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HomeMy WebLinkAboutPackets - Budget and Finance Committee (62)       AGENDA ORO VALLEY BUDGET AND FINANCE COMMISSION REGULAR SESSION JANUARY 20, 2026 COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE        REGULAR SESSION AT OR AFTER 4:00 PM   CALL TO ORDER   ROLL CALL   PLEDGE OF ALLEGIANCE   CALL TO AUDIENCE - at this time, any member of the public is allowed to address the Commission on any issue not listed on today’s agenda. Pursuant to the Arizona open meeting law, individual Commission 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 Commission 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.   STAFF LIAISON REPORT   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE NOVEMBER 18, 2025 REGULAR SESSION MEETING MINUTES   2.DISCUSSION AND POSSIBLE ACTION ON ELECTING A CHAIR AND VICE CHAIR FOR THE BUDGET AND FINANCE COMMISSION A) DISCUSSION AND POSSIBLE ACTION IN ELECTING A CHAIR OF THE BUDGET AND FINANCE COMMISSION FOR THE UPCOMING YEAR B) DISCUSSION AND POSSIBLE ACTION IN ELECTING A VICE-CHAIR OF THE BUDGET AND FINANCE COMMISSION FOR THE UPCOMING YEAR   3.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S ANNUAL COMPREHENSIVE FINANCIAL REPORT AND SINGLE AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2025   4.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY25/26 FINANCIAL UPDATE THROUGH NOVEMBER 2025 (PLEASE REFERENCE ATTACHMENTS)   COUNCIL LIAISON COMMENTS   ADJOURNMENT   POSTED: 1/16/26 at 5:00 PM by ck When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior to the Commission meeting in the Town Clerk's Office between the hours of 8:00 a.m. – 5:00 p.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 Commission 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 Commission 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 Commission on any item(s) on this agenda, please complete a blue speaker card located on the Agenda table at the back of the room and give it to the Recording Secretary. 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 Chair 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 the Commission. Please organize your speech, you will only be allowed to address the Commission once regarding the topic being discussed. 3. Please limit your comments to 3 minutes. 4. During “Call to Audience”, you may address the Commission 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. “Notice of Possible Quorum of the Oro Valley Town Council, Boards, Commissions and Committees: In accordance with Chapter 3, Title 38, Arizona Revised Statutes and Section 2-4-4 of the Oro Valley Town Code, a majority of the Town Council, Board of Adjustment, Historic Preservation Commission, Parks and Recreation Advisory Board, Stormwater Utility Commission, and Water Utility Commission may attend the above referenced meeting as a member of the audience only.”    Budget and Finance Commission 1. Meeting Date:01/20/2026   Submitted By:Melissa Flores, Legal SUBJECT: REVIEW AND APPROVAL OF THE NOVEMBER 18, 2025 REGULAR SESSION MEETING MINUTES 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 changes) the November 18, 2025 regular session meeting minutes Attachments Draft Minutes 111825  D R A F T MINUTES BUDGET AND FINANCE COMMISSION REGULAR SESSION NOVEMBER 18, 2025 COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 4:00 PM   CALL TO ORDER   ROLL CALL Present: Joyce Garland, Chair Dan Karlsberg, Vice Chair Michael Mason, Commissioner Eloho Okeze, Commissioner Absent:Matthew Miller, Commissioner Staff Present: Joe Winfield, Mayor Jeff Wilkins, Town Manager David Gephart, Chief Financial Officer Chris Hutchison, Senior Budget Analyst PLEDGE OF ALLEGIANCE led by Chair Garland   CALL TO AUDIENCE - No comments were received.   STAFF LIAISON REPORT Chief Financial Officer David Gephart reported on the following: Recognized Mike Mason for his contributions for five years as Vice Chair, Chair, and a Commissioner on the Budget and Finance Commission. Town Council Meeting Agenda Items: Trails Connect Trails and Paths Master Plan 1st Quarter in Financials Town Attorney Search Reminder to Commissioners of the Volunteer Appreciation Banquet At the last Town Council Meeting: Council moved forward with noticing for the Town's new proposed tax categories Council approved a contingency reallocation request in the Capital Fund to authorize Budget Capacity for the purchase of a new Police Headquarters Building   REGULAR SESSION AGENDA   1.REVIEW AND APPROVAL OF THE OCTOBER 21, 2025 REGULAR SESSION MEETING MINUTES    11/18/25 Minutes, Budget and Finance Commission Regular Session 1 1.REVIEW AND APPROVAL OF THE OCTOBER 21, 2025 REGULAR SESSION MEETING MINUTES       Motion by Vice Chair Dan Karlsberg, seconded by Commissioner Michael Mason to approve the October 21, 2025 regular session meeting minutes.  Vote: 4 - 0 Carried   2.PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY25/26 FINANCIAL UPDATE THROUGH SEPTEMBER 2025 (PLEASE REFERENCE ATTACHMENTS) Presentation by David Gephart, Chief Financial Officer. Discussion ensued amongst staff and commissioners.      3.DISCUSSION AND POSSIBLE ACTION TO CANCEL DECEMBER 16, 2025 MEETING       Motion by Commissioner Michael Mason, seconded by Vice Chair Dan Karlsberg for approval of canceling the December 16, 2025 Budget & Finance Commission regular session meeting.  Vote: 4 - 0 Carried   COUNCIL LIAISON COMMENTS Mayor Winfield provided the following comments: A thank you to Commissioner Mason for his many years of service. Would like to wish everyone a Happy Thanksgiving and Happy Holidays. Extends a personal invitation to the Commissioners of the Volunteer Appreciation Dinner and encourages them to bring their families.   ADJOURNMENT    Motion by Commissioner Eloho Okeze, seconded by Vice Chair Dan Karlsberg to adjourn the meeting at: 4:47 PM  Vote: 4 - 0 Carried     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 Budget and Finance Commission of Oro Valley, Arizona held on the 18th day of November, 2025. I further certify that the meeting was duly called and held and that a quorum was present. Dated this 18th day of November, 2025. ___________________________ Melissa Flores Legal Secretary 11/18/25 Minutes, Budget and Finance Commission Regular Session 2    Budget and Finance Commission 2. Meeting Date:01/20/2026   Submitted By:Melissa Flores, Legal SUBJECT: DISCUSSION AND POSSIBLE ACTION ON ELECTING A CHAIR AND VICE CHAIR FOR THE BUDGET AND FINANCE COMMISSION A) DISCUSSION AND POSSIBLE ACTION IN ELECTING A CHAIR OF THE BUDGET AND FINANCE COMMISSION FOR THE UPCOMING YEAR B) DISCUSSION AND POSSIBLE ACTION IN ELECTING A VICE-CHAIR OF THE BUDGET AND FINANCE COMMISSION FOR THE UPCOMING YEAR RECOMMENDATION: Staff recommends electing a Chair and Vice-Chair to serve for this year EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: On January 9, 2019, Council adopted Resolution No. (R)19-01, establishing the Budget and Finance Commission and adopting the operating procedures for the Commission. Per the operating procedures, the Commission shall elect a Chair and Vice-Chair from among its own members in February of each year.  The term will be for a period of one year. FISCAL IMPACT: N/A SUGGESTED MOTION: A) I Move to elect ____________as the Chair of the Budget and Finance Commission for this calendar year. B) I Move to elect ___________ as the Vice-Chair for the Budget and Finance Commission for this calendar year.    Budget and Finance Commission 3. Meeting Date:01/20/2026   Submitted By:David Gephart, Finance SUBJECT: PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S ANNUAL COMPREHENSIVE FINANCIAL REPORT AND SINGLE AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2025 RECOMMENDATION: N/A EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: The audit of the Town's Annual Comprehensive Financial Report (ACFR) for June 30, 2025, was completed on December 12, 2025. The Town received an unmodified (clean) audit opinion.  Just as last year, the Town was also subject to a Single Audit, which is required when expenditures of federal grants and awards exceed $750,000. A grant received from the Water Infrastructure Finance Authority (WIFA) along with some other homeland security grants thrust the Town over the $750,000 federal spending threshold.  The 2025 ACFR has been submitted to the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting award program. The Town believes the current ACFR continues to meet the Certificate of Achievement’s program requirements for another year.   The ACFR includes introductory, financial and statistical sections. The introductory section includes a letter of transmittal, organization chart and the previous year’s GFOA certificate. The financial section includes the Auditors' report, Management’s Discussion and Analysis, basic financial statements and the notes to the financial statements. The statistical section includes multi-year financial trends, revenue capacity, debt capacity, operating and demographic information. Management's Discussion and Analysis, starting on Page 19 of the attached ACFR, provides a narrative overview and analysis of the Town's financial activities. Brian Hemmerle, CPA, will be present at the meeting to provide an overview of the ACFR to Town Council and answer any questions. FISCAL IMPACT: N/A SUGGESTED MOTION: N/A Attachments FY25 ACFR  FY25 Single Audit Report  FY25 Expenditure Limitation Report  Presentation Slide Deck  ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TOWN OF ORO VALLEY, ARIZONA Prepared by: Finance Department of Town of Oro Valley David Gephart, CPA Chief Financial Officer Wendy Gomez, MPA Deputy Finance Director Aaron Van Winkle Senior Accountant Nancy Arvizu, CPA Senior Accountant Suzy Molinar Accounting Specialist Nik Abbou Accounting Specialist Chris Hutchison, CPA Senior Budget Analyst Town of Oro Valley, Arizona 11000 N. La Cañada Drive Oro Valley, AZ 85737 (520)229-4700 https://www.orovalleyaz.gov TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal 1 Organizational Chart 8 List of Town Officials 9 GFOA Certificate of Achievement 10 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT 12 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 17 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 35 Statement of Activities 36 Fund Financial Statements: Balance Sheet – Governmental Funds 40 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 43 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 47 Statement of Net Position – Proprietary Funds 48 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 49 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TABLE OF CONTENTS FINANCIAL SECTION Page BASIC FINANCIAL STATEMENTS Statement of Cash Flows – Proprietary Funds 50 Notes to Financial Statements 51 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 90 Community Center Fund 91 Grants and Contributions Fund 92 Schedule of the Proportionate Share of the Net Pension Liability – ASRS 93 Schedule of Changes in the Net Pension Liability and Related Ratios – PSPRS Police 94 Schedule of Changes in the Net Pension Liability and Related Ratios – PSPRS Dispatchers 96 Schedule of Pension Contributions – All Pension Plans 98 Notes to Required Supplementary Information 100 SUPPLEMENTARY INFORMATION COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Governmental Funds: Combining Balance Sheet – All Non-Major Governmental Funds – By Fund Type 104 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non-Major Governmental Funds – By Fund Type 105 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TABLE OF CONTENTS FINANCIAL SECTION Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Special Revenue Funds: Combining Balance Sheet 108 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 109 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 110 Capital Projects Funds: Combining Balance Sheet 114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 115 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 116 Debt Service Fund: Changes in Fund Balances - Budget and Actual 122 STATISTICAL SECTION Financial Trends: Net Position by Component 125 Changes in Net Position 126 Fund Balances of Governmental Funds 128 Changes in Fund Balances of Governmental Funds 129 Revenue Capacity: Principal Sales Taxpayers 130 Taxable Sales by Category 131 TOWN OF ORO VALLEY, ARIZONA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TABLE OF CONTENTS STATISTICAL SECTION Page Direct and Overlapping Sales Tax Rates 132 Net Limited and Full Cash Assessed Value of Taxable Property 133 Historical and Projected Excise Tax Collections 134 Debt Capacity: Ratio of Outstanding Debt by Type 135 Direct and Overlapping Governmental Activities Debt 136 Legal Debt Margin Information 137 Calculation of Legal Debt Margin 138 Pledged-Revenue Coverage 139 Historical and Projected Water System Revenues, Expenses, Debt Service and Coverage 140 Demographic and Economic Information: Demographic and Economic Statistics 141 Principal Employers 142 Operating Information: Full-Time Equivalent Town Employees by Function 143 Water Utility Revenues by User Type 144 Operating Indicators by Function 145 Water Rates 146 Capital Assets Statistics by Function 147 INTRODUCTORY SECTION (This page intentionally left blank) 1 December 12, 2025 Honorable Mayor, Members of Town Council and Citizens of the Town of Oro Valley, Arizona: State law mandates that cities publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States of America by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the annual comprehensive financial report of the Town of Oro Valley, Arizona (Town) for the fiscal year ended June 30, 2025. Management assumes full responsibility for the completeness and reliability of all 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 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 Baker Tilly, LLP, a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2025, 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, 2025, 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. Additionally, the Town is required to have an independent audit ("Single Audit") of federal financial assistance received by the Town directly from federal agencies or passed through to the Town by the State of Arizona, or other governmental entities during the fiscal year. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the government's internal controls and compliance with legal requirements having a direct and material impact on major programs, with special emphasis on internal controls and compliance requirements involving the administration of major federal awards. It’s in our nature… www.orovalleyaz.gov 11000 N. La Cañada Drive • Oro Valley, Arizona 85737 phone: (520) 229-4700 • fax: (520) 229-0428 2 The results of the Town's Single Audit for the fiscal year ended June 30, 2025, found no material weaknesses in the internal control structure, and no instances of significant violations of applicable laws and regulations with respect to major programs. Additional information is available within the separately issued Single Audit Report. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Town of Oro Valley’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE TOWN The Town of Oro Valley was incorporated in 1974. Located in northeastern Pima County, three miles north of Tucson, it sits at an elevation of 2,620 feet. The Town currently occupies a land area of more than 36 square miles and serves an estimated population of 49,159. The population of Oro Valley has increased 65% since the 2000 population of 29,700. Based on current Census estimates, Oro Valley has a median household income of $108,178, compared to the median household income for the state of Arizona of $77,315. 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 Judge. The Town Manager is responsible for implementation of the policies of the Town Council. The Town Manager appoints all other department directors except those mentioned above under Town Council responsibilities. The Town of Oro Valley provides a full range of services including police protection; the construction and maintenance of streets and related infrastructure; proper planning and economic development; the provision of water and stormwater services; public transportation services; recreational activities and cultural events. As with all cities in the State of Arizona, the Town of Oro Valley is required to comply with Article IX, Section 20 (1) of the Arizona Constitution, which sets limits on the Town’s legal budget capacity. In August 2020, Oro Valley voters approved a Permanent Base Adjustment for the Town. The Permanent Base Adjustment option permanently increases the Town’s base limit so that when the State’s expenditure limitation formula is applied, it results in a limitation more closely matching the Town’s annual budget. This permanent adjustment, which took effect in the fiscal year ending June 30, 2024, saves the Town the cost of future Home Rule elections and associated staff time every four years, giving the Town permanent control over expenditures instead of using a state-calculated formula. The annual operating budget serves as the foundation for the Town’s financial planning and control. The objective of these controls is to ensure compliance with legal provisions embodied in the annual 3 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 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 from personnel reclassifications; transfers that would reduce or eliminate funding for items designated in the adopted Capital Improvement Plan; and transfers that would reduce or eliminate funding for debt service. All other operational budget amendments involving transfers between line items or expenditure categories require approval by the Town Manager. MAJOR INITIATIVES AND ACCOMPLISHMENTS FOR THE YEAR The Council adopted Strategic Plan for FY 23-24 through 24-25 is the culmination of an extensive four-month process involving Town Council, Town staff, and the Oro Valley community. Rooted deeply in the values and priorities of the Your Voice, Our Future 10-year General Plan, the two-year Strategic Plan provides organizational direction in seven focus areas:  Economic Vitality  Culture and Recreation  Public Safety  Roads, Water and Town Assets  Land Use and Design  Effective and Efficient Government  Financial Stability 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 2024-25.  Recognized as a “Triple Crown Winner” by the Government Finance Officers Association for receiving the Certificate of Achievement for Excellence in Financial Reporting Award (31 st consecutive year), the Distinguished Budget Presentation Award (17th consecutive year) and the Popular Annual Financial Reporting Award (13th consecutive year)  Ended FY 24-25 with a $20.7 million fund balance in the General Fund, exceeding budget expectations by $4.0 million  Reached 99.7% plan funded status in the Town’s Public Safety Personnel Retirement System for the Oro Valley Police Department  Received an unmodified “clean” audit opinion for the Town’s annual financial statements  Issued $6.1 million in bonds and secured a $12.0 million Water Infrastructure Finance Authority loan (including $1 million in forgivable principal) to finance a portion of the Town’s independent and partnered components of the regional Northwest Recharge, Recovery and Delivery System (NWRRDS) project. The NWRRDS project will reduce groundwater pumping and increase delivery of Central Arizona Project water to the Town by up to 150%  Completed Phase 1 and the first half of Phase 2 for Oro Valley Path Forward, the community’s next 10-year General Plan update  Oro Valley ranked safest city in Arizona by Safewise.com 4 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 in which the Town operates. Local sales tax revenue came in at 93% of budget in FY 24-25, due to a shortfall in construction sales tax, while state shared revenues came in at 101% 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 81% of total General Fund revenue for FY 24-25. Total local sales tax collections totaled $29.7 million for FY 24-25, which represents a $0.8 million, or 2.7% decrease from last fiscal year. Major local sales tax categories experiencing year-over-year changes compared to amounts collected in FY 23-24 are as discussed below:  Utility tax collections totaled $4.0 million for FY 24-25, roughly flat compared to last fiscal year  Retail tax collections totaled $11.7 million for FY 24-25, up 0.7%, or approximately $80,000 over last fiscal year  Restaurant and bar tax collections totaled $3.6 million for the fiscal year, up 4.2%, or approximately $145,000 over last fiscal year  Construction sales tax collections totaled $3.9 million for the fiscal year, down nearly 30%, or $1.6 million from last fiscal year The chart below is a look at the past five years’ local sales tax activity by category: $- $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13 Utility Taxes Retail Taxes Restaurant/Bar Taxes Construction Taxes M i l l i o n s Sales Tax Activity by Sector - FY 20-21 through FY 24-25 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 In FY 24-25, the Town received $20.3 million for state shared revenues in the General Fund, a decrease of nearly 10% or $2.2 million from last fiscal year. This was due primarily to statutory reductions and a rate cap on state income tax growth. The trend chart on the following page depicts the performance of both revenue categories from FY 15-16 through FY 25-26 budget projections: 5 $- $5 $10 $15 $20 $25 $30 $35 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 Budget Mi l l i o n s Local Sales Tax Collections and State Shared Revenues Sales Taxes State Shared Revenues Critical to success in this area is the preparation of realistic growth assumptions helping guide Town revenue projections. Over the past two years, the Town has faced flattening revenues alongside rising costs. Economic factors include reductions in state funding, increased operating costs driven by inflation, sharp rises in road maintenance and construction materials prices, slower development due to higher interest rates, and plateauing sales tax revenues. At the same time, Oro Valley is transitioning from a phase of steady growth to a more mature, built-out Town, with fewer parcels of developable land remaining. Future population and economic growth of the Town depend largely on continued available land for development. Therefore, strategic annexation efforts and discussions are ongoing as a means to address the potential for future buildout within existing Town boundaries. While strong state population and economic growth continue to increase shared revenues, Oro Valley’s population growth is being outpaced by Phoenix-area municipalities, which is eroding the Town’s allocation of state shared revenues. Legislative changes made at the state level have also impacted this significant revenue source for the Town. Statutory income tax rate reductions and a cap of 2.5% are forecast to limit growth in shared income tax revenues to about 2% per year in future years. As noted, General Fund state shared revenues decreased 10%, or $2.2 million in FY 24-25. They are expected to decline another 3.6% for FY 25-26. Concerted efforts were initiated in FY 24-25 to diversify the Town’s revenue base, which has been a continuing goal within the Town Council’s Strategic Plan for a number of years. Broad community input has been solicited in this process and continues into the new fiscal year. In the near term, projected commercial and residential development should be steady over the next two to three-year period. Residential activity has slowed after a 15-plus year high in FY 20-21. In FY 24-25, the Town estimated that 95 single family residential (SFR) building permits would be issued; a total of 112 were issued by year-end. The FY 25-26 budget conservatively assumes 107 SFR permits will be issued during the year. The chart on the following page 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 15-16 through FY 25-26 budget projections: 6 0 100 200 300 400 500 600 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 Budget SF R P e r m i t s P e r m i t R e v e n u e SFR Permits and Building Activity Revenue SFR Permits Residential Permit Revenues Commercial Permit Revenues Future Focus During FY 25-26, 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. This is especially important given the declines in state shared revenues and construction sales tax. 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 imperative to continue analyzing the budget in this manner to avoid future reliance on one- time revenues to fund recurring costs. For FY 25-26, the Town will focus its efforts on supporting elements of the Town Council adopted Strategic Plan all while navigating any potential economic fluctuations that may occur. These strategies will be fulfilled in a number of ways as highlighted below:  Protect and prioritize aging infrastructure with the following capital projects budgeted for FY 25-26: • Nearly $5.8 million for roadways and related infrastructure and equipment, including $3.1 million for the Pavement Preservation Program in the Highway Fund • $23.7 million to continue progress towards the regional NWRRDS project to increase utilization of Central Arizona Project water allocations in the future • $3.3 million for Town-wide vehicle replacements, including nearly $1.1 million to fund the Police Department’s necessary vehicle replacements • $800,000 to complete a safety and efficiency expansion and improvement of the Town’s Court building  Continue the Town’s commitment towards fully funding the Public Safety Pension Retirement System (PSPRS) with nearly $1.6 million in additional contributions budgeted for FY 25-26  Continue prioritizing financial stability by evaluating current costs and revenue sources, controlling expenditures and exploring new opportunities for diversification of General Fund resources 7 The Town also continues to maintain strong investment grade ratings on its outstanding excise tax bonds, rated “AA+” by Standard and Poor’s. This is largely achieved by maintaining strong fund balance reserves in the General Fund, currently at $20.7 million, or 39% of FY 25-26 adopted expenditures of $53.0 million. This is well above the Council-adopted policy threshold of 25% of expenditures. AWARDS AND ACKNOWLEDGMENTS Award. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Oro Valley for its annual comprehensive financial report for the year ended June 30, 2024. This was the thirtieth consecutive year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements and are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. The preparation of this Annual Comprehensive Financial Report could not have been accomplished without the efficient and dedicated services of the entire staff of the Finance Department who assisted in and contributed to its preparation. We thank the Mayor and members of the Town Council for their interest and support in planning and conducting the financial affairs of the Town in a responsible and efficient manner. Respectfully submitted, Jeff Wilkins David Gephart Town Manager Chief Financial Officer 8 Organizational Chart 9 TOWN OF ORO VALLEY, ARIZONA LIST OF TOWN OFFICIALS ELECTED OFFICIALS Mayor Mr. Joe Winfield Vice-Mayor Ms. Melanie Barrett Council Member Ms. Elizabeth Robb Council Member Dr. Harry “Mo” Greene Council Member Ms. Joyce Jones-Ivey Council Member Mr. Josh Nicolson Council Member Ms. Mary Murphy TOWN MANAGEMENT Town Manager Jeff Wilkins Deputy Town Manager Chris Cornelison Chief Financial Officer David Gephart Human Resources Director Andrew Votava Town Clerk Michael Standish Judge James Hazel Legal Services Director Tobin Sidles Water Utility Director Peter Abraham Chief of Police Kara Riley Public Works Director/Town Engineer Paul Keesler Community and Economic Development Director Paul Melcher Parks and Recreation Director Rosalyn Epting Information Technology Director Scott Zufelt 10 11 FINANCIAL SECTION 12 Independent Auditors' Report To the Town Council of The Town of Oro Valley, Arizona Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town of Oro Valley (the Town), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town as of June 30, 2025 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Town and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matter As discussed in Note 1, the Town adopted the provisions of GASB Statement No. 101,Compensated Absences, effective July 1, 2024. Our opinions are not modified with respect to this matter. Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. 13 Other Matters Compliance Over Use of Highway User Revenue Fund and Other Dedicated State Transportation Revenue Monies In connection with our audit, nothing came to our attention that caused us to believe that the Town failed to use highway user revenue fund monies received by the Town pursuant to Arizona Revised Statues Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues received by the Town solely for the authorized transportation purposes, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the Town’s noncompliance with the use of highway user revenue fund monies and other dedicated state transportation revenues, insofar as they relate to accounting matters. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control. Accordingly, no such opinion is expressed. 14  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, such as Management’s Discussion and Analysis and the other required supplementary information as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements. The accompanying supplementary information such as combining and individual fund financial statements, listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 supplementary information is fairly stated in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the Introductory Section and Statistical Section included in the annual report but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 15 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2025 on our consideration of the Town's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Town's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Town's internal control over financial reporting and compliance. Restricted Use Relating to the Other Matter The communication related to compliance with the aforementioned indenture described in the Other Matter paragraph is intended solely for the information and use of the Arizona State Legislature, management and other responsible parties within the Town and is not intended to be and should not be used by anyone other than these specified parties. Tempe, Arizona December 12, 2025 16 (This page intentionally left blank) 17 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 18 (This page intentionally left blank) TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 19 As management of the Town of Oro Valley, Arizona (Town), we offer readers of the Town’s financial statements this overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2025. The management’s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The financial statements, which follow the Management’s Discussion and Analysis, provide key financial highlights for fiscal year ending June 30, 2025 as follows.  The Town’s total net position of governmental activities increased $7.6 million to $224.6 million, due primarily to reductions in net pension liability and long-term debt. Business-type activities increased $5.0 million to $133.5 million, due primarily to capital asset additions. Governmental activities and business-type activities represent 63 percent and 37 percent respectively, of the total net position of $358.1 million.  General revenues from governmental activities decreased $2.5 million to $53.1 million, or 64 percent of all current fiscal year governmental activities revenues. Program specific revenues in the form of charges for services and grants and contributions increased nearly $5.7 million to $30.4 million, or 36 percent of total current fiscal year governmental activities revenues. This was due primarily to capital asset contributions made to the Town. The Town had $25.5 million in program revenues and $736,848 in general revenues related to business-type activities.  The Town had $75.9 million in expenses related to governmental activities, an increase of 4 percent from the prior fiscal year. The increase was attributable to culture and recreation, as well as general government, highways and streets, and transit. The Town had $21.2 million in expenses related to business-type activities, an increase of 7.0 percent from the prior fiscal year, attributable to Water Fund costs of sales and services.  Among major funds, the General Fund had $56.4 million in revenues, consisting primarily of sales taxes and intergovernmental revenues. Total expenditures for the General Fund were $48.7 million. The General Fund’s fund balance decreased from $22.1 million to $20.7 million, due to budgeted transfers for one-time capital projects.  The Community Center Fund had $12.1 million in revenues, consisting primarily of charges for services and sales taxes. Total expenditures for the Community Center Fund were $9.3 million.  The General Government CIP Fund had $3.2 million in revenues consisting primarily of intergovernmental and other revenues. Total expenditures for the General Government CIP Fund were $6.0 million.  The Grants and Contributions Fund had $835,679 in revenues consisting primarily of intergovernmental revenue. Total expenditures for the Grants and Contributions Fund were $714,711.  The Municipal Debt Service Fund had $106,927 in revenues consisting primarily of interest income and other revenues. Total expenditures for the Municipal Debt Service Fund were $4.0 million.  The Water Fund had operating revenues of $21.7 million, exceeding operating expenses of $19.4 million. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 20 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private- sector business. The accrual basis of accounting is used for the government-wide financial statements. The statement of net position presents information on all Town assets liabilities, and deferred inflows/outflows of resources, with the difference reported as net position . Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the Town’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows . Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). In the government-wide financial statements the Town’s activities are presented in the following categories:  Governmental activities – Most of the Town’s basic services are included here, such as general government, public safety, highways and streets, transit, and culture and recreation. Sales taxes, intergovernmental, and charges for services finance most of these activities.  Business-type activities – The services provided by the Town included here are water and stormwater utilities. The services are primarily financed through user fees and charges. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Town’s near-term financing requirements. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 21 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Town’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Community Center, Grants and Contributions, General Government CIP, and Municipal Debt Service Funds, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Proprietary funds. The Town maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses enterprise funds to account for its Oro Valley Water Utility and Stormwater Drainage Utility. The Town uses an internal service fund to finance its self- insured employee health benefits. Because these services predominately benefit governmental rather than business-type functions, the internal service fund has been included within governmental activities in the government-wide financial statements. Notes to the financial statements. The notes provide additional information essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements immediately follow the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s budget process, and pension plans. The Town adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances – budget and actual has been provided for the General Fund and the major Special Revenue Funds as required supplementary information. Schedules for the pension plans have also 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 $358.1 million as of the current fiscal year end. The largest portion of the Town’s net position reflects its investment in capital assets (e.g., land, water rights, buildings and improvements, improvements other than buildings, infrastructure, vehicles, machinery and equipment and construction in progress), less any related outstanding debt used to acquire those assets. The Town uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 22 net of related outstanding debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the Town’s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance is unrestricted and may be used to meet the Town’s ongoing obligations to its citizens and creditors. The following table presents a summary of the Town’s net position for the fiscal years ended June 30, 2025, and June 30, 2024. 2025 2024 2025 2024 2025 Total 2024 Total Current and other assets 58,407,764$ 57,840,473$ 21,995,991$ 25,915,922$ 80,403,755$ 83,756,395$ Capital assets, net 228,072,559 225,923,637 136,810,085 125,099,990 364,882,644 351,023,627 Total assets 286,480,323 283,764,110 158,806,076 151,015,912 445,286,399 434,780,022 Deferred outflows of resources 10,488,462 14,573,869 642,445 579,010 11,130,907 15,152,879 Current and other liabilities 11,503,466 13,245,957 6,850,830 7,015,871 18,354,296 20,261,828 Noncurrent liabilities 56,247,241 65,125,567 18,851,864 15,943,193 75,099,105 81,068,760 Total liabilities 67,750,706 78,371,524 25,702,694 22,959,064 93,453,400 101,330,588 Deferred inflows of resources 4,649,166 3,008,706 235,102 142,315 4,884,268 3,151,021 Net position Net investment in capital assets 199,942,273 195,184,523 125,033,742 110,254,720 324,976,015 305,439,243 Restricted 6,259,077 4,502,647 6,481,181 14,427,924 12,740,258 18,930,571 Unrestricted 18,367,563 17,270,579 1,995,802 3,810,899 20,363,365 21,081,478 Total net position 224,568,913$ 216,957,749$ 133,510,725$ 128,493,543$ 358,079,638$ 345,451,292$ Governmental Activities Business-type Activities At the end of the current fiscal year the Town reported positive balances in all categories of net position. The Town’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. The following are significant current year transactions impacting the Statement of Net position.  The addition of $15.4 million and $15.6 million in capital assets (net of dispositions) for governmental and business-type activities, respectively, attributable to roadway improvements, building improvements and construction in progress for the Water Utility.  Current assets decreased $3.9 million for business-type activities, due to planned cash outlays for capital investment.  The addition of $13.3 million and $3.9 million for governmental activities and business- type activities, respectively, in accumulated depreciation due to depreciation expense.  Noncurrent liabilities decreased $8.9 million for governmental activities resulting from debt repayments and prior fiscal year funding of the Town’s outstanding PSPRS pension liability. Noncurrent liabilities increased $2.9 for business-type activities, due to bonds issued in FY 24-25.  Deferred outflows for governmental activities decreased $4.1 million, due to prior fiscal year funding of the Town’s outstanding PSPRS pension liability. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 23 Changes in net position. The Town’s total revenues for the current fiscal year were $109.8 million. The total cost of all programs and services was $97.2 million. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2025 and June 30, 2024. 2025 2024 2025 2024 2025 Total 2024 Total Revenues Program revenues Charges for services 15,225,554$ 13,953,799$ 23,272,964$ 21,071,883$ 38,498,518$ 35,025,682$ Operating grants and contributions 3,287,190 3,237,521 - - 3,287,190 3,237,521 Capital grants and contributions 11,868,940 7,512,562 2,256,093 4,257,006 14,125,033 11,769,568 General revenues Sales taxes 29,688,954 30,522,235 - - 29,688,954 30,522,235 Franchise taxes 679,027 715,334 - - 679,027 715,334 Unrestricted state shared revenues 20,315,738 22,500,362 - - 20,315,738 22,500,362 Miscellaneous 147,864 92,569 17,300 18,481 165,164 111,050 Investment earnings Interest 2,069,704 2,009,088 662,693 854,325 2,732,397 2,863,413 Net increase/(decrease) in fair value 229,868 (218,561) 56,855 (104,083) 286,723 (322,644) Total revenues 83,512,837 80,324,909 26,265,905 26,097,612 109,778,742 106,422,521 Expenses General government 23,475,179 22,885,243 - - 23,475,179 22,885,243 Public safety 21,467,491 21,516,996 - - 21,467,491 21,516,996 Highways and streets 12,918,088 12,407,093 - - 12,918,088 12,407,093 Transit 2,067,887 1,691,450 - - 2,067,887 1,691,450 Culture and recreation 14,796,221 13,167,591 - - 14,796,221 13,167,591 Interest on long-term debt 1,179,140 1,270,041 - - 1,179,140 1,270,041 Water - - 19,890,406 18,305,199 19,890,406 18,305,199 Stormwater - - 1,355,984 1,486,716 1,355,984 1,486,716 Total expenses 75,904,006 72,938,414 21,246,390 19,791,915 97,150,396 92,730,329 Excess/(Deficiency) before transfers 7,608,831 7,386,495 5,019,515 6,305,697 12,628,346 13,692,192 Transfers 2,333 (520,393) (2,333) 520,393 - - Change in net position 7,611,164 6,866,102 5,017,182 6,826,090 12,628,346 13,692,192 Beginning net position 216,957,749 210,091,647 128,493,543 121,667,453 345,451,292 331,759,100 Ending net position 224,568,913$ 216,957,749$ 133,510,725$ 128,493,543$ 358,079,638$ 345,451,292$ Governmental Activities Business-type Activities The following are significant current year transactions that have had an impact on the change in net position.  Total expenses increased $4.4 million, or 4.8 percent. Personnel costs remained mostly flat as a result of reduced pension funding requirements and vacancy savings, offset with merit and step increases. Other operating costs increased as a result of depreciation, claim settlements, water wheeling and delivery charges, rising software costs, credit card processing fees, repair and maintenance, contracted services, utilities and insurance.  Total revenues increased $3.4 million, or 3.2 percent. Charges for services increased as a TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 24 result of additional water sales, groundwater preservation fees, and impact fees, as well as additional revenues from the Town’s golf contractor operations and Community Center. Capital grants and contributions increased as a result of highway and streets contributed capital. Governmental and Business-type activities. The following table presents the cost of the Town’s major functional activities. The table also shows each function’s net cost (total cost, less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the Town’s taxpayers by each of these functions. Total Net (Expense) Total Net (Expense) Expenses Revenue Expenses Revenue General government 23,475,179$ (17,496,699)$ 22,885,243$ (15,020,148)$ Public safety 21,467,491 (20,056,368) 21,516,996 (20,329,469) Highways and streets 12,918,088 (3,088,144) 12,407,093 (7,794,639) Transit 2,067,887 216,269 1,691,450 748,599 Culture and recreation 14,796,221 (3,918,241) 13,167,591 (4,568,832) Interest on long-term debt 1,179,140 (1,179,140) 1,270,041 (1,270,041) Total 75,904,006$ (45,522,323)$ 72,938,414$ (48,234,532)$ Water 19,890,406$ 3,897,399$ 18,305,199$ 5,502,452$ Stormwater drainage 1,355,984 385,268 1,486,716 34,522 Total 21,246,390$ 4,282,667$ 19,791,915$ 5,536,974$ Business-type Activities Governmental Activities June 30, 2025 June 30, 2024   The cost of all governmental activities this year was $75.9 million. The increase of $3.0 million from the prior year was due to the operating cost increases noted previously.  The cost of all business-type activities this year was $21.2 million. The increase of nearly $1.5 million from the prior year was due to increases in operating costs for the Water Utility.  Federal and State government grants, developer contributions, and charges for services subsidized certain governmental programs and business-type programs with revenues of $55.9 million.  Net cost of governmental activities of $45.5 million was financed by general revenues, which are made up of primarily sales taxes and state shared revenues totaling $50.7 million. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 25 FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As the Town completed the year, its governmental funds reported a combined fund balance of $47.1 million, an increase of $2.1 million. This was due primarily to a decrease in liabilities, with revenue recognition that was unearned in the previous fiscal year, as well as a decrease in accounts payable. The General Fund comprises 44.0 percent of the total governmental fund balance. Approximately $5.6 million, or 27.1 percent of the General’s Fund ending fund balance is unassigned. The General Fund is the principal operating fund of the Town. The decrease in fund balance of $1.4 million to $20.7 million as of fiscal year end was the result of planned transfers for capital spending of one- time revenues. Total revenues in the General Fund decreased approximately $2.7 million, due to declines in sales taxes and state shared revenues. General Fund expenditures decreased $1.4 million, in part due to PSPRS pension funding decreases resulting from improved plan funded status. Public Works and Transit expenditures also decreased from the prior fiscal year. The Community Center Fund’s ending fund balance increased from $1.8 million to $2.9 million, due to charges for services revenue. The General Government CIP Fund’s ending fund balance increased from $16.7 million to $17.2 due to intergovernmental revenue and donations The Grants and Contributions Fund’s ending fund balance increased nearly $250,000 due to grant revenue. The Municipal Debt Service Fund’s ending fund balance decreased from $326,002 to $53,800 due to debt repayments. Proprietary funds. Net position of the Enterprise Funds at the end of the year amounted to $133.5 million. This increased by $5.0 million during the fiscal year due in large part to water sales and federal grants. Net position of the Internal Service Fund at the end of the year amounted to $4.0 million. This increased by $591,318 during the fiscal year due to premiums exceeding claim settlement costs. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 26 BUDGETARY HIGHLIGHTS The Town’s annual adopted budget established the legal level of expenditure control. Budgetary comparison statements are required for the General Fund and all major special revenue funds and are reported as Required Supplementary Information. These statements compare the original budget, the budget as amended throughout the year, and the actual revenues and expenditures. Budgetary schedules for the other governmental funds are also presented in this report as Other Supplementary Information. Amendments to the Town of Oro Valley’s fiscal year 2024-25 operating and capital budget may occur throughout the year between departments, and between funds in all other funds in a legally permissible manner. Minor budget adjustments within General Fund departments did occur, mainly to reflect proper budget classification of capitalized and non-capitalized items. Significant General Fund budget variances are summarized as follows:  The unfavorable variance of $0.7 million in revenues was attributable to a shortfall in construction sales tax collections resulting from reduced residential and commercial development and construction activity.  The favorable expenditure variance of $4.4 million was attributable to budgeted contingency that was not utilized, as well as operating savings recognized in the Information Technology, Police, Public Works, and Community and Economic Development Departments. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 27 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. At year end, the Town had invested $364.9 million in capital assets (net of accumulated depreciation), including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. This amount represents a net increase of $13.9 million from last year. This was primarily due to construction in progress and infrastructure. The following schedule presents capital asset balances for the fiscal years ended June 30, 2025 and June 30, 2024. Increase/ 2025 2024 (Decrease) Land 36,289,821$ 36,289,821$ -$ Infrastructure 260,736,333 251,101,285 9,635,048 Buildings and Improvements 90,748,319 87,890,040 2,858,279 Machinery, equipment, and vehicles 23,972,342 22,809,672 1,162,670 Right of use asset 3,357,019 3,281,900 75,119 Construction in progress 3,783,939 2,106,956 1,676,983 Accumulated depreciation/amortization (190,815,214) (177,556,037) (13,259,177) Net capital assets 228,072,559$ 225,923,637$ 2,148,922$ Increase/ 2025 2024 (Decrease) Land 2,410,660$ 2,410,660$ -$ Water rights 8,534,490 8,534,490 - Water system 153,421,537 152,125,390 1,296,147 Stormwater system 4,276,663 4,196,312 80,351 Machinery, equipment, and vehicles 7,699,446 7,052,460 646,986 Construction in progress 36,510,017 22,968,118 13,541,899 Accumulated depreciation (76,042,728) (72,187,440) (3,855,288) Net capital assets 136,810,085$ 125,099,990$ 11,710,095$ Business-type Activities Governmental Activities The estimated cost to complete current construction projects is $30.3 million. Additional information on the Town’s capital assets can be found in Note 5. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 28 Debt Administration. At year end, the Town had $57.6 million in long-term debt outstanding with $6.8 million due within one year. Long-term debt decreased by $463,795 due to $6.6 million in maturities and redemptions, offset with a $6.1 million revenue bond issuance for the Town’s Water Utility. The following table presents a summary of the Town’s outstanding long- term debt for the fiscal years ended June 30, 2025 and June 30, 2024. Increase/ 2025 2024 (Decrease) Revenue bonds 38,056,160$ 40,789,128$ (2,732,968)$ Leases 370,144 597,242 (227,098) Financed purchases 29,149 49,723 (20,574) Subscription liabilities 1,281,278 1,678,826 (397,548) 39,736,731$ 43,114,919$ (3,378,188)$ Increase/ 2025 2024 (Decrease) Revenue bonds 16,433,390$ 13,184,870$ 3,248,520$ Loans payable 1,427,503 1,761,630 (334,127) 17,860,893$ 14,946,500$ 2,914,393$ Business-type Activities Governmental Activities State statutes currently limit the amount of general obligation debt a Town may issue to 20 percent of its net full cash assessed valuation for water, sewer, lights, open space preserves, parks, playgrounds and recreational facilities. The current debt limitation for the Town is $256.1 million. State statutes also currently limit the amount of general obligation debt a Town may issue to six percent of its net full cash assessed valuation for all other purposes. The current debt limitation for the Town is $76.8 million. The Town does not have any general obligation debt. The Town has a bond rating of “AA+” from Standard & Poor’s and “AA” from fitch Ratings on outstanding revenue bonds. Additional information on the Town’s long-term debt can be found in Notes 6 through 11. TOWN OF ORO VALLEY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2025 29 ECONOMIC AND OTHER FACTORS IMPACTING NEXT YEAR’S BUDGET Many factors were considered by the Town’s administration during the process of developing the fiscal year 2025-26 budget. Among them:  Unemployment rate for the Town of Oro Valley is currently 4.5 percent. Both Pima County’s and the State of Arizona’s unemployment rates are 4.8 percent.  Per capita personal income and educational attainment continue to be favorable in comparison to other Arizona municipalities  Single family residential (SFR) building permits issued in this fiscal year totaled 112, as compared to 178 SFR building permits issued last fiscal year. Projections for SFR building permits are 107 for fiscal year 25-26.  Lower population growth, with fewer opportunities for residential and commercial expansion as Town approaches buildout  While the rate of inflation has slowed, costs have not considerably declined from highs observed over the last few years  Capital needs for aging infrastructure are beginning to outpace available resources   Vulnerability of the Town’s structurally balanced budget due to heavy reliance on economically sensitive revenue sources and the need for diversification of the Town’s revenue base  Continued critical analysis of ongoing operating costs, with focus on maintaining or reducing expenditures The adopted combined operating and capital expenditure budget for fiscal year 25-26 totals $151.5 million, an increase of roughly $665,000, or less than 0.5 percent over last year’s budget of $150.8 million. The budget for capital improvements decreased $7.3 million due to completion of facility and water improvements and a reduced budget for culture and recreation projects. Additional contingency of $4.7 million was included in next year’s budget, for potential capital projects. The operating budget increased $3.3 million, or 3.6%, due primarily to budgeted debt service for the Water Utility attributable to new issuance, public safety pay increases from a new Memorandum of Understanding between the Town of Oro Valley and the Oro Valley Police Officers Association, and an increase in contracted costs for the Town’s golf course operator. The budget for fiscal year 2025-26 continues to place emphasis on achieving the goals identified in the Town’s adopted Strategic Plan, and includes the following focus areas: economic vitality, culture and recreation, public safety, roads water and Town assets, land use and design, effective and efficient government, and financial stability. 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. 30 (This page intentionally left blank) 31 BASIC FINANCIAL STATEMENTS 32 (This page intentionally left blank) 33 GOVERNMENT-WIDE FINANCIAL STATEMENTS 34 (This page intentionally left blank) TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2025 35 ASSETS Current assets: Cash and investments $ 50,256,711 $ 18,400,214 $68,656,925 Taxes receivable 2,462,075 - 2,462,075 Accounts receivable 862,465 2,765,003 3,627,468 Donation receivable 400,000 - 400,000 Interest receivable 259,675 173,125 432,800 Intergovernmental receivable 1,154,176 365,991 1,520,167 Lease receivable 1,976,450 - 1,976,450 Inventories 129,356 - 129,356 Prepaid items 760,799 291,658 1,052,457 Total current assets 58,261,707 21,995,991 80,257,698 Noncurrent assets: Capital assets, non-depreciable/amortized 40,073,760 47,455,167 87,528,927 Capital assets, depreciable/amortized (net) 187,998,799 89,354,918 277,353,717 Net pension asset 146,057 - 146,057 Total noncurrent assets 228,218,616 136,810,085 365,028,701 Total Assets 286,480,323 158,806,076 445,286,399 DEFERRED OUTFLOWS OF RESOURCES Pension plan items 10,488,462 642,445 11,130,907 Total Deferred Outflows of Resources 10,488,462 642,445 11,130,907 LIABILITIES Current liabilities: Accounts payable and accrued expenses 2,011,428 1,276,159 3,287,587 Accrued wages and benefits 1,337,675 168,915 1,506,590 Intergovernmental payable 119,362 825,312 944,674 Interest payable - 138,563 138,563 Unearned revenue 872,615 175,465 1,048,080 Claims payable 356,345 - 356,345 Customer deposits payable 498,388 744,635 1,243,023 Other accrued liabilities 142,806 - 142,806 Compensated absenses 2,640,798 279,734 2,920,532 Leases payable 206,903 - 206,903 Subscription technology arrangements payable 492,533 - 492,533 Financed purchases 21,671 - 21,671 Loan payable - 342,989 342,989 Revenue bonds 2,802,942 2,899,058 5,702,000 Total current liabilities 11,503,466 6,850,830 18,354,296 Noncurrent liabilities: Leases payable 163,241 - 163,241 Subscription technology arrangements payable 788,745 - 788,745 Financed purchases 7,478 - 7,478 Revenue bonds 38,746,902 13,534,332 52,281,234 Loan payable - 1,084,514 1,084,514 Compensated absenses 411,128 98,471 509,599 Net pension liability 16,129,747 4,134,547 20,264,294 Total noncurrent liabilities 56,247,241 18,851,864 75,099,105 Total Liabilities 67,750,706 25,702,694 93,453,400 DEFERRED INFLOWS OF RESOURCES Leases 1,869,358 - 1,869,358 Pension plan items 2,779,808 235,102 3,014,910 Total Deferred Inflows of Resources 4,649,166 235,102 4,884,268 NET POSITION Net investment in capital assets 199,942,273 125,033,742 324,976,015 Restricted for: Capital projects 4,024,739 6,481,181 10,505,920 Debt service 53,800 - 53,800 Pensions 146,057 - 146,057 Public safety 435,694 - 435,694 Highway and streets 1,598,787 - 1,598,787 Unrestricted 18,367,563 1,995,802 20,363,365 Total Net Position $ 224,568,913 $ 133,510,725 $ 358,079,638 Business-type Activities Governmental Activities Total The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2025 36 Functions/Programs Primary Government Governmental activities: General government $ 23,475,179 $ 4,598,190 $10,441 $ 1,369,849 Public safety 21,467,491 168,713 1,242,410 - Highway and streets 12,918,088 1,255,278 - 8,574,666 Transit 2,067,887 - 1,965,156 319,000 Culture and recreation 14,796,221 9,203,373 69,182 1,605,425 Interest on long-term debt 1,179,140 - - - Total governmental activities 75,904,006 15,225,554 3,287,190 11,868,940 Business-type activities: Water 19,890,406 21,742,703 - 2,045,102 Stormwater 1,355,984 1,530,261 - 210,991 Total business-type activities 21,246,390 23,272,964 - 2,256,093 Total Primary Government $ 97,150,396 $ 38,498,518 $3,287,190 $ 14,125,033 General revenues: Taxes: Sales taxes Franchise taxes Unrestricted state shared revenues Investment income: Interest Net increase in fair value of investments Miscellaneous Transfers Total general revenues and transfers Changes in net position Net position, beginning of year Net position, end of year Program Revenues Contributions Grants and Capital Expenses Services Charges for Operating Grants and Contributions The notes to the basic financial statements are an integral part of this statement 37 $ (17,496,699) $ - $ (17,496,699) (20,056,368) - (20,056,368) (3,088,144) - (3,088,144) 216,269 - 216,269 (3,918,241) - (3,918,241) (1,179,140) - (1,179,140) (45,522,323) - (45,522,323) - 3,897,399 3,897,399 - 385,268 385,268 - 4,282,667 4,282,667 $ (45,522,323) $ 4,282,667 $ (41,239,656) 29,688,954 - 29,688,954 679,027 - 679,027 20,315,738 - 20,315,738 2,069,704 662,693 2,732,397 229,868 56,855 286,723 147,864 17,300 165,164 2,333 (2,333) - 53,133,487 734,515 53,868,002 7,611,164 5,017,182 12,628,346 216,957,749 128,493,543 345,451,292 $ 224,568,913 $ 133,510,725 $ 358,079,638 Totals Net (Expense) Revenue and Changes in Net Position Net (Expense) Revenue and Changes in Net Position Activities Governmental Activities Business-type 38 (This page intentionally left blank) 39 FUND FINANCIAL STATEMENTS TOWN OF ORO VALLEY, ARIZONA BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2025 40 Community ASSETS Cash and investments $ 19,758,464 $ 2,614,344 $ 16,910,913 Taxes receivable 2,158,764 303,311 - Accounts receivable 546,777 271,795 43,893 Donation receivable 400,000 Interest receivable 138,419 14,705 38,112 Intergovernmental receivable 739,707 - - Lease receivable 1,416,204 289,528 - Inventories - 129,356 - Prepaid items 405,454 60,024 219,416 Total Assets $ 25,163,789 $ 3,683,063 $ 17,612,334 LIABILITIES Accounts payable $ 719,417 $ 320,146 $ 364,468 Accrued payroll and related benefits 1,337,675 - - Intergovernmental payable 119,265 29 - Unearned revenue 637,165 34,483 - Customer deposits payable 291,753 - - Other accrued liabilities - 142,806 - Total Liabilities 3,105,275 497,464 364,468 DEFERRED INFLOWS OF RESOURCES Lease related 1,356,112 263,699 - FUND BALANCES Nonspendable 465,546 215,209 219,416 Restricted - - - Committed 14,623,887 2,706,691 - Assigned - - 17,028,450 Unassigned 5,612,969 - - Total Fund Balances 20,702,402 2,921,900 17,247,866 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 25,163,789 $ 3,683,063 $ 17,612,334 General Center Government CIP General The notes to the basic financial statements are an integral part of this statement. 41 $ 410,056 $ 52,837 $ 6,012,332 $ 45,758,946 - - - 2,462,075 - - - 862,465 400,000 16,610 963 35,614 244,423 2,841 - 411,628 1,154,176 - - 270,718 1,976,450 - - - 129,356 59,109 - - 744,003 $ 488,616 $ 53,800 $ 6,730,292 $ 53,731,894 $ 20,175 $ - $ 409,077 $ 1,833,283 - - - 1,337,675 51 - 17 119,362 200,967 - - 872,615 206,635 - - 498,388 - - - 142,806 427,828 - 409,094 4,804,129 - - 249,547 1,869,358 - - 21,171 921,342 60,788 53,800 5,998,432 6,113,020 - - 52,048 17,382,626 - - - 17,028,450 - - - 5,612,969 60,788 53,800 6,071,651 47,058,407 $ 488,616 $ 53,800 $ 6,730,292 $ 53,731,894 Debt Service FundsContributions Total Funds Non-Major Municipal Governmental GovernmentalGrants and 42 (This page intentionally left blank) TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2025 43 Governmental Fund Balances $ 47,058,407 Capital assets are not financial resources in governmental funds, but are reported in the Statement of Net Position at their net depreciable value. Governmental capital assets 418,887,773 Less accumulated depreciation/amortization (190,815,214) 228,072,559 Net pension assets held in trust for future benefits are not available for Town operations, and therefore, are not reported in the funds. 146,057 Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. Deferred outflows of resources related to pensions 10,488,462 Deferred inflows of resources related to pensions (2,779,808) 7,708,654 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. 3,995,323 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences payable (3,051,925) Revenue bonds payable (41,549,844) Leases payable (370,144) Subscriptions Based Information Technology Arrangements (1,281,278) Financed purchases (29,149) Net pension liability (16,129,747) (62,412,087) Net Position of Governmental Activities $ 224,568,913 The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2025 44 REVENUES Sales taxes $ 25,778,829 $ 3,910,125 $ - Franchise taxes 679,027 - - Development impact fees - - - Intergovernmental 23,267,819 - 1,164,417 Licenses, fees and permits 1,798,222 - - Fines, forfeitures and penalties 67,674 - - Charges for services 3,126,307 7,998,592 - Donations 21,981 - 400,000 Investment income: Interest 888,561 41,008 646,662 Net increase in fair value of investments 94,368 12,602 75,880 Other 697,800 159,050 934,103 Total Revenues 56,420,588 12,121,377 3,221,062 EXPENDITURES Current: General government 21,777,284 - 116,920 Public safety 19,330,777 - 163,881 Highway and streets - - 10,000 Transit 2,034,885 - 36,463 Culture and recreation 4,646,070 7,975,597 62,846 Capital outlay 336,530 1,136,453 5,565,173 Debt service: Principal retirement 542,065 178,273 - Interest and fiscal charges 78,678 9,434 - Total Expenditures 48,746,289 9,299,757 5,955,283 REVENUES OVER/(UNDER) EXPENDITURES 7,674,299 2,821,620 (2,734,221) OTHER FINANCING SOURCES/(USES) Subscription-based information technology arrangements 75,119 - - Sale of general capital assets 25 118 51,162 Insurance recoveries 24,797 2,194 113,408 Transfers in/(out), net (9,153,341) (1,717,149) 3,139,787 Total Other Financing Sources/(Uses)(9,053,400) (1,714,837) 3,304,357 NET CHANGE IN FUND BALANCES (1,379,101) 1,106,783 570,136 FUND BALANCES, Beginning of year 22,081,503 1,815,117 16,677,730 FUND BALANCES, End of year $ 20,702,402 $ 2,921,900 $ 17,247,866 CenterGeneral Government CIP Community General The notes to the basic financial statements are an integral part of this statement 45 $ - $ - $ - $ 29,688,954 - - - 679,027 - - 1,454,021 1,454,021 795,551 8,580 4,295,322 29,531,689 - - 40,389 1,838,611 - - 24,067 91,741 - - 31,194 11,156,093 - - - 421,981 5,862 31,329 300,533 1,913,955 2,332 - 25,175 210,357 31,934 67,018 1,358 1,891,263 835,679 106,927 6,172,059 78,877,692 - - - 21,894,204 479,498 - 274 19,974,430 - - 2,623,891 2,633,891 - - - 2,071,348 29,788 - 959 12,715,260 205,425 - 5,634,655 12,878,236 - 2,732,974 - 3,453,312 - 1,296,534 - 1,384,646 714,711 4,029,508 8,259,779 77,005,327 120,968 (3,922,581) (2,087,720) 1,872,365 - - - 75,119 - - - 51,305 - - 7,467 147,866 125,375 3,650,379 3,957,282 2,333 125,375 3,650,379 3,964,749 276,623 246,343 (272,202) 1,877,029 2,148,988 (185,555) 326,002 4,194,622 44,909,419 $ 60,788 $ 53,800 $ 6,071,651 $ 47,058,407 Municipal Debt Service Grants and Contributions Non-Major Funds Governmental Funds Governmental Total 46 (This page intentionally left blank) 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, 2025 47 Net change in fund balances - total governmental funds $ 2,148,988 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/amortization expense. Expenditures for capital assets $ 12,722,441 Less current year depreciation/amortization (14,678,811) (1,956,370) Capital contributions 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. 4,312,022 Deferred items such as premiums related to the net cost of issuance of bonds are amortized over the life of the associated bond issue in the government-wide statements but not reported in the funds. 205,511 Governmental funds report pension contributions as expenditures. However, they are reported as deferred outflows of resources in the Statement of Net Position. The change in the net pension liability, adjusted for deferred pension items, is reported as pension expense in the Statement of Activities. (454,538) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on disposal of assets $ (206,730) Compensated absences (407,225) (613,955) 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. 591,318 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. Subscription technology arrangement issuance $ (75,119) Lease principal retirement 227,098 Financed purchases principal retirement 20,574 Subscriptions-based Information Technology Arrangements principal retirement 472,667 Revenue bond principal retirement 2,732,968 3,378,188 Change in net position of governmental activities.$ 7,611,164 The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET POSITION – PROPRIETARY FUNDS JUNE 30, 2025 48 ASSETS Current assets: Cash and investments $ 17,163,482 $ 1,236,732 $18,400,214 $4,497,765 Accounts receivable 2,594,529 170,474 2,765,003 - Intergovernmental receivable 155,000 210,991 365,991 - Interest receivable 165,514 7,611 173,125 15,252 Prepaid items 291,658 - 291,658 16,796 Total current assets 20,370,183 1,625,808 21,995,991 4,529,813 Noncurrent assets: Capital assets, non-depreciable 47,167,793 287,374 47,455,167 - Capital assets, depreciable (net) 85,953,681 3,401,237 89,354,918 - Total noncurrent assets 133,121,474 3,688,611 136,810,085 - Total Assets 153,491,657 5,314,419 158,806,076 4,529,813 DEFERRED OUTFLOWS OF RESOURCES Pension plan items 511,961 130,484 642,445 - LIABILITIES Current liabilities: Accounts payable and accrued expenses 1,104,963 171,196 1,276,159 178,145 Accrued wages and benefits 132,676 36,239 168,915 - Intergovernmental payable 825,312 - 825,312 - Interest payable 138,563 - 138,563 - Unearned revenue 175,465 - 175,465 - Claims payable - - - 356,345 Customer deposits payable 744,635 - 744,635 - Compensated absences 245,692 34,042 279,734 - Loan payable 342,989 - 342,989 - Revenue bonds 2,899,058 - 2,899,058 - Total current liabilities 6,609,353 241,477 6,850,830 534,490 Noncurrent liabilities: Revenue bonds 13,534,332 - 13,534,332 - Loan payable 1,084,514 - 1,084,514 - Compensated absences 98,471 - 98,471 - Net pension liability 3,670,899 463,648 4,134,547 - Total noncurrent liabilities 18,388,216 463,648 18,851,864 - Total Liabilities 24,997,569 705,125 25,702,694 534,490 DEFERRED INFLOWS OF RESOURCES Pension plan items 187,352 47,750 235,102 - NET POSITION Net investment in capital assets 121,345,131 3,688,611 125,033,742 - Restricted for capital projects 6,481,181 - 6,481,181 - Unrestricted 992,385 1,003,417 1,995,802 3,995,323 Total Net Position $ 128,818,697 $ 4,692,028 $ 133,510,725 $ 3,995,323 Activities: GovernmentalEnterprise Funds Non-Major Water Enterprise Fund Total Service Fund Internal The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION – PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2025 49 OPERATING REVENUES: Charges for services $ 21,695,846 $ 1,530,261 $ 23,226,107 $ 168,042 Other 46,857 - 46,857 567,363 Self insurance premiums - - - 3,967,167 Total Operating Revenues 21,742,703 1,530,261 23,272,964 4,702,572 OPERATING EXPENSES: Costs of sales and services 15,046,786 1,210,216 16,257,002 147,948 Contractual services 409,772 5,048 414,820 1,048,984 Depreciation 3,920,977 140,720 4,061,697 - Claims payments - - - 3,086,759 Administrative - - - 2,823 Total Operating Expenses 19,377,535 1,355,984 20,733,519 4,286,514 OPERATING INCOME/(LOSS)2,365,168 174,277 2,539,445 416,058 NONOPERATING REVENUES (EXPENSES): Capital grants 895,902 210,991 1,106,893 - Sale of assets 11,379 - 11,379 - Insurance recoveries 5,921 - 5,921 - Investment income: Interest 616,095 46,598 662,693 155,749 Net increase in fair value of investments 51,157 5,698 56,855 19,511 Interest expense (378,355) - (378,355) - Bond issuance costs (102,550) - (102,550) - Loss on disposal of capital assets (31,966) (31,966) - Total Nonoperating Revenues (Expenses)1,067,583 263,287 1,330,870 175,260 INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 3,432,751 437,564 3,870,315 591,318 DEVELOPMENT FEES 845,054 - 845,054 - CAPITAL CONTRIBUTIONS 304,146 - 304,146 - TRANSFERS IN/(OUT), NET (2,333) - (2,333) - CHANGES IN NET POSITION 4,579,618 437,564 5,017,182 591,318 NET POSITION, Beginning of year 124,239,079 4,254,464 128,493,543 3,404,005 NET POSITION, End of year $ 128,818,697 $ 4,692,028 $ 133,510,725 $ 3,995,323 Enterprise Funds Governmental Water Enterprise Fund Total Service Fund Activities: Non-Major Internal The notes to the basic financial statements are an integral part of this statement TOWN OF ORO VALLEY, ARIZONA STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2025 50 Increase (Decrease) in Cash and Cash Equivalents Cash flows from operating activities: Cash received from customers $ 21,280,125 $ 1,529,801 $ 22,809,926 $ - Cash received from premiums - - - 3,967,167 Cash payments to suppliers for goods and services (12,046,092) (132,314) (12,178,406) (469,342) Cash payments to employees for services (3,555,071) (909,906) (4,464,977) - Cash payments for claims - - - (3,053,366) Net cash provided by operating activities 5,678,962 487,581 6,166,543 444,459 Cash flows from noncapital and related financing activities: Interfund transfers (2,333) - (2,333) - Net cash used by noncapital financing activities (2,333) - (2,333) - Cash flows from capital and related financing activities: Development impact fees 845,054 - 845,054 - Capital grants 740,902 - 740,902 - Acquisition of capital assets (15,131,887) (367,725) (15,499,612) - Proceeds from sale of bonds 6,084,550 - 6,084,550 - Bond issuance costs (102,550) - (102,550) - Proceeds from sale of capital assets 11,379 - 11,379 - Insurance recoveries 5,921 - 5,921 - Principal paid on long-term debt (3,170,157) - (3,170,157) - Interest on long-term debt (311,948) - (311,948) - Net cash used for capital financing activities (11,028,736) (367,725) (11,396,461) - Cash flows from investing activities: Investment income 690,607 53,034 743,641 178,117 Net cash provided by investing activities 690,607 53,034 743,641 178,117 Net increase (decrease) in cash and cash equivalents (4,661,500) 172,890 (4,488,610) 622,576 Cash and cash equivalents, beginning of year 21,824,982 1,063,842 22,888,824 3,875,189 Cash and cash equivalents, end of year $ 17,163,482 $ 1,236,732 $ 18,400,214 $ 4,497,765 Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities Operating income (loss)$ 2,365,168 $ 174,277 $ 2,539,445 $ 416,058 Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation 3,920,977 140,720 4,061,697 - Provision for bad debt 23,443 1,440 24,883 - Change in assets and liabilities: Accounts receivable (451,939) (1,900) (453,839) - Prepaid items 202,175 - 202,175 (16,796) Accounts payable (328,443) 165,205 (163,238) 11,804 Unearned revenue (97,717) - (97,717) - Claims payable - - - 33,393 Accrued wages and benefits 6,884 14,267 21,151 - Customer deposits payable 63,635 - 63,635 - Pension plan items (25,221) (6,428) (31,649) - Total adjustments 3,313,794 313,304 3,627,098 28,401 Net cash provided by operating activities $ 5,678,962 $ 487,581 $ 6,166,543 $ 444,459 Non-cash capital and financing activities Contribution of assets from developers $ 304,146 $ - $ 304,146 $ - Loss on disposal of capital assets 31,966 - 31,966 - Governmental Activities Internal Service FundWater Non-major Enterprise Fund Total Enterprise Funds The notes to the basic financial statements are an integral part of this statement. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 51 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Town of Oro Valley, Arizona (Town) have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Town’s accounting policies are described below. A. Reporting Entity The Town is a municipal entity governed by an elected mayor and council. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The Town is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, there are no component units combined with the Town for financial statement presentation purposes, and the Town is not included in any other governmental reporting entity. Consequently, the Town’s financial statements include the funds of those organizational entities for which its elected governing body is financially accountable. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the nonfiduciary activities of the Town. For the most part, the effect of internal activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the Town. Governmental activities normally are supported by sales taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Sales taxes, franchise taxes, unrestricted state shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 52 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government- wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long- term debt and acquisitions under lease contracts are reported as other financing sources. Sales taxes, franchise taxes, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Miscellaneous revenue is not susceptible to accrual because generally it is 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 internal service fund is presented in a single column on the face of the proprietary fund statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 53 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Town reports the following major governmental funds. General Fund – This fund accounts for all financial resources of the Town, except those required to be accounted for in other funds. Community Center Fund – This fund accounts for the activity of the Oro Valley Community Center, including golf, tennis, food and beverage and fitness revenues and expenditures. This fund also accounts for the half cent sales taxes revenues dedicated to these operations, as well as other Parks and Recreation facilities, amenities or operations as determined by the Town Council. General Government CIP Fund – This fund accounts for governmental capital asset projects. Grants and Contributions Fund – This fund accounts for governmental grants and contributions received and expended by the Town. Municipal Debt Service Fund – This fund accounts for debt service payments on the Series 2010 Excise Tax Revenue Obligations, the Series 2012 Excise Tax Revenue Obligations, the Series 2015 Excise Tax Revenue Refunding Obligations, the Series 2016 Excise Tax Revenue Obligations, the Series 2017 Refunding Excise Tax Revenue Obligations, the Series 2018 Excise Tax Revenue Obligations, the Taxable Series 2021 Excise Tax Revenue Obligations and the Tax- Exempt Series 2021 Excise Tax Revenue Obligations. The Town reports the following major proprietary funds. Water Fund – This fund accounts for the costs to operate, construct and finance the Town water system. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Town’s internal service fund are charges for health benefits. The principal operating revenues of the Town’s enterprise funds are charges to customers for water and stormwater drainage services. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, and amortization. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Cash and Investments For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end were cash on hand, cash in bank, and cash and investments held by another governmental entity as the Town’s fiscal agent. 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 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 54 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) any applicable deposit insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. E. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. F. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Interfund balances between governmental funds are eliminated on the Statement of Net Position. All receivables are shown net of an allowance for uncollectibles. G. Inventory All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories consist of expendable supplies held for consumption. Inventories are recorded as expenses when consumed on the government-wide financial statements and the fund financial statements. H. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the government-wide and fund financial statements. Prepaid items are recorded as expenses when consumed in the government-wide financial statements and the fund financial statements. I. Capital Assets Capital assets, which include land, water rights, buildings and improvements, right-to-use lease assets, improvements other than buildings, infrastructure, vehicles, machinery, equipment, and construction in progress, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of $25,000 or more and an estimated useful life of two or more years. Exceptions maybe be made depending on the requirements of certain federal or state grants. Capital assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 55 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Certain capital assets of the Town are depreciated/amortized using the straight-line method over the following estimated useful lives: Assets Years Buildings 50 Improvements other than buildings 20-30 Infrastructure 20-50 Vehicles 4-6 Machinery and equipment 7-20 Intangible right-to-use lease assets are amortized over the shorter of the lease term or the useful life of the underlying assets above. Intangible right-to-use subscription assets are amortized over the shorter of the subscription term or the useful life of the underlying IT assets. J. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. 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 number of years employed. Employees who terminate their employment shall be paid in a lump sum. Full-time employees accumulate sick leave at the rate of one workday 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 exceeds 480 hours of accrued sick leave, one half of the sick leave balance in excess of 480 hours shall be paid to the employee upon separation from employment. The current and long-term liabilities, including related benefits, for accumulated annual and sick leave are reported on the government-wide financial statements as full balances of annual leave, one half of sick balances in excess of 480 hours, and an average annual use of sick leave for those with balances less than 480 hours. 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. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 56 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Leases and subscription-based information technology arrangements As lessee, the Town recognizes lease liabilities with an initial, individual value of $75,000 or more. The Town uses its estimated incremental borrowing rate to measure lease liabilities unless it can readily determine the interest rate implicit in the lease. The Town’s estimated incremental borrowing rate is based on the average interest rate of other financing instruments with similar terms and risks as those currently entered into by the Town. As lessor, the Town recognizes lease receivables with an initial, individual value of $150,000 or more. If there is no stated rate in the lease contract (or if the stated rate is not the rate the Town charges the lessee) and the implicit rate cannot be determined, the Town uses its own estimated incremental borrowing rate as the discount rate to measure lease receivables. The Town’s estimated incremental borrowing rate is calculated as described above. The Town recognizes subscription liabilities with an initial value of $75,000 or more. The Town uses its estimated incremental borrowing rate to measure subscription liabilities unless it can readily determine the interest rate implicit in the arrangement. The Town’s estimated incremental borrowing rate is calculated as described above. M. Pensions For purposes of measuring the net pension liabilities, related deferred outflows of resources and deferred inflows of resources, and related expenses, information about the pension plans’ fiduciary net position and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Generally, resources from the General Fund are used to pay for pensions. N. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Deferred amounts on refunding result from the difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. The Town's legal debt limit for water, sewer, lights, open space preserves, parks, playgrounds, and recreational facilities is $256.1 million, and for all other purposes is $76.8 million. The Town does not have any related debt. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 57 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) O. Interfund Activity Cash flows from one fund to another without requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. P. Net Position Flow Assumption In the government-wide and proprietary fund financial statements the Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. Q. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. R. New Pronouncements For the year ended June 30, 2025, the Town implemented GASB Statement No. 101, Compensated Absences, which requires that liabilities for compensated absences be recognized for [1] leave that has not been used and [2] leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if [a] the leave is attributable to services already rendered, [b] the leave accumulates, and [c] the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. The implementation of GASB 101 did not result in a material change of compensated absence balances. For the year ended June 30, 2025, the Town implemented GASB Statement No. 102, Certain Risk Disclosures. The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. This statement requires a government to assess whether a concentration or constraint makes the primary government reporting unit, or other reporting units that report a liability for revenue debt, vulnerable to the risk of a substantial impact. Additionally, this Statement requires a government to assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued. The implementation of GASB 102 did not result in a material change to the risk disclosures in the financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 58 NOTE 2 – FUND BALANCE CLASSIFICATIONS Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. Restricted. Fund balance is reported as restricted when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Committed. The committed fund balance classification includes amounts that can be used only for the specific purposes imposed by formal action of the Town Council through the approval of a Town resolution. Those committed amounts cannot be used for any other purpose unless the Town Council removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. The committed fund balance reported in the General Fund is to be used for contingency reserve. The committed fund balance reported in the Townwide Facilities Projects Fund is used for improvements to Town parks. The committed fund balance reported in the Community Center Fund is used for the culture and recreation activity of the Community Center as well as other Parks and Recreation facilities, amenities or operations as determined by the Town Council. Assigned. Amounts in the assigned fund balance classification are intended to be used by the Town for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the General Fund, assigned fund balance represents the remaining amount that is not restricted or committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a management official delegated that authority by formal Town Council action. This authorization has been given to the Town Manager through the approval of Resolution number (R)24-23, which amended the Town Financial and Budgetary Policies. The assigned fund balance in the General Government CIP Fund is to be used for governmental capital asset projects. Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. The Town applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 59 NOTE 2 – FUND BALANCE CLASSIFICATIONS (Continued) The table below provides details of the major components of the Town’s fund balance classifications at year end. Grants and Municipal Total Fund Balances: Nonspendable: Inventory $- $ 129,356 $ - $ - $ - $ - 129,356$ Prepaid items 405,454 60,024 219,416 - - - 684,894 Leases 60,092 25,829 - - - 21,171 107,092 Restricted: - Highway and Streets - - - - - 1,598,787 1,598,787 Debt service - - - - 53,800 - 53,800 Capital projects - - - - - 4,024,739 4,024,739 Public safety - - - 60,788 - 374,906 435,694 Committed: - Contingency reserve 14,623,887 - - - - - 14,623,887 Culture & recreation - 2,706,691 - - - 52,048 2,758,739 Assigned: - Townwide capital - - 17,028,450 - - - 17,028,450 Unassigned: 5,612,969 - - - - - 5,612,969 Total Fund Balances $ 20,702,402 $ 2,921,900 $ 17,247,866 $ 60,788 $ 53,800 $ 6,071,651 47,058,407$ Debt Service Fund Non-Major Governmental Funds General Fund Community Center Fund General Government CIP Fund Contributions Fund TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 60 NOTE 3 – CASH AND INVESTMENTS A.R.S. authorize the Town to invest public monies in obligations of the U.S. Government and its agencies, obligations of the State and certain local government subdivisions, interest- bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. The statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s investments. Custodial Credit Risk – Deposits. Custodial Credit risk is the risk that in the event of bank failure the Town’s deposits may not be returned to the Town. The Town does not have a deposit policy for custodial credit risk. At year end, the carrying value of the Town’s deposits was $7,348,573 and the bank balance was $8,709,075. Of the bank balance, $750,000 was covered by Federal depository insurance and the remainder was covered by collateral held by the pledging financial institution’s trust department or agent but not in the Town’s name and no amounts were uninsured and uncollateralized. Additionally, the Town had cash on hand of $7,254. Fair Value Measurements. The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.  Level 1 inputs are quoted prices in active markets for identical assets  Level 2 inputs are significant other observable inputs  Level 3 inputs are significant unobservable inputs Valuation Techniques. Equity and debt securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Money markets and certificates of deposit securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool – Government (Pool 7), with no regulatory oversight. The pools as an investment company are not registered with the Securities and Exchange Commission. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. The Arizona State Treasurer has a publicly available financial report that includes financial statements and required supplementary information. Copies may be obtained by contacting the Arizona State Treasurer, 1700 West Washington, Phoenix, AZ 85007 or at www.aztreasury.gov. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 61 NOTE 3 – CASH AND INVESTMENTS (Continued) The County Treasurer’s pool is an external investment pool with no regulatory oversight. The pool is not required to register (and is not registered) with the Securities and Exchange Commission. The fair value of each participants’ position in the County Treasurer investment pool approximates the value of the participants’ shares in the pool and the participants’ shares are not identified with specific investments. Participants in the pool are not required to categorize the value of shares in accordance with the fair value hierarchy. Custodial Credit Risk – Investments. The Town’s investment in the State and County Treasurer’s investment pools represents a proportionate interest in the pool’s portfolio; however, the Town’s portion is not identified with specific investments and is not subject to custodial credit risk. 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: Credit Quality Ratings Investment Type Fair Value Category Less than 1 1-5 S&P's Money Market - Wells Fargo 190,533$ Level 2 190,533$ -$ N/A Money Market - Zion Bank 167,602 Level 2 167,602 - N/A Money Market - US Bank 12,150,897 Level 2 12,150,897 - N/A Money Market - BNY Mellon 218,613 Level 2 218,613 - N/A U.S. Treasuries 20,484,667 Level 1 - 20,484,667 AA+ Collateralized Mortgage Obligations 2,172,220 Level 1 - 2,172,220 AA+ Asset-Backed Securities 6,005,213 Level 1 1,973 6,003,240 N/A Certificate of Deposit 1,542,006 Level 1 - 1,542,006 A+ Corporate Notes: 10,662,431 Level 1 - 10,662,431 BBB+ Total 53,594,183 12,729,619$ 40,864,564$ County Treasurer's Investment Pool 447,177 Not applicable 447,177 N/A State Treasurer's Investment Pool 5 7,259,736 Not applicable 7,259,736 AAA Total 61,301,096$ Investment Maturities (in Years) 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. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 62 NOTE 3 – CASH AND INVESTMENTS (Continued) Credit Risk. The Town has implemented an investment policy that will minimize credit risk, which is the risk of loss due to the failure of the security or backer by the following: 1. Limiting investments to the types of securities listed in Section 6 of this investment policy; 2. Pre-qualifying financial institutions, broker/dealers, intermediaries, and advisers with which the Town will do business in accordance with Section 5; and 3. Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. Concentration of Credit Risk. The Town places no limit on the amount the Town may invest in any one issuer. Investments in any one issuer are as follows: Money Markets 9 U.S. Treasuries 34 Supra-National Agency 1 Collateralized Mortgage Obligations 5 Bank Note 0 Certificate of Deposit 3 County Treasurer's Investment Pool 1 State Treasurer's Investment Pool 5 4 100 % Concentration % NOTE 4 – 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 and lease receivables. Intergovernmental Receivables – As of June 30, 2025, intergovernmental receivables, net of allowance for uncollectibles, for the Town’s individual major funds and non-major governmental funds in the aggregate, were as follows: Grants and Non-Major Contributions Governmental Water Fund Funds Fund Intergovernmental receivables: Due from federal government $ 253,065 $2,841 $- $ 155,000 $210,991 Due from state government 480,746 - 411,628 - - Due from other governments 5,895 - - - - Net intergovernmental receivables $ 739,706 $2,841 $411,628 $ 155,000 $210,991 General Fund Non-Major Enterprise Fund TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 63 NOTE 4 – RECEIVABLES (Continued) Lease Receivables – The Town leases cell tower space and building/facility space to third parties under the provisions of various lease agreements. All lease agreements are fixed payment with no variable leases. As of June 30, 2025, the Town is reporting the following lease receivables, deferred inflows related to leases, lease revenue and interest revenue: Deferred Inflows Lease Lease Related to Lease Interest Lease Receivable Leases Revenue Revenue Governmental Activities: Communication tower lease 1,686,921$ 1,605,660$ 93,655$ 41,868$ Building lease 289,529 263,698 60,729 8,017 Total 1,976,450$ 1,869,358$ 154,384$ 49,885$ Future payments included in the measurement of the lease receivable are summarized as follows: Year ending June 30:Principal Interest 2026 105,451$ 63,382$ 2027 91,124 60,320 2028 81,764 57,731 2029 85,991 55,096 2030 99,438 52,175 2031-2035 370,000 215,397 2036-2040 225,880 173,346 2041-2045 309,631 128,642 2046-2050 332,430 69,799 2051-2053 170,419 18,293 2054-2055 104,322 3,122 1,976,450$ 897,303$ Total Governmental Activities TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 64 NOTE 5 – CAPITAL AND INTANGIBLE ASSETS A summary of capital and intangible asset activity for the year ended June 30, 2025, was as follows: Governmental Activities: NON-DEPRECIABLE/AMORTIZABLE Land $ 36,289,821 $- $- $- $36,289,821 Construction in progress 2,106,956 4,297,566 (2,620,583) - 3,783,939 Total non-depreciable/amortizable 38,396,777 4,297,566 (2,620,583) - 40,073,760 DEPRECIABLE/AMORTIZABLE Infrastructure 251,101,285 9,648,512 (13,464) - 260,736,333 Buildings & improvements 87,890,040 3,284,752 (426,473) - 90,748,319 Machinery, equipment & vehicles 22,809,672 2,349,097 (1,186,427) - 23,972,342 Software - SBITA Subscriptions 2,216,958 75,119 - - 2,292,077 Equipment - Leases 1,064,942 - - - 1,064,942 Total depreciable/amortizable 365,082,897 15,357,480 (1,626,364) - 378,814,013 ACCUMULATED DEPRECIATION/AMORTIZATION Infrastructure (146,901,852) (9,630,808) 13,464 - (156,519,196) Buildings & improvements (15,027,117) (2,074,889) 229,523 - (16,872,483) Machinery, equipment & vehicles (14,611,990) (2,269,415) 1,176,647 - (15,704,758) Software - SBITA Subscriptions (538,132) (472,667) - - (1,010,799) Equipment - Leases (476,946) (231,032) - - (707,978) Total accumulated depreciation/amortization (177,556,037) (14,678,811) 1,419,634 - (190,815,214) Total capital assets being depreciated/amortized 187,526,860 678,669 (206,730) - 187,998,799 Capital assets, net of depreciation/amortization $ 225,923,637 $4,976,235 $(2,827,313) $- $228,072,559 Business-type Activities: NON-DEPRECIABLE Land $ 2,410,660 $- $- $- $2,410,660 Water rights 8,534,490 - - - 8,534,490 Construction in progress 22,968,118 14,909,685 (1,367,786) - 36,510,017 Total non-depreciable 33,913,268 14,909,685 (1,367,786) - 47,455,167 DEPRECIABLE Water system 152,125,390 1,296,147 - - 153,421,537 Stormwater system 4,196,312 80,351 - - 4,276,663 Machinery, equipment & vehicles 7,052,460 885,361 (238,375) - 7,699,446 - Total depreciable 163,374,162 2,261,859 (238,375) - 165,397,646 ACCUMULATED DEPRECIATION Water system (65,767,667) (3,681,326) - - (69,448,993) Stormwater system (945,722) (87,771) - - (1,033,493) Machinery, equipment & vehicles (5,474,051) (292,600) 206,409 - (5,560,242) - Total accumulated depreciation (72,187,440) (4,061,697) 206,409 - (76,042,728) Total capital assets being depreciated 91,186,722 (1,799,838) (31,966) - 89,354,918 Capital assets, net of depreciation $ 125,099,990 $13,109,847 $(1,399,752) $- $136,810,085 Transfers Transfers Beginning Ending Balance Increases Decreases Balance Beginning Ending Balance Increases Decreases Balance TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 65 NOTE 5 – CAPITAL AND INTANGIBLE ASSETS (Continued) Depreciation and amortization expense was charged to functions/programs as follows: Governmental activities: General government $ 534,000 $ 542,597 $ 1,076,597 Public safety 1,245,068 - 1,245,068 Highways & streets 10,294,370 - 10,294,370 Culture & recreation 1,901,675 161,101 2,062,776 Total depreciation/amortization expense - governmental activities $ 13,975,113 $ 703,698 $ 14,678,811 Business-type activities: Water $ 3,920,977 $ - $ 3,920,977 Stormwater 140,720 - 140,720 Total depreciation - expense business-type activities $ 4,061,697 $ - $ 4,061,697 Amortization TotalDepreciation Amortization TotalDepreciation Construction Commitments – As of year-end, the Town had contractual commitments related to park improvements, facility improvements, and water system improvements. At year end the Town had spent $12.9 million on the projects and had estimated remaining contractual commitments of $30.3 million. NOTE 6 – LOAN PAYABLE The Town has a loan from the Water Infrastructure Finance Authority (WIFA) of Arizona for water system projects. The loan payable at current fiscal year end is presented below. Interest Rate (Including Remaining Business-type activities:Fees)Maturities WIFA Loan, 2014 2.65% 7/1/25-29 $ 1,427,503 $ 342,989 Total $ 1,427,503 $ 342,989 Outstanding Principal June 30, 2025 Due Within One Year TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 66 NOTE 6 – LOAN PAYABLE (Continued) Principal and interest payments on the business-type activities loan payable at June 30, 2025 is summarized as follows: Year ending June 30: $ 342,989 $ 33,310 352,085 24,093 361,422 14,632 371,007 4,920 $ 1,427,503 $ 76,955 Total 2026 2027 2028 2029 Principal Interest NOTE 7 – REVENUE BONDS PAYABLE Bonds payable at year end consisted of the following outstanding revenue and refunding bonds. The bonds are both callable and noncallable with interest payable semiannually. Taxes, water revenues, and impact fees are used to pay bonded debt. Purpose Governmental activities: Revenue bonds: Excise Tax Revenue Obligations, 2010 $ 2,445,000 $ 485,000 $ 160,000 Revenue Bonds, 2012 2,580,000 640,000 205,000 Pension Obligation Bonds, 2021 17,975,000 15,115,000 970,000 Parks and Recreation, 2021 21,120,000 18,775,000 750,000 Private placement revenue bonds: Refunding Excise Tax Revenue Obligations, 2015 2,529,250 301,500 301,500 Excise Tax Revenue Obligations, 2016 2,000,000 1,119,000 150,000 Refunding Excise Tax Revenue Obligations, 2017 1,115,556 270,660 133,692 Excise Tax Revenue Obligations, 2018 2,035,000 1,350,000 132,750 Total $ 38,056,160 $ 2,802,942 0.27-2.70% 3.50-4.00% 2.43% Due Within One Year 5.49-6.59% 7/1/25-28 7/1/25-27 7/1/25-343.02% 7/1/25-42 7/1/25-39 4.00-5.00% 1.91% 2.20% 7/1/25-26 7/1/25-32 Outstanding Principal June 30, 2025Issued Amount Original Interest Rates 7/1/25-28 Remaining Maturities Business-type activities: Private placement revenue bonds: Refunding Revenue Bonds, 2015$ 1,245,750 $ 148,500 $ 148,500 Refunding Revenue Bonds, 2017 13,186,444 3,199,340 1,580,308 Excise Tax Revenue Obligations, 20186,105,000 4,050,000 398,250 Refunding Revenue Bonds, 2021 5,582,000 2,951,000 772,000 Revenue Bonds, 2025 6,084,550 6,084,550 - Total $ 16,433,390 $ 2,899,058 Original Amount Issued Interest Remaining Outstanding Principal June 30, 2025RatesMaturities Due Within One Year 4.09% 7/1/26-35 1.91% 7/1/25-26 3.02% 1.16-1.27% 7/1/25-34 7/1/25-30 2.43% 7/1/25-27 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 67 NOTE 7 – REVENUE BONDS PAYABLE (Continued) Annual debt service requirements to maturity on revenue and refunding bonds for governmental activities at year end are summarized as follows: $ 2,085,000 $ 1,140,563 $ 717,942 $ 69,565 2,140,000 1,074,363 426,718 55,995 2,195,000 1,003,105 297,000 46,738 1,870,000 936,511 305,250 38,939 1,925,000 875,138 312,500 30,936 10,645,000 3,361,730 981,750 47,117 11,210,000 1,508,673 - - 2,945,000 118,900 - - $35,015,000 $10,018,983 $3,041,160 $289,290 Year ending June 30: 2026 2027 2028 2029 2030 2031-2035 2036-2040 Total 2041-2042 Revenue BondsRevenue Bonds Interest Governmental Activities Principal InterestPrincipal Private Placement Annual debt service requirements to maturity on revenue and refunding bonds for business-type activities at year end are summarized as follows: $ 2,899,058 $ 482,195 3,275,102 354,965 1,739,370 310,869 1,477,740 265,208 1,140,000 222,001 5,172,900 513,934 729,220 - $ 16,433,390 $ 2,149,172 Business-type Activities Total Revenue Bonds Principal Interest 2031-2035 Year ending June 30: 2027 2028 2029 2026 Private Placement 2036 2030 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 68 NOTE 7 – REVENUE BONDS PAYABLE (Continued) Pledged revenues – governmental activities. The Town has pledged future excise tax revenues to repay outstanding revenue bonds and refunding revenue bonds of $41.5 million as of June 30, 2025. Proceeds from the original bond issuances, including those subsequently refunded, provided financing for land acquisition, facility construction and pension obligations. The bonds are paid solely from the Town’s excise taxes and are payable through 2042. Total annual principal and interest payments for all excise 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 $48.4 million. The current total excise tax revenues were $49.9 million, and the total principal and interest paid on the bonds was $4.0 million or approximately 8 percent of excise revenues. Pledged revenues – business-type activities. The Town has pledged future water revenues to repay outstanding revenue bonds and refunding revenue bonds of $16.4 million as of June 30, 2025. 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 2036. Total annual principal and interest payments for all water revenue bond issuances are expected to require approximately 14 percent of gross revenues. The total principal and interest to be paid on the bonds is $18.6 million. The current total customer gross revenues were $22.6 million, and the total principal and interest paid on the bonds was $3.2 million or approximately 14 percent of water revenues. NOTE 8 – OBLIGATIONS UNDER LEASES Leases – Lease agreements are summarized as follows: Description Copiers 09/30/2022 60 months 6,400 3.5% 228,978 159,580 Golf carts 06/01/2022 54 months 10,906 2.5% 345,709 202,952 Fitness equipment 01/15/2022 48 months 1,278 2.5% 22,555 7,612 Total lease agreements $ 597,242 $ 370,144 June 30, 2025 BalancePayment TermsDate Liability Lease Beginning Interest Rate Payment Amount Annual requirements to amortize long-term obligations and related interest are as follows: Year Ending June 30 2026 $ 206,903 8,432 2027 150,501 2,638 2028 12,740 60 Total $ 370,144 $ 11,130 InterestPrincipal Governmental Activities TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 69 NOTE 9 – SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS The Town has obtained the right to use software under the provisions of various subscription-based information technology arrangements. The total amount of subscription assets are summarized as follows: Description Sensus/Flexnet 7/1/2022 $ 3,921 3.75% $ 245,267 $ 130,560 Sprypoint 7/1/2022 7,750 3.75% 337,173 89,522 Watersmart 8/1/2023 2,975 3.75% 160,213 100,289 Axon 8/1/2023 27,375 3.75% 1,474,305 922,874 ESRI/ArcGIS 8/14/2024 3,308 3.75% 75,119 38,033 Total SBITA agreements $ 2,292,077 $ 1,281,278 June 30, 2025 Beginning Payment Payment Interest SBITA Balance Date Terms Amount Rate Liability 72 months 48 months 60 months 60 months 24 months The following schedule details minimum subscription payments to maturity for the Town’s subscriptions liability at June 30, 2025: Year Ending June 30 2026 492,533 51,410 2027 380,400 30,843 2028 408,345 2,898 Total $ 1,281,278 $ 85,151 Governmental Activities InterestPrincipal NOTE 10 – FINANCED PURCHASE AGREEMENT The Town acquired Community Center fitness equipment under contract at a total purchase price of $81,722. The following schedule details debt service requirements to maturity for the Town’s financed purchases at June 30, 2025. Year ending June 30: $21,671 $1,006 7,478 81 $29,149 $1,087 Governmental Activities 2026 2027 Principal Interest Total TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 70 NOTE 11 – CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the current fiscal year was as follows: Due Within One Year Governmental activities Revenue bonds $ 37,045,000 $ - $ (2,030,000) $ 35,015,000 $ 2,085,000 Private placement revenue bonds 3,744,128 - (702,968) 3,041,160 717,942 Premium 3,699,195 - (205,511) 3,493,684 - Total bonds payable 44,488,323 - (2,938,479) 41,549,844 2,802,942 Leases payable 597,242 - (227,098) 370,144 206,903 Financed purchases 49,723 - (20,574) 29,149 21,671 Subscriptions liability 1,678,826 75,119 (472,667) 1,281,278 492,533 Net pension liability 21,409,403 - (5,279,656) 16,129,747 - Compensated absences payable 2,644,700 2,844,410 (2,437,185) 3,051,925 2,640,798 Governmental activities long-term liabilities $70,868,217 $2,919,529 $(11,375,659) $62,412,087 $6,164,847 Business-type activities Private placement revenue bonds $13,184,870 $6,084,550 $(2,836,030) $16,433,390 $2,899,058 Total bonds payable 13,184,870 6,084,550 (2,836,030) 16,433,390 2,899,058 Loan payable 1,761,630 - (334,127) 1,427,503 342,989 Net pension liability 4,094,318 40,229 - 4,134,547 - Compensated absences payable 349,946 293,864 (265,605) 378,205 279,734 Business-type activities long-term liabilities $19,390,764 $6,418,643 $(3,435,762) $22,373,645 $3,521,781 Outstanding July 1, 2024 Outstanding June 30, 2025 Matured/ Redeemed During YearIssued July 1,Redeemed June 30, 2024 Outstanding Issued Matured/ During Year Outstanding 2025 Due Within One Year TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 71 NOTE 12 – TRANSFERS At year end, transfer activity in the funds was as follows: Interfund transfers: General Fund $ - $ 9,153,341 Community Center Fund - 1,717,149 General Government CIP 7,139,787 4,000,000 Grants and Contributions 125,375 - Municipal Debt Service Fund 3,650,379 - Non-Major Governmental Funds 4,000,000 42,718 Water Fund - 2,333 $ 14,915,541 $ 14,915,541 Transfers In Transfers Out Transfers were made from the General, Community Center, Water and General Impact Fee Funds to the Municipal Debt Service Fund for debt service. In addition, transfers were made from the General Fund to the General Government CIP Fund and from the General Government CIP Fund to the Highway Fund to support capital projects. A transfer was made from the General Fund to the Grants and Contributions fund for grant matching requirements. 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 FOR THE YEAR ENDED JUNE 30, 2025 72 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 Town carries insurance for Liability, Property, Excess Liability, Inland Marine, Cyber, and Miscellaneous Insurances (bonds, special events, drone). The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its members’ additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. The Town is insured by Arizona Municipal Workers Compensation Pool for potential worker related accidents. The Town has established a Self-Insurance Fund to account for and finance its uninsured risks of loss related to its employee health benefits program. The activity is reported in an internal service fund in these financial statements. Under this program, the Fund provides coverage for up to a maximum of $150,000 for each claim, not to exceed an annual aggregate of $2,000,000. The Fund purchases commercial insurance for claims in excess of this coverage. Settled claims have not exceeded this coverage for the past three fiscal years. Liabilities of the fund are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay- outs), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. Changes in the balances of claims liabilities during the past two years are as follows. 2024-25 $ 322,952 $ 3,053,366 $ 3,019,973 $ 356,345 2023-24 $ 361,329 $ 2,786,657 $ 2,825,034 $ 322,952 Claim Payments Claims Payable at End of Year Claims Payable Beginning of Year Current Year Claims and Changes in Estimates TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 73 NOTE 15 – PENSIONS The Town contributes to the plans described below. The plans are component units of the State of Arizona. Aggregate Amounts. On June 30, 2025, the Town reported the following aggregate amounts related to pensions for all plans to which it contributes. Net pension asset $ 146,057 $ - $ 146,057 Net pension liability 16,129,747 4,134,547 20,264,294 Pension deferred outflows of resources 10,488,462 642,445 11,130,907 Pension deferred inflows of resources 2,779,808 235,102 3,014,910 Pension expense 4,565,406 346,126 4,911,532 Total Business-type Activities Governmental Activities The Town reported $4.1 million of pension contributions as expenditures in the governmental funds related to all plans to which it contributes. A. Arizona State Retirement System Plan Description. Town employees not covered by the other pension plans described below participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost- sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple- employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website at www.azasrs.gov. GASB Statement 75 has not been recorded or further disclosed due to its relative insignificance to the Town’s financial statements. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 74 NOTE 15 – PENSIONS (Continued) Benefits Provided. The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement Initial Membership Date: Before July 1, 2011 On or After July 1, 2011 Years of service and age required to receive benefit Sum of years and age equals 80 10 years, age 62 5 years, age 50* Any years, age 65 30 years, age 55 25 years, age 60 10 years, age 62 5 years, age 50* Any years, age 65 Final average salary is based on Highest 36 consecutive months of last 120 months Highest 60 consecutive 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 retirement benefit option chosen determines the survivor benefit. 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. 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. For members with 10 or more years of service, benefits range from $100 per month to $260 per month depending on the age of the member and dependents. For members with five to nine years of service, the benefits are the same dollar amounts as above multiplied by a vesting fraction based on completed years of service. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 75 NOTE 15 – PENSIONS (Continued) Active members are eligible for a long-term disability benefit in the event they become unable to perform their work. The monthly benefit is equal to two-thirds of their monthly earnings. Members receiving benefits continue to earn service credit up to their normal retirement dates. Members with long-term disability commencement dates after June 30, 1999, are limited to 30 years of service or the service on record as of the effective disability date if their service is greater than 30 years. Contributions. In accordance with State statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the fiscal year ended June 30, 2025, statute required active ASRS members to contribute at the actuarially determined rate of 12.27 percent (12.12 percent for retirement and 0.15 percent for long-term disability) of the members’ annual covered payroll, and statute required the Town to contribute at the actuarially determined rate of 12.27 percent (12.05 percent for retirement, 0.07 percent for health insurance premium benefit, and 0.15 percent for long-term disability) of the active members’ annual covered payroll. The Town’s contributions for the year ended June 30, 2025, were as follows: Pension $ 2,088,553 Contributions Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to ASRS. The Town was required by statute to contribute at the actuarially determined rate of 10.19 percent (10.14 for retirement and 0.05 percent for long-term disability) of annual covered payroll. ACR contributions are included in employer contributions presented above. The Town’s pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Contributions from the Water Enterprise Fund were 14%, and contributions from the non-major enterprise fund were 4%. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 76 NOTE 15 – PENSIONS (Continued) Pension Liability. The net pension liability was measured as of June 30, 2024. The total liability used to calculate the net liability was determined using update procedures to roll forward the total liability from an actuarial valuation as of June 30, 2023, to the measurement date of June 30, 2024. The Town’s proportion of the net asset/liability was based on the Town’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2024. The Town’s proportions measured as of June 30, 2024, and the change from its proportions measured as of June 30, 2023, were: Pension $ 19,960,278 0.125 0.003 Town % Proportion Increase (Decrease) Net (Asset)/ Liability Pension Expense and Deferred Outflows/Inflows of Resources. The Town has deferred outflows and inflows of resources related to the net pension liability. Certain changes in the net pension liability are recognized as pension expense over a period of time rather than the year of occurrence. For the year ended June 30, 2025, the Town recognized pension expense as follows: Pension $ 1,913,581 Expense TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 77 NOTE 15 – PENSIONS (Continued) The Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience $ 1,114,164 $ - Changes of assumptions or other inputs - - Net difference between projected and actual earnings on pension investments - 1,274,682 Changes in proportion and differences between contributions and proportionate share of contributions 349,090 25,096 Contributions subsequent to the measurement date 2,088,553 - Total $ 3,551,807 $ 1,299,778 of Resources Deferred Outflows Deferred Inflows of Resources The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: $ (421,705) 1,141,764 (322,664) (233,919) - - Thereafter Pension 3030 2029 2027 2028 2026 TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 78 NOTE 15 – PENSIONS (Continued) Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability are as follows: Pension Actuarial valuation date June 30, 2023 Actuarial roll forward date June 30, 2024 Actuarial cost method Entry age normal Investment rate of return 7.0% Projected salary increases 2.9-8.4% Inflation 2.3% Permanent base increases Included Mortality rates 2017 SRA Scale U-MP Recovery rates 2012 GLTD for long-term disability Healthcare cost trend rate Not applicable Actuarial assumptions used in the June 30, 2023 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2020. The long-term expected rate of return on ASRS plan investments was determined to be 7.0 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage. The target allocation and best estimates of geometric real rates of return for each major asset class of ASRS are summarized in the following table: Asset Class Public Equity 44% 4.48% Credit 23% 4.40% Real Estate 17% 6.05% Private Equity 10% 6.11% Interest rate sensitive 6% -0.45% Total 100% Target Long-term Expected Geometric Allocation Real Rate of Return TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 79 NOTE 15 – PENSIONS (Continued) Discount Rate. At June 30, 2024, the discount rate used to measure the ASRS total pension liability was 7.0 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following table presents the Town’s proportionate share of the net pension liability calculated using the discount rate of 7.0 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1- percentage-point lower (6.0 percent) or 1-percentage-point higher (8.0 percent) than the current rate: Rate Pension $ 30,563,267 $ 19,960,278 $ 11,123,612 Proportionate share of the net liability Discount Rate Current 1% Decrease 1% Increase 6.0% 7.0% 8.0% Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. The report is available on the ASRS website at www.azasrs.gov. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 80 NOTE 15 – PENSIONS (Continued) B. Public Safety Personnel Retirement System and Corrections Officer Retirement Plan Plan Descriptions. Town public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS) or employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PSDCRP). The PSPRS administers an agent and cost- sharing multiple-employer defined benefit pension plan and an agent and cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan. A nine- member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. Employees who were PSPRS members before July 1, 2017, participate in the agent plans, and employees who became PSPRS members on or after July 1, 2017, participate in either the agent plans or cost- sharing plans (PSPRS Tier 3 Risk Pool). Town dispatchers participate in the Corrections Officer Retirement Plan (CORP) or the Public Safety Personnel Defined Contribution Retirement Plan. The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan for dispatchers (agent plans), which were closed to new members as of July 1, 2018. Employees who were CORP members before July 1, 2018, participate in CORP or PSDCRP. Dispatcher employees who became members on or after July 1, 2018, participate in PSDCRP. The PSPRS Board of Trustees described above and the participating local boards govern CORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. The PSPRS and CORP issue a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com. The PSPRS Tier 3 Risk Pool plans and the PSPRS OPEB plans are not further disclosed because of their relative insignificance to the Town’s financial statements. Benefits Provided. The PSPRS and CORP provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows. See the publicly available PSPRS and CORP financial report for additional benefits information. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 81 NOTE 15 – PENSIONS (Continued) Retirement and disability Years of service and age required to receive benefit Final average salary is based on Benefit percent Normal retirement Accidental disability retirement Catastrophic disability retirement Ordinary disability retirement Survivor benefit Retired members Active members 20 years, not to exceed 80% 50% or normal retirement, whichever is greater 90% for the first 60 months then reduced to either 10 years, age 6210 years, age 62 years OR plus 2-2.5% for each year of credited service over monthly compensation if death was the result of injuries received on the job whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20, 62.5% or normal retirement, whichever is greater or 2.5% per year of credited service Normal retirement calculated with actual years of credited service or 20 years of credited service, On or after July 1, 2017 15 years of credited service, age 52.5* Highest 60 consecutive months of last 15 years 1.5-2.5% per year of credited service, not to exceed 80% 15 or more years of service, age 55 months of last 20 years On or after January 1, 2012 and before July 1, 2017 25 years of service or 15 years of credited service, age 52.5 Highest 60 consecutive 20-25 years of service, any age Highest 36 consecutive months of last 20 years 50% less 2% for each year of credited service less than 20 80%-100% of accidental disability retirement benefit or 100% of average 80%-100% of retired member's pension benefit Before January 1, 2012 15 years of service, age 62 Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50 percent of the member’s compensation for up to 12 months. Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $100 per month to $260 per month depending on the age of the member and dependents. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 82 NOTE 15 – PENSIONS (Continued) Employees Covered by Benefit Terms. As of June 30, 2025, the following employees were covered by the agent plan’s benefit terms: Retirees & beneficiaries 61 6 Inactive, non-retired members 21 2 Active members 54 2 Total 136 10 Police CORP-Dispatchers Contributions. State statutes establish the pension contribution requirements for active PSPRS and CORP employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS and CORP pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2025, are indicated below. Rates are a percentage of active members’ annual covered payroll. CORP - PSPRS – Police Dispatchers Active members – pension 7.65% 7.65% Town: Pension 16.22% 6.00% Health insurance 0.00% 0.00% Employers are also required to pay an Alternate Contribution Rate (ACR), for retired members who return to work in positions that would typically be filled by an employee who contributes to PSPRS or CORP. The Town was required by statute to contribute at the actuarially determined rate of 8 percent for the PSPRS and 6 percent for the CORP. ACR contributions are included in employer contributions presented above. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 83 NOTE 15 – PENSIONS (Continued) The contributions to the pension plans for the year ended June 30, 2025, were: Pension $ 2,390,970 $ 9,118 Contributions PSPRS-Police CORP-Dispatchers The Town’s pension contributions are paid by the same funds as the employee’s salary, with the largest component coming from the General Fund. Pension Liability. As of June 30, 2025, the Town reported the following liabilities. Pension $ 304,016 $ (146,057) PSPRS-Police CORP-Dispatchers Net Liability (Asset) The net pension liability was measured as of June 30, 2024, and the total liability used to calculate the net liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability for both the PSPRS and CORP are as follows: Pension Actuarial valuation date June 30, 2024 Actuarial cost method Entry age normal Investment rate of return 7.2% Projected salary increases 3.0 – 6.25% Inflation 2.5% Cost-of-living adjustment 1.85% Mortality rates PubS-2010 tables Healthcare cost trend rate Not applicable Actuarial assumptions used in the June 30, 2024 valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2021. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 84 NOTE 15 – PENSIONS (Continued) The long-term expected rate of return on PSPRS and CORP plan investments was determined to be 7.2 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Cash - Mellon 2% 0.89% Diversifying strategies 5% 3.15% Core bonds 6% 2.44% International public equity 16% 4.47% Global private equity 27% 7.05% Private credit 20% 6.24% U.S. public equity 24% 3.62% Total 100% Allocation Real Rate of ReturnAsset Class Expected Geometric Long-term Target TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 85 NOTE 15 – PENSIONS (Continued) Changes in Net Liability (Asset) PSPRS - Police Balances at June 30, 2024 $ 85,636,864 $ 79,847,757 $ 5,789,107 Changes for the year: Service cost 1,166,338 - 1,166,338 Interest on the total liability 6,103,689 - 6,103,689 Differences between expected and actual experience in the measurement of the total liability (1,091,466) - (1,091,466) Changes of assumptions or other inputs - - - Contributions - employer - 3,142,964 (3,142,964) Contributions - employee - 431,746 (431,746) Net investment income - 8,126,723 (8,126,723) Benefit payments, including refunds of employee contributions (4,059,483) (4,059,483) - Administrative expense - (37,781) 37,781 Other - - - Net changes 2,119,078 7,604,169 (5,485,091) Balances at June 30, 2025 $ 87,755,942 $ 87,451,926 $ 304,016 CORP - Dispatchers Balances at June 30, 2024 $3,910,076 $3,851,063 $59,013 Changes for the year: Service cost 16,676 - 16,676 Interest on the total liability 272,518 - 272,518 Differences between expected and actual experience in the measurement of the total liability 80,249 - 80,249 Changes of assumptions or other inputs - - - Contributions - employer - 172,061 (172,061) Contributions - employee - 14,758 (14,758) Net investment income - 390,455 (390,455) Benefit payments, including refunds of employee contributions (283,563) (283,563) - Administrative expense - (2,761) 2,761 Tiers 1 & 2 Adjustment - - Other - - - Net changes 85,880 290,950 (205,070) Balances at June 30, 2025 $3,995,956 $4,142,013 $(146,057) Liability (Asset)Net Position Liability (Asset) Pension Increase/(Decrease) Total Pension Plan Fiduciary Net Pension Plan Fiduciary Net Position Net Pension Liability Pension Increase/(Decrease) Total Pension Liability TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 86 NOTE 15 – PENSIONS (Continued) Discount Rate. At June 30, 2024, the discount rate used to measure the total pension liability (asset) was 7.2 percent. The projection of cash flows used to determine the PSPRS and CORP discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension liability. Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following table presents the Town’s net pension liability calculated using the discount rates noted above, as well as what the net liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: PSPRS-Police: Net Pension Liability $ 12,980,100 $ 304,016 $ (9,947,411) CORP-Dispatchers: Net Pension Liability $ 349,185 $ (146,057) $ (555,342) 6.2% 7.2% 8.2% 1% Decrease 1% IncreaseDiscount Rate Current Plan Fiduciary Net Position. Detailed information about the plans’ fiduciary net position is available in the separately issued PSPRS and CORP financial report. The report is available on the PSPRS website at www.psprs.com. TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 87 NOTE 15 – PENSIONS (Continued) Expense. For the year ended June 30, 2025, the Town recognized the following as pension expense: Pension Expense $ 2,929,692 $ 68,259 PSPRS-Police CORP-Dispatchers Deferred Outflows/Inflows of Resources. At June 30, 2025, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS-Police: Differences between expected and actual experience $ 4,618,548 $ 1,054,390 Changes of assumptions or other inputs 520,340 - Net difference between projected and actual earnings on plan investments - 607,771 Contributions subsequent to the measurement date 2,390,970 - Total $ 7,529,858 $ 1,662,161 CORP-Dispatchers: Differences between expected and actual experience $ 40,125 $ - Changes of assumptions or other inputs - - Net difference between projected and actual earnings on plan investments - 52,971 Contributions subsequent to the measurement date 9,118 - Total $ 49,243 $ 52,971 Resources Resources Deferred Outflows of Deferred Inflows of TOWN OF ORO VALLEY, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2025 88 NOTE 15 – PENSIONS (Continued) The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: 2026 $ 1,125,121 $ 5,257 2027 2,374,668 22,069 2028 456,237 (16,820) 2029 (479,299) (23,352) 2030 - - Thereafter - - Year Ending June 30:Pension Pension CORP-DispatchersPSPRS-Police 89 REQUIRED SUPPLEMENTARY INFORMATION TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2025 90 Variance Budgeted Amounts with Final Original Final Actual Budget REVENUES Sales taxes $27,993,025 $ 27,993,025 $ 25,778,829 $ (2,214,196) Franchise taxes 715,800 715,800 679,027 (36,773) Intergovernmental 23,074,474 23,074,474 23,267,819 193,345 Licenses, fees and permits 1,673,022 1,673,022 1,798,222 125,200 Fines, forfeitures and penalties 55,000 55,000 67,674 12,674 Charges for services 2,966,467 2,966,467 3,126,307 159,840 Donations - - 21,981 21,981 Investment income: Interest 400,000 400,000 888,561 488,561 Net increase in fair value of investments - - 94,368 94,368 Other 224,000 224,000 697,800 473,800 Total Revenues 57,101,788 57,101,788 56,420,588 (681,200) EXPENDITURES General government: Non departmental 2,721,603 2,721,603 2,831,072 (109,469) Town council 241,102 241,102 216,145 24,957 Town clerk 564,954 564,954 514,388 50,566 Town manager 1,742,926 1,742,926 1,654,950 87,976 Human resources 764,005 764,005 667,283 96,722 Finance 867,767 867,767 856,458 11,309 Information Technology 6,022,838 6,022,838 5,127,812 895,026 Legal services 1,175,969 1,175,969 1,139,202 36,767 Community and economic development 4,289,037 4,289,037 3,652,543 636,494 Town court 1,123,551 1,123,551 1,019,285 104,266 Public works 4,671,291 4,751,291 4,098,146 653,145 Public safety: Police 20,128,736 20,190,736 19,330,777 859,959 Transit: Transit 2,129,376 2,136,176 2,034,885 101,291 Culture and recreation: Parks and recreation 4,664,496 4,689,496 4,646,070 43,426 Debt service Principal - - 542,065 (542,065) Interest - - 78,678 (78,678) Total debt service - - 620,743 (620,743) Capital outlay 680,400 506,600 336,530 170,070 Contingency 1,314,787 1,314,787 - 1,314,787 Total Expenditures 53,102,838 53,102,838 48,746,289 4,356,549 REVENUES OVER/(UNDER) EXPENDITURES 3,998,950 3,998,950 7,674,299 3,675,349 OTHER FINANCING SOURCES/(USES) Sale of assets 5,000 5,000 25 (4,975) Insurance recoveries - - 24,797 24,797 Subscription-based information technology arrangements - - 75,119 75,119 Transfers out (9,403,341) (9,403,341) (9,153,341) 250,000 Total Other Financing Sources/(Uses)(9,398,341) (9,398,341) (9,053,400) 344,941 NET CHANGE IN FUND BALANCE (5,399,391) (5,399,391) (1,379,101) 4,020,290 FUND BALANCE, Beginning of year 22,081,503 22,081,503 22,081,503 - FUND BALANCE, End of year $16,682,112 $ 16,682,112 $ 20,702,402 $ 4,020,290 See notes to required supplementary information TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – COMMUNITY CENTER FUND FOR THE YEAR ENDED JUNE 30, 2025 91 Variance Budgeted Amounts with Final Original Final Actual Budget REVENUES Sales taxes $3,879,440 $3,879,440 $3,910,125 $30,685 Charges for services 6,626,727 6,626,727 7,998,592 1,371,865 Investment income: . Interest 16,682 16,682 41,008 24,326 Net increase in fair value of investments - - 12,602 12,602 Other 162,550 162,550 159,050 (3,500) Total Revenues 10,685,399 10,685,399 12,121,377 1,435,978 EXPENDITURES Current: Culture and recreation 7,439,183 7,569,461 7,975,597 (406,136) Capital outlay 1,792,500 1,543,971 1,136,453 407,518 Debt service: Principal retirement - - 178,273 (178,273) Interest and fiscal charges - - 9,434 (9,434) Contingency 500,000 648,251 - 648,251 Total Expenditures 9,731,683 9,761,683 9,299,757 461,926 REVENUES OVER/(UNDER) EXPENDITURES 953,716 923,716 2,821,620 1,897,904 OTHER FINANCING SOURCES/(USES) Sale of assets - - 118 118 Insurance recoveries - - 2,194 2,194 Transfers out (1,717,149) (1,717,149) (1,717,149) - Total other financing sources/(uses) (1,717,149) (1,717,149) (1,714,837) 2,312 NET CHANGE IN FUND BALANCE (763,433) (793,433) 1,106,783 1,900,216 FUND BALANCE, Beginning of year 1,815,117 1,815,117 1,815,117 - FUND BALANCE, End of year $1,051,684 $ 1,021,684 $ 2,921,900 $ 1,900,216 See notes to required supplementary information TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GRANTS AND CONTRIBUTIONS FUND FOR THE YEAR ENDED JUNE 30, 2025 92 Variance Budgeted Amounts with Final Original Final Actual Budget REVENUES Intergovernmental $4,062,595 $4,062,595 $795,551 $(3,267,044) Investment income: . Interest 25,000 25,000 5,862 (19,138) Net increase in fair value of investments - - 2,332 2,332 Other 526,000 526,000 31,934 (494,066) Total Revenues 4,613,595 4,613,595 835,679 (3,777,916) EXPENDITURES Current: General Government 500,000 445,822 - 445,822 Public Safety 170,950 413,450 479,498 (66,048) Culture and Recreation - - 29,788 (29,788) Capital outlay 6,014,150 3,825,828 205,425 3,620,403 Contingency 200,000 200,000 - 200,000 Total Expenditures 6,885,100 4,885,100 714,711 4,170,389 REVENUES OVER/(UNDER) EXPENDITURES (2,271,505) (271,505) 120,968 392,473 OTHER FINANCING SOURCES/(USES) Transfers in 2,299,905 299,905 125,375 (174,530) Transfers out - - - - Total other financing sources/(uses) 2,299,905 299,905 125,375 (174,530) NET CHANGE IN FUND BALANCE 28,400 28,400 246,343 217,943 FUND BALANCE, Beginning of year (185,555) (185,555) (185,555) - FUND BALANCE, End of year $(157,155) $ (157,155) $ 60,788 $ 217,943 See notes to required supplementary information TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY ARIZONA STATE RETIREMENT SYSTEM LAST TEN FISCAL YEARS 93 2025 2024 2023 2022 2021 Measurement date June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Town's proportion of the net pension (assets) liability 0.12% 0.12% 0.12% 0.12% 0.12% Town's proportionate share of the net pension (assets) liability 19,960,278$ 19,655,601$ 19,916,374$ 15,876,526$ 21,464,093$ Town's covered payroll 16,824,722$ 15,901,116$ 14,545,595$ 13,511,313$ 13,793,013$ Town's proportionate share of the net pension (assets) liability as a percentage of its covered payroll 118.64% 123.61% 136.92% 117.51% 155.62% Plan fiduciary net position as a percentage of the total pension liability 76.93% 75.47% 74.26% 78.58% 69.33% 2020 2019 2018 2017 2016 Measurement date June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Town's proportion of the net pension (assets) liability 0.13% 0.13% 0.12% 0.12% 0.12% Town's proportionate share of the net pension (assets) liability 18,808,834$ 18,237,813$ 19,453,870$ 20,050,356$ 18,575,537$ Town's covered payroll 13,630,224$ 13,018,275$ 12,193,145$ 11,857,622$ 11,826,486$ Town's proportionate share of the net pension (assets) liability as a percentage of its covered payroll 137.99% 140.09% 159.55% 169.09% 157.07% Plan fiduciary net position as a percentage of the total pension liability 73.24% 73.40% 69.92% 67.06% 68.35% See notes to required supplementary information TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM – POLICE LAST TEN FISCAL YEARS 94 2025 2024 2023 2022 Measurement date June 30,2024 June 30,2023 June 30, 2022 June 30, 2021 Total pension liability Service cost $ 1,166,338 $ 1,181,744 $ 1,373,511 $ 1,359,359 Interest 6,103,689 5,450,177 5,155,618 4,928,984 Changes of benefit terms - - - - (1,091,466) 6,412,956 1,479,536 (577,199) Changes of assumptions or other inputs - - 719,444 - (4,059,483) (3,846,347) (3,082,329) (2,159,116) Net change in total pension liability 2,119,078 9,198,530 5,645,780 3,552,028 Total pension liability—beginning 85,636,864 76,438,334 70,792,554 67,240,526 Total pension liability—ending $ 87,755,942 $ 85,636,864 $ 76,438,334 $ 70,792,554 Plan fiduciary net position Contributions—employer $ 3,142,964 $ 1,446,816 $ 30,446,078 $ 3,343,850 Contributions—employee 431,746 605,765 553,740 554,204 Net investment income 8,126,723 5,770,191 (3,122,413) 10,961,057 (4,059,483) (3,846,347) (3,082,329) (2,159,116) Administrative expense (37,781) (28,833) (56,065) (51,282) Other (735)- 5,595 Net change in plan fiduciary net position 7,604,169 3,946,857 24,739,011 12,654,308 Plan fiduciary net position—beginning 79,847,757 75,900,900 51,161,889 38,507,581 Plan fiduciary net position—ending $ 87,451,926 $ 79,847,757 $ 75,900,900 $ 51,161,889 Net pension (assets) liability—ending $ 304,016 $ 5,789,107 $ 537,434 $ 19,630,665 99.65%93.24%99.30%72.27% Covered payroll $ 7,649,618 $ 6,622,521 $ 7,265,499 $ 6,181,716 3.97%87.42%7.40%317.56% Differences between expected and actual experience Benefit payments, including refunds of employee contributions Benefit payments, including refunds of employee contributions Plan fiduciary net position as a percentage of the total pension Net pension (assets) liability as a percentage of covered payroll See notes to required supplementary information 95 2021 2020 2019 2018 2017 2016 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 $ 1,418,920 $ 1,552,240 $ 1,515,028 $ 1,638,736 $ 1,363,768 $ 1,224,807 4,573,136 4,264,774 3,922,057 3,615,210 3,185,633 2,842,514 - - - 435,327 3,164,555 - 1,073,763 (303,721) 136,020 247,905 (548,533) 1,312,293 - 1,627,934 - 747,786 1,902,904 - (2,104,146) (1,884,430) (1,588,615) (2,061,668) (1,106,968) (1,049,346) 4,961,673 5,256,797 3,984,490 4,623,296 7,961,359 4,330,268 62,278,853 57,022,056 53,037,566 48,414,270 40,452,911 36,122,643 $ 67,240,526 $ 62,278,853 $ 57,022,056 $ 53,037,566 $ 48,414,270 $ 40,452,911 $ 3,072,830 $ 2,624,761 $ 1,278,293 $ 1,811,735 $ 1,505,274 $ 1,669,125 563,652 575,136 622,233 905,024 840,020 794,478 479,186 1,843,370 2,159,685 3,228,386 154,181 874,562 (2,104,146) (1,884,430) (1,588,615) (2,061,668) (1,106,968) (1,049,346) (39,077) (33,037) (33,570) (28,966) (22,586) (21,722) (52,206) 31,984 107,852 19,066 38,225 93,803 1,920,239 3,157,784 2,545,878 3,873,577 1,408,146 2,360,900 36,587,342 33,429,558 30,883,680 27,010,103 25,601,957 23,241,057 $ 38,507,581 $ 36,587,342 $ 33,429,558 $ 30,883,680 $ 27,010,103 $ 25,601,957 $ 28,732,945 $ 25,691,511 $ 23,592,498 $ 22,153,886 $ 21,404,167 $ 14,850,954 57.27%58.75%58.63%58.23%55.79%63.29% $ 6,672,512 $ 6,942,593 $ 7,209,721 $ 7,199,177 $ 7,355,092 $ 7,004,292 430.62%370.06%327.23%307.73%291.01%212.03% TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM – DISPATCHERS LAST TEN FISCAL YEARS 96 2025 2024 2023 2022 Measurement date June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 Total pension liability Service cost $ 16,676 $ 16,408 $ 16,669 $ 22,257 Interest 272,518 261,914 253,314 242,038 Changes of benefit terms - - 80,249 110,346 42,782 75,279 Changes of assumptions or other inputs - - 52,917 - (283,563) (199,743) (195,826) (163,212) Net change in total pension liability 85,880 188,925 169,856 176,362 Total pension liability—beginning 3,910,076 3,721,151 3,551,295 3,374,933 Total pension liability—ending $ 3,995,956 $ 3,910,076 $ 3,721,151 $ 3,551,295 Plan fiduciary net position Contributions—employer $ 172,061 $ 2,218,919 $ 123,193 $ 138,372 Contributions—employee 14,758 14,017 12,377 14,583 Net investment income 390,455 160,124 (66,048) 387,481 (283,563) (199,743) (195,826) (163,212) Administrative expense (2,761) (2,293) (1,214) (1,786) Other - (2,051) - - Net change in plan fiduciary net position 290,950 2,188,973 (127,518) 375,438 Plan fiduciary net position—beginning 3,851,063 1,662,090 1,789,608 1,414,170 Plan fiduciary net position—ending $ 4,142,013 $ 3,851,063 $ 1,662,090 $ 1,789,608 Net pension liability (asset)—ending $ (146,057) $ 59,013 $ 2,059,061 $ 1,761,687 103.66% 98.49% 44.67% 50.39% Covered payroll $ 127,623 $ 154,548 $ 158,877 $ 180,822 (114.44)% 38.18% 1296.01% 974.27% Differences between expected and actual experience Benefit payments, including refunds of employee contributions Benefit payments, including refunds of employee contributions Plan fiduciary net position as a percentage of the total pension liability Net pension liability (asset) as a percentage of covered payroll See notes to required supplementary information 97 2021 2020 2019 2018 2017 2016 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 $ 22,224 $ 30,922 $ 34,542 $ 32,541 $ 32,257 $ 52,754 233,081 215,182 223,773 185,568 182,053 174,403 - - (175,686) 395,457 14,504 - 18,688 124,217 (73,061) (12,524) (12,392) 14,554 - 61,495 - 85,035 64,514 - (139,459) (136,724) (141,910) (132,788) (119,180) (148,851) 134,534 295,092 (132,342) 553,289 161,756 92,860 3,240,399 2,945,307 3,077,649 2,524,360 2,362,604 2,269,744 $ 3,374,933 $ 3,240,399 $ 2,945,307 $ 3,077,649 $ 2,524,360 $ 2,362,604 $ 122,322 $ 120,338 $ 87,566 $ 77,331 $ 52,583 $ 64,005 16,244 16,099 15,976 18,502 18,982 30,272 38,182 71,209 89,317 136,094 7,237 45,101 (139,459) (136,724) (141,910) (132,788) (119,180) (148,851) (1,478) (1,971) (2,051) (1,591) (1,423) (1,490) (264) - (24) (8) (8) (926) 35,547 68,951 48,874 97,540 (41,809) (11,889) 1,378,623 1,309,672 1,260,798 1,163,258 1,205,067 1,216,956 $ 1,414,170 $ 1,378,623 $ 1,309,672 $ 1,260,798 $ 1,163,258 $ 1,205,067 $ 1,960,763 $ 1,861,776 $ 1,635,635 $ 1,816,851 $ 1,361,102 $ 1,157,537 41.90%42.54%44.47%40.97%46.08%51.01% $ 210,542 $ 202,262 $ 201,687 $ 233,934 $ 245,274 $ 380,303 931.29%920.48%810.98%776.65%554.93%304.37% TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF PENSION CONTRIBUTIONS – ALL PENSION PLANS LAST TEN FISCAL YEARS 98 2025 2024 2023 2022 Arizona State Retirement System: Actuarially determined contribution 2,088,553$ 2,024,014$ 1,895,413$ 1,746,926$ Contributions in relation to the actuarially determined contribution 2,088,553 2,024,014 1,895,413 1,746,926 Contribution deficiency (excess) - - - - Town's covered payroll 17,332,390$ 16,824,722$ 15,901,116$ 14,545,595$ Contributions as a percentage of covered payroll 12.05% 12.03% 11.92% 12.01% Public Safety Personnel Retirement System - Police: Actuarially determined contribution 1,277,060$ 841,458$ 1,523,896$ 3,165,578$ Contributions in relation to the actuarially determined contribution 2,390,970 3,341,458 1,523,896 30,216,213 Contribution deficiency (excess) (1,113,910) (2,500,000) - (27,050,635) Town's covered payroll 7,873,368$ 7,649,618$ 6,622,521$ 7,265,499$ Contributions as a percentage of covered payroll 16.22% 11.00% 23.01% 43.57% Public Safety Personnel Retirement System - Dispatchers Actuarially determined contribution 9,118$ 163,919$ 183,062$ 125,878$ Contributions in relation to the actuarially determined contribution 9,118 163,919 2,219,857 125,878 Contribution deficiency (excess) - - (2,036,795) - Town's covered payroll 151,967$ 127,623$ 154,548$ 158,877$ Contributions as a percentage of covered payroll 6.00% 128.44% 1436.36% 79.23% See notes to required supplementary information 99 2021 2020 2019 2018 2017 2016 1,574,068$ 1,579,300$ 1,523,859$ 1,418,992$ 1,314,421$ 1,286,552$ 1,574,068 1,579,300 1,523,859 1,418,992 1,314,421 1,286,552 - - - - - - 13,511,313$ 13,793,013$ 13,630,224$ 13,018,275$ 12,193,145$ 11,857,622$ 11.65% 11.45% 11.18% 10.90% 10.78% 10.85% 2,572,830$ 2,552,903$ 2,548,626$ 2,485,191$ 1,679,568$ 1,554,131$ 3,072,830 3,052,903 2,548,626 2,485,191 1,679,568 1,554,131 (500,000) (500,000) - - - - 6,181,716$ 6,672,512$ 6,942,593$ 7,209,721$ 7,199,177$ 7,355,092$ 41.62% 38.26% 36.71% 34.47% 23.33% 21.13% 136,575$ 126,199$ 124,108$ 87,996$ 77,830$ 54,083$ 136,575 126,199 124,108 87,996 77,830 54,083 - - - - - - 180,822$ 210,542$ 202,262$ 201,687$ 233,934$ 245,274$ 75.53% 59.94% 61.36% 43.63% 33.27% 22.05% TOWN OF ORO VALLEY, ARIZONA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2025 100 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 – BUDGETING AND BUDGETARY CONTROL A.R.S. requires the Town to prepare and adopt a balanced budget annually for each governmental fund. The Town Council must approve such operating budgets on or before the third Monday in July. A.R.S. prohibits expenditures in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level for the General Fund or at the fund level for all other funds. In certain instances, transfers of appropriations between departments or from the contingency account to a department may be made upon Town Manager or Town Council approval, respectively. NOTE 3 – PENSION SCHEDULES Actuarial Assumptions for Valuations Performed. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends. Arizona courts have ruled that provisions of a 2011 law that changed the mechanism for funding permanent pension benefit increases and increased employee pension contribution rates were unconstitutional or a breach of contract because those provisions apply to individuals who were members as of the law’s effective date. As a result, the PSPRS changed benefit terms to reflect the prior mechanism for funding permanent benefit increases for those members and revised actuarial assumptions to explicitly value future permanent benefit increases. PSPRS also reduced those members’ employee contribution rates. These changes are reflected in the plans’ pension liabilities for fiscal year 2015 (measurement date 2014) for members who were retired as of the law’s effective date and fiscal year 2018 (measurement date 2017) for members who retired or will retire after the law’s effective date. These changes also increased the PSPRS-required contributions beginning in fiscal year 2016 for members who were retired as of the law’s effective date. These changes increased the PSPRS-required contributions beginning in fiscal year 2019 for members who retired or will retire after the law’s effective date. 101 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 102 (This page intentionally left blank) 103 GOVERNMENTAL FUNDS TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET – ALL NON-MAJOR GOVERNMENTAL FUNDS – BY FUND TYPE JUNE 30, 2025 104 ASSETS Cash and investments $ 1,964,733 $ 4,047,599 $ 6,012,332 Interest receivable 6,426 29,188 35,614 Intergovernmental receivable 411,628 - 411,628 Lease Receivable - 270,718 270,718 Total Assets $ 2,382,787 $ 4,347,505 $ 6,730,292 LIABILITIES Accounts payable $ 409,077 $ - $ 409,077 Intergovernmental payable 17 - 17 Total Liabilities 409,094 - 409,094 DEFERRED INFLOWS OF RESOURCES Lease Related - 249,547 249,547 FUND BALANCES Nonspendable - 21,171 21,171 Restricted 1,973,693 4,024,739 5,998,432 Committed - 52,048 52,048 Total Fund Balances 1,973,693 4,097,958 6,071,651 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 2,382,787 $ 4,347,505 $ 6,730,292 Special Revenue Capital Projects Funds Total Non-Major Governmental 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, 2025 105 REVENUES Development impact fees $ - $ 1,454,021 $ 1,454,021 Charges for Services - 31,194 31,194 Intergovernmental 4,262,644 32,678 4,295,322 Licenses, fees and permits 40,389 - 40,389 Fines, forfeitures and penalties 24,067 - 24,067 Investment income: Interest 142,986 157,547 300,533 Net increase in fair value of investments 6,729 18,446 25,175 Other 1,358 - 1,358 Total Revenues 4,478,173 1,693,886 6,172,059 EXPENDITURES Current: Public safety - 274 274 Highway and streets 2,572,292 51,599 2,623,891 Culture and recreation - 959 959 Capital outlay 4,876,765 757,890 5,634,655 Total Expenditures 7,449,057 810,722 8,259,779 REVENUES OVER/(UNDER) EXPENDITURES (2,970,884) 883,164 (2,087,720) OTHER FINANCING SOURCES/(USES) Insurance Recoveries 7,467 - 7,467 Transfers in/(out) 4,000,000 (42,718) 3,957,282 Total Other Financing Sources (Uses)4,007,467 (42,718) 3,964,749 NET CHANGE IN FUND BALANCES 1,036,583 840,446 1,877,029 FUND BALANCES, Beginning of year 937,110 3,257,512 4,194,622 FUND BALANCES, End of year $ 1,973,693 $ 4,097,958 $ 6,071,651 Special Revenue Capital Projects Funds Total Non-Major Governmental 106 (This page intentionally left blank) 107 SPECIAL REVENUE FUNDS The Special Revenue Funds account for the proceeds of specific revenue sources, other than major capital projects, that are legally restricted to expenditures for specified purposes. Highway User Revenue – accounts for the Town’s share of motor fuel tax revenues. 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. TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET – NON-MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2025 108 ASSETS Cash and investments $ 1,589,827 $ 139,549 $ 235,357 $ 1,964,733 Interest receivable 6,426 - - 6,426 Intergovernmental receivable 411,628 - - 411,628 Total Assets $ 2,007,881 $ 139,549 $ 235,357 $ 2,382,787 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 409,077 $ - $ - $ 409,077 Intergovernmental payable 17 - - 17 Total Liabilities 409,094 - - 409,094 Fund balances: Restricted 1,598,787 139,549 235,357 1,973,693 Total Fund Balances 1,598,787 139,549 235,357 1,973,693 Total Liabilities and Fund Balances $ 2,007,881 $ 139,549 $ 235,357 $ 2,382,787 Federal Seizures HURF and Forfeitures and Forfeitures Totals State Seizures TOWN OF ORO VALLEY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2025 109 REVENUES Intergovernmental $ 4,262,644 $ - $ - $ 4,262,644 Licenses, fees and permits 40,389 - - 40,389 Fines, forfeitures and penalties - 10,204 13,863 24,067 Investment income: Interest 123,210 7,553 12,223 142,986 Net increase in fair value of investments 6,729 - - 6,729 Other 1,358 - - 1,358 Total Revenues 4,434,330 17,757 26,086 4,478,173 EXPENDITURES Current: Highway and streets 2,572,292 - - 2,572,292 Capital outlay 4,876,765 - - 4,876,765 Total Expenditures 7,449,057 - - 7,449,057 OTHER FINANCING SOURCES/(USES) Insurance recoveries 7,467 - - 7,467 Transfers in 4,000,000 - - 4,000,000 Total other financing sources/(uses)4,007,467 - - 4,007,467 NET CHANGE IN FUND BALANCES 992,740 17,757 26,086 1,036,583 FUND BALANCES, Beginning of year 606,047 121,792 209,271 937,110 FUND BALANCES, End of year $ 1,598,787 $ 139,549 $ 235,357 $ 1,973,693 State Seizures Federal Seizures HURF and Forfeitures and Forfeitures Totals 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, 2025 110 Actual REVENUES Intergovernmental $4,283,146 $4,262,644 $(20,502) Licenses, fees and permits 25,000 40,389 15,389 Fines, forfeitures and penalties - - - Investment income: Interest 150,000 123,210 (26,790) Net increase in fair value of investments - 6,729 6,729 Other 2,000 1,358 (642) Total Revenues 4,460,146 4,434,330 (25,816) EXPENDITURES Current: Public safety - - - Highway and streets 2,640,303 2,572,292 68,011 Capital outlay 5,456,000 4,876,765 579,235 Contingency 200,000 - 200,000 Total Expenditures 8,296,303 7,449,057 847,246 REVENUES OVER/ (UNDER) EXPENDITURES (3,836,157) (3,014,727) 821,430 OTHER FINANCING SOURCES/(USES) Insurance recoveries 1,000 7,467 6,467 Transfers in 4,000,000 4,000,000 - Total other financing sources/(uses)4,001,000 4,007,467 6,467 NET CHANGE IN FUND BALANCE 164,843 992,740 827,897 FUND BALANCE, Beginning of year 606,047 606,047 - FUND BALANCE, End of year $ 770,890 $ 1,598,787 $ 827,897 HURF Budget Variance with Budget 111 Actual Actual $- $- $- $- $- $- - - - - - - 15,000 10,204 (4,796) 85,000 13,863 (71,137) 5,000 7,553 2,553 - 12,223 12,223 - - - - - - - - - - - - 20,000 17,757 (2,243) 85,000 26,086 (58,914) 100,000 100,000 - - - - - - - - - - - - - - 170,152 - 170,152 110,043 - 110,043 270,152 - 270,152 110,043 - 110,043 (250,152) 17,757 267,909 (25,043) 26,086 51,129 - - - - - - - - - - - - - - - - - - (250,152) 17,757 267,909 (25,043) 26,086 51,129 121,792 121,792 - 209,271 209,271 - $ (128,360) $ 139,549 $ 267,909 $ 184,228 $ 235,357 $ 51,129 with Budget State Seizures and Forfeitures Federal Seizures and Forfeitures Budget Budget Variance with Budget Variance 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, 2025 112 Variance with Actual Budget REVENUES Intergovernmental $4,283,146 $4,262,644 $(20,502) Licenses, fees and permits 25,000 40,389 15,389 Fines, forfeitures and penalties 100,000 24,067 (75,933) Investment income: Interest 155,000 142,986 (12,014) Net increase in fair value - of investments - 6,729 6,729 Other 2,000 1,358 (642) Total Revenues 4,565,146 4,478,173 (86,973) EXPENDITURES Current: Public safety 100,000 - 100,000 Highway and streets 2,640,303 2,572,292 68,011 Capital outlay 5,456,000 4,876,765 579,235 Contingency 480,195 - 480,195 Total Expenditures 8,676,498 7,449,057 1,227,441 REVENUES OVER/ (UNDER) EXPENDITURES (4,111,352) (2,970,884) 1,140,468 OTHER FINANCING SOURCES/(USES) Insurance recoveries 1,000 7,467 6,467 Transfers in 4,000,000 4,000,000 - Total other financing sources/(uses)4,001,000 4,007,467 6,467 NET CHANGE IN FUND BALANCE (110,352) 1,036,583 1,146,935 FUND BALANCE, Beginning of year 937,110 937,110 - FUND BALANCE, End of year $ 826,758 $ 1,973,693 $ 1,146,935 Totals Budget 113 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 (Major Fund) – 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. TOWN OF ORO VALLEY, ARIZONA COMBINING BALANCE SHEET – NON-MAJOR CAPITAL PROJECT FUNDS JUNE 30, 2025 114 ASSETS Cash and investments $ 3,071,734 $ 499,760 $ 51,934 $ 424,171 $ 4,047,599 Interest receivable 23,296 4,194 114 1,584 29,188 Lease receivable - - - 270,718 270,718 Total Assets $ 3,095,030 $ 503,954 $ 52,048 $ 696,473 $ 4,347,505 LIABILITIES Accounts payable $ - $ - $ - $ - $ - Total Liabilities - - - - - DEFERRED INFLOWS OF RESOURCES Lease Related - - - 249,547 249,547 FUND BALANCES Nonspendable - - - 21,171 21,171 Restricted 3,095,030 503,954 - 425,755 4,024,739 Committed - - 52,048 - 52,048 Total Fund Balances 3,095,030 503,954 52,048 446,926 4,097,958 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 3,095,030 $ 503,954 $ 52,048 $ 696,473 $ 4,347,505 Townwide TownwideGeneral Impact Facilities Impact Fees Fees Projects Totals Roadway Development PAG/RTA TOWN OF ORO VALLEY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – NON-MAJOR CAPITAL PROJECT FUNDS YEAR ENDED JUNE 30, 2025 115 REVENUES Development impact fees $ 1,182,692 $ 271,329 $ - $ - $ 1,454,021 Intergovernmental - - - - - Charges for services - - 32,678 31,194 63,872 Investment income: Interest 114,173 15,836 1,164 26,374 157,547 Net increase in fair value of investments 13,915 2,386 229 1,916 18,446 Total Revenues 1,310,780 289,551 34,071 59,484 1,693,886 EXPENDITURES Current: Public safety - 274 - - 274 Highway and streets 8,556 - - 43,043 51,599 Culture and recreation - 959 - - 959 Capital outlay 757,890 - - - 757,890 Total Expenditures 766,446 1,233 - 43,043 810,722 REVENUES OVER/(UNDER) EXPENDITURES 544,334 288,318 34,071 16,441 883,164 OTHER FINANCING USES Transfers out - (42,718) - - (42,718) NET CHANGE IN FUND BALANCES 544,334 245,600 34,071 16,441 840,446 FUND BALANCES, Beginning of year 2,550,696 258,354 17,977 430,485 3,257,512 FUND BALANCES, End of year $ 3,095,030 $ 503,954 $ 52,048 $ 446,926 $ 4,097,958 Townwide General Townwide Impact Facilities Roadway Impact Fees Fees Projects Totals Development PAG/RTA TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2025 116 Variance with Actual Budget REVENUES Development impact fees $230,027 $1,182,692 $952,665 Intergovernmental - - - Charges for services - - - Investment income: Interest 38,000 114,173 76,173 Net increase in fair value of investments - 13,915 13,915 Other - - - Total Revenues 268,027 1,310,780 1,042,753 EXPENDITURES Current: General government - - - Public safety - - - Highway and streets - 8,556 (8,556) Culture and recreation - - - Capital outlay 100,000 757,890 (657,890) Contingency 300,000 - 300,000 Total Expenditures 400,000 766,446 (366,446) REVENUES OVER/(UNDER) EXPENDITURES (131,973) 544,334 676,307 OTHER FINANCING SOURCES/(USES) Sale of general capital assets - - - Insurance recoveries - - - Transfers in/(out), net - - - Total other financing sources (uses) - - - NET CHANGE IN FUND BALANCE (131,973) 544,334 676,307 FUND BALANCE, Beginning of year 2,550,696 2,550,696 - FUND BALANCE, End of year $ 2,418,723 $ 3,095,030 $ 676,307 Budget Townwide Roadway Development Impact Fees TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2025 117 Variance Variance with with Actual Budget Actual Budget $204,499 $271,329 $66,830 $- $- $- - - - - - - - - - - 32,678 32,678 15,350 15,836 486 500 1,164 664 - 2,386 2,386 - 229 229 - - - - - - 219,849 289,551 69,702 500 34,071 33,571 - - - - - - - 274 (274) - - - - - - - - - - 959 (959) - - - - - - - - - 235,000 - 235,000 18,216 - 18,216 235,000 1,233 233,767 18,216 - 18,216 (15,151) 288,318 303,469 (17,716) 34,071 51,787 - - - - - - - - - - - - (42,718) (42,718) - - - - (42,718) (42,718) - - - - (57,869) 245,600 303,469 (17,716) 34,071 51,787 258,354 258,354 - 17,977 17,977 - $ 200,485 $ 503,954 $ 303,469 $ 261 $ 52,048 $ 51,787 General Impact Fees Budget Townwide Facilities Projects Budget TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2025 118 Variance with Actual Budget REVENUES Development impact fees $- $- $- Intergovernmental 1,000,000 1,164,417 164,417 Charges for services - - - Donations - 400,000 400,000 Investment income: Interest 348,382 646,662 298,280 Net increase in fair value of investments - 75,880 75,880 Other 933,490 934,103 613 Total Revenues 2,281,872 3,221,062 939,190 EXPENDITURES Current: General government - 116,920 (116,920) Public safety - 163,881 (163,881) Highway and streets - 10,000 - Transit 37,000 36,463 Culture and recreation - 62,846 (62,846) Capital outlay 10,286,569 5,565,173 4,721,396 Contingency 3,384,893 - 3,384,893 Total Expenditures 13,708,462 5,955,283 7,762,642 REVENUES OVER/(UNDER) EXPENDITURES (11,426,590) (2,734,221) 8,701,832 OTHER FINANCING SOURCES/(USES) Sale of general capital assets 100,000 51,162 (48,838) Insurance recoveries 15,000 113,408 98,408 Transfers in/(out), net 2,965,257 3,139,787 174,530 Total other financing sources (uses) 3,080,257 3,304,357 224,100 NET CHANGE IN FUND BALANCE (8,346,333) 570,136 8,925,932 FUND BALANCE, Beginning of year 16,677,730 16,677,730 - FUND BALANCE, End of year $ 8,331,397 $ 17,247,866 $ 8,925,932 General Government CIP Budget TOWN OF ORO VALLEY, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL - ALL CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2025 119 Variance Variance with with Actual Budget Actual Budget $- $- $- $434,526 $1,454,021 $1,019,495 17,000 - (17,000) 1,017,000 1,164,417 147,417 28,125 31,194 3,069 28,125 63,872 35,747 - - - - 400,000 400,000 50,000 26,374 (23,626) 452,232 804,209 351,977 - 1,916 1,916 - 94,326 94,326 - - - 933,490 934,103 613 95,125 59,484 (35,641) 2,865,373 4,914,948 2,049,575 - - - - 116,920 (116,920) - - - - 164,155 (164,155) 50,000 43,043 6,957 50,000 61,599 (11,599) 37,000 36,463 537 - - - - 63,805 (63,805) - - - 10,386,569 6,323,063 4,063,506 120,000 - 120,000 4,058,109 - 4,058,109 170,000 43,043 126,957 14,531,678 6,766,005 7,765,673 (74,875) 16,441 91,316 (11,666,305) (1,851,057) 9,815,248 - - - 100,000 51,162 (48,838) - - - 15,000 113,408 98,408 - - - 2,922,539 3,097,069 174,530 - - - 3,037,539 3,261,639 224,100 (74,875) 16,441 91,316 (8,628,766) 1,410,582 10,039,348 430,485 430,485 - 19,935,242 19,935,242 - $ 355,610 $ 446,926 $ 91,316 $ 11,306,476 $ 21,345,824 $ 10,039,348 PAG/RTA Totals Budget Budget 120 (This page intentionally left blank) 121 MUNICIPAL DEBT SERVICE FUND Debt Service Funds are created to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Municipal Debt Service – to account for the payments of debt service on the Series 2010 Excise Tax Revenue Obligations, the Series 2012 Excise Tax Revenue Obligations, the Series 2015 Excise Tax Revenue Refunding Obligations, the Series 2016 Excise Tax Revenue Obligations, the Series 2017 Refunding Excise Tax Revenue Obligations, the Series 2018 Excise Tax Revenue Obligations, the Series 2021 Parks and Recreation Excise Tax Revenue Obligations, and the 2021 Excise Tax PSPRS Pension Obligation Bonds. TOWN OF ORO VALLEY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – MUNICIPAL DEBT SERVICE FUND YEAR ENDED JUNE 30, 2025 122 Variance with Actual Budget REVENUES Intergovernmental $19,975 $8,580 $(11,395) Investment income: Interest 135,000 31,329 (103,671) Other 100,000 67,018 (32,982) Total Revenues 254,975 106,927 (148,048) EXPENDITURES Debt service: Principal retirement 2,732,974 2,732,974 - Interest and fiscal charges 1,297,380 1,296,534 846 Contingency 100,000 - 100,000 Total Expenditures 4,130,354 4,029,508 100,846 REVENUES OVER (UNDER) EXPENDITURES (3,875,379) (3,922,581) (47,202) OTHER FINANCING SOURCES Transfers in 3,900,379 3,650,379 250,000 Total other financing sources 3,900,379 3,650,379 250,000 NET CHANGE IN FUND BALANCE 25,000 (272,202) 202,798 FUND BALANCE, Beginning of year 326,002 326,002 - FUND BALANCE, End of year $ 351,002 $ 53,800 $ 202,798 Municipal Debt Service Budget 123 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. 124 (This page intentionally left blank) 125 TOWN OF ORO VALLEY, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2025 2024 2023 2022 2021 Governmental Activities: Net investment in capital assets $ 199,942,273 $ 195,184,523 $ 181,274,918 $ 179,219,389 $ 184,355,212 Restricted 6,259,077 4,502,647 15,579,039 21,752,087 5,392,323 Unrestricted 18,367,563 17,270,579 13,237,690 1,104,482 335,300 Total governmental activities net position $ 224,568,913 $ 216,957,749 $ 210,091,647 $ 202,075,958 $ 190,082,835 Business-type Activities: Net investment in capital assets $ 125,033,742 $ 110,254,720 $ 95,456,678 $ 87,969,917 $ 84,049,866 Restricted 6,481,181 14,427,924 Unrestricted 1,995,802 3,810,899 26,210,775 27,109,858 27,721,215 Total business-type activities net position $ 133,510,725 $ 128,493,543 $ 121,667,453 $ 115,079,775 $ 111,771,081 Primary Government: Net investment in capital assets $ 324,976,015 $ 305,439,243 $ 276,731,596 $ 267,189,306 $ 268,405,078 Restricted 12,740,258 18,930,571 15,579,039 21,752,087 5,392,323 Unrestricted 20,363,365 21,081,478 39,448,465 28,214,340 28,056,515 Total primary government net position $ 358,079,638 $ 345,451,292 $ 331,759,100 $ 317,155,733 $ 301,853,916 2020 2019 2018 2017 2016 Governmental Activities: Net investment in capital assets $ 152,604,355 $ 141,506,384 $ 137,311,856 $ 133,414,691 $ 132,419,826 Restricted 6,601,283 5,752,355 4,424,244 6,006,584 4,653,905 Unrestricted (11,756,943) (10,619,492) (11,583,669) (15,397,688) (10,883,206) Total governmental activities net position $ 147,448,695 $ 136,639,247 $ 130,152,431 $ 124,023,587 $ 126,190,525 Business-type Activities: Net investment in capital assets $ 76,933,346 $ 73,170,068 $ 69,036,006 $ 66,755,370 $ 61,261,271 Restricted Unrestricted 25,077,357 23,499,030 21,397,377 18,721,247 19,504,748 Total business-type activities net position $ 102,010,703 $ 96,669,098 $ 90,433,383 $ 85,476,617 $ 80,766,019 Primary Government: Net investment in capital assets $ 229,537,701 $ 214,676,452 $ 206,347,862 $ 200,170,061 $ 193,681,097 Restricted 6,601,283 5,752,355 4,424,244 6,006,584 4,653,905 Unrestricted 13,320,414 12,879,538 9,813,708 3,323,559 8,621,542 Total primary government net position $ 249,459,398 $ 233,308,345 $ 220,585,814 $ 209,500,204 $ 206,956,544 Source: Town of Oro Valley Finance Department 126 TOWN OF ORO VALLEY, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Expenses Governmental activities: General government $ 23,475,179 $ 22,885,243 $ 21,118,167 $ 28,083,397 $ 19,633,975 $ 17,210,855 $ 14,727,150 $ 12,639,867 $ 12,130,905 $ 11,888,794 Public safety 21,467,491 21,516,996 20,002,651 8,232,307 18,291,873 19,416,010 18,958,436 17,683,197 22,251,172 16,123,500 Highways and streets 12,918,088 12,407,093 12,041,764 10,234,099 11,629,477 10,201,832 10,791,469 7,505,589 9,417,459 9,089,318 Transit 2,067,887 1,691,450 1,520,300 1,267,596 939,341 1,106,750 1,125,490 1,505,341 1,533,258 1,432,910 Culture and recreation 14,796,221 13,167,591 11,839,721 10,059,071 9,396,975 9,551,170 9,699,357 10,111,731 10,204,276 9,695,639 Interest on long-term debt 1,179,140 1,270,041 1,406,761 1,149,019 290,251 362,651 355,545 350,404 511,502 494,732 Total governmental activities expenses 75,904,006 72,938,414 67,929,364 59,025,489 60,181,892 57,849,268 55,657,447 49,796,129 56,048,572 48,724,893 Business-type activities: Water 19,890,406 18,305,199 17,438,890 16,202,611 16,157,523 15,953,546 15,089,673 15,568,288 14,753,418 14,406,074 Stormwater 1,355,984 1,486,716 1,409,674 1,282,283 1,368,001 1,444,865 1,291,490 1,190,898 1,115,494 917,898 Total business-type activities expenses 21,246,390 19,791,915 18,848,564 17,484,894 17,525,524 17,398,411 16,381,163 16,759,186 15,868,912 15,323,972 Total primary government expenses $ 97,150,396 $ 92,730,329 $ 86,777,928 $ 76,510,383 $ 77,707,416 $ 75,247,679 $ 72,038,610 $ 66,555,315 $ 71,917,484 $ 64,048,865 Program Revenues Governmental activities: Charges for services General government $ 4,598,190 $ 4,714,761 $ 5,567,269 $ 5,519,724 $ 6,305,121 $ 5,205,012 $ 4,920,132 $ 5,084,396 $ 4,901,504 $ 4,096,927 Public safety 168,713 290,374 245,285 341,334 340,430 157,312 173,488 128,651 138,075 168,808 Highways and streets 1,255,278 369,376 287,013 378,585 739,936 1,675,929 754,388 1,039,542 1,052,167 764,397 Transit - - - - 463 110,309 138,125 119,536 100,052 88,684 Culture and recreation 9,203,373 8,579,288 7,003,209 7,033,797 5,236,021 4,391,639 5,014,018 5,096,804 4,611,576 4,373,693 Operating grants and contributions 3,287,190 3,237,521 4,533,920 4,040,118 8,171,190 3,621,830 4,669,814 4,949,928 4,664,197 5,503,530 Capital grants and contributions 11,868,940 7,512,562 9,258,047 8,493,664 25,566,365 16,338,347 8,302,441 5,529,831 6,749,407 3,602,656 Total governmental activities program revenues 30,381,683 24,703,882 26,894,742 25,807,222 46,359,527 31,500,378 23,972,406 21,948,688 22,216,978 18,598,695 Business-type activities: Charges for services Water 21,742,703 19,550,645 17,702,458 18,333,445 18,199,075 20,218,758 17,519,158 19,455,685 18,158,385 16,739,580 Stormwater 1,530,261 1,521,238 1,474,130 1,495,382 1,472,363 1,443,616 1,426,246 1,386,278 1,314,787 828,258 Operating grants and contributions - - - - - - - - - 35,000.00 Capital grants and contributions 2,256,093 4,257,006 3,964,061 1,612,125 7,603,672 169,194 2,899,213 870,920 1,097,285 3,334,372 Total business-type activities program revenues 25,529,057 25,328,889 23,140,649 21,440,952 27,275,110 21,831,568 21,844,617 21,712,883 20,570,457 20,937,210 Total primary government program revenues $ 55,910,740 $ 50,032,771 $ 50,035,391 $ 47,248,174 $ 73,634,637 $ 53,331,946 $ 45,817,023 $ 43,661,571 $ 42,787,435 $ 39,535,905 Net (expense)/revenue: Governmental activities $ (45,522,323) $ (48,234,532) $ (41,034,622) $ (33,218,267) $ (13,822,365) $ (26,348,890) $ (31,685,041) $ (27,847,441) $ (33,831,594) $ (30,126,198) Business-type activities 4,282,667 5,536,974 4,292,085 3,956,058 9,749,586 4,433,157 5,463,454 4,953,697 4,701,545 5,613,238 Total primary government net expense $ (41,239,656) $ (42,697,558) $ (36,742,537) $ (29,262,209) $ (4,072,779) $ (21,915,733) $ (26,221,587) $ (22,893,744) $ (29,130,049) $ (24,512,960) 127 General Revenues and Other Changes in Net Position Governmental activities: Taxes: Sales $ 29,688,954 $ 30,522,235 $ 30,163,507 $ 30,583,921 $ 24,056,793 $ 22,757,403 $ 22,924,400 $ 21,664,398 $ 19,767,720 $ 16,998,464 Franchise 679,027 715,334 763,311 756,388 722,700 662,048 635,494 656,664 647,830 621,546 Unrestricted state revenue sharing 20,315,738 22,500,362 18,581,727 15,081,806 14,435,336 12,638,148 11,879,950 11,577,834 11,177,729 10,549,196 Investment earnings 2,299,572 1,790,527 1,389,962 (1,181,160) 136,789 1,098,267 1,132,215 74,542 68,435 238,210 Miscellaneous 147,864 92,569 - 150,100 - - - - - - Transfers 2,333 (520,393) (1,848,196) (198,665) 2,522 2,472 2,581 2,847 2,942 3,030 Total governmental activities 53,133,487 55,100,634 49,050,311 45,192,390 39,354,140 37,158,338 36,574,640 33,976,285 31,664,656 28,410,446 Business-type activities: Investment earnings 719,548 750,242 436,397 (861,433) 59 910,920 774,842 5,916 11,995 204,669 Miscellaneous 17,300 18,481 11,000 15,404 13,255 - - - - - Transfers (2,333) 520,393 1,848,196 198,665 (2,522) (2,472) (2,581) (2,847) (2,942) (3,030) Total business-type activities 734,515 1,289,116 2,295,593 (647,364) 10,792 908,448 772,261 3,069 9,053 201,639 Total primary government $ 53,868,002 $ 56,389,750 $ 51,345,904 $ 44,545,026 $ 39,364,932 $ 38,066,786 $ 37,346,901 $ 33,979,354 $ 31,673,709 $ 28,612,085 Change in Net Position Governmental activities 7,611,164 6,866,102 8,015,689 11,974,123 25,531,775 10,809,448 4,889,599 6,128,844 (2,166,938) (1,715,752) Business-type activities 5,017,182 6,826,090 6,587,678 3,308,694 9,760,378 5,341,605 6,235,715 4,956,766 4,710,598 5,814,877 Total primary government $ 12,628,346 $ 13,692,192 $ 14,603,367 $ 15,282,817 $ 35,292,153 $ 16,151,053 $ 11,125,314 $ 11,085,610 $ 2,543,660 $ 4,099,125 Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 128 2025 2024 2023 2022 2021 General fund Nonspendable $ 465,546 $ 686,393 $ 360,848 $ 1,279,770 $ 204,193 Committed 14,623,887 15,051,151 12,116,181 12,813,742 9,883,194 Assigned - - - - - Unassigned 5,612,969 6,343,959 11,321,463 16,296,912 22,321,155 Total general fund $ 20,702,402 $ 22,081,503 $ 23,798,492 $ 30,390,424 $ 32,408,542 All other governmental funds Nonspendable $ 455,796 $ 370,497 $ 512,728 $ 308,947 $ 157,497 Restricted 6,113,020 4,502,647 17,289,074 29,043,570 5,392,323 Committed 2,758,739 1,651,557 841,463 5,749,810 2,602,097 Assigned 17,028,450 16,488,770 12,210,451 - 2,438,272 Unassigned - (185,555) - - - Total all other governmental funds $ 26,356,005 $ 22,827,916 $ 30,853,716 $ 35,102,327 $ 10,590,189 2020 2019 2018 2017 2016 General fund Nonspendable $ 45,553 $ 129,504 $ 141,676 $ 130,030 $ 97,269 Committed 10,485,304 13,608,565 - - - Assigned - 2,584,994 1,441,862 1,441,862 1,441,862 Unassigned 10,368,691 3,248,602 14,384,104 11,831,322 8,985,422 Total general fund $ 20,899,548 $ 19,571,665 $ 15,967,642 $ 13,403,214 $ 10,524,553 All other governmental funds Nonspendable $ 73,201 $ 105,403 $ 130,202 $ 132,538 $ 127,600 Restricted 5,471,396 5,752,355 4,424,244 6,006,584 4,031,923 Committed 805,717 406,247 1,594,293 1,829,232 2,617,856 Assigned 2,410,736 3,611,045 2,209,618 1,716,361 1,340,991 Unassigned - - (201,765) (237,769) (29,198) Total all other governmental funds $ 8,761,050 $ 9,875,050 $ 8,156,592 $ 9,446,946 $ 8,089,172 Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 129 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Revenues Taxes $ 30,367,981 $ 31,237,569 $ 30,926,818 $ 31,340,309 $ 24,779,493 $ 23,419,451 $ 23,559,894 $ 22,321,062 $ 20,415,550 $ 17,620,010 Intergovernmental 29,531,689 32,129,316 29,910,099 27,545,642 31,780,507 30,840,092 24,375,992 21,634,143 22,118,633 19,488,066 Fines, forfeitures, & penalties 91,741 191,523 130,630 233,228 233,331 183,381 247,283 529,687 558,692 283,470 Licenses, fees, & permits 1,838,611 2,148,372 2,670,580 2,418,918 3,362,933 2,400,899 2,387,832 2,679,690 2,388,951 1,915,992 Charges for services 11,156,093 10,510,647 9,191,669 9,392,716 7,162,259 7,463,179 7,206,705 6,599,847 6,226,578 5,956,058 Contributions & donations 421,981 5,122 1,641,102 - - - - 133,928 150,000 149,513 Special assessments - - - - 172,640 175,197 174,066 175,854 175,539 189,525 Development impact fees 1,454,021 461,552 419,210 605,406 1,256,426 980,302 1,039,763 1,346,402 1,348,528 795,471 Investment income 2,124,312 1,707,505 1,348,183 (1,091,168) 132,373 1,098,267 1,132,215 74,542 68,435 238,210 Other revenues 1,891,263 1,757,713 1,690,583 691,442 1,024,290 965,588 841,111 576,970 572,886 504,796 Total revenues $ 78,877,692 $ 80,149,319 $ 77,928,874 $ 71,136,493 $ 69,904,252 $ 67,526,356 $ 60,964,861 $ 56,072,125 $ 54,023,792 $ 47,141,111 Expenditures General government $ 21,894,204 $ 21,601,329 $ 20,615,414 $ 28,445,524 $ 17,610,897 $ 16,531,008 $ 14,424,463 $ 11,998,586 $ 11,098,844 $ 11,426,687 Public safety 19,974,430 20,290,617 19,829,261 35,253,398 16,438,199 16,767,994 16,250,498 16,731,963 15,725,029 15,494,532 Highways & streets 2,633,891 2,372,557 2,123,019 1,779,889 1,795,203 1,904,698 2,999,923 3,092,143 2,993,402 2,754,413 Transit 2,071,348 1,697,772 1,530,444 1,328,131 930,687 1,110,444 1,150,322 1,536,294 1,528,654 1,432,910 Culture & recreation 12,715,260 11,794,125 10,788,607 9,284,693 8,363,664 8,735,394 8,880,611 9,399,598 9,433,339 9,097,752 Capital outlay 12,878,236 28,669,591 28,493,535 13,545,876 9,993,713 20,637,466 15,293,326 10,081,427 9,196,801 7,995,340 Debt service Principal 3,453,312 3,340,192 3,250,712 1,034,249 1,146,027 1,262,487 1,124,885 1,304,226 1,075,466 897,637 Interest 1,384,646 1,475,552 1,496,692 557,218 290,251 365,454 327,421 356,661 314,914 336,510 Issuance cost on bonds - - - 728,808 - - 35,000 - 67,959 104,533 Total expenditures $ 77,005,327 $ 91,241,735 $ 88,127,684 $ 91,957,786 $ 56,568,641 $ 67,314,945 $ 60,486,449 $ 54,500,898 $ 51,434,408 $ 49,540,314 Excess of revenues over/ (under) expenditures $ 1,872,365 $ (11,092,416) $ (10,198,810) $ (20,821,293) $ 13,335,611 $ 211,411 $ 478,412 $ 1,571,227 $ 2,589,384 $ (2,399,203) Other financing sources/(uses) Proceeds from lease agreements - - 349,652 - - - - - - 1,043,214 Proceeds from financed purchase agreements - - 81,722 - - - - - - - Proceeds from subscription-based information technology arrangements 75,119 1,634,518 582,440 - - - - - - - Payment to bond escrow agent - - - - - - - - (1,171,447) (2,523,121) Issuance of long-term debt - - - 39,095,000 - - 2,035,000 - 3,115,556 2,529,250 Premium on bonds issued - - - 4,247,224 - - - - - - Sale of general capital assets 51,305 73,470 141,421 150,796 - - - - - - Insurance recoveries 147,866 162,032 51,229 20,957 - - - - - - Transfers in 10,872,823 15,540,708 22,916,769 6,401,665 2,747,343 2,046,718 4,407,180 3,342,890 2,953,072 1,872,026 Transfers out (10,870,490) (16,061,101) (24,764,965) (6,600,330) (2,744,821) (2,044,246) (4,404,599) (3,640,043) (3,250,130) (1,868,996) Total other financing sources/(uses)276,623 1,349,627 (641,732) 43,315,312 2,522 2,472 2,037,581 (297,153) 1,647,051 1,052,373 Net change in fund balances $ 2,148,988 $ (9,742,789) $ (10,840,542) $ 22,494,019 $ 13,338,133 $ 213,883 $ 2,515,993 $ 1,274,074 $ 4,236,435 $ (1,346,830) ` Debt service as a percentage of noncapital expenditures 7.53% 7.45% 7.71% 2.01% 3.06% 3.40% 3.16% 3.66% 3.32% 3.00% Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA PRINCIPAL SALES TAXPAYERS CURRENT FISCAL YEAR AND NINE YEARS PRIOR 130 % of Total % of Total Business Sales Tax Business Sales Tax Taxpayer Type Rank Payments Taxpayer Type Rank Payments Taxpayer A Utility $ 2,580,144 1 8.69% Taxpayer A Utility $ 1,916,534 1 11.91% Taxpayer B Retail 2,134,178 2 7.19% Taxpayer I Accomodation 1,169,909 2 7.27% Taxpayer C Accomodation 1,637,565 3 5.52% Taxpayer B Retail 1,016,496 3 6.32% Taxpayer D Retail 1,230,162 4 4.14% Taxpayer C Retail 812,055 4 5.05% Taxpayer E Retail 1,202,120 5 4.05% Taxpayer D Utility 513,229 5 3.19% Taxpayer F Construction 1,016,277 6 3.42% Taxpayer G Retail 489,898 6 3.04% Taxpayer G Accomodation 935,319 7 3.15% Taxpayer F Retail 441,352 7 2.74% Taxpayer H Utility 838,514 8 2.82% Taxpayer H Retail 429,809 8 2.67% Taxpayer I Retail 565,893 9 1.91% Taxpayer E Construction 388,577 9 3.41% Taxpayer J Utility 544,279 10 1.83% Taxpayer J Retail 354,280 10 2.20% $ 12,684,452 42.73% $ 7,532,139 47.80% Sales Tax Sales Tax Payments Payments June 30, 2025 June 30, 2016 Source: Arizona Department of Revenue TOWN OF ORO VALLEY, ARIZONA TAXABLE SALES BY CATEGORY LAST TEN FISCAL YEARS ($000’s) 131 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Construction $ 3,553 $ 5,336 $ 5,311 $ 5,804 $ 3,893 $ 4,363 $ 4,191 $ 4,653 $ 4,295 $ 2,131 Manufacturing 555 644 724 639 283 198 173 140 137 156 Transportation, Warehousing, Communications & Utilities 4,279 4,347 3,921 3,771 3,593 3,288 3,335 3,384 3,171 3,133 Wholesale Trade 406 405 371 265 228 211 183 154 136 131 Retail Trade 11,763 11,695 11,381 12,058 10,890 9,830 8,430 7,733 7,086 6,844 Restaurants, Bars & Lodging 6,443 5,535 6,206 5,906 3,374 3,011 4,299 3,907 3,473 3,295 Finance, Insurance & Real Estate 448 427 376 383 313 442 1,114 646 562 443 Services 2,028 1,881 1,722 1,526 1,276 1,004 963 840 702 672 All Other 213 250 150 232 206 409 237 206 202 190 Cable Franchise 679 715 763 756 723 662 635 657 648 622 Total $ 30,367 $ 31,235 $ 30,925 $ 31,340 $ 24,779 $ 23,418 $ 23,560 $ 22,320 $ 20,412 $ 17,617 Fiscal Year Source: Arizona Department of Revenue TOWN OF ORO VALLEY, ARIZONA DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS 132 Fiscal Year Ended Utility June 30, Sales Tax Bed Tax Sales Tax Sales Tax 2016 2.50% 6.00% 4.00% 4.00% 6.10% 2017 2.50% 6.00% 4.00% 4.00% 6.10% 2018 2.50% 6.00% 4.00% 4.00% 6.10% 2019 2.50% 6.00% 4.00% 4.00% 6.10% 2020 2.50% 6.00% 4.00% 4.00% 6.10% 2021 2.50% 6.00% 4.00% 4.00% 6.10% 2022 2.50% 6.00% 4.00% 4.00% 6.10% 2023 2.50% 6.00% 4.00% 4.00% 6.10% 2024 2.50% 6.00% 4.00% 4.00% 6.10% 2025 2.50% 6.00% 4.00% 4.00% 6.10% Town of Oro Valley Construction Pima County Sales Source: Arizona Department of Revenue TOWN OF ORO VALLEY, ARIZONA NET LIMITED AND FULL CASH ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS 133 Fiscal Year Net Full Estimated Ended Assessed Cash Assessed Full Cash June 30, Value Value Value 2016 572,696,599 593,299,222 5,616,655,680 - 2017 593,580,247 616,216,705 5,688,443,027 - 2018 612,684,205 633,479,221 6,058,189,523 - 2019 645,311,769 683,985,966 6,456,152,108 - 2020 678,873,768 730,293,104 6,937,292,543 - 2021 758,352,130 813,753,982 7,742,926,046 - 2022 786,505,278 838,744,317 8,023,965,026 - 2023 828,970,219 1,002,518,296 9,695,469,656 - 2024 873,032,771 1,209,485,802 11,785,654,511 - 2025 920,146,269 1,221,013,460 11,955,695,716 - Net Limited Total Outstanding General Obligation Bond Debt Source: Arizona Department of Revenue Abstract of the Assessment Roll TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED EXCISE TAX COLLECTIONS JUNE 30, 2025 134 Fiscal Year Fiscal Year Revenue Source Town Sales Tax (a) $ 32,658,408 $ 31,817,056 $ 25,788,829 $ 26,715,684 $ 26,449,853 $ 27,048,414 $ 21,109,373 $ 20,172,487 $ 20,454,936 $ 19,333,457 Franchise Fees 646,520 653,051 679,027 715,334 763,311 756,388 722,700 662,048 635,494 656,664 Licenses & Permits 1,563,905 2,116,123 1,838,611 2,122,503 2,670,580 2,418,918 3,362,933 2,400,899 2,387,832 2,679,690 Fines 69,367 68,680 67,674 61,640 130,630 132,636 135,547 111,611 165,669 131,393 State-shared Sales Tax 7,685,370 7,376,599 7,417,134 7,281,900 7,077,517 6,637,079 5,462,343 4,694,491 4,469,774 4,210,168 State-shared Income Tax 10,208,026 9,522,662 10,277,099 12,779,482 9,082,721 6,174,401 6,580,331 5,870,231 5,370,779 5,422,693 Subtotal $ 52,831,596 $ 49,767,164 $ 46,068,373 $ 49,676,543 $ 46,174,612 $ 43,167,836 $ 37,373,227 $ 33,911,767 $ 33,484,484 $ 32,434,065 Parks and Recreation Sales Tax (a) - - 3,910,125 3,792,744 3,713,654 3,535,507 2,947,420 2,584,916 2,469,464 2,330,941 Total $ 52,831,596 $ 53,734,074 $ 49,978,498 $ 53,469,287 $ 49,888,266 $ 46,703,343 $ 40,320,647 $ 36,496,683 $ 35,953,948 $ 34,765,006 Projected Fiscal Year 2026 Fiscal Year 2027 Fiscal Year Fiscal Year 20192020 2018 Fiscal YearFiscal Year 2021 Audited Fiscal Year 2024 20222023 Fiscal Year 2025 (a) Per Council Ordinance (O)25-04 adopted August 13, 2025, the Parks and Recreation Sales Tax was redirected to be beneficially applied to the General Fund. Beginning FY 2026, this amount is included with Town Sales Tax. Source: Oro Valley Finance Department Note: The above information is provided for bond requirements only and the bond does not require ten years of data. TOWN OF ORO VALLEY, ARIZONA RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS 135 Percentage Fiscal Financed Subscription Note of Personal Year Purchases Liabilities Payable Income 2016 $ 966,962 $ - $ - $ 700,000 $ 7,716,638 $ 780,000 $ 34,517,647 $ 80,423 $ 8,879,907 $ 53,641,577 2.95% 1,231 2017 716,622 - - 350,000 9,341,559 640,000 30,804,327 40,814 8,284,407 50,177,729 2.69% 1,146 2018 458,744 - - - 8,788,954 490,000 28,079,939 - 7,690,874 45,508,511 2.35% 1,022 2019 254,070 - - - 10,051,867 335,000 30,135,034 - 7,079,179 47,855,150 2.37% 1,059 2020 33,937 - - - 9,171,710 170,000 25,669,708 - 6,448,759 41,494,114 1.95% 901 2021 - - - - 8,229,620 - 24,909,835 - 2,713,108 35,852,563 1.62% 762 2022 769,691 - - - 50,463,247 - 20,476,968 - 2,404,213 74,114,119 3.15% 1,537 2023 * 827,109 69,254 466,860 - 47,362,076 - 16,231,628 - 2,087,126 66,507,939 2.55% 1,360 2024 597,242 49,723 1,678,826 - 44,488,323 - 13,184,870 - 1,761,630 61,760,614 2.15% 1,258 2025 370,144 29,149 1,281,278 - 41,549,844 - 16,433,390 - 1,427,503 61,091,308 2.02% 1,243 *Note: 2023 Excise Tax Bonds figure for Governmental Activities revised to include bond premium Per CapitaLeases Loan Payable Business-Type Activities Total Primary GovernmentLeases Excise Tax Bonds Governmental Activities Revenue BondsBonds Assessment Special Source: Town of Oro Valley Finance Department and U.S. Census Bureau TOWN OF ORO VALLEY, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT JUNE 30, 2025 136 Estimated Estimated Share Debt Percentage of Overlapping Governmental Unit Outstanding Applicable Debt Pima County $ 34,346,000 7.60% $ 2,608,896 Amphitheater Unified School District 58,450,000 42.47% 24,822,292 Golder Ranch Fire District 73,251,483 69.95% 51,242,616 Subtotal, overlapping debt 78,673,805 Town of Oro Valley 43,230,415 100.00% 43,230,415 Total estimated direct and overlapping debt $ 121,904,220 Source: Pima County, Golder Ranch Fire District and Amphitheater Unified School District No. 10. (1) Estimated percentage of debt outstanding applicable to the Town is calculated based on a portion of the Town’s net limited assessed valuation as a percentage of the net limited assessed valuation of the overlapping jurisdiction. TOWN OF ORO VALLEY, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 137 2025 2024 2023 2022 2021 Debt Limit $ 317,463,500 $ 314,466,309 $ 260,654,757 $ 215,707,584 $ 211,576,035 Total net debt applicable to limit - - - - - Legal debt margin $ 317,463,500 $ 314,466,309 $ 260,654,757 $ 215,707,584 $ 211,576,035 Total net debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% 2020 2019 2018 2017 2016 Debt Limit $ 189,876,207 $ 177,836,351 $ 164,704,598 $ 160,216,343 $ 154,257,798 Total net debt applicable to limit - - - - - Legal debt margin $ 189,876,207 $ 177,836,351 $ 164,704,598 $ 160,216,343 $ 154,257,798 Total net debt applicable to the limit as a percentage of debt limit 0.00% 0.00% 0.00% 0.00% 0.00% Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA CALCULATION OF LEGAL DEBT MARGIN JUNE 30, 2025 138 Net Full Cash Assessed Valuation $ 1,221,013,460 Debt Limit - 20% of net full cash assessed valuation $ 244,202,692 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 $ 244,202,692 Debt Limit - 6% of net full cash assessed valuation $ 73,260,808 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 $ 73,260,808 Total legal debt margin $ 317,463,500 Water, Sewer, Light, Parks, Open Space and Recreational Facility Bonds All other general obligation bonds Source: Pima County Assessor’s Officer TOWN OF ORO VALLEY, ARIZONA PLEDGED REVENUE COVERAGE JUNE 30, 2025 139 Water Utility Revenue Bonds Fiscal Year 2016 $ 16,943,615 $ 3,054,080 $ 1,239,488 $ 4,293,568 3.95 2017 18,169,402 3,054,060 870,547 3,924,607 4.63 2018 19,455,685 2,607,710 897,871 3,505,581 5.55 2019 17,519,158 3,933,228 839,823 4,773,051 3.67 2020 20,218,758 4,348,648 775,538 5,124,186 3.95 2021 22,304,186 3,544,910 661,932 4,206,842 5.30 2022 19,515,935 4,051,414 527,252 4,578,666 4.26 2023 19,531,841 4,245,340 449,395 4,694,735 4.16 2024 21,936,531 3,046,758 311,895 3,358,653 6.53 2025 22,605,057 2,836,026 248,087 3,084,113 7.33 Governmental Revenue Bonds Fiscal Year 2016 $ 31,883,978 $ 530,920 $ 289,630 $ 820,550 38.86 2017 31,739,256 334,940 281,475 616,415 51.49 2018 34,262,128 544,290 280,170 824,460 41.56 2019 36,414,803 763,772 284,213 1,047,985 34.75 2020 36,511,067 877,352 312,875 1,190,227 30.68 2021 37,951,105 942,090 273,354 1,215,444 31.22 2022 43,590,851 971,586 243,858 1,215,444 35.86 2023 48,018,775 2,895,660 1,435,398 4,331,058 11.09 2024 48,020,003 2,668,242 1,359,610 4,027,852 11.92 2025 49,346,003 2,732,974 1,287,380 4,020,354 12.27 Coverage Principal Interest Total CoverageRevenues Debt Service Debt Service Gross Revenues Gross Principal Interest Total Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED WATER SYSTEM REVENUES, EXPENSES, DEBT SERVICE AND COVERAGE LAST TEN FISCAL YEARS 140 Revenues: Water revenues $ 18,212,809 $ 16,252,902 $ 14,539,682 $ 14,406,542 $ 14,679,253 $ 13,764,702 $ 12,413,502 $ 13,586,667 $ 12,493,557 $ 12,018,429 Water impact fees 845,054 2,367,405 1,818,383 1,167,086 4,100,556 - - - - - Water connection fees - - - - - 810,689 621,106 816,045 816,353 544,852 Alternative water connection fees - - - - - 1,627,435 1,246,838 1,638,175 1,638,792 1,094,460 Groundwater preservation fees 2,658,134 2,391,910 2,256,987 2,413,719 2,617,452 2,389,953 2,213,303 2,611,075 2,440,045 2,371,100 Other revenues 1,784,961 924,314 916,789 1,528,588 906,925 1,625,979 1,024,407 803,723 769,638 710,740 Interest income 667,252 725,801 426,923 (830,161) (1,211) 887,772 758,457 - 11,020 203,857 Total Revenues 24,168,211 22,662,332 19,958,764 18,685,774 22,302,975 21,106,530 18,277,613 19,455,685 18,169,405 16,943,438 Expenses: Personnel 3,536,734 3,616,586 3,519,660 3,233,737 3,480,942 3,392,481 3,236,682 3,155,109 3,021,915 2,952,249 Operations & maintenance 5,621,534 5,109,857 5,037,212 4,414,647 4,133,238 4,288,975 3,445,511 3,838,409 4,719,579 5,059,998 CAP water costs 5,554,493 5,081,666 4,223,033 4,123,353 3,736,489 3,696,131 3,393,317 3,523,052 2,892,392 1,952,117 Total Expenses 14,712,761 13,808,109 12,779,905 11,771,737 11,350,669 11,377,587 10,075,510 10,516,570 10,633,886 9,964,364 Net water system revenues 9,455,450 8,854,223 7,178,859 6,914,037 10,952,306 9,728,943 8,202,103 8,939,115 7,535,519 6,979,074 Water supported debt service 2007 WIFA Loan - - - - 2,198,236 306,657 310,866 311,000 311,130 311,256 2009 WIFA Loan - - - - 1,310,973 147,425 149,175 149,226 149,275 149,322 2014 WIFA Loan 376,416 376,530 376,642 372,565 372,867 373,072 377,060 377,158 395,534 361,059 2007 Excise tax bonds - - - - - - - - 1,245,403 1,197,678 2012 Refunding bonds - - 1,896,532 1,820,750 4,168,782 1,930,382 1,996,381 1,963,731 1,980,781 1,995,481 2013 Refunding bonds - - - - - 1,010,000 1,024,645 1,024,073 1,033,428 1,022,420 2015 Refunding revenue obligations 149,356 149,356 148,640 148,678 148,666 149,924 152,339 150,259 25,101 17,116 2017 Refunding revenue obligations 1,620,250 1,621,774 1,622,426 1,623,122 1,623,896 1,624,758 1,658,306 235,873 - - 2018 Excise tax revenue obligations 509,310 508,998 509,822 509,580 510,498 409,122 - - - - 2021 Refunding revenue bonds 805,194 1,078,037 517,315 432,538 18,838 - - - - - 2021 Refunding revenue bonds - - - 24,778 11,081 - - - - - - Total water supported debt service $ 3,460,526 $ 3,734,695 $ 5,071,377 $ 4,932,011 $ 10,363,837 $ 5,951,340 $ 5,668,772 $ 4,211,320 $ 5,140,652 $ 5,054,332 Debt service coverage 2.73 2.37 1.42 1.40 1.06 1.63 1.45 2.12 1.47 1.38 2025 2024 2021 2020 2019 2018 2017 20162023 2022 Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS 141 Fiscal Year Per Capita Ended Personal Unemployment June 30, Population Income Rate 2016 43,565 1,817,844,597 41,727 5.3% 2017 43,781 1,863,394,821 42,562 4.6% 2018 44,517 1,932,614,654 43,413 4.8% 2019 45,184 2,014,980,480 44,595 4.9% 2020 46,044 2,128,752,252 46,233 8.6% 2021 47,070 2,213,843,310 47,033 5.5% 2022 48,222 2,349,424,062 48,721 3.4% 2023 48,906 2,612,118,366 53,411 4.1% 2024 49,111 2,874,319,497 58,527 3.4% 2025 49,159 3,023,819,249 61,511 4.3% Income Personal Source: U.S. Census Bureau, Arizona Commerce Authority, Arizona Office of Economic Opportunity, and Pima Association of Governments TOWN OF ORO VALLEY, ARIZONA PRINCIPAL EMPLOYERS CURRENT FISCAL YEAR AND NINE YEARS PRIOR 142 Employer Employees Rank Employer Employees Rank Roche Tissue Diagnostics 1,600 1 Ventana Medical Systems 1,400 1 Oro Valley Hospital 650 2 Oro Valley Hospital 602 2 Town of Oro Valley 560 3 Town of Oro Valley 529 3 Simpleview 450 * 4 Amphitheater Public Schools 549 4 Amphitheater Public Schools 439 5 El Conquistador Tucson 345 5 Walmart 338 * 6 Fry's Food & Drug 235 6 El Conquistador Tucson 294 7 Walmart 229 7 Fry's Food & Drug 248 8 Splendido at Rancho Vistoso 188 8 Splendido at Rancho Vistoso 183 9 Securaplane 167 9 Meggitt Securaplane 119 10 Target 150 10 Total 4,881 Total 4,394 June 30, 2016June 30, 2025 * 2024 employment information – 2025 information not available Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 143 Function/Program 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 Administration Town Clerk 4.48 3.96 3.73 4.73 4.73 4.73 4.73 4.69 4.54 4.56 Town Manager 12.38 11.38 10.38 8.38 8.38 10.38 10.38 7.38 7.38 7.38 Human Resources 5.00 4.00 4.00 4.00 4.00 4.00 4.00 3.48 3.48 3.50 Economic Development 1.00 1.00 1.00 1.00 1.00 1.00 1.00 3.00 3.00 3.00 Finance 6.20 6.20 7.20 8.20 7.20 8.00 8.00 7.00 7.00 7.00 Information Systems 15.80 18.80 16.80 15.80 13.80 9.00 9.00 8.00 7.00 7.00 Legal 7.00 7.00 7.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 Development & Infrastructure Services 28.26 27.78 27.78 26.78 26.78 27.38 27.38 26.88 103.63 83.76 Parks & Recreation 69.06 68.56 67.08 63.06 63.10 63.10 63.10 60.78 48.02 49.36 Cultural Resources - - - - - - - - - 0.20 Police Civilians 32.73 31.73 31.73 30.73 30.25 31.25 31.25 30.25 31.25 30.25 Officers 107.00 107.00 107.00 104.00 106.88 106.88 101.88 104.88 101.88 102.88 Town Court 9.48 9.46 8.98 8.50 8.48 8.48 8.00 8.00 8.00 8.00 Public Works 79.11 76.30 75.71 71.37 70.89 70.29 70.29 65.79 - - Water Utility 40.48 40.48 40.48 40.48 40.48 39.48 39.48 39.48 39.48 38.48 Total 417.97 413.65 408.87 393.03 391.97 389.97 384.49 375.61 370.66 351.37 Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA WATER UTILITY REVENUES BY USER TYPE LAST TEN FISCAL YEARS 144 Fiscal Year Ended June 30, 2016 $ 8,103,644 $ 778,915 $ 1,129,741 $ 50,479 $ 310,609 $ - $ 114,427 $ 1,530,107 $ 12,493,557 2017 8,416,714 814,041 1,170,946 51,373 224,532 8,733 104,880 1,702,338 13,586,667 2018 8,990,121 860,124 1,371,555 61,504 520,324 13,735 103,126 1,666,178 12,413,504 2019 8,849,732 856,941 1,087,648 69,363 302,780 9,627 69,091 1,168,322 13,764,702 2020 9,798,411 925,233 1,193,423 65,007 345,149 8,787 85,600 1,343,092 14,679,253 2021 10,394,919 902,536 1,513,518 65,537 228,950 8,575 65,356 1,499,862 14,406,542 2022 10,287,598 974,823 1,322,881 66,053 378,582 8,682 100,890 1,267,033 14,539,682 2023 10,552,884 1,034,275 1,298,563 82,649 297,443 41,631 82,598 1,149,640 16,252,902 2024 11,658,979 1,101,693 1,771,471 137,029 147,152 16,566 126,185 1,293,827 16,252,902 2025 13,003,882 1,205,948 2,134,143 90,901 216,184 7,018 134,356 1,420,378 18,212,809 TotalResidential Commercial Irrigation Irrigation Reclaimed Construction Construction Reclaimed Turf Turf Reclaimed Source: Town of Oro Valley Water Utility Department TOWN OF ORO VALLEY, ARIZONA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 145 Function/Program 2024 2023 2022 2021 2020 2019 2018 2017 2016 Police Burglaries 25 51 32 49 41 42 50 77 71 85 Citations (traffic) 2,698 2,606 2,752 2,987 3,516 2,681 3,117 2,992 3,446 3,890 Investigations 703 860 928 977 1,164 932 963 915 818 824 Total arrests 1,824 1,693 1,359 1,385 1,438 1,251 1,488 1,786 1,458 1,598 Thefts 441 555 529 544 534 501 504 567 493 586 Development & Infrastructure Services Street resurfacing (miles) 63 74 71 69 54 51 88 44 89 92 Parks & Recreation Recreation programs held annually 162 155 112 97 45 105 96 73 55 52 Months of public pool operations 12 12 11 12 11 12 12 12 12 12 Parks maintenance staff hours worked 22,362 25,912 21,145 19,677 18,720 18,220 18,311 17,842 15,463 15,083 Water New connections 111 198 186 183 505 273 264 331 340 176 Total connections 21,609 21,498 21,300 21,149 20,966 20,461 20,188 19,924 19,588 19,355 Transit Total route miles 682,942 654,173 625,554 593,117 350,248 455,777 454,277 468,346 568,657 529,170 Passengers 67,908 66,768 61,447 56,001 28,686 39,902 47,847 49,474 51,131 45,202 2025 Source: Town of Oro Valley Finance Department TOWN OF ORO VALLEY, ARIZONA WATER RATES LAST TEN FISCAL YEARS 146 Fiscal Year Ended June 30, 2016 14.19 2.32 3.19 4.40 6.05 0.90 14.19 2017 14.62 2.34 3.25 4.53 6.29 0.90 14.62 2018 16.45 2.34 3.25 4.53 6.29 0.90 14.62 2019 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2020 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2021 18.26 2.34 3.25 4.53 6.29 0.90 14.62 2022 18.99 2.40 3.35 4.80 6.70 0.90 14.62 2023 19.94 2.52 3.52 5.04 7.04 0.90 14.62 2024 21.14 2.65 3.88 6.05 8.80 0.90 14.62 2025 22.20 2.92 4.85 8.17 12.32 1.00 14.62 Tier 2 Per 1,000 Base Rate Monthly Reclaimed WaterPotable Water Tier 3 Per 1,000 Tier 4 Per 1,000 GPF Per 1,000 Base Rate Monthly Tier 1 Per 1,000 Source: Town of Oro Valley Water Utility Department TOWN OF ORO VALLEY, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 147 Function/Program 2024 2023 2022 2021 2020 2019 2018 2017 2016 Police Stations 1 1 1 1 1 1 1 1 1 1 Substations 3 3 3 3 3 3 3 3 3 3 Patrol units 78 83 79 81 84 84 78 78 72 77 Other fleet 58 64 66 57 41 42 46 65 67 44 Development & Infrastructure Services Streets (miles) 439 439 431 430 421 421 421 421 421 421 Streetlights 106 104 103 95 95 95 95 95 95 95 Traffic signals 22 22 22 22 22 22 22 22 19 19 Parks & Recreation Acreage 651 651 651 449 449 449 449 449 448 448 Playgrounds 3 3 3 3 3 3 2 2 2 2 Baseball/softball diamonds 7 7 7 7 7 7 7 7 7 7 Community centers 1 1 1 1 1 1 1 1 1 1 Golf course holes 45 45 45 45 36 45 45 45 45 45 Tennis courts 31 31 31 31 31 32 32 32 32 32 Swimming pools 2 2 2 2 2 2 3 4 4 4 Water Number of wells 18 18 18 18 18 18 19 20 20 20 Reservoir storage capacity 12 11 11 11 11 11 11 11 11 12 Number of booster stations 27 26 26 26 26 26 26 26 26 27 Transit Transit vans 4 4 5 6 6 7 7 7 4 4 Transit mini buses 26 26 24 24 23 21 21 21 22 22 2025 Source: Town of Oro Valley Finance Department 148 (This page intentionally left blank) Town of Oro Valley Report on Federal Awards June 30, 2025 Town of Oro Valley Table of Contents June 30, 2025 Page 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 1 Report on Compliance for Each Major Federal Program;Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3 Schedule of Expenditures of Federal Awards 6 Notes to Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8 Summary of Prior Year Findings 9 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.      , .           ,         .           Government Auditing Standards Independent Auditors' Report To the Honorable Mayor and Town Council of Town of Oro Valley 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 (Government Auditing Standards), the 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 (the Town), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements, and have issued our report thereon dated December 12, 2025.      , .     In planning and performing our audit of the financial statements, we considered the Town's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control. Accordingly, we do not express an opinion on the effectiveness of the Town'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 a 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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 1 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town'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 financial statements. 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. 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. Tempe, Arizona December 12, 2025 2 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.         " .  #      ,   #        AB    . C  ' ()  *  +  Independent Auditors' Report To the Honorable Mayor and Town Council of Town of Oro Valley         " .   Opinion on the Major Federal Program We have audited the Town of Oro Valley's (the Town) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on the Town's major federal program for the year ended June 30, 2025. The Town's major federal program is identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. In our opinion, the Town complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2025. Basis for Opinion on the Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors' Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the Town and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. W e believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the major federal program. Our audit does not provide a legal determination of the Town's compliance with the compliance requirements referred to above. 3 Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the Town's federal programs. Auditors' Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Town's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Town's compliance with the requirements of the major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Town's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the Town's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 4 Our consideration of internal control over compliance was for the limited purpose described in the Auditors' Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Town's financial statements. W e issued our report thereon dated December 12, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Tempe, Arizona December 12, 2025 5 Assistance Pass-Through Federal Grantor/Listing Pass-Through Agency Grant Federal Program Title Number Agency Number Expenditures Federal Programs U.S. Department of Transportation Transit Services Program Cluster: Enhanced Mobility of Seniors and Individuals with Disabilities 20.513 Governor's Office of Highway Safety ADOT 5310 -GRT-23-0009474-T, ADOT 5310 - 2324TOV5310-09 23,039$ Total Transit Services Program Cluster 23,039 Highway Safety Cluster: National Priority Safety Programs 20.616 Governor's Office of Highway Safety 2024-AL-023, 2024-PTS-039, 2025- PTS-040, 2025-AL-023 112,524 Total Highway Safety Cluster 112,524 Total U.S. Department of Transportation 135,563 U.S. Department of Justice Bulletproof Vest Partnership Program:16.607 Bureau of Justice Assistance OMB #1121-0235 21,541 Total U.S. Department of Justice 21,541 Executive Office of the President, Office of National Drug Control Policy High Intensity Drug Trafficking Areas Program 95.001 City of Tucson and Pima County G24SA0007A 94,957 Total Executive Office of the President, Office of National Drug Control Policy 94,957 U.S. Department of Homeland Security Hazard Mitigation Grant 97.039 N/A HMGP FM-5385-002-002R 210,991 Total U.S. Department of Homeland Security 210,991 U.S. Department of Justice Homeland Security Grant Program:97.067 Arizona Department of Homeland Security 230425-01 347,771 Total U.S. Department of Justice 347,771 U.S. Department of Treasury COVID-19 - State and Local Fiscal Recovery Fund 21.027 N/A AZ-0035 205,425 COVID-19 - State and Local Fiscal Recovery Fund 21.027 Water Infrastructure Finance Authority of Arizona WC4-194-2024 895,902 Total U.S. Department of Treasury 1,101,327 Total federal programs 1,912,150$ * Denotes major program tested Schedule of Expenditures of Federal Awards Year Ended June 30, 2025 Town of Oro Valley See notes to schedule of expenditures of federal awards 6 * * Town of Oro Valley Notes to Schedule of Expenditures of Federal Awards June 30, 2025 7 1.Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Town under programs of the federal government for the year ended June 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Town of Oro Valley, Arizona, it is not intended to and does not present the financial position, changes in net position or cash flows of the Town of Oro Valley, Arizona. 2.Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual or modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available. The underlying accounting records for some grant programs are maintained on the modified accrual basis of accounting. Under the modified accrual basis, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the liability is incurred. The accounting records for other grant programs are maintained on the accrual basis, i.e., when the revenue has been earned and the liability is incurred. 3.Indirect Cost Rate The Town of Oro Valley has not elected to use the 10% de minimis indirect cost rate. Town of Oro Valley Schedule of Findings and Questioned Costs Year Ended June 30, 2025 8 Section I -Summary of Auditors'Results Financial Statements Type of report the auditors issued on whether the financial statements audited were prepared in accordance with GAAP:Unmodified Internal control over financial reporting: Material weakness(es) identified?yes X no Significant deficiency(ies) identified?yes X none reported Noncompliance material to financial statements noted?yes X no Federal Awards Internal control over major federal programs: Material weakness(es) identified?yes X no Significant deficiency(ies) identified?yes X none reported Type of auditors'report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR 200.516(a) of the Uniform Guidance?yes X no Auditee qualified as low-risk auditee?X yes no Dollar threshold used to distinguish between Type A and Type B programs:$750,000 Identification of major federal programs: Assistance Listing Number Name of Federal Program or Cluster 21.027 COVID-19 -State and Local Fiscal Recovery Fund Section II -Financial Statement Findings Required to be Reported in Accordance With Government Auditing Standards None noted. Section III -Federal Awards Findings and Questioned Costs None noted. Town of Oro Valley Summary Schedule of Prior Audit Findings Year Ended June 30, 2025 9 Finding 2024-001 Maintenance and Recording of Federally Purchased Capital Assets Criteria:Per 2 CFR § 200.313 (Uniform Guidance) for managing federally funded property, recipients must: maintain records of capital assets purchased with federal funds including detailed descriptions, serial numbers, acquisition dates, and funding sources. The recipients must also perform physical inventories at least every two years to ensure assets are accounted for, and establish internal controls to safeguard assets from loss, damage, or unauthorized use. Condition:During the audit, we noted that the Town did not segregate capital assets acquired utilizing federal funds in its capital asset software, including records of asset locations and condition. Since federally funded capital assets were not separately tracked in the capital asset system, we were unable to determine which disposals during the current year, if any were federally purchased assets. Lastly, the Town did not maintain records of any federally purchased asset inventory counts completed during the last two years. Current Status:Fully Corrected Town of Oro Valley, Arizona Annual Expenditure Limitation Report June 30, 2025 Town of Oro Valley, Arizona Table of Contents June 30, 2025 Page Independent Accountants' Report 1 Annual Expenditure Limitation Report - Part I 2 Annual Expenditure Limitation Report - Part II 3 Annual Expenditure Limitation Report - Reconciliation 4 Notes to Annual Expenditure Limitations Report 5 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. 1 Independent Accountants' Report The Auditor General of the State of Arizona and The Honorable Mayor and Town Council Of the Town of Oro Valley, Arizona We have examined the accompanying Annual Expenditure Limitation Report of the Town of Oro Valley, Arizona for the year ended June 30, 2025. The Town's management is responsible for presenting this report in accordance with the Uniform Expenditure Reporting System as described in Note 1. Our responsibility is to express an opinion on this report based on our examination. We have presented the results of our examination in the accompanying schedules. Our examination was conducted in accordance with the attestation standards for a direct examination engagement established by the American Institute of Certified Public Accountants (AICPA). Those standards require that we plan and perform the examination to obtain reasonable assurance about whether this report is presented in accordance with the Uniform Expenditure Reporting System. An examination involves performing procedures to obtain evidence about the amounts and disclosures in the report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of the report, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We are required to be independent of the Town of Oro Valley and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our examination engagement. In our opinion, the Annual Expenditure Limitation Report of the Town of Oro Valley, Arizona is fairly presented in accordance with the Uniform Expenditure Reporting System as described in Note 1, in all material respects. Tempe, Arizona December 12, 2025 Internal Governmental Enterprise Service Funds Funds Funds Total A.Amounts reported on the Reconciliation, Line D 76,808,527$ 35,829,262$ 4,253,121$ 116,890,910$ B.Less exclusions claimed: 1.Debt proceeds - - - - 2.Debt service requirements - - - - 3.Dividends, interest, and gains on the sale or redemption of investment securities - - - - 4.Trustee or custodian - - - - 5.Grants and aid from the federal government - - - - 6.Grants, aid, contributions, or gifts from a private agency, organization, or individual, except amounts received in lieu of taxes - - - - 7.Amounts received from the State of Arizona - - - - 8.Quasi-external interfund transactions - - - - 9.Voter-approved amounts accumulated for the purchase of land, and the purchase or construction of buildings or improvements - - - - 10.Highway user revenues in excess of those received in fiscal year 1979-80 - - - - 11.Contracts with other political subdivisions - - - - 12.Refunds, reimbursements, and other recoveries - - - - 13.Voter-approved exclusions not identified above - - - - 14.Prior years carryforward - - - - 15. Qualifying capital improvement expenditures repaid in accordance with A.R.S. §41-1279.07 - - - - 16. Total exclusions claimed - - - - C. Amounts subject to the expenditure limitation 76,808,527$ 35,829,262$ 4,253,121$ 116,890,910$ Town of Oro Valley, Arizona Annual Expenditure Limitation Report - Part II Year Ended June 30, 2025 Description See notes to annual expenditure limitation report 3 Year Ended June 30, 2025 Internal Governmental Enterprise Service Funds Funds Funds Total A.77,005,327$ 21,246,390$ 4,286,514$ 102,538,231$ B. Subtractions: 1. Items not requiring use of current financial resources: a.Depreciation - 4,061,697 - 4,061,697 b.Loss on disposal of capital assets - 31,966 - 31,966 c.Bad debt expense - 24,883 - 24,883 d.Pension expense (Note 2)- 346,126 - 346,126 e.Claims incurred but not reported (IBNR) (Note 3)- - 356,345 356,345 f.Landfill closure and postclosure care costs and pollution remediation - - - - 2.- - - - 3.121,681 - - 121,681 4. 75,119 - - 75,119 5.- - - - 6. Total subtractions 196,800 4,464,672 356,345 5,017,817 C. Additions: 1. Principal payments on long-term debt - 3,170,157 - 3,170,157 2.- 15,499,612 - 15,499,612 3. Amounts paid in the current year but reported as expenses in previous years: a.Claims previously recognized as IBNR (Note 3)- - 322,952 322,952 b.Landfill closure and postclosure care costs and pollution remediation - - - - 4.- 377,775 - 377,775 5.- - - - 6.- 19,047,544 322,952 19,370,496 D.76,808,527$ 35,829,262$ 4,253,121$ 116,890,910$ Involuntary court judgments Amounts reported on Part II, Line A Capital asset acquisitions Pension contributions paid in the current year (Note 2) Total additions Transfers to separate legal entities Town of Oro Valley, Arizona Annual Expenditures Limitation Report - Reconciliation Present value of net minimum lease, financed purchase, and subscription-based information technology arrangement (SBITA) contract payments recorded as expenditures at the agreements' inception Total expenditures/expenses/deductions and applicable other financing uses, special items, and extraordinary items reported within the fund financial statements Expenditures of separate legal entities established under Arizona Revised Statutes Required fees paid to the Industrial Commission of Arizona (Note 4) Description See notes to annual expenditure limitation report 4 Town of Oro Valley, Arizona Notes to Annual Expenditure Limitation Report June 30, 2025 5 1. Summary of Significant Accounting Policies The Annual Expenditure Limitation Report (AELR) is presented as prescribed by the Uniform Expenditure Reporting System (UERS), as required by Arizona Revised Statutes §41-1279.07. The AELR excludes expenditures, expenses, or deductions of certain revenues specified in the Arizona Constitution, Article IX, §20, from the total expenditure, expenses, or deductions reported in the fund financial statements. In accordance with the UERS, a note to the AELR is presented below for any exclusion claimed on Part II and each subtraction or addition in the Reconciliation that cannot be traced directly to an amount reported in the fund financial statements. All references to financial statement amounts in the following notes refer to the Statement of Revenues, Expenditures and Changes in Fund Balances for the Governmental Funds, Statement of Revenues, Expenses and Changes in Net Position for the Proprietary Funds, and the Statement of Cash Flows for the Proprietary Funds. 2. Pension and Expense The $346,126 subtraction for pension expense consists of changes in the net pension assets and liabilities, and changes in deferred inflows and outflows related to pensions recognized in the current year in the enterprise funds. The $377,775 addition for pension contributions paid in the current year consists of the required pension contributions made to the Arizona State Retirement System from the enterprise funds. 3 IBNR Claims The $356,345 subtraction for claims incurred but not reported consists of the estimated costs of claims incurred and expensed in the current year but not yet paid in the internal service funds. The $322,952 addition for claims paid in the current year, but reported as expenses incurred but not reported in previous years, consists of cash payments in the current year for claims recognized as an expense in previous years in the internal service funds. 4. Fees Paid to the Industrial Commission of Arizona The subtraction for required fees State law required the City/Town to pay that are excluded from the city/town expenditure limitation consists of payments to the Industrial Commission of Arizona pursuant to A.R.S. §23-1703 for the Municipal Firefighter Cancer Reimbursement Fund, which were recorded as a $121,681 expenditure. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2023 Baker Tilly US, LLP. Reporting and insights from 2025 audit: Town of Oro Valley, Arizona June 30, 2025 2 Executive summary We have completed our audit of the financial statements of the Town of Oro Valley for the year ended June 30, 2025 and have issued our report thereon dated December 12, 2025. • Financial Statement Audit Report • Unqualified opinion • Government Auditing Standards Compliance Report • No instances of noncompliance or other matters • No identified material weaknesses • Federal Grants Single Audit Report • No instances of noncompliance This presentation supplements our letter to governance dated December 12, 2025 as required by our professional standards. 3 Our responsibilities As your independent auditor, our responsibilities include: • Planning and performing the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. Reasonable assurance is a high level of assurance, but not an absolute level of assurance. • Assessing the risks of material misstatement of the basic financial statements whether due to fraud or error. Included in that assessment is a consideration of the Town’s internal control over financial reporting • Performing appropriate procedures based upon our risk assessment • Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management • Forming and expressing an opinion based on our audit about whether the basic financial statements prepared by management, with the oversight of those charged with governance:  • Are free from material misstatement • Present fairly in all material respects and in accordance with accounting principles generally accepted in the United States of America • -Performing tests related to compliance with certain provisions of laws, regulations, contracts and grants, as required by Government Auditing Standards • Our audit of the basic financial statements does not relieve management or those charged with governance of their responsibilities. 4 Our responsibilities We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of those charged with governance including:  • Internal control matters – Various controls have been tested with no reportable findings. • Qualitative aspects of the Town’s accounting practice including policies, accounting estimates and financial statement disclosures – This can be found on Note 1 of the financial statements • Significant unusual transactions – All significant and unusual transactions have been audited with no reportable issues. • Significant difficulties encountered – No difficulties to report • Disagreements with management – No disagreements to report •  Circumstances that affect the form and content of the auditors' report and key audit matters – None noted • - Audit consultations outside the engagement team – None noted • Corrected and uncorrected misstatements – No misstatements identified • Other audit findings or issues – None noted 5 Required communications Management’s consultations with other accountants • In some cases, management may decide to consult with other accountants about auditing and accounting matters. • Management informed us that and to our knowledge, there were no consultations with other accountants regarding auditing or accounting matters. Compliance with laws and regulations We did not identify any non-compliance with laws and regulations during our audit. Fraud We did not identify any instances of known or suspected fraud during our audit. Going concern Pursuant to professional standards, we are required to communicate to you, when applicable, certain matters relating to our evaluation of the Town’s ability to continue as a going concern for a reasonable period of time but no less than 12 months from the date of the basic financial statements including the effects on the basic financial statements and the adequacy of the related disclosures and the effects on the auditor's report. No such matters or conditions have come to our attention during our engagement. Related parties We did not have any significant findings or issues arise during the audit in connection with the Town’s related parties. 6 Nonattest services The following nonattest services were provided by Baker Tilly: • Adjusting journal entries • Preparation of the Data Collection Form on the Federal Clearinghouse website • Baker Tilly will assist in preparing the GASB 68 / 74 - Pension / OPEB journal entries using actuary and plan provided support for (ASRS, PSPRS, EORP, CORP). In addition, we prepared GASB No. 34 conversion entries which are summarized in the, “Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position” and the, “Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities” in the financial statements. None of these nonattest services constitute an audit under generally accepted auditing standards, including Government Auditing Standards. 7 Communications with Town Council and Management • Expenditure Limitation Report • Town was $33.9 million dollars under the Home Rule Expenditure Limitation • Issued to the Arizona State Auditor General timely Voter-Approved Expenditure Limitation   $150,835,253 Town Expenditures Subject to Limitation     116,890,910 Amount under the expenditure Limitation      $ 33,944,343 • Single Audit • Town expended $1,912,150 of federal funds in Fiscal Year 2025 • Major program was: • COVID-19 State and Local Fiscal Recovery Fund • Town received an unmodified opinion on the federal single audit. 8 Questions? Brian Hemmerle, CPA, CFE Partner E: Brian.Hemmerle@bakertilly.com Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2022 Baker Tilly US, LLP    Budget and Finance Commission 4. Meeting Date:01/20/2026   Submitted By:Christopher Hutchison, Finance SUBJECT: PRESENTATION AND POSSIBLE DISCUSSION OF THE TOWN'S FY25/26 FINANCIAL UPDATE THROUGH NOVEMBER 2025 (PLEASE REFERENCE ATTACHMENTS) RECOMMENDATION: N/A EXECUTIVE SUMMARY: Please reference attachments for this item. BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: N/A Attachments November FY 2026 Financial Update  Town Manager’s Office DATE: TO: FROM: TOWN COUNCIL REPORT January 14, 2026 Mayor and Council Jeff Wilkins, Town Manager David Gephart, Chief Financial Officer SUBJECT: November 2025 Financial Update This financial update is intended to provide an overview and status of revenues and expenditures for the Town’s selected funds through November 2025 for fiscal year 2025/26. Funds included in this financial update are the General Fund, Highway Fund, Community Center Fund and Capital Fund. Also included are the two enterprise funds, Water and Stormwater. Please note that all amounts are preliminary, un- audited and subject to change. Additionally, figures may not include any adjusting audit entries required at year-end. Pages 1-15 are the financial status reports for the funds. Appendix 1 and 2 provide further details on golf activity and contractor performance. Appendix 3 is the consolidated report of all Town funds. Appendix 4 is the General Fund sales tax collections. Appendix 5 is the General Fund state shared revenues. Appendix 6 is a breakdown of the Town’s outstanding debt service principal and interest payments. Appendix 7 is a summary of operating investment values and earnings by month. Appendix 8 lists the specific infrastructure projects that are eligible to receive funding from impact fees. General Fund Financial Status Fiscal Year to Date: November 2025 Revenues ` Amount Percent Local Sales Tax 10,613,622$ 10,348,216$ 32,470,107$ (22,121,891)$ 32% 29,666,219$ State Shared Revenues 8,317,430 8,059,402 19,863,884 (11,804,482) 41% 19,863,884 Licenses & Permits 765,866 805,491 2,116,123 (1,310,632) 38% 2,291,067 Grants 182,828 383,764 466,851 (83,087) 82% 698,219 Intergovernmental 385,316 859,611 2,320,362 (1,460,751) 37% 2,320,362 Charges for Service 1,246,450 1,277,821 3,050,223 (1,772,402) 42% 3,028,526 Other Revenue 893,991 368,128 916,480 (548,352) 40% 947,981 Total Revenues 22,405,504$ 22,102,432$ 61,204,030$ (39,101,598)$ 36% 58,816,259$ Uses Amount Percent Personnel Services 13,200,822$ 13,950,431$ 37,457,276$ 23,506,845$ 37% 36,904,931$ Operations and Maintenance 6,531,021 6,322,595 15,129,790 8,807,195 42% 15,110,703 Capital Outlay 88,139 84,559 411,000 326,442 21% 411,000 Transfers Out 3,673,126 6,953,829 8,831,579 1,877,750 79% 10,831,579 Total Uses 23,493,108$ 27,311,414$ 61,829,645$ 34,518,231$ 44% 63,258,213$ Change in Fund Balance Total Revenues 22,405,504$ 22,102,432$ 61,204,030$ 58,816,259$ 58,816,259$ Total Uses (23,493,108) (27,311,414) (61,829,645) (63,258,213) (63,258,213) Change in Fund Balance (1,087,603)$ (5,208,982)$ (625,615)$ (4,441,954)$ (4,441,954)$ Beginning Fund Balance 20,702,401$ 20,702,401$ Estimated Ending Fund Balance 15,493,419$ 16,260,447$ 16,260,447$ Note: The estimated ending fund balance exceeds the Town's 25% expenditure reserve policy by a margin of about $3.2 million. Transfers Out: Following the Town Council’s direction to reduce the General Fund reserve level from 30% to 25%, a one-time $2 million transfer to the Capital Fund was made in October. This action does not affect the originally budgeted transfers, but it raises the year-end estimate by $2 million. Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2025/26 Budget Year End Estimate Year End Estimate Page 1 of 14 General Fund Financial Status Fiscal Year to Date: November 2025 Local Sales Tax Revenue Amount Percent Construction 1,960,421$ 774,069$ 5,086,266$ (4,312,197)$ 15% 3,626,670$ Utilities 1,899,918 1,924,298 4,316,890 (2,392,592) 45% 3,954,906 Retail 3,603,445 4,167,128 11,836,368 (7,669,240) 35% 11,402,545 Remote Seller 702,421 957,693 2,444,773 (1,487,080) 39% 2,687,915 Bed Tax 722,757 558,746 2,464,858 (1,906,112) 23% 2,013,152 Restaurant & Bar 1,053,855 1,232,459 3,726,636 (2,494,177) 33% 3,508,147 Other 503,886 569,568 1,941,265 (1,371,697) 29% 1,819,832 Cable Franchise 166,920 164,255 653,051 (488,796) 25% 653,051 Local Sales Tax Total 10,613,622$ 10,348,216$ 32,470,107$ (22,121,891)$ 32% 29,666,219$ State Shared Revenue Amount Percent State Income Tax 4,282,125$ 3,967,776$ 9,522,662$ (5,554,886)$ 42% 9,522,662$ State Sales Tax 2,962,867 3,044,141 7,376,599 (4,332,458) 41% 7,376,599 Vehicle License Tax 1,072,439 1,047,485 2,629,797 (1,582,312) 40% 2,629,797 Smart and Safe - - 334,826 (334,826) - 334,826 State Shared Total 8,317,430$ 8,059,402$ 19,863,884$ (11,804,482)$ 41% 19,863,884$ Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Total state shared revenues are performing as expected. Overall, Local sales tax revenues are forecasted to fall short of budget expectations by $2.8 million or 9%. Sales tax collections decreased 9.5% compared to the same period last year, a steeper decline than originally forecasted, primarily reflecting reduced activity in the construction and hotel sectors. Construction-related revenue reflects both the broader slowdown and specific project delays affecting the Marketplace hotel and Vistoso Golf Club property apartment developments. Revenue is projected to increase later in the fiscal year from the Oro Valley Marketplace apartment project and renovation work advances at the Roche Ventana building. Retail and restaurant sectors continue to perform consistently, and remote seller collections maintain their positive growth trajectory. Please refer to Appendix 4 for a detailed breakdown of local sales tax collections. FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate $4.0 $3.0 $1.0 $0.0 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 State Income Tax State Sales Tax Vehicle License Tax Smart and Safe Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.8 $1.9 $4.2 $1.0 $0.6 $1.2 $0.6 $0.2$0 $2 $4 $6 $8 $10 $12 $14 Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 2 of 14 General Fund Financial Status Fiscal Year to Date: November 2025 Licenses & Permits Revenue Amount Percent Business Licenses & Permits 92,363$ 72,167$ 255,000$ (182,833)$ 28% 229,304$ Residential Building Permits 392,177 414,933 908,066 (493,133) 46% 1,346,042 Commercial Building Permits 172,751 176,594 750,077 (573,483) 24% 452,101 Other Building Permits and Fees 108,575 141,798 202,980 (61,182) 70% 263,620 Licenses & Permits Total 765,866$ 805,491$ 2,116,123$ (1,310,632)$ 38% 2,291,067$ Grants Revenue Amount Percent Federal grants 154,951$ 327,028$ 375,000$ (47,972)$ 87% 581,368$ State Grants 27,877 56,736 91,851 (35,115) 62% 116,851 Grants Total 182,828$ 383,764$ 466,851$ (83,087)$ 82% 698,219$ FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget A total of 39 Single Family Residential (SFR) permits have been issued through November (107 budgeted for the year). Licenses and permits revenue is projected to increase by 8.3% overall, driven primarily by stronger building permit activity. The business license and permit forecast was reduced 10% after FY25 actuals fell below estimates. While commercial building permit activity exceeded expectations, supporting a $200,000 increase to the estimate, $400,000 was reclassified to residential permits for the Marketplace apartments and approximately 8% was shifted to grading permit fees for the Oro Valley Marketplace project, resulting in a net downward adjustment. These changes were partly offset by a $60,000 increase in other building permit revenues from large grading permits and stronger fire permit activity. Year End Estimate Grant revenues are performing better than expected. A significant portion of the budgeted grants are allocated to the Police Department. These grants can fluctuate based on factors such as officer scheduling, overtime, and the timing of reimbursements and awards from grant programs. The forecast for federal grant revenues has been increased by 55%, reflecting funding from the HIDTA program and the Department of Homeland Security. About $72,000 of budgeted state grants is related to school resource officer reimbursements for Leman Academy. $0.1 $0.4 $0.2 $0.1 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 Business Licenses & Permits Residential Building Permits Commercial Building Permits Other Building Permits and Fees Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.3 $0.1 $0.0 $0.1 $0.2 $0.3 $0.4 Federal grants State Grants Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 3 of 14 General Fund Financial Status Fiscal Year to Date: November 2025 Intergovernmental Revenue Amount Percent School Resource Officers 62,150$ 151,437$ 409,502$ (258,065)$ 37% 409,502$ RTA Reimbursements 323,166 708,174 1,904,860 (1,196,686) 37% 1,904,860 PC Library District Reimburse - - 6,000 (6,000) - 6,000 Intergovernmental Total 385,316$ 859,611$ 2,320,362$ (1,460,751)$ 37% 2,320,362$ Charges for Service Revenue Amount Percent Enterprise Funds Cost Allocation 709,066$ 683,895$ 1,641,347$ (957,452)$ 42% 1,641,347$ Recreation Fees 392,457 381,622 978,950 (597,328) 39% 946,553 Development Fees 25,029 64,490 90,110 (25,620) 72% 100,110 Court Fees 45,663 41,026 115,000 (73,974) 36% 115,000 Other 74,234 106,788 224,816 (118,028) 48% 225,516 Charges for Service Total 1,246,450$ 1,277,821$ 3,050,223$ (1,772,402)$ 42% 3,028,526$ FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2025/26 Budget Actual Vs. Budget Year End Estimate Year End Estimate Intergovernmental revenues are performing in line with expectations. These revenues are reimbursement-based and typically lag between the time services are provided and when funds are received. FY 2024/25 Actuals FY 2025/26 Actuals Charges for services are performing slightly below expectations. Cost allocation charges to the Town’s enterprise funds for shared services, along with Parks & Recreation fees, represent the majority of this revenue category. The enterprise fund allocations are budgeted amounts distributed evenly across all 12 months. The year-over-year decrease is mainly due to one- time water system monitoring upgrades in the prior year that were funded through the IT budget and charged to the Water Utility. Recreation fee revenues were revised down 3%, reflecting lower activity in swimming pool admissions and field and court rentals than originally anticipated. Partially offsetting this, development fee revenues were increased by $10,000 due to higher-than-expected engineering plan review fees related to the Marketplace development. $0.2 $0.7 $0.0 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 School Resource Officers RTA Reimbursements PC Library District Reimburse Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.7 $0.4 $0.1 $0.0 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 Enterprise Funds Cost Allocation Recreation Fees Development Fees Court Fees Other Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 4 of 14 General Fund Financial Status Fiscal Year to Date: November 2025 Other Revenue Amount Percent Fines 27,902$ 23,272$ 68,680$ (45,408)$ 34% 60,000$ Interest Earnings 344,977 291,281 637,500 (346,219) 46% 637,500 Miscellaneous 521,112 53,576 210,300 (156,724) 25% 250,481 Other Revenue Total 893,991$ 368,128$ 916,480$ (548,352)$ 40% 947,981$ FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate The year-over-year decrease of miscellaneous revenue is due to a one-time rebate received from the Arizona Municipal Risk Retention Pool (AMRRP) in the prior year. Overall, other revenues are performing above expectations, driven by a higher in-lieu income forecast based on stronger prior-year results than originally projected. The miscellaneous revenue forecast was also increased due to insurance recoveries and asset sales.$0.0 $0.3 $0.1 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 Fines Interest Earnings Miscellaneous Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 5 of 14 General Fund Financial Status Fiscal Year to Date: November 2025 Expenditures by Department Amount Percent Clerk 219,290$ 165,612$ 446,275$ 280,663$ 37% 442,544$ Community & Econ. Dev. 1,388,033 1,324,006 4,275,011 2,951,005 31% 4,101,516 Council 127,255 125,859 216,163 90,304 58% 216,163 Finance 344,151 337,353 870,300 532,947 39%870,300 Non-Departmental 1,368,660 1,380,151 3,052,282 1,672,131 45% 3,052,282 Human Resources 264,326 263,186 744,887 481,701 35% 742,878 Information Technology 2,958,708 2,988,754 5,925,996 2,937,242 50% 5,925,806 Legal 422,911 409,672 1,193,587 783,915 34% 1,145,891 Town Manager 637,234 649,823 1,812,726 1,162,903 36% 1,801,986 Parks & Recreation 1,909,050 1,875,099 5,230,510 3,355,411 36% 5,059,370 Police 7,359,862 8,081,662 21,333,810 13,252,148 38% 21,205,131 Public Works 2,430,190 2,354,867 6,714,762 4,359,895 35% 6,729,286 Town Court 390,312 401,541 1,181,757 780,216 34% 1,133,479 Total Department Expenditures 19,819,982$ 20,357,585$ 52,998,066$ 32,640,481$ 38% 52,426,634$ Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget $0.2 $1.3 $0.1 $0.3 $1.4 $0.3 $3.0 $0.4 $0.6 $1.9 $8.1 $2.4 $0.4 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Overview: Departments are spending within budget limits through November. Please note that Council and Information Technology typically incur higher upfront costs early in the fiscal year. Community & Economic Development: Year-to-date personnel expenditures are below budget expectations due to turnover in two Building Inspector positions, the Economic Development Program Manager, and a vacancy in the Code Compliance Specialist position. Year-to-date operating expenditures are also below budget, primarily due to timing within the in-house Economic Development and Tourism program, where several planned initiatives have not yet begun. Police: This year-over-year increase is mainly due to an additional quarterly pension contribution to the Public Safety Personnel Retirement System (PSPRS) that was recorded at the beginning of FY26 but applied to the prior fiscal year (FY25), along with increased personnel costs from wage adjustments outlined in the most recent labor agreement. The department is still forecasted to be within budget due to vacancy savings and benefit election differences from budget. Page 6 of 14 Highway Fund Financial Status Fiscal Year to Date: November 2025 Sources ` Amount Percent Licenses & Permits 17,557$ 7,395$ 30,000$ (22,606)$ 25% 25,000$ Highway User Revenue 1,682,606 1,694,118 4,456,367 (2,762,249) 38% 4,357,925 Interest Earnings 42,339 56,544 99,000 (42,456) 57% 99,000 Miscellaneous 2,835 34,421 2,500 31,921 1377% 34,684 Transfers In 1,000,000 500,000 2,000,000 (1,500,000) 25% 2,000,000 Total Sources 2,745,337$ 2,292,477$ 6,587,867$ (4,295,390)$ 35% 6,516,609$ Expenditures Amount Percent Personnel 497,381$ 512,696$ 1,348,218$ 835,522$ 38% 1,357,662$ O&M 459,841 478,020 1,317,935 839,915 36% 1,317,935 Capital Outlays 1,468,000 1,349,767 4,790,000 3,440,233 28% 4,790,000 Total Expenditures 2,425,221$ 2,340,482$ 7,456,153$ 5,115,671$ 31% 7,465,597$ Change in Fund Balance Total Sources 2,745,337$ 2,292,477$ 6,587,867$ 6,516,609$ Total Expenditures (2,425,221) (2,340,482) (7,456,153) (7,465,597) Change in Fund Balance 320,116$ (48,005)$ (868,286)$ (948,988)$ Beginning Fund Balance 1,598,787$ 1,598,787$ Estimated Ending Fund Balance 1,550,782$ 649,799$ Year End Estimate Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Highway Fund revenues and expenditures are performing generally in line with expectations through November. Minor variances are primarily due to timing of capital activity and personnel adjustments. Revenues: Highway User Revenue (HURF) and road permit revenues are both trending slightly below budget expectations. Miscellaneous revenues have exceeded budget due to insurance recoveries and asset sales. The planned $2 million transfer from the Capital Fund supports road improvement projects and is recorded evenly throughout the fiscal year. Expenditures: Personnel expenditures are projected to exceed budget by approximately 0.7%, primarily due to adjustments to maximum pay ranges in the adopted pay plan that were not included in the original personnel forecast. Budgeted capital outlays include the Town’s annual pavement preservation program and several capital improvement projects. Page 7 of 14 Community Center Fund Financial Status Fiscal Year to Date: November 2025 Revenues Amount Percent Local Sales Tax 1,463,477$ 593,099$ -$ 593,099$ na 593,099$ Contracted Operating Revenues 1,994,406 2,245,368 5,625,078 (3,379,710) 40% 6,555,000 Town Operating Revenues 535,426 530,308 1,534,043 (1,003,735) 35% 1,710,703 Other Revenues 5,433 24,552 60,172 (35,620) 41% 82,672 Total Revenues 3,998,742$ 3,393,326$ 7,219,293$ (3,825,967)$ 47% 8,941,474$ Uses Amount Percent Contracted Operating Expenditures 2,456,464$ 2,454,111$ 5,728,637$ 3,274,526$ 43% 5,969,838$ Town Operating Expenditures 906,237 955,743 2,380,461 1,424,718 40% 2,378,636 Capital Outlay 249,568 368,388 2,443,700 2,075,312 15% 2,443,700 Transfers Out 1,717,149 172,968 172,968 - 100% 172,968 Total Uses 5,329,417$ 3,951,211$ 10,725,766$ 6,774,555$ 37% 10,965,142$ Change in Fund Balance Total Revenues 3,998,742$ 3,393,326$ 7,219,293$ 8,941,474$ Total Uses (5,329,417) (3,951,211) (10,725,766) (10,965,142) Change in Fund Balance (1,330,675)$ (557,884)$ (3,506,473)$ (2,023,667)$ Beginning Fund Balance 2,921,900$ 2,921,900$ Estimated Ending Fund Balance 2,364,016$ 898,233$ Year End Estimate FY 2025/26 Budget Actual Vs. Budget FY 2025/26 Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals Page 8 of 14 Community Center Fund Financial Status Fiscal Year to Date: November 2025 Local Sales Tax Revenue Amount Percent Retail 900,861$ 367,836$ -$ 367,836$ - 367,836$ Remote Seller 175,605 79,650 - 79,650$ - 79,650 Restaurant & Bar 263,464 101,493 - 101,493 - 101,493 Other 123,547 44,120 - 44,120 - 44,120 Local Sales Tax Total 1,463,477$ 593,099$ -$ 593,099$ - 593,099$ Contracted Operating Revenue Amount Percent Golf Revenue, Trail & Cart Fees 890,266$ 1,009,193$ 2,818,625$ (1,809,432)$ 36% 3,404,000$ Member Dues 680,185 776,541 1,590,560 (814,019) 49%1,770,000 Food & Beverage (Overlook) 291,640 355,861 814,633 (458,772) 44%914,000 Merchandise & Other 132,316 103,773 401,260 (297,487) 26% 467,000 Contracted Revenue Total 1,994,406$ 2,245,368$ 5,625,078$ (3,379,710)$ 40% 6,555,000$ Actual Vs. Budget Year End Estimate Year End Estimate Note: Estimated sales tax collections on golf operations for FY 2025/26 is $174,287. FY 2025/26 Budget FY 2025/26 Budget Actual Vs. Budget On August 13, 2025, the Town Council adopted Ordinance (O)25-04, removing the spending restrictions on the half-cent sales tax and redirecting those revenues to the General Fund, effective 30 days later in September. Accordingly, the FY 2025/26 actual revenues shown here reflect only the first two months of the fiscal year, during which the restriction was still in place. Any operating shortfalls within this fund will be covered by transfers from the General Fund at year-end. For detailed information on total local sales tax collections, please refer to Appendix 4. Contracted golf revenues are forecasted to exceed budget by approximately $930,000, or 16%, driven by strong membership numbers and increased public play. Through November, 36,857 rounds of golf have been played, representing a 1% increase over the prior year and exceeding budget expectations by 7.5%. Please refer to Appendix 3 for or a more in-depth analysis of golf revenues, expenses, and historical comparisons FY 2024/25 Actuals FY 2025/26 Actuals FY 2024/25 Actuals FY 2025/26 Actuals $1.0 $0.8 $0.4 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Golf Revenue, Trail & Cart Fees Member Dues Food & Beverage (Overlook) Merchandise & Other Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.4 $0.1 $0.1 $0.0 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 $0.7 $0.8 $0.9 $1.0 Retail Remote Seller Restaurant & Bar Other Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 9 of 14 Community Center Fund Financial Status Fiscal Year to Date: November 2025 Town Operating Revenue Amount Percent Daily Drop-Ins 27,619$ 20,334$ 75,625$ (55,291)$ 27% 61,122$ Member Dues 411,548 416,977 990,420 (573,443) 42% 1,167,749 Recreation Programs 54,123 47,949 382,500 (334,551) 13% 377,355 Facility Rental Income 42,136 45,048 85,498 (40,450) 53% 104,477 Town Operating Revenue Total 535,426$ 530,308$ 1,534,043$ (1,003,735)$ 35% 1,710,703$ Other Revenue Amount Percent Interest Income 2,961$ 24,519$ 22,500$ 2,019$ 109% 45,000 HOA Contributions - - 34,050 (34,050) - 34,050 Miscellaneous 2,471 33 3,622 (3,589) 1% 3,622 Other Revenue Total 5,433$ 24,552$ 60,172$ (35,620)$ 41% 82,672$ Year End Estimate The FY 2025/26 HOA contribution budget pertains to the HOAs associated with the 9-hole Pusch Ridge course. FY 2025 was the final year of agreed upon annual contributions to golf from HOAs on the 36-hole course. Due to stronger-than-anticipated interest income, the year-end estimate has been revised upward to $45,000. FY 2025/26 Budget Actual Vs. Budget FY 2025/26 Budget Actual Vs. Budget Year End Estimate Town operating revenues are performing generally in line with expectations. Daily drop-in fees and in-house rec programs are trending below budget, offset by higher-than-expected member dues. The year end estimates have been adjusted to reflect the Town Council approved rate increases effective January 1, 2026. FY 2025/26 Actuals FY 2024/25 Actuals FY 2025/26 Actuals FY 2024/25 Actuals $0.0 $0.4 $0.0 $0.0 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 Daily Drop-Ins Member Dues Recreation Programs Facility Rental Income Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.0 $0.0 $0.0$0.0 $0.1 Interest Income HOA Contributions Miscellaneous Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 10 of 14 Community Center Fund Financial Status Fiscal Year to Date: November 2025 Contracted Operating Expenditures Amount Percent Personnel 778,095$ 833,382$ 1,992,268$ 1,158,886$ 42% 2,053,000$ Food & Beverage (Overlook) 287,180 303,128 751,271 448,143 40% 833,000 Operations & Maintenance 1,323,404 1,240,722 2,768,538 1,527,816 45% 2,845,278 Equipment Leases 67,784 76,879 216,560 139,681 36% 238,560 Contracted Expenditures Total 2,456,464$ 2,454,111$ 5,728,637$ 3,274,526$ 43% 5,969,838$ Town Operating Expenditures Amount Percent Personnel 522,627$ 499,552$ 1,303,239$ 803,687 38% 1,301,414$ Operations & Maintenance 383,610 456,191 1,077,222 621,031 42% 1,077,222 Town Operating Expenditures Total 906,237$ 955,743$ 2,380,461$ 1,424,718$ 40% 2,378,636$ FY26 Revised Budget Artificial Turf Installation at Community Center Entrance 150,000 Community Center Exterior Stucco Repair and Painting 190,500 Community Center Parking Lot Resurface 950,000 CRC ADA Exterior Restroom 325,000 Greenmaster Mower Replacement x2 (36-Hole)120,000 South Pump Station (36 Hole) 510,000 Pusch Ridge Tennis Bleachers and ADA Accessibility 198,200 2,443,700 Year End Estimate Contracted golf operating expenditures declined by 0.1% compared to the same period last year, primarily due to water savings. However, expenses are projected to exceed the budget by approximately $241,000, or 4.2%, driven by higher cost of sales from increased revenue, along with elevated labor costs. List of FY26 Capital Projects: Year End Estimate Town operating expenditures are trending about on budget with some slight projected savings in personnel. FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget $0.5 $0.5 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Personnel Operations & Maintenance Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget $0.8 $0.3 $1.2 $0.1 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Personnel Food & Beverage (Overlook) Operations & Maintenance Equipment Leases Mi l l i o n s FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Page 11 of 14 Capital Fund Financial Status Fiscal Year to Date: November 2025 Sources ` Amount Percent Vehicle Reserves 388,954$ 428,719$ 1,028,926$ (600,207)$ 42% Interest Earnings 255,375 243,291 470,000 (226,709) 52% Miscellaneous 3,522 84,239 40,000 44,239 211% Transfers In from General Fund 1,784,947 3,250,000 5,000,000 (1,750,000) 65% Total Sources 2,432,799$ 4,006,249$ 6,538,926$ (2,532,677)$ 61% Uses Amount Percent O&M 34,597$ 7,798$ -$ (7,798)$ na Capital Outlays 2,297,094 5,740,061 11,867,973 6,127,912 48% Transfers Out 1,000,000 559,109 2,234,200 1,675,091 25% Total Uses 3,331,690$ 6,306,967$ 14,102,173$ 7,795,206$ 45% Change in Fund Balance Total Sources 2,432,799$ 4,006,249$ 6,538,926$ Total Uses (3,331,690) (6,306,967) (14,102,173) Change in Fund Balance (898,892)$ (2,300,719)$ (7,563,247)$ Beginning Fund Balance 16,847,866$ Estimated Ending Fund Balance 9,284,619$ FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Sources: Quarterly transfers in from the General Fund support capital improvement projects as budgeted. A one-time additional transfer of $2 million resulted from Town Council's direction to reduce the General Fund reserve from 30% to 25%. In addition, an annual reserve for vehicle replacement is established based on the purchase price and expected lifespan of Town-owned vehicles. This reserve is allocated evenly over twelve months and charged to the General Fund each month. Uses: O&M costs reflect the purchase of smaller, non-capitalized equipment used to outfit new Police vehicles. Capital outlays through November consist primarily of the Council-directed purchase of a building for the planned new Police Headquarters (approximately $3.8 million), along with related urgent building maintenance and inspection costs, and planned Police vehicle replacements. The budget also includes $2 million in transfers to the Highway Fund for capital improvement projects, recorded evenly across four quarters. An additional $234,200 is budgeted for transfer to the Grants Fund to cover the Town’s 20% match for transit vehicles funded primarily through federal grants. Page 12 of 14 Water Utility Fund Financial Status Fiscal Year to Date: November 2025 Revenues ` Amount Percent Water Sales 8,310,259$ 8,771,282$ 18,511,000$ (9,739,718)$ 47% 19,328,767$ Charges For Services 1,511,943 1,530,541 3,457,000 (1,926,459) 44% 3,495,200 Interest Earnings 120,623 178,227 100,000 78,227 178% 350,000 Miscellaneous 1,973 1,707 20,000 (18,294) 9% 21,047 Total Revenues 9,944,798$ 10,481,757$ 22,088,000$ (11,606,243)$ 47% 23,195,014$ Uses Amount Percent Personnel 1,348,558$ 1,328,746$ 3,985,725$ 2,656,979$ 33% 3,815,644$ O&M 4,693,427 4,628,389 11,552,175 6,923,786 40% 11,545,570 Capital Outlays 735,351 756,049 2,327,639 1,571,590 32% 2,325,896 Debt Service 3,116,988 3,523,708 3,890,977 367,269 91% 3,890,977 Transfers Out 2,333 3,004 9,883,004 9,880,000 0% 9,883,004 Total Uses 9,896,658$ 10,239,895$ 31,639,520$ 21,399,625$ 32% 31,461,090$ Note: Excludes non-cash outlays for depreciation & amortization Change in Fund Balance Total Revenues 9,944,798$ 10,481,757$ 22,088,000$ 23,195,014$ Total Uses (9,896,658) (10,239,895) (31,639,520) (31,461,090) Change in Fund Balance 48,141$ 241,862$ (9,551,520)$ (8,266,076)$ Beginning Fund Balance 14,762,151$ 14,762,151$ Estimated Ending Fund Balance 15,004,013$ 6,496,075$ Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Year End Estimate Revenues: Charges for services are projected to exceed budget expectations, driven by higher-than-anticipated groundwater preservation fee collections. Interest earnings are exceeding budget expectations due to interest earned on invested bond and loan funds, with the year-end estimate increased to $350,000. Miscellaneous revenues are projected to exceed budget due to insurance recoveries. Uses: Personnel: Expenditures are trending below budget due to vacancies in several positions, including two Water Utility Operators, a Water Utility Supervisor, and a Water Control Systems Supervisor. Operations & Maintenance: Projected savings are anticipated in gasoline and field supply costs. Debt Service: The full annual principal payment is recorded at the beginning of the fiscal year, while interest payments occur semiannually in January and June. A detailed schedule of outstanding debt issuances is provided in Appendix 6. Transfers Out: Transfers are primarily to the Water Resource Impact Fee Fund to support NWRRDS capital projects and represent 40% of groundwater preservation fee revenues. This transfer is recorded at year-end and may vary based on actual revenue collections. A smaller transfer of $3,004 was made to the Debt Service Fund for debt repayment. Page 13 of 14 Stormwater Utility Fund Financial Status Fiscal Year to Date: November 2025 Revenues ` Amount Percent Charges For Services 651,051$ 655,513$ 1,527,000$ (871,487)$ 43% 1,527,000$ Grants - - 239,200 (239,200) - 239,200 Interest Earnings 17,514 19,544 20,000 (456) 98% 45,000 Total Revenues 668,566$ 675,057$ 1,786,200$ (1,111,143)$ 38% 1,811,200$ Expenses Amount Percent Personnel 375,551$ 347,149$ 990,258$ 643,109$ 35% 965,653$ O&M 128,136 130,167 444,755 314,588 29% 430,975 Capital Outlays - - 718,000 718,000 - 418,000 Total Expenses 503,687$ 477,316$ 2,153,013$ 1,675,697$ 22% 1,814,628$ Note: Excludes non-cash outlays for depreciation Change in Fund Balance Total Revenues 668,566$ 675,057$ 1,786,200$ 1,811,200$ Total Expenses (503,687) (477,316) (2,153,013) (1,814,628) Change in Fund Balance 164,879$ 197,741$ (366,813)$ (3,428)$ Beginning Fund Balance 1,447,723$ 1,447,723$ Estimated Ending Fund Balance 1,645,465$ 1,444,295$ Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget Year End Estimate FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Actual Vs. Budget FY 2024/25 Actuals FY 2025/26 Actuals FY 2025/26 Budget Year End Estimate Revenues: Budgeted grant revenue consists of a federal grant supporting the Sierra Wash at Glover Road Infrastructure Repair and Rehabilitation capital project. Expenses: Personnel: Savings are expected due to the Senior Engineering Associate position being vacant for 1.5 months and filled at a lower rate than budgeted. Operations & Maintenance: Projected savings are anticipated in gasoline and equipment repair and maintenance. Capital Outlays: Budgeted capital expenditures include general infrastructure maintenance and three major capital improvement projects: - Sierra Wash at Glover Road Infrastructure Repair and Rehabilitation ($318,000) - Sierra Wash at Via Mandarina Drainage Improvements ($50,000) - Oro Valley Drive Drainage and Pavement Improvements ($300,000) The Oro Valley Drive Drainage and Pavement Improvements project ($300,000) was taken over by Pima County and has been removed from the year-end estimate. Page 14 of 14 APPENDIX 1 El Conquistador Golf Mgmt., LLC Report Date: 11/30/2025 El Conquistador Golf Course Nov - 2025 Budget Nov - 2024 Bud Var PY Var Nov - 2025 Budget Nov - 2024 Bud Var PY Var Rounds Public 5,633 5,200 5,868 433 (235)17,692 14,550 16,294 3,142 1,398 Member 4,107 4,450 4,831 (343) (724)17,176 16,740 17,093 436 83 Tournament 950 1,325 1,546 (375) (596)1,989 2,980 3,156 (991) (1,167) Total Rounds 10,690 10,975 12,245 (285) (1,555)36,857 34,270 36,543 2,587 314 Membership Fees 183,661.24 146,000.00 168,871.23 37,661.24 14,790.01 776,541.27 639,000.00 680,184.72 137,541.27 96,356.55 Total Membership Revenue 183,661.24 146,000.00 168,871.23 37,661.24 14,790.01 776,541.27 639,000.00 680,184.72 137,541.27 96,356.55 Sales - Green Fees 240,553.96 213,000.00 223,991.20 27,553.96 16,562.76 701,236.42 547,250.00 599,890.89 153,986.42 101,345.53 Sales - Tournament 45,664.83 62,500.00 60,573.57 (16,835.17) (14,908.74)77,248.94 116,000.00 122,106.42 (38,751.06) (44,857.48) Sales - Member Rounds 469.00 350.00 459.00 119.00 10.00 2,836.00 1,250.00 1,347.99 1,586.00 1,488.01 Lessons & Clinics 995.00 2,250.00 2,910.00 (1,255.00) (1,915.00)5,565.92 11,500.00 9,675.00 (5,934.08) (4,109.08) Range, Rental & Other Golf Related 10,334.29 15,175.00 15,115.15 (4,840.71) (4,780.86)56,737.60 34,475.00 47,813.95 22,262.60 8,923.65 Cart Fees 39,683.48 32,350.00 38,442.86 7,333.48 1,240.62 165,567.85 133,650.00 147,893.14 31,917.85 17,674.71 Golf Fees Revenue 337,700.56 325,625.00 341,491.78 12,075.56 (3,791.22)1,009,192.73 844,125.00 928,727.39 165,067.73 80,465.34 Sales - Soft Goods 16,313.46 17,200.00 17,350.15 (886.54) (1,036.69)43,652.59 50,775.00 58,021.00 (7,122.41) (14,368.41) Sales - Hard Goods 15,140.07 12,300.00 14,108.06 2,840.07 1,032.01 48,022.99 38,250.00 42,414.89 9,772.99 5,608.10 Merchandise Revenue 31,453.53 29,500.00 31,458.21 1,953.53 (4.68)91,675.58 89,025.00 100,435.89 2,650.58 (8,760.31) Other Revenue 1,124.02 500.00 (5,132.93)624.02 6,256.95 5,619.02 13,500.00 (6,581.68) (7,880.98)12,200.70 Other Revenue 1,124.02 500.00 (5,132.93)624.02 6,256.95 5,619.02 13,500.00 (6,581.68) (7,880.98)12,200.70 Sales - Food 45,235.89 825.00 52,151.77 44,410.89 (6,915.88)159,945.92 1,475.00 149,729.06 158,470.92 10,216.86 Sales - Beer 27,816.46 2,500.00 32,869.72 25,316.46 (5,053.26)98,654.80 4,350.00 93,265.20 94,304.80 5,389.60 Sales - Wine 3,143.53 0.00 2,162.33 3,143.53 981.20 9,658.88 0.00 6,573.82 9,658.88 3,085.06 Sales - Liquor 13,851.74 225.00 14,360.31 13,626.74 (508.57)38,320.53 425.00 33,573.16 37,895.53 4,747.37 Group Service Charges 17,743.43 0.00 6,080.51 17,743.43 11,662.92 55,758.89 0.00 8,498.51 55,758.89 47,260.38 Food & Beverage Revenue 107,791.05 3,550.00 107,624.64 104,241.05 166.41 362,339.02 6,250.00 291,639.75 356,089.02 70,699.27 TOTAL REVENUE 661,730.40 505,175.00 644,312.93 156,555.40 17,417.47 2,245,367.62 1,591,900.00 1,994,406.07 653,467.62 250,961.55 Expenses COS - Merchandise 16,189.36 20,474.50 21,554.21 4,285.14 5,364.85 60,076.62 63,000.75 70,590.30 2,924.13 10,513.68 COS - Food 17,467.87 247.50 15,633.93 (17,220.37) (1,833.94)65,429.12 442.50 55,948.49 (64,986.62) (9,480.63) COS - Beer 9,391.00 750.00 8,958.55 (8,641.00) (432.45)29,305.82 1,305.00 27,325.26 (28,000.82) (1,980.56) COS - Wine 892.30 0.00 784.75 (892.30) (107.55)2,772.68 0.00 2,075.53 (2,772.68) (697.15) COS - Liquor 3,909.43 67.50 3,264.45 (3,841.93) (644.98)11,179.33 127.50 8,962.22 (11,051.83) (2,217.11) Cost of Sales 47,849.96 21,539.50 50,195.89 (26,310.46)2,345.93 168,763.57 64,875.75 164,901.80 (103,887.82) (3,861.77) Gross Margin 613,880.44 483,635.50 594,117.04 130,244.94 19,763.40 2,076,604.05 1,527,024.25 1,829,504.27 549,579.80 247,099.78 Month-to-Date Year-to-Date APPENDIX 1 Page 1 of 3 APPENDIX 1 El Conquistador Golf Mgmt., LLC Report Date: 11/30/2025 El Conquistador Golf Course Nov - 2025 Budget Nov - 2024 Bud Var PY Var Nov - 2025 Budget Nov - 2024 Bud Var PY Var Month-to-Date Year-to-Date Salaries & Wages 179,276.27 147,589.00 193,957.79 (31,687.27)14,681.52 861,033.82 644,395.00 800,332.78 (216,638.82) (60,701.04) Payroll Taxes 14,027.38 11,600.00 15,727.08 (2,427.38)1,699.70 60,343.60 50,550.00 62,059.80 (9,793.60)1,716.20 Workers Comp 3,494.41 2,500.00 3,297.38 (994.41) (197.03)19,363.18 12,500.00 14,192.12 (6,863.18) (5,171.06) Employee Benefits 11,072.34 14,500.00 16,666.52 3,427.66 5,594.18 48,365.25 50,500.00 54,753.78 2,134.75 6,388.53 Other Employee Benefits 2,245.23 1,300.00 2,187.27 (945.23) (57.96)15,907.79 6,500.00 7,217.21 (9,407.79) (8,690.58) Total Payroll & Benefits 210,115.63 177,489.00 231,836.04 (32,626.63)21,720.41 1,005,013.64 764,445.00 938,555.69 (240,568.64) (66,457.95) Meals & Entertainment 424.52 475.00 1,698.90 50.48 1,274.38 2,160.64 2,800.00 3,933.24 639.36 1,772.60 Travel 1,906.90 150.00 569.43 (1,756.90) (1,337.47)3,697.10 2,325.00 2,681.87 (1,372.10) (1,015.23) Total Employee Related 2,331.42 625.00 2,268.33 (1,706.42) (63.09)5,857.74 5,125.00 6,615.11 (732.74)757.37 R&M - Equipment 6,042.52 12,000.00 14,698.19 5,957.48 8,655.67 80,318.62 80,000.00 76,765.01 (318.62) (3,553.61) R&M - Building 670.45 1,500.00 0.00 829.55 (670.45)4,034.91 15,500.00 9,975.22 11,465.09 5,940.31 R&M - Golf Course & Tennis Courts 715.88 4,500.00 6,295.04 3,784.12 5,579.16 12,021.64 18,000.00 22,026.11 5,978.36 10,004.47 R&M - Other 413.07 400.00 401.04 (13.07) (12.03)2,065.35 2,000.00 1,604.16 (65.35) (461.19) Sod 0.00 0.00 0.00 0.00 0.00 0.00 1,000.00 1,067.72 1,000.00 1,067.72 Sand & Gravel 1,666.36 0.00 0.00 (1,666.36) (1,666.36)11,873.55 11,500.00 14,899.07 (373.55)3,025.52 Seed & Mulch 0.00 0.00 686.66 0.00 686.66 116,507.48 145,000.00 125,697.74 28,492.52 9,190.26 Gas, Diesel, Oil & Lubricants 2,882.59 3,950.00 5,747.50 1,067.41 2,864.91 19,333.85 22,250.00 20,037.03 2,916.15 703.18 Fertilizers 8,142.62 8,500.00 8,314.05 357.38 171.43 24,971.87 42,500.00 22,901.45 17,528.13 (2,070.42) Chemicals 10,114.60 1,500.00 4,495.93 (8,614.60) (5,618.67)53,680.55 36,450.00 22,703.96 (17,230.55) (30,976.59) Total Repairs & Maintenance 30,648.09 32,350.00 40,638.41 1,701.91 9,990.32 324,807.82 374,200.00 317,677.47 49,392.18 (7,130.35) Marketing & Advertising 930.50 1,120.00 903.42 189.50 (27.08)5,095.63 6,450.00 9,762.76 1,354.37 4,667.13 Computer Related 829.51 0.00 0.00 (829.51) (829.51)8,119.50 0.00 0.00 (8,119.50) (8,119.50) Dues & Subscriptions 4,787.93 3,870.00 3,505.42 (917.93) (1,282.51)21,252.87 19,350.00 16,547.99 (1,902.87) (4,704.88) Operating Supplies 9,567.36 6,500.00 10,899.57 (3,067.36)1,332.21 54,673.53 40,275.00 58,741.50 (14,398.53)4,067.97 Linens & Laundry 717.98 0.00 668.99 (717.98) (48.99)3,862.11 0.00 4,376.12 (3,862.11)514.01 Postage 37.76 0.00 0.00 (37.76) (37.76)272.56 150.00 287.66 (122.56)15.10 Member Relations 450.00 500.00 340.17 50.00 (109.83)1,094.07 1,000.00 2,713.90 (94.07)1,619.83 Uniforms 489.52 0.00 1,358.81 (489.52)869.29 2,631.37 3,175.00 4,484.92 543.63 1,853.55 Other Operating 0.00 0.00 960.00 0.00 960.00 0.00 0.00 1,182.00 0.00 1,182.00 Merchant Processing Fees 6,592.14 6,400.00 6,088.03 (192.14) (504.11)28,799.87 22,100.00 22,666.53 (6,699.87) (6,133.34) Bank Fees 0.00 0.00 0.00 0.00 0.00 (31.83)0.00 0.00 31.83 31.83 Cash Short / (Over) 0.00 0.00 0.00 0.00 0.00 47.02 0.00 0.00 (47.02) (47.02) Centralized Services 2,347.88 2,125.00 2,398.47 (222.88)50.59 11,304.17 10,625.00 10,638.00 (679.17) (666.17) Total Operating Expenses 26,750.58 20,515.00 27,122.88 (6,235.58)372.30 137,120.87 103,125.00 131,401.38 (33,995.87) (5,719.49) Operating Profit 344,034.72 252,656.50 292,251.38 91,378.22 51,783.34 603,803.98 280,129.25 435,254.62 323,674.73 168,549.36 Electric & Gas 21,893.84 27,000.00 25,826.54 5,106.16 3,932.70 122,792.83 137,500.00 129,346.01 14,707.17 6,553.18 Water 125,555.22 165,750.00 169,085.07 40,194.78 43,529.85 492,809.32 579,500.00 567,913.37 86,690.68 75,104.05 Telephone & Internet Connection 850.00 875.00 851.23 25.00 1.23 3,606.80 4,375.00 3,352.38 768.20 (254.42) Other Third-party Services 4,182.96 4,325.00 2,579.27 142.04 (1,603.69)19,460.40 28,675.00 30,186.28 9,214.60 10,725.88 Total Utilities 152,482.02 197,950.00 198,342.11 45,467.98 45,860.09 638,669.35 750,050.00 730,798.04 111,380.65 92,128.69 APPENDIX 1 Page 2 of 3 APPENDIX 1 El Conquistador Golf Mgmt., LLC Report Date: 11/30/2025 El Conquistador Golf Course Nov - 2025 Budget Nov - 2024 Bud Var PY Var Nov - 2025 Budget Nov - 2024 Bud Var PY Var Month-to-Date Year-to-Date Lease Expense - Fixed 15,077.76 14,582.00 13,258.76 (495.76) (1,819.00)75,388.80 72,910.00 66,293.80 (2,478.80) (9,095.00) Lease Expense - Short-term & Other 298.11 298.00 298.11 (0.11)0.00 1,490.55 2,040.00 2,063.40 549.45 572.85 Total Leases 15,375.87 14,880.00 13,556.87 (495.87) (1,819.00)76,879.35 74,950.00 68,357.20 (1,929.35) (8,522.15) Fixed Operating Expenses 167,857.89 212,830.00 211,898.98 44,972.11 44,041.09 715,548.70 825,000.00 799,155.24 109,451.30 83,606.54 Gross Operating Profit 176,176.83 39,826.50 80,352.40 136,350.33 95,824.43 (111,744.72) (544,870.75) (363,900.62)433,126.03 252,155.90 Insurance 7,546.50 6,000.00 5,877.20 (1,546.50) (1,669.30)37,732.51 30,000.00 30,267.41 (7,732.51) (7,465.10) Bad Debt Expense 103.11 200.00 340.17 96.89 237.06 405.51 800.00 1,620.75 394.49 1,215.24 Fees, Permits, & Licenses 0.00 0.00 651.60 0.00 651.60 3,440.36 3,675.00 4,116.46 234.64 676.10 Base Management Fees 11,257.30 11,094.00 10,824.32 (163.30) (432.98)55,420.54 55,470.00 54,121.60 49.46 (1,298.94) Other Expenses 18,906.91 17,294.00 17,693.29 (1,612.91) (1,213.62)96,998.92 89,945.00 90,126.22 (7,053.92) (6,872.70) Net Operating Income 157,269.92 22,532.50 62,659.11 134,737.42 94,610.81 (208,743.64) (634,815.75) (454,026.84)426,072.11 245,283.20 Incentive Management Fee 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,030.62 0.00 8,030.62 NET INCOME 157,269.92 22,532.50 62,659.11 134,737.42 94,610.81 (208,743.64) (634,815.75) (462,057.46)426,072.11 253,313.82 EBITDA 157,269.92 22,532.50 62,659.11 134,737.42 94,610.81 (208,743.64) (634,815.75) (462,057.46)426,072.11 253,313.82 APPENDIX 1 Page 3 of 3 APPENDIX 2 Operating:Through Nov Budget Cumulative FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY2024 FY2025 FY2026 FY 2026 Actuals Revenue 36 Hole 500,158 1,883,452 1,798,304 2,171,484 2,367,136 2,593,395 3,522,083 3,674,489 3,856,880 4,724,718 4,933,178 1,765,022 4,311,050 33,790,299 Pusch Ridge - 105,370 99,134 59,726 106,184 98,316 - 380,375 414,225 528,346 619,276 124,485 528,628 2,535,437 F&B - Overlook - 606,171 708,594 745,766 671,582 554,336 448,782 671,479 725,222 766,679 865,944 355,861 785,400 7,120,416 Total Revenue 500,158 2,594,993 2,606,032 2,976,976 3,144,902 3,246,047 3,970,865 4,726,343 4,996,327 6,019,743 6,418,398 2,245,368 5,625,078 43,446,151 Expenses 36 Hole 1,112,252 3,588,714 3,936,889 3,817,932 3,771,706 3,891,341 3,915,216 3,740,982 3,929,757 4,263,007 4,365,456 1,965,591 4,468,886 42,298,843 Pusch Ridge - 253,513 256,769 236,160 230,196 287,112 - 319,702 390,959 478,320 516,762 185,393 508,480 3,154,886 F&B - Overlook - 861,740 823,383 841,866 785,499 701,538 440,382 630,509 596,910 684,037 756,376 303,128 751,271 7,425,367 Total Expenses 1,112,252 4,703,967 5,017,041 4,895,958 4,787,401 4,879,991 4,355,598 4,691,193 4,917,626 5,425,364 5,638,594 2,454,111 5,728,637 52,879,096 Profit/(Loss) 36 Hole (612,094) (1,705,262) (2,138,585) (1,646,448) (1,404,570) (1,297,946) (393,133) (66,493) (72,877) 461,711 567,722 (200,569) (157,836) (8,508,544) Pusch Ridge - (148,143) (157,635) (176,434) (124,012) (188,796) - 60,673 23,266 50,026 102,514 (60,908) 20,148 (619,449) F&B - Overlook - (255,569) (114,789) (96,100) (113,917) (147,202) 8,400 40,970 128,312 82,642 109,569 52,733 34,129 (304,951) Total Operating Profit/(Loss)(612,094) (2,108,974) (2,411,009) (1,918,982) (1,642,499) (1,633,944) (384,733) 35,150 78,701 594,379 779,804 (208,744) (103,559) (9,432,944) Capital Investments 45,116 47,909 29,464 - - 131,035 2,828,061 4,619,904 2,184,848 743,897 119,998 630,000 10,750,233 Initial purchase (1)300,000 350,000 350,000 1,000,000 Notes: (1) $1,000,000 original purchase of courses and community center 1/2 cent sales tax 506,710 2,030,750 2,199,466 2,330,941 2,463,034 2,584,916 2,947,420 3,535,507 3,707,578 3,792,744 3,904,926 593,099 - 30,597,091 HOA contributions - - - - - - 125,000 159,050 159,050 159,050 159,050 - 34,050 761,200 POST AGREEMENTPRE AGREEMENT Town of Oro Valley Golf Analysis APPENDIX 2 Page 1 of 2 APPENDIX 2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2024 Gross Margin 213,698 225,040 295,419 332,783 495,412 480,305 525,109 589,339 694,275 586,473 430,577 294,092 Expenses 406,558 333,614 420,523 454,504 412,959 349,298 308,213 291,616 334,623 326,900 398,960 530,376 Net Income/(Loss) (192,860) (108,573) (125,103) (121,721) 82,453 131,007 216,896 297,723 359,652 259,573 31,617 (236,284) FY 2025 Gross Margin 263,005 299,163 297,857 375,363 594,117 556,764 534,838 706,996 737,685 675,958 450,287 378,899 Expenses 411,466 416,806 442,887 488,946 531,458 378,085 374,611 318,371 420,446 381,953 453,967 476,826 Net Income/(Loss) (148,461) (117,643) (145,030) (113,583) 62,659 178,679 160,226 388,625 317,239 294,005 (3,681) (97,927) FY 2026 Gross Margin 337,860 344,855 377,531 402,476 613,880 Expenses 416,385 419,190 518,351 474,811 456,611 Net Income/(Loss) (78,525) (74,335) (140,820) (72,334) 157,270 - - - - - - - Town of Oro Valley Golf Analysis - Contractor Financials - 200,000 400,000 600,000 800,000 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Comparison of Gross Income by Month - Total Golf Operations FY 2024 FY 2025 FY 2026 - 100,000 200,000 300,000 400,000 500,000 600,000 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Comparison of Total Expenses by Month - Total Golf Operations FY 2024 FY 2025 FY 2026 (400,000) (200,000) - 200,000 400,000 600,000 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Comparison of Net Income/(Loss) by Month - Total Golf Operations FY 2024 FY 2025 FY 2026 APPENDIX 2 Page 2 of 2 APPENDIX 3 Consolidated Year-to-Date Financial Report through November 2025 FY 2025/2026 Fund FY 25/26 Beginning Fund Balance Revenue Other Fin Sources/ Transfers In Total In Personnel O&M Capital Debt Service Other Fin Uses/ Transfers Out Total Out Fund Balance Through November 2025 General Fund 20,702,401 22,102,432 - 22,102,432 13,950,431 6,322,595 84,559 - 6,953,829 27,311,414 15,493,419 Highway Fund 1,598,787 1,792,477 500,000 2,292,477 512,696 478,020 1,349,767 - - 2,340,482 1,550,782 Grants and Contributions Fund 60,787 366,170 59,109 425,279 406 45,754 312,426 - - 358,586 127,480 Seizure & Forfeiture - Justice/State 374,906 3,248 - 3,248 - - - - - - 378,154 Community Center Fund 2,921,900 3,393,326 - 3,393,326 499,552 2,910,302 368,388 - 172,968 3,951,211 2,364,016 Municipal Debt Service Fund 53,800 107,759 3,918,566 4,026,325 - 7,038 - 3,428,051 - 3,435,088 645,037 Water Resource System & Dev. Impact Fee Fund 6,481,181 435,820 - 435,820 - 84,040 2,454,681 557,505 - 3,096,226 3,820,774 Townwide Roadway Dev Impact Fee Fund 3,095,031 156,241 - 156,241 - - - - - - 3,251,272 Parks & Recreation Impact Fee Fund 381,038 48,005 - 48,005 - - - - - - 429,043 Police Impact Fee Fund 122,916 24,777 - 24,777 - - - - 38,765 38,765 108,928 Capital Fund 16,847,866 756,249 3,250,000 4,006,249 - 7,798 5,740,061 - 559,109 6,306,967 14,547,147 PAG/RTA Fund 446,926 5,309 - 5,309 - 8,400 70,000 - - 78,400 373,835 Water Utility 14,762,151 10,481,757 - 10,481,757 1,328,746 4,628,389 756,049 3,523,708 3,004 10,239,895 15,004,013 Stormwater Utility 1,447,723 675,057 - 675,057 347,149 130,167 - - - 477,316 1,645,465 Benefit Self Insurance Fund 3,995,323 1,729,257 - 1,729,257 - 2,106,176 - - - 2,106,176 3,618,404 Recreation In-Lieu Fee Fund 52,018 502 - 502 - - - - - - 52,520 Total 73,344,754 42,078,386 7,727,675 49,806,061 16,638,979 16,728,677 11,135,931 7,509,264 7,727,675 59,740,526 63,410,288 APPENDIX 4 Local Sales Tax Collections FY 2025/26 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN TOTAL Construction Sales Tax 179,150 163,435 98,998 89,454 243,032 774,069 Utility Sales Tax 302,786 412,779 407,129 429,423 372,182 1,924,298 Retail Sales Tax 941,576 897,606 867,961 893,562 934,258 4,534,964 Remote Seller Sales Tax 192,279 205,970 220,208 196,932 221,954 1,037,342 Bed Tax 112,651 91,706 92,611 115,225 146,552 558,746 Restaurant & Bar Sales Tax 269,228 238,235 263,782 292,127 270,580 1,333,952 All Other Local Sales Tax *115,341 108,925 133,051 119,804 136,567 613,688 Monthly Total 2,113,010$ 2,118,656$ 2,083,741$ 2,136,528$ 2,325,125$ 10,777,059$ Cumulative Total 2,113,010$ 4,231,666$ 6,315,407$ 8,451,935$ 10,777,059$ Monthly variance (220,775)$ (201,284)$ (240,986)$ (191,015)$ (279,060)$ Cumulative variance (220,775)$ (422,059)$ (663,045)$ (854,060)$ (1,133,120)$ FY 2024/25 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN TOTAL Construction Sales Tax 427,032 291,729 371,199 324,860 545,601 253,973 356,030 414,112 171,326 130,317 296,873 293,764 3,876,815 Utility Sales Tax 306,838 399,701 417,156 405,901 370,322 335,865 288,120 341,375 312,662 259,576 253,922 266,994 3,958,432 Retail Sales Tax 937,920 893,895 855,486 893,023 923,982 1,034,704 1,317,644 978,283 891,361 1,032,305 1,001,099 922,356 11,682,057 Remote Seller Sales Tax 164,541 176,303 174,003 175,191 187,988 229,019 275,105 193,315 178,898 200,958 196,195 199,852 2,351,368 Bed Tax 107,778 180,045 136,688 120,312 177,934 231,333 286,851 209,622 320,232 321,945 252,906 177,851 2,523,496 Restaurant & Bar Sales Tax 271,259 239,294 251,212 286,989 268,563 287,017 374,825 280,614 314,687 382,887 280,512 327,412 3,565,273 All Other Local Sales Tax *118,418 138,973 118,983 121,267 129,793 172,790 208,896 179,929 219,760 224,200 183,278 134,802 1,951,088 Monthly Total 2,333,785$ 2,319,940$ 2,324,727$ 2,327,543$ 2,604,184$ 2,544,700$ 3,107,472$ 2,597,249$ 2,408,926$ 2,552,188$ 2,464,785$ 2,323,029$ 29,908,529$ Cumulative Total 2,333,785$ 4,653,725$ 6,978,452$ 9,305,995$ 11,910,179$ 14,454,879$ 17,562,351$ 20,159,600$ 22,568,526$ 25,120,715$ 27,585,500$ 29,908,529$ *Does not include cable franchise fees or sales tax audit revenues APPENDIX 5 General Fund State Shared Revenues FY 2025/26 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN TOTAL State Shared Income Tax 793,555 793,555 793,555 793,555 793,555 3,967,776 State Shared Sales Tax 619,095 603,827 595,627 602,207 623,385 3,044,141 County Auto Lieu 216,240 215,390 219,757 235,357 160,740 1,047,485 Smart and Safe - - - - - - Monthly Total 1,628,891$ 1,612,772$ 1,608,939$ 1,631,119$ 1,577,680$ 8,059,402$ Cumulative Total 1,628,891$ 3,241,663$ 4,850,602$ 6,481,721$ 8,059,402$ Monthly variance (59,126)$ (41,479)$ (26,784)$ (47,715)$ (82,925)$ Cumulative variance (59,126)$ (100,605)$ (127,389)$ (175,104)$ (258,029)$ FY 2024/25 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN TOTAL State Shared Income Tax 856,425 856,425 856,425 856,425 856,425 856,425 856,425 856,425 856,425 856,425 856,425 856,425 10,277,099 State Shared Sales Tax 593,796 582,212 575,094 597,416 614,349 622,937 724,079 596,353 582,965 677,435 632,153 618,346 7,417,134 County Auto Lieu 237,795 215,615 204,204 224,993 189,831 182,939 128,184 304,691 257,209 119,394 230,779 325,869 2,621,504 Smart and Safe - - - - - 138,177 - - 15 - - 148,981 287,173 Monthly Total 1,688,016$ 1,654,252$ 1,635,723$ 1,678,834$ 1,660,605$ 1,800,479$ 1,708,688$ 1,757,469$ 1,696,614$ 1,653,254$ 1,719,357$ 1,949,620$ 20,602,911$ Cumulative Total 1,688,016$ 3,342,268$ 4,977,991$ 6,656,825$ 8,317,430$ 10,117,909$ 11,826,596$ 13,584,065$ 15,280,679$ 16,933,933$ 18,653,291$ 20,602,911$ APPENDIX 6 Debt Service Expense Adopted Forecast Forecast Forecast Forecast Forecast Forecast Forecast Final Payment 2025/26 2026/27 2027/28 2028/29 2029/30 2030-2035 2036-2040 2041-2045 Date Municipal Debt Service Fund Excise Tax Revenue Bonds - - - 2010 CREBS 186,370 176,066 170,437 - - - - - 2028 2012 Revenue Bonds 224,631 227,147 224,125 - - - - - 2028 2015a Refunding Excise Tax 304,379 - - - - - - - 2026 2016 Excise Tax 172,968 172,635 172,236 172,760 172,207 344,447 - - 2032 2017a Refunding Excise Tax 138,645 138,626 - - - - - - 2027 2018a Excise Tax Revenue Obligation 171,515 171,446 171,502 171,429 171,229 684,420 - - 2034 2021 Parks & Rec Excise Tax 1,543,300 1,544,800 1,539,425 1,542,050 1,537,550 7,693,950 7,682,400 3,063,900 2042 2021 Pension Obligation Bonds 1,271,262 1,266,350 1,264,118 1,264,461 1,262,588 6,312,780 5,036,273 - 2039 Total Municipal Debt Service Fund 4,013,070 3,697,070 3,541,843 3,150,700 3,143,574 15,035,597 12,718,673 3,063,900 Community Center Fund Contracts Payable Leased Fitness Equipment 7,668 - - - - - - - 2026 Financed Fitness Equipment 22,677 7,559 - - - - - - 2027 Golf Carts 130,867 76,339 - - - - - - 2027 Leased Copiers 76,800 76,800 12,800 - - - - - 2028 Total Community Center Fund 238,012 160,698 12,800 - - - - - WRSDIF Fund Excise Tax Revenue Bonds 2021b Excise Tax Revenue Obligation (4) 55,924 56,015 55,596 34,453 8,255 - - - 2030 2025b Senior Lien Water Revenue Obligation (5) 455,408 455,411 455,408 455,409 455,410 2,277,041 - - 2035 2025b WIFA Loan (6) 493,700 468,639 468,639 468,639 468,639 2,343,196 2,343,196 2,343,196 2045 Total WSRDIF Fund 1,005,032 980,065 979,643 958,501 932,304 4,620,237 2,343,196 2,343,196 Water Utility Fund Excise Tax Revenue Bonds 2015b Refunding Revenue Bonds (1) 148,500 - - - - - - 2026 2017b Refunding Revenue Bonds (2) 1,619,650 1,619,032 - - - - - - 2027 2018b Excise Tax Revenue Obligation (3) 508,532 508,144 508,118 507,710 506,914 2,024,062 - - 2034 2021a Excise Tax Revenue Obligations (4) 743,499 744,714 739,138 458,046 109,745 - - - 2030 2025a Senior Lien Water Revenue Obligation (5) 303,605 303,607 303,605 303,606 303,607 1,518,027 - - 2035 Water Revenue Loans 2014 WIFA Loan 371,750 371,509 371,261 371,006 - - - - 2029 2025a WIFA Loan (6) 329,134 312,426 312,426 312,426 312,426 1,562,131 1,562,131 1,562,131 2045 Total Water Utility Fund 4,024,671 3,859,432 2,234,549 1,952,794 1,232,692 5,104,220 1,562,131 1,562,131 TOTAL DEBT SERVICE - ALL FUNDS 9,280,785 8,697,265 6,768,834 6,061,995 5,308,571 24,760,053 16,624,000 6,969,227 (5) Series 2025 debt service is split between the Water Utility Fund (40%) and the Water Impact fee Fund (60%). (6) 2025 WIFA loan debt service is split between the Water Utility Fund (40%) and the Water Impact fee Fund (60%). (1) Series 2015 for municipal operation facilities debt service is split between General Fund excise tax revenue (67%) and water revenue (33%). (2) Series 2017 debt service is split between General Fund excise tax revenue (8%) and water revenue (92%). (3) Series 2018 for water infrastucture and police evidence and substation facility. Debt service is split between General Fund excise tax revenue (25%) and water revenue (75%). (4) Series 2021 debt service is split between the Water Utility Fund (93%) and the Water Impact fee Fund (7%). APPENDIX 7 Town of Oro Valley Operating Investment Summary Fiscal Year 2025/26 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN LGIP Ending Market Value 11,048,264$ 10,564,199$ 9,802,412$ 8,759,464$ 10,446,793$ Investment Income 34,213$ 41,256$ 34,954$ 31,477$ 35,518$ 1-Month Yield 4.33% 4.32% 4.18% 4.09% 3.97% PFM Asset Management Closing Market Value 39,752,553$ 38,301,783$ 37,918,398$ 37,062,569$ 35,042,894$ Investment Income 199,738$ 172,343$ 102,243$ 130,423$ 207,951$ Annualized Yield to Maturity at Cost 4.51% 4.54% 4.53% 4.53% 4.54% Wells Fargo Sweep Ending Balance 3,413,781$ 6,187,767$ 2,581,008$ 4,856,250$ 4,081,463$ Investment Income 13,910$ 10,451$ 15,825$ 13,151$ 10,020$ 7-Day Simple Yield 4.18% 4.18% 4.01% 4.00% 3.84% Total Ending Balance 54,214,597$ 55,053,750$ 50,301,818$ 50,678,283$ 49,571,151$ Total Investment Income 247,861$ 224,050$ 153,022$ 175,052$ 253,489$ APPENDIX 8 Town of Oro Valley - Development Impact Fee Fund Projects Parks and Recreation Facilities Description Cost Completed? Skate Park $1,500,000 Yes Playground and Parking Lot $1,700,000 Yes Multiuse Fields (lighted) $1,200,000 Yes Dog Park $150,000 Yes Developed Park Land $927,694 Park Amenities $2,501,696 Police Police Substation Debt $1,198,500 Police Vehicles $846,050 Street Facilities La Cholla Blvd, Tangerine Rd-Lambert Ln - Road Widening $1,700,000 Yes Shannon Rd, Tangerine Rd-Naranja Dr - New Road $1,000,000 Lambert Ln. .5 mi E of Shannon-Rancho Sonora - Road Widening $1,000,000 Rancho Vistoso & Woodburne - Intersection Improvement $750,000 Oracle Rd & Rams Field Intersection - Intersection Improvement $750,000 Moore Rd La Cholla Blvd - Intersection Improvement $900,000 Moore Rd - Extension E of Rancho Vistoso Blvd - New Road & Intersection $1,026,840 Yes Moore Rd & La Canada Dr Intersection - Intersection Improvement $1,200,000 Yes Glover Rd Multi Use Path - Multi-modal facility $150,000 Yes Glover Rd south half widening - Road Widening $500,000 Yes Water Facilities Water Supply Steam Pump D-Zone Well $1,500,000 Program Management Support Services (P) $1,050,000 Yes Well Improvement Analysis and Recovery Permits (P) $150,000 Yes Well Drilling and Testing (P) $300,000 Yes Construction Permitting, Drilling, Development and Testing (P) $1,500,000 Yes Well Equipment Design and Site Improvements (P) $1,800,000 Yes Storage Palisades C-Zone Storage Tank and Pipeline $4,250,000 Pressure Zone G Storage Expansion $8,000,000 Pressure Zone G, H and I Storage Expansion $4,000,000 Forebay Design (P)$99,231 Yes Forebay Reservoir Construction (P) $900,000 Yes Shannon Rd Forebay Reservoir And Booster Station Prop (Ind.) $240,000 Yes Forebay Reservoir Booster Station Design (Ind.) $90,000 Yes Shannon Rd Forebay Reservoir and Booster Station Design (Ind.) $180,000 Yes Booster Station Construction Forebay Res. (Ind.) $300,000 Yes Shannon Road Forebay Res. Construction (Ind.) $840,000 Yes Shannon Road Forebay Res. Construction (Ind.) $540,000 Yes Arizona municipalities can charge development fees to cover the cost of infrastructure improvements needed to support new development. These fees are one-time payments used to fund projects like building new roads, parks, or water facilities. The amount of the fee is determined by an Infrastructure Improvements Plan (IIP) and land use assumptions. Importantly, development fees can only be used for building new infrastructure or paying off debt for growth-related projects. They cannot be used for ongoing maintenance, repairs, or addressing existing problems. The Town's IIP includes public services for parks and recreation facilities, police facilities, street facilities, and water facilities. Below is a list of identified IIP projects use in the latest impact fee study to calculate the development fees. These are projects that would be eligible to be funded by development fees as outlined in ARS § 9-463.05 (T)(7)(a). APPENDIX 8 Page 1 of 2 APPENDIX 8 Water Facilities Continued Description Cost Completed? Distribution Moore Road F-Zone Interconnect $750,000 Water Plant 14 Booster Capacity Expansion $250,000 Pipeline Design (Recovery Water & Transmission) (P) $660,692 Yes Pipeline Construction (P) $4,320,000 Pipeline Route Study and Preliminary Design (Ind.) $120,000 Yes Pipeline Easement Acquisition (Ind.) $450,000 Yes Pipeline Design (Ind.) $600,000 Yes Pipeline Construction NWRRDS to La Canada Res. (Ind.) $5,880,000 Interconnect to Tangerine Rd. (Ind.) $270,000 Yes Interconnect to Lambert Lane (Ind.) $510,000 Yes APPENDIX 8 Page 2 of 2