HomeMy WebLinkAboutPopular Annual Financial Report (PAFR) - 6/30/2024Town ofTown of
INSIDE
Fiscal Year ended June 30, 2024
POPULAR ANNUAL FINANCIAL REPORT
Michael Rauch
OVERVIEW
ORO VALLEY TOWN COUNCIL
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Harry “Mo” Greene, II, Councilmember
Elizabeth Robb, Councilmember
Mary Murphy, Councilmember
Joe Winfield, Mayor
Melanie Barrett, Vice Mayor
Joyce Jones-Ivey, Councilmember
Josh Nicolson, Councilmember
Jill Wheatley, “Purple Love”
ORO VALLEY FAST FACTS
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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 49,111 (Arizona Commerce Authority)
# OF HOUSEHOLDS
(US Census estimate)
21,019
BACHELOR’S DEGREE
OR HIGHER (Age 25+)
56%
MEDIAN INCOME
(US Census estimate)
$101,394
# OF PARKS 7
PARK ACRES
MAINTAINED
651
TRAILS AND PATHS 62 miles
PUBLIC STREET LANE
MILES MAINTAINED
439
2024 BUDGET $148.5 million
HISTORY MESSAGE from the TOWN MANAGER
We are pleased to present the Town of
Oro Valley Popular Annual Financial
Report (PAFR) for fiscal year 2023/24.
This is the thirteenth 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 twelve
years with their Popular Annual Financial Reporting Award.
The Town is one of only 18 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.
The Town demonstrated strong financial performance during
fiscal year 2023/24. In the General Fund, our main operating
fund, revenues exceeded budget by $1.6 million. Through a
combination of strong revenue growth and expenditure savings,
the Town reduced its use of fund balance in the General Fund
from a budget of $9.7 million to $1.7 million. General Fund
reserves total $22.1 million, or 43% of budgeted expenditures for
the coming fiscal year.
The Town’s disciplined approach to budgeting, adherence to
strong financial management principles and policies, and a
track record of prudent financial decision-making help 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 continuing investments in
our facilities and infrastructure that provide maximum benefit to
our community and managing your taxpayer dollars in the most
efficient and effective manner.
We hope that our 2024 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,
Jeff Wilkins, Town Manager
Jeff Wilkins
Town Manager
Jill Wheatley, “Purple Love”
FISCAL YEAR (FY) 23/24 ACCOMPLISHMENTS
Recognized as a “Triple Crown
Winner” by the Government
Finance Officers Association
for receiving the Certificate of
Achievement for Excellence in
Financial Reporting Award (30th
consecutive year), the Distinguished
Budget Presentation Award (16th
consecutive year) and the Popular
Annual Financial Reporting
Award (12th consecutive year)
Ended FY 23/24 with a $22.1 million
fund balance in the General Fund,
exceeding budget expectations by
$8.0 million
Revised and updated comprehensive
Town Financial and Budgetary
Policies
Received an unmodified “clean”
audit opinion for the Town’s annual
financial statements
Completed work on the $25 million
(including premium) bond-funded
parks and recreation amenities and
improvements, including Naranja Park
improvements, Community Center and
golf course irrigation improvements
Celebrated the Town of Oro Valley’s
50th anniversary with numerous
community events
Completed a community survey as
part of Oro Valley Path Forward, the
community’s next 10-year General Plan
update
Continued construction on the
partnered and independent portion
of the Water Utility’s Northwest
Recharge, Recovery and Delivery
System (NWRRDS) project to reduce
groundwater pumping and increase
delivery of Central Arizona Project
water to the Town by up to 150%
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ACCOLADES
Government Finance Officers Association
Award for
Outstanding
Achievement in
Popular Annual
Financial Reporting
Presented to
Town of Oro Valley
Arizona
For its Annual Financial Report
For the Fiscal Year Ended
June 30, 2023
Executive Director/CEO
League of American Bicyclists 2022-2026
Tucson Local Media Best of the Northwest 2024
Elite Personal Finance 2022
Charlie Alolkoy, “Oro Valley Country Club, Oro Valley”
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 addition of $25.6 million in capital assets (net of dispositions) for
governmental activities, largely attributable to parks and recreation and
roadway improvements.
• Current assets decreased $10.0 million and $8.6 million for governmental
activities and business-type activities, respectively, due to planned cash
outlays for capital investment and spending of remaining parks and recreation
bond proceeds.
• The addition of $10.9 million and $3.7 million for governmental activities
and business-type activities, respectively, in accumulated depreciation/
amortization due to depreciation/amortization expense.
• Long-term debt decreased $1.7 million and $3.4 million for governmental
activities and business-type activities, respectively, due to debt payments
made during 2024.
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STATEMENT OF NET POSITION
The Statement of Net Position is presented in much more detail in the Town’s Annual
Comprehensive Financial Report. Below is a very high-level summary that captures
total assets and liabilities and compares them to prior years. The Statement of Net
Position may serve as a useful overall indicator of the Town’s financial position and
trends over the last few 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.
Current Assets and Other Assets
Capital Assets, Net
Deferred Outflows
Deferred Inflows
Liabilities
Net Position
WHAT IT MEANS202420232022
Current assets and other assets $ 83,756,395 $ 102,039,607 $ 114,318,253
Capital assets, net 351,023,627 324,828,157 306,544,971
Current and other liabilities 11,071,607 12,855,925 13,442,686
Long-term liabilities 90,258,981 92,359,891 114,177,844
John Amato, “Coronado National Forest”
Sales Taxes
$30,522,235
29%
STATEMENT OF ACTIVITIES
2024 2023 2022
$106,422,521 $101,381,295 $ 91,793,200
92,730,329 86,777,928 76,510,383
13,692,192 14,603,367 15,282,817
331,759,100 317,155,733 301,872,916
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Note: The totals below reflect both the governmental and business-type activities of
the Town.
Includes Governmental & Business-Type Activities
REVENUES
Charges for Services
$35,025,682
33%
Miscellaneous
$111,050
0%Investment Earnings
$2,540,769
2%
Operating Grants &
Contributions
$3,237,521
3%
Capital Grants & Contributions
$11,769,568
11%
Unrestricted State-Shared Revenues
$22,500,362
21%
Franchise Taxes
$715,334
1%
Sales Taxes
$30,522,235
29%
WHAT IT MEANS
$36
$32
$28
$24
$20
$16
$12
$8
$4
$-
$(4)
This chart illustrates the sources and percentages of the Town’s revenues totaling $106.4
million for FY 23/24. The Town’s primary revenue sources during FY 23/24 include charges
for services, sales taxes and unrestricted state shared revenues. Together these three
categories represented 83% of all revenue collections in FY 23/24.
This three-year historical comparison chart provides a snapshot of the Town’s
revenue growth for Governmental Funds for the last three fiscal years. The growth in
intergovernmental revenues for FY 22/23 and FY 23/24 was attributable to an increase in
state-shared revenues. The growth in other revenues for FY 22/23 was attributable to a
one-time land donation.
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.
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EXPENSES
This chart illustrates the uses and percentages of the Town’s
expenses across all funds totaling $92.7 million for FY 23/24. The
majority of expenses relate to general government operations,
public safety, and Water Utility operations. More than two-
thirds of the Town’s total expenses (68%) are from these three
areas. Total expenses increased by $6.0 million due primarily to
personnel and other operating costs as noted previously.
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General
Government
$22,885,243
25%
Stormwater Drainage
$1,486,716
2%
Water
$18,305,199
20%Interest on
Long-Term Debt
$1,270,041
1%
Culture &
Recreation
$13,167,591
14%
Transit
$1,691,450
2%Highways & Streets
$12,407,093
13%
Public Safety
$21,516,996
23%
General Government expenses are incurred
by the Town’s administrative departments,
including Town Council, Town Manager, Legal
Services, Finance, Town Clerk, Human Resources,
Town Court, Information Technology, Economic
Development and 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 and dispatch 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 MEANS
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$-
General Government expenses are incurred
by the Town’s administrative departments,
including Town Council, Town Manager, Legal
Services, Finance, Town Clerk, Human Resources,
Town Court, Information Technology, Economic
Development and 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 and dispatch 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.
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WHAT IT MEANS
$40
$35
$30
$25
$20
$15
$10
$5
$-
DEBT & FINANCIAL RATINGS
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.
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.
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.
Leases Payable reflects future
payments due on equipment leases
entered into by the Town.
Financed Purchases represents
future payments for equipment
purchased under a contract.
Subscription Liabilities are future
payments due on subscription-
based information technology
arrangements entered into by the
Town.
WHAT IT MEANS
*Totals do not include accumulated depreciation/amortization
10
$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$-
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, vehicle purchases or construction which result in or make 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, 2024, the Town had invested $351.0 million in capital assets (net of accumulated depreciation/
amortization), including buildings, facilities, vehicles, computers, equipment, right of use assets and infrastructure assets.
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Governmental Activities*Business-Type Activities*
Land
$36,289,821
9%
Construction in
Progress
$2,106,956
0%
Equipment - Leases
$1,064,942
0%
Software - SBITA
Subscriptions
$2,216,958
1%Machinery, Equipment
and Vehicles
$22,809,672
6%
Buildings and
Improvements
$87,890,040
22%
Infrastructure
$251,101,285
62%
Land
$2,410,660
1%
Machinery,
Equipment
and Vehicles
$7,052,460
4%
Stormwater
System
$4,196,312
2%
Water System
$152,125,390
77%
Water Rights
$8,534,490
4%
Construction
in Progress
$22,968,118
12%
*Totals do not include accumulated depreciation/amortization
This historical comparison
chart provides a snapshot of
the Town’s total outstanding
debt and debt per capita
over the last five fiscal years.
The increase in FY 21/22
was attributable to the
issuance of excise tax bonds
to fund parks and recreation
improvements and pay
off the Town’s unfunded
liability in the Public Safety
Personnel Retirement
System.
ECONOMIC OUTLOOK AND FUTURE FOCUS
Local sales tax revenue exceeded budget expectations in FY 23/24 by 4%, while state shared revenues came in at 98.9% of
budget. The Town continues to provide services and programs without a property tax to fund operations and, therefore,
is dependent upon local sales tax and state shared revenues as major sources of revenue for its operating and capital
expenditures. These sources accounted for approximately 84% of total General Fund revenue for FY 23/24.
Critical to success in this area is the preparation of realistic growth assumptions helping guide Town revenue projections.
Despite inflation and interest rate increases that occurred over the past couple of years, there continues to be economic
growth and activity in Oro Valley, the Tucson metropolitan region and statewide. Arizona continues to do well in national
economic rankings and remains one of the fastest growing states in both population and personal income. With Oro Valley’s
proximity to the Tucson metro region, it is likely that the Town’s local economy will continue to benefit with increased
housing sales, retail and tourism growth, and overall household and personal income growth.
Future population and economic growth of the Town depends largely on continued available land for development;
therefore, strategic annexation efforts and discussions are ongoing as a means to address the potential for future buildout
within existing town boundaries.
The Town continues to dedicate one-time revenues to funding one-time expenditures in the budget, specifically for capital
improvement projects, while ensuring sufficient recurring revenues exist to fund recurring expenditures. With the current
growth and activity expectations in future years, it will be important to continue to analyze the budget in this manner to
avoid future reliance on one-time revenues to fund recurring costs.
For FY 24/25, the Town will focus its efforts on supporting elements of the Town Council adopted Strategic Plan while
navigating any potential economic fluctuations that may occur. The FY 24/25 budget includes completion of a safety and
efficiency expansion and improvement of the Town’s Court Building; Town-wide vehicle replacements; continued funding of
the Town’s Pavement Preservation Program, which maintains the current condition of Town streets; and investments in the
Town’s water system, continuing to ensure a safe, reliable and sustainable water supply to meet community needs.
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Employees
Roche Tissue Diagnostics 1,800
Oro Valley Hospital 700
Simpleview 450
Town of Oro Valley 449
Amphitheater Public Schools 439
Walmart 338
El Conquistador Tucson 294
Splendido at Rancho Vistoso 200
Fry's Food & Drug 182
Casa de la Luz Hospice 155