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Financial Reports-Comprehensive Annual Financial Report (CAFR) - 6/30/2006
TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2006 ) Mr. Paul Loomis ) Mayor Mr. Terry Parish Vice Mayor Council Members Ms. Paula Abbott Mr. Kenneth "K.C." Carter Ms. Helen Dankwerth Mr. Barry Gillespie Mr. Alfred Kunisch David L. Andrews Town Manager Stacey Lemos Finance Director Prepared by: Finance Department TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2006 , TABLE OF CONTENTS � 111 INTRODUCTORY SECTION � 111 Letter of Transmittal 1 List of Principal Officials 7 Organizational Chart 8 GFOA Certificate of Achievement 9 FINANCIAL SECTION � Independent Auditor's Report 13 Management's Discussion and Analysis 15 4111 Basic Financial Statements Statement of Net Assets 28 Statement of Activities 29 Balance Sheet- Governmental Funds 30 Reconciliation of the Balance Sheet of Governmental Funds � to the Statement of Net Assets 31 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 33 General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 34 HURF Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 35 Public Transportation Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 36 41Statement of Net Assets - Proprietary Funds 37 Statement of Revenues, Expenses and Changes in Fund Net Assets- Proprietary Funds 38 Statement of Cash Flows - Proprietary Funds 39 111 Notes to the Basic Financial Statements 41 Required Supplementary Information: Public Safety Personnel Retirement System and Arizona Corrections Officer Retirement Plan Schedule of Funding Progress 62 1 TOWN OF ORO VALLEY, ARIZONA T T COMPREHENSIVE ANNUAL FINANCIAL REPORT 1 FOR THE FISCAL YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS 1 1 Combining and Individual Fund Statements and Schedules Combining Balance Sheet-Nonmajor Governmental Funds 66 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -Nonmajor Governmental Funds 68 Oracle Road Debt Service Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 70 Townwide Roadway Development Impact Fees Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 71 State Seizures and Forfeitures Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 72 Federal Seizures and Forfeitures Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 73 Municipal Debt Service Fund- Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 74 Library Construction Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 75 Oracle Road Construction Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 76 Pima County Bond Projects Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 77 Municipal Building Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 78 TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS 111 STATISTICAL SECTION • Financial Trends: Net Assets by Component 80 Changes in Net Assets 81 Fund Balances of Governmental Funds 83 Changes in Fund Balances of Governmental Funds 84 Revenue Capacity 1111 Principal Employers 86 ITaxable Sales by Category 87 Direct and Overlapping Sales Tax Rates 88 � Debt Capacity Ratio of Outstanding Debt by Type 89 41Direct and Overlapping Governmental Activities Debt 90 Legal Debt Margin Information 91 Calculation of Legal Debt Margin 92 Pledged-Revenue Coverage 93 Demographic and Economic Information Demographic and Economic Statistics 95 Operating Information 41 Full-time Equivalent Employees by Function 96 411 Water Utility Revenues by User Type 97 Operating Indicators by Function 98 Water Rates 99 Capital Assets Statistics by Function 100 Z 70 O C f! -1 O INTRODUCTORY SECTION ��,, �. �� r -9 TOWN OF ORO VALLEY T. N.LA CANADA DRIVE .�; �.;,.. �.�_� ��¢���'�'_{�� L 11000 ORO VALLEY,ARIZONA 85737 tr Administrative Offices(520)229-4700 Fax(520)297-0428 •-•;:r' www.townoforovalley.corn ' r ,.`✓ .;Jr y �'r r � •`'rte 4" UNDED 1 September 20, 2006 To the Honorable Mayor Loomis, Members of the Town Council, and Citizens of the Town of Oro Valley: State law requires that all general-purpose local governments, publish within six months of the close of each fiscal year a compete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report of the Town of Oro Valley(Town) for the fiscal year ended June 30, 2006. This report consists of management's representations concerning the finances of the Town of Oro Valley. 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 of Oro Valley 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 of Oro Valley's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town of Oro Valley'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 of Oro Valley's financial statements have been audited by Cronstrom, Osuch and Company, P.C. a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Oro Valley for the fiscal year ended June 30, 2006, 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 of Oro Valley's financial statements for the fiscal year ended June 30, 2006, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. 1 GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in , conjunction with it. The Town of Oro Valley's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The Town of Oro Valley was incorporated in 1974. It is located in northeastern Pima County and has a land area of 34.68 square miles. The Town's current population is estimated at 44,000. 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 Clerk, Chief of Police, Town Engineer, Town Attorney and Magistrate. The Town of Oro Valley provides a full range of services including police protection; the 41 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.A. in the notes to the basic financial statements. The annual budget serves as the foundation for the Town of Oro Valley's financial planning and 1 control. All departments of the Town are required to submit requests for appropriations to the Town Manager in March of each year. The Town Manager uses these requests as the starting ' point for developing a proposed budget. The Town Manager then presents this proposed budget to the Council for review each year. The Council is required to hold public hearings on the proposed budget and to adopt a tentative budget by no later than the third Monday in July of each year. The appropriated budget is prepared by fund and department. 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. The Town of Oro Valley maintains extensive budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Town Council. 2 � 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 of Oro Valley operates. Local Economy The local economic outlook for the Town of Oro Valley remained stable in fiscal year 2005/06. Sales tax collections from construction, retail trade and restaurants and bars and hotel/motel lodging are the major industries which accounted for 86.5% of all sales tax receipts for fiscal year 2005/06. 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. 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. To this end, the Town increased the bed tax rate from 3%to 6%, which became effective January 1, 2006. The Town has allocated this bed tax revenue to fund parks and recreation facilities and services and economic development efforts. Construction sales tax collections for fiscal year 2005/06 increased by $1,293,952 or 36% as compared to fiscal year 2004/05. Demonstrating the decline in residential development, single family residential building permits issued during fiscal year 2005/06 totaled 388, down from 422 permits issued in fiscal year 2004/05. Sales tax collections from retail trade totaled $3,229,331 for this fiscal year. This is an increase of$287,072 over last fiscal year. Several new shopping centers are scheduled to be completed or begin construction over the next three to five years. As such, the Town can expect to see commercial building-related revenues increase slightly, as well as an increase in related retail sales taxes as those commercial centers open for business. In a further effort to replace and supplement the Town:s declining construction-related revenues, the Town continues to expand its annexation and economic development efforts. Several potential annexation areas are currently being evaluated. The Southwest Planning Area is a 2.2 square mile area southwest of the Town's boundaries that includes about 4,100 residents and significant commercial properties, including a shopping mall, restaurants, movie theaters, and a resort hotel. The Town is also assessing the annexation potential of 45 square miles of land north of the Town that is owned by the Arizona State Land Department. Long-term Financial Planning The Town's 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. 3 During fiscal year 2005/06, Town staff worked with a consultant to develop an Economic Vitality Model for the Town. This model is an interactive, land-use based fiscal impact model that is designed to project the Town's future revenues and expenditures over the next twenty years based on projections of land use development throughout the Town. The model can be I to forecast Town-wide level or specific, project-level results, such as the budgetary impact of an annexation area on the Town. The Town is also migrating to a performance and program-based budgeting approach beginning • in fiscal year 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 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 system will be designed to more accurately capture costs by program. By utilizing the Economic Vitality model in conjunction with the new ERP system, the Town will be able to perform long- range forecasts at a program-based level and determine any revenue shortfalls that may need to be addressed in the near-term. 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. 111 Cash Management Polices and Practices41 , 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 i fiscal year 2004/05 was 2.237% and 3.939% in fiscal year 2005/06. Investments held in the , LGIP earned $1,473,865 in interest revenue for the year ended June 30, 2006. The account at LGIP for the construction of the reclaimed water system improvement project and potable water system improvements and expansion earned $297,884 in interest revenue. A debt service reserve fund was established in 1996 for the Municipal Property Corporation (MPC) municipal water system acquisition bonds. In 1999, MPC revenue bonds were issued for � the construction of the community development building and for water system improvements and ' a reserve fund was also established. These reserve funds are maintained in trust accounts with Wells Fargo Bank. 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 $169,968 for fiscal year 2005/2006. 1 4 � 1 1 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, 2006 for the Town's 286 full-time, 65 part-time and 46 seasonal employees. The Town did not make an unemployment contribution in fiscal year 2005/2006. Pension Benefits The Town of Oro Valley contributes to the Public Safety Personnel Retirement System (PSPRS), agent multiple-employer, public employee retirement system that acts as a common investment and administrative agent to provide retirement and death and disability benefits for all eligible commissioned police department personnel. All benefit provisions and other requirements are established by the state statutes. Employees were required to contribute 7.65 percent of their annual salary to PSPRS in FY 2005/06. The Town is required to contribute the remaining amounts necessary to fund the PSPRS, as determined by the actuarial basis specified by statute. The rate for FY 2005/06 was 9.78 percent of the annual covered payroll for PSPRS. The Town of Oro Valley police dispatchers contribute to the Arizona Correction Officers Retirement Plan (ACORP). The Correction Officers Retirement Plan is an agent multiple- employer which is administered in the same manner as the Public Safety Personnel Retirement System. Employees were required to contribute 8.50 percent while the Town contributed 8.15 percent of their annual salary in FY 2005/06. All non-police and certain part-time employees contribute to the Arizona State Retirement System (ASRS). The Arizona State Retirement System is a cost sharing, multi-employer, public employee, tax-qualified, defined benefit plan (with the exception of the defined contribution portion). The ASRS Board is the governing body of the ASRS and is responsible for the administration and management of the ASRS and its trust fund. Employees were required to contribute 6.9 percent for retirement and .5 percent for long-term disability. The Town is required to contribute 6.9 percent for retirement and .5 percent for long-term disability. Additional information on the Town of Oro Valley's retirement plans can be found in Note 4.C. on pages 57 - 59. 5 Awards and Acknowledgements 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, 2005. In order to be awarded a Certificate of Achievement, the Town published an easily readable and efficiently organized comprehensive annual financial . report. The report satisfied both accounting principals generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. We would also like to extend our appreciation to the Mayor and Council for their leadership and support. The preparation of this Comprehensive Annual Financial Report was made possible by the dedicated work of the Finance Department staff. Respectfully submitted, a; David L Andrews • Town Manager 4,41,tes Stacey Le s 41 Finance Director 41 6 � TOWN OF ORO VALLEY, ARIZONA LIST OF PRINCIPAL OFFICIALS ► ELECTED OFFICIALS Mayor Mr. Paul Loomis Vice-Mayor Mr. Terry Parish Council Member Ms. Paula Abbott Council Member Mr. Kenneth "K.C." Carter Council Member Ms. Helen Dankwerth Council Member Mr. Barry Gillaspie Council Member Mr. Alfred Kunisch DEPARTMENT HEADS Town Manager David L. Andrews Acting Assistant Town Manager Philip Saletta Finance Director Stacey Lemos Human Resources Director Sandra Abbey Town Engineer Craig Civalier Town Clerk Kathryn E. Cuvelier Magistrate George Dunscomb Town Attorney Melinda Garrahan Water Utility Director Philip Saletta Chief of Police Daniel G. Sharp Community Development Director H. Brent Sinclair 7 I I III >, I c O cm 4,- 0 I cls p a) L_ _c c c p_ .2 L 2 (n -TO I ÷,-; —• F– i1a) (60cs . 6 _- 0C C co c — I oes III pi O (3) 0) . co c c I ._ al c c c 4-, Ca 1 2 Pi I � � CI 1-. ' }= O c/ , c 1 < E O E -5 cm I V v o 'v 2 III . co Z M= co Q o W 111o 1— -a 4.,..._ 1 < 0 a) .--- a c0 = Z o = �, °- Q 111, N co Es a) 12 4 c _c I ce a a) 0 ca J O 15 2 41 cy , i re ›- 0H O D W 11- H L II O , . 43 Q to' i z III < ' 2 .4E' a) i U III - t O co 0 ' a) El 0 I-- i E E I a) E (i) -° a) — (r) -a I O E . U0 .p Q. UO c Cl) ' I C 0,5 t6 0 CD O H .p > O a3 -&--) o � W O co •v) O C) 0 U) El L c� IE co i � O II p p = - E o 00 Q o (./) I C = o 0 111 F— II 8 i A Certificate o Achievement for Excellence In Financial Reporting Presented to Town of OValley Arizona For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2005 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. deaddiv eltar et(141% w � ��A1FS s, cc, CORPORATION E President sEAL 4.0 */Cr de0Aff. Executive Director 9 z C) F J FINANCIAL SECTION t t 41 THIS PAGE BLANK 41 12 ronstrom 8706 E. MANZANITA DRIVE, SUITE 100 (*such k Company SCOTTSDALE,ARIZONA 85258 a no.,,.aaof+.s953m.7...Ou .sra,.3astxa.wpm..n 3.aRS+r=unit Cz�k:+n •M�f.•.4,-K-:4.14:z.AuE::KAI%.h'S: Certified 'ublic Accountants (480) 348-1102 • FAx(480) 348-1104 INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and the Town Council of the Town of Oro Valley, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Oro Valley, Arizona (Town), as of and for the year ended June 30, 2006, 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 reports 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Oro Valley, Arizona, as of June 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, HURF Fund and Public Transportation Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. 13 A PROFESSIONAL CORPORATION • WWW.CRONSTROMOSUCH.COM 111 The management's discussion and analysis on pages 15 - 25 and the Public Safety Personnel Retirement System Schedule of Funding Progress on page 62 are not a required part of the basic , financial statements but are supplementary information required by accounting principles 41generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement 411 and presentation of the required supplementary information. However, we did not audit the 411 information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements. 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. a The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. 41 6,0>A4turro, DAAAA Ocyripamv, AC. Cronstrom, Osuch& Company, P.C. September 20, 2006 , 14 � ► Management's Discussion and Analysis As management of the Town of Oro Valley, Arizona (Town), we offer readers of the Town of Oro Valley's financial statements this narrative overview and analysis of the financial activities of the Town of Oro Valley for the fiscal year ended June 30, 2006. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. Financial Highlights ♦ The assets of the Town of Oro Valley as of June 30, 2006 exceeded its liabilities by $163,926,293 (net assets). Of this amount, $38,021,617 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. ♦ The government's total net assets increased by$13,273,071. ♦ As of June 30, 2006, the Town of Oro Valley's governmental funds reported combined ending fund balances of $24,149,579 which is a decrease of $2,863,938 or 11% in comparison to last fiscal year. ♦ At the end of the current fiscal year, unreserved fund balance for the General Fund was $14,356,224 or 68% of total General Fund expenditures. The unreserved fund balance included $872,361 designated for compensated absences and $195,312 designated for unemployment. The remaining $13,288,551 was undesignated. ♦ Total debt (other than compensated absences) for the Town of Oro Valley at June 30, 2006 was $84,374,405. Compared to last fiscal year this was a net increase of$1,570,036 or a 1.9% increase. Total debt service payments, including the amortization of discounts, premiums and deferred amounts on the refundings were $4,644,964. Bonds in the amount of $6,215,000 were issued for the purchase of land to construct new municipal facilities for Town employees. Overview of the Financial Statements. This discussion and analysis is intended to serve as an introduction to the Town of Oro Valley's basis financial statements. The Town of Oro Valley's basic financial statements are comprised of 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 of Oro Valley's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the Town of Oro Valley's assets and liabilities, with the difference between assets and liabilities 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 of Oro Valley is improving or declining. 15 The statement of activities presents information about how the government's net assets changed during the most recent fiscal year. Changes in net assets are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, certain 41revenues and expenses reported in this statement will result in cash flows in future fiscal periods 41(e.g.,uncollected court fines and earned but unused vacation leave). The government-wide financial statements distinguish functions of the Town of Oro Valley that are principally supported by local taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Town of Oro Valley include general government, public safety, highways and streets and culture and recreation. The business-type activities of the Town of Oro Valley include the Oro Valley Water Utility and Stormwater Utility. The government-wide financial statements include not only the Town of Oro Valley itself , (known as the primary government), but also a legally separate Town of Oro Valley Municipal Property Corporation (MPC). 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. These activities are accounted for in the Oro Valley Water Utility enterprise fund. The government-wide financial statements can be found on pages 28-29 of this report. 41 111 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 of Oro Valley, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town of Oro Valley can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same , functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows 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 a government'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 government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund ' statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 16 � The Town of Oro Valley maintains fourteen individual governmental funds. 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 Fund, Highway User Revenue Fund (HURF), Public Transportation Fund, Oracle Road Debt Service Fund and the Townwide Roadway Development Impact Fees Fund which are considered to be major funds. Data from the other nine governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The Town of Oro Valley adopts an annual appropriated budget for its General Fund, certain Special Revenue Funds, Debt Service Funds and Capital Project Funds. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the departmental level for the General Fund and in total by fund for the other funds. The Town also maintains an encumbrance accounting system as one method of maintaining budgetary control. Encumbered amounts lapse at year end. However, outstanding encumbrances generally are reappropriated as part of the subsequent year's budget. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the General Fund and Special Revenue Funds reported as major funds (H1JRF and the Public Transportation Funds), this comparison is presented on pages 34-36 as part of the basic financial statements for the governmental funds. Budgetary comparisons for all Nonmajor Governmental Funds with appropriated annual budgets are presented in the Combining and Individual Fund Statements and Schedules of this report on pages 66-78. As demonstrated by the statements and schedules included in the financial section of this report, the Town of Oro Valley continues to meet its responsibility for sound financial management. The basic governmental fund financial statements can be found on pages 30-33 of this report. 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. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Oro Valley Water Utility and the Stormwater Utility. The basic proprietary fund financial statements can be found on pages 37-39 of this report. Notes to the basic 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 on pages 41-59 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town of Oro Valley's progress in funding the Arizona Public Safety Retirement System available to commissioned police officers and the Correction Officers Retirement Plan for police dispatchers. Required supplementary information can be found on page 62 of this report. 17 4 11 1111 411 The combining statements referred to earlier in connection with nonmajor governmental funds are presented imrnyfollowing ediatel the required supplementary information. Combining and , individual fund statements and schedules can be found on pages 66-78 of this report. 1111 Government-wide Financial Analysis II III As noted earlier, over time net assets may serve as useful indicators of a government's financial position. In the case of the Town of Oro Valley, assets exceeded liabilities by $163,926,293 at 411 June 30, 2006. III 111 Net assets consist of three com onents. The largest portion of net assets ($114,654,277 or 70%) II itsinvestments in capital assets (e.g., land, buildings, machinery and equipment), less any reflects p • Oro Valleyuses these capital I related outstanding debt used to acquire those assets. The Town of p assets to providecitizens; consequently,services to these assets are not available for future III Although the Town of Oro Valley's investment in capital assets is reported net ofIII spending. A g related debt, the resources needed to repay this debt must be provided from other sources, since I the capital assets themselves cannot be used to liquidate these liabilities. p I Town of Oro Valley's Net Assets III Governmental Activities Business-type' Activities Total II 2006 2005 2006 2005 2006 2005 III 111 Current and other assets $ 32,846,248 $ 35,660,512 $ 27,964,323 $ 29,316,237 $ 60,810,571 $ 64,976,749 Capital assets 123.405.883 111.123.232 71677.799 64.768.962 195,083.682 175.892.194 I Total assets 156.252.131 146.783.744 99.642.122 94.085.199 255.894,253 240.868.94311 Long-term liabilities outstanding 20,858,681 19,423,682 64,516,057 64,283,747 85,374,738 83,707,429 II Other liabilities 3.997.485 4.063,472 2.595.737 2.444.820 6.593.222 6.508.292 Total liabilities 24.856.166 23.487.154 67.111.794 66.728.567 91.967.960 90.215.721 111 Net assets: III Invested in capital assets, I net of related debt 107,413,486 92,541,223 7,240,791 546,602 114,654,277 93,087,825 Restricted 8,919,398 15,360,660 2,331,001 2,310,980 11,250,399 17,671,640 i Unrestricted 15.063.081 15.394.707 22.958.536 24.499.050 38.021,617 39.893.757 Total net assets $131.395.965 $123.296.590 $ 32.530.328 $ 27.356.632 $163.926.293 $150.653.222 , III The secondp ortion of the Town of Oro Valley's net assets ($11,250,399 or 7%) representsII resources that are subject to external restrictions. The third portion of net assets is the � used to meet the i unrestricted portion ($38,021,617or 23%). These net assets may be s government's ongoingobligations to citizens and creditors. 41 og . . t end of the current fiscalyear, the Town of Oro Valley had positive net assets, both for the At the I government as a whole, as well as for its separate governmental and business-type activities. i the current fiscal year, the Town's net assets increased by $8,099,375 in governmental ' During activities and $5,173,696 in business-type activities for a total of$13,273,071. 4 4 4 18 i i d The $8 million increase in governmental activities was mainly attributed to the category of capital assets. Several street and road improvement projects were completed in this fiscal year including the Tangerine Road Widening Project ($1 OM) and Lambert Lane Safety Improvements ($388K) and miscellaneous street and road projects ($2M). Business-type activities in the Oro Valley Water Utility fund increase by $5.2M. This increase is primarily related to the category of capital assets which increased by $6.9M. Phase I of the reclaimed water delivery system was completed in this fiscal year. Governmental and Business-type Activities. Governmental activities increased the Town of Oro Valley's net assets by $8,099,375 which accounts for 61% of the total growth in the net assets of the Town of Oro Valley. Key elements of this increase are as follows: • Local sales tax collections totaled $12.9 million which is an increase in collections of $3.0 million as compared to last fiscal year. Construction sales tax ($21V), retail trade ($287K) and restaurants and bars and hotel/motel ($504K) were the industries that accounted for the increase. • $2.9 million in state grant funds was received for street and road improvement projects. • State shared revenues increased by $1 million as compared to last fiscal year. • Investment earnings increased by $433,913 over last fiscal year due to higher interest rate yields. Business-type activities increased the Town of Oro Valley's net assets by $5,173,696 which accounted for 39% of the total growth in the Town's net assets. Key elements of this increase are as follows. • Total revenues for the Oro Valley Water Utility totaled $15,618,123. Revenues collected were water sales ($10.7M), charges for services ($1.2M), water connection fees ($1.8M), capital contributions ($629K) and investments earnings ($951K). • Total expenses for the Oro Valley Water Utility were $10,438,869. This is an increase of 8.3% from the previous fiscal year. 19 411 a a Town of Oro Valley's Change in Net Assets a ill Governmental Activities Business-type Activities Total a 2006 2005 2006 2005 2006 2005 II Revenues: • Program Revenues Fees,fines and charges for services $ 4,197,210 $ 4,180,651 $14,059,792 $11,966,123 $ 18,257,002 $ 16,146,774 Operating grants and contributions 4,558,864 4,216,642 - - 4,558,864 4,216,642 ii Capital grants and contributions 3,994,640 19,267,422 628,501 2,934,747 4,623,141 22,202,169 ii General Revenues IIITaxes Sales taxes 12,455,609 9,536,791 - - 12,455,609 9,536,791 Franchise taxes 435,428 402,482 - - 435,428 402,482 I Impact Fees 1,098,977 1,547,819 - - 1,098,977 1,547,819 p - - 3,343,471 2,935,615 11 State revenue sharing 3,343,471 2,935,615 State sales tax revenue sharing 3,432,007 2,958,376 - - 3,432,007 2,958,376 i Auto lieu tax revenue sharing 1,541,560 1,395,094 - - 1,541,560 1,395,094 Investment earnings 991.151 557.238 956.189 591.932 1.947.340 1,149.170 a Total Revenues 36.048.917 46.998.130 15.644.482 15.492.802 51.693.399 62.490.932 111 Expenses: 111 government 7,162,732 5,997,864 - - 7,162,732 5,997,864 Public safety 11,155,542 10,309,453 - - 11,155,542 10,309,453 Highways and streets 5,732,026 4,789,234 - - 5,732,026 4,789,234 Culture and recreation 3,014,341 2,631,306 - - 3,014,341 2,631,306 S Interest on long-term debt 805,123 653,331 - - 805,123 653,331 Water 10'438,869 9,642,592 10,438,869 9,642,592 I Stormwater drainage - - 111.695 271.469 111.695 271.469 Total Expenses 27.869,764 24.3 81,188 10.550.564 9.914.061 38.420.328 34.295.249 4111 Increase in net assets before 8,179,153 22,616,942 5,093,918 5,578,741 13,273,071 28,195,683 II transfers 41 Transfers (79,778) (91.194) 79,778 91.194 - - I Change in net assets 8,099,375 22,525,748 5,173,696 5,669,935 13,273,071 28,195,683 , Net assets,beginning of year II 123.296.590 100.770.842 27.3 56.632 21.686.697 150.653.222 122.457.539 Net assets,end of year $131.395.965 $123.296.590 $32.530.328 $27.356.632 $ 163.926.293 $ 150.653.222 1 II Financial Analysis of the Government's Funds II • II The Town of Oro Valley uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 1 III Governmental funds. The focus of the Town of Oro Valley's governmental fundsis to provide Iinformation on near-term inflows, outflows, and balances of spendable resources. Such informationI of Oro Valley's financing is useful in assessing the Town y requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net 4 resources available for spending at the end of the fiscal year. I 11 I 20 1 . 1 As of the end of the current fiscal year, the Town of Oro Valley's governmental funds reported combined ending unreserved fund balances of $24,061,688 a decrease of $2,915,641 in comparison with the prior year. The unreserved fund balance includes funds designated for compensated absences ($921,284) and unemployment reserves ($220,447). The general fund is the chief operating fund of the Town of Oro Valley. At the end of the current fiscal year, the unreserved fund balance of the General Fund was $14,356,224, and the total fund balance was $14,363,491. As a measure of the general fund's liquidity, it is useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 68% of total general fund expenditures, while total fund balance represents 68% of that same amount. The unreserved fund balance of the Town of Oro Valley's General Fund increased by $2,612,064 during the current fiscal year. Key factors in this increase are as follows: • Total revenues of$25,018,727 exceeded expenditures by $3,947,566. • Revenue sources which exceeded budget included the following: local sales tax collections ($2.5M), state/county shared revenues ($397K), investment earnings ($296K) • Sales tax recoveries ($307K) generated from sales tax audits also exceeded expectations. • Expenditures were under budget by $867K, excluding contingencies. This was mainly attributed to capital improvement projects carried forward to fiscal year 2006/07 and cost savings in various departments due to staffing vacancies during the year. Unreserved Unreserved Fund Balance Fund Balance Increase/(Decrease) Fiscal Year 2005/06 Fiscal Year 2004/05 From 2004/05 General Fund $ 14,3 5 6,224 $ 11,744,160 $ 2,612,064 Highway User Revenue Fund 3,753,310 3,308,622 444,688 Public Transportation Fund 53,169 88,230 (3 5,061) Oracle Road Debt Service Fund 100,715 216,592 (115,877) Townwide Roadway Development Impact Fees Fund 4,119,146 7,301,641 (3,182,495) Nonmajor Governmental Funds 1,679.124 4.318.084 (2,63 8,960) Total Governmental Funds $ 24.061.688 $ 26.977.329 $ (2.915.641) The Highway User Revenue Fund's unreserved fund balance increased by $444,688 which was primarily due to higher than anticipated construction sales tax collections. Townwide Roadway Development Impact Fee fund's fund balance decreased by $3.2 million. This decrease was due to the completion of several major road and street improvement projects. The decrease of $2.6M in the nonmajor governmental funds is mainly attributed to the expenditures relating to the completion of the Oracle Road Improvement District. 21 111 Proprietary funds. The Town of Oro Valley's proprietary funds provide the same type of - 411 information found in the government-wide financial statements, but in more detail. • Unrestricted net assets of the Oro Valley Water Utility at the end of the year amounted to 111 $22,885,482, and those for the Stormwater Utility amounted to $73,054. The total growth in net assets for the Water Utility was $5,179,253. The Stormwater Utility unrestricted net assets 1111 decreased by $5,557. Key factors attributing to these changes are the following: Oro Valley Water Utility 41 • Water sales totaled $10,745,087, which is an increase of 11% compared to last fiscal year. ♦ Water connection fees collected total $1,838,526, an increase of 108%over last fiscal 411 year. 411 ♦ Net income for the fiscal year was $4.6 million, a $1.7 million increase over last fiscal year. • Operating costs were slightly below budgeted amounts. • Capital assets increased by $16 million due to the completion of the reclaimed water 41 delivery system. Stormwater Utility ♦ Expenses exceeded revenues by $5,557 (net of transfers) due to the completion of several stormwater and drainage study projects. 111 General Fund Budgetary Highlights The Town of Oro Valley amended the General Fund's budget in fiscal year 2005/06 by reducing � the general government's contingency/reserve budgeted expenditures by $20,000. An increase of . $20,000 was made to the Parks and Recreation budget. The net change in the General Fund was 111 zero. There were no significant variances between the final amended budget and actual results, with the exception of local sales tax ($2.4M), state/county shared revenue ($397K) and investment . earnings ($295K). General administration expenditures included budgeted contingencies of$8.6 million that were unspent at the end of the fiscal year. Capital Asset and Debt Administration Capital assets. The Town of Oro Valley's investment in capital assets for its Governmental and � Business-type Activities as of June 30, 2006 was $195,083,682 (net of accumulated � depreciation). This investment in capital assets includes land, buildings and improvements, equipment and vehicles, park facilities, streets, water systems and water rights. The net increase in the Town of Oro Valley's investment in capital assets for the current fiscal year was $19,191,488 or 11%. 22 , Town of Oro Valley Arizona's Capital Assets (net of depreciation) Governmental Activities 2006 2005 Land $ 13,159,928 $ 10,021,765 Infrastructure 73,430,056 63,019,956 Buildings and improvements 15,808,180 14,610,058 Machinery, equipment and vehicles 2,038,232 1,736,683 Construction in progress l 8.969,487 21,734,770 Total $ 123,405,883 $111,123,232 The increase of $12.2 in capital assets for governmental activities is mainly attributed to the purchase of land for municipal facilities, the completion of several street and road improvement projects and the completion of the Oro Valley Public Library building expansion. Business-type Activities 2006 2005 Land $ 2,410,660 $ 823,823 Water rights 6,172,3 61 6,172,3 61 Water system 62,105,519 45,988,055 Equipment and vehicles 493,710 522,827 Construction in progress 495.549 11.261,896 Total $ 71,677,799 $ 64,768,962 The increase in the business-type activities of$6.9 was largely due to the completion of Phase I of the reclaimed water delivery system. Additional information on the Town of Oro Valley's capital assets can be found in note 3.A.4 on pages 51 and 52 of this report. Long-term debt. At the end of the current fiscal year, the Town of Oro Valley had total bonded debt, special assessments, certificates of deposits and loans outstanding of $84,374,405, including $964,738 for deferred amounts on refundings,premiums and discounts. This amount is comprised of debt backed by the full faith and credit of the government. Governmental activities debt of $19,937,397 includes $17,333,254 which is paid with General Fund revenue sources and $2,604,143 paid with Townwide Roadway Development Impact Fees. Business-type activities are paid with water related revenue sources such as water sales and water connection fees. 23 a a a Town of Oro Valley 111 Outstanding Debt II Governmental Activities II 2006 2005 a 254 $ 9,413,909 13 173 Revenue bonds $ > III Special assessment debt 3,945,000 3,945,000 a Certificates of participation 215,000 420,000 Loan payable 2,604,143 4.803 100 a Total $ 19,937,397 $ 18,582,009 a Business-type Activities a 41 2006 2005 II Revenue bonds $ 64,437,008 $= 64,222,360 a a During the fiscal year, the Town of Oro Valley issued $6,215,000 in Excise Tax Revenue bonds.67% will be repaid by governmentalactivity 33% funds and from business type activity funds. a 111 Proceeds from this bond issue were used to purchase land and, at a future date, will be used for the construction of Town facilities. ! "A" ratingfrom Standard & Poor's and a "A+" ratingII The Town of Oro Valley maintains an from Fitch on the revenue bonds outstanding. a Additional information on the Town of Oro Valley's long-term debt can be found on page 53-54 II of this report. a Economic Factors and Next Year's Budgets and Rates a o • The unemployment rate for the Town of Oro Valley is currently 3%. Pima County's and II ' 4.3% and 4.4%, respectively. a a the State of Arizona's unemployment rates are ♦ The Town's secondary assessed valuation for the current year is $463,211,743, an increase11% I41 of over last fiscal year. • Single family residential building permits issued in this fiscal year totaled 388, which is down 34 permits from last fiscal year. 411 I II a 41 II I I 24 IIII II The Town of Oro Valley's budget for fiscal year 2006/07 totaled $105,869,650 an increase of $6,875,390 or 7% compared to last fiscal year. This increase is attributed to the following factors: ♦ $5.6 million increase in the General Fund related to the possible adoption of a utility sales tax ($1.2M), state/county shared revenues ($1.5M), an increase in the fund balance ($1.6M), and local sales tax collections ($989k) due to two new commercial centers coming on-line and an increase in the overall level of sales activity from Town residents. ♦ $1.7 million in the newly created Bed Tax Fund, the result of increasing the bed tax rate from 3%to 6%. ♦ $1.6 million in the Highway Fund related to increased construction sales tax ($468k), highway user revenue tax collections ($3 78k), and an increase in the fund balance ($630k). ♦ $1.3 million in the Roadway Development Impact Fee Fund from state and federal grants to assist in major road projects. ♦ $2.6M in the Water Utility Fund related to a 5% water rate increase planned for FY 2006/07 and increased water sales ($1.4M), a $ .04 increase in Groundwater Preservation fees ($174k), and an increase in the fund balance ($700k). Requests for Information This financial report is designed to provide a general overview of the Town of Oro Valley's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report of requests for additional financial information should be addressed to the following: Stacey Lemos, Finance Director or Mary Rallis, Accounting Supervisor Town of Oro Valley, Arizona 11,000 N. La Canada Drive Oro Valley, Arizona 85737 25 4 I I II I I I I I 41 I I 41 THIS PAGE BLANK I 11 I III I I III I 41 II I I 1 1 I II I II I I I I I I I I I 26 I ► ► Basic Financial Statements 27 4 I 41 TOWN OF ORO VALLEY, ARIZONA 41 STATEMENT OF NET ASSETS II JUNE 30, 2006 I I 1 Governmental Business-type Activities Activities Totals , Assets Cash and cash equivalents $ 23,761,444 $ 18,198,719 $ 41,960,163 Receivables,net of allowance for doubtful accounts II receivable 1,879,941 1,788,701 3,668,642 Taxes receivable 1,088,902 - 1,088,902 , Intergovernmental receivable 1,572,340 - 1,572,340 Special assessments receivable 3,945,000 - 3,945,000 1111 Interest receivable 99,508 94,795 194,303 Inventones 80,074 - 80,074 II Prepaid items 7,817 464 8,281 II charges 411,222 1,280,982 1,692,204 Restricted assets - 6,600,662 6,600,662 II Capital assets Non-depreciable 32,129,415 9,078,570 41,207,985 II Depreciable(net) 91.276.468 62.599.229 153.875.697 II Total assets 156.252.131 99.642.122 255.894.253 41 Liabilities I Accounts payable 1,158,155 559,243 1,717,398 Accrued wages and benefits 367,077 34,082 401,159 111 Interest payable - 1,442,853 1,442,853 Intergovernmental payable 568,409 441,581 1,009,990 ill Unearned revenue 572,438 - 572,438 Customer deposits payable 1,331,406 117,978 1,449,384 I Noncurrent liabilities Due within one year 1,778,049 2,332,381 4,110,430 1111 Due in more than one year 19.080.632 62.183.676 81.264.308 II Total liabilities 24.856.166 67.111.794 91.967.960 111 Net assets I Invested in capital assets,net of related debt 107,413,486 7,240,791 114,654,277 Restricted for 11 Public safety 283,271 - 283,271 Highways and streets 3,887,020 - 3,887,020 II Debt service 280,055 2,331,001 2,611,056 II Capital outlay 4,119,229 - 4,119,229 Other 349,823 - 349,823 II Unrestricted 15.063.081 22.958.536 38.021.617 II Total net assets $ 131.395.965 $ 32.530.328 $ 163.926.293 III1 I 41 1 I 1 The notes to the basic financial statements are an integral part of this statement. , 28 I . 1 t� t� O M rn O M dt Q1 .--, C\ 00 t� -� O O N ,--. 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C. co H III III I TOWN OF ORO VALLEY, ARIZONA II BALANCE SHEET i GOVERNMENTAL FUNDS JUNE 30, 2006 r II I Townwide I Roadway Nonmajor II Public Oracle Road Development Governmental General HURF Transportation Debt Service Impact Fees Funds Totals II Assets Cash and cash equivalents $ 10,998,905 $ 3,650,143 $ 368,708 $ 100,715 $ 4,271,547 $ 4,371,426 $ 23,761,444 II Receivables,net 41Accounts receivable 677,640 - - - 998,588 203,713 1,879,941 Taxes receivable 1,088,902 - - - - - 1,088,902 i Intergovernmental receivable 808,327 264,013 - - 500,000 - 1,572,340 Special assessments III receivable - - - 3,945,000 - - 3,945,000 54 022 17,3081 Interest receivable 196 - 16,612 11,370 99,508 Due from other funds 3,260,770 - - - - - 3,260,770 ii Inventories - 80,074 - - - - 80,074 Prepaid items 7.267 389 78 - 83 - 7.817 i Total assets $ 16.895.833 $ 4.011.927 $ 368.982 $ 4.045.715 $ 5.786.830 $ 4.586.509 $p 35.695.796 11 Liabilities and Fund Balances . Liabilities i Accounts payable $ 869,498 $ 151,511 $ 3,688 $ - $ 55,361 $ 78,097 $ 1,158,155 Accrued wages and benefits 329,546 26,402 5,447 - 5,682 - 367,077 39 - - - 347 568,409 II Intergovernmental payable568,023 Due to other funds - - 306,600 - 1,606,558 1,347,612 3,260,770 e Deferred revenue 702,221 - - 3,945,000 - 213,179 4,860,400 Customer deposits payable 63.054 202 - - - 1.268.150 1.331.406 4 Total liabilities 2.532.342 178.154 315.735 3.945.000 1.667.601 2.907.385 11.546.217 v Fund balances 111 Reserved for: - - - - - - Inventories - 80,074 - - - - 80,074 a Prepaid items 7,267 389 78 - 83 - 7,817 Unreserved: Undesignated 13,288,551 3,696,081 43,330 100,715 4,112,156 - 21,240,833 ii Designated for compensated absences 872,361 34,173 7,760 - 6,990 - 921,284 4 Designated for unemployment 195,312 23,056 2,079 - - - 220,447 a Unreserved,reported in 111nonmajor: Special revenue funds - - - - - 633,094 633,094 e Debt service funds - - - - - 179,340 179,340 Capital projects funds - - - - - 866.690 866.690 a Total fund balances 14.363.491 3.833.773 53.247 100.715 4.119.229 1.679.124 24.149.579 I Total liabilities and fund balances $ 16.895.833 $ 4.011.927 $ 368.982 $ 4.045.715 $ 5.786.830 $ 4.586.509 $ 35.695.796 ii I I I The notes to the basic financial statements are an intergral part of this statement. 41 30 1 I • TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2006 Fund balances-total governmental funds $ 24,149,579 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental capital assets 155,407,171 Less accumulated depreciation (32.001.288) Capital assets used in governmental activities 123.405.883 Other long-term assets are not available to pay for current-period expenditures and are not susceptible to accrual. Special assessments receivable 3,945,000 Court receivable 342,962 Long-term liabilities,including bonds payable,are not due and payable in the current period and therefore are not reported in the governmental funds. Revenue bonds (13,559,446) Special assessment debt (3,945,000) Certificates of participation (215,000) Loans payable (2,604,143) Deferred amounts on the refunding 514,184 Deferred amount on the premium (127,992) Compensated absences (921,284) Deferred bond issuance costs 411.222 Net assets of governmental activities $ 131.395.965 The notes to the basic financial statements are an integral part of this statement. 31 111 II Ill TOWN OF ORO VALLEY, ARIZONA 111 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 1 GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 41 II I Townwide • Roadway Nonmajor II Public Oracle Road Development Governmental General HURF Transportation Debt Service Impact Fees Funds Totals II Revenues IITaxes Sales taxes $ 10,622,636 $ 1,832,973 $ - $ - $ - $ - $ 12,455,609 ii Franchise taxes 435,428 - - - - - 435,428 Intergovernmental 9,800,799 2,793,322 270,560 - 2,987,296 921,238 16,773,215 , Fines and forfeitures 213,750 - - - - 248,496 462,246 Licenses andP ermits 2,385,102 48,162 - - - - 2,433,264 i Charges for services 901,983 2,222 38,471 - - - 942,676 Contributions and donations 11,221 - - 86,106 - - 97,327 4 Impact fees - - - - 1,098,977 - 1,098,977 4 Investment earnings 495,252 158,335 7,905 - 170,844 158,815 991,151 Other 152.556 71.862 10.100 - 13.025 77.885 325.428 . Total Revenues 25.018.727 4.906.876 327.036 86,106 4.270.142 1.406.434 36.015321 I Expenditures . Current General government 6,731,169 - - 25,016 - 3,232,771 9,988,956 e Public safety 11,491,434 - - - - 145,481 11,636,915 Highways and streets - 4,417,801 527,581 - 5,145,164 3,683,015 13,773,561 a Culture and recreation 2,848,558 - - - - 1,019,691 3,868,249 Debt Service Principal retirement - - - 2,198,957 657,638 2,856,595 . Interest on long-term debt - - - 176,967 108,433 445,958 731,358 Issuance costs - - - - - 107.897 107.897 . Total Expenditures 21.071.161 4.417.801 527.581 201.983 7.452.554 9.292.451 42,963.531_ I Excess(deficiency)of revenues over expenditures 3.947.566 489.075 (200.545) (115.877) (3.182.412) (7.886.017) (6.948.210) I Other financing sources(uses) I Transfers in - - 165,562 - - 1,083,007 1,248,569 Transfers out (1,328,347) - - - - (1,328,347) Ill Issuance of long-term debt - - - - - 4.164.050 , 4,164.050 a Total other financing sources (uses) (1.328.347) - 165.562 - - 5.247.057 4.084.272 . Net change in fund balances 2,619,219 489,075 (34,983) (115,877) (3,182,412) (2,638,960) (2,863,938) e Fund balances,beginning of I year 11.744.272 3.344.698 88.230 216.592 7.301.641 4.318.084 27.013.517 Fund balances,end of year $ 14.363.491 $ 3.833.773 $ 53.247 $ 100.715 $ 4.119.229 $ 1.679.124 $ 24.149.579 I I I I I The notes to the basic financial statements are an intergral part of this statement. S 32 IIII . 1 ► TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND ► CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Net change in fund balances-total governmental funds $ (2,863,938) 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 and reported as depreciation expense. Expenditures for capital assets 15,404,934 Less current year depreciation (3.122.283) Excess capital expenditures over depreciation 12.282.651 Some revenues reported in the statement of activities do not provide current financial resources and therefore are not reported as revenues in governmental funds. Court fines 33,596 The issuance of long-term debt(e.g. bonds, leases)provides current financial resources to governmental funds,while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. The issuance of long- term debt increases long-term liabilities on the statement of net assets and the repayment of principal on long-term debt reduces long-term debt on the statement of net assets. Also, governmental funds report the effect of issuance costs,premiums,discounts,and similar items when the debt is first issued,whereas these items are deferred and amortized over the term of the long-term debt in the statement of activities. Principal payments on long-term debt 2,856,595 Issuance costs 107,897 Proceeds of revenue bonds (4,164,050) Amortization of the deferred amount on the refunding (57,132) Amortization of the deferred amount on the premium 9,199 Amortization of issuance costs (25,832) 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 the governmental funds. Net increase in compensated absences (79.611) Change in net assets of governmental activities $> 8.099.375 The notes to the basic financial statements are an integral part of this statement. 33 i II I TOWN OF ORO VALLEY, ARIZONA I GENERAL FUND II STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL 111 FOR THE FISCAL YEAR ENDED JUNE 30, 2006 II II Original Variance with Budget Final Budget Actual Final Budget 111 Revenues IIITaxes Sales taxes $ 8,176,000 $ 8,176,000 $ 10,622,636 $ 2,446,636 i Franchise taxes 402,000 402,000 435,428 33,428 Intergovernmental 9,333,106 9,333,106 9,800,799 467,693 III Fines and forfeitures 187,000 187,000 213,750 26,750 Licenses and permits 2,705,000 2,705,000 2,385,102 (319,898) I Charges for services 703,400 703,400 901,983 198,583 Contributions and donations - - 11,221 11,221 ill Investment earnings 200,000 200,000 495,252 295,252 II Other 135.000 135.000 152.556 17.556 Total Revenues 21.841.506 21.841.506 25.018.727 3.177.221 1111 Expenditures II Current General government II Town council 216,509 216,509 183,720 32,789 4 414 743 (42,898) 111 Town clerk 414,7 3 457,641 Magistrate court 613,886 613,886 593,645 20,241 III Town manager 586,011 586,011 575,596 10,415 Finance 960,255 960,255 535,996 424,259 II Legal 839,615 839,615 904,355 (64,740) Planning anzoning in 831,498 831,498 712,962 118,536 II g General administration 9,080,127 9,060,127 286,084 8,774,043 Custodial facility maintenance 164,077 164,077 155,111 8,966 II Economic development 689,956 689,956 709,808 (19,852) 1111 Community development administration 451,971 451,971 452,056 (85) Human resources 267,364 267,364 287,013 (19,649) II Information systems 602,383 602,383 561,708 40,675 Public works 345.247 345.247 315.474 29,773 111 Total general government 16.063.642 16.043.642 6.731.169 9.312.473 Public safety 1111 Police 10,302,509 10,302,509 10,108,807 193,702 II Building safety 1.275.274 1.275.274 1.3 82.627 (107.353) Total public safety 11.577.783 11.577,783 11.491.434 86,349 III Culture and recreation Parks and recreation 1,638,102 1,658,102 1,812,702 (154,600) 111 Library 1.210.679 1.210.679 1.035.856 174.823 IITotal culture and recreation 2.848.781 2.868.781 2.848.558 20.223 Total Expenditures 30.490.206 30.490.206 21.071.161 9.419.045 111 Excess(deficiency)of revenues over expenditures (8.648.700) (8.648.700) 3.947.566 12.596.2661 Other financing sources(uses) 411 Transfers out (1.328.347) (1.328.347) (1.328.347) - Total other financing sources(uses) (1.328.347) (1.328.347) (1.328.347) - 1111 Net change in fund balances (9,977,047) (9,977,047) 2,619,219 12,596,266 II Fund balances,beginning of year 9.977.047 9.977.047 11.744.272 1.767.225 II Fund balances,end of year $ - $ - $ 14.363.491 $ 14.363.491 El I The notes to the basic financial statements are an integral part of this statement. II 34 I TOWN OF ORO VALLEY, ARIZONA HURF FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Original and Final Variance with Final Budget Actual Budget Revenues Taxes $ 1,391,000 $ 1,832,973 $ 441,973 Intergovernmental 3,326,000 2,793,322 (532,678) Licenses and permits 21,000 48,162 27,162 Charges for services 2,000 2,222 222 Investment earnings 20,000 158,335 138,335 Other L000 7L862 70.862 Total Revenues 4.761.000 4.906.876 145.876 Expenditures Current Highways and streets 7.394.643 4.417.801 2.976.842 Total Expenditures 7.394.643 4.417.801 2.976.842 Excess(deficiency)of revenues over expenditures (2,633,643) 489,075 3,122,718 Fund balances,beginning of year 2.633.643 3.344.698 711.055 Fund balances,end of year $ - $ 3.833.773 $ 3.833.773 The notes to the basic financial statements are an integral part of this statement. 35 III I 1 TOWN OF ORO VALLEY, ARIZONA PUBLIC TRANSPORTATION FUND III STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND 111 BALANCES - BUDGET AND ACTUAL I FOR THE FISCAL YEAR ENDED JUNE 30, 2006 II II I Original and Final Variance with Final Budget Actual Budget II Revenues 111 Intergovernmental $ 318,160 $ 270,560 $ (47,600) II Charges for services 33,500 38,471 4,971 Investment earnings 2,000 7,905 5,905 III Other - 10.100 10,100 Total Revenues 353.660 327.036 (26.624) 111 II Expenditures IICurrent Highways and streets 580.880 527.581 53.299 Total Expenditures 580.880 527.581 53.299 II over Excess(deficiency)of revenuesexpenditures (227,220) (200.545) 26.675 1 Other financing sources • Transfers in 165.562 165.562 - Total other financing sources 165.562 165.562 Net change in fund balances (61,658) (34,983) 26,675 a Fund balances,beginning of year 61.658 88.230 26.572 a Fund balances,end of year $ - $r 53.247 $ 53.247 a a a a a a a a a a a I I a I IIII The notes to the basic financial statements are an integral part of this statement. 4111 36 411 I TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2006 Stormwater Water Drainage Totals Assets Current assets Cash and cash equivalents $ 18,104,758 $ 93,961 $ 18,198,719 Receivables,net Accounts receivable 1,788,701 - 1,788,701 Interest receivable 94,423 372 94,795 Prepaid items 452 12 464 Deferred charges 1,280,982 - 1,280,982 Restricted assets 6.600.662 - 6.600.662 Total current assets 27,869,978 94,345 27,964,323 Noncurrent assets Capital assets Non-depreciable 9,078,570 - 9,078,570 Depreciable(net) 62.599.229 - 62.599,229 Total Assets 99.547,777 94.345 99.642.122 Liabilities Current liabilities Accounts payable 540,674 18,569 559,243 Accrued wages and benefits 33,268 814 34,082 Interest payable 1,442,853 - 1,442,853 Intergovernmental payable 441,581 - 441,581 Customer deposits payable 117,978 - 117,978 Compensated absences 65,204 1,908 67,112 Bonds,notes and loans payable 2.265.269 - 2.265.269 Total current liabilities 4,906,827 21,291 4,928,118 Noncurrent liabilities Compensated absences 11,937 - 11,937 Bonds,notes and loans payable 62.171.739 - 62.171 739 Total liabilities 67.090.503 21.291 67.111.794 Net assets Invested in capital assets,net of related debt 7,240,791 - 7,240,791 Restricted for Debt service 2,331,001 - 2,331,001 Unrestricted 22.885.482 73.054 22.958.536 Total net assets $ 32.457.274 $ 73.054 $ 32.530.328 The notes to the basic financial statements are an integral part of this statement. 37 II I I TOWN OF ORO VALLEY, ARIZONA I STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS111 PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 4 I I Stormwater Water Drainage Totals I Operating revenues 111 Charges for services $ 11.933.089 $ - $ 11.933.089 Total operating revenues 11.933 089 - 11.933.089 III Operating expenses Costs of sales and services 5,311,796 111,695 5,423,491 111 Depreciation and amortization 2.238.847 - 2.238.847 Total operating expenses 7.550.643 111.695 7.662.338 111 Operating income(loss) 4.382.446 (111.695) 4.270.751 I Nonoperating revenues(expenses) 1111 Connection fees 1,838,526 - 1,838,526 Impact fees 246,737 - 246,737 1111 Investment earnings 951,230 4,959 956,189 Interest expense (2,888,226) - (2,888,226) III Miscellaneous nonoperating revenues 20.039 21.401 41.440 II Total nonoperating revenues(expenses) 168.306 26.360 194.666 Income(loss)before contributions and III transfers 4,550,752 (85,335) 4,465,417 1 Capital contributions 628,501 - 628,501 I Transfers in - 79.778 79.778 I Change in net assets 5,179,253 (5,557) 5,173,696 I Total net assets,beginning of year 27.278.021 78.611 27.3 56.632 . Total net assets,end of year $ 32.457.274 $ 73.054 $ 32.530.328 II I I I i I I I I 1111I II I The notes to the basic financial statements are an integral part of this statement. II 38 4 I TOWN OF ORO VALLEY, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Stormwater Water Drainage Totals Cash flows from operating activities Receipts from customers $ 11,804,466 $ - $ 11,804,466 Payments to suppliers (3,294,638) (58,137) (3,352,775) Payments to employees (1,905,644) (45,877) (1,951,521) Connection fees 1,838,526 - 1,838,526 Impact fees 246,737 - 246,737 Other revenue 20,039 21,401 41,440 Customer deposits (2.3 89) - (2.389) Net cash flows from operating activities 8.707.097 (82.613) 8.624.484 Cash flows from noncapital financing activities Transfers in - 79.778 79.778 Net cash flows from noncapital financing activities - 79.778 79,778 Cash flows from capital and financing activities Purchase of capital assets (7,097,864) - (7,097,864) Proceeds of revenue bonds 2,050,950 - 2,050,950 Issuance costs (53,142) - (53,142) Principal payment on capital debt (1,907,362) - (1,907,362) Interest payment on capital debt (2.919.027) - (2.919.027) Net cash flows from capital and financing activities (9.926.445) - (9,926.445) Cash flows from investing activities Investment earnings 925.965 4,783 930,748 Net cash flows from investing activities 925.965 4.783 930.748 Net change in cash and cash equivalents (293,383) 1,948 (291,435) Cash and cash equivalents,beginning of year 24.998.803 92.013 25.090.816 Cash and cash equivalents,end of year(including$6,600,662 of restricted assets in the Water Fund) $ 24.705.420 $ 93,961 $ 24.799.381 Reconciliation of operating income(loss)to net cash provided by operating activities Operating income(loss) $ 4,3 82,446 $ (111,695) $ 4,270,751 Adjustments to reconcile operating income(loss)to net cash provided (used)by operating activities: Depreciation and amortization 2,238,847 - 2,238,847 Connection fees 1,838,526 - 1,838,526 Impact fees 246,737 - 246,737 Nonoperating receipts 20,039 21,401 41,440 Change in assets/liabilities: Receivables,net (210,733) - (210,733) Prepaid items (452) (12) (464) Accounts payable 153,771 8,232 162,003 Intergovernmental payable 82,110 - 82,110 Accrued payroll and related benefits (58,578) (1,428) (60,006) Compensated absences 16,773 889 17,662 Customer deposits (2.3 89) - (2.3 89) Net cash provided(used)by operating activities $ 8.707.097 $ (82.613) $ 8.624.484 Non-cash and investing activities Bond issuance costs of$84,859 were amortized during the year. In addition, the Town received $628,501 of assets contributed by developers recorded as capital contributions in the Statement of Revenues, Expenses and Changes in Fund Net Assets. The notes to the basic financial statements are an integral part of this statement. 39 a aa a a aa aa a a a a THIS PAGE BLANK II 4 a I I a I • I 4 I I 4 4 I I 4 I I 4 I • • • 4 I I 40 I TOWN OF ORO VALLEY,ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the Town of Oro Valley, Arizona (Town) have been prepared in conformity with U.S. generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A summary of the Town's more significant accounting policies follows. During the year ended June 30, 2006, the Town implemented the provisions of the Governmental Accounting Standards Board Statement No. 44, Economic Conditions Reporting: the Statistical Section. The implementation of GASB Statement No. 44 only requires additional disclosures, and has no effect on reported amounts for deposits, investments, net assets, or changes in net assets. A. Reporting entity The Town is a municipal government that is governed by a separately elected governing body. It is legally separate from and fiscally independent of other state and local governments. The accompanying 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. Included within the reporting entity: The Town of Oro Valley Municipal Property Corporation - 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 is a nonprofit 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 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. 41 1111 111 41 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the 111 primary government and its component units. The effect of interfund activity has been 41 removed from these statements; however, interfund services provided and used are not eliminated in the process of consolidation. Governmental activities are normally supported by taxes and intergovernmental revenues. 41 The statement of activities demonstrates the degree to which the direct expenses of a 111 given function or segment are offsetby 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 Iparticular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds. Major individual • governmental funds are reported as separate columns in the fund financial statements. � C. Measurement focus, basis of accounting, and financial statement presentation . The government-wide financial statements are reported using the economic resources 1111 measurement focus and the accrual basis of accounting. Revenues are recorded when 41 earned and expenses are recorded when a liability is incurred, regardless of the timing of 41 related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial 411 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, except expenditures related to compensated absences and 111 claims and judgments, which are recorded only when payment is due. However, since debt service resources are provided during the current year for payment of general long- term principal and interest due early in the following year, the expenditures and related liabilities have been recognized in the Debt Service Funds. 41 42 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 Taxes, intergovernmental grants and aid, and interest 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. All other revenue items are considered to be measurable and available only when cash is received by the government. The Town reports the following major governmental funds: The General Fund is the Town's primary operating fund. It accounts for all financial resources of the Town, except those required to be accounted for in another fund. The Highway Users Revenue Fund (HURF) accounts for the operations of the street maintenance department. Financing is provided by the Town's share of state gasoline taxes and local sales tax from construction. State law requires these gasoline taxes be used to maintain streets. The Public Transportation Fund accounts for the operation of the Town's public transportation system. The Oracle Road Debt Service Fund accounts for the special assessment collections and payment of the outstanding Oracle road bond issue. The Townwide Roadway Development Impact Fees Fund accounts for the collection and capital expenditures of the Townwide Roadway Development Impact Fees. The Town reports the following major proprietary funds: The Water Fund accounts for the costs to operate, construct and finance the Town's water system. The Stormwater Drainage Fund accounts for the costs to operate, construct and finance the Town's storm drainage. In addition, it accounts for the cost to educate the public relating to storm drainage water as required by the E.P.A. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the government-wide financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements with the exception of interfund services provided and used during the fiscal year. 43 a a TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 a Amounts reported as program revenues include 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated 411 resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. a Proprietary funds distinguish operating revenues and expenses from nonoperating items. 41 Operating revenues and expenses generally result from providing services and producing o I and delivering goods in connection with a proprietary fund's principal ongoing operations. 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, for governmental activities it is the Town's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, liabilities, and net assets or equity 111 i 1. Deposits and investments The Town's cash and cash equivalents are considered to be cash on hand, demand 111 deposits, cash and investments held by the State Treasurer, and highly liquid investments with maturities of three months or less from the date of acquisition. Cash and investments are pooled except for funds required to be held by fiscal agents or dentures. Interest earned from investments restricted under provisions of bond in purchased with such pooled monies is allocated to each of the funds based on the average 111 daily cash balances. State statutes authorize the Town to invest in obligations of the U.S. Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase agreements, obligations of the State of Arizona or any of its counties or incorporated cities, towns or duiY organized school districts, improvement districts in this state and the State Treasurer's Local Government Investment Pool. 111 2. Receivables I All trade accounts receivables are recorded net of allowance for doubtful accounts. 411 3. Short-term interfund receivables/payables During the course of operations, individual funds within the Town's pooled cash accounts may borrow money from the other funds within the pool on a short-term basis. These receivables and payables are classified as "due from other funds" or "due to other funds" on the balance sheet of the fund financial statements and are eliminated in the preparation of theg overnment-wide financial statements. a 44 a .. TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 4. Inventories and prepaid items Inventories consist of expendable supplies held for consumption. Inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 5. Restricted assets Certain proceeds of the Town's bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets because their use is limited by applicable bond covenants. 6. Capital assets Capital assets, which include property, plant, and equipment, are reported in the governmental activities column in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. General infrastructure assets acquired prior to July 1, 2002 are not reported in the basic financial statements. Those assets will be transitioned in over the next three fiscal years in accordance with GASB Statement No. 34. Depreciation on all assets is provided on a straight-line basis over the following estimated useful lives: Buildings 50 years Improvements other than buildings 20 years Infrastructure 50 years Machinery and equipment 5 years Vehicles 5 years 45 111 111 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 . 7. Compensated absences The liability for compensated absences reported in the government-wide statements consists of unpaid, accumulated leave balances. The liability has been calculated using 111 the vesting method, in which leave amounts for both employees who currently are eligible 111 to receive termination payments and other employees who are expected to become 111 eligible in the future to receive such payments upon termination are included. 8. Long-term obligations In the government-wide financial statements, long-term debt and other long-term � obligations are reported as liabilities in the applicable governmental activities. Bond � premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. a In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of 1111debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Net assets � In the government-wide financial statements, net assets are reported in three categories: 111 net assets invested in capital assets, net of related debt; restricted net assets; and I net assets. Net assets invested in capital assets, net of related debt is separately reported because the Town reports all Town assets which make up a significant � portion of total net assets. Restricted net assets account for the portion of net assets restricted by parties outside the Town. Unrestricted net assets are the remaining net assets not included in the previous two categories. 10. Fund equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. , 46 � TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary information The Town Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Arizona Revised Statutes, the Town Manager submits a proposed budget for the fiscal year commencing the following July 1 to the Town Council. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comment. 3. Prior to the third Monday in July, a tentative budget must be legally adopted and there is no statutory requirement for adopting the final budget. To ensure compliance with the State imposed expenditure limitation, a uniform expenditure report must be filed with the State each year. This report, issued under a separate cover, reconciles total Town expenditures from the audited financial statements to total expenditures for reporting in accordance with the State's uniform expenditure reporting system (A.R.S. §41-1279.07). 4. Expenditures may not legally exceed the expenditure limitation of all fund types as a whole. For management and legal purposes, the Town Council adopts a budget in accordance with Generally Accepted Accounting Principles by department for the General Fund and in total by fund for all funds for which a budget is adopted (the Town did not adopt a budget for the Industrial Development Authority or Revegetation Assurance Nonmajor Funds). The Town Manager, subject to Town Council approval, may at any time transfer various unencumbered appropriation balances or portions thereof between departments. The adopted budget cannot be amended in any way without Town Council approval. S. Formal budgetary integration is employed as a management control device during the year on the same modified accrual basis of accounting used to record actual revenues and expenditures. The Town is subject to the State of Arizona's Spending Limitation Law for Towns and Cities. This law does not permit the Town to spend more than budgeted revenues plus the carryover unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. The Town complied with this law during the year. 47 I III I TOWN OF ORO VALLEY, ARIZONA III NOTES TO THE BASIC FINANCIAL STATEMENTS e FOR THE FISCAL YEAR ENDED JUNE 30, 2006 II I No supplementary budgetary appropriations were necessary during the year. I B. Excess of expenditures over appropriations III Expenditures exceeded appropriations in the following funds: II III Amount of Overexpenditure II General Fund: Il Town clerk $ 42,898 I Legal 64,740 I Economic development 19,852 111 Community development administration 85 111Human resources 19,649 Building safety 107,353 411 Parks and recreation 154,600 1 Oracle Road Debt Service Fund 68,569 ill Nonmajor Governmental Funds: Library Construction 286,691 Oracle Road Construction 1,209,063 41 411 The overexpenditures listed in the General Fund were the result of recording the short- term compensated absence liability, a non-cash transaction. Cash was available to meet I all the overexpenditures listed above. 411 a I III 41 41 I III 411 4111 Ill I IIII III 48 I ► ► TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 NOTE 3 - DETAILED NOTES ON ALL FUNDS A. Assets 1. Deposits and investments Deposits and investments at June 30, 2006 consist of the following: Deposits Cash on hand $ 3,300 Cash in bank 9,325,924 Cash with the County Treasurer 343,764 Investments State Treasurer's Investment Pool 38887.837 Total cash and investments 48,560,825 Restricted assets (6,600,662) Total cash and equivalents $ 41,960,163 Deposits - The Town's deposits at June 30, 2006, were entirely covered by federal depository insurance or by collateral held by the Town's custodial bank in the Town's name. Investments - The State Board of Deposit provides oversight for the State Treasurer's pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant's position in the pool approximates the value of that participant's pool shares. The shares are not identified with specific investments and are not subject to custodial credit risk. In addition, the money market mutual fund is not subject to custodial credit risk. All other investments of the Town are uninsured and unregistered with the securities held by the counterparty's trust department or agent in the Town's name. Interest rate risk In accordance with the investment policy, the Town manages its exposure to declines in fair values by limiting its investments to maturities of six months or less. Credit risk. All of the Town's deposits and investments are either insured, collateralized or invested in U.S. government securities. The Town's investment in the State Treasurer's investment pool did not receive a credit quality rating from a national rating agency. 49 41 III I TOWN OF ORO VALLEY, ARIZONA I NOTES TO THE BASIC FINANCIAL STATEMENTS . FOR THE FISCAL YEAR ENDED JUNE 30, 2006 II II 2. Restricted assets 4 Restricted assets in the Enterprise Fund at June 30, 2006 consisted of the following: 4 111 Future debt service $ 2,331,001 III Current debt service 3,740,713 II proceeds 410,970 Customer deposits 117,978 ill $ 6.600.662 11 3. Receivables I I Governmental funds report deferred revenue in connection with receivables for revenues I that are not considered to be available to liquidate liabilities of the current period. I 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 411I components of deferred revenue and unearned revenue reported in the governmentalII funds were as follows: . Unavailable Unearned 1111 General Fund III Prepaid developer fees $ - $ 358,098 . JCEF court enhancement funds - 1,161 ICourt fines 342,962 - Oracle Road Debt Service Fund 41 Special assessments 3,945,000 - II Nonmajor Governmental Funds . Gaming funds - 206,500 Seizure funds - 6,679 4 $ 4.287.962 $ 572.438 I II II I I 111 II II I II II 50 II TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 4. Capital assets Capital asset activity for the year ended June 30, 2006 was as follows: Beginning Ending Balances Increases Decreases Balances Governmental Activities: Capital assets not being depreciated: Land $ 10,021,765 $ 3,13 8,163 $ - $ 13,159,928 Construction in progress 21,734.770 9.260,791 (12.026.074) 18.969,487 Total capital assets, not being depreciated 31,756,535 12,398,954 (12,026,074) 32,129,415 Capital assets being depreciated: Infrastructure 86,062,3 48 12,465,416 - 98,527,764 Buildings and improvements 16,971,118 1,623,650 - 18,594,768 Machinery, equipment and vehicles 5,464.850 942,988 (252.614) 6,155,224 Total capital assets being depreciated 108.498.316 15.032.054 (252,614) 123,277,756 Less accumulated depreciation for: Infrastructure (23,042,392) (2,055,316) - (25,097,708) Buildings and improvements (2,361,060) (425,528) - (2,786,588) Machinery, equipment and vehicles (3,728,167) (641.439) 252,614 (4.116,992) Total accumulated depreciation (29.131.619) (3,122.283) 252,614 (32,001,288) Total capital assets, being depreciated, net 79,366,697 11,909,771 - 91,276,468 Governmental activities capital assets, net S 111,123,232 $ 24,308,725 $ (12,026,074) $ 123,405,883 51 I I I TOWN OF ORO VALLEY, ARIZONA 111 NOTES TO THE BASIC FINANCIAL STATEMENTS I FOR THE FISCAL YEAR ENDED JUNE 30, 2006 I II Beginning Ending II Balances Increases Decreases Balances Business-type Activities: I Capital assets not being depreciated: Land $ 823,823 $ 1,586,837 $ - $ 2,410,660 Water rights 6,172,361 - - 6,172,361 III Construction inp rogress 11.261.896 4.339.865 (15,106.212) 495.549IIII Total capital assets, not being depreciated reciated 18,258,080 5,926,702 (15,106,212) 9,078,570 III Capital assets being depreciated: 111 Water system 57,696,207 18,090,879 - 75,787,086 411 pII Eq ui ment and vehicles 1,179.391 80.396 - 1.259,787 capital assets being 41 depreciated 58.875,598 18.171.275 - 77.046.873 II ' Less accumulated depreciation for: II Water system (11,708,152) (1,973,415) - (13,681,567) IIII p111 Eq ui ment and vehicles (656.564) (109.513) - (766,077) Total accumulated depreciation (12.364,716) (2.082.928) - (14.447.644) 1 Total capital assets, 11 being p depreciated, net 46,510,882 16,088,347 - 62,599,229 11 Business-type activities capital assets, net $ 64,768,962 $ 22,015,049 $(15,106,212) $ 71,677,799 II Depreciation expense was charged to functions/programs as follows: p11 Governmental activities: 111 Generalg overnment $ 319,831 4 Public safety 319,543 Highways and streets 2,277,468 4 • Culture and recreation 205,441 I 4 Total depreciation expense governmental activities $ 3.122.283 41 Business-type activities: II Water $ 2,082,928 4 Storm water drainage - Total depreciation expense business-type activities $ 2.082.928 4 1 52 i I TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 5. Construction commitments The Town has active construction projects as of June 30, 2006. The governmental fund projects include road improvements and widening and Phase I of the reclaimed water project and potable water infrastructure projects. At year-end the government's commitments with contractors are as follows: Governmental Remaining Project Spent-to-date Commitment First Avenue (Bridge) $ 3,546,215 $ 35,000 Pusch View Bridge 9,3 83,437 231,000 First Avenue (Road) 812.359 7,041,326 $ 13.742.011 $ 7307.326 Business-type Remaining Project Spent-to-date Commitment Phase I Reclaimed Water Mains $ 67,622 $ 373,628 Potable - Mains 28,988 28,988 Potable - Boosters 103,301 47,199 Potable - Wells 200,419 3,853 Potable - Reservoirs 95.219 64,481 $ 495.549 $ 518,149 53 TOWN OF ORO VALLEY,ARIZONA � NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 , B. Interfund receivables,payables and transfers As of June 30, 2006 interfund receivable and payables were as follows: � Due From Public Townwide Nonmajor , Transportation Roadway Governmental Due To Fund Fund Fund Total 1 General Fund $ 306.600 $ L606.558 $ 1.347.612 $ 3.260370 The above interfund receivables and payables were recorded to cover a deficit cash • balance at June 30, 2006 in the Municipal Debt Service Fund. Funds were received subsequent to June 30, 2006 to cover the deficit cash balance. Interfund transfers for the year ended June 30, 2006 consisted of the following: Transfer Out General , Transfers To Fund Public Transportation Fund $ 165,562 Nonmajor Governmental Funds 1,083,007 Stormwater Drainage Fund 79378 $ 1.328.347 Transfers were made from the General Fund to subsidize the Public Transportation Fund and the Stormwater Drainage Fund and to transfer funds to the Municipal Debt Service IFund to make the required principal and interest payments on outstanding bonded indebtedness. � 4111 54 � TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 C. Long-term obligations The Town has long-term bonds and loans payable issued to provide funds for the acquisition and construction of major capital facilities. The Town has also issued debt to refund earlier obligations with higher interest rates. The debt is being repaid by various debt service funds. Compensated absences are paid by the applicable fund where each employee is regularly paid, primarily the General Fund. During the fiscal year ended June 30, 2006, the Town issued $6,215,000 in Excise Revenue Bonds (67% for governmental and 33% for business-type). The proceeds will be used to fund the acquisition and construction of a Town facility. Changes in long-term obligations for the year ended June 30, 2006 are as follows: Due Within July 1,2005 Increases Decreases June 30,2006 One Year Governmental Activities: Bonds and loans payable: Revenue bonds $ 9,848,034 $ 4,164,050 $ (452,638) $ 13,559,446 $ 573,670 Special assessment debt 3,945,000 - - 3,945,000 185,000 Certificates of participation 420,000 - (205,000) 215,000 215,000 Loan payable 4.803,100 - (2.198,957) 2.604,143 104,143 19,016,134 4,164,050 (2,856,595) 20,323,589 1,077,813 Less deferred amounts on: Refunding (571,316) - 57,132 (514,184) (57,132) Premium 137,191 - (9,199) 127,992 9,199 Total bonds and loans payable 18,582,009 4.164.050 (2.808,662) 19,937,397 1,029,880 Other liabilities: Compensated absences 841,673 1.013,871 (934,260) 921,284 748,169 Governmental activities long-term liabilities $ 19,423.682 $ 5.177.921 $ (3,742,922) $ 20,858,681 $ 1,778.049 Business-type Activities: Bonds and notes payable: Revenue bonds $ 64,871,966 $ 2,050,950 $ (1,907,362) $ 65,015,554 $ 2,336,330 Less deferred amount on: Refunding (1,368,620) - 97,758 (1,270,862) (97,759) Discount (239,402) - 17,795 (221,607) (17,795) Premium 958.416 - (44.493) 913.923 44,493 Total bonds and notes payable 64.222,360 2.050.950 (1,836,302) 64.437.008 2.265.269 Other liabilities: Compensated absences 6L387 102.705 (85,043) 79,049 67,112 Business-type activities long-term liabilities $ 64.283,747 $ 2.153.655 $ (1,921.345) $ 64.516.057 $ 2.332.3 81 55 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS 41 FOR THE FISCAL YEAR ENDED JUNE 30, 2006 a Debt service requirements on long-term debt at June 30, 2006 are as follows: . Governmental Activities Business-type Activities 111 a Principal Interest Principal Interest Year Ending June 30, 2007 $ 1,077,813 $ 824,530 $ 2,336 330, $ 2932,023 1111 2008 3,403,102 737,016 2,631,898 2,847,826 111 2009 938,900 668,462 2,686,100 2,749,747 111 2010 880,080 640,168 2,784,920 2,646,842 2011 800,280 598,808 2,899,720 2,535,931 2012-16 5,694,772 2,275,348 13,245,228 10,817,077 2017-21 6,161,842 957,935 14,438,158 7,758,545111 2022-26 1,366,800 147,013 15,443,200 4,244,917 2027-30 - - 8.550,000 449,750 $ 20.323.589 $ 6.849.280 $ 65.015.554 $ 36,982.658 a a NOTE 4 - OTHER 1NFORHA TION 111 A. Risk management The Town of Oro Valley, Arizona, is exposed to various risks of loss related to torts; theft1111 of, damage to and destruction of assets; errors and omissions; and natural disasters. The Town's insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the Town is ag c artii atin member. The limit for basic coverage is for p p $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 1111 settlements exceeded insurance coverage duringof the past three fiscal year and no any y years. The Arizona Municipal Risk Retention Pool is structured such that member premiums are adequate based on an actuarial review that will provide reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its members p additional premiums should reserves and annual premiums be insufficient to meet the Pool's obligations. I I I I 56 I TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 The Town is insured by Arizona Municipal Workers Compensation Pool for potential worker related accidents. The Town is self-insured for unemployment insurance. Changes in the balances of claims liabilities during the past two years are as follows: 2006 2005 Unpaid claims, beginning of year $ - $ - Incurred claims (including IBNRs) - 8,627 Claim payments - (8.627) Unpaid claims, end of year $ - $ - B. Contingent liabilities Accumulated sick leave - Sick leave benefits provide for ordinary sick pay and are cumulative but do not vest with employees unless an employee has exceeded 60 days of accrued sick leave, then one-half of the sick leave balance in excess of 60 days is paid upon termination. Unvested accumulated sick leave of Town employees at June 30, 2006, totaled $221,500. Lawsuits - The Town is a defendant in various lawsuits. In the opinion of the Town's attorney the outcome of these lawsuits is not presently determinable. C. Retirement plans Arizona State Retirement System Plan Description - The Town contributes to a cost-sharing multiple-employer defined benefit pension plan administered by the Arizona State Retirement System. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The system is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information. The most recent report may be obtained by writing the System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910 or by calling (602) 240-2000 or(800) 621-3778. 57 TOWN OF ORO VALLEY,ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS 411 FOR THE FISCAL YEAR ENDED JUNE 30, 2006 41 Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and the Town's contribution rate. For the year ended June 30, 2006, active plan members and the Town were each required by statute to contribute at the actuarially determined rate of 7.4 percent (6.9 percent retirement and 0.5 percent long-term disability) of the members' annual covered payroll. The Town's contributions to the System for the years ended June 30, 2006, 2005, and 2004 were $449,275, $467,741, and 111 $341,135, respectively, which is equal to the required contributions for the year. Public Safety Personnel Retirement System (PSPRS) and Arizona Corrections Officer Retirement Plan (ACORP) Plan Description - The Town contributes to the Public Safety Personnel Retirement System (PSPRS) and the Arizona Corrections Officer Retirement Plan (ACORP), agent multiple-employer, public employee retirement systems. These plans act as common investments and administrative agents to provide retirement and death and disability benefits for public safety and corrections personnel who are regularly assigned hazardous duty in the employment of the State of Arizona or a political subdivision thereof. All � benefit provisions and other requirements are established by State statute. The PSPRS and ACORP issue publicly available financial reports that include financial statements and required supplementary information for PSPRS and ACORP. The reports may be obtained by writing to Public Safety Personnel, 1020 E. Missouri Ave., Phoenix, AZ 85014 or by calling (602)255-5575. Funding Policy - Covered employees are required to contribute 7.65 and 8.50 percent of , their annual salary to the PSPRS and ACORP, respectively. The Town is required to contribute the remaining amounts necessary to fund the PSPRS and ACORP, as determined by the actuarial basis specified by statute. The current rate is 11.86 and 10.18 1111 percent of annual covered payroll for PSPRS and ACORP, respectively. Annual Pension Cost - During the year ended June 30, 2005 (the date of the last available information), the Town of Oro Valley's annual pension cost of $367,387 and $42,661 for the PSPRS for police and the Oro Valley ACORP Dispatchers, respectively, 41was equal to the Town of Oro Valley's required and actual contributions. I The required contribution was determined as part of the June 30, 2005 actuarial valuation using an entry age actuarial funding method. Significant actuarial assumptions used in determining the entry age actuarial accrued liability include (a) a rate of return on the investment of present and future assets of 8.5% per year compounded annually, (b) projected salary increases of 6.0% per year compounded annually, and (c) additional projected salary increases and inflation of 0.0% to 3.0% per year attributable to , seniority/merit. 58 � TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2006 The actuarial value of the Town of Oro Valley's assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The Town of Oro Valley's unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2005, was 20 years. The preceding methods comply with the financial reporting standards established by the Governmental Accounting Standards Board. Three-Year Trend Information PSPRS Police Fiscal Year Annual Pension Percent Net Pension Ended June 30, Cost (APC) Contributed Obligation 2003 $ 311,931 100.0 % $ - 2004 378,010 100.0 - 2005 367,387 100.0 - Oro Valley ACORP Dispatchers Fiscal Year Annual Pension Percent Net Pension Ending June 30, Cost (APC) Contributed Obligation 2003 $ 21,643 100.0 % - 2004 18,116 100.0 - 2005 42,661 100.0 - Additional historical trend information for the Town's PSPRS and ACORP is disclosed on page 62. Historical trend information is presented in order for the reader to assess the progress made in accumulating sufficient assets to pay pension benefits as they become payable. 59 1 t I I I I I t I t t I THIS PAGE BLANK , I I II I I I I I II II I I II I 11 I I I I I II I I I I 1111 60 I Required Supplementary Information 61 a a a TOWN OF ORO VALLEY, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION111 PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM AND ARIZONA CORRECTIONS OFFICER RETIREMENT PLAN SCHEDULE OF FUNDING PROGRESS a Oro Valley PSPRS Police a Over(Under) a Entry Age funded AAL . as a Percentage Valuation Actuarial Actuarial Over(Under) Annual g Date Value of Accrued Percent funded Covered of Covered II June 30, Assets Liability(AAL) Funded AAL Payroll Payroll a 1997 $ 2,23 9,319 $ 2,614 221 85.7 % $ (374,902) $1,682,582 (22.3)% a 1998 2,772,586 3,067,826 90.4 (295,240) 1,890,076 (15.6) I 1999 3,623,182 3,956,207 91.6 (333,025) 2,143,829 (15.5) 2000 4,583,291 4,862,212 94.3 (278,921) 2493>062 (11.2) II 2001 5,766,661 5,168,557 111.6 598,104 2,948,683 20.3 a 2002 6,565,301 6,327,848 103.8 237,453 3,406,239 7.0 2003 7,939,646 7,226,436 109.9 713,210 3,660,509 19.5 4 2004 9,072,514 8,871,479 102.3 201,035 3,665,787 5.5 a 2005 10,351,579 11,901,526 87.0 (1,549,947) 4,354,983 (35.6) II 4 Oro Valley ACORP Dispatchers 111 Over(Under) Entry Age funded AAL 11 Valuation Actuarial Actuarial Over(Under) Annual as a Percentage II Date Value of Accrued Percent funded Covered of Covered • • • Payroll Payroll II June 30, Assets Liability(AAL) Funded AAL y y 2002 $ - $ 433,070 - % $ (433,070) $ 395,386 (109.5)% II 2003 434,235 749,710 57.9 (315,475) 504,064 (62.6) 2004 568,823 785,950 72.4 (217,127) 418,377 (51.9) 1 2005 788,467 1,047,685 75.3 (259,218) 518,393 (50.0) 1 I * Information prior to 2002 is not available. II 41 I I I I 62 I Combining and Individual Fund Statements and Schedules 63 a a a a a a a a a 41a a THIS PAGE BLANK a a 41 a a a a a a II II a a a a II III I II II I 11 I 41 I I I 64 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Industrial Development Authority - accounts for the industrial development activities of the Town. 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. DEBT SERVICE FUND 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. CAPITAL PROJECTS FUNDS Library Construction - accounts for the collection and capital expenditures of the Oro Valley Library. Oracle Road Construction - accounts for the capital improvements to the Oracle road, funded by special assessment debt. Pima County Bond Projects - accounts for the revenues and expenditures for capital improvements to roads funded by grants from Pima Count. Municipal Building - accounts for the bond proceeds issued to acquire land and construct the public works facility. 65 III III 111 TOWN OF ORO VALLEY,ARIZONA I COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS II JUNE 30,2006 . II III Special Revenue Debt Service Capital Projects . Industrial Federal • Development Revegetation State Seizures Seizures and Municipal Library Oracle Road Authority Assurances and Forfeitures Forfeitures Total Debt Service Construction Construction IIII Assets , Cash and cash equivalents $ 177 $ 1,611,597 $ 81,642 $ 262,195 $ 1,955,611 $ 1,314,825 $ - $ 1,400 Receivables,net IAccounts receivable - - - - - - 183,713 - Interest receivable 1 6.198 26 - 6.225 2.155 - - II Total assets $ 178 $ 1.617.795 $ 81.668 $i 262.195 $ 1.961.836 $ 1.316.980 $ 183,713 $ 1.400 II Liabilities and Fund Balances II Liabilities Accounts payable $ - $ - $ - $ 5,907 $ 5,907 $ - $ 42,199 $ 1,400 Intergovernmental payable - - - 347 347 Due to other -funds - - 15,422 32,237 47,659 1,137,640 141,514 I Deferred revenue - - 6,679 - 6,679 - - - Customer deposits payable - 1.268.150 - - 1.268.150 - - - I Total liabilities - 1.268.150 22.101 38.491 1.328,742 1.137 640 183,713 1.400 Fund balances IIII Unreserved 178 349.645 59.567 223,704 633.094 179.340 - - Total fund balances 178 349.645 59.567 223,704 633.094 179.340 - - II Total liabilities and fund balances $ 178 $ 1.617.795 $ 81.668 $ 262.195 $ 1.961.836 $ 1.316.980 $ 183.713 $ 1.400 • 1111 II i I I I I IIII IIII I II II II II I I 66 1 I di Capital Projects Total Nonmajor Pima County Municipal 'Governmental Bond Projects Building Total Fund $ 206,500 $ 893,090 $ 1,100,990 $ 4,371,426 20,000 - 203,713 203,713 2.990 2,990 11,370 $ 226.500 $ 896.080 $ 1,307.693 $ 4.586.509 $ - $ 28,591 $ 72,190 $ 78,097 347 20,000 799 162,313 1,347,612 206,500 - 206,500 213,179 - 1.268.150 226.500 29.390 441.003 2,907.385 866.690 866.690 1.679,124 866.690 866.690 1.679.124 $ 226.500 $ 896.080 $ 1.307.693 $ 4.586.509 67 III 111 III TOWN OF ORO VALLEY,ARIZONA III COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS II FOR THE FISCAL YEAR ENDED JUNE 30,2006 II II Special Revenue Debt Service Capital Projects II Industrial Federal Development Revegetation State Seizures Seizures and Municipal Library Oracle Road II Authority Assurances and Forfeitures Forfeitures Total Debt Service Construction Construction Revenues III Intergovernmental $ - $ - $ - $ - $ - $ - $ 910,238 $ Fines and forfeitures - 5,956 242,540 248,496 II Investment earnings 8 61,225 3,664 5,119 70,016 13,189 1 43,311 Other - - 77.885 - 41 Total revenues 8 61,225 9.620 247.659 318.512 13_189 988.124 43,311 II Expenditures II Current General government 10 - • - - 10 - - Public safety - - 66,336 79,145 145,481 - - Highways and streets - - - - - - - 3,683,015 ,015 , Culture and recreation - - - - - - 1,019,691 - Debt Service I Principal retirement - - - - - 657,638 - long-term debt - - - - - 445,958 - 111Issuance costs - -Interest on g - - - IIITotal expenditures 10 - 66.336 79.145 145.491 1.103.596 1.019.691 3.683.015 Excess(deficiency)of revenues over expenditures (2) 61.225 (56,716) 168.514 173.021 (1,090,407) (31.567) (3,639,704) i Other financing sources(uses) I Transfers in - - - - - 1,083,007 - - Issuance of long-term debt - - - 111 Total other financing sources(uses) - - - - - 1.083.007 - - Net change in fund balances (2) 61,225 (56,716) 168,514 173,021 (7,400) (31,567) (3,639,704) 11ill Fund balances,beginning of year 180 288.420 116.283 55.190 460.073 186,740 31.567 3,639,704 II Fund balances,end of year $ 178 $ 349.645 $ 59.567 $ 223.704 $ 633.094 $ 179.340 $ - $ - II411 I II II I I 41 II II III II II 68 Capital Projects Total Nomnajor Pima County Municipal Governmental Bond Projects Building Total Funds $ 11,000 $ - $ 921,238 $ 921,238 248,496 32,298 75,610 158,815 77.885 77.885 11.000 32.298 1.074,733 1.406.434 11,000 3,221,761 3,232,761 3,232,771 145,481 3,683,015 3,683,015 1,019,691 1,019,691 657,638 445,958 107.897 107.897 107,897 11.000 3.329.658 8.043.364 9.292,451 (3.297.360) (6.968.631) (7.886.017) 1,083,007 4.164.050 4.164.050 4.164.050 4.164.050 4,164.050 5,247,057 866,690 (2,804,581) (2,638,960) 3,671.271 4.318.084 $ - $ 866.690 $ 866.690 $ 1.679.124 69 TOWN OF ORO VALLEY,ARIZONA ORACLE ROAD DEBT SERVICE FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues • Contributions and donations $ 93.414 $ 86.106 $ (7,308) Total Revenues 93.414 86,106 (7.308) Expenditures Current , General government 5,000 25,016 (20,016) Debt Service Interest on long-term debt 128,414 176.967 (48,553) Total Expenditures 133.414 201.983 (68.569) . Excess(deficiency)of revenues over expenditures (40,000) (115,877) (75,877) Fund balances,beginning of year 40.000 216.592 176.592 , Fund balances,end of year $ - $ 100,715 $, 100.715 111 111I 111 1111 1111 I I 70 a i TOWN OF ORO VALLEY,ARIZONA TOWNWIDE ROADWAY DEVELOPMENT IMPACT FEES FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ 4,510,000 $ 2,987,296 $ (1,522,704) Impact fees 1,285,000 1,098,977 (186,023) Investment earnings - 170,844 170,844 Other 5.000 13,025 8.025 Total Revenues 5.800.000 4.270,142 (1.529.858) Expenditures Current Highways and streets 8,920,777 5,145,164 3,775,613 Debt Service Principal retirement 780,000 2,198,957 (1,418,957) Interest on long-term debt 87.452 108,433 (20,981) Total Expenditures 9.788.229 7,452.554 2,335.675 Excess(deficiency)of revenues over expenditures (3.988.229) (3,182,412) 805,817 Other financing sources(uses) Transfers in 1,325,000 - (1,325,000) Transfers out (1.325,000) - 1,325,000 Total other financing sources(uses) - - - Net change in fund balances (3,988,229) (3,182,412) 805,817 Fund balances,beginning of year 3,988.229 7.301,641 3,313,412 Fund balances,end of year $ - $ 4,119.229 $, 4,119.229 71 TOWN OF ORO VALLEY,ARIZONA STATE SEIZURES AND FORFEITURES FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 41 Original and Final Variance with Final 111 Budget Actual Budget Revenues Fines and forfeitures $ 10,000 $ 5,956 $ (4,044) Investment earnings _ 3.664 3.664 i Total Revenues 10.000 9.620 (3 80) 11 Expenditures , Current Public safety 76.282 66.336 9,946 Total Expenditures 76.282 66,336 9.946 Excess(deficiency)of revenues over expenditures (66,282) (56,716) 9,566 Fund balances,beginning of year 66.282 116.283 50.001 , $ _ $ Fund balances,end of year 59.567 $ 59.567 111 I 111 41 72 I TOWN OF ORO VALLEY,ARIZONA FEDERAL SEIZURES AND FORFEITURES FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues Fines and forfeitures $ 100,000 $ 242,540 $ 142,540 Investment earnings - 5.119 5.119 Total Revenues 100.000 247,659 147.659 Expenditures Current Public safety 104.808 79,145 25,663 Total Expenditures 104.808 79.145 25,663 Excess(deficiency)of revenues over expenditures (4,808) 168,514 173,322 Fund balances,beginning of year 4.808 55,190 50,382 Fund balances,end of year $ - $ 223.704 $ 223.704 73 4 4 4 TOWN OF ORO VALLEY,ARIZONA II MUNICIPAL DEBT SERVICE FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL111 FOR THE FISCAL YEAR ENDED JUNE 30,2006 111 41 Original and Final Variance with Final Budget Actual Budget I Revenues 11Investment earnings $ 3.000 $ 13.189 $ 10,189 Total Revenues 3,000 13.189 10,189 111 Expenditures II Debt Service Principal retirement 657,638 657,638 - II Interest on long-term debt 608.807 445,958 162,849 Total Expenditures 1.266,445 L103.596 162.849 III Excess(deficiency)of revenues over expenditures (1,263.445) (1.090,407) 173,038 II Other financing sources(uses) II Transfers in 1.083,007 1.083,007 - Total other financing sources(uses) 1.083,007 1.083.007 - II Net change in fund balances (180,438) (7,400) 173,038 , Fund balances,beginning of year 180.438 186.740 6,302 111 Fund balances,end of year $_ - $ 179.340 $ 179.340 I I I II 111 III I I I II 41 111 II II II I I II II I I 11 74 II I I TOWN OF ORO VALLEY,ARIZONA LIBRARY CONSTRUCTION FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ 733,000 $ 910,238 $ 177,238 Investment earnings - 1 1 Other - 77.885 77.885 Total Revenues 733.000 988.124 255.124 Expenditures Current Culture and recreation 733.000 1.019.691 (286.691) Total Expenditures 733.000 1.019.691 (286,691) Excess(deficiency)of revenues over expenditures - (31,567) (31,567) Fund balances,beginning of year - 31.567 31,567 Fund balances,end of year $ - $ - $ - 75 111 TOWN OF ORO VALLEY,ARIZONA ORACLE ROAD CONSTRUCTION FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL 111 FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues Investment earnings $ - $ 43.311 $ 43.311 1111 Total Revenues - 43.311 43,311 Expenditures Current Highways and streets 2.473,952 3,683.015 (1,209,063) 111 Total Expenditures 2,473.952 3.683,015 (1,209.063) Excess(deficiency)of revenues over expenditures (2,473,952) (3,639,704) (1,165,752) Fund balances,beginning of year 2,473,952 3.639.704 1.165,752 I Fund balances,end of year I 111111 1111 111I 111 76 I TOWN OF ORO VALLEY,ARIZONA PIMA COUNTY BOND PROJECTS FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ 5.000.000 $ 11.000 $ (4.989.000) Total Revenues 5.000.000 11.000 (4.989,000) Expenditures Current General government 6.000.000 11,000 5.989.000 Total Expenditures 6.000.000 11.000 5,989,000 Excess(deficiency)of revenues over expenditures (1.000.000) - 1.000,000 Other financing sources(uses) Issuance of long-term debt 1.000.000 - (1,000.000) Total other financing sources(uses) 1.000.000 - (1,000,000) Net change in fund balances - - - Fund balances,beginning of year - - - Fund balances,end of year $ - $ - $ - 77 1111 II II TOWN OF ORO VALLEY,ARIZONA MUNICIPAL BUILDING FUND , SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2006 IIII 111 Original and Final Variance with Final I Budget Actual Budget Revenues 111Re s Investment earnings $ - $ 32.298 $ 32.298 IIITotal Revenues 32.298 32,298 III Expenditures Current II General government 6,000,000 3,221,761 2,778,239 Debt Service II Issuance costs - 107.897 (107.897) Total Expenditures 6.000.000 3.329.658 2,670.342 I Excess(deficiency)of revenues over expenditures (6.000.000) (3.297.360) 2.702,640 II Other financing sources(uses) 41 Issuance of long-term debt 6.000.000 4.164.050 (1.835,950) Total other financing sources(uses) 6.000,000 4.164.050 (1.835,950) . Net change in fund balances - 866,690 866,690 411 Fund balances,beginning of year - - - III Fund balances,end of year $ - $ 866.690 $ 866.690 111I III I 111II 111 II II I II IIII I II I II I II III 78 I di cn C, r STATISTICAL SECTION 79 • 111 TOWN OF ORO VALLEY, ARIZONA NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) r UNAUDITED) I I Fiscal Year 2003 2004 2005 2006 Governmental activities 11 Invested in capital assets,net of related debt $ 21,188,015 $ 30,546,282 $ 92,541,223 $ 107,413,486 Restricted 2,303,550 3,958,033 15,360,660 8,919,398 Unrestricted 13.828,711 19.248,712 15,394,707 15,063,081 Totalg overnmental activities net assets $ 37,320,276 $ 53,753.027 $ 123,296.590 $, 131.395,965 Business-type activities Invested in capital assets,net of related debt $ 3,745,153 $ (14,913,572) $ 546,602 $ 7,240,791 3 492 488 2 310,980 2,331,001 Restricted 3,575,789 > Unrestricted 10,262,534 33,107,781 24,499,050 22,958,536 Total business-type activities net assets $ 17,583,476 $ 21.686.697 $ 27.356,632 $ 32,530,328 Primary government Invested in capital assets,net of related debt $ 24,933,168 $ 15,632,710 $ 93,087,825 $ 114,654,277 Restricted 5,879,339 7,450,521 17,671,640 11,250,399 Unrestricted 24,091,245 52.3 56,493 39,893,757 38.021,617 Total primary government net assets $ 54,903,752 $ 75.439,724 $ 150,653,222 $ 163,926,293 Source: Town of Oro Valley Finance Department Note: 2002-03 was the Town of Oro Valley,Arizona's first year to prepare government-wide financial statements. 1 I 1 1 t 80 I I I I I N N ,-,_,,i) d• O� d• 00 00 N d• O d• •..-■ M t� ' M d' N tt `D C\ � N `O d' � tt �'-' 01 O O O r- N O M --, t- 00 `D cn cM M 00 00 `D t-- M �t Vn N O CV" .. n � •. ♦ n n •. n n r `p N �n N 4 v-) CT 00 O O M M Oo �t 00 •-. o0 o0 01 CD � v) M �-- O �! 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H Z to 0 V) I I I TOWN OF ORO VALLEY,ARIZONA PRINCIPAL EMPLOYERS JUNE 30, 2006 (UNAUDITED) II I I I 2006 1997 111 Percentage of Percentage of Total Town Total Town 41 Employer Employees Rank Employment Employees Rank Employment111 I Amphitheater Public Schools 646 1 4.35 % 230 2 5.98 % II Ventana Medical Systems 566 2 3.81 - - - II Northwest Medical Center 450 3 3.03 - - - II Hilton El Conquistador Resort 440 4 2.96 600 1 15.60 41 Town of Oro Valley 333 5 2.24 160 4 4.16 1I Fry's Food Stores 270 6 1.82 200 3 5.20III Hilton El Conquistador Country Club 260 7 1.75 150 5 3.90 I Home Depot 160 8 1.08 - - - 41 Northwest Medical Center Urgent Care 150 9 1.01 - - - 41 Stone Canyon Golf/Golf Club at Vistoso 130 10 0.88 - - - I Vanguard Automation - - - 136 6 3.54 1 Oro Valley Country Club - - - 75 7 1.95 II Smitty's Food Stores - - - 70 8 1.82 II Selectide - - - 60 9 1.56 4 ABC Food Stores - - - 50 10 1.30 II 3.405 22.93 % 1,731 45.00 % 4 4 Source: Principal Employers Arizona Workforce Informer. ' I I I III I 86 I 1 1 i I 00 ani--•,OO\NNN �tc.n� o 00.001�nN01[� �001c 00 0 00 �--. NM00N — �7 to O ,1' MN N N 0 1 N 69 CA -- o Ot�M'OVN0'0NO�'0UNON ' u, -y-- T 00- c ,r t- O 0 O M N..-, Oh fV 0 ' N EA 69 1 '.:1-ON0 ,0N10 ----MMN O o --Ni Nin001-- t- t- OM N .-•, N N 69 4, 00,t- -• --‘.0,f Nin0N M o t-- 0 M 00 in ,C 00 in cf 0, 0� .-�. O M N M N ` 0 .-r N..r N O N 69 69 O,,O in --t--0 in 00 N N .n o r- 'n`O r- d• to c!• O r- r- N r- 00 N N M ,O 0 00c .-.r-i ,O N 1 L.. N ct I Z / >= I I III TOWN OF ORO VALLEY,ARIZONA II DIRECT AND OVERLAPPING SALES TAX RATES 41LAST TEN FISCAL YEARS (UNAUDITED) ill III 11 Town of Oro I Valley Town of Oro Town of Oro Construction I Fiscal Year Valley Sales Tax Valley Bed Tax Sales Tax Pima County 1 1997 2.00 % 1.00 % - % 5.60 % 111 1998 2.00 1.00 - 5.60 1999 2.00 1.00 - 5.60 1111 2000 2.00 1.00 - 5.60 III 2001 2.00 3.00 - 5.60 2002 2.00 3.00 - 5.60 . 2003 2.00 3.00 - 5.60 III2004 2.00 3.00 4.00 5.60 2005 2.00 3.00 4.00 5.60 II 2006 2.00 6.00 4.00 6.10 11 III Source: Arizona Department of Revenue. 111 I II a a a I I a I I II III III I I 111 I 11 O 88 til III IA 1 r i ON `O ON M `0 00 ct -fl t� M ON ct t� 0 O - I •cd cd r.d^ N t --`o ;, •.^ ,-.4O� -, ,.., r ; d- N N r--, U < cu . w 0 0 ► z z 0 cio oo t---= E- •-co co N 00 0000 N O v0 O 14.4 O p MI MI> > 4 ch vi.LI-) 4 4 � ki c a) qt) c Q 6 a 0 0 a z z N 0N N ' o if) o N 0Ln ► N O N N N O ON M d0' O N d1' `O VD 00 O -1- rt.. 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I I c G) N 00 t--- 0 E4 3 1.--- 00 0, O — N Ma) VD U o ct ON ON O O O O O O O i-+ ON 0N ON N N N Nw > N N N 0 TOWN OF ORO VALLEY, ARIZONA M DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT JUNE 30, 2006 (UNAUDITED) 41 I I Estimated Estimated Share of 111 Outstanding Percentage Overlapping UnitApplicable(1) Debt 111 GovernmentalDebt Pima County $ 584,227,000 6.73 % $ 39,289,854 S Pima County Community College District 70,730,000 6.73 % 4,756,664 Pima County Flood Control District 3,010,000 6.77 % 203,777 Amphitheater Unified School District No. 10 70,860,000 36.93 % 26,166,968 411 Town of Oro Valley None 100.00 % None Total direct and overlapping debt $ 70.417,263 I Source:Pima County,Pima County Community Collage 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 2005-06. !I I I I I I I I I I i I i I 41 I I 41 I N i 90 r 1 i '. �t v, �n O O ^ ,t) f +n O re-, + M NWit-O + O N ' 69 69 O O 00 00 O O + O O 00 00 N o0 00 O_ _O it, 69 00 00 O O O O + O N M M 1 ON � 1 64 6R O O O� ON ' O .41- + ..:1.N O^ O� + 0000 000 69 69 O O IF 00 00 . N Z 00 00 O O + O CV %D dO ,-' 69 69 O N a w No 0 I w O oo Noo W ►-- w 69 69 < LCQ • � � � oo o r 00 O 4z N M , �• w O E—+ H 69 69 O O o Q < M 0, N + N O T .41 E-4 w 69 69 ON al 00 00 M M 00 C^ C ON 1-... [� O. �t tet' '-'� vO 69 69 ,+,,, 0 NN C7, ON -g C- 00 0o R3 + alf a) `Zr dN' 69 6'9 0 0 al 2 •5 4. • a) s E cts •.�.... o-- . ,3 U E 8.cCb0 O . 'C3 -5 E-. Co ' C i Ta y ' ct o tido - td u.u. 0 E .. "' � F-' 0 CA TOWN OF ORO VALLEY,ARIZONA • CALCULATION OF LEGAL DEBT MARGIN 4111 JUNE 30,2006 (UNAUDITED) I I Net secondary assessed valuation $ 463211,743 Water,Sewer,Light,Parks,Open Space and a Recreational Facility Bonds . Debt limit-20%of secondary net assessed valuation $ 92,642,349 Debt applicable to limit General obligation bonds outstanding $ - . Less amount set aside for repayment of debt Net debt applicable to limit 411 20%legal debt margin 92,642349 41 All other general obligation bonds 411 1111 Debt limit-6%of secondary net assessed valuation 27,792,705 411 Debt applicable to limit General obligation bonds outstanding $ - ILess amount set aside for repayment of debt - Net debt applicable to limit All other general obligation bonds debt margin 27,792,705 , Total legal debt margin $ 120,435,054 I I 41 Source:Pima County Assessor's Office. 41 41 I I 1111 92 � TOWN OF ORO VALLEY, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) 1 Water Utility Revenue Bonds 1 Debt Service I Fiscal Gross Year Revenues Principal Interest Total Coverage I 1997 $ 5,008,354 $ 100,000 $ 1,497,475 $ 1,597,475 3.14 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 I 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 Governmental Revenue Bonds Debt Service Fiscal Gross Year Revenues Principal Interest Total Coverage 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 Source: Town of Oro Valley Finance Department. 93 II IIII TOWN OF ORO VALLEY, ARIZONA II PLEDGED-REVENUE COVERAGE • LAST TEN FISCAL YEARS (UNAUDITED) I I 41 Certificates of Participation II Debt Service 41 Fiscal Gross II Year Revenues Principal Interest Total Coverage 1997 $ 9,104,686 $ 140,000 $ 150,707 $ 290,707 31.32 II 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 143,000,536 390,000 271,756 661,756 216.09 111 2001 15,220,985 155,000 253,322 408,322 37.28 8 2002 16,268,695 160,000 245,938 405,938 40.08 411 2003 16,435,018 170,000 237,994 407,994 40.28 I 2004 19,837,894 180,000 15,768 195,768 101.33 2005 21,011,720 190,000 26,690 216,690 96.97 1 2006 25,018,727 205,000 16,566 221,566 112.92III II Special Assessment III Debt Service II Fiscal Gross I Year Revenues Principal Interest Total Coverage I 1997 $ 84,056 $ 90,000 $ 26,100 $ 116,100 0.72 1998 62,569 90,000 19,575 109,575 0.57 ill 1999 40,985 90,000 13,050 103,050 0.40 . 2000 5,048 90,000 6,525 96,525 0.05 2006 - 176,967 176,967 - 41 II Source: Town of Oro Valley Finance Department. 111 I 41 I I I I 41 I III II 94 I a TOWN OF ORO VALLEY, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Per Capita Fiscal Personal Unemployment Year Population Personal Income Income Rate 1997 22,832 Not Available Not Available 2.30 % 1998 25,236 Not Available Not Available 2.20 1999 25,455 $ 792,515,970 $ 31,134 2.30 2000 29,700 952,420,194 32,068 1.90 2001 29,700 980,992,800 33,030 2.00 2002 34,050 1,158,413,770 34,021 2.00 2003 37,260 1,305,649,691 35,042 2.90 2004 37,700 1,360,700,031 36,093 2.60 2005 39,310 1,461,373,787 37,176 2.50 2006 44,000 1,684,799,289 38,291 3.00 Source: U.S. Census Bureau and Arizona Employment statistics. 95 II 1 ., III 0 0 0 0 0 0 kr) O O O O cn O O O O O 00 , kr) 0 00v) ON OO kr) 00d- OOkr) OO .71- ,,,,O 4 M N t- 4 O 4 M O Oi Oo `O o0 4 4 N 0 ...-, — ' N *-+ N OT kr) c*) cn N M1 i c0Ooe0In 00 000 44000v-) 1111 Ln 0 0 0 kr) O N O 0 kr) 00 O O O kr) kr) O k `n4 M N t� t7 4 M O 4 00 N06 .-� 4 4 0 r-+ N — N O\ v� M r--, 0 N M III 01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 kr) O O O O kn M O O O kr) kr) O M 0 4 4 M N t� N o0 t� 4 M O d- Oh 00 00 M kn 0 ' N '- No0 Ncr00 I N N I o 0 0 0 0 0 0 O O O O O o O o 0 o O I c OO On0 0000M0 0 O O c,i -O ' tM M O 7 Nc., O UIaci E. 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