HomeMy WebLinkAboutPopular Annual Financial Report (PAFR) - 6/30/2019Town of Town of ORO VALLEY, ARIZONA
Fiscal Year ending June 30, 2019
POPULAR ANNUAL FINANCIAL REPORT
INSIDE
Overview 1
Oro Valley Fast Facts 2
Message from
the Town Manager 2
Accomplishments &
Accolades 3
GFOA Award 3
Net Position 4
Activities 5
Revenues 6
Expenses 7
Debt & Financial Ratings 9
Town Assets 10
Employment &
Economic Statistics 11
Left to right:
Bill Rodman, Councilmember
Steve Solomon, Councilmember
Rhonda Piña, Councilmember
Joe Winfield, Mayor
Melanie Barrett, Vice Mayor
Josh Nicolson, Councilmember
Joyce Jones-Ivey, Councilmember
OVERVIEW
The Town of Oro Valley is proud to present its eighth annual Popular Annual Financial Report (PAFR). The purpose
of the PAFR is to provide a user-friendly summary of the financial position of the Town of Oro Valley and other
interesting information for citizens who want a better understanding of the Town’s finances. The financial
information in the PAFR is taken from the Town’s Comprehensive Annual Financial Report (CAFR). The CAFR
outlines the Town’s financial position and operating activities each fiscal year presented in conformity with
generally accepted accounting principles (GAAP) and includes financial statements audited by Heinfeld Meech &
Co., P.C., certified public accountants. The Town received an unmodified (or clean) audit opinion, which is the best
audit opinion that the financial statements could receive.
While the numbers in the PAFR come from an audited source, they are presented in a summarized, unaudited
non-GAAP format that is more accessible to the public. Additionally, some of the information in the PAFR is
from the Town’s Annual Budget. Citizens who wish to review the audited, GAAP-based, full disclosure financial
statements can refer to the Town’s CAFR available on the Town’s website at www.orovalleyaz.gov, or contact the
Finance Department by phone at 520-229-4700 or in person at 11000 N. La Cañada Drive, Oro Valley, AZ 85737.
ORO VALLEY COUNCIL
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Connect with us! Visit www.orovalleyaz.gov.
INCORPORATED 1974
SERVICES Police, Parks and Recreation, Water
Utility, Stormwater Utility, Public
Transit, Community Development
and Public Works
FORM OF GOVERNMENT Council/Manager
GOVERNING BODY Mayor elected at large to four-year
term; 6 councilmembers elected at
large to four-year terms
POPULATION
(2016 census estimate)
45,184
# OF HOUSEHOLDS
(2016 census data)
19,295
BACHELOR’S DEGREE
OR HIGHER (AGE 25+)
52.3%
MEDIAN INCOME
(2016 census data)
$79,458
# OF PARKS 7
PARK ACRES MAINTAINED
772
TRAILS AND PATHS 54.5 miles
PARKS PROGRAMS
HELD ANNUALLY
96
2019 BUDGET $142.9 million
ORO VALLEY FAST FACTS
HISTORY
After World War II, the Tucson area experienced dramatic
population growth. In the early 1950s, the Oro Valley
Country Club opened at the base of Pusch Ridge, and
land owners began building residential homes. As the
community continued to grow, area residents increasingly
desired local control of the land in the area. In the late
1960s, a petition to incorporate began to circulate in Oro
Valley, and Oro Valley was successfully incorporated in
1974. What began as a Town with only 2.4 square miles
and 1,200 residents has grown into a vibrant community
and tourist destination featuring world-class amenities
and outdoor attractions, excellent
schools, and a diverse
business environment.
2
Mary Jacobs
Town Manager
MESSAGE from the TOWN MANAGER
We are pleased to present the
Town of Oro Valley Popular
Annual Financial Report (PAFR)
for fiscal year 2018/19. This is
the eighth consecutive year
that we have produced this
summarized overview of various
financial aspects of the Town,
including sources of revenues and
expenditures, financial trends,
assets and liabilities and debt
obligations. We are humbled to
have earned recognition from the Government Finance Officers
Association (GFOA) for the past seven years with their Popular
Annual Financial Reporting Award. The Town is one of only
fourteen government agencies in Arizona to prepare a PAFR,
representing the Town’s ongoing commitment to transparency,
accountability and communicating the financial position of the
Town in this easy-to-understand format.
The Town’s audited financial statements once again received an
unmodified or “clean” audit opinion by our outside, independent
auditors, which is the highest form of audit opinion given.
In addition, the Town demonstrated continued strong financial
performance during fiscal year 2018/19. We are pleased to report
that in the General Fund, our main operating fund, revenues
exceeded expenditures by $1.4 million. These surplus funds will
be allocated toward future capital project funding and reducing
the Town’s Public Safety Personnel Retirement System (PSPRS)
unfunded liability.
The Town’s disciplined approach to budgeting, adherence to
strong financial management principles and policies and a track
record of prudent financial decision-making helps to ensure
both near- and long-term fiscal health and sustainability. This is
evidenced by the Town’s strong credit rating, including our ‘AA+’
rating from Standard and Poor’s.
In the coming year, we look forward to making investments in our
facilities that provide maximum benefit to our community and
managing your taxpayer dollars in the most efficient and effective
manner.
We hope that our 2019 Popular Annual Financial Report fulfills
its purpose as an understandable, informative publication, and
thank you for your interest in the Town of Oro Valley government
functions and finances.
Respectfully,
Mary Jacobs, Town Manager
ACCOLADES
• Oro Valley ranked by
“Safewise” as the Safest City in
Arizona for 2019
• Certificate of Achievement
for Financial Reporting
Excellence for FY 2017/18
from the Government Finance
Officers Association (GFOA)
for the 25th consecutive year
• Popular Annual Financial
Report (PAFR) award for FY
2017/18 from the GFOA for
the seventh consecutive year
• Distinguished Budget
Presentation Award from
the GFOA for the tenth
consecutive year
• Achievement of Excellence
in Procurement Award from
the National Procurement
Institute for the eleventh
consecutive year
FY 18/19 ACCOMPLISHMENTS
Participated as a contributing partner in the
ground breaking of the new University of
Arizona Center for Innovation at Oro Valley
Established fully functional back-up
Emergency Communications Center at
Marana Police Department
Collected over $2 million in plan review and
permit fees representing more than $155
million in work valuation for new private
construction
Issued a total of 2,363 permits and performed
approximately 29,000 building inspections
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 2018-19 with a $1.4 million increase
in the General Fund ending fund balance
Transitioned the Town’s recreation software
to CivicRec, providing a more user-friendly
application for citizens and greater
visibility of parks and recreational activities
Completed training of all full-time
employees in process improvement
skills as part of the Town’s Peak
Performance initiative, resulting in an
estimated $50,000 in savings for FY 18/19
Broke ground on $20M La Cholla Blvd.
widening project with partners Pima
County and the Regional Transportation
Authority
Increased Town’s capacity to
deliver CAP water by 30%, with the
commissioning of the Water Utility’s
fourth CAP water interconnect, further
offsetting the use of groundwater
Delivered a combined total of 2.99 billion
gallons of water to water utility customers
The Government Finance Officers Association of the United States
and Canada (GFOA) has given an Award for Outstanding Achievement
in Popular Annual Financial Reporting to the Town of Oro Valley for
its Popular Annual Financial Report for the fiscal year ended June 30,
2018. The Award for Outstanding Achievement in Popular Annual
Financial Reporting is a prestigious national award recognizing
conformance with the highest standards for preparation of state and
local government popular reports.
In order to receive this award, a government unit must publish a
Popular Annual Financial Report, whose contents conform to program
standards of creativity, presentation, understandability and reader
appeal.
The award is valid for a period of one year only. We believe our current
report continues to conform to program requirements, and we are
submitting it to GFOA to determine eligibility for another award.
3
STATEMENT OF NET POSITION
This Statement of Net Position is presented in much more detail in the Town’s
Comprehensive Annual Financial Report. This is a very high-level summary
that captures total assets and liabilities and compares them to prior years. This
Statement of Net Position may serve as a useful overall indicator of the Town’s
financial position and trends over the last two years.
The Town’s activities are presented in two categories. Governmental activities
include most of the Town’s core services, such as public safety, parks and
recreation, and street maintenance. Sales taxes, state-shared revenues and
grants finance most of these activities. Business-type activities are the Water and
Stormwater utilities, which are primarily financed through user fees and charges.
The largest portion of the Town’s net position reflects its investment in capital
assets such as land, buildings and improvements, vehicles, machinery and
equipment, and construction, less any outstanding debt used to acquire those
assets. The Town uses these capital assets to provide services to its citizens;
consequently, these assets are not available for future spending.
The following are significant transactions that impacted the Statement of Net
Position:
• The principal retirement of $ 917,722 in bonds and $8,315 in bond premium
for governmental activities, and the principal retirement of $3.9 million in
bonds and $116,677 in bond premium for business-type activities.
• The issuance of $8.1 million of revenue bonds, $2.0 million in governmental
activities, and $6.1 million in business-type activities.
• The addition of $9.4 million and $3.6 million for governmental activities and
business-type activities, respectively, in accumulated depreciation due to
depreciation expense.
• The addition of $14.5 million and $6.6 million for governmental activities
and business-type activities, respectively, in capital assets related to
buildings and improvements, infrastructure, and water systems.
WHAT IT MEANSi
Current Assets and Other Assets
are assets that one can reasonably
expect to convert to cash, sell, or
consume within one year.
Capital Assets, Net are the Town’s
land, buildings, equipment,
improvements, infrastructure, and
construction in progress, net of
accumulated depreciation.
Deferred Outflows are outflows of
resources that have already occurred
but are applicable to future periods.
Deferred Inflows are inflows of
resources that have already occurred
but are applicable to future periods.
Liabilities are payments due to
vendors and employees, lease
payments due, and other long term
debt of the Town.
Net Position is the difference
between assets plus deferred
outflows and liabilities plus deferred
inflows, of which may or may not be
available for future spending.
4
Statement of Net Position for the year ended June 30, 2019
2019 2018
Assets
Current assets and other assets $ 73,663,286 $ 62,576,122
Capital assets, net 258,548,990 250,529,464
Total assets 332,212,276 313,105,586
Deferred outflows 10,355,143 11,223,394
Liabilities
Current and other liabilities 12,350,907 10,324,285
Long-term liabilities 94,066,616 91,492,799
Total liabilities 106,417,523 101,817,084
Deferred inflows 2,841,551 1,926,082
Net Position $ 233,308,345 $ 220,585,814
STATEMENT OF ACTIVITIES
The Statement of Activities, often referred to as the Town’s income
statement, reflects all of the financial activity for the Town during
the fiscal year ended June 30, 2019. This statement presents
information to show how the Town’s net position changed during
the year as a result of the financial activity (e.g., revenues and
expenses). Over time, increases or decreases in net position may
serve as a useful indicator of whether the Town’s financial position
is improving or deteriorating. Below is a summarized version of the
detailed statement of activities found in the Town’s Comprehensive
Annual Financial Report.
Statement of Activities for the year ended
June 30, 2019
Note: The totals below reflect both the governmental and business-type
activities of the Town.
The Statement of Activities shows that the Town’s total net position
has improved over the beginning net position. The increase of $5.5
million in total expenses was largely due to an increase in highways
and street expenses due to improvements. Total revenues
increased $5.5 million, or 7 percent, largely due to additional
intergovernmental revenues for road maintenance projects.
2019 2018
Revenues $ 83,163,924 $ 77,640,925
Expenses 72,038,610 66,555,315
Change in net
position
11,125,314
11,085,610
Net position,
beginning of year,
restated
222,183,031
209,500,204
Net position, end of year $ 233,308,345 $ 220,585,814
5
Revenues by Source
Includes Governmental & Business-Type Activities
This chart illustrates the sources and percentages of the Town’s revenues totaling $83.2
million for FY 2018/19. The Town’s primary revenue sources during 2019 include charges for
services, sales taxes and state-shared revenues. Together these three categories represented
78% of all revenue collections in FY 2018/19.
The Town Council and management are focused on efforts to maintain long-term
financial health through diversified revenue sources while strategically investing in
community initiatives. These decisions range from increasing efficiencies to using valuable
intergovernmental partnerships to enhance and expand services.
Three-Year Historical Comparison - Revenues
Governmental funds only
REVENUES
Where the money comes from
Charges for Services
29,945,555
36%
Operating Grants &
Contributions
4,669,814 6%
Investment Earnings
1,907,057
2%
Unrestricted State
Shared Revenues
11,879,950
15%
Franchise Taxes
635,494
1%
Sales Taxes
22,924,400
28%
Capital Grants & Contributions
11,201,654
13%MillionsIntergo
ver
n
me
nt
al
Charges f
or Ser
vic
es
Sales & Fr
a
nc
hise T
axes
Investm
e
nt
Ear
ni
n
gs
Other R
e
ve
n
u
es
Charges for Services are
revenues collected for
services rendered to the
public. Water sales make
up the majority of these
revenues.
Sales Taxes are levied on
retail sales at 2.5%, utilities
and construction activity at
4%, and lodging at 6%.
Franchise Taxes are
negotiated fee revenues from
a local cable provider.
Unrestricted State Shared
Revenues consist of the
Town’s portion of Arizona
state income tax, sales
tax, and vehicle license
tax revenue shared with
incorporated cities, towns,
and counties.
Capital Grants and
Contributions are dedicated
towards specific capital
expenditures and purposes,
such as highways and streets.
Operating Grants and
Contributions are dedicated
towards specific operating
expenditures and purposes,
such as employee salaries
and ongoing maintenance
costs for roadways, public
safety, and culture and
recreation.
Investment Earnings consist
of interest income earned on
the Town’s invested funds.
WHAT IT MEANSi
$28
$24
$20
$16
$12
$8
$4
$-
2017
2018
2019
6
EXPENSES
Where the money goes
This chart illustrates the uses and percentages of the Town’s
expenses across all funds totaling $72.0 million for FY 2018/19.
The majority of expenses relate to public safety (police),
general government operations and Water Utility operations.
More than two-thirds of the Town’s total expenses (68%) are
from these three areas.
Expenses by Category
Includes Governmental & Business-Type Activities
General Government expenses are incurred by
the Town’s administrative departments, including
Mayor and Town Council, Town Manager, Legal
Services, Finance, Town Clerk, Human Resources,
Magistrate Court, and include other non-
departmental costs.
Highways and Streets expenses are related
to the design, construction, maintenance and
operation of all roadways, sidewalks and related
infrastructure within the town.
Culture and Recreation expenses are those
incurred by the Town to enrich the quality of life
in Oro Valley through parks, recreational and
cultural activities.
Public Safety expenses are those incurred by the
Town to provide police services to the public.
Water expenses are those incurred by the Town
to provide water to the public.
Transit expenses are those related to the
operation of the Sun Shuttle Dial-a-Ride service
funded through a partnership with the Regional
Transportation Authority (RTA).
Stormwater Drainage expenses are those related
to the design, construction, maintenance and
operation of all stormwater drainageways within
the town.
Interest on Long-Term Debt reflects the interest
costs for long-term debt, such as bonds and
loans. This does not include any interest costs on
water-related debt.
WHAT IT MEANSi
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General Government
14,727,150
20%
Stormwater Drainage
1,291,490
2%Water
15,089,673
21%
Interest on
Long-term debt
355,545
1%
Culture &
Recreation
9,699,357
13%
Transit
1,125,490
2%Highways & Streets
10,791,469
15%
Public Safety
18,958,436
26%
Three-Year Historical Comparison - Expenditures
Governmental Funds Only
Five-Year Historical Comparison - Revenues & Expenditures
Governmental Funds Only
$70
$60
$50
$40
$30
$20
$10
$-
ExpendituresMillions$18
$16
$14
$12
$10
$8
$6
$4
$2
$-
The Five-Year Historical Comparison chart provides a snapshot of the Town’s revenue and expenditure growth for the last five fiscal
years. The revenue and expenditure increase shown for FY 2015/16 mainly represents full-year operations of the Oro Valley Community
Center. Revenue growth through FY 2018/19 reflects continued economic recovery with increased sales tax collections and state-shared
revenues.
8
The charts on this page reflect
information for the Town’s
governmental funds only.
These funds account for most
of the Town’s basic services,
such as general government,
public safety, highways
and streets, and culture
and recreation. Sales taxes,
state-shared revenues and
charges for services finance
most of these activities.
As such, the business-type
activities related to Water and
Stormwater operations are
excluded.
2015 2016 2017 2018 2019
2017 2018
General G
o
v
e
r
n
m
e
n
t
Public Saf
e
t
y
Highways
&
St
r
e
e
t
s
Transit
Culture &
R
e
c
r
e
a
ti
o
n
Capital O
u
tl
a
y
Debt Servi
c
e
2019
Millions51.43 54.5043.20
49.54
40.22
54.02
47.14
56.07
60.96
60.49
Revenues
Standard & Poor’s raised its long-term rating
on excise tax revenue bonds to “AA+” from
“AA-“
S&P identified key credit considerations such
as very strong economic fundamentals, very
strong coverage and liquidity, and the Town’s
general creditworthiness.
The Town continues to maintain strong investment grade ratings
on its outstanding excise tax bonds, which were upgraded from
“AA-“ to “AA+” by Standard & Poor’s. The Town’s water revenue
bonds, are rated “AA” by Standard & Poor’s. This is largely achieved
by the Council’s goal of continuing to diversify the Town’s revenue
base and maintaining strong fund balance reserves in the General
Fund, currently at $19.5 million, or 46% of FY 2019-20 adopted
expenditures of $42 million.
DEBT & FINANCIAL RATINGS
As of June 30, 2019, the Town had $46.8 million in long-term
debt outstanding with $6.2 million due within one year. The
majority of the outstanding debt relates to the Water Utility capital
improvement revenue bonds. The chart below depicts the Town’s
outstanding debt for the fiscal year ended June 30, 2019.MillionsWhat they’re saying...
WIFA Utility Loans are low-interest loans from
the Water Infrastructure Finance Authority of
Arizona (WIFA). They finance the construction
and improvement of drinking water,
wastewater, wastewater reclamation, and other
water quality projects.
Governmental Bonds are used to finance long-
lived capital improvements, including land
acquisition and construction or improvement
of Town facilities. The Town’s excise taxes are
pledged as repayment of the debt.
Utility Bonds are issued to finance long-lived
utility capital improvements for the Town’s
Water Utility. This debt is repaid with Water
Utility revenues.
Special Assessment Bonds are used to
finance specific infrastructure or improvement
projects. A district is formed and the debt
is repaid with assessments on properties
within the district. The Town currently has one
outstanding special assessment bond issue,
which was used for roadway improvements.
WHAT IT MEANSi
9
Outstanding Debt Obligations as of June 30, 2019
$35
$30
$25
$20
$15
$10
$5
$-
Utility Loans - WIFA Governmental
Bonds
Utility Bonds Special Asmt. Bonds,
Capital Leases, Note
Payable
$7.08
$0.59
$29.08
$10.05
WIFA Utility Loans are low-interest loans from
the Water Infrastructure Finance Authority of
Arizona (WIFA). They finance the construction
and improvement of drinking water,
wastewater, wastewater reclamation, and other
water quality projects.
Governmental Bonds are used to finance long-
lived capital improvements, including land
acquisition and construction or improvement
of Town facilities. The Town’s excise taxes are
pledged as repayment of the debt.
Utility Bonds are issued to finance long-lived
utility capital improvements for the Town’s
Water Utility. This debt is repaid with Water
Utility revenues.
Special Assessment Bonds are used to
finance specific infrastructure or improvement
projects. A district is formed and the debt
is repaid with assessments on properties
within the district. The Town currently has one
outstanding special assessment bond issue,
which was used for roadway improvements.
WHAT IT MEANS
TOWN ASSETS
The Town develops a ten-year Capital Improvement Program (CIP) to systematically identify, plan, schedule, finance, track
and monitor capital projects and acquisitions necessary to support service delivery to the community. Capital improvement
projects are defined as infrastructure, equipment and vehicle purchases or construction which results in or makes
improvements to a capitalized asset costing more than $50,000 and having a useful life of five or more years. These capital
projects and acquisitions comprise the capital assets of the Town. At June 30, 2019, the Town had invested $258.5 million
in capital assets (net of accumulated depreciation), including buildings, facilities, vehicles, computers, equipment and
infrastructure assets. (Millions)Outstanding debtDebt per Capita$60
$50
$40
$30
$20
$10
$-
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-2015 2016 2017 2018 2019
Total
Outstanding
Debt
Debt Per
Capita
Five Year Historical Comparison
Total Outstanding Debt & Debt Per Capita
10
Capital Assets
Governmental Activities*
Capital Assets
Business-Type Activities*
Land
$19,518,801
7%
Construction
in Progress
$9,473,241
3%
Machinery,
Equipment and
Vehicles
$16,978,935
6%Buildings and
Improvements
$40,261,741
15%
Infrastructure
$188,485,038
69%
Land
$2,410,660
2%
Equipment
and Vehicles
$5,752,158
4%Stormwater
System
$3,230,283
2%
Water System
$136,565,936
85%
Water Rights
$8,534,490
5%
Construction in
Progress
$3,286,193
2%
*Totals do not include accumulated depreciation
ECONOMIC DEVELOPMENT
The Town Council and management are focused on creating long-
term economic sustainability, fostering a robust local economy and
job market that provide opportunities for quality employment, and
sustaining a strong sector of targeted industries, including bioscience,
aerospace, and high tech that provide opportunities for synergy and
growth.
The Town’s public safety programs include Adopt-A-Business,
Community Volunteer Assistance Program, Gals! Start your Engines,
and Self-Defense Awareness and Fight Education also known as SAFE.
This year SafeWise ranked Oro Valley as the number one safest city
in Arizona. This is an important designation because public safety
promotes economic growth and encourages families to buy homes,
play in our parks, attend our schools and visit our businesses. There
continues to be healthy economic growth in Oro Valley, as well as the
Tucson metro region and state-wide. With Oro Valley’s close proximity
to Tucson, 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.
Management is in the process of creating a comprehensive annexation
blueprint to guide the Town’s strategic growth and economic
expansion. The Town’s goal is to support quality development with
integrated architecture and natural open space to maintain and
enhance the character of our community. The Town is working
with the Planning and Zoning Commission and Town Council to
create targeted commercial code amendments. This will add greater
flexibility for redeveloping commercial properties. The Town’s
infrastructure is being revitalized through projects like the Tangerine
Road and La Cholla improvement projects and the La Cañada and
Moore intersection safety improvement project.
Town Demographic & Economic Statistics Personal Income (Millions)PopulationPopulation Personal Income
11
45,500
45,000
44,500
44,000
43,500
43,000
42,500
42,000
41,500
41,000
40,500
$2,000
$1,950
$1,900
$1,850
$1,800
$1,750
$1,700
$1,675
$1,600
$1,5502018201520162017
Employees % of Total Town
EmploymentRoche Tissue
Diagnostics 1,300 6.78%
Honeywell Aerospace 650 3.39%
Oro Valley Hospital 605 3.15%
Amphitheater School
District 502 2.62%
Town of Oro Valley 302 1.57%
Casa de la luz Hospice 272 1.42%
El Conquistador Tucson,
A Hilton Resort 250 1.30%
Simpleview 213 1.11%
Splendido at Rancho
Vistoso 204 1.06%
Meggitt Securaplane 157 0.82%
Town Employment Statistics
Principal Employers in Oro Valley
2019