Due within one year $ 204,674
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 11 – CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the current fiscal year was as follows:
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Governmental activities:
Revenue bonds payable $ 9,322,126 $ $ 544,290 $ 8,777,836 $ 763,772
Deferred bond premium 19,433 8,315 11,118
Total bonds payable 9,341,559 552,605 8,788,954 763,772
Special assessments payable 640,000 150,000 490,000 155,000
Note payable 350,000 350,000
Capital leases payable 716,622 257,878 458,744 204,674
Net pension liability 38,596,717 734,936 39,331,653
Net OPEB liability 35,755 35,755
Compensated absences payable 2,037,952 1,854,223 1,722,896 2,169,279 1,692,038
Governmental activity long-term
liabilities $ 51,682,850 $ 2,624,914 $ 3,033,379
$ 51,274,385 $ 2,815,484
Beginning
Balance Additions Reductions
Ending
Balance
Due Within
One Year
Business-type activities:
Revenue bonds payable $ 29,520,874 $ $ 2,607,710 $ 26,913,164 $ 3,933,228
Deferred bond premium 1,283,453 116,678 1,166,775
Total bonds payable 30,804,327 2,724,388 28,079,939 3,933,228
Loan payable 8,284,407 593,533 7,690,874 611,695
Capital leases payable 40,814 40,814
Net pension liability 4,218,909 125,956 4,092,953
Net OPEB liability 9,631 9,631
Compensated absences payable 312,139 258,605 225,727 345,017 227,710
Business-type activities long-term
liabilities $ 43,660,596 $ 268,236 $ 3,710,418 $ 40,218,414 $ 4,772,633
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 12 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At year end, interfund balances were as follows:
Due to/from other funds: At year end, the PAG/RTA Fund, a non-major governmental fund,
had a negative cash balance of $138,019. Negative cash on deposit was reduced by interfund
borrowing with the General Fund. All interfund balances are expected to be paid within one
year.
Interfund transfers:
Transfers in
Transfers out
General
Fund
Non-Major
Governmental
Funds
Internal
Service
Funds
Total
General Fund $ $ 2,224,668 $ 300,000 $ 2,524,668
Community Center Fund 120,000 45,956 165,956
Non-Major Governmental Funds 185,000 764,419 949,419
Water Fund 2,847 2,847
Total $ 305,000 $ 3,037,890 $ 300,000 $ 3,642,890
Transfers were made from the General, Bed Tax, Community Center, and Water Funds to the
Municipal Debt Service Fund for debt service. In addition, transfers were made from the
General and General Impact Fees Funds to the General Government CIP Fund to fund capital
projects. Transfers were made from the General Fund to the Self Insurance Fund to fund
insurance claims. Finally, transfers were made from the Bed Tax and Community Center Funds
to the General Fund to repay loaned amounts.
NOTE 13 – 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
JUNE 30, 2018
NOTE 14 – 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 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 $125,000
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.
The Town limits its exposure through specific and aggregate stop-loss coverage. All claims
handling procedures are performed by a third-party claims administrator. Reported unpaid
claims, as well as incurred but not reported claims, have been accrued as a liability based upon
monthly claims lag summary reports. These claims are expected to be fully paid within one
year of the financial statement date.
Claims Payable
Beginning of
Year
Current Year
Claims and
Changes in
Estimates
Claim
Payments
Claims
Payable at
End of Year
2017-18 $ 323,077 $ 1,985,456 $ 2,021,204 $ 287,329
2016-17 249,036 2,761,967 2,687,926 323,077
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The Town contributes to the plans described below. The plans are component units of the State
of Arizona.
Aggregate Amounts. At June 30, 2018, the Town reported the following aggregate amounts
related to pensions and other postemployement benefits (OPEB) for all plans to which it
contributes.
The Town reported $4.1 million of pension and OPEB contributions as expenditures in the
governmental funds related to all plans to which it contributes.
A. Arizona State Retirement System
Plan Description. Town employees participate in the Arizona State Retirement System
(ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension
plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit
(OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability
(OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the
provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly
available financial report that includes its financial statements and required supplementary
information. The report is available on the ASRS website at www.azasrs.gov.
Governmental
Activities
Business-type
Activities Total
Net pension and OPEB assets 198,685$ 14,594$ 213,279$
Net pension and OPEB liability 39,367,408 4,102,584 43,469,992
Deferred outflows of resources 9,274,610 621,961 9,896,571
Deferred inflows of resources 1,660,960 265,122 1,926,082
Pension and OPEB expense 5,371,840 272,123 5,643,963
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
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 $150 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
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
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 current fiscal
year, active ASRS members were required by statute to contribute at the actuarially determined
rate of 11.50 percent (11.34 percent for retirement and 0.16 percent for long-term disability)
of the members’ annual covered payroll, and the Town was required by statute to contribute at
the actuarially determined rate of 11.50 percent (10.90 percent for retirement, 0.44 percent for
health insurance premium benefit, and 0.16 percent for long-term disability) of the active
members’ annual covered payroll. The Town’s contributions for the year ended June 30, 2018
were as follows:
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
9.49 percent (9.26 for retirement, 0.10 percent for health insurance premium benefit, and 0.13
percent for long-term disability). ACR contributions are included in employer contributions
presented above.
The Town’s pension and OPEB contributions are paid by the same funds as the employee’s
salary, with the largest component coming from the General Fund.
Contributions
Pension $ 1,418,992
Health Insurance Premium 57,280
Long-Term Disability 20,829
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Pension and OPEB Assets/Liability. The net pension and OPEB assets/liability were
measured as of June 30, 2017. The total liability used to calculate the net assets or net liability
was determined using update procedures to roll forward the total liability from an actuarial
valuation as of June 30, 2016, to the measurement date of June 30, 2017. 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, 2017.
At June 30, 2018, the Town reported the following amounts for its proportionate share of the
ASRS plans net assets/liability. In addition, at June 30, 2017, the Town’s percentage proportion
for each plan and the related change from its proportion measured as of June 30, 2016 was:
Pension/OPEB Expense and Deferred Outflows/Inflows of Resources. The Town has
deferred outflows and inflows of resources related to the net pension and OPEB assets/liability.
Certain changes in the net pension and OPEB assets/liability are recognized as pension and
OPEB expense over a period of time rather than the year of occurrence. For the year ended
June 30, 2018, the Town recognized pension and OPEB expense as follows:
Net
(Assets) Liability
District
% Proportion
Increase
(Decrease)
Pension $ 19,453,870 0.125 0.001
Health Insurance Premium (68,769)0.126
Long-Term Disability 45,386 0.125
Expense
Pension $ 1,217,908
Health Insurance Premium 40,222
Long-Term Disability 24,214
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The Town reported deferred outflows of resources and deferred inflows of resources related to
pensions and OPEB from the following sources:
Deferred Outflows of Resources
Pension
Health
Insurance
Premium
Long-Term
Disability
Differences between expected and actual experience $ $ $
Changes of assumptions or other inputs 844,926
Net difference between projected and actual earnings
on pension investments 139,665
Changes in proportion and differences between
contributions and proportionate share of contributions 449,224
Contributions subsequent to the measurement date 1,418,992 57,280 20,829
Total $ 2,852,807 $ 57,280 $ 20,829
Deferred Inflows of Resources
Pension
Health
Insurance
Premium
Long-Term
Disability
Differences between expected and actual experience $ 583,355 $ $
Changes of assumptions or other inputs 581,706
Net difference between projected and actual earnings
on pension investments 77,431 6,789
Changes in proportion and differences between
contributions and proportionate share of contributions 83 6
Total $ 1,165,061 $ 77,514 $ 6,795
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The amounts of deferred outflows of resources resulting from contributions subsequent to the
measurement date as reported in the table above will be recognized as an adjustment of the net
pension and OPEB assets/liability in the year ended June 30, 2019. Other amounts reported as
deferred outflows of resources and deferred inflows of resources related to pensions and OPEB
will be recognized in pension and OPEB expense as follows:
Actuarial Assumptions. The significant actuarial assumptions used to measure the total
pension and OPEB liability are as follows:
Pension OPEB
Actuarial valuation date June 30, 2016 June 30, 2016
Actuarial roll forward date June 30, 2017 June 30, 2017
Actuarial cost method Entry age normal Entry age normal
Investment rate of return 8.0% 8.0%
Projected salary increases 3.0-6.75% Not applicable
Inflation 3.0% 3.0%
Permanent base increases Included Not applicable
Mortality rates 1994 GAM Scale BB 1994 GAM Scale BB
Healthcare cost trend rate Not applicable Not applicable
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an
actuarial experience study for the five-year period ended June 30, 2012. 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, 2013, actuarial valuation. The study did not include an analysis of the
assumed investment rate of return.
Year Ending June 30:Pension
Health
Insurance
Premium
Long-Term
Disability
2019 $ (422,133) $ (19,376) $ (1,698)
2020 893,456 (19,376)(1,698)
2021 244,949 (19,376)(1,698)
2022 (447,497)(19,376)(1,698)
2023 (11)(1)
Thereafter (1)
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The long-term expected rate of return on ASRS plan investments was determined to be 8.70
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 and by adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major asset
class for all ASRS plans are summarized in the following table:
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
Equity 58% 6.73%
Fixed income 25% 3.70
Real estate 10% 4.25
Multi-asset 5% 3.41%
Commodities 2% 3.84
Total 100%
Discount Rate. The discount rate used to measure the ASRS total pension and OPEB liability
was 8.0 percent, which is less than the long-term expected rate of return of 8.70 percent. The
projection of cash flows used to determine the discount rate assumed that contributions from
participating employers will be made based on the actuarially determined rates based on the
ASRS Board’s funding policy, which establishes the contractually required rate under Arizona
statute. Based on those assumptions, the plans’ fiduciary net position was projected to be
available to make all projected future benefit payments of current plan members. Therefore,
the long-term expected rate of return on investments was applied to all periods of projected
benefit payments to determine the total pension and OPEB liability.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Sensitivity of the Proportionate Share of the Net Pension and OPEB Assets/Liability to
Changes in the Discount Rate. The following presents the Town’s proportionate share of the
net pension and OPEB assets/liability calculated using the discount rate of 8.0 percent, as well
as what the proportionate share of the net pension and OPEB assets/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:
Pension and OPEB Plan Fiduciary Net Position. Detailed information about the pension and
OPEB plan’s fiduciary net position is available in the separately issued ASRS financial report.
The report is available on the ASRS website at www.azasrs.gov.
B. Public Safety Personnel Retirement System 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). The PSPRS
administers an agent multiple-employer defined benefit pension plan and an agent multiple-
employer defined benefit health insurance premium benefit (OPEB) plan. A nine-member
board known as the Board of Trustees and the participating local boards govern the PSPRS
according to the provisions of A.R.S. Title 38, Chapter 5, Article 4.
Town dispatchers participate in the Corrections Officer Retirement Plan (CORP). The CORP
administers an agent multiple-employer defined benefit pension plan and an agent multiple-
employer defined benefit health insurance premium benefit (OPEB) plan. 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.
Proportionate share of the net (assets) liability
1% Decrease
Current
Discount Rate 1% Increase
Rate 7.0% 8.0% 9.0%
Pension $ 24,969,380 $ 19,453,870 $ 14,845,189
Health Insurance Premium 114,205 (68,769) (224,265)
Long-Term Disability 54,270 45,386 37,853
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Benefits Provided. The PSPRS and CORP provide retirement, health insurance premium
supplement, disability, and survivor benefits. State statute establishes benefits terms. Certain
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.
Retirement Initial
Membership Date:
Tier 1 Tier 2
Years of service and age
required to receive
benefit
20 years of service, any age
15 years of service, age 62
25 years or 15 years of credited
service, age 52.5
Final average salary is
based on
Highest 36 consecutive months of
last 20 years
Highest 60 consecutive months of
last 20 years
Normal retirement 50% less 2.0% for each year of
credited service less than 20 years
or plus 2.0% to 2.5% for each year
of credited service over 20 years,
not to exceed 80%
1.5 % to 2.5% per year of credited
service, not to exceed 80%
Accidental disability
retirement
50% or normal retirement, whichever is greater
Survivor benefit:
Retired members 80% to 100% of retired member’s pension benefit
Active members 80% of accidental disability retirement benefit or 100% of average monthly
compensation if death was the result of injuries received on the job
Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on
inflation and excess investment earnings for CORP. 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 $150 per month to $260 per
month depending on the age of the member and dependents.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Employees Covered by Benefit Terms. At June 30, 2018, the following employees were
covered by the agent plan’s benefit terms:
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, 2018, are
indicated below. Rates are a percentage of active members’ annual covered payroll.
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 18.86 percent for the PSPRS and 37.43 percent for the CORP. ACR contributions are
included in employer contributions presented above.
PSPRS - Police CORP - Dispatchers
Pension
Health
Insurance Pension
Health
Insurance
Retirees and beneficiaries 36 36 5 5
Inactive, non-retired members 12 2 3 0
Active members 93 93 4 4
Total 141 131 12 9
PSPRS - Police
CORP -
Dispatchers
Active members – pension 7.65%7.96%
Town:
Pension 34.47%43.63%
Health insurance 0.38%
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The contributions to the pension and OPEB plans for the year ended were:
The Town’s pension and OPEB contributions are paid by the same funds as the employee’s
salary, with the largest component coming from the General Fund.
Pension and OPEB Assets/Liability. At June 30, 2018, the Town reported the following assets
and liabilities.
The net pension and OPEB assets/liability were measured as of June 30, 2017. The total liability
used to calculate the net asset or liability was determined by an actuarial valuation as of that date.
The total liability as of June 30, 2017, reflects changes of actuarial assumptions based on the
results of an actuarial experience study for the 5-year period ended June 30, 2016, including
decreasing the investment rate of return from 7.5 percent to 7.4 percent, decreasing the wage
inflation from 4.0 percent to 3.5 percent, and updating mortality, withdrawal, disability, and
retirement assumptions.
Contributions
PSPRS - Police
CORP -
Dispatchers
Pension $ 2,485,191 $ 87,996
Health insurance 27,397
Net (Assets) Liability
PSPRS - Police
CORP -
Dispatchers
Pension 22,153,886$ 1,816,850$
Health insurance (128,078) (16,431)
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Actuarial Assumptions. The significant actuarial assumptions used to measure the total
pension/OPEB liability for both the PSPRS and CORP are as follows:
Actuarial assumptions used in the June 30, 2017, valuation were based on the results of an
actuarial experience study for the 5-year period ended June 30, 2016.
The long-term expected rate of return on PSPRS and CORP plan investments was determined to
be 7.40 percent using a building-block method in which best-estimate ranges of expected future
real rates of return (expected returns, net of plan investment expenses and inflation) are
developed for each major asset class. The target allocation and best estimates of geometric real
rates of return for each major asset class are summarized in the following table:
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
Short-term investments 2% 0.25%
Absolute return 2% 3.75%
Risk parity 4% 5.00%
Fixed income 5% 1.25%
Real assets 9% 4.52%
GTAA 10% 3.96%
Private credit 12% 6.75%
Real estate 10% 3.75%
Credit opportunities 16% 5.83%
Non-U.S. equity 14% 8.70%
U.S. equity 16% 7.60%
Total 100%
Pension OPEB
Actuarial valuation date June 30, 2017 June 30, 2017
Actuarial cost method Entry age normal Entry age normal
Investment rate of return 7.4%7.4%
Projected salary increases 3.5%Not applicable
Inflation 2.5%Not applicable
Permanent benefit increase Included Not applicable
Mortality rates RP-2014 tables using MP-2016
improvement scale with
adjustements to match current
experience
RP-2014 tables using MP-2016
improvement scale with
adjustements to match current
experience
Healthcare cost trend rate Not applicable Not applicable
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Changes in Net (Assets)/Liability
Pension
Increase (Decrease)
Health Insurance
Increase (Decrease)
PSPRS - Police
Total
(Assets)
Liability
Plan
Fiduciary
Net Position
Net
(Assets)
Liability
Total
(Assets)
Liability
Plan
Fiduciary
Net Position
Net
(Assets)
Liability
Balances at June 30, 2017 48,414,270$ 27,010,103$ 21,404,167$ 1,108,855$ 1,057,826$ 51,029$
Changes for the year:
Service cost 1,638,736 1,638,736 26,772 26,772
Interest on the total liability 3,615,210 3,615,210 83,347 83,347
Changes of benefit terms 435,327 435,327 3,280 3,280
Differences between expected and
actual experience in the
measurement of the liability 247,905 247,905 (29,508) (29,508)
Changes of assumptions
or other inputs 747,786 747,786 (113,968) (113,968)
Contributions – employer 1,811,735 (1,811,735) 25,271 (25,271)
Contributions – employee 905,024 (905,024) -
Net investment income 3,228,386 (3,228,386) 124,864 (124,864)
Benefit payments, including refunds
of employee contributions (2,061,668) (2,061,668) - (21,892) (21,892) -
Administrative expense (28,966) 28,966 (1,105) 1,105
Other changes 19,066 (19,066) -
Net changes 4,623,296 3,873,577 749,719 (51,969) 127,138 (179,107)
Balances at June 30, 2018 53,037,566$ 30,883,680$ 22,153,886$ 1,056,886$ 1,184,964$ (128,078)$
CORP - Dispatchers
Balances at June 30, 2017 2,524,360$ 1,163,258$ 1,361,102$ 48,337$ 63,294$ (14,957)$
Changes for the year:
Service cost 32,541 32,541 372 372
Interest on the total liability 185,568 185,568 3,505 3,505
Changes of benefit terms 395,457 395,457 -
Differences between expected and
actual experience in the
measurement of the liability (12,524) (12,524) 5,830 5,830
Changes of assumptions
or other inputs 85,035 85,035 (3,921) (3,921)
Contributions – employer 77,331 (77,331) -
Contributions – employee 18,502 (18,502) -
Net investment income 136,094 (136,094) 7,324 (7,324)
Benefit payments, including refunds
of employee contributions (132,788) (132,788) - (3,567) (3,567) -
Administrative expense (1,591) 1,591 (64) 64
Other changes (8) 8 -
Net changes 553,289 97,540 455,749 2,219 3,693 (1,474)
Balances at June 30, 2018 3,077,649$ 1,260,798$ 1,816,851$ 50,556$ 66,987$ (16,431)$
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Discount Rate. At June 30, 2017, the discount rate used to measure the total pension and
OPEB liability was 7.4 percent, which was a decrease of 0.1 percent from the discount rate
used as of June 30, 2016.
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 and OPEB liability.
Sensitivity of the Net Pension and OPEB Assets (Liability) to Changes in the Discount
Rate. The following presents the Town’s net pension and OPEB assets (liability) calculated
using the discount rates noted above, as well as what the net assets (liability) would be if it
were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point
higher than the current rate:
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.
1% Decrease Current Discount Rate 1% Increase
PSPRS - Police:
Rate 6.40% 7.40% 8.40%
Net pension (assets) liability 30,363,028$ 22,153,886$ 15,555,686$
Net OPEB (assets) liability 12,522 (128,078) (244,365)
CORP - Dispatchers
Rate 6.40%7.40%8.40%
Net pension (assets) liability 2,218,704$ 1,816,850$ 1,488,656$
Net OPEB (assets) liability (11,368) (16,431) (20,749)
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
Expense. For the year ended June 30, 2018, the Town recognized the following as pension and
OPEB expense:
Deferred Outflows/Inflows of Resources. At June 30, 2018, the Town reported deferred
outflows of resources and deferred inflows of resources related to pensions and OPEB from
the following sources:
Expense
PSPRS - Police
CORP -
Dispatchers
Pension $ 3,772,814 $ 586,979
Health insurance 2,530 (706)
Pension Health Insurance
PSPRS - Police:
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Deferred
Outflows of
Resources
Deferred Inflows
of Resources
Differences between expected
and actual experience $ 874,073 $ 494,883 $ $ 24,682
Changes of assumptions or other inputs 2,975,881 95,330
Net difference between projected and
actual earnings on plan investments 376,560 36,354
Contributions subsequent to the
measurement date 2,485,191 27,397
Total 6,711,705$ 494,883$ 27,397$ 156,366$
CORP - Dispatchers
Differences between expected
and actual experience $ 3,958 $ 22,604 $ 4,280 $
Changes of assumptions or other inputs 114,111 2,878
Net difference between projected and
actual earnings on plan investments 18,379 2,170
Contributions subsequent to the
measurement date 87,996
Total 224,444$ 22,604$ 4,280$ 5,048$
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2018
NOTE 15 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
The amounts of deferred outflows of resources resulting from contributions subsequent to the
measurement date as reported in the table above will be recognized as an adjustment of the net
pension and OPEB assets/liability in the year ended June 30, 2019. Other amounts reported as
deferred outflows of resources and deferred inflows of resources related to pensions and OPEB
will be recognized in pension and OPEB expense as follows:
NOTE 16 – TAX ABATEMENTS
The Town enters into property tax abatement agreements with local businesses under A.R.S.
§9-500.11. Under the statute, a city or town may enter into a retail development tax incentive
agreement for the purpose of economic development activities. To be eligible, the tax incentive
agreement must be expected to raise more revenue than the amount of the incentive within the
duration of the agreement, and in the absence of a tax incentive, the retail business facility
would not locate in the city or town in the same time, place or manner.
For the fiscal year ended June 30, 2018, the Town abated sales taxes totaling $765,096. Of this
amount, $763,470 was a 45 percent sales tax abatement to a developer, for developing a
regional lifestyle and entertainment retail shopping center to create additional jobs, generate
additional sales tax revenue, and provide diverse commercial and retail service opportunities
to the Town’s residents.
NOTE 17 – SUBSEQUENT EVENT
On October 23, 2018, the Town issued Excise Tax Revenue Obligations, Series 2018 in the
amount of $8.1 million, maturing on July 1, 2019 through 2033, with an average interest rate of
3.02 percent. The purpose of the bonds is to make improvements to the Town’s water utility
infrastructure, and to construct a police evidence and substation facility.
PSPRS - Police CORP - Dispatchers
Year Ending June 30:Pension
Health
Insurance Pension
Health
Insurance
2019 1,160,783 (32,552) 75,617 (36)
2020 1,387,631 (32,552) 41,257 (36)
2021 880,241 (32,552) 7,029 (155)
2022 194,250 (32,554) (1,059) (541)
2023 108,726 (23,464)
Thereafter (2,692)
REQUIRED SUPPLEMENTARY INFORMATION
Revenues:
Sales taxes
Franchise taxes
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Charges for services
Investment earnings
Other
Total revenues
Expenditures:
Current -
General government
Public safety
Transit
Culture and recreation
Capital outlay
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Budgeted
Amounts
Original & Final
$ 16,544,573
620,000
14,136,390
2,063,121
120,000
2,210,453
103,000
233,000
36,030,537
11,183,855
17,069,896
1,550,003
3,507,481
569,014
44,134
1,320
33,925,703
2,104,834
305,000
(2,799,668)
(2,494,668)
(389,834)
$(389,834)
Actual
$ 17,961,199
656,664
13,740,676
2,634,574
131,831
2,217,259
390,030
37,732,233
11,070,844
16,551,778
1,536,294
3,174,753
569,014
44,134
1,320
32,948,137
4,784,096
305,000
(2,524,668)
(2,219,668)
2,564,428
13,403,214
$15,967,642
Variance with
Final Budget
Positive
(Negative)
$ 1,416,626
36,664
(395,714)
571,453
11,831
6,806
(103,000)
157,030
1,701,696
113,011
518,118
13,709
332,728
977,566
2,679,262
275,000
275,000
2,954,262
13,403,214
$16,357,476
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL FUND
YEAR ENDED JUNE 30, 2018
See accompanying notes to this schedule.
Revenues:
Sales taxes
Charges for services
Other
Total revenues
Expenditures:
Current -
Culture and recreation
Capital outlay
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances (deficits), end of year
Budgeted
Amounts
Original & Final
$ 2,308,112
4,159,931
27,861
6,495,904
6,034,662
44,075
215,802
35,706
6,330,245
165,659
(165,956)
(165,956)
(297)
$(297)
Actual
$ 2,330,941
4,382,588
963
6,714,492
6,224,845
45,464
215,802
36,831
6,522,942
191,550
(165,956)
(165,956)
25,594
(97,157)
$(71,563)
Variance with
Final Budget
Positive
(Negative)
$ 22,829
222,657
(26,898)
218,588
(190,183)
(1,389)
(1,125)
(192,697)
25,891
25,891
(97,157)
$(71,266)
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
COMMUNITY CENTER
YEAR ENDED JUNE 30, 2018
See accompanying notes to this schedule.
2018 2017 2016 2015
Measurement date June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Town's proportion of the net pension
liability (asset)0.12%0.12%0.12%0.11%
Town's proportionate share of the net
pension liability (asset)19,453,870$ 20,050,356$ 18,575,537$ 16,642,712$
Town's covered payroll 12,193,145$ 11,857,622$ 11,826,486$ 11,086,887$
Town's proportionate share of the net
pension liability (asset) as a percentage
of its covered payroll 159.55% 169.09% 157.07% 150.11%
Plan fiduciary net position as a
percentage of the total pension liability 69.92%67.06%68.35%69.49%
NOTE:
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
LAST FOUR FISCAL YEARS
ARIZONA STATE RETIREMENT SYSTEM
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 accompanying notes to this schedule.
2018 2017 2016 2015
Measurement date June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total pension liability
Service cost $ 1,638,736 $ 1,363,768 $ 1,224,807 $ 1,157,832
Interest 3,615,210 3,185,633 2,842,514 2,408,825
Changes of benefit terms 435,327 3,164,555 444,387
Differences between expected and actual experience 247,905 (548,533) 1,312,293 (356,776)
Changes of assumptions 747,786 1,902,904 3,014,125
(2,061,668) (1,106,968) (1,049,346) (1,304,993)
Net change in total pension liability 4,623,296 7,961,359 4,330,268 5,363,400
Total pension liability—beginning 48,414,270 40,452,911 36,122,643 30,759,243
Total pension liability—ending $ 53,037,566 $ 48,414,270 $ 40,452,911 $ 36,122,643
Plan fiduciary net position
Contributions—employer $ 1,811,735 $ 1,505,274 $ 1,669,125 $ 1,211,218
Contributions—employee 905,024 840,020 794,478 698,036
Net investment income 3,228,386 154,181 874,562 2,774,126
(2,061,668) (1,106,968) (1,049,346) (1,304,993)
Administrative expense (28,966) (22,586) (21,722) (22,342)
Other 19,066 38,225 93,803 (93,142)
Net change in plan fiduciary net position 3,873,577 1,408,146 2,360,900 3,262,903
Plan fiduciary net position—beginning 27,010,103 25,601,957 23,241,057 19,978,154
Plan fiduciary net position—ending $ 30,883,680 $ 27,010,103 $ 25,601,957 $ 23,241,057
Net pension liability—ending $ 22,153,886 $ 21,404,167 $ 14,850,954 $ 12,881,586
Plan fiduciary net position as a percentage of
the total pension liability 58.23% 55.79% 63.29% 64.34%
Covered payroll $ 7,199,177 $ 7,355,092 $ 7,004,292 $ 6,021,786
Net pension liability as a percentage of covered
payroll 307.73% 291.01% 212.03% 213.92%
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.
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - POLICE
LAST FOUR FISCAL YEARS
Benefit payments, including refunds of employee
contributions
Benefit payments, including refunds of employee
contributions
See accompanying notes to this schedule.
2018 2017 2016 2015
Measurement date June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total pension liability
Service cost $ 32,541 $ 32,257 $ 52,754 $ 53,985
Interest 185,568 182,053 174,403 154,443
Changes of benefit terms 395,457 14,504 29,545
Differences between expected and actual experience (12,524) (12,392) 14,554 (48,767)
Changes of assumptions 85,035 64,514 174,536
(132,788) (119,180) (148,851) (68,874)
Net change in total pension liability 553,289 161,756 92,860 294,868
Total pension liability—beginning 2,524,360 2,362,604 2,269,744 1,974,876
Total pension liability—ending $ 3,077,649 $ 2,524,360 $ 2,362,604 $ 2,269,744
Plan fiduciary net position
Contributions—employer $ 77,331 $ 52,583 $ 64,005 $ 63,179
Contributions—employee 18,502 18,982 30,272 32,699
Net investment income 136,094 7,237 45,101 146,441
(132,788) (119,180) (148,851) (68,874)
Administrative expense (1,591) (1,423) (1,490) (1,151)
Other (8) (8) (926)
Net change in plan fiduciary net position 97,540 (41,809) (11,889) 172,294
Plan fiduciary net position—beginning 1,163,258 1,205,067 1,216,956 1,044,662
Plan fiduciary net position—ending $ 1,260,798 $ 1,163,258 $ 1,205,067 $ 1,216,956
Net pension liability—ending $ 1,816,851 $ 1,361,102 $ 1,157,537 $ 1,052,788
Plan fiduciary net position as a percentage of
the total pension liability 40.97% 46.08% 51.01% 53.62%
Covered payroll $ 233,934 $ 245,274 $ 380,303 $ 387,839
Net pension liability as a percentage of covered
payroll 776.65% 554.93% 304.37% 271.45%
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.
TOWN OF ORO VALLEY, ARIZONA
Benefit payments, including refunds of employee
contributions
Benefit payments, including refunds of employee
contributions
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - DISPATCHERS
LAST FOUR FISCAL YEARS
See accompanying notes to this schedule.
2018 2017 2016 2015
Arizona State Retirement System:
Actuarially determined contribution 1,418,992$ 1,314,421$ 1,286,552$ 1,207,362$
Contributions in relation to the
actuarially determined contribution 1,418,992 1,314,421 1,286,552 1,207,362
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 13,018,275$ 12,193,145$ 11,826,486$ 11,086,887$
Contributions as a percentage
of covered payroll 10.90% 10.78% 10.88% 10.89%
Public Safety Personnel Retirement System - Police:
Actuarially determined contribution 2,485,191$ 1,679,568$ 1,554,131$ 1,354,630$
Contributions in relation to the
actuarially determined contribution 2,485,191 1,679,568 1,554,131 1,354,630
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 7,209,721$ 7,199,177$ 7,355,092$ 7,004,292$
Contributions as a percentage
of covered payroll 34.47% 23.33% 21.13% 19.34%
Public Safety Personnel Retirement System - Dispatchers:
Actuarially determined contribution 87,996$ 77,830$ 54,083$ 64,005$
Contributions in relation to the
actuarially determined contribution 87,996 77,830 54,083 64,005
Contribution deficiency (excess) $ $ $ $
Town's covered-employee payroll 201,687$ 233,934$ 245,274$ 380,303$
Contributions as a percentage
of covered-employee payroll 43.63% 33.27% 22.05% 16.83%
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.
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF CONTRIBUTIONS
ALL PENSION PLANS
LAST FOUR FISCAL YEARS
See accompanying notes to this schedule.
2018 2017 2016 2015 2014
Measurement date June 30, 2017 0000
Town's proportion of the net OPEB
(assets) liability 0.13%0.00% 0.00% 0.00% 0.00%
Town's proportionate share of the net
OPEB (assets) liability (68,769)$ $ $ $ $
Town's covered payroll 12,193,145$ $ $ $ $
Town's proportionate share of the net
OPEB (assets) liability as a percentage
of its covered payroll -0.56%#DIV/0! #DIV/0! #DIV/0! #DIV/0!
Plan fiduciary net position as a
percentage of the total OPEB liability 103.57%0.00% 0.00% 0.00% 0.00%
NOTE:
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET OPEB LIABILITY
JUNE 30, 2018
ARIZONA STATE RETIREMENT SYSTEM - HEALTH INSURANCE PREMIUM
The pension and OPEB 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 accompanying notes to this schedule.
2018 2017 2016 2015 2014
Measurement date June 30, 2017 0000
Town's proportion of the net OPEB
(assets) liability 0.13%0.00% 0.00% 0.00% 0.00%
Town's proportionate share of the net
OPEB (assets) liability 45,386$ $ $ $ $
Town's covered payroll 12,193,145$ $ $ $ $
Town's proportionate share of the net
OPEB (assets) liability as a percentage
of its covered payroll 0.37%#DIV/0! #DIV/0! #DIV/0! #DIV/0!
Plan fiduciary net position as a
percentage of the total OPEB liability 84.44%0.00% 0.00% 0.00% 0.00%
NOTE:The pension and OPEB schedules in the required supplementary information are intended to show information for ten
years, and additional information will be displayed as it becomes available.
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET OPEB LIABILITY
ARIZONA STATE RETIREMENT SYSTEM - LONG-TERM DISABILITY
JUNE 30, 2018
See accompanying notes to this schedule.
2018 2017 2016 2015
Measurement date June 30, 2017 000
Total OPEB liability
Service cost $ 26,772 $ $ $
Interest 83,347
Changes of benefit terms 3,280
(29,508)
Changes of assumptions or other inputs (113,968)
Benefit payments (21,892)
Net change in total OPEB liability (51,969)
Total OPEB liability—beginning 1,108,855
Total OPEB liability—ending $ 1,056,886 $ $ $
Plan fiduciary net position
Contributions—employer $ 25,271 $ $ $
Contributions—employee
Net investment income 124,864
Benefit payments (21,892)
Administrative expense (1,105)
Other
Net change in plan fiduciary net position 127,138
Plan fiduciary net position—beginning 1,057,826
Plan fiduciary net position—ending $ 1,184,964 $ $ $
Net OPEB (assets) liability—ending $ (128,078) $ $ $
112.12%#DIV/0! #DIV/0! #DIV/0!
Covered payroll $ 7,199,177 $ $ $
-1.78%#DIV/0!#DIV/0!#DIV/0!
NOTE:
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - POLICE - HEALTH INSURANCE PREMIUM
JUNE 30, 2018
Net OPEB (assets) liability as a
percentage of covered payroll
The pension and OPEB schedules in the required supplementary information are intended to show information for ten
years, and additional information will be displayed as it becomes available.
Differences between expected and actual
experience
Plan fiduciary net position as a
percentage of the total OPEB liability
See accompanying notes to this schedule.
2018 2017 2016 2015
Measurement date June 30, 2017 000
Total OPEB liability
Service cost $ 372 $ $ $
Interest 3,505
Changes of benefit terms
5,830
Changes of assumptions or other inputs (3,921)
Benefit payments (3,567)
Net change in total OPEB liability 2,219
Total OPEB liability—beginning 48,337
Total OPEB liability—ending $ 50,556 $ $ $
Plan fiduciary net position
Contributions—employer $ $ $ $
Contributions—employee
Net investment income 7,324
Benefit payments (3,567)
Administrative expense (64)
Other
Net change in plan fiduciary net position 3,693
Plan fiduciary net position—beginning 63,294
Plan fiduciary net position—ending $ 66,987 $ $ $
Net OPEB (assets) liability—ending $ (16,431) $ $ $
132.50%#DIV/0! #DIV/0! #DIV/0!
Covered payroll $ 233,934 $ $ $
-7.02%#DIV/0!#DIV/0!#DIV/0!
NOTE:
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - DISPATCHERS - HEALTH INSURANCE PREMIUM
JUNE 30, 2018
The pension and OPEB schedules in the required supplementary information are intended to show information for ten
years, and additional information will be displayed as it becomes available.
Differences between expected and actual
experience
Plan fiduciary net position as a
percentage of the total OPEB liability
Net OPEB (assets) liability as a
percentage of covered payroll
See accompanying notes to this schedule.
2018 2017 2016 2015
Arizona State Retirement System - Health Insurance Premium:
Actuarially determined contribution 57,280$ $ $ $
Contributions in relation to the
actuarially determined contribution 57,280
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 13,018,275$ $ $ $
Contributions as a percentage
of covered payroll 0.44%#DIV/0! #DIV/0! #DIV/0!
Arizona State Retirement System - Long-Term Disability:
Actuarially determined contribution 20,829$ $ $ $
Contributions in relation to the
actuarially determined contribution 20,829
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 13,018,275$ $ $ $
Contributions as a percentage
of covered payroll 0.16%#DIV/0! #DIV/0! #DIV/0!
Public Safety Personnel Retirement System - Police - Health Insurance Premium:
Actuarially determined contribution 27,397$ $ $ $
Contributions in relation to the
actuarially determined contribution 27,397
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 7,209,721$ $ $ $
Contributions as a percentage
of covered payroll 0.38%#DIV/0! #DIV/0! #DIV/0!
Public Safety Personnel Retirement System - Dispatchers - Health Insurance Premium:
Actuarially determined contribution $ $ $ $
Contributions in relation to the
actuarially determined contribution
Contribution deficiency (excess) $ $ $ $
Town's covered payroll 201,687$ $ $ $
Contributions as a percentage
of covered payroll 0.00%#DIV/0!#DIV/0!#DIV/0!
NOTE:
ALL OPEB PLANS
JUNE 30, 2018
The pension and OPEB schedules in the required supplementary information are intended to show information for ten
years, and additional information will be displayed as it becomes available.
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF OPEB CONTRIBUTIONS
See accompanying notes to this schedule.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2018
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 AND OPEB PLAN SCHEDULES
Factors that Affect Trends. The actuarial assumptions used in the June 30, 2016, valuation
for ASRS were based on the results of an actuarial experience study for the five-year period
ended June 30, 2012. 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, 2013, actuarial valuation. The study
did not include an analysis of the assumed investment rate of return.
The actuarial assumptions used in the June 30, 2016, valuation for PSPRS were based on the
results of an actuarial experience study for the 5-year period ended June 30, 2011. The total
pension liability used to calculate the net pension liability for PSPRS was determined by an
actuarial valuation as of that date. The total pension liability as of June 30, 2016, reflects
changes of benefit terms and actuarial assumptions for a court ruling for funding permanent
benefit increases and a decrease in the wage growth assumption from 4.5% to 4.0%.
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COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
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GOVERNMENTAL FUNDS
ASSETS
Cash and cash equivalents
Accounts receivable
Intergovernmental receivable
Special assessments
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Unearned revenue
Due to other funds
Total liabilities
Deferred inflows of resources:
Unavailable revenues - special assessments
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
Special Revenue
$ 2,377,613
58,809
301,333
$2,737,755
$ 698,197
54,879
753,076
406,104
1,578,575
1,984,679
$2,737,755
Debt Service
$ 97,462
495,000
$592,462
$ 1,250
1,250
495,000
96,212
96,212
$592,462
Capital Projects
$ 6,091,803
1,453,127
$7,544,930
$ 696,085
563,562
138,019
1,397,666
3,921,928
15,718
2,209,618
6,147,264
$7,544,930
TOWN OF ORO VALLEY, ARIZONA
COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE
JUNE 30, 2018
Total Non-Major
Governmental
Funds
$ 8,566,878
58,809
1,754,460
495,000
$10,875,147
$ 1,395,532
54,879
563,562
138,019
2,151,992
495,000
4,424,244
1,594,293
2,209,618
8,228,155
$10,875,147
Revenues:
Sales taxes
Development impact fees
Special assessments
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Contributions and donations
Investment earnings
Other
Total revenues
Expenditures:
Current -
General government
Public safety
Highway and streets
Capital outlay
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Special Revenue
$ 1,372,258
3,479,458
45,116
397,856
35,481
13,585
5,343,754
927,742
12,142
3,092,143
1,058,942
5,090,969
252,785
(410,019)
(410,019)
(157,234)
2,141,913
$1,984,679
Debt Service
$
175,854
45,119
4,296
100,896
326,165
694,290
318,510
1,012,800
(686,635)
686,783
686,783
148
96,064
$96,212
Capital Projects
$
1,346,402
4,368,890
133,928
34,765
71,496
5,955,481
168,043
8,408,007
350,000
8,926,050
(2,970,569)
2,351,107
(539,400)
1,811,707
(1,158,862)
7,306,126
$6,147,264
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, 2018
Total Non-Major
Governmental
Funds
$ 1,372,258
1,346,402
175,854
7,893,467
45,116
397,856
133,928
74,542
185,977
11,625,400
927,742
180,185
3,092,143
9,466,949
1,044,290
318,510
15,029,819
(3,404,419)
3,037,890
(949,419)
2,088,471
(1,315,948)
9,544,103
$8,228,155
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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.
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.
Bed Tax – accounts for the collection of the 6 percent bed tax revenues which funds economic
development and tourism initiatives.
Impound Fee – accounts for the collection of administrative fees for processing vehicles
impounded by the Oro Valley police department.
ASSETS
Cash and cash equivalents
Accounts receivable
Intergovernmental receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Total liabilities
Fund balances:
Restricted
Committed
Total fund balances
Total liabilities and fund balances
HURF
$ 902,283
58,809
301,333
$1,262,425
$ 246,827
54,879
301,706
960,719
960,719
$1,262,425
State Seizures
and Forfeitures
$ 265,605
$265,605
$ 36,377
36,377
229,228
229,228
$265,605
Federal Seizures
and Forfeitures
$ 173,062
$173,062
$
173,062
173,062
$173,062
TOWN OF ORO VALLEY, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30, 2018
Bed Tax
$ 1,032,849
$1,032,849
$ 414,993
414,993
617,856
617,856
$1,032,849
Impound Fee
$ 3,814
$3,814
$
3,814
3,814
$3,814
Totals
$ 2,377,613
58,809
301,333
$2,737,755
$ 698,197
54,879
753,076
406,104
1,578,575
1,984,679
$2,737,755
Revenues:
Sales taxes
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Investment earnings
Other
Total revenues
Expenditures:
Current -
General government
Public safety
Highway and streets
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances, end of year
HURF
$
3,479,458
45,116
31,054
13,585
3,569,213
3,092,143
867,254
3,959,397
(390,184)
(390,184)
1,350,903
$960,719
State Seizures
and Forfeitures
$
168,160
4,095
172,255
158,817
95,365
254,182
(81,927)
(81,927)
311,155
$229,228
Federal Seizures
and Forfeitures
$
192,946
332
193,278
12,142
12,142
181,136
181,136
(8,074)
$173,062
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30, 2018
Bed Tax
$ 1,372,258
1,372,258
710,671
96,323
806,994
565,264
(410,019)
(410,019)
155,245
462,611
$617,856
Impound Fee
$
36,750
36,750
58,254
58,254
(21,504)
(21,504)
25,318
$3,814
Totals
$ 1,372,258
3,479,458
45,116
397,856
35,481
13,585
5,343,754
927,742
12,142
3,092,143
1,058,942
5,090,969
252,785
(410,019)
(410,019)
(157,234)
2,141,913
$1,984,679
Total revenues
Revenues:
Sales taxes
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Charges for services
Investment earnings
Other
Expenditures:
Current -
General government
Public safety
Highway and streets
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances (deficits), end of year
HURF
Budget
$
3,363,581
57,000
100,000
36,994
2,000
3,559,575
3,971,693
1,113,942
5,085,635
(1,526,060)
275,000
275,000
(1,251,060)
$(1,251,060)
Actual
$
3,479,458
45,116
31,054
13,585
3,569,213
3,092,143
867,254
3,959,397
(390,184)
(390,184)
1,350,903
$960,719
Variance -
Positive
(Negative)
$
115,877
(11,884)
(100,000)
(5,940)
11,585
9,638
879,550
246,688
1,126,238
1,135,876
(275,000)
(275,000)
860,876
1,350,903
$2,211,779
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, 2018
State Seizures and Forfeitures
Budget
$
128,062
128,062
250,659
150,513
401,172
(273,110)
(273,110)
$(273,110)
Actual
$
168,160
4,095
172,255
158,817
95,365
254,182
(81,927)
(81,927)
311,155
$229,228
Variance -
Positive
(Negative)
$
40,098
4,095
44,193
91,842
55,148
146,990
191,183
191,183
311,155
$502,338
Federal Seizures and Forfeitures
Budget
$
(146,938)
(146,938)
19,164
19,164
(166,102)
(166,102)
$(166,102)
Actual
$
192,946
332
193,278
12,142
12,142
181,136
181,136
(8,074)
$173,062
Variance -
Positive
(Negative)
$
339,884
332
340,216
7,022
7,022
347,238
347,238
(8,074)
$339,164
(Continued)
Total revenues
Revenues:
Sales taxes
Intergovernmental
Licenses, fees & permits
Fines, forfeitures & penalties
Charges for services
Investment earnings
Other
Expenditures:
Current -
General government
Public safety
Highway and streets
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances (deficits), beginning of year
Fund balances (deficits), end of year
Bed Tax
Budget
$ 1,126,955
8,011
1,134,966
942,677
127,769
1,070,446
64,520
(410,019)
(410,019)
(345,499)
$(345,499)
Actual
$ 1,372,258
1,372,258
710,671
96,323
806,994
565,264
(410,019)
(410,019)
155,245
462,611
$617,856
Variance -
Positive
(Negative)
$ 245,303
(8,011)
237,292
232,006
31,446
263,452
500,744
500,744
462,611
$963,355
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, 2018
Impound Fee
Budget
$
40,000
40,000
63,345
63,345
(23,345)
(23,345)
$(23,345)
Actual
$
36,750
36,750
58,254
58,254
(21,504)
(21,504)
25,318
$3,814
Variance -
Positive
(Negative)
$
(3,250)
(3,250)
5,091
5,091
1,841
1,841
25,318
$27,159
Totals
Budget
$ 1,126,955
3,363,581
57,000
21,124
100,000
45,005
2,000
4,715,665
1,256,681
19,164
3,971,693
1,392,224
6,639,762
(1,924,097)
275,000
(410,019)
(135,019)
(2,059,116)
$(2,059,116)
Actual
$ 1,372,258
3,479,458
45,116
397,856
35,481
13,585
5,343,754
927,742
12,142
3,092,143
1,058,942
5,090,969
252,785
(410,019)
(410,019)
(157,234)
2,141,913
$1,984,679
Variance -
Positive
(Negative)
$ 245,303
115,877
(11,884)
376,732
(100,000)
(9,524)
11,585
628,089
328,939
7,022
879,550
333,282
1,548,793
2,176,882
(275,000)
(275,000)
1,901,882
2,141,913
$4,043,795
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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,
and the Series 2017 Refunding Excise Tax Revenue Obligations.
Oracle Road Debt Service – to account for the special assessment collections and payment of the
outstanding Oracle Road bond issue.
ASSETS
Cash and cash equivalents
Special assessments
Total assets
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts payable
Total liabilities
Deferred inflows of resources:
Unavailable revenues - special assessments
Fund balances:
Restricted
Total fund balances
Total liabilities, deferred inflows of resources
and fund balances
Municipal Debt
Service
$ 89,735
$89,735
$1,000
1,000
88,735
88,735
$89,735
Oracle Road
Debt Service
$ 7,727
495,000
$502,727
$250
250
495,000
7,477
7,477
$502,727
Totals
$ 97,462
495,000
$592,462
$1,250
1,250
495,000
96,212
96,212
$592,462
TOWN OF ORO VALLEY, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR DEBT SERVICE FUNDS
JUNE 30, 2018
Revenues:
Special assessments
Intergovernmental
Investment earnings
Other
Total revenues
Expenditures:
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Municipal Debt
Service
$
45,119
4,296
100,670
150,085
544,290
290,170
834,460
(684,375)
683,783
683,783
(592)
89,327
$88,735
Oracle Road
Debt Service
$ 175,854
226
176,080
150,000
28,340
178,340
(2,260)
3,000
3,000
740
6,737
$7,477
Totals
$ 175,854
45,119
4,296
100,896
326,165
694,290
318,510
1,012,800
(686,635)
686,783
686,783
148
96,064
$96,212
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2018
Total revenues
Revenues:
Special assessments
Intergovernmental
Investment earnings
Other
Expenditures:
Debt service -
Principal retirement
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Municipal Debt Service
Budget
$
51,403
90,000
141,403
544,290
339,261
883,551
(742,148)
683,783
683,783
(58,365)
$(58,365)
Actual
$
45,119
4,296
100,670
150,085
544,290
290,170
834,460
(684,375)
683,783
683,783
(592)
89,327
$88,735
Variance -
Positive
(Negative)
$
(6,284)
4,296
10,670
8,682
49,091
49,091
57,773
57,773
89,327
$147,100
TOWN OF ORO VALLEY, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR DEBT SERVICE FUNDS
YEAR ENDED JUNE 30, 2018
Oracle Road Debt Service
Budget
$ 186,520
186,520
150,000
46,514
196,514
(9,994)
3,000
3,000
(6,994)
$(6,994)
Actual
$ 175,854
226
176,080
150,000
28,340
178,340
(2,260)
3,000
3,000
740
6,737
$7,477
Variance -
Positive
(Negative)
$ (10,666)
226
(10,440)
18,174
18,174
7,734
7,734
6,737
$14,471
Totals
Budget
$ 186,520
51,403
90,000
327,923
694,290
385,775
1,080,065
(752,142)
686,783
686,783
(65,359)
$(65,359)
Actual
$ 175,854
45,119
4,296
100,896
326,165
694,290
318,510
1,012,800
(686,635)
686,783
686,783
148
96,064
$96,212
Variance -
Positive
(Negative)
$ (10,666)
(6,284)
4,296
10,896
(1,758)
67,265
67,265
65,507
65,507
96,064
$161,571
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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.
Energy Efficiency Project – to account for bond proceeds to fund energy improvements at the
Oro Valley Community Center.
ASSETS
Cash and cash equivalents
Intergovernmental receivable
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Unearned revenue
Due to other funds
Total liabilities
Fund balances:
Restricted
Committed
Assigned
Total fund balances
Total liabilities and fund balances
Townwide
Roadway
Development
Impact Fees
$ 2,877,357
$2,877,357
$ 17,261
563,562
580,823
2,296,534
2,296,534
$2,877,357
General Impact
Fees
$ 929,624
$929,624
$
929,624
929,624
$929,624
Townwide
Facilities Projects
$ 15,718
$15,718
$
15,718
15,718
$15,718
TOWN OF ORO VALLEY, ARIZONA
COMBINING BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUNDS
JUNE 30, 2018
General
Government CIP
$ 2,269,018
$2,269,018
$ 59,400
59,400
2,209,618
2,209,618
$2,269,018
PAG/RTA
$
1,453,127
$1,453,127
$ 619,424
138,019
757,443
695,684
695,684
$1,453,127
Energy
Efficiency
Project
$86
$86
$
86
86
$86
Totals
$ 6,091,803
1,453,127
$7,544,930
$ 696,085
563,562
138,019
1,397,666
3,921,928
15,718
2,209,618
6,147,264
$7,544,930
Revenues:
Development impact fees
Intergovernmental
Contributions and donations
Investment earnings
Other
Total revenues
Expenditures:
Current -
Public safety
Capital outlay
Debt service -
Principal retirement
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances, end of year
Townwide
Roadway
Development
Impact Fees
$ 909,345
26,590
935,935
1,736,557
1,736,557
(800,622)
(800,622)
3,097,156
$2,296,534
General Impact
Fees
$ 437,057
8,175
445,232
445,232
(539,400)
(539,400)
(94,168)
1,023,792
$929,624
Townwide
Facilities Projects
$
15,718
$15,718
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2018
General
Government CIP
$
1,507,850
350,000
1,857,850
(1,857,850)
2,351,107
2,351,107
493,257
1,716,361
$2,209,618
PAG/RTA
$
4,368,890
133,928
71,496
4,574,314
168,043
4,595,349
4,763,392
(189,078)
(189,078)
884,762
$695,684
Energy
Efficiency
Project
$
568,251
568,251
(568,251)
(568,251)
568,337
$86
Totals
$ 1,346,402
4,368,890
133,928
34,765
71,496
5,955,481
168,043
8,408,007
350,000
8,926,050
(2,970,569)
2,351,107
(539,400)
1,811,707
(1,158,862)
7,306,126
$6,147,264
Total revenues
Revenues:
Development impact fees
Intergovernmental
Contributions and donations
Investment earnings
Other
Expenditures:
Current -
Public safety
Capital outlay
Debt service -
Principal retirement
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Townwide Roadway Development Impact Fees
Budget
$ 906,401
5,000
911,401
3,935,497
3,935,497
(3,024,096)
(3,024,096)
$(3,024,096)
Actual
$ 909,345
26,590
935,935
1,736,557
1,736,557
(800,622)
(800,622)
3,097,156
$2,296,534
Variance -
Positive
(Negative)
$ 2,944
21,590
24,534
2,198,940
2,198,940
2,223,474
2,223,474
3,097,156
$5,320,630
TOWN OF ORO VALLEY, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2018
General Impact Fees
Budget
$ 422,712
422,712
865,882
865,882
(443,170)
(539,400)
(539,400)
(982,570)
$(982,570)
Actual
$ 437,057
8,175
445,232
445,232
(539,400)
(539,400)
(94,168)
1,023,792
$929,624
Variance -
Positive
(Negative)
$ 14,345
8,175
22,520
865,882
865,882
888,402
888,402
1,023,792
$1,912,194
Townwide Facilities Projects
Budget
$
15,718
15,718
(15,718)
(15,718)
$(15,718)
Actual
$
15,718
$15,718
Variance -
Positive
(Negative)
$
15,718
15,718
15,718
15,718
15,718
$31,436
(Continued)
Total revenues
Revenues:
Development impact fees
Intergovernmental
Contributions and donations
Investment earnings
Other
Expenditures:
Current -
Public safety
Capital outlay
Debt service -
Principal retirement
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
General Government CIP
Budget
$
4,034,577
4,034,577
(4,034,577)
2,351,107
2,351,107
(1,683,470)
$(1,683,470)
Actual
$
1,507,850
350,000
1,857,850
(1,857,850)
2,351,107
2,351,107
493,257
1,716,361
$2,209,618
Variance -
Positive
(Negative)
$
2,526,727
(350,000)
2,176,727
2,176,727
2,176,727
1,716,361
$3,893,088
TOWN OF ORO VALLEY, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2018
PAG/RTA
Budget
$
7,899,982
22,500
7,922,482
8,518,687
8,518,687
(596,205)
(596,205)
$(596,205)
Actual
$
4,368,890
133,928
71,496
4,574,314
168,043
4,595,349
4,763,392
(189,078)
(189,078)
884,762
$695,684
Variance -
Positive
(Negative)
$
(3,531,092)
133,928
48,996
(3,348,168)
(168,043)
3,923,338
3,755,295
407,127
407,127
884,762
$1,291,889
Energy Efficiency Project
Budget
$
700,000
700,000
(700,000)
(700,000)
$(700,000)
Actual
$
568,251
568,251
(568,251)
(568,251)
568,337
$86
Variance -
Positive
(Negative)
$
131,749
131,749
131,749
131,749
568,337
$700,086
(Continued)
Total revenues
Revenues:
Development impact fees
Intergovernmental
Contributions and donations
Investment earnings
Other
Expenditures:
Current -
Public safety
Capital outlay
Debt service -
Principal retirement
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Changes in fund balances
Fund balances, beginning of year
Fund balances (deficits), end of year
Totals
Budget
$ 1,329,113
7,899,982
5,000
22,500
9,256,595
18,070,361
18,070,361
(8,813,766)
2,351,107
(539,400)
1,811,707
(7,002,059)
$(7,002,059)
Actual
$ 1,346,402
4,368,890
133,928
34,765
71,496
5,955,481
168,043
8,408,007
350,000
8,926,050
(2,970,569)
2,351,107
(539,400)
1,811,707
(1,158,862)
7,306,126
$6,147,264
Variance -
Positive
(Negative)
$ 17,289
(3,531,092)
133,928
29,765
48,996
(3,301,114)
(168,043)
9,662,354
(350,000)
9,144,311
5,843,197
5,843,197
7,306,126
$13,149,323
TOWN OF ORO VALLEY, ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30, 2018
INTERNAL SERVICE FUNDS
Self Insurance - to account for the financial activity associated with the Town’s self-insurance
program for employee health care.
Fleet Maintenance - to account for the Town’s fleet maintenance services.
ASSETS
Current assets:
Cash and cash equivalents
Total current assets
Noncurrent assets:
Net other postemployment benefit assets
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Pension and other postemployment benefit plan items
LIABILITIES
Current liabilities:
Accounts payable
Claims payable
Total current liabilities
Noncurrent liabilities:
Non-current portion of long-term obligations
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Pension and other postemployment benefit plan items
NET POSITION
Unrestricted
Total net position
Fleet
Maintenance
$1,287,316
1,287,316
360
360
1,287,676
15,347
78,045
78,045
104,328
104,328
182,373
6,541
1,114,109
$1,114,109
Self Insurance
$1,030,754
1,030,754
1,030,754
6,917
287,329
294,246
294,246
736,508
$736,508
Totals
$2,318,070
2,318,070
360
360
2,318,430
15,347
84,962
287,329
372,291
104,328
104,328
476,619
6,541
1,850,617
$1,850,617
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF NET POSITION -
ALL INTERNAL SERVICE FUNDS
JUNE 30, 2018
Operating revenues:
Charges for services
Other
Self insurance premiums
Total operating revenues
Operating expenses:
Costs of sales and services
Claims payments
Administrative
Reinsurance premiums
Total operating expenses
Operating income (loss)
Income (loss) before transfers
Transfers in
Changes in net position
Total net position, beginning of year
Total net position, end of year
Fleet
Maintenance
$ 1,235,167
82,429
1,317,596
1,283,097
1,283,097
34,499
34,499
300,000
334,499
779,610
$1,114,109
Self Insurance
$
3,592,298
3,592,298
1,985,456
99,949
657,028
2,742,433
849,865
849,865
849,865
(113,357)
$736,508
Totals
$ 1,235,167
82,429
3,592,298
4,909,894
1,283,097
1,985,456
99,949
657,028
4,025,530
884,364
884,364
300,000
1,184,364
666,253
$1,850,617
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION -
ALL INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2018
Fleet Maintenance Self Insurance Total
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers 1,317,596$ $1,317,596$
Cash received from premiums 3,592,298 3,592,298
Cash payments to suppliers for goods and services (1,188,190) (765,809) (1,953,999)
Cash payments to employees for services (94,461)(94,461)
Cash payments for claims (2,021,204) (2,021,204)
Net cash provided by (used for) operating activities 34,945 805,285 840,230
Cash flows from noncapital and related financing activities:
Interfund transfers 300,000 300,000
Net cash provided by (used for) noncapital financing activities 300,000 300,000
Net increase (decrease) in cash and cash equivalents 334,945 805,285 1,140,230
Cash and cash equivalents, beginning of year 952,371 225,469 1,177,840
Cash and cash equivalents, end of year 1,287,316$ 1,030,754$ 2,318,070$
Reconciliation of Operating Income (Loss) to
Net Cash Provided by (Used for) Operating Activities
Operating income (loss)34,499$ 849,865$ 884,364$
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:
Change in assets and liabilities:
Accounts payable 1,591 (8,832)(7,241)
Claims payable (35,748)(35,748)
Pension/OPEB items (1,145)(1,145)
Total adjustments 446 (44,580)(44,134)
Net cash provided by (used for) operating activities 34,945$ 805,285$ 840,230$
TOWN OF ORO VALLEY, ARIZONA
COMBINING STATEMENT OF CASH FLOWS
ALL INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2018
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.
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2014 2015 2016 2017 2018
Governmental activities
Net investment in capital assets 133,714,821$ 133,800,218$ 132,419,826$ 133,414,691$ 137,311,856$
Restricted 4,555,138 3,599,966 4,653,905 6,006,584 4,424,244
Unrestricted 18,430,146 (9,493,907) (10,883,206) (15,397,688) (11,583,669)
Total governmental activities net position 156,700,105$ 127,906,277$ 126,190,525$ 124,023,587$ 130,152,431$
Business-type activities
Net investment in capital assets 52,775,561$ 54,858,448$ 61,261,271$ 66,755,370$ 69,036,006$
Restricted
Unrestricted 21,541,202 20,092,694 19,504,748 18,721,247 21,397,377
Total business-type activities net position 74,316,763$ 74,951,142$ 80,766,019$ 85,476,617$ 90,433,383$
Primary government
Net investment in capital assets 186,490,382$ 188,658,666$ 193,681,097$ 200,170,061$ 206,347,862$
Restricted 4,555,138 3,599,966 4,653,905 6,006,584 4,424,244
Unrestricted 39,971,348 10,598,787 8,621,542 3,323,559 9,813,708
Total primary government net position 231,016,868$ 202,857,419$ 206,956,544$ 209,500,204$ 220,585,814$
Governmental activities 2009 2010 2011 2012 2013
Net investment in capital assets
Restricted
Unrestricted 120,515,962$ 127,712,057$ 132,956,156$ 135,336,862$ 134,512,094$
7,537,331 9,580,610 9,048,505 11,454,390 3,730,312
Total governmental activities net position 26,135,593 15,979,093 10,588,160 10,808,596 18,901,112
Business-type activities 154,188,886$ 153,271,760$ 152,592,821$ 157,599,848$ 157,143,518$
Net investment in capital assets
Restricted
Unrestricted 28,212,750$ 31,383,715$ 40,005,568$ 45,669,488$ 48,802,267$
Total business-type activities net position 24,393,984 24,404,427 20,371,225 19,067,780 19,501,676
Primary government 52,606,734$ 55,788,142$ 60,376,793$ 64,737,268$ 68,303,943$
Net investment in capital assets
Restricted
Unrestricted 148,728,712$ 159,095,772$ 172,961,724$ 181,006,350$ 183,314,361$
7,537,331 9,580,610 9,048,505 11,454,390 3,730,312
Total primary government net position 50,529,577 40,383,520 30,959,385 29,876,376 38,402,788
206,795,620$ 209,059,902$ 212,969,614$ 222,337,116$ 225,447,461$
Source: Town of Oro Valley Finance Department
TOWN OF ORO VALLEY, ARIZONA
NET POSITION BY COMPONENT
LAST TEN FISCAL YEARS
(ACCRUAL BASIS OF ACCOUNTING)
(UNAUDITED)
2009201020112012201320142015201620172018ExpensesGovernmental activities:General government9,936,639$ 9,950,053$ 9,887,523$ 9,961,376$ 9,861,131$ 10,990,007$ 11,533,702$ 11,888,794$ 12,130,905$ 12,639,867$ Public Safety15,019,980 13,730,593 12,509,201 12,349,948 12,770,224 13,814,914 16,587,168 16,123,500 22,251,172 17,683,197 Highways and streets9,481,040 9,353,689 8,895,987 9,339,062 9,255,004 8,754,110 9,400,140 9,089,318 9,417,459 7,505,589 Transit1,275,093 1,404,646 1,432,910 1,533,258 1,505,341 Culture and recreation3,806,555 3,527,949 3,375,281 3,227,895 2,783,633 3,399,623 4,572,490 9,695,639 10,204,276 10,111,731 Interest on long-term debt954,645 1,767,155 430,570 654,262 522,917 656,260 439,027 494,732 511,502 350,404 Total governmental activities/expenses39,198,859 38,329,439 35,098,562 35,532,543 35,192,909 38,890,007 43,937,173 48,724,893 56,048,572 49,796,129 Business-type activities:Water13,495,124 12,830,137 12,527,851 11,984,829 13,047,373 13,572,677 13,608,931 14,406,074 14,753,418 15,568,288 Stormwater drainage494,166 486,994 586,006 636,966 983,975 749,038 854,510 917,898 1,115,494 1,190,898 Total business-type activities expenses13,989,290 13,317,131 13,113,857 12,621,795 14,031,348 14,321,715 14,463,441 15,323,972 15,868,912 16,759,186 Total primary government expenses53,188,149$ 51,646,570$ 48,212,419$ 48,154,338$ 49,224,257$ 53,211,722$ 58,400,614$ 64,048,865$ 71,917,484$ 66,555,315$ Program RevenuesGovernmental activities:Fees, Fines and Charges for Services:General government2,835,884$ 2,261,815$ 2,455,182$ 3,079,526$ 3,740,046$ 3,978,117$ 3,516,359$ 4,096,927$ 4,901,504$ 5,084,396$ Public Safety83,279 28,785 33,976 33,109 45,346 35,976 29,097 168,808 138,075 128,651 Highways and streets119,847 137,436 400,977 329,420 1,052,581 546,066 496,098 764,397 1,052,167 1,039,542 Transit71,078 72,783 88,684 100,052 119,536 Culture and recreation110,857 119,273 126,290 82,832 169,965 435,354 1,108,734 4,373,693 4,611,576 5,096,804 Operating grants and contributions5,392,667 4,728,050 4,887,283 5,247,844 5,318,097 4,706,844 5,070,396 5,503,530 4,664,197 4,949,928 Capital grants and contributions1,781,571 6,514,602 8,980,239 7,107,063 2,920,335 2,919,641 2,456,727 3,602,656 6,749,407 5,529,831 Total governmental activities program revenues 10,324,105 13,789,961 16,883,947 15,879,794 13,246,370 12,693,076 12,750,194 18,598,695 22,216,978 21,948,688 Business-type activities:Charges for services:Water 16,098,086 15,136,784 15,119,065 15,817,345 16,732,600 19,286,794 16,088,681 16,739,580 18,158,385 19,455,685 Stormwater Utility746,655 927,238 888,391 752,212 813,400 759,428 771,594 828,258 1,314,787 1,386,278 Operating grants and contributions35,000 Capital grants and contributions3,697,229 362,273 1,655,307 245,607 48,871 179,675 1,979,037 3,334,372 1,097,285 870,920 Total business-type activities program revenues 20,541,970 16,426,295 17,662,763 16,815,164 17,594,871 20,225,897 18,839,312 20,937,210 20,570,457 21,712,883 Total primary government program revenues30,866,075$ 30,216,256$ 34,546,710$ 32,694,958$ 30,841,241$ 32,918,973$ 31,589,506$ 39,535,905$ 42,787,435$ 43,661,571$ (ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)TOWN OF ORO VALLEY, ARIZONACHANGES IN NET POSITIONLAST TEN FISCAL YEARS
2009201020112012201320142015201620172018Net (Expense)/RevenuesGovernmental activities(28,874,754)$ (24,539,478)$ (18,214,615)$ (19,652,749)$ (21,946,539)$ (26,196,931)$ (31,186,979)$ (30,126,198)$ (33,831,594)$ (27,847,441)$ Business-type activities6,552,680 3,109,164 4,548,906 4,193,369 3,563,523 5,904,182 4,375,871 5,613,238 4,701,545 4,953,697 Total primary government net expenses(22,322,074)$ (21,430,314)$ (13,665,709)$ (15,459,380)$ (18,383,016)$ (20,292,749)$ (26,811,108)$ (24,512,960)$ (29,130,049)$ (22,893,744)$ General Revenues and Other Changes in Net PositionGovernmental activities:Taxes:Sales taxes15,376,408$ 12,970,865$ 11,572,148$ 12,799,678$ 14,241,065$ 15,286,001$ 16,132,159$ 16,998,464$ 19,767,720$ 21,664,398$ Franchise taxes506,685 509,285 514,814 525,427 539,477 571,731 582,064 621,546 647,830 656,664 Impact fees*441,020 584,113 Unrestricted state revenue sharing5,886,132 5,086,953 4,520,935 3,461,359 9,048,365 9,636,906 10,413,464 10,549,196 11,177,729 11,577,834 Unrestricted state sales tax revenue sharing3,134,789 2,891,386 2,569,666 3,204,612 Unrestricted auto lieu tax revenue sharing1,655,875 1,484,125 1,318,989 1,479,094 Investment earnings (loss)113,995 95,625 39,124 189,606 265,787 255,702 216,175 238,210 68,435 74,542 Special item - Capital asset conveyance(2,606,804) Transfers2,319 3,178 3,119 3,030 2,942 2,847 Total governmental activities27,114,904 23,622,352 20,535,676 21,659,776 21,490,209 25,753,518 27,346,981 28,410,446 31,664,656 33,976,285 Business-type activities:Investment earnings (loss)128,083 72,244 39,745 167,106 5,471 111,816 124,887 204,669 11,995 5,916 Transfers(2,319) (3,178) (3,119) (3,030) (2,942) (2,847) Total business-type activities128,083 72,244 39,745 167,106 3,152 108,638 121,768 201,639 9,053 3,069 Total primary government27,242,987$ 23,694,596$ 20,575,421$ 21,826,882$ 21,493,361$ 25,862,156$ 27,468,749$ 28,612,085$ 31,673,709$ 33,979,354$ Change in Net PositionGovernmental activities(1,759,850)$ (917,126)$ 2,321,061$ 2,007,027$ (456,330)$ (443,413)$ (3,839,998)$ (1,715,752)$ (2,166,938)$ 6,128,844$ Business-type activities6,680,763 3,181,408 4,588,651 4,360,475 3,566,675 6,012,820 4,497,639 5,814,877 4,710,598 4,956,766 Total primary government4,920,913$ 2,264,282$ 6,909,712$ 6,367,502$ 3,110,345$ 5,569,407$ 657,641$ 4,099,125$ 2,543,660$ 11,085,610$ Source: Town of Oro Valley Finance Department* Impact fees in fiscal year 2011 are now presented in program revenues.
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2009201020112012201320142015201620172018General FundNonspendable$$$$$$ 31,278$ 97,269$ 130,030$ 141,676$ RestrictedCommittedAssigned1,769,333 1,608,035 1,608,035 1,608,035 1,553,999 1,441,862 1,441,862 1,441,862 Unassigned9,237,805 9,793,614 11,529,070 9,925,988 8,566,598 8,985,422 11,831,322 14,384,104 ReservedUnreserved15,940,438 11,904,429 Total general fund15,940,438$ 11,904,429$ 11,007,138$ 11,401,649$ 13,137,105$ 11,534,023$ 10,151,875$ 10,524,553$ 13,403,214$ 15,967,642$ All Other Governmental FundsNonspendable$$$$$$149,348$ 127,600$ 132,538$ 130,202$ Restricted9,128,505 11,454,390 3,730,312 4,555,138 3,599,966 4,031,923 6,006,584 4,424,244 Committed 840,704 622,919 4,166,818 5,343,506 4,637,773 2,617,856 1,829,232 1,594,293 Assigned1,500,000 1,421,593 1,340,991 1,716,361 2,209,618 Unassigned(29,198) (237,769) (201,765) ReservedUnreserved, reported in:Special revenue funds5,887,082 5,868,523 Capital projects funds9,071,398 3,933,044 Debt service funds158,816 1,929,635 Total all other governmental funds15,117,296$ 11,731,202$ 9,969,209$ 12,077,309$ 7,897,130$ 11,398,644$ 9,808,680$ 8,089,172$ 9,446,946$ 8,156,592$ Source: Town of Oro Valley Finance DepartmentNote:(MODIFIED ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)The provisions of the Governmental Accounting Standards Board (GASB) Statement No. 54 were adopted in fiscal year 2011. The standard replaces the previous reserved and unreserved fundbalance categories with the following five fund balance classifications; nonspendable, restricted, committed, assigned, and unassigned fund balance.Fiscal YearTOWN OF ORO VALLEY, ARIZONAFUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS
2009201020112012201320142015201620172018RevenuesTaxes 15,883,093$ 13,480,150$ 12,086,962$ 13,325,105$ 14,780,542$ 15,857,732$ 16,714,223$ 17,620,010$ 20,415,550$ 22,321,062$ Intergovernmental17,616,213 17,940,749 18,040,619 19,723,086 16,817,756 16,732,631 17,714,991 19,488,066 22,118,633 21,634,143 Fines and forfeitures413,720 612,031 560,941 895,820 551,962 673,336 221,571 283,470 558,692 529,687 Licenses and permits1,507,930 1,108,411 1,059,309 1,185,862 1,813,947 2,116,700 1,605,937 1,915,992 2,388,951 2,679,690 Charges for services1,066,376 965,455 926,135 1,209,814 1,630,238 1,850,181 2,991,826 5,956,058 6,226,578 6,599,847 Contributions and donations1,000 59 15,000 995 27,229 149,513 150,000 133,928 Special assessments367,539 368,152 365,811 366,028 365,935 1,462,307 178,078 189,525 175,539 175,854 Impact fees441,020 584,113 481,619 417,742 988,342 569,338 439,637 795,471 1,348,528 1,346,402 Investment earnings113,995 95,625 39,124 189,606 265,787 255,702 216,175 238,210 68,435 74,542 Other revenues233,123 216,030 297,109 460,512 349,326 305,489 141,618 504,796 572,886 576,970 Total revenues37,644,009$ 35,370,775$ 33,872,629$ 37,774,570$ 37,591,064$ 39,823,416$ 40,224,056$ 47,141,111$ 54,023,792$ 56,072,125$ ExpendituresGeneral government9,586,029$ 9,452,778$ 9,848,393$ 9,212,866$ 9,289,771$ 10,610,673$ 10,862,553$ 11,426,687$ 11,098,844$ 11,998,586$ Public safety14,289,423 12,979,291 11,928,567 11,993,864 12,342,349 13,539,322 15,071,396 15,494,532 15,725,029 16,731,963 Highways and streets3,848,725 3,475,556 3,288,349 3,191,654 3,513,479 3,710,577 2,602,321 2,754,413 2,993,402 3,092,143 Transit1,404,646 1,432,910 1,528,654 1,536,294 Culture and recreation3,416,305 3,157,369 3,031,520 2,954,549 2,468,129 2,445,131 4,078,817 9,097,752 9,433,339 9,399,598 Capital Outlay11,332,914 3,189,765 7,014,659 6,929,834 11,053,739 5,495,185 8,093,704 7,995,340 9,196,801 10,081,427 Debt ServicePrincipal retirement938,900 3,400,877 3,459,970 3,052,953 571,910 1,867,901 649,840 897,637 1,075,466 1,304,226 Interest and fiscal charges1,034,061 831,580 470,578 554,274 498,729 472,268 436,010 336,510 314,914 356,661 Payment to bond escrow agent6,279,112 Bond Issuance costs26,550 75,800 104,533 67,959 Total expenditures44,446,357$ 42,792,878$ 39,042,036$ 37,965,794$ 39,738,106$ 38,141,057$ 43,199,287$ 49,540,314$ 51,434,408$ 54,500,898$ Excess of revenues(6,802,348)$ (7,422,103)$ (5,169,407)$ (191,224)$ (2,147,042)$ 1,682,359$ (2,975,231)$ (2,399,203)$ 2,589,384$ 1,571,227$ over (under) expendituresOther Financing Sources (Uses)Premium on bonds issued$$$113,835$ $$$$$$Proceeds from capital lease agreements212,895 1,043,214 Issuance of long-term loan payablePayment to bond escrow agent(2,523,121) (1,171,447) Issuance of long-term debt2,445,000 2,580,000 2,529,250 3,115,556 Transfers in1,950,898 10,012,679 860,143 1,003,666 1,704,272 4,115,152 4,326,627 1,872,026 2,953,072 3,342,890 Transfers out(1,950,898) (10,012,679) (795,020) (1,003,666) (2,001,953) (4,111,974) (4,323,508) (1,868,996) (3,250,130) (3,640,043) Total other financing sources (uses) $ $ 2,510,123$ 2,693,835$ (297,681)$ 216,073$ 3,119$ 1,052,373$ 1,647,051$ (297,153)$ Net change in fund balances(6,802,348)$ (7,422,103)$ (2,659,284)$ 2,502,611$ (2,444,723)$ 1,898,432$ (2,972,112)$ (1,346,830)$ 4,236,435$ 1,274,074$ Debt service as a percentage of5.88%10.60%12.36%11.55%3.76%7.30%3.17%3.00%3.32%3.66%noncapital expendituresSource: Town of Oro Valley Finance DepartmentLAST TEN FISCAL YEARS(MODIFIED ACCRUAL BASIS OF ACCOUNTING)(UNAUDITED)Fiscal YearTOWN OF ORO VALLEY, ARIZONACHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
20182009PercentagePercentageof Total Townof Total TownEmployerEmployees Rank Employment Employees Rank EmploymentRoche Tissue Diagnostics 1,306 1 7.26%Oro Valley Hospital 571 2 3.17% 560 4 3.65%Amphitheater Public Schools 535 3 2.97% 577 3 3.76%Town of Oro Valley 311 4 1.73% 416 5 2.71%Hilton El Conquistador Golf & Tennis Resort 235 5 1.31% 600 2 3.91%Casa de la luz Hospice 215 6 1.19%Splendido at Rancho Vistoso 156 7 0.87%Securaplane 164 8 0.91%Simpleview 184 9 1.02%Walmart Supercenter 119 10 0.66%Ventana Medical Systems0.00% 680 1 4.43%Fry's Food & Drug Store220 6 1.43%Home Depot150 7 0.98%Target135 8 0.88%Long Realty125 9 0.81%Stone Canyon Golf/Golf Club at Vistoso80 10 0.52%Total3,796 21.09%3,543 23.08%Source: Town of Oro Valley Department of Economic DevelopmentTOWN OF ORO VALLEY, ARIZONAPRINCIPAL EMPLOYERS(UNAUDITED)CURRENT FISCAL YEAR AND FISCAL YEAR NINE YEARS PRIOR
Fiscal Year 2018Fiscal Year 2009Percentage ofPercentage ofSales TaxTotal SalesSales TaxTotal SalesTaxpayerBusiness TypePaymentsRankTax PaymentsPaymentsRankTax PaymentsTaxpayer AUtility2,042,793$ 19.43%759,413$ 25.00%Taxpayer B Construction1,560,619 27.20%Taxpayer C Accomodation1,412,874 36.52%1,236,482 18.14%Taxpayer D Retail Trade1,122,708 45.18%517,200 6Taxpayer E Retail Trade926,250 54.28%543,183 53.57%Taxpayer F Construction680,029 63.14%Taxpayer G Government600,551 72.77%422,108 82.78%Taxpayer H Retail Trade479,569 82.21%Taxpayer I Retail Trade476,370 92.20%488,700 73.22%Taxpayer J Construction436,341 102.01%0.00%Taxpayer K Construction696,401 34.58%Taxpayer L Construction672,816 44.43%Taxpayer M Construction358,422 92.36%Taxpayer N Construction324,965 102.14%Total9,738,104$ 44.95%6,019,690$ 36.20%Source: Arizona Department of RevenueTOWN OF ORO VALLEY, ARIZONAPRINCIPAL SALES TAXPAYERSCURRENT FISCAL YEAR AND FISCAL YEAR NINE YEARS PRIOR(UNAUDITED)
2009 2010 2011 2012 2013 2014 2015 2016 20172018Construction5,143$ 2,110$ 1,707$ 1,738$ 2,842$ 3,338$ 3,199$ 2,131$ 4,295$ 4,653$ Manufacturing230 230 266 258 258 257 141 156 137 140 Transportation, Warehousing, Communications & Utilities1,632 1,554 1,534 2,450 2,785 2,959 3,068 3,133 3,171 3,384 Wholesale Trade54 75 93 106 110 103 125 131 136 154 Retail Trade4,264 4,544 4,720 4,925 5,153 5,243 5,808 6,844 7,086 7,733 Restaurants, Bars & Lodging2,333 2,283 2,314 2,314 2,164 2,761 2,803 3,295 3,473 3,907 Finance, Insurance & Real Estate324 381 324 333 335 75 270 443 562 646 Services322 378 417 456 456 529 599 672 702 840 All Other 896 627 102 103 75 60 115 190 202 206 Cable Franchise507 509 515 525 540 572 582 622 648 657 Total15,705$ 12,691$ 11,992$ 13,208$ 14,718$ 15,897$ 16,710$ 17,617$ 20,412$ 22,321$ Town sales tax rate*2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50% 2.50% 2.50%Source: Arizona Department of Revenue*Note:1% Additional Bed Tax Effective May 1, 19903% Additional Bed Tax Effective September 1, 20014% Construction Sales Tax Effective May 1, 20046% Additional Bed Tax Effective January 1, 20062% Utility Sales Tax Effective April 1, 20072% Additional Utility Sales Tax Effective August 1, 2011.5% Additional sales tax effective March 1, 2015Fiscal YearTOWN OF ORO VALLEY, ARIZONATAXABLE SALES BY CATEGORYLAST TEN FISCAL YEARS (UNAUDITED)($000's)
Town of Oro
Town of Oro Town of Oro Valley Town of Oro
Fiscal Valley Valley Construction Valley
Year Sales Tax Bed Tax Sales Tax Utility Sales Tax Pima County
2009 2.00% 6.00% 4.00% 2.00% 6.10%
2010 2.00% 6.00% 4.00% 2.00% 7.10%
2011 2.00% 6.00% 4.00% 2.00% 7.10%
2012 2.00% 6.00% 4.00% 4.00% 7.10%
2013 2.00% 6.00% 4.00% 4.00% 6.10%
2014 2.00% 6.00% 4.00% 4.00% 6.10%
2015* 2.50% 6.00% 4.00% 4.00% 6.10%
2016 2.50% 6.00% 4.00% 4.00% 6.10%
2017 2.50% 6.00% 4.00% 4.00% 6.10%
2018 2.50% 6.00% 4.00% 4.00% 6.10%
*.5% Additional sales tax effective March 1, 2015
Source: Arizona Department of Revenue
TOWN OF ORO VALLEY, ARIZONA
DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
Year
Limited Assessed
Valuation
Full Cash
Assesed
Valuation
Estimated Full
Cash Value
Total
Outstanding
General
Obligation Bond
Debt
2009 582,236,657$ 686,707,506$ 6,141,419,229$ 0
2010 642,601,840 693,924,598 6,140,054,657 0
2011 649,015,575 672,309,638 6,041,904,306 0
2012 618,976,953 629,340,548 5,716,229,517 0
2013 589,160,533 592,761,968 5,461,131,133 0
2014 553,366,744 556,259,856 5,175,406,955 0
2015 556,566,167 560,863,509 5,252,917,489 0
2016 572,696,599 593,299,222 5,616,655,680 0
2017 593,580,247 616,216,705 5,688,443,027 0
2018 612,684,205 633,479,221 6,058,189,523 0
Source: State of Arizona Department of Revenue Abstract of the Assessment Roll
Note:
TOWN OF ORO VALLEY, ARIZONA
LIMITED & FULL CASH ASSESSED PROPERTY VALUES
LAST TEN FISCAL YEARS
(UNAUDITED)
Beginning in FY 2016, due to Proposition 117, the primary (limited assessed valuation) is to be used by
municipalities when levying for maintenance and operation and for debt retirement. Prior to that date, the
secondary (full cash) assessed valuation was used when levying for debt retirement, voter-approved
budget overrides, and maintenance and operation of special service districts.
FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalYearYearYearYearYearYearYearYearYearYearRevenue Source2011201220132014201520162017201820192020Town Sales and Franchise Taxes 12,086,962$ 13,325,106$ 14,780,543$ 15,857,732$ 16,714,223$ 17,620,010$ 20,415,550$ 22,321,148$ 21,821,976$ 21,975,685$ Licenses and Permits1,059,309 1,185,862 1,813,947 2,116,700 1,605,937 1,915,992 2,313,504 2,679,690 2,184,796 2,429,095 Fines195,933 200,672 180,875 172,232 148,050 159,154 131,637 131,393 120,000 135,000 State-Shared Sales Tax3,024,857 3,204,612 3,356,826 3,569,711 3,747,944 3,887,673 3,989,179 4,210,168 4,345,225 4,497,308 State-Shared Income Tax3,834,911 3,461,359 4,189,186 4,571,196 4,964,635 4,937,719 5,329,864 5,422,693 5,374,593 5,640,597 Total20,201,972$ 21,377,611$ 24,321,377$ 26,287,571$ 27,180,789$ 28,520,548$ 32,179,734$ 34,765,092$ 33,846,591$ 34,677,685$ (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 DepartmentNote: The above information is provided for bond requirements only and the bond does not require ten years of data.TOWN OF ORO VALLEY, ARIZONAHISTORICAL AND PROJECTED EXCISE TAX COLLECTIONSJUNE 30, 2018(UNAUDITED)ProjectedAcutal
Business-Type ActivitiesSpecial Total PercentageFiscal Capital Note Loan Excise Tax Assessment Revenue Capital Loan Primaryof Personal PerYear Leases Payable Payable Bonds Bonds Bonds Leases Payable Government Income Capita2009$ $ 8,000,000$ 11,449,146$ 3,360,000$ 57,575,854$ 107,046$ 5,788,122$ 86,280,168$ 4.72% 1,975 20105,513,133 4,939,750 3,145,000 52,305,500 123,883 6,305,650 72,332,916 3.86% 1,662 20112,513,133 7,149,780 2,920,000 49,803,970 35,392 5,473,096 67,895,371 3.73% 1,656 20129,485,968 2,685,000 45,988,331 5,893,122 64,052,421 3.85% 1,550 20139,155,743 2,435,000 43,349,121 185,307 5,575,041 60,700,212 3.59% 1,409 2014168,994 8,703,428 1,055,000 40,811,243 93,593 6,371,529 57,203,787 3.41% 1,366 2015128,594 1,000,000 8,215,673 925,000 37,683,805 118,862 8,169,765 56,241,699 3.25% 1,331 2016966,962 700,000 7,716,638 780,000 34,517,647 80,423 8,879,907 53,641,577 2.95% 1,231 2017716,622 350,000 9,341,559 640,000 30,804,327 40,814 8,284,407 50,177,729 2.69% 1,146 2018458,744 8,788,954 490,000 28,079,939 7,690,874 45,508,511 2.35% 1,022 Source: Town of Oro Valley Finance Department and U.S. Census BureauTOWN OF ORO VALLEY, ARIZONARATIO OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS (UNAUDITED)Governmental Activities
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Pima County 288,182,000$ 7.44% 21,454,639$
Pima County Community College District 1,328,821 7.44%98,928
Amphitheater Unified School District No. 10 82,070,000 41.08% 33,714,733
Total Overlapping 55,268,301
Town of Oro Valley 9,737,698 100% 9,737,698
Total Direct 9,737,698
Total direct and overlapping debt 65,005,999$
Source: Pima County, Pima County Community College District and Amphitheater Unified School District No. 10.
(1) Proportion applicable to the Town of Oro Valley, Arizona, is computed on the ratio of secondary
assessed valuation for 2017-18.
TOWN OF ORO VALLEY, ARIZONA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
JUNE 30, 2018
(UNAUDITED)
2009201020112012201320142015201620172018Debt Limit178,543,952$ 180,420,396$ 174,800,436$ 163,628,543$ 154,118,112$ 144,627,563$ 145,824,512$ 154,257,798$ 160,216,343$ 164,704,598$ Total net debt applicable to limitLegal debt margin178,543,952$ 180,420,396$ 174,800,436$ 163,628,543$ 154,118,112$ 144,627,563$ 145,824,512$ 154,257,798$ 160,216,343$ 164,704,598$ Total net debt applicable to the limitas a percentage of debt limit0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%Source: Town of Oro Valley Finance DepartmentFiscal YearTOWN OF ORO VALLEY, ARIZONALEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARS(UNAUDITED)
Net secondary assessed valuation 633,479,221$
Water, Sewer, Light, Parks, Open Space and
Recreational Facility Bonds
Debt limit - 20% of secondary net assessed valuation 126,695,844$
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 126,695,844$
All other general obligation bonds
Debt Limit - 6% of secondary net assessed valuation 38,008,753$
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 38,008,753$
Total legal debt margin 164,704,598$
Source: Pima County Assessor's Office
TOWN OF ORO VALLEY
CALCULATION OF LEGAL DEBT MARGIN
JUNE 30, 2018
(UNAUDITED)
Water Utility Revenue Bonds
Fiscal Gross
Year Revenues Principal Interest Total Coverage
2009 16,223,544$ 2,011,100$ 2,784,444$ 4,795,544$ 3.38
2010 15,207,113 5,270,354 2,689,427 7,959,781 1.91
2011 15,359,681 2,501,530 2,505,960 5,007,490 3.07
2012 15,983,999 2,370,180 2,190,894 4,561,074 3.50
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
Governmental Revenue Bonds
Fiscal Gross
Year Revenues Principal Interest Total Coverage
2009 28,084,482$ 733,900$ 486,372$ 1,220,272$ 23.01
2010 25,695,598 6,510,516 933,536 7,444,052 3.45
2011 23,921,715 234,970 253,984 488,954 48.92
2012 25,085,767 304,820 314,703 619,523 40.49
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
Special Assessment
Fiscal Gross
Year Revenues Principal Interest Total Coverage
2009 367,539$ 205,000$ 248,429$ 453,429$ 0.81
2010 368,152 215,000 152,203 367,203 1.00
2011 365,811 225,000 147,548 372,548 0.98
2012 366,028 235,000 132,423 367,423 1.00
2013 365,935 250,000 117,576 367,576 1.00
2014 1,462,307 1,380,000 80,020 1,460,020 1.00
2015 178,078 130,000 45,917 175,917 1.01
2016 189,525 145,000 58,189 203,189 0.93
2017 175,539 140,000 33,203 173,203 1.01
2018 175,854 150,000 26,290 176,290 1.00
Source: Town of Oro Valley Finance Department
Debt Service
TOWN OF ORO VALLEY, ARIZONA
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
Debt Service
Debt Service
2009201020112012201320142015201620172018Revenues:Water revenues11,424,787$ 12,071,031$ 12,038,482$ 11,578,981$ 11,585,181$ 12,169,375$ 11,280,269$ 12,018,429$ 12,493,557$ 13,586,667$ Water connection fees1,588,084 293,607 244,376 462,762 706,159 1,413,047 591,045 544,852 816,353 816,045 Alternative water connection fees812,740 475,973 400,988 759,958 1,253,055 2,376,682 1,172,170 1,094,460 1,638,792 1,638,175 Groundwater preservation fees1,632,549 1,769,142 2,096,093 2,315,277 2,527,524 2,599,718 2,330,231 2,371,100 2,440,045 2,611,075 Other revenues639,926 527,031 541,299 557,222 660,681 727,972 714,965 710,740 769,638 803,723 Interest income125,458 70,329 38,445 166,654 110,615 124,593 203,857 11,020 Total revenues16,223,544 15,207,113 15,359,683 15,840,854 16,732,600 19,397,409 16,213,273 16,943,438 18,169,405 19,455,685 Expenses:Personnel2,447,642 2,514,595 2,418,118 2,497,865 2,537,150 2,659,895 2,767,143 2,952,249 3,021,915 3,155,109 Operations & maintenance5,415,423 4,505,751 3,721,167 3,559,807 4,564,894 4,303,230 4,530,436 5,059,998 4,719,579 3,838,409 CAP water costs185,490 154,575 903,855 636,519 1,093,105 1,499,594 1,570,793 1,952,117 2,892,392 3,523,052 Total expenses8,048,555 7,174,921 7,043,140 6,694,191 8,195,149 8,462,719 8,868,372 9,964,364 10,633,886 10,516,570 Net water system revenues8,174,989 8,032,192 8,316,544 9,146,662 8,537,452 10,934,690 7,344,901 6,979,074 7,535,519 8,939,114 Water supported debt service:2007 WIFA Loan308,406 369,627 316,983 316,875 316,763 311,494 311,377 311,256 311,130 311,000 2009 WIFA Loan161,554 182,268 186,817 150,471 149,367 149,322 149,275 149,226 2014 WIFA Loan296,972 361,059 395,534 377,158 2003 Revenue Bonds2,544,423 2,544,973 2,545,935 2,545,435 980,000 2003 Refunding Revenue Bonds648,674 647,374 1,152,546 1,238,996 1,243,058 2005 Excise Tax Bonds151,946 152,672 151,744 152,099 151,245 152,565 152,516 2007 Excise Tax Bonds1,136,077 1,516,494 791,099 791,203 791,111 790,822 1,255,948 1,197,678 1,245,403 2012 Refunding Bonds956,975 1,968,281 1,971,082 1,995,481 1,980,781 1,963,731 2013 Refunding Bonds1,513,427 1,046,558 1,022,420 1,033,428 1,024,073 2015 Refunding Revenue Obligations17,116 25,101 150,259 2017 Refunding Revenue Obligations235,873 Total water supported debt service4,789,526$ 5,231,140$ 5,119,860$ 5,226,876$ 4,625,969$ 4,887,060$ 5,183,820$ 5,054,333$ 5,140,652$ 3,975,446$ Debt service coverage1.711.541.621.751.852.241.421.381.472.25Source: Oro Valley Finance DepartmentTOWN OF ORO VALLEY, ARIZONAWATER SYSTEM REVENUES, EXPENSES, DEBT SERVICE AND COVERAGELAST TEN FISCAL YEARS(UNAUDITED)Fiscal Year
Personal Per
Income Capita
(thousands Personal Unemployment
Year Population of dollars)Income Rate
2009 43,694 1,828,222,176$ 41,841$ 5.1%
2010 43,521 1,875,613,105 43,097 6.2%
2011 41,011 1,820,460,164 44,390 6.0%
2012 41,335 1,661,839,665 40,204 6.4%
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%
Source: US Census Bureau, Arizona Employment statistics and Pima Association of Governments
TOWN OF ORO VALLEY, ARIZONA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
(UNAUDITED)
2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Function/Program
Administration
Town Clerk 4.69 4.54 4.56 4.56 4.90 4.54 4.44 4.60 4.00 4.60
Town Manager 7.38 7.38 7.38 8.00 7.00 7.00 7.10 7.10 8.10 8.50
Human Resources 3.48 3.48 3.50 3.50 2.00 5.00 5.00 5.00 4.00 4.00
Economic Development 3.00 3.00 3.00 2.00 2.00 3.00 1.00 1.00 1.40 1.40
Finance 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 9.00
Information Systems 8.00 7.00 7.00 7.00 7.30 6.50 6.50 8.00 8.00 7.00
Legal 6.00 6.00 6.00 6.00 6.00 6.00 8.00 8.00 7.00 10.00
Community Development
Building Safety 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13.00 16.00
Community Development Admin.0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Planning & Zoning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13.00 16.00
Development & Infrastructure Services 26.88 103.63 83.76 81.45 78.84 77.22 73.38 73.10 0.00 0.00
Parks and Recreation 60.78 48.02 49.36 36.20 37.61 27.26 20.62 22.70 27.50 27.60
Cultural Resources 0.00 0.00 0.20 0.00 0.00 1.35 1.30 1.30 0.00 0.00
Library 0.00 0.00 0.00 0.00 0.00 0.00 18.55 18.40 18.50 18.70
Police
Civilians 30.25 31.25 30.25 30.25 25.93 30.25 30.25 29.70 30.70 33.00
Officers 104.88 101.88 102.88 102.88 101.91 101.44 97.96 95.00 97.90 102.40
Magistrate Court 8.00 8.00 8.00 8.00 8.70 8.00 8.00 9.00 9.00 9.00
Public Works 65.79 0.00 0.00 0.00 0.00 0.00 0.00 0.00 47.70 52.90
Water Utility 39.48 39.48 38.48 37.48 37.00 36.00 36.00 34.00 35.00 36.30
Total 375.61 370.66 351.37 334.32 326.19 320.56 325.10 323.90 331.80 356.40
Source: Town of Oro Valley Finance Department
TOWN OF ORO VALLEY, ARIZONA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION
LAST TEN FISCAL YEARS
(UNAUDITED)
Full-time Equivalent Employees as of June 30
FiscalIrrigationConstructionTurfYear Residential Commercial Irrigation Reclaimed Construction Reclaimed TurfReclaimedTotal20097,573,960$ 749,019$ 1,093,852$ 9,007$ 349,994$ 3,757$ 265,413$ 1,389,783$ 11,434,785$ 20108,040,762 902,432 1,152,529 14,240 222,447 720 354,308 1,383,592 12,071,030 20118,043,658 921,825 1,166,921 13,258 92,257 814 130,704 1,669,045 12,038,482 20127,761,639 954,472 1,050,602 13,466 120,830 653 115,568 1,561,750 11,578,980 20137,752,934 962,824 1,040,793 19,000 196,354 884 135,720 1,507,574 11,616,083 20147,881,436 886,712 1,169,067 187,622 283,632 816 121,108 1,638,981 12,169,374 20157,649,136 779,877 981,545 214,848 271,815 115,955 1,267,093 11,280,269 20168,103,644 778,915 1,129,741 50,479 310,609 114,427 1,530,107 12,017,922 20178,416,714 814,041 1,170,946 51,373 224,532 8,733 104,880 1,702,338 12,493,557 20188,990,121 860,124 1,371,555 61,504 520,324 13,735 103,126 1,666,178 13,586,667 Source: Town of Oro Valley Water Utility DepartmentWATER UTILITY REVENUES BY USER TYPELAST TEN FISCAL YEARS(UNAUDITED)TOWN OF ORO VALLEY, ARIZONA
2009201020112012201320142015201620172018Function/ProgramPoliceBurglaries125 120 100 134 105 75 77 85 71 77Citations (traffic)9,256 6,736 5,2445,084 5,456 4,668 4,486 3,890 3,446 2,992Investigations917 732 746 711 681 765 832 824 818 915Total Arrests2,478 2,176 1,932 1,716 1,564 1,679 1,7211,598 1,458 1,786Thefts528 567 656 571 563 561 500 586 493 567Development & Infrastructure ServicesStreet resurfacing (miles)53.4 14.813.9 22.4 30.5 73.4 101.0 92.0 89.0 44.0Parks and RecreationRecreation Programs Held Annually46 40 47 37 35 30 38 52 55 73Months of Public Pool Operations10 12 12 12 10 12 12 12 12 12Parks Maintenance Man-Hours Worked 16,28816,120 18,680 16,016 17,000 20,000 16,255 15,083 15,463 17,842LibraryCollection volume95,750 100,142 100,652 97,364000000WaterNew connections196 68 61 97 213 165 202 176 340 331Total connections18,373 18,441 18,502 18,599 18,812 18,977 19,17919,355 19,588 19,924TransitTotal route miles163,964 138,752 138,333200,058 353,936 439,512 392,071 529,170 568,657 468,346Passengers17,101 15,573 14,873 20,119 32,442 39,196 39,102 45,202 51,131 49,474Source: Town of Oro Valley Finance DepartmentNote: Oro Valley Library was transferred to Pima County Library District on January 1, 2013.TOWN OF ORO VALLEY, ARIZONAOPERATING INDICATORS BY FUNCTIONLAST TEN FISCAL YEARS(UNAUDITED)
Reclaimed
Water
Base Rate Tier 1 Tier 2 Tier 3 Tier 4 GPF Base Rate
Year monthly per 1,000 per 1,000 per 1,000 per 1,000 per 1,000 monthly
2009 13.91$ 2.18$ 2.95$ 3.95$ 5.25$ 0.55$ 13.91$
2010 14.19 2.20 2.99 4.03 5.38 0.75 14.19
2011 14.19 2.20 2.99 4.03 5.38 0.75 14.19
2012 14.19 2.20 2.99 4.03 5.38 0.95 14.19
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
Source: Town of Oro Valley Water Utility
Note: The rate for all reclaimed water is $2.27 per 1,000 gallons.
Potable Water
TOWN OF ORO VALLEY, ARIZONA
WATER RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
2009201020112012201320142015201620172018Function/ProgramPoliceStations1111111111Substations2333333333Patrol units109 108 53 67 66 64 74 77 72 78Other fleet0 0 55 42 43 42 45 44 67 65Development & Infrastructure ServicesStreets (miles)220.1 214.0 203.8 203.8 205.1 421.0 421.0 421.0 421.0 421.0Streetlights93939393959595959595Traffic signals16 18 16 17 19 19 19 19 19 22Parks and recreationAcreage300 374 374 436 436 457 448 448 448 449Playgrounds2222222222Baseball/softball diamonds7777777777Community centers 0000001111Golf course holes 00000045454545Tennis courts11111132323232Swimming pools1112224444WaterWells22 18 22 22 22 18 20 20 20 19Storage capacity (MG)19 19 20 20 20 13 12 12 12 10Booster capacity27 26 25 25 25 26 27 27 27 46TransitTransit vans9955597447Transit mini buses0 0 5 10 12 17 19 22 22 21Source: Town of Oro Valley Finance DepartmentTOWN OF ORO VALLEY, ARIZONACAPITAL ASSETS STATISTICS BY FUNCTIONLAST TEN FISCAL YEARS(UNAUDITED)
Page 1
January 28, 2019
Honorable Mayor and Members of the Town Council
Town of Oro Valley, Arizona
We have audited the financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of Town of Oro Valley, Arizona for
the year ended June 30, 2018. Professional standards require that we provide you with information
about our responsibilities under generally accepted auditing standards and Government Auditing
Standards, as well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our engagement letter provided to you during the planning phase
of the audit. Professional standards also require that we communicate to you the following matters
related to our audit.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by Town of Oro Valley, Arizona are described in Note 1 to the financial
statements. No matters have come to our attention that would require us, under professional standards,
to inform you about the methods used to account for significant unusual transactions and the effect of
significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
As described in Note 1 of the financial statements, the Town implemented the provisions of the
Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial
Reporting for Postemployment Benefits Other Than Pensions, for the year ended June 30, 2018. GASB
Statement No. 75 requires governments providing defined benefit postemployment benefits other than
pensions to recognize the long-term obligation for those benefits as a liability, and to more
comprehensively and comparably measure the annual costs of those benefits. This Statement also
enhances accountability and transparency through revised note disclosures and new required
supplementary information.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from management’s current judgments.
The most sensitive estimates affecting the financial statements are:
Management’s estimate of the useful lives of depreciable capital assets is based on the length
of time management estimates those assets will provide some economic benefit in the future.
Management’s estimate of the accrued compensated absences is based on leave rates and Town
policies regarding payment of unused vested leave.
Management’s estimate of the allowance for uncollectible receivable balances is based on past
experience and future expectation for collection of various account balances.
Page 2
Management’s estimate of the insurance claims incurred but not reported is based on
information provided by the entity’s third party administrators and subsequent claims activity.
The assumptions used in the actuarial valuations of the pension and other postemployment
benefits plans are based on historical trends and industry standards.
We evaluated the key factors and assumptions used to develop these estimates and determined that
they are reasonable in relation to the basic financial statements taken as a whole and in relation to the
applicable opinion units.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Audit Adjustments
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that we believe are trivial, and communicate them to the appropriate level
of management. During the course of the audit we identified audit adjustments for developer
contributed infrastructure and impact fees credits that were brought to the attention of, and corrected
by management. None of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken as
a whole.
In addition, as part of the professional services we provided to the Town we assisted with the
preparation of the financial statements and notes to financial statements. In providing this service we
prepared adjusting journal entries necessary to convert the accounting records to the basis of
accounting required by generally accepted accounting principles. Those adjusting journal entries have
been provided to management who reviewed and approved those entries and accepted responsibility
for them.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during
the course of our audit.
Management Representations
We have requested certain written representations from management, which are included in the
management representation letter provided to us at the conclusion of the audit.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation
involves application of an accounting principle to the Town of Oro Valley, Arizona’s financial
statements or a determination of the type of auditor’s opinion that may be expressed on those
statements, our professional standards require the consulting accountant to check with us to determine
that the consultant has all the relevant facts. To our knowledge, there were no such consultations with
other accountants regarding auditing and accounting matters.
Page 3
Discussions with Management
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management throughout the course of the year. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition
to our retention as the Town’s auditors.
Compliance with Ethics Requirements Regarding Independence
The engagement team, others in our firm, and as appropriate, our firm, have complied with all relevant
ethical requirements regarding independence. Heinfeld, Meech & Co., P.C. continually assesses client
relationships to comply with relevant ethical requirements, including independence, integrity, and
objectivity, and policies and procedures related to the acceptance and continuance of client
relationships and specific engagements. Our firm follows the “Independence Rule” of the AICPA Code
of Professional Conduct and the rules of state boards of accountancy and applicable regulatory
agencies. It is the policy of the firm that all employees be familiar with and adhere to the independence,
integrity, and objectivity rules, regulations, interpretations, and rulings of the AICPA, U.S.
Government Accountability Office (GAO), and applicable state boards of accountancy.
Responsibility for Fraud
It is important for both management and the members of the governing body to recognize their role in
preventing, deterring, and detecting fraud. One common misconception is that the auditors are
responsible for detecting fraud. Auditors are required to plan and perform an audit to obtain reasonable
assurance that the financial statements do not include material misstatements caused by fraud.
Unfortunately most frauds which occur in an organization do not meet this threshold.
The attached document prepared by the Association of Certified Fraud Examiners (ACFE) is provided
as a courtesy to test the effectiveness of the fraud prevention measures of your organization. Some of
these steps may already be in place, others may not. Not even the most well-designed internal controls
or procedures can prevent and detect all forms of fraud. However, an awareness of fraud related
factors, as well as the active involvement by management and the members of the governing body in
setting the proper “tone at the top”, increases the likelihood that fraud will be prevented, deterred and
detected.
Additional Reports Issued
In addition to the auditor’s report on the financial statements we will also issue the following
documents related to this audit. These reports are typically issued within 30 days of the date of this
letter.
Report on internal control over financial reporting and on compliance in accordance with
Government Auditing Standards
Examination report on the Annual Expenditure Limitation Report
Other Important Communications Related to the Audit
Attached to this letter are a copy of the signed engagement letter provided to us at the initiation of the
audit, and a copy of the management representation letter provided to us at the conclusion of the audit.
If there are any questions on the purpose or content of these letters please contact the engagement
partner identified in the attached engagement letter.
Page 4
Restriction on Use
This information is intended solely for the use of the members of the Town Council and management
of Town of Oro Valley, Arizona and is not intended to be, and should not be, used by anyone other
than these specified parties.
Very truly yours,
Heinfeld, Meech & Co., P.C.
Tucson, Arizona
Fraud Prevention Checklist
The most cost-effective way to limit fraud losses is to prevent fraud from occurring. This checklist is
designed to help organizations test the effectiveness of their fraud prevention measures.
1. Is ongoing anti-fraud training provided to all employees of the organization?
Do employees understand what constitutes fraud?
Have the costs of fraud to the company and everyone in it — including lost profits, adverse
publicity, job loss and decreased morale and productivity — been made clear to employees?
Do employees know where to seek advice when faced with uncertain ethical decisions, and
do they believe that they can speak freely?
Has a policy of zero-tolerance for fraud been communicated to employees through words and
actions?
2. Is an effective fraud reporting mechanism in place?
Have employees been taught how to communicate concerns about known or potential
wrongdoing?
Is there an anonymous reporting channel available to employees, such as a third-party
hotline?
Do employees trust that they can report suspicious activity anonymously and/or
confidentially and without fear of reprisal?
Has it been made clear to employees that reports of suspicious activity will be promptly and
thoroughly evaluated?
Do reporting policies and mechanisms extend to vendors, customers and other outside
parties?
3. To increase employees’ perception of detection, are the following proactive measures taken
and publicized to employees?
Is possible fraudulent conduct aggressively sought out, rather than dealt with passively?
Does the organization send the message that it actively seeks out fraudulent conduct through
fraud assessment questioning by auditors?
Are surprise fraud audits performed in addition to regularly scheduled audits?
Is continuous auditing software used to detect fraud and, if so, has the use of such software
been made known throughout the organization?
4. Is the management climate/tone at the top one of honesty and integrity?
Are employees surveyed to determine the extent to which they believe management acts with
honesty and integrity?
Are performance goals realistic?
Have fraud prevention goals been incorporated into the performance measures against which
managers are evaluated and which are used to determine performance-related compensation?
Has the organization established, implemented and tested a process for oversight of fraud
risks by the board of directors or others charged with governance (e.g., the audit committee)?
5. Are fraud risk assessments performed to proactively identify and mitigate the company’s
vulnerabilities to internal and external fraud?
6. Are strong anti-fraud controls in place and operating effectively, including the following?
Proper separation of duties
Use of authorizations
Physical safeguards
Job rotations
Mandatory vacations
7. Does the internal audit department, if one exists, have adequate resources and authority to
operate effectively and without undue influence from senior management?
8. Does the hiring policy include the following (where permitted by law)?
Past employment verification
Criminal and civil background checks
Credit checks
Drug screening
Education verification
References check
9. Are employee support programs in place to assist employees struggling with addictions,
mental/ emotional health, family or financial problems?
10. Is an open-door policy in place that allows employees to speak freely about pressures,
providing management the opportunity to alleviate such pressures before they become
acute?
11. Are anonymous surveys conducted to assess employee morale?
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor’s Report
Honorable Mayor and Members of the Town Council
Town of Oro Valley, Arizona
We have audited, in accordance with the 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, the financial statements of the
governmental activities, the business-type activities, each major fund, and the aggregate remaining
fund information of Town of Oro Valley, Arizona, as of and for the year ended June 30, 2018, and
the related notes to the financial statements, which collectively comprise Town of Oro Valley,
Arizona’s basic financial statements, and have issued our report thereon dated January 8, 2019.
Our report included an emphasis of matter paragraph as to comparability because of the
implementation of Governmental Accounting Standards Board Statement No. 75.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Town of Oro
Valley, Arizona’s internal control over financial reporting (internal control) to determine the audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
Town of Oro Valley, Arizona’s internal control. Accordingly, we do not express an opinion on
the effectiveness of Town of Oro Valley, Arizona’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or
combination of deficiencies, in internal control such that there is a reasonable possibility that a
material misstatement of the entity’s financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant
deficiencies may exist that were not identified. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses. We
did identify a certain deficiency in internal control, described in the accompanying schedule of
findings and responses as item FS-2018-001 that we consider to be a significant deficiency.
Page 1
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Town of Oro Valley, Arizona’s financial
statements are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Town of Oro Valley, Arizona’s Response to Finding
Town of Oro Valley, Arizona’s response to the finding identified in our audit is described in the
accompanying schedule of findings and responses. Town of Oro Valley, Arizona’s response was
not subjected to the auditing procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Heinfeld, Meech & Co., P.C.
Tucson, Arizona
January 8, 2019
Page 2
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF FINDINGS AND RESPONSES
YEAR ENDED JUNE 30, 2018
FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Finding Number: FS-2018-001
Repeat Finding: No
Type of Finding: Significant Deficiency
Description: Communication of Financial Information
CRITERIA
The Town is responsible for establishing procedures to ensure that all financial transactions are
communicated to the Finance Department and captured in the Town's financial records.
CONDITION
The Town’s current procedures were not adequate to ensure that transactions which occurred
outside of the Finance Department were reported to the appropriate individuals for recording in
the Town’s general ledger. This led to the following errors:
Street infrastructure contributed to the Town was not captured in capital asset records.
Impact fee credits issued to developers were not recorded in the Town’s general ledger.
A cash contribution received was incorrectly recorded as deposits payable.
CAUSE
When the Town updated its development impact fees and Town ordinance in 2014 to comply with
State law changes, formal written internal procedures were not developed to establish the
necessary forms and processes for administering and accounting for impact fee credit agreements.
The primary source of documentation was held in email communications and internal
spreadsheets.
EFFECT
Without sufficient procedures to ensure all financial transactions are recorded there is risk the
Town’s financial statements will be misstated.
CONTEXT
The Town received $2.5 million in street infrastructure in the current year which was not added to
the Town’s capital asset records. Additionally, $630,830 in impact fee credits were issued in
exchange for the contributed infrastructure. Of these credits, $199,000 were drawn on and used by
developers during the fiscal year. The Town did not record transactions related to the impact fee
credits, resulting in a misstated general ledger. Also, a cash contribution of $133,000 was
incorrectly recorded as a deposit payable.
RECOMMENDATION
The Town should implement procedures to ensure that all transactions and pertinent financial
information is being communicated to the Finance Department and captured in the Town’s
financial records.
Page 3
TOWN OF ORO VALLEY, ARIZONA
SCHEDULE OF FINDINGS AND RESPONSES
YEAR ENDED JUNE 30, 2018
FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Finding Number: FS-2018-001
VIEWS OF RESPONSIBLE OFFICIALS
Officials from the Community and Economic Development Department, Public Works
Department, Legal Department, and Finance Department are developing the formal written
procedures and forms necessary to properly account for impact fee credit agreements. These
procedures will be completed by February 15, 2019, and will be followed by training with all key
staff involved in collecting, approving, managing and accounting for impact fees and impact fee
credit agreements. It is important to note that while the Town did not have formal written
procedures in place, all information related to the value of infrastructure constructed and impact
fee credits was readily available and able to be entered into the Town’s financial records through
journal entry posting.
Page 4
Town Council Regular Session A.
Meeting Date:02/06/2019
Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office
Department:Town Clerk's Office
Information
SUBJECT:
Minutes - January 16 and January 23, 2019
RECOMMENDATION:
Staff recommends approval.
EXECUTIVE SUMMARY:
N/A
BACKGROUND OR DETAILED INFORMATION:
N/A
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
I MOVE to approve, (approve, with the following changes) the January 16 and January 23, 2019.
Attachments
1-16-19 Draft Minutes
1-23-19 Draft Minutes
1/16/19 Minutes, Town Council Study Session 1
MINUTES
ORO VALLEY TOWN COUNCIL
STUDY SESSION
January 16, 2019
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CANADA DRIVE
STUDY SESSION AT OR AFTER 6:00 PM
CALL TO ORDER
Mayor Winfield called the meeting to order at 6:01 p.m.
ROLL CALL
PRESENT: Joseph C. Winfield, Mayor
Melanie Barrett, Vice Mayor
Joyce Jones-Ivey, Councilmember
Josh Nicolson, Councilmember
Rhonda Piña, Councilmember
Bill Rodman, Councilmember
Steve Solomon, Councilmember
STUDY SESSION AGENDA
1. DISCUSSION REGARDING THE POTENTIAL ANNEXATION OF 888 ACRES
OF STATE LAND LOCATED BETWEEN MOORE ROAD TO THE NORTH,
CAMINO DEL NORTE TO THE SOUTH, THORNYDALE ROAD TO THE WEST
AND SHANNON ROAD TO THE EAST
Mayor Winfield gave a brief overview regarding the potential annexation of 888 acres of
state land and discussed the expected etiquette for the study session.
Town Manager Mary Jacobs provided the format for the study session and introduced
the staff that would be presenting information regarding item #1.
Assistant Town Manager Chris Cornelison opened the presentation regarding the
potential annexation of 888 acres of state land and outlined the following:
- Purpose
- Geographic Location Map
- Annexation / Rezoning
- Town of Oro Valley Annexation History
- Why Annex?
1/16/19 Minutes, Town Council Study Session 2
Principle Planner Michael Spaeth continued the presenta tion and outlined the following:
- Your Voice, Our Future General Plan
- Specific Plan
- Design Approach
- Key Map - Development Units 1-4
- Key Map - Development Unit 5
- Key Map - Development Unit 6
- Key Map - Development Unit 7
- Key Map - Development Unit 8
- Key Map - Development Unit 9-11
- Zoning Bank
- Rancho Vistoso Land Use Summary Table
- Environmentally Sensitive Lands (ESL)
- Significant Individual Plants
- Buffer yards
- Roads & Streets
- Drainage
- Water Utility
- Parks and Recreation
- Public Participation
- Focus Areas 1-4
- Core Issues Remaining
- Next Steps
There were questions and discussion amongst Council and staff regarding the potential
annexation of 888 acres of state land.
Mr. Cornelison continued the presentation and outlined the following;
- Summary and Discussion
Discussion continued amongst Council and staff regarding the potential annexation of
888 acres of state land.
Mayor Winfield recessed the meeting at 8:24 p.m.
Mayor Winfield reconvened the meeting at 8:34 p.m.
Discussion resumed amongst Council and staff regarding the potential annexation of
888 acres of state land.
Mr. Cornelison concluded the study session by listing the following issues and concerns
addressed by Council regarding the potential annexation of state land:
1/16/19 Minutes, Town Council Study Session 3
- Concerns for retail viability
- Discuss road network concerns around the property to ensure that capacity and road
design issues were addressed
- Address the importance of having a tech p ark area or preserving it as a hard zoning
- Address the desire for a park system to include the potential for a town, regional or
larger HOA park
- Clarifying the net acreage versus the gross acreage
- Address concern that future rezoning's would not potentially receive current
entitlements
- Desire for a variety of lot sizes to include effective transitions, intensities and land
uses
- Complete community
- Zo ning bank concerns regarding development 9
- Consider amount of Neighborhood meetings held after resubmittal
- Interest to maintain Oro Valley standards and design principals
- Drainage concerns regarding the residents to the south
- Good buffers and/or appropriate transitional lot sizes
- Consider Neighborhood meetings followed by an open house
ADJOURNMENT
Mayor Winfield adjourned the meeting at 9:33 p.m.
Prepared by:
_________________________
Michelle Stine, MMC
Deputy Town Clerk
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of
the study session of the Town of Oro Valley Council of Oro Valley, Arizona held on the
16th day of January 2019. I further certify that the meeting was duly called and held and
that a quorum was present.
Dated this ____ day of __________________, 2019.
_________________________
Michael Standish, CMC
Town Clerk
1/23/19 Minutes, Town Council Regular Session 1
MINUTES
ORO VALLEY TOWN COUNCIL
REGULAR SESSION
January 23, 2019
ORO VALLEY COUNCIL CHAMBERS
11000 N. LA CANADA DRIVE
REGULAR SESSION AT OR AFTER 6:00 PM
CALL TO ORDER
Mayor Winfield called the meeting to order at 6:01 p.m.
ROLL CALL
PRESENT: Joseph C. Winfield, Mayor
Melanie Barrett, Vice -Mayor
Joyce Jones-Ivey, Councilmember
Josh Nicolson, Councilmember
Rhonda Piña, Councilmember
Bill Rodman, Councilmember
Steve Solomon, Councilmember
PLEDGE OF ALLEGIANCE
Mayor Winfield led the audience in the Pledge of Allegiance.
UPCOMING MEETING ANNOUNCEMENTS
Town Clerk Mike Standish announced the upcoming meetings.
TOWN MANAGER’S REPORT
Town Manager Mary Jacobs updated the Council on the number of registered
participants for FlashVote surveys. Ms. Jacobs also reminded citizens that the Budget
and Finance Commission will be accepting applications until 5 p.m. on January 31st.
COUNCIL REPORTS
No reports were received.
ORDER OF BUSINESS
1/23/19 Minutes, Town Council Regular Session 2
Mayor Winfield reviewed the order of business and stated that the order would stand as
posted.
INFORMATIONAL ITEMS
There were no informational items.
CALL TO AUDIENCE
Greg Durnan representative of Acacia Info rmation Technologies gave an update
regarding upcoming events for the Oro Valley Chamber of Commerce.
PRESENTATIONS
1. Presentation by the Oro Valley Chapter of Citizens’ Climate Lobby
Jane Conlin and Ed Beshore, representing the Oro Valley Chapter of Citizens' Climate
Lobby, provided an overview of the chapters’ grassroots advocacy and their response to
climate change.
2. Fiscal Year 2018/2019 Financial Update Through November 2018
Chief Financial Officer Stacey Lemos presented the FY 2018/2019 Financial Update
through November 2018 and included the following:
- General Fund
- General Fund Highlights
- Highway Fund
- Highway Fund Highlights
- Community Center Fund
- Community Center Fund Highlights
Discussion ensued amongst Council and staff regarding FY 2018/2019 Financial
Update through November 2018.
CONSENT AGENDA
Mayor Winfield requested that item (B) be removed from the Consent Agenda for
discussion.
A. Minutes - January 9, 2019
C. Appointment of Judge Pro Tempore for the Oro Valley Magistrate Court
1/23/19 Minutes, Town Council Regular Session 3
D. Request for approval of a Final Plat for Phase 2 of the Villages at Silverhawke
residential subdivision, located near the southeast corner of Tangerine Road and
N. 1st Avenue
MOTION: A motion was made by Councilmember Solomon and seconded by
Councilmember Rodman to approve Consent Agenda items (A), (C) and (D).
MOTION carried, 7-0.
B. (Re)appointments to various boards and commissions: Historic Preservation
Commission (HPC), Parks and Recreation Advisory Board (PRAB), Planning and
Zoning Commission (PZC), Stormwater Utility Commission (SWUC) and Water
Utility Commission (WUC)
MOTION: A motion was made by Vice Mayor Barrett and seconded by Co uncilmember
Nicolson to appoint "Skeet" Sharolyn Posey to the Planning and Zoning Commission for
a partial term expiring December 31, 2019 and appoint Harold Bergsma, Celeste
Gambill and Ellen Hong for terms expiring December 31, 2020.
Discussion ensued amongst Council and staff regarding item B.
AMENDMENT TO THE MOTION: Vice Mayor Barrett MOVED to AMEND the motion to
approve the appointments of “Skeet” Sharolyn Posey, Harold Bergsma, Celeste Gambill
and Ellen Hong to the Planning and Zoning Commission a nd all the other recommended
(re)appointments listed in the Council Communication. Councilmember Nicolson
Seconded the amended motion.
AMENDED MOTION: A motion was made by Vice Mayor Barrett and seconded by
Councilmember Nicolson to approve the appointments of “Skeet” Sharolyn Posey,
Harold Bergsma, Celeste Gambill and Ellen Hong to the Planning and Zoning
Commission and all the other recommended (re)appointments listed in the Council
Communication. Councilmember Nicolson Seconded the amended mo tion.
AMENDED MOTION carried, 4-3 with Councilmember Piña, Councilmember Rodman,
and Councilmember Solomon opposed.
REGULAR AGENDA
1. AMENDMENTS TO THE ANIMAL CONTROL CODE
A. RESOLUTION NO. (R)19 -02, DECLARING THE ORO VALLEY TOWN CODE,
CHAPTER 18, ARTICLE 18 -8, EXCESSIVE NOISE CAUSED BY ANIMALS OR
BIRDS; VIOLATIONS; PENALTIES, AND SECTION 18 -8-3, EXCESSIVE NOISE
- IMPOUNDMENT ORDER TO SHOW CAUSE, A PUBLIC RECORD
B. ORDINANCE NO. (O)19-02, AMENDING THE ORO VALLEY TOWN CODE,
1/23/19 Minutes, Town Council Regular Session 4
CHAPTER 18, ARTICLE 18 -8, EXCESSIVE NOISE CAUSED BY ANIMALS OR
BIRDS; VIOLATIONS; PENALTIES, AND ADDING SECTION 18 -8-3,
EXCESSIVE NOISE - IMPOUNDMENT ORDER TO SHOW CAUSE
MOTION: A motion was made by Mayor Winfield and seconded by Councilmember
Rodman to table agenda item #1 until appropriate changes have been made to the
proposed Animal Control Resolution and Ordinance.
MOTION carried, 7-0.
FUTURE AGENDA ITEMS
No future agenda items were requested.
CALL TO AUDIENCE
No comments were received.
EXECUTIVE SESSION - Pursuant to ARS 38-431.03(A)(1) Personnel matters
- Police Chief Daniel G. Sharp’s annual performance review
MOTION: A motion was made by Councilmember Solomon and seconded by
Councilmember Piña to go into Executive Session at 7:10 p.m. pursuant to ARS 38-
431.03(A)(1) Personnel matters - Police Chief Daniel G. Sharp's annual performance
review.
MOTION carried, 7-0.
Mayor Winfield said the following staff members would join Council in Executive
Session: Police Chief Daniel Sharp and Town Clerk Mike Standish.
RESUME REGULAR SESSION
Mayor Winfield reconvened the regular session at 7:48 p.m.
ADJOURNMENT
MOTION: A motion was made by Councilmember Rodman and seconded by
Councilmember Piña to adjourn the meeting at 7:49 p.m.
MOTION carried, 7-0.
__________________________
Michelle Stine, MMC
1/23/19 Minutes, Town Council Regular Session 5
Deputy Town Clerk
I hereby certify that the foregoing minutes are a true and correct copy of the minutes of
the regular session of the Town of Oro Valley Council of Oro Valley, Arizona held on the
23rd day of January, 2019. I further certify that the meeting was duly called and held
and that a quorum was present.
Dated this _____ day of ____________________, 2019 .
___________________________
Michael Standish, CMC
Town Clerk
Town Council Regular Session B.
Meeting Date:02/06/2019
Requested by: Kara Riley Submitted By:Catherine Hendrix, Police Department
Department:Police Department
Information
SUBJECT:
Resolution No. (R)19-03, authorizing and approving an Intergovernmental Agreement between the Town of Oro
Valley and Pima County for the installation and maintenance of Emergency Vehicle Preemption (EVP) equipment at
signalized intersections and the installation of related EVP equipment on emergency response vehicles
RECOMMENDATION:
Staff recommends approval.
EXECUTIVE SUMMARY:
The Town of Oro Valley desires to enter into an intergovernmental agreement with Pima County for the installation
and maintenance of emergency vehicle preemption (EVP) equipment at signalized intersections and the installation
of related EVP equipment on emergency response vehicles.
The installation of EVP equipment on County maintained traffic signals and related EVP activation equipment on
certain Oro Valley emergency response vehicles will allow for safer and more efficient emergency responses.
BACKGROUND OR DETAILED INFORMATION:
The Town of Oro Valley previously had an intergovernmental agreement with Golder Ranch Fire District. With the
growth of Oro Valley, the need for emergency vehicle preemption needs to be extended for additional intersections.
FISCAL IMPACT:
The intergovernmental agreement will not be a fiscal impact. The devices for the EVP are currently installed in the
emergency light bar. The Pima County maintained traffic signals have the EVP activation equipment already
installed. This intergovernmental agreement is simply a formality to update the programming software needed to
allow activation by Oro Valley emergency response vehicles.
SUGGESTED MOTION:
I MOVE to APPROVE/DENY Resolution No. (R)19-03, approving the IGA between the Town of Oro Valley and
Pima County for the installation and maintenance of Emergency Vehicle Preemption Equipment at signalized
intersections and the installation of related EVP equipment on emergency response vehicles.
Attachments
(R)19-03 EVP Resolution IGA
EVP IGA TOV/Pima County
RESOLUTION NO. (R)19-03
A RESOLUTION OF THE MAYOR AND COUNCIL OF THE
TOWN OF ORO VALLEY, ARIZONA, AUTHORIZING AND
APPROVING AN INTERGOVERNMENTAL AGREEMENT
BETWEEN THE TOWN OF ORO VALLEY AND PIMA COUNTY
FOR THE INSTALLATION AND MAINTENANCE OF
EMERGENCY VEHICLE PREEMPTION (EVP) EQUIPMENT AT
SIGNALIZED INTERSECTIONS AND THE INSTALLATION OF
RELATED EVP EQUIPMENT ON EMERGENCY RESPONSE
VEHICLES; AND DIRECTING THE TOWN MANAGER, TOWN
CLER K, TOWN LEGAL SERVICES DIRECTOR , OR THEIR DULY
AUTHORIZED OFFICERS AND AGENTS, TO TAKE ALL STEPS
NECESSARY TO CARRY OUT THE PURPOSES AND INTENT OF
THIS RESOLUTION
WHEREAS, the Town of Oro Valley pursuant to Arizona Revised Statutes A.R.S. §11-
952 is authorized to enter into or renew agreements for joint and cooperative action with
other public agencies; and
WHEREAS, the Town of Oro Valley is authorized to establish and maintain the Oro
Valley Police Department, pursuant to A.R.S. §9-240 (B)(12); and
WHEREAS, the Town of Oro Valley desires to enter into an intergovernmental agreement
with Pima County for the installation and maintenance of emergency vehicle preemption
(EVP) equipment at signalized intersections and the installation of related EVP equipment
on emergency response vehicles; and
WHEREAS, the installation of EVP equipment on County maintained traffic signals and
related EVP activation equipment on certain Oro Valley emergency response vehicles will
allow for safer and more efficient emergency respons es; and
WHEREAS, it is in the best interest of the Town to enter into the IGA, attached hereto
as Exhibit “A” and incorporated herein by this reference for the installation and
maintenance of emergency vehicle preemption (EVP) equipment at signalized
intersections and the installation of related EVP equipment on emergency response
vehicles.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of
Oro Valley, Arizona, that:
SECTION 1. That the Intergovernmental Agreement between the Town of Oro Valley
and Pima County, for the installation and maintenance of emergency vehicle preemption
(EVP) equipment at signalized intersections and the installation of related EVP
equipment on emergency response vehicles ; attached hereto as Exhibit “A” is hereby
authorized and approved.
SECTION 2. That the Town Manager, Town Clerk, Town Legal Services Director, or
their duly authorized officers and agents are hereby authorized and directed to take all steps
necessary to carry out the purposes and intent of this resolution.
PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley,
Arizona, this 6th day of February, 2019.
TOWN OF ORO VALLEY
Joseph C. Winfield, Mayor
ATTEST: APPROVED AS TO FORM :
Michael Standish, Town Clerk Tobin Sidles, Legal Services Director
Date: Date:
EXHIBIT “A”
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INTERGOVERNMENTAL AGREEMENT
between
PIMA COUNTY
and
ORO VALLEY
This Intergovernmental Agreement is entered into by and between Pima County, a body
politic and corporate of the State of Arizona (hereinafter “County”), and The Town of Oro
Valley, Pima County, Arizona hereinafter (“Oro Valley”) a municipal corporation of the State of
Arizona pursuant to Arizona Revised Statutes (A.R.S.) § 11-951, et seq.
RECITALS
A. County and Oro Valley have statutory authority to enter into intergovernmental
agreements for joint and cooperative action pursuant to A.R.S. §11 -952; and
B. County has the authority under A.R.S. § 11-251(4) to layout, maintain, control and
manage public roads within the County; and
C. The parties acknowledge that the installation of emergency vehicle preemption (EVP )
equipment at signalized intersections, and related EVP activation equipment on
emergency response vehicles, has been shown to have the potentia l to improve
emergency vehicle response times and expediency through signalized intersections under
certain circumstances; and
D. County and Oro Valley have determined that the installation of EVP equipment on
County maintained traffics signals and related EVP activation equipment on certain Oro
Valley vehicles will allow safer and more efficient emergency responses and have
entered into this Agreement to facilitate the installation, operation and maintenance of
said equipment in the interest of public safety.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties agree as follows:
AGREEMENT
1. Purpose: The purpose of this Agreement is to provide for the installation, operation and
maintenance of EVP equipment o n specified and applicable County maintained traffic
signals and related EVP activation equipment on Oro Valley’s emergency response
vehicles that will be within Pima County.
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2. Term/Extension/Termination: This Agreement shall become effective on the date it is
signed by the last party to sign and shall remain in effect for a period of ten (10) years
from the effective date, unless terminated or otherwise modified in writing by
amendment signed by both parties. This Agreement also may be canceled if for any
reason the Pima County Board of Supervisors or Oro Valley’s Town Council does not
appropriate funds for the stated purpose of this Agreement. In the event of such
cancellation, neither party shall have any obligation to the other under this Agreement,
except that Oro Valley will reimburse County for any actual costs that are reimbursable
under this Agreement and were incurred before termination.
3. Oro Valley’s Responsibilities: Oro Valley shall:
a) Purchase, install and maintain, on those emergency response vehicles operated by or
on behalf of Oro Valley that Oro Valley determines to be appropriate, EVP activation
equipment that automatically terminates the normal operations of the involved traffic
signal within the priority and routine prescribed by Pima County upon arrival of the
emergency vehicle at that traffic signal. Oro Valley acknowledges and understands
that the time a preempted signal takes to actually respond, in terms of providing a
green indication to the preempting emergency vehicle, can vary based on the normal
operational control requirements at that signal and where that signal is within that
sequence of control at the time the signal is preempted and what the priority is for that
sequence as it relates to the preemption. Oro Valley further acknowledges and
understands that it may be possible that the signal has already been preempted by
another emergency vehicle.
b) Install only EVP activation equipment compatible with existing County EVP
equipment. All EVP activation equipment installed pursuant to this Agreement shall
be installed in accordance with the manufacturer’s instructions and set up in
accordance with Pima County practices for such equipment.
c) Maintain an accurate inventory of applicable emergency response vehicles equipped
with preemption emitters and provide County written notice within three (3) working
days of any change in the status of any vehicle equipped with, or intended to be
equipped with, preemption emitter equipment. Oro Valley shall provide a copy of the
inventory and all notices of changes to the County Traffic Signal Supervisor.
d) Use preemption equipment only when performing official Code-3 responses
(emergency lights and sirens activated) where traffic signal p reemption is appropriate
and instruct all operators of Oro Valley’s emergency vehicles equipped with
preemption emitters of this requirement on a regular basis.
e) Train all vehicle operators in accordance with nationally recognized fire industry
standards (NFPA 1002) on the safe operation and characteristics of emergency
vehicle preemption systems as applied and sued in the field by the applicable
jurisdictions and the site specific parameters of the signal(s) being preempted.
121608 / 00629917 / v 1 3 of 7
Oro Valley IGA 10/19/2018
f) Take appropriate administrat ive and disciplinary measure against any operator that
violates preemption use procedures.
g) Designate an official or employee to be the official liaison with County and to be
responsible for instruction and administering rules to the operators of EVP
equipment.
h) Oro Valley’s agent, consultant or contractor may perform any or all of the above
obligations on behalf of Oro Valley.
i) Reimburse County for actual costs of all EVP equipment, mutually agreed upon and
expressly authorized by Oro Valley in writing, purchased and installed by County for
the sole benefit of Oro Valley.
4. County’s Responsibilities: County shall:
a) Install and maintain preemption equipment and detectors at those County signalized
intersections selected by County. In the selection of the intersections to be equipped
with preemption equipment, County shall consider those intersections specifically
requested by Oro Valley to be included in County’s preemption program.
b) Install and maintain beacons at signalized intersections equipped with EVP
equipment that will indicate when a traffic signal has been preempted by an
emergency vehicle.
c) Assign encoding to individual emitters purchased by Oro Valley.
d) Maintain records of preemption activities recorded by traffic signal controllers at
intersections per the ability and parameters of the equipment to keep such records.
e) Designate an official to represent County for purposes of resolving issues, changes
and regular business related to the operation of the EVP equipment.
f) Coordinate and maintain the use of common preemption equipment settings through
the Pima County Signal Supervisor.
g) County’s agent, consultant or contactor may perform any or all of the above
obligations on behalf of the County.
h) Invoice Oro Valley for the actual cost incurred by the County in purchasing and
installing traffic control devices that will primarily benefit Oro Valley when such
purchase and installation are mutually agreed upon in advance, in writing. County
shall be responsible for the maintenance and replacement of any such equipment.
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5. Ownership of Materials, Equipment and Appurtenances. All materials, equipment and
appurtenances installed under this Agreement on emergency vehicles shall remain the
property of Oro Valley or its contractor as mutually agreed upon between Oro Valley and
contractor. All materials, equipment and appurtenances installed under this Agreement as
part of County facilities shall remain the property of County.
6. Insurance. When requested by the other party, each party shall provide proof to the other
off their worker’s compensation, automobile, accident, property damage, and liability
coverage or program of self-insurance. If contracts are used, the contractor’s insurance
shall be reviewed and approved by the other jurisdiction.
7. Indemnification. Each party (as “Indemnitor”) agrees to indemnify, defend, and hold
harmless the other party (as “Indemnitee”) from and against any and all claims, losses,
liability, costs, or expenses (including reasonable attorney's fees) (hereinafter collectively
referred to as "Claims") arising out of bodily injury of any person (including death) or
property damage, but only to the extent that such Claims which result in
vicarious/derivative liability to the Indemnitee are caused by the act, omission,
negligence, misconduct, or other fault of the Indemnitor, its officers, officials, agents,
employees, or volunteers. This term will survive the expiration or termination of this
Agreement.
8. Notices. Each party shall notify the other in writing within thirty (30) calendar days of
the receipt of any claim, demands, suits, or judgments against the receiving party for
which the party intends to invoke the provisions of this Article. Each party shall keep the
other party informed on a current basis of its defense of any claims, demands, suits, or
judgments under this Article. All notices or demands upon any party to this agreement
shall be in writing, unless other forms are designated elsewhere, and shall be delivered in
person or sent by mail addressed as follows:
COUNTY: Director
Pima County Department of Transportation
201 North Stone Avenue, 4th Floor
Tucson, AZ 85701
Technical questions and reports of equipment failure or malfunction should be referred
to:
Pima County Dept. of Transportation
Traffic Signals and Lighting Section
1313 S. Mission Road, Building #28
Tucson, Arizona 85713
ORO VALLEY:
Chief of Police
Oro Valley Police Department
11000 N. La Canada Dr.
Oro Valley, AZ 85737
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9. Books and Records. Each party shall keep and maintain proper and complete books,
records, and accounts, which shall be open for inspection and audit by duly authorized
representatives of any other party at all reasonable times.
10. Legal Jurisdiction. Nothing in this Agreement shall be construed as either limiting or
extending the legal jurisdiction of County or the Town.
11. Counterparts. This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together will constitut e one and the
same instrument. The signature pages from one or more counterpart may be removed
from such counterpart and attached to a single instrument.
12. No Joint Venture. It is not intended by this Agreement to, and nothing contained in this
Intergovernmental Agreement shall be construed to, create any partnership, joint venture,
or employment relationship between the parties or create any employer -employee
relationship between county and Town employees, or between Town and county
employees. Neither party shall be liable for any debts, accounts, obligations, or other
liabilities whatsoever of the other, including (without limitation) the other party's
obligation to withhold Social Security and income taxes for itself or any of its employees.
13. No Third Party Beneficiaries. Nothing in the provisions of this Agreement is intended to
create duties or obligations to or rights in third parties not parties to this Agreement or
effect the legal liability of either party to the Agreement by imposing any standard o f care
with respect to the maintenance of roadways different from the standard of care that is
reasonable for these roadways at these locations.
14. Compliance with Laws. The parties shall comply with applicable federal, state, and local
laws, rules, regulat ions, standards, and executive orders, without limitation to those
designated within this Agreement.
a. Anti-Discrimination. The provisions of A.R.S. § 41-1463 and Executive Order
Number 75-5, as amended by Executive Orders Number 2009 -9, issued by the
Governor of the State of Arizona are incorporated by this reference as a part of this
Intergovernmental Agreement.
b. Americans with Disabilities Act. This Agreement is subject to all applicable
provisions of the Americans with Disabilities Act (Public Law 101 -336, 42 U.S.C.
12101-12213) and all applicable federal regulations under the Act, including 28
CFR Parts 35 and 36.
c. A.R.S. § 38-511. This Agreement is subject to the provisions of A.R.S. § 38 -511.
121608 / 00629917 / v 1 6 of 7
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15. Waiver by either party of any breach of any term, covenant, or condition herein contained
shall not be deemed a waiver of any other term, covenant, or condition, or any subsequent
breach of the same or any other term, covenant, or condition herein contained.
16. Force Majeure. A party shall not be in default under this Agreement if it does not fulfill
any of its obligations under this Agreement because it is prevented or delayed in doing so
by reason of “uncontrollable forces.” The term “uncontrollable forces” shall mean, for the
purpose of this agreement, any cause beyond the control of the party affected, including,
but not limited to, failure of facilities, breakage or accident to machinery or transmission
facilities, weather conditions, flood, earthquake, lightning, fire, epidemic, war, riot, civil
disturbance, sabotage, strike, lockout, labor dispute, boycott, material or energy shortage,
casualty loss, acts of God, or action or non-action by governmental bodies in approving or
failing to act upon applications for approvals or permits which are not due to the negligence
or willful action of the parties, order of any government officer or court (excluding o rders
promulgated by the parties themselves), and declared local, state or national emergency,
which, by exercise of due diligence and foresight, such party could not reasonably have
been expected to avoid. Either party rendered unable to fulfill any obligations by reason of
uncontrollable forces shall exercise due diligence to remove such inability with all
reasonable dispatch.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this _____ day
of ___________________, 2019.
PIMA COUNTY ORO VALLEY
_______________________________ _______________________________
Chairman, Board of Supervisors Authorized Officer Signature
______________ ________________________________
Date Printed Name and Title
_______________
Date
ATTEST: ATTEST:
______________________________ _________________________________
Clerk of the Board Michael Standish, Town Clerk
______________ ______________
Date Date
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Intergovernmental Agreement Determination
The foregoing Intergovernmental Agreement between Pima County and Oro Valley has been
reviewed pursuant to A.R.S. § 11-952 by the undersigned, each of whom has determined that it is
in proper form and is within the powers and authority granted under the laws of the State of Arizona
to the party represented by the him/her.
Pima County:
___________________________________________
Deputy County Attorney Date
Oro Valley:
___________________________________________
Tobin Sidles, Legal Services Director Date