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Home My WebLink About2007 Financial Statement June 30Town of Marana Marana, Arizona Comprehensive Annual Financial Report For the fiscal year ended June 30, 2007 lúÎÐÐÔÉÉØÙÉÎÉÕØ×ÈÉÈËØÔÏÊÍÔËØÙÛÄÎÈËÍÜÊÉk (This page intentionally left blank) TOWN OF MARANA MARANA, ARIZONA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Issued by: Finance Department (This page intentionally left blank) TOWN OF MARANA, ARIZONA TABLE OF CONTENTS INTRODUCTORY SECTION Page Letter of Transmittal i Town of Marana Town Council vi Town of Marana Senior Staff vii Town of Marana Organizational Chart vii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 5 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Assets 19 Statement of Activities 20 Fund Financial Statements: Balance Sheet – Governmental Funds 24 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Assets 27 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities 31 TOWN OF MARANA, ARIZONA TABLE OF CONTENTS (Cont’d) FINANCIAL SECTION (Cont’d) Page BASIC FINANCIAL STATEMENTS (Concl’d) Statement of Net Assets – Proprietary Funds 32 Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds 33 Statement of Cash Flows – Proprietary Funds 34 Notes to Financial Statements 35 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (Required Supplementary Information) General Fund 63 Highway User Revenue Fund 64 Note to Required Supplementary Information 65 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Other Major Governmental Funds Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: South Benefit Area Impact Fees Fund 71 Transportation Fund 72 PAG Capital Fund 73 Sales Tax Capital Fund 74 Other Capital Projects Fund 75 Non-Major Governmental Funds: Combining Balance Sheet – All Non-Major Governmental Funds – By Fund Type 79 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All Non-Major Governmental Funds – By Fund Type 80 TOWN OF MARANA, ARIZONA TABLE OF CONTENTS (Concl’d) FINANCIAL SECTION (Concl’d) Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Concl’d) Non-Major Special Revenue Funds: Combining Balance Sheet 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 88 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 92 Non-Major Debt Service Funds: Combining Balance Sheet 102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 104 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 106 Non-Major Capital Projects Fund: Combining Balance Sheet 112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 114 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual 116 SUPPLEMENTAL INFORMATION Statistical Section 121 (This page intentionally left blank) INTRODUCTORY SECTION (This page intentionally left blank) Ó¿®½¸ îëô îððè The Honorable Mayor and Town Council, and Citizens of the Town of Marana, Arizona: State statutes require that cities and towns publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the annual financial report of the Town of Marana, Arizona (Town) for the fiscal year ended June 30, 2007. This report consists of senior management’s representations concerning the finances of the Town. Consequently, senior management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Town has established a comprehensive internal control framework that is designed to protect both the Town’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Town’sfinancial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the Town’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town’s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2007, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town’s financial statements for the fiscal year ended June 30, 2007, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditors’ report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town was part of a broader, federally mandated Single Audit as required by the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governmentsand Non-Profit Organizations designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited Town’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in a separately issued Single Audit Reporting Package. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Town’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE TOWN The Town of Marana, incorporated in 1977, is located in northern Pima County and one of the fastest growing communities in Arizona.Straddling Interstate 10, Marana is only 10 miles north of downtown Tucson and 90 miles south of downtown Phoenix. Marana’s original incorporation covered approximately ten square miles. The Town’s planning area currently occupies over 120 square miles and serves a population in excess of 32,000. In its infancy, the Town was primarily a rural, agricultural community. However, through annexations and planned growth, the Town is now home to several residential, commercial and industrial developments, including Continental Ranch, Continental Reserve, Sunflower, Heritage Highlands, Dove Mountain, Saguaro Ranch, Sky Ranch, Continental Ranch Business Park and Arizona Pavilions Drive. Legislative authority for the Town of Marana is vested in a seven-member Mayor and Council. Voters of the Town directly elect the Mayor. Council-members serve four-year staggered terms. The Council fixes the duties and compensation of Town officials and employees, and enacts ordinances and resolutions relating to Town services, taxes, appropriating and borrowing moneys, licensing and regulating businesses and trades and other municipal purposes. The Town Council appoints the Town Manager who has full responsibility for executing Council polices and administering Town operations. Town employees are hired under personnel rules approved by the Council. A staff of approximately 360 employees is responsible for the functions and operations of the Town government. ECONOMIC CONDITION AND OUTLOOK Current Condition. The Town’s fiscal position improved significantly from fiscal year 2005-06. At June 30, ïçòðò 2007, the unreserved, total governmental fund balance was $ million The majority of the increase in fund balance is attributable to the unspent portion of bond proceeds issued for the Tangerine Farms Road Improvement District, a blended component unit, and the accumulation of development fees and sales tax revenues for future capital projects. The Town, like most municipalities, is significantly dependent upon sales tax revenues which are subject to economic fluctuations. Sales tax revenues comprised 58% of general fund revenues. Retail and construction comprised 75% of total sales tax revenues. Revenues related to the residential construction industry slowed significantly during the current fiscal year. Revenue shortfalls from the slowdown in residential development were largely offset by revenues received from strong commercial development. Residential development is expected to be relatively slow through at least the next fiscal year. In fiscal year 2007, the Town issued 744 single family residential (SFR) permits, a decrease of 38.9% from the prior year. Future Economic Outlook. Despite the significant slowdown in residential development, the Town of Marana’s economic outlook continues to be positive. The Town is well positioned to take advantage of future residential and commercial development. Once the economy rebounds, Marana is expected to have very rapid commercial, industrial and residential growth in the next ten years due to the abundance of developable land. Residential growth continues to occur predominately in two distinct areas of the Town. Continental Ranch, while nearing build-out, is still home to several significant developments, including Continental Reserve, Ironwood Reserve and Saguaro Springs. Similarly, the Dove Mountain area continues to experience growth in Heritage Highlands, Canyon Pass, Villages at Dove Mountain and Saguaro Ranch. From the commercial perspective, several new business establishments commenced operations in fiscal year 2006-07 which will significantly enhance the local employment and tax base of the Town. In summary, the economic outlook continues to be positive. The fiscal year 2007-08 budget reflects modest recurring revenue growth and, therefore, spending levels have been adjusted accordingly. Cash Management Cash is invested on a pooled basis with the Arizona State Treasurer’s Office in the Local Government Investment pool. Investment income is allocated to the funds monthly on the basis of the cash provided for investment. The average yield on investments held with the State Treasurer was 5.12% for fiscal year 2006-2007. Expenditure Limitation One June 30, 1980 Arizona voters approved general propositions amending the Arizona Constitution to establish expenditure and revenue limitations for local governments. The purpose of the expenditure limitation is to control expenditures and to limit future increases in spending to adjustments for inflation, deflation and population growth of the Town. On May 17, 2005, the voters of the Town approved an alternative expenditure limitation, the effect of which is that the total budgeted expenditures of each yearly budget becomes the expenditure limitation for that year on a total budget basis. This alternative expenditure limitation is effective for four years. Single Audit As a recipient of Federal, State and County financial assistance, the Town is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws, regulations, contracts and grants related to those programs. Internal control is subject to periodic evaluation by management. As part of the Town’s single audit described earlier, tests are made to determine the adequacy of the internal controls, including that portion related to Federal financial assistance programs, as well as to determine that the Town has complied with applicable laws and regulations. Pension Benefits Employees of the Town of Marana participate in one of four pension plans. Most Town employees participate in the Town of Marana’s Money Purchase Plan which is a defined contribution plan. The Public Safety Retirement System administers an agent multiple- employer defined benefit pension plan that covers public safety personnel. Dispatchers participate in the Correctional Officers Retirement Plan. The Elected Officials’ Retirement Plan administers a cost-sharing multiple-employer defined benefit pension plan for elected officials. Risk Management The Town is responsible for the supervision and protection of the Town’s assets by employing various risk management techniques and procedures, which will reduce, minimize or eliminate the potential for risk. The Town carries insurance for general liability, property, automobile, and public official’s errors and omissions through the Arizona Municipal Risk Retension Pool (AMRRP). TOWN OF MARANA, ARIZONA PRINCIPAL OFFICIALS OF THE TOWN OF MARANA FISCAL YEAR 2007 MAYOR AND COUNCIL Ed Honea, Mayor Herbert Kai, Vice Mayor Roxanne Ziegler, Councilmember Russell Clanagan, Councilmember Patti Comerford, Councilmember Carol McGorray, Councilmember Jon Post, Councilmember MANAGEMENT STAFF Mike Reuwsaat, Town Manager Gilbert Davidson, Deputy Town Manager Deb Thalasitis, Assistant Town Manager DEPARTMENT HEADS Jocelyn Bronson, Town Clerk Frank Cassidy, Town Attorney Mike Mencinger, Operations Division Manager Brad DeSpain, Utilities Director Barbara Johnson, Public Works Director Charles Mangum, Airport Manager Kevin Kish, Planning Director James West, Town Magistrate John Huntley, Building Official Vacant, Information Technology Director Tom Ellis, Parks and Recreation Director Joseph Lettrick, GIS Services Director Erik Montague, Finance Director Vacant, Human Resources Director T. VanHook, Community Development Director Richard Vidaurri, Police Chief TOWN OF MARANA, ARIZONA ORGANIZATIONAL CHART FISCAL YEAR 2007 Citizens of the Town of Marana Town Council Town Manager Public Information Office Deputy Town Manager Assistant Town Manager BuildingPlanningTown ClerkFinance Parks & Economic Services RecreationDevelopment HumanLegal GISPublic Works Community Resources Development InformationWater Utility Operations & Airport Technology Maintenance Police Courts (This page intentionally left blank) FINANCIAL SECTION (This page intentionally left blank) MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) (This page intentionally left blank) TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 As management of the Town of Marana, Arizona, (Town) we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2007. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The Town’s total net assets of governmental activities increased $17.6 million which represents a 9 percent increase from fiscal year 2005-06. General revenues from governmental activities accounted for $50.0 million in revenue, or 79 percent of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $13.3 million, or 21 percent of total governmental activities. The Town had $3.1 million of program revenues related to business-type activities. The Town had approximately $44.9 million in expenses related to governmental activities; of which $13.3 million of these expenses were offset by program specific charges for services or grants and contributions. General revenues of $50 million were adequate to provide for the remaining costs of these programs. Among major funds, the General Fund had $35.5 million in fiscal year 2006-07 revenues, which primarily consisted of sales taxes and licenses, fee and permits. The General fund had $27.9 million of expenditures during the year. The Transportation Fund had $11.0 million in fiscal year 2006-07 revenues, primarily consisting of sales taxes. The Transportation Fund’s fund balance increase from $13.2 million as of June 30, 2006 to $16.9 million as of June 30, 2007 was primarily due to decreased capital activity in 2006-07. The Sales Tax Capital Fund had $635,694 in fiscal year 2006-07 revenues, which primarily consisted of sales taxes. The Sales Tax Capital Fund’s fund balance decreased to $4.9 million as of June 30, 2007, was primarily due to decreased sales tax collections and an increase in capital activity associated with the fund in 2006- 07. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. The statement of net assetspresents information on all of the Town’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the Town’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements outline functions of the Town that are principally supported by sales taxes and intergovernmental revenues. The governmental activities of the Town include general government, development and planning services, town attorney, police, magistrate court, public works, parks and recreation, community development, and interest on long-term debt and are principally supported by sales taxes, intergovernmental revenues, and licenses, fees and permits. The business-type activities of the Town include water and airport operations and are primarily supported through user fees and charges. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental fundsare used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Town’s near-term financing requirements. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 OVERVIEW OF FINANCIAL STATEMENTS (Concl’d) Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Town’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Highway Users Revenue, South Benefit Area Impact Fees, Transportation, Sales Tax Capital, Pima Association of Governments and Other Capital Projects, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Proprietary funds. The Town maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses enterprise funds to account for its water and airport services. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s budget process. The Town adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances – budget and actual has been provided for the General Fund as required supplementary information. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the Town, assets exceeded liabilities by $218.0 million as of June 30, 2007. The majority of the Town’s net assets (37%) reflect its investment in capital assets (land, building and improvements, vehicles and equipment and construction in progress) net of accumulated depreciation and any related outstanding debt used to acquire or construct those assets. The Town uses these capital assets to provide services to its citizens, consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the Town’s net assets (27 percent) are restricted for grants, highways and streets, capital outlay and debt service repayment. The Town’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. The following table presents a summary of the Town’s net assets for the fiscal years ended June 30, 2007 and June 30, 2006. Governmental Activities Business-type Activities Total 2007 2006 2007 2006 2007 2006 (as restated) (as restated) Current assets $ 84,526,732 $ 57,054,067 $ 2,356,380$ 1,387,429 $ 86,883,112$ 58,441,496 Other noncurrent assets 4,702,275 1,889,751 4,702,2751,889,751 Capital assets, net 206,977,137 187,826,735 25,521,63118,918,043 232,498,768120,801,898 Total assets, net 296,206,144 246,770,553 27,878,01120,305,472 324,084,155181,133,145 Current liabilities 14,487,592 9,610,062 1,377,1761,235,834 15,866,04410,845,896 Noncurrent liabilities 62,720,682 36,216,031 7,08438,014 62,726,49036,254,045 Total liabilities 77,208,274 45,826,093 1,384,2601,273,848 78,592,53447,099,941 Net assets: Invested in capital assets, net of related debt 159,963,322 74,507,489 25,521,63314,990,361 185,484,955 89,497,850 Restricted 59,313,117 54,656,893 59,313,117 54,656,893 Unrestricted (278,569) 71,780,078 965,967131,181 687,398 71,911,259 Total net assets $218,997,870 $200,944,460 $ 26,487,600$ 15,121,542 $245,485,470$216,066,002 GASB 34 requirements resulted in a restatement of fiscal year 2006 capital assets, net of depreciation, of $82,032,797 in governmental activities and $3,910,084 in business-type activities, primarily related to system improvements. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont’d) Changes in net assets. The Town’s total revenues for the fiscal year ended June 30, 2007, were $75.1 million. The total cost of all programs and services was $45.8 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2007 and June 30, 2006. Governmental Activities Business-type Activities Total 2007 2006 2007 2006 2007 2006 Revenues: Program revenues: Charges for services $ 6,056,964 $ 8,128,111 $ 3,090,233 $ 3,360,444 $ 9,147,197 $ 11,488,555 Operating grants and contributions 1,404,429 450,206 1,404,429 450,206 Capital grants and contributions 5,904,043 26,035,799 9,072,643 3,531,000 14,976,686 29,566,799 General revenues: Sales taxes 30,899,549 34,166,649 30,899,549 34,166,649 Highway users taxes 2,067,893 1,252,523 2,067,893 1,252,523 State shared revenues 6,893,620 3,633,777 6,893,620 3,633,777 System development fees 230,677 3,587,792 230,677 3,587,792 Investment income 4,444,618 1,834,944 18,771 4,463,389 1,834,944 Intergovernmental revenues 4,810,090 4,810,090 Miscellaneous revenues 220,950 220,950 Transfers 470,357 (470,357) - Total revenues 63,403,190 79,089,801 11,711,290 6,891,444 75,114,480 85,981,245 Expenses: General government 10,133,839 8,740,289 10,133,839 8,740,289 Development & planning 3,441,768 6,438,405 3,441,768 6,438,405 Town attorney 488,779 488,779 Police 9,187,308 8,948,324 9,187,308 8,948,324 Magistrate court 806,554 806,554 Public works 15,898,158 5,510,155 15,898,158 5,510,155 Parks & recreation 3,557,473 3,307,369 3,557,473 3,307,369 Community development 375,279 255,651 375,279 255,651 Interest on long-term debt 2,296,864 1,815,763 2,296,864 1,815,763 Airport 1,028,212 837,135 1,028,212 837,135 Water 3,227,101 2,628,525 3,227,101 2,628,525 Total expenses 44,890,689 36,311,289 4,255,313 3,465,660 49,146,002 39,776,949 Increase in net assets $ 18,512,501 $ 42,778,512 $ 7,455,977 $ 3,425,784 $ 25,968,478 $ 46,204,296 The following are significant current year transactions that have had an impact on the Statement of Activities. Sales taxes decreased as a result of a ½ cent dedicated sales tax which was repealed in August of 2006. State shared revenues increased as a result of the growth in the population. Capital grants and contributions decreased due to reduced developer contributed capital. Fiscal year 2006 included $20.2 million in developer contributed assets. Investment income increased due to increased cash and investment balances. Expenses increased as a result of the growing population and the level of services needed to provide for it. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont’d) The following table presents the cost of the eleven major Town functional activities. The table also shows each function’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the State and Town’s taxpayers by each of these functions. Year Ended June 30, 2007 Year Ended June 30, 2006 Total Net (Expense)/ Total Net (Expense)/ ExpensesRevenueExpensesRevenue Governmental Activities 11,133,839$ (8,098,875)$ 10,035,622 $ (8,902,264) General government 3,441,768 1,379,2536,438,405 (468,946) Development & planning 9,187,308 (8,800,330)8,948,324 (8,443,489) Police Public works 15,898,158(11,544,196)5,510,155 19,853,882 3,557,473 (1,957,648)3,307,369 (2,016,647) Parks & recreation Community development 375,279 (206,593)255,651 96,054 2,296,864 (2,296,864)1,815,763 (1,815,763) Interest on long-term debt Total $ 44,890,689$ (31,525,253)$ 36,311,289 $ (1,697,173) Business-Type Activities $ 1,028,212$ 5,217,652 $ 837,135 $ 2,438,078 Airport Water 3,227,1012,689,911 2,628,525 987,706 Total $ 4,255,313$ 7,907,563 $ 3,465,660 $ 3,425,784 The cost of all governmental activities this year was $44.9 million and the cost of all business-type activities this year was $4.3 million. The increases are due to a higher level of services delivered to meet the growing community. Federal and State governments, contributions and charges for services subsidized certain programs with grants, contributions and other local revenues of $7.4 million. Net cost of governmental activities ($31.5 million) was financed by general revenues, which are made up of primarily sales taxes totaling $30.9 million. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the Town’s net resources available for spending at the end of the fiscal year. The financial performance of the Town as a whole is reflected in its governmental funds. As of June 30, 2007, the Town’s governmental funds reported a combined fund balance of $75.1 million, of which $18.9 million is unreserved and undesignated and therefore available for spending at the Town’s discretion. The General Fund, which is the principal operating fund of the Town, had a fund balance of $19.3 million. The South Benefit Area Impact Fee Fund had a fund balance of $9.7 million, related to system development fees to be used for future infrastructure needs. The Transportation fund balance increased $3.7 million to $16.9 million due to sales taxes collected for future improvements. The Sales Tax Capital Fund’s fund balance decreased $.2 million to $4.9 million due to the repeal of the.5% sales tax accounted for in this fund in August 2006. A major governmental fund in fiscal year 2006-07, the Other Capital Projects fund had a fund balance at the year of the year of $13.6 million; the majority of its revenues related to permit and licensing fees. Proprietary funds. Net assets of the Enterprise Fund at June 30, 2007 amounted to approximately $26.5 million, with $11.1 million in the Water Fund and $15.4 million in the Airport Fund. TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 BUDGETARY HIGHLIGHTS The Town did revise the operating budget of the General Fund during the year. A schedule showing the budget amounts compared to the Town’s actual financial activity for the General Fund is provided in this report as required supplementary information. The following are significant current year transactions that explain the budget variances. Sales tax revenue variance was attributed to growth in the Town’s retail industry. License, fees and permit revenues were below expectations due to the decline in the residential development market. Development and Planning Services expenditures were higher than expected due to increased outside plan review costs. Highways and streets costs were high due to the flood event that occurred in August 2006. Culture and recreation expenditures exceeded budget due to a change in how park program activity is recorded. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets . As of June 30, 2007, the Town had invested $231.5 million in governmental and business-type capital assets (net of accumulated depreciation). Total depreciation expense for the year was $10.7 million, with $9.8 million attributed to governmental activities and $978,605 to business-type activities. The following schedule presents capital asset balances for the fiscal years ended June 30, 2007 and June 30, 2006. Additional information on the Town’s capital assets can be found in Note 6. Governmental Activities Business-type Activities As ofAs of As ofJune 30, 2006 As ofJune 30, 2006 June 30, 2007 (As restated) June 30, 2007 (As restated) Land $ 3,491,030 $ 3,491,030 $ 221,810 $ 221,810 Water rights 543,696 543,696 Construction in progress 32,590,723 9,462,225 6,232,398 401,013 Buildings and improvements 41,786,107 41,475,588 21,826,244 20,133,607 Machinery and equipment 15,634,383 14,157,406 398,976 374,424 Infrastructure 157,187,070 153,861,382 Organization costs 54,737 54,737 Less: Accumulated depreciation (43,712,176) (34,620,896) (3,756,230) (2,811,244) Total $ 206,977,137 $187,826,735 $ 25,521,632 $ 18,918,043 TOWN OF MARANA, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2007 CAPITAL ASSETS AND DEBT ADMINISTRATION (Concl’d) Debt Administration. At year-end, the Town had $65.4 million in long-term obligations outstanding with $2.9 million due within one year. The following table presents a summary of the Town’s outstanding bonded debt for the fiscal years ended June 30, 2007 and June 30, 2006. Additional information on the Town’s long-term obligations can be found in Note 7. Governmental Activities Business-type Activities 2007 2006 2007 2006 General obligation bonds $ 5,355,000 $ 5,355,000 $ $ Revenue bonds 30,460,000 31,835,000 Special assessment bonds 25,774,000 - Compensated absences 741,765 688,094 27,962 40,767 Notes payable 2,900,000 4,900,000 8,800 17,600 Capital Lease 135,210 173,292 Total $65,365,975 $42,951,386 $36,762 $ 58,367 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES Many factors were considered by Mayor, Council and staff during the development of the fiscal year 2006-07 budget. The primary factors were the Town’s sales tax and building & development fees. These key revenue sources were again pivotal in the adoption of the fiscal 2006-07 budget. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a general overview of the Town’s finances and to demonstrate the Town’s accountability for the resources it receives.If you have questions about this report or need additional information, contact the Finance Department, Town of Marana, Arizona at 11555 West Civic Center Drive, Marana, Arizona 85653. (This page intentionally left blank) BASIC FINANCIAL STATEMENTS (This page intentionally left blank) GOVERNMENT-WIDE FINANCIAL STATEMENTS (This page intentionally left blank) TOWN OF MARANA, ARIZONA STATEMENT OF NET ASSETS JUNE 30, 2007 Governmental Business-type ActivitiesActivitiesTotal ASSETS Current assets: Cash and cash equivalents $77,312,758 $2,046,592 $79,359,350 Taxes receivable934 934 Accounts receivable706,529 293,452 999,981 Interest receivable98,179 98,179 Due from governments5,590,376 86,210 5,676,586 Internal balances502,040 (502,040) Prepaid items315,916 20,188 336,104 Other assets 405,825 405,825 Total current assets84,526,7322,350,22786,876,959 Noncurrent assets: Restricted cash and investments2,218,698 2,218,698 Deferred bond charges2,483,577 2,483,577 Capital assets not depreciated36,081,753 6,997,904 43,079,657 Capital assets (net of depreciation)170,895,384 18,523,729 189,419,113 Total noncurrent assets211,679,41225,521,633237,201,045 Total assets 296,206,14427,871,860324,078,004 LIABILITIES Current liabilities: Accounts payable4,974,715 913,909 5,888,624 Accrued payroll and employee benefits559,035 30,934 589,969 Unearned revenue3,267,536 44,666 3,312,202 Deposits held for others613,699 351,611 965,310 Due to other government602,492 602,492 Compensated absences593,412 27,256 620,668 Capital leases38,860 38,860 Notes payable1,000,000 8,800 1,008,800 General obligation bonds - CFD45,000 45,000 Revenue bonds1,220,000 1,220,000 Accrued interest payable1,572,843 1,572,843 Total current liabilities14,487,5921,377,17615,864,768 Noncurrent liabilities: Compensated absences148,353 7,084 155,437 Capital leases115,578 115,578 Notes payable1,900,000 1,900,000 Deferred bond premium232,751 232,751 General obligation bonds - CFD5,310,000 5,310,000 Special assessment bonds - TRFID25,774,000 25,774,000 Revenue bonds29,240,000 29,240,000 Total non-current liabilities62,720,6827,08462,727,766 Total liabilities 77,208,2741,384,26078,592,534 NET ASSETS Invested in capital assets, net of related debt159,963,322 25,521,633 185,484,955 Restricted for: Grants534,810 534,810 Highways and streets53,679,716 53,679,716 Capital outlay779,362 779,362 Debt service4,319,229 4,319,229 Unrestricted(278,569)965,967 687,398 Total net assets $218,997,870 $26,487,600 $245,485,470 The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2007 Program Revenues OperatingCapital Grants Charges for Grants and and Functions/Programs ExpensesServicesContributionsContributions Primary Governmen t Governmental activities: General government $ 1,107,72210,133,839$ 829,492$ 97,750$ Development & planning services 4,717,5213,441,768 103,500 Public safety 18,8599,187,308 343,258 24,861 Highways and streets 4,88715,898,158 4,349,075 Culture and recreation 207,9753,557,473 62,993 1,328,857 Community development 375,279 168,686 Interest on long-term debt 2,296,864 Total governmental activities 6,056,96444,890,689 1,404,429 5,904,043 Business-type activities: Airport 185,4921,028,212 6,060,370 Water 2,904,7413,227,101 3,012,273 Total business-type activities 3,090,2334,255,313 9,072,643 Total primary governmen t$ 9,147,19749,146,002$ 1,404,429$ 14,976,686$ General revenues: Taxes: Sales taxes Highway user taxes State shared revenues Intergovernmental System development fees Investment income Miscellaneous Transfers Total general revenues and transfers Changes in net assets Net assets, beginning of year, as restated Net assets, end of year The notes to the financial statements are an integral part of this statement. Net (Expense) Revenue and Changes in Net Assets GovernmentalBusiness-type ActivitiesActivitiesTotals $ (8,098,875)$ (8,098,875)$ 1,379,2531,379,253 (8,800,330)(8,800,330) (11,544,196)(11,544,196) (1,957,648)(1,957,648) (206,593)(206,593) (2,296,864)(2,296,864) (31,525,253) (31,525,253) 5,217,6505,217,650 2,689,9132,689,913 7,907,563 7,907,563 $ 7,907,563(31,525,253)$ (23,617,690)$ 30,899,54930,899,549 2,067,8932,067,893 6,893,6206,893,620 4,810,0904,810,090 230,677230,677 18,7714,444,618 4,463,389 220,950220,950 (470,357)470,357 (451,586)50,037,754 49,586,168 7,455,97718,512,501 25,968,478 19,031,623200,485,369 219,516,992 $ 26,487,600218,997,870$ 245,485,470$ (This page intentionally left blank) FUND FINANCIAL STATEMENTS TOWN OF MARANA, ARIZONA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2007 South Benefit Highway User Area Impact General FundRevenueFees ASSETS Cash and cash equivalents $16,330,865 $ $9,595,743 Restricted cash and investments116,558 Taxes receivable Accounts receivable588,635 Interest receivable76,622 Due from governments1,861,287 191,878 Due from other funds3,298,835 Prepaid items212,784 57,729 Total assets $22,485,586 $191,878 $9,653,472 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $827,272 $28,727 $ Accrued payroll and employee benefits 385,628 Compensated absences171,598 Due to other funds 35,428 Deposits held for others613,699 Deferred revenue637,040 8,691 Due to other government602,492 Bonds payable Bond interest payable Total liabilities 3,237,72964,1558,691 Fund balances (deficits): Reserved for prepaid items212,784 57,729 Reserved for debt service Reserved for capital improvements Reserved for grants & programs Reserved for transportation projects 127,723 9,587,052 Unreserved: Undesignated19,035,073 Unreserved reported in: Special revenue funds Capital projects funds Total fund balances 19,247,857127,7239,644,781 Total liabilities and fund balances $22,485,586 $191,878 $9,653,472 The notes to the financial statements are an integral part of this statement. Non-MajorTotal Sales Tax Other Capital GovernmentalGovernmental TransportationPAG Capital CapitalProjectsFundsFunds $17,906,930 $101,134 $4,891,576 $15,746,153 $12,740,357 $77,312,758 2,102,140 2,218,698 934 934 117,894 706,529 21,535 22 98,179 666,929 1,800,000 132,844 282,897 654,541 5,590,376 3,298,835 43,550 1,853 315,916 $18,617,409 $1,901,134 $5,045,955 $16,029,050 $15,617,741 $89,542,225 $1,679,632 $5,133 $112,303 $2,110,532 $211,116 $4,974,715 1,157 652 387,437 171,598 1,860,333 901,034 2,796,795 613,699 6,556 1,800,000 282,897 532,352 3,267,536 602,492 750,000 750,000 856,497 856,497 1,687,3453,665,466112,3032,393,4293,251,65114,420,769 43,550 1,853 469,160 784,294 784,294 13,635,621 2,786,132 16,421,753 567,720 567,720 16,853,390 (1,764,332)4,933,652 8,165,437 37,902,922 33,12418,914,953 12,050 12,050 48,604 48,604 16,930,064(1,764,332)4,933,65213,635,62112,366,09075,121,456 $18,617,409 $1,901,134 $5,045,955 $16,029,050 $15,617,741 $89,542,225 (This page intentionally left blank) TOWN OF MARANA, ARIZONA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2007 Total governmental fund balances$75,121,456 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds: Governmental capital assets250,689,313 Less accumlated depreciation(43,712,176) 206,977,137 Deferred items related to the issuance of bonds are amortized over the life of the associated issue in the government-wide statements2,250,826 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds: Compensated absences(741,765) Capital Lease(154,438) Notes payable(2,900,000) Revenue bonds payable(29,710,000) General obligation bonds payable(5,355,000) Special assessment bonds(25,774,000) Accrued interest payable(716,346) (65,351,549) Net assets of governmental activities218,997,870$ The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2007 South Benefit Highway User Area Impact General FundRevenueFees Revenues: Sales taxes $20,645,824 $ $ Intergovernmental6,961,564 2,067,893 Licenses, fees & permits4,865,395 420,681 Fines, forfeitures & penalties676,838 Charges for services 379,953 Lease income 19,500 Contributions108,536 System development fees Investment income 775,687 1,017,555 Miscellaneous 1,036,508 Total revenues 35,469,8052,067,8931,438,236 Expenditures: Current - General government7,515,954 Development & planning services3,344,894 Public safety7,639,775 Highways and streets3,524,925 2,090,644 Culture and recreation2,893,751 Community development243,516 Capital outlay2,745,629 Debt service - Bond issuance costs Principal retirement Interest and fiscal charges Total expenditures 27,908,4442,090,644 Excess (deficiency) of revenues over expenditures 7,561,361(22,751)1,438,236 Other financing sources (uses): Face value of bonds issued Transfers in Transfers out(2,355,161) Total other financing sources (uses) (2,355,161) Changes in fund balances 5,206,200(22,751)1,438,236 Fund balances, beginning of year, as restated 14,041,657 150,474 8,206,545 Fund balances (deficits), end of year $19,247,857 $127,723 $9,644,781 The notes to the financial statements are an integral part of this statement. Non-MajorTotal Sales Tax Other Capital GovernmentalGovernmental TransportationPAG Capital CapitalProjectsFundsFunds $9,904,171 $ $349,554 $ $ $30,899,549 323,776 5,337,045 14,690,278 2,838,240 1,984,235 10,108,551 89,971 766,809 379,953 19,500 16,000 254,095 378,631 354,775 354,775 1,123,733 1 286,140 507,966 733,536 4,444,618 17,011 1,053,519 11,043,9041635,6943,669,9828,770,66863,096,183 768,282 201,007 8,485,243 3,344,894 269,858 7,909,633 243,787 8,728 5,868,084 2,893,751 99,936 343,452 5,959,533 813,186 14,313,563 8,824,142 32,656,053 935,963 248,375 1,184,338 237,363 1,800,000 1,440,000 3,477,363 123,137 620,901 1,709,381 2,453,419 7,332,1021,800,000813,18615,870,42712,801,42768,616,230 3,711,802(1,799,999)(177,492)(12,200,445)(4,030,759)(5,520,047) 25,774,000 3,250,000 29,024,000 4,075 2,821,443 2,825,518 (2,355,161) 25,778,0756,071,44329,494,357 3,711,802(1,799,999)(177,492)13,577,6302,040,68423,974,310 13,218,262 35,667 5,111,144 57,991 10,325,406 51,147,146 $16,930,064 $(1,764,332) $4,933,652 $13,635,621 $12,366,090 $75,121,456 (This page intentionally left blank) TOWN OF MARANA, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2007 Net changes in fund balances - total governmental funds23,974,310$ Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives s depreciation expense. Expenditures for capitalized assets28,777,586$ Less current year depreciation(9,762,393) 19,015,193$ Some items of the government funds are sources and uses of current financial resources and therefore are not reported as revenues or expenses in the Statement of Activities. Proceeds from bonds issued(29,024,000)$ Bond issuance costs1,184,338(27,839,662)$ Repayment of debt principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Capital lease principal retirement37,363$ Note principal retirement2,000,000 Bond principal retirement1,440,000 3,477,363$ Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Amortization of deferred charges(46,373)$ Accrued interest(14,659) Compensated absences(53,671) (114,703)$ Change in net assets in governmental activities18,512,501$ The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2007 Enterprise Funds WaterAirportTotal ASSETS Current assets: Cash and cash equivalents $2,046,592 $ $2,046,592 247,800 45,652 293,452 Accounts receivable Due from governments 86,210 86,210 Prepaid items18,518 1,670 20,188 Other assets405,825 405,825 Total current assets2,718,735133,5322,852,267 Noncurrent assets: Capital assets not depreciated592,978 6,404,926 6,997,904 Capital assets (net of depreciation)9,017,303 9,506,426 18,523,729 Total noncurrent assets 9,610,28115,911,35225,521,633 Total assets 12,329,01616,044,88428,373,900 LIABILITIES Current liabilities: Accounts payable749,449 164,460 913,909 Accrued payroll and employee benefits 22,708 8,226 30,934 Unearned revenue44,666 44,666 Due to other funds 502,040 502,040 Deposits held for others351,611 351,611 Compensated absences22,154 5,102 27,256 Notes payable8,800 8,800 Total current liabilities1,199,388679,8281,879,216 Noncurrent liabilities: Compensated absences5,808 1,276 7,084 Total non-current liabilities5,8081,2767,084 Total liabilities 1,205,196681,1041,886,300 NET ASSETS Invested in capital assets, net of related debt9,610,281 15,911,352 25,521,633 Unrestricted1,513,539 (547,572)965,967 Total net assets $11,123,820 $15,363,780 $26,487,600 The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2007 Enterprise Funds WaterAirportTotal Operating revenues: Charges for services $2,873,423 $ $2,873,423 Lease income 184,788 184,788 Miscellaneous 31,318 704 32,022 Total operating revenues 2,904,741185,4923,090,233 Operating expenses: Personnel costs835,867 161,021 996,888 1,545,516 267,540 1,813,056 Contractual services Commodities180,420 26,576 206,996 Other210,798 48,970 259,768 Depreciation expense454,500 524,105 978,605 Total operating expenses 3,227,1011,028,2124,255,313 Operating loss (322,360)(842,720)(1,165,080) Nonoperating revenues (expenses): Investment income18,769 2 18,771 Total nonoperating revenues (expenses) 18,769218,771 Income (loss) before capital contributions and transfers (303,591)(842,718)(1,146,309) Capital contributions 3,012,273 6,060,370 9,072,643 Transfers out (470,357)(470,357) Changes in net assets 2,238,3255,217,6527,455,977 Total net assets, beginning of year, as restated 8,885,495 10,146,128 19,031,623 Total net assets, end of year $11,123,820 $15,363,780 $26,487,600 The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2007 Enterprise Funds WaterAirportTotal Cash flows from operating activities: Received from customers $ 209,4692,727,273$ 2,936,742$ Payments to suppliers for goods and services (340,079)(1,495,405) (1,835,484) Payments to employees for services (154,879)(831,469) (986,348) Net cash provided for (used by) operating activities (285,489)400,399 114,910 Cash flows from non-capital activities: Interfund borrowing 21,94021,940 Transfers in Transfers out (470,357)(470,357) Net cash provided for (used by) non-capital activities 21,940(470,357) (448,417) Cash flows from capital activities: Capital grants received 6,060,3706,060,370 Development fees received 1,313,6241,313,624 Principal payments on long-term debt (8,800)(8,800) Acquisition and construction of capital assets (5,796,823)(105,188) (5,902,011) Net cash provided for (used by) capital activities 263,5471,199,636 1,463,183 Cash flows from investing activities: Interest on investments 218,769 18,771 Net cash provide by investing activities 218,769 18,771 Net increase (decrease) in cash and cash equivalents 1,148,447 1,148,447 Cash and cash equivalents, beginning of period 898,145 898,145 Cash and cash equivalents, beginning of period $ -2,046,592$ 2,046,592$ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ (842,720)(322,360)$ (1,165,080)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation 524,105454,500 978,605 Change in assets and liabilities: (Increase) decrease in accounts receivable (15,652)64,810 49,158 Decrease in due from other governments 41,299 41,299 (Increase) decrease in prepaid items (1,670)93,385 91,715 Increase in accounts payable 3,007441,329 444,336 Increase in accrued payroll 12,32811,017 23,345 (Decrease) in compensated absences payable (6,186)(6,619) (12,805) Increase in deposits held for others 64,242 64,242 (Decrease) in unearned revenues (399,905) (399,905) Net cash provided for (used by) operating activities $ (285,489)400,399$ 114,910$ The notes to the financial statements are an integral part of this statement. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing government accounting and financial reporting principles. A. Reporting Entity The Town of Marana, Arizona (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 controlled by the Mayor and Council are included in the annual financial report. Control is determined on the basis of budget adoption, taxing authority, and the ability to significantly influence operations and accountability for fiscal matters. The Town provides a full range of services including general government, development and planning services, legal, public safety, public works, and parks and recreation services. In accordance with generally accepted accounting principles, these financial statements present the Town and its component units, the Town of Marana Municipal Property Corporation (MMPC), the Gladden Farms Community Facilities District (GFCFD), the Vanderbilt Farms Community Facilities District (VFCFD) and the Tangerine Farms Road Improvement District (TFRID). The MMPC, GFCFD, VFCFD and TFRID are blended with the Town in these financial statements as all four were established by the Town in order to fund the debt incurred to finance the purchase of the Town hall, various capital projects, and capital assets used by the water fund. In addition, the MMPC only provides services to the Town. The MMPC, GFCFD, VFCFD and TFRID component units each have a June 30 year-end and are included in the 1997 Bond, 2003 Bond, and 2004 Bond Debt Service Funds, the Gladden Farms Capital Projects and Debt Service Funds, the Vanderbilt Farms Capital Projects and Debt Service Funds, and the Other Capital Projects Funds, respectively. Separate financial statements of the MMPC, the GFCFD, the VFCFD and the TFRID are not prepared on a stand-alone basis. B. Basis of Presentation The basic financial statements include both the government-wide statements and fund- based financial statements. The government-wide statements focus on the Town as a whole, while the fund-based statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide Financial Statements The government-wide financial statements (i.e. the statement of net assets and the statement of activities) present financial information about the Town as a whole. The reported information includes all of the activities of the Town and its component units. For the most part, the effect of internal activity has been removed from these statements. These statements are to distinguish between the governmentaland business-type activitiesof the Town. Governmental activitiesnormally are supported by taxes and intergovernmental TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) revenues, and are reported separately from business-type activities, which are financed in whole or part by fees charged to external parties. The statement of activities demonstrates the degree to which the direct expenses of a given function of the Town’s governmental activities or segment of its business-type activities are offset by program revenues. Direct expensesare those that are clearly identifiable with a specific function or segment. The Town does not currently have an indirect cost allocation system. However, the General Fund does allocate administrative charges to the Enterprise funds to support general services used by those funds (line purchasing, accounting, administration, etc.) These fees are included in the expense column on the Statement of Activities. Program revenuesinclude 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, investment income, and other items not included among program revenues are reported instead as general revenues. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Water Utility and Airport funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if doing so would distort the direct costs and program revenues reported by the departments concerned. Fund Financial Statements Fund statements provide information about the Town’s funds, including blended component units. Separate statements are presented for the governmental and proprietary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds. The Town reports the following major 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. Highway Users Revenue Fund – This fund accounts for the maintenance and construction of roads, streets and highways as well as payment of debt service associated with road construction. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) South Benefit Area Impact Fees – This fund accounts for the financing and construction of the Twin Peaks Interchange Project. Transportation – This fund accounts for the financing and construction of transportation capacity improvement projects. Sales Tax Capital Fund – This fund accounts for sales tax proceeds which are used for authorized capital improvements. PAG Capital Fund – This fund accounts for proceeds from Pima Association of Governments which is used for the Thornydale Road Improvements project. Other Capital Projects Fund – This fund accounts for the financing and construction of roads and other infrastructure associated with other capital improvements as well as the Tangerine Farms Road Improvement District. The Town reports the following major proprietary funds: Water Fund – This fund is used to account for the financing and operation of the Water Utility. Airport Fund – This fund is used to account for the financing and operation of the Marana Airport. C. Measurement Focus and Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned, including unbilled water services which are accrued, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon all eligibility requirements imposed by the grantor or provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focusand the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be availablewhen they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service resources are provided during the current year for payment of long-term debt principal and interest due early in the following year (not to exceed one month) and, therefore, the expenditures and related liabilities have been recognized. Compensated absences are recorded only when payment is due. Sales taxes, licenses and permits, charges for services, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. The Town reports deferred revenue on its governmental funds balance sheet. Deferred revenues arise when potential revenue does not meet the “measurable” and “available” criteria for recognition in the current period. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. In subsequent periods, when both the revenue recognition criteria are met, or when the Town has the legal claim to the resources, the liability for deferred revenue is removed from the governmental funds balance sheet and revenue is recognized. Proceeds of long-term debt and acquisitions under capital lease agreements are reported as other financing sources. When both restricted and unrestricted resources are available for use, it is the Town's policy to use restricted resources first, then unrestricted resources as they are needed. Additionally, the Town funds certain programs by a combination of grants and general revenues. The Town applies grant resources to such programs before using general revenues. The Town as adopted GASB Statement No. 20, “Accounting and Financial Reporting for Proprietary Fund and Other Governmental Entities That Use Proprietary Accounting” for its business-type activities and enterprise funds. The Town has elected to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board (“FASB”) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins issued prior to December 1, 1989, to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the optionof following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Town has elected not to follow subsequent private-sector guidance. D. Cash and Cash Equivalents For the purposes of the statement of cash flows, the Town considers all highly liquid investments (including the funds' participation in the investment pool account, and appropriate restricted assets) to be cash equivalents. Individual fund investments with a maturity of 3 months or less when purchased are considered as cash equivalents. E. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for expenditures or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) F. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles accepted in the United States of America requires management to make estimates and assumptions. This will affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. G. Investments Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s Local Government Investment Pool, interest-bearing savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government; and bonds of the State of Arizona counties, cities, towns, school districts, and special districts as specified by statue. The State Board of Deposit provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All investments are stated at fair value. H. Restricted Assets The trust indentures executed for the entire bond series issued require all cash and investments for each 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 to finance various capital projects. In addition, the State of Arizona required that assets obtained at the completion of criminal proceedings by the Town's police department be given to Pima County for custodial purposes. These assets are restricted for expenses that will enhance the Town's ability to conduct police investigations. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Prepaid items are recorded as expenses when consumed in the government-wide financial statements. Prepaid items are recorded as expenditures when purchased in the fund financial statements and are offset by a reserve of fund balance. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) J. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non- current portion of interfund loans). All trade and other receivables are shown net of an allowance for uncollectible amounts. K. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. L. Capital Assets Capital assets, including public domain infrastructure such as roads, bridges, curbs and sidewalks, lighting system, water distribution system and other assets that are immovable and of value to the Town, are defined as assets with an initial individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are valued at estimated fair value on the date donated. Capital assets are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. No long-term assets or depreciation are shown in the governmental funds financial statements. The Town has chosen not to apply the modified approach to any network, system, or subsystem of infrastructure assets. The cost of normal maintenance and repairs that do not significantly add to the value of the asset or materially extend the life of the asset are not capitalized. Major improvements are capitalized and depreciated over the remaining useful life of the related capital assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets is included as part of the capitalized value of the assets constructed. In fiscal year 2007, the Town has retroactively reported the Town’s general infrastructure assets as by GASB 34, “Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments.” GASB 34 requires the Town to report infrastructure assets acquired prior to July 1, 2002 within five years of that date. The effect of this change was to report and depreciated general infrastructure assets (e.g. roads, bridges, sidewalks, and similar items) acquired by the Town from July 1, 1980 to June 30, 2002. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Depreciation is provided over the estimated useful lives of such assets using the straight- line method. These estimated useful lives are as follows. Years Buildings 40 Building improvements 10-15 Pump stations, distribution systems, equipment and improvements 15-50 Public domain infrastructure 20-30 Machinery, equipment, and assets under capital lease 4-10 M. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable business-type activities and proprietary fund type statement of net assets. Bond related charges and credits, such as premium discounts and issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. N. Compensated Absences The Town's employee vacation and sick leave policies generally provide for granting vacation and sick leave with pay. Vacation leave vests with the employee as it is earned. The current and long-term liabilities for accumulated vacation, including related benefits, are reported on the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations, and retirements. Sick leave benefits provided for ordinary sick pay are not vested with the employees. Generally, resources from the General Fund are used to pay for compensated absences. O. Transactions Between Funds Transactions that would be treated as revenue or expenses if they involved organizations external to the governmental unit are accounted for as revenue or expenses in the funds involved. Transactions which constitute reimbursements of a fund for expenses initially made from that fund which are properly applicable to another fund are recorded as expenses in the reimbursing fund and as reductions of the expense in the fund that is reimbursed. Interfund transfers between governmental funds are eliminated in the Statement of TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded) Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after non-operating revenues/expenses in proprietary funds. P. 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. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Individual Deficit Fund Balances – At June 30, 2007, the MANTIS Special Revenue Fund had a deficit fund balance of $9,598; PAG Capital Projects Fund had a deficit fund balance of $1,731,208; Pima County Bond Capital Fund, a non-major governmental fund reported a deficit of $327,054 in fund balance. All three funds with deficit fund balances account for the activity of cost/reimbursement programs. The deficits are as a result of the timing difference between the expenditures and the receipt of reimbursement. The Town expects reimbursement for these expenditures early in fiscal year 2007-08 which are expected to eliminate the deficits. Excess Expenditures Over Budget – At June 30, 2007, the Town had expenditures in funds that exceeded the budget; however, this does not constitute a violation of any legal provisions. NOTE 3 - BUDGETARY CONTROL The voters of the State of Arizona, on June 3, 1980, approved an expenditure limitation that is applicable to all local governments. This limitation, based on expenditures of the 1979-80 fiscal year, restricts the growth of expenditures based on a factor of increases in population and inflation. Certain expenditures are held to be excludable. The limitation is set by the State Economic Estimates Commission prior to April 1 of each year for the following fiscal year. As allowed, the voters of the Town of Marana, on May 17, 2005, approved an alternative expenditure limitation - home rule option to be applicable to the Town. This alternative expenditure limitation is free from any ties to the state imposed limitations and is in effect for four consecutive years beginning with the fiscal year ended June 30, 2007. This limitation provides for the Town to allow the Mayor and Council to adopt an annual expenditure limitation each year with no expenditures held to be excludable. Therefore, the annual expenditure limitation equals the adopted budget. The Town establishes its fiscal year as the twelve-month period beginning July 1. The departments submit to the Town manager a budget of estimated expenditures for the ensuing fiscal year. The Town manager and each department head meet to discuss mutually acceptable changes for the estimated expenditures for that department after which TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 3 - BUDGETARY CONTROL (Concluded) the Town manager subsequently submits a budget of estimated expenditures and revenues to the Town Council. Upon receipt of the budget estimates, the Town Council will hold a public meeting to obtain taxpayer comments. Concurrently, a copy of the budget estimates is published in a local newspaper. The Town Council is prevented from legally enacting the budget through passage of a resolution until 15 days have passed after the date of the public meeting. Prior to July 1, the budget is legally enacted. The Town manager is authorized to transfer budgeted amounts within any department or any fund; however, any revisions that reallocate budgeted amounts from the budget line items labeled "contingency" must be approved by the Town Council. NOTE 4 - CASH AND INVESTMENTS A.R.S. authorize the Town to invest public monies in the State Treasurer’s local government investment pools, the County Treasurer’s investment pool, interest-bearing savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government; and bonds of the State of Arizona counties, cities, towns, school districts, and special districts as specified by statute. The statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the Town’s investments. The State Board of Investment provides oversight for the State Treasurer’s pools. At June 30, 2007, the carrying amount of the Town’s deposits was $8,399,086, and the bank balance was $13,734,284. The differences between the book and bank balances are due to timing of certain transactions like deposits in transit and outstanding checks. Of the bank balance, $600,000 was covered by Federal depository insurance, $10,106,804 was covered by collateral and $6,488 was uninsured and uncollateralized. At June 30, 2007, the Town’s investments consisted of the following. Investment Maturities (in Years) Investment Type Fair Value Less than 1 1-5 Money Market Investments $ 948,692 $ 948,692$ U.S. Treasuries 1,412,177 1,412,177 U.S. Agencies 19,150,590 4,215,94714,934,643 $ 6,576,816$ 14,934,643 State Treasurer’s investment pool 511,735,162 78 days average maturities State Treasurer’s investment pool 737,713,643 50 days average maturities $70,960,264 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 4 - CASH AND INVESTMENTS (Concluded) Interest Rate Risk. The Town does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. The Town has no investment policy that would further limit its investment choices. As of June 30, 2007, the Town’s investment in the State Treasurer’s investment pool did not receive a credit quality rating from a national rating agency. The Town’s investments in U.S. Agencies were rated Aaa by Moody’s Investors Service and AAA by Standard & Poor’s. Custodial Credit Risk. The Town’s investment in the State Treasurer’s investment pool represents a proportionate interest in the pool’s portfolio; however, the Town’s portion is not identified with specific investments and is not subject to custodial credit risk. Concentration of Credit Risk. The Town places no limit on the amount it may invest in any one issuer. More than 5 percent of the Town’s investments are in U.S. Agencies. These îé investments are % of the Town’s total investments. NOTE 5 - RECEIVABLES Other receivables, net of allowance for uncollectibles, as of year end for the Town’s individual major funds and non-major governmental funds in the aggregate, are as follows. Highway UsersNon-Major General Transportation Sales Tax Revenue Other Capital Governmental Fund Fund Capital FundFund Projects Fund Funds Taxes receivable 934 Accounts receivable 588,635 117,894 Interest receivable 21,53522 Due from other 282,897 governments 1,861,287666,929132,844191,8782,454,541 Due from other funds 3,298,835 Net total receivables $5,748,757$ 666,929 $ 154,379 $ 191,878$ 282,897 $ 2,573,391 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenuereported in the governmental funds were as follows. Ë²¿ª¿·´¿¾´» Deferred revenue Land lease payment – General Fund 475,200 Interest earnings – General Fund 161,840 Developer deposits held by Town - Non-Major governmental funds 531,862 HURF Funds – Thornydale Road Project 1,800,000 Interest earnings – Non-Major governmental funds 298,634 Total deferred revenue $ 3,267,536 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 6 - CAPITAL ASSETS The following is a summary of the changes in capital assets for fiscal year ended June 30, 2007. Beginning BalanceEnding Governmental Activities (As restated) Additions Deletions Balance Capital assets, not being depreciated: $ 3,491,030 $ $ $ 3,491,030 Land 9,462,225 24,742,560 1,614,062 32,590,723 Construction in progress Total capital assets, not being 12,953,255 24,742,560 1,614,062 36,081,753 depreciated Capital assets, being depreciated: 41,475,588 310,519 41,786,107 Buildings and improvements 14,157,406 2,150,920 673,943 15,634,383 Machinery, equipment, and other assets 153,861,382 3,325,688 157,187,070 Infrastructure 209,494,376 5,787,127 673,943 214,607,560 Total capital assets being depreciated Less accumulated depreciation for: (2,511,063)(1,288,359) (3,799,422) Buildings and improvements (6,657,405)(2,521,247)671,113 (8,507,539) Machinery, equipment, and other assets (25,452,428)(5,952,786) (31,405,214)) Infrastructure (34,620,896)(9,762,392)671,113 (43,712,176) Total accumulated depreciation 174,873,480 (3,975,266) 2,830 170,895,384 Total capital assets, being depreciated, net $ 187,826,735 $20,767,294 $ 1,616,893 $ 206,977,136 Governmental activities capital assets, net Governmental activities depreciation expense was charged to function/programs as follows. Governmental Activities: $ 1,647,626 General government 55,266 Development & planning services 1,135,924 Police 8,307 Magistrate court 6,286,510 Public works 625,241 Parks & recreation 3,518 Community development $ 9,762,393 Total depreciation expense – governmental activities Construction Commitments – As of June 30, 2007, the Town was involved in several governmental activities construction projects. The estimated cost to complete the construction projects is $26.7 million. Long Term Capital Lease - In February 2006, the Town entered into a 20-year lease agreement with National Bank of Arizona to acquire a road grader. Quarterly payments of $11,174 began effective June 1, 2006 and will continue through March 31, 2011, with an annual interest of 4.1% for the term of the agreement. Over the length of the loan, $23,028 will be applied to interest, $200,446 to principal. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 6 - CAPITAL ASSETS (Concluded) The road grader has been capitalized at the present value of the future minimum lease payment as of the date of its inception. The present value of this capital lease is calculated as such: Lease Purchase Price $200,446 Less Accumulated Depreciation ($40,089) ëé Present Value of Capital Lease $160,3 A summary of changes in capital assets for business-type activities is as follows. Beginning Balance Ending Business-Type Activities (As restated) Additions Deletions Balance Capital assets, not being depreciated: $ 221,810 $ $ $ 221,810 Land 543,696 543,696 Water rights 401,013 5,831,385 6,232,398 Construction in progress Total capital assets, not being 1,166,5195,831,385 6,997,904 depreciated Capital assets being depreciated: 20,133,607 1,692,637 21,826,244 Improvements 374,424 58,17233,620398,976 Machinery, equipment, and other assets 54,737 54,737 Organization costs 20,562,768 1,750,80933,62022,279,957 Total capital assets being depreciated Less accumulated depreciation: (2,598,040)(898,486) (3,496,526) Improvements (182,098)(79,134)33,620(227,613) Machinery, equipment, and other assets (31,106)(985) (32,091) Organization costs (2,811,244)(978,605)33,620(3,756,230) Total accumulated depreciation 17,751,524 772,204 18,523,727 Total capital assets, being depreciated, net $ 18,918,043 $ 6,603,589$ $ 25,521,632 Business-type activities capital assets, net Business-type depreciation expense was charged to functions/programs as follows. Business-type Activities: Water $ 454,500 Airport 524,105 Total depreciation expense – business-type activities $ 978,605 Construction Commitments – As of June 30, 2007, the Town was involved in several business-type activities construction projects. The estimated cost to complete the construction projects is $1.4 million. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 7 – LONG-TERM DEBT A. Notes Payable The Town's Water Fund was advanced funds under a zero-interest loan in the amount of $88,000 for the purchase of capital assets for the water system, collateralized by two storage tanks in the water system and requiring monthly payments of $733 over a ten year term. The following is a schedule by years of the debt service requirements for this note payable in the water fund as of June 30, 2007. Year Ending June 30: 2008 8,800 Total minimum payments required $ 8,800 The Town received a $7,000,000 loan from the Arizona Department of Transportation (ADOT) through the Highway Expansion and Extension Loan Program (HELP) to help fund costs related to the Thornydale Road reconstruction. The following is a schedule by years of the debt service requirements for the loan as of June 30, 2007. Year ending June 30: Principal Interest Total 2008 1,000,000 72,8771,072,877 2009 1,000,000 47,7471,047,747 2010 900,000 22,617922,617 Total $ 2,900,000 $ 143,241$3,043,241 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 7 – LONG-TERM DEBT (Cont’d) B. Community Facilities District (CFD) General Obligation Bonds Gladden Farms Community Facilities District (a component unit) issued general obligation bonds for infrastructure improvements. The CFD general obligation bonds outstanding as reported in governmental activities as of June 30, 2007, were as follows. Outstanding June 30, 2007 $2,105,000 CFD General Obligation Bonds, 2004 Series, due in annual installments of $45,000 to $165,000; through July 15, 2029; at a 5.0% to 6.5% interest rate. $ 2,105,000 $3,250,000 CFD General Obligation Bonds, 2006 Series, due in annual installments of $70,000 to $395,000; through July 15, 2031; at a 4.9% to 5.5% interest rate. $ 3,250,000 Total $ 5,355,000 Annual debt service requirements to maturity on the CFD general obligation bonds at June 30, 2007, are summarized as follows. Year Ending June 30: PrincipalInterestTotal 200845,000301,712346,712 2009120,000299,337419,337 2010120,000293,407413,407 2011135,000287,353422,353 2012135,000280,683415,683 2013-17790,0001,288,0462,078,046 2018-221,035,0001,040,5162,075,516 2023-271,370,000697,7632,067,763 2028-311,605,000226,2131,831,213 Total$ 5,355,000$4,715,030$10,070,030 C. Tangerine Farms Road Improvement District Improvement Bonds Tangerine Farms Road Improvement District (a component unit) issued general obligation bonds for infrastructure improvements. The TFRID special assessment bonds outstanding as reported in governmental activities as of June 30, 2007, were as follows. Outstanding June 30, 2007 $25,774,000 TFRID Special AssessmentBonds, due in annual installments of $951,000 to $2,043,000; through January 1, 2026; at an interest rate of 4.6%. $ 25,774,000 Total $ 25,774,000 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 7 – LONG-TERM DEBT (Cont’d) Annual debt service requirements to maturity on the TFRID special assessment bonds at June 30, 2007, are summarized as follows. Year Ending June 30: PrincipalInterestTotal 2008-1,185,6041,185,604 2009951,0001,163,7312,114,731 2010995,0001,118,9732,113,973 20111,040,0001,072,1682,112,168 20121,088,0001,023,2242,111,224 2013 – 17 6,240,0004,299,25210,539,252 2018 – 22 7,812,0002,689,71210,501,712 2023 – 26 7,648,000723,3968,371,396 Total$ 25,774,000$13,276,060$39,050,060 D. Revenue Bonds The Town has issued revenue bonds for acquiring water systems, infrastructure upgrades, the design and construction of the new municipal complex and to refund prior issuances. These bonds are payable solely from the excise taxes collected by the Town. The revenue bonds outstanding as reported in governmental activities as of June 30, 2007 were as follows. Outstanding June 30, 2007 $8,175,000 Revenue Bonds, 1997 Series, due in bi- annual installments of $100,000 to $300,000; through July 1, 2022; at a 4.6% to 5.25% interest rate. $ 4,030,000 $19,700,000 Revenue Bonds, 2003 Series, due in bi- annual installments of $260,000 to $665,000; through July 1, 2028; at a 2.0% to 5.0% interest rate. 18,390,000 $8,675,000 Revenue and Refunding Bonds, 2004 Series, due in bi-annual installments of $130,000 to $320,000; through July 1, 2028; at a 3.0% to 5.25% interest rate. 8,040,000 Total $ 30,460,000 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 7 – LONG-TERM DEBT (Cont’d) Annual debt service requirements to maturity on revenue bonds at June 30, 2007, are summarized as follows . Year ending June 30: Principal Interest Total 2008 1,220,000 1,402,188 2,622,188 2009 1,055,000 1,363,763 2,418,763 2010 1,075,000 1,327,431 2,402,431 2011 1,210,000 1,285,643 2,495,643 2012 1,270,000 1,234,684 2,504,684 2013 – 17 6,570,000 5,371,183 11,941,183 2018 – 22 8,250,000 3,657,761 11,907,761 2023 – 27 7,850,000 1,519,388 9,369,388 2027 – 28 1,960,000 98,875 2,058,875 Total $ 30,460,000 $ 17,260,918 $ 47,720,918 In prior years, the Town defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Town’s governmental activities column of the statement of net assets. At June 30, 2007, $4,900,000 of bonds outstanding is considered defeased. E. Capital Leases Annual debt service requirements for this capital lease as of June 30, 2007 are summarized below: Year ending June 30: Principal Interest Total 2008 38,860 5,835 44,695 ì 200940,515,18044,695 2010 42,227 2,468 44,695 2011 32,836 685 33,521 í Total $ 154,438 $ 1,168 $ 167,606 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 7 – LONG-TERM DEBT (Cont’d) The following is a summary of changes in long-term debt activity for fiscal year ended June 30, 2007. Beginning Due Within Ending Balance Balance Additions Reductions One Year Governmental activities: General obligation bonds $ 2,105,000$3,250,000$ $ 5,355,000$45,000 Revenue bonds 31,835,000 1,375,00030,460,0001,220,000 Compensated absences 688,094733,152679,481741,765593,412 Notes payable 4,900,000 2,000,0002,900,0001,000,000 Special assessment bonds - 25,774,00025,774,000 Capital lease 192,520 38,082154,43838,860 Total $ 39,720,614$ 29,757,152$ 4,092,563$ 65,385,203$ 2,897,272 Business-type activities: Compensated absences $ 40,767$ 34,070$ 40,497$ 34,340$ 27,256 Note payable17,600 8,8008,8008,800 Total êôðëê $ 58,367$ 34,070$ 49,297$ 43,140$ 3 NOTE 8 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS Due to/from other funds: Due From Highway User Non-MajorBusiness- RevenueGovernmental Type Due To FundFundsActivities Total $ 35,428$ 2,761,367$ 502,040$ 3,298,835 General Fund $ 35,428 $ 2,761,367 $ 502,040 $ 3,298,835 Total At June 30, 2007, several funds were involved in interfund borrowing arrangements with the General Fund due to insufficient resources available in the funds to cover expenditures. Interfund transfers: Transfer In Other Capital Non-Major Projects Governmental Transfer Out FundsFundsTotal General Fund 2,351,0864,075 2,355,161 Water Fund 470,357 470,357 Total2,821,4434,075 2,825,518 Interfund transfers were made by the Town during the fiscal year to ensure that sufficient resources were available to cover expenditures in the applicable funds. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS A. Arizona Public Safety Retirement System All of the Town's full-time police officers are covered by the Marana Police Arizona Public Safety Personnel Retirement System, which is an agent/multiple-employer administered by the fund manager of the Arizona Public Safety Personnel Retirement System, defined benefit public employee retirement system (PERS). Authority to establish and amend the benefit provisions of this pension plan is established by Arizona State statute. The State of Arizona Public Safety Personnel Retirement System issues a publicly available financial report that includes financial statements and required supplemental information for the Marana Marshal's plan. This report may be obtained by writing to the Arizona Public Safety Personnel Retirement System 1020 E. Missouri Phoenix, Arizona 85014. The pension plan provides pension benefits, deferred allowances, death and disability benefits and limited 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 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 the average monthly compensation for the entire service period reduced at a rate of 4% a year for each service year below 20 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 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 compensation 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 80% of the monthly payments, or 100% if duty related, the deceased active police officer TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS (Cont’d) would have been paid for disability or, in the case of a retired police officer, 80% 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 spouses’ benefits terminate upon their 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 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 the surviving spouse pays for this coverage. However, they cannot be charged more than $150 per month plus an amount up to $110 per month for dependent coverage, if any. Officers with at least 20 years of credited service may elect to enter the Deferred Retirement Option Plan (DROP), for up to 60 months. During the DROP period, the frozen accrued pension is credited to the officer's DROP account. The account is paid at time of actual retirement. The Town's current year payroll for eligible police officers amounted to $4,104,462. 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 an open period of 20 years. During 2006-07, the Town was required to contribute 9.23% of its police officers' covered payroll to the plan. The contribution requirements of plan members are established and maybe amended by Arizona State statute. The Arizona Public Safety Personnel Retirement System's funding policy providesfor actuarially determined employer contributions at rates which will provide assets sufficient to pay benefits when due. This funding policy/objective is stated in the Arizona State statutes. Total contributions made during fiscal year 2006-07 were $692,833, of which $378,842 was made by the Town and $313,991 was made by police officers. The pension contributions represent funding for normal cost and the amortization of the unfunded actuarial accrued liability. A variety of significant actuarial assumptions are used as of June 30, 2007, to determine the standardized measure of the entry age actuarial accrued liability and these assumptions are summarized below. The present value of future pension payments is computed by using a discount rate of 8.50%. The discount rate is equal to the estimated long-term rate of return on current and future investments of the pension plan. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS (Cont’d) Future pension payments reflect an assumption of 5.00% (compounded annually) salary increases as a result of inflation. Future pension payments reflect an assumption of additional projected salary increases ranging from 1.0% to 3.0% per year, depending on age, attributable to seniority/merit. The actuarial value of the assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments. The standardized measure of the unfunded actuarial accrued liability as of June 30, 2007 is as follows. Active members $7,902,643 Retired members and survivors 2,046,801 DROP members 2,117,021 Former members with vested benefits 84,792 Total actuarial accrued liability 12,151,257 Actuarial value of assets 8,392,338 Unfunded actuarial accrued liability 3,758,919 SCHEDULE OF FUNDING PROGRESS (6) Unfunded (2)AAL as a (3) (1)Entry Age (5)Percentage ActuarialActuarialPercent(4)Annualof Covered ValuationFundedPayroll Value of AccruedUnfundedCovered Date June 30AssetsLiability (AAL)(1)/(2)AAL (2)-(1)Payroll(4)/(5) 2007 $8,392,338 $12,151,257 69.1 $3,758,919 $4,104,462 91.6% 2006 7,603,870 9,353,865 81.3 1,749,995 3,886,273 45.0% 2005 6,633,350 8,249,632 80.4 1,616,282 3,141,628 51.4% Trend Information Annual Pension PercentNet Pension Fiscal Year Ended June 30, Cost (APC) ContributedObligation 2007 $386,239 100.0 - 0 - 2006 347,042 100.0 - 0 - 2005 258,091 100.0 - 0 - TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 9 - EMPLOYEE RETIREMENT SYSTEMS (Concluded) B. Town of Marana Retirement Plan The Town has established a Money Purchase Plan and Trust known as the Town of Marana Retirement Plan (the Plan) in the form of the International City Management Association Retirement Corporation Prototype Money Purchase Plan and Trust. The prototype plan is qualified under Section 401 of the Internal Revenue Code. The Plan is a defined contribution plan that provides pension benefits for all full-time employees and permanent part-time employees, except for commissioned police personnel who are covered under the Arizona Public Safety Personnel Retirement System. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Employees are eligible to participate from the date of employment. The Plan requires that the employee and the Town contribute an amount equal to 4% and 8%, respectively, of the employee's biweekly earnings, which includes overtime and bonuses. The Town's contributions for each employee (and interest allocated to the employee's account) are fully vested after five years of continuous service. Town contributions for, and interest forfeited by, employees who leave employment before five years of service are used to reduce the Town's current- period contribution requirement. The Town's total payroll in fiscal year 2006-07 was $15,214,958. The Town's contributions were calculated using the earnings amount of $10,579,181. For fiscal 2006-07, the covered employees made the required 4% contribution, amounting to $423,167, with the Town making a contribution of 8%, amounting to $846,334 for a total of $1,269,501. NOTE 10 - RISK MANAGEMENT The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The Town's insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the Town is a participating member. The limit for basis coverage is for $2,000,000 per occurrence on a claims made purpose. Excess coverage is for an additional $13,000,000 per occurrence on a follow form, claims made basis. The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the pool to meet its expected financial obligations. The pool has the authority to assess its members additional premiums should reserves and annual premiums be insufficient to meet the pool's obligations. The Town continues to carry commercial insurance for all other risks of loss, including workers’ compensation and employee health and accident insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 11 - COMMITMENTS AND CONTINGENCIES The Town is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the Town Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the Town’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of Town management, based on the advice of the Town Attorney, the resolution of these matters will not have a material adverse effect on the Town’s financial position. NOTE 12 - LEASING ARRANGEMENTS Airport The Airport Authority, an Enterprise Fund, leases part of the airport to local Marana businesses under non-cancelable operating leases requiring fixed and contingent rentals based on aviation fuel dispensed on the premises. The following is a schedule of future minimum rentals receivable under these leases at June 30, 2007, not including any year beyond the minimum of twenty years in the lease for the general fund and not including renewal options for the leases for the Airport Authority. Year Ending June 30: Airport 2008 155,446 2009 155,529 2010 173,628 2011 173,711 2012 174,342 2013 – 17 879,513 2018 – 22 1,023,268 2023 – 27 1,065,910 2028 – 32 1,108,599 2033 – 37 1,378,275 2038 – 42 1,759,067 2043 – 47 2,245,064 Total $10,292,354 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 12 - LEASING ARRANGEMENTS (Cont’d) Land – State of Arizona The Town has assigned and assumed a non-cancelable long-term operating lease for 2,400 acres of land with the State of Arizona with an expiration of October 2099. This lease had an initial annual rent of $432,000 that requires 10% increases in the annual rent payments for each succeeding five year period. In conjunction with the Town assuming the long-term operating lease, a developer has signed a non-cancelable agreement to reimburse the Town the annual rental payment for a minimum of twenty years. This non-cancelable twenty year term begins after the first twelve consecutive months generate more than $1,000,000 in resort sales tax to the Town from the development project known as "Dove Mountain". It is unknown when this event will occur, resulting in the start of the twenty year term. These leases provide for payments of minimum annual rentals as follows, excluding real estate taxes, common area charges, management fees, and sales taxes. Years Ending June 30, 2008 475,200 2009 475,200 2010 475,200 2011 522,720 2012 522,720 2013 – 17 2,718,144 2018 – 22 2,989,958 2023 – 27 3,288,953 2028 – 32 3,617,848 2033 – 37 3,979,634 2038 – 42 4,377,598 2043 – 47 4,815,356 2048 – 52 5,296,893 2053 – 57 5,826,583 2058 – 62 6,409,240 2063 – 67 7,050,165 2068 – 72 7,755,181 2073 – 77 8,530,699 2078 – 82 9,383,769 2083 – 87 10,322,146 2088 – 92 11,354,361 2093 – 97 12,489,798 2098-2100 5,284,146 éôçêïôëïî Total$11 Minimum annual rentals above excludes annual rental under the remaining renewal options as of June 30, 2007. Rent expense under the above leases for fiscal 2006-07 aggregated $475,200. TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 13 – ACCOUNTING RESTATEMENTS As a result of implementing the retroactive infrastructure requirement of GASB Statement No. 34, the Town’s governmental capital asset balances as of June 30, 2006 have been restated as net assets as of July 1, 2006, on the government-wide Statement of Activities. The reconciliation below summarizes the differences between net asset balances as of June 30, 2006, as previously reported, to net assets as of July 1, 2006, reported in the government-wide Statement of Activities. Additional corrections were necessary to properly record revenues and expenditures in the proper fiscal year. The reconciliation below also summarizes the differences between fiscal year 2006 fund balances as reported and beginning fund balances as reported in fiscal year 2007. Statement of Activities Net Assets, June 30, 2006, as previously reported $118,911,662 Adjustment to capital asset balances 81,573,707 Net Assets, July 1, 2006, as restated $200,485,369 Additional corrections were necessary to properly record revenues and expenditures in the proper fiscal year. The reconciliation below also summarizes the differences between fiscal year 2006 fund balances as reported and beginning fund balances as reported in fiscal year 2007. Local Transportation General Fund Assistance Fund Fund Balance June 30, 2006 as 13,718,269 previously reported Recognition of revenues in proper year 323,388 Recognition of expenditures in proper year (18,322) Account Balance, July 1, 2006, as restated 14,041,657(18,322) Net assets recorded in the business-type activities were impacted by recognition of water related improvements donated by developers not previously recorded in prior periods. The correction reflects any additional improvements added to the Town’s inventory, less any accumulated depreciation. Statement of Water ActivitiesFund Net Assets, June 30, 2006, as previously reported $15,121,542$4,975,414 Correction to capital asset balances 3,910,0813,910,081 Net Assets, July 1, 2006, as restated $19,031,623$8,885,495 TOWN OF MARANA, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 NOTE 14 – SUBSEQUENT EVENTS Debt Issuance On August 15, 2007, the Gladden Farms Community Facilities District, a blended component unit, issued $3,075,000 of General Obligation Bonds, Series 2007. These bonds were issued for the purpose of acquiring certain public infrastructure. Interest rates range from 4.40 percent to 5.45 percent, with a term of 25 years. Retirement System On July 1, 2007 the Town moved from the Money Purchase Retirement Plan and Trust defined contribution plan administered by the International City Management Association to the Arizona State Retirement System (ASRS) defined benefit plan. ASRS administers a cost-sharing multiple-employer defined benefit pension plan. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. All full-time employees not in the Public Safety Retirement System, Correctional Officers Retirement System or Elected Officials Retirement System are eligible to participate. Wastewater Intergovernmental Agreement Termination On July 11, 2007 the Town terminated a 1979 intergovernmental agreement with Pima County. The agreement granted Pima County the rights and responsibilities of treating sewer flows within the Town and managing related wastewater treatment facilities in exchange for Pima County's receipt of all connection fees and sewer user fees generated from users and development within the Town. The agreement provided for termination by either party upon six months written notice. After termination of the agreement, all sewer facilities located within the Town will be owned and operated by the Town except flow- through sewer facilities, which remain vested with the County. The Town and Pima County have not reached agreement on how the transition of the sewer system should occur post- termination, so the Town on October 17, 2007 filed a lawsuit entitled Town of Marana v Pima County (Case Number C20076038) to seek interpretation of the relative rights and responsibilities of the parties under the agreement and to obtain court oversight of the transition process. Modification of Federal Emergency Management Agency flood maps On September 17, 2007 the Federal Emergency Management Agency (FEMA) issued revised preliminary flood maps that generally affect the areas of the Town located (i) between the Union Pacific railroad tracks and the Santa Cruz River from the Pinal County line on the north to Ina Road on the south and (ii) north of Tangerine Road between the Central Arizona Project canal and the Union Pacific railroad tracks. The revised maps remove from flood-protection consideration all non-certified levy-like structures. The revised preliminary flood maps are currently scheduled to become effective on September 30, 2008. If the maps become effective, significant portions of existing and future development within the Town will be placed into a regulatory floodplain, requiring those with federally backed mortgages to obtain flood insurance. The Town is aggressively pursuing federal legislation to withdraw the revised preliminary flood maps until further studies can be completed. (This page intentionally left blank) SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (REQUIRED SUPPLEMENTARY INFORMATION) (This page intentionally left blank) TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2007 Variance with Budgeted Amounts Final Budget Positive OriginalFinalActual (Negative) Revenues: Sales taxes $17,217,929 $17,217,929 $20,645,824 $3,427,895 Intergovernmental5,235,505 5,235,505 6,961,564 1,726,059 Licenses, fees & permits5,954,487 5,954,487 4,865,395 (1,089,092) Fines, forfeitures & penalties544,350 544,350 676,838 132,488 Charges for services229,967 229,967 379,953 149,986 Lease income493,300 493,300 19,500 (473,800) Contributions 108,536 108,536 Investment income525,000 525,000 775,687 250,687 Miscellaneous958,246 958,246 1,036,508 78,262 Total revenues 31,158,78431,158,78435,469,8054,311,021 Expenditures: Current - General government 7,826,397 7,922,587 7,515,954 406,633 Development & planning services2,993,513 3,027,513 3,344,894 (317,381) Public safety7,778,097 7,778,097 7,639,775 138,322 Highways and streets3,042,070 3,022,070 3,524,925 (502,855) Culture and recreation2,768,293 2,654,293 2,893,751 (239,458) Community development 243,516 (243,516) Capital outlay3,363,970 3,367,780 2,745,629 622,151 Total expenditures 27,772,34027,772,34027,908,444(136,104) Excess (deficiency) of revenues over expenditures 3,386,4443,386,4447,561,3614,174,917 Other financing sources (uses): Transfers out (2,355,161)(2,355,161) Total other financing sources (uses) (2,355,161)(2,355,161) Change in fund balances 3,386,4443,386,4445,206,2001,819,756 Fund balances, July 1, 2006, as restated 14,041,657 14,041,657 Fund balances, June 30, 2007 $3,386,444 $3,386,444 $19,247,857 $15,861,413 See accompanying notes to this schedule. TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - HIGHWAY USER REVENUE YEAR ENDED JUNE 30, 2007 Budgeted Variance with Amounts Final Budget Positive Original & FinalActual (Negative) Revenues: Intergovernmental $2,060,300 $2,067,893 $7,593 Total revenues 2,060,3002,067,8937,593 Expenditures: Current - Highways and streets 2,060,300 2,090,644 (30,344) Total expenditures 2,060,3002,090,644(30,344) Change in fund balances (22,751)(22,751) Fund balances, July 1, 2006 150,474 150,474 Fund balances, June 30, 2007 $ $127,723 $127,723 See accompanying notes to this schedule. TOWN OF MARANA, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2007 NOTE 1 - BUDGETARY BASIS OF ACCOUNTING The adopted budget of the Town is prepared on a basis of accounting consistent with accounting principles generally accepted in the United States of America. (This page intentionally left blank) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (This page intentionally left blank) OTHER MAJOR GOVERNMENTAL FUNDS SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (This page intentionally left blank) TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - SOUTH BENEFIT AREA IMPACT FEES YEAR ENDED JUNE 30, 2007 Budgeted Variance with Amounts Final Budget Positive Original & FinalActual (Negative) Revenues: Licenses, fees & permits $1,589,690 $420,681 $(1,169,009) Investment income138,716 1,017,555 878,839 Total revenues 1,728,4061,438,236(290,170) Change in fund balances 1,728,4061,438,236(290,170) Fund balances, July 1, 2006 8,206,545 8,206,545 Fund balances, June 30, 2007 $1,728,406 $9,644,781 $7,916,375 TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - TRANSPORTATION YEAR ENDED JUNE 30, 2007 Variance with Budgeted Amounts Final Budget Positive OriginalFinalActual (Negative) Revenues: Sales taxes $9,000,000 $9,000,000 $9,904,171 $904,171 Contributions 16,000 16,000 Investment income337,500 337,500 1,123,733 786,233 Total revenues 9,337,5009,337,50011,043,9041,706,404 Expenditures: Current - General government750,000 750,000 768,282 (18,282) Highways and streets315,583 315,583 243,787 71,796 Capital outlay8,874,895 8,624,895 6,013,770 2,611,125 Debt service - Principal retirement 237,363 (237,363) Interest and fiscal charges 68,900 (68,900) Total expenditures 9,940,4789,690,4787,332,1022,358,376 Change in fund balances (602,978)(352,978)3,711,8024,064,780 Fund balances, July 1, 2006 13,218,262 13,218,262 Fund balances (deficits), June 30, 2007 $(602,978) $(352,978) $16,930,064 $17,283,042 TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - PAG CAPITAL YEAR ENDED JUNE 30, 2007 Budgeted Variance with Amounts Final Budget Positive Original & FinalActual (Negative) Revenues: Intergovernmental $11,257,000 $ $(11,257,000) Investment income 1 1 Total revenues 11,257,0001(11,256,999) Expenditures: Capital outlay 11,257,000 11,257,000 Debt service - Principal retirement 1,800,000 (1,800,000) Total expenditures 11,257,0001,800,0009,457,000 Change in fund balances (1,799,999)(1,799,999) Fund balances, July 1, 2006 35,667 35,667 Fund balances (deficits), June 30, 2007 $ $(1,764,332) $(1,764,332) TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - SALES TAX CAPITAL YEAR ENDED JUNE 30, 2007 Budgeted Variance with Amounts Final Budget Positive Original & FinalActual (Negative) Revenues: Sales taxes $394,008 $349,554 $(44,454) Investment income150,000 286,140 136,140 Total revenues 544,008635,69491,686 Expenditures: Capital outlay 1,700,000 813,186 886,814 Total expenditures 1,700,000813,186886,814 Change in fund balances (1,155,992)(177,492)978,500 Fund balances, July 1, 2006 5,111,144 5,111,144 Fund balances (deficits), June 30, 2007 $(1,155,992) $4,933,652 $6,089,644 TOWN OF MARANA, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - OTHER CAPITAL PROJECTS YEAR ENDED JUNE 30, 2007 Variance with Budgeted Amounts Final Budget Positive OriginalFinalActual (Negative) Revenues: Intergovernmental $6,682,500 $6,682,500 $323,776 $(6,358,724) Licenses, fees & permits 2,838,240 2,838,240 Investment income 507,966 507,966 Total revenues 6,682,5006,682,5003,669,982(3,012,518) Expenditures: Current - General government 2,871,891 2,871,891 Capital outlay36,380,505 33,508,614 14,313,563 19,195,051 Debt service - 935,963 (935,963) Bond issuance costs Interest and fiscal charges 620,901 (620,901) Total expenditures 36,380,50536,380,50515,870,42720,510,078 Excess (deficiency) of revenues over expenditures (29,698,005)(29,698,005)(12,200,445)17,497,560 Other financing sources (uses): Face value of bonds issued29,698,005 29,698,005 25,774,000 (3,924,005) 4,075 4,075 Transfers in Total other financing sources (uses) 29,698,00529,698,00525,778,075(3,919,930) Change in fund balances 13,577,63013,577,630 Fund balances, July 1, 2006 57,991 57,991 Fund balances, June 30, 2007 $ $ $13,635,621 $13,635,621 (This page intentionally left blank) NON-MAJOR GOVERNMENTAL FUNDS (This page intentionally left blank) TOWN OF MARANA, ARIZONA COMBINING BALANCE SHEET - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE JUNE 30, 2007 Total Non-Major SpecialCapitalGovernmental Debt Service RevenueProjectsFunds ASSETS $556,998 $884,900 $11,298,459 $12,740,357 Cash and cash equivalents Restricted cash and investments67,924 2,034,216 2,102,140 Taxes receivable 934 934 114,689 3,093 112 117,894 Accounts receivable 22 22 Interest receivable Due from governments160,919 493,622 654,541 1,853 1,853 Prepaid items Total assets $900,530 $2,924,996 $11,792,215 $15,617,741 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $75,233 $ $135,883 $211,116 Accrued payroll and employee benefits652 652 Due to other funds141,822 759,212 901,034 Deferred revenue 532,352 532,352 Bonds payable 750,000 750,000 Bond interest payable 856,497 856,497 Total liabilities 217,7072,138,849895,0953,251,651 Fund balances: Reserved for prepaid items 1,853 1,853 Reserved for debt service 784,294 784,294 Reserved for capital improvements 2,786,132 2,786,132 Reserved for grants & programs567,720 567,720 Reserved for transportation projects103,053 8,062,384 8,165,437 Unreserved: Undesignated12,050 48,604 60,654 Total fund balances 682,823786,14710,897,12012,366,090 Total liabilities and fund balances $900,530 $2,924,996 $11,792,215 $15,617,741 TOWN OF MARANA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL NON-MAJOR GOVERNMENTAL FUNDS - BY FUND TYPE YEAR ENDED JUNE 30, 2007 Special RevenueDebt ServiceCapital Projects Revenues: Intergovernmental $526,955 $ $4,810,090 Licenses, fees & permits 1,984,235 Fines, forfeitures & penalties89,971 Contributions190,095 64,000 System development fees 324,710 30,065 Investment income2,116 222,211 509,209 Miscellaneous17,011 Total revenues 826,148546,9217,397,599 Expenditures: Current - General government196,268 4,739 Public safety269,858 Highways and streets8,728 Community development99,936 Capital outlay49,524 8,774,618 Debt service - Bond issuance costs 248,375 Principal retirement 1,440,000 Interest and fiscal charges 1,709,381 Total expenditures 624,3143,149,3819,027,732 Excess (deficiency) of revenues over expenditures 201,834(2,602,460)(1,630,133) Other financing sources (uses): Face value of bonds issued 3,250,000 Transfers in 2,821,443 Total other financing sources (uses) 2,821,4433,250,000 Change in fund balances 201,834218,9831,619,867 Fund balances, beginning of year 480,989 567,164 9,277,253 Fund balances, end of year $682,823 $786,147 $10,897,120 Total Non-Major Governmental Funds $5,337,045 1,984,235 89,971 254,095 354,775 733,536 17,011 8,770,668 201,007 269,858 8,728 99,936 8,824,142 248,375 1,440,000 1,709,381 12,801,427 (4,030,759) 3,250,000 2,821,443 6,071,443 2,040,684 10,325,406 $12,366,090 (This page intentionally left blank) NON-MAJOR SPECIAL REVENUE FUNDS Federal Grant Funds – ßºº±®¼¿¾´» includes the Community Development Block Grants, Ø±«·²¹ »¬¿¾´·¸»¼ Program, HIDTA, and MANTIS Grant. The separate funds have been for ¬± ¿½½±«²¬ grant revenues and to provide compliance with Federal grant regulations. Other Grant Funds – ¬ô Ô±½¿´ includes COPS Grant, JCEF Court fund, RICO, Auto Thef Ì¸»» º«²¼ ¿®» Transportation, Fill The Gap and Local Technology – Courts Funds. ©±®µô ±® non-federal funds required by Arizona Statues to be used for police, public magistrate court expenditures. TOWN OF MARANA, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2007 ßºº±®¼¿¾´» Community Ø±«·²¹ Development Ð®±¹®¿³ ÖÝÛÚ Ý±«®¬ Î×ÝÑ Block Grant ASSETS $7,312 $209,148 $39,012 $20,875 Cash and cash equivalents Restricted cash and investments 53,498 Accounts receivable 14,862 Due from governments Total assets $22,174 $209,148 $39,012 $74,373 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $1,142 $986 $ $ Accrued payroll and employee benefits 128 Due to other funds Total liabilities 1,142986128 Fund balances: Reserved for grants & programs 21,032 208,162 38,884 74,373 Reserved for transportation projects Unreserved: Undesignated Total fund balances 21,032208,16238,88474,373 Total liabilities and fund balances $22,174 $209,148 $39,012 $74,373 LocalLocal HIDTAMANTISAuto TheftFill-the-Gap TransportationTechnology $31,146 $ $4,277 $110,375 $21,752 $113,101 52,413 15,505 12,356 65,783 $83,559 $15,505 $16,633 $176,158 $21,752 $113,101 $ $ $ $73,105 $ $ 346 178 24,757 25,10317873,105 83,559 (9,598)16,455 21,752 113,101 103,053 83,559(9,598)16,455103,05321,752113,101 $83,559 $15,505 $16,633 $176,158 $21,752 $113,101 (Continued) TOWN OF MARANA, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR SPECIAL REVENUE FUNDS JUNE 30, 2007 (Concluded) Other Special Totals Revenue Fund ASSETS $ $556,998 Cash and cash equivalents Restricted cash and investments14,426 67,924 Accounts receivable114,689 114,689 160,919 Due from governments Total assets $129,115 $900,530 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ $75,233 Accrued payroll and employee benefits 652 Due to other funds117,065 141,822 Total liabilities 117,065217,707 Fund balances: Reserved for grants & programs 567,720 Reserved for transportation projects 103,053 Unreserved: Undesignated 12,050 12,050 Total fund balances 12,050682,823 Total liabilities and fund balances $129,115 $900,530 (This page intentionally left blank) TOWN OF MARANA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 Community Development Block GrantHOME ProgramJCEF Court Revenues: Intergovernmental $151,751 $ $ Fines, forfeitures & penalties 26,749 Contributions Investment income Miscellaneous 16,934 Total revenues 151,75116,93426,749 Expenditures: Current - General government 4,256 10 46,254 Public safety Highways and streets Community development81,029 18,907 Capital outlay46,441 Total expenditures 131,72618,91746,254 Change in fund balances 20,025(1,983)(19,505) Fund balances (deficits), beginning of year 1,007 210,145 58,389 Fund balances (deficits), end of year $21,032 $208,162 $38,884 Local RICOHIDTAMANTISAuto TheftTransportationFill-the-Gap $ $54,846 $71,270 $41,994 $207,094 $ 6,558 26,437 2,077 2 7 77 28,59154,84671,27041,996207,1016,558 42,820 73,915 18,940 82,922 39,419 8,728 3,083 42,82018,94082,92239,41985,726 (14,229)35,906(11,652)2,577121,3756,558 88,602 47,653 2,054 13,878 (18,322)15,194 $74,373 $83,559 $(9,598) $16,455 $103,053 $21,752 (Continued) TOWN OF MARANA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 (Concluded) LocalOther Special TechnologyRevenue FundTotals Revenues: Intergovernmental $ $ $526,955 Fines, forfeitures & penalties56,664 89,971 Contributions 163,658 190,095 Investment income 30 2,116 Miscellaneous 17,011 Total revenues 56,664163,688826,148 Expenditures: Current - General government 5,952 23,061 196,268 Public safety 128,577 269,858 Highways and streets 8,728 Community development 99,936 Capital outlay 49,524 Total expenditures 5,952151,638624,314 Change in fund balances 50,71212,050201,834 Fund balances (deficits), beginning of year 62,389 480,989 Fund balances (deficits), end of year $113,101 $12,050 $682,823 (This page intentionally left blank) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 Community Development Block Grant Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $373,450 $151,751 $(221,699) Fines, forfeitures & penalties Contributions Investment income Miscellaneous Total revenues 373,450151,751(221,699) Expenditures: Current - General government 60,223 4,256 55,967 Public safety Highways and streets Community development275,400 81,029 194,371 Capital outlay 100,000 46,441 53,559 Total expenditures 435,623131,726303,897 Change in fund balances (62,173)20,02582,198 Fund balances (deficits), July 1, 2006 1,007 1,007 Fund balances (deficits), June 30, 2007 $(62,173) $21,032 $83,205 ____________ *The HOME Program Fund was included in the Town's budget, however, the budget was -0-. HOME ProgramJCEF Court Variance - Variance - PositivePositive Budget*Actual(Negative)BudgetActual(Negative) $ $ $ $15,000 $ $(15,000) 26,749 26,749 16,934 16,934 16,93416,93415,00026,74911,749 10 (10)60,915 46,254 14,661 18,907 (18,907) 18,917(18,917)60,91546,25414,661 (1,983)(1,983)(45,915)(19,505)26,410 210,145 210,145 58,389 58,389 $ $208,162 $208,162 $(45,915) $38,884 $84,799 (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 (Continued) RICO Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $ $ $ Fines, forfeitures & penalties Contributions 26,437 26,437 Investment income 2,077 2,077 Miscellaneous 77 77 Total revenues 28,59128,591 Expenditures: Current - General government 26,931 42,820 (15,889) Public safety Highways and streets Community development Capital outlay Total expenditures 26,93142,820(15,889) Change in fund balances (26,931)(14,229)12,702 Fund balances (deficits), July 1, 2006 88,602 88,602 Fund balances (deficits), June 30, 2007 $(26,931) $74,373 $101,304 ____________ *The HIDTA Fund was included in the Town's budget, however, the budget was -0-. HIDTAMANTIS Variance - Variance - PositivePositive Budget*Actual(Negative)BudgetActual(Negative) $ $54,846 $54,846 $56,360 $71,270 $14,910 54,84654,84656,36071,27014,910 18,940 (18,940)56,360 82,922 (26,562) 18,940(18,940)56,36082,922(26,562) 35,90635,906(11,652)(11,652) 47,653 47,653 2,054 2,054 $ $83,559 $83,559 $ $(9,598) $(9,598) (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 (Continued) Auto Theft Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $56,360 $41,994 $(14,366) Fines, forfeitures & penalties Contributions Investment income 2 2 Miscellaneous Total revenues 56,36041,996(14,364) Expenditures: Current - General government Public safety56,360 39,419 16,941 Highways and streets Community development Capital outlay Total expenditures 56,36039,41916,941 Change in fund balances 2,5772,577 Fund balances (deficits), July 1, 2006 13,878 13,878 Fund balances (deficits), June 30, 2007 $ $16,455 $16,455 Local TransportationFill-the-Gap Variance - Variance - PositivePositive BudgetActual(Negative)BudgetActual(Negative) $138,250 $207,094 $68,844 $5,000 $ $(5,000) 6,558 6,558 7 7 138,250207,10168,8515,0006,5581,558 75,000 73,915 1,085 5,000 5,000 59,750 8,728 51,022 3,500 3,083 417 138,25085,72652,5245,0005,000 121,375121,3756,5586,558 (18,322)(18,322) 15,194 15,194 $ $103,053 $103,053 $ $21,752 $21,752 (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR SPECIAL REVENUE FUNDS YEAR ENDED JUNE 30, 2007 (Concluded) Local Technology Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $ $ $ Fines, forfeitures & penalties35,650 56,664 21,014 Contributions Investment income Miscellaneous Total revenues 35,65056,66421,014 Expenditures: Current - General government 35,650 5,952 29,698 Public safety Highways and streets Community development Capital outlay Total expenditures 35,6505,95229,698 Change in fund balances 50,71250,712 Fund balances (deficits), July 1, 2006 62,389 62,389 Fund balances (deficits), June 30, 2007 $ $113,101 $113,101 ____________ *The Other Special Revenue Fund Fund was included in the Town's budget, however, the budget was -0-. Other Special Revenue FundTotals Variance - Variance - PositivePositive Budget*Actual(Negative)BudgetActual(Negative) $ $ $ $644,420 $526,955 $(117,465) 35,650 89,971 54,321 163,658 163,658 190,095 190,095 30 30 2,116 2,116 17,011 17,011 163,688163,688680,070826,148146,078 23,061 (23,061)263,719 196,268 67,451 128,577 (128,577)112,720 269,858 (157,138) 59,750 8,728 51,022 275,400 99,936 175,464 103,500 49,524 53,976 151,638(151,638)815,089624,314190,775 12,05012,050(135,019)201,834336,853 480,989 480,989 $ $12,050 $12,050 $(135,019) $682,823 $817,842 (This page intentionally left blank) NON-MAJOR DEBT SERVICE FUNDS Debt Service Funds are created to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. 1997 Bond Debt Service Fund – this fund accounts for the accumulation of resources and payment of principal and interest on the series 1997 revenue bonds. The Town has pledged Town sales tax revenue, state shared revenues licenses, fees and permits revenue, and fines, forfeitures and penalties revenue to make the required payments for this series. 2003 Bond Debt Service Fund – this fund accounts for the accumulation of resources and payment of principal and interest on the Series 2003 Revenue Bonds. The Town has pledged Town sales tax revenue, state shared revenues, licenses, fees and permits revenue, and fines, forfeitures and penalties revenue to make the required payments for this series. 2004 Bond Debt Service Fund – this fund accounts for the accumulation of resources and payment of principal and interest on the series 2004 revenue bonds. The Town has pledged Town sales tax revenue, state shared revenues, licenses, fees and permits revenue, and fines, forfeitures and penalties revenue to make the required payments for this series. Gladden Farms Debt Service Fund – this fund accounts for the accumulation of resources and payment of principal and interest on the Gladden Farms general obligation bonds. TOWN OF MARANA, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR DEBT SERVICE FUNDS JUNE 30, 2007 1997 Bond 2003 Bond 2004 Bond Gladden Farms Debt ServiceDebt ServiceDebt ServiceDebt Service ASSETS $857 $570,938 $307 $312,798 Cash and cash equivalents Restricted cash and investments402,831 688,139 321,210 622,036 Taxes receivable 934 3,093 Accounts receivable 529 903 421 Prepaid items Total assets $404,217 $1,259,980 $321,938 $938,861 LIABILITIES AND FUND BALANCES Liabilities: Deferred revenue $ $490 $ $531,862 Bonds payable300,000 270,000 135,000 45,000 Bond interest payable102,231 417,061 185,787 151,418 Total liabilities 402,231687,551320,787728,280 Fund balances: Reserved for prepaid items 529 903 421 Reserved for debt service1,457 571,526 730 210,581 Total fund balances 1,986572,4291,151210,581 Total liabilities and fund balances $404,217 $1,259,980 $321,938 $938,861 Totals $884,900 2,034,216 934 3,093 1,853 $2,924,996 $532,352 750,000 856,497 2,138,849 1,853 784,294 786,147 $2,924,996 TOWN OF MARANA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2007 1997 Bond 2003 Bond 2004 Bond Debt ServiceDebt ServiceDebt Service Revenues: System development fees $ $ $ Investment income 1,129 1,492 844 Total revenues 1,1291,492844 Expenditures: Debt service - Principal retirement 585,000 540,000 270,000 Interest and fiscal charges211,358 826,687 377,218 Total expenditures 796,3581,366,687647,218 Excess (deficiency) of revenues over expenditures (795,229)(1,365,195)(646,374) Other financing sources (uses): Transfers in797,215 1,379,653 644,575 Total other financing sources (uses) 797,2151,379,653644,575 Change in fund balances 1,98614,458(1,799) Fund balances, beginning of year 557,971 2,950 Fund balances, end of year $1,986 $572,429 $1,151 Gladden Farms Debt ServiceTotals $324,710 $324,710 218,746 222,211 543,456546,921 45,000 1,440,000 294,118 1,709,381 339,1183,149,381 204,338(2,602,460) 2,821,443 2,821,443 204,338218,983 6,243 567,164 $210,581 $786,147 TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2007 1997 Bond Debt Service Variance - Positive BudgetActual(Negative) Revenues: System development fees $ $ $ Investment income 1,129 1,129 Total revenues 1,1291,129 Expenditures: Debt service - Principal retirement585,000 585,000 Interest and fiscal charges212,215 211,358 857 Total expenditures 797,215796,358857 Excess (deficiency) of revenues over expenditures (797,215)(795,229)1,986 Other financing sources (uses): Transfers in797,215 797,215 Total other financing sources (uses) 797,215797,215 Change in fund balances 1,9861,986 Fund balances, July 1, 2006 Fund balances, June 30, 2007 $ $1,986 $1,986 2003 Bond Debt Service2004 Bond Debt Service Variance - Variance - PositivePositive BudgetActual(Negative)BudgetActual(Negative) $ $ $ $ $ $ 1,492 1,492 844 844 1,4921,492844844 540,000 540,000 270,000 270,000 839,654 826,687 12,967 374,575 377,218 (2,643) 1,379,6541,366,68712,967644,575647,218(2,643) (1,379,654)(1,365,195)14,459(644,575)(646,374)(1,799) 1,379,654 1,379,653 (1)644,575 644,575 1,379,6541,379,653(1)644,575644,575 14,45814,458(1,799)(1,799) 557,971 557,971 2,950 2,950 $ $572,429 $572,429 $ $1,151 $1,151 (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR DEBT SERVICE FUNDS YEAR ENDED JUNE 30, 2007 (Concluded) Gladden Farms Debt Service Variance - Positive Budget*Actual(Negative) Revenues: System development fees $ $324,710 $324,710 Investment income 218,746 218,746 Total revenues 543,456543,456 Expenditures: Debt service - Principal retirement 45,000 (45,000) Interest and fiscal charges 294,118 (294,118) Total expenditures 339,118(339,118) Excess (deficiency) of revenues over expenditures 204,338204,338 Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances 204,338204,338 Fund balances, July 1, 2006 6,243 6,243 Fund balances, June 30, 2007 $ $210,581 $210,581 ____________ *The Gladden Farms Debt Service Fund was included in the Town's budget, however, the budget was -0-. Totals Variance - Positive BudgetActual(Negative) $ $324,710 $324,710 222,211 222,211 546,921546,921 1,395,000 1,440,000 (45,000) 1,426,444 1,709,381 (282,937) 2,821,4443,149,381(327,937) (2,821,444)(2,602,460)218,984 2,821,444 2,821,443 (1) 2,821,4442,821,443(1) 218,983218,983 567,164 567,164 $ $786,147 $786,147 (This page intentionally left blank) NON-MAJOR CAPITAL PROJECTS FUND Capital Projects Funds are created to account for the purchase or construction of major capital facilities which are not financed by the general, enterprise, or special revenue funds. North Benefit Area Impact Fees – this fund accounts for the financing and construction of transportation projects that are defined within the benefit area. Park Impact Fees Fund – this fund accounts for park impact fees collected by the Town and utilized for authorized capital improvements. HELP Capital Fund – this fund accounts for a portion of the financing and construction of the Thornydale Road project. Pima County Bond Fund – this fund accounts for the financing and construction of projects funded through Pima County Bond program. Gladden Farms Capital Fund – this fund accounts for the proceeds from the sale of general obligation bonds which are used for authorized capital improvements. TOWN OF MARANA, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR CAPITAL PROJECTS FUNDS JUNE 30, 2007 North Benefit Area Impact Park Impact HELP Loan Pima County FeesFeesCapitalBond Capital ASSETS $958,712 $3,128,449 $7,162,806 $ Cash and cash equivalents Accounts receivable Interest receivable 22 493,622 Due from governments Total assets $958,712 $3,128,449 $7,162,828 $493,622 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ $15,263 $59,156 $61,464 Due to other funds 759,212 Total liabilities 15,26359,156820,676 Fund balances: Reserved for capital improvements 3,113,186 (327,054) Reserved for transportation projects 958,712 7,103,672 Unreserved: Undesignated Total fund balances 958,7123,113,1867,103,672(327,054) Total liabilities and fund balances $958,712 $3,128,449 $7,162,828 $493,622 Gladden Farms Vanderbilt Totals CapitalFarms Capital $24,633 $23,859 $11,298,459 112 112 22 493,622 $24,745 $23,859 $11,792,215 $ $ $135,883 759,212 895,095 2,786,132 8,062,384 24,745 23,859 48,604 24,74523,85910,897,120 $24,745 $23,859 $11,792,215 TOWN OF MARANA, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON-MAJOR CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2007 North Benefit Area Impact Park Impact HELP Loan FeesFeesCapital Revenues: Intergovernmental $ $ $ Licenses, fees & permits630,378 1,328,857 Contributions System development fees Investment income 112,288 393,777 Total revenues 630,3781,441,145393,777 Expenditures: Current - General government 4,739 Capital outlay 515,592 335,448 Debt service - Bond issuance costs Total expenditures 515,592340,187 Excess (deficiency) of revenues over expenditures 630,378925,55353,590 Other financing sources (uses): Face value of bonds issued Total other financing sources (uses) Change in fund balances 630,378925,55353,590 Fund balances (deficits), beginning of year 328,334 2,187,633 7,050,082 Fund balances (deficits), end of year $958,712 $3,113,186 $7,103,672 Pima County Gladden Farms Vanderbilt Bond CapitalCapitalFarms CapitalTotals $4,810,090 $ $ $4,810,090 25,000 1,984,235 64,000 64,000 30,065 30,065 244 1,892 1,008 509,209 4,874,33431,95726,0087,397,599 4,739 4,888,871 3,032,558 2,149 8,774,618 248,375 248,375 4,888,8713,280,9332,1499,027,732 (14,537)(3,248,976)23,859(1,630,133) 3,250,000 3,250,000 3,250,0003,250,000 (14,537)1,02423,8591,619,867 (312,517)23,721 9,277,253 $(327,054) $24,745 $23,859 $10,897,120 TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2007 North Benefit Area Impact Fees Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $ $ $ Licenses, fees & permits654,901 630,378 (24,523) Contributions System development fees Investment income57,146 (57,146) Total revenues 712,047630,378(81,669) Expenditures: Current - General government Capital outlay Debt service - Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures 712,047630,378(81,669) Other financing sources (uses): Face value of bonds issued Total other financing sources (uses) Change in fund balances 712,047630,378(81,669) Fund balances (deficits), July 1, 2006 328,334 328,334 Fund balances (deficits), June 30, 2007 $712,047 $958,712 $246,665 Park Impact FeesHELP Loan Capital Variance - Variance - PositivePositive BudgetActual(Negative)BudgetActual(Negative) $ $ $ $ $ $ 2,052,934 1,328,857 (724,077) 179,138 112,288 (66,850)131,250 393,777 262,527 2,232,0721,441,145(790,927)131,250393,777262,527 4,739 (4,739) 3,047,700 515,592 2,532,108 7,000,000 335,448 6,664,552 3,047,700515,5922,532,1087,000,000340,1876,659,813 (815,628)925,5531,741,181(6,868,750)53,5906,922,340 (815,628)925,5531,741,181(6,868,750)53,5906,922,340 2,187,633 2,187,633 7,050,082 7,050,082 $(815,628) $3,113,186 $3,928,814 $(6,868,750) $7,103,672 $13,972,422 (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2007 (Continued) Pima County Bond Capital Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $ $4,810,090 $4,810,090 Licenses, fees & permits Contributions 64,000 64,000 System development fees Investment income 244 244 Total revenues 4,874,3344,874,334 Expenditures: Current - General government Capital outlay12,083,800 4,888,871 7,194,929 Debt service - Bond issuance costs Total expenditures 12,083,8004,888,8717,194,929 Excess (deficiency) of revenues over expenditures (12,083,800)(14,537)12,069,263 Other financing sources (uses): Face value of bonds issued 12,083,800 (12,083,800) Total other financing sources (uses) 12,083,800(12,083,800) Change in fund balances (14,537)(14,537) Fund balances (deficits), July 1, 2006 (312,517)(312,517) Fund balances (deficits), June 30, 2007 $ $(327,054) $(327,054) ____________ *The Gladden Farms Capital Fund was included in the Town's budget, however, the budget was -0-. **The Vanderbilt Farms Capital Fund was included in the Town's budget, however, the budget was -0-. Gladden Farms CapitalVanderbilt Farms Capital Variance - Variance - PositivePositive Budget*Actual(Negative)Budget**Actual(Negative) $ $ $ $ $ $ 25,000 25,000 30,065 30,065 1,892 1,892 1,008 1,008 31,95731,95726,00826,008 3,032,558 (3,032,558) 2,149 (2,149) 248,375 (248,375) 3,280,933(3,280,933)2,149(2,149) (3,248,976)(3,248,976)23,85923,859 3,250,000 3,250,000 3,250,0003,250,000 1,0241,02423,85923,859 23,721 23,721 $ $24,745 $24,745 $ $23,859 $23,859 (Continued) TOWN OF MARANA, ARIZONA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - NON-MAJOR CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2007 (Concluded) Totals Variance - Positive BudgetActual(Negative) Revenues: Intergovernmental $ $4,810,090 $4,810,090 Licenses, fees & permits2,707,835 1,984,235 (723,600) Contributions 64,000 64,000 System development fees 30,065 30,065 Investment income367,534 509,209 141,675 Total revenues 3,075,3697,397,5994,322,230 Expenditures: Current - General government 4,739 (4,739) Capital outlay22,131,500 8,774,618 13,356,882 Debt service - Bond issuance costs 248,375 (248,375) Total expenditures 22,131,5009,027,73213,103,768 Excess (deficiency) of revenues over expenditures (19,056,131)(1,630,133)17,425,998 Other financing sources (uses): Face value of bonds issued 12,083,800 3,250,000 (8,833,800) Total other financing sources (uses) 12,083,8003,250,000(8,833,800) Change in fund balances (6,972,331)1,619,8678,592,198 Fund balances (deficits), July 1, 2006 9,277,253 9,277,253 Fund balances (deficits), June 30, 2007 $(6,972,331) $10,897,120 $17,869,451 TOWN OF MARANA, ARIZONA STATISTICAL SECTION JUNE 30, 2007 Statistical Section Financial presentations included in the Statistical Section provide data and information on the financial, physical, and economic characteristics of the Town of Marana. The following schedules cover multiple fiscal years and provide users with a broader and more complete understanding of the Town and its financial affairs and economic condition. They also present detailed information as a context for understanding this year's financial statements, note disclosures, and required supplementary information. SchedulePage Financial Trends These schedules contain trend information to help users understand and assess how the Town's financial position has changed over time. Net Assets by Component - Last Five Fiscal Years1123 Changes in Net Assets - Last Five Fiscal Years2124 Governmental Activities Tax Revenues by Source - Last Five Years3125 Fund Balances of Governmental Funds - Last Five Fiscal Years4128 Changes in Fund Balances of Governmental Funds - Last Six Fiscal Years5130 Revenue Capacity These schedules contain information to help users understand and assess the Town's local revenue source, the property tax. Assessed Value, Estimated Actual Value and Assessment Ratios of Taxable Property - 6132 Last Ten Years Property Tax Rates - Direct and Overlapping Governments - Last Ten Years7133 Ð®·²½·°¿´ Ð®±°»®¬§ Ì¿¨°¿§»®8134 Property Tax Levies and Collections - Last Ten Fiscal Years9135 Debt Capacity These schedules present information to help users understand and assess the Town's debt burden and its ability to service current debt and to issue additional debt in the future. Ratios of Outstanding Debt by Type - Last Ten Fiscal Years10136 Ratios of General Bonded Debt Outstanding - Last Ten Fiscal Years11137 Direct and Overlapping Governmental Activities Debt12138 Pledged-Revenue Coverage - Last Ten Fiscal Years13139 Demographic and Economic Information These schedules present economic and demographic indicators to help users understand the environment within which the Town's financial activities take place. Demographic and Economic Statistics - Last Ten Fiscal Years14140 Principal Employers - Current Year and Nine Years Ago15141 Operating Information These schedules present information to help users understand the Town's operations and resources as well as to provide a context for understanding and assessing the Town's economic condition. Full-time Equivalent City Government Employees by Function - Last Five Fiscal Years16142 Other Information These schedules present information to help users understand potential for growth and economic opportunites within the town. Sales Tax by Industry - Last Five Years17143 Top Ten Employers - Selected Industries18144 Single Family Residential Permits Issued - Last Seven Years19145 (This page intentionally left blank) TOWN OF MARANA NET ASSETS BY COMPONENT LAST FIVE FISCAL YEARS (Accrual basis of accounting) (Amounts expressed in thousands) Fiscal Year * 20032004200520062007 (as restated) Governmental activities Invested in capital assets, net of related debt 10,658$ 20,044$ 28,450$ 73,954$ 159,963$ Restricted 6,97311,93959,313 Unrestricted 10,72425,04431,04433,018(279) Total governmental activities net assets 28,35545,08759,495118,912218,998 Business-type activities Invested in capital assets, net of related debt8,81711,74911,65714,99025,522 Restricted 397 Unrestricted 183(2,091)(236)131966 Total business-type activities net assets 9,3969,65811,42115,12226,488 Primary government Invested in capital assets, net of related debt 19,47531,79240,10788,944185,485 Restricted 7,370 11,93959,313 Unrestricted 10,90722,95330,80833,149687 Total primary government net assets 37,751$ 54,745$ 70,915$ 134,033$ 245,485$ *The Town implemented Government Accounting Standards Board Statement #34 effective fiscal year 2003. Therefore, any presentation based on the accrual basis of accounting will reflect five years of historical data; in contrast to any presentation based on the modified accrual basis of accounting which reflect ten years of historical data. TOWN OF MARANA CHANGES IN NET ASSETS LAST FIVE FISCAL YEARS (Accrual basis of accounting) (Amounts expressed in thousands) Fiscal Year* 20032004200520062007 Expenses Government activities: General government5,934$ 5,845$ 6,175$ 8,740$ 10,134$ Development & planning services3,068 3,465 4,803 6,438 3,442 Town Attorney354 208 401 489 - Public safety4,642 5,305 6,309 8,948 9,187 Magistrate court459 492 741 807 - Highways and streets8,308 3,294 4,086 5,510 15,898 Culture & recreation2,632 2,079 2,642 3,307 3,557 Community development316 275 238 256 375 Interest on long-term debt762 689 1,709 1,816 2,297 Total government activities expenses 26,475 21,650 27,105 36,311 44,891 Business-type activities: Airport214 391 564 837 1,028 Water1,171 1,730 1,974 2,629 3,227 Total business-type activities expenses1,384 2,122 2,538 3,466 4,255 Total primary government expenses 27,860$ 23,772$ 29,643$ 39,777$ 49,146$ Program Revenues Governmental activities: Charges for services: General government 511$ 1,797$ 696$ 472 $ 1,108$ Development & planning services2,612 1,050 3,153 5,969 4,718 Town attorney- 70 26 13 - Public safety- 1,580 338 192 19 Magistrate court313 163 521 648 - Highways and streets- 801 3,933 590 5 Culture and recreation148 577 722 191 208 Community development- - 77 51 Operating grants and contributions 485 534 785 450 1,404 Capital grants and contributions 5,319 4,323 3,135 26,036 5,904 Total government activites program revenues 9,387 10,894 13,385 34,614 13,365 Business-type activites: Changes for services: Airport69 102 134 144 185 Water1,158 1,552 2,375 3,216 2,905 Capital grants and contributions1,934 729 595 3,531 9,073 Total business-type activity program revenues3,162 2,383 3,103 6,891 12,163 Total primary government program revenues12,550 13,276 16,488 41,506 25,528 Net (expense)/revenue Governmental activities(17,088) (10,756) (13,720) (1,697) (31,525) Business-type activities1,778 261 565 3,426 7,908 Total primary government net expense(15,310)$ (10,495)$ (13,155)$ 1,729$ (23,618)$ Fiscal Year* 20032004200520062007 General Revenues and Other Changes in Net Assets Governmental activities: General revenues City sales taxes17,336$ 20,059$ 25,126$ 34,167$ 30,900$ Highway Users/Local Transit Assistance Funding1,545 2,471 1,285 1,253 2,068 Shared shared revenues2,615 2,938 1,803 3,634 6,894 Pima Association of Governments Funding1,975 1,418 - - - Intergovernmental - - - - 4,810 System development fees- - 115 3,588 231 Investment income (loss)(213) 602 757 1,835 4,463 Miscellaneous199 - - - 221 Transfers(1,103) - - - 470 Total governmental activities5,017 7,430 3,961 10,309 19,157 Business-type activities: Transfers1,103 - - (470) Total business-type activities1,103 - - - (470) Total primary government6,121$ 7,430$ 3,961$ 10,309$ 18,687$ Change in Net Assets Governmental activities(12,071)$ (3,326)$ (9,758)$ 8,612$ (12,368)$ Business-type activities2,881 261 565 3,426 7,437 Total primary government(9,189)$ (3,065)$ (9,193) $ 12,038$ (4,931)$ *The Town implemented Government Accounting Standards Board Statement #34 effective fiscal year 2003. Therefore, any presentation based on the accrual basis of accounting will reflect five years of historical data; in contrast to any presentation based on the modified accrual basis of accounting which reflect ten years of historical data. ** In prior fiscal years, 2003 through 2006, the functions of Town Attorney and Magistrate Court were reported separately. However, both functions have been consolidated as part of the General Government function, as per General Accounting and Financial Reporting standards. TOWN OF MARANA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST FIVE FISCAL YEARS (Accrual basis of accounting) (Amounts expressed in thousands) Highway User FiscalRevenue Year Sales TaxtaxesTotal 200730,900$ 2,068$ 32,969$ 200634,167 1,253 35,420 200525,126 1,285 26,411 200420,059 2,471 22,530 200317,336 1,545 18,881 *The Town implemented Government Accounting Standards Board Statement #34 effective fiscal year 2003. Therefore, any presentation based on the accrual basis of accounting will reflect five years of historical data; in contrast to any presentation based on the modified accrual basis of accounting which reflect ten years of historical data. (This page intentionally left blank) TOWN OF MARAN A FUND BALANCES OF GOVERNMENTAL FUND S LAST TEN FISCAL YEARS (Modified accrual basis of accounting) (Amounts expressed in thousands) Fiscal Year 19981999200020012002 General Fund Reserved 42$ 40$ 47$ 70$ 90$ Unreserved 10,175 14,207 18,425 20,076 20,358 Total general fund10,217 14,247 18,472 20,146 20,448 All other governmental funds Reserved -$ -$ -$ -$ -$ Unreserved, reported in: Major governmental funds Special revenue funds74 61 109 125 160 Capital revenue funds 4,906 3,107 12,003 8,850 7,980 Debt service funds347 397 985 1,033 1,013 Total all other governmental funds5,327$ 3,564$ 13,097$ 10,008$ 9,153$ Total fund balance of governmental funds15,544$ 17,811$ 31,569$ 30,154$ 29,601$ Fiscal Year 20032004200520062007 $ 9090$ 213$ 22,09916,777 13,140 13,718 19,035 22,18916,867 13,140 13,718 19,248 $ --$ -$ -$ 55,813$ 8,0495,557 20,096 33,274 - 1,531196 556 650 12 7,015399 2,804 2,633 49 7221,016 16 567 $ 17,3187,169$ 23,472$ 37,124$ 55,874$ $ 39,50724,037$ 36,612$ 50,842$ 75,121$ TOWN OF MARANA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST SIX FISCAL YEARS (Modified accrual basis of accounting) (Amounts expressed in thousands) Fiscal Year 200220032004200520062007 Reveues Sales taxes15,258$ 17,336$ 20,059$ 26,369$ 34,167$ 30,900$ Intergovenmental revenues11,737 6,620 7,189 4,160 11,227 14,690 Licenses, fees and permits5,380 6,065 6,264 7,914 6,201 10,109 Fines, forfeitures and penalties362 313 365 481 628 767 Charges for services - 148 116 113 220 380 Lease Income- 456 442 438 498 20 Contributions-----379 System development fees1,721 3,588 355 Investment earnings959 (213) 602 757 1,835 4,445 Miscellaneous 913 199 719 518 511 1,054 Total revenues 34,609$ 30,924$ 35,758$ 42,473$ 58,874$ 63,096$ Expenditures General government 3,521$ 3,960$ 5,307$ 5,626$ 6,533$ 8,485$ Development & planning services4,519 2,578 3,101 4,050 5,615 3,345 Town attorney371 354 208 365 427 - Public safety 4,070 4,254 4,865 5,325 7,125 7,910 Magistrate Court386 441 480 557 704 - Highways and streets2,987 3,102 2,365 2,833 3,152 5,868 Community development306 316 275 202 217 343 Culture and recreation 1,399 1,673 1,705 2,045 2,574 2,894 Capital outlay 14,100 16,414 18,808 29,084 13,062 32,710 Debt service Principal 1,441 1,533 1,569 1,489 3,450 3,477 Interest 807 758 689 1,611 1,785 2,453 Other charges 4 4 505 465 - 1,184 Total expenditures 33,909$ 35,384$ 39,876$ 53,651$ 44,644$ 68,670$ Excess of revenues over (under) expenditures701$ (4,461)$ (4,119)$ (11,178)$ 14,230$ (5,574)$ Fiscal Year 200220032004200520062007 Other financing sources (uses) Transfers in 8,680$ 16,498$ 12,211$ 39,766$ 4,698$ 2,826$ Transfers out (8,680)(17,601)(12,211)(39,766)(4,698)(2,355) Bonds issued 19,70010,78029,024 Note Proceeds7,000 Lease purchase proceeds591 Premium on bonds issued 307 Discount on bonds issued(111) Payments to refunded bond escrow agent (6,644) Residual equity transfer out(1,845) Total other financing sources (uses) (1,254)$ (1,103)$ 19,589$ 11,443$ -$ 29,494$ Net change in fund balance (553)$ (5,564)$ 15,470$ 265$ 14,230$ 23,920$ Debt service as a percenta ge of noncapital expenditures12.8%13.8%15.1%17.0%19.9%24.7% TOWN OF MARANA ASSESSED VALUE AND ESTIMATED ACTUAL OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (Amounts expressed in thousands) Assessed Less: Tax TotalValue as a Estimated Exempt Fiscal Year Taxablepercentage Actual Real Ended June ResidentialCommercialAssessedTotal Direct of actual Taxable Property 30PropertyPropertyValueTax Rate Value Value 2007225,022 204,381 16,038 413,365 5.06743,321,030 12.4% 2006164,013 161,008 14,694 310,328 5.34062,456,873 12.6% 2005126,136 136,270 14,149 248,257 5.46111,933,911 12.8% 2004104,736 122,380 13,696 213,420 5.49671,650,694 12.9% 200380,003 115,954 13,079 182,878 5.49811,363,836 13.4% 200263,610 100,054 7,113 156,551 5.49981,116,238 14.0% 200150,080 87,121 7,226 129,975 5.5828920,663 14.1% 200040,168 70,954 6,178 104,944 5.5635729,878 14.4% 199954,505 38,644 5,822 87,327 5.5651591,981 14.8% 1998- 5.2487 SOURCE: Pima County Assessor's Office TOWN OF MARANA PRINCIPAL PROPERTY TAXPAYERS FOR THE YEAR ENDING JUNE 30, 2007 (Amounts expressed in thousands) 2007 Percentage of Total Taxabletaxable AssessedAssessed Value Rank Value Taxpayer Fidelity National Title TR 302122,659$ 156.3% Fidelity National Title TR 60338352 27.5% Bank of America339 37.2% Smith Food & Drug Centers Inc324 46.9% Gladden 25 LLC282 56.0% Title Security Agency of Arizona TR 891234 64.9% Weingarten Newquist LLC224 74.8% Fidelity National Title TR 60183144 83.0% Wells Fargo Bank National Assn83 91.8% First American Title TR 917079 101.7% Totals 4,721$ Notes: The Town of Marana does not impose a property tax; principal property taxpayers represented above reflect those properties within the boundaries of the Gladden Farms Community Facilities District, which does impose a property tax. Source: Pima County Treasurer's Office TOWN OF MARAN A PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (Amounts expressed in thousands) Collected within the Fiscal Year of Total Collections the Levyto Date Fiscal Year Ended June Total Tax Levy for PercentagePercentage 30Fiscal YearAmountof LevyAmountof Levy 2007287$ 286$ 99.70%286$ 99.70% 200664 62 97.54%64 100.00% 20058 8 99.96%8 100.00% 2004- - - - - 2003- - - - - 2002- - - - - 2001- - - - - 2000- - - - - 1999- - - - - 1998- - - - - Notes: The Town does not impose a property tax; levies and collections presented above reflect assessments directly related to the Gladden Farms Community Facilities District. Prior to fiscal year 2005, the CFD did not exist; therefore, no levies or collections are presented in fiscal years 2004 and prior. Source: Pima County Treasurer's Office TOWN OF MARANA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (Amounts expressed in thousands, except per capita amount) Governmental Activities GeneralPercentage RevenueObligationCapitalTotal Primary of Personal Fiscal Year BondsBonds*LeasesGovernmentIncome **Per Capita 200730,460$ 5,355$ 154$ 35,969$ 0.0%1,080.15$ 200631,835 2,105 - 33,940 118.2%1,131.33 200533,395 2,105 - 35,500 132.9%1,328.34 200432,100 - 154 32,254 129.6%1,396.34 200313,780 - 199 13,979 61.3%685.00 200215,080 - 544 15,624 71.3%863.09 200116,330 - - 16,330 76.4%1,039.86 200017,515 - 50 17,565 85.6%1,235.61 19997,930 - 122 8,052 42.2%612.91 19988,175 - 224 8,399 46.7%767.17 Notes: * Bonds issued for Gladden Farms Facilities District FY 05, a component unit of the Town. Principal debt payoff does not begin until FY 2008 ** Indivdiual statistics not available for Marana, included in figures for Pima County and Tucson Metropolitan area. Source: US Census Bureau, Bureau of Economic Analysis TOWN OF MARANA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (Amounts expressed in thousands, except per capita amount) Less: AmountsPercentage of AvaliableEstimated Generalin Debt Actual FiscalObligationServiceTaxable Value Per YearBondsFundTotal of propertyCapita 20075,355 5,355 0.16%16.1% 20062,105 - 2,105 0.09%7.0% 20052,105 - 2,105 0.11%7.9% 2004- - - 0.00% 2003- - - 0.00% 2002- - - 0.00% 2001- - - 0.00% 2000- - - 0.00% 1999- - - 0.00% 1998- - - 0.00% Notes: The Town of Marana does not impose a property tax; any property taxes presented in this report are directly related to the Gladden Farms Community Facilities District, formed in fiscal year 2005. Consequently, no general obligation bonds were issued by the District until fiscal year 2005. TOWN OF MARANA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30,2007 (Amounts expressed in thousands) Estimated Estimated Share of Debt Outstanding Percentage Overlapping Debt Governmental Unit Applicable State of ArizonaNone5.70%None Pima County 231,310,000$ 4.52%10,455,212$ Pima County Community College District 610,730,000 4.52%2,790,196 Pima County Flood Control District2,230,000 5.08%113,284 Metropolitan Domestic Water Improvement District None71.11%None Northwest Fire District13,105,000 38.25%5,012,663 Gladden Farms Community Facilities District5,355,000 100.00%5,355,000 Red Hawk Community Facilities District None100.00%None Tangerine Farms Road Improvement District25,774,000 100.00%25,774,000 Flowing Wells Unified School District No. 810,730,000 100.00%10,730,000 Marana Unfied School District No. 6107,125,000 52.32%56,047,800 Town of Marana *None100.00%None $ 116,278,155 Total direct and overlapping debt Notes: * Does not include the Municipal Property Corporation municipal facilities revenue bonds outstanding in the aggregate principal amount of $31,150,150. Does not include the Bonds. Sources: The various entities TOWN OF MARANA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (Amounts expressed in thousands) Gladden Farms Community Facilities District General Tangerine Road Farms Improvement District Special Obligation Bonds *Assessment Bonds ** Special Property Tax Assessment Fiscal YearCollectionsCoverage CollectionsDebt Service Coverage Debt Service Principal Interest Principal Interest 2007- - 128$ - - - 186$ - 2006- - - - - - - - 2005- - - - - - - - 2004- - - - - - - - 2003- - - - - - - - 2002- - - - - - - - 2001- - - - - - - - 2000- - - - - - - - 1999- - - - - - - - 1998- - - - - - - - Notes: * Bonds issued for Gladden Farms Facilities District FY 05, a component unit of the Town. Principal debt payoff does not begin until FY 2008. Collection of property tax revenues to begin fiscal year 2008. **Special assessment nonds issued for Tangerine Road Farms Improvement District, a governmental fund of the Town. Principal debt payoff begins FY 2008. Collection of fees related to special assessments to begin fiscal year 2008. TOWN OF MARANA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Education Level Per Capita PersonalMedianin Years of SchoolUnemployment Fiscal YearPopulation Personal IncomeAgeFormalEnrollmentRate Income Schooling* 200733,300 29,870,880 897 34.5- 13,194 3.2% 200630,000 28,722,000 957 34.5- 13,343 4.0% 200526,725 26,703,829 999 34.5- 13,027 4.2% 200423,099 24,881,039 1,077 34.5- 12,745 4.4% 200320,407 22,800,566 1,117 34.5- 12,404 5.3% 200218,103 21,925,506 1,211 34.5- 12,230 5.4% 200115,704 21,386,801 1,362 34.5- 12,073 3.7% 200014,216 20,513,582 1,443 34.513 11,849 3.5% 199913,138 19,060,860 1,451 34.5- 11,358 2.1% 199810,948 18,002,341 1,644 34.5- 11,127 2.0% * Information published for census year only. Sources: U.S. Census Bureau, Population Division; Arizona Department of Economic Security; Pima Association of Governments; Marana Unified School District TOWN OF MARAN A PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AG O 20071998 Percentage of Total Percentage of Total City EmploymentCity Employment EmployeesEmployees Employe r Marana Unified School District1,660 22.6%1,140 17.1% Army Reserve/National Guard Training Center635 8.6%170 2.5% Evergreen Air Center, Inc.605 8.2%645 9.6% Wal-Mart450 6.1%- 0.0%(2) Town of Marana330 4.5%139 2.1% Costco275 3.7%- 0.0%(1) Sargent Controls & Aerospace240 3.3%210 3.1% Target225 3.1%- 0.0%(1) Comcast of Arizona209 2.8%189 2.8% Coca-Cola Bottling185 2.5%212 3.2% Notes: (1) 1998 Profile unavailable (2) New business opened FY 2003 TOWN OF MARANA FULL-TIME EQUIVALENT TOWN GOVERNMENT EMPLOYEES BY FUNCTION LAST FIVE FISCAL YEARS 20032004200520062007 Function General Government 38.541.541.554.558.0 Development & planning services32.539.050.551.551.5 Public Safety ----- Police----- Officers67.067.071.082.084.0 Civilians 20.020.021.027.029.0 Highways and streets 28.031.032.035.036.0 Engineering 13.013.018.520.522.0 Maintenance----- Culture and recreation 35.035.835.541.049.3 Community Development1.01.01.01.03.0 Water Utilities9.011.014.018.518.0 Municipal Airport1.02.02.02.02.0 Total 245.0261.3287.0333.0352.8 Source: Town of Marana, Human Resources Department TOWN OF MARANA TOP TEN TAXPAYERS BY SELECTED INDUSTRY GROUPS AS OF JUNE 30, 2007 RetailConstructionRestaurant & Bars Costco Wholesale CorporationPulte HomesMcDonald's #2397 Wal-Mart Store #1381Meritage Homes of Arizona, Inc.Texas Roadhouse The Home DepotUS Home of Arizona Construction CompanyStarbucks Coffee #5326 Sam Levitz Furniture Company, Inc.Richmond American Homes of Arizona, Inc.Wendy's of Tucson Lowe's HIW Inc.Borderland Construction Company, Inc.Kentucky Fried Chicken Y303006 Target Stores T-1439D R Horton Inc.La Parilla Suiza Kohl's Department StoreSky Ranch Homes, LLCEeegee's Sportsmans WarehouseArizona Underground, Inc.Carl's Jr Restaurant #7621 Tucson Cycle & SkiHallcraft Construction, Inc.Jack in the Box Fry's Food & Drug Stores #2Hunter Contractor CompanyTaco Bell Source: Town of Marana Finance Department, Arizona Department of Revenue TOWN OF MARANA SINGLE FAMILY RESIDENTIAL PERMITS LAST SEVEN FISCAL YEARS Month 2007200620052004200320022001 January 3552130811018353 February 834412971996250 March531341801051058765 April5568203521297068 May816122213613810581 June6575123108994766 July 921681409912281 August 991431341238773 September 27149175967090 October 34139141867265 November 6179119555550 December 591061367610246 Calendar Total372806177113981206962 788 Fiscal Total 7441218183210881179859712 Source: Town of Marana Finance Department, Town of Marana Building Services (This page intentionally left blank) ×²·¼» ½±ª»® () Town of Marana 11555 W. Civic Center Dr. Marana, AZ 85653 Phone: 520-382-1900 www.marana.com Fax: 520-382-1901