HomeMy WebLinkAbout1993 Financial Statement June 30 TOWN OF MARANA
Marana, Arizona
FINANCIAL STATEMENTS
Year Ended June 30, 1993
TABLE OF CONTENTS
EXHIBIT PAGE
INDEPENDENT AUDITOR'S REPORT 1
GENERAL PURPOSE FINANCIAL STATEMENTS:
1 Combined Balance Sheet, All Fund Types
and Account Groups 2
2 Combined Statement of Revenues, Expen-
ditures and Changes in Fund Balances,
All Governmental Fund Types 3
3 Combined Statement of Revenues, Expen-
ditures and Changes in Fund Balances,
Budget and Actual, General and Spe-
cial Revenue Fund Types 4
4 Combined Statement of Revenues, Expenses
and Changes in Deficit, All Proprietary
Fund Types 5
5 Combined Statement of Cash Flows, All
Proprietary Fund Types 6
Summary of Significant Accounting Policies 7 -13
Notes to Combined Financial Statements 14 -23
•
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a. y.
.. Clifton,
fi Gunderson & Co.
- - Certified Public Accountants & Consultants
Honorable Mayor and Town Council
Town of Marana
Marana, Arizona
Independent Auditor's Report
We have audited the accompanying general purpose financial
statements of the Town of Marana, Arizona, as of and for the year
ended June 30, 1993. These general purpose financial statements are
the responsibility of the Town's management. Our responsibility is
to express an opinion on these general purpose financial statements
based on our audit.
We conducted our audit in accordance with generally accepted audit-
ing standards, Government Auditing Standards, issued by the Comp-
troller General of the United States, and the provisions of Office
of Management and Budget (OMB) Circular A -128, Audits of State and
Local Governments. Those standards and OMB Circular A -128 require
that we plan and perform the audit to obtain reasonable assurance
about whether the general purpose financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
general purpose financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred
to above present fairly, in all material respects, the financial
position of the Town of Marana, Arizona, as of June 30, 1993, and
the results of its operations and cash flows of its proprietary
fund types for the year then ended in conformity with generally
accepted accounting principles.
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Tucson, Arizona
October 8, 1993 (except for Note 9, as
to which the date is November 3, 1993)
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TOWN OF MARANA, ARIZONA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES - EXHIBIT 2
Year Ended June 30, 1993
Totals
Special (Memorandum Only)
General Revenue 1993 1992
REVENUES
Taxes
Sales - Marana $ 515,111 $ $ 515,111 $ 447,429
Sales - Arizona 142,585✓ 142,585 132,507 x'
Urban sharing 141,393• 141,393 135,516
Auto lieu 38,231 38,231 34,218
Licenses, fees and permits 243,731 243,731 86,815
Fines, forfeitures and
penalties 67,178 67,178 103,113
Grants and contributions
Highway user fees - Arizona 164,173 ✓ 164,173 155,262
Public safety - Arizona 39,100✓ 39,100 El
Public safety - Tucson 72,427 72,427 33,688
Block grants - Pima County 148,041 148,041 103,285
LTAF Funds - Arizona 19,805 ✓ 19,805 18,655
Parks - Pima County 85,739 85,739 74,063
Other 59,782 3,110 62,892 88,862
Total revenues 1,293,750 446,656 1,740,406 1,413,413
OTHER FINANCING SOURCES
Proceeds from bond sales 315,000 315,000
Conversion of accounts to notes
payable 22,857 22,857
Total other financing sources 337,857 337,857
Total revenues and other financing sources 1,631,607 446,656 2,078,263 1,413,413
EXPENDITURES
Administration 567,470 567,470 278,581
Development and planning services 36,579 36,579 57,464
Town Attorney 50,184 50,184 42,805
Public safety 516,929 121,232 638,161 603,553
Magistrate court 86,557 86,557 105,702
Public works 70,310 176,248 246,558 234,665
Capital projects 148,250 148,250 103,285
Parks 85,739 85,739 74,063
Total expenditures 1,413,768 445,730 1,859,498 1,500,118
Excess (deficiency) of revenues and
other financing sources over (under)
expenditures 217,839 926 218,765 (86,705)
■
FUND BALANCES, BEGINNING 93,521 108,954 202,475 289,180
FUND BALANCES, ENDING $ 311,360 $ 109,880 $ 421,240 $ 202,475
These financial statements should be read only in connection with the accompanying
summary of significant accounting policies and notes to financial statements.
3
TOWN OF MARANA, ARIZONA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL AND SPECIAL REVENUE FUND TYPES - EXHIBIT 3
Year Ended June 30, 1993
General Special Revenue
Actual Budget (a) Variance Actual Budget (a) Variance
REVENUES
Taxes
Sales - Marana $ 515,111 $ 472,000 $ 43,111 $ $ $
Sales - Arizona 142,585 133,286 9,299
Urban sharing 141,393 141,366 27
Auto lieu 38,231 32,400 5,831
Licenses, fees and permits 243,731 150,000 93,731
Fines, forfeitures and
penalties 67,178 140,000 (72,822)
Grants and contributions
Highway user fees - Arizona 164,173 177,761 (13,588)
Public safety - Arizona 39,100 43,330 (4,230)
Public safety - Tucson 72,427 62,312 10,115
Block grants - Pima County 148,041 479,168 (331,127)
LTAF Funds - Arizona 19,805 19,805 0
Parks - Pima County 85,739 62,000 23,739
Other 59,782 946,313 (886,531) 3,110 199,848 (196,738)
Total revenues 1,293,750 2,077,365 (783,615) 446,656 982,224 (535,568)
OTHER FINANCING SOURCES
Proceeds from bond sales 315,000 0 315,000
Conversion of accounts to notes
payable 22,857 0 22,857
Total other financing sources 337,857 0 337,857
EXPENDITURES
Administration 567,470 353,442 (214,028)
Development and planning
services 36,579 68,062 31,483 5,000 5,000
Town Attorney 50,184 47,491 (2,693) 5,700 5,700
Public safety 516,929 460,971 (55,958) 121,232 155,942 34,710
Magistrate court 86,557 91,712 5,155
Public works 70,310 108,484 38,174 176,248 197,598 21,350
Capital projects 148,250 481,136 332,886
Parks 85,739 95,890 10,151 15,000 15,000
Other 851,313 851,313 121,848 121,848
Total expenditures 1,413,768 2,077,365 663,597 445,730 982,224 536,494
Excess of revenues and other
financing sources over 926
expenditures 217,839 0 217,839 926 0
FUND BALANCES, BEGINNING 93,521 0 93,521 108,954 0 108,954
FUND BALANCES, ENDING $ 311,360 $ 0 $ 311,360 $ 109,880 $ 0 $ 109,880
(a) The Town's budget included an additional $91,837 for revenues and expenditures for water enterprise activities that is not
included in this statement because these activities are proprietary in nature. In addition, $851,313 and $121,848 is included
in the budget for both other revenue and other expenditures in the general fund and special revenue funds, respectively, for
the effects of a proposed annexation that was not completed during fiscal 1993.
These financial statements should be read only in connection with the accompanying
summary of significant accounting policies and notes to financial statements.
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TOWN OF MARANA, ARIZONA
COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN
DEFICIT — ALL PROPRIETARY FUND TYPES — EXHIBIT 4
Year Ended June 30, 1993
Proprietory Totals
Fund Type (Memorandum Only)
Water 1993 1992
OPERATING REVENUES
Current use charges $ 72,295 $ 72,295 $ 51,031
Other 4,086 4,086
Total operating revenues 76,381 76,381 51,031
OPERATING EXPENSES
Material, supplies and
other expenses 42,051 42,051 33,753
Depreciation expense 12,853 12,853 12,537
Total operating
expenses 54,904 54,904 46,290
OPERATING INCOME 21,477 21,477 4,741
NONOPERATING REVENUES
(EXPENSES)
Interest income 258 258 926
Bond interest expense (22,857) (22,857) (22,857)
Bond fees (1,958) (1,958) (1,880)
Total nonoperating revenues (expenses) (24,557) (24,557) (23,811)
NET LOSS (3,080) (3,080) (19,070)
DEFICIT, BEGINNING (34,427) (34,427) (15,357)
DEFICIT, ENDING $ (37,507) $ (37,507) $ (34,427)
Il,
These financial statements should be read only in connection with the accompanying
summary of significant accounting policies and notes to financial statements.
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TOWN OF MARANA, ARIZONA
COMBINED STATEMENT OF CASH FLOWS
ALL PROPRIETARY FUND TYPES EXHIBIT 5
Year Ended June 30, 1993
Proprietary Totals
Fund Type (Memorandum Only)
Water 1993 1992
ASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,080) $ (3,080) $ (19,070)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Nonoperating revenues (expenses)
associated with trustee/fiscal agents 24,557 24,557 23,811
Depreciation 12,853 12,853 12,537
Changes in operating assets and liablities:
Increase in accounts receivable (3,498) (3,498) (472)
Increase (decrease) in accounts payable 560 560 (8,051)
Cash provided by operating activities 31,392 31,392 8,755
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets, cash used by investing activities (26,632)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in due to other fund (13,113) (13,113) 16,895
Payments to trustee/fiscal agents for debt service (24,821) (24,821) (24,426)
Reimbursements from trustee /fiscal agents 5,000 5,000 8,120
Cash provided by (used in) financing activities 32,934
( ) (32,934) 589
NET DECREASE IN CASH (1,542) (1,542) (17,288)
CASH, BEGINNING OF YEAR 3,197 3,197 20,485
CASH, END OF YEAR (a) $ 1,655 $ 1,655 $ 3,197
Cash $ 1,655 $ 1,655 $ 3,197
Cash with trustee/fiscal agents 563 563 2,172 j!
Total $ 2,218 $ 2,218 $ 5,369
(a) Cash on the balance sheet consists of cash the Town can access and cash on deposit with trustee/fiscal agents. Cash flows from cash
with trustee/fiscal agents are not presented above because these activities represent noncash transactions.
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES
CASH FLOWS WITH TRUSTEE /FISCAL AGENTS FROM INVESTING AND
OTHER ACTIVITIES
Payments from water fund for debt service $ 24,821 $ 24,821 $ 24,426
Interest income 258 258 926
Decrease In investments 4,987 4,987 6,510
Reimbursements to water fund (5,000) (5,000) (8,120)
Cash with trustee/fiscal agents provided by
investing and other activities 25,066 25,066 23,742
CASH FLOWS WITH TRUSTEE /FISCAL AGENTS FROM FINANCING AND
OTHER ACTIVITIES
Interest and other obligations paid (24,816) (24,816) (24,737)
Increase (decrease) in accounts payable (1,859) (1,859) 1,859
Cash with trustee/fiscal agents used in
financing and other activities (26,675) (26,675) (22,878)
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NET INCREASE (DECREASE) IN CASH WITH TRUSTEE /FISCAL AGENTS (1,609) (1,609) 864
CASH WITH TRUSTEE/FISCAL AGENTS, BEGINNING OF YEAR 2,172 2,172 1,308
CASH WITH TRUSTEE/FISCAL AGENTS, END OF YEAR $ 563 $ 563 $ 2,172
These financial statements should be read only In connection with the accompanying
summary of significant accounting policies and notes to financial statements.
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
The Town of Marana (the Town) was incorporated on March 21, 1977,
under the provisions of the Constitution of Arizona and the Arizona
Revised Statutes. The Town operates under a council -mayor form of
government. All funds and entities related to the Town that are
con - trolled by the Mayor and Council are included in this annual
financial report. This control is determined on the basis of budget
adoption, taxing authority and the ability to issue outstanding
debt secured by revenues or which is a general obligation of the
Town, as well as selection of governing authority, designation of
management, ability to significantly influence operations and
accountability for fiscal matters. The Town provides a full range
of services including general governmental administration,
development and planning, legal, public safety, public works, and
parks services. The accounting policies of the Town conform to
generally accepted accounting principles (GAAP) as applicable to
governments. The Governmental Accounting Standards Board (GASB) is
the accepted standard - setting body for establishing accounting and
financial reporting principles. The following is a summary of the
more significant policies:
REPORTING ENTITY
In evaluating how to define the Town of Marana, for financial
reporting purposes, management has considered all potential
component units. The decision to include a potential component
unit in the reporting entity was made by applying the criteria set
forth by GAAP. The basic, but not the only, criterion for
including a potential component unit within the reporting entity is
the Town's ability to exercise oversight responsibility. The most
significant manifestation of this ability is financial inter-
dependency. Other manifestations of the ability to exercise
oversight responsibility include, but are not limited to, the
selection of governing authority, the designation of management,
the ability to significantly influence operations and
accountability for fiscal matters. A second criterion used in
evaluating potential component units is the scope of public
service. Application of this criterion involves considering
whether the activity benefits the Town and /or its citizens, or
whether the activity is conducted within the geographic boundaries 1;
of the Town and is generally available to its citizens. A third
criterion used to evaluate potential component units for inclusion
or exclusion from the reporting entity is the existence of special
financial relationships, regardless of whether the Town is able to jl
exercise oversight responsibilities. Based upon the application of !'
this criteria, the following component unit is considered within
the Town's reporting entity: �.
{ �4
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
REPORTING ENTITY (Continued)
Town of Marana Municipal Property Corporation
The Town of Marana Municipal Property Corporation governing board
is appointed by the Town Council. The Town's general fund and
water fund pay rent to the Municipal Property Corporation in order
to fund the debt incurred to finance the purchase of the Town hall
and fixed assets used by the water fund. The legal liability for
the Municipal Property Corporation's debt remains with the Town.
FUND ACCOUNTING
The accounts of the Town are organized on the basis of funds and
account groups, each of which is considered a separate accounting
entity. The operations of each fund are accounted for with a
separate set of self - balancing accounts that comprise its assets,
liabilities, fund equity, revenues and expenditures. Government
resources are allocated to and accounted for in individual funds
based upon the purposes for which they are to be spent and the
means by which spending activities are controlled. The various
funds are grouped, in the financial statements in this report, into
generic fund types and broad fund categories as follows:
Governmental funds:
General fund - This fund is the general operating fund of the Town.
It is used to account for all financial resources, except those
required to be accounted for in another fund.
Special revenue funds - These funds are used to account for the
proceeds of specific revenue sources that are legally restricted to
expenditures for specified purposes.
Debt service fund - Although such a fund is normally used to
account for the accumulation of resources for the payment of
general long -term debt principal, interest and related costs, the
Town has not yet established such a fund. Most debt is funded
directly from other funds with no amounts accumulated.
1
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
FUND ACCOUNTING (Continued)
Proprietary funds:
Enterprise fund - This fund is used to account for water utility
operations that are financed and operated in a manner similar to
private business enterprises. The intent of the governing body is
that the costs (expenses, including depreciation) of providing
water services to the general public on a continuing basis be
financed or recovered primarily through user charges.
MEASUREMENT FOCUS, FIXED ASSETS AND LONG-TERM LIABILITIES
The accounting and reporting treatment applied to the fixed assets
and long -term liabilities associated with a fund are determined by
its measurement focus. All governmental funds are accounted for on
a spending or "financial flow" measurement focus. This means that
only current assets and current liabilities are generally included
on their balance sheets. Their reported fund balance (net current
assets) is considered a measure of "available spendable resources."
Governmental fund operating statements present increases (revenues
and other financial sources) and decreases (expenditures and other
financial uses) in net current assets, as appropriate. Accordingly,
they are said to present a summary of sources and uses of
"available spendable resources" during a period.
Fixed assets used in governmental fund type operations (general
fixed assets) are accounted for in the general fixed assets group
of accounts, rather than in governmental funds.
Public domain ( "infrastructure ") general fixed assets consisting of
certain improvements other than buildings, including roads, curbs
and gutters, streets and sidewalks, bridges and lighting systems,
are not capitalized. No depreciation is being provided on general
fixed assets.
All general fixed assets are valued at historical cost. Donated
general fixed assets are valued at their estimated fair values on
the dates of donation.
Long -term liabilities expected to be financed from governmental
funds are accounted for in the general long -term debt group of
accounts, not in the governmental funds.
a ,
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
MEASUREMENT FOCUS, FIXED ASSETS AND LONG -TERM LIABILITIES
(Continued)
Because of their spending measurement focus, expenditure recogni-
tion of governmental fund types is limited to exclude amounts
represented by noncurrent liabilities. Since they do not affect net
current assets, such long -term amounts are not recognized as
governmental fund type expenditures or fund liabilities. They are
instead reported as liabilities in the general long -term debt group
of accounts.
The aforementioned two account groups are not funds. They are
concerned only with the measurement of financial position. They
are not involved with measurement of results of operations.
The proprietary fund is accounted for in a cost of services or
"capital maintenance" measurement focus. This means that all assets
and all liabilities, whether current or noncurrent, associated with
its activity are included on its balance sheet. Its reported fund
equity, net total assets, is segregated into contributed capital
and retained earnings components. Proprietary fund operating
statements present increases (revenues) and decreases (expenses) in
net total assets.
Water operations property is stated at cost or fair values on the ,
dates of donation. Depreciation (amortization) of all exhaustible
fixed assets used by water operations is charged as an expense
against its operations. Accumulated depreciation is reported on the
water operations balance sheet. Depreciation is provided over the
estimated useful lives of such assets using the straight -line
method. These estimated useful lives are as follows:
Estimated
Useful Lives (Years)
Pump stations, distribution system,
equipment and improvements 20
Organization costs 40 �!I
Expenditures for water repairs and maintenance are charged to I'
income. Additions, major renewals and replacements that increase
the water properties' useful lives are capitalized. The cost of
property sold or retired, together with the related accumulated
depreciation, is removed from the appropriate accounts and
resulting gain or loss is included in net income of the utility.
The Town no longer carries any inventory. Supplies needed for
operations are now being purchased on an as- needed basis.
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
BASIS OF ACCOUNTING
Basis of accounting refers to when revenues and expenditures are
recognized in the accounts and reported in the financial
statements. Basis of accounting relates to the timing of the
measurements made, regardless of the measurement focus applied. I
The proprietary fund is maintained on an accrual basis of
accounting. The governmental funds are maintained on a modified
accrual basis. The modified accrual basis of accounting recognizes
expenditures on an accrual basis, but revenues are recognized when
received, except for material revenues determined to be both j
measurable and "available." "Available" means collectible within
the current period or soon enough thereafter to be used to pay
liabilities of the current period. Deferred revenue in the
governmental funds arises when grant monies are received prior to
the incurrence of qualifying expenditures.
i i ,
BUDGETS AND BUDGETARY ACCOUNTING
II
The budgets formally adopted by the Mayor and Council are prepared ' !,
on a purpose, not object basis. All appropriations lapse at year ,
end, and the budgetary information reflected on the financial I!
statements represents the original adopted budget for fiscal 1993
with no augmentations. L
ENCUMBRANCES i
Encumbrance accounting, under which purchase orders, contracts and
other commitments for the expenditure of monies are recorded in
order to reserve that portion of the applicable appropriation, is
not employed as an extension of formal budgetary integration in the
general fund and special revenue funds.
RESERVES
No reservations of fund balances have been established by the Mayor
and Council at the end of fiscal 1993, except amounts reserved for
restricted assets.
BOND ISSUANCE COSTS
For the water fund, bond issuance costs are capitalized in the
period in which the bonds are issued and are amortized on a
,: straight line basis over 20 years. For all other funds, bond
; _
issuance costs are recognized as expenditures in the period in
which the bonds are issued.
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 1993
NOTE RECEIVABLE
The Town grants commercial loans to businesses in Marana, Arizona,
from monies received under its Community Development Block Grant
Program. At June 30, 1993, one such loan had been made to a local
business in Marana. A substantial portion of the debtor's ability
to honor the terms of this loan is dependent upon the economic
conditions in Arizona. The Town requires collateral for all notes
receivable. The extent and type of collateral is determined on a
case by case basis.
INVESTMENTS
Investments consist of U.S. Government fund obligations, a category
1 investment. Category 1 investments are investments that are
insured, registered or held by the Town's agent in the Town's name,
or by the Town itself. All investments are made through the Town's
trustee /fiscal agents for the bond issues. Investments are stated ;!
at cost, which approximates market.
II I
RESTRICTED ASSETS
The trust indentures executed for all of the bond series issued
require all cash and investments for the bond series to be held on
deposit by the trustee /fiscal agents. These assets are restricted
for payment of interest and trustee fees associated with the bond
issues, retirement of principal balances and purchasing the Town
hall, the Honea Water Company and improvements to water fund fixed
assets. �)
COMPENSATED ABSENCES
In the general long -term debt group of accounts, essentially the
entire accumulated liability for compensated absences is reflected,
since the liability at June 30, 1993, will most likely not be paid
within the current accounting cycle. Rather, in fiscal 1994 the
Town will probably pay that year's accrual without utilizing
amounts accrued from prior years.
COMPARATIVE DATA
Comparative total data for the prior year is presented and restated
in the accompanying general purpose financial statements in order
to provide an understanding of changes in the Town's financial
position and operations. However, presentation of prior year totals
by fund type have not been presented in the statements, since their
# _ Y
inclusion would make the statements unduly complex and difficult to
read.
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TOWN OF MARANA, ARIZONA
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES `I
June 30, 1993
TOTAL COLUMNS ON THE COMBINED FINANCIAL STATEMENTS
Total columns on the combined financial statements are captioned
"Memorandum Only" to indicate that they are presented only to
facilitate financial analysis. Data in these columns does not
present financial position or results of operations in conformity
with generally accepted accounting principles. Neither is such
data comparable to a consolidation. Interfund eliminations have
not been made in the aggregation of this data.
SEIZED PROPERTY
The Town Police have in their custody certain assets seized in
criminal proceedings. Until formal procedures have been finalized,
the ownership of this property is not determinable. In addition,
legal requirements dictate that such assets not be reflected on the
Town's financial records in an agency capacity until Town ownership
has been determined. Consequently, no such assets are recorded on
these financial statements.
Li
Ii.
ij
This information is an integral part of the
accompanying financial statements.
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TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 1 - CASH
The carrying amount of the Town's deposits with financial institu-
tions was $303,490 and the bank balances were $324,706 at June 30,
1993. The bank balances are categorized as follows:
Amount insured by the FDIC $191,689
Uncollateralized
133,017
Total bank balances $324,706
The uncollateralized balances are the result of Town management
believing that accounts maintained with a financial institution are
insured individually, rather than combined as one amount for
insurance purposes with that financial institution.
NOTE 2 - NOTE RECEIVABLE
Note receivable (Community Development Block Grant
Program), collateralized by a deed of trust, bear -
ing interest at 40, payable in monthly installments
of principal and interest of $553, due August 1995. $18,190
During fiscal 1993, the debtor on this note declared bankruptcy.
The property collateralizing this note is in the process of being
sold. The Town believes the cash proceeds from this sale will be
sufficient to satisfy both the first and second lienholders, with
the Town being the second lienholder.
NOTE 3 - FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION
The following is a summary of the changes in general fixed assets
for fiscal 1993:
Balance Balance
July 1, June 30,
1992 Additions Deletions 1993
Land $ 7,134 $ 51,150 $ $ 58,284
Land improvements 123,412 123,412
Buildings 248,079 248,079
Assets under capital
lease 465,974 10,828 (329,930) 146,872
Machinery, equipment
and other assets 464,733 54,330 (16,558) 502,505
Marana park 150,000 150,000
$1,211,253 $ 364,387 $(346,488) $1,229,152
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TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 3 - FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION (CONTINUED)
A summary of water fund property, plant and equipment at June 30, Lf
1993, is as follows:
Land $ 9,720
Water rights 50,000
Pump stations 57,000
Distribution system 89,000
Equipment and improvements 60,047
Bond issue costs 27,268
Organization costs 47,523
Construction work -in- progress 20,272
360,830
Less accumulated depreciation and amortization (37,163)
$ 323,667
NOTE 4 - LONG -TERM DEBT
During 1990, the water fund issued revenue bonds through the Town
of Marana Municipal Property Corporation for the purpose of
purchasing the Honea Water Company and making improvements to the
assets purchased. These 1990 bonds, secured by all general fund
revenues, consist of a series of issues with fixed interest rates
ranging from 7.55% to 8.30 %, depending upon the maturity dates of
the various issues. Periodic principal payments are due July 1,
1995, through July 1, 2009, in amounts ranging from $10,000 to
$30,000 annually. The 1990 series revenue bonds are callable as
follows:
Redemption Price (As 11
Redemption Date a Percent of Principal) �
7 -1 -1999 and thereafter 100.0
The following is a schedule by years of the debt service
requirements for these revenue bonds as of June 30, 1993: II
Years Ending 1990 Series
June 30 Bonds
1994 $ 22,858
1995 32,858 �!
1996 32,103 j
1997 31,338
1998 35,563
Thereafter 366,260
Total payments 520,980
Less amount representing
interest (240,980)
Principal $ 280,000
15
,
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 4 - LONG -TERM DEBT (Continued)
The following is a summary of general long -term debt transactions
for fiscal 1993:
Balances Balances
at July 1, at June 30,
1992 Additions Reductions 1993
Revenue bonds(a) $ $ 315,000 $ $ 315,000
Capital leases(b) 383,689 10,828 (302,726) 91,791
Notes payable(c) 57,334 22,857 (5,652) 74,539
Compensated
absences(d) 43,577 4,558 48,135
Land contract(e) 2,781 (2,781)
Total $ 487,381 $ 353,243 $ 336,159 $ 529,465
(a) In July, 1992, the Town issued revenue bonds through the Town
of Marana Municipal Property Corporation for the purpose of
exercising an option to purchase the Town hall, which had been
included as a capital lease under the general long -term debt
account group. These bonds, secured by all general fund
revenues and the Town hall, carry interest rates ranging from
6% to 8 %, depending upon the maturity dates of the various
issues. The principal payments are due July 1, 1994, through
July 1, 2018, in amounts ranging from $5,000 to $25,000
annually.
The 1992 Series Revenue Bonds are callable as follows:
Redemption Price (As �!
Redemption Dates a Percent of Principal)
7 -1 -2001 and 1 -1 -2002 101.0%
7 -1 -2002 and 1 -1 -2003 100.5
7 -1 -2003 and thereafter 100.0
Annual debt service requirements to maturity for these revenue
bonds are as follows:
Years Ending 1992 Series
June 30 Bonds
1994 $ 29,503
1995 29,203
1996 28,890
1997 28,565
1998 28,227
Thereafter 583,573
Total payments 727,961
Less amount representing
interest (412,961)
Principal $ 315,000
16 1
1
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
It
NOTE 4 - LONG -TERM DEBT (CONTINUED)
(b) The following is a schedule by years of the future minimum
lease payments under capital leases as of June 30, 1993:
Years Ending '}
June 30
1994 $ 42,898
1995 37,155
1996 18,529 ��
1997 9,149
Total net minimum lease payments 107,731 1
Less amount representing interest (15,940)
Present value of net minimum lease
payments $ 91,791
(c) During fiscal 1991 and 1993, the Town negotiated the following
notes payable with vendors, thereby converting outstanding
accounts payable balances:
Note payable, requiring monthly installments
of $583, including interest at 9% per year,
with the final payment due in April 1995. $ 11,775
Note payable, requiring interest at 10% per
year, with the final balance due in October 39,907
1993.
Note payable, requiring monthly installments
of $1,013, including interest at 6t per year,
with the final payment due in June 1995. 22,857
$ 74,539
Future maturities are as follows:
Years Ending
June 30
1994 $ 57,176
1995 17,363
$ 74,539
(d) This consists of the long -term portion of accrued vacation and
compensatory time, with an increase of $4,558 for fiscal 1993.
(e) In 1979, the Town borrowed $7,134 at 7t interest from the
State of Arizona to purchase a 2.5 acre parcel of land.
Principal and interest is payable in yearly installments of
approximately $575. The remaining balance of $2,781 was paid
in full during fiscal 1993.
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Y r
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 5 - DEFERRED REVENUE
During fiscal 1991, Pima County transferred the Marana Park to the
Town. In consideration of this transfer, Pima County agreed to
subsidize the Town with $250,000 for the maintenance and operation
of the Marana Park. This $250,000 subsidy is being paid in $50,000
installments over a 2 1/2 year period. The Town received $200,000
of this subsidy during fiscal 1992 and 1991, of which $107,301 was
recognized as deferred revenue at June 30, 1992. During fiscal
1993, the Town received the final $50,000 of this subsidy and
incurred $85,739 in expenditures for the maintenance and operation
of the Marana Park. Therefore, at June 30, 1993, there was
$71,562 in deferred revenue from the subsidy received from Pima
County. Deferred revenue also includes $33,552 at June 30, 1993,
which represents advances from developers, pending building permits �!
being issued by the Town to the developers.
NOTE 6 - ADDITIONAL DISCLOSURES
The Town does not budget on an object basis; therefore, the
expenditures on the general purpose financial statements have been
grouped by purpose, which is the Town's budgetary approach.
Although this facilitates budget to actual comparisons, the
following analysis is necessary to analyze expenditures by current,
capital (which includes the purchase of the Town hall for $255,750
from bond proceeds in administration) and debt service (which
includes bond issuance costs of $28,620 in administration)
categories:
Current Capital Debt
Purpose Operations Outlay Service
Administration $ 241,043 $255,750 $ 70,677
Development and
planning services 36,579
Town Attorney 50,184
Public safety 575,263 19,764 43,134
Magistrate court 86,557
Public works 233,786 12,772
Capital outlay /projects 209 148,041
Parks 85,739
$1,309,360 $423,555 $126,583
The Town budgets by purpose and not by fund; however, the budgeting
by purpose closely correlates to what would be, in substance,
budgeting by fund. There were no excesses of expenditures over
appropriations for fiscal 1993 by fund, considering the Town's
contingency appropriations.
18
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 7 - PUBLIC SAFETY PENSION PLAN
All of the Town's full -time police officers are covered by the
Marana Marshal's Arizona Public Safety Personnel Retirement System,
which is a multiple - employer, public employee retirement system
(PERS) .
The pension plan provides pension benefits, deferred allowances,
death and disability benefits and health insurance benefits. A
member is eligible if he is employed in a covered position prior to
attaining age 50 years, for at least 20 hours a week for more than
6 months a year. A member may retire after reaching the age of 62
and completion of 15 years service, or completion of 20 years
service with the Town. Benefits vest after 10 years of credited
service. Police officers who retire with 25 or more years of
credited service are entitled to monthly pension payments for the
remainder of their lives equal to 50% of average monthly
compensation for the first 20 years of credited service with the
Town, plus 2 1/2% of average monthly compensation for each year of
credited service above 20 years with the Town. Police officers who
retire with 20 years of credited service, but less than 25 years of
credited service, are entitled to monthly pension payments for the
remainder of their lives equal to 50% of average monthly
compensation for the first 20 years of credited service with the
Town, plus 2% of average monthly compensation for each year of
credited service between 20 and 25 years with the Town. Police
officers who retire with less than 20 years of credited service
with the Town are entitled to monthly pension payments for the
remainder of their lives equal to at least 30% of the average
monthly compensation for the entire service period increased at a
rate of 4% a year for each service year above the minimum 15 years
of service. The maximum monthly pension payment cannot exceed 80%
of the average monthly compensation.
Pension provisions include deferred allowances whereby a police
officer may terminate his employment with the Town after
accumulating 10 or more years credited service. Pension benefits
are then equal to twice the amount of pension benefits based on the
police officer's accumulated contributions. If the police officer
does not withdraw his accumulated contributions, the police officer
is entitled to these pension benefits upon reaching the age of 62.
Pension provisions include disability and death benefits. Disabled
officers are entitled to monthly payments for life of 50% of their
average monthly compensation or normal pension amount, whichever is
greater, if their disability is service connected, regardless of
years of credited service. Average monthly compensation (AMC) is
one- thirty -sixth of total compensation paid a member during the 3
years, out of the last 10 years of credited service, in which the
amount paid was highest. If the police officer's disability was not
service connected, the disabled officer is entitled to monthly
payments for life of 25% of AMC, if the credited service is less
19
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 7 - PUBLIC SAFETY PENSION PLAN (Continued)
than 7 years, 50% of AMC, if the credited service is 7 through 13
years, or 75% of AMC, if the credited service is 14 through 19
years. If the police officer is only temporarily disabled, he is
entitled to monthly payments equal to one - twelfth of 50% of com-
pensation paid during the year preceding the date the disability
was incurred. The payments terminate after 12 months or prior
recovery. Surviving spouses are entitled to two - thirds of the
monthly payments, or 100% if duty related, the deceased active
police officer would have been paid for disability or, in the case
of a retired police officer, two - thirds of the retired officer's
monthly pension payments. To qualify as a surviving spouse, the
spouse must have been married to the deceased for at least 2 years.
The spouse's benefits terminate upon her death. Each dependent
child of a deceased police officer is entitled to one -ninth of the
monthly payments the deceased active police officer would have been
paid for disability or, in the case of a retired police officer,
one -ninth of the retired officer's monthly pension payments. When k
the dependent child reaches the age of 18 or 23, if the dependent
is a full -time student, the monthly payments will terminate.
Pension provisions include health insurance benefits, whereby the
retired police officer or his surviving spouse can elect to be
covered by a health insurance plan provided by the Town or State of
Arizona. The retired police officer or his surviving spouse pay for
this coverage. However, they cannot be charged more than $60 per
month plus an amount up to $25 per month for dependent coverage, if
any.
The Town's current year payroll for eligible police officers
amounted to approximately $317,000.
Police officers of the Town are required to pay 7.65% of their
gross earnings to the pension plan. The Town makes periodic
contributions to the pension plan at actuarially determined rates
that, expressed as percentages of annual covered payroll, are
designed to accumulate sufficient assets to pay benefits when due.
The normal cost and actuarial accrued liability are determined
using an entry age actuarial funding method. Unfunded actuarial
accrued liabilities are being amortized as a level percent of
payroll over a period of 40 years (from July 1, 1978) . During 1993,
the Town was required to contribute 5.87% of its police officers'
covered payroll to the plan.
Total contributions made during fiscal 1993 were approximately
$43,000, of which approximately $19,000 was made by the Town and
approximately $24,000 was made by police officers. The contributed
amounts were actuarially determined as described above and were
based on an actuarial valuation as of June 30, 1991. The pension
contributions represent funding for normal cost and the
amortization of the unfunded actuarial accrued liability.
20
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 7 - PUBLIC SAFETY PENSION PLAN (Continued)
Significant actuarial assumptions used to compute pension contri-
bution requirements are the same as those used to determine the
standardized measure of the pension obligation.
The computation of the pension contribution requirements for fiscal
1993 was based on the same actuarial assumptions, benefit provi-
sions, actuarial funding method and other significant factors as
used to determine pension contribution requirements in the previous
years.
Presented below is the total pension benefit obligation of the
Town's PERS as of June 30, 1992, the date of the last available
report. The amount of the total pension benefit obligation is
based on a standardized measurement established by GASB -5 that,
with some exceptions, must be used by a PERS. The standardized
measurement is the actuarial present value of credited projected
benefits. This pension valuation method reflects the present value
of estimated pension benefits that will be paid in future years as
a result of police officer services performed to date and is
adjusted for the effects of projected salary increases. A stan-
dardized measure of the pension benefit obligation was adopted by
the GASB to enable readers of PERS financial statements to assess
the Town's PERS funding status on a going- concern basis, assess
progress made in accumulating sufficient assets to pay benefits
when due and make comparisons among such plans.
Because the standardized measure as of June 30, 1992, is used only
for disclosure purposes by the Town's PERS, the measurement is
independent of the actuarial computation made to determine
contributions to the PERS, as previously explained.
A variety of significant actuarial assumptions are used as of June
30, 1992, to determine the standardized measure of the pension
benefit obligation and these assumptions are summarized below:
. The present value of future pension payments is computed by using
a discount rate of 9 %. The discount rate is equal to the esti-
mated long -term rate of return on current and future investments
of the pension plan.
. Future pension payments reflect an assumption of 6.5% (compounded
annually) salary increases as a result of inflation.
. Future pension payments reflect an assumption of additional
projected salary increases ranging from 0.0% to 3.0% per year,
depending on age, attributable to seniority /merit.
21
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 7 - PUBLIC SAFETY PENSION PLAN (CONTINUED)
The standardized measure of the assets in excess of the pension
benefit obligation as of June 30, 1992, is as follows:
Retirees and beneficiaries currently
receiving benefits and terminated
employees not yet receiving benefits $ -0-
Current employees
Accumulated employee contributions
including allocated investment
income 119,765
Employer- financed vested 85,670
Employer- financed nonvested 90,216
Health insurance 7,113
Total pension benefit obligation 302,764
Net assets available for benefits (346,512)
Assets in excess of the pension $(43,748)
benefit obligation
No changes in actuarial assumptions or benefit provisions that
would significantly affect the valuation of the pension benefit
obligation occurred during fiscal 1992.
During fiscal 1993 and as of June 30, 1992, the Marana Marshal's
Arizona PERS held no securities issued by the Town or other related
parties.
Historical trend information as of June 30, 1992, for the Town's
PERS is presented below:
Fiscal Year
1992 1991 1990
. Net assets available for benefits as
e of the pension benefit
a percentage p
obligation applicable to the Town's
police officers. 114.4% 150.8% 118.3%
. Unfunded pension benefit obligation
as a percentage of the Town's annual
covered payroll for police officers. -0- % -0- % -0- %
. Town's contributions to the pension
plan as a percentage of annual cov-
ered payroll for police officers. 6.28% 5.85% 6.89%
Historical trend information is presented in order for a reader to
assess the progress made in accumulating sufficient assets to pay
pension benefits as they become payable.
22
9
TOWN OF MARANA, ARIZONA
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 1993
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Town is continuously liable with respect to other claims
incidental to the ordinary course of its operations. At June 30,
1993, it is the opinion of Town management, based on the advice of
the Town Attorney, that any such claims would not have a material
effect on the Town's financial position.
The Town leases a truck under a noncancelable operating lease
expiring in fiscal 1998. Future minimum lease payments under this
lease are as follows:
Years Ending
June 30
1994 $ 3,388
1995 3,388
1996 3,388
1997 3,388
1998 1,129
$ 14,681
The Town is also obligated under the terms of this lease to
compensate the lessor for any mileage driven on the truck which is
above the monthly intended mileage. Such a guarantee is in essence
contingent rentals that are not determinable at year end.
NOTE 9 - SUBSEQUENT EVENT
On October 1, 1993, the Town filed documents with the Pima County
Recorder's Office to complete the annexation process of a 1.5
square mile district located along West Ina and North Thornydale
Roads. The City of Tucson challenged the annexation by filing a
suit against the Town on October 26, 1993. Although the annexation
was challenged, the Town decided to start collecting sales taxes
and providing services to the new district on October 30, 1993.
This decision was prompted by concerns that the Town could be held
liable for not providing services to the district, since services
were scheduled to start 30 days after the documents were filed.
Based on advice from attorneys, Town management believes the
challenge will be ruled against and the annexation will be accepted
by the courts. If the annexation is not accepted by the courts,
the Town will cease to collect sales taxes and cease to provide
services to this district at that time. The Town projects that the
annexed district could produce $3 to $5 million in annual sales
taxes to the Town.
This information should be read only in connection
with the accompanying accountant's report.
23