HomeMy WebLinkAboutFinancial Reports-Comprehensive Annual Financial Report (CAFR) - 6/30/2010 TOWN OF ORO VALLEY,ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
11000 North La Canada Drive—Oro Valley, Arizona 85737-7015
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30,2010
Prepared by:
Finance Department
Stacey Lemos, CPA
Finance Director
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TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal
Organization Chart vii
List of Town Officials viii
GFOA Certificate of Achievement ix
FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
(Required supplementary information) 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Assets 21
Statement of Activities 22
Fund Financial Statements:
Balance Sheet—Governmental Funds 26
Reconciliation of the Balance Sheet—
Governmental Funds to the Statement of Net Assets 29
Statement of Revenues, Expenditures and Changes in Fund Balances—
Governmental Funds 30
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances—Governmental Funds to the
Statement of Activities 33
Statement of Net Assets—Proprietary Funds 34
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS (Cont'd)
FINANCIAL SECTION (Cont'd) Page
BASIC FINANCIAL STATEMENTS (Concl'd)
Statement of Revenues, Expenses and Changes in Fund Net Assets—
Proprietary Funds 35
Statement of Cash Flows—Proprietary Funds 36
Notes to Financial Statements 37
SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES —BUDGET AND ACTUAL
(Required Supplementary Information)
General Fund 62
Highway User Fund 63
Note to Required Supplementary Information 64
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Other Major Governmental Funds Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual:
Municipal Debt Service Fund 68
Oracle Road Debt Service Fund 69
Townwide Roadway Development Impact Fees Fund 70
Non-Major Governmental Funds:
Combining Balance Sheet—All Non-Major Governmental Funds
By Fund Type 72
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances—All Non-Major Governmental Funds—By Fund Type 73
TOWN OF ORO VALLEY,ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS (Cont'd)
FINANCIAL SECTION (Concl'd) Page
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES (Concl'd)
Non-Major Special Revenue Funds:
Combining Balance Sheet 76
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 78
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual 80
Non-Major Capital Projects Funds:
Combining Balance Sheet 87
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 88
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual 90
STATISTICAL SECTION
Financial Trends:
Net Assets by Component 97
Changes in Net Assets 98
Fund Balances of Governmental Funds 100
Changes in Fund Balances of Governmental Funds 102
Revenue Capacity:
Principal Employers 104
Principal Sales Taxpayers 105
TOWN OF ORO VALLEY,ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS (Concl'd)
STATISTICAL SECTION (Concl'd) Pane
Taxable Sales by Category 106
Direct and Overlapping Sales Tax Rates 107
Debt Capacity:
Ratio of Outstanding Debt by Type 108
Direct and Overlapping Governmental Activities Debt 109
Legal Debt Margin Information 110
Calculation of Legal Debt Margin 111
Pledged-Revenue Coverage 112
Demographic and Economic Information:
County-Wide Demographic and Economic Statistics 113
Operating Information:
Full-Time Equivalent Town Employees by Function 114
Water Utility Revenues by User Type 115
Operating Indicators by Function 116
Water Rates 117
Capital Assets Statistics by Function 118
INTRODUCTORY SECTION
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1 r-
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11000 N. LA CANADA DRIVE
VC'''',':`&',.'-';'=-4`'",--4,4'2.4L4fi'flj
ORO VALLEY ARIZONA 85737
1.s Administrative Offices(520)229-4700 Fax(520)297-0428
www.townoforovalley.corn
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NDE
November 23, 2010
Honorable Mayor, Members of Town Council and
Citizens of the Town of Oro Valley, Arizona:
State law mandates that cities publish a complete set of financial statements presented in
conformity with accounting principles generally accepted in the United States of America and
audited in accordance with auditing standards generally accepted in the United States of America
by a certified public accounting firm licensed in the State of Arizona. Pursuant to that
requirement, we hereby issue the comprehensive annual financial report of the Town of Oro
Valley, Arizona (Town) for the fiscal year ended June 30, 2010.
This report consists of management's representations concerning the finances of the Town.
Consequently, management assumes full responsibility for the completeness and reliability of all
of the information presented in this report. To provide a reasonable basis for making these
representations, management of the Town has established a comprehensive internal control
framework that is designed both to protect the Town's assets from loss, theft, or misuse and to
compile sufficient reliable information for the preparation of the Town's financial statements in
conformity with accounting principles generally accepted in the United States of America.
Because the cost of internal controls should not outweigh their benefits, the Town's
comprehensive framework of internal controls has been designed to provide reasonable rather
than absolute assurance that the financial statements will be free of from material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is
complete and reliable in all material respects.
The Town's financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified
public accounting firm. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town for the fiscal year ended June 30, 2010, 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 unqualified opinion that the Town's financial
statements for the fiscal year ended June 30, 2010, are fairly presented in conformity with
accounting principles generally accepted in the United States of America. The independent
auditors' report is presented as the first component of the financial section of this report.
Accounting principles generally accepted in the United States of America require that
management provide a narrative introduction, overview, and analysis to accompany the basic
financial statements in the form of Management's Discussion and Analysis (MD&A). This letter
of transmittal is designed to complement the MD&A and should be read in conjunction with it.
The Town of Oro Valley's MD&A can be found immediately following the report of the
independent auditors.
1
PROFILE OF THE TOWN
The Town of Oro Valley was incorporated in 1974. It is located in northeastern Pima County and
has a land area of 34.85 square miles. The Town's current population is estimated at 43,521.
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 Council Members. Council Members are elected to four-year staggered terms. The
citizens of Oro Valley elect the Mayor. The Council, from among its members, selects the Vice-
Mayor. The Town Council is responsible, among other things, for the adoption of local
ordinances, budget adoption, the development of citizen advisory committees, the hiring and
removal of the Town Manager, the Police Chief, Town Attorney and Town Magistrate. The
Town Manager is responsible for implementation of the policies of the Town Council. The Town
Manager appoints all other department heads except those mentioned above under Town Council
responsibilities.
The Town of Oro Valley provides a full range of services including police protection; the
construction and maintenance of streets and related infrastructure; the provision of water
services; public transportation services; recreational activities, a public library and cultural
events. In addition to general government activities, the governing body is financially
accountable for the Municipal Property Corporation; therefore, this activity is included in the
reporting entity. Additional information in regards to the Municipal Property Corporation can be
found in Note 1 in the notes to the basic financial statements.
As with all cities in the State of Arizona, the Town of Oro Valley is required to comply with
Article IX, Section 20 (1) of the Arizona Constitution, which sets limits on the Town's legal
budget capacity. The Town currently operates under the Alternative Expenditure Limitation —
Home Rule Option. This option allows the Town Council to establish the budgetary limits
locally, rather than being restricted by the State-imposed expenditure limitation. The voters must
authorize this option every four years. It was last authorized by the citizens of Oro Valley in
March of 2010.
The annual operating budget serves as the foundation for the Town's financial planning and
control. The objective of these budgetary controls is to ensure compliance with legal provisions
embodied in the annual operating budget approved by the Town Council. The Town's proposed
operating budget is presented to the Town Council for review throughout the budget cycle
starting in January and tentatively approved in June or July. The Town Council is required to
hold a public hearing on the proposed budget and to adopt the final budget by no later than the
second Monday in August. The Town Manager, subject to Town Council approval, may at any
time transfer various unencumbered appropriation balances or portions thereof between a
department or activity. The adopted budget cannot be amended in any way without Town
Council approval.
11
MAJOR INITIATIVES AND ACCOMPLISHMENTS FOR THE YEAR
Oro Valley's current Strategic Plan follows four focus areas:
• Financial and Economic Sustainability
Council and management are focused on efforts to stimulate local economic
development, strengthen business retention and improve the business climate of the
Town to improve business attraction.
• Quality of Life and Environmental Sustainability
The Town is making considerable strides towards clean energy and energy efficiency
with town-wide upgrades to facilities and the issuance of Clean Renewable Energy
Bonds to finance the installation of solar photovoltaic panels as covered parking.
• Community Infrastructure
The Town's energy efficiency upgrades allow for improvements to Town facilities
with zero fiscal impact to the Town. This is a self-sustaining capital improvement
project that involves smart one-time use of contingency reserves to be recouped with
energy savings. To address current and future transportation demands, the widening
of Lambert Lane will commence in FY 2010-11 with bonds that will be repaid with
Pima Association of Governments (PAG) regional funding. Oro Valley continues to
pursue delivery of Central Arizona Project (CAP) water to the town and continues
investigating the most economical way to achieve that.
• Leadership and Communication
Town will continue to communicate with residents through its monthly Town
newsletter, The Oro Valley Vista, which is produced electronically and posted on the
Town's website. Something new in the way of communication is our financial
dashboard. This provides a snapshot of the Town's financial condition, and is posted
on the Town Finance Department's website on a monthly basis.
The following are some of the highlights and accomplishments of the Town during the fiscal
year:
Town Council
Approved energy efficiency project funding
• Approved resources conservation measures including residential gray water and solar-
ready ordinances
• Approved $3.4M loan from the State Water Infrastructure Finance Authority (WIFA) for
water utility improvements
• Initiated Granicus video streaming of all Council Chamber meetings
Town Clerk
• Implementation of Agenda Quick software program to automate Council agenda and
packet preparation
111
Town Manager
• Secured the groundbreaking of BASIS Charter School
• Expanded businesses in Oro Valley Marketplace and other commercial and office
districts
• Completed the Steam Pump Ranch Historical Gardens project
• Performed energy audit and began implementation of energy efficiency plans
Police
• Dispose-A-Med program became a national model and has guided other organizations
seeking to develop prescription medicine disposal programs
• School Resource Office CSI program continues to gain notoriety through statewide
regional competitions.
• Received $55,170 in funding through the application of grants, which were used to
provide services to the community and equipment for the staff
Planning & Zoning
• Steam Pump Ranch listed on National Register of Historic Places
• Completed Environmentally Sensitive Lands ordinance
• Developed Town Energy Efficiency Conservation Strategy
Parks & Recreation
• Implemented new ramada reservation process, increasing revenues and enhancing
customer service
• Obtained grants from Arizona Department of Transportation (ADOT) and Regional
Transportation Authority (RTA) for Canada Del Oro Shared Use Path Final Phase
• Obtained funding for Calle Concordia Bike Lane project through RTA funding
Public Works
• Crack sealed 100 lane miles of paved streets
• Completed surface treatments of roads in several subdivisions
• Received $485K from Pima County Regional Flood Control District for two drainage
improvement projects
• Completion of Hardy/Northern roundabout intersection
Water Utility
• Reduced annual debt service payments by early defeasance of 1999 and 2001 bonds
• Installed additional water system security features and updated the Emergency Response
plan
• Received WIFA loan to finance $3,403,000 in capital improvements
• The Utility took 4,000 water quality samples with all results meeting federal, state, and
local water quality regulations
iv
ECONOMIC CONDITIONS AND OUTLOOK
The Town continues to be heavily reliant on local sales taxes, as well as state-shared sales and
income taxes. The State's ominous budget crisis predicts continued declines in state-shared
revenues for the Town and will weigh significantly on the Town's fiscal condition. In FY
2009-10, the State permanently eliminated Local Transportation Assistance Funds (LTAF),
which the Town relied upon to support its local transportation system, Coyote Run. Council
approved an increased subsidy from the Town's General Fund to preserve local transportation
service levels in FY 2010-11 and will continue to work with our regional transportation partners
to find a solution for continuing this valuable service to our community in future years.
As the Town approaches build out, residential and commercial construction will continue to
decline. Single family residential permits have dropped precipitously from 422 in FY 2004-05 to
75 budgeted for FY 2010-11 and resulted in double-digit decreases in construction sales taxes
over the last two years.
The information presented in the financial statements is perhaps best understood when it is
considered from the broader perspective of the specific environment within which the Town
operates.
Local Economy.
The Town continues to provide services and programs without a property tax to fund operations.
One reason why construction sales tax is going down is due to the completion of an 800,000
square foot commercial shopping center in FY 2008-09, the Oro Valley Marketplace. However,
a silver lining appears as a result of the increase in retail opportunities, with steady year-over-
year increases in retail sales tax collections over the past 36 months.
The Town is anticipating future growth in its bio-science sector with expansion not only among
our international pharmaceutical corporate citizens, but the arrival of a research outgrowth of the
University of Arizona, BIOS Oro Valley. These jobs may add to Oro Valley's higher median
income base and generate increased local demand in our housing industry and retail sectors.
Coupled with this clean-industry and research sector growth has been the realization that the
Town must facilitate competitive public education offerings to complement our community
values and lifestyle amenities. To this end, our officials have worked hard the past two years to
draw nationally recognized K-12 programs and can now boast the International Baccalaureate
program offered in one of our high schools by Amphitheater School District and the nationally
acclaimed public charter school, BASIS Oro Valley.
A continuing priority for the Town Council is the potential annexation of 9,100 acres (14 square
miles) of State Trust Land to the north of Oro Valley, referred to as the Arroyo Grande
Annexation. After making progress towards the annexation in FY 2008-09, the process is
currently hampered by the State's budget crisis and the staffing reductions made in the State
Land Department. Officials will make every effort to keep the process moving forward.
Additionally, an annexation team has been charged with exploring new opportunities for Town
boundary expansions that make economic sense.
v
Long-term financial planning.
The Home Rule option was approved by voters in 2010, allowing the Town to set its budget
limits locally, rather than by the State at an artificially low rate, utilizing all available resources
for providing services to the community. Balancing resources against our residents' expectations
for services will be an ongoing challenge because we have chosen not to have a property tax and
rely heavily on other funding sources that can fluctuate dramatically. This fact will continue to
be a decisive driver of future policy and service-level decisions. Finding ways to reduce or wipe
out structural budget deficits caused by an excess of recurring expenditures over incoming
revenues is critical for continued financial sustainability. To assist in the decision-making
process, performance measures implemented in the FY 2010-11 budget will allow our elected
officials to make data-driven decisions with regard to future service levels and program delivery,
decisions that will become more critical with fewer resources in the future.
The next several years will likely be focused on increased attention to local economic
development utilizing re-engineered and innovative approaches. Preserving strong contingency
reserves within all of our Town funds is a philosophical and operational cornerstone. We will
continue to communicate the Town's budget performance to our residents and the Mayor and
Town Council on a monthly basis. Frequent updates of the Town's five-year financial forecast
are planned as well as continuing to foster a learning culture by utilizing our employees in an
Employee Budget Focus team, Innovations Team or Solutions Squads in order to maintain a
proactive, rather than reactive, approach in addressing the dynamic economic climate.
AWARDS AND ACKNOWLEDGMENTS
Award. The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the
Town of Oro Valley for its comprehensive annual financial report for the year ended
June 30, 2009. This was the sixteenth consecutive year that the Town has achieved this
prestigious award. In order to be awarded a Certificate of Achievement, a government must
publish an easily readable and efficiently organized comprehensive annual financial report. This
report must satisfy both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement
Program's requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate.
Acknowledgments. The preparation of this Comprehensive Annual Financial Report could not
have been accomplished without the efficient and dedicated services of the entire staff of the
Finance Department who assisted and contributed in its preparation. We thank the Mayor and
members of the Town Council for their interest and support in planning and conducting the
financial affairs of the Town in a responsible and progressive manner.
Respectfully submitted,
(4-
off
Jerene Watson Stacg Lemos, CPA
Town Manager Finance Director
vi
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vii
TOWN OF ORO VALLEY,ARIZONA
LIST OF TOWN OFFICIALS
ELECTED OFFICIALS
Mayor Dr. Satish Hiremath
Vice-Mayor Mr. William Garner
Council Member Mr. Barry Gillaspie
Council Member Mr. Joe Hornat
Council Member Ms. Mary Snider
Council Member Mr. Steve Solomon
Council Member Mr. Lou Waters
DEPARTMENT HEADS
Town Manager Jerene Watson
Finance Director Stacey Lemos, CPA
Human Resources Director Betty Dickens
Town Engineer Craig Civalier
Town Clerk Kathryn E. Cuvelier
Magistrate George Dunscomb
Town Attorney Tobin Rosen
Water Utility Director Philip Saletta
Chief of Police Daniel G. Sharp
Planning and Zoning Director Vacant
Building Safety Director Suzanne Smith
Parks and Recreation Director Ainsley A. Legner
Information Technology Director Kevin Verville
viii
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Oro Valley
Arizona
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2009
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
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1E �TAiES\qn
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tethrtpoRnoN `�
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Executive Director
ix
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FINANCIAL SECTION
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10120 N. Oracle Road
HEINFELD, MEECH & CO., P.C. Tucson,Arizona 85704
CERTIFIED PUBLIC ACCOUNTANTS Tel(520)742-2611
Fax(520)742-2718
INDEPENDENT AUDITORS' REPORT
Honorable Mayor and Members of the Town Council
Town of Oro Valley, Arizona
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the
Town of Oro Valley, Arizona (Town), as of and for the year ended June 30, 2010, which
collectively comprise the Town's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the Town's management. Our responsibility
is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall basic financial statement presentation. We believe
that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the Town of Oro Valley, Arizona,
as of June 30, 2010, and the respective changes in financial position and cash flows, where
applicable, thereof for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
November 23, 2010 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 to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
TUCSON • PHOENIX • FLAGSTAFF
www.heinfeldmeech.com
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 5 through 14 and budgetary comparison
information on pages 62 through 64 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by
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.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town's financial statements as a whole. The accompanying
supplementary information such as the introductory section, combining and individual fund
financial statements and schedules, and statistical section are presented for purposes of additional
analysis and are not a required part of the financial statements. The combining and individual
fund financial statements and schedules are the responsibility of management and were derived
from and relate directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in
the audit of the financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to
prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated in all material respects in relation to the
financial statements as a whole. The introductory and statistical sections have not been subjected
to the auditing procedures applied in the audit of the basic financial statements and, accordingly,
we do not express an opinion or provide any assurance on them.
c0e) tit5e,tiOt VW.Q.0,01 4- &Oli Pi e.l
HEINFELD, MEECH & CO., P.C.
Certified Public Accountants
November 23, 2010
Page 2
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
(Required Supplementary Information)
Page 3
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Page 4
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30,2010
As management of the Town of Oro Valley,Arizona(Town),we offer readers of the Town's financial
statements this narrative overview and analysis of the financial activities of the Town for the fiscal year
ended June 30, 2010. We encourage readers to consider the information presented here in conjunction
with additional information that we have furnished in our letter of transmittal,which can be found in the
introductory section of this report.
FINANCIAL HIGHLIGHTS
The financial statements which follow the Management's Discussion and Analysis provide those
significant key financial highlights for 2009-10 as follows.
• The Town's total net assets of governmental activities decreased $917,126 to $153.3 million and
business-type activities increased $3.2 million to $55.8 million representing 73 percent and 27
percent respectively, of the total net assets of$209.1 million.
• General revenues from governmental activities accounted for$23.6 million in revenue,or 63 percent
of all revenues from governmental activities. Program specific revenues in the form of charges for
services and grants and contributions accounted for$13.8 million or 37 percent of total governmental
activities revenues. The Town had $16.4 million of program revenues and $72,244 in general
revenues related to business-type activities.
• The Town had$38.3 million in expenses related to governmental activities,a decrease of 2 percent
from the prior fiscal year. The Town had$13.3 million in expenses related to business-type activities
a decrease of 5 percent from the prior fiscal year.
• Among major funds,the General Fund had$25.7 million in revenues,which primarily consisted of
sales taxes and intergovernmental revenues. The total expenditures of the General Fund were$25.5
million. The General Fund's fund balance decreased from $15.9 million to $11.9 million, due
primarily to a transfer of fund balance to the Municipal Debt Service Fund for the defeasance of
revenue bonds.
• The Highway User Revenue Fund, had $3.8 million in revenues, which primarily consisted of
intergovernmental revenues. The total expenditures of the Highway User Revenue Fund were$3.6
million.
• The Municipal Debt Service Fund's fund balance increased $1.8 million to $1.9 million due
primarily to transfers in of$9.2 million for the defeasance of revenue bonds. Total expenditures for
the Municipal Debt Service Fund were $7.5 million.
• The Townwide Roadway Development Impact Fee Fund had $4.4 million in revenues, which
primarily consisted of intergovernmental revenues. The total expenditures of the Townwide
Roadway Development Impact Fee Fund were $4.4 million.
• The Water Fund operating revenues of$14.4 million exceeded operating expenses of$10.1 million.
The change in net assets of$2.7 million was due to operating income of$4.2 million and capital
contributions from line extension agreements of$362,273.
Page 5
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Town's basic financial
statements. The Town's basic financial statements comprise three components: 1) government-
wide financial statements,2)fund financial statements,and 3)notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide financial statements. The government-wide financial statements are designed
to provide readers with a broad overview of the Town's finances, in a manner similar to a private-
sector business.
The statement of net assets presents information on all of the Town's assets and liabilities,with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
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 assets changed during
the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs,regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused compensated absences).
In the government-wide financial statements the Town's activities are presented in the following
categories:
• Governmental activities — Most of the Town's basic services are included here, such as
general government, public safety, highways and streets, and culture and recreation. Sales
taxes, intergovernmental, and charges for services finance most of these activities.
• Business-type activities—The services provided by the Town included here are water and
stormwater utilities. The services are primarily financed through user fees and charges.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The Town uses
fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All
of the funds of the Town can be divided into two categories: governmental funds and proprietary
funds.
Page 6
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
OVERVIEW OF FINANCIAL STATEMENTS (Concl'd)
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows of spendable resources,as well as on balances of spendable
resources available at the end of the fiscal year. Such information may be useful in evaluating the
Town's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the Town's near-term
financing decision. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Information is presented separately in the governmental fund balance sheet and in the
governmental fund statement of revenues, expenditures and changes in fund balances for the
General, Highway User Revenue, Municipal Debt Service, Oracle Road Debt Service, and
Townwide Roadway Development Impact Fees 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 of Oro Valley 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 of Oro Valley uses enterprise funds to account
for its Oro Valley Water Utility and Stormwater Utility. The Town uses an internal service fund
to account for its fleet maintenance services. Because these services predominately benefit
governmental rather than business-type functions, it has been included within governmental
activities in the government-wide financial statements.
Notes to the financial statements. The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements can be found immediately following the basic financial statements.
Other information. In addition to the basic financial statements and accompanying notes, this
report also presents certain required supplementary information concerning the Town's budget
process. 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 major Special Revenue Fund as required supplementary information.
Page 7
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Net assets may serve over time as a useful indicator of a government's financial position. In the case of
the Town, assets exceeded liabilities by $209.1 million as of the current fiscal year end.
The largest portion of the Town's net assets (76 percent) reflects its investment in capital assets (e.g.,
land, buildings and improvements, improvements other than buildings, infrastructure, vehicles,
machinery and equipment and construction in progress),less any related debt used to acquire those assets
that is still outstanding. The Town uses these capital assets to provide services to its citizens;
consequently,these assets are not available for future spending. Although the Town's investment in its
capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources,since the capital assets themselves cannot be used to liquidate
these liabilities.
The following table presents a summary of the Town's net assets for the fiscal years ended June 30,2010
and June 30, 2009.
2010 2009 2010 2009
Governmental Governmental Business-type Business-type
Activities Activities Activities Activities 2010 Total 2009 Total
Current and other assets $ 30,638,869 $ 39,513,022 $ 27,124,402 $ 28,435,788 $ 57,763,271 $ 67,948,810
Capital assets,net 141,309,940 143,325,108 91,505,866 91,683,772 232,815,806 235,008,880
Total assets,net 171,948,809 182,838,130 118,630,268 120,119,560 290,579,077 302,957,690
Current and other liabilities 8,120,707 6,291,123 6,413,489 6,011,823 14,534,196 12,302,946
Long-term liabilities 10,556,342 22,358,121 56,428,637 61,501,003 66,984,979 83,859,124
Total liabilities 18,677,049 28,649,244 62,842,126 67,512,826 81,519,175 96,162,070
Invested in capital assets,net
of related debt 127,712,057 120,515,962 31,383,715 28,212,750 159,095,772 148,728,712
Restricted 9,580,610 7,537,331 9,580,610 7,537,331
Unrestricted 15,979,093 26,135,593 24,404,427 24,393,984 40,383,520 50,529,577
Total net assets $ 153,271,760 $ 154,188,886 $ 55,788,142 $ 52,606,734 $209,059,902 $206,795,620
The Town's financial position is the product of several financial transactions including the net results of
activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the
depreciation of capital assets. The following are significant current year transactions that have had an
impact on the Statement of Net Assets.
• The addition of$2.6 million in business-type activities capital assets through improvements to
the existing water system.
• The addition of$5.1 million in governmental activities capital assets, including$4.4 million for
infrastructure. Additions to infrastructure assets consisted of $2.2 million for street
improvements and $2.2 million in contributed capital from developers for subdivisions.
• The decrease of$9.2 million in governmental activities long-term debt was due mainly to the
defeasance of the 2000, 2001 and 2003 Refunding Revenue Bonds.
• The decrease of$4.7 million in business-type activities long-term debt was due mainly to the
defeasance of the 1999 and 2001 Revenue Bonds.
Page 8
TOWN OF ORO VALLEY,ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30,2010
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont'd)
Changes in net assets. The Town's total revenues for the current fiscal year were $53.9 million.
The total cost of all programs and services was $51.6 million. The following table presents a
summary of the changes in net assets for the fiscal years ended June 30, 2010 and June 30, 2009.
2010 2009 2010 2009
Governmental Governmental Business-type Business-type 2010 2009
Activities Activities Activities Activities Total Total
Revenues:
Program revenues:
Charges for services $ 2,547,309 $ 3,149,867 $ 16,064,022 $ 16,844,741 $ 18,611,331 $19,994,608
Operating grants and contributions 4,728,050 5,392,667 4,728,050 5,392,667
Capital grants and contributions 6,514,602 1,781,571 362,273 3,697,229 6,876,875 5,478,800
General revenues:
Sales taxes 12,970,865 15,376,408 12,970,865 15,376,408
Franchise taxes 509,285 506,685 509,285 506,685
Impact fees 584,113 441,020 584,113 441,020
Unrestricted state shared revenues 9,462,464 10,676,796 9,462,464 10,676,796
Investment earnings 95,625 113,995 72,244 128,083 167,869 242,078
Total revenues 37,412,313 37,439,009 16,498,539 20,670,053 53,910,852 58,109,062
Expenses:
General government 9,950,053 9,936,639 9,950,053 9,936,639
Public safety 13,730,593 15,019,980 13,730,593 15,019,980
Highways and streets 9,353,689 9,481,040 9,353,689 9,481,040
Culture and recreation 3,527,949 3,806,555 3,527,949 3,806,555
Interest on long-term debt 1,767,155 954,645 1,767,155 954,645
Water 12,830,137 13,495,124 12,830,137 13,495,124
Stormwater drainage 486,994 494,166 486,994 494,166
Total expenses 38,329,439 39,198,859 13,317,131 13,989,290 51,646,570 53,188,149
Change in net assets $ (917,126) $ (1,759,850) $ 3,181,408 $ 6,680,763 $ 2,264,282 $ 4,920,913
Total revenues decreased $4.2 million, or 7 percent, primarily due to a reduction in collections in
local sales taxes, building permit fees, and state income tax. The decrease of$2.4 million in sales
tax was largely due to a decline in construction sales tax collections. Building permit fees decreased
by $428,000 primarily due to a decline in commercial building activity, and state income tax
decreased by $799,000 due to current economic conditions. An increase in capital grants of$1.4
million was primarily due to $2.7 million received from the Pima Association of Governments for
the payment of principal and interest on the Arizona Department of Transportation(ADOT)HELP
Loan.
Expenses decreased$1.5 million primarily due to staffing reductions and vacancies and savings in
operations and maintenance costs in all Town departments.
Page 9
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30,2010
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Concl'd)
Governmental and Business-type activities. The following table presents the cost of the 7 major
Town functional activities. The table also shows each function's net cost(total cost less charges for
services generated by the activities and intergovernmental aid provided for specific programs). The
net cost shows the financial burden that was placed on the State and Town's taxpayers by each of
these functions.
2010 2009
Net Net
Total (Expense)/ Total (Expense)/
Governmental Activities Expenses Revenue Expenses Revenue
General government $ 9,950,053 $ (7,508,064) $ 9,936,639 $ (6,900,795)
Public safety 13,730,593 (12,852,342) 15,019,980 (14,442,958)
Highways and streets 9,353,689 363,309 9,481,040 (3,536,920)
Culture and recreation 3,527,949 (2,775,226) 3,806,555 (3,039,436)
Interest on long-term debt 1,767,155 (1,767,155) 954,645 (954,645)
Total $38,329,439 $(24,539,478) $ 39,198,859 $(28,874,754)
Business-type Activities
Water $12,830,137 $ 2,668,920 $ 13,495,124 $ 6,3 00,191
Stormwater drainage 486,994 440,244 494,166 252,489
Total $13,317,131 $ 3,109,164 $ 13,989,290 $ 6,552,680
• The cost of all governmental activities this year was $38.3 million. The decrease of
$869,420 from the prior year was due primarily to the reduction in operational costs in
public safety and increased intergovernmental grant revenues.
• The cost of all business-type activities this year was $13.3 million. The decrease of
$672,159 from the prior year was primarily due to the reduction of operational costs in the
water utility.
• Federal and State governments,developer contributions,and charges for services subsidized
certain governmental programs and business-type programs with revenues of$30.2 million.
• Net cost of governmental activities of $24.5 million was financed by general revenues,
which are made up of primarily sales taxes and state shared revenues of$22.4 million.
Page 10
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
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,unreserved 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 $23.6
million, a decrease of$7.4 million due to the $6.3 million payment to bond escrow agent for the
defeasance of revenue bonds.
The General Fund is the principal operating fund of the Town. The decrease in fund balance of$4.0
million in the General Fund for the fiscal year to $11.9 million,was due primarily to the transfer of
fund balance to the Municipal Debt Service Fund for the defeasance of revenue bonds.
The fund balance of the Highway User Revenue Fund showed a decrease of$31,338 to$4.2 million
for the current fiscal year.
The fund balance of the Municipal Debt Service Fund showed an increase of$1.8 million to $1.9
million due to transfers in for the defeasance of revenue bonds.
The Townwide Roadway Fund showed an increase of$7,078 to $2.3 million for the current fiscal
year.
Proprietary funds. Net assets of the Enterprise Funds at the end of the year amounted to $55.8
million. The increase of $3.2 million from the prior fiscal year was primarily due to operating
income of$4.5 million.
Page 11
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
BUDGETARY HIGHLIGHTS
There were no amendments to the Town of Oro Valley's fiscal year 2009-10 operating and capital
budget. A schedule showing the original and final budget amounts compared to the Town's actual
financial activity for the General Fund is provided in this report as required supplementary
information. The significant variances are summarized as follows:
• The unfavorable variance of $2.2 million in revenues was a result of a decline in
construction sales tax, commercial building permit fees, and state income tax.
• The favorable variance of$1.9 million in expenditures was a result of salary savings and
operational cost savings in all departments.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. At year end, the Town had invested $232.8 million in capital assets (net of
accumulated depreciation), including buildings, facilities, vehicles, computers, equipment, and
infrastructure assets. This amount represents a net decrease of$2.2 million from last year,primarily
due to depreciation of the Town's assets. Total depreciation expense for the year was$9.9 million.
The following schedule presents capital asset balances for the fiscal years ended June 30, 2010 and
June 30, 2009.
As of As of
Governmental Activities June 30, 2010 June 30, 2009
Land $ 18,878,468 $ 18,878,468
Infrastructure 143,835,153 139,428,821
Buildings and improvements 19,962,664 19,871,218
Machinery, equipment, and vehicles 9,147,800 8,954,814
Construction in progress 3,913,137 3,569,261
Less: Accumulated depreciation (54,427,282) (47,377,474)
Total $ 141,309,940 $143,325,108
Page 12
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30,2010
CAPITAL ASSETS AND DEBT ADMINISTRATION (Concl'd)
As of As of
Business-type Activities June 30, 2010 June 30, 2009
Land $ 2,410,660 $ 2,410,660
Water rights 8,534,490 8,534,490
Water system 98,839,269 97,496,342
Stormwater system 1,044,302 1,028,602
Equipment and vehicles 3,411,001 3,264,268
Construction in progress 1,699,004 613,499
Less: Accumulated depreciation (24,432,860) (21,664,089)
Total $ 91,505,866 $ 91,683,772
Additional information on the Town's capital assets can be found in Note 4.
Debt Administration. At year end,the Town had$72.3 million in long-term debt outstanding,$6.8
million due within one year. The following table presents a summary of the Town's outstanding
long-term debt for the fiscal years ended June 30, 2010 and June 30, 2009.
Governmental Activities
2010 2009
Revenue bonds $ 4,939,750 $ 11,449,146
Special assessment bonds 3,145,000 3,360,000
Loan payable 5,513,133 8,000,000
Total $ 13,597,883 $ 22,809,146
Business-type Activities
2010 2009
Revenue bonds $ 52,305,500 $ 57,575,854
Loan payable 6,305,650 5,788,122
Capital leases 123,883 107,046
$ 58,735,033 $ 63,471,022
State statutes currently limit the amount of general obligation debt a Town may issue to 20 percent
of its total assessed valuation for water,sewer,lights,open space preserves,parks,playgrounds and
recreational facilities. The current debt limitation for the Town is $138.8 million.
The Town of Oro Valley has a bond rating of"AA-" rating from Standard & Poor's and an "A+"
rating from Fitch on outstanding revenue bonds.
Additional information on the Town's long-term debt can be found in Notes 5 through 9.
Page 13
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2010
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
• The unemployment rate for the Town of Oro Valley is currently 6.2%. Pima County's and
the State of Arizona's unemployment rates are 8.7% and 9.7%, respectively.
• The Town's secondary assessed valuation for the current year is $693,924,598.
• Single family residential (SFR) building permits issued in this fiscal year totaled 65, as
compared to 120 SFR building permits issued last fiscal year. Projections for SFR building
permits are 75 for fiscal year 2010-11.
The adopted combined operating and capital expenditure budget for fiscal year 2010-11 totals
$116.2 million, a decrease of 4.4% over last year's budget of$121.5 million. This decrease is
attributed to the continued economic downturn causing a further drop in our major revenue sources:
local sales taxes, state-shared revenues and residential and commercial permit fees. Emphasis was
placed on streamlining service delivery, increasing operating efficiencies, and improving the
structural balance of the Town's budget by reducing recurring expenditures to align with continued
revenue reductions.
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 Canada Drive, Oro Valley, Arizona 85737.
Page 14
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Page 15
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Page 16
BASIC FINANCIAL STATEMENTS
Page 17
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Page 18
GOVERNMENT-WIDE FINANCIAL STATEMENTS
Page 19
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Page 20
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF NET ASSETS
JUNE 30,2010
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:
Cash and cash equivalents $ 24,529,378 $ 21,963,048 $ 46,492,426
Taxes receivable 871,726 871,726
Accounts receivable 423,479 2,348,906 2,772,385
Intergovernmental receivable 1,247,379 1,247,379
Special assessments 3,145,000 3,145,000
Loans receivable 122,000 122,000
Prepaid items 5,506 5,506
Total current assets 30,222,468 24,433,954 54,656,422
Noncurrent assets:
Deferred bond charges 416,401 2,690,448 3,106,849
Capital assets,non-depreciable 22,791,605 12,644,154 35,435,759
Capital assets,depreciable(net) 118,518,335 78,861,712 197,380,047
Total noncurrent assets 141,726,341 94,196,314 235,922,655
Total assets 171,948,809 118,630,268 290,579,077
LIABILITIES
Current liabilities:
Accounts payable 2,042,164 559,665 2,601,829
Accrued wages and benefits 724,026 89,892 813,918
Intergovernmental payable 319,527 841,512 1,161,039
Interest payable 1,269,105 1,269,105
Unearned revenue 139,168 139,168
Customer deposits payable 216,952 180,189 397,141
Compensated absences 1,218,900 114,290 1,333,190
Capital leases payable 88,491 88,491
Loans payable 3,000,000 768,815 3,768,815
Special assessment bonds 225,000 225,000
Revenue bonds 234,970 2,501,530 2,736,500
Total current liabilities 8,120,707 6,413,489 14,534,196
Noncurrent liabilities:
Compensated absences 343,791 58,876 402,667
Capital leases payable 35,392 35,392
Loans payable 2,513,133 5,536,835 8,049,968
Special assessment bonds 2,920,000 2,920,000
Deferred bond premium 74,638 993,564 1,068,202
Revenue bonds 4,704,780 49,803,970 54,508,750
Total non-current liabilities 10,556,342 56,428,637 66,984,979
Total liabilities 18,677,049 62,842,126 81,519,175
NET ASSETS
Invested in capital assets,net of related debt 127,712,057 31,383,715 159,095,772
Restricted for:
Public safety 472,183 472,183
Highways and streets 4,345,686 4,345,686
Capital outlay 2,771,997 2,771,997
Debt service 1,929,635 1,929,635
Other 61,109 61,109
Unrestricted 15,979,093 24,404,427 40,383,520
Total net assets $ 153,271,760 $ 55,788,142 $ 209,059,902
The notes to the financial statements are an integral part of this statement.
Page 21
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30,2010
Net(Expense)
Revenue
and Changes
Program Revenues in Net Assets
Operating Capital
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Activities
Primary Government
Governmental activities:
General government $ 9,950,053 $ 2,261,815 $ 135,163 $ 45,011 $ (7,508,064)
Public safety 13,730,593 28,785 849,466 (12,852,342)
Highway and streets 9,353,689 137,436 3,109,971 6,469,591 363,309
Culture and recreation 3,527,949 119,273 633,450 (2,775,226)
Interest on long-term debt 1,767,155 (1,767,155)
Total governmental activities 38,329,439 2,547,309 4,728,050 6,514,602 (24,539,478)
Business-type activities:
Water 12,830,137 15,136,784 362,273
Stormwater drainage 486,994 927,238
Total business-type activities 13,317,131 16,064,022 362,273
Total primary government $ 51,646,570 $ 18,611,331 $ 4,728,050 $ 6,876,875 (24,539,478)
General revenues:
Taxes:
Sales taxes 12,970,865
Franchise taxes 509,285
Impact fees 584,113
Unrestricted state shared revenues 9,462,464
Investment earnings 95,625
Total general revenues 23,622,352
Changes in net assets (917,126)
Net assets,beginning of year 154,188,886
Net assets,end of year $153,271,760
The notes to the financial statements are an integral part of this statement.
Page 22
Net(Expense)Revenue
and Changes in Net Assets
Business-type
Activities Totals
$ $ (7,508,064)
(12,852,342)
363,309
(2,775,226)
(1,767,155)
(24,539,478)
2,668,920 2,668,920
440,244 440,244
3,109,164 3,109,164
3,109,164 (21,430,314)
12,970,865
509,285
584,113
9,462,464
72,244 167,869
72,244 23,694,596
3,181,408 2,264,282
52,606,734 206,795,620
$ 55,788,142 $209,059,902
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Page 24
FUND FINANCIAL STATEMENTS
Page 25
TOWN OF ORO VALLEY,ARIZONA
BALANCE SHEET-GOVERNMENTAL FUNDS
JUNE 30,2010
Municipal Debt
General Fund HURF Service
ASSETS
Cash and cash equivalents $ 11,846,102 $ 4,647,289 $ 1,917,911
Taxes receivable 871,726
Accounts receivable 338,060 40,407
Intergovernmental receivable 544,958 244,247
Special assessments
Prepaid items 5,506
Total assets $ 13,606,352 $ 4,931,943 $ 1,917,911
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 570,961 $ 669,600 $
Accrued wages and benefits 635,519 66,375
Intergovernmental payable 319,527
Deferred revenue 139,168
Customer deposits payable 36,748
Total liabilities 1,701,923 735,975
Fund balances:
Unreserved:
Undesignated 11,904,429 4,195,968 1,917,911
Unreserved reported in:
Special revenue funds
Capital projects funds
Total fund balances 11,904,429 4,195,968 1,917,911
Total liabilities and fund balances $ 13,606,352 $ 4,931,943 $ 1,917,911
The notes to the financial statements are an integral part of this statement.
Page 26
Townwide
Roadway Non-Major Total
Oracle Road Development Governmental Governmental
Debt Service Impact Fees Funds Funds
$ 11,724 $ 2,475,606 $ 3,576,479 $ 24,475,111
871,726
45,012 423,479
458,174 1,247,3 79
3,145,000 3,145,000
5,506
$ 3,156,724 $ 2,933,780 $ 3,621,491 $ 30,168,201
$ $ 660,475 $ 92,602 $ 1,993,638
16,391 718,285
319,527
3,145,000 3,284,168
947 179,257 216,952
3,145,000 661,422 288,250 6,532,570
11,724 2,272,358 20,302,390
1,672,555 1,672,555
1,660,686 1,660,686
11,724 2,272,358 3,333,241 23,635,631
$ 3,156,724 $ 2,933,780 $ 3,621,491 $ 30,168,201
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Page 28
TOWN OF ORO VALLEY,ARIZONA
RECONCILIATION OF THE BALANCE SHEET-GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
JUNE 30,2010
Total governmental fund balances $ 23,635,631
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
Capital assets used in governmental acitivities are not financial
resources and therefore are not reported in the funds.
Governmental capital assets $ 195,737,222
Less accumulated depreciation (54,427,282) 141,309,940
Special assessments receivable are not available to pay for current period
expenditures and therefore are not reported in the funds. 3,145,000
Deferred items related to the issuance of bonds are amortized over the life of
the associated issuance in the government-wide statements but not
reported in the funds.
Deferred bond charges 416,401
Deferred bond premium (74,638) 341,763
Long-term liabilites are not due and payable in the current period and therefore
are not reported in the funds.
Special assessment bonds (3,145,000)
Revenue bonds (4,939,750)
Loans payable (5,513,133)
Compensated absences (1,562,691) (15,160,574)
Net assets of governmental activities $ 153,271,760
The notes to the financial statements are integral part of this statement.
Page 29
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30,2010
Municipal Debt
General Fund HURF Service
Revenues:
Sales taxes $ 12,043,584 $ 801,570 $
Franchise taxes 509,285
Impact fees
Special assesments
Intergovernmental 10,725,866 2,886,453
Licenses,fees&permits 1,055,270 53,141
Fines,forfeitures&penalties 202,144
Charges for services 913,638
Contributions and donations 59
Investment earnings 62,200 8,692 107
Other 183,552 14,478
Total revenues 25,695,598 3,764,334 107
Expenditures:
Current-
General government 8,912,829
Public safety 12,919,307
Highway and streets 2,972,645
Culture and recreation 3,157,369
Capital outlay 558,416 594,755
Debt service-
Principal retirement 699,010
Interest and fiscal charges 465,950
Payment to bond escrow agent 6,279,112
Bond issuance costs 26,550
Total expenditures 25,547,921 3,567,400 7,470,622
Excess(deficiency)of revenues over expenditures 147,677 196,934 (7,470,515)
Transfers in 9,240,679
Transfers out (4,183,686) (228,272)
Total other financing sources(uses) (4,183,686) (228,272) 9,240,679
Changes in fund balances (4,036,009) (31,338) 1,770,164
Fund balances,beginning of year 15,940,438 4,227,306 147,747
Fund balances,end of year $ 11,904,429 $ 4,195,968 $ 1,917,911
The notes to the financial statements are an integral part of this statement.
Page 30
Townwide
Roadway Non-Major Total
Oracle Road Debt Development Governmental Governmental
Service Impact Fees Funds Funds
$ $ $ 125,711 $ 12,970,865
509,285
341,034 243,079 584,113
368,152 368,152
4,059,901 268,529 17,940,749
1,108,411
409,887 612,031
51,817 965,455
59
16,311 8,315 95,625
18,000 216,030
368,152 4,435,246 1,107,338 35,370,775
539,949 9,452,778
59,984 12,979,291
502,911 3,475,556
3,157,369
1,728,168 308,426 3,189,765
215,000 2,486,867 3,400,877
152,497 213,133 831,580
6,279,112
26,550
367,497 4,428,168 1,411,270 42,792,878
655 7,078 (303,932) (7,422,103)
772,000 10,012,679
(5,600,721) (10,012,679)
(4,828,721)
655 7,078 (5,132,653) (7,422,103)
11,069 2,265,280 8,465,894 31,057,734
$ 11,724 $ 2,272,358 $ 3,333,241 $ 23,635,631
Page 31
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Page 32
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 30,2010
Net changes in fund balances-total governmental funds $ (7,422,103)
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However,in the Statement of Activities,
the cost of those assets is allocated over their estimated useful lives as depreciation expense.
Expenditures for capital assets $ 2,847,944
Less current year depreciation (7,119,650) (4,271,706)
Capital assets contributed by developers to the Town are not recorded in the governmental funds as
they do not provide current financial resources but are recognized in the Statement of Activities as
program revenues. 2,256,538
Special assessment revenues in the Statement of Activities do not provide current financial resources
and therefore are not reported as revenues in the governmental funds. (215,000)
Repayment of debt principal are expenditures in the governmental funds,but the repayment reduces
long-term liabilities in the Statement of Net Assets.
Loan principal retirement 2,486,867
Revenue bond principal retirement 6,509,396
Special assessment bond principal retirement 215,000 9,211,263
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.
Amortization of deferred charges (440,299)
Compensated absences (35,819) (476,118)
Change in net assets in governmental activities $ (917,126)
Page 33 The notes to the financial statements are integral part of this statement.
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
JUNE 30,2010
Enterprise Funds Governmental
Activities:
Non-Major Internal Service
Water Enterprise Fund Total Fund
ASSETS
Current assets:
Cash and cash equivalents $ 21,510,553 $ 452,495 $ 21,963,048 $ 54,267
Accounts receivable 2,097,199 251,707 2,348,906
Loans receivable 122,000 122,000
Total current assets 23,729,752 704,202 24,433,954 54,267
Noncurrent assets:
Deferred bond charges 2,690,448 2,690,448
Capital assets,non-depreciable 12,418,272 225,882 12,644,154
Capital assets,depreciable(net) 77,474,594 1,3 87,118 78,861,712
Total noncurrent assets 92,5 83,314 1,613,000 94,196,314
Total assets 116,313,066 2,317,202 118,630,268 54,267
LIABILITIES
Current liabilities:
Accounts payable 428,043 131,622 559,665 48,526
Accrued wages and benefits 81,422 8,470 89,892 5,741
Intergovernmental payable 841,512 841,512
Interest payable 1,269,105 1,269,105
Customer deposits payable 180,189 180,189
Compensated absences 112,227 2,063 114,290
Capital leases payable 88,491 88,491
Loans payable 768,815 768,815
Revenue bonds 2,501,530 2,501,530
Total current liabilities 6,182,843 230,646 6,413,489 54,267
Noncurrent liabilities:
Compensated absences 57,814 1,062 58,876
Capital leases payable 35,392 35,392
Loans payable 5,536,835 5,536,835
Deferred bond premium 993,564 993,564
Revenue bonds 49,803,970 49,803,970
Total non-current liabilities 56,392,183 36,454 56,428,637
Total liabilities 62,575,026 267,100 62,842,126 54,267
NET ASSETS
Invested in capital assets,net of related debt 31,281,716 101,999 31,383,715
Unrestricted 22,456,324 1,948,103 24,404,427
Total net assets $ 53,738,040 $ 2,050,102 $ 55,788,142 $
The notes to the financial statements are an integral part of this statement.
Page 34
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30,2010
Enterprise Funds Governmental
Activities:
Non-Major Internal Service
Water Enterprise Fund Total Fund
Operating revenues:
Charges for services $ 14,365,400 $ 744,944 $ 15,110,344 $ 864,159
Other 1,804 1,804 7,509
Total operating revenues 14,367,204 744,944 15,112,148 871,668
Operating expenses:
Costs of sales and services 7,174,921 425,023 7,599,944 871,668
Depreciation and amortization 2,965,790 56,764 3,022,554
Total operating expenses 10,140,711 481,787 10,622,498 871,668
Operating income 4,226,493 263,157 4,489,650
Nonoperating revenues(expenses):
Impact fees 475,973 475,973
Intergovernmental 182,294 182,294
Connection fees 293,607 293,607
Investment earnings 70,329 1,915 72,244
Interest expense (2,689,426) (5,207) (2,694,633)
Total nonoperating revenues
(expenses) (1,849,517) 179,002 (1,670,515)
Income before capital contributions and
transfers 2,376,976 442,159 2,819,135
Capital contributions 362,273 362,273
Changes in net assets 2,739,249 442,159 3,181,408
Total net assets,beginning of year 50,998,791 1,607,943 52,606,734
Total net assets,end of year $ 53,738,040 $ 2,050,102 $ 55,788,142 $
The notes to the financial statements are an integral part of this statement.
Page 35
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30,2010
Governmental
Enterprise Funds Activities
Non-Major Internal Service
Water Enterprise Fund Total Fund
Increase(Decrease)in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers $ 14,144,242 $ 574,681 $ 14,718,923 871,668
Cash payments to suppliers for goods and services (4,685,029) (127,662) (4,812,691) (683,470)
Cash payments to employees for services (2,384,928) (211,917) (2,596,845) (133,931)
Net cash provided by operating activities 7,074,285 235,102 7,309,387 54,267
Cash flows from noncapital and related financing activities:
Connection fees 293,607 293,607
Grants received 182,294 182,294
Net cash provided by noncapital financing activities 293,607 182,294 475,901
Cash flows from capital and related financing activities:
Development impact fees 475,973 475,973
Acquisition of capital assets (1,940,117) (182,212) (2,122,329)
Proceeds from loans 1,062,307 1,062,307
Principal paid on long-term debt (3,152,769) (89,425) (3,242,194)
Payment to bond escrow agent (2,784,364) (2,784,364)
Interest on long-term debt (2,804,001) (5,207) (2,809,208)
Net cash used for capital and related
financing activities (9,142,971) (276,844) (9,419,815)
Cash flows from investing activities:
Investment income 95,777 2,438 98,215
Net cash provided by investing activities 95,777 2,438 98,215
Net increase(decrease)in cash and cash equivalents (1,679,302) 142,990 (1,536,312) 54,267
Cash and cash equivalents,beginning of year 23,189,855 309,505 23,499,360
Cash and cash equivalents,end of year $ 21,510,553 $ 452,495 $ 21,963,048 $ 54,267
Reconciliation of Operating Income to
Net Cash Provided by Operating Activities
Operating income $ 4,226,493 $ 263,157 $ 4,489,650 $
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation and amortization 2,965,790 56,764 3,022,554
Change in assets and liabilities:
Increase in accounts receivable (272,112) (170,263) (442,375)
Increase in accounts payable 103,314 85,945 189,259 48,526
Increase(decrease)in accrued payroll and employee benefits (12,598) 2,001 (10,597) 5,741
Increase(decrease)in compensated absences payable 14,248 (2,502) 11,746
Increase in deposits held for others 49,150 49,150
Total adjustments 2,847,792 (28,055) 2,819,737 54,267
Net cash provided by operating activities $ 7,074,285 $ 235,102 $ 7,309,387 $ 54,267
Page 36 The notes to the financial statements are an integral part of this statement.
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Oro Valley, Arizona 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. As required by
accounting principles generally accepted in the United States of America, these financial
statements present the Town and its component units,entities for which the Town is considered
to be financially accountable. Blended component units,although legally separate entities,are,in
substance, part of the Town's operations and so data from these units are combined with data of
the Town,the primary government. The blended component units presented have a June 30 year
end.
The financial reporting entity consists of a primary government and its component units. A
component unit is a legally separate entity that must be included in the reporting entity in
conformity with generally accepted accounting principles. The Town is a primary government
that has a separately elected governing body, is legally separate, and is fiscally independent of
other state or local governments. Furthermore, component units combined with the Town for
financial statement presentation purposes, and the Town, are 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.
Blended Component Unit — The financial reporting entity presented in these financial
statements consists of the Town and one blended component unit. This component unit,
discussed below, is included in the Town's reporting entity because of the significance of its
operational relationship or financial relationship with the Town. The component unit is governed
by a board, substantially or wholly,comprised of the Town's elected council. Separate financial
statements are not prepared for the component unit on a stand-alone basis.
The Town of Oro Valley Municipal Property Corporation's(MPC)Board of Directors consists of
the three members which are appointed by the Town of Oro Valley Town Council. The MPC, a
non-profit corporation incorporated under the laws of the State of Arizona,was originally formed
for the purpose of assisting the Town in obtaining financing for acquiring the Canada Hills and
Rancho Vistoso water companies. The Town has a contractual obligation for the repayment of
the Municipal Property Corporation's Municipal Facilities Revenue Bonds, Series 2003, 2005,
and 2007. The activity of the 2003 MPC is reported in the applicable water enterprise fund and
the activity of the Series 2005 and 2007 MPC is reported in the applicable water enterprise and
governmental funds. All related receivables and payables between the Town and the MPC have
been eliminated.
Page 37
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets 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 and its component units. For the most part,
the effect of internal activity has been removed from these statements. These statements are to
distinguish between the governmental and business-type activities of the Town. Governmental
activities normally are supported by sales taxes and intergovernmental revenues,and are reported
separately from business-type activities,which rely to a significant extent on fees and charges for
support.
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,
unrestricted state shared revenues, investment income and other items not included among
program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and the major individual enterprise fund are reported as separate
columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
Government-wide Financial Statements — The government-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Grants and similar items are recognized as revenue
as soon as all eligibility requirements imposed by the grantor or provider have been met. As a
general rule, the effect of internal activity has been eliminated from the government-wide
financial statements; however, the effects of interfund services provided and used between
functions are reported as expenses and program revenues at amounts approximating their external
exchange value.
Page 38
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
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.
Sales taxes, franchise taxes, licenses and permits, charges for services, special assessments and
investment income associated with the current fiscal period are all considered to be susceptible to
accrual and have been recognized as revenues of the current fiscal period. Grants and similar
awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or
provider have been met. Miscellaneous revenue is not susceptible to accrual because generally
they are not measurable until received in cash. Grants and similar awards are recognized as
revenue as soon as all eligibility requirements imposed by the grantor or provider have been met.
Deferred revenue arise 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, economic development, police, and parks and recreation.
When both restricted and unrestricted resources are available for use, it is the Town's policy to
use restricted resources first, then unrestricted resources as they are needed.
The focus of governmental fund financial statements is on major funds rather than reporting
funds by type. Each major fund is presented in a separate column. Non-major funds are
aggregated and presented in a single column.
The Town reports the following major governmental funds.
General Fund — This fund accounts for all financial resources of the Town, except those
required to be accounted for in other funds.
Highway User Revenue Fund—This fund is used to account for the Town's share of motor
fuel tax revenues.
Municipal Debt Service Fund—This fund accounts for the payments of debt service on the
Municipal Property Corporation Revenue Bonds of 2003 Refunding, 2005 and 2007
Refunding.
Page 39
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Oracle Road Debt Service Fund—This fund accounts for the special assessment collections
and payment of the outstanding Oracle Road bond issue.
Townwide Roadway Development Impact Fees Fund—This fund accounts for the collection
and capital expenditures of the Townwide Roadway Development Impact Fees.
The Town reports the following major proprietary fund.
Water Fund—This fund accounts for the costs to operate, construct and finance the Town's
water system.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund financial statements to
the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent private-
sector guidance for their business-type activities and enterprise funds, subject to this same
limitation. The Town has elected not to follow subsequent private-sector guidance.
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 to user departments
for fleet maintenance services. The principal operating revenues of the Town's enterprise fund
are charges to customers for water and stormwater drainage services. Operating expenses for
these funds include the cost of sales and services, 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 June 30, 2010 were cash in bank and investments held by the County and State
Treasurers.
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.
Page 40
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
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."
All trade receivables are shown net of an allowance for uncollectibles.
G. 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 and fund financial statements.
H. Capital Assets
Capital assets, which include property, plant, and equipment, are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements.
Capital assets are defined by the Town as assets with an initial,individual cost of$5,000 or more
and an estimated useful life of more than one year. Such assets are recorded at historical cost or
estimated historical cost if actual historical cost is not available. Donated capital assets are
recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend the life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
Page 41
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Certain capital assets of the Town are depreciated using the straight line method over the
following estimated useful lives:
Assets Years
Buildings 50
Improvements other than buildings 20-30
Infrastructure 20-50
Vehicles 4-6
Machinery and equipment 7-20
I. Compensated Absences
The Town's employee annual and sick leave policies generally provide for granting annual and
sick leave with pay. Full-time employees accrue annual leave based on the number of years
employed. Employees who terminate employment shall be paid in a lump sum. Full-time
employees accumulate sick leave at the rate of one work day per month. Part-time employees
whose normal week is twenty hours or more receive sick leave at half the rate of full-time
employees. Once an employee has exceeded 480 hours of accrued sick leave,one half of the sick
leave balance in excess of the 480 hours shall be paid to the employee upon separation from
employment. The current and long-term liabilities, including related benefits, for accumulated
vacation and sick leave are reported on the government-wide financial statements. A liability for
these amounts, including related benefits, is reported in governmental funds only if they have
matured, for example, as a result of employee leave, resignations and retirements. Generally,
resources from the General Fund are used to pay for compensated absences.
J. Long-term Obligations
In the government-wide financial statements and proprietary fund financial statements,long-term
debt and other long-term obligations are reported as liabilities in the applicable business-type
activities and proprietary fund type statement of net assets.
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.
Page 42
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30,2010
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concl'd)
K. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for expenditures or are legally restricted by outside parties for use
for a specific purpose.
L. Interfund Activity
Flows of cash from one fund to another without a requirement for repayment are reported as
interfund transfers. Interfund transfers between governmental funds are eliminated in the
Statement of Activities. Interfund transfers in the fund statements are reported as other financing
sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary
funds.
M. Estimates
The preparation of the financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes.
Actual results may differ from those estimates.
NOTE 2 —CASH AND INVESTMENTS
A.R.S.authorize the Town to invest public monies in obligations of the U.S. Government and its
agencies, obligations of the State and certain local government subdivisions, interest-bearing
savings accounts and certificates of deposit, collateralized repurchase agreements, certain
obligations of U.S. corporations, and certain other securities. The statutes do not include any
requirements for credit risk,custodial credit risk,concentration of credit risk,interest rate risk,or
foreign currency risk for the Town's investments.
The State Treasurer's pools are external investment pools, the Local Government Investment
Pool(Pool 5)and Local Government Investment Pool-Government(Pool 7),with no regulatory
oversight. The pools are not required to register(and are not registered)with the Securities and
Exchange Commission. The activity and performance of the pools are reviewed monthly by the
State Board of Investment. The fair value of each participant's position in the State Treasurer
investment pools approximates the value of the participant's shares in the pool and the
participants' shares are not identified with specific investments. No regulatory oversight is
provided for the County Treasurer's investment pool and that pool's structure does not provide
for shares.
Page 43
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 2—CASH AND INVESTMENTS (Concl'd)
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
$545,090 and the bank balance was $430,963. At year end,the Town's deposits were entirely
covered by Federal depository insurance.
At year end, the Town's investments consisted of the following.
Investment Type Maturities Fair Value
Money Market—U.S. Treasuries Less than one year $ 5,328,816
County Treasurer's investment pool 177 days average 537,493
State Treasurer's investment pool 5 22 days average 38,331,034
State Treasurer's investment pool 7 29 days average 1,744,889
Total $45,942,232
Interest Rate Risk. The Town does not have a formal investment policy that limits investment
maturities as a means of managing its exposure to fair value losses arising from increasing
interest rates.
Credit Risk. The Town has no investment policy that would further limit its investment choices.
As of year end,the Town's investment in the State and County Treasurers' investment pools did
not receive a credit quality rating from a national rating agency. All of the investments in the
State Treasurer's investment pool 7 were rated AAA by Standard and Poor's. For investments in
the State Treasurer's investment pool 5, 88%of the securities were rated AAA,AGY,A+,or Al
by Standard and Poor's.
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.
Page 44
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 3 —RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and
presented separately in the financial statements with the exception of due from governmental
entities. Due from governmental entities, net of allowance for uncollectibles, as of year end for
the Town's individual major funds in the aggregate, were as follows.
Highway Townwide
User Roadway
General Revenue Development
Fund Fund Impact Fees Fund
Due from Federal government $ 219,638 $ $
Due from State government 325,320 244,247
Due from other governments 458,174
Net due from governmental entities $ 544,958 $ 244,247 $ 458,174
Governmental funds report deferred revenue in connection with receivables for revenues that are
not considered to be available to liquidate liabilities of the current period. Governmental funds
also defer revenue recognition in connection with resources that have been received,but not yet
earned. At the end of the current fiscal year,the various components of deferred revenue reported
in the governmental funds were as follows.
Unavailable Unearned
Prepaid developer fees (General Fund) $ $ 139,168
Special assessments (Oracle Road Debt Service Fund) 3,145,000
Total deferred revenue for governmental funds $ 3,145,000 $ 139,168
Page 45
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 4—CAPITAL ASSETS
A summary of capital asset activity for the fiscal year ended June 30, 2010 follows.
Beginning Ending
Governmental Activities Balance Increase Decrease Balance
Capital assets,not being depreciated:
Land $ 18,878,468 $ $ $ 18,878,468
Construction in progress 3,569,261 2,047,007 1,703,131 3,913,137
Total capital assets,not being depreciated 22,447,729 2,047,007 1,703,131 22,791,605
Capital assets,being depreciated:
Infrastructure 139,428,821 4,406,332 143,835,153
Buildings and improvements 19,871,218 91,446 19,962,664
Machinery,equipment, and vehicles 8,954,814 262,828 69,842 9,147,800
Total capital assets being depreciated 168,254,853 4,760,606 69,842 172,945,617
Less accumulated depreciation for:
Infrastructure (38,319,083) (5,469,619) (43,788,702)
Buildings and improvements (4,091,355) (460,037) (4,551,392)
Machinery, equipment, and vehicles (4,967,036) (1,189,994) (69,842) (6,087,188)
Total accumulated depreciation (47,377,474) (7,119,650) (69,842) (54,427,282)
Total capital assets,being depreciated,net 120,877,379 (2,359,044) 118,518,335
Governmental activities capital assets,net $ 143,325,108 $ (312,037) $ 1,703,131 $ 141,309,940
Beginning Ending
Business-Type Activities Balance Increase Decrease Balance
Capital assets,not being depreciated:
Land $ 2,410,660 $ $ $ 2,410,660
Water rights 8,534,490 8,534,490
Construction in progress 613,499 1,165,254 79,749 1,699,004
Total 11,558,649 1,165,254 79,749 12,644,154
Capital assets,being depreciated:
Water system 97,496,342 1,342,927 98,839,269
Stormwater system 1,028,602 15,700 1,044,302
Equipment and vehicles 3,264,268 146,733 3,411,001
Total capital assets being depreciated 101,789,212 1,505,360 103,294,572
Less accumulated depreciation for:
Water system (19,908,664) (2,494,717) (22,403,3 81)
Stormwater system (32,211) (20,834) (53,045)
Equipment and vehicles (1,723,214) (253,220) (1,976,434)
Total accumulated depreciation (21,664,089) (2,768,771) (24,432,860)
Total capital assets,being depreciated,net 80,125,123 (1,263,411) 78,861,712
Business-type activities capital assets,net $ 91,683,772 $ (98,157) $ 79,749 $ 91,505,866
Page 46
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 4—CAPITAL ASSETS (Concl'd)
Depreciation expense was charged to functions/programs as follows:
Governmental activities:
General government $ 457,915
Public Safety 695,609
Highways and streets 5,614,644
Culture and recreation 351,482
Total depreciation expense—governmental activities $7,119,650
Business-type activities:
Water $2,712,007
Stormwater 56,764
Total depreciation expense—business-type activities $2,768,771
Construction Commitments — As of June 30, 2010, the Town was involved in several
construction projects. The estimated cost to complete the construction projects is$28.6 million.
NOTE 5—LOANS PAYABLE
The Town received an$8,000,000 loan from the Arizona Department of Transportation(ADOT)
for streets projects. The loan payable at June 30, 2010, is presented below.
Interest Rate Outstanding Due
(Including Principal Within
Governmental activities: Fees) Maturity June 30, 2010 One Year
ADOT HELP Loan 3.50% 7/30/10-12 $ 5,513,133 $3,000,000
Total $ 5,513,133 $3,000,000
Principal and interest payments on the governmental activities loans payable at June 30,2010 are
summarized as follows.
Governmental Activities
Year ending June 30: Principal Interest
2011 $ 3,000,000 $
2012 513,133 105,724
2013 2,000,000 63,940
Total $ 5,513,133 $ 169,664
Page 47
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 5—LOANS PAYABLE (Concl'd)
The Town received two loans from the Water Infrastructure Finance Authority of Arizona for
water system projects. The Town also received loan financing for water rights from the Central
Arizona Water Conservation Town (CAWCD) to be paid back over five years. The loans
payable at June 30, 2010 are presented below.
Interest Rate Outstanding Due
(Including Principal Within
Business-type activities: Fees) Maturity June 30, 2010 One Year
WIFA Loan, 2007 2.04% 7/1/10-24 $ 4,154,412 $ 173,144
WIFA Loan, 2009 2.75% 7/1/10-18 1,184,306 124,457
CAWCD Loan 5.20% 12/1/10-11 966,932 471,214
Total $ 6,305,650 $ 768,815
Principal and interest payments on the business-type activities loans payable at June 30,2010 are
summarized as follows.
Business-type Activities
Year ending June 30: Principal Interest
2011 $ 768,815 $ 170,197
2012 803,388 142,140
2013 318,081 107,106
2014 328,844 97,541
2015 339,973 87,658
2016-20 1,626,741 298,862
2021-25 1,315,221 150,713
2026-28 804,587 22,933
Total $ 6,305,650 $ 1,077,150
Page 48
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 6—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 and
Impact Fees are used to pay bonded debt.
Original Outstanding
Amount Interest Principal Due Within
Purpose Issued Rates Maturity June 30, 2010 One Year
Governmental activities:
Revenue Bonds, 2005 $ 4,164,050 3.13-4.75% 7/1/10-25 $ 3,584,500 $ 167,500
Refunding Revenue Bonds, 2007 1,389,180 4.25-5.00% 7/1/10-26 1,355,250 67,470
Total $ 4,939,750 $ 234,970
Annual debt service requirements to maturity on revenue and refunding bonds for governmental
activities at year end are summarized as follows.
Governmental Activities
Year ending June 30: Principal Interest
2011 $ 234,970 $ 199,244
2012 179,820 192,013
2013 186,910 184,416
2014 194,000 176,108
2015 204,440 168,600
2016-20 1,355,830 694,518
2021-25 1,996,090 335,439
2026-29 587,690 18,953
Total $ 4,939,750 $ 1,969,291
Original Outstanding
Amount Interest Principal Due Within
Purpose Issued Rates Maturity June 30, 2010 One Year
Business-type activities:
Revenue Bonds, 2003 $ 31,750,000 3.25-5.00% 7/1/10-28 $ 26,487,500 $1,355,000
Refunding Revenue Bonds, 2003 10,225,080 3.13-5.00% 7/1/10-19 8,032,750 266,500
Revenue Bonds, 2005 2,050,950 3.13-4.75% 7/1/10-25 1,765,500 82,500
Refunding Revenue Bonds, 2007 16,420,820 4.25-5.00% 7/1/10-26 16,019,750 797,530
Total $ 52,305,500 $2,501,530
Page 49
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30,2010
NOTE 6—BONDS PAYABLE (Concl'd)
Annual debt service requirements to maturity revenue and refunding bonds for business-type
activities at year end are summarized as follows.
Business-type Activities
Year ending June 30: Principal Interest
2011 $ 2,501,530 $ 2,315,565
2012 2,370,180 2,231,020
2013 2,536,840 2,131,609
2014 2,128,500 2,026,368
2015 2,535,310 1,931,432
2016-20 14,566,920 7,786,489
2021-25 15,873,910 4,126,583
2026-29 9,792,310 790,689
Total $ 52,305,500 $23,339,755
During the current fiscal year, the Town deposited $7,460,466 in an irrevocable trust with an
escrow agent for the defeasance of outstanding revenue bonds related to the governmental and
business-type activities Revenue Bonds Series 2000, 2001, and the governmental activities
portion of the Revenue Refunding Bonds Series 2003. As a result, the revenue bonds are
considered to be defeased, and the liability for those bonds has been removed from the
government-wide statements.
Pledged revenues—governmental activities. The Town has pledged future sales(excise)tax
revenues to repay outstanding revenue bonds and refunding revenue bonds of$4.9 million as of
June 30, 2010. Proceeds from the original bond issuances, including those subsequently
refunded,provided financing for land acquisition and facility construction. The bonds are paid
solely from the Town's sales taxes and are payable through 2027. Total annual principal and
interest payments for all sales tax revenue bonds are expected to require less than 5%of gross
revenues. The total principal and interest to be paid on the bonds is $6.9 million. The current
total sales tax revenues were$12.2 million and the total principal and interest paid on the bonds
was $1.2 million, or 10% of gross revenues.
Pledged revenues—business-type activities. The Town has pledged future water revenues to
repay outstanding revenue bonds and refunding revenue bonds of $52.3 million as of
June 30, 2010. Proceeds from the original bond issuances, including those subsequently
refunded, provided financing for the construction and improvements to the Town's water
systems and infrastructure. The bonds are paid solely from water utility revenues and are
payable through 2029. Total annual principal and interest payments for all water revenue bond
issuances are expected to require approximately 25%of gross revenues. The total principal and
interest to be paid on the bonds is$75.6 million. The current total customer gross revenues were
$15.1 million and the total principal and interest paid on the bonds was $4.8 million or 32% of
gross revenues.
Page 50
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 7—SPECIAL ASSESSMENT BONDS
Special assessment bonds year end consisted of the following outstanding bonds. The bonds are
both callable and noncallable with interest payable semiannually. Special assessments from the
Oracle Road Debt Service Fund are used to pay bonded debt.
Original Outstanding Due
Amount Interest Principal Within
Purpose Issued Rates Maturity June 30, 2010 One Year
Governmental activities:
Special assessments debt $3,945,000 4.20-5.00% 1/1/10-21 $ 3,145,000 $ 225,000
Total $ 3,145,000 $ 225,000
Annual debt service requirements to maturity on special assessment bonds at year end are
summarized as follows.
Governmental Activities
Year ending June 30: Principal Interest
2011 $ 225,000 $ 141,202
2012 235,000 129,701
2013 250,000 117,578
2014 260,000 105,867
2015 270,000 94,602
2016-20 1,550,000 271,327
2021 355,000 8,431
Total $ 3,145,000 $ 868,708
Page 51
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 8—OBLIGATIONS UNDER CAPITAL LEASES
The business-type activities of the Town have acquired a street sweeper and dump truck under
the provisions of long-term lease agreements classified as a capital leases. The lease agreements
qualify as capital leases for accounting purposes and, therefore, have been recorded at the
present value of their future minimum lease payments as of the inception date. Revenues from
the Stormwater Fund are used to pay the capital lease obligations.
The assets capitalized and acquired through capital leases are as follows.
Business-type
Activities
Asset:
Machinery, equipment, and vehicles $ 307,648
Less: Accumulated depreciation 37,184
Total $ 270,464
The future minimum lease obligations and the net present value of these minimum lease
payments at year end were as follows.
Business-type
Year Ending June 30: Activities
2011 $ 94,632
2012 37 173
Total minimum lease payments 131,805
Less: amount representing interest 7,922
Present value of minimum lease payments $ 123,883
Due within one year $ 88,491
Page 52
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 9 — CHANGES IN LONG-TERM LIABILITIES
•
Long-term liability activity for the current fiscal year was as follows.
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Revenue bonds payable $ 11,449,146 $ $ 6,509,396 $ 4,939,750 $ 234,970
Special assessments payable 3,360,000 215,000 3,145,000 225,000
Loan payable 8,000,000 2,486,867 5,513,133 3,000,000
Compensated absences payable 1,526,872 1,497,920 1,462,101 1,562,691 1,218,900
Governmental activity long-term
liabilities $ 24,336,018 $ 1,497,920 $10,673,364 $ 15,160,574 $ 4,678,870
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Business-type activities:
Revenue bonds payable $ 57,575,854 $ $ 5,270,354 $ 52,305,500 $ 2,501,530
Loan payable 5,788,122 1,184,307 666,779 6,305,650 768,815
Capital lease payable 107,046 106,262 89,425 123,883 88,491
Compensated absences payable 161,420 175,505 163,759 173,166 114,290
Business-type activities long-term
liabilities $ 63,632,442 $ 1,466,074 $ 6,190,317 $ 58,908,199 $ 3,473,126
Page 53
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 10—INTERFUND RECEIVABLES, PAYABLES,AND TRANSFERS
At year end, several funds had negative cash balances.
Interfund transfers:
Transfers in
Municipal Non-Major
Debt Service Governmental
Transfers out Fund Funds Total
General Fund $ 3,411,686 $ 772,000 $ 4,183,686
HURF Fund 228,272 228,272
Non-Major Governmental Funds 5,600,721 5,600,721
Total $ 9,240,679 $ 772,000 $10,012,679
Transfers were made from the General Fund to subsidize the Public Transportation and Pima
County Bond Projects Funds. Transfers were made from the General, Highway User Revenue
and Municipal Building Funds to the Municipal Debt Service Fund to make the required
principal and interest payments on outstanding bonded indebtedness, and for the defeasance of
the 2000, 2001, and 2003 Revenue Bonds.
NOTE 11 —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.
NOTE 12 —RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts;theft of,damage to,and destruction
of assets; errors and omissions; injuries to employees; and natural disasters.
The Town's insurance protection is provided by the Arizona Municipal Risk Retention Pool, of
which the Town is a participating member. The limit for basic coverage is for $2,000,000 per
occurrence on a claims made basis. Excess coverage is for an additional $10,000,000 per
occurrence on a follow form, claims made basis. The aggregate limit is also $10,000,000. No
significant reduction in insurance coverage occurred during the year and no settlements exceeded
insurance coverage during any of the past three fiscal years.
Page 54
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 12 —RISK MANAGEMENT (Concl'd)
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.
NOTE 13 —RETIREMENT PLAN
Plan Descriptions — The Town contributes to the three plans described below. Benefits are
established by state statute and generally provide retirement,death,long-term disability,survivor,
and health insurance premium benefits.
The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer
defined benefit pension plan; a cost-sharing multiple employer defined benefit health insurance
premium plan;and a cost-staring,multiple-employer defined benefit long-term disability plan that
covers employees of the State of Arizona and employees of participating political subdivisions
and school districts. The ASRS is governed by the Arizona State Retirement System Board
according to the provisions of A.R.S. Title 38, Chapter 5, Article 2.
The Public Safety Personnel Retirement System (PSPRS) administers agent multiple-employer
defined benefit pension plan and an agent multiple-employer defined benefit health insurance
premium plan that covers public safety personnel who are regularly assigned hazardous duty as
employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a
common investment and administrative agent,is governed by a five-member board,known as The
Fund Manager, and 162 local boards according to the provisions of A.R.S. Title 38, Chapter 5,
Article 4.
The Corrections Officer Retirement Plan (CORP) administers an agent multiple-employer
defined benefit pension plan and an agent multiple-employer defined benefit health insurance
premium plan that covers certain employees of the State of Arizona's Department of Corrections
and Department of Juvenile Corrections, and county employees whose primary duties require
direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the
participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6.
Page 55
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 13—RETIREMENT PLAN (Cont'd)
Each plan issues a publicly available financial report that includes its financial statements and
required supplementary information. A report may be obtained by writing or calling the
applicable plan.
ASRS PSPRS/CORP
P.O. Box 33910 3010 E. Camelback Road Suite 200
Phoenix, AZ 85012-0250 Phoenix, AZ 85016
(602) 240-2200 or (800) 621-3778 (602) 255-5575
Funding policy — The Arizona State Legislature establishes and may amend active plan
members' and the Town's contribution rates.
Cost-sharing plans — The Arizona State Legislature establishes and may amend active plan
members' and the Town's contribution rates. For the current fiscal year,active ASRS members
were required by statute to contribute at the actuarially determined rate of 9.40 percent (9.00
percent for retirement and 0.4 percent for long-term disability)of the members' annual covered
payroll and the Town was required by statute to contribute at the actuarially determined rate of
9.40 percent (8.34 percent for retirement, 0.66 percent for health insurance premium, and 0.4
percent for long-term disability) of the members' annual covered payroll.
The Town's contributions for the current and two preceding years, all of which were equal to the
required contributions, were as follows.
Health Benefit Long-Term
Retirement Supplement Disability
Fund Fund Fund
Year ending June 30:
2010 $ 949,928 $ 75,174 $ 45,560
2009 996,346 119,711 62,350
2008 936,503 122,153 58,168
Agent plan — For the current fiscal year, active PSPRS and CORP members were required by
statute to contribute 7.65 and 7.96 percent of the members' annual covered payroll,and the Town
was required to contribute at the actuarially determined rate of 14.88 and 9.52 percent. The
health insurance premium portion of the contribution rate was actuarially set at 0.55 percent of
covered payroll for PSPRS and 0.36 percent for CORP.
Page 56
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 13 —RETIREMENT PLAN (Cont'd)
Actuarial methods and assumptions — The contribution requirements for the year ended
June 30, 2010 were established by the June 30, 2008 actuarial valuations, and those actuarial
valuations were based on the following actuarial methods and assumptions. Actuarial valuations
involve estimates of the value of reported amounts and assumptions about the probability of
events in the future. The required schedule of funding programs which follows provides multi-
year trend information that shows whether the actuarial value of the plans' assets are increasing
or decreasing over time relative to the actuarial accrued liability for benefits.
PSPRS CORP
Actuarial valuation date June 30, 2008 June 30, 2008
Actuarial cost method Projected unit credit Projected unit credit
Actuarial assumptions:
Investment rate of return 8.5% 8.5%
Projected salary increases 5.5% - 8.5% 5.5% - 8.5%
Inflation rate 5.0% 5.0%
Amortization method Level percent closed for Level percent closed for
unfunded actuarial unfunded actuarial
liability, open for excess liability, open for excess
Remaining amortization 28 years for unfunded 28 years for unfunded
actuarial accrued actuarial accrued
liability, 20 years for liability, 20 years for
excess excess
Asset valuation method Smoothed market value Smoothed market value
Annual Pension/OPEB Cost — The Town's pension/OPEB cost for the agent plans for the
current fiscal year end and related information follows.
PSPRS CORP
Health Health
Pension Insurance Pension Insurance
Annual pension/OPEB cost $ 846,785 $ 31,299 $ 42,532 $ 1,608
Contributions made 846,785 31,299 42,532 1,608
Page 57
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 13 —RETIREMENT PLAN (Cont'd)
Trend Information — Information for each of the agent plans as of most recent actuarial
valuations follows.
Oro Valley Police Plan:
Year Ended Annual Pension Percentage of APC Net Pension
June 30, Cost (APC) Contributed Obligation
Pension
2009 $1,005,600 100% -0-
2008 577,551 100 -0-
2007 478,027 100 -0-
Health Insurance
2009 77,502 100 -0-
2008 59,146 100 -0-
Oro Valley ACORP Dispatchers:
Year Ended Annual Pension Percentage of APC Net Pension
June 30, Cost(APC) Contributed Obligation
Pension
2009 $57,404 100% -0-
2008 36,214 100 -0-
2007 35,184 100 -0-
Health Insurance
2009 5,447 100 -0-
2008 6,126 100 -0-
Page 58
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 13—RETIREMENT PLAN (Cont'd)
Funding Progress—An analysis of funding progress for each of the agent plans as of the most
recent actuarial valuations follows. For this valuation,which was prior to the implementation of
GASB Statement No.45,the pension and health insurance benefit amounts were aggregated. In
future years these benefits will be disaggregated and reported separately.
Oro Valley Police Plan
Pension
Unfunded
Liability as
Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Funding Funded Covered of Covered
Date Plan Assets Liability Liability Ratio Payroll Payroll
June 30, (a) (b) (a-b) (a/b) (c) ([a-bJ/c)
2009 $15,727,624 $20,322,658 $(4,595,034) 77.4% $5,951,423 77.21%
2008 13,644,758 18,167,094 (4,522,336) 75.1 5,856,015 77.23
2007 11,996,669 16,700,207 (4,703,538) 71.8 5,306,795 88.63
Health Insurance
Unfunded
Liability as
Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Funding Funded Covered of Covered
Date Plan Assets Liability Liability Ratio Payroll Payroll
June 30, (a) (b) (a-b) (a/b) (c) ([a-bJ/c)
2009 -0- $628,965 $(628,965) 0.0% $5,951,423 10.57%
2008 -0- 563,998 (563,998) 0.0% 5,856,015 9.63
2007 -0- 568,235 (568,235) 0.0% 5,306,795 10.71
Page 59
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30,2010
NOTE 13—RETIREMENT PLAN (Concl'd)
Oro Valley ACORP Dispatchers:
Pension
Unfunded
Liability as
Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Funding Funded Covered of Covered
Date Plan Assets Liability Liability Ratio Payroll Payroll
June 30, (a) (b) (a-b) (a/b) (c) [a-b]/c)
2009 $1,082,181 $1,581,254 $(499,073) 68.4% $604,184 82.60%
2008 1,026,134 1,594,642 (568,508) 64.3% 729,262 77.96
2007 960,316 1,278,537 (318,221) 75.1% 639,247 49.78
Health Insurance
Unfunded
Liability as
Actuarial Actuarial Annual Percentage
Valuation Value of Accrued Funding Funded Covered of Covered
Date Plan Assets Liability Liability Ratio Payroll Payroll
June 30, (a) (b) (a-b) (a/b) (c) [a-b]/c)
2009 -0- $54,580 $(54,580) 0.0% $604,184 9.03%
2008 -0- 71,711 (71,711) 0.0 729,262 9.83
2007 -0- 33,414 (33,414) 0.0 639,247 5.23
NOTE 14—SUBSEQUENT EVENT
On July 22,2010,the Town issued$2.4 million in Clean Renewable Energy Bonds(CREBS)to
fund the construction of a covered parking structure with integrated solar panels.
Page 60
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES—BUDGET AND ACTUAL
(REQUIRED SUPPLEMENTARY INFORMATION)
Page 61
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-GENERAL FUND
YEAR ENDED JUNE 30,2010
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Sales taxes $ 13,418,740 $ 12,043,584 $ (1,375,156)
Franchise taxes 475,000 509,285 34,285
Intergovernmental 11,047,556 10,725,866 (321,690)
Licenses,fees&permits 1,313,890 1,055,270 (258,620)
Fines, forfeitures&penalties 286,603 202,144 (84,459)
Charges for services 1,039,137 913,638 (125,499)
Contributions and donations 59 59
Investment earnings 232,730 62,200 (170,530)
Other 125,000 183,552 58,552
Total revenues 27,938,656 25,695,598 (2,243,058)
Expenditures:
Current-
General government 10,672,675 8,912,829 1,759,846
Public safety 13,639,734 12,919,307 720,427
Culture and recreation 3,162,880 3,157,369 5,511
Capital outlay 558,416 (558,416)
Total expenditures 27,475,289 25,547,921 1,927,368
Excess(deficiency)of revenues over
expenditures 463,367 147,677 (315,690)
Other financing sources(uses):
Transfers out (2,030,637) (4,183,686) (2,153,049)
Total other financing sources(uses) (2,030,637) (4,183,686) (2,153,049)
Change in fund balances (1,567,270) (4,036,009) (2,468,739)
Fund balances,July 1,2009 1,567,270 15,940,438 14,373,168
Fund balances,June 30,2010 $ $ 11,904,429 $ 11,904,429
See accompanying notes to this schedule.
Page 62
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-HURF
YEAR ENDED JUNE 30,2010
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Sales taxes $ 1,899,884 $ 801,570 $ (1,098,314)
Intergovernmental 2,656,128 2,886,453 230,325
Licenses,fees&permits 53,141 53,141
Investment earnings 8,692 8,692
Other 112,392 14,478 (97,914)
Total revenues 4,668,404 3,764,334 (904,070)
Expenditures:
Current-
Highway and streets 6,921,832 2,972,645 3,949,187
Capital outlay 1,384,893 594,755 790,138
Total expenditures 8,306,725 3,567,400 4,739,325
Excess(deficiency)of revenues over
expenditures (3,638,321) 196,934 3,835,255
Other financing sources(uses):
Transfers out (431,305) (228,272) 203,033
Total other financing sources(uses) (431,305) (228,272) 203,033
Change in fund balances (4,069,626) (31,338) 4,038,288
Fund balances,July 1,2009 4,069,626 4,227,306 157,680
Fund balances,June 30,2010 $ $ 4,195,968 $ 4,195,968
See accompanying notes to this schedule.
Page 63
TOWN OF ORO VALLEY, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2010
NOTE 1 —BUDGETARY BASIS OF ACCOUNTING
The adopted budget of the Town is prepared on the modified accrual basis of accounting.
Page 64
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 65
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Page 66
OTHER MAJOR GOVERNMENTAL FUNDS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES—BUDGET AND ACTUAL
Page 67
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-MUNICIPAL DEBT SERVICE
YEAR ENDED JUNE 30,2010
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Investment earnings $ 2,000 $ 107 $ (1,893)
Total revenues 2,000 107 (1,893)
Expenditures:
Debt service-
Principal retirement 700,867 699,010 1,857
Interest and fiscal charges 467,188 465,950 1,238
Payment to bond escrow agent 6,279,112 (6,279,112)
Bond issuance costs 26,620 26,550 70
Total expenditures 1,194,675 7,470,622 (6,275,947)
Excess(deficiency)of revenues over
expenditures (1,192,675) (7,470,515) (6,277,840)
Other financing sources(uses):
Transfers in 1,034,297 9,240,679 8,206,382
Total other financing sources(uses) 1,034,297 9,240,679 8,206,382
Change in fund balances (158,378) 1,770,164 1,928,542
Fund balances,July 1,2009 158,378 147,747 (10,631)
Fund balances,June 30,2010 $ $ 1,917,911 $ 1,917,911
Page 68
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-ORACLE ROAD DEBT SERVICE
YEAR ENDED JUNE 30,2010
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Special assesments $ 367,203 $ 368,152 $ 949
Total revenues 367,203 368,152 949
Expenditures:
Debt service-
Principal retirement 271,961 215,000 56,961
Interest and fiscal charges 192,899 152,497 40,402
Total expenditures 464,860 367,497 97,363
Change in fund balances (97,657) 655 98,312
Fund balances,July 1,2009 97,657 11,069 (86,588)
Fund balances,June 30,2010 $ $ 11,724 $ 11,724
Page 69
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-TOWNWIDE ROADWAY DEVELOPMENT IMPACT FEES
YEAR ENDED JUNE 30,2010
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Impact fees $ 1,051,549 $ 341,034 $ (710,515)
Intergovernmental 5,919,487 4,059,901 (1,859,586)
Investment earnings 16,311 16,311
Other 74,679 18,000 (56,679)
Total revenues 7,045,715 4,435,246 (2,610,469)
Expenditures:
Capital outlay 3,710,453 1,728,168 1,982,285
Debt service-
Principal retirement 5,339,413 2,486,867 2,852,546
Interest and fiscal charges 457,605 213,133 244,472
Total expenditures 9,507,471 4,428,168 5,079,303
Change in fund balances (2,461,756) 7,078 2,468,834
Fund balances,July 1,2009 2,461,756 2,265,280 (196,476)
Fund balances,June 30,2010 $ $ 2,272,358 $ 2,272,358
Page 70
NON-MAJOR GOVERNMENTAL FUNDS
Page 71
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-ALL NON-MAJOR GOVERNMENTAL FUNDS-BY FUND TYPE
JUNE 30,2010
Total
Non-Major
Governmental
Special Revenue Capital Projects Funds
ASSETS
Cash and cash equivalents $ 1,954,781 $ 1,621,698 $ 3,576,479
Accounts receivable 45,012 45,012
Total assets $ 1,954,781 $ 1,666,710 $ 3,621,491
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 86,578 $ 6,024 $ 92,602
Accrued wages and benefits 16,391 16,391
Customer deposits payable 179,257 179,257
Total liabilities 282,226 6,024 288,250
Fund balances:
Unreserved:
Undesignated 1,672,555 1,660,686 3,333,241
Total fund balances 1,672,555 1,660,686 3,333,241
Total liabilities and fund balances $ 1,954,781 $ 1,666,710 $ 3,621,491
Page 72
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 30,2010
Total
Non-Major
Governmental
Special Revenue Capital Projects Funds
Revenues:
Sales taxes $ 125,711 $ $ 125,711
Impact fees 243,079 243,079
Intergovernmental 223,518 45,011 268,529
Fines, forfeitures&penalties 409,887 409,887
Charges for services 51,817 51,817
Investment earnings 8,315 8,315
Total revenues 819,248 288,090 1,107,338
Expenditures:
Current-
General government 510,639 29,310 539,949
Public safety 59,984 59,984
Highway and streets 502,911 502,911
Capital outlay 34,935 273,491 308,426
Total expenditures 1,108,469 302,801 1,411,270
Excess(deficiency)of revenues over expenditures (289,221) (14,711) (303,932)
Other financing sources(uses):
Transfers in 302,000 470,000 772,000
Transfers out (5,600,721) (5,600,721)
Total other financing sources(uses) 302,000 (5,130,721) (4,828,721)
Change in fund balances 12,779 (5,145,432) (5,132,653)
Fund balances,beginning of year 1,659,776 6,806,118 8,465,894
Fund balances,end of year $ 1,672,555 $ 1,660,686 $ 3,333,241
Page 73
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Page 74
NON-MAJOR 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.
Revegetation Assurances — accounts for monies received from developers to help ensure
developments are properly revegetated to Town standards.
State Seizures and Forfeitures—accounts for state police seizures and forfeitures received by the
Town.
Federal Seizures and Forfeitures—accounts for federal police seizures and forfeitures received by
the Town.
Bed Tax— accounts for the collection of the 6 percent bed tax revenues which funds projects for
parks and recreation, economic development and Naranja Town Site developments.
Public Transportation—accounts for the operation of the Town's public transportation system.
Impound Fee—accounts for the collection of administrative fees for processing vehicles impounded
by the Oro Valley police department.
Page 75
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30,2010
Revegetation State Seizures Federal Seizures
Assurances and Forfeitures and Forfeitures Bed Tax
ASSETS
Cash and cash equivalents $ 240,366 $ 207,221 $ 281,431 $ 1,054,083
Total assets $ 240,366 $ 207,221 $ 281,431 $ 1,054,083
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ 16,099 $ 370 $ 64,355
Accrued wages and benefits 183
Customer deposits payable 179,257
Total liabilities 179,257 16,099 370 64,538
Fund balances:
Unreserved:
Undesignated 61,109 191,122 281,061 989,545
Total fund balances 61,109 191,122 281,061 989,545
Total liabilities and fund balances $ 240,366 $ 207,221 $ 281,431 $ 1,054,083
Page 76
Public
Transportation Impound Fee Totals
$ 168,232 $ 3,448 $ 1,954,781
$ 168,232 $ 3,448 $ 1,954,781
$ 5,705 $ 49 $ 86,578
12,809 3,399 16,391
179,257
18,514 3,448 282,226
149,718 1,672,555
149,718 1,672,555
$ 168,232 $ 3,448 $ 1,954,781
Page 77
TOWN OF ORO VALLEY,ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30,2010
Revegetation State Seizures Federal Seizures
Assurances and Forfeitures and Forfeitures
Revenues:
Sales taxes $ $ $
Intergovernmental
Fines, forfeitures&penalties 122,760 231,917
Charges for services
Investment earnings (4,571) 2,770 3,132
Total revenues (4,571) 125,530 235,049
Expenditures:
Current-
General government
Public safety 39,900 20,084
Highway and streets
Capital outlay 17,738 13,173
Total expenditures 57,638 33,257
Excess(deficiency)of revenues over expenditures (4,571) 67,892 201,792
Other financing sources(uses):
Transfers in
Total other financing sources(uses)
Change in fund balances (4,571) 67,892 201,792
Fund balances,beginning of year 65,680 123,230 79,269
Fund balances,end of year $ 61,109 $ 191,122 $ 281,061
Page 78
Public
Bed Tax Transportation Impound Fee Totals
$ 125,711 $ $ $ 125,711
223,518 223,518
55,210 409,887
51,817 51,817
5,777 1,207 8,315
131,488 276,542 55,210 819,248
415,429 95,210 510,639
59,984
502,911 502,911
4,024 34,935
415,429 506,935 95,210 1,108,469
(283,941) (230,393) (40,000) (289,221)
302,000 302,000
302,000 302,000
(283,941) 71,607 (40,000) 12,779
1,273,486 78,111 40,000 1,659,776
$ 989,545 $ 149,718 $ $ 1,672,555
Page 79
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 30,2010
Revegetation Assurances
Variance-
Positive
Budget* Actual (Negative)
Revenues:
Sales taxes $ $ $
Intergovernmental
Fines, forfeitures&penalties
Charges for services
Investment earnings (4,571) (4,571)
Other
Total revenues (4,571) (4,571)
Expenditures:
Current-
General government
Public safety
Highway and streets
Capital outlay
Total expenditures
Excess(deficiency)of revenues over
expenditures (4,571) (4,571)
Other financing sources(uses):
Transfers in
Transfers out
Total other financing sources(uses)
Change in fund balances (4,571) (4,571)
Fund balances(deficits),July 1,2009 65,680 65,680
Fund balances,June 30,2010 $ $ 61,109 $ 61,109
*The Revegetation Assurances Fund was included in the Town's budget,however,the budget was-0-.
Page 80
State Seizures and Forfeitures Federal Seizures and Forfeitures
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ $ $ $ $ $
178,000 122,760 (55,240) 279,000 231,917 (47,083)
2,770 2,770 3,132 3,132
178,000 125,530 (52,470) 279,000 235,049 (43,951)
331,607 39,900 291,707 167,001 20,084 146,917
147,419 17,738 129,681 109,535 13,173 96,362
479,026 57,638 421,388 276,536 33,257 243,279
(301,026) 67,892 368,918 2,464 201,792 199,328
(301,026) 67,892 368,918 2,464 201,792 199,328
301,026 123,230 (177,796) (2,464) 79,269 81,733
$ $ 191,122 $ 191,122 $ $ 281,061 $ 281,061
(Continued)
Page 81
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 30,2010
(Continued)
Bed Tax
Variance-
Positive
Budget Actual (Negative)
Revenues:
Sales taxes $ 550,181 $ 125,711 $ (424,470)
Intergovernmental
Fines, forfeitures&penalties
Charges for services
Investment earnings 5,777 5,777
Other 13,512 (13,512)
Total revenues 563,693 131,488 (432,205)
Expenditures:
Current-
General government 1,992,528 415,429 1,577,099
Public safety
Highway and streets
Capital outlay
Total expenditures 1,992,528 415,429 1,577,099
Excess(deficiency)of revenues over
expenditures (1,428,835) (283,941) 1,144,894
Other financing sources(uses):
Transfers in
Transfers out
Total other financing sources(uses)
Change in fund balances (1,428,835) (283,941) 1,144,894
Fund balances(deficits),July 1,2009 1,428,835 1,273,486 (155,349)
Fund balances,June 30,2010 $ $ 989,545 $ 989,545
Page 82
Public Transportation Impound Fee
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ $ $ $ $ $
188,544 223,518 34,974
60,000 55,210 (4,790)
51,817 51,817
1,207 1,207
194,900 (194,900)
383,444 276,542 (106,902) 60,000 55,210 (4,790)
100,000 95,210 4,790
651,164 502,911 148,253
5,210 4,024 1,186
656,374 506,935 149,439 100,000 95,210 4,790
(272,930) (230,393) 42,537 (40,000) (40,000)
302,000 302,000
(100,973) 100,973
201,027 302,000 100,973
(71,903) 71,607 143,510 (40,000) (40,000)
71,903 78,111 6,208 40,000 40,000
$ $ 149,718 $ 149,718 $ $ $
(Continued)
Page 83
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 30,2010
(Concluded)
Totals
Variance-
Positive
Budget Actual (Negative)
Revenues:
Sales taxes $ 550,181 $ 125,711 $ (424,470)
Intergovernmental 188,544 223,518 34,974
Fines,forfeitures&penalties 517,000 409,887 (107,113)
Charges for services 51,817 51,817
Investment earnings 8,315 8,315
Other 208,412 (208,412)
Total revenues 1,464,137 819,248 (644,889)
Expenditures:
Current-
General government 2,092,528 510,639 1,581,889
Public safety 498,608 59,984 438,624
Highway and streets 651,164 502,911 148,253
Capital outlay 262,164 34,935 227,229
Total expenditures 3,504,464 1,108,469 2,395,995
Excess(deficiency)of revenues over
expenditures (2,040,327) (289,221) 1,751,106
Other financing sources(uses):
Transfers in 302,000 302,000
Transfers out (100,973) 100,973
Total other financing sources(uses) 201,027 302,000 100,973
Change in fund balances (1,839,300) 12,779 1,852,079
Fund balances(deficits),July 1,2009 1,839,300 1,659,776 (179,524)
Fund balances,June 30,2010 $ $ 1,672,555 $ 1,672,555
Page 84
NON-MAJOR 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.
Capital Asset Replacement—accounts for revenues dedicated for the routine replacement of Town
vehicles, computers, and other equipment.
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.
Pima County Bond Projects—accounts for the revenues and expenditures for historic preservation
capital improvements funded by grants and from Pima County bond funds.
Municipal Building Fund—accounts for the bond proceeds issued to acquire land and construct the
public works facility.
Page 85
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Page 86
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-NON-MAJOR CAPITAL PROJECTS FUNDS
JUNE 30,2010
Capital Asset General Impact Pima County
Replacement Fees Bond Projects Totals
ASSETS
Cash and cash equivalents $ 499,639 $ 367,145 $ 754,914 $ 1,621,698
Accounts receivable 45,012 45,012
Total assets $ 499,639 $ 367,145 $ 799,926 $ 1,666,710
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ $ 6,024 $ 6,024
Total liabilities 6,024 6,024
Fund balances:
Unreserved:
Undesignated 499,639 367,145 793,902 1,660,686
Total fund balances 499,639 367,145 793,902 1,660,686
Total liabilities and fund balances $ 499,639 $ 367,145 $ 799,926 $ 1,666,710
Page 87
TOWN OF ORO VALLEY,ARIZONA
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30,2010
Capital Asset General Impact Pima County
Replacement Fees Bond Projects
Revenues:
Impact fees $ $ 243,079 $
Intergovernmental 45,011
Total revenues 243,079 45,011
Expenditures:
Current-
General government 29,310
Capital outlay 55,653
Total expenditures 84,963
Excess(deficiency)of revenues over expenditures 243,079 (39,952)
Other financing sources(uses):
Transfers in 470,000
Transfers out
Total other financing sources(uses) 470,000
Change in fund balances 243,079 430,048
Fund balances,beginning of year 499,639 124,066 363,854
Fund balances,end of year $ 499,639 $ 367,145 $ 793,902
Page 88
Municipal
Building Totals
$ $ 243,079
45,011
288,090
29,310
217,838 273,491
217,838 302,801
(217,838) (14,711)
470,000
(5,600,721) (5,600,721)
(5,600,721) (5,130,721)
(5,818,559) (5,145,432)
5,818,559 6,806,118
$ $ 1,660,686
Page 89
TOWN OF ORO VALLEY,ARIZONA
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL-NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30,2010
Capital Asset Replacement
Variance-
Positive
Budget* Actual (Negative)
Revenues:
Impact fees $ $ $
Intergovernmental
Investment earnings
Total revenues
Expenditures:
Current-
General government
Capital outlay
Total expenditures
Excess(deficiency)of revenues over
expenditures
Other financing sources(uses):
Transfers in
Transfers out
Total other financing sources(uses)
Change in fund balances
Fund balances,July 1,2009 499,639 499,639
Fund balances,June 30,2010 $ $ 499,639 $ 499,639
*The Capital Asset Replacement Fund was included in the Town's budget,however,the budget was-0-.
Page 90
General Impact Fees Pima County Bond Projects
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ 443,959 $ 243,079 $ (200,880) $ $ $
633,515 45,011 (588,504)
443,959 243,079 (200,880) 633,515 45,011 (588,504)
679,705 679,705 495,587 29,310 466,277
941,007 55,653 885,354
679,705 679,705 1,436,594 84,963 1,351,631
(235,746) 243,079 478,825 (803,079) (39,952) 763,127
470,000 470,000
470,000 470,000
(235,746) 243,079 478,825 (333,079) 430,048 763,127
235,746 124,066 (111,680) 333,079 363,854 30,775
$ $ 367,145 $ 367,145 $ $ 793,902 $ 793,902
(Continued)
Page 91
TOWN OF ORO VALLEY,ARIZONA
COMBINING SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL-NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30,2010
(Concluded)
Municipal Building
Variance-
Positive
Budget Actual (Negative)
Revenues:
Impact fees $ $ $
Intergovernmental
Investment earnings 15,295 (15,295)
Total revenues 15,295 (15,295)
Expenditures:
Current-
General government
Capital outlay 5,868,462 217,838 5,650,624
Total expenditures 5,868,462 217,838 5,650,624
Excess(deficiency)of revenues over
expenditures (5,853,167) (217,838) 5,635,329
Other financing sources(uses):
Transfers in
Transfers out (5,600,721) (5,600,721)
Total other financing sources(uses) (5,600,721) (5,600,721)
Change in fund balances (5,853,167) (5,818,559) 34,608
Fund balances,July 1,2009 5,853,167 5,818,559 (34,608)
Fund balances,June 30,2010 $ $ $
Page 92
Totals
Variance-
Positive
Budget Actual (Negative)
$ 443,959 $ 243,079 $ (200,880)
633,515 45,011 (588,504)
15,295 (15,295)
1,092,769 288,090 (804,679)
1,175,292 29,310 1,145,982
6,809,469 273,491 6,535,978
7,984,761 302,801 7,681,960
(6,891,992) (14,711) 6,877,281
470,000 470,000
(5,600,721) (5,600,721)
470,000 (5,130,721) (5,600,721)
(6,421,992) (5,145,432) 1,276,560
6,421,992 6,806,118 384,126
$ $ 1,660,686 $ 1,660,686
Page 93
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Page 94
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 school districts.
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.
Page 95
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Page 96
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DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
Town of Oro
Town of Oro Town of Oro Valley Town of Oro
Fiscal Valley Valley Construction Valley
Year Sales Tax Bed Tax Sales Tax Utility Sales Tax Pima County
2001 2.00% 3.00% 2.00% 0.00% 5.60%
2002 2.00% 3.00% 2.00% 0.00% 5.60%
2003 2.00% 3.00% 2.00% 0.00% 5.60%
2004 2.00% 3.00% 4.00% 0.00% 5.60%
2005 2.00% 3.00% 4.00% 0.00% 5.60%
2006 2.00% 6.00% 4.00% 0.00% 6.10%
2007 2.00% 6.00% 4.00% 2.00% 6.10%
2008 2.00% 6.00% 4.00% 2.00% 6.10%
2009 2.00% 6.00% 4.00% 2.00% 6.10%
2010 2.00% 6.00% 4.00% 2.00% 7.10%
Source: Arizona Department of Revenue
Page 107
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DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
JUNE 30, 2010
(UNAUDITED)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Pima County $ 420,261,000 7.05% $ 29,628,401
Pima County Community College District 25,881,294 7.05% 1,824,631
Amphitheater Unified School Distrist No. 10 59,870,000 39.48% 23,636,676
Town of Oro Valley 13,597,883 100.00% 13,597,883
Total direct and overlapping debt $ 68,687,591
Source: Pima County, Pima County Community College District and Amphitheater Unified School District No. 10.
(1) Proportion applicable to the Town of Oro Valley, Arizona, is computed on the ratio of secondary
assessed valuation for 2009-10.
Page 109
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CALCULATION OF LEGAL DEBT MARGIN
JUNE 30, 2010
(UNAUDITED)
Net secondary assessed valuation $ 693,924,598
Water, Sewer, Light, Parks, Open Space and
Recreational Facility Bonds
Debt limit- 20% of secondary net assessed valuation $ 138,784,920
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 $ 138,784,920
All other general obligation bonds
Debt Limit- 6% of secondary net assessed valuation 41,635,476
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 41,635,476
Total legal debt margin $ 180,420,396
Source: Pima County Assessor's Office
Page 111
TOWN OF ORO VALLEY,ARIZONA
PLEDGED-REVENUE COVERAGE
LAST TEN FISCAL YEARS
(UNAUDITED)
Water Utility Revenue Bonds
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
2001 $ 8,330,951 $ 1,683,544 $ 1,926,914 $ 3,610,458 2.31
2002 9,435,130 1,768,040 2,173,192 3,941,232 2.39
2003 10,380,720 1,578,040 2,395,359 3,973,399 2.61
2004 12,202,664 1,478,710 2,650,195 4,128,905 2.96
2005 12,544,928 1,473,710 2,949,409 4,423,119 2.84
2006 14,989,621 1,907,362 2,888,226 4,795,588 3.13
2007 14,810,173 2,336,330 2,552,081 4,888,411 3.03
2008 17,668,212 1,981,898 2,452,583 4,434,481 3.98
2009 16,223,544 2,011,100 2,784,444 4,795,544 3.38
2010 15,207,113 2,485,990 2,689,427 5,175,417 2.94
Governmental Revenue Bonds
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
2001 $15,220,985 $ 140,000 $ 65,935 $ 205,935 73.91
2002 16,268,695 486,456 320,846 807,302 20.15
2003 16,435,018 346,960 320,599 667,559 24.62
2004 19,837,894 361,290 386,228 747,518 26.54
2005 21,011,720 456,290 433,108 889,398 23.62
2006 25,018,727 452,638 415,640 868,278 28.81
2007 14,287,963 788,670 642,711 1,431,381 9.98
2008 14,529,809 708,102 501,150 1,209,252 12.02
2009 13,447,862 733,900 486,372 1,220,272 11.02
2010 12,169,295 699,010 933,536 1,632,546 7.45
Certificates of Participation
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
2001 $15,220,985 $ 155,000 $ 253,322 $ 408,322 37.28
2002 16,268,695 160,000 245,938 405,938 40.08
2003 16,435,018 170,000 237,994 407,994 40.28
2004 19,837,894 180,000 15,768 195,768 101.33
2005 21,011,720 190,000 26,690 216,690 96.97
2006 25,018,727 205,000 16,566 221,566 112.92
2007 14,287,963 - - - 0.00
2008 14,529,809 - - - 0.00
2009 13,447,862 - - - 0.00
2010 12,169,295 - - - 0.00
Special Assessment
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
2001 $ - $ - $ - $ - 0.00
2002 - - - - 0.00
2003 - - - - 0.00
2004 - - - - 0.00
2005 - - - - 0.00
2006 - - 176,967 176,967 0.00
2007 379,840 185,000 186,828 371,828 0.00
2008 365,810 195,000 177,577 372,577 0.98
2009 367,539 205,000 248,429 453,429 0.81
2010 368,152 215,000 152,203 367,203 1.00
Source: Town of Oro Valley Finance Department
Page 112
TOWN OF ORO VALLEY, ARIZONA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
(UNAUDITED)
Personal Per
Income Capita
(thousands Personal Unemployment
Year Population of dollars) Income Rate
2001 29,700 $ 980,992,800 33,030 2.0%
2002 34,050 1,158,413,770 34,021 2.0%
2003 37,260 1,305,649,691 35,042 2.9%
2004 37,700 1,360,700,031 36,093 2.6%
2005 39,310 1,461,373,787 37,176 2.5%
2006 40,215 1,539,868,259 38,291 3.0%
2007 42,551 1,678,195,258 39,440 2.6%
2008 43,651 1,773,226,205 40,623 3.0%
2009 43,694 1,828,222,176 41,841 5.1%
2010 43,521 1,875,613,105 43,097 6.2%
Source: US Census Bureau, Arizona Employment statistics and Pima Association of Governments
Page 113
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WATER RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
Base Rate Tier 1 Tier 2 Tier 3 Tier 4 GPF
Year monthly per 1,000 per 1,000 per 1,000 per 1,000 per 1,000
2001 $ 11.25 $ 1.78 $ 2.08 $ 2.31 N/A N/A
2002 12.00 1.90 2.35 3.00 N/A N/A
2003 12.00 1.90 2.35 3.00 N/A N/A
2004 12.30 1.92 2.55 3.25 N/A $ 0.21
2005 12.65 1.98 2.68 3.58 N/A 0.21
2006 12.65 1.98 2.68 3.58 N/A 0.21
2007 13.25 2.08 2.81 3.76 N/A 0.25
2008 13.25 2.08 2.81 3.76 $ 5.00 0.40
2009 13.91 2.18 2.95 3.95 5.25 0.55
2010 14.19 2.20 2.99 4.03 5.38 0.75
Source: Town of Oro Valley Water Utility
Page 117
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