2007 Comprehensive Annual Report

Transcription

WATER UTILITIES
COMMUNITY FACILITIES DISTRICT
(dba APACHE JUNCTION WATER COMPANY)
A Component Unit
of
The City of Apache Junction, Arizona
Comprehensive Annual Financial Report
For the Year Ended June 30, 2007
Prepared by the Finance Department
J. Keith Lewis, District Treasurer
John C. White, Finance Manager
WATER UTILITIES
City of Apache Junction, Arizona
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended June 30, 2007
TABLE OF CONTENTS
Schedule
Table of Contents
Page
iii
INTRODUCTORY SECTION
v
List of Officers
vi
Organizational Chart
vii
Certificate of Achievement Award
viii
Letter of Transmittal
ix
FINANCIAL SECTION
xv
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
1
3
11
Statement of Net Assets
12
Statement of Revenues, Expenses and Changes in Net Assets
13
Statement of Cash Flows
14
Notes to Financial Statements
16
Supplemental Information
29
Schedule of Revenues, Expenditures and Changes in Fund Balance Budgetary Basis
31
STATISTICAL SECTION
33
Financial Trends
Net Assets by Component - Last Five Fiscal Years
A-1
34
Changes in Net Assets - Last Five Fiscal Years
A-2
35
Ten Largest Customers - Current Year and Eight Years Ago
B-1
36
Groundwater Used, By Source, By Calendar Year - Last Ten Calendar Years
B-2
37
Water Sales by Customer Type - Last Four Fiscal Years
B-3
38
Number of Water Meters in Service by Type - Last Four Fiscal Years
B-4
39
Water Rates - Last Ten Fiscal Years
B-5
40
Ratios of Outstanding Debt by Type - Business-type Activities
C-1
41
Pledged Revenue Coverage
C-2
42
Revenue Capacity
Debt Capacity
Demographic and Economic Information
Demographic Statistics
D-1
43
Principal Employers - Current Year and Nine Years Ago
D-2
44
Full-time Equivalent Employees by Function - Last Ten Fiscal Years
E-1
45
Operating and Capital Indicators - Last Ten Fiscal Years
E-2
46
Operating Information
iii
(This page intentionally left blank)
iv
INTRODUCTORY SECTION
v
WATER UTILITIES
LIST OF OFFICERS
June 30,
30 2007
Elected Officials
John S. Insalaco, District Chairman
Robert E. (R.E.) Eck
Vice-Chairperson
Mary E. (Robin) Barker
Board member
Richard M. Dietz
Board member
Jeffrey M. Serdy
Board member
Joseph G. Severs
Board member
Walter L. (Chip). Wilson
Board member
Staff (1)
George R. Hoffman
District Manager
Kay Bigelow
District Attorney
Kathleen Connelly
District Clerk
Doug Dobson
Utility Director
Frank Blanco
District Director
Giao Pham
District Engineer
J. Keith Lewis
District Treasurer
John C. White
Finance Manager
(1)
Except for the District Director , listed staff are employees or the City of Apache Junction or, in the
case of the District Attorney , on contract. Therefore, these positions are not reflected on Schedule E-1.
vi
WATER UTILITIES
Organizational Chart
District Board
District Manager
District Attorney
District Clerk
Utility Director
District Treasurer
Finance Manager
District Engineer
District Director
Administrative
Assistant
Water Operator
Supervisor
Senior Utility
Maintenance
Worker (2)
Utility
Worker II
(4)
Water Accounts
Supervisor
Utility
Worker I
(2)
Account
Clerk II
Account
Clerk I
Employees of the Water Utilities Community Facilities District (District) are shown in the
blue boxes, whereas City of Apache Junction (City) employees who work in a dual
capacity for the District are shown in the grey boxes. Contracted services, the
Attorney, is shown in a dotted box format.
vii
viii
APACHE JUNCTION WATER COMPANY
112 East 2nd Avenue, Apache Junction, Arizona 85219
Mailing Address P.O. Box 4768, Apache Junction, Arizona 85278-4768
(480) 982-6030
Fax: (480) 288-6623
December 19, 2007
To The District Chairman And Members Of The Board Of The Water Utilities Community
Facilities District
Honorable Chairman and Board Members:
We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the
Water Utilities Community Facilities District (City of Apache Junction, Arizona) [hereinafter
referred to as the District], for the year ended June 30, 2007. This is the seventh year that the
District has prepared a CAFR.
Although the auditors have stated an opinion attesting to the fairness of the financial
statements, it cannot be emphasized strongly enough that the responsibility for both the
accuracy of the information, and the completeness and fairness of the information,
including all disclosures, belongs to the District's management. To provide a reasonable
basis for making these representations, management has established a comprehensive internal
control framework to protect the District's assets from loss, theft and misuse, and to compile
sufficient, reliable financial and bUdgetary information. Because the cost of internal controls
should not outweigh the benefits, the objective is to provide reasonable, rather than absolute,
assurance that the financial statements are free of material misstatement. To the best of our
knowledge and belief, this report is complete and accurate, in all material respects.
Arizona Revised Statutes require that, each year, all cities, including the City of Apache
Junction, undergo an audit by a Certified Public Accountant (CPA) licensed in Arizona.
Although as a Community Facilities District, the District is not required to undergo an annual
audit, as a blended component unit of the City, the District is audited in a separate, but parallel,
engagement. The firm of Fester & Chapman P.C., which has conducted the audit in recent
years, performed the audit for the year ended June 30, 2007. Fester & Chapman P.C.
concluded that there is a reasonable basis for their opinion which was that the financial
statements were free of material misstatement. The auditors' report covers the basic financial
statements in the Financial Section of this report.
FINANCIAL REPORTING ENTITY
The District was formed on September 29, 1994, pursuant to Title 48, Article 6 of the Arizona
Revised Statutes (A.R.S).
In 1995, the District assumed operations of the Consolidated
Water Company and provides water service to Consolidated's former service area.
----------------------------An
ix
Operative Division ofWUCFD---
The Board of Directors consists of the City Council of the City of Apache Junction, Arizona
(City). Because of the City’s ability to exercise control over the District, the District is considered
to be a blended component unit of the City for financial reporting purposes. Component units
are legally separate entities for which the City is considered to be financially accountable.
Because the City designates the management of the District and is able to significantly influence
District operations, the District is a component unit of the City.
Although much of the information contained in this report is also found in the City’s CAFR, this
report reflects the District and does not present the financial position or results of operations of
the City of Apache Junction, Arizona.
ECONOMIC CONDITION AND OUTLOOK
As the Phoenix metropolitan area has grown, the community has become enveloped into the
Phoenix metro economy as well. Historically, the local economy had been dependent upon
tourism and strengthened in the winter and more sluggish in the summer months. While tourism
remains an important factor in the local economy, the area is not as reliant on tourism as it once
was. Throughout the late nineties the City experienced a residential construction boom. While
there is sporadic infill development, the City is now closer to build-out and, therefore, the related
tax revenues had leveled off. Although it is not evident in the local statistics presented further
on, there are concerns because the statewide economy is declining.
Arizona’s economy is slowing, likely in a recession according to Marshall Vest, Director of the
Economic and Business Research Center at the University of Arizona 1 . At the Economic
Outlook Luncheon on December 7, 2007, three multiple shocks to the economy were cited:
1) Housing is in a free fall
2) Credit Markets are in turmoil
3) Oil is approaching $100 per barrel
2
Dr. Vest’s colleague, Gerald Swanson, also of the University of Arizona, expressed concerns
about inflation along with recession indicating that Arizona’s economy will have a landing in
2008, how hard remains uncertain, and that the economy will slip into a period of slow growth,
or no growth. Additionally, he concludes that unemployment will move up. 3
Although the District is in Pinal County which was cited by the US Census Bureau as the sixth
fastest growing county in the country and the fastest in the state from July 1, 2000 through
July 1, 20064, much of that growth occurred in the early part of the decade. Moreover, Apache
Junction did not benefit as much from the housing boom as some other communities. This was
because the City was, for practical purposes, landlocked with respect to development.
However, on December 7, 2006 the Arizona State Land Department auctioned off in excess of
1,000 acres in the southern part of the City which had been restricted. Additionally, the
developer is also committed to master plan the remaining twelve square miles of the Lost
1
Marshall Vest , Director - Eller Economic & Business Research Center, University of Arizona, Economic Outlook for 2008/09
(http://www.eller.arizona.edu/docs/press/2007/12/EllerCollege_EconomicOutlookLuncheon_Dec07_2007.pdf, p.1 slide 5)
2
Marshall Vest , Director -Eller Economic & Business Research Center, University of Arizona, Economic Outlook for 2008/09
(http://www.eller.arizona.edu/docs/press/2007/12/EllerCollege_EconomicOutlookLuncheon_Dec07_2007.pdf, p.1 slide 6)
3
Gerald Swanson, PhD, Professor of Economics, Eller Economic & Business Research Center, University of Arizona Economic
Outlook for 2008/09 (http://www.eller.arizona.edu/docs/press/2007/12/EllerCollege_EconomicOutlookLuncheon_Dec07_2007.pdf,
p.12)
4
U.S. Census Bureau http://www.census.gov/popest/counties/CO-EST2006-08.html
x
Dutchman Heights. It is expected that the master planning, including planning for roadways,
infrastructure, land use and urban planning, could take a an additional 15-18 months, but after
that, growth opportunities for the future are on the horizon.
Information on which to gauge the local economy at the local level is much more limited
compared to the national, state and even regional levels. Some information can be obtained
through unemployment rates, Transaction Privilege (Sales) Tax collections, and construction
and building data. It is important to note that the following information pertains to the City and
not to the District.
Unemployment figures continue to improve for the City. The average unemployment rate for the
year ended June 30, 2007 (FY07) was 3.4%, less than the 3.7% from the prior year. June 2007
had 3.2% unemployment versus 3.7% in June, 2006. Unemployment fluctuated during the past
two fiscal years which is uncharacteristic. The previous fiscal years, 2003-04 and 2004-05
reflect the historical norm with unemployment generally decreasing over the previous month
during the first part of the fiscal year. This is assumed to result from the seasonal nature of the
economy. It is worth noting that, except for January 2007, every month in FY07 showed
unemployment no higher than the corresponding month of the previous year, for example,
January 2007 compared with January 2006.
Apache Junction unemployment is reflected in the following graph.
Unemployment Rates
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Jul-03
Oct-03 Jan-04 Apr-04
Jul-04
Jul-05
Jul-06
The same information is reflected in the table on the following page.
The low unemployment numbers seem to contradict to the reports of recession, but it is
important to note that employment statistics tend to be lagging indicators of the economy in that
the employment changes are among the last to reflect the state of the economy.
xi
City of Apache Junction Arizona - Unemployment Rates
Unemployment Rates by Month
2005-06
2004-05
2003-04
Unemployment Unemployment Unemployment
July
August
September
October
November
December
January
February
March
April
May
June
Annual
Average
Rate
Rate
Rate
5.3%
4.3%
5.0%
4.0%
4.8%
4.0%
4.6%
3.7%
4.4%
Monthly
2006-07
Change from Unemployment
Rate
Monthly
Change from
Change
1 year ago
Change
1 year ago
4.2%
0.1%
-0.1%
3.8%
0.1%
-0.4%
4.0%
-0.2%
0.0%
3.4%
-0.4%
-0.6%
4.1%
0.1%
0.1%
3.5%
0.1%
-0.6%
3.9%
-0.2%
0.2%
3.5%
0.0%
-0.4%
3.5%
3.7%
-0.2%
0.2%
3.4%
-0.1%
-0.3%
4.3%
3.4%
3.4%
-0.3%
0.0%
3.3%
-0.1%
-0.1%
4.9%
3.8%
3.9%
0.5%
0.1%
4.0%
0.7%
0.1%
4.4%
3.8%
3.6%
-0.3%
-0.2%
3.4%
-0.6%
-0.2%
4.5%
3.9%
3.4%
-0.2%
-0.5%
3.4%
0.0%
0.0%
4.2%
3.7%
3.4%
0.0%
-0.3%
3.2%
-0.2%
-0.2%
4.1%
3.7%
3.2%
-0.2%
-0.5%
2.8%
-0.4%
-0.4%
4.4%
4.1%
3.7%
0.5%
-0.4%
3.2%
0.4%
-0.5%
4.6%
3.8%
3.7%
-0.1%
3.4%
-0.3%
Department of Economic Security
Tax collections can also provide insight as to the condition of the local economy. The table
below and graph on the following page illustrate the changes in taxable sales over the past two
years and the seasonal nature of the economy with the peaks during winter months. Also, it can
be seen that the sales have increased over the prior year.
Non-Construction Taxable Sales by Month
2005-06
2006-07
July
$
August
Taxable Sales
Monthly
Taxable Sales
Monthly
Change from
(in thousands)
Change
(in thousands)
Change
1 year ago
34,310
33,227
$
(81) $
35,666
(1,083)
35,374
(890)
36,469
September
32,337
October
35,995
3,658
36,409
November
32,987
(3,008)
40,512
$
(508) $
1,356
(292)
2,147
1,095
4,132
414
(60)
4,103
7,525
December
39,067
6,080
43,394
2,882
4,327
January
46,556
7,489
53,388
9,994
6,832
February
41,233
(5,323)
44,489
(8,899)
3,256
March
42,115
882
43,095
(1,394)
April
45,014
2,899
36,684
(6,411)
May
40,302
(4,712)
39,673
2,989
June
36,174
(4,128)
43,222
3,549
Annual Total
$
$
459,317
xii
488,375
980
(8,330)
(629)
7,048
$
29,058
The previous table excludes construction. Construction activity is of a one-time nature and not
a permanent part of the economic base. In recent years much of the vacant land in the City
has been developed and while construction has peaked, it does continue. A decreasing amount
of land is available for development because the State Trust land comprises the largest area
that is not yet available. As a result, in the short-term, construction is expected to decrease until
the area to the south is developed.
The following graph illustrates the changes over the past two years, and shows the seasonal
nature of the economy with the peaks during winter months. Again, it can be seen that the
sales have increased marginally over the prior year.
Non-Construction Taxable Sales
(in thousands of dollars)
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Although growth has leveled off over previous years, the District continues to serve the present
customer base, albeit in a manner less efficient and economical than should be the case. With
growth on the horizon, future capital outlays will be needed to allow additional and for the more
efficient use of the District’s Central Arizona Project (CAP) allotment and other water resources.
MAJOR INITIATIVES
The major undertaking in the prior year was the Water Resource Assessment by Damon S.
Williams Associates (DSWA) which lasted much of the year. Recommendations to increase
the water supplies included the following:
1) Hire an aggressive water rights attorney and acquire new water rights resources.
During the study DSWA projected a 42% shortfall in future water demand and concluded
that CAP surface water should be the focus in satisfying this demand.
2) Complete the engineering design and construction of the City of Mesa
Interconnect/Booster Pump Station. This is a direct connection with the City of Mesa’s
system and also involves the Mesa Treatment Plant. This would eliminate payments to
Arizona Water for "wheeling" the water and, more importantly, would add capacity over and
above the District’s Arizona Water connection. The preliminary design work has been
completed and the legal details are being worked out with the City of Mesa prior to the land
purchase being consummated. The land cost is expected to be $125,000, and a staff
xiii
estimate of the overall construction cost was $5.0 million. A minimum of 3.5 miles of
transmission main pipe would be required. Staff is in the process of requesting long-term
financing from the Water Infrastructure Finance Authority of Arizona (WIFA). Amounts not
eligible for WIFA funding would be financed with Capital Facilities Fees. It is important to
note that this was cited as a short-term backup by DSWA.
3) Begin design and construction for a WUCFD CAP surface water treatment facility.
This would significantly increase the system capacity and alleviate the District's reliance on
groundwater and reliance on outside organizations. It would also provide a long-term
solution for demand problems and bypass some regulatory challenges resulting from the
use of well water.
Another accomplishment was the completion and implementation of a rate study. As a result of
the rate study the District introduced a tiered rate structure designed to encourage conservation
while maintaining a lifeline rate.
OTHER INFORMATION
Acknowledgments
The preparation of the District’s CAFR was made possible through the assistance and
cooperation of many people both in and outside the City of Apache Junction and Water Utilities
Community Facilities District. Howard McDonald and the field crew assisted through the taking
of the inventory along with Hazel Randall who compiled the information and proofread this letter.
Lisa Hales and Jennifer Kaddi in Finance also reviewed the MD&A and this letter. We also
extend our appreciation to John Petges for his accounting support throughout the year.
Awards
The Government Finance Officers’ Association of the United States and Canada (GFOA)
awarded the Certificate of Achievement for Excellence in Financial Reporting to the Water
Utilities Community Facilities District, Arizona for its comprehensive annual financial report
(CAFR) for the year ended June 30, 2006. This is the sixth consecutive year that the District
has received this prestigious award. In order to be awarded a Certificate of Achievement, a
government must publish an easily readable and efficiently organized comprehensive annual
financial report. This report must satisfy both generally accepted accounting principles and
applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement
Program’s requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate.
Respectfully submitted,
John C. White
J. Keith Lewis
District Treasurer
John C. White
Finance Manager
xiv
FINANCIAL SECTION
xv
xvi
feoler6ahapman
pc.
C6rtified
Public
Accountants
4001 North 3rd Street
Suite275
Phoenix,
AZ 85012-2086
Tel: (602) 264-3077
Fax: (602) 265-6241
Independent
Auditors'Report
To the DistrictBoard
WaterUtilities
CommunityFacilities
District
Cityof ApacheJunction,Arizona
We have audited the accompanyingfinancialstatementsof the Water UtilitiesCommunitv
Facilities
District,City of ApacheJunction,Arizona(WUCFD),as of and for the year endedJune
30, 2007, as listed in the table of contents.These financialstatementsare the responsibility
of
WUCFD'smanagement.
Our responsibility
is to expressan opinionon thesefinancialstatements
basedon our audit.
We conductedour auditin accordance
with auditingstandardsgenerallyacceptedin the United
States of America and the standardsapplicableto financialaudits containedin Government
AuditingStandards,issued by the ComptrollerGeneralof the United States.Those standards
requlrethat we plan and performthe audit to obtain reasonableassuranceabout whetherthe
financialstatementsare free of materialmisstatement.An audit includesexamining,on a test
basis,evidencesupportingthe amountsand disclosuresin the financialstatements.An audit
also includesassessingthe accountingprinciplesused and significantestimatesmade by
management,
as well as evaluating
the overallfinancialstatementpresentation.
We believethat
our auditprovidesa reasonable
basisfor our opinion.
As discussedin Note 1, the financialstatementspresentonlythe WUCFDand do not purportto,
and do not,presentfairlythe financialpositionof Cityof ApacheJunction,Arizona,as of June 30,
2007, and the charges in its financialposition and cash flows, for the year then ended in
conformitywith accountingprinciplesgenerallyacceptedin the UnitedStatesof America.
In our opinion,the financialstatementsreferredto above presentfairly,in all materialrespects,
the financialpositionof Water UtilitiesCommunityFacilities
District,of City of ApacheJunction,
Arizona,as of June 30, 2007,and the changesin financialpositionand cashflowsthereoffor the
year then ended in conformityaccountingprinciplesgenerallyacceptedin the United States of
America.
In accordancewith GovernmentAuditingStandards,we will also issue our report on our
consideration
of City of ApacheJunction,Arizona'sinternalcontrolover financialreportingand on
our tests of its compliancewith certain provisionsof laws, regulations,contacts, and grant
agreementsand other mattersat a future date. The purposeof that report is to describethe
scope of our testingof internalcontrolover financialreportingand complianceand the resultsof
that testing, and not to provide an opinion on internalcontrol over financialreoortinoor on
compliance.That report is an integral part of an audit performedin accordanie with
Governmental
AuditingStandardsand shouldbe consideredin assessingthe resultsof our audit.
The Management'sDiscussionand Analysison pages 3 through9 is not a requiredpart of the
basic financialstatements,but is supplementaryinformationrequiredby accountingprincipals
generallyacceptedin the UnitedStatesof America.We have appliedceriainlimitedprocedures,
which consistedprincipallyof inquiresof managementregardingthe methodsof measurement
and presentationof the requiredsupplementaryinformation.However,we did not audit the
information
and expressno opinionon it.
Our auditwas conductedfor the purposeof formingan opinionon the basicfinancialstatements
of WUCFDtakenas whole.The accompanying
BudgetaryComparison
Scheduleon page 31 and
the introductoryand statisticalsectionslistedin the table of contentsare presentedior purposes
of additionalanalysis and are not a required part of the basic statements.The Budgetary
ComparisonSchedulehas been subjectedto the auditingproceduresappliedin the audit of the
basicfinancialstatements
and,in our opinion,is fairlystatedin all materlalrespectsin relationto
the basicfinancialstatementstakenas a whole.The introductory
and statisticaisections
nave not
been subjectedto the auditingproceduresappliedin the audit of the basic financialstatements
and,accordingly,
we expressno opinionon them.
c!,q,^*
Pc,
lat^+
December19,2007
MANAGEMENT'S DISCUSSION AND ANALYSIS
This subsection of the Water Utilities Community Facilities District's annual financial report
presents our discussion and analysis of the District's financial performance during the fiscal year
that ended on June 30, 2007. Please read it in conjunction with the transmittal letter at the front
of this report and the City's financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
•
Net assets increased by $446,651 during the year, from $6,133,121 to
$6,579,772.
•
Operating revenues increased $84,685 or 2.94% ($2,875,872 to $2,960,557).
•
Operating expenses decreased by $1,084,336 to $2,454,630 from $3,538,966,
a decrease of 30.64%. The decrease was because of the one-time expenses,
incurred in the prior year, relating to the replacement of the water supply lost
with the collapse of Well #5, the principal water source for the District.
•
The District's financial assets were $2,951,305 at year-end, up from $1,965,286
a year ago. This reflects earnings and new loan proceeds.
CONDENSED FINANCIAL DATA
The following table summarizes the total assets, liabilities and net assets for the District as of
June 30, 2007 and June 30, 2006. The current year information is provided in greater detail in
the basic financial statements which follow this analysis.
Table 1, below, summarizes the net assets for the District as a whole.
Table 1
Net Assets of the Water Utilities Community Facilities District
(a component unit of the City of Apache Junction, Arizona)
Increase (Decrease)
June 30, 2007
June 30, 2006
$
$
Amount
2,333,679
11,658,739
$ 1,068,139
Percentage
Tatal assets
14,756,666
13,992,418
764,248
45.770/0
-2.61 %
5.46 %
Long-term debt outstanding
7,228,134
948,760
6,957,729
901,568
270,405
47,192
3.89%
5.23%
8,176,894
7,859,297
317,597
4.04%
4,126,714
143,613
2,309,135
4,701,010
105,664
1,326,447
(574,296)
37,949
982,688
-12.22 %
35.910/0
74.08 %
446,651
7.28%
Current and other assets
Capital assets
Other liabilities
Tatal liabilities
3,401,818
11,354,848
(303,891 )
Net assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Tatal net assets
$
6,579,772
3
$
6,133,121
$
Net Assets
The net assets of the District at June 30,2007, were $6,579,772. Of this, $4,126,714 consists of
capital assets net of related debt. Capital assets include land, buildings, improvements,
machinery and equipment, and infrastructure, net of depreciation. Capital assets decreased by
$303,891 during the year. Although capital assets in the amount of $99,809 were added, the
increase was offset by depreciation of $403,700, resulting in a net decrease of $303,891.
The increase in current and other assets of $1,068,189 consisted of overall system net earnings
and also from loan proceeds in the amount of $693,497 from the Water Infrastructure Finance
Authority of Arizona (WIFA). The WIFA loan reimbursed outlays, most of which were made in
prior years for the construction of an arsenic treatment system.
The main reasons for the increase in other liabilities were increased amounts accrued related to
Safe Yield requirements. As a hedge against taxes on groundwater withdrawal, the District is
purchasing recharge credits from the Superstition Mountains Community Facilities District #1,
the local wastewater treatment provider.
The liability increased from $92,340 as of
June 30, 2006 to $148,196 at June 30, 2007. Another increase involved the Central Arizona
Groundwater Replenishment District (CAGRD) tax. This tax, payable in October, increased
from $155,826 to $178,157.
After taking into account all capital asset and long-term debt activity, the net decrease in capital
assets net of related debt was $574,296. This decrease is broken down as follows:
Purchase and construction of capital assets
Depreciation on capital assets
Principal payments on long-term debt
Amortization of bond reacquisition costs
Additional capital related borrowings
Amortization on bond discount
Net change in capital assets net of related debt
$
99,809
(403,700)
487,794
(62,324)
(693,807)
(2,068)
$ (574.296)
Additional information on both capital assets and long-term debt activities can be found on
page 8 of this MD&A and in Notes 4 and 5 on pages 22 through 24 in the Notes to Financial
Statements.
Changes In Net Assets
The results of operations of the District improved, returning to profitability following a year which
reflected a substantial loss due to the collapse of Well #5, the District's main source of water.
Table 2 on the following page compares the changes in net assets for the District during the
fiscal year with those of the prior year.
4
Table 2
Comparative Revenues and Expenses of the Water Utilities Community Facilities District
Year Ended
Increase (Decrease)
June 30, 2007 June 30, 2006
Operating revenues
Residential sales
Nonresidential sales
Other charges
Miscellaneous
$
Total operating revenues
Operating expenses
Administration
Operations
Depreciation
Amortization
Plant
Operations
Safe Yield (Central Arizona Project)
Depreciation
Amortization
Total operating expenses
Nonoperating expenses
Interest expense
Loss on disposal of capital assets
Total expenses
Change in net assets
Net assets-beginning of year
Net assets-end of year
$
$
2,257,287
372,791
230,271
15,523
2,960,563
2,875,872
84,691
2.94%
195,643
95,435
73,272
79,680
122,371
15,755
167.01%
19.77%
3,251,641
3,028,824
222,817
7.36%
552,365
8,192
24,350
497,367
10,701
21,711
54,998
(2,509)
2,639
11.06%
-23.45%
12.16%
1,107,138
365,515
395,508
1,562
2,065,975
560,466
379,231
3,515
(958,837)
(194,951)
16,277
(1,953)
-46.41%
-34.78%
4.29%
-55.56%
2,454,630
3,538,966
(1,084,336)
-30.64%
350,360
-
363,955
104,895
(13,595)
(104,895)
-3.74%
-100.00%
2,804,990
4,007,816
(1,202,826)
-30.01%
446,651
6,133,121
(978,992)
7,112,113
1,425,643
(978,992)
-145.62%
-13.77%
6,579,772 $
6,133,121
$
90,586
34,265
(45,884)
5,724
Percentage
2,347,873 $
407,056
184,387
21,247
Nonoperating revenues
Capital facilities fees
Interest and investment revenue
Total revenues
Amount
446,651
4.01%
9.19%
-19.93%
36.87%
7.28%
OPERATING REVENUES
Overall operating revenues increased by $84,691 or 2.94%. While the number of meters
increased, actual consumption decreased marginally. The principal reason for the revenue
increase was a rate increase which took place in November, 2006. The estimated effect of the
rate increase was $132,000. Of this, $96,000 is attributable to the adoption of a graduated rate
structure on consumption, and $36,000 is attributable to an increase in base meter charges.
5
Other charges decreased because the District was unable to renew an ongoing contract for the
sale of nonpotable Central Arizona Project Water for irrigation purposes due to the development
of agricultural land in the surrounding areas.
NONOPERATING REVENUES
Capital facilities fees increased mainly due to one new development in the existing service area.
Capital facilities fees consist of one-time fees which are held and designated by the District for
additional water sources and infrastructure.
Interest and investment revenue increased with the increasing investment balances as the
District returned to profitability.
OPERA TING EXPENSES
In the aggregate, Administration operations increased from $497,367 to $552,365. While most
of the line items decreased marginally, the reason for the overall increase was a Water
Resources Assessment report by an engineering firm.
Plant operations decreased substantially, principally because of the need in the prior year to
treat Central Arizona Project water and for the emergency purchase of water from the Arizona
Water Company to replace the supply lost when Well #5 collapsed. The total cost related to the
water supply replacement is estimated at $1.141 million. Details of this estimate are as follows:
Rental of temporary treatment facility
Rental of ancillary equipment
Diesel fuel to operate temporary facility
Estimated overtime incurred to operate temporary facility
Water purchased at retail from Arizona Water Company
Miscellaneous costs
Total
$ 632,220
85,211
59,430
27,600
333,223
2,830
$1:140.514
The decrease does not reflect the entire amount of the $1.141 million savings. Offsetting some
of the savings are higher personnel costs due to the implementation of a step program and
increased costs of chemicals used in arsenic remediation.
Safe Yield, which in prior years had been captioned Central Arizona Project, decreased from
$560,466 to $365,515. There are different components of this line item. The decrease is a
result of the discontinued opportunity to use part of the District's Central Arizona Project
allotment for incentive recharge. The savings was $236,406, but this is partially offset by an
increase in the CAGRD Tax which increased from $155,326 to $178,157.
Depreciation expense increased with new capital assets added in the previous year, most
notably the re-drilled Well #5, having been in service and depreciated over the entire fiscal
year.
NONOPERA TING EXPENSES
Interest expense decreased because the long-term balance on which interest expense is
imputed decreased. Therefore, less interest accrued.
The item reflected in the prior year's loss on the disposal of capital assets consists of the
collapsed Well # 5.
6
ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
The District had an increase in net assets of $446,651 compared with the prior year's decrease
of $978,992. The prior year's collapse of Well NO.5 was the overriding factor in this shift.
In order to evaluate the financial position of the District, it is important to distinguish between the
economic measurement focus and the financial measurement focus. Under the economic
measurement focus, all assets, including buildings and infrastructure, are reported as are all
liabilities, including debts that do not mature for years, such as bonds and long-term notes.
Under the financial focus, however, there is a greater emphasis on current resources and
outlays for more of a short-term nature. The most significant difference is that long-term debt
and capital assets such as buildings and infrastructure are not included in the financial
measurement focus.
For analysis purposes, it is useful to introduce the term fund balance, the term often used in
more traditional governmental budgetary accounting. Fund balance is the equivalent to net
assets without taking into account capital assets and long-term debt. Also deducted from fund
balance are debt restrictions resulting from long-term debt covenants. For a more complete
listing of the differences, see both Note 6 of the Notes to Financial Statements and the
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budgetary Basis on
page 31 in the supplemental section. Fund balance increased by $1,015,255 from $708,262 to
$1,723,524.
Another way of determining whether the District's overall financial position improved or
deteriorated would be to compare the principal financial (current) assets and liabilities for the
past two years, as illustrated in Table 3. Not all current assets and liabilities shown on the
balance sheet are included. Inventories are excluded, and restricted assets that will be used to
pay the current portions of long-term debt are included as current assets.
Table 3
Financial Assets and Liabilities of the Water Utilities Community Facilities District
Increase (Decrease)
June 30, 2007
Cash and cash equivalents including
restricted cash to be used to pay
July 1, debt service
Investments
Accounts and interest receivable (net)
Prepaid expenses
Amount
Percentage
$
527,918
2,151,798
207,985
63,604
2,951,305
1,445,111
$
621,853
1,029,164
257,990
56,279
1,965,286
1,376,413
$
(93,935)
1,122,634
(50,005)
7,325
986,019
68,698
-15.11 %
109.08%
-19.38%
13.02%
50.17%
4.99%
$
1,506,194
$
588,873
$
917,321
155.78 %
Total financial assets
Financial liabilities
Net financial assets
June 30, 2006
Although the District is reporting an increase in net assets of $446,651, net financial assets
increased $917,321. The main reason for the difference was that District received loan
proceeds in the amount of $693,497 to reimburse capital outlays made in the previous year.
The District's financial position clearly improved.
7
CAPITAL ASSET AND DEBT ADMINISTRATION
CAPITAL ASSETS
Capital asset outlays during the year were $99,809 and included the following:
1) $795,947 has been spent on an arsenic treatment system, $22,846 in fiscal year 2007.
Although the asset has been placed in service, there is still work that needs' to be
finalized. The original negotiated price was to be $796,052. The project is being
financed via a restructured loan from the Water Infrastructure Finance Authority of
Arizona (WIFA).
2) During the year, $72,963 was spent on the construction of a new well, Well #8. This is
not yet complete and, with prior year expenditures, is listed as construction in progress
in the amount of $1,003,321 at June 30, 2007.
3) $4,000 was added that was attributable to right of way acquisition after the fact on a line
on South Ironwood Drive. This is being incorporated into the cost basis of the line.
For additional information concerning capital assets, see Note 4 - Capital Assets on page 21.
DEBT ADMINISTRATION
As far as debt administration is concerned, the District has two bond issues and a long-term
note payable.
The note of $2,919,214 payable to WIFA was closed on May 3,2006. The proceeds at the time
of closing, $2,133,162, were used to retire a previous loan, along with accrued interest, to
WIFA. The balance will be drawn down to finance the arsenic treatment system. The previous
loan had been used on the Royal Palm waterline project which was completed in 2002.
The 1997 Series A bonds have, after taking into account the refunded amount, a face amount
outstanding of $310,000 and continue to have a Standard & Poor's Underlying Rating (SPUR)
of BBB and an insured AAA rating.
For more information on long-term debt, see Note 5 of the financial statements on page 22.
FACTORS AFFECTING FINANCIAL POSITION OR RESULTS OF OPERATIONS
Despite the increase in capital facilities fees, which for the most part reflects the completion of
one development in the service area, growth remains an uncertainty. The rate of growth in the
service area has been decreasing. However, there are future prospects for major growth to the
south of the City. As the District needs to plan to meet the infrastructure and supply needs of
the anticipated development, the District is challenged in meeting its present service
requirements. Yet even with the leveling off of growth, the District is producing at capacity and
purchasing water from other sources or incurring costs to treat the District's allotment of Central
Arizona Project water. Continuing to meet the service demands will remain the primary
challenge for the District.
One way that the District is presently meeting this need is through a "wheeling" agreement with
the City of Mesa and Arizona Water Company. A new increase for a monthly "capacity" charge
has been added to the contract in the amount of $6,481 ($77,772 annually).
8
CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide citizens, taxpayers, customers, investors and
creditors with general information about the District's finances, and to demonstrate the District's
accountability and compliance with respect to fiscal matters. If there are questions concerning
this report or if further information is required, please contact the Water Utilities Community
Facilities District; Finance Department; 300 E. Superstition Blvd.; Apache Junction, AZ 85219.
Alternative contact information would be to contact the offices of the Finance Manager at
(480) 474-5108 or [email protected].
9
10
BASIC FINANCIAL STATEMENTS
11
WATER UTILITIES
(CITY OF APACHE JUNCTION, ARIZONA)
STATEMENT OF NET ASSETS
JUNE 30, 2007
ASSETS
CURRENT ASSETS
Cash
Investments
Inventory
Accounts receivable, net of allowance
for uncollectible accounts
Accrued interest receivable
Restricted cash to be used to liquidate current liabilities
Prepaid expenses
Total current assets
2003
$
31,567
2,151,798
100,882
185,632
22,353
496,351
63,604
3,052,187
NONCURRENT ASSETS
Restricted cash equivalents
Deferred charges
Capital assets
assets, not being depreciated
Capital assets, being depreciated - net
Total noncurrent assets
Total assets
143,613
206,018
3,086,778
3 086 778
8,268,070
11,704,479
14,756,666
LIABILITIES
CURRENT LIABILITIES
Accounts payable
Accrued payroll and employee benefits
Due to City of Apache Junction
Interest payable
Deferred revenue
Current maturities of long-term obligations
Deposits held for others
Total current liabilities
473,161
70,318
2,573
154,596
24,141
496,351
223,971
1,445,111
LONG-TERM OBLIGATIONS, less current maturities
Total liabilities
6,731,783
8,176,894
NET ASSETS
Invested in capital assets net of related debt
Restricted for debt retirement
Unrestricted
Total net assets
Total liabilities and equity
$
$
The accompanying notes are an integral part of these statements.
12
4,126,714
143,613
2,309,445
6,579,772
14,756,666
WATER UTILITIES
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
YEAR ENDED JUNE 30, 2007
Year to
Date (YTD)
OPERATING REVENUES
Residential sales
Non-residential sales
Other charges
Miscellaneous
$
Total operating revenues
2,347,873
407,056
184,387
21,247
2,960,563
OPERATING EXPENSES
Administration
Operations
Depreciation
Amortization
552,365
8,192
24,350
Plant
Operations
Safe Yield
Depreciation
Amortization
1,107,138
1
107 138
365,515
395,508
1,562
Total operating expenses
2,454,630
Operating income
505,933
NONOPERATING REVENUES (EXPENSES)
Interest and investment revenue
Interest expense
195,643
95,435
(350,360)
Total nonoperating revenues (expenses)
(59,282)
Net income (loss)
446,651
Total net assets - beginning of year (as restated)
Total net assets - end of year
6,133,121
$
13
6,579,772
WATER UTILITIES
STATEMENT OF CASH FLOWS
2003
Cash flows from operating activities:
Cash received from customers
Cash refunded to customers
Other operating receipts
Cash payments to suppliers for goods and services
Cash payments to employees for services
Net cash used by operating activities
$
Cash flows from capital and related financing activities:
Proceeds from long-term borrowing
Proceeds from capital facilities fees
Purchase and construction of capital assets
Interest paid on long-term debt
Principal payments on revenue bonds and note payable
Net cash used by capital and related financing activities
3,065,501
(51,328)
2,540
(1,238,821)
(656,530)
1,121,362
693,497
186,643
(102,468)
(311,111)
(487,483)
(20,922)
Cash flows from investing activities:
Interest received on investments
Purchase of investments
Net cash used by investing activities
2,095
(1,164,422)
(1,162,327)
Net decrease in cash and cash equivalents
Cash and cash equivalents, beginning of the year
Cash and cash equivalents, end of the year
$
Cash and cash equivalents consist of:
Unrestricted cash
Restricted assets - cash and cash equivalents
Total
$
$
14
(61,887)
733,418
671,531
31,567
639,964
671,531
0
continued
WATER UTILITIES
STATEMENT OF CASH FLOWS (continued)
2003
Reconciliation of operating income to net cash used by operating activities:
Operating income
$
Adjustments to reconcile operating income (loss) to net cash provided
by operating activities:
Depreciation
Amortization
Increase in inventory
Decrease in accounts receivable
Operating expenses paid directly from noncash investment accounts to the City
Increase in prepaid items
Decrease in deposits held for others
Increase in accounts payable and accrued liabilities related to operations
505,933
403,700
25,912
(12,660)
64,691
134,924
(7,325)
(16,331)
22,518
Total adjustments
615,429
Net cash used by operating activities
$
1,121,362
0
NONCASH INVESTING ACTIVITIES
Reinvested interest on non-cash investments
$
80,901
NONCASH CAPITAL FINANCING ACTIVITIES
Capital facilities fees paid directly into noncash investments
$
4,060
15
Apache Junction Water Utilities Community Facilities District
June 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Apache Junction Water Utilities Community Facilities District,
City of Apache Junction, Arizona [(AJWUCFD) or (District)] conform to U.S. generally
accepted accounting principles as applicable to proprietary funds of governmental units as
promulgated by the Governmental Accounting Standards Board (GASB). A summary of the
District's more significant accounting policies follows.
A. Reporting Entity
The District is a Community Facilities District formed by the City of Apache Junction,
Arizona (the City), under the laws of the State of Arizona on September 29, 1994.
AJWUCFD provides water to certain residents of the City and its surrounding areas.
The District is considered to be a blended component unit of the City. Component units are
legally separate entities for which the City is considered to be financially accountable. The
City is financially accountable for the District because the District is governed by a sevenmember board consisting of the City Council, Mayor and Vice Mayor. The District is
reported as an enterprise fund.
The financial statements are intended to present the financial position, results of operations
and cash flows of only the funds administered by the District. These financial statements
do not present the financial position or the results of operations of the City of Apache
Junction, Arizona.
B. Basis of Accounting
Basis of accounting relates to the timing of the measurements made, regardless of the
measurement focus applied and determines when revenues and expenses are recognized
in the accounts and reports in the financial statements.
The District is reported as an enterprise fund. Enterprise funds account for operations that
are financed and operated in a manner similar to private business enterprises, in which the
intent of the District Board is that the costs (expenses, including depreciation) of providing
goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges; or for which the District Board has decided that periodic
determination of revenues earned, expenses incurred, or net income is appropriate for
capital maintenance, public policy, management control, accountability, or other purposes.
16
June 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The financial statements of the Proprietary Fund are accounted for on the flow of economic
resources measurement focus and use the accrual basis of accounting. Revenues are
recognized when they are earned, and expenses are recognized when they are incurred.
C. Operating and Nonoperating Revenues and Expenses
The enterprise fund distinguishes operating revenues and expense from nonoperating
items. Operating revenues and expenses generally result from providing services and in
connection with principal ongoing operations. The District's principal operating revenues
are charges to customers for water sales related charges. Operating expenses include
administrative expenses, production and distribution expenses including depreciation on
capital assets
Nonoperating revenues include revenues from noncapital financing activities, capital
financing activities and revenues from investing activities. Capital financing revenues
include developer contributions, capital facilities fees and other revenue sources that
would be shown on the Statement of Cash Flows as a positive cash flow from capital
and related financing activities. Investing revenues include interest and investment
income.
Nonoperating expenses include interest expense and any other expense that would be
shown on the Statement of Cash Flows as a negative cash flow from capital and related
financing activities, investing activities, or noncapital financing activities.
Gains and losses on the disposition of capital assets are reported as nonoperating
revenues or expenses.
D. Pronouncements of GASS and FASS
Government Accounting Standards Board (GASB) Statement No. 20 states that Financial
Accounting Standards Board (FASB) and its predecessor body pronouncements issued
before November 30, 1989, continue to be applicable to Enterprise Funds unless they
conflict with or contradict GASB guidance.
Enterprise Funds may take either of the following approaches to FASB guidance issued
subsequent to November 30, 1989.
1. An entity may elect to continue to follow FASB guidance that does not conflict with
or contradict GASB guidance. If this election is made, it must be followed
consistently. It would not be appropriate to follow some FASB pronouncements
issued subsequent to the cutoff date, but not others.
2. An entity may elect not to subject itself to FASB guidance issued subsequent to the
cutoff date. In that case, even FASB amendments of guidance issued prior to the
cutoff date would not be applicable to proprietary operations.
The District has elected to subject itself to FASB guidance issued subsequent to
November 30, 1989.
17
June 30, 2007
E. Cash and Investments
Arizona Revised Statutes authorize the District to invest public monies in the State
Treasurer's investment pool; obligations issued or guaranteed by the United States or
any of the senior debt of its agencies, sponsored agencies, corporations, sponsored
corporations, or instrumentalities; specified state and local government bonds; interest
earning investments such as savings accounts, certificates of deposit, and repurchase
agreements in eligible depositories; and specified commercial paper, bonds, debentures,
and notes issued by corporations organized and doing business in the United States.
Credit risk:
Statues have the following requirements for credit risk:
1. Commercial paper must be rated P1 by Moody's investors' service or A 1 or better by
Standard and Poor's rating service.
2. Corporate bonds, debentures, and notes must be rated A or better by Moody's
investors service or Standard and Poor's rating service.
3. Fixed income securities must carry one of the two highest ratings by Moody's
investors service and Standard and Poor's rating service. If only one of the abovementioned services rates the security, it must carry the highest rating of that service.
Custodial credit risk:
Statutes require collateral for demand deposits, certificates of deposit, and repurchase
agreements at 101 percent of all deposits not covered by federal depository insurance.
Concentration of credit risk:
Statutes do not include requirements for concentration of credit risk.
Interest rate risk:
Statutes require that public monies invested in securities and deposits have a maximum
maturity of 5 years and that public operating fund monies invested in securities and
deposits have a maximum maturity of 3 years. Investments in repurchase agreements
must have a maximum maturity of 180 days.
Foreign currency risk:
Statutes do not allow foreign investments.
F. Cash and Cash Equivalents
For purposes of the statement of cash flows, the District considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.
18
June 30, 2007
G. Allowance for Doubtful Accounts
The District provides an allowance for doubtful accounts equal to the estimated
uncollectible portion. This estimate, at approximately g% of year-end accounts receivable,
is based on historical collection experience and a review of the current status of accounts
receivable.
H. Inventories
Inventories are recorded as assets when purchased and are expensed when consumed.
They consist mostly of water meters, repair parts, and tubing and are stated at the lower of
cost or market value using the first-in, first-out method of valuation.
I. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items.
J. Capital Assets
Purchased capital assets are stated at cost less accumulated depreciation. Depreciation of
capital assets is charged as an expense against operations. The estimated useful lives in
determining depreciation on a straight-line method are:
Water system and improvements
Machinery and equipment
Buildings
30 years
5-7 years
40 years
Since July 1, 2000, the District's capitalization policy has been to capitalize only assets with
a cost in excess of $5,000.
K. Use of Estimates
In preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the 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.
L. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick leave
earned by employees based on services already rendered. Employees may accumulate up
to 320 hours of vacation depending on years of service, but any vacation hours in excess of
the maximum amount that are unused at year end are forfeited. Also, upon retirement or
resignation of an employee, the District pays 50 percent of the value of accumulated sick
leave hours earned between 320 and 640 hours and 25 percent of the value of sick leave
hours earned between 640 and 1040 hours.
19
June 30, 2007
L. Compensated Absences (continued)
Vested compensated absences are recorded as expenses and liabilities as the benefits
accrue to employees.
M. Restricted Assets
Certain proceeds of the District's revenue bonds, as well as certain resources set aside for
bond repayment and capital projects, are classified as restricted assets on the balance
sheet because their use is limited by applicable bond covenants.
N. Income Taxes
The District is exempt from income taxes as a governmental district.
NOTE 2 - DEPOSITS AND INVESTMENTS
A. Deposits
Custodial Credit Risk - In the case of deposits, this is the risk that in the event of bank
failure, the District's deposits may not be returned. As of June 30, 2007, the carrying
amount of deposits was $671,531. The Federal Deposit Insurance Corporation protects
the District against loss on the first $100,000 on deposit with each separate financial
institution. The remaining balance was covered by collateral held by the pledging
financial institution's trust department in the District's name.
Restricted cash consists of cash held by a trustee. Future use will be for the payments
on outstanding revenue bonds payable and capital improvements.
B. Investments
The District has few investments and chooses to disclose its investments by specifically
identifying each. The District has not adopted a formal investment policy. At
June 30, 2007, the District's investments were as follows:
Investment Type
State Treasurer's investment pool 7
Amount
Maturities
$ 2,151,798
n/a
$ 2,151,798
The State Board of Investment provides oversight for the State Treasurer's pools, and
the Local Government Investment Pool Advisory Committee provides consultation and
advice to the Treasurer. The fair value of a participant's position in the pool
approximates the value of that participant's pool shares and the participant's shares are
not identified with specific investments.
20
June 30, 2007
NOTE 2 - DEPOSITS AND INVESTMENTS - CONTINUED
Custodial Credit Risk - For an investment, custodial credit risk is the risk that, in the
event of the failure of the counterparty, the District will not be able to recover the value of
its investments or collateral securities that are in the possession of an outside party. The
District does not have an investment policy for custodial credit risk. At June 30, 2007, all
of the District's investments were uninsured and held by the counterparty's trust
department not in the District's name.
Interest Rate Risk - the District does not have a formal investment policy that limits
investment maturities as a means of managing its exposure to fair value losses arising
from increasing interest rates.
Credit Risk - At June 30, 2007, credit risk for the District's investments was as follows:
State Treasurer's investment pool 7 - not rated
Concentration of Credit Risk - the District places no limit on the amount that AJWUCFD
may invest in anyone issuer. More than 5 percent of The District's investments are in
State Treasurer's Local Government Investment Pool 7. These investments are 100 % of
the District's total investments.
NOTE 3 - RESTRICTED ASSETS
Certain proceeds of the District's revenue bonds, as well as certain resources set aside for
bond repayment, are classified as restricted assets on the balance sheet as their use is
limited by applicable bond covenants. At June 30, 2007 the total amount shown as
restricted assets was $639,964.
21
June 30, 2007
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2007 was as follows:
Balance
July 1, 2006
Capital Assets not being depreciated:
Land
Construction in progress
Capital Assets being depreciated:
Buildings
Water system
$
Totals at historical cost
Less accum ulated depreciation for:
Buildings
Water system
Improvements other than buildings
$
Deletions
Balance
June 30, 2007
$
$
72,964
1,962,868
1,123,910
96,005
10,286,695
1,341,776
26,845
96,005
10,313,540
1,341,776
14,738,290
99,809
14,838,099
(6,665)
(1,960,925)
(5,035)
(1,106,926)
(2,401 )
(342,890)
(975)
(57,434)
(9,066)
(2,303,815)
(6,010)
(1,164,360)
(3,079,551 )
Total accumulated depreciation
Business-type capital assets, net
1,962,868
1,050,946
Additions
11,658,739
(403,700)
$
(3,483,251 )
(303,891 ) $
$ 11,354,848
NOTE 5 - LONG·TERM DEBT
The following is a summary of changes in long-term debt of the District for the year ended
June 30, 2007:
Serial Bonds
Current portion
Noncurrent portion
Net of bond discount
Net of reacquisition costs
Total bonds payable
Note payable
Current portion
Noncurrent portion
Total note payable
Total long-term obligations
July 1, 2006
Increases
$ 345,000
$ 360,000
Decreases
$
June 30, 2007
$ 360,000
4,895,000
(2,068)
(413 z365)
4 z824,567
360 z000
345,000
360,000
(2,068)
(62 z324)
640,608
129,845
2 z003 z317
2,133 z162
136,351
693 z497
829 z848
129,845
148,990
278 z835
136,351
2,547 z824
2,684 z175
$6,957,729
$1,189,848
$ 919,443
$7,228.134
22
4,535,000
(351 z041)
4,543 z959
June 30, 2007
NOTE 5 - LONG-TERM DEBT - CONTINUED
Long-term obligations payable at June 30, 2007 are comprised of the following:
Partially refunded WUCFD serial revenue bonds, series
1997A, for the purchase of assets and retirement of debt.
Issue amount $6,750,000 of which $310,000 is
outstanding. The original bond discount of is fully
amortized as of June 30, 2007. Interest rates vary from
5.20% to 5.35%. Semi-annual interest payments are due
on January 1 and July 1. Principal payments coincide with
staggered bond maturities due annually on July 1 with final
maturities on July 1, 2007.
$ 310,000
WUCFD serial revenue bonds, series 2004A, for the
retirement of debt. Issue amount $4,670,000 of which
$4,585,000 is outstanding and reported net of unamortized
bond reacquisition costs of $351,041 at June 30, 2007.
Interest rates vary from 2.50% to 4.500/0. Semi-annual
interest payments are due on January 1 and July 1.
Principal payments coincide with staggered bond
maturities due annually on July 1 with final maturities on
July 1, 2017.
4,233,959
Water Infrastructure Finance Authority (WIFA) note payable
for the financing of water distribution improvements.
Balance represents draws, net of repayments, from an
authorized maximum of $3,200,000. Interest is 3.430%.
Semi-annual interest payments are due on January 1 and
July 1. Principal payments are due annually on July 1 with
the note maturating July 1, 2021.
2,684,175
(496,351 )
$ 6.731.783
Less current maturities
Annual cash requirements to amortize all the outstanding revenue bonds payable, and the
total note payable at June 30,2007, are as follows:
Year Ending
June 30,
2008
2009
2010
2011
2012
2013-2017
2018-2022
2023-2026
Total
Bonds .Payable
Principal
Interest
$ 360,000 $ 195,445
380,000
180,227
390,000
166,984
405,000
151,815
425,000
135,215
2,395,000
392,562
540,000
12,150
$ 4 895,000 $ 1,234,398
23
Note Payable
Principal
Interest
$ 136,351 $ 93,714
139,063
89,025
143,915
84,172
148,936
79,149
73,951
154,132
855,187
249,562
1,015,196
125,209
91,395
9,039
$ 2,684.175 $ 803,821
Total
Principal
Interest
$ 496,351 $ 289,159
519,063
269,252
251 ,156
533,915
553,936
230,964
579,132
209,166
3,250,187
642,124
1,555,196
137,359
91,395
9,039
$ 7,579.175 $2,038.219
June 30, 2007
NOTE 5 - LONG-TERM DEBT - CONTINUED
Bond discounts, deferred refunding costs, as well as issuance costs, are deferred and
amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable deferred refunding cost of $351,041. Issuance costs of
$317,081 are reported on the balance sheet net of accumulated amortization at
June 30,2007 of $142,694.
NOTE 6 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
The adopted budget of AJWUCFD is prepared on a basis consistent with generally
accepted accounting principles (GAAP) with the following exceptions: 1) capital asset
outlays are budgetary expenditures, 2) depreciation and amortization expenses are
excluded from the budgetary basis statements, 3) available proceeds from bonds and
notes payable are budgetary revenues, 4) escrow deposits for principal and reserve
requirements on long-term debt are included in the appropriated budget, 5) deferred
expenses, while recognized as an asset and amortized for GAAP purposes, are treated
as expenditures when the associated outlays are made, 6) accrued payments for the
purchase of long-term storage credits, while accrued for GAAP purposes, are
recognized as expenditures in the year in which they are paid 7) gain or loss on the
disposal of assets for GAAP purposes is not recognized for budgetary reporting
purposes, only any sales proceeds, and 8) materials held in inventories are treated as
expended when purchased for budgetary purposes.
Consequently, the following adjustments are necessary to present actual revenues and
expenses on a budgetary basis in order to provide a meaningful comparison.
24
June 30, 2007
Statement of revenues, expenses
and changes in net assets
Total
Revenues
Total
Expenses
Net
Assets
$ 3,251,641
$ 2,804,990
$ 6,579,772
Capital assets
Capital outlay shown as part of capital assets
on GAAP basis financial statements
Depreciation expense
Long-term debt-bonds and notes payable
Bond reacquisition cost and related amortization
Proceeds from long term debt
Bond discount and related amortization
Restrictions removed from bond reserves
Restricted deposits in bond trust accounts
Deferred charges and related amortization
Accrual of purchase of long-term storage credits
Inventory and inventory change
Schedule of revenues, expenses an changes in
fund balance - budgetary basis
(11,354,848)
99,809
(403,700)
508,990
(62,324)
7,579,175
(351,041 )
693,496
(2,068)
58,506
30,707
(683)
12,660
$ 4,003,643
$ 2,988,381
(552,666)
(9,279)
(66,707)
(100,882)
$ 1,723,524
NOTE 7 - RISK MANAGEMENT
The City and the District are exposed to various risks of loss related to torts; theft of,
damage to, and destruction of assets; errors and omissions; injuries to employees; and
natural disasters. The City is a member of the Arizona Municipal Risk Retention Pool
(AMRRP), a public entity risk pool currently operating as a common risk management and
insurance program for Arizona municipalities. The coverage under AMRRP extends to
AJWUCFD. The City and AJWUCFD pay an annual premium to AMRRP for its general
insurance coverage. The Agreement for Formation of AMRRP provides that AMRRP will be
self-sustaining through member premiums and will reinsure through commercial companies
for excess claims for each insured event.
AJWUCFD is covered for workers' compensation insurance by the State Compensation
Fund, a quasi-governmental carrier created by state statute. The fund provides members
with workers' compensation coverage, as required by law, and risk management services.
AJWUCFD is responsible for paying a premium, based on an experience rating formula
that allocates expenditures and liabilities among the members.
AJWUCFD continues to carry commercial insurance for all other risks of loss, including
employee health and accident insurance. Settled claims resulting from these risks have not
exceeded commercial insurance coverage in any of the past three years.
25
June 30, 2007
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The District is a component unit of the City of Apache Junction, Arizona. The City and the
District receive numerous notices of claims for damages occurring generally from false
arrest, negligence, and bodily injury, breach of contract, defamation of character and
invasion of privacy. The filing of such claims commences a statutory period for initiating
judicial action, and the City and District currently carry excess general liability insurance to
cover possible losses arising therefrom. The District attorney has indicated that he is not
aware of any such action, which would have a significant adverse impact on the District's
financial condition.
On April 5, 2005, the District entered into a contract with Hunter Contracting Company
for the design and construction of an arsenic treatment system. The contract's details
follow:
Total contract amount
Completed and paid through June 30,2007
Remaining contractual commitments including
accrued retentions of $79,605
$ 796,052
716,342
$
79.710
The project is expected to be completed in 2007 and will be funded through a
restructuring of the existing note payable to the Water Infrastructure Finance Authority of
Arizona.
The District has entered into a ten-year agreement with the Superstition Mountains
Community Facilities District No. 1 for the purchase of long-term storage credits. The
agreement is for the purchase of the lesser of 2,120 acre feet or ninety percent (90 % ) of
the available credits. The purchase price will be calculated at ninety-eight (98 % ) of the
Central Arizona Project Municipal and Industrial Users Excess water rate, rounded to the
nearest dollar. Included in the District's liabilities is an accrual for $148,196 for the
credits generated from January 2006 through June 2007. The agreement expires on
December 31,2015.
26
June 30, 2007
NOTE 9 - RETIREMENT PLANS
Plan Description - AJWUCFD contributes to the plan described below. Benefits are
established by state statute and generally provide retirement, death, long-term disability,
survivor, and health insurance premium benefits.
The Arizona State Retirement System (ASRS) administers a cost-sharing multipleemployer defined benefit pension plan that covers general employees of AJWUCFD. The
ASRS is governed by the Arizona State Retirement System Board according to the
provisions of A.R.S. Title 38, Chapter 5, Article 2.
The ASRS issues a publicly available financial report that includes its financial statements
and required supplementary information. A report may be obtained by writing or calling the
plan.
ASRS
3300 N. Central Ave.
Phoenix, AZ 85067-3910
(602) 240-2200 or (800) 621-3778
Funding Policy - The Arizona State Legislature established and may amend active plan
members' and the District's contribution rates.
Cost-sharing plans - For the year ended June 30, 2007, active ASRS members,
AJWUCFD was each required by statute to contribute at the actuarially determined rate of
9.10 percent (8.60 percent retirement and 0.50 percent long-term disability) of the
members' annual covered payroll. The District's contributions to ASRS for the years ended
June 30, 2007, 2006, and 2005 were $38,911, $34,820, and $24,734, respectively, which
were equal to the required contributions for the year.
27
28
SUPPLEMENTAL INFORMATION
29
30
WATER UTILITIES
COMMUNITY FACILITIES DISTIRCT
BUDGETARY COMPARISON SCHEDULE
Actual
Amounts
(Budgetary
Basis)
Budgeted Amounts
Final
Original
Variance from
Final Budget
Positive
(Negative)
REVENUES:
Residential sales
Nonresidential sales
Nonresidential/construction
Establishment/miscellaneous
Installaton charge
CAP (Central Arizona
Project standpipe)
Fire hydrant meters
Other services and charges
Miscellaneous
Water recharges
Miscellaneous
Earnings of investments
Designated and restricted revenues
Capital facilties fees
Bond proceeds
I f t t
Infrastructure
finanacing
fi
i
Proceeds from Sale of Land
$
Total revenues
EXPENDITURES:
Administration
Operations
Debt service
Total administration
Plant
Operations
Central Arizona Project
Contingency
Capital outlay
Total plant
Total expenditures
Excess of revenues over
(under) expenditures
Budgetary fund balance
beginning of year
Budgetary fund balance
$
end of year
Reconciliation to GAAP basis:
Capital assets
Bonds and notes payable
Deferred charges
Restricted deposits in bond trust accounts
Inventory
2,250,000
330,000
25,000
32,000
10,000
$
2,250,000
330,000
25,000
32,000
10,000
$
2,363,232
407,056
49,857
27,725
23,398
$
113,232
77,056
24,857
(4,275)
13,398
14,000
1,000
60,000
14,000
1,000
60,000
13,543
1,650
65,330
(457)
650
5,330
60,543
5,000
25,000
60,543
5,000
25,000
2,883
5,895
95,435
(57,660)
895
70,435
100,000
29,500
796,000
796 000
4,000,000
100,000
29,500
796 000
796,000
4,000,000
195,643
58,500
693 496
693,496
95,643
29,000
(102 504)
(102,504)
(4,000,000)
7,738,043
7,738,043
4,003,643
(3,734,400)
646,755
794,881
646,755
794,881
552,365
793,603
94,390
1,278
1,441,636
1,441,636
1,345,968
95,668
1,300,642
410,000
310,765
4,275,000
1,300,642
410,000
310,765
4,275,000
1,177,971
364,632
99,809
122,671
45,368
310,765
4,175,191
6,296,407
6,296,407
1,642,413
4,653,995
7,738,043
7,738,043
2,988,381
4,749,663
0
0
1,015,262
1,015,263
731,039
731,039
708,262
731,039
~
$
Net assets-GAAP Basis
731,039
~
1,723,524
~
11,354,848
(7,228,134)
75,986
552,666
100,882
$
31
6,579,772
(22,777)
$
992,485
32
STATISTICAL SECTION
This part of the Water Utilities Community Facilities District comprehensive annual
financial report presents detailed information as a context for understanding what the
information in the statements, note disclosures, and required supplementary information
says about the District's financial health.
Contents
Page
Financial Trends
These schedules contain trend information to assist the reader in understanding
how the city's financial performance and well-being have changed over time.
34
Revenue Capacity
These schedules contain information to assist the reader in assessing the
District's
District
s most significant revenue source
source, water sales
sales.
36
Debt Capacity
These schedules present information to assist the reader in assessing the
affordability of the District's current levels of outstanding debt and the District's
ability to issue additional debt in the future.
41
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the District's financial activities take
place and to help make comparisons over time and with other governments.
43
Operating Information
These schedules contain information about the District's operations and
resources to help the reader understand how the District's financial information
relates to the services that the District provides and the activities that it performs.
33
45
Schedule A-1
WATER UTILITIES
(City of Apache Junction, Arizona)
Net Assets by Component
Last Five Fiscal Years (1)
Fiscal Year Ended June 30,
2003
2004
2005
2006
2007
$ 2,821,565
$ 2,390,835
$ 3,249,907
$ 4,701,010
$ 4,126,714
Restricted
1,739,223
1,360,849
844,156
105,664
143,613
Unrestricted
1,509,183
2,892,216
3,018,050
1,326,447
2,309,445
$ 6,069,971
$ 6,643,900
$ 7,112,113
$ 6,133,121
$ 6,579,772
Primary Government
Invested in capital assets,
net of related debt
Tota net assets
(1)
The District GASB Statement 34 in the fiscal year ended June 30, 2003.
34
Schedule A-2
WATER UTILITIES
Changes in Net Assets
Last Five Fiscal Years (1)
2003
2004
2005
2006
2007
$ 1,278,361
1,157,318
114,864
72,303
2,622,846
$ 1,978,035
523,723
140,863
25,848
2,668,469
$ 2,094,765
326,122
222,743
111,294
2,754,924
$ 2,257,287
372,791
230,271
15,523
2,875,872
$ 2,347,873
407,056
184,387
21,247
2,960,563
$
$
$
$
$
Operating Revenues
Residential sales
Non-residential sales
Other charges
Miscellaneous
Total Operating Revenues
Operating Expenses
Administration
Operations
365,424
343,052
430,580
497,367
552,365
Depreciation
9,220
9,981
9,865
10,701
8,192
Amortization
21,640
20,764
24,387
21,711
24,350
396,284
396 284
373
373,797
797
464
464,832
832
529
529,779
779
584
584,907
907
Plant
Operations
Central Arizona Project
Depreciation
Amortization
T t l Administration
Total
Ad i i t ti
1,017,167
312,233
371,072
908,824
343,089
354,495
12,184
932,399
358,505
339,711
12,184
2,065,975
560,466
379,231
3,515
1,107,138
365,515
395,508
1,562
(2)
Total Plant
1,700,472
1,618,592
1,642,799
3,009,187
1,869,723
(2)
2,096,756
1,992,389
2,107,631
3,538,966
2,454,630
526,090
676,080
647,293
(663,094)
505,933
277,532
88,059
(393,739)
(89,944)
135,363
30,908
(268,422)
77,799
131,193
(388,072)
73,272
79,680
(363,955)
(104,895)
195,643
95,435
(350,360)
(118,092)
(102,151)
(179,080)
(315,898)
(59,282)
407,998
573,929
468,213
(978,992)
446,651
(2)
468,213
$ (978,992)
446,651
(2)
Total Operating Expenses
Net operating income (loss)
(2)
Nonoperating revenue (expense)
Interest and earnings on investment
Interest expense
Loss on the disposal of capital assets
Total nonoperating revenue
(expense)
Income before contributions
Capital contributions
Change in net assets
(1)
(2)
355,178
$
763,176
$
573,929
$
$
The District GASB Statement 34 in the fiscal year ended June 30, 2003.
Plant operations reflects $1.141 million resulting from the collapse of Well #5. This affects net operations
and the change in net assets
35
Schedule B-1
WATER UTILITIES
Ten Largest Customers
(1)
Current Year and Eight Years Ago
Year ended June 30, 2007
Customer Name
Golden Vista RV Association
Sales
$
Percentage
Percentage
of Metered
of Metered
Sales
127,392
4.63%
Dolce Vita (a retirement community)
99,432
3.61%
Cax Rancho Mirage, LLC (a mobile home park)
77,057
R R of AJ Home Assoc Inc. (recr. vehicle park)
Sales
$
Sales
106,995
6.37%
2.80%
45,184
2.69%
75,551
2.74%
58,166
3.46%
Roberts Resorts (recreational vehicle park)
65,703
2.38%
41,012
2.44%
Indian Wells Apartments
63,581
2.31%
Apache Junction Landfill
61,605
2.24%
Raindance Mobile Home Park
34,798
1.26%
30,276
1.80%
Apache Junction Unified School District #43
27,232
0.99%
Superstition Mountain HOA
26,404
0.96%
41,039
2.44%
Wheeler Construction
35,822
2.13%
Desert Sun Condo Association
29,007
1.73%
Apache Skies Mobile Home Park
26,514
1.58%
Countryside Travel Trailer Resort
26,443
1.57%
CK Inc (apartments)
Subtotal of ten largest customers
Balance from other customers
Total District Water Sales
(1)
$
658,755
23.91%
440,458
26.21%
2,096,174
76.09%
1,239,902
73.79%
2,754,929
100.00%
1,680,360
100.00%
$
Although GASB 44 paragraph 19 prescribes that information from nine years prior be presented,
the most recent available information is from the year ended June 30, 1999.
Note: A customer is listed only if in the top ten for the year presented in each table. A customer
listed in one table but not the other may, or may not have been, in business as a lower
ranked customer during the other year presented.
36
Schedule B-2
WATER UTILITIES
Groundwater Used, By Source, By Calendar Year (1)
Last Ten Calendar Years (1)
(Expressed in Acre-Feet) (2)
Calendar
Year
(1)
(2)
Well #5
Well #6
Total
Well
Production
Groundwater
Purchased
66.03 a/f
Total
Groundwater
Used
1997
737.22 a/f
394.40 a/f
1,131.62 a/f
1,197.65 a/f
1998
752.70
510.63
1,263.33
0.01
1,263.34
1999
857.16
625.38
1,482.54
0.00
1,482.54
2000
926.46
598.21
1,524.67
86.35
1,611.02
2001
987.25
575.58
1,562.83
76.58
1,639.41
2002
974.47
633.54
1,608.01
267.10
1,875.11
2003
866.19
487.67
1,353.86
63.53
1,417.39
2004
910.65
451.21
1,361.86
0.21
1,362.07
2005
779.84
497.74
1,277.58
199.68
1,477.26
2006
456.00
709.00
1,165.00
162.86
1,327.86
Source: Annual Water Withdrawal and Use Report - Provider Summary reports filed with the
Arizona Department of Water Resources
An acre-foot (a/f) contains 325,851 gallons
37
Schedule B-3
WATER UTILITIES
Water Sales by Customer Type
Last Four Fiscal Years (1)
Year Ended June 30,
2004
Residential (2)
Single family houses
Mobile homes
$
Single family units subtotal
Apartments and condominiums
Multi-family master metered (3)
Multi-family subtotal
Total residential
Nonresidential
Business
Lodging
Other nonresidential sales (4)
Total nonresidential sales
Consumption rate per 1000 gallons (5)
$
2005
1,092,574
158,937
$
2006
1,069,513
153,036
$
2007
1,152,573
162,952
$
1,200,152
160,803
1,251,511
1,222,549
1,315,525
1,360,955
120,476
606,048
112,915
759,301
118,182
823,580
115,612
871,306
726,524
1,978,035
872,216
2,094,765
941,762
2,257,287
986,918
2,347,873
$
$
$
$
239 633
239,633
195,072
89,018
$
246,222
246
222
28,391
51,509
$
269,049
269
049
35,519
68,223
$
300,580
300
580
36,392
70,084
$
523,723
$
326,122
$
372,791
$
407,056
$
3.88
$
3.88
$
3.88
$
3.88
(1)
The last three fiscal years are used because the District reorganized the billing structure to more
closely match Arizona Department of Water Resources reporting criteria in July 2003.
(2)
Residential customers, except listed as master-metered, include individually
metered houses, mobile homes and apartments
(3)
Multi-family master metered accounts in this category include mobile home parks and apartment
buildings with one or more common meters
(4)
Other nonresidential sales include sales to the landfill and standpipe sales of potable water.
(5)
Schedule B-5 shows monthly service charge by meter size and graduated rate beginning in November 2006
38
Schedule B-4
WATER UTILITIES
Number of Water Meters in Service by Type (1)
Last Four Fiscal Years (2)
June
2004
Residential (3)
Single family houses
Mobile homes
2005
2006
2007
2,327
464
2,442
461
2,443
467
2,550
469
2,791
2,903
2,910
3,019
396
169
402
164
425
155
406
155
Multi-family subtotal
Total residential meters
565
3,356
566
3,469
580
3,490
561
3,580
Nonresidential
Business
Lodging
Other nonresidential meters (5)
158
4
41
156
4
34
162
5
35
164
4
34
Total nonresidential meters
203
194
202
202
Single family units subtotal
Apartments and condominiums
Multi-family master meters (4)
(1)
Based on June, the last billing month of each fiscal Year
(2)
The last three fiscal years are used because the District reorganized the billing structure to more
closely match Arizona Department of Water Resources reporting criteria in July 2003.
(3)
Residential customers, except listed as master-metered, include individually
metered houses, mobile homes and apartments
(4)
Multi-family master metered accounts in this category include mobile home parks and apartment
buildings with one or more common meters
single sale in excess of $5,000 has been 1.2%. The 1% difference on large
purchases was not considered when estimating taxable sales.
(5)
Other nonresidential sales include sales to the landfill and standpipe sales of potable water.
39
Schedule B-5
WATER UTILITIES
Water Rates
Last Ten Fiscal Years
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Monthly
Base Rate
5/8 x 3/4"
$
5.65
$
5.65
$
5.65
$
5.65
$
5.65
$
9.95
$
9.95
$
9.95
$
9.95
$
10.94
3/4"
17.15
17.15
17.15
17.15
17.15
17.15
17.15
17.15
17.15
18.87
1”
21.65
21.65
21.65
21.65
21.65
21.65
21.65
21.65
21.65
23.82
1 1/2"
49.65
49.65
49.65
49.65
49.65
49.65
49.65
49.65
49.65
54.62
2”
104.65
104.65
104.65
104.65
104.65
104.65
104.65
104.65
104.65
115.12
3”
144.65
144.65
144.65
144.65
144.65
144.65
144.65
144.65
144.65
117.58
4”
194.65
194.65
194.65
194.65
194.65
194.65
194.65
194.65
194.65
233.58
6”
344.65
344.65
344.65
344.65
344.65
344.65
344.65
344.65
344.65
413.58
8”
460.00
460.00
460.00
460.00
460.00
460.00
460.00
460.00
460.00
552.00
Consumption
Rate:
(per 1000
gallons)
0-8000
gallons
greater than
8000 gallons
$
3.88
$
3.88
$
3.88
$
3.88
$
3.88
$
3.88
$
3.88
$
3.88
$
3.88
$
4.35
3.88
3.88
3.88
3.88
3.88
3.88
3.88
3.88
3.88
4.50
Standpipe
4.00
4.00
4.00
4.00
4.00
4.35
4.35
4.35
4.35
4.35
Nonpotable
Standpipe
2.00
2.00
2.00
2.00
2.00
2.25
2.25
2.25
2.25
2.25
Potable
Note: For sales after November 1, 2006 a new rate schedule went into effect for base rates and for a
graduated rate structure in which most accounts are billed $3.88 per thousand for the first 8,000 gallons
used. The portion of the consumption in excess of 8,000 gallons is billed at $4.50 per thousand gallons.
40
Schedule C-1
WATER UTILITIES
Ratios of Outstanding Debt by Type - Business-type Activities
Year Ended
June 30,
1997
Series A
Revenue
Bonds
(1)
2004
Series A
Revenue
WIFA (2)
Bonds
Loans
Per
Total
Meter
(3)
1998
$ 4,335,000
$ 4,335,000
$ 1,775.18
1999
4,135,000
4,135,000
1,499.82
2000
3,925,000
3,925,000
1,363.79
2001
3,705,000
3,705,000
1,229.26
2002
3,475,000
$ 1,935,312
5,410,312
1,544.92
2003
3,235,000
2,163,223
5,398,223
1,509.15
2004
1,150,000
$ 4,670,000
2,206,410
8,026,410
2,255.88
2005
885,000
4,670,000
2,108,410
7,663,410
2,083.01
2006
605,000
4,635,000
2,133,162
7,373,162
1,949.54
2007
310,000
4,585,000
2,684,175
7,579,175
2,004.01
(1)
The 1997 Series A bonds with maturing after July 1, 2007 were defeased in an advance refunding
concurrent with the issuance of the 2004 Series A Bonds on June 9, 2004.
(2)
WIFA - Water Infrastructure Finance Authority of Arizona. WIFA loan #920018-02 was
merged into WIFA Loan #920111-06 on May 3, 2006.
(3)
Per capita information is not available because the District service area does not coincide with
those of the City and, therefore, the population and income are not available. The meter count
is taken from June of each year. Standpipe meters are not included in the count.
41
Schedule C-2
WATER UTILITIES
Pledged Revenue Coverage(1)
Water Utilities Community Facilities District Combined Bonded Debt
Year
Ended
June 30,
Gross
Revenues(2)
Operation
and
Net Revenues
Maintenance Available for
Expenses (3) Debt Service
1998
$ 1,749,945
$
1999
1,937,123
2000
$ 200,000
$ 366,810
$ 566,810
1.75
1.15
1,058,709
878,414
210,000
358,310
568,310
1.55
1.15
2,329,305
1,285,632
1,043,673
220,000
348,440
568,440
1.84
1.15
2001
2,672,890
1,438,340
1,234,550
230,000
337,880
567,880
2.17
1.15
2002
3,031,891
1,298,601
1,733,290
240,000
326,610
566,610
3.06
1.25
2003
2,988,436
1,694,824
1,293,612
377,234
390,365
767,599
1.69
1.25
2004 (6)
2,834,740
1,594,946
1,239,794
359,516
268,422
627,938
1.97
1.25
2005
2,963,916
1,721,484
1,242,432
412,758
312,612
725,370
1.71
1.25
3,028,824
3,123,808
474,845
275,525
750,370
(0.13)
1.20
3,251,641
2,025,018
508,989
254,483
763,472
1.61
1.20
(7)
2007
$
Coverage Required
Coverage (5)
Ratio
989,359
2006
760,586
Debt Service Requirements(4)
Principal
Interest
Total
(94,984)
1,226,623
(1)
Source: Water Utilities Community Facilities District (W.U.C.F.D.) records.
(2)
Includes Interest Revenues as per definition of Gross Revenues in Bond Trust Indenture
(3)
Total Operating Expenses net of Depreciation and Amortization
(4)
Includes Debt Service Payments due on July 1 of subsequent fiscal year since related debt service will
be due paid from funds on hand as of June 30.
(5)
There had been different coverage requirements. The 1997 Series A. Revenue Bonds had a coverage requirement
of 1.15 while the WIFA had a coverage requirement of 1.25. The more stringent requirement of 1.25 had been listed.
With the WIFA Changes involving the WIFA loan, a new coverage ration was set during the year ended June 30, 2006
(6)
Amounts associated with advance refunding of 1997 Series A bond issued not included
(7)
Reason for failing to meet coverage was the collapse of Well #5. The cost of replacing the output from the well is
estimated at $1.141 million.
42
Schedule D-1
WATER UTILITIES
Demographic Statistics
Year Ended
June 30,
Population
Year-Round
(1)
(2)
Seasonal
Personal
Income (3)
Per
Capita (3)
(thousands
Personal
of dollars)
Income
Unemployment
Rates
(4)
1998
24,596
(b)
33,117
408,736
16,618
3.0 %
1999
28,296
(b)
33,200
492,945
17,421
3.1
2000
31,814
(c)
37,377
579,937
18,229
4.2
2001
32,800
(a)
37,750
647,636
19,745
3.1
2002
33,570
(a)
38,128
672,944
20,046
4.5
2003
34 400
34,400
(a)
38 510
38,510
709 328
709,328
20 620
20,620
52
5.2
2004
35,117
(b)
38,895
755,683
21,519
4.5
2005
34,070
(a)
39,284
783,576
22,999
3.8
2006
34,055
(a)
39,000
(d)
821,475
24,122
3.7
2007
37,538
(d)
39,000
(d)
972,047
25,895
3.4
Note: This information is not available for the District so information for the City of Apache Junction is
provided.
(1)
(2)
Sources:
(a)
Arizona Department of Economic Security (DES) Population Statistics Unit
(b)
City of Apache Junction Economic Development Division (Economic Development)
(c)
United States Census Bureau
(d)
Preliminary County Controlled Population Estimates from the DES Population Statistics Unit
and the Central Arizona Association of Governments (CAAG) plus 275 for Maricopa County
based on DES Population Statistics Unit estimates from previous years
Source: City of Apache Junction, Economic Development Office except as noted
Winter Visitors' Association
(d)
(3)
Finance Department estimate using Bureau of Economic Analysis and University
of Arizona Eller Business and Research Data
(4)
Annual average compiled from Department of Economic Security data
43
Schedule D-2
WATER UTILITIES
Principal Employers
Current Year and Nine Years Ago
Employer
Full-Time
Percentage
Full-Time
Percentage
Equivalent
of Total City
Equivalent
of Total City
Employees
Employment
Employees
Employment
Apache Junction Unified School District #43
704
3.87%
576
6.54%
City of Apache Junction
296
1.63%
204
2.32%
Wal-Mart Store # 1831
331
1.82%
Superstition Mountain Mental Health Center
186
1.02%
121
1.37%
Apache Junction Medical Center
157
0.86%
110
1.25%
United States Postal Service
88
0.48%
105
1.19%
Apache Junction Fire District
88
0.48%
67
0.76%
Fry's Food and Drug
87
0.48%
Central Arizona College-Superstition Mountain Campus
77
0.42%
Superstition Ford
75
0.41%
127
1.44%
Casa Blanca Health Center
84
0.95%
K-Mart
79
0.90%
The Good Apple
37
0.42%
1,510
17.14%
Safeway Stores
0.00%
Total
2,089
11.47%
Note: This information is not available for the District so information for the City of Apache Junction is provided
(1)
Sources: City of Apache Junction, Office of Economic Development;
44
Schedule E-1
WATER UTILITIES
Full-time Equivalent Employees by Function
Function/Title
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Administration
District Director
1.000
Operations Manager
Water Superintendent
1.00
1.00
1.00
1.00
1.00
Water Accounts Supervisor
1.00
0.75
0.75
1.00
1.000
1.000
0.60
0.600
0.600
0.15
0.150
0.150
1.00
1.00
1.000
1.000
1.00
1.00
1.000
1.000
1.00
1.00
1.000
1.000
0.475
0.475
0.75
Administrative Assistant
Accounting Assistant
1.00
1.00
Account Clerk II
1.00
1.00
1.00
1.00
1.00
Account Clerk I
0.75
1.00
1.00
1.00
1.00
1.000
1.00
Finance Manager
Accountant
1.00
1.00
2.00
Customer Service Rep. I.
Total Administration
2.50
3.75
3.75
4.00
4.00
4.00
5.00
5.75
6.225
6.225
1.00
1.00
1.00
1.00
1.000
1.000
1.00
2.00
1.00
1.00
2.000
2.000
4.00
4.00
4.00
4.000
4.000
2.00
3.00
3.00
2.000
2.000
Plant
Water Operator - Supervisor
Water Operator
1.00
1.00
1.00
1.00
Senior Utility Worker
1.00
1.00
1.00
1.00
Utility Worker II
Utility Worker I
3.00
3.00
4.00
Meter Reader
6.00
6.00
1.00
1.00
Total Plant
5.00
5.00
6.00
9.00
9.00
9.00
9.00
9.00
9.000
9.000
Total
7.50
8.75
9.75
13.00
13.00
13.00
14.00
14.75
15.225
15.225
Source: District Budgetary Records
45
Schedule E-2
WATER UTILITIES
Operating and Capital Indicators
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Production
Wells
2
2
2
2
2
2
2
2
2
2
Booster Stations
2
2
2
2
2
2
2
2
2
2
Pumps
5
5
5
5
5
5
5
5
5
5
44
47
48
50
52
58
58
62
62
65
1 Million gallon storage tanks
1
2
2
2
2
2
2
2
2
2
1/2 Million gallon storage Tanks
2
2
2
2
2
2
2
2
2
2
2 M. gal 3 M. gal 3 M. gal 3 M. gal 3 M. gal 3 M. gal 3 M. gal 3 M. gal 3 M. gal
3 M. gal
Distribution
Miles of water mains
Storage
Total capacity
46

2007 Comprehensive Annual Report

Transcription

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