HomeMy WebLinkAboutFinancial Reports-Comprehensive Annual Financial Report (CAFR) - 6/30/2007 RO VALLEY
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Comprehensive Annual Financial Report
for the Fiscal Year Ended June 30, 2007
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11000 North La Canada Drive • Oro Valley, Arizona 85737
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
Prepared by:
Finance Department
Stacey Lemos
Finance Director
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TOWN OF ORO VALLEY,ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Letter of Transmittal
Organizational Chart ix
List of Town Officials x
GFOA Certificate of Achievement xi
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, 2007
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 63
Highway User Fund 64
Note to Required Supplementary Information 65
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND
SCHEDULES
Other Major Governmental Fund Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual:
Oracle Road Debt Service Fund 70
Townwide Roadway Development Impact Fees Fund 71
Non-Major Governmental Funds:
Combining Balance Sheet—All Non-Major Governmental Funds
By Fund Type 75
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances—All Non-Major Governmental Funds —By Fund Type 76
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
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 80
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 82
Combining Schedule of Revenues,Expenditures and
Changes in Fund Balances —Budget and Actual 84
Non-Major Debt Service Fund:
Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual 91
Non-Major Capital Projects Funds:
Combining Balance Sheet 95
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances 97
Combining Schedule of Revenues, Expenditures and
Changes in Fund Balances—Budget and Actual 98
TOWN OF ORO VALLEY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2007
TABLE OF CONTENTS (Concl'd)
STATISTICAL SECTION Page
Financial Trends:
Net Assets by Component 103
Changes in Net Assets 104
Fund Balances of Governmental Funds 106
Changes in Fund Balances of Governmental Funds 108
Revenue Capacity:
Principal Employers 110
Taxable Sales by Category 111
Direct and Overlapping Sales Tax Rates 112
Debt Capacity:
Ratio of Outstanding Debt by Type 113
Direct and Overlapping Governmental Activities Debt 114
Legal Debt Margin Information 115
Calculation of Legal Debt Margin 116
Pledged-Revenue Coverage 117
Demographic and Economic Information:
County-Wide Demographic and Economic Statistics 118
Operating Information:
Full-Time-Equivalent Town Employees by Function 119
Water Utility Revenues by User Type 120
Operating Indicators by Function 121
Water Rates 122
Capital Assets Statistics by Function 123
INTRODUCTORY SECTION
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TOWN OF ORO VALLEY
11000 N.LA CANADA DRIVE
ORO VALLEY,ARIZONA 85737
Administrative Offices(520)229-4700 Fax(520)297-0428
www.townoforovalley.com
•
OUN D Eo
November 15, 2007
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, 2007.
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 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, 2007, 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 auditor 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, 2007, 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's MD&A can be found immediately following the report of the independent auditors.
PROFILE OF THE TOWN
The Town of Oro Valley was incorporated in 1974. It is located in northeastern Pima County and
has a land area of 34.85 square miles. The Town's current population is estimated at 42,917.
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 and the hiring of
the Town Manager. The Town Manager is responsible for implementation of the policies of the
Town Council. The Town Manager appoints all department heads except the Town Attorney and
Magistrate. The Chief of Police is appointed by the Town Council and Town Manager.
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.
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. 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.
A schedule of revenues, expenditures and changes in fund balances — budget and actual are
provided in this report for the General and Highway User Funds. These schedules are presented
as required supplementary information. For other Governmental Funds, this schedule is
presented in the Combining and Individual Fund Statements and Schedules section of this report.
11
MAJOR INITIATIVES AND ACCOMPLISHMENTS FOR THE YEAR
During FY 2006/07, the Town continued to invest in programs and amenities that keep Oro
Valley the Community of Excellence it strives to be. During this time, the Mayor and Town
Council adopted a strategic plan which identified the following focus areas:
• Financial Sustainability
• Quality of Life
• Economic Development
• Protection of Environment and Cultural Assets
• Leadership and Communication
The following are some of the highlights and accomplishments of the Town during the fiscal
year:
Town Council
• Directed the Town Manager to implement an Enterprise Resource Planning (ERP)
system, program-based budgeting, a financial sustainability plan and program evaluations
to provide financial sustainability and accountability within Town governance
• Explored annexation opportunities in the Southwest Area and conceptual planning with
the Arizona State Land Department for State land north of Town
• Furthered the development of Steam Pump Ranch, Honey Bee Village and Naranja Town
Site
Town Clerk
• Improved citizen access to public information by providing on-line full text search
capability of the Oro Valley Town Code and unveiled live voice streaming capability of
regular Town Council meetings and other board and commission meetings
Economic Development
• Launched the Oro Valley Business Navigator, an information database focusing on Oro
Valley businesses
• Developed for Council adoption the Community Economic Development Strategy for
Oro Valley
Finance
• Received an upgraded bond rating to `AA-` from Standard& Poor's
• Began implementation of the Tyler MUNIS Enterprise Resource Planning (ERP) System
• Continued transition to a program and performance-based budgeting model
• Completed 10-year Financial Sustainability Plan for Oro Valley
Police
• Completed new 5-year Strategic Plan for department through 2012
• One of the first organizations in the area to implement Reverse 911 System
• Sponsored training by nationally recognized trainers, attended by police officers from the
United States and Canada
• Applied for and received grant funding for new 2007 Police BMW RT 1200 motorcycles
• Applied for and received grant funding from ATF for bomb detection canine
Planning and Zoning
• Completed Honey Bee Village Archaeological Preserve Implementation Plan
111
• Completed review of all plans for Oro Valley Marketplace, Steam Pump Village and
Ventana Medical Systems expansion
• Initiated Steam Pump Ranch Master Plan process
• Coordinated successful Citizens Planning Institute classes resulting in 35 graduates
Building Safety
• Developed an implementation plan for improving the permitting, inspection and
information processes
• Provided on-line access to information for all active and historical permits
• Provided pre-construction and construction assistance for large projects including: Oracle
Crossings, Steam Pump Village, Ventana Medical Systems, Northwest Hospital
expansion and Oro Valley Marketplace
Parks and Recreation
• Completed the Naranja Town Site Programming and Concept Design Process
• Completed the installation of 3-1/2 miles of natural trails through the Naranj a Town Site
• Resurfaced basketball and tennis courts at Riverfront Park
• Completed the Town's Naming and Branding Policy
Public Works
• Began implementation of Pavement Preservation Program to assess the overall condition
of Town streets
• Crack sealed 85 lane miles of the Town's paved streets
• Repaired bridge deck joints on Honey Bee bridge
• Installed a box culvert over Highlands Wash to prevent the flooding of Lambert Lane
during major rainstorms
• Responded to 106 police emergency call-outs
• Began construction on the widening of First Avenue from Lambert Lane to Tangerine
Road
• Completed the CDO Linear Park design
Transit Service
• Reached an all-time record for annual passenger trips totaling 17,507
• Purchased new dispatching and scheduling software to increase productivity and
eliminate manual scheduling
Water Utility
• Took 943 water quality samples with all results meeting federal, state and local water
quality regulations
• Delivered 488 million gallons of reclaimed water to area golf courses
• Completed design of Phase 2 of the reclaimed water system
• Performed 206 residential water use audits
• Analyzed and updated Alternative Water Resource Development Impact Fees to pay for
future delivery of Central Arizona Project(CAP) water to Oro Valley
FACTORS AFFECTING FINANCIAL CONDITION
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.
iv
Local Economy. The local economic outlook for the Town of Oro Valley saw a continued
slowdown in residential construction activity during FY 2006/07. This was offset, however, by a
marked increase in commercial construction activity during the year. Sales tax collections from
construction, retail trade and restaurants and bars and hotel/motel lodging are the major
industries which accounted for 88% of all sales tax receipts for fiscal year 2006/07. As indicated
in prior years, the Town of Oro Valley relies heavily on one-time construction-related revenues
to provide funding for delivering services and programs to its residents. The Town currently
does not have a property tax in place, therefore the budget is very dependent on sales taxes and
state shared revenues to fund ongoing programs and services. As the Town faces expected
declines in residential construction over the next 5-10 years, efforts continue to be made to
diversify our revenues, explore the feasibility of additional revenue sources and cost control
efforts.
Construction sales tax collections for fiscal year 2006/07 increased by $2,007,187 or 41% as
compared to fiscal year 2005/06. Demonstrating the decline in residential development, single
family residential building permits issued during fiscal year 2006/07 totaled 335, down from 388
permits issued in fiscal year 2005/06.
Sales tax collections from retail trade totaled $3,664,500 for this fiscal year. This is an increase
of $435,169, or 13%, over last fiscal year. Two new shopping centers, Oracle Crossings and
Steam Pump Village, opened for business during FY 2006/07 and the construction of several
other centers are scheduled to be completed over the next two to four years. When all of the
expected commercial construction activity is completed, it is anticipated that there will be over
two (2) million square feet of commercial retail and office space added to the Town over this
time period. As such, the Town can expect to see one-time commercial building-related
revenues sustained at higher levels over the next two to four years, as well as an increase in
related retail sales taxes as those commercial centers open for business. Once this growth in
commercial construction subsides, however, it is anticipated that those one-time construction-
related revenues will significantly decrease as well.
In a further effort to replace and supplement the Town's declining construction-related revenues,
the Town continues to expand its annexation planning and economic development efforts. The
Town is currently assessing the annexation potential of 15 square miles of land north of the
Town that is owned by the Arizona State Land Department.
Long-term financial planning. The Town's citizen-based Finance and Bond Committee
continues to serve as a source for the Town Council in analyzing and providing
recommendations for the Town's financial future. During FY 2006/07, the Committee worked
with Town staff on the preparation of the Town's first 10-Year Financial Sustainability Plan.
This plan encompassed a 10-year projection of the costs of existing Town service levels, the
incremental costs of increased service levels, identification of gaps in funding levels or expected
revenue shortfalls, and recommended service level changes or additional revenue solutions to
meet the Town's needs over the long term. The scope of this analysis focused primarily on the
General Fund and the Highway User Revenue Fund. In summary, this plan forecasted that the
Town could sustain its existing service and program levels into the future with current revenue
sources, but should the Town or residents desire increases in programs or service levels requiring
additional staff or resources, then additional, stable revenue sources would need to be
implemented to pay for them.
The Town also continued its migration from a traditional line item budget to a performance and
program-based budgeting approach during FY 2006/07. By doing so, the Town will be able to
measure the specific costs of providing programs and services to its residents, as well as measure
v
the efficiency with which those programs are provided. To facilitate this change in approach, the
Town is implementing a new enterprise resource planning (ERP) system to be completed in
fiscal year 2007/08. This is an integrated financial reporting system designed to more accurately
capture costs by program area.
The Town Council continues to analyze and study all available revenue sources available to the
Town in an effort to further diversify its revenue base and provide financial sustainability into
the future.
Cash Management. The Town uses a system of consolidated cash management. Cash from all
funds is pooled in a central disbursement fund. Cash to be used for payment of current
expenditures is maintained in a checking account; the balance of cash is maintained on deposit
with the Arizona State Treasurer's Local Government Investment Pool. Cash in the Local
Government Investment Pool (LGIP) is available upon 24 hours notice. The LGIP invests in
U.S. Treasury Notes, U.S. Treasury Bills and federally guaranteed insurance contracts. The
average interest rate for the fiscal year 2005/06 was 3.939% and 5.200% in fiscal year 2006/07.
Investments held in the LGIP earned $2,038,821 in interest revenue for the year ended June 30,
2007. The account at LGIP for the construction of the reclaimed water system improvement
project and potable water system improvements and expansion earned $188,544 in interest
revenue.
Trust accounts are held with Wells Fargo Bank for annual debt service payments. Funds on
deposit in the trust accounts are invested solely in obligations that are issued or guaranteed by the
U.S. Treasury, such as U.S. Treasury bills, bonds and notes ("U.S. Treasury Securities").
Interest on investments held with the trustee earned$160,781 for fiscal year 2006/07.
A debt service reserve fund was established in 2005 for the construction of the Municipal
Operations Center land and building construction. These funds are maintained in trust accounts
with the Bank of New York Trust Co. N.A. Funds on deposit in the trust accounts are invested
solely in obligations that are issued or guaranteed by the U.S. Treasury, such as U.S. Treasury
bills, bonds and notes ("U.S. Treasury Securities"). Interest on investments held with the trustee
earned $34,119 for fiscal year 2006/07.
Risk Management. The Town of Oro Valley participates in the Arizona Municipal Risk Retention
Pool. Risk coverage includes general liability, errors and omissions, property and automobile
insurance. The policy insures up to $2,000,000 per incident occurrence plus any excess liability
of up to a $10,000,000 limit per occurrence per year. Coverage is provided on a claims-made
basis.
The Town participates in the Arizona Municipal Workers Compensation Pool for workers
compensation insurance coverage.
The Town of Oro Valley is self-insured for unemployment compensation. Unemployment
reserves totaled $228,593 as of June 30, 2007 for the Town's 311 full-time, 46 part-time and 67
seasonal employees. The Town did not make an unemployment contribution in fiscal year
2006/07.
vi
AWARDS AND ACKNOWLEDGMENTS
Awards. The Government Finance Officers Association (GFOA) awarded a Certificate
of Achievement for Excellence in Financial Reporting to the Town for its Comprehensive
Annual Financial Report for the year ended June 30, 2006. This report satisfied both
accounting principles generally accepted in the United States of America and applicable
legal requirements. This was the thirteenth year the Town received this prestigious
award.
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,
(..) . ,7.aaAAa4___
XF- 4,,,,vtt'S
David L. Andrews Stacey mos, CPA
Town Manager Finance Director
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TOWN OF ORO VALLEY, ARIZONA
LIST OF TOWN OFFICIALS
ELECTED OFFICIALS
Mayor Mr. Paul Loomis
Vice-Mayor Ms. Helen Dankwerth
Council Member Ms. Paula Abbott
Council Member Mr. Kenneth "K.C." Carter
Council Member Mr. Barry Gillaspie
Council Member Mr. Alfred Kunisch
Council Member Mr. Terry Parish
DEPARTMENT HEADS
Town Manager David L. Andrews
Assistant Town Manager Jerene Watson
Finance Director Stacey Lemos
Human Resources Director Sandra Abbey
Town EngineerCraig Civalier
Town Clerk Kathryn E. Cuvelier
Magistrate George Dunscomb
Interim Town Attorney Tobin Sidles
Water Utility Director Philip Saletta
Chief of Police Daniel G. Sharp
Planning and Zoning Director Sarah More
Building Safety Director Suzanne Smith
Parks and Recreation Director Ainsley A. Reeder
Information Technology Director Kevin Verville
x
Certificate of
Achievement
dor Excellence
in Financial
Reporting
Presented to
Town of Oro Valley
Arizona
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2006
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.
0,t3-F 44}% irf,"
�N17£0 S7ATES N
t Arm i President
LNICALO
*A,#910649
Executive Director
xi
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FINANCIAL SECTION
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IL"4114HEINFELD, MEECH & CO., P.C.CERTIFIED PUBLIC ACCOUNTANTS 10120 N.Oracle Road
Tucson,Arizona 85704
(520)742-2611
Gary Heinfeld,CPA,CGFM Scott W.Kies,CPA Fax(520)742-2718
Nancy A.Meech,CPA,CGFM Kimberly A.Robinson,CPA
Jennifer L. Shields,CPA Kera Badalamenti,CPA www.heinfeldmeech.com
Corey Arvizu,CPA
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 (General, Highway User Revenue, Oracle Road Debt
Service, and the Townwide Roadway Development Impact Fees Funds), and the aggregate
remaining fund information of the Town of Oro Valley, Arizona (Town), as of and for the year
ended June 30, 2007, 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 listed above, and the aggregate remaining fund information of the Town of Oro
Valley, Arizona, as of June 30, 2007, and the respective changes in financial position and cash
flows, where applicable, thereof for the year then ended in conformity with accountingrinci les
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generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
November 15, 2007, on our consideration of the Town's internal control over financial reporting
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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,
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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.
The management's discussion and analysis on pages 5 through 15 and budgetary comparison
information on pages 63 through 65 are not a required part of the basic financial statements but
are supplementary information required by the Governmental Accounting Standards Board. We
have applied certain limited procedures, which consisted principally of inquires of management
regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Town's basic financial statements. 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 basic financial statements. The combining and individual fund financial
statements and schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole. The introductory section and
statistical section have not been subjected to the auditing procedures applied in the audit of the
basic financial statements and, accordingly, we express no opinion on them.
,ems•, itke,c,,,L,
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HEINFELD, MEECH & CO., P.C.
Certified Public Accountants
November 15, 2007
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, 2007
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, 2007. 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 2006/07 as follows.
• The Town's total net assets of governmental activities increased$14.8 million to$138.5 million
and business-type activities increased$6.3 million to$38.8 million representing 78 percent and
22 percent respectively, of the total net assets of$177.3 million.
• General revenues from governmental activities accounted for $29.8 million in revenue, or 64
percent of all revenues from governmental activities. Program specific revenues in the form of
charges for services and grants and contributions accounted for$17.0 million or 36 percent of
total governmental activities revenues. The Town had$16.7 million of program revenues and
$1.2 million in general revenues related to business-type activities.
• The Town had $32.0 million in expenses related to governmental activities, an increase of 15
percent from the prior fiscal year. The Town had$11.5 million in expenses related to business-
type activities, an increase of 9 percent from the prior fiscal year.
• Among major funds,the General Fund had$29.2 million in revenues,which primarily consisted
of sales taxes and intergovernmental revenues. The total expenditures of the General Fund were
$23.2 million. The General Fund's fund balance increased from$14.1 million to$18.5 million,
due to the growth in commercial construction activity during FY 06/07,resulting in a$2 million
increase in construction sales tax revenues over FY 2005/06 totals. Sales tax recoveries($1.2M)
generated from sales tax audits also exceeded expectations. Finally, total actual expenditures
were under budget by $2 million, excluding contingencies.
• The Highway User Revenue Fund had $5.9 million in revenues which primarily consisted of
sales taxes and intergovernmental revenues. The total expenditures of the Highway User
Revenue Fund were $4.8 million.
• The Water Fund operating revenues of $12.3 million exceeded operating expenses of $8.1
million. The change in net assets of$5.9 million was due primarily to operating income of$4.2
million and $2.7 million in capital contributions from line extension agreements.
Page 5
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
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, 2007
OVERVIEW OF FINANCIAL STATEMENTS (Cont'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, Oracle Road Debt Service, and the 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 one type of proprietary fund. 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.
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 Funds as required supplementary information.
Page 7
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
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 $177.3 million as of June 30, 2007.
The largest portion of the Town's net assets(69 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 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 table presents a summary of the Town's net assets for the fiscal years ended June 30,
2007 and June 30, 2006.
2007 2006 2007 2006
Governmental Governmental Business-type Business-type
Activities Activities Activities Activities 2007 Total 2006 Total
Current and other assets $36,399,408 $ 32,846,248 $28,631,927 $27,964,323 $ 65,031,335 $ 60,810,571
Capital assets,net 125,795,995 123,405,883 77,102,895 71,677,799 202,898,890 195,083,682
Total assets,net 162,195,403 156,252,131 105,734,822 99,642,122 267,930,225 255,894,253
Current and other liabilities 7,778,755 3,997,485 6,170,121 2,595,737 13,948,876 6,593,222
Long-term liabilities 15,873,961 20,858,681 60,777,911 64,516,057 76,651,872 85,374,738
Total liabilities 23,652,716 24,856,166 66,948,032 67,111,794 90,600,748 91,967,960
Invested in capital assets,net
of related debt 106,644,847 107,413,486 15,534,043 7,240,791 122,178,890 114,654,277
Restricted 8,326,731 8,919,398 2,331,001 8,326,731 11,250,399
Unrestricted 23,571,109 15,063,081 23,252,747 22,958,536 46,823,856 38,021,617
Total net assets $138,542,687 $131,395,965 $38,786,790 $32,530,328 $177,329,477 $163,926,293
The following are significant current year transactions that have had an impact on the Statement of
Net Assets.
• The addition of$4.5 million in business-type activities capital assets through improvements
to the potable water system and expansion of the reclaimed water system.
• The addition of$19.8 million in governmental activities capital assets,including$1.8 million
for vehicles and equipment, and $18 for infrastructure. Infrastructure assets consisted of
roadway widening projects,bridge construction and repair,and roadway overlay and surface
treatments.
Page 8
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont'd)
Changes in net assets. The Town's total revenues for the fiscal year ended June 30, 2007, were
$64.6 million. The total cost of all programs and services was $43.5 million. The following table
presents a summary of the changes in net assets for the fiscal years ended June 30,2007 and June 30,
2006.
2006
2007 2006 2007 Business-
Governmental Governmental Business-type type 2007 2006
Activities Activities Activities Activities Total Total
Revenues:
Program revenues:
Charges for services $ 3,765,011 $ 4,197,210 $ 13,617,461 $ 14,059,792 $ 17,382,472 $18,257,002
Operating grants and contributions 4,893,869 4,558,864 4,893,869 4,558,864
Capital grants and contributions 8,321,691 3,994,640 3,066,170 628,501 11,387,861 4,623,141
General revenues:
Sales taxes 16,873,630 12,455,609 16,873,630 12,455,609
Franchise taxes 478,175 435,428 478,175 435,428
Impact fees 1,038,217 1,098,977 1,038,217 1,098,977
Unrestricted state shared revenues 4,473,305 3,343,471 9,944,318 3,343,471
Unrestricted state sales tax revenue sharing 3,744,864 3,432,007 3,432,007
Unrestricted auto lieu tax revenue sharing 1,726,149 1,541,560 1,541,560
Investment earnings 1,471,641 991,151 1,163,837 956,189 2,635,477 1,947,340
Total revenues 46,786,552 36,048,917 17,847,468 15,644,482 64,634,019 51,693,399
Expenses:
General government 7,529,245 7,162,732 7,529,245 7,162,732
Public Safety 12,352,671 11,155,542 12,352,671 11,155,542
Highways and streets 7,757,276 5,732,026 7,757,276 5,732,026
Culture and recreation 3,375,314 3,014,341 3,375,314 3,014,341
Interest on long-term debt 996,336 805,123 996,336 805,123
Water 11,446,958 10,438,869 11,446,958 10,438,869
Stormwater drainage 74,235 111,695 74,235 111,695
Total expenses 32,010,842 27,869,764 11,521,193 10,550,564 43,532,035 38,420,328
Transfers 69,813 (79,778) (69,813) 79,778
Increase in net assets $ 14,845,523 $ 8,099,375 $ 6,256,462 $ 5,173,696 $21,101,985 $13,273,071
Total revenues increased $12.9 million, or 25 percent, primarily as a result of an increase in local
sales tax revenues of $4.4 million primarily related to the construction, retail and hotel/motel
industries. The Town also received$1.2 million in one-time revenues from sales tax audit recoveries
during FY 2006/07. State/county shared revenues increased by $1.6 million due to an increase in
distributions based on the Town's population and an increase in the overall revenue base distributed
by the State. In addition, a capital contribution of$4.5 million was received from Pima County for
the Steam Pump Ranch property, a 15-acre historical site acquired with Pima County bond funds
located within the Town.
Expenses increased $5.1 million primarily due to an increase in personnel costs related to salary
market adjustments for all Town personnel and for increased expenditures relating to the widening of
First Avenue from Lambert Lane to Tangerine Road.
Page 9
TOWN OF ORO VALLEY,ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont'd)
Governmental and Business-type activities. The following table presents the cost of the seven(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 Town's taxpayers by each
of these functions.
2007 2006
Total Net(Expense)/ Total Net(Expense)/
Governmental Activities Expenses Revenue Expenses Revenue
General government $ 7,529,245 $ 337,963 $ 7,162,732 $ (2,425,437)
Public Safety 12,352,671 (10,923,779) 11,155,542 (10,373,487)
Highways and streets 7,757,276 (816,932) 5,732,026 589,100
Culture and recreation 3,375,314 (2,631,187) 3,014,341 (2,104,103)
Interest on long-term debt 996,336 (996,336) 805,123 (805,123)
Total $32,010,842 $(15,030,271) $ 27,869,764 $(15,119,050)
Business-type Activities
Water $11,446,958 $ 4,873,510 $ 10,438,869 $ 4,228,023
Stormwater drainage 74,235 288,928 111,695 (90,294)
Total $11,521,193 $ 5,162,438 $ 10,550,564 $ 4,137,729
• The cost of all governmental activities this year was $32.0 million. The increase of$4.1
million from the prior year was due primarily to additional personnel costs to fund a salary
market adjustment for all Town employees and for the increased expenditures related to the
widening of First Avenue from Lambert Lane to Tangerine Road.
• The cost of all business-type activities this year was$11.5 million. The increase of$970,629
from the prior year was primarily due to personnel salary market adjustments and increased
depreciation expense resulting from the reclaimed water system.
• Federal and State governments and charges for services subsidized certain governmental
programs and business-type programs with revenues of$33.7 million.
• Net cost of governmental activities of$15.0 million was financed by general revenues,which
are made up of primarily sales taxes and state shared revenues of$26.8 million.
Page 10
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
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 $28.1
million,an increase of$4.0 million due primarily to increases in the General Fund from construction
sales tax collections resulting from the increased commercial construction activity seen during FY
2006/07. The Town also collected$1.2 million in one-time revenues from sales tax audit recoveries
during the year.
The General Fund is the principal operating fund of the Town. The increase in fund balance of$4.4
million in the General.Fund for the fiscal year to $18.5 million was due primarily to construction
taxes and sales tax audit recoveries. Town department spending also came in under budget due to
staffing vacancies and operating efficiencies.
The fund balance of the Highway User Revenue Fund showed a decrease of$186,759 primarily due
to a transfer of$1 million to subsidize the Townwide Roadway Impact Fee Fund. This was almost
equally offset by an increase in construction sales tax revenues($700K),the distribution of which is
split between the General Fund and the Highway User Revenue Fund,and increased Highway User
Revenue Funds from the State ($300K) over FY 2005/06 collections.
The Townwide Roadway Impact Fee Fund showed a decrease of$404,512 due primarily to the
completion of several street expansion and improvement projects during the year.
Proprietary funds. Net assets of the Enterprise Funds at the end of the year amounted to $38.8
million. The increase of$6.3 million from fiscal year 2005/06 was primarily due to improvements to
the potable water system and expansion of the reclaimed water system.
BUDGETARY HIGHLIGHTS
There were no amendments to the Town of Oro Valley's Fiscal Year 2006/07 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:
Page 11
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
• The favorable variance of$3.2 million in General Fund revenues was mainly attributed to
local sales tax collections and state/county shared revenues. Expenditures were below
budget by $2 million due to departmental savings resulting from personnel vacancies,
operating efficiencies and the carry forward of several capital improvement projects into the
subsequent fiscal year.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. As of June 30, 2007, the Town had invested $257.4 million in capital assets,
including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. This
amount represents a net increase prior to depreciation of$22.3 million from last year,primarily due
to the completion of several roadway projects and the donation of land (Steam Pump Ranch) from
Pima County. Total depreciation expense for the year was $7.2 million.
The following schedule presents capital asset balances for the fiscal years ended June 30, 2007 and
June 30, 2006.
As of
As of June 30, 2006
Governmental Activities June 30, 2007 (Restated)
Land $ 17,694,622 $ 13,159,928
Infrastructure 110,082,926 92,120,969
Buildings and improvements 18,956,247 18,594,768
Vehicles, machinery and equipment 7,186,005 6,15 5,224
Construction in progress 9,708,610 18,969,487
Less: Accumulated depreciation (37,832,415) (33,293,294)
Total $ 125,795,995 $115,707,082
As of As of
Business-type Activities June 30, 2007 June 30, 2006
Land $ 2,410,660 $ 2,410,660
Water rights 6,172,361 6,172,361
Water system 79,048,639 75,787,086
Equipment and vehicles 2,539,885 1,259,787
Construction in progress 3,626,425 495,549
Less: Accumulated depreciation (16,695,075) (14,447,644)
Total $ 77,102,895 $ 71,677,799
Additional information on the Town's capital assets can be found in Note 5.
Page 12
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30,2007
CAPITAL ASSETS AND DEBT ADMINISTRATION (Concl'd)
Debt Administration. At year-end,the Town had$80.7 million in long-term debt outstanding,$5.4
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, 2007 and 2006.
Governmental Activities
2007 2006
Revenue bonds $12,891,148 $13,559,446
Special assessment bonds 3,760,000 3,945,000
Certificates of participation 215,000
Loan payable 2,500,000 2,604,143
Total $19,151,148 $20,323,589
Business-type Activities
2007 2006
Revenue bonds $61,568,852 $65,015,554
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 in this 20% category is $116.6
million.
The Town of Oro Valley received an upgraded bond rating during FY 2006/07 and now maintains a
"AA-" rating from Standard & Poor's and an "A+" rating from Fitch on the outstanding revenue
bonds.
DISCUSSION ON REFUNDING
During FY 2006/07, the Town refunded $19.0 million in outstanding debt that carried an average
interest rate of 5.3%. The Town issued$17.8 million in excise tax revenue refunding bonds with an
average interest rate of 4.3%. This refunding resulted in a net present value debt service savings of
over $1 million.
Additional information on the Town's long-term debt can be found in Notes 6 through 9.
Page 13
TOWN OF ORO VALLEY, ARIZONA
MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)
YEAR ENDED JUNE 30, 2007
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
• The unemployment rate for the Town of Oro Valley is currently 2.6%. Pima County's and
the State of Arizona's unemployment rates are 3.7% and 3.8%, respectively.
• The Town's secondary assessed valuation for the current year is$582,838,439,an increase of
25% over last fiscal year.
• Single family residential(SFR)building permits issued in this fiscal year totaled 335,which
is down from 388 SFR building permits issued last year. Projections for SFR building
permits are 320 for FY 2007/08 based on the slow down in the housing market and the
limited amount of remaining developable land within the Town's incorporated boundaries.
• The development of major retail shopping centers is on the rise in the Town. The new
Oracle Crossings development has been open for over a year and continues to grow in sales
volume. Construction of Oro Valley Marketplace,a 1.1 million square feet retail center,will
begin in FY 2007/08 and open in the fall of FY 2008/09.
The adopted combined operating and capital expenditure budget for fiscal year 2007-08 totals$118.8
million, an increase of$12.9 million or 12.2% more than fiscal year 2006-07. This increase is
attributed to the following factors:
• $10.3 million in Outside Funding sources in the form of reimbursements from the Pima
Association of Governments(PAG),Pima County Bond proceeds and various federal grants
primarily in the Townwide Roadway Development Impact Fee Fund.
• $1.5 million in State Shared revenues in the General Fund,primarily from state income taxes
and state sales tax collections
• $1.5 million in local sales tax collections in the General Fund related to the addition of four
new commercial centers and an increase in construction activity.
• $1.4 million in the Water Enterprise Fund related to increases in water rates,impact fees and
groundwater preservation fees
• $473.5K in the Stormwater Utility Fund for the proposed implementation of a stormwater
utility fee
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.
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BASIC FINANCIAL STATEMENTS
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Page 18
GOVERNMENT-WIDE FINANCIAL STATEMENTS
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Page 20
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF NET ASSETS
JUNE 30,2007
Governmental Business-type
Activities Activities Total
ASSETS
Current assets:
Cash and cash equivalents $ 26,354,023 $ 22,699,080 $ 49,053,103
Taxes receivable 1,317,291 1,317,291
Accounts receivable 3,000,548 2,193,022 5,193,570
Intergovernmental receivable 927,813 927,813
Special assessments 3,760,000 3,760,000
Interest receivable 135,161 96,529 231,690
Prepaid items 3,717 3,717
Total current assets 35,498,553 24,988,631 60,487,184
Noncurrent assets:
Deferred bond charges 900,855 3,643,296 4,544,151
Capital assets,non-depreciable 27,403,232 12,209,446 39,612,678
Capital assets,depreciable(net) 98,392,763 64,893,449 163,286,212
Total noncurrent assets 126,696,850 80,746,191 207,443,041
Total assets 162,195,403 105,734,822 267,930,225
LIABILITIES
Current liabilities:
Accounts payable 1,339,673 1,429,336 2,769,009
Accrued wages and benefits 426,791 38,059 464,850
Intergovernmental payable 56,599 575,539 632,138
Interest payable 28,875 1,907,507 1,936,382
Unearned revenue 552,447 552,447
Customer deposits payable 856,479 138,170 994,649
Compensated absences 1,114,789 99,612 1,214,401
Loans payable 2,500,000 2,500,000
Special assessment bonds 195,000 195,000
Revenue bonds 708,102 1,981,898 2,690,000
Total current liabilities 7,778,755 6,170,121 13,948,876
Noncurrent liabilities:
Compensated absences 7,122 17,565 24,687
Special assessment bonds 3,565,000 3,565,000
Deferred bond premium 118,793 1,173,392 1,292,185
Revenue bonds 12,183,046 59,586,954 71,770,000
Total non-current liabilities 15,873,961 60,777,911 76,651,872
Total liabilities 23,652,716 66,948,032 90,600,748
NET ASSETS
Invested in capital assets,net of related debt 106,644,847 15,534,043 122,178,890
Restricted for:
Public safety 301,649 301,649
Highways and streets 3,669,301 3,669,301
Capital outlay 3,714,717 3,714,717
Debt service 245,208 245,208
Other 395,856 395,856
Unrestricted 23,571,109 23,252,747 46,823,856
Total net assets $ 138,542,687 $ 38,786,790 $ 177,329,477
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 30,2007
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 $ 7,529,245 $ 3,291,983 $ 40,531 $ 4,534,694 $ 337,963
Public safety 12,352,671 229,546 1,199,346 (10,923,779)
Highway and streets 7,757,276 122,124 3,031,223 3,786,997 (816,932)
Culture and recreation 3,375,314 121,358 622,769 (2,631,187)
Interest on long-term debt 996,336 (996,336)
Total governmental activities 32,010,842 3,765,011 4,893,869 8,321,691 (15,030,271)
Business-type activities:
Water 11,446,958 13,617,336 2,703,132
Stormwater drainage 74,235 125 3 63,03 8
Total business-type activities 11,521,193 13,617,461 3,066,170
Total primary government $ 43,532,035 $ 17,382,472 $ 4,893,869 $ 11,387,861 (15,030,271)
General revenues:
Taxes:
Sales taxes 16,873,630
Franchise taxes 478,175
Impact fees 1,03 8,217
Unrestricted state shared revenues 9,944,318
Investment earnings 1,471,641
Transfers 69,813
Total general revenues and transfers 29,875,794
Changes in net assets 14,845,523
Net assets,beginning of year,as restated 123,697,164
Net assets,end of year $138,542,687
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
$ $ 337,963
(10,923,779)
(816,932)
(2,631,187)
(996,336)
(15,03 0,271)
4,873,510 4,873,510
288,928 288,928
5,162,438 5,162,438
5,162,438 (9,867,833)
16,873,630
478,175
1,03 8,217
9,944,318
1,163,837 2,635,478
(69,813)
1,094,024 30,969,818
6,256,462 21,101,985
32,530,328 156,227,492
$ 38,786,790 $177,329,477
Page 23
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Page 24
FUND FINANCIAL STATEMENTS
Page 25
TOWN OF ORO VALLEY,ARIZONA
BALANCE SHEET-GOVERNMENTAL FUNDS
JUNE 30,2007
Oracle Road
General HURF Debt Service
ASSETS
Cash and cash equivalents $ 16,684,432 $ 3,467,715 $ 108,388
Taxes receivable 1,317,291
Accounts receivable 694,764 215,429
Intergovernmental receivable 548,745 282,085
Special assessments 3,760,000
Interest receivable 94,256 20,724
Due from other funds 814,567
Prepaid items 3,717
Total assets $ 20,157,772 $ 3,985,953 $ 3,868,388
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 490,014 $ 246,627 $ 1,800
Accrued wages and benefits 383,729 35,807
Intergovernmental payable 56,599
Interest payable
Due to other funds 56,303
Deferred revenue 688,909 3,760,000
Customer deposits payable 60,815 202
Total liabilities 1,680,066 338,939 3,761,800
Fund balances:
Unreserved:
Undesignated 18,477,706 3,647,014 106,588
Unreserved reported in:
Special revenue funds
Debt service funds
Capital projects funds
Total fund balances 18,477,706 3,647,014 106,588
Total liabilities and fund balances $ 20,157,772 $ 3,985,953 $ 3,868,3 88
The notes to the financial statements are an integral part of this statement.
Page 26
Townwide
Roadway Non-Major Total
Development Governmental Governmental
Impact Fees Funds Funds
$ 2,181,430 $ 3,912,058 $ 26,354,023
1,317,291
2,089,826 529 3,000,548
96,983 927,813
3,760,000
11,601 8,580 135,161
814,567
3,717
$ 4,282,857 $ 4,018,150 $ 36,313,120
$ 539,265 $ 61,967 $ 1,339,673
7,255 426,791
56,599
28,875 28,875
758,264 814,567
206,500 4,655,409
795,462 856,479
568,140 1,829,448 8,178,393
3,714,717 25,946,025
1,244,081 1,244,081
138,620 138,620
806,001 806,001
3,714,717 2,188,702 28,134,727
$ 4,282,857 $ 4,018,150 $ 36,313,120
Page 27
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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 30,2007
Total governmental fund balances $ 28,134,727
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 $ 163,628,410
Less accumulated depreciation (37,832,415) 125,795,995
Some revenues are not available to pay for current period expenditures
and therefore are not reported in the funds.
Special assessments receivable 3,760,000
Court fines receivable 342,962 4,102,962
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 900,855
Deferred bond premium (118,793) 782,062
Long-term liabilites are not due and payable in the current period and therefore
are not reported in the funds.
Special assessment bonds (3,760,000)
Revenue bonds (12,891,148)
Loans payable (2,500,000)
Compensated absences (1,121,911) (20,273,059)
Net assets of governmental activities $ 138,542,687
Page 29 The notes to the financial statements are integral part of this statement.
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-
GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30,2007
Oracle Road Debt
General HURF Service
Revenues:
Sales taxes $ 13,072,197 $ 2,585,667 $
Franchise taxes 478,175
Impact fees
Special assesments 189,820
Intergovernmental 11,234,763 3,031,223
Licenses,fees&permits 2,328,450 40,401
Fines,forfeitures&penalties 215,500
Charges for services 965,134 2,276
Contributions and donations
Investment earnings 791,301 192,681 190,020
Other 114,632 11,912
Total revenues 29,200,152 5,864,160 379,840
Expenditures:
Current-
General government 6,416,623
Public safety 11,737,901
Highway and streets 3,173,450
Culture and recreation 3,052,171
Capital outlay 1,970,746 1,645,168
Debt service-
Bond issuance costs
Principal retirement 185,000
Interest and fiscal charges 188,967
Total expenditures 23,177,441 4,818,618 373,967
Excess(deficiency)of revenues over expenditures 6,022,711 1,045,542 5,873
Other financing sources(uses):
Issuance of refunding bonds
Premium on bonds issued
Payment to refunding bond escrow agent
Transfers in
Transfers out (1,625,640) (1,232,301)
Total other financing sources(uses) (1,625,640) (1,232,301)
Changes in fund balances 4,397,071 (186,759) 5,873
Fund balances,beginning of year 14,080,635 3,833,773 100,715
Fund balances,end of year $ 18,477,706 $ 3,647,014 $ 106,588
The notes to the financial statements are an integral part of this statement.
Page 30
Townwide
Roadway Non-Major Total
Development Governmental Governmental
Impact Fees Funds Funds
$ $ 1,215,766 $ 16,873,630
478,175
1,038,217 1,038,217
189,820
3,781,484 358,243 18,405,713
2,368,851
213,958 429,458
59,511 1,026,921
19,171 19,171
162,162 135,477 1,471,641
693 8,024 135,261
4,982,556 2,010,150 42,436,858
602,407 7,019,030
70,898 11,808,799
99,831 495,570 3,768,851 •
57,057 3,109,228
6,102,996 943,280 10,662,190
28,868 28,868
104,143 788,670 1,077,813
80,098 652,140 921,205
6,387,068 3,638,890 38,395,984
(1,404,512) (1,628,740) 4,040,874
1,389,180 1,389,180
25,719 25,719
(1,540,438) (1,540,438)
1,000,000 1,927,754 2,927,754
(2,857,941)
1,000,000 1,802,215 (55,726)
(404,512) 173,475 3,985,148
4,119,229 2,015,227 24,149,579
$ 3,714,717 $ 2,188,702 $ 28,134,727
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 30,2007
Net changes in fund balances-total governmental funds $ 3,985,148
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 $ 10,512,295
Less current year depreciation (4,919,239) 5,593,056
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. 4,534,694
Some revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
Special assessments (185,000)
Premium on sale of bonds (25,719) (210,719)
The issuance of long-term debt provides current financial resources to governmental funds,but the
issuance increases long-term liabilities in the Statement of Net Assets. (1,389,180)
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 104,143
Bond principal retirement 2,457,478 2,561,621
Deferred items associated with the issuance bonds are revenues or expenditures in the
governmental funds. However,in the Statement of Activities the net cost of these items is
amortized over the life of the bonds. 85,498
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 (75,131)
Compensated absences (200,627)
Loss on disposal of capital assets (38,837) (314,595)
Change in net assets in governmental activities $ 14,845,523
The notes to the financial statements are integral part of this statement.
Page 33
TOWN OF ORO VALLEY,ARIZONA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
JUNE 30,2007
Enterprise Funds
Non-Major
Water Enterprise Fund Total
ASSETS
Current assets:
Cash and cash equivalents $ 22,694,359 $ 4,721 $ 22,699,080
Accounts receivable 1,829,984 363,038 2,193,022
Interest receivable 96,504 25 96,529
Total current assets 24,620,847 367,784 24,988,631
Noncurrent assets:
Deferred bond charges 3,643,296 3,643,296
Capital assets,non-depreciable 11,846,098 363,348 12,209,446
Capital assets,depreciable(net) 64,893,449 64,893,449
Total noncurrent assets 80,382,843 363,348 80,746,191
Total assets 105,003,690 731,132 105,734,822
LIABILITIES
Current liabilities:
Accounts payable 1,152,680 276,656 1,429,336
Accrued wages and benefits 37,146 913 38,059
Intergovernmental payable 575,539 575,539
Interest payable 1,907,507 1,907,507
Customer deposits payable 138,170 138,170
Compensated absences 97,848 1,764 99,612
Revenue bonds 1,981,898 1,981,898
Total current liabilities 5,890,788 279,333 6,170,121
Noncurrent liabilities:
Compensated absences 17,254 311 17,565
Deferred bond premium 1,173,392 1,173,392
Revenue bonds 59,586,954 59,586,954
Total non-current liabilities 60,777,600 311 60,777,911
Total liabilities 66,668,388 279,644 66,948,032
NET ASSETS
Invested in capital assets,net of related debt 15,170,695 363,348 15,534,043
Unrestricted 23,164,607 88,140 23,252,747
Total net assets $ 38,335,302 $ 451,488 $ 38,786,790
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 30,2007
Enterprise Funds
Non-Major
Water Enterprise Fund Total
Operating revenues:
Charges for services $ 12,353,358 $ $ 12,353,358
Total operating revenues 12,353,358 12,353,358
Operating expenses:
Costs of sales and services 5,717,610 74,235 5,791,845
Depreciation and amortization 2,401,3 32 2,401,3 32
Total operating expenses 8,118,942 74,235 8,193,177
Operating income(loss) 4,234,416 (74,235) 4,160,181
Nonoperating revenues(expenses):
Impact fees 148,200 148,200
Intergovernmental 35,000 363,038 398,038
Connection fees 1,050,471 1,050,471
Investment earnings 1,157,837 6,000 1,163,837
Other 65,307 125 65,432
Interest expense (3,328,016) (3,328,016)
Total nonoperating revenues
(expenses) (871,201) 369,163 (502,038)
Income before capital contributions and
transfers 3,363,215 294,928 3,658,143
Capital contributions 2,668,132 2,668,132
Transfers in 83,506 83,506
Transfers out (153,319) (153,319)
Changes in net assets 5,878,028 378,434 6,256,462
Total net assets,beginning of year 32,457,274 73,054 32,530,328
Total net assets,end of year $ 38,335,302 $ 451,488 $ 38,786,790
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 30,2007
Enterprise Funds
Stormwater
Water Drainage Total
Increase(Decrease)in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers $ 12,332,267 $ $ 12,332,267
Cash payments to suppliers for goods and services (2,841,198) (129,161) (2,970,359)
Cash payments to employees for services (2,088,157) (49,747) (2,137,904)
Net cash provided by(used for)operating activities 7,402,912 (178,908) 7,224,004
Cash flows from noncapital and related financing activities:
Grants received 35,000 363,038 398,038
Connection fees 1,050,471 1,050,471
Other revenue 65,307 125 65,432
Interfund borrowing (153,319) 83,506 (69,813)
Net cash provided by noncapital financing activities 997,459 446,669 1,444,128
Cash flows from capital and related financing activities:
Development impact fees 148,200 148,200
Acquisition of capital assets (5,015,801) (363,348) (5,379,149)
Proceeds from sale of bonds 16,420,820 16,420,820
Principal paid on long-term debt (19,867,522) (19,867,522)
Interest on long-term debt (3,252,885) (3,252,885)
Net cash used for capital and related
financing activities (11,567,188) (363,348) (11,930,536)
Cash flows from investing activities:
Investment income 1,155,756 6,347 1,162,103
Net cash provided by investing activities 1,155,756 6,347 1,162,103
Net(decrease)in cash and cash equivalents (2,011,061) (89,240) (2,100,301)
Cash and cash equivalents,beginning of year 24,705,420 93,961 24,799,381
Cash and cash equivalents,end of year $ 22,694,359 $ 4,721 $ 22,699,080
Reconciliation of Operating Income(Loss)to
Net Cash Provided by(Used for)Operating Activities
Operating income(loss) $ 4,234,416 $ (74,235) $ 4,160,181
Adjustments to reconcile operating income(loss)
to net cash provided by(used for)operating activities:
Depreciation 2,401,332 2,401,332
Change in assets and liabilities:
(Increase) in accounts receivable (41,283) (363,038) (404,321)
(Increase)decrease in prepaid items 452 12 464
Increase(decrease)in accounts payable 745,964 258,087 1,004,051
Decrease in accrued payroll and employee benefits 3,878 99 3,977
Increase(decrease)in compensated absences payable 37,961 167 38,128
Increase in deposits held for others 20,192 20,192
Total adjustments 3,168,496 (104,673) 3,063,823
Net cash provided by(used for)operating
activities $ 7,402,912 $ (178,908) $ 7,224,004
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, 2007
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,
which 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
1996, 1999, 2001 and 2003. The activity of the 1996 MPC is reported in the applicable water
enterprise fund and the activity of the Series 1999, 2001 and 2003 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, 2007
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,as
are the proprietary fund financial statements. 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 effect 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, 2007
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 so 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 also 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 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.
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.
Page 39
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
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 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.
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.
D. Investments
Nonparticipating interest-earning investment contracts are stated at cost. Money market
investments and participating interest investment contracts with a remaining maturity of one year
or less at time of purchase are stated at amortized cost. All other investments are stated at fair
value.
E. Investment Income
Investment income is composed of interest and net changes in the fair value of applicable
investments.
Page 40
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
F. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at
the end of the fiscal year are 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. Trade accounts receivable
in excess of 180 days comprise the trade accounts receivable 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.
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, 2007
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.
N. Statement of Cash Flows
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, 2007 were cash in bank and investments held by State Treasurer.
NOTE 2—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Excess Expenditures Over Budget— At June 30, 2007, the Town had expenditures in funds
that exceeded the budget, however this does not constitute a violation of any legal provisions.
Page 43
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 3—CASH AND INVESTMENTS
A.R.S. authorize the Town to invest public monies in obligations of the U.S.Government and its
agencies, obligations of the State and certain local government subdivisions, interest-bearing
savings accounts and certificates of deposit, collateralized repurchase agreements, certain
obligations of U.S. corporations, and certain other securities. The statutes do not include any
requirements for credit risk,custodial credit risk,concentration of credit risk,interest rate risk,or
foreign currency risk for the Town's investments.
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. No comparable oversight is provided for the County Treasurer's
investment pool. The fair value of each participant's position in the State Treasurer and County
Treasurer investment pools approximates the value of the participant's shares in the pool.
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. As of June 30, 2007, Town deposits were collateralized with
securities held by the pledging financial institution and consisted of the following.
Cash on hand $ 3,300
Cash in bank 6,267,999
Total $6,271,299
Page 44
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 3— CASH AND INVESTMENTS (Concl'd)
At June 30, 2007, the Town's investments consisted of the following.
Investment Type Maturities Fair Value
County Treasurer's investment pool 252 days average $ 391,371
State Treasurer's investment pool 5 84 days average 38,876,070
State Treasurer's investment pool 7 50 days average 3,514,363
Total $42,781,804
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 June 30, 2007, the Town's investment in the State and County Treasurers' investment
pools did not receive a credit quality rating from a national rating agency.
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 45
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 4--RECEIVABLES
Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and
presented separately in the financial statements with the exception of due from governmental
entities. Due from governmental entities, net of allowance for uncollectibles, as of year end for
the Town's individual major funds and non-major governmental funds in the aggregate, are as
follows.
Highway
User Non-Major
General Revenue Governmental
Fund Fund Funds
Due from governmental entities:
Due from State government $548,745 $282,085 $ 96,983
Net due from governmental entities $548,745 $282,085 $ 96,983
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) $ $ 345,947
Court fines (General Fund) 342,962
Special assessments (Oracle Road Debt Service Fund) 3,760,000
Gaming funds (Non-Major governmental funds) 206,500
Total deferred revenue for governmental funds $ 4,102,962 $ 552,447
Page 46
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 5— CAPITAL ASSETS
A summary of capital asset activity for the fiscal year ended June 30, 2007 follows.
Beginning
Balance Ending
Governmental Activities (As Restated) Increase Decrease Balance
Capital assets,not being depreciated:
Land $ 13,159,928 $ 4,534,694 $ $ 17,694,622
Construction in progress 18,969,487 7,031,126 16,292,003 9,708,610
Total capital assets,not being depreciated 32,129,415 11,565,820 16,292,003 27,403,232
Capital assets,being depreciated:
Infrastructure 92,120,969 17,961,957 110,082,926
Buildings and improvements 18,594,768 361,479 18,956,247
Vehicles,machinery,and equipment 6,155,224 1,449,736 418,955 7,186,005
Total capital assets being depreciated 116,870,961 19,773,172 418,955 136,225,178
Less accumulated depreciation for:
Infrastructure (26,389,714) (3,762,086) (30,151,800)
Buildings and improvements (2,786,588) (435,087) (3,221,675)
Vehicles,machinery,and equipment (4,116,992)
(722,066) (380,118) (4,45 8,940)
Total accumulated depreciation (33,293,294) (4,919,239) (380,118) (37,832,415)
Total capital assets,being depreciated,net 83,577,667 14,853,933 38,837 98,392,763
Governmental activities capital assets,net $ 115,707,082 $ 26,419,753 $ 16,330,840 $ 125,795,995
Beginning Ending
Business-Type Activities Balance Increase Decrease Balance
Capital assets,not being depreciated:
Land $ 2,410,660 $ $ $ 2,410,660
Water rights 6,172,361 6,172,361
Construction in progress 495,549 3,161,716 30,840 3,626,425
Total 9,078,570 3,161,716 30,840 12,209,446
Capital assets,being depreciated:
Water system 75,787,086 3,261,553 79,048,639
Equipment and vehicles 1,259,787 1,280,098 2,539,885
Total capital assets being depreciated 77,046,873 4,541,651 81,588,524
Less accumulated depreciation for:
Water system (13,681,567) (1,718,517) (15,400,084)
Equipment and vehicles (766,077) (528,914) (1,294,991)
Total accumulated depreciation (14,447,644) (2,247,431) (16,695,075)
Total capital assets,being depreciated,net 62,599,229 2,294,220 64,893,449
Business-type activities capital assets,net $ 71,677,799 $ 5,455,936 $ 30,840 $ 77,102,895
Page 47
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 7—BONDS PAYABLE (Cont'd)
Annual debt service requirements to maturity on revenue and refunding bonds for governmental
activities at June 30, 2007, are summarized as follows.
Governmental Activities
Year ending June 30: Principal Interest
2008 $ 708,102 $ 501,150
2009 733,900 492,749
2010 699,010 462,840
2011 642,750 436,805
2012 878,430 407,287
2013-17 4,254,976 1,478,348
2018-22 3,178,660 660,789
2023-27 1,795,320 170,901
Total $ 12,891,148 $ 4,610,869
Original Outstanding Due
Amount Interest Principal Within
Purpose Issued Rates Maturity June 30, 2007 One Year
Business-type activities:
Revenue Bonds, 1999 $ 2,199,538 4.40-5.00% 7/1/07-19 $ 2,235,000 $ 185,000
Revenue Bonds, 2001 5,647,468 4.00-4.63% 7/1/07-13 1,795,782 225,648
Revenue Bonds, 2003 31,750,000 3.00-4.50% 7/1/07-28 29,205,000 1,250,000
Refunding Revenue Bonds, 2003 10,225,080 2.25-4.30% 7/1/07-19 9,915,750 247,000
Revenue Bonds, 2005 2,050,950 3.13-4.75% 7/1/07-25 1,996,500 74,250
Refunding Revenue Bonds, 2007 16,420,820 4.00-5.00% 7/1/09-26 16,420,820
Total $ 61,568,852 $1,981,898
Page 50
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 7—BONDS PAYABLE (Concl'd)
Annual debt service requirements to maturity revenue and refunding bonds for business-type
activities at June 30, 2007, are summarized as follows.
Business-type Activities
Year ending June 30: Principal Interest
2008 $ 1,981,898 $ 2,452,583
2009 2,011,100 2,612,750
2010 2,485,990 2,538,280
2011 2,947,250 2,441,361
2012 2,836,570 2,336,112
2013-17 14,220,024 9,882,189
2018-22 15,916,340 6,399,583
2023-27 15,924,680 2,662,386
2028-32 3,245,000 164,375
Total $ 61,568,852 $31,489,619
During the year ended June 30,2007,the Town issued$17,810,000 in refunding bonds, with an
effective interest rate of 4.32 percent, to advance refund $19,015,000 of outstanding revenue
bonds, with an average interest rate of 5.56 percent. The net proceeds of$17,769,634, which
includes$329,734 of bond premium,(after payment of$370,100 in underwriting fees,insurance,
and other issuance costs) and a Town contribution of$1,979,570 were used to purchase U.S.
government securities. Those securities were deposited in an irrevocable trust with an escrow
agent,to provide for all future debt service payments of the refunded revenue bonds. As a result,
the refunded revenue bonds are considered to be defeased, and the liability for those bonds has
been removed from the government-wide financial statements.The reacquisition price exceeded
the net carrying amount of the old debt by $1,294,178. This amount is reported as deferred
charges and amortized over the new debt's life. This advance refunding was undertaken to
reduce total debt service payments over the next 20 years by $2,273,302 and resulted in an
economic gain of$1,090,401.
Page 51
TOWN OF ORO VALLEY,ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 8—SPECIAL ASSESSMENT BONDS
Special assessment bonds at June 30, 2007, 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, 2007 One Year
Governmental activities:
Special assessments debt $3,945,000 4.20-5.00% 1/1/08-22 $ 3,760,000 $ 195,000
Total $ 3,760,000 $ 195,000
Annual debt service requirements to maturity on special assessment bonds at June 30,2007,are
summarized as follows.
Governmental Activities
Year ending June 30: Principal Interest
2008 $ 195,000 $ 177,577
2009 205,000 167,827
2010 215,000 157,577
2011 225,000 146,827
2012 235,000 135,577
2013-17 1,355,000 500,835
2018-22 1,330,000 158,883
Total $ 3,760,000 $ 1,445,103
Page 52
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 9—CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended June 30, 2007 was as follows.
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Revenue bonds payable $ 13,559,446 $ 1,389,180 $ 2,057,478 $ 12,891,148 $ 708,102
Special assessments payable 3,945,000 185,000 3,760,000 195,000
Loan payable 2,604,143 104,143 2,500,000 2,500,000
Certificates of participation payable 215,000 215,000
Compensated absences payable 921,284 1,246,872 1,046,245 1,121,911 1,114,789
Governmental activity long-term
liabilities $ 21,244,873 $ 2,636,052 $ 3,607,866 $ 20,273,059 $ 4,517,891
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Business-type activities:
Revenue bonds payable $65,015,554 $16,420,820 $19,867,522 $ 61,568,852 $ 1,981,898
Compensated absences payable 79,049 145,004 106,876 117,177 99,612
Business-type activities long-term
liabilities $65,094,603 $16,565,824 $19,974,398 $ 61,686,029 $ 2,081,510
Page 53
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 10—INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
At June 30, 2007, interfund balances were as follows.
Due to/from other funds:
Due from
Highway
User Non-Major
Revenue Governmental
Due to Fund Funds Total
General Fund $ 56,303 $ 758,264 $814,567
Total $ 56,303 $ 758,264 $814,567
At June 30,2007,several funds had negative cash balance in the pooled cash accounts. Negative
cash on deposit was reduced by interfund borrowing with other funds. All interfund balances are
expected to be paid within one year.
Interfund transfers:
Transfers in
Townwide
Impact Non-Major Non-Major
Development Governmental Business-type
Transfers out Fees Fund Funds Fund Total
General Fund $ $ 1,542,134 $ 83,506 $1,625,640
Highway User Revenue Fund 1,000,000 232,301 1,232,301
Water Fund 153,319 153,319
Total $ 1,000,000 $ 1,927,754 $ 83,506 $3,011,260
Transfers were made from the General Fund to subsidize the Public Transportation Fund,
Stormwater Drainage Fund and Steam Pump Ranch Acquisition Fund. Transfers were made
from the General Fund,Highway User Revenue Fund and Water Utility Fund to the Municipal
Debt Service Fund to make the required principal and interest payments on outstanding bonded
indebtedness. A transfer was made from the Highway User Revenue Fund to subsidize the
Townwide Roadway Development Impact Fee Fund.
Page 54
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
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.
Lawsuits — The Town is a defendant in a number of lawsuits as of June 30, 2007. It is the
opinion of management and Town counsel that the amount of losses resulting from these
litigations at June 30, 2007, would not be material to the financial position of the Town.
NOTE 12—PRIOR PERIOD ADJUSTMENT
The July 1, 2006,government-wide net assets for governmental activities do not agree to the prior
year financial statements for capital assets not properly recorded in the prior year.
Statement of
Activities
Net Assets, June 30, 2006, as previously
reported $131,395,965
Capital asset restatement (7,698,801)
Net Assets, July 1, 2006, as restated $123,697,164
NOTE 13—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 55
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 13—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 14—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 that covers general employees of the Town. 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)is an agent multiple-employer defined
benefit pension 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 Arizona Corrections Officer Retirement Plan(ACORP)provides a uniform,consistent and
equitable statewide program for those eligible corrections officers as defined by the Plan. Each
member shall contribute 8.5% of salary to the Plan on a pre-tax basis by payroll deduction.
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/ACORP
3300 N. Central Ave. 3010 E. Camelback Road Suite 200
Phoenix, AZ 85012-0250 Phoenix, AZ 85016
(602) 240-2200 or(800) 621-3778 (602) 255-5575
Page 56
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 14—RETIREMENT PLAN (Cont'd)
Funding policy-The Arizona State Legislature establishes and may amend active plan members'
and the Town's contribution rates.
Cost-sharing plans-For the year ended June 30, 2007, active ASRS members were required by
statute to contribute at the actuarially determined rate of 9.10 percent(8.60 percent retirement and
0.50 percent long-term disability) of the members' annual covered payroll. The Town's
contributions to ASRS for the years ended June 30, 2007, 2006, and 2005 were $817,984
$449,275,and$467,741,respectively,which were equal to the required contributions for the year.
Agent plan-For the year ended June 30,2007,active PSPRS members were required by statute to
contribute 7.65 percent of the members' annual covered payroll, and the Town was required to
contribute at the actuarially determined rate of 9.45 percent.
Annual Pension Cost—The Town's pension cost for the agent plan for the year ended June 30,
2006 and related information follows.
PSPRS ACORP
Contribution rates:
Town 10.12% 6.94%
Plan members 7.65% 7.96%
Annual pension cost $434,478 $40,089
Contributions made $434,478 $40,089
Actuarial valuation date June 30, 2006 June 30, 2006
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%
Includes inflation at 5.0% 5.0%
Amortization method Level percent open Level percent open
Remaining amortization 30 years for unfunded 30 years for unfunded
actuarial accrued liability, actuarial accrued liability,
20 years for excess 20 years for excess
Asset valuation method Smoothed market value Smoothed market value
Page 57
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 14—RETIREMENT PLAN (Concl'd)
Trend Information—Information for the agent plan 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
2004 $378,010 100% $-0-
2005 367,387 100 -0-
2006 434,478 100 -0-
Oro Valley ACORP Dispatchers:
Year Ended Annual Pension Percentage of APC Net Pension
June 30, Cost (APC) Contributed Obligation
2004 $18,116 100% $-0-
2005 42,661 100 -0-
2006 40,089 100 -0-
Funding Progress—An analysis of funding progress for each of the agent plans as of June 30,
2007 follows.
Oro Valley Police Plan:
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-131/c)
2004 $ 9,072,514 $ 8,871,479 $ 201,035 102.3% $3,665,787 - 0 - %
2005 10,351,579 11,338,052 (986,473) 91.3 4,354,983 22.7
2006 11,345,626 12,654,350 (1,308,724) 89.7 4,614,186 28.4
Oro Valley ACORP Dispatchers:
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_) Ta-bi/c)
2004 $ 568,823 $ 785,950 $ (217,127) 72.4% $ 418,377 51.9%
2005 788,467 1,000,086 (211,619) 78.8 518,393 40.8
2006 889,875 1,140,381 (250,506) 78.0 515,269 48.6
Page 58
TOWN OF ORO VALLEY, ARIZONA
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 15 —SUBSEQUENT EVENTS
On August 17, 2007, the Town issued$6.0 million in WIFA loans.
On October 2, 2007, the Town issued$8.0 million in HELP loans.
Page 59
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Page 60
SCHEDULES OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES —BUDGET AND ACTUAL
(REQUIRED SUPPLEMENTARY INFORMATION)
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Page 62
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-GENERAL FUND
YEAR ENDED JUNE 30,2007
Budgeted
Amounts Variance with
Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Sales taxes $ 10,599,815 $ 13,072,197 $ 2,472,382
Franchise taxes 420,000 478,175 58,175
Intergovernmental 10,744,875 11,234,763 489,888
Licenses,fees&permits 2,629,000 2,328,450 (300,550)
Fines,forfeitures& penalties 200,000 215,500 15,500
Charges for services 826,900 965,134 138,234
Investment earnings 320,000 791,301 471,301
Other 185,900 114,632 (71,268)
Total revenues 25,926,490 29,200,152 3,273,662
Expenditures:
Current-
General government 18,601,170 6,416,623 12,184,547
Public safety 13,560,349 11,737,901 1,822,448
Culture and recreation 3,798,119 3,052,171 745,948
Capital outlay 1,970,746 (1,970,746)
Total expenditures 35,959,638 23,177,441 12,782,197
Excess(deficiency)of revenues over
expenditures (10,033,148) 6,022,711 16,055,859
Other financing sources(uses):
Transfers out (1,505,640) (1,625,640) (120,000)
Total other financing sources(uses) (1,505,640) (1,625,640) (120,000)
Change in fund balances (11,538,788) 4,397,071 15,935,859
Fund balances,July 1,2006 11,538,788 14,080,635 2,541,847
Fund balances,June 30,2007 $ $ 18,477,706 $ 18,477,706
See accompanying notes to this schedule.
Page 63
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-HURF
YEAR ENDED JUNE 30,2007
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Sales taxes $ 1,859,000 $ 2,585,667 $ 726,667
Intergovernmental 3,63 8,500 3,031,223 (607,277)
Licenses,fees&permits 40,401 40,401
Charges for services 2,276 2,276
Investment earnings 192,681 192,681
Other 195,000 11,912 (183,088)
Total revenues 5,692,500 5,864,160 171,660
Expenditures:
Current-
Highway and streets 7,723,643 3,173,450 4,550,193
Capital outlay 1,645,168 (1,645,168)
Total expenditures 7,723,643 4,818,618 2,905,025
Excess(deficiency)of revenues over
expenditures (2,031,143) _ 1,045,542 3,076,685
Other financing sources(uses):
Transfers out (1,232,301) (1,232,301)
Total other financing sources(uses) (1,232,301) (1,232,301)
Change in fund balances (3,263,444) (186,759) 3,076,685
Fund balances,July 1,2006 3,263,444 3,833,773 570,329
Fund balances,June 30,2007 $ $ 3,647,014 $ 3,647,014
See accompanying notes to this schedule.
Page 64
TOWN OF ORO VALLEY, ARIZONA
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2007
NOTE 1 —BUDGETARY BASIS OF ACCOUNTING
The adopted budget of the Town is prepared on the modified accrual basis of accounting.
Page 65
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Page 66
COMBINING AND INDIVIDUAL
FUND FINANCIAL STATEMENTS
AND SCHEDULES
Page 67
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Page 68
OTHER MAJOR GOVERNMENTAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES —BUDGET AND ACTUAL
Page 69
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL-ORACLE ROAD DEBT SERVICE
YEAR ENDED JUNE 30,2007
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Special assesments $ 367,203 $ 189,820 $ (177,383)
Investment earnings 190,020 190,020
Total revenues 367,203 379,840 12,637
Expenditures:
Debt service-
Principal retirement 283,415 185,000 98,415
Interest and fiscal charges 191,827 188,967 2,860
Total expenditures 475,242 373,967 101,275
Change in fund balances (108,039) 5,873 113,912
Fund balances,July 1,2006 108,039 100,715 (7,324)
Fund balances,June 30,2007 $ $ 106,588 $ 106,588
Page 70
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 30,2007
Budgeted Variance with
Amounts Final Budget
Positive
Original&Final Actual (Negative)
Revenues:
Impact fees $ 1,489,200 $ 1,03 8,217 $ (450,983)
Intergovernmental 6,103,870 3,781,484 (2,322,386)
Investment earnings 162,162 162,162
Other 5,000 693 (4,307)
Total revenues 7,598,070 4,982,556 (2,615,514)
Expenditures:
Current-
Highway and streets 12,097,960 99,831 11,998,129
Capital outlay 6,102,996 (6,102,996)
Debt service-
Principal retirement 104,143 (104,143)
Interest and fiscal charges 80,098 (80,098)
Total expenditures 12,097,960 6,387,068 5,710,892
Excess(deficiency)of revenues over
expenditures (4,499,890) (1,404,512) 3,095,378
Other financing sources(uses):
Transfers in 1,000,000 1,000,000
Total other financing sources(uses) 1,000,000 1,000,000
Change in fund balances (3,499,890) (404,512) 3,095,378
Fund balances,July 1,2006 3,499,890 4,119,229 619,339
Fund balances,June 30,2007 $ $ 3,714,717 $ 3,714,717
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Page 72
NON-MAJOR GOVERNMENTAL FUNDS
Page 73
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Page 74
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-ALL NON-MAJOR GOVERNMENTAL FUNDS-BY FUND TYPE
JUNE 30,2007
Total
Non-Major
Municipal Debt Governmental
Special Revenue Service Capital Projects Funds
ASSETS
Cash and cash equivalents $ 2,384,817 $ 371,372 $ 1,155,869 $ 3,912,058
Accounts receivable 529 529
Intergovernmental receivable 96,983 96,983
Interest receivable 8,580 8,580
Total assets $ 2,490,380 $ 371,372 $ 1,156,398 $ 4,018,150
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 50,654 $ 1,990 $ 9,323 $ 61,967
Accrued wages and benefits 7,255 7,255
Due to other funds 392,928 230,762 134,574 758,264
Deferred revenue 206,500 206,500
Customer deposits payable 795,462 795,462
Total liabilities 1,246,299 232,752 350,397 1,829,448
Fund balances:
Unreserved:
Undesignated 1,244,081 138,620 806,001 2,188,702
Total fund balances 1,244,081 138,620 806,001 2,188,702
Total liabilities and fund balances $ 2,490,380 $ 371,372 $ 1,156,398 $ 4,018,150
Page 75
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 30,2007
Municipal Debt
Special Revenue Service Capital Projects
Revenues:
Sales taxes $ 1,215,766 $ $
Intergovernmental 358,243
Fines, forfeitures&penalties 213,958
Charges for services 59,511
Contributions and donations 19,171
Investment earnings 93,421 7,938 34,118
Other 8,024
Total revenues 1,948,923 7,938 53,289
Expenditures:
Current-
General government 602,407
Public safety 70,898
Highway and streets 495,570
Culture and recreation 57,057
Capital outlay 709,302 233,978
Debt service-
Bond issuance costs 28,868
Principal retirement 788,670
Interest and fiscal charges 652,140
Total expenditures 1,935,234 1,469,678 233,978
Excess(deficiency)of revenues over expenditures 13,689 (1,461,740) (180,689)
Other financing sources(uses):
Issuance of refunding bonds 1,3 89,180
Premium on bonds issued 25,719
Payment to refunding bond escrow agent (1,540,438)
Transfers in 261,195 1,546,559 120,000
Total other financing sources(uses) 261,195 1,421,020 120,000
Change in fund balances 274,884 (40,720) (60,689)
Fund balances, beginning of year 969,197 179,340 866,690
Fund balances,end of year $ 1,244,081 $ 138,620 $ 806,001
Page 76
Total
Non-Major
Governmental
Funds
$ 1,215,766
358,243
213,958
59,511
19,171
135,477
8,024
2,010,150
602,407
70,898
495,570
57,057
943,280
28,868
788,670
652,140
3,638,890
(1,628,740)
1,3 89,180
25,719
(1,540,438)
1,927,754
1,802,215
173,475
2,015,227
$ 2,188,702
Page 77
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Page 78
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.
Page 79
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-NON-MAJOR SPECIAL REVENUE FUNDS
JUNE 30,2007
Revegetation State Seizures Federal Seizures
Assurances and Forfeitures and Forfeitures Bed Tax
ASSETS
Cash and cash equivalents $ 1,185,016 $ 141,392 $ 250,128 $ 528,264
Intergovernmental receivable
Interest receivable 6,302 2,278
Total assets $ 1,191,318 $ 141,392 $ 250,128 $ 530,542
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ 33,436 $ 3,365 $ 6,253
Accrued wages and benefits
Due to other funds 9,736 43,334
Customer deposits payable 795,462
Total liabilities 795,462 43,172 46,699 6,253
Fund balances:
Unreserved:
Undesignated 395,856 98,220 203,429 524,289
Total fund balances 395,856 98,220 203,429 524,289
Total liabilities and fund balances $ 1,191,318 $ 141,392 $ 250,128 $ 530,542
Page 80
Public
Transportation Totals
$ 280,017 $ 2,3 84,817
96,983 96,983
8,580
$ 377,000 $ 2,490,3 80
$ 7,600 $ 50,654
7,255 7,255
339,858 392,928
795,462
354,713 1,246,299
22,287 1,244,081
22,287 1,244,081
$ 377,000 $ 2,490,380
Page 81
TOWN OF ORO VALLEY,ARIZONA
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-
NON-MAJOR SPECIAL REVENUE FUNDS
YEAR ENDED JUNE 30,2007
Revegetation State Seizures Federal Seizures
Assurances and Forfeitures and Forfeitures
Revenues:
Sales taxes $ $ $
Intergovernmental
Fines, forfeitures&penalties 75,133 138,825
Charges for services
Investment earnings 46,211 10,045 13,147
Other
Total revenues 46,211 85,178 151,972
Expenditures:
Current-
General government
Public safety 16,672 54,226
Highway and streets
Culture and recreation
Capital outlay 29,853 118,021
Total expenditures 46,525 172,247
Excess(deficiency)of revenues over expenditures 46,211 38,653 (20,275)
Other financing sources(uses):
Transfers in
Total other financing sources(uses)
Change in fund balances 46,211 38,653 (20,275)
Fund balances, beginning of year 349,645 59,567 223,704
Fund balances,end of year $ 395,856 $ 98,220 $ 203,429
Page 82
Public
Bed Tax Transportation Totals
$ 1,215,766 $ $ 1,215,766
358,243 358,243
213,958
59,511 59,511
14,851 9,167 93,421
8,024 8,024
1,230,617 434,945 1,948,923
602,407 602,407
70,898
495,570 495,570
57,057 57,057
329,898 231,530 709,302
989,362 727,100 1,935,234
241,255 (292,155) 13,689
261,195 261,195
261,195 261,195
241,255 (30,960) 274,884
283,034 53,247 969,197
$ 524,289 $ 22,287 $ 1,244,081
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 30,2007
Revegetation Assurances
Variance-
Positive
Budget* Actual (Negative)
Revenues:
Sales taxes $ $ $
Intergovernmental
Fines,forfeitures&penalties
Charges for services
Investment earnings 46,211 46,211
Other
Total revenues 46,211 46,211
Expenditures:
Current-
General government
Public safety
Highway and streets
Culture and recreation
Capital outlay
Total expenditures
Excess(deficiency)of revenues over
expenditures 46,211 46,211
Other financing sources(uses):
Transfers in •
Total other financing sources(uses)
Change in fund balances 46,211 46,211
Fund balances,July 1,2006 349,645 349,645
Fund balances,June 30,2007 $ $ 395,856 $ 395,856
*The Revegetation Assurances Fund was included in the Town's budget,however,the budget was-0-.
Page 84
State Seizures and Forfeitures Federal Seizures and Forfeitures
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ $ $ $ $ $
10,000 75,133 65,133 100,000 138,825 38,825
10,045 10,045 13,147 13,147
10,000 85,178 75,178 100,000 151,972 51,972
92,089 16,672 75,417 279,764 54,226 225,538
29,853 (29,853) 118,021 (118,021)
92,089 46,525 45,564 279,764 172,247 107,517
(82,089) 38,653 120,742 (179,764) (20,275) 159,489
(82,089) 38,653 120,742 (179,764) (20,275) 159,489
82,089 59,567 (22,522) 179,764 223,704 43,940
$ $ 98,220 $ 98,220 $ $ 203,429 $ 203,429
(Continued)
Page 85
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 30,2007
(Concluded)
Bed Tax
Variance-
Positive
Budget Actual _ (Negative)
Revenues:
Sales taxes $ 1,194,251 $ 1,215,766 $ 21,515
Intergovernmental
Fines,forfeitures&penalties
Charges for services
Investment earnings 14,851 14,851
Other
Total revenues 1,194,251 1,230,617 36,366
Expenditures:
Current-
General government 1,710,039 602,407 1,107,632
Public safety
Highway and streets
Culture and recreation 57,057 (57,057)
Capital outlay 329,898 (329,898)
Total expenditures 1,710,039 989,362 720,677
Excess(deficiency)of revenues over
expenditures (515,788) 241,255 757,043
Other financing sources(uses):
Transfers in
Total other financing sources(uses)
Change in fund balances (515,788) 241,255 757,043
Fund balances,July 1,2006 515,788 283,034 (232,754)
Fund balances,June 30,2007 $ $ 524,289 $ 524,289
Page 86
Public Transportation Totals
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ $ $ $ 1,194,251 $ 1,215,766 $ 21,515
232,800 358,243 125,443 232,800 358,243 125,443
110,000 213,958 103,958
59,511 59,511 59,511 59,511
9,167 9,167 93,421 93,421
127,683 8,024 (119,659) 127,683 8,024 (119,659)
360,483 434,945 74,462 1,664,734 1,948,923 284,189
1,710,039 602,407 1,107,632
371,853 70,898 300,955
697,213 495,570 201,643 697,213 495,570 201,643
57,057 (57,057)
231,530 (231,530) 709,302 (709,302)
697,213 727,100 (29,887) 2,779,105 1,935,234 843,871
(336,730) (292,155) 44,575 (1,114,371) 13,689 1,128,060
261,195 261,195 261,195 261,195
261,195 261,195 261,195 261,195
(75,535) (30,960) 44,575 (853,176) 274,884 1,128,060
75,535 53,247 (22,288) 853,176 969,197 116,021
$ $ 22,287 $ 22,287 $ $ 1,244,081 $ 1,244,081
Page 87
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Page 88
NON-MAJOR DEBT SERVICE FUNDS
Debt Service Funds are created to account for the accumulation of resources for,and thepaY ment of,
general long-term debt principal and interest.
Municipal Debt Service — accounts for the payments of debt service on the 1996 Certificates of
Participation and the 1999 Municipal Property Corporation Excise Tax Revenue Bonds.
Page 89
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Page 90
TOWN OF ORO VALLEY,ARIZONA
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES- BUDGET AND ACTUAL-NON-MAJOR DEBT SERVICE FUND
YEAR ENDED JUNE 30,2007
Municipal Debt Service
Variance-
Positive
Budget Actual (Negative)
Revenues:
Investment earnings $ 3,000 $ 7,938 $ 4,938
Total revenues 3,000 7,938 4,938
Expenditures:
Debt service-
Bond issuance costs 28,868 (28,868)
Principal retirement 1,009,720 788,670 221,050
Interest and fiscal charges 712,741 652,140 60,601
Total expenditures 1,722,461 1,469,678 252,783
Excess(deficiency)of revenues over expenditures (1,719,461) (1,461,740) 257,721
Other financing sources(uses):
Issuance of refunding bonds 1,3 89,180 1,3 89,180
Premium on bonds issued 25,719 25,719
Payment to refunding bond escrow agent (1,540,438) (1,540,438)
Transfers in 1,546,559 1,546,559
Total other financing sources(uses) 1,546,559 1,421,020 (125,539)
Change in fund balances (172,902) (40,720) 132,182
Fund balances,July 1,2006 172,902 179,340 6,438
Fund balances,June 30,2007 $ $ 138,620 $ 138,620
Page 91
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Page 92
NON-MAJOR CAPITAL PROJECTS FUNDS
Capital Projects Funds are created to account for the purchase or construction of major capital
p
facilities which are not financed by the general, enterprise, or special revenue funds.
Pima County Bond Projects—accounts for the revenues and expenditures for historicp reservation
capital improvements funded by grants and from Pima County bond funds.
Municipal Building—accounts for the bond proceeds issued to acquire land and construct thep ublic
works facility.
Regional Transportation Authority Improvement -- accounts for street projects
improvement
p
funded by the Regional Transportation Authority.
Page 93
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Page 94
TOWN OF ORO VALLEY,ARIZONA
COMBINING BALANCE SHEET-NON-MAJOR CAPITAL PROJECTS FUNDS
JUNE 30,2007
Pima County Municipal
Bond Projects Building Totals
ASSETS
Cash and cash equivalents $ 225,671 $ 930,198 $ 1,155,869
Accounts receivable 529 529
Total assets $ 225,671 $ 930,727 $ 1,156,398
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ 9,323 $ 9,323
Due to other funds 134,574 134,574
Deferred revenue 206,500 206,500
Total liabilities 206,500 143,897 350,397
Fund balances:
Unreserved:
Undesignated 19,171 786,830 806,001
Total fund balances 19,171 786,830 806,001
Total liabilities and fund balances $ 225,671 $ 930,727 $ 1,156,398
Page 95
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Page 96
TOWN OF ORO VALLEY,ARIZONA
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-
NON-MAJOR CAPITAL PROJECTS FUNDS
YEAR ENDED JUNE 30,2007
Pima County Municipal
Bond Projects Building Totals
Revenues:
Contributions and donations $ 19,171 $ $ 19,171
Investment earnings 34,118 34,118
Total revenues 19,171 34,118 53,289
Expenditures:
Capital outlay 120,000 113,978 233,978
Total expenditures 120,000 113,978 233,978
Excess(deficiency)of revenues over expenditures (100,829) (79,860) (180,689)
Other financing sources(uses):
Transfers in 120,000 120,000
Total other financing sources(uses) 120,000 120,000
Change in fund balances 19,171 (79,860) (60,689)
Fund balances, beginning of year 866,690 866,690
Fund balances,end of year $ 19,171 $ 786,830 $ 806,001
Page 97
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 30,2007
Pima County Bond Projects
Variance-
Positive
Budget Actual (Negative)
Revenues:
Intergovernmental $ 5,600,000 $ $ (5,600,000)
Contributions and donations 19,171 19,171
Investment earnings
Total revenues 5,600,000 19,171 (5,580,829)
Expenditures:
Capital outlay 5,806,500 120,000 5,686,500
Total expenditures 5,806,500 120,000 5,686,500
Excess(deficiency)of revenues over
expenditures (206,500) (100,829) 105,671
Other financing sources(uses):
Transfers in 120,000 120,000
Total other financing sources(uses) 120,000 120,000
Change in fund balances (206,500) 19,171 225,671
Fund balances,July 1,2006 206,500 (206,500)
Fund balances,June 30,2007 $ $ 19,171 $ 19,171
Page 98
Municipal Building Regional Transportation Authority Improvement
Variance- Variance-
Positive Positive
Budget Actual (Negative) Budget Actual (Negative)
$ $ $ $ 600,000 $ $ (600,000)
20,300 34,118 13,818
20,300 34,118 13,818 600,000 (600,000)
1,320,292 113,978 1,206,314 600,000 600,000
1,320,292 113,978 1,206,314 600,000 600,000
(1,299,992) (79,860) 1,220,132
(1,299,992) (79,860) 1,220,132
1,299,992 866,690 (433,302)
$ $ 786,830 $ 786,830 $ $ $
(Continued)
Page 99
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 30,2007
(Concluded)
Totals
Variance-
Positive
Budget Actual (Negative)
Revenues:
Intergovernmental $ 6,200,000 $ $ (6,200,000)
Contributions and donations 19,171 19,171
Investment earnings 20,300 34,118 13,818
Total revenues 6,220,300 53,289 (6,167,011)
Expenditures:
Capital outlay 7,726,792 233,978 7,492,814
Total expenditures 7,726,792 233,978 7,492,814
Excess(deficiency)of revenues over
expenditures (1,506,492) (180,689) 1,325,803
Other financing sources(uses):
Transfers in 120,000 120,000
Total other financing sources(uses) 120,000 120,000
Change in fund balances (1,506,492) (60,689) 1,445,803
Fund balances,July 1,2006 1,506,492 866,690 (639,802)
Fund balances,June 30,2007 $ $ 806,001 $ 806,001
Page 100
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 taxes.
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 101
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Page 102
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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
1998 2.00% 1.00% 0.00% 0.00% 5.60%
1999 2.00% 1.00% 0.00% 0.00% 5.60%
2000 2.00% 1.00% 0.00% 0.00% 5.60%
2001 2.00% 3.00% 0.00% 0.00% 5.60%
2002 2.00% 3.00% 0.00% 0.00% 5.60%
2003 2.00% 3.00% 0.00% 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%
Source: Arizona Department of Revenue
Page 112
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TOWN OF ORO VALLEY, ARIZONA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
JUNE 30, 2007
(UNAUDITED)
Estimated
Estimated Share of
Debt Percentage Overlapping
Governmental Unit Outstanding Applicable Debt
Pima County $ 290,150,000 7.08% $ 20,531,852
Pima County Community College District 57,650,000 7.08% 4,079,481
Pima County Flood Control District 1,470,000 7.08% 104,021
Amphitheater Unified School Distrist No. 10 57,280,000 39.03% 22,354,386
Town of Oro Valley None 100.00% None
Total direct and overlapping debt 47,069,740
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 2006-07,
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CALCULATION OF LEGAL DEBT MARGIN
JUNE 30, 2007
(UNAUDITED)
Net secondary assessed valuation $ 582,838,439
Water, Sewer, Light, Parks, Open Space and
Recreational Facility Bonds
Debt limit-20% of secondary net assessed valuation $ 116,567,688
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 $ 116,567,688
All other general obligation bonds
Debt Limit-6% of secondary net assessed valuation 34,970,306
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 34,970,306
Total legal debt margin $ 151,537,994
Source: Pima County Assessor's Office
Page 116
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
1998 $ 5,589,270 $ 325,000 $ 1,493,775 $ 1,818,775 3.07
1999 6,173,325 350,000 1,481,921 1,831,921 3.37
2000 8,706,515 425,000 1,627,675 2,052,675 4.24
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 1,676,880 1,910,173 3,587,053 4.13
Governmental Revenue Bonds
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
1998 $ - $ - $ - $ - 0.00
1999 - - - - 0.00
2000 14,300,536 - 40,606 40,606 352.18
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 29,200,152 843,120 702,740 1,545,860 18.89
Certificates of Participation
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
1998 $10,215,814 $ 320,000 $ 305,441 $ 625,441 16.33
1999 11,840,398 310,000 289,039 599,039 19.77
2000 14,300,536 390,000 271,756 661,756 21.61
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 29,200,152 - - - 0.00
Special Assessment
Fiscal Gross Debt Service
Year Revenues Principal Interest Total Coverage
1998 $ 62,569 $ 90,000 $ 19,575 $ 109,575 0.57
1999 40,985 90,000 13,050 103,050 0.40
2000 5,048 90,000 6,525 96,525 0.05
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 1.02
Source: Town of Oro Valley Finance Department
Page 117
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
1998 25,236 Not Available Not Available 2.2%
1999 25,455 $ 792,515,970 $ 31,134 2.3%
2000 29,700 952,420,194 32,068 1.9%
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 42,917 1,692,630,159 39,440 2.6%
Source: US Census Bureau and Arizona Employment statistics
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WATER RATES
LAST TEN FISCAL YEARS
(UNAUDITED)
Base Rate Tier 1 Tier 2 Tier 3 GPF
Year monthly per 1,000 per 1,000 per 1,000 per 1,000
1998 $ 9.75 $ 1.71 N/A N/A N/A
1999 9.85 1.73 N/A N/A N/A
2000 10.81 1.73 $ 1.85 N/A N/A
2001 11.25 1.78 2.08 $ 2.31 N/A
2002 12.00 1.90 2.35 3.00 N/A
2003 12.00 1.90 2.35 3.00 N/A
2004 12.30 1.92 2.55 3.25 $ 0.21
2005 12.65 1.98 2.68 3.58 0.21
2006 12.65 1.98 2.68 3.58 0.21
2007 13.25 2.08 2.81 3.76 0.25
Source: Town of Oro Valley Water Utility
Page 122
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Page 124
TOWN OF ORO VALLEY,ARIZONA
REPORT ON AUDIT OF ANNUAL EXPENDITURE
LIMITATION REPORT
YEAR ENDED JUNE 30, 2007
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TOWN OF ORO VALLEY,ARIZONA
REPORT ON AUDIT OF ANNUAL EXPENDITURE
LIMITATION REPORT
YEAR ENDED JUNE 30, 2007
CONTENTS PAGE
Independent Auditors' Report 1
Annual Expenditure Limitation Report- Part I 2
Annual Expenditure Limitation Report - Part II 3
Annual Expenditure Limitation Report- Reconciliation 4
Note to Annual Expenditure Limitation Report 5
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1.2141 HEINFELD, MEECH & CO., P.C.
UBLIC ACCOUNTANTS
CERTIFIED P 10120 N.Oracle RoadTucson,Arizona 85704
(520)742-2611
Gary Heinfeld,CPA,CGFM Scott W.Kies,CPA Fax(520)742-2718
Nancy A.Meech,CPA,CGFM Kimberly A.Robinson,CPA
Jennifer L. Shields,CPA Kera Badalamenti,CPA www.heinfeldmeech.com
Corey Arvizu,CPA
INDEPENDENT AUDITORS' REPORT
The Auditor General of the State of Arizona and
The Honorable Mayor and Town Council
of the Town of Oro Valley, Arizona
We have audited the accompanying Annual Expenditure Limitation Report of the Town of Oro
Valley, Arizona for the year ended June 30, 2007. This report is the responsibility of the Town of
Oro Valley,Arizona's management. Our responsibility is to express an opinion on this report based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the report is free of material misstatement. An audit includes examining,on
a test basis,evidence supporting the amounts and disclosures in the report. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall report presentation. We believe that our audit provides a reasonable basis for
our opinion.
The accompanying Annual Expenditure Limitation Report was prepared for the purpose of
complying with the uniform expenditure reporting system as discussed in Note 1,and is not intended
to be a presentation in conformity with accounting principles generally accepted in the United States
of America.
In our opinion',the Annual Expenditure Limitation Report of Town of Oro Valley, Arizona,for the
year ended June 30, 2007,referred to above presents fairly,in all material respects, the information
required by the uniform expenditure reporting system on the basis of accounting described in Note 1.
This report is intended solely for the information and use of management and for filing with the
Auditor General of the State of Arizona,and is not intended to be and should not be used by anyone
other than these specified parties.
L-4 s2A,,,,l_tbi szeA, , (i
HEIN FELD, MEECH& CO., P.C.
Certified Public Accountants
December 17, 2007
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TOWN OF ORO VALLEY,ARIZONA
ANNUAL EXPENDITURE LIMITATION REPORT—PART I
YEAR ENDED JUNE 30, 2007
1. Economic Estimates Commission expenditure
limitation $ 17,930,260
2. Voter-approved alternative expenditure limitation
pp
(approved March 14, 2006) See Note 1 105869>650
3. Enter amount applicable from line 1 or line 2 105,869,650
4. Amount subject to the expenditure limitation
Line
(total amount from Part II, C) 74,302,954
5. Amount under the expenditure limitation $ 31,566,696
I hereby certify, to the best of knowledge myknowled a and belief, that the information contained in this
with the
report is accurate and in accordancerequirements of the uniform expenditure reporting
system.
Signature of Chief Fiscal Officer: /g 10) 4,441.4 1
Name and Title: Stacey Lemos, CPA--Finance Director
Telephone Number: (520)229-4732 Date: December 17, 2007
See accompanying notes to report.
Page 2
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TOWN OF ORO VALLEY, ARIZONA
ANNUAL EXPENDITURE LIMITATION REPORT-PART II
YEAR ENDED JUNE 30,2007
Governmental Enterprise
Description Funds Funds Total
A.Amounts reported on the Reconciliation, Line D $ 39,936,422 $ 34,366,532 $ 74,302,954
B. Less exclusions claimed:*
C. Amount subject to the expenditure limitation $ 39,936,422 $ 34,366,532 $ 74,302,954
* Exclusions do not apply to the Town of Oro Valley,Arizona's annual expenditure limitation report due to the
voter-approved alternative expenditure limitation adopted March 14,2006.
See accompanying note to report.
Page 3
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TOWN OF ORO VALLEY,ARIZONA
ANNUAL EXPENDITURE LIMITATION REPORT-RECONCILIATION
YEAR ENDED JUNE 30,2007
Governmental Enterprise
Description Funds Funds Total
A. Total expenditures/expenses/deductions and applicable other
financing uses,special items and extraordinary items
reported in the basic financial statements $ 39,936,422 $ 11,521,193 $ 51,457,615
B. Subtractions:
1. Items not requiring use of working capital-
Depreciation and amortization 2,401,332 2,401,332
2. Total subtractions 2,401,332 2,401,332
C. Additions:
1. Principal payments on long-term debt 19,867,522 19,867,522
2. Acquisition of capital assets 5,379,149 5,379,149
3. Total additions 25,246,671 25,246,671
D. Amounts reported on Part II,Line A $ 39,936,422 $ 34,366,532 $ 74,302,954
See accompanying note to report.
Page 4
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TOWN OF ORO VALLEY, ARIZONA
NOTE TO ANNUAL EXPENDITURE LIMITATION REPORT
YEAR ENDED JUNE 30,2007
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Annual Expenditure Limitation Report (AELR) is presented on the basis of
accounting prescribed by the Uniform Expenditure Reporting System (VERS), as
required by Arizona Revised Statutes §41-1279.07, and in accordance with the voter
approved alternative expenditure limitation adopted March 14, 2006, as authorized by
the Arizona Constitution Article IX, §20(9). This plan provides for the Town to allow
the Mayor and Council to adopt an annual expenditure limitation each year, which for
fiscal 2006-07 equaled the budget of$105,869,650. This budget was formally adopted
on July 19, 2006.
Page 5
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