City Council Regular Meeting 220 N. Main St Phoenix Plaza Civic Center Tuesday, February 4, 2019
1. CALL TO ORDER Mayor Luz called the regular meeting of the City Council to order on Monday, February 4, 2019, at 6:30 p.m. at the Phoenix Plaza Civic Center.
ROLL CALL
PRESENT: Sarah Westover, Angie Vermillion, Robert Crawford, Terry Baker, Jim Snyder, Stuart Warren, and Chris Luz
STAFF PRESENT: Aaron Prunty, City Manager Kimberlyn Collins, City Recorder Douglas McGeary, City Attorney Ray DiPasquale, Public Works Director Derek Bowker, Chief of Police J.C. Boothe, Finance Director
2. PLEDGE OF ALLEGIANCE
3. PRESENTATIONS a. FY 2017-18 Financial Audit Report by KDP Mark Damon and Jeny Grupe, KDP, Certified Public Accountants presented the FY 2017-18 auditor report. (Exhibit A) Mr. Damon stated in their opinion, the financial statements referred to above present fairly, in all material respects, and talked about the different activities of the government. This represents an unmodified opinion, which is the highest form of assurance KDP can give on financial statements. Mr. Damon reviewed their independent Auditors report required by the Oregon State.
Mr. Damon clarified when Council became mirrored of the Urban Renewal Agency those documents were blended within the City’s records. The Urban Renewal Agency still has its stand-alone audit but folds into the City documents. (Exhibit B)
Mr. Damon presented the Council with two letters discussing Professional Standards. (Exhibit C) and stated it was a pleasure to work with the City and being a part of the organization.
Mayor Luz asked how the City is positioned with our PERS liability. Mr. Damon clarified the City’s net position in total is $11.3 million to the positive, which covers the City’s $1.4 million liability. Luz asked KDP to clarify any mishandlings of funds in the past. Mr. Damon stated if there had been any misuse of funds, they would report back to management right away.
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Luz questioned how the City of Phoenix compares financially to other cities. Mr. Damon stated Phoenix is in a good financial position. b. Semi-Annual Financial Report J.C. Boothe, Finance Director presented the Semi-Annual Report to Council. (Exhibit D)
Luz asked if marijuana revenue is less due to the lower cost of marijuana. Boothe stated that would be her guess.
4. PUBLIC COMMENTS Tony Chavez, Phoenix inquired about the on-duty police officer participating in the swearing in of the Mayor and the lack of leadership from Council President, at the last City Council meeting. Mr. Chavez commented he understands the meeting was cut short but asked for the Mayor to address the issues as promised at the previous meeting. Mayor Luz stated he would add those points to Mayor’s comments at the end of the meeting.
Dr. Michael Shunk, Phoenix spoke to the last City Council meeting surrounding the Mayor’s disregard to the Phoenix Municipal Code 2.28.090. (Exhibit E)
Rhianna Simes, Phoenix spoke to her treatment as a Parks and Greenway Commissioner. (Exhibit F)
Clarkie Clark, Phoenix spoke to the status of the skate park. (Exhibit G)
Sarah Collins, Phoenix spoke in support of the community newsletter. Ms. Collins comes from a town where the community newsletter played an essential role for the citizens to receive local information.
Andrea Adams, Phoenix welcomed Councilor Crawford and Vermillion to the council. Ms. Adams spoke to the hard job they have for the next few years. Ms. Adams stated she has attended over 60 City Council meetings in the last five years. Ms. Adams spoke to the mistreatment by leadership in the City and encouraged Council to have their eyes wide open as they move forward and to make sure they are a good community partner and citizen with the women in the City.
5. CONSENT AGENDA a. Reports for Information & Possible Action: 1. Approval of Temporay Liquor License for the Phoenix Clubhouse 2. Appoint Budget Officer for FY 2019-20 and Approve Budget Calendar for FY 2019- 20
Motion: So moved. MOVED BY SNYDER, SECONDED BY WARREN. No further discussion.
MOTION APPROVED UNANIMOUSLY 6. CONSENT AGENDA ITEMS PULLED FOR DISCUSSION
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a. Minutes from City Council Meeting, Janaury 22, 2019 Mayor Luz asked Kimberlyn Collins, City Recorder if the caveat for the IGA was mentioned in the minutes. Recorder Collins stated the caveat are in the minutes.
Motion: So moved. MOVED BY SNYDER, SECONDED BY WARREN. No further discussion.
MOTION APPROVED UNANIMOUSLY
7. UNFINISHED BUSINESS a. Mayor’s Newsletter Tony Chavez, Phoenix presented a petition from Phoenix citizens who support having the Mayor’s newsletter be changed to a community newsletter. (Exhibit H) Mr. Chavez explained we are the only City in the valley that does not have a community newsletter, and this would be a great tool to bring people together from all parts of the community. The community newsletter would provide information to citizens and staff by providing a better way to connect.
Dr. Michael Shunk, Phoenix spoke to the support of a community newsletter. (Exhibit I)
Clarkie Clark, Phoenix spoke to the support of the community newsletter but is concerned with the Phoenix residents that do not have a Phoenix zip code. Ms. Clark stated the government does need more communication with all constituents, and efforts should be taken to reach all households.
Charlette Poulos, Phoenix spoke in favor of the community newsletter and presented a sample of the Talent community newsletter that is published monthly in the Flash. (Exhibit K)
Christine Totten, Phoenix spoke in favor of turning the Mayor’s newsletter into a community newsletter.
Andrea Adams, Phoenix spoke in support of changing the Mayor’s newsletter to a community newsletter and adding a section into the newsletter where a citizen could volunteer, submit articles, or have citizens highlighting City Council members.
Leigh Naumann, Phoenix spoke in favor of abolishing the Mayor’s newsletter and creating a community-based newsletter. This will promote inclusivity in our community and give a voice to all members and disseminate information accurately and unbiased.
Aaron Prunty, City Manager stated the cost to do a monthly newsletter would be approximately $1,300 - $1,400 per issue. The cost would fluctuate depending on the number of pages in each issue.
Councilor Warren thanked everyone for their comments and sharing their thoughts, and thanked Mr. Chavez for bringing the petitions. Westover spoke in favor of the community forming a group that meets once a month to process the newsletter, and staff can proofread the articles.
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Councilor Baker stated there is overwhelming support for the community newsletter, and since we represent the community, we need to serve their interests. Baker commented he believes monthly is too much, but every other month keeps it fresh and alive. Baker is in favor of the community creating the newsletter with a Mayor’s page. Baker suggested we work out all the details, make it an email blast, and doesn’t believe the money for the hard copies should be an issue.
Councilor Warren stated a monthly newsletter could keep it down to one page, which makes the cost more manageable, easier to fill the newsletters and print. Warren stated we need to do it right from the beginning and make an investment into this project and the community.
Councilor Snyder spoke to Councilor Westover’s idea of having citizens put the newsletter together, and former Councilor Shunk’s idea of the newsletter coming from the staff. Snyder stated we couldn’t do both, and we need a centralized editor to bring together the City’s portion and the citizens portion of the newsletter. Snyder commented we need to be sure to reach those in the City but are not in our system.
Mayor Luz explained the challenges and process of his newsletter. Luz commented he wanted to be sure the newsletter doesn’t die down if it’s not done appropriately.
Councilor Vermillion agreed with Councilor Snyder’s idea to have a community segment, staff report, and a Mayor’s page, with staff editing before being sent out.
Westover agreed it needs to go through the budget cycle for approval and suggested setting up an informal committee to discuss how to move forward with a liaison from the Council. The committee needs to develop the criteria, timelines, who would contribute, and format. These are the logistics to discuss, and once established, we can come up with a proposed budget that can be submitted to the budget committee. Westover asked if there was a Councilor who would be willing to sit on this committee. Councilor Warren offered to help.
Motion: I move that we move forward with getting a community group together and have Councilor Warren support that group and establishing some criteria, logistics, and a proposed budget for a community newsletter. MOVED BY WESTOVER, SECONDED BY BAKER. Councilor Vermillion questioned if it would be once a month. Baker stated that would be up to the committee to determine, but highly suggested every other month. Luz agreed to every other month but stressed the newsletter should contain current events and suggested our homepage have current events so that the community can be kept up to date on the events.
ROLL CALL VOTE AS FOLLOWS: Ayes: Vermillion, Warren, Snyder, Baker, Crawford, Westover MOTION APPROVED WITH SIX AYES b. City Manager’s Evaluation Councilor Baker commented he thought this process was figured out last summer and would like to go back to that process. Council and staff discussed the different options and the best method for Department Heads.
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Tony Chavez, Phoenix stated Phoenix has a long history of City Manager turnover and controversy in the way they were treated and let go. Every time this happens, it costs the City and taxpayers thousands of dollars. In the last ten years, it has cost the City well over $100,000 in the loss of City Managers and litigation. More important than money is when we lose a City Manager it sets the City productivity and growth back and stops the City from its momentum. Every time that happens it takes a long time to get that momentum back. Mr. Chavez requested the Council keeps the process that was decided in July of 2018 for a fair and transparent process.
Andrea Adams, Phoenix commented it makes it very difficult to do business in the City of Phoenix with the turnover of City Managers. They have gone through five or six City Managers who change the process each time, and this makes it challenging to do business in the City. Ms. Adams reminded Council we are the City’s customers. The continued changing of the process for OLCC permits causes interruptions to the staff and the businesses.
Leigh Naumann, Phoenix spoke to his time sitting on committees and for the City of Ashland, and he believes a review process needs to quantitate and be objective, and the rubric you have laid out in the agenda report does just that.
Pam Cooper, Phoenix spoke to the uncomfortableness of staff having to face the people telling you what you are doing wrong.
Douglas McGeary, City Attorney stated the process is outlined on pg. 55 of the packet.
Motion: I move to reaffirm our process for the Phoenix City Manager performance evaluation. MOVED BY WESTIOVER, SECONDED BY WARREN. Councilor Snyder suggested adding an additional bullet point showing the Department Heads will fill out their forms and submit them to Council. Aaron Prunty, City Manager stated that portion was outlined in the agenda report and the approval of the original process back in July of 2018.
ROLL CALL VOTE AS FOLLOWS: Ayes: Vermillion, Warren, Snyder, Baker, Crawford, Westover MOTION APPROVED WITH SIX AYES
8. NEW BUSINESS a. Medford Water Commission Rate Increase Ray DiPasquale, Public Works Director reported the Medford Water Commission notified users of a rate increase to take effect on March 1, 2019. The rate increase would be $0.06 per 1000 gallons of water consumed. This would add a little less than $20,000 of additional costs to the City, assuming we will use the same amount of water we used the previous year. The new rates impact the City’s rate structure, and the staff is recommending a rate increase to offset Medford Water Commission changes. The water fund is operating in a suitable condition, and a base rate increase from $37.21 to $37.51 for the first 5,000 gallons and an increase of $0.06 per 1000 gallons of consumption over the first 5,000 gallons will be sufficient to help ease the increase. Staff recommends having the base rate increase effective on July 1, 2019.
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Luz spoke to an additional rate increase that will come from the Medford Water Commission next year to help fund the Duff Treatment Plant #2. DiPasquale stated this is true, but it’s not as significant for the City like bulk water purchasers just because of the way the infrastructure improvements agreements workout.
Luz suggested making the change to a tier three. Prunty stated we could come back to the Council with different rate changes for different tiers. Warren requested staff come back with information that would show the average impact on residential and commercial here in Phoenix. DiPasquale concurred.
Motion: I move to extend the meeting to 9:30 p.m. MOVED BY WARREN, SECONDED BY BAKER. No further discussion.
APPROVED UNANIMOUSLY b. Status of the Parks and Greenway Commission Mayor Luz commented that inaccurate information had been put on Facebook and he would like staff to speak to the issue first, before going into public comment on the matter.
Aaron Prunty reported there are a few members left on the Parks and Greenway Commission and the ordinance that created the commission doesn’t define the role and responsibility of the commission. A few years back the commission focus changed, to be more policy minded instead of event planning. This caused members to drop off from the commission, and the idea is to move back to a commission or committee that deals with events such as Parks and Recreation. This could be tied into the civic center and promote more volunteerism in Phoenix.
Councilor Warren commented they lost Laura Bellah when they switched to more of a political advisory commission. The last two members resigned because they served their time. It is not due to losing the recreational element, in fact, we still operate in that capacity. Warren stated he believes we need to do a better job of recruiting new members back on the commission.
DiPasquale stated the City Council has control of the funding mechanisms, the budgetary process, and policy decisions, which effects how we can do anything with the parks or facilities. Considering all the funds run through the City Council it makes sense for items like the pest management discussion to go before Council, without an additional step for the process.
Luz commented the items in the Parks Master Plan is a good fit for the Parks and Greenway Commission but handling things like a pest management program is the wrong place, and it should come to Council. DiPasquale stated even items like the skatepark should be able to go right before Council without a barrier to get in front of the decision makers. Warren commented the Parks and Greenway Commission wasn’t doing anything with the pest management plan because they can't do so. Unfortunately, the last City Council meeting went over, and I wasn’t able to talk about the Parks and Greenway meeting. Warren stated it was a unanimous vote after a very tough conversation. Motion: Move to have an opportunity to discuss with City Council the use of pesticides within the City.” Warren stated this is a very appropriate conversation for the
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Parks and Greenway Commission to have since they are in charge of the Parks where kids and other people play.
Westover stated she pulled Talent’s ordinance for their Parks and Recreation Committee and she believes it is just a case of confusion with roles. We, as a City, have failed in training and making sure what the roles are to serve on these committees and commissions. Westover believes the Parks and Greenway Commission can serve both as a policy committee and a recreational committee. If the roles and responsibly are defined clearly in an ordinance, this will help eliminate sunsetting the commission. DiPasquale suggested the City should have somebody at the City who is responsible for recreation. Recreation and volunteerism go hand and handing in this community.
Council and staff discussed status and alternatives for the Parks and Greenway Commission and if it should be sunset or reorganize.
Nancy Peterson, Chair of the Parks and Greenway Commission stated she has served about a decade and through the years the Parks and Greenway Commission has changed dramatically. It began as a group that got together to do events and bring the community together, and over time it has changed to the political arm. Volunteers are difficult to get, and the commission is uncertain how many events will happen this year since we do not have an event or volunteer coordinator.
Sandy Wine, Phoenix commented she would volunteer for the City of Phoenix in any compacity they need because when you live in Phoenix you are a part of the community and it’s something you should do. Ms. Wine asked the Council to not give up on the commission.
Rhianna Simes, Phoenix stated she serves on the Parks Commission and doesn’t appreciate the assumption that has been made about their availability or their interest in events. Ms. Simes clarified that the duties and roles had been outlined in Ordinance No. 960. “The Parks and Greenway Commission may make studies, hold hearings and prepare reports and recommendations on its initiative or at the request of the city council.” Now that the commission has more information on how the parks are managed, we want to talk about the matter. Ms. Simes spoke to the publics input that went into the Parks Master Plan where it states workshop participants were dissatisfied with the number of pesticides used in the parks and expressed a preference to natural landscaping. We desire to be here for public safety of citizens and City employees.
Sarah Collins, Phoenix spoke in opposition of using glyphosate-based herbicides in the City parks. (Exhibit L)
Motion: I move to extend the meeting to 10:00 p.m. MOVED BY WESTOVER, SECONDED BY VERMILLION. No further discussion.
ROLL CALL VOTE AS FOLLOWS: Ayes: Vermillion, Westover, Snyder, Baker, Crawford, Warren MOTION APPROVED WITH SIX AYES
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Lyla Heigl, Phoenix spoke to her time on the commission and the activities over the years. Ms. Heigl shared her concerns for children at the schools and the parks, with the herbicide spray.
Lyla Heigl read Carolyn Marshall’s letter into the record. (Exhibit M)
Lyla Heigl read Jason Couch’s letter into the record. (Exhibit N)
Rhianna Simes, Phoenix spoke against the Parks and Greenway Commission being sunset. (Exhibit O)
Clarkie Clark, Phoenix spoke against the Parks and Greenway Commission being sunset. (Exhibit P)
Martha Hess, Phoenix thanked everyone for bringing the topic up and addressing this matter. Ms. Hess is excited about people willing to step up and do this volunteer work. She appreciates Prunty and DiPasquale for seeing the holes in the legislation and for wanting to clarify it. She encouraged the Council to work with the commission and to create one where all the roles and responsibilities are clarified. That’s positive stuff moving forward.
Meena Scott, Phoenix stated she is a member of the community garden and also a professional landscaper. Ms. Scott spoke in favor of keeping the commission.
Jim Chase, Phoenix stated the last time he attended a council meeting was for the road diet. Mr. Chase wants to make sure the community garden will continue to be available as it is an asset to many of the citizens. Mr. Chase stated he wanted to speak positively about the matter this evening but as an infrequent attendee at City Council meetings he is continually dismayed at the dysfunction, and lack of transparency from Council.
Leigh Naumann, Phoenix gave a definition of what sunset means and requested Council give the commission more teeth and power. Mr. Naumann stated parks are key to developing strong, healthy, and functioning communities and the City might want to assign staff that governs our parks.
Laura Bellah, Phoenix spoke in support of keeping the Parks and Greenway Commission. Almost every community has a Parks and Recreation Department. Ms. Bellah stated this was a learning experience and when a difficult issue came up that we didn’t want to deal with we tried to sunset the Commisison. This should be an opportunity to grow.
Terry Trantham, Medford informed the Council she is a past member of Bee City USA and a concerned citizen. Ms. Trantham commented on how dishearten she was to learn the commission might go away because we need more structure for parks and recreation.
Andrea Adams, Phoenix recommended Council listen to the citizens. Phoenix is not a big place, and people do hear about ill treatment on boards. Ms. Adams spoke in opposition of sunsetting
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the Parks and Greenway Commission and concurred with Mr. Naumann about giving the Parks and Greenway Commission more teeth.
Mayor Luz stated we would not come to any conclusions this evening, but we will add it to the agenda for future discussion.
10. STAFF REPORTS: Douglas McGeary, City Attorney no report.
Aaron Prunty, City Manager no report.
11. MAYOR AND COUNCIL COMMENTS/ REPORTS: Council Baker commented on the excellent turnout tonight and was please with how often the civic center is being used. Baker stated he hopes it inspires other businesses to come to Phoenix.
Councilor Crawford thanked everyone and stated this is what makes our City great. We need to allow our citizens to talk about things that concern them, and we need to be here to listen. Crawford is excited to be here and move forward.
Councilor Snyder stated we also have people who are within the boundaries of the zip code that are not within our municipal boundaries. At some point me need to get an understanding of this to be able to handle distribution and various concerns.
Councilor Warren thanked everyone for coming. Warren stated it had been a tough meeting, but there were points where we all laughed together, and that’s what makes this community so great. Warren apologized to those who felt stepped on or kept quiet.
Councilor Vermillion thanked everyone and the volunteers who have spent hours and years volunteering. Vermillion spoke to the Phoenix Grad Night Auction on Sunday, February 10th at 2 pm and the meeting with Cindy Cameron and Terri Chavez from the Chamber of Commerce.
Councilor Westover thanked everyone for their time and their passion for making Phoenix a better place. Westover is looking forward to the pesticide discussion at the half-day strategic plan.
12. ADJOURNMENT: The meeting adjourned at 10:00 p.m.
Respectfully submitted,
Kimberlyn Collins City Recorder
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Exhibit "A"
CITY OF PHOENIX, OREGON
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2018 WITH INDEPENDENT AUDITOR'S REPORTS
received at 2/4/19 City Council Meeting 041 CITY OF PHOENIX, OREGON
Year Ended June 30, 2018
ELECTED OFFICIALS OF THE CITY OF PHOENIX, OREGON
Chris Luz Mayor 121 Samuel Lane Loop Phoenix, Oregon 97535 541-261-3139
Jim Snyder Councilor 809 Amerman Dr. Phoenix, OR 97535 541-897-0595
Michael Shunk Councilor 458 Elm St. Phoenix, OR 97535 541-531-4214
Sarah Westover Councilor 204 W. 2nd St. Phoenix, OR 97535 541-972-0869
Stuart Warren Councilor 111 W 3rd St./PO Box 2053 Phoenix, OR 97535 541-324-1009
Terry Baker Councilor 612 N. Church/PO Box 402 Phoenix, OR 97535 541-973-7220
Cindy Cameron Councilor 465 Elm St. Phoenix, OR 97535 541-941-6512
ADMINISTRATION
Aaron Prunty City Manager 112 W. 2nd Street P.O. Box 330 Phoenix, Oregon 97535
Janette Boothe Finance Director/Human Resource Director 112 W. 2nd Street P.O. Box 330 Phoenix, Oregon 97535
042 CITY OF PHOENIX, OREGON Year Ended June 30, 2018 Table of Contents
Page
Independent Auditor's Report A-1 – A-3 Management’s Discussion and Analysis B-1 – B-8 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 1 Statement of Activities 2 Fund Financial Statements: Balance Sheet - Governmental Funds 3 Reconciliation of Governmental Funds Balance Sheet to Statement of Net Position 4 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities 6 Statement of Net Position - Proprietary Fund 7 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Fund 8 Statement of Cash Flows - Proprietary Fund 9 Notes to Basic Financial Statements 10 – 42
Required Supplementary Information: Schedule of the City’s Proportionate Share of the Net Pension Asset/(Liability) and Schedule of the City’s Contributions (OPERS) 43 Schedule of the City’s Proportionate Share of the Net Other Post Employment Benefit (RHIA) 44 Major Governmental Funds: Combined General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance 45 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: General Fund 46 Street Fund 47 Street SDC Fund 48 Combined Phoenix Urban Renewal Agency Fund Schedule of Revenue, Expenditures and Changes in Working Capital 49 Schedule of Revenues, Expenditures and Changes in Working Capital – Budget to Actual: Phoenix Urban Renewal Agency Capital Projects Fund 50 Phoenix Urban Renewal Agency Debt Service Fund 51
043 Table of Contents (continued)
Other Supplementary Information: Major Governmental Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual: Phoenix Urban Renewal Agency Bond Fund 52 Non-Major Governmental Funds: Combining Non-Major Governmental Schedule of Revenues, Expenditures and Changes in Fund Balance 53 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual: Advertising Promotion Fund 54 Tourist Usage Fund 55 Parks and Recreation SDC Fund 56 Proprietary Funds: Combining Proprietary Schedule of Revenues, Expenditures and Changes in Working Capital & Water Fund 57 Schedules of Revenues, Expenditures and Changes in Fund Working Capital - Budget and Actual: Water Fund 58 Water System Development Fund 59 Stormwater Development Charges Fund 60 Reserve Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Capital Reserve Fund 61
Independent Auditor’s Report Required by Oregon State Regulations 62 – 63
044 INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Council City of Phoenix Phoenix, OR 97535
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Phoenix Oregon, (the City) as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Phoenix, Oregon, as of June 30, 2018, and the respective changes in financial position, and where applicable, cash flows, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
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045 Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, general fund and major special revenue fund budgetary comparison information, certain pension schedules, and certain other post-employment benefit schedules as listed in the Table of Contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board (GASB), who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to management’s discussion and analysis, certain pension schedules, and certain other post- employment benefit schedules in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on management’s discussion and analysis, certain pension schedules, and certain other post-employment benefit schedules because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
The general fund and major special revenue fund budgetary comparison schedules, as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the general fund and major special revenue fund budgetary comparison information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The other supplementary information listed in the table of contents is presented for purposes of additional analysis and is not required as part of the basic financial statements.
The other supplementary information is the responsibility of management and was derived from, and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplementary information is fairly stated in all material respects in relation to the financial statements as a whole.
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046 Other Reporting Required by Oregon State Regulations
In accordance with Oregon State Regulations, we have also issued our report dated December 21, 2018, on our consideration of the City’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, including the provisions of Oregon Revised Statutes (ORS) as specified in Oregon Administrative Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations. The purpose of that report is to describe the scope of our testing necessary to address the required provisions of ORS, and not to provide an opinion on compliance with such provisions.
Mark E. Damon CPA, Partner KDP Certified Public Accountants, LLP Medford, Oregon December 21, 2018
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047 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
This Management Discussion and Analysis (MD&A) is presented to facilitate financial analysis and provide an overview of the financial activities of the City of Phoenix, Oregon (the City) for the fiscal year ended June 30, 2018. Information in the MD&A is based on currently known facts, decisions and conditions. Please read it in conjunction with the basic financial statements and the accompanying notes to those financial statements. It should also be noted that all amounts included in text below are rounded for ease of reading.
FINANCIAL HIGHLIGHTS
• In the government-wide statements, the City’s assets and deferred outflows totaled $20.1 million at June 30, 2018, consisting of $13.47 million in capital assets, $5.46 million in cash and investments, $655 thousand in receivables and $8 thousand in other assets. The City’s assets and deferred outflows increased by $2.38 million, or 13.4 percent from the prior year.
• In the government-wide statements, the City’s liabilities and deferred inflows totaled $8.8 million at June 30, 2018, consisting of $6.46 million in long-term debt, $1.44 million in net pension liability and about $754 thousand in accounts payable and other current liabilities. The City’s liabilities and deferred inflows increased by $834 thousand or 9.47 percent from the prior year.
• In the government-wide statements, the City’s net position (assets/deferred outflows minus liabilities/deferred inflows) totaled $11.35 million at June 30, 2018, of which $7.01 million was net investment in capital assets, $235 thousand was considered restricted, and $4.1 million was considered unrestricted. In the prior year, net position totaled $9.8 million of which $5.63 million was net investment in capital assets, $1.22 million was considered restricted, and $2.95 million was considered unrestricted.
• The City’s net position increased $477 thousand during the fiscal year ended June 30, 2018, an increase of about 4.87 percent (before considering restatements). This increase is related to increased revenues in both the governmental activities and the business type activities. The beginning net position was restated as a result of the Phoenix Urban Renewal Agency becoming a blended component unit during fiscal 2018. See Note 3 of the financial statements for further information.
• In the government-wide statements, the City generated program revenues of $1.82 million which is primarily Charges for Services. General revenues which include taxes, licenses and permits, intergovernmental, franchise fees, fines and forfeitures and earnings on investments totaled $3.21 million for governmental activities. The business type activities generated $34 thousand in general revenues. The Government-Wide expenses were $3.41 million for governmental activities and $1.18 million for business type activities. Total Government Wide expenses were $4.60 million.
B-1 048 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
OVERVIEW OF THE FINANCIAL STATEMENTS
The Basic Financial Statements and supplementary information are presented using the integrated approach as prescribed by GASB Statement No. 34. The Basic Financial Statements are comprised of three components:
1. Government-wide financial statements
2. Fund financial statements
3. Notes to the basic financial statements
The Basic Financial Statements present financial information about the City as a whole and about its activities. Following the Basic Financial Statements is the Required and Other Supplementary Information which provides budgetary comparisons for the governmental and proprietary funds, and other combining fund schedules. Finally, completing the document is a series of other financial schedules, and reports by the independent certified public accountants, as required by statute.
1. Government-wide Financial Statements
The government-wide financial statements are designed to present the financial picture of the City in a manner similar to a private-sector business, i.e. from the economic resources measurement focus using the accrual basis of accounting.
The statement of net position includes all assets and deferred outflows of the City (including infrastructure) as well as all liabilities and deferred inflows (including long-term debt). Net position is the difference between assets/deferred outflows and liabilities/deferred inflows, which is one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net position may be an indicator of whether its financial health is improving or deteriorating.
The statement of activities reports all revenues when earned and expenses when incurred regardless of the timing of related cash flows. The focus of the statement of activities is to present the major program costs, matching major resources with each. To the extent a program’s costs are not recovered by grants and direct charges, it is paid from general taxes and other general revenues. This statement summarizes and simplifies the user’s analysis to determine the extent to which programs are self-supporting and/or subsidized by general revenues.
The government-wide financial statements distinguish programs/functions of the City that are governmental (principally supported by taxes and intergovernmental revenues) to those that are business-type (intended to recover all or a significant portion of their costs through user fees and charges).
Governmental activities of the City are categorized as follows:
• Executive – includes the City Manager function and administration oversight.
• Administrative – includes centralized services such as information technology, administration and financial services and other general functions not separately identified as a program.
• Public Safety – includes police department.
B-2 049 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
• Parks department – includes maintenance of the City’s parks and playgrounds.
• Building department – includes the City’s building inspection function.
• Planning department – includes the City’s community development and building inspection functions.
• Highways and streets – includes the City’s street maintenance operations, street and local improvement construction and the City’s engineering activities.
• Non-departmental – includes those activities that are not specifically included in another department.
Business-type activities include the following:
• Water – includes all costs for maintenance, operations, and construction of the City’s water delivery system.
2. Fund Financial Statements
Following the government-wide statements is a section containing fund financial statements. The fund financial statements include statements for governmental funds and proprietary funds. Funds are used to segregate resources for specific activities or objectives.
Governmental Funds. The governmental fund statements emphasize available financial resources rather than net income. They are prepared using the current financial resources measurement focus and modified accrual basis of accounting. A reconciliation of the fund balance reported in the governmental funds balance sheet to the net position reported on the government-wide statement of net position, and a reconciliation of the change in fund balances reported in the governmental funds statement of revenues, expenditures and changes in fund balances to the change in net position reported in the government-wide statement of activities are provided to facilitate a comparison between governmental funds and governmental activities.
The City has nine governmental funds. The governmental fund statements present the five major funds separately; General Fund, Street Fund, the Street Improvement Fund, the Phoenix Urban Renewal Agency Bond Fund, and the Phoenix Urban Renewal Agency Fund. The other nonmajor funds (Advertising Promotion, Tourist Usage and Parks and Recreation SDC) are combined and presented in a single column as other governmental funds.
Proprietary Funds. Proprietary funds are used to account for activities supported by user charges and where the emphasis is on net income. The City has three enterprise funds to account for its water operations. The Water Fund is the major enterprise fund. The Water SDC Fund and Stormwater SDC Fund are budgeted separately, but are considered part of the Water Fund and are combined with that fund in the proprietary fund financial statements.
B-3 050 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
3. Notes to the Basic Financial Statements
The notes provide information that is essential for a full understanding of the data presented in the government-wide and fund financial statements (the basic financial statements). Information such as significant accounting policies and detail of certain assets/deferred outflows and liabilities/deferred inflows are included in the notes which should be read in conjunction with the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Analysis of Net Position
The City’s assets/deferred outflows exceeded liabilities/deferred inflows by $11.35 million at June 30, 2018. Net position for governmental activities totaled $8.01 million while net position for business-type activities totaled $3.25 million.
June 30, 2018 June 30, 2017
Governmental Business-type Governmental Business-type Activities Activities Activities Activities Capital assets, net $ 9,978,177 $ 3,491,670 $ 4,019,912 $ 3,482,232 Other assets 4,141,117 1,984,335 7,698,689 1,628,163 Total assets 14,119,294 5,476,005 11,718,601 5,110,395
Deferred outflow s 454,788 95,260 745,463 186,365
Total assets and deferred outflow s 14,574,082 5,571,265 12,464,064 5,296,760
Current liabilities 535,554 542,453 1,252,007 73,459 Net pension liability 1,186,869 248,603 1,339,863 334,966 Long-term debt, net 4,625,477 1,830,410 3,062,069 1,819,691 Total liabilities 6,347,900 2,621,466 5,653,939 2,228,116
Deferred inflow s 127,377 26,681 66,600 16,650
Total liabilities and deferred inflow s 6,475,277 2,648,147 5,720,539 2,244,766
Net Position: Invested in capital assets 5,352,700 1,661,260 3,962,843 1,662,541 Restricted 76,538 157,964 1,026,722 191,760 Unrestricted 2,669,567 1,428,365 1,753,960 1,197,693 Total net position 8,098,805 3,247,589 $ 6,743,525 $ 3,051,994
As mentioned earlier, net position may be an indicator of the City’s financial position. At the end of the current year, the City has a positive net position balance. Net position increased by $476 thousand before considering the restatement. The largest portion of the City’s net position is its net investment in capital assets, 62%. Its restricted/unrestricted net position represent, 38% of total net position. In the prior year, 57% of the City’s net position was net investments in capital assets, and 43% percent was restricted/unrestricted.
B-4 051 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
Analysis of Changes in Net Position (continued)
The City’s Statement of Activities for fiscal year ended June 30 follows:
June 30, 2018 June 30, 2017 Governmental Business-type Governmental Business-type Activities Activities Activities Activities Revenues Program Revenues Charges for services $ 353,885 $ 1,423,066 $ 508,963 $ 1,349,433 Operating grants 47,075 - 22,727 - General Revenues: Property taxes 1,547,057 - 1,061,121 - Other taxes 61,003 - 28,956 - Licenses and permits 81,137 - 135,825 - Intergovernmental 696,825 - 760,001 - Franchise fees 345,624 27,615 332,674 10,943 Fines and forfeitures 56,473 - 195,057 - Interest earnings 75,857 - 38,480 87 Miscellaneous 346,017 6,077 95,224 40,082 Total revenues 3,610,953 1,456,758 3,179,028 1,400,545
Expenses: Executive 366,261 - 129,129 - Administrative 122,204 - 137,026 - Planning 123,110 - 210,282 - Parks Department 139,567 - 111,287 - Building 122,384 - 127,553 - Police 1,148,559 - 1,222,218 - Highw ay and street 429,125 - 544,555 - Non-Departmental 461,321 - 139,315 - Interest Expense 498,751 - 114,092 - Water - 1,179,791 - 1,131,393 Total expenses 3,411,282 1,179,791 2,735,457 1,131,393
Transfer (to) and from other funds - - 24,121 (24,121)
Change in net position 199,671 276,967 467,692 245,031
Beginning net position - restated 7,899,134 2,970,622 6,275,833 2,806,963
Ending net position $ 8,098,805 $ 3,247,589 $ 6,743,525 $ 3,051,994
Governmental Activities
Governmental activities increased the City’s net position by approximately $200 thousand. Revenues totaled approximately $3.61 million, and consisted primarily of property taxes of approximately $1.55 million, intergovernmental of approximately $697 thousand, charges for services of approximately $354 thousand, and franchise fees of approximately $346 thousand.
B-5 052 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
Business-Type Activities
Business-type activities increased the City’s net position by approximately $277 thousand. Business- type revenues totaled $1.46 million and consisted primarily of charges for services (approximately 98%).
Charges for services, which totaled approximately $1.42 million, are comprised of solely water. Business- type activities are self-supporting where revenues are expected to cover expenses.
FUND ANALYSIS
The City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements.
Governmental Funds
The focus of the governmental funds is to provide information on near-term inflows, outflows and balances of resources that are available for spending. Such information is useful in assessing the City’s financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Major governmental funds reported by the City include the General Fund, the Street Fund, Street SDC Fund, Phoenix Urban Renewal Agency Bond Fund and Phoenix Urban Renewal Agency Fund.
At the end of the current year, the City’s governmental funds had combined ending fund balances of $3.64 million, a decrease of approximately $984 thousand. This decrease can primarily be attributed to capital outlay associated with urban renewal.
The General Fund is a primary operating fund of the City. At the end of the fiscal year, the unassigned fund balance of the General Fund was $725 thousand, a decrease of $191 thousand from the previous year. Unassigned fund balance represents 35.4% total General Fund expenditures, which may be a useful measure of the General Fund’s liquidity.
Fund balances decreased by $55 thousand in the Street Fund, decreased by $86 thousand in the Street SDC Fund, decreased by $144 thousand in the Phoenix Urban Renewal Agency Bond Fund, decreased by $1.14 million in the Phoenix Urban Renewal Agency Fund, and decreased by $33 thousand in Other Governmental Funds.
Proprietary Funds
The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.
At June 30, 2018, unrestricted net position of the proprietary funds was $1.43 million, an increase of approximately $723 thousand from the prior year. Net investment in capital assets was $1.66 million and the restricted net position balance was $158 thousand. The Water Fund reported an increase in net position for the current fiscal year of approximately $277 thousand.
Other factors concerning the finances of the proprietary funds can be found in the previous discussion of the City’s business-type activities.
B-6 053 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
CAPITAL ASSETS
As of June 30, 2018, the City had invested $13.5 million in capital assets, net of depreciation as reflected in the following table:
Governmental Business-type Activities Activities Total
Land $ 1,679,097 $ 21,731 $ 1,700,828 Construction in Progress 4,084,134 160,677 4,244,811 Buildings & Improvements 506,055 755,750 1,261,805 Machinery & Equipment 201,344 34,832 236,176 Infrastructure 3,507,547 2,518,680 6,026,227 $ 9,978,177 $ 3,491,670 $ 13,469,847
DEBT ADMINISTRATION
As of year-end, the City had $6.46 million in long-term debt outstanding compared to $5.16 million in the previous year.
Outstanding Matured Outstanding Due July 1, and June 30, Within 2017 Issued Redeemed 2018 One Year Governmental Funds Auto Leasing Specialists $ 57,069 $ - $ (17,665) $ 39,404 $ 18,990 Full Faith & Credit Bonds, Series 2015B 2,515,000 - - 2,515,000 - Full Faith & Credit Bonds, Series 2015C 490,000 - (125,000) 365,000 125,000 Full Faith & Credit Bonds, Series 2017 - 1,560,000 (41,910) 1,518,090 85,645 3,062,069 1,560,000 (184,575) 4,437,494 229,635
Unamortized Premium/(Discount) 198,129 - (10,146) 187,983 10,146
Total Governmental Funds 3,260,198 1,560,000 (194,721) 4,625,477 239,781
Business Type Activities Advanced Refunding Bonds-Series 2015 1,695,000 - (60,000) 1,635,000 65,000 Lost Creek Water Storage 124,691 - (6,584) 118,107 6,799 1,819,691 - (66,584) 1,753,107 71,799
Unamortized Premium/(Discount) 81,372 - (4,069) 77,303 4,069
Total Business Type Activities 1,901,063 - (70,653) 1,830,410 75,868
Total Long-Term Debt $ 5,161,261 $1,560,000 $ (265,374) $ 6,455,887 $ 315,649
B-7 054 CITY OF PHOENIX MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended June 30, 2018
Debt Limitation and Ratings
Oregon Revised Statues provides a limit on non-self-supporting general obligation debt of 3 percent of the real market value of all taxable property within the City. Based on the fiscal year 2018 value, the City is within its debt limitation.
Please refer to the notes to the basic financial statements for further detailed information.
ECONOMIC FACTORS, NEXT YEAR’S BUDGET AND RATES
The City remains primarily a bedroom community. Due to its demographics and its geographic location in relation to Medford, Talent, and Ashland a high percentage of our population commutes for employment.
The City has continued to see minimal growth in the residential sector over the past year with the buildout of a major residential development it is anticipated that this trend will continue over the next few years. The City has seen a slight increase in commercial activity, including a possible hotel development on the east side of Interstate 5.
The City’s official population estimate as of July 1, 2017 was 4,605, reflecting less than a 1% increase from the previous year. The assessed value of property in the City was $311.5 million.
Anticipated Highlights for the fiscal year 2018-2019 are as follows:
• Capital Improvement Plan Update • Main Street/Bear Creek Drive overlay and construction • North Church Street construction (to completion) • Furry Road reconstruction project • Property acquisition at entrance to Blue Heron Park • Park improvement projects (parking expansion at Blue Heron, volleyball court at Colver) • Water System Master Plan update (to completion) • AC pipe replacement (Colver Road to Skyline Pump Station Network) • Water meter replacement and radio read installations
REQUEST FOR INFORMATION
The City’s financial statements are designed to present users with a general overview of the City’s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to City Hall P.O. Box 330, 112 West 2nd Street, Phoenix, Oregon 97535. The City’s telephone number is 541-535-1955.
B-8 055 BASIC FINANCIAL STATEMENTS
056 GOVERNMENT-WIDE FINANCIAL STATEMENTS
057 CITY OF PHOENIX STATEMENT OF NET POSITION JUNE 30, 2018
Governmental Business-type Activities Activities Total
ASSETS AND DEFERRED OUTLOWS OF RESOURCES: Assets: Cash and investments $ 3,629,383 $ 1,833,648 $ 5,463,031 Accounts receivable 394,954 148,585 543,539 Property tax receivable 110,980 - 110,980 Prepaid expenses 2,556 1,423 3,979 RHIA asset 3,244 679 3,923 Capital assets, net Land 1,679,097 21,731 1,700,828 Construction in progress 4,084,134 160,677 4,244,811 Buildings and improvements 506,055 755,750 1,261,805 Machinery and equipment 201,344 34,832 236,176 Infrastructure 3,507,547 2,518,680 6,026,227
TOTAL ASSETS 14,119,294 5,476,005 19,595,299
Deferred outflows of resources: Deferred amounts related to other post employment benefits (RHIA) 4,260 892 5,152 Deferred amounts related to pensions 450,528 94,368 544,896
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 14,574,082 5,571,265 20,145,347
LIABILITIES AND DEFERRED INFLOWS OF RESOURCES: Liabilities: Accounts payable 400,507 176,042 576,549 Due to other funds (678) 678 - Customer deposits 8,365 10,086 18,451 Accrued interest payable 56,043 8,465 64,508 Accrued compensated absences 71,317 22,711 94,028 Net pension liability 1,186,869 248,603 1,435,472 Long-term debt, net of unamortized premium/discount: Due within one year 239,781 75,868 315,649 Due in more than one year 4,385,696 1,754,542 6,140,238
TOTAL LIABILITIES 6,347,900 2,296,995 8,644,895
Deferred inflows of resources: Deferred amounts related to other post employment benefits (RHIA) 1,847 387 2,234 Deferred amounts related to pensions 125,530 26,294 151,824
TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 6,475,277 2,323,676 8,798,953
NET POSITION: Net investment in capital assets 5,352,700 1,661,260 7,013,960 Restricted 76,538 157,964 234,502 Unrestricted 2,669,567 1,428,365 4,097,932
TOTAL NET POSITION $ 8,098,805 $ 3,247,589 $ 11,346,394
See accompanying notes to basic financial statements 1 058 CITY OF PHOENIX STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2018
Program Revenues Net (Expense) Revenue and Fines, Fees, and Operating Changes in Net Position Charges for Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Activities Activities Total Governmental activities: General government Executive $ 366,261 $ - $ - $ (366,261) $ $ (366,261) Administrative 122,204 25,405 - (96,799) - (96,799) Planning 123,110 - - (123,110) - (123,110) Parks 139,567 9,879 - (129,688) - (129,688) Building 122,384 3,756 - (118,628) - (118,628) Police 1,148,559 - - (1,148,559) - (1,148,559) Highway and street 429,125 314,845 - (114,280) - (114,280) Non-Departmental 461,321 - 47,075 (414,246) - (414,246) Interest expense 498,751 - - (498,751) (498,751)
Total government activities 3,411,282 353,885 47,075 (3,010,322) - (3,010,322)
Business-type activities: Water 1,179,791 1,423,066 - - 243,275 243, 275
Total Common City $ 4,591,073 $ 1,776,951 $ 47,075 (3,010,322) 243,275 (2,767,047)
General revenues: Property taxes 1,547,057 - 1,547,057 Other taxes 61,003 - 61,003 Licenses and permits 81,137 - 81,137 Intergovernmental 696,825 - 696,825 Franchise fees 345,624 27,615 373,239 Fines and forfeitures 56,473 - 56,473 Interest earnings 75,857 - 75,857 Miscellaneous 346,017 6,077 352,094
Total general revenues 3,209,993 33,692 3,243,685
CHANGE IN NET POSITION 199,671 276,967 476,638
BEGINNING NET POSITION - JULY 1, 2017 6,743,525 3,051,994 9,795,519
Prior period adjustment 1,155,609 (81,372) $ 1,074,237
Net position - beginning, as restated 7,899,134 2,970,622 10,869,756
ENDING NET POSITION - JUNE 30, 2018 $ 8,098,805 $ 3,247,589 $ 11,346,394
See accompanying notes to basic financial statements 2 059 FUND FINANCIAL STATEMENTS
060 CITY OF PHOENIX BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2018
Phoenix Urban Phoenix Urban Nonmajor General Street Street SDC Renewal Agency Renewal Governmental Fund Fund Fund Bond Fund Agency Fund Funds Total ASSETS Cash and investments $ 1,940,239 $ 890,342 $ 78,857 $ 94 $ 651,861 $ 67,990 $ 3,629,383 Accounts receivable 327,558 64,226 - - - 3,170 394,954 Property tax receivable 82,497 - - - 28,483 - 110,980 Interfund receivable 211 - - 234,392 - 5,378 239,981 Prepaid expenses 1,403 1,153 - - - - 2,556
TOTAL ASSETS $ 2,351,908 $ 955,721 $ 78,857 $ 234,486 $ 680,344 $ 76,538 $ 4,377,854
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable $ 89,938 $ 7,150 $ 6,546 $ - $ 305,238 $ - $ 408,872 Interfund payable 4,443 468 - - 234,392 - 239,303
TOTAL LIABILITIES 94,381 7,618 6,546 - 539,630 - 648,175
Deferred Inflows of Resources: Unavailable revenue - property taxes 66,153 - - - 22,715 - 88,868
TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 160,534 7,618 6,546 - 562,345 - 737,043
Fund Balances: Restricted: Interchange development - - 59,710 - - - 59,710 Highway 99 maintenance - 358 - - - - 358 Street SDC's - - 12,601 - - - 12,601 Park and recreation SDC's - - - - - 65,058 65,058 Urban renewal - - - - 117,999 - 117,999 Committed: Traffic court equipment 14,183 - - - - - 14,183 Jackson County fine share 29,828 - - - - - 29, 828 Debt service 234,486 Advertising promotion - - - - - 2,622 2,622 Tourist usage - - - - - 8,858 8,858 Capital improvements 1,374,258 - - - - - 1,374,258 Assigned: Police equipment replacement 45,000 - - - - - 45,000 Reserve officer program 1,829 - - - - - 1,829 Streets - 946,592 - - - - 946,592 Nonspendable 1,403 1,153 - - - - 2,556 Unassigned 724,873 - - - - - 724,873
TOTAL FUND BALANCES 2,191,374 948,103 72,311 234,486 117,999 76,538 3,640,811
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 2,351,908 $ 955,721 $ 78,857 $ 234,486 $ 680,344 $ 76,538 $ 4,377,854
See accompanying notes to basic financial statements 3 061 CITY OF PHOENIX RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION JUNE 30, 2018
TOTAL FUND BALANCES $ 3,640,811
Capital assets are not financial resources and therefore are not reported in the governmental funds: Cost $ 11,636,062 Accumulated depreciation (1,657,885) 9,978,177
Deferred outflows/inflows of resources related to pensions and other postemployment benefits (RHIA)-(net) 327,411
The other post employment benefit asset (RHIA) is not reported with the governmental 3,244 funds as it is not available nor payable currently.
A portion of the City's property taxes are collected after year-end but are not available soon enough to pay for the current year's operations, and therefore are not reported as revenue in the governmental funds. 88,868
Long-term liabilities not payable in the current year are not reported as governmental fund liabilities. Interest on long-term debt is not accrued in the governmental funds, but rather recognized as an expenditure when due. These liabilities consist of: Compensated absences payable (71,317) Net pension liability (1,186,869) Accrued interest payable (56,043) Long-term debt, net of unamortized premium/discount (4,625,477)
TOTAL NET POSITION $ 8,098,805
See accompanying notes to basic financial statements 4 062 CITY OF PHOENIX STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2018
Street Phoenix Urban Phoenix Nonmajor General Street SDC Renewal Agency Urban Renewal Governmental Fund Fund Fund Bond Fund Agency Fund Funds Total
REVENUES Taxes $ 1,200,413 $ - $ - $ - $ 375,222 $ 11,692 $ 1,587,327 Charges for services 32,553 251,026 63,819 - - 9,879 357,277 Licenses and permits 80,732 405 - - - - 81,137 Earnings on investments 35,527 32,453 - - 7,877 - 75,857 Intergovernmental 251,372 417,406 - - - - 668,778 Grants - - - - 47,075 - 47,075 Franchise fees 318,872 13,691 - - - - 332,563 Court 13,061 - - - - - 13,061 Fines and forfeitures 57,093 - - - - - 57,093 Miscellaneous 46,542 72 - - 20,502 270 67,386
TOTAL REVENUES 2,036,165 715,053 63,819 - 450,676 21,841 3,287,554
EXPENDITURES Current: Executive 170,855 - - - - - 170,855 Administrative 121,386 - - - - - 121,386 Planning 122,690 - - - - - 122,690 Parks 138,847 - - - - 37,747 176,594 Building 122,064 - - - - - 122,064 Police 1,158,122 - - - - - 1,158,122 Highways and streets - 427,649 - - - - 427,649 Urban renewal agency - - - - 13,737 - 13,737 Non-departmental 158,739 - - 1,201 60,080 17,399 237,419 Debt service: Principal - - - 184,575 - - 184,575 Interest - - - 117,161 - - 117,161 Capital outlay 57,221 - - - 2,867,103 - 2,924,324
TOTAL EXPENDITURES 2,049,924 427,649 - 302,937 2,940,920 55,146 5,776,576
OTHER FINANCING SOURCES (USES): Transfers In 492,848 - - - - - 492,848 Transfers Out - (342,848) (150,000) (492,848) Intergovernmental loan, series 2017 - - - (1,504,700) 1,504,700 - - Remaining proceeds, series 2015 - - - (144,248) 144,248 - - Scheduled debt service transfers, series 2015 - - - 302,937 (302,937) - - Debt issuance costs - - - (55,300) - - (55,300) Proceeds from new debt, series 2017 - - - 1,560,000 - - 1,560,000
TOTAL OTHER FINANCING SOURCES (USES) 492,848 (342,848) (150,000) 158,689 1,346,011 - 1,504,700
NET CHANGE IN FUND BALANCE 479,089 (55,444) (86,181) (144,248) (1,144,233) (33,305) (984,322)
FUND BALANCE - JULY 1, 2017, as restated 1,712,285 1,003,547 158,492 378,734 1,262,232 109,843 4,625,133
FUND BALANCE - JUNE 30, 2018 $ 2,191,374 $ 948,103 $ 72,311 $ 234,486 $ 117,999 $ 76,538 $ 3,640,811
See accompanying notes to basic financial statements 5 063 CITY OF PHOENIX RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2018
NET CHANGE IN FUND BALANCE $ (984,322)
Amounts reported for governmental activities in the Statement of Activities are different because:
Government funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Expenditures for capital assets $ 2,928,340 Less current year depreciation (186,581) 2,741,759
Property taxes that do not meet the measurable and available criteria are not recognized as revenue in the current year in the governmental funds. In the Statement of Activities property taxes are recognized as revenue when levied. 20,463
Lease payments for police vehicles are reported in the Statement of Activities but are not reported in the Governmental Fund statements. 17,665
Compensated absences are recognized as an expenditure in the governmental funds when they are paid. In the Statement of Activities compensated absences are recognized as an expenditure when earned. (12,048)
Governmental funds report the effect of premiums and discounts when debt is first issued, whereas thse amounts are amortized in the Statement of Activities. This amount is the net effect of the following difference: Amortization of premium (discount) 10,146
In the Statement of Activities interest is accrued on long-term debt, whereas in the governmental funds it is recorded as an interest expense when due. This is the amount by which the interest paid exceeded the interest expense. Interest paid 202,423 Less: interest expense (208,111) (5,688)
Government funds report pension contributions as expenditures. However, in the Statement of Activities, the cost of pension and RHIA benefits earned net of employee contributions is reported as pension/RHIA expenses. (195,214)
Principal repayments are an expenditure in the governmental fund presentation. In the Statement of Activities, these loan repayments are reclassified to the Statement of Net Assets as a reduction of debt. Principal repayments 166,910 Proceeds (1,560,000) (1,393,090)
CHANGE IN NET POSITION $ 199,671
See accompanying notes to basic financial statements 6 064 CITY OF PHOENIX STATEMENT OF NET POSITION PROPRIETARY FUND JUNE 30, 2018
Total Water Fund ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets: Pooled cash and investments $ 1,833,648 Receivables, net 148,585 Prepaid expenses 1,423
Total current assets 1,869,828
Noncurrent assets: RHIA asset 679 Land 21,731 Construction in progress 160,677 Buildings and improvements, net 755,750 Machinery and equipment, net 34,832 Infrastructure, net 2,518,680
Total noncurrent assets 3,492,349
TOTAL ASSETS 5,476,005
Deferred outflows of resources: Deferred amounts related to other post employment benefits (RHIA) 892 Deferred amounts related to pensions 94,368
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 5,571,265
LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION Current liabilities: Accounts payable 176,042 Due to other funds 678 Accrued interest payable 8,465 Customer deposits 10,086 Compensated absences 22,711 Net pension liability 248,603 Long-term debt, net (current portion) 75,868
Total current liabilities 542,453
Noncurrent liabilities: Long-term debt, net 1,754,542
Total noncurrent liabilities 1,754,542
TOTAL LIABILITIES 2,296,995
Deferred inflows of resources: Deferred amounts related to other post employment benefits (RHIA) 387 Deferred amounts related to pensions 26,294
TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 2,323,676
Net Position: Net investment in capital assets 1,661,260 Restricted- system development 157,964 Unrestricted 1,428,365
TOTAL NET POSITION $ 3,247,589
See accompanying notes to basic financial statements 7 065 CITY OF PHOENIX STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUND YEAR ENDED JUNE 30, 2018
Water Fund
OPERATING REVENUES Charges for services $ 1,331,137 System development charges 91,929 Franchise fees 27,615 Miscellaneous 6,077
TOTAL OPERATING REVENUES 1,456,758
OPERATING EXPENSES Current: Personal services 431,332 Materials and services 496,185 Capital Outlay 42,341 Depreciation 151,239
TOTAL OPERATING EXPENSES 1,121,097
OPERATING INCOME (LOSS) 335,661
NONOPERATING REVENUES (EXPENSES) Interest expense (58,694)
TOTAL NONOPERATING REVENUE (EXPENSES) (58,694)
INCOME (LOSS) BEFORE OTHER FINANCING SOURCES 276,967
NET CHANGE IN NET POSITION 276,967
NET POSITION - JULY 1, 2017 as restated 2,970,622
NET POSITION - JUNE 30, 2018 $ 3,247,589
See accompanying notes to basic financial statements 8 066 CITY OF PHOENIX STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2018
Water Fund CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 1,465,239 Payments to suppliers (400,343) Payments to employees (410,353)
Net cash provided (used) by operating activities 654,543
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchase and construction of capital assets (160,677) Bond interest paid, net of premium (63,308) Principal paid on capital debt (66,584)
Net cash provided (used) by capital and related financing activities (290,569)
Net increase (decrease) in cash and cash equivalents 363,974
Balances - Beginning of the year 1,469,674
Balances - End of the year $ 1,833,648
Reconciliation of operating income (loss) to net cash provided (used) by operating activities:
Operating income (loss) $ 335,661 Adjustments to reconcile operating income to cash provided by operating activities: Depreciation expense 151,239 Change in assets and liabilities: Receivables, net 8,481 Pension items 14,108 Deposits 1,841 Compensated absences 5,030 Accounts and other payables 138,183
Net cash provided (used) by operating activities $ 654,543
See accompanying notes to basic financial statements 9 067 NOTES TO BASIC FINANCIAL STATEMENTS
068 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies
The financial statements of the City of Phoenix, Oregon have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. The more significant of the City’s accounting policies are described below.
The Financial Reporting Entity
The City of Phoenix is a municipal corporation governed by a mayor and an elected council. The administration of day to day city affairs is the responsibility of the City Manager who is appointed by and serves under the supervision of the City Council. The City provides the following services as authorized by its charter: police, parks, building and planning, streets, urban renewal, and services. Sewer services are provided through a contract with an outside party.
Accounting principles generally accepted in the United States of America require that these financial statements present the City (the primary government) and all component units, if any. Blended component units are, in substance, part of the primary government's operations, even though they are legally separate entities. Thus, blended component units are appropriately presented as funds of the primary government. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. The City does not have any discretely presented component units.
The accompanying financial statements present all activities and funds for which the City is considered financially accountable. The criteria used in making this determination includes appointment of a voting majority, imposition of will, financial benefit or burden on the primary government, and fiscal dependency on the primary government.
Blended Component Unit
The City has included the financial operations of its Urban Renewal Agency (the Agency) as a blended component unit in the basic financial statements. The Agency is a legally separate entity which is governed by a board comprised of the members of the City Council as stipulated by the Agency’s bylaws. The City Council has the ability to impose its will on the Agency as determined on the basis of budget adoption, taxing authority, and funding for the Agency. The operational responsibility for the component unit rests with the management of the City. The City accounts for the Agency using a governmental fund (Phoenix Urban Renewal Fund). This fund is considered a special revenue fund for financial reporting purposes.
Financial Statement Presentation, Measurement Focus and Basis of Accounting
Government-Wide Financial Statements
The Statement of Net Position and the Statement of Activities report information on all activities of the City. Governmental activities, which are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely on fees charged to external parties for services.
10 069 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Government-Wide Financial Statements (continued)
The Statement of Activities presents the direct expenses of a given function/program or business-type activity and the related program revenues categorized into charges for services, operating grants and contributions and capital grants and contributions. Direct expenses are those that are clearly identifiable
with a specific function or program. Indirect expenses are those costs, usually administrative in nature, that support all City functions and enable direct services to be provided. Program revenues include 1) fees, fines and charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or program, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or program. Taxes, investment income and other items not included among program revenues are reported as general revenues.
The government-wide financial statements are accounted for using an economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of timing of related cash flows. Nonexchange transactions, in which the City receives value without giving equal value in exchange, include property taxes, grants, entitlements and donations. Revenue from property taxes is recognized in the year for which the taxes are levied. Revenues from grants, entitlements and donations are recognized when all eligibility requirements have been satisfied. The effect of interfund activity within governmental activities or business-type activities such as transfers, advances and loans is eliminated.
The City applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted assets are available.
Fund Financial Statements
The City uses funds to report its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance, and to aid financial management by segregating transactions related to certain functions or activities.
A fund is a separate accounting entity with a self-balancing set of accounts. Funds are classified into two categories: governmental and proprietary. Each category, in turn, is divided into separate funds. Fund financial statements are provided for governmental and proprietary fund types.
Governmental Funds
Governmental funds are used to account for most of the City's general activities, including the collection and disbursement of earmarked monies (special revenue and debt service funds).
The governmental fund financial statements are presented on a modified accrual basis of accounting with a current financial resources measurement focus whereby only current assets (deferred outflows) and current liabilities (deferred inflows) generally are included in the Balance Sheet, and the Statement of Revenues, Expenditures and Changes in Fund Balance present increases and decreases in those current net fund balances. Governmental funds use the modified accrual basis of accounting where revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount can be determined and "available" means collectible within the current period or soon enough thereafter (60 days) to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due.
11 070 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Governmental Funds (continued)
Intergovernmental revenues are recognized when all eligibility requirements are met. Eligibility requirements for intergovernmental revenues received on a reimbursement basis (i.e. where monies must be expended on specific projects or for a specific purpose before any amounts are paid to the City) are determined to be met when the underlying expenditures are recorded. Eligibility requirements for intergovernmental revenues which are unrestricted as to purpose of the expenditure and are usually revocable only for failure to comply with prescribed requirements are considered to be met at the time of receipt or when susceptible to accrual.
Property taxes are reflected as revenues in the fiscal period for which they were levied, provided they are due, or past due and receivable within the current period, and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period (60 days). Otherwise, they are reported as deferred inflow of resources (unavailable revenue). Property taxes, which are held at year end by the collecting agency, Jackson County, and are remitted to the City within the 60- day period, are reported as “Taxes Receivable.”
Licenses and permits, charges for services, fines and forfeits, and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available.
The following are the City’s major governmental funds:
General Fund – The General Fund is the general operating fund of the City. It is used for all financial resources except those required to be accounted for in another fund. Principal sources of revenue are property taxes, utility franchise fees, intergovernmental and other taxes. The Capital Reserve Fund was established to accumulate resources from year to year for specific purposes and projects related to infrastructure and/or purchase new equipment, at the discretion of the City Council. This fund has been combined with the General Fund as reserve funds do not meet the definition of a fund under generally accepted accounting principles.
Street Fund (Special Revenue Fund) – This fund accounts for services and debt principal and interest payments made related to street rehabilitation. Principal sources of revenues are intergovernmental revenues, grant awards, and charges for services.
Street SDC Fund (Special Revenue Fund) – This fund accounts for capital improvement projects which increase capacity for the city. Principal sources of revenue are charges for services.
Phoenix Urban Renewal Bond Fund (Debt Service Fund) – During the year ended June 30, 2016, the City established this fund to account for the bond issuances on behalf of the Phoenix Urban Renewal Agency (PhURA) as stipulated in a September 2015, Intergovernmental Agreement between the City and the Agency, a separate government of itself.
Phoenix Urban Renewal Agency Fund – This fund was formed primarily to carry out the terms of the Urban Renewal Plan, implement certain goals and objectives of the City of Phoenix Comprehensive Plan, and assist in meeting the City's economic development objectives.
The City’s other non-major governmental funds consist of the Advertising Promotion Fund, Tourist Usage Fund, and Parks and Recreation System Development Charges Fund.
12 071 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Proprietary Funds – Enterprise funds
Proprietary funds can be separated into enterprise funds and internal service funds. All of the City’s proprietary funds are enterprise funds. These funds account for the acquisition, operation and maintenance of the City facilities and services which are entirely self-supporting through service charges of customers. Services accounted for through enterprise funds are sewer operations and public facilities improvements.
Funds included in this category are the Water Fund, Water System Development Charges Fund, Storm Water System Development Charges Fund, and the Capital Reserve fund.
The City’s proprietary fund distinguishes between operating and nonoperating revenues and expenses. Operating revenues and expenses of the City’s internal service fund consist of charges for services and the cost of providing those services. All other revenues and expenses are reported as nonoperating.
The principal operating revenues are charges to customers. Operating expenses include cost of sales, debt service, capital outlay, administration expenses, and depreciation.
All proprietary funds are accounted for using a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the Statement of Net Position. The accrual basis of accounting is utilized by proprietary fund types where revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.
The City reports the following major enterprise fund:
Water Fund – This fund accounts for the maintenance, operation, and construction of the City's water intake, purification, and delivery systems, as well as the City's wastewater collection and treatment system. Principal sources of revenue are user fees, franchise fees, and systems development charges.
The City’s other enterprise funds consist of the Water Systems Development Charges Fund, Storm Water Systems Development Charges Fund, and Capital Reserve Fund. These funds have been combined with the Water Fund as management views these funds a s a collective enterprise fund for financial reporting purposes.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two types of deferred outflows, which arises only under the full accrual basis of accounting that qualifies for reporting in this category.
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition on net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The City has three types of deferred inflows, deferred amounts related to pension, deferred amounts related to other post-employment benefits (OPEB), and unavailable revenue related to property taxes. Unavailable revenue related to property taxes arises only under the modified accrual basis of accounting. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet.
13 072 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 those estimates.
Pooled Cash and Investments
The City’s cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less. Short-term investments are stated at cost which approximates fair value.
The City's investments, authorized under state statute, consist of the State of Oregon Treasurer’s Local Government Investment Pool (LGIP). The LGIP is stated at cost which approximates fair value. Fair value of the LGIP is the same as the City’s value in the pool shares.
The Oregon State Treasury administers the LGIP. It is an open-ended no-load diversified portfolio offered to any agency, political subdivision or public corporation of the State that by law is made the custodian of, or has control of, any fund. The LGIP is commingled with the State’s short-term funds. In seeking to best serve local governments of Oregon, the Oregon legislature established the Oregon Short-Term Fund Board. The purpose of the Board is to advise the Oregon State Treasury in the management and investment options of the LGIP. The investments are regulated by the Oregon Short Term Fund Board and approved by the Oregon Investment Council (ORS 294.805 to 294.895). Earnings on pooled cash and investments are credited to each fund monthly based on the average daily balance of each participating fund.
Pooled cash and investments have the general characteristics of a demand deposit account in that any participating fund may deposit additional cash at any time and may also withdraw cash at any time without prior notice or penalty.
For purposes of the Statement of Cash Flows, the proprietary fund types consider all highly liquid investments with a maturity date of three months or less when purchased to be cash equivalents.
Deposits
The City requires refundable security deposits from property owners wishing to be annexed into the City and from utility customers. Upon service termination, the individual’s respective deposit is applied to the amount owing with any remaining balance refunded to the customer.
Grants
Unreimbursed grant expenditures due from granter agencies are recorded in the basic financial statements as receivables and revenues. Cash received from granter agencies in excess of related grant expenditures is recorded as unearned revenue in the combined balance sheet.
14 073 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Property Taxes Receivable
Property taxes receivable that are collected within 60 days after year-end are considered measurable and available and, therefore, are recognized as revenue. The remaining balance is recorded as deferred inflow of resources because it is not deemed available to finance operations of the current period. An allowance for doubtful accounts is not deemed necessary because uncollectable property taxes become a lien of the property. Ad valorem property taxes are a lien on all taxable property as of July 1. Property taxes are levied and payable on November 15. Taxes are administrated by the County. Collection dates are November 15, February 15, and May 15. Discounts are allowed if the amount due is received by November 15. Taxes unpaid and outstanding on May 16 are considered delinquent.
Uncollected property taxes are shown in the combined balance sheet. Uncollected taxes are deemed to be substantially collectible or recoverable through liens; therefore, no allowance for uncollectible taxes has been established. The remaining balance of taxes receivable is recorded as unavailable revenue because it is not deemed available to finance operations of the current period.
Prepaids
Governmental fund expenditures for services/benefits extending over more than one accounting period are recorded as expense in the period in which the cash is paid. In the government-wide financial statements these expenditures are recorded as a current asset.
Operating Revenues and Expenses, Non-Operating Revenues and Expenses
Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the City, these revenues are charges for water services. Operating expenses are necessary costs incurred to provide the goods or services that are the primary activity of the fund. Non- operating revenues and expenses are those revenues and expenses not directly related to the service provided by the fund. Non-operating revenues and expenses include interest, grants, SOC charges and gain or loss on disposition of capital assets.
Capital Assets Including Equipment Leased Under Capital Lease
Capital assets, which includes property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life extending beyond a single reporting period, (one year). Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.
Capital assets in the proprietary fund types are stated at cost, or the estimated fair market value at the date of receipt for gifts or projects constructed by others and accepted for ownership and maintenance by the City.
Maintenance and repairs are expensed as incurred. Replacements which improve or extend the lives of property are capitalized. Depreciation is computed on the straight-line method over the estimated useful lives of the related Assets. Upon disposal of the assets, the accounts are relieved of the related costs and accumulated depreciation and resulting gains or losses are reflected in operations. Estimated useful lives used in computing depreciation are:
15 074 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Capital Assets Including Equipment Leased Under Capital Lease (continued)
Buildings and Improvements 10 to 50 years Machinery 3 to 25 years Infrastructure 15 to 40 years
Long-term Debt and Debt Issuance Costs
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 governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are recognized as an expense in the period incurred.
In the fund financial statement, the bond discounts, premiums and issuance costs are recognized when incurred and not deferred. The face amount of the debt issued and premiums received are reported as other financing sources while discounts are reported as other financing used. Bond issuance costs are recognized as expenses in the period incurred.
Vested Compensated Absences
Liabilities for vacation pay and compensated absences are recorded in the Statement of Net Position for proprietary funds when vested or earned by employees. Vacation pay and compensated absences are accrued as expenditures in the governmental funds when the amounts are expected to be liquidated with expendable available resources. Sick pay, which does not vest, is recognized in all funds when leave is taken.
Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Oregon Public Employees Retirement System (PERS) and additions to/deductions from PERS’s fiduciary net position have been determined on the same basis as they are reported by PERS. For this purpose, benefit payment (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Post-Employment Health Care Benefits
Substantially all of the City’s employees are participants in the State of Oregon Public Employees Retirement System (OPERS) – Retirement Health Insurance Account (RHIA). Contributions to OPERS RHIA are made on a current basis as required by the plan and are charged as expenses.
Interfund Transactions
Transactions that constitute reimbursements to a fund for expenditures initially made from it that are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. Operating interfund transactions are reported as transfers.
16 075 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Net Position and Fund Balances
In the government-wide financial statements, equity is classified as net position and displayed in three components:
Net investments in capital assets – consists of net capital assets reduced by outstanding balances of any related debt obligations and deferred inflows of resources attributable to the acquisition, construction, or improvement of those assets and increase by balances of deferred outflows of resources related to those assets.
Restricted net position – net position is considered restricted if their use is constrained to a particular purpose. Restrictions are imposed by external organizations such as federal or state laws or buyers of the City’s bonds. Restricted net position is reduced by liabilities and deferred inflows or resources related to the restricted assets.
Unrestricted net position – consists of all other net position that does not meet the definition of the above two components and is available for general use by the City.
In the fund financial statements, governmental fund equity is classified in the flowing categories:
Non-spendable - Includes items not immediately converted to cash, such as prepaid items and inventory.
Restricted - Includes items that are restricted by external creditors, grantors or contributors, or restricted by legal constitutional provisions.
Committed - Includes items committed by the City Council, by formal action.
Assigned - Includes items assigned for specific uses, authorized by the City Administrator and/or Finance Director.
Unassigned - This is the residual classification used for those balances not assigned to another category.
It is the City’s policy to first use restricted net position prior to the use of unrestricted net position when expenditure is incurred for purposes for which both restricted and unrestricted net position is available. In addition, it is the City’s policy to use committed and then assigned fund balance when an expenditure is incurred for purposes for which committed, assigned, and unrestricted fund balance classifications could be used.
To preserve a sound financial system and to provide a stable financial base, the governing body has adopted a minimum fund balance policy. In accordance with the policy, the City has determined that the minimum fund balance for the General Fund should be equal to four months of General Fund expenditures.
17 076 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Adoption of New GASB Pronouncements
During the fiscal year ended June 30, 2018, the City implemented the following GASB Pronouncements:
GASB Statement No. 75, supersedes GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions; and GASB Statement No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. The principal objective of GASB 75 is to improve the usefulness of information for decisions made by the various users of the general purpose external financial reports of governments whose employees (both active and inactive) are provided with postemployment benefits other than pensions.
GASB Statement No. 85, Omnibus 2017. Issued March 2017, this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, good will fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). Specifically, this Statement addresses the following topics:
• Blending a component unit in circumstances in which the primary government is a business-type activity that reports in a single column for financial statement presentation • Reporting amounts previously reported as good will and "negative" goodwill • Classifying real estate held by insurance entities • Measuring certain money market investments and participating interest-earning investment contract at amortized cost • Timing of the measurement of pension or OPEB liabilities and expenditures recognized in financial statements prepared using the current financial resources measurement focus • Recognizing on-behalf payments for pensions or OPEB in employer financial statements • Presenting payroll-related measures in required supplementary information for purposes of reporting by OPEB plans and employers that provide OPEB • Simplifying certain aspects of the alternative measurement method for OPEB • Accounting and financial reporting for OPEB provided through certain multiple-employer defined benefit OPEB plans.
GASB Statement No. 86, Certain Debt Extinguishment Issues. Issued May 2017, the purpose of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources-resources other than the proceeds of refunding debt-are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance.
GASB Statement No. 80, Blending Requirements for Certain Component Units. Issued January 2016, this statement improves financial reporting by clarifying the financial statement presentation requirements for certain component units.
GASB Statement No. 81, Irrevocable Split-Interest Agreements. Issued March 2016, this statement improves accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement.
18 077 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Future Adoption of GASB Pronouncements
The following GASB pronouncements have been issued, but are not effective as of June 30, 2018:
GASB Statement No. 83, Certain Asset Retirement Obligations. Issued November 2016, this statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). GASB 83 will be effective for the City, fiscal year ending June 30, 2019.
GASB Statement No. 84, Fiduciary Activities. Issued January 2017, this statement establishes criteria for identifying fiduciary activities of all state and local governments. GASB 84 will be effective for the City, fiscal year ending June 30, 2020.
GASB Statement No. 87, Leases. This Statement was Issued June 2017 to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. and increases the usefulness of governments' financial statements. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments' leasing activities. GASB Statement No. 87 will be effective for the City for fiscal year ending June 30, 2021.
GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements, issued March 2018 to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. GASB Statement No. 88 will be effective for the District for fiscal year ending June 30, 2019.
GASB Statement No. 89, Accounting for Interest Costs Incurred Before the End of a Construction Period. This statement was issued June 2018 to establish accounting requirements for interest cost incurred before the end of a construction period. The objectives of the Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period. GASB Statement No. 89 will be effective for the District for fiscal year ending June 30, 2021.
GASB Statement No. 90, Majority Equity Interests. Issued August 2018, the primary objective of this statement is to improve the consistency and comparability of reporting a government's majority equity interest in a legally separate organization; and to improve the relevance of financial statement information for certain component units. GASB Statement No. 90 will be effective for the District for fiscal year ending June 30, 2020.
The City will implement new GASB pronouncements no later than the required effective date. The City is currently evaluating whether or not the above listed new GASB pronouncements will have a significant impact to the City's financial statements.
Note 2 – Appropriation and Budgetary Controls
The City is subject to provisions of the Oregon Revised Statutes which set forth local budget procedures. A resolution authorizing appropriation for each fund sets the level by which expenditures cannot legally exceed appropriations. Appropriations are established by department in the General Fund, and by function (personal services, materials and services, capital outlay, debt service, transfers to other funds and contingency) in other funds.
19 078 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 2 – Appropriation and Budgetary Controls (continued)
The City Council may, however, approve additional appropriations for unexpected additional resources or necessary expenditures which could not be reasonably estimated at the time the budget was adopted. Additionally, budgets may be modified during the fiscal year by the use of appropriation transfers between legal categories or appropriation transfers from one fund to another. Such transfers must be authorized by official resolution or ordinance of the City Council. The resolution or ordinance must state the need for the transfer, the purpose of the authorized expenditures and the amount of the appropriation transferred.
Transfers of contingency appropriations which in aggregate during a fiscal year exceed 15% of the total appropriations of the fund may only be made after adoption of a supplemental budget prepared for that purpose. A supplemental budget less than 10% of the fund’s original budget may be adopted at a regular meeting of the governing body. A supplemental budget greater than 10% of the fund’s original budget requires public hearings, publication in newspapers and approval by the Council. Budget amounts shown in the financial statements include the original budget, supplemental budgets, and budget transfers. All appropriations terminate on June 30th.
Unexpected additional resources or appropriations may be added to the budget through the use of a supplemental budget. A supplemental budget requires hearings before the public, publications in newspapers and approval by the City Council. Original and supplemental budgets may be modified by the use of appropriation transfers between levels of control. Such transfers require approval by passing a Council resolution authorizing the transfer. All budget amendments are subject to the limitations put forth in the Oregon Revised Statutes Chapters 294.305 through 394.565 (Oregon Budget Law). Budget amounts are as originally budgeted, or as amended by the City Council.
General Fund expenditures are appropriated by department. Expenditure budgets for all other funds are appropriated at the following levels: Personnel Services, Materials and Services, Capital Outlay Debt Service, Contingency and Transfers.
During the fiscal year ended June 30, 2018, the City was in compliance with Local Budget Law, except as follows:
Excess of expenditures over appropriations
As noted in the financial statements, the City over-expended its appropriation authority in the Phoenix Urban Renewal Agency Debt Service Fund in payment for intergovernmental loan by $24,400.
As noted in the financial statements, the City over-expended its appropriation authority in the Phoenix Urban Renewal Agency Bond Fund in materials and service by $1,201, and debt service by $2,470.
20 079 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 3 – Restatements of Beginning Net Position and Fund Balance
Statement of Activities – Governmental Activities
During the fiscal year, the City incorporated the Phoenix Urban Renewal Agency (PhURA) under it’s governing oversight by dissolving the current PhURA Board and transferring authority to the City of Phoenix City Council Board. With this change, the PhURA is now reported within the City’s financial statements as a blended component unit. Additionally, premium/discounts associated with the Full Faith and Credit Series 2015B and 2015C bonds were previously not recorded in the financial statements. The summary below denotes the additions to net position as a result of these changes.
Total Governmental Activities Beginning $ 6,743,525 Restatement Adjustment 1,155,609
Total Governmental Activities Beginning - as restated $ 7,899,134
Statements of Activities – Business-Type and Statement of Revenues, Expenses and Changes in Net Position Proprietary Fund
During the fiscal year, the City identified an error within the Water Fund for an item that had not been included in the prior year’s financial statements. The item was related to the premium/discount on bonded debt that had not been included. The summary below denotes the reduction in net position as a result of these changes.
Total Water Fund Net Position Beginning $ 3,051,994 Restatement Adjustment (81,372)
Total Water Fund Net Position Beginning - as restated $ 2,970,622
Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Funds
During the fiscal year, the City incorporated the Phoenix Urban Renewal Agency (PhURA) under it’s governing oversight by dissolving the current PhURA Board and transferring authority to the City of Phoenix City Council Board. With this change, the PhURA is now reported within the City’s financial statements as a blended component unit. This summary below denotes the additions to beginning fund balance as a result of these changes.
Phoenix Urban Rewal Agency Fund Balance Beginning $ - Restatement Adjustment 1,262,232
Phoenix Urban Rewal Agency Fund Balance Beginning - as restated $ 1,262,232
21 080 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 4 – Cash and Investments
The City maintains a cash management pool for its cash and investments in which each fund participates. Interest earnings are distributed based on average daily balances.
The City participates in the State of Oregon Local Investment Pool (LGIP or Pool) which is an open ended, no-load diversified portfolio created under ORS 294.805 to 294.895 and is not registered with the U.S. Securities and Exchange Commission as an investment company. The State Treasurer is the investment officer for the Pool and is responsible for all funds in the Pool.
These funds must be invested and managed, like that of a prudent investor, exercising reasonable care, skill and caution. Investments in the fund are further governed by portfolio guidelines issued by the Oregon Short-term Funds Board, which establish diversification percentages and specify the types and maturities of investments. The Oregon Audits Division of the Secretary of State’s Office audits the Pool annually. The State of Oregon Local Government Investment Pool is not rated. Same day wire redemptions cannot exceed $1.5 million and withdrawals in excess of $25 million may require 48-hour notice.
The City’s position in the pool at June 30, 2018 is stated at amortized cost which approximates fair value.
Deposits
Deposits with financial institutions are comprised of bank demand deposits and certificates of deposit. For deposits in excess of federal depository insurance (currently limited to balances less than $250,000), Oregon Revised Statue 295 requires a multiple financial institution collateral pool and eliminated Certificates of Participation. As a result, all balances over the $250,000 FDIC limit are collateralized. As of June 30, 2018, the City’s deposits with various financial institutions exceeded the federal depository insurance limitation by $476,152.
Pooled Deposits and Investments
Investments in the Oregon State Treasury LGIP are made under the provisions of ORS 194.180. These funds are held in the City’s name and are not subject to collateralization requirements or ORS 295.015.
State of Oregon statutes restrict the types of investments in which the City may invest. Authorized investments include obligations of the United States Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, bankers’ acceptances, time certificates of deposit, certain commercial paper, and the State of Oregon Treasurer’s Local Government Investment Pool.
The City has invested funds in the State Treasurer’s Oregon Short-term Fund Local Government Investment Pool during fiscal year 2017-2018. Investments in the Local Government Investment Pool (LGIP) are included in the Oregon Short-Term Fund, which is an external investment pool that is not a 2a-7-like external investment pool, and is not registered with the U.S. Securities and Exchange Commission as an investment company. Fair value of the LGIP is calculated at the same value as the number of pool shares owned. The unit of account is each share held, and the value of the position would be the fair value of the pool's share price multiplied by the number of shares held. Investments in the Short-Term Fund are governed by ORS 294.135, Oregon Investment Council, and portfolio guidelines issued by the Oregon Short-Term Fund Board. Investment in the LGIP is neither insured nor guaranteed by the FDIC or any other government agency. Although the LGIP seeks to maintain the value of share investments at $1.00 per share, it is possible to lose money by investing in the pool.
22 081 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 4 – Cash and Investments (continued)
Pooled Deposits and Investments (continued)
In addition, the Oregon State Treasury LGIP distributes investment income on an amortized cost basis and participants’ equity in the pool is determined by the amount of participant deposits, adjusted for withdrawals and distributed income. Accordingly, the adjustment to fair value would not represent an expendable increase in the City’s cash position.
Investments in the Oregon State Treasury LGIP are made under the provisions of ORS 194.180. These funds are held in the City’s name and are not subject to collateralization requirements of ORS 295.015. Investments are stated at amortized cost, which approximated fair value.
As of June 30, 2018 and for the year then ended, the City was in compliance with the aforementioned State of Oregon statutes.
Credit Risk - State Statutes authorize the City to invest primarily in general obligations of the U.S. Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, banker’s acceptances, certain commercial papers, and the State Treasurer’s Investment Pool, among others. The City has no formal investment policy that further restricts its investment choices.
Concentration of Credit Risk - The City is required to provide information about the concentration of credit risk associated with its investments in one issuer that represents 5 percent or more of the total investments, excluding investments in external investment pools or those issued and explicitly guaranteed by the U.S. Government. The City has no such investments.
Interest Rate Risk - The City has no formal investment policy that explicitly limits investment maturities as a means of managing its exposure to fair value loss arising from increasing interest rates.
Amortized Cost Totals as of Not Measured Investments: 6/30/2018 Level One Level Two Level Three at Fair Value
Local Government Investment Pool $ 4,783,319 $ - $ - $ - $ 4,783,319 Certificates of Deposit 125,444 - 125,444 - - $ 4,908,763 $ - $ 125,444 $ - $ 4,783,319
A reconciliation of cash and investments as shown on the Statement of Net Position is as follows:
Cash and investments are reflected on the basic financial statements as follows:
Governmental Business-Type Activities Activities Total
Cash and investments 3,629,383 1,833,648$ 5,463,031
23 082 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 4 – Cash and Investments (continued)
Pooled Deposits and Investments (continued)
Cash and Investments are comprised of the following as of June 30, 2018:
Petty cash $ 300 Carrying amount of demand deposits 553,968 Carrying amount of investments 4,908,763 $ 5,463,031
Note 5 – Receivables
Governmental receivables are comprised of the following as of June 30, 2018:
PhURA Debt Tourist Pa rks & General Street Service Usage Recreation Fund Fund Fund Fund SDC Fund Total Accounts Receivable: Citation fines and forfeitures $ 252,677 $ - $ - $ - $ - $ 252,677 Property taxes 82,497 - 28,483 - - 110,980 Intergovernmental 32,782 46,425 - - - 79,207 Other 42,099 17,801 - 2,206 964 63,070
Total $ 410,055 $ 64,226 $ 28,483 $ 2,206 $ 964 $ 505,934
Business-type receivables are comprised of the following as of June 30, 2018:
Water Fund Accounts Receivable: Customer utility accounts $ 148,585
Total $ 148,585
24 083 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 6 – Capital Assets
Changes in the Governmental capital assets for the year ended June 30, 2018 are as follows:
Balance Governmental Activities June 30, 2017, Transfers/ Balance as restated Additions Disposals June 30, 2018 Capital assets not being depreciated: Land $ 1,649,958 $ 29,139 $ - $ 1,679,097 Construction in Progress 1,844,824 2,861,454 (622,144) 4,084,134
Total capital assets not being depreciated 3,494,782 2,890,593 (622,144) 5,763,231
Capital assets being depreciated: Buildings & Improvements 1,193,769 37,747 - 1,231,516 Machinery & Equipment 551,145 - - 551,145 Infrastructure 3,468,026 - 622,144 4,090,170
Total capital assets being depreciated 5,212,940 37,747 622,144 5,872,831
Less accumulated depreciation for: Buildings & Improvements (675,689) (49,772) - (725,461) Machinery & Equipment (325,917) (23,884) - (349,801) Infrastructure (469,698) (112,925) - (582,623)
Total accumulated depreciation (1,471,304) (186,581) - (1,657,885)
Total capital assets being depreciated, net 3,741,636 (148,834) 622,144 4,214,946
Total capital assets governmental activities, net $ 7,236,418 $ 2,741,759 $ - $ 9,978,177
Depreciation expense for the year of $186,581 was charged to non-departmental.
25 084 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 6 – Capital Assets (continued)
Changes in the Business-type capital assets for the year ended June 30, 2018 are as follows:
Business-type Activities Balance Transfers/ Balance June 30, 2017 Additions Disposals June 30, 2018 Capital assets not being depreciated: Land $ 21,731 $ - $ - $ 21,731 Construction in Progress - 160,677 - 160,677
Total capital assets not being depreciated 21,731 160,677 - 182,408
Capital assets being depreciated: Buildings & Improvements 1,754,602 - - 1,754,602 Machinery & Equipment 645,078 - - 645,078 Infrastructure 3,639,443 - - 3,639,443
Total capital assets being depreciated 6,039,123 - - 6,039,123
Less accumulated depreciation for: Buildings & Improvements (954,017) (44,835) - (998,852) Machinery & Equipment (597,963) (12,283) - (610,246) Infrastructure (1,026,642) (94,121) - (1,120,763)
Total accumulated depreciation (2,578,622) (151,239) - (2,729,861)
Total capital assets being depreciated, net 3,460,501 (151,239) - 3,309,262
Total capital assets business-type activities, net $ 3,482,232 $ 9,438 $ - $ 3,491,670
Depreciation expense for the year of $151,239 was charged to the Water Fund.
26 085 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 7 – Interfund Transactions
Interfund transfers during the year ended June 30, 2018 were as follows:
In Out
Governmental Activities: General Fund $ 492,848 $ - Street Fund - 342,848 Street Improvement SDC Fund - 150,000
Total Transfers $ 492,848 $ 492,848
Transfers and lnterfund balances are used to fund operations between funds. During the year the City made budgeted transfers from the General Fund to the Street and Street SDC Funds, to fund anticipated projects.
Note 8 – Accrued Compensated Absences
At June 30, 2018, the outstanding balance is comprised of accrued vacation and certain accrued sick time. On termination from employment, one-half of an employee’s unused accrued sick leave will be converted to the Oregon Public Employees Retirement System (PERS), if eligible. At fiscal year end, the City had no employees eligible for this sick-leave benefit. Changes in accrued compensated absences for the year ended June 30, 2018, are as follows:
Accrued Accrued June 30, 2017 Earned Taken June 30, 2018
Governmental Activities $ 59,269 54,160$ 42,112$ $ 71,317
Business-Type Activities 17,681 18,904 13,874 22,711
Total$ 76,950 73,064$ 55,986$ $ 94,028
27 086 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 9 – Long-Term Debt
Auto Leasing Specialists
During the 16-17 fiscal year, the City approved a lease-purchase for two police patrol vehicles. The lease is payable over 4 years at an interest rate of 6%. The amount capitalized was $79,014. Annual principal and interest payments of $21,945 are payable each August with a payoff in August of 2019. The payments are made from the General Fund.
The payment schedule for this capital lease is as follows:
Auto Leasing Specialists Year Principal Interest Total 2019 $ 18,990 $ 2,955 $ 21,945 2020 20,414 1,531 21,945
Total $ 39,404 $ 4,486 $ 43,890
Full Faith and Credit bonds - Series 2015B and 2015C
On September 29, 2015, the City issued $3,320,000 of full faith and credit obligation bonds, Series 2015B and 2015C to finance projects in the City's urban renewal area and to pay for costs of issuance of $62,290, sale and delivery of the bonds at a premium of $245,812. In conjunction with the issuance of the bonds, the City and the Phoenix Urban Renewal Agency (PhURA) entered into an intergovernmental agreement, where the Agency shall transfer tax increment revenues and proceeds to the City in amounts and times sufficient for the City to pay the Series 2015B and 2015C obligation under the terms of such obligations. The interest rate for the Series 2015B is 4.00%, and Series 2015C ranges between 1.85%-2.90.
Issuance costs of these two issuances totaled $62,290 which was expensed during the fiscal period of 2015-16. Interest expense during the current year for the 2015B and 2015C was $145,032 and $15,601 respectively.
The combined debt schedules of the 2015B and 2015C bond issuances are as follows:
Full Faith & Credit Bonds, Series 2015B and 2015C Combined Year Principal Interest Total 2019 $ 125,000 $ 109,980 $ 234,980 2020 130,000 107,105 237,105 2021 135,000 103,790 238,790 2022 135,000 99,600 234,600 2023 140,000 94,200 234,200 2024-2028 800,000 381,800 1,181,800 2029-2033 970,000 208,400 1,178,400 2034-2038 445,000 26,800 471,800
Total $ 2,880,000 $ 1,131,675 $ 4,011,675
28 087 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 9 – Long-Term Debt (continued)
Full Faith and Credit bonds - Series 2015B and 2015C (continued)
The separate schedules related to the Series B and Series C are as follows:
Full Faith & Credit Bonds, Series 2015B Year Principal Interest Total 2019 $ - $ 100,600 $ 100,600 2020 - 100,600 100,600 2021 25,000 100,600 125,600 2022 135,000 99,600 234,600 2023 140,000 94,200 234,200 2024-2028 800,000 381,800 1,181,800 2029-2033 970,000 208,400 1,178,400 2034-2038 445,000 26,800 471,800
Total $ 2,515,000 $ 1,112,600 $ 3,627,600
Full Faith & Credit Bonds, Series 2015C Year Principal Interest Total 2019 $ 125,000 $ 9,380 $ 134,380 2020 130,000 6,505 136,505 2021 110,000 3,190 113,190
Total $ 365,000 $ 19,075 $ 384,075
Refunding Bonds-Series 2015
On June 3, 2015, the City issued $1,815,000 of full faith and credit refunding obligation bonds, Series 2015, the proceeds of which retired, in full, two existing Water Revenue Bonds (Phase I, Loan 91-03, in the amount principal paid of $935,386 and Phase II, Loan 91-05, in the amount principal paid of $921,921 totaling $1,857,307 of principal owing as of the refunding issuance date. These water revenue refunding bonds were issued at a premium of $114,452. This refunding was undertaken by the City to take advantage of substantially reduced interest costs, ranging from 1% to 4% per annum for the refunding bonds, retiring existing debts carrying interests cost of about 4.75% to the City, along with the taking advantage of net premiums, at refunding issuance, mentioned above. Differences in overall costs could amount to over $625,000 in economic gains to the City. Principal and interest payments will be made from the Water Fund with the refunding bonds amortization schedule as follows, as of June 30, 2018. Interest expense for 2018 was $64,138.
29 088 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 9 – Long-Term Debt (continued)
Refunding Bond – Series 2015 (continued)
Refunding Bonds, Series 2015 Year Principal Interest Total 2019 $ 65,000 $ 58,000 $ 123,000 2020 65,000 56,700 121,700 2021 65,000 55,400 120,400 2022 70,000 53,700 123,700 2023 70,000 51,600 121,600 2024-2028 385,000 221,425 606,425 2029-2033 465,000 137,900 602,900 2034-2038 450,000 37,000 487,000
Total $ 1,635,000 $ 671,725 $ 2,306,725
Water Contract - Storage #1
On April 7, 1982 the City entered into a contract for a $269,950 payable to the United States of America, for water storage in Lost Creek Lake, a U.S. Army Corps of Engineers' owned facility. Annual payments of $10,643, including interest of 3.254% are payable each July 25th through 2031. Principal and interest payments are made from the Water Fund. Interest expense for 2018 was $7,635.
Lost Creek Water Storage Year Principal Interest Total 2019 $ 6,799 $ 3,844 $ 10,643 2020 7,020 3,623 10,643 2021 7,248 3,395 10,643 2022 7,484 3,159 10,643 2023 7,727 2,915 10,642 2024-2028 42,575 10,640 53,215 2029-2033 39,254 3,317 42,571
Total $ 118,107 $ 30,893 $ 149,000
Full Faith and Credit bonds - Series 2017
On November 17, 2017, the City issued $1,560,000 of full faith and credit obligation bonds, Series 2017 to finance projects in the City's urban renewal area and to pay for costs of issuance of $55,300. In conjunction with the issuance of the bonds, the City and the Phoenix Urban Renewal Agency (PhURA) entered into an intergovernmental agreement, where the Agency shall transfer tax increment revenues and proceeds to the City in amounts and times sufficient for the City to pay the Series 2017 obligation under the terms of such obligations.
30 089 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 9 – Long-Term Debt (continued)
Full Faith and Credit bonds - Series 2017 (continued)
Issuance costs of this issuance totaled $55,300 which was expensed during the fiscal period of 2017-18. The interest rate of 2.890%, resulted in interest expense for 2018 of $27,782.
Full Faith & Credit Bonds, Series 2017 Year Principal Interest Total 2019 $ 85,645 $ 43,258 $ 128,904 2020 88,138 40,765 128,904 2021 90,704 38,200 128,904 2022 93,344 35,560 128,904 2023 96,061 32,842 128,904 2024-2028 523,913 120,605 644,518 2029-2033 540,284 39,782 580,066
Total $ 1,518,090 $ 351,012 $ 1,869,103
The following is a recap of the City's long-term debt obligations for the year ended June 30, 2018.
Outstanding Matured Outstanding Due July 1, 2017 and June 30, Within as restated Issued Redeemed 2018 One Year Governmental Funds Auto Leasing Specialists $ 57,069 $ - $ (17,665) $ 39,404 $ 18,990 Full Faith & Credit Bonds, Series 2015B 2,515,000 - - 2,515,000 - Full Faith & Credit Bonds, Series 2015C 490,000 - (125,000) 365,000 125,000 Full Faith & Credit Bonds, Series 2017 - 1,560,000 (41,910) 1,518,090 85,645 3,062,069 1,560,000 (184,575) 4,437,494 229,635
Unamortized Premium/(Discount) 198,129 - (10,146) 187,983 10,146
Total Governmental Funds 3,260,198 1,560,000 (194,721) 4,625,477 239,781
Business Type Activities Advanced Refunding Bonds-Series 2015 1,695,000 - (60,000) 1,635,000 65,000 Lost Creek Water Storage 124,691 - (6,584) 118,107 6,799 1,819,691 - (66,584) 1,753,107 71,799
Unamortized Premium/(Discount) 81,372 - (4,069) 77,303 4,069
Total Business Type Activities 1,901,063 - (70,653) 1,830,410 75,868
Total Long-Term Debt $ 5,161,261 $1,560,000 $ (265,374) $ 6,455,887 $ 315,649
31 090 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 10 - Post-Employment Benefits Other Than Pensions (OPEB)
Retirement Health Insurance Account (RHIA) –
Plan Description - As a member of Oregon Public Employees Retirement System (OPERS), the City contributes to the Retirement Health Insurance Account (RHIA) for each of its eligible employees. RHIA is a cost-sharing multiple-employer defined benefit other post-employment benefit plan administered by OPERS. RHIA pays a monthly contribution toward the cost of Medicare companion health insurance premiums of eligible retirees. Oregon Revised Statute (ORS) 238.420 established this trust fund. Authority to establish and amend the benefit provisions of RHIA reside with the Oregon Legislature. The plan is closed to new entrants after January 1, 2004.
OPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Oregon Public Employees Retirement System, PO box 23700, Tigard, OR 97281-3700.
Funding Policy - Because RHIA was created by enabling legislation (ORS 238.420), contribution requirements of the plan members and the participating employers were established and may be amended only by the Oregon Legislature. ORS require that an amount equal to $60 dollars or the total monthly cost of Medicare companion health insurance premiums coverage, whichever is less, shall be paid from the Retirement Health Insurance Account established by the employer, and any monthly cost in excess of $60 dollars shall be paid by the eligible retired member in the manner provided in ORS 238.410. To be eligible to receive this monthly payment toward the premium cost the member must: (1) have eight years or more of qualifying service in PERS at the time of retirement or receive a disability allowance as if the member had eight years or more of creditable service in PERS, (2) receive both Medicare Parts A and B coverage, and (3) enroll in a PERS-sponsored health plan. A surviving spouse or dependent of a deceased PERS retiree who was eligible to receive the subsidy is eligible to receive the subsidy if he or she (1) is receiving a retirement benefit or allowance from PERS or (2) was insured at the time the member died and the member retired before May 1, 1991.
Participating employers are contractually required to contribute to RHIA at a rate assessed each year by OPERS. The contribution rates in effect for the fiscal year ended June 30, 2018 for the OPEB program were: Tier1/Tier 2 – 0.50%, and OPSRP general service – 0.43%. The City contributed $5,152 for the year ended June 30, 2018.
Pension Plan Comprehensive Annual Financial Report (CAFR) –
Oregon PERS produces an independently audited CAFR which can be found at: http://www.oregon.gov/pers/Pages/Financials/Actuarial-Financial-Information.aspx
Actuarial Valuation -
The actuarial valuation used for RHIA is identical to the actuarial valuation details related to the OPERS Plan disclosed in Note 9 Pension Plan (excluding the Actuarial Methods and Assumptions cost of living adjustment assumption, which has been removed, and a retiree healthcare participation assumption of 38% for healthy retirees and 20% for disabled retirees has been used). The actuarial valuation details are the Actuarial Methods and Assumptions, Discount Rate, Assumed Asset Allocation, and the Investment Rate of Return.
32 091 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 10 - Post-Employment Benefits Other Than Pensions (OPEB) (continued)
OPEB Liabilities/Assets, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB –
At June 30, 2018, the City reported $3,923 for its proportionate share of the net OPEB asset. The net OPEB asset was measured as of June 30, 2017, and the total OPEB asset used to calculate the net OPEB asset was determined by an actuarial valuation as of December 31, 2015. The City’s proportion of the net OPEB asset was based on a projection of the City’s long-term share of contributions to the OPEB plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2018, the City’s proportion was 0.00939976 percent.
For the year ended June 30, 2018, the City recognized a decrease of OPEB in expense of $134. The decrease of OPEB expense was generated during the measurement period primarily as a result of more than anticipated investment returns at the OPERS level.
At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows Deferred inflows of Resources of Resources
Net difference between projected and actual earnings on investments: $ - $ 1,817 Changes in proportionate share: - 417 Contributions subsequent to measurement date 5,152 -
Total $ 5,152 $ 2,234
$5,152 reported as deferred outflows of resources related to OPEB resulting from City contributions subsequent to the measurement date will be recognized as an increase to the net OPEB asset in the year ended June 30, 2018.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in pension expense as follows:
Deferred Outflow/(Inflow) of Year Ended Resources (prior to post- June 30, measurement date)
2019 $ (609) 2020 (609) 2021 (561) 2022 (455) Thereafter -
Total $ (2,234)
33 092 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 10 - Post-Employment Benefits Other Than Pensions (OPEB) (continued)
Sensitivity for the City’s Proportionate Share of the Net OPEB Asset to Changes in Discount Rate–
The following presents the City’s proportionate share of the net OPEB asset calculated using the discount rate of 7.50 percent, as well as what the City’s proportionate share of the net OPEB asset would be if it were calculated using a discount rate that is 1-percentage point lower (6.50 percent) or 1-percentage point higher (8.50 percent) than the current rate:
City's Net Pension 1% Decrease Current Discount Rate 1% Increase Asset/(Liability) (6.50%) (7.50%) (8.50%) Proportionate share of net OPEB asset/(liability) $ (547) $ 3,923 $ 7,725
The RHIA OPEB is unaffected by healthcare cost trends due to the benefit being limited to $60 monthly payments toward Medicare companion insurance premiums.
Note 11 – Pension Plan
Plan Description
Employees are provided pensions as participants under one or more plans currently available through Oregon Public Employees Retirement System (OPERS), a cost-sharing multiple-employer defined benefit plan in accordance with Oregon Revised Statutes Chapter 238, Chapter 23A, and Internal Revenue Service Code Section 401(a).
There are currently two programs within OPERS, with eligibility determined by the date of employment. Those employed prior to August 29, 2003 are OPERS Program members, and benefits are provided based on whether a member qualifies for Tier One or Tier Two described below. Those employed on or after August 29, 2003 are Oregon Public Service Retirement Plan (OPSRP) Program members. OPSRP is a hybrid retirement plan with two components: 1) the Pension Program (defined benefit; established and maintained as a tax-qualified governmental defined benefit plan), and 2) the Individual Account Program (IAP) (defined contribution; established and maintained as a tax-qualified governmental defined contribution plan).
The ORS Chapter 238 Defined Benefit Plan was closed to new members hired on or after August 29, 2003. In 1995, the Oregon Legislature created a second tier of benefits for those who became OPERS Program members after 1995 but before August 29, 2003. The second tier does not have the Tier One assumed earnings rate guarantee.
Beginning January 1, 2004, all employees who were active members of OPERS became members of the OPSRP IAP Program. OPERS plan member contributions (the employee contribution, whether made by the employee or "picked-up" by the employer) go into the IAP portion of OPSRP. OPERS plan members retain their existing OPERS accounts; however, member contributions after January 1, 2004 are deposited in the member's IAP, not into the member's OPERS account.
Plan Benefits
All benefits of the System are established by the legislature pursuant to Oregon Revised Statute (ORS) Chapter 238 and 238A.
34 093 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Tier One/Tier Two Retirement Benefit (Chapter 238)
Pension Benefits - The OPERS retirement allowance is payable monthly for life. It may be selected from 13 retirement benefit options. These options include survivorship benefits and lump-sum refunds. The basic benefit is based on years of service and final average salary. A percentage (1.67 percent for general service employees) is multiplied by the number of years of service and the final average salary. Benefits may also be calculated under a formula plus annuity (for members who were contributing before August 21, 1981) or a money match computation if a greater benefit results.
A member is considered vested and will be eligible at minimum retirement age for a service retirement allowance if he or she has had a contribution in each of five calendar years or has reached at least 50 years of age before ceasing employment with a participating employer. General Service employees may retire after reaching age 55. Tier One general service employee benefits are reduced if retirement occurs prior to age 58 with fewer than 30 years of service. Tier Two members are eligible for full benefits at age 60. The ORS Chapter 238 Defined Benefit Pension Plan was closed to new members hired on or after August 29, 2003.
Death Benefits - Upon the death of a non-retired member, the beneficiary receives a lump-sum refund of the member's account balance (accumulated contributions and interest). In addition, the beneficiary will receive a lump-sum payment from employer funds equal to the account balance, provided one or more of the following conditions are met:
• Member was employed by a OPERS employer at the time of death, • Member died within 120 days after termination of OPERS-covered employment, • Member died as a result of injury sustained while employed in a OPERS-covered job, or • Member was on an official leave of absence from a OPERS-covered job at the time of death.
Disability Benefits - A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related injury shall receive a disability benefit of 45% of the member's salary determined as of the last full month of employment before the disability occurred.
Benefit Changes After Retirement – Members may choose to continue participation in a variable equities investment account after retiring and may experience annual benefit fluctuations due to changes in the market value of equity investments.
Under ORS 238.360 monthly benefits are adjusted annually through cost-of-living changes. The cap on the COLA is 2.0 percent for fiscal year 2016 and beyond.
OPSRP Pension Program (Chapter 238A)
The ORS Chapter 238A Defined Benefit Pension Program provides benefits to members hired on or after August 29, 2003.
Pension Benefits - This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated with the following formula for members who attain normal retirement age:
General Service - 1.5 percent is multiplied by the number of years of service and the final average salary. Normal retirement age for general service members is age 65, or age 58 with 30 years of retirement credit.
35 094 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
OPSRP Pension Program (Chapter 238A) (continued)
A member of the pension program becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, and, if the pension program is terminated, the date on which termination becomes effective.
Death Benefits - Upon the death of a non-retired member, the spouse or other person who is constitutionally required to be treated in the same manner as the spouse receives for life 50 percent of the pension that would otherwise have been paid to the deceased member. The surviving spouse or other person may elect to delay payment of the death benefit. Payment must commence no later than December 31 of the calendar year in which the member would have reached 70 ½ years of age.
Disability Benefits - A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related injury shall receive a disability benefit of 45 percent of the member’s salary determined as of the last full month of employment before the disability occurred.
Benefit Changes After Retirement - Under ORS 238A.210, monthly benefits are adjusted annually through cost-of-living changes. As a result of the Moro Decision (Everice Moro et al v. State of Oregon et al), the cap on the COLA was restored to 2.0 percent for fiscal year 2016 and beyond.
Contributions
PERS' funding policy provides for periodic member and employer contributions at rates established by the Public Employees Retirement Board, subject to limits set in statute. The rates established for member and employer contributions were approved based on the recommendations of the System's third-party actuary.
The City's employer contributions for the year ended June 30, 2018 were $84,453, excluding amounts to fund employer specific liabilities. The contribution rates in effect for the fiscal year ended June 30, 2018 for each pension program were: Tier1/Tier 2 - 12.7%, OPSRP general service – 5.23%.
Pension Plan Comprehensive Annual Financial Report (CAFR)
Oregon PERS produces an independently audited CAFR which can be found at: http://www.oregon.gov/pers/Pages/section/financial_reports/financials.aspx.
Actuarial Valuation
The employer contribution rates effective July 1, 2015, through June 30, 2017, were set using the entry age normal actuarial cost method. Under this cost method, each active member's entry age present value of projected benefits is allocated over the member's service from their date of entry until their assumed date of exit, taking into consideration expected future compensation increases.
36 095 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Actuarial Methods and Assumptions Used in Developing Total Pension Liability
Valuation date December 31, 2015 Measurement date June 30, 2017 Experience study 2014, published September 23, 2015 Actuarial assumptions: Actuarial cost method Entry age normal Inflation rate 2.50 percent Long-term expected rate of return1 7.50 percent Discount rate 7.50 percent Projected salary increases 3.50 percent Cost of living adjustments (COLA) Blend of 2.00% COLA and graded COLA (1.25%/0.15%) in accordance with Moro decision; blend based on service. Mortality Healthy retirees and beneficiaries: RP-2000 Sex-distinct, generational per Scale BB, with collar adjustments and set-backs as described in the valuation. Active members: Mortality rates are a percentage of healthy retiree rates that vary by group, as described in the valuation. Disabled retirees: Mortality rates are a percentage (70% for males, 95% for females) of the RP-2000 Sex-distinct, generational per Scale BB, disabled mortality table.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31 of even numbered years. The methods and assumptions shown above are based on the 2014 Experience Study which reviewed experience for the four-year period ending on December 31, 2014.
Discount Rate
The discount rate used to measure the total pension liability was 7.5 percent for the Defined Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability.
37 096 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Assumed Asset Allocation Asset Class Target Allocation
Cash 0.00% Debt securities 20.00% Public equity 37.50% Private equity 17.50% Real estate 12.50% Alternative equity 12.50% Opportunity portfolio 0.00% Total 100.00%
Investment Rate of Return
To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2015 the PERS Board reviewed long-term assumptions developed by both Milliman’s capital market assumptions team and the Oregon Investment Council’s (OIC) investment advisors. Each asset class assumption is based on a consistent set of underlying assumptions, and includes adjustment for the inflation assumption. These assumptions are not based on historical returns, but instead are based on a forward- looking capital market economic model.
The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at the time based on the OIC long-term target asset allocation. The OIC’s description of each asset was used to map the target allocation to the asset classes shown below.
Asset Class Target Allocation Compounded Annual Return Core fixed income 8.00% 4.00% Short-term bonds 8.00% 3.61% Intermediate-term bonds 3.00% 5.42% High yield bonds 1.00% 6.20% Large/Mid cap US equities 15.75% 6.70% Small Cap US equities 1.31% 6.99% Micro Cap US equities 1.31% 7.01% Developed foreign equities 13.13% 6.73% Emerging market equities 4.12% 7.25% Non-US small Cap equities 1.88% 7.22% Private equities 17.50% 7.97% Real estate (property) 10.00% 5.84% Real estate (REITS) 2.50% 6.69% Hedge fund of funds - diversified 2.50% 4.64% Hedge fund - event-driven 0.63% 6.72% Timber 1.88% 5.85% Farmland 1.88% 6.37% Infrastructure 3.75% 7.13% Commodities 1.86% 4.58%
Total 100.00%
Assumed inflation - mean 2.50%
38 097 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Pension Liabilities/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
At June 30, 2018, the City reported a net pension liability of $1,435,472 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2018, the City’s proportion was approximately 0.01064887 percent.
For the year ended June 30, 2018, the City recognized pension expense of $200,871. Pension expense was generated during the measurement period as a result of less than anticipated investment returns and factors associated with the Moro Decision.
At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred inflows of Resources of Resources
Difference between expected and actual experience: $ 69,420 $ - Changes in assumptions: 261,661 - Net difference between projected and actual earnings on investments: 14,789 - Changes in proportionate share: 114,573 34,372 Differences between employer contributions and employer's proportionate share of system contributions - 117,452 Contributions subsequent to measurement date 84,453 -
Total $ 544,896 $ 151,824
39 098 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Pension Liabilities/Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense (income) as follows:
Deferred Outflow/Inflow of Year Ended Resources (prior to post- June 30, measurement date)
2019 $ 59,992 2020 177,883 2021 123,408 2022 (48,443) 2023 (4,220) Thereafter -
Total $ 308,620
Sensitivity for the City’s Proportionate Share of the Net Pension Liability to Changes in Discount Rate
The following presents the Reporting entity's proportionate, share of the net pension liability calculated using the discount rate of (7.50%), as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.50%) or one percentage- point higher (8.50%) than the current rate:
Current City's Net Pension 1% Decrease Discount Rate 1% Increase Asset/(Liability) (6.50%) (7.50%) (8.50%) Defined Benefit Pension $ (2,446,306) $ (1,435,472) $ (590,227)
Defined Contribution Plan - Individual Account Program (IAP)
Pension Benefits. Participants in OPERS defined benefit pension plans also participate in their defined contribution plan. An IAP member becomes vested on the date the employee account is established or on the date the rollover account was established. All covered employees are required by State statute to contribute 6% of their salary to the plan. If the employer makes optional employer contributions for a member, the member becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, the date the IAP is terminated, the date the active member becomes disabled, or the date the active member dies.
Upon retirement, a member of the OPSRP Individual Account Program (IAP) may receive the amounts in his or her employee account, rollover account, and vested employer account as a lump-sum payment or in equal installments over a 5, 10, 15, 20-year period or an anticipated life span option. Each distribution option has a $200 minimum distribution limit.
40 099 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 11 – Pension Plan (continued)
Defined Contribution Plan - Individual Account Program (IAP) (continued)
Death Benefits. Upon the death of a non-retired member, the beneficiary receives in a lump sum the member's account balance, rollover account balance, and vested employer optional contribution account balance. If a retired member dies before the installment payments are completed, the beneficiary may receive the remaining installment payments or choose a lump-sum payment.
Contributions. During 2018, the City, as an employee benefit, paid the employees portion of the contribution. For 2018, the City paid $69,228 for this contribution.
Note 12 – Property Tax Limitations
The State of Oregon has a constitutional limit on property taxes for schools and non-school government operations. The limitation provides property taxes for non-school operations are limited to $10.00 for each $1,000 of property market value. This limitation does not apply to taxes levied for principal and interest on general obligation bonded debt.
An additional limit reduced the amount of operating property tax revenues available to the City for its 1997- 98 fiscal year, and thereafter. This reduction was accomplished by rolling property values back to their 1995-96 values less 10% and limiting future tax value growth of each property to no more than 3% per year, subject to certain exceptions. Taxes levied to support bonded debt are exempted from the reductions. The Constitution also sets restrictive voter approval requirements for most tax and many fee increases and new bond issues.
Note 13 – Risk Management
The City of Phoenix is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the City carries commercial insurance. Worker’s compensation insurance is also provided through a commercial carrier. There has been no significant reduction in insurance coverage from the prior year and the City has not been required to pay any settlements in excess of insurance coverage during the past three fiscal years.
Note 14 – Commitments and Contingencies
Amounts received or receivable from government agencies are subject to audit and adjustment by these agencies. Any disallowed claims, including amounts already collected may constitute a liability of the City. The amount, if any, of costs which may be disallowed by the agency cannot be determined at this time, although the City management expects such amounts, if any, to be immaterial.
Note 15 – Concentrations of Risk
In the normal course of operations, the City receives grant funds from various Federal and State agencies. The grant programs are subject to audit by agents of the granting authority, the purpose of which is to ensure compliance with conditions precedent to the granting of funds. Any liability for reimbursement which may arise as the result of these audits is not believed to be material.
Note 16 – Current Vulnerability Due to Certain Concentrations
The City’s operations are concentrated within Jackson County. In addition, substantially all the City’s revenues, other than charges for services, for continuing operations are from federal, state, and local government agencies.
41 100 CITY OF PHOENIX Notes to Basic Financial Statements June 30, 2018
Note 17 – Tax Abatements
As of June 30, 2018, Jackson county provides tax abatements through five programs: Non-Profit Low Income Rental Housing, Enterprise Zone, Homebuyer Opportunity Limited Tax Exemption, Multiple-Unit Housing in Core Areas, and Residential Rehab Property.
For the fiscal year ended June 30, 2018, the City of Phoenix did not provide for any tax abatements under these programs.
Note 18 – Subsequent Events
Management of the City has evaluated events and transactions occurring after June 30, 2018 through December 21, 2018, the date the financial statements were available for issuance, for recognition and/or disclosure in the financial statements. Based on management’s knowledge, there were no additional events and/or transactions that required recognition and disclosure in the financial statements, except the following.
Changes in OPERS Pension Plan Provisions
At its July 28, 2017 meeting, the OPERS Board lowered its effective "assumed rate" from 7.5% to 7.2% effective, January 1, 2018. The assumed rate is the rate of investment return (including inflation) that the OPERS Fund's regular account is expected to earn over the long term. Oregon Administrative Rule 459-007-0001(2) states that the assumed rate "means the actuarial assumed rate of return on investments as adopted by the Board for the most recent actuarial valuation."
The lowered rate is expected to increase the OPERS net pension liability by an estimated $2.0 to $2.4 billion. Of this increase, the City’s proportional share is estimated at $212,977 to $255,573.
42 101 REQUIRED SUPPLEMENTARY INFORMATION
102 CITY OF PHOENIX SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION ASSET/(LIABILITY) AND SCHEDULE OF THE CITY'S CONTRIBUTIONS OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM (OPERS) LAST 10 FISCAL YEARS ENDING JUNE 30 (For Years Information is Available)
City of Phoenix Proportionate Share of Net Pension Asset / (Liability)
2018 2017 2016 2015
City of proportion of the net pension asset/(liability) 0.01064887% 0.01100000% 0.00500000% 0.00400000%
City's proportion of the net pension asset/(liability) $ (1,435,472) $ (1,674,829) $ (1,237,296) $ (815,813)
City's covered-employee payroll $ 1,132,253 $ 1,130,229 $ 1,170,114 $ 1,170,903
City's proportionate share of the net pension asset/(liability) as a percentage of its covered-employee payroll -126.78% -148.18% -105.74% 69.67%
Plan fiduciary net position as a percentage of the total pension liability 83.10% 80.52% 91.88% 103.59%
City of Phoenix Contributions
2018 2017 2016 2015
Contractually required contributions $ 84,453 $ 104,419 $ 123,976 $ 123,587
Contribution in relation to the contractually required (84,453) (104,419) (119,841) (123,587)
Contributions deficiency (excess) $ - $ - $ - $ -
City's covered - employee payroll $ 1,132,253 $ 1,130,229 $ 1,170,042 $ 1,170,903
Contributions as a percentage of covered-employee payroll 7.46% 9.24% 10.60% 10.55%
Note to schedule:
A summary of assumption changes implemented since the December 31, 2014 valuation are outlined briefly below. A comprehensive list of changes in methods and assumptions can be found in the 2014 Experience Study for the system, which was published on September 23, 2015, and can be found at: http://www.oregon.gov/PERS/Documents/Financials/Actuarial/2015/Experience-Study.pdf
Changes in Actuarial Method and Allocation Procedures: General Service member weighting changed from 30% to 25% of proportional liability.
Changes in Economic Assumptions: Inflation was lowered to 2.5%, and payroll growth was reduced from 3.75% to 3.5%. Investment return and interest crediting was reduced from 7.75% to 7.5%. With the implementation of GASB No. 67 and 68 this necessitated an explicit Tier 1/Tier 2 administrative expense assumption of $33 million per year for December 31, 2014 and December 31, 2015. Health care cost inflation and implementation of the excise tax in 2018 was considered. Disability mortality tables were updated using the RP2000 generational tables, whereas RP2000 static tables were previously used. Rates for disability, retirement from active status, and termination were adjusted.
Changes in Salary Increase Assumptions: Unused sick leave and vacation pay rates were adjusted. Retirement Health Insurance Account (RHIA) participation rate for healthy retires was reduced from 45% to 38%. The RHIPA participation rate was changed from a uniform rate of 13% to a service-based table of rates.
Other Information: This schedule is presented to illustrate required supplementary information for a 10 year period. The District adopted GASB 68 during fiscal 2014, as a result, only four years of information is presented.
43 103 CITY OF PHOENIX SCHEDULE OF THE DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB (RHIA) ASSET/(LIABILITY) AND SCHEDULE OF THE DISTRICT'S CONTRIBUTIONS OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM (RHIA) LAST 10 FISCAL YEARS ENDING JUNE 30 (For Years Information is Available)
City of Phoenix Proportionate Share of Net OPEB (Liability) / Asset
2018
City's proportion of the net OPEB RHIA asset/(liability) 0.00939976%
City's proportion of the net OPEB RHIA asset/(liability) $ 3,923
City's covered-employee payroll $ 1,132,253
City's proportionate share of the net OPEB RHIA asset/(liability) as a percentage of its covered-employee payroll 0.35%
Plan fiduciary net position as a percentage of the total pension liability 108.88%
City of Phoenix Contributions
2018
Contractually required contributions $ 5,152
Contribution in relation to the contractually required $ (5,152)
Contributions deficiency (excess) $ -
City's covered - employee payroll $ 1,132,253
Contributions as a percentage of covered-employee payroll 0.46%
Note to schedule:
Other Information: This schedule is presented to illustrate required supplementary information for a 10 year period. The City adopted GASB 75 for RHIA during fiscal 2018, as a result, only one year of information is presented.
44 104 CITY OF PHOENIX COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES: GENERAL FUND YEAR ENDED JUNE 30, 2018
Capital Total General Reserve General Fund Fund Fund
REVENUES Taxes $ 1,200,413 $ - $ 1,200,413 Charges for services 32,553 - 32,553 Licenses and permits 80,732 - 80,732 Earnings on investments 35,527 - 35,527 Intergovernmental 251,372 - 251,372 Franchise fees 318,872 - 318,872 Court 13,061 - 13,061 Fines and forfeitures 57,093 - 57,093 Miscellaneous 46,542 - 46,542
TOTAL REVENUES 2,036,165 - 2,036,165
EXPENDITURES Current: Executive 170,855 - 170,855 Administrative 121,386 - 121,386 Planning 122,690 - 122,690 Parks 138,847 - 138,847 Building 122,064 - 122,064 Police 1,158,122 - 1,158,122 Non-departmental 133,985 24,754 158,739 Capital outlay - 57,221 57,221
TOTAL EXPENDITURES 1,967,949 81,975 2,049,924
OTHER FINANCING SOURCES (USES): Transfers In/(Out) (55,000) 547,848 492,848
TOTAL OTHER FINANCING SOURCES (USES) (55,000) 547,848 492,848
NET CHANGE IN FUND BALANCE 13,216 465,873 479,089
FUND BALANCE - JULY 1, 2017 1,002,540 709,745 1,712,285
FUND BALANCE - JUNE 30, 2018 $ 1,015,756 $ 1,175,618 $ 2,191,374
Note: A portion of the Capital Reserve Fund is allocated to the General Fund as reserve funds don't qualify as a fund type under GAAP.
45 105 CITY OF PHEONIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Property taxes $ 1,045,200 $ 1,045,200 $ 1,066,829 $ 21,629 Other taxes 14,500 14,500 133,584 119,084 Charges for services 33,420 33,420 32,553 (867) Licenses and permits 78,850 78,850 80,732 1,882 Earnings on investments 12,000 12,000 35,527 23,527 Intergovernmental 133,192 133,192 251,372 118,180 Court 14,800 14,800 13,061 (1,739) Franchise fees 305,900 305,900 318,872 12,972 Fines and forfeitures 253,920 253,920 57,093 (196,827) Miscellaneous 9,465 9,465 46,542 37,077
TOTAL REVENUES 1,901,247 1,901,247 2,036,165 134,918
EXPENDITURES Current Executive 176,758 176,758 170,855 5,903 Administrative 125,154 125,154 121,386 3,768 Planning department 170,113 132,113 122,690 9,423 Parks maintenance 144,332 161,777 138,847 22,930 Building department 107,182 134,641 122,064 12,577 Police department 1,218,330 1,162,330 1,158,122 4,208 Non departmental 54,295 171,407 133,985 37,422 Contingency 280,000 211,984 - 211,984
TOTAL EXPENDITURES 2,276,164 2,276,164 1,967,949 308,215
OTHER FINANCING SOURCES (USES): Transfers (out) (70,000) (70,000) (55,000) 15,000
TOTAL OTHER FINANCING SOURCES (USES) (70,000) (70,000) (55,000) 15,000
NET CHANGE IN FUND BALANCE (444,917) (444,917) 13,216 458,133
FUND BALANCE - JULY 1, 2017 1,020,029 1,020,029 1,002,540 (17,489)
FUND BALANCE - JUNE 30, 2018 $ 575,112 $ 575,112 $ 1,015,756 $ 440,644
46 106 CITY OF PHEONIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STREET FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Charges for service $ 234,220 $ 234,220 $ 251,026 $ 16,806 Licenses and permit - - 405 405 Intergovernmental 371,500 371,500 417,406 45,906 Grants 17,500 17,500 - (17,500) Franchise fees 16,200 16,200 13,691 (2,509) Earnings on investments 4,450 4,450 32,453 28,003 Miscellaneous 500 500 72 (428)
TOTAL REVENUES 644,370 644,370 715,053 70,683
EXPENDITURES Current: Highway and streets: Personal services 251,539 251,539 228,715 22,824 Materials and services 244,220 251,856 198,934 52,922 Contingency 100,000 92,364 - 92,364
TOTAL EXPENDITURES 595,759 595,759 427,649 168,110
OTHER FINANCING SOURCES (USES): Transfer out (342,848) (342,848) (342,848) -
TOTAL OTHER FINANCING SOURCES (342,848) (342,848) (342,848) -
NET CHANGE IN FUND BALANCE (294,237) (294,237) (55,444) 238,793
FUND BALANCE - JULY 1, 2017 916,231 916,231 1,003,547 87,316
FUND BALANCE - JUNE 30, 2018 $ 621,994 $ 621,994 $ 948,103 $ 326,109
47 107 CITY OF PHEONIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL STREET SDC FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Charges for services $ 70,000 $ 70,000 $ 63,819 $ (6,181) Investment revenue 15 15 - (15)
TOTAL REVENUES 70,015 70,015 63,819 (6,196)
EXPENDITURES Highways and streets: Capital outlay 165,000 165,000 - 165,000
TOTAL EXPENDITURES 165,000 165,000 - 165,000
OTHER FINANCING SOURCES (USES) Operating transfers out (150,000) (150,000) (150,000) -
TOTAL OTHER FINANCING SOURCES (150,000) (150,000) (150,000) -
NET CHANGE IN FUND BALANCE (244,985) (244,985) (86,181) 158,804
FUND BALANCE - JULY 1, 2017 488,320 488,320 158,492 (329,828)
FUND BALANCE - JUNE 30, 2018 $ 243,335 $ 243,335 $ 72,311 $ (171,024)
48 108 CITY OF PHOENIX COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN WORKING CAPITAL: PHOENIX URBAN RENEWAL AGENCY FUND YEAR ENDED JUNE 30, 2018
Phoenix Urban Phoenix Urban Total Phoenix Renewal Agency Renewal Agency Urban Renewal Capital Fund Debt Fund Agency Fund
REVENUES Taxes $ - $ 375,222 $ 375,222 Earnings on investments - 7,877 7,877 Grants 47,075 - 47,075 Miscellaneous 20,502 - 20,502
TOTAL REVENUES 67,577 383,099 450,676
EXPENDITURES Current: Personal services 13,737 - 13,737 Materials and services 60,080 - 60,080 Capital Outlay 2,867,103 - 2,867,103
TOTAL EXPENDITURES 2,940,920 - 2,940,920
OTHER FINANCING SOURCES (USES): Transfers In/(Out) 126,000 (126,000) - Payment for intergovernmental loan - (302,937) (302,937) Debt proceeds, Series 2017 1,504,700 - 1,504,700 Debt proceeds, Series 2015B & 2015C 1,019,248 - 1,019,248
TOTAL OTHER FINANCING SOURCES (USES) 2,649,948 (428,937) 2,221,011
NET CHANGE IN WORKING CAPITAL (223,395) (45,838) (269,233)
WORKING CAPITAL - JULY 1, 2017 47,112 574,512 621,624
WORKING CAPITAL - JUNE 30, 2018 $ (176,283) $ 528,674 352,391
Reconciliation to fund balance:
Intergovernmental Liability (234,392)
Ending fund balance June 30, 2018 $ 117,999
49 109 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN WORKING CAPITAL - BUDGET AND ACTUAL PHOENIX URBAN RENEWAL AGENCY CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Grants $ 29,500 $ 69,500 $ 47,075 $ (22,425) Miscellaneous - - 20,502 20,502
TOTAL REVENUES 29,500 69,500 67,577 (1,923)
EXPENDITURES Current: Urban renewal agency: Personel services 47,000 47,000 13,737 33,263 Materials and services 89,000 89,000 60,080 28,920 Capital Outlay 2,480,660 3,035,360 2,867,103 168,257
TOTAL EXPENDITURES 2,616,660 3,171,360 2,940,920 230,440
OTHER FINANCING SOURCES Debt proceeds, Series 2017 990,000 1,504,700 1,504,700 - Debt proceeds, Series 2015B & 2015C 1,019,248 1,019,248 1,019,248 - Operating transfers in 95,000 95,000 126,000 31,000
TOTAL OTHER FINANCING SOURCES 2,104,248 2,618,948 2,649,948 31,000
NET CHANGE IN WORKING CAPITAL (482,912) (482,912) (223,395) 259,517
WORKING CAPITAL - JULY 1, 2017 518,542 518,542 47,112 (471,430)
WORKING CAPITAL - JUNE 30, 2018 $ 35,630 $ 35,630 $ (176,283) $ (211,913)
50 110 CITY OF PHEONIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN WORKING CAPITAL - BUDGET AND ACTUAL PHOENIX URBAN RENEWAL AGENCY DEBT SERVICE FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Taxes $ 355,000 $ 386,000 $ 375,222 $ (10,778) Investment revenue 1,200 1,200 7,877 6,677
TOTAL REVENUES 356,200 387,200 383,099 (4,101)
OTHER FINANCING SOURCES (USES) Payment for intergovernmental loan (278,537) (278,537) (302,937) (24,400) Transfers out (95,000) (126,000) (126,000) -
TOTAL OTHER FINANCING SOURCES (373,537) (404,537) (428,937) (24,400)
NET CHANGE IN WORKING CAPITAL (17,337) (17,337) (45,838) (28,501)
WORKING CAPITAL - JULY 1, 2017 26,133 26,133 574,512 548,379
WORKING CAPITAL - JUNE 30, 2018 $ 8,796 $ 8,796 $ 528,674 $ 519,878
51 111 OTHER SUPPLEMENTARY INFORMATION
112 CITY OF PHEONIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN WORKING CAPITAL - BUDGET AND ACTUAL PHOENIX URBAN RENEWAL AGENCY BOND FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
EXPENDITURES Current: Materials and service $ - $ - $ 1,201 $ (1,201) Debt service 237,293 299,266 301,736 (2,470)
TOTAL EXPENDITURES 237,293 299,266 302,937 (3,671)
OTHER FINANCING SOURCES (USES) Proceeds from debt - 1,560,000 1,560,000 - Scheduled debt service transfers, series 2015 237,293 299,266 302,937 3,671 Debt issuance costs - (55,300) (55,300) - Intergovernmental loan, series 2017 - (1,504,700) (1,504,700) - Payment of intergovernmental loan, Series 2015B & C (1,019,248) (1,019,248) (1,019,248) -
TOTAL OTHER FINANCING SOURCES (781,955) (719,982) (716,311) 3,671
NET CHANGE IN WORKING CAPITAL (1,019,248) (1,019,248) (1,019,248) -
WORKING CAPITAL - JULY 1, 2017, as restated 1,019,248 1,019,248 1,019,342 (94)
WORKING CAPITAL - JUNE 30, 2018 $ - $ - $ 94 $ (94)
Reconciliation to fund balance:
Intergovernmental Receivable 234,392
Ending fund balance June 30, 2018 234,486
52 113 CITY OF PHOENIX COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2018
Total Advertising Tourist Parks and Nonmajor Promotion Usage Recreation Governmental Fund Fund SDC Fund Funds
REVENUES Taxes $ 1,958 $ 9,734 $ - $ 11,692 Charges for services - - 9,879 9,879 Miscellaneous 270 - - 270
TOTAL REVENUES 2,228 9,734 9,879 21,841
EXPENDITURES Parks department - - 37,747 37,747 Non-departmental 6,789 10,610 - 17,399
TOTAL EXPENDITURES 6,789 10,610 37,747 55,146
EXCESS OF REVENUES OVER EXPENDITURES (4,561) (876) (27,868) (33,305)
CHANGES IN FUND BALANCE (4,561) (876) (27,868) (33,305)
FUND BALANCE - JULY 1, 2017 7,183 9,734 92,926 109,843
FUND BALANCE - JUNE 30, 2018 $ 2,622 $ 8,858 $ 65,058 $ 76,538
53 114 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ADVERTISING PROMOTION FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Taxes $ 2,000 $ 2,000 $ 1,958 $ (42) Miscellaneous 540 540 270 (270)
TOTAL REVENUES 2,540 2,540 2,228 (312)
EXPENDITURES Current Materials and services 7,000 7,000 6,789 211
TOTAL EXPENDITURES 7,000 7,000 6,789 211
NET CHANGE IN FUND BALANCE (4,460) (4,460) (4,561) (101)
FUND BALANCE - JULY 1, 2017 6,134 6,134 7,183 1,049
FUND BALANCE - JUNE 30, 2018 $ 1,674 $ 1,674 $ 2,622 $ 948
54 115 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TOURIST USAGE FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Taxes $ 18,050 $ 18,050 $ 9,734 $ (8,316)
TOTAL REVENUES 18,050 18,050 9,734 (8,316)
EXPENDITURES Material and services 20,500 20,500 10,610 9,890
TOTAL EXPENDITURES 20,500 20,500 10,610 9,890
NET CHANGE IN FUND BALANCE (2,450) (2,450) (876) 1,574
FUND BALANCE - JULY 1, 2017 7,712 7,712 9,734 2,022
FUND BALANCE - JUNE 30, 2018 $ 5,262 $ 5,262 $ 8,858 $ 3,596
55 116 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL PARKS AND RECREATION SDC FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Charges for service $ 5,000 $ 5,000 $ 9,879 $ 4,879 Earnings on investment 10 10 - (10)
TOTAL REVENUES 5,010 5,010 9,879 4,869
EXPENDITURES Parks Department: Capital outlay 80,000 80,000 37,747 42,253
TOTAL EXPENDITURES 80,000 80,000 37,747 42,253
NET CHANGE IN FUND BALANCE (74,990) (74,990) (27,868) 47,122
FUND BALANCE- JULY 1, 2017 79,381 79,381 92,926 13,545
FUND BALANCE - JUNE 30, 2018 $ 4,391 $ 4,391 $ 65,058 $ 60,667
56 117 PROPRIETARY FUNDS
118 CITY OF PHOENIX COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN WORKING CAPITAL WATER FUND YEAR ENDED JUNE 30, 2018
Water Capital Water Stormwater Total Fund Reserve Fund SDC Fund SDC Fund Water Fund
OPERATING REVENUES Charges for services $ 1,331,137 $ - $ - $ - $ 1,331,137 System development charges - - 83,414 8,515 91,929 Franchise fees 27,615 - - - 27,615 Miscellaneous 6,077 - - - 6,077
TOTAL OPERATING REVENUES 1,364,829 - 83,414 8,515 1,456,758
OPERATING EXPENSES Current: Personal services 412,208 - - - 412,208 Materials and services 497,843 - - - 497,843 Capital outlay - 201,360 - - 201,360
TOTAL OPERATING EXPENSES 910,051 201,360 - - 1,111,411
OPERATING INCOME (LOSS) 454,778 (201,360) 83,414 8,515 345,347
NONOPERATING REVENUES (EXPENSES) Interest expense (129,878) - - - (129,878)
TOTAL NONOPERATING REVENUE (EXPENSES) (129,878) - - - (129,878)
INCOME (LOSS) BEFORE OTHER FINANCING SOURCES 324,900 (201,360) 83,414 8,515 215,469
OTHER FINANCING SOURCES (USES)
Transfers in - 400,000 - - 400,000 Transfers out (274,275) - (125,725) - (400,000)
TOTAL OTHER FINANCING SOURCES (USES) (274,275) 400,000 (125,725) - -
NET CHANGE IN WORKING CAPITAL 50,625 198,640 (42,311) 8,515 215,469
NET WORKING CAPITAL - JULY 1, 2017, as restated 1,389,621 - 156,139 35,621 1,389,621
NET WORKING CAPITAL - JUNE 30, 2018 $ 1,440,246 $ 198,640 $ 113,828 $ 44,136 1,796,850
Add (deduct) adjustments to budgetary basis working capital to reconcile ending net position.
Non-current asset 3,492,349 Deferred outflows 95,260 Accrued interest (8,465) Compensated absences (22,711) Long-term debt (1,830,410) Net pension liability (248,603) Deferred inflows (26,681)
ENDING NET POSITION $ 3,247,589
Note: A portion of the Capital Reserve Fund is allocated to the Water Fund for GAAP reporting purposes.
57 119 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET WORKING CAPITAL - BUDGET AND ACTUAL WATER FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Charges for services $ 1,271,735 $ 1,271,735 $ 1,331,137 $ 59,402 Earnings on investments 72 72 - (72) Franchise fees 12,450 12,450 27,615 15,165 Miscellaneous 2,500 2,500 6,077 3,577
TOTAL REVENUES 1,286,757 1,286,757 1,364,829 78,072
EXPENDITURES Current Personal services 455,307 455,307 412,208 43,099 Materials and services 551,310 579,078 497,843 81,235 Debt service 129,893 129,893 129,878 15 Contingency 100,000 72,232 - 72,232
TOTAL EXPENDITURES 1,236,510 1,236,510 1,039,929 196,581
OTHER FINANCING SOURCES (USES): Transfers in 25,725 25,725 25,725 - Transfers out (300,000) (300,000) (300,000) -
TOTAL OTHER FINANCING SOURCES (USES) (274,275) (274,275) (274,275) -
NET CHANGE IN WORKING CAPITAL (224,028) (224,028) 50,625 274,653
NET WORKING CAPITAL - JULY 1, 2017, as restated - - 1,389,621 1,389,621
NET WORKING CAPITAL - JUNE 30, 2018 $ (224,028) $ (224,028) 1,440,246 $ 1,664,274
58 120 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET WORKING CAPITAL - BUDGET AND ACTUAL WATER SYSTEM DEVELOPMENT FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES System development charges $ 34,975 $ 34,975 $ 83,414 $ 48,439 Earnings on investments 25 25 - (25)
TOTAL REVENUES 35,000 35,000 83,414 48,414
OTHER FINANCING SOURCES (USES): Transfers out (125,725) (125,725) (125,725) -
TOTAL OTHER FINANCING SOURCES (USES) (125,725) (125,725) (125,725) -
NET CHANGE IN WORKING CAPITAL (90,725) (90,725) (42,311) 48,414
NET WORKING CAPITAL - JULY 1, 2017 145,748 145,748 156,139 10,391
NET WORKING CAPITAL - JUNE 30, 2018 $ 55,023 $ 55,023 $ 113,828 $ 58,805
59 121 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET WORKING CAPITAL - BUDGET AND ACTUAL STORMWATER DEVELOPMENT CHARGES FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES System development charges $ 8,000 $ 8,000 $ 8,515 $ 515
TOTAL REVENUES 8,000 8,000 8,515 515
NET CHANGE IN WORKING CAPITAL 8,000 8,000 8,515 515
NET WORKING CAPITAL - JULY 1, 2017 25,862 25,862 35,621 9,759
NET WORKING CAPITAL - JUNE 30, 2018 $ 33,862 $ 33,862 $ 44,136 $ 10,274
60 122 CITY OF PHOENIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET POSITION - BUDGET AND ACTUAL CAPITAL RESERVE FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
EXPENDITURES Current: Materials and services $ 150,000 $ 150,000 $ 24,754 $ 125,246 Capital outlay 1,352,848 1,352,848 258,581 1,094,267
TOTAL EXPENDITURES 1,502,848 1,502,848 283,335 1,219,513
OTHER FINANCING SOURCES Operating transfers in 962,848 962,848 947,848 15,000
TOTAL OTHER FINANCING SOURCES 962,848 962,848 947,848 15,000
NET CHANGE IN FUND BALANCE (540,000) (540,000) 664,513 1,204,513
FUND BALANCE - JULY 1, 2017 1,215,135 1,215,135 709,745 505,390
FUND BALANCE - JUNE 30, 2018 $ 675,135 $ 675,135 $ 1,374,258 $ 699,123
Note: A portion of the Capital Reserve Fund is allocated to the General Fund and the Water Fund for reporting purposes, as reserve funds don't qualify as a fund type under GAAP.
61 123
INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATIONS
Honorable Mayor and Council City of Phoenix Phoenix, Oregon
We have audited the basic financial statements of the City of Phoenix (the City) as of and for the year ended June 30, 2018, and have issued our report thereon dated December 21, 2018. We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Compliance
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not the objective of our audit, and accordingly, we do not express such an opinion.
We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following:
• Deposit of public funds with financial institutions under ORS Chapter 295. • Indebtedness limitations, restrictions and repayment. • Budgets legally required under ORS Chapter 294. • Insurance and fidelity under bonds in force or required by law. • Programs funded from outside sources. • Highway revenues used for public highways, roads, and streets. • Authorized investment of surplus funds (ORS Chapter 294). • Public contracts and purchasing under ORS Chapters 279A, 279B, 279C.
In connection with our audit, nothing came to our attention that caused us to believe the City was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administration Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations, except as reported in Note 2 of the financial statements.
62
124 OAR 162-10-0230 Internal Control
In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting.
Restrictions on Use
This report is intended solely for the information and use of the City Council and management of the City of Phoenix and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties.
Mark E. Damon CPA, Partner KDP Certified Public Accountants, LLP Medford, Oregon December 21, 2018
63
125 Exhibit "B"
PHOENIX URBAN RENEWAL AGENCY A BLENDED COMPONENT OF THE CITY OF PHOENIX, OR
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2018 WITH INDEPENDENT AUDITOR’S REPORT
received at 2/4/19 City Council Meeting 126 PHOENIX URBAN RENEWAL AGENCY Phoenix, Oregon Year Ended June 30, 2018
Board Members
Chris Luz Mayor
Jim Snyder Member
Michael Shunk Member
Sarah Westover Member
Stuart Warren Member
Terry Baker Member
Cindy Cameron Member
Board members received mail at the following address:
City of Phoenix 112 W. 2nd Street P.O. Box 330 Phoenix, OR 97535
City Administrators
Aaron Prunty, Executive Director
Janette Boothe, Finance and Human Resource Director
127 PHOENIX URBAN RENEWAL AGENCY Phoenix, Oregon Year Ended June 30, 2018
Table of Contents
Independent Auditor’s Report A1-A2
Management Discussion and Analysis B1-B5
Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position – Cash Basis 1 Statement of Activities – Cash Basis 2 Fund Financial Statements: Balance Sheet – Cash Basis Governmental Funds 3 Statement of Revenues, Expenditures, and Changes in Fund Balances Cash Basis – Governmental Funds 4 Notes to the Financial Statements 5-12
Supplementary Information: Governmental Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balances – Cash Basis Budget and Actual Capital Projects Fund 13 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Cash Basis Budget and Actual Debt Service Fund 14
Independent Auditors Report Required by Oregon State Regulations: 15-16
128
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor, Members of the Governing Body City of Phoenix Urban Renewal Agency Phoenix, Oregon
We have audited the accompanying cash basis financial statements of the governmental activities and each major fund of the City of Phoenix Urban Renewal Agency (a component unit of the City of Phoenix, Oregon), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the cash basis of accounting described in Note 1; this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Agency’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective cash basis financial position of the governmental activities and each major fund of the Agency, as of June 30, 2018, and the respective changes in cash basis financial position for the year then ended in accordance with the cash basis of accounting as described in Note 1.
A-1 129 Basis of Accounting
We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Other Matters
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The management’s discussion and analysis information listed in the Table of Contents, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s basic financial statements. The supplementary information listed in the Table of Contents is presented for purposes of additional analysis and is not required as part of the basic financial statements. This information is the responsibility of management and was derived from, and relates directly to the underlying accounting and other records used to prepare the financial statements. The supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements, and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated in all material respects in relation to the financial statements as a whole.
Other Reporting Required Oregon State Regulations
In accordance with Oregon State Regulation, we have also issued our report dated December 21, 2018 on our consideration of the Agency’s compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes (ORS) as specified in Oregon Administrative Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations. The purpose of that report is to describe the scope of our testing necessary to address the required provisions of ORS, and not to provide an opinion on compliance with such provisions.
Mark E. Damon CPA, Partner KDP Certified Public Accountants, LLP Medford, Oregon December 21, 2018
A-2 130 PHOENIX URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended June, 30, 2018
As management of the Phoenix Urban Renewal Agency, we offer readers of the Phoenix Urban Renewal Agency’s cash basis financial statements this narrative overview and analysis of the financial activities of the Phoenix Urban Renewal Agency for the fiscal year ended June 30, 2018.
Basis of Accounting
The Agency has elected to present its financial statements on a cash basis of accounting. This cash basis of accounting is a basis of accounting other than generally accepted accounting principles. Basis of accounting is a reference to when financial events are recorded, such as the timing for recognizing revenues, expenses, and their related assets and liabilities. Under the cash basis of accounting, revenues and expenses and related assets and liabilities are recorded when they result from cash transactions. As a result of using the cash basis of accounting, certain assets and their related revenues (such as accounts receivable and revenue for billed or provided services not yet collected) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid, and accrued expenses and liabilities) are not recorded in these financial statements. Therefore, when reviewing the financial information and discussion within this report, the reader should keep in mind the limitations resulting from the use of the cash basis of accounting.
FINANCIAL HIGHLIGHTS . The Urban Renewal’s total net position increased by $8 thousand. This increase is attributable to the increase in current year property taxes.
. As of the close of the current fiscal year, the Phoenix Urban Renewal Agency’s governmental fund reported an ending fund balance of $652 thousand an improvement of $8 thousand in comparison with the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Phoenix Urban Renewal Agency’s basic financial statements. The Phoenix Urban Renewal Agency’s financial statements comprise three components:
1. Government-wide financial statements (cash basis), 2. Fund financial statements (cash basis) 3. Notes to the financial statements.
1. Government-wide financial statements
The government-wide financial statements are designed to provide readers with a broad overview of the Phoenix Urban Renewal Agency’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on Phoenix Urban Renewal Agency’s assets and liabilities (cash basis), with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Phoenix Urban Renewal Agency is improving or deteriorating.
The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net position are reported when they result from a cash transaction.
The government-wide financial statements can be found on pages 1 and 2 of this report.
B-1 131 PHOENIX URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended June, 30, 2018
2. 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 Phoenix Urban Renewal Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near- term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Phoenix Urban Renewal Agency maintains two individual governmental funds.
The Phoenix Urban Renewal Agency adopts an annual appropriated budget for its funds. A budgetary comparison statement has been provided for the Capital Projects and the Debt Service Funds to demonstrate compliance with the agency’s budget. The basic governmental fund financial statements can be found on pages 3 through 4 of this report.
3. 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 on pages 5 through 12 of this report.
Supplementary information In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information concerning Phoenix Urban Renewal Agency’s budget to actual statement. Supplementary information can be found on pages 13-14 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government's financial position. The primary purpose of the Agency is to utilize tax increment financing to fund various improvement projects as identified in the revitalization plan of the City. As a result, it is not uncommon for Agencies to have negative net position as they service obligations.
B-2 132 PHOENIX URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended June, 30, 2018
Analysis of Net Position
Governmental Activities
ASSETS: 2018 2017 Current assets: Cash and investments $ 652,073 $ 643,735
TOTAL ASSETS 652,073 643,735
NET POSITION: Restricted for debt service 524,106 569,623 Unrestricted 127,967 74,112
TOTAL NET POSITION $ 652,073 $ 643,735
The Agency’s net position increased by $8 thousand during the current fiscal year.
B-3 133 PHOENIX URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended June, 30, 2018
Governmental activities
Governmental activities increased Phoenix Urban Renewal Agency’s net position by $8 thousand. Key elements of this increase are as follows:
Analysis of Changes in Net Position
Governmental Activities
2018 2017 REV ENUES: Operating grants and contributions $ 47,075 $ - Capital grants and contributions 2,523,948 - Long term loan proceeds - 250,000 Property taxes 374,343 368,298 Unrestircted investment earnings 7,877 1,625 Miscellaneous 20,502 821,478
T OT AL REV ENUES 2,973,745 1,441,401
EXPENSES: Personnel service 13,737 - Materials and services 61,066 223,877 Capital outlay 2,588,867 404,649 Interest on long-term debt 301,737 234,084
T OT AL EXPENSES 2,965,407 862,610
Change in net position 8,338 578,791
Beginning net position 643,735 64,944
Ending net position $ 652,073 $ 643,735
Property taxes revenue increased by $6,045 (1.64 percent) during the year.
FUND ANALYSIS
As noted earlier, the Phoenix Urban Renewal Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds
The focus of the Phoenix Urban Renewal Agency’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Phoenix Urban Renewal Agency’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
B-4 134 PHOENIX URBAN RENEWAL AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ended June, 30, 2018
Governmental funds (continued)
As of the end of the current fiscal year, the Phoenix Urban Renewal Agency’s governmental funds reported an ending fund balance of $652,073 an improvement of $8,338 in comparison with the prior year.
DEBT ADMINISTRATION At the end of the current fiscal year, the Agency had total long-term liabilities of $4,398,090. The debt outstanding at the end of the current fiscal year consists of full faith & credit bonds issued in the name of the City of Phoenix (City). An agreement between the City and the Agency recognizes that the Agency is directly responsible for the debt service requirements. The Agency will levy Urban Renewal taxes to meet annual debt service requirements and has pledged its tax increment revenues as security to the City. Bonds payable at year-end total $4,398,090 in long-term liabilities.
Additional information on the Phoenix Urban Renewal Agency’s debt can be found in note 3 on page 9 of this report.
Economic Factors and Next Year’s Budget and Rates
The City remains primarily a bedroom community. Due to its demographics and its geographic location in relation to Medford and Ashland, a high percentage of our population commutes for employment.
The City’s official population estimate as of July 1, 2017 was 4,605, reflecting a small increase from the previous year. The assessed value of property in the City was $311.5 million.
2018-2019 will have fewer projects than the previous year. Anticipated highlights for fiscal year 2018-2019 are the continuation of work on the civic center property, including design and construction of a bioswale.
REQUEST FOR INFORMATION
The City’s financial statements are designed to present users with a general overview of the City’s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to City Hall P.O Box 330, 112 W. 2nd, Phoenix, OR 97535. The City’s telephone number is 541-535-1955.
B-5 135 BASIC FINANCIAL STATEMENTS
136 GOVERNMENT-WIDE FINANCIAL STATEMENTS
137 PHOENIX URBAN RENEWAL AGENCY STATEMENT OF NET POSITION - CASH BASIS JUNE 30, 2018
Governmental Activities ASSETS: Current assets: Cash and investments $ 652,073
TOTAL ASSETS 652,073
NET POSITION: Restricted for debt service 524,106 Unrestricted 127,967
TOTAL NET POSITION $ 652,073
See notes to basic financial statements 1 138 PHOENIX URBAN RENEWAL AGENCY STATEMENT OF ACTIVITIES - CASH BASIS YEAR ENDED JUNE 30, 2018
Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Total Grants and Grants and Governmental Functions/Programs Expenses Contributions Contributions Activities Governmental activities: General government Personnel service $ 13,737 $ 8,645 $ - $ (5,092) Materials and services 61,066 38,430 - (22,636) Capital outlay 2,588,867 - 2,523,948 (64,919) Interest on long-term debt 301,737 - - (301,737)
Total government activities $ 2,965,407 $ 47,075 $ 2,523,948 (394,384)
Property taxes 374,343 Unrestricted investment earnings 7,877 Miscellaneous 20,502
Total general revenues: 402,722
CHANGE IN NET POSITION 8,338
Net position - June 30, 2017 643,735
Net position - June 30, 2018 $ 652,073
See notes to basic financial statements 2 139 PHOENIX URBAN RENWAL AGENCY STATEMENT OF ASSETS AND LIABILITIES - CASH BASIS GOVERNMENTAL FUNDS JUNE 30, 2018
Capital Debt Total Projects Service Governmental Fund Fund Funds ASSETS: Cash & investments $ 127,967 $ 524,106 $ 652,073
TOTAL ASSETS $ 127,967 $ 524,106 $ 652,073
LIABILITIES AND FUND BALANCE:
Fund Balances: Restricted for debt service $ - $ 524,106 $ 524,106 Unrestricted 127,967 - 127,967
TOTAL FUND BALANCE 127,967 524,106 652,073
TOTAL LIABILITIES AND FUND BALANCE $ 127,967 $ 524,106 $ 652,073
See notes to basic financial statements 3 140 PHOENIX URBAN RENEWAL AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - CASH BASIS GOVERNMENTAL FUNDS JUNE 30, 2018
Capital Debt Total Projects Service Governmental Fund Fund Funds
REVENUES: Property taxes $ - $ 374,343 $ 374,343 Donations, grants, reimbursements 47,075 - 47,075 Interest on investments - 7,877 7,877 Miscellaneous 20,502 - 20,502
TOTAL REVENUES 67,577 382,220 449,797
EXPENDITURES: Current: Personnel services 13,737 - 13,737 Materials and services 61,066 - 61,066 Capital outlay 2,588,867 - 2,588,867 Debt service - 301,737 301,737
TOTAL EXPENDITURES 2,663,670 301,737 2,965,407
OTHER FINANCING SOURCES (USES): Debt proceeds 2,523,948 - 2,523,948 Transfers in 126,000 - 126,000 Transfer out - (126,000) (126,000)
TOTAL OTHER FINANCING SOURCES (USES) 2,649,948 (126,000) 2,523,948
NET CHANGE IN FUND BALANCE 53,855 (45,517) 8,338
FUND BALANCE, July 1, 2017 74,112 569,623 643,735
FUND BALANCE, June 30, 2018 $ 127,967 $ 524,106 $ 652,073
See notes to basic financial statements 4 141 NOTES TO THE BASIC FINANCIAL STATEMENTS
142 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies
The financial statements of the City of Phoenix Urban Renewal Agency (the Agency) have been prepared on the cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles (GAAP).
The more significant of the Agency accounting policies are described below.
The Financial Reporting Entity
The Urban Renewal Agency of the City of Phoenix, Oregon (the Agency) was created by adoption of Ordinance 852 by the City of Phoenix, Oregon on August 15, 2005. The Agency is organized under general laws pertaining to urban renewal agencies in the State of Oregon. The Agency was formed primarily to carry out the terms of the Urban Renewal Plan, which is to eliminate blighting influences found in the renewal area, implement certain goals and objectives of the City of Phoenix Comprehensive Plan, and assist in meeting the City's economic development objectives through redevelopment of key sites, property rehabilitation, improving infrastructure in the renewal area, and assisting with the construction of needed public facilities.
The Agency’s governing body is identical to that of the City, and because the services of the Agency are for the benefit of the City, the Agency. A determination was made by using guidance provided for in GAAP that the Agency is a blended component unit of the City. As a result, the Agency’s financial statements are blended with those of the City by including them in the appropriate statements and schedules of the City’s Annual Financial Report. Copies of which may be obtained from the City Finance Director, P.O. Box 330, Phoenix, OR 97535.
Basis of Presentation – Fund Accounting
Financial operations of the Agency are accounted for in the following funds:
Capital Projects Fund - Includes all expenditures associated with the operation of the Agency, including administration and project construction. There are three categories within this Fund: personnel service, materials & services, and capital outlay.
Debt Service Fund - Includes tax revenue deposits and debt payments for long term and short-term borrowing, including urban renewal bonds and lines of credit.
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the Agency. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. In the case of the Agency, no business-type activities exist.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The Agency does not have program revenues and reports taxes and investment earnings as general revenues.
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143 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Government-Wide and Fund Financial Statements (continued)
In the government-wide statement of net position and statement of activities, governmental activities are presented using a cash basis of accounting. Under the cash basis, transactions are recognized when there is either incoming cash or outgoing cash; thus, the receipt of cash triggers recordation or revenue, while the payment of cash triggers the recordation of expense. Under the accrual basis, revenue is recorded when earned and expenses when incurred, irrespective of any cash transaction. The Agency makes certain exceptions to short term assets and liabilities that result from cash transactions. For example, the Agency accrues a current liability amounts due to the City as of June 30, 2018. The long- term items recorded by the Agency include; Long Term Debt.
The cash basis is a special-purpose framework other than GAAP. If the Agency utilized GAAP, the government-wide financial statements would use the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses when incurred, regardless of timing of related cash flows.
The Agency follows the cash basis of accounting with certain minor modifications. Under the cash basis of accounting, receipts are recorded when received and disbursements are recorded as paid by check or electronic transaction. Exceptions to the cash basis are any payroll advances that are considered to be cash equivalents and are displayed as a receivable. This basis of accounting is applied to both the government-wide financial statements and the fund financial statements uniformly.
Investments
Investments are stated at cost which approximates fair value.
Net Position
Net position comprises of the various net earnings from operations, nonoperating revenues, expenses and contributions of capital. The Agency's net position is classified in the following two categories:
Restricted - consists of external constraints placed on asset use by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation. Unrestricted net position - consists of all other assets that are not included in the other categories previously mentioned.
Fund Balance
In March 2009, the GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund-type Definitions. The objective of this statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund-type definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed on the use of the resources reported in governmental funds. Under this standard, the fund balance classifications are as follows:
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144 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 1 – Summary of Significant Accounting Policies (continued)
Fund Balance (continued)
Nonspendable fund balance – Includes items not immediately converted to cash, such as prepaid items and inventory.
Restricted fund balance - Includes items that are restricted by external creditors, grantors or contributors, or restricted by legal constitutional provisions.
Committed fund balance - Includes items committed by the City Council, by formal action.
Assigned fund balance – Includes items assigned for specific uses, authorized by the City Council and the Executive Director, but do not meet the criteria to be classified as restricted or committed.
Unassigned fund balance – This is the residual classification used for those balances not assigned to another category.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the reporting period. Actual results could differ from those estimates.
Note 2 – Stewardship, Compliance, and Accountability
Budgetary information
The Agency Council budgets all funds. A Council order authorizing appropriation for each fund sets the level by which expenditures cannot legally exceed appropriations. Either expenditures by department within funds or total personal services, materials and services, capital outlay, debt service and other expenditures by fund are the levels of control established by the Council order. The detail budget document, however, is required to contain more specific, detailed information for the above-mentioned expenditure categories. All annual appropriations lapse at fiscal year-end.
Unexpected additional resources or appropriations may be added to the budget through the use of a supplemental budget. A supplemental budget requires hearings before the public, publications in newspapers, and approval by the Council. Original and supplemental budgets may be modified during the fiscal year by the use of appropriations transfers between the levels of control. Such transfers require approval by passing a Council resolution authorizing the transfer. All budget amendments are subject to the limitations set forth in Oregon Revised Statutes 294.305 through 294.565 (Oregon Budget Law). Supplemental appropriations, permitted by Oregon Budget Law, were authorized by the City Council during the year. The Agency does not use encumbrances.
Annual budgets are adopted on a basis consistent with the cash basis of accounting for all funds. The nature and amount of all significant adjustments necessary to convert data prepared on a basis consistent with fund accounting to a cash basis are noted on the budget to actual statements included as supplementary information.
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145 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 2 – Stewardship, Compliance, and Accountability (continued)
Budgetary information (continued)
During the fiscal year ended June 30, 2018 the Agency was in compliance with Local Budget Law, except as follows:
Excess of expenditures over appropriations
As noted in the financial statements, the Agency over-expended its appropriation authority in the Debt Service Fund in debt service by $23,200.
Note 3 – Cash and Investments
Cash and investments are comprised of the following as of June 30, 2018: Carrying amount of demand deposits $ 67,350 Carrying amount of investments 584,723
Total cash and investments $ 652,073
State of Oregon statutes restrict the types of investments in which the Agency may invest. Authorized investments include obligations of the United States Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, bankers’ acceptances, time certificates of deposit, certain commercial paper, and the State of Oregon Treasurer’s Local Government Investment Pool.
The Agency has invested funds in the State Treasurer’s Oregon Short-term Fund Local Government Investment Pool during fiscal year 2017-2018. Investments in the Local Government Investment Pool (LGIP) are included in the Oregon Short-Term Fund, which is an external investment pool that is not a 2a- 7-like external investment pool, and is not registered with the U.S. Securities and Exchange Commission as an investment company. Fair value of the LGIP is calculated at the same value as the number of pool shares owned. The unit of account is each share held, and the value of the position would be the fair value of the pool's share price multiplied by the number of shares held. Investments in the Short-Term Fund are governed by ORS 294.135, Oregon Investment Council, and portfolio guidelines issued by the Oregon Short-Term Fund Board. Investment in the LGIP is neither insured nor guaranteed by the FDIC or any other government agency. Although the LGIP seeks to maintain the value of share investments at $1.00 per share, it is possible to lose money by investing in the pool.
In addition, the Oregon State Treasury LGIP distributes investment income on an amortized cost basis and participants’ equity in the pool is determined by the amount of participant deposits, adjusted for withdrawals and distributed income. Accordingly, the adjustment to fair value would not represent an expendable increase in the Agency’s cash position.
Investments in the Oregon State Treasury LGIP are made under the provisions of ORS 194.180. These funds are held in the Agency’s name and are not subject to collateralization requirements of ORS 295.015. Investments are stated at amortized cost, which approximated fair value.
As of June 30, 2018 and for the year then ended, the Agency was in compliance with the aforementioned State of Oregon statutes.
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146 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 3 – Cash and Investments (continued)
Credit Risk. State Statutes authorize the Agency to invest primarily in general obligations of the U.S. Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, banker’s acceptances, certain commercial papers, and the State Treasurer’s Investment Pool, among others. The Agency has no formal investment policy that further restricts its investment choices.
Concentration of Credit Risk. The Agency is required to provide information about the concentration of credit risk associated with its investments in one issuer that represents 5 percent or more of the total investments, excluding investments in external investment pools or those issued and explicitly guaranteed by the U.S. Government. The Agency has no such investments.
Interest Rate Risk. The Agency has no formal investment policy that explicitly limits investment maturities as a means of managing its exposure to fair value loss arising from increasing interest rates.
Disclosures about Fair Value of Assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:
Level 1 - Unadjusted inputs using quoted prices in active markets for identical investments.
Level 2 - Other significant observable inputs other than level 1 prices, including, but are not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest rates, prepayment speeds, credit risk, etc.) or other market corroborated inputs.
Level 3 - Significant inputs based on the best information available in the circumstances, to the extent observable inputs are not available.
Amortized Cost Investments Measured Totals as of Not Measured at Fair Value: 6/30/2018 Level One Level Two Level Three at Fair Value
Local Government Investment Pool $ 584,723 $ - $ - $ - $ 584,723
$ 584,723 $ - $ - $ - $ 584,723
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147 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 4 – Long-Term Obligations
Full Faith and Credit Bonds, Series 2015B and 2015C
The City of Phoenix periodically issues long term bonds to finance publicly owned and operated projects within the urban renewal area. The Agency entered into an intergovernmental agreement with the City of Phoenix to pay the debt service on these bonds in 2015. Interest rate for the Series 2015B is 4.00%, and Series 2015C ranges between 1.85%-2.90%, with interest expense for 2018 of $145,032 and 15,601 respectively. The Agency’s commitment for the full faith and credit obligations outstanding not included in the Statement of Net Position under the cash basis of accounting is $2,880,000.
Full Faith & Credit Bonds, Series 2015B Year Principal Interest Total 2019 $ - $ 100,600 $ 100,600 2020 - 100,600 100,600 2021 25,000 100,600 125,600 2022 135,000 99,600 234,600 2023 140,000 94,200 234,200 2024-2028 800,000 381,800 1,181,800 2029-2033 970,000 208,400 1,178,400 2034-2038 445,000 26,800 471,800
Total $ 2,515,000 $ 1,112,600 $ 3,627,600
Full Faith & Credit Bonds, Series 2015C Year Principal Interest Total 2019 $ 125,000 $ 9,380 $ 134,380 2020 130,000 6,505 136,505 2021 110,000 3,190 113,190
Total $ 365,000 $ 19,075 $ 384,075
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148 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 4 – Long-Term Obligations (continued)
Full Faith and Credit Bonds, Series 2017
Issuance costs of this issuance totaled $55,300 which was expensed during the fiscal period of 2017-18. These issuance costs, along with net bond proceeds totaling $1,504,700 are accounted for in the special revenue fund of the City under Resolution No. 1003, the PhURA Bond Fund. Interest rate is 2.890%, with interest expense for 2018 of $27,782. The Agency’s commitment for the full faith and credit obligations outstanding not included in the Statement of Net Position under the cash basis of accounting is $1,518,090.
Full Faith & Credit Bonds, Series 2017 Year Principal Interest Total 2019 $ 85,645 $ 43,258 $ 128,904 2020 88,138 40,765 128,904 2021 90,704 38,200 128,904 2022 93,344 35,560 128,904 2023 96,061 32,842 128,904 2024-2028 523,913 120,605 644,518 2029-2033 540,284 39,782 580,066
Total $ 1,518,090 $ 351,012 $ 1,869,103
Long-term liabilities for the year ended June 30, 2018:
Balance Balance June 30, 2017 Additions Reductions June 30, 2018 Governmental Activities: Full Faith & Credit, Series 2015B $ 2,515,000 $ - - $ 2,515,000 Full Faith & Credit, Series 2015C 490,000 - (125,000) 365,000 Full Faith & Credit, Series 2017 - 1,560,000 (41,910) 1,518,090
Total Governmental Activities $ 3,005,000 $ 1,560,000 $ (166,910) $ 4,398,090
Note 5 – Risk Management
The Agency is exposed to various risks of loss related to torts; errors and omissions; and natural disasters. During FY 2017/18 the Agency was covered by commercial insurance to minimize its exposure to these risks. There were no claims made against the Agency.
Note 6 – Contingencies
Management and the Agency's Legal Counsel are not aware of any contingencies that would require disclosure under Statement of Financial Accounting Standards No. 5.
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149 PHOENIX URBAN RENEWAL AGENCY Notes to the Basic Financial Statements June 30, 2018
Note 7 – Contractual Commitments over $5,000
During the fiscal year 2017/18 there were four new contracts executed. Values do not include any contract amendments subsequently authorized.
Original Payments Contract Contract Made this Balance New Contracts over $5,000: Project Name Date Amount Fiscal Year July 1, 2018
Adroit Construction Civic Center 9/15/2017$ 2,398,000 $ 2,103,364 $ 294,636 Welburn Electric Civic Center 3/8/2018 81,270 52,831 28,439 ACME Civic Center 1/23/2018 69,240 69,240 - Curtis Restaurant Civic Center 3/16/2018 42,434 25,460 16,974
$ 2,590,944 $ 2,250,895 $ 340,049
Note 8 – Subsequent Events
Management of the City has evaluated events and transactions occurring after June 30, 2018 through the date the financial statements were available for issuance, for recognition and/or disclosure in the financial statements. Based on management’s knowledge, there were no additional events and/or transactions that required recognition and disclosure in the financial statements.
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150 SUPPLEMENTARY INFORMATION
151 PHOENIX URBAN RENEWAL AGENCY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - CASH BASIS CAPITAL PROJECTS FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Donations, grants, reimbursements $ 29,500 $ 69,500 $ 47,075 $ (22,425) Miscellaneous - - 20,502 20,502
TOTAL REVENUES 29,500 69,500 67,577 (1,923)
EXPENDITURES Personnel services 47,000 47,000 13,737 33,263 Materials and services 89,000 89,000 61,066 27,934 Capital outlay 2,480,660 3,035,360 2,588,867 446,493
TOTAL EXPENDITURES 2,616,660 3,171,360 2,663,670 507,690
OTHER FINANCING SOURCES (USES): Debt proceeds 2,009,248 2,523,948 2,523,948 - Transfers in 95,000 95,000 126,000 (31,000)
TOTAL OTHER FINANCING SOURCES (USES) 2,104,248 2,618,948 2,649,948 (31,000)
NET CHANGE IN FUND BALANCE (482,912) (482,912) 53,855 474,767
FUND BALANCE, July 1, 2017 518,542 518,542 74,112 (444,430)
FUND BALANCE, June 30, 2018 $ 35,630 $ 35,630 $ 127,967 $ 30,337
13 152 PHOENIX URBAN RENEWAL AGENCY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - CASH BASIS DEBT SERVICE FUND YEAR ENDED JUNE 30, 2018
Variance with Final Budget Budget Positive Adopted Final Actual (Negative)
REVENUES Property taxes $ 355,000 $ 386,000 $ 374,343 $ (11,657) Interest on investments 1,200 1,200 7,877 6,677
TOTAL REVENUES 356,200 387,200 382,220 (4,980)
EXPENDITURES Debt service 278,537 278,537 301,737 (23,200)
TOTAL EXPENDITURES 278,537 278,537 301,737 (23,200)
OTHER FINANCING SOURCES (USES): Transfers out 95,000 126,000 (126,000) 252,000
TOTAL OTHER FINANCING SOURCES (USES) 95,000 126,000 (126,000) 252,000
NET CHANGE IN FUND BALANCE 172,663 234,663 (45,517) 223,820
FUND BALANCE, July 1, 2017 26,133 26,133 569,623 543,490
FUND BALANCE, June 30, 2018 $ 198,796 $ 260,796 $ 524,106 $ 767,310
14 153 INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATIONS
Honorable Mayor, Members of the Governing Body City of Phoenix Urban Renewal Agency Phoenix, Oregon
We have audited the basic financial statements of the City of Phoenix Urban Renewal Agency (the Agency) as of and for the year ended June 30, 2018, and have issued our report thereon dated December 21, 2018. We conducted our audit in accordance with auditing standards generally accepted in the United States of America.
Compliance
As part of obtaining reasonable assurance about whether the Agency’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not the objective of our audit, and accordingly, we do not express such an opinion.
We performed procedures to the extent we considered necessary to address the required comments and disclosures but were not limited to the following:
• Deposit of public funds with financial institutions under ORS Chapter 295. • Indebtedness limitations, restrictions and repayment. • Budgets legally required under ORS Chapter 294. • Insurance and fidelity under bonds in force or required by law. • Programs funded from outside sources. • Authorized investment of surplus funds (ORS Chapter 294). • Public contracts and purchasing under ORS Chapters 279A, 279B, 279C.
In connection with our audit, nothing came to our attention that caused us to believe the Agency was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administration Rules 162-10-0000 through 162-10-0320 of the Minimum Standards for Audits of Oregon Municipal Corporations, except as reported in Note 2 of the financial statements.
OAR 162-10-0230 Internal Control
In planning and performing our audit, we considered the Agency’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control over financial reporting.
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154 Restrictions on Use
This report is intended solely for the information and use of the governing body and management of the Agency and the State of Oregon, Division of Audits and is not intended to be and should not be used by anyone other than these specified parties.
Mark E. Damon CPA, Partner KDP Certified Public Accountants, LLP Medford, Oregon December 21, 2018
16
155 Exhibit "C"
December 21, 2018
To the City Council City of Phoenix
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Phoenix, Oregon (the City) for the year ended June 30, 2018 . Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 11, 2018. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. New accounting policies adopted during the year (related to new accounting pronouncements) did not have a material impact on the financial statements. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
- Management’s estimate of the property taxes receivable is based on information obtained from the Jackson County Tax Department. We evaluated the key factors and assumptions used to develop the estimate and determined it is reasonable.
- Management’s estimate of accumulated depreciation and related depreciation expense for the current year was based on management’s estimate of the useful lives of the fixed assets. We reviewed the capital asset listing, selected a sample and recalculated the accumulated and current year depreciation expense. We were satisfied that the calculations used was reasonable.
- Management’s estimate of its net pension liability, associated deferred outflows and inflows is based on information provided by the Oregon Public Employees Retirement System (OPERS). This information is subject to significant assumptions. In addition to testing certain contributions made by the City we have relied on the audit of OPERS plan. Based on the separate audit of the OPERS plan and the procedures performed the pension related balances appear reasonably state.
1 156 Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of Restatements of Beginning Net Position and Fund Balance in Note 3 to the financial statements.
The disclosure of Long-Term Debt in Note 9 to the financial statements.
The disclosure of Pension Plans in Note 11 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements (see Restatement of Beginning Net Position in Note 3 to the financial statements).
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated December 21, 2018.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Consistent with many local governments and organizations of similar size and scale, we noted certain segregation of duties issues within the internal control over financial reporting environment. Certain compensating controls help mitigate certain risks; however, segregation of duties is always a risk to monitor.
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157 Other Matters
We applied certain limited procedures to Management’s Discussion and Analysis (MD&A) and certain pension schedules, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on them.
With respect to other MD&A or pension schedules, including the general fund and major special revenue fund, and other supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
General Comment
During our audit we found the management and staff to be very receptive to our comments and suggestions. They were hard-working, diligent, and conscientious about their assigned responsibilities and duties. They were a pleasure to work with.
Very truly yours,
Mark E. Damon, CPA, Partner KDP Certified Public Accountants, LLP Medford, Oregon December 21, 2018
3
158 159 160 161 Exhibit "D"
______
To: Mayor and Council
From: J.C. Boothe, Finance/HR Director
Meeting Date: February 4, 2019
Subject: Semi - Annual Financial Report FY 2018/19
______
Background:
This financial report reflects the first half of the current fiscal year. I am pleased to report that revenues are coming in as expected and that expenditures are in line with the period. Additionally, all three major funds do not present any areas of concern to report.
General Fund
Year-to-Date Budget % of Budget Prior Year Revenues Property Taxes $ 1,003,906 $ 1,079,678 93% $ 964,751 Other Taxes $ 14,810 $ 33,750 44% $ 46,727 Charges for Services $ 22,308 $ 25,500 87% $ 13,993 Licenses and Permits $ 64,332 $ 61,150 105% $ 29,792 Fines and Forfeits $ 55,403 $ 201,400 28% $ 56,939 Franchise Fees $ 94,173 $ 300,000 31% $ 96,292 Intergovernmental $ 104,398 $ 238,000 44% $ 139,653 Grants/Contributions $ 1,071 $ - 0% $ - Misc. Revenues $ 1,785 $ 3,105 57% $ 4,785 Earnings on Investments $ 28,708 $ 25,000 115% $ 15,529 Total Revenues $ 1,390,894 $ 1,967,583 71% $ 1,368,461
Expenditures Operating Executive $ 118,040 $ 282,500 42% $ 91,379 Admin $ 54,579 $ 118,296 46% $ 57,355 Police $ 732,058 $ 1,369,276 53% $ 577,259 Planning $ 53,041 $ 145,481 36% $ 64,432 Building $ 82,902 $ 135,141 61% $ 52,470 Parks $ 66,973 $ 150,659 44% $ 69,872 Interdepartment $ 28,891 $ 78,698 37% $ 32,954 Non-Operating Transfers $ - $ 250,000 0% $ - Contingency $ 100,000 0% $ - Total Expenditures$ 1,136,484 $ 2,630,051 43% $ 945,721
Revenues over/(under) Expenditures $ 254,410 $ (662,468) $ 422,740
162 General Fund: Fiscal year to date, revenues exceed expenditures by $254,410 ($1,390,894 vs.$1,136,484). The primary reason for the excess in revenues is property tax revenue received in November totaling $983,780. Property tax revenue received is coming in as anticipated, approximately $48,000 more than received at this point in the prior year. Overall, the revenue is coming in at 71% of the budget; while marijuana tax is coming in lower than expected, planning and building charges for services are up, assisting in experiencing an increase in revenues overall of approximately $22,000 over the prior fiscal year. The General Fund revenue is comparable to the prior year, despite the City incurring a large one-time revenue of delinquent motel tax received in the prior year totaling approximately $43,000.
One item of note in the General Fund revenue is that overall fine revenue is similar to that of the prior year. I will continue to track the impact on the City of closing the Municipal Court as the year progresses; however, the similarity is a good indicator the City may not suffer a substantial decrease in revenue in the initial year of the transition to Jackson County.
Total General Fund expenditures are at 43% for the period; while the expenditures have increased significantly over the prior year, the budget for the current fiscal year has an increase of approximately $284,000. As mentioned in the budget message for the current fiscal year, the City is scheduled to incur larger operating expenditures compared to the prior year, largely due to the temporary FTE and operating costs of the new Civic Center, a vehicle purchase in the Police Department and expenditures that had previously been budgeted in the Advertising and Promotion Fund, which is scheduled to be closed in FY 2019. Additionally, the increase in budgeted expenditures is due in part by the transfer to the Capital Projects Fund for the property acquisition at Blue Heron Park.
Expenditures are higher for the period in the Executive, Police and Building departments in comparison to the prior year; however, much of the increase was explained above. Other factors for the Police Department include an increase in Code Enforcement hours and an increase in benefits. The increase in the Building Department is attributed to building inspections and plan checks; however, the expenses are offset by the increase in permit revenue.
163 Street Fund
Year-to-Date Budget % of Budget Prior Year Revenues Charges for Services $ 122,030 $ 242,000 50% $ 131,881 Franchise Fees $ 5,968 $ 16,500 36% $ 3,943 Intergovernmental $ 146,973 $ 280,000 52% $ 117,613 Diesel Tax $ 58,610 $ 102,500 57% $ 47,053 Misc. Rev $ - $ 200 0% $ 405 Earnings on Investments $ 18,935 $ 20,015 95% $ 13,100 Total Revenues $ 352,516 $ 661,215 53% $ 313,995
Expenditures Operating Personal Services $ 116,848 $ 256,428 46% $ 102,100 Materials & Supplies $ 107,274 $ 259,220 41% $ 80,313 Non-Operating Transfers $ - $ 300,000 0% $ - Contingency $ - $ 100,000 0% $ - Total Expenditures $ 224,122 $ 915,648 24% $ 182,413
Revenues over/(under) Expenditures $ 128,394 $ (254,433) $ 131,582
Street Fund: The City receives Street Fund revenue with service charges of street user fees, storm water, and franchise fees. Revenues overall show slightly above the 50% expected for the time period; however, the City has experienced an increase of $39,000 compared to the second quarter last year, primarily due to receiving an increase in diesel tax, ODOT gas tax revenue, and investment interest received in the LGIP account.
Total Street Fund expenditures are at 24% for the quarter. Personal Services has incurred an increase, primarily due to the increase in benefits. Operating Expenditures has increased compared to last year; however, many factors contribute to the increase and no significant increases in any particular area have been identified. The revenue and expenditures have increased at nearly the same amount compared to the prior year, contributing to an overall favorable position for the Street Fund.
164 Water Fund
Year-to-Date Budget % of Budget Prior Year Revenues Charges for Services$ 775,168 $ 1,347,069 58% $ 738,804 Misc. Revenues $ 3,599 $ 2,500 144% $ 120 Transfers $ 25,725 $ 25,725 100% $ 25,725 Total Revenues $ 804,492 $ 1,375,294 58% $ 764,649
Expenditures Operating Personal Services $ 239,990 $ 460,320 52% $ 210,792 Materials & Supplies$ 295,881 $ 581,750 51% $ 297,381 Debt Service $ 104,968 $ 133,643 79% $ 100,568 Non-Operating Transfers $ - $ 400,000 0% $ - Contingency $ - $ 100,000 0% $ - Total Expenditures $ 640,839 $ 1,675,713 38% $ 608,741
Revenues over/(under) Expenditures $ 163,653 $ (300,419) $ 155,908
Water Fund: Revenues consist of fees from customer water bills and new water meter installations. Overall revenues show above the 50% expected for the time period. Primarily attributing to the increase over prior year at this point is water consumption and an increase in water fees.
Regarding expenditures, Personal Services overall increased compared to prior year, as in the Street Fund, primarily attributed to City paid benefits. Materials and Services expenditures are right in line for the time period, coming in slightly lower than the prior year. Overall, revenues exceed expenditures for the year by $163,653 ($804,492 vs. $640,839), a strong position for the City.
165 Exhibit "E"
166 Exhibit "F"
Phoenix City Council meeting 2/4
My name is Rhianna Simes and I live at 4283 Colver Rd here in Phoenix. I live with my husband and three young children,and partof the reason we chose to buy our housJ ai�sta�ause of its proximity to Cow,..WR)At Colver Park. We were thrilled that we could live rurally and still walk to a neighborhood park. I am a M�\e_ member of the Phoenix Parks and Greenway Commission, and I am a volunteer for the City. I have my 0� ��', Masters of Science in Education and Botany - and I have over 17 yearsof professional -1��. horticultural/landscapingexperience- and was excited to be partof a citizen committee to supportmy city and our parks.However, I need to tell you about how I have been treated as a volunteer, and a member of the Parks Commission.
In two separate Parks Commission meetings I have been interrupted, disrespected, and talked over by City leadership. I have felt belittled, and that my opinion did not matter. In one meeting I was blatantly interrupted by City leadership and was talked over so much so that I had to request supportfrom Theresa, Citystaff. Once the meeting was brought to order, I was able to continue my comments.
In a separate meeting the Public Works Director attended, one of the Parks Commissionerswas making a motion and was completely interrupted - the Public Works Directorstarted talking over her, tryingto correct the motion she was making, in addition to multiple interruptions during other discussions in the same meeting.
As a volunteer on the Parks Commission, I was shocked at how volunteers were treated, and I have been shocked at the disrespect that has been shown to me and others.
For two separate meetings - at least 4 Phoenix residents attendedthe Parks Commission meetings to see if they wanted to get involved. However, each time the resident left the meeting in shock at the disrespect and interrupting that occurred at the meeting. Each time the residents felt concerned about ,o\--....� � etting involved. I think that the disrespect t�t has been shown by leadership, towards Parks o'M�0'1'b'Commissionershas served as a deterrent, and P�oenix residents have not wanted to get involved with the Commission.
As a member of the Phoenix community, as a Parks Commissioner, and as a professional in the horticulturecommunity I wanted to bring this culture to your attention, and to share about how the conduct of Phoenix leadershiphas impacted me and the ability of the Parks Commission to recruit more volunteers. I am asking foryour support in this matter.
Because of my concern for the health and safety for children, residents, and city workers- I request that pesticide use in Phoenix Parks be put on the CityCouncil's agenda
-Rhianna Simes
Phoenix Parks and Greenway Commissiore(2.4.19)
167 Exhibit "G"
168 Exhibit "H"
We the citizens of Phoenix Oregon would like to Express our supportand neec for a communitynewsletter. One that represents inputs frommultiple parts of city staffand departments, as well as input fromthe community, like schools, chamber, businesses and other public committees. A community newsletter ca greatlyimprove communication, collaboration and awareness between the communityand the city. We can all benefit fromthis. Please see your way to representing the citizens interests and ideas for this project as we areall partof this community. Thankyou
Name Address Signature ------·
169 170 171 Exhbit "I"
CityCouncil Meeting (2.4.19) -Newsletter
I would like to express my support for a true community newsletter, instead of the very biased and sometimes politically biased quarterly Mayor's newsletter that is the current practice.
Each week,councilor's receive a weekly report from all department heads. Public Works, Planning, City Manager, Chief of Police, etc. They are lengthy, informative, and as a former councilor, I would learn a lot about the weekly happenings of our city based on these fantastic reports.
I would argue for a true community newsletter that contains a summary of these weekly reports for the community on a monthly or 6 times annually basis. Since each department head is already writing a lengthy, detailed weekly report for councilors, it would not take that much time to distill the main points of these reports into a community newsletter. Evan previously said John had experience with this and might be willing to do the compilation and proofreading. Currently no proofreading is occurring and these letters go out with many grammatical and usage errors. :r \Jould q\5b \ik tc � � +'--\ Q�ptr>vcl pf'l)�.S bq-6,-c. pub\r<.�fr�.
I would like to see each department having a separate, but similar in length sectionputlining the hard work they and their department are doing for Phoenix. Besides being informative, I could see this being a community support and spirit builder if they knew what all the wonderful people were doing to make their lives better behind the scenes. At the end of each section I think it would be beneficial to have their names and contact info (number and email) for people to reach out for with additional questions or concerns.
The mayor could have a similarly sized section as the department heads, and I'd like to see a message from council. The commissions and committees could have a voice also, not to mention community event announcements, maybe a section from the high school with sports, social, and academic events, as well as a section from Carolyna sharing the amazing work and resources happening with the community dinners, the clothes closet and the food pantry.
Currently our city recorder and staffdo a great job of updating all of this information on the city website. However, as we all know, many members of our population do not have consistent internet access for a multitude of reasons. Having this information directly sent to everyone would help keep the population better informed of city projects and issues and lead to a stronger sense of community and pride in our beautiful town.
Revamping the newsletter to be more community focused could exponentially increase the information received by all of our community members and wouldn't take much more staff time than is already being utilized. The benefits far outweigh any potential downsides.
Thank you,
172 Exhibit "J"
Clarkie Clark Agenda item: 7.a Mayor's Newsletter
Many households within the city limits do not share the Phoenix zip code, therefore nothing mailed out to the public includes these residents.
From the few newsletters I have seen online recently, they strike me as nothing more than self serving campaign literature.
Yes, Phoenix government needs more communication with ALL constituents, not selected blocs and selective survey participants. A newsletter needs to focus more on gettingpeople involved by being transparent and supplying the public with details on "offthe record" discussions that are underway or yet to happen. ALL stakeholders in current discussions need to be notified and included.
Perhaps the City Manager would be a more appropriate city figure to compile a city newsletter after soliciting current and future topics from each department head, council, and "guest columns" from particular citizens at times.
However, I don't think any form of communication will be successful without direct line communication between the council and the public. Everyone is busy, but that should have been considered when volunteering for public service. Communication and transparency will explode if each councilor held informal private meeting slots by whatever method they prefer, emails, messenger, phone calls, or in-person with coffeeat whatever times are convenient for them. The city's web domain should not be used, nor the content distributed to other staff without the permission of the citizen.
173 exhibit "k" Page 4 — Talent News & Review — February 2019
SeptemberFebruary 2019 2018 Volume 1920 THE FLASH Issue 92 An update from City Administration, Planning, Public Works and Police Departments
The Flash, which occupies the following two pages, is a publication of the City of Talent and is editorially separate from the rest of the Talent News and Review. All content and editorial choices contained in the rest of the paper are the sole responsibility of the TNR and are not in any way associated with the City of Talent. -JG
FromFrom the the Mayor’s Mayor’s Office Office 49th Annual Harvest Festival First thing first! Councilor Emily Berlant has By Erin Zelinka beenTalent elected Council to has the beenseat ofon Councila good longPresident. search Harvest Festival Committee Thereto find are a importantnew City Manager responsibilities who will lead that thecome fine Did you know that the City of Talent’s The Harvest Festival will take place this withteam this at Cityposition, Hall, managingwhich include excellent filling essential in the year on Saturday, October 6, from 8 a.m. to 4 p.m., at Talent City Hall and the roleservices of Mayor and leadingat meetings, our goals during into thereality. Mayors Time skate park. absence.and effort With has the confidencegone into a of critical the Council, change in The day kicks off at 8 a.m. with a 5k/10k race organized by Southern Oregon Councilorleadership, Berlant because is we an know excellent the next choice 5 to for10 Runners, with an award ceremony afterward at The Grotto. years will be challenging and, in some ways, this position. Please join me in congratulating At 10 a.m., the Grand Parade will start down Main Street, featuring Grand her!transformative for Talent. We are pleased to Marshall Lester Naught. Les was the Public Works Superintendent for over 30 haveThe first found quarter a leader of every who willyear bringis a busy “good time. fit” years, and we want to celebrate his service! The theme of the parade this year Theexperiences, immediate skills projects and professional before the values, Council that is Harvest Dreams. will give Talent an edge into our next years. Our are goal setting for 2019/2020, preparing the There will be something for everyone, with musical performances by Emily Turn- search concluded in August; hiring Sandra Spelliscy to join the Talent team in budget and budget calendar for the next fiscal year, and reviewing those er (10:45 a.m. - Noon), Slow Corpse (12:30 - 2 p.m.) and The Brothers Reed pursuit of a new level of excellence! (2:30 - 4 p.m.) on the main stage. projects for this fiscal year that will need to be completed over the next several months. Items being considered by Council are an ordinance on In the beer and wine garden, Caldera Brewing Company and Paschal Winery Sandy comes from a background in rural, small town government, having will serve up local beverages, and local food carts will also be onsite. Shortserved Term a four-year Rentals, term updating as a member the Parks of the Master Mt. Shasta, Plan, California and updating City Council. land Children’s entertainment will include an inflatable obstacle course, a dunk tank, useShe regulationsis experienced to increate municipal more planning efficient and use land of use, land, having while spent considering five years two-person joust, demonstrations by ScienceWorks, balloon creations by Ingalls’ housing policies to ensure Talent can meet all of our communities needs. as a city planning commissioner. She grew up and attended college in southern balloons and more. TheCalifornia proposed and earned goals awill law be degree available at the on University the City of of California, Talent website Davis, whichfor The Harvest Home section is back with apple pressing, hens, the Rogue Valley reviewled to aand decades-long are subject career to adoption as an environmental during an open professional meeting andshould non-profit you Weavers & Spinners, and children’s vendor booths with organic veggies from wishadministrator, to weigh mostly in. This in and work around before the state the capitol Council in Sacramento. is some pretty Sandy heavy loves the generous Fry Family Farm lifting,to travel which and ishas good lived reason abroad to in laud Mexico, the hardFrance, work and of Nicaragua.staff and Talent She speaks City (almost) fluent Spanish. She and her husband recently relocated to Ashland The arts are represented as well, with local artisans with items for sale and live Council. plein air painting by local artist Jenay Elder. fromThis Mt is Shasta, also a momentwhere they of appreciationlive in a net-zero for home.those who volunteer to move Please join us for this free, family-friendly, zero-waste event, which would not be the many Talent projects into reality! Talent does an amazing amount Please stop by City Hall sometime and give Sandy a warm Talent welcome. possible without our generous community partners: or work, for such a small town. One of the main reasons for that is the She is excited to engage with residents and hear from folks about what they feel Providence Health & Services, Recology Ashland, Avista, RH2 Engineering, many volunteers who are involved in City Committee work. The Planning are priorities for Talent. Pacific Power, Medicap Pharmacy, State Farm Insurance Agent Brad Linnell, Commission, The Parks Commission, The Economic Development Fabricated Glass, Middleway Acupuncture & Herbs, Welburn Electric, The Grot- Commission, The Together for Talent Committee, The TalentGrateful Public to serve, Arts to, and Debi Rappaport, LMT & JSJ Practitioner. Committee, The Harvest Festival Committee areMayor all City Darby boards Ayers-Flood made up of citizens just like you, who are amply qualified to help the City decide how to manage our own community. This is Talent’s super power! Please consider joining the effort to make Talent stronger together. More informationDepartment on City Update Board openings can be found on the City website or The Bee City: Call for Volunteer Serice byBy calling Chief (541)535-1566Tim Doney Volunteers FORWARD TOGETHER! Awards It is that time of year when people are taking vacations. The Talent Police Mayor Darby Ayers-Flood The Volunteer Service Award will Department (TPD) is offering some common-sense tips that may help you The Bee City USA Talent now be awarded on a quarterly not fall victim to thieves and burglars when you are away. Please take a few Subcommittee would like to have basis hosted by the City of Talent. Commissionmoments to think about &and Committeeimplement a plan before Openings: leaving on vacation. more volunteers. We promote Nominate your favorite local activities and education regarding Together• Install good for locks Talent on doors and windows and use them; volunteers at Talent City Hall or our pollinators, certify pollinator Want a voice in your city’s affairs? Join Together for Talent, a city committee. Uponline to five at seatsbit.ly/VSAnominatons. available! Be a recommendinggardens with body the to Talentthe City Garden Council. • Make sure your residence looks occupied; utilize timers on lights, Funding is available for ways to improve the city. Participate in meaningful projects in our community. Club, and participate in the Harvest radios and/or televisions; Festival Parade. Our meeting Open Meeting on Tuesday, March 5th from 4 - 6 pm at the Old Town Hall. Election Schedule • Ask neighbors to watch your residence or ask TPD to perform vacation time is the second Tuesday of the The Jackson County General If youhome are interested, checks while please you are contact gone; callthe TPDCity atRecorder 541-535-1253 at 541-941-5939 for more or at [email protected] month from 4:00 to 6:00. Please Election will take place on call for our meeting place. information on home checks conducted by volunteers; Harvest Festival 2019 Nov. 6, 2018. • Notify the US Postal Service, UPS, and FedEx to hold deliveries while For further details, contact: Prospective candidates should Talentaway is looking or arrange for interestedfor a neighbor citizens or relative and volunteersto pick up your to takemail andpart in the planning process for the City’s 50th annual HarvestDolly Festival. Warden The Harvest keep the following timeline in mind: Festivalnewspaper will take while place you on are September gone; 21, 2019 here in downtown Talent. [email protected] 541-897-9965 Planning meetings are currently held every three weeks. The February meetingSept. will 10, be 2018: on February Last day 21stto file at 4pm at City Hall. • Have a neighbor place a garbage can at the street on the normal pick- candidate statements for voters’ If you are interested, please contact the City Recorder at 541-941-5939 or at [email protected] up date and return it; pamphlet. • Do not announce your absence on personal answering machines or OfficialOfficial Newsletter Newsletter of of the the Parks Commission Nov. 6, 2018: General Election CityCity ofof TalentTalent social media. Day. This is a seven-person commission, with each person serving a two-year term. The commission advises the Edited by Gabriella Ciprazo • Edited by Gabriella Ciprazo City Council on planning and improvements to City parks and provides oversightFor furtherto the City’sdetails, Summer visit Recre- www.cityoftalent.orgwww.cityoftalent.org ationPlease Programs. contact us Members with any non-emergencyare active in raising questions community and concerns awareness at 541- of use ofwww.cityoftalent.org/elections City parks and the importance. 541-535-1566541-535-1566 535-1253 and, of course, 911 for emergencies. of participation in recreational activities. [email protected]@cityoftalent.org If you are interested, please contact the City Recorder at 541-941-5939 or at [email protected] 174 February 2019 — Talent News & Review — Page 5 Talent Police Department
In conjunction with Portland State University and the Law Enforcement Contacts Policy & Data Review Committee, the Talent Police Department hosted an anti-bias training for law enforcement personnel titled: Tactical Ethics – Perspectives in Profiling. We opened this course to other local law enforce- ment agencies in the valley including: Phoenix Police, Jack- sonville Police, Eagle Point Police, Rogue River Police and the Veteran’s Administration Police Department.
In 2017, the Oregon legislature enacted rules requiring police agencies around the state to begin capturing data on individuals stopped for traffic violations as well as pedestrian stops. This was done in an effort to increase the transpar- ency of policing. The rules required the largest police agen- cies in the state to start capturing information related to race, age and location of residence in 2018. The next tier of agen- cies are required to start capturing data in July 2019. The smallest agencies in the state are required to start recording data in July 2020. The Talent Police Department voluntarily opted to start capturing data in December 2018, earlier than required. We are currently the smallest agency in the state capturing data and participating in this program.
Please don’t hesitate to call us if you need assistance. During normal business hours for non-emergency business – 541-535-1253, non-emergency dispatch 541-776-7206 or Emergency – 911.
Council to Consider Ban on Single Use Plastic
Plastic is pervasive. You’ve probably seen the photos of bird stomachs full of small bits of bottle lids and spoons, or walked down the street and seen plastic bags fluttering in the trees like leaves. Take a look around the room you’re sitting in while reading this... how much plastic can you reach out and touch? How much can you see? Don’t forget to include synthetic materials like polyester and nylon in that calculation. When you do a quick audit of the plastic in your life, you can quickly see how profuse it is.
Fortunately, cities (like Santa Monica and Seattle) and individuals all over the world are taking substantive action to reduce access to a slew of single use plastics (items used once, briefly, then tossed - for “convenience”). While we know that it’s partially due to the way things are manufactured and shipped by corporations, it’s important to not discredit the change a small group of committed people can make. By saying “no” to plastic and opting for durable, nonsynthetic materials, we as consumers can flip the script on what’s more convenient. To that like, the Talent Zero Waste Team, by way of the Together for Talent Committee, will be presenting a proposal to prohibit disposable foodservice ware made of plastics and plastic bags in Talent to the City Council on Wednesday, March 6 at 6:45pm. Please come to show your support or voice your concerns so we can start changing the system together. Because we don’t think anyone finds it convenient to be buried in plastic bits.
Talent Zero Waste Team “There is no away”
175 Exhibit "L"
My name is Sarah Collins and I am the
HOA president for the Skyline Homeowners Association. I live at 454 Elm St. in Phoenix. We recently decided within our HOA that we want to find more earth friendly and non toxic options for weed control. We no longer use round Up or any other glyphosphate based herbicides that are known to be dangerous and toxic to not only the earth but to our children and pets as well. There are safe and effective solutions that we must explore. We have a responsibility to keep our children, pets, our local streams and rivers and our planet as safe and clean as possible. There are so many safe alternatives to using these dangerous chemicals, it would be negligent not to look into them. Our children need us to be their voice and to vote for a cleaner safer environment for them to play in and enjoy for years to come. I’m so grateful that the Parks and Greenway commission is here to be the voice for the people and is looking into these options and hearing what the community of Phoenix has to say. Together we can follow the many cities before us who have already made the switch to a better and safer way of doing things.
Thank you for your time.
Received at the 2/4/19 City Council Meeting
176 Exhibit "M"
177 178 Exhibit "N"
Mayor Luz and CC members;
I apologize that my health at this time does not allow me to stay and testify in fullness to this body. All gave some, some gave all.
Mayor Luz, I applaud you on your public announcement of your commitment to keeping our fine little City safe. However, fire is not the only threat we face. For the last 50 plus years chemical companies have manufactured everything from Agent Orange to Round Up and told us they were safe. We know now that those were half truths at best. I have lost friends to the diseases that even the VA now admits were Agent Orange related, thus half truths are no longer good enough for me or many others.
As the Planning Commission's designated liaison to the Parks Committee, although I admit to being uninvolved since we got our master plan in place about a year ago, but still holding that post I would like to express my support for keeping the Parks Committee in place and actionable. For me the issue of how we maintain our parks is important. We are too late to take the lead, many other Cities have already looked closely at and amended or curtailed their use of anything with "cide" in the ingredients. We can however follow an educated lead and at least take a look at the hazards that using herbicides in places where our Elders walk and our children play.
There is no harm in gathering information and my understanding is that this is exactly what the Parks Commission doing with the expressed purpose of bringing that information to this body and have decisions made by this body as a whole. This is only one of many roles the the Parks Commission should be playing. I therefore respectfully request that this body leaves the Parks Commission in place and in action for the foreseeable future with a mandate to bring to this body information that will underpin action that will make our City safer, much safer and enjoyable for all.
Thank You Jason R. Couch MFA Vice Chair Phoenix Planning Commission Designated Liaison from Phoenix PC to Phoenix Parks Native American ~ Veteran ~ Filmmaker [email protected]
179 Exhibit "O"
L�
My name is Rhianna Simes, I live at 4283 Colver Rd in Phoenix. I here to speak in supportof the Phoenix Parks and Greenspace Commission as one of the last citizen committees in Phoenix. Citizen involvement is a crucial partof creating community, and citizen volunteering supportsCity functions, brings diverse voices to the table, and creates a sense of commitment to our Parks. vie__ r}.o V'AW... 0... �•
As a horticultureprofessional and mom who uses the Parks, I was thrilled to be involved on the Parks Commission. I wanted to be partof the Parks Commission after I was in Colver Park with my baby in a stroller in 2016. I was walking my baby around the track in the park when I saw a city employee spraying / {\O pesticides near the track near the playground. I felt afraid for our health and left the park immediately. Y �,�'I\ Since that time I have shared this storywith many of you to illustrate the need for furthereducation and \.J-0.. � information about spraying in Phoenix Parks- and to make sure that as a city we are providing people f\M.,SJ>l', safe and beautifulparks to enjoy. I.brought up my concernswith the Parks Commission and requested �-vvv- .n.-c�v4· I more informationand a potential Study session so that we could truly understand what was being v? • applied, where, when, and for what purpose. The science of landscape maintenance is still evolving, and so I felt thateducation was an importantfirst step to understanding the situation. The issue of a study session was brought up in a Parks Commission meeting, and the Commission voted to pick a date to host an education/ information session on the use of pesticides in Phoenix Parks.
This issue is an appropriate and timely issue to be brought up by the Parks Commission since concerns over Pesticide use was mentioned in interviewsconducted to create the Parks strategic Plan. These concerns are listed on page� of the Plan. However, after the Commission voted to move forwardwith the Study Session the City Manager informed me that the no funds would be allocated to provide educatiOJ'.ll No funds would be allocated even when the study session could occur during the regular hours when the Parks Commission meets. No funds would be allocated to educate ourselves about the potential risks of pesticides application in areas where children play. This was especially concerning after news of the recent lawsuit findingRound-up directlyconne cted to cancer from the courtsin California. This means that productsthat are being applied in Phoenix Parks have already been linked to producing Cancer from those exposed. I find it dishearteningthat the City of Phoenix will allocate over $2,000 to Parks for candy for th� Easter egg hunt, and another $2,000 for supportingthe High School Halloween event, but no funds would be allocated to determine if we are putting children, pets, and everyoneusing the parks in harm's way.
Mer aeing info,med bf the Recordi11g Seeretuy's Assistaot,tbal we doR't 5pra, an�iA�� e1.1rpaFks - if requestedI the City Spray records, which show that pesticides are being sprayed in pa�, in areas where childrenplay, sit, and interactwith the grass. In the same week that I obtained the spray records, I � received notice that the Parks Commission would be discontinued or 'sunset'. This series of events )#� r'N!.- leaves,feeling concerned, confused, and upset. I am asking foryour help today to continue the Parks ���' , �t, Commission so that we canprovide supportto create the safeand beautiful parks our community � ,t< 1,, desires. Please vote to supportthe Parks Commission, and to continue it as a citizen committee that �lt\ · supportsthe City. Thank you, Rhianna Simes (2.4.19) � � 0� ��- "1\✓ . � c� L\ • ./ "�.t, OJ"' rn .• ,i, "' 0 \'a- �};. ,.r- 180 Y'e.eev--e ol Q 2 \ 4 \ � q Ct.-"tv\� '\� \tl.u.,-nf\ '1s Exhibit "P"
Clarkie Clark Agenda item: 8.b Status of Parks & Greenway Commission
It's important the commission remain in place. With appx. 36 acres of park space and more acres yet to be added, the changing interests of park users, and the unfortunate problems facing the greenway is an undertaking that needs to be addressed and decisions made by the non-judgmental and non special-interest public with only minimal representation of the elected and staff.
After hearing of four recent vacancies, I have been asking parents of multi-sports minded kids if they would be interested in serving on the commission. I already have ideas on how to equally and fairly represent the public's recreational needs without conflict of interest.
For me, I have always been interested in serving on Parks Commission, I have had broad experience and also experience on crime and clean-ups on waterways and a wealth of information concerning environmental health consequences of pesticides and herbicides.
I have had several people ask me to serve. However, after the horrible and perhaps illegal experience I went through when asked by Al to serve on the PHURA Board, (then) Councilor Luz threatened me if I went through with it he would see to it when it got to Council they would not vote for me. I chose to proceed to Council in spite of his threat after being unanimously voted in by the voting members of PHURA. Luz carried through with his threat. He lied and produced out-of-context statements and co erced the then council (except for Terry Helfrich) to vote against me. And that they did.
For these reasons and many more, it is not advisable to dissolve a non-budgeted citizen commission. It is advised to wholeheartedly campaign to recruit non-biased commission members.
181