City of Scottsdale, Arizona comprehensive annual financial report for the year ended...

              City of Scottsdale, Arizona
Comprehensive Annual Financial Report
for the fiscal year ended June 30, 2009
Prepared by:
Financial Services Department
Scott McCarty, CPA
Chief Financial Officer
Richard D. Chess, MBA
Accounting & Tax Audit Director
City of Scottsdale, Arizona
City of Scottsdale, Arizona
City of Scottsdale, Arizona
Comprehensive Annual Financial Report
For the Fiscal Year ended June 30, 2009
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal – Chief Financial Officer, Financial Services................................................................................. 1
Certificate of Achievement - Government Finance Officers Association.......................................................................7
List of Elected and Appointed Officials/Organizational Chart........................................................................................8
FINANCIAL SECTION
Independent Auditors’ Report..............................................................................................................................................11
Management’s Discussion and Analysis..............................................................................................................................13
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets.............................................................................................................................................34
Statement of Activities...............................................................................................................................................35
Fund Financial Statements
Balance Sheet - Governmental Funds.......................................................................................................................36
Reconciliation of the Governmental Funds Balance Sheet to the Statement
of Net Assets............................................................................................................................................................38
Statement of Revenues, Expenditures, and Changes in Fund Balances –
Governmental Funds...............................................................................................................................................39
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities..........................................................41
Statement of Revenues, Expenditures, and Changes in Fund Balance –
Budget and Actual - General Fund.........................................................................................................................42
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balance -Budget and Actual - General Fund..............................................................................................43
Statement of Net Assets - Proprietary Funds..........................................................................................................44
Statement of Revenues, Expenses, and Changes in Fund Net Assets –
Proprietary Funds.....................................................................................................................................................46
Statement of Cash Flows - Proprietary Funds........................................................................................................47
Statement of Fiduciary Net Assets - Fiduciary Funds............................................................................................49
Statement of Changes in Fiduciary Net Assets - Fiduciary Funds.......................................................................50
Notes to the Financial Statements........................................................................................................................................51
I Summary of Significant Accounting Policies...........................................................................................................51
II Reconciliation of Government-wide and Fund Financial Statements.................................................................60
III Stewardship, Compliance, and Accountability.........................................................................................................66
IV Detailed Notes on All Funds.....................................................................................................................................69
A. Cash and Investments..................................................................................................................................69
B. Receivables.....................................................................................................................................................73
C. Capital Assets................................................................................................................................................74
D. Interfund Balances and Interfund Transfers.............................................................................................76
E. Leases..............................................................................................................................................................78
F. Bonds, Loans, and Other Payables..............................................................................................................79
City of Scottsdale, Arizona
Page
V Other Information.......................................................................................................................................................92
A. Risk Management.........................................................................................................................................92
B. Contingent Liabilities...................................................................................................................................92
C. Commitments and Subsequent Events......................................................................................................92
D. Joint Venture..................................................................................................................................................94
E. Pollution Remediation..................................................................................................................................94
F. Related Organization....................................................................................................................................95
G. Retirement and Pension Plans.....................................................................................................................95
H. Other Postemployment Benefits...............................................................................................................100
I. Postemployment Benefits Other Than Pensions....................................................................................101
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds ...................................................................................107
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Governmental Funds................................................................................................108
Combining Balance Sheet - Nonmajor Special Revenue Governmental Funds......................................................110
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Special Revenue Governmental Funds..................................................................111
Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:
Highway User Fuel Tax – Special Revenue Fund..................................................................................................112
Preserve Privilege Tax – Special Revenue Fund....................................................................................................113
Combining Balance Sheet - Nonmajor Debt Service Governmental Funds............................................................114
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Debt Service Governmental Funds...............................................................115
Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual:
General Obligation Bond – Debt Service Fund....................................................................................................116
Municipal Property Corporation Bond – Debt Service Fund.............................................................................117
Special Assessments Bond – Debt Service Fund..................................................................................................118
Scottsdale Preserve Authority Bond – Debt Service Fund..................................................................................119
Combining Balance Sheet - Nonmajor Capital Projects Governmental Funds.......................................................120
Combining Statement of Revenues, Expenditures, and Changes in
Fund Balances - Nonmajor Capital Projects Governmental Funds...................................................................121
Combining Statement of Net Assets - Internal Service Funds..................................................................................123
Combining Statement of Revenues, Expenses and Changes in
Fund Net Assets – Internal Service Funds.............................................................................................................124
Combining Statement of Cash Flows - Internal Service Funds.................................................................................125
Combining Statement of Fiduciary Net Assets - Fiduciary Funds............................................................................127
Combining Statement of Changes in Assets and Liabilities – Fiduciary Funds......................................................128
Other Supplementary Information:
Schedule of Changes in Long-Term Debt.........................................................................................................................130
City of Scottsdale, Arizona
STATISTICAL SECTION
Page
Financial Trends
Net Assets by Component – Last Eight Fiscal Years (accrual basis of accounting) ������������������������������������ 134
Changes in Net Assets – Last Eight Fiscal Years (accrual basis of accounting) ������������������������ 135
Governmental Activities Tax Revenue by Source – Last Eight Fiscal Years
(accrual basis of accounting). � 138
Fund Balances of Governmental Funds – Last Eight Fiscal Years
(modified accrual basis of accounting). � 139
Changes in Fund Balances of Governmental Funds – Last Eight Fiscal Years
(modified accrual basis of accounting) � 140
Governmental Activities Tax Revenue by Source – Last Eight Fiscal Years
(modified accrual basis of accounting) � 143
Revenue Capacity
Taxable Sales Subject to Privilege (Sales) Tax by Category - Last Eight Fiscal Years ������������������������ 144
Direct and Overlapping Sales Tax Rates - Last Eight Fiscal Years � 145
Sales Tax Revenue Payers by Industry - Current Year and Nine Years Ago ���������������������������������� 146
Property Tax Rates – Direct and Overlapping Governments – Last Eight Fiscal Years ���� 147
Principal Property Tax Payers – June 30, 2009 and 2000 ��������������������������������������� 148
Assessed Value of Taxable Property – Last Eight Fiscal Years. ������������������������������������������������� 149
Property Tax Levies and Collections – Last Eight Fiscal Years ������������������������ 150
Debt Capacity
Ratios of Outstanding Debt by Type – Last Eight Fiscal Years ����������������������������������������� 151
Ratios of General Bonded Debt Outstanding – Last Eight Fiscal Years ��� 152
Direct and Overlapping Governmental Activities Debt as of June 30, 2009 �� 153
Legal Debt Margin Information – Last Eight Fiscal Years ������������������������������������������������� 154
Pledged-Revenue Coverage – Last Eight Fiscal Years ������ 156
Economic and Demographic Information
Demographic and Economic Statistics – Last Eight Fiscal Years ��������������������������������������������� 157
Principal Employers – Current Year and Nine Years Ago �� 158
Operating Information
Full-time Equivalent City Government Employees by Function – Last Eight Fiscal Years � 159
Operating Indicators by Function – Last Eight Fiscal Years ����������������������� 160
Capital Asset Statistics by Function – Last Eight Fiscal Years ���������������������������������������������������� 163
City of Scottsdale, Arizona
City of Scottsdale, Arizona 1
Transmittal
Letter
For the Fiscal Year
Ended June 30, 2009
City of Scottsdale
Scottsdale, Arizona
October 14, 2009
To the Honorable Mayor, Members of the City Council, and Citizens of the
City of Scottsdale, Arizona:
The Comprehensive Annual Financial Report of the City of Scottsdale, Arizona,
(the City) for the fiscal year ended June 30, 2009, is submitted in accordance
with Article 6, Section 14, of the City Charter. Management assumes full
responsibility for the completeness and reliability of all information presented
in this report, based upon a comprehensive framework of internal control that
it established for this purpose. Because the cost of internal controls should not
outweigh their anticipated benefits, the objective is to provide reasonable rather
than absolute assurance that the financial statements are free of any material
misstatements.
LarsonAllen, LLP has issued an unqualified (“clean”) opinion on the City of
Scottsdale, Arizona’s financial statements for the year ended June 30, 2009.
The independent auditor’s report is located at the front of the financial section
of this report.
Management’s discussion and analysis (MD&A) immediately follows the
independent auditor’s report and provides a narrative introduction, overview
and analysis of the basic financial statements. MD&A complements this letter
of transmittal and should be read in conjunction with it.
City of Scottsdale Profile
Scottsdale is centrally located in Maricopa County, Arizona, with its boundaries
encompassing an area approximately 184 square miles, stretching 31 miles
from north to south. The City is bordered to the west by Phoenix, the state
capital, by Tempe to the south, and by the Salt River/Pima Maricopa Indian
Community to the east. Scottsdale, together with its neighboring cities, forms
the greater metropolitan Phoenix area, which is the economic, political, and
population center of the state.
City of Scottsdale, Arizona 2
Scottsdale was founded in the 1800’s when retired Army Chaplain Major Winfield Scott homesteaded
what is now the center of the City. The City incorporated in 1951 and the City Charter, under which
it is presently governed, was adopted in 1961. The City has experienced significant increases in
population, with the 1950 census reporting 2,032 residents, and the 2000 census reporting 202,705.
The City’s population for 2009 was estimated at 242,337.
Scottsdale operates under a council-manager form of government as provided by its Charter. The
Mayor and six City Council members are elected at large on a non-partisan ballot for a four-year term.
The City Council appoints the City Manager, who has full responsibility for carrying out City Council
policies and administering City operations. The City Manager, in turn, appoints City employees and
department General Managers under service procedures specified by Charter. City service departments
provide a full range of services including police and fire protection, sanitation/solid waste service,
water and sewer services, construction and maintenance of streets, recreational activities, including
libraries and cultural events.
The annual budget serves as the foundation for Scottsdale’s financial planning and control. The
City Council formally adopts the budget and legally allocates, or appropriates, available monies for
the City’s various funds. Therefore, these funds have appropriated budgets, and budget to actual
information is presented. On or before the second regular Council meeting in May, the City Manager
submits to the City Council a proposed budget for the fiscal year commencing the following July 1.
The budget includes proposed expenditures and the means of financing them. Two public hearings are
held prior to the budget’s final adoption in order to obtain taxpayer comments. In June, the budget is
legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during
the fiscal year. Additional expenditures may be authorized for expenditures directly necessitated by
a natural or man-made disaster as prescribed in the State Constitution, Article 9, Section 20. During
fiscal year (FY) 2008/09, there were no such supplemental budgetary appropriations to the original
budget.
The expenditure appropriations in the adopted budget are by department. The maximum legal
expenditure permitted for the fiscal year is the total budget as adopted. Departmental appropriations
may be amended during the year. Upon the recommendation of the City Manager, and with the
approval of the City Council: (1) transfers may be made from the appropriations for contingencies to
departments; and (2) unexpended appropriations may be transferred from one department to another.
Local Economy
The City of Scottsdale’s tax revenue base consists of a variety of tax categories, the most significant
being revenue collections from retail sales and tourism activity. The City also benefits from other
favorable conditions associated with Scottsdale, including a stable, diversified economic base and
a desirable location for work, destination, and living. Scottsdale is past its historic period of peak
expansion and the long-term economic outlook for the City recognizes this fact. Revitalization efforts
have resulted in a rebirth of the City’s downtown area, as well as renewed interest in redevelopment
of the more mature, southern parts of the City. Commercial successes are due, in part, to Scottsdale’s
commitment to targeted recruitment efforts that focus on industry segments that complement the
existing business mix, including: corporate headquarter and regional offices; high-tech, research
and development; bio-med; luxury resorts and hotels, and business and professional services. The
following categories represent key factors affecting Scottsdale’s economic and financial success:
City of Scottsdale, Arizona 3
Retail Sales
Scottsdale’s largest revenue source is sales tax generated from a well-balanced variety of business
categories including automotive, construction, food stores, hotels/motels, department stores, retail
stores, restaurants, utilities and rentals. The City saw retail sales tax revenues decrease by 17 percent
in FY 2008/2009 after falling 4 percent in the previous fiscal year, a result of the national recession.
Employment and Job Growth
Scottsdale remains a net importer of labor, with an estimated ratio of 1.3 jobs to workforce population
in the City (Source: SitesUSA 2009). This creates employment opportunities for Scottsdale residents
and creates a significant business component to the local tax base. Scottsdale’s unemployment rate
was 6.3 percent in August 2009, significantly lower than the state level of 9.3 percent. Historically,
Scottsdale’s unemployment rate is about 2 percent lower than the state’s average. Scottsdale
recruited seven new, targeted firms with about 360 new jobs over the past year. New employers to
announce moves to Scottsdale last year included Allviant, Stirling Energy Systems, and NightHawk
Radiology, as well as the expansion of the GoDaddy facility.
Commercial Vacancy Rates
Scottsdale’s citywide office vacancy rate was about 29 percent for the last quarter of the fiscal year.
The percentage is in line with the Valley average. Scottsdale has nearly 20 percent of new office space
in the Valley that is currently under construction.
Tourism
Tourism is one of Scottsdale’s largest and most vibrant industries, and is a significant contributor to the
City’s economy. A variety of lodging properties, including several world-class resorts and “boutique”
hotels, provide over 11,000 guest rooms, along with spectacular spas, trend-setting dining and one-of-a
kind Sonoran desert golf courses. With the addition of the new 54-room Best Western Sundial hotel
in 2009, room supply in Scottsdale is expected to remain relatively stable in 2010. Bed tax revenues
to the City declined by 22 percent for fiscal year 2008/2009, due largely to the declining national
economy and the “AIG Effect” affecting business travel, which resulted in significant reductions in
occupancy rates and room rates. Scottsdale visitors contribute about 20 percent of the City’s total
privilege and use tax revenues. With over 17,000 retail shops, nearly 600 restaurants, national and
international events, and spectacular southwest Sonoran desert setting, Scottsdale continues to be a
popular destination for visitors year-round and is well-positioned as the economy emerges from the
current recession.
City of Scottsdale, Arizona 4
Long-term Financial Planning
Scottsdale’s Five-Year Financial Plan is based upon sound financial reserves and conservative revenue
growth forecasts for the foreseeable future. Potential for State legislative impacts to reduce revenue-sharing
and additional demands for essential City services such as police, fire, transportation and social
services remain. Financial Services management plays a pivotal role in maintaining and recommending
enhancements to financial plan elements to ensure the continued financial stability for the City of
Scottsdale. Achieving and maintaining fiscal stability requires many elements all working in concert
with one another. The following identifies key elements of our financial plan.
Adopted Comprehensive Financial Policies
Financial policies establish the framework for Scottsdale’s overall fiscal planning and management.
They set forth guidelines against which current budgetary performance can be measured and proposals
for future programs can be evaluated. These policies set the tone for all fiscal decisions made by staff
and City Council. We currently identify 53 financial policies governing operations, capital planning, debt
management, reserves and financial reporting – regular review and enhancement of these policies is done
in conjunction with financial plan development and are adopted annually by the City Council.
Financial Resource Planning
Scottsdale’s strategic financial planning begins with determining the City’s fiscal capacity based upon
long-term financial forecasts of recurring, available revenues. Conservative financial forecasts coupled
with financial trend analysis techniques and careful reserve analysis help preserve the fiscal wellbeing of
Scottsdale. Strategic financial capacity planning is a critical element to reach long-term financial stability
goals and to determine special financial needs for the critical objectives of the City Council.
Multi-Year Operating Budget Planning
Multi-year budget planning encompasses long-range operating expenditure plans (including the operating
impacts of capital projects), which are linked to community expectations and broad goals of the City
Council. The multi-year approach provides a better opportunity for staff to change its financial paradigm
from what do we need this year to how do we accomplish our level of service objectives over time,
given our financial capacity. While the City is required to adopt an annual budget to meet State statutory
requirements, Scottsdale builds a five-year financial plan to help anticipate future impacts and ensure
achievement of City objectives.
Strategic Capital Improvement Project Planning
Scottsdale Capital Improvement Projects are planned for five or more years and analyzed using City
specific prioritization criteria. The operating cost impacts of projects are also planned and considered in
developing future operating budget plans. Projects with significant operating impacts are carefully timed
to avoid contingent liabilities, which future operating resources cannot meet. Pay-as-you-go funding
sources are also conservatively estimated to avoid over-committing to capital construction using revenues
that are not certain. To the extent debt financing is used, capital project plans are sized to conform to
existing debt management policies.
City of Scottsdale, Arizona 5
Debt Management
Scottsdale has a financial policy, which prohibits the issuance of debt for operating expenses. With that as
a governing framework, all debt issuances are for the purposes of financing capital infrastructure (or long-lived
costly assets). Each debt issuance is evaluated against policies addressing: debt service as a percent
of operating expenditures, tax and revenue bases for the repayment of debt, the overall debt burden on
the community, statutory limitations and market factors affecting tax-exempt interest costs. In all cases
a long-term analysis is made considering the financial (debt) capacity that fits the wherewithal (and
willingness) of our community to pay for the capital projects. Sizing of the City’s Capital Improvement
Plan based on debt capacity in conjunction with conservatively estimated pay-as-you-go revenues helps
stabilize per capita debt and lower annual debt service costs to the City over the long-term.
The City retained credit ratings of “Aaa”, “AAA”, and “AAA” from the three major credit rating agencies,
Moody’s Investors Service, Standard and Poor’s Ratings Group, and Fitch Ratings, respectively on the
City’s outstanding general obligation bonds. These are the highest ratings possible, originally earned by
the City in 2001, and are held by only a handful of local governments across the nation. A summary of
the City’s bond ratings are shown as follows:
City of Scottsdale Bonded Debt Ratings
As of June 30, 2009
Moody's Standard Fitch
Investors and Poor's Investors
Service Rating Group Service, Inc.
General Obligation (GO) Aaa AAA AAA
Municipal Property Corp (MPC) Aa1 AAA AA+
Water and Sewer Revenue (W&S) Aa1 AAA AA+
Highway User Revenue Fund (HURF) Aa3 AA Not Rated
Scottsdale Preserve Authority (SPA) Aa2 AA AA
Major Initiatives
The City of Scottsdale’s adopted fiscal year 2009/2010 budget was established with the national recession
as the back drop. The budget document was the culmination of the most challenging budget process in
the City’s history. We moved quickly and decisively to deal with the downturn. During the first half of
the 2008/09 fiscal year, we had already taken action to close a $40 million gap between revenues and
expenses. For the 2009/10 budget year, the City Council, the new Budget Review Commission, our
citizens and staff were faced with wrenching choices necessary to close an even larger gap – about $65
million.
We collectively met the challenge. We did so without instituting any new taxes or raising tax rates. The
Council was able to lower the City’s combined property tax rate from 79 cents to 74 cents per $100 of
assessed valuation. The Council also voted for the lowest increase in five years in utility fees, adding
about 2.4 percent to a typical homeowner’s bill.
City of Scottsdale, Arizona 6
In the process, we were able to accomplish two even more important objectives: 1) We were able to make
the needed reductions while limiting the impacts on our direct services to citizens. We promised to affect
them least and last, and we held to that commitment. 2) We were able to restructure the City organization,
reducing its size by 10 percent, streamlining the chain of command and combining similar work functions
to be more efficient and effective. We positioned our organization to be more financially sustainable for
the long term.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded
a Certificate of Achievement for Excellence in Financial Reporting to the City of Scottsdale for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2008. This was the
36th consecutive year that the government has achieved this prestigious award. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR.
This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR
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.
The City of Scottsdale received the Distinguished Budget Presentation Award for the fiscal year beginning
July 1, 2008 from the GFOA for our conformity in budget presentation. We believe that our current
budget continues to conform to the program requirements and expect to receive this award for the fiscal
year beginning July 1, 2009.
Additionally, on July 7, 2009, the City of Scottsdale was formally recognized for having its Cash
Handling Program certified by the Association of Public Treasurers of the United States and Canada
(APT US&C).
The preparation of this report could not have been accomplished without the dedicated service of the
entire staff of the Accounting and Budget divisions, the assistance of administrative personnel in the
various departments, and through the competent service of our independent auditors. I also wish to
express my sincere appreciation to the City Council and the City Manager for their interest and support
in planning and conducting the financial affairs of the City of Scottsdale in a responsible and progressive
manner.
Respectfully submitted,
Scott McCarty
Chief Financial Officer
City of Scottsdale, Arizona 7
City of Scottsdale, Arizona 8
Comprehensive
Annual
Financial
Report
For the Fiscal Year
Ended June 30, 2009
City of Scottsdale
Scottsdale, Arizona
City of Scottsdale, Arizona
List of Elected and Appointed Officials
City Council
W.J. “Jim” Lane, Mayor
Lisa M. Borowsky
Wayne Ecton
Susan Klapp
Robert W. Littlefield
Ron McCullagh
Tony Nelssen
Charter Offices
Deborah Robberson, City Attorney
Sharron Walker, City Auditor
Carolyn Jagger, City Clerk
B. Monte Morgan, City Judge
City Treasurer, (Vacant)
Administrative Staff
John Little, City Manager
David Ellison, Assistant City Manager
Roger Klingler, Assistant City Manager
Neal Shearer, Assistant City Manager
City of Scottsdale, Arizona 9
Citizens of Scottsdale
Mayor and City Council
City Attorney - Deborah Robberson 480-312-7994
City Auditor - Sharon Walker (480) 312-7867
City Clerk - Carolyn Jagger 480-312-2411
City Judge - B. Monte Morgan 480-312-2442
Police
Alan Rodbell
480-312-1900
Administrative Support
Assistant
City Manager
Assistant
City Manager
Roger Klingler
480-312-5830
Assistant
City Manager
Neal Shearer
480-312-2604
Fire
William L.
McDonald
480-312-1880
Economic
Vitality
Administration
Aviation
*
Transportation
Planning
*
Traffic
Engineering
-Intelligent
Transportation
Systems
Customer
Services &
Administration
*
Planning &
Design Services
*
Current Planning
Services
*
Plan Review &
Permit Services/
One Stop Shop
*
Inspection &
Land Survey
Services
Office of
the Chief
*
Uniformed
Services
*
Special
Programs
*
Investigative
Services
*
Administrative
Services
*
Personnel
Development
Fire
Administration
*
Fire Emergency
Services
*
Fire Support
Services
*
Emergency
Management
Economic
Development
*
Tourism
*
Revitalization
*
Business
Services
*
Water
Operations
*
Water
Quality
*
Water
Treatment
Administration
*
Capital
Project
Management
*
Solid
Waste
Management
*
*
Fleet
Management
*
Stormwater
Management
Operations &
Facilities
Management
*
Events
Management
Administration
*
Accounting
*
Budget
*
Risk
Management
*
Purchasing
*
Customer
Service
*
Application Dev.
Integration,
Mgt. & Support
*
*
GIS
Data Services
*
Project Office
*
Support
Administration
*
Human
Resources
*
*
Diversity &
Dialogue
Federal
Relations
*
State
Relations
*
Regional
Relations
Administration
*
Customer
Service &
Communication
*
Downtown
Marketing &
Promotion
*
Downtown
Project
Planning &
Coordination
*
Administration
*
Parks &
Recreation
*
Human
Services
*
Library
Systems
*
Facilities
Management
Citizen Advisory Boards Other Council-Appointed Staff
Citizen Advisory Commissions
*
Plan*ning
Technology
Traffic
Operations
*
Street
Operations
Training &
Development
*
Benefits
Management
Human Resources Application
Operations & Admin
*
IS Admin
Network
Operations
Help Desk/
Desktop
Technical
Support
*
David Ellison
480-312-4510
*
Transportation
Mary O’Connor
480-312-2334
Planning &
Development
Services
David Richert
480-312-2890
Citizen &
Neighborhood
Resources
Raun Keagy
480-312-2373
Public
Relations
*
Media
Relations
*
CityCable 11
Human
Resources
LaVerne
Parker Diggs
480-312-2615
Communication
& Public Affairs
Pat Dodds
480-312-2336
Government
Relations
Bridget Schwartz-Manock
480-312-2454
Information
Systems
Brad Hartig
480-312-7615
Financial
Services
Scott McCarty
480-312-7582
Community
Services
Debra Baird
480-312-2480
The Downtown
Group
Michelle Korf
(Acting)
480-312-2638
Water
Resources
Marshall Brown
480-312-5683
Municipal
Services
Dan Worth
480-312-5555
Water
Resources
Administration
WestWorld
Brian Dygert
480-312-6825
Cultural Council
Contract
Administration
Neighborhood
Services/
Code
Enforcement
*
Parking
Harold Stewart
(Acting)
City Treasurer - (Vacant)
City Manager
John Little
480-312-2800
Preservation
*
Office of
Environmental
Initiatives
City of Scottsdale, Arizona 10
City of Scottsdale, Arizona 11
12 City of Scottsdale, Arizona
City of Scottsdale, Arizona 13
FINANCIAL HIGHLIGHTS
Key Financial highlights for fiscal year 2009 are as follows:
The assets of the City exceeded • its liabilities at the close of the fiscal years 2009 and 2008 by $4.1
billion and $3.9 billion (net assets), respectively. Of these amounts, $322.8 million and $383.7
million (unrestricted net assets), respectively, may be used to meet the government’s ongoing
obligations to citizens and creditors.
• The City’s total net assets increased by $196.8 million and $195.5 million during fiscal years 2009
and 2008, respectively.
• As of June 30, 2009 and 2008, the City’s governmental funds reported combined ending fund
balances of $221.3 million and $335.8 million, respectively.
• At the close of the current fiscal year, unreserved fund balance for the General Fund was $59.6
million or 23 percent of total General Fund expenditures of $257.2 million.
• During fiscal year 2009 the City’s total bonded debt decreased by approximately $41.1 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of the City of Scottsdale’s (the City) Comprehensive Annual Financial Report
presents a narrative overview and comparative analysis of the financial activities of the City for
the fiscal years ended June 30, 2009 and 2008. We encourage readers to consider the information
presented here in conjunction with additional information that we have furnished in our letter of
transmittal and the basic financial statements.
14 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Relationship Between
Comprehensive Annual
Financial Report (CAFR)
and
Basic Financial Statements and
Required Supplementary Information (RSI)
Introductory
Section
Financial
Section
Statistical
Section
CAFR
Basic
Financial
Statements
and
RSI
General Information on the government structure,
services and environment
Management's Discussion and Analysis
Government-wide Financial Statements
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
Notes to the Financial Statements
Additional Required Supplementary Information
Information on individual funds and other
supplementary information not required
by GAAP
Trend data and nonfinancial data
+
+
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements comprise three components:
(1) Government-wide financial statements,
(2) Fund financial statements, and
(3) Notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City’s finances, in a manner similar to a private-sector business.
The statement of net assets and the statement of activities provide information about the whole City,
presenting both an aggregate view of the City’s finances and a longer-term view of those assets. Major
fund financial statements provide the next level of detail. For governmental funds, these statements
reflect how services were financed in the short term as well as what dollars remain for future spending.
The fund financial statement also displays the City’s most significant funds with all other major funds
presented in total in one column.
City of Scottsdale, Arizona 15
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
The statement of net assets presents information on all of the City’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may serve
as a useful indicator of whether or not the financial position of the City is improving or deteriorating.
The statement of activities presents information showing how the City’s net assets changed during the
most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods, such
as revenues pertaining to uncollected taxes and expenses for earned but unused vacation and sick leave
balances.
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by 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 City include general government, police, financial
services, transportation, community services, including parks, recreation and library services, information
systems, planning and development, downtown group, fire, municipal services, citizen and neighborhood
resources, human services, economic vitality, westworld, and streetlight and services district. The
business-type activities of the City include water, sewer, solid waste, and airport operations.
The government-wide financial statements are for the City itself. However, included within the
governmental activities of the government-wide financial statements are the operations of the City
of Scottsdale Municipal Property Corporation (MPC), the Scottsdale Preserve Authority (SPA), and
the Scottsdale Mountain, McDowell Mountain Ranch, DC Ranch, Via Linda Road, and Waterfront
Commercial Community Facilities Districts. Although legally separate from the City, these component
units are blended with the primary government because of their governance or financial relationships to
the City.
Separate financial statements of the MPC, SPA and the Scottsdale Mountain, McDowell Mountain Ranch,
DC Ranch, Via Linda Road and Waterfront Commercial Community Facilities Districts may be obtained
at the City’s Financial Services Department, Accounting Division, 7447 East Indian School Road, Suite
210, Scottsdale, Arizona 85251.
The government-wide financial statements can be found on pages 34 and 35 of this report.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the
funds of the City can be divided into the following three categories: Governmental Funds, Proprietary
Funds, and Fiduciary Funds.
16 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable
resources as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in determining what financial resources are available in the near future to
finance the City’s programs.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City maintains several individual governmental funds organized according to their type (special
revenue, debt service, and capital projects). Information is presented separately in the governmental
fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes
in fund balances for the General Fund, General Obligation Bond Debt Service Fund, General Capital
Improvement Plan (CIP) Capital Project Fund, and Transportation Privilege Tax Capital Project Fund
which are considered to be major funds. Data from the remaining governmental funds are combined into
a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is
provided in the form of combining statements in a separate section of this report.
The basic governmental fund financial statements begin on page 36 of this report.
Proprietary Funds
Proprietary Funds are generally used to account for services for which the City charges customers–either
outside customers, internal units or departments of the City. Proprietary Funds provide the same type
of information as shown in the government-wide financial statements, only in more detail. The City
maintains the following two types of Proprietary Funds:
Enterprise Funds are used to report the same functions presented as business-type activities in the
government-wide financial statements. The City uses Enterprise Funds to account for the operations
of the Water, Sewer, Solid Waste and Airport operations of the City. All Enterprise Funds are
considered to be major funds of the City.
Internal Service Funds are used to report activities that provide supplies and services for certain City
programs and activities. The City uses Internal Service Funds to account for its fleet of vehicles and
self-insurance. Because these services predominantly benefit governmental rather than business-type
functions, they have been included within governmental activities in the government-wide financial
statements. The Internal Service Funds are combined into a single, aggregated presentation in the
Propriety Fund financial statements. Individual fund data for the Internal Service Funds is provided
in the form of combining statements in a separate section of this report.
The basic Proprietary Fund financial statements begin on page 44 of this report.
City of Scottsdale, Arizona 17
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Fiduciary Funds
Fiduciary Funds are used to account for resources held for the benefit of parties outside the City. The City
has one private-purpose trust fund and two agency funds, which are reported under the Fiduciary Funds.
Fiduciary Funds are not reflected in the government-wide financial statement because the resources of
those funds are not available to support the City’s own programs. The accounting used for Fiduciary
Funds is much like that used for Proprietary Funds.
The basic Fiduciary Fund financial statements begin on page 49 of this report.
Notes to the Financial Statements
The notes to the financial statements provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. The notes can be found
beginning on page 51 of this report.
Combining Statements
The combining statements referred to earlier in connection with non-major Governmental Funds,
Internal Service Funds, and Fiduciary Funds are presented immediately following the notes to the financial
statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
While this document contains information about the funds used by the City to provide services to our
citizens, the Statement of Net Assets and the Statement of Activities serve to provide an answer to the
question of how the City, as a whole, did financially throughout the year. These statements include all
assets and liabilities using the accrual basis of accounting similar to the accounting used by the private
sector. The basis for this accounting takes into account all of the current year’s revenues and expenses
regardless of when the cash is received or paid.
These two statements report the City’s net assets and the changes in those assets. The change in assets is
important because it tells the reader whether the financial position of the City as a whole has improved
or diminished. However, in evaluating the overall position of the City, non-financial information such as
changes in the City’s tax base and the condition of the City’s capital assets will also need to be evaluated.
Analysis of Net Assets
As noted earlier, net assets may serve as a useful indicator of a government’s financial position. For the
City, assets exceeded liabilities by $4.1 billion and $3.9 billion at the close of the fiscal years 2009 and
2008, respectively.
18 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Net Assets
June 30, 2009 and 2008 (in thousands of dollars)
2009 2008 2009 2008 2009 2008
Assets
Current and Other Assets $ 404,805 $ 506,927 $ 338,886 $ 357,230 $ 743,691 $ 864,157
Capital Assets 3,389,974 3,128,903 1,305,463 1,235,209 4,695,437 4,364,112
Total Assets 3,794,779 3,635,830 1,644,349 1,592,439 5,439,128 5,228,269
Liabilities
Long-term Liabilities Outstanding 826,301 8 58,392 342,395 3 23,853 1,168,696 1,182,245
Other Liabilities 166,131 1 43,693 4 4,893 3 9,717 211,024 183,410
Total Liabilities 992,432 1,002,085 387,288 3 63,570 1,379,720 1,365,655
Net Assets
Invested in Capital Assets, Net of Related Debt 2,586,731 2,353,573 991,390 9 09,632 3,578,121 3,263,205
Restricted 131,732 1 89,540 2 6,568 2 6,147 158,300 215,687
Unrestricted 8 3,884 9 0,632 239,103 2 93,090 322,987 383,722
Total Net Assets $ 2,802,347 $ 2,633,745 $ 1,257,061 $ 1,228,869 $ 4,059,408 $ 3,862,614
Governmental
Activities Total
Business-Type
Activities
The largest portion of the City’s net assets reflects its investment in capital assets (e.g. land, buildings, and
equipment); less any related outstanding debt used to acquire those assets, of $3.6 billion (88 percent)
and $3.3 billion (84 percent) at June 30, 2009 and 2008, respectively. Although the City’s investment in
its capital assets is reported net of related debt, the resources needed to repay this debt must be provided
from other sources because the City uses these assets to provide services to citizens and; therefore, cannot
liquidate them.
An additional portion of the City’s net assets, $158.3 million (4 percent) at June 30, 2009 and $215.7
million (6 percent) at June 30, 2008 represent resources that are subject to external restrictions on how
they may be used. The remaining balance of unrestricted net assets at June 30, 2009 and 2008, $323.0
million (8 percent) and $383.7 million (10 percent), respectively, may be used to meet the government’s
ongoing obligations to citizens and creditors.
At the end of both the current and previous fiscal years, the City was able to report positive balances in
all three categories of net assets, both for the government as a whole, as well as for the business-type
activities.
Analysis of Changes in Net Assets
The City’s total net assets increased by $196.8 million and $195.5 million during the fiscal years 2009 and
2008, respectively. These increases are explained in the government and business-type activities discussion
herein, and are primarily a result of contributions from developers of infrastructure assets.
type
City of Scottsdale, Arizona 19
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Changes in Net Assets
For the Years Ended June 30, 2009 and 2008 (in thousands of dollars)
2009 2008 2009 2008 2009 2008
Revenues
Program Revenues
Charges for Services $ 36,941 $ 51,393 $ 148,606 $ 147,875 $ 185,547 $ 199,268
Operating Grants and Contributions 2 6,272 2 8,409 - - 2 6,272 2 8,409
Capital Grants and Contributions 2 40,289 157,808 2 2,067 5 0,679 262,356 2 08,487
General Revenues
Property Taxes 6 1,138 5 4,139 - - 6 1,138 5 4,139
Business Taxes 1 60,134 192,191 117 195 160,251 1 92,386
Intergovernmental Taxes 6 4,145 6 5,933 - - 6 4,145 6 5,933
Interest and Investment Income 1 4,653 1 9,187 4,958 6,910 1 9,611 2 6,097
Other 5,038 7,606 408 517 5,446 8,123
Total Revenues 6 08,610 576,666 1 76,156 206,176 784,766 7 82,842
Expenses
General Government 2 0,646 3 2,712 - - 2 0,646 3 2,712
Police 9 2,530 9 1,102 - - 9 2,530 9 1,102
Financial Services 9,913 1 0,930 - - 9,913 1 0,930
Transportation 8 7,552 9 0,039 - - 8 7,552 9 0,039
Community Services 7 8,523 7 8,285 - - 7 8,523 7 8,285
Information Systems 1 3,723 1 3,704 - - 1 3,723 1 3,704
The Downtown Group 4,595 4,697 - - 4,595 4,697
Fire 3 1,174 3 1,943 - - 3 1,174 3 1,943
Municipal Services 2 2,887 2 0,153 - - 2 2,887 2 0,153
Citizen and Neighborhood Resources 3,802 3,663 - - 3,802 3,663
Human Resources 3,545 4,790 - - 3,545 4,790
Economic Vitality 8,553 9,711 - - 8,553 9,711
Planning and Development 2 9,029 3 1,933 - - 2 9,029 3 1,933
WestWorld 595 3,289 - - 595 3,289
Streetlight and Services Districts 631 712 - - 631 712
Interest on Long-term Debt 4 2,242 3 9,457 - - 4 2,242 3 9,457
Water Utility - - 8 1,391 7 1,140 8 1,391 7 1,140
Sewer Utility - - 3 3,509 2 6,947 3 3,509 2 6,947
Airport - - 3,482 3,343 3,482 3,343
Solid Waste - - 1 9,650 1 8,772 1 9,650 1 8,772
Total Expenses 4 49,940 467,120 1 38,032 120,202 587,972 5 87,322
Increase in Net Assets Before
Transfers 1 58,670 109,546 3 8,124 8 5,974 196,794 1 95,520
Transfers 9,932 1 0,997 (9,932) (10,997) - -
Increase in Net Assets 1 68,602 120,543 2 8,192 7 4,977 196,794 1 95,520
Net Assets at Beginning of Year 2,633,745 2,513,202 1,228,869 1,153,892 3,862,614 3,667,094
Net Assets at End of Year $ 2,802,347 $ 2,633,745 $ 1,257,061 $ 1,228,869 $ 4,059,408 $ 3,862,614
Total
Governmental
Activities
Business-type
Activities
Governmental Activities
Governmental activities increased the City’s net assets by $168.6 million in fiscal year 2009 and $120.5
million in fiscal year 2008, thereby accounting for 86 percent and 62 percent, respectively, of the total
growth in the net assets of the City. The key factor of the increase is as follows:
Capital grants and contributions increased significantly over the previous fiscal year. The increase is
primarily due to capital contributions related to streets and storm drains donated by developers. Based
on construction schedules, there was an increase in cash contributions for capital projects. Also, the City
received additional distributions in Proposition 400 regional sales tax funds from the State of Arizona.
Property taxes increased 13 percent over previous prior year, due to new construction assessed values
being added to the tax roll. In addition, there was an increase in primary assessed valuations over the
previous year.
20 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Business taxes decreased 17 percent over previous year, primarily due to reduced sales taxes, an affect
of the economic recession which impacted most categories but especially affecting the automotive and
construction sectors. Also, bed taxes were greatly reduced due to the adverse impact the recession had on
Scottsdale’s tourism industry.
Program Revenues and Expenses for Governmental Activities
Fiscal Year 2008-09
(in thousands)
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
$260,000
$280,000
General Government
Police
Financial Services
Transportation
Community Services
Information Systems
The Downtown Group
Fire
Municipal Services
Citizen & Neighborhood Resources
Human Resources
Economic Vitality
Planning and Development
WestWorld
Streetlight and Services Districts
Interest on Long-term Debt
Expenses
Revenues
As shown in the “Program Revenues and Expenses for Governmental Activities” chart, police is the
largest function in expense (21 percent), followed by transportation (19 percent), and community services
(17 percent).
The Scottsdale Police Department, in partnership with the citizens of Scottsdale, recognizes the changing
needs of our community and law enforcement’s role in addressing those needs. Furthermore, they pledge
excellence, initiative and integrity to enhance the quality of life throughout our City knowing those they
serve deserve no less.
The Transportation Department ensures that Scottsdale neighborhoods, businesses and visitors are
provided an accessible, environmentally sensitive, safe and efficient transportation system. Projects and
operations for street, transit and non-motorized travel are developed in cooperation with the public and
promote economic sustainability for the community, preserves and enhances neighborhood quality of life
and ensures seamless connections to the regional network.
The City’s Community Services Department improves and preserves Scottsdale’s quality of life through
development of safe and highly maintained facilities and imaginative services that provide opportunities
for family interaction, cultural enrichment, and development of lifetime skills which build self-esteem,
promote healthy lifestyles and are a catalyst for community involvement. They provide assistance and
guidance to those in need and link our citizens with information and resources throughout the world.
City of Scottsdale, Arizona 21
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
General revenues such as property, business, and privilege taxes are not shown by program, but are
effectively used to support program activities citywide, such as police and fire services. For governmental
activities overall, without regard to program, capital grants and contributions (40 percent), are the largest
single source of funds, followed by business taxes which includes sales and use taxes and franchise taxes
(26 percent), intergovernmental taxes (11 percent), which includes state shared revenues, property taxes
(10 percent) and charges for services (6 percent).
Revenues by Source - Governmental Activities
Fiscal Year 2008/2009
(in thousands)
Interest and investment
income
$14,653 / 2%
Charges for services
$36,941 / 6%
Operating grants and
contributions
$26,272 / 4%
Capital grants and
contributions
$240,289 / 40%
Property taxes
$61,138 / 10%
Intergovernmental taxes
$64,145 / 11%
Business taxes
$160,134 / 26%
Other
$5,038 / 1%
Business-type Activities
Business-type activities increased the City’s net assets in fiscal years 2009 and 2008 by $28.2 million and
$75.0 million, respectively, accounting for 14 percent and 38 percent, respectively, of the total growth in
the City’s net assets. The key factor of this increase is as follows:
The Water and Sewer Utility Fund had capital contributions from developers and grantors resulting in
$22.1 million and $50.7 million in revenue for fiscal years 2009 and 2008, respectively. The majority of
this amount is from infrastructure donated from developers and development fees received.
22 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Water Utility Sewer Utility Airport Solid Waste
Program Revenues and Expenses -Business-type Activities
Fiscal Year 2008 / 2009
(in thousands)
Expenses
Program Revenues
Revenues by Source - Business-type Activities
Fiscal Year 2008 / 2009
(in thousands)
Business Taxes &
Other Income
$525 / 0%
Capital grants and
contributions
$22,067 / 13%
Interest and investment
income
$4,958 / 3%
Charges for services,
$148,606 / 84%
As shown in “Program Revenues and Expenses for Business-type Activities” and the “Revenues by Source
for Business-type Activities” charts, the largest of Scottsdale’s business-type activities, Water and Sewer
utilities, each had expenses of $81.4 million and $33.5 million, respectively, in fiscal year 2009, followed
by Solid Waste with operating expenses of $19.7 million and Aviation of $3.5 million. For the fiscal year,
revenues exceeded expenses for the Water and Sewer utilities and Solid Waste business activity. Revenues
exceed expenses due to multi-year financial planning and pay-as-you-go contributions to capital projects.
For the fiscal year, expenses exceeded revenue for Airport business activity, primarily due to a decrease in
airport fees. Charges for services provided the largest share of revenues (84 percent) followed by capital
grants and contributions (13 percent), which are largely developer contributions and development fees,
for all of the business-type activities.
City of Scottsdale, Arizona 23
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
The City’s Water Resources Department plans, manages and operates a safe, reliable water supply
and wastewater reclamation system and provides efficient, high quality customer service to Scottsdale
citizens. The Water Resources Department provides water service connections to approximately 87,000
customers.
The Solid Waste Department provides effective and responsive leadership that ensures the delivery of safe,
efficient and environmentally sound solid waste services to approximately 79,000 residential customers
and 1,600 commercial and roll-off customers.
The Aviation Department is a general aviation reliever facility with no commercial commuter or airline
service and is home to many of the Valley’s corporate aircraft. Approximately 10,000 passengers a year
travel through Scottsdale Airport to see the numerous sights across the State of Arizona.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds
Funds are created and segregated for the purpose of carrying on specific activities or attaining certain
objectives in accordance with special regulations, restrictions, or limitations. Activity not required to be
reported in a separate fund is included in the General Fund. Governmental funds are used to account
for tax-supported activities.
The focus of the City’s governmental funds is to provide information on near-term inflows, outflows,
and balances of resources that are available for spending. Such information is useful in assessing the
City’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. These funds are accounted
for by using the modified accrual basis of accounting. Types of governmental funds reported by the City
include the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Project Funds.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $221.3 million, a decrease of $114.5 million in comparison to the combined ending fund
balances at June 30, 2008 of $335.8 million. Approximately $193.2 million of the total at June 30, 2009
constitutes unreserved fund balance. Portions of this unreserved balance are designated in the City’s
budget plan for pay-as-you-go capital projects and operational contingency funding. The remainder of
fund balance is reserved to indicate that it is not available for new spending because it has already been
committed. For example, $24.2 million is committed for debt service payments.
Revenues for governmental functions overall totaled approximately $404.5 million in fiscal year 2009,
a decrease of about 5 percent ($22 million) over the previous year total of $426.6 million. In fiscal
year 2009 expenditures for governmental functions, totaled $533.9 million, a decrease of 6 percent ($37
million) over the fiscal year 2008 total of $570.6 million. In the fiscal years ended June 30, 2009 and 2008,
expenditures for governmental functions exceeded revenues by approximately $129.5 million and $144.0
million respectively.
24 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the
unreserved fund balance of the General Fund was $59.6 million, while total fund balance was $60.4
million. The unreserved and total balances for the General Fund at the end of fiscal year 2008 were $61.4
million and $62.3 million, respectively. As a measure of the General Fund’s liquidity, it may be useful to
compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved
fund balance represents 23 percent of the total General Fund expenditures of $257.2 million in fiscal
year 2009 and 24 percent of the total General Fund expenditures of $253.9 million in fiscal year 2008.
Total fund balance represents 24 percent and 25 percent of total fund expenditures for fiscal years 2009
and 2008, respectively. In fiscal year 2009 management has designated $30.9 million of the General Fund
unreserved fund balance for various uses. See note section III.C in the Notes to the Financial Statements
for further information regarding reservations and designations.
The General Fund Balance decreased in fiscal year 2009 by $1.9 million. General Fund performance
also reflects the recession. Overall, the General Fund’s performance resulted in expenditures exceeding
revenue in the fiscal year ended June 30, 2009, of $11.9 million.
The General Obligation Bond Debt Service fund is used to account for the accumulation of resources
for, and the payment of, general obligation long-term debt principal, interest and related costs. At the end
of the current fiscal year, the fund balance of the General Obligation Bond Debt Service Fund was $10.8
million, an increase of $1.3 million from the $9.5 million at the end of fiscal year 2009 due to planned
debt service payments.
The General CIP Construction Capital Project fund accounts for the resources used to acquire, construct
and improve major capital facilities, other than those financed by Proprietary Funds. These expenses were
primarily funded by pay-as-you-go transfers. The fund balances were $59.6 million and $101.0 million at
June 30, 2009 and 2008, respectively. Capital improvement expenditures in 2009 were $89.8 million.
The Transportation Privilege Tax Capital Project Fund accounts for the portion of the authorized 0.2
percent Transportation Privilege (Sales) Tax dedicated to transportation capital improvements. At the
end of the current fiscal year, the fund balance of the Transportation Privilege Tax Capital Project Fund
was $19.2 million, a decrease of $10.4 million from the $29.6 million at the end of fiscal year 2009.
Capital improvement expenditures in 2009 were $54.4 million.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial
statements, but in more detail.
At the end of the fiscal years 2009 and 2008, the unrestricted net assets for the Water and Sewer Utility
were $227.0 million and $281.1 million, respectively; Scottsdale Airport were $5.1 million and $4.9 million,
respectively; and the Solid Waste Utility Fund were $7.0 million and $7.1 million, respectively. The Internal
Service Funds, which are used to account for certain governmental activities, also had unrestricted net
assets of $26.1 million and $29.5 million, respectively.
City of Scottsdale, Arizona 25
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
The total growth in net assets for the Enterprise Funds was $28.2 million and $75.0 million for fiscal
years 2009 and 2008, respectively. Factors concerning the finances of these funds have been addressed
previously in the discussion of the City’s business-type activities. In particular, the Scottsdale Water
and Sewer net assets increased by $27.9 million due to capital contributions of $21.6 million as well as
increased revenues.
Fiduciary Funds
The City maintains Fiduciary Funds for the assets of the Family Self-Sufficiency Agency Fund, the
Retainage Escrow Agency Fund, and the Handicap Scholarship Private Purpose Trust Fund. As of the
end of fiscal year 2009, the net assets of the Handicap Scholarship Private Purpose Trust Fund totaled
$3,000.
General Fund Budgetary Highlights
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement
has been provided for the General Fund to demonstrate compliance with this budget.
The City’s final year-end budget differs from the original adopted budget due to applying budget balancing
strategies mid-year to deal with the depth and duration of the economic recession.
• Allocated personnel costs from operating funds to special revenue and capital funds to better
reflect program and capital project costs
• Reduced the transfer-out from the General Fund to the Capital Fund by reducing maintenance
projects
• Eliminated vacant and occupied positions, including a retirement incentive program
• Cancelled a 2% pay increase that was scheduled for January 2009
• Implemented budget reductions to contractual services and commodities such as consultants,
advertising, banking charges, training and travel, software licensing, supplies, printing, clothing
and small tools.
Additionally, the City Council approved Budget Contingency adjustments. The City Council approved
the use of contingency and increased the budget authorizing WestWorld to establish a Feed and Bedding
Program and increased funding for utilities necessary to cover the costs of operating new infrastructure
such as buildings and rights-of-way.
The actual budget based fund balance was $10.1 million better than the revised budget. Revenues and
transfers in were $1.3 million less than projected primarily because of local and state shared sales taxes.
However, expenses and transfers out were $11.4 million less than the revised budget. Specifically, public
safety overtime, software maintenance, communications, contract services, (e.g. banking and custodial),
supplies, and travel/training were all significantly less than the revised budget.
26 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Net budget expenditures for increases by department totaled $4.0 million and $3.0 million for fiscal years
2009 and 2008, respectively. The net increase is defined as follows (in thousands):
General Government $ 262
Police 2,103
Financial Services (11)
Transportation (74)
Community Services 3,084
Information Systems ( 467)
The Downtown Group (4)
Fire ( 1,120)
Municipal Services 4 60
Citizen and Neighborhood Resources 1 8
Human Resources ( 669)
Economic Vitality ( 136)
Planning and Development 2 61
WestWorld 3 02
Debt Service
Principal 3 3
Interest and Fiscal Charges 8
$ 4,050
Note: Amounts are the difference between the final and adopted budget for each department -
See CAFR "Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual"
Capital Assets and Debt Administration
Capital Assets
The City’s capital assets for its governmental and business-type activities as of June 30, 2009 and 2008,
amount to $4.7 billion and $4.4 billion, respectively (net of accumulated depreciation). Capital assets
include land, buildings and improvements, water and sewer systems, water rights, vehicles, machinery and
equipment, furniture and fixtures, and construction in progress. The total increase in the City’s capital
assets (net of accumulated depreciation) for the fiscal years 2009 and 2008 was 7.6 percent as shown in
the table below.
Capital Assets, Net of Depreciation
June 30, 2009 and 2008 (in thousands of dollars)
2009 2008 2009 2008 2009 2008
Land $ 1 ,380,255 $ 1 ,221,868 $ 3 7,969 $ 3 7,969 $ 1 ,418,224 $ 1 ,259,837
Buildings and Land Improvements 272,321 260,004 13,178 10,784 285,499 270,788
Streets and Storm Drains 1,427,453 1 ,433,125 - 1,427,453 1,433,125
Machinery and Equipment 27,452 28,354 12,930 13,242 40,382 4 1,596
Water Rights - - 89,701 90,173 89,701 9 0,173
Water System - - 682,560 691,948 682,560 691,948
Sewer System - - 308,230 310,989 308,230 310,989
Motor Vehicles and Maintenance by Fleet 24,120 25,398 - - 24,120 2 5,398
Furniture, Fixtures and Office Equipment - - - 7 - 7
Construction in Progress 258,373 160,154 160,895 80,097 419,268 240,251
Total $ 3 ,389,974 $ 3 ,128,903 $ 1 ,305,463 $ 1,235,209 $ 4 ,695,437 $ 4 ,364,112
Total
Governmental Business-type
Activities Activities
City of Scottsdale, Arizona 27
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Major capital asset events during the current fiscal year included the following:
Construction • in progress on the design and construction of the Police Operational Support
facilities at 76th Street and McKellips Road. Expenditures totaled $9.6 million this year against
a budget of $31.9 million.
• Construction in progress on the Fuel/Fleet Maintenance Facility-McKellips Service Center
located at McKellips Road. Expenditures totaled $3.4 million this year against a budget of
$4.3 million.
• Construction in progress on the Appaloosa Library located at Pinnacle Peak Road and Scottsdale
Road. Expenditures totaled $6.5 million this year against a budget of $10.7 million.
• Construction in progress on the infrastructure improvements and 157,000 square foot building
at the SkySong ASU Scottsdale Center for Innovation located at Scottsdale and McDowell
Road. Expenditures totaled $9.9 million this year against a budget of $38.2 million.
• Construction in progress on the acquisition, preservation and restoration of desert lands
along Scottsdale Road. Expenditures totaled $2.3 million this year against a budget of $26.9
million.
• Construction in progress on the Upper Camelback Wash Watershed bounded by Sweetwater
Avenue on the north, 96th Place on the east, Shea Boulevard on the South and 90th Street on
the west. Expenditures totaled $1.0 million against a budget of $6.4 million.
• Construction in progress on the Scottsdale Center for the Performing Arts Renovation located
on Second Street. Expenditures totaled $10.4 million against a budget of $16.6 million.
• Construction in progress on the four-lane minor arterial standards with landscaped median,
turn lanes, bike lanes, curb and gutter, new all-weather crossing of Indian Bend Wash and
sidewalk on the south side. Expenditures totaled $10.1 million against a budget of $25.8
million.
• Construction in progress on the four-lane major collector between Pima Freeway and 96th
Street and two-lane neighborhood collector between 96th Street and Frank Lloyd Wright.
Expenditures totaled $5.4 million against a budget of $21.6 million.
• Construction in progress on the six-lane major arterial cross-section with landscaped median,
turn lanes, bike lanes, sidewalks, curb and gutter, roadway drainage, and intelligent transportation
system facilities. Expenditures totaled $13.7 million against a budget of $49.1 million.
28 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
• The City’s water and sewer 5-year capital improvement plan includes significant cost impacts
from “unfunded” federal water quality mandates for treatment of arsenic and disinfection
by-product requirements, in addition to plant and infrastructure expansion to accommodate
growth. The most significant CIP cash expenditures include:
• Arsenic Mitigation Treatment ($1.2 million) – Design and construction of arsenic removal
treatment facilities and related distribution systems at various satellite sites throughout the
City to comply with the Safe Drinking Water Act Arsenic Rule. The Safe Drinking Water
Act lowered the maximum allowable levels for arsenic in drinking water from 50 ppb to
10 ppb as of January 2006. This new level for arsenic will require the City to utilize arsenic
mitigation treatment systems in accordance with the 2001 Water Resources Master Plan.
The project’s budget totals $88.5 million.
• Multi-City Sub-Regional Operating Group (SROG) Wastewater Plant Expansion UP01
($2.8 million) – Provides for additional sewer flow and solids handling capacity through
contribution to the capital improvements at the Multi-City 91st Avenue Wastewater
Treatment Plant located in Phoenix. Capacity expansion is due to planned increased
demand. The City of Scottsdale proportionate cost shared is derived through existing
intergovernmental agreements with the SROG. This expansion is designated as the Unified
Plant 2001 (UP01). The project’s budget totals $67.1 million.
• Central Arizona Project Plant expansion ($39.0 million) – Expansion of the existing CAP
Water Treatment Plant from its current capacity of 50 million gallons per day (mgd) to
a minimum capacity of 70 mgd to meet required standards. This will further reduce the
use of groundwater and increase use of surface water. The project’s budget totals $96.0
million.
• Well Sites ($2.0 million) – Design and construction of new wells and upgrade of existing
wells at locations determined consistent with the Master Plan for water system demand.
The City will still need to replace existing wells once the well has reached its useful life, a
new well will be needed to replace it. The project’s budget totals $23.1 million.
• CAP Plant Regulatory Compliance ($2.1 million) – Addition of granular activated carbon
facility at the CAP Water Treatment Plant in order to ensure compliance with the new
Federal water quality rule regarding disinfection by-products (DBP). The project’s budget
totals $59.4 million.
• Water Distribution System Improvements ($6.8 million) – Provides for water distribution
system improvements needed due to age of the system and increasing demand. Includes
replacement of mains, meters and valves, as well as design and construction of new water
mains at various locations throughout the distribution system to improve service and to
reduce operating costs. The project’s budget totals $35.7 million.
For government-wide financial statement presentation, all depreciable capital assets were depreciated
from acquisition date to the end of the current fiscal year. Fund financial statements record capital
asset purchases as expenditures. See Section IV.C in the Notes to the Financial Statements for further
information regarding capital assets.
City of Scottsdale, Arizona 29
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Debt Administration
At the end of the fiscal years 2009 and 2008, the City had total long-term obligations outstanding of
$1,187.6 million and $1,229.0 million, respectively. Of these amounts, $551.5 million and $574.4 million,
respectively, are General Obligation Bonds backed by the full faith and credit of the City. The remainder
includes revenue bonds, certificates of participation, and other obligations of $635.1 million and $654.6
million, respectively.
Outstanding Debt
June 30, 2009 and 2008 (in thousands of dollars)
2009 2008 2009 2008 2009 2008
General Obligation Bonds $ 551,455 $ 574,445 $ - $ - $ 551,455 $ 574,445
Revenue Bonds - - 4 8,345 5 2,005 4 8,345 5 2,005
Municipal Property Corporation Bonds 149,216 1 49,007 249,735 2 56,790 398,951 405,797
Scottsdale Preserve Authority Bonds 7 1,235 7 4,495 - - 7 1,235 7 4,495
Special Assessments Bonds 3,000 3,835 - - 3,000 3,835
Certificates of Participation 4,954 5,689 - - 4,954 5,689
Community Facilities Districts General
Obligation Bonds 4 0,665 4 2,450 - - 4 0,665 4 2,450
Add Deferred Issuance Premiums 1 7,572 1 9,257 2 1,532 2 2,999 3 9,104 4 2,256
Less Deferred Amounts on Refunding (8,112) (9,410) (5,592) (6,439) (13,704) (15,849)
Total Bonds Payable 829,985 8 59,768 314,020 3 25,355 1,144,005 1,185,123
Contracts Payable 1 6,828 1 7,875 - - 1 6,828 1 7,875
Capital Lease - 141 53 97 53 238
Compensated Absences 2 2,553 2 1,909 2,797 2,556 2 5,350 2 4,465
Post Employment Benefit - Implied Subsidy 1,157 1,179 185 146 1,342 1,325
Total Long-Term Liabilities $ 870,523 $ 900,872 $ 317,055 $ 328,154 $ 1,187,578 $ 1,229,026
Total
Type
Activities
Governmental
Activities
During fiscal year 2009, the City’s total bonded debt decreased by approximately $41.1 million. Bond
payable balances were reduced due to principal payments made in fiscal year 2009.
The State constitution imposes certain debt limitations on the City of six percent (6%) and twenty percent
(20%) of the outstanding assessed valuation of the City. The City’s available debt margin at June 30, 2009
and 2008 is $358.0 million and $285.0 million, respectively, in the 6% capacity and $1,241.4 million and
$1,024.0 million, respectively, in the 20% capacity. Additional information on the debt limitations and
capacities may be found in Section IV.F of the Notes to the financial statements and also in Table XVIIa
in the statistical section of this report.
In accordance with Statement No. 45 of the Governmental Accounting Standards Board - GASB
(Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions),
the Net Other Post-Employment Benefit Obligation (NOPEBO) included in the Outstanding Debt table
(above) represents the City’s actuarial required contribution (ARC) pursuant to the actuarial calculations
for the accrued cost of retiree health insurance as of June 30, 2009. The NOPEBO at the end of the
fiscal years 2009 and 2008 were $1.3 million and $1.3 million, respectively. The City is self insured and
funds employee healthcare costs with current funds and designates a reserve for actuarially determined
incurred but not reported claims (IBNR), a risk corridor, and partial funding for the ARC.
Additional information in the City’s long-term debt can be found in Section IV.F of the Notes to the
Financial Statements.
Business-type
30 City of Scottsdale, Arizona Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Economic Factors and Next Year’s Budget and Rates
The City of Scottsdale’s fiscal year 2010 budget included funding for the highest priorities of the City
Council and our citizens despite an economic recession. The budget was created with the intention of
impacting programs and services for citizens least and last.
The budget was not only developed to address the economic crisis but also included a significant change
in the way the City was structured. The City’s main functions are now consolidated under 8 divisions
instead of 21 departments. The goal was to restructure Scottsdale City government so that it is more
sustainable, more responsive and less subject to ups and downs of the economy.
Significant reductions to the base budget include $22 million in staff reductions resulting from a ten-percent
reduction in the workforce, 280 positions were eliminated via a retirement incentive program,
elimination of vacant positions and layoffs. Additionally, the City instituted $11 million in compensation
reductions by not going forward with a two-percent across-the- board pay increase effective January 1,
2009, suspending the merit pay program, and a two-percent across-the board pay reduction effective
July 1, 2009. All other types of expenses were reduced as well, such as transit services, fleet replacement,
technology and utilities.
A separate, key component of the annual financial plan is the City’s five-year Capital Improvement
Plan (CIP) for infrastructure and public facilities including roads, water and sewer improvements, parks,
buildings and information technology. The adopted CIP appropriation for fiscal year 2010 is $569.4
million, which includes $470.2 million (or 83 percent of the total) re-budgeted from the prior year. Under
Arizona law, the City must re-budget for a capital project until it is completed. Some examples of major
projects included in the CIP budget are:
• Community Facilities – Acquire, preserve and restore desert lands along Scottsdale Road to
promote its designation as a Scenic Corridor, infrastructure to support site development of the
Sky Song facility, design and construction of the Appaloosa library.
• Preservation – Construction of trails supporting the gateway to the preserve and expansion of
preserve lands.
• Drainage and Flood Control – Drainage improvement to several areas within Scottsdale including
the Granite Reef Watershed, Upper Camelback Watershed, and East Union Hills Interceptor
Channel.
• Public Safety – Construction of the Cactus Acres Fire Station 8 and Public Safety Radio
System.
• Service Facilities – Fuel/Fleet Maintenance Facility-McKellips Service Center, Transfer Station
Expansion and Network Infrastructure Extension.
• Transportation – Improvements to several main Scottsdale thorough ways including Scottsdale
Road-Thompson Peak Parkway to Pinnacle Peak, and Pima Road – Deer Valley to Pinnacle Peak.
Additionally, improvements will be made to bicycle lanes, enhanced sidewalks, and provide for
Loop 101 Park and Ride lot.
• Water Services – Modification and improvements to water distribution and sewer collection
system improvements.
The adopted budget continues the practice of designating a reserve equal to 10 percent of the General
Fund and Highway User Fund program budgets to ensure the City can provide basic services in the event
of major emergencies. This amount is $25.9 million and a $5 million contingency exists as well.
City of Scottsdale, Arizona 31
Management’s Discussion and Analysis
For the Fiscal Year Ended June 30, 2009
Requests For Information
This financial report is designed to provide a general overview of the City’s finances for all of those
with an interest in the government’s finances. If you have questions about this report or need additional
financial information, contact:
City of Scottsdale
Financial Services Department
Accounting Division
7447 E. Indian School Road, Suite 210
Scottsdale, AZ 85251
(480) 312-2437
Or visit our website at:
http://www.scottsdaleaz.gov/finance
32 City of Scottsdale, Arizona
City of Scottsdale, Arizona 33
Basic Financial Statements
34 City of Scottsdale, Arizona
Statement of Net Assets
June 30, 2009 (in thousands of dollars)
Governmental Business-type
Activities Activities Total
ASSETS
Current Assets
Cash and Investments $ 287,647 $ 103,461 $ 3 91,108
Cash with Fiscal Agent 42,903 18,285 6 1,188
Receivable (net of uncollectible amounts of $ 18,335)
Property Taxes and Penalties 12,609 - 1 2,609
Other Local Taxes 17,448 14 1 7,462
Intergovernmental 25,773 176 2 5,949
Charges for Services - 16,005 1 6,005
Interest and Other 13,527 2,323 1 5,850
Prepaid Expenses 748 - 7 48
Supplies Inventory 779 - 7 79
Restricted Cash, Cash Equivalents, and Investments:
Customer Advances and Deposits - 1,534 1 ,534
Other Restricted Assets
Joint Venture Construction Deposits - 7,730 7 ,730
Total Current Assets 401,434 149,528 5 50,962
Noncurrent Assets
Equity in Joint Venture - 123,632 1 23,632
Deferred Charges 3,371 1,524 4 ,895
Pollution Remediation Recoveries - 29,143 2 9,143
Restricted Cash, Cash Equivalents, and Investments:
Deferred Revenue - 8,491 8 ,491
Water and Sewer System Replacement - 26,568 2 6,568
Capital Assets
Land, Water Rights, and Construction in Progress 1,638,628 288,565 1 ,927,193
Facilities, Infrastructure, and Equipment (net of depreciation) 1,751,346 1,016,898 2 ,768,244
Total Capital Assets (net of accumulated depreciation) 3,389,974 1,305,463 4 ,695,437
Total Noncurrent Assets 3,393,345 1,494,821 4 ,888,166
Total Assets 3,794,779 1,644,349 5 ,439,128
LIABILITIES
Current Liabilities
Accounts Payable 25,046 11,460 3 6,506
Accrued Payroll and Benefits 16,598 1,319 1 7,917
Accrued Compensated Absences-Current 155 - 1 55
Accrued Compensated Absences-Due within One Year 10,570 1,179 1 1,749
Claims Payable 11,530 - 1 1,530
Due to Other Governments 3,856 - 3 ,856
Customer Advances and Deposits 2,128 1,534 3 ,662
Matured Bonds, Loans, Other Payables 28,920 10,715 3 9,635
Matured Bonds, Loans, Other Interest Payable 19,140 7,570 2 6,710
Bonds, Loans, and Other Payables-Due within One Year 33,652 11,116 4 4,768
Unearned Revenue 11,209 - 1 1,209
Other Liabilities 3,327 - 3 ,327
Total Current Liabilities 166,131 44,893 2 11,024
Noncurrent Liabilities
Accrued Compensated Absences-Due in More Than One Year 11,983 1,618 1 3,601
Deferred Revenue - 8,492 8 ,492
Bonds, Loans, and Other Payables-Due in More Than One Year 814,318 303,142 1 ,117,460
Pollution Remediation Obligation - 29,143 2 9,143
Total Noncurrent Liabilities 826,301 342,395 1 ,168,696
Total Liabilities 992,432 387,288 1 ,379,720
NET ASSETS
Invested in Capital Assets, Net of Related Debt 2,586,731 991,390 3 ,578,121
Restricted
Debt Service 24,236 - 2 4,236
Transportation and Preserve Privilege Tax Activities 39,108 - 3 9,108
Capital Projects 56,639 - 5 6,639
Grants 768 - 7 68
Special Programs 10,351 - 1 0,351
Streetlight and Service District 630 - 6 30
Water and Sewer System Replacement - 26,568 2 6,568
Unrestricted 83,884 239,103 3 22,987
Total Net Assets $ 2,802,347 $ 1,257,061 $ 4 ,059,408
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 35
Statement of Activities
For the Year Ended June 30, 2009 (in thousands of dollars)
Program Revenues
Operating Capital
Charges for Grants and Grants and Governmental Business-type
Function/Programs Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities
General Government $ 20,646 $ 14,670 $ 3 $ 1,104 $ (4,869) $ - $ ( 4,869)
Police 92,530 5,703 2,573 - (84,254) - ( 84,254)
Financial Services 9,913 - - - (9,913) - ( 9,913)
Transportation 87,552 - 14,892 236,776 1 64,116 - 164,116
Community Services 78,523 4,619 8,635 242 (65,027) - ( 65,027)
Information Systems 13,723 - - - (13,723) - ( 13,723)
The Downtown Group 4,595 - - - (4,595) - ( 4,595)
Fire 31,174 2,275 80 - (28,819) - ( 28,819)
Municipal Services 22,887 - - 2,158 (20,729) - ( 20,729)
Citizen and Neighborhood Resources 3,802 - 12 - (3,790) - ( 3,790)
Human Resources 3,545 - 17 - (3,528) - ( 3,528)
Economic Vitality 8,553 - 45 9 (8,499) - ( 8,499)
Planning and Development 29,029 6,393 15 - (22,621) - ( 22,621)
WestWorld 595 2,682 - - 2 ,087 - 2,087
Streetlight and Services Districts 631 599 - - (32) - ( 32)
Interest on Long-term Debt 42,242 - - - (42,242) - ( 42,242)
Total Governmental Activities 449,940 36,941 26,272 240,289 (146,438) - ( 146,438)
Business-Type Activities
Water Utility 81,391 91,546 - 12,994 - 23,149 23,149
Sewer Utility 33,509 34,198 - 8,584 - 9,273 9,273
Airport 3,482 2,813 - 489 - (180) ( 180)
Solid Waste 19,650 20,049 - - - 399 399
Total Business-Type Activities 138,032 148,606 - 22,067 - 32,641 32,641
Total Government $ 587,972 $ 185,547 $ 26,272 $ 262,356 (146,438) 32,641 ( 113,797)
General Revenues
Taxes
Property Taxes 6 1,138 - 61,138
Sales and Use Taxes 1 48,558 117 148,675
Franchise Taxes 1 1,576 - 11,576
Intergovernmental
State Shared Sales 1 8,677 - 18,677
State Revenue Sharing 3 5,103 - 35,103
Other 1 0,365 - 10,365
Interest and Investment Income 1 4,653 4,958 19,611
Other Revenue 5 ,038 408 5,446
Transfers 9 ,932 (9,932) -
Total General Revenues and Transfers 3 15,040 (4,449) 310,591
Change in Net Assets 1 68,602 28,192 196,794
Net Assets - Beginning 2 ,633,745 1,228,869 3,862,614
Net Assets - Ending $ 2 ,802,347 $ 1,257,061 $ 4,059,408
The notes to the financial statements are an integral part of this statement.
36 City of Scottsdale, Arizona
Balance Sheet
Governmental Funds
June 30, 2009 (in thousands of dollars)
Total
General General CIP Transportation Nonmajor Total
Obligation Bond Construction Privilege Tax Governmental Governmental
General Debt Service Capital Projects Capital Projects Funds Funds
ASSETS
Cash and Investments $ 71,058 $ 18,575 $ 63,657 $ 25,687 $ 70,033 $ 2 49,010
Cash with Fiscal Agent 459 27,871 259 - 14,314 42,903
Receivables (net of allowance for
uncollectibles)
Interest 624 - 321 72 477 1,494
Privilege Tax 7,252 - - - 3,434 10,686
Hotel/Motel Tax 73 - - - 293 366
Property Tax 902 1,418 - - 218 2,538
State Shared Sales Tax 1,521 - - - - 1,521
Franchise Fee 2,786 - - - - 2,786
Court Receivable 10,071 - - - - 10,071
Highway User Tax - - - - 1,272 1,272
Auto Lieu Tax 817 - - - - 817
Intergovernmental 6 - - 1,827 23,461 25,294
Grants - - 100 - 379 479
Special Assessments - - - - 2,542 2,542
Miscellaneous 6,025 - 3,007 - 233 9,265
Due from Other Funds 40 - - - - 40
Supplies Inventory 205 - - - - 205
Total Assets $ 101,839 $ 47,864 $ 67,344 $ 27,586 $ 1 16,656 $ 3 61,289
(continued)
Balance Sheet
Governmental Funds
June 30, 2009 (in thousands of dollars)
Total
General General CIP Transportation Nonmajor Total
Obligation Bond Construction Privilege Tax Governmental Governmental
General Debt Service Capital Projects Capital Projects Funds Funds
ASSETS
Cash and Investments $ 71,058 $ 18,575 $ 63,657 $ 25,687 $ 70,033 $ 2 49,010
Cash with Fiscal Agent 459 27,871 259 - 14,314 42,903
Receivables (net of allowance for
uncollectibles)
Interest 624 - 321 72 477 1,494
Privilege Tax 7,252 - - - 3,434 10,686
Hotel/Motel Tax 73 - - - 293 366
Property Tax 902 1,418 - - 218 2,538
State Shared Sales Tax 1,521 - - - - 1,521
Franchise Fee 2,786 - - - - 2,786
Court Receivable 10,071 - - - - 10,071
Highway User Tax - - - - 1,272 1,272
Auto Lieu Tax 817 - - - - 817
Intergovernmental 6 - - 1,827 23,461 25,294
Grants - - 100 - 379 479
Special Assessments - - - - 2,542 2,542
Miscellaneous 6,025 - 3,007 - 233 9,265
Due from Other Funds 40 - - - - 40
Supplies Inventory 205 - - - - 205
Total Assets $ 101,839 $ 47,864 $ 67,344 $ 27,586 $ 1 16,656 $ 3 61,289
(continued)
City of Scottsdale, Arizona 37
Balance Sheet
Governmental Funds
June 30, 2009 (in thousands of dollars)
Total
General General CIP Transportation Nonmajor Total
Obligation Bond Construction Privilege Tax Governmental Governmental
General Debt Service Capital Projects Capital Projects Funds Funds
LIABILITIES AND FUND BALANCES
Liabilities
Accounts Payable $ 6,630 $ 1 $ 7,325 $ 5,999 $ 3,306 $ 23,261
Accrued Payroll and Benefits 15,226 - 32 21 1,120 16,399
Due to Other Funds - - - - 40 40
Matured Bond Interest Payable 88 13,092 - - 5,960 19,140
Matured Bonds Payable 370 22,990 - - 5,560 28,920
Deferred Revenue
Property Tax 605 940 - - 143 1,688
Special Assessments - - - - 2,542 2,542
Court 4,235 - - - - 4,235
Tax Audit 4,526 - - - - 4,526
Intergovernmental - - - - 26,223 26,223
Other 994 - 6 2,406 332 3,738
Due to Other Governments 3,827 - 29 - - 3,856
Guaranty and Other Deposits 1,593 - 313 - 222 2,128
Other 3,323 - - - 4 3,327
Total Liabilities 41,417 37,023 7,705 8,426 45,452 140,023
Fund Balances
Reserved for
Inventory 205 - - - - 205
Streetlight and Services Districts 630 - - - - 630
Debt Service - 10,841 - - 13,395 24,236
Miscellaneous Receivable - - 3,000 - - 3,000
Unreserved, Reported in
General Fund - Designated 30,860 - - - - 30,860
General Fund - Undesignated 28,727 - - - - 28,727
Capital Projects Funds - - 56,639 19,160 27,099 102,898
Special Revenue Funds - - - - 30,710 30,710
Total Fund Balances 60,422 10,841 59,639 19,160 71,204 221,266
Total Liabilities and Fund Balances $ 101,839 $ 47,864 $ 67,344 $ 27,586 $ 1 16,656 $ 3 61,289
The notes to the financial statements are an integral part of this statement.
38 City of Scottsdale, Arizona
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets
June 30, 2009 (in thousands of dollars)
Fund Balances -Total Governmental Funds $ 221,266
Amounts reported for governmental activities in the statement of net assets
are different because (see Note II A):
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds. 3,361,080
Bond issuance costs are not financial resources and, therefore, are not
reported in the funds. 3,371
Long-term liabilities, including bonds payable, are not due and payable
in the current period and, therefore, are not reported in the funds. (870,059)
Because the focus of governmental funds is on short-term financing,
some assets will not be available to pay for current period expenditures.
Those assets are offset by deferred revenue in the funds. 31,743
Internal Service Funds are used by management to charge the costs of
certain activities, such as, insurance and vehicles to individual funds.
The assets and liabilities of the Internal Service Funds are included in
governmental activities in the statement of net assets. 54,946
Net Assets of Governmental Activities $ 2,802,347
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 39
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2009 (in thousands of dollars)
Total
General General CIP Transportation Nonmajor Total
Obligation Bond Construction Privilege Tax Governmental Governmental
General Debt Service Capital Projects Capital Projects Funds Funds
REVENUES
Taxes - Local
Property $ 2 1,892 $ 34,932 $ - $ - $ 3,669 $ 60,493
Transaction Privilege 9 4,118 - - - 45,262 139,380
Transient Occupancy 1 ,515 - - - 6,062 7,577
Light and Power Franchise 7 ,831 - - - - 7,831
Cable TV Franchise 3 ,606 - - - - 3,606
Salt River Project In-Lieu 1 39 - - - - 139
Other Taxes 8 20 - - - - 820
Taxes - Intergovernmental
State-Shared Sales 1 8,677 - - - - 18,677
State Revenue Sharing 3 5,103 - - - - 35,103
Auto Lieu Tax 8 ,530 - - - - 8,530
Highway User Tax - - - - 14,083 14,083
Local Transportation Assistance Fund - - - - 1,015 1,015
Business and Liquor Licenses 1 ,733 - - - - 1,733
Charges for Current Services
Building and Related Permits 6 ,446 - - - - 6,446
Fire Fees 2 ,275 - - - - 2,275
Recreation Fees 3 ,186 - - - 1,130 4,316
Westworld Equestrian Facility Fees 2 ,682 - - - - 2,682
Fines, Fees and Forfeitures
Court Fines 6 ,671 - - - 4 6,675
Parking 4 23 - - - - 423
Photo Radar 2 ,466 - - - - 2,466
Court Enhancement - - - - 967 967
Library 3 03 - - - - 303
Police Fees - - - - 625 625
Special Assessments - - - - 821 821
Property Rental 3 ,074 - - - 453 3,527
Interest Earnings 6 ,753 - 2 ,518 8 46 3,374 13,491
Intergovernmental
Federal Grants - - 2 42 1 ,203 7,147 8,592
State Grants - - - - 720 720
Miscellaneous 1 ,225 - - 18,622 2,654 22,501
Developer Contributions 1 4 - 3 68 9 ,043 - 9,425
Streetlight and Services Districts 5 99 - - - - 599
Contributions and Donations 1 - - - 1,518 1,519
Reimbursements from Outside Sources 4 92 - 2 12 2 46 260 1,210
Indirect Costs 1 4,038 - - - 879 14,917
Other 6 47 - - - 344 991
Total Revenues 2 45,259 34,932 3 ,340 29,960 90,987 404,478
(continued)
40 City of Scottsdale, Arizona
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Year Ended June 30, 2009 (in thousands of dollars)
Total
General General CIP Transportation Nonmajor Total
Obligation Bond Construction Privilege Tax Governmental Governmental
General Debt Service Capital Projects Capital Projects Funds Funds
EXPENDITURES
Current
General Government 1 8,682 - - - 534 19,216
Police 8 8,415 - - - 1,387 89,802
Financial Services 9 ,701 - - - - 9,701
Transportation 1 24 - - - 15,456 15,580
Community Services 6 0,505 - - - 10,302 70,807
Information Systems 9 ,904 - - - - 9,904
The Downtown Group 4 ,475 - - - 152 4,627
Fire 3 0,687 - - - 80 30,767
Municipal Services 1 ,679 - - - 17,121 18,800
Citizen and Neighborhood Resources 3 ,721 - - - 11 3,732
Human Resources 3 ,447 - - - 18 3,465
Economic Vitality 1 ,337 - - - 6,909 8,246
Planning and Development 1 6,650 - - - 21 16,671
WestWorld 3 ,615 - - - 89 3,704
Streetlight and Services Districts 6 32 - - - - 632
Debt Service
Principal 1 ,058 22,990 1 05 - 7,155 31,308
Interest and Fiscal Charges 2 ,542 26,885 7 - 12,178 41,612
Capital Improvements - - 89,646 54,364 11,348 155,358
Total Expenditures 2 57,174 49,875 89,758 54,364 82,761 533,932
Excess (Deficiency) of Revenues Over
Expenditures (11,915) (14,943) (86,418) (24,404) 8,226 (129,454)
OTHER FINANCING SOURCES (USES)
Transfers In 2 8,330 16,264 59,774 22,607 33,344 160,319
Transfers Out (18,296) - (14,787) (8,600) ( 103,674) (145,357)
Total Other Financing Sources and (Uses) 1 0,034 16,264 44,987 14,007 ( 70,330) 14,962
Net Change in Fund Balances ( 1,881) 1,321 (41,431) (10,397) ( 62,104) (114,492)
Fund Balances - Beginning 6 2,303 9,520 101,070 29,557 133,308 335,758
Fund Balances - Ending $ 6 0,422 $ 10,841 $ 59,639 $ 19,160 $ 71,204 $ 221,266
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 41
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to
the Statement of Activities
For the Year Ended June 30, 2009 (in thousands of dollars)
Net Change in Fund Balances - Total Governmental Funds $ ( 114,492)
Amounts reported for governmental activities in the statement of activities
are different because (see Note II B):
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. This is the
amount by which capital outlay exceeded depreciation in the current period. 51,079
Donations of capital assets are not reflected on the governmental fund
statements but are shown in the statement of activities. 2 09,561
Transfer of capital asset to the Internal Service Fund. ( 2,021)
Some expenses reported in the statement of activities do not require the use of
current financial resources and; therefore, are not reported as expenditures in
governmental funds. ( 605)
Revenues in the statement of activities that do not provide current
financial resources are not reported as revenues in the funds. ( 4,581)
Bond issuance costs are expended in the governmental funds when paid,
and are capitalized and amortized in the statement of net assets. This
is the amount by which current year bond issuance costs exceed amortization
expense in the current period. ( 293)
The issuance of long-term debt 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. This is the amount by
which debt proceeds exceeded principal retirement in the current period. 31,308
Additional interest accretion calculated on bonds and notes payable and ( 337)
amortization of bond premium and deferred amounts on refunding.
The net revenues of certain activities of internal service funds is reported
with governmental activities. ( 1,017)
Changes in Net Assets of Governmental Activities $ 1 68,602
The notes to the financial statements are an integral part of this statement.
42 City of Scottsdale, Arizona
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual
For the Year Ended June 30, 2009 (in thousands of dollars)
Variance Between
Budgeted Amounts Final Budget and
Actual Amounts Budget to GAAP Actual Amounts Actual Amounts
Original Final Budgetary Basis Differences GAAP Basis Budgetary Basis
REVENUES
Taxes - Local
Property $ 22,361 $ 22,167 $ 22,607 $ (715) $ 2 1,892 $ 440
Transaction Privilege 116,611 96,910 95,757 (1,639) 9 4,118 ( 1,153)
Transient Occupancy 1,972 1,598 1,525 (10) 1 ,515 ( 73)
Light and Power Franchise 7,718 8,200 7,791 4 0 7 ,831 ( 409)
Cable TV Franchise 3,603 3,603 3,566 4 0 3 ,606 ( 37)
Salt River Project In-Lieu 175 139 139 - 139 -
Other Taxes 842 830 814 6 820 ( 16)
Taxes - Intergovernmental
State-Shared Sales 22,000 19,900 18,936 (259) 18,677 ( 964)
State Revenue Sharing 34,000 34,600 35,103 - 35,103 503
Auto Lieu Tax 9,700 8,000 8,151 3 79 8,530 151
Business and Liquor Licenses 1,835 1,669 1,733 - 1,733 64
Charges for Current Services
Building and Related Permits 14,500 6,616 6,912 (466) 6,446 296
Fire Fees 1,440 2,331 1,752 5 23 2,275 ( 579)
Recreation Fees 3,114 3,114 3,206 (20) 3,186 92
Westworld Equestrian Facility Fees 2,387 2,728 2,663 1 9 2,682 ( 65)
Fines, Fees and Forfeitures
Court Fines 6,451 6,368 6,671 - 6,671 303
Parking 318 475 423 - 423 ( 52)
Photo Radar 2,844 2,315 2,466 - 2,466 151
Library 382 302 303 - 303 1
Property Rental 3,381 3,327 3,222 (148) 3,074 ( 105)
Interest Earnings 4,500 3,498 3,691 3 ,062 6,753 193
Intergovernmental
Miscellaneous 675 1,064 1,160 6 5 1,225 96
Developer Contributions - 14 14 - 14 -
Streetlight and Services Districts 732 732 600 (1) 599 ( 132)
Contributions and Donations - - 1 - 1 1
Reimbursements from Outside Sources 350 365 456 3 6 492 91
Indirect Costs 12,937 14,016 14,038 - 14,038 22
Other 1,000 1,016 628 1 9 647 ( 388)
Total Revenues 275,828 245,897 244,328 931 245,259 ( 1,569)
EXPENDITURES
Current
General Government 19,129 19,391 18,645 37 18,682 746
Police 90,335 92,438 88,325 90 88,415 4,113
Financial Services 9,993 9,982 9,586 115 9,701 396
Transportation 201 127 123 1 124 4
Community Services 58,822 61,906 60,380 125 60,505 1,526
Information Systems 10,603 10,136 9,888 16 9,904 248
The Downtown Group 4,581 4,577 4,479 (4) 4,475 98
Fire 33,238 32,118 30,733 (46) 30,687 1,385
Municipal Services 1,687 2,147 1,673 6 1,679 474
Citizen and Neighborhood Resources 3,775 3,793 3,691 30 3,721 102
Human Resources 4,316 3,647 3,439 8 3,447 208
Economic Vitality 1,503 1,367 1,323 14 1,337 44
Planning and Development 17,132 17,393 16,620 30 16,650 773
WestWorld 3,550 3,852 3,609 6 3,615 243
Streetlight and Services Districts 732 732 632 - 632 100
Inventory/Other - - 249 (249) - ( 249)
Debt Service
Principal 1,528 1,561 1,058 - 1,058 503
Interest and Fiscal Charges 4,498 4,506 2,542 - 2,542 1,964
Total Expenditures 265,623 269,673 256,995 179 257,174 12,678
Excess (Deficiency) of Revenues Over
Expenditures 10,205 (23,776) ( 12,667) 752 (11,915) 11,109
OTHER FINANCING SOURCES (USES)
Transfers In 11,691 28,078 28,330 - 28,330 252
Transfers Out (22,898) (17,054) ( 18,296) - (18,296) ( 1,242)
Total Other Financing Sources and (Uses) (11,207) 11,024 10,034 - 10,034 ( 990)
Net Change in Fund Balance (1,002) (12,752) ( 2,633) 752 (1,881) 10,119
Fund Balance - Beginning 41,359 44,887 44,887 17,416 62,303 -
Fund Balance - Ending $ 40,357 $ 32,135 $ 42,254 $ 18,168 $ 60,422 $ 10,119
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 43
General Fund
For the Year Ended June 30, 2009 (in thousands of dollars)
Explanation of Differences:
Items recorded as revenues for GAAP purposes that are not recorded
for budget purposes:
Change in Fair Value of Investments $ ( 3,658)
Change in Receivables 4,589
Total Revenue Reconciling Items: 931
Claims and Compensated Absences 321
Bad Debt Expense 107
Inventory/Other Expenses ( 249)
Total Expenditure Reconciling Items: 179
Net Increase in Fund Balance - Budget to GAAP $ 752
The beginning balance for Actual Amounts Budgetary Basis was adjusted
to the fiscal year ending fund balance amounts for fiscal year 2007/08
in the City of Scottsdale Adopted Fiscal Year Ending 2009/10 Budget Balance:
Fund Balance - Beginning $ 1 7,416
Fund Balance - Ending $ 1 8,168
The notes to the financial statements are an integral part of this statement.
Reconciliation of Statement of Revenues, Expenditures,
and Changes in Fund Balance - Budget and Actual
The City budgets revenues on the cash basis, rather than on the modified accrual
basis:
The City budgets for certain expenditures on the cash basis, rather than
on the modified accrual basis:
44 City of Scottsdale, Arizona
Statement of Net Assets
Proprietary Funds
June 30, 2009 (in thousands of dollars)
Governmental
Water and Activities -
Sewer Internal
Utility Airport Solid Waste Total Service Funds
ASSETS
Current Assets
Cash and Investments $ 91,834 $ 5,169 $ 6,458 $ 1 03,461 $ 38,637
Cash with Fiscal Agent 18,285 - - 18,285 -
Receivables
Privilege Tax - 14 - 14 -
Charges for Services 14,084 - 1,921 16,005 -
Intergovernmental - 176 - 176 -
Interest 876 30 40 946 220
Miscellaneous 1,188 148 41 1,377 6
Prepaid Expenses 748
Supplies Inventory - - - - 574
Restricted Cash, Cash Equivalents, and Investments: -
Customer Advances and Deposits 1,467 67 - 1,534 -
Other Restricted Assets
Joint Venture Construction Deposits 7,730 - - 7,730 -
Total Current Assets 135,464 5,604 8,460 149,528 40,185
Noncurrent Assets
Equity in Joint Venture 123,632 - - 123,632 -
Deferred Charges 1,524 - - 1,524 -
Pollution Remediation Recoveries 29,143 - - 29,143 -
Restricted Cash, Cash Equivalents, and Investments:
Deferred Revenue 8,447 44 - 8,491 -
Water and Sewer System Replacement 26,568 - - 26,568 -
Capital Assets
Land 27,294 9,564 1,111 37,969 -
Water Rights 89,701 - - 89,701 -
Water System 911,050 - - 911,050 -
Sewer System 417,352 - - 417,352 -
Buildings and Improvements - 19,295 3,005 22,300 1,847
Motor Vehicles - - - - 66,838
Machinery and Equipment 14,936 956 1,933 17,825 768
Furniture and Fixtures 621 - - 621 -
Construction in Progress 159,440 721 734 160,895 3,901
Less Accumulated Depreciation (341,773) (7,824) (2,653) (352,250) (44,460)
Total Capital Assets (net of
accumulated depreciation) 1 ,278,621 22,712 4,130 1 ,305,463 28,894
Total Noncurrent Assets 1 ,467,935 22,756 4,130 1 ,494,821 28,894
Total Assets $ 1 ,603,399 $ 28,360 $ 12,590 $ 1 ,644,349 $ 69,079
(continued on next page)
Balance Sheet
Governmental Funds
June 30, 2009 (in thousands of dollars)
General General CIP Transportation Nonmajor Obligation Bond Construction Privilege Tax Governmental General Debt Service Capital Projects Capital Projects Funds ASSETS
Cash and Investments $ 71,058 $ 18,575 $ 63,657 $ 25,687 $ Cash with Fiscal Agent 459 27,871 259 - Receivables (net of allowance for
uncollectibles)
Interest 624 - 321 72 Privilege Tax 7,252 - - - Hotel/Motel Tax 73 - - - Property Tax 902 1,418 - - State Shared Sales Tax 1,521 - - - Franchise Fee 2,786 - - - Court Receivable 10,071 - - - Highway User Tax - - - - Auto Lieu Tax 817 - - - Intergovernmental 6 - - 1,827 Grants - - 100 - Special Assessments - - - - Miscellaneous 6,025 - 3,007 - Due from Other Funds 40 - - - Supplies Inventory 205 - - - Total Assets $ 101,839 $ 47,864 $ 67,344 $ 27,586 $ (continued)
City of Scottsdale, Arizona 45
Statement of Net Assets
Proprietary Funds
June 30, 2009 (in thousands of dollars)
Governmental
Water and Activities -
Sewer Internal
Utility Airport Solid Waste Total Service Funds
LIABILITIES
Current Liabilities
Accounts Payable $ 1 0,898 $ 124 $ 438 $ 1 1,460 $ 1,785
Accrued Payroll and Benefits 1,013 133 173 1,319 354
Accrued Compensated Absences - Due Within One Year 824 59 296 1,179 201
Claims Payable - - - - 11,530
Customer Advances and Deposits 1,467 67 - 1,534 -
Matured Bonds Payable 10,715 - - 10,715 -
Matured Bond Interest Payable 7,570 - - 7,570 -
Bonds Payable and Other Payables - Due Within One Year 11,116 - - 11,116 -
Total Current Liabilities 43,603 383 907 44,893 13,870
Noncurrent Liabilities
Accrued Compensated Absences - Due in More Than One Year 1,006 68 544 1,618 217
Deferred Revenue 8,447 45 - 8,492 -
Bonds Payable and Other Payables - Due in More Than One Year 3 03,080 9 53 3 03,142 46
Pollution Remediation Obligation 29,143 - - 29,143 -
Total Noncurrent Liabilities 3 41,676 122 597 3 42,395 263
Total Liabilities 3 85,279 505 1,504 3 87,288 14,133
NET ASSETS
Invested in Capital Assets, Net of Related Debt 9 64,548 22,712 4,130 9 91,390 28,894
Restricted for Water and Sewer System Replacement 26,568 - - 26,568 -
Unrestricted 2 27,004 5,143 6,956 2 39,103 26,052
Total Net Assets $ 1,218,120 $ 2 7,855 $ 1 1,086 $ 1,257,061 $ 54,946
The notes to the financial statements are an integral part of this statement.
46 City of Scottsdale, Arizona
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Year Ended June 30, 2009 (in thousands of dollars)
Governmental
Water and Activities -
Sewer Internal
Utility Airport Solid Waste Total Service Funds
Operating Revenues
Charges for Sales and Services
Water Service Fees $ 8 4,722 $ - $ - $ 8 4,722 $ -
Sewer Service Fees 3 4,198 - - 34,198 -
Proprietary - Non-Potable Water Fees 6,824 - - 6,824 -
Solid Waste Fees - - 2 0,049 2 0,049 -
Airport Fees - 2 ,813 - 2 ,813 -
Other Services - - - - 49,644
Other 408 - - 408 1,305
Total Operating Revenues 1 26,152 2,813 20,049 1 49,014 50,949
Operating Expenses
Costs for Sales and Services
Water Operations 4 4,551 - - 44,551 -
Sewer Operations 1 6,927 - - 16,927 -
Solid Waste Operations - - 1 6,884 1 6,884 -
Airport Operations - 1 ,900 - 1 ,900 -
Other Services - - - - 44,648
Indirect Costs 9,758 611 2,568 12,937 -
Depreciation 3 4,253 971 198 35,422 5,451
Total Operating Expenses 1 05,489 3,482 19,650 1 28,621 50,099
Operating Income 2 0,663 ( 669) 399 20,393 850
Non-Operating Revenues (Expenses)
Property Tax - - - - 23
Transaction Privilege Tax - 117 - 117 -
Investment Income 4,630 134 194 4,958 1,162
Interest Expense ( 9,411) - - ( 9,411) -
Gain (Loss) on Sale of Capital Assets - - - - (43)
Net Non-Operating Revenues (Expenses) ( 4,781) 251 194 ( 4,336) 1,142
Income Before Contributions and Transfers 1 5,882 ( 418) 593 16,057 1,992
Capital Contributions 2 1,578 489 - 22,067 2,021
Transfers In 150 - 71 221 -
Transfers Out ( 9,702) ( 58) ( 393) ( 10,153) (5,030)
Change in Net Assets 2 7,908 13 271 28,192 (1,017)
Total Net Assets - Beginning 1 ,190,212 2 7,842 10,815 1 ,228,869 55,963
Total Net Assets - Ending $ 1 ,218,120 $ 2 7,855 $ 1 1,086 $ 1 ,257,061 $ 54,946
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 47
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2009 (in thousands of dollars)
Governmental
Water and Activities -
Sewer Internal
Utility Airport Solid Waste Total Service Funds
Cash Flows from Operating Activities
Cash Received from Customers $ 126,194 $ 2 ,842 $ 20,035 $ 149,071 $ 49,642
Cash Paid to Suppliers ( 55,295) (1,236) (13,310) (69,841) ( 39,050)
Cash Paid to Employees ( 17,594) (1,092) (5,972) (24,658) ( 4,607)
Other Operating 501 - - 501 1,305
Net Cash Provided by Operating Activities 53,806 5 14 753 55,073 7 ,290
Cash Flows from Non-Capital
Financing Activities
Property Tax - - - - 2 3
Transaction Privilege Tax - 1 19 - 119 -
Transfers In 150 - 71 221 -
Transfers Out ( 9,702) (58) (393) (10,153) ( 5,030)
Net Cash Provided by (Used for)
Non-Capital Financing Activities ( 9,552) 61 (322) (9,813) ( 5,007)
Cash Flows from Capital and Related
Financing Activities
Capital Contributions from Other
Water and Sewer Development Fees 3,169 - - 3,169 -
Capital Grants 2 1 ,242 - 1,244 -
Capital Contributions
Acquisition and Construction of Property and Equipment ( 79,000) (697) (580) (80,277) ( 6,093)
Principal Payments on Capital Debt ( 8,418) - - (8,418) -
Interest Paid on Capital Debt ( 13,321) - - (13,321) -
Investment in Joint Venture & CIP Deposit ( 3,515) - - (3,515) -
Sale of Capital Assets 564 - - 564 1 68
Net Cash Used for Capital and
Related Financing Activities (100,519) 5 45 (580) (100,554) ( 5,925)
Cash Flows from Investing Activities
Income Received on Investments 4,913 1 44 215 5,272 1 ,291
Net Cash Provided by Investing Activities 4,913 1 44 215 5,272 1 ,291
Net Increase (Decrease) in Cash and Cash Equivalents ( 51,352) 1 ,264 66 (50,022) ( 2,351)
Cash and Cash Equivalents at Beginning of Year 197,953 4 ,016 6,392 208,361 40,988
Cash and Cash Equivalents at End of Year $ 146,601 $ 5 ,280 $ 6,458 $ 158,339 $ 38,637
(continued on next page)
48 City of Scottsdale, Arizona
Statement of Cash Flows
Proprietary Funds (Concluded)
For the Year Ended June 30, 2009 (in thousands of dollars)
Governmental
Water and Activities -
Sewer Internal
Utility Airport Solid Waste Total Service Funds
Cash and Cash Equivalents
at End of Year Includes
Cash and Investments $ 91,834 $ 5,169 $ 6,458 $ 1 03,461 $ 38,637
Cash with Fiscal Agent 18,285 - - 18,285 -
Restricted Cash and Investments 36,482 111 - 36,593 -
Total Cash and Cash Equivalents $ 1 46,601 $ 5,280 $ 6,458 $ 1 58,339 $ 38,637
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating Income $ 20,663 $ (669) $ 399 $ 20,393 $ 850
Adjustments to Reconcile Operating
Income to Net Cash Provided
by Operating Activities
Depreciation and Amortization 34,253 971 198 35,422 5,451
Changes In Assets and Liabilities
Sources (Uses) of Cash
Accounts Receivable (386) - (29) (415) -
Miscellaneous Receivables 93 22 15 130 2
Prepaid Expenses - - - - (748)
Supplies Inventory - - - - 218
Accounts Payable (2,291) 70 38 (2,183) 249
Accrued Payroll and Benefits 684 112 125 921 239
Claims Payable - - - - 1,011
Deferred Revenue 837 7 - 844 (4)
Other Liabilities (47) 1 7 (39) 22
Total Adjustments 33,143 1,183 354 34,680 6,440
Net Cash Provided by Operating Activities $ 53,806 $ 514 $ 753 $ 55,073 $ 7,290
Supplemental Disclosure of Non-Cash
Financing Activities
Additions to Property, Plant, and Equipment
Contributions from Developers $ 18,426 $ - $ - $ 18,426 $ -
Contributions from Other Government Units - - - - 2,021
Amortization of Deferred Charges (154) - - (154) -
Loss on Sale of Capital Assets (563) - - (563) -
Total Non-Cash Financing Activities $ 17,709 $ - $ - $ 17,709 $ 2,021
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 49
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2009 (in thousands of dollars)
Private Purpose
Trust Funds Agency Funds
ASSETS
Cash and Cash Equivalents $ 3 $ 9,467
Total Assets 3 9,467
LIABILITIES
Accounts Payable - 1 27
Designated Escrow Payable - 9,340
Total Liabilities - 9,467
NET ASSETS
Held in Trust for Other Purposes $ 3 $ -
The notes to the financial statements are an integral part of this statement.
50 City of Scottsdale, Arizona
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
For the Year Ended June 30, 2009 (in thousands of dollars)
Private Purpose
Trust Funds
ADDITIONS
Contributions:
Private Donations $ 5
Total Additions 5
DEDUCTIONS
Scholarships 6
Total Deductions 6
Change in Net Assets (1)
Net Assets - Beginning 4
Net Assets - Ending $ 3
The notes to the financial statements are an integral part of this statement.
City of Scottsdale, Arizona 51
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2009
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The City of Scottsdale, Arizona (City) was incorporated in 1951. The current City Charter was adopted in
1961, which established the Council/Manager form of government. The City provides basic government
services to its citizens including roads, water, sewer, solid waste management, public transit, parks and
recreation facilities, police and fire.
The accounting policies of the City conform to accounting principles generally accepted in the United
States of America (GAAP) as applicable to governmental units. The following is a summary of the more
significant policies.
The financial reporting entity presented in these financial statements consists of the City of Scottsdale,
Arizona (the primary government) and its component units. The component units discussed below
are included in the City’s reporting entity because of the significance of their operational or financial
relationships with the City.
Component Unit Description and Criteria for Inclusion Reporting
Method
For Separate Financial
Statements
City of Scottsdale
Municipal Property
Corporation (MPC)
• Non-profit corporation created in 1967.
• Sole purpose is to construct, acquire, and equip
buildings, structures or land improvements for the City.
• Governed by Board of Directors appointed by the City
Council.
• For financial reporting purposes, transactions are
included as a governmental and proprietary fund type,
as if part of the City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
Scottsdale Preserve
Authority (SPA)
• Non-profit corporation created in 1997.
• Sole purpose is to finance land acquisitions for
McDowell Sonoran Preserve.
• Governed by a Board of Directors appointed by the
City Council.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
Scottsdale Mountain
Community
Facilities District
(CFD)
• Formed by 1992 petition to City Council.
• Created to acquire and improve public infrastructure in
specified land area.
• Able to levy taxes and issue bonds independent of the
City.
• Property owners within the designated area are
assessed for District taxes and costs of operation.
• City Council serves as the Board of Directors.
• The City has no liability for the District debt.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
52 City of Scottsdale, Arizona Notes to Financial Statements
For the Fiscal Year Ended June 30, 2009
McDowell Mountain
Ranch
Community
Facilities District
(CFD)
• Formed by 1994 petition to City Council.
• Created to acquire and improve public infrastructure in
specified land area.
• Able to levy taxes and issue bonds independent of the
City.
• Property owners within the designated area are
assessed for District taxes and costs of operation.
• City Council serves as the Board of Directors.
• The City has no liability for the District debt.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
DC Ranch
Community
Facilities District
(CFD)
• Formed by 1997 petition to City Council.
• Created to acquire and improve public infrastructure in
specified land area.
• Able to levy taxes and issue bonds independent of the
City.
• Property owners within the designated area are
assessed for District taxes and costs of operation.
• City Council serves as the Board of Directors.
• The City has no liability for the District debt.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
Via Linda Road
Community
Facilities District
(CFD)
• Formed by 1998 petition to City Council.
• Created to acquire and improve public infrastructure in
specified land area.
• Able to levy taxes and issue bonds independent of the
City.
• Property owners within the designated area are
assessed for District taxes and costs of operation.
• City Council serves as the Board of Directors.
• The City has no liability for the District debt.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
Waterfront
Commercial
Community
Facilities District
(CFD)
• Formed by 2005 petition to City Council.
• Created to acquire and improve public infrastructure in
specified land area.
• Able to levy taxes and issue bonds independent of the
City.
• Property owners within the designated area are
assessed for District taxes and costs of operation.
• City Council serves as the Board of Directors.
• The City has no liability for the District debt.
• For financial reporting purposes, transactions are
included as a governmental fund type, as if part of the
City’s operation.
Blended City of Scottsdale
Finance Department
Accounting Division
7447 E. Indian School Rd.
Ste. 210
Scottsdale, AZ 85251
City of Scottsdale, Arizona 53
Notes to Financial Statements
For the Fiscal Year Ended June 30, 2009
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of activities)
report information on all of the nonfiduciary activities of the primary government and its component
units. For the most part, the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses for a given function or
segment is 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, proprietary funds, and fiduciary funds,
even though the latter are excluded from the government-wide financial statements. Major individual
governmental funds and major individual enterprise 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, as are the proprietary fund and trust fund financial statements. Agency funds
do not have a measurement focus. 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 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. The City considers revenues to be available
if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures,
as well as expenditures related to vacation, sick leave, claims, and judgments, are recorded only when
payment is due.
Property taxes, other local taxes, licenses, 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 the City receives
cash.
54 City of Scottsdale, Arizona Notes to Financial Statements
For the Fiscal Year Ended June 30, 2009
The government reports the following major governmental funds:
The General Fund is the government’s primary operating fund. It accounts for all financial resources of
the general government,