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Financial Reports-Comprehensive Annual Financial Report (CAFR) - 6/30/2004
Com p reke n51Ve Annual rinancial Keport 4%;if,A,44. 0 ee 404 vit 4 1110. A,s 440( -NDED ror tile riscal year E__ndeci June 50, 200+ { F ` I TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Mr. Paul Loomis Mayor Ms. Paula Abbott Vice Mayor Council Members Mr. Kenneth "K.C." Carter Ms. Conny Culver Ms. Helen Dankwerth Mr. Barry Gillaspie Mr. Terry Parish Chuck Sweet Town Manager David L. Andrews Finance Director Prepared by: Finance Department f TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED TUNE 30, 2004 TABLE OF CONTENTS INTRODUCTORY SECTION 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 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 Statement 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 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 TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS 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 67 Townwide Roadway Development Impact Fees Fund- Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 68 State Seizures and Forfeitures Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 69 Federal Seizures and Forfeitures Fund- Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 70 Municipal Debt Service Fund- Schedule of Revenues, Expenditures, and p Changes in Fund Balances - Budget and Actual 71 TOWN OF ORO VALLEY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2004 TABLE OF CONTENTS STATISTICAL SECTION Government-wide information: Government-wide Expenses by Function 74 Government-wide Revenues 75 Fund Information: General Government Expenditures by Function 76 General Government Revenues by Source 77 State of Arizona Sales Tax Information Taxable Activities, Tax Rates and Distribution Shares 78 Transaction Privilege (Sales) Tax Rates by Category 79 Historical and Projected Excise Tax Collections 80 Town Transaction Privilege (Sales) and Franchise Tax Collections By Industry Classification 81 Special Assessment Billings and Collections 82 Estimated Debt Service Coverage Regarding Excise Tax Collections 83 Statement of Bonded Indebtedness 84 Direct and Overlapping General Obligation Bonded Debt 85 Computation of Legal Debt Margin 86 Property Tax Assessment Ratios and Comparative Secondary Assessed Valuation Histories 87 Comparative Secondary Assessed Valuation Histories 88 Assessed Valuations and Tax Rates 89 Primary and Secondary Property Tax Rates Direct and Overlapping Governments 90 Net Assessed and Full Cash Values of Taxable Property 91 Secondary Assessed Valuation By Property Classification 92 Secondary Assessed Valuation of Major Taxpayers 93 Historical and Projected Water System Revenues, Expenses, Debt Service and Coverage 94 Oro Valley Water Utility Schedule of Rates, Fees and Charges 95 Number of Meters Connected 100 Number of Connections by Type 101 History of Connections to the Water System 102 History of Building Permits 103 Schedule of the 15 Largest Water System Customers 104 Demographic Statistics 105 Property Value, Construction and Bank Deposits 107 Schedule of Top Employers 108 :� i ,' -- INTRODUCTORY SECTION THIS PAGE BLANK 1119% 0 �' TOWN OF ORO VALLEY 11000 N.LA CANADA DRIVE ORO VALLEY, ARIZONA 857374114 Administrative Offices(520)229-4700 Fax(520)297-0428 www.tov noforo,ialley.corn ""mom ,;} � °UND ED 1°.1 October 11, 2004 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 U.S. Generally Accepted Accounting Principles (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, 2004. 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 and Trbovich 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, 2004, 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, 2004, 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 provide requires g that management 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 withY it. The Town of Oro Valley's MD&A can be found immediately following the report of the independent auditors. Profile of the Government was The Town of Oro Valleyincorporated in 1974. It is located in northeastern Pima County � and has a land area of 33.2 square miles. The Town's current population is 37,700. 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 ym g and six Council Members. Council Members are elected to four-year staggered terms. The citizens of Oro Valleyelect the Mayor. The Council, from among its members, selects the Vice- Mayor. Y The Town Council is responsible, among other things, for the adoption of local p ordinances, budgetadoption, the development of citizen advisory committees and the hiring of p the Town Manager. The Manager is responsible for implementation of the policies of the Town Manager. g Cour Manager The Town Mana er a ppoints all department heads except the Town Clerk, Chief of Police, Town Engineer, Town Attorney and Magistrate. The Town of Oro Valleyprovides a full range of services including police protection; the construction and maintenance of streets and related infrastructure; the provision of water services; public transportation services; recreational activities, a public library and cultural events. In addition tog eneral government activities, the governing body is financially accountable for the Municipal Property Corporation; therefore, this activity is included in the p reporting entity.enti . Additional information in regards to the Municipal Property Corporation can be found in Note 1 A in the notes to the financial statements. The annual budget serves as the foundation for the Town of Oro Valley's financial planning and control. All departments of the Town are required to submit requests for appropriation to the Town Manager in March of each year. The Town Manager uses these requests as the starting Pg a point for developing 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 p g p year. budget The appropriated bud et is prepared by fund and department. The Town Manager, subject to Town Council approval, may at any time transfer various unencumbered appropriation balances orp ortions 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 in fiscal year 2003/04 continues to remain stable. Sales tax collections from construction, retail trade and restaurants & bars/hotel/motel lodging are the major industries which accounted for 88% of all sales tax receipts for fiscal year 2003/04. As indicated in prior years the Town relies heavily on construction sales taxes from residential construction activity which has declined in recent years. To this end the Town continues to explore the feasibility of additional revenue sources and cost control efforts. Based on a recommendation from the Town's Budget and Bond Committee, the Town increased the construction sales tax rate from 2% to 4% which became effective May 1, 2004. The Town has dedicated 75% of the 2% increase for streets and road maintenance and the remaining 25% for general municipal purposes. Construction sales tax collections for fiscal year 2003/04 increased by $1,036K or 52% as compared to fiscal year 2002/03. In addition, single family residential building permits issued increased by 82 permits or 20% as compared to last fiscal year. This increase in construction sales tax collections may be attributed to a significant acceleration of construction contract executions related to the tax rate change. The Town anticipates that the increased construction volume will return to normal activity levels in fiscal year 2004/05. Sales tax collections from retail trade totaled $2,722K for fiscal year 2003/04. This is an increase of$63 7K as compared to the previous fiscal year. This increase is attributed to a full year of retail sales collections from a newly annexed area south of Town limits which includes substantial retail businesses. Several new major shopping centers may have development activity over the next three to five years. The restaurants & bars/hotel/motel lodging industries makes up approximately 18.8% of the Town's sales tax base. A 10% increase in gross receipts and related sales tax collections from lodging is projected for FY 2004/05. Long-term financial planning The Town's Budget and Bond Committee continues to serve as a source for the Town Council in analyzing and providing recommendations for the Town's financial future. Financial projections on the Town's major operating funds such as the General Fund, Highway Fund, Public Transportation Fund and Townwide Roadway Development Impact Fee Fund will be revised and analyzed on a continuous basis. Future recommendations will be brought forward by the Budget and Bond Committee to the Town Council for their review and action. 3 managementpolices and practices The Town uses a system of consolidated cash Cash g 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 C LGIP invests in U.S. Treasury Notes, U.S. Treasury Bills and federally guaranteed insurance contracts. The average interest rate for the fiscal year 2002/03 was 1.837% and 1.445% in fiscal g year 2003/04. Investments held at LGIP earned $529,287 in interest revenue for the year ended June 30, 2004. LGIP accounts in the amount of $28,604,693 were established in December, 2003 for the 2003 Municipal Property Corporation Senior Lien Water Project Revenue bonds. These funds are for construction of the reclaimed water system improvement project and potable water system improvements and expansion. 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 p 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 org uaranteed 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 $41,893 for fiscal year 2003/2004. 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 Townartici ates in the Arizona Municipal Workers Compensation Pool for workers p p compensation insurance coverage. The Town of Oro Valley is self-insured for unemployment compensation. Unemployment reserves totaled $228,593 as of June 30, 2004 for the Town's 263 full-time, 18 part-time and 31 seasonal employees. The Town did not make an unemployment contribution in fiscal year 2003/2004. 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 2003/04. 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 2003/04 was 10.12 percent of the annual covered payroll for PSPRS. 4 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 3.85 percent of their annual salary in FY 2003/04. All non-police and certain part-time employees of the Town participated in a defined contribution pension plan 401 (a) administered by the ICMA Retirement Corporation from July 1, 2003 through August 31, 2004. All eligible employees participated in the plan six months from the date they were hired. Contributions made by an employee vested immediately and contributions made by the Town vested after one year of service. An employee that ended employment with the Town was entitled to his/her contributions and the vested portion of the Town's contributions, plus interest earned. Each employee contributed 5 percent of gross earnings. The Town contributed 5 percent of gross earnings. The Town contributed 7 percent of gross earnings. On September 1, 2003, the Town Council approved the transfer of all 401 (a) assets held by employees 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 5.2 percent for retirement and .5 percent for long- term disability. The Town was required to contribute 5.2 percent for retirement and .5 percent for long-term disability. Additional information on the Town of Oro Valley's pension arrangements can be found in Note 4C pages 57 - 59. 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, 2003. 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 U.S. generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. 5 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, ad Chuck Sweet Town Manager ) anc.,„ David L. Andrews Finance Director 6 TOWN OF ORO VALLEY,ARIZONA LIST OF PRINCIPAL OFFICIALS ELECTED OFFICIALS Mayor Mr. Paul Loomis Vice-Mayor Ms. Paula Abbott Council Member Mr. Kenneth "K.C." Carter Council Member Ms. Conny Culver Council Member Ms. Helen Dankwerth Council Member Mr. Barry Gillaspie Council Member Mr. Terry Parish DEPARTMENT HEADS Town Manager Chuck Sweet Finance Director David L. Andrews Town Clerk Kathryn E. Cuvelier Magistrate George Dunscomb Water Utility Director Alan Forrest Human Resources Director Jeff Grant Town Engineer Bill Jansen Chief of Police Daniel G. Sharp Acting Town Attorney Tobin Sidles Community Development Director H. Brent Sinclair 7 TOWN OF ORO VALLEY, ARIZONA ORGANIZATIONAL CHART • Town Council li +�•,bi,. mow.- 1 _os .'�•':«" :ra '.;'�'.-:' A'~'-''-.+% ,..^t.,r.",. ;p:.t.;''. Boards & Chuck Sweet George Dunscomb Town Magistrate ��° Commissions Town Manager ,, -,e-,r p- —$.,.--,...n,t---.... p'".,: ' t.►5i•i, -4, •.rRx, ,- .,i..4,.!."..1- 'Yi 1 .-r__ Jeff Weir Economic ,� H. Brent Sinclair a Development ;. ,4Community it ,4 :�� Development Director Administrator Ainsley Reeder 4 Parks & Recreation Administrator , Terry Vosler Building Administrator p,.4e .r ,,,�.•-Rt'n+ •�`.t��. tr^r•-.°fR ,� .'. ^' d'",„ •."'�j`'" `.r'.%-': `1, i+'..._.N+r./r' - .t.w Y wr �. .tea . Kathi Cuvelier Daniel Sharp ei Town Clerk • . Police Chief -- Bryant Nodine A Planning &Zoning Administrator Gw {r Tobin Sidles Alan Forrest Acting Town t Water Utility Director if,.me t Mary Hartz-Musgrave .,� Attorney �• Library Administrator ie "F ,'';a ,.wr , 7.AMdly'S't. �1i�:`+Is M+r.,�. . < e4 1 Jeff GrantBill Jansen == ' Human Resources Town Engineer DirectorI`. --♦ , -a..,...,"-'- N„. 41 .. Pt Davidrector iit Director Charles Kidwell f� Transit sit Services ,,,. 1',A f Administrator , r Kevin Verville Information v Technology A Administrator 8 Certificate of 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, 2003 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. 40,,e' 4101°V "to FE T HO Fp% pp/ UNITED STATES 7s President o� SEAT.roti Nast *Cr Executive Director 9 THIS PAGE BLANK 10 FINANCIAL SECTION 11 THIS PAGE BLANK 12 Clil CR0 ENSTROMIII &ATRBOVICH CCOUNTANT S 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, 2004, as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion 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. 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 opinion. 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, 2004, 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. 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 the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 13 8706 EAST MANZANITA DRIVE,SUITE 100 ■ SCOTTSDALE, ARIZONA 85258 ■ (480) 348-1 102 • FAX (480) 348-1104 A PROFESSIONAL CORPORATION Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Town's basic financial statements. The introductory section, combining p and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory 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. 6A-vw bLihvt_ ''.4- .-.04.- g a / Cronstrom & Trbovich, P.C. October 11, 2004 14 Management's Discussion and Analysis As management of the Town of Oro Valley (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, 2004. 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 for FY 2003/04 exceeded liabilities by $75,439,724 (net assets). Of this amount, $52,356,493 (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 $20,535,972. • As of June 30, 2004, the Town of Oro Valley's governmental funds reported combined ending fund balances of $23,010,404 which is an increase of $6,849,142 or 42% in comparison to last fiscal year. • At the end of the current fiscal year, unreserved fund balance for the General Fund was $9,377,367 or 53% of total General Fund expenditures. The unreserved fund balance included $207,713 designated for long-term compensated absences and $195,312 designated for unemployment. The remaining $8,974,342 was undesignated. • Total debt for the Town of Oro Valley at June 30, 2004 was $82,685,142. Compared to last fiscal year this was a net increase of$27,667,182 or 50%. A large portion of the increase was due to the issuance of bonds for water improvements and the partial refunding of existing bonds in the amounts of $31,750,000 and $15,750,000, respectively. Overview of the Financial Statements. This discussion and analysis is intended to serve as an introduction to the Town of Oro Valley's basic 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. 15 presents information on all of the Town of Oro Valley's assets and The statement of net assets with the difference between assets and liabilities reported as net assets. Over time, liabilities, in net assets mayserve as useful indicators of whether the financial increases or decreases position of the Town of Oro Valley is improving or declining. The statement of activities presents resents information about how the government's net assets changed recent fiscalyear. Changes in net assets are reported when the underlying event during the most giving rise to the change occurs, regardless of the timing of related cash flows. Thus, certain p revenues and expenses reported in this statement will result in cash flows in future fiscal periods (e.g., uncollected court fines and earned but unused vacation leave). The government-wide e financial statements distinguish functions of the Town of Oro Valley that are principally supported bylocal 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 government, public safety, highways and streets and culture and Valley include general recreation. The business-type e activities of the Town of Oro Valley include the Oro Valley Water Utility and Stormwater Drainage 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 PropertyCorporation'sMunicipal Munici al 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. statements A fund is a grouping of related accounts that is used to maintain Fund financial control over resources that have been segregated for specific activities or objectives. The Town other state and local governments, uses fund accounting to ensure and of Oro Valley, like demonstrate compliance with finance-related legal requirements. All of the funds of the Town of Oro Valley are divided into two categories: governmental funds and proprietary funds. Governmental funds Governmental funds are used to account for essentially the same functions governmental as activities in the government-wide financial statements. However, unlike the goverment-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 ofgovernmental overnmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar informationpresented for governmental activities in the government-wide financial statements. doingreaders maybetter understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental so 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 ten individual governmental funds. Information is presented separately governmental in the fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Highway User p � Revenue Fund (HURF), Public Transportation Fund and Townwide Roadway Development Impact Fees Fund which are considered to be major funds. Data from the other six governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajorgovernmental funds is provided in the form of combining statements elsewhere in this report. The Town of Oro Valley adopts is an annual appropriated budget for its General Fund, certain Special Revenue Funds, the Debt Service Fund and Capital Project Funds. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated g �"Y 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 g are generallyrea ro riated as part of the subsequent year's budget. Budget-to-actual pp p comparisons are provided in this report for each individual governmental fund for which an p appropriated ro riated annual budget has been adopted. For the General Fund and Special Revenue Funds reported as major funds (HURF and the Public Transportation Funds), this comparison is presentedon pages a es 34 - 36 as part of the basic financial statements for the governmental funds. Budgetary comparisons for all nonmajor governmental funds with appropriated annual budgets g �' arep resented in the Combining and Individual Fund Statements and Schedules of this report on pages 68 - 71. 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 two different types of proprietary funds. P �' 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 Drainage 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 Drainage 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. 17 Other information In addition to the basic financial statements and accompanying notes, this report also presentsrequiredsupplementary certain information concerning the Town of Oro Valley's progress ro in fundingthe Arizona Public Safety Retirement System available to commissionedpolice olice officers and the Correction Officers Retirement Plan for police dispatchers. pp Required supplementary information can be found on page 62 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediatelfollowing the required supplementary information. Combining and individual fund statements and schedules can be found on pages 66 - 71 of this report. Government-wide Financial Analysis earlier, over time net assets mayserve as useful indicators of a government's financial As noted position. In the case of the Town of Oro Valley, assets exceeded liabilities by $75,439,724 at the close of fiscal year June 30, 2004. The Town of Oro Valley's net assets (21 percent) reflects its investments in capital assets (e.g., land, buildings, machinery and equipment), less any related outstanding debt used to acquire those assets. The Town of Oro Valley uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town of Oro q y, p Valley's investment in capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Town of Oro Valley's Net Assets Governmental Activities Business-type Activities Total 2004 2003 2004 2003 2004 2003 Current and other assets $ 27,841,510 $ 19,287,825 $ 39,326,556 $ 16,101,546 $ 67,168,066 $ 35,389,371 Capital assets 47.606.414 33.668.131 50.711.438 46.282.997 98.317.852 79.951.128 Total assets 75.447.924 52.955.956 90.037.994 62.384.543 165.485.918 115.340.499 Long-term liabilities outstanding 17,808,290 13,187,933 65,685,546 42,585,433 83,493,836 55,773,366 Other liabilities 3.886.607 2.447.747 2.665.751 2.215.634 6.552.358 4.663.381 Total liabilities 21.694.897 15.635.680 68.351.297 44.801.067 90.046.194 60.436.747 Net assets: Invested in capital assets, net of related debt 30,546,282 21,188,015 (14,913,572) 3,745,153 15,632,710 24,933,168 Restricted 3,958,033 2,303,550 3,492,488 3,575,789 7,450,521 5,879,339 Unrestricted 19.248.712 13.828.711 33.107.781 10.262.534 52.356.493 24.091.245 Total net assets $ 53.753.027 $ 37.320.276 $ 21.686.697 $ 17.583.476 $ 75.439.724 $ 54.903.752 An additional portion of the Town of Oro Valley's net assets (10 percent) represents resources that � are subject to external restrictions. The remaining balance of net assets is thenrestricted portion ($52,356,493) which may be used to meet the governments� uongoing obligations to citizens and creditors. 18 At the end of the current fiscal year, the Town of Oro Valley had positive net assets, both for the goverment as a whole, as well as for its separate governmental and business-type activities. During the current fiscal year, the Town's net assets increased by $16,432,751 in governmental activities and $4,103,221 in business-type activities for a total of$20,535,972. Governmental activities increased primarily in the highway and streets function. $13M in state grants was received for street and road improvement projects. Currently there is $14M in street improvement projects in construction which are scheduled for completion in fiscal year 2004/05. In addition, a $5M loan from the Arizona Department of Transportation was received for the La Canada Drive Extension Project. Business-type activities in the Oro Valley Water Utility fund increased by $4K. Better than anticipated revenues from water sales, charges for services and water connection fees accounted for the increase. Governmental and Business-type Activities. Governmental activities increased the Town of Oro Valley's net assets by $16,432,751 which accounts for 80% of the total growth in the net assets of the Town of Oro Valley. Key elements of this increase are shown as follows: • Capital grants and contributions totaled $13.4M which is an increase of $12M over last fiscal year. State grants of$8M and Pima County bond proceeds of$4M were received for various road improvement projects. • Sales tax revenues increased by $2M as compared to last fiscal year. Construction ($1M) and retail trade ($63 7K) were the industries that accounted for the increase. • Total expenditures increased by $1.2M or 6%. This increase was in line with inflation and growth in maintaining current service levels. On May 1, 2004, the sales tax rate on construction projects increased from 2%to 4%. The Town has dedicated 75% of the 2% increase for streets and road maintenance and the remaining 25% for general municipal purposes. Business-type activities increased the Town of Oro Valley's net assets by $4,103,221, which accounted for 20% 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 were $13M. Included in this figure are water sales ($9M), charges for services ($890K), water connection fees ($2M) and capital contributions ($840K). • Total expenses for the Oro Valley Water Utility were $8,957,988. 19 Town of Oro Valley's Change in Net Assets Governmental Activities Business-type Activities Total 2004 2003 2004 2003 2004 2003 Revenues: Program Revenues Fees,fines and charges for services $ 4,072,567 $ 3,112,589 $11,917,546 $10,380,795 $15,990,113 $13,493,384 Operating grants and contributions 3,675,674 3,512,097 - 297,500 3,675,674 3,809,597 Capital grants and contributions 13,437,638 1,520,898 840,096 1,856,151 14,277,734 3,377,049 General Revenues Taxes Sales taxes 7,924,855 5,876,309 - - 7,924,855 5,876,309 Franchise taxes 371,697 341,489 - - 371,697 341,489 Impact Fees 1,189,848 885,371 - - 1,189,848 885,371 State revenue sharing 2,845,866 3,161,005 - - 2,845,866 3,161,005 State sales tax revenue sharing 2,686,614 2,322,772 - - 2,686,614 2,322,772 Auto lieu tax revenue sharing 1,374,464 1,307,305 - - 1,374,464 1,307,305 Investment earnings(loss) 281,518 (244,770) 285,118 (50,977) 566,636 (295,747) Loss on sale of capital assets - (30.525) - - - (30.525) Total Revenues 37.860.741 2L764.540 13.042.760 12.483.469 50.903.501 34.248.009 Expenses: General government 5,971,319 5,592,498 - - 5,971,319 5,592,498 Public safety 9,520,219 9,013,391 - - 9,520,219 9,013,391 Highways and streets 2,850,172 2,613,170 - - 2,850,172 2,613,170 Culture and recreation 2,566,173 2,352,445 - - 2,566,173 2,352,445 Interest on long-term debt 456,107 564,798 - - 456,107 564,798 Water - - 8,957,988 9,025,235 8,957,988 9,025,235 Stormwater drainage - - 45.551 104.948 45.551 104.948 Total Expenses 21.363.990 20.136.302 9.003.539 9.130.183 30.367.529 29.266.485 Increase in net assets before 16,496,751 1,628,238 4,039,221 3,353,286 20,535,972 4,981,524 transfers Transfers (64.000) - 64.000 - - - Change in net assets 16,432,751 1,628,238 4,103,221 3,353,286 20,535,972 4,981,524 Net assets,beginning of year 37.320.276 35.692.038 17.583.476 14.230.190 54.903.752 49.922.228 Net asses,end of year $53.753.027 $37.320.276 $2L686.697 $17.583.476 $75.439.724 $54.903.752 Financial Analysis of the Government's Funds As noted earlier, the Town of Oro Valley uses fund accounting to ensure and demonstrate compliance with finance-relate legal requirements. Governmental Funds. The focus of the Town of Oro Valley's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town of Oro Valley's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. 20 As of the end of the current fiscal year, the Town of Oro Valley's governmental funds reported combined ending unreserved fund balances of $22,985,320, an increase of $7,183,228 in comparison with the prior year. The unreserved fund balance includes funds designated for long- term compensated absences ($212,303) 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 $9,377,367, and the total fund balance was $9,384,539. 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 general fund balance represents 53% of total general fund expenditures, while total fund balance represents 53% of that same amount. The fund balance of the Town of Oro Valley's general fund increased by $943,202 during the current fiscal year. Key factors in this increase are as follows: ♦ Several revenue sources exceeded budgeted projections such as, local sales tax collections ($947K), residential building permit fees ($3 61 K), commercial building permit fees($204) and state shared revenues ($227K). • Expenditures were below budget by $872K (not including budgeted contingencies) which is mainly attributed to capital improvement projects carried forward to fiscal year 2004/05. Unreserved Unreserved Fund Balance Fund Balance Increase/Decrease Fiscal Year 2003/04 Fiscal Year 2002/03 From 2002/03 General Fund 9,3 77,3 67 8,087,246 1,290,121 Highway User Revenue Fund 2,087,762 1,663,183 424,579 Public Transportation 97,987 55,696 42,291 Townwide Roadway Development Impact Fees Fund 10,549,937 5,410,128 5,139,809 Nonmajor Governmental Funds 872.267 585.839 286.428 Total Governmental Funds $ 22,985.320 $ 15.802,092 $ 7.183.228 General Fund unreserved fund balance increased by $1.3M. Revenues exceeded expenditures by $943K and $331K was received from the Oro Valley Water utility for payoff of an advance. The Townwide Development Impact Fees Fund unreserved fund balance increased by $5.1M. This increase was primarily due to loan proceeds in the amount of $5M from the Arizona Department of Transportation for a road improvement project. Proprietary funds The Town of Oro Valley's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. 21 Unrestricted net assets of the Oro Valley Water Utility at the end of the year amounted to and those for the Stormwater Drainage Utility amounted to $245,759. The total growth in net assets for both funds was $4,084,772 and $18,449, respectively. Key factors to the growth in the Water and Stormwater Drainage Utility Funds are as follows: Oro Valley Water Utility • Revenues from water sales increased by$494K or 6%from last fiscal year. • Operating costs were under budget by $1.2M. • Net income for the fiscal year was $3.2M. • Capital contributions of $840K from line extension agreements with developers for capital improvements to the water utility's infrastructure. • Collections from water system development impact fees totaled $1,669K. Stormwater Drainage Utility • An operating transfer of $64,000 was received from the General Fund to fund p g ongoing operations. General Fund Budgetary Highlights The Town of Oro Valley amended the General Fund's budget in fiscal year 2003/04 by reducing thegeneral overnment's contingency/reserve budgeted expenditures by $335,180. Increases g were made to the following departments/divisions: Community Development Administration $36,500; Planning and Zoning $12,000; Building Safety $29,200; Parks and Recreation $193, Budgetedoperating o erating transfers were increased by $64,000 and were transferred to the Stormwater Utility Fund. The net change in the General Fund was zero. There were no significant variances between the final amended budget and actual results with the exception of General Administration expenditures and sales tax revenues. The General Administration budget included budgeted contingencies of approximately $5.5 million that was g unspent at the end of the fiscal year. The sales tax revenue budget to actual variance was due to increased construction. The Town had not budgeted for the resulting increase in construction sales tax revenue. The Highway Users Revenue Fund Budget was amended by an increase of$174,000 in capital g y expenditures and decreasing the contingency/reserve for the same. The Townside Roadway Development Impact Fees Fund budget was amended by an increase of $441,462 in capital p p expenditures and decreasing contingency/reserve to zero. 22 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, 2004 was $98,317,852 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery, 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 $18,366,724 or 23%. Town of Oro Valley's Capital Assets (net of depreciation) Governmental Activities 2004 2003 Land $ 10,021,765 $ 10,021,765 Infrastructure 1,804,020 1,468,728 Buildings and improvements 14,866,520 15,257,062 Machinery, equipment and vehicles 1,977,504 2,257,326 Construction in progress 18,936.605 4.663.250 Total $ 47,606,414 $ 33,668,131 The increase of$13.9M in capital assets for governmental activities is mainly attributed to road improvements projects currently under construction. Business-type Activities 2004 2003 Land $ 103,691 $ 103,691 Water rights 6,172,3 61 6,172,3 61 Water system 39,846,768 38,675,524 Equipment and vehicles 561,145 612,192 Construction in progress 4.027,473 719,229 Total $ 50,711,438 $ 46,282,997 The increase in the business-type activities of$4.4M was largely due to construction in progress on the reclaimed water delivery system which is expected to be completed in fiscal year 2004/2005. Additional information on the Town of Oro Valley's capital assets can be found in Note 3.A.4 on pages 50 - 51 of this report. 23 Long-term debt At the end of the current fiscal year, the Town of Oro Valley had total bonded g debt outstanding of $82,685,142, including ($1,290,858) 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 $17,060,132 includes $10,344,132 which is being paid with general fund revenue sources and $6,716,000 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. Town of Oro Valley's Outstanding Debt Governmental Activities 2004 2003 Revenue bonds $ 9,734,132 $ 6,594,116 Certificates of participation 610,000 4,170,000 Loan payable 6,716,000 1,716.000 Total $ 17,060,132 $ 12,480,116 Business-type Activities 2004 2003 Gross revenue bonds $ 65,625,010 $ 38,155,744 Notes payable - 4,3 82.100 Total $ 65,625,010 $ 42,537,844 The Town of Oro Valley's total debt had a net increase of$27,667,182 as a result of a refunding and new issuances for capital improvements. In December 2003, the Town issued $31,750,000 of Municipal Property Corporation (MPC) Senior Lien Water Project Revenue bonds at a premium of$913,355. $24,435,000 of the bond proceeds are for the construction of the reclaimed water system and upgrades to the existing potable water system in order to meet current and future water demands. The remaining funds are for the refunding of the 2000 Water Development Fee Revenue Obligations ($3,400,000) and the City of Tucson note payable ($3,915,000). In December, 2003 the Town also issued $15,750,000 at a premium of$172,001 in Municipal Property Corporation (MPC) Excise Tax Revenue Refunding bonds. Bonds refunded include the 1996 Municipal Water System Acquisition Bonds ($8,775,000), 1996 Certificates of Participation ($3,380,000), 2000 Excise Tax Revenue Obligations ($1,260,000) and 2001 MPC Excise Tax Revenue Bonds ($485,000). The refunding bonds were issued to reduce the Town's total debt service payments over the next 20 years by almost$303,303 and obtain an economic gain of$613,816. 24 The Town of Oro Valley maintains a "A" rating from Standard and Poor's and a "A+" rating from Fitch on the revenue bonds outstanding. Additional information on the Town of Oro Valley's long-term debt can be found on pages 53 - 55 of this report. Economic Factors and Next Year's Budgets and Rates e The unemployment rate for the Town of Oro Valley is currently 2.6%. Pima County's and the State of Arizona's unemployment rates are 3.9% and 5.2% respectively. • The Town's secondary assessed valuation for the current year is $358 million, an increase of 10% over last year. s Single family residential building permits issued in fiscal year 2003/04 increased by 82 permits or 20% over last year. • Average earnings for the Town of Oro Valley residents are $70,404. e The average value of a home in the Town of Oro Valley is $177,400. The Town of Oro Valley's budget for FY 2004/05 totals $117,842,886, an increase of $14,623,030 or 14% over last year. Street and road improvement projects and the reclaimed water system improvement account for most of the increase. The General Fund's budgeted expenditures for FY 2004/05 increased by $1,738,695 for a total of $25,722,971. This reflects a reduction in costs associated with maintaining the Town's current service levels. 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: David Andrews,Finance Director or Mary Rallis, Accounting Supervisor Town of Oro Valley 11,000 N. La Canada Drive Oro Valley, Arizona 85737 25 THIS PAGE BLANK 26 Basic Financial Statements 27 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET ASSETS JUNE 30, 2004 Governmental Business-type Activities Activities Totals Assets Cash and cash equivalents $ 23,141,855 $ 32,700,403 $ 55,842,258 Receivables,net of allowance for doubtful accounts Accounts receivable 2,536,551 1,556,292 4,092,843 Taxes receivable 1,233,848 - 1,233,848 Intergovernmental receivable 786,966 - 786,966 Interest receivable 26,804 54,958 81,762 Inventories 17,912 - 17,912 Prepaid items 7,172 - 7,172 Deferred charges 90,402 1,395,540 1,485,942 Restricted assets - 3,619,363 3,619,363 Capital assets Non-depreciable 28,958,370 10,303,525 39,261,895 Depreciable(net) 18.648.044 40.407.913 59.055.957 Total assets 75.447.924 90.037.994 165.485.918 Liabilities Accounts payable 2,179,779 510,129 2,689,908 Accrued wages and benefits 681,322 75,737 757,059 Interest payable - 1,611,484 1,611,484 Intergovernmental payable 26,033 341,526 367,559 Unearned revenue 160,671 - 160,671 Customer deposits payable 838,802 126,875 965,677 Noncurrent liabilities Due within one year 2,064,897 1,416,175 3,481,072 Due in more than one year 15.743.3 93 64.269.3 71 80.012.764 Total liabilities 21.694.897 68.3 51.297 90.046.194 Net assets Invested in capital assets,net of related debt 30,546,282 (14,913,572) 15,632,710 Restricted for Public safety 281,488 - 281,488 Highways and streets 2,203,661 - 2,203,661 Debt service 314,301 2,343,593 2,657,894 Capital outlay 900,429 - 900,429 Replacement and reserve - 1,148,895 1,148,895 Other 258,154 - 258,154 Unrestricted 19.248.712 33,107.781 52.356.493 Total net assets $ 53.753.027 $ 21.686.697 $ 75.439.724 28 WI CT cn M t` r-• d' M N to r` 00 d• d- O N N d-- en --+ N N O in in O CT in CT d- •-+ M 00 N in N N N `O •-, .-, -- `p in -. 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'L3 O O COD cz 'Zs .� 0.um 73 COC2 Gn O C ,a; ca. �? al >, cc: O o CO O s oc, aV � •= 3 � o tT. = TOWN OF ORO VALLEY, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2004 Townwide Roadway Nonmajor Public Development Governmental General HURF Transportation Impact Fees Funds Totals Assets Cash and cash equivalents $ 8,954,957 $ 1,969,825 $ 118,473 $ 9,832,763 $ 2,265,837 $ 23,141,855 Receivables,net Accounts receivable 751,133 - - 1,785,418 - 2,536,551 Taxes receivable 1,233,848 - - - - 1,233,848 Intergovernmental receivable 475,365 237,856 - 73,745 - 786,966 Interest receivable 11,418 2,300 134 11,206 1,746 26,804 Due from other funds 630,500 - - - - 630,500 Inventories - 17,912 - - - 17,912 Prepaid items 7.172 - - - - 7.172 Total assets $ 12.064.393 $ /227.893 $ 118.607 $ 11.703.132 $ 2.267.583 $ 28381.608 Liabilities and Fund Balances Liabilities Accounts payable $ 991,400 $ 39,041 $ 4,484 $ 1,142,742 $ 2,112 $ 2,179,779 Accrued wages and benefits 606,136 57,963 12,150 5,073 - 681,322 Intergovernmental payable 26,033 - - - - 26,033 Due to other funds - - - - 630,500 630,500 Deferred revenue 473,994 - - - 4,919 478,913 Customer deposits payable 80,815 202 - - 757,785 838,802 Compensated absences-current 501.476 25.013 3.986 5.380 - 535.855 Total liabilities 2.679.854 122.219 20.620 1.153.195 1.395.316 5.371.204 Fund balances Reserved for: - - - - - Inventories - 17,912 - - - 17,912 Prepaid items 7,172 - - - - 7,172 Unreserved: Undesignated 8,974,342 2,061,352 95,908 10,548,701 - 21,680,303 Designated for long-term compensated absences 207,713 3,354 - 1,236 - 212,303 Designated for unemployment 195,312 23,056 2,079 - - 220,447 Unreserved,reported in nonmajor: Special revenue funds - - - - 534,723 534,723 Debt service funds - - - - 314,301 314,301 Capital projects funds - - - - 23.243 23.243 Total fund balances 9.384.539 2.105.674 97.987 10.549.937 872.267 23.010.404 Total liabilities and fund balances $ 12.064.393 $ 2.227.893 $ 118.607 $ 11.703.132 $ 2.267.583 $ 28.381.608 The notes to the basic financial statements are an intergral part of this statement. 30 . TOWN OF ORO VALLEY, ARIZONA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2004 Fund balances-total governmental funds $ 23,010,404 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 52,789,234 Less accumulated depreciation (5.182.820) Capital assets used in governmental activities 47,606.414 Other long-term assets are not available to pay for current-period expenditures and are not susceptible to accrual. 318,242 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 (10,304,324) Certificates of participation (610,000) Loans payable (6,716,000) Deferred amounts on the refunding 628,448 Deferred amount on the premium (58,256) Long-term compensated absences (212,303) Deferred bond issuance costs 90.402 Net assets of governmental activities $ 53.753.027 The notes to the basic financial statements are an integral part of this statement. 31 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2004 Townwide Roadway Nonmajor Public Development Governmental General HURF Transportation Impact Fees Funds Totals Revenues Taxes Sales taxes $ 7,898,956 $ 25,899 $ - $ - $ - $ 7,924,855 Franchise taxes 371,697 - - - - 371,697 Intergovernmental 7,736,382 2,568,169 232,816 13,437,638 15,000 23,990,005 Fines and forfeitures 217,920 - - - 245,230 463,150 Licenses and permits 2,503,802 32,774 - - - 2,536,576 Charges for services 785,299 5,978 32,010 - - 823,287 Contributions and donations 30,141 - 110 - - 30,251 Impact fees - - - 1,189,848 - 1,189,848 Investment earnings 164,067 25,659 1,798 78,739 11,255 281,518 Other 129.630 61139 11.925 24.717 - 229.411 Total Revenues 19.837.894 2.721.618 278.659 14.730.942 271.485 37.840.598 Expenditures Current General government 5,793,887 - - - 6,590 5,800,477 Public safety 9,313,688 - - - 112,527 9,426,215 Highways and streets - 2,284,206 337,960 14,571,156 - 17,193,322 Culture and recreation 2,540,949 - - - - 2,540,949 Debt Service Principal retirement - - - - 541,290 541,290 Interest on long-term debt - - - 19,977 406,495 426,472 Issuance costs - - - - 93.415 93.415 Total Expenditures 17.648.524 2.284.206 337.960 14.591.133 1.160.317 36.022.140 Excess(deficiency)of revenues over expenditures 2.189.370 437.412 (59.301) 139.809 (888.832) 1.818.458 Other financing sources(uses) Transfers in - - 101,592 - 1,080,576 1,182,168 Transfers out (1,246,168) - - - - (1,246,168) Issuance of long-term loan payable - - - 5,000,000 - 5,000,000 Issuance of refunding debt - - - - 5,572,700 5,572,700 Payment to refunded debt escrow agent - - - - (5.478.016) (5.478.016) Total other financing sources (uses) (1.246.168) - 101.592 5.000.000 1.175.260 5.030.684 Net change in fund balances 943,202 437,412 42,291 5,139,809 286,428 6,849,142 Fund balances,beginning of year 8.441.337 1.668.262 55.696 5.410.128 585.839 16.161.262 Fund balances,end of year $ 9.384.539 $ 2.105.674 $ 97.987 $ 10.549.937 $ 872.267 $ 23.010.404 The notes to the basic financial statements are an integral part of this statement. 32 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, 2004 Net change in fund balances-total governmental funds $ 6,849,142 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 15,066,806 Less current year depreciation (1.118.998) Excess capital expenditures over depreciation 13.947.808 The statement of activities reports losses arising from the disposal of existing capital assets. Conversely, governmental funds do not report any gain or loss on disposals of capital assets. (9,525) 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 20,143 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 541,290 Issuance costs 93,415 Proceeds of loans payable (5,000,000) Proceeds of refunding debt issuance (5,572,700) Payment to refunded debt escrow agent 5,478,016 Amortization of the deferred amount on the refunding (28,566) Amortization of the deferred amount on the refunding and the premium 1,944 Amortization of the issuance cost (3,013) 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. Long-term compensated absences 114.797 Change in net assets of governmental activities $ 16.432.751 The notes to the basic financial statements are an integral part of this statement. 33 TOWN OF ORO VALLEY, ARIZONA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original Variance with Budget Final Budget Actual Final Budget Revenues Taxes Sales taxes $ 6,952,000 $ 6,952,000 $ 7,898,956 $ 946,956 Franchise taxes 378,000 378,000 371,697 (6,303) Intergovernmental 7,826,393 7,826,393 7,736,382 (90,011) Fines and forfeitures 200,000 200,000 217,920 17,920 Licenses and permits 1,821,000 1,821,000 2,503,802 682,802 Charges for services 554,300 554,300 785,299 230,999 Contributions and donations 24,500 24,500 30,141 5,641 Investment earnings 125,000 125,000 164,067 39,067 Other 100.000 100.000 129.630 29.630 Total Revenues 17.981.193 17.98L193 19.837.894 L856.701 Expenditures Current General government Town council 141,088 141,088 145,454 (4,366) Town clerk 407,471 407,471 361,249 46,222 Magistrate court 487,037 487,037 502,109 (15,072) Town manager 338,909 338,909 351,161 (12,252) Finance 477,867 477,867 454,199 23,668 Legal 557,781 557,781 524,165 33,616 Planning and zoning 780,947 792,947 708,558 84,389 General administration 6,222,200 5,887,020 390,299 5,496,721 Custodial facility maintenance 157,773 157,773 138,832 18,941 Economic development 1,039,630 1,039,630 884,353 155,277 Community development administration 355,701 392,201 390,287 1,914 Human resources 220,467 220,467 240,096 (19,629) Information systems 317,984 317,984 311,226 6,758 Geographical information systems 116,390 116,390 110,352 6,038 Public works 319.336 319.336 281.547 37.789 Total general government 11.940.581 11.653.901 5.793.887 5.860.014 Public safety Police 8,488,268 8,488,268 8,238,572 249,696 Building safety 1.219.895 1.249.095 1.075.116 173.979 Total public safety 9.708.163 9,737.363 9.313.688 423.675 Culture and recreation Parks and recreation 1,373,436 1,566,916 1,622,413 (55,497) Library 962.098 962.098 918.536 43.562 Total culture and recreation 2.335.534 2.529.014 2.540.949 (11.935) Total Expenditures 23.984.278 23.920.278 17.648.524 6.271.754 Excess(deficiency)of revenues over expenditures (6.003.085) (5.939.085) 2.189.370 8.128.455 Other financing sources(uses) Transfers out (1.182.168) (1.246.168) (1.246.168) - Total other financing sources(uses) (1.182.168) (1.246.168) (1.246.168) - Net change in fund balances (7,185,253) (7,185,253) 943,202 8,128,455 Fund balances,beginning of year 7.185.253 7.185.253 8.441.337 1.256.084 Fund balances,end of year $ - $ - $ 9.384.539 $ 9.384.539 The notes to the basic financial statements are an integral part of this statement. 34 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, 2004 Original and Final Variance with Final Budget Actual Budget Revenues Taxes $ - $ 25,899 $ 25,899 Intergovernmental 3,234,000 2,568,169 (665,831) Licenses and permits 22,000 32,774 10,774 Charges for services 6,000 5,978 (22) Investment earnings 20,000 25,659 5,659 Other 2.000 61139 61.139 Total Revenues 1284.000 2.721.618 (562.382) Expenditures Current Highways and streets 4.718.133 2.284.206 2.433.927 Total Expenditures 4,718.133 2.284.206 2.433.927 Excess(deficiency)of revenues over expenditures (1,434,133) 437,412 1,871,545 Fund balances,beginning of year 1.434.133 1.668.262 234.129 Fund balances,end of year $ - $ 2.105.674 $ 2.105.674 The notes to the basic financial statements are an integral part of this statement. 35 TOWN OF ORO VALLEY, ARIZONA PUBLIC TRANSPORTATION FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ 262,580 $ 232,816 $ (29,764) Charges for services 31,500 32,010 510 Contributions and donations - 110 110 Investment earnings 1,000 1,798 798 Other - 11.925 11.925 Total Revenues 295.080 278.659 (16.421) Expenditures Current Highways and streets 438.320 337.960 100.360 Total Expenditures 43 8.3 20 337.960 100.3 60 Excess(deficiency)of revenues over expenditures (143.240) (59.301) 83.939 Other financing sources Transfers in 101.592 101.592 - Total other financing sources 101.592 101.592 - Net change in fund balances (41,648) 42,291 83,939 Fund balances,beginning of year 41.648 55.696 14.048 Fund balances,end of year $ - $ 97.987 $ 97.987 The notes to the basic financial statements are an integral part of this statement. 36 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2004 Stormwater Water Drainage Totals Assets Current assets Cash and cash equivalents $ 32,452,909 $ 247,494 $ 32,700,403 Receivables,net Accounts receivable 1,556,292 - 1,556,292 Interest receivable 54,958 - 54,958 Deferred charges 1,395,540 - 1,395,540 Restricted assets 3,619,363 - 3,619,363 Noncurrent assets Capital assets Non-depreciable 10,303,525 - 10,303,525 Depreciable(net) 40.407.913 - 40A07.913 Total Assets 89.790.500 247.494 90.037.994 Liabilities Current liabilities Accounts payable 510,122 7 510,129 Accrued wages and benefits 74,009 1,728 75,737 Interest payable 1,611,484 - 1,611,484 Intergovernmental payable 341,526 - 341,526 Customer deposits payable 126,875 - 126,875 Compensated absences-current 13,526 - 13,526 Bonds,notes and loans payable-current 1,402,649 - 1,402,649 Noncurrent liabilities Compensated absences 47,010 - 47,010 Bonds,notes and loans payable 64.222.361 - 64.222.361 Total liabilities 68.349.562 1.735 68351.297 Net assets Invested in capital assets,net of related debt (14,913,572) - (14,913,572) Restricted for Replacement and reserve 1,148,895 - 1,148,895 Debt service 2,343,593 - 2,343,593 Unrestricted 32.862.022 245.759 33.107.781 Total net assets $ 21.440.938 $ 245.759 $ 21.686.697 The notes to the basic financial statements are an integral part of this statement. 37 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Stormwater Water Drainage Totals Operating revenues Charges for services $ 11.651,447 $__ - $ 11.651.447 Total operating revenues 11.651.447 - 11.651.447 Operating expenses Costs of sales and services 4,543,738 45,551 4,589,289 Depreciation and amortization 1.764.055 - 1.764.055 Total operating expenses 6.307.793 45.551 6.353.344 Operating income(loss) 5.343.654 (45.551) 5.298.103 Nonoperating revenues(expenses) Impact fees 248,093 - 248,093 Investment earnings 285,118 - 285,118 Interest expense (2,650,195) - (2,650,195) Miscellaneous nonoperating revenues 18.006 - 18.006 Total nonoperating revenues(expenses) (2.098.978) - (2.098.978) Income(loss)before contributions and transfers 3,244,676 (45,551) 3,199,125 Capital contributions 840,096 - 840,096 Transfers in - 64.000 64.000 Change in net assets 4,084,772 18,449 4,103,221 Total net assets,beginning of year 17.3 56.166 227.310 17.5 83.476 Total net assets,end of year $ 21.440.938 $ 245.759 $ 21.686.697 The notes to the basic financial statements are an integral part of this statement. 38 TOWN OF ORO VALLEY, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2004 Storm Water Water Drainage Totals Cash flows from operating activities Receipts from customers $ 11,300,553 $ - $ 11,300,553 Payments to suppliers (2,698,236) (43,816) (2,742,052) Payments to employees (1,614,730) - (1,614,730) Impact fees 248,093 - 248,093 Intergovernmental revenues - (400) (400) Other revenue 18,006 - 18,006 Customer deposits 47.059 - 47.059 Net cash flows from operating activities 7.300.745 (44.216) 7.256.529 Cash flows from noncapital financing activities Cash received from(paid to)other funds for interfund borrowing (330,729) - (330,729) Transfers in - 64.000 64.000 Net cash flows from noncapital financing activities (330.729) 64.000 (266.729) Cash flows from capital and financing activities Purchase of capital assets (5,244,610) - (5,244,610) Proceeds from capital debt 39,573,529 - 39,573,529 Proceeds of refunding revenue bonds 3,522,088 - 3,522,088 Issuance costs (853,860) - (853,860) Payment to refunding escrow agent on refunded bonds (13,919,519) - (13,919,519) Principal payment on capital debt (6,222,710) - (6,222,710) Interest payment on capital debt (2.075.588) - (2.075.588) Net cash flows from capital and financing activities 14.779.330 - 14.779.330 Cash flows from investing activities Investment earnings 245.332 - 245.332 Net cash flows from investing activities 245.332 - 245.332 Net change in cash and cash equivalents 21,994,678 19,784 22,014,462 Cash and cash equivalents,beginning of year 14.077.594 227.710 14.305.304 Cash and cash equivalents,end of year(including$3,619,363 of restricted assets in the Water Fund) $ 36.072.272 $ 247.494 $ 36.319.766 Reconciliation of operating income(loss)to net cash provided by operating activities Operating income(loss) $ 5,343,654 $ (45,551) $ 5,298,103 Adjustments to reconcile operating income(loss)to net cash provided (used)by operating activities: Depreciation and amortization 1,764,055 - 1,764,055 Impact fees 248,093 - 248,093 Nonoperating receipts 18,006 - 18,006 Change in assets/liabilities: Receivables,net (365,185) - (365,185) Accounts payable 198,448 7 198,455 Intergovernmental payable 14,291 (400) 13,891 Accrued payroll and related benefits 19,377 1,728 21,105 Compensated absences 12,947 - 12,947 Customer deposits 47.059 - 47.059 Net cash provided(used)by operating activities $ 7.300.745 $ (44.216) $ 7.256.529 Non-cash and investing activities Bond issuance costs of$63,359 were amortized during the year. In addition, the Town received $840,096 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 THIS PAGE BLANK 40 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 NOTE 1 -SUMMARY OF SIGNIFICANT A CCO UNTING 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. 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. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. The effect of interfund activity has been removed from these statements. Governmental activities are normally supported by taxes and intergovernmentalrevenues. r • 41 TOWN OF ORO VALLEY,ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. 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 measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 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 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 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. 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. 42 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 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 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 P. 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. Amounts reported as program revenues include 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. 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. 43 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 D. Assets, Liabilities, and Net Assets or Equity 1. Deposits and Investments The Town's cash and cash equivalents are considered to be cash on hand, demand 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 restricted underp rovisions of bond indentures. Interest earned from investments purchased with suchp ooled monies is allocated to each of the funds based on the average 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 duly organized school districts, improvement districts in this state and the State Treasurer's Local Government Investment Pool. 2. Receivables All trade accounts receivables are recorded net of allowance for doubtful accounts. 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 andpay ables 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 the government- wide financial statements. 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. Certainym a ents to vendors reflect costs applicable to future accounting periods and are p recorded as prepaid items in both government-wide and fund financial statements. 5. Restricted Assets Certainp roceeds 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. 44 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 6. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the governmental p activities column in theg overnment-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, plantequipment and e ui ment p urchased or acquired is carried at historical cost or estimated p 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 Furniture, machinery and equipment 5 years Vehicles 5 years 7. Compensated Absences The liability compensated ensated absences reported in the government-wide statements consists of p unpaid, accumulated leave balances. The liability has been calculated using the vesting method, in which leave amounts for both employees who currently are eligible to receive termination payments and other employees who are expected to become eligible in the future to receive such payments upon termination are included. 8. Long-Term Obligations In theg overnment-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Bond premiums and p 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. 45 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issuedreported is re orted as other financing sources. Premiums received on debt issuances are reported as other financingsources 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 theg overnment-wide financial statements, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets; and unrestricted 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 p that are subject to change. 46 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 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 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, Revegetation Assurance or Library Construction Nonmajor Funds). The Town Manager, subject to Town Council approval, may at any time transfer various unencumbered appropriation balances or portions thereof between a departments or activity. The adopted budget cannot be amended in any way without Town Council approval. 5. 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. No supplementary budgetary appropriations were necessary during the year. 47 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 B. Excess of Expenditures Over Appropriations Expenditures exceeded appropriations in the following funds: Amount of Overexpenditure General Fund: Town council $ 4,366 Magistrate court 15,072 Town manager 12,252 Human resources 19,629 Parks and recreation 55,497 Nonmajor Governmental Funds: Federal Seizures and Forfeitures 20,074 The overexpenditures listed in the General Fund was the result of recording the short-term p • compensated absence liability, a non-cash transaction. Cash was available to meet all the p overexpenditures listed above. NOTE 3 -DETAILED NOTES ON ALL FUNDS A. Assets 1. Deposits and Investments Deposits and investments at June 30, 2004 consist of the following: Deposits Cash on hand $ 2,900 Cash in bank 8,222,118 Cash with the County Treasurer 334,934 Investments State Treasurer's Investment Pool 50,901,669 Total cash and investments 59,461,621 Restricted assets (3.619.363) Total cash and equivalents $ 55,842.258 Deposits - The Town's deposits at June 30, 2004, were entirely covered by federal depository insurance or by collateral held by the Town's custodial bank in the Town's name. 48 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 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. 2. Restricted Assets Restricted assets in the Enterprise Fund at June 30, 2004 consisted of the following: Future debt service $ 2,343,593 Replacement reserve 1,148,895 Customer deposits 126,875 $ 3.619,363 3. Receivables Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Prepaid developer fees (General Fund) $ - $ 137,324 JCEF court enhancement funds (General Fund) - 18,428 Court fines (General fund) 318,242 - State seizures fund (Nonmajor governmental fund) - 4.919 $ 318.242 $ 160.671 49 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED TUNE 30, 2004 4. Capital Assets Capital asset activity for the year ended June 30, 2004 was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land $ 10,021,765 $ - $ - $ 10,021,765 Construction in progress 4,663.250 14.273355 - 18.936.605 Total capital assets, not being depreciated 14,685,015 14,273355 - 28,958,370 Capital assets being depreciated: Infrastructure 1,499,764 399,004 - 1,898,768 Buildings and improvements 16,830,610 - - 16,830,610 Machinery, equipment and vehicles 5.091.315 394,447 (384,276) 5,101,486 Total capital assets being depreciated 23,421,689 793,451 (384.276) 23,830,864 Less accumulated depreciation for: Infrastructure (31,036) (63,712) - (94,748) Buildings and improvements (1,573,548) (390,542) - (1,964,090) Machinery,equipment and vehicles (2.833.989) (664,744) 374,751 (3,123,982) Total accumulated depreciation (4,438,573) (1,118,998) 374,751 (5.182.820) Total capital assets, being depreciated, net 18,983,116 (325,547) (9,525) 18,648,044 Governmental activities capital assets,net $ 33,668,131 $ 13,947,808 $ (9,525) $ 47,606,414 50 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Beginning Ending Balance Increases Decreases Balance Business-type Activities: Capital assets not being depreciated: Land $ 103,691 $ - $ - $ 103,691 Water rights 6,172,3 61 - - 6,172,3 61 Construction in progress 719,229 3396,918 (88.674) 4.027,473 Total capital assets, not being depreciated 6,995,281 3,396,918 (88,674) 10,303,525 Capital assets being depreciated: Water system 47,159,089 2,718,292 - 49,877,381 Equipment and vehicles 1.046.095 58,170 - 1,104,265 Total capital assets being depreciated 48.205,184 2.776,462 - 50,981,646 Less accumulated depreciation for: Water system (8,483,565) (1,547,048) - (10,030,613) Equipment and vehicles (433,903) (109.217) - (543,120) Total accumulated depreciation (8,917,468) (1.656.265) - (10.573.733) Total capital assets, being depreciated,net 39,287,716 1,120,197 - 40,407,913 Business-type activities capital assets,net $ 46.282,997 $ 4.517,115 $ (88,674) $ 50,711,438 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government $ 330,051 Public safety 337,601 Highways and streets 267,035 Culture and recreation 184,311 Total depreciation expense governmental activities $ 1,118.998 Business-type activities: Water $ 1,656,265 Storm water drainage - Total depreciation expense business-type activities $ 1.656.265 51 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 5. Construction Commitments The Town has active construction projects as of June 30, 2004. The governmental fund projectsimprovements include road im and widening and Phase I of the reclaimed water project andotable water infrastructure projects.ects. At year end the government's commitments with P contractors are as follows: Governmental Remaining Project Spent-to-date Commitment Calle Concordia Road $ 63,378 $ 7,536 La Canada Road extension 327,066 2,639,261 La Canada Road widening 5,550,633 3,453,732 Tangerine Road 8,191,435 141,648 Lambert Lane 611,582 60,566 Oracle Road improvement 178,897 10,883 Pusch View Road extension - 7,884,883 First Avenue(Bridge) - 2,414,826 First/Palisades Interim 48,020 13,601 Tangerine/La Cholla 27,780 63 0,13 3 Lambert Safety 409A64 _ 116.637 $ 15.408.255 $ 17.373.706 Business-type Remaining Project Spent-to-date Commitment Phase I Reclaimed Water $ 566,279 $ 8,468,870 Potable - Mains 1,922,000 988,000 Potable - Boosters 112,000 20,000 Potable - Wells 698.242 230.019 $ 3.298.521 $ 9,706.889 52 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 B. Interfund Receivables, Payables and Transfers As of June 30, 2004 interfund receivable and payables were as follows: Due From Nonmajor Governmental Due To Fund General Fund $ 63 0.5 00 The above interfund receivables and payables is to cover a deficit cash balance at June 30, 2004 in the Municipal Debt Service Fund. Funds were received subsequent to June 30, 2004 to cover the deficit cash balance. Interfund transfers for the year ended June 30, 2004 consisted of the following: Transfers From General Transfers To Fund Public Transportation Fund $ 101,592 Nonmajor Governmental Fund 1,080,576 Storm Water Drainage Fund 64.000 $ 1.246.168 Transfers were made from the General Fund to subsidize the Public Transportation Fund and the Storm Water Drainage Fund and to transfer funds to the Municipal Debt Service Fund to make the required principal and interest payments on outstanding bonded indebtedness. 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. 53 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Changes in long-term obligations for the year ended June 30, 2004 are as follows: Due Within July 1,2003 Increases Decreases June 30,2004 One Year Governmental Activities: Bonds and loans payable: Revenue bonds $ 6,594,116 $ 5,512,500 $ (1,802,292) $ 10,304,324 $ 456,290 Certificates of participation 4,170,000 - (3,560,000) 610,000 190,000 Loan payable L716,000 5,000,000 - 6,716,000 936,000 12,480,116 10,512,500 (5,362,292) 17,630,324 1,582,290 Less deferred amounts on: Refunding - (657,014) 28,566 (628,448) (57,132) Premium - 60.200 (1,944) 58,256 3.884 Total bonds and loans payable 12,480,116 9.915,686 (5,335.670) 17,060,132 1,529,042 Other liabilities: Compensated absences 707.817 361.210 (320,869) 748,158 535.855 Governmental activities long-term liabilities $ 13.187,933 $ 10.276.896 $ (5.656.539) $ 17.808.290 $ 2.064.897 Business-type Activities: Bonds and notes payable: Revenue bonds $ 38,535,884 $ 41,987,500 $(14,177,708) $ 66,345,676 $ 1,473,710 Notes payable 4,3 82,100 - (4.3 82.100) - - 42,917,984 41,987,500 (18,559,808) 66,345,676 1,473,710 Less deferred amount on: deferred amount on refunding - (1,515,258) 48,880 (1,466,378) (97,759) deferred amount on discount (380,140) - 122,943 (257,197) (17,795) deferred amount on premium - 1.025,155 (22.246) 1.002,909 44.493 Total bonds and notes payable 42,537.844 41,497.397 (18.410.231) 65.625,010 1,402.649 Other liabilities: Compensated absences 47.589 27,410 (14.463) 60,536 13,526 Business-type activities long-term liabilities $ 42,585,433 $ 41.524.807 $(18.424.694) $ 65,685,546 $ 1.416,175 54 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Debt service requirements on long-term debt at June 30, 2004 are as follows: Governmental Activities Business-type Activities Year Ending June 30 Principal Interest Principal Interest 2005 $ 1,582,290 $ 564,944 $ 1,473,710 $ 2,981,778 2006 1,437,638 568,142 1,907,362 2,923,235 2007 3,178,120 534,782 2,281,880 2,854,343 2008 3,057,352 440,550 2,557,648 2,772,559 2009 576,450 355,503 2,608,550 2,677,000 2010-14 2,937,166 1,435,237 13,237,834 11,688,495 2015-19 3,708,076 678,975 13,256,924 8,797,252 2020-24 1,153,232 50,676 14,421,768 5,630,396 2025-28 - - 14.600,000 1,669,719 $ 17,630.324 $ 4.628,809 $ 66.345,676 $ 41.994.777 During the year ended June 30, 2004, the Town issued $15,750,000 in excise tax revenue bonds, with an average interest rate of 3.42 percent; $3,400,000 in Municipal Property Corporation bonds, with an average interest rate of 3.91 percent; and $3,915,000 in Municipal Property Corporation bonds, with an average interest rate of 2.83 percent to advance refund $17,645,000 ($4,821,002 of governmental and $12,823,998 of business-type activities) of outstanding Certificates of Participation and Revenue Bonds and payoff the outstanding note payable due to the City of Tucson in the amount of $3,895,000. The net proceeds of $22,706,930 (after payment of $358,070 in underwriting fees, insurance, and other issuance costs) were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments of the refunded COPs and Revenue Bonds. As a result, the refunded COPs and Revenue Bonds are considered to be defeased, and the liabilities for those bonds have been removed from the Governmental and Business-type Activities. The Town advance refunded the COPs, Revenue Bonds and paid down the Note Payable to reduce its total debt service payments over the next 20 years by almost $303,303 and obtained an economic gain (i.e., difference between the present values of the debt service payments on the old and new debt) of$613,816. 55 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 NOTE 4 - OTHER INFORMATION A. Risk Management Town of Oro Valle Arizona, is exposed to various risks of loss related to torts; theft of, The y9 , damage to and destruction of assets; errors and omissions; and natural disasters. The Towns insuranceprotection is provided by the Arizona Municipal Risk Retention Pool, of which the n Town is ap articipating member. The limit for basic coverage is for $2,000,000 per occurrence on a claims made basis. Excess coverage is for an additional $10,000,000 per occurrence on a follow form, claims made basis. The aggregate limit is also $10,000,000. No significant reduction in insurance coverage occurred during the year and no settlements exceeded insurance coverage during any of the past three fiscal years. The Arizona Municipal Risk Retention Pool is structured such that member premiums are p based on an actuarial review that will provide adequate reserves to allow the pool to meet its expected financial obligations. The pool has the authority to assess its members additional p g premiums should reserves and annual premiums be insufficient to meet the pools obligations. The Town is insured byArizona 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: 2004 2003 Unpaid claims, beginning of year $ - $ - Incurred claims (including IBNRs) 5,654 20,283 ClaimP ayments (5.654) (20.283) 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, 2004, totaled $293,731. 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. 56 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 C. Retirement Plans Defined Contribution Pension Plan All non-peace officers and certain part-time employees of the Town participated in a defined contribution ension plan administered by the ICMA Retirement Corporation as a 401(a) plan p during the months of July and August 2003. In September 2003 all non-peace officers and certainart-time employees began participating in the Arizona State Retirement System. The p p payroll for the Town employees covered by this plan during the months of July and August 2003 was $1,454,970. The Town's total payroll for this period was $1,966,176. A defined contributionension plan provides benefits in return for services rendered, provides p an individual account for each participant, and specifies how contributions to the individual's account are determined instead of specifying the amount of benefit the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account, the returns earned on investment of those contributions, and forfeitures of other participant's benefits that may be allocated to such participant's ant's account. All non-peace officer full-time Town employees were required to participate in pension ate the plan within six months from the date they were hired. Contributions made by an employee vested immediately and contributions made by the Town vested after one p year of service. An employee that leaves the employment of the Town is entitled to his or her contributions and the vested portion of the Town's contributions, plus interest earned. Each employee was required to contribute 5.0% of his or her gross earnings. The Town was required to contribute 7.0% of covered earnings. During the months of July and August 2003, the Town's required and actual contributions amounted to $101,848. The employees' contributions totaled $72,749. No ension provision changes occurred during the two months that the plan was in effect that p affected the required contributions made by the Town or its employees. The ICMA Retirement Corporation held no securities of the Town or other related parties during the fiscal year 2002-03 or as of the close of the fiscal year. Asyreviousl discussed, the Town discontinued contributing to the 401(a) defined contribution p plan and began contributing to the Arizona State Retirement System on September 1, 2003. 57 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Arizona State Retirement System Plan Description - The Town contributes to a cost-sharing multiple-employer defined benefit pensionplan lan administered by the Arizona State Retirement System. Benefits are established by state statute andy enerall provide retirement, death, long-term disability, survivor, and health g insurancep remium 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 pp 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. 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, 2004, active plan members and the Town were each required by statute to contribute at the actuarially determined rate of 5.7p ercent (5.2 ercent retirement and 0.5 percent long-term disability) of the members' p annual coveredper' Town's contributions a oll. The ibutito the System for the year ended June 30,2004 was $341,135, which is equal to the required contributions for the year. This was the first year the Town contributed to the Arizona State Retirement System. 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), anagent multiple-employer, public employee retirement system. During fiscal year g ended June 30, 2003, the Town also began contributing to the Arizona Corrections Officer Retirement Plan (ACORP). This plan is also an agent multiple-employer, public employee retirement system administered by the Arizona Public Safety Retirement Personnel. 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 dutythe in employment of the State of Arizona or a political subdivision thereof. All benefitP rovisions and other requirements are established by State statute. The PSPRS and ACORP issueublicly available financial reports that include financial statements and required p 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. 55- 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 remainingpby amounts necessary to fund the PSPRS and ACORP, as determined by the actuarial . basis specified statute. The current rate is 8.93 and 8.74 percent of annual covered payroll for PSPRS and ACORP, respectively. 58 TOWN OF ORO VALLEY, ARIZONA NOTES TO THE BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2004 Annual Pension Cost - During the year ended June 30, 2003 (the date of the last available information), the Town of Oro Valley's annual pension cost of $311,931 and $21,643 for the PSPRS forp olice and the Oro Valley ACORP Dispatchers, respectively, was equal to the Town of Oro Valley's required and actual contributions. The required contribution was determined as part of the June 30, 2003 actuarial valuation using an entryageactuarial actuarial funding method. Significant assumptions used in determining . the entryage actuarial accrued liability include (a) a rate of return on the investment of present g and future assets of 9.0% per year compounded annually, (b)projected salary increases of 6.5% per year compounded annually, and (c) additional projected salary increases and inflation of p 0.0%to 3.0% per year attributable to seniority/merit. 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 levelp ercentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2003,was 20 years. Thegrecedin methods comply with the financial reporting standards established by the Thepreceding Governmental Accounting Standards Board. Three-Year Trend Information PSPRS Police Fiscal Year Annual Pension Percent Net Pension Ended June 30, Cost (APC) Contributed Obligation 2001 $ 331,950 100.0 % $ - 2002 353,121 100.0 - 2003 311,931 100.0 - Oro Valley ACORP Dispatchers Fiscal Year Annual Pension Percent Net Pension Ending June 30, Cost (APC) Contributed Obligation 2003 $ 21,643 100.0 % - Information prior to 2003 is not available for the ACORP. 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 THIS PAGE BLANK 60 Required Supplementary Information 61 TOWN OF ORO VALLEY, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM AND ARIZONA COREZECTIONS OFFICER RETIREMENT PLAN SCHEDULE OF FUNDING PROGRESS Oro Valley PSPRS Police (Over)Under Entry Age funded AAL Valuation Actuarial Actuarial (Over)Under Annual as a Percentage Date Value of Accrued Percent funded Covered of Covered June 30, Assets Liability(AAL) Funded AAL Payroll Payroll 1996 1,591,318 $ 2,121,636 75.0 % $ (530,318) $1,440,638 (36.8)% 9 $ % (22.3)%1997 2239 319 2,614,221 85.7 (374,902) 1,682,582 1998 2,772,586 3,067,826 90.4 % (295,240) 1,890,076 (15.6)% , 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) 2,493,062 (11.2)% 2001 5,766,661 5,168,557 111.6 % 598,104 2,948,683 20.3 % 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 % * Information prior to 1996 is not available. Oro Valley ACORP Dispatchers (Over)Under Entry Age funded AAL Valuation Actuarial Actuarial (Over)Under Annual as a Percentage Date Value of Accrued Percent funded Covered of Covered June 30, Assets Liability(AAL) Funded AAL Payroll Payroll 2002 $ - $ 433,070 - % $ (433,070) $ 395,386 (109.5)% 2003 $ 434,235 $ 749,710 57.9 % $ (315,475) $ 504,064 (62.6)% * Information prior to 2002 is not available. 62 Combining and Individual Fund Statements and Schedules 63 THIS PAGE BLANK 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 FUND Library Construction-accounts for the collection and capital expenditures of the Oro Valley Library. 65 - TOWN OF ORO VALLEY,ARIZONA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30,2004 Capital Special Revenue Debt Service Projects Industrial Federal Nonmajor Development Revegetation State Seizures Seizures and Municipal Library Governmental Authority Assurances and Forfeitures Forfeitures Total Debt Service Construction Funds Assets Cash and cash equivalents $ 186 $ 1,014,595 $ 128,303 $ 155,291 $ 1,298,375 $ 944,219 $ 23,243 $ 2,265,837 Receivables,net Interest receivable - 1,158 6 - 1,164 582 - 1,746 Total assets $ 186 $ 1,015,753 $ 128.309 $ 155.291 $ 1.299.539 $ 944.801 $ 23.243 $ 2.267 583 Liabilities and Fund Balances Liabilities Accounts payable $ - $ - $ - $ 2,112 $ 2,112 $ - $ - $ 2,112 Due to other funds - - - - - 630,500 - 630,500 Deferred revenue - - 4,919 - 4,919 - - 4,919 Customer deposits payable - 757,785 - - 757.785 - - 757.785 Total liabilities - 757,785 4,919 2.112 764.816 630.500 - 1,395.316 Fund balances Unreserved 186 257,968 123,390 153.179 534.723 314,301 23.243 872.267 Total fund balances 186 257,968 123.390 153.179 534,723 314.301 23.243 872.267 Total liabilities and fund balances $ 186 $ 1.015.753 $ 128.309 $ 155.291 $ 1.299.539 $ 944.801 $ 23.243 $ 2.267.583 66 TOWN OF ORO VALLEY,ARIZONA COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30,2004 Capital Special Revenue Debt Service Projects Industrial Federal Nonmajor Development Revegetation State Seizures Seizures and Municipal Library Governmental Authority Assurances and Forfeitures Forfeitures Total Debt Service Construction Funds Revenues Intergovernmental $ - $ - $ - $ 15,000 $ 15,000 $ - $ - $ 15,000 Fines and forfeitures - - 78,298 166,932 245,230 - - 245,230 Investment earnings 3 12.275 (844) (1906) 7,528 3.727 - 11.255 Total revenues 3 12.275 77,454 178,026 267.758 3.727 - 271,485 Expenditures Current General government 10 - 1,823 - 1,833 - 4,757 6,590 Public safety - - 1,214 111,313 112,527 - - 112,527 Debt Service Principal retirement - - - - - 541,290 - 541,290 Interest on long-term debt - - - - - 406,495 - 406,495 Issuance costs - - - - - 93,415 - 93.415 Total expenditures 10 - 3,037 111.313 114.360 1,041.200 4,757 1,160.317 Excess(deficiency)of revenues over expenditures (7) 12.275 74.417 66,713 153.398 (1.037.473) (4,757) (888.832) Other financing sources(uses) Transfers in - - - - - 1,080,576 - 1,080,576 Issuance of refunding debt - - - - - 5,572,700 - 5,572,700 Payment to refunded debt escrow agent - - - - - (5.478.016) - (5.478.016) Total other financing sources(uses) - - - - - 1.175.260 - 1.175.260 Net change in fund balances (7) 12,275 74,417 66,713 153,398 137,787 (4,757) 286,428 Fund balances,beginning of year 193 245.693 48.973 86.466 381.325 176.514 28.000 585.839 Fund balances,end of year $ 186 $ 257.968 $ 123.390 $ 153.179 $ 534.723 $ 314.301 $ 23.243 $ 872.267 67 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 30,2004 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ 11,591,000 $ 13,437,638 $ 1,846,638 Impact fees 803,000 1,189,848 386,848 Investment earnings - 78,739 78,739 Other 4,000 _ 24.717 20,717 Total Revenues 12.398.000 14,730,942 2.332.942 Expenditures Current Highways and streets 26,868,373 14,571,156 12,297,217 Debt Service Interest on long-term debt - 19,977 (19,977) Total Expenditures 26.868.373 14,591,133 12.277.240 Excess(deficiency)of revenues over expenditures (14.470.373) 139.809 14,610.182 Other financing sources(uses) Transfers in 400,000 - (400,000) Issuance of long-term debt 5,576,000 - (5,576,000) Issuance of long-term loan payable - 5.000.000 5.000.000 Total other financing sources(uses) 5.976.000 5,000,000 (976.000) Net change in fund balances (8,494,373) 5,139,809 13,634,182 Fund balances,beginning of year 8,494.373 5.410.128 (3.084.245) Fund balances,end of year $ - $ 10.549.937 $ 10.549.937 68 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 30,2004 Original and Final Variance with Final Budget Actual Budget Revenues Fines and forfeitures $ 10,000 $ 78,298 $ 68,298 Investment earnings - (844) (844) Total Revenues 10.000 77.454 _ 67.454 Expenditures Current General government 2,361 1,823 538 Public safety 24.680 1.214 23.466 Total Expenditures 27.041 3,037 24.004 Excess(deficiency)of revenues over expenditures (17,041) 74,417 91,458 Fund balances,beginning of year 17.041 48.973 31,932 Fund balances,end of year $ - $ 123.390 $ 123.390 69 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 30,2004 Original and Final Variance with Final Budget Actual Budget Revenues Intergovernmental $ - $ 15,000 $ 15,000 Fines and forfeitures 40,000 166,932 126,932 Investment earnings - (3.906) (3,906) Total Revenues 40,000 178.026 138,026 Expenditures Current Public safety 91.239 111.313 (20,074) Total Expenditures91.239 111.313 (20,074) Excess(deficiency)of revenues over expenditures (51,239) 66,713 117,952 Fund balances,beginning of year 51.239 86.466 35,227 Fund balances,end of year $ - $ 153.179 $ 153,179 70 TOWN OF ORO VALLEY,ARIZONA MUNICIPAL DEBT SERVICE FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,2004 Original and Final Variance with Final Budget Actual Budget Revenues Investment earnings $ 3,000 $ 3.727 $ 727 Total Revenues 3.000 3.727 727 Expenditures Debt Service Principal retirement 541,290 541,290 - Interest on long-term debt 545,944 406,495 139,449 Issuance costs 166,600 93,415 73.185 Total Expenditures 1.253.834 1.041.200 212.634 Excess(deficiency)of revenues over expenditures (1.250.834) (1.037.473) .213.361 Other financing sources(uses) Transfers in 1,080,576 1,080,576 - Issuance of refunding debt - 5,572,700 5,572,700 Payment to refunded debt escrow agent - (5,478.016) (5.478.016) Total other financing sources(uses) 1,080,576 1,175.260 94.684 Net change in fund balances (170,258) 137,787 308,045 Fund balances,beginning of year 170.258 176.514 6.256 Fund balances,end of year $ - $ 314,301 $ 314.301 7 71 THIS PAGE BLANK 72 STATISTICAL SECTION 73 to 01 oo N .t" in ^ .. 7,43 T) r::) O N en O N en 00 ,---t 1 Ch to S.3 �" Q 64 Z00 M 00 0N OT �--+ a r H o cr Z ^ o0^ O• w 6 N � Cip V;P4R >4 '= < 00 r a' WO C) r -- c„ .4... .s, . i . ,c, , kr) .1- W W aw =u.. 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Mkr) Cil c0 — r.., tC3 M O as s-• M N .� 0 O O z, '' N N +) O 4 TOWN OF ORO VALLEY,ARIZONA GENERAL GOVERNMENT EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Highways Culture Claims Year General Public and and Capital and Debt Ended Government Safety Streets Recreation Outlay Judgements Service Total 1995 $3,142,403 $3,125,016 $ 874,783 $ 126,861 $ 894,039 $ - $ 306,585 $ 8,469,687 1996 2,778,347 3670514 1,216,141 407,484 167,662 - 398,348 8,638,496 1997 2,613,830 4,240,676 1,224,977 500,850 4,951,011 - 1,234,984 14,766,328 1998 2,880,570 4 251,231 1,207,437 647,146- 837,944 - 740,170 10,564,498 1999 3,317,668 5,240,616 1,149,073 636,302 878,843 - 793,212 12,015,714 2000 4,128,050 6,216,390 1,855,146 637,084 5,537,058 600,000 835,782 19,809,510 2001 7,256,772 7,347,742 2,924,119 1,193,846 3,628,630 - 2,537,759 24,888,868 2002 6,055,062 8,586,634 I 3,144,676 1,474,667 8,094,782 - 2,528,580 29,884,401 2003 6,698,052 8,796,643 8,892,030 2,394,212 - - 1,081,758 27,862,695 2004 5,800,477 9,426,215 17,193,322 - 2,540,949 - - 1,061,177 36,022,140 Source: Oro Valley Finance Department 76 TOWN OF ORO VALLEY,ARIZONA GENERAL GOVERNMENT REVENUES BY SOURCE LAST TEN FISCAL YEARS (UNAUDI'thD) Fiscal Fines Licenses Charges Contributions Year Inter- and and for and Impact Investment Ended Taxes Governmental Forfeitures Permits Services Donations Fees Earnings Other Total 1995 $3,459,754 $ 2,455,266 $407,933 '$1,275,265 $224,759 $ 800 $ 196,663 $384,742 $ 74,723 $8,479,905 1996 3,792,632 3,230,509 263,386 990,713 200,525 7,681 399,511 450,712 90,276 9,425,945 1997 3,865,996 5,380,979 280,644 941,888 198,948 28,052 804,907 498,158 48,036 12,047,608 1998 3,844,944 6,262,522 395,474 1,082,892 280,782 37,278 2,055,984 644,689 62,853 14,667,418 1999 4,518,732 6,780,403 331,032 1 1,411,820 239,945 2,001 1,594,256 884,085 50,902 15,813,176 2000 6,139,176 9,167,682 344,627 1,613,798 296,801 9,247 1,750,351 1,204,644 69,036 20,595,662 2001 6,429,157 8,328,908 333,755 1,776,265 387,657 3,785 1,413,932 1,342,814 172,726 20,188,999 2002 6,674,725 12,991,454 316,339 1,430,157 549,440 - 1,033,403 655,643 150,444 23,801,605 2003 6,217,798 11,786,746 307,570 1,784,568 633,406 37,331 885,371 . (244,770) 178,376 21,586,396 2004 8,296,552 23,990,005 463,150 2,536,576 823,287 30,251 1,189,848 281,518 229,411 37,840,598 Source: Oro Valley Finance Department 77 TOWN OF ORO VALLEY, ARIZONA STATE OF ARIZONA SALES TAX INFORMATION TAXABLE ACTIVITIES, TAX RATES AND DISTRIBUTION SHARES (UNAUDITED) Tax Distribution Business Activity Category Rate Share Mining-Severance 2.500% 80.00% Oil and Gas, Sand and Gravel 3.125% 32.00% Transportaton-Persons and Freight 5.600% 20.00% Utilities 5.600% 20.00% Communication 5.600% 20.00% Publishing 5.600% 20.00% Job Printing 5.600% 20.00% Private Cars/Pipelines 5.600% 20.00% Prime Contracting 5.600% 20.00% Owner Buildings 5.600% 20.00% Restaurants and Bars 5.600% 40.00% Amusements 5.600% 40.00% Personal Property Rentals 5.600% 40.00% Retail (excluding food sales) 5.600% 40.00% Hotel/Motel 5.500% 50.00% Membership Camping 5.600% 40.00% Timbering- Severance (a) 80.00% (a)The amount of severance tax levied on a severer engaged in the business of timbering shall be: (1) Two dollars thirteen cents per thousand board feet for timber products that are derived from ponderosa pine. (2) One dollar fifty-one cents per thousand board feet for timber products derived from all species except ponderosa pine. Source: Arizona Department of Revenue 78 TOWN OF ORO VALLEY, ARIZONA TRANSACTION PRIVILEGE (SALES) TAX RATES BY CATEGORY (UNAUDITED) Business Activity Category Rate Publishing 2.0% Printing and Advertising 2.0% Contracting 2.0% Retail Sales 2.0% Restaurants and Bars 2.0% Amusements 2.0% Miscellaneous 2.0% Hotel/Lodging Room Rentals 5.0% Source: Oro Valley Finance Department 79 TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED EXCISE TAX COLLECTIONS ($000's) JUNE 30, 2004 (UNAUDITED) Actual (a) Projected Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Year Revenue Source 2000/01 2001/02 _ 2002/03 2003/04 2004/05 2005/06 Town Sales and Franchise Taxes $ 6,395 $ 6,675 $ 6,293 $ 8,270 $ 7,990 $ 8,309 Licences and Permits 1,750 1,415 1,759 2,504 2,165 2,252 Fines 225 203 225 218 200 208 State-Shared Sales Tax 1,845 2,289 2,323 2,687 2,834 2,947 State-Shared Income Tax 2,346 3,098 3,161 2,846 2,936 3,053 $ 16,525 $ 16,125 $ 16,769 $ 12 561 $ 13,680 $ 13,761 Total � All revenue sources are resented on a modified accrual basis of accounting except for Town sales (a) p taxes which arep resented on the cash basis of accounting per the Arizona Department of Revenue Standard Industry Summary Local Taxes Collection Reports. Source: Oro Valley Finance Department Note: The above information is provided for bond requirements only and the bond does not require ten years of data. 80 TOWN OF ORO VALLEY,ARIZONA TOWN TRANSACTION PRIVILEGE(SALES)AND FRANCHISE TAX COLLECTIONS BY INDUSTRY CLASSIFICATION JUNE • 30,2004 ($000's) (UNAUDITED) Actual Projected Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Industry Classification 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 Construction $ 2,913 $ 2,779 $ 1,978 $ 3,014 $ 2,625 $ 2,730 Manufacturing 2 6 , 4 29 8 8 Transportation,Communications&Utilities 32 55 101 50 : 100 104 Wholesale Trade 13 61 31 46 60 62 Retail Trade 1,763 1,8772,086 2,722 2,700 2,808 . Restaurants,Bars&Lodging 1,082 1,250 1,354 1,556 1,650 1,716 Fire,Insurance&Real Estate 73 45 62 101 40 42 Services 257 258 285 393 410 426 All Other (3) 42 , 50 (13) 17 18 Cable Franchise 263 302 342 372 380 395 Total $ 6,395 $ 6,675 $ 6,293 1 $ 8,270 $ 7,990 $ 8,309 Source: Oro Valley Finance Department Note: The above information is provided for bond requirements only and the bond does not require ten years of data. 81 TOWN OF ORO VALLEY, ARIZONA SPECIAL ASSESSMENT BILLINGS AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Special Special Fiscal Assessment Assessment Year Billing Collected 1995 $ 120,000 $ 119,620 1996 145,550 145,386 1997 61,963 62,192 1998 31,424 54,651 1999 34,098 34,098 2000 3,138 3,138 2001 2002 - + 2003 2004 - Source: Oro Valley Finance Department Includes only debt service funds. 82 .3 c..) v „,,- 0.. m .4 v, —. 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C ,.... = cr im < ' .— — —, —., —. ...4 ...4 ..... ,..d ...I ...I ...I .,, ..... ....1 ..... .... ... /. ,1,4 g 1... CZ 5 V tO(,.• ...' . '... ›.. C, en 0, c:, -. ,-.3 (4.4, Cr tr.,kr, ,.0 t-- 00 0, 0 -4 cst en Cr kr, st:, t..- 00 C7, 0 4--, cst en 0- 0) 1/40 h. 00 0, 0 0 0 0 0,;..0 0 0 C) 0 C.,3 N cs1 CV c.,1 est cs1 est c.,4 -e-s ..6 2 0, C> 0 0 40 0.0 0 0 0 C> 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C) C> 0 C> = --4 N CV CN C,1 CN.cV csi C-,) c..41 est est csi csl C.,1 est N cs1 N est est c.,1 N Cs1 N cst NI c.,4 e,1 N •- 4 TOWN OF ORO VALLEY,ARIZONA STATEMENT OF BONDED INDEBTEDNESS RJNE 30,2004 (UNAUDITED) Total General Obligation Bonded Debt None Primary Assessed Valuation $ 341,973,974 Secondary Assessed Valuation 358,081,078 Estimated Full Cash Value 3,128,410,721 Source:2004 State of Arizona Department of Revenue Abstract of the Assessment Roll Direct General Obligation Bonded Debt Outstanding None Water and Sewer Revenue Bonds Outstanding None Street and Highway User Revenue Bonds Outstanding None Issue Maturity Balance Series Purpose Dates Outstanding Municipal Property Corporation Bonds 1996 Water Company 07/01/26 $ 16,898,792 Certificates of Participation 1996 Land Acquisition 07/01/17 610,000 Municipal Prop. Corp.-Excise Tax Rev.Bonds 1999 Dev. Serv.Bldg. 07/01/09 1,025,000 Municipal Prop. Corp.-Excise Tax Rev.Bonds 1999 Water Improvements 07/01/19 2,640,054 Excise Tax Revenue Obligations 2000 Land Acquisition 07/01/20 1,035,000 Municipal Prop. Corp.-Excise Tax Rev.Bonds 2001 Water Improvements 07/01/20 4,562,133 Municipal Prop.Corp.-Excise Tax Rev.Bonds 2001 Library 07/01/20 2,731,824 Municipal Prop.Corp.-Senior Lien Water Project 2003 Water Improvements 07/01/28 32,644,715 Municipal Prop. Corp.-Excise Tax Rev.Refunding 2003 Refunding-Water 07/01/19 10,345,694 Municipal Prop. Corp.-Excise Tax Rev.Refunding 2003 Refunding-General Fund 07/01/19 5,512,500 84 TOWN OF ORO VALLEY, ARIZONA DIRECT AND OVERLAPPING GENERAL OBLIGATION BONDED DEBT JUNE 30, 2004 (UNAUDITED) General Obligation Approx. Net Debt Overlapping Jurisdiction Bonded Debt Percent Amount State of Arizona None 0.80 None Pima County $ 229,457,000 6.36 $ 14,593,465 Pima County Community College District 80,785,000 6.36 5,137,926 Pima County Flood Control District 3,805,000 7.30 277,765 Amphitheater Unified School District No. 10 99,985,000 34.49 34,484,827 Town of Oro Valley None 100.00 None Total direct and overlapping general obligation bonded debt $ 54,493,983 Direct and Overlapping General Obligation Debt Ratios As % of As % of Per Capita Town's Town's Bonded Debt Secondary Estimated Population Est. Assesssed Full Cash @ 37,700 Valuation Value Direct General Obligation Bonded Debt $ - 0.00% 0.00% Direct and Overlapping General Obligation Bonded Debt 1,445.46 15.22% 1.74% 85 TOWN OF ORO VALLEY, ARIZONA COMPUTATION OF LEGAL DEBT MARGIN JUNE 30, 2004 (UNAUDI"i'ED) Net secondary assessed valuation $ 358,081,078 Calculation of 20% Debt Limitation 20% of secondary net assessed valuation 2 $ 71,616,216 Bonds outstanding Net 20%Debt Limitation 71,616,216 Calculation of 6%Debt Limitation 6%of secondary net assessed valuation(1) 21,484,865 Bonds outstanding Net 6%Debt Limitation 21,484,865 Total Bonding Capacity Ca aci $ 93,101,081 (1) Under Arizona law, cities can issue general obligation bonds for general municipal purposes up to an amount not exceeding 6% of assessed valuation. (2) Under Arizona law, cities can issue additional general obligation bonds for supplying 1 ing specific services, such as water, sewer, lighting, parks and recreational facilities up to an amount not exceeding 20% of assessed valuation. Source: Oro Valley Finance Department 86 TOWN OF ORO VALLEY,ARIZONA PROPERTY TAX ASSESSMENT RATIOS AND COMPARATIVE SECONDARY ASSESSED VALUATION HISTORIES TAX YEARS 1995 THROUGH 2004 ([1NAUDITED) Property Classification 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Mining 29% 28% 27% 26% 25% 25% 25% 25% 25% 25% Utility 29% 28% 27% 26% 25% 25% 25% 25% 25% 25% Commerical and Industrial 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Agriculture and Vacant Land 16%; 16% 16% 16% 16% 16% 16%, 16% 16% 16% Owner Occupied Residential 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Leased or Rented Residential 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Railroad,Private Car Company& Airline FIight Property 26% 24% 23% 22% 21% 10% 10% 10% 10% 21% Source: Arizona Department of Revenue 87 TOWN OF ORO VALLEY, ARIZONA COMPARATIVE SECONDARY ASSESSED VALUATION HISTORIES TAX YEARS 1995 THROUGH 2004 (UNAUDITED) Pima State of Tax Year County Arizona 2004 $ 5,633,321,019 $ 44,480,893,202 2003 5,233,293,681 40,861,415,479 2002 4,837,084,048 36,825,660,973 2001 4,491,395,307 34,468,574,240 2000 4,196,858,967 32,071,738,214 1999 4,616,303,822 28,184,077,278 1998 4,915,883,987 26,793,103,101 1997 3,247,512,122 25,384,679,197 1996 3,218,883,605 23,022,330,962 1995 3,150,104,570 22,179,317,949 Source: Arizona Department of Revenue Note: The above information is provided for bond requirements only and the bond does not require ten years of data. 88 TOWN OF ORO VALLEY,ARIZONA ASSESSED VALUATIONS AND TAX RATES JUNE 30, 2004 (UNAUDITED) Arizona legislation limits increases in assessed valuation of residential properties, limits total property taxes, levied by counties, cities, towns, community college districts, fire districts and school districts, establishes maximum limits on annual expenditures by counties, cities towns, community college districts, fire districts and school districts subject to adjustments for population and cost of living changes. There is no provision which would limit the amount of taxes which may be levied or expended to pay debt service on existing or future bond issues. Direct and Overlapping Secondary Assessed Valuation and Tax Rates per$100 of Assessed Valuation (1) 2004 Secondary Primary Tax Rates Assessed Assessed Per$100 of Overlapping Municipality Valuation Valuation Assessed Valuation State of Arizona $ 44,480,893,202 $ 41,886,818,760 0.0000 Pima County 5,633,321,019 5,423,410,351 5.3430 Pima Cty. Comm. College Dist. 5,633,321,019 5,423,410,351 1.3428 Pima County Library District 5,633,321,019 N/A 0.2124 Pima Cty. Flood Control Dist. 4,907,357,254 N/A 0.3546 Pima Cty. Fire Dist. 5,633,321,019 N/A 0.0427 Central AZ. Water Conservation District 5,633,321,019 N/A 0.1200 Golder Ranch Fire District 174,394,237 N/A 1.9500 Amphitheater Unified School District 1,038,222,730 996,784,900 6.3375 Total Tax Rates Per$100 of Assessed Valuation: Total Tax Rates Inside Town of Oro Valley, Golder Ranch Fire District and Amphitheater Unified School District District No. 10 15.7030 Total Tax Rates Inside Town of Oro Valley, and Amphitheater Unified School District No. 10 and Outside Golder Ranch Fire District 13.7530 (1) Based upon 2004 data obtained from the tax rolls of the Arizona Department of Revenue. 89 TOWN OF ORO VALLEY,ARIZONA PRIMARY AND SECONDARY PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS (PER$100 OF ASSESSED VALUE) LAST TEN FISCAL YEARS (UNAUDITED) Pima County Amphi. Flood Pima County Central Unified Fiscal State of Pima Control Comm. Free Arizona Fire School Town of Year Arizona County District College Library Project District Distirct Oro Valley Total 1995 0.4700 5.0638 0.3596 1.2183 0.2124 0.1400 1 0.0539 8.1646 0.0000 15.6826 1996 0.0000 5.0138 0.3596 1.2433 0.2224 0.1400 0.0549 7.6789 0.0000 14.7129 1997 0.0000 5.1139 0.3296 1.1836 0.2224 0.1400 0.0517 7.5099 0.0000 14.5511 1998 0.0000 5.1802 0.3246 1.1922 0.2224 0.1400 0.0515 7.0881 0.0000 14.1990 1999 0.0000 5.5287 0.3046 1.3696 0.2024 0.1400 0.0511 7.1715 0.0000 14.7679 2000 0.0000 5.5193 0.3046 1.5574 0.2024 0.1300 0.0495 6.8816 0.0000 14.6448 2001 0.0000 5.4644 0.3546 1.5470 0.2124 0.1300 0.0488 7.4427 0.0000 15.1999 2002 0.0000 5.3759 0.3546 1.5333 0.2124 0.1300 0.0458 7.0247 0.0000 14.6767 2003 0.0000 5.3587 0.3546 1.4884 0.2124 0.1200 0.0441 6.7601 0.0000 14.3383 5.3430 0.3546 1.3428 0.2124 0.1200 0.0427 6.3375 0.0000 13.7530 2004 0.0000 Source: Arizona Tax Research Association Note: The primary and secondary property tax rates for Pima County,Community College and the Amphitheater Unified School District jurisdictions are added together in the table. 90 TOWN OF ORO VALLEY, ARIZONA NET ASSESSED AND FULL CASH VALUES OF TAXABLE PROPERTY LAST TEN TAX YEARS (UNAUDITED) Secondary Total Tax Assessed Full Value to Full Year Type Value Cash Value Cash Value 1995 Secondary $ 119,234,229 $ 1,012,388,701 11.78% 1996 Secondary 130,338,325 1,134,829,789 11.49% 1997 Secondary 165,265,200 1,443,744,912 11.45% .4 1998 Secondary 178,766,882 1,547,098,212 11.55% 1999 Secondary 196,647,641 1,660,678,769 11.84% 2000 Secondary 220,687,234 1,874,760,891 11.77% 2001 Secondary 257,234,738 2,152,330,708 11.95% 2002 Secondary 294,649,424 2,536,114,768 11.62% 2003 Secondary 326,699,884 2,811,190,086 11.62% 2004 Secondary 358,081,078 3,128,410,721 11.45% Source: Pima County Assessor 91 TOWN OF ORO VALLEY,ARIZONA SECONDARY ASSESSED VALUATION BY PROPERTY CLASSIFICATION LAST FIVE TAX YEARS (UNAUDITED) 2000 2001 2002 2003 2004 Secondary Secondary Secondary Secondary Secondary Assessed Assessed Assessed Assessed Assessed Property Class Valuation Valuation Valuation Valuation Valuation Utilities $ 4,356,308 $ 4,224,746 $ 5,432,662 $ 5,478,784 $ 5,577,454 Commercial and Industrial 27,360,621 - 38,352,223 45,660,391 53,091,845 51,543,497 Agricultural and Vacant 26,182,766 30,114,158 35,879,382 36,099,358 38,447,925 Residential( occupied)ied) 154,208,262 171,628,461 193,762,244 217,987,550 244,278,100 Residential(rental) 8,579,277 12,915,150 13,914,745 14,042,347 18,234,102 Commercial Historical Property - - - - - $ 220,687,234 $ 257,234,738 $ 294,649,424 $ 326,699,884 $ 358,081,078 Source: Arizona Department of Revenue,Abstract of the Assessment Role and the Assessor of the County. 92 TOWN OF ORO VALLEY,ARIZONA SECONDARY ASSESSED VALUATION OF MAJOR TAXPAYERS JUNE 30,2004 (UNAUDITED) 2004 As % of Town's Secondary Total Secondary Assessed Assessed Taxpayer Valuation Valuation CHH Tucson Partnership(El Conquistador Hotel) $ 14,654,679 4.09% Barclay Group 2,516,468 0.70% Ventana Medical Systems Inc. 2,346,445 0.66% Tucson Electric Power 1,844,217 0.52% Target Corp. 1,685,304 0.47% Fri Rock Ridge 1,655,514 0.46% Home Depot 1,625,106 0.45% Qwest 1,547,724 0.43% Rancho Vistoso Center LLC 1,421,425 0.40% Boulder Canyon 1,224,000 0.34% Totals $ 30,520,882 8.52% Source: Pima County Assessor's Office 93 TOWN OF ORO VALLEY, ARIZONA HISTORICAL AND PROJECTED WATER SYSTEM REVENUES, EXPENSES,DEBT SERVICE AND COVERAGE (UNAUDITED) Historical Actual 2000/01 2001/02 2002/03 2003/04 Revenues: Water revenues $ 6,719,666 $ 8,176,260 $ 8,599,299 $9,093,069 Water connection fees 1,399,574 1,185,386 1,082,727 1,668,623 Alternative water connection fees 275,526 194,099 188,250 248,093 Other revenues 495,386 536,881 510,444 907,761 Interest income 924,112 498,535 (50,977) 285,118 Total revenues 9,814,264 10,591,161 10,329,743 12,202,664 Expenses: Personnel 1,125,462 1,334,751 1,519,058 1,647,054 Operations&maintenance 1,929,066 2,443,757 3,057,416 2,505,747 CAP water costs 211,142 236,142 500,681 390,936 Total expenses 3,265,670 4,014,650 5,077,155 4,543,737 Net water system revenues 6,548,594 6,576,511 5,252,588 7,658,927 Water supported debt service: 1996 Water related debt service 1,826,875 1,935,563 1,938,313 1,454,400 1999 Water related debt service 263,808 269,130 269,285 263,685 2001 Water related debt service 426,225 426,950 436,226 413,896 2003 Refunding debt service - - - 367,419 2003 Water related debt service - - - 1,247,396 Total water supported debt service $ 2,516,908 $ 2,631,642 $2,643,824 $3,746,796 Net water system revenues debt service coverage 2.60 x 2.50 x 1.99 x 2.04 x Source: Oro Valley Finance Department Note: The above information is provided for bond requirements only and the bond does not require ten years of data. Historical financial statements restated to reflect Water Connection Fees Fund and Alternative Water Connection Fees Fund. 94 TOWN OF ORO VALLEY,ARIZONA ORO VALLEY WATER UTILITY SCHEDULE OF RATES,FEES AND CHARGES (UNAUDITED) SCHEDULE OF WATER RATES EFFECTIVE JULY 17,2004 METER BASE RATE COMMODITY COMMODITY COMMODITY SIZE includes TIER 1 TIER 2 TIER 3 ZERO gallons $1.98 per 1000 gallons $2.68 per 1000 gallons $3.58 per 1000 gallons 5/8 x 3/4 $12.65 0-10,000 10,001-25,000 over 25,000 3/4 x 3/4 $18.95 0-10,000 10,001-25,000 over 25,000 1 $31.50 0-16,000 16,001-27,000 over 27,000 1.5 $63.15 0-38,000 38,001-64,000 over 64,000 2 $101.00 0-80,000 80,001-134,000 over 134,000 3 $202.00 0-186,000 186,001-311,000 over 311,000 4 $316.00 0-169,000 169,001-283,000 over 283,000 6 $631.00 0-1,800,000 1,800,001-3,006,000 over 3,006,000 8 $1,262.00 0-1,800,000 1,800,001-3,006,000 over 3,006,000 Golf course usage to be billed at Tier 1 rates. Tier 2&Tier 3 will be implemented for any usage in excess of ADWR allotment and will be billed after ADWR Annual report is filed. The Town entered into an agreement at the time of acquisition of the Rancho Vistoso Water Company that provides for a special rate for the Vistoso Partners golf courses. The commodity rate for any Vistoso Partners golf course is$194.00 per acre foot of water effective October 4,2002. This rate is valid until an alternative source of water can be provided to the golf courses. The following rates or service charges are effective July 17,2004: Service Charge Amount New Service Establishment Fee $20.00 Service Reconnection Fee $40.00 Service Reconnection Fee(after 5pm) $70.00 Meter Re-read Fee $20.00 Insufficient Funds/Return Check Fee $25.00 Document Reproduction Fee $1.50/Sheet Document Reproduction Fee Cost Backflow Prevention Install.Permit $35.00 Customer Requested Meter Test Cost Customer Security Deposit(basic) $40.00 Destruction of Property Cost Hydrant Meter Deposit $1,200.00 Delinquent Payment Fee $5.00 Service Area Inclusion Fee $5.00 per acre or$2.00 per lot A 5.6%sales tax will be added to meter installation fees. 95 TOWN OF ORO VALLEY,ARIZONA ORO VALLEY WATER UTILITY SCHEDULE OF RATES,FEES AND CHARGES (UNAUDITED) Meter Installation Meter Size Charges AWRD Fees (in inches) Effective 7/6/2002 Effective 8/13/1996 5/8"X 3/4" $150.00 $300.00 3/4"X 3/4" $175.00 $450.00 1"standard $200.00 $750.00 1.5"standard $390.00 $1,500.00 1.5"turbine $560.00 $1,500.00 2"standard $560.00 $2,400.00 2"turbine $550.00 $2,400.00 2"compound $1,365.00 $2,400.00 3"turbine $875.00 $4,500.00 3"compound $1,700.00 $4,500.00 4"turbine $1,600.00 $7,500.00 4"compound $2,750.00 $7,500.00 6"turbine $3,240.00 $15,000.00 6"compound $4,925.00 $15,000.00 8"turbine Time&Materials N/A Multifamily Per Unit Cost N/A $144.00 Turf Uses(per acre) Golf course turf areas $3,680.00 Lakes&opern water $4,640.00 Turf for cemeteries, $2,880.00 parks&schools Turf areas with 10 $2,880.00 acres or more turf Note: 5.6%sales tax must be added to meter installation fees. 96 TOWN OF ORO VALLEY,ARIZONA ORO VALLEY WATER UTILITY SCHEDULE OF RATES,FEES AND CHARGES EFFECTIVE AS OF JULY 5,2000 (UNAUDITED) Potable Water System Development Impact Fee Schedule . Single-Family *Comercial/ Irrigation(non-turf) Meter Size Residential Industrial Fees Meter Fees 5/8"X 3/4" $1,774 $4,080 $3,193 , 3/4"X 3/4" $1,774 N/A N/A , 1" $4,435 $10,200 $7,983 1 1/2" $8,870 $20,400 $15,965 2" $14,192 $32,640 $25,544 3 --- $65,280 $51,088 4" --- $102,000 $79,825 6" --- $204,000 $159,650 8" --- $408,000 $319,300 The meter component of the fee for master-metered residential uses is the higher of$834 per unit or the single-family residential fee(s)for the master meter(s)* Individual metered residential units shall pay the single-family residential fee for each meter. Turf usage fee is$18,351 per acre of turf * The total Potable Water System Development Fee for commercial/industrial and master- metered residential uses is the sum of the meter component set forth above and the following supplemental fee based on fire flow for uses requiring more than 1,000 gpm of fire flow (based on the total area of development and the fire flow requirement as determined by the Fire Department): Fire-Flow Requirement SDIFs 1,001 - 1,500 gpm $3,230/meter 1,501 -2,000 gpm $14,847/meter 2,001 -2,500 gpm $26,151/meter For residential uses, this fee shall be paid when construction permits are issued. For all other uses, this fee shall be paid when a water meter is obtained. If water system enhancements are required in order to have sufficient capacity to provide water to a development which will be served pursuant to a line extension agreement, the line extension agreement may provide either that the developer pay the full fee provided by this section at the time of entering into the line extension agreement or that the developer construct all system enhancements needed to serve the development which is the subject of the line extension agreement. 97 TOWN OF ORO VALLEY, ARIZONA ORO VALLEY WATER UTILITY SCHEDULE OF RATE, FEES AND CHARGES EFFECTIVE JULY 17,2004 New Development Hydraulic&Design Review Fees Hydaulic Review Design Review Base Sheet $155.00 $260.00 Each Add'l Sheet $25.00 $15.00 Plan Revision N/A $15.00 Each Fees include 2 hydraulic reviews and 2 design reviews. Additonal reviews to be$85.00 per review. Fees to be collected prior to receipt of approved plans. New Development Construction Inspection Fees Length of Water Main Fees (in feet) 0-500 $365.00 501-1000 $585.00 1001-1500 $805.00 1501-2000 $1,205.00 2001-2500 $1,245.00 2501-3000 $1,465.00 3001-3500 $1,685.00 3501-4000 $1,905.00 4001-4500 $2,125.00 4501-5000 $2,345.00 Repeat Pressure Test $60.00 per test Repeat Bacteria Test $75.00 per test Fees to be collected prior to project acceptance. For inspection services during other than normal working hours,this amount will be charged in addition to above fees: Labor Costs+30%Benefits 98 TOWN OF ORO VALLEY, ARIZONA ORO VALLEY WATER UTILITY SCHEDULE OF RATE, FEES AND CHARGES FISCAL YEAR 2003/04 PROPOSED RECLAIMED WATER RATE DESIGN FOR FY 2003-2004 METER BASE RATE COMMODITY COMMODITY COMMODITY SIZE includes TIER 1 TIER 2 TIER 3 ZERO gallons $1.98 PER 1000 GALS. $2.68 PER 1000 GALS. $3.58 PER 1000 GALS. 5/8 x 3/4 $12.65 ALL USAGE N/A N/A 3/4 x 3/4 $18.95 ALL USAGE N/A N/A 1 $31.50 ALL USAGE 1 N/A N/A 2 $63.15 ALL USAGE N/A N/A 2 $101.00 ALL USAGE N/A N/A 3 $202.00 ALL USAGE N/A N/A 4 $316.00 ALL USAGE N/A N/A 6 $631.00 ALL USAGE N/A N/A 8 $1,262.00 ALL USAGE N/A N/A 99 TOWN OF ORO VALLEY, ARIZONA NUMBER OF METERS CONNECTED (UNAUDITED) Fiscal Meters Running Year Connected Total Pre-05/01/96 * 9,863 9,863 1995/96 ** 152 10,015 1996/97 523 10,538 1997/98 802 11,340 1998/99 985 12,325 1999/00 *** 1,930 14,255 2000/01 789 15,044 2001/02 507 15,551 2002/03 470 16,021 2003/04 533 16,554 2004/05 450 17,004 2005/06 450 17,454 2006/07 450 17,904 2007/08 450 18,354 * Connections existing at the time the Town acquired the two private water companies. ** Connections added between May 1st and June 30, 1996. *** The Oro Valley water utility assumed management of the former OV #1 customers (977) in July 1999. Source: Oro Valley Water Utility 100 TOWN OF ORO VALLEY, ARIZONA NUMBER OF CONNECTIONS BY TYPE FISCAL YEAR 2003/04 (UNAUDITED) Number Percentage Percentage of of Water of User Type Connections Total Revenues Total Residential 15,661 94.61% $ 6,3 96,018 70.34% Commercial 211 1.27% 499,034 5.49% Irrigation 342 2.07% 751,420 8.26% Construction 330 1.99% 253,128 2.78% Turf 9 0.05% 1,140,124 12.54% Wholesale/Unmetered 1 0.01% 53,346 0.59% Totals 16,554 100.0% $ 9,093,070 100.0% Source: Oro Valley Water Utility and Finance Department 101 TOWN OF ORO VALLEY,ARIZONA HISTORY OF CONNECTIONS TO THE WATER SYSTEM LAST FIVE FISCAL YEARS (UNAUDITED) Fiscal Years Single Multi- EndingFamily Family Commercial Irrigation Turf Total Total June 30 Connections Connections Connections Connections Connections Connections EDU's(a) 2000 927 24 33 21 1 1,006 (b) 1,397 2001 749 9 14 15 0 787 789 2002 477 1 11 18 0 507 666 2003 416 29 10 15 0 470 610 2004 468 28 21 16 0 533 497 (a) EDU's are determined by dividing the total amount collected with respect to connections to the system by the then existing fee for a 5/8-inch connection. There can be no assurance that this level of connections or any other level will continue in future years. (b) On 7/1/99 the Town assumed managment of the OVWID#1 which consisted of 977 customers. These customers are not considered "new" connections and were not subject to impact fees, they have not been included in this figure. Source: The Town. Note: The above information is provided for bond requirements only and the bond does not require ten years of data. 102 TOWN OF ORO VALLEY,ARIZONA HISTORY OF BUILDING PERMITS LAST FIVE FISCAL YEARS (UNAUDITED) Fiscal Year Ending June 30, Building Permits 2000 1 1 2001 1 2002 1 2003 1 2004 Single Family Residential 1,144 793 534 412 494 4 Office 14 4 16 10 21 Miscellaneous 102 290 180 157 149 Retail 11 6 11 8 5 Apartments 10 - - - - Total Commercial 137 300. 207 175 175 Total 1,281 1,093 741 587 669 Source: The Town. Note: The above information is provided for bond requirements only and the bond does not require ten years of data. 103 TOWN OF ORO VALLEY, ARIZONA SCHEDULE OF THE 15 LARGEST WATER SYSTEM CUSTOMERS FISCAL YEAR 2003/04 (UNAUDITED) Annual Annual Gallons Water Water System Customer Delivered* Charges Golf Course& Country El Conquistador Club 308,091 $ 614,161 Sun City Golf Course 145,407 465,188 Hilton El Conquistador Resort 39,365 102,611 Vistoso Highland Golf Course 129,888 91,937 Sun City Community Association 15,990 60,351 Stone Canyon Golf Course 228,508 143,389 Ventana Medical 4,665 15,336 Rockridg e Apartments 20,131 57,217 p La Reserve (Evans/Withycombe)A artments 18,899 57,311 p La Cholla Air Park23,630 54,440 The Boulder Apartments 14,040 42,465 p _ Fry's Grocery Store 8,142 25,212 Honeywell (Allied Si al 6,148 19,028 Signal) Pusch Ridge Christian Academy 8,575 27,432 Marana Public School (DeGrazia) 4,263 13,907 Totals 975,742 $ 1,789,985 * 000's omitted. Source: Town 104 TOWN OF ORO VALLEY, ARIZONA DEMOGRAPHIC STATISTICS JUNE 30, 2004 (UNAUDITED) Population by Age Group Percentage Age Group Number of Total Under 5 1,893 5.02% 5 - 14 4,814 12.77% 15 - 19 2,032 5.39% 20 - 29 2,435 6.46% 30 - 39 4,400 11.67% 40 -49 5,904 15.66% 50 - 64 7,662 20.32% 65 and over 8,560 22.72% Total 37,700 100.00% Sources: Town of Oro Valley Planning and Zoning Division 105 TOWN OF ORO VALLEY,ARIZONA DEMOGRAPHIC STATISTICS JUNE 30, 2004 (UNAUDITED) Population by Ethnic Background Percentage Category Number of Total White 33,232 88.15% Hispanic 2,816 7.47% Black/African American 385 1.02% Native American 113 0.30% Other 1,154 3.06% Total 37,700 100.00% Sources: Town of Oro Valley Planning and Zoning Division 106 q:t �- O 00 00 M N ,n ON CT O CT CT -- .,n O O 00 CT Cry O 00 ' oo N M O N N •--- 00 N O CT 7. 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Q ON O1 - N O 00 r--, M O M O `J -- N in kr) o Z Z M N CT O N N o Ow -t 00 CT N kr) M c+) �t t- c—d '.5.O .-. t` N N -- t— �j O .6 E") > -- •-- O N in co �t CT O N Q v, b9 O Q cO E"" > U co Wp 04 C:) t"- N N N ten N N in CT "� p `O -o- "- N oo e 01 CI) C) .- _ d• M `O O1 ct. 00 N t^ �-, -� ., z CO N00 O 00 00 O \D d• O O --, •-. ON 00 O �t `D 00 O O et . .� N C`- --- 00 C •t O t— tr) = �}- `p kr M M o0 - O\ N 00 Q O -- � —� • - 00 N in 0.\ .-- <t O-, CT O 00 •-•. •c O -t N to O U 4 •-- N N M N o0 v-) in .�' , �.. c N N et cam.; COv) CO C/D U OD .... -' 'L3 ccs U O _ O cn O t— 00 to t� 00 N in in q O N d' M N '� en - O - [- > n .. co O s., CO r Z co, > Q '--.) c 4- 0 O U t- to t-- 00 O" O -- N M ct • 6 CT CT CT CT OC c) O O O O c O" O" 01 O\ O" O N O N N E--, CZ, -- N TOWN OF ORO VALLEY,ARIZONA SCHEDULE OF TOP EMPLOYERS JUNE 30,2004 (UNAUDITED) Governmental The Town of Oro Valley was incorporated in April, 1974. The Town is governed by a mayor,four council members, and a town manager. There is a local police department and service from Golder Ranch Fire District and Rural-Metro Fire Department,a private company available through subscription. Number of Largest Employers Product/Service Employees Hilton El Conquistador Resort Dining/Recreation/Hotel 425 Ventana Medical Systems Medical Research 413 Town of Oro Valley Government 334 Fry's Food Stores(2) Grocery Store 295 Hilton El Conquistador Country Club Dining/Recreation 260 Canyon Del Oro High School School 140 Target Retail Store 150 Long Realty Real Estate 130 Home Depot Retail Store 124 Stone Canyon Golf/GoIf Club at Vistoso Dining/Recreation 117 Securaplane Aerospace 93 Safeway Grocery Store 99 Oro Valley Country Club Dining/Recreation 95 Aventis Pharmaceuticals Medical Research 70 Desert Point Assisted Living 60 Uno's Chicago Bar&Grill Restaurant/Bar 60 Basha's Food Store Grocery Store 76 Risky Business Restaurant/Bar 49 Pizza Hut Restaurant 29 Walgreen's(2) Drug Store 36 Alterra Claire Bridge Assisted Living 30 Ross Stores Retail Store 35 Rubio's Baja Grill Restaurant 18 PetsMart Retail Store 22 Pusch Ridge Day Care Day Care 30 Albertson's Grocery Store 83 Trader Joe's Grocery Store 48 Osco Drug Store 14 General The Town of Oro Valley encompasses an area of approximately 33.2 square miles. Located in northeastern Pima County,the Town is six miles north of the Tuscon city Iimits. The Town's current population is 37,700 and recorded a 2.6%unemployment rate in 2004. 108